Half Yearly Report

Sep 11, 2013

Advanced Medical Solutions Group plc
(“AMS” or the “Group”)

RNS Number : 6825N
Advanced Medical Solutions Grp PLC
11 September 2013
 




11 September 2013

 

Advanced Medical Solutions Group plc

(“AMS” or the “Group”)

 

Interim Results for the six months ended 30 June 2013

 

Winsford, UK: Advanced Medical Solutions Group plc (AIM: AMS), the global medical technology company, today announces its interim results for the six months ended 30 June 2013.

 

Financial Highlights:

·      Group revenue up 11% to £27.4 million (2012 H1: £24.8 million), or 9% on a constant currency basis¹

·      Adjusted2 operating margin up 60 bps to 23.8% (2012 H1: 23.2%)

·      Adjusted2 profit before tax up 15% to £6.2 million (2012 H1: £5.4 million)

·     profit before tax up 33% to £6.0 million (2012 H1: £4.5 million)

·      Adjusted2 diluted earnings per share up 14% to 2.59p (2012 H1: 2.27p)

·     diluted earnings per share up 33% to 2.49p (2012 H1: 1.87p)

·      Net operating cash flow3 of £5.1 million (2012 H1: £5.0 million)

·      Net debt reduced to £2.6 million (31 December 2012 : £5.5 million)

·      Interim dividend of 0.19p per share (2012 H1: 0.17p), an 11.8% increase

 

Business Highlights:

·      Reorganisation of the Group into four Business Units already delivering results

·      Progress in the US with LiquiBand® tissue adhesive range

·     market share by volume increased to 17% in the alternate site segment and unchanged at around 4% in the hospital segment

·     FDA clearance in June 2013 for 2-octyl cyanoacrylate tissue adhesive enhances range

·     further distribution partnership agreements signed

·      ActivHeal® continues to make progress in the NHS, with a 25% increase in revenues compared with 2012 H1

·      Steady progress with RESORBA® brands, resulting in 4% growth in Germany to £6.7 million

·     sales of haemostats to hospitals grew 17% following expansion of product range

·     direct sales of sutures and cones for dental surgery increased 11%

·      Silver alginate growth continues with a 28% increase over 2012 H1

·      Board strengthened with the appointment of Peter M. Steinmann as Non-Executive Director

 

Subsequent Events:

 

·      Approval to market LiquiBand® in Russia received 6 September 2013

 

Commenting on the results Dr. Don Evans, Chairman of AMS, said:

 

“The first half of 2013 has seen another good performance by the Group, with the benefits of our reorganisation already producing results, including another double-digit increase in revenues, further operating margin improvements and strong rises in profitability. Our strong cash flow generation should also enable us to have net funds by the year end.”

 

“With further growth expected from our Branded Direct and OEM businesses, together with anticipated stronger progress in both Branded Distributed and Bulk Materials in the second half, we are confident of meeting current market expectations for the full year. The strength of the underlying business, combined with the opportunities we see from our R&D pipeline, lead the Board to be optimistic about our long term prospects.”

 

– 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 exceptional items which, in 2013 H1, were £nil million (2012 H1: £0.6 million) and before amortisation of acquired intangible assets which, in 2013 H1, were £0.2 million (2012 H1: £0.2 million) as defined in the financial review

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

 

 

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

 

Advanced Medical Solutions Group plc

Tel: +44 (0) 1606 545508

Chris Meredith, Chief Executive Officer

Mary Tavener, Group Finance Director




Tavistock Communications

Tel: +44 (0) 20 7920 3150

John West / Chris Munden / Andrew Dunn




Investec Bank plc (NOMAD)

Tel: +44 (0) 20 7597 5970

Gary Clarence / Daniel Adams / Patrick Robb


 

 

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

 

Founded in 1991, AMS is a leader in the development and manufacture of innovative and technologically advanced products for the US$20 billion global wound care and wound closure market. Through a mix of organic development and a number of acquisitions, AMS now has a wide range of products based on technologies that include alginates, silver alginates, foams, collagens, cyanoacrylate adhesives and sutures.

 

AMS manufactures wound care products for an extensive list of Original Equipment Manufacturer (“OEM”) customers around the world, but the majority of the Group’s revenues now come from its own brands – ActivHeal® wound care products in the UK to the NHS, LiquiBand® cyanoacrylate products primarily in the UK, Europe and the USA, and RESORBA® sutures and haemostat  products primarily in Europe. AMS develops innovative products from its R&D pipeline which it commercialises globally, either directly or through partnerships with its OEM customers.

 

AMS’s products are sold globally via a network of regional or multinational partners and distributors, as well as via AMS’s own direct sales forces in the UK, Germany, the Czech Republic and Russia.

 

With 450 employees operating under four distinct business units (Branded Direct, Branded Distributed, OEM and Bulk Materials) that match its multiple products and routes-to-market, AMS’s products are manufactured from two sites in the UK, one in the Netherlands, two in Germany and one in the Czech Republic.

 

 

 

 

Chairman’s Statement

 

Introduction

 

I am pleased to report that AMS has performed well in the first half of 2013 and that we are on track to deliver another year of good growth for the Group.

 

Financial Highlights

 

Reported Group revenue was up 11% to £27.4 million. At constant currency, revenue increased by 9%.

 

Adjusted operating margin increased by 60 bps to 23.8% (2012 H1: 23.2%) as the Group continues to make operational improvements. After net finance costs of £0.4 million (2012 H1: £0.4 million), adjusted profit before tax increased by 15% to £6.2 million (2012 H1: £5.4 million).

 

Adjusted diluted earnings per share¹ increased by 14% to 2.59p (2012 H1: 2.27p) and diluted earnings per share¹ increased by 33% to 2.49p (2012 H1: 1.87p).

 

With continuing strong cash generation, the Group reduced its net debt at 30 June 2013 to £2.6 million (2012 H1: net debt of £10.6 million) and expects to have net funds by the end of 2013.

 

1 Adjusted basic earnings per share and adjusted diluted earnings per share are described in Note 4

 

Key Achievements

 

The reorganisaton of the Group into four Business Units is proving successful in delivering benefits to Group performance.

 

The Branded Direct business has continued to develop the ActivHeal® brand and has achieved a 25% increase in revenues through range extension and by winning new NHS Trusts. The new UK surgical sales team is also starting to see results, with LiquiBand® now being sold into Operating Rooms in the UK, and the German sales team has seen particular success with its range of RESORBA® branded haemostats which include RESORBA®’s collagen technology.

 

The Branded Distributed business has had a steady start to the year. In the US, LiquiBand®‘s market share by volume has increased to 17% in the alternate site segment and we are pleased with the progress being made by our partner. In the hospital segment, our market share by volume has remained unchanged at around 4%. Following the FDA clearance in June 2013 for our 2-octyl cyanoacrylate tissue adhesive, we are completing further clinical studies that will allow us to make enhanced claims for this product. We have agreed terms with a distribution partner and expect this product to launch later this year. We expect to see growth in this segment from this launch and from our existing distributorship agreements.

