31.03.2015 19:42:32

Annual financial statement for 2014: Significant growth with LOQTEQ® (+63%) leads to expansion of trauma business (+27%)

aap Implantate AG / Annual financial statement for 2014: Significant growth with LOQTEQ® (+63%) leads to expansion of trauma business (+27%) . Processed and transmitted by Nasdaq OMX Corporate Solutions. The issuer is solely responsible for the content of this announcement.

aap Implantate AG (XETRA: AAQ.DE) was able to further implement its growth strategy in financial year 2014 and at the same time achieved progress in focussing on its trauma business. That is demonstrated by the significant increase in sales in the trauma business and, above all, in LOQTEQ® product family sales. Furthermore, during the reporting period two business activities -the Dutch subsidiary EMCM B.V. (contract manufacturing business) and the remaining 50% shareholding in the dental joint venture aap BM productions GmbH - which no longer formed a part of the company's core business were disposed. In addition, aap Implantate AG succeeded in 2014 inter alia in expanding its IP portfolio, especially in the area of the strategically important LOQTEQ® range and in continuing to accelerate development of its highly promising silver coating technology.

2014 - Successes and Milestones

Operative performance: Continued operations (normalised*)

in EUR million 2014 2013 Change
Sales revenue 29.8 25.8 16%
EBITDA 1.4 0.4 250%

 *Sales/EBITDA excluding one-off effects of equity disposal, one-off costs in connection with strategic measures and project proceeds and costs incurred in connection with them

In financial year 2014 the company achieved important successes here summarised once more as follows:

  • The financial targets were achieved: sales at EUR 31.6 million were within the October 2014 guidance of between EUR 30 million and EUR 34 million; EBITDA at EUR 2.3 million was also in line with expectations (October 2014 target corridor: EUR 2.0 million to EUR 4.5 million)
  • Trauma sales went up by 27% on the previous year to EUR 12.2 million, underlining the strategy of transformation into a pure trauma company
  • Significant sales growth of the LOQTEQ® portfolio shows that the anatomic plate system is increasingly gaining market acceptance (sales up by 63% to EUR 8.2 million)
  • Sale of all shares in the Dutch subsidiary EMCM B.V. for EUR 18 million
  • Disposal of remaining 50% shareholding in dental joint venture aap BM productions GmbH for EUR 1 million
  • Notice of allowance from the United States Patent and Trademark Office (USPTO) for core patent claims in respect of the LOQTEQ® system; scheduled expansion of the LOQTEQ® portfolio to cover further indication areas (such as the polyaxial LOQTEQ® radius plate system and the periprosthetic plate system)
  • Patent for silver coating technology received from the United States Patent and Trademark Office
  • Conclusion of a supply contract for a PMMA bone cement for the United States, Canada and Puerto Rico with a leading US healthcare services company

Evaluation of the 2014 Management Agenda

Customers
Targets of the 2014 Management Agenda Results of the 2014 Management Agenda Target achieved?
Growing trauma sales to > EUR 15 million (>50%); driven by LOQTEQ® Trauma sales increased by 27% to EUR 12.2 million; LOQTEQ® as main driver with +63% to EUR 8.2 million Partly
Expanding the LOQTEQ® portfolio; striving for >90% indication coverage Scheduled expansion of LOQTEQ® portfolio to cover further indication areas (e.g. polyaxial LOQTEQ® radius plate system and periprosthetic plate system) Yes
Appointing a distributor in the USA and further expansion of distribution network beyond BRICS and SMIT countries Infrastructure set up with the founding of a US subsidiary and the signing of a contract with a logistics service provider; negotiations with different distributors Partly
Appointing a new global partner for a bone cement Conclusion of supply contract for PMMA bone cement to USA, Canada and Puerto Rico with a leading US healthcare services company Yes

Innovation
Targets of the 2014 Management Agenda Results of the 2014 Management Agenda Target achieved?
Sustain freshness index of at >20% LOQTEQ® sales growth of 63% Yes
Accelerate the development of silver coated trauma products; aiming for market introduction in 2015 Final reports on the results of initial animal experiments on toxicity and infection model received Yes
Extend co-development network for resorbable magnesium products; aiming for market introduction in 2-3 years Negotiations with leading companies in the magnesium sector Partly
Interim analysis of the LOQTEQ® study for phase 1 products in the second quarter of 2014 Study of LOQTEQ® osteotomy plate's fatigue strength reveals outstanding proven properties compared with market leader; initial results of cold welding study show that no case of cold welding has been observed with LOQTEQ® plates and screws so far Partly


Finance
Targets of the 2014 Management Agenda Results of the 2014 Management Agenda Target achieved?
Profitable growth: sales of EUR 35 million (+22%) and EBITDA between EUR 5 million and EUR 6 million Adjusted guidance; sales between EUR 30 million and EUR 34 million; EBITDA between EUR 2 million and EUR 4 million Yes
Working capital ratio > 2.4 (in relation to sales) Working capital ratio at 1.8; 2014 sales growth with 70% of Q4 sales in December 2014 No
Strengthening the balance sheet by ongoing reduction of the percentage of intangible assets as of the balance sheet total Intangible assets as a proportion of the balance sheet total down to around 26% Yes
DCR < 3 and ICR > 8 DCR = 1.6 and ICR = 16.8 Yes

