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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Advanced Medical Solutions Group | AQSE:AMS.GB | Aquis Stock Exchange | Ordinary Share | GB0004536594 | Ordinary Shares 5p |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 200.00 | 195.00 | 205.00 | 201.95 | 200.00 | 200.00 | 1,248 | 16:29:58 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From May 2022 to May 2024
TIDMAMS
RNS Number : 9901S
Advanced Medical Solutions Grp PLC
15 March 2023
15 March 2023
Advanced Medical Solutions Group plc
("AMS" or the "Group" or the "Company")
Unaudited preliminary results for the year ended 31 December 2022
Strong revenue growth, profit and cash generation in line with expectations.
Good clinical and regulatory progress across promising pipeline of new products
Winsford, UK: Advanced Medical Solutions Group plc (AIM: AMS), the world-leading specialist in tissue-healing technologies, today announces its unaudited preliminary results for the year ended 31 December 2022.
Financial Summary:
Hot Features
Premium
2022 2021 Reported Change at
change constant
currency(1)
------ ------ ---------
Revenue (GBP million) 124.3 108.6 +14% +10%
----------------------------------- ------ ------ --------- -------------
Adjusted Measures
Adjusted(2) profit before
tax (GBP million) 28.5 25.6 +11%
Adjusted(2) profit before
tax margin % 22.9% 23.6% -0.7pp
Adjusted(2) diluted earnings
per share (p) 10.47 9.66 +8%
Reported Measures
Profit before tax (GBP million) 25.9 22.0 +18%
Profit before tax margin
% 20.8% 20.2% +0.6pp
Diluted earnings per share
(p) 9.30 8.01 +16%
Net operating cash flow (GBP
million) 26.9 31.0 -13%
Net cash(3) (GBP million) 82.3 73.0 +13%
Proposed full year dividend
per share (p) 2.15 1.95 +10%
----------------------------------- ------ ------ --------- -------------
Business Highlights (including post period end):
AMS is pleased to report robust financial performance in line with expectations and significant regulatory and clinical progress as it continues to invest in its portfolio of next-generation products.
Financial
-- Group revenue increased to GBP124.3 million (2021: GBP108.6 million), an increase of 14% or 10% at constant currency, driven by commercial progress, foreign exchange tailwinds and higher pricing to recover inflationary cost increases
-- Adjusted profit before tax increased by 11% to GBP28.5 million (2021: GBP25.6 million) as the business continued to manage the majority of inflationary pressure through selling price increases
-- Net cash increased to GBP82.3 million (2021: GBP73.0 million) driven by strong trading and robust operational cash flow
-- Investment in R&D increased to GBP12.3 million (2021: GBP9.3 million), representing 9.9% of revenues (2021: 8.6%), as the Group accelerates investment in new products and Medical Device Regulation ("MDR")
-- Surgical Business Unit revenues increased to GBP74.9 million (2021: GBP64.6 million), an increase of 16% and of 12% at constant currency
-- Woundcare Business Unit revenues increased to GBP49.5 million (2021: GBP44.0 million), an increase of 13% and of 8% at constant currency
-- Reflecting the strong financial performance and management's ongoing confidence in the Group's outlook, the Board proposes an increased final dividend of 1.51p per share (2021: 1.37p) bringing the total proposed dividend to 2.15p per share (2021: 1.95p)
Operational
-- Good engagement and progress with the FDA on our US L iquiBandFix8(R) Pre-Market Approval (PMA) with approval on track for H2 2023
-- The Seal-G(R) and Seal-G(R) MIST clinical study continues to progress well with over 80% of patients now recruited. The final results are on track to be released in H1 2023 when they will be used to market the technology during the commercial launch
-- LiquiBand (R) XL was approved and launched in the US during H2 2022. Initial market response is very positive and underpins confidence in the product
-- Completed the acquisition of AFS Medical GmbH ("AFS"), an Austria-based distributor of minimally invasive surgical devices for an initial cash purchase price of EUR4.5 million with a further cash deferred consideration of up to EUR1.5 million based on delivery of 2022-2024 EBITDA targets
-- On 1(st) February 2023, AMS announced that it had acquired Connexicon Medical Ltd (Connexicon), a tissue adhesive technology specialist, for an initial, upfront payment of EUR7 million with further deferred payments dependent on delivery of certain research & development, regulatory and commercial milestones between 2023 and 2027. The acquisition strengthens AMS's position in the $300 million global medical adhesive market, providing significant new commercial opportunities
Commenting on the results Chris Meredith, Chief Executive Officer of AMS, said: "I am pleased with the resilience that our business has shown in delivering another period of strong financial performance in the current challenging economic conditions, and we are on track to meet 2023 expectations. The investments we have made in our in-house and acquired technologies have strengthened the quality and breadth of our portfolio enabling us to deliver returns across a broader range and validate our growth strategy. AMS is committed to investing in R&D and acquisitions that will further strengthen our established portfolios while continuing to penetrate new markets, maintaining robust growth in the long-term."
Notes
1. Constant currency removes the effect of currency movements by re-translating the current year's performance at the previous year's exchange rates
2. Adjusted profit before tax is shown before amortisation of acquired intangible assets which was GBP3.4 million (2021: GBP3.2 million) and the movement in long-term liabilities recognised on acquisitions which was a credit GBP0.8 million (2021: GBP0.4 million debit).
3. Net cash consists of cash and cash equivalents with nil debt (2021: GBPnil debt)
- End -
For further information, please visit www.admedsol.com or contact:
Advanced Medical Solutions Group plc Tel: +44 (0) 1606
545508
Chris Meredith, Chief Executive Officer
Eddie Johnson, Chief Financial Officer
Michael King, Investor Relations
Consilium Strategic Communications Tel: +44 (0) 20 3709
5700
Mary-Jane Elliott / Matthew Neal / Lucy
Featherstone
Investec Bank PLC (NOMAD & Broker) Tel: +44 (0) 20 7597
5970
Gary Clarence / David Anderson
HSBC Bank PLC (Broker) Tel: +44 (0) 20 7991
8888
Sam McLennan / Joe Weaving / Stephanie
Cornish
About Advanced Medical Solutions Group plc
AMS is a world-leading independent developer and manufacturer of innovative tissue-healing technology, focused on quality outcomes for patients and value for payers. AMS has a wide range of surgical products including tissue adhesives, sutures, haemostats, internal fixation devices and internal sealants, which it markets under its brands LiquiBand(R) , RESORBA(R) , LiquiBandFix8(R) and Seal-G(R) . AMS also supplies wound care dressings such as silver alginates, alginates and foams through its ActivHeal(R) brand as well as under white label. Since 2019, the Group has made five acquisitions: Sealantis, an Israeli developer of innovative internal sealants; Biomatlante, a French developer and manufacturer of surgical biomaterials, Raleigh, a leading UK coater and converter of woundcare and bio-diagnostics materials, AFS Medical, an Austrian specialist surgical business and Connexicon, an Irish tissue adhesives specialist.
