Final Results for the year ended 31 March 2018

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 2018.

  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

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Financial Highlights

  • Group revenue and other income decreased by 6% to £3.83 million (2017: £4.09 million)
  • Adjusted LBITDA (before separately identifiable items): £1.58 million (2017: £1.26 million)
  • Cash balances at 31 March 2018: £5.02 million (2017: £8.98 million)

As previously announced, the revenue performance both in comparison with prior year and original market expectations was lower than anticipated. The decline on prior year was due to a number of customer issues: a temporary withdrawal of one customer's tissue product, suspension of two customer projects, and one customer's adjustment of inventory levels. These losses in 4 customers contributed over £800k of year over year decline and gains in new customers and growth in existing ones were not sufficient to offset the scale of their, albeit largely temporary, decline. Further, market expectations had assumed the signing of a major customer contract in FY2018 which in fact was signed last month.

We have taken action to mitigate softness in sales execution and improve financial performance and behind the apparently disappointing results there are a number of underlying positive trends that bode well for future financial performance.

Operational Highlights

  • Secured 16 new customers and 14 new customer agreements, up from 9 new customers last year
  • Grew EMEA by 40%, and our development business globally by 271%
  • Signed first ChondroMimetic® licence and distribution contract in South Korea
  • Announced successful results of an eight-year clinical study of ChondroMimetic® and initiated its CE mark submission
  • Strengthened both the Board and the Executive team with key hires bolstering the Group's commercial expertise
  • Secured import licences to China and restructured the Chinese Joint Venture ("JV") for greater flexibility and customer technical support
  • Completed the consolidation of our US R&D and Commercial sites into our Minneapolis site
  • Restructured and refocused our New Zealand resources to maximise our opportunity for success in the tissue business globally
  • Initiated the restructuring and investment required to optimise our global manufacturing footprint
  • Initiated review of our financials to bolster cash, improve margins and solidify trajectory to profitability

Post Period End

  • Secured major new customer development contract
  • Won Innovation award from key customer
  • Appointed Lou Ruggiero as Chief Business Officer

Annual General Meeting

  • The Company's AGM will be held at 3 Robroyston Oval, Nova Business Park, Glasgow, G33 1AP on 22 August 2018 at 11:00am

Jamal Rushdy, Chief Executive Officer of Collagen Solutions, commented: "On the one hand, we experienced a difficult year in terms of our sales performance and the necessity to mitigate several unexpected challenges in our core business, which is disappointing both to ourselves and shareholders. However, I am pleased that our global team, and highly supportive Board, faced these challenges head-on and achieved several positive outcomes during the year. I am confident the operational improvements and new organisational appointments we have made has put the Company in a much stronger position. Furthermore, our core business has strengthened with new contracted business moving us further up the value chain, while we achieved critical proprietary product milestones including successful clinical results from our ChondroMimetic® regenerative cartilage scaffold. As we are better positioned than last year and have set ourselves meaningful yet realistic goals for this year, I believe we will deliver improved execution and results."

This announcement contains information which, prior to its disclosure, was considered inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 (MAR).

 

Chairman's Statement

I am pleased to present Collagen Solutions' annual report and accounts for the year ended 31 March 2018.

As I look back over the period since I wrote my last annual statement we have encountered a number of challenges, some of which we were aware of, some which were completely left field in nature and some we managed to create all by ourselves.

Overview

Overall, 2018 was a year of significant change having encountered a number of challenges which we have taken the necessary steps to overcome.  On the face of it by a cursory examination of our headline revenue number (-6% year on year) we appear to have not moved forward, but the underlying reality is somewhat different.

Our Board and Management team have continued to make positive progress, delivering 16 new customers and 14 new commercial agreements and growing our development business, where we partner with companies to develop their own medical devices, by 271%. Our development business is crucial because of the partnerships it allows us to build with our customers and the longevity of the commercial relationships that result. We also won an award from one of our customers for Innovation in this area, underlining our expertise in the manufacturing and development of collagen products.

We continue to put in place the clear organisation and detailed initiatives to drive our focused strategy in the current financial year and beyond, which is to build a leading global regenerative biomaterials business based upon a core supply, development and manufacturing platform, enhanced by developing our own novel products, such as ChondroMimetic®, across a range of clinical indications.

To this end, towards the end of the year we refocused resources in New Zealand on a growing tissue opportunity we feel we are ideally placed to exploit. This meant the restructuring of our NZ operations which improved financial foundations.

