REG - Cambridge Nutrition. - Final Results
25/07/2024 07:00
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RNS Number : 7398X Cambridge Nutritional Sciences PLC 25 July 2024
CAMBRIDGE NUTRITIONAL SCIENCES PLC
("CNSL" or the "Company" or the "Group")
Final Results
CNSL (AIM: CNSL), the specialist medical diagnostics company focused on
delivering a personalised approach to nutrition for better health, announces
its audited results for the year ended 31 March 2024, a year that has seen the
establishment of a robust foundation for the future after transitioning out of
a diverse group structure.
Financial highlights
· Revenues for continuing operations up 30% to £9.8m (2023:
£7.5m)
· Gross margin improved to 61.9% (2023: 47.0%)
· Adjusted EBITDA* £0.2m (2023: EBITDA loss of £2.0m)
· Operating loss of £0.8m (2023: £3.2m) - stated after net
exceptional costs of £0.2m (2023: £0.5m)
· Cash and deposits £5.4m (2023 £5.1m)
Operational highlights
· CNSLab productivity improvements have increased capacity and
halving guaranteed turnaround times to customers
· Improvements in FoodPrint® production processes have increased
maximum output of tests by 11%
· Improved production yields have led to a reduction in scrap by
27%
· Investment in automation to further improve productivity and
reduce production costs
· UK lab sales increased by 58%, driven by increased consumer
demand through white-label partnerships
· UK deployment of MyHealthTracker digital app to practitioner base
· New plc name established to reflect the Group's focus on
personalised nutrition
· Well-funded to drive future growth
All references to financial performance and associated comparative data in the
report relate to continuing operations
* Adjusted for exceptional items and share-based payment charges; see Chief
Executive and Financial Review section
Commenting, Carolyn Rand, Chair of CNSL, said: "I am delighted to report that
this proved to be a good year for Cambridge Nutritional Sciences. Through
substantial commitment across the whole organisation, we have reduced
production backlogs and delivered stronger financials with a 30% sales growth.
We achieved a substantial gross margin improvement enabled through improved
efficiencies and productivity meaning a positive adjusted EBITDA in the
financial year.
We have continued to reshape and restructure the Group throughout the year,
consolidating improvements by strengthening the senior leadership team,
investing in business system upgrades and continuous improvement projects, and
preparing the business for the future."
Contacts:
Cambridge Nutritional Sciences www.cnsplc.com (http://www.cnsplc.com)
plc
Jag Grewal, Chief Executive investors@cnsplc.com
Officer
Cavendish Capital Markets Tel: 020 7220 0500
Limited
Geoff Nash/Edward Whiley/George Dollemore (Corporate Finance)
Nigel Birks / Harriet Ward (ECM)
About Cambridge Nutritional Sciences plc
Cambridge Nutritional Sciences plc (AIM: CNSL) is the specialist medical
diagnostics company focused on delivering a personalised approach to nutrition
for better health.
Chair's Statement
Carolyn Rand
Chair
Results overview
· 30% growth in sales to £9.8 million (2023: £7.5 million)
· Gross margins improved to 61.9% (2023: 47.0%)
· Adjusted EBITDA of £0.2 million (2023: Adjusted EBITDA loss of
£2.0 million)
· Cash and deposits of £5.4 million (2023: £5.1 million)
· Improvements in FoodPrint® production processes leading to
exceeding previous maximum output of tests by 11%
Business performance
Sales increased to £9.8 million (2023: £7.5 million) following organic
growth in our main product lines, FoodPrint® and CNSLab, with contribution
from the higher-than-normal brought forward order book. The improved gross
margin of 61.9% (2023: 47.0%) came from a sales mix of high margin FoodPrint®
products, reduced scrap costs and development in our continuous improvement
programme. This is an ongoing process, and we will be investing further
throughout the next financial year in systems and processes to ensure our
products can deliver a profitable contribution in the future.
New machinery, including component labelling and flow packaging, was installed
to improve our base product and save production hours. This will help maintain
our gross profit margin moving forward.
The combination of increased revenue, improved gross margin, and operational
control resulted in the Group returning to a positive adjusted EBITDA of £0.2
million (2023: loss of £2.0 million). Cash and deposits were £5.4 million
(2023: £5.1 million), allowing us to invest in continuous improvement
throughout the Group.
Over the period we have remained focused on our main market segments and have
deepened our relationships with existing channels, improving revenue. Our
long-term customer relationships are built on trust, education, and support.
Our practitioner educational programme underpins the commercialisation of our
products by empowering customers to develop skills and knowledge of the
products and their clinical utility. The provision of technical, marketing and
patient resources through our distributor portal provides a solid foundation
for our customers to promote our product lines in their market.
We believe in recognising the hard work that our business partners and
practitioners put into promoting our products in their markets and have
recently created "UK Practitioner of the Year" and "Business Partner of the
Year" awards to show our appreciation of their efforts.
Organisation
Following the transition into an organisation focused on delivering a
personalised approach to nutrition for better health, a new name for the plc
was established to reflect the Group's strategic objectives. We have made a
number of key appointments to strengthen and enhance the knowledge capital of
the Group's leadership team. This delivers both cultural changes and
upskilling of the Group to maintain and build on our leading position and
drive growth.
This included the hire of James Cooper, Chief Operating Officer, who joined
the organisation in January 2024. James has been integral to the successful
continuous improvement programme, examples of which are included in the
Operational strategy report. In addition to this, James has been leading a
team to redesign and improve our blood sample collection pack to be more
environmentally friendly and give a better user experience.
Chris Lea, Chief Financial Officer, left the organisation in August 2023.
Simon Douglas, Chair, serving on the Board for three years, stepped down in
April 2024. During their time in office, they were instrumental in the
successful sale of both the Alva site and the CD4 business, including moving
the head office from Alva in Scotland to Cambridgeshire. The disposals were
key in refocusing the business on food sensitivity testing and ensuring it has
sufficient resources to drive CNSL forward.
