Annual Report & Accounts 2021
Recovery &
Optimism
Advanced Medical Solutions
Group plc is a world-leading
specialist in tissue-healing
technologies.
Our Mission: To develop.
To make a real difference.
To add value.
2
Contents
Company Overview
1 Highlights
2 Our Business Model
4 Why Invest in AMS
Strategic Report
5 Chief Executive’s Q&A
8
Market and Business
Overview
10 Our Strategy
12 Strategy in Action
20 Key Performance Indicators
22
Operating Review –
Surgical Business Unit
Operating Review –
Woundcare Business Unit
s172 (Stakeholder
Engagement)
Environmental, Social
and Governance
44 Financial Review
47 Risk Management
24
26
32
Governance
52 Board of Directors
54 Senior Management Team
56
Corporate Governance
Report
Nomination Committee
Report
62
65 Audit Committee Report
69
Remuneration Committee
Report
81 Directors’ Report
Financial Statements
84
Independent Auditor’s
Report
Consolidated Income
Statement
Consolidated Statement of
Comprehensive Income
Consolidated Statement of
Financial Position
Consolidated Statement of
Changes in Equity
92
92
93
94
97
96
Consolidated Statement
of Cash Flows
Notes Forming Part
of the Consolidated
Financial Statements
131 Company Statement
of Financial Position
132 Company Statement
of Changes in Equity
133 Notes to the Company
Financial Statements
139 Five Year Summary
139 Alternative Performance
Measures
140 Advisors
About AMS OVERVIEW
Group revenue (£ million)
Diluted earnings per share (p)
Adjusted2 profit before tax (%)
£108.6m
2020: £86.8m Change: +25%
(+29% at constant currency1)
2019: £102.4m
8.01p
23.6%
2020: 3.94p Change: +103%
2019: 8.72p
2020: 15.4% Change: +8.2pp
2019: 26.0%
Profit before tax (%)
20.2%
Adjusted2 diluted earnings per share (p)
Net operating cash flow (£ million)
9.66p
£31.0m
2020: 11.6% Change: +8.6pp
2019: 23.7%
2020: 5.44p Change: +78%
2019: 9.83p
2020: £21.5m Change: +44%
2019: £21.7m
Profit before tax (£ million)
Net cash3 (£ million)
Adjusted2 profit before tax (£ million)
£22.0m
£73.0m
£25.6m
2020: £10.1m Change: +118%
2019: £24.3m
2020: £53.8m Change: +36%
2019: £64.1m
2020: £13.4m Change: +92%
2019: £26.6m
AMS is pleased to report strong financial performance
in line with expectations and significant regulatory and
clinical progress as it continues to invest in its portfolio
of next-generation products.
Proposed full-year dividend per share (p)
1.95p
2020: 1.70p Change: +15%
2019: 1.55p
Financial
Operational
Post-period end
• Strong performances across all key product
categories and territories as volumes
rebuild towards pre-pandemic levels.
• Investment in R&D increased to £9.3
million (2020: £7.9 million), representing
8.6% of revenues, progressing key projects.
• Surgical Business Unit revenues increased
to £64.6 million (2020: £50.2 million).
• Woundcare Business Unit revenues
increased to £44.0 million (2020:
£36.6 million).
• Global LiquiBand® sales increased to
£33.1 million (2020: £22.8 million), with
especially strong growth in the US.
• Seal-G® and Seal-G® MIST clinical study
progressing well with approximately 25%
of patients recruited. Final results on track
for H2 2022 to be used to market the
technology during full commercial launch.
• Signed an agreement to acquire AFS
Medical GmbH (‘AFS’), an Austrian based
distributor of minimally invasive surgical
devices, strengthening our direct surgical
sales footprint and capabilities.
• Recruitment for the LiquiBandFIX8® US
• Deal expected to complete in mid-2022
clinical trial completed and the Premarket
Approval (PMA) filing remains on track
for 2022.
• Submitted 510(k) for innovative high gelling
product with anti-biofilm activity which is
on track for a US launch at the end of 2022.
subject to regulatory clearance.
• The Group is reviewing activities in the
small legacy sales office in Moscow that
has historically contributed approx. 1% of
operating profit.
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1
2
Constant currency removes the effect of currency movements by re-translating the current year’s performance at the previous year’s exchange rates.
