RNS Number:9949D
Arthro Kinetics plc
18 September 2007
Arthro Kinetics plc
TUESDAY, 18 September 2007 - Interim Results for the six months ended 30 June
2007
Chief Executive's Statement
The first half of 2007 represented a significant improvement on 2006 and was
overall positive as the business began to benefit from the strategy implemented
at the end of 2006 and during the first half of 2007. Revenues of Euro1.1m are
pleasing against the backdrop of the business restructuring and having to
re-establish CaReS(R) in the German market following its withdrawal in November
2006.
Highlights
* Completion of an Euro8.9m placing and subscription in March 2007
* Revenues of Euro1.1m
* Loss for the period of Euro2.7m
* Recommenced sales of CaReS(R) to German hospitals in February 2007
* A 30% increase in the average selling price of CaReS(R) direct to
hospitals
* Expanded the agreement with the Arthro-Anda Tianjin Biologic Company for
the manufacture of CaReS(R) in China and:
* completed the first implantation of CaReS(R) in the region
* earned our first licence revenue from this joint venture
* Completed a new agreement with a local partner for the manufacture of
CaReS(R) in Japan
* Filed US FDA 510(k) applications for the radio frequency and shaver
units from the Endoscopic Spine Surgery (ESS) instrument portfolio.
Trading
Revenues of Euro1.1m delivered a gross profit of Euro0.3m and, overall, the Group
reported a loss before tax of Euro2.7m.
Having completed the placing and subscription in March 2007, raising Euro8.9m gross
proceeds the Group ended the period with cash of Euro7.2m. The loan to Australian
Biotechnologies Pty Limited of AUS$1.0m (Euro604k) was repaid in full with
associated interest on the due date 10 July 2007. No adjustment to the Group
statements as at 30 June 2007 has been made for this repayment.
Operational Review
Biologics
CaReS(R) remains the Group's only marketed biological implant and the main
source of revenue. Subsequent to a notification from the German Ministry of
Health with respect to the implementation of the European Directives 2004/23/EC
in Germany, the Group was obliged on 28 November 2006 to advise its client
hospitals in Germany that they should no longer take patient biopsies for
inclusion in CaReS(R), resulting in a temporary cessation of sales in the
Group's main market. Sales recommenced in Germany in February 2007, but first
half sales were adversely affected by the additional requirements of the new
system and opportunistic pressure from competitors. In July 2007, however,
following meetings with the German Minister of Health, a clarification of the
current situation was reached whereby Arthro Kinetics now has the same status as
other local German manufacturers (of articular cartilage implants) with respect
to biopsies for CaReS(R) and as such we expect an improvement in revenue during
the remainder of 2007.
Within Germany we remain focused on continuing to expand the number of hospitals
approved for CaReS(R) in the second half of 2007 and maintaining our lower sales
cost and improved selling prices. Outside of Germany, the performance of
distributors has been mixed and we are currently reviewing these sales channels
and expect to reach a conclusion on how best to proceed during the course of the
third quarter.
In Asia, collagen sales and licences for CaReS(R) manufacture generated their
first revenues and CaReS(R) sales were made in countries including Singapore,
Hong Kong and Malaysia.
Allografts
End user sales of allograft material were minimal in the first half of 2007 as a
result of a continuing lack of raw material supply and a sales effort focused
solely on orthopedics specialists. We have initiated an effort to expand sales
into dentistry and spine surgery and will continue to monitor closely the
allograft line of business.
ESS
Sales of spinal surgical instruments were in-line with our expectations and
following the submission of the outstanding 510(k) applications and the
completion of a number of regional distribution agreements for the Eastern
United States our confidence in this line of business is increasing.
New Product Development
The cell free implant "CFI" remains the priority development objective for the
Group in 2007. CFI is continuing to progress well with the first human
implantations due to commence in Q3 2007. We continue to plan on achieving CE
approval for the product by early 2008.
