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.

  1. Chairman's Statement
  2. CEO's Statement
  3. Statement of Comprehensive Income
  4. Statement of Financial Position
  5. Statement of Changes in Equity
  6. Statement of Cash Flows
  7. Notes


The full results are available to
download in PDF format

Financial Highlights

  • Group revenue and other income increased by 22% to £4.51 million (2018: £3.71 million)*
  • Revenue excluding other income grew 18% to £4.15 million (2018: £3.50 million)
  • Adjusted LBITDA (before separately identifiable items): £1.22 million (2018: £1.71 million)*
  • Cash balances at 31 March 2019: £1.68 million (2018: £5.02 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 ®
  • Signed four ChondroMimetic® 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 c£0.20 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 £5.96m gross of costs made up of a strategic investment by Rosen's Diversified Inc of £4.18 million, a placing with existing and new investors of £1.25 million and an open offer totalling £0.53 million.
  • ChondroMimetic® 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® 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 £0.12 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 £0.15 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® 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 £6m 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.”


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.

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® 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® 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®, we see a near-term opportunity to establish and realise revenue. ChondroMimetic® 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 £5.96million 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.

In January of 2019 we announced an award of a £1.54 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®:   Completing ChondroMimetic® 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

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

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.

Revenue and other income for the year was £4.51 million, including £4.15 million in sales and £0.35 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 £1.6 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 £2.53 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 £2.63 million (72% growth) mostly driven by new contract product development revenue. Our EMEA region maintained at a similar level to last year at £0.59 million, while Asia Pacific declined by 33% to £0.93 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®, 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®. We are pleased to have just received notice that our Notified Body completed an initial review of the ChondroMimetic® 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 £200k 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.

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®.

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 identifiable items Separately identifiable items (note 4) Total 2019 Before separately identifiable items Separately identifiable items (note 4) Total 2018
  Notes £ £ £ £ £ £
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)


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)


(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 £ £
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 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 to         Non-  
  Share Share payment be issued Merger Translation Retained   controlling Total
  capital premium reserve reserve reserve reserve deficit Total interest equity
  £ £ £ £ £ £ £ £ £ £
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

  2019 2018
  £ £
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



The notes to the financial statement are available in the PDF download.


Page last updated: 9 July 2019