TIDMCOS
RNS Number : 8615E
Collagen Solutions PLC
09 July 2019
9 July 2019
Collagen Solutions plc
("Collagen Solutions", the "Company" or the "Group")
Final Results
Notice of AGM
Collagen Solutions plc (AIM: COS), the developer and
manufacturer of biomaterials and regenerative medicines for the
enhancement and extension of human life, announces its final
results for the year ended 31 March 2019.
Financial Highlights
-- Group revenue and other income increased by 22% to GBP4.51 million (2018: GBP3.71 million)*
-- Revenue excluding other income grew 18% to GBP4.15 million (2018: GBP3.50 million)
-- Adjusted LBITDA (before separately identifiable items):
GBP1.22 million (2018: GBP1.71 million)*
-- Cash balances at 31 March 2019: GBP1.68 million (2018: GBP5.02 million)
*prior year reclassification - see note below
Operational Highlights during FY 2019
-- Secured 29 customers and 16 new customer agreements
-- Grew our North American business by 72% and our development business globally by 76%
-- Our development business accounted for 33% of total revenue
-- Signed two blue chip development customers
-- Completed CE Mark submission for ChondroMimetic (R)
-- Signed four ChondroMimetic(R) licence and distribution agreements
-- Established our tissue business unit in New Zealand and four new tissue customers secured
-- Consolidated our New Zealand collagen manufacturing into our
plant in Glasgow, realising cGBP0.20 million in annualised cash
savings
-- Transitioned fully our former Chinese JV and established two
new channel partners, both of which have commenced first sales
Post Period End
-- Fundraise: On 5 June 2019 the Company completed a fundraise
of GBP5.96m gross of costs made up of a strategic investment by
Rosen's Diversified Inc of GBP4.18 million, a placing with existing
and new investors of GBP1.25 million and an open offer totalling
GBP0.53 million.
-- ChondroMimetic(R) update: during the last week of the first
financial quarter, the Company's Notified Body informed the Company
it has completed an initial review of the ChondroMimetic(R) CE mark
application and submitted its first round of questions. The Company
has reviewed the questions and is preparing a response in due
course. While the Company believes the questions are addressable,
with the goal to receive approval in the current financial year,
the timing of any additional data that may be required and the
response time or additional questions by the notified body is not
certain.
-- David Evans announced his intention to resign as Chairman
effective 9 July due to the progression of his muscle-wasting
condition. He will be succeeded by Chris Brinsmead, an existing
Non-executive director.
Annual General Meeting
The Company's AGM will be held at 3 Robroyston Oval, Nova
Business Park, Glasgow, G33 1AP on 28 August 2019 at 11:00am.
*A disclosure restatement has been made to the 2018 prior year
figures reducing other income by GBP0.12 million relating to
R&D tax credits from the UK SME Scheme and includes these as a
credit within taxation rather than other income. The current year
equivalent amount is GBP0.15 million.
Jamal Rushdy, Chief Executive Officer of Collagen Solutions,
commented: "On behalf of the Board and management team, we are
pleased to report a successful year, delivering on the priorities
we set out to accomplish. With a substantial increase in our
contract product development business, which will lead to higher
value contract manufacturing, we have demonstrated progress moving
up the value chain. We also successfully consolidated our collagen
operations into Scotland and enabled our New Zealand team to focus
on a new, exciting tissue business opportunity. Furthermore, we
made good progress preparing for the launch of ChondroMimetic(R)
with new distributors and recent feedback from our notified body
has given us a clearer path to approval, subject to further
dialogue with the Notified Body and advisors as to scope and timing
of next steps. Finally, we are pleased to welcome our newest
strategic investor, Rosen's Diversified Inc, anchoring our
successful GBP6m fundraise last month.
"Lastly I would like to thank David Evans for his trust, support
and guidance over the last several years. On behalf of the Company
we wish him well and will miss him greatly."
Enquiries:
Collagen Solutions Plc
Jamal Rushdy, CEO Via Walbrook
Hilary Spence, CFO
Cenkos Securities Plc (Nominated
Adviser and Broker)
Giles Balleny / Stephen Keys Tel: 0207 397 8900
Walbrook PR Ltd Tel: 020 7933 8780 or collagen@walbrookpr.com
Anna Dunphy Mob: 07876 741 001
CHAIRMAN'S STATEMENT
I am pleased to present Collagen Solutions' annual report and
accounts for the year ended 31 March 2019.
I noted last year that I anticipated the 2019 financial year
would be a significant year of growth and change, following a
difficult 2018 financial year. I am pleased to report that business
grew by 18% in the year and our financial performance improved both
versus the prior year and market expectations.
Post year end a successful fund raise and strategic investment
completed on 5 June 2019 which I believe has put us in a strong
position to continue to grow.
