aap Implantate AG ("aap") was able to achieve many of the targets that it set itself for the financial year 2015 and made significant progress on strategy implementation. It was nevertheless a challenging year, especially because many of the strategic growth markets that have earned the company positive growth rates in recent years failed to live up to expectations in 2015. In financial year 2015 aap`s sales totalled EUR 28.0 million (FY/2014: EUR 30.6 million) and EBITDA closed the year at EUR -1.9 million (FY/2014: EUR 2.2 million).
2015 - Substantial Progress
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Significant development of the LOQTEQ® portfolio with an indication coverage of more than 90% of large bone fractures, thereby making the portfolio more attractive for established markets, purchasing and hospital groups and tender business
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Conclusion to the very largest extent of approval-relevant work for silver coating technology and submission of the design dossier to a notified body in January 2016 for CE conformity assessment process
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Disposal process for aap Biomaterials GmbH recommenced in Q4/2015 and signing of a share purchase agreement in March 2016
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Conclusion of a contract in Q3/2015 which provides for the automatic sale of the remaining 33% stake in aap Joints GmbH depending on the successful extension of eight products
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Signing of a total of 12 distribution agreements as part of developing the US market; initial use of LOQTEQ® products in different hospitals and first sales realized
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Successful new customer acquisition and sales start in Mexico, Argentina, Brazil and South Africa
All of these developments clearly represent shareholder value increasing factors for us that have not yet been reflected in measurable results in the profit and loss statement or cash flow.
For a detailed evaluation of the 2015 Management Agenda aap refers to the consolidated annual financial report for 2015, published today.
On March 22, 2016, aap signed a notarized share purchase agreement with a leading European private equity firm regarding the sale of 100% of the company shares in its subsidiary aap Biomaterials GmbH, based in Dieburg. The operation sold within the transaction consists of aap Biomaterials GmbH, which is specialized in the development, production and marketing of bone cements, mixing systems and related accessories, and aap`s distribution business in this area.
Based on this transaction and the fulfilment of the requirements of IFRS 5 in November 2015, the disposed operation will be presented in the consolidated financial statements of December 31, 2015 as a discontinued operation. The consolidated statement of income of the Group will therefore be split into two parts: continued operation and discontinued operation. The continued operation includes the activities bundled in aap Implantate AG, Berlin, aap Implants Inc., Dover, Delaware, USA, and MAGIC Implants GmbH, Berlin. The discontinued operation for financial year 2015 includes aap Biomaterials GmbH, Dieburg, the distribution business of aap in bone cements, mixing systems and related accessories, as well as, for financial year 2014, EMCM B.V., Nijmegen, Netherlands, which was sold in February 2014 to a private equity firm.
2015 - Financials
Sales
| In EUR million | FY/2015 | FY/2014 | Change on year |
| Trauma | 10.8 | 12.8 | -16% |
| Trauma - implants | 10.3 | 12.2 | -16% |
| Trauma - biomaterials | 0.5 | 0.6 | -9% |
| Other | 1.5 | 1.8 | -17% |
| Sales continued operation | 12.3 | 14.6 | -16% |
| | | | |
| Sales discontinued operation | 15.7 | 16.0* | -2% |
| Group sales | 28.0 | 30.6* | -9% |
*Discontinued operation: Consists of aap Biomaterials GmbH and aap`s distribution business in bone cements, mixing systems and accessories for the period 1-12/2015 excluding EMCM B.V. for the period 1-2/2014.
EBITDA
|
In EUR million
| FY/2015 | FY/2014 | Change on year |
| EBITDA continued operation | -6,8 | -3.9 | -73% |
| EBITDA discontinued operation | 4,9 | 6.2* | -20% |
| Group EBITDA | -1,9 | 2.2* | > -100% |
*Discontinued operation: Consists of aap Biomaterials GmbH and aap`s distribution business in bone cements, mixing systems and accessories for the period 1-12/2015 excluding EMCM B.V. for the period 1-2/2014.
In its continued operation aap`s sales in financial year 2015 totalled EUR 12.3 million (FY/2014: EUR 14.6 million). So the company was unable to achieve its trauma sales growth target as originally planned. That was mainly due to delays in sales development in a number of strategic growth markets (China, Russia and Turkey) due to deteriorated economic framework conditions and in the US market entry due to protracted administrative processes in hospitals.
aap has responded to these developments and will focusing more strongly on established markets as the USA, DACH region and further European countries in future, while at the same time also stabilising sales development in the BRICS and SMIT countries. In addition, the company has strengthened its sales organisation significantly by recruiting experienced sales managers that used to work for leading international companies.