In summary we have made an encouraging start to 2007, but there remains
significant work ahead. The initial restructuring effort is complete and we
continue to build on the platform established during the first half of 2007 and
continue to actively review the performance of individual business units.
Jason Loveridge
Chief Executive Officer
Consolidated Income Statement
for the six months ended 30 June 2007
Six months Six months Year ended
ended ended 31 December
30 June 2007 30 June 2006 2006
In thousands of Euro Note unaudited unaudited audited
Revenue 3 1,127 901 1,801
Cost of sales (798) (995) (2,009)
Gross profit/(loss) 329 (94) (208)
Distribution expenses (414) (1,088) (1,986)
Administration expenses 4 (2,761) (2,254) (6,778)
Other operating income 265 66 649
Other operating expenses
Intellectual property impairment - - (5,000)
Goodwill impairment - - (2,680)
Other (42) (12) (1,053)
Total other operating expenses (42) (12) (8,733)
Operating loss before finance (2,623) (3,382) (17,056)
costs
Financial income 96 373 204
Financial expenses (137) (1,555) (1,651)
Net financing costs (41) (1,182) (1,447)
Share of loss of associate (68) - -
Loss before taxation (2,732) (4,564) (18,503)
Income tax expense - (6) (4)
Loss for the period/year
attributable (2,732) (4,570) (18,507)
to equity holders of the parent
Basic loss per share (EUR) 5 (0.05) (0.24) (0.79)
All activities were in respect of continuing activities.
Consolidated Balance Sheet
for the six months ended 30 June 2007
Six months Six months Year ended
ended ended 31 December
30 June 2007 30 June 2006 2006
In thousands of Euro Note unaudited unaudited audited
Assets
Non current
Property, plant & equipment 607 960 680
Intangible assets 826 8,599 872
Investment in associate 6 4,535 - -
Other non current assets 70 - 70
Total non current assets 6,038 9,559 1,622
Current assets
Inventories 628 184 675
Trade and other receivables 1,013 923 764
Current tax assets 108 167 142
Cash and cash equivalents 7,196 7,279 3,199
Total current assets 8,945 8,553 4,780
Total assets 14,983 18,112 6,402
Equity and liabilities
Capital and reserves
Ordinary share capital 7 12,552 8,106 8,106
Share premium 7 8,976 5,284 5,284
Merger reserve 30,753 30,753 30,753
Currency translation reserve 185 (114) 112
Accumulated losses (43,884) (28,456) (41,867)
Total equity attributable to
equity holders of the parent 8,582 15,573 2,388
Non current liabilities
Interest bearing loans and 123 349 397
borrowings
Total non current liabilities 123 349 397
Current liabilities
Interest bearing loans and 8 250 168 1,307
borrowings
Trade and other payables 4,411 1,853 1,739
Current tax liabilities 61 65 65
Provisions 1,556 104 506
Total current liabilities 6,278 2,190 3,617
Total equity and liabilities 14,983 18,112 6,402
Consolidated Statement of Cash Flows
for the six months ended 30 June 2007
Six months Six months Year ended
ended ended 31 December
30 June 2007 30 June 2006 2006
In thousands of Euro Note unaudited unaudited audited
Cash flows from operating
activities:
Loss for the period/year (2,732) (4,570) (18,507)
Adjustments for:
Depreciation and amortisation 144 142 432
Intellectual property impairment - - 5,000
Goodwill impairment - - 2,680
Movement on investment in 68 - -
associate
Finance income (96) (373) (204)
Finance expenses 137 1,555 1,651
Income tax expenses - 6 4
Decrease/(Increase) in inventories 47 16 (478)
(Increase)/Decrease in trade and
other receivables (215) 267 1,281
(Decrease)/Increase in trade and
other payables (886) (157) 130
Equity settled share based payment
transactions 260 74 334
Cash used in operations (3,273) (3,040) (7,677)
Interest paid (131) (81) (193)
Interest received 72 107 204
Taxes paid - (6) (4)
Net cash used in operating (3,332) (3,020) (7,670)
activities
Cash flows from investing
activities
Payments of disposals of tangible
