TIDMAMS
RNS Number : 8936L
Advanced Medical Solutions Grp PLC
11 September 2019
11 September 2019
Advanced Medical Solutions Group plc
("AMS" or the "Group")
Interim Results for the six months ended 30 June 2019
Winsford, UK, 11 September 2019: Advanced Medical Solutions
Group plc (AIM: AMS), the surgical and advanced woundcare
specialist company, today announces its unaudited interim results
for the six months ended 30 June 2019.
Financial Highlights:
GBP million H1 2019 H1 2018 Reported Growth
change at constant
currency(1)
Group revenue 48.7 47.6 +2% +1%
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Adjusted
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Adjusted(2) profit before tax 12.8 13.6 -6%
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Adjusted(2) diluted earnings
per share (pence) 4.80 4.97 -3%
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Adjusted(3) net cash inflow from
operating activities 11.2 12.7 -12%
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Reported
-------- -------- ---------
Profit before tax 11.2 13.6 -17%
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Diluted earnings per share (pence) 4.06 4.95 -18%
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Net cash inflow from operating
activities 10.3 12.7 -19%
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Net cash(4) 63.9 71.1 -10%
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Interim dividend per share (pence) 0.50 0.42 +19%
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Business Highlights (including post period end):
-- Group revenues up 2% to GBP48.7 million (1% at constant currency):
o Product ranges and geographies excluding US LiquiBand(R)
delivered 10% revenue growth at reported and constant currency
o 27% reduction in US LiquiBand(R) sales, as previously
referenced in our trading update, due to destocking, competitor
activity and delayed product launches
-- Acquisition of Sealantis in January for US$25 million:
o Integration and commercialisation plans progressing well
o In line with expectations, planned investment in R&D
impacted Group profit and positions the Group for future growth
-- Realigned business unit structure in place since January 2019:
o Surgical: revenues down 3% to GBP26.5 million (2018 H1:
GBP27.3 million) and by 4% at constant currency
-- LiquiBand(R) delivered strong growth in all territories, with
the exception of the US:
-- US revenues down by 27% to GBP7.7 million (2018 H1: GBP10.5
million), and by 31% at constant currency
-- UK and Germany revenues up 25% at reported and constant
currency to GBP3.4 million (2018 H1: GBP2.7 million)
-- Rest of World revenues up 46% to GBP2.1 million (2018 H1:
GBP1.4 million) and by 45% at constant currency
-- LiquiBand(R) Fix8(TM) revenues up 20% at reported and
constant currency to GBP1.2 million (2018 H1: GBP1.0 million)
-- RESORBA(R) sutures up 6% to GBP7.2 million (2018 H1: GBP6.8
million) and by 7% at constant currency
-- RESORBA(R) biosurgicals up 5% to GBP4.5 million (2018 H1:
GBP4.3 million) and by 6% at constant currency
o Woundcare: revenues up 9% to GBP22.2 million (2018 H1: GBP20.3
million) and by 8% at constant currency
-- Infection Management up 14% to GBP9.4 million (2018 H1:
GBP8.3 million) and by 12% at constant currency
-- Eddie Johnson appointed as CFO and Board member on 1 January
2019, following the planned retirement of Mary Tavener
-- The Board intends to pay an interim dividend of 0.50p per
share (2018 H1: 0.42p), an increase of 19%, on 25 October 2019 to
shareholders on the register at the close of business on 27
September 2019.
Commenting on the interim results, Chris Meredith, CEO of AMS,
said: "The Group continues to perform well and I am pleased to
report another period of growth. Despite disappointing trading in
the US for LiquiBand, which we expect to recover next year, we are
excited by the upcoming product approvals and pleased with the
progress made across multiple products and markets. The Board
continues to be optimistic about our long-term prospects and the
potential for further organic and acquisitive growth."
- 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 All items are shown before exceptional items which, in 2019 H1
were GBP0.9 million (2018 H1: nil) and before amortisation of
acquired intangible assets which, in 2019 H1, were GBP0.7 million
(2018 H1: GBP0.04 million) as defined in the financial review
3 Adjusted net cash inflow from operating activities is
calculated as net cash inflow from operating activities plus
exceptional items of GBP0.9 million (2018 H1: GBPnil)
4 Net cash is defined as cash and cash equivalents plus short
term investments less financial liabilities and bank loans
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
Consilium Strategic Communications Tel: +44 (0) 20 3709
5700
Mary-Jane Elliott / Matthew Neal / Nicholas
Brown / Olivia Manser
Investec Bank plc (NOMAD) & Broker Tel: +44 (0) 20 7597
5970
Daniel Adams / Gary Clarence / Patrick
Robb
About Advanced Medical Solutions Group plc
AMS is a world-leading independent developer and manufacturer of
innovative and technologically advanced products for the global
surgical and woundcare markets, focused on quality outcomes for
patients and value for payers. AMS has a wide range of surgical
products including tissue adhesives, sutures, haemostats, and
internal fixation devices, which it markets under its brands
LiquiBand(R) , RESORBA(R) , and LiquiBandFix8(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. In 2019, the Group acquired Sealantis, an Israeli-based
medical device company with a patent-protected internal sealant
technology platform.
AMS's products, manufactured in the UK, the Netherlands,
Germany, and the Czech Republic, are sold globally via a network of
multinational or regional partners and distributors, as well as via
AMS's own direct sales forces in the UK, Germany, the Czech
Republic and Russia. The Group has R&D innovation hubs in the
UK and Germany, as well as the recently acquired R&D facility
in Israel. Established in 1991, the Group has approximately 650
employees. For more information please see www.admedsol.com.
Chief Executive's Review
Group performance
I am pleased to report another period of growth for the group
despite the downturn in US LiquiBand(R) sales. Revenue increased by
2% to GBP48.7 million and by 1% at constant currency with continued
good results from the majority of our geographies and product
ranges. Excluding US LiquiBand(R) , Group sales increased by 10% on
both a reported and constant currency basis.
As previously announced, Surgical revenues were impacted by a
shortfall in US LiquiBand(R) sales and decreased by 3% (4% at
constant currency) to GBP26.5 million (2018 H1: GBP27.3 million).
In contrast, Woundcare revenues increased by 9% (8% at constant
currency) to GBP22.2 million (2018 H1: GBP20.3 million) as a result
of increased partner demand for antimicrobial dressings in
Infection Management.
Realigned Business Units for 2019
At the start of 2019, we made some adjustments to our Business
Unit structure to better manage our different surgical and advanced
woundcare opportunities and to optimise the Group's routes to
market. We are pleased this is having the desired effect on
woundcare and we believe that with our two individual business
units we are now optimally positioned to drive growth for the
future.
Growth
Despite the challenging conditions experienced across our
sector, I am pleased that the Group continues to see significant
growth opportunities in our surgical and woundcare ranges. Whilst a
slow-down in our progress with US LiquiBand(R) affected our overall
Surgical growth during the period, the performance of our range in
all other key markets and regions continues to be very strong.