 

The OEM business is progressing well with 14% growth over 2012 H1. Our ranges of silver alginate products have grown 28% compared with the first six months of 2012, with new geographical markets being accessed. New agreements have also been put in place with partners for our trilaminate foam dressing range, with launches agreed for the second half of the year.

 

The Bulk Materials business has seen modest growth in the first six months with orders from existing partners not at the level we would have anticipated, although an increase in sales is still expected this year. Agreements have also been signed with new partners which we expect to deliver sales in H2.

 

Dividend

 

The Board intends to pay an interim dividend of 0.19p per share (2012 H1: 0.17p), an increase of 11.8%, on 1 November 2013 to shareholders on the register at the close of business on 4 October 2013.

 

Board

We were pleased to welcome Peter M. Steinmann to the Board, who joined as a Non-Executive Director on 1 July 2013. Peter has extensive commercial experience and knowledge of the global medical devices market and will provide valuable counsel as the Group continues to expand into new markets.

 

As I indicated in the Report & Accounts for 2012 I intend to retire as Chairman this year. The process of recruiting my replacement is ongoing and we expect to make an announcement before the end of the year.

 

Employees

 

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

 

Outlook

 

I am pleased to inform shareholders that the Group continues to trade in line with current market expectations for the full year of 2013.

 

Our Branded Direct business continues to grow, with ActivHeal® and the RESORBA® brands performing strongly; we expect this to continue in the second half of 2013. LiquiBand®‘s growing presence in the US, together with the launch of our extended range of tissue adhesives, is expected to drive second half growth in the Branded Distributed business. Revenues from our OEM business partners continue to do well, with sales of silver alginate and our converted foam dressing ranges supporting growth. We also expect our Bulk Materials business to return to growth in the second half.

 

Looking ahead, we believe there are further opportunities for tissue adhesives in the US and that we have yet to exploit fully the export opportunities with our RESORBA® products. Approval of our hernia mesh fixation device for Europe is now expected in early 2014 and will provide us with another product offering to help strengthen our growing presence in the Operating Room.

 

The Group’s prospects remain excellent and we look forward to the future with confidence.

 

Dr. Don W. Evans

Chairman

 

 

 

 

Business Review

 

Branded Direct

 

Branded Direct revenue was 11% higher at £11.0 million (2012 H1: £9.9 million) and 9% higher at constant currency.

 

ActivHeal®

Sales of our ActivHeal® range of wound care dressings into the NHS were 25% ahead at £2.5 million (2012 H1: £2.0 million). Sales growth has been achieved through a combination of existing hospitals using ActivHeal® as a product of first choice, existing hospitals taking a broader range of dressings and some Primary Care Trusts taking some of the ActivHeal® range for the first time. In particular, our new range of foam dressings and our reinforced aquafiber dressings are generating considerable interest. We have also received notice that our Northern Ireland woundcare contract has been extended until 31 January 2016.

 

The ActivHeal® proposition of delivering significant cost savings without compromising clinical outcome or patient care continues to appeal to NHS Trusts and hence we expect good growth to continue from this brand.

 

LiquiBand®

LiquiBand® sales in the UK increased by 14% to £1.4 million (2012 H1: £1.2 million). Sales into the Accident and Emergency Room grew at 4%, reflecting the significant market share already taken by LiquiBand® in this area. Growth has mainly been achieved by our new surgical sales team who are able to access the Operating Room with our extended range of products that now include haemostats and sutures. This is an area which offers much potential.

 

While it can take some time for new products such as our RESORBA® haemostats and sutures to be fully evaluated by a UK Hospital Trust, we are already seeing sales of LiquiBand®, which is better known, for use in surgical applications. To exploit this opportunity better, we have hired a manager to drive our UK surgical sales force and have set up a small training team that will work across the Group supporting our sales personnel with product training.

 

Sales of LiquiBand® into Germany grew by 4% which was lower than we expected. 

 

RESORBA®

Sales into the German domestic market grew by 6% to £6.7 million (2012 H1: £6.3 million), and by 4% at constant currency. Within this, sales of haemostats increased by 17% to £1.7 million, helped by the launch of new products that have been added to the range, and there was an 11% increase to £2.0 million in sales of sutures and dental cones into the dental market. Going forward, the sales team in Germany is being strengthened by the addition of a manager who will be responsible for negotiating with the large buying groups in Germany, who are becoming increasingly important.

 

In the UK, there has so far only been a low level of sales of RESORBA® sutures and haemostats, although several significant evaluations are ongoing. We expect growth to be steady and to build as the NHS becomes more familiar with the RESORBA® brand.

 

Research and Development (R&D) is focusing on extending the attributes of our collagens to meet the needs of dental practitioners and oral surgeons.

 

Branded Distributed

 

Branded Distributed revenue was 5% higher at £3.5 million (2012 H1: £3.3 million) and 3% higher at constant currency.

 

LiquiBand® in the US

LiquiBand® has increased its volume market share in the US non-hospital or alternate site market to an estimated 17%, demonstrating that, with the right partner, LiquiBand®‘s combination of technical superiority and price competitiveness is able to take market share from the leading brand.

 

In the hospital sector, which is the dominant part of the US tissue adhesive market, our volume market share has remained flat at around 4%. To address this, we have signed further partnership agreements with major distributors that will give us national reach in the US, as well as enhancing our tissue adhesive range with an octyl formulation of cyanoacrylate. We received FDA clearance for our 2-octyl cyanoacrylate on 3 June 2013 and are currently completing some clinical studies that will allow us to launch this product with enhanced claims later in the year with a partner that is focused on the acute care sector. We will now be able to offer a full range of tissue adhesives, with butyl cyanaoacrylate formulations that are fast-setting and are particularly appropriate for closing wounds, as well as more film-forming adhesives based on octyl formulations that lend themselves more to liquid bandage applications.

 

Sales of LiquiBand® to the US increased by 2% in the first half to £0.8 million at both reported and constant currency. We expect, however, to report better progress in the US market for the full year.

 

LiquiBand® in the EU and ROW

Within the EU and ROW, LiquiBand® sales through our export distributors have performed well and sales increased by 27% to £0.6 million (2012 H1: £0.5 million) at both reported and constant currency.

 

In Russia, the regulatory approval process for LiquiBand® was slightly delayed as a result of procedural changes within Roszdravnador, the Russian Ministry of Health, however, approval has now been received on 6 September. A number of small tenders have already been won and the product is eagerly awaited.

 

Regulatory approval for LiquiBand® in China is progessing to plan and is expected in 2014.

 

Hernia mesh fixation device

Work continues on obtaining approval for the hernia mesh fixation device for the European market. Due to a minor change of the applicator, there will be a slight delay in the submission process and it is more likely that approval will be received in 2014 Q1.

 

RESORBA® sutures and dental products

Sales of sutures and dental products grew by 5% at constant currency to £2.1 million (2012 H1: £1.9 million), and by 7% at reported currency. Growth was seen across most territories, with our Chinese distributor performing strongly. Several new distributorships have been agreed, enabling products to be sold into a number of Asian markets with launch sales expected in the second half of the year.

