TIDMAMS
RNS Number : 6308H
Advanced Medical Solutions Grp PLC
14 March 2018
14 March 2018
Advanced Medical Solutions Group plc
("AMS" or the "Group")
Unaudited Preliminary Results for the year ended 31 December
2017
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 2017.
Financial Highlights:
2017 2016 Reported Growth
growth at constant
currency(1)
----------------------------- ----- -------- --------- -------------
Group revenue (GBP million) 96.9 83.2(6) 16% 12%
----------------------------- ----- -------- --------- -------------
Adjusted(2) operating
margin (%) 26.2 23.7 250bps -
----------------------------- ----- -------- --------- -------------
Adjusted(2) profit before
tax (GBP million) 25.4 19.7 29% -
----------------------------- ----- -------- --------- -------------
Profit before tax (GBP
million) 25.3 19.1 32% -
----------------------------- ----- -------- --------- -------------
Adjusted(2) diluted
earnings per share (p) 9.46 7.66 23% -
----------------------------- ----- -------- --------- -------------
Diluted earnings per
share (p) 9.39 7.38 27% -
----------------------------- ----- -------- --------- -------------
Net operating cash flow(3)
pre-exceptional items
(GBP million) 21.5 22.3 (4%)
----------------------------- ----- -------- --------- -------------
Net cash (GBP million)(4) 62.5 51.1 22% -
----------------------------- ----- -------- --------- -------------
-- Proposed final dividend of 0.75p per share, making a total
dividend for the year of 1.10p (2016: 0.92p), up 20%
Business Highlights:
-- Strong revenue growth, up 16% to GBP96.9 million and by 12% at constant currency
o Branded revenues up 22% to GBP55.2 million (2016: GBP45.4
million) and by 16% at constant currency
o OEM revenues up 10% to GBP41.7 million (2016: GBP37.8 million)
and by 8% at constant currency
-- Continued strong performance from LiquiBand(R) topical tissue
adhesives, sales up 35% to GBP26.0 million (2016: GBP19.3 million)
and by 30% at constant currency
o US revenues up 47% to GBP18.2 million (2016: GBP12.4 million)
and by 40% at constant currency
o As at 31 December 2017, market share by volume(5) increased to
26% (June 2017: 24%)
-- RESORBA(R) branded products up 15% to GBP20.8 milllion (2016:
GBP18.1 million) and by 6% at constant currency
-- Antimicrobial dressings up 11% to GBP19.4 million (2016:
GBP17.5 million) and by 9% at constant currency
-- Out-licensing deal signed with Organogenesis for a collagen-based wound dressing containing Polyhexamethylene Biguanide ("PHMB")
Outlook
2017 has seen another good performance by the Group. With our
increasing portfolio of products, high quality business partners,
the opportunities we see from our R&D pipeline and our strong
financial position, the Board remains optimistic about our future
prospects and the potential for further growth. The Group continues
to trade in line with Board expectations.
Commenting on the results Chris Meredith, Chief Executive
Officer of AMS, said:
"This has been another year of good growth across the Group and
we are well positioned to take advantage of market opportunities
across our product portfolio. Innovation is at the heart of our
strategy and this allows us to maintain the high quality of our
products that offer benefits to both patients and payors. Alongside
our organic growth plan, AMS is actively reviewing M&A
opportunities that will further increase value for shareholders. We
look to the future with continued confidence."
- End -
Note 1 Constant currency removes the effect of currency
movements by re-translating the current period's performance at the
previous period's exchange rates
Note 2 All items are shown before exceptional items which were
GBPnil (2016: GBP0.4 million) and amortisation of acquired
intangible assets which were GBP0.1 million (2016: GBP0.2 million)
as defined in the Financial Review
Note 3 Net operating cash flow is arrived at by taking the
operating profit for the period before exceptional items of GBPnil
(2016: GBP0.4 million), depreciation, amortisation, working capital
movements and other non cash items
Note 4 Net cash is defined as cash and cash equivalents plus
short term investments less financial liabilities and bank
loans
Note 5 Data supplied by Global Healthcare Exchange
Note 6 2016 Revenue restated by GBP0.7 million (2016: GBP0.6
million) as a result of adoption of IFRS 15 (Revenue from Contracts
with Customers)
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 Financial
Officer
Consilium Strategic Communications Tel: +44 (0)
20 3709 5700
Mary-Jane Elliott / Matthew Neal
/ Philippa Gardner
Investec Bank PLC (NOMAD & Broker) Tel: +44 (0)
20 7597 5970
Daniel Adams / Patrick Robb /
Gary Clarence
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, wound care and wound closure markets, focused on quality
outcomes for patients and value for payors. AMS has a wide range of
products that include silver alginates, alginates, foams, tissue
adhesives, sutures and haemostats, which it markets under its
brands; ActivHeal(R) , LiquiBand(R) and RESORBA(R) as well as
supplying under white label.
AMS's products, manufactured out of two sites in the UK, one in
the Netherlands, two in Germany and one in the Czech Republic, are
sold in more than 75 countries via a network of multinational or
regional partners and distributors, as well as via AMS's own direct
sales forces in the UK, Germany, the Czech Republic and Russia.
Established in 1991, the Group has approximately 600 employees. For
more information, please see www.admedsol.com.
Chairman's Statement
AMS 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 to report another year of strong revenue growth, profit
performance and cash generation.
Our revenues increased 16% to GBP96.9 million (2016: GBP83.2
million), representing growth of 12% on a constant currency basis
and our adjusted(7) profit before tax increased by 29% to GBP25.4
million (2016: GBP19.7 million) and our profit before tax increased
by 32% to GBP25.3 million (2016: GBP19.1 million). The continued
strong cash generation of the business has resulted in the Group
ending the year with net cash of GBP62.5 million (2016: GBP51.1
million).
As reported at the half year, at the beginning of 2017 we
reviewed our business structure and consolidated our Business Units
from four to two. Our Branded Business Unit focuses on the
distribution, marketing and innovation of all the Group's branded
products. Our OEM business focuses on the distribution, marketing
and innovation of all the Group's products that are supplied to our
medical device partners under their brands. This new structure is
designed to enhance focus and improve marketing efficiencies for
the Group.We have restated our segmental prior year financials in
line with this new reporting structure.
