Advanced Medical Solutions Group Regulatory News (AMS)

14 Mar 2006 07:03

Advanced Medical Solutions Grp PLC14 March 2006 For Immediate Release 14 March 2006 Advanced Medical Solutions Group plc ("AMS" or "the Group") Preliminary Results for the Year Ended 31 December 2005 Winsford, UK: Advanced Medical Solutions Group plc (AIM: AMS), the globalmedical technology company, today announces its preliminary results for the yearended 31 December 2005. Highlights • Company reports maiden profits • EBITDA £1.0 million positive (2004 : break-even) • Group turnover up 17% to £12.9 million (2004 : £11 million) • Gross margin further improved from 37% to 40% • Positive total cash flow resulting in year-end cash of £3.4 million (2004 : £3.2 million) • New products launched and partnerships extended: - Silver alginate launches in US and Europe - LiquiBand LaparoscopicTM launched throughout Europe - Global deal with Kimberly-Clark for skin sealant • Group well positioned for future growth: - US approval of LiquiBandTM range underway - Products undergoing approval in Japan and in China - NHS direct business building steadily Commenting on the results Dr. Geoffrey Vernon, Chairman of Advanced MedicalSolutions, said: "I am delighted that the Group has delivered maiden profits. This provides asolid financial platform to accelerate growth and the outlook for the businessis extremely positive." For further information, please contact: Advanced Medical Solutions Group plc On 14/03/06: +44 (0) 20 7466 5000 Don Evans, Chief Executive Thereafter: : +44 (0) 1606 545508Mary 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 delighted to inform investors that AMS has delivered maiden profitsfollowing a profitable second half year. Group turnover was up 17% to £12.9 million for the full year, with growthachieved across both business units, advanced woundcare and wound closure, andin all key markets. In advanced woundcare, the branded and private labelpartner business grew at double the market rate as the Company strengthened itsposition in the dynamic silver alginate market with further launches in US andEurope during 2005. Good progress was made in the UK in establishing theActivHeal(R) generic woundcare range. Independent technical and clinicalevaluations have shown that these products offer equivalent performance whencompared with branded products while still maintaining the quality of patientcare. The ActivHeal(R) range has been shown to significantly reduce the cost oftreating wounds, offering real and immediate savings to the NHS. These savingsare estimated to be of the order of £25 million per year. In wound closure, theCompany broadened its LiquiBandTM product range, is currently in the process ofobtaining approval for these products in the US, Japan and China, andstrengthened its position in Europe with the launch of LiquiBand LaparoscopicTM. The turnover growth, together with further improvement in gross margin from 37%to 40%, and continued control of operating expenses, resulted in a small pre-taxprofit in 2005 compared with a £1.0 million loss in the prior year. A post-taxprofit of £0.3 million was reported following recognition of an R & D tax creditand a deferred tax asset. EBITDA improved from break-even to £1.0 million forthe period. The Group generated a total of £0.2 million of cash in the yearresulting in cash of £3.4 million at the year-end. Good progress has been made during 2005 in positioning the Company for majorfuture growth opportunities in key business areas and global markets. Bydelivering its stated strategy of bringing the existing business through tobreak-even within current cash, management has now provided a solid financialplatform for this future growth. 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 uponcyanoacrylate technology address the emerging tissue adhesives segment of the $5billion wound closure market. This market is currently accessed through a directsales force in the UK and through distribution partners in Europe. The directUK sales force also carries a full range of standard advanced woundcare productsfor sale into the NHS hospital and community care markets under the ActivHeal(R)brand. Progress continues to be made in reducing the Group's dependence on theperformance of its major branded partners for delivering revenue growth andprofit. Its strategy of broadening its routes to market by complementing theserelationships with the provision of private label standard products to majordistributors, and by the expansion of its direct sales presence in the UK homemarket, continues to be successful. Advanced Woundcare Advanced woundcare sales of £10.5 million were up 18% on the prior year, whichat double the market growth rate reflects good progress made in gaining marketshare. 