- Sales and EBITDA in Q3/2016 at EUR 2,9 million (Guidance: EUR 2.5 million to EUR 4.0 million) and EUR -1.8 million (Guidance: EUR -2.0 million to EUR -1.2 million)
- EBITDA burdened by one-time effects in Q3/2016 and in nine-month period (Q3/2016: EUR 0.5 million; 9M/2016: EUR 0.8 million), which will largely result in savings effects on the earnings level in the future
- North America sales in Q3/2016 at EUR 0.7 million (Q3/2015: EUR 0.1 million) and in 9M/2016 at EUR 2.0 million (9M/2015: EUR 0.4 million)
- LOQTEQ®: Important progress in portfolio completion through market launchs of periprosthetic and polyaxial LOQTEQ® systems - further launches planned shortly
- Silver coating technology: good progress in CE conformity assessment procedure; preparation of approval documents for US FDA
- Signing of a notarial share purchase agreement about the remaining stake of 33% in aap Joints GmbH - Completion planned until year end 2016
- Change in the Supervisory Board: Jacqueline Rijsdijk follows Ronald Meersschaert
aap Implantate AG ("aap") achieved in the third quarter of 2016 sales and EBITDA in line with the expectations. In the continued operation sales in the reporting period amounted to EUR 2.9 million (Q3/2015: EUR 3.4 million) and were thus within the guidance of EUR 2.5 million to EUR 4.0 million. Furthermore, aap realized an EBITDA of EUR -1.8 million (Q3/2015: EUR -1.4 million) in the continued operation in the third quarter of 2016 and thereby a value within the forecasted corridor of EUR -2.0 million to EUR -1.2 million as well. EBITDA in the reporting period was burdened by one-time effects from the termination of a long-term license agreement in connection with the LOQTEQ® technology (EUR 0.3 million) and a value adjustment to customer receivables (EUR 0.2 million) totaling about EUR 0.5 million. The license agreement with a co-developer of the LOQTEQ® technology initially had a long maturity which was tied to the terms of the LOQTEQ® patents. By terminating the license agreement aap has succeeded in providing mid- and long-term as well as sustainable relief on the earnings level. Adjusted for the mentioned special effects recurring EBITDA in the third quarter was at EUR -1.3 million and thereby at the upper end of the guidance.
Q3 Sales
| In EUR million | Q3/2016 | Q3/2015 | Change on year |
| Trauma | 2.3 | 2.9 | -18% |
| Other | 0.6 | 0.5 | +2% |
| Sales continued operation | 2.9 | 3.4 | -15% |
Q3 EBITDA
| In EUR million | Q3/2016 | Q3/2015 | Change on year |
| EBITDA continued operation | -1.8 | -1.4 | -30% |
| One-time effects | 0.5 | 0 | > +100% |
| Recurring EBITDA continued operation | -1.3 | -1.4 | -5% |
In connection with the aimed focus on established markets such as North America, the DACH region and further European countries, aap succeeded in increasing sales in North America significantly and extending customer access in the DACH region. In contrast, China could not make a contribution towards sales in the third quarter of 2016 as well as in the year to date. In 2015 China was despite halted growth a main sales market. We are currently still in negotiations about a continuation of the distribution business and expect a conclusion as well as a corresponding recovery of the business until the end of the financial year. Overall it appears with respect to the sales development that the realized pleasing sales increases in North America in financial year 2016 could not compensate the so far missing sales contributions from China.
9M Sales
| In EUR million | 9M/2016 | 9M/2015 | Change on year |
| Trauma | 7.6 | 8.8 | -14% |
| Other | 1.2 | 1.1 | +14% |
| Sales continued operation | 8.8 | 9.9 | -11% |
| Sales discontinued operation | 4.2* | 12.1 | < -100% |
| Group sales | 13.0* | 22.0 | -41% |
* Includes aap Biomaterials GmbH business from 01/01/2016 to 05/11/2016.
9M EBITDA
| In EUR million | 9M/2016 | 9M/2015 | Change on year |
| EBITDA continued operation | -5.3 | -4.5 | -19% |
| One-time effects | 0.8 | 0.2 | > +100% |
| Recurring EBITDA continued operation | -4.5 | -4.3 | -6% |
| In EUR million | 9M/2016 | 9M/2015 | Change on year |
| EBITDA continued operation | -5.3 | -4.5 | -19% |
| EBITDA discontinued operation | 24.1* | 4.2 | > +100% |
| Group EBITDA | 18.8* | -0.3 | > +100% |
* Includes aap Biomaterials GmbH business from 01/01/2016 to 05/11/2016 and deconsolidation profit of sale of aap Biomaterials GmbH.
