AOR.L Regulatory News (AOR)

13 Dec 2007 07:01

Aortech International PLC13 December 2007 13 December 2007 AorTech International plc Interim Results For The Six Months Ended 30 September 2007 AorTech International plc (AIM: AOR) ("AorTech" or the "Company"), thebiomaterials and medical device development company, today announces itsunaudited interim results for the six months ended 30 September 2007. Operational Highlights • Pacing lead insulation business with St. Jude Medical continues to expand; • Execution of a licence agreement for a device co-development project, incorporating provisions for potential pre-royalty payments of US$32 million; • Human use of AorTech's proprietary polymer technology Elast-EonTM in gastroenterological implants, with its partner Allium-Medical, Inc.; • Active evaluations of Elast-Eon underway in the high-growth neuro-stimulation lead space; • Receipt of initial orders for moulded Elast-Eon components to be used in spinal disc development programme; • Customer qualification of the Company's scaled-up manufacturing operations; Technology Developments • Elast-Eon Solution Grade ("SG") and Elast-Eon 5 were both launched in the period. SG is formulated to meet the needs of customers wishing to coat various devices and components in Elast-Eon; and • The grant of a additional key heart valve patents in the EU and Australia, maintaining the Company's firm control on its Intellectual Property. Financial Highlights • Turnover up 175% to £328,000 (H1 2006: £119,000); • Loss after tax £759,000 (H1 2006 loss: £1.0 million); • As at 30 September 2007 cash reserves of £5.5 million; • £4.8 million raised net of expenses via a share Placing in August 2007. Jon Pither, Chairman, said: "The primary strategy of the Company remains one of building shareholder valuebased on our established and protected polymer technology, Elast-Eon. We are,therefore, continuing to increase the range of Elast-Eon materials for thedesign and manufacture of medical devices. However, the Directors also believethat our polymer component production capability will provide increasingfinancial returns, thus allowing us to exploit the potential of our majordevelopment projects in heart valve and breast implant devices. We view therecent market announcement of the second human application of Elast-Eon in anon-vascular stent application with Allium-Medical to be an important step inthe validation of this strategy. "We have made significant progress during the period achieving multinationalregulatory approvals, a reputation for quality and service, thousands of humanimplants in various applications with our premier biostable polymer Elast-Eonwhile significantly increasing operational capacity. "While a number of significant financial goals remain dependent upon numerousfactors, including the continued performance of AorTech operations and theprogress of our commercial partners and customers, the realisation of thesegoals continues satisfactorily. The management and the AorTech Board view thefuture with confidence." - Ends - For further information please contact: AorTech International plc Tel: + 1 801 201 4336Frank Maguire, Chief Executive Evolution Securities Tel: +44 20 7071 4300Bobbie Hilliam / Chris Clarke Hogarth Partnership Limited Tel: +44 20 7357 9477Melanie Toyne-Sewell / Sarah Richardson Notes to Editors About AorTech International plc Listed on AIM in London, AorTech International plc wholly owns AorTechBiomaterials based in Melbourne, Australia. AorTech Biomaterials was formed inJuly 1997 to develop and commercialise Elast-Eon, a highly useful and biostableco-polymer in the medical device and drug delivery fields. AorTech's Elast-Eon technology is the product of a decade of fundamentalresearch into biologically stable materials. Elast-Eon materials are patented,high silicone content, polyurethane copolymers which exhibit unparalleledbiological and mechanical performance. AorTech is firmly focused on the development and refinement of this material forthe medical community, with the aim of providing a wide range of highperformance Elast-Eon materials in a variety of application specificformulations and densities, for use in medical devices. Unaudited Interim Results For The Six Months Ended 30 September 2007 Chairman's Statement I am pleased to