Interim Results

RNS Number : 9854C

Advanced Medical Solutions Grp PLC

09 September 2008

For immediate release

9 September 2008

Advanced Medical Solutions Group plc

('AMS' or 'the Group')

Interim Results for the six months ended 30 June 2008

Winsford, UK: Advanced Medical Solutions Group plc (AIM: AMS), the global medical technology company, today announces its interim results for the six months ended 30 June 2008.

Financial Highlights

Strengthened financial position:

Group revenues up 24% to £9.8 million (H1 2007: £7.9 million)

Gross margin further improved to 47% (H1 2007: 43%)
Pre-tax profit up 80% to £1.2 million (H1 2007: £0.7 million)
EPS up 60% to 0.91p (H1 2007: 0.57p)
Net cash inflow from operating activities of £0.5 million (H1 2007: £1.2 million)
Following acquisition of 49.4% of Corpura, net funds of £5.4 million at 30 June 2008 (30 June 2007: £5.0 million)

Business Highlights

Good progress with future growth drivers:

Silver alginate market presence strengthened with additional major branded marketing and distribution partners signed for US and Europe
NHS direct woundcare business continues to build momentum in both Hospital and Primary Care Trusts with full ActivHeal® product range included on new framework agreement
FDA reclassification of topical tissue adhesives has accelerated the US regulatory approval process for the LiquiBand® range
Corpura Joint Venture strengthens AMS' position in hydrophilic polyurethane foams - the largest and fastest growing segment of the advanced woundcare dressings market

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

'I am delighted with the continued progress we have made at AMS, further strengthening our technology portfolio and market presence, supported by our strong financial position.

'With more than two months of the second half of our financial year now completed, I am pleased to report that the Group is trading strongly and the outlook for the business remains very positive.'

For further information, please contact:

Advanced Medical Solutions Group plc	+44 (0) 1606 545508
Don Evans, Chief Executive Officer
Mary Tavener, Group Finance Director
www.admedsol.com

Buchanan Communications	+44 (0) 20 7466 5000
Mark Court / Mary-Jane Johnson / Stasa Filiplic

Landsbanki Securities (UK) Ltd Shaun Dobson, Claes Spang	+44 (0) 20 7426 9000

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 and technologically advanced woundcare products.

In-house natural and synthetic polymer technology is used to provide advanced wound dressings based on the moist healing principle. AMS' 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 a product from design and development through to production and delivery for distribution and sale into customer markets.

The acquisition of 49.4% of Corpura BV in May 2008 strengthened AMS' 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 either for the closure of small cuts and trauma wounds through to large surgical incisions, or for protecting or sealing skin to prevent breakdown or infection.

AMS' products currently serve the majority of the key global markets sold either direct or through strategic partners or distributors.

Chairman's Statement

OVERVIEW

I am pleased to report that AMS has continued to make excellent progress during the first half-year, further strengthening its technology portfolio and market presence, supported by its strong financial position.

Group revenue grew by 24% to £9.8 million and pre-tax profit increased 80% to £1.2 million during the period.

The business continues to generate cash and, after the acquisition of 49.4% of the
Corpura polyurethane foam business, net funds stood at £5.4 million at the half-year end compared with £5.0 million at the previous half-year.

The Corpura joint venture has strengthened AMS' position in the largest, fastest growing segment of the advanced woundcare dressings market and provides an additional materials platform for delivery of new technologies currently under evaluation within R&D.

The re-classification of tissue adhesives by the FDA announced in May 2008 is of enormous significance as it facilitates entry of AMS' LiquiBand® range into the key US market following 510(k) regulatory approval, the application for which is currently underway.

OPERATING REVIEW

Advanced Woundcare

Advanced woundcare sales of £8.1 million were up 29% on the prior half-year, which is well ahead of, currently estimated market growth rates of around 9%.

