TIDMAMS
RNS Number : 4848S
Advanced Medical Solutions Grp PLC
17 March 2021
17 March 2021
Advanced Medical Solutions Group plc
("AMS" or the "Group")
Unaudited Preliminary Results for the year ended 31 December
2020
Robust financial and operational performance despite COVID-19
impacts; in line with current consensus forecasts; set for strong
growth in 2021 and beyond
Winsford, UK: Advanced Medical Solutions Group plc (AIM: AMS),
the surgical and advanced woundcare specialist company, today
announces its unaudited preliminary results for the year ended 31
December 2020.
Financial Summary:
2020 2019 Reported Change
change at constant
currency(1)
------ ------ ---------
Revenue (GBP million) 86.8 102.4 -15% -15%
----------------------------------- ------ ------ --------- -------------
Adjusted Measures
Adjusted(2) profit before
tax (GBP million) 13.4 26.6 -50%
Adjusted(2) profit before
tax % 15.4% 26.0% -10.6pp
Adjusted(2) diluted earnings
per share (p) 5.44 9.83 -45%
Reported Measures
Profit before tax (GBP million) 10.1 24.3 -58%
Profit before tax % 11.6% 23.7% -12.1pp
Diluted earnings per share
(p) 3.94 8.72 -55%
Net operating cash flow 21.5 21.7 -1%
Net cash (GBP million) 53.8 64.8 -17%
Proposed full year dividend
per share (p) 1.70p 1.55p +10%
----------------------------------- ------ ------ --------- -------------
Operational Highlights (including post period end):
-- Having prioritised employee safety, all manufacturing sites
have remained in operation throughout the COVID-19 pandemic
servicing customers and meeting order demand. Nonetheless, as
previously announced, and in line with consensus market forecasts,
on a Group level, sales and profitability were heavily impacted by
COVID-19, as shown in the above table
-- Given the Group's strong net cash position and reflecting the
Board's confidence in the future, an increased full year dividend
is proposed. In line with best practice, AMS repaid the GBP0.4
million of UK government furlough support that had been received
during the year
-- Approval and launch of LiquiBand (R) Rapid(TM), albeit at a
restricted level due to current lack of access to surgeons.
Successful completion of LiquiBand (R) XL clinical trials keeps us
on track for approval and launch towards the end of 2021
-- Investment in R&D increased to GBP7.9 million (2019:
GBP6.5 million) as progress continued on all key projects across
the Group
-- US clinical trial to support the Premarket Approval (PMA) for
LiquiBandFix8 (R) progressed well with more than 65% of the total
required patient procedures now complete. Filing for the device is
expected in 2022, following the 12 month follow-up stipulated by
the FDA
-- Patient enrolment for the first human clinical study of
Seal-G(R) and Seal-G(R) MIST began in February and CE mark
extensions for the product are expected imminently giving AMS
access to a new $1 billion addressable market with a differentiated
product to fulfil a significant unmet need
-- Acquisition of Raleigh Adhesive Coatings Limited ("Raleigh")
in November 2020 for GBP22 million provides a strong strategic fit
with commercial synergies and new commercial opportunities
-- Grahame Cook was appointed as Non-Executive Director and
joined the Audit, Nomination and Remuneration Committees in
January; Steve Bellamy, who has been an AMS Board member since
2007, will retire from the Board at the AGM in June.
Commenting on the results Chris Meredith, Chief Executive
Officer of AMS, said: "In what was a very challenging year for
everyone, I am pleased with how the team and the business performed
and the Group closed the year in line with current consensus
forecasts. Despite the severe COVID-19 disruption, the Group
remained profitable and generated strong operational cash flows,
whilst continuing to invest in key projects and an increasing
dividend with significant progress across many of the Group's key
strategic initiatives. The progress made on LiquiBand (R) XL,
Sealantis and the Fix8 PMA, as well as the acquisition of Raleigh
will be catalysts for accelerated growth as elective surgery
volumes recover.
Looking forward, the Group saw a continuing gradual recovery
over the last two quarters of 2020 and 2021 has started well with a
healthy order book in both Business Units. "
Notes
1. Constant currency removes the effect of currency movements by
re-translating the current year's performance at the previous
year's exchange rates
2. Adjusted profit before tax is shown before exceptional items
which were GBP0.8 million (2019: GBP1.1 million), amortisation of
acquired intangible assets which was GBP2.3 million (2019: GBP1.7
million) and change in fair value of long-term liability expense of
GBP0.2 million (2019: credit of GBP0.3 million) as defined in the
Financial Review. Adjusted operating margin is shown before
exceptional items and amortisation of acquired intangible
assets
3. Net cash is defined as cash and cash equivalents plus short
term investments less bank loans and financial liabilities
excluding those relating to IFRS16
- End -
For further information, please visit www.admedsol.com or
contact:
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 / Olivia
Manser
Investec Bank PLC (NOMAD & Broker) Tel: +44 (0) 20 7597
5970
Daniel Adams / Patrick Robb / Gary Clarence
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 made two acquisitions: Sealantis, an
Israeli medical device company with a patent-protected sealant
technology platform; and Biomatlante, an established developer and
manufacturer of innovative surgical biomaterial technologies based
in France. In 2020, the Group acquired Raleigh Adhesive Coatings, a
leading coater and converter of materials predominately for
woundcare and bio-diagnostics products based in the UK.
AMS's products, manufactured in the UK, Germany, France, Israel,
the Netherlands, 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, 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 Statement
COVID-19 impact
Having created a designated COVID-19 working group, prioritised
safe working practices and complied with government measures on
social distancing, all AMS sites have remained in operation
throughout the pandemic and the Group has therefore been able to
service the demand of its healthcare partners throughout 2020 while
maintaining its robust balance sheet.
As part of this, AMS has:
-- Enabled working from home arrangements for all roles that can do so;
-- Implemented support processes for staff who have tested
positive or have otherwise had to isolate;
-- Set up a designated team to closely monitor and risk assess
the impact of COVID-19 on operations and taken steps to establish
safe working practices in all AMS sites;
-- Undertaken a full evaluation of the supply chain to ensure
any risks are identified and mitigated;
-- Adjusted working patterns and put in place controls to
minimise physical interactions and ensure social distancing;
-- Maintained payment terms to support all of the Group's suppliers;
-- Provided contractual order flexibility to customers whose
demand has clearly been impacted by the COVID-19 downturn;
-- Repaid the GBP0.4 million of UK job retention scheme support
received relating to our employees who were unable to work during
the year due to COVID-19 restrictions. Furloughed employees
received full salary at the Group's cost;
-- Maintained a strong year end net cash position of GBP53.8
million and proposed a 10% increase in full year dividend.
As is well known, COVID-19 restrictions have disrupted our
global markets in 2020, with a resulting slowdown in surgical and
wound treatment volumes. In addition, reduced access to hospitals
has significantly restricted business development activities during
the year. As COVID-19 vaccine programmes roll out in key markets,
we await the reduction in infection rates and a gradual return to
normalised levels of elective surgery across all of our
markets.
