TIDMAMS
RNS Number : 9881M
Advanced Medical Solutions Grp PLC
20 September 2023
20 September 2023
Advanced Medical Solutions Group plc
("AMS" or the "Group")
Interim Results for the six months ended 30 June 2023
Winsford, UK, 20 September 2023: Advanced Medical Solutions
Group plc (AIM: AMS), the world-leading specialist in
tissue-healing technologies, today announces its unaudited interim
results for the six months ended 30 June 2023 (the "Period").
Financial Highlights:
H1 H1 Reported Change
change at constant
currency(1)
2023 2022
------- ------ ---------
Revenue (GBP million) 63.1 58.3 +8% +5%
----------------------------------- ------- ------ --------- -------------
Adjusted Measures
Adjusted(2) profit before
tax (GBP million) 13.8 13.6 +1%
Adjusted(2) profit before
tax margin % 21.8% 23.4% -1.6pp
Adjusted(2) diluted earnings
per share (p) 4.97 5.01 -1%
Reported Measures
Profit before tax (GBP million) 11.8 12.3 -5%
Profit before tax margin
% 18.7% 21.2% -2.5pp
Diluted earnings per share
(p) 4.06 4.42 -8%
Net operating cash flow (GBP
million) 4.1 12.5 -67%
Net cash (3) (GBP million) 69.1 75.3 -8%
Interim dividend per share
(p) 0.70p 0.64p +10%
----------------------------------- ------- ------ --------- -------------
Business Highlights (including post period end):
The Group made significant progress in a number of key projects
during the period which are expected to establish substantial, new
commercial opportunities in the short to medium term. As previously
highlighted, the results were impacted by the temporary de-stocking
impact of the US LiquiBand(R) strategic growth initiative but
included strong growth in other parts of the business.
Financial
-- Revenue increased by 8% to GBP63.1 million (2022 H1: GBP58.3
million) driven by growth in non-US markets, which averaged 20%
against the first half of last year
-- Gross margins reduced to 56.5% (2022 H1: 58.9%) due to temporary adverse product mix
-- Total investment in R&D increased to GBP6.0 million (2022
H1: GBP5.4 million), representing 9.5% (2022 H1: 9.3%) of revenue,
as progress was made on key projects including new product
development and Medical Device Regulation ("MDR")
-- The Group reports a 1% increase in adjusted profit before tax
to GBP13.8 million (2022 H1: GBP13.6 million) with adjusted profit
before tax margin of 21.8% (2022 H1: 23.4%)
-- Net cash decreased to GBP69.1 million from a 2022 year-end
position of GBP82.3 million (2022 H1: GBP75.3 million) following
the acquisition of Connexicon Medical Ltd ("Connexicon") in
February
-- Surgical Business Unit revenues increased to GBP39.4 million
(2022 H1: GBP35.9 million), an increase of 5% at constant
currency
-- Woundcare Business Unit revenues increased to GBP23.7 million
(2022 H1: GBP22.4 million), an increase of 4% at constant
currency
-- Given the Group's strong net cash position and reflecting the
Board's continued confidence in the future, the proposed interim
dividend is increased to 0.70p per share (2022 H1: 0.64p)
Operational
-- Good progress towards establishing new US LiquiBand (R)
distribution agreements with hospital partners and executing new
route-to-market strategy. As previously reported, associated
destocking was greater than expected but end-user sales were
unaffected and the Board remains confident that this initiative
will achieve its objective of creating the foundation for
accelerated growth for LiquiBand (R) in the US
-- Acquisition of Connexicon completed, adding to the Group's
ability to develop and commercialise innovative adhesive and
sealant technologies and to offer the increased differentiation and
exclusivity sought by our US partners. Integration is going well,
financial performance is in line with initial expectations and its
pipeline approvals are progressing well
-- Recruitment of the Seal-G (R) and Seal-G (R) MIST human
clinical trials completed in July 2023 with data to be made
available for a European soft launch in H2 2023. Initial data shows
significant reduction in leakage rates in cases using Seal-G
(R)
Post Period End
-- Announced 18 September, the Group has signed a US
LiquiBandFix8(R) commercialisation agreement with TELA Bio Inc
("TELA Bio") ahead of a September launch under the brand name
LIQUIFIX(TM) , entering a new $200 million addressable market with
a unique, differentiated product
-- The Group can confirm very good progress has been made with
all the new US LiquiBand(R) distribution agreements and is highly
confident that the new route-to-market strategy will be fully
operational and driving accelerated growth by the end of 2023
Commenting on the interim results, Chris Meredith, Chief
Executive Officer of AMS, said: "I'm pleased to report first half
growth at Group level driven by our diverse portfolio of products,
despite the short-term disruption to US LiquiBand (R) sales and the
changes to the Organogenesis royalty stream. This demonstrates the
increasing strength of our existing portfolio which will play a big
part in generating and sustaining stronger growth in the future. I
am particularly excited at the breadth of opportunities now open to
us as a number of new initiatives and product launches, such as
LIQUIFIX(TM) in the US and Seal-G(R) in Europe, come into effect
this year. With so many potential growth drivers in place, I remain
confident that we will see accelerated growth from 2024."
- 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 amortisation of
acquired intangible assets which, in 2023 H1, were GBP2.4 million
(2022 H1: GBP1.6 million) and a GBP0.4 million credit for movement
in long-term acquisition liabilities (2022 H1: credit of GBP0.3
million) as defined in the financial review. Adjusted operating
margin is shown before amortisation of acquired intangible
assets.
3 Net cash consists of cash and cash equivalents with nil debt (2022 H1 and YE: GBPnil debt)
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
ICR Consilium Tel: +44 (0) 20 3709
5700
Matthew Neal / Lucy Featherstone
Investec Bank plc (NOMAD) & Broker Tel: +44 (0) 20 7597
5970
Gary Clarence / David Anderson
HSBC Bank PLC (Broker) Tel: +44 (0) 20 7991
8888
Sam McLennan / Joe Weaving / Stephanie
Cornish
About Advanced Medical Solutions Group plc
AMS is a world-leading independent developer and manufacturer of
innovative tissue-healing technology, 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. Since 2019, the Group has made five acquisitions:
Sealantis, an Israeli developer of innovative internal sealants;
Biomatlante, a French developer and manufacturer of surgical
biomaterials, Raleigh, a leading UK coater and converter of
woundcare and bio-diagnostics materials, AFS Medical, an Austrian
specialist surgical business and Connexicon, an Irish tissue
adhesives specialist.