AMS's products, manufactured in the UK, Germany, France, the Netherlands, the Czech Republic and Israel, are sold globally 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. The Group has R&D innovation hubs in the UK, Ireland, Germany, France and Israel. Established in 1991, the Group has more than 800 employees. For more information, please see www.admedsol.com .
Chief Executive's Review
Group performance
The Group delivered record sales of GBP124.3 million driven by good commercial progress from both Business Units.
Surgical Business Unit
The Surgical Business Unit includes tissue adhesives, sutures, biosurgical devices and internal fixation devices marketed under the AMS brands LiquiBand(R) , RESORBA(R) , LiquiBandFix8(R) and Seal-G(R) .
Growth in the Surgical Business was driven by strong performances from the Biosurgical Devices and Internal Fixation products. Revenue increased by 16% in the period to GBP74.9 million (2021: GBP64.6 million) and by 12% on a constant currency basis.
Surgical Business 2022 2021 Reported Change
Unit GBP million GBP million Growth at constant
currency
Advanced Closure 36.0 33.1 9% 1%
------------- ------------- --------- -------------
Internal Fixation
and Sealants 4.1 2.6 60% 60%
------------- ------------- --------- -------------
Other Distributed 2.9 0.0
------------- ------------- --------- -------------
Traditional Closure 16.0 14.9 7% 6%
------------- ------------- --------- -------------
Biosurgical Devices 15.8 14.0 13% 13%
------------- ------------- --------- -------------
TOTAL 74.9 64.6 16% 12%
------------- ------------- --------- -------------
Advanced Closure
LiquiBand(R) is a range of topical skin adhesives, incorporating medical grade cyanoacrylate in combination with purpose-built applicators. These products are used to close and protect a broad variety of surgical and traumatic wounds.
Advanced Closure 2022 2021 Reported Change
GBP million GBP million Growth at constant
currency
Americas 23.4 22.4 5% -6%
------------- ------------- --------- -------------
UK/Germany 7.3 6.3 17% 17%
------------- ------------- --------- -------------
ROW 5.3 4.5 19% 17%
------------- ------------- --------- -------------
TOTAL 36.0 33.1 9% 1%
------------- ------------- --------- -------------
Revenues increased to GBP36.0 million (2021: GBP33.1 million) representing growth of 9% on a reported basis and 1% on a constant currency basis.
Strong growth in LiquiBand(R) globally was partially offset by weakness in US revenues and consequently US sales increased by only 5% at reported currency and declined by 6% at constant currency.
In 2022, the Group began a strategic review of its US LiquiBand(R) business which involves assessing and streamlining its routes to market and product offering in order to help drive stronger growth in this key market sector. As part of this initiative, we identified and first made contact with Connexicon as a potential acquisition target. We intend to complete this strategic review process during 2023 and it is expected that this will result in improved market access and growth potential from H2 2023. As a consequence of the ongoing changes, we had reduced orders from one partner in H2 2022 and this is expected to continue throughout H1 2023.
Following its approval in H1 2022, LiquiBand(R) XL delivered a strong launch in H2 2022 with GBP0.6 million of initial US orders fulfilled, strengthening our optimism on the short and long-term potential of LiquiBand(R) XL in the fast growing $60 million long wound market and unlocking further growth potential for the LiquiBand(R) business. The US approval is to be extended in early 2023 with the addition of a product that can close wounds up to 60cm rather than the current maximum of 40cm.
Going forward, we remain highly confident of delivering growth with LiquiBand(R) in the US, especially as we start to reap the benefits of adding LiquiBand(R) XL and the recently acquired Connexicon Medical products to our portfolio.
The acquisition of Connexicon Medical in February 2023 brings an existing Indermil(R) Flexifuse(R) business in Europe and APAC, progress towards accessing the large Chinese market and an exciting, enhanced portfolio for the US market that provides significant commercial synergies with approvals expected by early 2024. The addition of Connexicon's highly experienced R&D team to the Group has provided AMS with a medical adhesive development hub in Dublin, strengthening the Company's ability to develop and launch innovative adhesive and sealant technologies in the coming years.
Outside the US market, the LiquiBand(R) brand continued to perform very strongly, with underlying growth of 17% in both the UK/Germany and the Rest of the World markets. AMS is encouraged to see early-stage traction building for LiquiBand(R) XL outside the US, and this is now contributing to growth.
In addition, the Group has recently taken over the direct ownership and distribution of InteguSeal(R) , a cyanoacrylate microbial surgical sealant, from a partner that has historically generated a low level of sales. AMS is now looking at options for broader global distribution that have the potential to generate more meaningful revenue. The first direct order was shipped to a new partner in Japan in late 2022 and there is significant business development activity planned in other key EU and APAC markets in early 2023.
Internal Fixation and Sealants
LiquiBandFix8(R) uses individual, accurately delivered drops of cyanoacrylate adhesive inside the body, to fix hernia meshes in place, instead of sutures or tacks.
A strong performance from LiquiBandFix8(R) was supported by the UK National Institute for Clinical Excellence (NICE) recommendation and the AFS acquisition as revenues increased to record levels of GBP4.1 million (2021: GBP2.6 million) an increase of 60% at reported and constant currency. The marketing expertise from AFS will be beneficial to other marketing teams and will help to increase traction in more specialist minimally invasive surgical markets.
In October 2022, AMS reported that the Premarket Approval (PMA) for LiquiBandFix8(R) had been submitted and accepted by the FDA. Since then, FDA engagement has been high and the process is progressing well with approval on track for H2 2023. This would be the first product of its kind in the US and the anticipated launch in 2024 represents a significant commercial opportunity for the Company.
Seal-G(R) MIST ( laparoscopic surgery) and Seal-G(R) (open surgery ) are novel, internal, biological sealants used to seal tissue during gastrointestinal surgery to reduce bleeding and leakage of fluid. The trial continues to progress well with over 80% of the 160 procedures now complete, with results on track for H1 2023 and launch planned for H2 2023.
