AOR.L Regulatory News (AOR)

9 Dec 2005 07:01

Aortech International PLC09 December 2005 For Immediate Release 9 December 2005 AorTech International plc "AorTech" or "the Company") Interim Results for the six months ended 30 September 2005 AorTech International plc, the biomaterials Intellectual Property and MaterialManufacturing Company is pleased to announce its Interim Results for the sixmonths ended 30 September 2005. Operational Highlights • First FDA and European approval achieved for an implantable life sustaining device utilizing Elast-EonTM • Significant milestone payment triggered • Near-term royalty stream anticipated Financial Highlights • Turnover of £63,517 (2004: £38,101) • Loss before taxation of £929,566 (2004: £838,262) • Net cash of £3,060,660 (2004: £5,030,227) Commenting on the progress of the Company, Jon Pither, Chairman, said: "The Group has taken a major step forward with its material licensing businessby achieving FDA approval through a device partner. This licence is expected tomove the Group into its royalty bearing phase in the first quarter of 2006. Webelieve that this is the first of numerous applications that the Elast-EonTMfamily of polymers will see over the next few years and that the prospects forthe material licencing and supply segment of our business are bright. Our progress with the development of a more reliable next generation breastimplant device for surgeons and patients continues to exceed our expectations.The interest we are currently receiving from industry participants provides uswith the optimism that a specific programme for the development of thistechnology as part of a strategic relationship will be defined in theforeseeable future." The Group's Interim Report is expected to be sent to shareholders on or around16 December 2005. Copies will be available free of charge from the Group'sSurbiton office (address below) for a period of one month from 16 December 2005. For further information please contact: AorTech International plcFrank Maguire, Chief Executive 00 1 801 201 4336 Buchanan Communications 020 7466 5000Ben Willey, Lisa Baderoon, Rebecca Skye Dietrich Visit AorTech's website at: www.aortech.com AorTech International plc: Prestige Travel Suite, Barclays Bank House, 81-83 Victoria Road, Surbiton,Surrey, KT6 4NS, UK CHAIRMAN'S STATEMENT Licensing progress On 25 November 2005, the Company announced the achievement by one of itslicencees of FDA approval for the first long term implantable, life sustainingdevice incorporating Elast-EonTM technology. This was an important milestone for the Group, not only in financial terms butperhaps more importantly as validation of the suitability of our polymertechnology for these types of critical applications. It is an indication ofsuccess that the Group has achieved - technically - by generating superior results when tested against other commercially available medical polymers; - operationally - by achieving ISO credentials and performing consistently well in customer audits of our manufacturing facility, and - commercially - by negotiating and closing substantive licensing and supply contracts with medical device partners. AorTech will continue to defer to its clients' need for confidentiality of theterms, applications and identification of these clients in existing and futurelicences. Results For the six months ended 30 September 2005, the Group had a turnover of £63,517,net operating expenses of £1,045,861 and a loss before taxation of £929,566.Although turnover increased by 66% over the corresponding period for 2004,development expenditure increased by £109,566 and the loss before taxation was£91,304 greater than in the first half-year of 2004. The cash position at£3,060,660 compares with £5,030,227 at 30 September 2004. The Board believesthat the Group is entering the commercial phase which it anticipates will resultin a reduction in the cash burn during the remainder of the current financialyear. The Group's Australian operation will be moving to new premises during2006, which will provide an 18% increase in space with a 10% reduction in leaseexpense, and client-funded manufacturing expansion is expected to result in anapproximately 65% reduction in unit costs of production. Breast Implant The Company believes that the recent mergers and acquisition activity in theplastic surgery market, along with the anticipated FDA approval of thegel-filled breast implant in the United States, together have created a marketthat is receptive to the first new technology in more than two decades. AorTech's proprietary polymer, Elast-EonTM, is ideally suited for this purpose.Progress has been made with the development of a prototype 'generation 5' breastimplant device. Existing silicone breast implants are prone to shell failures related to stressfatigue and utilise a gel filler material which requires the use of metalcatalysts. These silicone gels are characterised by substantial levels ofleaching of low molecular weight material which is commonly known as silicone "gel bleed". The AorTech implant under development should offer productreliability advantages through a more robust shell and an Elast-EonTM gel whichis free from metal catalysts and has a greater than 50% reduction in these lowmolecular weight materials. New intellectual property has been filed, scientific papers will shortly bepublished in the American Society of Plastic and Aesthetic Surgery publicationAesthetic Surgery Journal and the Company continues talks with potentialindustry partners regarding licensing and co-development options. Board Changes I am particularly pleased to announce that the Board has been strengthened bythe recent appointment of Eddie McDaid and Gordon Wright as Non-ExecutiveDirectors, and I welcome the informed contribution that they will make to theCompany's continuing development. Summary The Group has taken a major step forward with its material licensing business byachieving FDA approval through a device partner. This licence is expected tomove the Group into its royalty bearing phase in the first quarter of calendaryear 2006. We believe that this is the first of several applications that theElast-EonTM family of polymers should achieve over the next few years and we areconfident that the prospects