TIDMAOR
RNS Number : 0614V
AorTech International PLC
29 November 2019
AorTech International plc
("AorTech", the "Company" or the "Group")
Unaudited Interim Results 2019
AorTech International plc (AIM: AOR), the biomaterials and
medical device IP company, today announces its unaudited interim
results for the six months ended 30 September 2019.
Highlights :
-- 27% increase in Elast-Eon(TM) income to GBP299,000 (2018: GBP236,000)
-- Continued investment in Research and Development activities
-- 30% reduction in loss to GBP158,000 (2018: GBP225,000)
-- Period end cash balance remains strong at GBP2,331,000 (31 March 2019: GBP2,412,145)
-- New licence agreement with Medibrane allows expansion of Elast-Eon(TM) Enabled devices
-- Outstanding progress in development of Elast-Eon(TM) sealed graft
-- Continued improvements to Elast-Eon(TM) Heart Valve and
commitment to manufacture expected soon
Bill Brown, Executive Chairman of AorTech, said:
"Progress over the past six months has been very positive. The
polymer business is performing well and an ambitious plan is in
place to develop it further. The medical textiles development has
been quite incredible and much credit must go to our partners, RUA
Medical, who have surpassed our expectations. Progress on the heart
valve is very positive with the timing of significantly improving
past designs arising at a point when the industry has much more
interest in alternative materials. We look forward to 2020 with
both excitement and confidence."
For further information contact:
AorTech International plc Tel: +44 (0)7730 718296
Bill Brown, Executive Chairman
Shore Capital Tel: +44 (0)20 7408 4090
Tom Griffiths / David Coaten
A copy of this announcement will be available shortly at
www.aortech.net/investor-relations/regulatory-news-alerts.
CHAIRMAN'S STATEMENT
I am delighted to set out an overview of the key unaudited
financial results of AorTech for the six months to 30 September
2019 together with an update on the progress being made in the
three strands of the business.
Unaudited results for the six months to 30 September 2019
Our polymer business which derives its income from licensing the
rights to the world leading bio-polymer Elast-Eon(TM) performed
well in the period with revenues increasing by 27 per cent to
GBP299,000 (2018: GBP236,000).
As AorTech transitions to become a medical device development
company, it was anticipated that costs would start to increase as
research and development activities were undertaken. These
activities started half way through the first half of last year
and, as a result, in the period to 30 September 2019,
administration costs (which include all our research and
development activities) were 29 per cent up on the same period last
year at GBP451,000 (2018: GBP350,000)(1) . We continue to control
expenditure and the costs incurred in the first half of the year
were 7 per cent lower than those incurred during the second half of
last year.
(1) 2018 comparatives as restated (see note 6)
AorTech has not specifically disclosed the total amount spent
during the period on research and development activities for
commercial reasons, but I am pleased to highlight the tax credit
recognised in these results which represents the value of a R&D
Tax credit claim that has been submitted for last year and will
result in a cash repayment of GBP81,000 (2018: GBPnil).
Amortisation of intangible assets amounted to GBP93,000 (2018:
GBP109,000).
The net impact of the above resulted in a much reduced loss for
the half year of GBP158,000 (2018: GBP225,000).
Cash management has remained a key focus and I am pleased that
cash at 30 September 2019 amounted to GBP2,331,000 representing
cash burn during the period of only GBP81,000. Interestingly, if
the R&D tax credit had been received in the six months ended 30
September 2019, the cash position over the period would have been
neutral, which would have been a major achievement for a developing
business.
Elast-Eon(TM) - Polymer Business
Elast-Eon(TM) is without doubt the world's leading biostable
polyurethane. It is a very high silicone content co-polymer of
polyurethane and silicone macrodials which retains the physical and
mechanical properties of conventional polyurethanes whilst
demonstrating levels of biological stability that far surpasses
rigid biostable polyurethanes.
A number of major medical device companies utilise Elast-Eon(TM)
and are achieving outstanding clinical results with their products.
As an example, Abbott has used Elast-Eon(TM) as an insulation
material on cardiac rhythm leads since 2006, thus providing unique
long term data on Elast-Eon(TM). This data shows that the presence
of Elast-Eon(TM) dramatically reduces the probability of abrasion
malfunction in tachycardia leads at 146 months by 83 per cent.