 

Sales into the Russian market were down by 4% at constant currency and by 1% at reported currency to £0.7 million (2012 H1: £0.7 million). Supply of products had been temporarily disrupted due to a requirement to re-register all products with the Russian regulatory body. This process has now been completed and growth is expected to resume.

 

Work is also ongoing to gain approval to supply RESORBA® sutures and haemostats into the US market. We expect approval to be received by mid 2014 and to be able to launch products with a partner shortly thereafter.  

 

OEM

 

The OEM business increased by 14% at constant and reported currency to £10.7 million (2012 H1: £9.4 million).

 

Good growth has been seen in our sales of advanced woundcare products to our OEM partners. Our silver alginate ranges of dressings increased by 28% at constant currency and by 29% at reported currency to £5.8 million (2012 H1: £4.5 million), with our partners continuing to take market share from the market leader and also taking products into new markets such as the Middle East.

 

New contracts have also been agreed to supply our range of trilaminate foam dressings throughout Europe, with sales expected in the second half of 2013.

 

The Group has been the subject of some extensive regulatory audits by a number of overseas bodies, including evaluations from both Brazil and South Korea. Having successfully passed all these audits, we are now able to supply a comprehensive range of products into these territories.

 

This business unit is further developing our foam range to include an antimicrobial foam, which is expected to launch in the US before the end of the year and in Europe in the first half of 2014.

 

Bulk Materials

 

Bulk Materials revenues increased by 2% at constant currency and reduced by 1% at reported currency to £2.2 million (2012 H1: £2.2 million).

 

The foam rollstock business has yet to see significant repeat orders following the pipe-line filling that occurred in 2011 as a result of a customer’s product launches. We still expect to see product re-orders from this customer in the current year. In addition, a number of new contracts have also been agreed with other customers, which should underpin business in the current year.

 

In terms of R&D, this business unit continues to focus on developing new foam formulations with antimicrobials, working in conjunction with the OEM business unit. 

 

Operations

 

Continuous improvements in operations across the Group are enabling AMS to meet the increased production volumes needed for growth without significant capital expenditure being required. Our new Group head of Quality and Regulatory started at the beginning of May and is streamlining quality and regulatory processes across our various sites to bring them under one Group standard that meets European CE marking and US FDA medical device regulation requirements.

 

Across the business, we have been investing in improving our ERP (Enterprise Resource Planning) management and reporting systems. Following a successful launch at our Plymouth site, our new ERP system is being extended to both Winsford and Etten Leur, with Winsford expected to launch in 2014 Q1 and Etten Leur in 2014 Q3.

 

Financial Review

 

Summary

 

Revenue increased by 11% to £27.4 million (2012 H1: £24.8 million). At constant currency (that is re-translating the current period’s performance at the previous period’s exchange rates), revenue growth would have been 9%.

 

The Group had no exceptional items in the first half of 2013 (2012 H1: £0.6 million exceptional costs). Amortisation of acquired intangible assets was £0.2 million in the six month period (2012 H1: £0.2 million).

 

Comparisons with 2012 are made on a pre-exceptional, pre-amortisation of acquired intangible asset cost basis as we believe that this provides a fairer 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 2013

Six months ended

30 June 2012


Adjusted Income Statement

£’000

£’000

Change

Revenue

27,392

24,766

10.6%

Gross profit

15,644

13,691

14.3%

Distribution costs

(324)

(277)


Administration expenses2

(8,882)

(7,743)


Other income

90

82


Adjusted operating profit

6,528

5,753

13.5%

Net finance costs

(361)

(403)


Adjusted profit before tax

6,167

5,350

15.3%

Amortisation of acquired intangibles

(200)

(242)


Exceptional items

(610)


Profit before tax

5,967

4,498

32.7%

Tax

(778)

(638)


Profit for the period

5,189

3,860

34.4%

Adjusted earnings per share – basic3

2.63p

2.31p

13.9%

Earnings per share – basic3

2.53p

1.89p

33.9%

Adjusted earnings per share – diluted3

2.59p

2.27p

14.1%

Earnings per share – diluted3

2.49p

1.87p

33.2%

2Administration expenses exclude exceptional items and amortisation of acquired intangible assets

3 See Note 4 Earnings per share for details of calculation

 

Gross margin improved by 180 bps to 57.1% (2012 H1: 55.3%), with improvements arising from operational efficiencies at both the Winsford and Etten Leur sites.

 

Adjusted operating profit increased by 13% to £6.5 million (2012 H1: £5.8 million) and the adjusted operating margin increased by 60 bps to 23.8% (2012 H1: 23.2%).

 

Adjusted diluted earnings per share increased by 14% to 2.59p (2012 H1: 2.27p) and diluted earnings per share increased by 33% to 2.49p (2012 H1: 1.87p).

 

The Group generated net cash from operating activities of £6.3 million (2012 H1: £4.9 million) and had net debt of £2.6 million at the half year end (2012 H1: net debt of £10.6 million).

 

The Group expects to have net funds by the end of 2013 and to have repaid the debt element of the funding raised to acquire RESORBA® at the end of 2011 within two years. This will leave the Group with 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. Exceptional expenses are not allocated to business units and are included within unallocated expenses.

 

Table 2

Operating result by business segment

Six months ended 30 June 2013

Branded Direct

Branded Distributed

OEM

Bulk Materials


£’000

£’000

£’000

£’000

Revenue

11,001

3,465

10,743

2,571

Profit from operations

2,906

574

2,541

518

Amortisation of acquired intangibles

125

56

19

Adjusted profit from operations4

3,031

630

2,560

518

Adjusted operating margin4

27.6%

18.2%

23.8%

20.1%

Six months ended 30 June 2012





Revenue

9,881

3,289

9,397

2,371

Profit from operations

2,684

439

2,183

235

Amortisation of acquired intangibles

157

68

17

Adjusted profit from operations4

2,841

507

2,200

235

Adjusted operating margin4

28.8%

15.4%

23.4%

9.9%

4 Excludes amortisation of intangible assets

 

Branded Direct

Branded Direct revenues increased by 11% to £11.0 million (2012 H1: £9.9 million) and by 9% at constant currency, with sales of ActivHeal® and Liquiband® driving growth in the UK, and sales of haemostats and sales of products into the dental market in Germany compensating for the lower growth of sutures in the German domestic market. Fee income of £0.1 million was received from the licensing of Intellectual Property to third parties (2012 H1: £0.1 million).

 

Adjusted operating margin decreased by 120 bps to 27.6% as increased investment was made in the surgical sales team in the UK and in training support for the national sales teams. R&D expense was 3.4% of revenue (2012 H1: 2.9%) on projects to develop improved collagens.

 

Branded Distributed

Branded Distributed revenues increased by 5% to £3.5 million (2012 H1: £3.3 million) and by 3% at constant currency, with export sales of RESORBA® products through distributors being the main driver of growth.

