Interim Results
Advanced Medical Solutions Grp PLC
06 September 2005
For immediate release 6 September 2005
Advanced Medical Solutions Group plc
('AMS' or 'the Company')
Interim results for the six months ended 30 June 2005
Winsford, UK: Advanced Medical Solutions Group plc (AIM: AMS), the global
woundcare technology company, is pleased to announce its interim results for the
six months ended 30 June 2005.
Highlights
• Group turnover increased 13% to £5.9 million (2004: £5.2 million)
• Pre-tax losses reduced 26% to £0.4 million (2004: £0.55 million) after
profitable second quarter
• EBITDA positive at £0.1 million (2004: break-even)
• Cash of £2.9 million (2004: £2.7 million) sufficient to take the Group
through to sustainable profitability
• New products launched and partnerships extended:
- Silver alginate launches in US and Europe
- LiquiBand LaparoscopicTM launched throughout Europe
- Marketing agreements signed for LiquiBandTM for France and Spain
• Group well positioned for future growth:
- US approval of LiquiBandTM range underway
- Products undergoing approval in Japan
- NHS direct business building steadily
Commenting on the half year results, Dr. Don Evans, Chief Executive of AMS,
said:
'I am delighted by the first half performance, and particularly by our continued
progress towards profitability. This endorses our strategy of broadening both
our routes to market and our product range and gives us confidence in the
current half and beyond.'
-ENDS-
For further information, please contact:
Advanced Medical Solutions Group plc Tel : +44 (0) 1606 545508
Don Evans, Chief Executive
Mary Tavener, Finance Director
www.admedsol.com
Buchanan Communications Tel: +44 (0) 20 7466 5000
Mark Court, Mary-Jane Johnson
Notes to Editors:
Advanced Medical Solutions is a leading company in the development and
manufacture of products for the $13 billion global woundcare market.
Founded in 1991 and currently quoted on AIM, Advanced Medical Solutions is
focused on the design, development and manufacture of innovative and
technologically advanced products for woundcare and other medical applications.
In-house natural and synthetic polymer technology is used to provide advanced
wound dressings based on the moist healing principle. AMS's resources ensure a
unique position as a vertically integrated 'one stop shop' to provide all
categories of moist wound healing products. The Company has the capability to
move from product design and development through to production and delivery
ready for distribution into customer markets.
The acquisition of MedLogic in 2002 has brought AMS products and technology in
cyanoacrylate based tissue adhesives that offer benefits over sutures and
staples for closing wounds sold direct to hospitals or through distributors.
AMS's technology and products currently serve the majority of the key global
markets and strategic partners.
Chairman's Statement
Overview
I am pleased to report that AMS continued to deliver good revenue growth and
strengthened its financial position during the period with sufficient cash to
take the Company through to profitability. On the back of a profitable second
quarter the Company further reduced its losses and moved into positive EBITDA.
Good progress has been made during the period in positioning the Company for
major future growth opportunities within key global markets.
Operating Review
The Group's core focus remains the development and manufacture of advanced
woundcare and wound closure products for sale in hospitals and long term care
facilities.
Advanced woundcare products are marketed and distributed into the $2.6 billion
global market through either major woundcare companies, under their leading
brands or through private label distributors. Products based upon superglue
technology address the emerging tissue adhesives segment of the $5 billion wound
closure market. This market is currently accessed by the Company through a
direct sales force in the UK and through distribution partners in Europe. The
direct UK sales force also carries a full range of standard advanced woundcare
products for sale into the NHS hospital and community care markets under our
ActivHeal(R) brand.
The Company continues to make progress in reducing its heavy dependence on the
performance of its major branded partners for delivering revenue growth and
profit. The Company's strategy of broadening its routes to market by
complementing these relationships with the provision of private label standard
products to major distributors and by the expansion of its direct sales presence
in the UK home market continues to be successful.
Advanced Woundcare
Advanced woundcare sales of £4.8 million for the six months to 30 June 2005 were
up 12% against the same period last year with growth spread across the product
range via branded and private label partners.
