Half Yearly Report

RNS Number : 4634Y
Advanced Medical Solutions Grp PLC
09 September 2015

For immediate release 

9 September 2015

 

Advanced Medical Solutions Group plc

(“AMS” or the “Group”)

 

Interim Results for the six months ended 30 June 2015

 

Winsford, UK, 9 September 2015: Advanced Medical Solutions Group plc (AIM: AMS), the surgical and advanced woundcare specialist company, today announces its interim results for the six months ended 30 June 2015.

 

Financial Highlights:

 

 

 

H1 2015

H1 2014

Reported growth

Growth at  constant currency¹

Group revenue (£ million)

32.7

29.4

11%

14%

Adjusted² operating margin (%)

25.2

24.5

70 bps

Adjusted² profit before tax (£ million)

8.2

7.3

13%

Profit before tax (£ million)

8.0

7.1

14%

Adjusted² diluted earnings per share (p)

3.23p

2.92p

12%

Diluted earnings per share (p)

3.15p

2.82p

11%

Net operating cash flow3

7.9

7.2

11%

Net cash (£ million)4

22.6

17.3

31%

Interim dividend per share

0.25p per share

0.22p per share

13.6%


 

 

 

 

Business Highlights:

· Branded Distributed revenues up 48% to £6.4 million (2014 H1: £4.3 million5) and by 52% at constant currency

· Branded Direct revenues down 3% to £11.1 million (2014 H1: £11.4 million5) but up 4% at constant currency

· OEM revenues up 14% to £13.5 million (2014 H1: £11.8 million) and by 12% at constant currency

· Bulk Materials revenues down 10% to £1.7 million (2014 H1: £1.9 million) and by 1% at constant currency

· Continued improvement and strong performance in the US with LiquiBand® tissue adhesive range:

Revenues up 139% to £3.3 million ( 2014 H1: £1.3 million) at constant currency

Market share by volume increased to 21.5% (December 2014: 19%) in the alternate site segment and 9.5% (December 2014: 7%) in the hospital segment 

· ActivHeal® continues to make progress in the NHS, with a 7% increase in revenues, growing market share

· Silver alginate revenues increased by 14% at constant currency to £7.9 million (2014 H1: £6.8 million)

· Expanded use of Hernia Mesh Fixation device LiquiBand® Fix8™ and £0.4 million of sales achieved in the first six months of 2015 since launch in 2014 with encouraging uptake across Europe

 

Post Period End Highlight

· CE Approval for an antimicrobial foam including Polyhexamethylene Biguanide (PHMB) for Europe received on 27 August 2015

 

 

Commenting on the results Chris Meredith, CEO of AMS, said:

 

“The first half of 2015 has seen another period of good performance by the Group and we are confident of meeting current market expectations for the full year.

 

The first six months have seen AMS grow market share in the US with LiquiBand® performing strongly. LiquiBand® Fix8™, our innovative new surgical device currently used for Hernia Mesh Fixation, has also been well received with a strong uptake by surgeons internationally, highlighting not only the potential of our innovation at AMS but also our capabilities at navigating the regulatory approval pathway.

 

The strength of the underlying business and our strong financial position, combined with the opportunities we see from our innovative R&D pipeline, leads the Board to be optimistic about our longer term prospects and the potential for growth.”

 

– End –

 

1    Constant currency removes the effect of currency movements by re-translating the current period’s performance at the previous period’s exchange rates

2    All items are shown before amortisation of acquired intangible assets which, in 2015 H1, were £0.2 million (2014 H1: £0.2 million) as defined in the financial review

3    Operating cash flow is arrived at by taking the operating profit for the period and adjusting it for depreciation, amortisation, working capital movements and other non cash items

4    Net cash is defined as cash and cash equivalents plus short term investments less financial liabilities and bank loans

5    £0.2m of sutures for the dental market has been reclassified from the Branded Direct to the Branded Distributed segment.

 

 

For further information, please contact:

 

Advanced Medical Solutions Group plc

Tel: +44 (0) 1606 545508

Chris Meredith, Chief Executive Officer

Mary Tavener, Group Finance Director




Consilium Strategic Communications

Tel: +44 (0) 20 3709 5700

Mary-Jane Elliott / Jonathan Birt / Matthew Neal / Hendrik Thys

 


Investec Bank plc (NOMAD) & Broker

Tel: +44 (0) 20 7597 5970

Gary Clarence / Daniel Adams / 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, wound care and wound closure markets, focused on quality outcomes for patients and value for payors. AMS has a wide range of products that include silver alginates, alginates, foams, tissue adhesives, sutures and haemostats, which it markets under its brands ActivHeal®, LiquiBand® and RESORBA® as well as supplying under white label.

 

AMS’s products, manufactured out of two sites in the UK, one in the Netherlands, two in Germany and one in the Czech Republic, are sold in 65 countries 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. Established in 1991, the Group has approximately 470 employees. For more information please see www.admedsol.com.



Chairman’s Statement

 

AMS is on track to deliver another year of good growth with strong performance in the first six months of the year. AMS’s brands continue to perform well and our partners continue to drive growth in our OEM business.

 

The Group is advancing the development of new products through its innovative Research and Development (R&D) team, building a pipeline which will support growth with our partners, distributors and our own sales teams. We launched our novel Hernia Mesh Fixation device LiquiBand® Fix8™ in the second half of 2014 which was our first application using LiquiBand® medical adhesive inside the body. The launch has been very positive with the product, which received approval for expanded use for all types of abdominal hernia as well as for the closure of the membrane lining the abdominal wall (peritoneum) in April 2015, and it is now being sold in 16 countries both through our own sales forces as well as through distributors.

 

We are also pleased that we have received CE mark approval in August 2015 for a new anti-microbial foam. This foam incorporates PHMB (polyhexamethylene biguanide), which has been shown to be effective against several bacteria and known hospital “super bugs” and strengthens AMS’s position in the antimicrobial foam market. This product will be launched for sale with our OEM partners and into the NHS through our direct sales team in the second half of the year.

 

Overall, revenue increased by 11% to £32.7 million (2014 H1: £29.4 million), representing growth of 14% at constant currency and adjusted profit before tax1 increased by 13% to £8.2 milion (2014 H1: £7.3 million). The Group continues to generate cash and our net cash position has increased to £22.6 million as at 30 June 2015 (December 2014: £17.3 million).

