Advanced Medical Solutions Group plc

(“AMS” or the “Group”)

Unaudited Preliminary Results for the year ended 31 December 2021

~ Strong revenue growth, profit and cash generation despite the ongoing impact of COVID-19. Positioned for further growth with a promising pipeline of next-generation products ~

Winsford, UK: Advanced Medical Solutions Group plc (AIM: AMS), the world-leading specialist in tissue-healing technologies, today announces its unaudited preliminary results for the year ended 31 December 2021.

Financial Summary:

Business Highlights:

AMS is pleased to report strong financial performance in line with expectations and significant regulatory and clinical progress as it continues to invest in its portfolio of next-generation products.

Financial

·      Revenue increased to £108.6 million (2020: £86.8 million) with strong performances reported across all key product categories and territories as levels of elective surgery and wound treatment volumes continued to rebuild towards pre-pandemic levels. This represents an increase of 25% on a reported basis and 29% on a constant currency¹ basis

·      Adjusted profit before tax increased by 92% to £25.6 million (2020: £13.4 million) as increased sales volumes drove significant improvements in operational leverage

·      Net cash increased to £73.0 million (2020: £53.8 million) driven by strong trading during the year and robust operational cash flow

·      Investment in R&D increased to £9.3 million (2020: £7.9 million), representing 8.6% of revenues (2020: 9.1%), as progress continued across key projects throughout the Group

·      Surgical Business Unit revenues increased to £64.6 million (2020: £50.2 million), an increase of 34% at constant currency

·      Woundcare Business Unit revenues increased to £44.0 million (2020: £36.6 million), an increase of 23% at constant currency

·      Global LiquiBand^® sales increased to £33.1 million (2020: £22.8 million), an increase of 53% at constant currency, with particular strength shown in the US market as end user demand returned and partners rebuilt inventories

·      Reflecting the strong financial performance and Management’s ongoing confidence in the Group’s outlook, the Board proposes an increased final dividend of 1.37p per share (2020: 1.20p)

Operational

·      The Seal-G^® and Seal-G^® MIST clinical study continues to progress well with approximately 25% of patients now recruited. The final results are on track to be released in H2 2022 when they will be used to market the technology during the full commercial launch

·      As previously reported, recruitment for the US clinical trial of LiquiBandFix8^® has now been completed and the Premarket Approval (PMA) filing remains on track for H2 2022 once all the patients have completed their 12-month follow up

·      The filing for AMS’ innovative high gelling product with anti-biofilm activity has been submitted for 510(k) approval with the product on track for a US launch in late 2022

Acquisition

·      AMS is announcing today the signing of an agreement to acquire AFS Medical GmbH (“AFS”), an Austrian based distributor of minimally invasive surgical devices including LiquiBandFix8^®. The deal is expected to complete in mid-2022, subject to regulatory clearances, and strengthens the Group’s direct surgical sales footprint and capabilities

Commenting on the results Chris Meredith, Chief Executive Officer of AMS, said: “I am delighted with AMS’ financial performance in 2021 which reflects the strength of our product portfolio, the quality of our staff and partners, the expansion of our commercial platform and the commitment of clinicians to use our tissue-healing technologies. The acquisition of AFS enhances our direct selling footprint and capabilities, product portfolio and our plans to increase Fix8^® penetration globally and I am delighted to welcome them to the Group. Despite the pandemic continuing to present challenges, trading has started well in the new financial year and I remain confident that our commitment to innovation, investment in R&D and the expansion of our distribution network will deliver significant and robust long-term growth.”

Notes

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

2.     Adjusted profit before tax is shown before exceptional items which were £nil (2020: £0.8 million, 2019: £1.1 million), amortisation of acquired intangible assets which was £3.2 million (2020: £2.3 million, 2019: £1.7 million) and long-term liability expense of £0.4 million (2020: £0.2 million, 2019: credit of £0.3 million) as defined in the Financial Review. Adjusted operating margin is shown before exceptional items and amortisation of acquired intangible assets

3.     Net cash is defined as cash and cash equivalents plus short term investments less bank loans and financial liabilities excluding those relating to IFRS16

– End –

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

About Advanced Medical Solutions Group plc

AMS is a world-leading independent developer and manufacturer of innovative tissue-healing technology, focused on quality outcomes for patients and value for payers. AMS has a wide range of surgical products including tissue adhesives, sutures, haemostats, internal fixation devices and internal sealants, which it markets under its brands LiquiBand^®, RESORBA^®, LiquiBandFix8^® and Seal-G^®. AMS also supplies wound care dressings such as silver alginates, alginates and foams through its ActivHeal^® brand as well as under white label. Since 2019, the Group has made three acquisitions: Sealantis, an Israeli medical device company with a patent-protected sealant technology platform; Biomatlante, an established French developer and manufacturer of innovative surgical biomaterial technologies and Raleigh, a UK leading coater and converter of materials predominately for woundcare and bio-diagnostics products.

