TIDMAMS
RNS Number : 3694Z
Advanced Medical Solutions Grp PLC
14 March 2017
14 March 2017
Advanced Medical Solutions Group plc
("AMS" or the "Group")
Unaudited preliminary Results for the year ended 31 December
2016
Strong organic growth and innovation pipeline delivering
Winsford, UK: Advanced Medical Solutions Group plc (AIM: AMS),
the surgical and advanced wound care specialist company, today
announces its unaudited preliminary results for the year ended 31
December 2016.
Financial Highlights
2016 2015 Reported Growth
growth at constant
currency(1)
----------------------------- ----- ----- --------- -------------
Group revenue (GBP million) 82.6 68.6 20% 13%
----------------------------- ----- ----- --------- -------------
Adjusted(2) operating
margin (%) 23.9 25.4 (150bps) -
----------------------------- ----- ----- --------- -------------
Adjusted(2) profit before
tax (GBP million) 19.7 17.4 13% -
----------------------------- ----- ----- --------- -------------
Profit before tax (GBP
million) 19.1 17.0 12% -
----------------------------- ----- ----- --------- -------------
Adjusted(2) diluted
earnings per share (p) 7.66 6.86 12% -
----------------------------- ----- ----- --------- -------------
Diluted earnings per
share (p) 7.38 6.68 10% -
----------------------------- ----- ----- --------- -------------
Net operating cash flow(3)
pre-exceptional items
(GBP million) 22.3 22.5 (1%)
----------------------------- ----- ----- --------- -------------
Net cash (GBP million)(4) 51.1 34.2 49% -
----------------------------- ----- ----- --------- -------------
-- Proposed final dividend of 0.62p per share, making a total
dividend for the year of 0.92p (2015: 0.80p), up 15%
Business Highlights:
-- Good sales progress across all Business Units:
o Branded Distributed up 42% to GBP20.8 million (2015: GBP14.6
million), and up 30% at constant currency
o Branded Direct up 10% to GBP24.6 million (2015: GBP22.3
million), and up 3% at constant currency
o OEM up 16% to GBP32.1 million (2015: GBP27.7 million), and up
12% at constant currency
o Bulk Materials up 33% to GBP5.2 million (2015: GBP3.9
million), and up 21% at constant currency
-- Continued strong performance in the US with LiquiBand(R) tissue adhesive range:
o Revenues up 56% to GBP12.5 million (2015: GBP8.0 million) and
39% at constant currency
o As at 31 December 2016, market share by volume(5) increased to
23% (June 2016: 19%) and initial 20% target share achieved in the
combined hospital and non-hospital market
-- Successful launch of antimicrobial and atraumatic foam dressings into Europe
-- Antimicrobial dressing revenues including both silver and
PHMB (Polyhexamethylene Biguanide) up 13% to GBP17.5 million (2015:
GBP15.5 million) and 9% at constant currency
-- Sales of the hernia mesh fixation device, LiquiBand(R)
Fix8(TM) increased 73% to GBP1.7 million (2016: GBP1.0 million),
68% at constant currency, and is in use in 25 countries; now
preparing for Pre Market Approval (PMA) in US
-- German and Czech RESORBA(R) business up 15% to GBP13.1
million (2015: GBP11.3 million) and 4% at constant currency
-- Successful launch of RESORBA(R) sutures into the US
-- ActivHeal(R) business declined 5% to GBP6.0 million (2015: GBP6.4 million)
Commenting on the results Chris Meredith, Chief Executive
Officer of AMS, said:
"2016 was the twelfth consecutive year of solid revenue growth
for AMS and during the period all Business Units performed well
resulting in increased profit and continued strong cash generation.
Our LiquiBand(R) products continue to perform well in the US and we
now have captured more than 20% of the market with a target to
achieve a further 10% share gain in the next three years. Our
strategy for organic growth is to continue to expand into new
geographies through further regulatory approvals, increase our
distribution of surgical products through both our direct and
distributed routes and launch further high quality products from
our R&D pipeline that add value to payors and patients."
- 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 were GBP0.4
million (2015: GBPnil) and amortisation of acquired intangible
assets which, in 2016, were GBP0.2 million (2015: GBP0.4 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: GBPnil), 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
5 Data supplied by Global Healthcare Exchange
For further information, please visit www.admedsol.com or
contact:
Advanced Medical Solutions Group Tel: +44 (0)
plc 1606 545508
Chris Meredith, Chief Executive
Officer
Mary Tavener, Chief Finance Officer
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 - see
www.admedsol.com
AMS is a world-leading independent developer and manufacturer of
innovative and technologically advanced products for the global
surgical and wound care markets, focused on quality outcomes for
patients and value for payors. AMS has a wide range of wound care
products that include silver alginates, alginates, foams, tissue
adhesives, sutures and haemostats, which it sells under white label
as well as its own brand ActivHeal(R) , and surgical tissue
adhesives, sutures and haemostats, which markets under its own
brands; LiquiBand(R) and RESORBA(R) .
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 more than 70 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 Company has 600 employees. For more
information, please see www.admedsol.com.
Chairman's Statement
AMS has had another year of strong performance and continues to
progress as a leading, international provider of high quality, high
value, innovative and technologically advanced products for the
surgical and advanced wound care markets. We are pleased that we
have delivered another year of strong revenue growth, profit
performance and good cash generation.
I am pleased to report a 20% increase in revenue to GBP82.6
million (2015: GBP68.6 million), representing growth of 13% on a
constant currency basis and an increase in adjusted(6) profit
before tax before exceptional items of 13% to GBP19.7 million
(2015: GBP17.4 million), and an increase in profit before taxation
of 12% to GBP19.1million (2015: GBP17.0 million). The continued
strong cash flow generation of the business has resulted in the
Group ending the year with net cash of GBP51.1 million (2015:
GBP34.2 million).
Our strategy of having multiple products and multiple routes to
market continues to pay off and we have made good progress across
all Business Units in the last year. Whilst revenue growth was
steady in our Branded Direct Business Unit, our Branded Distributed
Business Unit's success in the US has continued with LiquiBand(R)
gaining market share, and surpassing our initial 20% target market
share. We have also launched a range of dental sutures into the US
through a new partner and we intend to expand our distribution
network more widely by targeting market opportunities in Asia
Pacific and South America.
Our OEM and Bulk Business Units have performed well. Our
partners have delivered good growth supported by a number of new
foam product launches. This follows on from our success with
LiquiBand(R) Fix8(TM) hernia mesh fixation device, our first
surgical device using medical adhesive inside the body, with plans
in place for open surgery hernia use and other secondary
indications subject to regulatory approval. The success of these
launches demonstrates the strength and breadth of our innovation
and our product development pipeline.
The Board is proposing a final dividend of 0.62p per share,
making a total dividend for the year of 0.92p per share, an
increase of 15% (2015: 0.80p). If approved at the Annual General
Meeting, this dividend will be paid on 16 June 2017 to shareholders
on the register at the close of business on 26 May 2017.
