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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Advanced Medical Solutions Group Plc | LSE:AMS | London | Ordinary Share | GB0004536594 | ORD 5P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| -0.80 | -0.43% | 185.80 | 185.60 | 187.00 | 188.80 | 185.20 | 187.40 | 272,263 | 16:35:08 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Plastics,resins,elastomers | 126.21M | 15.89M | 0.0732 | 25.44 | 404.45M |
TIDMAMS
RNS Number : 7521J
Advanced Medical Solutions Grp PLC
14 September 2016
For immediate release 14 September 2016
Advanced Medical Solutions Group plc
("AMS" or the "Group")
Interim Results for the six months ended 30 June 2016
Winsford, UK, 14 September 2016: Advanced Medical Solutions Group plc (AIM: AMS), the surgical and advanced woundcare specialist company, today announces its interim results for the six months ended 30 June 2016.
Financial Highlights:
Hot Features
Premium
H1 H1 Reported Growth
2016 2015 growth at constant
currency(1)
--------------------------- ------- ------ --------- -------------
Group revenue (GBP
million) 39.2 32.7 20% 17%
--------------------------- ------- ------ --------- -------------
Adjusted(2) profit
before tax (GBP million) 9.5 8.2 16%
--------------------------- ------- ------ --------- -------------
Profit before tax (GBP
million) 9.0 8.0 13%
--------------------------- ------- ------ --------- -------------
Adjusted(2) diluted
earnings per share
(pence) 3.68p 3.23p 14%
--------------------------- ------- ------ --------- -------------
Diluted earnings per
share (pence) 3.46p 3.15p 10%
--------------------------- ------- ------ --------- -------------
Net operating cash
flow before exceptional
items(3) (GBP million) 9.8 7.9 23%
--------------------------- ------- ------ --------- -------------
Net cash (GBP million)(4) 41.1 22.6 82%
--------------------------- ------- ------ --------- -------------
Interim dividend per
share (pence) 0.30p 0.25p 20%
--------------------------- ------- ------ --------- -------------
Business Highlights:
-- Good sales progress across all Business Units
o Branded Distributed revenues up 50% to GBP9.6 million (2015 H1: GBP6.4 million) and by 46% at constant currency
o Branded Direct revenues up 8% to GBP12.0 million (2015 H1: GBP11.1 million) and by 5% at constant currency
o OEM revenues up 9% to GBP14.7 million (2015 H1: GBP13.5 million) and by 8% at constant currency
o Bulk Materials revenues up 66% to GBP2.8 million (2015 H1: GBP1.7 million) and by 60% at constant currency
-- Continued improvement and strong performance in the US with LiquiBand(R) tissue adhesive range
o Revenues up 83% to GBP6.0 million (2015 H1: GBP3.3 million), and by 74% at constant currency
o Market share by volume increased to 19% (December 2015: 17%) in the combined hospital and non-hospital market
-- Expanded use of Hernia Mesh Fixation device, LiquiBand(R) Fix8(TM), with GBP0.8 million of sales (2015 H1: GBP0.4 million)
-- Sales of RESORBA(R) branded products into Germany and Czech Republic up 9% to GBP6.4 million (2015 H1: GBP5.9 million) and by 4% at constant currency
-- ActivHeal sales flat, although market share continues to grow
-- R&D pipeline delivering results with antimicrobial foam dressings and atraumatic foam dressings, now both launched into Europe
-- First sales of RESORBA(R) sutures into the US with positive initial feedback
Commenting on the interim results, Chris Meredith, CEO of AMS, said:
"The first half of 2016 has seen another period of strong financial growth by the Group. As was disclosed at the time of our trading update in July, revenues (primarily as a result of currency effects) were expected to be ahead and profitability to be in line with current market expectations for the full year. This continues to be the case.
"AMS continues to grow market share in the US tissue adhesives market with LiquiBand(R) performing strongly now holding 19% of the total market. LiquiBand(R) Fix8(TM), our innovative new surgical device currently used for Hernia Mesh Fixation, is also performing well and has now been launched into a further five countries, and we are currently exploring other indications for its use. In addition, following the regulatory approvals gained in 2015, we have successfully launched two new ranges of foam dressings into Europe and have made our first sales of sutures into the US.
"The business is in robust health and the Board remains optimistic about our longer-term organic growth prospects and our innovative R&D pipeline. The Board is regularly evaluating acquisition opportunities to complement our organic growth and to optimise the value of our strong financial position."
- End -
1 Constant currency removes the effect of currency movements by re-translating the current period's performance at the previous period's exchange rates
2 All items are shown before exceptional items which, in 2016 H1 were GBP0.4 million (2015 H1: GBPnil) and before amortisation of acquired intangible assets which, in 2016 H1, were GBP0.1 million (2015 H1: GBP0.2 million) as defined in the financial review
3 Operating cash flow is arrived at by taking the operating profit for the period before exceptional items of GBP0.4 million (2015 H1: GBPnil) and adjusting it for depreciation, amortisation, working capital movements and other non cash items
4 Net cash is defined as cash and cash equivalents plus short term investments less financial liabilities and bank loans
For further information, please contact:
Advanced Medical Solutions Group Tel: +44 (0)
plc 1606 545508
Chris Meredith, Chief Executive
Officer
Mary Tavener, Group Finance Director
Consilium Strategic Communications Tel: +44 (0)
20 3709 5700
Mary-Jane Elliott / Jonathan
Birt / Matthew Neal / Hendrik
Thys
Investec Bank plc (NOMAD) & Broker Tel: +44 (0)
20 7597 5970
Daniel Adams / Patrick Robb
About Advanced Medical Solutions Group plc
AMS is a world-leading independent developer and manufacturer of innovative and technologically advanced products for the global surgical, wound care and wound closure markets, focused on quality outcomes for patients and value for payers. AMS has a wide range of products that include silver alginates, alginates, foams, tissue adhesives, sutures and haemostats, which it markets under its brands ActivHeal(R) , LiquiBand(R) and RESORBA(R) as well as supplying under white label.
AMS's products, manufactured out of two sites in the UK, one in the Netherlands, two in Germany and one in the Czech Republic, are sold in 75 countries via a network of multinational or regional partners and distributors, as well as via AMS's own direct sales forces in the UK, Germany, the Czech Republic and Russia. Established in 1991, the Group has 530 employees. For more information please see www.admedsol.com.
Chairman's Statement
AMS continues to perform well across the Group and is on track to deliver another year of good growth.
In summary our key achievements within the period are as follows:
One of our key products, LiquiBand(R) , increased market share to 19% in the US tissue adhesive market and separately, in the US, following FDA approval in November 2015, we are now pleased to have initiated our first sales of RESORBA(R) sutures into this important market.
During the period we also launched two new ranges of foam dressings. Our antimicrobial foam dressing was launched into Europe following the CE mark approval that we received in August 2015. This foam incorporates PHMB (polyhexamethylene biguanide), which has been shown to be effective against several bacteria and known hospital "super bugs", strengthening AMS's position in the antimicrobial advanced woundcare market. In addition, our foam portfolio was further increased by the launch of our new atraumatic silicone foam dressing range.