I would like to thank both Chris Lea and Simon Douglas for all their efforts
during their time in office.
During the year the headcount has reduced to 91 (2023: 97) through a managed
programme of efficiency and productivity improvement. The headcount will
continue to be managed carefully and will include increases in sales and
marketing, partially offset by further efficiency improvements across other
areas of the Group. The investment in sales and marketing aligns with the
Group's long-term growth strategy.
DHSC Dispute
We remain in dispute with the Department of Health and Social Care (DHSC)
regarding an alleged obligation to repay DHSC a £2.5 million pre-production
payment under a historical contract to manufacture COVID-19 lateral flow
tests.
As previously notified, having taken legal advice we do not consider that we
are required to repay this pre-production payment. We are also considering
claims against DHSC for additional losses that we have suffered as a result of
DHSC's conduct pursuant to the contract. We are continuing to explore
potential ways to resolve this dispute without the need for legal proceedings.
Outlook
We are targeting strategic growth though new market segments and geographies,
while embracing digital technologies to support our customers. We are
establishing several new relationships with lab partners in the EU, which we
expect to profit from in the future. Sales cycles for much of our business are
typically lengthy, so these activities may not have an immediate impact but
will result in significant growth potential in the mid-term.
After an extensive validation process to gain regulatory approval, our first
US partner laboratory is now in position to market FoodPrint® under its own
branding.
We are delighted that gross margin has recovered to 61.9% (2023: 47.0%). Using
our continuous improvement process we expect to maintain this result going
forward.
Our operational costs next year are budgeted to stay broadly in line with this
year, with cost savings in manufacturing being reinvested in sales growth
areas.
Our strong cash and deposits position will allow us to further develop our
production capabilities and invest in new technology, plant and packaging
Amongst a number of initiatives, we will be updating and producing a more
environmentally friendly sample collection pack, implementing a new eQMS and
installing a wireless temperature monitoring system. In the year ahead, we are
looking to further develop the MyHealthTracker app and extend its reach, which
in turn will help our customers personalise their diet to promote optimal
health. This is another step towards our goal of improved patient care through
a more personalised approach to health and wellbeing. It will empower people
to become more proactive about managing their health.
We are further investing in the design of our products to maintain compliance
with the new EU In Vitro Diagnostic Regulations (IVDR) which will replace the
current In Vitro Diagnostic Directive (IVDD). The new IVDR requirements are
expected to be implemented from 2029. Having an IVDR compliant product will
ensure the long-term future of European sales and establish the product as
best-in-class which should accelerate and broaden our future market
opportunities across Europe and beyond.
Whilst we remain focused on building a pipeline to deliver strong organic
growth opportunities, we will carefully consider any potential opportunities
that may be served by market consolidations.
I would like to thank all our staff for their commitment and dedication for
continuing to deliver both products and services throughout the year. To our
shareholders, both new and old, we thank them for their commitment and
patience as we further re-focus the Group and look forward to further progress
in the years ahead.
Carolyn Rand
Chair
24 July 2024
Chief Executive and Financial Review
Building for the future
Jag Grewal
Chief Executive
Introduction
The Group now solely operates in the consumer healthcare segment of
personalised nutrition with a focus on food sensitivity testing. It is
increasingly being recognised how important gut health is to overall health
and wellbeing and how poor nutrition links to the development of chronic
inflammatory disease. Targeted diagnostics are essential in assisting
healthcare professionals to identify the causes of poor gut health and
planning therapeutic protocols for their patients.
In the past year we have developed the Group's new segment focus. Along the
way, we have installed new functions such as HR, finance and regulatory
affairs and we are substantially developing our systems and processes to match
the new business structure. We now have a very clear vision and mission, to
promote a personalised and functional approach to health.
In the financial year we delivered a strong set of results with revenue
growth, profitability and cash generation. There are still more improvements
that can be made in order to build a solid foundation for future growth, but
we have identified, and are already working on, what we need to do as a team
to deliver this and have already made great strides towards this goal.
Core business review
The Group manufactures and markets products to identify food sensitivity,
characterised by a delayed adverse physiological response to particular foods,
as opposed to an allergic reaction to food.
Personalised nutrition and associated testing, such as food sensitivity, is
still a novel area of medicine and gut health. Though there is tremendous
interest in the role this plays in wellness and chronic disease, our
scientific and marketing team continues to focus on increasing awareness to
drive demand for our tests either to our own laboratory or our partners around
the world. The team works tirelessly to educate our consumers and drive
awareness of nutritional therapy through our Health and Nutrition Academy
webinars. These webinars have focused on the use of our testing in
naturopathic practice, functional medicine and sports nutrition as well as
demonstrating the clinical utility of our products in relation to gut health,
skin health and neurological and cognitive conditions. We also partner with
relevant professional bodies and key opinion leaders in the field of gut
health which continues to reinforce our position as a leader in the market.
In March 2023, CNS launched MyHealthTracker, a health and wellbeing tool
designed to be used alongside a trained healthcare professional, allowing the
patient to receive laboratory test results direct to their smartphone and
helping the patient make personalised changes to their diet for optimal
health. Access is by invitation only from an approved healthcare professional,
with its main goal being to elevate patient care by way of a more personalised
approach to health and wellbeing. Over the past year, the digital platform was
rolled out in the UK supporting our CNSLab practitioners. The digital platform
not only improves consumer/patient and healthcare professional engagement but
will help the Group develop and gain a deeper understanding of our end user
global market. This drives awareness and better health outcomes to deliver
organic growth from an existing customer base. The functionality of the app
will continue to be developed in order to add further benefits to the customer
base. In addition, we will look to expand and install the app in international
markets over the next few years.
Early in the financial year the Group embedded a process to improve
production. This resulted in additional benefits beyond improving just the
production yield of FoodPrint® by embedding core skills and learning into our
manufacturing teams. We now have a manufacturing operation that puts
continuous improvement at its heart to help us become more efficient and embed
a new culture of improvement.
