TIDMAMS
RNS Number : 7879L
Advanced Medical Solutions Grp PLC
15 September 2021
15 September 2021
Advanced Medical Solutions Group plc
("AMS" or the "Group")
Interim Results for the six months ended 30 June 2021
Winsford, UK, 15 September 2021: 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 2021 (the "Period").
Financial Highlights:
H1 H1 Reported Change
change at constant
currency(1)
2021 2020
------ ------ ---------
Revenue (GBP million) 50.2 39.3 28% 31%
----------------------------------- ------ ------ --------- -------------
Adjusted Measures
Adjusted(2) profit before
tax (GBP million) 12.4 5.3 133%
Adjusted(2) profit before
tax 24.6% 13.5% 11.1pp
Adjusted(2) diluted earnings
per share (p) 4.64 2.16 115%
Reported Measures
Profit before tax (GBP million) 11.2 4.3 163%
Profit before tax 22.3% 10.8% 11.5pp
Diluted earnings per share
(p) 4.10 1.68 144%
Net operating cash flow (GBP
million) 13.7 8.8 55%
Net cash (3) (GBP million) 61.1 67.9 -10%
Interim dividend per share
(p) 0.58p 0.50p +16%
----------------------------------- ------ ------ --------- -------------
Business Highlights (including post period end):
AMS is pleased to report interim results slightly ahead of the
trading update of 7 July 2021 with strong revenue growth,
profitability and cash generation despite the residual impacts of
COVID-19. The Group made significant regulatory and clinical
progress in the Period and continued to invest in developing
next-generation products.
-- Revenue increased to GBP50.2 million (2020 H1: GBP39.3
million) as the impact of COVID-19 continues to reduce and many key
markets rebuild towards more routine levels of elective surgery.
This represents an increase of 28% on a reported basis and 31% on a
constant currency(1) basis
-- The Group reports a 133% increase in adjusted profit before
tax to GBP12.4 million (2020 H1: GBP5.3 million) with a significant
improvement in operational leverage resulting from the increased
sales volumes
-- Net cash increased to GBP61.1 million from a year-end
position of GBP53.8 million (2020 H1: GBP67.9 million) driven by
improved trading and good operational cash flow
-- Investment in R&D increased to GBP4.4 million (2020 H1:
GBP3.8 million), representing 8.7% of revenue, as progress was made
on key projects across the Group
-- The US clinical trial to support the Premarket Approval (PMA)
for LiquiBandFix8(R) continues to progress well with patient
procedure volumes now sufficient to prepare and submit the PMA
clinical module. FDA filing for the device is on track for 2022
-- The LiquiBand(R) XL 510(k) application was submitted in the
Period with approval expected by the end of 2021
-- As previously announced, Seal-G(R) and Seal-G(R) MIST were
awarded CE marks and the first human clinical trials commenced for
both products in the Period. Interim study results are expected in
early 2022 to support the full commercial European launch planned
for 2022
-- Good progress was made in integrating Raleigh, acquired in
November 2020. Revenues continue to perform in line with initial
expectations and it is expected to be earnings enhancing in
2021
-- Given the Group's strong net cash position and reflecting the
Board's continued confidence in the future, the interim dividend is
increased to 0.58p per share (2020 H1: 0.50p)
-- Post period end - Chris Locke was appointed as Chief
Technology Officer and Douglas Le Fort was appointed as Independent
Non-Executive Director
Commenting on the interim results, Chris Meredith, Chief
Executive Officer of AMS, said: " I am pleased to report the
continued growth of the business as demand returns towards
pre-pandemic levels. During the Period, AMS delivered strong
revenue growth, profitability and cash generation, alongside
significant regulatory and clinical progress in developing the next
generation of innovative products that we expect to drive further
growth over the coming years. AMS is in robust financial health to
deliver organic and acquisitive growth, and reflecting the
confidence of the Board, the interim dividend is being increased
for the half year. The addition of Chris Locke and Douglas Le Fort
to our team adds considerable R&D and commercial experience
that will be valuable as we deliver on our significant growth
opportunities. "
- End -
Notes
1 Constant currency adjusts for the effect of currency movements
by re-translating the current period's performance at the previous
period's exchange rates
2 Adjusted profit before tax is shown before exceptional items
which, in 2021 H1 were GBPnil (2020 H1: GBPnil), before
amortisation of acquired intangible assets which, in 2021 H1, were
GBP1.6 million (2020 H1: GBP1.1 million) and change in long-term
liabilities credit of GBP0.4 million (2020 H1: credit of GBP0.03
million) as defined in the financial review. Adjusted operating
margin is shown before exceptional items and amortisation of
acquired intangible assets.
3 Net cash in 2021 H1 was GBP61.1 million (2020 H1: GBP67.9
million) defined as cash and cash equivalents of GBP61.1 million
(2020 H1: GBP68.4 million) plus short-term investments less
financial liabilities and bank loans in 2021 H1 of GBPnil (2020 H1:
GBP0.5 million)
For further information, please contact:
Advanced Medical Solutions Group plc Tel: +44 (0) 1606
545508
Chris Meredith, Chief Executive Officer
Eddie Johnson, Chief Financial Officer
Michael King, Investor Relations Manager
Consilium Strategic Communications Tel: +44 (0) 20 3709
5700
Mary-Jane Elliott / Matthew Neal / Matthew
Cole
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, internal
fixation devices and internal sealants, which it markets under its
brands LiquiBand(R) , RESORBA(R) , LiquiBandFix8(R) and Seal-G(R) .
AMS also supplies wound care dressings such as silver alginates,
alginates and foams through its ActivHeal(R) brand as well as under
white label. 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, the
Netherlands, the Czech Republic and Israel, are sold globally via a
network of multinational or regional partners and distributors, as
well as via AMS's own direct sales forces in the UK, Germany, the
Czech Republic and Russia. The Group has R&D innovation hubs in
the UK, Germany, France and Israel. Established in 1991, the Group
has more than 700 employees. For more information, please see
www.admedsol.com .
Chief Executive's Review
Surgical Business Unit
The Surgical Business Unit includes tissue adhesives, sutures,
biosurgical devices and internal fixation devices marketed under
the AMS brands LiquiBand(R) , RESORBA(R) and LiquiBandFix8(R) .
The ongoing recovery of global elective surgery volumes drove
significant revenue growth in the Surgical Business Unit but demand
remains below pre-pandemic levels as COVID-19 continues to impact
surgical volumes and hospital access, restricting business
development activities in all categories. Revenue increased by 42%
in the Period to GBP30.4 million (2020 H1: GBP21.4 million) and by
45% on a constant currency basis.