Whilst it is expected that the short term impact of COVID-19
will dissipate, it is anticipated that long term behavioural
impacts could provide AMS with new opportunities, such as increased
'direct to patient' supply of products.
Product portfolio progress opening up new markets
Driven by favourable global healthcare and demographic trends,
global surgical and advanced woundcare markets are expected to grow
in the medium to long term providing ongoing growth potential for
AMS. In addition, the key R&D and regulatory projects in the
Group's pipeline will significantly increase the size of the market
that is addressable by our products.
LiquiBand (R) range
Following the successful clinical trials for LiquiBand (R) XL
the Group expects to obtain 510(k) approval in H2 2021 which will
allow entry in to the growing $50 million large wound closure
market towards the end of 2021. This product launch has the added
benefit of unlocking further growth potential in the base LiquiBand
(R) business.
The clinical trial for the LiquiBand Fix8 (R) US Pre-Market
Approval process is progressing well and both trial results and
surgeon feedback has been positive. It is expected that patient
procedures will be complete in 2021 followed by FDA filing in 2022.
US approval would be a significant milestone for the Group, being
the first product of its type to enter the $250 million US hernia
fixation market. This positive progress supports efforts to secure
more specialist partners for LiquiBand Fix8 (R) which is expected
to drive much stronger growth for this category globally as
elective surgery volumes recover.
Sealantis
The Sealantis clinical trial commencement in February and the
extended product approvals expected imminently position AMS with a
differentiated product to address the high unmet medical need for
an effective internal sealant following bowel surgery. The planned
Seal G range of products will allow the Group to enter the global
$1 billion internal sealants market starting as planned in H1 2021
with a soft launch whilst further clinical evidence is built that
will facilitate a full European launch in 2022.
Raleigh
The acquisition of Raleigh enhances the Group's woundcare
capabilities and growth potential and enables entry into the
bio-diagnostic testing sector for the first time, demonstrating the
Group's strategy of utilising its strong financial position to
acquire businesses with complementary products, exciting
technologies and new routes to market.
Woundcare
AMS further increased its addressable market in woundcare with a
number of product launches and approvals:
-- The US launch of Silver Moisture Wicking Fabric provides
access to the growing market for the management of skin folds and
skin-on-skin friction;
-- The US approval of the Debridement pad opens the market for
wound bed preparation devices; and
-- The CE mark approval of Silicone PHMB foam, which sits
alongside the existing US approval, facilitates greater penetration
of the antimicrobial foam market.
These new woundcare products enable the Group's partners to
participate in new markets worth a total of $200 million.
AMS has also made significant R&D and regulatory progress in
expanding the product indications for our Silver High Performance
Dressing which positions the Group to obtain a full anti-microbial
claim by the end of 2021. This important indication will unlock
deeper penetration of the US antimicrobial gelling fibre market
with a competitive product.
Acquisition strategy
The Group continues to seek acquisitions that deliver additional
value for shareholders and meet the criteria of being accretive
businesses with strong R&D and manufacturing capabilities, and
that have products or customers that offer effective commercial
synergies. The acquisition of Raleigh demonstrates a good fit with
this strategy, and integration is progressing well. The Board
remains optimistic about Raleigh's growth prospects, as well as the
potential for significant cross-selling and cost saving
synergies.
During the year, the Group incurred exceptional costs of GBP0.8
million relating to both the acquisition of Raleigh and its
participation in a process, in which AMS was unsuccessful, for a
sizeable surgical business.
Regulatory opportunities and progress
The Board is confident that the implementation of Medical Device
Regulation (MDR) will provide opportunities for AMS due to
anticipated competitor product withdrawals. The Group is making
strong progress in its own MDR preparations having already secured
additional time by extending the Group's existing MDD filings.
As a result of the COVID-19 pandemic, the deadline for Notified
Bodies to review Medical Device Directive (MDD) certificates was
extended by one year to May 2021, allowing AMS and other companies
additional time to get new products approved or existing products
reapproved under MDD. The end date, when all MDD certificates
become invalid, remains as 26 May 2024.
AMS utilised the MDD extension to submit and obtain CE mark
approval for Silicone PHMB foam and to file for extensions to the
Sealantis CE mark.
In 2020, AMS successfully completed its final MDD
recertifications so that all products now have extended MDD
certificates allowing ample time for compliance with the new
European Medical Devices Regulation by 2024. AMS is well prepared
for the stricter requirements on product safety and performance,
clinical evaluation and post-market clinical evidence stipulated by
MDR and in the year submitted its first four MDR files for Notified
Body review.
The senior management team's extensive preparations leave the
Group well placed to exploit opportunities that will undoubtedly
arise in the next few years during the implementation of MDR.
AMS obtained various product approvals for new territories in
2020 including the Group's first approvals in India for both
LiquiBand(R) and LiquiBandFix8(R) .
Brexit
The Group's extensive preparations for Brexit enabled it to
navigate the end of the transition period on 31 December 2020 with
limited impact on the business. UK product certificates have been
reassigned to BSI Netherlands, Advanced Medical Solutions BV has
been appointed as the EU Authorised Representative for the Group's
UK manufactured products and the other necessary administrative and
labelling changes have been put in place. The Group now intends to
unwind the increased stock levels that were built to mitigate
possible Brexit delays.
In 2021, AMS is expected to experience a minimal level of Brexit
related disruption in the following areas:
-- Delays in port
-- Increased freight costs including surcharges, paperwork and
proof of origin declaration costs
-- Further labelling changes such as for the additional UK CA mark to be phased in
-- MDR importer requirements to be phased in
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 would not have
been possible.
Outlook
Despite the ongoing challenges posed by COVID-19 across the
globe, the Group has seen a continuing gradual recovery across the
business over recent quarters and 2021 has started well with a
healthy order book in both Business Units.
Strong progress has been made in product development, regulatory
approvals in new geographies and product indications, significantly
increasing the size of the Group's addressable market in the near
term including the approval of LiquiBand (R) Rapid(TM) and the
successful clinical trials for LiquiBand (R) XL. On this basis the
Group is set for strong organic growth in 2021 and beyond. AMS will
continue to invest in R&D programmes and, in particular, in
Sealantis, the LiquiBandFix8 (R) PMA and Medical Device Regulation,
which are expected to provide significant growth opportunities in
the medium term.
The Board is committed to its strategy of building organic and
acquisitive growth and is confident in both the short and long-term
prospects for AMS.
Operational review
Group performance
Given that all products and regions were impacted by COVID-19
restrictions, the Group performed well and saw improving results in
Q3 and Q4. However, as previously stated, Group revenue declined to
GBP86.8 million (2019: GBP102.4 million) and the resulting adverse
operating leverage led to adjusted profit before tax reducing to
GBP13.4 million (2019: GBP26.6 million) and adjusted diluted
earnings per share reducing to 5.4p (2019: 9.8p).
Surgical Business Unit
The Surgical Business Unit includes tissue adhesives, sutures,
biosurgical devices and internal fixation devices marketed
predominately under the AMS brands LiquiBand(R) , RESORBA(R) and
LiquiBandFix8(R) . Business Unit revenue reduced by 11% to GBP50.2
million (2019: GBP56.5 million) due to sales volumes being
adversely impacted by the effects of COVID-19.