On behalf of the Board, I would like to thank all of our
employees for their contributions during the past year which have
been central to the Company's strong performance. I would also like
to thank our customers, suppliers, business partners and
shareholders for their continued support in helping AMS achieve its
goals.
We ensure that the Group is managed in accordance with the UK
Corporate Governance Code as far as is reasonably practicable,
although it is not a requirement for an AIM quoted company. The
Board believes that effective corporate governance will assist in
the delivery of shareholder value and safe-guarding shareholders'
long-term interests.
AMS continues to be in robust financial health and is well
positioned to invest in both internal and external opportunities in
line with the Group's long-term strategy priorities and growth
objectives.
Peter Allen
Chairman
(6) All items are shown before amortisation of acquired
intangible assets which, in 2016, was GBP0.2 million (2015: GBP0.4
million) as defined in the financial review and before exceptional
costs which were GBP0.4 million (2015 :GBPnil)
Chief Executive's Statement
I am pleased to report another strong set of results across the
Group. Our revenue has increased 20% to GBP82.6 million and we have
improved our adjusted profit before tax and before exceptional
items by 13% to GBP19.7 million, marking the twelfth consecutive
year we have delivered growth in revenue, profits and earnings per
share.
We continue to deliver on our strategy for growth by expanding
into new geographies, increasing our distribution of surgical
products through our direct sales forces, enhancing our product
portfolio and providing high quality products that add value to
payors in our advanced woundcare and surgical markets.
Branded Distributed
The Branded Distributed Business Unit reports the sales of our
brands through third party distributors where the Group does not
have a direct sales force.
Branded Distributed reported revenue was 42% higher at GBP20.8
million (2015: GBP14.6 million) and 30% higher at constant
currency. The main contributor to this growth continues to be the
sales of our LiquiBand(R) range of products into the US, which
accounted for 60% of the Business Unit's total sales.
LiquiBand(R) in the US
Sales of LiquiBand(R) in the US increased by 56% to GBP12.5
million (2015: GBP8.0 million) at reported currency and by 39% at
constant currency. We have now increased our volume market share in
the US market to 23%(7) , up from the half year and exceeding the
initial target of 20% set when we first launched this product into
the US in 2010.
Our LiquiBand(R) range of products utilises different
formulations of cyanoacrylate that meet the needs of the surgeon
and are sold by our distributors throughout the whole of the US.
LiquiBand(R) products combine cyanoacrylate adhesive technology
with innovatively designed applicators that are able to meet the
requirements of the surgeon and the treatment of the full spectrum
of wounds that they need to close and protect. Our US based product
sales specialists continue to work closely with our distributors to
convert more hospitals and we are now targeting a further 10%
market gain over the next three years, to take our market share by
volume to at least 30%.
LiquiBand(R) in the EU and Rest of the World
Outside of the US, in the EU and ROW, our sales of LiquiBand(R)
have increased by 29% to GBP2.2 million (2015: GBP1.7 million) at
reported currency and 28% at constant currency. We have now started
to increase our sales in Asia Pacific by signing distributorships
in these regions and are supporting these with personnel based in
the region. We are already seeing some early success with an
additional seven distributorships agreed, selling our tissue
adhesives, haemostats and sutures. This provides a significant
opportunity for us in the medium term.
Our regulatory approval process for LiquiBand(R) in China has
proved challenging and has been paused. The tissue adhesive market
in China is small and nascent and will take some time to develop.
In the meantime we will invest resources into gaining access into
the more readily accessible markets in Asia and the Middle
East.
Hernia Mesh Fixation device - LiquiBand(R) Fix8(TM)
AMS received approval to market LiquiBand(R) Fix 8(TM), in
Europe in May 2014. This was the Group's first application using
medical cyanoacrylate technology inside the body. It is used to
hold hernia meshes in place within the body instead of traditional
tacks and staples. This accurate laparoscopic application of
adhesive is expected to reduce surgical complications, in
particular the potential pain associated with the use of tacks and
staples, thereby improving the patient experience and reducing
healthcare costs overall.
Surgeon response to LiquiBand(R) Fix8(TM) has been very positive
about the ease of use of this device and the benefit it brings to
patients regarding the reduced incidence of post-operative pain.
Sales of LiquiBand(R) Fix8(TM) in our Branded Distributed Unit
increased by 69% to GBP1.1 million (2015: GBP0.7 million). A number
of surgeons have endorsed the product and have provided valuable
feedback about enhancements to the device as well as other possible
non-hernia applications. The Company is
(7) Data supplied by Global Healthcare Exchange
actively exploring these opportunities.
Having had more than 12 months' feedback from European usage, we
have made improvements to the device. We are now in a position to
start the process to gain approval to market this device in the US.
As this will be a first-to-market device into the US, the
regulatory process will be a full Pre Market Approval (PMA)
involving clinical trials. Our estimate is that it will take around
three years to achieve, requiring an investment of at least GBP3
million.
RESORBA(R)
Sales of RESORBA(R) products to all export markets (excluding
Russia) increased by 25% at reported currency to GBP3.9 million
(2015: GBP3.1 million), and by 12% at constant currency. Within
this, our sales of dental products have increased 33% to GBP1.9
million and 20% at constant currency. This includes our first sales
of dental sutures into the US following their approval from the FDA
in 2015.
We launched a range of dental sutures into the US with a
specialised dental distributor in March 2016 and have achieved
GBP0.2 million of sales in the first year. Gaining US approval for
the RESORBA(R) product range has been an aim for the Group since we
acquired the business in late 2011 and now provides a significant
opportunity for the Group in the medium term. The total US surgical
suture market is estimated to be in excess of $1billion in size and
is dominated by a few major brands.
Sales in Russia increased by 28% at constant currency, and
increased 29% at reported currency to GBP1.0 million (2015: GBP0.8
million) reflecting improved market conditions.
Research and Development
In R&D our focus is on continuing to improve the
formulations of the base monomers that are used in our adhesives as
well as improving the design and innovation around our devices. We
have modified the tip and priming mechanism of our hernia fixation
device following surgeon feedback and have started the process to
get FDA approval to sell this product into the US.
Development work has also started on an open hernia mesh
fixation device which we hope will gain approval in Europe this
year.
In addition, work has begun on gaining approval in Europe for
the LiquiBand(R) Fix 8(TM) device for new indications and it is
expected we will be selling the first of these in 2018.
Branded Direct
The Branded Direct Business Unit reports sales of our branded
products through our own sales teams in the UK, Germany and Czech
Republic. Reported revenue increased 10% to GBP24.6 million (2015:
GBP22.3 million) and grew by 3% at constant currency.
UK
Within the UK we supply our range of woundcare dressings,
ActivHeal(R) into the NHS, supplying both hospitals and community
care. We supply LiquiBand(R) , haemostats and sutures as part of
our surgical offering.
