TIDMCOS
RNS Number : 3357Y
Collagen Solutions PLC
05 December 2017
Collagen Solutions Plc
(the "Company" or the "Group")
Half Yearly Report
Interim Results for the six months ended 30 September 2017
Collagen Solutions plc (AIM: COS), a global supplier, developer
and manufacturer of medical grade collagen and tissue components
for use in regenerative medicine applications including
orthopaedics, dental, wounds, and cardiovascular, announces results
for the six months ended 30 September 2017.
Operational Highlights
-- Completed patient assessments with eight-year follow up data
for our ChondroMimetic(R) cartilage scaffold
-- Increased close rate of commercial pipeline, with eight new
customers / agreements in period (vs two in H1 2016, and nine in
the entirety of FY 2017)
-- Completed relocation and consolidation of U.S. Headquarters
with R&D and Commercial teams co-located in Minneapolis
-- Received import clearances for our biomaterials and achieved
the first customer supply agreement under our Chinese JV
-- Research activities under both Horizon 2020 projects
progressing well, with grant funding totalling approximately EUR1
million over a multi-year period
Financial Highlights
-- Group revenue and other income remained flat at GBP1.86 million (H1 2016: GBP1.89 million)
-- LBITDA of GBP0.96 million (H1 2016: GBP0.71 million)
-- Pre-tax loss of GBP1.38 million (H1 2016: GBP0.98 million)
-- Cash and cash equivalents of GBP6.74 million at 30 September
2017 (31 March 2017: GBP8.98 million)
Jamal Rushdy, Chief Executive Officer of Collagen Solutions,
commented: "We have made good progress in the first half of the
financial year both in advancing and improving our sales pipeline
and increasing our customer base. We also achieved important
operational milestones by opening our new U.S. headquarters in
Minneapolis and tripling our pericardium tissue supply base. Also,
we are pleased that we completed patient assessments for the
ChondroMimetic(R) study, targeting release of data in Q1 2018 and
CE mark submission shortly thereafter, whilst continuing with
partnering discussions. The Board remains confident of the Company
increasing shareholder value over the long term whilst mindful of
revenue timing with some customers over the next period. We are
highly focused in managing through these challenges and are
confident of executing on our sales pipeline, hitting key
milestones in 2018 and the long term prospects for the
Company."
About Collagen Solutions:
Collagen Solutions Plc is a global provider of medical grade
collagen formulations and components for use in regenerative
medicine, medical devices and in-vitro diagnostics and research.
The capabilities of the Company include the provision of native,
soluble and powdered collagen formulations, processed and
semi-processed tissues such as pericardium, bone, and blood
vessels, and expertise in the development and contract manufacture
of collagen components for use as engineered tissue scaffolds and
other medical devices. These products are used in a wide variety of
applications including orthopaedics, cardiovascular, dental,
plastic surgery, wound healing, neurology and urology. Collagen
Solutions' unique offering extends beyond material supply and
contract services through the highly skilled staff who support
customers through the various stages of development and regulatory
approval. For additional information, please visit
www.collagensolutions.com.
Collagen Solutions Plc
David Evans, Chairman
Jamal Rushdy, CEO / Gill Via Walbrook
Black, CFO
Mob: 07721 413 496
Lisa Baderoon, Investor
Relations
lisa.baderoon@collagensolutions.com
Cenkos Securities Plc
(Nominated Adviser and
Broker)
Steve Cox (Corporate Finance) Tel: 0207 397 8900
Stephen Keys
Walbrook PR Ltd Tel: 020 7933 8780 or collagen@walbrookpr.com
Mike Wort Mob: 07900 608 002
Anna Dunphy Mob: 07876 741 001
CHAIRMAN'S STATEMENT
I am pleased to present Collagen Solutions' interim results for
the six-month period ended 30 September 2017. During the period, we
made further progress with our core growth strategy. We continued
to diversify our customer bases, have taken steps to ensure we
increase our high-quality supply base to meet anticipated demand,
and also continued developing the strong R&D pipeline of
finished devices that will create additional value in the coming
years. This continues the momentum for the Group in striving to be
the industry's first choice for regenerative biomaterials.
Overview
During this six-month period, revenue (including other income)
has remained fairly level when compared to the comparable period.