Surgical Business 2020 2019 Reported Change
Unit GBP'000 GBP'000 Growth at constant
currency
Advanced closure 22,751 30,085 -24% -24%
---------- ---------- ---------- --------------
Internal Fixation
and Sealants 2,104 2,629 -20% -20%
---------- ---------- ---------- --------------
Traditional Closure 12,993 14,407 -10% -9%
---------- ---------- ---------- --------------
Biosurgical Devices 12,321 9,423 31% 30%
---------- ---------- ---------- --------------
TOTAL 50,169 56,544 -11% -11%
---------- ---------- ---------- --------------
Advanced Closure
Advanced Closure comprises LiquiBand(R) , incorporating medical
cyanoacrylate adhesives in purpose-built applicators used to close
and protect topical wounds as well as surgical sealants sold under
partners' brands.
Advanced Closure 2020 2019 Reported Change
GBP'000 GBP'000 Growth at constant
currency
Americas 13,940 18,999 -27% -26%
---------- ---------- ---------- --------------
UK/Germany 4,955 6,850 -28% -28%
---------- ---------- ---------- --------------
ROW 3,856 4,236 -9% -9%
---------- ---------- ---------- --------------
TOTAL 22,751 30,085 -24% -24%
---------- ---------- ---------- --------------
Revenues decreased by 24% on a reported and constant currency
basis to GBP22.8 million (2019: GBP30.1 million).
Following its approval and restricted launch in 2020, the
commercial launch of LiquiBand(R) Rapid(TM) in 2021 will enable a
key partner to regain ground with an improved product.
In addition, the planned 2021 launch of LiquiBand(R) XL will
enable AMS to compete in the treatment of large wounds and unlock
further growth potential in the LiquiBand(R) business. 510(k)
approval is expected in H2 2021 following successful clinical
trials in late 2020, with the product demonstrating very positive
performance characteristics against the predicate device.
Whilst US procedural volumes remain depressed and hospital
access limited, based on the above factors, US LiquiBand(R) is
expected to deliver strong growth in 2021 and beyond.
AMS continues to obtain approvals for LiquiBand(R) in new
geographies and notably obtained approval for LiquiBand(R) in India
during the year. The Group is now in the process of screening and
selecting the best go-to-market partner for its first commercial
activity into this large market.
Internal Fixation and Sealants
This category comprises LiquiBandFix8(R) and Seal G(R) .
LiquiBandFix8(R) is used to fix hernia meshes inside the body with
accurately delivered individual drops of cyanoacrylate adhesive.
Seal-G(R) is used to reinforce the staple / suture line to minimise
anastomotic leaks following gastrointestinal bowel surgery.
LiquiBandFix8(R) revenue decreased by 20% to GBP2.1 million
(2019: GBP2.6 million). Despite the restrictions, pleasing progress
has been made in product training and new territory approvals. The
sales teams delivered virtual symposia with prominent hernia
societies attended by more than 8,000 surgeons to increase
awareness of the reduced post-operative complications when using
LiquiBandFix8(R) instead of staples or tacks. The Group also
obtained approvals for LiquiBandFix8(R) in other geographies,
notably in India and Brazil, with distributor selection and launch
planning now in process.
The clinical trial for the Fix8(R) Pre-Market Approval process
had to be suspended for approximately six months due to COVID-19
but has since regained momentum with over 65% of the total required
patient procedures now complete. FDA approval is expected to be
filed in 2022 upon completion of the 12 month follow-up stipulated
by the FDA. AMS continues to be excited about the long-term
prospects for the LiquiBandFix8(R) portfolio, with entry into the
US being a significant milestone for the Group. Feedback from
surgeons and hospital centres involved in the trial has been very
encouraging to date.
During 2020, commercial research activity was completed with
European Key Opinion Leaders which provided positive feedback on
Seal-G & Seal-G MIST as solutions to the high unmet need for an
effective GI sealant.
Post-period end, the Group progressed two major milestones
towards the Sealantis soft launch in H1 2021 and full European
commercial launch in 2022:
-- Began patient enrolment for the first clinical study of
Seal-G(R) & Seal-G MIST(R) in February 2021, following COVID-19
related delays in 2020
-- Progressed CE mark extensions to final notified body review
to strengthen the portfolio by obtaining approval for the
laparoscopic Seal-G MIST(R) device and extending the open Seal-G(R)
CE mark to include a blue colourant to aid visibility during
surgery. Both approvals are expected imminently.
Traditional Closure
The Traditional Closure category comprises the RESORBA(R)
branded Absorbable and Non-absorbable Suture ranges, which includes
certain surgical specialties (such as dental and ophthalmic).
Revenue decreased by 10% at reported and 9% at constant currency
to GBP13.0 million (2019: GBP14.4 million).
AMS expects to drive suture growth by focusing on specific
opportunities such as targeted GPO promotions in the DACH region,
increasing its US footprint, dental portfolio selling with
Biomatlante and RESORBA(R) products and leveraging its Moorfields
Eye Hospital site advocacy to grow the ophthalmic business.
The Group continues to look for ways to make its suture
portfolio more comprehensive. In 2019, AMS added a long lasting
synthetic PDO thread material, followed by the 2020 launch of a
high tensile strength OT Cord range for orthopaedic and sports
medicine. In 2021, a barbed suture range to provide knotless tissue
security is expected to be launched.
Biosurgical Devices
The Biosurgical Devices category comprises RESORBA(R) and
Biomatlante technologies including antibiotic loaded collagen
sponges, collagen membranes and cones, synthetic bone substitutes
and bio-absorbable screws.
Biosurgical revenue increased by 31% at reported and 30% at
constant currency to GBP12.3 million (2019: GBP9.4 million)
reflecting the inclusion of Biomatlante sales following its
acquisition in November 2019. AMS expects to make significant
progress selling Biomatlante products under the RESORBA (R) brand
through the existing sales infrastructure and some initial sales
have been made into Germany during the year. In addition, AMS is
looking to sell more of its dental and orthopaedic collagens and
sutures via the existing Biomatlante customer base.
In November 2020, the Group filed a 510(k) application for
freeze dried bone substitute (FDBS) which would be the first US
approval for any of Biomatlante's newer innovative products. The
FDBS platform has strong cohesive properties when mixed with
fluids, can be easily moulded for optimal surgical placement and
will open up opportunities for the addition of active ingredients
such as platelets, stem cells or synthetic peptides. AMS
anticipates 510(k) approval in the next 12 months.
Collagen loaded with Vancomycin has been sold in Germany for
several years on a named patient prescription only basis and we
continue to progress a full CE mark to allow broader promotion and
sales. AMS is currently progressing with an MDD application but
will move to proceed under MDR as necessary. The Group continues to
work with both EU and US regulators on wider market approvals for
its antibiotic loaded collagen pacemaker pouch, also currently sold
via prescription in Germany.