Silver alginate continues to be a major growth driver for this business segment. AMS has two silver technologies being sold by a number of major branded woundcare companies into the key global market channels: hospitals, nursing homes, home health and burn clinics. The Group's presence in this dynamic market, which is estimated to have a current value of $300 million and to be growing at 20%, was further strengthened by signing new marketing and distribution partners in the US and Europe and broadening the product range.

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

In June, 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.

This is the first procurement project of its type in the medical device arena and involved a robust supplier selection process including clinical user groups to assess economic and clinical aspects of companies' products. The evaluation included cost, quality, clinical data, innovation, manufacturing capability, user education and clinical/technical support.

The ActivHeal® range was rated highly in the assessment reflecting the quality of the comprehensive offering by AMS in this product sector. The product range consists of alginate, foam, hydrocolloid, hydrogel and the recently introduced AquaFiber® high absorbancy, clear gelling dressing.

Inclusion of the full ActivHeal® range on the new framework agreement underpins AMS' NHS direct woundcare business over the next two years. In addition to a strong cost management offering, added value features such as the innovation provided by a UK based R&D and manufacturing presence and the clinical training and education provided by the UK clinical nurse team were also recognised during the supplier assessment process.

In May, 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 Leur, Netherlands. Corpura, which is cash generative and employs 13 people, reported sales of €2.2 million in 2007.

Corpura supplies AMS with base polyurethane foam for inclusion into AMS' foam products. 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 for delivery of higher value technologies to prevent infection and help accelerate wound healing.

Wound Closure and Sealants

The wound closure and sealants business grew in line with expectations at 8% to £1.8 million in the period (H1 2007: 28% to £1.7 million), reflecting Kimberly-Clark Health Care's launch of InteguSeal® and related stocking and pipeline fill in the prior period. Reaction from users and institutions remains positive as clinical evidence is being generated demonstrating the benefits of the product as a means of reducing skin flora contamination of the wound site in a wide range of surgical procedures.

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) arena. The Group has maintained its market leadership in the UK and its Education Programme for minor wound closure was accredited in January by the Royal College of Nursing Accreditation Unit. Containing both theory and a practical skills session this programme enables UK nursing staff to gain an in-depth knowledge of closing wounds by using tissue adhesives in the emergency room for treating small cuts and trauma wounds, and contributes study hours towards their continuing professional development.

The Group is continuing to review its strategy for penetration of the European Operating Room (OR) market where it currently has limited presence through specialist OR distributors. This review includes expanding its direct sales presence, currently limited to the UK Emergency Room arena, together with the development of a range of OR products with strong clinical support.

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 $200 million and growing at a rate of 15%, is the US. Regulatory approval for entering this market is progressing well.

In May, the FDA completed its review of a petition submitted by AMS for re-classification of tissue adhesives for topical approximation of skin. The FDA concluded that these devices should be re-classified from Class III into Class II. This means that 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).

510(k) submissions covering the LiquiBand® tissue adhesive range have been prepared and are currently under review by the FDA with approval anticipated this year allowing AMS entry into the US market in 2009 through marketing partners.

Research & Development

The Group has continued to invest in a strategically aligned and focused R&D programme to deliver future profitable growth.

Short to medium term developments (2008-2009) are focused on fully exploiting silver technologies in advanced woundcare and upgrading the LiquiBand® product range with indication-specific devices.

Longer term research activities (2010-2011) 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 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.

New premises

In July, 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 will be available for fit-out in early 2009 and 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.

FINANCIAL REVIEW

Summary

After a further 6 months of strong operational performance, the operating margin for the Group improved to 10.5% compared with 7.2% for the prior half year and profit before taxation increased 80% to £1.2 million (2007: £0.7 million). Fully diluted earnings per share increased to 0.85p (2007: 0.54p).

In May the Group announced that it had entered a joint venture with Recticel Noord BV to acquire 49.4% of its subsidiary Corpura BV for £1.3 million and to provide funding of £0.7 million.

At the end of the period the Group had net funds of £5.4 million (2007: £5.0 million).

