Material for life
Collagen Solutions plc Annual report and accounts 2015
Collagen Solutions plc Annual report and accounts 2015 Our capabilities include the provision of native, 
soluble and powdered collagen formulations 
and expertise in the development and contract 
manufacture of collagen components for use 
as tissue scaffolds and medical devices.
Visit our website:
www.collagensolutions.com
Enhancing customers’ 
collagen-based 
products for the timely 
benefit of patients. Strategic report Corporate governance Financial statements
01
Collagen Solutions plc
Annual report and accounts 2015
Highlights
Strategic report
01 Highlights
02 At a glance
04 Our markets
06 Chairman’s statement
08 Chief Executive’s statement
12 Our business model
14 Our strategy
15 Strategic report
18 Financial review
Corporate governance
20 Board of directors
22 Corporate governance
24 Directors’ remuneration report
25 Directors’ report
27 Independent auditors’ report
Financial statements
28  C o ns o li d a t e d s t a t e m e n t 
of comprehensive income
29  Consolidated statement of financial position
30 Company statement of financial position
31  Consolidated statement of changes 
in equity
32 Company statement of changes in equity
33 Consolidated statement of cash flows
34 Company statement of cash flows
35 Notes to the financial statements
54 Notice of Annual General Meeting
IBC Officers and professional advisers
Highlights of our year
• Acquired Southern Lights Biomaterials, with numerous benefits such as providing 
a readily available and consistent supply of source tissue, a greater international 
client base and consultancy services
• Signed a contract with Globus Medical Inc. to supply collagen powder 
for the manufacture of bone grafting products
• Our customer Novabone obtained 510k approvals for medical devices 
which incorporate both Collagen Solutions and Southern Lights Biomaterials 
collagen components
• Signed a contract with Desu Medical to supply collagen for the treatment 
of dura/spinal injuries
• Signed an agreement with Kyeron to develop and supply collagen powder 
for the manufacture of a wound management device
• Gained exclusive licence from University College London (UCL) of intellectual 
property around polymetric collagen formulation
• Collaborated with Jellagen to improve the production of medical grade 
collagen derived from jellyfish
 View our business at a glance
 Page 2
 View our markets
 Page 4
Financial highlights
Revenue and other income £
£1,035,500
LBITDA* £
(£689,816)
Cash and cash equivalents £
£3,391,356
24,023
1,035,500
2014 2015
(388,269)
(689,816)
2014 2015
1,491,660
3,391,356
2014 2015
* Before the charge for acquisition costs of £155,131 (2014: £74,769) in relation to the Southern Lights Biomaterials acquisition (2014: Collbio Group acquisition). Strategic report
02
Collagen Solutions plc
Annual report and accounts 2015
How we use collagen
Collagen Solutions provides collagen materials and know-how to add functionality 
and value to customers’ products. Our business model ensures we can service 
multiple markets, containing multiple customers with multiple products.
At a glance
We provide medical grade collagen which 
advances and enhances customers’ products 
for the timely benefit of patients.
Location Function Activity
  View our business model
 Page 12
What collagen is
Collagen is a protein that functions as a building block for tissues, cells and organs. 
It has inherent therapeutic benefits and decades of precedent use in a wide range 
of products from cosmetics to medical devices and tissue scaffolds.
• A ubiquitous biomaterial found in all mammalian skin, tendon etc.
• Collagen structure is generally conserved across the species
• Precedence of use in medical applications for more than 30 years
• Major sources for medical applications are bovine and porcine
• Animal source materials in medicine is well understood  
and highly regulated
New Zealand
Primary
processing
Research and
development
Clean room
manufacturing
USA
Sourcing and
clean room
manufacturing
Formulation and
device development
Sterile supply and
device manufacturing
UK
Source: Campbell, N.A. Biology 1995. 
Éditions du Rénouveau Pedagogique Inc. St Laurent. Strategic report Corporate governance Financial statements
03
Collagen Solutions plc
Annual report and accounts 2015
Development of 
medical devices
Proprietary 
collagen 
products
Development 
services for 
collagen 
formulations
Added value 
collagen supply
Our unique offering extends beyond material supply 
and contract services as we support customers through 
various stages of development and regulatory approval.
Raw tissue/xenografts Soluble Powder Tissue scaffolds
Contract 
manufacturing 
of medical 
devices
 View our markets
 Page 4
Collagen-based biomaterials:
Our services
We are experts in the sourcing and provision of functional medical grade 
collagen-based biomaterials for use in medical devices and regenerative 
medicine – at every stage in the value chain.
Our customers
We service customers with products that are medical grade and meet 
the regulatory requirements of notified bodies and competent authorities 
for use in medical devices, regenerative medicine and in-vitro diagnostics.
Collagen Solutions IP Strategic report
04
Collagen Solutions plc
Annual report and accounts 2015
Market opportunities
Our markets
Collagen-based products
$15bn
*
USA
Research and 
development
Formulation and 
device development
Global biomaterials market
$50bn
*
* Source: Hardman research note (COS website).
The market for collagen products is large, diverse 
and continuing to grow, with the collagen-based 
end user market set to reach $15 billion this year.*
Market focus
We provide collagen products globally to Asia, Europe 
and the USA. We strive to become a globally recognised 
centre of excellence in the chemistry, supply, development 
and manufacture of medical grade collagen biomaterials. 
Addressable markets are large and diverse
Product category Market size CAGR
Biomaterials >$50bn** 15%***
Collagen medical devices >$15bn* >10%*
Tissue engineering >$1bn** 13%****
Cell culture reagents >$200mn* 5%**
* Hardman research note (COS website).
** Global Markets for Media, Sera and Reagents in Biotechnology.
*** www.marketsandmarkets.com/Market-Reports/biomaterials-393.html.
**** Lee et al. Biomaterials Research 2014, 18:11. Strategic report Corporate governance Financial statements
05
Collagen Solutions plc
Annual report and accounts 2015
New Zealand
Primary processing
Sourcing and clean 
room manufacturing
Collagen Solutions UK
Clean room
manufacturing
Sterile supply and device 
manufacturing
Manufacturing capabilities and capacities
Category UK NZ
Collagen products Soluble/Powder Powder/Sheets
Pericardium
Theoretical capacity p.a. 2,400l (soluble) 240kg (powder)
Facility size 9,750 sq ft 4,300 sq ft
Territories served EU, USA EU, USA, Asia Strategic report
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Collagen Solutions plc
Annual report and accounts 2015
Chairman’s statement
  We are pleased to report 
that progress has been made 
in terms of creating long-term 
shareholder value.
 David Evans, Chairman
Summary
• The year has been one of considerable progress, 
culminating with the strategic acquisition of Southern 
Lights Biomaterials, based in New Zealand
• Successful technology transfer of the first product from 
San Jose to GMP contract manufacturing in Glasgow 
during the year
• We have set ourselves a target by 2020 to create 
a biomaterials business with a value of £100 million 
through a combination of organic growth and 
exploitation of licensed IP, as well as through 
appropriate acquisitions
 View our strategic report
 Page 15
I am pleased to present Collagen Solutions’ annual report 
and accounts for the year ended 31 March 2015. 
The year under review has been one of considerable progress 
for the Group as a whole culminating in December with the 
strategic acquisition of Southern Lights Ventures 2002 Limited 
(Southern Lights Biomaterials or SLB).
This acquisition would not have been possible had we not been able to 
bed down the acquisitions of Collbio Limited and Collagen Solutions LLC 
into a cohesive operating unit. That progress gave us the confidence 
that the original strategic plan could be successfully executed.
Southern Lights Biomaterials, based in New Zealand, was established 
in 2003 and has achieved much of what we want to achieve on a 
grander scale: it has a strong customer base generating recurring 
revenues (in Asia and North America), it has a surety of supply of 
high grade collagen from negligible BSE risk sources, and it has IP 
and know-how from which strategic value can be created. Allied to 
that it has in Geoff Bennett experience and wisdom that has both 
complemented the existing Collagen team and strengthened our 
Board overall.
Our objective remains the same: to build a significant global 
biomaterials business by assisting customers in expediting the 
transition of their products from development through to manufacture 
by the provision of cost-effective, functional collagen materials and 
devices, across a range of clinical indications, for the ultimate benefit 
of providing effective and affordable treatment to patients.
Overview
The enlarged Group is still in its early stages of development; 
however, we are pleased to report that progress has been made 
in terms of creating long-term shareholder value.
In particular I would draw your attention to the following:
• Customer announcements of biomaterials supplied to 
Globus Medical Inc., Desu Medical, Kyeron Medical Innovations 
and Novabone Products LLC.
• The management teams in Glasgow, San Jose and New Zealand 
have been integrated and are working effectively as a cohesive unit. Strategic report Corporate governance Financial statements
07
Collagen Solutions plc
Annual report and accounts 2015
• The appointment of Geoff Bennett as Chief Business Officer 
to the Board.
• The successful technology transfer of the first product from San Jose 
to GMP contract manufacturing in Glasgow during the year.
• We have made further advances in our work with one of our partners, 
Jellagen, on the processing of jellyfish into vector-free collagen.
We have set ourselves a target by 2020 to create a biomaterials 
business with a value of £100 million through a combination of 
organic growth and exploitation of licensed IP, as well as through 
appropriate acquisitions, and we look forward to continuing that 
journey, having already made some significant progress.
Results
The Group’s results for the year ended 31 March 2015 are set out 
in the Consolidated Statement of Comprehensive Income. Revenue 
and other income for the year was £1,035,500 (2014: £24,023). 
Administrative expenses (before separately identifiable items) were 
£1,265,918 (2014: £303,647), which includes the costs of operating 
a public company and the related regulatory costs. Selling and 
marketing costs were £218,732 (2014: £71,914). Losses before 
interest, tax, depreciation and amortisation (LBITDA) (before 
separately identifiable costs) were £689,816 (2014: £388,269) 
and the loss per share was 1.17p (2014: 1.10p). Revenue of £562,624 
and profit after tax of £123,571 is attributable to Southern Lights 
Biomaterials since 10 December 2014, the acquisition date.
Net cash used in operations during the year was £1,070,812 
(2014: £524,839), net cash used in investing activities was £2,404,496 
(2014: £1,357,278) and net cash inflow from financing activities 
was £5,363,304 (2014: £3,373,777). The Group’s cash balances 
at 31 March 2015 were £3,391,356 (2014: £1,491,660).
Board and management
On the acquisition of Southern Lights Biomaterials, one of its 
co-founders, Geoff Bennett, was appointed to the Board. John Higgins, 
Chief Scientist, also became a key member of the management team. 
Both have extensive knowledge and contacts within the industry 
and are also significant shareholders in the Company.
We have recently added the considerable experience of Tom Hyland 
to the management team, who joined the Company as Chief Operating 
Officer in April 2015. Tom has over 20 years’ collagen chemistry 
knowledge having worked in senior roles in various global medical 
device and life science organisations.
I am very pleased to see the enlarged team gel and work together 
as a cohesive global unit under Stewart’s leadership. 
Outlook 
The year 2015/16 will see a continued investment in people and 
facilities in our three locations as we continue to expand our sales 
pipeline. We are looking to develop strong collaborative partnerships 
with key players in the regenerative medicine space, and to develop 
our product offering whilst we continue to transfer technologies from 
our core R&D facility in San Jose to our manufacturing unit in Glasgow, 
leading to the expansion of the Glasgow site. We also continue to expand 
our capacity and capabilities at our manufacturing facility in New Zealand.
We are recognised within the industry for the quality of the materials 
that we produce, and our ability to do that within a GMP environment. 
That gives me confidence in our long-term revenue generation, as 
those revenues are effectively embedded into our customers’ products. 
What is more difficult to judge is the exact timing of such revenues 
as our customers take their products through to launch and beyond. 
The setting and management of expectations remains a key risk 
in the public equity markets, where too great a store is placed on 
a single data point without reference to the underlying fundamentals.
We have yet to reach a critical mass of manufactured products and 
we see this beginning to happen in the coming year, whilst as 
always remaining opportunistic to value-adding opportunities 
that will shorten this timescale.
We are looking to continue to leverage opportunities to develop and 
exploit IP, and I will update you later on in the year as we formalise 
such arrangements. It is anticipated that this investment will come 
from our existing resources.
Your Group remains one of the most innovative and exciting that I 
have ever been involved in and I see the ability to secure significant 
value accretion in a relatively low-risk manner by adopting a portfolio 
approach with regard to development for our customers and ensuring 
our revenues are secured long term by taking that from R&D 
through to manufacturing.
Thank you for your support.
David Evans
Non-executive Chairman
10 July 2015
The acquisition of Southern Lights Biomaterials 
in December 2014 is a complementary, logical 
and strategic extension which further de-risks 
the Company’s business model.
Benefits include:
• established global customer base and pipeline;
• secure raw material from BSE free New Zealand;
• IP relating to collagen and pericardium materials; and
• management experienced in Asian markets.
Acquisition of Southern Lights Biomaterials
Southern Lights Facility Strategic report
08
Collagen Solutions plc
Annual report and accounts 2015
Chief Executive’s statement
  With the acquisition of SLB, 
the Group has a biomaterials 
development team which 
is truly world class.
 Dr Stewart White, Chief Executive Officer
Collagen Solutions partners with its customers to expedite their 
products to the market. Through these customers, the Group 
provides products and services in a diverse range of life science 
markets and territories. The Group has facilities in the UK, the 
USA and now also New Zealand, as a result of the acquisition 
of Southern Lights Biomaterials in December 2014. The Group 
remains focused on delivering products of the highest quality 
to our valued, and now expanded, customer base.
Operational trading
Revenue comprises direct sales of existing collagen products, 
development activities and, as a result of the SLB acquisition, 
tissue supply. The Group has won business from US-based 
customers Globus Medical and Novabone, both of which utilise 
Collagen Solutions’ materials in FDA-approved products. This 
model of embedded materials in approved products, and therefore 
embedded long-term revenues, is a theme which is reflected across 
the Group. Last year it was our stated intent to continue to establish 
and increase these long-term relationships. I believe we have 
demonstrated this in the various new customer announcements.
In order to provide our functional materials, the Group must 
continually invest in its manufacturing and quality systems to ensure 
compliance with ever increasing requirements from regulatory bodies. 
As a result of the SLB acquisition, the Group now has two facilities 
which hold ISO 13485 and 22442 certifications. This provides the 
Group with added mitigation around business continuity. We now 
have another accredited standalone facility with experienced staff 
Summary
• Collagen Solutions plc’s acquisition of Southern 
Lights Biomaterials has been a transformational event 
for the Group
• The Group’s gross profit margin of 78% reflects 
the value our customers place on our products, 
services and support
• Our location in New Zealand and our established 
business activities mean that the Group now has 
a wholly additive reach into the Asian market
• Collagen Solutions is now recognised as 
a significant global player in the biomaterials field
 View our financial review
 Page 18 Strategic report Corporate governance Financial statements
09
Collagen Solutions plc
Annual report and accounts 2015
who understand the requirements of manufacturing and quality 
management systems in order to successfully operate in the 
medical device industry. 
Research and development activities within the Group continue 
to be core to our ability to innovate and expedite solutions for our 
customers and have benefited from ongoing investment in the 
current year. To assist our R&D team, I am pleased to report that 
Professor Robert Brown of University College London was appointed 
to the Group as Scientific Adviser, joining our Scientific Advisory 
Board. Similarly, we have been fortunate that Tom Hyland, our new 
Chief Operating Officer, has also joined the Scientific Advisory 
Board. Robert and Tom come with a vast amount of experience 
in collagen-based tissue regeneration, collagen chemistry 
and GMP manufacturing. 
With the acquisition of SLB, the Group has a biomaterials 
development team which is truly world class and positions us very 
well to compete in a global industry where customers have diverse 
clinical application requirements across a wide range of life science 
markets and territories. Our product range continues to expand 
to serve these markets. The Group’s gross profit margin of 78% 
reflects the value our customers place on our products, services 
and support.
During the current year the Group has continued to refine its IP 
strategy. The Group has licensed technology from University 
College London which it believes will be novel in the provision of 
added value polymeric collagen formulations in the regenerative 
medicine space.
Collagen Solutions’ willingness to collaborate on exciting development 
projects continued in the period with its participation in the SMART 
funding obtained by its strategic partner Jellagen, of which the 
Group holds 10.5% interest. 
Acquisition of Southern Lights Biomaterials
On 10 December 2014 Collagen Solutions plc acquired the 
New Zealand-based Southern Lights Biomaterials by issuing equity 
worth £1.95 million and cash of £2.46 million and providing contingent 
consideration of NZ$4 million relating to performance conditions. 
This acquisition is a transformational event for the Group and has 
proven to be wholly complementary and additive to the existing 
capabilities within the Group. There are many reasons why 
the SLB acquisition was attractive to the Board:
• biomaterials company with an established reputation;
• established customer base, with a significant proportion in Asia; 
• safe and established supply chain from BSE free New Zealand;
• capacity and capability around tissue supply;
• experienced management: Geoff Bennett joined the Group 
Board as Chief Business Officer (CBO); and
• complementary product range now including tendon as well 
as existing hide-sourced materials.
This acquisition has built revenue and offers the Group the ability 
to implement its previously stated strategic aim to combine and 
expand both development and manufacturing capabilities to 
ensure the Group becomes a globally recognised company in 
the chemistry, supply, development and manufacture of medical 
grade collagen biomaterials. 
