TIDMAMS
RNS Number : 3559Z
Advanced Medical Solutions Grp PLC
14 September 2022
14 September 2022
Advanced Medical Solutions Group plc
("AMS" or the "Group")
Interim results for the six months ended 30 June 2022
Winsford, UK, 14 September 2022: Advanced Medical Solutions
Group plc (AIM: AMS), the world-leading specialist in
tissue-healing technologies, today announces its unaudited interim
results for the six months ended 30 June 2022 (the "Period").
Financial Highlights:
H1 H1 Reported Change
change at constant
currency(1)
2022 2021
------- ------ ---------
Revenue (GBP million) 58.3 50.2 16% 16%
----------------------------------- ------- ------ --------- -------------
Adjusted Measures
Adjusted(2) profit before
tax (GBP million) 13.6 12.4 10%
Adjusted(2) profit before
tax (%) 23.4% 24.6% -1.2pp
Adjusted(2) diluted earnings
per share (p) 5.01 4.64 8%
Reported Measures
Profit before tax (GBP million) 12.3 11.2 10%
Profit before tax (%) 21.2% 22.3% -1.1pp
Diluted earnings per share
(p) 4.42 4.10 8%
Net operating cash flow (GBP
million) 12.5 13.7 -8%
Net cash (3) (GBP million) 75.3 61.1 23%
Interim dividend per share
(p) 0.64p 0.58p +10%
----------------------------------- ------- ------ --------- -------------
Business Highlights (including post period end):
The encouraging start to trading in 2022 continued despite
having to manage the increasing macro-economic challenges of supply
chain and inflation. AMS is pleased to report strong growth in
revenue and profitability as well as significant regulatory and
clinical progress in the Period whilst continuing to invest in
developing its next-generation products.
Financial
-- Revenue increased by 16% to GBP58.3 million (2021 H1: GBP50.2
million) predominately driven by commercial progress and increased
pricing to recover inflationary cost increases
-- Gross margins increased to 58.9% (2021 H1: 55.9%) as a result of increased volumes
-- Total investment in R&D increased to GBP5.4 million (2021
H1: GBP4.4 million), representing 9.3% (2021 H1: 8.7%) of revenue,
as progress was made on key projects across the Group
-- The Group reports a 10% increase in adjusted profit before
tax to GBP13.6 million (2021 H1: GBP12.4 million) despite increased
investment in R&D. Adjusted profit before tax margin of 23.4%
remains in line with that generated for the full year 2021
-- Net cash increased to GBP75.3 million (FY 2021: GBP73.0
million)driven by strong trading and operational cash flow, partly
offset by the acquisition of AFS Surgical
-- Surgical Business Unit revenues increased to GBP35.9 million
(2021 H1: GBP30.4 million), an increase of 18% at constant
currency
-- Woundcare Business Unit revenues increased to GBP22.4 million
(2021 H1: GBP19.8 million), an increase of 11% at constant
currency
-- Given the Group's strong net cash position and reflecting the
Board's continued confidence in the future, the interim dividend is
increased to 0.64p per share (2021 H1: 0.58p)
Operational
-- As announced in May 2022, the LiquiBand(R) XL 510(k) approval
has been received and initial orders have been fulfilled in Q3.
This approval provides access to a new $60m, long wound sealant
market in the US and strengthens our market share across the entire
LiquiBand(R) product portfolio
-- The acquisition of AFS Surgical was completed in the Period
and integration is going well. The Board remains excited about the
commercial synergies that this acquisition provides. Financial
performance continues to be in line with initial expectations
-- As previously reported, recruitment for the US clinical trial
of LiquiBandFix8 (R) has now been completed and the Premarket
Approval (PMA) filing remains on track for H2 2022 once all the
patients have completed their 12-month follow up
-- The Seal-G(R) and Seal-G(R) MIST human clinical trials have
continued and approximately half of the total of 160 patient
procedures have now been completed. Patient recruitment has been
slower than initially planned but is now ramping up. With nine
sites now actively recruiting patients, procedures are expected to
be completed in the first half of 2023
Outlook
AMS has delivered strong revenue growth in the first half driven
by solid underlying performance, management activities to protect
margin and the continuing recovery in overseas markets. Trading has
continued to progress well in Q3 and AMS remains confident that
momentum will continue throughout the second half with the Company
on track to meet expectations for the full year.
Commenting on the interim results, Chris Meredith, Chief
Executive Officer of AMS, said: "I am pleased to report AMS's
continued robust financial performance in the first half with
strong revenue, profitability and cash generation. We have also
seen significant regulatory and clinical progress in meeting
enhanced regulatory requirements and developing the next generation
of innovative products, including the launch of LiquiBand(R) XL,
that we expect to drive further growth over the coming years. This
progress has been achieved against a backdrop of challenging
macro-economic conditions which is testament to the quality and
dedication of the AMS teams involved. The Group's ongoing, robust
financial health makes it well placed to deliver organic and
acquisitive growth; reflecting this confidence, the Board has
decided to increase the dividend for the first half."
- End -
Notes
1 Constant currency adjusts for the effect of currency movements
by re-translating the current period's performance at the previous
period's exchange rates
2 Adjusted profit before tax is shown before amortisation of
acquired intangible assets which, in 2022 H1, were GBP1.6 million
(2021 H1: GBP1.6 million) and a GBP0.3 million credit for a change
in long-term liabilities (2021 H1: credit of GBP0.4 million) as
defined in the financial review. Adjusted operating margin is shown
before amortisation of acquired intangible assets.
3 Net cash in 2022 H1 was GBP75.3 million (2021 H1: GBP61.1
million) and consists of cash and cash equivalents of GBP75.3
million (2021 H1: GBP61.1 million).
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 Manager
Consilium Strategic Communications Tel: +44 (0) 20 3709
5700
Mary-Jane Elliott / Matthew Neal / Lucy
Featherstone
Investec Bank plc (NOMAD) & Broker Tel: +44 (0) 20 7597
5970
Daniel Adams / Gary Clarence
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(R) , RESORBA(R) , LiquiBandFix8(R) and Seal-G(R) .
AMS also supplies wound care dressings such as silver alginates,
alginates and foams through its ActivHeal(R) brand as well as under
white label. Since 2019, the Group has made four acquisitions:
Sealantis, an Israeli medical device company with a
patent-protected sealant technology platform; Biomatlante, an
established French developer and manufacturer of innovative
surgical biomaterial technologies, Raleigh, a UK leading coater and
converter of materials predominately for woundcare and
bio-diagnostics products and AFS Medical, a specialist distributor
of minimally invasive surgical devices based in Austria.
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, Germany, France and Israel. Established
in 1991, the Group has more than 700 employees. For more
information, please see www.admedsol.com .
Chief Executive's Review
Surgical Business Unit
The Surgical Business Unit includes tissue adhesives, sutures,
biosurgical devices and internal fixation devices marketed under
the AMS brands LiquiBand(R) , RESORBA(R) and LiquiBandFix8(R) .