 

With the strength of our cash position and the availability of a credit facility, we continue to evaluate and consider potential acquisitions that are in line with the Group’s growth strategy.

 

Dividend

 

The Board intends to pay an interim dividend of 0.25p per share (2014 H1: 0.22p), an increase of 13.6%, on 30 October 2015 to shareholders on the register at the close of business on 2 October 2015.

 

People

 

On behalf of the Board, I would like to thank all Group employees for their continued hard work in the development of AMS as a global medical technology business, as well as our customers, suppliers, business partners and shareholders for their continued support.

 

Outlook

 

The Group continues to trade in line with current market expectations for the year ending 31 December 2015.

 

 

Peter Allen

Chairman

 

 

1      Adjusted profit before tax is adjusted for amortisation of acquired intangible assets



 

Chief Executive’s Review

 

I am pleased to report another period of good performance at AMS across the Group from both our established and new products.  Our position in the international marketplace continues to gain strength as we become more widely recognised as an established high quality provider, partner and innovator. 

 

Business Review

 

Branded Distributed

 

Branded Distributed revenue was 48% higher at £6.4 million (2014 H1: £4.32 million) and 52% higher at constant currency. £0.2m of sutures for the dental market, which would have been included in the Branded Direct business segment, are now being included in the Branded Distributed business segment, as this better reflects the nature of the sale. The prior year’s sales have been represented to aid comparison.

 

LiquiBand® in the US

In the US our products are now demonstrating signs of more rapid market penetration with sales of LiquiBand® increasing by 161% in the first half and by 139% at constant currency to £3.3 million (2014 H1: £1.3 million), with all of our distribution partners performing well. The launch of our 2-octyl cyanoacrylate formulation has extended our portfolio of products and has contributed to growth in sales in the first six months. We now have a range of cyanoacrylate formulations available that provide very fast wound closure as well as having film-forming capabilities that provide a barrier layer over wounds.

 

Latest IMS data has our volume market share increasing to 9.5% in the US hospital sector while our volume market share in the US non-hospital or alternate site market is now an estimated 21.5%. We are pleased with the progress that we are making with LiquiBand® in this market and we expect to see the recognition of the quality and value of our products to continue this positive trend.

 

LiquiBand® in the EU and ROW

LiquiBand® has also shown good growth in the EU and ROW. LiquiBand® sales through our export distributors have continued to perform well and sales increased by 20% to £0.7 million (2014 H1: £0.6 million) at reported currency, by 20% at constant currency, with both the French and Dutch markets performing particularly strongly.

 

The regulatory approval process for LiquiBand® in China is continuing, with the submission being reviewed by the Chinese FDA. Approval is targeted for early 2016.

 

Hernia Mesh Fixation device – LiquiBand® Fix8™

This product was launched in the second half of 2014 and was the Group’s first application using our medical cyanoacrylate technology inside the body. LiquiBand® Fix8™ is used to hold hernia meshes in place, potentially as part of all types of hernia repair surgery instead of traditional tacks and staples as well as for the closure of the membrane lining the abdominal wall (peritoneum)We are now selling the product in fourteen countries through a number of distributors. Endorsement from surgeons has been positive and sales of £0.3 million have already been achieved through our distributors in the first six months (2014 H1: £nil). This is expected to further increase as awareness of the product and the significant benefits of its clinical use by surgeons, versus current applications, are more widely recognised. We expect to develop further opportunities for this kind of application, broadening the market for the use of adhesives internally. This is an important part of our strategy to increase our penetration of the Operating Room (“OR”) segment of the wound closure market.

 

RESORBA® 

Sales of RESORBA® products to all markets excluding Russia decreased by 8% at reported currency to £1.4 million (2014 H1: £1.5 million), but did grow by 1% at constant currency. Although good growth was seen in a number of territories including Italy this was offset by lower sales in China, Austria and Spain.

 

Sales into the Russian market, decreased 38% to £0.4 million (2014 H1: £0.6 million) at reported currency and by 6% at constant currency, reflecting both the weakness of the rouble and challenging

 

 

2    £0.2m of sutures for the dental market has been reclassified from the Branded Direct to the Branded Distributed segment.

market conditions. A number of hospital tenders have been delayed and Russian manufactured

products are being prioritised over imported ones.

 

 

Work continues to gain regulatory approval to supply RESORBA® sutures into the US market. Whilst we received our first approval for the sale of one type of suture for the US market relatively quickly, the approval process of the remaining suture ranges continues. We expect to obtain approval for the remainder of the suture ranges before the end of the year enabling launch into the US thereafter.

 

Our R&D effort is focusing on extending the applications of tissue adhesives for internal use and improving the formulations that go into our adhesives.

 

 

Branded Direct

 

The reported revenue for the Branded Direct business unit was 3% lower at £11.1 million (2014 H1: £11.43 million) but 4% higher at constant currency.

 

Overall, we are aiming to achieve higher sales growth from this business unit and, while there are some significant successes, there are areas where we are focused to improve our performance. As a result, we have invested in strengthening the management team with a number of key hires including a new Business Unit Director and a new National Sales Manager for Germany. We are also strengthening the UK sales team with a new UK Sales Manager for the OR.

 

ActivHeal®

Sales of our ActivHeal® range of wound care dressings into the NHS were 7% ahead at £2.9 million (2014 H1: £2.7 million). The ActivHeal® proposition of delivering significant cost savings, with uncompromised clinical outcomes and patient care, continues to appeal to NHS Trusts and hence we expect good growth to continue from this brand. We will also be broadening the product range being offered to the NHS by including our anti-microbial foam which has recently been approved for market.

 

LiquiBand®

UK sales of LiquiBand® into the Accident and Emergency Room (‘A&E’) decreased 9% to £1.1 million (2014 H1: £1.3 million) while sales into the OR increased 21% to £0.4 million (2014 H1: £0.3 million). LiquiBand® Sales into the OR have been enhanced by the launch of LiquiBand® Fix8™, while in the A&E, AMS is maintaining a market leadership position.

 

Our growth in the UK has been held back in the first six months as a result of some territories lacking sales force coverage and this is currently being addressed. Following a period of training we expect the new team to improve sales growth.