The appointment of James Cooper, recently promoted to Chief Operating Officer,
has helped cement the ongoing improvements. James spent many years developing
these skills whilst at Chartwell Consulting, where he was responsible for
leading step change operational improvements across a wide range of
manufacturing industries. James' insight, experience and expertise will be
invaluable in spearheading this division, helping to enable and expedite CNS's
next phase of growth.
Strategy
Going forward, the Company has a singular focus on its core Health and
Nutrition business, maintaining its leadership position and targeting
significant organic growth through embracing digital technologies and related
marketing activities. We have come out of a period of significant change,
rebuilding the Group for longer-term growth in what is a very exciting market.
In order to drive future growth ambitions, we are taking steps to increase our
sales capacity in order to reach more prospects and convert them into
customers. Supported by a recently introduced CRM system we are now looking to
build on our leadership position and drive business in vacant or
under-represented territories as well as change and refresh our approach in
under-performing regions. Sales cycles for much of our business tend to be
long so these activities may not have immediate impact but will lead to
significant growth potential in the mid-term.
The Group's growth strategy will be underpinned by expansion in primary
European markets through key partnerships with labs which have an established
customer base for our products. Though Europe is a relatively mature
marketplace, it is dominated by large commercial laboratory groups which
either have an interest in providing the tests we manufacture or boosting
their existing market position. The other area of focus is the US, where food
sensitivity testing is well established with healthcare practitioners and end
users recognising its clinical benefits. Our initial focus in this market will
be through investing in a US-based sales team tasked with identifying
additional laboratory partners.
To realise our vision of becoming a leader in personalised health, we are
planning to develop a wider menu of complementary health tests to promote
through our established global network of lab partners and healthcare
practitioners. We have seen growing demand from our existing customer base for
a more comprehensive health test portfolio. Extending our menu will allow
practitioners to better manage their patients' health to improve patient
outcomes, enabling the Board's vision of delivering personalised nutrition for
better health. However, this area of science is fast evolving and so we are
engaging with our practitioner base to understand how best to meet their needs
in this dynamic field.
Building on the excellent work in operations around our FoodPrint®
manufacturing line, we are now taking the next steps in product enhancement.
Our development team is working towards ensuring our products meet the EU In
Vitro Diagnostic Regulations (IVDR) which we will need to comply with by 2029.
At the same time, it represents an opportunity to implement new manufacturing
technologies that will improve yields, productivity and therefore margin. IVDR
compliance also raises the barrier to competitor products.
Summary and outlook
The new financial year has started with a strong and stable operational
performance combined with a renewed focus on refreshing our relationships with
existing distributors, customers and growing our funnel of sales prospects.
This year we will see a more targeted sales focus on our markets, extending on
the good growth made in the UK in the past year. Expanding our presence in key
European markets as well as the US market are key goals as we continue to
evaluate a wider menu of complementary health tests to sell via our
established channels.
We operate in a dynamic market where it is increasingly being recognised that
improving gut health and avoiding food-driven inflammation are key to
achieving a healthy weight and maximising energy. As healthcare systems creak
under the burden of chronic disease and an ageing population, society is
increasingly turning to prevention through wellness. Personalised nutrition is
at the very frontier of this change and Cambridge Nutritional Sciences sits at
the heart of this movement.
I would like to thank the outgoing Chair, Simon Douglas, for his support and
mentorship over the years. I also look forward to working with our new Chair,
Carolyn Rand, who brings a fresh dynamic focus and extensive experience to the
organisation which is often needed to stimulate new ideas and a focus on
delivery.
On a personal level, I remain honoured to lead the organisation, a company I
love, in a healthcare market I am passionate about, and am delighted with our
performance in the past year. We have delivered a very strong set of results
while at the same time laying a solid foundation for the future in what is an
increasingly important market of personalised health diagnostics. We have
strengthened both our operational performance and our organisation. I would
like to acknowledge the hard work and commitment of the Cambridge Nutritional
Sciences team that has been pivotal in delivering this strong performance and
I look forward to an exciting year ahead.
Jag Grewal
Chief Executive Officer
24 July 2024
Financial Review
Financial results summary
For the year ended 31 March 2024, the Group reported revenue of £9.8 million
(2023: £7.5 million), an EBITDA loss of £0.1 million (2023: EBITDA loss of
£2.6 million), an adjusted EBITDA of £0.2 million (2023: EBITDA loss of
£2.0 million), and a statutory loss before tax of £0.7 million (2023: £3.3
million).
Health and Nutrition Corporate Total
2024 £'000 £'000 £'000
Sales 9,774 - 9,774
Operating profit/(loss) after net exceptional costs 589 (1,362) (773)
Add back:
Depreciation and amortisation 650 - 650
EBITDA 1,239 (1,362) (123)
Share-based payment charge 12 61 73
Net exceptional costs 100 138 238
Adjusted EBITDA 1,351 (1,163) 188
Statutory profit/(loss) before taxation 591 (1,336) (745)
Health and Corporate Total
Nutrition
2023 £'000 £'000 £'000
Sales 7,546 - 7,546
Operating loss after exceptional costs (2,132) (1,107) (3,239)
Add back:
Depreciation and amortisation 591 - 591
EBITDA (1,541) (1,107) (2,648)
Share-based payment charge 1 77 78
Exceptional aborted relocation costs 524 - 524
Adjusted EBITDA (1,016) (1,030) (2,046)
Statutory loss before taxation (2,145) (1,107) (3,252)
Revenue of £9.8 million (2023: £7.5 million) was 30% above prior year, with
improvements due to organic growth in our main product lines, FoodPrint® and
CNSLab, and a contribution from the higher-than-normal order book brought
forward from 2023.
From a geographic point of view, we saw growth in a number of key regions
including the UK where our direct laboratory operation grew by 58%, largely
fuelled by our direct-to-consumer channels. The Middle East and Africa region
remains an important territory with 85% growth, whilst North American sales
grew by 63% and Asia and the Far East by 30%.