report that the first six months of the financial year havecontinued the encouraging progress made in the prior financial year. Financial Review Group turnover for the first six months of the financial year ended 30 September2007 increased 175% to £328,000 (H1 2006 £119,000). Turnover booked during theperiod principally came from polymer sales and up-front fees. Operating expensesfor the six months were £1.4 million (H1 2006 £1.2 million), an increase of 13%over the comparative six months in line with the increase in turnover. Theoperating expenses included £388,000 of development expenditure (H1 2006:£371,000) and amortisation of intangible fixed assets amounting to £49,000 (H12006: £48,000). The loss after tax for the six months ended 30 September was£759,000 (H1 2006: £1.0 million). In August this year, the Company raised £4.8 million net of expenses. As at 30September 2007, the Group had cash reserves of £5.5 million (31 March 2007: £1.5million). The Company intends to use the proceeds of the share Placing to assistwith the expansion of its US commercial efforts with new hires in marketing andsales, and investment within the Company's technology and manufacturing facilityin order to reduce ongoing costs and provide capital for new machinery. The remainder of this statement focuses on the commercial and technical progressthat has been and continues to be achieved. Operational Review Manufacturing and Supply of Elast-Eon bulk material Following the share Placing in August 2007, the Directors invested approx £0.5million in order to double the capacity of the factory. Plans for in-housemanufacturing of a key raw material are on target and new injection mouldingequipment is scheduled for delivery in Q1 2008. Elast-Eon Solution Grade ("SG")and Elast-Eon 5 are both new products launched in the period. SG is formulatedto meet the needs of customers wishing to coat various devices and components inElast-Eon. Elast-Eon 5 represents the next step in the technology's developmentand is the result of our continued efforts to produce polymers with improvedphysical properties and stability. The Board is particularly pleased that as the manufacturing operations have beenscaled up and new products launched, key customer qualifications have grown innumber and perfect customer quality and delivery performance has beenmaintained. Markets and Customers The Company continues to pursue joint venture projects and licensing agreementswith major medical device companies. The Board also continues to see the marketfor its Elast-Eon polymer to be large and growing. We believe that our customershave recognised Elast-Eon as a top quality silicone-urethane material for soft,long-term, high fatigue, blood-contacting implants. The Company is also pleased to confirm it has received initial orders for itsmoulded Elast-Eon components to be used in one of its spinal disc developmentprogrammes. This is a new area of use for the Elast-Eon product and we believeindicates the wide range of potential applications in which Elast-Eon can beused. For example, the Company has active evaluations of Elast-Eon underway inthe high-growth neuro-stimulation lead market. Device Development Programme The key agreement for the Company during the financial period was the executionof a licence agreement for the co-development of one of the Company's deviceprojects incorporating provisions for potential pre-royalty payments of US$32million. This programme is proceeding according to plan. As previously stated,while the agreement is not expected to have a material impact on the Company'sfinancial position in the short term, the Company will receive milestonepayments plus potential material supplies revenue. The Company has succeeded in producing Elast-Eon breast implant shells forcustomer evaluation. Summary We have made significant progress during the past two years culminating in thekey agreement with a global medical device company. During this time, we haveachieved multinational regulatory approvals, a reputation for quality andservice, thousands of human implants in various applications of our premierbiostable polymer Elast-Eon, and a significantly increased operational capacity. A number of significant financial goals remain dependent upon numerous factorsincluding the continued performance