Markets served
The acquisition of SLB into the newly expanded Group means that 
there are significant benefits already being realised through simple 
activities of upselling a wider product range to a much expanded 
customer base. Our location in New Zealand and established 
business activities mean that the Group now has reach into the 
Asian market. In addition the added manufacturing capacity allows 
the business to compete on a volume basis and still retain its 
operating margins.
We have medical grade products which can be utilised 
in the markets for: 
• medical devices – our core business;
• in-vitro reagents/diagnostics – where collagen is used as a 
reagent there is less regulatory approval required compared 
with medical devices. We expect discussions held in the period 
to provide access to this market; and
• regenerative medicine products – we believe we can add value to 
existing therapeutic agents by combining with a biomaterial solution 
which can add efficacy, viability and other benefits of applications, 
such as ease of use for healthcare professionals. Although at an 
early stage, the Board is excited by the prospects for the Group 
to add value to such disruptive treatments. 
By serving a range of market territories and customers with clinical 
indications, the diverse, de-risked nature of our business model 
is clear. 
Global business development
The Group now has three main locations addressing customer 
needs around the world:
• North America – San Jose, USA.
• Europe – Glasgow, UK.
• Asia – Marton, New Zealand. Strategic report
10
Collagen Solutions plc
Annual report and accounts 2015
Chief Executive’s statement continued
Global business development continued
These local capabilities and reach are important, providing 
convenience and surety to customers. Within the current period 
the business development team has integrated well in order to serve 
our global market and has been actively cross-selling the Group’s 
products in their respective regions and market sectors. I am pleased 
to say that Geoff Bennett, our Chief Business Officer, is now part of 
this team. Geoff’s previous experience as a Chartered Accountant, 
public company CFO and more recently serial entrepreneur and MD 
of SLB will ensure our business processes are capable of meeting 
this global demand. 
Strategic risks and mitigation 
The Group’s main activity relies on established relationships with 
a variety of leading suppliers of raw biomaterials. It is possible that 
some issues may arise, such as a disease outbreak, which could 
damage our supply chain.
Similarly, many of our customers have products on the market, 
whilst others require ongoing development support, regulatory 
approval or further investment to reach commercial volumes. It is 
possible that some customers’ products may not reach the market 
for reasons unrelated to Collagen Solutions’ activities.
It is our view that such risks have been mitigated as much as is 
possible by building on our robust strategy of maintaining a diverse 
and de-risked business model. That is, the Group can provide even 
greater level of surety around its supply chain, with control of source 
material from New Zealand. Coupled with its existing supply chain, 
the Group is in an extremely competitive position which we believe 
has no peer comparison.
Post-balance sheet events
• Retained ISO 13485/ISO 22442 certifications for our manufacturing 
facility in Glasgow following external audit during June 2015.
• Innovate UK Grant Award with the Electrospinning Company Limited 
to develop novel biosynthetic substance for internal wound healing.
• Tom Hyland joined as Chief Operating Officer for the Group 
(non-Board). Tom brings world class expertise in collagen chemistry, 
medical device manufacture and significant general management 
experience from a range of large life science companies.
• The Group’s subsidiary Southern Lights Biomaterials received 
approval from the US patent office on its novel process involving 
pericardium for usage in the heart valve replacement market. 
• Expansion into an additional 3,250 sq ft space at our 
Glasgow facility.
Outlook/current trading
The coming period will see the focus of the management team 
towards converting the cross-selling opportunities which have 
already been identified as a result of the acquisition of SLB. The 
Group will continue to actively sell its global manufacturing capacity, 
which now includes significant volume potential in our New Zealand 
facility. It is our aim that a greater amount of products will be used 
in the reagent and diagnostics space in addition to the fascinating 
advances we are observing in our activities with regenerative 
medicine companies.
With a strong internal IP base the Group will also advance 
discussions with suitable strategic partners in order to realise 
the maximum value for its IP and, therefore, shareholder return.
I share the Board’s view that the opportunities for the Group 
are significant and that Collagen Solutions is now recognised 
as a significant global player in the biomaterials field.
Dr Stewart White
Chief Executive Officer
10 July 2015 Strategic report Corporate governance Financial statements
11
Collagen Solutions plc
Annual report and accounts 2015
Customers, products, territories
Customer
(not disclosed)
Brain stent
Bone graft
Wound care
Dental
Turkey
USA
Netherlands
South Korea
Collagen Solutions has licensed breakthrough technology 
from Professor Brown’s laboratories that produces 
stronger living collagen-based tissues. He commented: 
“Collagen materials have a pivotal role in regenerative 
medicine – the Company is well positioned to participate 
in this area, by developing and enhancing such therapies.”
Find out more online: 
www.ucl.ac.uk/cmr/staffprofiles/RABRO31
Professor Robert Brown, 
a member of Collagen Solutions’ 
Scientific Advisory Board
Our facilities and equipment Strategic report
12
Collagen Solutions plc
Annual report and accounts 2015
Our business model
The Group’s competitive advantages are based on both the ability 
to source quality raw materials from accredited sources and to develop 
novel and relevant formulations from different types of materials 
to meet customer needs. 
We can also assist customers through the regulatory approval 
process for their medical devices, and then offer the GMP facilities 
for large scale production, thereby taking their products to market. 
We are uniquely placed to add value throughout the entire  
supply chain.
We add value through proprietary know-how 
and experience – controlling cost and decreasing 
time to commercialisation.
Manufacture
Research & 
development
Supply of
platform
products
Time to Revenue
Embedded Value
Research & 
Diagnostics
Medical
Devices
Regenerative
Medicine
Multiple customers
Multiple sectors
Multiple products Strategic report Corporate governance Financial statements
13
Collagen Solutions plc
Annual report and accounts 2015
Supply of platform products
Understanding regulatory requirements and our customers’ 
functional needs is inherent in our platform approach. Wherever 
possible our products have been developed to work towards a 
process that will satisfy notified bodies and authorities and have 
a specification which allows for the widest range of applications. 
For example our soluble collagen product can be used as a cell 
culture reagent or a medical device component, or can be applied 
in the manufacture of tissue scaffolds.
This approach allows us to realise additional value for the same 
historic investment, and technical know-how, across our products, 
whilst providing the benefit of ready-to-use material to a wider 
number of customers.
Manufacturing
It is pleasing to report that both our facilities in New Zealand and 
the UK have retained their ISO 13485/ISO 22442 notified body 
certifications. These certifications are essential and require ongoing 
vigilance and commitment from our quality team to ensure our 
facilities are audit ready, and they are a requirement of both 
customers and regulatory authorities alike.
The addition of Southern Lights Biomaterials’ manufacturing facility, 
including substantial freeze-drying capacity, means that the Group’s 
wide offering of materials now has sufficient capacity to cope with 
larger volume opportunities. In summary, both UK and New Zealand 
facilities have capacity, which has been a focus for the commercial 
team within the period.
Research and development
Our commitment to invest in R&D continued in the current period. 
The basis of these efforts comprised:
• developing our own new formulations in response 
to “market pull”;
• assisting customers such as Kyeron and Jellagen 
with specific requirements; 
• supporting technology transfer from San Jose to Glasgow; and
• assessing internal IP and external opportunities.
The R&D team now includes our colleagues from Southern Lights 
Biomaterials, providing the Company with a truly world class 
knowledge base around biomaterials and medical device development. 
The many benefits of having an experienced global team means that 
we have additional capacity, capabilities and experience in order 
for projects and products to move to completion.
  View our strategy
  Page 14
  View our KPIs
  Page 15
• Strong management team with 50+ years combined 
experience in collagen production, development 
and exploitation.
• International reach with relationships with key 
global players.
• Opportunities to leverage IP value internally  
and externally.
• Capabilities in place to exploit opportunities 
in regenerative medicine.
• De-risked, diversified and evolving business model.
Why invest in Collagen Solutions? Strategic report
14
Collagen Solutions plc
Annual report and accounts 2015
Our strategy
Our strategy is to provide functional collagen raw materials, 
device development and contract manufacturing to our global 
customer base.
Distinctive competencies Markets Operations
Research, development 
and contract manufacturing
Diagnostic reagents, medical 
devices, regenerative medicine
Development of collagen 
formulations and medical 
devices and the contract 
manufacturing thereof
Strategic objectives
• Utilise capacity for new products
• Extend range of manufacturing activities 
and necessary certification
• Increase number of products through 
our facilities
• Invest in regenerative medicine
• Distribution partnerships 
for collagen products
• Facilitate products’ applications in a wider 
range of territories and finished products
• Increase process and product activities 
in manufacturing
• Register know-how and IP
• Licence know-how and/or medical device 
capability to blue chip companies
Focus for future
• Increase product range
• Support other collagen companies,  
e.g. Jellagen
• Expand capabilities through partnering
• Retain and expand regulatory 
certifications
• Increase testimony from key opinion leaders 
(KOLs)/companies using our materials 
• Association with preferred partners 
for specific device products
• Demonstrate increased traction 
in regenerative medicine
• Use collagen knowledge to increase 
our academic collaborations
• Register device specific IP
• Progress already licensed IP
Create shareholder value
Our aim of achieving a valuation of £100 million by 2020 remains 
our focus. Management believes this will occur as a result of our 
impressive existing customer base, embedded collagen materials 
which are already within approved devices on the market, and 
the diverse and de-risked nature of our business model.
Become a significant global player
We would suggest this goal has been achieved in the current 
period. That is, with facilities on three continents Collagen Solutions 
is already a global presence in the biomaterials field. We also supply 
customers in North America, Europe and Asia – this shows the quality 
of our products and our willingness to support customers in different 
territories or with different regulatory requirements across a wide 
range of products.
Monetise embedded value, harvest historic 
and current investment
We believe the IP and know-how that is held within the Company 
is significant and potentially has high value. This proprietary knowledge 
is a combination of both the formulations we provide and we also have 
the ability to utilise these same formulations in particular forms of 
finished devices and therapeutic applications. With our impressive 
global customer base and network, we believe we could have 
ready-made routes to realise maximum value for shareholders.
Create organic growth
Our activities around increasing straightforward commercial supply 
of existing products and our global capacity continues. In addition 
to realising new opportunities, the acquisition of Southern Lights 
Biomaterials has significantly expanded the Group’s customer base. 
The commercial team has been working towards cross-selling 
all products into this extended and impressive customer base.
Our key objectives Strategic report Corporate governance Financial statements
15
Collagen Solutions plc
Annual report and accounts 2015
Strategic report
Collagen Solutions strives to become a globally recognised centre 
of excellence in the chemistry, supply, development and manufacture 
of medical grade collagen biomaterials.
Our strategy
Our mission is to increase the profitability of our business by 
growing revenue through continual improvement and development 
of our product offering, innovation and harnessing IP. Our aim 
is to develop sales channels around the world, while investing 
in our manufacturing facilities to enable the Group to meet that 
sales growth. Our progress to date is noted in both the Chairman’s 
and the Chief Executive’s Statements.
Our markets
Our extensive technical expertise in the area of collagen formulations 
and our GMP capacity and capabilities make us very well placed 
to meet the needs of customers in the reagent, medical device 
and regenerative medicine markets in all geographical areas.
Key performance indicators
Financial KPIs
The directors consider the principal financial performance indicators 
of the Group to be:
• revenue and revenue growth;
• gross profit;
• gross profit margin;
• LBITDA;
• EPS; and
• cash and cash equivalents.
The directors consider the principal non-financial performance 
indicators to be:
• development of collagen product portfolio;
• collaboration with strategic partners to develop embedded value 
products and IP; and
• maintaining GMP processes and building capability and capacity.
Revenue and other income £
£1,035,500
24,023
1,035,500
2014 2015
LBITDA* £
(£689,816)
(388,269)
(689,816)
2014 2015
Gross profit £
£758,926
11,939
758,926
2014 2015
EPS p
(1.17p)
(1.10)
(1.17)
2014 2015
Gross profit margin %
78.0%
49.7
78.0
2014 2015
Cash and cash equivalents £
£3,391,356
1,491,660
3,391,356
2014 2015
* Before the charge for acquisition costs of £155,131 (2014: £74,769) in relation to the Southern Lights Biomaterials acquisition (2014: Collbio Group acquisition). Strategic report
16
Collagen Solutions plc
Annual report and accounts 2015
Strategic report continued
Our products
Our standard product range includes raw tissue supply, 
various concentrations of soluble and acid soluble collagen, 
acid swollen gels, freeze-dried powders, collagen sheets 
and fibrous collagen. The Group manufactures the FDA-cleared 
product Excellagen, a collagen gel used in wound care and 
cell therapy fields, in addition to other collagen components 
for approved medical devices for use in bone void fillers and 
in sponges for cell therapy skin substitute applications. Future 
plans include commercialising additional products by harnessing 
the IP from the licence agreement with UCL for wider patient 
benefits and development of formulations from novel sources 
of raw materials, such as jellyfish.
Competitive advantages
The Group’s competitive advantages are based on both the 
ability to source quality raw materials from accredited sources, 
and to develop novel and relevant formulations from different 
types of materials to meet customer needs. We can also assist 
customers through the regulatory approval process for their medical 
devices, and then offer the GMP facilities for large scale production, 
thereby taking their products to market. We are uniquely placed 
to add value throughout the entire supply chain, having surety 
of supply through high grade collagen sourcing from negligible 
BSE risk sources.
Review of the business
The Group’s results are set out in the Consolidated Statement 
of Comprehensive Income on page 28 and are explained within 
the Financial Review on pages 18 and 19. On 10 December 2014, 
the Group announced the acquisition of the entire issued share 
capital of Southern Lights Ventures 2002 Limited, t/a Southern 
Lights Biomaterials. A full review of the Group’s activities and future 
developments is incorporated into the Chairman’s and the 
Chief Executive’s statements.
Corporate social responsibility 
The Group embraces working in a way that delivers financial stewardship 
and socially responsible and environmentally sustainable business 
performance and ensures adherence to the law and conducts its 
affairs to the highest ethical standards. We expect our customers 
and suppliers to embrace these same principles. The Group values 
teamwork, taking personal responsibility, positive attitudes and working 
hard to deliver positive outcomes for all our stakeholders – customers, 
staff and shareholders alike. We encourage the personal learning, 
growth and development of our team and voluntarily try to eliminate 
practices that harm the environment.
Employee involvement 
The Group recognises and seeks to encourage the involvement 
of its employees, with the aim being the recruitment, motivation 
and retention of quality employees throughout the Group. During 
the year a share option scheme operated within the Enterprise 
Management Incentive Scheme was introduced.
The Group’s employment policies, including the commitment 
to equal opportunity, are designed to attract, retain and motivate 
employees regardless of sex, race, religion or disability. Equality 
of treatment includes full and fair assessment of applications 
and extends to training and continuing career development.
The Group is committed to ensuring and communicating the 
requirements for a safe and healthy working environment for 
all employees, consistent with health and safety legislation and, 
wherever practicable, gives full consideration to applications 
for employment from disabled people.
On behalf of the Board 
Gill Black
Chief Financial Officer 
10 July 2015 Strategic report Corporate governance Financial statements
17
Collagen Solutions plc
Annual report and accounts 2015
Principal risks and uncertainties
The principal risks and uncertainties that could have an adverse impact on the performance of the Group are detailed below:
Risk and impact Mitigating controls
Sales pipeline
The impact of our customers’ stage of regulatory approval of their medical 
device or product is critical to Collagen Solutions’ revenue streams. Our collagen 
component or formulation may have been developed, embedded and listed 
as part of a customer’s regulatory admission, but commercial revenues may 
be delayed until such approval is obtained in the relevant geographical 
market from the relevant agencies.
Customers in early stage development may require to secure external 
funding before committing to volume manufacturing and this can delay 
revenues for the Group.
The Group continues to focus on building and diversifying the customer 
pipeline and has strategies in place to:
• increase production scheduling flexibility;
• accelerate revenues by use of minimum order quantities and non-refundable 
fees for engineering and set-up costs for a specific GMP process; and
• develop long-term collaborative and development partnerships with our 
customers, resulting in our products becoming embedded in their end 
devices and therapies.
Growth
The ability of the Group to manage growth effectively, and implement 
its strategy, requires careful planning and management control systems. 
The pace of change required could place a significant strain on the Group’s 
management, operational, financial and personnel resources and could have 
a detrimental impact on the trading performance of the Group. 
The Group has an experienced management team and a clear strategy 
for any required integration and management of business growth.
Competition
Many of the Group’s competitors have access to greater funds; however, 
the directors believe that the Group can compete strongly and that there are 
sufficient barriers to entry to other competitors entering the same markets. 
The Group’s investment in marketing and business development will support 
sales in territories across the world.
Technology
Technologies in the medical device market continue to evolve and there 
is a risk the Group’s offering may become outdated as improvements 
in technology are made. 
The Board has confidence in the Group’s research and development 
capabilities to respond to such eventualities. The Group relies on information 
technology systems to run the business, and its continued commitment to 
investment in this area will ensure robust, effective management information 
systems to allow management to make key financial decisions affecting 
the business.
Suppliers
The Group has a limited number of suppliers for some of our raw materials 
which we may not be able to find replacements for, or immediately transition 
to alternative suppliers. These materials are used in validated processes, 
and substitution of replacement raw materials may have a revenue impact 
as a result of potential delays in validation and approval.