We have set ourselves a goal to accrete value by creating a leading biomaterials business through a combination of organic growth and exploitation of our own and licensed IP, as well as through appropriate acquisitions, and we believe the momentum for achieving this is increasing.

The funding secured in March 2017 will allow us to continue to build the business and see us through the end of the financial year and beyond. The changes initiated during 2018 and progress made will provide us the platform to strengthen our core business in 2019.

Commercial focus

We went into 2017/18 knowing that one of our customers was unlikely to order at the same level as in the previous year due to financing issues therefore the year on year comparison must be analysed in that context.

A significant element of our anticipated revenue growth was going to come through the supply of pericardium tissue to a major customer and having geared up significantly to be able to meet predicted demand, our customer halted their own development programme in November resulting in the cancellation of anticipated orders. This was beyond our control and we have been working hard to mitigate this.

We were also faced with two further unexpected customer issues including a further project suspension and overstocking.

Our anticipated breakthrough in China has not happened as planned and we were both delayed and distracted by our JV partner seeking to acquire us. This rejection by us has forced us to reconfigure our plans for China and how we operate there.

Finally, we signed a new development and supply contract last month which we had anticipated would have been signed by 31 March but despite our best efforts we were unable to conclude  this until last month.

We have yet to achieve a critical mass of revenue that enables us to weather the storm of the vicissitudes of our customers without disappointing the markets in terms of resultant missed forecasts - we are at least two years away from achieving that.

Despite the under performance there have been a number of positive developments during the year and they are highlighted throughout the report. Most importantly from my perspective are four key highlights. Firstly, in terms of the overall team (which we have strengthened in the period), I admire both their resilience and drive to succeed. Secondly in terms of ChondroMimetic® is the absolutely outstanding results from our longitudinal study. Thirdly and flatteringly has been the number of strategic approaches we have received which indicates we must be doing something right even if that has not been reflected in their value of us. Fourthly, and most importantly going forward, is in terms of the quality and nature of our customer pipeline which is the strongest it has ever been.

Innovation and IP

We have continued to invest in the proprietary product pipeline, in particular ChondroMimetic®, an exciting cartilage repair technology based around a bi-layered collagen sponge. During the year we announced positive results from follow up tests, technically known as open label extension trials, on 15 of the 17 patients from the original clinical trials conducted in Budapest in 2009.

These new tests have provided us with eight years of longitudinal data which will help enormously with our partnering activities. CE mark submission has been made and we expect CE Mark by the end of this financial year.

Our other key projects are in wound healing and in bone graft substitutes. We remain confident about our ability to partner these products although the increasing burden of regulation has resulted in extended timelines.

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 have again made a number of key appointments to strengthen both the Board and the executive team.

Chris Brinsmead was appointed as a Non-Executive Director in January 2018. Chris brings to the Board a wealth of experience gained from his time at AstraZeneca and a variety of other roles. In the time since joining he has brought a new dimension to the Board discourse.

Hilary Spence was appointed CFO in January 2018 bringing with her 30 years of commercial, restructuring and cash management experience. Hilary replaced Gill Black, who stepped down from the Board for personal reasons but remains within the Group.

Recognising the need for stronger commercial delivery, Lou Ruggiero, a seasoned sales executive, joined us in April to focus on speed of delivery and execution within the commercial arena.

It is anticipated that Lou, together with Tom Hyland (COO), will join the Board in the first half of this financial year.

The Board is confident that we now have a team in place to deliver the short to medium-term strategic goals and have also strengthened our functional teams to drive product innovation and take the business to the next level of growth.

Our people

As part of our vital few initiatives for the year we committed to providing development opportunities for our employees and worked with them on individual employee development plans to deliver the required targeted training to allow them to deliver enhanced performance to the business in its growth phase. We value feedback from our employees and carry out an annual survey to measure our performance in this area.

Results

The Group's results for the year ended 31 March 2018 are set out in the Consolidated Statement of Comprehensive Income and discussed further in the Financial Review.

