Preliminary Results
Advanced Medical Solutions Grp PLC
14 March 2006
For Immediate Release 14 March 2006
Advanced Medical Solutions Group plc
('AMS' or 'the Group')
Preliminary Results for the Year Ended 31 December 2005
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 2005.
Highlights
• Company reports maiden profits
• EBITDA £1.0 million positive (2004 : break-even)
• Group turnover up 17% to £12.9 million (2004 : £11 million)
• Gross margin further improved from 37% to 40%
• Positive total cash flow resulting in year-end cash of £3.4 million
(2004 : £3.2 million)
• New products launched and partnerships extended:
- Silver alginate launches in US and Europe
- LiquiBand LaparoscopicTM launched throughout Europe
- Global deal with Kimberly-Clark for skin sealant
• Group well positioned for future growth:
- US approval of LiquiBandTM range underway
- Products undergoing approval in Japan and in China
- NHS direct business building steadily
Commenting on the results Dr. Geoffrey Vernon, Chairman of Advanced Medical
Solutions, said:
'I am delighted that the Group has delivered maiden profits. This provides a
solid financial platform to accelerate growth and the outlook for the business
is extremely positive.'
For further information, please contact:
Advanced Medical Solutions Group plc On 14/03/06: +44 (0) 20 7466 5000
Don Evans, Chief Executive Thereafter: : +44 (0) 1606 545508
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 delighted to inform investors that AMS has delivered maiden profits
following a profitable second half year.
Group turnover was up 17% to £12.9 million for the full year, with growth
achieved across both business units, advanced woundcare and wound closure, and
in all key markets. In advanced woundcare, the branded and private label
partner business grew at double the market rate as the Company strengthened its
position in the dynamic silver alginate market with further launches in US and
Europe during 2005. Good progress was made in the UK in establishing the
ActivHeal(R) generic woundcare range. Independent technical and clinical
evaluations have shown that these products offer equivalent performance when
compared with branded products while still maintaining the quality of patient
care. The ActivHeal(R) range has been shown to significantly reduce the cost of
treating wounds, offering real and immediate savings to the NHS. These savings
are estimated to be of the order of £25 million per year. In wound closure, the
Company broadened its LiquiBandTM product range, is currently in the process of
obtaining approval for these products in the US, Japan and China, and
strengthened its position in Europe with the launch of LiquiBand LaparoscopicTM.
The turnover growth, together with further improvement in gross margin from 37%
to 40%, and continued control of operating expenses, resulted in a small pre-tax
profit in 2005 compared with a £1.0 million loss in the prior year. A post-tax
profit of £0.3 million was reported following recognition of an R & D tax credit
and a deferred tax asset. EBITDA improved from break-even to £1.0 million for
the period. The Group generated a total of £0.2 million of cash in the year
resulting in cash of £3.4 million at the year-end.
Good progress has been made during 2005 in positioning the Company for major
future growth opportunities in key business areas and global markets. By
delivering its stated strategy of bringing the existing business through to
break-even within current cash, management has now provided a solid financial
platform for this future growth.
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
cyanoacrylate technology address the emerging tissue adhesives segment of the $5
billion wound closure market. This market is currently accessed 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 the ActivHeal(R)
brand.
Progress continues to be made in reducing the Group's dependence on the
performance of its major branded partners for delivering revenue growth and
profit. Its 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 £10.5 million were up 18% on the prior year, which
at double the market growth rate reflects good progress made in gaining market
share.
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 infections such as MRSA. 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 its route to market strategy
whereby the Company licenses its new technology to major branded partners that
are best placed to create these markets on a global basis, whilst the Company
also addresses 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 its ActivHeal(R) brand.
Further progress has been made with the ActivHeal(R) offering during the year.
Independent technical and clinical assessment has shown that ActivHeal(R)
products are equivalent to or better than the branded versions whilst offering
significant savings, typically 40%, against current spend. This represents £25
million per year in England and Scotland at a time of severe funding pressure.
Nine Trusts are currently using ActivHeal(R) and realising savings. Central
decision making bodies are now being targeted to encourage early adoption and
savings throughout the NHS to accelerate this programme.
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
a marketing partner, Nitto Medical.
Wound Closure
The wound closure business grew 11% to £2.4 million in the year despite a slow
first quarter in the NHS due to pressure on budgets. Although the core Accident
& Emergency (A&E) business was affected, the Company maintained its strong
market leadership position.