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 infections such as MRSA. In combinationwith alginate, a biopolymer derived from seaweed, AMS can provide productsideally suited to treatment of a wide variety of chronic wounds. This transition to higher value products fits with its route to market strategywhereby the Company licenses its new technology to major branded partners thatare best placed to create these markets on a global basis, whilst the Companyalso addresses the cost pressures on healthcare budgets by providing a valuerange of products for routine use. These products are sold via private labeldistributors or direct to the NHS under its ActivHeal(R) brand. Further progress has been made with the ActivHeal(R) offering during the year.Independent technical and clinical assessment has shown that ActivHeal(R)products are equivalent to or better than the branded versions whilst offeringsignificant savings, typically 40%, against current spend. This represents £25million per year in England and Scotland at a time of severe funding pressure.Nine Trusts are currently using ActivHeal(R) and realising savings. Centraldecision making bodies are now being targeted to encourage early adoption andsavings throughout the NHS to accelerate this programme. 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 witha marketing partner, Nitto Medical. Wound Closure The wound closure business grew 11% to £2.4 million in the year despite a slowfirst quarter in the NHS due to pressure on budgets. Although the core Accident& Emergency (A&E) business was affected, the Company maintained its strongmarket leadership position. The European partner base has been broadened with the addition of BaxterHealthcare Europe as a marketing and distribution partner for the key markets ofFrance and Spain. This has now provided the Company with a presence in all thekey markets in Europe for the products to be used in both A&E and the OperatingRoom (OR). The launch of LiquiBand LaparoscopicTM takes the Company 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 peryear. Closure of keyhole incisions with adhesives offers significant advantagesto both the surgeon and patient in terms of clinical and cosmetic outcome. Thisproduct is now on sale throughout Europe. It forms an ideal complement to theLiquiBand SurgicalTM product which is more suited to larger wounds such as thosefollowing Caesarean sections or hip replacement. The Company has also initiated the regulatory approval of the LiquiBandTMproduct range by the Food & Drug Administration (FDA) in the US. Approval isanticipated in 2007, which will provide access to the major part of the global$100 million tissue adhesives market. The Company is also progressingregulatory approval of wound closure products in Japan and China. Theseapprovals in the US and Far East markets offer very exciting growthopportunities for the Company in the medium to long term. Development activity continues with a view to extending the use of cyanoacrylatetechnology for closing wounds and protecting skin against breakdown. Thestrategic partnership with Kimberly-Clark for a novel surgical skin sealantannounced in March 2006, offers a very exciting new business opportunity. TheCompany expects to make further major announcements about technologydevelopments in 2006. Outlook The outlook for the Group is extremely positive. Good progress has been madeduring the year in growing market share and the Group is well positioned forcontinued organic growth in key global markets with its major branded andprivate label partners and through its direct UK sales into the NHS. The Group's cash position and AIM status provide it with the opportunity toaccelerate growth by making suitable acquisitions which fit with the Group'sstated strategy and technologies. I would like to thank all AMS employees for their efforts over the past year,particularly in bringing the business through to profitability. The Group is making excellent progress in delivering a profitable high valuemedical technology business for its stakeholders. Dr. Geoffrey N. Vernon Chairman 13 March 2006 Consolidated Profit and Loss Account For the year ended 31 December 2005 Year ended Year ended 31 December 31 December 2005 2004 Note £'000 £'000 Turnover 7 12,892 11,019Cost of sales (7,753) (6,913) Gross profit 5,139 4,106Distribution costs (123) (153)Administration costs (5,604) (5,352)Other operating income 546 328 Operating loss (42) (1,071)Interest receivable and similar income 101 114Interest payable and similar charges (32) (33) Profit/(loss) on ordinary activities before taxation 27 (990)Taxation 249 573 Profit/(loss) sustained for the year 276 (417) Earnings/(loss) per shareBasic 2 0.19p (0.3)pDiluted 2 0.19p (0.3)p 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 2005 Group Year ended 31 Year ended December 31 December 2005 2004 £'000 £'000Profit/(loss) for the financial year 276 (417) Currency translation differences on foreign currency net (3) (13)investments Total profit/(losses) recognised since last annual 273 (430)report Reconciliation of Movements in Shareholders' Funds For the year ended 31 December 2005 Group Company Year ended Year ended Year ended Year ended 31 December 31 December 31 December 31 December 2005 2004 2005 2004 £'000 £'000 £'000 £'000 Opening shareholders' funds 11,574 12,004 12,454 12,758Profit/(loss) for the financial year 276 (417) 196 (304)Currency translation differences on foreign (3) (13) - -currency net investments Closing shareholders' funds 11,847 11,574 12,650 12,454 The profit for the Company includes a