Woundcare Business Unit
The Woundcare Business Unit is comprised of a multi-product
portfolio of advanced woundcare dressings sold under partner brands
and under the ActivHeal(R) brand, plus a portfolio of specialist
medical bulk materials now including the multi-layer woundcare and
bio-diagnostics products that came with the Raleigh
acquisition.
Revenue decreased by 20% to GBP36.6 million (2019: GBP45.8
million) due to COVID-19 impacts on sales volumes.
Woundcare Business 2020 2019 Reported Change at
Unit GBP'000 GBP'000 Growth constant
currency
Infection Management 15,289 20,555 -26% -25%
---------- ---------- ---------- -----------
Exudate Management 15,413 19,271 -20% -20%
---------- ---------- ---------- -----------
Other Woundcare 5,925 5,998 -1% -1%
---------- ---------- ---------- -----------
TOTAL 36,627 45,824 -20% -20%
---------- ---------- ---------- -----------
During 2020, AMS successfully obtained MDD extensions until 2024
for all the remaining products in its woundcare range.
Consequently, the Group has secured the maximum time possible to
complete compliance with the new MDR certification requirements.
AMS has a dedicated team in place focused on completing the work
for each product in good time to allow regular approvals across the
next three years.
Despite the lower market growth rates and consolidation activity
in the woundcare market, the Board is confident that the following
catalysts position our woundcare business unit for good growth:
- The approval of several new products
- The addition of Raleigh
- ActivHeal(R) potential in select new markets
- The opportunities expected to arise from MDR
Infection Management
The infection management category comprises advanced woundcare
dressings that incorporate antimicrobials such as Silver and
Polyhexamethylene Biguanide (PHMB). Revenue decreased by 26% on a
reported basis and 25% on a constant currency basis to GBP15.3
million (2019: GBP20.6 million) predominantly due to COVID-19
impacts.
During the year, the Group's Silver Moisture Wicking Fabric
product was launched with two US partners and Silver
High-Performance Dressings were launched with a second US partner.
Volumes were impacted by COVID-19 restrictions, which limited
access to potential customers and promotional opportunities.
In November 2020, AMS obtained CE mark approval for the Silicone
PHMB foam range which sits alongside the US approval for this
product which was granted in late 2019. The silicone variant of the
Group's PHMB range provides gentle but secure adhesion in addition
to existing performance characteristics such as rapid microbial
activity and eradication of pathogens. This provides AMS with a
strong product for the growing antimicrobial foam market.
During 2020, AMS completed the development of a debridement pad
which clinicians use to prepare the wound bed and enhance wound
healing. The Group successfully obtained approval for use in FDA
markets and also progressed European approval by submitting the CE
mark application.
Following progress made in 2020, the Group is now positioned to
obtain a full anti-microbial claim for our Silver High Performance
Dressing in 2021 which will unlock deeper penetration of the US
antimicrobial gelling fibre market with a patent protected product
that has excellent performance characteristics. We expect to submit
the special 510(k) application in Q2 2021.
In December 2020, an exclusive five year agreement for one of
the Group's silver alginates came up for renewal. Although
discussions are on-going with the customer, the new terms the
customer is seeking are not acceptable to AMS and therefore the
contract may not be renewed. We are also assessing various other
options to maximise the value to AMS for the next five years.
Looking ahead, the Group continues to work on developing next
generation high-gelling products with differentiated anti-biofilm
claims and an application of its surgical tissue scaffolds in a
woundcare environment.
Exudate Management
Exudate management comprises advanced woundcare dressings and
gels which do not incorporate any antimicrobial elements. Raleigh's
results are reported within exudate management and provides
significant growth opportunities. Revenue decreased by 20% to
GBP15.4 million (2019: GBP19.3 million).
AMS has progressed the initiative to find and appoint new
distribution partners for ActivHeal(R) in markets with strong
demand for high quality, cost effective dressings and where current
key partners have no or low presence. A number of ActivHeal(R)
contracts were signed in 2020 and are expected to launch in 2021,
contributing significant additional sales value over the next five
years. Registrations are also being pursued in additional
territories with a view to further exploiting this growth
opportunity.
The acquisition of Raleigh in November 2020 significantly
strengthens AMS's woundcare position by bringing acrylic and
silicone coating and perforation in house, providing opportunities
for cost savings and aiding product development. In addition,
Raleigh's products and expertise will allow AMS to win new
customers and enter into new markets such as the bio-diagnostic
testing sector and brings an R&D pipeline of new projects in
the medical space. AMS recorded GBP0.7 million of sales in 2020
relating to Raleigh.
With the heightened attention on the prevention of pressure
ulcers in all major markets, it is pleasing to add a product in
this indication to the existing US silicone foam range. It will
enable all the Group's customers to promote the expanded range for
this increasingly important patient concern.
Other Woundcare
Other Woundcare comprises royalties, fees and woundcare
sealants. Revenue decreased by 1% on a reported and constant
currency basis to GBP5.9 million (2019: GBP6.0 million) mainly due
to a minor decrease in sealant revenue. Royalty and fee income,
which includes the Group's licensing arrangement with
Organogenesis, remained consistent.
Chris Meredith
Chief Executive Officer
Financial Review
Summary
Group revenue declined by 15% at reported and constant currency.
Adjusted profit before tax reduced by 50% as investment in R&D
and other key projects continued and the employee base was
retained, resulting in adverse operating leverage.
To provide the clearest possible insight into 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 reconcile
them as appropriate. The measures used in this statement include
constant currency revenue growth, adjusted operating margin,
adjusted profit before tax, adjusted earnings per share and
adjusted net cash inflow from operating activities, allowing the
impacts of exchange rate volatility, exceptional items,
amortisation and the change in fair value of long-term liability to
be separately identified. Net cash is an additional non-GAAP
measure used.
Excluding exceptional items, administration expenses reduced
marginally to GBP33.7 million (2019: GBP34.6 million) inclusive of
losses arising from foreign exchange movements as the Group
implemented effective cost management although these were partially
offset by higher amortisation of intangibles. The Group operated
its factories at much lower volumes, resulting in under-absorption
of its fixed costs and, to reflect the need for operational staff
to continue attending Group sites during the lockdown period,
additional one-off payments were made to these employees totalling
GBP0.3 million. Furthermore, GBP0.4 million of UK job retention
scheme support was repaid relating to our employees who were unable
to work but still received their salary in full at the Group's
cost.
The Group incurred GBP7.9 million of gross R&D spend in the
period (2019: GBP6.5 million), representing 9.1% of sales (2019:
6.3%) reflecting increased investment in innovation and in meeting
the increasing regulatory standards.
Exceptional items were GBP0.8 million in the year (2019: GBP1.1
million) relating to both the acquisition of Raleigh and our
participation in a process, in which AMS was unsuccessful, for a
sizeable surgical business.
Amortisation of acquired intangible assets was GBP2.3 million in
2020 (2019: GBP1.7 million) due to the full period effect of the
acquisition of Sealantis in January 2019 and Biomatlante in
November 2019.