Key Opinion Leader feedback continues to be highly positive and AMS remains excited about the opportunity for Seal-G(R) products in answering a high unmet patient need for an effective GI sealant. Beyond colon surgery, the Company sees opportunities to drive demand in surgeries with other potential indications that experience high leakage rates, for example oesophageal and pancreatic surgery. In early 2023, we received our first end-user commercial order from a UK surgeon who is using SEAL-G(R) in oesophageal surgery to reduce the risk of leaks.
Traditional Closure
RESORBA(R) branded Absorbable and Non-absorbable Suture ranges are used in general surgery and a wide range of surgical specialties including dental and ophthalmic surgery. Revenue increased by 7% to GBP16.0 million and by 6% at constant currency (2021: GBP14.9 million).
This portfolio has been established in predominantly European markets. However, in line with the Group's ongoing strategy to expand the geographic reach of existing products, recent successes in the US dental market made a significant contribution to Traditional Closure revenues during the period.
Biosurgical Devices
The Biosurgical Devices category comprises antibiotic-loaded collagen sponges, collagen membranes and cones, oxidised cellulose, synthetic bone substitutes and bio-absorbable screws. R evenues increased by 13% at reported and constant currency to GBP15.8 million (2021: GBP14.0 million).
Demand for collagens both with and without antibiotics continued to drive growth in Europe in 2022 including an increased focus on the cardiovascular market with a supplementary brand and a new specialist partner network. AMS's strategy to expand its distribution network into new territories has also been working well, with particular success in the Far East where one of its distributors was the first to exceed annual collagen revenues of GBP0.5 million.
The Group continues to work towards its first collagen approval in the US with a 510(k) submission expected in 2023 for a dental application to support haemostasis and healing following tooth extraction.
The RESORBA (R) branded bone substitutes range has shown a promising start following its launch in 2021, rolling out in a number of European countries during 2022. The Group continues to work towards its planned Independent Rep launch into the US Bone Substitutes market which is on track for mid-2023.
Other Distributed Products
Following the acquisition of AFS in the period, the Other Distributed category comprises products distributed by AFS, including minimally invasive access ports and laparoscopic instruments. This category excludes sales of LiquiBandFix8(R) which are recorded within the Internal Fixation and Sealants category. Since acquisition, AFS trading has been in-line with expectations.
Woundcare Business Unit
The Woundcare Business Unit is comprised of the Group's multi-product portfolio of advanced woundcare dressings sold under its partners' brands and the ActivHeal (R) label, plus a portfolio of specialist medical bulk materials including multi-layer woundcare and bio diagnostics products.
The Woundcare portfolio growth was driven by higher ordering from OEM partners, growth in ActivHeal (R) , bulk materials and royalties as well as increased pricing to recover inflationary cost increases . Revenue increased by 13% in the Period to GBP49.5 million (2021: GBP44.0 million) and by 8% on a constant currency basis.
Woundcare Business 2022 2021 Reported Change
Unit GBP million GBP million Growth at constant
currency
Infection Management 16.1 15.1 7% 2%
------------- ------------- --------- -------------
Exudate Management 23.4 21.7 8% 7%
------------- ------------- --------- -------------
Other Woundcare 9.9 7.2 38% 26%
------------- ------------- --------- -------------
TOTAL 49.5 44.0 13% 8%
------------- ------------- --------- -------------
Infection Management
The infection management category comprises advanced woundcare dressings that incorporate anti-microbials such as Silver and Polyhexamethylene Biguanide (PHMB). Revenue increased by 7% on a reported basis and by 2% on a constant currency basis to GBP16.1 million (2021: GBP15.1 million).
The Group's growth in the infection management market continues to be affected by reimbursement issues in a number of territories, driving greater use of standard dressings over higher priced anti-microbial alternatives. However, orders for AMS's silver alginate range have now stabilised following the renegotiation of a major contract in 2022 and progress continues to be made through new distribution channels. Other new products, such as the Silver High Performance Dressing and Silicone PHMB foam range continue to be rolled out and help to sustain growth.
New product approvals in this area are becoming increasingly challenging and we are currently reviewing FDA questions on the 510(k) for our innovative high gelling product with anti-biofilm activity that was submitted in 2022. On a more positive note, we expect to obtain extended US approval for our Silicone PHMB foam range in H1 2023. This dressing provides high efficacy and sustained performance, and the enhanced anti-microbial approval increases its potential to penetrate the US, MEA and APAC regions.
Exudate Management
Exudate Management comprises advanced woundcare dressings, gels and bulk materials which do not incorporate any antimicrobial elements. Revenue increased by 8% on a reported basis and by 7% on a constant currency basis to GBP23.4 million (2021: GBP21.7 million).
Increased orders from the Group's OEM partners continued to drive Exudate Management growth with a significant increase in demand for our specialist medical foam material.
Growth has also been driven by the successful implementation of the Group's strategy to expand the distribution network for its own ActivHeal(R) range of dressings. AMS has continued to appoint new ActivHeal (R) distribution partners in markets where its key partners have no or low presence, but the demand for a high quality, cost effective woundcare dressing range still exists. Several new contracts were signed in 2022, with launches being undertaken as market registrations are obtained.
AMS has applied its Biosurgical, collagen technology into developing a tissue scaffold designed to treat hard to heal and stalled wounds such as diabetic foot ulcers and venous leg ulcers. A 510(k) submission was made in the period and we are reviewing FDA questions as we continue to evaluate the optimal commercial strategy.
Progress continues to be made in the development of a customer-specific negative pressure dressing. The 510(k) submission has been made by our partner and AMS awaits confirmation of approval and commercialisation.
Other Woundcare
Other Woundcare comprises royalties, fees and woundcare sealants. Revenue increased by 38% at reported currency and by 26% at constant currency to GBP9.9 million (2021: GBP7.2 million) due to increased partner demand for membranes, gels and hydrocolloid and a higher royalty income from the Group's licensing arrangement with Organogenesis.
Acquisition strategy
The Group continues to seek acquisitions that deliver additional value for shareholders and meet the criteria of being accretive businesses with strong R&D and manufacturing capabilities, and/or that have products or customers that offer effective commercial synergies.
In line with our stated strategy, the acquisition of AFS in May 2022 underlines the Group's ambition to expand its direct surgical footprint and capability and the acquisition of Connexicon Medical in February 2023 illustrates the company's commitment to further expand its key portfolios and ensure that it remains at the forefront of its core technologies.
Whilst in recent years the Group's completed transactions have been strategic bolt-ons, a key focus of the recently formed corporate business development team is on identifying larger more transformative targets. With cash of GBP82.3 million at the end of 2022 and access to extensive debt facilities, the Group is well placed to execute a deal of this nature.