Good progress has been made with all of our brands. LiquiBand(R)
continues to do well in the US and we have gained a further 2%
market share since we last reported to take our market share by
volume to 26%. Revenue from our RESORBA(R) brands grew steadily
across all territories and has grown by 15% and by 6% at constant
currency to GBP20.8 million (2016: GBP18.1 million), while
ActivHeal(R) grew by 4% to GBP6.3 million (2016: GBP6.0
million).
We were pleased to announce in October 2017 that we had agreed a
patent out-licensing agreement with Organogenisis for a collagen
based wound dressing containing Polyhexamethylene Biguanide
("PHMB"). Under this agreement, we receive royalties from
Organogenesis's net sales in the US on the product. The agreement
is in place for the life of the patent which expires in October
2026.
The Board is proposing a final dividend of 0.75p per share,
making a total dividend for the year of 1.10p per share, an
increase of 20% (2016: 0.92p). If approved at the Annual General
Meeting, this dividend will be paid on 15 June 2018 to shareholders
on the register at the close of business on 25 May 2018.
On behalf of the Board, I would like to thank all of our
employees for their contributions during the past year. We would
not have been able to achieve our strong performance without their
commitment and effort. 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 sustainable shareholder value and safe-guard
shareholders' long-term interests.
AMS continues to be in robust financial health and we are
continuing to grow our international footprint and scale. The Group
is well positioned to increase investment in internal innovation
and to actively pursue external opportunities in line with our
long-term strategy and growth objectives.
Peter Allen
Chairman
(7) All items are shown before amortisation of acquired
intangible assets which, in 2017, was GBP0.1 million (2016: GBP0.2
million) as defined in the financial review and before exceptional
costs which were GBPnil million (2016: GBP0.4 million)
Chief Executive's Statement
I am pleased to report another strong set of results across the
Group. Our revenue has increased 16% to GBP96.9 million and we have
improved our adjusted(8) profit before tax by 29% to GBP25.4
million and our reported profit before tax by 32% to GBP25.3
million (2016: GBP19.1 million).
Our strategy for growth remains unchanged. We continue to expand
into new geographies, increase our distribution of surgical
products through our direct sales forces, and enhance our product
portfolio by developing high quality products that add value to
patients and payors in our advanced woundcare and surgical
markets.
As reported at the half year, we have streamlined our reporting
structure and now operate under two Business Units: Branded and
OEM.
Branded
The Branded Business Unit reports the sales of all our own
brands. Branded reported revenue was 22% higher at GBP55.2 million
(2016: GBP45.4 million) and 16% higher at constant currency.
LiquiBand(R) topical adhesives
LiquiBand(R) is our range of medical adhesives based on
cyanoacrylate, and is our largest brand with sales of GBP26.0
million, (2016: GBP19.3 million) up 35% on the prior year and 30%
at constant currency.
Our LiquiBand(R) range of products utilises different
formulations of cyanoacrylate in innovatively designed applicators.
They are designed to meet the requirements of the clinician and to
treat the full spectrum of wounds that they need to close and
protect. They have several key attributes that compare favourably
with the existing market leader, including wound closure strength,
tensile strength, set time, surface area coverage and adhesive
yield.
Sales in the US, which remains our largest market, increased by
47% to GBP18.2 million (2016: GBP12.4 million) at reported currency
and by 40% at constant currency. We access this market through
distributors who target both hospitals and non hospitals, helping
us to identify customers and convert opportunities into sales
following surgeon evaluation. We support our partners with
marketing and clinical data demonstrating the efficacy of our
products. We continue to grow our volume market share which is now
at 26%, up 2% from June 2017 and 3% over the full year.
In the UK and Germany good progress has been made. Revenues have
increased 12% to GBP5.3 million (2016: GBP4.7 million) and 10% at
constant currency with new hospitals being accessed. In the EU and
ROW, sales of LiquiBand(R) increased by 19% to GBP2.5 million
(2016: GBP2.1 million) at reported currency and 18% at constant
currency.
We are now targeting new geographic markets for LiquiBand(R) .
Following on from establishing distribution agents in Asia, we have
also identified opportunities for LiquiBand(R) in a number of
Central American markets and anticipate first sales in this region
in 2018.
Our primary focus for R&D is to extend our LiquiBand(R)
product range to compete in the growing market for combined glues
and tape used for larger wound closure. We expect to receive
approval to market this in the US around the end of 2018.
(8) All items are shown before amortisation of acquired
intangible assets which, in 2017, was GBP0.1 million (2016: GBP0.2
million) as defined in the financial review and before exceptional
costs which were GBPnil million (2016: GBP0.4 million)
Hernia Mesh Fixation device - LiquiBand(R) Fix8(TM)
LiquiBand(R) Fix 8(TM) is used to hold hernia meshes in place
within the body instead of tacks and staples. This accurate
laparoscopic application of adhesive is expected to both reduce
surgical complications and reduce the potential pain associated
with the use of tacks and staples. It also provides the ability to
attach mesh in areas where tacks and staples cannot be applied,
helping to improve the patient experience and surgical
outcomes.
As reported at the half year, sales growth of LiquiBand(R)
Fix8(TM) has been restricted due to design enhancements we have
made following surgeon feedback. Further feedback has been received
on the updated device and modifications have been completed. We
have chosen not to actively promote the device while the
modifications were ongoing, nevertheless sales increased by 3% to
GBP1.7 million (2016: GBP1.7 million) and 1% at constant currency.
We expect to see a return to sales growth this year.
At present, the device is approved for use within Europe and
those markets that accept European approval standards. We have
started the process to get LiquiBand(R) Fix8(TM) approved in the US
market. This necessitates a full Pre Market Approval (PMA)
involving clinical trials with patient enrolment expected to start
in mid 2018 and enrolment completing by the end of the year. We
expect the total cost of completing the approval process will be
around GBP3 million with the majority of the spend being incurred
in 2018 and 2019.
