TIDMAOR
RNS Number : 1239H
AorTech International PLC
15 August 2016
AorTech International plc
("AorTech", "the Company" or "the Group")
Audited results for the year ended 31 March 2016
AorTech International plc (AIM: AOR), the biomaterials and
medical device IP company, today announces its results for the year
ended 31 March 2016.
Financial summary
-- Total Group revenue increased by over 5% from previous year
to US$901k
-- Net trading profit of $128k (2015: US$96k profit) before
exceptional costs, exchange rate differences and bad debt
provisions
-- Operating loss after charging $312k in amortisation of
intangible assets and $369k in bad debt provisions
Other developments
-- Maintained 2015 level of administrative expenses before
exceptional costs and bad debt provisions
-- Share Capital reorganisation taken place, with contingent
liability extinguished.
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
Giles Rolls / Jonny Franklin-Adams Tel: +44 20 7220 0500
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(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 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(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
In the year to 31 March 2016, Revenue and Other Income increased
from $857,000 to $901,000, an increase of just over 5%.
Administrative expenses, before exceptional costs, foreign exchange
differences and bad debt provisions, were maintained in line with
the prior year, $773,000 (2015: $761,000), resulting in a net
trading profit of $128,000 before exceptional costs, exchange
differences and bad debt provisions. However, after bad debt
provisions of $369,000 the net trading profit has been reduced to a
net trading loss of $241,000. The Company incurred an overall
operating loss of $575,000 after amortisation of intangible assets
of $312,000 (2015: $332,000) after exceptional litigation costs of
$80,000 (2015: $204,000) and exchange rate differences of $58,000
(2015: $15,000). Operating losses increased from $455,000 to
$575,000 with the year-end cash balances reducing from $360,000 in
2015 to $314,000. This reduction was mainly due to the significant
bad debt provisions required in respect of two major debtors. In
addition, further investment was made in development costs of
$168,000 during the year.
Your Board has, however, continued to maintain close control on
all of its overheads, as is demonstrated by maintaining the costs
at the same level as the previous year.
Bad Debt Provision
During the year, we had to provide for a sum of $150,000 due
from SynCardia and $219,000 from iSense. The SynCardia debt had
been the subject of a mediated settlement which was being repaid at
the rate of $25,000 per month. Unfortunately, monthly payments
ceased from October 2015 and appropriate legal action was
immediately instigated for recovery. AorTech achieved an arrestment
on the debtor's bank account but then our recovery was frustrated
due to SynCardia filing for bankruptcy under Chapter 11. The other
substantial debt of $219,000 was due under the terms of a licence
regarding the continuous glucose monitoring business. AorTech's US
attorneys, who were pursuing this debt on our behalf, have recently
informed the Board that all of the assets of this company have been
transferred to another company of a similar name, leaving the
debtor company with substantial liabilities, including its debt
obligations to AorTech. Your Board is taking advice from its US
attorneys to determine what recovery options may be appropriate in
respect of this debt.
Litigation against Frank Maguire and Others
One of the key tasks assigned to Mr Maguire in the final two
years of his employment at AorTech, in addition to the management
and licensing of AorTech's polymer intellectual property, was to
seek a partner or funding for the polymer heart valve project. This
was always viewed as an important area of business and of potential
value to shareholders, and indeed Mr Maguire often reported to the
Board the potential value of the heart valve IP and know-how.
Mr Maguire tendered his resignation on 26 November 2013
providing the Company with three days' notice. Since his
resignation, Mr Maguire has worked with Foldax, Inc. as its
CEO.
Shortly after his resignation, AorTech asked Mr Maguire to
confirm that he had returned to the Company all files, data and
confidential information. AorTech understands that at the time Mr
Maguire possessed substantial amounts of AorTech information
related to both its heart valve project and its polymers. Mr
Maguire did not respond to this request. Given this lack of
response and our growing concern over other issues related to Mr
Maguire's involvement with Foldax, Inc., AorTech asked its legal
representatives to write to Mr Maguire demanding return of all
Company property. As a result of Mr Maguire's lack of response,
litigation ensued. To date, AorTech's information has not been
fully returned.
Our focus in the litigation is to ensure that AorTech has
returned to it all of the confidential data misappropriated by Mr
Maguire, that Mr Maguire's new business does not use or benefit
from that confidential information and that the manufacturing trade
secrets for AorTech polymers and heart valve remain secret and are
not used or disclosed in the future.
Loan Note Share Issue
At last year's AGM, shareholders authorised the Directors to
take all steps necessary to allot shares to loan note holders in
return for the surrender of their remaining rights under the notes
issued in October 2012. These rights were extinguished in January
2016 by the issue of new shares in the Company. The dilution to
ordinary shareholders amounted to 15% which, in the opinion of the
Directors, is a level substantially less than would have been
suffered if an equity issue had been undertaken in October
2012.
