22 Jul 2009 07:00
AorTech International plc
("AorTech" or the "Company")
Results for the year ended 31 March 2009
AorTech International plc (AIM: AOR) the biomaterials and medical device development company, today announces its results for the year ended 31 March 2009.
Financial Highlights (vs. prior year) • Group turnover decreased from £1.5m to £1.3m • Pre tax loss remained at £2.1m • Cash reserves decreased from £5.3m to £4.2m - Ends -
| For further information please contact: |
| AorTech International plc | Tel: + 1 801 201 4336 |
| Frank Maguire, Chief Executive | |
| Evolution Securities Bobbie Hilliam Chris Clarke | Tel: +44 20 7071 4300 |
| AorTech International plc Sarah Price, Investor Relations | Tel: + 1 801 649 4163 e-mail sprice@aortech.com |
Notes to Editors: About AorTech International plc Listed on AIM in London, AorTech International plc wholly owns AorTech Biomaterials based in Melbourne, Australia and AorTech Medical Devices based in Salt Lake City, UT, USA. AorTech Biomaterials was formed in July 1997 to develop and commercialise Elast-Eon™, a highly useful and biostable co-polymer in the medical device and drug delivery fields. AorTech's Elast-Eon technology is the product of a decade of fundamental research into biologically stable materials. Elast-Eon materials are patented, high silicone content, polyurethane co-polymers which exhibit unparalleled biological and mechanical performance. AorTech is firmly focused on the development of this material with the aim of providing a wide range of high performance Elast-Eon materials in a variety of application specific formulations and densities, for use in medical devices.
CHAIRMAN'S STATEMENT
I am pleased to report to you on another year of progress for the Group.
Financial Review
Group revenue for the year ended 31 March 2009 was £1.3m, a decrease of £0.2m in the figure achieved in the prior twelve month financial reporting period. Operating expenses were however reduced by £93,000 from £3,125,000 in the corresponding period last year to £3,032,000. After allowing for grants received, the loss before taxation was £1.2m, the same as for the year ended 31 March 2008. Licensing fees, bulk material and components are reflected in this year's reported revenues. Interest received on our cash deposits increased, notwithstanding the general global lowering of interest rates, and the Group benefited from the strengthening of the Australian currency due to the location of the majority of the Group's assets there.
The slight decreased level of income generated during the period compared to last year should not divert attention from the very considerable progress achieved during the year, namely the qualification of our materials and manufacturing capability for a rapidly increasing range of applications. We have also been successful in expanding and initiating customer relationships that should deliver strong income and profit growth in the future. New licence agreements for applications in vascular connectors, vascular stents and circulatory support pumps have been entered into and existing licences in lead insulation and arterial/venous cannula have been expanded during the period. Our revenue was generated from 21 different accounts, but the greater part of our income continues to arise from the licence fees and milestone payments. There will therefore continue to be significant fluctuations in our revenue during the current year as a result of these major lump sum payments.
The effect of the global economic crisis has had a minor but measurable effect on our industry. This impact is limited to a reduction in new programmes at existing companies and the ability of early stage companies to obtain cash to fund their own development programmes. We are happy to report that the Group continues to have adequate cash reserves for the immediate future and beyond. The net cash balances at 31 March 2009 were £4.2m, which we expect will provide adequate financial resources to support the Group's ongoing operations and development plans. The number of shares in issue remained at 4,832,778 during the course of the financial year ended 31 March 2009.
Strategy and Current Trading
Implant numbers and commensurate polymer volume continued to grow at an accelerating pace during the period. Actual implant numbers are now in excess of one million which equates to several million patient years of reliable Elast-Eon™ device performance. In each of our licences we require our customers to report to us any adverse clinical results and with almost three years of implant history there have been no such reports involving any Elast-Eon™ components from anywhere in the world. Our factory has maintained its perfect delivery and quality performance for another year. Shareholders have the right to be proud of the Melbourne facility and its staff.
Perhaps the most exciting progress has come in the development and supply of Elast-Eon™ components and the utilisation of our proprietary processing methods to produce certain types of next generation orthopædic and cardiology components to our customers' specification. In the coming year we project that our highest growth area will be in the production of Elast-Eon™ components for ventricular assist, vascular occlusion, various coatings and in particular, cardiac pacing and neurostimulation headers. Each of these markets are of high value and we believe that Elast-Eon™ provides advantages over existing technologies that will enable AorTech and its Licensees to gain substantial market share.
We recently announced our entry into the supply of material and manufacture of headers for pacemakers and neurostimulation devices. We have signed our first licence agreement for two products and have high expectation for growth in this area.
Operational Highlights of the Financial Year
The US$32.8 million co-development programme for new products announced in July 2007 continues to proceed on plan and has expanded into related product areas providing revenues for the next period.