Financially, we remain very strong. In the first six months of the year, revenue increased by 20% to GBP39.2 million (2015 H1: GBP32.7 million), representing growth of 17% at constant currency and adjusted profit before tax(5) increased by 16% to GBP9.5 million (2015 H1: GBP8.2 million). Our net cash position has increased to GBP41.1 million as at 30 June 2016 (31 December 2015: GBP34.2 million).
To further accelerate our growth beyond our own strong organic means, we continue to evaluate and consider potential acquisitions that are in line with the Group's strategy.
Dividend
The Board intends to pay an interim dividend of 0.30p per share (2015 H1: 0.25p), an increase of 20%, on 28 October 2016 to shareholders on the register at the close of business on 30 September 2016.
Team
On behalf of the Board, I would like to thank all Group employees for their continued hard work that has helped AMS to prosper as a global medical technology business, as well as our customers, suppliers, business partners and shareholders for their continued support.
Outlook
The Group continues to trade in line with current market expectations for profit and, as a result of the positive impact of currency, ahead of market expectations for revenue for the year ending 31 December 2016.
Peter Allen
Chairman
5 Adjusted profit before tax is adjusted for exceptional items and amortisation of acquired intangible assets
Chief Executive's Review
I am pleased to report another six months of good performance at AMS across all of our Business Units.
Business Review
Branded Distributed
Branded Distributed revenue was 50% higher at GBP9.6 million (2015 H1: GBP6.4 million) and 46% higher at constant currency.
LiquiBand(R) in the US
Sales of LiquiBand(R) into the US continue to perform well and have increased by 83% to GBP6.0 million and by 74% at constant currency (2015 H1: GBP3.3 million) with our portfolio of cyanoacrylate formulations successfully addressing the needs of the market.
Latest industry data shows our overall market share by volume increasing to 19% up from 17% as at December 2015 and we are well on our way to meeting our original target of gaining 20% of the US topical tissue adhesives market share by volume. We still expect to see significant gains from the current level over the next five years.
LiquiBand(R) in the EU and ROW
LiquiBand(R) sales through our export distributors have continued to perform well and have shown good growth in the EU and ROW with sales increasing by 17% to GBP0.9 million (2015 H1: GBP0.7 million) at both reported and constant currency.
LiquiBand(R) Fix8(TM)
LiquiBand(R) Fix8(TM) is used to fix hernia meshes in place, and was first launched in Europe in the second half of 2014. It was the Group's first application using our medical cyanoacrylate technology inside the body. Surgeon response to this product has been positive and sales have increased by 94% at both reported and constant currency to GBP0.5 million (2015 H1: GBP0.3 million). We have now launched this product in a further five countries.
Following positive feedback from surgeons, we now expect to develop further opportunities for this kind of application, broadening the market for the use of adhesives internally. This is an important part of our strategy to increase our penetration of the Operating Room ("OR").
RESORBA(R)
Sales of RESORBA(R) products to all export markets, excluding Russia, increased 12% at reported currency to GBP1.6 million (2015 H1: GBP1.4 million), and by 8% at constant currency.
Sales into the Russian market, increased 7% to GBP0.48 million (2015 H1: GBP0.42 million) at reported currency and by 21% at constant currency. However, market conditions in this territory remain challenging.
Regulatory approval to supply RESORBA(R) sutures into the US market was obtained for the majority of our suture product portfolio in November 2015. We have now launched a range of dental sutures through a new distributor with a strong dental focus. The initial sales of GBP0.1 million will include an element of stocking, however, initial feedback has been positive and we expect further orders this year.
We are building on the success of this Business Unit by increasing our sales and marketing resource in the US and Europe as well as establishing a presence in the Far East which presents an opportunity in a region where we believe the quality of our products will drive success.
Branded Direct
The reported revenue for the Branded Direct business unit was 8% higher at GBP12.0 million (2015 H1: GBP11.1 million) and 5% higher at constant currency.
Following the initiatives that were taken in 2015, we are pleased with the initial progress that has been made.
LiquiBand(R)
UK sales of LiquiBand(R) into the Accident and Emergency Room ("A&E") increased 9% to GBP1.2 million (2015 H1: GBP1.1 million) while sales into the OR increased 28% to GBP0.5 million (2015 H1: GBP0.4 million).
As expected, we are seeing the return to growth of our LiquiBand(R) accounts following the changes implemented, while sales into the OR have been enhanced by LiquiBand(R) Fix8(TM).
Sales of LiquiBand(R) into Germany increased by 26% to GBP0.9 million (H1 2015: GBP0.7 million) and by 20% at constant currency with sales of LiquiBand(R) Fix8(TM) doubling in the same period.
ActivHeal(R)
Sales of our ActivHeal(R) range of wound care dressings into the NHS were flat at GBP2.9 million (2015 H1: GBP2.9 million). Sales are lower than expected, and have been impacted from some unusual ordering patterns from our UK distributors that occurred at the start of the year. End sales data indicates that our market share continues to grow and that the lack of growth in our first half sales is due to timing. The ActivHeal(R) proposition of delivering significant cost savings, with uncompromised clinical outcomes and patient care, continues to appeal to NHS Trusts. We expect this brand to continue to progress and to show growth for the full year.
RESORBA(R)
Sales of RESORBA(R) branded products into Germany and the Czech Republic increased by 9% to GBP6.4 million (2015 H1: GBP5.9 million), and grew 4% at constant currency. Sales of haemostats increased 10% at constant currency to GBP1.8 million and sales of sutures and collagens into the dental market were flat at constant currency at GBP1.8 million. We are starting to see the benefits of converting hospitals following tender wins in 2015.
OEM
OEM revenue increased 9% at reported currency to GBP14.7 million (2015 H1: GBP13.5 million) and by 8% at constant currency.
In August 2015 we obtained CE approval to market in Europe our antimicrobial foam incorporating polyhexamethylene biguanide (PHMB). PHMB has been shown to be effective against several bacteria especially Escherichia Coli (E-Coli) and Staphylococcus Aureus, including the methicillin resistant type (MRSA). This PHMB Antimicrobial Foam Wound Dressing can be used on exuding chronic and acute wounds that are infected or are at risk of infection and can be applied to pressure ulcers, leg and foot ulcers, diabetic ulcers and surgical wounds. Sales into the EU were GBP0.5 million in the first six months. We were expecting to obtain US approval in the first half of 2016, however, further clinical trials were requested by the FDA and approval is now expected towards the end of the second half of 2016.
As anticipated, the launch of our new antimicrobial foam has had some short-term impact on our silver alginate sales. Sales in the first six months declined 3% at reported currency to GBP7.6 million (2015 H1: GBP7.9 million) and 4% at constant currency. Overall, AMS's position in the antimicrobial advanced woundcare market has been strengthened by this addition to our portfolio and our total antimicrobial offering has grown 3% at reported currency and 2% at constant currency despite the general slow-down in the global advanced wound care market.
In addition to launching our antimicrobial foam range, we have also launched a range of atraumatic foam dressings into our advanced wound care range, further extending our foam portfolio. The initial response has been positive and sales of all our foam-based dressings have increased 222% at both reported and constant currency to GBP2.5 million (2015 H1: GBP0.7 million).