Significant revenue growth in the Surgical Business Unit was
driven by commercial progress, increased pricing and ongoing stock
building by some partners. Revenue increased by 18% in the Period
to GBP35.9 million (2021 H1: GBP30.4 million) on a reported and
constant currency basis.
Overall elective surgery volumes in our key markets continue to
be restricted by hospital capacity and remain below pre-pandemic
norms and as a result, the backlog of patients awaiting elective
surgery is at record levels.
Surgical Business 2022 2021 Reported Growth
Unit H1 H1 Growth at constant
GBP GBP million currency
million
Advanced Closure 17.9 15.2 18% 15%
--------- ------------- --------- -------------
Internal Fixation
and Sealants 1.6 1.2 37% 39%
--------- ------------- --------- -------------
Traditional Closure 8.0 7.3 10% 12%
--------- ------------- --------- -------------
Biosurgical Devices 7.7 6.7 15% 18%
--------- ------------- --------- -------------
Other Distributed 0.7 - - -
Products
--------- ------------- --------- -------------
TOTAL 35.9 30.4 18% 18%
--------- ------------- --------- -------------
Advanced Closure
LiquiBand(R) is a range of topical skin adhesives, incorporating
medical grade cyanoacrylate in combination with purpose-built
applicators. These products are used to close and protect a broad
variety of surgical and traumatic wounds.
Advanced Closure 2022 2021 Reported Growth
H1 H1 Growth at constant
GBP GBP million currency
million
Americas 12.0 10.4 16% 11%
--------- ------------- --------- -------------
UK/Germany 3.4 2.8 22% 23%
--------- ------------- --------- -------------
Rest of World 2.5 2.0 25% 24%
--------- ------------- --------- -------------
TOTAL 17.9 15.2 18% 15%
--------- ------------- --------- -------------
Revenues increased to GBP17.9 million (2021 H1: GBP15.2 million)
representing growth of 18% on a reported basis and 15% on a
constant currency basis.
US LiquiBand(R) growth was strong as LiquiBand(R) Rapid
continued to make good progress in the market. As previously
reported, there has been a level of stock building by our partners
as they recover from the COVID-19 pandemic, which continued and was
completed in the Period.
LiquiBand(R) XL is now being sold in additional European
territories following its launch in the United Kingdom in late 2021
and initial sales have also been made into Australia and Japan.
The 510(k) for LiquiBand(R) XL was received in the Period and
initial orders to the US are being fulfilled in Q3 2022. This
approval provides access to a new $60 million market and unlocks
further growth potential in the LiquiBand(R) business with all
partners.
Internal Fixation and Sealants
LiquiBandFix8(R) is used to fix hernia meshes placed inside the
body with accurately delivered individual drops of cyanoacrylate
adhesive, instead of traditional tacks and staples. Revenues
increased by 37% on a reported basis to GBP1.6 million (2021 H1:
GBP1.2 million) and 39% on a constant currency basis due to
commercial progress, increasing volumes of hernia surgery and, to a
lesser extent, the acquisition of AFS which increases the Group's
end sales of the product. Encouraging growth has been seen in the
UK following recommendation from the National Institute for
Clinical Excellence (NICE) to consider the use of cyanoacrylate
adhesives in place of invasive tackers.
The acquisition of AFS, who are specialist distributors of
LiquiBandFix8(R) , will strengthen our ability to further penetrate
into existing markets and will complement our existing sales
expertise.
The US clinical trial for LiquiBandFix8 (R) continues to
progress well with completed patient procedure numbers on track to
submit the clinical module of the Premarket Approval (PMA) filing
in the second half of 2022, after the 12-month patient follow-up.
AMS continues to be encouraged about the long-term prospects for
the LiquiBandFix8(R) portfolio with entry into the US being a
significant milestone for the Group.
In the Period, the clinical trials for both Seal-G(R) MIST (
laparoscopic surgery) and Seal-G(R) (open surgery ) progressed with
nine sites now being used in the trial and about half of the 160
procedures now complete. Recruitment into the trial has been slower
than initially expected but is ramping up and completion is now
anticipated in H1 2023. We continue to develop our relationships
with Key Opinion Leaders and potential partners and remain positive
about the opportunity that this product presents to answer a high
unmet patient need for an effective GI sealant. Follow-on pivotal
clinical trial design is now underway, with a view to starting in
2023.
Traditional Closure
RESORBA(R) branded Absorbable and Non-absorbable Suture ranges
are used in general surgery and a wide range of surgical
specialties including dental and ophthalmic surgery. Revenue
increased by 10% to GBP8.0 million and by 12% at constant currency
(2021 H1: GBP7.3 million) with significant growth in sales of
dental sutures into the US.
Biosurgical Devices
The Biosurgical Devices category comprises antibiotic-loaded
collagen sponges, collagen membranes and cones, oxidised cellulose,
synthetic bone substitutes and bio-absorbable screws. R evenue
increased by 15% to GBP7.7 million (2021 H1: GBP6.7 million) and by
18% at constant currency driven by demand for collagens both with
and without antibiotics.
The Group is working towards its first collagen approval in the
US with a 510(k) submission expected in H1 2023 for a dental
application to support haemostasis and healing following tooth
extraction.
Sales of our RESORBA (R) branded bone substitutes range in
Germany, the Czech Republic and elsewhere continued to grow since
launching in 2020.
The Group intends to launch into the US Bone Substitutes market
in the next 12 months via an Independent Rep model. This will
initially incorporate a number of existing Biomatlante products and
in time is expected to be supplemented by adding our more
innovative Freeze-Dried Bone Substitute range that requires more
development and regulatory work before it can be
commercialised.
Other Distributed Products
The Other Distributed category comprises products distributed by
AFS, including minimally invasive access ports and laparoscopic
instruments, following its acquisition in the Period. This category
excludes sales of LiquiBandFix8(R) which are recorded within the
Internal Fixation and Sealants category. Since acquisition trading
has been in line with expectations.
Plymouth facility expansion
The construction phase of the Plymouth facility expansion
started in the Period and the two-year project remains on track.
The extension will significantly increase the manufacturing
capacity for Seal-G (R) , Fix8(R) and LiquiBand(R) as well as
provide more R&D laboratory space.
Woundcare Business Unit
The Woundcare Business Unit is comprised of the Group's
multi-product portfolio of advanced woundcare dressings sold under
its partners' brands and the ActivHeal (R) label, plus a portfolio
of specialist medical bulk materials and multi-layer woundcare
products.
The Woundcare Business Unit delivered growth due to higher
ordering from OEM partners, growth in increased ActivHeal (R) sales
overseas and royalties as well as increased pricing to recover
inflationary cost increases . Revenue increased by 13% in the
Period to GBP22.4 million (2021 H1: GBP19.8 million) and by 11% on
a constant currency basis.