Revenue

Revenue increased 24% to £9.8 million for the first six months ended 30 June 2008. Advanced woundcare sales increased 29% to £8.1 million with silver alginate and alginate sales performing well and with sales of the Activheal® range into the NHS increasing by more than 50%. Wound closure and sealant sales grew 8% to £1.8 million with sales of the surgical skin sealant showing good traction following the previous year's launch.

Revenue growth continues in all key geographical regions. Sales into the UK increased 30% with both partner business and sales to the NHS doing well. Sales into the US grew 52% despite the continuing weak dollar. Approximately 70% of these sales are denominated in dollars. However, as the dollar has been at a comparable rate in H1 2008 compared with H1 2007 there was not a significant impact on revenue. Sales into Europe grew 6% reflecting the ordering patterns of the Group's partners. More than 90% of the Group's sales into Europe are denominated in Sterling so the Group did not see a significant benefit from the strong Euro.

Gross margin and profit from operations

Gross margin increased to 47% (H1 2007: 43%) across the Group with both business segments contributing to the improvement.

Profit from operations increased to £1.0 million or 10.5% of sales, a 79% improvement compared with the first half last year. Administration costs have increased as investment has been made in sales, R&D and administration to support the growth of the business. The segment result for the advanced woundcare business improved to £1.3 million or 16% of sales (H1 2007: 9%). The segment result for the wound closure and sealants business included around £0.3 million of R&D costs relating to obtaining approval to sell LiquiBand® in the USA. Adjusting for these costs the segment result would have been 13% of sales compared with 9% in the previous year.

Other income resulted from fees paid by partners for the development of new products.

Interest and taxation

Net interest was £0.2 million earned on the cash and investment balances in the period.

The Group recognised a tax income of £0.1 million, mainly resulting from an increase in the deferred tax asset.

Earnings per share

The profit after tax for the period was £1.3 million. Basic earnings per share increased 60% to 0.91p and on a fully diluted basis earnings per share increased 57% to 0.85p.

Cash flow and net investments

Cash inflow from operating activities in the first six months was £0.5 million. There was an increase in working capital in the period of £1.1 million with trade receivables increasing by £0.7 million. As reported in the 2007 results, trade receivables were better than expected at the end of the year as some customers paid earlier than expected. Adjusting for this, the increase in trade receivables is in line with the increased revenue of the Group and with the increased volume of business to the USA. Debtor days at the end of June were 55 compared with 52 at the year end. Working capital as a percentage of sales was 16% compared with 12% at the end of the year.

The Group invested £0.4 million in plant and equipment and capitalised £0.1 million of its R&D spend. Around £4 million of capital expenditure has been identified for the fit-`out of the new facility, which will start in 2009. Both cash and financing will be used to fund this fit-out.

On 30 May 2008 AMS acquired 49.4% of Corpura BV, a company based in Etten Leur, Netherlands, from Recticel Holding Noord BV for a cash consideration of £1.3 million and has provided £0.7 million of funding towards the joint venture. Corpura BV develops and produces hydrophilic, polyurethane foams that have medical applications. Details on the joint venture are included in note 6. The joint venture has been accounted for under the equity method.

At the half year the Group's balance sheet remains strong with net funds of £5.4 million.

Principal risks

The principal financial risks affecting the business activities of the Group are detailed on page 20 of the Annual Reports and Accounts for the year ended 31 December 2007. The relocation of the advanced woundcare operations will be a key focus for management over the next eighteen months to ensure minimal disruption to the business.

OUTLOOK

AMS operates in a market whose demographics are extremely favourable, underpinned by an increasing need for products to treat chronic and acute wounds.

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. Entry into the US market with LiquiBand®, expected in 2009, offers a near-term step change opportunity for the business.

With trading continuing to be strong at the start of the second half of the year, the outlook for the business remains very positive.