Sales of other woundcare products were strongly influenced by the stocking patterns of our partners and declined 6% to GBP4.6 million (2015 H1: GBP4.9 million) and by 8% at constant currency.
Following discussions with our OEM partner that is supplied with an exclusive range of collagen products, we have renegotiated the supply agreement from an exclusive to a non-exclusive arrangement, allowing us from 2017 to supply a range of collagen products though our distributors into the EU and through our direct sales force in the UK. In the short term, this may result in some reduction of sales in the OEM business as this partner will no longer be required to meet a minimum amount of sales to maintain exclusivity. In the medium term however, we expect sales in both our Branded Direct and Branded Distributed Business Units to increase as our collagen product portfolio is extended.
Bulk Materials
Bulk Materials revenue increased by 66% at reported currency to GBP2.8 million (2015 H1: GBP1.7 million) and by 60% at constant currency with sales to our major contract partners performing strongly.
This Business Unit provides a key component for both our Branded Direct and OEM Business Unit. The launch of the antimicrobial and atraumatic foam ranges has resulted in a doubling of intercompany sales compared with the first six months of 2015 and has been a contributor to the margin improvement in this Business Unit.
Research and Development
Our R&D effort is focusing on a number of key projects.
We are continuing to extend the applications of tissue adhesives for internal use, including the development of an open hernia device, as well as improving further the formulations that go into our adhesives.
We are working on extending the attributes of our collagens to meet the needs of dental practitioners and oral surgeons, together with making good progress in the development of a range of collagens that include antibiotics.
We are also developing a range of surgical dressings and a range of High Performance dressings. We expect to be able to launch both of these ranges in 2017.
Operations
The launch of the two new foam dressing ranges has required new converting processes to be developed. We have been pleased that we were able to meet the significant volume demands of these new launches, however, the initial efficiencies of these processes have been lower than for our more established ranges and lower than we would expect to obtain on an ongoing basis. We estimate that these operating effects have had a negative impact of around 500 basis points on the operating margins for the OEM business, where most of the sales of these products have been recorded. Changes are currently being made to refine the manufacturing processes to improve our efficiences and we expect to see margin improvement.
Investment is being made in the Etten Leur facility to increase our foam manufacturing capacity. Approximately, GBP0.5 million of capex will be spent in the second half of the year. This is expected to increase capacity by approximately 40%.
Quality and Regulatory
The FDA conducted its first routine inspection at the Group in June at our Winsford site. We were pleased with the outcome of our first FDA inspection.
We are progressing with obtaining approval to sell our collagen products in the US and approval is expected towards the end of 2017.
Approval to market our final family of sutures in the US is expected in the second half of 2016. This will complete the approval process for our entire suture range and allow us to sell a comprehensive range of sutures in the US.
Registration of LiquiBand(R) in China is currently on hold due to changes in the regulatory pathway. Indications are that a full clinical trial in China may be required but as yet the potential scope of this clinical trial is unknown. This will extend the time needed to obtain approval in this region.
In 2017, we also expect to start the approval process to potentially allow us to market LiquiBand(R) Fix8(TM) in the US.
Acquisitions strategy
The Group is actively looking for businesses that meet its acquisition strategy. During the period, an opportunity was identified and work undertaken to understand the business in more detail. As a result of the outcome of this work, a decision was taken not to proceed with this acquisition. An exceptional charge of GBP0.4 million has been incurred relating to this activity. The Group continues to review suitable acquisition opportunities.
Referendum vote to leave the EU
There has been no immediate impact on the Company's operations following the UK's referendum vote to leave the European Union other than the currency exchange rates.
Summary and outlook
The first half of 2016 has seen good performance by the Group and we are trading in line with current market expectations for profit and, as a result of the positive impact of currency, ahead of market expectations for revenue for the full year. With our increasing portfolio of products, strong partners and the opportunities we see from our innovative R&D pipeline, the Board remains optimistic about our long term prospects and the potential for further growth.
Financial Review
Summary
Revenue increased by 19.7% to GBP39.2 million (2015 H1: GBP32.7 million). At constant currency, revenue growth would have been 16.9%.
Amortisation of acquired intangible assets was GBP0.1 million in the six month period (2015 H1: GBP0.2 million).
Comparisons with 2015 are made on a pre-exceptional and pre-amortisation of acquired intangible asset cost basis, as we believe that this provides a more relevant representation of the Group's trading performance. To aid comparison, the Group's adjusted income statement is summarised in Table 1 below.
Table 1 Six months Six months
ended ended
30 June 30 June
2016 2015
Adjusted Income Statement GBP'000 GBP'000 Change
---------------------------- -------------- -------------- -------
Revenue 39,153 32,713 19.7%
---------------------------- -------------- -------------- -------
Gross profit 22,473 19,036 18.1%
Distribution costs (512) (408)
Administrative expenses(6) (12,879) (10,715)
Other income 415 319
---------------------------- -------------- -------------- -------
Adjusted operating
profit 9,497 8,232 15.4%
Net finance income
/ (costs) 2 (31)
---------------------------- -------------- -------------- -------
Adjusted profit before
tax 9,499 8,201 15.8%
Amortisation of acquired
intangibles (122) (186)
Exceptional items (361) -
---------------------------- -------------- -------------- -------
Profit before tax 9,016 8,015 12.5%
Tax (1,680) (1,354)
---------------------------- -------------- -------------- -------
Profit for the period 7,336 6,661 10.0%
---------------------------- -------------- -------------- -------
Adjusted earnings
per share - basic(7) 3.74p 3.29p 13.7%
Earnings per share
- basic(7) 3.51p 3.20p 9.7%
---------------------------- -------------- -------------- -------
Adjusted earnings
per share - diluted(7) 3.68p 3.23p 13.9%
Earnings per share
- diluted(7) 3.46p 3.15p 9.8%
---------------------------- -------------- -------------- -------
6 Administration expenses exclude exceptional items and amortisation of acquired intangible assets
7 see Note 4 Earnings per share for details of calculation
The gross margin percentage for the Group was 57.4% (2015 H1: 58.2%). This 80bps reduction in gross margin was mainly as a result of sales mix and initial inefficiencies in the manufacture of our new foam product launches at the Winsford site.
Adjusted operating profit increased by 15.4% to GBP9.5 million (2015 H1: GBP8.2 million) but the adjusted operating margin decreased by 90bps to 24.3% (2015 H1: 25.2%) partly due to continued investment in sales and marketing as well as the mix and new product manufacturing inefficiencies referred to above.
During the six months ended 30 June 2016, the Group incurred exceptional items of GBP0.4 million relating to an aborted transaction (2015 H1: GBPnil).
The Group generated profit before tax of GBP9.0 million (2015 H1: GBP8.0 million) and had net cash of GBP41.1 million at the half year end (2015 H1: GBP22.6 million).
Adjusted diluted earnings per share increased by 13.9% to 3.68p (2015 H1: 3.23p) and diluted earnings per share increased by 9.8% to 3.46p (2015 H1: 3.15p).
The Group has a strong balance sheet enabling financing of further organic growth and appropriate acquisitions.
Income Statement
The operational performance of the Business Units is shown in Table 2 below. The adjusted profit from operations and the adjusted operating margin are shown after excluding exceptional items and amortisation of acquired intangibles.