A summary of Health and Nutrition revenue is in the table below:
2024 2023 Variance
£'000 £'000 %
FoodPrint® 6,016 4,123 46%
Food Detective® 2,082 2,291 (9)%
CNSLab service 1,500 948 58%
Food ELISA/other 176 184 (4)%
9,774 7,546 30%
The gross profit margin percentage has increased to 61.9% (2023: 47.0%),
driven by investment and a focus on production and operational improvements
with further impact coming from the sales mix of high margin FoodPrint®
products.
Excluding net exceptional costs, administrative overheads increased by £0.5
million to £5.3 million (2023: £4.8 million).
Sales and marketing costs decreased by £0.1 million to £1.4 million (2023:
£1.5 million).
Exceptional items
2024 2023
£'000 £'000
Aborted relocation income/(costs) 71 (524)
Compensation for loss of office (195) -
Legal costs (114) -
Total (238) (337)
During the year, the Group incurred net exceptional costs of £0.2 million
(2023: £0.5 million). Income of £0.1 million was received in relation to the
surrender of the lease for the planned new manufacturing facility in Ely. The
lease for the current Littleport site was extended to June 2025 with talks
ongoing to further extend whilst continuing to evaluate the needs of the
business in the future. Costs of £0.2 million were incurred in relation to
compensation for loss of office for three employees who left the organisation
throughout the financial year. £0.1 million of expenditure was incurred on
the ongoing dispute with DHSC as legal costs increased due to the mediation
meeting and continued correspondence.
Adjusted EBITDA
Alongside the key performance indicators of revenue and gross margin
percentage, the Group continues to consider EBITDA and adjusted EBITDA as
being more appropriate performance measures which are better aligned with the
cash-generating activities of the business. The Group made an EBITDA loss of
£0.1 million (2023: EBITDA loss of £2.6 million), with no further costs
incurred in relation to discontinued operations. The adjusted EBITDA (before
net exceptional costs and share-based payment charges) is £0.2 million (2023:
EBITDA loss of £2.0 million).
2024 2023
Total Total
£'000 £'000
Operating loss after net exceptional costs (773) (3,239)
Depreciation and amortisation 650 591
EBITDA (123) (2,648)
Exceptional costs 238 524
Share-based payment charge 73 78
Adjusted EBITDA 188 (2,046)
The Group has recorded a loss after tax of £0.3 million (2023: £3.2
million).
Taxation
The current year tax credit of £0.4 million (2023: £0.4 million) arises from
a review of the deferred tax asset. Other than to offset any deferred tax
liabilities which may crystallise in the future, based on the Group's trading
assumptions the deferred tax asset in respect of trading losses will begin
being realised from 2025 onwards, when the Group starts to generate taxable
profits. The deferred tax asset has been valued based upon a future UK
corporation tax of 25%.
Loss per share
The loss per share was 0.1 pence (2023: 1.7 pence) based on a statutory loss
after tax of £0.3 million (2022: loss of £3.9 million). The adjusted profit
per share was 0.0 pence (2023: loss of 1.4 pence). The adjusted profit after
tax was £0.1 million (2023: loss of £3.1 million) and the profit per share
is calculated on the basic average of 238.1 million shares (2023: 231.8
million shares) in issue.
Research and development
During the year, the Group invested a total of £0.3 million in all
development activities, £0.1 million lower than the prior year (2023: £0.4
million), representing 3.5% (2023: 4.7%) of revenue. Of the total expenditure,
£nil (2023: £0.1 million) has been capitalised in accordance with IAS 38 -
Development Costs, whilst earlier stage expenditure and expenditure not
qualifying in accordance with IAS 38 criteria of £0.3 million (2023: £0.3
million) has been expensed through the income statement.
Property, plant and equipment
Total expenditure on property, plant and equipment in the year was £0.05
million (2023: £0.03 million).
As at 31 March 2024, the outstanding liabilities in connection with leases
recognised under IFRS 16 includes short-term liabilities of £0.1 million
(2023: £0.02 million) and long-term liabilities of £0.03 million (2023:
£nil).
Financing and going concern
In determining the appropriate basis of preparation of the financial
statements, the Directors are required to consider whether the Company and
Group can continue in operational existence through a period of at least
twelve months from the date of approving the financial statements (the going
concern period). The Directors have determined that the going concern period
for the purposes of these financial statements is the period through to 31
July 2025. The Group realised a loss of £0.3 million for the year ended 31
March 2024 (2023: loss of £3.9 million). As at 31 March 2024, the Group had
net current assets of £6.4 million, including cash and deposits of £5.4
million.
The Group's business activities, together with the factors likely to affect
its future development, performance and position, are set out in the
Strategic Report. The financial position of the Group, its cash flows,
liquidity position and borrowing facilities are described in the Financial
Review.
The Directors have prepared trading and cash flow base case forecasts to 31
July 2025 and have applied reverse stress tests to the base case forecasts.
The stress tests have been applied to take account of the impact of potential
uncertain outcomes that are, to an extent, outside of management's control, as
well as reduced trading forecasts, taking into account current macro-economic
conditions. These scenarios include:
· The reverse stress test indicates revenue could fall by a further 45% and a
gross margin could deteriorate by an additional 11% before forecast cash
resources are exhausted.
· After taking legal advice and making an assessment of the terms and conditions
contained within the contract with the DHSC, the Directors do not believe the
Group will be required to repay the pre-production payment of £2.5 million.
We are also considering claims against DHSC for additional losses that we have
suffered as a result of DHSC's conduct pursuant to the contract. We are
continuing to explore potential ways to resolve this dispute without the need
for legal proceedings. As such, the Directors believe that there will be no
cash outflow in the form of a repayment to the DHSC in the going concern
period and repayment is not included in the base case or as a sensitivity.
However, the Directors acknowledge that there is a risk that a repayment of
some or all of this amount may be required, the timing and quantum of which is
uncertain.