The Group’s materials are sourced from BSE free territories, with suppliers 
which have the necessary quality systems, certifications and export health 
attestations in place to ensure reduced risk. Any change to the status 
in BSE free status of our suppliers could impact our supply chain 
and ultimately revenues.
Treasury policy and financial risk
The Group maintains a centralised treasury function, which operates 
under policies and guidelines approved by the Board. These cover funding, 
management of foreign exchange exposure and interest rate risk. 
The purpose is to manage the financial risks of the business and 
to secure the most cost-effective funding.
The Group’s principal financial assets are cash and bank balances, which are 
exposed to varying degrees to the following risks: liquidity risk, credit risk and 
foreign currency risk. The policy for managing these risks is outlined below:
• Liquidity risk – the Group maintains proactive relationships with its banks 
and investors and its working capital requirements are anticipated via the 
forecasting and budgetary process.
• Credit risk – the Group is mainly exposed to credit risk from its trade and 
other receivables, short-term deposits and bank balances. An allowance 
for impairment is made when there is an identified loss event which, based 
on previous experience, is evidence of a reduction in the recoverability of the 
cash flows. Cash is held on deposit with highly reputable financial institutions. 
Management considers the above measures to control the credit risk exposure.
• Foreign currency risk – the Group has overseas revenue in US dollars, 
with minimal income in NZ dollars and euros, and is exposed to minimal 
trading foreign currency risk. The functional currency of the Company 
is sterling. Revenues in US dollars are utilised in funding US operations 
and forward exchange rate contracts may be used to hedge any such 
exposure. The Group seeks to negotiate contracts in the functional 
currency where possible.  Strategic report
18
Collagen Solutions plc
Annual report and accounts 2015
Financial review
  The Group has made investment 
in its resources during the year 
in order to meet the anticipated 
ongoing demand for its products 
and services.
 Gill Black, Chief Financial Officer
Group results
Group revenue and other income was £1,035,500 (2014: £24,023) 
for the year ended 31 March 2015. During the year the Group 
continued to establish its presence in the market for the development 
and production of collagen formulations. 
LBITDA (before separately identifiable items of £155,131 (2014: £74,769)) 
for the period was £689,816 (2014: £388,269) and the loss before tax 
(before separately identifiable items) was £947,246 (2014: £405,229). 
Separately identifiable items comprise acquisition and integration 
costs in relation to the Southern Lights Biomaterials acquisition 
(2014: Collbio Group acquisition).
Cash and borrowings
As at 31 March 2015, the Group had cash balances of £3.39 million 
(2014: £1.49 million) and financial liabilities of £4.43 million 
(2014: £2.41 million) in relation to the contingent consideration. 
The Consolidated Statement of Cash Flows shows the movements in 
funds during the year, including the placing of ordinary shares and 
cash flows relating to the acquisition of Southern Lights Biomaterials.
Overheads
The Group has made investment in its resources during the year 
in order to meet the anticipated ongoing demand for its products 
and services.
Financing
In December 2014, the Company was successful in an over-subscribed 
equity placing of £5.42 million, net of expenses, which allowed the 
financing of the acquisition of Southern Lights Biomaterials and also 
raised additional working capital for the Group.
Summary
• Group revenue and other income was £1,035,500 
(2014: £24,023) for the year ended 31 March 2015
• As at 31 March 2015, the Group had cash balances 
of £3.39 million (2014: £1.49 million)
• In December 2014, the Company was successful 
in an over-subscribed equity placing of £5.42 million, 
net of expenses
2015 Geographical sales £
£972,846
 Europe 141,355
 USA and Canada 545,659
 Asia 285,832 Strategic report Corporate governance Financial statements
19
Collagen Solutions plc
Annual report and accounts 2015
Business risks
Risk management is an important element of the management process 
throughout the Group, and internal controls have been developed 
to address the main business risks, which are considered to be:
Strategic
The Group operates in a global market and is dependent on enhancing 
revenues by leveraging existing customers, products and facilities in 
order to provide a comprehensive offering of a broad range of collagen 
raw materials, development services and contract manufacturing 
for collagen-based medical devices. One of the risks to the business 
is that of timing of customer projects, where, as a component supplier, 
we rely on customer demand, which is not within our control, so in 
order to mitigate this risk we constantly strive to have a diversified 
customer base with multiple products.
Key performance indicators (KPIs)
The Group monitors the following KPIs to ensure the business performs 
in line with expectations and that issues are identified promptly 
and efficiency measures can be quantified:
• turnover growth;
• gross margin %;
• operating costs;
• earnings per share; and
• cash and cash equivalents.
Operational
The Group’s most important assets are its employees, its customers 
and the development of know-how and intellectual property rights (IPR):
• Employees are recruited carefully to address the needs 
of the business. 
• Appropriate training is provided to support the development 
of employees. 
• The needs of the Group’s customers are addressed to ensure 
that they are appropriate.
• The Group has controls in place to safeguard the IPR 
that it develops. 
• The Group also has established procedures to maintain 
its appropriate accreditations.
• The Group recognises the importance of its IT infrastructure 
and back office systems to deliver its services. 
• The Group has the appropriate controls in place to secure 
its data and maximise the operational efficiency of its systems. 
Controls exist to ensure information is made available to enable 
management to monitor the performance of the Group.
The controls address the performance of the Group based on 
monthly management accounts, which include details of sales, 
gross margin and costs. 
Treasury policies and financial risk
The Group maintains a treasury function, which operates under 
policies and guidelines approved by the Board. These cover funding, 
management of foreign exchange exposure and interest rate risk. 
The purpose is to manage the financial risks of the business 
effectively and to secure the most cost-effective funding. 
Contingent consideration
At the date of acquisition the Group made a provision of £1.74 million 
for contingent consideration payable resulting from the acquisition 
of Southern Lights Biomaterials. This provision was made from an 
estimate of the maximum to be paid under the ‘earn-out conditions’. 
The directors believe that the provision represents the best estimate 
of the eventual outcome of the ‘earn-out’. Any future revision to the 
consideration will be charged/credited to the income statement in 
accordance with IFRS 3 (revised) in future periods. This is in addition 
to the provision made in last year’s accounts of £2.4 million in relation 
to the contingent consideration arising from the acquisition of the 
Collbio Group. Total contingent consideration now provided in 
the accounts at 31 March 2015 is £4.32 million with unwinding 
of discount being charged within finance costs and charged 
to the Consolidated Statement of Comprehensive Income.
Gill Black
Chief Financial Officer 
10 July 2015 Corporate governance
20
Collagen Solutions plc
Annual report and accounts 2015
Board of directors
Stewart White
Chief Executive Officer 
Dr Stewart White was CEO of Collbio 
and has recent and direct board experience 
of an AIM quoted company. Stewart has 
international experience in operations, 
business and product development, 
and Good Manufacturing Practices (GMP) 
compliant manufacturing of collagen 
medical devices, advanced biologics 
and Active Pharmaceutical Ingredients 
in both small to medium enterprises as 
well as global pharmaceutical companies. 
Stewart is a graduate of the University 
of Strathclyde and holds a first-class 
degree in Applied Microbiology, a PhD 
in Fermentation Technology and 
Bioprocessing and an MBA.
Gill Black
Chief Financial Officer 
and Company Secretary
Gill Black brings with her extensive 
board-level financial experience to the Group, 
having been Financial Director and Company 
Secretary of A&E Russell Ltd, and was 
instrumental in its expansion before taking it 
through the subsequent acquisition by Bunzl 
plc in 2008. After spending two years as 
Head of Finance at AKP Scotland Ltd, she 
became Head of Finance and Company 
Secretary of GVA James Barr Ltd, a privately 
owned property consultancy business which 
merged in 2013 with top five UK independent 
GVA Grimley. Previously, Gill was a Senior 
Manager at KPMG, Glasgow, where she led 
a team advising many high growth businesses.
Gill holds an MA in Accountancy and 
Economics from the University of Dundee 
and is a Chartered Accountant and 
ICAS member.
David Evans R 
Non-executive Chairman 
David has a proven track record in 
acquiring, integrating and growing businesses 
in the diagnostic area and in value creation, 
exemplified by his role at BBI Holdings Plc, 
where he grew the company through acquisition 
and organic growth from a value of £4 million 
to a value of £84 million in 2007, when BBI 
was sold to Inverness Medical Innovations 
Inc. He was Chairman of DxS Limited, which 
was sold in 2009 for £82 million. David was 
also Chairman of Sirigen Group Limited, 
an early-stage medical technology company 
that was sold in 2012 to Becton, Dickinson 
and Company, a global medical technology 
company. David was previously Chairman 
of Immunodiagnostics Systems Holdings Plc 
and Epistem Holdings Plc.
David is currently Chairman of EKF Diagnostics 
Holdings Plc, Scancell Holdings Plc, 
Omega Diagnostics Group Plc, Venn Life 
Sciences Holdings Plc, OptiBiotix Health Plc 
and Premaitha Health plc.
The Board appreciates the value of good corporate 
governance and is responsible to shareholders 
for the proper management of the Group.
N Strategic report Corporate governance Financial statements
21
Collagen Solutions plc
Annual report and accounts 2015
Geoff Bennett
Chief Business Officer 
Geoff co-founded Southern Lights 
Biomaterials in 2003 and, as CEO, was 
responsible for guiding the company 
to a dominant position in biomaterials 
and regenerative medicine. He has 
financial and operational experience 
including previously holding the chief 
financial role at three publicly traded 
Canadian companies (Pelorus Navigation 
Systems Inc., Circle Energy Inc. and 
Solid State Geophysical Inc.) as well 
as experience of early stage enterprises 
specialising in technology commercialisation, 
such as InnerVision Medical Technologies 
Inc., where he held the position of Chief 
Operating Officer. Geoff holds a Bachelor 
of Commerce degree from the University 
of Alberta and is a member of the Canadian 
Institute of Chartered Accountants.
Kevin Wilson R A 
Non-executive Director 
Dr Kevin Wilson was Corporate Finance 
Director and Head of the Manchester office 
for Arbuthnot Securities. Kevin has spent 
over 25 years as a securities analyst and 
corporate finance adviser in both stockbroking 
and investment banking, providing advice 
to a wide range of smaller public and private 
companies. He is a visiting fellow at Lancaster 
and Manchester Business Schools and 
a visiting professor at Lausanne and 
Geneva. Kevin is a director of AIM listed 
EKF Diagnostics Holdings Plc and 
a former director of BBI Holdings Plc.
Malcolm Gillies R A 
Non-executive Director 
Malcolm is a director in several private 
companies mostly involved in the healthcare 
area including Aircraft Medical, Antoxis and 
Ohmedics. He has previously held positions 
as a non-executive director in public companies 
and was Company Secretary at Axis-Shield Plc. 
He has a background as a corporate finance 
lawyer, having been a senior partner with 
Shepherd and Wedderburn.
R Remuneration Committee
A Audit Committee
N Nomination Committee
N N Corporate governance
22
Collagen Solutions plc
Annual report and accounts 2015
Corporate governance
Principles of corporate governance
The Board appreciates the value of good corporate governance not 
only in the areas of accountability and risk management but also as 
a positive contribution to business prosperity. It believes that corporate 
governance involves more than a simple ‘box ticking’ approach to 
establish whether a company has met the requirements of a number 
of specific rules and regulations. Rather, the issue is one of applying 
corporate governance principles (including those set out in the 
Corporate Governance Code for Small and Mid-Size Quoted Companies 
published by the Quoted Companies Alliance) in a sensible and 
pragmatic fashion having regard to the individual circumstances of 
a particular company’s business. The key objective is to enhance 
and protect shareholder value.
Board structure
The Board is responsible to shareholders for the proper management 
of the Group. A statement of directors’ responsibilities in respect 
of the financial statements is set out on page 26. 
The non-executive directors have a particular responsibility to ensure that 
the strategies proposed by the executive directors are fully considered. 
All non-executive directors receive a fixed fee for their services.
To enable the Board to discharge its duties, all directors have full 
and timely access to all relevant information and there is a procedure 
for all directors, in furtherance of their duties, to take independent 
professional advice, if necessary, at the expense of the Group. 
The Board is responsible for overall Group strategy, approval of 
major capital expenditure projects and consideration of significant 
financing matters.
The following Committees, which have written terms of reference, 
deal with specific aspects of the Group’s affairs:
Remuneration Committee
The Remuneration Committee is responsible for making 
recommendations to the Board on the Group and the Company’s 
framework of executive remuneration and its cost. The Committee 
determines the contract terms, remuneration and other benefits for 
each of the executive directors, including performance-related bonus 
schemes, pension rights and compensation payments. The Board 
itself determines the remuneration of the non-executive directors. 
The Committee comprises three non-executive directors (David Evans, 
Malcolm Gillies and Kevin Wilson). It is chaired by Malcolm Gillies.
Audit and Risk Committee
The Audit and Risk Committee comprises two non-executive directors 
(Malcolm Gillies and Kevin Wilson) and is chaired by Kevin Wilson.
Its prime tasks are to review the scope of the external audit, to 
receive regular reports from Baker Tilly UK Audit LLP, and to review 
the half yearly and annual accounts before they are presented to the 
Board, focusing in particular on accounting policies and areas 
of management judgement and estimation.
The Committee is responsible for monitoring the controls which are in 
force to ensure the integrity of the information reported to shareholders.
The Committee acts as a forum for discussion of internal control issues 
and contributes to the Board’s review of the effectiveness of the Group’s 
internal control and risk management systems and processes. It advises 
the Board on the appointment of external auditors and on their 
remuneration for both audit and non-audit work, and discusses the 
nature and scope of the audit with the external auditors. It reviews 
and monitors the independence of the auditors, especially with 
regard to non-audit work. 
The Audit and Risk Committee met to consider the reports of the 
auditors prior to the submission of the annual financial statements 
to the Board.
Nomination Committee
The Nomination Committee comprises three non-executive directors 
(David Evans, Malcolm Gillies and Kevin Wilson) and is chaired 
by Malcolm Gillies. 
Its duties include the review of the structure, size and composition 
of the Board, including skills, knowledge, experience and diversity, 
succession planning, review of leadership needs and identification, 
evaluation and nomination of candidates to fill Board vacancies, 
as necessary.
Internal control
The directors are responsible for the Group’s system of internal 
control and reviewing its effectiveness. The Board has designed the 
Group’s system of internal control in order to provide the directors 
with reasonable assurance that its assets are safeguarded, that 
transactions are authorised and properly recorded and that material 
errors and irregularities are either prevented or would be detected 
within a timely period. Strategic report Corporate governance Financial statements
23
Collagen Solutions plc
Annual report and accounts 2015
However, no system of internal control can eliminate the risk of failure 
to achieve business objectives or provide absolute assurance 
against material misstatement or loss.
The key elements of the control system in operation are:
• the Board meets regularly with a formal schedule of matters for 
decision and has put in place an organisational structure with clear 
lines of responsibility defined and with appropriate delegation 
of authority; 
• the subsidiaries’ boards also meet regularly with a formal 
schedule of matters for decision; and
• there are procedures for planning, approval and monitoring of capital 
expenditure and information systems for monitoring the Group’s 
financial performance against approved budgets and forecasts.
The Audit and Risk Committee receives reports from the external 
auditors on a regular basis and from executive directors of the 
Group. The Board receives periodic reports from all Committees.
There are no significant issues disclosed in the report and financial 
statements for the year ended 31 March 2015 and up to the date 
of approval of the report and financial statements that have required 
the Board to deal with any related material internal control issues.
The Board has considered whether the Group’s internal control 
processes would be significantly enhanced by an internal audit function 
and has taken the view that, at the Group’s current stage of development, 
this is not a necessity. The Board will continue to review this matter.
The Group is compliant with industry standard quality assurance 
measures and undergoes regular external audits to ensure that 
accreditation is maintained.
Relations with shareholders
The Group values its dialogue with both institutional and private 
investors. Effective two-way communication with the investment 
community is actively pursued and this encompasses issues such 
as performance, policy and strategy. The directors have had meetings 
with actual and potential investors and they will continue to do so 
on a regular basis. The Group maintains an informative website 
containing information likely to be of interest to existing and new 
investors. In addition, the Group retains the services of financial 
PR consultants, providing an additional contact point for investors.
There is also an opportunity, at the Company’s Annual General 
Meeting, for individual shareholders to raise general business matters 
with the full Board, and notice of the Company’s Annual General 
Meeting is circulated to all shareholders before such meeting.
Going concern
The directors believe that the use of the going concern basis of 
accounting is appropriate because they consider that the Group has 
considerable financial resources, together with a robust sales pipeline 
and commitments from a number of customers. As such the directors 
believe that the Group is well placed to manage its business risks 
successfully. The directors have a reasonable expectation that the 
Group has adequate resources to continue in operational existence 
for the foreseeable future. Thus they continue to adopt the going 
concern basis of accounting in preparing the financial statements. Corporate governance
24
Collagen Solutions plc
Annual report and accounts 2015
Directors’ remuneration report
Remuneration Committee
The Company has a Remuneration Committee. The Committee 
comprises three non-executive directors (Malcolm Gillies, 
David Evans and Kevin Wilson). It is chaired by Malcolm Gillies.