Table 2
Operating result by
business segment
Six months ended OEM
30 June 2016 Branded Branded Bulk
Distributed Direct Materials
GBP'000 GBP'000 GBP'000 GBP'000
------------------------ --- ------------- ---------- -------- -----------
Revenue 9,632 11,990 14,742 3,756(8)
Profit from operations 3,374 2,760 2,662 862
Amortisation of
acquired intangibles 38 78 6 -
Adjusted profit
from operations(9) 3,412 2,838 2,668 862
Adjusted operating
margin(9) 35.4% 23.7% 18.1% 22.9%
----------------------------- ------------- ---------- -------- -----------
Six months ended
30 June 2015
Revenue 6,411 11,110 13,515 2,140(8)
Profit from operations 1,640 2,845 3,616 270
Amortisation of
acquired intangibles 58 119 9 -
Adjusted profit
from operations(9) 1,698 2,964 3,625 270
Adjusted operating
margin(9) 26.5% 26.7% 26.8% 12.6%
----------------------------- ------------- ---------- -------- -----------
8 Revenue includes intersegment sales. See Note 5
9 Excludes amortisation of acquired intangible assets
Expenses relating to exceptional items, non-executive Directors and plc costs are not allocated to Business Units and are included within unallocated expenses.
Branded Distributed
Branded Distributed revenues increased by 50.2% to GBP9.6 million (2015 H1: GBP6.4 million) and by 45.5% at constant currency, with sales of LiquiBand(R) into the US being the main driver of growth.
Adjusted operating margin increased by 890 bps to 35.4% (2015 H1: 26.5%) due to the increase in sales while investment in our sales & marketing team to support our partners has continued. R&D expense was 5.0% of revenues (2015 H1: 4.5%) with expenditure in this segment being incurred on projects to improve our formulation and applicators for tissue adhesives, as well as ongoing development of the internal use of tissue adhesives.
Branded Direct
Branded Direct revenues increased 7.9% to GBP12.0 million (2015 H1: GBP11.1 million) and 5.0% at constant currency, with sales of ActivHeal(R) driving revenues in the UK and RESORBA(R) brands supporting growth in Germany and Czech Republic.
Adjusted operating margin decreased by 300bps to 23.7% (2015 H1: 26.7%), due to investment in our commercial teams. R&D expense in this segment was 2.3% of revenue (2015 H1: 3.1%) on projects to develop improved antibiotic collagens.
OEM
OEM revenues increased by 9.1% to GBP14.7 million (2015 H1: GBP13.5 million) and 7.7% at constant currency. R&D expense was 4.4% of revenues (2015 H1: 3.6%) with spend being incurred in the development of post surgical dressings and high performance dressings.
Adjusted operating margin reduced by 870 bps to 18.1% (2015 H1: 26.8%), mostly as a result of sales mix and the launch of new products It is also worth noting that some of the benefit in terms of margin resulting from the substantial increase in OEM foam sales is reported in the Bulk Materials Business Unit and is part of the reason for the increase in operating margin in that Business Unit.
Bulk Materials
Bulk material revenues, excluding intercompany sales, increased by 66.3% to GBP2.8 million (2015 H1: GBP1.7 million) at reported currency and 59.8% at constant currency. The adjusted operating margin increased to 22.9% (2015 H1: 12.6%), resulting from changes in sales mix and benefiting from a substantial increase in intercompany sales to the OEM Business Unit.
Geographic breakdown of revenues
The geographic breakdown of Group revenues in 2016 is set out in note 5. Sterling sales, including some European partners, represents the largest currency with significant sales also in Euros and US dollars. The Group's policy is to use natural hedging where possible and to hedge transactional risk. The Group estimates that a 10% movement in the GBP:US$ or GBP:Euro exchange rate would impact Sterling revenues by approximately 3% and 3% respectively and, in the absence of any hedging, this would result in an impact on profit of 2.1% and 0.5% respectively.
Net finance income
Net finance income is comprised of finance income GBP57,000 (2015 H1: GBP31,000) representing interest received on cash balances less finance costs GBP55,000 (2015 H1: GBP62,000) including amortisation of capitalised debt costs.
Profit before tax
Profit before tax for the six months was 12.5% higher at GBP9.0 million (2015 H1: GBP8.0 million).
Taxation
The Group's effective rate of tax for the six months was 18.6% (2015 H1: 16.9%). This reflects the blend of profits and tax rates in the countries in which the Group operates and incorporates R&D relief, the phased introduction of the patent box scheme and the recognition of previously unrecognised tax losses in the UK. From 2017, the Group will no longer be treated as a SME for tax purposes and will not be able to claim for R&D relief. Instead, an allowance for R&D spend will be given and be treated as grant income. In 2015, R&D relief provided a 1.91% benefit to the Group's effective tax rate.
Profit after tax and earnings per share
Adjusted profit after tax increased by 14.2% to GBP7.8 million (2015 H1: GBP6.8 million), resulting in a 13.7% increase in adjusted basic earnings per share to 3.74p (2015 H1: 3.29p) and a 13.9% increase in adjusted diluted earnings per share to 3.68p (2015 H1: 3.23p).
Profit after tax increased 10% to GBP7.3 million (2015 H1: GBP6.7 million), resulting in a 9.7% increase in basic earnings per share to 3.51p (2015 H1: 3.20p) and an 9.8% increase in diluted earnings per share to 3.46p (2015 H1: 3.15p).
Dividend per share
The Board intends to pay an interim dividend of 0.30p per share on 30 October 2016 to shareholders on the register on 2 October 2016. This is an increase of 20% compared with the first half of 2015.
Cash Flow and Balance Sheet
Table 3 summarises the Group's cash flows.
Table 3 Six months Six months
ended ended
30 June 2016 30 June 2015
Cash Flow GBP'000 GBP'000
------------------------------- -------------- --------------
Adjusted operating profit
(Table 1) 9,497 8,232
Non-cash items 1,993 1,453
Adjusted EBITDA(10) 11,490 9,685
Working capital movement (1,730) (1,740)
Operating cash flow before
exceptional items 9,760 7,945
Exceptional items (361) -
Operating cash flow after
exceptional items 9,399 7,945
Capital expenditure and
capitalised R&D (1,265) (1,087)
Net Interest income/(expense) 1 (33)
Tax (933) (689)
Free cash flow 7,202 6,136
Dividends paid (1,150) (999)
Proceeds from share issues 416 267
Exchange gains / (losses) 430 (68)
Net increase in cash and
cash equivalents 6,898 5,336
------------------------------- -------------- --------------
10 Adjusted EBITDA is earnings before interest, tax, depreciation, intangible asset amortisation, share based payments and exceptional items
The Group had an operating cash flow before exceptional items of GBP9.8 million (2015 H1: GBP7.9 million) and a conversion of adjusted operating profit into free cash flow of 76% (2015 H1: 75%).
Working capital increased GBP1.7 million in line with the growth of the business. Inventory increased by GBP1.1 million in the first six months with months of supply being 4.4 (2015 H1: 4.7 months). Trade receivables increased GBP2.0 million with debtor days at 49 (2015 H1: 47 days). Trade payables increased GBP1.4 million, excluding the fair value of forward foreign exchange contracts.
