TIDMAOR
RNS Number : 1144Y
AorTech International PLC
27 November 2014
AORTECH INTERNATIONAL PLC ("AorTech", "the Company" or "the
Group")
Unaudited Interim Results
For the six months ended 30 September 2014
CHAIRMAN'S STATEMENT
I set out below a commentary on the key matters over the past
six months.
Unaudited results for the Six Months to 30 September 2014
During the period, total Group revenue grew from the $71,000
achieved from continuing operations last year to $524,000. Our
Licence fee income increased by $200,000 to $271,000 and we also
saw growth in Royalty income from $nil to $134,000.
Administration Costs for the period were $340,000, a decrease
from the actual spend disclosed in last years Interim Accounts of
$740,000; however some of those prior year costs related to
discontinued activities.
We suffered a charge of $212,000 in exceptional administration
costs relating to the legal case being pursued against our former
CEO. The operating loss has been reduced from $373,000 in 2013 to
$215,000 and would have been broadly break even but for those
litigation costs.
Litigation
We continue to pursue the case against our former CEO Frank
Maguire. We have recognised all of the costs incurred to date and
are hopeful that a proportion of these, together with 90% of all
future costs, will be recoverable from our insurers. There has
recently been ongoing correspondence between AorTech's attorney and
the insurer's attorney to clarify and resolve certain matters that
have arisen from queries raised by the insurers. We are however
confident that there will be a successful outcome to these
matters.
We are in continuing discussions with our insurer to extend the
litigation to cover the former CEO's new business interest and
certain related parties.
Biomerics, LLC Manufacturing Licence
Biomerics, our manufacturing licensee, has now fully validated
the manufacturing process, and materials have been supplied to
customers. We previously reported that we had reimbursed Biomerics
$47,000 of the $155,000 they had incurred on labour costs relating
to the validation process. In the 6 months to 30 September 2014 a
further $96,000 had been reimbursed, leaving an outstanding balance
of $12,000.
Whilst there have been a number of enquiries from potential
customers, both Biomerics and AorTech are disappointed that these
have not progressed further. Biomerics have submitted a proposal to
amend the terms of a supply agreement relating to one of AorTech's
licensees. Biomerics and AorTech have begun discussions on this and
a number of other issues relating to the contractual relationship
between the two companies. It is hoped that agreement on all these
issues can be reached but there can be no certainty that this will
be achieved.
Other Licensees
A number of in-depth discussions have been ongoing with several
licensees to resolve issues which have arisen and, in some cases,
to restructure and revise licence terms. This has created an
increased workload but the benefits from this should arise in
future years.
The vast majority of our licensees are continuing to progress
their products through the development and regulatory process with
two of our licensees achieving commercialisation.
As can be seen from the financial results, there was increased
income from licence and royalty fees during the period and we are
hopeful that certain of our licensees will continue to achieve
successful launches of their products, resulting in further
increased revenue flows for AorTech. As mentioned previously,
AorTech's future success is dependent on the future success of
AorTech's licensees.
Cash and Debtors Position
Cash at 30 September 2014 was $335,000, a decrease of $307,000
from the 31 March 2014 balance of $642,000.
Debtors due within one year increased from $401,000 at 31 March
2014 to $725,000. These include a long-standing debtor where the
agreed payment schedule is being met through monthly repayments,
with $300,000 expected to be recovered within the next 12 months.
In addition there is a balance of $175,000 due which we have not
provided against because a blue chip company has a secondary
obligation in respect of the debt and thus we are hopeful of full
recovery. The cash and working capital position of the Company is
reliant upon the timely collection of the debtor book.
We continue to rigorously monitor and control overheads. As a
quoted IP Company, patent and insurance costs are significant and
these together with the costs associated with our stock market
listing accounted for almost 50% of the Administrative expense of
$340,000.
Heart Valve
We are actively exploring a number of areas for maximising the
return for AorTech from the Heart Valve project and we will report
on progress in this area as and when there is news flow.
Conclusion
Although there has been progress during the six months to 30
September 2014, the Board and our CEO, Eddie McDaid in particular
have been faced with almost daily challenges to try and resolve a
myriad of issues that have arisen, some of which are related to the
tenure of the previous CEO. The litigation against the former CEO
has added to the workload and has been a necessary but unwelcome
distraction from focusing on the generation of income to create
increased value for shareholders.