The eight new customers on-boarded during the period will
contribute to revenue over the latter part of this year and
thereafter. Repeat orders from certain customers paused while they
await regulatory clearance and funding. Work completed in securing
additional tissue supply will be recognised once our customer
related project delays are resolved. We expect timing clarity by
the end of Q1 2018.
The overall goal to create significant shareholder value by
setting a target to grow our revenue by 5x within five years
remains on track and we have implemented detailed plans to deliver
on the different elements involved to achieve this growth target.
These include:
- Revenue acceleration of the core business, including
development services and sourcing of new biomaterials, through the
commercial team
- Geographic expansion and increasing the number of channel
partners in selected segments, including distributors for the
research markets - particularly in Asia and Europe
- Commercialisation through partnering of our proprietary
"finished devices" including ChondroMimetic(R), followed by next
stage products for wound and bone healing
As part of our research and development strategy the Group is
participating in two Horizon 2020 grant-funded research programmes,
related to cell-based tissue regeneration techniques and a
collagen-based drug delivery system for the treatment of
Parkinson's disease. Both projects underway will run over the next
two to four years and Collagen Solutions will receive, over the
full term, approximately EUR1 million of European Union
funding.
Results
The Group's results for the six months ended 30 September 2017
are set out in the Consolidated Statement of Comprehensive Income.
Revenue (including other income) for the first six months was
GBP1,858,664 (H1 2016: GBP1,891,001), with new customer revenue in
the period being less than non-recurring revenues from certain
customers awaiting regulatory approval or funding for their
products. Administrative expenses, including research and
development costs, (excluding separately identifiable items) were
GBP1,944,461 (H1 2016: GBP1,341,652) reflecting the increase in
headcount over the comparable period in the areas of R&D,
quality control/assurance, operations and finance and
administration, and also increased R&D spend on the finished
device pipeline. Selling and marketing costs were GBP482,926 (H1
2016: GBP417,143) due to the strengthening of the global commercial
team and the execution of various marketing initiatives. LBITDA for
the first six months was GBP962,935 (H1 2016: GBP712,537), and the
basic and diluted loss per share 0.42p (H1 2016: 0.60p).
Net cash used in operations during the period was GBP1,778,063.
The Group's cash balance at 30 September 2017 was GBP6,739,105 (31
March 2017: GBP8,978,150). Cash consumption during the period
includes a planned GBP1,049,902 payment of deferred consideration,
which related mainly to the 2014 acquisition of NZ based Southern
Lights Biomaterials. A GBP1 million tranche of the Norgine Bond was
also drawn down in the period.
Board and management
We have benefited during the full period from the appointments
of Chris Wattengel, VP Global R&D and Brad Selman, VP Global
Sales & Marketing, having joined us just prior to the start of
the financial year. Chris has been well placed to lead our growing
portfolio of product development projects, having previously
achieved multiple 510k and CE Mark clearances.
Due to family circumstances, Gill Black has decided to step down
as CFO once a replacement is appointed. The recruitment process for
a new CFO is well underway. Gill will continue as Company Secretary
and a member of the finance team going forward to provide a smooth
transition and continuity to the new appointee who will also be
based in Glasgow with the UK finance team. We thank Gill for her
invaluable contributions as a Board member and CFO over the past
three and a half years.
Summary
Our sales pipeline is the strongest it has been in terms of both
average value of opportunities and quality of customers. It also
has a wider geographic spread with a deeper penetration into the
European customer sales channel. While we continue to face a
specific risk with a Korean customer on potential reduced
quantities at contract renewal next fiscal year, the team is making
progress of mitigating this risk by proposing new product
categories and services with the customer, and leveraging our
market reach to help accelerate their sales. Our progress in the
Chinese market continues to show early promise with the first
supply agreement of the JV now closed for supply of our collagen
products. The completion of the ChondroMimetic(R) extension study
in September is expected to provide headline results in Q1 2018 and
we expect to be in a position to provide this data to prospective
commercialisation partners moving into 2018.
We will soon benefit from the closer collaboration of R&D
and commercial teams now under common leadership in Minneapolis and
this has started to show early signs of increased opportunities. In
particular, I am pleased to report that due to a tremendous amount
of focus and effort on the part of our NZ and commercial teams we
have now trebled our validated tissue supply capacity to fulfil the
increased demand for pericardium.