In January 2019, AMS announced the acquisition of Sealantis for
US$25 million. Sealantis' products, which reduce leakage of blood
or fluid in high-risk surgery, provide AMS with access to the
growing $1 billion internal sealants market. Integration is
progressing well and is largely complete. We expect to start
clinical trials on target at around the end of 2019 to support
first product launches for gastrointestinal surgery in 2021 with
further innovations to follow in subsequent years.
The Group continues to explore options to acquire other
businesses to accelerate growth and deliver value for our
shareholders. Our selection criteria remain unchanged. The Group
has disclosed an exceptional item in the period which reflects
costs incurred in such business development activities.
Regulatory
In the first half of 2019, AMS successfully completed its
five-year recertification process for the LiquiBand(R) range
following on from the recent recertification of the RESORBA(R)
portfolio. This demonstrates our capability to navigate the
increasingly challenging regulatory framework as we implement our
robust group wide regulatory plan. Consequently, AMS is well
prepared for the stricter requirements on product safety and
performance, clinical evaluation and post-market clinical evidence
stipulated by the new European Medical Devices Regulation (MDR)
which is currently in its transition phase.
In terms of growth and innovation, we are beginning to see the
impact of the MDR on the sector and our extensive preparation is
starting to provide opportunities and we remain confident in AMS's
ability to exploit them.
Brexit
Having completed a comprehensive review of Brexit related risks,
we continue to be well prepared for the possibility of a 'No Deal'
Brexit. We have reassigned our UK product certificates to BSI
Netherlands and appointed Advanced Medical Solutions BV as EU
Authorised Representative for our UK manufactured products. We have
increased stock holdings on all sites and continue to have
extensive planning conversations with our customers.
Business Unit performance
Surgical Business Unit
The Surgical Business Unit reports tissue adhesives, sutures,
biosurgical devices and internal fixation devices marketed under
the AMS brands LiquiBand(R) , RESORBA(R) and LiquiBand(R) Fix8(TM).
In the first half of 2019, Surgical revenue decreased by 3% to
GBP26.5 million (2018 H1: GBP27.3 million) (4% at constant
currency), with a slowdown in the US masking significant progress
made elsewhere.
Surgical Business 2019 2018 Reported Growth
Unit H1 H1 Growth at constant
currency
Advanced closure 13,093 14,575 (10%) (13%)
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Internal Fixation
and Sealants 1,179 981 20% 20%
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Traditional Closure 7,181 6,761 6% 7%
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Biosurgical Devices 4,508 4,295 5% 6%
------- ------- --------- -------------
Topical Sealants 530 693 (24%) (21%)
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TOTAL 26,491 27,305 (3%) (4%)
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Advanced Closure
Advanced Closure comprises predominately the LiquiBand(R)
topical skin adhesive range of products incorporating medical
cyanoacrylate adhesives in combination with purpose-built
applicators. These products are used to close and protect a broad
variety of surgical and traumatic wounds.
Advanced Closure 2019 2018 Reported Growth
H1 H1 Growth at constant
currency
Americas 7,690 10,493 (27%) (31%)
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UK/Germany 3,353 2,676 25% 25%
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Rest of World 2,050 1,406 46% 45%
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TOTAL 13,093 14,575 (10%) (13%)
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Revenues grew strongly in all territories with the exception of
the US where we were impacted by a combination of factors:
-- Destocking
-- Competitor gains at two large Group Purchasing Organisations
-- Lack of combined glue and tape device for large wound closure in the AMS portfolio
Consequently, first half revenues decreased by 10% to GBP13.1
million (2018 H1: GBP14.6 million) or by 13% at constant
currency.
US LiquiBand(R) is expected to return to growth in 2020 due to
an expanded product portfolio and the stabilisation of customer
inventories. We expect to obtain US approval before the end of the
year for the newly developed accelerated drying device and to
launch with a major partner. In addition, the LiquiBand(R) XL
device for closing larger wounds will significantly augment our
portfolio and open new markets and customer opportunities. The
LiquiBand(R) XL regulatory process is progressing slower than
anticipated with US approval now expected in Q3 2020.
Internal Fixation and Sealants
This category comprises our LiquiBand(R) Fix 8(TM) devices,
indicated for the internal fixation of hernia meshes using our
LiquiBand(R) technology. Through the accurate delivery of
individual drops of cyanoacrylate adhesive, LiquiBand(R) Fix8(TM)
is used to hold hernia meshes in place within the body instead of
traditional tacks and staples.
Revenue in this category increased by 20% to GBP1.2 million
(2018 H1: GBP1.0 million) driven by demand for the LiquiBand(R) Fix
8(TM) laparoscopic device in particular. Open hernia surgery is
also a substantial portion of the global hernia market and
represents a significant opportunity for AMS. The open surgery
device soft launched in late 2018 in order to gather clinical
feedback and, to date, this has been very positive from surgical
users with no recommended design changes and we are therefore
moving forward with full promotion and sales activities in the
second half of the year.
The US Premarket Approval process for LiquiBand(R) Fix8(TM) is
underway with IDE patient enrolment commencing in August 2019. We
continue to be excited about the long-term prospects for the
LiquiBand(R) Fix8(TM) portfolio and entry into the US will be a
significant milestone for the Group.
The global internal surgery market represents a significant
opportunity for AMS and the acquisition of Sealantis, announced in
January 2019, provides AMS with a technology platform and delivery
systems to access the $1 billion internal sealant market. Premarket
activities in R&D, marketing and regulatory are ongoing and
following this initial work, we are implementing product design
enhancements ahead of the trials starting at around the end of
2019.
Traditional Closure
The traditional closure category includes our RESORBA(R) branded
Absorbable and Non-absorbable Suture ranges which include certain
surgical specialties such as dental and ophthalmic and are sold in
Germany and numerous other territories. Revenue increased by 6% to
GBP7.2 million (2018 H1: GBP6.8 million) (7% at constant
currency).
AMS will continue to explore targeted opportunities in this area
and will aim to drive growth and market share by bundling sutures
with other products. AMS is also investing in operational
improvements and capacity to allow for improved flexibility and
efficiencies.
Biosurgical Devices
The Biosurgical devices category principally comprises
collagen-based materials including our RESORBA(R) Gentacoll(R)
Gentamycin collagen products used in Orthopaedic and Cardiac
applications, and collagen membranes and cones used in Dental
applications. Revenue increased by 5% to GBP4.5 million (2018 H1:
GBP4.3 million) and by 6% at constant currency due to progress with
multiple distributors.
Prescription usage of our antibiotic collagen pouch for
cardiovascular devices in Germany began at the end of 2018 and we
are also working towards approval for this product in the US.
Antibiotic loaded collagens provide local, rather than systemic,
drug delivery giving significant patient benefits. This is a key
product development focus for AMS and we are working on development
and regulatory activities for alternative antibiotics for
Orthopaedic and Cardiac applications.
Submission for CE approval for a Vancomycin-containing collagen
was completed in the first half of 2019 with expected notified body
and pharmaceutical body responses anticipated in the first half of
2020.