of AorTech operations, technology andfactors outside the Company's control such as the activities of its partners andcustomers. The AorTech management and Board are of the view that the bulk ofthese activities are progressing in line with expectations. The share Placing has provided us with the necessary resource to carry throughour development plans, as we seek to deploy our proven technology within furtherlarge scale and life sustaining markets. The Board is confident that AorTech hasthe technology, resources, partners and commitment to fully realise thepotential of our unique Elast-Eon polymer and thereby build shareholder valueover the coming years. Jon PitherChairman Condensed Consolidated Interim Income StatementSix months ended 30 September 2007 (Unaudited) Six months to Six months to Twelve months to 30 Sept 2007 30 Sept 2006 31 March 2007 £000 £000 £000 Revenue 328 119 276 Other income - grants received 234 - 213 Cost of sales (187) (79) (158)Administrative expenses (742) (707) (1,589)Other expenses - development expenditure (388) (371) (821)Other expenses - amortisation of intangible assets (49) (48) (148) -------- -------- --------Operating loss (804) (1,086) (2,227)Finance cost (2) (1) (3)Finance income 47 53 109 -------- -------- --------Loss before taxation (759) (1,034) (2,121)Taxation - - - -------- -------- --------Loss for the financial period (759) (1,034) (2,121) ======== ======== ======== Loss per share (basic anddiluted) - pence (18.82) (27.14) (55.67) Condensed Consolidated Interim Balance Sheet As at 30 September 2007 (Unaudited) 30 Sept 2007 30 Sept 2006 31 March 2007 £000 £000 £000AssetsNon current assets Property, plant and equipment 536 537 472 Intangible assets 1,280 1,269 1,262 -------- ------- --------Total noncurrent assets 1,816 1,806 1,734 -------- ------- -------- Current assets Inventories 217 91 89 Trade and other receivables 310 315 374 Cash and cash equivalents 5,462 2,336 1,480 -------- ------- --------Total current assets 5,989 2,742 1,943 -------- ------- --------Total assets 7,805 4,548 3,677 -------- ------- -------- -------- ------- --------LiabilitiesCurrent liabilities Trade and other payables (399) (283) (469) Current tax payable - - - -------- ------- --------Total current liabilities (399) (283) (469) -------- ------- --------Non current liabilities Other non current liabilities (233) (279) (247) -------- ------- --------Total non current liabilities (233) (279) (247) -------- ------- --------Total liabilities (632) (562) (716) -------- ------- --------Net assets 7,173 3,986 2,961 ======== ======= ========Equity Issued capital 12,026 9,526 9,526 Share premium 2,340 - - Other reserve (2,003) (2,003) (2,003) Foreign exchange reserve 106 (87) (25) Profit and loss account (5,296) (3,450) (4,537) -------- ------- --------Equity shareholders' funds 7,173 3,986 2,961 ======== ======= ======== Condensed Consolidated Interim Cash Flow StatementSix months ended 30 September 2007 (Unaudited) Six months to Six months to Twelve months 30 Sept 2007 30 Sept 2006 to 31 March 2007 £000 £000 £000 Cash flows from operating activities Group loss after tax (759) (1,034) (2,121)Adjustments for: Depreciation of property, plant and equipment 44 53 133 Amortisation of intangible assets 49 48 148 Foreign exchange profit/(loss) on consolidation 62 (43) (75) Decrease in trade and other receivables 64 989 930 (Increase)/decrease in inventories (128) 49 51 (Decrease)/increase in trade payables (84) (91) 63 -------- -------- -------Net cash flow from operating activities (752) (29) (871) -------- -------- -------Cash flows from investing activities Purchase of property, plant and equipment (109) (351) (420) Proceeds of sale of property, plan and equipment 3 - 55 -------- -------- -------Net cash flow from investing activities (106) (351) (365) -------- -------- -------Cash flows from financing activities Proceeds from issue of share capital, net of issue costs 4,840 - - -------- -------- -------Net cash flow from financing activities 4,840 - - -------- -------- -------Net increase/(decrease) in cash and cash equivalents 3,982 (380) (1,236)Cash and cash equivalents at beginning of period 1,480 2,716 2,716 -------- -------- -------Cash and cash equivalents at end of period 5,462 2,336 1,480 ======== ======== ======= Condensed