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."

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

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

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).

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:

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

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).

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.

• 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.
• 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.
• 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

Consolidated Statement of Comprehensive Income

for the year ended 31 March 2024

Other comprehensive loss to be reclassified to profit and loss in subsequent periods

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).

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.

Business segment information

Health and

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

Unallocated assets comprise cash and deferred taxation. Unallocated liabilities relate to deferred income balances.

Product segment information

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.

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.

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.

* 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.

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.