Overview
Our Board and management team have continued to make positive
progress delivering 29 new customers and 16 new customer
agreements. Growth has been in spite of the expiration of a
historical supply agreement to a South Korean customer that is
working down high inventory levels, and a temporary withdrawal of
one customer's tissue product. The latter customer has just
recently had its revised product approved by the FDA. The growth
despite this temporary setback has enabled us to de-risk the
overall business and reduce our reliance on our top 10
customers.
We have continued to put in place the clear organisational
structures and initiatives to drive our strategy, which is to build
a leading global regenerative biomaterials business based on a core
supply, development and manufacturing platform, enhanced by
development of our own novel products such as ChondroMimetic(R)
across a range of clinical indications.
As a Board, we also understand that the success of the Company
as a whole is only possible because of the dedication and hard work
of our employees. This year we have asked more of them than ever
before, and on behalf of the Board I would like to acknowledge the
huge effort delivered by our colleagues.
We have also managed to increasingly attract new high calibre
hires who all bring something new to the Company and will help us
to build the solid platform required to build our value for the
future.
Financially during the last quarter of the year the core
business was profitable at EBITDA level; a significant milestone
for us. We will continue to make losses and burn cash for a couple
of years as we require continued investment in several of our
growth initiatives including the commercialisation of
ChondroMimetic(R) and to repay the Norgine Ventures debt. However,
with this important inflection in our core business and the fund
raise we can be more confident about the stability of our financial
foundations.
Operationally we delivered the synergies from consolidating
manufacturing from New Zealand into Glasgow. This allowed us to
refocus the team in New Zealand on expanding our tissue offering
and customer base, which they have executed well.
Strategy - Creating Value for the Future
The Company continues to make progress in our strategy to move
up the value chain as evidenced by the transition of our business
from raw materials supply towards development services leading to
contract manufacturing, supporting customers as they launch new
products based on our innovative biomaterials products and
know-how.
We believe our core business is poised for accelerated growth as
a number of our existing customers start to approach the launches
of their products. Currently most of our customers, but half of our
revenue, comes from products that are pre-launch: the 14% by number
of our customers that are post launch with their products
contribute almost the same in revenue as the 86% of our customers
that are pre-launch of their own products.
If these pre-launch products are successfully developed, obtain
the requisite regulatory approvals and are launched we will be
well-positioned to transition these development projects to
contract manufacturing revenue or commercial levels of supply. As
such we believe that these contracted customers represent an
attractive embedded growth driver as revenues from these contracts
as they move to a supply phase are expected to be larger than in
the development phase and also repeatable as they are required to
fulfil commercial sales.
We continued to pursue our own proprietary product portfolio
during the year. In ChondroMimetic(R), we see a near-term
opportunity to establish and realise revenue. ChondroMimetic(R) is
a collagen-based implant for the treatment of small osteochondral
(cartilage and underlying bone) defects and has previously received
CE-mark certification under its previous licensors for the
treatment of small chondral and sub chondral lesions, with
approximately 1,000 units previously supplied into European
markets.
While we have not yet received the CE mark for which we
submitted an application, we have received initial questions from
our notified body and are preparing a response in due course and
our plans remain subject to the external regulatory review process,
the timing of which is outside our control.
Our other key projects are in wound healing and in bone graft
substitutes. Both products have completed their in vitro
pre-clinical testing and we are in early stage discussions with
potential commercial partners regarding private label distribution
and/or licensing for one of these products. These projects have
been progressing positively but we plan to further advance the bone
graft and wound products only via a commercial partnership.
Post Balance Sheet Fund Raise
I am pleased with the Strategic Investment by Rosen's
Diversified Inc ("RDI") that we completed on 5 June 2019. This
coupled with the Placing and Open Offer raised gross funds of
GBP5.96million from RDI and new and existing shareholders. We
expect the fund raise should improve our chance of reaching
profitability with no need for another.
Rosen's Diversified Inc. are a multi-billion dollar, family
owned business involved in food production, agrichemicals and
distribution. RDI operate the 5th largest beef processing company
in the US, the American Foods Group. The strategic investment in
Collagen Solutions will provide accelerated access to one of their
targeted growth sectors - animal tissue-related biomedical
products. The Subscription with RDI is accompanied by a supply
agreement with Scientific Life Solutions (a subsidiary of RDI) for
the supply of tissue.
Funds will be used to further customer and our own proprietary
product development, expand contract manufacturing activities and
capabilities and for working capital including the repayment of the
Norgine Ventures Bond Facility.
Grants
In January of 2019 we announced an award of a GBP1.54 million
research and development grant across our qualifying projects in
our product development pipeline. No grant claims have been made to
date. Our ability to claim against this grant going forward will
depend upon our R&D project prioritisation.
Our collaborations with various academic and industry partners
continue and include our participation in two prestigious European
Horizon 2020 consortiums to develop (i) a disease-modifying therapy
for Parkinson's which could slow down the progression of the
disease rather than offering symptomatic benefits, and (ii)
cell-based tissue regeneration techniques.