Remuneration policy
The policy of the Committee is to reward executive directors in line 
with the current remuneration of directors in comparable businesses 
in order to recruit, motivate and retain high quality executives within 
a competitive marketplace, thereby enhancing shareholder value.
Directors’ remuneration
The table below summarises all directors’ emoluments and pension contributions for the current period.
2015
Salary, bonus 2014
 and fees Pension Salary and fees
£ £ £
D E Evans 40,000 — 12,000
Dr K W Wilson 30,000 — 12,000
M J Gillies 30,000 — 12,000
Dr S White 100,000 2,250 18,750
G N Black 90,000 1,688 6,250
B G Bennett 24,545 736 —
314,545 4,674 61,000
Pension payments of £4,674 were made on behalf of the directors to the Company’s Group Personal Pension Plan or a KiwiSaver Plan 
in the year ended 31 March 2015 (2014: £Nil). 
Directors’ share options
At 31 March 2015, the following directors held options over the shares of the Company:
 At At Date
31 March 2015 31 March 2014 exercisable Expiry date
D E Evans 4,050,000 4,050,000 29 March 2013 28 March 2023
G N Black 1,000,000 — 1 January 2017 23 November 2024
Details of the options are covered in notes 18 and 20. The only movement in the period was the granting of options to Gill Black. Strategic report Corporate governance Financial statements
25
Collagen Solutions plc
Annual report and accounts 2015
Directors’ report
The directors submit their report and consolidated financial statements 
of Collagen Solutions plc for the year ended 31 March 2015.
Principal activities
The principal activity of the Company is as a holding company. 
The principal activity of the Group is the supply, development 
and manufacture of medical grade collagen components and 
biomaterials for use in regenerative medicine, medical devices 
and in-vitro diagnostics. 
Strategic Report
The following matters are dealt with in the Strategic Report 
on pages 15 to 17:
• review of the business;
• corporate social responsibility; and
• employee involvement.
Results and dividends
The trading results for the year and the Group’s financial position at 
the end of the year are shown in the attached financial statements. 
The directors do not recommend a final dividend.
At the date of acquisition the Group made a provision of £1.7 million 
for the contingent consideration payable resulting from the acquisition 
of Southern Lights Biomaterials. This provision was made on the 
basis of the best estimate of the outcome of the earn-out revenues 
under the sale and purchase agreement, which provides for a 
maximum payout of £1.97 million on revenues to 31 March 2018.
Directors 
The directors of the Company during the year are listed below:
• D E Evans;
• Dr K W Wilson;
• M J Gillies;
• Dr S White;
• G N Black; and
• B G Bennett (appointed 10 December 2014).
Directors’ and officers’ insurance cover is provided by the Company.
At 31 March 2015, the directors had beneficial interests 
in the Company’s shares as listed below:
At At 
31 March 2015 31 March 2014
Class of share Number Number
D E Evans Ordinary shares 
of 1p each
12,888,730 5,495,874
Dr S White Ordinary shares 
of 1p each
3,464,327 3,107,184
Dr K W Wilson Ordinary shares 
of 1p each
1,792,296 1,078,010
M J Gillies Ordinary shares 
of 1p each
1,214,286 500,000
G N Black Ordinary shares 
of 1p each
357,143 —
B G Bennett Ordinary shares 
of 1p each
6,325,988 — 
There are 500,000 deferred shares of 9p in issue at 31 March 2015 
and these are held as follows: D E Evans – 125,000, Dr K W Wilson 
– 125,000 and M J Gillies – 250,000. The deferred shares do not 
confer any voting rights.
Substantial shareholdings 
As at 30 June 2015, other than the directors’ beneficial interests, 
there were the following substantial shareholdings:
Class of share Number
Legal and General Ordinary shares of 1p each 16,000,000
NVM Private Equity Ordinary shares of 1p each 12,728,579
Calculus Capital Ordinary shares of 1p each 10,714,000
Helium Rising Stars Fund Ordinary shares of 1p each 10,714,000
Hargreave Hale Ordinary shares of 1p each 10,000,000
Brian Geoffrey Bennett 
& Family Trust
Ordinary shares of 1p each 6,325,988
Peter French Meyer 
& Family Trust
Ordinary shares of 1p each 6,240,502
Rathbones Investment 
Management
Ordinary shares of 1p each 5,821,250 
Share capital
On 10 December 2014, 85,714,286 ordinary shares of 1p were 
issued for a cash consideration of 7p per share, and a further 
21,428,572 ordinary shares of 1p each were issued at a price of 
7p per share to the vendors as part of the initial consideration for 
the acquisition of Southern Lights Ventures 2002 Limited. The fair 
value of these shares at 10 December 2014, the date of acquisition, 
was 9.12p per share.
The total number of issued ordinary shares at 31 March 2015 was 
170,968,865. The total number of deferred shares at 31 March 2015 
was 500,000. Corporate governance
26
Collagen Solutions plc
Annual report and accounts 2015
Directors’ report continued
Research and development
The Group invests in the research and development in the UK, 
the USA and NZ and collaborates with partners and academia. 
In the opinion of the directors, continuity of investment in this area 
is essential for the maintenance of the Group’s market position 
and for future growth.
Supplier payment policy
It is Group policy to agree and clearly communicate the terms of 
payment as part of the commercial arrangements negotiated with 
suppliers and then to pay according to those terms based upon 
the timely receipt of an accurate invoice. At 31 March 2015, average 
creditor days were 45–60 days.
Charitable and political contributions
No charitable or political donations were made by the Group 
in the period.
Statement as to disclosure of information to auditors
The directors who were in office on the date of approval of these 
financial statements have confirmed that, as far as they are aware, 
there is no relevant audit information of which the auditors are 
unaware. Each of the directors have confirmed that they have taken 
all the steps that they ought to have taken as directors in order 
to make themselves aware of any relevant audit information and 
to establish that it has been communicated to the auditors. Details 
of financial risk management objectives and policies, including 
exposure to price risk, credit risk, liquidity risk and cash flow risk, 
are shown in the Strategic Report on page 17.
Directors’ responsibilities in the preparation 
of the financial statements
The directors are responsible for preparing the Strategic Report, 
the Directors’ Report and the financial statements in accordance 
with applicable law and regulations.
Company law requires the directors to prepare Group and 
Company financial statements for each financial year. The directors 
are required by the AIM Rules of the London Stock Exchange to 
prepare Group financial statements in accordance with International 
Financial Reporting Standards (IFRSs) as adopted by the European 
Union (EU) and have elected under company law to prepare the 
Company financial statements in accordance with IFRSs as adopted 
by the EU.
The financial statements are required by law and IFRSs adopted 
by the EU to present fairly the financial position of the Group 
and the Company and the financial performance of the Group. 
The Companies Act 2006 provides in relation to such financial 
statements that references in the relevant part of that Act to 
financial statements giving a true and fair view are references 
to their achieving a fair presentation.
Under company law the directors must not approve the financial 
statements unless they are satisfied that they give a true and fair 
view of the state of affairs of the Group and the Company and 
of the profit or loss of the Group for that period. 
In preparing the Group and Company financial statements, 
the directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable 
and prudent;
• state whether they have been prepared in accordance with IFRSs 
adopted by the EU; and
• prepare the financial statements on the going concern basis 
unless it is inappropriate to presume that the Group and the 
Company will continue in business.
The directors are responsible for keeping adequate accounting 
records that are sufficient to show and explain the Group’s and the 
Company’s transactions and disclose with reasonable accuracy at 
any time the financial position of the Group and the Company and 
enable them to ensure that the financial statements comply with 
the Companies Act 2006. They are also responsible for safeguarding 
the assets of the Group and the Company and hence for taking 
reasonable steps for the prevention and detection of fraud and 
other irregularities.
The directors are responsible for the maintenance and integrity 
of the corporate and financial information included on the 
Collagen Solutions plc website.
Legislation in the United Kingdom governing the preparation and 
dissemination of financial statements may differ from legislation 
in other jurisdictions.
Annual General Meeting
The notice convening the Annual General Meeting to be held at 
10.00am on 24 August 2015 at Shepherd and Wedderburn LLP, 
191 West George Street, Glasgow G2 2LB can be found 
on the Company’s website.
Auditors
A resolution to re-appoint Baker Tilly UK Audit LLP as auditors 
will be proposed at the Annual General Meeting.
On behalf of the Board 
Gill Black
Chief Financial Officer 
10 July 2015 Strategic report Corporate governance Financial statements
27
Collagen Solutions plc
Annual report and accounts 2015
Independent auditors’ report
to the members of Collagen Solutions plc
We have audited the Group and Parent Company financial statements 
(the financial statements) on pages 28 to 53. The financial reporting 
framework that has been applied in their preparation is applicable 
law and International Financial Reporting Standards (IFRSs) as adopted 
by the European Union and, as regards the parent company financial 
statements, as applied in accordance with the provisions of the 
Companies Act 2006. 
This report is made solely to the Company’s members, as a body, 
in accordance with Chapter 3 of Part 16 of the Companies Act 
2006. Our audit work has been undertaken so that we might state 
to the Company’s members those matters we are required to state 
to them in an auditor’s report and for no other purpose. To the fullest 
extent permitted by law, we do not accept or assume responsibility 
to anyone other than the Company and the company’s members 
as a body, for our audit work, for this report, or for the opinions 
we have formed.
Respective responsibilities of directors and auditor
As more fully explained in the Directors’ Responsibilities Statement 
set out on page 26 the directors are responsible for the preparation 
of the financial statements and for being satisfied that they give a 
true and fair view. Our responsibility is to audit and express an 
opinion on the financial statements in accordance with applicable 
law and International Standards on Auditing (UK and Ireland). Those 
standards require us to comply with the Auditing Practices Board’s 
(APB’s) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements 
is provided on the Financial Reporting Council’s website at  
http://www.frc.org.uk/auditscopeukprivate.
Opinion on financial statements
In our opinion, 
• the financial statements give a true and fair view of the state 
of the Group’s and the parent’s affairs as at 31 March 2015 
and of the Group’s loss for the year then ended;
• the Group financial statements have been properly prepared 
in accordance with IFRSs as adopted by the European Union;
• the parent company financial statements have been properly prepared 
in accordance with IFRSs as adopted by the European Union and 
as applied in accordance with the Companies Act 2006; and
• the financial statements have been prepared in accordance 
with the requirements of the Companies Act 2006.
Opinion on other matter prescribed 
by the Companies Act 2006
In our opinion the information given in the Strategic Report and 
the Directors’ Report for the financial year for which the financial 
statements are prepared is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where 
the Companies Act 2006 requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the parent 
company, or returns adequate for our audit have not been 
received from branches not visited by us; or
• the parent company financial statements are not in agreement 
with the accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law 
are not made; or
• we have not received all the information and explanations 
we require for our audit. 
Graham Bond FCA (Senior Statutory Auditor)
For and on behalf of Baker Tilly UK Audit LLP, Statutory Auditor 
Chartered Accountants
3 Hardman Street
Manchester M3 3HF
11 July 2015 Financial statements
28
Collagen Solutions plc
Annual report and accounts 2015
Before Separately Before Separately
separately identifiable separately identifiable
identifiable items Total identifiable items Total
items (note 4) 2015 items (note 4) 2014
Notes £ £ £ £ £ £ 
Revenue 972,846 — 972,846 24,023 — 24,023
Cost of sales (213,920) — (213,920) (12,084) — (12,084)
Gross profit 758,926 — 758,926 11,939 — 11,939
Share-based compensation (26,746) — (26,746) (24,647) — (24,647)
Administrative expenses (1,265,918) (155,131) (1,421,049) (303,647) (74,769) (378,416)
Selling and marketing costs (218,732) — (218,732) (71,914) — (71,914)
Other income 62,654 — 62,654 — — — 
Operating loss before interest, 
tax, depreciation and amortisation (689,816) (155,131) (844,947) (388,269) (74,769) (463,038) 
Amortisation and depreciation (129,778) — (129,778) (16,960) — (16,960)
Finance income 5 1,470 — 1,470 — — —
Finance expense 5 (129,122) — (129,122) — — —
Loss before taxation 2 (947,246) (155,131) (1,102,377) (405,229) (74,769) (479,998)
Taxation 6 (21,215) — (21,215) — — —
Loss for the year (968,461) (155,131) (1,123,592) (405,229) (74,769) (479,998)
Currency translation difference 317,669 — 317,669 (44,666) — (44,666)
Other comprehensive income/(loss) 317,669 — 317,669 (44,666) — (44,666)
Total comprehensive expense 
for the year (650,792) (155,131) (805,923) (449,895) (74,769) (524,664) 
Basic and diluted loss per share – pence 7 (1.17p) (1.10p)
Consolidated statement of comprehensive income
for the year ended 31 March 2015  Strategic report Corporate governance Financial statements
29
Collagen Solutions plc
Annual report and accounts 2015
2015 2014
Notes £ £
ASSETS
Non-current assets
Intangible assets 8 12,918,911 6,894,398
Property, plant and equipment 9 793,725 232,484
13,712,636 7,126,882
Current assets
Inventories 11 218,544 39,265
Trade and other receivables 12 644,475 167,036 
Cash and cash equivalents 13 3,391,356 1,491,660
4,254,375 1,697,961
Total assets 17,967,011 8,824,843
EQUITY AND LIABILITIES
Equity attributable to equity holders of the parent company
Share capital 20 1,754,689 683,260
Share premium 7,845,973 3,230,105
Share-based payment reserve 51,393 24,647 
Merger reserve 4,531,798 2,842,683
Translation reserve 273,003 (44,666)
Retained deficit (1,603,590) (479,998)
Total equity 12,853,266 6,256,031
Non-current liabilities
Deferred tax 16 285,022 —
Other financial liabilities 14 4,319,891 2,409,236
Borrowings 19 87,563 —
4,692,476 2,409,236
Current liabilities
Trade and other payables 14 359,273 159,576
Income tax liabilities 40,153 —
Borrowings 19 21,843 —
421,269 159,576
Total liabilities 5,113,745 2,568,812
Total liabilities and equity 17,967,011 8,824,843
These financial statements were approved by the Board of directors and authorised for issue on 10 July 2015 and are signed on its behalf by:
G N Black Dr S White
Chief Financial Officer Chief Executive Officer
Company number: 8446337
Consolidated statement of financial position
as at 31 March 2015  Financial statements
30
Collagen Solutions plc
Annual report and accounts 2015
2015 2014
Notes £ £
ASSETS
Non-current assets
Financial asset investments 10 12,684,805 6,563,378 
Intangible assets 8 60,832 —
Property, plant and equipment 9 13,951 —
12,759,588 6,563,378
Current assets
Trade and other receivables 12 1,116,721 317,818
Cash and cash equivalents 13 2,980,509 1,477,822
4,097,230 1,795,640 
Total assets 16,856,818 8,359,018
EQUITY AND LIABILITIES
Equity attributable to equity holders of the parent company
Share capital 20 1,754,689 683,260
Share premium 7,845,973 3,230,105
Share-based payment reserve 51,393 24,647
Merger reserve 4,531,798 2,842,683
Retained deficit (996,042) (262,626)
Total equity 13,187,811 6,518,069
Non-current liabilities
Financial liabilities 14 3,588,815 1,782,122
Current liabilities
Trade and other payables 14 80,192 58,827
Total liabilities 3,669,007 1,840,949
Total liabilities and equity 16,856,818 8,359,018
These financial statements were approved by the Board of directors and authorised for issue on 10 July 2015 and are signed on its behalf by:
G N Black Dr S White
Chief Financial Officer Chief Executive Officer
Company number: 8446337
Company statement of financial position
as at 31 March 2015  Strategic report Corporate governance Financial statements
31
Collagen Solutions plc
Annual report and accounts 2015
Consolidated statement of changes in equity
for the year ended 31 March 2015
Share-based
Share Share payment Merger Translation Retained
capital premium reserve reserve reserve deficit Total
£ £ £ £ £ £ £
Issue of shares for cash 450,000 3,600,000 — — — — 4,050,000
Issue of consideration shares 
on acquisition 233,260 — — 3,149,011 — — 3,382,271
Share issue costs — (369,895) — (306,328) — — (676,223)
Total transactions with 
owners in their capacity 
as owners 683,260 3,230,105 — 2,842,683 — — 6,756,048
Share-based compensation — — 24,647 — — — 24,647
Loss for the period — — — — — (479,998) (479,998)
Currency translation difference — — — — (44,666) — (44,666)
Loss and total comprehensive 
expense for the period — — — — (44,666) (479,998) (524,664)
At 1 April 2014 683,260 3,230,105 24,647 2,842,683 (44,666) (479,998) 6,256,031
Issue of shares for cash 857,143 5,142,857 — — — — 6,000,000
Issue of consideration shares 
on acquisition 214,286 — — 1,740,000 — — 1,954,286
Share issue costs — (526,989) — (50,885) — — (577,874)
Total transactions with 
owners in their capacity 
as owners 1,071,429 4,615,868 — 1,689,115 — — 7,376,412
Share-based compensation — — 26,746 — — — 26,746
Loss for the year — — — — — (1,123,592) (1,123,592)
Currency translation difference — — — — 317,669 — 317,669
Loss and total comprehensive 
income for the year — — — — 317,669 (1,123,592) (805,923)
At 31 March 2015 1,754,689 7,845,973 51,393 4,531,798 273,003 (1,603,590) 12,853,266 Financial statements
32
Collagen Solutions plc
Annual report and accounts 2015
Company statement of changes in equity
for the year ended 31 March 2015
Share-based
Share Share payment Merger Retained
capital premium reserve reserve deficit Total
£ £ £ £ £ £
Issue of shares for cash 450,000 3,600,000 — — — 4,050,000
Issue of consideration shares on acquisition 233,260 — — 3,149,011 — 3,382,271
Share issue costs — (369,895) — (306,328) — (676,223)
Total transactions with owners in their 
capacity as owners 683,260 3,230,105 — 2,842,683 — 6,756,048
Share-based compensation — — 24,647 — — 24,647
Total comprehensive loss for the year — — — — (262,626) (262,626)
At 1 April 2014 683,260 3,230,105 24,647 2,842,683 (262,626) 6,518,069
Issue of shares for cash 857,143 5,142,857 — — — 6,000,000
Issue of consideration shares on acquisition 214,286 — — 1,740,000 — 1,954,286
Share issue costs — (526,989) — (50,885) — (577,874)
Total transactions with owners 
in their capacity as owners 1,071,429 4,615,868 — 1,689,115 — 7,376,412
Share-based compensation — — 26,746 — — 26,746
Total comprehensive loss for the year — — — — (733,416) (733,416)
At 31 March 2015 1,754,689 7,845,973 51,393 4,531,798 (996,042) 13,187,811 Strategic report Corporate governance Financial statements
33
Collagen Solutions plc
Annual report and accounts 2015
Consolidated statement of cash flows
for the year ended 31 March 2015
2015 2014
Note £ £
Cash flow from operating activities
Loss before taxation (1,102,377) (479,998)
Share-based compensation 26,746 24,647
Depreciation 75,110 12,647
Amortisation 54,668 4,313
Finance expense 129,122 —
Finance income (1,470) —
Loss on sale of property, plant and equipment 4,834 —
Increase in inventories (122,743) (13,337)
Increase in trade and other receivables (194,770) (65,511)
Increase/(decrease) in trade and other payables 89,909 (6,876)
Foreign exchange — (724)
Cash used in operations (1,040,971) (524,839)
Interest paid (3,822) —
Taxation paid (26,019) —
Net cash used in operations (1,070,812) (524,839)
Investing activities
Proceeds from sale of property, plant and equipment 12,716 —
Payments to acquire property, plant and equipment (158,792) (426)
Payments to acquire licensed IP and patents (68,222) —
Payments to acquire Southern Lights Ventures 2002 Limited 10 (2,191,668) 15,471
Payments to acquire business and assets of Collagen Solutions LLC — (1,398,985)
Net cash acquired with acquisition of business and assets of Collagen Solutions LLC — 26,662
Interest received 1,470 —
Net cash used in investing activities (2,404,496) (1,357,278)
Financing activities
Net proceeds on issue of ordinary shares 5,422,126 3,373,777
Repayment of director’s loan (53,468) —
Repayment of related party loan (5,354) —
Net cash generated from financing activities 5,363,304 3,373,777
Net increase in cash and cash equivalents 1,887,996 1,491,660
Effect of foreign exchange rate changes on the balance of cash held in foreign currencies 11,700 —
Net increase in cash and cash equivalents 1,899,696 1,491,660
Cash and cash equivalents at the beginning of the financial year 1,491,660 —
Cash and cash equivalents at the end of the financial year 3,391,356 1,491,660 Financial statements
34
Collagen Solutions plc
Annual report and accounts 2015
Company statement of cash flows
for the year ended 31 March 2015
2015 2014
Note £ £
Cash flow from operating activities
Loss before taxation (733,416) (262,626)
Share-based compensation 26,746 24,647
Depreciation 3,306 —
Finance expense 102,000 —
Increase in trade and other receivables (36,906) (122,496)
Increase in trade and other payables 21,365 58,827
Net cash used in operations (616,905) (301,648)
Investing activities
Payments to acquire property, plant and equipment (17,257) —
Payments to acquire licensed IP (60,832) —
Payments to acquire Southern Lights Ventures 2002 Limited 10 (2,462,448) —
Movement in Group borrowings — (1,398,985)
Net cash used in investing activities (2,540,537) (1,398,985)
Financing activities
Proceeds on issue of ordinary shares 5,422,126 3,373,777
Movement in Group borrowings (761,997) (195,322)
Net cash generated from financing activities 4,660,129 3,178,455
Net increase in cash and cash equivalents 1,502,687 1,477,822
Cash and cash equivalents at the beginning of the financial year 1,477,822 —
Cash and cash equivalents at the end of the financial year 2,980,509 1,477,822 Strategic report Corporate governance Financial statements
35
Collagen Solutions plc
Annual report and accounts 2015
Notes to the financial statements
General information
Collagen Solutions plc is incorporated and domiciled in the United Kingdom. The locations and principal activities of the subsidiaries are 
set out in note 10. The registered office is c/o Shepherd and Wedderburn LLP, Condor House, 10 St. Paul’s Churchyard, London EC4M 8AL.