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,
Austria, the Czech Republic and Russia. The Group has R&D
innovation hubs in the UK, Ireland, Germany, France and Israel.
Established in 1991, the Group has more than 800 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) , LiquiBandFix8(R) and
LIQUIFIX(TM) . Revenue increased by 10% on a reported basis and 5%
on a constant currency basis in the Period to GBP39.4 million (2022
H1: GBP35.9 million).
Surgical Business 2023 2022 Reported Growth
Unit H1 H1 Growth at constant
GBP GBP million currency
million
Advanced Closure 17.0 17.9 -5% -8%
--------- ------------- --------- -------------
Internal Fixation
and Sealants 2.2 1.6 31% 27%
--------- ------------- --------- -------------
Traditional Closure 9.4 8.0 18% 12%
--------- ------------- --------- -------------
Biosurgical Devices 8.3 7.7 7% 3%
--------- ------------- --------- -------------
Other Distributed
Products 2.5 0.7 267% 252%
--------- ------------- --------- -------------
TOTAL 39.4 35.9 10% 5%
--------- ------------- --------- -------------
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 2023 2022 Reported Growth
H1 H1 GBP Growth at constant
GBP million currency
million
Americas 9.2 12.0 -23% -27%
--------- --------- --------- -------------
UK/Germany 4.0 3.4 16% 15%
--------- --------- --------- -------------
ROW 3.8 2.5 53% 52%
--------- --------- --------- -------------
TOTAL 17.0 17.9 -5% -8%
--------- --------- --------- -------------
LiquiBand(R) revenues reduced by 5% to GBP17.0 million (2022 H1:
GBP17.9 million) due to the previously announced disrupted ordering
patterns and de-stocking during the Period that has occurred during
the transition to our new, previously reported, strategic
initiative to accelerate US LiquiBand(R) growth. However, this was
offset by strong growth in non-US markets.
As part of its enhanced partner strategy in the US, the Group
continues to have positive discussions with its partners and has
made good progress with new agreements aimed at delivering stronger
growth from early 2024 onwards. This process has taken longer and
associated destocking has been greater than initially anticipated,
as indicated in the 4 September trading update. Expectations for FY
2024 remain unchanged.
The Group confirms that since the end of the Period, very good
progress has been made with all US LiquiBand(R) distribution
agreements and that it is highly confident that the new
route-to-market strategy will be fully operational and driving
accelerated growth by the end of 2023.
The destocking has not affected LiquiBand(R) end sales demand
and the pipeline of evaluations and conversions for LiquiBand (R)
XL continues to grow strongly. As such the Board's expectations for
LiquiBand(R) growth remain high, both short and long term and
LiquiBand (R) sales forecasts for 2024 and future years remain
unchanged.
The acquisition of Connexicon was completed in February and
integration of the business is progressing well with its existing
portfolio continuing to grow in European and ROW territories. It is
also being positioned to obtain approval in China, which would be
AMS' first tissue adhesive approval in this very large market. In
addition, the development and approval of its new US portfolio, to
support the enhanced partner strategy, is progressing well with
510(k) approvals on track for H2 2024.
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 31% on a reported basis to GBP2.2 million (2022 H1:
GBP1.6 million) and 27% on a constant currency basis due to good
commercial progress, increasing volumes of hernia surgery and the
annualised impact of the acquisition of AFS Medical ("AFS").
Following the PMA approval for LiquiBandFix8(R) in June 2023,
and the earlier completion of a 284-patient US clinical study, AMS
announced on 18 September an agreement for TELA Bio to market and
distribute LiquiBandFix8(R) across the United States under the
brand name LIQUIFIX(TM) . The signing of this agreement
successfully concludes a comprehensive selection process involving
a number of potential partners with a broad range of strengths and
marketing strategies. During this process, it became clear that
TELA Bio brings the right combination of strengths and attributes,
with a vision and ambition that is closely aligned with and
complements AMS' strategy and aspirations. TELA Bio is a specialist
medical technology company that designs, develops and markets
innovative tissue reinforcement materials to address unmet needs in
soft tissue reconstruction. It has an established and fast-growing
footprint in the US market with products that focus on addressing
the shortcomings of existing reinforcement materials in hernia
repair, abdominal wall reconstruction and plastic reconstructive
surgery.
TELA Bio's specialist representative sales force are now
undergoing training ahead of launch in September 2023 at the
American Hernia Society Annual Meeting. As the first product of its
kind in the US, its less invasive application is expected to reduce
pain and other post-operative complications and to provide tangible
benefits to patients and payors. This represents a significant
commercial opportunity for AMS as it enters a new addressable
market estimated at $200 million.
Seal-G(R) MIST ( laparoscopic surgery) and Seal-G(R) (open
surgery ) are novel, internal, biological sealants used to seal
tissue during gastrointestinal surgery to reduce leakage of fluid.
Enrolment for the first Seal-G (R) clinical study, comprising 160
patients, was successfully completed in July 2023 and a small
number of end-user commercial orders have been received for devices
ahead of the European soft launch in Q4 2023 that will utilise data
from the study. An initial analysis of the data indicates a
significant reduction in the number of serious clinical leaks that
required re-operation. Although not a randomised controlled trial,
the Seal-G(R) study reported serious leakages of only 1.25% which
is significantly lower than the 4.2% - 4.7% leakage rate reported
in DICA (Diverticular Inflammation and Complication) data and in
published studies.
Planning and study design for follow-on clinical trials is
progressing well as AMS assesses the optimum pathway to build
evidence for both colon and other surgical procedures whilst giving
consideration to our medium-term goal of Pre-Market Approval in the
large and lucrative US market.
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 18% to GBP9.4 million and by 12% at constant currency
(2022 H1: GBP8.0 million) with a steady performance from its more
established European markets. The Group's ongoing strategy to
increase its penetration of other geographies also drove growth,
such as in the US, where increasing dental suture sales made a
significant contribution to Traditional Closure growth.
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 evenue
increased by 7% to GBP8.3 million (2022 H1: GBP7.7 million) and by
3% at constant currency.
End user demand for AMS' collagens remains strong but timing of
orders and despatches resulted in uneven phasing with stronger
revenues and growth anticipated in the second half of 2023. AMS
remains confident in the growth potential of its innovative
Biosurgical portfolio via its specialist partner network as it
continues to expand its distribution network into new
territories.
The Group's strategy to market Biomatlante's bone substitutes
under the RESORBA (R) brand continues to progress well with growth
in an increasing number of European countries in the Period and the
initial pilot US launch via an independent rep model in the second
half of 2023.
