10 July 2018

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.

Download

The full results are available to
download in PDF format

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).

 

Collagen Solutions Plc
Jamal Rushdy, CEO
Hilary Spence, CFO
Contact via Walbrook
Cenkos Securities plc (Nominated Adviser and Broker)
Stephen Keys
Steve Cox (Corporate Finance)
Tel: 0207 397 8900
Walbrook PR Ltd Tel: 020 7933 8780 or collagen@walbrookpr.com
Helen Cresswell Mob: 07841 917 679
Anna Dunphy Mob: 07876 741 001