Annual financial statements 2019: 9% sales growth and strongly improved EBITDA; significant milestones and growing interest in pioneering key technologies antibacterial silver coating and resorbable magnesium implants
DGAP-News: aap Implantate AG
/ Key word(s): Annual Results
2019 - Major Results and Progress - Sales by region: Double-digit growth rates in USA (+14%) and in international markets (+10%); continuation of stable growth trend in Germany (+2%) - USA: Continued dynamic development; almost doubling of number of weekly operations performed since end of September 2019 compared with previous year and conclusion of contracts with two national purchasing groups; far advanced negotiations on conclusion of development and supply contract with leading US medical technology company - Earnings: Strongly improved EBITDA (+20%) due to higher total operating performance, higher gross margin, increase in other operating income and reduced other operating expenses; EBITDA in FY/2019 influenced by substantial one-time effects; Recurring EBITDA also significantly improved with EUR -3.7 million (FY/2018: EUR -5.0 million) - Costs: Continued consistent implementation of cost reduction and efficiency improvement program with change of stock exchange listing and discontinuation of parts of standard trauma portfolio in FY/2019; in FY/2020 already extensive staff reduction (approx. 25% of personnel) with aim of annual cost savings of more than EUR 1.3 million from 2021; further cost reductions ongoing - Cash flow and balance sheet: Cash holdings of EUR 3.2 million[1] and continued high equity ratio - LOQTEQ(R): FDA approval for polyaxial LOQTEQ(R) VA foot and calcaneus systems; focus in FY/2019 on quality management and four audits performed; continued focus on conversion of documentation to regulatory requirements of MDR and sterile-packaged implants - Silver coating technology: With approval for clinical human study by BfArM in 2019 and release by ethics commissions in 2020, all regulatory requirements for start of study in Germany fulfilled; further funding of up to approximately EUR 2.7 million for conduction of human clinical study by BMBF; due to corona pandemic, no concrete start date for study can currently be determined - Resorbable magnesium implant technology: regulatory clearance path in USA largely coordinated with FDA; very promising initial results in pilot animal study with Colorado State University to obtain essential preclinical data; talks with technology-savvy investors intensified for joint further development of the technology
For a detailed evaluation of the Management Agenda 2019 aap refers to the consolidated annual financial report 2019, published today. 2019 - Financials Sales
In view of developments in individual markets, aap was able to continue the stable growth trend in the German market in 2019, increasing sales by 2% to EUR 2.8 million (FY/2018: EUR 2.8 million). Business in international markets also developed positively. Here, the company achieved growth of 10% to EUR 6.9 million (FY/2018: EUR 6.2 million), which is primarily due to the expansion of existing sales relationships. Following a stabilizing phase in the first nine months of 2019, dynamic development has been observed in the USA since the end of September. The number of weekly operations was almost doubled compared to the same period of the previous year, which is also reflected in a sales increase of around 56% in the fourth quarter of 2019. As a result, aap recorded sales growth of 14% to EUR 2.0 million in the financial year 2019 (FY/2018: EUR 1.8 million). In addition, in the fourth quarter of 2019 the Company concluded contracts with two national purchasing groups that give aap access to a US-wide network of hospitals and surgical operation centres. Talks with other purchasing groups are also currently under way. In addition, the Company is in far advanced negotiations on concluding a development and supply contract with a world-leading U.S. medical technology company. EBITDA
In the financial year 2019 aap recorded a strongly improved EBITDA of EUR -5.1 million (FY/2018: EUR -6.4 million). The EBITDA was significantly influenced by the following developments: - Higher total operating performance in particular due to sales growth with only very small increase in inventories and lower level of capitalized internal and development work - Gross margin increases from 78% to 80% due to improved product-, customer- and price-mix and higher share of high-margin US sales in total sales - Increase in other operating income, in particular due to BMBF grants for silver coating technology and cost reimbursements due to termination of legal disputes - Decrease in other operating expenses
Outlook for 2020 The corona pandemic leads to a significant impairment of business operations at aap, which is reflected in a corresponding decline in sales and earnings in the first two quarters of 2020. In addition, restructuring measures such as the staff reduction announced in March 2020 will lead to one-time expenses in the current financial year that will additionally burden earnings. In addition, the decision taken in the annual financial statements to no longer capitalize the costs of the two development projects antibacterial silver coating and resorbable magnesium implants will have a full impact on EBIDTA from the 2020 financial year. Against this backdrop, the Management Board expects a significantly lower level of sales and earnings for the financial year 2020. On the basis of the data currently available, sales are expected to be between EUR 8 million and EUR 10 million and EBITDA between EUR -6.7 million and EUR -5.5 million. It should be noted, however, that the available forecast data is characterized by a high degree of uncertainty. This is based in particular on the corona pandemic, the further course of which is very difficult to assess at the present time. For example, in the second half of 2020 a second wave, feared by some virologists and experts, could occur, which in the worst case could lead to a renewed lockdown with corresponding negative effects for the economy. Looking at the individual markets, it can be seen that in the first two quarters, in addition to Germany, international business in particular was affected by the effects of the corona pandemic, so that a corresponding significant year-on-year decline in sales was recorded in each case. On this basis aap intends to stabilize sales development in both markets by the end of the year if the pandemic is positive so that from 2021 sales can once again show a positive dynamic. In the USA, on the other hand, the Company continues on a strong growth course despite the corona pandemic and in the year to date has been able to increase sales significantly with a double digit growth rate over the previous year. After the first two contracts with national purchasing groups were concluded in 2019, further contracts are to follow in the current fiscal year, thus creating the basis for further growth. Overall, aap is striving despite COVID-19 for an increase in sales of at least 30 % in the USA in financial year 2020 compared to the previous year. On the cost side, aap will continue to consistently implement the cost reduction and efficiency improvement program already launched in financial year 2019. The aim is to streamline the Company's cost structure sustainably and thereby increase efficiency and flexibility. In this context, the number of employees has already been reduced in the current financial year by around 25% compared with the level at the end of February 2020 (monthly closing date before the measure was announced on March 16), which should lead to annual cost savings of more than EUR 1.3 million from 2021. aap plans further cost reductions in the area of administration, among other things, and is in negotiations with its IT service provider and landlord in this connection. The manufacturing costs shall be reduced by at least 20%. Overall, aap is currently undergoing a comprehensive restructuring and refinancing process to secure the Company's continued existence and future viability. Against this background the Management Board is currently working intensively on the implementation of various financing and cost-saving options. For further details we refer to the insider information published on June 29, 2020 in accordance with Article 17 of the MAR. --------------------------------------------------------------------------------------------------------------------------------------
30.06.2020 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG. |
Language: | English |
Company: | aap Implantate AG |
Lorenzweg 5 | |
12099 Berlin | |
Germany | |
Phone: | +49 (0) 30 75 01 90 |
Fax: | +49 (0) 30 75 01 91 11 |
E-mail: | info@aap.de |
Internet: | www.aap.de |
ISIN: | DE0005066609 |
WKN: | 506660 |
Listed: | Regulated Market in Frankfurt (General Standard); Regulated Unofficial Market in Berlin, Dusseldorf, Hamburg, Munich, Stuttgart, Tradegate Exchange |
EQS News ID: | 1083089 |
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