 

Adjusted operation margin improved by 280 bps to 18.2% mainly as a result of sales mix, with a reduction in sales in Russia where margins are lower than the rest of the business unit. R&D expense was 5.9% of revenues (2012 H1: 7.6%) with work on the hernia mesh fixation device being the major project. A further £0.1 million of R&D spend was capitalised in the period.

 

OEM

OEM revenues increased by 14% to £10.7 million (2012 H1: £9.4 million) and by 14% at constant currency. R&D expense was 3.3% of revenues (2012 H1: 4.4%) with spend being incurred on a number of projects to improve our range of foams. These projects are being worked on jointly with the Bulk Materials division.

 

Adjusted operating margin improved by 40 bps to 23.8% (2012 H1: 23.4%) due to operational efficiencies from increased volumes of production.

 

Bulk Materials

Bulk material revenues, excluding intercompany sales, reduced by 1% to £2.2 million (2012 H1: £2.2 million) at reported currency and increased by 2% at constant currency, with adjusted operating margin, including intercompany sales, improving markedly to 20.1% (2012 H1: 9.9%). A number of improvements have been made to the foam process in Etten Leur which is now resulting in significantly improved operating margins. R&D expense was 2.9% of revenue (2012 H1: 2.8%) with projects ongoing to add antimicrobials to our base foam products.

 

Geographic breakdown of revenues

The geographic breakdown of Group revenues in 2013 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.

 

Profit before tax

Profit before tax for the period was 33% higher at £6.0 million (2012 H1: £4.5 million).

 

The Group’s effective rate of tax for the six months was 13% (2012 H1: 14.2%). This is reflective of the recognition of previously unrecognised brought forward tax losses in the UK, R&D relief and the impact of the introduction of the patent box relief scheme. It also reflects the impact of blending profits and losses from different countries and the different tax rates associated with these countries. By the end of 2013 all the trading losses in the UK will have been recognised.

 

Profit after tax and earnings per share

Adjusted profit after tax5 increased by 14% to £5.4 million (2012 H1: £4.7 million), resulting in a 14% increase in adjusted basic earnings per share to 2.63p (2012 H1: 2.31p) and a 14% increase in diluted adjusted earnings per share to 2.59p (2012 H1: 2.27p).

 

Profit after tax increased by 34% to £5.2 million (2012 H1: £3.9 million), resulting in a 34% increase in basic earnings per share to 2.53p (2012 H1: 1.89p) and a 33% increase in diluted earnings per share to 2.49p (2012 H1: 1.87p).

 

 

5 Adjusted profit after tax excludes amortisation of acquired intangibles

 

Dividend per share

The Board intends to pay an interim dividend of 0.19p per share on 1 November 2013 to shareholders on the register on 4 October 2013. This is an increase of 11.8% compared with 2012 H1.

 

Cash Flow and Balance Sheet

 

Table 3 summarises the Group cash flows.

 

Table 3

Six months ended

30 June 2013

Six months ended

30 June 2012

Cash Flow

£’000

£’000

Adjusted operating profit (Table 1)

6,528

5,753

Non-cash items

1,501

1,114

Adjusted EBITDA6

8,029

6,867

Working capital movement

(2,946)

(1,275)

Operating cash flow before exceptional items

5,083

5,592

Exceptional items

(610)

Operating cash flow after exceptional items

5,083

4,982

Capital expenditure and capitalised R&D

(1,181)

(1,324)

Net interest

(210)

(403)

Tax

351

(121)

Free cash flow

4,043

3,134

Financing

(6,764)

(1,550)

Dividends paid

(712)

(617)

Proceeds from share issues

266

142

Exchange losses

(55)

(622)

Net (decrease)/increase in cash and cash equivalents

(3,222)

487

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

 

The Group had an operating cash flow before exceptional items of £5.1 million (2012 H1: £5.6 million) and a conversion of adjusted operating profit into free cash flow of 62% (2012 H1: 54%).

 

Working capital increased by £2.9 million in the period. Inventory increased by £2.1 million to 4.6 months of supply (2012 H1: 3.9 months). This increase of inventory has occurred in Winsford to meet anticipated sales to OEM partners and the increasing demand for ActivHeal® products. Trade receivables increased by £0.2 million, with debtor days at 42 (2012 H1: 41 days). Trade payables reduced by £0.6 million.

 

We have invested £0.8 million in capital equipment and software in the first six months (2012 H1: £1.0 million) with spend incurred in upgrading business information systems. £0.4 million of R&D spend has been capitalised (2012 H1: £0.3 million). In addition, the Group has taken a £0.3 million impairment of development costs for a product that the Group now does not expect to commercialise successfully.

 

Finance costs of £0.2 million have been paid on our €25 million term loan facility and the availability of the £8 million revolving credit facility with HSBC.

 

A taxation refund of £0.4 million has been received as a result of the fiscal merger of the German group of companies completed in 2012, and an overpayment on account arising under the previous tax grouping. This has arisen due to a timing difference, with a payment in respect of the same tax period required in the second half of the current financial year.

 

The Group paid its final dividend for the year ended 31 December 2012 of £0.7 million (2012 H1: £0.6 million) on 28 May 2013.

 

The Group generated a free cash flow of £4.0 million in the period (2012 H1: £3.1 million), enabling a further payment of £1.7 million against the term loan ahead of schedule.

 

In December 2011, the Group entered into a €25 million amortising term loan facility with HSBC with a final maturity of 31 July 2015. This facility carries an annual interest rate of EURIBOR plus a margin of 1.5% to 2.5% depending on the Group’s net debt to EBITDA ratio.

 

On 13 July 2012, the Group converted half of the then remaining €23 million term loan into Sterling to align the cash flows generated by the business with the repayment of the term loan. The resulting £9.4 million Sterling facility carries an annual interest rate of LIBOR plus a margin of 1.5% to 2.5% depending on the Group’s net debt to EBITDA ratio. The Group has made several repayments of the term loan ahead of schedule and, as at 30 June 2013, the Group had €9.4 million and £0.3 million of the respective Euro and Sterling term loan facilities outstanding.  

 

In December 2011, the Group also entered into an £8 million revolving credit facility with HSBC, with a final maturity of 31 July 2015. This facility is for general working capital purposes, and carries an annual interest rate of LIBOR plus a margin of 1.5% to 2.5% depending on the Group’s net debt to EBITDA ratio. This facility was undrawn as at 30 June 2013.

 

At the end of the period, the Group had net debt7 of £2.6 million (2012 H2: net debt7 of £5.5 million), a reduction of £2.9 million since 31 December 2012. The movement in net debt during 2013 H1 is reconciled in Table 4 below:

 

Table 4


Movement in net debt7

£’000

Net debt as at 1 January 2013

(5,544)

Exchange rate impacts

(690)

Free cash flow

4,043

Dividends paid

(712)

Proceeds from share issues

266

Net debt as at 30 June 2013

(2,637)

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

 

The Group’s going concern position is fully described in note 12 and the Group remains comfortably within its lending covenants. The Group expects to have net funds by the end of 2013.