The Company's position in the dynamic silver market was strengthened with the
introduction of its fibre based silver alginate technology into Europe under a
leading brand and the launch by a number of partners of alginate dressings
incorporating ionic silver alginate in the US. Silver is a broad spectrum
antimicrobial that helps to prevent infection. In combination with alginate, a
biopolymer derived from seaweed, AMS can provide products ideally suited to
treatment of a wide variety of chronic wounds.
This transition to higher value products fits with our route to market strategy
whereby we look to license our new technology to the major brands, which are
best placed to create these markets on a global basis, whilst we also address
the cost pressures on healthcare budgets by providing a value range of products
for routine use. These products are sold via private label distributors or
direct to the NHS under our ActivHeal(R) brand.
The Company made steady progress with its ActivHeal(R) offering during the
period despite a number of external factors. Typically many NHS Trusts came
under severe funding restrictions during the first quarter as funds ran out at
the end of the budget cycle. Ironically, this prevented active assessment of
our cost reduction offering. However, we have made real progress as many user
evaluations have been successfully completed and a growing number of Hospital
and Primary Care Trusts are now routinely using the ActivHeal(R) range. We
remain confident that this strategy of providing a value range direct from the
manufacturer offering major savings will be increasingly successful and will
capture a significant share of the £100 million NHS advanced woundcare spend.
Complementing this approach, the Group continues to fund the development of new
differentiated products for licensing to its major branded partners.
Progress continues to be made in accessing the Far East market with a number of
products currently undergoing regulatory approval in Japan in collaboration with
our marketing partner, Nitto Medical.
Wound Closure
The wound closure business grew 14% to £1.1 million in the period despite a slow
first quarter in the NHS due to pressure on budgets. This affected our core
Accident & Emergency (A&E) business where we maintained our strong market
leadership position and also delayed the take up of our new SkinLinkTM skin
closure strip which is under evaluation in a large number of sites. This
product offers significant benefits over current products such as sutures,
staples and conventional adhesive strips in closing wounds where medical glues
are inappropriate due to swelling, tissue loss or skin tension over joints, and
significantly strengthens our product portfolio.
We have broadened our European partner base with the addition of Baxter
Healthcare Europe as our marketing and distribution partner for the key markets
of France and Spain. This has now given us a presence in all the key markets in
Europe for our products for both A&E and Operating Room (OR) use.
The recent launch of LiquiBand LaparoscopicTM takes us into an exciting new
growth area. This product was specifically designed to target wound closure
following laparoscopic (keyhole) surgery, which is an increasingly popular
technique with more than 1 million procedures currently performed in Europe.
Closure of keyhole incisions with glue offers significant advantages to both the
surgeon and patient in terms of clinical and cosmetic outcome. This product is
now on sale in the UK and initial orders have been received from a number of our
European partners. It forms an ideal complement to our LiquiBand SurgicalTM
product which is more suited to larger wounds such as those following Caesarean
sections or hip replacement.
The Company has now initiated the regulatory approval of the LiquiBandTM product
range by the Food & Drug Administration (FDA) in the US. Approval is
anticipated in 2007, which will then give us access to the world's dominant
tissue glue market with a value estimated to be around $100 million. The
approval process is being supported financially by a marketing partner that has
the capability of replicating in the US the success that the product has seen in
Europe in winning market share against the same competitive products. This
offers a very exciting growth opportunity for the Company in the medium to long
term.
Development activity continues to extend the use of our cyanoacrylate glue
technology for closing wounds or protecting skin against breakdown. A number of
projects are under way with partners as well as products under development to
strengthen our direct presence in this evolving market.
Financial Review
Turnover increased 13% to £5.9 million (2004: £5.2 million) for the six months
ended 30 June 2005. Both businesses grew well with advanced woundcare growing
12% and wound closure growing 14%. Turnover increased in the UK by 34% through
direct sales and sales to branded partners despite a slow first quarter caused
by budgetary constraint within the NHS. Sales into Europe grew 6% while sales
into the US declined slightly by 2%. The latter reflecting nothing more
significant than the ordering patterns of some US distributors.
The gross margin for the Company was 37%, which was similar to the previous
year. This is expected to improve as sales of wound closure products increase
and our routes to market broaden.
