Shares in Scottish biomaterials manufacturer Collagen Solutions took a battering yesterday after the company warned on profits.
Stock in the Glasgow-headquarted group lost almost a third of its value in early trading exchanges before stabilising.
Investors were spooked after the company – which manufactures medical grade collagen biomaterials for use in research, medical devices and regenerative medicine – said delays in concluding contract discussions with a new customer had “materially impacted” revenues for the closing financial year.
It said the issue and other previously disclosed customer product delays meant turnover in the year to March 31 will be £3.5 million, down from £3.9m in the prior year.
The company said moves to restructure its New Zealand operations would exacerbate the situation and warned the overall loss for the year will be greater than previously anticipated.
“It is clearly disappointing to have not hit our revised revenue targets for the year,” chairman David Evans said.
“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.”
The group said cash balances at year-end were approximately £5m, down from £9m at the same juncture last year.
Chief executive Jamal Rushdy said there were reasons for optimism.
He 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.
“Together with the recently announced measures aimed at rationalising the company’s cost structure, we now aim to be cash flow positive in the final quarter of the current financial year.”
Shares closed down 0.55p at 2.70p.