Preliminary Results
Advanced Medical Solutions Grp PLC
13 March 2007
For Immediate Release 13 March 2007
Advanced Medical Solutions Group plc
('AMS' or 'the Group')
Preliminary Results for the Year Ended 31 December 2006
Winsford, UK: Advanced Medical Solutions Group plc (AIM: AMS), the global
medical technology company, today announces its preliminary results for the year
ended 31 December 2006.
Financial Highlights
Financial position considerably improved:
• Pre-tax profit increased to £0.6 million (2005: £27,000)
• EPS more than doubled to 0.5p (2005: 0.2p)
• Positive total cash flow of £1.2 million (2005: £0.2 million) resulting in
year-end cash of
• £4.6 million (2005: £3.4 million)
• Group turnover up 11% to £14.3 million (2005: £12.9 million) with gross
margin further improved to 42% from 40%
Business Highlights
Continued progress in key organic growth drivers:
• Silver alginate
Further silver alginate launches in US and Europe with strategic partners
• NHS woundcare
NHS direct business building steadily with over 40 Trusts now using
ActivHeal(R) range
• Surgical skin sealant
Kimberly-Clark Health Care launches surgical skin sealant in Europe and US
• New territories
LiquiBand(R) regulatory approval progressing in US
Commenting on the results Dr. Geoffrey Vernon, Chairman of Advanced Medical
Solutions, said:
'I am delighted with the progress AMS has made. During the year the Group has
improved its financial position and progressed on its key future growth
opportunities. The outlook for the Group is extremely positive with a strong
start to 2007.'
For further information, please contact:
Advanced Medical Solutions Group plc
Don Evans, Chief Executive Officer On 13/03/07: +44 (0) 20 7466 5000
Mary Tavener, Finance Director Thereafter : +44 (0) 1606 545508
www.admedsol.com
Buchanan Communications
Mark Court, Mary-Jane Johnson Tel: +44 (0) 20 7466 5000
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
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 a product from 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 topical 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 delighted to inform investors that AMS has gone from strength to strength
in 2006, improving its financial position considerably and progressing key
future growth opportunities.
Group turnover increased 11% to £14.3 million with growth achieved across both
business units, advanced woundcare (up 9%) and wound closure and sealants (up
21%). Gross margins continued to improve from 40% to 42%.
Pre-tax profits increased to £0.6 million following achievement of break-even in
2005. Post-tax profits more than doubled to £0.7 million resulting in earnings
per share (EPS) increasing 150% to 0.5p. EBITDA was up 37% to £1.4 million.
The Group generated a total of £1.2 million of cash in the year resulting in
cash of £4.6 million at the year-end and net funds of £4.2 million (2005: £3.1
million). These results provide a solid financial platform for future growth.
Good progress was made during 2006 with the key identified organic growth
drivers:
• Silver alginate - The Group further strengthened its position in the
dynamic silver alginate market with launches in Europe and the US with
strategic partners.
• NHS woundcare - The number of NHS Trusts using the ActivHeal(R) product
range has doubled to over 40 with good geographical coverage of hospitals
and Primary Care Trusts in England and Scotland in addition to the Northern
Ireland contract.
• Surgical skin sealant - An exciting new market for surgical skin sealants
was entered into with Kimberly-Clark Health Care, a global leader in
infection control in the operating room.
• New territories - US approval of the LiquiBandTM tissue adhesives range
has been progressed with entry expected in 2008.
Operating Review
The Group's core focus remains the development, manufacture and sale of advanced
woundcare dressings and products for closing wounds and sealing tissue.
AMS provides a full range of advanced woundcare dressings for sale into the
hospital, nursing home and community care market. These products are used
mainly for chronic wounds such as ulcers and pressure sores.
Products based upon cyanoacrylate adhesives technology allow the closure of
wounds following trauma or surgical incisions, or seal skin to protect against
breakdown or wound infection. These products address the emerging tissue
adhesives and sealants segment of the wound closure market.
AMS has successfully adopted a three tier route to market strategy:
• Branded Partners - The Group believes that the most effective way of
rapidly commercialising new technologies/concepts on a global basis is
through strategic partnerships with major branded companies.
• Private Label - AMS also addresses the increasing trend towards private
label in advanced woundcare, driven by cost constraints by health care
providers, by provision of own label products to distributors. These
products allow savings to be made on treatment of routine wounds alongside
the use of the new innovative products for more difficult wounds.