We have invested GBP1.3 million in fixed assets, software and capitalised R&D in the first six months (2015 H1: GBP1.0 million), including the completion of the collagen manufacturing expansion started in 2015. GBP0.1 million of R&D spend has been capitalised (2015 H1: GBP0.1 million).
Net taxation of GBP0.9 million was paid which is in line with the Group's profitability within the tax jurisdictions in which it operates.
The Group paid its final dividend for the year ended 31 December 2015 of GBP1.2 million on 10 June 2016 (2015 H1: GBP1.0 million).
The Group had free cash flow of GBP7.2 million in the period (2015 H1: GBP6.1 million), with a net increase in cash equivalents of GBP6.9 million (2015 H1: GBP5.3 million increase).
The Group has a five-year, GBP30 million, multi-currency, revolving credit facility, obtained in December 2014, with an accordion option under which AMS can request up to an additional GBP20 million on the same terms. The facility is provided jointly by HSBC and The Royal Bank of Scotland PLC. It is unsecured on the assets of the Group and is currently undrawn.
At the end of the period, the Group had net cash(11) of GBP41.1 million (2015 H2: net cash(11) of GBP22.6 million). The movement in net cash during the first half of 2016 is reconciled in Table 4 below:
Table 4 Movement in net cash(11) GBP'000 -------------------------- -------- Net cash as at 1 January 2016 34,201 Exchange rate impacts 430 Free cash flow 7,202 Dividends paid (1,150) Proceeds from share issues 416 Net cash as at 30 June 2015 41,099 -------------------------- --------
11 Net cash is defined as cash and cash equivalents plus short term investments less financial liabilities and bank loans
The Group's going concern position is fully described in note 12 and the Group had no borrowings in the period.
CONDENSED CONSOLIDATED INCOME STATEMENT for the six months ended 30 June 2016
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended 31 December
30 June 2016 30 June 2015 2015
Before Exceptional Before Exceptional Before Exceptional
exceptional items exceptional Items exceptional items
items (see Total items Total Items Total
note
7)
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- ----- ------------ ------------ --------- ------------ ------------ --------- ------------ ------------ ---------
Revenue from
continuing
operations 5 39,153 - 39,153 32,713 - 32,713 68,596 - 68,596
Cost of sales (16,680) - (16,680) (13,677) - (13,677) (28,688) - (28,688)
---------------- ----- ------------ ------------ --------- ------------ ------------ --------- ------------ ------------ ---------
Gross profit 22,473 - 22,473 19,036 - 19,036 39,908 - 39,908
Distribution
costs (512) - (512) (408) - (408) (951) - (951)
Administration
costs (13,001) (361) (13,362) (10,901) - (10,901) (22,505) - (22,505)
Other income 415 - 415 319 - 319 589 - 589
Profit/(loss)
from
operations 9,375 (361) 9,014 8,046 - 8,046 17,041 - 17,041
Finance income 57 - 57 31 - 31 73 - 73
Finance costs (55) - (55) (62) - (62) (118) - (118)
---------------- ----- ------------ ------------ --------- ------------ ------------ --------- ------------ ------------ ---------
Profit /(loss)
before
taxation 9,377 (361) 9,016 8,015 - 8,015 16,996 - 16,996
Income tax 8 (1,680) - (1,680) (1,354) - (1,354) (2,877) - (2,877)
---------------- ----- ------------ ------------ --------- ------------ ------------ --------- ------------ ------------ ---------
Profit/(loss)
for
the period
attributable
to equity
holders
of the parent 7,697 (361) 7,336 6,661 - 6,661 14,119 - 14,119 ---------------- ----- ------------ ------------ --------- ------------ ------------ --------- ------------ ------------ --------- Earnings per share Basic 4 3.68p (0.17p) 3.51p 3.20p - 3.20p 6.78p - 6.78p Diluted 4 3.63p (0.17p) 3.46p 3.15p - 3.15p 6.68p - 6.68p Adjusted(12) diluted 4 3.68p - 3.68p 3.23p - 3.23p 6.86p - 6.86p ---------------- ----- ------------ ------------ --------- ------------ ------------ --------- ------------ ------------ ---------
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended 31 December
30 June 2016 30 June 2015 2015
GBP'000 GBP'000 GBP'000
---------------------------- ----------------- ----------------- -----------------------
Profit for the period 7,336 6,661 14,119
----------------------------- ----------------- ----------------- -----------------------
Exchange differences
on translation of foreign
operations 6,560 (5,058) (3,348)
(Loss)/gain arising
on cash flow hedges (2,419) 699 (3)
----------------------------- ----------------- ----------------- -----------------------
Other comprehensive
income/(expense) for
the period 4,141 (4,359) (3,351)
----------------------------- ----------------- ----------------- -----------------------
Total comprehensive
income for the period
attributable to equity
holders of the parent 11,477 2,302 10,768
----------------------------- ----------------- ----------------- -----------------------
(12) Adjusted for exceptional items and for amortisation of acquired intangible assets
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(Unaudited) (Unaudited) (Audited)
30 June 30 June 31 December
2016 2015 2015
GBP'000 GBP'000 GBP'000
Assets
Non-current assets
Acquired intellectual
property rights 9,264 8,290 8,359
Software intangibles 1,966 1,760 2,009
Development costs 1,777 1,796 1,803
Goodwill 38,940 33,516 34,579
Property, plant and
equipment 16,538 15,606 15,795
Deferred tax assets - 662 135
Trade and other receivables 10 18 13
----------------------------- ------------ ------------ ------------
68,495 61,648 62,693
Current assets
Inventories 10,465 8,166 8,843
Trade and other receivables 13,074 13,294 10,817
Current tax assets 8 13 9
Cash and cash equivalents 41,099 22,616 34,201
----------------------------- ------------ ------------ ------------
64,646 44,089 53,870
----------------------------- ------------ ------------ ------------
Total assets 133,141 105,737 116,563
----------------------------- ------------ ------------ ------------
Liabilities
Current liabilities
Trade and other payables 12,089 6,710 9,139
Current tax liabilities 1,420 956 806
Other taxes payable 302 360 234
Obligations under finance
leases 1 1 1
13,812 8,027 10,180
Non-current liabilities
Trade and other payables 1,473 441 415
Deferred tax liabilities 2,783 2,267 2,311
Obligations under finance - 1 -
leases
4,256 2,709 2,726
----------------------------- ------------ ------------ ------------
Total liabilities 18,068 10,736 12,906
----------------------------- ------------ ------------ ------------
Net assets 115,073 95,001 103,657
----------------------------- ------------ ------------ ------------
Equity
Share capital 10,499 10,433 10,451
Share premium 33,578 33,044 33,196
Share-based payments
reserve 2,945 1,854 2,253
Investment in own shares (152) (152) (152)
Share-based payments
deferred tax reserve 404 294 437
Other reserve 1,531 1,531 1,531
Hedging reserve (2,944) 177 (525)
Translation reserve (1,655) (9,925) (8,215)
Retained earnings 70,867 57,745 64,681
----------------------------- ------------ ------------ ------------
Equity attributable
to equity holders of
the parent 115,073 95,001 103,657
----------------------------- ------------ ------------ ------------
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
capital premium payments shares deferred reserve reserve reserve earnings Total
tax
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- --------
At 1 January
2016
(audited) 10,451 33,196 2,253 (152) 437 1,531 (525) (8,215) 64,681 103,657
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- --------
Consolidated
profit for
the
period to 30
June 2016 - - - - - - - - 7,336 7,336
Other
comprehensive