Surgical Business 2021 2020 Reported Growth
Unit H1 GBP'000 H1 GBP'000 Growth at constant
currency
Advanced Closure 15,194 8,875 71% 79%
------------ ------------ --------- -------------
Internal Fixation
and Sealants 1,193 967 23% 23%
------------ ------------ --------- -------------
Traditional Closure 7,265 6,188 17% 18%
------------ ------------ --------- -------------
Biosurgical Devices 6,725 5,398 25% 24%
------------ ------------ --------- -------------
TOTAL 30,377 21,428 42% 45%
------------ ------------ --------- -------------
Advanced Closure
LiquiBand(R) is a range of topical skin adhesives, incorporating
medical grade cyanoacrylate in combination with purpose-built
applicators. These products are used to close and protect a broad
variety of surgical and traumatic wounds.
Advanced Closure 2021 2020 Reported Growth
H1 GBP'000 H1 GBP'000 Growth at constant
currency
Americas 10,372 5,094 104% 117%
------------ ------------ --------- -------------
UK/Germany 2,846 1,956 46% 45%
------------ ------------ --------- -------------
Rest of World 1,976 1,825 8% 9%
------------ ------------ --------- -------------
TOTAL 15,194 8,875 71% 79%
------------ ------------ --------- -------------
Revenues increased to GBP15.2 million (2020 H1: GBP8.9 million)
representing growth of 71% on a reported basis and 79% on a
constant currency basis.
US LiquiBand(R) growth was especially strong driven by increased
end sales demand and by the Group's partners now replenishing
inventory levels that were reduced during the COVID-19 crisis.
Sales of LiquiBand(R) Rapid, our new accelerated Topical Skin
Adhesive technology, continue to grow despite the challenges of
COVID-19, including the first major Integrated Delivery Network
(IDN) conversion with this technology.
The 510(k) for LiquiBand(R) XL was submitted to the FDA in the
Period and the product remains on schedule for approval by the end
of the year. Approval would provide access to a new $50 million
market and unlock further growth potential in the LiquiBand(R)
business with all partners.
The Group has also continued to leverage the LiquiBand(R) brand
in new geographies and has selected a partner in India following
approval in 2020, with launch shipments due to be made in the
second half of 2021.
Internal Fixation and Sealants
LiquiBandFix8(R) is used to fix hernia meshes placed inside the
body with accurately delivered individual drops of cyanoacrylate
adhesive, instead of traditional tacks and staples. Revenues
increased by 23% to GBP1.2 million (2020 H1: GBP1.0 million) with
demand continuing to improve despite remaining heavily suppressed
in comparison to pre-pandemic levels, reflecting the non-essential
nature of the majority of hernia surgery.
The US clinical trial for LiquiBandFix8 (R) continues to
progress well with completed patient procedure volumes now
sufficient to prepare and submit the clinical module and Premarket
Approval (PMA) filing on track for 2022 after the 12-month patient
follow-up. 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.
In the Period, AMS obtained CE mark approval for Seal-G(R) MIST
( laparoscopic surgery) and expanded the CE mark for Seal-G(R)
(open surgery ) to include a colourant to aid surgeon visibility.
In addition, the Group started the first human clinical trials for
both products with interim study results expected in early 2022 .
First commercial sales are expected in H2 2021 ahead of full
European commercial launch in 2022 to be supported by clinical
study results. Key Opinion Leader feedback continues to be very
positive and AMS remains confident that the device is a good
solution to the high unmet patient need for an effective GI
sealant.
Traditional Closure
RESORBA(R) branded Absorbable and Non-absorbable Suture ranges
are used in general surgery and a wide range of surgical
specialties including dental and ophthalmic surgery. Revenue
increased by 17% to GBP7.3 million and by 18% at constant currency
(2020 H1: GBP6.2 million).
To enhance its competitive edge in the tendering process, AMS
continues to develop line extensions to complement its range of
specialist products. It has recently expanded its suture portfolio
by adding ranges with self-anchoring barbed needles and also with
special needles optimised for cardio-vascular surgery. Both
products were soft launched in June 2021.
Biosurgical Devices
The Biosurgical Devices category comprises antibiotic-loaded
collagen sponges, collagen membranes and cones, oxidised cellulose,
synthetic bone substitutes and bio-absorbable screws. R evenues
increased by 25% to GBP6.7 million (2020 H1: GBP5.4 million) and by
24% at constant currency.
Included within Biosurgical Devices are revenues for
Biomatlante, which increased by 20% to GBP2.0 million in the Period
incorporating sales of the new RESORBA (R) branded bone substitutes
range in Germany, the Czech Republic and elsewhere.
Antibiotic-loaded collagens, used to locally deliver antibiotics
and significantly reduce the catastrophic risks that can be caused
by severe localised infections, are a key part of our biosurgical
portfolio. Gentamycin loaded collagen is sold under CE mark in
Europe and Vancomycin loaded collagen is sold at low volumes via
prescription in Germany. AMS has extended the CE mark for
Gentamycin under the Medical Devices Directive (MDD) and is
progressing with the work required for Medical Device Regulation
(MDR) approval and also is exploring avenues for potential US
certification which would require Premarket Approval. In addition,
the Group is progressing with MDR submission work to obtain a CE
mark for Vancomycin that would enable broader promotion and
sales.
Furthermore, the Group is exploring the new FDA Breakthrough
Device designation as a mechanism for obtaining US approval for the
Group's antibiotic-loaded collagen pacemaker pouch, also currently
sold at very low levels via prescription in Germany .
AMS is also working towards its first collagen approval in the
US with a 510(k) submission expected in 2022 for a dental
application which supports haemostasis and healing following tooth
extraction.
The Group's newly developed freeze-dried bone substitute (FDBS),
which can be mixed with fluids and moulded for optimal placement in
orthopaedic and spine surgery, is expected to open up longer-term
opportunities for the Group relating to the addition of active
ingredients such as platelets, stem cells or synthetic peptides. US
approval with limited indications is expected in 2022 with
additional claims in the US and European approval under MDR
expected to follow in the coming years.
Woundcare Business Unit
The Woundcare Business Unit is comprised of the Group's
multi-product portfolio of advanced woundcare dressings sold under
its partners' brands and the ActivHeal (R) label, plus a portfolio
of specialist medical bulk materials including multi-layer
woundcare and bio diagnostics products following the acquisition of
Raleigh in late 2020.
The Woundcare Business Unit delivered growth as global wound
treatment volumes gradually recover towards pre-pandemic levels
despite some business development activities continuing to be
impacted by COVID-19 restrictions. Revenue increased by 11% in the
Period to GBP19.8 million (2020 H1: GBP17.9 million) and by 14% on
a constant currency basis.