The financial statements of Collagen Solutions plc and its subsidiaries (the “Group”) for the year ended 31 March 2015 were authorised 
for issue by the Board of directors on 10 July 2015.
Accounting policies
Basis of preparation
The financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European 
Union (IFRSs), including IFRS Interpretations Committee (IFRICs) interpretations as endorsed by the European Union (EU) and in accordance 
with those parts of the Companies Act 2006 applicable to companies reporting under IFRSs.
The financial statements have been prepared on the historical cost basis except for certain financial liabilities incorporated at fair value. 
The consolidated financial statements are presented in sterling, which is also the functional currency of the Company. The principal 
accounting policies adopted are set out below.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries. The results of subsidiaries 
acquired or disposed of during the year are included in the Consolidated Statement of Comprehensive Income from the date of their 
acquisition and until their date of disposal.
The Group uses the acquisition method of accounting to account for business combinations. The consideration transferred for the 
acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the Group. 
The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. 
Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed 
in a business combination are measured initially at their fair values at the acquisition date.
The excess of the consideration transferred over the fair value of the Group’s share of the identifiable net assets acquired is recorded 
as goodwill. If this is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference 
is recognised directly in the Consolidated Statement of Comprehensive Income.
Intra-group balance transactions and any unrealised income and expenses arising from intra-group transactions are eliminated in preparing 
the consolidated financial statements.
The Company Statement of Comprehensive Income has not been disclosed in accordance with section 408 of the Companies Act 2006. 
The loss for the year of the parent company amounted to £733,416 (2014: £262,626).
Going concern
As part of its going concern review the Board has followed the guidelines published by the Financial Reporting Council entitled “Going 
Concern and Liquidity Risk Guidance for UK Companies 2009”. In determining the appropriate basis of preparing the financial statements, 
the directors are required to consider whether the Company can continue in operational existence for the foreseeable future, being a period 
of not less than 12 months from the date of the approval of the financial statements. As at 31 March 2015 the Group had cash and cash 
equivalents of £3.39 million and net current assets of £3.83 million.
Management prepares detailed working capital forecasts which are reviewed by the Board on a regular basis. Cash flow forecasts and 
projections have been prepared through to 30 September 2016 and take into account sensitivities on revenues and costs. Having made 
relevant and appropriate enquiries, including consideration of the Company’s and the Group’s current cash resources and the working 
capital forecasts, the directors have a reasonable expectation that the Company and the Group will have adequate cash resources to 
continue to meet the requirements of the business for at least the next 12 months. Accordingly, the Board continues to adopt the going 
concern basis in preparing the financial statements.
Revenue
Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and 
services provided in the normal course of business, net of discounts and other sales-related taxes. Depending on the contractual terms, 
revenue is recognised based on the level of work completed to date in respect of each individual element of the contract. Laboratory 
services are recognised on a fee-for-service basis. The difference between the amount of revenue recognised and the amount invoiced 
on a particular contract is included in the Consolidated Statement of Financial Position as deferred income.
Normally amounts become billable in advance on the achievement of certain milestones, in accordance with agreed payment schedules 
included in the contract or on submission of appropriate detail. Any cash payments received as a result of this advance billing are not 
representative of revenue earned on the contract, as revenues are recognised over the period in which the specified contractual obligations 
are fulfilled. Amounts included in deferred income are expected to be recognised within one year and are included within current liabilities.  Financial statements
36
Collagen Solutions plc
Annual report and accounts 2015
Accounting policies continued
Revenue continued
In the event of contract termination, if the value of the work performed and recognised as revenue is greater than aggregate milestone 
billings at the date of termination, cancellation clauses provide that the Group be paid for all work performed to the termination date.
Government grants
Government grants receivable for the reimbursement of costs charged to the income statement are credited to the income statement 
within other income in the year in which the costs are incurred.
Segmental reporting
The Group’s Chief Operating Decision Maker, the Chief Executive Officer, is responsible for resource allocation and the assessment 
of performance. In the performance of this role, the Chief Executive Officer reviews the Group’s activities, in the aggregate. The Group 
has therefore determined that it has only one reportable segment under IFRS 8 Operating Segments, which is biomaterials.
Goodwill
Goodwill arising on consolidation represents the excess of the consideration transferred and the fair value of the identifiable assets 
and liabilities of the acquiree at the date of acquisition. Goodwill on acquisitions of subsidiaries is included in ‘intangible assets’. Goodwill 
is not amortised but is tested annually for impairment and is carried at cost less accumulated impairment losses. See note 8 for detailed 
assumptions and methodology. Impairment losses are not subsequently reversed.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units 
or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose identified according 
to operating segment, irrespective of whether other assets or liabilities of the acquiree are assigned to those units. Each unit or group of units 
to which the goodwill is allocated shall represent the lowest level within the entity at which goodwill is monitored for internal management 
purposes and not be larger than an operating segment.
Contingent consideration is measured at its acquisition-date fair value and is included as part of the consideration transferred. Changes 
in the fair value of the contingent consideration that qualify as measurement adjustments are adjusted retrospectively, with corresponding 
adjustments against goodwill. The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify 
as measurement period adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified 
as an asset or a liability is re-measured at subsequent reporting dates with the corresponding gain or loss being recognised in profit or loss 
for the relevant financial period.
Purchased goodwill arising on the acquisition of a business and its net assets represents the excess of the consideration and the fair value 
of the identifiable assets and liabilities of that business at the date of acquisition. It is included within intangible assets and subject to annual 
impairment reviews noted above.
Intangible assets
Intangible assets acquired as part of a business combination are recognised outside goodwill if the asset is separable or arises from 
contractual or other legal rights and its fair value can be measured reliably.
Intangible assets are stated at cost, net of any amortisation and any provision for impairment. Amortisation is calculated so as to write 
off the cost of an asset, less its estimated residual value, over the useful economic life of that asset as follows:
Customer contracts and relationships – over two to ten years, depending on terms of contract, on a straight line basis
Licensed IP and patents – over estimated useful lives – ten to 25 years
Expenditure on research (or on the research phase of an internal project) is recognised as an expense when it is incurred. Expenditure 
arising from the Group’s development is recognised only if all of the following conditions are met:
• an asset is created that can be identified (such as new processes or products);
• it is probable that the asset created will generate future economic benefits;
• the development cost of the asset can be measured reliably;
• the Group has the intention to complete the asset and the ability and intention to use or sell it;
• the product or process is technically and commercially feasible; and 
• sufficient resources are available to complete the development and to either sell or use the asset.
Where no internally generated intangible asset can be recognised, development expenditure is recognised as an expense in the period 
in which it is incurred.
Notes to the financial statements continued Strategic report Corporate governance Financial statements
37
Collagen Solutions plc
Annual report and accounts 2015
Accounting policies continued
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and any recognised impairment loss. Cost comprises 
purchase price and other directly attributable costs. Depreciation is charged so as to write off the cost or valuation of assets to their residual 
values over their estimated useful lives, using the straight-line method, or diminishing value over the following estimated useful lives:
Leasehold property improvements  – over life of lease
Plant, equipment and machinery  – 8%–60%
The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds 
and the carrying amount of the asset and is recognised in the Consolidated Statement of Comprehensive Income.
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date. An asset’s carrying amount 
is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.
Impairment
At each reporting date, the Group reviews the carrying amounts of its property, plant and equipment and intangibles, including goodwill, 
to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable 
amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash 
flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit (CGU) to which 
the asset belongs. 
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows 
are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money 
and the risks specific to the asset for which the estimates of future cash flows have been adjusted.
If the recoverable amount of an asset (or CGU) is estimated to be less than its carrying amount, the carrying amount of the asset (or CGU) 
is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or CGU) is increased to the revised estimate of its recoverable 
amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment 
loss been recognised for the asset (or CGU) in prior years. A reversal of an impairment loss is recognised as income immediately.
Detailed assumptions with regard to discount, growth and inflation rates are set out in note 8 to the accounts.
Investments
Investments are initially recorded at cost. The subsequent measurement of contingent consideration is recognised through the income 
statement. The fair value of the contingent consideration is recognised by discounting the estimated sums payable by the discount rate of equity 
financing. Unwinding of the discount is charged to finance costs over the relevant period. The fair value of the share price at date of acquisition 
for shares issued as part of the consideration is reflected in the cost of the investment. Investments are reviewed for impairment if events 
or changes in circumstances indicate the carrying value may not be recoverable.
Inventories
Inventories are valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving items. 
Inventories comprise completed product and work in process. The cost of inventories is calculated on a weighted average cost method. 
The cost included within inventories comprises direct materials and, where applicable, direct labour costs and an attributable portion 
of production overheads in bringing them to their present location and condition. Net realisable value is the estimated selling price 
in the ordinary course of business, less the estimated costs of completion and selling expenses.
Financial instruments
Financial assets and financial liabilities are recognised when the Group has become a party to the contractual provisions of the instrument.
Trade receivables
Trade receivables, classified as loans and receivables, are recognised initially at fair value and subsequently measured at amortised cost 
using the effective interest method, less provision for impairment. A provision for impairment of trade receivables is established when there 
is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. The amount 
of provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the 
effective interest rate.
Trade payables
Trade payables, classified as other liabilities, are initially recognised at fair value and subsequently at amortised cost using the effective 
interest method.
Financial liabilities
Financial liabilities are classified according to the substance of the contractual arrangements entered into. An instrument will be classified 
as a financial liability when there is a contractual obligation to deliver cash or another financial asset to another enterprise. Instruments 
that are settled through the delivery of a variable number of equity shares are classified as financial liabilities. Financial statements
38
Collagen Solutions plc
Annual report and accounts 2015
Accounting policies continued
Financial instruments continued
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand, deposits held at call with banks and other short-term, highly liquid 
investments with original maturities of three months or less. 
For the purposes of the Consolidated Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents 
as defined above, net of any outstanding bank overdraft when it forms an integral part of the Group’s cash management.
Borrowings
Interest-bearing bank loans and overdrafts are initially recorded at fair value, which represents the fair value of the consideration received, 
net of any issue costs associated with the borrowings. Borrowings are subsequently stated at amortised cost.
Finance charges, including premiums payable on settlement or redemption, are accounted for on an accrual basis and are added 
to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 
12 months after the reporting date.
Contingent consideration
Contingent consideration amounts arising from acquisitions are recorded at fair value having regard to the relevant discount rate of equity 
capital. The finance costs arising from unwinding the instrument over the period are charged through the Consolidated Statement of 
Comprehensive Income. Amounts are reviewed annually against criteria for payment set out within the relevant sale and purchase agreements.
Derecognition of financial instruments
The derecognition of financial assets takes place when the Group no longer controls the contractual rights that comprise the financial 
instrument, which is normally the case when the instrument is sold, or all of the cash flows attributable to the instrument are passed 
through to an independent third party.
Leasing commitments
Rentals payable under operating leases, where substantially all the benefits and risks remain with the lessor, are charged to income 
on a straight-line basis over the term of the relevant lease, except where another more systematic basis is more representative 
of the time pattern in which economic benefits from the lease asset are consumed.
Foreign currencies
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic 
environment in which the entity operates (the functional currency). The consolidated financial statements are presented in sterling, which 
is the Company’s functional and the Group’s presentation currency. Amounts included within non-current assets in respect of amounts 
loaned to foreign subsidiaries have no fixed terms of repayment and there is no intention or expectation that repayment of such amounts 
will be demanded.
Transactions in overseas currencies are translated at the exchange rate ruling at the date of the transaction. Foreign exchange gains 
and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets 
and liabilities denominated in foreign currencies are recognised in the Consolidated Statement of Comprehensive Income. 
The results and financial position of subsidiaries that have a functional currency different from the presentation currency are translated 
into the presentation currency as follows:
(a)  assets and liabilities for each reporting date are translated at the closing rate at that date; and
(b)   income and expenses are translated at average exchange rates (unless this average is not a reasonable approximation of the 
cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate 
on the dates of the transactions).
All resulting exchange differences are recognised in other comprehensive income in the translation reserve.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity 
and translated at the closing rate. 
Taxation
Current tax is the expected corporation tax payable or receivable in respect of the taxable profit/loss for the financial period using tax rates 
enacted or substantively enacted at the reporting date, less any adjustments to tax payable or receivable in respect of previous periods.