Consolidated Interim Statement Of Changes In EquitySix months ended 30 September 2007 (Unaudited) Share Foreign Profit and Share premium Other exchange loss Total capital account reserve reserve account equity £000 £000 £000 £000 £000 £000 Balance at 31 March 2006 9,526 - (2,003) - (2,416) 5,107 Changes in equity for first half of FY 2006/07 Exchange difference on translation of foreign operations - - - (87) - (87) ------- -------- ------- -------- ------- -------Net income/(expense) recogniseddirectly in equity - - - (87) - (87)Loss for the period - - - - (1,034) (1,034) ------- -------- ------- -------- ------- -------Total recognised income and expense for the period - - - (87) (1,034) (1,121) ------- -------- ------- -------- ------- -------Balance at 30 September 2006 9,526 - (2,003) (87) (3,450) 3,986 Changes in equity for second half of FY 2006/07 Exchange difference on translation of foreign operations - - - 62 - 62 ------- -------- ------- -------- ------- -------Net income/(expense) recogniseddirectly in equity - - - 62 - 62Loss for the period - - - - (1,087) (1,087) ------- -------- ------- -------- ------- -------Total recognised income and expense for the period - - - 62 (1,087) (1,025) ------- -------- ------- -------- ------- -------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 operations - - - 131 - 131 ------- -------- ------- -------- ------- -------Net income/(expense) recogniseddirectly in equity - - - 131 - 131Loss for the period - - - - (759) (759) ------- -------- ------- -------- ------- -------Total recognised income and expense for the period - - - 131 (759) (628)Issue of share capital 2,500 2,600 - - - 5,100Share issue costs - (260) - - - (260) ------- -------- ------- -------- ------- -------Balance at 30 September 2007 12,026 2,340 (2,003) 106 (5,296) 7,173 ======= ======== ======= ======== ======= ======= IFRS transition note These condensed consolidated interim financial statements form part of the firstperiod that will be prepared under IFRS. An explanation of how the transitionfrom UK GAAP to IFRS has affected the Group is set out on pages 10 - 13. TheIFRS accounting policies of the Group are detailed later in this Interim Report. The Group's date of transition to IFRS was 1 April 2006. The main itemscontributing to the change in financial information compared with that reportedpreviously under UK GAAP are shown below. IAS 20 - 'Accounting for government grants and disclosure of governmentassistance'. In accordance with IAS 20, grants received are recognised as a credit in theIncome Statement under the category 'Other income', whereas under UK GAAP thesewere shown as part of Revenue. IAS 21 - 'The effects of changes in foreign exchange rates'. Under UK GAAP, the Group reported differences in exchange rates on consolidationwithin the profit and loss account reserve. Under IFRS, the Group has claimedthe exemption from retrospective application of IAS 21. The Group is nowrequired to show all post transition differences on consolidation as a separateitem within Equity, being the foreign exchange reserve. Explanation of material adjustments to the cash flow statement Application of IFRS has resulted in reclassification of an item in the cash flowstatement as follows: Under UK GAAP, payments to acquire tangible fixed assets were classified as partof 'Capital expenditure and financial investment'. Under IFRS, payments toacquire property, plant and equipment have been classified as part of 'Investingactivities'. There are no other material differences between the cash flowstatement presented under IFRS and the cash flow statement presented under UKGAAP. Reconciliation Of Income Statement (Unaudited) Six months to 30 September 2006 ---------------------- UK GAAP Adjustments IFRS IAS 20 £000 £000 £000 Revenue 119 - 119Grants received - - - -------- -------- --------Group revenue 119 - 119Other income - grants received - - -Cost of sales (79) - (79)Administrative expenses (707) - (707)Other expenses - developmentexpenditure (371) - (371)Other expenses - amortisation ofintangible assets (48) - (48) -------- -------- --------Operating loss (1,086) - (1,086) Finance costs (1) - (1)Finance income 53 - 53 -------- -------- --------Loss before taxation (1,034) - (1,034)Taxation - - - -------- -------- --------Loss