assets - - 25
Purchase of property, plant and
equipment (24) (118) (393)
Purchase of intangibles - - (3)
Cash acquired with acquisitions - 34 37
Net cash used in investing (24) (84) (334)
activities
Cash flow from financing
activities
Proceeds from issue of ordinary
shares (net of costs) 7 8,593 6,782 6,782
Proceeds from loans 8 693 - 1,340
Repayment of loans 8 (2,009) (98) -
Issue of loans to third parties - - (604)
Payment of finance lease - (86) (249)
liabilities
Net cash generated from finance
activities 7,277 6,598 7,269
Net Increase/(Decrease) in cash
and cash equivalents 3,921 3,494 (735)
Consolidated Statement of Cash Flows continued
for the six months ended 30 June 2007
Cash and cash equivalents at beginning of period/year 3,199 3,795 3,795
Currency translation 76 (113) 139
Cash and cash equivalents at end of period/year 7,196 7,176 3,199
Consisting of:
Cash at bank 7,196 7,279 3,199
Bank overdraft - (103) -
7,196 7,176 3,199
Consolidated Statement of Changes in Equity
for the six months ended 30 June 2007 unaudited
In thousands of Ordinary Share Merger Currency Accumulated Total
Euro Share Premium Reserve Translation Losses
Capital
Balance at 31
December 2006 8,106 5,284 30,753 112 (41,867) 2,388
Net loss for
the - - - - (2,732) (2,732)
period
Currency
translation
reserve - - - 73 - 73
Total
recognised
income and - - - 73 (2,732) (2,659)
expense
Net proceeds
from
placing and 4,446 3,692 - - 455 8,593
subscription
Share based
payments - - - - 260 260
Balance at 30
June 2007 12,552 8,976 30,753 185 (43,884) 8,582
for the six months ended 30 June 2006 unaudited
In thousands Ordinary Share Merger Reserve Currency Accumulated Total
of Euro Share Premium Translation Losses
Capital
Balance at 31
December 2005 28 120 - - (23,960) (23,812)
Net loss for
the period - - - (4,570) (4,570)
Currency
translation
reserve - - - (114) - (114)
Total
recognised
income and
expense - - - (114) (4,570) (4,684)
Conversion of
preferred
shares 225 28,541 - - - 28,766
Conversion of
loan 9 905 - - - 914
Shares in
consideration
for acquisition
of Arthro
Kinetics UK 1,255 6,278 - - - 7,533
Limited
Reflecting
the equity
structure of
Arthro 5,091 (35,844) 30,753 - - -
Kinetics Plc
Net proceeds
from 1,498 5,284 - - - 6,782
flotation
Share based
payments - - - - 74 74
Balance at 30
June 2006 8,106 5,284 30,753 (114) (28,456) 15,573
for the 12 months ended 31 December 2006 audited
In thousands Ordinary Share Merger Currency Accumulated Total
of Euro Share Premium Reserve Translation Losses
Capital
Balance at 31
December 2005 28 120 - - (23,960) (23,812)
Net loss for
the year - - - - (18,507) (18,507)
Currency
translation
reserve - - - 112 - 112
Total
recognised
income and - - - 112 (18,507) (18,395)
expense
Conversion of
preferred 225 28,541 - - - 28,766
shares
Conversion of
loan 9 905 - - - 914
Shares in
consideration
for acquisition
of Arthro 1,255 6,278 - - - 7,533
Kinetics
UK Limited
Reflecting
the equity
structure 5,091 (35,844) 30,753 - - -
of Arthro
Kinetics Plc
Net proceeds
from 1,498 5,284 - - - 6,782
flotation
Share based
payments - - - - 334 334
Derecognition
of derivative - - - - 266 266
liabilities
Balance at 31
December 2006 8,106 5,284 30,753 112 (41,867) 2,388
Notes to the Consolidated Financial Statements
1. Reporting Entity
Arthro Kinetics Plc ("the Company") is a company incorporated in the UK. The
Group is engaged in the development, manufacture and sale of orthopedic
products. The Group was formed on 24 February 2006 through the reverse
acquisition of Arthro Kinetics Plc by Arthro Kinetics AG (formerly known as Ars
Arthro AG) and the acquisition by Arthro Kinetics Plc of Arthro Kinetics UK
Limited (formerly known as Endospine Kinetics Limited). The Group financial
statements consolidate those of the Company and its subsidiaries (together
referred to as the "Group"). The Group is listed on AIM.