Adjusted profit before tax is shown before exceptional items which were £nil (2020: £0.8 million, 2019: £1.1 million), amortisation of acquired intangible assets which was
£3.2 million (2020: £2.3 million, 2019: £1.7 million) and long-term liability expense of £0.4 million (2020: £0.2 million, 2019: credit of £0.3 million) as defined in the Financial
Review. Adjusted operating margin is shown before exceptional items and amortisation of acquired intangible assets.
Net cash is defined as cash and cash equivalents plus short term investments less bank loans and financial liabilities excluding those relating to IFRS16.
3
* For further information on Alternative Performance Measures see page 139.
Advanced Medical Solutions Group plc Annual Report & Accounts 2021 01
Highlights
OVERVIEW
Our Business Model
Our Mission
To develop. To make a real difference. To add value.
Achieved through Our Value Chain
Research and new
product development
Research and development.
Design and testing.
Regulatory approval
8.6%
of sales invested in R&D
3
new product launches
Routes
to market
Flexible routes to market
incorporating our direct sales
teams, global network of
distributors and OEM partners.
Operations
Manufacturing.
Security of supply.
Supply chain resilience.
Quality assurance.
>100
distribution partners
9
locations of specialist,
manufacturing facilities
For information see Our Supply Chain on page 29
Underpinned by Our Values
02 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
Care
Caring about the work we
undertake and the real life
differences we can make.
Approvals for new products and new territories.Maintain approvals for existing products/markets. Our Business Model
Our Strategic Pillars
Delivering for Our Stakeholders
Growth
Exploiting the opportunities arising from having a broad product
range sold into large addressable markets via multiple routes to
market and across multiple geographies.
Innovation
Strengthening our portfolio by developing or acquiring
market-leading, high quality products and investing in people
to deliver innovation.
Operational Excellence
Continuously improving our operations to drive out cost and
improve margin, focus on what our customers need and value
and minimise operational risk.
Culture
Investing in recruiting and developing talent while embedding our
Care, Fair, Dare values.
Our Patients
Delivering excellent outcomes
for our Patients.
Our Employees
Being a great place for our
Employees to work.
Our Investors
Delivering long-term sustainable
growth and value for our Investors.
Our Clinicians
Delivering effective, efficient and
safe experiences for our Clinicians.
Our Partners
Delivering quality and value
for our Partners.
Our Regulators
Meeting the evolving
requirements of our Regulators.
Our Communities
and Environment
Involvement in our Communities and
minimising our Environmental impact.
Our Supply Chain
Strong, mutually beneficial
relationships with our Supply Chain.
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For information see Our Supply Chain on page 29
For information see Our Strategy on pages 10 and 11
For information on Our Stakeholders see pages 26 to 29
Fair
Acting with integrity and
ensuring we are fair in all
aspects of business.
Dare
Moving boundaries and
challenging constructively
to build on others’ ideas.
Advanced Medical Solutions Group plc Annual Report & Accounts 2021 03
OVERVIEW
Why Invest in AMS
AMS is committed to innovation and investment in Research and
Development to deliver significant long-term sustainable growth.
Innovative
products
Quality
manufacturing
Commercial
flexibility
Strong
financials
Globally recognised brands
focused on tissue-healing
technologies with increasing
investment in R&D creating
better outcomes for clinicians
and patients, multiple growth
drivers and recurring revenues.
Extensive manufacturing
capabilities and regulatory
expertise enables effective access
to markets and sustains a reliable
and consistent supply of high
quality, high margin products.
Our flexible distribution strategy
encompasses selling through our
own direct sales teams as well
as through a global network of
distributors and marketing partners
to enable effective access to the
major global healthcare markets.
A robust balance sheet and
strong cash generation enables
us to invest in long-term growth
opportunities and leverage our
business model further through
internal innovation and a targeted
acquisition strategy.
Our expanding portfolio of
innovative tissue-healing
products has been established
through increased investment
in our specialist R&D hubs and
acquisitions. This has created a
range of complementary growth
drivers with high values of recurring
revenues and strong gross margins.
In 2021, we incurred £9.3 million
of gross R&D spend, representing
8.6% of sales (2020: £7.9 million,
9.1% of sales).
Our balanced range of products
reduces our reliance on any single
market and helps to ensure a more
consistent Group performance.