Regulatory
In December 2022, the EU Commissioner announced that the enforcement of the Medical Devices Regulation (MDR) would be delayed until 2027 or 2028 depending on the classification of the device. Given the progress we have already made, AMS expects positive responses to its applications for certificate extensions for MDD products expiring before these dates. It is anticipated that competitors that have not made MDR progress will be unable to secure such extensions.
AMS plans to maintain its current schedule of work to meet the new standards and anticipates that the phasing of its capitalisation of R&D costs relating to MDR will be broadly unchanged.
At the current time, of the 55 AMS product groups going through MDR, 30 have been approved or are awaiting self-declaration, 19 are with the Notified Bodies ahead of their review and the remaining 6 files are being readied for submission to Notified Bodies in the next 12 months.
Supply Chain and Inflation
AMS has taken proactive steps to mitigate risks arising from global supply chain challenges such as increasing inventory levels and setting up alternative suppliers where feasible. As a result, shortages of material have not had a significant impact on the Group's ability to supply products to its customers. Given the long shelf life of the Group's materials and finished goods, the risk of inventory obsolescence is low but is closely monitored and provisions are made where relevant. We continue to closely monitor the global supply chain situation.
Inflationary pressures continue to be felt across the business through higher cost of goods, energy prices and staff costs. However, the Group has been able to successfully recover a significant proportion of this impact from its customers through price review negotiations.
Environmental, Social & Governance
Our ESG strategy remains focused on our environmental impact, the well-being of our workforce, driving equality, diversity and inclusion, and further strengthening our corporate governance, internally and across our supply chain. We believe that being a good corporate citizen is critical to our long-term sustainable success .
Building on the ESG framework we developed in 2021, the Group has made good progress in 2022. An important step during the year was the appointment of Inspired Energy as our ESG partner. AMS has worked with the organisation to create a 'Pathway to Net Zero' with an initial focus on calculating our Scope 3 emissions and Carbon Balance Sheet. We intend to complete this process prior to issuing the annual report in early Q2 2023 and will publish a comprehensive update at that time.
The steering committee continues to manage ESG activities across the Group and has been supplemented with a network of local ESG champions representing each site and function, as well as an Equality Diversity and Inclusion Committee.
Stakeholders
On behalf of the Board, I would like to thank the Group's committed staff, partners and other stakeholders, without whose help and commitment, the achievements of this year, and the years prior, would not have been possible.
Outlook
The Group is well placed to navigate the ongoing macro-economic challenges. We have proven our ability to recover the majority of energy and other cost inflation by increasing selling prices, are insulated from high interest rates due to our cash position and our products do not rely on consumer demand exposed to recessionary factors.
These factors along with our proven commercial strategy to increase our share of our large markets with innovation and geographical expansion, leaves us well placed for continued growth both in the short and long term.
Influenced by the strategic review of our US LiquiBand(R) business, and the associated 2024 launch timing for the US Connexicon products, we expect weak demand in H1 2023 as we finalise the strategic discussions across our partner base, followed by recovery in H2 2023 and much stronger growth thereafter.
Given AMS' resilience and the strength of its overall portfolio, the Group remains on track to meet market expectations for 2023.
Chris Meredith
Chief Executive Officer
Financial Review
Summary
IFRS reporting
To provide the clearest possible insight into our performance, the Group uses alternative performance measures. These measures are not defined in International Financial Reporting Standards (IFRS) and, therefore, are considered to be non-GAAP (Generally Accepted Accounting Principles) measures. Accordingly, the relevant IFRS measures are also presented where appropriate. AMS uses such measures consistently at the half-year and full-year and reconciles them as appropriate. The measures used in this statement include constant currency revenue growth, adjusted operating margin, adjusted profit before tax and adjusted earnings per share, allowing the impacts of exchange rate volatility, exceptional items, amortisation, and the movement in long-term acquisition liabilities to be separately identified. Net cash is an additional non-GAAP measure used.
Overview
Revenue increased by 14% at reported currency and 10% at constant currency to GBP124.3 million (2021: GBP108.6 million).
Gross margin improved to 59.0% (2021: 56.2%) as increased volumes drove improved operational leverage.
Administration expenses increased to GBP47.4 million (2021: GBP37.0 million) due to the addition of AFS expenses, higher regulatory and R&D investment, increased selling and marketing activity and a significant adverse foreign exchange movement.
The Group incurred GBP12.3 million of gross R&D spend in the period (2021: GBP9.3 million), representing 9.9% of sales (2021: 8.6%), reflecting increased investment in innovation and in meeting the increasing regulatory standards. As shown in the table below, part of this cost is capitalised and amortised over the following 5 to 10 years.
2022 2021
GBP'000 GBP'000
---------------------------------------- -------- --------
Total investment in Research and
Development, Regulatory and Clinical 12,301 9,343
Of which:
Charged to the profit and loss account 6,149 5,310
Capitalised, to be amortised over
5-10 years 6,152 4,033
Amortisation of acquired intangible assets increased to GBP3.4 million in 2022 (2021: GBP3.2 million) due to the acquisition of AFS in May 2022.
In the period, a credit of GBP0.8 million (2021: GBP0.4 million debit) was recorded in relation to movements in the long-term liabilities relating to deferred consideration and earnout from the Sealantis and AFS acquisitions.
Adjusted profit before tax, which excludes amortisation of acquired intangibles and movements in long term liabilities recognised on acquisition, increased by 11% to GBP28.5 million (2021: GBP25.6 million) whilst the adjusted PBT margin decreased by 70 bps to 22.9% (2021: 23.6%) due to cost inflation having an adverse impact on the Group's profit margin.
Reported profit before tax was GBP25.9 million (2021: GBP22.0 million).
Reconciliation of profit before tax to adjusted
profit before tax
(Unaudited) Audited
2022 2021
GBP'000 GBP'000
------------------------------------- ----------- -------
Profit before tax 25,910 21,984
--------------------------------------- ----------- -------
Amortisation of acquired intangibles 3,414 3,179
Movement in long-term acquisition
liabilities (840) 426
Adjusted profit before tax 28,484 25,589
--------------------------------------- ----------- -------
The Group's effective corporation tax rate, reflecting the blended tax rates in the countries where we operate and including UK patent box relief, increased slightly to 21.2% (2021: 20.5%). The UK Government's enactment of a 25% tax rate from April 2023 will result in an increased group effective tax rate from FY2023.
Adjusted diluted earnings per share increased by 8% to 10.47p (2021: 9.66p) and diluted earnings per share increased by 16% to 9.30p (2021: 8.01p), reflecting the Group's increased earnings.