With net operating expenses of £2.6 million at a similar level to last year
(2004: £2.5 million), the Company reported an operating loss of £0.45 million
(2004: £0.58 million) and a positive EBITDA of £0.1 million (2004: neutral).
The overall loss for the Company narrowed to £0.4 million (2004: £0.55 million).
Working capital decreased to £2.7 million (2004: £3.0 million). Stock increased
by £0.4 million partly to meet the shorter lead times required when selling
direct and partly to cover the commissioning of some new equipment. Trade
debtors increased to £2.3 million (2004: £2.2 million) although debtor days were
reduced to 58 (2004: 64). Creditors increased to £2.5 million (2004: 2.0
million).
Net operating cash flow reduced to an outflow of £0.1 million compared with £1.0
million in the previous period. This leaves the Group with £2.9 million of cash
(2004 : £2.7 million) and net funds of £2.5 million.
Outlook
The outlook for the Company remains positive with the progress made during the
first six months continuing into the second half of the year.
With sufficient cash to take it through to profitability, routes to market
broadened for the existing product range, major growth opportunities afforded by
launching LiquiBandTM in the US and by selling directly to the NHS, the Company
is extremely well positioned for the future.
Dr. Geoffrey N. Vernon
Chairman
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Unaudited Unaudited Audited
six months six months twelve months
ended ended ended
30 June 30 June 31 December
Note 2005 2004 2004
£'000 £'000 £'000
Turnover 2 5,857 5,206 11,019
Cost of sales (3,675) (3,294) (6,913)
Gross profit 2,182 1,912 4,106
Distribution costs (76) (51) (153)
Administration costs (2,632) (2,599) (5,352)
Other operating income 78 154 328
Operating loss (448) (584) (1,071)
Interest receivable and similar income 57 52 114
Interest payable and similar charges (16) (16) (33)
Loss on ordinary activities before taxation (407) (548) (990)
Taxation - - 573
Loss sustained for the period (407) (548) (417)
Basic and fully diluted loss per share 3 (0.29)p (0.39)p (0.3)p
STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
Unaudited Unaudited Audited
six months six months twelve months
ended ended ended
30 June 30 June 31 December
2005 2004 2004
£'000 £'000 £'000
Loss for the financial period (407) (548) (417)
Currency translation differences on
foreign currency net investments (8) (7) (13)
Total recognised losses relating to
the period (415) (555) (430)
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
Unaudited Unaudited Audited
six months six months twelve months
ended ended ended
30 June 30 June 31 December
2005 2004 2004
£'000 £'000 £'000
Opening shareholders' funds 11,574 12,004 12,004
Loss for the period (407) (548) (417)
Currency translation differences on
foreign currency net investments (8) (7) (13)
Closing shareholders' funds 11,449 11,574
11,159
CONSOLIDATED BALANCE SHEETS
Unaudited Unaudited Audited
six months six months twelve months
ended ended ended
30 June 30 June 31 December
2005 2004 2004
£'000 £'000 £'000
Fixed assets
Intangible assets 1,986 2,154 2,070
Tangible assets 3,402 4,030 3,706
5,388 6,184 5,776
Current assets
Stocks 1,895 1,536 1,506
Debtors
- due within one year 3,232 3,189 2,754
- due after more than one year 638 200 638
Cash at bank and in hand 2,859 2,665 3,160
8,624 7,590 8,058
Creditors: amounts falling due within one year (2,528) (1,973) (1,884)
Net current assets 6,096 5,617 6,174
Total assets less current liabilities 11,484 11,801 11,950
Creditors: amounts falling due after more than
one year
(325) (352) (376)
11,159 11,449 11,574
Capital and reserves
Called up share capital 11,782 11,782 11,782
Share premium account 37,978 37,978 37,978
Other reserve 1,531 1,531 1,531
Profit and loss account (40,132) (39,842) (39,717)
Equity shareholders' funds 11,159 11,449 11,574
CONSOLIDATED CASH FLOW STATEMENT
Unaudited Unaudited Audited
six months six months twelve months
ended ended ended
30 June 30 June 31 December
Note 2005 2004 2004
£'000 £'000 £'000
Net cash outflow
from operating activities (122) (967) (595)
Returns on investments and
servicing of finance
Interest received 21 33 102
Interest element of finance lease rental
and hire purchase payments (1) (1) (3)
Interest paid (15) (15) (30)
Net cash inflow from returns on
investments and servicing of finance 5 17 69
Taxation - 167 389
Capital expenditure and financial investment
Purchase of tangible fixed assets (168) (146) (284)
Sale of tangible fixed assets - 1 -
Net cash outflow for capital expenditure
and financial investment (168) (145) (284)
Cash outflow before use of
liquid resources and financing (285) (928) (421)
Management of liquid resources
Sale of term deposits 297 656 203
Financing
Repayment of secured loan 5 (6) (6) (11)
Net movement of capital element of finance
lease rental and hire purchase payments 5 (2) (2) (3)
Net cash outflow from financing (8) (8) (14)
Increase /(decrease) in cash 4 4 (280) (232)
NOTES
1. Basis of Preparation
The interim statements have been prepared in accordance with the accounting
policies set out in the annual report for the year ended 31 December 2004. The
results for the six months ended 30 June 2005 and 30 June 2004 have not been
audited and do not constitute statutory accounts within the meaning of section
240 of the Companies Act 1985.