Other Distributed Products
The Other Distributed category comprises products distributed by
AFS, including minimally invasive access ports and laparoscopic
instruments, following its acquisition in April 2022. This category
excludes sales of LiquiBandFix8(R) which are recorded within the
Internal Fixation and Sealants category. Predominantly driven by
annualisation, revenue increased by 267% on a reported basis and
252% on a constant currency basis to GBP2.5 million (2022 H1 GBP0.7
million).
Plymouth facility expansion
The construction phase of the Plymouth facility expansion is now
largely complete, significantly increasing the manufacturing
capacity for Seal-G, Fix8(R) and LiquiBand(R) and providing
additional R&D laboratory space.
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 and multi-layer woundcare
products.
The Woundcare Business Unit delivered growth in the Period, due
to higher ordering from OEM partners and increased sales of
ActivHeal (R) overseas. Revenue increased by 6% in the Period to
GBP23.7 million (2022 H1: GBP22.4 million) and by 4% on a constant
currency basis.
Woundcare Business 2023 2022 Reported Growth
Unit H1 H1 Growth at constant
GBP GBP million currency
million
Infection Management 7.7 7.2 8% 5%
--------- ------------- --------- -------------
Exudate Management 12.2 11.1 10% 8%
--------- ------------- --------- -------------
Other Woundcare 3.8 4.1 -8% -11%
--------- ------------- --------- -------------
TOTAL 23.7 22.4 6% 4%
--------- ------------- --------- -------------
Infection and Exudate Management
Infection Management revenue increased by 8% on a reported basis
and by 5% on a constant currency basis to GBP7.7 million (2022 H1:
GBP7.2 million) and Exudate Management revenue increased by 10% on
a reported and 8% on a constant currency basis to GBP12.2 million
(2022 H1: GBP11.1 million).
Key initiatives driving growth in the Period and expected to
drive future growth include:
-- Expanding the distribution network for our own ActivHeal(R)
range of dressings as newly signed distributors and new market
registrations make an impact. The Group expects ActivHeal(R) to
continue to be a key contributor to Woundcare growth in future
periods.
-- Commercial success with Raleigh's pipeline of new products of special medical materials.
Other Woundcare
Other Woundcare comprises royalties, fees and woundcare
sealants. Revenue reduced by 8% at reported currency and by 11% at
constant currency to GBP3.8 million (2022 H1: GBP4.1 million) as a
result of lower royalty income from the Group's licensing
arrangement with Organogenesis.
As announced on 4 September, Organogenesis has recently
indicated that changes to US reimbursement coverage have created
uncertainty regarding the revenue outlook for some of its key
products, including those utilising AMS patents. Given that
Organogenesis withdrew its own guidance and that AMS has no control
of, and minimal insight into its sales, AMS removed this royalty in
its entirety from Q4 2023 guidance onwards.
Regulatory
AMS continues to make good progress in meeting the requirements
for the new Medical Devices Regulation (MDR) and is well placed to
obtain certifications for all its products well before the extended
2027/2028 deadlines.
Supply chain and inflation
AMS continues to take proactive steps to address the ongoing
global supply chain challenges and has continued to increase
inventory levels during the Period while setting up alternative
suppliers where feasible. As a result, shortages of material have
not had a significant impact on the Group's ability to supply
products to its customers.
Inflationary pressures continue in some areas but the Group
continues to strive to recover a significant proportion of this
impact from its customers through price review negotiations.
Board changes
As part of the ongoing plan to refresh the Non-Executive
Directors, given that Peter Allen has completed 10 years service,
he will retire from the Board once a successor has been appointed.
The Group is progressing with a thorough, external selection
process for a new Chair that is now close to completion. A further
announcement will be made in due course.
Environmental, Social & Governance
AMS continues to make positive progress on its ESG activities,
building on the foundations reported in its FY22 Annual Report.
Since that report, we have further developed our Net Zero Strategy
and Pathway and have agreed key targets that will drive this
activity, for example: to be Net Zero by 2045.
AMS has also strengthened its preparations for the Task Force on
Climate-related Financial Disclosures (TCFD) and in conjunction
with its ESG consultants will continue to progress this area in
advance of its FY23 reporting in April 2024.
In addition, numerous and wide ranging ESG activities continue
to take place across the Group driven by employee suggestions and
actions, as well as Board and ESG Committee initiatives.
Stakeholders
On behalf of the Board, I would like to thank the Group's
committed staff, partners and other stakeholders, without whose
help and commitment the achievements during the Period would not
have been possible.
Summary and Outlook
In the first half of 2023, many parts of the business delivered
strong growth to offset the temporary shortfall in ordering of
LiquiBand(R) in the US and drive overall growth for the Group.
As announced in its 4 September trading statement, reduced
royalty expectations, following recent US reimbursement changes,
and higher than anticipated de-stocking by US partners have
impacted FY23 and consequently AMS expects revenues of
approximately GBP124 - GBP127 million and adjusted pre-tax profit
of approximately GBP25 - GBP27 million for the year. With the
exception of the royalty adjustment (impacting Q4 2023 to Q3 2026),
there were no changes to the expectations for future years.
The Board anticipates accelerated LiquiBand(R) growth from 2024
with the new US partner strategy taking effect and other key
initiatives, such as the imminent US launch of LIQUIFIX(TM) and the
soft launch of Seal-G(R) in Europe, now in place and setting the
foundation for strong growth and improving margins for the Group in
2024 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 and
profit, adjusted profit before tax and adjusted earnings per share,
allowing the impacts of exchange rate volatility, exceptional
items, amortisation and the movement in long-term acquisition
liabilities to be separately identified. Net cash is an additional
non-GAAP measure used.
Overview
Revenue increased by 8% at reported currency to GBP63.1million
(2022 H1: GBP58.3 million) and increased by 5% at constant currency
as summarised in the Chief Executive's Review.
Gross profit increased to GBP35.7 million (2022 H1: GBP34.4
million) but gross margin decreased to 56.5% (2022 H1: 58.9%) due
to adverse product mix relating to the temporary impact of the US
LiquiBand (R) strategic initiative and to reduced royalty income
from Organogenesis.
Administration expenses increased to GBP25.0 million (2022 H1:
GBP21.6 million) inclusive of adverse foreign exchange movements
which adversely affected the Group by GBP1.9 million in the first
half of the year when compared to the first half of 2022. The
acquisition of AFS in April 2022 has had an annualising effect in
the first half of 2023, adding GBP1.0 million of administration
expenses and the acquisition of Connexicon added GBP0.2 million of
operating administration costs, GBP0.6 million of amortisation of
acquired intangible assets and GBP0.2 million of one-off
professional fees relating to the acquisition. The group also
continued to invest in its sales and marketing teams as well as new
product development and regulatory team to support the Group's
continuing growth.
