RNS Number:6823R
Aortech International PLC
05 November 2003
AORTECH INTERNATIONAL PLC
Interim results
Encouraging Progress With New Biomaterials Business
AorTech International plc announces Interim Results for the 6 months ended 30
September 2003.
* Proprietary silicone/polyurethane biomaterial, Elast-Eon, being rolled
out with 4 new technology/material supply agreements signed, resulting in:
o #212,000 upfront payments received during the period from two agreements
o Ongoing milestone payments, royalties and raw material supplies
negotiated
* Cash in hand #6.2 million
* Group rationalisation complete
* Dramatic reduction in cash burn
Laurie Rostron, Chairman, commented:
"AorTech has been through an extremely difficult period but there are now clear
signs that the new strategy is beginning to work. AorTech has re-emerged as an
early stage biomaterials business with the opportunity to grow into a more
substantial company operating in a number of high growth markets."
5th November 2003
ENQUIRIES:
AorTech International plc Tel: 01698 746 699
Frank Maguire, Chief Executive
College Hill Tel: 020 7457 2020
Nicholas Nelson/Clare Warren
CHAIRMAN'S STATEMENT
Results
During the year ended 31 March 2003, the Company announced that it was
implementing a major change in strategy in order to significantly reduce the
cash burn rate and ensure the Company's survival. This rationalisation has now
been completed and most outstanding costs from the discontinued businesses have
been paid.
The results for the first 6 months of the year reflect the early stage nature of
this new business. Sales of #212,414 consist largely of up-front payments from
two new licencees for Elast-Eon. Operating expenses of #1,181,960 comprise costs
from both the new business and from businesses discontinued in the previous year
and lead to a loss before tax of #1,018,285. During the period, the Company
received cash in respect of research and development tax credits totalling
#1,252,332 and this is shown in the Profit and Loss Account as a taxation
credit, resulting in an after tax profit for the period of #234,047. The cash
position at the end of the half year was #6,199,292.
Biomaterials
The new strategy centres on the development of a biomaterials business based on
Elast-Eon, a proprietary silicone/polyurethane material. The Board is delighted
with the progress so far.
During the period to 30 September 2003, three new technology/material supply
agreements were signed with a fourth signed in October. These were as follows:
* Abbott Laboratories for use with their drug eluting stent programme -
non-exclusive
* St Jude Medical for use with their cardiac rhythm management programmes
- non-exclusive
* A major medical device partner for use in cardiovascular surgery
product applications
* Percardia for use in their trans-myocardial direct revascularisation
technology
These agreements all involve up-front payments followed by milestone payments,
raw material supplies and royalties. In some cases they may also involve
co-development work and the manufacture and supply of critical components and/or
products.
Discussions are also being held with other potential licencees in those sectors
where non-exclusive licences are currently held.
A strategic alliance has been formalised with the Australian CSIRO for future
product/material technology and the first licence has been signed for an
orthopaedic grade of the base polymer technology.
This orthopaedic material has been defined, processes for its production have
been qualified and scale up activities should be completed prior to the fiscal
year end. Customer reception to this new material has been very positive.
A grade of Elast-Eon has been developed with the specific intent of addressing
the strength and safety concerns that exist with the current breast implant
products. Feasibility and prototype device phases are complete and the company
is actively seeking a corporate partner.
A number of new development projects are currently being discussed with the
CSIRO
Operational progress has been highlighted by the qualification of alternate
suppliers of raw material and the qualification of the manufacturing quality
system to ISO 2000. In addition the Company's Technology and Manufacturing
Centre in Melbourne has successfully completed three corporate partner quality
system audits and has enhanced its analytical capabilities by the addition of
state of the art triple detection GPC and specialised equipment designed to
perform high-cycle fatigue performance of polymer materials.
Summary
The Company has travelled through an extremely difficult period but there are
now clear signs that the new strategy is beginning to work. The Company is
starting to re-emerge as an early stage biomaterials business with the
opportunity to grow into a more substantial company operating in a number of
high growth markets. The Board has been encouraged by the very positive response
from most of the large global medical device companies approached and their very
real interest in the Company's material technology and its development and
manufacturing capabilities.
The significant progress that the Company has made so far this year is entirely
due to the excellent and enthusiastic employees that have remained with the
Company, ably led by the CEO Frank Maguire.
CONSOLIDATED PROFIT AND LOSS ACCOUNT (UNAUDITED)
six months six months
ended ended year ended
30 September 30 September 31 March
2003 2002 2003
Note # # #
Turnover 2
Continuing operations 212,414 49,616 73,407
Discontinued operations - 802,074 1,305,731
212,414 851,690 1,379,138
Cost of sales (141,654) (570,439) (1,067,379)
Gross Profit 70,760 281,251 311,759
Selling and marketing costs (111,408) (1,275,382) (2,227,838)
Administrative expenses (1,070,552) (6,874,996) (9,938,130)
Administrative expenses include:
Development expenditure (161,088) (2,503,420) (4,182,296)
Amortisation of intangible fixed assets (51,050) (620,301) (1,206,732)
Rationalisation costs - (1,163,006) -
Costs of aborted acquisition - (467,915) (250,281)
Group operating loss before provision for (1,111,200) (7,869,127) (11,854,209)
impairment of goodwill
Provision for impairment of goodwill - - (16,535,412)
Group operating loss
Continuing operations 3 (1,111,200) (1,334,103) (18,587,192)
Discontinued operations - (6,535,024) (9,802,429)
(1,111,200) (7,869,127) (28,389,621)
Exceptional Items - - (11,335,504)
Loss on ordinary activities before interest 2 (1,111,200) (7,869,127) (39,725,125)
Interest Receivable 92,915 244,263 366,947
Loss on ordinary activities before taxation 2 (1,018,285) (7,624,864) (39,358,178)
Taxation 4 1,252,332 - -
Profit/(Loss) for the financial period 234,047 (7,624,864) (39,358,178)
Profit/(Loss) per ordinary share 5 6.14p (200.11p) (1,032.95p)
STATEMENT OF TOTAL RECOGNISED PROFITS/(LOSSES)
Profit/(Loss) for the financial period 234,047 (7,624,864) (39,358,178)
Currency translation differences arising on consolidation 250,406 (142,226) 58,190
Total recognised profits/(losses) 484,453 (7,767,090) (39,299,988)
CONSOLIDATED BALANCE SHEET (UNAUDITED)
30 September 30 September 31 March
2003 2002 2003
# # #
Fixed assets
Intangible assets 1,684,640 20,402,981 1,536,185
Tangible assets 278,927 4,843,081 319,976
1,963,567 25,246,062 1,856,161
Current assets
Stocks - 4,398,018 -
Debtors 168,977 1,460,150 532,912
Cash at bank 6,199,292 9,011,603 6,851,343
6,368,269 14,869,771 7,384,255
Creditors:
amounts falling due within one year (668,552) (1,586,491) (2,061,585)
Net current assets 5,699,717 13,283,280 5,322,670
Total assets less current liabilities 7,663,284 38,529,342 7,178,831
Accruals and deferred income (270,000) (87,613) (270,000)
Net assets 7,393,284 38,441,729 6,908,831
Capital and reserves
Called up share capital 9,525,695 9,525,696 9,525,696
Share premium account 63,359,594 63,359,593 63,359,593
Other reserve (2,003,143) (2,003,143) (2,003,143)
Profit and loss account (63,488,862) (32,440,417) (63,973,315)
7,393,284 38,441,729 6,908,831
CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED)
Six months Six months Year
ended ended Ended
30 September 30 September 31 March
2003 2002 2003
Note # # #
Net cash outflow from operating activities (see below)
Net cash outflow before exceptional items
Continuing operations 6 (850,772) (983,012) (828,455)
Discontinued operations - (6,383,407) (9,892,434)
(850,772) (7,366,419) (10,720,889)
Outflow related to exceptional items accrued during the
year ended 31 March 2003 (1,263,753) - (1,709,737)
Net cash outflow from operating activities (2,114,525) (7,366,419) (12,430,626)
Returns on investment and servicing of finance 124,178 348,941 498,976
Taxation 1,252,332 - -
Capital expenditure and financial investment 55,423 (537,658) (401,251)
Disposals - - 2,618,697
Cash outflow before management of liquid resources and (682,592) (7,555,136) (9,714,204)
financing
Management of liquid resources 884,132 7,268,666 9,438,942
Increase/(Decrease) in cash in the period 7 201,540 (286,470) (275,262)
NOTES
1. Basis of preparation
The interim financial statements have been prepared in accordance with the
guidance published by the Accounting Standards Board and on the basis of the
accounting policies set out in the Group's 2003 statutory accounts, with the
exception of the accounting policy for revenue recognition which has been
updated to reflect new income streams arising from the Biomaterials business.
The accounting policy is now as follows:
"Turnover excludes value added tax and sales between Group companies and is
recognised as follows:
Revenue relating to the supply of material and finished goods to customers is
recognised when products are shipped to customers.
Licence revenues, in respect of upfront payments for access by third parties to
the Company's technology and milestone payments, are recognised once the
Company's obligations for each milestone have been met and the Company has
achieved a right to be paid.
Royalty revenues are recognised as earned in accordance with third party sales
of the underlying products."
The interim financial statements were approved by a duly appointed and
authorised committee of the Board of Directors on 4 November 2003 and are
unaudited.
The information shown for the year ended 31 March 2003 does not constitute
statutory accounts within the meaning of section 240 of the Companies Act 1985
and has been extracted from the full accounts for the year ended 31 March 2003
which have been filed with the Registrar of Companies. The report of the
auditors on these accounts was unqualified and did not contain a 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.
(b) geographical area The analysis by geographical area of the
Group's turnover, loss before tax and net
assets is set out below:
(i) turnover
six months ended six months ended year ended
30 September 2003 30 September 2002 31 March 2003
sales by sales by sales by sales by sales by sales by
destination origin destination origin destination origin
# # # # # #
Geographical segment
United Kingdom - - 385,205 614,189 545,090 1,025,329
Rest of Europe - - 429,070 217,463 781,789 309,217
Rest of World 212,414 212,414 37,415 20,038 52,259 44,592
212,414 212,414 851,690 851,690 1,379,138 1,379,138
(ii) loss before tax
six months ended six months ended year ended
30 September 30 September 31 March
2003 2002 2003
# # #
Geographical segment
United Kingdom (830,269) (6,087,448) (38,063,717)
Rest of Europe 26,471 31,383 (15,391)
Rest of World (307,402) (1,813,062) (1,646,017)
Loss before interest (1,111,200) (7,869,127) (39,725,125)
Net interest receivable 92,915 244,263 366,947
(1,018,285) (7,624,864) (39,358,178)
(iii) net assets
30 September 30 September 31 March
2003 2002 2003
# # #
Geographical segment
United Kingdom 5,189,669 35,891,512 4,895,028
Rest of Europe 8,044 301,046 54,580
Rest of World 2,195,571 2,249,171 1,959,223
7,393,284 38,441,729 6,908,831
3. Group operating loss
The Group operating loss from continuing operations during the six months ended
30 September 2003 of #1,111,200 include costs of #284,806 which will not be
incurred in future periods following the restructuring of the Group and the
discontinuance of businesses in the previous year.
4. Taxation
The taxation credit for the six months to 30 September 2003 arises from cash
received in respect of research and development credits.
5. Profit/(loss) per ordinary share
The basic profit/(loss) per ordinary share is calculated on the profit of the
Group of #234,047 for the six months to 30 September 2003 (six months ended 30
September 2002: loss #7,624,864, year ended 31 March 2003: loss #39,358,178) and
on 3,810,278 (six months ended 30 September 2002: 3,810,278, year ended 31
March: 3,810,278) equity shares, being the weighted average number of shares
deemed to be in issue after adjusting for the ten for one share consolidation of
1 September 2003.
6. Net cash outflow from operating activities
Net cash outflow from operating activities before exceptional items during the
six months ended 30 September 2003 includes cash outflows of #181,132 relating
to businesses discontinued in the previous year.
7. Analysis of net funds
1 April cash non-cash 30 September
2003 flow changes 2003
# # # #
Net Cash:
Cash at bank and in hand 6,851,343 (682,592) 30,541 6,199,292
Deposits treated as liquid resources (6,438,817) 884,132 - (5,554,685)
412,526 201,540 30,541 644,607
Liquid resources:
Deposits included in cash 6,438,817 (884,132) - 5,554,685
Net funds 6,851,343 (682,592) 30,541 6,199,292
This information is provided by RNS
The company news service from the London Stock Exchange
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