This business area has seen good growth over the past six
months, but historically, AorTech has not enjoyed the success with
Elast-Eon(TM) that Elast-Eon(TM) deserves, due to years of poor
management. The outstanding benefits of Elast-Eon(TM) are now being
increasingly recognised. I am pleased to report that, having been
able to review and analyse this business opportunity in proper
detail, we look forward to a much higher level of promotion and
marketing of Elast-Eon(TM), particularly focused on having
Elast-Eon(TM) "designed into" products that will become
"Elast-Eon(TM) Enabled".
With this in mind, we are delighted to have recently signed a
very important licence agreement with Medibrane Limited, experts in
encapsulation technology for medical devices but stents in
particular. This licence is all about Medibrane designing
Elast-Eon(TM) into devices and promoting the benefits to device
manufacturers.
Elast-Eon(TM)Enabled Textile Devices
The value added by Elast-Eon(TM) to medical devices is
significantly more than can be charged for through material supply
and licensing. In order to capture more of the value added, AorTech
has decided to develop medical devices which are "Enabled" by the
key properties of Elast-Eon(TM).
The recent pace of development of the large bore grafts and
resulting prototype devices has been outstanding. Major
developments have been achieved in the textile construction, heat
setting and crimping technology, together with the application of
Elast-Eon(TM) coating and sealant. Bringing all of this together
has resulted in the recent production of a 100 per cent sealed,
superb handling Aortic Root graft that retains its shape and form
without being pressurised.
We have kept the industry appraised of our developments and have
received some very positive feedback on our product portfolio. We
have little doubt that once we achieve regulatory approval for the
grafts, there will be ready buyers for the devices, including
significant OEM interest.
The development time frame anticipates all animal testing and
ISO device testing being undertaken over the next year, allowing
application for initial FDA approval.
Elast-Eon(TM) Enabled Heart Valve
A highly significant event over the past six months in the field
of heart valve technology was the "first in man" of a polymer
leaflet heart valve as part of an early stage study. Despite this
having been achieved by a team which includes former employees of
AorTech and with a valve that looks similar to the previous
generation of AorTech's valve, we are delighted and encouraged by
this development.
From a regulatory perspective, a furrow has now been ploughed
and protocols for human testing of polymeric valves have clearly
been agreed by the FDA. From a commercial perspective, the change
in attitude and level of interest in alternative leaflet technology
has been remarkable and we have recently had a number of very
interesting discussions.
We hope the valve study is successful, primarily for the
patients receiving this new technology, but it would also increase
our confidence on the likely success of our own improved design.
Furthermore, we would prefer to have to explain the superior
benefits of our own valve over a successful competitor polymer
valve, rather than needing to convince the market that our design
will address any failures if the competitor product is
unsuccessful.
We are continuing to make good progress on both valve design and
design for manufacture and feedback from the process is currently
driving further improvements. We hope to commit soon to the
manufacture of early proof of concept prototypes. This should
confirm the capabilities of the novel manufacturing technology we
are looking to adopt before finalising the design. The objective
being to have design freeze quality valves under testing next
year.
Conclusion
Progress over the past six months has been very positive. The
polymer business is performing well and an ambitious plan is in
place to develop it further. The medical textiles development has
been quite incredible and much credit must go to our partners, RUA
Medical, who have surpassed our expectations. Progress on the heart
valve is very positive with the timing of significantly improving
past designs arising at a point when the industry has much more
interest in alternative materials. We look forward to 2020 with
both excitement and confidence.