AorTech has advanced into Elast-Eon™ header manufacturing through our first licence agreement. The header application relates to component parts for implantable pacemakers and neurostimulation devices. This has been rapidly followed by the supply of implant-quality components, accelerating our partners' programmes towards first human use in this application.
As announced, St Jude Medical elected to extend their exclusivity period for the use of our polymers in their pacing lead application. A new set of annual maintenance payments related to this development are now incorporated into our cash forecasts.
Breast implant patents continue to move through their examination phase and the Group has concluded that with the global downturn of elective cosmetic surgeries it will maintain its breast implant patent portfolio but suspend in-house development efforts until such time as the plastic surgery market recovers.
The development of a new biostable polymer, Ecsil, permitting softer formulations and improved strength, further cements AorTech's position as the leading supplier of high performance polymers to the medical long-term implant market. This product is in a number of customer evaluations and will be formally launched in Q3 2009. It will play a role in our breast implant development.
Outlook
Looking forward, the business is increasingly utilising the co-development of Elast-Eon™ components and the manufacture of these components to drive top line revenue. These projects have already proved of great interest to our customers. Our specific advantage is an ability to process Elast-Eon™ polymers in ways that are unique and of high value to numerous customer-based product development programmes.
In calendar year 2010 we are expecting first human use of devices incorporating Elast-Eon™ headers together with a major expansion of an existing licence along with multiple licences and regulatory approvals for urological applications. New orthopædic licences for both bulk polymer and for component supply are also anticipated within this window. In addition, we will see the clinical use of Elast-Eon™ in a critical long-term cardiac surgery implant.
These developments are in line with strategic expectations, and we believe that upon realisation they will create a substantial increase in shareholder value.
Jon Pither
Chairman
Consolidated income statement
| Year ended 31 March 2009 | Year ended 31 March 2008 | |||||
| £000 | £000 | |||||
| Note | ||||||
| Revenue |
| 1,259 | 1,484 | |||
| Other income - grants received | 234 | 268 | ||||
|
| ||||||
| Cost of sales | (124) | (205) | ||||
| Administrative expenses | (1,754) | (1,789) | ||||
| Other expenses - development expenditure | (1,040) | (1,023) | ||||
| Other expenses - amortisation of intangible assets | (114) | (108) | ||||
| Operating loss |
| (1,539) | (1,373) | |||
| Finance income |
| 290 | 214 | |||
| Loss before taxation | (1,249) | (1,159) | ||||
| Taxation |
| - | - | |||
| Loss attributable to equity holders of the parent company | (1,249) | (1,159) | ||||
| Loss per share | ||||||
| Basic and diluted - (pence per share) | 2 | (25.84) | (25.84) | |||
| Consolidated balance sheet |
|
|
|
|
|
| |
|
| 31 March 2009 |
| 31 March 2008 |
| |||
|
| £000 |
| £000 |
| |||
| Assets | |||||||
| Non current assets |
|
|
|
|
| ||
|
| Property, plant and equipment |
| 702 |
| 640 |
| |
|
| Intangible assets |
| 1,257 |
| 1,302 |
| |
| Total non current assets |
| 1,959 |
| 1,942 |
| ||
| Current assets |
|
|
|
| |||
|
| Inventories |
| 150 |
| 240 |
| |
|
| Trade and other receivables |
| 436 |
| 312 |
| |
|
| Cash and cash equivalents |
| 4,178 |
| 5,348 |
| |
| Total current assets |
| 4,764 |
| 5,900 |
| ||
| Total assets |
| 6,723 |
| 7,842 |
| ||
| Liabilities |
|
|
|
| |||
| Current liabilities |
|
|
|
| |||
|
| Trade and other payables |
| (512) |
| (581) |
| |
|
|
| ||||||
| Total current liabilities |
| (512) |
| (581) |
| ||
| Non current liabilities |
|
|
|
| |||
|
| Other non current liabilities |
| (79) |
| (147) |
| |
| Total non current liabilities |
| (79) |
| (147) |
| ||
| Total liabilities |
| (591) |
| (728) |
| ||
| Net assets |
| 6,132 |
| 7,114 |
| ||
| Equity |
|
|
|
| |||
|
| Issued capital |
| 12,082 |
| 12,082 |
| |
|
| Share premium |
| 2,340 |
| 2,340 |
| |
|
| Other reserve |
| (2,003) |
| (2,003) |
| |
|
| Foreign exchange reserve |
| 658 |
| 391 |
| |
|
| Profit and loss account |
| (6,945) |
| (5,696) |
| |
| Equity shareholders' funds |
| 6,132 |
| 7,114 |
| ||
|
|
|
|
|
|
| ||
| Consolidated cash flow statement | ||||||
| Year ended 31 March 2009 | Year ended 31 March 2008 | |||||
| £000 | £000 | |||||
| Cash flows from operating activities | ||||||
| Group loss after tax | (1,249) | (1,159) | ||||
| Adjustments for: | ||||||
| Depreciation of property, plant and equipment | 207 | 185 | ||||
