17 Jun 2008 07:00
AorTech International plc
("AorTech" or the "Company")
Results for the year ended 31 March 2008
AorTech International plc (AIM: AOR) the biomaterials and medical device development company, today announces its results for the year ended 31 March 2008.
Financial Highlights (vs. prior year) • Group turnover increased from £0.3m to £1.5m • Pre tax loss reduced from £2.1m to £1.2m • Cash reserves increased from £1.5m to £5.3m - 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: + 1 801 550 4349 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
Once again I am pleased to report another year of progress for the Group.
Results and Key Performance Indicators
Group revenue for the year to 31 March 2008 was £1.5m, an increase of £1.2m over that achieved in the twelve months to 31 March 2007. Licensing fees, bulk material, components and AorTech's first earned royalties are reflected in this year's reported revenues. Operating expenses increased by £409,000 from £2,716,000 in the corresponding period last year to £3,125,000, but the loss before taxation was reduced from £2.1m in the previous year to £1.2m.
In this period of early commercialisation, licensing fees and sales of bulk polymers are the primary elements of the revenue stream. Looking forward, we would expect royalty income and the supply of components to become major sources of income.
Following the August 2007 fundraising with institutional investors that raised £4.8m after expenses, the net cash balance at 31 March 2008 was £5.3m, which is expected to provide adequate financial resources to support the Group's development plans for the immediate future. The number of shares in issue increased from 3,810,278 at the start of the financial year, to 4,832,778 on 31 March 2008.
This year, for the first time, the presentation of the financial statements of the Group reflects the adoption of International Financial Reporting Standards (IFRS).
Strategy and Current Trading
AorTech's proprietary medical polymer, Elast-Eon, has seen a rapid increase in recognition and use in the period. Patient implants now number in the hundreds of thousands. Elast-Eon has entered into the human use phase as a material of construction for pacing leads, gastroenterological stents and cardio-pulmonary cannula. In July 2008, the first of these implants will have been in clinical use for more than two years. Based upon the success of this period of human use and progress, within various customer development programmes, the Group is optimistic regarding the early application of Elast-Eon materials to other component applications, especially for orthopædic and neurostimulation devices.
The Elast-Eon material licensing and supply business continues to grow in terms of the numbers of product evaluations. The time required for these evaluations is also becoming shorter. By way of comparison, the St. Jude licence announced in March 2006 came after 5 years of research, testing, and regulatory filings. As part of business development, the Company anticipates announcing new licences in due course that, on average, have been in development for 30 months or less. This improvement in licensing turnover time comes as a function of ever growing awareness in the marketplace of the performance of the Elast-Eon polymer and the high standards of product quality and operational performance at AorTech.
The anticipated increase in polymer licensing and supply revenue should provide the financial, technological and human resources that will support further development of the Group's owned polymer heart valve and breast implant products. These are major targets for our medium term strategy.
Operational Highlights of the Financial Year
The $32.8 million co-development program announced in July 2007 continues to proceed on plan.
Heart valve pilot manufacturing has been established and 75 units have been produced for evaluation by an outside party.
Reaction Injection Moulded (RIM) prototypes have been supplied to various cardiology and orthopædic customers at their request. These prototypes are targeted for potential use in current and next-generation products. AorTech has published data on the exceptional bond strength achieved through the use of RIM with Elast-Eon in conjunction with PEEK™, ceramic and various medical-grade metals. AorTech's Elast-Eon/RIM initiative is intended to provide the basis for a significant expansion of our component business.
The Group's production unit continued to operate at an exceptionally high standard of quality. Projected demand for polymer in 2008 can adequately be covered by the capacity of the existing plant.
The PDMS reactor has come on-line and is producing, in house, a key raw material for the manufacture of Elast-Eon, thus improving the strength of our supply chain and reducing overall costs. This reactor will be qualified at increased levels of output throughout the remainder of the financial year and is expected to be able to produce at levels at least sufficient for our current and foreseeable needs.
Progress has been made in the externally funded joint venture with Allium-Medical Limited evaluating the incorporation of anti-bacterial and anti-inflammatory drugs into Elast-Eon.
Across the board, the Group continues to make progress which is beginning to show in financial results. Clinical use of Elast-Eon is expanding into an ever-increasing range of applications; manufacturing efficiency and capability has improved; and new grades of Elast-Eon are coming through the pipeline. We will particularly focus on the development of component business and the exploitation of our heart valve and breast implant intellectual property and technology. The Group continues to enjoy an enviable delivery and quality record with its customers.
To date, the Group has successfully navigated the risk factors typical for any emerging medical technology business, including registration of intellectual property, regulatory requirements, the recruitment of outstanding staff and demonstration to potential customers of manufacturing and technological expertise that is able to offer customers the necessary levels of support and delivery.
Elast-Eon is now well established as an important and attractive material for many medical devices. The team at our laboratory and plant in Melbourne and staff in the USA have proved that they can turn this recognition into firm and growing sales. We therefore continue to view the future with confidence.