Focus and deliverables

The past year has seen further significant change in the business but we hope that this change has provided a solid foundation for the coming years. 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: A more solid financial footing including improved gross margin and cash generation.
  • Proprietary Products: We again have a multitude of development milestones in our product portfolio pipeline. Crucially, we aim to have ChondroMimetic® CE Mark approval by the end of the financial year and be performing the first-in-man surgeries by March 31st 2019. We are very excited about the prospect of bringing to market a product that could potentially have such a significant impact on the quality of people's lives. Targets for Bone graft are to complete the animal studies and complete the Wound animal pilot. We expect an ever-greater contribution to the value of the business from these projects as they approach commercialisation.
  • Commercial Execution: Achieving revenue growth across all our key territories in particular:
    • Delivering on our strategy to address a specific risk with a Korean customer which will impact 18/19 but be offset by growth in other areas 
    • Securing partners for our key proprietary products
    • With the restructuring of our presence in China and the securing of export licences we continue to examine a number of potential options for a route forward
    • Refocusing our resources and using the capacity that we have built to build on our presence in the growing tissue market from our base in New Zealand
  • Operational Execution: Completing our New Zealand restructure and ensuring that we realise the financial benefits in cost savings and more so from the simplification of our global manufacturing and deliver on the key development projects with our customers that will in 2019 account for almost half of our revenue.
  • Investor Relations: Improving the way that we tell our story. The growth in our development business is hugely exciting for us but has been masked by temporary customer issues. We need to get better at communicating to the marketplace what we are achieving. We will do this with clearer communication and better leading metrics around commercial performance, business segmentation and financial outlook.

Outlook

Going into the current year, we recognise the scale of our challenge as we are not expecting our main customer in Korea to order until next year. We believe that revenue, whilst not being replaced, can be substituted by contracts that we have either signed or have sufficient visibility on to make a reasoned judgement of likely success. Our first quarter has ended positively, and we are looking to build upon that in the second quarter.

We recognise the constraints on working capital and our plans reflect both the necessity to continue to invest in innovation and our responsibilities to you as Shareholders to deliver value as set out in our objectives above. We continue to examine sources of non-dilutive funding which, if secured, would be used to increase the scope and pace of our innovation pipeline.

We will continue to look for opportunities that we believe can create strategic value and establish critical mass whilst at the same time reviewing incoming strategic approaches to establish whether they are in Shareholders' interests.

As the founding and largest independent shareholder, I continue to be wholly committed to ensuring Collagen Solutions is a success and continue to be assured by:

- the quality of the people we have at Collagen Solutions and the fact that we have been able to attract into the Company people of a very high calibre
- the quality of our current product offering and our development and the feedback we receive from customers
- the continued support of the Board to our strategic plan
- the continued support of yourselves as Shareholders

Finally, we are committed to the positive future of Collagen Solutions and our vision to be the industry's first choice for regenerative biomaterials. We anticipate that we will have a significant year of growth and change, and it will be a transitional year in terms of new product development and revenue generation. On behalf of the Board, I would like to thank our shareholders, staff and partners for their continued support.

 

David Evans
Non-executive Chairman
9 July 2018

 

CEO'S Statement

Overview

While there were several positive achievements during  FY 2018, the revenue declines from a few of our core customers and lack of sufficient offsetting new business is disappointing and we have taken action both to improve sales execution and financial results, as further detailed below.

However, we made substantial progress in our stated strategy to create 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 accelerated and development revenue substantially increased, representing significant embedded contracted value for future OEM contract manufacturing while diversifying our customer base to mitigate risks as we experienced during the year.

Also, our proprietary product programmes have achieved key milestones including the successful positive results from our eight-year clinical study of ChondroMimetic®, an advanced scaffold for cartilage regeneration, with the CE Mark and first-in-man cases expected to be achieved this fiscal year.

Finally, we made key executive team appointments and implemented operational changes to adapt our organisation and financial position to better position us to successfully execute on our mission ahead.

Strengthening our core business

During FY 2018, our new customer acquisition rate accelerated with 16 new customers added compared with nine new customers in FY 2017.  New customer acquisition was geographically balanced with seven in North America, five in EMEA and four in Asia Pacific.

In addition to new customer acquisition, another key leading indicator of future growth is our development revenue. In FY 2018, development revenue grew by 271%. Development revenue is generated from customer contracts to develop a product or specialised biomaterial formulation that typically leads to recurring supply and contract manufacturing business once our customers receive regulatory approval. This development revenue is an indicator of how we are moving up the value chain by developing products for future contract manufacturing rather than basic raw materials supply, thus representing an embedded value of future upside potential.

Generally within our core business our revenue follows the stages of our customers' product cycle from product evaluation, to development, then regulatory review, and finally launch. We typically generate prototyping and development revenue during the evaluation and development stages, minimal or no revenue while the customer is awaiting regulatory approvals, then more sustainable and material revenue as the customer prepares and executes its product launch.