The Group incurred GBP6.0 million of gross R&D spend in the
Period (2022 H1: GBP5.4 million), representing 9.5% of sales (2022
H1: 9.3% of sales). This reflects the Group's continued investment
in innovation as demonstrated by the PMA approval of
LiquiBandFix8(R) in the period as well as investment to meet
increased regulatory standards. The acquisition of Connexicon has
further added to the Group's R&D capabilities in the period, in
particular the Group's ability to develop and launch innovative and
sealant technologies. As shown in the table below, elements of this
cost are capitalised and amortised over 5 to 10 years.
H1 2023 H1 2022
GBP'000 GBP'000
----------------------------------------------- --------- --------
Total investment in Research and Development,
Regulatory and Clinical 5,972 5,403
Of which:
Charged to the profit and loss account 2,926 2,832
Capitalised, to be amortised over 5-10
years 3,046 2,571
Amortisation of acquired intangible assets increased to GBP2.4
million (2022 H1: GBP1.6 million) following the acquisition of
Connexicon.
Adjusted operating profit, which excludes amortisation of
acquired intangibles, decreased by 7% to GBP12.8 million (2022 H1:
GBP13.8 million) whilst the adjusted operating margin decreased by
340 bps to 20.3% (2022 H1: 23.7%) due to the decrease in the gross
margin in addition to the Group's continued investment in future
growth opportunities.
Movement in long-term acquisition liabilities of Sealantis, AFS
& Connexicon resulted in a net credit of GBP0.4 million (2022
H1: GBP0.3 million).
Despite adverse sales mix impacts, the Group delivered increased
adjusted profit before tax of GBP13.8 million (2022 H1: GBP13.6
million). Reported profit before tax was GBP11.8 million (2022 H1:
GBP12.3 million).
Reconciliation of profit before tax to adjusted profit before
tax
-------------------------------------------------------------------
H1 2023 H1 2022
GBP'000 GBP'000
--------------------------------------------- --------- ---------
Profit before tax 11,768 12,336
Amortisation of acquired intangibles 2,402 1,573
Movement in long-term acquisition
liabilities (404) (283)
--------------------------------------------- --------- ---------
Adjusted profit before tax 13,766 13,626
--------------------------------------------- --------- ---------
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 24.1% (2022 H1: 21.6%) as a
result of the increase in the UK Corporation tax rate to 25%,
effective 1(st) April 2023 (2022: 19%).
The large UK corporation tax increase has had a significant
adverse impact on earnings per share resulting in adjusted diluted
earnings per share reducing by 1% to 4.97p (2022 H1: 5.01p),
diluted earnings per share reducing by 8% to 4.06p (2022 H1:
4.42p), adjusted basic earnings per share reducing by 1% to 5.04p
(2022 H1: 5.07p) and basic earnings per share reducing by 8% to
4.12p (2022 H1: 4.47p).
The Board intends to pay an interim dividend of 0.70p per share
on 27 October 2023 to shareholders on the register at the close of
business on 29 September 2023. This is a 10% increase on the
interim dividend paid in respect of the first half of 2022
reflecting the Board's ongoing confidence in the future growth in
the Group.
Operating result by business segment
Six months ended 30 June Surgical Woundcare
2023
GBP'000 GBP'000
---------------------------- --------- ----------
Revenue 39,411 23,677
Segment operating profit 8,164 2,860
Amortisation of acquired
intangibles 1,931 471
Adjusted segment operating
profit (4) 10,095 3,331
Adjusted operating margin
(4) 25.6% 14.1%
---------------------------- --------- ----------
Six months ended 30 June
2022
Revenue 35,941 22,363
Segment operating profit 9,605 3,081
Amortisation of acquired
intangibles 1,101 472
Adjusted segment operating
profit (4) 10,706 3,553
Adjusted operating margin
(4) 29.8% 15.9%
---------------------------- --------- ----------
(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 10% to GBP39.4 million (2022 H1:
GBP35.9 million) at reported currency and increased by 5% to
GBP38.3 million (2022 H1: GBP36.2 million) at constant currency.
Adjusted operating margin decreased by 420 bps to 25.6% (2022 H1:
29.8%) due to temporarily adverse sales mix, the impact of
inflation and increased investment in regulatory affairs, and
research and development.
Woundcare
Woundcare revenues increased by 6% to GBP23.7 million (2022 H1:
GBP22.4 million) at reported currency and increased by 4% to
GBP23.1 million (2022 H1: GBP22.1 million) at constant currency.
Adjusted operating margin decreased by 180 bps to 14.1% (2022 H1:
15.9%) predominately due to lower royalty income from
Organogenesis.
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 2.6% and 4.0% respectively and in the absence of any
hedging this would have an impact on the Group operating margin of
2.0% and 0.7% percentage points respectively.
Cash Flow
Net cash inflow from operating activities decreased by 67% to
GBP4.1 million (2022 H1: GBP12.5 million) due to increased working
capital as explained below.
At the end of the Period, net cash had reduced to GBP69.1
million (31 December 2022: GBP82.3 million) due to working capital
increases and acquisition related payments of EUR10m for the
acquisition and initial earnout of Connexicon, and EUR0.5 million
for the achievement of AFS' FY22 EBITDA milestone.
In the first half of 2023, receivables increased by GBP3.2
million (2022 H1: GBP0.9 million increase) due to increased sales
volumes, the impact of favourable hedging contracts, and the
addition of Connexicon. Debtor days reduced to 41 from the 44 days
at year-end (2022 H1: 43 days) as a result of lower US sales, which
are typically on longer payment terms. Creditor days were in line
with December 2022 at 37 days (2022 H1: 35 days). Total payables
were inflated by the addition of Connexicon and the associated
contingent consideration and increased by GBP4.0 million (2022 H1:
GBP5.5 million increase). Planned inventory increases to fulfil
anticipated commercial demand and to continue to build resilience
resulted in inventories growing by GBP3.9 million to 6.7 months of
supply in comparison to 6.2 months at December 2022 (2022 H1: 5.5
months).
In the Period, GBP4.8 million was invested in capital equipment,
R&D and regulatory costs (2022 H1: GBP4.3 million) including
investment in additional Freezer dryer capacity in Germany to
improve production efficiency and an extension at Plymouth which is
now substantially complete.
Tax payments increased to GBP1.4 million (2021 H1: GBP0.8
million) which is GBP1.5 million lower than tax in the income
statement. Payments in the prior period were particularly low due
to a refund of taxes received.