 

 

 

CONDENSED CONSOLIDATED INCOME STATEMENT for the six months ended 30 June 2013

 



(Unaudited)

(Unaudited)

(Audited)



Six months ended 30 June 2013

Six months ended 30 June 2012

Year ended 31 December 2012



Before

Exceptional


Before

Exceptional


Before

Exceptional




exceptional

items


exceptional

items


exceptional

items




items

(see note 7)

Total

items

(see note 7)

Total

Items

(see note 7)

Total


Note

£’000

£’000

£’000

£’000

£’000

£’000

£’000

£’000

£’000

Revenue from continuing operations

5

27,392

27,392

24,766

24,766

52,589

52,589

Cost of sales


(11,748)

(11,748)

(11,075)

(11,075)

(23,946)

(23,946)

Gross profit


15,644

15,644

13,691

13,691

28,643

28,643

Distribution costs


(324)

(324)

(277)

(277)

(543)

(543)

Administration costs


(9,082)

(9,082)

(7,985)

(610)

(8,595)

(16,105)

(849)

(16,954)

Other income


90

90

82

82

312

312

Profit/(loss) from operations


6,328

6,328

(610)

11,458

Finance income


1

1

16

16

35

35

Finance costs


(362)

(362)

(419)

(419)

(697)

(697)

Profit /(loss) before taxation


5,967

5,967

5,108

(610)

4,498

11,645

(849)

10,796

Income tax

8

(778)

(778)

(638)

(638)

(1,104)

(1,104)

Profit/(loss) for the period attributable to equity holders of the parent


5,189

5,189

4,470

(610)

3,860

10,541

(849)

9,692

Earnings per share











Basic

4

2.53p

2.53p

2.19p

(0.30p)

1.89p

5.17p

(0.42p)

4.75p

Diluted

4

2.49p

2.49p

2.16p

(0.29p)

1.87p

5.07p

(0.41p)

4.66p

Adjusted diluted

4

2.59p



2.27p



5.30p



 

 

 

 

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 


(Unaudited)

(Unaudited)

(Audited)


Six months ended 30 June 2013

Six months ended 30 June 2012

Year ended 31 December 2012



£’000



£’000



£’000


Profit for the period


5,189



3,860



9,692


Exchange differences on translation of foreign operations


2,439



(1,655)



(1,258)


Loss arising on cash flow hedges


(193)



(32)



(79)


Other comprehensive income/(expense) for the period


2,246



(1,687)



(1,337)


Total comprehensive income for the period attributable to equity holders of the parent


7,435



2,173



8,355


 

 

 

 

CONDENSED STATEMENT OF FINANCIAL POSITION

 






(Unaudited)

(Unaudited)

(Audited)


30 June 2013

30 June 2012

31 December 2012


£’000

£’000

£’000

Assets




Non-current assets




Acquired intellectual property rights

10,739

10,596

10,435

Software intangibles

1,468

948

1,134

Development costs

1,574

1,200

1,628

Goodwill

40,379

38,115

38,420

Property, plant and equipment

17,472

17,719

17,599

Deferred tax assets

2,446

3,293

2,651

Trade and other receivables

19

19

17


74,097

71,890

71,884

Current assets




Inventories

8,760

7,305

6,456

Trade and other receivables

10,492

8,897

10,179

Current tax assets

172

Cash and cash equivalents

5,619

7,609

8,867


24,871

23,811

25,764

Total assets

98,968

95,701

97,558

Liabilities




Current liabilities




Bank overdraft

26

Trade and other payables

4,650

5,102

5,605

Current tax liabilities

1,144

357

250

Other taxes payable

736

676

249

Other loans

8,256

3,274

2,796

Obligations under finance leases

4

13

5


14,790

9,422

8,931

Non-current liabilities




Trade and other payables

546

599

572

Other loans

14,947

11,589

Deferred tax liabilities

2,873

2,768

2,761

Obligations under finance leases

5

5

7


3,424

18,319

14,929

Total liabilities

18,214

27,741

23,860

Net assets

80,754

67,960

73,698

Equity




Share capital

10,291

10,209

10,230

Share premium

32,092

31,850

31,887

Share-based payments reserve

1,295

954

1,122

Investment in own shares

(77)

(77)

(77)

Share-based payments deferred tax reserve

74

506

180

Other reserve

1,531

1,531

1,531

Hedging reserve

(240)

(47)

Translation reserve

1,040

(1,796)

(1,399)

Retained earnings

34,748

24,783

30,271

Equity attributable to equity holders of the parent

80,754

67,960

73,698

 

 

 

 

CONDENSED CONSOLIDATED Statement of Changes in Equity

Attributable to equity holders of the Group

 




Share

Investment

Share-based







Share

Share

based

in own

payments

Other

Hedging

Translation

Retained



capital

premium

payments

shares

deferred tax

reserve

reserve

reserve

earnings

Total


£’000

£’000

£’000

£’000

£’000

£’000

£’000

£’000

£’000

£’000

At 1 January 2013 (audited)

10,230

31,887

1,122

(77)

180

1,531

(47)

(1,399)

30,271

73,698

Consolidated profit for the period to 30 June 2013

5,189

5,189

Other comprehensive income

(193)

2,439

2,246

Total comprehensive income

(193)

2,439

5,189

7,435

Share-based payments

173

(106)

67

Issue of share capital

Share options exercised

61

205

266

Shares purchased by EBT

Shares sold by EBT

Dividends paid

(712)

(712)

At 30 June 2013 (unaudited)

10,291

32,092

1,295

(77)

74

1,531

(240)

1,040

34,748

80,754

 




Share

Investment

Share-based







Share

Share

based

in own

payments

Other

Hedging

Translation

Retained



capital

premium

payments

shares

deferred tax

reserve

reserve

reserve

earnings

Total


£’000

£’000

£’000

£’000

£’000

£’000

£’000

£’000

£’000

£’000

At 1 January 2012 (audited)

10,176

31,704

779

(40)

631

1,531

32

(141)

21,540

66,212

Consolidated profit for the period to 30 June 2012

3,860

3,860

Other comprehensive income

(32)

(1,655)

(1,687)

Total comprehensive income

(32)

(1,655)

3,860

2,173

Share-based payments

181

(125)

56

Issue of share capital

2

2

Share options exercised

31

146

(6)

171

Shares purchased by EBT

(81)

(81)

Shares sold by EBT

44

44

Dividends paid

(617)

(617)

At 30 June 2012 (unaudited)

10,209

31,850

954

(77)

506

1,531

(1,796)

24,783

67,960

 




Share

Investment

Share-based







Share

Share

based

in own

payments

Other

Hedging

Translation

Retained



capital

premium

payments

shares

deferred tax

reserve

reserve

reserve

earnings

Total


£’000

£’000

£’000

£’000

£’000

£’000

£’000

£’000

£’000

£’000

At 1 January 2012 (audited)