AMS manufactures nearly all of
the products that we market in
nine multi-national locations that
together provide a broad range of
facilities and processes. Each site
specialises in specific technologies
and the technical expertise, lean
manufacturing practices and quality
processes that allow us to deliver
excellent customer service to a
broad range of customers, including
market leaders in the field.
Ongoing significant investment
in regulatory processes enables
us to comply with increasing
levels of regulatory requirements
such as the Medical Device
Regulation (MDR).
AMS’ commercial success is based
on the flexibility to select the
optimum route to market for each
product. We have successfully
penetrated the US surgical market
with a hybrid model, using four key
distribution partners, supported by
our own specialist sales team.
In some key European markets,
including the UK and Germany, we
maintain a direct sales presence
in surgical markets while in other
territories we use an established
network of distributors. Our
Woundcare portfolio is marketed
largely through Original Equipment
Manufacturer (OEM) partners,
although our ActivHeal® range is
becoming increasingly successful
in a number of territories.
Our track record of cash generation,
a cash position of £73 million at
December 2021 and an £80 million
undrawn, unsecured debt facility
enables the Group to continually
leverage its business model.
Significant investment in R&D
ensures a strong pipeline of new
products that can broaden our
portfolio. We constantly seek out
strategically aligned acquisitions
that can expand our technology
base, increase our manufacturing
capability and enhance our
distribution coverage.
Consequently, we feel confident
that we can sustain robust, long-
term top-line growth, ahead of the
market rate, increase our profitability
and maximise returns for our
shareholders.
12.8%
56.2%
84
£31.0m
Sales from products launched
in the previous five years
Gross margin
Countries sold into
Net operating cashflow
12.2%
88%
Sales CAGR¹ over 10 years
1 Compound Annual Growth Rate
Customer service %
(OTIF: On-Time-In-Full)
33.8%
US sales as % of Group
23.6%
Group adjusted
profit margin
See Our Strategy in action
on pages 12 to 19
See Operating reviews
on pages 22 to 25
See Operating reviews
on pages 22 to 25
See KPIs
on pages 20 to 21
04 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
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Chief Executive’s Q&A
The Group recovered well in
2021 and we are optimistic
about our growth prospects
Group revenue
£108.6m
+25%
(+29% at constant currency1)
Adjusted2 profit before tax
£25.6m
+92%
How do you assess Group
performance in 2021?
The Group performed extremely
well, with strong growth reported
across all key product categories
and territories as we made
good commercial progress.
Levels of elective surgery and
wound treatment volumes both
continued to rebuild towards
pre-pandemic levels. Revenue
increased to £108.6 million (2020:
£86.8 million) which represents
an increase of 29% on a constant
currency basis.
Chris Meredith, Chief Executive Officer
I am delighted with AMS’ financial
performance in 2021 which reflects our
recovery, the strength of our product
portfolio, the quality of our staff and
partners, the flexibility of our commercial
network and the commitment of clinicians
to use our tissue-healing technologies.
1
Constant currency removes the effect of currency movements by re-translating the current year’s performance at the previous year’s exchange rates.
2
Adjusted profit before tax is shown before exceptional items which were £nil (2020: £0.8 million, 2019: £1.1 million), amortisation of acquired intangible assets which was
£3.2 million (2020: £2.3 million, 2019: £1.7 million) and long-term liability expense of £0.4 million (2020: £0.2 million, 2019: credit of £0.3 million) as defined in the Financial
Review. Adjusted operating margin is shown before exceptional items and amortisation of acquired intangible assets.
Advanced Medical Solutions Group plc Annual Report & Accounts 2021 05
QA
STRATEGIC REPORT
Chief Executive’s Q&A continued
A focus on R&D…
How is the product pipeline
progressing?
How did the Group’s key clinical
projects progress during the year?
Significantly increased R&D
investment in recent years has
created a product pipeline that
we believe is stronger than ever
and creates a platform for near-
term growth. LiquiBandFIX8® in
the US and Seal-G® are two high
profile opportunities, with other
meaningful US launches expected
in the near future including dental
collagens, dermal repair scaffold and
antimicrobial anti-biofilm dressings.
Recent launches such as Silver High
Performance and Silicone PHMB
dressings are also expected to deliver
significant revenue.