Furthermore, as a result of mergers and acquisitions in the global orthopaedic industry and the related priorities set by decision makers, delays have occurred in concluding pending project deals in the biomaterials business. As a consequence sales in the discontinued operation were nearly unchanged on the year in the reporting period at EUR 15.7 million (FY/2014: EUR 16.0 million).
EBITDA in the continued operation amounted to EUR -6.8 million in financial year 2015 (FY/2014 EUR
-3.9 million). This was due largely to the following effects that affected EBITDA significantly in the reporting period:
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A EUR 0.9 million decline in other operating income due to the aap BM productions GmbH share disposal in 2014
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An extraordinary and one-off value adjustment (EUR -0.7 million) on standard trauma and recon product inventories as a result of cannibalization effects and the decision on the divestment of the remaining stake in aap Joints GmbH
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Pre-operating costs for developing sales in the United States (EUR -0.6 million)
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Higher cost of risk provisions for trade receivables and customer credits for sales in previous years due to poorer payment practice (EUR -0.3 million)
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Margin loss because of reversal of initial sales due to non-fulfilment of contractual obligations by a distributor (EUR -0.3 million)
In the discontinued operation aap`s EBITDA was at EUR 4.9 million in financial year 2015 (FY/2014: EUR 6.2 million) due to a decline in high-margin project business.
Outlook for 2016
On conclusion of the aap Biomaterials GmbH transaction aap will become a pure player in trauma with innovative and patented technologies. The company will thereby be able with a focussed business model to make even better use of opportunities in the fast-growing global trauma market. The new aap has a comprehensive IP-protected technology and product portfolio with a broad portfolio of LOQTEQ® plates and screws and an innovation pipeline with the silver coating technology and magnesium-based implants. As a consequence the company will enjoy short- and medium-term growth opportunities in three of the fastest-growing areas in orthopaedics: mainstream trauma, foot and ankle, and trauma complementary biomaterials. In view of this starting point, the "new" aap should be regarded a start-up company whose value creation is not derived from the financial figures of an income statement, but rather from the inherent value generation of an IP-based product and technology base.
In fiscal year 2016, aap wants to put particular focus on sustainably increasing sales with its trauma products while simultaneously adapting the cost structure to sufficiently account for future expected sales streams and the reduced size of the company. The focus of the company`s growth strategy will especially be on established markets like the United States, the DACH region and other European countries. At the same time sales development is to be stabilised in the BRICS and SMIT countries. The LOQTEQ® portfolio is to be extended to or completed by further indication areas. The focus here will be on polyaxial fixation technology and on foot and ankle. In addition, the further acceleration of the projects "silver coating of trauma implants" and "magnesium-based trauma implants" remains a key focus, in order to sustainably strengthen and further develop competitiveness through innovations.
The Management Board has set the following concrete financial targets for the financial year 2016:
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Sales of between EUR 13.0 million and EUR 15.0 million in the continued operation with 20% growth in trauma products (FY/2015: EUR 12.3 million)
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An EBITDA of between EUR -5.5 million and EUR -3.9 million for the continued operation (FY/2015: EUR -6.8 million)
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EDITDA of the Group (continued and discontinued operation) incl. deconsolidation gain of between EUR 14.1 million and EUR 15.7 million
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Implementation of cost-reduction measures with an annualized overall effect of EUR 2.0 million; possibly one-time additional costs in 2016 through termination of contractual relations
In the mid term the three IP-protected platform technologies LOQTEQ®, silver coating and magnesium have enormous growth potential. Furthermore the Management Board is convinced the three core technologies are destined to achieve their full value potential in cooperation with global partners. Unlocking the inherent value of these innovative product and technology basis is an essential goal of the company`s further strategic development. In this connection aap is currently working with a leading corporate finance firm to determine and evaluate the various possibilities for value generation.
With the new aap as a pure player in trauma, the Management Board is confident to realize a compelling growth story and to sustainably increase shareholder value.
About aap Implantate AG
aap Implantate AG is a globally operating medical device company headquartered in Berlin, Germany. The company develops, manufactures and markets trauma and biomaterials products for orthopedics. The trauma portfolio includes besides the innovative anatomical plating system LOQTEQ® a wide range of cannulated screws as well as standard plates and screws. In the biomaterials business the company is specialized on bone cements and mixing systems. In German-speaking countries aap Implantate AG directly sells its trauma products to hospitals, buying syndicates and hospital groups while it uses a broad network of distributors in more than 60 countries at the international level. In the biomaterials business sales are handled via OEM and private label cooperations with several selected international orthopedic and trauma companies. aap Implantate AG`s stock is listed in the Prime Standard segment of Frankfurt Stock Exchange (AAQ.DE). 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.franke@aap.de
This announcement is distributed by NASDAQ OMX Corporate Solutions on behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: aap Implantate AG via GlobeNewswire
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