Final Results - Year Ended 31 December 1999

Advanced Medical Solutions Group PLC 11 April 2000 ADVANCED MEDICAL SOLUTIONS PLC., Preliminary Results for the year ended 31 December 1999 Winsford, 11 April 2000, Advanced Medical Solutions plc., (AMS), announces preliminary results for the year ended 31 December 1999. 1999 1998 Turnover £6.2m £5.4m Gross Loss £(0.8)m £(0.6)m Loss before Taxation £(5.2)m £(4.9)m Loss per Share (pre-exceptionals) (8.4)p (12.2)p Highlights for the year: * Turnover up 15% * New products drive Consumer Skincare to 140% growth * Distribution agreements signed with Novartis Consumer Healthcare for UK and Eire (December 1999) and Germany (March 2000) * Business restructuring completed Commenting on the results, Don Evans, Chief Executive of AMS, said: 'The progress we have made in Consumer Skincare with new products and distribution agreements with key partners such as Novartis confirms the potential of our technology. The steps we have taken this year to focus production in the UK, cut costs and establish a separate Research and Technology Business Unit give me confidence that we are on track to becoming a profitable company.' 'In November 1999 we announced, in response to an increase in our share price, that the Company had received an approach proposing an all paper offer. Discussions with the party concerned have been terminated and no discussions with any other party are taking place'. For further information, please contact: Advanced Medical Solutions plc Don Evans, Chief Executive Officer on 11 April Tel: 020 7457 2345 Mary Tavener, Finance Director thereafter: Tel: 01606 863500 Gavin Anderson & Company Philip Ward Charlotte Stone Tel: 020 7457 2345 Chairman's Statement 1999 proved to be another year of tremendous change for AMS, as the company continues to progress towards a self-sustaining advanced healthcare business. Turnover increased from £5.4 million to £6.2 million, an increase of nearly 15 percent, but the losses before and after tax also rose from £4.9 million to £5.2 million. These figures do not reflect fully the progress being made towards repositioning the company. Up until 1999, AMS concentrated almost exclusively on the Professional business-to-business woundcare market. Following a detailed review of this market, the Board decided at the end of 1998 to put extra resources into the Consumer market and into Research and Technology. While this would increase the cash outflow and losses in the short term, it would provide a far more attractive business opportunity in the future. The 1999 figures bear out this strategy, since business-to-business Professional sales actually fell in 1999 by 4 percent, while Consumer sales increased by 142 per cent. The Board expects the Consumer business to increase in importance in years to come. The success of this strategy can be seen in other ways, as well. Our largest single customer in 1999 was Spenco, which is responsible for our Consumer brands in the USA. In the UK, Boots continues to increase sales of our Advanced Healing range. In September 1999, Novartis signed a distribution agreement for ActivHealTM, under which it is marketing the range as SavlonR ActivHealTM in the UK and the Republic of Ireland. I am delighted to say that, since the year-end, Novartis has signed a further agreement covering Germany. Research and Technology has also made good progress in 1999. It is now established in its own separate facilities at Tarvin Sands and is working on a number of projects, which the Board expects to lead to significant new product opportunities in the future. Other Developments AMS concentrated heavily in 1999 on improving manufacturing operations. The membrane manufacturing facility has now successfully all been transferred to Winsford, following the closure of the Denver facility. In addition, the facility is being progressively automated, leading to much greater efficiency. In 1999, AMS manufactured over twelve million dressings, compared with eight million in 1998, while the number of manufacturing staff remained constant. The balance sheet benefited in 1999 from the redemption of $4.5 million of Convertible Notes at a cost of $80,000 in February. This was reflected in the opening balance sheet for 1999. This was the final tranche of the consideration for the acquisition of Polymedica in 1997. The Board I am delighted that the Board was strengthened by the appointment of a permanent Finance Director, Mary Tavener, in June 1999. As part of the review of the business leading up to the rights issue in December 1999, it was also decided to slim down the Board on the non-executive side. Accordingly, Walter Christie, who is 70, is retiring from the Board and John Berry has resigned. I would like to take the opportunity to express both my personal and the Board's gratitude for all the help they have given me and AMS over the years. Both of them have contributed far more in terms of time and effort than would normally be expected from non-executives in what have been, at times, very difficult circumstances. I wish Walter a long and happy retirement and John success with his many business ventures. Following the year-end, the Chief Executive, Roy Smith decided to leave AMS to pursue another opportunity. Roy has worked diligently over the last three years to stabilise the business and he leaves the Company in an immeasurably stronger state than when he joined it. I wish him well in his new career. I am delighted that, in Don Evans (who was previously in charge of the Professional Woundcare and Consumer Skincare operations), we had an obvious internal successor to Roy. Don was appointed Chief Executive in January 2000. Prospects AMS is in a position to take advantage of the improvements to manufacturing and the shift to Consumer products referred to above. The balance sheet is strong, with £9.2 million of cash at the year-end on a pro-forma basis to include the rights issue proceeds (which were received in early January 2000). Partnerships are being secured to promote effectively the Consumer brands and the management team is in place