AFT Pharmaceuticals posted a narrower annual loss as interest and other finance costs swamped operating earnings and says it's negotiating the refinancing of its debt at more favourable interest rates.

Interest payments jumped more than 54 per cent as borrowing increased and other increases in finance costs reflected foreign exchange movements.

The marketer of over-the-counter medicines including Maxigesic pain killers says it made a net loss of $2.4 million for the year ended March, down from a $12.7 million net loss the previous year.

Operating earnings turned to a $6.1 million profit from a $10.1 million loss the previous year. Sales rose 5 per cent to $85.1 million and spending on research and development fell 69 per cent to $2.6 million.

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The company says excluding its since-sold lower margin hospital products - at the end of the 2018 financial year for New Zealand and early in the 2019 year for Australia - sales were up 14 per cent.

Operating cash flow turned positive to the tune of $1.1 million from an outflow of $9.2 million the previous year and AFT had $6.9 million in cash at March 31.

"The completion of the key Maxigesic clinical trials, the return to generating positive operating profits and cash flow and the continued strong growth in our broad portfolio of OTC medicines represent significant achievements," says chair David Flacks in a statement.

"We are now at a pivotal point in our development. We are well positioned to continue to build on the strong position we enjoy, particularly in OTC medicines in New Zealand and Australia," Flacks says.

"We have made good progress in Southeast Asia and we have continued to deliver on the significant out-licensing potential we see for Maxigesic in large international markets."

Founder and managing director Hartley Atkinson says he expects AFT to deliver strongly improved operating earnings for the current year.

The company had a $41.8 million loan at March 31, up from $30.7 million a year earlier, from specialist healthcare investor CRG and was paying 13.5 per cent interest. That loan matures at the end of the 2020 financial year.

"Although CRG has offered to extend the loan, we have begun negotiations with local banks to refinance our facilities at more attractive rates. Reflecting the positive outlook for the business, we are confident we will achieve that goal," AFT says.

In the meantime, AFT has established a $15 million interim banking facility with Bank of New Zealand which it says "uses the existing security arrangements between AFT, BNZ and CRG."

The company intends to repay US$9.5 million of the CRG facility in the next few days and plans to repay the balance on March 31 next year.

"We are grateful for the support and financial flexibility CRG has provided to AFT over five years of significant research and development investment and, as this business matures, it is appropriate for the company to seek alternative borrowing arrangements."

AFT should be able to reduce its interest costs to current commercial lending rates of about 8 per cent.

Atkinson says he sees "significant potential" for AFT's products in global markets.

"The timing is always difficult to forecast with certainty, not least because it is important that we find the right partners to take our products through to commercialisation," he says.

"At the same time, we continue to develop and commercialise line extensions of the Maxigesic range and other products such as NasoSurf and Pascomer. Once achieved, all have the potential to generate significant shareholder value and improve healthcare outcomes for patients around the globe."

The company has made significant progress "but there remains significant work to be done to reach our true potential and fully reward our shareholders," Atkinson says.

AFT is targeting positive cash flow and an operating profit between $9-12 million and will update the market at its annual meeting in August.

AFT shares fell 0.4 percent to $2.69 in early trading, below its 2015 float price of $2.80, but 7.6 percent higher than a year ago.

- BusinessDesk