6th Sep 2005 07:01
Advanced Medical Solutions Grp PLC06 September 2005 For immediate release 6 September 2005 Advanced Medical Solutions Group plc ("AMS" or "the Company") Interim results for the six months ended 30 June 2005 Winsford, UK: Advanced Medical Solutions Group plc (AIM: AMS), the globalwoundcare technology company, is pleased to announce its interim results for thesix months ended 30 June 2005. Highlights • Group turnover increased 13% to £5.9 million (2004: £5.2 million) • Pre-tax losses reduced 26% to £0.4 million (2004: £0.55 million) after profitable second quarter • EBITDA positive at £0.1 million (2004: break-even) • Cash of £2.9 million (2004: £2.7 million) sufficient to take the Group through to sustainable profitability • New products launched and partnerships extended: - Silver alginate launches in US and Europe - LiquiBand LaparoscopicTM launched throughout Europe - Marketing agreements signed for LiquiBandTM for France and Spain • Group well positioned for future growth: - US approval of LiquiBandTM range underway - Products undergoing approval in Japan - NHS direct business building steadily Commenting on the half year results, Dr. Don Evans, Chief Executive of AMS,said: "I am delighted by the first half performance, and particularly by our continuedprogress towards profitability. This endorses our strategy of broadening bothour routes to market and our product range and gives us confidence in thecurrent half and beyond." -ENDS- For further information, please contact: Advanced Medical Solutions Group plc Tel : +44 (0) 1606 545508Don Evans, Chief ExecutiveMary Tavener, Finance Directorwww.admedsol.com Buchanan Communications Tel: +44 (0) 20 7466 5000Mark Court, Mary-Jane Johnson Notes to Editors: Advanced Medical Solutions is a leading company in the development andmanufacture of products for the $13 billion global woundcare market. Founded in 1991 and currently quoted on AIM, Advanced Medical Solutions isfocused on the design, development and manufacture of innovative andtechnologically advanced products for woundcare and other medical applications. In-house natural and synthetic polymer technology is used to provide advancedwound dressings based on the moist healing principle. AMS's resources ensure aunique position as a vertically integrated 'one stop shop' to provide allcategories of moist wound healing products. The Company has the capability tomove from product design and development through to production and deliveryready for distribution into customer markets. The acquisition of MedLogic in 2002 has brought AMS products and technology incyanoacrylate based tissue adhesives that offer benefits over sutures andstaples for closing wounds sold direct to hospitals or through distributors. AMS's technology and products currently serve the majority of the key globalmarkets and strategic partners. Chairman's Statement Overview I am pleased to report that AMS continued to deliver good revenue growth andstrengthened its financial position during the period with sufficient cash totake the Company through to profitability. On the back of a profitable secondquarter the Company further reduced its losses and moved into positive EBITDA.Good progress has been made during the period in positioning the Company formajor future growth opportunities within key global markets. Operating Review The Group's core focus remains the development and manufacture of advancedwoundcare and wound closure products for sale in hospitals and long term carefacilities. Advanced woundcare products are marketed and distributed into the $2.6 billionglobal market through either major woundcare companies, under their leadingbrands or through private label distributors. Products based upon supergluetechnology address the emerging tissue adhesives segment of the $5 billion woundclosure market. This market is currently accessed by the Company through adirect sales force in the UK and through distribution partners in Europe. Thedirect UK sales force also carries a full range of standard advanced woundcareproducts for sale into the NHS hospital and community care markets under ourActivHeal(R) brand. The Company continues to make progress in reducing its heavy dependence on theperformance of its major branded partners for delivering revenue growth andprofit. The Company's strategy of broadening its routes to market bycomplementing these relationships with the provision of private label standardproducts to major distributors and by the expansion of its direct sales presencein the UK home