ActivHeal(R)
ActivHeal(R) is our range of high quality woundcare dressings
that offer the NHS significant cost savings without compromising on
clinical outcomes or patient care. Sales of our ActivHeal(R) range
decreased by 5% to GBP6.0 million (2015: GBP6.4 million) as we
failed to make up the lost ground that occurred during the
destocking in the first half of the year. We have been disappointed
by this performance and have taken a number of initiatives to
reinvigorate sales. We have refocused our sales efforts, provided
further training to our commercial team and have enhanced our
education and marketing materials. We have also strengthened our
brand by broadening the product range being offered to include our
anti-microbial and atraumatic foam dressings. ActivHeal(R) offers a
compelling proposition for the NHS and remains a significant
opportunity for the Group.
LiquiBand(R)
Sales of LiquiBand(R) into the Accident and Emergency Room
('A&E') in the UK increased 1% to GBP2.3 million (2015: GBP2.3
million), reversing the decline of the prior year and addressing
the competitive challenges we have seen, while sales of
LiquiBand(R) into the OR increased 31% to GBP0.9 million (2015:
GBP0.7 million). We are confident of the market opportunity for
LiquiBand(R) in the UK, particularly in the Operating Room. Sales
of LiquiBand(R) Fix8(TM) in the UK increased to GBP0.1 million
(2015: GBP0.05 million).
Germany and Czech Republic
Germany is one of the key markets in Europe and sales of
LiquiBand(R) in Germany, and Czech Republic, increased 20% at
reported currency to GBP1.7 million (2015: GBP1.4 million) and by
8% at constant currency, while sales of LiquiBand(R) Fix8(TM)
increased 88% to GBP0.5 million (2015: GBP0.2 million). We are
pleased with the steady progress we are making in converting
doctors and surgeons to the benefits of LiquiBand(R) and
LiquiBand(R) Fix8(TM).
RESORBA(R)
Sales of RESORBA(R) branded products in Germany and the Czech
Republic increased 15% at GBP13.1 million (2015: GBP11.3 million)
at reported level and 4% at constant currency. Within this, sales
of haemostats increased by 21% to GBP3.9 million (2015: GBP3.3
million) and by 9% at constant currency, sales of sutures and
collagens into the dental market increased by 14% to GBP3.5 million
and by 3% at constant currency, whilst sales of sutures into
hospitals were increased by 11% to GBP4.7 million (2015: GBP4.1
million) and flat at constant currency. We are seeing some success
in targetting smaller accounts that should prove quicker to
convert. However, it can take some time for conversions to be fully
effective. We believe our ability to supply a comprehensive range
of high quality sutures that provide cost savings to hospitals
remains compelling.
Sales of RESORBA(R) sutures and haemostats into the NHS
increased by 18% to GBP0.2 million (2015: GBP0.2 million) and this
still remains a sizeable opportunity for us, even though conversion
remains slower than we would like.
Research & Development
In R&D, our focus is on extending the attributes of our
collagens to meet the needs of dental surgeons as well as including
new antibiotics in our haemostats. We also may consider licensing
our technology to other parties if this will result in products
being quicker to launch. Longer term we are looking to develop
innovative applications for collagen to address unmet clinical
needs or improve the outcome of current surgical procedures.
OEM
The OEM Business Unit reports the sales of products that are
sold under third parties' brands. We have been working with several
of the world's major wound care companies for a number of years. We
provide manufacturing services to supply their woundcare dressings,
new products they can incorporate into their portfolio of brands,
as well as regulatory assistance in obtaining product approvals in
overseas markets.
OEM revenue increased by 16% at reported currency to GBP32.1
million (2015: GBP27.7 million) and by 12% at constant
currency.
Our OEM business is dependent on the success of the customers
that our partners serve and the outcome of their strategies.
Historically, it is prone to volatility as a result of ordering
patterns, pipeline filling associated with new product launches and
variability surrounding tender award allocations. Consequently,
revenues and product mix can vary from year to year and can impact
operating margin. In general, as we work with a large number of
partners, the potential effects of this volatility are mitigated.
Through the latter part of 2016 we have identified that there has
been a slowdown in activity in the Middle East resulting in delays
in the determination of some hospital tender awards; this is having
an impact on some of our partners that have significant business in
the region. We are yet to see a reversal of this trend in 2017,
this may impact performance of this Business Unit in the short
term, however, we continue to believe in the long-term potential of
this growth market.
In 2016 we introduced two new ranges of foam products; our
antimicrobial foam range containing Polyhexamethylene Biguanide
(PHMB) and our atraumatic foam range incorporating silicone,
facilitating easy dressing removal from sensitive skin. These have
been successfully launched this year.
We received CE approval in Europe for our antimicrobial dressing
on 1 September 2015. PHMB has been shown to be effective against
several bacteria including, amongst others, Staphylococcus Aureus
including the methicillin resistant type, (MRSA) and Escherichia
Coli (E-Coli) and this dressing may be used throughout the healing
process on moderate to heavily exuding chronic and acute wounds
that are infected or are at risk of infection as well as on
pressure ulcers, leg and foot ulcers, diabetic ulcers and surgical
wounds.
Our PHMB foam dressing range augments our antimicrobial, silver
alginate dressing ranges and provides an alternative method of
treating infected wounds.
We are currently working to achieve approval for our PHMB foam
dressings in the US and once this is received we expect to be able
launch later this year.
Our silver alginate business grew by 4% to GBP16.2 million
(2015: GBP15.5 million) at a reported level, but sales were flat at
constant currency with the silver range taken by one specific
partner being particularly affected by the slow-down in the Middle
East. Excluding this partner's sales, the rest of the silver
alginate business grew 5% at constant currency.
Our new PHMB dressings may have had some impact on our silver
alginate business, however, our combined sales of all antimicrobial
ranges have increased by 13% at a reported level to GBP17.5 million
(2015: GBP15.5 million) and by 9% at constant currency.
The launch of our range of atraumatic foam dressings into our
advanced wound care range has further extended our foam portfolio
and sales of all our foam-based dressings have increased 196% to
GBP5.3 million (2015: GBP1.8 million) and by 191% at constant
currency.
Sales of other woundcare products have also continued to perform
well and have increased by 9% to GBP10.5 million (2015: GBP9.7
million) and by 5% at constant currency.
During 2016, we renegotiated the supply agreement with an OEM
partner for collagen products, from an exclusive to a non-exclusive
arrangement, allowing us to now supply an enhanced range of
collagen products though our distributors into the EU and through
our direct sales force in the UK. In the medium term, we expect
increased sales in both our Branded Direct and Branded Distributed
Business Units, as our collagen product portfolio is extended. As
antictipated, given that the OEM partner is no longer required to
meet a minimum amount of sales to maintain exclusivity, this has
resulted in a decline of the sales of collagen products in the
Business Unit, which reduced by 85% to GBP0.1 million and by 87% at
constant currency.
