13th Mar 2007 07:01
Advanced Medical Solutions Grp PLC13 March 2007 For Immediate Release 13 March 2007 Advanced Medical Solutions Group plc ("AMS" or "the Group") Preliminary Results for the Year Ended 31 December 2006 Winsford, UK: Advanced Medical Solutions Group plc (AIM: AMS), the globalmedical technology company, today announces its preliminary results for the yearended 31 December 2006. Financial Highlights Financial position considerably improved: • Pre-tax profit increased to £0.6 million (2005: £27,000) • EPS more than doubled to 0.5p (2005: 0.2p) • Positive total cash flow of £1.2 million (2005: £0.2 million) resulting in year-end cash of • £4.6 million (2005: £3.4 million) • Group turnover up 11% to £14.3 million (2005: £12.9 million) with gross margin further improved to 42% from 40% Business Highlights Continued progress in key organic growth drivers: • Silver alginate Further silver alginate launches in US and Europe with strategic partners • NHS woundcare NHS direct business building steadily with over 40 Trusts now using ActivHeal(R) range • Surgical skin sealant Kimberly-Clark Health Care launches surgical skin sealant in Europe and US • New territories LiquiBand(R) regulatory approval progressing in US Commenting on the results Dr. Geoffrey Vernon, Chairman of Advanced MedicalSolutions, said: "I am delighted with the progress AMS has made. During the year the Group hasimproved its financial position and progressed on its key future growthopportunities. The outlook for the Group is extremely positive with a strongstart to 2007." For further information, please contact: Advanced Medical Solutions Group plcDon Evans, Chief Executive Officer On 13/03/07: +44 (0) 20 7466 5000Mary Tavener, Finance Director Thereafter : +44 (0) 1606 545508www.admedsol.com Buchanan CommunicationsMark Court, Mary-Jane Johnson Tel: +44 (0) 20 7466 5000 Notes to Editors: Advanced Medical Solutions is a leading company in the development andmanufacture of products for the $15 billion global woundcare market. Founded in 1991 and quoted on AIM, Advanced Medical Solutions is focused on thedesign, development and manufacture of innovative and technologically advancedproducts 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 a product from 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 topical wounds sold direct to hospitals or throughdistributors. AMS's technology and products currently serve the majority of the key globalmarkets and strategic partners. Chairman's Statement Overview I am delighted to inform investors that AMS has gone from strength to strengthin 2006, improving its financial position considerably and progressing keyfuture growth opportunities. Group turnover increased 11% to £14.3 million with growth achieved across bothbusiness units, advanced woundcare (up 9%) and wound closure and sealants (up21%). Gross margins continued to improve from 40% to 42%. Pre-tax profits increased to £0.6 million following achievement of break-even in2005. Post-tax profits more than doubled to £0.7 million resulting in earningsper share (EPS) increasing 150% to 0.5p. EBITDA was up 37% to £1.4 million.The Group generated a total of £1.2 million of cash in the year resulting incash of £4.6 million at the year-end and net funds of £4.2 million (2005: £3.1million). These results provide a solid financial platform for future growth. Good progress was made during 2006 with the key identified organic growthdrivers: • Silver alginate - The Group further strengthened its position in the dynamic silver alginate market with launches in Europe and the US with strategic partners. • NHS woundcare - The number of NHS Trusts using the ActivHeal(R) product range has doubled to over 40 with good geographical coverage of hospitals and Primary Care Trusts in England and Scotland in addition to the Northern Ireland contract. • Surgical skin sealant - An exciting new market for surgical skin sealants was entered into with Kimberly-Clark Health Care, a global leader in infection control in the operating room. • New territories - US approval of the LiquiBandTM tissue adhesives range has been progressed with entry expected in 2008. Operating Review The Group's core focus remains the development, manufacture and sale of advancedwoundcare dressings and products for closing wounds and sealing tissue. AMS provides a full range of advanced woundcare dressings for sale into thehospital, nursing home and community care market. These products are usedmainly for chronic wounds such as ulcers and pressure sores. Products based upon cyanoacrylate adhesives technology allow the closure ofwounds following trauma or surgical incisions, or seal skin to protect againstbreakdown or wound infection. These products address the emerging tissueadhesives and sealants segment of the wound closure market. AMS has