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Collagen Solutions warns on profits after contract delays
Due to a delay in contractual discussions with a new customer, Collagen Solutions warned investors on Wednesday that it had seen a material impact to revenues and would now be unable to meet its current revenue expectations.
The biomaterials developer and manufacturer said the delay, combined with additional previously disclosed customer product delays, will mean that Collagen's revenue for its trading year ended 31 March will fall around 10% to £3.5m.
Collagen also noted that its loss for the year would be "greater than anticipated" due to the lower-than-expected revenue and costs and write-downs associated with the proposed restructuring of its New Zealand operations.
The AIM-quoted firm highlighted that many of its losses would, "in part", be offset by a partial reversal of previously accrued earn-out provisions.
Chief executive Jamal Rushdy said: "While we have experienced protracted sales cycles across several parts of our business, the size and general nature of those contracts under negotiation is promising. Consequently, we continue to take steps to strengthen the commercial team, address the gaps in execution and focus our resources in the areas of greatest opportunity to more efficiently convert opportunities in our core business."
Chairman David Evans said: "It is clearly disappointing to have not hit our revised revenue targets for the year. Whilst the year ahead will be challenging given the previously flagged over-stocking situation with one of our Korean customers we will shortly announce key hires aimed at strengthening our commercial operations. Our backlog of commercial discussions remains healthy and the aim remains to build upon the size and nature of the contracts we secured in the second-half of the year."
Group cash balances at the year-end were approximately £5m, a 44.4% year-on-year slide.
As of 1040 BST, shares had retreated 14.77% to 2.77p.