income - - - - - - (2,419) 6,560 - 4,141
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- --------
Total
comprehensive
income - - - - - - (2,419) 6,560 7,336 11,477
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- --------
Share-based
payments - - 693 - (33) - - - - 660
Share options
exercised 48 382 (1) - - - - - - 429
Shares
purchased
by EBT - - - (449) - - - - - (449)
Shares sold by
EBT - - - 449 - - - - - 449
Dividends paid - - - - - - - - (1,150) (1,150)
At 30 June
2016
(unaudited) 10,499 33,578 2,945 (152) 404 1,531 (2,944) (1,655) 70,867 115,073
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- --------
Share- Investment Share-based
Share Share based in own payments Other Hedging Translation Retained
capital premium payments shares deferred reserve reserve reserve earnings Total
tax
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- --------
At 1 January
2015
(audited) 10,393 32,742 1,563 (148) 278 1,531 (522) (4,867) 52,083 93,053
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- --------
Consolidated
profit for
the
period to 30
June 2015 - - - - - - - - 6,661 6,661
Other
comprehensive
income - - - - - - 699 (5,058) - (4,359)
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- --------
Total
comprehensive
income - - - - - - 699 (5,058) 6,661 2,302
Share-based
payments - - 300 - 16 - - - - 316
Share options
exercised 40 302 (9) - - - - - - 333
Shares
purchased
by EBT - - - (262) - - - - - (262)
Shares sold by
EBT - - - 258 - - - - - 258
Dividends paid - - - - - - - - (999) (999)
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- --------
At 30 June
2015
(unaudited) 10,433 33,044 1,854 (152) 294 1,531 177 (9,925) 57,745 95,001
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- --------
Share- Investment Share-based
Share Share based in own payments Other Hedging Translation Retained
capital premium payments shares deferred reserve reserve reserve earnings Total
tax
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- --------
At 1 January
2015
(audited) 10,393 32,742 1,563 (148) 278 1,531 (522) (4,867) 52,083 93,053
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- --------
Consolidated
profit for
the
year to 31
December
2015 - - - - - - - - 14,119 14,119
Other
comprehensive
income - - - - - - (3) (3,348) - (3,351)
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- --------
Total
comprehensive
income - - - - - - (3) (3,348) 14,119 10,768
Share-based
payments - - 709 - 159 - - - - 868
Share options
exercised 58 454 (19) - - - - - - 493
Shares
purchased
by EBT - - - (262) - - - - - (262)
Shares sold by
EBT - - - 258 - - - - - 258
Dividends paid - - - - - - - - (1,521) (1,521)
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- --------
At 31 December
2015
(audited) 10,451 33,196 2,253 (152) 437 1,531 (525) (8,215) 64,681 103,657
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- --------
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited) (Unaudited) (Audited)
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2016 2015 2015
GBP'000 GBP'000 GBP'000
---------------------------------------------- ------------ ------------ ------------
Cash flows from operating
activities
Profit from operations 9,014 8,046 17,041
Adjustments for:
Depreciation 924 858 1,745
Amortisation - intellectual
property rights 122 186 367
- development costs 203 155 289
- software intangibles 173 140 410
Increase in inventories (1,147) (948) (1,501)
(Increase)/decrease in
trade and other receivables (1,962) (495) 2,148
Increase/(decrease) in
trade and other payables 1,379 (297) 1,336
Share-based payments expense 693 300 709
Taxation (933) (689) (1,253)
Net cash inflow from operating
activities 8,466 7,256 21,291
---------------------------------------------- ------------ ------------ ------------
Cash flows from investing
activities
Purchase of software (125) (26) (472)
Capitalised research and
development (149) (101) (373)
Purchases of property,
plant and equipment (1,016) (960) (1,907)
Disposal of property,
plant and equipment 25 - 77
Interest received 57 31 73
Net cash used in investing
activities (1,208) (1,056) (2,602)
---------------------------------------------- ------------ ------------ ------------
Cash flows from financing
activities
Dividends paid (1,150) (999) (1,521)
Finance lease (1) (2) (2)
Issue of equity shares 416 271 498
Shares purchased by EBT (449) (262) (262)
Shares sold by EBT 449 258 258
Interest paid (55) (62) (118)
Net cash used in financing
activities (790) (796) (1,147)
---------------------------------------------- ------------ ------------ ------------
Net increase in cash and
cash equivalents 6,468 5,404 17,542
Cash and cash equivalents
at the beginning of the
period 34,201 17,280 17,280
Effect of foreign exchange
rate changes 430 (68) (621)
Cash and cash equivalents
at the end of the period 41,099 22,616 34,201
---------------------------------------------- ------------ ------------ ------------
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 twelve months ended 31 December 2015 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 materials, medical adhesives for closing and sealing tissue, and sutures and haemostats for sale into the global medical device market.
2. Basis of preparation
The information for the year ended 31 December 2015 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. A copy of the statutory accounts for that year 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 statements. The unaudited condensed set of financial statements included in this half-yearly financial report have been prepared in accordance with the International Accounting Standard 34 'Interim Financial Reporting', as adopted by the European Union. These condensed interim accounts should be read in conjunction with the annual accounts of the Group for the year ended 31 December 2015. The annual financial statements of Advanced Medical Solutions Group plc are prepared in accordance with International Financial Reporting Standards as adopted by the European Union.
Changes in accounting policies
The adoption of the following standards, at 1 January 2016, has had no material impact on the Group's financial statements:
-- IAS 1 (amendments): Disclosure Initiative -- IAS 27 (amendments): Equity Method in Separate Financial Statements -- IAS 16 & IAS 41: Agriculture - Bearer plants
-- IAS 16 & IAS 38 (amendments): Clarification of Acceptable Methods of Depreciation and Amortisation
-- IFRS 11 (amendments): Accounting for Acquisitions of Interests in Joint Operations
-- Annual Improvements to IFRSs: 2012-2014 Cycle
4. Earnings per share
(Unaudited) (Unaudited) (Audited)
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
GBP'000 GBP'000 GBP'000
-------------------------------- ------------ ------------ ------------
Earnings
Earnings for the purposes
of basic and diluted
earnings per share
being net profit attributable
to equity holders of
the parent 7,336 6,661 14,119
Number of shares '000 '000 '000
-------------------------------- ------------ ------------ ------------
Weighted average number
of ordinary shares
for the purposes of
basic earnings per
share 209,271 207,963 208,376
-------------------------------- ------------ ------------ ------------
Effect of dilutive
potential ordinary
shares: share options,
deferred share bonus,
LTIPs 3,006 3,702 2,902
-------------------------------- ------------ ------------ ------------
Weighted average number
of ordinary shares
for the purposes of
diluted earnings per
share 212,277 211,665 211,278
-------------------------------- ------------ ------------ ------------
Basic EPS is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of shares outstanding during the period.
