aap Implantate AG adjusts outlook for financial year 2019
aap Implantate AG / Key word(s): Change in Forecast/Profit Warning
aap Implantate AG ("aap") announces that after an in-depth analysis under the leadership of the new CEO, based on the available figures for the first six months of 2019, the plans for the second half of 2019 and the current status of ongoing discussions on planned strategic partnerships with global orthopaedic companies, the sales and EBITDA forecast for financial year 2019 is adjusted. In addition, one-time and non-cash depreciations on inventories and a change in the accounting treatment of instruments will burden the earnings in financial year 2019 below the EBITDA level.
aap registered sales of EUR 2.5 million (Q2/2018: EUR 2.7 million) in the second quarter of 2019 and thus a value at the lower end of the forecast. 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. In contrast, aap increased sales on a half-yearly basis by +10% to EUR 6.0 million (H1/2018: EUR 5.4 million). Here, all regions contributed with positive growth rates (Germany +6%, North America +10 % and International +9%) to the realised increase in sales. 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.
On the basis of the reported sales figures, the Management Board has examined in detail the expected business development in the second half of 2019 and subsequent quarters. The main focus here was on the long-term and sustainable sales development in contrast to short-term growth, possibly at the expense of margins. The result was that the sales growth in Germany, North America and International will not be realized to the extent originally planned for 2019 and therefore, despite the reported sales growth in the first six months of 2019, an adjustment of the full-year forecast is necessary.
The adjustment of EBITDA is the result of the sales development and planning described above and the analysis of the current status of ongoing discussions with a view to concluding planned strategic partnerships with global orthopaedic companies (distribution networks, product development and approval projects as well as licensing deals).
Against the background of these developments, aap adjusts its outlook for the financial year 2019 and now expects sales between EUR 11.0 million and EUR 13.0 million (previous forecast: EUR 13 million to EUR 15 million) and EBITDA of EUR -6.0 million and EUR -5.0 million (previous forecast: EUR -4.4 million and EUR -2.8 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.
In connection with the conversion of processes and documents to the regulatory requirements of the new EU Medical Device Regulation (MDR), current market requirements show that hospitals in the CE region are increasingly demanding sterile-packed implants. aap is currently working intensively on the documents for the conformity assessment procedure for CE marking and is striving to equip the first hospitals with sterile-packed products by the end of the year. In this context, non-sterile packaged products, which are in the customer's possession, will be replaced and taken back during this and the subsequent year. Current analyses show that it does not make economic sense to subject implants, especially those which are no longer in their original packaging, to extensive testing and, if necessary, revision. At the same time, the Management Board has decided that the accounting treatment and presentation of instruments will be changed at the end of the year. Previously, instruments were presented as part of inventories under current assets, since there was until recently a stronger focus on markets with distribution business, where the instruments were sold. In future, instruments will be presented as part of fixed assets and subject to scheduled depreciation over 3 years. This accounting treatment will lead to a more transparent delimitation of inventories as part of current assets and corresponds in its economic content more to the current focus on established markets as Germany, North America and Western Europe, where the instruments are provided and permanently handed over to the customer. In addition, aap recently announced that the Company will discontinue parts of its standard trauma business at the end of financial year 2019 and that the affected inventories of products are to be sold by the end of the current year. There is, however, the possibility that despite intensive efforts, it will not be possible to sell the entire inventory of products by the end of the year. aap will carry out a final evaluation of the valuation effects from the aforementioned measures as part of the preparation of the annual financial statements as at December 31, 2019. Initial preliminary calculations for the three issues show one-time and non-cash depreciations of up to EUR 4 million, which are reported as part of depreciation below EBITDA.
In response to the current development of sales and EBITDA, the Management Board will consistently continue its analysis to identify cost reduction and efficiency enhancement potentials. In this context, initial measures have already been implemented, such as the change of the stock exchange listing and the discontinuation of parts of the standard trauma portfolio. In addition, aap will in future focus even more on sales expansion with higher-margin customers and products, as well as on further driving forward the marketing of its innovative and promising technologies. With a view to its antibacterial silver coating technology, aap will further intensify talks and negotiations with interested global medical technology companies following the approval of the human clinical study by the Federal Institute for Drugs and Medical Devices ("BfArM"). 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. All of these measures shall form the basis for sustainable and profitable growth.
13-Aug-2019 CET/CEST The DGAP Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases.
|Company:||aap Implantate AG|
|Phone:||+49 (0) 30 75 01 90|
|Fax:||+49 (0) 30 75 01 91 11|
|Listed:||Regulated Market in Frankfurt (Prime Standard); Regulated Unofficial Market in Berlin, Dusseldorf, Hamburg, Munich, Stuttgart, Tradegate Exchange|
|EQS News ID:||857095|
|End of Announcement||DGAP News Service|