The Seal-G® and Seal-G® MIST
clinical study continues to progress
well with more than 25% of patients
recruited. The final results are on track
to be released in H2 2022 when they
will be used to market the technology
during the full commercial launch. As
previously reported, recruitment for
the US clinical trial of LiquiBandFIX8®
has now been completed and the
Premarket Approval (PMA) filing
remains on track for 2022, once
all patients have completed their
12-month follow up.
Investments in major projects
Positioned for
further growth with
a promising pipeline
of next-generation
products.
2018
2020
2022
2024
2026
2028
2030
LiquiBand Fix8 US PMA
$200m US hernia mesh fixation market.
Investment: £3m
Market opportunity: $200m
Sealantis
$1bn market for internal sealants.
Investment: £10-£15m
EU ROW Market opportunity: $0.5bn
US Market opportunity: $0.5bn
MDR
Maintain access to all EU markets, further opportunities expected in future.
Investment: £15m-£20m
Market retention £3bn; Growth opportunities £tbc
A focus on Vision and Mission
How are you engaging with employees
on Vision, Mission and Objectives?
Based on feedback from our annual employee engagement survey, we have
spent time with our employees to clarify and improve understanding of our
Vision, Mission and Objectives and have cascaded this through the business.
We believe that our employees are our biggest asset and constantly strive
to improve our engagement with them. Strengthening and communicating
our Vision (see right) and Mission (see page 7) will drive long-term
sustainable growth.
Our Vision
A world where the
outcome of every patient
can benefit from our
products and a company
where every employee feels
invested and valued.
06 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
QAQAQA Chief Executive’s Q&A continued
How did COVID-19 impact
the business in 2021 and
early 2022?
The return of elective surgery
volumes towards pre-pandemic
levels in 2021 helped the Group to
deliver strong growth in revenue,
profitability and cash generation.
In 2022, the Omicron variant is
causing health staff shortages in
some of our markets but to date it
appears that AMS will experience
a much shorter and less severe
impact than in previous peaks of
the pandemic.
What progress did AMS make
towards the Medical Device
Regulation in 2021?
AMS obtained its first Medical
Device Regulation (MDR) certificates
in 2021, well ahead of the 2024
deadline. We continue to invest
heavily to comply with the extensive
requirements on product safety and
performance, clinical evaluation
and post-market clinical evidence.
Further submissions and approvals
are anticipated in 2022 and
management is confident that we
are well placed for the opportunities
that will inevitably arise in Europe
during the MDR implementation.
How is the Group coping with
Brexit and the global supply
chain crisis?
Whilst AMS did not suffer any impact
following the Brexit transition
period, we did experience some
disruption from the global supply
chain crisis. This is expected to
continue well into 2022. In addition
to the resulting cost inflation, we
have seen instances where delayed
deliveries from our material suppliers
have resulted in longer timelines
to fulfil some customer orders. We
continue to monitor the situation
and are striving to hold higher levels
of critical materials.
How is the M&A strategy
progressing?
How are you developing your
ESG strategy?
What is the outlook for 2022
and beyond?
The Group continues to actively seek
acquisitions that deliver additional
value for shareholders and meet
the criteria of being accretive
businesses with strong R&D and
manufacturing capabilities and/or
that have products or customers
that offer effective commercial
synergies. The agreement to acquire
AFS in March 2022, subject to
regulatory clearances, underlines
the strategy to expand our direct
surgical sales footprint and capability
whilst the acquisition of Raleigh in
2020 demonstrates our intention to
increase our woundcare capabilities
and commercial potential.
We have made strong progress
on ESG, establishing a Steering
Committee to manage activities
and developing an ESG Framework.
Our strategy focuses on our
environmental impact, well-being
of our employees, equality, diversity
and inclusion, and strengthening
corporate governance, internally
and across our supply chain, to
meet ever increasing customer
requirements. Our progress reaffirms
the commitment to being a good
corporate citizen. Further details
can be found in our ESG Report on
pages 32 to 43.
Trading has started well in the new
year, even though the pandemic
continues to present challenges,
and I remain confident that our
commitment to innovation,
investment in R&D and the
expansion of our distribution
network will deliver significant
and robust long-term growth.
Chris Meredith
Chief Executive Officer
14 April 2022
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Our Mission Statement
AMS is committed to the development of products and
people that make a real difference to the societies we
live in, to the patients our products help heal and to the
customers and stakeholders we serve every day. We
continuously strive to add value in every task we perform,
every role we fulfil and in every project we undertake.
• To develop.
• To make a real difference.