A GBP0.2 million expense was recorded due to the change in the
fair value of long-term liabilities recognised on acquisition of
Sealantis in 2019 (2019: credit of GBP0.3 million).
Adjusted operating margin decreased by 1,050 bps to 15.9% (2019:
26.4%) and operating margin decreased by 1,130 bps to 12.4% (2019:
23.7%) predominately due to COVID-19 impacts.
Adjusted profit before tax decreased by 50% to GBP13.4 million
(2019: GBP26.6 million) and profit before tax decreased by 58% to
GBP10.1 million (2019: GBP24.3 million).
Reconciliation of profit before tax to adjusted
profit before tax
(Unaudited) Audited
2020 2019
GBP'000 GBP'000
------------------------------------- ---------- ----------- -------
Profit before tax 10,089 24,257
-------------------------------------------------- ----------- -------
Amortisation of acquired intangibles 2,269 1,683
Change in fair value of long-term
liability 167 (345)
Exceptional items 834 1,053
-------------------------------------------------- ----------- -------
Adjusted profit before tax 13,359 26,648
-------------------------------------------------- ----------- -------
The Group's effective tax rate, reflecting the blended tax rates
in the countries where we operate and including UK patent box
relief, decreased to 14.9% (2019: 21.8%). The decrease was due to
patent box claims relating to the newly granted LiquiBand (R)
Exceed patents which can be retrospectively claimed.
Adjusted diluted earnings per share decreased by 45% to 5.44p
(2019: 9.83p) and diluted earnings per share decreased by 55% to
3.94p (2019: 8.72p).
Reflecting the Group's strong net cash position and confidence
in the Group's prospects, the Board is proposing an increased final
dividend of 1.20p per share, to be paid on 18 June 2021 to
shareholders on the register at the close of business on 28 May
2021. This follows the interim dividend of 0.50p per share paid on
23 October 2020 and would, if approved, make a total dividend for
the year of 1.70p per share (2019: 1.55p) an increase of 10%. In
line with best practice, AMS repaid the GBP0.4 million of UK
government furlough support that had been received during the
year.
Operating result by business segment
Year ended 31 December 2020 Surgical Woundcare
GBP'000 GBP'000
------------------------------ --------- ----------
Revenue 50,169 36,627
Segment operating profit 6,962 5,220
Amortisation of acquired
intangibles 2,132 137
Adjusted segment operating
profit(4) 9,094 5,357
Adjusted operating margin(4) 18.1% 14.6%
------------------------------ --------- ----------
Year ended 31 December 2019
Revenue 56,544 45,824
Segment operating profit 14,411 11,370
Amortisation of acquired
intangibles 1,675 8
Adjusted segment operating
profit (4) 16,086 11,378
Adjusted operating margin(4) 28.4% 24.8%
------------------------------ --------- ----------
(Note 4: Adjusted for exceptional items and amortisation of
acquired intangible assets)
(Table is reconciled to statutory information in note 3 of the
financial information.)
Surgical
Surgical revenues decreased by 11% to GBP50.2 million (2019:
GBP56.5 million) at both reported currency and constant currency.
Adjusted operating margin decreased 1,030 bps to 18.1% (2019:
28.4%) as the Group was unable to offset costs in the same
proportion to the decrease in revenue and as a result of increased
investment in R&D, clinical and regulatory affairs.
Woundcare
Woundcare revenues decreased by 20% at both reported currency
and constant currency to GBP36.6 million (2019: GBP45.8 million).
Adjusted operating margin decreased by 1,020 bps to 14.6% (2019:
24.8%).
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 year, approximately one third of sales was invoiced in Euros
and approximately one quarter was 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 2.8% and 3.4%
respectively and in the absence of any hedging this would have an
impact on profit of 2.2% and 0.1%.
Cash flow
Despite the unprecedented conditions, the Group delivered a
strong net cash inflow from operating activities of GBP21.5 million
(2019: GBP21.7 million) with the reduction in operating profit
being mostly offset by working capital management.
Reconciliation of Net cash inflow from operating activities
to Adjusted net cash inflow from operating activities
-------------------------------------------------------------------------
(Unaudited) (Audited)
Year ended Year ended
31 December 31 December
2020 2019
GBP'000 GBP'000
------------------------------------------- ------------- -------------
Net cash inflow from operating activities 21,511 21,699
Add back exceptional items 613 1,053
------------------------------------------- ------------- -------------
Adjusted net cash inflow from operating
activities 22,124 22,752
------------------------------------------- ------------- -------------
At the end of the period, following the acquisition of Raleigh
for GBP22.0 million, the Group had net cash of GBP53.8 million (31
December 2019: GBP64.8 million).
Working capital decreased during the year, due to a decrease in
receivables as a result of lower sales, partially offset by
increased inventory levels and lower payables. Inventory cover was
temporarily increased to 5.7 months of supply (2019: 5.1 months) in
preparation for potential supply chain risks relating to COVID-19
and the end of the Brexit transition period. Debtor days decreased
to 45 days (2019: 49 days) due to customer mix and Creditor days
decreased to 30 days (2019: 34 days).
Capital investment in equipment, R&D and regulatory costs
decreased slightly to GBP5.3 million (2019: GBP5.9 million).
Cash outflow relating to taxation decreased to GBP3.7 million
(2019: GBP5.9 million) due to lower taxable profits, partially
offset by the requirement to accelerate payments on account in the
UK.
The Group paid its final dividend for the year ended 31 December
2019 of GBP2.3 million in June 2020 (2019: for the year ending
2018, GBP1.9 million in June 2019), and its interim dividend for
the six months ended 30 June 2020 of GBP1.1 million in October 2020
(for the 6 months ended 30 June 2019: GBP1.1 million in October
2019).
The Group has an undrawn unsecured GBP80 million credit facility
provided jointly by The Royal Bank of Scotland and HSBC which is in
place until December 2023. 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.