Woundcare Business Unit
The Woundcare Business Unit is comprised of our multi-product
portfolio of advanced woundcare dressings and bulk materials sold
under partner brands plus the AMS branded ActivHeal(R) range sold
predominately to the NHS.
In the first half of 2019, revenue increased by 9% to GBP22.2
million (2018 H1: GBP20.3 million) (8% at constant currency)
largely driven by increased partner demand for antimicrobial
dressings (Infection Management).
Woundcare Business 2019 2018 Reported Growth
Unit H1 H1 Growth at constant
currency
Infection Management 9,407 8,273 14% 12%
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Exudate Management 10,082 9,466 7% 5%
------- ------- --------- -------------
Other Woundcare 2,734 2,577 6% 6%
------- ------- --------- -------------
TOTAL 22,223 20,316 9% 8%
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Infection Management
The infection management category comprises advanced woundcare
dressings that incorporate antimicrobials such as Silver and
Polyhexamethylene Biguanide (PHMB). Revenue increased by 14% to
GBP9.4 million (2018 H1: GBP8.3 million) and by 12% at constant
currency, with growth being driven by demand from a number of new
EU and ROW partners along with additional orders from some existing
customers which did include an element of Brexit planning.
The new atraumatic Silicone PHMB variant which received US
approval, post-period end, in July 2019 gives AMS and its
commercial partners much greater access to the attractive US
silicone antimicrobial foam market, which is worth in excess of
$100m and growing at 6% year-on-year. We expect to start shipping
orders for Silicone PHMB dressings around the end of 2019. The
first US partner for our existing PHMB range, which was approved in
late 2018, is working through its launch inventories and is
expected to reorder in the second half of 2019.
Post-period end, in July 2019, we also obtained US approval for
our Silver High Performance Dressing; the Group's next generation
antimicrobial gelling fibre technology with excellent performance
and patent protected construction and expect to receive launch
orders in the second half of 2019.
In August 2019, we gained US and EU approval for our Moisture
Wicking Fabric with silver, indicated for use in the management of
skin folds and skin-on-skin friction. This gives AMS and its
partners access to a $25 million US market as well as the nascent
EU market with orders expected in the second half of 2019.
We expect a second major US partner launch for our silver
post-operative dressings in the first half of 2020 whilst the
initial partner is expected to reorder in the second half of
2019.
Looking forward, the Group is working on developing next
generation high-gelling products with differentiated antibiofilm
claims.
Exudate Management
Exudate management comprises advanced woundcare dressings and
gels which do not incorporate any antimicrobial elements. Following
our business unit alignment in January 2019, this category includes
the majority of our ActivHeal(R) range. Revenue increased by 7% to
GBP10.1 million (2018 H1: GBP9.5 million) (5% at constant
currency).
AMS launched the new Lite foam range for wounds with low to
medium exudate at the end of 2018. It now incorporates a range of
shapes and sizes for the acute post-surgery market and it is being
distributed by a number of our partners in the US, EU and ROW.
At around the end of 2019, we expect to be able to extend the
claims on our silicone foam range to include pressure ulcer
prevention and to add further customers in new territories.
We are confident that the above actions, coupled with our
ability to meet the demands of MDR, will continue to counteract the
ongoing challenging market conditions in the advanced woundcare
market.
Other Woundcare
Other woundcare comprises royalties, fees and woundcare
sealants. Revenue increased by 6% at reported and constant currency
to GBP2.7 million (2018 H1: GBP2.6 million).
Summary and outlook
AMS has delivered another period of growth, notwithstanding the
previously reported unexpected slow down with US LiquiBand(R) .
With continued strong performance elsewhere in the Group and our
new product launches in the second half, trading is in line with
the Board's expectations for the full year. US LiquiBand(R) is
expected to return to growth in 2020, especially given the planned
launches of our new accelerated drying device which will widen our
product range and Liquiband(R) XL device which will open new
markets and customer opportunities.
The Group continues to execute on its strategy of delivering
consistent growth through exploiting multiple routes to market,
ensuring our products add value to patients and payors, and
diversifying through our product mix and innovation.
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. We use such measures
consistently at the half year and full year and reconcile them as
appropriate. The measures used in this statement include constant
currency revenue growth, adjusted operating margin, adjusted profit
before tax and adjusted net cash inflow from operating activities,
allowing the impacts of exchange rate volatility, exceptional items
and amortisation to be separately identified. Net cash is an
additional non-GAAP measure used.
Overview
Revenue increased by 2% to GBP48.7 million (2018 H1: GBP47.6
million). At constant currency, revenue growth would have been
1%.
Exceptional items of GBP0.9 million in the six month period
(2018 H1: GBPnil) relate to the integration costs of the Sealantis
acquisition as well as other business development activities.
Amortisation of acquired intangible assets was GBP0.7 million in
the six-month period (2018 H1: GBP0.04 million). On the acquisition
of Sealantis, we recognised a technology-based intangible asset of
GBP15.0 million, which will be amortised over the next nine years
ending 31 December 2027.
Adjusted operating profit which excludes amortisation of
acquired intangibles and exceptional costs, decreased by 5.2% to
GBP13.0 million (2018 H1: GBP13.7 million) whilst the adjusted
operating margin decreased by 210 bps to 26.7% (2018 H1: 28.8%) due
to the change in sales mix and the impact of the first period of
investment in Sealantis operating costs which were GBP0.5 million
in the first half (2018 H1: GBPnil).
Excluding exceptional items, administration expenses increased
by 5% to GBP16.6 million (2018: GBP15.8 million) inclusive of
losses arising from foreign exchange movements. The Group incurred
GBP2.9 million of gross R&D, regulatory and clinical spend in
the period (2018 H1: GBP2.4 million), representing 5.9% of sales
(2018 H1: 5.0%) reflecting ongoing investment in innovation and in
accommodating the heightened regulatory environment.
The Group generated adjusted profit before tax of GBP12.8
million (2018 H1: GBP13.6 million) and profit before tax of GBP11.2
million (2018 H1: GBP13.6 million).
The Group adopted IFRS 16 (Leases) in 2019 and the comparative
periods have been restated, which reduced profit before tax by
GBP0.1 million in the period (2018 H1: GBP0.1 million). There is no
overall impact on the Group's cash and cash equivalents as a result
of IFRS 16.
Reconciliation of profit before tax to adjusted profit before
tax
-------------------------------------------------------------------
Unaudited Unaudited
Six months Six months
ended ended
30-Jun-19 30-Jun-18
GBP'000 GBP'000
---------------------------------------- ------------ -----------
Profit before tax 11,219 13,552
Amortisation of acquired intangibles 682 40
Exceptional items 920 -
---------------------------------------- ------------ -----------
Adjusted profit before tax 12,821 13,592
---------------------------------------- ------------ -----------
The Group's effective tax rate, reflecting the blended tax rates
in the countries where we operate and including UK patent box
relief, increased to 21.8% (2018 H1: 21.1%) mainly due to some of
the exceptional items in the period not being deductible for tax
purposes and to Sealantis operating losses not being offset against
profits elsewhere in the group.