The Board has a reasonable expectation that the Company and Group have
adequate resources to continue in operational existence for the period to 31
July 2025. On this basis, the Directors continue to adopt the going concern
basis of preparation. Accordingly, these financial statements do not include
the adjustments that would be required if the Company and Group were unable to
continue as a going concern.
Operational Strategy
Our vision is for CNS to be a best-in-class operation which is highly
effective at delivering products and services on time and in full at a
competitive cost. The Group is already on this journey and by updating and
improving the structured approach, with the ongoing commitment of the whole
CNS team behind this vision, we are going from strength to strength. There are
four key elements that are driving the team:
- Being data driven - KPIs have been reviewed and improved. This enables the
team to identify the highest priority areas and achieve the biggest return on
investment for its efforts.
- Aligning priorities - The senior operations team has clear areas of
responsibility and communicates regularly through structured meetings. This
prevents any duplication of effort and potential road blocks are addressed
before they become a problem.
- Effective communication - A network of structures is used to communicate with
the wider business about the initiatives. This results in cross-functional
feedback and wider awareness of changes and improvements.
- Using improvement tools and structures - The team uses a number of
methodologies and structures when managing projects, solving problems and
communicating updates. This means that work is more effective, results are
replicable and new team members can be quickly onboarded.
Continuous improvements
We are applying these in three different areas, each of which is helping on
the journey to be best in class.
1. Improving current processes
Example: The CNSLab project has delivered a four-fold increase in the lab
capacity.
This involved analysing the way we currently operate, identifying how we can
improve through small changes to the existing processes and implementing them
in a timely manner.
2. Implementing quick wins
Example: The filling department was spending a large amount of time hand
labelling components. The team identified a quick fix and we installed an
inline labelling unit. This has resulted in a substantial saving, reducing the
run time by 66%.
This takes us a step further than point one and considers what would need to
be true to deliver a big improvement in efficiency or a step change in yield.
If a solution can be implemented quickly and economically the team pushes
ahead to realise the benefits.
3. Investing and planning future improvements
Example: We are considering which print technology and materials could yield
the best product in the future, both from a quality and cost perspective. This
is primarily carried out by the development team; however, the operations team
is also involved to offer input on the practicality and feasibility of
proposals and ideas.
Here we consider opportunities identified in step 2 that require higher effort
or resource to implement and deliver significant benefits once active.
All three of these areas offer substantial benefits for the key stakeholders
in CNS:
- Customers - Improvements in the design of our products benefit our customers
through a better user experience. One example is an improvement to the Sample
Collection Pack which is detailed later. This update will improve customer
experience and usability as well as reducing the environmental impact of the
pack as we shift from plastic to cardboard.
- Shareholders - Delivery of improvements like these increases the capacity and
reduces the cost. This delivers an improvement in the margin in the short term
and the ability to grow in the medium-long term.
- Employees - Improvements to how we work that reduce repetitive or difficult
manual tasks result in a better working environment. Reductions in time spent
on these areas also opens up the possibility for training and personal
development of the team. In recent months we have begun to focus on cross
training both within production and between key departments. This benefits
everyone by upskilling individuals, developing appreciation for other areas
and improving flexibility.
As we continue the journey to be a best-in-class operation we are involving
all areas of the Group. This has resulted in a great number of ideas and
improvements, many of which have been implemented and are making a real
impact. This is a circular process that has no end; therefore we will continue
to search out opportunities and continuously challenge ourselves to improve
into the future. The Board has a vital role to play in this process as they
help the Group to realise its full potential by celebrating success, advising
on challenges and pushing it further.
James Cooper
Chief Operating Officer
24 July 2024
Consolidated Statement of Comprehensive Income
for the year ended 31 March 2024
2024 2023
£'000 £'000
Continuing operations
Revenue 9,774 7,546
Cost of sales (3,728) (4,001)
Gross profit 6,046 3,545
Administration costs (5,287) (4,755)
Selling and marketing costs (1,378) (1,530)
Other income 84 25
Operating loss before exceptional items (535) (2,715)
Exceptional items (238) (524)
Operating loss after exceptional items (773) (3,239)
Finance income/(costs) 28 (13)
Loss before taxation (745) (3,252)
Tax credit 417 80
Loss for the year from continuing operations (328) (3,172)
Discontinued operations
Loss after tax for the year from discontinued operations - (688)
Loss for the year (328) (3,860)
Other comprehensive loss to be reclassified to profit and loss in subsequent
periods
Exchange differences on translation of foreign operations (14) (15)
Other comprehensive loss for the year (14) (15)
Total comprehensive losses for the year (342) (3,875)
Earnings per share (EPS)
Basic and diluted EPS on loss for the year (0.1)p (1.7)p
Earnings per share from continuing operations
Basic and diluted EPS on loss for the year from continuing operations (0.1)p (1.4)p
Consolidated Balance Sheet
as at 31 March 2024
2024 2023
£'000 £'000
ASSETS
Non-current assets
Intangibles 4,099 4,525
Property, plant and equipment 388 567
Right of use assets 126 21
Deferred taxation 1,406 997
Total non-current assets 6,019 6,110
Current assets
Inventories 607 777
Trade and other receivables 1,824 2,403
Short-term deposits 2,501 -
Cash and cash equivalents 2,943 5,115
Total current assets 7,875 8,295
Total assets 13,894 14,405
EQUITY AND LIABILITIES
Equity
Share capital 10,255 10,244
Share premium 25,072 25,072
Retained deficit (25,585) (25,319)
