TIDMAOR
RNS Number : 3738V
AorTech International PLC
07 August 2015
AorTech International plc
("AorTech", "the Company" or "the Group")
Audited results for the year ended 31 March 2015
AorTech International plc (AIM: AOR), the biomaterials and
medical device IP company, today announces its results for the year
ended 31 March 2015.
Financial summary
-- Group revenue from continuing operations doubled from
previous year to US$844k
-- Operating profit of US$81k (2014: US$440k loss) before
amortisation costs and exceptional items
-- Loss from continuing operations more than halved from US$823k
to US$326k
Other developments
-- Continuing reduction in administrative expenses, following
completion of exit from US
-- Consideration being given to capitalising on existing IP and
experience of past development work to create Polymer Heart
Valves
-- Share Capital reorganisation proposed
For further information contact:
AorTech International plc
Eddie McDaid, Chief Executive Tel: +44 (0)7802 920869
AorTech International plc
Bill Brown, Chairman Tel: +44 (0)7730 718296
finnCap Limited
Jonny Franklin-Adams/ Giles Rolls Tel: +44 20 7220 0500
A copy of this announcement will be available at
www.aortech.com/investor/announcements. 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(TM) and ECSil(TM) 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 implantable
sensor technology. 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(TM) and ECSil(TM)'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
I am pleased to report that in the financial year to 31 March
2015 we experienced an improvement in the business with revenues
and other income more than doubling from $419,000 to $857,000. The
administrative expenses in operating the business before the costs
of the litigation fell from $859,000 to $776,000, resulting in a
net profit before exceptional items and IP amortisation of $81,000.
Exceptional costs relating to the litigation against Frank Maguire
and related parties amounted to $204,000 which compares to the cost
incurred at the 6-month stage of $212,000, the reduction in the
second half of the year being a further recovery from our insurers
net of the excess on the insurance policy payable by AorTech. Over
the course of the year, the cash position fell from $642,000 to
$360,000. At the interim stage however, the cash position stood at
$335,000 and there has therefore been progress during the second
half.
Litigation
As previously reported in our interim accounts and in our recent
update to shareholders released on 16 April 2015, the Company
continues to pursue a legal action against the former CEO Frank
Maguire. This litigation has been extended and has commenced
against Foldax, the Company of which Mr Maguire is presently CEO,
together with other associated parties. This litigation which was
started in California has now been transferred to Utah to sit
alongside the case against Frank Maguire. As previously announced,
Mr Maguire has made a counter claim for alleged non-payment of
expenses amounting to $168,000.
No provision has been made in these financial statements for any
potential gains or losses as the action has not progressed
sufficiently.
Your Board continues to pursue this action against Mr Maguire,
Foldax and other connected parties in order to protect the
interests of AorTech and its shareholders.
Biomerics Manufacturing Licence
As reported in last year's Accounts, a licence with Biomerics
LLC was concluded for the manufacture and distribution of AorTech's
Elast-Eon(TM) materials.
We expressed some disappointment in the progress of this licence
in our 2014 Interim Results but I am now pleased to confirm that
there has been progress on the contractual relationship between
AorTech and Biomerics with an amendment to the original agreement
concluded since the year end. This amended agreement incorporates
several commercial changes including further capital expenditure by
both companies. AorTech's capital expenditure commitment will be
paid from future royalties.
The further positive news on this agreement is the commitment of
a long term supply of Elast-Eon(TM) to one of AorTech's major
licensees together with further enquiries from other potential
customers regarding receiving supplies of Elast-Eon(TM).
Other Licensees
I am pleased to report, as demonstrated in the growth of
AorTech's revenue, the continued increase of royalties from
existing licensees. The licensees who have achieved
commercialisation are continuing to see increased sales which
should in turn result in increased royalties to AorTech.
Those licensees who have yet to achieve full commercialisation
are continuing the development of their products through the
Regulatory process. It is important to recognise that AorTech's
future success is dependent upon the continued growth and success
of its licensees.