The European partner base has been broadened with the addition of Baxter
Healthcare Europe as a marketing and distribution partner for the key markets of
France and Spain. This has now provided the Company with a presence in all the
key markets in Europe for the products to be used in both A&E and the Operating
Room (OR).
The launch of LiquiBand LaparoscopicTM takes the Company 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 per
year. Closure of keyhole incisions with adhesives offers significant advantages
to both the surgeon and patient in terms of clinical and cosmetic outcome. This
product is now on sale throughout Europe. It forms an ideal complement to the
LiquiBand SurgicalTM product which is more suited to larger wounds such as those
following Caesarean sections or hip replacement.
The Company has also 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 provide access to the major part of the global
$100 million tissue adhesives market. The Company is also progressing
regulatory approval of wound closure products in Japan and China. These
approvals in the US and Far East markets offer very exciting growth
opportunities for the Company in the medium to long term.
Development activity continues with a view to extending the use of cyanoacrylate
technology for closing wounds and protecting skin against breakdown. The
strategic partnership with Kimberly-Clark for a novel surgical skin sealant
announced in March 2006, offers a very exciting new business opportunity. The
Company expects to make further major announcements about technology
developments in 2006.
Outlook
The outlook for the Group is extremely positive. Good progress has been made
during the year in growing market share and the Group is well positioned for
continued organic growth in key global markets with its major branded and
private label partners and through its direct UK sales into the NHS.
The Group's cash position and AIM status provide it with the opportunity to
accelerate growth by making suitable acquisitions which fit with the Group's
stated strategy and technologies.
I would like to thank all AMS employees for their efforts over the past year,
particularly in bringing the business through to profitability.
The Group is making excellent progress in delivering a profitable high value
medical technology business for its stakeholders.
Dr. Geoffrey N. Vernon
Chairman
13 March 2006
Consolidated Profit and Loss Account
For the year ended 31 December 2005
Year ended Year ended
31 December 31 December
2005 2004
Note £'000 £'000
Turnover 7 12,892 11,019
Cost of sales (7,753) (6,913)
Gross profit 5,139 4,106
Distribution costs (123) (153)
Administration costs (5,604) (5,352)
Other operating income 546 328
Operating loss (42) (1,071)
Interest receivable and similar income 101 114
Interest payable and similar charges (32) (33)
Profit/(loss) on ordinary activities before taxation 27 (990)
Taxation 249 573
Profit/(loss) sustained for the year 276 (417)
Earnings/(loss) per share
Basic 2 0.19p (0.3)p
Diluted 2 0.19p (0.3)p
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 2005
Group
Year ended 31 Year ended
December 31 December
2005 2004
£'000 £'000
Profit/(loss) for the financial year 276 (417)
Currency translation differences on foreign currency net (3) (13)
investments
Total profit/(losses) recognised since last annual 273 (430)
report
Reconciliation of Movements in Shareholders' Funds
For the year ended 31 December 2005
Group Company
Year ended Year ended Year ended Year ended
31 December 31 December 31 December 31 December
2005 2004 2005 2004
£'000 £'000 £'000 £'000
Opening shareholders' funds 11,574 12,004 12,454 12,758
Profit/(loss) for the financial year 276 (417) 196 (304)
Currency translation differences on foreign (3) (13) - -
currency net investments
Closing shareholders' funds 11,847 11,574 12,650 12,454
The profit for the Company includes a reversal of an exceptional write-down in
the value of investments of £101k (2004: £427k).