CONDENSED CONSOLIDATED INCOME STATEMENT
--------------------------------------------------------------------------------- ----------- --------
Year ended 31 December (Unaudited) (Audited)
Before Before
exceptional Exceptional exceptional Exceptional
items items 2020 items items 2019
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------ ---- ------------ ----------- -------- ------------ ----------- --------
Revenue from continuing
operations 3 86,796 - 86,796 102,368 102,368
Cost of sales (40,756) - (40,756) (41,885) - (41,885)
------------------------ ---- ------------ ----------- -------- ------------ ----------- --------
Gross profit 46,040 - 46,040 60,483 - 60,483
Distribution costs (1,071) - (1,071) (997) - (997)
Administration costs (33,658) (834) (34,492) (34,566) (1,053) (35,619)
Other income 253 - 253 376 - 376
------------ ----------- --------
Profit from operations 4 11,564 (834) 10,730 25,296 (1,053) 24,243
Finance income 220 - 220 406 - 406
Finance costs (861) - (861) (392) - (392)
------------------------ ---- ------------ ----------- -------- ------------ ----------- --------
Profit before taxation 10,923 (834) 10,089 25,310 (1,053) 24,257
Income tax 5 (1,505) - (1,505) (5,338) - (5,338)
------------------------ ---- ------------ ----------- -------- ------------ ----------- --------
Profit for the year
attributable to equity
holders of the parent 9,418 (834) 8,584 19,972 (1,053) 18,919
------------------------ ---- ------------ ----------- -------- ------------ ----------- --------
Earnings per share
Basic 6 4.38p (0.39p) 3.99p 9.30p (0.49p) 8.81p
Diluted 6 4.32p (0.38p) 3.94p 9.21p (0.49p) 8.72p
Adjusted diluted 6 5.44p (0.38p) 5.06p 9.83p (0.49p) 9.34p
------------------------ ---- ------------ ----------- -------- ------------ ----------- --------
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(Unaudited) (Audited)
2020 2019
GBP'000 GBP'000
---------------------------------------------- ----------- ---------
Profit for the year 8,584 18,919
-------------------------------------------------- ----------- ---------
Exchange differences on translation
of foreign operations 3,507 (3,538)
Gain arising on cash flow hedges 842 3,091
Deferred tax charge arising on
cash flow hedges (160) (130)
-------------------------------------------------- ----------- ---------
Total other comprehensive income/(expense)
for the year 4,189 (577)
-------------------------------------------------- ----------- ---------
Total comprehensive income for
the year attributable to equity
holders of the parent 12,773 18,342
-------------------------------------------------- ----------- ---------
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(Unaudited) (Audited)
31 December 31 December
2020 2019
GBP'000 GBP'000
Assets
Non-current assets
Acquired intellectual property rights 9,879 9,478
Technology based intangible assets 22,357 15,985
Software intangibles 2,437 2,832
Development costs 7,368 5,039
Goodwill 68,911 53,558
Property, plant and equipment 30,064 27,707
Deferred tax assets - 96
Trade and other receivables 364 531
--------------------------------------- ----------------------------- ------------
141,380 115,226
Current assets
Inventories 21,025 17,655
Trade and other receivables 21,107 29,221
Current tax assets 1,214 129
Cash and cash equivalents 53,829 64,751
--------------------------------------- ----------------------------- ------------
97,175 111,756
--------------------------------------- ----------------------------- ------------
Total assets 238,555 226,982
--------------------------------------- ----------------------------- ------------
Liabilities
Current liabilities
Trade and other payables 13,139 14,043
Current tax liabilities 319 1,781
Lease liabilities 1,257 1,353
14,715 17,177
Non-current liabilities
Trade and other payables 3,229 3,150
Deferred tax liabilities 8,536 6,409
Lease liabilities 9,864 8,347
Borrowings - 664
--------------------------------------- ----------------------------- ------------
21,629 18,570
--------------------------------------- ----------------------------- ------------
Total liabilities 36,344 35,747
--------------------------------------- ----------------------------- ------------
Net assets 202,211 191,235
--------------------------------------- ----------------------------- ------------
Equity
Share capital 10,769 10,745
Share premium 36,288 36,226
Share-based payments reserve 11,142 9,466
Investment in own shares (162) (159)
Share-based payments deferred tax
reserve 430 649
Other reserve 1,531 1,531
Hedging reserve 1,237 555
Translation reserve 3,258 (249)
Retained earnings 137,718 132,471
--------------------------------------- ----------------------------- ------------
Equity attributable to equity holders
of the parent 202,211 191,235
--------------------------------------- ----------------------------- ------------
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 2019 10,674 35,192 7,333 (156) 708 1,531 (2,406) 3,289 116,560 172,725
------------------ -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- --------
Consolidated
profit
for the year to
31 December 2019 - - - - - - - - 18,919 18,919
Other
comprehensive
income/(expense) - - - - - - 2,961 (3,538) - (577)
------------------ -------- ------------ --------- --------
Total
comprehensive
income - - - - - - 2,961 (3,538) 18,919 18,342
------------------ -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- --------
Share-based
payments - - 1,856 - (59) - - - - 1,797
Share options
exercised 71 1,034 277 - - - - - - 1,382
Shares purchased
by EBT - - - (603) - - - - - (603)
Shares sold by
EBT - - - 600 - - - - - 600
Dividends paid - - - - - - - - (3,008) (3,008)
--------
At 31 December
2019 (Audited) 10,745 36,226 9,466 (159) 649 1,531 555 (249) 132,471 191,235
------------------ -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- --------
Consolidated
profit
for the year to
31 December 2020 - - - - - - - - 8,584 8,584
Other
comprehensive
income - - - - - - 682 3,507 - 4,189
------------------ -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- --------
Total
comprehensive
income - - - - - - 682 3,507 8,584 12,773
------------------ -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- --------
Share-based
payments - - 1,611 - (219) - - - - 1,392
Share options
exercised 24 62 65 - - - - - - 151
Shares purchased
by EBT - - - (542) - - - - - (542)
Shares sold by
EBT - - - 539 - - - - - 539
Dividends paid - - - - - - - - (3,337) (3,337)
--------
At 31 December
2020 (Unaudited) 10,769 36,288 11,142 (162) 430 1,531 1,237 3,258 137,718 202,211
------------------ -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- --------
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited) (Audited)
Year ended Year ended
31 December
31 December 2020 2019
Note GBP'000 GBP'000
-------------------------------------- ---- ---------------- -----------
Cash flows from operating activities
Profit from operations 10,730 24,243
Adjustments for:
Depreciation 3,467 3,154
Amortisation - intellectual property
rights 2,269 1,683
- software intangibles 563 519
- development costs 533 492
Increase in inventories (1,892) (2,454)
Decrease/(Increase) in trade and
other receivables 10,262 (574)
Decrease in trade and other payables (2,292) (1,275)
Share-based payments expense 1,611 1,856
Taxation (3,740) (5,945)
Net cash inflow from operating
activities 21,511 21,699
-------------------------------------- ---- ---------------- -----------
Cash flows from investing activities
Purchase of software (126) (826)
Capitalised research and development (2,788) (2,355)
Purchases of property, plant and
equipment (2,346) (2,673)
Disposal of property, plant and
equipment 136 4
Interest received 277 422
Acquisition of subsidiaries net
of cash 7 (21,924) (24,145)
Net cash used in investing activities (26,771) (29,573)
-------------------------------------- ---- ---------------- -----------
Cash flows from financing activities
Dividends paid (3,337) (3,008)
Repayment of principal under lease
liabilities (1,150) (925)
Repayment of loan (664) -
Issue of equity shares 65 1,066
Shares purchased by EBT (542) (603)
Shares sold by EBT 539 600
Interest paid (735) (709)
Net cash used in financing activities (5,824) (3,579)
-------------------------------------- ---- ---------------- -----------
Net decrease in cash and cash
equivalents (11,084) (11,453)
Cash and cash equivalents at the
beginning of the year 64,751 76,391
Effect of foreign exchange rate
changes 162 (187)
Cash and cash equivalents at the
end of the year 53,829 64,751
-------------------------------------- ---- ---------------- -----------
Notes Forming Part of the Condensed Consolidated Financial
Statements
1. Reporting entity
Advanced Medical Solutions Group plc ("the Company") is a public
limited company incorporated and domiciled in England and Wales
(registration number 2867684). The Company's registered address is
Premier Park, 33 Road One, Winsford Industrial Estate, Cheshire,
CW7 3RT.