Research and Development
We continue to work on extending our advanced woundcare
portfolio with focus on extending our antimicrobial range,
improving the absorbancy of dressings and combining a number of
materials to enhance product performance.
Bulk Materials
The Bulk Business Unit reports sales of bulk materials to third
party convertors as well as supplying foam into the OEM and Direct
Business Units as a key material in our foam-based wound
dressings.
Bulk Materials revenue increased by 33% at reported currency to
GBP5.2 million (2015: GBP3.9 million) and by 21% at constant
currency.
Rollstock foam contributed around 93% of Bulk revenue and good
growth was seen by several partners.
Research and Development
In R&D, the focus is on developing new foam formulations,
working in conjunction with the OEM Business Unit.
Operations
Efficiency and gross margins
We continue to make operational improvements by reducing set up
times, eliminating non-value added activities and increasing
outputs wherever possible. These incremental efficiencies help to
improve gross margins across the Group.
The launches of the two new foam dressing ranges have required
new converting processes to be developed and the success of the
launches has resulted in significant volumes of new product being
required. We are pleased that we met these significant volume
demands, 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 a regular basis. We estimate that these
operating effects have had a negative impact of around 400 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 the manufacturing processes to improve our
efficiences and we would expect to see margin improvement in
2017.
Capacity and resource
Investment is being made in The Netherlands to increase our foam
capacity by approximately 40%. A new line is expected to be
operational in the second half of the year.
We continue to invest in improving our ERP (Enterprise Resource
Planning) management and reporting systems and having already
successfully completed the implementation in Winsford, Plymouth and
The Netherlands facilities where we have converted to Oracle ERP,
we are now working on implementing Oracle ERP in Germany. The
project is expected to complete in the second half of 2017.
Regulatory and quality assurance
With the regulatory framework becoming increasingly complex, we
have continued to invest in both Regulatory and Quality functions
and systems to ensure that we are able to support our partners with
winning approvals in new markets as well as obtaining approval for
our own products.
The FDA conducted its first ever routine inspection at the Group
in June 2016 at our Winsford site and we were pleased with the
positive outcome.
On the back of our success with LiquiBand(R) Fix 8(TM) in Europe
we have started work to gain approval to market this product in the
US which will involve a full PMA and is likely to take at least
three years with an investment of at least GBP3 million.
We are also working on identifying the regulatory pathway to
approve the inclusion of antibiotics in collagens and progressing
with obtaining approval to sell our collagen products in the US.
The latter approval is expected in late 2017 / early 2018.
Our regulatory approval process for LiquiBand(R) in China has
continued to be challenging. Having resubmitted our files to the
Chinese FDA further extensive Chinese based clinical trials have
been requested. As there is a lack of clarity around the nature of
the trials we have decided to cease the process until there is more
certainty around what is required for approval.
Our culture
As a Group that is highly dependent on the innovation and
creativity of our employees for our future growth and success, it
is important that we have a culture and set of values that is
clearly understood across the business. We have adopted the
business motto of 'The AMS Care, Fair, Dare approach' to summarise
our culture, underpin our values, and to deliver results, building
a sustainable future for our business. Under this motto, we have
defined the principles and expectations of how we will operate
together to deliver success.
We recognise the importance of our people to the Group and that
it is only by their effective engagement that we will continue to
be highly successful. We value their commitment and determination
to achieve and deliver good results. Our working environment
encourages openness, teamwork, an understanding of others' needs
and the ability 'to make a difference'. We continue to develop the
talent at AMS by training and by providing a place to work where
our employees feel valued, incentivised and fulfilled.
Acquisition strategy
The Group is actively looking for businesses that fit its
acquisition strategy. During the period, an opportunity was
identified and work undertaken to understand a business in more
detail. As a result of the outcome of this work, a decision was
taken not to proceed. An exceptional charge of GBP0.4 million has
been incurred relating to this activity. The Group continues to
actively review suitable acquisition opportunities.
Referendum vote to leave the EU
There has been no immediate impact on the Group's operations
following the UK's referendum vote to leave the EU other than the
positive impact on currency exchange rates. The Group is
considering the potential impact to the business once the UK leaves
the EU and has started to plan for this outcome.
Summary and Outlook
We have delivered a reported 20% revenue growth, 13% at constant
currency, with good profitability and cash generation during the
year.
All Business Units have delivered growth at constant currency
with US sales, in particular, delivering a very strong performance
and, not withstanding the OEM slight headwinds in emerging markets,
we expect this to continue in the coming year. We have been very
pleased with the launches of our antimicrobial and atraumatic foam
dressings into our advanced wound care range. With the continued
success of our LiquiBand(R) Fix8(TM) hernia mesh fixation device,
we are seeking approval for new indications and new market
entry.
We continue to invest in research and development to keep
improving our product range and deliver innovation that benefits
payors and patients.
We are confident that the Group, with its highest quality
products, is well placed to deliver growth and we remain optimistic
about the prospects for our future.
Financial Review
Summary
Group revenue increased by 20% to GBP82.6 million (2015: GBP68.6
million). At constant currency, revenue growth was 13%.
The Group incurred an exceptional expense of GBP0.4 million in
the year relating to an aborted acquisition (2015: nil). The Group
uses alternative performance measures such as adjusted operating
margin, adjusted profit before tax, net operating cash flow
pre-exceptional items, together with current revenue measures
restated at constant exchange rates, to allow the users of the
accounts to gain a clearer understanding of the performance of the
businss, allowing the impacts of amortisation, exceptional items
and exchange rate volatility to be separately identified.
Amortisation of acquired intangible assets was GBP0.2 million in
the period (2015: GBP0.4 million).
To aid comparison, the Group's adjusted income statement is
summarised in Table 1 below.
Year ended Year ended
Table 1 31-Dec-16 31-Dec-15
Adjusted Income Statement GBP'000 GBP'000 Change
--------------------------- -------------- -------------- -------
Revenue 82,621 68,596 20%
--------------------------- -------------- -------------- -------
Gross profit 47,427 39,908 19%
Distribution costs (1,047) (951)
Adjusted administration
costs(8) (27,293) (22,138)
Other income 621 589
--------------------------- -------------- -------------- -------
Adjusted operating profit 19,708 17,408 13%
Net finance costs (3) (45)
--------------------------- -------------- -------------- -------
Adjusted profit before
tax 19,705 17,363 13%
Amortisation of acquired
intangibles (242) (367)
Exceptional Items (361) -
--------------------------- -------------- -------------- -------
Profit before tax 19,102 16,996 12%
Tax (3,410) (2,877)
--------------------------- -------------- -------------- -------
Profit for the period 15,692 14,119 11%
--------------------------- -------------- -------------- -------
Adjusted earnings per
share - basic(9) 7.76p 6.95p 12%
Earnings per share -
basic(9) 7.48p 6.78p 10%
--------------------------- -------------- -------------- -------
Adjusted earnings per
share - diluted(9) 7.66p 6.86p 12%
Earnings per share -
diluted(9) 7.38p 6.68p 10%
--------------------------- -------------- -------------- -------
8 Adjusted administration costs exclude amortisation of acquired
intangible assets and exceptional items
9 See Note 7 Earnings per share for details of calculation
Revenues were favourably impacted by approximately GBP4.9
million due to the effects of currency movements in the year. Gross
margin reduced overall by 80bps due to adverse operational
variances on new wound care ranges, partly offset by mix changes
and the favourable impact of currency movements.
