RNS Number:1703A
Lombard Medical Technologies PLC
22 March 2006
Lombard Medical Technologies PLC
Company Completes Successful Year
Preliminary Results for the Year ended 31 December 2005
London, UK, 22 March 2006 - Lombard Medical Technologies PLC (AIM: LMT), the
specialist medical device company, today announces its results for the year
ended 31 December 2005.
Operating Highlights
* Investigational Device Exemption (IDE) approval received from the FDA
for a pivotal US clinical trial of the AorfixTM endovascular stent graft in
the treatment of abdominal aortic aneurysms
* CE Mark received for improved version of AorfixTM to be launched in April
2006 and expected to increase sales
* Significant progress made with the development of an endovascular stapler
for the fixation of stent grafts. CE Mark approval in Europe expected in
the first half of 2006
* Appointment of four new Board members with a wealth of experience in the
medical device and related industries
Financial Highlights
* Successful flotation on the Alternative Investment Market of the London
Stock Exchange (AIM) raising #26.2 million before expenses
* Over fourfold increase in turnover to #169,000 (2004: #40,000)
* Operating loss before exceptional items and goodwill amortisation increased
by #2.6 million to #6.7 million (2004: #4.1 million) reflecting increased
investment in R&D and a step change in sales and marketing costs
Alistair Taylor, Executive Chairman of LMT, commented:
"2005 has been a year of change and considerable progress. We operate in
rapidly growing markets where we believe our products have real competitive
advantage. The successful flotation on AIM has given us the funds to implement
our key strategic objectives and we are confident of further strong progress in
the coming year."
Enquiries:
Lombard Medical Technologies PLC
Tel: 01235 750 800
Alistair Taylor, Executive Chairman
Brian Howlett, Chief Executive Officer
Financial Dynamics
Tel: 020 7831 3113
David Yates / John Gilbert
Notes to editors
Lombard Medical Technologies is a medical devices company developing stent
grafts and other medical products for use in the treatment of vascular disease.
The Company's lead product, AorfixTM, is a stent graft for the treatment of
aortic aneurysms, a balloon-like enlargement of the aorta which, if untreated,
may rupture and cause death. Abdominal and thoracic aortic aneurysms are the
13th largest cause of death in the US and the market is estimated to be worth
approximately US$2 billion by 2010. AorfixTM is currently being commercialised
in the EU, with US clinical trials expected to commence during 2006. The
Company has a strategic collaboration with one of the world's leading medical
devices companies, Boston Scientific.
Lombard Medical has recently successfully completed its initial public offering
on AIM and was admitted to listing in December 2005, raising #23.9 million, net
of expenses. The Company, based in Oxfordshire & Yorkshire, currently employs
56 people.
Further background on the Company can be found at www.lombardmedical.com.
Chairman's Statement
Introduction
2005 has been a year of change and considerable progress. The successful
flotation on the Alternative Investment Market of the London Stock Exchange
(AIM) that raised #26.2m before expenses has given LMT the funds to implement
its key strategic objectives. Meanwhile the new Board appointments have given
LMT an experienced management team to execute those objectives.
Use of funds
The proceeds from the placing at the time of flotation are being used:
* to fund the US clinical trials programme for the AorfixTM stent graft;
* commence EU and US trials of a thoracic stent graft;
* develop clinical support and marketing infrastructure; and
* to strengthen the balance sheet and repay loans and overdrafts.
Board changes
In October, Stephen Terry resigned from his position as CEO due to ill health
and in November, John Kerslake resigned from his position as CFO. The Board
would like to thank Stephen and John for their contribution to LMT over the last
few years.
With the appointment of Brian Howlett in November, LMT gained a Chief Executive
with an excellent track record of growing sales, and extensive experience in the
medical device industry having served as General Manager of Boston Scientific
Limited for six years. Tim Hall, a Chartered Accountant with extensive senior
financial management experience gained in the pharmaceutical industry, also
joined the Board in November as Finance Director.
Commercialisation
The Company currently markets its AorfixTM stent graft directly through its own
sales force in the UK and through distributors in 17 other countries.
The launch in April 2006 of an improved version of AorfixTM, with greater
flexibility, electropolished wire and more radio opaque markers is expected to
help accelerate sales.