Adjusted diluted earnings per share decreased by 3.5% to 4.80p
(2018 H1: 4.97p) and diluted earnings per share decreased by 18.1%
to 4.06p (2018 H1: 4.95p).
The Board intends to pay an interim dividend of 0.50p per share
on 25 October 2019 to shareholders on the register at the close of
business on 27 September 2019. This is an increase of 19% compared
to the first half of 2018 and reflects the Board's confidence in
the future growth of the Group.
Operating result by business segment
Six months ended 30 June (Unaudited) (Unaudited)
2019 Surgical Woundcare
GBP'000 GBP'000
Revenue 26,491 22,223
Profit from operations 8,251 4,309
Amortisation of acquired
intangibles 678 4
Adjusted profit from operations(5) 8,929 4,313
Adjusted operating margin(5) 33.7% 19.4%
Six months ended 30 June
2018
Revenue 27,305 20,316
Profit from operations 9,914 4,029
Amortisation of acquired
intangibles 38 2
Adjusted profit from operations(5) 9,952 4,031
Adjusted operating margin(5) 36.4% 19.8%
(5) Adjusted for exceptional items and for amortisation of
acquired intangible assets
Table is reconciled to statutory information in note 7 of the
financial information.
Surgical
Surgical revenues decreased by 3% to GBP26.5 million (2018 H1:
GBP27.3million) and by 4% at constant currency due to a reduction
in sales of LiquiBand(R) into the US. Adjusted operating margin
decreased 270 bps to 33.7% (2018 H1: 36.4%) mainly due to the
change in sales mix, exchange rate movements and increased
investment in R&D, clinical and regulatory affairs.
Woundcare
Woundcare revenues increased by 9% to GBP22.2 million (2018 H1:
GBP20.3 million) at reported currency and by 8% at constant
currency. Adjusted operating margin decreased by 40 bps to 19.4%
(2018 H1: 19.8%).
Currency
More than one third of Group revenues are invoiced in US Dollars
and approximately one quarter are invoiced in Euros. The Group
hedges significant currency transaction exposure by using forward
contracts, and aims to hedge approximately 80% of its estimated
transactional exposure for the next 12 to 18 months. The Group
estimates that a 10% movement in the GBP:US$ or GBP:EUR exchange
rate will impact Sterling revenues by approximately 3.3% and 2.8%
respectively and in the absence of any hedging this would have an
impact on profit of 2.7% and 1.1%.
Cash Flow
Adjusted net cash inflow from operating activities reduced by
12% to GBP11.2 million (2018 H1: GBP12.7 million) predominately due
to increased payments of corporation tax. Net cash inflow from
operating activities was further impacted by exceptional items and
therefore reduced by 19% to GBP10.3 million (2018 H1: GBP12.7
million).
Reconciliation of Net cash inflow from operating activities
to Adjusted net cash inflow from operating activities
--------------------------------------------------------------------
Unaudited Unaudited
Six months Six months
ended ended Change
30-Jun-19 30-Jun-18
GBP'000 GBP'000
-------------------------------- ----------- ----------- --------
Net cash inflow from operating
activities 10,261 12,709 -19.3%
Exceptional items 920 -
-------------------------------- ----------- ----------- --------
Adjusted net cash inflow from
operating activities 11,181 12,709 -12.0%
-------------------------------- ----------- ----------- --------
At the end of the period, the Group had net cash of GBP63.9
million (31 December 2018: GBP76.4 million) with outflows in the
first half of 2019 relating to Sealantis including the acquisition
(GBP18.4 million), integration costs (GBP1.2 million) and operating
costs (GBP0.5 million).
In the first half of 2019, receivables reduced by GBP2.2 million
(2018 H1: GBP1.7 million) with debtor days at 41 (2018 H1: 43 days)
and payables reduced by GBP2.8 million (2018 H1: GBP1.8 million)
with creditor days at 26 (2018 H1: 29 days). Inventory increased by
GBP1.4 million in the period (2018 H1: GBP2.2 million) or 5.0
months of supply (2018 H1: 4.6 months of supply) as we continue to
hold higher stocks to mitigate possible Brexit supply risks and
further increased RESORBA(R) inventory in preparation for
anticipated incremental demand in the second half of 2019.
In the period, we invested GBP2.6 million in capital equipment,
R&D and regulatory costs including investment in converting and
packaging machines (2018 H1: GBP2.3 million).
Tax payments increased to GBP2.9 million (2018 H1: GBP1.7
million) which is GBP0.5 million higher than tax in the income
statement due to the timing of tax payments on account.
In June 2019, the Group paid its final dividend for the year
ended 31 December 2018 of GBP1.9 million (2018 H1: GBP1.6
million).
In December 2018, the Group secured a new GBP80 million,
multi-currency credit facility provided jointly by HSBC and The
Royal Bank of Scotland, which is in place until December 2023. It
is unsecured and undrawn. This facility carries an annual interest
rate of LIBOR or EURIBOR plus a margin that varies between 0.60%
and 1.70% depending on the Group's net debt to EBITDA ratio.
Financial Outlook
Despite the good overall performance, the downturn in US
LiquiBand(R) , investment in Sealantis and adverse foreign exchange
contracts have affected profitability and cash flow in the period.
However, trading for the full year is in line with the Board's
expectations and as these items unwind, the outlook for the future
remains strong.