Reflecting its confidence in the Group's prospects, the Board is proposing an increased final dividend of 1.51p per share, to be paid on 9 June 2023 to shareholders on the register at the close of business on 19 May 2023. This follows the interim dividend of 0.64p per share paid on 22 October 2022 and would, if approved, make a total dividend for the year of 2.15p per share (2021: 1.95p) an increase of 10%.
Operating result by business segment
Year ended 31 December 2022 Surgical Woundcare
GBP'000 GBP'000
------------------------------ --------- ----------
Revenue 74,861 49,469
Segment operating profit 19,333 6,687
Amortisation of acquired
intangibles 2,469 945
Adjusted segment operating
profit(4) 21,802 7,632
Adjusted operating margin(4) 29.1% 15.4%
------------------------------ --------- ----------
Year ended 31 December 2021
Revenue 64,630 43,971
Segment operating profit 18,298 5,420
Amortisation of acquired
intangibles 2,005 1,174
Adjusted segment operating
profit(4) 20,303 6,594
Adjusted operating margin(4) 31.4% 15.0%
------------------------------ --------- ----------
(Note 4: Adjusted for amortisation of acquired intangible assets)
(Table is reconciled to statutory information in note 3 of the financial information.)
Surgical
Surgical revenues increased by 16% to GBP74.9 million (2021: GBP64.6 million) at reported currency and by 11.6% at constant currency. Adjusted operating margin decreased by 230 bps to 29.1% (2021: 31.4%) due to lower shipments of LiquiBand(R) to US partners, the addition of AFS at lower operating margin and the adverse margin impact of inflation.
Woundcare
Woundcare revenues increased by 13% to GBP49.5 million (2021: GBP44.0 million) at reported currency and increased 8.4% at constant currency. Adjusted operating margin increased by 40 bps to 15.4% (2021: 15.0%) as favourable sales pricing mix was offset by the adverse margin impact of inflation.
Currency
The Group hedges significant currency transaction exposure by using forward contracts and aims to hedge approximately 80% of its estimated transactional exposure for the next 18 months. In the financial year, approximately one third of sales were invoiced in Euros and approximately 30% were invoiced in US Dollar.
The Group estimates that a 10% movement in the GBP:US$ or GBP: EUR exchange rate will impact Sterling revenues by approximately 3.1% and 3.0% respectively and, in the absence of any hedging, this would have an impact on the Group operating margin of 2.5% and 0.3% percentage points respectively.
Cash flow
The Group continued to generate significant amounts of cash from operations. Net cash inflow from operating activities in the period was GBP26.9 million, which was lower than 2021 (GBP31.0 million) due to increased investment in inventory to mitigate the supply chain crisis and to mitigate any potential risks relating to the transition to MDR.
At the end of the period, the Group had net cash of GBP82.3 million (31 December 2021: GBP73.0 million) inclusive of the acquisition of AFS.
Working capital increased during the year. Increased inventory and receivables were only partially offset by increased payables. Inventory cover increased to 6.2 months of supply (2021: 4.9 months) due to planned increases in stock levels. Debtor days and Creditor days have both remained broadly consistent with prior period at 44 days (2021: 44 days) and 37 days (2021: 37 days) respectively.
Capital investment in equipment, R&D and regulatory costs increased to GBP9.9 million (2021: GBP6.5 million) as the Group continues to invest in its future pipeline.
Cash outflow relating to taxation decreased to GBP3.3 million (2021: GBP4.1 million) due to the timing of payments on account.
The Group paid its final dividend for the year ended 31 December 2021 of GBP3.0 million in June 2022 (2021: for the year ending December 2020, GBP2.6 million in June 2021), and its interim dividend for the six months ended 30 June 2022 of GBP1.4 million in October 2022 (for the 6 months ended 30 June 2021: GBP1.2 million in October 2021).
The Group retains strong support from its two banks, NatWest and HSBC, and in order to retain maximum flexibility of facility size for future acquisitions, it did not renew its credit facility when it expired in December 2022.
CONDENSED CONSOLIDATED INCOME STATEMENT
(Unaudited) (Audited)
Year ended 31 December 2022 2021
Note GBP'000 GBP'000
----------------------------------------- ----- ------------ ----------
Revenue from continuing operations 3 124,330 108,601
Cost of sales (50,914) (47,531)
----------------------------------------- ----- ------------ ----------
Gross profit 73,416 61,070
Distribution costs (1,626) (1,483)
Administration costs (47,378) (36,970)
Other income 478 381
----------
Operating profit 4 24,890 22,998
Finance income 1,691 84
Finance costs (671) (1,098)
----------------------------------------- ----- ------------ ----------
Profit before taxation 25,910 21,984
Income tax 5 (5,504) (4,503)
----------------------------------------- ----- ------------ ----------
Profit for the period attributable to
equity holders of the parent 20,406 17,481
----------------------------------------- ----- ------------ ----------
Earnings per share
Basic 6 9.42p 8.11p
Diluted 6 9.30p 8.01p
Adjusted diluted (5) 6 10.47p 9.66p
----------------------------------------- ----- ------------ ----------
(Note 5: Adjusted for amortisation of acquired intangible assets and movement in long-term acquisition liabilities.)