The Company's ordinary shares are traded on the AIM market of
the London Stock Exchange plc. The consolidated financial
statements of the Company for the twelve months ended 31 December
2020 comprise the Company and its subsidiaries (together referred
to as the "Group").
The Group is primarily involved in the design, development and
manufacture of novel high-performance polymers (both natural and
synthetic) for use in advanced woundcare dressings and materials,
and medical adhesives and sutures for closing and sealing tissue,
for sale into the global medical device market and dental
market.
2. Basis of preparation
These condensed unaudited consolidated financial statements have
been prepared in accordance with the accounting policies set out in
the annual report for the year ended 31 December 2019 except for
new standards adopted for the year.
In the current year the Group has applied a number of amendments
to IFRSs issued by the IASB. Their adoption has not had a material
impact on the disclosures or on the amounts reported in the Annual
Financial Statements. The following amendments were applied:
-- Amendments to References to the Conceptual Framework in IFRS Standards
-- Definition of a Business (Amendments to IFRS 3)
-- Definition of Material (amendments to IAS 1 and IAS 8)
-- Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS7)
-- Conceptual Framework for Financial Reporting (Revised)
While the financial information included in this preliminary
announcement has been prepared in accordance with the recognition
and measurement criteria of International Financial Reporting
Standards (IFRSs), this announcement does not itself contain
sufficient information to comply with IFRSs. The Group expects to
publish full financial statements that comply with IFRSs in April
2021.
The financial information set out in the announcement does not
constitute the Group's statutory accounts for the years ended 31
December 2020 or 31 December 2019. The financial information for
the year ended 31 December 2019 is derived from the statutory
accounts for that year, which have been delivered to the Registrar
of Companies. The auditor reported on those accounts; their report
was unqualified, did not draw attention to any matters by way of
emphasis without qualifying their report and did not contain a
statement under s498 (2) or (3) Companies Act 2006. The audit of
the statutory accounts for the year ended 31 December 2020 is not
yet complete. These accounts will be finalised on the basis of the
financial information presented by the Directors in this
preliminary announcement and will be delivered to the Registrar of
Companies following the Group's annual general meeting.
The financial statements have been prepared on the historical
cost basis of accounting except as disclosed in the accounting
policies set out in the annual report for the year ended 31
December 2019.
With regards to the Group's financial position, it had cash and
cash equivalents at the 31 December 2020 of GBP53.8 million. In
December 2018, the Group entered a five-year, unsecured,
multi-currency, credit facility for GBP80 million and which was
undrawn in 2020.
While the current economic environment is uncertain, the Group
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 contracts with customers across different geographic
regions and also with substantial financial resources, ranging from
government agencies through to global healthcare companies. The
Group has also considered the ongoing implications of COVID-19 and
Brexit and developed appropriate risk management solutions to
mitigate these risks.
Having taken the above into consideration and reviewed cash flow
forecasts for the next 12 months, 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
preliminary announcement.
New accounting standards not yet applied
Certain new accounting standards and interpretations have been
published that are not mandatory for 31 December 2020 reporting
periods and have not been early adopted by the Group. These
standards are not expected to have a material impact on the entity
in the current or future reporting periods or on foreseeable future
transactions.
3. Segment information
As referred to in the Chief Executive's Statement, the Group is
organised into two Business Units: Surgical and
Woundcare. These Business Units are the basis on which the Group reports its 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 and
income tax assets. These are the measures reported to the Group's
Chief Executive for the purposes of resource allocation and
assessment of segment performance.
Business segments
Segment information about these businesses is presented
below.
Year ended Surgical Woundcare Consolidated
31 December 2020
(Unaudited)
GBP'000 GBP'000 GBP'000
------------------------------- ----------------- ---------- -------------
Revenue
External sales 50,169 36,627 86,796
Result
------------------------------- ----------------- ---------- -------------
Adjusted segment operating
profit 9,094 5,357 14,451
Amortisation of acquired
intangibles (2,132) (137) (2,269)
---------------------------------- ----------------- ---------- -------------
Segment operating
profit 6,962 5,220 12,182
Unallocated expenses (618)
Exceptional costs (834)
-------------
Operating profit 10,730
Finance income 220
Finance costs (861)
---------------------------------- ----------------- ---------- -------------
Profit before tax 10,089
Tax (1,505)
---------------------------------- ----------------- ---------- -------------
Profit for the year 8,584
---------------------------------- ----------------- ---------- -------------
At 31 December 2020 Surgical Woundcare Consolidated
(Unaudited)
Other information GBP'000 GBP'000 GBP'000
------------------------------- ----------------- ---------- -------------
Capital additions:
Software intangibles 74 52 126
Development 1,659 1,129 2,788
Property, plant and
equipment 1,367 979 2,346
Depreciation and amortisation (4,709) (2,123) (6,832)
---------------------------------- ----------------- ---------- -------------
Statement of Financial
Position
Assets
Segment assets 155,301 82,999 238,300
Unallocated assets 255
---------------------------------- ----------------- ----------
Consolidated total
assets 238,555
---------------------------------- ----------------- ---------- -------------
Liabilities
Segment liabilities 20,354 15,990 36,344
---------------------------------- ----------------- ---------- -------------
Year ended Surgical Woundcare Consolidated
31 December 2019
(Audited) GBP'000 GBP'000 GBP'000
--------------------------------------- --------- ---------- -------------
Revenue
External sales 56,544 45,824 102,368
Result
--------------------------------------- --------- ---------- -------------
Adjusted segment operating
profit 16,086 11,378 27,464
Amortisation of acquired
intangibles (1,675) (8) (1,683)
------------------------------------------ --------- ---------- -------------
Segment operating profit 14,411 11,370 25,781
Unallocated expenses (485)
Exceptional costs (1,053)
-------------
Operating profit 24,243
Finance income 406
Finance costs (392)
------------------------------------------ --------- ---------- -------------
Profit before tax 24,257
Tax (5,338)
------------------------------------------ --------- ---------- -------------
Profit for the year 18,919
------------------------------------------ --------- ---------- -------------
At 31 December 2019 Surgical Woundcare Consolidated
(Audited)
--------------------------------------- --------- ---------- -------------
Other information GBP'000 GBP'000 GBP'000
--------------------------------------- --------- ---------- -------------
Capital additions:
Software intangibles 364 462 826
Development 1,346 1,009 2,355
Property, plant and equipment 1,393 1,280 2,673
Depreciation and amortisation (3,985) (1,863) (5,848)
------------------------------------------ --------- ---------- -------------
Statement of Financial
Position
Assets
Segment assets 160,241 66,354 226,595
Unallocated assets 387
------------------------------------------ --------- ----------
Consolidated total assets 226,982
------------------------------------------ --------- ---------- -------------
