Cambridge Nutritional Sciences plc (CNSL.L) Earnings Call Transcript & Summary

Good afternoon, and welcome to the Omega Diagnostics Group PLC preliminary results investor presentation. [Operator Instructions] I'd now like to hand over to Jag Grewal, CEO. Good afternoon, sir.

Good afternoon. Thank you, Alexander, and good afternoon, everybody, and welcome to the final results presentation for financial year '22 for the year ending 31st of March 2022. I'm Jag Grewal. I'm the Chief Executive Officer of Omega Diagnostics. I joined the company just a little over 11 years ago and became CEO of the organization in January of this year. I have a long history in clinical diagnostics and IVDs spanning over 25 years, and have been involved in the industry for quite some time.

My name is Chris Lea. I'm the Chief Financial Officer. I've just celebrated my 1-year anniversary. It's fair to say that it's been a busier year than perhaps I expected when I first joined, but this is my third AIM listed business and looking forward to moving on to the next chapter with the business now that we're through the worst of COVID and the sale of CD4.

In terms of the areas we want to cover off today is really to describe to you, our audience and our shareholder base, a new vision and a new focus strategy going forward. Clearly, it's an FY '22 results presentation. So we have details on what we've been up to over the past year, and more importantly, our financials during FY '22, and an overview of the core business and our growth strategy going forward with a summary, and then some time for questions and answers at the end of the presentation. Just as a reminder, for those who are unaware of what we do, we've been a diagnostic company for over 30 years, previously headquartered in Scotland in a town called Alva near Stirling, with also a manufacturing base in Ely in Cambridge. We are a global company. Less than 10% of our revenues are within the U.K. We truly are an exporter of diagnostic kits and services. And really, our main vision and our main goal is to enable health care professionals to make informed decisions by the test that we provide, through either laboratories or in a clinic setting, to improve patients' long-term health. We only have the one division as of now, and that's Health and Nutrition. That's our entire focus of the business and our focus going forward. We are a pioneer and have innovation and lead the market in food sensitivity testing, which is effectively measuring long-term antibodies or IgG antibodies to a large number of foods depending on our platform, which allows our health care practitioners, our customers, our laboratories, and ultimately, the patients in improving their long-term health and well-being by personalizing their nutrition. The Global Health division that we discontinued, and we'll give a bit more detail around that through the presentation, used to sell CD4 tests into low and middle-income countries for effective management of HIV, particularly around advanced disease when your immune system starts to drop off and impact the patient health. As Chris said, it's been quite a tumultuous year, as I mentioned in my statement in the RNS. We've had a new team at the helm. We've had to recover the business after an attempted focus in and around COVID testing. The government failed to license the test to us for a reason unknown to us. And we then had to, as an executive management team, recover the business and recover those costs and ensure that the company going forward had a firm foundation for future growth. So in March, we sold the Alva site, which is a loss-making site, to a company called Accubio, which is a wholly-owned subsidiary of a Chinese company called Orient Gene. And then after failed Placing earlier in the year, which didn't allow us to move CD4, we took the strategic decision to discontinue the Global Health division and look for a buyer for the CD4 business. Soon after, we were able to raise some equity funds to fund our growth ambitions within the Health and Nutrition area. And then more recently, in July, announced the sale of CD4 to the same company, Accubio, after a competitive bidding process with a number of potential acquirers for a sum of money that Chris will break down later in the presentation. And finally, really going forward, we now have a stabilized business after the COVID-19 disruption, which is extremely disruptive not only to us as a business, but naturally to our shareholder base. We're looking to provide a new platform and a new foundation for growth based on our Health and Nutrition business, which to date has been growing over a number of years, has been very successful, and has positioned us in a leadership position, and we believe we're able to use that foundation to grow even further strategically, which we'll describe shortly. I'll hand over to Chris now as his results presentation, who will take you through the financials of FY '22.

