By Kristy Dorsey
Senior board members at Collagen Solutions, which has put itself up for sale, have taken a 25% pay cut after sales of its animal-based medical tissues fell by more than a third during the year to March.
The AIM-listed company said sales momentum was positive up to the end of February. However, that came to a halt in March with the global spread of Covid-19, with the effects of the outbreak “expected to continue to impact the company for the near future”.
“Although the demand and our order book for collagen supply remain strong, the company faced, and continues to face, challenges from the Covid-19 impact to production, logistics and customer disruption, and capacity constraints and production challenges in the company’s Glasgow plant,” directors said in a trading update.
READ MORE: Collagen Solutions puts itself up for sale
“Together, these factors contributed to a 34% decline in collagen supply sales in the full financial year.”
As a result, annual revenue will come in at £4.01 million, a 3.3% decline on the previous year. With year-end cash balances of £2.1m, the company is “actively pursuing” potential sources of cash such as Covid-19 loan and grant funding.
The non-executive board, along with chief executive Jamal Rushdy, have agreed to a 25% pay cut for up to six months. Other members of the executive team have taken similar cuts.
READ MORE: Scottish biomaterials business flags Covid-19 concerns and writes down £900,000 from contract delay
Collagen Solutions has invested £500,000 to nearly double capacity at its Glasgow site, which remains open along with facilities in the US and New Zealand. However, they are operating on reduced staffing levels.
“In addition, several late-stage agreements that the company reasonably expected to close in March were postponed by customers due to the uncertain business environment or other priorities related to the effects of the pandemic,” directors said.
Collagen Solutions confirmed on Thursday of last week that it was in discussions with “a number of parties” about possibly selling the business. It has given potential buyers until May 15 to lodge indicative offers.
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