Licenses
Over the years, AorTech has made substantial investment in the
development of bio stable polymers and medical device designs. The
objective is to capitalise on this investment for the benefit of
shareholders. The AorTech polymers have significant benefits for
medical device companies and in certain cases facilitate the
underlying performance of the devices. With our polymers being a
critical component in the supply chain, the device manufacturers
must have confidence in the long term supply of material. AorTech
was neither large enough nor perceived as secure enough to allow a
greater acceptance of the material, particularly by the larger
device companies. AorTech recognized this limitation and rather
than seek to continue as a small sub-scale supplier elected to
license the rights to manufacture polymer to Biomerics. Biomerics
is not only a polymer manufacturer but is an added value extruder,
molder and sub-contract manufacturer of medical device components
and devices itself. Over the past year, driven by customer
contracts and market interest, Biomerics has transferred the
Elast-Eon(TM) manufacture from a small scale set up into a fully
validated, commercial scale facility. In partnership with
Biomerics, AorTech has supported this scale up with an additional
investment during the financial year of $168,000 paid from a share
of gross margin on product sales. Biomerics have further developed
upon the Elast-Eon(TM) family of materials and are now marketing a
lower cost, potentially higher volume version of the material.
Business development activities continue and a growing list of
companies testing material is evidence of these efforts. Although
some of AorTech's licencees continue to experience delays in both
the achievement and the increased commercialisation of their
products, the performance of Elast-Eon(TM) is recognized as
critical in our customers' success. Significant funding has been
achieved by AorTech licencees in developing and commercialising
their products with AorTech's Elast-Eon(TM) seen as critical to
their success. In one instance, funds in excess of $100 million
have been raised to achieve successful commercialisation. We
anticipate that with the renewed interest in our material being
generated through our licencing partner, Biomerics, that additional
licences may be completed during the course of the next twelve
months.
Heart Valve Project
We have previously announced a potential transaction with a new
business established to commercialise the AorTech heart valve
technology. Fund raising for the new project is continuing but is
not yet finalised and any license will be dependent upon the new
business being fully funded. The package of data and information
that AorTech is able to deliver to the project is substantial. This
ranges from specific manufacturing know how and trade secrets for
the precise polymer best suited to a heart valve, detailed design
files for a polymer valve with a stress/strain profile
substantially less than the material mechanical properties,
together with a fully documented manufacturing process that allows
a clinical quality valve to be made on a repeatable basis. All of
these processes have been developed over a number of years of trial
and error and experimentation at considerable investment by
AorTech.
New accounting framework applying for the year ended 31 March
2016
The Company has elected to adopt FRS 101 'Reduced Disclosure
Framework' (FRS 101) for its parent company financial statements
for the year ended 31 March 2016. Following the application of FRS
101, the results, the financial position of the parent company, and
disclosures are the same as, or follow closely, those reported
under previous UK GAAP.
The Company's decision to adopt FRS 101 for its parent company's
financial statements does not require shareholder approval and
therefore no resolution on this matter is being put to the Annual
General Meeting. However, as stipulated in FRS 101, the Company is
required to notify all shareholders of this election, and any
shareholder or shareholders holding in aggregate 5 per cent or more
of the total allotted shares in the Company may serve an objection.
Objections must be served in writing and delivered to the Company
Secretary at Level Two, Springfield House, 23 Oatlands Drive,
Weybridge, Surrey, KT13 9LZ no later than 2 September 2016.
This election will apply on an ongoing basis until such time as
the Company notifies its shareholders of any change to its chosen
accounting framework for the parent company financial
statements.
Conclusion
The principal disappointment of the past year has been the
requirement to provide for sums of money contractually due to
AorTech. The ongoing litigation has also been a major consumption
of management time and is likely to continue to be so. AorTech has
sought to pursue an alternative dispute resolution route with the
objective being to have our confidential information returned to
us, the defendants precluded from using that information, and
compensation for our time and costs incurred. The defendants are
presently unwilling to engage in this process. While disputed by
defendants, our conclusion is that the defendants have retained and
are using or intend to use AorTech information in their
business.
We are however comfortable with how Biomerics is developing the
polymer manufacturing license and with the progress from other
licenses.
Bill Brown
Chairman
12 August 2016
Consolidated income statement
Year ended 31 March Year ended 31 March
2016 2015
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 3 751 - 751 844 - 844
Other income 150 - 150 13 - 13
Administrative
expenses (1,084) (80) (1,164) (776) (204) (980)
Other expenses
- amortisation
of intangible
assets 11 (312) - (312) (332) - (332)
--------------
Operating loss 3 (495) (80) (575) (251) (204) (455)
Finance (expense)
/ income 8 - (29) (29) - 129 129
---------------- -------------- ---------- ---------------- -------------- ---------
Loss from
continuing
operations
attributable
to owners of
the parent
company 5 (495) (109) (604) (251) (75) (326)
Loss from
discontinued
operations 16 - - - (44) - (44)
---------------- -------------- ---------- ---------------- -------------- ---------
Loss attributable
to owners of
the parent
company (495) (109) (604) (295) (75) (370)
Loss per share
Basic and diluted
(US cents per
share) 10 (12.00) (7.66)
Consolidated statement of comprehensive income
Year
ended Year
31 ended
March 31 March
2016 2015
US$000 US$000
Loss for the year (604) (370)
Other comprehensive income:
Exchange differences (35) 17
Income tax relating to other
comprehensive income - -
-------- ----------
Other comprehensive income
for the year, net of tax (35) 17
-------- ----------
Total comprehensive income
for the year, attributable
to owners of the parent
company (639) (353)
No items of other comprehensive income can be subsequently
reclassified to profit and loss.