Woundcare Business 2022 2021 Reported Growth
Unit H1 H1 Growth at constant
GBP GBP million currency
million
Infection Management 7.2 6.7 6% 4%
--------- ------------- --------- -------------
Exudate Management 11.1 10.0 11% 11%
--------- ------------- --------- -------------
Other Woundcare 4.1 3.1 32% 27%
--------- ------------- --------- -------------
TOTAL 22.4 19.8 13% 11%
--------- ------------- --------- -------------
Infection Management
The infection management category comprises advanced woundcare
dressings that incorporate antimicrobials such as Silver and
Polyhexamethylene Biguanide (PHMB). Revenue increased by 6% on a
reported basis and by 4% on a constant currency basis to GBP7.2
million (2021 H1: GBP6.7 million) due to sales growth with a number
of OEM partners and ActivHeal (R) growth in the Gulf States . Sales
of PHMB were adversely impacted, however, due to a raw material
supply issue which has since been resolved in the second half of
the year.
Following the receipt of an enhanced 510(k) approval for our
Silver High Performance Dressing incorporating an antimicrobial
indication in the prior year, we have continued to penetrate both
the US and the Middle East antimicrobial gelling fibre markets with
this patent-protected technology.
The Group's CE marked Silicone PHMB foam range, previously sold
at low levels into the MEA region, was launched into the UK and a
number of other European countries in the Period. US and APAC
launches are expected to follow in 2023.
AMS submitted a 510(k) application for its high gelling
antimicrobial product, in the Period. We have received, and are
working through, FDA questions and anticipate approval at around
the end of 2022 with commercial launch now expected in 2023.
AMS continues to invest in its R&D pipeline to develop the
next generation of advanced woundcare products and our reputation
for innovative solutions and expertise means we are regularly
approached by partners seeking to collaborate with AMS.
Exudate Management
Exudate management comprises advanced woundcare dressings and
gels which do not incorporate any antimicrobial elements. Revenue
increased by 11% on a reported and constant currency basis to
GBP11.1 million (2021 H1: GBP10.0 million) due to increased orders
from OEM partners and ActivHeal (R) growth driven by a tender win
in the Republic of Ireland.
Following the acquisition of Raleigh, the AMS and Raleigh
woundcare teams have worked closely together to develop
next-generation products and evaluate commercial opportunities for
Raleigh products. Progress has also been made with the in-sourcing
of elements of the woundcare manufacturing process which commenced
in the first half of 2022, albeit at lower levels than planned due
to supply chain challenges.
AMS has continued to appoint new ActivHeal (R) distribution
partners in markets where its key partners have no or low presence
but the demand for a high quality, cost effective woundcare
dressing range still exists. Several new contracts have been signed
in the first half of the year, expanding the Group's branded
distribution network, with launches planned in the second half of
the year and into 2023 upon receipt of market registrations.
Having gained regulatory approvals for its Mechanical
Debridement product in 2021, AMS is currently in discussions with a
number of potential commercial partners with launch expected in
2023.
AMS has applied its iosurgical collagen technology into
developing a tissue scaffold designed to treat hard to heal and
stalled wounds such as diabetic foot ulcers and venous leg ulcers.
A 510(k) submission was made in the Period and the Group continues
to evaluate the optimal commercial strategy.
AMS continues to develop a customer-specific negative pressure
dressing and expects to record initial sales in the second half of
2022 as our partner continues with its 510(k) process. In addition,
we expect to start work on the partner's next generation device in
the near future. The Group sees considerable medium-term potential
in the negative pressure wound treatment space.
As part of the Medical Devices Regulation (MDR) transition we
have been able to add a number of claims to existing products
during the Period including an extended wear and tear claim for
Silicone Wound Contact Layer as well as a claim to use under
negative pressure wound therapy and bony prominences. A pressure
injury prevention claim has also been added for the Silicone Foam
range.
Other Woundcare
Other Woundcare comprises royalties, fees and woundcare
sealants. Revenue increased by 32% at reported currency and by 27%
at constant currency to GBP4.1 million (2021 H1: GBP3.1 million)
due to increased partner demand for membranes, higher sales of
Silicone Wound Contact Layer and a higher royalty income from the
Group's licensing arrangement with Organogenesis.
Regulatory
The Group continues to make progress with its preparation for
MDR with 10 certificates now received and a further 13 files
submitted which together represent 40% of our planned number of
submissions. The Group remains well prepared for the stricter
requirements on product safety and performance, clinical evaluation
and post-market clinical evidence stipulated by MDR and further
submissions and approvals are anticipated in the second half of the
year.
The Group's extensive preparations leave it well placed to
exploit opportunities that it expects will arise in Europe in the
next few years during the implementation of MDR.
Supply chain and inflation
The Group continues to face supply chain challenges, like many
other businesses across all sectors globally, with inflationary
pressure being felt across the business and shortages of material
in some areas. AMS aims to recover the impact of cost inflation
from its customers predominately during annual price review
negotiations and is on track to achieve this in FY 2022. Shortages
of material did not have a significant impact on our operations in
the Period but there remains the risk of disruption in future
periods. We continue to review stockholding levels and our strong
balance sheet allows us to forward order where possible.
In the second half of 2022, AMS started to provide additional
support to its lower paid employees across the Group to help them
to cope with the cost-of-living crisis.
Board changes
As part of the ongoing plan to refresh the Non-Executive
Directors, Penny Freer stepped down during the Period after 12
years on the Board. As announced in August 2022, Liz Shanahan has
since been appointed to replace Penny as an Independent
Non-Executive Director. With considerable plc Board experience in
healthcare and life sciences and specialist skills in
communications, Liz will join the Audit, Nomination and
Remuneration Committees and will be responsible for Workforce
Engagement in line with the UK Corporate Governance Code
requirements.
Key management appointments support strategic growth
AMS is committed to pursue growth opportunities through
investment in organic and acquisitive growth opportunities. As part
of this process, the Group has created a dedicated corporate
business development team to strengthen its ability to identify new
targets that will expand and complement the Company's portfolio of
tissue-healing technologies and distribution capability. The new
team is headed by Brian Dowd, formerly the Global Marketing Manager
for the Surgical Business Unit at AMS. Based in the US, Brian
already has extensive knowledge of the Group's global strategy and
the competitive profile of its key markets, so is ideally placed to
pursue new M&A opportunities.
The Group has also appointed Andy Donnelly as Group R&D
Director who joins AMS with over 25 years of experience in
pharmaceutical, medical device and formulation development and will
be focussed on further strengthening the Group's innovation,
product development and ability to meet MDR requirements. Joining
AMS from Bespak, Andy replaces Chris Locke who joined AMS in July
2021 to head up the R&D function and left the business earlier
this year.
Russia
The Group continues to review the activities in its small legacy
sales office in Moscow that has historically contributed
approximately 1% of the Group's operating profit.
Environmental, Social & Governance
The Group continues to make strong progress on ESG led by our
Steering Committee which manages ESG activities across the Group.
Our ESG strategy continues to focus on our environmental impact,
the well-being of our workforce, driving equality, diversity and
inclusion, and further strengthening our corporate governance,
internally and across our supply chain to meet ever increasing
customer requirements. During the Period we have commenced the
development of a pathway to net zero with an external consultant
appointed to support our journey as we seek to reduce our carbon
footprint and waste and we have launched an electric vehicle scheme
for our employees. We continue to support good causes in our local
community with financial support and employee volunteering.
