note on cst agm 2010

Notes from CST AGM 15th November 2010


Tony Radford

Improvement of reimbursement guidelines in Japan is unheard of went up to 60%

Tube product in Japan adopted well.
www.tackleTB.com is a central site for anyone to do a story talk to the media, help with message development and follow up online, a lead often leads to a capture. Q&A sheets, pocket guides, brochures, it?s a PR company in a nutshell, this is very expensive to do.
We are assisting in contact investigations when we have a TB outbreak, we assist them in the testing.
R&D will rise in the future,
FX is a problem 9 years ago the A$ was 50 cents now at parity.
Dividend policy is we will pay at that level until we do something else.
We can grow at 40% for many years.
Market for tests:
45 million tests total
17 million in USA
10 million in Europe
11 million Japan

Skin test is completely useless in Japan, they only do X-rays
Korea do not test in every case for latent TB, need to push this
With more success more competition in the future
Estimated sales 2.6m to 2.9m FY 2011
German reimbursement 58Euros from January 2011 very significant.
QFT2G not manufacturing anymore saves us for making extra batches
Automation is the way forward, we will brand our own equipment, we will be responsible for servicing, this forms part of our long term strategy.
Need to create high IP core patents, 2017 to 2018 competition could make an inferior product cheaply.
2014 Mark 4 new characteristics to protect IP going forward, but we really have a wonderful product hard to improve on best practice
Lyme disease still much to our annoyance in the early phase.

Q) For Auditor:
Verification of IP acquired when CST was first set up?
A)Further development by the company itself, fully amortised, we have a register that explains the status and when it expires and how we can extend this.

Q) Did the company verify the existence of IP by the Auditor?
A) We are not informing the competition what we are doing, we did in fact run a process by an IP Lawyer, very complex area, we did a review, recommended some changes and we have gone down that route.

Q) Is the Auditor interested, has it been sold off or can we borrow against the IP?
A) We did take into account the numbers in the accounts

Q) High proportion in A$ does that mean they have to be repatriated in A$?
A) Yes

Q) Cash is in excess of $20million what are you going to do with this?
A) We have $20million cash and accumulated losses of $20million, our intention is to pay dividends out of profits.

We are trying to maximise our success, it?s not a real concern, and we have told the market about the value of our product. Engaged in PR, been very successful, been on CNBC, and engaged the press. We are protecting the credibility of the company and the story is getting out there, getting press. Today we are raising our profile.

Q) I am delighted with the guidance which is very impressive; we need to be out in the market place, promoting to brokers how good CST is as an investment?
A) T.Radford There?s a limit in how far I can spread myself around

Q) Affects on automation, what affect on revenues in coming years?
A) Automation in U.S. sell more equipment in U.S. outside U.S. PNG and Singapore have bought equipment. Mr Boyle then answered. Consumers we have are moving in numbers and we are building an increased business, the automation process can conduct 1,000 to 5,000. Interest in mechanisation over Lab technicians is picking up.

Q) R&D budget small how do you decide on where to spend the money?
A) We see huge future in R&D to do a pro rata of profit would be a mistake, low cost in diagnostics compared with pharmaceuticals, we have more staff coming on. We have a lot of R&D intellect than the numbers suggest.

Q) $20 million in reserve for M&A activity, is this a fixed amount or floating amount?
A) Depends on what comes along, 60% of profits will be allocated for dividends, we are on the lookout for opportunities that enhance our company, we can?t distribute by law because of existing losses.

Q) Generic competitors? What are the current competitors?
A) Skin test, two sellers in the world. T Spot total revenue ?2.5 m per test cost ?80 in Europe, $80 in U.S. they lost ?8.8m last year
Future technology, develop new tests for TB lots of confusion with gene expert test are for active, no competition they help us. We look very closely at any new tests.

Q) The new Diel study, are you going to promote this?
A) There is an embargo on this until it is in print, hopefully the media will take it up and publish something on this.