Advanced Medical Solutions Group plc

(“AMS” or the “Group”)

Unaudited Preliminary Results for the year ended 31 December 2018

~Continued good growth with delivery on strategy and market expectation~

Winsford, UK: Advanced Medical Solutions Group plc (AIM: AMS), the surgical and advanced woundcare specialist company, today announces its unaudited preliminary results for the year ended 31 December 2018.

Financial Highlights:

Proposed final dividend of 0.90p per share, making a total dividend for the year of 1.32p per share (2017: 1.10p), up 20%.

Business Highlights (including post-period end):

·      Revenues up 6% to £102.6 million and by 7% at constant currency

o  Branded revenues up 12% to £62.1 million (2017: £55.2 million) and by 13% at constant currency

o  OEM revenues down 3% to £40.5 million (2017: £41.7 million) and by 2% at constant currency

·      Adjusted operating margin up 180bps to 28.0% (2017: 26.2%).

·      Adjusted profit before tax up 14% to £28.9 million (2017: £25.4 million).

·      Continued strong performance from LiquiBand^® topical tissue adhesives, sales up 22% to £31.7 million (2017: £26.0 million) and by 24% at constant currency

o  US revenues up 26% to £23.0 million (2017: £18.2 million) and by 30% at constant currency

o  Market share by volume⁴ increased by 2% during the year

·      Strong growth in Internal Adhesives, following the relaunch of LiquiBand^® Fix 8™ laparoscopic in Q2 and the soft launch of the open device in Q4. Sales increased 21% to £2.1 milllion (2017: £1.7 million) and by 21% at constant currency

·      Sales of collagens and other biosurgical devices increased by 8% to £8.6 milllion (2017: £8.0 million) and by 6% at constant currency

·      Sales of sutures were impacted by regulatory challenges, up 1% at reported and constant currency to £13.3 milllion (2017: £13.1 million)

·      Antimicrobial dressings up 1% to £19.6 million (2017: £19.4 million) and by 2% at constant currency

·      After the period end, in January 2019, AMS announced the acquisition of Sealantis Limited (“Sealantis”) for $US 25 million (approximately £19 million) in cash with royalties due on product sales until 2027

o  Innovative technology platform and products to enter $US1 billion internal sealants market

o  First product expected in the European market in H1 2021; multiple potential additional sealant products

·      Appointment of Eddie Johnson as CFO and Board Director on 1 January 2019 following the retirement of Mary Tavener following 19 years of service

Outlook

The Group made good progress in the year, with new products strengthening the portfolio and the acquistion of Sealantis enabling us to drive towards unlocking further new growth from the US$1 billion internal sealants market in the short to medium term. The product portfolio was strengthened with four launches in Q4 and the Group is well prepared to navigate the increasingly challenging regulatory environment for medical device companies. The Group continues with its previously outlined long-term growth strategy and objectives and trading in the current financial year has begun in line with the Board’s expectations.  The Board remains optimistic about AMS’s future growth prospects.

Commenting on the results Chris Meredith, Chief Executive Officer of AMS, said: “2018 was AMS’s 17^th consecutive year of growth with strong financial and strategic progress across the Group. Our solid revenue growth was driven by sales in our Branded division which included LiquiBand^® topical tissue adhesives further increasing market share a further 2%, and the growth of our Internal Adhesives and Biosurgical devices. We have further reaffirmed our commitment to innovation through the acquisition of Sealantis which now opens up the large internal sealants market for the Group. We are well positioned to take advantage of market opportunities across our product portfolio, and we continue to actively review M&A opportunities.”