Deferred tax is recognised in respect of all temporary differences between the carrying amounts of assets and liabilities included in the 
financial statements and the amounts used for tax purposes that will result in an obligation to pay more, or a right to pay less or to receive 
more tax, with the following exceptions:
Notes to the financial statements continued Strategic report Corporate governance Financial statements
39
Collagen Solutions plc
Annual report and accounts 2015
Accounting policies continued
Taxation continued
No provision is made relating to the initial recognition of assets or liabilities that affect neither accounting nor taxable profit other 
than those acquired as part of a business combination.
Provision is made for deferred tax that would arise on all taxable temporary differences associated with investments except where the 
Group can control the reversal of the temporary differences.
Deferred tax assets are recognised only to the extent that the directors consider that it is probable that there will be suitable taxable profits 
from which the future reversal of the underlying temporary differences and unused tax losses and credits can be deducted.
Deferred tax is measured on an undiscounted basis at the tax rates that are expected to apply in the periods in which the asset is realised 
or liability is settled, based on tax rates and laws enacted or substantively enacted at the reporting date.
Provisions
Provisions are recognised when the Group has a present obligation as a result of a past event and it is probable that it will result 
in an outflow of economic benefits that can be reliably estimated.
Share-based payment transactions
The Group has applied the requirements of IFRS 2 Share-based Payment.
The Group issues equity-settled share-based payment transactions to certain employees and directors. Equity-settled share-based 
payment transactions are measured at fair value at the date of grant. The fair value determined at the grant date of equity-settled share-based 
payment transactions takes into account any non-vesting conditions and is expensed on a straight-line basis over the vesting period, based 
on the Group’s estimate of share options that will eventually vest, and a corresponding amount is credited to the share-based payment reserve.
Non-vesting conditions which are not satisfied during the vesting period are treated as cancellations and any remaining expense 
is accelerated in the period of failure.
Share-based payments associated with share options granted to employees of subsidiaries of the parent company are treated as an expense 
of the subsidiary company to be settled by equity of the parent company. The share-based payment expense increases the value of the 
parent company’s investment in the subsidiaries and is credited to the share-based payment reserve.
The proceeds received on exercise of share options are credited to share capital (for the nominal value) and share premium account 
(for the excess over nominal value).
Fair value is measured by use of the Trinomial Barrier Option and Black-Scholes models. The expected life used in the model has been 
adjusted, based on management’s best estimate, for the effect of non-transferability, exercise restrictions and behavioural considerations.
New standards and interpretations not applied
The Group and Company financial statements have been prepared in accordance with IFRSs, International Accounting Standards (IASs) 
and IFRSs Interpretations Committee (IFRICs) interpretations effective as at 31 March 2015. The Group and Company have not chosen 
to adopt any amendments or revised standards early.
IFRSs issued but not yet effective
The following IFRSs, IASs and IFRICs have been issued, are not yet effective, and have not been adopted by the Group or the Company 
in these financial statements. The directors do not believe the adoption will have a material impact on the business.
IAS 19 Employee Benefits – Defined Benefit Plans (Amended) – effective 1 July 2014
IFRS 2 Share-based Payment (Amended) – effective 1 July 2014
IFRS 3 Business Combinations (Amended) – effective 1 July 2014
IFRS 8 Operating Segments (Amended) – effective 1 July 2014
IAS 16 (Annual Improvements 2012) Property, Plant and Equipment – effective 1 July 2014
IAS 24 Related Party Disclosures – effective 1 July 2014
IAS 38 (Annual Improvements 2012) Intangible Assets – effective 1 July 2014
IAS 1 Presentation of Financial Statements – effective 1 January 2016
IAS 28 Investments in Associates and Joint Ventures – effective 1 January 2016
IFRS 9 Financial Instruments – effective 1 January 2018
IFRS 10 Consolidated Financial Statements – effective 1 January 2016
IFRS 11 Joint Arrangements – effective 1 January 2016
IFRS 12 Disclosure of Interests in Other Entities – effective 1 January 2016
IFRS 14 Regulatory Deferral Accounts – effective 1 January 2016
IFRS 15 Revenue from Contracts with Customers – effective 1 January 2017 Financial statements
40
Collagen Solutions plc
Annual report and accounts 2015
Accounting policies continued
New standards and interpretations not applied continued
IFRSs adopted in the year
The following IFRSs, IASs and IFRICs have been adopted for the first time in the year. As expected their adoption has not had a material 
impact on these financial statements.
IFRS 10 Consolidated Financial Statements – effective 1 January 2014
IFRS 12 Disclosure of Interests in Other Entities – effective 1 January 2014
IFRS 13 (Annual Improvements 2013) Fair Value Measurement – effective 1 January 2014
IAS 27 Separate Financial Statements (Amended) – effective 1 January 2014
IAS 32 Financial Instruments: Presentation – effective 1 January 2014
IAS 36 Impairment of Assets – effective 1 January 2014
IAS 39 Financial Instruments: Recognition and Measurement – effective 1 January 2014
IFRIC 21 Levies – effective 1 January 2014
Critical accounting estimates and judgements
The preparation of the financial information in conformity with IFRSs requires management to make judgements, estimates and assumptions 
that affect the application of policies and the reported amounts of assets and liabilities, income and expenses. The estimates and associated 
assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the 
results of which form the basis of making the judgements about carrying values of assets and liabilities that are both readily apparent from 
other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. 
Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in 
the period of the revision and future periods if the revision affects both current and future periods. These assumptions include but are not 
limited to the following areas: 
Contingent consideration
Contingent consideration is measured at its acquisition-date fair value and is included as part of the consideration transferred. Changes 
in the fair value of the contingent consideration that qualify as measurement adjustments are adjusted retrospectively, with corresponding 
adjustments against goodwill. The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify 
as measurement period adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified 
as an asset or a liability is re-measured at subsequent reporting dates with the corresponding gain or loss being recognised in profit or loss 
for the relevant financial period.
Amounts provided represent management’s best estimate of the likely outcome to be paid out under the individual earn-out provisions. 
Unwinding discount costs applied to the contingent considerations in relation to acquisitions made are charged through the income 
statement and included within finance costs.
Impairment of goodwill
The amount of goodwill initially recognised is dependent on the allocation of the purchase price to the fair value of the identifiable assets 
acquired and the liabilities assumed. The determination of the fair value of the assets and liabilities is based, to a considerable extent, on 
management’s judgement. Goodwill is tested annually for impairment. The test considers future cash flow projections of cash-generating 
units that give rise to the goodwill. Where the discounted cash flows are less than the carrying value of goodwill, an impairment charge is 
recognised for the difference. The key assumptions for the value in use calculations are those regarding the discount rates, growth rates 
and expected changes to revenue and direct costs during the period. These are detailed in note 8.
Fair values of acquired intangibles
In respect of business combinations the purchase price is allocated to the identifiable assets and liabilities of the acquired entity. The Group 
makes judgements and estimates in relation to the fair value allocation of the purchase price and whether any value should be attributable 
to assets and liabilities not recognised in the acquiree’s individual financial statements such as customer contracts and relationships. If any 
unallocated portion is positive it is recognised as goodwill. The recognition criteria in IAS No. 38 are applied to intangibles before allocating 
to goodwill in relation to development expenditure.
Management’s significant judgements in relation to customer contracts and relationships and patents as intangible assets are set out in note 8.
Management’s judgement is also required to estimate the useful lives of intangible assets, having reference to future economic benefits 
expected to be derived from the use of the asset. Economic benefits are based on the fair values of estimated future cash flows.
Deferred tax
Taxation management judgement is required to determine the amount of tax assets that can be recognised, based upon the likely timing 
and level of future taxable profits together with an assessment of future tax planning strategies.
Research and development
Careful judgement by the directors is applied when deciding whether the recognition requirements for development costs have been met. 
This is necessary as the economic success of any product development is uncertain until such time as technical viability has been proven and 
commercialisation is likely to be achieved. Judgements are based on the information available at each reporting date which includes progress 
with testing and data and commercial feasibility. Activities in relation to research and development are continuously monitored by the directors.
Notes to the financial statements continued Strategic report Corporate governance Financial statements
41
Collagen Solutions plc
Annual report and accounts 2015
1 Segmental reporting
2015 2014
£ £
Revenue information by geographical location
Europe 141,355 8,750
USA and Canada 545,659 15,273
Asia 285,832 —
972,846 24,023
Major customers
Two customers individually represented more than 10% of Group revenue at 28.8% in Asia and 16% in the USA and Canada respectively 
(2014: Nil). These revenues arise from the only operating segment, which is biomaterials.
The Group does not manage its business by reference to separate geographical locations. Consequently, an analysis of net assets and operating 
profit by location is not monitored and is therefore not provided.
2 Loss from operations
Loss from operations is stated after charging:
2015 2014
£ £
Amortisation 54,668 4,313
Depreciation of property, plant and equipment 75,110 12,647
Loss on sale of fixed assets 4,834 —
Auditors’ remuneration:
– as auditors 38,975 26,500
– other services 77,050 65,461
Operating lease costs:
– land and buildings; property, plant and equipment 94,492 18,131
Research and development 160,811 37,446
Amounts payable to Baker Tilly UK Audit LLP and their associates in respect of both audit and non-audit services:
Audit services:
– audit of Company 15,750 13,500
– audit of subsidiary undertakings 23,225 13,000
38,975 26,500
Non-audit services:
Fees payable to the Company’s auditors and their associates for other services:
– tax advisory services 9,050 2,500
– tax compliance services 5,500 —
– corporate finance transactions 62,500 62,961
77,050 65,461
3 Particulars of employees
The average number of staff employed by the Group, including executive directors, during the financial year amounted to:
2015 2014
Number Number
Operations 8 4
Administration 2 1
Management 4 2
14 7 Financial statements
42
Collagen Solutions plc
Annual report and accounts 2015
3 Particulars of employees continued
The aggregate payroll costs, including directors’ emoluments, of the above were:
2015 2014
£ £
Wages and salaries 689,504 98,066
Social security costs 56,166 9,802
Pension costs 10,246 —
Share-based compensation 26,746 24,647
782,662 132,515
Directors’ emoluments
The directors’ aggregate emoluments in respect of qualifying services were:
2015 2014
£ £
Emoluments receivable 214,545 25,000
Fees paid to third parties 100,000 36,000
Pension costs 4,674 —
319,219 61,000
There were three directors accruing retirement benefits with money purchase schemes during the year (2014: Nil).
The emoluments of the highest paid director were:
2015 2014
£ £
Emoluments 100,000 18,750
Contributions to defined contribution pension scheme 2,250 —
Total emoluments 102,250 18,750
There were no share options exercised at 31 March 2015.
4 Separately identifiable items 
2015 2014
£ £
Included within administrative expenses:
Acquisition and integration costs 155,131 74,769
155,131 74,769
5 Finance expense/income
2015 2014
£ £
Unwinding of discount – contingent consideration 125,300 —
Interest charged on related party loan (note 19) 3,822 —
129,122 —
Interest income on cash deposits (1,470) —
127,652 —
Notes to the financial statements continued Strategic report Corporate governance Financial statements
43
Collagen Solutions plc
Annual report and accounts 2015
6 Taxation 
2015 2014
Current tax £ £
Current tax on profit arising in overseas subsidiary 34,612 —
Total current tax 34,612 —
2015 2014
Deferred tax (note 16) £ £
Deferred tax credit associated with amortisation of fair value intangibles (7,576) —
Origination and reversal of temporary differences (5,821) —
Total deferred tax credit (13,397) —
Total tax charge 21,215 —
The charge for the year can be reconciled to the loss per the Consolidated Statement of Comprehensive Income as follows:
2015 2014
£ £
Loss on ordinary activities before tax (1,102,377) (479,998)
Tax at the UK corporation tax rate of 20% (2014: 21%) (220,475) (96,000)
Impact of different tax rates in other jurisdictions (9,876) —
Expenses not deductible for tax purposes 45,922 34,915
Tax losses not recognised as a deferred tax asset 205,644 61,085
Tax charge for the period 21,215 —
Unrecognised deferred tax asset 205,644 61,085
The unrecognised deferred tax asset relates to losses. Whilst the directors consider that there is a significant stream of income in the 
pipeline that may come to fruition, they consider that there is sufficient uncertainty surrounding the timing of those cash flows to warrant 
not recognising a deferred tax asset.
7 Loss per share
The calculation of basic loss attributable to the equity holders of the parent is based on losses of £1,123,592 (2014: £479,998) 
and on 96,409,178 (2014: 43,668,474) ordinary shares, being the weighted average number of shares in issue during the year. 
The loss for the year and the weighted average number of ordinary shares for calculating the diluted loss per share for the year ended 
31 March 2015 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 ordinary share and would therefore not be dilutive under the terms of IAS 33.
8 Intangible assets
Customer
Goodwill on Purchased contracts and Patents and 
acquisition goodwill relationships licensed IP Total
Group £ £ £ £ £
Cost
Arising on acquisition of subsidiary undertaking 3,953,334 — 34,496 — 3,987,830
Arising on acquisition of business and assets 
of Collagen Solutions LLC — 2,958,586 — — 2,958,586
Currency translation — (47,705) — — (47,705)
At 31 March 2014 3,953,334 2,910,881 34,496 — 6,898,711
Amortisation
Charge for the period — — (4,313) — (4,313)
At 31 March 2014 — — (4,313) — (4,313)
Net book value
At 31 March 2014 3,953,334 2,910,881 30,183 — 6,894,398 Financial statements
44
Collagen Solutions plc
Annual report and accounts 2015
8 Intangible assets continued
Customer
Goodwill on Purchased contracts and Patents and 
acquisition goodwill relationships licensed IP Total
Group £ £ £ £ £
Cost
At 1 April 2014 3,953,334 2,910,881 34,496 — 6,898,711
Additions — — — 68,222 68,222
Arising on acquisition of subsidiary undertaking 4,044,681 — 1,356,649 241,723 5,643,053
Currency translation — 367,596 — 310 367,906
At 31 March 2015 7,998,015 3,278,477 1,391,145 310,255 12,977,892
Amortisation
At 1 April 2014 — — (4,313) — (4,313)
Charge for the year — — (51,164) (3,504) (54,668)
At 31 March 2015 — — (55,477) (3,504) (58,981)
Net book value
At 31 March 2015 7,998,015 3,278,477 1,335,668 306,751 12,918,911
Impairment review
Total goodwill of £11,276,492 comprises goodwill arising on acquisition of subsidiary undertakings of £7,998,015 and goodwill arising on 
the purchase of a business of £3,278,477. Goodwill relates to the acquisition of Collagen Solutions (UK) Limited, the purchase of the assets 
of Collagen Solutions LLC in January 2014 and the acquisition of Southern Lights Ventures 2002 Limited in December 2014. This goodwill 
has been allocated to the combined Group as a single CGU for the purposes of the impairment review, since this is the lowest level within 
the entity at which management monitors goodwill for internal purposes. The whole Group is expected to benefit from the synergies of the 
business combinations through cross-selling opportunities, market reputation, cost savings and surety of supply. Synergies are represented 
by those unrecognised assets of the acquired entities that are effectively transferred to the CGU, rather than by the recognised assets.
The impairment review involves a value in use calculation which is based on the present value of expected future cash flows of the CGU 
to be generated. The key assumptions underlying the cash flow projections within the impairment review are revenue growth, margins and 
the level of operating expenditure. The cash flow projections are based on formally approved management cash flow projections for a three 
year period. A terminal value is calculated based on estimated real growth rate in perpetuity of 2.4% (2014: 2.25%) and rate of inflation 
in perpetuity of 3%, together with a pre-tax discount rate of 11.1% (2014: 10%). 
Key assumptions used in the growth calculations for years ended 2016 to 2018 are:
• Gross margins    (between 73% and 77%)
• Revenue growth   (between 62% and 106%)
• Increase in operating costs (between 5% and 59%)
The recoverable amount of the CGU exceeds the carrying amount of the CGU by 412.5%. The directors consider the revenues 
to be the most sensitive assumption used in the impairment reviews. A reduction in certain revenues of in excess of 64.29%, 
would result in the recoverable amount of the CGU being equal to its carrying amount.