The unique benefits of AorfixTM were recently publicised in the Vascular journal
in an abstract by Jean-Noel Albertini, MD et al. at the Vascular Surgery
Department, Hospital Robert Debre, Reims, France which concluded that AorfixTM
was the only stent graft which did not develop endoleaks, regardless of the
angulation of the neck of the abdominal aorta. The publication of this report
has once again endorsed the benefits of our AorfixTM stent graft, and supports
the growing body of evidence that suggests that our AorfixTM is the only stent
graft that can successfully treat abdominal aortic aneurysms in severely
angulated necks.
In October, Boston Scientific Limited was granted an extension to its existing
option to act as exclusive distributor of the Company's stent grafts for the
treatment of abdominal aortic aneurysms and thoracic aortic aneurysms in
territories outside the USA. The extension was granted to allow Boston
Scientific more time to complete due diligence on the Company's products,
processes and intellectual property.
Development
LMT has received an Investigational Device Exemption (IDE) from the FDA to
commence US clinical trials of AorfixTM. The trial begins in Q1 2006 and is due
to be completed in Q1 2008, with FDA approval expected either in Q4 2008 or Q1
2009.
Significant progress was also made during the year on LMT's unique endovascular
stapler. The initial market for this device will be for the endovascular
fixation of first generation AAA stent grafts that have begun to migrate.
European CE Mark approval for this device is expected in the first half of the
year with FDA approval, following a small trial, in early 2007.
Good progress has been made over the last year on LMT's thoracic stent graft and
European clinical trials are expected to start in Q3 of 2006 with US clinical
trials following in the second half of 2007.
Summary
AAA's are becoming increasingly recognised as a major cause of death, and, with
the commencement of the preventative screening programme of AAA's in the US,
there is the potential to diagnose many more aneurysms before they rupture,
enabling the insertion of a stent graft at a much earlier stage and resulting in
many more lives saved.
I am confident that in 2006 LMT will make a major breakthrough towards full
commercialisation of our innovative technologies. In the words of Ron Fairman,
MD of the University of Pennsylvania, "The AorfixTM device really enhances our
ability to extend the technology to more patients. It is a real contribution,
not just another device......" Dr Fairman is the Principal Investigator of the
LMT PYTHAGORAS trial in the USA.
The LMT team is proud to have brought to the market less invasive technologies
that pose less risk and trauma to patients, improve healthcare productivity and
offer more clinical choices to medical practitioners.
Alistair Taylor
Executive Chairman
Chief Executive's Review of Operations
Development of the AorfixTM endovascular stent graft progressed on several
fronts over the past year with the FDA granting IDE approval for the US clinical
trial and the 100 implant milestone being reached in Europe, some of which have
now been in place for up to four years.
The prevalence of abdominal aortic aneurysms (AAA) is increasing and there is an
estimated 1.7 million Americans who are unaware that they have AAA, with only
250,000 to 350,000 being diagnosed each year. The US market for AAA stent
grafts is forecast to reach over $0.5 billion by 2008 and we anticipate that the
worldwide market will be over $1 billion by 2010.
In February this year, we were very pleased to hear that the US Congress passed
legislation for one-time ultrasound screening to commence for abdominal aortic
aneurysms (AAA) in the US. With this legislation, patients at risk for AAA will
receive the ultrasound screening benefit as part of their "Welcome to Medicare"
physical, the US government healthcare programme for the 41 million elderly, in
the hope that more AAA's will be diagnosed and treated with a stent graft.
Coverage will begin in early 2007.
LMT is also developing a stent graft for the treatment of Thoracic Aortic
Aneurysms (TAA), which is nearing completion. Estimates of the number of annual
diagnoses range from 15,000 to 30,000 in the USA, with more than 16,000
diagnosed in Europe annually. Like AAA, TAA are believed to be under diagnosed,
since most patients are asymptomatic. An estimated 70% of TAA are currently not
treated, but this number is expected to fall in the coming years. Thoracic
stent grafts hold great promise not only for the treatment of TAA's but also for
other anomalies of the thoracic aorta, including acute and chronic dissections,
penetrating ulcers, pseudo-aneurysms and traumatic injuries. It is for these
reasons that we believe that the TAA stent graft has the potential to grow
substantially in a market worth $1 billion by 2010.
