2020 financial statements: visible results under restructuring with significantly improved Recurring EBITDA (+28%) in challenging times of COVID-19 pandemic
DGAP-News: aap Implantate AG
/ Key word(s): Annual Results/Annual Report
2020 - Key results and progress
- Sales by region: Sales development in Germany (-21%) and in international business (-39%) significantly impacted by COVID-19
- USA: Dynamic sales growth (+41%) through expansion of customer base and contracts concluded with US-wide purchasing associations and networks
- Earnings: EBITDA improved to EUR -4.8 million (FY/2019: EUR -5.1 million) despite significant one-time effects from restructuring, refinancing and revision of QM system, particularly due to cost reduction; Recurring EBITDA improved significantly by +28% to EUR -3.4 million (FY/2019: EUR -4.8 million)
- Gross margin and costs: Improvement of gross margin to 84% (FY/2019: 80%) due to increased share of high-margin US sales in total sales and discontinuation of standard trauma portfolio; massive cost reduction due to significant decrease in personnel expenses (EUR -1.7 million) and other operating expenses (EUR -1.6 million)
- Cash flow and balance sheet: Improved EBITDA and positive working capital effects reduce operating financing requirement to EUR -3.7 million (FY/2019: EUR -5.8 million); balance sheet restructuring within equity with capital reduction and offsetting against accumulated deficit
- Refinancing: First two steps successfully implemented in 2020 with capital reduction and convertible bond; sale of excess capacity in machinery reduces repayment burden in coming years; granting of shareholder loan shows confidence in the path taken; Management Board confident of implementing further measures in 2021, which, if successfully completed, will secure aap's financing
- LOQTEQ(R): Fundamental revision of quality management with focus on conversion of processes and documentation to meet increased regulatory requirements; successful recertification under still valid MDD standard until 2024
- Silver coating technology: All regulatory requirements for start of human clinical study in Germany fulfilled; test coatings performed for potential first joint development projects to be completed; ongoing discussions with global medical device companies on potential co-funding of study and further collaboration opportunities
- Resorbable magnesium implant technology: Confirmation by FDA of probable classification as particularly innovative "Novel" technology and qualification for faster "De Novo" approval pathway; results of pilot animal study with Colorado State University show controllable degradation process, planned bone healing and thus overall "proof of concept" of the technology; promising discussions underway with technology-savvy investors to finance joint further development of the technology
2020 - Key financial figures
In the USA, on the other hand, aap is on a dynamic growth course and was able to significantly increase sales in financial year 2020 (+41%) year-on-year. This sales increase is primarily based on a massive expansion of the customer base and the contracts concluded with US-wide purchasing associations and networks. Overall, the positive sales development in the USA mitigated the COVID-19-related sales declines in the other markets.
- Increase in gross margin to 84% (FY/2019: 80%) due to improved product, customer and price mix with lower material expenses, positively impacted by increased share of high-margin US sales in total sales and discontinuation of standard trauma portfolio at the end of FY/2019
- Significant decrease in personnel expenses (EUR -1.7 million) primarily due to headcount reduction implemented in Q1/2020 (headcount -30% as of Dec. 31, 2020 vs. Dec. 31, 2019)
- Significant reduction in other operating expenses (EUR -1.6 million) primarily in direct response to the COVID-19 pandemic in advertising and travel costs, but also in consulting and premises costs
In the first four months of financial year 2021, the focus was on securing aap's further financing. In this context, further measures were implemented to ensure the continuity of the Company and to finance the planned growth and further development of the key technologies. In this context, at the end of March 2021, aap signed a purchase agreement with a Berlin real estate company for the sale of a plot of land in Brandenburg and qualified for the first time to receive state Corona aid under the COVID-19 aid program "Überbrückungshilfe III". aap has already received funds of EUR 0.5 million from the aforementioned financing measures, and further funds of around EUR 0.4 million will flow to the Company in the short term if both financing measures are successfully completed. In addition, the Management Board is currently working on the implementation of further measures and is confident that it will be able to implement these successfully and thus secure aap's financing in line with current business planning. The Company also aims to continuously increase efficiency in the production process and thereby reduce manufacturing costs by a double-digit percentage. In addition, aap has continued to impose strict cost discipline throughout the Company.
Assuming an easing of the COVID-19 situation between the second and third quarter, aap aims to return to the growth path in financial year 2021. The Management Board expects sales between EUR 12.0 million and EUR 15.0 million, which corresponds to a significant growth rate of +29 to +61%. In this context, all markets are expected to contribute to the planned sales growth, with the USA acting as the main growth driver.
Regarding earnings, aap aims to achieve positive EBITDA in the operative trauma business for the first time in financial year 2021 if the development goes according to plan. Taking into account the full R&D project costs and before possible co-financing, the Management Board expects EBITDA of EUR -5.5 million to EUR -3.5 million for the current year.
In the area of its innovative silver coating technology, technology and product development for the human clinical study has been completed and all regulatory requirements (BfArM and ethics committee approvals) for the start of the study in Germany have been met. Against the backdrop of the still rampant COVID-19 pandemic, which is leading to a massive decline in trauma patients as a result of the lockdown measures, aap plans to start the study in financial year 2021, initially in individual clinical centers and then successively expand it to all participating clinics in Germany. The intended market approval of the silver coating technology in the USA will generate even significantly more effort. Due to the scarcity of resources, the Company intends to push forward the approval pathway for the human clinical study in the USA with the FDA in financial year 2021 and prepare the necessary documents for submission to the agency in order to be able to launch the study in the USA at a later date.
With the progress made to date in restructuring and refinancing, aap has laid a good and solid foundation for the new start. The Management Board is confident that, by joining forces, it will succeed in putting aap on track for sustainable success and transforming it into a financially sound and independent company.
aap Implantate AG; Fabian Franke; Head of Investor Relations; Lorenzweg 5; 12099 Berlin, Germany; Phone: +49 (0)30 75019 - 134; Fax: +49 (0)30 75019 - 290; Email: firstname.lastname@example.org
30.04.2021 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG.
|Company:||aap Implantate AG|
|Phone:||+49 (0) 30 75 01 90|
|Fax:||+49 (0) 30 75 01 91 11|
|Listed:||Regulated Market in Frankfurt (General Standard); Regulated Unofficial Market in Berlin, Dusseldorf, Hamburg, Munich, Stuttgart, Tradegate Exchange|
|EQS News ID:||1191383|
|End of News||DGAP News Service|