The Directors believe that whilst the pipeline is encouraging,
it will be challenging to meet current market expectations with
regards to revenue growth for the full year which is outlined in
the Chief Executive Report. The management team will continue to be
focused in closing outstanding deals throughout the remainder of
this financial year and mitigating impact from our customers'
delayed orders over the coming months.
Together with the Board, we are committed to the positive future
for Collagen Solutions and its vision to be the industry's first
choice for regenerative biomaterials and thank our shareholders,
staff and partners for their continued support.
David E Evans
Chairman
4 December 2017
CHIEF EXECUTIVE OFFICERS'S STATEMENT
The first six months of the year has delivered on a number of
key milestones. Eight new customer deals (versus nine in total for
the 12 months prior) and the final patient being assessed in our
eight-year extension clinical study of ChondroMimetic(R) being two
significant achievements, whilst the quality and scale of our sales
pipeline are both at their highest levels to date. These are all
key contributors towards realising value from our multiple growth
initiatives.
Revenue performance
Revenue and other income for the first six months was GBP1.86
million, including GBP1.73 million in sales and GBP0.13 million in
other income. Whilst this was broadly in line with the comparable
period the mix of sales had a different composition. Strong growth
was achieved from EMEA, 72% up on the prior period, mainly arising
from an increase in development services which will lead to
commercial supply volumes in the future.
Revenue from North America fell by GBP0.2 million to GBP0.78
million, a decrease of 20%, partly as a result of a customer
project on hold whilst raising funding for the next phase of their
clinical trial and other uneven ordering patterns. We must however
acknowledge some challenges within this region, and we have made
changes in our organisation and approach, specifically in how our
sales team engage and manage new business accounts, that we believe
will prove successful over the next period with several major
opportunities under proposal.
Revenue from Asia was 6% down on the first half of last year to
GBP0.62 million caused by some uneven customer order patterns and
some delays in new customer revenue, and we remain positive with
respect to the pipeline of new customer business in this
region.
Operational achievements
Within Collagen Solutions there are two key parts to our
business model, 'Core Biomaterials' and 'Proprietary Products'.
Core biomaterials
This is the supply, development, manufacturing of collagen
tissue and devices for medical applications, with our clients
providing a recurring revenue throughout their lifetime with these
applications. We are focused on growth from customer product
launches and expansion with incremental sales deriving from new
customers and new geographies.
We are delighted that during the first six months of the year
the team delivered eight new early-stage customer wins. This is a
tremendous achievement compared with nine deals signed in the
entirety of last year. The new business gained is across the full
spectrum of our business offering, ranging from another distributor
in Asia, development projects in NZ and the UK for European
customers, new tissue sourcing and core supply of soluble and
lyophilised collagen to Asia, US and EMEA.
Collagen Solutions also continues to see demand for its
pericardium tissue business grow, and through specific initiatives
to diversify and increase our tissue supply base in Australia and
New Zealand, these activities have allowed us to secure the
additional anticipated demand with existing and new customers and
tripled our capacity.
Proprietary products
Within our proprietary products division a key milestone was
also met in September when we completed patient assessments in our
eight-year extension clinical study of ChondroMimetic(R)
osteochondral scaffold. The resulting data is due to be reported in
Q1 2018, followed by a CE mark submission, whilst now engaging in
partnering discussions in Asia and Europe.
The Company has made a presentation available regarding this
study update on its website at:
http://ir.collagensolutions.com/content/investors/presentations.asp
Innovation, product development and IP
The Company continues to be committed to invest in research and
development and has made continued progress in biomaterials
innovation, both for our core Supply, Development, and
Manufacturing business and also our Proprietary Products
programmes.
A foundation of our value proposition to customers is our
scientific expertise in formulations of collagen and tissue
application for regenerative medicine. We continue to build upon
this expertise through various research programmes including our
two Horizon 2020 grants; the Development of Biomaterial-based
Delivery Systems for Parkinson's disease (BrainMatTrain) and
Multisystem Cell Therapy for Improvement of Urinary Continence
(MUSIC). Together these grants total approximately EUR1 million in
funding through 2021.