– End –

Note 1   Constant currency removes the effect of currency movements by re-translating the current year’s performance at the previous year’s exchange rates

Note 2   All items are shown before exceptional items which were £0.4 million (2017: £nil) and amortisation of acquired intangible assets which were £0.1 million (2017: £0.1 million) as defined in the Financial Review

Note 3   Net cash is defined as cash and cash equivalents plus short term investments less financial liabilities and bank loans

Note 4   Data supplied by Global Healthcare Exchange

For further information, please visit www.admedsol.com or contact:

About Advanced Medical Solutions Group plc – see www.admedsol.com 

AMS is a world-leading independent developer and manufacturer of innovative and technologically advanced products for the global surgical and woundcare markets, focused on quality outcomes for patients and value for payors. AMS has a wide range of products that include tissue adhesives, sutures, biosurgical devices, internal sealants, silver alginates, alginates and foams, which it markets under its brands; LiquiBand^®, LiquiBand^® Fix 8™, RESORBA^® and ActivHeal^® as well as supplying under white label.

AMS’s products, manufactured out of two sites in the UK, one in the Netherlands, two in Germany and one in the Czech Republic, are sold in more than 75 countries via a network of multinational or regional partners and distributors, as well as via AMS’s own direct sales forces in the UK, Germany, the Czech Republic and Russia.  Established in 1991, the Group has approximately 630 employees.  For more information, please see www.admedsol.com.

Chairman’s Statement

Overview

This has been another good year for the Group and we continue to progress as a leading, international provider of high quality, high value, innovative and technologically advanced products for the surgical and advanced woundcare markets.

Strategy

During 2018 our strategy has evolved to overcome changing market dynamics. With a focus on our strategic pillars of Growth, Innovation, Operational Excellence and Culture, we continue to provide high quality products with benefits to both patients and payors. Our acquisition of Sealantis adds significant growth potential in the internal sealants market and underlines our increasing commitment to innovation.

Board changes

As announced at our AGM in June 2018, Mary Tavener retired from the role of Chief Financial Officer and Board Director on 31 December 2018 and Eddie Johnson, who has been with AMS for seven years, as Group Financial Controller, assumed the role of Chief Financial Officer and joined the Board. We would like to thank Mary for her 19 years of dedicated and outstanding service to AMS. In her time with the Group, she has been integral to our listing on AIM, several acquisitions and this has culminated in AMS growing for 17 consecutive years. 

We are also pleased that in November 2018 Alan Richardson joined the Group as Chief Operations Officer from Convatec. Alan has assumed responsibility for our Group Operations, Quality and Regulatory functions and brings with him a wealth of experience

Dividend

The Board is proposing a final dividend of 0.90p per share, to be paid on 14 June 2019 to shareholders on the register at the close of business on 24 May 2019. This follows the interim dividend of 0.42p per share on 26 October 2018 and would, if approved, make a total dividend for the year of 1.32p per share (2017: 1.10p), an increase of 20%.

On behalf of the Board, I would like to thank all of our employees for their contributions during the past year. We would not have been able to achieve our strong performance without their commitment and effort. I would also like to thank our customers, suppliers, business partners and shareholders for their continued support in helping AMS achieve its goals.

AMS continues to be in robust financial health and is well positioned to take advantage of market opportunities across our product portfolio and invest in both internal and external opportunities in line with the Group’s long-term strategy and growth objectives.

Peter Allen

Chairman

Chief Executive’s Statement

Group performance

I am pleased to report another good set of results for the Group. Revenue increased by 6%, or 7% at constant currency, to £102.6 million and adjusted profit before tax increased by 14% to £28.9 million, which contributed to an increase of 13% in adjusted diluted earnings per share.

Branded Business Unit sales increased strongly by 12% to £62.1 million and by 13% at constant currency, underlining the potential for our products in the global surgical market, with LiquiBand^® contributing £31.7 million of sales at 22% growth, or 24% at constant currency.

We strengthened our product portfolio in both Business Units with four key launches in Q4: LiquiBand^® Fix 8™ Open (EU), LiquiBand^® Exceed Mini (US), silver post-operative dressing (US) and antimicrobial PHMB foam dressing (US).