Translation reserve (60) (46)
Total equity 9,682 9,951
Liabilities
Non-current liabilities
Long-term borrowings - 19
Lease liabilities 25 -
Deferred income 2,500 2,500
Total non-current liabilities 2,525 2,519
Current liabilities
Short-term borrowings 22 32
Lease liabilities 101 23
Trade and other payables 1,323 1,525
Total current liabilities 1,446 1,580
Liabilities directly associated with assets held for sale 241 355
Total liabilities 4,212 4,454
Total equity and liabilities 13,894 14,405
Carolyn Rand Jag Grewal
Non-Executive Chair Chief Executive Officer
24 July 2024 24 July 2024
Cambridge Nutritional Sciences plc
Registered number: 5017761
Consolidated Statement of Changes in Equity
for the year ended 31 March 2024
Share Share Retained Translation
capital premium deficit reserve Total
£'000 £'000 £'000 £'000 £'000
Balance at 31 March 2022 8,044 25,340 (21,537) (31) 11,816
Loss for year ended 31 March 2023 - - (3,860) - (3,860)
Other comprehensive loss - net exchange adjustments - - - (15) (15)
Total comprehensive losses for the year - - (3,860) (15) (3,875)
Issue of share capital for cash consideration 2,200 - - - 2,200
Expenses in connection with share issue - (268) - - (268)
Share-based payments - - 78 - 78
Balance at 31 March 2023 10,244 25,072 (25,319) (46) 9,951
Loss for year ended 31 March 2024 - - (328) - (328)
Other comprehensive loss - net exchange adjustments - - - (14) (14)
Total comprehensive losses for the year - - (328) (14) (342)
Issue of share capital 11 - - - 11
Share-based payments - - 62 - 62
Balance at 31 March 2024 10,255 25,072 (25,585) (60) 9,682
Consolidated Cash Flow Statement
for the year ended 31 March 2024
2024 2023
£'000 £'000
Cash flows generated from operations
Loss for the year from continuing operations (328) (3,172)
Loss for the year from discontinued operations - (688)
Adjustments for:
- Depreciation 214 219
- Amortisation of intangible assets 436 372
- Impairment and derecognition of intangible assets - 15
- Impairment of property, plant and equipment 110 -
- Impairment loss recognised on the remeasurement to fair value - 176
- Impairment of assets relating to aborted Ely relocation - 399
- Share-based payments 73 78
- Taxation (417) (380)
- Finance (income)/costs (28) 16
Cash inflow/(outflow) from operating activities before working capital 60 (2,965)
movement
Decrease in trade and other receivables 579 812
Decrease in inventories 170 128
Decrease in trade and other payables (202) (1,466)
Movement in grants - (139)
Taxation received - 478
Cash inflow/(outflow) from operating activities 607 (3,152)
Investing activities
Finance income 50 19
Income from sale of the CD4 business - 5,315
Purchase of property, plant and equipment (48) (25)
Purchase of intangible assets (11) (128)
Net cash (used in)/generated from investing activities (9) 5,181
Financing activities
Finance costs (1) (1)
Proceeds from issue of share capital - 2,200
Expenses in connection with share issue - (268)
Principal portion of asset finance payments (143) (314)
Transfer to short-term deposits (2,501) -
Interest portion of asset finance payments (13) (25)
Principal portion of lease liability payments (99) (97)
Interest portion of lease liability payments (9) (9)
Net cash (used in)/generated from financing activities (2,766) 1,486
Net (decrease)/increase in cash and cash equivalents (2,168) 3,515
Effects of exchange rate movements (4) (5)
Cash and cash equivalents at beginning of year 5,115 1,605
Cash and cash equivalents at end of year 2,943 5,115
Company Balance Sheet
as at 31 March 2024
2024 2023
£'000 £'000
ASSETS
Non-current assets
Investments 3,102 3,101
Intercompany receivables 19,834 19,067
Total non-current assets 22,936 22,168
Current assets
Trade and other receivables 73 85
Cash and cash equivalents 5 717
Total current assets 78 802
Total assets 23,014 22,970
EQUITY AND LIABILITIES
Equity
Share capital 10,627 10,616
Share premium 25,689 25,689
Retained deficit (13,621) (13,627)
Total equity 22,695 22,678
Liabilities
Current liabilities
Trade and other payables 319 292
Total current liabilities 319 292
Total liabilities 319 292
Total equity and liabilities 23,014 22,970
As permitted by section 408 of the Companies Act 2006, no separate statement
of comprehensive income is presented for the Company.
The Company loss in the year was £56,000 (2023: profit of £22,000).
Jag Grewal
Carolyn Rand
Non-Executive Chair Chief Executive Officer
24 July 2024 24 July 2024
Cambridge Nutritional Sciences plc
Registered number: 5017761
Company Statement of Changes in Equity
for the year ended 31 March 2024
Share Share Retained
capital premium deficit Total
£'000 £'000 £'000 £'000
Balance at 31 March 2022 8,416 25,957 (13,727) 20,646
Profit for the year ended 31 March 2023 - - 22 22
Issue of share capital for cash consideration 2,200 - - 2,200
Expenses in connection with share issue - (268) - (268)
Share-based payments - - 78 78
Balance at 31 March 2023 10,616 25,689 (13,627) 22,678
Loss for the year ended 31 March 2024 - - (56) (56)
Issue of share capital 11 - - 11
Share-based payments - - 62 62
Balance at 31 March 2024 10,627 25,689 (13,621) 22,695
Company Cash Flow Statement
for the year ended 31 March 2024
2024 2023
£'000 £'000
Cash flows generated from operations
(Loss)/profit for the year (56) 22
Adjustments for:
- Share-based payments 73 78
- Finance income (27) -
Cash (outflow)/inflow before working capital movement (10) 100
Decrease/(increase) in trade and other receivables excluding intercompany 12 (14)
financing
Increase/(decrease) in trade and other payables 26 (104)
Cash inflow/(outflow) from operating activities 28 (18)
Investing activities
Finance income 27 -
Advances to subsidiary companies (1,532) (6,482)
Repayments from subsidiary companies 765 4,240
Net cash used in investing activities (740) (2,242)
Financing activities
Proceeds from issue of share capital - 2,200
Expenses of share issue - (268)
Net cash generated from financing activities - 1,932
Net decrease in cash and cash equivalents (712) (328)
Cash and cash equivalents at beginning of year 717 1,045
Cash and cash equivalents at end of year 5 717
Notes to the Financial Statements
for the year ended 31 March 2024
1 Basis of preparation
The extracts from the Consolidated financial statements, and the Company
financial statements, are presented in sterling and have been prepared in
accordance with UK-adopted international accounting standards and, as regards
to the Company financial statements, as applied in accordance with the
provisions of the Companies Act 2006. The Company has taken advantage of
section 408 of the Companies Act 2006 not to present the Company statement of
comprehensive income.