Patent protection supports this strategy with Australia-New
Zealand tissue sourcing becoming a more significant part of our
core business and we believe we have a strong patent position
within our current portfolio which includes: pericardium material,
which can be used for heart valve replacement medical devices and
other applications and the filing of a provisional US patent
application covering novel properties of a bone graft substitute
formulation.
Our wound healing project based upon core technology developed
over several years has been presented at multiple conferences. This
technology has the potential to address the limitations of current
split or full-thickness autologous skin grafts, particularly in
large wound sites. Our pre-clinical trials are scheduled to begin
in 2018 with wound market clearance expected to follow in late 2018
/ early 2019.
Relocation complete
We completed consolidation of our new U.S. Headquarters with
R&D and Commercial teams co-located in Minneapolis, resulting
from our relocation of our U.S. R&D facilities from San Jose to
Minneapolis. We are confident of realising some operational cost
savings by merging the two sites but more importantly enhancing our
global R&D and commercial coordination and collaboration with
the leadership of both teams at the same Minneapolis site.
Investor relations
We are committed to increasing our profile within the investor
community and creating greater transparency in how we communicate
to existing and new investors on a global basis. We have attended a
number of key investor symposiums over the period which have been
received well and we will continue to do this over the next period.
Recent presentations can be accessed from our website
http://ir.collagensolutions.com/content/investors/presentations.asp.
We have also recently appointed Lisa Baderoon as our internal
Investor Relations consultant. Lisa Baderoon has over 25 years'
experience within the healthcare arena engaging with companies and
investors and creating effective and proactive investor relations
strategies for clients. We are confident that, with Lisa working
with Collagen Solution's Board and advisors, this will be a key
component to achieving long term shareholder value as we focus on
achieving key milestones in our future development.
Current trading and outlook
The quality and scale of our sales pipeline are both at their
highest levels to date, with several opportunities in the mid-high
six figure range. With a strong operational team now in place we
continue to build a solid global sales pipeline, engaging in
partnering discussions and securing new customer agreements for the
long term.
We have already highlighted in our trading update in October of
being second half weighted with regards to revenue growth and we
are confident that the full year will demonstrate this progress.
Guidance should however be given at this stage in our trading year
that we will likely be behind current market expectations.
There are a few key customer issues that are creating this
shortfall, even while the Company extends its customer base and
grows its pipeline. Predominantly these are based on external
circumstances aligned to our customers own internal forecasts,
development cycles and approvals that have been delayed. In
particular, one of our core tissue customers has very recently
reduced year-end orders due to their own internal delays of launch
plans, when we had expected an increase in volumes on launch this
year and for whom we significantly increased abattoir capacity. We
understand this is an inherent challenge within our highly
regulated medical devices marketplace and we are endeavoring to
assess and put in strategic initiatives to ensure we mitigate as
much as possible from these issues going forward.
A further factor is based on deals aligned to this financial
year moving into the next year as final negotiations take longer
than initially planned, to complete. Whilst frustrating,
particularly with regards to the quality of the live deals we
currently have under negotiation, we are confident in securing many
of these agreements.
There are however a number of further key developments and new
business opportunities over the next period which could have a
significant positive impact on the business longer term.
ChondroMimetic(R)'s resulting data which is on track to be reported
in Q1 2018, is one key milestone and our focus is in securing a
partner or partners within 2018.
In summary, we remain positive on the operational improvements
we have made to date, the strength and quality of our sales
pipeline, and the progress and prospects for our proprietary
devices projects including ChondroMimetic(R). We look forward to
providing the market with updates on progress through 2018.