Woundcare Business 2021 2020 Reported Growth
Unit H1 GBP'000 H1 GBP'000 Growth at constant
currency
Infection Management 6,724 7,281 (8%) (5%)
------------ ------------ --------- -------------
Exudate Management 10,011 7,205 39% 41%
------------ ------------ --------- -------------
Other Woundcare 3,091 3,368 (8%) (3%)
------------ ------------ --------- -------------
TOTAL 19,826 17,854 11% 14%
------------ ------------ --------- -------------
Infection Management
The infection management category comprises advanced woundcare
dressings that incorporate antimicrobials such as Silver and
Polyhexamethylene Biguanide (PHMB). Revenue reduced by 8% on a
reported basis and by 5% on a constant currency basis to GBP6.7
million (2020 H1: GBP7.3 million).
As previously reported, an exclusive five-year agreement for one
of the Group's silver alginates was not initially extended at
December 2020 which impacted sales in the Period. AMS is now
pleased to report that a new five-year contract has been agreed
that provides ongoing supply for this customer's demand. This new
agreement also allows AMS to promote the product directly in many
markets which has already resulted in the Group securing new
business. In the short term, the Group expects to record lower
revenues in comparison to the annual minimum of the previous
contract. In the medium term, the Group expects the combined value
from direct sales and sales to the partner to return to historical
levels.
In the Period, AMS obtained enhanced 510(k) approval for our
Silver High Performance Dressing, incorporating an anti-microbial
indication which is important for commercial success. This
patent-protected technology provides the potential for deeper
penetration into the US antimicrobial gelling fibre market and the
Group is in discussions with interested strategic partners.
Existing partners' sales of Moisture Wicking Fabric, used to
manage skin fold issues, have temporarily been restricted by
COVID-19. However, a number of new partners have indicated interest
in the product which will also be marketed on a 'direct to patient'
basis in the US on Amazon.com from around the end of 2021.
AMS continues to invest in its R&D pipeline which includes
an antimicrobial high gelling product with anti-biofilm activity,
which is expected to launch in the US in 2022.
Exudate Management
Exudate management comprises advanced woundcare dressings and
gels which do not incorporate any antimicrobial elements. Revenue
increased by 39% on a reported basis and 41% on a constant currency
basis to GBP10.0 million (2020 H1: GBP7.2 million) which
incorporated GBP2.8 million of Raleigh sales (2020 H1: GBP
nil).
Following the acquisition of Raleigh, the AMS and Raleigh
woundcare teams have worked closely together to evaluate commercial
opportunities for Raleigh products as well as actively progressing
the in-sourcing of elements of the woundcare manufacturing process
which are expected to start to deliver cost savings for the Group
from early 2022.
AMS has continued to appoint new distribution partners in
markets where its key partners have no or low presence but the
demand for a high quality, cost effective wound care dressing range
still exists. Several new contracts have been signed in the first
half of the year, in particular in Africa and Asia, expanding the
Group's branded distribution network, with launches planned in the
second half of the year and into 2022 that are expected to drive
significant growth in the next few years.
For some time, AMS has been developing a customer-specific
negative pressure dressing which is now due for 510(k) submission
by our partner in late 2021 ahead of anticipated commercial launch
in 2022. The Group sees considerable medium term potential in the
negative pressure wound treatment space, especially given our
significantly increased internal expertise in this area following
the appointment of Chris Locke.
Other Woundcare
Other Woundcare comprises royalties, fees and woundcare
sealants. Revenue decreased by 8% at reported currency and by 3% at
constant currency to GBP3.1 million (2020 H1: GBP3.4 million) due
to low partner demand for membranes.
In the Period, AMS obtained CE mark approval for its Mechanical
Debridement product and successfully listed the product with the
FDA for the US market and are currently assessing commercial
opportunities.
New Skin Scaffold development
AMS has applied its Biosurgical, collagen technology into
developing a tissue scaffold designed to treat hard to heal and
stalled wounds such as diabetic foot ulcers and venous leg ulcers.
A 510(k) submission to the FDA is nearing completion which is
targeted for 2022 and the Group is in the process of developing the
optimal commercial strategy.
Regulatory
Significantly ahead of the 2024 deadline, AMS obtained its first
two Medical Devices Regulation (MDR) certificates in the Period.
The Group remains well prepared for the stricter requirements on
product safety and performance, clinical evaluation and post-market
clinical evidence stipulated by MDR and further submissions and
approvals are anticipated in the coming months.
The Group's extensive preparations leave it well placed to
exploit opportunities that will undoubtedly arise in Europe in the
next few years during the implementation of MDR.
Supply Chain / Brexit
Having completed comprehensive preparations for Brexit, the
Group did not experience any significant disruption in early 2021
following the end of the transition period at December 2020.
However, like many other businesses across all sectors globally,
AMS has recently experienced some supply chain disruptions due to
haulier shortages and transportation delays caused by the
combination of COVID-19 and Brexit. During this period of
disruption, the Group is reviewing its stockholding levels and
expects to incur increased freight and raw material costs. To date
there has not been a material impact, however, we are monitoring
this situation very closely and continue to evaluate all options
.
Summary and outlook
AMS delivered strong revenue growth, profitability and cash
generation in the first half of 2021, along with an increased
dividend, driven by good underlying performance and the reducing
impact of COVID-19 on elective surgery volumes. The Group made
significant regulatory and clinical progress in the Period as it
continues to increase its investments in developing next-generation
products.
AMS expects the improving trend in elective surgery and wound
treatment volumes to continue in the second half of 2021 and into
2022, despite the presence of the COVID-19 Delta variant in key
markets. However, the pace of recovery for different types of
surgical procedures and the potential impact of any new COVID-19
variants in our key markets remains difficult to predict.
Nevertheless, we have enjoyed a strong third quarter of the year,
in particular with order coverage into the US ahead of our internal
forecasts, placing us in a strong position to secure demand for our
full-year forecast.
The strong underlying performance of the business, together with
key R&D initiatives and innovative product launches, the US
LiquiBand (R) recovery plan and the Group's strong financial
position, mean that AMS is well placed for continued growth over
the second half of 2021 and beyond.
Financial Review
IFRS reporting
To provide the clearest possible insight into our performance,
the Group uses alternative performance measures. These measures are
not defined in International Financial Reporting Standards (IFRS)
and, therefore, are considered to be non-GAAP (Generally Accepted
Accounting Principles) measures. Accordingly, the relevant IFRS
measures are also presented where appropriate. AMS uses such
measures consistently at the half-year and full-year and reconciles
them as appropriate. The measures used in this statement include
constant currency revenue growth, adjusted operating margin,
adjusted profit before tax and adjusted earnings per share,
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.