| Amortisation of intangible assets | 114 | 108 | ||||
| Interest income | (290) | (214) | ||||
| Deferred income released | (64) | (29) | ||||
| Loss on disposal of property, plant and equipment | - | 18 | ||||
| (Increase)/decrease in trade and other receivables | (124) | 62 | ||||
| Decrease/(increase) in inventories | 90 | (151) | ||||
| (Decrease)/increase in trade and other payables | (73) | 41 | ||||
| Net cash flow from operating activities | (1,389) | (1,139) | ||||
| Cash flows from investing activities | ||||||
| Purchase of property, plant and equipment | (234) | (312) | ||||
| Interest received | 290 | 214 | ||||
| Net cash flow from investing activities | 56 | (98) | ||||
| Cash flows from financing activities | ||||||
| Proceeds from issue of share capital, net of issue costs | - | 4,896 | ||||
| Net cash flow from financing activities | - | 4,896 | ||||
| Net (decrease)/increase in cash and cash equivalents | (1,333) | 3,659 | ||||
| Foreign exchange differences | 163 | 209 | ||||
| Cash and cash equivalents at beginning of year | 5,348 | 1,480 | ||||
| Cash and cash equivalents at end of year | 4,178 | 5,348 | ||||
| Consolidated statement of changes in equity | ||||||||||||||||
| Share capital | Share premium account | Other reserve | Foreign exchange reserve | Profit and loss account | Total equity | |||||||||||
| £000 | £000 | £000 | £000 | £000 | £000 | |||||||||||
| Balance at 1 April 2007 | 9,526 | - | (2,003) | (25) | (4,537) | 2,961 | ||||||||||
| Exchange difference on translation of foreign operations | - | - | - | 416 | - | 416 | ||||||||||
| Net income recognised directly in equity | - | - | - | 416 | - | 416 | ||||||||||
| Loss for the year | - | - | - | - | (1,159) | (1,159) | ||||||||||
| Total recognised income and expense for the year | - | - | - | 416 | (1,159) | (743) | ||||||||||
| Issue of share capital (net of issue costs) | 2,556 | 2,340 | - | - | - | 4,896 | ||||||||||
| Balance at 31 March 2008 | 12,082 | 2,340 | (2,003) | 391 | (5,696) | 7,114 | ||||||||||
| Exchange difference on translation of foreign operations | - | - | - | 267 | - | 267 | ||||||||||
| Net income recognised directly in equity | - | - | - | 267 | - | 267 | ||||||||||
| Loss for the year | - | - | - | - | (1,249) | (1,249) | ||||||||||
| Total recognised income and expense for the year | - | - | - | 267 | (1,249) | (982) | ||||||||||
| Balance at 31 March 2009 | 12,082 | 2,340 | (2,003) | 658 | (6,945) | 6,132 | ||||||||||
1. Basis of preparation
The financial information in this preliminary announcement has been prepared under the historical cost convention except for certain financial instruments which are carried at fair value, and in compliance with International Financial Reporting Standards (IFRS) and International Financial Reporting Interpretations Committee (IFRIC) interpretations as adopted by the European Union as at 31 March 2009.
2. Loss per share
The basic loss per Ordinary share of 25.84p (2008: 25.84p) is calculated on the loss of the Group of £1,249,000 (2008: £1,159,000) and on 4,832,778 (2008: 4,484,875) equity shares, being the number of shares in issue during the year. The diluted loss per share does not differ from the basic loss per share as the exercise of share options would have the effect of reducing the loss per share and is therefore not dilutive under the terms of IAS 33.
3. Preliminary announcement
The summary accounts set out above do not constitute statutory accounts as defined by Section 240 of the UK Companies Act 1985. The summarised consolidated balance sheet at 31 March 2009, the summarised consolidated income statement, the summarised consolidated cash flow statement and the summarised consolidated statement of changes in equity for the year then ended have been extracted from the Group's statutory accounts for the year to 31 March 2009 upon which the auditor's opinion is unqualified, and did not contain statements under Section 237(2) or Section 237(3) of the Companies Act 1985. The statutory accounts for the year ended 31 March 2009 were approved by the Directors on 20 July 2009, but have not yet been delivered to the Registrar of Companies.
4. Notice of Annual General Meeting
Notice is hereby given that the twelfth Annual General Meeting of AorTech International plc will be held in the Mansfield Room of the Marriott Hotel Chancery Court, 252 High Holborn, London WC1V 7EN on 16 September 2009 at 12:00 noon.
5. Posting and availability of accounts
The annual report and accounts for the year ended 31 March 2009 will be sent by post to all registered shareholders on 21 August 2009. Additional copies will be available for a month thereafter from the Company's Surbiton office. Alternatively, the document may be viewed on, or downloaded from, the Company's website: www.aortech.com.