successfully adopted a three tier route to market strategy: • Branded Partners - The Group believes that the most effective way of rapidly commercialising new technologies/concepts on a global basis is through strategic partnerships with major branded companies. • Private Label - AMS also addresses the increasing trend towards private label in advanced woundcare, driven by cost constraints by health care providers, by provision of own label products to distributors. These products allow savings to be made on treatment of routine wounds alongside the use of the new innovative products for more difficult wounds. • Direct - AMS sells direct to the NHS in its own home market Advanced Woundcare Advanced woundcare sales of £11.5 million were up 9% on the prior year. Following US launches during 2005, the Group further strengthened its positionin the dynamic silver market with the European launch of a range of calciumalginate woundcare dressings containing ionic silver technology by a number ofbranded partners. The ionic silver technology allows AMS to provide selectedpartners an entry into the expanding silver alginate woundcare market, which iscurrently estimated at over $100 million worldwide and growing in excess of 20%per year. AMS introduced its fibre-based silver alginate technology into the USin 2004 and Europe in 2005 under an exclusive, global agreement with a leadingbrand. The Group now has a broad range of partners covering different channels(hospitals, nursing homes, home health) in Europe and the US. Silver is a broad spectrum anti-microbial that helps to prevent infections suchas MRSA. In combination with alginate, a biopolymer derived from seaweed, AMScan provide products ideally suited to the treatment of a wide variety ofchronic wounds. Steady progress continues to be made with the Company's direct ActivHeal(R)offering to the NHS. More than 40 NHS Hospital and Primary Care Trusts acrossthe UK have now adopted the ActivHeal(R) range of advanced woundcare productsallowing them to achieve substantial cost savings at a time of severe fundingpressures without compromising patient care. Many more centres are currentlyevaluating the product offering. The move to ten Strategic Health Authoritieswithin the NHS should be a positive development for the business as this shouldresult in a more streamlined, centralised approach being adopted for productevaluation and selection. Under the present system each Trust independentlyevaluates the product range being offered, which delays the process ofintroducing generic substitutes or replacement new products. We remain confident that our strategy of delivering both innovation to the NHSthrough our R&D activities with major branded companies, and offering real costsavings through the ActivHeal(R) range, will be successful, enabling us tocapture a significant share of the estimated £100 million UK advanced woundcaremarket. Wound Closure and Sealants The wound closure and sealants business grew 21% to £2.9 million in the periodas the Group maintained its strong market leadership position in the UK Accident& Emergency arena and strengthened its European partner business. Based on cyanoacrylate medical adhesive technology, the LiquiBand(R) rangecovers products for closure of small cuts and trauma wounds particularly to theface and scalp, through to large surgical incisions such as caesarean sectionsand hip replacements. These products are approved and on sale throughout Europefor use in Accident & Emergency (A&E) and in operating rooms. A number of NHSAmbulance Trusts in the UK have also now adopted LiquiBand(R) to close traumawounds at the scene of injury, thus potentially reducing the number of A&Eadmissions. Development activity to extend the cyanoacrylate adhesive technology into newareas has resulted in an exciting strategic partnership with Kimberly-Clark fora novel surgical skin sealant to help control the risk of skin floracontamination throughout a surgical procedure, a key factor in the developmentof surgical site infections. AMS has developed an innovative film-formingsolution that bonds to the skin sealing off the spaces where bacteria can grow.Based upon patented technology, the product immobilises endogenous pathogensthereby reducing the risk of skin flora contamination of the surgical site. AMS has entered into an exclusive global agreement with Kimberley-Clark HealthCare for the marketing and distribution of the product under the Kimberley-Clark* InteguSeal Microbial Sealant brand. Following regulatory approvals, thisproduct was launched in Europe in March 2006 and in the US in February 2007. Approval of the LiquiBand(R) product range continues to progress in the US. TheGroup anticipates entry into this $110 million market in 2008 via a partner witha product range that is well proven in Europe. We believe this will