Thank you very much, Jag. First of all, I'd just like to apologize for the delay in terms of the publication of the results. With the sale of the CD4 business being completed on the 31st of July and then us having to take some time to do stocktakes and calculate the value of the inventory that was being transferred, together with presenting our Global Health division as a discontinued activity has required significant extra audit work from Ernst & Young, and significant technical input from the EY team in terms of the presentation around the discontinued operations. And unfortunately, that has taken longer than either ourselves or EY thought it would take to get to that conclusion. So apologies for the delay and for the publication of the results without prior notice on Monday, but we're now out there and the figures are obviously out in the market and have been for a couple of days. I'd just like to start with the basis of preparation of the income statement that is showing ahead of you at the moment. So because CD4 and COVID has been treated as a discontinued operation, it appears towards the bottom of the screen with a -- there's a one-line number, which is a loss of just under GBP 10 million. The remaining presentation in terms of the P&L is the continuing business. So it's our Health and Nutrition division, and it also includes the corporate cost base. So you'll see the revenue has grown year-on-year, 25%, in line with what we said in the trading statement that went out at the beginning of April. Our margin is around about 60%. Our cost base has gone up a little bit year-on-year for a number of reasons. Firstly, on the sales and marketing side, we've decided to invest to grow the business in terms of headcount, in terms of experience of people. So we've brought in some higher-grade people. We've also done the corporate rebrand, and we've been resourcing to develop our digital app, which we'll be launching fairly shortly. On the rest of the cost side, we've seen a higher level of amortization coming through this year from projects that were committed and developed in prior periods. But we've also had a slight change of emphasis in terms of our R&D expenditure this year. We've moved much more towards continuous product improvement rather than pure research, and as a result, a greater proportion of the costs hitting the P&L rather than being capitalized on the balance sheet and amortized over an extended period of time. And we've also had to deal with preparation for the IVDR regulations, which were due to come in force into May this year. A lot of work and time and effort went into product development to deal with those regulations. And at the last minute, the implementation of those, as far as we were concerned, has been delayed until 2027. On the exceptional items, we've got 2 exceptional items totaling GBP 337,000 this year. We've got aborted Placing fees for the 7th of March meeting where the placing did not proceed. And we've also got some severance costs in relation to the former Chief Executive. So in terms of the key metrics, as I mentioned, sales from the Health and Nutrition business have grown 25%. Our gross profit has grown slightly more than 25%. So as you can see, we've got about a 1% improvement in the gross margin percentage from 58.6% to 59.7% from 1 year to the next. And that's really driven by a higher proportion of FoodPrint in our product mix. So FoodPrint rather than Food Detective, and with the falloff in or the slower anticipated demand in China from our lead partner over there, where the margin on that business is lower than the average, we've seen a slight pickup in the overall margin due to product mix. Overall, that leaves the business at an adjusted EBITDA level that's pretty much breakeven, just under GBP 200,000 of adjusted EBITDA. And by adjusted EBITDA, I mean I'm bringing in a couple of extra changes in terms of the definition to traditional EBITDA, and that is making sure we add back the share-based payment charges, which are obviously noncash, and any exceptional items that are impacting the residual business. Okay, regional sales. Jag, would you like to run us...

Yes. Thank you, Chris. I think it was a pleasing return to growth for the Health and Nutrition business. Over a year prior that was impacted by COVID. What is pleasing is to see that all regions around the world, and a reiteration, we are a global business, but all regions around the world returned to growth and significant growth, particularly in Europe and North America, particularly fueled by Canada. As Chris said, we were missing Chinese sales in the FY. And previously, we reported that was due to some overstocking in the prior year. We hope to bring that back to growth over this coming year as well, albeit there probably will be a COVID impact in terms of lockdowns in China in this current FY, but it was very pleasing to see an increase across the board in terms of Health and Nutrition core business sales. If we break that down into our 2 key product areas: FoodPrint, which is our laboratory-based system, Microarray system that allows up to 222 different foods to be tested from a couple of drops of blood from a fingertip. Again, having had a dip in FY '21, really pleasing to see that return strongly, supported by actually an increased awareness and increased demand of home sampling and remote consultations. Over the COVID years, we have been more used to either doing tests or taking blood or taking samples in a home setting, and that's further fueled our growth in the laboratory sector. Food Detective sales, as said, returned to kind of previous levels. But really, we were missing Chinese sales in FY '22, which we hope to come back in this FY and ongoing in what is quite a large potential market still for food sensitivity testing going forward.