Your Board continues to meet challenges but is determined to
overcome them and, together with its licensees, to achieve and
deliver the necessary revenue and profitability for AorTech and its
shareholders.
Bill Brown, Chairman
Enquiries
AorTech International Pls
Bill Brown, Chairman
Tel: +44 (0) 7730 718296
Eddie McDaid, Chief Executive
Tel: +44 (0) 7802 920869
finnCap
Stuart Andrews/James Thompson
finnCap as Nominated Advisor
Tel: 020 7220 0500
CONDENSED CONSOLIDATED INTERIM
INCOME STATEMENT
Six months ended 30 September
2014 Unaudited Unaudited Audited
Six Six Twelve
months months months
to 30 to 30 to 31
Sept Sept March
Note 2014 2013 2014
US$000 US$000 US$000
Revenue 524 71 418
------------------ ------------------ ------------------
Other income - - 1
------------------ ------------------ ------------------
Cost of sales (46) (48) -
Administrative expenses (340) (284) (859)
Exceptional administrative
expenses 2 (212) - (83)
Other expenses - amortisation
of intangible assets (141) (112) (241)
------------------ ------------------ ------------------
Operating loss (215) (373) (764)
Finance income / (expense) 3 117 (47) (59)
------------------
Loss from continuing operations
attributable to owners of the
parent company (98) (420) (823)
------------------
Loss from discontinued operations
4 - (300) (486)
------------------
Loss attributable to owners
of the parent company (98) (720) (1,309)
Taxation - - -
Loss attributable to equity
holders of the parent company (98) (720) (1,309)
================== ================== ==================
Loss per share (basic and diluted)
- US cents (2.03) (14.90) (27.09)
CONDENSED CONSOLIDATED INTERIM STATEMENT OF
COMPREHENSIVE INCOME
Unaudited Unaudited Audited
Six Twelve
Six months months
months to to
to 30 31
30 Sept Sept March
2014 2013 2013
US$000 US$000 US$000
Loss for the period (98) (720) (1,309)
Other comprehensive income:
Exchange differences on translating
foreign operations (487) (99) (51)
Income tax relating to other - - -
comprehensive income
------------------------- ------------- ---------------
Other comprehensive income for
the period, net of tax (487) (99) (51)
------------------------- ------------- ---------------
Total comprehensive income for
the period, attributable to
equity holders of the parent
company (585) (819) (1,360)
------------------------- ------------- ---------------
CONDENSED CONSOLIDATED INTERIM
BALANCE SHEET
Unaudited Unaudited Audited
30
Sept 30 Sept 31 March
2014 2013 2014
US$000 US$000 US$000
Assets
Non current assets
Intangible assets 1,673 1,603 1,861
Property, plant and
equipment - 7 -
Trade and other receivables 150 - 300
Total non current assets 1,823 1,610 2,161
---------------- --------------- ------------
Current assets
Inventories - 56 46
Trade and other receivables 725 1,027 401
Cash and cash equivalents 335 1,023 642
Total current assets 1,060 2,106 1,089
---------------- --------------- ------------
Total assets 2,883 3,716 3,250
---------------- --------------- ------------
Liabilities
Current liabilities
Trade and other payables (228) (242) (306)
---------------- --------------- ------------
Total current liabilities (228) (242) (306)
---------------- --------------- ------------
Non current liabilities
Change of control redemption
premium (76) (182) (193)
---------------- --------------- ------------
Total non current liabilities (76) (182) (193)
---------------- --------------- ------------
Total liabilities (304) (424) (499)
================ =============== ============
Net assets 2,579 3,292 2,751
================ =============== ============
Equity
Issued capital 19,597 19,550 20,144
Share premium 3,796 3,786 3,901
Other reserve (3,249) (3,241) (3,340)
Foreign exchange reserve 4,278 4,353 3,791
Profit and loss account (21,843) (21,156) (21,745)
Total equity attributable
to equity holders of
the parent company 2,579 3,292 2,751
================ =============== ============
CONDENSED CONSOLIDATED INTERIM
CASH FLOW STATEMENT
Unaudited Unaudited Audited
Six Six Twelve
months months months
to 30 to 30 to 31
Sept Sept March
2014 2013 2014
US$000 US$000 US$000
Cash flows from operating
activities
Group loss after tax (98) (420) (823)
Adjustments for:
Amortisation of intangible
assets 141 112 241
Finance (income) / expense (117) - 59
(Increase) / decrease in
trade and other receivables (174) (46) 102
Decrease in inventories 46 - -