In addition LMT is developing a range of open surgery and endovascular staplers.
Several of the first generation stent grafts have inadequate fixation, which
can result in the migration of the graft. The endovascular stapler has
demonstrated in vitro an ability to fix strongly a migrating stent graft, so
that it has the potential to be not only a repair device but also used in new
implantations. With the potential growth in TAA stent grafts, fixation becomes
even more of an issue as the thoracic aorta is a very dynamic anatomical
environment. A further application is in the less invasive fixation of
percutaneous heart valves which is a new and fast developing market. We have
opened discussions with third parties with regard to licensing and/or
distribution arrangements for the endovascular line.
The Company's Polymer Coatings Division has developed a series of products,
including drug delivery coatings for coronary stents that will deliver one or
more drugs on a programmable basis. We are in discussions with several
companies with a view to licensing out the coatings for the treatment of
coronary and peripheral vascular disease as well as applications for urology and
dermatology.
Commercialisation
LMT has made considerable commercial progress during 2005. Turnover increased
over fourfold to #169,000 in 2005. Successful achievements include:
* the establishment of reference centres for the implantation of Aorfix TM in
the UK and Ireland, Greece and Poland;
* the roll out of implantation of the AorfixTM AAA stent graft in 12
countries throughout Europe;
* the strong performance of AorfixTM in more than 100 clinical and commercial
implants. No endoleaks, migration, or kinking of the device have been
experienced;
* significant progress has been made in developing the TAA device and the
endovascular stapler to pre-clinical trials as well as progressing
proprietary medical device coating technology for a variety of applications
in the cardiovascular, urology and dermatology markets. A CE mark has been
granted for wound dressings based on hydrogels that have been outlicensed
to Brightwake Limited for launch in the UK in the first half of 2006;
* the recent approval of the IDE by the FDA to commence clinical trials of
AorfixTM; and
* the successful raising of #30.9 million before expenses to fund future
commercial and product developments in the Company.
Business Goals and Strategies
LMT's objective is to become a leading developer of innovative solutions for the
treatment of cardiovascular and other diseases of importance to global morbidity
and mortality.
Successful elements of our business strategy will continue as follows:
* to focus on unmet clinical, patient and health economic needs in the
Company's core markets - AAA, TAA and surgical joining;
* to continue to develop existing products - AAA and TAA stent grafts, as
well as an endovascular stapler that can be used to secure migrating AAA
stent grafts;
* to develop new products and innovate new treatment methods; for example our
plans include the development of lower profile stent grafts that will widen
application to include women and other patients with smaller vessels as
well as reducing in-hospital stay to overnight or day-case;
* to work on second-generation drug eluting polymers that can be used to
improve further the restenosis rates achieved by current drug eluting
stents in coronary artery disease;
* to focus on the USA and EU as primary markets for our technologies. The USA
has the largest population that could benefit from our existing and planned
products and has an advantageous climate for re-imbursement; through 2006
and 2007 LMT will be dedicated to conducting FDA approved clinical trials
in the USA to gain the earliest possible entry of our stent graft products
to that market; and
* to develop strategic partnerships with leading medical device companies for
marketing, distribution and licensing - the Company has signed an agreement
with Boston Scientific whereby it has an option to distribute our Aorfix
stent graft products in markets outside the USA.
Operations and Staffing
During 2006 a significant step forward for our business will be the
establishment of a base for our operations in the USA, the major world market
for medical devices. As a measure of our commitment to this market Peter
Phillips the present Managing Director for the Cardiovascular Devices Division
will assume the title of President of Lombard Medical Technologies Inc., and he
will relocate to the Boston area where our US facility will be located. His
responsibilities will include:
* the establishment of US infrastructure for Lombard Medical Technologies;
* implementation of the US FDA clinical programme for the AorfixTM
endovascular stent graft;
* the formation and management of strategic relationships with major US
medical device companies;
* the establishment of centres of clinical excellence in the USA for LMT
products; and
* obtaining FDA approval for the Company's Endovascular Stapling device.