Adjusted operating profit before exceptional items increased by
13% to GBP19.7 million (2015: GBP17.4 million) but the adjusted
operating margin reduced by 150 bps to 23.9% (2015: 25.4%).
Administration costs excluding exceptional items increased by 23%
to GBP27.3m (2015: GBP22.1 million) due to currency movements and
further investment in selling and marketing, particularly to
support the Branded Direct business unit. There was also a benefit
from the translation of US dollar receivables. The Group expensed
GBP2.3 million of R&D to the income statement (2015: GBP1.8
million). Spend as a percentage of sales increased to 2.8% (2015:
2.6%).
Profit before tax for the year was 12% higher at GBP19.1 million
(2015: GBP17.0 million).
The Group's effective rate of tax for the year was 17.9% (2015:
16.9%). This is reflective of the utilisation of previously
unrecognised brought-forward UK tax losses, Patent Box relief and
R&D tax credits. It also reflects the impact of blending
profits and losses from different countries and the different tax
rates associated with these countries. The effective tax rate of
the Group is expected to increase in 2017, as the Group is no
longer classified as a Small Medium Enterprise (SME) and will no
longer be able to gain R&D tax credits at the SME rate. We
estimate that this will increase our taxation rate by approximately
two percent.
A reconciliation between the weighted average Group tax rate and
the Group's effective rate is summarised in Table 2 below.
Table 2
Taxation %
Weighted average Group tax rate 22.11
Loss utilisation and recognition (1.06)
Patent box relief (1.27)
R&D relief (0.96)
Expenses not deductible, prior year adjustments,
depreciation & share based payments (0.97)
-------------------------------------------------- --------
Effective taxation rate 17.85
-------------------------------------------------- --------
Earnings (excluding amortisation of acquired intangible assets
and before exceptional items) increased by 12% to GBP16.3 million
(2015: GBP14.5 million), resulting in a 12% increase in adjusted
basic earnings per share to 7.77p (2015: 6.95p) and a 12% increase
in adjusted diluted earnings per share to 7.66p (2015: 6.86p).
Profit after tax increased by 11% to GBP15.7 million (2015:
GBP14.1 million), resulting in a 10% increase in basic earnings per
share to 7.48p (2015: 6.78p) and a 10% increase in diluted earnings
per share to 7.38p (2015: 6.68p).
The Board is proposing a final dividend of 0.62p per share, to
be paid on 16 June 2017 to shareholders on the register at the
close of business on 26 May 2017. This follows the interim dividend
of 0.30p per share that was paid on 30 October 2016 and would, if
approved, make a total dividend for the year of 0.92p per share
(2015: 0.80p), a 15% increase on 2015.
The operational performance of the Business Units is shown in
Table 3 below. The adjusted profit from operations and the adjusted
margin are shown after excluding amortisation of acquired
intangibles. To aid comparison and in determining the operational
margins of the individual Business Units, the revenue of the Bulk
Materials Business Unit sales made to other Business Units of
GBP1.8 million (2015: GBP0.8 milllion) is included.
Table 3
Operating result by business segment
Year ended 31 December Branded Branded Bulk
2016 Distributed Direct OEM Materials
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- ------------- -------- -------- -----------
Revenue 20,753 24,553 32,070 7,040
Profit from operations 6,337 4,976 6,881 1,796
Amortisation of acquired
intangibles 84 141 17 -
Adjusted profit from
operations(10) 6,421 5,117 6,898 1,796
Adjusted operating
margin(10) 30.9% 20.8% 21.5% 25.5%
-------------------------- ------------- -------- -------- -----------
Year ended 31 December
2015
Revenue 14,631 22,344 27,674 4,772
Profit from operations 4,366 5,235 7,139 814
Amortisation of acquired
intangibles 127 214 25 -
Adjusted profit from
operations(10) 4,493 5,449 7,164 814
Adjusted operating
margin(10) 30.7% 24.4% 25.9% 17.1%
-------------------------- ------------- -------- -------- -----------
(10) excludes amortisation of intangible assets and exceptional
items
Branded Distributed
The adjusted operating margin of this Business Unit increased to
30.9% (2015: 30.7%), supported by US sales growth, but was lower
than the margin reported in H1 2016 (35.4%), reflecting a higher
than usual proportion of US sales in H1 and an increase in business
unit operating expenses as a result of investment in sales and
marketing personnel.
Branded Direct
The adjusted operating margin of this Business Unit reduced to
20.8% (2015: 24.4%) mainly due to continued investment in sales and
marketing and was lower than the position at H1 2016 (23.7%) mainly
due to the phasing of fee income which occurred in the first six
months of the year.
OEM
The adjusted operating margin of this Business Unit reduced to
21.5% (2015: 25.9%) due to adverse operational variances on new
wound care ranges albeit higher than the margin reported at H1 2016
(18.1%). It is worth noting that some of the margin benefit arising
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
The adjusted operating margin of this Business Unit increased to
25.5% (2015: 17.1%), and improved from the position in H1 2016
(22.9%). Margins were affected by the higher volumes of production
and sales, including a substantial increase in intercompany sales
to the OEM business unit.
Geographic breakdown of revenues
The geographic breakdown of Group revenues in 2016 is shown in
Table 4 below:
Table 4
Geographic Breakdown of Group Revenues
---------------------------------------------------
GBP millions % of % of
2016 total 2015 total
------------------- ----- ------- ----- -------
Europe (excluding
UK & Germany) 21.4 25.9% 19.1 27.8%
Germany 18.3 22.1% 13.4 19.5%
UK 17.4 21.1% 16.7 24.3%
USA 23.5 28.5% 17.8 25.9%
Rest of World 2.0 2.4% 1.6 2.3%
------------------- ----- ------- ----- -------
48% of the Group's sales are in Europe (excluding the UK) of
which 59% are denominated in Euros. Approximately 95% of all sales
to the US are denominated in US Dollars. The Group hedges
significant transaction exposure by using forward contracts and
options and aims to have 70% of its estimated transactional
exposure for the next twelve months hedged. The Group estimates
that a 10% movement in the GBP:US$ or GBP: Euro exchange rate will
impact Sterling revenues by approximately 2.7% and 3.1%
respectively and in the absence of any hedging this would have an
impact on profit of 2.2% and 0.5%.
