Interim Results
Aortech International PLC
06 December 2006
6 December 2006
Interim Results for the six months ended 30 September 2006
AorTech International plc (AIM: AOR) ('AorTech' or the 'Company'), the medical
device development and biomaterials intellectual property and licensing company,
today announces its interim results for the six months to 30 September 2006.
Highlights
• Turnover up 87% to £119k (H1 2005: £64k);
• Loss before tax increased to £1.0m (H1 2005: Loss £0.9m);
• Net cash position of £2.3m (H1 2005: £3.1m), reflecting investment in
development projects and new facility;
• Further partnership evaluations underway for heart valve.
Post period end:
• New facility in Melbourne opened on 30 October to scale-up manufacturing
capability;
• Non-exclusive licence and material supply agreement signed with Allium
Medical, Inc. on 25 October for the use of Elast-Eon(TM)in non-vascular
stents;
• Exclusive material licensing and supply agreement signed with Avalon
Laboratories of Rancho Dominguez, CA, on 5 December, in the field of
cardiopulmonary vascular support cannulae;
• Exclusive material licensing and supply agreement signed with Harland
Medical Systems LLC, on 6 December, for the use of Elast-Eon(TM)in guide
wire and catheter coatings.
Commenting on the results, Jon Pither, Chairman of AorTech, said:
'Over the past six months we have been able to build on 2006's key milestone,
the first human use of our core product Elast-Eon(TM)in cardiac pacing leads.
The result has been that there has been considerable acceleration from existing
customers in material evaluations for our product and, in addition, there has
been strong growth in the number of new customer programmes across a remarkably
broad range of applications.
'Our strategy remains to build a profitable, cash positive, polymer licensing
and supply business and to leverage that base with selected device development
projects with high potential returns, such as heart valve and breast implant,
with which the directors expect to enhance shareholder value.'
-Ends-
Enquiries:
AorTech International plc Tel: : + 1 801 581 0854
Frank Maguire, CEO
Hogarth Partnership Limited Tel: +44 (0)20 7357 9477
Andrew Jaques / Sarah Richardson
Notes to editors:
About AorTech International plc
Listed on AIM in London, AorTech International plc wholly owns AorTech
Biomaterials Pty Ltd based in Melbourne, Australia. AorTech Biomaterials was
formed in July 1997 to commercialise a range of medical grade polyurethanes for
medical implants developed by the Commonwealth Scientific and Industrial
Research Organisation (CSIRO).
AorTech's Elast-Eon(TM)technology is the product of a decade of fundamental
research into biologically stable materials. ElastEon(TM)materials are patented,
high silicone content, polyurethane copolymers which exhibit unparalleled
biological and mechanical performance.
AorTech is firmly focused on the development and refinement of this material for
the medical community, with the aim of providing a wide range of high
performance Elast-Eon(TM)materials in a variety of application specific
formulations and densities, for use in medical devices.
Chairman's Statement
In my last Chairman's Statement I was able to confirm that Elast-EonTM, our core
product, had been applied by St Jude Medical for human use in the sheathing of
pacemaker leads. Over the past six months, we have been able to build on this
extremely important milestone with the result that there has been considerable
acceleration from existing customers in material evaluations for our product
and, in addition, there has been strong growth in the number of new customer
programmes across a broad range of applications.
Our strategy remains to build a profitable, cash positive, polymer licensing and
supply business and to leverage that base with selected device development
projects with high potential returns, such as heart valve and breast implant,
with which the directors expect to enhance shareholder value.
Results
Group turnover for the six months to 30 September 2006 was £119,078 (2005:
£63,517); net operating expenses were £1,127,807 (2005: £1,045,861) and the loss
before taxation for the period was £1,034,166 (2005: £929,566). Whilst turnover
increased by 87% compared with the corresponding period in the previous year,
the net operating costs were 8% higher, and the pre-tax loss increased by 11%.
The net results are in line with those projected by the management for the
period, and include costs related to the relocation of the Australian operation
to new and larger premises in Melbourne.
The cash position of £2,335,526 on 30 September 2006 compares with £2,715,804 at
the start of the period, and with £3,060,660 as at 30 September 2005.
Heart Valve
The robust condition of our polymer licensing and supply business has provided
the basis for the Company to be selective in its choice of partners for the
polymer valve platform. In the opinion of the Board, the market environment for
this technology continues to improve and there are viable options for
partnering.
The technology continues to perform well in its evaluations by potential
customers and, as reported in my statement in the Annual Report, we continue to
make progress towards a partnership for this project.
Breast Implant
As advised in my previous Chairman's Statement, we have been anticipating the US
re-approval of the silicone gel-filled implant which we believe will bring
forward the level of investment in new technology in this field. This FDA
approval has been recently granted and we believe that this market environment
will consequently become increasingly receptive to a next generation breast
implant product.
Current trading
I am pleased to report that since the interim period end our new Melbourne
facility has been opened, which gives us substantially greater production
capacity. This facility will underpin AorTech's future commercial development
and economic prosperity by providing room for growth as well as enabling AorTech
to provide its customers with leading edge synthesis and manufacturing
capabilities, meeting the increasing orders for polymer expected through the
coming year. As announced on 25 October 2006, we have signed a non-exclusive
licence and material supply agreement with Allium Medical Inc., a Delaware based
company, for the purchase and use of AorTech's Elast-Eon(TM)bio-material in the
field of non-vascular stents. We also announced the signing of an exclusive
material licensing and supply agreement with Avalon Laboratories of Rancho
Dominguez, CA, on 5 December 2006, in the field of cardiopulmonary vascular
support cannulae including those cannulae used with ventricular assist and
extracorporeal heart/lung support devices. In addition we today announced an
exclusive material licensing and supply agreement with Harland Medical Systems
LLC, for various short-term guide wire and catheter coating applications.
Outlook
During the second half of the current financial year, the Board expects revenues
to begin to increase meaningfully and anticipates that this trend will continue
into the next financial year. Current trading remains in line with the Board's
expectations.
Jon Pither
Chairman
CONSOLIDATED PROFIT AND LOSS ACCOUNT
(unaudited) (unaudited) (audited)
six months six months year ended
ended 30 ended 30 31 March
September 2006 September 2005 2006
Note £ £ £
Turnover 119,078 63,517 1,424,944
Cost of sales (78,771) (28,675) (222,751)
Gross profit 40,307 34,842 1,202,193
Net operating
expenses (1,127,807) (1,045,861) (1,867,740)
Net operating expenses
include:
Development
expenditure (371,353) (396,986) (634,292)
Amortisation
of intangible
fixed assets (47,855) (49,697) (99,491)
Loss on
ordinary
activities
before
interest (1,087,500) (1,011,019) (665,547)
Interest
receivable 53,334 81,453 142,199
Loss on
ordinary
activities
before
taxation (1,034,166) (929,566) (523,348)
Taxation - - -
Loss for the
financial
period (1,034,166) (929,566) (523,348)
Loss per
ordinary share 3 (27.14p) (24.40p) (13.74p)
All of the turnover and operating losses are derived from
continuing operations
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
Loss for the
financial
period (1,034,166) (929,566) (523,348)
Currency
translation
differences
arising on
consolidation (87,605) 105,538 (22,981)
Total
recognised
losses (1,121,771) (824,028) (546,329)
CONSOLIDATED BALANCE SHEET
(unaudited) (unaudited) (audited)
30 September 30 September 31 March 2006
2006 2005
£ £ £
Fixed assets
Intangible assets 1,269,267 1,480,441 1,360,209
Tangible assets 537,466 205,631 239,775
1,806,733 1,686,072 1,599,984
Current assets
Stocks 91,144 115,791 139,637
Debtors 315,406 289,311 1,304,424
Cash at bank 2,335,526 3,060,660 2,715,804
2,742,076 3,465,762 4,159,865
Creditors: amounts
falling due within one
year (284,349) (322,352) (508,371)
Net current assets 2,457,727 3,143,410 3,651,494
Total assets less
current liabilities 4,264,460 4,829,482 5,251,478
Creditors: amounts
falling due after more
than one year (279,050) - (144,297)
Net assets 3,985,410 4,829,482 5,107,181
Capital and reserves
Called up share
capital 9,525,695 9,525,695 9,525,695
Other reserve (2,003,143) (2,003,143) (2,003,143)
Profit & Loss account (3,537,142) (2,693,070) (2,415,371)
Equity shareholders'
funds 3,985,410 4,829,482 5,107,181
CONSOLIDATED CASH FLOW
STATEMENT
(unaudited) (unaudited) (audited)
Note six months six months
ended ended
30 September 30 September year ended
2006 2005 31 March 2006
£ £ £
Net cash outflow from
operating (86,628) (1,015,153) (1,188,804)
activities
Returns on investment and
servicing of finance:
Interest received 53,334 81,453 142,199
Taxation
Research and development tax
credits refunded - - (98,899)
Capital expenditure and
financial investment
Purchase of tangible fixed
assets (351,122) (35,590) (119,759)
--------- --------- ---------
Cash outflow before
management
of liquid resources and
financing (384,416) (969,290) (1,265,263)
Management of liquid
resources
Cash released from short term
deposit 527,936 938,938 1,658,461
Increase / (Decrease) in cash
in
the period 4 143,520 (30,352) 393,198
---------------------------- ----- --------- --------- ---------
NOTES TO THE INTERIM FINANCIAL STATEMENTS (unaudited)
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2006
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 2006 statutory accounts.
The interim financial statements were approved by a duly appointed and
authorised committee of the Board of Directors on 5 December 2006 and are
unaudited.
The information shown for the year ended 31 March 2006 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 2006
which have been filed with the Registrar of Companies. The report of the
auditors on those 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 The Group operates in one class of business, being the
business development and exploitation of a range of innovative
biomaterials.
(b) geographical The analysis by geographical area of the Group's turnover,
area loss before tax and net assets is set out below:
six months six months year ended
ended ended
30 September 30 September 31 March 2006
2006 2005
sales by sales by sales by
destination sales by origin destination sales by origin destination sales by origin
(i) turnover £ £ £ £ £ £
Geographical
segment
United Kingdom 43,967 - 23,073 - 35,870 -
Rest of Europe - - 8,079 - - -
Rest of
World 75,111 119,078 32,365 63,517 1,389,074 1,424,944
------- --------- ------- --------- ---------- ---------
119,078 119,078 63,517 63,517 1,424,944 1,424,944
------- --------- ------- --------- ---------- ---------
(ii) Loss
before six months six months year ended
taxation ended ended
30 September 30 September 31 March
2006 2005 2006
£ £ £
Geographical
segment
United Kingdom (318,533) (382,150) (689,206)
Rest of (768,967) (628,869) 23,659
World --------- ---------- ---------
Loss before
interest (1,087,500) (1,011,019) (665,547)
Net interest
receivable 53,334 81,453 142,199
--------- ---------- ---------
Loss before
taxation (1,034,166) (929,566) (523,348)
--------- ---------- ---------
30 September 30 September 31 March
2006 2005 2006
(iii) net £ £ £
assets
Geographical
segment
United Kingdom 1,681,447 2,856,656 2,127,732
Rest of 2,303,963 1,972,826 2,979,449
World --------- ---------- ---------
3,985,410 4,829,482 5,107,181
--------- ---------- ---------
3. LOSS PER ORDINARY SHARE
The basic loss per ordinary share is calculated on the loss of the Group of
£1,034,166 for the six months to 30 September 2006 (six months ended 30
September 2005: loss of £929,566, year ended 31 March 2006: loss of £523,348)
and on 3,810,278 (six months ended 30 September 2005: 3,810,278, year ended 31
March 2006: 3,810,278) equity shares.
exchange 30 September
4. ANALYSIS OF NET FUNDS 1 April 2006 cash flow differences 2006
£ £ £
Net cash:
Cash at bank
and in hand 2,715,804 (384,416) 4,138 2,335,526
Deposits
treated as
liquid
resources (2,051,010) 527,936 - (1,523,074)
-------- --------- ---------- ----------
664,794 143,520 4,138 812,452
Liquid resources:
Deposits
included in
cash 2,051,010 (527,936) - 1,523,074
-------- --------- ---------- ----------
Net funds 2,715,804 (384,416) 4,138 2,335,526
-------- --------- ---------- ----------
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