The results for the year ended 31 December 2004 are extracted from the audited
annual financial statements on which the auditors reported without
qualification. Full financial statements for that year have been filed with the
Registrar of Companies.
2. Segmental information
Unaudited Unaudited Audited
six months six months twelve months
ended ended ended
30 June 30 June 31 December
2005 2004 2004
£'000 £'000 £'000
Turnover by geographical region:
United States of America 993 1,014 2,259
Rest of Europe 3,042 2,863 5,481
United Kingdom 1,543 1,155 2,810
Rest of World 279 174 469
5,857 5,206 11,019
Turnover by business unit:
Advanced woundcare 4,766 4,245 8,893
Wound closure 1,091 961 2,126
5,857 5,206 11,019
It is not possible to identify loss before taxation and net assets by business
unit because of the use of common services.
Turnover, loss before tax and net assets by origin
£'000 £'000 £'000
Turnover
United Kingdom 5,857 5,206 11,019
United States - - -
5,857 5,206 11,019
Loss before Tax
United Kingdom (356) (495) (879)
United States (51) (53) (111)
(407) (548) (990)
Net Assets
United Kingdom 11,159 11,446 11,576
United States - 3 (2)
11,159 11,449 11,574
The turnover and loss before taxation is wholly attributable to the principal
activity of the Group.
3. Loss per share
The basic loss per share has been calculated on a weighted average number of
shares in issue for the six months ended 30 June 2005, namely 142,082,536 (2004:
142,082,536) and losses of £407k (2004: £548k).
4. Reconciliation of net cash flow to movement in net funds (note 5)
Unaudited Unaudited Audited
six months six months twelve months
ended ended ended
30 June 30 June 31 December
2005 2004 2004
£'000 £'000 £'000
Increase/(decrease) in cash during the period 4 (280) (232)
Cash outflow to repay debt and finance leases 8 8 14
Cash inflow from decrease in liquid resources (297) (656) (203)
Change in net funds resulting from cash flows (285) (928) (421)
New finance leases - - (2)
Translation difference (8) (7) (13)
Movement in net funds in the period (293) (935) (436)
Net funds at 1 January 2005 2,810 3,246 3,246
Net funds at 30 June 2005 2,517 2,311 2,810
5. Analysis of net funds
1 January Cash Exchange 30 June
2005 flows movements 2005
£'000 £'000 £'000 £'000
Cash 516 4 (8) 512
Term deposits 2,644 (297) - 2,347
Cash at bank and in hand 3,160 (293) (8) 2,859
Debt due within one year (12) - - (12)
Debt due after one year (322) 6 - (316)
Finance leases (16) 2 - (14)
Total 2,810 (285) (8) 2,517
Advanced Medical Solutions Group plc
Road 3, Winsford Industrial Estate
Winsford, Cheshire, CW7 3PD, UK
Tel: +44 (0)1606 863500 Fax: +44 (0)1606 863600
E-mail: info@admedsol.com Web: www.admedsol.com
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