Consolidated balance sheet
31 March 31 March
2016 2015
US$000 US$000
Notes
Assets
Non current assets
Intangible assets 11 1,367 1,546
Total non current assets 1,367 1,546
---------- ------------
Current assets
Trade and other receivables 13 243 737
Cash and cash equivalents 14 314 360
Total current assets 557 1,097
---------- ------------
Total assets 1,924 2,643
---------- ------------
Liabilities
Current liabilities
Trade and other payables 15 (165) (192)
Total current liabilities (165) (192)
---------- ------------
Non current liabilities
Change of control redemption
premium 15 - (53)
---------- ------------
Total non current liabilities - (53)
Total liabilities (165) (245)
Net assets 1,759 2,398
========== ============
Equity
Issued capital 19 17,426 17,937
Share premium 19 3,595 3,474
Other reserve (2,881) (2,974)
Foreign exchange reserve 6,627 6,076
Profit and loss account (23,008) (22,115)
Total equity attributable
to equity holders of the
parent 1,759 2,398
========== ============
The Consolidated financial statements were approved by the Board
on 12 August 2016 and were signed on its behalf by W Brown,
Chairman and E McDaid, Director
Company number SC170071
Consolidated cash flow statement
Year
ended Year ended
31 March 31 March
2016 2015
US$000 US$000
Cash flows from operating activities
Group loss after tax (604) (326)
Adjustments for:
Amortisation of intangible assets 312 332
Finance expense / (income) 29 (129)
Decrease / (increase) in trade
and other receivables 494 (36)
Decrease in trade and other
payables (109) (125)
----------- --------------------
Net cash flow from continuing
operations 122 (284)
Net cash flow from discontinued
operations - 2
----------- --------------------
Net cash flow from operating
activities 122 (282)
Cash flows from investing activities
Purchase of intangible assets (168) -
----------- --------------------
Net cash flow from continuing
operations (168) -
Net cash flow from discontinued
operations - -
Net cash flow from investing
activities (168) -
----------- --------------------
Net cash flow from financing
activities - -
----------- --------------------
Net decrease in cash and cash
equivalents (46) (282)
Cash and cash equivalents at
beginning of year 360 642
Cash and cash equivalents at
end of year 314 360
=========== ====================
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
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
========= ====== ========= ================= ========= =======
Changes in equity
Issue of equity share
capital 54 235 - - (289) -
------- ------ -------- ------ --------- ------
Transactions with owners 54 235 - - (289) -
Loss for the year - - - - (604) (604)
Other comprehensive
income
Exchange difference
on translating foreign
operations (565) (114) 93 551 - (35)
Total comprehensive
income for the year (565) (114) 93 551 (604) (639)
------- ------ -------- ------ --------- ------
Balance at 31 March
2016 17,426 3,595 (2,881) 6,627 (23,008) 1,759
======= ====== ======== ====== ========= ======
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of preparation
The Consolidated financial statements are for the year ended 31
March 2016. 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 2016.
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 2022, 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 2016, 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 2016 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 2015 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 2015
have been delivered to the Registrar of Companies. The 31 March
2016 accounts were approved by the Directors on 12 August 2016, but
have not yet been delivered to the Registrar of Companies.
4. Earnings per share
The basic loss per Ordinary share of 12.00 US cents (2015: loss
of 7.66 US cents) is calculated on the loss of the Group of
US$604,000 (2015: loss of US$370,000) and on 5,032,823 (2015:
4,832,778) 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. 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
2016 2016 2016 2015 2015 2015
$000 $000 $000 $000 $000 $000
Revenue - - - - - -
Other income - - - - - -
Cost of sales - - - (44) - (44)
Administrative - - - - - -
expenses
Profit on
disposal of - - - - - -
property, plant
and equipment
----------------- ------------------ ------- ------------------ ------------------ -------
Operating loss - - - (44) - (44)
----------------- ------------------ ------- ------------------ ------------------ -------
Notice of Annual General Meeting
Notice of the nineteenth 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 Tuesday, 27 September 2016 at
11:00am.
Posting and availability of accounts
The annual report and accounts for the year ended 31 March 2016
will be sent by post to all registered shareholders on 26 August
2016. 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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR PIMBTMBBBTTF
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