Stakeholders
On behalf of the Board, I would like to thank the Group's
committed staff, partners and other stakeholders, without whose
help and commitment the achievements of this year, and the years
prior, would not have been possible.
Summary
AMS delivered strong revenue growth, profitability and cash
generation in the first half of 2022 driven by good underlying
performance and the continuing recovery from the COVID-19 pandemic.
The Group made significant regulatory and clinical progress in the
Period as it continues to increase its investments in developing
next-generation products.
Financial Review
IFRS reporting
To provide the clearest possible insight into our performance,
the Group uses alternative performance measures. These measures are
not defined in International Financial Reporting Standards (IFRS)
and, therefore, are considered to be non-GAAP (Generally Accepted
Accounting Principles) measures. Accordingly, the relevant IFRS
measures are also presented where appropriate. AMS uses such
measures consistently at the half-year and full-year and reconciles
them as appropriate. The measures used in this statement include
constant currency revenue growth, adjusted operating margin and
profit, adjusted profit before tax and adjusted earnings per share,
allowing the impacts of exchange rate volatility, exceptional
items, amortisation and the change in long-term liabilities to be
separately identified. Net cash is an additional non-GAAP measure
used.
Overview
Revenue increased by 16% at reported and constant currency to
GBP58.3 million (2021 H1: GBP50.2 million).
Gross profit increased to GBP34.4 million (2021 H1: GBP28.1
million) as a result of the sales increases in the Period and gross
margin as a percentage of revenue improved to 58.9% (2021 H1:
55.9%) as a result of higher volumes. Whilst we are experiencing
inflationary supply pressure across the business we aim to recover
these additional costs from customers.
Administration expenses increased to GBP21.6 million (2021 H1:
GBP16.5 million) inclusive of foreign exchange movements as
business activity returned to more routine levels and the business
invested in its commercial and technical teams as well as its wider
business infrastructure in preparation for further growth. The
acquisition of AFS added GBP0.5 million of administration costs and
GBP0.2 million of one-off fees in relation to the acquisition which
have not been deemed material enough to disclose as exceptional in
nature.
The Group incurred GBP5.4 million of gross R&D spend in the
Period (2021 H1: GBP4.4 million), representing 9.3% of sales (2021
H1: 8.7%) which reflects an ongoing investment in innovation and in
accommodating the heightened regulatory environment.
No exceptional costs have been incurred in the six-month period
(2021 H1: GBPnil) and amortisation of acquired intangible assets
was GBP1.6 million in the six-month period (2021 H1: GBP1.6
million).
Adjusted operating profit which excludes amortisation of
acquired intangibles, increased by 9% to GBP13.8 million (2021 H1:
GBP12.7 million) whilst the adjusted operating margin decreased by
150 bps to 23.7% (2021 H1: 25.2%) as the Group continued to invest
in growth opportunities.
GBP0.3 million was recorded within finance income due to the
movement in long-term liabilities recognised on acquisition of
Sealantis in 2019 (2021 H1: GBP0.4 million).
The Group generated adjusted profit before tax of GBP13.6
million (2021 H1: GBP12.4 million) and profit before tax of GBP12.3
million (2021 H1: GBP11.2 million).
Reconciliation of profit before tax to adjusted profit before
tax
--------------------------------------------------------------------
Six months Six months
ended ended
30 June 2022 30 June 2021
GBP'000 GBP'000
-------------------------------------- ------------- -------------
Profit before tax 12,336 11,193
Amortisation of acquired intangibles 1,573 1,587
Change in long-term liabilities (283) (407)
-------------------------------------- ------------- -------------
Adjusted profit before tax 13,626 12,373
-------------------------------------- ------------- -------------
The Group's effective corporation tax rate, reflecting the
blended tax rates in the countries where we operate and including
UK patent box relief, increased to 21.6% (2021 H1: 20.2%). The
increase on the previous period has arisen as the Group has
generated a higher proportion of its profits in Germany where the
tax rate is higher than in other countries in which the Group pays
corporation tax.
Adjusted diluted earnings per share increased by 8% to 5.01p
(2021 H1: 4.64p) and diluted earnings per share increased by 8% to
4.42p (2021 H1: 4.10p) reflecting the Group's increased earnings.
Adjusted basic earnings per share also increased by 8% to 5.07p
(2021 H1: 4.69p) and basic earnings per share increased by 8% to
4.47p (2021 H1: 4.15p).
The Board intends to pay an interim dividend of 0.64p per share
on 21 October 2022 to shareholders on the register at the close of
business on 30 September 2022. This is a 10% increase on the
interim dividend paid in respect of the first half of 2021
reflecting the Board's confidence in the future growth in the
Group.
Operating result by business segment
Six months ended 30 June Surgical Woundcare
2022
GBP'000 GBP'000
---------------------------- --------- ----------
Revenue 35,941 22,363
Segment operating profit 9,605 3,081
Amortisation of acquired
intangibles 1,101 472
Adjusted segment operating
profit (4) 10,706 3,553
Adjusted operating margin
(4) 29.8% 15.9%
---------------------------- --------- ----------
Six months ended 30 June
2021
Revenue 30,377 19,826
Segment operating profit 8,854 2,543
Amortisation of acquired
intangibles 1,001 586
Adjusted segment operating
profit (4) 9,855 3,129
Adjusted operating margin
(4) 32.4% 15.8%
---------------------------- --------- ----------
(4) Adjusted for amortisation of acquired intangible assets
Table is reconciled to statutory information in note 5 of the
financial information.
Surgical
Surgical revenues increased by 18% to GBP35.9 million (2021 H1:
GBP30.4 million) at reported currency and constant currency.
Adjusted operating margin decreased by 260 bps to 29.8% (2021 H1:
32.4%) due to continued investment in research and development,
regulatory expenditure and the impact of inflation which has
diluted the operating margin.
Woundcare
Woundcare revenues increased by 13% to GBP22.4 million (2021 H1:
GBP19.8 million) at reported currency and by 11% at constant
currency. Adjusted operating margin increased by 10 bps to 15.9%
(2021 H1: 15.8%).
Currency
The Group hedges significant currency transaction exposure by
using forward contracts and aims to hedge approximately 80% of its
estimated transactional exposure for the next 12 to 18 months. In
the first half of the year, approximately one third of sales were
invoiced in Euros and approximately one quarter were invoiced in US
Dollars.
The Group estimates that a 10% movement in the GBP:US$ or
GBP:EUR exchange rate will impact Sterling revenues by
approximately 3.8% and 3.2% respectively and in the absence of any
hedging this would have an impact on the Group operating margin of
3.1% and 0.3% percentage points respectively.
Cash Flow
Net cash inflow from operating activities decreased by 8% to
GBP12.5 million (2021 H1: GBP13.7 million) as a result of an
increase in Inventory holdings.
At the end of the Period, the Group had net cash of GBP75.3
million (31 December 2021: GBP73.0 million).
In the first half of 2022, receivables increased by GBP0.9
million due to the addition of AFS and higher sales in the Period
(2021 H1: GBP1.5 million increase) with debtor days at 43, a slight
reduction from the 44 days at 31 December 2021 (2021 H1: 50 days).