for the material licensing and supply segment ofour business are bright. Our technical progress with the development of a safer breast implant device forsurgeons and patients continues to exceed our expectations. The interest we arecurrently receiving from a number of industry participants provides us with theoptimism that a long term programme for the development of this technology willbe defined in the foreseeable future. Jon PitherChairman9 December 2005 AORTECH INTERNATIONAL PLC CONSOLIDATED PROFIT AND LOSS ACCOUNT (unaudited) six months six months year ended 30 ended 30 ended september 2005 september 31 march 2004 2005 Note £ £ £Turnover 63,517 38,101 136,958 Cost of sales (28,675) (8,929) (31,339) Gross profit 34,842 29,172 105,619Net operating expenses (1,045,861) (976,958) (2,189,908) Net operating expenses include: Development expenditure (396,986) (287,420) (653,896) Amortisation of intangible fixed assets (49,697) (46,427) (94,589) Group operating loss (1,011,019) (947,786) (2,084,289) Loss on ordinary activities before interest (1,011,019) (947,786) (2,084,289)Interest receivable 81,453 109,524 216,899 Loss on ordinary activities before taxation (929,566) (838,262) (1,867,390)Taxation - - - Loss for the financial period (929,566) (838,262) (1,867,390) Loss per ordinary share 3 (24.40p) (22.00p) (49.01p) All of the turnover and operating losses are derived from continuingoperations STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES Loss for the financial period (929,566) (838,262) (1,867,390)Currency translation differences arising on consolidation 105,538 (66,209) (45,215) Total recognised losses (824,028) (904,471) (1,912,605) CONSOLIDATED BALANCE SHEET (unaudited) 30 september 2005 30 september 2004 31 march 2005 £ £ £Fixed assetsIntangible assets 1,480,441 1,474,060 1,449,366Tangible assets 205,631 206,722 189,678 1,686,072 1,680,782 1,639,044 Current assetsStocks 115,791 50,744 68,852Debtors 289,311 296,492 278,948Cash at bank 3,060,660 5,030,227 4,015,126 3,465,762 5,377,463 4,362,926 Creditors: amounts falling due within one year (322,352) (396,601) (348,460) Net current assets 3,143,410 4,980,862 4,014,466Net assets 4,829,482 6,661,644 5,653,510 Capital and reservesCalled up share capital 9,525,695 9,525,695 9,525,695Share premium account - 63,359,594 -Other reserve (2,003,143) (2,003,143) (2,003,143)Profit & Loss account (2,693,070) (64,220,502) (1,869,042)Equity shareholders' funds 4,829,482 6,661,644 5,653,510 CONSOLIDATED CASH FLOW STATEMENT(unaudited) Note six months six year ended ended months ended 31 march 30 september 30 september 2005 2005 2004 £ £ £Net cash outflow from operating activities (1,015,153) (1,029,725) (2,139,103) Returns on investment and servicing of finance 81,453 109,524 216,899 Taxation - - - Capital expenditure and financial investment (35,590) (11,374) (28,000) Cash outflow before management of liquid resources and financing (969,290) (931,575) (1,950,204) Management of liquid resources 938,938 924,297 1,994,364 Increase / (decrease) in cash in the period 4 (30,352) (7,278) 44,160 NOTES TO THE INTERIM FINANCIAL STATEMENTS (unaudited) FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2005 1. BASIS OF PREPARATIONThe interim financial statements have been prepared in accordance with the guidance publishedby the Accounting Standards Board and on the basis of the accounting policies set out in theGroup's 2005 statutory accounts. The interim financial statements were approved by a duly appointed and authorised committeeof the Board of Directors on 2 December 2005 and are unaudited. The information shown for the year ended 31 March 2005 does not constitute statutory accountswithin the meaning of section 240 of the Companies Act 1985 and has been extracted from thefull accounts for the year ended 31 March 2005 which have been filed with the Registrar ofCompanies. The report of the auditors on those accounts was unqualified and did not containa statement under either section 237(2) or section 237(3) of the Companies Act 1985. 2. SEGMENTAL ANALYSIS BY CLASS OF BUSINESS AND GEOGRAPHICAL AREA (a) class of business The Group operates in one class of business, being the development and exploitation of a range of innovative biomaterials. (b) geographical area The analysis by geographical area of the Group's turnover, loss before tax and net assets is set out below: six months ended six months ended year ended 30 september 2005 30 september 2004 31 march 2005 sales by sales sales by sales by sales by sales by destination by destination origin destination origin origin(i) turnover £ £ £ £ £ £Geographical segmentUnited Kingdom 23,073 - - - 13,024 -Rest of Europe 8,079 - - - - -Rest of World 32,365 63,517 38,101 38,101 123,934 136,958 63,517 63,517 38,101 38,101 136,958 136,958 (ii) Loss before six months six months year endedtaxation ended ended 30 september 30 31 march september 2005 2004 2005 £ £ £Geographical segmentUnited Kingdom (382,150) (391,298) (957,192)Rest of Europe - - -Rest of World (628,869) (556,488) (1,127,097)Loss before interest (1,011,019) (947,786) (2,084,289)Net interest receivable 81,453 109,524 216,899Loss before taxation (929,566) (838,262) (1,867,390) 30 september 30 31 march september 2005 2004 2005(iii) net assets £ £ £Geographical segmentUnited Kingdom 2,856,656 4,772,111 3,733,878Rest of Europe - - -Rest of World 1,972,826 1,889,533 1,919,632 4,829,482 6,661,644 5,653,510 3. LOSS PER ORDINARY SHARE The basic loss per ordinary share is calculated on the loss of the Group of £929,566 for thesix months to 30 September 2005 (six months ended 30 September 2004: loss of £838,262, yearended 31 March 2005: loss of £1,867,390) and on 3,810,278 (six months ended 30 September2004: 3,810,278, year ended 31 March 2005: 3,810,278) equity shares. exchange 30 september4. ANALYSIS OF NET FUNDS 1 april 2005 cash flow differences 2005 £ £ £ £ Net cash:Cash at bank and in hand 4,015,126 (969,290) 14,824 3,060,660Deposits treated as liquid resources (3,709,470) 938,938 - (2,770,532) 305,656 (30,352) 14,824 290,128Liquid resources:Deposits included in cash 3,709,470 (938,938) - 2,770,532Net funds 4,015,126 (969,290) 14,824 3,060,660 This information is provided by RNS The company news service from the London Stock Exchange