Jamal Rushdy
Chief Executive Officer
4 December 2017
Collagen Solutions Plc
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 30 September 2017
Unaudited Unaudited Audited
six months six months year ended
ended 30 ended 30 31
September September March 2017
2017 2016
Notes GBP GBP GBP
REVENUE 1,725,605 1,830,662 3,945,787
Cost of sales (628,744) (525,512) (983,632)
------------ ------------ ---------------
Gross profit 1,096,861 1,305,150 2,962,155
Share-based compensation (30,000) (25,002) (50,585)
Administrative
expenses
(excluding separately
identifiable items) (1,944,461) (1,341,652) (3,596,707)
Separately identifiable
items 4 264,532 (294,229) 227,155
------------ ------------ ---------------
Total Administrative
expenses (1,679,929) (1,635,881) (3,369,552)
Selling and marketing
costs (482,926) (417,143) (718,986)
Other income 133,059 60,339 144,762
------------ ------------ ---------------
LOSS BEFORE INTEREST
TAX
DEPRECIATION AND
AMORTISATION (962,935) (712,537) (1,032,206)
Amortisation and
depreciation (233,905) (206,224) (449,427)
Finance income 2,412 2,106 2,841
Finance expense (185,280) (66,658) (134,958)
------------ ------------ ---------------
LOSS BEFORE TAXATION (1,379,708) (983,313) (1,613,750)
Taxation 12,972 (53,326) (141,928)
------------ ------------ ---------------
LOSS FOR THE PERIOD (1,366,736) (1,036,639) (1,755,678)
Attributable to:
Owners of the parent (1,349,920) (1,026,955) (1,707,265)
Non-controlling
interest (16,816) (9,684) (48,413)
------------ ------------ ---------------
(1,366,736) (1,036,639) (1,755,678)
------------ ------------ ---------------
Currency translation
difference (520,647) 1,387,568 1,392,495
------------ ------------ ---------------
Other comprehensive
(loss)/income (520,647) 1,387,568 1,392,495
------------ ------------ ---------------
TOTAL COMPREHENSIVE
(LOSS)/GAIN FOR THE
PERIOD (1,887,383) 350,929 (363,183)
==================== ============ ===============
Attributable to:
Owners of the parent (1,867,610) 351,597 (327,007)
Non-controlling
interest (19,773) (668) (36,176)
------------ ------------ ---------------
(1,887,383) 350,929 (363,183)
------------ ------------ ---------------
Basic and diluted
loss per share
- pence attributed
to owners of the
parent 3 (0.42p) (0.60p) (0.95p)
========================== ======= ============ ============ ===============
Collagen Solutions Plc
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 September 2017
Unaudited Unaudited Audited
30 September 30 September 31 March
2017 2016 2017
ASSETS Notes GBP GBP GBP
Non-current assets
Intangible assets 14,160,038 14,326,420 14,581,893
Property, plant and equipment 1,231,726 1,250,552 1,142,741
------------- ------------- ------------
15,391,764 15,576,972 15,724,634
------------- ------------- ------------
Current assets
Inventories 318,552 410,081 313,395
Trade and other receivables 946,187 851,529 806,566
Cash and cash equivalents 6,739,105 1,657,193 8,978,150
------------- ------------- ------------
8,003,844 2,918,803 10,098,111
------------- ------------
Total assets 23,395,608 18,495,775 25,822,745
============= ============= ============
EQUITY AND LIABILITIES
Equity attributable to equity
holders of the parent company
Share capital 5 3,290,166 1,841,213 3,287,991
Share premium 14,869,909 8,835,508 14,851,092
Share-based payment reserve 167,809 112,226 137,809
Shares to be issued reserve 106,581 1,025,353 131,934
Merger reserve 4,531,798 4,531,798 4,531,798
Translation reserve 1,021,986 1,537,970 1,539,676
Retained deficit (5,641,239) (3,611,009) (4,291,319)
------------- ------------- ------------
Equity attributable to non-equity
holders of the parent company 18,347,010 14,273,059 20,188,981
------------- ------------- ------------
Non-controlling interest
reserve 77,384 132,665 97,157
Total equity 18,424,394 14,405,724 20,286,138
Non-current liabilities
Deferred tax 207,174 235,992 221,847
Other financial liabilities - 2,538,779 1,289,357
Borrowings 6 2,468,327 60,138 1,879,899
------------- ------------- ------------
2,675,501 2,834,909 3,391,103
-------------
Current liabilities
Trade and other payables 899,933 888,721 1,000,086
Income tax liabilities - 15,293 58,530
Other financial liabilities 949,152 325,703 1,060,484
Borrowings 6 446,628 25,425 26,404
------------- ------------- ------------
2,295,713 1,255,142 2,145,504