Payables increased by GBP5.5 million as a result of the addition of
AFS which includes an element of contingent consideration and
increased liabilities for foreign currency hedging (2021 H1: GBP1.8
million decrease). Creditor days increased to 35 days (2021 H1: 31
days) largely due to the impact of a number of capital expenditure
projects. Inventory levels increased by GBP3.4 million in the
Period but remained consistent at 5.5 months of supply in the
Period (2021 H1: 5.5 months of supply) as the increase is in-line
with revenue growth once the impact of AFS is considered. Attempts
to hold higher stock levels have been offset by supply chain
challenges.
In the Period, we invested GBP4.3 million in capital equipment,
R&D and regulatory costs including investment in expanding the
Plymouth site to increase factory and laboratory capacity (2021 H1:
GBP2.8 million).
Tax payments decreased to GBP0.8 million (2021 H1: GBP1.9
million) which is GBP1.8 million lower than tax in the income
statement due to a refund of taxes paid in the previous year.
In June 2022, the Group paid its final dividend for the year
ended 31 December 2021 of GBP3.0 million (2021 H1: GBP2.6
million).
The Group has an unsecured, undrawn GBP80 million,
multi-currency credit facility provided jointly by HSBC and
NatWest, which is in place until December 2022. This facility
carries an annual interest rate of the applicable reference rate
such as SONIA in the case of sterling plus a margin that varies
between 0.60% and 1.70% depending on the Group's net debt to EBITDA
ratio.
CONDENSED CONSOLIDATED INCOME STATEMENT
(Unaudited) (Unaudited) (Audited)
Six months Year ended
Six months ended ended 31 December
30 June 2022 30 June 2021 2021
Total Total Total
Note GBP'000 GBP'000 GBP'000
----------------------------------- -------- ----------------- -------------- -------------
Revenue 5 58,304 50,203 108,601
Cost of sales (23,934) (22,116) (47,531)
----------------------------------- -------- ----------------- -------------- -------------
Gross profit 34,370 28,087 61,070
Distribution
costs (781) (627) (1,483)
Administration
costs (21,579) (16,512) (36,970)
Other income 227 133 381
Operating
profit 12,237 11,081 22,998
Finance income 436 451 84
Finance costs (337) (339) (1,098)
Profit before
taxation 12,336 11,193 21,984
Income tax 7 (2,668) (2,261) (4,503)
----------------------------------- -------- ----------------- -------------- -------------
Profit for
the period
attributable
to equity holders
of the parent 9,668 8,932 17,481
----------------------------------- -------- ----------------- -------------- -------------
Earnings per
share
Basic 4 4.47p 4.15p 8.11p
Diluted 4 4.42p 4.10p 8.01p
Adjusted diluted
(5) 4 5.01p 4.64p 9.66p
----------------------------------- -------- ----------------- -------------- -------------
The above results relate to continuing operations
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
(Unaudited) (Unaudited) (Audited)
Six months Year ended
Six months ended ended 31 December
30 June 2022 30 June 2021 2021
GBP'000 GBP'000 GBP'000
----------------------------------- -------- ----------------- -------------- -------------
Profit for
the period 9,668 8,932 17,481
----------------------------------- -------- ----------------- -------------- -------------
Exchange differences on translation of
foreign operations 3,896 (3,891) (5,194)
Loss arising on cash flow hedges (3,704) (264) (1,548)
Deferred tax credit arising on cash flow
hedges - 50 290
--------------------------------------------- ----------------- -------------- -------------
Other comprehensive credit /(charge) for
the period 192 (4,105) (6,452)
--------------------------------------------- ----------------- -------------- -------------
Total comprehensive income for the period
attributable to equity holders of the
parent 9,860 4,827 11,029
--------------------------------------------- ----------------- -------------- -------------
(5) Adjusted for amortisation of acquired intangible assets and
change in long-term liabilities
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(Unaudited) (Unaudited) (Audited)
30 June 31 December
2022 30 June 2021 2021
Note GBP'000 GBP'000 GBP'000
Assets
Non-current assets
Acquired intellectual property
rights 13,219 9,364 9,118
Technology based intangible
assets 18,908 20,563 19,256
Software intangibles 1,898 2,184 2,107
Development costs 12,614 8,929 10,477
Goodwill 69,409 66,659 66,032
Property, plant and equipment 27,783 28,542 27,441
Trade and other receivables 79 90 105
-------------------------------- ----- ------------ ------------- --------------------------------
143,910 136,331 134,536
Current assets
Inventories 22,732 20,599 19,300
Trade and other receivables 21,985 19,892 21,016
Current tax assets 177 2,041 1,692
Cash and cash equivalents 75,341 61,114 72,965
-------------------------------- ----- ------------ ------------- --------------------------------
120,235 103,646 114,973
-------------------------------- ----- ------------ ------------- --------------------------------
Total assets 264,145 239,977 249,509
-------------------------------- ----- ------------ ------------- --------------------------------
Liabilities
Current liabilities
Trade and other payables 18,422 11,574 14,958
Current tax liabilities 1,746 307 897
Lease liabilities 1,109 1,196 1,153
21,277 13,077 17,008
Non-current liabilities
Trade and other payables 5,724 2,777 3,679
Deferred tax liabilities 8,229 9,218 7,438
Lease liabilities 8,323 9,271 8,707
22,276 21,266 19,824
-------------------------------- ----- ------------ ------------- --------------------------------
Total liabilities 43,553 34,343 36,832
-------------------------------- ----- ------------ ------------- --------------------------------
Net assets 220,592 205,634 212,677
-------------------------------- ----- ------------ ------------- --------------------------------
Equity
Share capital 11 10,836 10,787 10,804
Share premium 37,102 36,355 36,996
Share-based payments reserve 14,434 12,107 13,180
Investment in own shares (167) (164) (164)
Share-based payments deferred
tax reserve 569 557 933
Other reserve 1,531 1,531 1,531
Hedging reserve (3,725) 1,023 (21)
Translation reserve 1,960 (633) (1,936)
Retained earnings 158,052 144,071 151,354
-------------------------------- ----- ------------ ------------- --------------------------------
Equity attributable to equity
holders of the parent 220,592 205,634 212,677
-------------------------------- ----- ------------ ------------- --------------------------------
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
deferred
capital premium payments shares tax reserve reserve reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- -----------------
At 1 January
2022
(audited) 10,804 36,996 13,180 (164) 933 1,531 (21) (1,936) 151,354 212,677
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- -----------------
Consolidated
profit for
the
period to 30
June 2022 - - - - - - - - 9,668 9,668
Other
comprehensive
income - - - - - - (3,704) 3,896 - 192
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- -----------------
Total
comprehensive
income - - - - - - (3,704) 3,896 9,668 9,860
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- -----------------
Share-based
payments - - 1,141 - - - - - - 1,141
Share options
exercised 32 106 113 - (364) - - - - (113)
Shares
purchased by
EBT - - - (337) - - - - - (337)
Shares sold by
EBT - - - 334 - - - - - 334
Dividends paid
(Note 8) - - - - - - - - (2,970) (2,970)
----------- ------------ -------- -------- ------------
At 30 June
2022
(unaudited) 10,836 37,102 14,434 (167) 569 1,531 (3,725) 1,960 158,052 220,592
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- -----------------
Share- Investment Share-based
Share Share based in own payments Other Hedging Translation Retained
deferred
capital premium payments shares tax reserve reserve reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- -----------------
At 1 January
2021
(audited) 10,769 36,288 11,142 (162) 430 1,531 1,237 3,258 137,718 202,211