In AorTech's Interim results of 30 September 2014 we reported
that there was a balance due from a licensee of $175,000 which had
not been provided against since a Blue Chip Company had a secondary
obligation in respect of this debt. The debt has subsequently
increased to $275,000. Since the year end AorTech has received a
lump sum settlement from the Blue Chip Company in order to have it
released from its secondary obligation. No provision has been made
against this debt in these accounts but should AorTech's action
for
recovery of the debt not be fully successful, any under recovery
will be effectively offset in cash terms against the settlement
figure received since the year end.
Cash
As previously indicated, although cash fell from $642,000 to
$360,000 during the year, there was an improvement in cash in the
second half.
In order to achieve this financial position your Board has had
to rigorously monitor and control overheads and, indeed, Directors'
salaries have been maintained at a reduced level and in certain
instances Directors' salaries have been deferred.
I am pleased to report that the Company's cash position has
increased since the financial year end and anticipate that the
Company should be cash flow positive during the current financial
year 2015/2016.
Heart Valve
Now that the polymer licensing business has been stabilised and
has some positive momentum, we have been able to spend time and
resource in reviewing exactly where AorTech stands with the Heart
Valve project. Over the years, there have been three major
development phases of the polymer heart valve. The first attempt
was some 13 years ago when AorTech undertook the development
itself. This attempt failed when a non-regulatory trial in juvenile
sheep had a very disappointing conclusion. The valve was redesigned
to change the stress profile on leaflets and the manufacturing
process revised to ensure a better quality leaflet finish. The new
design was licensed to a large medical device Company that
undertook its own rigorous testing. The data from these tests
remain the property of that licensee but the overall results were
very encouraging. Unfortunately, the licensee did not pursue the
project as we understand all their valve R&D efforts were being
diverted to their trans-catheter project. A second major license
was entered into in 2007 and was taken back in late 2011. During
the course of this license, further design changes were made and a
range of durability and animal trials undertaken. Much of the
testing work was positive although there were also some adverse
issues which arose.
From the review of the history of the Heart Valve project it is
apparent that, despite these adverse issues, there are many
positive results that indicate the exciting potential in AorTech's
polymer heart valve. The recent development and early introduction
of a TAVI valve into the heart valve market provides exciting new
possibilities for the introduction of a heart valve made from a
polymeric material. The root causes of the failures are now well
understood and taking the positive aspects from all three projects
suggests that replicating previous trials would get a positive
outcome for both In Vitro and In Vivo testing. To reach the stage
of human trials, all of the testing carried out to date will need
to be redone under regulatory conditions which would require
quality and manufacturing systems of a substantially higher
standard than when AorTech manufactured valves for testing in the
past. Seeking any subsequent deal with an industry major would
require successful data from the above trials.
The opportunity for the Polymer Heart Valve remains the
durability of a mechanical valve with the hemodynamics of a tissue
valve. Cost of manufacture would be considerably lower than other
prosthetic valves and the leaflet technology would be perfect for
TAVI.
AorTech's technology, know-how and IP in the Polymer Valve area
is only one of the ingredients required for success. The two other
key inputs are people with the necessary Quality, Regulatory,
Clinical and Manufacturing experience together with access to
capital. In order to capitalise on the development work of the last
15 years for the benefit of AorTech shareholders, we are
considering whether there is the opportunity of bringing a team
together with the necessary experience and track record in the
device industry that could be supported by external finance.
Share Capital Reorganisation
The Company's shares are currently trading at a price
significantly below their nominal value of 250 pence per share. At
the close of trading on 5 August 2015 the Company's Closing Price
was 25.5 pence per Existing Ordinary Share. Accordingly, subject to
Shareholder approval at the Company's AGM which is expected to be
held on 24 September 2015, the Directors propose to reorganise the
Company's share capital as explained below, with a view to reducing
the nominal value of the Existing Ordinary Shares.