 

Sales of LiquiBand® into Germany declined by 1% to £0.7 million (H1 2014: £0.7 million) but grew by 11% at constant currency with a good level of initial sales of LiquiBand® Fix8™. Progress in Germany is expected to continue.

 

RESORBA®

Sales of RESORBA® branded products into Germany and the Czech Republic reduced by 9% to £5.9 million (2014 H1: £6.6 million), but grew 2% at constant currency. Sales of haemostats increased by 3% at constant currency to £1.6 million and sales of sutures and collagens into the dental market grew 2% at £1.7 million.

 

We were pleased to win the contract to supply sutures to the Klinikum Darnstadt hospital in Southern Hesse, an academic teaching hospital with 960 beds, in March 2015. When fully converted, this contract will be worth approximately €0.2 million on an annualised basis. We expect to see the benefit of this contract from 2016.

 

R&D is focusing on extending the attributes of our collagens to meet the needs of dental practitioners and oral surgeons. We have developed an enhanced collagen cone which we expect to obtain market approval in Europe this year, as well as making good progress in including different antibiotics in our haemostats.

 

 

3    £0.2m of sutures for the dental market has been reclassified from the Branded Direct to the Branded Distributed segment.

 

OEM

 

OEM revenue increased by 14% at reported currency to £13.5 million (2014 H1: £11.8 million) and by 12% at constant currency. The management of this Business Unit has also been strengthened with a new Business Unit Director who joined the Group in August 2015.

 

Our silver alginate ranges of dressings continue to perform well with sales increasing by 17% at reported currency and by 14% at constant currency to £7.9 million (2014 H1: £6.8 million). We continue to support our partners with obtaining regulatory approvals to allow our products to be sold into new geographical markets.

 

Sales of our foam-based dressings remained flat at £0.7 million (2014 H1: £0.7 million) while our other woundcare products grew 19% to £4.6 million (£3.8 million) and by 16% at constant currency.

We obtained CE mark approval to market in Europe an antimicrobial foam including polyhexamethylene biguanide (PHMB) on 27 August 2015. PHMB has been shown to be effective against several bacteria including, amongst others, Staphylococcus Aureus including the methicillin resistant type, (MRSA) and Escherichia Coli (E-Coli). This PHMB Antimicrobial Foam Wound Dressing is indicated for use on moderate to heavily exuding chronic and acute wounds that are infected or are at risk of infection and may be used on pressure ulcers, leg and foot ulcers, diabetic ulcers and surgical wounds. Contracts are already in place with our OEM partners and this product is expected to launch in 2015.

R&D is further developing both our foam and our fibre product ranges. CE approval to market a further antimicrobial foam and an atraumatic foam in Europe is expected this year with product launches expected shortly thereafter.

 

 

Bulk Materials

 

Bulk Materials revenue decreased by 10% at reported currency to £1.7 million (2014 H1: £1.9 million) and by 1% at constant currency.

 

This business provides a key component for both our Branded Direct and OEM Business Unit. Work continues to develop new foam formulations such as our new antimicrobial foam that has recently been approved working with the OEM Business Unit.

 

 

Operations

 

Operational improvements continue to be made through both our efficient manufacturing initiatives and through our Total Productive Maintenance Programs (TPM) with a continuous improvement cycle of reducing set up times, eliminating non-value added activities and increasing outputs. These incremental changes are helping to improve gross margins across the Group. We have also identified some areas where additional capital is needed to provide equipment for extra operational flexibility or to increase capacity to take advantage of further commercial opportunities.  This investment totalled £0.5m in the first half of 2015. We will also be investing around £0.7 million on plant and equipment in Germany over the next twelve months to increase our collagen production capacity.

 

Summary and outlook

 

The first half of 2015 has seen another good performance by the Group and we are confident of meeting current market expectations for the full year. The strength and efficiencies of the underlying business and our strong financial position, combined with the opportunities we see from our innovative R&D pipeline, lead the Board to be optimistic about our long term prospects and the potential for further growth.

 

 

 

 

 

 

 

Financial Review

 

Summary

 

Revenue increased by 11.1% to £32.7 million (2014 H1: £29.4 million). At constant currency, revenue growth would have been 13.7%.

 

Amortisation of acquired intangible assets was £0.2 million in the six month period (2014 H1: £0.2 million).

 

Comparisons with 2014 are made on a pre-amortisation of acquired intangible asset cost basis, as we believe that this provides a more relevant representation of the Group’s trading performance. To aid comparison, the Group’s adjusted income statement is summarised in Table 1 below.

 

Table 1

Six months ended

30 June 2015

Six months ended

30 June 2014


Adjusted Income Statement

£’000

£’000

Change

Revenue

32,713

29,440

11.1%

Gross profit

19,036

16,840

13.0%

Distribution costs

(408)

(381)


Administrative expenses4

(10,715)

(9,377)


Other income

319

142


Adjusted operating profit

8,232

7,224

14.0%

Net finance (costs)/ income

(31)

27


Adjusted profit before tax

8,201

7,251

13.1%

Amortisation of acquired intangibles

(186)

(197)


Profit before tax

8,015

7,054

13.6%

Tax

(1,354)

(1,090)


Profit for the period

6,661

5,964

11.7%

Adjusted earnings per share – basic5

3.29p

2.97p

10.8%

Earnings per share – basic5

3.20p

2.88p

11.1%

Adjusted earnings per share – diluted5

3.23p

2.92p

10.6%

Earnings per share – diluted5

3.15p

2.82p

11.7%

Administration expenses exclude amortisation of acquired intangible assets

see Note 4 Earnings per share for details of calculation

 

Across the Group gross margins improved by 100 bps to 58.2% (2014 H1: 57.2%).

 

Adjusted operating profit increased by 14.0% to £8.2 million (2014 H1: £7.2 million) and the adjusted operating margin increased by 70bps to 25.2% (2014 H1: 24.5%).

 

Adjusted diluted earnings per share increased by 10.6% to 3.23p (2014 H1: 2.92p) and diluted earnings per share increased by 11.7% to 3.15p (2014 H1: 2.82p).

 

The Group generated profit from operations of £8.0 million (2014 H1: £7.0 million) and had net cash of £22.6 million at the half year end (2014 H1: £10.2 million).

 

The Group has a strong balance sheet enabling financing of further organic growth and appropriate acquisitions.

 

 

Income Statement

 

The operational performance of the business units is shown in Table 2 below. The adjusted profit from operations and the adjusted operating margin are shown after excluding amortisation of acquired intangibles.

 

Table 2


Operating result by business segment


Six months ended 30 June 2015


Branded distributed

 

Branded direct

OEM

Bulk materials



£’000

£’000

£’000

£’000

Revenue


6,4117

11,1107

13,515

2,1406

Profit from operations


1,640

2,845

3,616

270

Amortisation of acquired intangibles


58

119

9

Adjusted profit from operations7


1,698

2,964

3,625

270

Adjusted operating margin7


26.5%

26.7%

26.8%

12.6%

Six months ended 30 June 2014






Revenue


4,3407

11,3977

11,831

2,269

Profit from operations


840

3,179

3,194

223

Amortisation of acquired intangibles


61

126

10

Adjusted profit from operations8


901

3,305

3,204

223

Adjusted operating margin8


20.8%

29.0%

27.1%

9.8%

6    Revenue includes intersegment sales. See Note 5

£0.2m of sutures for the dental market has been reclassified from the Branded Direct to the Branded Distributed segment

8    Excludes amortisation of intangible assets

Expenses relating to non-executive Directors and plc costs are not allocated to business units and are included within unallocated expenses.

 

 

Branded Distributed

Branded Distributed revenues increased by 47.7% to £6.4 million (2014 H1: £4.3 million) and by 51.7% at constant currency, with sales of LiquiBand® into the US being the main driver of growth.

 

Adjusted operating margin increased by 570 bps to 26.5% from the increase in sales while investment in our US sales & marketing team to support our partners has continued. R&D expense was 4.5% of revenues (2014 H1: 8.0%) with expenditure in this segment being incurred on projects to improve our base monomer formulation for our tissue adhesives as well as extending the claims for the use of our tissue adhesives internally.

 

Branded Direct

Branded Direct revenues decreased by 2.6% to £11.1 million (2014 H1: £11.4 million) but increased by 4.0% at constant currency, with sales of ActivHeal® driving growth in the UK and RESORBA® brands supporting growth in Germany and Czech Republic. Fee income of £0.1 million was received from the licensing of Intellectual Property to third parties (2014 H1: £0.1 million).

 

Adjusted operating margin decreased by 230bps to 26.7%, due partly to a change in sales mix but mainly as a result of investment in strengthening our commercial teams as well as investment in our Quality systems compared with the prior year and costs in obtaining regulatory approval for sutures in the US. R&D expense in this segment was 3.1% of revenue (2014 H1: 2.9%) on projects to develop improved collagens.

 

OEM

OEM revenues increased by 14.2% to £13.5 million (2014 H1: £11.8 million) and by 11.5% at constant currency. R&D expense was 3.6% of revenues (2014 H1: 4.0%) with spend being incurred on  projects to improve our range of foams, with a particular focus on products with antimicrobial properties. These projects are being worked on jointly with the Bulk Materials division.

 

Adjusted operating margin reduced by 30 bps to 26.8% (2014 H1: 27.1%), mainly as a result of sales mix.

 

Bulk Materials

Bulk material revenues, excluding intercompany sales, reduced by 10.4% to £1.7 million (2014 H1: £1.9 million) at reported currency and decreased by 1.1% at constant currency. The adjusted operating margin including intercompany sales increased to 12.6% (2014 H1: 9.8%), resulting from the change in sales mix.

 

Geographic breakdown of revenues

The geographic breakdown of Group revenues in 2015 is set out in note 5. Overall, less than 40% of revenues are in Euros as the UK still invoices in Sterling to most of its European partners, and nearly all sales to the US are invoiced in US dollars. The Group’s policy is to set up natural hedges where possible and to hedge transactional risk. The Group estimates that a 10% movement in the £:US$ or £:Euro exchange rate will impact Sterling revenues by approximately 2% and 3% respectively and, in the absence of any hedging, this would result in an impact on profit of 0.9% and 0.4% respectively.

 

Profit before tax

Profit before tax for the six months was 13.6% higher at £8.0 million (2014 H1: £7.1 million).

 

The Group’s effective rate of tax for the six months was 16.9% (2014 H1: 15.5%). This is reflective of the recognition of previously unrecognised brought forward tax losses in the UK, R&D relief and the continued impact of the phased introduction of the patent box relief scheme. It also reflects the blend of profits and losses from different countries and the different tax rates associated with each of these countries.

 

Profit after tax and earnings per share

Adjusted profit after tax increased by 11% to £6.8 million (2014 H1: £6.2 million), resulting in an 11% increase in adjusted basic earnings per share to 3.29p (2014 H1: 2.97p) and an 11% increase in diluted adjusted earnings per share to 3.23p (2014 H1: 2.92p).

 

Profit after tax increased 12% to £6.7 million (2014 H1: £6.0 million), resulting in an 11% increase in basic earnings per share to 3.20p (2014 H1: 2.88p) and an 12% increase in diluted earnings per share to 3.15p (2014 H1: 2.82p).

 

Dividend per share

The Board intends to pay an interim dividend of 0.25p per share on 30 October 2015 to shareholders on the register on 2 October 2015. This is an increase of 13.6% compared with the first half of 2014.

 

 

Cash Flow and Balance Sheet

 

Table 3 summarises the Group cash flows.

 

Table 3

Six months ended

30 June 2015

Six months ended

30 June 2014

Cash Flow

£’000

£’000

Adjusted operating profit (Table 1)

8,232

7,224

Non-cash items

1,453

1,360

Adjusted EBITDA9

9,685

8,584

Working capital movement

(1,740)

(1,423)

Operating cash flow

7,945

7,161

Capital expenditure and capitalised R&D

(1,087)

(866)

Net Interest (expense) / income

(33)

25

Tax

(689)

(929)

Free cash flow

6,136

5,391

Dividends paid

(999)

(850)

Proceeds from share issues

267

9

Exchange (losses) / gains

(68)

364

Net increase in cash and cash equivalents

5,336

4,914

9    Adjusted EBITDA is earnings before interest, tax, depreciation, intangible asset amortisation and share based payments

 

The Group had an operating cash flow of £7.9 million (2014 H1: £7.2 million) and a conversion of adjusted operating profit into free cash flow of 75% (2014 H1: 75%).

 

Working capital increased by £1.7 million in the period. Inventory increased by £0.9 million in the first six months with months of supply being 4.7 (2014 H1: 4.7 months). Trade receivables increased by £0.5 million in line with the growth of the business with debtor days at 47 (2014 H1: 45 days). Trade payables reduced by £0.3 million.

 

We have invested £1.0 million in capital equipment and software in the first six months (2014 H1: £0.6 million). The major areas of spend have been in upgrading equipment around the Group and the project spend on Quality Documentation Systems. £0.1 million of R&D spend has been capitalised (2014 H1: £0.2 million). No development costs were impaired in the period (2014 H1: none).

 

The Group agreed a new, five-year, £30 million, multi-currency, revolving credit facility in December 2014 with an accordion option under which AMS can request up to an additional £20 million on the same terms.  The new facility is provided jointly by the Group’s existing bank HSBC, as well as The Royal Bank of Scotland PLC and replaces the previous £4 million facility.  It is unsecured on the assets of the Group and is currently undrawn. 

 

Net taxation of £0.7 million was paid which is in line with the Group’s profitability within the tax jurisdictions in which it operates.  We have some net tax losses within the UK subsidiaries which it is estimated will be utilised by the end of the next financial year.

 

The Group paid its final dividend for the year ended 31 December 2014 of £1.0 million (2014 H1: £0.9 million) on 29 May 2014.

 

The Group had a free cash flow of £6.1 million in the period (2014 H1: £5.4 million), with a net increase in cash equivalents of £5.3 million (2014 H1: £4.9 million increase).

 

At the end of the period, the Group had net cash10 of £22.6 million (2014 H2: net cash10 of £10.2 million), an increase of £5.3 million since 31 December 2014. The movement in net cash during the first half of 2015 is reconciled in Table 4 below:

 

Table 4


Movement in net cash10

£’000

Net cash as at 1 January 2015

17,280

Exchange rate impacts

(68)

Free cash flow

6,136

Dividends paid

(999)

Proceeds from share issues

267

Net cash as at 30 June 2015

22,616

10  Net cash is defined as cash and cash equivalents plus short term investments less financial liabilities and bank loans

 

The Group’s going concern position is fully described in note 11 and the Group had no borrowings in the period.

 


CONDENSED CONSOLIDATED INCOME STATEMENT for the six months ended 30 June 2015



(Unaudited)

(Unaudited)

(Audited)



Six months ended 30 June 2015

Six months ended 30 June 2014

Year ended 31 December 2014




Total



Total



Total



Note


£’000



£’000



£’000


Revenue from continuing operations

5


32,713



29,440



63,010


Cost of sales



(13,677)



(12,600)



(27,167)


Gross profit



19,036



16,840



35,843


Distribution costs



(408)



(381)



(853)


Administration costs



(10,901)



(9,574)



(20,070)


Other income



319



142



250


Profit from operations



8,046



7,027



15,170


Finance income



31



30



49


Finance costs



(62)



(3)



(1)


Profit before taxation



8,015



7,054



15,218


Income tax

7


(1,354)



(1,090)



(2,354)


Profit for the period attributable to equity holders of the parent



6,661



5,964



12,864


Earnings per share











Basic

4


3.20p



2.88p



6.20p


Diluted

4


3.15p



2.82p



6.08p


Adjusted diluted

4


3.23p



2.92p



6.26p


 

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME


(Unaudited)

(Unaudited)

(Audited)


Six months ended 30 June 2015

Six months ended 30 June 2014

Year ended 31 December 2014



£’000



£’000



£’000


Profit for the year


6,661



5,964



12,864


Exchange differences on translation of foreign operations


(5,058)



(2,375)



(4,200)


Profit/(loss) arising on cash flow hedges


699



(79)



(1,173)


Other comprehensive expense for the period


(4,359)



(2,454)



(5,373)


Total comprehensive income for the period attributable to equity holders of the parent


2,302



3,510



7,491



CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

 


(Unaudited)

(Unaudited)

(Audited)


30 June 2015

30 June 2014

31 December 2014


£’000

£’000

£’000

Assets




Non-current assets




Acquired intellectual property rights

8,290

9,688

9,238

Software intangibles

1,760

1,637

1,835

Development costs

1,796

1,782

1,850

Goodwill

33,516

37,761

36,696

Property, plant and equipment

15,606

16,182

16,003

Deferred tax assets

662

1,355

1,108

Trade and other receivables

18

18

22


61,648

68,423

66,752

Current assets




Inventories

8,166

8,229

7,532

Trade and other receivables

13,294

11,696

12,969

Current tax assets

13

63

Cash and cash equivalents

22,616

10,171

17,280


44,089

30,159

37,781

Total assets

105,737

98,582

104,533

Liabilities




Current liabilities




Trade and other payables

6,710

5,477

7,649

Current tax liabilities

956

752

584

Other taxes payable

360

254

259

Obligations under finance leases

1

5

2


8,027

6,488

8,494

Non-current liabilities




Trade and other payables

441

504

472

Deferred tax liabilities

2,267

2,617

2,513

Obligations under finance leases

1

2

1


2,709

3,123

2,986

Total liabilities

10,736

9,611

11,480

Net assets

95,001

88,971

93,053

Equity




Share capital

10,433

10,385

10,393

Share premium

33,044

32,517

32,742

Share-based payments reserve

1,854

1,395

1,563

Investment in own shares

(152)

(148)

(148)

Share-based payments deferred tax reserve

294

121

278

Other reserve

1,531

1,531

1,531

Hedging reserve

177

572

(522)

Translation reserve

(9,925)

(3,042)

(4,867)

Retained earnings

57,745

45,640

52,083

Equity attributable to equity holders of the parent

95,001

88,971

93,053

 

 


CONDENSED CONSOLIDATED Statement of Changes in Equity

Attributable to equity holders of the Group

 




Share-

Investment

Share-based







Share

Share

based

in own

payments

Other

Hedging

Translation

Retained



capital

premium

payments

shares

deferred tax

reserve

reserve

reserve

earnings

Total


£’000

£’000

£’000

£’000

£’000

£’000

£’000

£’000

£’000

£’000

At 1 January 2015 (audited)

10,393

93,053

Consolidated profit for the period to 30 June 2015

6,661

6,661

Other comprehensive income

699

(5,058)

(4,359)

Total comprehensive income

699

(5,058)

6,661

2,302

Share-based payments

300

16

316

Share options exercised

40

302

(9)

333

Shares purchased by EBT

(262)

(262)

Shares sold by EBT

258

258

Dividends paid

(999)

(999)

At 30 June 2015 (unaudited)

10,433

33,044

1,854

(152)

294

1,531

177

(9,925)

57,745

95,001

 

 



Share-

Investment

Share-based







Share

Share

based

in own

payments

Other

Hedging

Translation

Retained



capital

premium

payments

shares

deferred tax

reserve

reserve

reserve

earnings

Total


£’000

£’000

£’000

£’000

£’000

£’000

£’000

£’000

£’000

£’000

At 1 January 2014 (audited)

10,343

86,088

Consolidated profit for the period to 30 June 2014

5,964

5,964

Other comprehensive income

(79)

(2,375)

(2,454)

Total comprehensive income

(79)

(2,375)

5,964

3,510

Share-based payments

250

(37)

213

Share options exercised

42

153

(181)

14

Shares purchased by EBT

(190)

(190)

Shares sold by EBT

186

186

Dividends paid

(850)

(850)

At 30 June 2014 (unaudited)

10,385

32,517

1,395

(148)

121

1,531

572

(3,042)

45,640

88,971

 

 

 




Share-

Investment

Share-based







Share

Share

based

in own

payments

Other

Hedging

Translation

Retained



capital

premium

payments

shares

deferred tax

reserve

reserve

reserve

earnings

Total


£’000

£’000

£’000

£’000

£’000

£’000

£’000

£’000

£’000

£’000

At 1 January 2014 (audited)

10,343

86,088

Consolidated profit for the year to 31 December 2014

12,864

12,864

Other comprehensive income

(1,173)

(4,200)

(5,373)

Total comprehensive income

(1,173)

(4,200)

12,864

7,491

Share-based payments

592

120

712

Share options exercised

50

378

(355)

73

Shares purchased by EBT

(190)

(190)

Shares sold by EBT

186

186

Dividends paid

(1,307)

(1,307)

At 31 December 2014 (audited)

10,393

32,742

1,563

(148)

278

1,531

(522)

(4,867)

52,083

93,053

 

 


CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

 


(Unaudited)

(Unaudited)

(Audited)


Six months

Six months



ended

ended

Year ended


30 June 2015

30 June 2014

31 December 2014


£’000

£’000

£’000

Cash flows from operating activities




Profit from operations

8,046

7,027

15,170

Adjustments for:




Depreciation

858

868

1,750

Amortisation   – intellectual property rights

186

197

389

 – development costs

155

151

331

 – software intangibles

140

91

228

Impairment of development costs

92

(Increase)/decrease in inventories

(948)

(334)

221

Increase in trade and other receivables

(495)

(282)

(1,623)

(Decrease)/increase in trade and other payables

(297)

(807)

1,298

Share-based payments expense

300

250

592

Taxation

(689)

(929)

(1,876)

Net cash inflow from operating activities

7,256

6,232

16,572

Cash flows from investing activities




Purchase of software

(26)

(76)

(408)

Capitalised research and development

(101)

(237)

(581)

Purchases of property, plant and equipment

(960)

(553)

(1,478)

Disposal of property, plant and equipment

61

Interest received

31

30

50

Net cash used in investing activities

(1,056)

(836)

(2,356)

Cash flows from financing activities




Dividends paid

(999)

(850)

(1,307)

Finance lease

(2)

(2)

(4)

Issue of equity shares

271

13

69

Shares purchased by EBT

(262)

(190)

(190)

Shares sold by EBT

258

186

186

Interest paid

(62)

(3)

(1)

Net cash used in financing activities

(796)

(846)

(1,247)

Net increase in cash and cash equivalents

5,404

4,550

12,969

Cash and cash equivalents at the beginning of the period

17,280

5,257

5,257

Effect of foreign exchange rate changes

(68)

364

(946)

Cash and cash equivalents at the end of the period

22,616

10,171

17,280

 



 

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 twelve months ended 31 December 2014 comprise the Company and its subsidiaries (together referred to as the “Group”).

 

The Group is primarily involved in the design, development and manufacture of novel high performance polymers (both natural and synthetic) for use in advanced wound care dressings and materials, medical adhesives for closing and sealing tissue, and sutures and haemostats for sale into the global medical device market.

 

2.    Basis of preparation

 

The information for the year ended 31 December 2014 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditor reported on those accounts; their report was unqualified, did not draw attention to any matters of emphasis without qualifying the report and did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

 

The individual financial statements for each Group company are presented in the currency of the primary economic environment in which it operates (its functional currency). For the purpose of the Consolidated financial statements, the results and financial position of each Group company are expressed in pounds sterling, which is the functional currency of the Company and the presentation currency for the Consolidated financial statements.

 

3.    Accounting policies

 

The same accounting policies, presentations and methods of computation are followed in the condensed set of financial statements as applied in the Group’s latest annual audited financial statements. The unaudited condensed set of financial statements included in this half-yearly financial report have been prepared in accordance with the International Accounting Standard 34 ‘Interim Financial Reporting’, as adopted by the European Union. These condensed interim accounts should be read in conjunction with the annual accounts of the Group for the year ended 31 December 2014. The annual financial statements of Advanced Medical Solutions Group plc are prepared in accordance with International Financial Reporting Standards as adopted by the European Union.

 

Changes in accounting policies

 

The adoption of the following standards, at 1 January 2015, has had no material impact on the Group’s    financial statements:

 

· IFRS 1: Meaning of effective IFRSs

· IFRS 3: Scope exceptions for joint ventures

· IFRS 13: Scope of paragraph 52 (portfolio exception)

· IAS 40: Clarifying the interrelationship of IFRS 3 Business Combinations and IAS 40 Investment Property when classifying property as investment property or owner -occupied property

· IFRIC 21: Levies

 



 

4.    Earnings per share

 


(Unaudited)

(Unaudited)

(Audited)


Six months

Six months

Year


ended

ended

ended


30 June 2015

30 June 2014

31 December 2014


£’000

£’000

£’000

Earnings

Earnings for the purposes of basic and diluted earnings per share being net profit attributable to equity holders of the parent

6,660

5,964

12,864

Number of shares

‘000

‘000

000

Weighted average number of ordinary shares for the purposes of basic earnings per share

207,963

207,302

207,529

Effect of dilutive potential ordinary shares: share options, deferred share bonus, LTIPs

3,702

3,978

3,991

Weighted average number of ordinary shares for the purposes of diluted earnings per share

211,665

211,280

211,520

 

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

 

The calculation of adjusted EPS excluding amortisation of associated intangible assets and is based on earnings of:

 


(Unaudited)

(Unaudited)

(Audited)


Six months

Six months

Year


ended

ended

ended


30 June 2015

30 June 2014

31 December 2014


£’000

£’000 

£’000

Earnings

Earnings for the purposes of basic and diluted earnings per share being net profit attributable to equity holders of the parent

6,660

5,964

12,864

Amortisation of acquired intangible assets

186

197

389

Earnings excluding amortisation of acquired intangible assets

6,846

6,161

13,253

 

The denominators used are the same as those detailed above for both basic and diluted earnings per share.

 

Adjusted EPS after adding back amortisation of acquired intangible assets:

 


(Unaudited)

(Unaudited)

(Audited)


Six months

Six months

Year


ended

ended

ended


30 June 2015

30 June 2014

31 December 2014


pence

pence 

pence

Adjusted basic EPS

3.29p

2.97p

6.39p

Adjusted diluted EPS

3.23p

2.92p

6.26p

 

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, 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:

 

Branded Direct

Selling, marketing and innovation of the Group’s branded products sold directly by the Group’s sales teams.

 

Branded Distributed

Selling, marketing and innovation of the Group’s branded products sold by distributors in markets not serviced by the Group’s sales teams.

 

OEM

Distribution, marketing and innovation of the Group’s products supplied to partners under their brands.

 

Bulk Materials

Distribution, marketing and innovation of bulk materials to medical device partners and convertors.

 

Segment information about these businesses is presented below:

 

Six months ended

30 June 2015

(unaudited)

Branded Direct

Branded Distributed

OEM

Bulk Materials

Eliminations

Consolidated


£’000

£’000

£’000

£’000

£’000

£’000

Revenue







External sales

11,110

6,411

13,515

1,677

32,713

Inter-segment sales

– 

– 

– 

463

(463)

Total revenue

11,110

6,411

13,515

2,140

(463)

32,713

Result







Segment result

2,845

1,640

3,616

270

8,371

Unallocated expenses






(325)

Profit from operations






8,046

Finance income






31

Finance costs






(62)

Profit before tax






8,015

Tax






(1,355)

Profit for the period






6,660

 

At 30 June 2015

(unaudited)

Branded Direct

Branded Distributed

OEM

Bulk Materials

Consolidated

Other Information

£’000

£’000

£’000

£’000

£’000

Capital additions:






Software intangibles

10

3

10

3

26

Development

11

37

52

1

101

Property, plant and equipment

310

85

529

36

960

Depreciation and amortisation

(392)

(235)

(602)

(110)

(1,339)

Balance sheet






Assets






Segment assets

49,872

20,570

30,610

4,508

105,560

Unallocated assets





177

Consolidated total assets





105,737

Liabilities






Segment liabilities

4,914

2,085

3,345

442

10,786

Consolidated total liabilities





10,786

 



 

 

Six months ended

30 June 2014

(unaudited)

Branded Direct

Branded Distributed

OEM

Bulk Materials

Eliminations

Consolidated


£’000

£’000

£’000

£’000

£’000

£’000

Revenue







External sales11

11,397

4,340

11,831

1,872

29,440

Inter-segment sales

 

 

 

397

(397)

Total revenue

11,397

4,340

11,831

2,269

(397)

29,440

Result







Segment result

3,179

840

3,194

223

7,436

Unallocated expenses






(409)

Profit from operations






7,027

Finance income






30

Finance costs






(3)

Profit before tax






7,054

Tax






(1,090)

Profit for the period






5,964

At 30 June 2014

(unaudited)

Branded Direct

Branded Distributed

OEM

Bulk Materials

Consolidated

Other Information

£’000

£’000

£’000

£’000

£’000

Capital additions:






Software intangibles

27

7

34

8

76

Development

42

56

139

237

Property, plant and equipment

215

67

214

57

553

Depreciation and amortisation

(419)

(171)

(586)

(131)

(1,307)

Balance sheet






Assets






Segment assets

54,803

15,134

24,468

4,177

98,582

Unallocated assets





Consolidated total assets





98,582

Liabilities






Segment liabilities

5,018

1,334

2,844

415

9,611

Consolidated total liabilities





9,611

 

Year ended

31 December 2014 (audited)

Branded Direct

Branded Distributed

OEM

Bulk Materials

Eliminations

Consolidated


£’000

£’000

£’000

£’000

£’000

£’000

Revenue







External sales12

23,194

10,663

25,275

3,878

63,010

Inter-segment sales




702

(702)

Total revenue

23,194

10,663

25,275

4,580

(702)

63,010

Result







Segment result

6,012

2,999

6,225

485

15,721

Unallocated expenses






(551)

Profit from operations






15,170

Finance income






49

Finance costs






(1)

Profit before tax






15,218

Tax






(2,354)

Profit for the year






12,864

 

 

 

 

 

 

 

11            £0.2m of sutures for the dental market has been reclassified from the Branded Direct to the Branded Distributed         segment 

12            £0.4m of sutures for the dental market has been reclassified from the Branded Direct to the Branded Distributed         segment

 

At 31 December 2014

(audited)

Branded Direct

Branded Distributed

OEM

Bulk Materials

Consolidated

Other Information

£’000

£’000

£’000

£’000

£’000

Capital additions:






Software intangibles

88

11

272

37

408

Development

200

113

262

6

581

Property, plant and equipment

586

179

617

96

1,478

Depreciation and amortisation

(903)

(356)

(1,188)

(251)

(2,698)

Balance sheet






Assets






Segment assets

Unallocated assets

55,456

 

17,207

 

27,200

 

4,462

 

104,325

208

Consolidated total assets





104,533

Liabilities






Segment liabilities

5,257

2,159

3,531

533

11,480

Consolidated total liabilities





11,480

 

 

 

Geographical segments

 

The Group operates in the UK, Germany, the Netherlands, the Czech Republic, with a sales office located in Russia and a sales presence in the USA. 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/services, based upon location of the Group’s customers:

 


(Unaudited)

(Unaudited)

(Audited)


Six months ended

Six months ended

Year ended


30 June 2015

30 June 2014

31 December 2014


£’000

£’000

£’000

United Kingdom

7,953

7,406

15,308

Germany

6,219

7,652

14,042

Europe excluding United Kingdom and Germany

9,979

7,510

18,747

United States of America

8,131

5,984

13,786

Rest of World

431

888

1,127


32,713

29,440

63,010

 

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 2015

30 June 2014

31 December 2014


£’000

£’000

£’000

United Kingdom

50,767

37,839

46,049

Germany

49,766

54,410

52,887

Europe excluding United Kingdom and Germany

5,095

6,074

5,506

United States of America

109

259

91


105,737

98,582

104.533

 

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 2015. 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

Contract value

Fair value


30 June 2015

31 Dec 2014

30 June 2015

31 Dec 2014

30 June 2015

31 Dec 2014

30 June 2015

31 Dec 2014


USD:£1

USD:£1

USD’000

USD’000

£’000

£’000

£’000

£’000

Cash flow hedges









Sell US dollars









Less than 3 months

1.658

1.606

2,900

4,100

1,749

2,553

(93)

(78)

3 to 6 months

1.676

1.633

3,500

3,400

2,089

2,082

(135)

(102)

7 to 12 months

1.580

1.667

6,900

6,400

4,368

3,838

(24)

(275)

Over 12 months

1.525

1.596

8,600

8,100

5,638

5,075

156

(126)




21,900

22,000

13,844

13,548

(96)

(581)

 


Ave. exchange rate

Foreign currency

Contract value

Fair value


30 June 2015

31 Dec 2014

30 June 2015

31 Dec 2014

30 June 2015

31 Dec 2014

30 June 2015

31 Dec 2014


EUR:£1

EUR:£1

EUR’000

EUR’000

£’000

£’000

£’000

£’000

Cash flow hedges









Sell Euros









Less than 3 months

1.253

1.255

 660

600

527

478

57

11

3 to 6 months

1.248

1.253

1,300

400

1,041

383

114

9

7 to 12 months

Over 12 months

1.315

1.336

1.250

1.247

1,000

1,600

1,960

300

760

1,198

1,568

241

47

55

32

7




4,560

3,260

3,526

2,670

273

59

 

7. Taxation

 

UK Corporation Tax for the six month period ended 30 June 2015 is charged at 20.5% (six months ended 30 June 2014: 22%, year ended 31 December 2014: 21.5%). The effective rate of current tax for the six months ended 30 June 2015 was 16.9% (six months ended 30 June 2014: 15.5%, year ended 31 December 2014: 15.5%) after the application of losses brought forward, patent box and research and development tax relief, with some off-set for disallowable expenditure. The rate of tax is reflective of the impact of blending profits and losses from different countries and the different tax rates associated with those countries.

 

8. Dividends

 


(Unaudited)

(Unaudited)

(Audited)


Six months ended

Six months ended

Year ended

Amounts recognised as distributions to equity holders in the period:

30 June 2015

30 June 2014

31 December 2014


£’000

£’000

£’000

Final dividend for the year ended 31 December 2013 of 0.41p per ordinary share

850

851

Interim dividend for the year ended 31 December 2014 of 0.22p per ordinary share

456

Final dividend for the year ended 31 December 2014 of 0.48p per ordinary share

999


999

850

1,307

 

9. Contingent liabilities

 

The Directors are not aware of any contingent liabilities faced by the Group as at 30 June 2015 (30 June 2014: £nil, 31 December 2014: £nil).

 

10. Share capital

 

Share capital as at 30 June 2015 amounted to £10,433,000 (30 June 2014: £10,385,000, 31 December 2014: £10,393,000). During the period, the Group issued 1,439,229 shares in respect of exercised share options, LTIPS and the Deferred Share Bonus Scheme.

 

11. Going concern

 

In carrying out their duties in respect of going concern, the Directors have carried out a review of the Group’s financial position and cash flow forecasts for the next 12 months. These have been based on a comprehensive review of revenue, expenditure and cash flows, taking into account specific business risks and the current economic environment.

 

With regards to the Group’s financial position, it had cash and cash equivalents at 30 June 2015 of £22.6 million. The Group agreed a new, five-year, £30 million, multi-currency, revolving credit facility in December 2014 with an accordion option under which AMS can request up to an additional £20 million on the same terms.  The new facility is provided jointly by the Group’s existing bank HSBC, as well as The Royal Bank of Scotland PLC and replaces the previous £4 million facility.  It is unsecured on the assets of the Group and is currently undrawn.

 

While the current economic environment is uncertain, AMS operates in markets whose demographics are favourable, underpinned by an increasing need for products to treat chronic and acute wounds. Consequently, market growth is predicted. The Group has a number of long-term contracts with customers across different geographic regions and also with substantial financial resources, ranging from government agencies through to global healthcare companies.

 

After taking the above into consideration, the Directors have reached the conclusion that the Group is well placed to manage its business risks in the current economic environment. Accordingly, they continue to adopt the going concern basis in preparing the condensed consolidated financial statements.

 

12. Principal risks and uncertainties

 

Further detail concerning the principal risks affecting the business activities of the Group is detailed on pages 11 and 12 of the Annual Report and Accounts for the year ended 31 December 2014. There have been no significant changes since the last annual report.

 

13. Seasonality of sales

 

There are no significant factors affecting the seasonality of sales between the first and second half of the year.

 

14. Events after the balance sheet date

 

There has been no material event subsequent to the end of the interim reporting period ended 30 June 2015.

 

15. 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 available on our website “www.admedsol.com”.

 


This information is provided by RNS
The company news service from the London Stock Exchange

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