In June 2023, the Group paid its final dividend for the year
ended 31 December 2022 of GBP3.3 million (2022 H1: GBP3.0
million).
The Group retains strong support from its two banks, NatWest and
HSBC, and is confident in its ability to raise necessary funds to
complete further acquisitions as and when opportunities arise.
CONDENSED CONSOLIDATED INCOME STATEMENT
(Unaudited) (Unaudited) (Audited)
Six months Year ended
Six months ended ended 31 December
30 June 2023 30 June 2022 2022
Total Total Total
Note GBP'000 GBP'000 GBP'000
----------------------------------- -------- ----------------- -------------- -------------
Revenue 5 63,088 58,304 124,330
Cost of sales (27,435) (23,934) (50,914)
----------------------------------- -------- ----------------- -------------- -------------
Gross profit 35,653 34,370 73,416
Distribution
costs (713) (781) (1,626)
Administration
costs (25,007) (21,579) (47,378)
Other income 473 227 478
Operating
profit 10,406 12,237 24,890
Finance income 2,229 436 1,691
Finance costs (867) (337) (671)
Profit before
taxation 11,768 12,336 25,910
Income tax 7 (2,836) (2,668) (5,504)
----------------------------------- -------- ----------------- -------------- -------------
Profit for
the period
attributable
to equity holders
of the parent 8,932 9,668 20,406
----------------------------------- -------- ----------------- -------------- -------------
Earnings per
share
Basic 4 4.12p 4.47p 9.42p
Diluted 4 4.06p 4.42p 9.30p
Adjusted diluted
(5) 4 4.97p 5.01p 10.47p
----------------------------------- -------- ----------------- -------------- -------------
The above results relate to continuing operations
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
(Unaudited) (Unaudited) (Audited)
Six months Year ended
Six months ended ended 31 December
30 June 2023 30 June 2022 2022
GBP'000 GBP'000 GBP'000
----------------------------------- -------- ----------------- -------------- -------------
Profit for
the period 8,932 9,668 20,406
----------------------------------- -------- ----------------- -------------- -------------
Exchange differences on translation of
foreign operations (3,674) 3,896 6,940
Gain/(Loss) arising on cash flow hedges 2,774 (3,704) (1,297)
Deferred tax charge arising on cash flow
hedges (163) - (201)
--------------------------------------------- ----------------- -------------- -------------
Other comprehensive (Charge)/credit for
the period (1,063) 192 5,442
--------------------------------------------- ----------------- -------------- -------------
Total comprehensive income for the period
attributable to equity holders of the
parent 7,869 9,860 25,848
--------------------------------------------- ----------------- -------------- -------------
(5) Adjusted for amortisation of acquired intangible assets and
movement in long-term acquisition liabilities.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(Unaudited) (Unaudited) (Audited)
30 June 31 December
2023 30 June 2022 2022
Note GBP'000 GBP'000 GBP'000
Assets
Non-current assets
Intangible assets 55,451 46,639 48,373
Goodwill 79,770 69,409 70,859
Property, plant and equipment 29,344 27,783 29,015
Trade and other receivables 1,260 79 937
------------------------------- ----- ------------ ------------- ------------
165,825 143,910 149,184
Current assets
Inventories 31,812 22,732 27,911
Trade and other receivables 24,392 21,985 21,553
Current tax assets 403 177 184
Cash and cash equivalents 69,142 75,341 82,262
------------------------------- ----- ------------ ------------- ------------
125,749 120,235 131,910
------------------------------- ----- ------------ ------------- ------------
Total assets 291,574 264,145 281,094
------------------------------- ----- ------------ ------------- ------------
Liabilities
Current liabilities
Trade and other payables 21,097 18,422 20,671
Current tax liabilities 594 1,746 948
Lease liabilities 1,051 1,109 1,059
22,742 21,277 22,678
Non-current liabilities
Trade and other payables 7,034 5,724 3,510
Deferred tax liabilities 10,919 8,229 9,593
Lease liabilities 8,126 8,323 8,691
26,079 22,276 21,794
------------------------------- ----- ------------ ------------- ------------
Total liabilities 48,821 43,553 44,472
------------------------------- ----- ------------ ------------- ------------
Net assets 242,753 220,592 236,622
------------------------------- ----- ------------ ------------- ------------
Equity
Share capital 11 10,858 10,836 10,843
Share premium 37,420 37,102 37,269
Share-based payments reserve 17,199 14,434 15,711
Investment in own shares (167) (167) (167)
Share-based payments deferred
tax reserve 413 569 531
Other reserve 1,531 1,531 1,531
Hedging reserve 1,092 (3,725) (1,519)
Translation reserve 1,330 1,960 5,004
Retained earnings 173,077 158,052 167,419
------------------------------- ----- ------------ ------------- ------------
Equity attributable to equity
holders of the parent 242,753 220,592 236,622
------------------------------- ----- ------------ ------------- ------------
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 2023
(audited) 10,843 37,269 15,711 (167) 531 1,531 (1,519) 5,004 167,419 236,622
------------------ -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- -----------------
Consolidated
profit for the
period to 30
June 2023 - - - - - - - - 8,932 8,932
Other
comprehensive
income/(expense) - - - - - - 2,611 (3,674) - (1,063)
------------------ -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- -----------------
Total
comprehensive
income/(expense) - - - - - - 2,611 (3,674) 8,932 7,869
------------------ -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- -----------------
Share-based
payments - - 1,476 - - - - - - 1,476
Share options
exercised 15 151 12 - (118) - - - - 60
Shares purchased
by EBT - - - (687) - - - - - (687)
Shares sold by
EBT - - - 687 - - - - - 687
Dividends paid
(Note 8) - - - - - - - - (3,274) (3,274)
----------- ------------ -------- -------- ------------
At 30 June 2023
(unaudited) 10,858 37,420 17,199 (167) 413 1,531 1,092 1,330 173,077 242,753
------------------ -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- -----------------
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 2022
(audited) 10,804 36,996 13,180 (164) 933 1,531 (21) (1,936) 154,354 212,677
------------------ -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- -----------------
Consolidated
profit for the
period
to 30 June 2022 - - - - - - - - 9,668 9,668
Other
comprehensive
(expense)/
income - - - - - - (3,704) 3,896 - 192
------------------ -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- -----------------
Total
comprehensive
(expense)/
income - - - - - - (3,704) 3,896 9,668 9,860
------------------ -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- -----------------
Share-based
payments - - 1,141 - - - - - - 1,141
Share options
exercised 32 106 113 - (364) - - - - (113)
Shares purchased
by EBT - - - (337) - - - - - (337)
Shares sold by
EBT - - - 334 - - - - - 334
Dividends paid
(Note 8) - - - - - - - - (2,970) (2,970)
------------------ -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- -----------------
At 30 June 2022