Cash Flow
Table 5 summarises the Group's cash flows.
Table 5
Group Cash Flows
-------- --------
2016 2015
Year ended 31 December GBP'000 GBP'000
---------------------------------------- -------- --------
Adjusted operating profit (Table
1) 19,708 17,408
Non-cash items 4,023 3,153
---------------------------------------- -------- --------
Adjusted EBITDA(11) 23,731 20,561
Working capital movement (1,480) 1,983
---------------------------------------- -------- --------
Operating cash flow before exceptional
items 22,251 22,544
Exceptional items (361) -
---------------------------------------- -------- --------
Operating cashflow after exceptional
items 21,890 22,544
Capital expenditure and capitalised
R&D (2,536) (2,675)
Net Interest (3) (47)
Tax (2,065) (1,253)
---------------------------------------- -------- --------
Free cash flow 17,286 18,569
Dividends paid (1,783) (1,521)
Proceeds from share issues 868 494
Exchange gains /(losses) 553 (621)
Net increase in cash and cash
equivalents 16,924 16,921
---------------------------------------- -------- --------
11: Adjusted EBITDA is earnings before interest, tax,
depreciation, intangible asset amortisation, share based payments
and exceptional items
Adjusted EBITDA increased by 15% to GBP23.7 million (2015:
GBP20.6 million).
Working capital increased in the year in line with the growth of
the business. 4.4 months of supply of inventory was held across the
group (2015: 4.4 months of supply). Trade debtor days were in line
with prior year at 41 days (2015: 41 days) while trade payable days
decreased slightly to 33 days (2015: 34 days).
The Group generated net cash from operating activities of
GBP21.9 million (2015: GBP22.5 million) (see Table 5) and had net
cash of GBP51.1 million (2015: GBP34.2 million) at the end of the
year.
In the year, we invested GBP2.6 million in capital equipment,
software and capitalised R&D (2015: GBP2.7 million), including
ERP software and internally developed products.
The Group generated a free cash flow of GBP17.3 million in the
year (2015: GBP18.6 million). The conversion of adjusted operating
profit into free cash flow was 88% (2015: 107%).
The Group paid its final dividend for the year ended 31 December
2015 of GBP1.2 million (2015: for the year ending 2014, GBP1.0
million) on 10 June 2016, and its interim dividend for the six
months ended 30 June 2016 of GBP0.6 million (2015: GBP0.6 million)
on 28 October 2016.
In December 2014 the Group entered into a five-year, GBP30
million, multi-currency revolving credit facility with an accordion
option under which AMS can request up to an additional GBP20
million on the same terms. The previous facility for GBP4 million
was due to expire in 2015. The Group chose to take advantage of
favourable credit conditions to put in place a more suitable
facility to support its growth ambitions. The new facility is
provided jointly by the Group's existing bankers, HSBC, as well as
The Royal Bank of Scotland PLC. It is unsecured and has not been
drawn down. This facility carries an annual interest rate of LIBOR
or EURIBOR plus a margin that varies between 0.65% and 1.75%
depending on the Group's net debt to EBITDA ratio.
At the end of the period, the Group had net cash of GBP51.1
million (2015: GBP34.2 million). The movement in net cash from the
start of the year to net cash at the end of the year is reconciled
in Table 6 below:
Table 6
Movement in net cash GBP'000
--------------------------------- --------
Net cash as at 1 January 2016 34,201
Exchange rate impacts 553
Free cash flow 17,286
Dividends paid (1,783)
Proceeds from share issues 868
Net cash as at 31 December 2016 51,125
--------------------------------- --------
The Group's going concern position is fully described in note
2.
CONDENSED CONSOLIDATED
INCOME STATEMENT
Year ended 31 December (Unaudited) (Audited)
Before
exceptional Exceptional
items items 2016 2015
Note GBP'000 GBP'000
---------------------------------------- ------------- ------------ ------------ ----------
Revenue from continuing
operations 4 82,621 - 82,621 68,596
Cost of sales (35,194) (35,194) (28,688)
--------------------------------- ------ ------------- ------------ ------------ ----------
Gross profit 47,427 - 47,427 39,908
Distribution costs (1,047) - (1,047) (951)
Administration costs (27,535) (361) (27,896) (22,505)
Other income 621 - 621 589
Profit from operations 4,5 19,466 (361) 19,105 17,041
Finance income 108 - 108 73
Finance costs (111) - (111) (118)
--------------------------------- ------ ------------- ------------ ------------ ----------
Profit before taxation 19,463 (361) 19,102 16,996
Income tax 6 (3,410) - (3,410) (2,877)
--------------------------------- ------ ------------- ------------ ------------ ----------
Profit for the year attributable
to equity holders of the
parent 16,053 (361) 15,692 14,119
----------------------------------------- ------------- ------------ ------------ ----------
Earnings per share
Basic 7 7.65p (0.17p) 7.48p 6.78p
Diluted 7 7.55p (0.17p) 7.38p 6.68p
Adjusted(12) diluted 7 7.66p (0.17p) 7.49p 6.86p
--------------------------------- ------ ------------- ------------ ------------ ----------
(12 Adjusted for exceptional
items and for amortisation
of acquired intangible
assets)
CONDENSED CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
(Unaudited) (Audited)
2016 2015
GBP'000 GBP'000
--------------------------------- ------ ------------- ------------ ------------ ----------
Profit for the year 15,692 14,119
--------------------------------- ------ ------------- ------------ ------------ ----------
Items that will potentially
be reclassified subsequently
to profit and loss:
Exchange differences
on translation of foreign
operations 8,851 (3,348)
Loss arising on cash
flow hedges (3,009) (3)
--------------------------------- ------ ------------- ------------ ------------ ----------
Other comprehensive
income/(expense) for
the year 5,842 (3,351)
--------------------------------- ------ ------------- ------------ ------------ ----------
Total comprehensive
income for the year
attributable to equity
holders of the parent 21,534 10,768
--------------------------------- ------ ------------- ------------ ------------ ----------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(Unaudited) (Audited)
31-Dec-16 31-Dec-15
GBP'000 GBP'000
Assets
Non-current assets
Acquired intellectual property
rights 9,468 8,359
Software intangibles 2,500 2,009
Development costs 1,645 1,803
Goodwill 40,337 34,579
Property, plant and equipment 16,177 15,795
Deferred tax assets - 135
Trade and other receivables 10 13
---------------------------------- ------------ ----------
70,137 62,693
Current assets
Inventories 11,440 8,843
Trade and other receivables 11,872 10,817
Current tax assets 432 9
Cash and cash equivalents 51,125 34,201
---------------------------------- ------------ ----------
74,869 53,870
-------------------------------- ------------ ----------
Total assets 145,006 116,563
---------------------------------- ------------ ----------