------------- ------------- ------------
Total liabilities 4,971,214 4,090,051 5,536,607
------------- ------------- ------------
Total liabilities and equity 23,395,608 18,495,775 25,822,745
============= ============= ============
Collagen Solutions Plc
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 30 September 2017
Share Share Share-Based Shares Merger Translation Retained Total Non-Controlling Total
Capital Premium Payment to Reserve Reserve Deficit Interest Equity
Account Reserve be
issued
Reserve
------------ ------------ ------------ -------------- ------------ ------------ -------------- ------------- ---------------- -------------
GBP GBP GBP GBP GBP GBP GBP GBP GBP GBP
As 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
on acquisition
of assets 2,175 23,178 - (25,353) - - - - - -
Issue of
shares
to Collagen
Solutions
(UK) vendors 80,000 920,000 - (1,000,000) - - - - - -
------------ ------------ ------------ -------------- ------------ ------------ -------------- ------------- ---------------- -------------
Total
transactions
with owners
in their
capacity
as owners 82,175 943,178 - (1,025,353) - - - - - -
Share Based
Compensation - - 25,002 - - - - 25,002 - 25,002
Non-controlling
interest
share of
net assets - - - - - - - - 133,333 133,333
Loss for
period - - - - - - (1,026,955) (1,026,955) (9,684) (1,036,639)
Currency
translation
difference - - - - - 1,378,552 - 1,378,552 9,016 1,387,568
----------------- ------------ ------------ ------------ -------------- ------------ ------------ -------------- ------------- ---------------- -------------
Loss and
total
comprehensive
income
for period - - - - - 1,378,552 (1,026,955) 351,597 (668) 350,929
As at 30
September
2016 1,841,213 8,835,508 112,226 1,025,353 4,531,798 1,537,970 (3,611,009) 14,273,059 132,665 14,405,724
------------ ------------ ------------ -------------- ------------ ------------ -------------- ------------- ---------------- -------------
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 80,000 920,000 - (1,000,000) - - - - - -
------------ ------------ ------------ -------------- ------------ ------------ -------------- ------------- ---------------- -------------
Total
transactions
with owners
in their
capacity
as owners 1,446,778 6,015,584 - (1,000,000) - - - 6,462,362 - 6,462,362
Share-based
compensation - - 25,583 - - - - 25,583 - 25,583
Norgine
warrants
to be issued - - - 106,581 - - - 106,581 - 106,581
----------------- ------------ ------------ ------------ -------------- ------------ ------------ -------------- ------------- ---------------- -------------
Loss for
the period - - - - - - (680,310) (680,310) (38,729) (719,039)
Currency
translation
difference - - - - - 1,706 - 1,706 3,221 4,927
----------------- ------------ ------------ ------------ -------------- ------------ ------------ -------------- ------------- ---------------- -------------
Loss and
total
comprehensive
loss for
the period - - - - - 1,706 (680,310) (678,604) (35,508) (714,112)
At 31 March
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 - - 30,000 - - - - 30,000 - 30,000
----------------- ------------ ------------ ------------ -------------- ------------ ------------ -------------- ------------- ---------------- -------------
Loss for
the period - - - - - - (1,349,920) (1,349,920) (16,816) (1,366,736)
Currency
translation
difference - - - - - (517,690) - (517,690) (2,957) (520,647)
----------------- ------------ ------------ ------------ -------------- ------------ ------------ -------------- ------------- ---------------- -------------
Loss and
total
comprehensive
loss for
the period - - - - - (517,690) (1,349,920) (1,867,610) (19,773) (1,887,383)
------------ ------------ ------------ -------------- ------------ ------------ -------------- ------------- ---------------- -------------
At 30 September
2017 3,290,166 14,869,909 167,809 106,581 4,531,798 1,021,986 (5,641,239) 18,347,010 77,384 18,424,394
------------ ------------ ------------ -------------- ------------ ------------ -------------- ------------- ---------------- -------------
Collagen Solutions Plc
CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months ended 30 September 2017
Unaudited Unaudited Audited
six months six months year
ended 30 ended 30 ended 31
September September March
2017 2016 2017
------------- ----------- -----------
GBP GBP GBP
CASH FLOW FROM OPERATING