In R&D, we are also working on broadening the claims on the
use of the device for hernia mesh fixation as well as for a number
of other laparoscopic surgical applications and developing a device
suitable for hernia mesh fixation in open surgery which we expect
to launch in Europe in the first half of 2019.
RESORBA(R)
Our RESORBA(R) branded products portfolio is comprised of a
comprehensive range of sutures which are used to close wounds and a
range of bio-surgical products that include collagens, cellulose
and bone substitutes that can be used as haemostats or scaffolds
for tissue growth. Sales of RESORBA(R) products increased by 15% to
GBP20.8 million (2016: GBP18.1 million) and by 6% at constant
currency. Within this, sales of sutures increased by 15% to GBP13.0
million (2016: GBP11.3 million) and by 6% at constant currency and
sales of bio-surgical products increased by 16% to GBP7.9 million
(2016: GBP6.8 million) and by 8% at constant currency.
During 2016, we renegotiated the supply agreement with an OEM
partner for collagen products in order to go direct. We are pleased
that we have started to sell these products into a number of new
territories.
Germany remains our largest market with GBP13.0 million of sales
(2016: GBP12.0 million), up 8% on the prior year and up by 1% at
constant currency while sales to markets outside Germany accessed
by our distributors increased by 30% to GBP7.5 million (2016:
GBP5.8 million) and 19% at constant currency. Our initiative to
offer a range of dental sutures into the US market is developing
and following launch in 2016, sales have increased to GBP0.3
million. The total US surgical suture market is estimated to be in
excess of $1 billion and is dominated by a few major brands and
provides a significant opportunity for the Group in the medium
term.
We continue to access new markets, in particular Asia Pacific,
and have recently hired a new sales manager to target Australasia
for both our RESORBA(R) and LiquiBand(R) brand ranges.
In R&D we continue to work on preparing a range of different
antibiotics that can be incorporated in our bio-surgical products.
We expect to file for European approval in the second half of
2018.
ActivHeal(R)
ActivHeal(R) is our range of high quality woundcare dressings
specifically designed to offer the NHS significant cost savings
without compromising on clinical outcomes or patient care. Sales of
ActivHeal(R) increased by 4% to GBP6.3 million (2015: GBP6.0
million), reversing the decline that was reported in 2016, however
the market remains difficult with increasing price pressure
becoming evident. The Group has enhanced its education and
marketing materials as well as broadened its product range with our
antimicrobial and atraumatic foam dressing ranges.
OEM
Our OEM business supports our partners with a multi-product
portfolio of advanced woundcare products and bulk materials. We
have been working with many of the world's major wound care
companies for a number of years providing 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. Revenue increased
10% to GBP41.7 million (2016: GBP37.8 million) and increased 8% at
constant currency.
A key driver for this Business Unit is in supplying products
that incorporate antimicrobials. Sales of our antimicrobial
dressings increased by 11% to GBP19.4 million (2016: GBP17.5
million), and by 9% at constant currency. Within this, silver
alginate products grew by 12% to GBP18.0 million (2016: GBP16.2
million) and by 9% at constant currency while the Polyhexamethylene
Biguanide (PHMB) foam range, which was launched in 2016 into
Europe, increased 2% at reported and constant currency.
PHMB is an antimicrobial which is effective against several
bacteria including Methicillin-resistant Staphylococcus aureus
(MRSA) and Escherichia coli (E.coli). Although we received approval
to market PHMB foam into the US in 2017, we deferred a launch until
we could market these products with extended claims. We expect to
obtain these approvals in 2018.
Sales of our non-antimicrobial foams were down 16% at reported
currency to GBP7.4 million (2016: GBP8.8 million) and by 20% at
constant currency. Sales were impacted by the pipeline fill of our
atraumatic foam launches in 2016, which we estimate to have been
around GBP1 million. We also had some issues caused by a change of
raw material from one of our suppliers which interrupted our
ability to promote part of our more established range of products.
These issues are now resolved. Sales of our other technologies,
which include alginates and gels, increased 7% at reported currency
to GBP11.8 million (2016: GBP11.0 million) and by 5% at constant
currency.
In October 2017 we agreed an out-licensing agreement with
Organogenesis Inc., a commercial leader in regenerative medicine
focused on advanced wound care and surgical biologics, on a U.S.
patent for a collagen-based wound dressing containing PHMB.
Under the terms of the agreement, Organogenesis has been granted
an exclusive license in the United States to the patent. In
exchange for this, we have recognised GBP2.5 million from
royalties, and will receive a minimum royalty of $1 million for
each of the financial years ending 31 December 2018 and 2019. This
is part of an ongoing royalty stream that will be payable to AMS on
the net sales of the Licensed Product for the life of the patent.
The patent is due to expire in October 2026.
The Group's ability to out-license our patented technologies is
an endorsement of the quality of our innovation and we are pleased
to be working with a partner that is using the AMS patent to access
the US market so effectively.
In the latter part of 2017, we noted that a number of our
partners have reported a slowdown in the European advanced wound
care market. We continue, however, to believe in our medium and
long term prospects in this market.
In R&D, we continue to work on extending our advanced
woundcare portfolio with focus on our antimicrobial range,
improving the absorbancy of dressings and combining a number of
materials to enhance product performance. We are developing a range
of surgical dressings for which we are expecting to obtain approval
in mid 2018 for the US market. We are also expecting to receive
approval to market an antimicrobial high performance dressing in
the US before the end of 2018.
Operations and regulatory
With the business continuing to show strong organic growth, we
have made investments in our converting capability at our Etten
Leur site, as well as improving our packaging capability in
Nuremberg which is expected to complete in 2018.
As a result of the continued success of our medical adhesives
business, we have also made plans to extend the capacity of the
Plymouth facility. This will be a significant project for us and we
estimate that the spend will be around GBP4 million and will take
around three years. It will provide us with the capability to
increase production of our existing product range as well as
allowing us the capacity to manufacture new products such as the
open hernia device.