The Company is also expecting to recruit a Worldwide Director of Regulatory
Affairs who will support Peter in the pivotal US clinical trials and FDA
approval of the AAA and TAA applications of the AorfixTM endovascular stent
graft, as well as in the FDA approval of the Endovascular Stapling device. The
Worldwide Director of Regulatory Affairs will also be responsible for supporting
and directing the headquarters regulatory affairs staff in the UK, in their
regulatory submissions and activities in markets outside the US, with particular
emphasis on Europe and Japan.
Outside the USA we have strengthened our direct sales force in the UK and are
appointing four clinical/sales specialists in continental Europe who will boost
the speed of adoption of AorfixTM through in-hospital training of the AorfixTM
technology and support our distributors in the development of AorfixTM market
share in key markets such as Italy and Germany. This effort will be led by
Andrew Tasker as International Sales and Marketing Director. Andrew joins us
with a wealth of experience and success in senior international sales and
marketing positions in the pharmaceutical and medical device sectors, most
recently with Pfizer.
Strong product development capabilities are essential to enhancing the Company's
core technologies, developing new product applications for these technologies
and maintaining competitiveness. LMT has invested a significant amount of human
and financial resources in research and development. We have assembled a team
of highly experienced engineers, scientists and technicians which will be
expanded in 2006 in order to develop further enhancements to our existing
products and innovative new product approaches to the treatment of
cardiovascular disease. Examples of future anticipated developments include:
* redesign of components to facilitate increased automation of manufacture;
* increased product size ranges for both AAA and TAA stent grafts;
* improved markers to aid visualisation on x-ray;
* continuously woven graft material to produce a smaller implant and
delivery system; and
* investigation into new materials and processes to reduce the profile of
the implant further and, therefore the size of the delivery system.
The Company is also boosting its investment in its manufacturing operations as
our sales and clinical trial uptake accelerate during 2006 and beyond. We will
continue as key objectives:
* to reduce unit cost further, and
* to maintain high standards of reliability; and
* to implement continuous quality improvement.
Prospects
In 2006 we look forward to using the funds raised in the float to continue to
deliver on our strategy that we laid out in our admission document. This year
we expect to commence the US clinical trials for our AorfixTM stent graft in
AAA's, launch the new flexible delivery system for our AAA stent grafts in the
EU and announce a distribution partner for our Endostapler.
In addition we shall be announcing the clinical data on the EU post marketing
study for our AAA stent grafts and receive the initial feedback from the US
clinical trials that we will be beginning in the first half of this year.
Brian Howlett
Chief Executive Officer
Finance Director's Report
Turnover
Turnover consisted entirely of sales of AorfixTM which rose over fourfold to
#169,000 (2004: #40,000). Sales growth reflected the Company's focus on the
establishment of reference centres for the implantation of AorfixTM as the first
phase of its commercialisation strategy. In 2006 the Company moves into the
next phase of its commercialisation strategy, aided by the funds from the IPO to
invest in sales and marketing infrastructure.
The majority of sales were to European distributors with those to the Greek and
Irish distributors, which together represented over 50% of sales, being
particularly encouraging.
Gross profit
Gross profit for the year was #82,000 (2004: #24,000). The gross margin of
48.5% (2004: 60%) reflected the high proportion of sales to distributors, the
relatively low volumes and discounts given to new customers.
Operating expenses before goodwill amortisation and exceptional items
Operating expenses before goodwill amortisation and exceptional items rose by
#2.7 million to #6.8 million (2004: #4.1 million). Increased investment in R&D
to #3.2 million (2004: #1.8 million) and a step change in sales and marketing
costs to #0.9 million (2004: #0.3 million) accounted for the majority of the
increase with the remainder coming from an increase in general and
administration costs to #2.7 million (2004: 2.0 million).
Exceptional items
A breakdown of the exceptional charges for the year is detailed below.
#m
Corporate finance and associated corporate advisory expenses 0.5
Bank facility forbearance and arrangement fees 0.6
Board and other restructuring costs 0.7
_____
1.8
_____
Whilst costs of #2.0 million directly related to the IPO and associated placing
have been set against the share premium account, other costs linked to the IPO
and preference share issues but not directly related to these fund raisings,
such as those for market research and advice given on running a public company,
have been included in the profit and loss account as an exceptional item.
