Interim Results & CEO Statement
ADVANCED MEDICAL SOLUTIONS GROUP PLC
27 October 1999
ADVANCED MEDICAL SOLUTIONS PLC.,
Interim Results for the Six Months Ended 30 June 1999
Winsford, 27 October 1999, Advanced Medical Solutions Group plc., (AMS),
announces interim results for the six months ended 30 June 1999.
Highlights for the year to date:
* Investment in establishing a Consumer Woundcare business resulted in
the launch of 15 new products including additions to the ActivHealTM and
SpyroflexTM ranges.
* Turnover increased to £2.8 million and losses before tax rose to £3.1
million as investment to build the consumer business increased.
* Novartis Consumer Healthcare signs marketing and distribution agreement
for Consumer Woundcare products in UK and the Republic of Ireland.
Equity fund-raising possible in the final quarter of 1999.
Review
Roy Smith, Chief Executive Officer of AMS said:
'Our business continues to make good progress as the strategy of investing
to build a Consumer Woundcare business is implemented. The launch of 15 new
products has tripled Consumer Woundcare sales.'
'Our confidence in the potential of this business was confirmed by the
recent signing of an agreement with Novartis Consumer Healthcare UK
(Novartis). Under the agreement Novartis will market and distribute the
ActivHealTM range of products as SavlonTM ActivHealTM to consumer markets in
the UK and the Republic of Ireland. AMS will manufacture finished product
for Novartis and will receive an initial up-front payment and ongoing
royalties. The agreement also specifies minimum volumes over a five year
period. We look forward to working with Novartis to maximise the benefits
of this agreement for both parties.'
'We will focus on obtaining additional agreements similar to that with
Novartis, as we recognise that our investment in marketing and promotion is
better served through relationships with larger organisations such as
Novartis. Other leading pharmaceutical organisations have shown interest in
marketing our Consumer Woundcare product range in various countries, and
more agreements are expected to be signed in the coming months.'
For further information, please contact:
Advanced Medical Solutions Group plc
Roy Smith, Chief Executive
Mary Tavener, Finance Director Tel: 01606 863500
Gavin Anderson & Company
Philip Ward Tel: 0171 457 2345
ADVANCED MEDICAL SOLUTIONS GROUP PLC.,
Unaudited Interim Results for the Six Months Ended 30 June 1999
Chairman's Statement
Results
In the six months ended 30 June 1999, turnover increased to £2.8 million
(1998: £2.7 million), although the loss (before and after tax) increased to
£3.1 million (1998: £1.9 million). The increased loss reflects the heavy
investment needed to launch new consumer brands, as well as substantial
revenue costs incurred in improving manufacturing processes.
In the October 1998 rights issue document, the Group stated its intention to
start a new business in the consumer woundcare market which would incur
significant start-up investment costs. The additional costs relating to the
required changes in manufacturing processes and the additional sales,
marketing and promotional expenditure necessary to promote the ActivHealTM
and SpyroflexR brands were significant and contributed to the increased loss
for the period. The Group has achieved the launch of 15 new products within
Consumer Woundcare in the first six months of 1999.
The benefit of this investment can already be seen, with Consumer Woundcare
sales for the first six months of 1999 being £710,000 (324 per cent) ahead
of the same period last year, and while the investment in launching
ActivHealTM and SpyroflexR has proved to be more costly than anticipated,
the demand for our Consumer Woundcare products continues to increase.
Professional Woundcare sales of approximately £1.8 million in the first six
months of 1999 have been disappointing, largely as a result of a major
shortfall in sales of foam, primarily MitraflexTM and FlexzanTM in the very
difficult US market. Excluding these two products, Professional Woundcare
sales in the first six months of 1999 were £213,000 (14 per cent) ahead of
last year. The Board expects an improvement in this business segment during
the second half of 1999.
The Group also continues to invest in its core technologies in Advanced
Healthcare to provide future, long-term development for the business.
Management Focus
The senior management team is now in place; this will allow the Group to
focus on reducing the operating costs within the business. It is clear that
further cost reductions are necessary, with overheads being a priority going
forward.
The Group remains confident that improvements in manufacturing productivity
will be realised in the second half of 1999, although some efficiencies will
not be evident until the early part of 2000.
Year 2000 Compliance
The Directors believe that the majority of computer systems critical to the
business operation of the Group are now Year 2000 compliant, having been the
subject of a comprehensive testing programme and that the remaining critical
systems will be compliant by November 1999. The Directors anticipate that
the total costs of achieving Year 2000 compliance will not be material.
Such costs are being charged to the profit and loss account as incurred.
Board Changes
In July, the Board appointed Mary Tavener as Finance Director. Prior to
joining the Group, Mary held positions with BTP plc as group financial
controller and Churchill Tableware Ltd as finance director. This
manufacturing-based experience will be invaluable in the continued
transformation of the Group.
Outlook
Significant progress has been made during the first six months of 1999. The
investment in Consumer Woundcare has resulted in an agreement being signed
with Novartis Consumer Health Limited under which Novartis will market and
distribute our current ActivHealTM range as SavlonR ActivHealTM to the
consumer market within the UK and Republic of Ireland. The agreement
provides for an initial payment, future royalty streams and minimum
quantities over a five-year period.
The Board will focus on agreements similar to that with Novartis, as it
recognises that the investment in marketing and promotion is better served
through relationships with larger organisations such as Novartis. Other
leading pharmaceutical organisations have also shown interest in marketing
our Consumer Woundcare product range in various countries and more
agreements are expected to be signed in the coming months.