• Direct - AMS sells direct to the NHS in its own home market
Advanced Woundcare
Advanced woundcare sales of £11.5 million were up 9% on the prior year.
Following US launches during 2005, the Group further strengthened its position
in the dynamic silver market with the European launch of a range of calcium
alginate woundcare dressings containing ionic silver technology by a number of
branded partners. The ionic silver technology allows AMS to provide selected
partners an entry into the expanding silver alginate woundcare market, which is
currently estimated at over $100 million worldwide and growing in excess of 20%
per year. AMS introduced its fibre-based silver alginate technology into the US
in 2004 and Europe in 2005 under an exclusive, global agreement with a leading
brand. The Group now has a broad range of partners covering different channels
(hospitals, nursing homes, home health) in Europe and the US.
Silver is a broad spectrum anti-microbial that helps to prevent infections such
as MRSA. In combination with alginate, a biopolymer derived from seaweed, AMS
can provide products ideally suited to the treatment of a wide variety of
chronic wounds.
Steady progress continues to be made with the Company's direct ActivHeal(R)
offering to the NHS. More than 40 NHS Hospital and Primary Care Trusts across
the UK have now adopted the ActivHeal(R) range of advanced woundcare products
allowing them to achieve substantial cost savings at a time of severe funding
pressures without compromising patient care. Many more centres are currently
evaluating the product offering. The move to ten Strategic Health Authorities
within the NHS should be a positive development for the business as this should
result in a more streamlined, centralised approach being adopted for product
evaluation and selection. Under the present system each Trust independently
evaluates the product range being offered, which delays the process of
introducing generic substitutes or replacement new products.
We remain confident that our strategy of delivering both innovation to the NHS
through our R&D activities with major branded companies, and offering real cost
savings through the ActivHeal(R) range, will be successful, enabling us to
capture a significant share of the estimated £100 million UK advanced woundcare
market.
Wound Closure and Sealants
The wound closure and sealants business grew 21% to £2.9 million in the period
as the Group maintained its strong market leadership position in the UK Accident
& Emergency arena and strengthened its European partner business.
Based on cyanoacrylate medical adhesive technology, the LiquiBand(R) range
covers products for closure of small cuts and trauma wounds particularly to the
face and scalp, through to large surgical incisions such as caesarean sections
and hip replacements. These products are approved and on sale throughout Europe
for use in Accident & Emergency (A&E) and in operating rooms. A number of NHS
Ambulance Trusts in the UK have also now adopted LiquiBand(R) to close trauma
wounds at the scene of injury, thus potentially reducing the number of A&E
admissions.
Development activity to extend the cyanoacrylate adhesive technology into new
areas has resulted in an exciting strategic partnership with Kimberly-Clark for
a novel surgical skin sealant to help control the risk of skin flora
contamination throughout a surgical procedure, a key factor in the development
of surgical site infections. AMS has developed an innovative film-forming
solution that bonds to the skin sealing off the spaces where bacteria can grow.
Based upon patented technology, the product immobilises endogenous pathogens
thereby reducing the risk of skin flora contamination of the surgical site.
AMS has entered into an exclusive global agreement with Kimberley-Clark Health
Care for the marketing and distribution of the product under the Kimberley-Clark
* InteguSeal Microbial Sealant brand. Following regulatory approvals, this
product was launched in Europe in March 2006 and in the US in February 2007.
Approval of the LiquiBand(R) product range continues to progress in the US. The
Group anticipates entry into this $110 million market in 2008 via a partner with
a product range that is well proven in Europe. We believe this will lead to
significant value creation in future.
Research & Development
The Group continued to build on its previous successful technology programmes in
advanced woundcare dressings, silver alginate and novel tissue adhesives and
sealants, by investing £1 million (7% of turnover) on R&D during 2006. This
activity is maintaining a strong pipeline of new products for our direct
business and as a technology provider for strategic partners.
Board
The AMS Board was strengthened with the appointment of Chris Meredith as
Commercial Director in April 2006 and Steve Bellamy as Non-Executive Director in
February 2007. Chris has made a major contribution to the continued successful
commercialisation of the Company's technologies and Steve's strong City
experience will be of great value as the Group continues to look for strategic
corporate opportunities to enhance growth.
Outlook
The outlook for the Group is extremely positive with a strong start to 2007.