The address of the Company's registered office is 7 Silk House, Park Green,
Macclesfield, Cheshire, UK.
2. Basis of Preparation
a) Statement of Consistency
The interim statement has been prepared on the basis of the accounting policies
set out in the annual report and accounts for the year to 31 December 2006 and
in accordance with those accounting policies expected to be followed in the year
end statements. The Group has chosen not to adopt IAS 34 "Interim Financial
Statements" in preparing the interim statement since the adoption as a standard
is not mandatory.
The financial information contained in this report does not amount to statutory
financial statements within the meaning of section 240 Companies Act 1985. The
financial information contained in this report is unaudited. The financial
statements for the year ended 31 December 2006, from which data has been
extracted, were prepared in accordance with International Financial Reporting
Standards as adopted by the EU ("Adopted IFRSs") and have been delivered to the
Registrar of Companies. The report of the auditors was unqualified in accordance
with section 235 of the Companies Act 1985 and did not contain a statement under
section 237 (2) or (3) of the Companies Act 1985. The interim statements were
approved by the board of directors on 17 September 2007.
b) Business Combination
Arthro Kinetics Plc acquired all the equity and financial instruments of Arthro
Kinetics AG and Arthro Kinetics UK Limited on 24 February 2006. Arthro Kinetics
AG was the significantly larger partner and in line with IFRS 3 is deemed to be
the acquirer. Consequently, the business combination has been accounted for
using reverse acquisition accounting principles. Subsequent to the reverse
acquisition, Arthro Kinetics Plc acquired Arthro Kinetics UK Limited.
In accordance with IFRS 3:
The pre-combination results are those of Arthro Kinetics AG and subsidiaries.
The accumulated loss of the Group is based on the pre-combination reserves of
Arthro Kinetics AG and subsidiaries and the post combination reserves of all
Group companies.
Arthro Kinetics Plc and Arthro Kinetics UK Limited have been consolidated from
the date of acquisition at the fair values as at that date.
c) Functional and Presentational Currency
The financial statements are presented in euros, which is the Group's
presentational currency. All financial information presented in euros has been
rounded to the nearest thousand.
d) Going Concern
The financial statements are prepared on a going concern basis which the
directors believe to be appropriate for the following reasons. The directors
agreed revenue plans across its geographical segments for 2007 and 2008
significantly higher than the Group revenue of Euro1.8m achieved in 2006. Based on
these assumptions the directors identified Euro9.0m as the funding requirement to
support the business in 2007 and 2008. Additionally the Company issued warrants
attached to the placing and subscription with the intent of raising a further
Euro9.0m by the end of 2008. The warrant proceeds were not assumed in the working
capital requirements of the business in 2007 and 2008. Assuming expenditure is
in line with plan the Group needs to achieve its revenue targets for 2007 and
2008 for the funding of Euro9.0m currently available to be sufficient for the
Group's needs through 2007 and 2008. In light of the above and their assessment
of the business the directors have prepared the financial statements on the
basis of going concern. A significant deviation from the Group's budgets may
cast doubt on the Group's ability to continue as a going concern. The Group may,
therefore, be unable to continue realising its assets and discharging its
liabilities in the normal course of business but the financial statements do not
include any adjustments that would result.