Thank you, Jag. So I don't want to dwell too much on Global Health, because it's no longer a part of our continuing business. But I thought it's worth taking a little bit of time just to run through the transactions that we've undertaken during the course of the last year and the reasons behind them. So when I joined the business in September last year, we had about GBP 4 million in the bank. We had an overdraft facility of GBP 2 million, but we were losing GBP 0.5 million a month, primarily out of the Alva site, a combination of low volume in terms of CD4 testing, which was growing, but from a very small base, having just been launched in the previous financial year, but also having resourced up for COVID demand from the government contract and/or subcontract work for third parties. We had a high fixed cost base, much higher, because the workforce essentially had been doubled. Extra space had been taken on within the site, and we just did not have sufficient volume going through the site to be able to recover those costs. Over the course of time, we obviously tried to get our own tests accredited to be able to sell, particularly for home use rather than professional use. And over that time, the pricing of lateral flow tests became quite a lot lower than even our raw material costs. So you could buy them in from China and delivered for far lower than the price we would pay just for materials. And obviously, we would have labor and overhead to attach to that as well. So the decision was taken ultimately that we needed to withdraw completely from the COVID market, and we needed to deal with the fixed cost base of the Alva site. During those conversations with third-party customers, Orient Gene were one of those, and they identified that they were looking for a U.K. site that had lateral flow manufacturing expertise. So we did some rework for them towards the back end of last calendar year, and that triggered a conversation around them taking over the site. We announced that deal in the middle of February and completed it in early March. We essentially sold the plant and equipment -- a proportion of plant and equipment on the Alva site at a loss of about GBP 200,000. But more importantly, we transferred the remaining 14 years of the lease for value. So we managed to avoid having to pay out the rental fees, which was just under GBP 200,000 a year. We actually generated an accounting gain on the disposal of GBP 200,000, and we also avoided the dilapidations liability that would have been around about GBP 600,000, and we transferred that dilapidations obligation to the buyer. As part of the transaction, we moved the vast majority of employees on the site across to Accubio. So at the time of transfer that was 93 people, and we were able to do that without making any redundancies, and we retained only the people that we needed to continue for the Omega business. We also negotiated the right to occupy part of the site for the remainder of 2022 and to subcontract employees to work on CD4 production while we evaluate and moving our CD4 production line from Alva into our planned new site in Ely. The upshot of all of that was we received GBP 1 million of cash. And more importantly, we lowered the monthly operating costs of the remaining CD4 business by GBP 200,000; from GBP 0.5 million to GBP 300,000 a month. So step one, reduced the cost base. Our CD4 business was growing. It grew from GBP 100,000 revenue in FY '21 to GBP 1 million revenue in FY '22, and we were struggling to manufacture the tests in the current site. Our order intake was GBP 2 million last year, and we only managed to deliver GBP 1 million out of the door. And that's partly because it is a complicated product to make. It's run in batches. It's a difficult product to make. There's a lot of quality control processes involved in it. And we recognize that there was additional investment required in terms of technology, in terms of employees in training and development, and in terms of working capital if we were to scale up production to be able to make a success of that business. We did have a ticking clock in terms of the site. We were committed to move out of the site completely by the end of 2022, under a transitional services agreement that we had negotiated with Accubio. So we knew we needed to get on with the process quite quickly. As Jag mentioned before, we were obviously very disappointed that the planned Placing, where we had GBP 5 million lined up at 5P, was voted against by shareholders at the general meeting on the 7th of March. And as a result, we weren't funded to be able to relocate the CD4 business to Ely because of the fund raise. Around about GBP 1.5 million of that was committed towards relocating CD4. So we launched the sale process in March. We concluded that in July. We had a number of bids received from various parties around the world. And the conclusion was best value for shareholders was to sell the business to Accubio, who could afford to pay a little bit more than third parties because they didn't have the costs associated with relocating the production line into a different facility. So the price we achieved, I have to say, exceeded my expectations, but we received up to GBP 6.3 million. Of that, just under GBP 0.5 million was for fixed assets and GBP ,000 for the inventory, and then GBP 4 million for the intellectual property. In addition, we'll get a royalty from Accubio on future sales up until December 2026, which is capped at about GBP 1 million in aggregate. I'm not sure of their plans in terms of how much of that we will get. We've taken a conservative view in terms of our calculations that we will get revenue in line with what we would have got under that arrangement last year. And if we do better, that's a bonus. As part of the due diligence process, it became apparent that the WHO had implemented a protocol for test approval during the COVID period, which was not their normal protocol. Ordinarily, we would have completed a clinical study ahead of receiving our WHO prequalification approval. But because of COVID, that study could not be undertaken. So they flipped it around. They gave us conditional approval with a requirement for a confirmatory study to be undertaken. That study started in April this year in Kenya, but it is very much an arm's length study as far as Omega is concerned. Our involvement has been limited to supplying the tests, doing a little bit of training of the staff who staff will be taking the samples and paying the bill. The rest of it is being run by the Kenyan Medical Research Institute, reporting directly into the World Health Organization. From the sale process, it was identified that if the product did not pass that clinical study successfully, there was a risk that the product could be delisted by the WHO and be taken out of the market. We think that's very unlikely based upon the fact that we've got a couple of years of experience of the product in the market. We've got a number of other studies. We've got customer feedback. We know our level of product return rates and things like that. And we are pretty confident that the study will just be confirmatory as such. And in due course that we will receive the balancing GBP 4 million that we are due from Accubio, which is currently sitting in a bank account with the solicitors, pending completion of the study. What does our