10,176

31,704

779

(40)

631

1,531

32

(141)

21,540

66,212

Consolidated profit for the year to 31 December 2012

9,692

9,692

Other comprehensive income

(79)

(1,258)

(1,337)

Total comprehensive income

(79)

(1,258)

9,692

8,355

Share-based payments

363

(451)

(88)

Issue of share capital

Share options exercised

54

183

(20)

217

Shares purchased by EBT

(81)

(81)

Shares sold by EBT

44

44

Dividends paid

(961)

(961)

At 31 December 2012 (audited)

10,230

31,887

1,122

(77)

180

1,531

(47)

(1,399)

30,271

73,698

 

 

 

 

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

 


(Unaudited)

(Unaudited)

(Audited)


Six months

Six months



ended

ended

Year ended


30 June 2013

30 June 2012

31 December 2012


£’000

£’000

£’000

Cash flows from operating activities




Profit from operations

6,328

4,901

11,458

Adjustments for:




Depreciation

924

871

1,633

Amortisation   – intellectual property rights

200

242

480

                       – development costs

103

56

125

                       – software intangibles

15

12

62

Impairment of development costs

286

(Increase)/decrease in inventories

(2,127)

(706)

258

(Increase)/decrease in trade and other receivables

(196)

2,200

923

(Decrease) in trade and other payables

(623)

(2,769)

(2,740)

Share-based payments expense

173

175

363

Taxation

351

(121)

(669)

Net cash inflow from operating activities

5,434

4,861

11,893

Cash flows from investing activities




Purchase of software

(375)

(105)

(380)

Capitalised research and development

(397)

(304)

(802)

Purchases of property, plant and equipment

(409)

(915)

(1,572)

Interest received

1

16

35

Net cash used in investing activities

(1,180)

(1,308)

(2,719)

Cash flows from financing activities




Dividends paid

(712)

(617)

(961)

Finance lease

(3)

(9)

(19)

Repayment of secured loan

(6,761)

(1,541)

(5,564)

Issue of equity shares

266

179

217

Shares purchased by EBT

(81)

(81)

Shares sold by EBT

44

44

Interest paid

(211)

(419)

(692)

Net cash (used in) financing activities

(7,421)

(2,444)

(7,056)

Net (decrease)/increase in cash and cash equivalents

(3,167)

1,109

2,118

Cash and cash equivalents at the beginning of the period

8,841

7,122

7,122

Effect of foreign exchange rate changes

(55)

(622)

(399)

Cash and cash equivalents at the end of the period

5,619

7,609

8,841

 

 

 

Notes Forming Part of the Consolidated Financial Statements

 

1.      Reporting entity

 

Advanced Medical Solutions Group plc (“the Company”) is a public limited company incorporated and domiciled in England and Wales (registration number 2867684). The Company’s registered address is Premier Park, 33 Road One, Winsford Industrial Estate, Cheshire, CW7 3RT.

 

The Company’s ordinary shares are traded on the AIM market of the London Stock Exchange plc. The consolidated financial statements of the Company for the twelve months ended 31 December 2012 comprise the Company and its subsidiaries (together referred to as the “Group”).

 

The Group is primarily involved in the design, development and manufacture of novel high performance polymers (both natural and synthetic) for use in advanced woundcare dressings and materials, medical adhesives for closing and sealing tissue, and sutures and haemostats for sale into the global medical device market.

 

2.      Basis of preparation

 

The information for the year ended 31 December 2012 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditor reported on those accounts; their report was unqualified, did not draw attention to any matters of emphasis without qualifying the report and did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

 

The individual financial statements for each Group company are presented in the currency of the primary economic environment in which it operates (its functional currency). For the purpose of the Consolidated financial statements, the results and financial position of each Group company are expressed in pounds sterling, which is the functional currency of the Company, and the presentation currency for the Consolidated financial statements.

 

3.      Accounting policies

 

The same accounting policies, presentations and methods of computation are followed in the condensed set of financial statements as applied in the Group’s latest annual audited financial statements. The unaudited condensed set of financial statements included in this half-yearly financial report have been prepared in accordance with the International Account Standard 34 ‘Interim Financial Reporting’, as adopted by the European Union. These condensed interim accounts should be read in conjunction with the annual accounts of the Group for the year ended 31 December 2012. The annual financial statements of Advanced Medical Solutions Group plc are prepared in accordance with International Financial Reporting Standards as adopted by the European Union.

 

4.      Earnings per share

 


(Unaudited)

(Unaudited)

(Audited)


Six months

Six months

Year


ended

ended

ended


30 June 2013

30 June 2012

31 December 2012


£’000

£’000

£’000

Earnings

Earnings for the purposes of basic and diluted earnings per share being net profit attributable to equity holders of the parent

5,189

3,860

9,692

Number of shares

‘000

‘000

‘000

Weighted average number of ordinary shares for the purposes of basic earnings per share

204,930

203,683

204,059

Effect of dilutive potential ordinary shares: share options, deferred share bonus, LTIPs

3,080

3,023

3,945

Weighted average number of ordinary shares for the purposes of diluted earnings per share

208,010

206,706

208,004

 

Basic EPS is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of shares outstanding during the period.

 

Diluted EPS is calculated on the same basis as basic EPS but with the further adjustment to the weighted average shares in issue to reflect the effect of all potentially dilutive share options. The number of potentially dilutive share options is derived from the number of share options and awards granted to employees where the exercise price is less than the average market price of the Company’s ordinary shares during the period.

 

Adjusted earnings per share

 

The calculation of adjusted EPS excluding amortisation of associated intangible assets and exceptional items is based on earnings of:

 


(Unaudited)

(Unaudited)

(Audited)


Six months

Six months

Year


ended

ended

ended


30 June 2013

30 June 2012

31 December 2012


£’000

£’000 

£’000

Earnings

Earnings for the purposes of basic and diluted earnings per share being net profit attributable to equity holders of the parent

5,189

3,860

9,692

Exceptional items

610

849

Amortisation of acquired intangible assets

200

242

480

Earnings excluding exceptional items and amortisation of acquired intangible assets

5,389

4,712

11,021

 

The denominators used are the same as those detailed above for both basic and diluted earnings per share.

 

Adjusted EPS after adding back exceptional items and amortisation of acquired intangible assets:

 


(Unaudited)

(Unaudited)

(Audited)


Six months

Six months

Year


ended

ended

ended


30 June 2013

30 June 2012

31 December 2012


pence

pence

pence

Adjusted basic EPS

2.63p

2.31p

5.40p

Adjusted diluted EPS

2.59p

2.27p

5.30p

 

The adjusted diluted EPS information is considered to provide a fairer representation of the Group’s trading performance.

 

5.      Segment information

 

In the latter stages of the year to December 2012 the Group was re-organised into four business units: Branded Direct, Branded Distributed, OEM and Bulk Materials. These divisions are the basis on which the Group reports its segment information. The comparative information for the six months ended 30 June 2012 has been restated under this new format.