Liabilities
Segment liabilities 21,647 14,100 35,747
------------------------------------------ --------- ---------- -------------
Consolidated total liabilities 35,747
------------------------------------------ --------- ---------- -------------
Geographic segments
The Group operates in the UK, The Netherlands, Germany, the
Czech Republic, France, 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 revenue
by geographical market, irrespective of the origin of the
goods/services, based upon location of the Group's customers:
(Unaudited) (Audited)
Year ended 31 December 2020 2019
GBP'000 GBP'000
----------------------------- ------------------- -----------------
United Kingdom 16,748 20,151
Germany 18,888 20,018
France 4,369 3,913
Rest of Europe 18,027 19,563
United States of America 23,690 34,879
Rest of World 5,074 3,844
------------------------------- ------------------- -----------------
86,796 102,368
----------------------------- ------------------- -----------------
The following table provides an analysis of the Group's total
assets by geographical location:
-----------------------------------------------------------------------
(Unaudited) (Audited)
As at 31 December 2020 2019
GBP'000 GBP'000
----------------------------- ------------------- -----------------
United Kingdom 125,343 117,055
Germany 71,752 69,501
France 9,703 9,614
Rest of Europe 7,224 5,106
United States of America 3,370 2,532
Israel 21,163 23,175
------------------------------- ------------------- -----------------
238,555 226,982
----------------------------- ------------------- -----------------
4. Profit from operations
(Unaudited) (Audited)
Year ended 31 December 2020 2019
GBP'000 GBP'000
------------------------------------ ------------ ------------------ ----------------
Profit from operations is arrived at after
charging:
Depreciation of property, plant and equipment 3,467 3,154
Amortisation of:
- acquired intellectual property rights 2,269 1,683
- software intangibles 563 519
- development costs 533 492
Research and development costs expensed
excluding regulatory costs 3,727 3,195
Cost of inventories recognised as expense 40,397 40,717
Write down of inventories expensed 359 504
Staff costs 35,828 33,179
Net foreign exchange loss 376 2,790
-------------------------------------------------- ------------------ ----------------
5. Taxation
(Unaudited) (Audited)
Year ended 31 December 2020 2019
GBP'000 GBP'000
-------------------------------------------- --------------------- -------------------
a) Analysis of charge for the year
Current tax:
Tax on ordinary activities - current
year 1,514 5,195
Tax on ordinary activities - prior
year 21 5
--------------------------------------------- --------------------- -------------------
1,535 5,200
Deferred tax:
Tax on ordinary activities - current
year (3) 61
Tax on ordinary activities - prior
year (27) 77
--------------------------------------------- --------------------- -------------------
(30) 138
-------------------------------------------- --------------------- -------------------
Tax charge for the year 1,505 5,338
--------------------------------------------- --------------------- -------------------
The Group has chosen to use a weighted average country tax rate
rather than the UK tax rate for the reconciliation of the charge
for the year to the profit per the income statement. The Group
operates in several jurisdictions, some of which have a tax
rate in excess of the UK tax rate. As such, a weighted average
country tax rate is believed to provide the most meaningful
information to the users of the financial statements.
-------------------------------------------------------------------------------------------
(Unaudited) (Audited)
Year ended 31 December 2020 2019
GBP'000 GBP'000
-------------------------------------------- --------------------- -------------------
b) Factors affecting tax charge
for the year
Profit before taxation 10,089 24,257
--------------------------------------------- --------------------- -------------------
Profit multiplied by the weighted
average Group tax rate of 24.6%
(2019: 21.6%) 2,481 5,248
Effects of:
Net expenses not deductible for
tax purposes and other timing differences 268 246
Patent Box Relief (1,091) (124)
Utilisation of trading losses - (26)
Net impact of deferred tax on capitalised
development costs and R&D relief (186) (131)
Share-based payments 39 43
Adjustments in respect of prior
year - current tax 21 5
Adjustments in respect of prior
year and rate changes - deferred
tax (27) 77
Taxation 1,505 5,338
--------------------------------------------- --------------------- -------------------
6. Earnings per share
The calculation of the basic and diluted earnings per share is
based on the following data:
(Unaudited) (Audited)
Year ended 31 December 2020 2019
Number of shares '000 '000
--------------------------------------------------- ------------ ----------
Weighted average number of ordinary shares
for the purposes of basic earnings per
share 215,126 214,730
--------------------------------------------------- ------------ ----------
Effect of dilutive potential ordinary shares:
share options, deferred share bonus, LTIPs 2,705 2,107
--------------------------------------------------- ------------ ----------
Weighted average number of ordinary shares
for the purposes of diluted earnings per
share 217,831 216,837
--------------------------------------------------- ------------ ----------
(Unaudited) (Audited)
2020 2019
GBP'000 GBP'000
--------------------------------------------------- ------------ ----------
Profit for the year attributable to equity
holders of the parent 8,584 18,919
Exceptional costs 834 1,053
Amortisation of acquired intangible assets 2,269 1,683
Movement in fair value accounting for liabilities 167 (345)
Adjusted profit for the year attributable
to equity holders of the parent 11,854 21,310
--------------------------------------------------- ------------ ----------
(Unaudited) (Audited)
2020 2019
pence pence
--------------------------------------------------- ------------ ----------
Basic EPS 3.99 8.81
Diluted EPS 3.94 8.72
Adjusted basic EPS 5.51 9.92
Adjusted diluted EPS 5.44 9.83
--------------------------------------------------- ------------ ----------
7. Acquisition of Raleigh
On 23 November 2020 the Group acquired the entire issued share
capital of Raleigh Adhesive Coatings Limited, a UK-based woundcare
and bio-diagnostics coatings business. In the year ended 31
December 2020, Raleigh contributed GBP0.7 million revenue to the
Group and had an operating profit of GBP0.1 million. In addition,
amortisation of intangible assets of GBP0.1 million was recorded
within the Group as a result of the acquisition. Had Raleigh been
part of the Group since 1 January 2020, it would have contributed
GBP6.4 million of revenue and GBP0.4 million of operating
profit.
GBP'000
------------------------------------ --------
Identifiable net assets acquired
Technology-based Intangible assets 1,320
Customer related intangible assets 7,390
Property, plant and equipment 587
Finance lease assets 645
Trade and other receivables 1,999
Inventory 1,009
Cash and cash equivalents 76
Corporation tax debtor 54
Trade and other payables (1,891)
Lease liabilities (646)
Deferred tax (1,713)
------------------------------------ --------
Goodwill 13,170
------------------------------------ --------
Total net assets acquired 22,000
------------------------------------ --------
Satisfied by GBP'000
-------------------- --------
Cash consideration 22,000
-------------------- --------
Net cash flow on acquisition GBP'000
------------------------------ --------
Cash consideration 22,000
Cash acquired (76)
------------------------------ --------
21,924
------------------------------ --------
None of the goodwill on the acquisition is expected to be
deductible for income tax.
8. Events after reporting period
There have been no material events subsequent to the end of the
reporting period ended 31 December 2020.
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END
FR JFMMTMTABTMB
(END) Dow Jones Newswires
March 17, 2021 03:00 ET (07:00 GMT)
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