Board and Management
During the year we delivered on the appointments mentioned in my
report last year and Lou Ruggiero our Chief Business Officer and
Tom Hyland our Chief Operating Officer both joined the Board on 3
September 2018.
On 5 June 2019, following the strategic investment made through
RDI we welcomed Wade Rosen to the Board. Wade is part of the Rosen
family and is a successful business leader, entrepreneur, and
co-founder of two business-to-business technology companies. Wade
currently serves as a Director of RDI, and as Executive Vice
President at Scientific Life Solutions, a subsidiary of RDI amongst
other directorships. Wade will bring a new dimension to the
Board.
Focus for Financial Year 2020 and beyond
This financial year is about delivering the growth and creating
the structures that we need to be the business we aim to be in
three years' time. We remain ambitious and the agenda for the
coming year reflects both the opportunities that we have identified
and the associated challenges.
Our key targets for the current year are as follows;
-- Financial Performance: Further improvements on financial
performance including solidifying core business profitability
-- ChondroMimetic(R): Completing ChondroMimetic(R) CE mark
approval, subject to regulatory timings
-- Core Business Growth: Unlocking the embedded value in our
existing customers, delivering on existing opportunities and
building a longer-term revenue stream
-- Infrastructure: Building the infrastructure and capabilities
that we will need to service the business we will be in three
years' time
-- Product Portfolio: Creating the right product portfolio for the business moving forward
Outlook
Going into the current year with the fundraise under our belt I
believe we are in a strong position; the challenge for us being
about continued delivery and unlocking the embedded value in the
business to return our shareholders' investments for them.
I noted last year that we were still not quite at the critical
mass of revenue that would enable us to weather the storm of the
vicissitudes of our customers, and that I thought we were at least
two years away from achieving that. This is still the case however
with both funding in place and line of sight to some of the
contractual arrangements that will drive growth in the medium to
long term I believe we are in a much improved position.
Finally, I have taken the decision to step-down as Chairman and
from the Board as a result of the relentless progression of my
muscle-wasting condition and an inevitable conclusion that I can no
longer give 100% to the position and that is not in Shareholders'
best interests. I will be succeeded by Chris Brinsmead, one of my
fellow Non-executive directors who I am confident will, under his
Chairmanship, take the Company to the next level of its
development.
On behalf of the Board I would like to once again thank
shareholders, staff and partners for their continued support.
David Evans
Non-executive Chairman
8 July 2019
CEO'S STATEMENT
Overview
I am pleased to report double-digit growth and a significant
increase in product development revenue, as well as solid execution
against our stated priorities for the year.
We made substantial progress towards our goal of creating value
by moving up the value chain from a raw biomaterials supplier
towards being a trusted full-service partner to our customers by
developing and manufacturing innovative regenerative medicine
products.
Our core business strengthened as new account acquisition
continued to grow at record pace and development revenue
substantially increased, representing significant embedded value
for future OEM contract manufacturing while diversifying our
customer base to mitigate the customer concentration risks we
experienced last year.
We successfully executed on our initiatives for the year
including our financial performance, product development
programmes, commercial and operational initiatives, and improved
investor communications.
Finally, we completed key new-hires this year and invested in
our global team's development to strengthen the Company's talent
base.
Performance
Revenue and other income for the year was GBP4.51 million,
including GBP4.15 million in sales and GBP0.35 million in other
income. This represents growth of 22% on prior year overall, with
18% sales growth, driven largely by increases in North America and
product development revenue.
We added 16 new customer agreements during the year, consistent
with the number of agreements in the prior year although at a
higher average value. New customer agreements came from all our
geographies with five in North America, five in EMEA, and six in
Asia Pacific.
Our contract development and manufacturing category posted
significant growth of 79% to GBP1.6 million, representing 39% of
revenue overall made up of 33% contract product development revenue
and 6% from other sources. We believe this significant amount of
contract product development revenue is a positive indicator of
future contract manufacturing business as these products move from
development to launch phase over the next few years. Our supply
business decreased by 2.7% to GBP2.53 million. This slight decline
is mostly due to the expiration of a historical supply agreement to
a South Korean customer that is working down high inventory levels
and one other customer decline, which was offset by other supply
business growth such that adjusted for these losses the supply
business more than doubled. Included in this supply business are
revenues from our newly established tissue business unit, which has
diversified our offering from mostly Australian/New Zealand-sourced
bovine pericardium to a wide range of additional tissue products
from both porcine and bovine sources including U.S.-based
suppliers.
Geographically, revenue from North America increased
substantially to GBP2.63 million (72% growth) mostly driven by new
contract product development revenue. Our EMEA region maintained at
a similar level to last year at GBP0.59 million, while Asia Pacific
declined by 33% to GBP0.93 million, entirely driven by the South
Korean contract expiration. However, we remain in close contact
with this customer and plan to support their growth in the future
once their inventory adjusts to the level required for their
business.