Prior to the IPO the Company's financial position was uncertain and the Company
was dependent upon the support of its bank for its continued operation.
Overdraft and other fees related to this continued support totalled #0.6
million.
In November 2005, Stephen Terry and John Kerslake resigned from the Board.
Their compensation for loss of office totalling #0.5 million is included as an
exceptional item along with the termination costs of several sales force
personnel.
Goodwill amortisation and impairment charges
Goodwill amortisation was #1.3 million (2004: #0.7 million).
The Company has shareholdings in two unquoted medical device companies, Endoart
SA and Vascular Concepts Holdings Limited. In 2004, the book value of the
Company's investment in Endoart SA was written-down by #0.9 million so that the
value per share of the Company's holding equalled that of new equity being
issued by Endoart SA. No further impairment was considered necessary in 2005.
Net interest payable
Net interest payable in the year was #2.0 million including preference share
dividends and appropriations in accordance with FRS 25. The same costs and
appropriations in 2004 totalled #1.7 million. The increase of #0.3 million was
primarily due to a higher average number of preference shares in issue in 2005.
Taxation
The R&D tax credits recoverable are only recorded on receipt of confirmation of
our claim. The 2004 accounts include an R&D tax credit recoverable of #0.2
million in respect of 2003. No confirmation has been received in relation to R&
D tax credits for 2004 and hence there is no such credit in the 2005 accounts.
Loss for the financial year
The loss for the financial year was #11.7 million (2004: #8.0 million). The
increase of #3.7 million was principally due to higher operating costs,
exceptional charges, goodwill and net interest payable partially offset by the
reduction in impairment charge.
Capital expenditure and financial investment
Capital expenditure and financial investments in the year of #0.7 million (2004:
#0.2 million) included a #0.2 million investment in Endoart SA and the purchase
of various patents and intellectual property relating to AorfixTM from Pearsalls
Sutures, a division of Bridport (UK) Limited, for #0.4 million.
Operating cash flow
Net cash outflow before financing for the year rose by #3.8 million to #8.6
million (2004: #4.8 million) primarily due to: the increased loss for the
financial year; higher fixed asset investments; the decrease in non-cash charges
(depreciation, amortisation and impairments); partially offset by decreases in
working capital and higher tax receipts.
As at December 2005 LMT had cash and short-term deposits of #16.3 million.
Financing and share restructuring
The Company successfully raised a total of #30.9 million before expenses in 2005
of which #3.1 million came from an issue of convertible preference shares in
October, #1.6 million from an issue of ordinary shares to Camden Partners at the
time of the flotation and #26.2 million on flotation through the placing of 16.5
million ordinary shares at a price of 159 pence per share. Expenses related to
these share issues totalled #2.7 million. Following flotation loans and
overdrafts totalling #6 million were repaid.
Further to resolutions passed at the Extraordinary General Meeting held on 5
December 2005 all Convertible Preference Shares of 1 pence each were subdivided
and converted into an Ordinary Share of 0.138 pence and a Deferred Share.
Subsequently all Ordinary Shares of 0.138 pence each were consolidated and
subdivided into new Ordinary Shares of 2 pence each.
The Deferred Shares have no economic value and will be cancelled in due course.
Loss per share
The net loss per share, based on an average of 7.9 million shares in issue
during the year, was 148.4 pence, an increase of 5% over the previous year
(2004: 140.8 pence).
Post balance sheet event
On 28 February 2006 at an Extraordinary General Meeting of LMT's 94.4% owned
subsidiary Lombard Medical Plc, a special resolution was passed for the company
to be voluntarily wound up. Lombard Medical Plc has not traded since September
2004 when its business and assets were sold to LMT for #25.1 million. The
consideration was satisfied by way of an intra-group loan that became repayable
on demand following LMT's flotation. A members' voluntary liquidation of
Lombard Medical Plc is the most cost-effective method of distributing the
minority shareholders' interest in the remaining assets of the company.