2 Going concern
The Group's business activities, together with the factors likely to affect
its future development, performance and position, are set out in the
Strategic Report. The financial position of the Group, its cash flows,
liquidity position and borrowing facilities are described in the Financial
Review.
In determining the appropriate basis of preparation of the financial
statements, the Directors are required to consider whether the Company and
Group can continue in operational existence through a period of at least
twelve months from the date of approving the financial statements (the going
concern period). The Directors have determined that the going concern period
for purposes of these financial statements is the period through to 31 July
2025. The Group realised a loss of £0.3 million for the year ended 31 March
2024 (2023: loss of £3.9 million). As at 31 March 2024, the Group had net
current assets of £6.4 million, including cash and deposits of £5.4m.
The Directors have prepared trading and cash flow base case forecasts to 31
July 2025 and have applied reverse stress tests to the base case forecasts.
The stress tests have been applied to take account of the impact of potential
uncertain outcomes that are, to an extent, outside of management's control, as
well as reduced trading forecasts, taking into account current macro-economic
conditions. These scenarios include:
· After taking into account the above sensitivities and mitigating actions, the
reverse stress test indicates revenue could fall by a further 45% and a gross
margin could deteriorate by an additional 11% before forecast cash resources
are exhausted.
· After taking legal advice and making an assessment of the terms and conditions
contained within the contract with the DHSC, the Directors do not believe the
Group will be required to repay the pre-production payment of £2.5 million.
We are also considering claims against DHSC for additional losses that we have
suffered as a result of DHSC's conduct pursuant to the contract. We are
continuing to explore potential ways to resolve this dispute without the need
for legal proceedings. As such, the Directors believe that there will be no
cash outflow in the form of a repayment to the DHSC in the going concern
period and repayment is not included in the base case or as a sensitivity.
However, the Directors acknowledge that there is a risk that a repayment of
some or all of this amount may be required, the timing and quantum of which is
uncertain.
The Board has a reasonable expectation that the Company and Group have
adequate resources to continue in operational existence for the period to 31
July 2025. On this basis, the Directors continue to adopt the going concern
basis of preparation. Accordingly, these financial statements do not include
the adjustments that would be required if the Company and Group was unable to
continue as a going concern.
3 Preliminary announcement
The summary accounts set out above do not constitute statutory accounts as
defined by section 434 of the UK Companies Act 2006. The summarised
consolidated and company statement of financial position at 31 March 2024, the
summarised consolidated income statement, the summarised consolidated and
company cash flow statement and the summarised consolidated and company
statement of changes in equity for the year then ended have been extracted
from the Group's statutory financial statements for the year ended 31 March
2024 upon which the auditor's opinion is unqualified and did not contain a
statement under either sections 498(2) or 498(3) of the Companies Act 2006.
The audit report for the year ended 31 March 2024 did not contain statements
under sections 498(2) or 498(3) of the Companies Act 2006. The statutory
financial statements for the year ended 31 March 2023 have been delivered to
the Registrar of Companies. The 31 March 2024 accounts were approved by the
Directors on 24 July 2024, but have not yet been delivered to the Registrar of
Companies.
4 Segmental information
The Health and Nutrition division specialises in the research, development and
production of kits to aid the detection of immune reactions to food. It also
provides clinical analysis to the general public, clinics and health
professionals as well as supplying the point-of-care Food Detective® test.
The Corporate segment consists of centralised corporate costs which are not
allocated to the trading activities of the Group.
Inter-segment transfers or transactions are entered into under the normal
commercial conditions that would be available to unrelated third parties.
Business segment information
Health and
Nutrition Corporate Total
2024 £'000 £'000 £'000
Revenue 10,041 - 10,041
Inter-segment revenue (267) - (267)
Total revenue 9,774 - 9,774
Cost of sales (3,728) - (3,728)
Gross profit 6,046 - 6,046
Operating costs (5,357) (1,224) (6,581)
Operating profit/(loss) before net exceptional items 689 (1,224) (535)
Net exceptional items (100) (138) (238)
Operating profit/(loss) after net exceptional items 589 (1,362) (773)
Depreciation 214 - 214
Amortisation 436 - 436
EBITDA 1,239 (1,362) (123)
Net exceptional items 100 138 238
Share-based payment charges 11 62 73
Adjusted EBITDA 1,350 (1,162) 188
Share-based payment charges (11) (62) (73)
Depreciation (214) - (214)
Amortisation (436) - (436)
Net finance income 1 27 28
Net exceptional costs (100) (138) (238)
Profit/(loss) before tax 590 (1,335) (745)
Net exceptional items 100 138 238
Share-based payment charges 11 62 73
Amortisation (excluding development costs) 121 - 121
Adjusted profit/(loss) before tax 822 (1,135) (313)
Health and
Nutrition Corporate Total
2023 £'000 £'000 £'000
Revenue 7,742 - 7,742
Inter-segment revenue (196) - (196)
Total revenue 7,546 - 7,546
Cost of sales (4,001) - (4,001)
Gross profit 3,545 - 3,545
Operating costs (5,153) (1,107) (6,260)
Operating loss before exceptional items (1,608) (1,107) (2,715)
Exceptional items (524) - (524)
Operating loss after exceptional items (2,132) (1,107) (3,239)
Depreciation 219 - 219
Amortisation 372 - 372
EBITDA (1,541) (1,107) (2,648)
Exceptional items 524 - 524
Share-based payment charges 1 77 78
Adjusted EBITDA (1,016) (1,030) (2,046)
Share-based payment charges (1) (77) (78)
Depreciation (219) - (219)
Amortisation (372) - (372)
Net finance costs (13) - (13)
Exceptional items (524) - (524)
Loss before tax (2,145) (1,107) (3,252)
Exceptional items 524 - 524
Share-based payment charges 1 77 78
Amortisation (excluding development costs) 109 - 109
Adjusted loss before tax (1,511) (1,030) (2,541)
The adjusted loss before taxation is a key measure of the Group's trading
performance used by the Directors. The reported numbers are non-GAAP measures.