Overview
Revenue increased by 28% at reported currency and 31% at
constant currency to GBP50.2 million (2020 H1: GBP39.3
million).
Administration expenses decreased marginally to GBP16.5 million
(2020 H1: GBP16.9 million) inclusive of foreign exchange movements
despite higher amortisation of intangibles. The Group incurred
GBP4.4 million of gross R&D spend in the period (2020 H1:
GBP3.8 million), representing 8.7% of sales (2020 H1: 9.6%) which
reflects an ongoing investment in innovation and in accommodating
the heightened regulatory environment.
No exceptional costs have been incurred in the six-month period
(2020 H1: GBPnil).
Amortisation of acquired intangible assets was GBP1.6 million in
the six-month period (2020 H1: GBP1.1 million) due to the effect of
the acquisition of Raleigh in November 2020.
Adjusted operating profit which excludes amortisation of
acquired intangibles and exceptional costs, increased by 130.4% to
GBP12.7 million (2020 H1: GBP5.5 million) whilst the adjusted
operating margin increased by 1,120 bps to 25.2% (2020 H1: 14.0%)
due to the negative impact of the COVID-19 pandemic on the Group's
revenues in the prior period.
GBP0.4 million was recorded within finance income due to the
change in long-term liabilities recognised on acquisition of
Sealantis in 2019 (2020 H1: GBP0.03 million).
The Group generated adjusted profit before tax of GBP12.4
million (2020 H1: GBP5.3 million) and profit before tax of GBP11.2
million (2020 H1: GBP4.3 million).
Reconciliation of profit before tax to adjusted profit before
tax
-------------------------------------------------------------------
Six months Six months
ended ended
30 June 21 30 June 20
GBP'000 GBP'000
---------------------------------------- ------------ -----------
Profit before tax 11,193 4,260
Amortisation of acquired intangibles 1,587 1,074
Change in long-term liabilities (407) (29)
---------------------------------------- ------------ -----------
Adjusted profit before tax 12,373 5,305
---------------------------------------- ------------ -----------
The Group's effective corporation tax rate, reflecting the
blended tax rates in the countries where we operate and including
UK patent box relief, increased to 20.2% (2020 H1: 14.4%). The
increase on the previous period has arisen as the Group was able to
retrospectively claim for patent box relief as a result of the
granting of patents on LiquiBand(R) Exceed in the first half of
2020. Additionally, the substantive enactment of the higher tax
rate in the UK from April 2023 has increased the valuation of the
deferred tax liability and contributed an additional 3.0 percentage
points to the effective tax rate.
Adjusted diluted earnings per share increased by 115% to 4.64p
(2020 H1: 2.16p) and diluted earnings per share increased by 144%
to 4.10p (2020 H1: 1.68p) reflecting the Group's increased
earnings.
The Board intends to pay an interim dividend of 0.58p per share
on 22 October 2021 to shareholders on the register at the close of
business on 24 September 2021. This is a 16% increase on the
interim dividend paid in respect of the first half of 2020
reflecting the Board's confidence in the future growth in the
Group.
Operating result by business segment
Six months ended 30 June Surgical Woundcare
2021
GBP'000 GBP'000
--------------------------------- --------- ----------
Revenue 30,377 19,826
Profit from operations 8,854 2,543
Amortisation of acquired
intangibles 1,001 586
Adjusted profit from operations
(4) 9,855 3,129
Adjusted operating margin
(4) 32.4% 15.8%
--------------------------------- --------- ----------
Six months ended 30 June
2020
Revenue 21,428 17,854
Profit from operations 1,951 2,779
Amortisation of acquired
intangibles 1,069 5
Adjusted profit from operations
(4) 3,020 2,784
Adjusted operating margin
(4) 14.1% 15.6%
--------------------------------- --------- ----------
(4) Adjusted for amortisation of acquired intangible assets
Table is reconciled to statutory information in note 5 of the
financial information.
Surgical
Surgical revenues increased by 42% to GBP30.4 million (2020 H1:
GBP21.4 million) at reported currency and 45% at constant currency.
Adjusted operating margin increased by 1,830 bps to 32.4% (2020 H1:
14.1%) as higher sales allowed the Group to achieve greater
operational leverage compared with the previous period.
Woundcare
Woundcare revenues increased by 11% to GBP19.8 million (2020 H1:
GBP17.9 million) at reported currency and by 14% at constant
currency. Adjusted operating margin increased by 20 bps to 15.8%
(2020 H1: 15.6%) as the general recovery was partially offset by
reduced Silver Alginate volumes.
Currency
The Group hedges significant currency transaction exposure by
using forward contracts, and aims to hedge approximately 80% of its
estimated transactional exposure for the next 12 to 18 months. In
the first half of the year, approximately one third of sales were
invoiced in Euros and approximately one quarter were invoiced in US
Dollars.
The Group estimates that a 10% movement in the GBP:US$ or
GBP:EUR exchange rate will impact Sterling revenues by
approximately 3.1% and 3.0% respectively and in the absence of any
hedging this would have an impact on the Group operating margin of
2.6% and 0.2% percentage points respectively.
Cash Flow
Net cash inflow from operating activities increased by 55% to
GBP13.7 million (2020 H1: GBP8.8 million) as a result of the
Group's increased profitability.
At the end of the period, the Group had net cash of GBP61.1
million (31 December 2020: GBP53.8 million).
In the first half of 2021, receivables increased by GBP1.5
million due to higher sales (2020 H1: GBP11.9 million decrease)
with debtor days at 50 (2020 H1: 43 days) and payables reduced by
GBP1.8 million (2020 H1: GBP1.1 million decrease) with creditor
days at 31 (2020 H1: 30 days). Inventory decreased to 5.5 months of
supply in the period (2020 H1: 6.7 months of supply).
In the period, we invested GBP2.8 million in capital equipment,
R&D and regulatory costs including investment in converting and
packaging machines (2020 H1: GBP2.4 million).
Tax payments decreased to GBP1.9 million (2020 H1: GBP3.3
million) which is GBP0.3 million lower than tax in the income
statement due to the timing of payments on account. The prior
period included accelerated payments on account in the UK,
resulting in a higher cash outflow than in the current period.
In June 2021, the Group paid its final dividend for the year
ended 31 December 2020 of GBP2.6 million (2020 H1: GBP2.3
million).