Tim Hall
Finance Director
Consolidated Profit and Loss Account for the year ended 31 December 2005
2005 2004
Note #'000 #'000
_____ _____ _____
Turnover 2 169 40
Cost of sales (87) (16)
_____ _____ _____
Gross profit 82 24
Development and administrative expenses (inc. exceptional items) (9,866) (5,675)
_____ _____ _____
Operating loss before exceptional items & goodwill amortisation (6,749) (4,077)
Exceptional items 3 (1,754) (887)
Amortisation of goodwill (1,281) (687)
_____ _____ _____
Operating loss 4 (9,784) (5,651)
Impairment of investments - (868)
Net interest payable and similar charges 5 (1,949) (476)
_____ _____ _____
Loss on ordinary activities (11,733) (6,995)
Taxation on loss on ordinary activities 6 - 209
_____ _____ _____
Loss after taxation (11,733) (6,786)
Non equity dividends and appropriations 7 - (1,178)
_____ _____ _____
Loss for the financial year (11,733) (7,964)
_____ _____ _____
Basic and diluted loss per share (pence) 8 (148.4) (140.8)
_____ _____ _____
All activity relates to continuing operations.
The Group has no recognised gains and losses other than the loss above and
therefore no separate statement of total recognised gains and losses has been
presented.
There is no difference between the loss on ordinary activities before taxation
and the loss for the financial year stated above, and their historical cost
equivalents.
Following the adoption of FRS25 "Financial instruments: disclosures and
presentation" from 1 January 2005 preference share appropriations have been
represented as part of interest payable. The comparative figures have not been
restated as permitted by FRS 25.
Consolidated Balance Sheet as at 31 December 2005
2005 2004
Note #'000 #'000
_____ _____ _____
Fixed assets
Intangible assets 2,215 2,659
Tangible assets 301 343
Investments - unquoted 2,825 2,595
_____ _____ _____
5,341 5,597
_____ _____ _____
Current assets
Stocks 318 147
Debtors 475 417
Cash at bank and in hand 10 16,342 20
_____ _____ _____
17,135 584
Creditors: amounts falling due within one year (2,893) (5,522)
_____ _____ _____
Net current assets/(liabilities) 14,242 (4,938)
_____ _____ _____
Net assets 19,583 659
_____ _____ _____
Capital and reserves
Called up share capital 4,201 3,270
Share premium account 25,420 6,207
Other reserve 11,118 -
Profit and loss account (22,976) (10,230)
_____ _____ _____
Shareholders' funds/(deficit) 11 17,763 (753)
Equity minority interests 1,820 1,412
_____ _____ _____
Capital employed 19,583 659
_____ _____ _____
Analysis of shareholders' funds/(deficit):
Equity shareholders' funds/(deficit) 17,763 (11,129)
Non-equity shareholders' funds - 10,376
_____ _____ _____
17,763 (753)
_____ _____ _____
Consolidated Cash Flow Statement for the year ended 31 December 2005
2005 2004
Note #'000 #'000
_____ _____ _____
Net cash outflow from operating activities 9 (7,637) (4,317)
_____ _____ _____
Returns on investment and servicing of finance
Interest received 49 17
Interest paid (452) (265)
_____ _____ _____
Net cash outflows from returns on investments and servicing of (403) (248)
finance
_____ _____ _____
Taxation received 209 -
_____ _____ _____
Capital expenditure and financial investment
Purchase of investments (231) -
Purchase of intangible fixed assets (423) -
Purchase of tangible fixed assets (94) (188)
_____ _____ _____
Net cash outflow from capital expenditure and financial (748) (188)
investment
_____ _____ _____
Acquisitions and disposals
Disposal of subsidiary undertakings - (60)
_____ _____ _____
Net cash outflows from acquisitions and disposals - (60)
_____ _____ _____
Net cash outflow before financing (8,579) (4,813)
_____ _____ _____
Financing
Issue of ordinary shares 26,181 -
Issue of preference shares 3,150 4,656
Share issue expenses (2,121) (549)
Loans advanced 1,550 -
Repayment of loans (3,342) -
_____ _____ _____
Net cash inflow from financing 25,418 4,107
_____ _____ _____
Increase/(decrease) in cash in the period 16,839 (706)
_____ _____ _____
Notes to the Financial Statements for the year ended 31 December 2005
1. Basis of preparation
The financial information for 2004 has been extracted from the statutory
accounts for the year ended 31 December 2004, which have been delivered to the
registrar of companies. The auditors' report on those accounts was unqualified
and did not contain any statement under section 237(2) or (3) of the Companies
Act 1985. The financial information for 2005 presented by the directors in this
statement is derived from the statutory accounts for 2005. The accounts have
been audited and the audit report is unqualified and does not contain a
statement under section 237(2) or (3) of the Companies Act. The accounts will
be delivered to the registrar of companies following the Company's annual
general meeting on 9 May 2006.
2. Segmental Reporting
2005 2004
Business analysis #'000 #'000
_____ _____
Turnover
Cardiovascular devices 169 40
Polymer coatings - -
_____ _____
169 40
_____ _____
Loss before tax
Cardiovascular devices (5,561) (2,945)
Polymer coatings (576) (512)
Central costs (3,647) (2,194)
_____ _____
Operating loss (9,784) (5,651)
Amounts written off investments - (868)
Net finance cost (1,949) (476)
_____ _____
(11,733) (6,995)
_____ _____
Net Assets
Cardiovascular devices 1,823 2,193
Polymer coatings 241 314
_____ _____
2,064 2,507
Central 1,177 1,991
Net cash/(debt) 16,342 (3,839)
_____ _____
19,583 659
_____ _____
Central net assets comprise assets, partially offset by liabilities that cannot
practically be divided between the segments.
Analyses by business are based on the Group's management structure. Turnover
between segments is immaterial. All turnover and activity arises in the United
Kingdom. Geographical analysis based on the country in which the customer is
located is as follows:
2005 2004
Turnover by destination #'000 #'000
_____ _____
United Kingdom and Europe 160 13
United States of America 9 27
_____ _____
169 40
_____ _____
3. Exceptional Items
2005 2004
#'000 #'000
_____ _____
Corporate finance and associated corporate advisory expenses (470) (887)
Bank facility forebearance and arrangement fees (555) -
Board and other restructuring costs (729) -
_____ _____
(1,754) (887)
_____ _____
On 13 December 2005 the Company was listed on AIM. There was an associated
placing of 16,466,359 new ordinary shares at the time of the listing. Costs
directly related to the fund raising such as those of the Company's Nominated
Advisor and Broker have been set against the share premium account. However,
costs relating to advice given on running a public company, market research and
other costs linked to the IPO but not directly related to the fund raising are
included in the profit and loss account as an exceptional item along with bank
fees related to the bank's continued support during the period up to receipt of
the placing proceeds.
In November 2005, Stephen Terry and John Kerslake resigned from the Board.
Their compensation for loss of office is included as an exceptional item along
with the termination costs of several sales force personnel.
4. Operating Loss
2005 2004
#'000 #'000
_____ _____
Operating loss is stated after charging:
Depreciation of tangible fixed assets 136 235
Amortisation of licences 35 9
Amortisation of goodwill (note 10) 1,281 687
Research and development expenditure 3,157 1,798
Operating lease rentals
- Motor vehicles 22 52
- Land and buildings 207 158
- Other assets 8 5
Auditors' remuneration 35 31
_____ _____
5. Net Interest Payable and Similar Charges
2005 2004
#'000 #'000
_____ _____
Interest receivable
Interest receivable on bank deposits 49 17
_____ _____
Interest payable and related expenses
Bank interest payable (188) (346)
Camden Partners loan interest (124) -
Lion Capital Partners loan interest (141) (124)
Other interest payable - (9)
Minority share of interest payable intra-group (56) (14)
Preference shares:
Dividend at 8% on amount paid up (912) -
Appropriations (577) -
_____ _____
(1,998) (493)
_____ _____
Net interest payable and similar charges (1,949) (476)
_____ _____
6. Taxation on Loss on Ordinary Activities
The credit of #209,000 in 2004 relates to the utilisation of tax losses from
research and development expenditure to reclaim payroll taxes paid.
Taxation losses carried forward at the end of the year amounted to approximately
#23 million and the unrecognised deferred tax asset at 30% is approximately #6.9
million. No deferred tax asset has been recognised in respect of these losses
as the directors consider it is, as yet, uncertain whether the losses will be
utilised. Tax losses would be utilised in future periods against trading profits
or the reclaiming of payroll taxes (at a lower effective rate).