to deliver success. Professional Woundcare is being stabilised, as far as possible, in a very competitive environment. The Board is focusing entirely on delivery of sustainable business for shareholders. I am pleased to report that sales for the first quarter are in line with budget and are 20 per cent. up on the corresponding period for last year. Lastly, I would like to thank all of the staff at AMS, who have really made great efforts on behalf of your Company. James Noble Chairman 11 April 2000 Consolidated Profit and Loss Accounts Year ended Year ended Year ended Year ended 31 December 31 December 31 December 31 December 1999 1998 1998 1998 Before exceptional Exceptional Total items items Total £ £ £ Turnover 6,221,006 5,387,430 --- 5,387,430 Cost of sales (7,028,549) (5,947,584) --- (5,947,584) Gross loss (807,543) (560,154) --- (560,154) Distribution costs (273,931) (85,520) --- (85,520) Administration costs (4,782,179) (4,411,403) (1,164,370) (5,575,773) Other operating income 564,357 155,150 --- 155,150 Operating Loss (5,299,296) (4,901,927) (1,164,370) (6,066,297) Interest receivable and similar income 220,650 145,160 1,142,714 1,287,874 Interest payable and similar charges (76,956) (144,916) --- (144,916) Loss on ordinary activities before taxation (5,155,602) (4,901,683) (21,656) (4,923,339) Taxation --- --- --- --- Retained loss for the year (5,155,602) (4,901,683) (21,656) (4,923,339) Loss per share Basic and fully diluted (8.4)p (12.2)p --- (12.2)p The above results relate to continuing operations. There is no difference between the results reported above and results on an historic cost basis. Statement of Total Recognised Gains and Losses Group Year ended Year ended 31 December 31 December 1999 1998 £ £ Loss for the financial year (5,155,602) (4,923,339) Currency translation differences on foreign currency net investments 13,324 --- Total losses recognised since last annual report (5,142,278) (4,923,339) Reconciliation of Movements in Shareholders' Funds Group Company Year ended Year ended Year ended Year ended 31 December 31 December 31 December 31 December 1999 1998 1999 1998 £ £ £ £ Opening 14,732,610 9,095,288 39,582,470 30,467,812 shareholders funds (Loss)/profit for the financial year (5,155,602) (4,923,339) (26,231,563) 1,197,074 Other recognised gains and losses relating to the year (net) 13,324 --- --- --- New share capital subscribed --- 2,479,178 --- 2,479,178 Premium on issue of shares during the year --- 9,073,236 --- 9,073,236 Costs of share issue --- (943,121) --- (943,121) Convertible notes repaid --- (2,691,709) --- (2,691,709) Goodwill written back --- 2,643,077 --- --- Closing shareholders' funds 9,590,332 14,732,610 13,350,907 39,582,470 Balance Sheets at 31 December 1999 Group Company 1999 1998 1999 1998 £ £ £ £ Fixed assets Intangible assets --- --- --- --- Tangible assets 5,606,055 5,969,435 --- --- Investments --- --- 10,741,436 32,478,975 5,606,055 5,969,435 10,741,436 32,478,975 Current Assets Stocks 1,803,095 2,419,723 --- --- Debtors - due within one year 2,090,900 1,905,247 254,262 9,734 - due after more than one year --- 132,255 --- 132,255 Cash at bank and in hand 2,722,876 7,372,235 2,387,289 7,044,473 6,616,871 11,829,460 2,641,551 7,186,462 Creditors: amounts falling due within one year (2,306,077) (2,644,825) (32,080) (82,967) Net current assets 4,310,794 9,184,635 2,609,471 7,103,495 Total assets less current 9,916,849 15,154,070 13,350,907 39,582,470 liabilities Creditors: amounts falling due after more than one year (326,517) (421,460) --- --- Provisions for liabilities and charges --- --- --- --- 9,590,332 14,732,610 13,350,907 39,582,470 Capital and reserves Called up share capital 6,170,578 6,170,578 6,170,578 6,170,578 Share premium account 33,568,341 33,568,341 33,568,341 33,568,341 Other reserve 1,531,045 1,531,045 --- --- Profit and loss account (31,679,632) (26,537,354) (26,388,012) (156,449) Equity shareholders' funds 9,590,332 14,732,610 13,350,907 39,582,470 Consolidated Cash Flow Statement for the year ended 31 December 1999 Year ended Year ended 31 December 31 December 1999 1998 £ £ Net cash outflow from (3,600,405) (4,867,105) operating activities Returns on investments and servicing of finance Interest paid (1,082) (8,467) Interest received 170,046 145,160 Interest element of finance lease rental and hire purchase payments (75,874) (136,449) Net cash inflow from returns on investments and servicing of finance 93,090 244 Capital expenditure and financial investment Purchase of tangible fixed assets (704,119) (740,994) Sale of tangible fixed assets 6,549 --- Cash outflow before use of liquid resources and financing (4,204,885) (5,607,855) Management of liquid resources Sales of term deposits 4,222,571 --- Purchase of term deposits --- (6,500,000) Financing Share issues by parent company --- 11,552,414 Share issues expenses --- (943,121) Repayment of promissory note (48,632) (1,288,897) Net movement in capital element of finance lease rental and hire purchase payments (409,166) (545,611) Net cash (outflow)/inflow from financing (457,798) 8,774,785 Decrease in cash (440,112) (3,333,070) Notes to the Accounts: 1. No dividend has been proposed. 2. This statement was approved by the Directors and agreed with the Company's auditors on 11 April 2000. A copy can be obtained from the Secretary at the Company's Head Office, Road Three, Industrial Estate, Winsford, Cheshire CW7 3PD. 3. The figures and financial information for the year 1999 do not constitute the statutory financial statements for that year. Those financial statements include an unqualified auditors report and will be delivered to the Registrar in due course. 4. The figures and financial information for the year 1998 do not constitute the statutory financial statements for that year. Those financial statements have been delivered to the Registrar and included the auditors report which was unqualified. 5. The Annual General Meeting will be held at Rookery Hall, Worleston, Nantwich, Nr. Chester, Cheshire, CW5 6DQ at 12.00pm on 18 May 2000.

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