• To add value.
Advanced Medical Solutions Group plc Annual Report & Accounts 2021 07
QAQAQAQAQAQA
STRATEGIC REPORT
Market and Business Overview
We develop tissue-healing technologies in the global
tissue-healing markets, which are driven by increasingly
ageing populations and innovative technology.
Surgical
The surgical market addressable by our products is estimated to be worth approximately $6.4bn1 globally with historic
Compound Annual Growth Rates (CAGRs) of between 0% and 8%.
$6.4bn
$0.3bn – Tissue Adhesives – LiquiBand®
$1bn – Biosurgical Devices – Collagens/other haemostatic devices
$0.65bn – Biosurgical Devices – Bone substitutes
$0.4bn – Internal Fixation – LiquiBandFIX8®
$3bn – Sutures – RESORBA®
$1bn – Internal Sealants – Seal-G®/Seal-G® MIST
Tissue Adhesives – LiquiBand®
LiquiBand® is AMS’ most successful
product range having gained over
20% of end-volumes in the US market.
The brand recovered well in 2021,
supported by the recent launch
of LiquiBand® Rapid. The launch
of LiquiBand® XL (large wounds)
expected in H2 2022 should unlock
further hospital conversions.
Additional expansion in EU, APAC and
LATAM region, continues to support
growth for the brand.
Internal Fixation –
LiquiBandFIX8®
AMS’ LiquiBandFIX8® brand enables
entry to the hernia mesh fixation
market, removing the need for
staples or tacks, which reduces pain
and recovery time. Ongoing rollout
of the product in Europe and a US
launch in 2023 is expected to drive
long-term growth.
Biosurgical Devices – Collagens
AMS competes within the $1bn
collagen/other haemostatic devices
market, specifically targeting
the surgical and dental collagen
segments. New approvals for antibiotic
surgical dressings help to drive
growth in Europe, while the Group
is working towards its first collagen
approval in the US, with a 510(k)
submission expected in H1 2023 for
a dental application.
Biosurgical Devices –
Bone substitutes
The Group’s range of Bi-phasic
Tri-calcium phosphate products
address the $650m ceramics
segment of the synthetic bone
substitute market. Leveraging
the recently acquired portfolio
and a renewed focus on spinal
surgery is supporting growth
through Biomatlante.
Sutures – RESORBA®
The Group targets a subset of the
much larger $3bn global suture market
with a direct market presence in
Germany and the UK, while supplying
customers in specialist applications.
Internal Sealants –
Seal-G®/Seal-G® MIST
The CE mark of Seal-G®/Seal-G® MIST
in 2021 enables entry into the EU
portion of the $1bn market of GI Tract
sealants. Data from an ongoing clinical
trial is expected in H2 2022, with a full
European launch to follow.
1 Sourced from various third party data sources, market reports and internal estimates.
08 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
Market and Business Overview
$6.4bn
0-8%
$4.2bn
0-5%
Global Surgical market
Surgical product CAGRs
(estimate of annual market
growth rates)
Global Advanced Woundcare
market
Woundcare product CAGRs
(estimate of annual market
growth rates)
Woundcare
The global Advanced Woundcare market is worth approximately $4.2bn with historic product CAGRs estimated to be
between 0-5%. AMS competes in this market with its expertise focused on foam and fibre-based materials. The estimated
value of these segments are summarised below.
$4.2bn
$0.9bn – Infection Management
$2.6bn – Exudate Management
$0.7bn – Other Woundcare
Infection Management
AMS’ antimicrobial range targets the
market for foam and fibre dressings
that are used to treat hard to heal
wounds that are at risk of infection.
The Group sustains a competitive
edge through innovation, such as
using its silver and Polyhexamethylene
Biguanide (PHMB) technology and its
new antimicrobial high gelling product
with anti-biofilm activity, expected to
be launched in 2022.
Exudate Management
AMS specialises in fibre and foam
dressings that target the part of this
market which optimise the healing
environment and enhance tissue-
healing without the use of anti-
infective agents. Innovation is set to
support growth and includes an entry
into the negative pressure market and
a new US regulatory submission for a
woundcare skin-scaffold in 2022.
Other Woundcare
The global market of other products in
the treatment of hard to heal wounds.
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ActivHeal®
A branded range of Exudate
Management and Infection
Management products that
are marketed in the UK and
other markets.