Organic growth is expected to progress due to favourable woundcare demographics,
a blue chip partner base, the dynamic silver market and widening acceptance of
our ActivHeal(R) woundcare range by NHS Trusts in the UK. US approval and entry
for our LiquiBand(R) tissue adhesive range, and the new surgical skin sealant
market entry offer step change opportunities for future growth and value
creation. The Company's move to profitability and positive cash flow is also
allowing management to consider suitable acquisitions to leverage AMS's
technology and distribution base.
I would like to thank all AMS employees for their continued efforts during 2006
in strengthening the Group's position as a profitable, cash generative business.
This is a very exciting time for AMS.
Dr. Geoffrey N. Vernon
Chairman
12 March 2007
Consolidated Profit and Loss Account
For the year ended 31 December 2006
Year ended Year ended
31 December 31 December
2006 2005
Note £'000 £'000
Turnover 7 14,322 12,892
Cost of sales (8,279) (7,753)
Gross profit 6,043 5,139
Distribution costs (107) (123)
Administration costs (6,022) (5,604)
Other operating income 480 546
Operating profit/(loss) 394 (42)
Interest receivable and similar income 204 101
Interest payable and similar charges (29) (32)
Profit on ordinary activities before taxation 569 27
Taxation 167 249
Retained profit for the year 736 276
Earnings per share
Basic 2 0.52p 0.19p
Diluted 2 0.50p 0.19p
The above results relate to continuing operations.
There is no difference between reported and historical profits and losses.
Statement of Total Recognised Gains and Losses
For the year ended 31 December 2006
Group
Year ended Year ended
31 December 31 December
2006 2005
£'000 £'000
Profit for the financial year 736 276
Currency translation differences on foreign currency net 17 (3)
investments
Total profit recognised since last annual report 753 273
Reconciliation of Movements in Shareholders' Funds
For the year ended 31 December 2006
Group Company
Year ended Year ended Year ended Year ended
31 December 31 December 31 December 31 December
2006 2005 2006 2005
£'000 £'000 £'000 £'000
Opening shareholders' funds 11,847 11,574 12,650 12,454
Profit for the financial year 736 276 361 196
Share option cost 60 - 60 -
Currency translation differences on
foreign currency net investments
17 (3) - -
Closing shareholders' funds 12,660 11,847 13,071 12,650
The profit for the Company includes the reversal of a provision against the
carrying value of investments of £388k (2005: £101k).
Balance Sheets
At 31 December 2006
Group Company
2006 2005 2006 2005
£'000 £'000 £'000 £'000
Fixed assets
Intangible assets 1,734 1,902 - -
Tangible assets 2,877 3,403 - -
Investments - - 8,904 9,570
4,611 5,305 8,904 9,570
Current assets
Stocks 1,786 1,669 - -
Debtors - due within one year 3,728 3,247 93 14
- due after more than one year 957 747 200 200
Cash at bank and in hand 4,552 3,388 3,961 2,989
11,023 9,051 4,254 3,203
Creditors: amounts falling due within
one year (2,678) (2,193) (87) (123)
Net current assets 8,345 6,858 4,167 3,080
Total assets less current liabilities 12,956 12,163 13,071 12,650
Creditors: amounts falling due after
more than one year (296) (316) - -
12,660 11,847 13,071 12,650
Capital and reserves
Called up share capital 11,782 11,782 11,782 11,782
Share option reserve 60 - 60 -
Share premium account 37,978 37,978 37,978 37,978
Other reserve 1,531 1,531 - -
Profit and loss account (38,691) (39,444) (36,749) (37,110)
Equity shareholders' funds 12,660 11,847 13,071 12,650
Dr D.W. Evans
Chief Executive Officer
12 March 2007
Consolidated Cash Flow Statement
For the year ended 31 December 2006
Year ended Year ended
31 December 31 December
2006 2005
Note £'000 £'000
Net cash inflow from operating activities 9 1,343 534
Returns on investments and servicing of finance
Interest received 74 131
Interest element of finance lease rental and hire purchase payments (1) (2)
Interest paid (28) (30)
Net cash inflow from returns on investments and servicing of finance 45 99
Taxation 78 189
Capital expenditure and financial investment
Purchase of tangible fixed assets (309) (575)
Receipts from sale of tangible fixed assets 8 -
Net cash outflow from capital expenditure and financial investment (301) (575)
Cash inflow before use of liquid resources and financing 1,165 247
Management of liquid resources
Purchase of term deposits (964) (342)
Financing
Repayment of secured loan 11 (13) (13)
Net movement of capital element of finance lease rental 11
and hire purchase payments (5) (3)
Net cash outflow from financing (18) (16)
Increase/(decrease) in cash 10 183 (111)
Notes to the Accounts
1. No dividend has been proposed.
2. The basic earnings per share has been calculated on a weighted
average number of ordinary shares in issue during the year, namely 142,082,536
(2005: 142,082,536) and profit of £736k (2005: profit of £276k).