Growth Initiatives
In anticipation of receiving the CE mark for ChondroMimetic(R),
we have established distribution partners in selected geographic
areas. In the course of the financial year, we secured new
distribution partners in Southeast Asia and Europe as well as hired
a focused commercial leader with cartilage therapy expertise in
Europe. Once we receive CE mark approval this team will be well
poised to begin initial human surgical cases with
ChondroMimetic(R). We are pleased to have just received notice that
our Notified Body completed an initial review of the
ChondroMimetic(R) CE mark application. Our team is diligently
preparing responses and assessing, in collaboration with our
notified body and advisors what, if any, additional information or
data may be required as well as the related timing.
We also advanced our other proprietary product technologies,
completing the in vitro testing for our bone graft substitute
targeted for spinal indications as well as our wound healing
products. We believe with this additional data available we are
better able to market these technologies and are currently seeking
partners to complete the necessary tests and regulatory filings to
commercialise these products.
Our commercial organisation delivered several achievements
relative to our goals last year. Our aim was to achieve growth
across all territories via improved global sales operations
processes and leadership, which we achieved net of one outlier
related to the expiration of the aforementioned South Korean
contract.
We also set out to secure new distribution partners in China,
which we accomplished and have realised our first sales from these
new partners during the financial year.
Finally, we set a goal to grow and diversify our tissue
business, which we did with four new customers as well as new
offerings of tissue products and sourcing of porcine as well as
equine tissues.
Operations and Infrastructure
Our major operational initiative in FY 2019 was to restructure
our New Zealand operations to consolidate duplicative collagen
production operations into our Glasgow, Scotland plant and re-focus
the tissue sourcing team in New Zealand into a global tissue
business unit.
I am pleased to say we successfully completed this goal with no
impact to customer orders and also significantly increased our
employee engagement scores in New Zealand while broadening our
tissue offering with additional products including porcine and
equine sourcing, as well as establishing new U.S.-based supply. We
also delivered on our cost synergy goals with over GBP200k of
annualised savings realised.
Finally, our operations team along with our global R&D team
were focused on delivering on a number of customer product
development and contract manufacturing milestones, which we
delivered upon during the course of the year.
Our people
We are pleased that Lou Ruggiero joined us as Chief Business
Officer earlier in April 2018, bringing valuable sales experience
and strong leadership to the commercial organisation.
As we grow, our organisation is changing rapidly and we remain
committed to providing development opportunities for our employees
and work with them on individual employee development plans to
deliver the required training to allow them to progress within the
business.
We value feedback from our employees and carry out periodic
surveys and other feedback opportunities to measure employee
engagement in a number of areas. We plan to continue to invest in
our people so we can fulfill our mission through passionate
delivery from our global team.
Conclusion
The management team is excited about our momentum from last year
and the opportunities before us. We are focused on delivering
continued growth and financial performance for the current fiscal
year, and importantly building value over the next several years by
successfully delivering on our customer projects and their product
launches, growing our more diversified tissue business,
capitalising on our geographic expansion, gaining new customers in
our core business, and gaining regulatory approval in anticipation
of first cases for ChondroMimetic(R).
Finally, it is with a feeling of tremendous gratitude that I
wish David Evans well as he steps down as Chairman and thank him
for his trust, support, guidance and commitment to me and the
Company over the last several years.