(Decrease) / increase in
trade and other payables (78) 4 69
-------------------- ------------------- ----------------
Net cash flow from continuing
operations (280) (350) (352)
Net cash flow from discontinued
operations - 315 312
-------------------- ------------------- ----------------
Net cash flow from operating
activities (280) (35) (40)
-------------------- ------------------- ----------------
Cash flows from investing
activities
Purchase of intangible
assets (20) (62) (439)
-------------------- ------------------- ----------------
Net cash flow from continuing
investing activities (20) (62) (439)
Net cash flow from discontinued
investing activities - (3) -
Net cash flow from investing
activities (20) (65) (439)
-------------------- ------------------- ----------------
Net decrease in cash and
cash equivalents (300) (100) (479)
Foreign exchange movements
on cash held in foreign
currencies (7) 136 134
Cash and cash equivalents
at beginning of period 642 987 987
Cash and cash equivalents
at end of period 335 1,023 642
==================== =================== ================
CONDENSED CONSOLIDATED INTERIM STATEMENT OF
CHANGES IN EQUITY
Profit
Share Foreign and
Share premium Other exchange loss Total
(Unaudited) capital account reserve reserve account equity
US$000 US$000 US$000 US$000 US$000 US$000
Balance at 1
April
2013 18,351 3,555 (3,043) 5,684 (20,436) 4,111
Transactions
with owners - - - - - -
Loss for the
period - - - - (720) (720)
Other
comprehensive
income
Exchange
difference
on translating
foreign
operations 1,199 231 (198) (1,331) - (99)
Income tax
relating
to components
of other
comprehensive
income - - - - - -
------------------------ --------------- ---------------- ----------------------- ----------------- -------------
Total
comprehensive
income for the
period 1,199 231 (198) (1,331) (720) (819)
------------------------ --------------- ---------------- ----------------------- ----------------- -------------
Balance at 30
September
2013 19,550 3,786 (3,241) 4,353 (21,156) 3,292
Transactions
with owners - - - - - -
Loss for the
period - - - - (589) (589)
Other
comprehensive
income
Exchange
difference
on translating
foreign
operations 594 115 (99) (562) - 48
Income tax
relating
to components
of other
comprehensive
income - - - - - -
------------------------ --------------- ---------------- ----------------------- ----------------- -------------
Total
comprehensive
income for the
period 594 115 (99) (562) (589) (637)
Balance at 31
March
2014 20,144 3,901 (3,340) 3,791 (21,745) 2,751
Transactions
with owners - - - - - -
Profit for the
period - - - - (98) (98)
Other
comprehensive
income
Exchange
difference
on translating
foreign
operations (547) (105) 91 487 - (74)
Income tax
relating
to components
of other
comprehensive
income - - - - - -
------------------------ --------------- ---------------- ----------------------- ----------------- -------------
Total
comprehensive
income for the
period (547) (105) 91 487 (98) (172)
Balance at 30
September
2014 19,597 3,796 (3,249) 4,278 (21,843) 2,579
======================== =============== ================ ======================= ================= =============
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL
STATEMENTS
1. BASIS OF PREPARATION
These condensed consolidated interim financial statements are
for the six months ended 30 September 2014, and have been prepared
with regard to the requirements of IAS 34 on "Interim Financial
Reporting". They do not include all of the information required for
full financial statements, and should be read in conjunction with
the consolidated financial statements of the Group for the year
ended 31 March 2014.
These condensed consolidated interim financial statements have
been prepared in accordance with the accounting policies set out
below which are based on the recognition and measurement principles
of IFRS in issue as adopted by the European Union (EU) and
effective at 31 March 2014. They were approved for issue by the
Board of Directors on 26 November 2014.
After considering the period end cash position, making
appropriate enquiries and reviewing budgets and profit and cash
flow forecasts for a period of at least twelve months from the date
of signing these financial statements, 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 condensed consolidated interim
financial statements is appropriate.