Given the changing market dynamics, particularly in woundcare and the regulatory environment, we continue to evolve our organisation and strategy to maximise value and efficiency for the Group. In 2018 our strategy has evolved to allow increased focus on our four key strategic pillars of Growth, Innovation, Operational Excellence and Culture and going into 2019, we made some minor adjustments within the Business Units to better manage our different surgical and advanced woundcare opportunities and optimise the Group’s routes to market. We are pleased with the progress we have made and are well positioned to drive continued growth for the future.

Market

The Group operates in the large global surgical and advanced woundcare markets, both of which have shown steady growth over many years due to favourable global healthcare trends and both provide AMS with significant future opportunities.

The growth trajectory continued in 2018 for our main surgical market and we extended our future addressable market by adding the Sealantis portfolio to our range. The addition of the Seal G and Seal G MIST products through the acquisition of Sealantis opens up a further US$1 billion market within which we do not yet compete. We anticipate that commercialisation will commence in 2021.

As reported by many other global woundcare suppliers, the advanced woundcare market has shown some weakness in the past year. This has been due to factors such as local reimbursement changes in certain countries and the entry of some lower cost competition which have slowed growth rates for all woundcare providers.

We know from our recent experiences of product recertification in Germany that the increased regulatory hurdles are likely to result in competitor product withdrawals in our surgical and woundcare markets and fewer competitors in the medium term which will result in more opportunities for the stronger, higher quality suppliers and products, including AMS. We are confident of long term growth as we continue to expand our product portfolio, enter new geographies and increase our share in each market.

Strategy

Our long-term growth strategy remains unchanged. Historically our strategy to expand into new geographies, increase distribution of our surgical products and to enhance our product portfolio has served us well and delivered several years of solid growth. As we continue to evolve to overcome changing market dynamics so does our strategy and our strategy is now based on four pillars: Growth, Innovation, Operational Excellence and Culture.

Growth

Our Growth strategy still centres on exploiting the opportunities from having multiple routes to market across multiple geographies trying to ensure our products add value to patients and payors through delivery of equal or better clinical performance without compromising care or outcomes.

Innovation

For Innovation we continue to strengthen our portfolio by developing or acquiring high quality products that allow us or our partners to make market share gains in high value segments.

Operational Excellence

In the increasingly competitive medical device space, as we continue to grow and expand our technology base, we need to ensure that we continue to drive down costs and to defend our margin through Operational Excellence. We have created the Chief Operations Officer role to lead this pillar of our business and are well advanced with developing plans to ensure ongoing continuous improvement is driven across each of our operating sites.

Culture

We are only as good as our people and we have spent significant time agreeing and communicating our desired culture and capturing the essence of what has helped AMS become the success it is today. Recruiting and retaining high calibre individuals and teams remains critical to the success of AMS and we believe the work we have done and continue to do in this area will serve us well for the future. Our Cultural pillar is captured within our Care Fair Dare values and behaviours which we use to help recruit, recognise and reward performance across the Group.

Sealantis Deal & Acquisition Strategy

The acquisition of Sealantis has brought us a pipeline of significant products, intellectual property, a strong R&D team and access to markets in which we have not historically operated. The internal sealants market is large (greater than US$1 billion) and growing, and Sealantis has developed a range of products that reduce leakage of blood or fluid in high risk surgeries. Bringing in the high quality people and products to our Group is exciting and both businesses are currently working through the integration process which we expect to complete this year. We will start clinical trials in H2 2019 in support of first product launches in H1 2021. In addition to the initial product uses in gastrointestinal surgery, significant potential opportunities have also been identified in Neuro, Orthopaedic and Cardiovascular surgery indications.

The Group continues to actively look for businesses that deliver value for shareholders, immediately or in the short to medium term, and which meet our selection criteria of being:

·    Products or technologies that enable us to leverage our woundcare customer base or surgical routes to market;

·    Surgically focused companies with product synergies, strong R&D capability and ownership of their own products.