market continues to be successful. Advanced Woundcare Advanced woundcare sales of £4.8 million for the six months to 30 June 2005 wereup 12% against the same period last year with growth spread across the productrange via branded and private label partners. The Company's position in the dynamic silver market was strengthened with theintroduction of its fibre based silver alginate technology into Europe under aleading brand and the launch by a number of partners of alginate dressingsincorporating ionic silver alginate in the US. Silver is a broad spectrumantimicrobial that helps to prevent infection. In combination with alginate, abiopolymer derived from seaweed, AMS can provide products ideally suited totreatment of a wide variety of chronic wounds. This transition to higher value products fits with our route to market strategywhereby we look to license our new technology to the major brands, which arebest placed to create these markets on a global basis, whilst we also addressthe cost pressures on healthcare budgets by providing a value range of productsfor routine use. These products are sold via private label distributors ordirect to the NHS under our ActivHeal(R) brand. The Company made steady progress with its ActivHeal(R) offering during theperiod despite a number of external factors. Typically many NHS Trusts cameunder severe funding restrictions during the first quarter as funds ran out atthe end of the budget cycle. Ironically, this prevented active assessment ofour cost reduction offering. However, we have made real progress as many userevaluations have been successfully completed and a growing number of Hospitaland Primary Care Trusts are now routinely using the ActivHeal(R) range. Weremain confident that this strategy of providing a value range direct from themanufacturer offering major savings will be increasingly successful and willcapture a significant share of the £100 million NHS advanced woundcare spend. Complementing this approach, the Group continues to fund the development of newdifferentiated products for licensing to its major branded partners. Progress continues to be made in accessing the Far East market with a number ofproducts currently undergoing regulatory approval in Japan in collaboration withour marketing partner, Nitto Medical. Wound Closure The wound closure business grew 14% to £1.1 million in the period despite a slowfirst quarter in the NHS due to pressure on budgets. This affected our coreAccident & Emergency (A&E) business where we maintained our strong marketleadership position and also delayed the take up of our new SkinLinkTM skinclosure strip which is under evaluation in a large number of sites. Thisproduct offers significant benefits over current products such as sutures,staples and conventional adhesive strips in closing wounds where medical gluesare inappropriate due to swelling, tissue loss or skin tension over joints, andsignificantly strengthens our product portfolio. We have broadened our European partner base with the addition of BaxterHealthcare Europe as our marketing and distribution partner for the key marketsof France and Spain. This has now given us a presence in all the key markets inEurope for our products for both A&E and Operating Room (OR) use. The recent launch of LiquiBand LaparoscopicTM takes us into an exciting newgrowth area. This product was specifically designed to target wound closurefollowing laparoscopic (keyhole) surgery, which is an increasingly populartechnique with more than 1 million procedures currently performed in Europe.Closure of keyhole incisions with glue offers significant advantages to both thesurgeon and patient in terms of clinical and cosmetic outcome. This product isnow on sale in the UK and initial orders have been received from a number of ourEuropean partners. It forms an ideal complement to our LiquiBand SurgicalTMproduct which is more suited to larger wounds such as those following Caesareansections or hip replacement. The Company has now initiated the regulatory approval of the LiquiBandTM productrange by the Food & Drug Administration (FDA) in the US. Approval isanticipated in 2007, which will then give us access to the world's dominanttissue glue market with a value estimated to be around $100 million. Theapproval process is being supported financially by a marketing partner that hasthe capability of replicating in the US the success that the product has seen inEurope in winning market share against the same competitive products. Thisoffers a very exciting growth opportunity