(unaudited) 10,836 37,102 14,434 (167) 569 1,531 (3,725) 1,960 158,052 220,592
------------------ -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- -----------------
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
2022
(audited) 10,804 36,996 13,180 (164) 933 1,531 (21) (1,936) 151,354 212,677
--------------- -------------- ------------------ -------------- ----------- ---------------- --------------- -------- ------------ -------------- --------------
Consolidated
profit for
the year
to 31
December 2022 - - - - - - - - 20,406 20,406
Other
comprehensive
(expense)/
income - - - - - - (1,498) 6,940 - 5,442
--------------- -------------- ------------------ -------------- ----------- ---------------- --------------- -------- ------------ -------------- --------------
Total
comprehensive
(expense)/
income - - - - - - (1,498) 6,940 20,406 25,848
--------------- -------------- ------------------ -------------- ----------- ---------------- --------------- -------- ------------ -------------- --------------
Share-based
payments - - 2,439 - (402) - - - - 2,037
Share options
exercised 39 273 92 - - - - - - 404
Shares
purchased by
EBT - - - (392) - - - - - (392)
Shares sold by
EBT - - - 389 - - - - - 389
Dividends paid
(Note 8) - - - - - - - - (4,341) (4,341)
--------------- -------------- ------------------ -------------- ----------- ---------------- --------------- -------- ------------ -------------- --------------
At 31 December
2022
(audited) 10,843 37,269 15,711 (167) 531 1,531 (1,519) 5,004 167,419 236,622
--------------- -------------- ------------------ -------------- ----------- ---------------- --------------- -------- ------------ -------------- --------------
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited) (Unaudited) (Audited)
Six months Six months Year
ended ended ended
30 June 31 December
2023 30 June 2022 2022
Note GBP'000 GBP'000 GBP'000
-------------------------------------- ----- ------------ ------------- ------------
Cash flows from operating activities
Operating profit 10,406 12,237 24,890
Adjustments for:
Depreciation 2,045 1,917 4,049
Amortisation - acquired intangible
assets 2,402 1,573 3,414
- development costs 458 436 879
- software intangibles 258 245 502
Increase in inventories (4,011) (2,355) (7,087)
Increase in trade and other
receivables (2,732) (1,098) (596)
(Decrease)/Increase in trade
and other payables (4,783) (737) 1,711
Share-based payments expense 1,476 1,141 2,439
Taxation paid (1,370) (827) (3,324)
Net cash inflow from operating
activities 4,149 12,532 26,877
-------------------------------------- ----- ------------ ------------- ------------
Cash flows from investing activities
Purchase of software (4) (22) (73)
Capitalised development costs (3,046) (2,571) (6,152)
Purchases of property, plant
and equipment (1,767) (1,669) (3,739)
Proceeds from disposal of property,
plant and equipment - 27 46
Interest received 1,147 156 820
Acquisition of subsidiaries
(net of cash acquired) 9 (5,529) (2,781) (2,781)
Payment of contingent consideration 9 (3,080) - -
Net cash used in investing
activities (12,279) (6,860) (11,879)
-------------------------------------- ----- ------------ ------------- ------------
Cash flows from financing activities
Dividends paid 8 (3,274) (2,970) (4,341)
Repayment of principal under
lease liabilities (653) (581) (1,295)
Issue of equity shares 162 108 (331)
Shares purchased by EBT (687) (337) 266
Shares sold by EBT 687 334 (392)
Interest paid (198) (304) 389
Repayment of borrowings 9 (486) (331) (617)
Net cash used in financing
activities (4,449) (4,081) (6,321)
-------------------------------------- ----- ------------ ------------- ------------
Net (decrease)/increase in
cash and cash equivalents (12,579) 1,591 8,677
Cash and cash equivalents at
the beginning of the period 82,262 72,965 72,965
Effect of foreign exchange
rate changes (541) 785 620
Cash and cash equivalents at
the end of the period 69,142 75,341 82,262
-------------------------------------- ----- ------------ ------------- ------------
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 2023
comprise the Company and its subsidiaries (together referred to as
the "Group").
The Group is primarily involved in the design, development and
manufacture of innovative tissue-healing technology for sale into
the global medical device market.
2. Basis of preparation
The information for the period ended 30 June 2023 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 2022 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):
- Amendments to IFRS 17 Insurance Contracts including the
Extension of the Temporary Exemption from Applying IFRS 9
(Amendments to IFRS 4)
- Initial Application of IFRS 17 and IFRS 9 - Comparative Information (Amendment to IFRS 17)
- Deferred Tax related to Assets and Deferred Tax related to
Assets and Liabilities arising from a Single Transaction
(Amendments to IAS 12)
- Definition of Accounting Estimates (Amendments to IAS 8); and
- Disclosure of Accounting Policies (Amendments to IAS 1 and Practice Statement 2)
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 2022. 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
2023 2022 2022
Number of shares '000 '000 ' 000
------------------------------------- ------------ ------------ ------------
Weighted average number of ordinary
shares for the purposes of basic
earnings per share 216,947 216,272 216,512
------------------------------------- ------------ ------------ ------------
Effect of dilutive potential
ordinary shares: share options,
deferred annual bonus, Share
Incentive Plan, LTIPs 3,084 2,527 2,969
------------------------------------- ------------ ------------ ------------
Weighted average number of
ordinary shares for the purposes
of diluted earnings per share 220,031 218,799 219,481
------------------------------------- ------------ ------------ ------------
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 amortisation of
acquired intangible assets and movement in long-term acquisition
liabilities and is based on earnings of:
(Unaudited) (Unaudited)
Six months Six months (Audited)
ended ended Year ended
30 June 30 June 31 December
2023 2022 2022
GBP'000 GBP'000 GBP'000
----------------------------------------------- ------------ ------------ ------------
Earnings
Profit for the year being attributable
to equity holders of the parent 8,932 9,668 20,406
Amortisation of acquired intangible
assets 2,402 1,573 3,414
Movement in long-term acquisition liabilities (404) (283) (840)
Adjusted profit for the year being
attributable to equity holders of the
parent 10,930 10,958 22,980
----------------------------------------------- ------------ ------------ ------------
pence pence pence
----------------------------------------------- ------------ ------------ ------------
Basic EPS 4.12 4.47 9.42
Diluted EPS 4.06 4.42 9.30
Adjusted basic EPS 5.04 5.07 10.61
Adjusted diluted EPS 4.97 5.01 10.47
----------------------------------------------- ------------ ------------ ------------
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 an
alternative representation of the Group's trading performance,
consistent with the view of management.