Dr. Geoffrey N. Vernon

8 September 2008 CONSOLIDATED INCOME STATEMENT

For the six months ended 30 June 2008


		Six months	Six months
		ended	ended	Year ended
		30 June 2008	30 June 2007	31 December 2007
	Note	£'000	£'000	£'000
Revenue	5	9,844	7,932	16,856
Cost of sales		(5,239)	(4,536)	(9,431)
Gross profit		4,605	3,396	7,425
Distribution costs		(75)	(44)	(130)
Administration costs		(3,849)	(2,913)	(6,158)
Profit/(loss) on disposal of property, plant & equipment		10	-	3
Other income		339	138	512
Share of result of joint venture		-	-	-
Profit from operations		1,030	577	1,652
Finance income		181	100	282
Finance costs		(16)	(13)	(29)
Profit before taxation		1,195	664	1,905
Income tax		111	144	331
Profit for the period attributable to equity holders of the parent		1,306	808	2,236
Earnings per share
Basic	4	0.91p	0.57p	1.57p
Diluted		0.85p	0.54p	1.48p

CONSOLIDATED BALANCE SHEET

At 30 June 2008

	Six months		Six months
	ended		ended	Year ended
	30 June 2008		30 June 2007	31 December 2007
	£'000		£'000	£'000
Assets
Non-current assets
Acquired intellectual property rights	1,482	1,650		1,566
Software intangibles	49	25		45
Development costs	369	269		342
Property, plant and equipment	2,914	3,014		2,910
Deferred tax assets	1,849	1,065		1,421
Trade and other receivables	200	200		200
Investment in joint venture	2,020	-		-
	8,883	6,223		6,484
Current assets
Inventories	1,934	1,940		1,726
Trade and other receivables	4,650	3,617		3,504
Tax receivable	-	17		-
Investments	4,817	3,864		6,654
Cash and cash equivalents	846	1,460		876
	12,247	10,898		12,760
Total assets	21,130	17,121		19,244
Liabilities
Current liabilities
Trade and other payables	3,124	2,634		2,909
Other taxes payable	226	100		276
Financial liabilities	16	15		15
Obligations under finance leases	12	6		5
	3,378	2,755		3,205
Non-current liabilities
Financial liabilities	271	286		279
Obligations under finance leases	63	16		14
	334	302		293
Total liabilities	3,712	3,057		3,498
Net assets	17,418	14,064		15,746
Equity
Share capital	7,166	11,823		7,157
Share based payments reserve	224	116		154
Investment in own shares	(18)	-		(13)
Share based payments deferred tax reserve	609	160		320
Share premium	20	37,984		17
Merger reserve	1,531	1,531		1,531
Retained earnings	7,886	(37,550)		6,580
Total equity	17,418	14,064		15,746

CONSOLIDATED Statement of Changes in Equity

Attributable to equity holders of the Group

		Share	Investment	Share based
	Share	based	in own	payments	Share	Merger	Retained
	capital	payments	shares	deferred tax	premium	reserve	earnings	Total
	£'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	-	70	-	-	-	-	-	70
Share based payments - deferred tax	-	-	-	289	-	-	-	289
Issue of share capital	5	-	-	-	-	-	-	5
Share options exercised	4	-	-	-	3	-	-	7
Shares purchased by EBT	-	-	(89)	-	-	-	-	(89)
Shares sold by EBT	-	-	84	-	-	-	-	84
Consolidated profit for the period to 30 June 2008	-	-	-	-	-	-	1,306	1,306

At 30 June 2008	7,166	224	(18)	609	20	1,531	7,886	17,418

		Share	Investment	Share based
	Share	based	in own	payments	Share	Merger	Retained
	capital	payments	shares	deferred tax	premium	reserve	earnings	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000