Pursuant to the Share Capital Reorganisation, it is proposed
that each Existing Ordinary Share with a nominal value of 250 pence
will be sub-divided and redesignated into one Ordinary Share of 5
pence and one Deferred Share of 245 pence.
Following the Share Capital Reorganisation each Shareholder will
hold the same number of Ordinary Shares that he or she held
immediately beforehand, with a nominal value per Ordinary Share of
5 pence.
The Ordinary Shares resulting from the Share Capital
Reorganisation will have exactly the same rights as those currently
accruing to the Existing Ordinary Shares under the Articles,
including those relating to voting and entitlement to
dividends.
The Deferred Shares will have very limited rights and will
effectively be valueless. They will have no voting rights and will
have no rights as to dividends and only very limited rights on a
return of capital. They will not be admitted to or listed on any
stock exchange and will not be freely transferable. The rights
attaching to the Deferred Shares are set out in the Articles as
amended pursuant to resolution 7 to be passed at the AGM. The
amendments to the Articles are being made principally to set out
the rights attaching to the Deferred Shares.
Resolution 8 contained in the Notice of General Meeting at the
end of this document will, if passed by Shareholders, effect the
proposed Share Capital Reorganisation as detailed above. If
approved, the Share Capital Reorganisation will take place at 6pm
on 24 September 2015. Application will be made to the London Stock
Exchange for the admission to trading and dealings on AIM in the
new Ordinary Shares arising from the Share Capital Reorganisation,
becoming effective at 8am on 25 September 2015.
The Company does not propose to issue new share certificates to
the existing Shareholders as a result of the Share Capital
Reorganisation. The existing share certificates which have been
issued to the Shareholders in respect of their holdings of Existing
Ordinary Shares will remain valid in respect of the New Ordinary
Shares following completion of the Share Capital
Reorganisation.
CREST accounts of Shareholders will not be credited in respect
of any entitlement to Deferred Shares.
Loan Notes
In October 2012 the Company issued Loan Notes to obtain the
necessary funding to allow it to continue to operate. The Loan Note
holders still have the right to receive from the Company a payment
of a sum equal to 15% of sums paid to shareholders on a Change of
Control. Resolution 9 being proposed at the AGM seeks shareholder
approval for the Board to take all necessary steps to allow the
Company to allot shares in exchange for the surrender of these
rights. 8.26% of the Loan Notes are owned by Directors or their
connected parties. Bill Brown and Eddie McDaid, and connected
parties, will therefore abstain from voting on this resolution.
Recommendation
Gordon Wright, acting as an independent Director, believes
resolution 9 to be in the best interests of the Company and the
Shareholders as a whole and recommends you to vote in favour of
that resolution as he intends to do in respect of his beneficial
holdings amounting, in aggregate, to 308,311 Existing Ordinary
Shares representing 6.38 per cent of the existing total voting
rights. As noted above, Bill Brown and Eddie McDaid, and connected
parties, will abstain from voting on this resolution.
Your Board believes resolutions 7 and 8 to be in the best
interests of the Company and the Shareholders as a whole.
Accordingly, the Directors unanimously recommend you to vote in
favour of those Resolutions to be proposed at the General Meeting.
All of the Directors intend to vote in favour of Resolutions 7 and
8 in respect of their beneficial holdings, amounting, in aggregate,
to 667,632 Existing Ordinary Shares, representing 13.81 per cent,
of the existing total voting rights.
Roy Mitchell
During the past year Roy served as finance director and his
contribution was invaluable to the Company during that time. His
forensic analysis of documentation provided additional evidence and
support in AorTech's litigation action. I wish, on behalf of the
Board, to thank Roy for his expertise and contribution during these
past twelve months.