4. Earnings per share (continued)
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
The calculation of adjusted EPS excluding execeptional costs and amortisation of associated intangible assets and is based on earnings of:
(Unaudited) (Unaudited) (Audited)
Six months Six months Year
Ended ended ended
30 June 30 June 31 December
2016 2015 2015
GBP'000 GBP'000 GBP'000
-------------------------------- ------------ ------------ ------------
Earnings
Earnings for the purposes
of basic and diluted
earnings per share
being net profit attributable
to equity holders of
the parent 7,336 6,661 14,119
Exceptional items 361 - -
Amortisation of acquired
intangible assets 122 186 367
Earnings excluding
exceptional items and
amortisation of acquired
intangible assets 7,819 6,847 14,486
-------------------------------- ------------ ------------ ------------
The denominators used are the same as those detailed above for both basic and diluted earnings per share.
Adjusted EPS after adding back exceptional items and amortisation of acquired intangible assets:
(Unaudited) (Unaudited) (Audited)
Six months Six months Year
Ended ended ended
30 June 30 June 31 December
2016 2015 2015
pence pence pence
---------------------- ------------ ------------ ------------
Adjusted basic EPS 3.74p 3.29p 6.95p
Adjusted diluted EPS 3.68p 3.23p 6.86p
---------------------- ------------ ------------ ------------
The adjusted diluted EPS information is considered to provide a fairer representation of the Group's trading performance.
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:
Branded Direct
Selling, marketing and innovation of the Group's branded products sold directly by the Group's sales teams.
Branded Distributed
Selling, marketing and innovation of the Group's branded products sold by distributors in markets not serviced by the Group's sales teams.
OEM
Distribution, marketing and innovation of the Group's products supplied to partners under their brands.
Bulk Materials
Distribution, marketing and innovation of bulk materials to medical device partners and convertors.
Segment information about these businesses is presented below:
Six months ended
30 June 2016
(unaudited) Branded Direct Branded Distributed OEM Bulk Materials Eliminations Consolidated
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------- --------------- -------------------- -------- --------------- ------------- -------------
Revenue
External sales 11,990 9,632 14,742 2,789 - 39,153
Inter-segment sales - - - 967 (967) -
---------------------- --------------- -------------------- -------- --------------- ------------- -------------
Total revenue 11,990 9,632 14,742 3,756 (967) 39,153
---------------------- --------------- -------------------- -------- --------------- ------------- -------------
Result
---------------------- --------------- -------------------- -------- --------------- ------------- -------------
Segment result 2,760 3,374 2,662 862 - 9,658
Unallocated expenses (644)
--------------- -------------
Profit from
operations 9,014
Finance income 57
Finance costs (55)
---------------------- --------------- -------------------- -------- --------------- ------------- -------------
Profit before tax 9,016
Tax (1,680)
---------------------- --------------- -------------------- -------- --------------- ------------- -------------
Profit for the period 7,336
---------------------- --------------- -------------------- -------- --------------- ------------- -------------
At 30 June 2016
(unaudited) Branded Direct Branded Distributed OEM Bulk Materials Consolidated
Other Information GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- --------------- -------------------- -------- --------------- -------------
Capital additions:
Software intangibles 25 2 97 1 125
Research & Development 29 68 51 1 149
Property, plant and equipment 490 218 182 101 991
Depreciation and amortisation (370) (239) (684) (129) (1,422)
-------------------------------- --------------- -------------------- -------- --------------- -------------
Balance sheet
Assets
Segment assets 60,074 28,446 35,340 9,067 132,927
Unallocated assets 214
-------------------------------- --------------- -------------------- -------- ---------------
Consolidated total assets 133,141
-------------------------------- --------------- -------------------- -------- --------------- -------------
Liabilities
Segment liabilities 6,626 3,799 6,125 1,518 18,068
-------------------------------- --------------- -------------------- -------- --------------- -------------
Consolidated total liabilities 18,068
-------------------------------- --------------- -------------------- -------- --------------- -------------
Six months ended
30 June 2015 Branded Direct Branded Distributed OEM Bulk Materials Eliminations Consolidated
(unaudited) GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------- --------------- -------------------- -------- --------------- --------------- -------------
Revenue
External sales 11,110 6,411 13,515 1,677 - 32,713
Inter-segment
sales - - - 463 (463) -
----------------- --------------- -------------------- -------- --------------- --------------- -------------
Total revenue 11,110 6,411 13,515 2,140 (463) 32,713
----------------- --------------- -------------------- -------- --------------- --------------- -------------
Result
----------------- --------------- -------------------- -------- --------------- --------------- -------------
Segment result 2,845 1,640 3,616 270 - 8,371
Unallocated
expenses (325)
--------------- -------------
Profit from
operations 8,046
Finance income 31
Finance costs (62)
----------------- --------------- -------------------- -------- --------------- --------------- -------------
Profit before
tax 8,015
Tax (1,354)
----------------- --------------- -------------------- -------- --------------- --------------- -------------
Profit for the
period 6,661
----------------- --------------- -------------------- -------- --------------- --------------- -------------
At 30 June 2015
(unaudited) Branded Direct Branded Distributed OEM Bulk Materials Consolidated
Other GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Information
----------------- --------------- -------------------- ------------------------- --------------- -------------
Capital
additions:
Software
intangibles 10 3 10 3 26
Research &
Development 11 37 52 1 101
Property, plant
and equipment 310 85 529 36 960
Depreciation and
amortisation (392) (235) (602) (110) (1,339)
----------------- --------------- -------------------- ------------------------- --------------- -------------
Balance sheet
Assets
Segment assets 49,872 20,570 30,610 4,508 105,560
Unallocated
assets 177
----------------- --------------- -------------------- ------------------------- ---------------
Consolidated
total assets 105,737
----------------- --------------- -------------------- ------------------------- --------------- -------------
Liabilities
Segment
liabilities 4,914 2,035 3,345 442 10,736
----------------- --------------- -------------------- ------------------------- --------------- -------------
Consolidated
total
liabilities 10,736
----------------- --------------- -------------------- ------------------------- --------------- -------------
Year ended
31 December 2015 Branded Direct Branded Distributed OEM Bulk Materials Eliminations Consolidated
(audited) GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- --------------- -------------------- -------- --------------- --------------- -------------
Revenue
External sales 22,344 14,631 27,675 3,946 - 68,596
Inter-segment sales - - - 826 (826) -
--------------------- --------------- -------------------- -------- --------------- --------------- -------------
Total revenue 22,344 14,631 27,675 4,772 (826) 68,596
--------------------- --------------- -------------------- -------- --------------- --------------- -------------
Result
--------------------- --------------- -------------------- -------- --------------- --------------- -------------
Segment result 5,235 4,366 7,139 814 - 17,554
Unallocated expenses (513)
-------------
Profit from
operations 17,041
Finance income 73
Finance costs (118)
--------------------- --------------- -------------------- -------- --------------- --------------- -------------
Profit before tax 16,996
Tax (2,877)
--------------------- --------------- -------------------- -------- --------------- --------------- -------------
Profit for the year 14,119
--------------------- --------------- -------------------- -------- --------------- --------------- -------------
At 31 December 2015 Branded Direct Branded Distributed OEM Bulk Materials Consolidated
(audited)
Other Information GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- --------------- -------------------- ------------------------- --------------- -------------
Capital additions:
Software intangibles 111 15 333 13 472
Research &
Development 102 67 200 4 373
Property, plant and
equipment 730 332 663 182 1,907 Depreciation and amortisation (855) (431) (1,309) (217) (2,812) --------------------- --------------- -------------------- ------------------------- --------------- ------------- Balance sheet Assets Segment assets 57,264 20,913 32,874 5,347 116,398 Unallocated assets 165 --------------------- --------------- -------------------- ------------------------- --------------- ------------- Consolidated total assets 116,563 --------------------- --------------- -------------------- ------------------------- --------------- ------------- Liabilities Segment liabilities 5,353 2,888 3,930 735 12,906 --------------------- --------------- -------------------- ------------------------- --------------- ------------- Consolidated total liabilities 12,906 --------------------- --------------- -------------------- ------------------------- --------------- -------------
Geographical segments
The Group operates in the UK, Germany, the Netherlands, the Czech Republic, with a sales office located in Russia 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 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:
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
30 June 2016 30 June 2015 31 December 2015
GBP'000 GBP'000 GBP'000
--------------------------------------------- ----------------- ----------------- -----------------
United Kingdom 8,926 7,953 16,657
Germany 8,421 6,219 13,371
Europe excluding United Kingdom and Germany 10,481 9,979 19,223
United States of America 10,660 8,131 17,766
Rest of World 665 431 1,579
--------------------------------------------- ----------------- ----------------- -----------------
39,153 32,713 68,596
--------------------------------------------- ----------------- ----------------- -----------------
The following table provides an analysis of the Group's total assets by geographical location.