Patents and
licensed IP
Company £
Cost
At 1 April 2014 —
Additions 60,832
At 31 March 2015 60,832
Amortisation
At 1 April 2014 and 31 March 2015 —
Net book value
At 1 April 2014 and 31 March 2015 60,832
Notes to the financial statements continued Strategic report Corporate governance Financial statements
45
Collagen Solutions plc
Annual report and accounts 2015
9 Property, plant and equipment
Leasehold Plant, equipment
improvements and machinery Total
Group £ £ £
Cost
Additions — 426 426
Arising on acquisition of business and assets of Collagen Solutions LLC — 20,215 20,215
Arising on acquisition of subsidiary undertaking — 224,490 224,490
At 31 March 2014 — 245,131 245,131
Depreciation
Charge for the year — 12,647 12,647
At 31 March 2014 — 12,647 12,647
Net book value
At 31 March 2014 — 232,484 232,484
Cost
At 1 April 2014 — 245,131 245,131
Additions 7,138 151,654 158,792
Arising on acquisition of subsidiary undertaking 282,212 200,561 482,773
Disposals — (20,547) (20,547)
Currency translation 6,521 6,065 12,586
At 31 March 2015 295,871 582,864 878,735
Depreciation
At 1 April 2014 — 12,647 12,647
Charge for the year 10,812 64,298 75,110
Disposals — (2,997) (2,997)
Currency translation 84 166 250
At 31 March 2015 10,896 74,114 85,010
Net book value
At 31 March 2015 284,975 508,750 793,725
Plant, 
 equipment
Company and machinery
Cost
At 1 April 2014 —
Additions 17,257
At 31 March 2015 17,257
Depreciation
At 1 April 2014 —
Charge for the year 3,306
At 31 March 2015 3,306
Net book value 
At 31 March 2015 13,951
At 31 March 2014 — Financial statements
46
Collagen Solutions plc
Annual report and accounts 2015
10 Financial asset investments
2015 2014
Company £ £
Investments in subsidiaries:
– Southern Lights Ventures 2002 Limited 6,121,427 —
– Collagen Solutions (UK) Limited 4,102,122 4,102,122
10,223,549 4,102,122
Loans to subsidiary undertakings 2,461,256 2,461,256
12,684,805 6,563,378
Details of subsidiaries, all wholly owned and included in the consolidated financial statements are as follows:
Proportion of
voting rights
Country of incorporation Holding and shares held Nature of business
Collagen Solutions (UK) Limited England Ordinary shares 100% Collagen manufacture
Collagen Solutions (US) Inc. (held indirectly) USA Ordinary shares 100% Collagen manufacture
Southern Lights Ventures 2002 Limited New Zealand Ordinary shares 100% Collagen manufacture and supply
Impairment review
The recoverable amount of investments is determined from value in use calculations when there is an indication of impairment. The key 
assumptions for the value in use calculations are those regarding the discount rates, growth rates and future expected changes to revenue 
and direct costs in relation to the particular investment and are set out in note 8.
Management estimates that there has been no impairment. 
The Group prepares forecasts derived from the most recent financial budgets. Changes in revenue and direct costs are based on 
management’s plans to cross sell the Group’s expanded range of current and pipeline products into existing customers and markets, 
and also to exploit opportunities with new customers, including extending into new market territories. These are approved by 
management and cash flows extrapolated thereafter in perpetuity. 
Based on the assumptions and estimates discussed above, and in note 8, management believes that no impairment provision is required.
Acquisition
On 10 December 2014 the Company completed the acquisition of the entire issued share capital of Southern Lights Ventures 2002 Limited, 
t/a Southern Lights Biomaterials, for a maximum consideration of up to £6 million. Initial consideration of £4 million was satisfied by £2.5 million 
in cash and £1.5 million in new ordinary shares issued at 7p per share, although the actual share price on date of acquisition had increased 
to 9.12p. In addition, a performance consideration payable is contingent on the future sales revenues up to the period ended 31 March 2018.
The contingent consideration is to be satisfied by up to NZ$4 million in two tranches of cash contingent on future sales revenues and it is 
anticipated at this time that the consideration will be payable in full and has been provided for on that basis. The fair value of this contingent 
consideration included at the balance sheet date is £1,704,693.
Notes to the financial statements continued Strategic report Corporate governance Financial statements
47
Collagen Solutions plc
Annual report and accounts 2015
10 Financial asset investments continued
Acquisition continued
At the date of acquisition the relevant Southern Lights Ventures 2002 Limited assets comprised the following:
Fair value
Book value adjustment Fair value
£ £ £
ASSETS
Non-current assets
Intangible assets
Patents and licensed IP 83,246 158,477 241,723
Customer contracts and relationships — 1,356,649 1,356,649
Property, plant and equipment 482,773 — 482,773
566,019 1,515,126 2,081,145
Current assets
Inventories 51,807 — 51,807
Trade and other receivables 268,054 — 268,054
Cash and cash equivalents 270,780 — 270,780
590,641 — 590,641
Total assets 1,156,660 1,515,126 2,671,786
Current liabilities
Trade and other payables 186,323 — 186,323
Related party loan 19,373 — 19,373
205,696 — 205,696
Non-current liabilities 
Deferred tax (4,503) 303,025 298,522
Related party loan 90,822 — 90,822
86,319 303,025 389,344
Total liabilities 292,015 303,025 595,040
Net assets 864,645 1,212,101 2,076,746
Goodwill arising on acquisition 4,044,681
6,121,427
Settled by:
Cash consideration 2,462,448
21,428,572 ordinary shares at 9.12p per share 1,954,286
Contingent consideration 1,704,693
6,121,427
Net cash acquired with subsidiary undertaking 270,780
The strike price at which the consideration shares were issued was 7p, being the price per the admission document. On 10 December 2014, 
when the shares were issued, the price was 9.12p.
Acquisition costs relating to the acquisition of Southern Lights Ventures 2002 Limited and under IFRS 3 (revised) are written off 
to comprehensive income as incurred.
Goodwill arising from the acquisition consists mainly of the anticipated synergies and economies of scale from combining and integrating 
the New Zealand and existing UK and US businesses, including their skilled development teams, as one Group. Customer contracts, 
relationships and pipeline opportunities were identified and discounted cash flow values were attributed. Revenues from patents held 
were also valued on a discounted cash flow basis.
The fair value of the acquired identifiable intangible assets of £1,515,126 has been determined by the use of the multi-period excess 
earnings method from management’s assessment of the present value of the incremental after-tax cash flows (excess earnings) 
attributable to the intangible asset over its remaining useful life.
The revenue included in the Consolidated Statement of Comprehensive Income since 10 December 2014 contributed by Southern Lights 
Ventures 2002 Limited was £0.56 million. Southern Lights Ventures 2002 Limited also contributed a profit after tax and management charges 
of £0.12 million over the same period. Had SLB been consolidated from 1 April 2014 the Consolidated Statement of Comprehensive Income 
would show pro-forma revenue of £1.8 million and loss after tax of £0.8 million. Financial statements
48
Collagen Solutions plc
Annual report and accounts 2015
11 Inventories
2015 2014
Group £ £
Raw materials 19,457 —
Work in progress 19,885 —
Consumables and finished goods for resale 179,202 39,265
218,544 39,265
Inventories expensed in the Consolidated Statement of Comprehensive Income are shown within cost of sales. All inventories are carried 
at the lower of cost or net realisable value. Inventories consumed in cost of sales amounted to £145,675 (2014: £4,075).
12 Trade and other receivables
Group Company Group Company
2015 2015 2014 2014
£ £ £ £
Trade receivables 418,972 — 18,048 —
Other receivables 150,618 112,894 107,889 93,129
Amounts owed by Group undertakings (note 19) — 957,319 — 195,322
Prepayments and accrued income 74,885 46,508 41,099 29,367
644,475 1,116,721 167,036 317,818
Included within trade receivables is £387 ,419 (2014: £15,798) denominated in US dollars, £20,807 (2014: £Nil) denominated in euros and £7 ,416 
(2014: £Nil) denominated in NZ dollars. £3,330 (2014: £2,250) is denominated in GBP sterling.
The amounts presented in the Consolidated Statement of Financial Position are net of impairment allowances. The ageing profile of trade 
receivables is shown below.
2015 2014
£ £
Current 297,671 3,000 
31–60 days old 75,109 5,188 
60–90 days old 40,344 1,215 
Over 90 days 5,848 8,645 
418,972 18,048
The directors are of the opinion that none of the overdue debts require impairment.
13 Cash and cash equivalents
Cash and cash equivalents comprise cash held by the Group as noted. The carrying amount of the asset approximates the fair value. 
Group balances are held in the following currencies:
2015 2014
GBP sterling 3,012,652 1,480,465
Euro 14,962 —
US dollar 347,064 11,195
NZ dollar 16,678 —
3,391,356 1,491,660
Cash and cash equivalents held by the Company were £2,980,509 (2014: £1,477,822). All balances were held in GBP sterling.
14 Current liabilities
Current liabilities
Group Company Group Company
2015 2015 2014 2014
£ £ £ £
Trade and other payables
Trade payables 214,927 36,488 45,775 12,000
Social security and other taxes 13,749 — 9,589 —
Director’s loan — — 53,468 —
Accruals and deferred income 130,597 43,704 50,744 46,827
359,273 80,192 159,576 58,827
The carrying amount of trade and other payables approximates to their fair values. 
Notes to the financial statements continued Strategic report Corporate governance Financial statements
49
Collagen Solutions plc
Annual report and accounts 2015
14 Current liabilities continued
Non-current liabilities
Group Company Group Company
2015 2015 2014 2014
£ £ £ £
Other financial liabilities
Contingent consideration 4,319,891 3,588,815 2,409,236 1,782,122
Elements of the contingent consideration become payable if certain sales targets are reached over the course of the period to 31 March 2018 
and/or if a number of supply contracts are concluded. There are three separate sets of earn-out conditions relating to the acquisitions of 
Collagen Solutions (UK) Limited, Collagen Solutions LLC and Southern Lights Ventures 2002 Limited. In making the maximum provision 
under the agreement, management has taken the view that based on current information the relevant targets will be reached.
The amounts recognised as of the date of relevant acquisitions are as follows: Collagen Solutions (UK) Limited – £1,782,122; 
Collagen Solutions LLC – £627,113; and Southern Lights Ventures 2002 Limited – £1,704,693.
The terms for Collagen Solutions (UK) Limited require the Group to pay the vendors two tranches of up to £1 million in ordinary shares 
based on a 12.5p strike price i.e. 8 million ordinary shares dependent on Group turnover reaching £2.25 million and securing three 
manufacturing contracts respectively.
The terms for Collagen Solutions LLC require the Group to pay the vendors two tranches of up to $0.625 million in cash dependent on 
sales of certain deferred consideration products and sales to certain deferred consideration customers reaching $3.5 million in any two 
consecutive years ending before 31 March 2018.
The terms for Southern Lights Ventures 2002 Limited require the Group to pay the vendors two tranches of NZ$2 million in cash dependent 
on turnover for any two years ending before 31 March 2018. The maximum amount is payable if turnover of NZ$6.5 million is achieved. 
In the case of both Collagen Solutions LLC and Southern Lights Ventures 2002 Limited, pro-rata amounts will be payable if the maximum 
turnover levels are not achieved. As stated above management estimates that in light of current information the maximum consideration 
will be payable as provided in the accounts.
15 Financial liabilities and assets
The Group’s treasury policy and management of financial instruments, which form part of these financial statements, are set out 
in the Financial Review.
Group 2015 Group 2014
 Cash Cash 
 and cash Loans and Other and cash Loans and Other
 equivalents receivables liabilities equivalents receivables liabilities
Contingent consideration — — 4,319,891 — — 2,409,236
Trade and other receivables — 644,475 — — 167,036 —
Cash and cash equivalents 3,391,356 — — 1,491,660 — —
Borrowings – related party loan — — 109,406 — — —
Trade and other payables — — 359,273 — — 159,576
Total 3,391,356 644,475 4,788,570 1,491,660 167,036 2,568,812
Company 2015 Company 2014
Cash  Cash
 and cash Loans and Other and cash Loans and Other
 equivalents receivables liabilities equivalents receivables liabilities
Contingent consideration — — 3,588,815 — — 1,782,122
Trade and other receivables — 1,116,721 — — 317,818 —
Cash and cash equivalents 2,980,509 — — 1,477,822 — —
Trade and other payables — — 80,192 — — 58,827
Total 2,980,509 1,116,721 3,669,007 1,477,822 317,818 1,840,949 Financial statements
50
Collagen Solutions plc
Annual report and accounts 2015
15 Financial liabilities and assets continued
Currency derivatives
The Group and the Company have not utilised forward contracts to hedge future purchase transactions and cash flows in the financial year. 
Credit risk
The Group and the Company’s credit risk is primarily attributable to trade receivables and cash and cash equivalents although all cash 
is held on deposit with highly reputable financial institutions. 
Credit risk with respect to trade receivables is due to the Group and Company trading with a limited number of companies which are generally 
large listed or blue chip medical device companies. Therefore, the Group and the Company do not expect in the normal course of events 
that these debts are at significant risk. Where there is perceived to be a greater risk, a standby letter of credit or similar is sought. The Group 
and the Company’s maximum exposure to credit risk is reflected in the carrying amounts of its financial assets as set out in the table above.
The Group and the Company have no significant concentration of credit risk in respect of their trade receivables as the exposure is spread 
over a number of customers.
Interest rate risk
The Group and the Company’s interest rate exposure is limited to their cash and cash equivalents. Cash and cash equivalents are held 
on short-term deposit attracting variable rates of interest.
Liquidity risk
All trade and other payables contracted at the reporting date have a settlement date of less than 12 months. 
Contingent consideration
The contingent consideration relating to the purchase consideration on the acquisitions made has been discounted to reflect the fair value 
of the future cash outflows based on the directors’ best estimate of when such sums will become payable under the terms of the agreement.
Interest rate risk profile of financial assets
The Group and the Company’s financial assets at 31 March 2015 comprised cash and trade receivables. The cash balances of £3,391,356 
(2014: £1,491,660) (Group) and £2,980,509 (2014: £1,477,822) (Company) are floating rate financial assets. Trade receivables are 
non-interest bearing.
Fair values of financial liabilities and financial assets
The fair values based upon the market value or discounted cash flows of financial liabilities and financial assets held in the Group 
and the Company were not materially different from their book values.
Finance and interest rate risk
Where appropriate, the Group and the Company manage their exposure to interest rate fluctuations on their borrowings to reduce 
the impact of adverse variations in the market rates on the Group’s profit and cash flow. 
Currency risk
The Group and the Company have overseas revenues in US dollars and minimal amounts in NZ dollars and euros.
The Group and the Company’s activities expose them primarily to currency risk. However, this risk is mitigated by the fact that there is a requirement 
to settle the costs including salary and fixed overheads of the facility in San Jose in US dollars. The Group also requires to settle salary costs 
and cover overheads of their NZ facility in NZ dollars, which presents a currency risk. In future, the Group and the Company can use foreign 
exchange forward contracts if required to hedge this exposure. There were no forward exchange rate contracts at the balance sheet date. 
The Group does not use derivative financial instruments for speculative purposes. The use of financial derivatives is governed by the Group’s 
policies approved by the board of directors, which provide written principles for the use of financial derivatives. 
16 Deferred tax liabilities
£
At 1 April 2014 —
On acquisition of subsidiaries 298,522
Translation movement (103)
Credited to income statement (13,397)
At 31 March 2015 285,022
At the reporting date, the Group has unused tax losses of £1,333,645 available for offset against profits. A cumulative deferred tax asset 
of £266,729 has not been recognised in respect of such losses.
Notes to the financial statements continued Strategic report Corporate governance Financial statements
51
Collagen Solutions plc
Annual report and accounts 2015
17 Commitments under operating leases
At 31 March 2015 the Group and the Company had outstanding commitments for future minimum lease payments under non-cancellable 
operating leases, which fall due as follows:
Group Company Group Company
2015 2015 2014 2014
£ £ £ £
Land and buildings
Within one year 150,473 50,000 41,905 —
Between one and five years 226,550 183,233 53,319 53,319
377,023 233,233 95,224 53,319
Equipment
Within one year 658 658 — —
Between one and five years 2,304 2,304 — —
2,962 2,962 — —
Operating lease charges for the year amounted to £94,492 (2014: £18,131). The remaining lease term for property is five years.
18 Share-based payment transactions
The Company has granted equity-settled share options to three employees, two of whom are directors. 
D E Evans options
The exercise price is the market value of the shares at the date of grant of 10p. The vesting period is up to ten years. If the options remain 
unexercised after a period of ten years from the date of grant, the options expire. The first vesting criterion has been achieved and the second 
criterion is for share price to reach 20p. 
G Black options
The exercise price is the market value of the shares at the date of grant of 7.75p. The vesting period is up to ten years. If the options remain 
unexercised after a period of ten years from the date of grant, the options expire. The vesting criterion is either for share price to reach 
27p or EPS to reach 1p.
Employee options
The exercise price is the market value of the shares at the date of grant of 7.88p. The vesting period is up to ten years. If the options remain 
unexercised after a period of ten years from the date of grant, the options expire. The vesting criteria are as follows:
(i) 64,724 options exercisable after 2 January 2016; no performance conditions apply;
(ii) 64,725 options exercisable after 2 January 2018; no performance conditions apply;
(iii) 64,725 options exercisable if either share price reaches 27p or EPS reaches 1p;
(iv) 64,725 options exercisable if annual sales reach £2.25 million and three new manufacturing contracts are entered into before 31 March 2017;
(v) 64,725 options exercisable if 90% of operational targets are met for two consecutive years; and
(vi) 64,725 options exercisable if 90% of operational targets are met for four consecutive years.
A reconciliation of option movements over the year to 31 March 2015 is shown below:
2015 2014
Weighted Weighted
average average
Number exercise Number exercise
of share price of share price
options (in p) options (in p)
Outstanding at the beginning of the period 4,050,000 10.00 — —
Granted during the year 1,888,349 8.37 4,050,000 10.00
Lapsed during the year (500,000) 10.00 — —
Outstanding at the end of the period 5,438,349 9.43 4,050,000 10.00
Exercisable at 31 March 2015 — — — — 
The Group recognised the following expense in relation to share-based payment transactions:
2015 2014
£ £
Charged to Consolidated Statement of Comprehensive Income 26,746 24,647
The options outstanding at 31 March 2015 had a weighted average exercise price of 9.43p and a weighted average remaining contractual 
life of 8.4 years. Financial statements
52
Collagen Solutions plc
Annual report and accounts 2015
18 Share-based payment transactions continued
Employee options continued
The fair value of options granted under the scheme is measured by use of the Trinomial Barrier Option and Black-Scholes models. 