 

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly investments, and related revenue, corporate assets, head office expenses, income tax assets and the Group’s external borrowings. These are the measures reported to the Group’s Chief Executive for the purposes of resource allocation and assessment of segment performance.

 

Business segments

The principal activities of the business units are as follows:

 

Branded Direct

Selling, marketing and innovation of the Group’s branded products sold directly by the Group’s sales teams

 

Branded Distributed

Selling, marketing and innovation of the Group’s branded products sold by distributors in markets not serviced by the Group’s sales teams

 

OEM

Selling, marketing and innovation of the Group’s products supplied to partners under their brands

 

Bulk Materials

Selling, marketing and innovation of bulk materials to medical device partners and convertors

 

Segment information about these businesses is presented below.

 

Six months ended

30 June 2013

(unaudited)

Branded Direct

Branded Distributed

OEM

Bulk Materials

Eliminations

Consolidated


£’000

£’000

£’000

£’000

£’000

£’000

Revenue







External sales

11,001

3,465

10,743

2,183


27,392

Inter-segment sales




388

(388)

Total revenue

11,001

3,465

10,743

2,571

(388)

27,392

Result







Segment result

2,906

574

2,541

518


6,539

Unallocated expenses






(211)

Profit from operations






6,328

Finance income






1

Finance costs






(362)

Profit before tax






5,967

Tax






(778)

Profit for the year






5,189

 

At 30 June 2013

(unaudited)

Branded Direct

Branded Distributed

OEM

Bulk Materials

Consolidated

Other Information

£’000

£’000

£’000

£’000

£’000

Capital additions:






Software intangibles

75

6

258

36

375

Development

103

46

172

76

397

Property, plant and equipment

187

60

156

6

409

Depreciation and amortisation

445

125

575

97

1,242

Balance sheet






Assets






Segment assets

55,451

15,351

23,688

4,478

98,968

Unallocated assets





Consolidated total assets





98,968

Liabilities






Segment liabilities

5,034

1,540

2,779

605

9,958

Unallocated liabilities





8,256

Consolidated total liabilities





18,214

 

Unallocated liabilities consist of the Group’s external borrowings.

 

As restated six months ended 30 June 2012 (unaudited)

Branded Direct

Branded Distributed

OEM

Bulk Materials

Eliminations

Consolidated


£’000

£’000

£’000

£’000

£’000

£’000

Revenue







External sales

9,881

3,289

9,397

2,199


24,766

Inter-segment sales




172

(172)

Total revenue

9,881

3,289

9,397

2,371

(172)

24,766








Result







Segment result

2,684

439

2,183

235


5,541

Unallocated expenses






(640)

Profit from operations






4,901

Finance income






16

Finance costs






(419)

Profit before tax






4,498

Tax






(638)

Profit for the year






3,860

 

Unallocated costs included £449,000 of exceptional costs incurred in respect of the acquisition of RESORBA®.

 

Restated at

30 June 2012

(unaudited)

Branded Direct

Branded Distributed

OEM

Bulk Materials

Consolidated

Other Information

£’000

£’000

£’000

£’000

£’000

Capital additions:






Software intangibles

26

5

72

2

105

Development

61

13

223

7

304

Property, plant and equipment

205

44

544

122

915

Depreciation and amortisation

464

159

446

112

1,181

Balance sheet






Assets






Segment assets

51,485

14,491

24,861

4,864

95,701

Unallocated assets





Consolidated total assets





95,701

Liabilities






Segment liabilities

3,639

1,130

3,753

997

9,519

Unallocated liabilities





18,222

Consolidated total liabilities





27,741

 

Unallocated liabilities consist of the Group’s external borrowings.

 

Year ended

31 December 2012 (audited)

Branded Direct

Branded Distributed

OEM

Bulk Materials

Eliminations

Consolidated


£’000

£’000

£’000

£’000

£’000

£’000

Revenue







External sales

20,105

6,758

21,954

3,772


52,589

Inter-segment sales




468

(468)

Total revenue

20,105

6,758

21,954

4,240

(468)

52,589

Result







Segment result

6,092

1,133

5,152

313


12,690

Unallocated expenses






(1,232)

Profit from operations






11,458

Finance income






35

Finance costs






(697)

Profit before tax






10,796

Tax






(1,104)

Profit for the year






9,692

 

Unallocated costs included £849,000 of exceptional costs incurred in respect of the acquisition of RESORBA®.

 

Re-presented at

31 December 2012

(audited)

Branded Direct

Branded Distributed

OEM

Bulk Materials

Consolidated

Other Information

£’000

£’000

£’000

£’000

£’000

Capital additions:






Software intangibles

107

18

247

8

380

Development

134

129

539

802

Property, plant and equipment

479

123

783

187

1,572

Depreciation and amortisation

795

279

989

237

2,300

Balance sheet






Assets






Segment assets

53,060

14,820

25,077

4,601

97,558

Unallocated assets






Consolidated total assets





97,558

Liabilities






Segment liabilities

4,291

1,362

3,104

718

9,475

Unallocated liabilities





14,385

Consolidated total liabilities





23,860

 

Unallocated liabilities consist of the Group’s external borrowings.

 

The goodwill and intangible assets with indefinite useful economic life at 31 December 2012 were allocated to the relevant business units in proportion to profit from operations on a consistent basis for all four segments.

 

However, it has since become apparent that the allocation did not represent a true representation of the goodwill and intangible assets utilised by each segment. This was due to a number of one-off transactions occurring which distorted the allocation.

 

The 31 December 2012 comparative information has been re-presented to reallocate £1.4 million of goodwill and £0.4 million of intangibles assets from Branded Distributed to Branded Direct, such that these assets are ascribed to the appropriate business segment. The adjustments result in no impact upon profit.

 

Geographical segments

 

The group operates in the UK, Germany, the Netherlands, the Czech Republic and Russia, with personnel located in the USA. In presenting information on the basis of geographical segments, segment revenue is based on the geographical location of customers. Segment assets are based on the geographical location of the assets.

 

The following table provides an analysis of the Group’s sales by geographical market, irrespective of the origin of the goods/services, based upon location of the Group’s customers:

 


(Unaudited)

(Unaudited)

(Audited)


Six months ended

Six months ended

Year ended


30 June 2013

30 June 2012

31 December 2012


£’000

£’000

£’000

United Kingdom

6,119

4,778

10,721

Germany

7,599

6,836

13,944

Europe excluding United Kingdom and Germany

7,742

8,179

16,855

United States of America

5,105

4,617

10,013

Rest of World

827

356

1,056


27,392

24,766

52,589

 

The following table provides an analysis of the group’s total assets by geographical location.

 


(Unaudited)

(Unaudited)

(Audited)


Six months ended

Six months ended

Year ended


30 June 2013

30 June 2012

31 December 2012


£’000

£’000

£’000

United Kingdom

32,895

32,258

36,444

Germany

59,634

56,389

55,132

Europe excluding United Kingdom and Germany

6,266

7,008

5,923

United States of America

173

46

59

Rest of World


98,968

95,701

97,558

 

6.      Financial Instruments’ fair value disclosures

 

It is the policy of the Group to enter into forward foreign exchange contracts to cover specific foreign currency payments and receipts.