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- -----------------
Consolidated
profit for
the period
to 30 June
2021 - - - - - - - - 8,932 8,932
Other
comprehensive
income - - - - - - (214) (3,891) - (4,105)
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- -----------------
Total
comprehensive
income - - - - - - (214) (3,891) 8,932 4,827
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- -----------------
Share-based
payments - - 878 - - - - - - 878
Share options
exercised 18 67 87 - 127 - - - - 299
Shares
purchased by
EBT - - - (368) - - - - - (368)
Shares sold by
EBT - - - 366 - - - - - 366
Dividends paid
(Note 8) - - - - - - - - (2,579) (2,579)
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- -----------------
At 30 June
2021
(unaudited) 10,787 36,355 12,107 (164) 557 1,531 1,023 (633) 144,071 205,634
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- -----------------
Share- Investment Share-based
Share Share based in own payments Other Hedging Translation Retained
deferred
capital premium payments shares tax reserve reserve reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- --------
At 1 January
2021
(audited) 10,769 36,288 11,142 (162) 430 1,531 1,237 3,258 137,718 202,211
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- --------
Consolidated
profit for
the year
to 31
December 2021 - - - - - - - - 17,481 17,481
Other
comprehensive
income - - - - - - (1,258) (5,194) - (6,452)
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- --------
Total
comprehensive
income - - - - - - (1,258) (5,194) 17,481 11,029
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- --------
Share-based
payments - - 1,979 - 503 - - - - 2,482
Share options
exercised 35 708 59 - - - - - - 802
Shares
purchased by
EBT - - - (366) - - - - - (366)
Shares sold by
EBT - - - 364 - - - - - 364
Dividends paid
(Note 8) - - - - - - - - (3,845) (3,845)
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- --------
At 31 December
2021
(audited) 10,804 36,996 13,180 (164) 933 1,531 (21) (1,936) 151,354 212,677
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- --------
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited) (Unaudited) (Audited)
Six months Six months
ended ended Year ended
30 June 30 June 31 December
22 21 21
Note GBP'000 GBP'000 GBP'000
------------------------------------------- ----- ------------ ------------ ------------
Cash flows from operating activities
Operating profit 12,237 11,081 22,998
Adjustments for:
Depreciation 1,917 1,946 3,893
Amortisation - intellectual property
rights 1,573 1,587 3,179
- development costs 436 336 529
- software intangibles 245 241 1,247
(Increase)/Decrease in inventories (2,355) (190) 941
(Increase)/Decrease in trade and
other receivables (1,098) 967 (1,769)
(Decrease)/Increase in trade and
other payables (737) (1,318) 2,105
Share-based payments expense 1,141 878 1,979
Taxation (827) (1,867) (4,077)
Net cash inflow from operating
activities 12,532 13,661 31,025
------------------------------------------- ----- ------------ ------------ ------------
Cash flows from investing activities
Purchase of software (22) (28) (254)
Capitalised research and development (2,571) (1,969) (4,441)
Purchases of property, plant and
equipment (1,669) (848) (1,768)
Disposal of property, plant and
equipment 27 45 53
Interest received 156 43 84
Acquisition of subsidiary (net of
cash acquired) 9 (2,781) - -
Net cash used in investing activities (6,860) (2,757) (6,326)
------------------------------------------- ----- ------------ ------------ ------------
Cash flows from financing activities
Dividends paid 8 (2,970) (2,579) (3,845)
Repayment of principal under lease
liabilities (581) (607) (1,281)
Issue of equity shares 108 69 723
Shares purchased by EBT (337) (368) (366)
Shares sold by EBT 334 366 364
Interest paid (304) (342) (700)
Repayment of borrowings 9 (331) - -
Net cash used in financing activities (4,081) (3,461) (5,105)
------------------------------------------- ----- ------------ ------------ ------------
Net increase in cash and cash equivalents 1,591 7,443 19,594
Cash and cash equivalents at the
beginning of the period 72,965 53,829 53,829
Effect of foreign exchange rate
changes 785 (158) (458)
Cash and cash equivalents at the
end of the period 75,341 61,114 72,965
------------------------------------------- ----- ------------ ------------ ------------
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 six months ended 30 June 2022
comprise the Company and its subsidiaries (together referred to as
the "Group").
The Group is primarily involved in the design, development and
manufacture of innovative tissue-healing technology for sale into
the global medical device market.
2. Basis of preparation
The information for the period ended 30 June 2022 does not
constitute statutory accounts as defined in section 434 of the
Companies Act 2006. A copy of the statutory accounts for the year
ended 31 December 2021 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 apart from the adoption of the following new or amended
IFRS and Interpretations issued by the International Accounting
Standards Board (IASB):
- Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS37)
- Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16)
- Annual Improvements to IFRS Standards 2018-2020 (Amendments to
IFRS1, IFRS9, IFRS16 and IAS 41); and
- References to Conceptual Framework (Amendments to IFRS3)
No revised standards adopted in the current period have had a
material impact on the Group's financial statements.
The unaudited condensed set of financial statements included in
this half-yearly financial report have been prepared in accordance
with International Accounting Standard 34 'Interim Financial
Reporting', as adopted by the United Kingdom. These condensed
interim accounts should be read in conjunction with the annual
accounts of the Group for the year ended 31 December 2021. The
annual financial statements of Advanced Medical Solutions Group plc
are prepared in accordance with International Financial Reporting
Standards as adopted by the United Kingdom.
4. Earnings per share
(Unaudited) (Unaudited)
Six months Six months (Audited)
ended ended Year ended
30 June 30 June 31 December
2022 2021 2021
Number of shares '000 '000 ' 000
------------------------------------- ------------ ------------ ------------
Weighted average number of ordinary
shares for the purposes of basic
earnings per share 216,272 215,468 215,677
------------------------------------- ------------ ------------ ------------
Effect of dilutive potential
ordinary shares: share options,
deferred share bonus, LTIPs 2,527 2,630 2,627
------------------------------------- ------------ ------------ ------------
Weighted average number of
ordinary shares for the purposes
of diluted earnings per share 218,799 218,098 218,304
------------------------------------- ------------ ------------ ------------
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
Adjusted EPS is calculated after adding back amortisation of
acquired intangible assets and change in long-term liabilities and
is based on earnings of:
(Unaudited) (Unaudited)
Six months Six months (Audited)
ended ended Year ended
30 June 30 June 31 December
2022 2021 2021
GBP'000 GBP'000 GBP'000
---------------------------------------- ------------ ------------ ------------
Earnings
Profit for the year being attributable
to equity holders of the parent 9,668 8,932 17,481
Amortisation of acquired intangible
assets 1,573 1,587 3,179
Change in long-term liabilities (283) (407) 426
Adjusted profit for the year being
attributable to equity holders of the
parent 10,958 10,112 21,086
---------------------------------------- ------------ ------------ ------------
pence pence pence
---------------------------------------- ------------ ------------ ------------
Basic EPS 4.47 4.15 8.11
Diluted EPS 4.42 4.10 8.01
Adjusted basic EPS 5.07 4.69 9.78
Adjusted diluted EPS 5.01 4.64 9.66
---------------------------------------- ------------ ------------ ------------
The denominators used are the same as those detailed above for
both basic and diluted earnings per share.