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(Unaudited) (Audited)
2022 2021
GBP'000 GBP'000
---------------------------------------------- ----------- ---------
Profit for the year 20,406 17,481
-------------------------------------------------- ----------- ---------
Exchange differences on translation
of foreign operations 6,940 (5,194)
Loss arising on cash flow hedges (1,297) (1,548)
Deferred tax (charge)/credit arising
on cash flow hedges (201) 290
-------------------------------------------------- ----------- ---------
Total other comprehensive income/(expense)
for the year 5,442 (6,452)
-------------------------------------------------- ----------- ---------
Total comprehensive income for
the year attributable to equity
holders of the parent 25,848 11,029
-------------------------------------------------- ----------- ---------
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(Unaudited) (Audited)
31 December 31 December
2022 2021
GBP'000 GBP'000
Assets
Non-current assets
Intangible assets 48,373 40,958
Goodwill 70,859 66,032
Property, plant and equipment 29,015 27,441
Trade and other receivables 937 105
------------------------------------------- ------------ --------------------------------
149,184 134,536
Current assets
Inventories 27,911 19,300
Trade and other receivables 21,553 21,016
Current tax assets 184 1,692
Cash and cash equivalents 82,262 72,965
------------------------------------------- ------------ --------------------------------
131,910 114,973
------------------------------------------- ------------ --------------------------------
Total assets 281,094 249,509
------------------------------------------- ------------ --------------------------------
Liabilities
Current liabilities
Trade and other payables 20,671 14,958
Current tax liabilities 948 897
Lease liabilities 1,059 1,153
22,678 17,008
Non-current liabilities
Trade and other payables 3,510 3,679
Deferred tax liabilities 9,593 7,438
Lease liabilities 8,691 8,707
21,794 19,824
------------------------------------------- ------------ --------------------------------
Total liabilities 44,472 36,832
------------------------------------------- ------------ --------------------------------
Net assets 236,622 212,677
------------------------------------------- ------------ --------------------------------
Equity
Share capital 10,843 10,804
Share premium 37,269 36,996
Share-based payments reserve 15,711 13,180
Investment in own shares (167) (164)
Share-based payments deferred tax reserve 531 933
Other reserve 1,531 1,531
Hedging reserve (1,519) (21)
Translation reserve 5,004 (1,936)
Retained earnings 167,419 151,354
------------------------------------------- ------------ --------------------------------
Equity attributable to equity holders
of the parent 236,622 212,677
------------------------------------------- ------------ --------------------------------
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
deferred
capital premium payments shares tax reserve reserve reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------ -------------- ------------------ -------------- ----------- ---------------- --------------- -------- ------------ -------------- --------------
At 1 January 2021
(Audited) 10,769 36,288 11,142 (162) 430 1,531 1,237 3,258 137,718 202,211
------------------ -------------- ------------------ -------------- ----------- ---------------- --------------- -------- ------------ -------------- --------------
Consolidated
profit
for the year to
31 December 2021 - - - - - - - - 17,481 17,481
Other
comprehensive
expense - - - - - - (1,258) (5,194) - (6,452)
------------------ -------- ------------ -------------- --------------
Total
comprehensive
expense - - - - - - (1,258) (5,194) 17,481 11,029
------------------ -------------- ------------------ -------------- ----------- ---------------- --------------- -------- ------------ -------------- --------------
Share-based
payments - - 1,979 - 503 - - - - 2,482
Share options
exercised 35 708 59 - - - - - - 802
Shares purchased
by EBT - - - (366) - - - - - (366)
Shares sold by
EBT - - - 364 - - - - - 364
Dividends paid - - - - - - - - (3,845) (3,845)
--------------
At 31 December
2021 (Audited) 10,804 36,996 13,180 (164) 933 1,531 (21) (1,936) 151,354 212,677
------------------ -------------- ------------------ -------------- ----------- ---------------- --------------- -------- ------------ -------------- --------------
Consolidated
profit for the
year to 31
December
2022 - - - - - - - - 20,406 20,406
Other
comprehensive
(expense)/income - - - - - - (1,498) 6,940 - 5,442
------------------ -------------- ------------------ -------------- ----------- ---------------- --------------- -------- ------------ -------------- --------------
Total
comprehensive
(expense)/income - - - - - - (1,498) 6,940 20,406 25,848
------------------ -------------- ------------------ -------------- ----------- ---------------- --------------- -------- ------------ -------------- --------------
Share-based
payments - - 2,439 - (402) - - - - 2,037
Share options
exercised 39 273 92 - - - - - - 404
Shares purchased
by EBT - - - (392) - - - - - (392)
Shares sold by
EBT - - - 389 - - - - - 389
Dividends paid - - - - - - - - (4,341) (4,341)
--------------
At 31 December
2022 (Unaudited) 10,843 37,269 15,711 (167) 531 1,531 (1,519) 5,004 167,419 236,622
------------------ -------------- ------------------ -------------- ----------- ---------------- --------------- -------- ------------ -------------- --------------
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited) (Audited)
Year ended Year ended
31 December
31 December 2022 2021
Note GBP'000 GBP'000
---------------------------------------- ------- ---------------- -----------
Cash flows from operating activities
Operating profit 24,890 22,998
Adjustments for:
Depreciation 4,049 3,893
Amortisation - acquired intangible
assets 3,414 3,179
- software intangibles 502 529
- development costs 879 1,247
(Increase)/decrease in inventories (7,087) 941
Increase in trade and other receivables (596) (1,769)
Increase in trade and other payables 1,711 2,105
Share-based payments expense 2,439 1,979
Taxation paid (3,324) (4,077)
Net cash inflow from operating
activities 26,877 31,025
---------------------------------------- ------- ---------------- -----------
Cash flows from investing activities
Purchase of software (73) (254)
Capitalised research and development (6,152) (4,441)
Purchases of property, plant and
equipment (3,739) (1,768)
Disposal of property, plant and
equipment 46 53
Interest received 820 84
Acquisition of subsidiaries net
of cash 7 (2,781) -
Net cash used in investing activities (11,879) (6,326)
---------------------------------------- ------- ---------------- -----------
Cash flows from financing activities
Dividends paid (4,341) (3,845)
Repayment of principal under lease
liabilities (1,295) (1,281)
Repayment of loan 7 (331) -
Issue of equity shares 266 723
Shares purchased by EBT (392) (366)
Shares sold by EBT 389 364
Interest paid (617) (700)
Net cash used in financing activities (6,321) (5,105)
---------------------------------------- ------- ---------------- -----------
Net increase in cash and cash
equivalents 8,677 19,594
Cash and cash equivalents at
the beginning of the year 72,965 53,829
Effect of foreign exchange rate
changes 620 (458)
Cash and cash equivalents at
the end of the year 82,262 72,965
---------------------------------------- ------- ---------------- -----------
Notes Forming Part of the Condensed 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 02867684). 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 2022 comprise the Company and its subsidiaries (together referred to as the "Group").
The Group is primarily involved in the design, development and manufacture of innovative tissue healing technology, focused on quality outcomes for patients and value for payers The Group has a wide range of surgical products including tissue adhesives, sutures, haemostats, internal fixation devices and internal sealants, which it markets under its brands LiquiBand(R) , RESORBA(R) , LiquiBandFix8(R) and Seal-G(R) . The Group also supplies wound care dressings such as silver alginates, alginates and foams through its ActivHeal(R) brand as well as under white label.
2. Basis of preparation
These condensed unaudited consolidated financial statements have been prepared in accordance with the accounting policies set out in the annual report for the year ended 31 December 2021 except for new standards adopted for the year.