Following the FDA inspection of our Winsford site in June 2016,
our Plymouth facility was inspected by the FDA in April 2017. We
were very pleased with the outcome of this audit with no
non-conformances raised.
The new European Medical Devices Regulation (MDR) entered into
force on 25 May 2017, marking the start of the transition period
for manufacturers selling medical devices into Europe. The MDR,
which replaces the Medical Devices Directive (MDD) has a transition
period of three years and manufacturers have this transition period
to update their technical documentation and processes to meet the
new requirements. The MDR brings more scrutiny on product safety
and performance and stricter requirements on clinical evaluation
and post-market clinical follow up. Our notified body, BSI, is
already adopting the new standard and we are working with our OEM
partners to ensure that we meet the new requirements. We anticipate
that, although there will be some additional costs associated with
meeting the new requirements, overall, the tighter regulatory
standards should prove beneficial for the Group in the longer
term.
Our implementation of Oracle ERP in Germany was successfully
completed at the end of September. This will bring benefits from
better availability of information and enhanced controls. This
completes our major ERP conversions across the Group, although
ongoing improvements to systems will continue.
Acquisitions strategy
The Group is actively looking for businesses that meet its
acquisition strategy of:
-- licensing or acquiring technology that allows us to leverage
our global OEM customer base or branded routes to market;
-- licensing or acquiring additional brands within woundcare,
wound closure or surgical setting that complement our existing
range; and
-- geographic expansion through acquiring surgically focused
companies with strong direct sales capability and ownership of
complementary products.
We have an internal team working with advisors to identify,
appraise and progress acquisition opportunities.
The UK and the European Union
To date, there has been no day-to-day operational impact of the
referendum vote to leave the European Union, other than changes to
currency exchange rates. In preparation, the Group has submitted
its application to obtain Authorised Economic Operator status for
its UK trading entities and expects to achieve this designation by
the end of the year. With its footprint in mainland Europe, the
Group is well positioned to deal with the uncertain outcome of the
UK negotiations with the EU, moving activities into jurisdictions
that are beneficial to the business.
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
understood and embraced 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 have run workshops across all our
sites and have responded to feedback about how we can improve the
Care, Fair, Dare ethos in the workplace. We are now enbodying these
attitudes into our objectives and appraisal process.
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 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.
Summary and outlook
2017 has seen another good performance by the Group. Trading in
the current financial year has begun well and is in line with the
Board's expectations. With our increasing portfolio of products,
high quality business partners, the opportunities we see from our
R&D pipeline and our strong financial position, the Board
remains optimistic about our long-term prospects and the potential
for further growth.
Financial Review
Summary
The Group has delivered another year of strong financial
performance, with revenue increasing by 16%, or 12% at constant
currency, to GBP96.9 million (2016: GBP83.2 million) and with
improving operating margins.
The Group has elected to adopt IFRS 15 (Revenue from Contracts
with Customers) in 2017, which has no impact on profit or cash flow
but results in fee income of GBP0.7 million (2016: GBP0.6 million)
being recorded as Revenue rather than as Other Income.
During the year, the Group streamlined into two Business Units,
to enhance commercial focus and improve marketing efficiencies.
All prior year values have been restated to refect IFRS 15
adoption and the Business Unit restructure.
The Group uses alternative performance measures such as adjusted
operating margin, adjusted profit before tax, net operating cash
flow pre-exceptional items, and revenue growth at constant
currency, to allow the users of the accounts to gain a clearer
understanding of performance, allowing the impacts of amortisation,
exceptional items and exchange rate volatility to be separately
identified. The Group did not incur any exceptional costs in the
year (2016: GBP0.4 million) and amortisation of acquired intangible
assets was GBP0.1 million in the period (2016: GBP0.2 million).
To aid comparison, the Group's adjusted income statement is
summarised in Table 1 below.
Year ended Year ended
31 December 31 December
Table 1 2017 2016 (restated)(10)
Adjusted Income Statement GBP'000 GBP'000 Change
---------------------------- -------------- --------------------- -------
Revenue 96,908 83,242 16%
---------------------------- -------------- --------------------- -------
Gross profit 58,404 48,048 22%
Distribution costs (1,130) (1,047)
Adjusted administration
costs(8) (32,050) (27,293)
Other income 150 -
---------------------------- -------------- --------------------- -------
Adjusted operating
profit 25,374 19,708 29%
Net finance income/(costs) 37 (3)
---------------------------- -------------- --------------------- -------
Adjusted profit before
tax 25,411 19,705 29%
Amortisation of acquired
intangibles (134) (242)
Exceptional Items - (361)
---------------------------- -------------- --------------------- -------
Profit before tax 25,277 19,102 32%
Tax (5,143) (3,410)
---------------------------- -------------- --------------------- -------
Profit for the period 20,134 15,692 28%
---------------------------- -------------- --------------------- -------
Adjusted earnings
per share - basic(9) 9.58p 7.77p 23%
Earnings per share
- basic(9) 9.52p 7.65p 24%
---------------------------- -------------- --------------------- -------
Adjusted earnings
per share - diluted(9) 9.46p 7.66p 23%
Earnings per share
- diluted(9) 9.39p 7.38p 27%
---------------------------- -------------- --------------------- -------
Note 8 Adjusted administration costs exclude amortisation of
acquired intangible assets and exceptional items
Note 9 See Note 7 Earnings per share for details of calculation
Note 10 Restated to reflect GBP0.6 million of fee income as
revenue under newly adopted IFRS15
Currency movements impacted revenues favourably by approximately
GBP3.4 million during the year.
Adjusted operating profit before exceptional items increased by
29% to GBP25.4 million (2016: GBP19.7 million) and adjusted
operating margin increased by 250 bps to 26.2% (2016: 23.7%).
Administration costs excluding exceptional items increased by 17%
to GBP32.0m (2016: GBP27.3 million) due to currency movements and
further investment in selling and marketing, particularly to
support the Branded Business Unit. The Group incurred GBP3.0
million of gross R&D spend in the year (2016: GBP2.6 million),
respresenting 3.1% of sales (2016: 3.1%).
Profit before tax for the year was 32% higher at GBP25.3 million
(2016: GBP19.1 million).