We have an internal team working with advisors to identify, appraise and progress acquisition opportunities and continue to explore options to accelerate growth through select targets.

Realligned Business Units for 2019

We have identified some significant benefits accessible by implementing a realignment to our Business Units. The changes include the transfer of ActivHeal^® (£6.3 million sales in 2018) from Branded to OEM, and the renaming of the Business Units to Surgical and Woundcare, respectively, to better reflect the nature of the business. The new structure was implemented in January 2019 and will be presented in this way from the H1 2019 results onwards.

Under the new structure, our Surgical Unit (previously the Branded Unit) will only include the sales, marketing, research, development and innovation of all our surgical products. Woundcare (previously the OEM Unit) will now include all advanced woundcare sales, marketing, research, development and innovation of all woundcare devices, regardless of whether they are sold under an AMS or a partner brand name.

Regulatory

As already announced, in May 2017, the European Medical Devices Regulation (MDR) started its three year transition period to replace the existing Medical Devices Directive. The MDR stipulates stricter requirements on product safety and performance, clinical evaluation and post-market clinical evidence and all medical device manufacturers will have to update their technical documentation and processes to meet the new requirements in order to continue to sell into the EU, creating a significant increase in medical regulatory activities globally.

Notified bodies will also have to operate to the new higher standards and each will have to go through their own approval process in order to be able to certify medical devices under MDR. Consequently, over the last few years the number of Notified Bodies has roughly halved to 60 and those that remain are indicating resource constraints within their organisations as they strive to meet the new regulatory requirements and the influx of requests from companies who are seeking a new body following the closure of their previous selected partner.

AMS is prepared for the impact of these regulatory changes over the next few years and expects to see market growth opportunities in the medium term as a result of this increasingly complex environment. All medical device manufacturers are at risk of experiencing delays in product approvals and recertifications and significantly increased demands for evidence on older products.

In 2018 and early 2019, AMS successfully completed its five-year recertification process for the RESORBA^® product portfolio, which proved significantly more onerous than usual, as we previously reported, due to the above factors and resulted in some short-term disruption to supply. Although this did influence the phasing of our sales, the Group did not see a material impact in 2018 nor does it expect one in 2019. As a result of working through this process, AMS is able to confidently work within this regulatory framework and has prepared and actioned a robust group wide plan to navigate the regulatory challenges of the next few years.

Brexit

As already reported, AMS is well positioned and well prepared for Brexit and in early 2019, BSI Netherlands confirmed the successful reassignment of all of our UK product certificates from BSI U.K. to BSI Netherlands, with a protracted transition period for related packaging changes. As a further minor labelling change, we will have to include details of an EU Authorised Representative (Advanced Medical Solutions BV) on the packaging of our UK manufactured products. We have also completed a comprehensive review of our supply chain to identify critical raw materials and increased stock holdings to reduce the risk of supply chain disruptions.

The year ahead

We enter 2019 with optimism due to our strong and enhanced product portfolio and our regulatory strength. This provides us with significant opportunities in our large and growing markets, particularly given the anticipated impact of the EU’s Medical Device Regulation. We anticipate and are already seeing products being withdrawn from the market and suppliers refusing to commit to new requirements in support of existing products. This can only be good for the stronger more capable players in the space and will increase the burden on low cost or inferior products.

The underlying demographics are still working in our favour in both our woundcare and surgical markets. As our portfolio continues to evolve through our own research and development and select acquisitons and licensing deals, as well as our continuous process of gaining new approvals and market entry across all key regions, we remain very optimistic about the future prospects for AMS.

Business Unit performance

Branded Business Unit

The Branded Business Unit reports products sold under AMS brands. Overall, revenue increased by 12% to £62.1 million (2017: £55.2 million) and by 13% at constant currency. This was driven principally by strong growth in Advanced Closure and Internal Fixation and Sealants, as well as continued growth across the rest of the product range.