The Group has an unsecured, undrawn GBP80 million,
multi-currency credit facility provided jointly by HSBC and
NatWest, which is in place until December 2022. This facility
carries an annual interest rate of 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
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended 31 December
30 June 2021 30 June 2020 2020
Before Exceptional Before Exceptional Before Exceptional
Exceptional Items Exceptional Items Exceptional Items
Note Note Note
Items 7 Total Items 7 Total Items 7 Total
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- ----- ------------ ------------ --------- ------------ ------------ --------- ------------ ------------ ---------
Revenue from
continuing
operations 5 50,203 - 50,203 39,282 - 39,282 86,796 - 86,796
Cost of sales (22,116) - (22,116) (17,540) - (17,540) (40,756) - (40,756)
---------------- ----- ------------ ------------ --------- ------------ ------------ --------- ------------ ------------ ---------
Gross profit 28,087 - 28,087 21,742 - 21,742 46,040 - 46,040
Distribution
costs (627) - (627) (483) - (483) (1,071) - (1,071)
Administration
costs (16,512) - (16,512) (16,949) - (16,949) (33,658) (834) (34,492)
Other income 133 - 133 115 - 115 253 - 253
Profit from
operations 11,081 - 11,081 4,425 - 4,425 11,564 (834) 10,730
Finance income 451 - 451 166 - 166 220 - 220
Finance costs (339) - (339) (331) - (331) (861) - (861)
Profit before
taxation 11,193 - 11,193 4,260 - 4,260 10,923 (834) 10,089
Income tax 8 (2,261) - (2,261) (614) - (614) (1,505) - (1,505)
---------------- ----- ------------ ------------ --------- ------------ ------------ --------- ------------ ------------ ---------
Profit for
the period
attributable
to equity
holders
of the parent 8,932 - 8,932 3,646 - 3,646 9,418 (834) 8,584
---------------- ----- ------------ ------------ --------- ------------ ------------ --------- ------------ ------------ ---------
Earnings per
share
Basic 4 4.15p - 4.15p 1.70p - 1.70p 4.38p (0.39p) 3.99p
Diluted 4 4.10p - 4.10p 1.68p - 1.68p 4.32p (0.38p) 3.94p
Adjusted
diluted
(5) 4 4.64p - 4.64p 2.16p - 2.16p 5.44p (0.38p) 5.06p
---------------- ----- ------------ ------------ --------- ------------ ------------ --------- ------------ ------------ ---------
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
30 June 2021 30 June 2020 31 December 2020
GBP'000 GBP'000 GBP'000
---------------- ----- ------------ ------------ --------- ------------ ------------ --------- ------------ ------------ ---------
Profit for
the year 8,932 3,646 8,584
---------------- ----- ------------ ------------ --------- ------------ ------------ --------- ------------ ------------ ---------
Exchange differences on translation
of foreign operations (3,891) 6,733 3,507
(Loss)/gain arising on cash
flow hedges (264) (1,759) 842
Deferred tax credit /(charge)
arising on cash flow hedges 50 130 (160)
--------------------------------------------------- --------- ------------ ------------ --------- ------------ ------------ ---------
Other comprehensive (charge)/
credit for the period (4,105) 5,104 4,189
--------------------------------------------------- --------- ------------ ------------ --------- ------------ ------------ ---------
Total comprehensive income for
the period attributable to equity
holders of the parent 4,827 8,750 12,773
--------------------------------------------------- --------- ------------ ------------ --------- ------------ ------------ ---------
(5) Adjusted for exceptional items, amortisation of acquired
intangible assets and the change in long-term liabilities.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(Unaudited) (Unaudited) (Audited)
31 December
30 June 2021 30 June 2020 2020
Note GBP'000 GBP'000 GBP'000
Assets
Non-current assets
Acquired intellectual property
rights 9,364 10,095 9,879
Technology based intangible
assets 20,563 16,134 22,357
Software intangibles 2,184 2,665 2,437
Development costs 8,929 6,103 7,368
Goodwill 66,659 57,470 68,911
Property, plant and equipment 28,542 27,629 30,064
Trade and other receivables 90 223 364
-------------------------------- ----- ------------- ------------- -----------------------
136,331 120,319 141,380
Current assets
Inventories 20,599 23,653 21,025
Trade and other receivables 19,892 17,603 21,107
Current tax assets 2,041 1,001 1,214
Cash and cash equivalents 61,114 68,355 53,829
-------------------------------- ----- ------------- ------------- -----------------------
103,646 110,612 97,175
-------------------------------- ----- ------------- ------------- -----------------------
Total assets 239,977 230,931 238,555
-------------------------------- ----- ------------- ------------- -----------------------
Liabilities
Current liabilities
Trade and other payables 11,574 12,577 13,139
Current tax liabilities 307 - 319
Lease liabilities 1,196 1,140 1,257
13,077 13,717 14,715
Non-current liabilities
Trade and other payables 2,777 3,470 3,229
Other loans - 498 -
Deferred tax liabilities 9,218 6,863 8,536
Lease liabilities 9,271 8,070 9,864
21,266 18,901 21,629
-------------------------------- ----- ------------- ------------- -----------------------
Total liabilities 34,343 32,618 36,344
-------------------------------- ----- ------------- ------------- -----------------------
Net assets 205,634 198,313 202,211
-------------------------------- ----- ------------- ------------- -----------------------
Equity
Share capital 11 10,787 10,764 10,769
Share premium 36,355 36,284 36,288
Share-based payments reserve 12,107 10,211 11,142
Investment in own shares (164) (161) (162)
Share-based payments deferred
tax reserve 557 417 430
Other reserve 1,531 1,531 1,531
Hedging reserve 1,023 (1,074) 1,237
Translation reserve (633) 6,484 3,258
Retained earnings 144,071 133,857 137,718
-------------------------------- ----- ------------- ------------- -----------------------
Equity attributable to equity
holders of the parent 205,634 198,313 202,211
-------------------------------- ----- ------------- ------------- -----------------------
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
2021
(audited) 10,769 36,288 11,142 (162) 430 1,531 1,237 3,258 137,718 202,211
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- ---------------
Consolidated
profit for
the period
to 30 June
2021 - - - - - - - - 8,932 8,932
Other
comprehensive
income - - - - - - (214) (3,891) - (4,105)
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- ---------------
Total
comprehensive
income - - - - - - (214) (3,891) 8,932 4,827
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- ---------------
Share-based
payments - - 878 - - - - - - 878
Share options
exercised 18 67 87 - 127 - - - - 299
Shares
purchased by
EBT - - - (368) - - - - - (368)
Shares sold by
EBT - - - 366 - - - - - 366
Dividends paid - - - - - - - - (2,579) (2,579)
----------- ------------ -------- -------- ------------
At 30 June
2021
(unaudited) 10,787 36,355 12,107 (164) 557 1,531 1,023 (633) 144,071 205,634
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- ---------------
Share- Investment Share-based
Share Share based in own payments Other Hedging Translation Retained
deferred
capital premium payments shares tax reserve reserve reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- ---------------
At 1 January
2020
(audited) 10,745 36,226 9,466 (159) 649 1,531 555 (249) 132,471 191,235
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- ---------------
Consolidated
profit for
the period
to 30 June
2020 - - - - - - - - 3,646 3,646
Other
comprehensive
income - - - - - - (1,629) 6,733 - 5,104
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- ---------------
Total
comprehensive
income - - - - - - (1,629) 6,733 3,646 8,750
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- ---------------
Share-based
payments - - 795 - - - - - - 795
Share options
exercised 19 58 (50) - (232) - - - - (205)
Shares
purchased by
EBT - - - (375) - - - - - (375)
Shares sold by
EBT - - - 373 - - - - - 373
Dividends paid - - - - - - - - (2,260) (2,260)
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- ---------------
At 30 June
2020
(unaudited) 10,764 36,284 10,211 (161) 417 1,531 (1,074) 6,484 133,857 198,313
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- ---------------
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
2020
(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
(audited) 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) (Unaudited) (Audited)
Six months Six months
ended ended Year ended
30 June 30 June 31 December
21 20 20
GBP'000 GBP'000 GBP'000
-------------------------------------------- ------------ ------------ ------------
Cash flows from operating activities
Profit from operations 11,081 4,425 10,730
Adjustments for:
Depreciation 1,946 1,700 3,467
Amortisation - intellectual property
rights 1,587 1,074 2,269
- development costs 336 251 563
- software intangibles 241 256 533
Increase in inventories (190) (5,357) (1,892)
Decrease in trade and other receivables 967 11,260 10,262
Decrease in trade and other payables (1,318) (2,269) (2,292)
Share-based payments expense 878 795 1,611
Taxation (1,867) (3,318) (3,740)
Net cash inflow from operating activities 13,661 8,817 21,511
-------------------------------------------- ------------ ------------ ------------
Cash flows from investing activities
Purchase of software (28) (52) (126)
Capitalised research and development (1,969) (1,217) (2,788)
Purchases of property, plant and equipment (848) (1,141) (2,346)
Disposal of property, plant and equipment 45 120 136
Interest received 43 166 277
Acquisition of subsidiary - (39) (21,924)
Net cash used in investing activities (2,757) (2,163) (26,771)
-------------------------------------------- ------------ ------------ ------------
Cash flows from financing activities
Dividends paid (2,579) (2,260) (3,337)
Repayment of principal under lease
liabilities (607) (493) (1,150)
Issue of equity shares 69 60 65
Shares purchased by EBT (368) (375) (542)
Shares sold by EBT 366 373 539
Interest paid (342) (347) (735)
Repayment of secured loan - (176) (664)
Net cash used in financing activities (3,461) (3,218) (5,824)
-------------------------------------------- ------------ ------------ ------------
Net increase/(decrease) in cash and
cash equivalents 7,443 3,436 (11,084)
Cash and cash equivalents at the beginning
of the period 53,829 64,751 64,751
Effect of foreign exchange rate changes (158) 168 162
Cash and cash equivalents at the end
of the period 61,114 68,355 53,829
-------------------------------------------- ------------ ------------ ------------
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 2021
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 2021 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 2020 has been delivered to the Registrar of
Companies. The auditor reported on those accounts; their report was
unqualified, did not draw attention to any matters of emphasis
without qualifying the report and did not contain a statement under
section 498 (2) or (3) of the Companies Act 2006.
The individual financial statements for each Group company are
presented in the currency of the primary economic environment in
which it operates (its functional currency). For the purpose of the
consolidated financial statements, the results and financial
position of each Group company are expressed in pounds sterling,
which is the functional currency of the Company and the
presentation currency for the consolidated financial
statements.
3. Accounting policies
The same accounting policies, presentations and methods of
computation are followed in the condensed set of financial
statements as applied in the Group's latest annual audited
financial apart from the adoption of the following new or amended
IFRS and Interpretations issued by the International Accounting
Standards Board (IASB):
- Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS7, IFRS4 and IFRS16)
No revised standards adopted in the current period have had a
material impact on the Group's financial statements.
The unaudited condensed set of financial statements included in
this half-yearly financial report have been prepared in accordance
with International Accounting Standard 34 'Interim Financial
Reporting', as adopted by the United Kingdom. These condensed
interim accounts should be read in conjunction with the annual
accounts of the Group for the year ended 31 December 2020. The
annual financial statements of Advanced Medical Solutions Group plc
are prepared in accordance with International Financial Reporting
Standards as adopted by the United Kingdom.
4. Earnings per share
(Unaudited) (Unaudited)
Six months Six months (Audited)
ended ended Year ended
30 June 30 June 31 December
2021 2020 2020
Number of shares '000 '000 ' 000
------------------------------------- ------------ ------------ ------------
Weighted average number of ordinary
shares for the purposes of basic
earnings per share 215,468 214,985 215,126
------------------------------------- ------------ ------------ ------------
Effect of dilutive potential
ordinary shares: share options,
deferred share bonus, LTIPs 2,630 2,585 2,705
------------------------------------- ------------ ------------ ------------
Weighted average number of ordinary
shares for the purposes of diluted
earnings per share 218,098 217,570 217,831
------------------------------------- ------------ ------------ ------------
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,
amortisation of acquired intangible assets and change in the fair
value of long-term liability and is based on earnings of:
(Unaudited) (Unaudited)
Six months Six months (Audited)
ended ended Year ended
30 June 30 June 31 December
2021 2020 2020
GBP'000 GBP'000 GBP'000
---------------------------------------- ------------ ------------ ------------
Earnings
Profit for the year being attributable
to equity holders of the parent 8,932 3,646 8,584
Exceptional items - - 834
Amortisation of acquired intangible
assets 1,587 1,074 2,269
Change in long-term liabilities (407) (29) 167
Adjusted profit for the year being
attributable to equity holders of the
parent 10,112 4,691 11,854
---------------------------------------- ------------ ------------ ------------
pence pence pence
---------------------------------------- ------------ ------------ ------------
Basic EPS 4.15 1.70 3.99
Diluted EPS 4.10 1.68 3.94
Adjusted basic EPS 4.69 2.18 5.51
Adjusted diluted EPS 4.64 2.16 5.44
---------------------------------------- ------------ ------------ ------------
The denominators used are the same as those detailed above for
both basic and diluted earnings per share.
The adjusted diluted EPS information is considered to provide a
fairer representation of the Group's trading performance.
5. Segment information
Segment results, assets and liabilities include items directly
attributable to a segment as well as those that can be allocated on
a reasonable basis. Unallocated items comprise mainly investments
and related revenue, corporate assets, head office expenses,
exceptional items, income tax assets and the Group's external
borrowings. These are the measures reported to the Group's Chief
Executive for the purposes of resource allocation and assessment of
segment performance.
Business segments
The principal activities of the business units are as
follows:
Surgical
Selling, marketing and innovation of the Group's surgical
products either sold directly by our sales teams or by
distributors.
Woundcare
Selling, marketing and innovation of the Group's advanced
woundcare products supplied under partner brands, bulk materials
and the ActivHeal brand predominantly to the UK NHS as well as bio
diagnostics products following the acquisition of Raleigh in
November 2020.
Segment information about these Business Units is presented
below:
Six months ended
30 June 2021 Surgical Woundcare Consolidated
(Unaudited) GBP'000 GBP'000 GBP'000
-------------------------------------- --------- ---------- -------------
Revenue 30,377 19,826 50,203
-------------------------------------- --------- ---------- -------------
Result
-------------------------------------- --------- ---------- -------------
Adjusted segment operating profit 9,855 3,129 12,984
Amortisation of acquired intangibles (1,001) (586) (1,587)
Segment operating profit 8,854 2,543 11,397
Unallocated expenses (316)
Exceptional items -
-------------
Profit from operations 11,081
Finance income 451
Finance costs (339)
-------------------------------------- --------- ---------- -------------
Profit before tax 11,193
Tax (2,261)
-------------------------------------- --------- ---------- -------------
Profit for the period 8,932
-------------------------------------- --------- ---------- -------------
At 30 June 2021
(Unaudited) Surgical Woundcare Consolidated
Other information GBP'000 GBP'000 GBP'000
-------------------------------- --------- ---------- -------------
Capital additions:
Software intangibles 16 12 28
Development 1,216 753 1,969
Property, plant and equipment 463 385 848
Depreciation and amortisation (2,481) (1,629) (4,110)
-------------------------------- --------- ---------- -------------
Balance sheet
Assets
Segment assets 155,927 83,870 239,797
Unallocated assets 180
-------------------------------- --------- ----------
Consolidated total assets 239,977
-------------------------------- --------- ---------- -------------
Liabilities
Segment liabilities 20,301 14,043 34,343
-------------------------------- --------- ---------- -------------
Consolidated total liabilities 34,343
-------------------------------- --------- ---------- -------------
Six months ended
30 June 2020 Surgical Woundcare Consolidated
(Unaudited) GBP'000 GBP'000 GBP'000
-------------------------------------- --------- ---------- -------------
Revenue 21,428 17,854 39,282
-------------------------------------- --------- ---------- -------------
Result
-------------------------------------- --------- ---------- -------------
Adjusted segment operating profit 3,020 2,784 5,804
Amortisation of acquired intangibles (1,069) (5) (1,074)
Segment operating profit 1,951 2,779 4,730
Unallocated expenses (305)
Exceptional items -
-------------
Profit from operations 4,425
Finance income 166
Finance costs (331)
-------------------------------------- --------- ---------- -------------
Profit before tax 4,260
Tax (614)
-------------------------------------- --------- ---------- -------------
Profit for the period 3,646
-------------------------------------- --------- ---------- -------------
At 30 June 2020
(Unaudited) Surgical Woundcare Consolidated
Other information GBP'000 GBP'000 GBP'000
-------------------------------- --------- ---------- -------------
Capital additions:
Software intangibles 25 27 52
Development 647 570 1,217
Property, plant and equipment 663 478 1,141
Depreciation and amortisation (2,261) (1,020) (3,281)
-------------------------------- --------- ---------- -------------
Balance sheet
Assets
Segment assets 163,143 67,467 230,610
Unallocated assets 321
-------------------------------- --------- ----------
Consolidated total assets 230,931
-------------------------------- --------- ---------- -------------
Liabilities
Segment liabilities 18,160 14,458 32,618
-------------------------------- --------- ---------- -------------
Consolidated total liabilities 32,618
-------------------------------- --------- ---------- -------------
Year ended
31 December 2020 Surgical Woundcare Consolidated
(Audited) GBP'000 GBP'000 GBP'000
-------------------------------------- --------- ---------- -------------
Revenue 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 items (834)
-------------
Profit from operations 10,730
Finance income 220
Finance costs (861)
-------------------------------------- --------- ---------- -------------
Profit before tax 10,089
Tax (1,505)
-------------------------------------- --------- ---------- -------------
Profit for the year 8,584
-------------------------------------- --------- ---------- -------------
Year ended
31 December 2020
(Audited) Surgical Woundcare Consolidated
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)
-------------------------------- --------- ---------- -------------
Balance sheet
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
-------------------------------- --------- ---------- -------------
Consolidated total liabilities 36,344
-------------------------------- --------- ---------- -------------
Geographical segments
The Group operates in the UK, Germany, the Netherlands, France,
the Czech Republic, Israel, with a sales office located in Russia
and a sales presence in the USA. In presenting information on the
basis of geographical segments, segment revenue is based on the
geographical location of customers. Segment assets are based on the
geographical location of the assets.
The following table provides an analysis of the Group's sales by
geographical market, irrespective of the origin of the goods or
services, based upon location of the Group's customers:
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
30 June 2021 30 June 2020 31 December 2020
GBP'000 GBP'000 GBP'000
-------------------------- ----------------- ----------------- -----------------
United Kingdom 8,488 7,349 16,748
Germany 9,956 9,234 18,888
France 1,886 2,254 4,369
Rest of Europe 10,601 9,778 18,027
United States of America 16,385 8,922 23,690
Rest of World 2,887 1,745 5,074
-------------------------- ----------------- ----------------- -----------------
50,203 39,282 86,796
-------------------------- ----------------- ----------------- -----------------
The following table provides an analysis of the Group's total
assets by geographical location.
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
30 June 2021 30 June 2020 31 December 2020
GBP'000 GBP'000 GBP'000
-------------------------- ----------------- ----------------- -----------------
United Kingdom 133,038 114,466 125,343
Germany 67,338 73,163 71,752
France 9,263 10,291 9,703
Rest of Europe 6,860 4,924 7,224
Israel 20,091 24,478 21,163
United States of America 3,387 3,609 3,370
239,977 230,931 238,555
-------------------------- ----------------- ----------------- -----------------
6. Financial Instruments' fair value disclosures
It is the policy of the Group to enter into forward foreign
exchange contracts to cover specific foreign currency payments and
receipts.