The diluted earnings per share has been calculated by adjusting the
weighted average number of ordinary shares in issue to assume conversion of all
dilutive potential shares, namely 146,114,345 (2005: 142,948,093) and a profit
of £736k (2005: profit of £276k).
3. This statement was approved by the Directors and agreed with the
Group's auditors on 12 March 2007. A copy can be obtained from the Secretary at
the Company's Head Office, Road Three, Winsford Industrial Estate, Winsford,
Cheshire CW7 3PD. The accounting policies adopted for the Preliminary Results
will be consistent with the published accounts for year ended 31 December 2006.
4. The figures and financial information for the year 2006 do not
constitute the statutory financial statements for that year.
5. The figures and financial information for the year 2005 do not
constitute the statutory financial statements for that year. Those financial
statements have been delivered to the Registrar and included an auditor's report
which was unqualified.
6. The Annual General Meeting will be held at 11:00am on 6 June 2007 at
Oaklands Hotel, Millington Lane, Gorstage, Weaverham, Northwich, Cheshire
CW8 2SU.
7. Segmental information
Turnover by geographical region: Turnover
2006 2005
£'000 £'000
United Kingdom 4,524 3,731
Rest of Europe 5,600 6,098
United States of America 3,480 2,288
Rest of World 718 775
14,322 12,892
Turnover by business unit: Turnover
2006 2005
£'000 £'000
Advanced woundcare 11,462 10,535
Wound closure and sealants 2,860 2,357
14,322 12,892
It is not possible to identify profit before taxation and net asset by business
unit because of the use of common services.
Turnover, profit/(loss) before tax and net assets by origin:
2006 2006 2006 2005 2005 2005
Turnover Profit/(loss) Net assets Turnover Profit/(loss) Net assets
£'000 £'000 £'000 £'000 £'000 £'000
United Kingdom 14,322 654 12,656 12,892 137 11,845
United States - (85) 4 - (110) 2
Group 14,322 569 12,660 12,892 27 11,847
The turnover and profit before taxation is wholly attributable to the principal
activity of the Group.
8. Operating profit/(loss)
Year ended Year ended
31 December 31 December
2006 2005
£'000 £'000
Operating profit/(loss) arrived at after charging/(crediting):
Depreciation 816 877
Amortisation 168 168
Loss on disposal of fixed assets 11 1
Operating lease rentals - plant and machinery 90 90
- land and buildings 294 294
Auditors' remuneration - statutory audit 38 33
- further assurance services 11 9
- tax compliance 8 15
- tax advisory 4 5
Research and development 973 1,147
Exchange loss/(profit) 105 (47)
9. Reconciliation of operating profit/(loss) to net cash inflow from
operating activities
Year ended Year ended
31 December 31 December
2006 2005
£'000 £'000
Operating profit/(loss) 394 (42)
Depreciation 816 877
Amortisation of intangible fixed assets 168 168
Loss on sale of fixed assets 11 1
Increase in stocks (117) (163)
Increase in debtors (472) (567)
Increase in creditors 483 260
Share options cost 60 -
Net cash inflow from operating activities 1,343 534
10. Reconciliation of net cash flow to movement in net funds:
(Note 11)
Year ended Yearended
31 December 31 December
2006 2005
£'000 £'000
Increase/(decrease) in cash in the year 183 (111)
Cash outflow from reductions in debt and finance leases 18 16
Cash outflow from increase in liquid resources 964 342
Change in net funds resulting from cash flows 1,165 247
Translation difference 17 (3)
Movement in net funds in year 1,182 244
Net funds at 1 January 2006 3,054 2,810
Net funds at 31 December 2006 4,236 3,054
11. Analysis of net funds:
1 January Cash Exchange 31 December
2006 flows Movements 2006
£'000 £'000 £'000 £'000
Cash 402 183 17 602
Term deposits 2,986 964 - 3,950
Cash at bank and in hand 3,388 1,147 17 4,552
Debt due within one year (13) (1) - (14)
Debt due after one year (309) 14 - (295)
Finance leases (12) 5 - (7)
Total 3,054 1,165 17 4,236
This information is provided by RNS
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