Jamal Rushdy
Chief Executive Officer
8 July 2019
Consolidated statement of comprehensive income
for the year ended 31 March 2019
Restated (note 6)
Before Separately Before Separately
separately identifiable separately identifiable
identifiable items Total identifiable items Total
items (note 2019 items (note 2018
4) 4)
Notes GBP GBP GBP GBP GBP GBP
------------------- ----- ------------ ------------ ----------------- ---------------- ------------ -----------
Revenue 4,150,736 - 4,150,736 3,504,624 - 3,504,624
Cost of sales (1,111,399) - (1,111,399) (1,039,401) - (1,039,401)
------------------- ----- ------------ ------------ ----------------- ---------------- ------------ -----------
Gross profit 3,039,337 - 3,039,337 2,465,223 - 2,465,223
Share-based
compensation (85,900) - (85,900) (68,011) - (68,011)
Administrative
expenses (3,499,544) 248,775 (3,250,769) (3,412,092) (81,402) (3,493,494)
Selling and
marketing
costs (1,024,868) - (1,024,868) (897,308) (41,046) (938,354)
Other income 354,445 - 354,445 203,236 - 203,236
------------------- ----- ------------ ------------ ----------------- ---------------- ------------ -----------
Operating loss before
interest, tax,
depreciation
and amortisation (1,216,530) 248,775 (967,755) (1,708,952) (122,448) (1,831,400)
Amortisation and
depreciation (562,355) - (562,355) (526,946) - (526,946)
Finance income 15,254 - 15,254 18,244 - 18,244
Finance expense (332,213) - (332,213) (402,814) - (402,814)
------------------- ----- ------------ ------------ ----------------- ---------------- ------------ -----------
Loss before
taxation (2,095,844) 248,775 (1,847,069) (2,620,468) (122,448) (2,742,916)
Taxation 6 180,800 - 180,800 151,353 - 151,353
------------------- ----- ------------ ------------ ----------------- ---------------- ------------ -----------
Loss for the year (1,915,044) 248,775 (1,666,269) (2,469,115) (122,448) (2,591,563)
------------------- ----- ------------ ------------ ----------------- ---------------- ------------ -----------
Attributable to:
Owners of the
parent (1,915,044) 248,775 (1,666,269) (2,447,026) (122,448) (2,569,474)
Non-controlling
interest - - - (22,089) - (22,089)
------------------- ----- ------------ ------------ ----------------- ---------------- ------------ -----------
(1,915,044) 248,775 (1,666,269) (2,469,115) (122,448) (2,591,563)
------------------- ----- ------------ ------------ ----------------- ---------------- ------------ -----------
Currency
translation
difference 129,488 - 129,488 (876,014) - (876,014)
------------------- ----- ------------ ------------ ----------------- ---------------- ------------ -----------
Other comprehensive
income / (loss) 129,488 - 129,488 (876,014) - (876,014)
-------------------------- ------------ ------------ ----------------- ---------------- ------------ -----------
Total comprehensive
loss for the year (1,785,556) 248,775 (1.536,781) (3,345,129) (122,448) (3,467,577)
-------------------------- ------------ ------------ ----------------- ---------------- ------------ -----------
Attributable to:
Owners of the
parent (1,785,556) 248,775 (1,536,781) (3,319,761) (122,448) (3,442,209)
Non-controlling
interest - - - (25,368) - (25,368)
------------------- ----- ------------ ------------ ----------------- ---------------- ------------ -----------
(1,785,556) 248,775 (1,536,781) (3,345,129) (122,448) (3,467,577)
------------------- ----- ------------ ------------ ----------------- ---------------- ------------ -----------
Basic and diluted
loss per share 4 (0.51p) (0.79p)
------------------- ----- ------------ ------------ ----------------- ---------------- ------------ -----------
Consolidated statement of financial position
as at 31 March 2019
2019 2018
Note GBP GBP
-------------------------------------------- ---- ----------- -----------
ASSETS
Non-current assets
Intangible assets 14,944,687 14,332,892
Property, plant and equipment 1,101,959 1,228,530
-------------------------------------------- ---- ----------- -----------
16,046,646 15,561,422
-------------------------------------------- ---- ----------- -----------
Current assets
Inventories 338,068 324,904
Trade and other receivables 1,137,758 1,085,783
Cash and cash equivalents 1,678,079 5,022,314
-------------------------------------------- ---- ----------- -----------
3,153,905 6,433,001
-------------------------------------------- ---- ----------- -----------
Total assets 19,200,551 21,994,423
-------------------------------------------- ---- ----------- -----------
EQUITY AND LIABILITIES
Equity attributable to equity holders of
the parent company
Share capital 7 3,290,166 3,290,166
Share premium 14,869,909 14,869,909
Share-based payment reserve 291,720 205,820
Shares to be issued reserve 106,581 106,581
Merger reserve 4,531,798 4,531,798
Translation reserve 805,387 675,899
Retained deficit (8,464,231) (6,797,962)
-------------------------------------------- ---- ----------- -----------
Total equity 15,431,330 16,882,211
-------------------------------------------- ---- ----------- -----------
Non-current liabilities
Deferred tax 162,094 192,509
Provision for other liabilities and charges 121,744 151,753
Borrowings 1,294,079 1,914,114
-------------------------------------------- ---- ----------- -----------
1,577,917 2,258,376
-------------------------------------------- ---- ----------- -----------
Current liabilities
Trade and other payables 938,556 802,394
Provision for other liabilities and charges 38,538 1,041,520
Borrowings 1,214,210 1,009,922
-------------------------------------------- ---- ----------- -----------
2,191,304 2,853,836
-------------------------------------------- ---- ----------- -----------
Total liabilities 3,769,221 5,112,212
-------------------------------------------- ---- ----------- -----------
Total liabilities and equity 19,200,551 21,994,423
-------------------------------------------- ---- ----------- -----------
Consolidated statement of changes in equity
for the year ended 31 March 2019
Share-based Shares Non-
to
Share Share payment be Merger Translation Retained controlling Total
issued
capital premium reserve reserve reserve reserve deficit Total interest equity
GBP GBP GBP GBP GBP GBP GBP GBP GBP GBP