Conclusion
Despite the time and commitment required in the litigation
action, the past year has been one of relative success. Revenue
from license fees and royalties are now greater than overheads, the
Company was cash positive in the second half of the year, progress
is being made with our key licensees and we expect the year 2015/16
to be one of further progress.
Bill Brown
Chairman
6 August 2015
Consolidated income statement
Year ended 31 March 2015 Year ended 31 March 2014
Pre-exceptional Pre-exceptional
items Exceptional items Exceptional
items Total items Total
Notes US$000 US$000 US$000 US$000 US$000 US$000
Revenue 3 844 - 844 418 - 418
Other income 13 - 13 1 - 1
Administrative
expenses (776) (204) (980) (859) (83) (942)
Other expenses
- amortisation
of intangible
assets 11 (332) - (332) (241) - (241)
-------------
Operating
(loss) /
profit 3 (251) (204) (455) (681) (83) (764)
Finance income
/ (expense) 8 - 129 129 - (59) (59)
----------------- ------------------ --------- ---------------- ------------- ----------------
Loss from
continuing
operations
attributable
to owners of
the parent
company 5 (251) (75) (326) (681) (142) (823)
Loss from
discontinued
operations 17 (44) - (44) (486) - (486)
----------------- ------------------ --------- ---------------- ------------- ----------------
Loss
attributable
to
owners of the
parent
company (295) (75) (370) (1,167) (142) (1,309)
Loss per share
Basic and
diluted (US
cents per
share) 10 (7.66) (27.09)
Consolidated statement of comprehensive income
Year
ended Year ended
31 March 31 March
2015 2014
US$000 US$000
Loss for the year (370) (1,309)
Other comprehensive income:
Exchange differences on translating
foreign operations 17 (51)
Income tax relating to other comprehensive
income - -
------------ ------------------
Other comprehensive income for the
year, net of tax 17 (51)
------------ ------------------
Total comprehensive income for the
year, attributable
to owners of the parent company (353) (1,360)
No items of other comprehensive income can be subsequently
reclassified to profit and loss
Consolidated balance sheet
31 March 31 March
2015 2014
US$000 US$000
Notes
Assets
Non current assets
Intangible assets 11 1,546 1,861
Trade and other receivables 14 - 300
Total non current assets 1,546 2,161
-------------- ------------------
Current assets
Inventories 12 - 46
Trade and other receivables 14 737 401
Cash and cash equivalents 15 360 642
Total current assets 1,097 1,089
-------------- ------------------
Total assets 2,643 3,250
-------------- ------------------
Liabilities
Current liabilities
Trade and other payables 16 (192) (306)
Total current liabilities (192) (306)
-------------- ------------------
Non current liabilities
Change of control redemption premium 16 (53) (193)
-------------- ------------------
Total non current liabilities (53) (193)
Total liabilities (245) (499)
Net assets 2,398 2,751
============== ==================
Equity
Issued capital 20 17,937 20,144
Share premium 20 3,474 3,901
Other reserve (2,974) (3,340)
Foreign exchange reserve 6,076 3,791
Profit and loss account (22,115) (21,745)
Total equity attributable to equity
holders of the parent 2,398 2,751
============== ==================
The Consolidated financial statements were approved by the Board
on 6 August 2015 and were signed on its behalf by
W D Brown, Chairman and E McDaid, Director
Company number SC170071
Consolidated cash flow statement
Year Year
ended ended
31 March 31 March
2015 2014
US$000 US$000
Cash flows from operating activities
Group loss after tax (326) (823)
Adjustments for:
Amortisation of intangible assets 332 241
Finance (income) / expense (129) 59
Increase in trade and other receivables 36 102
(Decrease) / increase in trade and other
payables (254) 69
---------------------- ----------
Net cash flow from continuing operations (341) (352)
Net cash flow from discontinued operations 2 312
---------------------- ----------
Net cash flow from operating activities (339) (40)
Cash flows from investing activities
Purchase of intangible assets - (439)
---------------------- ----------
Net cash flow from continuing operations - (439)
Net cash flow from discontinued operations - -
Net cash flow from investing activities - (439)
---------------------- ----------
Cash flows from financing activities
Interest paid - -
Proceeds from issue of loan notes - -
Repayment of loan notes - -
Redemption premium paid to loan note holders - -
---------------------- ----------
Net cash flow from financing activities - -
---------------------- ----------
Net decrease in cash and cash equivalents (339) (479)
Foreign exchange movements on cash held
in foreign currencies 57 134
Cash and cash equivalents at beginning
of year 642 987
Cash and cash equivalents at end of year 360 642
====================== ==========
Consolidated statement of changes in
equity
Profit
Issued Foreign and
Share Share Other exchange loss Total
capital premium reserve reserve account equity
US$000 US$000 US$000 US$000 US$000 US$000
Balance at 31 March 2013 18,351 3,555 (3,043) 5,684 (20,436) 4,111
Transactions with owners - - - - - -
Loss for the year - - - - (1,309) (1,309)
Other comprehensive income
Exchange difference on
translating
foreign operations 1,793 346 (297) (1,893) - (51)
Total comprehensive income
for the year 1,793 346 (297) (1,893) (1,309) (1,360)
--------- ------------ --------- ---------------- ------------- --------
Balance at 31 March 2014 20,144 3,901 (3,340) 3,791 (21,745) 2,751
Transactions with owners - - - - - -
Loss for the year - - - - (370) (370)
Other comprehensive income
Exchange difference on translating
foreign operations (2,207) (427) 366 2,285 - 17
Total comprehensive income
for the year (2,207) (427) 366 2,285 (370) (353)
--------- ------ --------- ----------------- --------- -------
Balance at 31 March 2015 17,937 3,474 (2,974) 6,076 (22,115) 2,398
========= ====== ========= ================= ========= =======
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of preparation
The Consolidated financial statements are for the year ended 31
March 2015. 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 2015.
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 2021, 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 2015, 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 2015 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 2014 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 2014
have been delivered to the Registrar of Companies. The 31 March
2015 accounts were approved by the Directors on 6 August 2015, but
have not yet been delivered to the Registrar of Companies.
4. Earnings per share
The basic loss per Ordinary share of 7.66 US cents (2014: loss
of 27.09 US cents) is calculated on the loss of the Group of
US$370,000 (2014: loss of US$1,309,000) and on 4,832,778 (2014:
4,832,778) equity shares, being the number of shares in issue
during the year. Of this, 6.75 US cents (2014: 17.03 US cents) is
calculated on the loss from continuing operations, whilst a loss of
0.916 US cents (2014: loss of 10.06 US cents) results from
discontinued operations.
The diluted earnings per share is not materially different from
the basic earnings per share. 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. Discontinued 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. As a consequence, results
attributable to manufacturing activity constitute a discontinued
operation, and have been presented as such in the prior year
figures in the Income Statement.
The results of the discontinued manufacturing operations are
shown in more detail below.
Pre-exceptional Pre-exceptional
items Exceptional items items Exceptional items
Total Total
2015 2015 2015 2014 2014 2014
$000 $000 $000 $000 $000 $000
Revenue - - - 245 - 245
Other income - - - 13 - 13
Cost of sales (44) - (44) (211) - (211)
Administrative
expenses - - - (537) - (537)
Profit on
disposal of
property,
plant and
equipment - - - 4 - 4
----------------- ------------------ ------- ------------------ ------------------ -------
Operating
(loss) /
profit (44) - (44) (486) - (486)
----------------- ------------------ ------- ------------------ ------------------ -------
Notice of Annual General Meeting
Notice of the eightteenth 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 Thursday, 24 September 2014 at
11:00am.
Posting and availability of accounts
The annual report and accounts for the year ended 31 March 2015
will be sent by post to all registered shareholders on 25 August
2014. 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.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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