discontinued business look like? So this is essentially the Alva site. It is our COVID business and our CD4 business for last year. So revenue of just under GBP 4 million. And you can see there it's generating a gross loss that's defined as having taken into account direct labor and cost of raw materials, so before any overheads are allocated. Of the revenue, around about GBP 1 million was CD4, GBP 2.6 million was COVID, and then there's a small amount of other. The overhead for this particular site of GBP 4.8 million is particularly high. And some of that is to do just with the cost of being in a regulated industry. So for example, we need a quality department. Whether we're selling 1 test or 10 million tests, the processes and the people that are required to operate that scheme is virtually the same. And the issue we had, I think, was the lack of volume and a high fixed cost base, plus some production inefficiencies as we were going through the ramp-up phase left to a business that was really unsustainable. I'll talk about exceptional items on the next slide, just identified for you what's there. I'd just like to draw your attention, though, to the impairment loss recognized on the remeasurement to fair value less cost to sell of GBP 1.9 million. So this is effectively where we have taken into account all of the asset write-downs associated with the withdrawal from Global Health and the sale of our CD4 business. There's 3 components within here, broadly similar values. There's actually a loss on sale for CD4, which is GBP 645,000 after costs. There is R&D work that had been undertaken within the Global Health division, developing things like tests for cryptococcus and for TB, that were ideally going to be sold to the same global health customers who were buying the CD4 tests. And obviously, with the withdrawal from CD4, the inherent value in that research and development was not going to be pursued by Omega. And then the final piece is an asset write-down for tangible fixed assets, primarily equipment that was purchased in anticipation of the government demand for COVID tests, and that's around about a GBP 600,000 write-down on the remaining assets that were in Alva, but that were not acquired by Accubio either on the site sale transaction back in March or on the CD4 transaction that we just completed. Exceptional items. So broken down within here, we've got a net GBP 200,000 loss on the sale of the Alva site. So that's a GBP 400,000 loss after costs, but with GBP 158,000 gain on the disposal of the lease. We've written off the remaining inventory, and this is mostly COVID inventory from the Alva site. We've got a bad debt provision of GBP 190,000. GBP 150,000 of that relates to Abingdon. So if you recall, we've had a long-standing debt from Abingdon from December 2020, which was settled in July this year. Abingdon actually paid us nearly the full GBP 700,000 that we would do, but they have identified that as part of their settlement with the Department of Health. An element of their settlement is held in escrow pending the outcome of an ongoing dispute between Abingdon and the Department of Health. And there is a potential, therefore, that if that case goes against Abingdon that they will look to try and recover a proportion of that GBP 700,000 from us, and we've made provision for that in relation to our accounts for last year. We treated our CD4 business and our remaining COVID assets as held for sale as at the end of March 2022. So these figures appear effectively as 2 figures: One, a total assets figure held for sale; and two, a total borrowings figure held for sale. So these are primarily our CD4 assets: our cumulative research and development expenditure of around about GBP 4.4 million, written down to GBP 3.8 billion; our plant and equipment of around about GBP 400,000; our inventory at that point was GBP 664,000. Those fixed assets and that inventory, as you are aware, have been sold post year-end. Fixed asset value we got just under GBP 0.5 million for. And the inventory, actually, by the time we came to the end of July, we'd invested more on inventory and the value was GBP 850,000 for cash that we sold. In doing the calculations around the recoverable amounts, we have assumed the full recovery of the GBP 4 million of deferred consideration that I referred to before. And in relation to our COVID assets that are left in Alva, we've written these down to around about GBP 140,000, which is approximately 20% of the book value, and we intend to physically remove those from the Alva site and in the process to sell those off to the market wherever we can to recover some costs. We do also have some borrowing outstanding on some of those CD4 assets. We had a finance lease arrangement with Bank of Scotland in relation to lateral flow test machines, and there's about GBP 465,000 worth of liability sitting out there that needs to be settled when we finally dispose of those assets. Finally, the DHSC dispute. This has been going on since the beginning of December last year. So it's not moving particularly quickly. It's taking significant time for letters to be exchanged between the 2 parties. The position hasn't really changed since the beginning of February. From the Board's point of view and based upon our legal advice, we don't believe we have any requirement to repay. We spent the money in good faith on the things we were supposed to spend it on in anticipation of the ramp-up of the contract that ultimately didn't happen. We've asked a number of questions to the Department of Health around the licensing of the intellectual property, which was a key gate in terms of moving into a production phase, and ultimately, the gate at which the DHSC failed to deliver. So they didn't license the test. We didn't have anything to manufacture. They couldn't order anything from us. They didn't tell us that they failed to license the test and they just let the contract lapse. So the latest correspondence is proposing mediation, which we're prepared to engage in. However, we are requesting that they provide the information that we've asked for back in February, so we can have a more productive session around mediation. We do believe we have potential to recover additional costs from the Department of Health. If you look at it simply, we lost around about GBP 400,000 on the sale of the Alva site. We had a cost base that was unsustainable back in the summer after the department should have known that they were unable to meet their obligations to provide us with the test. And we've also had to take an impairment charge against assets that were bought specifically for the COVID contract. So I think there's a 7-figure damages claim there that we will be looking to pursue. We haven't assumed, by the way, that we'll receive any of those funds from that. Equally, we've not assumed that we will pay any funds to the Department of Health. So we still have a balance sheet liability of the GBP 2.5 million deferred income pending resolution of the dispute. And finally, the government-funded equipment. We asked the government to pick that up 6 months ago. It's still on the site. It has not been moved as yet, and that maybe gives you an indication of the pace at which this particular issue is being pursued from the Department of Health point of view. With that, I'll hand over to Jag to talk a little bit more about the future.