FY 2018 results show that we had 48% of our customers, representing 22% of revenue in the evaluation and development phase, 17% of customers/ 10% of revenue under regulatory review, and 31% of customers /59% of revenue in launch mode.  For perspective, we estimate that two years ago in FY 2016 our business had 92% of revenue from launched products with 46% fewer customers, clearly demonstrating the degree to which our core business has diversified with a significant embedded value of our customers' development pipeline yet to be realised.

Revenue performance

Revenue and other income for the year was £3.83 million, including £3.50 million in sales and £0.33 million in other income. This represents a decline of 6% on the prior year due largely to a temporary withdrawal of one customer's tissue product, indefinite suspension of two customer projects, and one significant customer that adjusted inventory levels, all contributing to over £800k of year-over-year declines and masking the aforementioned triple-digit growth in development revenue and other gains from new accounts gained in the year.

We believe at least half of these declines can be reversed as they are not related to permanent customer losses but rather delays in projects or adjustment of inventory levels.  Additionally, we had expected a major customer contract to close before the end of the fiscal year but this was delayed further impacting results. This agreement has subsequently closed in the first quarter of the current fiscal year.

Geographically, revenue from North America and Asia Pacific declined by 21% to £1.53 million and 13% to £1.38 million respectively due to these issues, while EMEA grew 40% to £0.60 million as that region was not impacted by these events and experienced substantial new customer growth.

While on the one hand we are pleased with our new account acquisition and development agreements, we have taken action to address the revenue decline during FY 2018 and lack of sufficient offsets. One of the key strategic initiatives in the current fiscal year, led by our newly appointed Chief Business Officer, is to optimise our commercial operations to improve speed to close and pipeline value to ensure we meet or exceed revenue targets.

Advancing our proprietary products

In February 2018 we announced the successful results from an eight-year extension clinical study of 15 patients who received ChondroMimetic® implants as an osteochondral scaffold for the repair of cartilage defects in the knee. The data demonstrated that the quality of the regenerated cartilage was nearly identical to native cartilage, and patient clinical results sustained ‘excellent' levels over an eight-year timeframe. Furthermore, a key functional score showed outcomes were equal to or better than equivalent scores reported in the literature for substantially more expensive two-stage cartilage repair technologies.

The customer response to these results has been encouraging, and a significant achievement was the execution of a licence and distribution agreement in December 2017 with a South Korean partner, Insung Medical Co. Ltd. Under the terms of the agreement, Insung is pursuing regulatory and reimbursement approvals in Korea and is supported by our existing commercial office in Seoul. We continue to have discussions with both global and regional distributors in preparation for our CE Mark approval in Europe, which we continue to expect in the second half of 2018, followed by the first cases before the end of our current fiscal year.

In addition to ChondroMimetic®, we have two other proprietary product programmes that we advanced during the fiscal year. One programme is focused on a novel bone graft substitute family for use in spine, trauma, and extremities procedures with excellent surgeon handling characteristics and formulations designed for enhanced bone healing. The other programme is related to wound healing, including multiple internally developed collagen matrices with the potential to address several markets in wound care and burns. We have recently initiated animal trials for both of these programmes and expect results in the second half of our current fiscal year.

Adapting our organisation and operations

We have taken several steps this past year to enhance our leadership team while also simplifying and focusing our operations in order to improve our chances of achieving our ambitious growth goals and path to profitability.

In commercial operations we recently appointed Lou Ruggiero as Chief Business Officer. Lou is focused on several areas of commercial optimisation through increased sales operating rigour, sales team development, and new channel strategies to ensure we meet or exceed revenue targets. In addition, we terminated our Chinese joint venture such that we now own 100% of the Chinese subsidiary, allowing us more flexibility in engaging with and providing technical support to commercial partners in China.

Operationally, we successfully completed the consolidation of our US offices in October to combine R&D and commercial teams in Minneapolis, and established our global R&D leadership in Minneapolis under our new VP of Research and Development, Chris Wattengel.  In parallel, driven by customer demand and led by our COO, Tom Hyland, we have reconfigured much of our Glasgow operation to be more flexible and responsive to utilise capacity beyond collagen raw materials production to contract manufacturing and other development work. Together these changes have facilitated the triple-digit increase in development revenue and gain of new customer manufacturing contracts.