Advanced Closure 

Advanced Closure is the largest proportion of the Branded Business Unit. It is comprised predominately of the LiquiBand^® topical skin adhesive range of products incorporating medical cyanoacrylate adhesives in combination with purpose built applicators. These products are used to close and protect a broad variety of surgical and traumatic wounds.

The category saw strong growth in 2018, with revenue increasing by 22% to £31.7 million (2017: £26.0 million), and by 24% at constant currency. This was driven by AMS continuing to take market share, new products launches, and expansion into new markets. We are the second largest player in the global advanced closure market, and in 2018 our share of the key US market increased by 2% in the year. The Group expects this growth and market share capture to continue in the coming years. 

2018 saw the successful US launch of LiquiBand^® Exceed mini device which is used to close smaller wounds. The regulatory process for our newly developed large wound device is also progressing, but taking longer than anticipated, with US approval now expected in Q3 2019.

Internal Fixation and Sealants

This category comprises our LiquiBand^® Fix 8™ devices, which are indicated for the internal fixation of hernia meshes using our LiquiBand^® technology. Through the accurate delivery of individual drops of cyanoacrylate adhesive, LiquiBand^® Fix8™ is used to hold hernia meshes in place within the body instead of traditional tacks and staples.

Revenue in this category increased by 21% to £2.1 million (2017: £1.7 million). After new design enhancements were made to our LiquiBand^® Fix 8™ laparoscopic device, the product moved back into strong growth from Q2 2018 and has received very positive feedback from surgeons. In late 2018, we launched LiquiBand^® Fix8™ for open surgery, which is a substantial portion of the global hernia market, and can be used for both mesh fixation and final wound closure with potential cost advantages. 

The US approval process for LiquiBand^® Fix8™ is well underway with patient enrolment for the clinical study in H1 2019. The global internal surgery market represents a significant opportunity for AMS and, with the acquisition of Sealantis, announced in January 2019, we now have multiple adhesive technologies to develop in combination with our applicator design expertise.

Traditional Closure

The traditional closure category includes our RESORBA^® branded Absorbable and Non-absorbable Sutures. Revenue growth in the period was restricted by the regulatory challenges, increasing by 1% to £13.3 million (2017: £13.1 million). Growth has been driven by a number of new accounts recently won in the U.K. and China and by success with variants for certain surgical specialties, including dental and ophthalmic.

Whilst the suture category is complex and mature, AMS will continue to explore targeted opportunities in this area and and will aim to derive benefit by bundling sutures with other products. 

Biosurgical devices

The Biosurgical devices category is principally composed of collagen-based materials including our RESORBA^® Gentacoll^® Gentamycin Collagen products used in Orthopaedic and Cardiac applications, and Collagen fleeces and cones used in Dental applications. Revenue increased by 8% to £8.6 million (2017: £8.0 million) and by 6% at constant currency, driven by growth in Asia and progress among some of our European distributors.

We conducted our first prescription usage of a new antibiotic collagen pouch for cardiac implantable electronic devices, such as pacemakers, in Germany. Antibiotic loaded collagens provide local, rather than systemic, drug delivery giving significant patient and environmental benefits. This is a key product development focus for AMS and we are working on development and regulatory activities for alternative antibiotics for Orthopaedic and Cardiac applications.

AMS also further broadened its range of Dura substitute products and Dental membranes in the period.

Advanced Woundcare

The Branded woundcare category is predominately the ActivHeal^® range. Revenue was flat in the year at £6.3 million (2017: £6.3 million), but growth was seen in certain areas such as our newer launches in silicone and antimicrobial products.

As part of our announced Business Unit restructure, the ActivHeal^® brand will be managed by the Woundcare Business Unit, enabling new product and customer opportunities to be assessed as part of our overall woundcare portfolio.

OEM Business Unit

Our OEM Business Unit reports products sold under partner brands, supporting our partners with a multi-product portfolio of advanced woundcare products and bulk materials. Revenue declined slightly by 3% to £40.5 million (2017: £41.7 million) and by 2% at constant currency.