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 (R) brand predominantly to the UK NHS as well as
bio diagnostics products following the acquisition of Raleigh.
Segment information about these Business Units is presented
below:
Six months ended
30 June 2023 Surgical Woundcare Consolidated
(Unaudited) GBP'000 GBP'000 GBP'000
-------------------------------------- --------- ---------- -------------
Revenue 39,411 23,677 63,088
-------------------------------------- --------- ---------- -------------
Result
-------------------------------------- --------- ---------- -------------
Adjusted segment operating profit 10,095 3,331 13,426
Amortisation of acquired intangibles (1,931) (471) (2,402)
-------------------------------------- --------- ---------- -------------
Segment operating profit 8,164 2,860 11,024
Unallocated expenses (618)
-------------
Operating profit 10,406
Finance income 2,229
Finance costs (867)
-------------------------------------- --------- ---------- -------------
Profit before tax 11,768
Tax (2,836)
-------------------------------------- --------- ---------- -------------
Profit for the period 8,932
-------------------------------------- --------- ---------- -------------
At 30 June 2023
(Unaudited) Surgical Woundcare Consolidated
Other information GBP'000 GBP'000 GBP'000
------------------------------- ---------- ----------- --------------
Capital additions:
Software intangibles 2 2 4
Development 2,680 366 3,046
Property, plant and equipment 1,253 514 1,767
Depreciation and amortisation (3,680) (1,483) (5,163)
------------------------------- ---------- ----------- --------------
Balance sheet
Assets
Segment assets 206,856 84,718 291,574
Unallocated assets -
------------------------------- ---------- -----------
Consolidated total assets 291,574
------------------------------- ---------- ----------- --------------
Liabilities
Segment liabilities 37,800 11,021 48,821
------------------------------- ---------- ----------- --------------
Six months ended
30 June 2022 Surgical Woundcare Consolidated
(Unaudited) GBP'000 GBP'000 GBP'000
--------------------------------------- --------- ---------- -------------
Revenue 35,941 22,363 58,304
--------------------------------------- --------- ---------- -------------
Result
--------------------------------------- --------- ---------- -------------
Adjusted segment operating profit 10,706 3,553 14,259
Amortisation of acquired intangibles (1,101) (472) (1,573)
--------------------------------------- --------- ---------- -------------
Segment operating profit 9,605 3,081 12,686
Unallocated expenses (449)
-------------
Operating profit 12,237
Finance income 436
Finance costs (337)
--------------------------------------- --------- ---------- -------------
Profit before tax 12,336
Tax (2,668)
--------------------------------------- --------- ---------- -------------
Profit for the period 9,668
--------------------------------------- --------- ---------- -------------
At 30 June 2022
(Unaudited) Surgical Woundcare Consolidated
Other information GBP'000 GBP'000 GBP'000
-------------------------------------- --------- ---------- -------------
Capital additions:
Software intangibles 13 9 22
Development 1,976 595 2,571
Property, plant and equipment 1,095 574 1,669
Depreciation and amortisation (2,695) (1,476) (4,171)
-------------------------------------- --------- ---------- -------------
Balance sheet
Assets
Segment assets 179,274 84,757 264,031
Unallocated assets 114
-------------------------------------- --------- ----------
Consolidated total assets 264,145
-------------------------------------- --------- ---------- -------------
Liabilities
Segment liabilities 29,184 14,369 43,553
-------------------------------------- --------- ---------- -------------
Year ended
31 December 2022 Surgical Woundcare Consolidated
(Audited) GBP'000 GBP'000 GBP'000
-------------------------------------- --------- ---------- -------------
Revenue 74,861 49,469 124,330
-------------------------------------- --------- ---------- -------------
Result
-------------------------------------- --------- ---------- -------------
Adjusted segment operating profit 21,802 7,632 29,434
Amortisation of acquired intangibles (2,469) (945) (3,414)
Segment operating profit 19,333 6,687 26,020
-------------------------------------- --------- ---------- -------------
Unallocated expenses (1,130)
-------------
Operating profit 24,890
Finance income 1,691
Finance costs (671)
-------------------------------------- --------- ---------- -------------
Profit before tax 25,910
Tax (5,504)
-------------------------------------- --------- ---------- -------------
Profit for the year 20,406
-------------------------------------- --------- ---------- -------------
At 31 December 2022
(Audited) Surgical Woundcare Consolidated
Other information GBP'000 GBP'000 GBP'000
------------------------------- --------- ---------- -------------
Capital additions:
Software intangibles 34 39 73
Development 4,617 1,535 6,152
Property, plant and equipment 2,258 1,481 3,739
Depreciation and amortisation (5,759) (3,085) (8,844)
------------------------------- --------- ---------- -------------
Balance sheet
Assets
Segment assets 190,456 90,638 281,094
Unallocated assets -
------------------------------- --------- ----------
Consolidated total assets 281,094
------------------------------- --------- ---------- -------------
Liabilities
Segment liabilities 29,786 14,686 44,472
------------------------------- --------- ---------- -------------
Geographical segments
The Group operates in the UK, the Netherlands, Germany, the
Czech Republic, Ireland, France and Israel, with a sales office
located in Russia, distributor in Austria, 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 Group's small legacy sales office in Moscow has
historically contributed approximately 1% of the Group's operating
profit.