The Group's effective tax rate increased to 20.4% (2016: 17.9%)
mainly due to being required to move to the less favourable, large
company RDEC scheme in 2017. This effective tax rate reflects the
blended tax rates in the countries in which we operate and, for the
UK, includes the tax relief associated with the patent box scheme
and the utilisation of residual previously unrecognised UK tax
losses.
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 21.91
Patent box relief (1.23)
Net impact of deferred tax on capitalised
development costs and R&D relief 0.67
Net impact of expenses not deductible,
utilisation of historical losses, prior
year adjustments, depreciation and share
based payments (1.00)
------------------------------------------- --------
Effective taxation rate 20.35
------------------------------------------- --------
Earnings (excluding amortisation of acquired intangible assets
and before exceptional items) increased by 24% to GBP20.3 million
(2016: GBP16.3 million), resulting in a 23% increase in adjusted
basic earnings per share to 9.58p (2016: 7.77p) and a 23% increase
in adjusted diluted earnings per share to 9.46p (2016: 7.66p).
Profit after tax increased by 28% to GBP20.1 million (2016:
GBP15.7 million), resulting in a 24% increase in basic earnings per
share to 9.52p (2016: 7.65p) and a 27% increase in diluted earnings
per share to 9.39p (2016: 7.38p).
The Board is proposing a final dividend of 0.75p per share, to
be paid on 15 June 2018 to shareholders on the register at the
close of business on 25 May 2018. This follows the interim dividend
of 0.35p per share on 27 October 2017 and would, if approved, make
a total dividend for the year of 1.10p per share (2016: 0.92p), a
20% increase on 2016.
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.
Table 3
Operating result by business segment
Year ended 31 December
2017 Branded OEM
GBP'000 GBP'000
-------------------------- -------- --------
Revenue 55,244 41,664
Profit from operations 14,336 11,354
Amortisation of acquired
intangibles 125 9
Adjusted profit from
operations 14,461 11,363
Adjusted operating
margin 26.2% 27.3%
-------------------------- -------- --------
Year ended 31 December
2016 (restated)
Revenue 45,427 37,815
Profit from operations 11,313 8,677
Amortisation of acquired
intangibles 225 17
Adjusted profit from
operations 11,538 8,694
Adjusted operating
margin 25.4% 23.0%
-------------------------- -------- --------
Branded
The adjusted operating margin of the Branded Business Unit
increased to 26.2% (2016: 25.4%), supported by sales growth and
sales mix. Operating costs increased, especially sales, marketing,
R&D and regulatory costs, to continue to support ongoing
growth.
OEM
The adjusted operating margin of the OEM Business Unit increased
to 27.3% (2016: 23.0%), mainly due to the out-licensing agreement
of wound dressings containing Collagen and PHMB, which generated a
GBP2.5 million royalty income in the year.
Geographic breakdown of revenues
The geographic breakdown of Group revenues in 2017 is shown in
Table 4 below:
Table 4
Geographic Breakdown of Group Revenues
---------------------------------------------------------
GBP'000 % of
2017 % of total 2016 total
--------------------- ----- ----------- ----- -------
Europe excluding UK
and Germany 22.9 23.6% 21.4 25.8%
Germany 19.1 19.7% 18.4 22.1%
UK 17.3 17.9% 17.9 21.5%
USA 35.3 36.4% 23.5 28.2%
Rest of World 2.3 2.4% 2.0 2.4%
--------------------- ----- ----------- ----- -------
Approximately 90% of our US sales are invoiced in US Dollars and
approximately 60% of our sales to mainland Europe are invoiced in
Euros. The Group hedges significant currency transaction exposure
by using forward contracts and options and aims to have at least
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 3.3% and 2.6% respectively and in the absence of any
hedging this would have an impact on profit of 2.7% and 0.3%.
Cash Flow
Table 5 below summarises the Group's cash flows.
Table 5
Group Cash Flows
-------- --------
2017 2016
Year ended 31 December GBP'000 GBP'000
---------------------------------------- -------- --------
Adjusted operating profit (Table
1) 25,374 19,708
Non-cash items 4,127 4,023
---------------------------------------- -------- --------
Adjusted EBITDA(11) 29,501 23,731
Working capital movement (8,049) (1,480)
---------------------------------------- -------- --------
Operating cash flow before exceptional
items 21,452 22,251
Exceptional items - (361)
---------------------------------------- -------- --------
Operating cash flow after exceptional
items 21,452 21,890
Capital expenditure and capitalised
R&D (4,455) (2,536)
Net Interest 37 (3)
Tax (4,486) (2,065)
---------------------------------------- -------- --------
Free cash flow 12,548 17,286
Dividends paid (2,049) (1,783)
Proceeds from share issues 809 868
Exchange gains 21 553
Net increase in cash and cash
equivalents 11,329 16,924
---------------------------------------- -------- --------
Note 11: Adjusted EBITDA is earnings before interest, tax,
depreciation, intangible asset amortisation, share based payments
and exceptional items
Adjusted EBITDA increased by 24% to GBP29.5 million (2016:
GBP23.7 million).
Working capital increased during the year, mainly due to the
higher value of trade receivables, which was caused by sales
phasing and royalties, with debtor days unchanged at 41 days (2016:
41 days). Trade payable days reduced to 27 days (2016: 33 days) and
months of supply of inventory held across the Group reduced to 4.2
months (2016: 4.4 months of supply).
The Group generated net cash from operating activities of
GBP21.5 million (2016: GBP21.9 million).
In the year, we invested GBP4.5 million in capital equipment,
software and capitalised R&D (2016: GBP2.5 million), including
investment in new packaging machines, ERP software and internally
developed products.
Cash outflow relating to taxation increased sharply to GBP4.5
million (2016: GBP2.1 million) with historical losses and related
deferred tax balances now fully used up.
The Group generated a free cash flow of GBP12.5 million in the
year (2016: GBP17.3 million). The conversion of adjusted operating
profit into free cash flow was 49% (2016: 88%). This was mainly due
to investment in the Business Units, working capital outflow,
increased taxation and dividends.