reversal of an exceptional write-down inthe value of investments of £101k (2004: £427k). Balance Sheets At 31 December 2005 Group Company 2005 2004 2005 2004 £'000 £'000 £'000 £'000Fixed assetsIntangible assets 1,902 2,070 - -Tangible assets 3,403 3,706 - -Investments - - 9,570 9,589 5,305 5,776 9,570 9,589 Current assetsStocks 1,669 1,506 - -Debtors 3,247 2,754 14 72 - due within one year- due after more than one year 747 638 200 200Cash at bank and in hand 3,388 3,160 2,989 2,755 9,051 8,058 3,203 3,027Creditors: amounts falling due within one year (2,193) (1,884) (123) (162) Net current assets 6,858 6,174 3,080 2,865 Total assets less current liabilities 12,163 11,950 12,650 12,454 Creditors: amounts falling due after more than (316) (376) - -one year 11,847 11,574 12,650 12,454 Capital and reservesCalled up share capital 11,782 11,782 11,782 11,782Share premium account 37,978 37,978 37,978 37,978Other reserve 1,531 1,531 - -Profit and loss account (39,444) (39,717) (37,110) (37,306) Equity shareholders' funds 11,847 11,574 12,650 12,454 Dr D W Evans Chief Executive Officer 13th March 2006 Consolidated Cash Flow Statement For the year ended 31 December 2005 Year ended Year ended 31 December 31 December 2005 2004 Note £'000 £'000 Net cash inflow/(outflow) from operating activities 534 (595) Returns on investments and servicing of financeInterest received 131 102Interest element of finance lease rental and hire purchase (2) (3)payments Interest paid (30) (30) Net cash inflow from returns on investments and servicing of 99 69finance Taxation 189 389 Capital expenditure and financial investmentPurchase of tangible fixed assets (575) (284) Net cash outflow for capital expenditure and financial (575) (284)investment Cash inflow/(outflow) before use of liquid resources and 247 (421)financing Management of liquid resources(Purchase) / Sale of term deposits (342) 203 FinancingRepayment of secured loan 9 (13) (11)Net movement of capital element of finance lease rental 9 (3) (3)and hire purchase payments Net cash outflow from financing (16) (14) Decrease in cash 8 (111) (232) Notes to the Accounts 1. No dividend has been proposed. 2. The basic earnings/(loss) per share has been calculated on a weightedaverage number of ordinary shares in issue during the year, namely 142,082,536(2004: 142,082,536) and profit of £276k (2004: loss of £417k). The diluted earnings/(loss) per share has been calculated by adjusting theweighted average number of ordinary shares in issue to assume conversion of alldilutive potential shares, namely 142,948,093 (2004: 142,082,536) and a profitof £276k (2004: loss of £417k). 3. This statement was approved by the Directors and agreed with theGroup's auditors on 10 March 2006. 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 2005. 4. The figures and financial information for the year 2005 do notconstitute the statutory financial statements for that year. 5. The figures and financial information for the year 2004 do notconstitute the statutory financial statements for that year. Those financialstatements have been delivered to the Registrar and included an auditors' reportwhich was unqualified. 6. The Annual General Meeting will be held at 11:00am on 31 May 2006 atOaklands Hotel, Millington Lane, Gorstage, Weaverham, Northwich, Cheshire CW82SU. 7. Segmental information Turnover by geographical region: Turnover 2005 2004 £'000 £'000 United States of America 2,288 2,259Rest of Europe 6,098 5,481United Kingdom 3,731 2,810Rest of World 775 469 12,892 11,019 Turnover by business unit: Turnover 2005 2004 £'000 £'000Advanced woundcare 10,535 8,893Wound closure 2,357 2,126 12,892 11,019 It is not possible to identify profit/(loss) before taxation and net asset bybusiness unit because of the use of common services. Turnover, profit/(loss) before tax and net assets by origin: 2005 2005 2005 2004 2004 2004 Turnover Profit/(loss) Net assets Turnover Loss Net assets £'000 £'000 £'000 £'000 £'000 £'000United Kingdom 12,892 137 11,845 11,019 (879) 11,576United States - (110) 2 - (111) (2)Group 12,892 27 11,847 11,019 (990) 11,574 The turnover and profit/(loss) before taxation is wholly attributable to theprincipal activity of the Group. 8. Reconciliation of net cash flow to movement in net funds: (Note 9) Year ended Year ended 31 December 31 December 2005 2004 £'000 £'000Decrease in cash in the year (111) (232)Cash outflow from reductions in debt and finance leases 16 14Cash outflow/(inflow) from increase/(decrease) in liquid 342 (203)resources Change in net funds resulting from cash flows 247 (421)New finance leases - (2)Translation difference (3) (13) Movement in net funds in year 244 (436)Net funds at 1 January 2005 2,810 3,246Net funds at 31 December 2005 3,054 2,810 9. Analysis of net funds: 1 January Cash flows Exchange 31 December movements 2005 2005 £'000 £'000 £'000 £'000 Cash 516 (111) (3) 402Term deposits 2,644 342 - 2,986 Cash at bank and in hand 3,160 231 (3) 3,388Debt due within one year (12) (1) - (13)Debt due after one year (322) 13 - (309)Finance leases (16) 4 - (12) Total 2,810 247 (3) 3,054 This information is provided by RNS The company news service from the London Stock Exchange