3. Segmental Reporting
Segment information is presented in respect of the Group's business and
geographical segments. The primary format, geographic segments, is based on the
Group's management and internal reporting structure.
Segment results, assets and liabilities include items directly attributable to a
segment as well as those that can be allocated on a reasonable basis.
Unallocated items comprise mainly investments, loans and borrowings and related
expenses, corporate assets and head office expenses and income tax assets and
liabilities.
Geographic Segments
The Group operates in three geographical areas: Asia Pacific, North and Latin
America, and Europe. In Europe manufacturing and distribution facilities are
located in Austria and Germany respectively. The Group has sales and marketing
operations in Germany, the UK, Australia and the United States covering the
geographical areas noted above.
In presenting information on the basis of geographic segments, segment revenue
is based on the geographic location of customers. Segment assets are based on
the geographic location of the assets.
Business Segments
The Group operates in the following three business segments:
Biological - the research, development and manufacture of biological implants
Allograft - a bone processing service to produce allograft material
Surgical - the sale of surgical spinal instruments for use in orthopedic surgery
Primary Reporting Format - Geographic Segments
In thousands of Euro Europe Asia Pacific North & Latin Group
America
Six months ended 30 June 2007
Revenue 776 170 181 1,127
Segment result and operating
loss (2,265) (120) (238) (2,623)
Financial income 96
Financial expense (137)
Share of loss of equity
accounted joint venture (68)
Loss before tax (2,732)
Segment assets 2,983 133 272 3,388
Unallocated assets 11,595
Group assets 14,983
Segment liabilities 887 43 206 1,136
Unallocated liabilities 5,265
Group liabilities 6,401
Capital expenditure 17 7 - 24
Depreciation & amortisation 138 6 - 144
In thousands of Euro Europe Asia Pacific North & Latin Group
America
Six months ended 30 June 2006
Revenue 784 117 - 901
Segment result and operating
loss (3,246) (60) (76) (3,382)
Financial income 373
Financial expense (1,555)
Loss before tax (4,564)
Segment assets 3,100 40 346 3,486
Unallocated assets 14,626
Group assets 18,112
Segment liabilities 1,957 101 2 2,060
Unallocated liabilities 479
Group liabilities 2,539
Capital expenditure 118 - - 118
Depreciation & amortisation 142 - - 142
In thousands of Euro Europe Asia Pacific North & Latin Group
America
Year ended 31 December 2006
Revenue 1,528 273 - 1,801
Segment result and operating
loss (15,901) (313) (842) (17,056)
Financial income 204
Financial expense (1,651)
Loss before tax (18,503)
Segment assets 3,135 187 158 3,480
Unallocated assets 2,922
Group assets 6,402
Segment liabilities 1,573 118 290 1,981
Unallocated liabilities 2,033
Group liabilities 4,014
Capital expenditure 357 39 - 396
Depreciation & amortisation 425 7 - 432
Unallocated assets consist of cash and other centrally held assets. Unallocated
liabilities include financial loans and liabilities detailed in note 8.
Capital expenditure excludes balances arising from business combinations.
Secondary Reporting Format - Business Segments
In thousands Revenue Segment Assets
of Euro Six months Six months Year Six months Six months Year
ended ended ended ended ended ended
30 June 30 June 31 December 30 June 30 June 31 December
2007 2006 2006 2007 2006 2006
Biological 585 712 1,339 6,289 1,826 1,717
Allograft 90 72 164 181 55 131
Surgical 452 117 298 607 8,140 439
Unallocated - - - 7,906 8,091 4,115
1,127 901 1,801 14,983 18,112 6,402
Capital Expenditure
In thousands Tangible Assets Intangible Assets
of Euro Six months Six months Year Six months Six months Year
ended ended ended ended ended ended
30 June 30 June 31 December 30 June 30 June 31 December
2007 2006 2006 2007 2006 2006
Biological 15 40 67 - - 3
Surgical 3 65 127 - - -
Unallocated 6 13 199 - - -
24 118 393 - - 3
Unallocated assets consist of cash and other centrally held assets.