Bill Brown, Chairman
28 November 2019
CONDENSED CONSOLIDATED INTERIM INCOME STATEMENT
Six months ended 30 September 2019
Unaudited Unaudited Audited
(restated)
Six months Six months Twelve months
to 30 Sept to 30 Sept to 31 March
2019 2018 2019
Note GBGBP000 GBGBP000 GBGBP000
------------ ------------ --------------
Revenue 3 299 236 463
Other income 6 - 7
Administrative expenses (451) (350) (835)
Exceptional administrative
(expenses) / income (net) 2 - (2) (6)
Other expenses - share-based
payments - - (42)
Other expenses - depreciation
& amortisation (93) (109) (218)
------------ ------------ --------------
Operating loss (239) (225) (631)
Finance income/(expense) - - 22
Loss attributable to owners
of the parent company (239) (225) (609)
------------ ------------ --------------
Taxation 81 - -
------------ ------------ --------------
Loss attributable to equity
holders of the parent
company 6 (158) (225) (609)
------------ ------------ --------------
Loss per share (basic
and diluted) - GB Pence (1.08) (2.01) (4.72)
CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE
INCOME
Six months ended 30 September 2019
Unaudited Unaudited Audited
(restated)
Six months Six months Twelve months
to 30 Sept to 30 Sept to 31 March
2019 2018 2019
GBGBP000 GBGBP000 GBGBP000
Loss for the period (158) (225) (609)
------------ ------------ --------------
Total comprehensive income
for the period, attributable
to owners of the parent company (158) (225) (609)
------------ ------------ --------------
CONDENSED CONSOLIDATED INTERIM BALANCE SHEET
At 30 September 2019
Unaudited Unaudited Audited
(restated)
30 Sept 30 Sept 31 March
2019 2018 2019
Note GBGBP000 GBGBP000 GBGBP000
Assets
Non-current assets
Intangible assets 4 355 557 448
Tangible assets 5 2 1 1
---------- ------------ ----------
Total non-currents assets 357 558 449
Current assets
Trade and other receivables 234 233 238
Cash and cash equivalents 2,331 2,593 2,412
---------- ------------ ----------
Total current assets 2,565 2,826 2,650
---------- ------------ ----------
Total assets 2,922 3,384 3,099
---------- ------------ ----------
Liabilities
Current liabilities
Trade and other payables (80) (42) (99)
---------- ------------ ----------
Total current liabilities (80) (42) (99)
---------- ------------ ----------
Net assets 2,842 3,342 3,000
---------- ------------ ----------
Equity
Issued capital 7 12,574 12,574 12,574
Share premium 7 4,550 4,595 4,550
Other reserve (1,916) (2,003) (1,916)
Profit and loss account 6 (12,366) (11,824) (12,208)
---------- ------------ ----------
Total equity attributable
to equity holders of
the parent company 2,842 3,342 3,000
---------- ------------ ----------
CONDENSED CONSOLIDATED INTERIM CASH FLOW STATEMENT
Six months ended 30 September 2019
Unaudited Unaudited Audited
Six months Six months Twelve months
to 30 to 30 to 31 March
Sept 2019 Sept 2018 2019
GBGBP000 GBGBP000 GBGBP000
Cash flows from operating
activities
Group loss after tax (158) (225) (609)
Adjustments for:
Depreciation of tangible
assets and amortisation
of intangible assets 93 109 218
Share-based payments - - 42
(Increase) / decrease in
trade and other receivables 4 (100) (104)
Increase / (Decrease) in
trade and other payables (19) (26) 31
----------- ----------- --------------
Net cash flow from operating
activities (80) (242) (422)
----------- ----------- --------------
Cash flows from investing
activites
Purchase of equipment (1) (1) (1)
Acquisition of subsidiary,
net of cash acquired - (139) (139)
Purchase of intangible assets - - -
----------- ----------- --------------
Net cash flow from investing
activities (1) (140) (140)
----------- ----------- --------------
Cash flows from financing
activities
Proceeds of issue of share
capital, net of issue costs - 2,553 2,552
----------- ----------- --------------
Net cash flow from financing
activities - 2,553 2,552
----------- ----------- --------------
Net increase / (decrease)
in cash and cash equivalents (81) 2,171 1,990
Cash and cash equivalents
at beginning of period 2,412 422 422
----------- ----------- --------------
Cash and cash equivalents
at end of period 2,331 2,593 2,412
----------- ----------- --------------
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN
EQUITY
Share Share Other Profit and Total
capital premium reserve loss account Equity
GBGBP000 GBGBP000 GBGBP000 GBGBP000 GBGBP000
---------- ---------- ---------- -------------- ----------
Balance at 01 April
2018 12,118 2,500 (2,003) (11,599) 1,016
---------- ---------- ---------- -------------- ----------
Issue of equity
share capital (net
of issue costs) 456 2,095 - - 2,551
Loss for the period - - - (225) (225)
Total comprehensive
income for the
period - - - (225) (225)
---------- ---------- ---------- -------------- ----------
Balance at 30 September
2018 12,574 4,595 (2,003) (11,824) 3,342
---------- ---------- ---------- -------------- ----------
Share-based payments 42 42
Share warrants -45 45 -
---------- ---------- ---------- -------------- ----------
Transactions with
owners - -45 87 - 42
---------- ---------- ---------- -------------- ----------
Loss for the period - - - (384) (384)
Total comprehensive
income for the
period - - - (384) (384)
---------- ---------- ---------- -------------- ----------
Balance at 31 March
2019 12,574 4,550 (1,916) (12,208) 3,000
---------- ---------- ---------- -------------- ----------
Transactions with - - - - -
owners
Loss for the period - - - (158) (158)
Total comprehensive
income for the
period - - - (158) (158)
---------- ---------- ---------- -------------- ----------
Balance at 30 September
2019 12,574 4,550 (1,916) (12,366) 2,842
---------- ---------- ---------- -------------- ----------
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 2019 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 2019.