lead tosignificant value creation in future. Research & Development The Group continued to build on its previous successful technology programmes inadvanced woundcare dressings, silver alginate and novel tissue adhesives andsealants, by investing £1 million (7% of turnover) on R&D during 2006. Thisactivity is maintaining a strong pipeline of new products for our directbusiness and as a technology provider for strategic partners. Board The AMS Board was strengthened with the appointment of Chris Meredith asCommercial Director in April 2006 and Steve Bellamy as Non-Executive Director inFebruary 2007. Chris has made a major contribution to the continued successfulcommercialisation of the Company's technologies and Steve's strong Cityexperience will be of great value as the Group continues to look for strategiccorporate opportunities to enhance growth. Outlook The outlook for the Group is extremely positive with a strong start to 2007. Organic growth is expected to progress due to favourable woundcare demographics,a blue chip partner base, the dynamic silver market and widening acceptance ofour ActivHeal(R) woundcare range by NHS Trusts in the UK. US approval and entryfor our LiquiBand(R) tissue adhesive range, and the new surgical skin sealantmarket entry offer step change opportunities for future growth and valuecreation. The Company's move to profitability and positive cash flow is alsoallowing management to consider suitable acquisitions to leverage AMS'stechnology and distribution base. I would like to thank all AMS employees for their continued efforts during 2006in strengthening the Group's position as a profitable, cash generative business. This is a very exciting time for AMS. Dr. Geoffrey N. Vernon Chairman12 March 2007 Consolidated Profit and Loss Account For the year ended 31 December 2006 Year ended Year ended 31 December 31 December 2006 2005 Note £'000 £'000Turnover 7 14,322 12,892Cost of sales (8,279) (7,753)Gross profit 6,043 5,139Distribution costs (107) (123)Administration costs (6,022) (5,604)Other operating income 480 546Operating profit/(loss) 394 (42)Interest receivable and similar income 204 101Interest payable and similar charges (29) (32)Profit on ordinary activities before taxation 569 27Taxation 167 249Retained profit for the year 736 276Earnings per shareBasic 2 0.52p 0.19pDiluted 2 0.50p 0.19p The above results relate to continuing operations. There is no difference between reported and historical profits and losses. Statement of Total Recognised Gains and Losses For the year ended 31 December 2006 Group Year ended Year ended 31 December 31 December 2006 2005 £'000 £'000 Profit for the financial year 736 276Currency translation differences on foreign currency net 17 (3)investmentsTotal profit recognised since last annual report 753 273 Reconciliation of Movements in Shareholders' Funds For the year ended 31 December 2006 Group Company Year ended Year ended Year ended Year ended 31 December 31 December 31 December 31 December 2006 2005 2006 2005 £'000 £'000 £'000 £'000 Opening shareholders' funds 11,847 11,574 12,650 12,454Profit for the financial year 736 276 361 196Share option cost 60 - 60 -Currency translation differences onforeign currency net investments 17 (3) - -Closing shareholders' funds 12,660 11,847 13,071 12,650 The profit for the Company includes the reversal of a provision against thecarrying value of investments of £388k (2005: £101k). Balance Sheets At 31 December 2006 Group Company 2006 2005 2006 2005 £'000 £'000 £'000 £'000Fixed assetsIntangible assets 1,734 1,902 - -Tangible assets 2,877 3,403 - -Investments - - 8,904 9,570 4,611 5,305 8,904 9,570Current assetsStocks 1,786 1,669 - -Debtors - due within one year 3,728 3,247 93 14 - due after more than one year 957 747 200 200Cash at bank and in hand 4,552 3,388 3,961 2,989 11,023 9,051 4,254 3,203Creditors: amounts falling due withinone year (2,678) (2,193) (87) (123)Net current assets 8,345 6,858 4,167 3,080Total assets less current liabilities 12,956 12,163 13,071 12,650Creditors: amounts falling due aftermore than one year (296) (316) - - 12,660 11,847 13,071 12,650Capital and reservesCalled up share capital 11,782 11,782 11,782 11,782Share option reserve 60 - 60 -Share premium account 37,978 37,978 37,978 37,978Other reserve 1,531 1,531 - -Profit and loss account (38,691) (39,444) (36,749) (37,110)Equity shareholders' funds 12,660 11,847 13,071 12,650 Dr D.W. Evans Chief Executive Officer 12 March 2007 Consolidated Cash Flow Statement For the year ended 31 December 2006 Year ended Year ended 31 December 31 December 2006 2005 Note £'000 £'000Net cash inflow from operating activities 9 1,343 534Returns on investments and servicing of financeInterest received 74 131Interest element of finance lease rental and hire purchase payments (1) (2)Interest paid (28) (30)Net cash inflow from returns on investments and servicing of finance 45 99Taxation 78 189Capital expenditure and financial investmentPurchase of tangible fixed assets (309) (575)Receipts from sale of tangible fixed assets 8 -Net cash outflow from capital expenditure and financial investment (301) (575)Cash inflow before use of liquid resources and financing 1,165 247Management of liquid resourcesPurchase of term deposits (964) (342)FinancingRepayment of secured loan 11 (13) (13)Net movement of capital element of finance lease rental 11and hire purchase payments (5) (3)Net cash outflow from financing (18) (16)Increase/(decrease) in cash 10 183 (111) Notes to the Accounts 1. No dividend has been proposed. 