4. Expenses
Included in administration expenses is the following;
In thousands of Euro Six months Six months Year
ended ended ended
30 June 30 June 31 December
2007 2006 2006
Research and development 911 438 1,587
5. Loss per Share
In thousands of shares Six months Six months Year
ended ended ended
30 June 30 June 31 December
2007 2006 2006
Net loss for the period/year (Euro'000) (2,732) (4,570) (18,507)
Weighted average no. of shares in issue
(Basic, 000 of shares) 60,638 19,329 23,446
Basic loss per share (EUR per share) (0.05) (0.24) (0.79)
The effect of the full exercise of share options in the money is anti-dilutive
as the Group made a loss in all periods.
6. Investment in Associate
In thousands of Euro Six months Six months Year
ended ended ended
30 June 30 June 31 December
2007 2006 2006
Investment in associate at fair value 4,603 - -
Share of loss of associate (68) - -
Investment in associate 4,535 - -
On 22 May 2007 Arthro Kinetics Plc and Tianjin Anda Group Holding Company
ratified the establishment of Arthro-Anda Tianjin Biologic Technology Company
Limited, a joint venture company established for the manufacture and
distribution of CaReS in China. Arthro Kinetics contributed intellectual
property to the joint venture in exchange for a 25% holding in the entity.
Arthro Kinetics is obliged to transfer 40% of this holding (ie 10% of the 25%)
to external parties. As at 30 June 2007 Arthro Kinetics remains the legal and
beneficial owner of the 25% holding and has accounted on this basis.
Based on an assessment of the joint venture company the directors have decided
to treat it as an associate and account for its consolidation on an equity
basis.
7. Share Capital and Reserves
Increase in Share Capital
At an EGM on 22 March 2007, the board obtained shareholder approval for the
issue of 44,402,685 ordinary shares subscribed for at #0.10 each to parties
including funds controlled by Heidelberg Innovation, and the placing of a
further 16,000,000 shares at #0.10 each by Nomura Code Securities Limited with
institutional investors. The total amount raised through the fund raise was
Euro8.9m.
Each investor participating in the subscription and placing received a warrant
carrying the right to subscribe for one share at #0.20 each for every two shares
subscribed, exercisable up to and including 17 December 2008.
The subscription and placing price was below the nominal value of the Company's
shares of #0.20. Therefore, unissued shares have been sub-divided into 4 new
shares of #0.05 each. Existing shares have been divided into one new share of
#0.05 plus a deferred share, which will carry no commercial value, of #0.15. The
deferred shares have no voting rights, no rights to dividends and negligible
rights on a return of capital. The deferred shares will not be listed on any
stock exchange and will not be freely transferable. No share certificates will
be issued for any of the deferred shares. The Company will have the right at any
time to purchase all the deferred shares for an aggregate consideration of
#0.01. There are no immediate plans to purchase or to cancel the deferred
shares, although the directors propose to keep the situation under review.
The fair value of the warrants at the date of grant was measured using a
Black-Scholes model and calculated at #0.01 per share. The collective fair value
of the warrants of Euro455k was recognised in accumulated losses.
The authorised and issued share capital following the subscription and placing
is detailed below:
Unit Authorised Issued Share
Share Capital Capital
Ordinary shares
Number of shares Number 150,000,000 88,003,166
Nominal value UK # 0.05 0.05
Aggregate nominal
value UK # 7,500,000 4,400,158.30
Deferred shares
Number of shares Number 27,600,481 27,600,481
Nominal value UK # 0.15 0.15
Aggregate nominal
value UK # 4,140,072.15 4,140,072.15
Combined
Aggregate nominal
value UK # 11,640,072.15 8,540,230.45
Following the subscription and placing, Heidelberg, and certain investors with
whom Heidelberg is acting in concert (the "Concert Party"), controlled a total
of 56.7 per cent of the enlarged share capital.