Infection Management

The infection management category comprises advanced woundcare dressings that incorporate antimicrobials such as Silver and Polyhexamethylene Biguanide (PHMB). Revenue increased by 1% to £19.6 million (2017 £19.4 million) and by 2% at constant currency.

In Q4 we successfully launched our new patented silver post-operative dressing with a major US partner. This is an ergonomic dressing for total joint arthroplasty, of which there are approximately 1.6 million performed annually in the United States. In vitro data has demonstrated the product’s best-in-class performance against a wide spectrum of bacteria and yeast. Following FDA approval, and also in Q4, we launched our premium PHMB foam range into the US with a new partner. The PHMB foam range demonstrates enhanced performance, with rapid microbial activity within 24 hours and eradication of some pathogens within six hours. The market for antimicrobial foams in the US and EU is approximately £100 million and growing.

In the second half of 2019, we expect to further extend our infection management portfolio by launching an antimicrobial high performance dressing and a range of products addressing skin infections on intact skin. The Group is also working on developing next generation high-gelling products with differentiated antibiofilm claims.

Exudate Management

The exudate management category comprises advanced woundcare dressings which do not incorporate any antimicrobial elements. Revenue was impacted by changes in reimbursement levels in certain countries as well as increasing lower-cost competition and consequently declined by 6% to £16.0 million (2017: £17.0 million) and by 5% at constant currency.

AMS launched the new Lite foam product range in the period, secured a new US partner and expanded into Latin America following successful regulatory approval in Brazil.

The Group is working on extending the Lite foam portfolio with a range of shapes and sizes for the acute post surgery market, as well as extending the claims on our silicone foam range for pressure ulcer prevention.  

We are confident that the above actions will counteract the ongoing challenging market conditions anticipated in 2019.

Other Woundcare

Other woundcare comprises the sealants used in woundcare, royalties and other fee income. Revenue decreased by 8% to £4.9 million (2017 £5.3 million) and by 6% at constant currency due to reduced Organogenesis royalties of £1.8 million (2017, initial year with some up front elements: £2.5 million) as end sales were impacted by lower reimbursement levels until fully reinstated in Q4.

ActivHeal ^®

The realignment of the business units in 2019 to incorporate ActivHeal^® into the woundcare division will enable the Business Unit to have direct access to clinicians, with a more focused approach and simplified decision making structure, in addition to commercial and R&D synergies.

Chris Meredith

Chief Executive Officer

 

Financial Review

Summary

The Group delivered another strong financial performance, with a 12% increase in profit before tax and a 6% increase in reported revenue. At constant currency, revenue increased by 7% with currency movements reducing revenue by approximately £0.9 million during the year.

To provide the clearest possible insight into our performance, the Group uses alternative performance measures. These measures are not defined in International Financial reporting Standards (IFRS) and, therefore, are considered to be non-GAAP (Generally accepted accounting principles) measures. Accordingly, the relevant IFRS measures are also presented where appropriate, We use such measures consistently at the half year and full year and reconcile them as appropriate. The measures used in this statement include constant currency revenue growth, adjusted operating margin and adjusted profit before tax, allowing the impacts of exchange rate volatility, exceptional items and amortisation to be separately identified. Net cash is an additional non-GAAP measure used. The Group incurred exceptional costs of £0.4 million in the year relating mainly to the acquisition of Sealantis (2017: £nil) and amortisation of acquired intangibles of £0.1 million (2017: £0.1 million).

Administration costs excluding exceptional items increased by 4.3% to £33.6 million (2017: £32.2 million) with increased investment in R&D, regulatory and sales and marketing being partially offset by favourable movements on currency contracts. The Group incurred £6.0 million of gross R&D, regulatory and clinical spend in the year (2017: £4.3 million), representing 5.8% of sales (2017: 4.4%), with increased regulatory costs incurred due to the recertification of Suture and Collagen products.