We also appointed Hilary Spence as CFO in January of 2018 who has been focused on improvements in financial performance and analysis. We also decided to restructure our New Zealand operation, improving efficiencies by moving New Zealand collagen production to Glasgow and R&D to Minneapolis. This will not only enable the New Zealand team to focus on a meaningful opportunity in the tissue business, leveraging their operational and logistic strengths in tissue procurement and proximity to Australia and New Zealand abattoirs but will also drive improvement in our manufacturing margins. These changes along with our expected revenue growth provide a clear path to profitability.

Conclusion

Looking forward in the current fiscal year, we are focused on delivering expected financial results, achieving key milestones with our proprietary products including the first cases for ChondroMimetic®, and executing on key commercial and operational initiatives as described by our Chairman.

On behalf of the management team, we remain enthusiastic and committed to our vision to be the industry's first choice for regenerative biomaterials, following a strategy to create value by moving up the value chain with a greater share of development and OEM contracts in our core business, plus developing novel proprietary products for distribution and licensing.

 

Jamal Rushdy
Chief Executive Officer
9 July 2018

 

Consolidated Statement of Comprehensive Income
for the year ended 31 March 2018

  Notes Before
separately
identifiable
items
£
Separately
identifiable
items
(note 5)
£
Total
2018
£
Before
separately
identifiable
items
£
Separately
identifiable
items
(note 5)
£
Total
2017
£
Revenue   3,504,624 - 3,504,624 3,945,787 - 3,945,787
Cost of sales   (1,039,401) - (1,039,401) (983,632) - (983,632)
               
Gross profit   2,465,223 - 2,465,223 2,962,155 - 2,962,155
Share-based compensation   (68,011) - (68,011) (50,585) - (50,585)
Administrative expenses   (3,412,092) (81,402) (3,493,494) (3,596,707) 227,155 (3,369,552)
Selling and marketing costs   (897,308) (41,046) (938,354) (718,986) - (718,986)
Other income   327,213 - 327,213 144,762 - 144,762
Operating loss before interest, tax, depreciation and amortisation   (1,584,975) (122,448) (1,707,423) (1,259,361) 227,155 (1,032,206)
Amortisation and depreciation   (526,946) - (526,946) (449,427) - (449,427)
Finance income   18,244 - 18,244 2,841 - 2,841
Finance expense   (402,814) - (402,814) (134,958) - (134,958)
Loss before taxation   (2,496,491) (122,448) (2,618,939) (1,840,905) 227,155 (1,613,750)
Taxation   27,376 - 27,376 (141,928) - (141,928)
Loss for the year   (2,469,115) (122,448) (2,591,563) (1,982,833) 227,155 (1,755,678)
Attributable to:              
Owners of the parent   (2,447,026) (122,448) (2,569,474) (1,934,420) 227,155 (1,707,265)
Non - controlling interest   (22,089) - (22,089) (48,413) - (48,413)
    (2,469,115) (122,448) (2,591,563) (1,982,833) 227,155 (1,755,678)
Currency translation difference   (876,014) - (876,014) 1,392,495 - 1,392,495
Other comprehensive (loss)/income   (876,014) - (876,014) 1,392,495 - 1,392,495
Total comprehensive loss for the year   (3,345,129) (122,448) (3,467,577) (590,338) 227,155 (363,183)
Attributable to:              
Owners of the parent   (3,319,761) (122,448) (3,442,209) (554,162) 227,155 (327,007)
Non - controlling interest   (25,368) - (25,368) (36,176) - (36,176)
    (3,345,129) (122,448) (3,467,577) (590,338) 227,155 (363,183)
Basic and diluted loss per share 4     (0.79p)     (0.95p)

 

Consolidated Statement of Financial Position
as at 31 March 2018

  Notes 2018
£
2017
£
ASSETS      
Non-current assets      
Intangible assets   14,332,892 14,581,893
Property, plant and equipment   1,228,530 1,142,741
    15,561,422 15,724,634
Current assets      
Inventories   324,904 313,395
Trade and other receivables   1,085,783 806,566
Cash and cash equivalents   5,022,314 8,978,150
    6,433,001 10,098,111
Total assets   21,994,423 25,822,745
       