Balance Sheets
At 31 December 2005
Group Company
2005 2004 2005 2004
£'000 £'000 £'000 £'000
Fixed assets
Intangible assets 1,902 2,070 - -
Tangible assets 3,403 3,706 - -
Investments - - 9,570 9,589
5,305 5,776 9,570 9,589
Current assets
Stocks 1,669 1,506 - -
Debtors 3,247 2,754 14 72
- due within one year
- due after more than one year 747 638 200 200
Cash at bank and in hand 3,388 3,160 2,989 2,755
9,051 8,058 3,203 3,027
Creditors: amounts falling due within one year (2,193) (1,884) (123) (162)
Net current assets 6,858 6,174 3,080 2,865
Total assets less current liabilities 12,163 11,950 12,650 12,454
Creditors: amounts falling due after more than (316) (376) - -
one year
11,847 11,574 12,650 12,454
Capital and reserves
Called up share capital 11,782 11,782 11,782 11,782
Share premium account 37,978 37,978 37,978 37,978
Other reserve 1,531 1,531 - -
Profit and loss account (39,444) (39,717) (37,110) (37,306)
Equity shareholders' funds 11,847 11,574 12,650 12,454
Dr D W Evans
Chief Executive Officer
13th March 2006
Consolidated Cash Flow Statement
For the year ended 31 December 2005
Year ended Year ended
31 December 31 December
2005 2004
Note £'000 £'000
Net cash inflow/(outflow) from operating activities 534 (595)
Returns on investments and servicing of finance
Interest received 131 102
Interest element of finance lease rental and hire purchase (2) (3)
payments
Interest paid (30) (30)
Net cash inflow from returns on investments and servicing of 99 69
finance
Taxation 189 389
Capital expenditure and financial investment
Purchase of tangible fixed assets (575) (284)
Net cash outflow for capital expenditure and financial (575) (284)
investment
Cash inflow/(outflow) before use of liquid resources and 247 (421)
financing
Management of liquid resources
(Purchase) / Sale of term deposits (342) 203
Financing
Repayment of secured loan 9 (13) (11)
Net movement of capital element of finance lease rental 9 (3) (3)
and hire purchase payments
Net cash outflow from financing (16) (14)
Decrease in cash 8 (111) (232)
Notes to the Accounts
1. No dividend has been proposed.
2. The basic earnings/(loss) per share has been calculated on a weighted
average number of ordinary shares in issue during the year, namely 142,082,536
(2004: 142,082,536) and profit of £276k (2004: loss of £417k).
The diluted earnings/(loss) 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 142,948,093 (2004: 142,082,536) and a profit
of £276k (2004: loss of £417k).
3. This statement was approved by the Directors and agreed with the
Group's auditors on 10 March 2006. 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 2005.
4. The figures and financial information for the year 2005 do not
constitute the statutory financial statements for that year.
5. The figures and financial information for the year 2004 do not
constitute the statutory financial statements for that year. Those financial
statements have been delivered to the Registrar and included an auditors' report
which was unqualified.
6. The Annual General Meeting will be held at 11:00am on 31 May 2006 at
Oaklands Hotel, Millington Lane, Gorstage, Weaverham, Northwich, Cheshire CW8
2SU.
7. Segmental information
Turnover by geographical region: Turnover
2005 2004
£'000 £'000
United States of America 2,288 2,259
Rest of Europe 6,098 5,481
United Kingdom 3,731 2,810
Rest of World 775 469
12,892 11,019
Turnover by business unit: Turnover
2005 2004
£'000 £'000
Advanced woundcare 10,535 8,893
Wound closure 2,357 2,126
12,892 11,019
It is not possible to identify profit/(loss) 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:
2005 2005 2005 2004 2004 2004
Turnover Profit/(loss) Net assets Turnover Loss Net assets
£'000 £'000 £'000 £'000 £'000 £'000
United Kingdom 12,892 137 11,845 11,019 (879) 11,576
United States - (110) 2 - (111) (2)
Group 12,892 27 11,847 11,019 (990) 11,574
The turnover and profit/(loss) before taxation is wholly attributable to the
principal activity of the Group.
8. Reconciliation of net cash flow to movement in net funds: (Note 9)
Year ended Year ended
31 December 31 December
2005 2004
£'000 £'000
Decrease in cash in the year (111) (232)
Cash outflow from reductions in debt and finance leases 16 14
Cash outflow/(inflow) from increase/(decrease) in liquid 342 (203)
resources
Change in net funds resulting from cash flows 247 (421)
New finance leases - (2)
Translation difference (3) (13)
Movement in net funds in year 244 (436)
Net funds at 1 January 2005 2,810 3,246
Net funds at 31 December 2005 3,054 2,810
9. Analysis of net funds:
1 January Cash flows Exchange 31 December
movements
2005 2005
£'000 £'000 £'000 £'000
Cash 516 (111) (3) 402
Term deposits 2,644 342 - 2,986
Cash at bank and in hand 3,160 231 (3) 3,388
Debt due within one year (12) (1) - (13)
Debt due after one year (322) 13 - (309)
Finance leases (16) 4 - (12)
Total 2,810 247 (3) 3,054
This information is provided by RNS
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