CONDENSED CONSOLIDATED INCOME STATEMENT
(Unaudited) (Unaudited) Restated(6) (Unaudited) Restated(6)
Six months ended Six months ended Year ended 31 December
30 June 2019 30 June 2018 2018
Before Exceptional Before Exceptional Before Exceptional
Exceptional Items Exceptional Items Exceptional Items
Note Note Note
Items 9 Total Items 9 Total Items 9 Total
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------ ----- ------------ ------------ --------- ------------ ------------ --------- ------------ ------------ ---------
Revenue from
continuing
operations 7 48,714 - 48,714 47,621 - 47,621 102,598 - 102,598
Cost of sales (19,500) - (19,500) (17,626) - (17,626) (39,192) - (39,192)
------------------ ----- ------------ ------------ --------- ------------ ------------ --------- ------------ ------------ ---------
Gross profit 29,214 - 29,214 29,995 - 29,995 63,406 - 63,406
Distribution
costs (459) - (459) (614) - (614) (1,316) - (1,316)
Administration
costs (16,607) (920) (17,527) (15,778) - (15,778) (33,318) (402) (33,720)
Other income 157 - 157 59 - 59 104 - 104
Profit from
operations 12,305 (920) 11,385 13,662 - 13,662 28,876 (402) 28,474
Finance income 200 - 200 157 - 157 378 - 378
Finance costs (366) - (366) (267) - (267) (581) - (581)
Profit before
taxation 12,139 (920) 11,219 13,552 - 13,552 28,673 (402) 28,271
Income tax 10 (2,446) - (2,446) (2,866) - (2,866) (5,784) - (5,784)
------------------ ----- ------------ ------------ --------- ------------ ------------ --------- ------------ ------------ ---------
Profit for
the period
attributable
to equity
holders
of the parent 9,693 (920) 8,773 10,686 - 10,686 22,889 (402) 22,487
------------------ ----- ------------ ------------ --------- ------------ ------------ --------- ------------ ------------ ---------
Earnings per
share
Basic 6 4.53p (0.43p) 4.10p 5.02p - 5.02p 10.74p (0.19p) 10.55p
Diluted 6 4.48p (0.42p) 4.06p 4.95p - 4.95p 10.59p (0.18p) 10.41p
Adjusted(7)
diluted 6 4.80p (0.43p) 4.37p 4.97p - 4.97p 10.63p (0.19p) 10.44p
------------------ ----- ------------ ------------ --------- ------------ ------------ --------- ------------ ------------ ---------
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
(Unaudited) (Unaudited) Restated (Unaudited) Restated
Six months ended Six months ended Year ended 31 December
30 June 2019 30 June 2018 2018
GBP'000 GBP'000 GBP'000
------------------ ----- ------------ ------------ --------- ------------ ------------ --------- ------------ ------------ ---------
Profit for
the year 8,773 10,686 22,487
------------------ ----- ------------ ------------ --------- ------------ ------------ --------- ------------ ------------ ---------
Exchange
differences
on translation
of foreign
operations 930 (4) 466
Gain/(loss)
arising on
cash flow hedges 284 (1,613) (3,064)
------------------ ----- ------------ ------------ --------- ------------ ------------ --------- ------------ ------------ ---------
Other
comprehensive
income/(expense)
for the period 1,214 (1,617) (2,598)
------------------ ----- ------------ ------------ --------- ------------ ------------ --------- ------------ ------------ ---------
Total
comprehensive
income for
the period
attributable
to equity
holders
of the parent 9,987 9,069 19,889
------------------ ----- ------------ ------------ --------- ------------ ------------ --------- ------------ ------------ ---------
(6) See note 4 in the notes to the consolidated financial
statements
(7) Adjusted for exceptional items and for amortisation of
acquired intangible assets
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(Unaudited) (Unaudited) (Unaudited)
30 June 2019 30 June 2018 31 December
Restated(8) 2018
Restated(8)
Note GBP'000 GBP'000 GBP'000
Assets
Non-current assets
Acquired intellectual property
rights 9,654 9,622 9,673
Intangible assets 14,875 - -
Software intangibles 2,983 2,876 2,548
Development costs 3,696 2,506 3,204
Goodwill 52,333 41,746 42,145
Property, plant and equipment 27,563 27,694 27,850
Loans and other financial assets 30 - -
Deferred tax assets 179 244 208
Trade and other receivables 321 19 415
---------------------------------- ----- ------------- ------------- -------------
111,634 84,707 86,043
Current assets
Inventories 16,298 13,232 14,800
Trade and other receivables 23,288 18,830 27,172
Current tax assets 22 - 813
Cash and cash equivalents 63,888 71,129 76,391
---------------------------------- ----- ------------- ------------- -------------
103,496 103,191 119,176
---------------------------------- ----- ------------- ------------- -------------
Total assets 215,130 187,898 205,219
---------------------------------- ----- ------------- ------------- -------------
Liabilities
Current liabilities
Trade and other payables 11,086 8,856 14,642
Current tax liabilities 2,267 3,310 3,863
Lease liabilities 983 931 976
14,336 13,097 19,481
Non-current liabilities
Trade and other payables 3,540 1,262 655
Deferred tax liabilities 5,934 3,126 3,303
Lease liabilities 8,567 9,317 9,055
18,041 13,705 13,013
---------------------------------- ----- ------------- ------------- -------------
Total liabilities 32,377 26,802 32,494
---------------------------------- ----- ------------- ------------- -------------
Net assets 182,753 161,096 172,725
---------------------------------- ----- ------------- ------------- -------------
Equity
Share capital 13 10,738 10,672 10,674
Share premium 36,072 35,148 35,192
Share-based payments reserve 8,343 5,562 7,333
Investment in own shares (159) (156) (156)
Share-based payments deferred
tax reserve 729 815 708
Other reserve 1,531 1,531 1,531
Hedging reserve (2,122) (955) (2,406)
Translation reserve 4,219 2,819 3,289
Retained earnings 123,402 105,660 116,560
---------------------------------- ----- ------------- ------------- -------------
Equity attributable to equity
holders of the parent 182,753 161,096 172,725
---------------------------------- ----- ------------- ------------- -------------
(8) See note 4 in the notes to the consolidated financial
statements
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 reserve reserve reserve earnings Total
tax
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- --------
At 1 January
2019
(Unaudited) 10,674 35,192 7,333 (156) 708 1,531 (2,406) 3,289 116,560 172,725
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- --------
Consolidated
profit
for the
period to
30 June 2019 - - - - - - - - 8,773 8,773
Other
comprehensive
income - - - - - - 284 930 - 1,214
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- --------
Total
comprehensive
income - - - - - - 284 930 8,773 9,987
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- --------
Share-based
payments - - 1,065 - - - - - - 1,065
Share options
exercised 64 880 (55) - 21 - - - - 910
Shares
purchased by
EBT - - - (603) - - - - - (603)
Shares sold by
EBT - - - 600 - - - - - 600
Dividends paid - - - - - - - - (1,931) (1,931)
At 30 June
2019
(unaudited) 10,738 36,072 8,343 (159) 729 1,531 (2,122) 4,219 123,402 182,753
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- --------
Share- Investment Share-based
Share Share based in own payments Other Hedging Translation Retained
capital premium payments shares deferred reserve reserve reserve earnings Total
tax
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- --------
Balance at 1
January
2018 -
Restated(9) 10,632 34,778 4,676 (152) 815 1,531 658 2,823 96,565 152,326
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- --------
Consolidated
profit
for the
period to
30 June 2018 - - - - - - - - 10,686 10,686
Other
comprehensive
income - - - - - - (1,613) (4) - (1,617)
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- --------
Total
comprehensive
income - - - - - - (1,613) (4) 10,686 9,069
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- --------
Share-based
payments - - 907 - - - - - - 907
Share options
exercised 40 370 (21) - - - - - - 389
Shares
purchased by
EBT - - - (600) - - - - - (600)
Shares sold by
EBT - - - 596 - - - - - 596
Dividends paid - - - - - - - - (1,591) (1,591)
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- --------
At 30 June
2018
(Unaudited) 10,672 35,148 5,562 (156) 815 1,531 (955) 2,819 105,660 161,096