AMS’s products, manufactured in the UK, Germany, France, the Netherlands, the Czech Republic and Israel, are sold globally 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. The Group has R&D innovation hubs in the UK, Germany, France and Israel. Established in 1991, the Group has more than 700 employees. For more information, please see www.admedsol.com.

Chief Executive’s Review

Group Performance

The Group delivered record sales of £108.6 million supported by commercial success, despite the ongoing impact of COVID-19 on elective surgery, wound treatment volumes and hospital access. In comparison to 2019, this included a positive net revenue impact of £6 million from acquisitions and foreign exchange movements.

Surgical Business Unit

The Surgical Business Unit includes tissue adhesives, sutures, biosurgical devices and internal fixation devices marketed under the AMS brands LiquiBand^®, RESORBA^®, LiquiBandFix8^® and Seal-G^®.

The recovery of global elective surgery volumes continued throughout 2021, supporting significant revenue growth in the year. Revenue increased by 29% in the period to £64.6 million (2020: £50.2 million) and by 34% on a constant currency basis.

Advanced Closure 

LiquiBand^® is a range of topical skin adhesives, incorporating medical grade cyanoacrylate in combination with purpose-built applicators. These products are used to close and protect a broad variety of surgical and traumatic wounds.

Revenues increased to £33.1 million (2020: £22.8 million), representing strong growth of 46% on a reported basis and 53% on a constant currency basis. This was achieved despite restricted access to hospitals, for both our direct sales teams and those of our distribution partners, which impacted our ability to win new business.

US LiquiBand^® sales were particularly strong, up 60%, to record high end sales volumes, driven by increased market demand and the replenishment of inventory levels at the Group’s marketing partners that had been reduced in 2020. The availability of LiquiBand^® Rapid, the new accelerated Topical Skin Adhesive technology and a re-focussing of the marketing strategy also helped to support the overall performance of this franchise. As announced in the December trading update, whilst later than planned, AMS expects the 510(k) approval for LiquiBand^®XL to be granted in the first half of 2022 as it works to submit responses to the FDA’s final questions.

LiquiBand^®sales in the UK and Germany also recovered strongly as underlying demand for the product returned while the rollout of LiquiBand^® Rapid during the year continued to strengthen the brand’s market position. Following successful pilots with Key Opinion Leaders, LiquiBand^®XL was launched into the UK in late 2021 and European launch will follow in the first half of 2022. Approvals for Liquiband^® XL have also recently been granted in New Zealand and Australia with launch planning underway in both markets. Surgeon feedback from this large wound product continues to be very positive.

Leverage of the LiquiBand^® brand also continues in the Rest of the World with initial sales to the Group’s new Indian partner in the period and further new LiquiBand^® territories expected to follow in 2022 and beyond.

Internal Fixation and Sealants

LiquiBandFix8^® is used to fix hernia meshes placed inside the body with accurately delivered individual drops of cyanoacrylate adhesive, instead of traditional, suture, tacks and staples. Revenues increased by 23% on a reported basis and 24% on a constant currency basis to £2.6 million (2020: £2.1 million). Demand continued to improve despite remaining heavily suppressed in comparison to pre-pandemic levels, reflecting the non-essential nature of the majority of hernia surgery. AMS continued to launch LiquiBandFix8^® into new territories including through a new Indian distributor in 2021. It also expects to increase its penetration in existing markets, building on the extensive combined experience of the AMS sales team and, following its acquisition, the AFS sales team. 

AMS continues to prepare the US PMA for LiquiBandFix8^® now that recruitment into the clinical trial is complete. The Group still anticipates that the PMA filing will be finalised in the second half of 2022 once the 12-month patient follow-up is complete and continues to believe that US approval and launch of this product will be a significant milestone for the Group.

Seal-G^® MIST (laparoscopic surgery) and Seal-G^® (open surgery) are a novel, internal, biological sealant used to seal tissue during gastrointestinal surgery to reduce bleeding and leakage of fluid. As previously announced, AMS obtained CE mark for both of these products in the first half of 2021. Since then, the first human clinical trial with the technology has begun with approximately 25% of patients recruited to date.  With an additional five trial sites now recruiting patients, results are expected to be released in H2 2022. The Group does not anticipate significant revenues until it can start to market the clinical trial results as part of the full European launch. Key Opinion Leader feedback continues to be very positive and AMS remains confident that the device is a good solution to the high unmet patient need for an effective GI sealant.

As we plan for full scale manufacturing of Seal-G, the US Fix8^® volumes and ongoing growth of LiquiBand^® globally, we have started an exciting project to expand the footprint of our Plymouth facility to accommodate these volumes and increase the space available in the laboratories for our R&D team. Construction is expected to start in 2022 with an estimated total spend of £2 million to £3 million over a two year period.

Traditional Closure

RESORBA^® branded Absorbable and Non-absorbable Suture ranges are used in general surgery and a wide range of surgical specialties including dental and ophthalmic surgery. Revenue increased by 15% to £14.9 million and by 18% at constant currency (2020: £13.0 million).

We continue to make small additions to our comprehensive range of sutures and to look for growth opportunities in existing and new territories.

Biosurgical Devices

The Biosurgical Devices category comprises antibiotic-loaded collagen sponges, collagen membranes and cones, oxidised cellulose, synthetic bone substitutes and bio-absorbable screws. Revenues increased by 14% to £14.0 million (2020: £12.3 million) and by 17% at constant currency.

Demand for collagen and bone-substitutes increased during the year as elective procedures started to return towards normal levels. Dental and orthopaedic surgical procedures continued to be significantly affected and slower to recover following the restrictions caused by COVID-19. This is reflected in the sales of these products. 

Antibiotic-loaded collagens, used to locally deliver antibiotics, remain an important part of AMS’ biosurgical portfolio. The company has extended the CE mark for Gentamycin until 2024 under the Medical Devices Directive (MDD) while it progresses the work required for Medical Device Regulation (MDR) approval.

The Group is also working towards its first collagen approval in the US with 510(k) submission expected in H1 2023 for a dental application which supports haemostasis and healing following tooth extraction.

The RESORBA^® branded bone substitutes range was sold into six new EU countries in 2021 following its initial launch in 2020 with more territories to follow in 2022.

The Group has been assessing approval options for its newly developed freeze-dried bone substitute (FDBS), which can be mixed with fluids and moulded for optimal placement in orthopaedic and spine surgery. In response to the changing regulatory environment in Europe and the US, AMS has decided to modify its strategy to pursue wider, more commercially attractive claims in the long-term, rather than apply for more limited, specific applications in the short-term. Consequently, more development and regulatory work will be required before this technology can be commercialised. 

Acquisition of AFS Medical GmbH

The Group today announces that it has strengthened its direct sales footprint, capabilities, and product portfolio, by agreeing to acquire AFS Medical GmbH, a specialist distributor of minimally invasive surgical devices headquartered in Vienna. The acquisition will be an important part of the Group’s strategy to expand its direct sales presence and expertise as well as enhancing its plans to increase LiquiBand Fix8^® penetration in other markets. The AFS direct sales team in Austria has been very successful in marketing LiquiBand Fix8^®, as a distributor for AMS, gaining a significant share of the Austrian market for hernia mesh fixation; AFS will continue to distribute LiquiBand Fix8^® along with a range of surgical products for AMS and other suppliers. AFS also has a number of proprietary designs for surgical devices that AMS intends to develop, manufacture and market in the future. Consideration will be an initial cash purchase price of €4.5 million, including debt, with a further cash deferred consideration of up to €1.5 million based on EBITDA delivery in 2022-2024. The acquisition is expected to complete in mid-2022 following the required regulatory clearances. It is expected to add approximately €4 million to Group revenues in 2023 and to be earnings enhancing.

Woundcare Business Unit

The Woundcare Business Unit is comprised of the Group’s multi-product portfolio of advanced woundcare dressings sold under its partners’ brands and the ActivHeal^® label, plus a portfolio of specialist medical bulk materials including multi-layer woundcare and bio diagnostics products following the acquisition of Raleigh Coatings in late 2020.

Global wound treatment volumes continue to recover towards pre-pandemic levels in 2021 and helped to drive growth in the Woundcare Business Unit. Revenue increased by 20% in the period to £44.0 million (2020: £36.6 million) and by 23% on a constant currency basis. A healthy order book is in place heading into 2022 suggesting that a level of confidence is returning in many markets.

Infection Management

The infection management category comprises advanced woundcare dressings that incorporate antimicrobials such as Silver and Polyhexamethylene Biguanide (PHMB). Revenue reduced by 1% on a reported basis but increased by 1% on a constant currency basis to £15.1 million (2020: £15.3 million).

As previously reported, 2021 sales were impacted by the renegotiation of a long-standing commercial agreement for one of the Group’s novel silver alginates, which resulted in there being no orders for this product in H1 2021. Sales restarted in H2 2021 but at a lower level than in previous years. The new five-year contract agreement is non-exclusive and allows AMS to promote the product directly in many markets and the Group has already made progress in gaining new business with this product.

In the first half of 2021, AMS obtained enhanced anti-microbial 510(k) approval for its patent-protected Silver High Performance Dressing. This product is now being sold via two US partners and into a number of ActivHeal territories whilst discussions continue with other interested partners.

Good progress has been made in the development of AMS’ innovative antimicrobial high gelling product with anti-biofilm activity. The 510(k) submission has now been made to the FDA and US approval and launch is anticipated at the end of 2022.

The Group’s Silicone PHMB foam range, which provides high efficacy and sustained performance, was CE mark approved in 2020, is now being sold into the MEA region and is expected to launch with a US partner and multiple APAC distributors in 2022.  

Exudate Management

Exudate Management comprises advanced woundcare dressings and gels which do not incorporate any antimicrobial elements. Revenue increased by 41% on a reported basis and 43% on a constant currency basis to £21.7 million (2020: £15.4 million) which incorporated £5.5 million of Raleigh sales (2020: £0.7 million).

Following its acquisition in November 2020, the integration of the Raleigh acquisition continues to progress well, including the in-sourcing of woundcare manufacturing processes which are expected to come on stream and save costs in 2022. New commercial opportunities arising from the acquisition have also been evaluated and a number of existing customers have already signed multi-year contracts with the Group.

AMS made good progress in expanding the commercialisation of its ActivHeal^® portfolio, having signed multiple agreements with distributors in APAC and Gulf States and won a tender in the Kingdom of Saudi Arabia.

The Woundcare Business Unit has also expanded its distribution network in the period by appointing a distribution partner in the Republic of Ireland to fulfil contract awards with the Health Service Executive, including products within both Infection Management and Exudate Management.

AMS continues to develop a customer-specific negative pressure dressing which requires 510(k) submission by our partner with submission and launch still planned for 2022. The Group sees considerable medium-term potential in the negative pressure wound treatment space.

AMS has continued to develop the application of its biosurgical, collagen technology into a tissue scaffold designed to treat hard to heal and stalled wounds such as diabetic foot ulcers and venous leg ulcers. The 510(k) submission to the FDA remains on-track for H2 2022 and a number of commercial partners have expressed an interest in this technology.

Other Woundcare

Other Woundcare comprises royalties, fees and woundcare sealants. Revenue increased by 22% at reported currency and by 28% at constant currency to £7.2 million (2020: £5.9 million) due to higher royalties from Organogenesis.

During the period, AMS obtained CE mark approval for its Mechanical Debridement product and successfully listed the product with the FDA for the US market and are currently assessing commercial opportunities.

Acquisition strategy

The Group continues to seek acquisitions that deliver additional value for shareholders and meet the criteria of being accretive businesses with strong R&D and manufacturing capabilities, and/or that have products or customers that offer effective commercial synergies. The agreement to acquire AFS underlines the Group’s strategy to expand its direct surgical footprint and capability whilst the acquisition of Raleigh in 2020 demonstrates our objective to increase our woundcare capabilities and commercial potential.

Regulatory

As previously announced, AMS obtained its first Medical Devices Regulation (MDR) certificates in the year, significantly ahead of the 2024 deadline. The Group continues to invest heavily in the processes needed to comply with the extensive requirements on product safety and performance, clinical evaluation and post-market clinical evidence stipulated by MDR. Further submissions and approvals are anticipated this year and Management is confident that it is well placed for the opportunities that will inevitably arise in Europe during the ongoing implementation of MDR.

As previously reported, our Woundcare Business Unit continues to suffer headwinds from ongoing reviews of reimbursement regimes in various European countries, which can influence the appetite of our partners to commit to new product launches.

Supply Chain

Whilst the Group did not suffer any impact at the end of the Brexit transition period, it did experience some disruption in 2021 due to the global supply chain crisis prompted by the pandemic and this is expected to continue well into 2022. We have seen a number of instances where delayed deliveries from our material suppliers have resulted in longer timelines for us to fulfil some of our customer orders. We continue to closely monitor the supply situation and global inflationary challenges and are building higher levels of critical raw materials and forward planning as much as possible.

Russia

The Group is reviewing the activities in its small legacy sales office in Moscow that has historically contributed approximately 1% of the Group’s operating profit.

Environmental, Social & Governance

The Group continues to make strong progress on ESG. We have established a Steering Committee which manages activities across the Group and helped to develop an ESG Framework. Our ESG strategy is focused on our environmental impact, the well-being of our workforce, driving equality, diversity and inclusion, and further strengthening our corporate governance, internally and across our supply chain to meet ever increasing customer requirements. The progress we have made reaffirms our commitment to being a good corporate citizen which we believe is critical to our long-term sustainable success.

Stakeholders

On behalf of the Board, I would like to thank the Group’s committed staff, partners and other stakeholders, without whose help and commitment, the achievements of this year, and the years prior, would not have been possible.

Summary and Outlook

The return of elective surgery volumes towards pre-pandemic levels and AMS’ ongoing commitment to expanding its portfolio through new product launches has meant the Group has been able to deliver strong growth in revenue, profitability and cash generation in 2021 which was in line with expectations, along with an increased dividend. Furthermore, both Business Units have made significant regulatory and clinical progress in the year as the Group continues to increase its investments in developing next-generation products that it believes will drive robust long-term growth.

The Omicron COVID-19 variant is causing healthcare staff shortages in some of our markets but to date it appears that AMS will experience a much shorter and less severe impact from this variant than in previous peaks of the pandemic.

The US LiquiBand^® and general business recovery in 2021 and healthy order book in early 2022 are grounds for optimism and with our strong financial position and ongoing commitment to innovation, AMS is well placed for continued growth in 2022 and beyond.

Chris Meredith

Chief Executive Officer

 

Financial Review

Summary

IFRS reporting

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. AMS uses such measures consistently at the half-year and full-year and reconciles them as appropriate. The measures used in this statement include constant currency revenue growth, adjusted operating margin, adjusted profit before tax and adjusted earnings per share, allowing the impacts of exchange rate volatility, exceptional items, amortisation and the change in long-term liability expense to be separately identified. Net cash is an additional non-GAAP measure used.

Overview

Revenue increased by 25% at reported currency and 29% at constant currency to £108.6 million (2020: £86.8 million).

Gross margin improved to 56.2% (2020: 53.0%) as a result of higher throughput at our manufacturing facilities reducing the cost to manufacture our products and as a result of a strong recovery of sales in our higher margin goods.

Administration expenses increased to £37.0 million (2020: £34.5 million) inclusive of foreign exchange movements due to higher amortisation of intangible assets and a return to more routine levels of business activity, partially offset by favourable currency hedges in the year.

The Group incurred £9.3 million of gross R&D spend in the period (2020: £7.9 million), representing 8.6% of sales (2020: 9.1%), reflecting increased investment in innovation and in meeting the increasing regulatory standards.

No exceptional costs were incurred in the year (2020: £0.8 million relating to both the acquisition of Raleigh and our participation in a process, in which AMS was unsuccessful, for a sizeable surgical business).

Amortisation of acquired intangible assets was £3.2 million in 2021 (2020: £2.3 million) due to the full period effect of the acquisition of Raleigh in November 2020.

£0.4 million was recorded in relation to the long-term liability expense recognised on acquisition of Sealantis in 2019 (2020: £0.2 million).

Adjusted operating profit which excludes amortisation of acquired intangibles and exceptional costs, increased by 89.3% to £26.2 million (2020: £13.8 million) whilst the adjusted operating margin increased by 880 bps to 24.1% (2020: 15.9%) due to the negative impact of the COVID-19 pandemic on the Group’s revenues in the prior period.

The Group generated adjusted profit before tax of £25.6 million (2020: £13.4 million) and profit before tax of £22.0 million (2020: £10.1 million).

The Group’s effective corporation tax rate, reflecting the blended tax rates in the countries where we operate and including UK patent box relief, increased to 20.5% (2020: 14.9%). The increase on the previous period has arisen as the Group was able to retrospectively claim for patent box relief as a result of the granting of patents on LiquiBand^® Exceed in the first half of 2020. Additionally, the substantive enactment of the higher tax rate in the UK from April 2023 has increased the valuation of the deferred tax liability and contributed an additional 2.6 percentage points to the effective tax rate.

Adjusted diluted earnings per share increased by 78% to 9.66p (2020: 5.44p) and diluted earnings per share increased by 103% to 8.01p (2020: 3.94p), reflecting the Group’s increased earnings.

Reflecting the Group’s strong net cash position and confidence in the Group’s prospects, the Board is proposing an increased final dividend of 1.37p per share, to be paid on 17 June 2022 to shareholders on the register at the close of business on 27 May 2022. This follows the interim dividend of 0.58p per share paid on 22 October 2021 and would, if approved, make a total dividend for the year of 1.95p per share (2020: 1.70p) an increase of 15%.

^{Note 4: Adjusted for exceptional items and amortisation of acquired intangible assets}

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

Surgical

Surgical revenues increased by 29% to £64.6 million (2020: £50.2 million) at reported currency and 34% at constant currency. Adjusted operating margin increased by 1,330 bps to 31.4% (2020: 18.1%) as higher sales allowed the Group to achieve greater operational leverage compared with the previous period.

Woundcare

Woundcare revenues increased by 20% to £44.0 million (2020: £36.6 million) at reported currency and by 23% at constant currency. Adjusted operating margin increased by 400 bps to 15.0% (2020: 14.6%) as the general recovery was partially offset by reduced Silver Alginate volumes.

Currency

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. In the year, approximately one third of sales was invoiced in US dollars and approximately 30% was invoiced in Euros.

The Group estimates that a 10% movement in the £:US$ or £:€ exchange rate will impact Sterling revenues by approximately 3.4% and 2.9% respectively and, in the absence of any hedging, this would have an impact on the Group operating margin of 2.8% and 0.3% percentage points respectively.

Cash flow

The Group continued to generate significant amounts of cash through operations as strong net cash inflow from operating activities grew to £31.0 million (2020: £21.5 million) as the business recovered from the impact of the COVID-19 pandemic without significantly increasing working capital.

At the end of the period, the Group had net cash of £73.0 million (31 December 2020: £53.8 million).

Working capital decreased during the year, despite the sales growth achieved during the year. An increase in receivables as a result of higher sales has been offset by reduced inventory levels and increased payables. Inventory cover reduced to 4.9 months of supply (2020: 5.7 months) following a period of increased demand and supply chain disruption. To mitigate against ongoing supply disruption, the Group intends to rebuild inventory back to the higher levels held during the Brexit transition period and earlier stages of the COVID-19 pandemic. Debtor days reduced marginally to 44 days (2020: 45 days) whilst Creditor days increased to 37 days (2020: 30 days) mainly due to the timing of payments.

Capital investment in equipment, R&D and regulatory costs increased to £6.5 million (2020: £5.3 million) as the Group continues to invest in its future pipeline.

Cash outflow relating to taxation increased to £4.1 million (2020: £3.7 million) which is £0.4 million lower than tax in the income statement. This is due to the timing of payments on account and the non-cash impact of the upwards revaluation in the Deferred Tax Liability following the enactment of higher tax rates in the UK from April 2023. Despite a significantly higher tax expense in the year as the Group’s taxable profits grew, the prior period included accelerated payments on account in the UK resulting in only a marginal increase in cash outflow relating to taxation. The UK Government’s enactment of a 25% tax rate from April 2023 will result in an increased group effective tax rate from FY2023.

The Group paid its final dividend for the year ended 31 December 2020 of £2.6 million in June 2021 (2020: for the year ending 2019, £2.3 million in June 2020), and its interim dividend for the six months ended 30 June 2021 of £1.2 million in October 2021 (for the 6 months ended 30 June 2020: £1.1 million in October 2020).

The Group has an undrawn unsecured £80 million credit facility provided jointly by Natwest and HSBC which is in place until December 2022. This facility carries an annual interest rate of the applicable reference rate such as SONIA in the case of sterling plus a margin that varies between 0.60% and 1.70% depending on the Group’s net debt to EBITDA ratio.

^{Note 5: Adjusted for exceptional items, amortisation of acquired intangible assets and long-term liabilities expense.}

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION