Preliminary Results

RNS Number : 9660O
Advanced Medical Solutions Grp PLC
17 March 2009



For immediate release

17 March 2009

Advanced Medical Solutions Group plc

(“AMS” or the Group”)

Preliminary Results for the Year Ended 31 December 2008

WinsfordUK: Advanced Medical Solutions Group plc (AIM: AMS), the global medical technology company, today announces its preliminary results for the year ended 31 December 2008.

Financial Highlights:

Strong financial performance:

  • Group revenue up 21% to £20.3 million (2007: £16.9 million)
  • Gross margin further improved to 48% from 44%
  • Pre-tax profit increased 54% to £2.9 million (2007: £1.9 million)
  • EPS increased 47% to 2.3p (2007: 1.6p)
  • Net cash inflow from operating activities of £2.8 million (2007: £3.7 million)
  • Strong balance sheet with net funds(1) of £7.3 million (2007: £7.2 million)

Business Highlights:

Good progress with key growth drivers:

  • Silver alginate market presence strengthened with additional major branded marketing and distribution partners signed for US and Europe and two new 510(k) approvals
  • NHS direct woundcare business continues to build momentum with full ActivHeal® product range included on new framework agreement and products used in nearly half of all NHS Hospital Trusts throughout the UK
  • FDA reclassification of topical tissue adhesives has accelerated the US regulatory approval process for the LiquiBand® range with initial product approved in February 2009
  • Corpura joint venture strengthens AMS’ position in hydrophilic polyurethane foams – the largest and fastest growing segment of the advanced woundcare dressings market

(1) Net funds is defined as cash and cash equivalents plus short-term investments less financial liabilities

Commenting on the results Dr. Geoffrey Vernon, Chairman of Advanced Medical Solutions, said:

It was another year of excellent progress for AMS with strong growth in both revenue and profit. We have broadened our global customer base and strengthened our technology portfolio. The outlook for the business is very positive, with entry into the US market of LiquiBand expected in the second half of 2009 delivering another key growth driver. In addition, we continue to see opportunities to accelerate growth further through potential corporate activity.

For further information, please contact:

Advanced Medical Solutions Group plc

Don Evans, Chief Executive Officer

Mary Tavener, Finance Director

www.admedsol.com

 On 17/03/09: +44 (0) 20 7466 5000

 Thereafter : +44 (0) 1606 545508

Buchanan Communications

Mark Court / Mary-Jane Johnson / Stasa Filiplic

Tel: +44 (0) 20 7466 5000

Investec Bank plc

Tel: +44 (0) 20 7597 5970

Richard Jones/Tim Pratelli

Notes to Editors:

Advanced Medical Solutions is a leading company in the development and manufacture of products for the $15 billion global woundcare market.

Founded in 1991 and quoted on AIM, Advanced Medical Solutions is focused on the design, development and manufacture of innovative products for advanced woundcare and wound closure.

The advanced woundcare products are based on the moist wound healing principle.  AMS uses its inhouse technology to provide a vertically integrated ‘one stop shop’ for all categories of moist wound healing products. The Company has the capability to move a product from design and development through to production and delivery for distribution and sale into customer markets.

The acquisition of 49.4% stake in Corpura BV in May 2008 strengthened AMS’s position in hydrophilic polyurethane foam – the largest and fastest growing segment of the advanced woundcare market.

AMS’ technology in cyanoacrylate based tissue adhesives is used for the closure of small cuts and trauma wounds through to large surgical incisions, and also for protecting or sealing skin to prevent breakdown or infection. 

AMS’ products which currently serve the majority of the key global markets are sold either direct or through strategic partners and distributors. 

  CHAIRMAN’S STATEMENT

Overview

It was another excellent year of progress by AMS.

The Group broadened its global customer base, strengthened its technology portfolio with regulatory approvals and new product launches and acquired 49.4% of the Corpura medical foam business, whilst maintaining its strong financial position and cash generation.

Group revenue grew by 21% to £20.3 million, with underlying growth of 19% when adjusted for the dollar. Gross margin improved across the Group to 48% from 44% as the business benefited from increased sales of silver alginate and its ActivHeal® product range. Pre-tax profit increased 54% to £2.9 million during the period.

The business continues to generate cash and after the Corpura acquisition, for €2.5 million including funding, net funds stood at £7.3 million compared with £7.2 million at the previous year-end.

The Corpura joint venture has strengthened AMS’ position in polyurethane foam, the largest, fastest growing segment of the advanced woundcare dressings market and provides an additional material platform for the delivery of new technologies currently under evaluation within Research & Development (“R&D”).

The recent 510(k) clearance for LiquiBand tissue adhesive allows initial entry into the key US market for topical wound closure, which is expected in the second half of 2009 via marketing and distribution partners.

The Group notes the FRC’s recent guidance on going concern given the uncertain economic climate and comments on its position in Note 7 to this announcement.

Operating Review

Advanced Woundcare

Advanced Woundcare sales of £16.4 million were up 28% on prior year (26% at constant currency), which is well ahead of the currently estimated market growth rate of around 8%, with both silver alginate and the NHS delivering strong revenue growth.

Silver alginate continues to be a major growth driver for this business segment with sales up over 30% year on year. AMS has already commercialised two silver technologies and in December 2008 received 510(k) clearance allowing sale into the US market for two additional silver products.

The Group’s presence in this dynamic market which is estimated to have a current value of around $300 million, and to be growing at 20%, was further strengthened by signing new marketing and distribution partners in the US and Europe.

Good progress continues to be made in penetrating the UK NHS with AMS’s own brand ActivHeal®. ActivHeal® is a range of woundcare dressings offered directly to the NHS as a first line therapy for treating routine wounds which offers substantial savings in woundcare budgets. The ActivHeal® range complements the use of AMS’ newer technologies, such as silver alginate, for treating infected or more difficult to heal wounds, which are sold through strategic partners.

In June 2008, the full ActivHeal® range was included on the new framework agreement negotiated by NHS Supply Chain, part of DHL Logistics, for the supply of advanced woundcare products to NHS Hospital Trusts.  Sales of the ActivHeal® range were up nearly 50% in the year and these products are now used in almost half of the NHS Foundation and Acute Hospital Trusts.

In May 2008, AMS formed a joint venture with Recticel, a Belgian-based global leader in polyurethane foam, under which it acquired 49.4% of the shares in Corpura BV, a fully owned subsidiary of Recticel. Established in 2004, Corpura develops and produces hydrophilic polyurethane foams for medical applications from a state-of-the-art, dedicated R&D and manufacturing facility in Etten LeurNetherlands. Corpura, which is profitable, cash generative and employs 13 people supplies AMS with base polyurethane foam for inclusion into AMS’s wound dressings. The shareholding in Corpura has given the Group a strong technology position in polyurethane foams – the largest ($900 million) and fastest growing (20%) segment of the advanced woundcare dressings market – and provides an ideal platform material utilising the Group’s R&D capability and IP for delivery of higher value technologies to prevent infection and help accelerate wound healing.

This joint venture has been accounted for under the equity method and contributed £80,000 to the Group’s profit in 2008.

Wound Closure and Sealants

As expected, wound closure and sealants sales declined 4% to £3.9 million in the year compared with a 41% growth in 2007 reflecting Kimberly-Clark Health Care’s major launch and related stocking and pipeline fill of InteguSeal® Surgical Skin Sealant in 2007 following its exclusive global licensing of this technology in 2006.  Excluding InteguSeal®, the underlying business grew 14%.

InteguSeal® is currently available in key global markets and during 2008 was the subject of extensive activity by Kimberly-Clark to create market awareness and compile clinical evidence demonstrating the benefits of the product in reducing skin flora contamination of the wound site in a wide range of surgical procedures. Surgical site infections (SSIs) are a major source of concern to surgeons and healthcare providers worldwide and clinical evidence showing statistically significant reduction of SSIs with the use of InteguSeal® will open up a major growth opportunity for AMS in the surgical arena. Initial feedback is encouraging and significant clinical papers are expected to be published and presented at surgical conferences during 2009. In December 2008, Kimberly-Clark launched IS-50 a smaller size InteguSeal® surgical sealant which is ideally suited for orthopaedic procedures that involve small surgical incisions in  areas such as on the hands, feet and ankles.

Good progress continues to be made in penetrating the European market with the LiquiBand® tissue adhesive range with a particularly strong presence being built in the Emergency Room (ER). AMS maintained its market leadership position in the UK for the use of topical adhesives for closure of small trauma wounds in the ER. The Group is actively looking to improve its penetration of the European Operating Room (OR) market, where it currently has limited presence through specialist OR distributors. This activity includes evaluating opportunities to expand its direct sales presence, currently limited to the UK ER arena, together with the development of a range of OR products with strong clinical support such as LiquiBand® Laparoscopic, developed specifically for closing small surgical incisions such as port sites following laparoscopic procedures. The Group is evaluating acquisition opportunities to support this strategy.

Whilst good progress continues to be made in growing the European business, the dominant segment of the global topical tissue adhesives market, currently estimated to be worth $200 million and growing at a rate of 15%, is the US estimated at $170m. Regulatory approval for entering this market with the full LiquiBand®  range is progressing well.

In May 2008, the FDA completed its review of a petition submitted by AMS for reclassification of tissue adhesives for topical approximation of skin. The FDA concluded that these devices should be reclassified from Class III to Class II. This means that topical tissue adhesives will now be cleared for commercial distribution via a Pre-market Notification 510(k) submission rather than the more onerous Pre-market Approval application (PMA). The additional costs of obtaining this approval have been taken as an expense within R&D.

510(k) submissions have been submitted and the first product, LiquiBand® Tissue Adhesive, which is ideally suited to the ER market, was cleared in February 2009, with market entry expected in the second half of 2009 via marketing and distribution partners. Further submissions are in progress covering products targeted at surgical wounds and the OR and these are expected to be approved throughout the year.

Research & Development

The Group has continued to invest in a strategically aligned and focused R&D programme to deliver future profitable growth. Significant investment has been made in R&D with total spend, including capitalised R&D, increasing to 8% of total revenue (2007: 7%) with the main expenditure being incurred in obtaining regulatory approval for LiquiBand™ in the US, together with a number of silver projects in advanced woundcare.

Short to medium term developments (2009 – 2010) are focused on fully exploiting silver technologies in advanced woundcare and upgrading the LiquiBand® product range with indication-specific devices.

Longer term research activities are focused on new technology platforms to access new market opportunities or address unmet clinical needs.

In advanced woundcare, a wide range of new technologies with the potential to accelerate wound healing has been assessed and potential licensing opportunities identified. Of particular interest are technologies that inhibit the formation of bacterial biofilms or that modulate excess protease activity as both factors are associated with delayed wound healing. These technologies would be incorporated into AMS‘s woundcare materials and regulated as medical devices. In wound closure and sealants, longer term R&D efforts are focused on entering the $600 million internal adhesives and sealants market. A development programme is now underway for an implantable adhesive for fixation of surgical materials and devices utilising the Group’s expertise in cyanoacrylate chemistry and applicator design. These products are being developed to fit with the trend towards procedures being conducted via laparoscopic surgery.

New premises

In July 2008, AMS announced that it had agreed a pre-let for the lease of a 138,500 sq. ft bespoke building in Winsford, Cheshire, for development into a new facility comprising offices, R&D laboratories, manufacturing and warehousing. This facility is now available for commencement of fit-out and will allow rationalisation of AMS’ two existing facilities in Winsford into the new building during 2009 and 2010.

A 15 year lease, with an option to extend for a further 10 years, has been agreed for the new facility, which is sized to accommodate AMS’ existing operations and to allow future expansion. Costs associated with this project have been fairly modest in 2008 and have been included under administration costs.

In 2009, the costs of the site move will be identified as exceptional items. These costs will include the validation of the plant and additional lease costs while the new facility is being fitted out. Capex for the new facility has been budgeted at £4.6m.

Outlook

The Group remains well placed to continue to deliver organic growth, driven by silver alginate sales through multiple partners, increased penetration into the NHS, access to polyurethane foam technology and a strong R&D pipeline. With entry into the US market of LiquiBand® expected in second half 2009 delivering another key growth driver, the outlook for the business remains very positive. In addition, the Group is continuing to evaluate acquisition opportunities that fit with its strategy. 

Dr. Geoffrey N. Vernon

Chairman

17 March 2009

  CONSOLIDATED INCOME STATEMENT

For the year ended 31 December 2008

Year ended

Year ended

31 December 2008 

31 December 2007 

Note

£’000

£’000

Revenue

4

20,316

16,856

Cost of sales

(10,562)

(9,431)

Gross profit

9,754

7,425

Distribution costs

(160)

(130)

Administration costs

(7,666)

(6,158)

Profit on disposal of property, plant & equipment

35

3

Other income

656

512

Share of results of joint venture

80

Profit from operations

4,5

2,699

1,652

Finance income

265

282

Finance costs

(37)

(29)

Profit before taxation 

2,927

1,905

Income tax

382

331

Profit for the year attributable to equity holders of the parent 

3,309

2,236

Earnings per share

Basic

6

2.31p

1.57p

Diluted

6

2.16p

1.48p

The above results relate to continuing operations.

CONSOLIDATED BALANCE SHEET 

At 31 December 2008

2008

2007

£’000

£’000

Assets

Non-current assets

Acquired intellectual property rights

1,398

1,566

Software intangibles

40

45

Development costs

520

342

Property, plant and equipment

3,199

2,910

Deferred tax assets

2,045

1,421

Investment in joint venture

1,749

Loans and receivables

662

Trade and other receivables

209

200

9,822

6,484

Current assets

Inventories

2,231

1,726

Trade and other receivables

4,894

3,504

Investments

5,730

6,654

Cash and cash equivalents

1,882

876

14,737

12,760

Total assets

24,559

19,244

Liabilities

Current liabilities

Trade and other payables

3,409

2,909

Derivative financial instruments

599

Other taxes payable

308

276

Financial liabilities

17

15

Obligations under finance leases

14

5

4,347

3,205

Non-current liabilities

Financial liabilities

262

279

Obligations under finance leases

58

14

320

293

Total liabilities

4,667

3,498

Net assets

19,892

15,746

Equity

Share capital

7,169

7,157

Share based payments reserve

300

154

Investment in own shares

(18)

(13)

Share based payments deferred tax reserve

571

320

Share premium

23

17

Other reserve

1,531

1,531

Translation reserve

427

Retained earnings

9,889

6,580

Equity attributable to equity holders of the parent

19,892

15,746

  CONSOLIDATED Statement of Changes in Equity

Attributable to equity holders of the Group

Share 

Share

Investment

based

Share

based

in own

payments 

Share

Retained

capital

payments

shares

deferred tax

premium

Other

Translation

earnings

Total

£’000

£’000

£’000

£’000

£’000

£’000

£’000

£’000

£’000

At 1 January 2008

7,157

154

(13)

320

17

1,531

6,580

15,746

Share based payments

146

146

Share based payments

– deferred tax

251

251

Issue of share capital 

5

5

Share options exercised

7

6

13

Shares purchased by EBT

(89)

(89)

Shares sold by EBT

84

84

Exchange differences on translation of foreign operations

427

427

Consolidated profit for the year 

3,309

3,309

At 31 December 2008

7,169

300

(18)

571

23

1,531

427

9,889

19,892

 

  

CONSOLIDATED CASH FLOW STATEMENT

For the year ended 31 December 2008

Year ended
Year ended
31 December 
31 December 
2008
2007
£’000
£’000
Cash flows from operating activities
Profit from operations
2,699
1,652
Adjustments for:
Share of results of joint venture
(80)
Depreciation
673
686
Amortisation – intellectual property rights
168
168
 – development costs 
160
16
 – software intangibles
24
19
Profit on sale of non-current assets
(35)
(3)
(Increase)/decrease in inventories
(505)
60
(Increase)/decrease in trade and other receivables
(1,613)
396
Increase in trade and other payables
1,140
603
Share based payments expense
146
94
Net cash inflow from operating activities
2,777
3,691
Cash flows from investing activities
Proceeds on disposal of property, plant and equipment
56
3
Purchase of software
(19)
(35)
Development costs capitalised
(343)
(294)
Purchases of property, plant and equipment
(894)
(502)
Taxation
9
Returns from investment in money market deposits
924
(2,704)
Interest received
487
101
Investment in joint venture
(1,376)
Movement in loans and receivables
(531)
Net cash used in investing activities
(1,696)
(3,422)
Cash flows from financing activities
Finance lease 
(17)
(8)
Repayment of secured loan
(29)
(15)
Issue of equity shares
13
70
Shares purchased by EBT
(89)
(34)
Shares sold by EBT
84
21
Interest paid
(37)
(29)
Net cash (used in)/from financing activities
(75)
5
Net increase in cash and cash equivalents
1,006
274
Cash and cash equivalents at the beginning of 
 the year
876
602
Cash and cash equivalents at the end of the year
1,882
876

 

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 Road Three, Winsford

 Industrial Estate, Winsford, Cheshire CW7 3PD.

The Company’s ordinary shares are traded on the AIM market of the London Stock Exchange plc. The financial statements of the Company for the twelve months ended 31 December 2008 comprise the Company and its subsidiaries and joint venture (together referred to as the “Group”).

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

2. Basis of Preparation

These preliminary statements have been prepared in accordance with the accounting policies set out in the annual report for the year ended 31 December 2007 and those to be adopted at 31 December 2008.

While the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRSs), as adopted for use in the EU, this announcement does not itself contain sufficient information to comply with IFRSs. The Group expects to publish full financial statements that comply with IFRSs in April 2009.

The financial information set out in the announcement does not constitute the Group‘s statutory accounts for the years ended 31 December 2008 or 31 December 2007. The financial information for the year ended 31 December 2007 is derived from the statutory accounts for that year, which have been delivered to the Registrar of Companies. The auditors reported on those accounts; their report was unqualified, did not draw attention to any matters by way of emphasis without qualifying their report and did not contain a statement under s237(2) or (3) Companies Act 1985. The audit of the statutory accounts for the year ended 31 December 2008 is not yet complete. These accounts will be finalised on the basis of the financial information presented by the directors in this preliminary announcement and will be delivered to the Registrar of Companies following the Group‘s annual general meeting.

The financial statements have been prepared on the historical cost basis of accounting except as disclosed in the accounting policies set out below.

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

Details of the accounting policies applied are those set out in Advanced Medical Solutions Group plc annual report and accounts 2007, with the exception of the following accounting policies that have been adopted during the year ended 2008.

Basis of consolidation

 Interests in joint ventures

A joint venture is a contractual arrangement whereby the Group and other parties undertake an economic activity that is subject to joint control; that is, when the strategic financial and operating policy decisions relating to the activities require the unanimous consent of the parties sharing control.

The Group reports its interests in jointly controlled entities using the equity method of accounting where it is considered that the Group is able to exercise joint control over the operating and financial decisions of the investee.

Any goodwill arising on the acquisition of the Group’s interest in a jointly controlled entity is recognised as part of the investment and reviewed for impairment when there is objective evidence of impairment.

  

 Derivative financial instruments

The Group enters into foreign exchange forward contracts to manage its exposure to foreign exchange rate risk. 

Derivatives are initially recognised at fair value at the date the derivative contract is entered into and are subsequently remeasured to their fair value at each balance sheet date. A derivative with a positive fair value is recognised as a financial asset whereas a derivative with a negative fair value is recognised as a financial liability. The resulting gain or loss is recognised in profit or loss immediately.

Derivatives with remaining maturity of less than 12 months are presented as current assets or current liabilities.

4.  Segment information

For management purposes, the Group is organised into two business units, advanced woundcare and wound closure and sealants. These divisions are the basis on which the Group reports its segment information.

Intersegment pricing is determined on an arm’s length basis.

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly investments, and related revenue, corporate assets, head office expenses and income tax assets.

Business segments

The principal activities of the advanced woundcare business unit are the research, development, manufacture and distribution of novel, high performance polymers for use as wound dressings.

The principal activities of the wound closure and sealants business unit is the research, development, manufacture and distribution of medical adhesives and products for closing and sealing tissue.

 Segment information about these businesses is presented below. 

2008

Advanced woundcare

year ended

31 Dec 2008

£‘000

Wound closure & sealants

year ended

31 Dec 2008

£‘000

Eliminations

year ended

 31 Dec 2008

£‘000

Consolidated

year ended

 31 Dec 2008

£‘000

Revenue

External sales

16,415

3,901

20,316

Inter-segment sales

33

(33)

Total revenue

16,448

3,901

(33)

20,316

Inter-segment sales are charged at prevailing market prices.

Results

Segment result

3,036

848

 – 

3,884 

Unallocated expenses

(1,185)

Profit from operations

2,699

Finance income

265

Finance costs

(37)

Profit before tax

2,927

Tax

382

Profit for the year

3,309

  4.  Segment information (continued)

Other information

Advanced woundcare

year ended

31 Dec 2008

£‘000

Wound closure & sealants

year ended

31 Dec 2008

£‘000

Eliminations

year ended

 31 Dec 2008

£‘000

Consolidated

year ended

 31 Dec 2008

£‘000

Capital additions:

Software intangibles

15

4

19

Research & development

294

49

343

Property, plant and equipment

727

251

978

Depreciation and amortisation

721

304

1,025

Balance sheet

Assets

Segment assets

  10,596

5,019

15,615

Unallocated assets

8,944

Consolidated total assets

24,559

Liabilities

Segment liabilities

2,847

1,079

3,926

Unallocated liabilities

741

Consolidated total liabilities

4,667

 Note: Included in the advanced woundcare segment are assets (£1,749k) and results (£80k) in respect of Corpura BV, the Group’s joint venture.

2007

Advanced woundcare

year ended

31 Dec 2007

£‘000

Wound closure & sealants

year ended

31 Dec 2007

£‘000

Eliminations

year ended

 31 Dec 2007

£‘000

Consolidated

year ended

 31 Dec 2007

£‘000

Revenue

External sales

12,799

4,057

16,856

Inter-segment sales

28

(28)

Total revenue

12,827

4,057

(28)

16,856

Inter-segment sales are charged at prevailing market prices.

Result

Segment result

1,363

715

2,078

Unallocated expenses

(426)

Share of results of joint venture

Profit from operations

1,652

Finance income

282

Finance costs

(29)

Profit before tax

1,905

Tax

331

Profit for the year

2,236

  4. Segment information (continued)

Other information

Advanced woundcare

year ended

31 Dec 2007

£‘000

Wound closure & sealants

year ended

31 Dec 2007

£‘000

Eliminations

year ended

 31 Dec 2007

£‘000

Consolidated

year ended

 31 Dec 2007

£‘000

Capital additions:

Software intangibles

33

2

35

Research & development

187

107

294

Property, plant and equipment

335

167

502

Depreciation and amortisation

645

244

889

Balance sheet

Assets

Segment assets

7,084

4,377

11,461

Unallocated assets

7,783

Interest in joint venture

Consolidated total assets

19,244

Liabilities

Segment liabilities

2,213

1,061

3,274

Unallocated liabilities

224

Consolidated total liabilities

3,498

Geographical segments

The advanced woundcare and wound closure and sealants segments operate mainly in the UK, with a sales office located 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:

Year ended

Year ended

31 Dec 2008

31 Dec 2007

£’000

£’000

United Kingdom

7,023

5,731

Europe excluding United Kingdom

7,991

6,686

United States of America

4,810

4,217

Rest of World

492

222

20,316

16,856

All assets are classified as under the United Kingdom due to the immateriality of the carrying value of all assets held in the United States of America.

  5. Profit from operations

Year ended

Year ended

31 Dec 2008

31 Dec 2007

£’000

£’000

Profit from operations is arrived at after charging/(crediting):

Profit on sale of non-current assets

(35)

(3)

Depreciation of property, plant and equipment

673

686

Amortisation of: 

 acquired intellectual property rights

168

168

 software intangibles

24

19

 development costs

160

16

Operating lease rentals – plant and machinery

90

90

   – land and buildings

315

294

Research and development costs expensed to the income statement

1,534

784

Cost of inventories recognised as expense

9,993

9,119

Staff costs

6,883

5,900

Fair value loss on derivative financial instruments

599

Net foreign exchange gains

(474)

(36)

6.  Earnings per share

The calculation of the basic and diluted earnings per share is based on the following data:

Year ended

31 Dec 2008

£‘000

Year ended

31 Dec 2007

£‘000

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

3,309

2,236

Number of shares

Year ended

31 Dec 2008
000

Year ended

31 Dec 2007 000

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

143,284

142,535

Effect of dilutive potential ordinary shares:

share options, deferred share bonus, LTIPs

9,979

8,684

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

153,263

151,219


7.  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 the year end of £1.9m and investments totalling £5.7m, with a maturity not exceeding 3 months, while having no reliance on banking facilities.

  While the current economic environment is uncertain, AMS operates in a market whose demographics are   extremely favourable, underpinned by an increasing need for products to treat chronic and acute wounds.   Consequently, strong 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.

  Having taken the above into consideration the Directors have reached a conclusion that the Group is well   placed to manage its business risks despite the current uncertain economic outlook. Accordingly, they   continue to adopt the going concern basis in preparing the annual report and accounts.
  

8.  No dividend has been proposed.   

9.  This statement was approved by the Directors and agreed with the Group’s auditors on 16 March 2009. A copy can be

 obtained from the Secretary at the Company’s Head Office, Road Three, Winsford Industrial Estate,

 Winsford, Cheshire CW7 3PD.


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

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