ACTIVITIES
Loss before taxation (1,379,708) (983,313) (1,613,750)
Share based compensation 30,000 25,002 50,585
Depreciation 116,880 114,126 234,390
Amortisation 117,025 92,098 215,037
(Decrease)/increase in contingent
consideration (392,477) 294,229 (325,390)
Finance expense 185,280 66,658 134,958
Finance income (2,412) (2,106) (2,841)
Loss on sale of property,
plant and equipment - - 993
Increase in inventories (9,169) (136,061) (54,345)
(Increase) in trade and other
receivables (102,282) (140,561) (212,571)
(Decrease)/increase in trade
and other payables (102,790) 22,056 190,947
------------- ----------- -----------
CASH USED IN OPERATIONS (1,539,653) (647,872) (1,381,987)
Interest paid (119,793) (3,513) (7,082)
Taxation paid (118,617) (45,366) (104,941)
------------- ----------- -----------
Net cash used in operations (1,778,063) (696,751) (1,494,010)
------------- ----------- -----------
INVESTING ACTIVITIES
Proceeds from the sale of
property, plant and equipment - - 414
Payments to acquire property,
plant and equipment (203,629) (98,915) (137,324)
Payments to acquire licensed
IP, patents and intangibles (176,661) (70,803) (341,502)
Interest received 2,412 2,106 2,841
Payment of deferred consideration (1,049,902) (25,353) -
Net cash used in investing
activities (1,427,780) (192,965) (475,571)
------------- ----------- -----------
FINANCING ACTIVITES
Repayment of related party
loan (15,145) (11,050) (10,931)
Net proceeds on issue of
ordinary shares (4,361) - 6,462,362
Net proceeds from bond issue 1,000,000 - 1,940,000
----------- ----------- -----------
NET CASH GENERATED FROM/(USED
IN) FINANCING ACTIVITIES 980,494 (11,050) 8,391,431
----------- ----------- -----------
Net (decrease)/increase in
cash and cash equivalents (2,225,349) (900,766) 6,421,850
Effect of foreign exchange
rates on the balance of cash
held in foreign currencies (13,696) 64,813 63,154
----------- ----------- -----------
Net (decrease)/ increase
in cash and cash equivalents (2,239,045) (835,953) 6,485,004
Cash and cash equivalents
at the beginning of the financial
period 8,978,150 2,493,146 2,493,146
----------- ----------- -----------
Cash and cash equivalents
at the end of the financial
period 6,739,105 1,657,193 8,978,150
=========== =========== ===========
Collagen Solutions Plc
NOTES TO THE INTERIM FINANCIAL STATEMENTS
1. BASIS OF PREPARATION
The unaudited interim statement results for the six-month period
ending 30 September 2017 were approved by the Board of Directors on
4 December 2017. The financial information contained in the interim
report does not constitute statutory accounts within the meaning of
section 434 (3) of the Companies Act 2006. The financial
information for the full preceding year is based on the statutory
accounts for the year ended 31 March 2017, upon which the auditors
issued an unqualified opinion and did not contain any statement
under section 498(2) or 498(3) of the Companies Act 2006. The
audited statutory accounts for the period ended 31 March 2017 have
been lodged with the Registrar of Companies.
While the financial information included in this interim report
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.
2. SEGMENTAL REPORTING
Revenue information by geographical location:
Unaudited Unaudited Audited
six months six months year ended
ended 30 ended 30 31 March
September September 2017
2017 2016
------------ ------------ ------------
GBP GBP GBP
Europe, Middle
East & Africa 321,850 187,348 425,269
North America 780,586 979,984 1,924,540
Asia 623,169 663,330 1,595,978
------------ ------------ ------------
1,725,605 1,830,662 3,945,787
------------ ------------ ------------
3. LOSS PER SHARE
The calculation of basic loss per ordinary share for the six
months ended 30 September 2017 is based on losses of GBP1,366,736
and on 324,322,845 ordinary shares being the weighted average
number of shares in issue during the period. The calculation of
basic loss per ordinary share for the six months ended 30 September
2016 is based on losses of GBP1,036,639 and on 172,391,708 ordinary
shares being the weighted average number of shares in issue during
the period. The calculation of basic loss per ordinary share for
the period ended 31 March 2017 is based on losses of GBP1,755,678
and on 185,778,383 ordinary shares being the weighted average
number of shares in issue during the period.