Thank you, Chris. Just going to the next couple of slides that are really designed to outline our path going forward now, focused on Health and Nutrition, focused on a market that we lead in today, focus on a market that we are very familiar with today. For those of you who are a little less aware of the products and services that are in this division, I just wanted to do a little bit of a recap of our key brands and our products in this area. So Food Detective, which we mentioned before in the numbers, is a single-use near-patient test that can be used in a clinic or pharmacy setting and can test blood of a finger prick from a patient in such a setting and test for IgG antibodies. These are your long-term antibodies to up to 59 different foods. It delivers the results in 40 minutes. It gives you a positive or negative if you have antibodies to those foods. Our flagship product and the majority of our sales in the food sensitivity area is our FoodPrint system. This is now used by over 140 labs worldwide in over 70 countries. And it's actually quite an innovative Microarray technology that allows, from just a couple of drops of blood that can be taken at home from a finger prick, sent to a partner lab that uses our technology and is able to quantify, so give actually a numerical results that measures the level of IgG antibodies, your long-term antibodies to over 200 different foods and provide quite a nice sophisticated report back to the health care professional, and ultimately, the health care consumer and patient to then manage their diets and manage elimination of certain foods going forward. We also sell some FoodELISAs. They are more basic grade laboratory tools using an ELISA format. And then in the U.K. and Ireland, servicing those markets directly, we have our own CNS lab brand. The CNS lab itself is based at our facility in Ely in Cambridge, directly services health care professionals in the U.K. and Irish markets. It's a concept that we hope to roll out into other territories as well in terms of being tried and tested. Typically, our customers are government hospitals, reference or private labs, nutritionists, naturopaths, and functional medicine doctors, those that are dealing with patients suffering from chronic long-term inflammatory conditions that are quite often linked to poor gut health, either by poor nutrition, ultra-processed foods, high consumption of sugar, et cetera, or they could be by health care consumers wishing to maintain their health and wellness going forward. But it's a market we've been in for a long time. It's a market that we lead in and are prevalent in many countries globally. For us, it's generated increasing revenues year-on-year. It's been a cash generative business, more importantly, with an EBITDA of about GBP 1.4 million reported in FY '22. Good gross margins from these sales, and more importantly, going forward, significant opportunities for future growth now that we have the focus in this one specific area and are not distracted by other ventures going forward. And those growth areas are kind of badged really into 3 core buckets really. One is organic. Our business has grown over the years and particularly over the past FY '22 year. So organic growth to us is key. It's a market that's growing anyway. The awareness of nutrition and chronic health is only going in one direction, and that's in the upward direction, particularly as more and more chronic conditions that we live with are being related to poor nutrition and poor gut health. We will maintain our leadership position in this area. Our go-to-market strategy is really based around scientific education and building awareness of the tests and the role they have in improving gut health and nutrition. But as Chris said, we're also embracing digital technology; an app, actually, more than just an app, that will really link our customers with their patients and help manage those patients much more easily and much more effectively. And that equally then allows us to be more active on the marketing side with our brand reaching the end consumer much easier than it does today. In terms of geographical expansion and growth, we also have ongoing channel optimization, addressing those countries that we're not in today, as well as upskilling our business partners in each of those areas. So our business partners in those countries as distributors are not only just importing product and selling into the market, but they support that market, they support the science and education, they support the clinical studies, and quite often also support their customers, their laboratories, their health care professionals, and more importantly, their patients by providing nutritional support in getting people healthier and better, who then obviously become your best salespeople in that country. China itself represents a very big opportunity for the company going forward. It's an increasingly health-conscious market, increasingly expenditure spent in the private sector. And that does provide, just by sheer numbers alone, a big opportunity for a version of Food Detective that we registered in China a number of years ago. And then there's the U.S. The U.S. is a market that we have a little bit of presence in with a partner lab, but we're looking to expand in that marketplace, which is arguably the most health-conscious and mature personal health and well-being market in the world. And I've got a few more slides to explain our strategy there. And then the third one is a very classic diagnostics play, a very classic razor-blade model, where if you've got existing sales channels, good sales channels with experienced partners in a market where your brand is recognized very well, then the best thing to do is expand the basket of goods with complementary tests into those markets. Looking at the microbiome, which is effectively that the measurement and the understanding of the gut flora in your gut, which has a big impact on