------------------------------ ---------- ----------- -------- --------- ----------- ----------- ----------- ----------- -----------
At 1 April
2017 3,287,991 14,851,092 137,809 131,934 4,531,798 1,539,676 (4,291,319) 20,188,981 97,157 20,286,138
Issue of
shares on
acquisition
of assets 2,175 23,178 - (25,353) - - - - - -
Share issue
costs - (4,361) - - - - - (4,361) - (4,361)
-------------------- --------- ---------- ----------- -------- --------- ----------- ----------- ----------- ----------- -----------
Total transactions
with owners
in their
capacity
as owners 2,175 18,817 - (25,353) - - - (4,361) - (4,361)
Share-based
compensation - - 68,011 - - - - 68,011 - 68,011
Non-controlling
interest
transfer
of shares
to Company - - - - - 8,958 62,831 71,789 (71,789) -
-------------------- --------- ---------- ----------- -------- --------- ----------- ----------- ----------- ----------- -----------
Loss for
the year - - - - - - (2,569,474) (2,569,474) (22,089) (2,591,563)
Currency
translation
difference - - - - - (872,735) - (872,735) (3,279) (876,014)
-------------------- --------- ---------- ----------- -------- --------- ----------- ----------- ----------- ----------- -----------
Loss and
total comprehensive
loss for
the year - - - - - (872,735) (2,569,474) (3,442,209) (25,368) (3,467,577)
-------------------- --------- ---------- ----------- -------- --------- ----------- ----------- ----------- ----------- -----------
At 1 April
2018 3,290,166 14,869,909 205,820 106,581 4,531,798 675,899 (6,797,962) 16,882,211 - 16,882,211
Share-based
compensation - - 85,900 - - - - 85,900 - 85,900
-------------------- --------- ---------- ----------- -------- --------- ----------- ----------- ----------- ----------- -----------
Loss for
the year - - - - - - (1,666,269) (1,666,269) - (1,666,269)
Currency
translation
difference - - - - - 129,488 - 129,488 - 129,488
-------------------- --------- ---------- ----------- -------- --------- ----------- ----------- ----------- ----------- -----------
Loss and
total comprehensive
loss for
the year - - - - - 129,488 (1,666,269) (1,536,781) - (1,536,781)
-------------------- --------- ---------- ----------- -------- --------- ----------- ----------- ----------- ----------- -----------
At 31 March
2019 3,290,166 14,869,909 291,720 106,581 4,531,798 805,387 (8,464,231) 15,431,330 - 15,431,330
-------------------- --------- ---------- ----------- -------- --------- ----------- ----------- ----------- ----------- -----------
Consolidated statement of cash flows
for the year ended 31 March 2019
Restated (note 6)
2019 2018
GBP GBP
------------------------------------------------------ ----------- -----------
Cash flow from operating activities
Loss before taxation (1,847,069) (2,742,916)
Share-based compensation 85,900 68,011
Depreciation 334,461 290,242
Amortisation 227,894 236,704
Increase/(decrease) in contingent consideration 4,744 (793,285)
Finance expense 332,213 402,814
Finance income (15,254) (18,244)
(Gain)/loss on sale of property, plant and equipment (67,591) 2,360
Gain on sale of investment (214,965) -
Increase in inventories (12,418) (19,213)
Decrease/(increase) in trade and other receivables 53,442 (218,592)
Increase /(decrease) in trade and other payables 112,635 (168,747)
(Decrease)/increase in provisions (202,736) 631,066
------------------------------------------------------ ----------- -----------
Cash used in operations (1,208,744) (2,329,800)
Interest paid (273,327) (272,606)
Taxation received/(paid) 53,245 (42,837)
------------------------------------------------------ ----------- -----------
Net cash used in operations (1,428,826) (2,645,243)
------------------------------------------------------ ----------- -----------
Investing activities
Proceeds from the sale of investment 214,965 -
Proceeds from sale of property, plant and equipment 67,591 -
Payments to acquire property, plant and equipment (454,215) (422,397)
Payments to acquire licensed IP and patents,
and development costs (740,045) (796,420)
Settlement of contingent and deferred consideration (566,951) (1,049,901)
Interest received 15,254 18,244
------------------------------------------------------ ----------- -----------
Net cash used in investing activities (1,463,401) (2,250,474)
------------------------------------------------------ ----------- -----------
Financing activities
Net proceeds on issue of ordinary shares - (4,361)
Net proceeds from Bond issue - 1,000,000
Repayment of Bonds (420,325) -
Repayment of related party loan (43,022) (29,862)
------------------------------------------------------ ----------- -----------
Net cash (used)/generated from financing activities (463,347) 965,777
------------------------------------------------------ ----------- -----------
Net (decrease) in cash and cash equivalents (3,355,574) (3,929,940)
Effect of foreign exchange rate changes on the
balance of cash held in foreign currencies 11,339 (25,896)
------------------------------------------------------ ----------- -----------
Net decrease in cash and cash equivalents (3,344,235) (3,955,836)
------------------------------------------------------ ----------- -----------
Cash and cash equivalents at the beginning of
the financial year 5,022,314 8,978,150
------------------------------------------------------ ----------- -----------
Cash and cash equivalents at the end of the financial
year 1,678,079 5,022,314
------------------------------------------------------ ----------- -----------
NOTES TO THE AUDITED PRELIMINARY ANNOUNCEMENT
1. BASIS OF THE ANNOUNCEMENT
The audited preliminary results for the year ended 31 March 2019
were approved by the Board of directors on 8 July 2019. The
financial information in this preliminary announcement does not
constitute full accounts within the meaning of section 434 (3) of
the Companies Act 2006 but is derived from the accounts for the
year ended 31 March 2019. The figures for the year are audited. The
preliminary announcement is prepared on the same basis as set out
in the statutory accounts for the year ended 31 March 2019. Those
accounts upon which the auditors issued an unqualified opinion,
also had no statement under section 498(2) or (3) of the Companies
Act 2006.