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
30 June 2016 30 June 2015 31 December 2015
GBP'000 GBP'000 GBP'000
--------------------------------------------- ----------------- ----------------- -----------------
United Kingdom 72,559 50,767 62,785
Germany 56,768 49,766 50,592
Europe excluding United Kingdom and Germany 3,597 5,095 3,060
United States of America 217 109 126
--------------------------------------------- ----------------- ----------------- -----------------
133,141 105,737 116,563
--------------------------------------------- ----------------- ----------------- -----------------
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 2016. 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 Contract value Fair value
30 June 31 Dec 30 June 31 Dec 30 June 31 Dec 2015 30 June 31 Dec 2015
2016 2015 2016 2015 2016 2016
USD:GBP1 USD:GBP1 USD'000 USD'000 GBP'000 GBP'000 GBP'000 GBP'000
Cash flow
hedges
Sell US
dollars
Less than 3
months 1.526 1.606 4,000 5,100 2,621 3,176 (424) (257)
3 to 6
months 1.526 1.527 4,600 4,000 3,015 2,619 (478) (80)
7 to 12
months 1.466 1.526 9,000 8,600 6,141 5,634 (674) (167)
Over 12
months 1.427 1.524 18,500 3,000 12,966 1,969 (948) (56)
------------ ----------- ----------- ----------- ----------- ----------- ------------ ----------- ------------
36,100 20,700 24,743 13,398 (2,524) (560)
------------ ----------- ----------- ----------- ----------- ----------- ------------ ----------- ------------
Ave. exchange rate Foreign currency Contract value Fair value
30 June 31 Dec 30 June 31 Dec 30 June 31 Dec 30 June 31 Dec
2016 2015 2016 2015 2016 2015 2016 2015
EUR:GBP1 EUR:GBP1 EUR'000 EUR'000 GBP'000 GBP'000 GBP'000 GBP'000
Cash flow hedges
Sell Euros
Less than 3
months 1.346 1.309 850 600 632 459 (77) 21
3 to 6 months 1.335 1.358 1,050 650 786 479 (94) 2
7 to 12 months 1.278 1.358 2,100 1,900 1,643 1,399 (112) 9
Over 12 months 1.250 1.356 3,450 350 2,760 258 (137) 1
----------------- ----------- ---------- ----------- ----------- -----------
7,450 3,500 5,821 2,595 (420) 33
----------------- ---------- ----------- ---------- ----------- ---------- ----------- ----------- -----------
7. Exceptional items
During the six months ended 30 June 2016, the Group incurred an exceptional charge of GBP361,000 relating to an aborted transaction (2015 H1: GBPnil).
8. Taxation
UK corporation tax for the six-month period ended 30 June 2016 is charged at 20.0% (six months ended 30 June 2015: 20.5%, year ended 31 December 2015: 20.25%). The effective rate of current tax for the six months ended 30 June 2016 was 18.6% (six months ended 30 June 2015: 16.9%, year ended 31 December 2015: 16.9%) after the application of losses brought forward, patent box and research and development tax relief, with some off-set for disallowable expenditure. The rate of tax is reflective of the impact of blending profits and losses from different countries and the different tax rates associated with those countries.
From 1st January 2017, the Group will no longer meet the definition of being a small or medium sized enterprise (SME). As a result of being a large company, the Company will obtain tax relief through the R&D expenditure credit scheme (RDEC). As well as being a lower rate of relief to the SME scheme, the RDEC will be recognised as operating income for the Group.
9. Dividends
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
Amounts recognised as distributions to equity holders in the 30 June 2016 30 June 2015 31 December 2015
period:
GBP'000 GBP'000 GBP'000
----------------- ----------------- -----------------
Final dividend for the year ended 31 December 2014 of 0.48p
per ordinary share - 999 935
Interim dividend for the year ended 31 December 2015 of
0.25p per ordinary share - - 586
Final dividend for the year ended 31 December 2015 of 0.55p 1,150 - -
per ordinary share
1,150 999 1,521
------------------------------------------------------------- ----------------- ----------------- -----------------
10. Contingent liabilities
The Directors are not aware of any contingent liabilities faced by the Group as at 30 June 2016 (30 June 2015: GBPnil, 31 December 2015: GBPnil).
11. Share capital
Share capital as at 30 June 2016 amounted to GBP10,499,000 (30 June 2015: GBP10,433,000, 31 December 2015: GBP10,451,000). During the period, the Group issued 955,104 shares in respect of exercised share options, LTIPS and the Deferred Share Bonus Scheme.
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. These have been based on a comprehensive review of revenue, expenditure and cash flows, taking into account specific business risks and the current economic environment.
With regards to the Group's financial position, it had cash and cash equivalents at 30 June 2016 of GBP41.1 million and a five-year, GBP30 million, multi-currency, revolving credit facility, obtained in December 2014, with an accordion option under which AMS can request up to an additional GBP20 million on the same terms. The credit facility is provided jointly by HSBC and The Royal Bank of Scotland PLC. It is unsecured on the assets of the Group and is currently undrawn.
Whilst 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, market growth is predicted. 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 10 and 11 of the Annual Report and Accounts for the year ended 31 December 2015. There has been no immediate impact on the Company's operations following the UK's referendum vote to leave the European Union. The Company will monitor the situation and take any appropriate action when the process for leaving the European Union is determined. There have been no other 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
There has been no material event subsequent to the end of the interim reporting period ended 30 June 2016.
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 available on our website "www.admedsol.com".
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR VXLFFQKFFBBK
(END) Dow Jones Newswires
September 14, 2016 02:00 ET (06:00 GMT)
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