for the Company in the medium to longterm. Development activity continues to extend the use of our cyanoacrylate gluetechnology for closing wounds or protecting skin against breakdown. A number ofprojects are under way with partners as well as products under development tostrengthen our direct presence in this evolving market. Financial Review Turnover increased 13% to £5.9 million (2004: £5.2 million) for the six monthsended 30 June 2005. Both businesses grew well with advanced woundcare growing12% and wound closure growing 14%. Turnover increased in the UK by 34% throughdirect sales and sales to branded partners despite a slow first quarter causedby budgetary constraint within the NHS. Sales into Europe grew 6% while salesinto the US declined slightly by 2%. The latter reflecting nothing moresignificant than the ordering patterns of some US distributors. The gross margin for the Company was 37%, which was similar to the previousyear. This is expected to improve as sales of wound closure products increaseand our routes to market broaden. With net operating expenses of £2.6 million at a similar level to last year(2004: £2.5 million), the Company reported an operating loss of £0.45 million(2004: £0.58 million) and a positive EBITDA of £0.1 million (2004: neutral).The overall loss for the Company narrowed to £0.4 million (2004: £0.55 million). Working capital decreased to £2.7 million (2004: £3.0 million). Stock increasedby £0.4 million partly to meet the shorter lead times required when sellingdirect and partly to cover the commissioning of some new equipment. Tradedebtors increased to £2.3 million (2004: £2.2 million) although debtor days werereduced to 58 (2004: 64). Creditors increased to £2.5 million (2004: 2.0million). Net operating cash flow reduced to an outflow of £0.1 million compared with £1.0million in the previous period. This leaves the Group with £2.9 million of cash(2004 : £2.7 million) and net funds of £2.5 million. Outlook The outlook for the Company remains positive with the progress made during thefirst six months continuing into the second half of the year. With sufficient cash to take it through to profitability, routes to marketbroadened for the existing product range, major growth opportunities afforded bylaunching LiquiBandTM in the US and by selling directly to the NHS, the Companyis extremely well positioned for the future. Dr. Geoffrey N. VernonChairman CONSOLIDATED PROFIT AND LOSS ACCOUNT Unaudited Unaudited Audited six months six months twelve months ended ended ended 30 June 30 June 31 December Note 2005 2004 2004 £'000 £'000 £'000Turnover 2 5,857 5,206 11,019Cost of sales (3,675) (3,294) (6,913)Gross profit 2,182 1,912 4,106Distribution costs (76) (51) (153)Administration costs (2,632) (2,599) (5,352)Other operating income 78 154 328Operating loss (448) (584) (1,071)Interest receivable and similar income 57 52 114Interest payable and similar charges (16) (16) (33)Loss on ordinary activities before taxation (407) (548) (990)Taxation - - 573Loss sustained for the period (407) (548) (417)Basic and fully diluted loss per share 3 (0.29)p (0.39)p (0.3)p STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES Unaudited Unaudited Audited six months six months twelve months ended ended ended 30 June 30 June 31 December 2005 2004 2004 £'000 £'000 £'000Loss for the financial period (407) (548) (417)Currency translation differences onforeign currency net investments (8) (7) (13)Total recognised losses relating tothe period (415) (555) (430) RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS Unaudited Unaudited Audited six months six months twelve months ended ended ended 30 June 30 June 31 December 2005 2004 2004 £'000 £'000 £'000Opening shareholders' funds 11,574 12,004 12,004Loss for the period (407) (548) (417)Currency translation differences onforeign currency net investments (8) (7) (13)Closing shareholders' funds 11,449 11,574 11,159 CONSOLIDATED BALANCE SHEETS Unaudited Unaudited Audited six months six months twelve months ended ended ended 30 June 30 June 31 December 2005 2004 2004 £'000 £'000 £'000Fixed assetsIntangible assets 1,986 2,154 2,070Tangible assets 3,402 4,030 3,706 5,388 6,184 5,776 Current assetsStocks 1,895 1,536 1,506Debtors- due within one year 3,232 3,189 2,754- due after more than one year 638 200 638Cash at bank and in hand 2,859 2,665 3,160 8,624 7,590 8,058Creditors: amounts falling due within one year (2,528) (1,973) (1,884)Net current assets 6,096 5,617 6,174Total assets less current liabilities 11,484 11,801 