The proceeds of the subscription and the placing will be used to strengthen the
Company's balance sheet and to provide working capital to both finance the
restructuring and support the ongoing operations of the business, including the
ongoing development and regulatory approval of products in its development
pipeline.
The additional funds to be received through the exercise of the warrants will
also be applied to further strengthen the Company's balance sheet and to raise
further working capital.
Through the subscription Heidelberg Innovation agreed to set off the obligation
to repay the Euro2.0m unsecured loan plus accrued interest (Euro91k) against the
monies due in connection with the subscription.
8. Interest Bearing Loans and Borrowings
Unsecured Loans
On 21 December 2006 the Company entered into a loan agreement with Heidelberg
Innovation GmbH pursuant to which Heidelberg Innovation agreed to lend Euro2.0m
(#1.35m) to the Company. Interest is payable at 20% per annum. The loan is
repayable on the expiry of five months from the date of each relevant draw down
date. Default interest is at an annual rate of 25% per annum. No security was
provided against the loan. The money was drawn down as to Euro1.3m on 22 December
2006, Euro0.3m on 8 January 2007 and Euro0.4m on 23 January 2007. The loans were given
in order to provide the necessary short time finance to support the Company
ahead of an anticipated placing and subscription. As detailed in note 7
Heidelberg Innovation agreed to set off the obligation to repay the Euro2.0m
unsecured loan plus accrued interest against the monies due in connection with
the subscription.
9. Group entities
Group Undertakings at 30 June 2007
Group name Country of % of Principal activity
incorporation voting
share
capital
held
Arthro Kinetics AG Germany 100 Development and sale of
(formerly Ars Arthro AG) orthopedic products
Arthro Kinetics Austria 100 Manufacture of orthopedic
Biotechnologie GmbH products
Arthro Kinetics UK 100 Holding of intellectual
Medical Ltd property
Arthro Kinetics UK Limited
(formerly Endospine UK 100 Sale and distribution of
Kinetics Limited) orthopedic products
Arthro Kinetics Pty Australia 100 Marketing of orthopedic
Limited products
Arthro Kinetics Inc. USA 100 Marketing of orthopedic products
Cell and Tissue Austria - Special purpose vehicle for the sale
Bank Austria (CTBA) and distribution of orthopedic products
EKL Asia Ltd Hong Kong 100 Dormant
Arthro-Anda Tianjin China 25 Manufacture, sale and distribution
Biologic Technology of orthopedic products
Company Limited
(associate)
As at 30 June 2007 Arthro Kinetic Plc was deemed through its subsidiary
companies to have control over the Cell and Tissue Bank Austria (CTBA). The
Group controls the finance and operating policies of the CTBA as a result of it
being the sole supplier of allograft processing services to the CTBA and a
consequence of key members of Arthro Kinetics management residing on the
management board of the CTBA.
On 22 May 2007 Arthro Kinetics Plc and Tianjin Anda Group Holding Company
ratified the establishment of Arthro-Anda Tianjin Biologic Technology Company
Limited, a joint venture company established for the manufacture and
distribution of CaReS in China. Arthro Kinetics contributed intellectual
property to the joint venture in exchange for a 25% holding in the entity.
Arthro Kinetics is obliged to transfer 40% of this holding (ie 10% of the 25%)
to external parties. As at 30 June 2007 Arthro Kinetics remains the legal and
beneficial owner of the 25% holding.
Based on an assessment of the joint venture company the directors have decided
to treat it as an associate and account for its consolidation on an equity
basis.
Contacts
Arthro Kinetics Plc Tel: +49 (0)711 305 110 70
Jason Loveridge, Chief Executive Officer
Doug Quinn, Chief Financial Officer
Nomura Code Securities Limited Tel: +44 (0)207 776 1200
Richard Potts
Clare Terlouw
END
This information is provided by RNS
The company news service from the London Stock Exchange
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