The adjusted diluted EPS information is considered to provide a
fairer representation of the Group's trading performance.
5. Segment information
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,
exceptional items, 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:
Surgical
Selling, marketing and innovation of the Group's surgical
products either sold directly by our sales teams or by
distributors.
Woundcare
Selling, marketing and innovation of the Group's advanced
woundcare products supplied under partner brands, bulk materials
and the ActivHeal (R) brand predominantly to the UK NHS as well as
bio diagnostics products following the acquisition of Raleigh in
November 2020.
Segment information about these Business Units is presented
below:
Six months ended
30 June 2022 Surgical Woundcare Consolidated
(Unaudited) GBP'000 GBP'000 GBP'000
-------------------------------------- --------- ---------- -------------
Revenue 35,941 22,363 58,304
-------------------------------------- --------- ---------- -------------
Result
-------------------------------------- --------- ---------- -------------
Adjusted segment operating profit 10,706 3,553 14,259
Amortisation of acquired intangibles (1,101) (472) (1,573)
Segment operating profit 9,605 3,081 12,686
Unallocated expenses (449)
-------------
Operating profit 12,237
Finance income 436
Finance costs (337)
-------------------------------------- --------- ---------- -------------
Profit before tax 12,336
Tax (2,668)
-------------------------------------- --------- ---------- -------------
Profit for the period 9,668
-------------------------------------- --------- ---------- -------------
At 30 June 2022
(Unaudited) Surgical Woundcare Consolidated
Other information GBP'000 GBP'000 GBP'000
-------------------------------- ---------- ----------- --------------
Capital additions:
Software intangibles 13 9 22
Development 1,976 595 2,571
Property, plant and equipment 1,095 574 1,669
Depreciation and amortisation (2,695) (1,476) (4,171)
-------------------------------- ---------- ----------- --------------
Balance sheet
Assets
Segment assets 179,274 84,757 264,031
Unallocated assets 114
-------------------------------- ---------- -----------
Consolidated total assets 264,145
-------------------------------- ---------- ----------- --------------
Liabilities
Segment liabilities 29,184 14,369 43,553
-------------------------------- ---------- ----------- --------------
Consolidated total liabilities 43,553
-------------------------------- ---------- ----------- --------------
Six months ended
30 June 2021 Surgical Woundcare Consolidated
(Unaudited) GBP'000 GBP'000 GBP'000
-------------------------------------- --------- ---------- -------------
Revenue 30,377 19,826 50,203
-------------------------------------- --------- ---------- -------------
Result
-------------------------------------- --------- ---------- -------------
Adjusted segment operating profit 9,855 3,129 12,984
Amortisation of acquired intangibles (1,001) (586) (1,587)
Segment operating profit 8,854 2,543 11,397
Unallocated expenses (316)
-------------
Operating profit 11,081
Finance income 451
Finance costs (339)
-------------------------------------- --------- ---------- -------------
Profit before tax 11,193
Tax (2,261)
-------------------------------------- --------- ---------- -------------
Profit for the period 8,932
-------------------------------------- --------- ---------- -------------
At 30 June 2021
(Unaudited) Surgical Woundcare Consolidated
Other information GBP'000 GBP'000 GBP'000
-------------------------------- --------- ---------- -------------
Capital additions:
Software intangibles 16 12 28
Development 1,216 753 1,969
Property, plant and equipment 463 385 848
Depreciation and amortisation (2,481) (1,629) (4,110)
-------------------------------- --------- ---------- -------------
Balance sheet
Assets
Segment assets 155,927 83,870 239,797
Unallocated assets 180
-------------------------------- --------- ----------
Consolidated total assets 239,977
-------------------------------- --------- ---------- -------------
Liabilities
Segment liabilities 20,301 14,043 34,343
-------------------------------- --------- ---------- -------------
Consolidated total liabilities 34,343
-------------------------------- --------- ---------- -------------
Year ended
31 December 2021 Surgical Woundcare Consolidated
(Audited) GBP'000 GBP'000 GBP'000
-------------------------------------- --------- ---------- -------------
Revenue 64,630 43,971 108,601
-------------------------------------- --------- ---------- -------------
Result
-------------------------------------- --------- ---------- -------------
Adjusted segment operating profit 20,303 6,594 26,897
Amortisation of acquired intangibles (2,005) (1,174) (3,179)
Segment operating profit 18,298 5,420 23,718
Unallocated expenses (720)
-------------
Operating profit 22,998
Finance income 84
Finance costs (1,098)
-------------------------------------- --------- ---------- -------------
Profit before tax 21,984
Tax (4,503)
-------------------------------------- --------- ---------- -------------
Profit for the year 17,481
-------------------------------------- --------- ---------- -------------
Year ended
31 December 2021
(Audited) Surgical Woundcare Consolidated
Other information GBP'000 GBP'000 GBP'000
-------------------------------- --------- ---------- -------------
Capital additions:
Software intangibles 145 109 254
Development 2,922 1,519 4,441
Property, plant and equipment 1,028 740 1,768
Depreciation and amortisation (5,579) (3,269) (8,848)
-------------------------------- --------- ---------- -------------
Balance sheet
Assets
Segment assets 159,442 89,944 249,386
Unallocated assets 123
-------------------------------- --------- ----------
Consolidated total assets 249,509
-------------------------------- --------- ---------- -------------
Liabilities
Segment liabilities 22,651 14,181 36,832
-------------------------------- --------- ---------- -------------
Consolidated total liabilities 36,832
-------------------------------- --------- ---------- -------------
Geographical segments
The Group operates in the UK, Germany, the Netherlands, France,
the Czech Republic, Israel, with a sales office located in Russia
and a sales presence 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 or
services, based upon location of the Group's customers:
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
30 June 2022 30 June 2021 31 December 2021
GBP'000 GBP'000 GBP'000
-------------------------- ----------------- ----------------- -----------------
United Kingdom 9,515 8,488 18,454
Germany 10,250 9,956 20,863
Rest of Europe 14,596 12,487 22,913
United States of America 19,519 16,385 36,712
Rest of World 4,424 2,887 9,659
-------------------------- ----------------- ----------------- -----------------
58,304 50,203 108,601
-------------------------- ----------------- ----------------- -----------------
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 2022 30 June 2021 31 December 2021
GBP'000 GBP'000 GBP'000
-------------------------- ----------------- ----------------- -----------------
United Kingdom 145,112 133,038 142,056
Germany 67,942 67,338 67,389
France 9,611 9,263 9,674
Rest of Europe 14,697 6,860 7,853
Israel 22,277 20,091 20,553