The financial information for the six months ended 30 September
2014 and the comparative figures for the six months ended 30
September 2013 are unaudited and have been prepared on the basis of
the accounting policies set out in the consolidated financial
statements of the Group for the year ended 31 March 2014.
These extracts do not constitute statutory accounts under
section 434 of the Companies Act 2006. The financial statements for
the year ended 31 March 2014, prepared under IFRS, received an
unqualified audit report, did not contain statements under sections
498(2) and 498(3) of the Companies Act 2006 and have been delivered
to the Registrar of Companies.
The accounting policies have been applied consistently
throughout the Group for the purposes of preparation of these
condensed consolidated interim financial statements.
Loss per share has been calculated on the basis of the result
for the period after tax, divided by the weighted average number of
ordinary shares in issue in the period of 4,832,778. The
comparatives are calculated by reference to the weighted average
number of ordinary shares in issue which were 4,832,778 for the
period to 30 September 2013 and 4,832,778 for the year ended 31
March 2014.
2. EXCEPTIONAL ADMINISTRATIVE EXPENSES
This comprises the exceptional administrative expense
represented by the cost of litigation against the Company's former
CEO.
3. FINANCE INCOME / (EXPENSE)
The change of control redemption premium represents the decrease
/ (increase) in the premium payable to the former loan note holders
in the event of a change of control of the Company. The amount
payable is based upon the market capitalisation of the Company at
the balance sheet date.
4. 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 an
intellectual property holding company. As a consequence, results
attributable to manufacturing activity constitute a discontinued
operation, and have been presented as such in the Income Statement.
Comparative figures have been adjusted accordingly.
5. SEGMENTAL REPORTING
The Company is an Intellectual Property (IP)
holding company whose principal activity is
exploiting the value of its IP and know-how.
During the first six months of financial year
2014/15 all revenue originated in the United
Kingdom.
Unaudited Unaudited Audited
Twelve
Six Six months
months months to
to 30 to 30 31
Sept Sept March
2014 2013 2014
US$000 US$000 US$000
Analysis of revenue by
products and services and
by geographical area
Geographical segments
United Kingdom:
Supply of product 119 - 48
Licence fees - services 271 71 332
Royalty revenue 134 - 38
524 71 418
================= ================== ==============
Unaudited Unaudited Audited
Twelve
Six Six months
months months to
to 30 to 30 31
Sept Sept March
2014 2013 2014
US$000 US$000 US$000
Analysis of result - operating
loss
Continuing operations
United Kingdom (215) (373) (764)
Operating loss (215) (373) (764)
Finance income / (expense) - all UK 117 (47) (59)
----------------- ------------------ --------------
Loss on continuing operations before taxation (98) (420) (823)
----------------- ------------------ --------------
Discontinued operation
USA - (300) (486)
----------------- ------------------ --------------
Loss on discontinued operations - (300) (486)
================= ================== ==============
6. FINANCE (EXPENSE) / INCOME
Unaudited Unaudited Audited
Twelve
Six Six months
months months to
to 30 to 30 31
Sept Sept March
2014 2013 2014
US$000 US$000 US$000
Bank interest income / - 1 -
(expense)
Change of control redemption
premium 117 (48) (59)
---------- ---------- --------
117 (47) (59)
========== ========== ========
7. INTANGIBLE ASSETS
The following table shows the impact of additions,
exchange rate adjustments and amortisation on intangible
assets.
Intellectual Development
property costs Total
US$000 US$000 US$000
At 1 April 2013 1,840 - 1,840
Additions during period 62 - 62
Exchange rate adjustment (187) - (187)
Amortisation (112) - (112)
------------------- --------------------- ---------------
At 30 September 2013 1,603 - 1,603
Additions during period 58 319 377
Exchange rate adjustment 10 - 10
Amortisation (118) (11) (129)
------------------- --------------------- ---------------
At 1 April 2014 1,553 308 1,861
Additions during period 20 - 20
Exchange rate adjustment (67) - (67)
Amortisation (109) (32) (141)
------------------- --------------------- ---------------
At 30 September 2014 1,397 276 1,673
------------------- --------------------- ---------------
8. INTERIM ANNOUNCEMENT
The interim results announcement report was released on 27
November 2014. A copy of the Interim Report will become available
on 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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