In the current year the Group has applied a number of amendments to IFRSs issued by the IASB. Their adoption has not had a material impact on the disclosures or on the amounts reported in the Annual Financial Statements. The following amendments were applied:
-- Interest Rate Benchmark Reform (Amendments to IFRS 9, IAS 39 and IFRS7, IFRS4 and IFRS16) -- Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS37) -- Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16)
-- Annual Improvements to IFRS Standards 2018-2020 (Amendments to IFRS1, IFRS9, IFRS16 and IAS 41); and
-- References to Conceptual Framework (Amendments to IFRS3)
While the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of international accounting standards and International Financial Reporting Standards (IFRSs) as adopted by the UK, this announcement does not itself contain sufficient information to comply with IFRSs. The Group expects to publish full financial statements that comply with IFRSs in April 2023.
The financial information set out in the announcement does not constitute the Group's statutory accounts for the years ended 31 December 2022 or 31 December 2021. The financial information for the year ended 31 December 2021 is derived from the statutory accounts for that year, which have been delivered to the Registrar of Companies. The auditor reported on those accounts; their report was unqualified, did not draw attention to any matters by way of emphasis without qualifying their report and did not contain a statement under s498 (2) or (3) Companies Act 2006. The audit of the statutory accounts for the year ended 31 December 2022 is not yet complete. These accounts will be finalised on the basis of the financial information presented by the Directors in this preliminary announcement and will be delivered to the Registrar of Companies following the Group's annual general meeting.
The financial statements have been prepared on the historical cost basis of accounting except as disclosed in the accounting policies set out in the annual report for the year ended 31 December 2021.
Going concern
With regards to the Group's financial position, it had cash and cash equivalents at the 31 December 2022 of GBP82.3 million. In December 2018, the Group entered an unsecured, multi-currency, credit facility for GBP80 million which was undrawn in 2022 and expired in December 2022. The Group has opted not to renew the facility.
While the current economic environment is uncertain, the Group 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 contracts with customers across different geographic regions and also with substantial financial resources, ranging from government agencies through to global healthcare companies.
Having taken the above into consideration and reviewed cash flow forecasts for the next 12 months, 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 preliminary announcement.
New accounting standards not yet applied
Certain new accounting standards and interpretations have been published that are not mandatory for 31 December 2022 reporting periods and have not been early adopted by the Group. These standards are not expected to have a material impact on the entity in the current or future reporting periods or on foreseeable future transactions.
3. Segment information
As referred to in the Chief Executive's Statement, the Group is organised into two Business Units: Surgical and Woundcare. These Business Units are the basis on which the Group reports its 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 and income tax assets. These are the measures reported to the Group's Chief Executive for the purposes of resource allocation and assessment of segment performance.
Business segments
Segment information about these businesses is presented below.
Year ended 31 December
2022 Surgical Woundcare Consolidated
(unaudited)
GBP'000 GBP'000 GBP'000
------------------------------- --------- ---------- -------------
Revenue
External sales 74,861 49,469 124,330
Result
------------------------------- --------- ---------- -------------
Adjusted segment operating
profit 21,802 7,632 29,434
Amortisation of acquired
intangibles (2,469) (945) (3,414)
------------------------------- --------- ---------- -------------
Segment operating
profit 19,333 6,687 26,020
Unallocated expenses (1,130)
Operating profit 24,890
Finance income 1,691
Finance costs (671)
------------------------------- --------- ---------- -------------
Profit before tax 25,910
Tax (5,504)
------------------------------- --------- ---------- -------------
Profit for the year 20,406
------------------------------- --------- ---------- -------------
Year ended 31 December
2022 Surgical Woundcare Consolidated
(Unaudited)
Other information GBP'000 GBP'000 GBP'000
------------------------------- --------- ---------- -------------
Capital additions:
Software intangibles 34 39 73
Development costs 4,617 1,535 6,152
Property, plant and
equipment 2,258 1,481 3,739
Depreciation and amortisation (5,759) (3,085) (8,844)
------------------------------- --------- ---------- -------------
At 31 December 2022
Statement of Financial
Position
Assets
Segment assets 190,456 90,638 281,094
Unallocated assets -
------------------------------- --------- ----------
Consolidated total
assets 281,094
------------------------------- --------- ---------- -------------
Liabilities
Segment liabilities 29,786 14,686 44,472
------------------------------- --------- ---------- -------------
Year ended 31 December 2021 Surgical Woundcare Consolidated
(audited)
GBP'000 GBP'000 GBP'000
----------------------------------------- ----------- ---------- -------------
Revenue
External sales 64,630 43,971 108,601
Result
----------------------------------------- ----------- ---------- -------------
Adjusted segment operating
profit 20,303 6,594 26,897
Amortisation of acquired intangibles (2,005) (1,174) (3,179)
----------------------------------------- ----------- ---------- -------------
Segment operating profit 18,298 5,420 23,718
Unallocated expenses (720)
-------------
Operating profit 22,998
Finance income 84
Finance costs (1,098)
----------------------------------------- ----------- ---------- -------------
Profit before tax 21,984
Tax (4,503)
----------------------------------------- ----------- ---------- -------------
Profit for the year 17,481
----------------------------------------- ----------- ---------- -------------
Year ended 31 December 2021 Surgical Woundcare Consolidated
(audited)
----------------------------------------- ----------- ---------- -------------
Other information GBP'000 GBP'000 GBP'000
----------------------------------------- ----------- ---------- -------------
Capital additions:
Software intangibles 145 109 254
Development costs 2,922 1,519 4,441
Property, plant and equipment 1,028 740 1,768
Depreciation and amortisation (5,579) (3,269) (8,848)
----------------------------------------- ----------- ---------- -------------
At 31 December 2021
Statement of Financial Position
Assets
Segment assets 159,442 89,944 249,386
Unallocated assets 123
----------------------------------------- ----------- ----------
Consolidated total assets 249,509
----------------------------------------- ----------- ---------- -------------
Liabilities
Segment liabilities 22,651 14,181 36,832
----------------------------------------- ----------- ---------- -------------
Geographic segments
The Group operates in the UK, The Netherlands, Germany, the Czech Republic, France and Israel, with a sales office located in Russia, as a distributor in Austria, 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 revenue by geographical market, irrespective of the origin of the goods/services, based upon location of the Group's customers:
(Unaudited) (Audited)
Year ended 31 December 2022 2021
GBP'000 GBP'000
-------------------------- ------------------ ----------------
United Kingdom 19,960 18,454
Germany 20,780 20,863