EQUITY AND LIABILITIES      
Equity attributable to equity holders of the parent company      
Share capital 6 3,290,166 3,287,991
Share premium   14,869,909 14,851,092
Share-based payment reserve   205,820 137,809
Shares to be issued reserve   106,581 131,934
Merger reserve   4,531,798 4,531,798
Translation reserve   675,899 1,539,676
Retained deficit   (6,797,962) (4,291,319)
    16,882,211 20,188,981
Equity attributable to non-equity holders of the parent company      
Non-controlling interest reserve   - 97,157
Total equity   16,882,211 20,286,138
Non-current liabilities      
Deferred tax   192,509 221,847
Provision for other liabilities and charges   151,753 1,289,357
Borrowings   1,914,114 1,879,899
Total non-current liabilities   2,258,376 3,391,103
Current liabilities      
Trade and other payables   802,394 1,000,086
Income tax liabilities   - 58,530
Provision for other liabilities and charges   1,041,520 1,060,484
Borrowings   1,009,922 26,404
Total current liabilities   2,853,836 2,145,504
Total liabilities   5,112,212 5,536,607
Total liabilities and equity   21,994,423 25,822,745

 

Consolidated Statement of Changes in Equity
for the year ended 31 March 2018

  Share
capital
£
Share
premium
£
Share-based
payment
reserve
£
Shares to
be issued
reserve
£
Merger
reserve
£
Translation
reserve
£
Retained
deficit
£
Total
£
Non-
Controlling
Interest
£
Total
Equity
£
At 1 April 2016 1,759,038 7,892,330 87,224 2,050,706 4,531,798 159,418 (2,584,054) 13,896,460 - 13,896,460
Issue of shares for cash 1,366,778 5,467,111 - - - - - 6,833,889 - 6,833,889
Share issue costs - (371,527) - - - - - (371,527) - (371,527)
Issue of shares to Collagen Solutions (UK) vendors 160,000 1,840,000 - (2,000,000) - - - - - -
Issue of shares on acquisition of assets 2,175 23,178 - (25,353) - - - - - -
Total transactions with owners in their capacity as owners 1,528,953 6,958,762 - (2,025,353) - - - 6,462,362 - 6,462,362
                     
Share-based compensation - - 50,585 - - - - 50,585 - 50,585
Norgine warrants to be issued - - - 106,581 - - - 106,581 - 106,581
Non-controlling interest share of net assets - - - - - - - - 133,333 133,333
Loss for the year - - - - - - (1,707,265) (1,707,265) (48,413) (1,755,678)
Currency translation difference - - - - - 1,380,258 - 1,380,258 12,237 1,392,495
Loss and total comprehensive loss for the year - - - - - 1,380,258 (1,707,265) (327,007) (36,176) (363,183)
                     
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 31 March 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

 

Consolidated Statement of Cash Flows
for the year ended 31 March 2018

  2018
£
2017
£
Cash flow from operating activities    
Loss before taxation (2,618,939) (1,613,750)
Share-based compensation 68,011 50,585
Depreciation 290,242 234,390
Amortisation 236,704 215,037
Decrease in contingent consideration (793,285) (325,390)
Finance expense 402,814 134,958
Finance income (18,244) (2,841)
Loss on sale of property, plant and equipment 2,360 993
Increase in inventories (19,213) (54,345)
Increase in trade and other receivables (267,157) (212,571)
(Decrease)/increase in trade and other payables (168,747) 190,947
Increase in provisions 631,066 -
Cash used in operations (2,254,388) (1,381,987)
Interest paid (272,606) (7,082)
Taxation paid (118,249) (104,941)
Net cash used in operations (2,645,243) (1,494,010)
Investing activities    
Proceeds from sale of property, plant and equipment - 414
Payments to acquire property, plant and equipment (422,397) (137,324)
Payments to acquire licensed IP and patents, and development costs (796,420) (341,502)
Settlement deferred and contingent consideration (1,049,901) -
Interest received 18,244 2,841
Net cash used in investing activities (2,250,474) (475,571)
Financing activities    
Net proceeds on issue of ordinary shares (4,361) 6,462,362
Net proceeds from Bond issue 1,000,000 1,940,000
Repayment of related party loan (29,862) (10,931)
Net cash generated from/(used in) financing activities 965,777 8,391,431
Net (decrease)/increase in cash and cash equivalents (3,929,940) 6,421,850
Effect of foreign exchange rate changes on the balance of cash held in foreign currencies (25,896) 63,154
Net (decrease)/increase in cash and cash equivalents (3,955,836) 6,485,004
Cash and cash equivalents at the beginning of the financial year 8,978,150 2,493,146
Cash and cash equivalents at the end of the financial year 5,022,314 8,978,150

 

Notes

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

 

Page last updated: 10 July 2018