aap: Q2/2019 sales and EBITDA in line with guidance; double-digit sales growth in H1/2019

DGAP-News: aap Implantate AG / Key word(s): Half Year Results

14.08.2019 / 08:12

The issuer is solely responsible for the content of this announcement.


aap Implantate AG (“aap“) achieved its financial objectives in the second quarter of 2019. aap registered sales of EUR 2.5 million (Q2/2018: EUR 2.7 million) and thus a value at the lower end of the forecast of EUR 2.5 million to EUR 3.5 million. EBITDA in the second quarter of 2019 were burdened by significant one-time effects in a volume of about EUR 0.8 million and amounted to EUR -2.1 million (Q2/2018: EUR -1.5 million), thus being also at the lower end of the guidance of EUR -2.1 million to EUR -1.1 million. In contrast, aap increased sales on a half-yearly basis by +10% to EUR 6.0 million (H1/2018: EUR 5.4 million), with all regions contributing with positive growth rates. EBITDA in the first six months of 2019 were EUR -3.1 million (H1/2018: EUR -3.1 million). Based on unchanged recurring EBITDA (adjusted by one-time effects) in the second quarter of 2019 of EUR -1.3 million, recurring EBITDA improved significantly on a half-yearly basis by +18% to EUR -2.2 million.
 

Q2/2019 and H1/2019 – Major results and progress

– Sales by region: Q2: Stable business in Germany, whereas international business was, as expected after a strong Q1, down on the previous year; further stabilisation in North America with a growth trend in distribution business; good growth rates in all regions on a half-yearly basis

Earnings: EBITDA burdened in Q2 by significant one-time effects due primarily to early termination of contract with former CEO and termination of legal disputes; recurring EBITDA adjusted for one-time effects in Q2 on previous year level, while in H1 considerable improvement was registered (H1/2019: EUR -2.2 million; +18%)

Gross margin and costs: Improvement of gross margin[1] to 83% in Q2 (Q2/2018: 76%) and 84% in H1 (H1/2018: 77%) along with declining cost level (adjusted for one-time effects)

Cash flow and balance sheet: Successful completion of capital increase with subscription rights and two further external financings with net inflows totalling around EUR 5.2 million; Cash need in H1 totalled EUR 4.0 million with positive effects of working capital reduction (EUR 1.7 million); cash holdings of EUR 7.6 million[2]; first-time application of IFRS 16 – Leasing and concluded factoring agreement lead to shifts in balance sheet, income statement and cash flow

– LOQTEQ(R): FDA approval for polyaxial LOQTEQ(R) VA foot system – Launch in US and further markets planned for beginning of 2020; continuous focus on adaptation of processes and documents to new regulatory requirements of MDR and development of sterile packaging for implants

Silver coating technology: In Q2 continued intensive exchange with BfArM on application to conduct a human clinical study; training of participating doctors and preparation of silver-coated implants for hospitals; preparation of application for FDA to conduct the human clinical study in the US; at the beginning of August BfArM granted approval for study and application submitted to FDA

Q2/2019 and H1/2019 – Financials

Q2 Sales

In KEUR Q2/2019 Q2/2018 Change
Trauma
Germany
North America
North America distributors
North America global partners

International (without North America)
Europe (without Germany)
BRICS states
Total key markets
Rest
2,490
728
620
614
6

1,142
451
192
643
499
2,678
735
621
584
37

1,322
493
187
680
642
-7%
-1%
0%
+5%
-84%

-14%
-9%
+3%
-5%
-22%
Other -17 -24 +29%
Sales 2,473 2,654 -7%
 

H1 Sales

In KEUR H1/2019 H1/2018 Change
Trauma
Germany
North America
North America distributors
North America global partners

International (without North America)
Europe (without Germany)
BRICS states
Total key markets
Rest
5,491
1,480
1,266
1,244
22

3,195
1,105
1,013
2,118
1,077
5,473
1,391
1,149
1,095
54

2,933
995
925
1,920
1,013
+9%
+6%
+10%
+14%
-59%

+9%
+11%
+10%
+10%
+6%
Other +33 -37 >+100%
Sales 5,974 5,436 +10%
 

On a half-yearly basis all regions contributed with positive growth rates to the realized increase in sales. That includes Germany (+6%), although no growth was posted in the second quarter of 2019 compared with the same period of the previous year (-1%). In international business, aap recorded an expected quarterly decline (-14%) in the second quarter following strong first three months, although the positive growth trend on a half-yearly basis could be continued in this market as well (+9%). In North America, aap continued to stabilize sales development in both the second quarter and in the first half of 2019 (+10%). Particularly the growth in distribution business (+5% in Q2/2019 and +14% in H1/2019) shows that the implemented measures are bearing fruit and the foundation for the return to dynamic growth has been laid.
 

Q2 EBITDA

In KEUR Q2/2019 Q2/2018 Change
EBITDA -2,146 -1,530 -40%
One-time effects 853* 227** >+100%
Recurring EBITDA 1,293 -1,303 -4%

* Includes cost of personnel measures, termination of legal disputes (net effect) and external staff.
**Includes cost of external staff and project Quality First / Fit-4-MDR.