The Group paid its final dividend for the year ended 31 December
2016 of GBP1.3 million on 16 June 2017 (2016: for the year ending
2015, GBP1.2 million), and its interim dividend for the six months
ended 30 June 2017 of GBP0.7 million (2016: GBP0.6 million) on 27
October 2017.
The Group has a GBP30 million, multi-currency credit facility
with a GBP20 million accordion option, provided jointly by HSBC and
The Royal Bank of Scotland in place until December 2019. 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 GBP62.5
million (2016: GBP51.1 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 2017 51,125
Exchange rate impacts 21
Free cash flow 12,548
Dividends paid (2,049)
Proceeds from share issues 809
Net cash as at 31 December 2017 62,454
--------------------------------- --------
The Group's going concern position is fully described in note
2.
CONDENSED CONSOLIDATED INCOME
STATEMENT
Restated
------------ ----------- ---------
Year ended 31 December (Unaudited) (Audited)
2017 Before Exceptional 2016
exceptional Items
Items
Note GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------------------------- ------ ----------- ------------ ----------- ---------
Revenue from continuing operations 4 96,908 83,242 - 83,242
Cost of sales (38,504) (35,194) - (35,194)
--------------------------------------------------------- ------ ----------- ------------ ----------- ---------
Gross profit 58,404 48,048 - 48,048
Distribution costs (1,130) (1,047) - (1,047)
Administration costs (32,184) (27,535) (361) (27,896)
Other income 150 - - -
------------ ----------- ---------
Profit from operations 5 25,240 19,466 (361) 19,105
Finance income 147 108 - 108
Finance costs (110) (111) - (111)
--------------------------------------------------------- ------ ----------- ------------ ----------- ---------
Profit before taxation 25,277 19,463 (361) 19,102
Income tax 6 (5,143) (3,410) - (3,410)
--------------------------------------------------------- ------ ----------- ------------ ----------- ---------
Profit for the year attributable to equity holders of the parent 20,134 16,053 (361) 15,692
----------------------------------------------------------------- ----------- ------------ ----------- ---------
Earnings per share
Basic 7 9.52p 7.65p (0.17p) 7.48p
Diluted 7 9.39p 7.55p (0.17p) 7.38p
Adjusted(12) diluted 7 9.46p 7.66p (0.17p) 7.49p
--------------------------------------------------------- ------ ----------- ------------ ----------- ---------
(Note 12: Adjusted for exceptional items and for amortisation of
acquired intangible assets)
CONDENSED CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
(Unaudited) (Audited)
2017 2016
GBP'000 GBP'000
------------------------------------ ----------- ---------
Profit for the year 20,134 15,692
---------------------------------------- ----------- ---------
Exchange differences on
translation of foreign
operations 2,187 8,851
Gain/(loss) arising on
cash flow hedges 4,192 (3,009)
---------------------------------------- ----------- ---------
Total other comprehensive
income for the period 6,379 5,842
---------------------------------------- ----------- ---------
Total comprehensive income
for the period attributable
to equity holders of the
parent 26,513 21,534
---------------------------------------- ----------- ---------
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(Unaudited) (Audited)
31 Dec-17 31-Dec-16
GBP'000 GBP'000
Assets
Non-current assets
Acquired intellectual property
rights 9,675 9,468
Software intangibles 3,078 2,500
Development costs 2,135 1,645
Goodwill 41,801 40,337
Property, plant and equipment 17,019 16,177
Deferred tax assets 199 -
Trade and other receivables 286 10
---------------------------------- ------------ ----------
74,193 70,137
Current assets
Inventories 11,073 11,440
Trade and other receivables 20,950 11,872
Current tax assets 48 432
Cash and cash equivalents 62,454 51,125
---------------------------------- ------------ ----------
94,525 74,869
-------------------------------- ------------ ----------
Total assets 168,718 145,006
---------------------------------- ------------ ----------
Liabilities
Current liabilities
Trade and other payables 10,547 12,901
Current tax liabilities 2,290 2,049
Other taxes payable 15 85
12,852 15,035
Non-current liabilities
Trade and other payables 310 1,291
Deferred tax liabilities 3,120 3,152
3,430 4,443
-------------------------------- ------------ ----------
Total liabilities 16,282 19,478
---------------------------------- ------------ ----------
Net assets 152,436 125,528
---------------------------------- ------------ ----------
Equity
Share capital 10,632 10,524
Share premium 34,778 34,005
Share-based payments reserve 4,676 3,469
Investment in own shares (152) (152)
Share-based payments deferred
tax reserve 815 459
Other reserve 1,531 1,531
Hedging reserve 658 (3,534)
Translation reserve 2,823 636
Retained earnings 96,675 78,590
---------------------------------- ------------ ----------
Equity attributable to equity
holders of the parent 152,436 125,528
---------------------------------- ------------ ----------
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
2016
(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
December
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
(audited) 10,524 34,005 3,469 (152) 459 1,531 (3,534) 636 78,590 125,528
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- --------
Consolidated
profit
for the year
to 31
December
2017 - - - - - - - - 20,134 20,134
Other
comprehensive
income - - - - - - 4,192 2,187 - 6,379
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- --------
Total
comprehensive
income - - - - - - 4,192 2,187 20,134 26,513
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- --------
Share-based
payments - - 1,279 - 356 - - - - 1,635
Share options
exercised 108 773 (72) - - - - - - 809
Shares
purchased by
EBT - - - (484) - - - - - (484)
Shares sold by
EBT - - - 484 - - - - - 484
Dividends paid - - - - - - - - (2,049) (2,049)
At 31 December
2017
(unaudited) 10,632 34,778 4,676 (152) 815 1,531 658 2,823 96,675 152,436
--------------- -------- -------- --------- ----------- ------------ -------- -------- ------------ --------- --------
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited) (Audited)
Year ended 31 December 2017 2016
GBP'000 GBP'000
------------------------------------ ------------ ----------
Cash flows from operating
activities
Profit from operations 25,240 19,105
Adjustments for:
Depreciation 2,053 1,898
Amortisation
- intellectual property
rights 134 242
- development costs 380 441
- software intangibles 415 329
Impairment of development
costs - 125
Decrease/(increase) in inventories 505 (2,005)
Increase in trade and other
receivables (8,627) (674)
Increase in trade and other
payables 73 1,199
Share-based payments expense 1,279 1,230
Taxation (4,486) (2,065)
Net cash inflow from operating
activities 16,966 19,825
--------------------------------------- ------------ ----------
Cash flows from investing
activities
Purchase of software (958) (795)
Capitalised research and
development (860) (259)
Purchases of property, plant
and equipment (2,901) (1,523)
Disposal of property, plant
and equipment 264 41
Interest received 147 109
Net cash used in investing
activities (4,308) (2,427)
--------------------------------------- ------------ ----------
Cash flows from financing
activities
Dividends paid (2,049) (1,783)
Finance lease - (1)
Issue of equity shares 809 868
Shares purchased by EBT (484) (449)
Shares sold by EBT 484 449
Interest paid (110) (111)
Net cash used in financing
activities (1,350) (1,027)
--------------------------------------- ------------ ----------
Net increase in cash and
cash equivalents 11,308 16,371
Cash and cash equivalents
at the beginning of the year 51,125 34,201
Effect of foreign exchange
rate changes 21 553
Cash and cash equivalents
at the end of the year 62,454 51,125
--------------------------------------- ------------ ----------
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
2017 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 2016 and adjusted
for the early adoption of IFRS15, Revenue from Contracts with
Customers.