The inputs into the models for options granted during the year are as follows:
Employee Employee Director
option option option 
Grant date 10/09/2014 31/07/2014 24/11/2014
Lapse date 25/03/2015 — —
Share price at grant date 10p 7.88p 7.75p
Exercise price 10p 7.88p 7.75p
Number of employees 1 1 1
Share options granted 500,000 388,349 1,000,000
Vesting period (years) 1–10 1–10
Expected volatility 30% 30%
Option life (years) 10 10
Expected life (years) 1–10 1–10
Risk free rate 2.6% 2.6%
Expected dividends expressed as a dividend yield 0% 0%
Fair value per option 2p 2p
Expected volatility was based upon the historical volatility over the expected life of the schemes. The expected life is based upon historical data and 
has been adjusted based on management’s best estimates for the effects of non-transferability, exercise restrictions and behavioural considerations.
19 Related party transactions
Transactions with key management
Key management personnel compensation comprised:
2015 2014
Equity-settled share options 26,746 24,647
Short-term benefits (including NIC) 356,586 64,348
Pension costs 4,674 —
Total remuneration 388,006 88,995
At 31 March 2015, two of the directors participated in a share option arrangement, as noted in the Directors’ Report and note 18.
At 31 March 2015, there was no outstanding loan due to a shareholder director. £53,468 outstanding at 31 March 2014 was repaid during the year.
Group Group
2015 2014
Related party loan £ £
Borrowings – current 21,843 —
Borrowings – non-current 87,563 —
109,406 —
1615915 Alberta Limited is a minority shareholder of Collagen Solutions plc. In June 2014, the Company’s subsidiary undertaking entered 
into a contract to purchase a freeze dryer for NZ$211,500. 1615915 Alberta Limited subsequently replaced Westpac New Zealand Ltd as 
the lender. The Alberta loan is secured over equipment with a fixed interest rate of 8.2% per annum and a repayment term of five years. 
Total amount outstanding at 31 March 2015 was £109,406. The fair value of these borrowings represent their carrying value as the effect 
of discounting is not significant.
The terms and conditions of the transactions with key management personnel and their related parties were no more favourable than those 
available, or which might reasonably be expected to be available, on similar transactions to non-key management personnel related entities 
on an arm’s length basis.
Transactions between Group companies
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation. 
The transactions during the year were management charges of £186,613 (2014: £30,250). In addition the Company provided net funding 
of £761,997 (2014: £1,560,000).
The outstanding balance due to the Company from its subsidiaries as at 31 March 2015 was £3,418,575 (2014: £2,656,578). 
Notes to the financial statements continued Strategic report Corporate governance Financial statements
53
Collagen Solutions plc
Annual report and accounts 2015
19 Related party transactions continued
Investment
The Company holds a 10.5% investment in ordinary 1p shares in Jellagen Pty Limited, a company involved in the production of 
jellyfish collagen. No value is carried on the balance sheet. Collagen Solutions (UK) Limited provided development services amounting 
to £32,000 (2014: Nil) to Jellagen Pty Limited under terms in the normal course of business.
Other
Diagnostic Capital Limited, a company in which David Evans and Kevin Wilson have an interest, provided corporate finance services 
amounting to £80,167 (2014: £87,279) in relation to the acquisition made in the year. These services were charged at normal market rates.
20 Share capital
2015 2015 2014 2014
Number £ Number £
Issued and full paid
Issued ordinary shares of 1p 170,968,865 1,709,689 63,826,007 638,260
Issued deferred shares of 9p 500,000 45,000 500,000 45,000
Balance at the end of the year 171,468,865 1,754,689 64,326,007 683,260
Ordinary shares 
The total number of issued shares at 31 March 2015 was 170,968,865 (2014: 63,826,007). 
On 10 December 2014, as part of the initial consideration for the acquisition of Southern Lights Ventures 2002 Limited, 21,428,572 shares 
were issued pursuant to a placing at a price of 7p per share and at the same time a further 85,714,286 shares were issued at 7p for cash. 
The fair value of these shares at 10 December 2014 was 9.12p.
Deferred shares
The total number of deferred shares at 31 March 2015 was 500,000 (2014: 500,000). The deferred shares do not confer any voting rights.
Options
At 31 March 2015 the Company had 5,438,349 (2014: 4,050,000) unissued ordinary shares of 1p each under the Company’s share option 
schemes, details of which are as follows:
Option Date
price from which Expiry
Grant date Number (in p) exercisable date
29 March 2013 4,050,000 10 2 January 2014 28 March 2023
31 July 2014 388,349 7.88 2 January 2016 30 July 2024
24 November 2014 1,000,000 7.75 1 January 2017 23 November 2024
Details of share options are disclosed in note 18 of the accounts.
Capital management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide 
returns for shareholders and maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital 
to shareholders, issue new shares or sell assets to reduce debt.
Both share capital and the share premium account arise on the issue of shares. The retained deficit reflects losses incurred to date.
Share-based payment reserve
This reserve is the result of the Company’s grant of equity-settled share options to selected employees and is measured in accordance 
with IFRS 2 Share-based Payment. 
Translation reserve
The translation reserve arises from the retranslation of the foreign subsidiaries to the presentational currency of the Group on consolidation.
Merger reserve
This reserve arises from the premium on the difference between the fair value share price of Collagen Solutions plc shares issued 
as consideration shares on 2 January 2014 and 10 December 2014 and the nominal value of those shares. Consideration shares were 
issued to satisfy part of the consideration in the acquisition of Collagen Solutions (UK) Limited, the acquisition of the business and assets 
of Collagen Solutions LLC, and the acquisition of Southern Lights Ventures 2002 Limited.
21 Contingent liabilities
Group and Company
At 31 March 2015, there were no contingent liabilities. Financial statements
54
Collagen Solutions plc
Annual report and accounts 2015
Notice is hereby given that an Annual General Meeting of Collagen Solutions plc (the “Company”) will be held at the offices 
of Shepherd and Wedderburn LLP, 191 West George Street, Glasgow G2 2LB at 10.00am on 24 August 2015 for the following purposes:
To consider and, if thought fit, pass the following as ordinary resolutions: 
1.  To receive and adopt the Company’s accounts for the financial year ended 31 March 2015, together with the Directors’ Report 
and the Auditors’ Report on those accounts.
2. To re-elect Brian Geoffrey Bennett as a director of the Company. 
3. To re-appoint Baker Tilly UK Audit LLP as auditors of the Company. 
4. To authorise the directors to fix the auditors’ remuneration.
5. That:
 (A)   the directors be generally and unconditionally authorised to allot shares in the Company, or to grant rights to subscribe 
for or to convert any security into shares in the Company, up to a maximum nominal amount of £729,896.22;
 (B)  in addition to the authority contained in sub-paragraph (A) of this resolution, the directors be authorised to allot shares in the Company, 
or to grant rights to subscribe for or to convert any security into shares in the Company, comprising equity securities (within the meaning 
of section 560(1) of the Companies Act 2006 (the “Act”)) up to a maximum nominal amount of £569,896.22 in connection with 
a Pre-Emptive Offer undertaken by means of a rights issue;
 (C) the authorities given in this resolution:
  (1) are given pursuant to section 551 of the Act and shall be in substitution for all pre-existing authorities under that section; and
  (2)  unless renewed, revoked or varied in accordance with the Act, shall expire on 30 September 2016, or, if earlier, at the end of the 
next Annual General Meeting of the Company to be held in 2016, save that the Company may before such expiry make an offer 
or agreement which would or might require the allotment of shares in the Company, or the grant of rights to subscribe for or 
to convert any security into shares in the Company, after such expiry; and
 (D) for the purpose of this resolution, “Pre-Emptive Offer” means an offer of equity securities to:
  (1)  holders of ordinary shares (other than the Company) on a fixed record date in proportion to their respective holdings of such shares; and
  (2)  other persons entitled to participate in such offer by virtue of, and in accordance with, the rights attaching to any other equity 
securities held by them,
   in each case, subject to such exclusions or other arrangements as the directors may deem necessary or appropriate in relation to 
fractional entitlements or legal, regulatory or practical problems under the laws or the requirements of any regulatory body or stock 
exchange of any territory or otherwise.
To consider and, if thought fit, pass the following as a special resolution:
6. That:
 (A)  subject to the passing of resolution 5 set out in the notice of Annual General Meeting dated 29 July 2015 (the “Allotment Authority”), 
the directors be given power pursuant to section 570 of the Companies Act 2006 (the “Act”) to allot equity securities (within the meaning 
of section 560(1) of the Act) for cash, pursuant to the Allotment Authority as if section 561(1) of the Act did not apply to any such 
allotment, provided that such power shall be limited to the allotment of equity securities:
  (1) in the case of paragraph (A) of the Allotment Authority: 
   (a) in connection with a Pre-Emptive Offer (as defined in the Allotment Authority); or
   (b) otherwise than in connection with a Pre-Emptive Offer, up to a maximum nominal amount of £256,453.30; and
  (2)  in the case of paragraph (B) of the Allotment Authority, in connection with a Pre-Emptive Offer undertaken by means of a rights 
issue; and
Notice of Annual General Meeting
Collagen Solutions plc
(Registered number: 8446337) Strategic report Corporate governance Financial statements
55
Collagen Solutions plc
Annual report and accounts 2015
 (B) the power given in this resolution:
  (1) shall be in substitution for all pre-existing powers under section 570 of the Act; and
  (2)  unless renewed in accordance with the Act, shall expire at the same time as the Allotment Authority, save that the Company 
may before such expiry make an offer or agreement which would or might require equity securities to be allotted after such expiry.
By order of the Board
Gill Black
Company Secretary
29 July 2015 
Registered office
c/o Shepherd and Wedderburn LLP
Condor House
10 St. Paul’s Churchyard
London EC4M 8AL
England 
Notes
1.  A member of the Company entitled to attend and vote at the meeting convened by this notice is entitled to appoint one or more proxies 
to exercise any of his/her rights to attend, speak and vote at that meeting on his/her behalf. If a member appoints more than one proxy, 
each proxy must be entitled to exercise the rights attached to different shares. A proxy need not be a member of the Company. 
2.  A proxy may only be appointed using the procedures set out in these notes and the notes to the proxy form. To appoint a proxy, a member 
may complete, sign and date the enclosed proxy form and deposit it at the office of the Company’s registrars, Capita Asset Services, 
at The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU by 10.00am on 20 August 2015. Any power of attorney or any other 
authority under which the proxy form is signed (or a duly certified copy of such power or authority) must be enclosed with the proxy form.
3.  In order to revoke a proxy appointment, a member must sign and date a notice clearly stating his/her intention to revoke his/her proxy 
appointment and deposit it at the office of the Company’s registrars, Capita Asset Services, at The Registry, 34 Beckenham Road, 
Beckenham, Kent BR3 4TU prior to the commencement of the meeting.
4.  Any corporation which is a member of the Company may authorise one or more persons (who need not be a member of the Company) 
to attend, speak and vote at the meeting as the representative of that corporation. A certified copy of the board resolution of the 
corporation appointing the relevant person as the representative of that corporation in connection with the meeting must be deposited 
at the office of the Company’s registrars prior to the commencement of the meeting.
5.  The right to vote at the meeting shall be determined by reference to the register of members of the Company. Only those persons 
whose names are entered on the register of members of the Company at 6.00pm on 20 August 2015 shall be entitled to attend and 
vote in respect of the number of shares registered in their names at that time. Changes to entries on the register of members after 
that time shall be disregarded in determining the rights of any person to attend and/or vote at the meeting. Financial statements
56
Collagen Solutions plc
Annual report and accounts 2015
Notice of Annual General Meeting continued
Collagen Solutions plc
(Registered number: 8446337)
Explanatory notes to the Notice of Annual General Meeting
These notes give an explanation of the proposed resolutions. Resolutions 1 to 5 are proposed as ordinary resolutions. This means that for 
each of those resolutions to be passed, more than half of the votes cast must be in favour of the resolution. Resolution 6 is proposed as a 
special resolution. This means that for resolution 6 to be passed, at least three-quarters of the votes cast must be in favour of the resolution.
Resolution 1 – Annual report and accounts
The directors must lay the Company’s accounts, the Directors’ Report and the Auditors’ Report before the shareholders in a general 
meeting. This is a legal requirement after the directors have approved the accounts and the Directors’ Report, and the auditors have 
prepared their report.
Resolution 2 – Re-election of directors
The Company’s Articles of Association require that at the Annual General Meeting of the Company any directors who have been appointed 
since the last Annual General Meeting; or any who were not appointed or re-appointed at one of the preceding two Annual General Meetings, 
must retire from office. Accordingly, Brian Geoffrey Bennett will offer himself for re-election at the Annual General Meeting.
Biographical details of the directors are set out on pages 20 and 21 of the annual report and accounts. 
Resolutions 3 and 4 – Re-appointment and remuneration of auditors
The Company is required to appoint auditors for each financial year of the Company. Resolution 3 proposes the re-appointment 
of Baker Tilly UK Audit LLP as the Company’s auditors for the current financial year of the Company ending on 31 March 2016. Resolution 4 
seeks authority for the directors to decide the auditors’ remuneration.
Resolution 5 – Renewal of authority to allot shares 
The purpose of this resolution is to renew the directors’ power to allot shares. Section 551 of the Companies Act 2006 (the “Act”) provides 
that the directors may not allot new shares (other than for employee share schemes) without shareholder approval. This resolution proposes 
that authority be granted in substitution of the existing authority to allot securities up to a maximum amount of £729,896.22. Of this amount, 
£569,896.22 represents approximately one-third of the Company’s total issued ordinary share capital as at 31 July 2015, being the latest 
practicable date prior to publication of this document, and £160,000 represents the nominal amount of shares which the Directors anticipate will 
require to be issued in satisfaction of its obligations to the vendors of Collbio Limited under the acquisition agreement dated 9 December 2013, 
the first tranche of which the Directors’ anticipate will fall due prior to or shortly after the AGM and a second and final tranche will potentially 
fall due at some point thereafter depending on the performance of Collbio Limited (the “Collbio Allotments”). The Directors confirm that they 
would not use the authority in excess of £569,896.22 other than for the Collbio Allotments. 
In addition, following guidance issued by the ABI in December 2008 and updated in November 2009, the Company is seeking additional 
authority to allot securities in connection with a fully pre-emptive rights issue up to a maximum amount of £569,896.22, representing 
approximately one-third of the Company’s total issued ordinary share capital as at 17 July 2015, being the latest practicable date prior to 
publication of this document. The benefit to the Company of obtaining such authority on an annual basis is that it would allow the Company 
to implement a rights issue of an amount equal to two-thirds of the issued ordinary share capital without the need to call an additional 
general meeting. This would shorten the implementation timetable of such a rights issue. 
The directors consider that the authorities sought pursuant to resolution 5 are desirable to allow the Company to retain flexibility although 
they have no present intention of exercising these authorities. The authorities will expire at the end of the 2016 Annual General Meeting or, 
if earlier, on 30 September 2016, unless previously cancelled or varied by the Company in general meeting. 
Resolution 6 – Disapplication of pre-emption rights
Section 561(1) of the Act provides that if the directors wish to allot any equity securities, or sell any treasury shares (if it holds any), for cash, 
it must first offer them to existing shareholders in proportion to their existing shareholdings. Section 561 does not apply in connection with 
an employee share scheme. The purpose of this resolution is to allow the directors to allot equity securities for cash as if section 561(1) of 
the Act did not apply, in connection with rights issues, open offers and other pre-emption offers pursuant to the authority granted by 
resolution 5, and otherwise up to a total amount of £256,453.30, representing approximately 15% of the Company’s total issued ordinary 
share capital as at 17 July 2015, being the latest practicable date prior to publication of this document. This power is being sought in order 
to give the Company the flexibility to raise funds in the future should it choose to do so. 
The authority will expire at the end of the 2016 Annual General Meeting or, if earlier, on 30 September 2016, unless previously cancelled 
or varied by the Company in general meeting. Strategic report Corporate governance Financial statements
Officers and professional advisers
Directors
D E Evans – Non-executive Chairman
M J Gillies – Non-executive Director 
Dr K W Wilson – Non-executive Director
Dr S White – Chief Executive Officer
G N Black – Chief Financial Officer
B G Bennett – Chief Business Officer 
(appointed 10 December 2014)
Company Secretary
G N Black
Registered office
c/o Shepherd and Wedderburn LLP
Condor House
10 St. Paul’s Churchyard
London
EC4M 8AL
Nominated adviser and broker
Panmure Gordon (UK) Limited
One New Change
London
EC4M 9AF
Auditors
Baker Tilly UK Audit LLP
Chartered Accountants
3 Hardman Street
Manchester
M3 3HF
Registrars
Capita Asset Services
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
PR
Walbrook PR Limited
4 Lombard Street
London
EC3V 9HD
  Collagen Solutions plc Annual report and accounts 2015
c/o Shepherd and Wedderburn LLP
Condor House
10 St. Paul’s Churchyard
London
EC4M 8AL
www.collagensolutions.com Collagen Solutions plc Annual report and accounts 2015