Adjusted operating margin increased by 180 bps to 28.0% (2017: 26.2%) and operating margin increased by 150 bps to 27.5% (2017: 26.0%) due to positive sales mix and favourable currency contracts.

Adjusted profit before tax increased by 14% to £28.9 million (2017: £25.4 million) and profit before tax increased by 12% to £28.4 million (2017: £25.3 million).

The Group’s effective tax rate, reflecting the blended tax rates in the countries where we operate, and  including UK patent box relief was unchanged at 20.3% (2017: 20.3%).

Adjusted diluted earnings per share increased by 13% to 10.71p (2017: 9.46p) and diluted earnings per share increased by 12% to 10.48p (2017: 9.39p).

The Board is proposing a final dividend of 0.90p per share, to be paid on 14 June 2019 to shareholders on the register at the close of business on 24 May 2019. This follows the interim dividend of 0.42p per share on 26 October 2018 and would, if approved, make a total dividend for the year of 1.32p per share (2017: 1.10p), a 20% increase on 2017.

^{Note 5: Adjusted for exceptional items and for amortisation of acquired intangible assets}

^{Table is reconciled to statutory information in note 3 of the financial information.}

Branded

The adjusted operating margin of the Branded Business Unit increased by 320 basis points to 29.4% (2017: 26.2%), supported by sales growth, beneficial sales mix and favourable currency movements. Operating costs increased, especially sales, marketing, R&D and regulatory costs, to continue to support ongoing growth.

OEM

The adjusted operating margin of the OEM Business Unit decreased slightly to 27.1% (2017: 27.3%), mainly due to the reduced royalty from Organogenesis in the period.

Currency

More than one third of Group revenues are invoiced in US Dollars and approximately one quarter are invoiced in Euros. The Group hedges significant currency transaction exposure by using forward contracts, and aims to hedge approximately 80% of its estimated transactional exposure for the next 12 to 18 months. The Group estimates that a 10% movement in the £:US$ or £:€ exchange rate will impact Sterling revenues by approximately 3.6% and 2.5% respectively and in the absence of any hedging this would have an impact on profit of 3.0% and 0.7%. 

Cash Flow

Net cash inflow from operating activities increased by 20% to £20.4 million (2017: £17.0 million) and at the end of the period, the Group had net cash of £76.4 million (2017: £62.5 million).

Working capital increased during the year mainly due to trade receivables being £6.8 million higher, which was caused by a change in customer mix (more US customers on longer payment terms), sales phasing (impacted by new product launch dates and also some product availability issues relating to the recertification of RESORBA^® products) and currency movements. Debtor days increased to 47 days (2017: 41 days) mainly due to the increased proportion of US debtors which are on longer payment terms. Inventory also increased during the year as we intentionally built stock levels to mitigate possible supply risks from recertification and Brexit, with inventory months increasing to 4.7 months (2017: 4.2 months of supply). Creditor days increased to 31 days (2017: 27 days).

In the year, we invested £4.7 million in capital equipment, R&D and regulatory costs (2017: £4.5 million).

Cash outflow relating to taxation decreased to £3.8 million (2017: £4.5 million) due to the timing of tax payments on account.

The Group paid its final dividend for the year ended 31 December 2017 of £1.6 million on 15 June 2018 (2017: for the year ending 2016, £1.3 million), and its interim dividend for the six months ended 30 June 2018 of £0.9 million (2017: £0.7 million) on 26 October 2018.

In December 2018, the Group secured a new £80 million, multi-currency credit facility with a £20 million accordion option. The credit facility is provided jointly by HSBC and The Royal Bank of Scotland and is in place until December 2023. It is unsecured and has not been drawn down. This facility carries an annual interest rate of LIBOR or EURIBOR plus a margin that varies between 0.60% and 1.70% depending on the Group’s net debt to EBITDA ratio.

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION