For immediate release

9 September 2015

 

Advanced Medical Solutions Group plc

(“AMS” or the “Group”)

 

Interim Results for the six months ended 30 June 2015

 

Winsford, UK, 9 September 2015: Advanced Medical Solutions Group plc (AIM: AMS), the surgical and advanced woundcare specialist company, today announces its interim results for the six months ended 30 June 2015.

 

Financial Highlights:

 

	H1 2015	H1 2014	Reported growth	Growth at  constant currency¹
Group revenue (£ million)	32.7	29.4	11%	14%
Adjusted² operating margin (%)	25.2	24.5	70 bps	–
Adjusted² profit before tax (£ million)	8.2	7.3	13%	–
Profit before tax (£ million)	8.0	7.1	14%	–
Adjusted² diluted earnings per share (p)	3.23p	2.92p	12%	–
Diluted earnings per share (p)	3.15p	2.82p	11%	–
Net operating cash flow3	7.9	7.2	11%	–
Net cash (£ million)4	22.6	17.3	31%	–
Interim dividend per share	0.25p per share	0.22p per share	13.6%

 

 

Business Highlights:

·      Branded Distributed revenues up 48% to £6.4 million (2014 H1: £4.3 million⁵) and by 52% at constant currency

·      Branded Direct revenues down 3% to £11.1 million (2014 H1: £11.4 million⁵) but up 4% at constant currency

·      OEM revenues up 14% to £13.5 million (2014 H1: £11.8 million) and by 12% at constant currency

·      Bulk Materials revenues down 10% to £1.7 million (2014 H1: £1.9 million) and by 1% at constant currency

·      Continued improvement and strong performance in the US with LiquiBand^® tissue adhesive range:

o  Revenues up 139% to £3.3 million ( 2014 H1: £1.3 million) at constant currency

o  Market share by volume increased to 21.5% (December 2014: 19%) in the alternate site segment and 9.5% (December 2014: 7%) in the hospital segment  

·      ActivHeal^® continues to make progress in the NHS, with a 7% increase in revenues, growing market share   

·      Silver alginate revenues increased by 14% at constant currency to £7.9 million (2014 H1: £6.8 million)

·      Expanded use of Hernia Mesh Fixation device LiquiBand^® Fix8™ and £0.4 million of sales achieved in the first six months of 2015 since launch in 2014 with encouraging uptake across Europe

 

Post Period End Highlight

·      CE Approval for an antimicrobial foam including Polyhexamethylene Biguanide (PHMB) for Europe received on 27 August 2015

 

 

Commenting on the results Chris Meredith, CEO of AMS, said:

 

“The first half of 2015 has seen another period of good performance by the Group and we are confident of meeting current market expectations for the full year.

 

The first six months have seen AMS grow market share in the US with LiquiBand^® performing strongly. LiquiBand^® Fix8™, our innovative new surgical device currently used for Hernia Mesh Fixation, has also been well received with a strong uptake by surgeons internationally, highlighting not only the potential of our innovation at AMS but also our capabilities at navigating the regulatory approval pathway.

 

The strength of the underlying business and our strong financial position, combined with the opportunities we see from our innovative R&D pipeline, leads the Board to be optimistic about our longer term prospects and the potential for growth.”

 

– End –

 

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

2    All items are shown before amortisation of acquired intangible assets which, in 2015 H1, were £0.2 million (2014 H1: £0.2 million) as defined in the financial review

3    Operating cash flow is arrived at by taking the operating profit for the period and adjusting it for depreciation, amortisation, working capital movements and other non cash items

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

5    £0.2m of sutures for the dental market has been reclassified from the Branded Direct to the Branded Distributed segment.

 

 

For further information, please contact:

 

Advanced Medical Solutions Group plc	Tel: +44 (0) 1606 545508
Chris Meredith, Chief Executive Officer Mary Tavener, Group Finance Director
Consilium Strategic Communications	Tel: +44 (0) 20 3709 5700
Mary-Jane Elliott / Jonathan Birt / Matthew Neal / Hendrik Thys
Investec Bank plc (NOMAD) & Broker	Tel: +44 (0) 20 7597 5970
Gary Clarence / Daniel Adams / Patrick Robb

 

 

About Advanced Medical Solutions Group plc

 

AMS is a world-leading independent developer and manufacturer of innovative and technologically advanced products for the global surgical, wound care and wound closure markets, focused on quality outcomes for patients and value for payors. AMS has a wide range of products that include silver alginates, alginates, foams, tissue adhesives, sutures and haemostats, which it markets under its brands ActivHeal^®, LiquiBand^® and RESORBA^® 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 65 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 470 employees. For more information please see www.admedsol.com.

Chairman’s Statement

 

AMS is on track to deliver another year of good growth with strong performance in the first six months of the year. AMS’s brands continue to perform well and our partners continue to drive growth in our OEM business.

 

The Group is advancing the development of new products through its innovative Research and Development (R&D) team, building a pipeline which will support growth with our partners, distributors and our own sales teams. We launched our novel Hernia Mesh Fixation device LiquiBand^® Fix8™ in the second half of 2014 which was our first application using LiquiBand^® medical adhesive inside the body. The launch has been very positive with the product, which received approval for expanded use for all types of abdominal hernia as well as for the closure of the membrane lining the abdominal wall (peritoneum) in April 2015, and it is now being sold in 16 countries both through our own sales forces as well as through distributors.

 

We are also pleased that we have received CE mark approval in August 2015 for a new anti-microbial foam. This foam incorporates PHMB (polyhexamethylene biguanide), which has been shown to be effective against several bacteria and known hospital “super bugs” and strengthens AMS’s position in the antimicrobial foam market. This product will be launched for sale with our OEM partners and into the NHS through our direct sales team in the second half of the year.

 

Overall, revenue increased by 11% to £32.7 million (2014 H1: £29.4 million), representing growth of 14% at constant currency and adjusted profit before tax¹ increased by 13% to £8.2 milion (2014 H1: £7.3 million). The Group continues to generate cash and our net cash position has increased to £22.6 million as at 30 June 2015 (December 2014: £17.3 million).

 

With the strength of our cash position and the availability of a credit facility, we continue to evaluate and consider potential acquisitions that are in line with the Group’s growth strategy.  

 

Dividend

 

The Board intends to pay an interim dividend of 0.25p per share (2014 H1: 0.22p), an increase of 13.6%, on 30 October 2015 to shareholders on the register at the close of business on 2 October 2015.

 

People

 

On behalf of the Board, I would like to thank all Group employees for their continued hard work in the development of AMS as a global medical technology business, as well as our customers, suppliers, business partners and shareholders for their continued support.

 

Outlook

 

The Group continues to trade in line with current market expectations for the year ending 31 December 2015.

 

 

Peter Allen

Chairman

 

 

1      Adjusted profit before tax is adjusted for amortisation of acquired intangible assets

 

Chief Executive’s Review

 

I am pleased to report another period of good performance at AMS across the Group from both our established and new products.  Our position in the international marketplace continues to gain strength as we become more widely recognised as an established high quality provider, partner and innovator. 

 

Business Review

 

Branded Distributed

 

Branded Distributed revenue was 48% higher at £6.4 million (2014 H1: £4.3² million) and 52% higher at constant currency. £0.2m of sutures for the dental market, which would have been included in the Branded Direct business segment, are now being included in the Branded Distributed business segment, as this better reflects the nature of the sale. The prior year’s sales have been represented to aid comparison.

 

LiquiBand^® in the US

In the US our products are now demonstrating signs of more rapid market penetration with sales of LiquiBand^® increasing by 161% in the first half and by 139% at constant currency to £3.3 million (2014 H1: £1.3 million), with all of our distribution partners performing well. The launch of our 2-octyl cyanoacrylate formulation has extended our portfolio of products and has contributed to growth in sales in the first six months. We now have a range of cyanoacrylate formulations available that provide very fast wound closure as well as having film-forming capabilities that provide a barrier layer over wounds.  

 

Latest IMS data has our volume market share increasing to 9.5% in the US hospital sector while our volume market share in the US non-hospital or alternate site market is now an estimated 21.5%. We are pleased with the progress that we are making with LiquiBand^® in this market and we expect to see the recognition of the quality and value of our products to continue this positive trend.

 

LiquiBand^® in the EU and ROW

LiquiBand^® has also shown good growth in the EU and ROW. LiquiBand^® sales through our export distributors have continued to perform well and sales increased by 20% to £0.7 million (2014 H1: £0.6 million) at reported currency, by 20% at constant currency, with both the French and Dutch markets performing particularly strongly.

 

The regulatory approval process for LiquiBand^® in China is continuing, with the submission being reviewed by the Chinese FDA. Approval is targeted for early 2016.

 

Hernia Mesh Fixation device – LiquiBand^® Fix8™

This product was launched in the second half of 2014 and was the Group’s first application using our medical cyanoacrylate technology inside the body. LiquiBand^® Fix8™ is used to hold hernia meshes in place, potentially as part of all types of hernia repair surgery instead of traditional tacks and staples as well as for the closure of the membrane lining the abdominal wall (peritoneum).  We are now selling the product in fourteen countries through a number of distributors. Endorsement from surgeons has been positive and sales of £0.3 million have already been achieved through our distributors in the first six months (2014 H1: £nil). This is expected to further increase as awareness of the product and the significant benefits of its clinical use by surgeons, versus current applications, are more widely recognised. We expect to develop further opportunities for this kind of application, broadening the market for the use of adhesives internally. This is an important part of our strategy to increase our penetration of the Operating Room (“OR”) segment of the wound closure market.

 

RESORBA^® 

Sales of RESORBA^® products to all markets excluding Russia decreased by 8% at reported currency to £1.4 million (2014 H1: £1.5 million), but did grow by 1% at constant currency. Although good growth was seen in a number of territories including Italy this was offset by lower sales in China, Austria and Spain.

 

Sales into the Russian market, decreased 38% to £0.4 million (2014 H1: £0.6 million) at reported currency and by 6% at constant currency, reflecting both the weakness of the rouble and challenging

 

 

2    £0.2m of sutures for the dental market has been reclassified from the Branded Direct to the Branded Distributed segment.

market conditions. A number of hospital tenders have been delayed and Russian manufactured

products are being prioritised over imported ones.

 

 

Work continues to gain regulatory approval to supply RESORBA^® sutures into the US market. Whilst we received our first approval for the sale of one type of suture for the US market relatively quickly, the approval process of the remaining suture ranges continues. We expect to obtain approval for the remainder of the suture ranges before the end of the year enabling launch into the US thereafter.

 

Our R&D effort is focusing on extending the applications of tissue adhesives for internal use and improving the formulations that go into our adhesives.

 

 

Branded Direct

 

The reported revenue for the Branded Direct business unit was 3% lower at £11.1 million (2014 H1: £11.4³ million) but 4% higher at constant currency.

 

Overall, we are aiming to achieve higher sales growth from this business unit and, while there are some significant successes, there are areas where we are focused to improve our performance. As a result, we have invested in strengthening the management team with a number of key hires including a new Business Unit Director and a new National Sales Manager for Germany. We are also strengthening the UK sales team with a new UK Sales Manager for the OR.  

 

ActivHeal^®

Sales of our ActivHeal^® range of wound care dressings into the NHS were 7% ahead at £2.9 million (2014 H1: £2.7 million). The ActivHeal^® proposition of delivering significant cost savings, with uncompromised clinical outcomes and patient care, continues to appeal to NHS Trusts and hence we expect good growth to continue from this brand. We will also be broadening the product range being offered to the NHS by including our anti-microbial foam which has recently been approved for market.

 

LiquiBand^®

UK sales of LiquiBand^® into the Accident and Emergency Room (‘A&E’) decreased 9% to £1.1 million (2014 H1: £1.3 million) while sales into the OR increased 21% to £0.4 million (2014 H1: £0.3 million). LiquiBand^® Sales into the OR have been enhanced by the launch of LiquiBand^® Fix8™, while in the A&E, AMS is maintaining a market leadership position.

 

Our growth in the UK has been held back in the first six months as a result of some territories lacking sales force coverage and this is currently being addressed. Following a period of training we expect the new team to improve sales growth.

 

Sales of LiquiBand^® into Germany declined by 1% to £0.7 million (H1 2014: £0.7 million) but grew by 11% at constant currency with a good level of initial sales of LiquiBand^® Fix8™. Progress in Germany is expected to continue.  

 

RESORBA^®

Sales of RESORBA^® branded products into Germany and the Czech Republic reduced by 9% to £5.9 million (2014 H1: £6.6 million), but grew 2% at constant currency. Sales of haemostats increased by 3% at constant currency to £1.6 million and sales of sutures and collagens into the dental market grew 2% at £1.7 million.

 

We were pleased to win the contract to supply sutures to the Klinikum Darnstadt hospital in Southern Hesse, an academic teaching hospital with 960 beds, in March 2015. When fully converted, this contract will be worth approximately €0.2 million on an annualised basis. We expect to see the benefit of this contract from 2016.

 

R&D is focusing on extending the attributes of our collagens to meet the needs of dental practitioners and oral surgeons. We have developed an enhanced collagen cone which we expect to obtain market approval in Europe this year, as well as making good progress in including different antibiotics in our haemostats.

 

 

3    £0.2m of sutures for the dental market has been reclassified from the Branded Direct to the Branded Distributed segment.

 

OEM

 

OEM revenue increased by 14% at reported currency to £13.5 million (2014 H1: £11.8 million) and by 12% at constant currency. The management of this Business Unit has also been strengthened with a new Business Unit Director who joined the Group in August 2015.

 

Our silver alginate ranges of dressings continue to perform well with sales increasing by 17% at reported currency and by 14% at constant currency to £7.9 million (2014 H1: £6.8 million). We continue to support our partners with obtaining regulatory approvals to allow our products to be sold into new geographical markets.

 

Sales of our foam-based dressings remained flat at £0.7 million (2014 H1: £0.7 million) while our other woundcare products grew 19% to £4.6 million (£3.8 million) and by 16% at constant currency.

We obtained CE mark approval to market in Europe an antimicrobial foam including polyhexamethylene biguanide (PHMB) on 27 August 2015. PHMB has been shown to be effective against several bacteria including, amongst others, Staphylococcus Aureus including the methicillin resistant type, (MRSA) and Escherichia Coli (E-Coli). This PHMB Antimicrobial Foam Wound Dressing is indicated for use on moderate to heavily exuding chronic and acute wounds that are infected or are at risk of infection and may be used on pressure ulcers, leg and foot ulcers, diabetic ulcers and surgical wounds. Contracts are already in place with our OEM partners and this product is expected to launch in 2015.

R&D is further developing both our foam and our fibre product ranges. CE approval to market a further antimicrobial foam and an atraumatic foam in Europe is expected this year with product launches expected shortly thereafter.

 

 

Bulk Materials

 

Bulk Materials revenue decreased by 10% at reported currency to £1.7 million (2014 H1: £1.9 million) and by 1% at constant currency.

 

This business provides a key component for both our Branded Direct and OEM Business Unit. Work continues to develop new foam formulations such as our new antimicrobial foam that has recently been approved working with the OEM Business Unit.

 

 

Operations

 

Operational improvements continue to be made through both our efficient manufacturing initiatives and through our Total Productive Maintenance Programs (TPM) with a continuous improvement cycle of reducing set up times, eliminating non-value added activities and increasing outputs. These incremental changes are helping to improve gross margins across the Group. We have also identified some areas where additional capital is needed to provide equipment for extra operational flexibility or to increase capacity to take advantage of further commercial opportunities.  This investment totalled £0.5m in the first half of 2015. We will also be investing around £0.7 million on plant and equipment in Germany over the next twelve months to increase our collagen production capacity.

 

Summary and outlook

 

The first half of 2015 has seen another good performance by the Group and we are confident of meeting current market expectations for the full year. The strength and efficiencies of the underlying business and our strong financial position, combined with the opportunities we see from our innovative R&D pipeline, lead the Board to be optimistic about our long term prospects and the potential for further growth.

 

 

 

 

 

 

 

Financial Review

 

Summary

 

Revenue increased by 11.1% to £32.7 million (2014 H1: £29.4 million). At constant currency, revenue growth would have been 13.7%.

 

Amortisation of acquired intangible assets was £0.2 million in the six month period (2014 H1: £0.2 million).

 

Comparisons with 2014 are made on a pre-amortisation of acquired intangible asset cost basis, as we believe that this provides a more relevant representation of the Group’s trading performance. To aid comparison, the Group’s adjusted income statement is summarised in Table 1 below.

 

Table 1	Six months ended 30 June 2015	Six months ended 30 June 2014
Adjusted Income Statement	£’000	£’000	Change
Revenue	32,713	29,440	11.1%
Gross profit	19,036	16,840	13.0%
Distribution costs	(408)	(381)
Administrative expenses4	(10,715)	(9,377)
Other income	319	142
Adjusted operating profit	8,232	7,224	14.0%
Net finance (costs)/ income	(31)	27
Adjusted profit before tax	8,201	7,251	13.1%
Amortisation of acquired intangibles	(186)	(197)
Profit before tax	8,015	7,054	13.6%
Tax	(1,354)	(1,090)
Profit for the period	6,661	5,964	11.7%
Adjusted earnings per share – basic5	3.29p	2.97p	10.8%
Earnings per share – basic5	3.20p	2.88p	11.1%
Adjusted earnings per share – diluted5	3.23p	2.92p	10.6%
Earnings per share – diluted5	3.15p	2.82p	11.7%

4    Administration expenses exclude amortisation of acquired intangible assets

5    see Note 4 Earnings per share for details of calculation

 

Across the Group gross margins improved by 100 bps to 58.2% (2014 H1: 57.2%).

 

Adjusted operating profit increased by 14.0% to £8.2 million (2014 H1: £7.2 million) and the adjusted operating margin increased by 70bps to 25.2% (2014 H1: 24.5%).

 

Adjusted diluted earnings per share increased by 10.6% to 3.23p (2014 H1: 2.92p) and diluted earnings per share increased by 11.7% to 3.15p (2014 H1: 2.82p).

 

The Group generated profit from operations of £8.0 million (2014 H1: £7.0 million) and had net cash of £22.6 million at the half year end (2014 H1: £10.2 million).

 

The Group has a strong balance sheet enabling financing of further organic growth and appropriate acquisitions.

 

 

Income Statement

 

The operational performance of the business units is shown in Table 2 below. The adjusted profit from operations and the adjusted operating margin are shown after excluding amortisation of acquired intangibles.

 

Table 2
Operating result by business segment
Six months ended 30 June 2015			Branded distributed	Branded direct	OEM	Bulk materials
			£’000	£’000	£’000	£’000
Revenue			6,4117	11,1107	13,515	2,1406
Profit from operations			1,640	2,845	3,616	270
Amortisation of acquired intangibles			58	119	9	–
Adjusted profit from operations7			1,698	2,964	3,625	270
Adjusted operating margin7			26.5%	26.7%	26.8%	12.6%
Six months ended 30 June 2014
Revenue			4,3407	11,3977	11,831	2,269
Profit from operations			840	3,179	3,194	223
Amortisation of acquired intangibles			61	126	10	–
Adjusted profit from operations8			901	3,305	3,204	223
Adjusted operating margin8			20.8%	29.0%	27.1%	9.8%

6    Revenue includes intersegment sales. See Note 5

7    £0.2m of sutures for the dental market has been reclassified from the Branded Direct to the Branded Distributed segment

8    Excludes amortisation of intangible assets

Expenses relating to non-executive Directors and plc costs are not allocated to business units and are included within unallocated expenses.

 

 

Branded Distributed

Branded Distributed revenues increased by 47.7% to £6.4 million (2014 H1: £4.3 million) and by 51.7% at constant currency, with sales of LiquiBand^® into the US being the main driver of growth.

 

Adjusted operating margin increased by 570 bps to 26.5% from the increase in sales while investment in our US sales & marketing team to support our partners has continued. R&D expense was 4.5% of revenues (2014 H1: 8.0%) with expenditure in this segment being incurred on projects to improve our base monomer formulation for our tissue adhesives as well as extending the claims for the use of our tissue adhesives internally.

 

Branded Direct

Branded Direct revenues decreased by 2.6% to £11.1 million (2014 H1: £11.4 million) but increased by 4.0% at constant currency, with sales of ActivHeal^® driving growth in the UK and RESORBA^® brands supporting growth in Germany and Czech Republic. Fee income of £0.1 million was received from the licensing of Intellectual Property to third parties (2014 H1: £0.1 million).

 

Adjusted operating margin decreased by 230bps to 26.7%, due partly to a change in sales mix but mainly as a result of investment in strengthening our commercial teams as well as investment in our Quality systems compared with the prior year and costs in obtaining regulatory approval for sutures in the US. R&D expense in this segment was 3.1% of revenue (2014 H1: 2.9%) on projects to develop improved collagens.

 

OEM

OEM revenues increased by 14.2% to £13.5 million (2014 H1: £11.8 million) and by 11.5% at constant currency. R&D expense was 3.6% of revenues (2014 H1: 4.0%) with spend being incurred on  projects to improve our range of foams, with a particular focus on products with antimicrobial properties. These projects are being worked on jointly with the Bulk Materials division.

 

Adjusted operating margin reduced by 30 bps to 26.8% (2014 H1: 27.1%), mainly as a result of sales mix.

 

Bulk Materials

Bulk material revenues, excluding intercompany sales, reduced by 10.4% to £1.7 million (2014 H1: £1.9 million) at reported currency and decreased by 1.1% at constant currency. The adjusted operating margin including intercompany sales increased to 12.6% (2014 H1: 9.8%), resulting from the change in sales mix.

 

Geographic breakdown of revenues

The geographic breakdown of Group revenues in 2015 is set out in note 5. Overall, less than 40% of revenues are in Euros as the UK still invoices in Sterling to most of its European partners, and nearly all sales to the US are invoiced in US dollars. The Group’s policy is to set up natural hedges where possible and to hedge transactional risk. The Group estimates that a 10% movement in the £:US$ or £:Euro exchange rate will impact Sterling revenues by approximately 2% and 3% respectively and, in the absence of any hedging, this would result in an impact on profit of 0.9% and 0.4% respectively.

 

Profit before tax

Profit before tax for the six months was 13.6% higher at £8.0 million (2014 H1: £7.1 million).

 

The Group’s effective rate of tax for the six months was 16.9% (2014 H1: 15.5%). This is reflective of the recognition of previously unrecognised brought forward tax losses in the UK, R&D relief and the continued impact of the phased introduction of the patent box relief scheme. It also reflects the blend of profits and losses from different countries and the different tax rates associated with each of these countries.

 

Profit after tax and earnings per share

Adjusted profit after tax increased by 11% to £6.8 million (2014 H1: £6.2 million), resulting in an 11% increase in adjusted basic earnings per share to 3.29p (2014 H1: 2.97p) and an 11% increase in diluted adjusted earnings per share to 3.23p (2014 H1: 2.92p).

 

Profit after tax increased 12% to £6.7 million (2014 H1: £6.0 million), resulting in an 11% increase in basic earnings per share to 3.20p (2014 H1: 2.88p) and an 12% increase in diluted earnings per share to 3.15p (2014 H1: 2.82p).

 

Dividend per share

The Board intends to pay an interim dividend of 0.25p per share on 30 October 2015 to shareholders on the register on 2 October 2015. This is an increase of 13.6% compared with the first half of 2014.

 

 

Cash Flow and Balance Sheet

 

Table 3 summarises the Group cash flows.

 

Table 3	Six months ended 30 June 2015	Six months ended 30 June 2014
Cash Flow	£’000	£’000
Adjusted operating profit (Table 1)	8,232	7,224
Non-cash items	1,453	1,360
Adjusted EBITDA9	9,685	8,584
Working capital movement	(1,740)	(1,423)
Operating cash flow	7,945	7,161
Capital expenditure and capitalised R&D	(1,087)	(866)
Net Interest (expense) / income	(33)	25
Tax	(689)	(929)
Free cash flow	6,136	5,391
Dividends paid	(999)	(850)
Proceeds from share issues	267	9
Exchange (losses) / gains	(68)	364
Net increase in cash and cash equivalents	5,336	4,914

9    Adjusted EBITDA is earnings before interest, tax, depreciation, intangible asset amortisation and share based payments

 

The Group had an operating cash flow of £7.9 million (2014 H1: £7.2 million) and a conversion of adjusted operating profit into free cash flow of 75% (2014 H1: 75%).

 

Working capital increased by £1.7 million in the period. Inventory increased by £0.9 million in the first six months with months of supply being 4.7 (2014 H1: 4.7 months). Trade receivables increased by £0.5 million in line with the growth of the business with debtor days at 47 (2014 H1: 45 days). Trade payables reduced by £0.3 million.

 

We have invested £1.0 million in capital equipment and software in the first six months (2014 H1: £0.6 million). The major areas of spend have been in upgrading equipment around the Group and the project spend on Quality Documentation Systems. £0.1 million of R&D spend has been capitalised (2014 H1: £0.2 million). No development costs were impaired in the period (2014 H1: none).

 

The Group agreed a new, five-year, £30 million, multi-currency, revolving credit facility in December 2014 with an accordion option under which AMS can request up to an additional £20 million on the same terms.  The new facility is provided jointly by the Group’s existing bank HSBC, as well as The Royal Bank of Scotland PLC and replaces the previous £4 million facility.  It is unsecured on the assets of the Group and is currently undrawn. 

 

Net taxation of £0.7 million was paid which is in line with the Group’s profitability within the tax jurisdictions in which it operates.  We have some net tax losses within the UK subsidiaries which it is estimated will be utilised by the end of the next financial year.

 

The Group paid its final dividend for the year ended 31 December 2014 of £1.0 million (2014 H1: £0.9 million) on 29 May 2014.

 

The Group had a free cash flow of £6.1 million in the period (2014 H1: £5.4 million), with a net increase in cash equivalents of £5.3 million (2014 H1: £4.9 million increase).

 

At the end of the period, the Group had net cash¹⁰ of £22.6 million (2014 H2: net cash¹⁰ of £10.2 million), an increase of £5.3 million since 31 December 2014. The movement in net cash during the first half of 2015 is reconciled in Table 4 below:

 

Table 4
Movement in net cash10	£’000
Net cash as at 1 January 2015	17,280
Exchange rate impacts	(68)
Free cash flow	6,136
Dividends paid	(999)
Proceeds from share issues	267
Net cash as at 30 June 2015	22,616

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

 

The Group’s going concern position is fully described in note 11 and the Group had no borrowings in the period.