17 Dec 2008 07:00
17 December 2008
AorTech International plc
Interim Results for the six months ended 30 September 2008
AorTech International plc (AIM: AOR) ("AorTech" or the "Company"), the biomaterials and medical device development company, today announces its unaudited interim results for the six months ended 30 September 2008.
"There has been considerable progress made in the evaluation and testing of Elast-Eon™ in a range of medical device applications, by several health care companies. The Group's material is now being used and fully accepted in three human use applications and further devices with Elast-Eon™ are expected to come into use during the next two years. Although there are lengthy periods before substantial sums of royalty and licence income are earned, Elast-Eon™ is now a proven material for use within the body, and the long years of development and testing should result in significant payments to the Group during the next two years."
For further information please contact:
| AorTech International plc Frank Maguire, Chief Executive | Tel: + 1 801 201 4336 |
| Evolution Securities Bobbie Hilliam | Tel: +44 20 7071 4300 |
Notes to Editors
About AorTech International plc
Listed on AIM in London, AorTech International plc wholly owns AorTech Biomaterials based in Melbourne, Australia. 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 copolymers which exhibit unparalleled biological and mechanical performance.
AorTech is firmly focused on the development and refinement of this material for the medical community, 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.
Unaudited Interim Results for the six months ended 30 September 2008
Chairman's Statement
I am pleased to report that during the first six months of the financial year 2008/09 steady progress continues to be made by the AorTech Group in its project development programmes.
Financial Review
Group revenue for the six month period was £74,000, which compares with £328,000 for the corresponding period during the previous financial year, when up-front licence fees of US$300,000 were received. Our revenue is subject to significant fluctuations due to the nature of the Group's income, particularly from our joint venture development projects. Major lump sum payments are anticipated from the continuing success of these projects during the next twenty-four months. Operating expenses for the half-year increased by 9% to £1.45m, which included £543,000 of development expenditure (H1 2007: £388,000) and £93,000 amortisation of intangible assets (H1 2007: £49,000). The loss after tax for the six months was £1.2m, an increase of £440,000 over the 2007 corresponding period. The increase in development expenses occurred according to plan and was directly attributable to the scale-up of internal polymer heart valve manufacturing operations and the completion of the Group's reactor and related systems for the production of key raw material, polydimethylsiloxane (PDMS - or silicone). Operating expenses are consistently running below budgeted levels.
Operational Review
Elast-Eon™ continues to enjoy a rapid expansion of trouble-free clinical use and applications. The recent announcement of FDA approval for use in long-term cannula applications will accelerate this usage and additional new applications are expected to advance to clinical stage within the next twelve months.
A number of licence agreements concluded in prior periods are maturing and are projected to enter the clinical phase during 2009/2010. All of the Group's licences are structured with clinical phase milestone payments.
The Group has also been refining its processing and manufacturing expertise in the development of its polymer licensing and supply business. The announcement of an agreement with a leading manufacturer of a life-sustaining circulatory support system for the use of Elast-Eon™ in their long-term devices is the first of several component supply agreements the Group expects to announce over the coming year. In this agreement, AorTech will be producing an Elast-Eon™ pumping chamber assembly for the licensee's ventricular assist device.
Discussions with key customers for Elast-Eon™/ RIM (Reaction Injection Moulded) components continue to move forward as the evaluation of supplied parts has yielded encouraging results.
Based upon the foundation of a growing number of regional regulatory approvals for devices manufactured from Elast-Eon™ and the Group's track record of quality and on-time delivery, the Board is projecting continued momentum in both polymer and component revenues over the coming quarters. A Director of US Sales has been appointed, who has 20 years experience in the industry, to further exploit the potential of these commercial opportunities.
The $32.8 million codevelopment programme with a major medical device partner announced in July 2007 continues to proceed in accordance with the initial business plan. A milestone payment was recently received after the end of the interim report period and the continuing success of this project is expected to result in the initiation of a second parallel programme intended to exploit the licensed technology in a related field.
Breast implant development has been characterised by progress with various patent filings and improvements in shell technology. The Group expects to put greater focus on this project in 2009.
The Group has now established its scientific and operational credentials in the marketplace for medical use engineered polymers and it is believed that predictable growth will follow. Initiatives with orthopaedic applications, expanded use in cardiology products and internal device development are expected to be recognised and produce meaningful revenues in the near future.
It is important to recognise that the future growth and value increase for the Group will be derived from the major co-development programmes which are already in place and which are continuing to progress in a satisfactory manner. The success of these projects will not only result in significant and continuous revenue payments but should, on completion, create a substantial increase in shareholder value.
Jon Pither
Chairman
Condensed Consolidated Interim Income Statement
Six months ended 20 September 2008
| (Unaudited) | Six months to 30 Sept 2008 | Six months to 30 Sept 2007 | Twelve months to 31 March 2008 | |||
| £000 | £000 | £000 | ||||
| Revenue | 74 | 328 | 1,484 | |||
| Other income - grants received | 36 | 234 | 268 | |||
| Cost of sales | (35) | (187) | (205) | |||
| Administrative expenses | (777) | (742) | (1,789) | |||
| Other expenses - development expenses | (543) | (388) | (1,023) | |||
| Other expenses - amortisation of intangible assets | (93) | (49) | (108) | |||
| Total operating loss | (1,338) | (804) | (1,373) | |||
| Finance cost | (3) | (2) | - | |||
| Finance income | 142 | 47 | 214 | |||
| Loss before taxation | (1,199) | (759) | (1,159) | |||
| Taxation | - | - | - | |||
| Loss for the financial period | (1,199) | (759) | (1,159) | |||
| Loss per share (basic and diluted) - pence | (24.81) | (18.82) | (25.84) | |||
Condensed Consolidated Interim Balance Sheet
| (Unaudited) | 30 Sept 2008 | 30 Sept 2007 | 31 March 2008 | |||
|
|
| £000 | £000 | £000 | ||
| Assets | ||||||
| Non current assets | ||||||
| Property, plant and equipment | 690 | 536 | 640 | |||
| Intangible assets | 1,198 | 1,280 | 1,302 | |||
| Total non current assets | 1,888 | 1,816 | 1,942 | |||
| Current assets | ||||||
| Inventories | 205 | 217 | 240 | |||
| Trade and other receivables | 119 | 310 | 312 | |||
| Cash and cash equivalents | 4,229 | 5,462 | 5,348 | |||
| Total current assets | 4,553 | 5,989 | 5,900 | |||
| Total assets | 6,441 | 7,805 | 7,842 | |||
| Liabilities | ||||||
| Current liabilities | ||||||
| Trade and other payables | (482) | (399) | (581) | |||
| Current tax payable | - | - | - | |||
| Total current liabilities | (482) | (399) | (581) | |||
| Non current liabilites | ||||||
| Other non current liabilities | (192) | (233) | (147) | |||
| Total non current libilities | (192) | (233) | (147) | |||
| Total liabilities | (674) | (632) | (728) | |||
| Net assets | 5,767 | 7,173 | 7,114 | |||
| Equity | ||||||
| Issued capital | 12,082 | 12,026 | 12,082 | |||
| Share premium | 2,340 | 2,340 | 2,340 | |||
| Other reserve | (2,003) | (2,003) | (2,003) | |||
| Foreign exchange reserve | 243 | 106 | 391 | |||
| Profit and loss account | (6,895) | (5,296) | (5,696) | |||
| Equity shareholders' funds | 5,767 | 7,173 | 7,114 | |||
Condensed Consolidated Interim Cash Flow Statement
| Six months to 30 Sept 2008 | Six months to 30 Sept 2007 | Twelve months to 31 March 2008 | ||||
| (Unaudited) | £000 | £000 | £000 | |||
| Cashflows from operating activities | ||||||
| Group loss after tax | (1,199) | (759) | (1,159) | |||
| Adjustments for: | ||||||
| Depreciation of property, plant and equipment | 143 | 44 | 185 | |||
| Amortisation of intangible assets | 93 | 49 | 108 | |||
| Loss on disposal of property, plant and equipment | - | - | 18 | |||
| Decrease in trade and other receivables | 193 | 64 | 62 | |||
| (Increase)/Decrease in inventories | 35 | (128) | (151) | |||
| Increase/(Decrease) in trade payables | (99) | (84) | 12 | |||
| Net cashflow from operating activities | (834) | (814) | (925) | |||
| Cashflows from investing activities | ||||||
| Purchase of property, plant and equipment | (155) | (109) | (312) | |||
| Proceeds of sale of property, plan and equipment | - | 3 | - | |||
| Net cashflow from investing activities | (155) | (106) | (312) | |||
| Cashflows from financing activities | ||||||
| Proceeds from issue of share capital, net of issue costs | - | 4,840 | 4,896 | |||
| Net cashflow from financing activities | - | 4,840 | 4,896 | |||
| Net increase / (decrease) in cash and cash equivalents | (989) | 3,920 | 3,659 | |||
| Foreign exchange differences | (130) | 62 | 209 | |||
| Cash and cash equivalents at beginning of period | 5,348 | 1,480 | 1,480 | |||
| Cash and cash equivalents at end of period | 4,229 | 5,462 | 5,348 | |||
Condensed Consolidated Interim Statement of Changes in Equity
| (Unaudited) | Share capital | Share premium account | Other reserve | Foreign exchange reserve | Profit and loss account | Total equity | ||||||
| £000 | £000 | £000 | £000 | £000 | £000 | |||||||
| Balance at 31 March 2007 | 9,526 | - | (2,003) | (25) | (4,537) | 2,961 | ||||||
| Changes in equity for first half of FY 2007/08 | ||||||||||||
| Exchange difference on translation of foreign operation | - | - | - | 131 | - | 131 | ||||||
| Net income/(expense) recognised directly in equity | - | - | - | 131 | - | 131 | ||||||
| Loss for the period | - | - | - | - | (759) | (759) | ||||||
| Total recognised income and expense for the period | - | - | - | 131 | (759) | (628) | ||||||
| Issue of share capital | 2,500 | 2,600 | - | - | - | 5,100 | ||||||
| Share issue costs | - | (260) | - | - | - | (260) | ||||||
| Balance at 30 September 2007 | 12,026 | 2,340 | (2,003) | 106 | (5,296) | 7,173 | ||||||
| Changes in equity for second half of FY 2007/08 | ||||||||||||
| Exchange difference on translation of foreign operation | - | - | - | 285 | - | 285 | ||||||
| Net income/(expense) recognised directly in equity | - | - | - | 285 | - | 285 | ||||||
| Loss for the period | - | - | - | - | (400) | (400) | ||||||
| Total recognised income and expense for the period | - | - | - | 285 | (400) | (115) | ||||||
| Issue of share capital (net of issue costs) | 56 | - | - | - | - | 56 | ||||||
| Balance at 31 March 2008 | 12,082 | 2,340 | (2,003) | 391 | (5,696) | 7,114 | ||||||
| Changes in equity for first half of FY 2008/09 | ||||||||||||
| Exchange difference on translation of foreign operation | - | - | - | (148) | - | (148) | ||||||
| Net income/(expense) recognised directly in equity | - | - | - | (148) | - | (148) | ||||||
| Loss for the period | - | - | - | - | (1,199) | (1,199) | ||||||
| Total recognised income and expense for the period | - | - | - | (148) | (1,199) | (1,347) | ||||||
| Balance at 30 September 2008 | 12,082 | 2,340 | (2,003) | 243 | (6,895) | 5,767 | ||||||
Notes to the condensed consolidated interim financial statements
1. Basis of Preparation
These condensed consolidated interim financial statements are for the six months ended 30 September 2008, and have been prepared with regard to the requirements of IAS 34 on "Interim Financial Reporting". They do not include all of the information required for full financial statements, and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 March 2008.
These condensed consolidated interim financial statements have been prepared in accordance with the accounting policies set out below which are based on the recognition and measurement principles of IFRS in issue as adopted by the European Union (EU) and effective at 31 March 2009 or are expected to be adopted and effective at 31 March 2009. They were approved for issue by the Board of Directors on 15 December 2008.
The accounting policies have been applied consistently throughout the Group for the purposes of preparation of these condensed consolidated interim financial statements.
The financial information for the six months ended 30 September 2008 and the comparative figures for the six months ended 30 September 2007 are unaudited and have been prepared on the basis of the accounting policies set out in the consolidated financial statements of the Group for the year ended 31 March 2008. This financial information does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. The financial statements for the year ended 31 March 2008, prepared under IFRS, received an unqualified audit report, did not contain statements under sections 237(2) and 237(3) of the Companies Act 1985 and have been delivered to the Registrar of Companies.
Loss per share has been calculated on the basis of the result for the period after tax, divided by the weighted average number of ordinary shares in issue in the period of 4,832,778. The comparatives are calculated by reference to the weighted average number of ordinary shares in issue which were 4,034,322 for the period to 30 September 2007 and 4,430,230 for the year ended 31 March 2008.
2. Segmental Reporting
The principal activity of AorTech International plc Group currently is the development and exploitation of a range of innovative biomaterials.
All revenue during the first six months of financial year 2008/09 originated in Australia, with the exception of £1,396 which was received by the USA company.
| (Unaudited) | ||||||
| Six months to 30 Sept 2008 | Six months to 30 Sept 2007 | Twelve months to 31 March 2008 | ||||
| £000 | £000 | £000 | ||||
| Analysis of revenue | ||||||
| Geographical segments | ||||||
| United Kingdom | - | 147 | (1) | |||
| Australia | 73 | 181 | 11 | |||
| United States of America | 1 | - | 1,474 | |||
| 74 | 328 | 1,484 | ||||
| Analysis of result - operating loss | ||||||
| Geographical segments | ||||||
| United Kingdom | (313) | (241) | (780) | |||
| Australia | (854) | (433) | (459) | |||
| United States of America | (171) | (130) | (134) | |||
| (1,338) | (804) | (1,373) | ||||
3. Additions to and amortisation of intangible assets
The following tables show the significant additions to and amortisation of intangible assets
| Intellectual property | Total | |||
| £000 | £000 | |||
| At 31 March 2007 | 1,262 | 1,262 | ||
| Exchange rate adjustment | 67 | 67 | ||
| Amortisation | (49) | (49) | ||
| At 30 September 2007 | 1,280 | 1,280 | ||
| Exchange rate adjustment | 81 | 81 | ||
| Amortisation | (59) | (59) | ||
| At 31 March 2008 | 1,302 | 1,302 | ||
| Exchange rate adjustment | (11) | (11) | ||
| Amortisation | (93) | (93) | ||
| At 30 September 2008 | 1,198 | 1,198 |