In the first nine months of 2016 aap realized sales of EUR 8.8 million (9M/2015: EUR 9.9 million) in the continued operation and an EBITDA of EUR -5.3 million (9M/2015: EUR -4.5 million). EBITDA in the nine-month period of the current financial year was additionally burdened by an one-time effect from personnel measures implemented in the second quarter of EUR 0.3 million besides the special effects already mentioned. Consequently one-time effects in the first nine months total EUR 0.8 million. In particular the termination of the long-term license agreement and the personnel measures will result in noticeable cost savings and thereby earnings improvements of the company in the years to come. Adjusted for all special effects recurring EBITDA in the nine-month period 2016 was at EUR -4.5 million and thereby almost at the level of the corresponding prior year period.
The following highlights indicate the progress aap made in the third quarter of 2016 in implementing the Management Agenda for 2016:
- North America sales: sales with local distributors and global partners who sell aap products under their own name or the aap label in North America totaled EUR 0.7 million in Q3/2016 (Q3/2015: EUR 0.1 million) and EUR 2.0 million in 9M/2016 (9M/2015: EUR 0.4 million) and were thus significantly above expectations
- LOQTEQ®: important progress in portfolio completion through recent market launchs of periprosthetic LOQTEQ® system and polyaxial LOQTEQ® VA ankle system - Shortly further launchs of various polyaxial LOQTEQ® systems for different anatomical areas
- Silver coating technology: good progress in CE conformity assessment procedure for silver-coated LOQTEQ® plate - Intensive and constructive exchange with notified body; preparation of approval documents for US Food and Drug Administration (FDA)
- Signing of a notarial share purchase agreement about the remaining stake of 33% in aap Joints GmbH for EUR 0.4 million on 23 September 2016; prerequisite for closing is the recertification of three products until year end 2016; prolongation of the CE approval is a very challenging task as these are so-called class III products which are in a difficult approval environment with constantly increasing requirements and partly long reaction times of approval authorities; conclusion of the contract led to a value adjustment on the stake in aap Joints GmbH of EUR 0.4 million in Q3/2016
- Amicable agreement with co-developer of LOQTEQ® technology about premature termination of a long-term license agreement and compensation with an indemnity payment which is provided as a first fixed payment in 2016 and will subsequently be payed out in tranches if certain sales targets are reached only in the next three years; termination leads to a mid- and long-term as well as sustainable discharge of earnings level; first indemnity payment of EUR 0.3 million leads to an one-off extraordinary charge on earnings in Q3/2016
- Change in the Supervisory Board: Jacqueline Rijsdijk follows Ronald Meersschaert who resigned from his office for personal reasons; Jacqueline Rijsdijk has acknowledged economic and financial expertise and an excellent network
Outlook for 2016 In the fourth quarter of 2016, aap aims to achieve further progress in its strategy implementation. The Management Board will be focusing on the following topics:
To accelerate value-based innovations, aap will be taking forward in a targeted manner the further expansion of the LOQTEQ® portfolio for certain indication areas respectively functionalities and plans the market launch of further polyaxial LOQTEQ® systems for different anatomical regions.
In the area of silver coating technology, the active interaction with the approval authorities will be continued regarding the current CE conformity assessment procedure. For the US approval the necessary approval documents are being prepared for submission to the US authorities.
The company wants to enhance market access by means of two approaches: Firstly, sales activities in the established markets in North America and Western Europe are to be expanded further. Based on the very pleasing sales development in North America in the first nine months of 2016 we expect a continuation of the sales dynamics in the fourth quarter of 2016. Secondly, further endeavours will be undertaken to stabilize sales in growth markets such as the BRICS and SMIT countries.
Following the successful divestment of aap Biomaterials GmbH, aap has already initiated extensive measures to reduce personnel and material costs in order to take into account the reduced size of the company. We will push this cost optimization process further in the next quarters.
Based on the business performance to date and taking into account the one-time effects as well as the ongoing negotiations, the Management Board expects sales and EBITDA to be at the lower end of the guidance for financial year 2016.
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® 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, 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