At 1 January 2007	11,782	60	-	67	37,978	1,531	(38,369)	13,049

Share based payments	-	94	-	-	-	-	-	94
Share based payments - deferred tax	-	-	-	253	-	-	-	253
Issue of share capital	34	-	-	-	-	-	-	34
Share options exercised	19	-	-	-	17	-	-	36
Cancellation of deferred shares	(4,678)	-	-	-	-	-	4,678	-
Cancellation of share premium account	-	-	-	-	(37,978)	-	37,978	-
Shares purchased by EBT	-	-	(34)	-	-	-	-	(34)
Shares sold by EBT	-	-	21	-	-	-	-	21
Surplus on EBT	-	-	-	-	-	-	57	57
Consolidated profit for the year to 31 December 2007	-	-	-	-	-	-	2,236	2,236

At 31 December 2007	7,157	154	(13)	320	17	1,531	6,580	15,746

CONSOLIDATED CASH FLOW STATEMENT

For the six months ended 30 June 2008

	Six months	Six months
	Ended	ended	Year ended
	30 June 2008	30 June 2007	31 December 2007
	£'000	£'000	£'000
Cash flows from operating activities
Profit from operations	1,030	577	1,652
Adjustments for:
Depreciation	343	383	686
Amortisation - intellectual property rights	84	84	168
- development costs	92	13	16
- software intangibles	11	8	19
Profit on sale of non-current assets	(10)	-	(3)
Decrease/(increase) in inventories	(208)	(154)	60
Decrease/(increase) in trade and other receivables	(1,073)	124	396
Increase in trade and other payables	137	86	603
Share based payments expense	70	56	94
Net cash inflow from operating activities	476	1,177	3,691
Cash flows from investing activities
Proceeds on disposal of property, plant and equipment	25	-	3
Purchase of software	(15)	(5)	(35)
Research and development	(119)	(303)	(294)
Purchases of property, plant and equipment	(362)	(228)	(502)
Taxation	-	-	9
Investment in money market deposits	1,837	86	(2,704)
Interest received	108	78	101
Investment in joint venture	(2,020)	-	-
Net cash used in investing activities	(546)	(372)	(3,422)
Cash flows from financing activities
Finance lease	50	15	(8)
Repayment of secured loan	(1)	(7)	(15)
Issue of equity shares	12	47	70
Shares purchased by EBT	(89)	-	(34)
Shares sold by EBT	84	-	21
Interest paid	(16)	(13)	(29)
Net cash from financing activities	40	42	5
Net (decrease)/increase in cash and cash equivalents	(30)	847	274
Cash and cash equivalents at the beginning of the period	876	602	602
Foreign exchange rate adjustments	-	11	-
Cash and cash equivalents at the end of the period	846	1,460	876

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 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 2007 comprise the Company and its subsidiaries (together referred to as the 'Group').

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

2. 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 2007 and those to be adopted at 31 December 2008. The results for the six months ended 30 June 2007 and 30 June 2008 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 2007 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.

The accounting policies set out below have been applied consistently to all periods presented in the financial statements.

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

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.

4. Earnings per share

	Six months	Six months	Year
	ended	ended	ended
	30 June 2008	30 June 2007	31 December 2007
	£'000	£'000	£'000
Earnings for the purposes of basic and diluted earnings per share being net profit attributable to equity holders of the parent	1,306	808	2,236

Number of shares	'000	'000	'000
Weighted average number of ordinary shares for the purposes of basic earnings per share	143,198	142,430	142,535

Effect of dilutive potential ordinary shares:
share options, deferred share bonus, LTIPs	10,054	6,668	8,684
Weighted average number of ordinary shares for the purposes of diluted earnings per share	153,252	149,098	151,219

5. 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.

Inter-segment 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 six months ended 30 June 2008 £'000	Wound closure & sealants six months ended 30 June 2008 £'000	Eliminations six months ended 30 June 2008 £'000	Consolidated six months ended 30 June 2008 £'000
Revenue
External sales	8,037	1,807	-	9,844
Inter-segment sales	20	-	(20)	-
Total revenue	8,057	1,807	(20)	9,844

Inter-segment sales are charged at prevailing market prices.