how you metabolize food and how you develop, or not as the case may be, chronic disease, as well as nutrigenomics, which is effectively looking at your DNA, looking at those genes where you have mutations and which are more susceptible to give you disorders of metabolism and nutrition. If we look at the U.S. in a bit more detail, arguably, this is the largest food sensitivity testing market in the world, and we have a minimal presence in there over the years, largely because over the years our focus has been in other areas of the business, and we've not been able to really expand much in the U.S. Now with a bit of funding under our belt, and more importantly, a bit of focus, we aim to establish our own CNS lab service, a tried and tested model, into that marketplace, which as you can see by the numbers, has the potential to realize quite a few million pounds per annum in the next couple of years. And by replicating what we do today already in the U.K. and Ireland, as well as those labs around the world, we believe we can differentiate and compete in that marketplace, particularly harnessing it with our digital platform, and the way we educate through science and education in the marketplace with our health care professional customers. Our FoodPrint system, the Microarray is unique. It's USP allows for easier sample collection and transport, which gives us a key competitive edge in any marketplace, but particularly in the U.S., where there are some existing labs already offering food sensitivity testing. And then once we have a presence in the U.S., we can then add to that basket of goods in the U.S. by offering a much more comprehensive gut testing profile. The first step in that profile in terms of menu is working with a partner company to provide a new laboratory service. This is not a new technology or a new widget that we'll be selling into the marketplace, but utilizing existing gene sequencing technology, and by taking that information and presenting it in the same way as we do our FoodPrint test results to the health care professional, and ultimately, the patients suffering from whatever chronic conditions that generally are linked to inflammatory conditions linked to a poor diversity of gut flora in the gut. So this is a really massive area going forward. We're just scratching the surface now on what the human microbiome means in terms of our health and well-being, and our position being quite central in gut testing and diagnostics gives us a good position to launch this new testing service from. And then there's the relationship with your own DNA. Everyone is different. Everyone's nutritional assessment will be different, because all of our DNA is different. There are a large number of potential mutations in your DNA that can lead to potential metabolic and nutrition disorders. If you were to improve the diet and take higher degrees of fiber, less sugar, less processed foods, for example, which is the mantra at the moment in this area, then that will improve your microbiome, which will mean actually that these genes that misbehave are not switched on and you preserve your well-being and improve chronic disease outcomes going forward. The microbiome and nutrigenomics area itself could be quite big, and we anticipate, again, to add quite a few million of revenue to our books over the next couple of years. And now we are focused in one area, and we are providing a foundation for the business going forward. We still aim and plan to move into our new facility in Ely in Cambridge. It's a facility that gives us over double the amount of square foot that we have currently to accommodate future expansion. More importantly, it makes us compliant and maintains our compliance to the various ISO standards required for manufacturing clinical diagnostics products. Currently, we're waiting to take possession around the end of this calendar year, but that's still subject to the resolution of some outstanding issues with a developer of that product to bring it up to the specification required for our manufacturing processes. So in summary, we now have a very different business than we had this time last year or even with the turn of the calendar year. We've exited the Alva site to reduce the cost base. We moved out of COVID-19 test development and potential manufacturing. We completed a successful fund raise after this, which allows us to invest in the growth opportunities that exist in the Health and Nutrition business. And following on from that, we successfully divested the CD4 business to Accubio to really allow us to focus on our business. And that becomes a key difference going forward. I think over the 11 years I've been with Omega Diagnostics, we've attempted to operate in a moonshot fashion, put all of our chips on technical development, R&D, with this inherent technical risk on products that require development from prototypes or from scratch, for a commercialization by moving into a segment of the market that we weren't previously in. The difference now is we're looking to invest and grow in a market we're in today. A segment and a business that today, and in my 11 years, we now become, for the first time, a cash-generative and profitable business going forward. We have a growing business and a growing market in which we lead, and we can grow from that foundation by targeting new geographies and selling a wider basket of goods that are much more easily commercialized than R&Ding a new product into those existing sales channels. And we believe we can be successful by differentiating in our sales channel, and more importantly, staying ahead of the competition and staying ahead of a market that we lead through digital platform and health care practitioner and patient engagement that really is geared around the exciting area of personalized nutrition and combating chronic disease linked to poor gut health on a global basis. So thank you for your time, and I think we'll lead into some Q&A.