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- --------
Share- Investment Share-based
Share Share based in own payments Other Hedging Translation Retained
capital premium payments shares deferred reserve reserve reserve earnings Total
tax
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- --------
Balance at 1
January
2018 -
Restated(1) 10,632 34,778 4,676 (152) 815 1,531 658 2,823 96,565 152,326
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- --------
Consolidated
profit
for the year
to 31
December 2018 - - - - - - - - 22,487 22,487
Other
comprehensive
income - - - - - - (3,064) 466 - (2,598)
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- --------
Total
comprehensive
income - - - - - - (3,064) 466 22,487 19,889
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- --------
Share-based
payments - - 1,659 - (107) - - - - 1,552
Share options
exercised 42 414 998 - - - - - - 1,454
Shares
purchased by
EBT - - - (600) - - - - - (600)
Shares sold by
EBT - - - 596 - - - - - 596
Dividends paid - - - - - - - - (2,492) (2,492)
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- --------
At 31 December
2018
(unaudited) 10,674 35,192 7,333 (156) 708 1,531 (2,406) 3,289 116,560 172,725
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- --------
(9) See note 4 in the notes to the consolidated financial
statements
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited) (Unaudited) (Unaudited)
Restated(10) Restated(10)
Six months Six months Year
ended ended ended
30-Jun-19 30-Jun-18 31-Dec-18
GBP'000 GBP'000 GBP'000
--------------------------------------- ------------ ------------- -------------
Cash flows from operating activities
Profit from operations 11,385 13,662 28,474
Adjustments for:
Depreciation 1,603 1,590 3,180
Amortisation - intellectual property
rights 682 40 81
- development costs 244 128 325
- software intangibles 218 244 593
Increase in inventories (1,361) (2,174) (3,707)
Decrease/(increase) in trade
and other receivables 2,162 1,714 (6,813)
(Decrease)/increase in trade
and other payables (2,798) (1,752) 1,692
Share-based payments expense 1,065 907 1,659
Taxation (2,939) (1,650) (3,810)
Net cash inflow from operating
activities 10,261 12,709 21,674
--------------------------------------- ------------ ------------- -------------
Cash flows from investing activities
Purchase of software (662) (58) (304)
Capitalised research and development (730) (498) (1,392)
Purchases of property, plant
and equipment (1,231) (1,752) (3,062)
Disposal of property, plant and
equipment - 6 78
Interest received 199 157 377
Acquisition of subsidiary (18,408) - -
Net cash used in investing activities (20,832) (2,145) (4,303)
--------------------------------------- ------------ ------------- -------------
Cash flows from financing activities
Dividends paid (1,931) (1,591) (2,492)
Repayments of principal under
lease liabilities (486) (428) (858)
Issue of equity shares 907 385 430
Shares purchased by EBT (603) (600) (600)
Shares sold by EBT 600 596 596
Interest paid (366) (267) (581)
Net cash used in financing activities (1,879) (1,905) (3,505)
--------------------------------------- ------------ ------------- -------------
Net (decrease)/increase in cash
and cash equivalents (12,450) 8,659 13,866
Cash and cash equivalents at
the beginning of the period 76,391 62,454 62,454
Effect of foreign exchange rate
changes (53) 16 71
Cash and cash equivalents at
the end of the period 63,888 71,129 76,391
--------------------------------------- ------------ ------------- -------------
(10) See note 4 in the notes to the consolidated financial
statements
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 2019
comprise the Company and its subsidiaries (together referred to as
the "Group").
The Group is primarily involved in the design, development and
manufacture of surgical and advanced woundcare products for sale
into the global medical device market.
2. Basis of preparation
The information for the period ended 30 June 2019 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 2018 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 with the exception of IFRS 16 - Leases (see
note 4). With the exception of IFRS 16 Leases, no other new or
revised standards adopted in the current period have had a material
impact on the Group's financial statements, including IFRS9
financial instruments.
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 European Union. These condensed
interim accounts should be read in conjunction with the annual
accounts of the Group for the year ended 31 December 2018. 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. Changes in accounting policies - IFRS 16
From 1 January 2019, the Group has adopted IFRS 16 (Leases).
The Group is not party to any material leases where it acts as a
lessor, but the Group does have a number of material property
leases relating to operating sites as well as equipment and vehicle
leases.
Details of the Group's accounting policies under IFRS 16 are set
out below, followed by a description of the impact of adopting IFRS
16. Significant judgements applied in the adoption of IFRS 16
included determining the lease term for those leases with
termination or extension options and determining an incremental
borrowing rate where the rate implicit in a lease could not be
readily determined.
Approach to transition
The Group has applied IFRS 16 using the full retrospective
approach, with restatement of the comparative information. In
respect of those leases the Group previously treated as operating
leases, the Group has elected to measure its right of use assets
arising from property leases using the approach set out in IFRS
16.C8(b)(i). Under IFRS 16.C8(b)(i) right of use assets are
calculated as if the Standard applied at lease commencement but
discounted using the borrowing rate at the date of initial
application.
Financial impact
The application of IFRS 16 to leases previously classified as
operating leases under IAS 17 resulted in the recognition of
right-of-use assets and lease liabilities. Provisions for onerous
lease contracts have been derecognised and operating lease
incentives previously recognised as liabilities have been
derecognised and factored into the measurement of the right-to-use
assets and lease liabilities.
The Group has chosen to use the table below to set out the
adjustments recognised at the date of initial application of
IFRS16.
As previously As restated
reported
At 31 December Impact of At 1 January
2018 IFRS16 2019
GBP'000 GBP'000 GBP'000
------------------------------- --------------- ---------- -------------
Assets
Non-current assets
Property, plant and equipment 18,124 9,726 27,850
Deferred tax asset 177 31 208
------------------------------- --------------- ---------- -------------
Total impact on assets 18,301 9,757 28,058
Liabilities
Current liabilities
Lease liabilities - 976 976
Non-current liabilities
Lease liabilities - 9,055 9,055
------------------------------- --------------- ---------- -------------
Total impact on liabilities - 10,031 10,031
Retained earnings 116,833 (273) 116,560
------------------------------- --------------- ---------- -------------
Additional Property, plant and equipment recognised at 31
December 2018 as part of the transition includes GBP9.0 million of
Leasehold property, GBP0.5 million of Plant and machinery and
GBP0.2 million of Motor vehicles.
In terms of the income statement impact, the application of IFRS
16 resulted in a decrease in other operating expenses and an
increase in depreciation and interest expense compared to IAS 17.
During the six months ended 30 June 2019, in relation to leases
under IFRS 16 the Group recognised the following amounts in the
consolidated income statement:
Six months Six months
ended ended
30 June 30 June
2019 2018
GBP'000 GBP'000
---------------------------- ----------- -----------
Depreciation (562) (510)
Operating leases 702 636
Finance cost (196) (208)
---------------------------- ----------- -----------
Net impact on Group profit (56) (82)
---------------------------- ----------- -----------
The table below presents a reconciliation from operating lease
commitments disclosed at 31 December 2018 under IAS 17 to lease
liabilities recognised at 1 January 2019 under IFRS 16.