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 2018.
The financial information set out in the announcement does not
constitute the Group's statutory accounts for the years ended 31
December 2017 or 31 December 2016. The financial information for
the year ended 31 December 2016 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 2017 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 2016.
With regards to the Group's financial position, it had cash and
cash equivalents at the year end of GBP62.5 million. The Group also
has in place a five-year, unsecured, multi-currency, credit
facility for GBP30 million which is due for renewal in December
2019 and which was undrawn in 2017.
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 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.
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 7 - Disclosure Initiative
-- Amendments to IAS 12, Recognition of Deferred Tax Assets for
Unrealised Losses
-- Annual Improvements to IFRSs: 2014-16 Cycle specifically
amendments to IFRS 12 IFRS 12, Disclosure of Interests in Other
Entities
IFRS 15 is effective for annual periods beginning 1 January 2018
and will replace IAS 11 Construction Contracts and IAS 18 Revenue.
The standard establishes a principles based approach for revenue
recognition and is based on the concept of recognising revenue for
obligations only when they are satisfied and the control of goods
or services is transferred. It applies to all contracts with
customers, except those in the scope of other standards. It
replaces the separate models for goods, services and construction
contracts under the current accounting standards. The Group has
decided to adopt the standard early with effect for the year ended
31 December 2017. As a result of the early adoption, Other Income
of GBP709,000 excluding the royalty income from Organogenesis has
been re-classified as Revenue (2016: GBP621,000). The impact on
profit before tax is GBPnil (2016: GBPnil).
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 9, Financial Instruments - effective for accounting
periods beginning on or after 1 January 2018.
-- IFRIC 22, Foreign Currency Transactions and Advance
Consideration - effective for accounting periods beginning on or
after 1 January 2018.
-- Amendments to IFRS 2, Classification and Measurement of
Share-based Payment Transactions - effective for accounting periods
beginning on or after 1 January 2018.
-- Annual Improvements to IFRSs: 2014-16 Cycle, IFRS 1 and IAS
28 Amendments - 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.
-- IFRIC 23, Uncertainty over Income Tax Treatments - effective
for accounting periods beginning on or after 1 January 2019.
The Directors do not expect that the adoption of the standards
listed above will have a material impact on the Financial
Statements of the Group in future periods, except as follows:
IFRS 16 is effective for annual periods beginning 1 January 2019
and will replace IAS 17 Leases. The standard represents a
significant change in the accounting and reporting of leases for
lessees as it provides a single lessee accounting model. As such it
requires lessees to recognise assets and liabilities for all leases
unless the underlying asset has a low value or the lease term is 12
months or less. The standard may also require the capitalisation of
a lease element of contracts held by the Group which under the
existing accounting standard would not be considered a lease. Early
adoption is permitted if IFRS 15 'Revenue from Contracts with
Customers' has also been applied; however, the Group does not
expect to undertake this option.
The Group holds a number of operating leases, which currently,
under IAS 17, are expensed on a straight line basis over the lease
term. The Group has made the following estimates of the approximate
impacts of adopting the new standard, which are sensitive to all
changes up to the application date. If the standard had been
adopted in the current year, a depreciation charge of around GBP1.0
million in relation to the right-of-use asset and a finance expense
charge of around GBP0.6 million would have been recognised in place
of the operating lease charge of GBP1.3 million. In addition, a
right-of-use asset and largely offsetting lease liability of
approximately GBP11.0 million would be recognised in the statement
of financial position.
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 two Business Units: Branded and OEM (original
equipment manufacturer). 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 OEM Consolidated
31 December
2017
(unaudited)
GBP'000 GBP'000 GBP'000
---------------------- -------- -------- -------------
Revenue
External sales 55,244 41,664 96,908
Result
---------------------- -------- -------- -------------
Segment result 14,336 11,354 25,690
Unallocated
expenses (450)
-------------
Profit from
operations 25,240
Finance income 147
Finance costs (110)
---------------------- -------- -------- -------------
Profit before
tax 25,277
Tax (5,143)
---------------------- -------- -------- -------------
Profit for
the year 20,134
---------------------- -------- -------- -------------
At 31 December
2017 Branded OEM Consolidated
(unaudited)
Other Information GBP'000 GBP'000 GBP'000
---------------------- -------- -------- -------------
Capital additions:
Software intangibles 715 243 958
Development 425 435 860
Property, plant
and equipment 1,563 1,338 2,901
Depreciation
and amortisation (1,192) (1,790) (2,982)
---------------------- -------- -------- -------------
Balance sheet
Assets
Segment assets 112,057 56,580 168,637
Unallocated
assets 81
---------------------- -------- --------
Consolidated
total assets 168,718
---------------------- -------- -------- -------------
Liabilities
Segment liabilities 10,406 5,876 16,282
---------------------- -------- -------- -------------
Consolidated
total liabilities 16,282
---------------------- -------- -------- -------------
Year ended Branded OEM Consolidated
31 December
2016 (restated)
GBP'000 GBP'000 GBP'000
---------------------- -------- -------- ---------------
Revenue
External sales 45,427 37,815 83,242
Result
---------------------- -------- -------- ---------------
Segment result 11,313 8,677 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 (restated) Branded OEM Consolidated
Other Information GBP'000 GBP'000 GBP'000
---------------------- -------- -------- ---------------
Capital additions:
Software intangibles 596 199 795
Development 157 102 259
Property, plant
and equipment 1,105 418 1,523
Depreciation
and amortisation (1,310) (1,600) (2,910)
---------------------- -------- -------- ---------------
Balance sheet
Assets
Segment assets 97,498 47,388 144,886
Unallocated
assets 120
---------------------- -------- --------
Consolidated
total assets 145,006
---------------------- -------- -------- ---------------
Liabilities
Segment liabilities 12,020 7,458 19,478
---------------------- -------- -------- ---------------
Consolidated
total liabilities 19,478
---------------------- -------- -------- ---------------
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 revenue
by geographical market, irrespective of the origin of the
goods/services, based upon location of the Group's customers:
Year ended 31 December 2017 2016
GBP'000 GBP'000
------------------------------- -------- --------
United Kingdom 17,266 17,957
Germany 19,062 18,466
Europe excluding United
Kingdom and Germany 22,939 21,360
United States of America 35,330 23,505
Rest of World 2,311 1,954
--------------------------------- -------- --------
96,908 83,242
------------------------------- -------- --------
The following table provides
an analysis of the Group's
total assets by geographical
location.
As at 31 December 2017 2016
GBP'000 GBP'000
------------------------------- -------- --------
United Kingdom 98,305 80,580
Germany 65,212 59,950
Europe excluding United
Kingdom and Germany 4,743 3,962
United States of America 458 514
--------------------------------- -------- --------
168,718 145,006
------------------------------- -------- --------
5. Profit from operations
Year ended 31 December 2017 2016
GBP'000 GBP'000
------------------------------------------------------------ -------- --------
Profit from operations is arrived
at after charging:
Depreciation of property, plant
and equipment 2,053 1,898
Amortisation of:
- acquired intellectual property
rights 134 242
- software intangibles 415 329
- development costs 380 441
Operating lease rentals - plant
and machinery 248 253
- land and buildings 1,005 917
Research and development costs
expensed to the income statement 2,052 2,276
Cost of inventories recognised
as expense 36,516 33,498
Write down of inventories expensed 1,448 634
Staff costs 29,920 26,162
Net foreign exchange loss 2,427 1,271
------------------------------------------------------------- -------- --------
6. Taxation
Year ended 31 December 2017 2016
GBP'000 GBP'000
------------------------------------- ---------- ----------
a) Analysis of charge
for the year
Current tax:
Tax on ordinary activities
- current year 5,397 3,180
Tax on ordinary activities
- prior year (293) (358)
----------------------------------------- ---------- ----------
5,104 2,822
Deferred tax:
Tax on ordinary activities
- current year 39 599
Effect of reduction
in UK corporation
tax rates - (11)
----------------------------------------- ---------- ----------
39 588
------------------------------------- ---------- ----------
Tax charge for the
year 5,143 3,410
----------------------------------------- ---------- ----------
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 2017 2016
GBP'000 GBP'000
------------------------------------- ---------- ----------
b) Factors affecting
tax charge for the
year
Profit before taxation 25,277 19,102
Profit multiplied
by the weighted average
Group tax rate of
21.91% (2016: 22.11%) 5,538 4,224
Effects of:
Net expenses not deductible
for tax purposes and
other timing differences 1 19
Patent Box Relief (310) (242)
Utilisation and recognition
of trading losses - (203)
Net impact of deferred
tax on capitalised
development costs
and R&D relief 170 (183)
Share-based payments 37 (47)
Adjustments in respect
of prior year - current
tax (293) (359)
Adjustments in respect
of prior year and
rate changes - deferred
tax - 201
Taxation 5,143 3,410
----------------------------------------- ---------- ----------
7. Earnings per share
The calculation of the basic and diluted earnings per share is
based on the following data:
Year ended 31 December 2017 2016
GBP'000 GBP'000
----------------------------------------------- --------- ---------
Earnings
Profit for the year attributable to equity holders
of the parent
Pre exceptional items 20,134 16,053
Post exceptional items 20,134 15,692
Number of shares '000 '000
----------------------------------------------- --------- ---------
Weighted average number of ordinary shares
for the purposes of basic earnings per share 211,563 209,815
----------------------------------------------- --------- ---------
Effect of dilutive potential ordinary shares:
share options, deferred share bonus, LTIPs 2,760 2,778
----------------------------------------------- --------- ---------
Weighted average number of ordinary shares
for the purposes of diluted earnings per
share 214,323 212,593
----------------------------------------------- --------- ---------
2017 2016
GBP'000 GBP'000
----------------------------------------------- --------- ---------
Profit for the year attributable to equity
holders of the parent 20,134 16,053
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 134 242
Adjusted profit for the year attributable
to equity holders of the parent 20,268 16,295
----------------------------------------------- --------- ---------
2017 2016
pence pence
----------------------------------------------- --------- ---------
Basic - pre exceptional 9.52p 7.65p
Basic - post exceptional 9.52p 7.48p
Diluted - pre exceptional 9.39p 7.55p
Diluted - post exceptional 9.39p 7.38p
Adjusted basic (before exceptional items) 9.58p 7.76p
Adjusted diluted (before exceptional items) 9.46p 7.66p
----------------------------------------------- --------- ---------
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR EAFDDFAEPEAF
(END) Dow Jones Newswires
March 14, 2018 03:01 ET (07:01 GMT)
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