Liabilities
Current liabilities
Trade and other payables 13,830 9,139
Current tax liabilities 2,049 806
Other taxes payable 85 234
Obligations under finance
leases - 1
15,964 10,180
Non-current liabilities
Trade and other payables 362 415
Deferred tax liabilities 3,152 2,311
3,514 2,726
-------------------------------- ------------ ----------
Total liabilities 19,478 12,906
---------------------------------- ------------ ----------
Net assets 125,528 103,657
---------------------------------- ------------ ----------
Equity
Share capital 10,524 10,451
Share premium 34,005 33,196
Share-based payments reserve 3,469 2,253
Investment in own shares (152) (152)
Share-based payments deferred
tax reserve 459 437
Other reserve 1,531 1,531
Hedging reserve (3,534) (525)
Translation reserve 636 (8,215)
Retained earnings 78,590 64,681
---------------------------------- ------------ ----------
Equity attributable to equity
holders of the parent 125,528 103,657
---------------------------------- ------------ ----------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attributable to equity holders of the Group
Share- Investment Share-based
in
Share Share based 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
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
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- --------
Consolidated
profit for
the year to
31 Dec 2016 - - - - - - - - 15,692 15,692
Other
comprehensive
income - - - - - - (3,009) 8,851 - 5,842
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- --------
Total
comprehensive
income - - - - - - (3,009) 8,851 15,692 21,534
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- --------
Share-based
payments - - 1,230 - 22 - - - - 1,252
Share options
exercised 73 809 (14) - - - - - - 868
Shares
purchased by
EBT - - - (449) - - - - - (449)
Shares sold by
EBT - - - 449 - - - - - 449
Dividends paid - - - - - - - - (1,783) (1,783)
At 31 December
2016
(unaudited) 10,524 34,005 3,469 (152) 459 1,531 (3,534) 636 78,590 125,528
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- --------
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited) (Audited)
Year ended 31 December 2016 2015
GBP'000 GBP'000
-------------------------------- ------------ ----------
Cash flows from operating
activities
Profit from operations 19,105 17,041
Adjustments for:
Depreciation 1,898 1,745
Amortisation
- intellectual property
rights 242 367
- development costs 441 410
- software intangibles 329 289
Impairment of development
costs 125 -
Increase in inventories (2,005) (1,501)
(Increase)/decrease in trade
and other receivables (674) 2,148
Increase in trade and other
payables 1,199 1,336
Share-based payments expense 1,230 709
Taxation (2,065) (1,253)
Net cash inflow from operating
activities 19,825 21,291
----------------------------------- ------------ ----------
Cash flows from investing
activities
Purchase of software (795) (472)
Capitalised research and
development (259) (373)
Purchases of property, plant
and equipment (1,523) (1,907)
Disposal of property, plant
and equipment 41 77
Interest received 109 73
Net cash used in investing
activities (2,427) (2,602)
----------------------------------- ------------ ----------
Cash flows from financing
activities
Dividends paid (1,783) (1,521)
Finance lease (1) (2)
Issue of equity shares 868 498
Shares purchased by EBT (449) (262)
Shares sold by EBT 449 258
Interest paid (111) (118)
Net cash used in financing
activities (1,027) (1,147)
----------------------------------- ------------ ----------
Net increase in cash and
cash equivalents 16,371 17,542
Cash and cash equivalents
at the beginning of the year 34,201 17,280
Effect of foreign exchange
rate changes 553 (621)
Cash and cash equivalents
at the end of the year 51,125 34,201
----------------------------------- ------------ ----------
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 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
2016 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,
and medical adhesives and sutures for closing and sealing tissue,
for sale into the global medical device market and dental
market.
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 2015.
While the financial information included in this preliminary
announcement has been prepared in accordance with the recognition
and measurement criteria of International Financial Reporting
Standards (IFRSs), as adopted for use in the EU, 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 2017.
The financial information set out in the announcement does not
constitute the Group's statutory accounts for the years ended 31
December 2016 or 31 December 2015. The financial information for
the year ended 31 December 2015 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 2016 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 2015.
With regards to the Group's financial position, it had cash and
cash equivalents at the year end of GBP51.1 million. The Group also
has in place a five-year, unsecured, new multi-currency, credit
facility for GBP30 million which is due for renewal in December
2019 and which was undrawn in 2016.
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 long-term 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 the Directors have
reached a 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.
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:
-- Amendments to IAS 1, Presentation of Financial Statements: Disclosure Initiative.
-- Amendments to IAS 16 and IAS 38, Clarification of Acceptable
Methods of Depreciation and Amortisation.
-- Annual Improvements 2012-2014 Cycle, specifically amendments
to (i) IFRS 5, Non-current Assets Held for Sale and Discontinued
Operations, (ii) IFRS 7, Financial Instruments: Disclosures, and
(iii) IAS 19, Employee Benefits.
New accounting standards not yet applied
At the date of authorisation of the annual financial statements,
the following new and revised IFRSs that are potentially relevant
to the Group, and which have not been applied in the annual
financial statements, were in issue but not yet effective (and in
some cases had not yet been adopted by the EU):
-- IFRS 2, Share-based Payment - effective for accounting
periods beginning on or after 1 January 2018.
-- IFRS 16, Leases - effective for accounting periods beginning on or after 1 January 2019.
-- IAS 7, Statement of Cash Flows - effective for accounting
periods beginning on or after 1 January 2017.
-- IAS 12, Income Taxes - effective for accounting periods beginning on or after 1 January 2017.
-- IFRS 9, Financial Instruments: Classification and measurement
- effective for accounting periods beginning on or after 1 January
2018.
-- IFRS 15, Revenue from Contracts with Customers - effective
for accounting periods beginning on or after 1 January 2018.
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 incorporating new standards effective for the year as
noted above. 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.