GBP'000
30 June
2018
GBP'000
-------------------------------------------- --------
Operating lease commitments disclosed
under IAS 17 at 31 December 2018 15,181
Short-term and low value lease commitments
straight-line expensed under IFRS 16 (300)
Effect of discounting (2,775)
Effect of different rent calculations
between IAS 17 and IFRS 16 (2,075)
-------------------------------------------- --------
Lease liabilities recognised at 1 January
2019 10,031
-------------------------------------------- --------
5. Acquisition of Sealantis
On 31 January 2019 the Group acquired the entire issued share
capital of Sealantis Limited, an Israeli based developer of an
alginate-based tissue adhesive technology platform.
GBP'000
----------------------------------- --------
Identifiable net assets acquired
Technology-based intangible asset 15,012
Property, plant and equipment 21
Other receivables 59
Cash and cash equivalents 999
Trade and other payables (804)
Deferred tax on Intangible asset (2,552)
Grant liability (1,694)
Goodwill 9,765
Total net assets acquired 20,806
----------------------------------- --------
Satisfied by GBP'000
-------------------------- --------
Cash consideration 19,407
Contingent consideration 1,399
-------------------------- --------
20,806
-------------------------- --------
Contingent consideration reflects the fair value of a royalty
due to the sellers in each financial year up to 31st December
2027.
Net cash flow on acquisition GBP'000
------------------------------ --------
Cash consideration 19,407
Cash acquired (999)
------------------------------ --------
18,408
------------------------------ --------
None of the goodwill on the acquisition is expected to be
deductible for income tax.
6. Earnings per share
(Unaudited) (Unaudited) (Unaudited)
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2019 2018 2018
Number of shares '000 '000 '000
----------------------------------- ------------ -------------- --------------
Weighted average number of
ordinary shares for the purposes
of basic earnings per share 213,876 212,836 213,146
----------------------------------- ------------ -------------- --------------
Effect of dilutive potential
ordinary shares: share options,
deferred share bonus, LTIPs 2,452 3,057 2,911
----------------------------------- ------------ -------------- --------------
Weighted average number of
ordinary shares for the purposes
of diluted earnings per share 216,328 215,893 216,057
----------------------------------- ------------ -------------- --------------
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 exceptional items
and amortisation of acquired intangible assets and is based on
earnings of:
(Unaudited) (Unaudited) (Unaudited)
Restated Restated
Six months Six months Year
ended ended ended
30 June 30 June 31 December
19 18 18
GBP'000 GBP'000 GBP'000
---------------------------------------- ------------ ------------ ------------
Earnings
Profit for the year being attributable
to equity holders of the parent 8,773 10,686 22,487
Exceptional items 920 - 402
Amortisation of acquired intangible
assets 682 40 81
Adjusted profit for the year being
attributable to equity holders of the
parent 10,375 10,726 22,970
---------------------------------------- ------------ ------------ ------------
pence pence Pence
---------------------------------------- ------------ ------------ ------------
Adjusted basic EPS 4.85p 5.04p 10.78p
Adjusted diluted EPS 4.80p 4.97p 10.63p
---------------------------------------- ------------ ------------ ------------
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.
7. 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. As announced in our annual financial
statements for the year ended 31 December 2018, we have renamed our
business units from Branded and OEM to Surgical and Woundcare
respectively as we believe this better reflects that nature of the
business. Comparative segment information has been restated to
align with the new business unit structure.
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 brand predominantly to the UK NHS.
Segment information about these Business Units is presented
below:
Six months ended
30 June 2019 Surgical Woundcare Consolidated
(Unaudited) GBP'000 GBP'000 GBP'000
-------------------------------------- --------- ---------- -------------
Revenue 26,491 22,223 48,714
-------------------------------------- --------- ---------- -------------
Result
-------------------------------------- --------- ---------- -------------
Adjusted segment operating profit 8,929 4,313 13,242
Amortisation of acquired intangibles (678) (4) (682)
Segment operating profit 8,251 4,309 12,560
Unallocated expenses (255)
Exceptional items (920)
-------------
Profit from operations 11,385
Finance income 200
Finance costs (366)
-------------------------------------- --------- ---------- -------------
Profit before tax 11,219
Tax (2,446)
-------------------------------------- --------- ---------- -------------
Profit for the period 8,773
-------------------------------------- --------- ---------- -------------
At 30 June 2019
(Unaudited) Surgical Woundcare Consolidated
Other information GBP'000 GBP'000 GBP'000
-------------------------------- --------- ---------- -------------
Capital additions:
Software intangibles 293 369 662
Development 455 275 730
Property, plant and equipment 734 497 1,231
Depreciation and amortisation (1,817) (930) (2,747)
-------------------------------- --------- ---------- -------------
Balance sheet
Assets
Segment assets 151,021 63,656 214,677
Unallocated assets 453
-------------------------------- --------- ----------
Consolidated total assets 215,130
-------------------------------- --------- ---------- -------------
Liabilities
Segment liabilities 19,267 13,110 32,377
-------------------------------- --------- ---------- -------------
Consolidated total liabilities 32,377
-------------------------------- --------- ---------- -------------
Six months ended
30 June 2018 (restated) (11) Surgical Woundcare Consolidated
(Unaudited) GBP'000 GBP'000 GBP'000
-------------------------------------- --------- ---------- -------------
Revenue 27,305 20,316 47,621
-------------------------------------- --------- ---------- -------------
Result
-------------------------------------- --------- ---------- -------------
Adjusted segment operating profit 9,952 4,031 13,983
Amortisation of acquired intangibles (38) (2) (40)
Segment operating profit 9,914 4,029 13,943
Unallocated expenses (281)
Profit from operations 13,662
Finance income 157
Finance costs (267)
-------------------------------------- --------- ---------- -------------
Profit before tax 13,552
Tax (2,866)
-------------------------------------- --------- ---------- -------------
Profit for the period 10,686
-------------------------------------- --------- ---------- -------------
(11) Restated on transition to IFRS 16 (see note 4) and to align
to the new business structure.
At 30 June 2018
(Unaudited) Surgical Woundcare Consolidated
Other information GBP'000 GBP'000 GBP'000
-------------------------------- --------- ---------- -------------
Capital additions:
Software intangibles 20 38 58
Development 279 219 498
Property, plant and equipment 1,319 433 1,752
Depreciation and amortisation (929) (1,073) (2,002)
-------------------------------- --------- ---------- -------------
Balance sheet
Assets
Segment assets 127,059 60,778 187,837
Unallocated assets 61
-------------------------------- --------- ----------
Consolidated total assets 187,898
-------------------------------- --------- ---------- -------------
Liabilities
Segment liabilities 16,399 10,403 26,802
-------------------------------- --------- ---------- -------------
Consolidated total liabilities 26,802
-------------------------------- --------- ---------- -------------
Year ended
31 December 2018 (restated) (11) Surgical Woundcare Consolidated
(Unaudited) GBP'000 GBP'000 GBP'000
------------------------------------------------------- ----------- ---------------------- --------------------
Revenue 57,492 45,106 102,598
------------------------------------------------------- ----------- ---------------------- --------------------
Result
------------------------------------------------------- ----------- ---------------------- --------------------
Adjusted segment operating profit 18,619 10,898 29,517
Amortisation of acquired intangibles (76) (5) (81)
Segment operating profit 18,543 10,893 29,436
Unallocated expenses (560)
Exceptional items (402)
--------------------
Profit from operations 28,474
Finance income 378
Finance costs (581)
------------------------------------------------------- ----------- ---------------------- --------------------
Profit before tax 28,271
Tax (5,784)
------------------------------------------------------- ----------- ---------------------- --------------------
Profit for the year 22,487
------------------------------------------------------- ----------- ---------------------- --------------------
(11) Restated on transition to IFRS 16 (see note 4) and to align to the new business structure.