Organisation/IT
Targets of the 2014 Management Agenda Results of the 2014 Management Agenda Target achieved?
Further improvements of the ERP functionality Planning and consolidation software implemented Yes
Optimisation of supply chain management with a focus on Trauma products Improvement of supply capability in screw production and increase in plate production Yes
Divestment/out licensing of non-core products and IP Disposal of remaining 50% shareholding in dental joint venture aap BM productions GmbH for EUR 1 million in cash Yes

Key financials of aap Group in 2014


in EUR million
2014 2013 Change
Trauma 12.2 9.6 27%
of which LOQTEQ® 8.2 5.0 63%
Biomaterials 16.4 15.0 10%
Projects 1.2 2.8 -58%
Other 0.8 1.2 -31%
Sales continued operations 30.6 28.6 7%
Sales discontinued operations 1.0* 11.4** -91%
Total sales 31.6 40.0 -21%

* EMCM B.V. sales 01-02/2014: EUR 1.2 million less consolidation effects (EUR 0.2 million)
** EMCM B.V. sales 01-12/2013: EUR 12.3 million less consolidation effects (EUR 0.9 million)

aap Implantate AG's sales totalled EUR 31.6 million in financial year 2014. Of these EUR 31.6 million an amount of EUR 30.6 million is attributable to the continued operations (aap Implantate AG excluding EMCM B.V.). As a result of the sale of EMCM B.V. on February 28, 2014, the sales figures for the financial year 2014 include sales from EMCM for January and February totalling EUR 1.0 million.

The positive sales development in the reporting period was particularly driven by the trauma business. This underlines the strategic alignment of the management board transforming aap Implantate AG in a leading European trauma company. In financial year 2014 the company reported sales of EUR 12.2 million in the trauma business, corresponding to a growth rate of 27% with respect to the result in the previous year (FY 2013: EUR 9.6 million).

Considering the sales in the trauma business more detailed, the development of the LOQTEQ® product family has to be emphasized particularly. Here the company was able to increase sales in the reporting period by 63% to EUR 8.2 million (FY 2013: EUR 5.0 million). The positive sales development of LOQTEQ® demonstrates that the IP protected product family is increasingly well established at the market and has a strong appeal among several customers. All in all, the growth dynamic in financial year 2014 underlines the successful implementation of the strategy sustainably aligning aap Implantate AG on the trauma business.

In its biomaterials business the company achieved year-on-year sales growth of 10% in financial year 2014 to EUR 16.4 million (FY 2013: EUR 15.0 million).

in EUR million 2014 2013 Change
EBITDA continued operations 2.3 5.1 -55%
EBITDA discontinued operations 0.0 2.2 n.a.
EBITDA 2.3 7.4 -69%

in EUR million 2014 2013 Change
EBITDA continued operations 2.3 5.1 -55%
of which projects 0.8 4.4 -82%
of which one-off effects 0.1 0.3 -67%
EBITDA continued operations (normalised) 1.4 0.4 250%

in EUR million 2014 2013 Change
EBIT continued operations -0.1 0.8 -113%
EBIT discontinued operations 0.0 -2.9 n.a.
Total EBIT -0.1 -2.1 95%

In financial year 2014 aap Implantate AG's EBITDA amounted to EUR 2.3 million (FY 2013: EUR 7.4 million). EBIT improved by 95% from EUR -2.1 million in financial year 2013 to EUR -0.1 million in the reporting period. For continued operations, EBITDA in the last financial year was at EUR 2.3 million (FY 2013: EUR 5.1 million), whereas EBIT amounted to EUR -0.1 million (FY 2013: EUR 0.8 million). Both financial years include special effects so that an assessment of year-on-year operative development should be based on normalised EBITDA (excluding special effects).

In financial year 2014 the company earned project income totalling EUR 0.8 million from a development contract for a bone cement and the mixing system to go with it. On the basis of the abovementioned contract and of a further contract covering the outlicensing of a bone cement to a Chinese partner aap Implantate AG reported project income totalling EUR 4.4 million in the previous year. Furthermore, there were one-off effects in both financial years. In financial year 2014 the company sold the remaining 50% shareholding in its dental joint venture, including operating resources, leading to a EUR 1.2 million effect on EBITDA. One-off expenses totalling roughly the same amount were also incurred in the reporting period. They related, for example, to up-front costs for the planned sale of aap Biomaterials GmbH, extensive negotiations on existing contracts with various major customers, expenses incurred in connection with structural measures at the level of the management holding company and consulting costs in connection with ongoing audits by the Deutsche Prüfstelle für Rechnungslegung and company audits in years gone by. The special effects contained in the EBITDA for financial year 2013 were based on a positive effect arising from the disposal of a shareholding in aap Joints GmbH (EUR 0.6 million) and on costs already incurred in connection with the disposal of the contract manufacturing business (EMCM B.V.; EUR 0.2 million). Excluding special effects, normalised EBITDA in the financial year 2014 totalled EUR 1.4 million (FY 2013: EUR 0.4 million), which corresponds to a growth rate of more than 100% on the previous year. Overall, it can be said that in respect of the operative development of continued operations profitable growth was achieved in both core areas, Trauma and Biomaterials, on the basis of normalised results.