Jon Pither
Chairman
CONSOLIDATED INCOME STATEMENT
| Year ended 31 March 2008 | Year ended 31 March 2007 | |||
| £000 | £000 | |||
| Revenue | 1,484 | 276 | ||
| Other income - grants received | 268 | 213 | ||
|
| ||||
| Cost of sales | (205) | (158) | ||
| Administrative expenses | (1,789) | (1,589) | ||
| Other expenses - development expenditure | (1,023) | (821) | ||
| Other expenses - amortisation of intangible assets | (108) | (148) | ||
| Operating loss | (1,373) | (2,227) | ||
| Finance cost | - | (3) | ||
| Finance income | 214 | 109 | ||
| Loss before taxation | (1,159) | (2,121) | ||
| Taxation | - | - | ||
| Loss attributable to equity holders of the parent company | (1,159) | (2,121) | ||
| Loss per share | ||||
| Basic and diluted - (pence per share) | (25.84) | (55.67) | ||
| CONSOLIDATED BALANCE SHEET |
|
|
| |
| 31 March 2008 |
| 31 March 2007 | ||
| £000 |
| £000 | ||
| Assets | ||||
| Non current assets |
|
|
| |
|
| Property, plant and equipment | 640 |
| 472 |
|
| Intangible assets | 1,302 |
| 1,262 |
| Total non current assets | 1,942 |
| 1,734 | |
| Current assets |
|
| ||
|
| Inventories | 240 |
| 89 |
|
| Trade and other receivables | 312 |
| 374 |
|
| Cash and cash equivalents | 5,348 |
| 1,480 |
| Total current assets | 5,900 |
| 1,943 | |
| Total assets | 7,842 |
| 3,677 | |
| Liabilities |
|
| ||
| Current liabilities |
|
| ||
|
| Trade and other payables | (581) |
| (527) |
|
| ||||
| Total current liabilities | (581) |
| (527) | |
| Non current liabilities |
|
| ||
|
| Other non current liabilities | (147) |
| (189) |
| Total non current liabilities | (147) |
| (189) | |
| Total liabilities | (728) |
| (716) | |
| Net assets | 7,114 |
| 2,961 | |
| Equity |
|
| ||
|
| Issued capital | 12,082 |
| 9,526 |
|
| Share premium | 2,340 |
| - |
|
| Other reserve | (2,003) |
| (2,003) |
|
| Foreign exchange reserve | 391 |
| (25) |
|
| Profit and loss account | (5,696) |
| (4,537) |
| Equity shareholders' funds | 7,114 |
| 2,961 | |
| CONSOLIDATED CASH FLOW STATEMENT | ||||
| Year ended 31 March 2008 | Year ended 31 March 2007 | |||
| £000 | £000 | |||
| Cash flows from operating activities | ||||
| Group loss after tax | (1,159) | (2,121) | ||
| Adjustments for: | ||||
| Depreciation of property, plant and equipment | 185 | 133 | ||
| Amortisation of intangible assets | 108 | 148 | ||
| Loss on disposal of property, plant and equipment | 18 | 55 | ||
| Decrease in trade and other receivables | 62 | 930 | ||
| (Increase)/decrease in inventories | (151) | 51 | ||
| Increase in trade and other payables | 12 | 63 | ||
| Net cash flow from operating activities | (925) | (741) | ||
| Cash flows from investing activities | ||||
| Purchase of property, plant and equipment | (312) | (420) | ||
| Net cash flow from investing activities | (312) | (420) | ||
| 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 increase/(decrease) in cash and cash equivalents | 3,659 | (1,161) | ||
| Foreign exchange differences | 209 | (75) | ||
| Cash and cash equivalents at beginning of year | 1,480 | 2,716 | ||
| Cash and cash equivalents at end of year | 5,348 | 1,480 | ||
| 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 2006 | 9,526 | - | (2,003) | - | (2,416) | 5,107 | ||||||
| Exchange difference on translation of foreign operations | - | - | - | (25) | - | (25) | ||||||
| Net expense recognised directly in equity | - | - | - | (25) | - | (25) | ||||||
| Loss for the year | - | - | - | - | (2,121) | (2,121) | ||||||
| Total recognised income and expense for the year | - | - | - | (25) | (2,121) | (2,146) | ||||||
| Balance at 31 March 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 | ||||||
1. Basis of preparation
With effect from 1 April 2007, the Company is required to present its consolidated financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union. Accordingly, the financial information in this preliminary announcement has been prepared in accordance with accounting policies which are based on the IFRS in issue and in effect at 31 March 2008. Comparatives have been restated in compliance with the principles of IFRS.
2. Loss per share
The basic loss per Ordinary share of 25.84p (2007: 55.67p) is calculated on the loss of the Group of £1,159,000 (2007: £2,121,000) and on 4,484,875 (2007: 3,810,278) equity shares, being the weighted average number of shares deemed to be 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 2008; 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 2008 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 2008 were approved by the Directors on 16 June 2008, but have not yet been delivered to the Registrar of Companies.
4. Notice of Annual General Meeting
Notice is hereby given that the eleventh 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 27 August 2008 at 10:00 am.
5. Posting and availability of accounts
The annual report and accounts for the year ended 31 March 2008 will be sent by post to all registered shareholders on 1 August 2008. 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.