Result
Segment result	1,296	(53)	-	1,243
Unallocated expenses	-	-	-	(213)
Profit from operations	-	-	-	1,030
Finance income	-	-	-	181
Finance costs	-	-	-	(16)
Profit before tax	-	-	-	1,195
Tax	-	-	-	111
Profit for the year				1,306

Note: Included within the advanced woundcare segment result is £nil in respect of the results of Corpura BV 5. Segment information continued

Other information	Advanced woundcare six months ended 30 June 2008 £'000		Wound closure & sealants six months ended 30 June 2008 £'000	Eliminations six months ended 30 June 2008 £'000	Consolidated six months ended 30 June 2008 £'000
Capital additions:
Software intangibles		11	4	-	15
Research & development		97	22	-	119
Property, plant and equipment		232	130	-	362
Depreciation and amortisation		381	149	-	530
Balance sheet
Assets
Segment assets		12,582	4,344	-	16,926
Unallocated assets					4,204
Consolidated total assets					21,130
Liabilities
Segment liabilities		2,488	1,003	-	3,491
Unallocated liabilities					221
Consolidated total liabilities					3,712

Note: Included in advanced woundcare segment assets is £2,020k in respect of Corpura BV.

2007	Advanced woundcare six months ended 30 June 2007 £'000	Wound closure & sealants six months ended 30 June 2007 £'000	Eliminations six months ended 30 June 2007 £'000	Consolidated six months ended 30 June 2007 £'000
Revenue
External sales	6,262	1,670	-	7,932
Inter-segment sales	3	-	(3)	-
Total revenue	6,265	1,670	(3)	7,932

Inter-segment sales are charged at prevailing market prices.

Result
Segment result	556	153	-	709
Unallocated expenses				(132)
Profit from operations				577
Finance income				100
Finance costs				(13)
Profit before tax				664
Tax				144
Profit for the year				808

5. Segment information continued

		Wound
	Advanced	closure &
	woundcare	Sealants	Eliminations	Consolidated
	six months	six months	six months	six months
	ended	Ended	ended	Ended
	30 June 2007	30 June 2007	30 June 2007	30 June 2007
Other information	£'000	£'000	£'000	£'000
Capital additions;
Software intangibles	5	-		5
Research & development	226	77		303
Property, plant and equipment	105	123		228
Depreciation and amortisation	364	116		480

Balance sheet
Assets
Segment assets	8,550	4,132		12,682
Unallocated assets				4,439
Consolidated total assets				17,121

Liabilities
Segment liabilities	1,722	1,109		2,831
Unallocated liabilities				226
Consolidated total liabilities				3,057

2007		Advanced woundcare year ended 31 December 2007 £'000	Wound closure & sealants year ended 31 December 2007 £'000	Eliminations year ended 31 December 2007 £'000	Consolidated year ended 31 December 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)
Profit from operations				1,652
Finance income				282
Finance costs				(29)
Profit before tax				1,905
Tax				331
Profit for the year				2,236

5. Segment information continued

		Wound
	Advanced	closure &
	woundcare	sealants	Eliminations	Consolidated
	year	year	year	Year
	ended	ended	ended	Ended
	31 December 2007	31 December 2007	31 December 2007	31 December 2007
Other information	£'000	£'000	£'000	£'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
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:

	Six months ended	Six months ended	Year ended
	30 June 2008	30 June 2007	31 December 2007
	£'000	£'000	£'000
United Kingdom	3,568	2,738	5,731
Europe excluding United Kingdom	3,678	3,469	6,686
United States of America	2,467	1,620	4,217
Rest of World	131	105	222
	9,844	7,932	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.

6. Investment in joint venture

On 30 May 2008 the Group and Recticel formed a joint venture relating to Corpura BV, Recticel's fully owned subsidiary. The Group acquired 49.4 per cent of the issued share capital of Corpura BV for £1.3m and has provided funding of £0.7m for the J.V. Corpura BV develops and produces hydrophilic polyurethane foams in Etten Leur, Netherlands.