Outlook for 2015

aap Implantate AG aims to continue to implement its growth strategy in financial year 2015. Its focus continues to be on transformation into a pure trauma company. As a consequence the company aims especially to achieve strong trauma sales growth, with the LOQTEQ® product family continuing to be acting as the main driver of this development.

The Management Board has set itself the main targets as follows for the financial year 2015:

  • Sales growth to a value of between EUR 33 million and EUR 35 million (FY 2014: EUR 30.6 million)
  • EBITDA of between EUR 2.5 million and EUR 3.5 million (FY 2014: EUR 2.3 million)
  • Trauma sales growth of between 20% and 25% to between EUR 14.8 million and EUR 15.4 million (FY 2014: EUR 12.3 million)
  • Development of US market; appointment of distributors in BRICS and SMIT countries not yet covered; impact on business development expected for the second half of 2015
  • Implementation and conclusion of all approval-relevant work (CE) in the silver technology sector and submission of approval application for silver technology
  • Further expansion of LOQTEQ® portfolio with target of >90% indication coverage
  • Maintenance of a freshness index of at least 20%
  • Increase in biomaterials sales by 10%

For the first quarter of 2015 aap Implantate AG expects sales of between EUR 6.5 million and EUR 7.0 million. For EBITDA the company anticipates a value of between EUR -0.5 million and EUR 0.1 million for the first three months of the current financial year.

After negotiations with a consortium of private equity bidders on the sale of aap Biomaterials GmbH have been broken off shortly before their conclusion the subsidiary is now to be developed further as planned. aap Implantate AG plans to measure the progress of this process in the second half of 2015 and derive concrete options for action.

On its way to becoming a pure trauma company aap Implantate AG aims to pursue the targeted further development of its trauma business and, especially, to add further indication areas to the LOQTEQ® portfolio to complete it. There is a further focus on accelerating the silver coating project in order to strengthen and extend competitiveness on a lasting basis by means of innovations. In financial year 2015 aap Implantate AG intends in particular to concentrate on lasting sales growth of its trauma products. The company's aim is to achieve annual trauma sales growth of more than 20% in the years ahead. These growth rates are to be generated in particular by opening up new markets, which will increase costs in the short term. As sales increase and a critical mass is reached there will be a perceptible improvement in results. Furthermore aap Implantate AG continues to screen the market for potential smaller bolt-on acquisition targets.

aap Implantate AG's complete consolidated annual financial statement will be published by 30 April 2015 at the latest. The reason for the delay is the recent abortion of negotiations on the sale of aap Biomaterials GmbH with the result that a disposal of the subsidiary any time soon could no longer be considered likely. aap Biomaterials GmbH accordingly had to be treated and stated as part of the aap Group, requiring extensive adjustments.

This press release is based on the consolidated and audited results for the financial year 2014, including besides an overview of key financials the consolidated balance sheet, the consolidated income statement, the consolidated cash flow statement and the consolidated statement of changes in equity.

About aap Implantate AG
aap is a global medical device company headquartered in Berlin, Germany that develops, manufactures and markets innovative biomaterials and implants that are used in orthopedic procedures. The Company's products, which include a full line of plating systems, cannulated screws and bone cement products, are primarily used in the orthopedic specialty areas of trauma and spine repair. The Company's products are sold through its direct sales force, distribution partners and license agreements with OEM partners. aap's stock is listed in the Prime Standard segment of the Frankfurt Stock Exchange. For more information, please visit www.aap.de, or download the Company's investor relations app from the Apple's App Store or Google Play.

Forward-looking statement
This release may contain forward-looking statements based on current experience, estimates and projections of the management board and currently available information. They are not guarantees of future performance. Various known and unknown risks, uncertainties and other factors could lead to material differences between the actual future results, financial situation, development or performance of the company and the estimates given here. Many factors could cause the actual results, performance or achievements of aap to be materially different from those that may be expressed or implied by such statements. These factors include those discussed in aap's public reports. Forward-looking statements therefore speak only as of the date they are made. aap does not assume any obligation to update the forward-looking statements contained in this release or to conform them to future events or developments.

For inquiries please contact: aap Implantate AG, Fabian Franke, Investor Relations, Lorenzweg 5, 12099 Berlin, Germany
Tel.: +49 30 7501 9-134, fax: +49 30 7501 9-290, e-mail: f.frankeh@aap.de

 

 




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Source: aap Implantate AG via Globenewswire

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aap Implantate AG
Lorenzweg 5 Berlin Germany

WKN: 506660;ISIN: DE0005066609;
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