Corporate consists of centralised corporate costs which are not allocated
across the trading divisions.
The segment assets and liabilities are as follows:
Health and
Nutrition Corporate Total
2024 £'000 £'000 £'000
Segment assets 6,971 73 7,044
Unallocated assets - - 6,850
Total assets 6,971 73 13,894
Segment liabilities 1,153 318 1,471
Unallocated liabilities - - 2,500
Total liabilities 1,153 318 3,971
Health and
Nutrition Corporate Total
2023 £'000 £'000 £'000
Segment assets 8,208 85 8,293
Unallocated assets - - 6,112
Total assets 8,208 85 14,405
Segment liabilities 1,307 292 1,599
Unallocated liabilities - - 2,500
Total liabilities 1,307 292 4,099
Unallocated assets comprise cash and deferred taxation. Unallocated
liabilities relate to deferred income balances.
Product segment information
2024 2023 Variance
£'000 £'000 %
FoodPrint(®) 6,016 4,123 46%
Food Detective(®) 2,082 2,291 (9)%
CNSLab service 1,500 948 58%
Other 176 184 (4)%
9,774 7,546 30%
Information about major customers
One customer within the Health and Nutrition segment accounts for £1,600,000,
16.0% (2023: £839,000, 11.0%) of continuing revenues.
Geographical information
The Group's geographical information is based on the location of its markets
and customers. Sales to external customers disclosed in the geographical
information are based on the geographical location of its customers. The
analysis of segment assets and capital expenditure is based on the
geographical location of the assets.
2024 2023
£'000 £'000
Revenues
UK 1,527 975
Rest of Europe 2,061 2,311
North America 1,868 1,143
South/Central America 493 301
India 551 529
Asia and the Far East 2,238 1,726
Africa and the Middle East 1,036 561
9,774 7,546
Property, Trade
plant and and other
Intangibles equipment* Inventories receivables Total
2024 £'000 £'000 £'000 £'000 £'000
Assets
UK 4,096 513 535 1,660 6,804
India 3 1 72 164 240
Unallocated assets - - - - 6,850
Total assets 4,099 514 607 1,824 13,894
Property, Trade
plant and and other
Intangibles equipment* Inventories receivables Total
2023 £'000 £'000 £'000 £'000 £'000
Assets
UK 4,524 586 724 2,312 8,146
India 1 2 53 91 147
Unallocated assets - - - - 6,112
Total assets 4,525 588 777 2,403 14,405
* Includes right of use assets
2024 2023
£'000 £'000
Liabilities
UK 1,529 1,531
India 74 68
Unallocated liabilities 2,500 2,500
Total liabilities 4,103 4,099
Capital expenditure
Health and Nutrition 48 25
Total capital expenditure 48 25
Intangible expenditure
Health and Nutrition 11 128
Total intangible expenditure 11 128
5 Earnings per share
Basic earnings per share are calculated by dividing the loss for the year
attributable to ordinary equity holders of the Group by the weighted average
number of ordinary shares outstanding during the year.
Diluted earnings per share are calculated by dividing the loss attributable to
ordinary equity holders of the Group by the weighted average number of
ordinary shares outstanding during the year plus the weighted average number
of ordinary shares that would be issued on the conversion of all the dilutive
potential ordinary shares into ordinary shares. Diluting events are excluded
from the calculation when the average market price of ordinary shares is lower
than the exercise price.
2024 2023
£'000 £'000
Loss attributable to equity holders of the Group
Continuing operations (328) (3,172)
Discontinued operations - (688)
Loss attributable to equity holders of the Group for basic earnings (328) (3,860)
2024 2023
Number Number
Basic average number of shares 237,727,136 231,263,884
Share options 370,000 575,000
Diluted weighted average number of shares 238,097,136 231,838,884
Basic and diluted EPS on loss for the year (0.1)p (1.7)p
Basic and diluted EPS on loss for the year from continuing operations (0.1)p (1.4)p
Adjusted earnings per share on profit for the year
The Group presents adjusted earnings per share, which are calculated by taking
adjusted profit/(loss) before taxation and adding the tax credit or deducting
the tax charge in order to allow shareholders to understand better the
elements of financial performance in the year, so as to facilitate comparison
with prior periods and to better assess trends in financial performance.
2024 2023
£'000 £'000
Loss attributable to equity holders of the Group (328) (3,860)
Net exceptional costs* 238 550
Amortisation of intangible assets 121 109
Share-based payment charges 73 78
Adjusted loss attributable to equity holders of the Group 104 (3,123)
* Being the sum of continuing exceptional items, discontinuing
exceptional items and impairment loss recognised on the remeasurement to fair
value less costs to sell.
Adjusted loss for the year - continuing operations
The reported numbers are non-GAAP measures.
2024 2023
£'000 £'000
Loss for the year from continuing operations (328) (3,172)
Net exceptional costs 238 524
Amortisation of intangible assets 121 109
Share-based payment charges 73 78
Adjusted profit/(loss) for the year from continuing operations 104 (2,461)
Adjusted EPS on loss for the year 0.0p (1.4)p
Adjusted EPS on loss for the year from continuing operations 0.0p (1.1)p
Adjusted profit/(loss) before taxation, which is a key measure of the Group's
trading performance used by the Directors, is derived by taking statutory loss
before taxation and adding back exceptional items, amortisation of intangible
assets (excluding development costs) and share-based payment charges.
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