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 2019. They were approved for issue by the
Board of Directors on 28 November 2019.
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 interim financial statements, the Directors have
formed a judgement at the time of approving the interim 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
2019 and the comparative figures for the six months ended 30
September 2018 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 2019.
These extracts do not constitute statutory accounts under
section 434 of the Companies Act 2006. The financial statements for
the year ended 31 March 2019, 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.
The functional and presentational currency of AorTech
International Plc is GBGBP as this is where all sales arise and
from where the majority of costs now emanate. Previously, to
reflect the substance of transactions, the Directors chose to use
US$ as the Company's presentational currency. Exchange differences
therefore arose in each prior period representing the retranslation
of reserves from a functional currency of GBGBP to their
presentational currency at the time of US$. The exchange
differences have been eliminated by this change in presentational
currency.
Loss per share has been calculated on the basis of the result
for the period after tax, divided by the number of ordinary shares
in issue in the period of 14,686,608. The comparatives are
calculated by reference to the weighted average number of ordinary
shares in issue which were 12,910,847 for the year ended 31 March
2019.
2. EXCEPTIONAL ADMINISTRATIVE EXPENSES
This comprises the exceptional administrative expense of sundry
disbursement costs associated with the now resolved litigation
against the Company's former CEO.
3. SEGMENTAL REPORTING
The Company is an Intellectual Property (IP) holding company
whose principal activity is exploiting the value of its IP and
know-how.
All revenue and operating result originated in the United
Kingdom.
Analysis of revenue by income
stream
Unaudited Unaudited Audited
Six months Six months Twelve months
to 30 Sept to 30 Sept to 31 March
2019 2018 2019
GBGBP000 GBGBP000 GBGBP000
License fees - services 40 38 76
Royalty revenue 259 198 387
------------ ------------ --------------
Total 299 236 463
------------ ------------ --------------
Analysis of revenue by geographical
location
Unaudited Unaudited Audited
Six months Six months Twelve months
to 30 Sept to 30 Sept to 31 March
2019 2018 2019
GBGBP000 GBGBP000 GBGBP000
Europe 103 97 178
USA 174 121 251
RoW 22 18 34
------------ ------------ --------------
Total 299 236 463
------------ ------------ --------------
4. INTANGIBLE ASSETS
Intellectual Development Total
property costs GBGBP000
GBGBP000 GBGBP000
At 01 April 2018 413 114 527
Additions 139 139
Amortisation (79) (30) (109)
------------- ------------ ----------
At 30 September 2018 473 84 557
------------- ------------ ----------
Additions - - -
Amortisation (80) (29) (109)
------------- ------------ ----------
At 01 April 2019 393 55 448
------------- ------------ ----------
Additions - - -
Amortisation (80) (13) (93)
------------- ------------ ----------
At 30 September 2019 313 42 355
------------- ------------ ----------
Additions to Intellectual property arise on consolidation of
Cortech Medical Limited which was acquired during the period ended
30 September 2018. As previously disclosed to shareholders in the
fund-raising circular, Cortech was acquired from William Brown, a
director of the Company, and therefore represents a related party
transaction.
5. TANGIBLE ASSETS
GBGBP000
Cost
At 01 April 2019 1
Additions 1
--------------------
At 30 September 2019 2
--------------------
Depreciation
At 01 April 2019 -
Charge for the period -
--------------------
At 30 September 2019 -
--------------------
Net book value
At 01 April 2019 1
--------------------
At 30 September 2019 2
--------------------
6. RESTATEMENT OF SEPTEMBER 2018 RESULTS
The unaudited interim results for the six months ended 30
September 2018 have been restated to take account of a small audit
adjustment that was made at year-end, which reclassifed cGBP6k of
costs as administrative expenses, this expense had previously been
deducted from the share premium account.
7. ISSUED SHARE CAPITAL
During the 6 month period to 30 September 2018, the Company
undertook a fund-raising which included the issue of 9,128,913 new
ordinary shares of 5 pence each, thereby increasing Issued share
capital by GBP456,000 and the share premium account by
GBP2,095,000, net of costs.
8. INTERIM ANNOUNCEMENT
The interim results announcement was released on 29 November
2019. A copy of this Interim Report is also available on the
Company's website www.aortech.net.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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