The Group held the following financial instruments at fair value
at 30 June 2021. 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 June 30 June 31 Dec 30 June 30 June 31 Dec 30 June 30 June 31 Dec
21 20 20 21 20 20 21 20 20
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 1.29 1.30 1.30 6,500 9,000 8,000 339 (363) 312
3 to 6
months 1.26 1.24 1.30 8,000 8,500 6,500 570 (17) 235
7 to 12
months 1.35 1.30 1.27 14,000 14,000 14,000 269 (526) 805
Over 12
months - 1.25 1.31 - 10,000 6,000 - (87) 205
----------- --------- --------- --------- -------- -------- -------- -------- -------- --------
28,500 41,500 34,500 1,178 (993) 1,557
----------- --------- --------- --------- -------- -------- -------- -------- -------- --------
Ave. exchange rate Foreign currency Fair value
30 June 30 June 31 Dec 30 June 30 June 31 Dec 30 June 30 June 31 Dec
21 20 20 21 20 20 21 20 20
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 1.13 1.14 1.15 800 900 600 23 (28) (16)
3 to 6
months 1.10 1.07 1.14 600 600 600 27 12 (15)
7 to 12
months 1.12 1.14 1.11 1,200 1,200 1,200 33 (47) (1)
Over 12
months - 1.11 1.10 - 1,000 600 - (18) 2
------------ --------- --------- --------- -------- -------- -------- -------- -------- --------
2,600 3,700 3,000 83 (81) (30)
------------ --------- --------- --------- -------- -------- -------- -------- -------- --------
7. Exceptional items
During the six months ended 30 June 2021, the Group incurred
exceptional items of GBPnil (2020 H1: GBPnil, year ended 31
December 2020: GBP0.8 million in relation to the acquisition of
Raleigh Adhesive Coatings Limited as well as the transaction costs
to participate in another potential process which was ultimately
unsuccessful) .
8. Taxation
The weighted average tax rate for the Group for the six month
period ended 30 June 2021 was 22.5% (first half of 2020: 25.2%,
year ended 31 December 2020: 24.6%). The Group's effective tax rate
for the full year is expected to be 20.2%, which has been applied
to the six months ended 30 June 2021 (first half of 2020: 14.4%,
year ended 31 December 2020: 14.9%). This represents an increase on
the previous period as the Group was able to retrospectively claim
for patent box relief as a result of the granting of patents on
LiquiBand(R) Exceed in the first half of 2020 and also reflects the
impact of the substantive enactment of the higher tax rate in the
UK from April 2023 resulting in an increased valuation of the
deferred tax liability in the current period.
9. Dividends
(Unaudited) (Unaudited) (Audited)
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2021 2020 2020
Amounts recognised as distributions
to equity holders in the period: GBP'000 GBP'000 GBP'000
------------------------------------- ------------ ------------ ------------
Final dividend for the year ended
31 December 2019 of 1.05p per
ordinary share - 2,260 2,260
Interim dividend for the year
ended 31 December 2020 of 0.50p
per ordinary share - - 1,077
Final dividend for the year ended
31 December 2020 of 1.20p per
ordinary share 2,579 - -
-------------------------------------
2,579 - 3,337
------------------------------------- ------------ ------------ ------------
10. Contingent liabilities
The Directors are not aware of any contingent liabilities faced
by the Group as at 30 June 2021 (30 June 2020: GBPnil, 31 December
2020: GBPnil).
11. Share capital
Share capital as at 30 June 2021 amounted to GBP10,787,000 (30
June 2020: GBP10,764,000, 31 December 2020: GBP10,769,000). During
the period the Group issued 352,526 shares in respect of exercised
share options, LTIPS, Deferred Annual Bonus Scheme and the Deferred
Share Bonus Scheme.
12. Going concern
In carrying out their duties in respect of going concern, the
Directors have carried out a review of the Group's financial
position and cash flow forecasts for the next 12 months. These have
been based on a comprehensive review of revenue, expenditure and
cash flows, taking into account specific business risks and the
current economic environment.
Due to the impact that COVID-19 has had on the global economy,
the Group has deemed it appropriate to use sensitivity analysis on
the Group's forecasted performance, using a mid-case scenario, a
10% sales reduction, and a worst-case scenario, a 25% sales
reduction. The results show that in both scenarios AMS is able to
continue its operations for a period of at least 12 months, and
importantly there remains significant margin between our covenants
in place.
With regards to the Group's financial position, it had cash and
cash equivalents at 30 June 2021 of GBP61.1 million and a
four-year, GBP80 million, multi-currency, revolving credit
facility, obtained in December 2018, with an accordion option under
which AMS can request up to an additional GBP20 million on the same
terms. The credit facility is provided jointly by HSBC and NatWest,
is subject to leverage and interest cover covenants, is unsecured
on the assets of the Group and is currently undrawn.
While the current economic environment is uncertain, AMS
operates in markets whose demographics are favourable, underpinned
by an increasing need for products to treat chronic and acute
wounds. Consequently, long-term market growth is expected. The
Group has a number of long-term contracts with customers across
different geographic regions and also with substantial financial
resources, ranging from government agencies through to global
healthcare companies.
After taking the above into consideration, the Directors have
reached the conclusion that the Group is well placed to manage its
business risks in the current economic environment. Accordingly,
they continue to adopt the going concern basis in preparing the
condensed consolidated financial statements.
13. Principal risks and uncertainties
Further detail concerning the principal risks affecting the
business activities of the Group is detailed on pages 46-49 of the
Annual Report and Accounts for the year ended 31 December 2020.
There have been no significant changes since the last annual
report, other than the continued uncertainty surrounding the
COVID-19 pandemic, for which, an update has been provided in market
announcements and within these Interim Statements.
14. Seasonality of sales
There are no significant factors affecting the seasonality of
sales between the first and second half of the year.
15. Events after the balance sheet date
There have been no material events subsequent to the end of the
interim reporting period ended 30 June 2021.
16. Copies of the interim results
Copies of the interim results can be obtained from the Group's
registered office at Premier Park, 33 Road One, Winsford Industrial
Estate, Winsford, Cheshire, CW7 3RT and are available on our
website "www.admedsol.com".
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END
IR XZLLFFKLLBBQ
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September 15, 2021 02:00 ET (06:00 GMT)
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