4. Segment information
As referred to in the Chief Executive's Report, the Group is
organised into four business units: Branded Direct, Branded
Distributed, OEM (original equipment manufacturer) and Bulk
Materials. 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 Branded Branded OEM Bulk Eliminations Consolidated
31 December
2016 Direct Distributed Materials
(unaudited)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------- -------- ------------ -------- ---------- ------------- -------------
Revenue
External sales 24,553 20,753 32,070 5,245 - 82,621
Inter-segment
sales 1,795 (1,795) -
---------------------- -------- ------------ -------- ---------- ------------- -------------
Total revenue 24,553 20,753 32,070 7,040 (1,795) 82,621
---------------------- -------- ------------ -------- ---------- ------------- -------------
Result
---------------------- -------- ------------ -------- ---------- ------------- -------------
Segment result 4,976 6,337 6,881 1,796 19,990
Unallocated
expenses (885)
---------- ------------- -------------
Profit from
operations 19,105
Finance income 108
Finance costs (111)
---------------------- -------- ------------ -------- ---------- ------------- -------------
Profit before
tax 19,102
Tax (3,410)
---------------------- -------- ------------ -------- ---------- ------------- -------------
Profit for
the year 15,692
---------------------- -------- ------------ -------- ---------- ------------- -------------
At 31 December
2016 Branded Branded OEM Bulk Consolidated
Direct Distributed Materials
(unaudited)
Other Information GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------- -------- ------------ -------- ---------- ------------- -------------
Capital additions:
Software intangibles 463 133 194 5 795
Development 31 126 100 2 259
Property, plant
and equipment 734 371 201 217 1,523
Depreciation
and amortisation (843) (466) (1,340) (260) (2,909)
---------------------- -------- ------------ -------- ---------- ------------- -------------
Balance sheet
Assets
Segment assets 68,197 29,301 40,665 6,723 144,886
Unallocated
assets 120
---------------------- -------- ------------ -------- ---------- -------------
Consolidated
total assets 145,006
---------------------- -------- ------------ -------- ---------- ------------- -------------
Liabilities
Segment liabilities 7,082 4,938 6,291 1,167 19,478
---------------------- -------- ------------ -------- ---------- ------------- -------------
Consolidated
total liabilities 19,478
---------------------- -------- ------------ -------- ---------- ------------- -------------
Year ended Branded Branded OEM Bulk Eliminations Consolidated
31 December
2015 Direct Distributed Materials
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------- -------- ------------ -------- ---------- ------------- -------------
Revenue
External sales 22,344 14,631 27,674 3,946 - 68,595
Inter-segment
sales 826 (826) -
----------------------- -------- ------------ -------- ---------- ------------- -------------
Total revenue 22,344 14,631 27,674 4,772 (826) 68,595
----------------------- -------- ------------ -------- ---------- ------------- -------------
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 Branded OEM Bulk Consolidated
Direct Distributed Materials
Other Information GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------- -------- ------------ -------- ---------- ------------- -------------
Capital additions:
Software intangibles 111 15 333 13 472
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
----------------------- -------- ------------ -------- ---------- ------------- -------------
Geographic segments
The Group operates in the UK, The Netherlands, Germany, the
Czech Republic and Russia, with a sales presence in the US. 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:
Year ended 31 December 2016 2015
GBP'000 GBP'000
------------------------------- -------- --------
United Kingdom 17,457 16,657
Germany 18,345 13,371
Europe excluding United
Kingdom and Germany 21,360 19,223
United States of America 23,505 17,766
Rest of World 1,954 1,579
--------------------------------- -------- --------
82,621 68,596
------------------------------- -------- --------
The following table provides
an analysis of the Group's
total assets by geographical
location.
As at 31 December 2016 2015
GBP'000 GBP'000
------------------------------- -------- --------
United Kingdom 80,580 62,785
Germany 59,950 50,592
Europe excluding United
Kingdom and Germany 3,962 3,060
United States of America 514 126
--------------------------------- -------- --------
145,006 116,563
------------------------------- -------- --------
5. Profit from operations
Year ended 31 December 2016 2015
GBP'000 GBP'000
------------------------------------------------------------ -------- --------
Profit from operations is arrived
at after charging:
Depreciation of property, plant
and equipment 1,898 1,754
Amortisation of:
- acquired intellectual property
rights 242 367
- software intangibles 329 289
- development costs 441 410
Operating lease rentals - plant
and machinery 253 250
- land and buildings 917 896
Research and development costs
expensed to the income statement 2,276 1,817
Cost of inventories recognised
as expense 34,132 27,836
Staff costs 24,846 20,500
Net foreign exchange loss 1,271 391
------------------------------------------------------------- -------- --------
6. Taxation
Year ended 31 December 2016 2015
GBP'000 GBP'000
------------------------------------ ---------- ----------
a) Analysis of charge
for the year
Current tax:
Tax on ordinary activities
- current year 3,180 1,743
Tax on ordinary activities
- prior year (358) 58
---------------------------------------- ---------- ----------
2,822 1,802
Deferred tax:
Tax on ordinary activities
- current year 599 1,055
Effect of reduction
in UK corporation
tax rates (11) 20
---------------------------------------- ---------- ----------
588 1,075
------------------------------------ ---------- ----------
Tax charge for the
year 3,410 2,877
---------------------------------------- ---------- ----------
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
Year ended 31 December 2016 2015
GBP'000 GBP'000
------------------------------------ ---------- ----------
b) Factors affecting
tax charge for the
year
Profit before taxation 19,102 16,996
Profit multiplied
by the weighted average
group tax rate of
22.11% (2015:22.35%) 4,224 3,798
Effects of:
Net expenses not deductible
for tax purposes and
other timing differences 50 43
Depreciation for period
less than capital
allowances (31) (1)
Patent Box Relief (203) (438)
Utilisation and recognition
of trading losses (242) (269)
Research and development
relief (183) (324)
Share-based payments (47) 10
Adjustments in respect
of prior year - current
tax (359) 58
Adjustments in respect
of prior year and
rate changes - deferred
tax 201 -
Taxation 3,410 2,877
---------------------------------------- ---------- ----------
7. Earnings per share
The calculation of the basic and diluted earnings per share is
based on the following data:
Year ended 31 December 2016 2015
GBP'000 GBP'000
----------------------------------------------- --------- --------
Earnings
Profit for the year attributable to equity holders
of the parent
Pre exceptional items 16,053 14,119
Post exceptional items 15,692 14,119
Number of shares '000 '000
----------------------------------------------- --------- --------
Weighted average number of ordinary shares
for the purposes of basic earnings per share 209,815 208,376
----------------------------------------------- --------- --------
Effect of dilutive potential ordinary shares:
share options, deferred share bonus, LTIPs 2,778 2,902
----------------------------------------------- --------- --------
Weighted average number of ordinary shares
for the purposes of diluted earnings per
share 212,593 211,278
----------------------------------------------- --------- --------
2016 2015
GBP'000 GBP'000
----------------------------------------------- --------- --------
Profit for the year attributable to equity
holders of the parent 16,053 14,119
Earnings for the purposes of basic and diluted earnings
per share being net profit attributable to equity
holders of the parent
Amortisation of acquired intangible assets 242 367
Adjusted profit for the year attributable
to equity holders of the parent 16,295 14,486
----------------------------------------------- --------- --------
2016 2015
pence pence
----------------------------------------------- --------- --------
Basic - pre exceptional 7.65p 6.78p
Basic - post exceptional 7.48p 6.78p
Diluted - pre exceptional 7.55p 6.68p
Diluted - post exceptional 7.38p 6.68p
Adjusted basic 7.76p 6.95p
Adjusted diluted 7.66p 6.86p
----------------------------------------------- --------- --------
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR EAKDLFLSXEEF
(END) Dow Jones Newswires
March 14, 2017 03:01 ET (07:01 GMT)
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