2. The basic earnings per share has been calculated on a weightedaverage number of ordinary shares in issue during the year, namely 142,082,536(2005: 142,082,536) and profit of £736k (2005: profit of £276k). The diluted earnings per share has been calculated by adjusting theweighted average number of ordinary shares in issue to assume conversion of alldilutive potential shares, namely 146,114,345 (2005: 142,948,093) and a profitof £736k (2005: profit of £276k). 3. This statement was approved by the Directors and agreed with theGroup's auditors on 12 March 2007. A copy can be obtained from the Secretary atthe Company's Head Office, Road Three, Winsford Industrial Estate, Winsford,Cheshire CW7 3PD. The accounting policies adopted for the Preliminary Resultswill be consistent with the published accounts for year ended 31 December 2006. 4. The figures and financial information for the year 2006 do notconstitute the statutory financial statements for that year. 5. The figures and financial information for the year 2005 do notconstitute the statutory financial statements for that year. Those financialstatements have been delivered to the Registrar and included an auditor's reportwhich was unqualified. 6. The Annual General Meeting will be held at 11:00am on 6 June 2007 atOaklands Hotel, Millington Lane, Gorstage, Weaverham, Northwich, CheshireCW8 2SU. 7. Segmental informationTurnover by geographical region: Turnover 2006 2005 £'000 £'000United Kingdom 4,524 3,731Rest of Europe 5,600 6,098United States of America 3,480 2,288Rest of World 718 775 14,322 12,892Turnover by business unit: Turnover 2006 2005 £'000 £'000Advanced woundcare 11,462 10,535Wound closure and sealants 2,860 2,357 14,322 12,892 It is not possible to identify profit before taxation and net asset by businessunit because of the use of common services. Turnover, profit/(loss) before tax and net assets by origin: 2006 2006 2006 2005 2005 2005 Turnover Profit/(loss) Net assets Turnover Profit/(loss) Net assets £'000 £'000 £'000 £'000 £'000 £'000United Kingdom 14,322 654 12,656 12,892 137 11,845United States - (85) 4 - (110) 2Group 14,322 569 12,660 12,892 27 11,847 The turnover and profit before taxation is wholly attributable to the principalactivity of the Group. 8. Operating profit/(loss) Year ended Year ended 31 December 31 December 2006 2005 £'000 £'000Operating profit/(loss) arrived at after charging/(crediting):Depreciation 816 877Amortisation 168 168Loss on disposal of fixed assets 11 1Operating lease rentals - plant and machinery 90 90 - land and buildings 294 294Auditors' remuneration - statutory audit 38 33 - further assurance services 11 9 - tax compliance 8 15 - tax advisory 4 5Research and development 973 1,147Exchange loss/(profit) 105 (47) 9. Reconciliation of operating profit/(loss) to net cash inflow fromoperating activities Year ended Year ended 31 December 31 December 2006 2005 £'000 £'000Operating profit/(loss) 394 (42)Depreciation 816 877Amortisation of intangible fixed assets 168 168Loss on sale of fixed assets 11 1Increase in stocks (117) (163)Increase in debtors (472) (567)Increase in creditors 483 260Share options cost 60 -Net cash inflow from operating activities 1,343 534 10. Reconciliation of net cash flow to movement in net funds:(Note 11) Year ended Yearended 31 December 31 December 2006 2005 £'000 £'000Increase/(decrease) in cash in the year 183 (111)Cash outflow from reductions in debt and finance leases 18 16Cash outflow from increase in liquid resources 964 342Change in net funds resulting from cash flows 1,165 247Translation difference 17 (3)Movement in net funds in year 1,182 244Net funds at 1 January 2006 3,054 2,810Net funds at 31 December 2006 4,236 3,054 11. Analysis of net funds: 1 January Cash Exchange 31 December 2006 flows Movements 2006 £'000 £'000 £'000 £'000Cash 402 183 17 602Term deposits 2,986 964 - 3,950Cash at bank and in hand 3,388 1,147 17 4,552Debt due within one year (13) (1) - (14)Debt due after one year (309) 14 - (295)Finance leases (12) 5 - (7)Total 3,054 1,165 17 4,236 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Advanced Medical Solutions Group