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 2023 30 June 2022 31 December 2022
Segmental Revenue GBP'000 GBP'000 GBP'000
-------------------------- ----------------- ----------------- -----------------
United Kingdom 9,994 9,515 19,960
Germany 11,666 10,250 20,780
Rest of Europe 19,136 14,596 32,519
United States of America 16,678 19,519 40,807
Rest of World 5,614 4,424 10,264
-------------------------- ----------------- ----------------- -----------------
63,088 58,304 124,330
-------------------------- ----------------- ----------------- -----------------
The following table provides an analysis of the Group's total
assets by geographical location:
(Unaudited) (Unaudited) (Audited)
30 June 2023 30 June 2022 31 December 2022
Segmental Assets GBP'000 GBP'000 GBP'000
-------------------------- ------------- ------------- -----------------
United Kingdom 154,705 145,112 151,817
Germany 76,428 67,942 78,877
France 11,414 9,611 11,934
Rest of Europe 27,117 14,697 16,670
Israel 19,698 22,277 21,345
United States of America 2,212 4,506 451
291,574 264,145 281,094
-------------------------- ------------- ------------- -----------------
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 2023. 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 30 31 30
June 30 June 31 Dec June 30 June Dec June 30 June 31 Dec
23 22 22 23 22 22 23 22 22
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 1.31 1.36 1.28 9,500 9,000 11,500 (192) (791) (540)
3 to 6
months 1.30 1.36 1.31 9,000 10,000 9,000 (142) (868) (550)
7 to 12
months 1.21 1.32 1.30 15,000 17,500 18,500 585 (1,012) (1,040)
Over 12
months 1.14 1.30 1.15 15,000 25,000 22,500 1,188 (1,052) 890
----------- --------- --------- --------- -------- -------- -------- -------- -------- ----------
48,500 61,500 61,500 1,439 (3,723) (1,240)
----------- --------- --------- --------- -------- -------- -------- -------- -------- ----------
Ave. exchange rate Foreign currency Fair value
30 30 30
June 30 June 31 Dec June 30 June 31 Dec June 30 June 31 Dec
23 22 22 23 22 22 23 22 22
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 1.15 1.15 1.14 600 900 600 5 6 (9)
3 to 6
months 1.15 1.15 1.15 600 900 600 4 2 (15)
7 to 12
months 1.14 1.15 1.15 1,200 1,600 1,200 8 (5) (29)
Over 12
months - 1.15 1.14 - 800 1,200 - (5) (26)
------------ --------- --------- --------- -------- -------- -------- -------- -------- --------
2,400 4,200 3,600 17 (2) (79)
------------ --------- --------- --------- -------- -------- -------- -------- -------- --------
7. Taxation
The weighted average tax rate for the Group for the six-month
period ended 30 June 2023 was 26.3% (first half of 2022: 24.4%,
year ended 31 December 2022: 22.8%). The Group's effective tax rate
for the full year is expected to be 24.1%, which has been applied
to the six months ended 30 June 2023 (first half of 2022: 21.6%,
year ended 31 December 2022: 21.2%). This represents an increase on
the previous period due to the increased tax rate in the UK, where
the Group generates a significant amount of profit.
8. Dividends
(Unaudited) (Unaudited) (Audited)
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2023 2022 2022
Amounts recognised as distributions
to equity holders in the period: GBP'000 GBP'000 GBP'000
------------------------------------- ------------ ------------ ------------
Final dividend for the year ended
31 December 2021 of 1.37p per
ordinary share - 2,970 2,960
Interim dividend for the year
ended 31 December 2022 of 0.64p
per ordinary share - - 1,381
Final dividend for the year ended
31 December 2022 of 1.51p per
ordinary share 3,274 - -
-------------------------------------
3,274 2,970 4,341
------------------------------------- ------------ ------------ ------------
9. Acquisition of Connexicon
On 1 February 2023, the Group acquired 99% of the Share Capital
of Connexicon Medical Limited ("Connexicon"), a tissue adhesive
technology specialist based in Dublin, Republic of Ireland for an
initial up-front payment of EUR 7 million, with options in place to
acquire the remaining 1% of Share Capital. The remaining 1% of
Share Capital not acquired by AMS have no-voting rights and the
options are linked to future contingent considerations up to a
potential EUR18 million, dependent on the delivery of certain
research & development, regulatory and commercial milestones
between 2023 and 2027.
In the five-month period from acquisition to 30 June 2023,
Connexicon contributed GBP0.4 million of revenue to the Group and a
negligible amount of operating profit. In addition, amortisation of
intangible assets of GBP0.6 million was recorded within the Group
as a result of the acquisition. The results, assets and liabilities
of Connexicon has been included in the Surgical business unit
segment.
GBP'000
------------------------------------ -------------
Identifiable net assets acquired
Customer related intangible assets 587
Technology based intangible assets 7,951
Property, plant and equipment 800
Trade and other receivables 754
Inventory 466
Cash and cash equivalents 846
Trade and other payables (1,204)
Lease liabilities (8)
Borrowings (487)
Deferred tax on intangible asset (674)
Arising on acquisition
Goodwill 11,040
------------------------------------ -------------
Total net assets 20,071
------------------------------------ -------------
Satisfied by GBP'000
-------------------------- --------------
Cash consideration 6,375
Contingent consideration 13,696
-------------------------- --------------
20,071
-------------------------- --------------
Net cash flow on acquisition GBP'000
------------------------------ --------------
Cash consideration 6,375
Cash acquired (846)
------------------------------ --------------
5,529
------------------------------ --------------
Contingent consideration arose on the acquisition in respect of
up to EUR18 million which is payable subject to delivery of certain
research & development, regulatory and commercial milestones
between 2023 and 2027. EUR16 million (GBP14 million) is the
estimated fair value of the contingent consideration at the
acquisition date.
None of the goodwill on the acquisition is expected to be
deductible for income tax.
During the period, GBP3.1 million of Contingent consideration
was paid (30 June 2022: GBPnil, 31 December 2022: GBPnil) .
Connexicon met milestones relating to product and process
validation resulting in a contingent consideration payment of EUR3
million whilst AFS achieved its 2022 EBITDA milestone, resulting in
a payment of EUR500,000.
10. Contingent liabilities
The Directors are not aware of any contingent liabilities faced
by the Group as at 30 June 2023 (30 June 2022: GBPnil, 31 December
2022: GBPnil).
11. Share capital
Share capital as at 30 June 2023 amounted to GBP10,858,000 (30
June 2022: GBP10,836,000, 31 December 2022: GBP10,843,000). During
the period the Group issued 296,989 shares in respect of share
options, LTIPS, Deferred Annual Bonus Scheme and the Share
Incentive Plan.
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 and
considered whether there are any factors that indicate a
deterioration in trading performance beyond 12 months. The
forecasts used are based on a comprehensive review of revenue,
expenditure and cash flows, taking into account specific business
risks and the current economic environment.
The Group has used 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 all of these scenarios AMS is able to continue
its operations for a period of at least 12 months.
With regards to the Group's financial position, it had cash and
cash equivalents at 30 June 2023 of GBP69.1 million.
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 43-47 of the
Annual Report and Accounts for the year ended 31 December 2022.
There have been no significant changes since the last annual
report.
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
With the exception of its trading update on 4(th) September,
there have been no material events subsequent to the end of the
interim reporting period ended 30 June 2023.
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 DBGDCGGBDGXC
(END) Dow Jones Newswires
September 20, 2023 02:00 ET (06:00 GMT)
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