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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