While the financial information included in this preliminary
announcement has been prepared in accordance with the recognition
and measurement criteria of International Financial Reporting
Standards, as adopted by the European Union (EU) (IFRS), this
announcement does not in itself contain sufficient information to
comply with IFRS.
The Company is a limited liability company incorporated and
domiciled in England & Wales and whose shares are quoted on
AIM, a market operated by The London Stock Exchange. The
consolidated financial information of Collagen Solutions plc is
presented in pounds sterling (GBP), which is also the functional
currency of the Group.
The statutory accounts for the financial year ended 31 March
2019 will be delivered to the Registrar of Companies following the
Company's Annual General Meeting.
2. GOING CONCERN
As part of its going concern review the Board has followed the
guidelines published by the Financial Reporting Council entitled
"Guidance on the Going Concern Basis of Accounting and Reporting on
Solvency and Liquidity Risks 2016". In determining the appropriate
basis of preparing the financial statements, the Directors are
required to consider whether the Company and Group can continue in
operational existence for the foreseeable future, being a period of
not less than twelve months from the date of the approval of the
financial statements. As at 31 March 2019 the Group had cash and
cash equivalents of GBP1.68 million and net current assets of
GBP0.96 million.
Management prepares detailed working capital forecasts which are
reviewed by the Board on a regular basis. Cash flow forecasts and
projections have been prepared through to 31 March 2022 and take
into account sensitivities on revenues and costs. Having made
relevant and appropriate enquiries, including consideration of the
Company's and Group's current cash resources and the working
capital forecasts, and in particular in view of the post balance
sheet fund raise completed on 5 June 2019, the Directors have a
reasonable expectation that the Company and Group will have
adequate cash resources to continue to meet the requirements of the
business for at least the next 12 months from the date of approval
of the financial statements. Accordingly, the Board continues to
adopt the going concern basis in preparing the financial
statements.
3. SEGMENTAL REPORTING
The Group's Chief Operating Decision Maker, the Chief Executive
Officer, is responsible for resource allocation and the assessment
of performance. In the performance of this role, the Chief
Executive Officer reviews the Group's activities, in aggregate. The
Group has therefore determined that it has only one reportable
segment under IFRS 8, Operating Segments, which is
biomaterials.
4. LOSS PER SHARE
The calculation of basic loss attributable to the equity holders
of the parent is based on losses of GBP1,666,269 (2018:
GBP2,569,474) and 324,516,552 (2018: 324,419,433) ordinary shares,
being the weighted average number of shares in issue during the
year.
The loss for the year and the weighted average number of
ordinary shares for calculating the diluted loss per share for the
year ended 31 March 2019 are identical to those for the basic loss
per share. This is because the outstanding share options would have
the effect of reducing the loss per ordinary share and would
therefore not be dilutive under the terms of IAS 33.
5. SEPARATELY IDENTIFIABLE ITEMS
2019 2018
GBP GBP
-------------------------------------------------- --------- ---------
Included within administrative expenses:
Gain on sale of Jellagen Pty Limited investment 214,965 -
Release of contingent consideration provision(1) - 738,466
Restructuring gains /(costs)(2) 33,810 (819,868)
-------------------------------------------------- --------- ---------
Comprising:
Gain on sale of assets previously written off 67,591 -
Additional costs - transfer of processes (43,000) -
Release of provision 9,219 -
Employee costs - (231,909)
Onerous lease costs of property - (140,125)
Onerous lease dilapidations - (62,774)
Fixed asset write offs - (266,414)
General and administrative costs - (118,646)
-------------------------------------------------- --------- ---------
248,775 (81,402)
-------------------------------------------------- --------- ---------
1. The release of the contingent consideration provision in the
year ended 31 March 2018 relates to the reassessment of the
earn-outs payable for the acquisitions of Collagen Solutions LLC
and Collagen Solutions NZ Limited.