The current tax credit of #nil is lower than the standard UK corporation rate of
30% applied to the loss for the period. The differences are explained below:
2005 2004
#'000 #'000
_____ _____
Loss before tax for the period at 30% (3,520) (2,099)
Additional deduction for research and development expenditure (200) (100)
Amounts not deductible for tax purposes including amortisation of goodwill 1,030 759
and preference share dividends
Losses carried forward 2,690 1,440
_____ _____
- -
_____ _____
7. Non-Equity Dividends and Appropriations
2005 2004
#'000 #'000
_____ _____
Preference shares
Dividend at 8% per annum on paid up amount - (612)
Appropriations - (566)
_____ _____
- (1,178)
_____ _____
Under FRS25 these charges are presented as an interest expense for the year
ended 31 December 2005 and as non-equity dividends payable for the year ended 31
December 2004.
8. Loss per Share
The Company applied FRS22 "Earnings per share" for the year ended 31 December
2005 and has prepared comparatives on a consistent basis.
Basic loss per share is calculated by dividing the loss attributable to ordinary
shareholders by the weighted average number of ordinary shares.
The diluted earnings per ordinary share are identical to those used for the
basic earnings per ordinary share as the exercise of share options and
conversion of preference shares would have had the effect of reducing the loss
per ordinary share and are therefore not dilutive.
The losses and weighted average number of shares used on the calculations are
set out below:
2005 2004
#'000 #'000
_____ _____
Loss after taxation (11,733) (6,786)
Less preference dividends and appropriations - (1,178)
_____ _____
Loss attributable to ordinary shareholders (11,733) (7,964)
_____ _____
Weighted average number of shares ('000) 7,906 5,655
_____ _____
Basic and diluted loss per share (pence) (148.4) (140.8)
_____ _____
9. Reconciliation of Operating Loss to Net Cash Outflow from Operating
Activities
2005 2004
#'000 #'000
_____ _____
Operating loss (9,784) (5,651)
Amortisation of goodwill 1,281 687
Depreciation and amortisation of licences 171 244
Increase in stocks (171) (144)
Increase in debtors (267) (67)
Increase in creditors 1,133 614
_____ _____
Net cash outflow from operating activities (7,637) (4,317)
_____ _____
10. Analysis of Net Cash/(Debt)
Reclassification
31 December under FRS25 & Cash
2004 appropriations movements
#'000 #'000 #'000
_____ _____ _____
Cash at bank and in hand 20 - 16,322
Bank overdraft (517) - 517
Bank loan (1,400) - 1,400
Loans (1,942) - 392
Preference share liabilities - (11,707) (2,992)
_____ _____ _____
(3,839) (11,707) 15,639
_____ _____ _____
Continued from table above
Non cash movements 31 December
2005
_____ _____
#'000 #'000
_____ _____
Cash at bank and in hand - 16,342
Bank overdraft - -
Bank loan - -
Loans 1,550 -
Preference share liabilities 14,699 -
_____ _____
16,249 16,342
_____ _____
11. Reconciliation of Movements in Group Shareholders' Funds
2005 2004
#'000 #'000
_____ _____
Loss for the financial period (11,733) (7,964)
Dividends credited to reserves - 865
Cash dividend retained - 426
Reclassification of preference share interests as liabilities under FRS25 (10,376) -
Conversion of preference shares and loan to ordinary shares 16,250 -
Warrant reserve created 158 -
New share capital issued, including premium 26,181 4,656
Expenses of share issues (1,964) (549)
_____ _____
Net change in shareholders' funds 18,516 (2,566)
Opening shareholders' (deficit)/funds (753) 1,813
_____ _____
Closing shareholders' funds/(deficit) 17,763 (753)
_____ _____
12. Post Balance Sheet Events
The Company's dormant subsidiary Lombard Medical Plc was put into Members'
Voluntary Liquidation with effect from 28 February 2006. The reason for this
was to allow the minority shareholders to receive their share of the proceeds of
#25.1 million from the sale of Lombard Medical Plc's assets and business to
Lombard Medical Technologies PLC in September 2004.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SELFUFSMSEDD_SN_RNS1703A_SU_RNSTEST_XX_070130.0233_RZ__RT_R.xRoute.001
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