Jag, certainly. And Jag and Chris, thank you very much for your presentation. [Operator Instructions] But just while the company takes a few months to read those questions sent today, I'd like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A can be accessed via our investor dashboard. We received a number of questions out of today's event and a number throughout today's meeting. And with the time left, I could perhaps start off with this question here. I'll just bring your cameras up just before doing so. So maybe one for you, Jag. Do you think food intolerance can revive the company and turn into a GBP 100 million plus market cap business?

That's a good question. We couldn't even attempt to be GBP 100 million. I'm assuming that's market cap business with the losses that we were incurring at the start of the year. We had a plan to address that, to focus our business on the area that did have growth potential, and we've done that. We've worked quite hard this year to turn the company around to enable us to grow in the future. Whether we turn into GBP 100 million plus market cap business. I mean, that's quite a large sales number required. But I certainly believe we're in an exciting area for us to achieve significant growth over the next couple of years. What I would urge the audience to look at and look at in detail is the new analyst note that came out on Monday alongside the results. I think you can download this from the finnCap website that actually outlined our sales for this year and for next year and shows how our sales are growing in the right direction, upwards and onwards?

That's great. Maybe one for you, Chris. Do you think the market is valuing Omega correctly? And what do you think a fair value would be?

No, I don't think the market is valuing Omega correctly, and I'm sure that's an overhang from COVID in the last 12, 18 months, and to move away from that will take time, will take education for shareholders, and will take delivery from the management team in terms of, ultimately, financial results going forward. I think there's also probably a bit of an overhang in the share price here as a result of a warrant that we had to issue back in June as part of the fund raise that we completed. But the reality is, we have GBP 2.5 million in the bank. We expect to receive GBP 4 million from our CD4 business within the next couple of months. That's essentially the market cap, and therefore, there's no value being attributed to the Health and Nutrition business on a go-forward basis. So I would argue that the business is significantly undervalued at this point in time.

The next question here is as follows. You've sold off or discontinued most of the portfolios as loss making to reduce cost. But the revenue for the profit-making business is not increasing. Where is the value in the company?

