Final Results

RNS Number : 0839O

AorTech International PLC

16 August 2017

 

AorTech International plc

("AorTech", "the Company" or "the Group")

Audited results for the year ended 31 March 2017

AorTech International plc (AIM: AOR), the biomaterials and medical device IP company, today announces its results for the year ended 31 March 2017.

Financial summary

·      Trading Profit Achieved: Adding back amortisation of goodwill, an operating profit of $55k was achieved compared to a loss of $263k in the previous year.

·      Loss for year down 65%: Loss from continuing operations reduced from $604k to $237k.

·      Costs Reduced: Administrative expenses before exceptional items and bad debt provisions reduced from US$715k in previous year to US$523k in 2017.

·      High quality of Revenues: Despite a reduction in income, the revenues recognised in the current year are recurring and supported by contracts.

For further information contact:

AorTech International plc 

Bill Brown, Chairman & Chief Executive                                       Tel: [phone] 

finnCap Limited

Giles Rolls / Jonny Franklin-Adams                                             Tel: [phone] 

A copy of this announcement will be available at www.aortech.net/investor-relations/rns-and-insider-information/. The content of the website referred to in this announcement is not incorporated into and does not form part of this announcement.

About AorTech:

AorTech has developed biostable, implantable polymers, including Elast-Eon™ and ECSil™ the world's leading long-term implantable co-polymers, now manufactured on their behalf by Biomerics LLC in Utah, USA.  With several million implants and seven years of successful clinical use, AorTech polymers are being developed and used in cardiology and urological applications, including pacing leads, cardiac cannulae, stents and neuro stimulation devices. Devices manufactured from AorTech polymers have numerous US FDA PMA approvals, 510k's, CE Marks, Australian TGA and Japanese Ministry of Health approvals.

Elast-Eon™ and ECSil™'s biostability is comparable to silicone while exhibiting excellent mechanical, blood contacting and flex-fatigue properties. These polymers can be processed using conventional thermoplastic extrusion and moulding techniques. A range of materials in a variety of application-specific formulations for use in medical devices and components are available.

CHAIRMAN'S STATEMENT

In the year to 31 March 2017, AorTech's revenues were reduced to $614,000 (2016: $901,000) over the full year; however the second half year witnessed sales which were approximately 50% higher than those achieved at the interim stage.  AorTech generated a profit of $55,000 before the amortisation of intangible assets (2016: loss of $263,000).  After amortisation of intangible assets (depreciation of Intellectual Property) of $292,000, the Company incurred an operating loss of $237,000 - less than half that incurred during the previous year (2016: $575,000).  The Board continued to maintain a close control over costs with administration expenses for the year being less than half those incurred during the previous year, although the change in the Sterling/US Dollar exchange rate contributed to that reduction.

The net current assets (total current assets less total current liabilities) remained relatively stable at $404,000 compared to $392,000 last year.  Within this figure however there was a fall of $200,000 in the cash position which stood at $114,000 at the year end. The fall in cash was mostly offset by an increase in receivables and as expected, the cash position has increased since the year end.

Licensees

Over the years, AorTech has signed a number of licences to allow AorTech polymer intellectual property to be incorporated into medical devices.  A number of devices are marketed which utilise the benefits of Elast-Eon™ polymers; these include cardiac rhythm management pacing leads, coronary artery stents, neuro stimulation devices, catheters and urology stents. In all applications, the material is performing well and delivering the bio-stability of silicone together with the mechanical properties of urethane. Our manufacturing licensee, Biomerics concluded a licence for Elast-Eon™ earlier this year together with a long term supply agreement. There are currently a number of companies evaluating Elast-Eon™ which if succesful may lead to other licences.  Biomerics adopts a different approach to licensing to that which AorTech has historically pursued. AorTech signed a number of licences with very small/development companies long before products were ready for market launch. As a result, other than annual maintenance fees, the revenues from those licences depended upon future product launches. By contrast, Biomerics is focussed on volume supply and near term success.

Some historic licences signed by the Company have not generated value for AorTech and have only resulted in the Elast-Eon™ material not being exploited in the field of the licence. An example of this was the licence for breast implants signed in 2011. Since that time, AorTech's technology has not been incorporated into any new device nor generated any revenue for AorTech despite maintaining an IP portfolio in this arena. Your Board still believes there to be substantial benefits in utilising Elast-Eon™ technology in cosmetic and reconstructive surgery and as a result recently terminated this licence in order to pursue other opportunities in the field.

In a similar manner, we have sought to withdraw from non-performing licences. We recently served notice of termination on CardioSolutions, Inc which had licenced polymer for use in heart valve repair, as two annual minimum payments had been missed.

Ongoing Litigation

As shareholders are aware, AorTech has been embroiled in long-running litigation against its former CEO and related parties. The Court recently heard four motions for partial summary judgement. One of these motions was brought by AorTech against Mr Frank Maguire seeking judgement on Mr Maguire's breach of his service agreement.  The other three motions for partial summary judgement were brought by defendants after the AorTech motion was briefed.  These motions included a cross motion seeking denial of AorTech's motion on Mr Maguire's breach of contract; a motion seeking summary judgement on an alleged breach by AorTech of a consulting agreement with Mr Maguire, and a motion seeking summary judgement on alleged non-payment of travel expenses incurred by Mr Maguire a number of years prior to his resignation.  At the time of writing, the Court has still to issue its rulings on these motions together with two other motions for partial summary judgement heard nearly two years ago.

A significant amount of work has been undertaken, yet due to the confidentiality of the process and the materials shared with the Court, very little detail can be reported to shareholders.

AorTech remains confident in its position and is committed to pursuing justice on behalf of shareholders.

Board Changes

Mr Eddie McDaid retired as Chief Executive Officer and a Director last October. Your Board wishes to express its gratitude to Mr McDaid for his dedication and hard work and to wish him a long and happy retirement.

The vacancy on the Board created by Eddie's retirement was filled by the appointment of John McKenna as a Non-executive Director.

Conclusion

Despite the fall in revenue over the year, the overall quality and maintainability of sales is much better year on year.  A new revenue-generating licence has been signed and enquiries have increased markedly.  We have taken back control of our breast implant IP and are actively pursuing opportunities to exploit this alongside our other intellectual property, including heart valves and polymers.

W Brown

Chairman and Chief Executive Officer

15 August 2017

Consolidated income statement

		Year ended 31 March 2017			Year ended 31 March 2016
		Pre-exceptional items	Exceptional items	Total	Pre-exceptional items	Exceptional items	Total
Notes		US$000	US$000	US$000	US$000	US$000	US$000
Revenue	3	614	-	614	751	-	751
Other income		-	-	-	150	-	150
Administrative expenses		(571)	12	(559)	(1,084)	(80)	(1,164)
Other expenses - amortisation of intangible assets	11	(292)	-	(292)	(312)	-	(312)
Operating loss	3	(249)	12	(237)	(495)	(80)	(575)
Finance (expense) / income	8	-	-	-	-	(29)	(29)
Loss from continuing operations attributable to owners of the parent company	5	(249)	12	(237)	(495)	(109)	(604)
Loss attributable to owners of the parent company		(249)	12	(237)	(495)	(109)	(604)
Loss per share
Basic and diluted (US cents per share)	10			(4.27)			(12.00)

Consolidated statement of comprehensive income

	Year ended  31 March 2017		Year ended  31 March 2016
	US$000		US$000
Loss for the year	(237)		(604)
Other comprehensive income:
I Items that will not be reclassified subsequently to profit and loss
Exchange differences	(2,329)		(586)
Items that will be reclassified subsequently to profit and loss
Exchange differences	2,125		551
Other comprehensive income for the year, net of tax	(204)		(35)
Total comprehensive income for the year, attributable    to owners of the parent company	(441)		(639)

Consolidated balance sheet

				31 March 2017		31 March                        2016
				US$000		US$000
		Notes
Assets
Non current assets
	Intangible assets	11		914		1,367
Total non current assets				914		1,367
Current assets
	Trade and other receivables	13		392		243
	Cash and cash equivalents	14		114		314
Total current assets				506		557
Total assets				1,420		1,924
Liabilities
Current liabilities
	Trade and other payables	15		(102)		(165)
Total current liabilities				(102)		(165)
Total liabilities				(102)		(165)
Net assets				1,318		1,759
Equity
	Issued capital	17		15,189		17,426
	Share premium	17		3,133		3,595
	Other reserve			(2,511)		(2,881)
	Foreign exchange reserve			8,752		6,627
	Profit and loss account			(23,245)		(23,008)
Total equity attributable to equity holders of the parent				1,318		1,759

The Consolidated financial statements were approved by the Board on 15 August 2017 and were signed on its behalf by W Brown, Chairman and CEO, and G Wright, Director

Company number SC170071

Consolidated cash flow statement

		Year ended  31 March 2017		Year  ended  31 March 2016
		US$000		US$000
Cash flows from operating activities
	Group loss after tax	(237)		(604)
Adjustments for:
	Amortisation of intangible assets	292		312
	Finance expense / (income)	-		29
	(Increase) / decrease in trade and other receivables	(149)		494
	Decrease in trade and other payables	(106)		(109)
Net cash flow from continuing operations		(200)		122
Net cash flow from operating activities		(200)		122
Cash flows from investing activities
	Purchase of intangible assets	-		(168)
Net cash flow from continuing operations		-		(168)
Net cash flow from investing activities		-		(168)
Net cash flow from financing activities		-		-
Net decrease in cash and cash equivalents		(200)		(46)
Cash and cash equivalents at beginning of year		314		360
Cash and cash equivalents at end of year		114		314

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1.   Basis of preparation

The Consolidated financial statements are for the year ended 31 March 2017.  They have been prepared in compliance with International Financial Reporting Standards (IFRS) and IFRS Interpretations Committee (IFRIC) interpretations as adopted by the European Union as at 31 March 2017.

The Consolidated financial statements have been prepared under the historical cost convention.

The accounting policies remain unchanged from the previous year.

2.   Going concern

After considering the year end cash position, making appropriate enquiries and reviewing budgets and profit and cash flow forecasts to 31 March 2023, the Directors have formed a judgement at the time of approving the financial statements that there is a reasonable expectation that the Group has sufficient resources to continue in operational existence for the foreseeable future. For this reason the Directors consider the adoption of the going concern basis in preparing the Consolidated financial statements is appropriate.

3. Preliminary announcement

The summary accounts set out above do not constitute statutory accounts as defined by Section 434 of the UK Companies Act 2006. The summarised consolidated balance sheet at 31 March 2017, the summarised consolidated income statement, the summarised consolidated statement of comprehensive income, the summarised consolidated statement of changes in equity and the summarised consolidated cash flow statement for the year then ended have been extracted from the Group's statutory financial statements for the year ended 31 March 2017 upon which the auditor's opinion is unqualified and did not contain a statement under either sections 498(2) or 498(3) of the Companies Act 2006. The audit report for the year ended 31 March 2016 did not contain statements under Section 498(2) or Section 498(3) of the Companies Act 2006. The statutory financial statements for the year ended 31 March 2016 have been delivered to the Registrar of Companies. The 31 March 2017 accounts were approved by the Directors on 15 August 2017, but have not yet been delivered to the Registrar of Companies.

4. Earnings per share

The basic loss per ordinary share of 4.27 US cents (2016: loss of 12.00 US cents) is calculated on the loss of the Group of US$237,000 (2016: loss of US$604,000) and on 5,557,695 (2016: 5,032,823) equity shares, being the weighted average number of shares 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.

5.  Current operations

On 1 October 2013, the Group signed an agreement with Biomerics LLC for the manufacture and distribution of our patented materials, including to our existing licensees.  In the opinion of the Directors, the Biomerics transaction transformed the Group into a pure intellectual property company.

Notice of Annual General Meeting

Notice of the twentieth Annual General Meeting of AorTech International Plc will be posted with the Annual

Report and Accounts and will be held in the offices of Kergan Stewart LLP, 163 Bath Street, Glasgow G2 4SQ

on Wednesday, 27 September 2017 at 11:00am.

Posting and availability of accounts

      The annual report and accounts for the year ended 31 March 2017 will be sent by post or electronically to all registered shareholders on 1 September 2017.  Additional copies will be available for a month thereafter from the Company's Weybridge office. Alternatively, the document may be viewed on, or downloaded from, the Company's website: www.aortech.net.

 

END

 

 

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