 

The Group held the following financial instruments at fair value at 30 June 2013. The Group has no financial instruments with fair values that are determined by reference to significant unobservable inputs i.e. those that would be classified as level 3 in the fair value hierarchy, nor have there been any transfers of assets or liabilities between levels of the fair value hierarchy. There are no non-recurring fair value measurements.

 

The following table details the forward foreign currency contracts outstanding as at the period-end:

 


Ave. exchange rate

Foreign currency

Contract value

Fair value


30 June 2013

31 Dec 2012

30 June 2013

31 Dec 2012

30 June 2013

31 Dec 2012

30 June 2013

31 Dec 2012


USD:£1

USD:£1

USD’000

USD’000

£’000

£’000

£’000

£’000

Cash flow hedges









Sell US dollars









Less than 3 months

1.563

1.595

2,550

1,650

1,632

1,034

(44)

13

3 to 6 months

1.594

1.596

1,750

1,350

1,098

846

(53)

10

7 to 12 months

1.519

1.595

8,400

3,300

5,528

2,070

(9)

26




12,700

6,300

8,258

3,950

(106)

49

 


Ave. exchange rate

Foreign currency

Contract value

Fair value


30 June 2013

31 Dec 2012

30 June 2013

31 Dec 2012

30 June 2013

31 Dec 2012

30 June 2013

31 Dec 2012


EUR:£1

EUR:£1

EUR’000

EUR’000

£’000

£’000

£’000

£’000

Cash flow hedges









Sell Euros









Less than 3 months

1.255

1.257

1,200

1,100

956

875

(72)

(22)

3 to 6 months

1.253

1.256

1,200

1,100

957

876

(72)

(23)

7 to 12 months

1.163

1.254

3,600

2,400

3,097

1,914

10

(51)




6,000

4,600

5,010

3,665

(134)

(96)

 

7.      Exceptional items

 

During the six month period ended 30 June 2013, there were no exceptional costs. In 2012 H1, £610,000 of exceptional costs were incurred relating to the integration of the RESORBA® business.

 

8.      Taxation

 

UK Corporation Tax for the six month period is charged at 23.25% (six months ended June 2012: 25%, year ended 31 December 2012: 24.5%). The effective rate of current tax for the six months ended 30 June 2013 was 13% (six months ended 30 June 2012: 14.2%, year ended 31 December 2012: 10.2%) after the application of losses brought forward, patent box and research and development tax relief, with some off-set for disallowable expenditure. The rate of tax is reflective of the impact of blending profits and losses from different countries and the different tax rates associated with those countries.

 

9.      Dividends

 


(Unaudited)

(Unaudited)

(Audited)


Six months ended

Six months ended

Year ended

Amounts recognised as distributions to equity holders in the period:

30 June 2013

30 June 2012

31 December 2012


£’000

£’000

£’000

Final dividend for the year ended 31 December 2011 of 0.305p per ordinary share

617

617

Interim dividend for the year ended 31 December 2012 of 0.17p per ordinary share

344

Final dividend for the year ended 31 December 2012 of 0.35p per ordinary share

712


712

617

961

 

10.    Contingent liabilities

 

The directors are not aware of any contingent liabilities faced by the Group as at 30 June 2013 (30 June 2012: £nil, 31 December 2012: £nil).

 

11.    Share capital

 

Share capital as at 30 June 2013 amounted to £10,291,000 (30 June 2012: £10,209,000, 31 December 2012: £10,230,000). During the period, the Group issued £36,000 shares in respect of exercised share options and £25,000 shares in respect of the Deferred Share Bonus Scheme.

 

12.    Going concern

 

In carrying out their duties in respect of going concern, the Directors have carried out a review of the Group’s financial position and cash flow forecasts for the next 12 months. These have been based on a comprehensive review of revenue, expenditure and cash flows, taking into account specific business risks and the current economic environment.

 

With regards to the Group’s financial position, it had cash and cash equivalents at 30 June 2013 of £5.6 million, and a split term loan of €9.4 million and £0.3 million repayable by 31 July 2015 which was fully drawn down. The Group also has in place a revolving credit facility of £8 million, which has not been drawn down and is available until 31 July 2015.

 

While the current economic environment is uncertain, AMS operates in markets whose demographics are favourable, underpinned by an increasing need for products to treat chronic and acute wounds. Consequently, market growth is predicted. The Group has a number of long-term contracts with customers across different geographic regions and also with substantial financial resources, ranging from government agencies through to global healthcare companies.

 

Having taken the above into consideration, the Directors have reached the conclusion that the Group is well placed to manage its business risks in the current economic environment. Accordingly, they continue to adopt the going concern basis in preparing the condensed consolidated financial statements.

 

13.    Principal Risks and uncertainties

 

Further detail concerning the principal risks affecting the business activities of the Group is detailed on pages 17-18 of the Annual Report and Accounts for the year ended 31 December 2012. There have been no significant changes since the last annual report.

 

14.    Seasonality of sales

 

There are no significant factors affecting the seasonality of sales between the first and second half of the year.

 

15.    Events after the balance sheet date

 

The Group has received clearance from Roszdravnador, the Russian Ministry of Health regulator, on 6 September 2013 to market LiquiBand® Flex and LiquiBand® Optima in Russia.

 

16.    Copies of the interim results

 

Copies of the interim results can be obtained from the Group’s registered office at Premier Park, 33 Road One, Winsford Industrial Estate, Winsford, Cheshire, CW7 3RT.

 


This information is provided by RNS
The company news service from the London Stock Exchange
 

END

 
 

IR GGUPABUPWGBU

For further information, please contact:

Advanced Medical Solutions Group plc

Tel: 44 (0) 1606 545508

Chris Meredith, Chief Executive Officer

Eddie Johnson, Chief Financial Officer

Michael King, Investor Relations

Consilium Strategic Communications

Tel: 44 (0) 20 3709 5700

Matthew Neal / Lucy Featherstone

Investec Bank PLC (NOMAD & Broker)

Tel: 44 (0) 20 7597 5970

Gary Clarence / David Anderson

HSBC Bank PLC (Broker)

Tel: 44 (0) 20 7991 8888

Sam McLennan / Joe Weaving / Stephanie Cornish

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 five acquisitions: Sealantis, an Israeli developer of innovative internal sealants; Biomatlante, a French developer and manufacturer of surgical biomaterials, Raleigh, a leading UK coater and converter of woundcare and bio-diagnostics materials, AFS Medical, an Austrian specialist surgical business and Connexicon, an Irish tissue adhesives specialist.

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, Austria, the Czech Republic and Russia. The Group has R&D innovation hubs in the UK, Ireland, Germany, France and Israel. Established in 1991, the Group has more than 800 employees. For more information, please see admedsol.com.

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