The Board is well aware of the progress required to meet Shareholder
expectations; the focus going forward will be to increase revenue streams,
to improve manufacturing productivity and operating efficiencies and to
ensure that the development of the core technology continues within
Professional and Consumer Woundcare, Advanced Healthcare and Research and
Technology.
The Group critically depends for its success in generating sufficient
revenues coupled with a level of manufacturing efficiency which would allow
it to achieve profitability. To reach this position, the Group is likely to
require extra funding and the Board is currently discussing with its
advisers a possible equity fund-raising in the final quarter of 1999.
James Noble
Non-Executive Chairman
Consolidated Profit and Loss Accounts
Unaudited Unaudited Audited
Six Six Twelve
months ended months ended months ended
30 June 30 June 31 December
1999 1998 1998
Note £'000 £'000 £'000
Turnover 2,806 2,692 5,387
Cost of Sales (3,452) (2,508) (5,801)
Gross(loss)/profit (646) 184 (414)
Administrative
expenses including
exceptional items (2,748) (2,239) (5,807)
Other operating income 162 100 155
Operating loss
before exceptional items (3,232) (1,955) (4,901)
Abortive
acquisition costs ----- ----- (747)
Reorganisation
costs ----- ----- (417)
Operating Loss (3,232) (1,955) (6,066)
Interest receivable
and similar income 1 145 81 1,288
Interest payable
and similar charges (46) (74) (145)
99 7 1,143
Loss on ordinary
activities before
taxation (3,133) (1,948) (4,923)
Taxation ----- ----- -----
Loss for the period (3,133) (1,948) (4,923)
Loss per ordinary
share (basic and
fully diluted) 2 (5.1p) (5.3p) (12.2p)
Consolidated Balance Sheets
Unaudited Unaudited Audited
Six Six Twelve
months ended months ended months ended
30 June 30 June 31 December
1999 1998 1998
Note £'000 £'000 £'000
Fixed Assets ----- 39 -----
Intangible Assets 5,715 5,885 5,969
Tangible Assets 5,715 5,924 5,969
Current Assets
Stocks 2,243 2,756 2,420
Debtors
- due within one year 1,933 1,843 1,905
- due after more
than one year 132 132 132
Cash at bank and in
hand 3,977 1,204 7,372
8,285 5,935 11,829
Creditors: amounts
falling
due within one year (2,180) (1,898) (2,645)
Net Current Assets 6,105 4,037 9,184
Total Assets Less
Current Liabilities 11,820 9,961 15,153
Creditors: amounts
falling due after
more than one year (202) (2,825) (421)
11,618 7,136 14,732
Capital and
Reserves
Called up share
capital:
- Shares issued 6,170 3,691 6,170
- Shares to be issued 3 ------ 41 -----
Share premium
account
- Shares issued 33,568 25,438 33,568
- Shares to be issued 3 ----- 2,651 -----
Other Reserve 1,531 1,531 1,531
Profit and loss
account (29,651) (26,216) (26,537)
Equity Shareholders
Funds 11,618 7,136 14,732
Consolidated Cash Flow Statements
Unaudited Unaudited Audited
Six Six Twelve
months ended months months ended
30 June ended 31 December
1999 30 June 1998
1998
£'000 £'000 £'000
Net cash outflow from
operating activities (3,010) (2,312) (4,867)
Returns on investments and
servicing of finance
Interest paid ----- (4) (8)
Interest received 145 81 145
Interest element of
finance lease rental and
higher purchase payments (46) (70) (137)
Cash inflow from
returns on investments
and servicing of finance 99 7 -----
Capital expenditure and
financial investment
Purchase of tangible fixed
assets (233) (438) (741)
Cash outflow before
use of liquid resources
and financing (3,144) (2,743) (5,608)
Management of liquid
resources
Sale of term deposits 2,750 ----- -----
Purchase of term deposits ----- ----- (6,500)
Financing
Issue of shares ----- ----- 11,553
Share issue expenses ----- ----- (943)
Repayment of promissory
note ----- ----- (1,289)
Capital element of finance
lease rental and
hire purchase payments (271) (258) (546)
Net cash (outflow)/inflow from
financing (271) (258) 8,775
Decrease in cash (665) (3,001) (3,333)
Notes
1. Interest receivable and similar income.
Interest receivable and similar income for the year ended 31 December 1998
included a gain of £1.1 million relating to the prepayment of a promissory
note.
2. Loss per share
The basic loss per share has been calculated on the weighted average number
of shares in issue for the six months ended 30 June 1999, namely 61,705,779
(1998: 36,913,995) and losses of £3,133,000 (£1,948,000). Loss per share on
a fully diluted basis is not materially different from that on an undiluted
basis.
3. Shares to be issued
On 27 February 1999 the Company redeemed, for US$80,000, two convertible
notes relating to contingent deferred consideration for an acquisition.
This was reflected in the balance sheet at 31 December 1998. The effect was
to eliminate share capital and share premium to be issued and included in
the unaudited balance sheet at 30 June 1998.
4. Basis of Preparation
This interim report has been prepared using accounting policies consistent
with those set out in the 1998 Annual Report and Accounts. The comparative
figures for the year ended 31 December 1998 do not constitute statutory
accounts. These figures have been extracted from the audited accounts for
that year, which have been delivered to the Registrar of Companies and on
which the auditors issued an unqualified report, which did not contain a
statement under either section 237(2) or (3) of the Companies Act 1985.
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