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aap Implantate AG resolves concept for extensive workforce reduction and unscheduled value adjustment on capitalized development costs; Postponement of the publication of the 2019 annual financial statements

aap Implantate AG / Key word (s): Company Restructuring / Annual Results
aap Implantate AG resolves concept for extensive workforce reduction and unscheduled value adjustment on capitalized development costs; Postponement of the publication of the 2019 annual financial statements

March 16, 2020 / 6:49 pm CET / CEST
Publication of inside information according to Article 17 of Regulation (EU) No. 596/2014, transmitted by DGAP - a service of EQS Group AG.
The issuer is responsible for the content of the announcement.

The board of the aap Implants AG ("aap") decided on March 16, 2020, with the approval of the Supervisory Board on the same day, a concept for extensive staff reductions and, as part of the preparation of the 2019 annual and consolidated financial statements, the implementation of an unscheduled value adjustment on capitalized development costs Evaluation of various strategic alternatives decided to postpone the publication of the 2019 annual financial report (HGB) and the 2019 consolidated annual financial report (IFRS) to April 30, 2020.
 

aap Based on a workforce of 145, plans to reduce the workforce by around 25% by February 29, 2020 in the current financial year. The aim of the measure is to save more than EUR 1.3 million in personnel costs annually from 2021. In connection with the measure, the company expects one-time expenses of up to EUR 0.7 million, which will impact earnings in the 2020 financial year. In order to make the measure as socially acceptable as possible, the downsizing is to take place in cooperation with a private transfer company.
 

The planned reduction in the workforce is an essential part of the Board of Management's measures to reduce costs and increase efficiency. The decision was made against the background of the current economic situation aap and made to adapt to the actual market and sales situation. The aim of the personnel measure is to sustainably slim down the company's cost structure and thus increase efficiency and flexibility. In this context, measures such as changing the stock exchange listing and discontinuing parts of the standard dream portfolio were already implemented in the 2019 financial year.
 

aap develops innovative platform technologies and products in response to needs and challenges in traumatology that have not yet been adequately addressed. With its three platform technologies LOQTEQ (R) (successfully on the market since 2011), antibacterial silver coating (in the approval process) and resorbable magnesium implants (in development), the company is addressing precisely these needs.
 

Capitalized in accordance with IFRS regulations aap As a development-intensive company, in addition to self-produced assets, it also includes expenses for in-house and development projects (capitalized development costs), the approval and economically successful marketing of which is highly likely. Development projects must be recognized as assets if all six criteria of IAS 38 "Intangible Assets" are met. All six criteria apply equally alongside one another. Among other things, the company must prove the availability of technical, financial and other resources in order to be able to complete the intangible asset. All capitalized development projects (developed and acquired in-house) must be subjected to an annual impairment test. Any need for impairment is to be recognized immediately in the year in which it occurs as an unscheduled depreciation in the income statement.
 

In the 2019 financial year aap made significant progress in its innovative key technologies, antibacterial silver coating and absorbable magnesium implants. With regard to silver coating technology, the company received, among other things, the approval for the implementation of a clinical human study by the Federal Institute for Drugs and Medical Devices ("BfArM") as well as another funding commitment from the Federal Ministry of Education and Research ("BMBF") for up to around 2 . EUR 7 million. In the field of absorbable magnesium implant technology, aap coordinate the regulatory approval path with the US Food and Drug Administration (FDA) as far as possible and record the first very promising results in a pilot animal study with the renowned Colorado State University.
 

Regardless of the progress made in the 2019 financial year and the measures introduced to reduce costs and increase efficiency, the company will, at least for the foreseeable future, be dependent on further financing through equity or debt capital measures. In addition, against the background of the ever increasing regulatory requirements (conversion to MDR), there are increasing uncertainties with regard to the duration of the approval process and the associated risk of the timely financing of the projects under development. In order to adequately take into account the aforementioned risks aap After an in-depth analysis under the leadership of the new Chairman of the Board of Management / CEO, it was decided to make an unscheduled value adjustment on the development projects of antibacterial silver coating technology and absorbable magnesium implant technology totaling EUR 10.8 million in the course of preparing the 2019 annual and consolidated financial statements. This non-cash effect is shown below EBITDA as an impairment loss in the 2019 income statement. Regardless of this, the Management Board is still firmly convinced that the two innovative key technologies, antibacterial silver coating and resorbable magnesium implants, will be approved for the market, especially in cooperation with partners and with the help of the state funding that has already been promised.
 

The aforementioned progress, especially in the 2019 financial year, is being followed with great interest by various global orthopedic companies, who are renewed their interest in the innovative silver coating technology of aap have affirmed. Specifically, in addition to joint product development and approval projects, the company is also discussing distribution partnerships and licensing deals through to the sale of the technology for specific areas of application. In the field of absorbable magnesium implant technology, has aap The discussions with technology-savvy investors intensified in order to provide the financial basis for the joint further development of the technology in a timely manner. With regard to its platform technology LOQTEQ (R), the company is in advanced discussions about the conclusion of a development and supply agreement with a leading US medical technology company.
 

At the same time, the Management Board is currently evaluating various strategic alternatives for increasing value. These include joint venture agreements and corporate transactions (e.g. mergers, share or asset deals and carve-outs). The review of these measures is carried out as part of the company's ongoing holistic strategic planning and the associated efforts to identify all available options to increase the inherent value of aapevaluate its extensive trauma product portfolio and its various patented platform technologies.
 

Since individual decisions in the context of this upcoming evaluation may have to be taken into account in the 2019 annual and consolidated financial statements, the company has decided to postpone the publication of the 2019 annual financial statements (HGB) and the 2019 consolidated financial statements (IFRS) to April 30, 2020. aap will comment again on any developments in the context of this process after the management board has made specific decisions together with the supervisory board or has otherwise completed the evaluation of the issues.


 

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aap Implantate AG (ISIN DE0005066609) - General Standard / Regulated Market - All German stock exchanges -

over aap Implants AG
The aap Implantate AG is a global medical technology company based in Berlin, Germany. The company develops, manufactures and markets products for traumatology. In addition to the innovative anatomical plate system LOQTEQ (R), the IP-protected portfolio includes a wide range of cannulated screws. In addition, the aap Implantate AG has an innovation pipeline with promising development projects such as antibacterial silver coating technology and magnesium-based implants. These technologies address critical problems in traumatology that have not yet been adequately resolved. The aap Implantate AG sells its products in Germany directly to hospitals, purchasing groups and group clinics, while at the international level primarily a broad network of distributors in around 25 countries is used. In the USA the company continues with its subsidiary aap Implants Inc. on a hybrid sales strategy. Sales are carried out through distribution agents as well as through partnerships with global orthopedic companies. The share of the aap Implantate AG is listed in the General Standard of the Frankfurt Stock Exchange (XETRA: AAQ.DE). For more information, please visit our website at www.aap.de.

Forward-Looking Statements
This release may contain forward-looking statements that are based on current expectations, assumptions and forecasts of the Management Board as well as information currently available to it. The forward-looking statements are not to be understood as guarantees of future developments and results contained therein. 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. These factors also include those who aap described in published reports. Forward-looking statements are therefore only valid on the day on which they are made. We do not assume any obligation to update the forward-looking statements made in this release or to adapt them to future events or developments.

 

Contact:
If you have any questions, please contact:
aap Implantate AG; Fabian Franke; Investor relations; Lorenzweg 5; 12099 Berlin, Germany;
Tel .: + 49 / (0) 30/750 19 - 134; Fax .: + 49 / (0) 30/750 19 - 290; [email protected]
 

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