Rest of Europe 32,519 22,913
United States of America 40,807 36,712
Rest of World 10,264 9,659
---------------------------- ------------------ ----------------
124,330 108,601
-------------------------- ------------------ ----------------
The following table provides an analysis of the Group's total
assets by geographical location:
-----------------------------------------------------------------------
(Unaudited) (Audited)
As at 31 December 2022 2021
GBP'000 GBP'000
------------------------------------ ---------------- -------------
United Kingdom 151,817 142,056
Germany 78,877 67,389
France 11,934 9,674
Rest of Europe 16,670 7,853
United States of America 451 1,984
Israel 21,345 20,553
-------------------------------------- ---------------- -------------
281,094 249,509
------------------------------------ ---------------- -------------
4. Operating profit
(Unaudited) (Audited)
Year ended 31 December 2022 2021
GBP'000 GBP'000
------------------------------------------------------------ ------------------ ----------------
Operating profit is arrived at after charging/(crediting):
Depreciation of property, plant and equipment 4,049 3,893
Amortisation of:
- acquired intangible assets 3,414 3,179
- software intangibles 502 529
- development costs 879 1,247
Research and development costs expensed
excluding regulatory costs 4,323 3,841
Cost of inventories recognised as expense 50,663 47,530
Write down of inventories expensed 251 1
Staff costs 46,065 39,691
Net foreign exchange loss/(gain) 1,683 (2,017)
------------------------------------------------------------- ------------------ ----------------
5. Taxation
(Unaudited) (Audited)
Year ended 31 December 2022 2021
GBP'000 GBP'000
-------------------------------------------- ------------ --------------
a) Analysis of charge for the year
Current tax:
Tax on ordinary activities - current
year 5,655 4,936
Tax on ordinary activities - prior
year 6 (323)
--------------------------------------------- ------------ --------------
5,661 4,613
Deferred tax:
Tax on ordinary activities - current
year (84) (490)
Tax on ordinary activities - prior
year (73) (190)
Effect of increase in UK corporation
tax rates to 25% - 570
--------------------------------------------- ------------ --------------
(157) (110)
-------------------------------------------- ------------ --------------
Tax charge for the year 5,504 4,503
--------------------------------------------- ------------ --------------
The Group has chosen to use a weighted average country tax rate
rather than the UK tax rate for the reconciliation of the charge
for the year to the profit per the income statement. The Group
operates in several jurisdictions, some of which have a tax
rate in excess of the UK tax rate. As such, a weighted average
country tax rate is believed to provide the most meaningful
information to the users of the financial statements.
---------------------------------------------------------------------------
(Unaudited) (Audited)
Year ended 31 December 2022 2021
GBP'000 GBP'000
-------------------------------------------- ------------ --------------
b) Factors affecting tax charge
for the year
Profit before taxation 25,910 21,984
--------------------------------------------- ------------ --------------
Profit multiplied by the weighted
average Group tax rate of 22.8%
(2021: 23.0%) 5,911 5,053
Effects of:
Net expenses not deductible for
tax purposes and other timing differences 243 7
Patent Box Relief (554) (652)
Utilisation of trading losses (269) -
Net impact of deferred tax on capitalised
development costs and R&D relief 32 (123)
Share-based payments 208 161
Adjustments in respect of prior
year - current tax 6 (323)
Adjustments in respect of prior
year and rate changes - deferred
tax (73) 380
Taxation 5,504 4,503
--------------------------------------------- ------------ --------------
6. Earnings per share
The calculation of the basic and diluted earnings per share is based on the following data:
(Unaudited) (Audited)
Year ended 31 December 2022 2021
Number of shares '000 '000
----------------------------------------------- ------------ ----------
Weighted average number of ordinary shares
for the purposes of basic earnings per
share 216,512 215,677
----------------------------------------------- ------------ ----------
Effect of dilutive potential ordinary shares:
share options, deferred share bonus, LTIPs 2,969 2,635
----------------------------------------------- ------------ ----------
Weighted average number of ordinary shares
for the purposes of diluted earnings per
share 219,481 218,312
----------------------------------------------- ------------ ----------
(Unaudited) (Audited)
2022 2021
GBP'000 GBP'000
----------------------------------------------- ------------ ----------
Profit for the year attributable to equity
holders of the parent 20,406 17,481
Amortisation of acquired intangible assets 3,414 3,179
Movement in long-term acquisition liabilities (840) 426
Adjusted profit for the year attributable
to equity holders of the parent 22,980 21,086
----------------------------------------------- ------------ ----------
(Unaudited) (Audited)
2022 2021
pence pence
----------------------------------------------- ------------ ----------
Basic EPS 9.42 8.11
Diluted EPS 9.30 8.01
Adjusted basic EPS 10.61 9.78
Adjusted diluted EPS 10.47 9.66
----------------------------------------------- ------------ ----------
7. Acquisition of AFS
On 28 April 2022, the Group acquired the entire issued share capital of AFS Medical GmbH, an Austria-based distributor of minimally invasive surgical devices.
In the eight month period from acquisition to 31 December 2022, AFS contributed GBP3.7 million of net revenue to the Group and GBP0.2 million of operating profit. In addition, amortisation of intangible assets of GBP0.3 million was recorded within the Group as a result of the acquisition.
GBP'000
------------------------------------ ------------
Identifiable net assets acquired
Customer related intangible assets 3,424
Marketing intangible assets 524
Property, plant and equipment 242
Trade and other receivables 296
Inventory 845
Cash and cash equivalents 42
Trade and other payables (1,294)
Lease liabilities (226)
Borrowings (331)
Borrowings from AMS (2,526)
Deferred tax on intangible asset (986)
Arising on acquisition
Goodwill 1,452
------------------------------------ ------------
Total net assets 1,462
------------------------------------ ------------
Borrowings from AMS arose as funds were advanced prior to completion of the acquisition to repay external funding. These borrowings are now eliminated on consolidation. GBP0.3 million of borrowings that existed at the date of acquisition have been repaid prior to 31 December 2022 as disclosed in the Condensed Consolidated Statement of Cash flows.
Satisfied by GBP'000
------------------------------ --------
Cash consideration 297
Contingent consideration 1,165
------------------------------ --------
1,462
------------------------------ --------
Net cash flow on acquisition GBP'000
------------------------------ --------
Cash consideration 297
Cash acquired (42)
------------------------------ --------
255
------------------------------ --------
Contingent consideration arose on the acquisition in respect of up to EUR1.5 million which is payable subject to EBITDA delivery in 2022-2024. GBP1.2 million is the estimated fair value of it as at the acquisition date.
None of the goodwill on the acquisition is expected to be deductible for income tax.
8. Events after reporting period
There have been no material events subsequent to 31 December 2022 with the exception of the acquisition of Connexicon Medical Limited, announced in February 2023, for initial consideration of EUR7 million and with further deferred payments dependent on the delivery of future research & development, regulatory and commercial milestones.
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