RUA Life Sciences confident despite first-half weakness
By Josh White
Date: Friday 24 Nov 2023
(Sharecast News) - Medical device specialist RUA Life Sciences said in a trading update on Friday that it expected revenue for the year to meet forecasts despite some order disruption.
The AIM-traded firm's contract manufacturing business saw a front-loaded revenue distribution last year, but that pattern has reversed this year due to temporary disruptions in shipping order timings to customers.
As a result, total group revenue, including royalties, declined to £0.79m in the first half, marking a 28% decrease compared to the first six months of 2023, when it stood at £1.1m.
On a brighter note, royalties from biomaterials related to Elast-Eon rose to £0.2m for the period, making for a 6% year-on-year increase.
As a result, contract manufacturing revenues dipped to £0.6m, registering a 35% year-on-year decline.
However, since the period ended, October saw a robust performance for contract manufacture.
By the end of the month, revenues had nearly recovered, trailing just 6% behind the year-to-date budget.
RUA's management anticipated complete order fulfilment by the end of November, aligning with budget projections and returning to normal trading volumes.
As a result, the group remained confident that full-year revenues would meet management expectations.
Despite the disruption in orders, RUA Life Sciences said it prudently managed its resources, ending the period on 30 September with a cash balance of £0.5m, down from £1.5m on 31 March.
As a result, with a resurgence in order shipments and the receipt of research and development tax credits of £0.38m, the cash position as of 21 November was above £1m.
Due to the shift in revenue distribution favouring the second half and resultant revenue shortfalls, group losses before tax for the first half were expected to widen by 22% to £1.4m temporarily.
"Taking into account the recent catch-up in shipments, our biomaterials and contract manufacturing businesses continue to perform in line with expectations and demonstrate growth potential," said chairman Bill Brown.
"As announced on 20 November with the strategy update our focus is to minimise the future investment required for the group to commercialise its development projects and provide a pathway for the group to reach profitability and cash generation in a significantly shorter timeframe."
RUA said it would announce its interim results in the second half of December.
At 1335 GMT, shares in RUA Life Sciences were down 16.57% at 26.28p.
Reporting by Josh White for Sharecast.com.
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