At 31 December 2018
(Unaudited) Surgical Woundcare Consolidated
Other Information GBP'000 GBP'000 GBP'000
------------------------------------------------------- ----------- ---------------------- --------------------
Capital additions:
Software intangibles 170 134 304
Development 815 577 1,392
Property, plant and equipment 1,730 1,332 3,062
Depreciation and amortisation (2,281) (1,898) (4,179)
------------------------------------------------------- ----------- ---------------------- --------------------
Balance sheet
Assets
Segment Assets 137,208 67,492 204,700
Unallocated assets 519
------------------------------------------------------- ----------- ---------------------- --------------------
Consolidated total assets 205,219
------------------------------------------------------- ----------- ---------------------- --------------------
Liabilities
Segment liabilities 19,349 13,145 32,494
------------------------------------------------------- ----------- ---------------------- --------------------
Consolidated total liabilities 32,494
------------------------------------------------------- ----------- ---------------------- --------------------
Geographical segments
The Group operates in the UK, Germany, the Netherlands, the
Czech Republic, with a sales office located in Russia and a sales
presence in the USA. As a result of the acquisition of Sealantis,
the Group now has an office in Israel. 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) (Unaudited)
Six months ended Six months ended Year ended
30 June 2019 30 June 2018 31 December 2018
GBP'000 GBP'000 GBP'000
--------------------------------------------- ----------------- ----------------- -----------------
United Kingdom 8,971 9,190 18,447
Germany 10,437 9,653 23,987
Europe excluding United Kingdom and Germany 12,826 10,957 19,416
United States of America 14,473 16,060 37,317
Rest of World 2,007 1,761 3,431
--------------------------------------------- ----------------- ----------------- -----------------
48,714 47,621 102,598
--------------------------------------------- ----------------- ----------------- -----------------
The following table provides an analysis of the Group's total
assets by geographical location.
(Unaudited) (Unaudited) (Unaudited)
Six months ended Six months ended Year ended
30 June 2019 30 June 2018 31 December 2018
GBP'000 GBP'000 GBP'000
--------------------------------------------- ----------------- ----------------- -----------------
United Kingdom 138,405 116,641 129,340
Germany 69,024 64,630 66,505
Europe excluding United Kingdom and Germany 4,912 6,143 6,663
United States of America 2,439 484 2,711
Rest of World 350 - -
--------------------------------------------- ----------------- ----------------- -----------------
215,130 187,898 205,219
--------------------------------------------- ----------------- ----------------- -----------------
8. 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 2019. 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-Jun-19 30-Jun-18 31-Dec-18 30-Jun-19 30-Jun-18 31-Dec-18 30-Jun-19 30-Jun-18 31-Dec-18
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 1.406 1.284 1.319 9,500 7,500 10,400 (690) 163 (230)
3 to 6
months 1.444 1.282 1.432 7,500 7,300 7,500 (665) 187 (589)
7 to 12
months 1.363 1.374 1.423 16,000 15,900 17,000 (705) (343) (1,175)
Over 12
months 1.338 1.443 1.407 5,000 20,000 7,000 (140) (955) (397)
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
38,000 50,700 41,900 (2,200) (948) (2,391)
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Ave. exchange rate Foreign currency Fair value
30-Jun-19 30-Jun-18 31-Dec-18 30-Jun-19 30-Jun-18 31-Dec-18 30-Jun-19 30-Jun-18 31-Dec-18
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 1.112 1.146 1.114 960 650 600 2 (8) -
3 to 6
months 1.108 1.134 1.116 960 1,150 960 2 (7) (4)
7 to 12
months 1.137 1.115 1.110 1,820 1,560 1,920 46 5 (9)
Over 12
months 1.139 1.109 1.110 900 2,240 320 28 3 (2)
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
4,640 5,600 3,800 78 (7) (15)
---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
9. Exceptional items
During the six months ended 30 June 2019, the Group incurred
exceptional items of GBP0.9 million (2018 H1: GBPnil) in relation
to the acquisition and integration of Sealantis as well as the
transaction costs to participate in another potential process which
was ultimately unsuccessful.
10. Taxation
The weighted average tax rate for the Group for the six month
period ended 30 June 2019 was 21.8% (first half of 2018: 20.7%,
year ended 31 December 2018: 21.1%). The Groups effective tax rate
for the full year is expected to be 21.8%, which has been applied
to the six months ended 30 June 2019 (first half of 2018: 20.7%,
year ended 31 December 2018: 21.1%) after the impact of some
disallowable expenditure offset to some extent by the application
of patent box and research and development tax relief.
11. Dividends
(Unaudited) (Unaudited) (Unaudited)
Six months ended Six months ended Year ended
30 June 2019 30 June 2018 31 December 2018
GBP'000 GBP'000 GBP'000
Amounts recognised as distributions to equity holders in the
period:
Final dividend for the year ended 31 December 2017 of 0.75p
per ordinary share - 1,591 1,591
Interim dividend for the year ended 31 December 2018 of
0.42p per ordinary share - - 901
Final dividend for the year ended 31 December 2018 of 0.90p 1,931 - -
per ordinary share
------------------------------------------------------------- ----------------- ----------------- -----------------
1,931 1,591 2,492
------------------------------------------------------------- ----------------- ----------------- -----------------
12. Contingent liabilities
The Directors are not aware of any contingent liabilities faced
by the Group as at 30 June 2019 (30 June 2018: GBPnil, 31 December
2018: GBPnil).
13. Share capital
Share capital as at 30 June 2019 amounted to GBP10,738,000 (30
June 2018: GBP10,672,000, 31 December 2018: GBP10,674,000). During
the period the Group issued 1,442,313 shares in respect of
exercised share options, LTIPS, Deferred Annual Bonus Scheme and
the Deferred Share Bonus Scheme.
14. 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 2019 of GBP63.9 million and a
five-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 The
Royal Bank of Scotland PLC. It 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, 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.
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.
15. Principal risks and uncertainties
Further detail concerning the principal risks affecting the
business activities of the Group is detailed on pages 32 and 33 of
the Annual Report and Accounts for the year ended 31 December 2018.
There have been no significant changes since the last annual
report.
16. Seasonality of sales
There are no significant factors affecting the seasonality of
sales between the first and second half of the year.
17. Events after the balance sheet date
There has been no material event subsequent to the end of the
interim reporting period ended 30 June 2019.
18. 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".
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR FBLLFKKFZBBL
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