for the financial period (1,034) - (1,034) ======== ======== ======== Twelve months to 31 March 2007 ---------------------- UK GAAP Adjustments IFRS IAS 20 £000 £000 £000 Revenue 276 - 276Grants received 213 (213) - -------- -------- --------Group revenue 489 (213) 276Other income - grants received - 213 213Cost of sales (158) - (158)Administrative expenses (1,589) - (1,589)Other expenses - developmentexpenditure (821) - (821)Other expenses - amortisation ofintangible assets (148) - (148) -------- -------- --------Operating loss (2,227) - (2,227) Finance costs (3) - (3)Finance income 109 - 109 -------- -------- --------Loss before taxation (2,121) - (2,121)Taxation - - - -------- -------- --------Loss for the financial period (2,121) - (2,121) ======== ======== ======== Reconciliation Of Equity (Unaudited) 1 April 1 April 2006 2006 UK GAAP Adjustments IFRSAssets £000 £000 £000Non current assets Property, plant and equipment 240 - 240 Intangible assets 1,360 - 1,360 -------- -------- --------Total non currentassets 1,600 - 1,600 -------- -------- --------Current assets Inventories 140 - 140 Trade and other receivables 1,304 - 1,304 Cash and cash equivalents 2,716 - 2,716 -------- -------- --------Total current assets 4,160 - 4,160 -------- -------- --------Total assets 5,760 - 5,760 -------- -------- --------LiabilitiesCurrent liabilities Trade and other payables (509) - (509) Current tax payable - - - -------- -------- --------Total current liabilities (509) - (509) -------- -------- --------Non current liabilities Other non current liabilities (144) - (144) -------- -------- --------Total non current liabilities (144) - (144) -------- -------- --------Total liabilities (653) - (653) -------- -------- --------Net assets 5,107 - 5,107 ======== ======== ========Equity Issued capital 9,526 - 9,526 Share premium - - - Other reserve (2,003) - (2,003) Foreign exchange reserve - - - Profit and loss account (2,416) - (2,416) -------- -------- --------Equity shareholders' funds 5,107 - 5,107 ======== ======== ======== Reconciliation Of Equity (Unaudited) 30 Sept 30 Sept 2006 2006 UK GAAP Adjustments IFRS IAS 21Assets £000 £000 £000Non current assets Property, plant and equipment 537 - 537 Intangible assets 1,269 - 1,269 -------- -------- --------Total non current assets 1,806 - 1,806 -------- -------- --------Current assets Inventories 91 - 91 Trade and other receivables 315 - 315 Cash and cash equivalents 2,336 - 2,336 -------- -------- --------Total current assets 2,742 - 2,742 -------- -------- --------Total assets 4,548 - 4,548 -------- -------- --------LiabilitiesCurrent liabilities Trade and other payables (283) - (283) Current tax payable - - - -------- -------- --------Total current liabilities (283) - (283) -------- -------- --------Non current liabilities Other non current liabilities (279) - (279) -------- -------- --------Total non current liabilities (279) - (279) -------- -------- --------Total liabilities (562) - (562) -------- -------- --------Net assets 3,986 - 3,986 ======== ======== ========Equity Issued capital 9,526 - 9,526 Share premium - - - Other reserve (2,003) - (2,003) Foreign exchange reserve - (87) (87) Profit and loss account (3,537) 87 (3,450) -------- -------- --------Equity shareholders' funds 3,986 - 3,986 ======== ======== ======== Reconciliation Of Equity (Unaudited) 31 March 31 March 2007 2007 UK GAAP Adjustments IFRS IAS 21Assets £000 £000 £000Non current assets Property, plant and equipment 472 - 472 Intangible assets 1,262 - 1,262 -------- -------- --------Total non current assets 1,734 - 1,734 -------- -------- --------Current assets Inventories 89 - 89 Trade and other receivables 374 - 374 Cash and cash equivalents 1,480 - 1,480 -------- -------- --------Total current assets 1,943 - 1,943 -------- -------- --------Total assets 3,677 - 3,677 -------- -------- --------LiabilitiesCurrent liabilities Trade and other payables (469) - (469) Current tax payable - - - -------- -------- --------Total current liabilities (469) - (469) -------- -------- --------Non current liabilities Other non current liabilities (247) - (247) -------- -------- --------Total non current liabilities (247) - (247) -------- -------- --------Total liabilities (716) - (716) -------- -------- --------Net assets 2,961 - 2,961 ======== ======== ========Equity Issued capital 9,526 - 9,526 Share premium - - - Other reserve (2,003) - (2,003) Foreign exchange reserve - (25) (25) Profit and loss account (4,562) 25 (4,537) -------- -------- --------Equity shareholders' funds 2,961 - 2,961 ======== ======== ======== Notes To The Condensed Consolidated Interim Financial Statements 1. Preparation of the Accounts These condensed consolidated interim financial statements are for the six monthsended 30 September 2007, and have been prepared with regard to the requirementsof IFRS 1 "First Time Adoption of International Financial Reporting Standards"relevant to interim reports because they are part of the period covered by theGroup's first IFRS financial statements for the year ending 31 March 2008. Theydo not include all of the information required for full financial statements,and should be read in conjunction with the consolidated financial statements(under UK GAAP) of the Group for the year ended 31 March 2007. These condensed consolidated interim financial statements (the interim financialstatements) have been prepared in accordance with the accounting policies setout below which are based on the recognition and measurement principles of IFRSin issue as adopted by the European Union (EU) and effective at 31 March 2008 orare expected to be adopted and effective at 31 March 2008, our first annualreporting date at which we are required to use IFRS accounting standards adoptedby the EU. They were approved for issue by the Board of Directors on 12 December2007. AorTech International Plc's consolidated financial statements were prepared inaccordance with United Kingdom Accounting Standards (United Kingdom GenerallyAccepted Accounting Practice) until 31 March 2007. The date of transition toIFRS was 1 April 2006. The comparative figures in respect of 2006 have beenrestated to reflect changes in accounting policies as a result of the adoptionof IFRS. The disclosures required by IFRS 1 concerning the transition from UKGAAP to IFRS are given in the reconciliation schedules included within thisreport. The accounting policies have been applied consistently throughout the Group forthe purposes of preparation of these condensed consolidated interim financialstatements. The financial information for the six months ended 30 September 2007 and thecomparative figures for the six months ended 30 September 2006 and the twelvemonths ended 31 March 2007 are unaudited and have been prepared on the basis ofthe accounting policies set out in the notes to this financial information. Thisfinancial information does not constitute statutory accounts as defined inSection 240 of the Companies Act 1985. The financial statements for the yearended 31 March 2007, prepared under UK GAAP, received an unqualified auditreport, did not contain statements under sections 237(2) and 237(3) of theCompanies Act 1985 and have been delivered to the Registrar of Companies. 2. Segmental reporting The principal activity of AorTech International plc Group currently is thedevelopment and exploitation of a range of innovative biomaterials. All revenue originated in Australia, with the exception in the first six monthsof financial year 2007/08 when an upfront payment of £146,700 in respect of amedium term contractual arrangement was received by the UK company. (Unaudited) Six months to Six months to Twelve months 30 Sept 2007 30 Sept 2006 to 31 March 2007 £000 £000 £000Analysis of revenueGeographical segments United Kingdom 147 - - Australia 181 119 276 United States of America - - - -------- ------- -------- 328 119 276 ======== ======= ========Analysis of result - operating lossGeographical segments United Kingdom (241) (318) (681) Australia (433) (752) (1,409) United States of America (130) (16) (137) -------- ------- -------- (804) (1,086) (2,227) ======== ======= ======== 3. Loss Per Share Loss per share has been calculated on the basis of the result for the periodafter tax, divided by the weighted average number of ordinary shares in issue inthe period of 4,034,322. The comparatives are calculated by reference to theweighted average number of ordinary shares in issue which were 3,810,278 for theperiod to 30 September 2006 and 3,810,278 for the year ended 31 March 2007. 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