11,950 Creditors: amounts falling due after more thanone year (325) (352) (376) 11,159 11,449 11,574Capital and reservesCalled up share capital 11,782 11,782 11,782Share premium account 37,978 37,978 37,978Other reserve 1,531 1,531 1,531Profit and loss account (40,132) (39,842) (39,717)Equity shareholders' funds 11,159 11,449 11,574 CONSOLIDATED CASH FLOW STATEMENT Unaudited Unaudited Audited six months six months twelve months ended ended ended 30 June 30 June 31 December Note 2005 2004 2004 £'000 £'000 £'000Net cash outflowfrom operating activities (122) (967) (595) Returns on investments andservicing of financeInterest received 21 33 102Interest element of finance lease rentaland hire purchase payments (1) (1) (3)Interest paid (15) (15) (30)Net cash inflow from returns oninvestments and servicing of finance 5 17 69 Taxation - 167 389 Capital expenditure and financial investmentPurchase of tangible fixed assets (168) (146) (284)Sale of tangible fixed assets - 1 - Net cash outflow for capital expenditureand financial investment (168) (145) (284) Cash outflow before use ofliquid resources and financing (285) (928) (421) Management of liquid resourcesSale of term deposits 297 656 203 FinancingRepayment of secured loan 5 (6) (6) (11)Net movement of capital element of financelease rental and hire purchase payments 5 (2) (2) (3)Net cash outflow from financing (8) (8) (14)Increase /(decrease) in cash 4 4 (280) (232) NOTES 1. Basis of Preparation The interim statements have been prepared in accordance with the accountingpolicies set out in the annual report for the year ended 31 December 2004. Theresults for the six months ended 30 June 2005 and 30 June 2004 have not beenaudited and do not constitute statutory accounts within the meaning of section240 of the Companies Act 1985. The results for the year ended 31 December 2004 are extracted from the auditedannual financial statements on which the auditors reported withoutqualification. Full financial statements for that year have been filed with theRegistrar of Companies. 2. Segmental information Unaudited Unaudited Audited six months six months twelve months ended ended ended 30 June 30 June 31 December 2005 2004 2004 £'000 £'000 £'000Turnover by geographical region:United States of America 993 1,014 2,259Rest of Europe 3,042 2,863 5,481United Kingdom 1,543 1,155 2,810Rest of World 279 174 469 5,857 5,206 11,019 Turnover by business unit:Advanced woundcare 4,766 4,245 8,893Wound closure 1,091 961 2,126 5,857 5,206 11,019 It is not possible to identify loss before taxation and net assets by businessunit because of the use of common services. Turnover, loss before tax and net assets by origin £'000 £'000 £'000TurnoverUnited Kingdom 5,857 5,206 11,019United States - - - 5,857 5,206 11,019Loss before TaxUnited Kingdom (356) (495) (879)United States (51) (53) (111) (407) (548) (990)Net AssetsUnited Kingdom 11,159 11,446 11,576United States - 3 (2) 11,159 11,449 11,574 The turnover and loss before taxation is wholly attributable to the principalactivity of the Group. 3. Loss per share The basic loss per share has been calculated on a weighted average number ofshares in issue for the six months ended 30 June 2005, namely 142,082,536 (2004:142,082,536) and losses of £407k (2004: £548k). 4. Reconciliation of net cash flow to movement in net funds (note 5) Unaudited Unaudited Audited six months six months twelve months ended ended ended 30 June 30 June 31 December 2005 2004 2004 £'000 £'000 £'000Increase/(decrease) in cash during the period 4 (280) (232)Cash outflow to repay debt and finance leases 8 8 14Cash inflow from decrease in liquid resources (297) (656) (203)Change in net funds resulting from cash flows (285) (928) (421)New finance leases - - (2)Translation difference (8) (7) (13)Movement in net funds in the period (293) (935) (436)Net funds at 1 January 2005 2,810 3,246 3,246Net funds at 30 June 2005 2,517 2,311 2,810 5. Analysis of net funds 1 January Cash Exchange 30 June 2005 flows movements 2005 £'000 £'000 £'000 £'000Cash 516 4 (8) 512Term deposits 2,644 (297) - 2,347Cash at bank and in hand 3,160 (293) (8) 2,859Debt due within one year (12) - - (12)Debt due after one year (322) 6 - (316)Finance leases (16) 2 - (14)Total 2,810 (285) (8) 2,517 Advanced Medical Solutions Group plcRoad 3, Winsford Industrial EstateWinsford, Cheshire, CW7 3PD, UKTel: +44 (0)1606 863500 Fax: +44 (0)1606 863600E-mail: [email protected] Web: www.admedsol.com This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Advanced Medical Solutions Group