The loss for the period and the weighted average number of
ordinary shares for calculating the diluted loss per share for the
six months ended 30 September 2017, the six months ended 30
September 2016 and the year ended 31 March 2017 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 share
and would therefore not be dilutive under the terms of
International Accounting Standard ("IAS") No 33.
4. SEPARATELY IDENTIFIABLE ITEMS
Separately identifiable items in the six months ended 30
September 2017 of GBP264,532 relate to the release of deferred
contingent consideration provisions on reassessment of the
earn-outs payable for the acquisition of Collagen Solutions LLC and
Collagen Solutions NZ Limited (formerly Southern Lights Ventures
2002 Limited). This release totaled GBP353,557. This has been
offset by GBP89,025 of relocation and reorganisation costs due to
the consolidation of the US R&D facility in San Jose to the
commercial HQ in Minneapolis during the period.
Separately identifiable items in the six months ended 30
September 2016 of GBP294,229 related to unrealised translation
losses on the conversion of deferred contingent consideration
payments due in New Zealand dollars for the acquisition of Collagen
Solutions NZ Limited in December 2014.
Separately identifiable items in the year ended 31 March 2017 of
GBP227,155 related to the release of deferred contingent
consideration provisions on reassessment of the earn-out payable
for the acquisitions of Collagen Solutions LLC and Collagen
Solutions NZ Limited totaling GBP553,063. This has been offset by a
GBP253,027 foreign exchange loss on the translation of the earn out
payable in New Zealand dollars to Sterling for the acquisition of
Collagen Solutions NZ Limited and legal fees of GBP72,881 in
relation to setting up the Norgine Bond facility agreement.
5. SHARE CAPITAL
On 11 September 2017, 217,475 ordinary shares were issued as
part of the consideration for the ChondroMimetic(R) assets.
The following table details the warrants and share options
granted over ordinary shares of the Company at 30 September
2017.
Grant Date Number Warrant/option Date from Expiry Date
Price which exercisable
(pence)
--------------- ------------- --------------- ------------------- --------------
29 March 2 January 28 March
2013 4,050,000 10 2014 2023
--------------- ------------- --------------- ------------------- --------------
31 July 2 January 30 July
2014 388,349 7.88 2016 2024
--------------- ------------- --------------- ------------------- --------------
24 November 1 January 23 November
2014 1,000,000 7.75 2017 2024
--------------- ------------- --------------- ------------------- --------------
1 April 31 March
2015 500,000 9.625 1 April 2018 2025
--------------- ------------- --------------- ------------------- --------------
15 December 15 December 14 December
2015 3,300,000 8.888 2018 2025
--------------- ------------- --------------- ------------------- --------------
14 July 13 July
2016 2,700,000 8.125 14 July 2016 2026
--------------- ------------- --------------- ------------------- --------------
15 February 26 October 14 February
2017 500,000 5.63 2019 2027
--------------- ------------- --------------- ------------------- --------------
7 March 6 March
2017 500,000 5.75 7 March 2020 2027
--------------- ------------- --------------- ------------------- --------------
31 March 30 March
2017 5,075,283 5.911 31 March 2017 2027
--------------- ------------- --------------- ------------------- --------------
12 July 11 July
2017 3,900,000 5.25 12 July 2020 2027
--------------- ------------- --------------- ------------------- --------------
Total 21,913,632
--------------- ------------- --------------- ------------------- --------------
6. BORROWINGS
On 31 July 2017, the Company drew down GBP1,000,000 of Tranche B
of the Bond Subscription Agreement with Norgine Ventures Fund I SCA
SICAR. The term of this tranche is 42 months with principal
repayments commencing in August 2018 in monthly instalments. The
interest rate is 10.1%.
7. INTERIM RESULTS
These results were approved by the Board of Directors on 4
December 2017. Copies of the interim report are available to the
public from the Group's website, www.collagensolutions.com. If you
would like to receive a hard copy of the interim report please
contact the Collagen Solutions Plc offices on +44 (0)141 648 9100
to request a copy.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR OKQDKABDDBBK
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