United States of America 4,506 3,387 1,984
264,145 239,977 249,509
-------------------------- ----------------- ----------------- -----------------
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 2022. 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 Fair value
30 30 30
June 30 June 31 Dec June 30 June 31 Dec June 30 June 31 Dec
22 21 21 22 21 21 22 21 21
USD:GBP1 USD:GBP1 USD:GBP1 USD'000 USD'000 USD'000 GBP'000 GBP'000 GBP'000
Cash flow
hedges
Sell US
dollars
Less than
3 months 1.36 1.29 1.32 9,000 6,500 10,000 (791) 339 152
3 to 6
months 1.36 1.26 1.38 10,000 8,000 7,000 (868) 570 (114)
7 to 12
months 1.32 1.35 1.36 17,500 14,000 19,000 (1,012) 269 (184)
Over 12
months 1.30 - 1.34 25,000 - 7,500 (1,052) - 14
----------- --------- --------- --------- -------- -------- -------- -------- -------- --------
61,500 28,500 43,500 (3,723) 1,178 (132)
----------- --------- --------- --------- -------- -------- -------- -------- -------- --------
Ave. exchange rate Foreign currency Fair value
30 30 30
June 30 June 31 Dec June 30 June 31 Dec June 30 June 31 Dec
22 21 21 22 21 21 22 21 21
EUR:GBP1 EUR:GBP1 EUR:GBP1 EUR'000 EUR'000 EUR'000 GBP'000 GBP'000 GBP'000
Cash flow
hedges
Sell Euros
Less than
3 months 1.15 1.13 1.11 900 800 700 6 23 43
3 to 6
months 1.15 1.10 1.15 900 600 900 2 27 24
7 to 12
months 1.15 1.12 1.15 1,600 1,200 1,800 (5) 33 32
Over 12
months 1.15 - 1.14 800 - 600 (5) - 12
------------ --------- --------- --------- -------- -------- -------- -------- -------- --------
4,200 2,600 4,000 (2) 83 111
------------ --------- --------- --------- -------- -------- -------- -------- -------- --------
7. Taxation
The weighted average tax rate for the Group for the six month
period ended 30 June 2022 was 24.4% (first half of 2021: 22.5%,
year ended 31 December 2021: 23.0%). The Group's effective tax rate
for the full year is expected to be 21.6%, which has been applied
to the six months ended 30 June 2022 (first half of 2021: 20.2%,
year ended 31 December 2021: 20.5%). This represents an increase on
the previous period due to a higher proportion of the Group's
profits arising in Germany where the tax rate is higher than in
other countries in which the Group pays corporation tax.
8. Dividends
(Unaudited) (Unaudited) (Audited)
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2022 2021 2021
Amounts recognised as distributions
to equity holders in the period: GBP'000 GBP'000 GBP'000
------------------------------------- ------------ ------------ ------------
Final dividend for the year ended
31 December 2020 of 1.20p per
ordinary share - 2,579 2,579
Interim dividend for the year
ended 31 December 2021 of 0.58p
per ordinary share - - 1,266
Final dividend for the year ended
31 December 2021 of 1.37p per
ordinary share 2,970 - -
-------------------------------------
2,970 2,579 3,845
------------------------------------- ------------ ------------ ------------
9. Acquisition of AFS
On 28 April 2022, the Group acquired the entire issued share
capital of AFS Medical GmbH, an Austria based distributor of
minimally invasive surgical devices.
In the two month period from acquisition to 30 June 2022, AFS
contributed GBP0.9 million of revenue to the Group and a negligible
amount of operating profit. In addition, amortisation of intangible
assets of GBP0.1 million was recorded within the Group as a result
of the acquisition.
GBP'000
------------------------------------ ------------
Identifiable net assets acquired
Customer related intangible assets 3,424
Marketing intangible assets 524
Property, plant and equipment 242
Trade and other receivables 296
Inventory 845
Cash and cash equivalents 42
Trade and other payables (1,294)
Lease liabilities (226)
Borrowings (331)
Borrowings from AMS (2,526)
Deferred tax on intangible asset (986)
Arising on acquisition
Goodwill 1,452
------------------------------------ ------------
Total net assets 1,462
------------------------------------ ------------
Borrowings from AMS arose as funds were advanced prior to
completion of the acquisition to repay external funding. These
borrowings are now eliminated on consolidation. GBP0.3 million of
borrowings that existed at the date of acquisition have been repaid
prior to 30 June 2022 as disclosed in the Condensed Consolidated
Statement of Cash flows.
Satisfied by GBP'000
------------------------------ --------------
Cash consideration 297
Contingent consideration 1,165
------------------------------ --------------
1,462
------------------------------ --------------
Net cash flow on acquisition GBP'000
------------------------------ --------------
Cash consideration 297
------------------------------ --------------
Cash acquired (42)
------------------------------ --------------
255
------------------------------ --------------
Contingent consideration arose on the acquisition in respect of
up to EUR1.5 million which is payable subject to EBITDA delivery in
2022-2024. GBP1.2 million is the estimated fair value of it as at
the acquisition date.
None of the goodwill on the acquisition is expected to be
deductible for income tax.
10. Contingent liabilities
The Directors are not aware of any contingent liabilities faced
by the Group as at 30 June 2022 (30 June 2021: GBPnil, 31 December
2021: GBPnil).
11. Share capital
Share capital as at 30 June 2022 amounted to GBP10,836,000 (30
June 2021: GBP10,787,000, 31 December 2021: GBP10,804,000). During
the period the Group issued 655,390 shares in respect of share
options, LTIPS, Deferred Annual Bonus Scheme and 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.
Due to the impact that COVID-19 has had on the global economy,
the Group has deemed it appropriate to use sensitivity analysis on
the Group's forecasted performance, using a mid-case scenario, a
10% sales reduction, and a worst-case scenario, a 25% sales
reduction. The results show that in all of these scenarios AMS is
able to continue its operations for a period of at least 12 months,
and importantly there remains significant margin between our
covenants in place.
With regards to the Group's financial position, it had cash and
cash equivalents at 30 June 2022 of GBP75.3 million and a
four-year, GBP80 million, multi-currency, revolving credit
facility, obtained in December 2018, with an accordion option under
which AMS can request up to an additional GBP20 million on the same
terms. The credit facility is provided jointly by HSBC and NatWest,
is subject to leverage and interest cover covenants, is unsecured
on the assets of the Group and is currently undrawn.
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, long-term market growth is expected. 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.
After taking 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 47-51 of the
Annual Report and Accounts for the year ended 31 December 2021.
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
There have been no material events subsequent to the end of the
interim reporting period ended 30 June 2022.
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 and are available on our
website "www.admedsol.com".
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END
IR FXLLFLKLZBBD
(END) Dow Jones Newswires
September 14, 2022 02:02 ET (06:02 GMT)
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