2. The restructuring costs during the year ended 31 March 2018
relate to the reorganisation of the New Zealand operations as
announced in March 2018 and the planned transfer of most production
processes to the Glasgow site and also the reorganisation of
R&D operations including the relocation of the US facility from
San Jose to Minnesota in late 2017. Additional costs and gains
relating to the same restructuring in the year ended 31 March 2019
have been included in separately identifiable items.
2019 2018
GBP GBP
--------------------------------------------- ---- --------
Included within selling and marketing costs:
Restructuring costs(1) - (41,046)
--------------------------------------------- ---- --------
Comprising:
Employee costs - (41,046)
--------------------------------------------- ---- --------
- (41,046)
--------------------------------------------- ---- --------
1. The restructuring costs during the year ended 31 March 2018
relate to the reorganisation of commercial operations including the
relocation of the US facility from San Jose to Minnesota in late
2017.
6. PRIOR YEAR RESTATEMENT
A disclosure restatement has been made to the 2018 prior year
figures. This restatement reduces other income by GBP123,977
relating to R&D tax credits from the UK SME Scheme and includes
these as a credit within Taxation. This restatement has the effect
of reducing other income from GBP327,213 to GBP203,236 and
increasing the tax credit in the same year from GBP27,376 to
GBP151,353 for the year ended 31 March 2018. The loss before
taxation increased from GBP2,618,939 to GBP2,742,916 as a result of
this restatement, while the loss for the year was unchanged.
7. SHARE CAPITAL
2019 2019 2018 2018
Number GBP Number GBP
------------------------------- ----------- --------- ----------- ---------
Issued and fully paid
Issued ordinary shares of 1p 324,516,552 3,245,166 324,516,552 3,245,166
Issued deferred shares of 9p 500,000 45,000 500,000 45,000
------------------------------- ----------- --------- ----------- ---------
Balance at the end of the year 325,016,552 3,290,166 325,016,552 3,290,166
------------------------------- ----------- --------- ----------- ---------
Ordinary shares
The total number of issued shares at 31 March 2019 was
324,516,522 (2018: 324,516,552). 119,166,429 ordinary shares were
issued after the balance sheet date as part of a fund raise
completed on 6(th) June.
Deferred shares
The total number of deferred shares at 31 March 2019 was 500,000
(2018: 500,000). The deferred shares do not confer any voting
rights.
Options and warrants
At 31 March 2019 the Company had 28,963,632 (2018: 22,613,632)
unissued ordinary shares of 1p each under the Company's share
option and warrant schemes, details of which are as follows:
Option Date
price from which Expiry
Grant date Number (in p) exercisable date
29 March 2013 4,050,000 10.00 29 March 2013 28 March 2023
24 November 2014 1,000,000 7.75 1 January 2017 23 November 2024
1 April 2015 500,000 9.63 1 April 2018 31 March 2025
15 December 2015 3,300,000 8.89 15 December 2018 14 December 2025
14 July 2016 2,700,000 8.13 14 July 2016 13 July 2026
15 February 2017 500,000 5.63 26 October 2019 14 February 2027
7 March 2017 500,000 5.75 7 March 2020 6 March 2027
31 March 2017 5,075,283 5.91 31 March 2017 30 March 2027
12 July 2017 3,900,000 5.25 12 July 2020 11 July 2027
23 January 2018 388,349 7.88 23 January 2018 30 July 2020
5 March 2018 200,000 3.38 15 November 2017 4 March 2028
20 March 2018 100,000 3.63 20 March 2018 19 March 2021
5 April 2018 666,666 2.70 3 January 2019 4 April 2028
5 April 2018 666,667 2.70 3 January 2020 4 April 2028
5 April 2018 666,667 2.70 3 January 2021 4 April 2028
3 May 2018 666,666 3.65 16 April 2019 2 May 2028
3 May 2018 666,667 3.65 16 April 2020 2 May 2028
3 May 2018 666,667 3.65 16 April 2021 2 May 2028
18 September
19 September 2018 1,500,000 3.70 19 September 2021 2028
18 September
19 September 2018 50,000 3.70 19 September 2018 2028
8 January 2019 200,000 3.15 8 January 2019 7 January 2029
16 January 2019 333,333 3.85 3 January 2019 15 January 2029
16 January 2019 333,333 3.85 3 January 2020 15 January 2029
16 January 2019 333,334 3.85 3 January 2021 15 January 2029
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR EAXXPEAANEFF
(END) Dow Jones Newswires
July 09, 2019 04:32 ET (08:32 GMT)
Collagen Solutions (LSE:COS)
Historical Stock Chart
From Apr 2024 to May 2024
Collagen Solutions (LSE:COS)
Historical Stock Chart
From May 2023 to May 2024