H1 EBITDA

In KEUR H1/2019 H1/2018 Change
EBITDA -3,144 -3,118 -1%
One-time effects 943* 425** >+100%
Recurring EBITDA -2,201 -2,693 +18%

* Includes cost of personnel measures, external staff and termination of legal disputes (net effect).
** Includes cost of external staff and project Quality First / Fit-4-MDR.

In respect of earnings aap benefited in both the second quarter and the first half of 2019 from an improved gross margin and a declining cost level (adjusted for one-time effects). At the same time, however, earnings were burdened by significant one-time effects in the second quarter, due primarily to the early termination of the contract with the former CEO and the termination of legal disputes. On that basis EBITDA in the second quarter of 2019 were EUR -2.1 million (Q2/2018: EUR -1.5 million) and in the first six months of the current financial year EUR -3.1 million (H1/2018: EUR -3.1 million). Adjusted for one-time effects, recurring EBITDA in the second quarter of 2019 were unchanged at EUR -1.3 million. If compared on a half-yearly basis, recurring EBITDA improved significantly by +18 % to EUR -2.2 million (H1/2018: EUR -2.7 million) and reflect the aimed development: Focus on established markets with higher profit margins and simultaneous a disciplined cost management to improve the operating performance.
 

In the second quarter of 2019 aap also implemented a package of measures to strengthen its financial base. The Company successfully completed a capital increase with subscription rights and two further external financings. The overall inflow from these measures totalled around EUR 5.2 million that the Company uses to finance the planned sales growth and for the further development of its pioneering and innovative silver coating technology.
 

Outlook
In the second half of 2019 a number of challenges lie ahead for aap that the Company must master. Specifically, the Management Board will continue its analysis to identify cost reduction and efficiency enhancement potentials in the Company in the months ahead. On the sales side, the positive first-half growth trend in Germany is to be maintained, while in North America, based on the stabilised sales level in the first six months of 2019, a more dynamic development is to be shown in the distribution business. In addition, aap works focussed on the conclusion of strategic partnerships with global orthopaedic companies (distribution networks as well as product development and approval projects). Further key focal points of our work will be sterile packaging for implants as well as the adaptation of processes and documents to the regulatory requirements of the new EU Medical Device Regulation (MDR).
 

With a view to its antibacterial silver coating technology, aap will further intensify talks and negotiations with interested global medical technology companies after approval of the human clinical study by the Federal Institute for Drugs and Medical Devices (“BfArM”). In detail, the Company discusses in addition to joint product development and approval projects also distribution partnerships as well as licensing deals up to the sale of the technology for specific application areas. For its innovative resorbable magnesium implant technology aap aims to push forward the further development of this promising technology jointly with partners under aap‘s management.
 

For financial year 2019 the Management Board expects sales of EUR 11.0 million to EUR 13.0 million and EBITDA of EUR -6.0 million to EUR 5.0 million. This corresponds to an increase in sales of 2% to 21% and an improvement in EBITDA of 6% to 22% compared with the previous year’s figures.
 

Against the background of the resolved change of the stock exchange listing from the Prime Standard to the General Standard of the regulated market of the Frankfurt Stock Exchange, aap will no longer be publishing a consolidated quarterly statement for the third quarter of 2019. The Company will comply with the high transparency requirements of the regulated market in the General Standard in the future as well and continue to inform its shareholders and the capital market about the developments in a suitable form on a quarterly basis within a financial year.

[1] Relating to sales revenues, changes in inventories of finished and unfinished products and cost of materials / purchased services.
[2] In the consolidated balance sheet of 30/06/2019 EUR 5.2 million is stated as cash and cash equivalents, while cash with banks totalling EUR 2.4 million is shown under current and non-current other financial assets as it was pledged to secure financial liabilities respectively cash payments were made to secure bank guarantees granted to third parties.
 

——————————————————————————————————————————————-
aap
Implantate AG (ISIN DE0005066609) – Prime Standard/Regulated Market – All German stock markets –

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 products for orthopaedics. The IP protected portfolio includes besides the innovative anatomical plating system LOQTEQ(R) and trauma complementary biomaterials a wide range of cannulated screws as well as standard plates and screws. Furthermore, aap Implantate AG has an innovation pipeline with promising development projects as the antibacterial silver coating technology and magnesium based implants. These technologies address critical problems in surgery that haven’t yet been resolved adequately. In German-speaking Europe aap Implantate AG directly sells its products to hospitals, buying syndicates and hospital groups while it uses a broad network of distributors in more than 25 countries at the international level. aap Implantate AG’s stock is listed in the Prime Standard segment of Frankfurt Stock Exchange (XETRA: 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; Manager Investor Relations; Lorenzweg 5; 12099 Berlin, Germany; Tel.: +49/30/750 19 – 134; Fax.: +49/30/750 19 – 290; f.franke@aap.de


14.08.2019 Dissemination of a Corporate News, transmitted by DGAP – a service of EQS Group AG.
The issuer is solely responsible for the content of this announcement.

The DGAP Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases.
Archive at www.dgap.de


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 (Prime Standard); Regulated Unofficial Market in Berlin, Dusseldorf, Hamburg, Munich, Stuttgart, Tradegate Exchange
EQS News ID: 857299

 
End of News DGAP News Service

show this