Well, just maybe to correct that question. The revenue for the profit-making business grew 25% year-on-year in the last 12 months. So that's not quite true. But it's fair to say that the last year has been very much around stabilizing the business since I joined. As I mentioned during the presentation, we had GBP 4 million in the bank, and we were losing GBP 0.5 million a month. Clearly not a sustainable business model. And that fundamentally had to be addressed as the priority within the business. The inherent value was always in the Health and Nutrition business on a continuing basis, absent I guess the high expectations around a government contract worth GBP 364 million for COVID contracts. But the core underlying business here, the bit that's generating profit and is in a market that is growing and has expansion opportunities and actually has some intellectual property sitting within it as well, that allows us some protection against the competition, that's always been there inherent within the Health and Nutrition business. We're in a market that's growing. We've got money in the bank. We think we have opportunities to invest. And this year is the time at which we would look, as Jag mentioned, to invest in developing our proposition in the U.S. and in adding to the product menu in order to be able to sell more through the same sales channel that we have. So fundamentally, I think we're in a market that is growing, and we have to deliver and make sure that we can exploit that. But we do have a single focus and none of the distractions perhaps the business has had historically by trying to do too much with too little resource to be able to do anything particularly well.

I know you've mentioned the GBP 4 million from the CD4 sale. We've had an investor that's asked Jag, what makes you confident that you'll receive the GBP full 4 million from the CD4 sale?

Yes, that's a very good question. And I guess one of the heartening things about CD4, which is now in a different stable, there have been numerous studies -- so the formula is contingent on a technical evaluation in Kenya. So let's just be clear on that, first of all. There needs to pass some technical criteria for the WHO to kind of continue to rubber stamp the test that actually does today a tremendous job in identifying advanced disease, which in old money is full-blown AIDS. So it's determining whether someone is now suffering from full-blown AIDS, and they need to go on to antiretroviral treatment. The technical element of the study in Kenya, and then looking at the performance, we backed up in numerous other studies, and then most recently even published a study in Botswana highlighted an exceptional level of performance of the VISITECT CD4 advanced disease test in an independent study. So we're fairly confident of the performance of the test in the hands of the Kenyan evaluators. But to date also, we've commercialized and had sales in 29 countries with excellent customer feedback. As I said, not just studies, but feedback from the field, from health workers, and Ministry of Health officials in saying how well that test is performing and the impact it's having on patients in low middle-income countries. And then the last element that gives us some cause to be very confident is over the years it's been commercialized and in the market we've had actually extremely low level of product returns and failures in real life with real patients and real health care workers. So we believe that the risk is low and it's just now a matter of time to wait for that report to be published, to be adjudicated on. And as I said, for WHO to just re-rubber stamp the test for implementation in those countries where it's needed.

And maybe a final question, maybe for you, Chris. What are you doing to improve the share price?

Well, I guess, first and foremost, we stopped the losses. So we now have a stable business to grow from. And as Jag mentioned, this is possibly the first time, for many, many years, where actually we're not spending more than we're earning. We are focused very much on our Health and Nutrition business as our sole business. It's a much simpler business to understand, to explain to people. We need to educate our investors and potential investors, and we need to rebuild trust and confidence after what has been a fairly turbulent year for the business and for shareholders. We're doing that through things like this particular meeting. When you see the annual report, which will be published very shortly, you will see quite a lot of narrative around the market and our products to help understand where we fit within the consumer health care space. And we're looking at our potential Capital Markets Day later in the year, so that we can start to garner some interest from some of these institutional investors as well as the retail investors. But I think, fundamentally, we've cleared the decks in my view, we have opportunities ahead of us, and we now need to deliver.

Jag, Chris, thank you very much for answering these questions. And, of course, the company will review all questions submitted today, and we'll publish those responses on the Investor Meet company platform. But just before redirecting investors to provide you with their feedback, which now is particularly important to you both, Jag, could I just ask you for a few closing comments?

Yes. Thank you very much. I'd like to thank everyone attending the session today. I know it's been a very tumultuous and turbulent year. But we do believe sincerely that by restructuring the business, giving the management team and our teams below us, and it's really down to the people below us in the company to now start delivering, start rebuilding that trust and faith in the company. But remembering that we are in actually a very exciting space of personalized nutrition diagnostics with a business that is not new to us, it's not new to the customer, a market that we lead and has significant growth potential going forward.

Thanks once again for updating investors today. Could I please ask investors not to close the session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This will only take a few moments to complete and that shall be greatly valued by the company. On behalf of the management team of Omega Diagnostics Group plc, I would like to thank you for attending today's presentation, and good afternoon to you all.