Advanced Medical Solutions Group plc Annual Report & Accounts 2021 09
STRATEGIC REPORT
Our Strategy
AMS is committed to the long-term, sustainable development of
products and people that make a real difference to the societies we live
in, to the patients our products help to heal and to the customers and
stakeholders we serve every day.
Our Strategic Pillars driving future success
Growth
Innovation
Exploiting the opportunities arising from having a broad
product range, which are sold via multiple routes to
market and across multiple geographies.
Strengthening our portfolio by developing or acquiring
market leading high-quality products and investing in
people to deliver innovation.
Priorities
Priorities
Delighting our customers and executing sales and marketing
strategies that maximise success.
Continually improving systems, products and processes to deliver
business excellence.
Creating products and services which delight our customers.
Delivering at least three new products into the market annually
which satisfy an unmet customer need.
Progress
Progress
Strong growth in US LiquiBand® with record levels of end-user
sales volumes.
Launched LiquiBand® XL into the UK with the EU and the US to
follow in early 2022 and mid-2022 respectively.
Completed US Fix8® IDE enrolment with filing expected in 2022.
Delivered approvals and launches of Surgical products and line
extensions in multiple territories.
Expanded ActivHeal® into APAC, Gulf States and Africa.
Progressed the operational and commercial synergies arising from
the 2020 acquisition of Raleigh Coatings.
Group-wide clinical plan to support MDR certifications with
approvals achieved in 2021.
Gained Seal-G® MIST CE approval: open device approved to include
colourant. Commenced clinical trial and pilot launch with first sales.
Launched RESORBA® Bone branded product into six new
EU countries.
Voice of customer and market research initiatives for LiquiBandFIX8®
and LiquiBand® XL platforms gained better insight in to surgical usage,
perceptions, pricing and expectations.
Invested in in-house cell culture laboratory to support entry into Bio-
engineered Skin Substitutes market for ex-vivo and cell proliferation
testing, and creation of skin healing models.
Developed dermal repair scaffold for skin substitute market.
Key Opinion Leaders (KOLs): focus groups, advisory panel solicited
market feedback to inform early stage innovation project selection.
Key KPIs
Revenue movement.
Earnings per share.
See pages 20 to 21
Key KPIs
% revenue spend on R&D and Innovation.
% of sales from new products launched in previous five years.
See pages 20 to 21
Risks
Lack of growth, poor ROI from R&D or acquisitions, failure to deliver
against forecast.
Risks
Poor ROI from R&D or acquisitions, weak talent management,
regulatory risk.
See pages 47 to 51
See pages 47 to 51
10 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
Our Strategy
Our Mission:
To develop.
To make a real difference.
To add value.
Operational Excellence
Culture
Continuously improving our operations to drive out cost,
improve margin, focus on what our customers need and
value and minimise operational risk.
Investing in hiring and developing talent while embedding
our Care, Fair, Dare values.
Priorities
Priorities
Consistently supply high-quality products with a high level of
customer service via an optimised and agile supply chain.
Keeping our critical products and sites fully compliant and meeting
all required market standards.
Delivering a culture of continuous improvement.
Creating a high performance culture by investing in people.
Developing leaders who can manage transformational change in
a culturally diverse environment.
Focused action on training and improvements identified through
employee engagement.
Progress
Progress
Delivered 3.7% cost reduction projects across sites despite global
supply chain pressures and Brexit.
Managed COVID-19 safe environment with continued strong safety
performance (2021 Accident Incident Rate (AIR) Score of 1.7 (2020: 2.8)).
Further embedded our Electronic Quality Management System (eQMS)
across multiple sites.
Implementation of key investments delivering capacity, cost reduction
and reducing business risk.
Continuous improvement activities resolved process issues to improve
our yields.
Drew on our Care, Fair, Dare values to help manage our way through
COVID-19.
Developed ESG Framework and launched an ESG Steering Committee to
manage and embed ESG across the Group.
Launched employee engagement tool, allowing communication and
actions to build engagement with tracking throughout the year.
Utilised Apprenticeship levy to support 18 employees in continuing
professional development.
Rolled out Diversity and Inclusion training across the business.
Introduced Altogether AMS as our branded forum to focus on inclusivity.
Implemented forecasting tool to improve forecast accuracy and process.
Further implemented the Management Development Programme.
Successful integration of Raleigh operations with collaboration across
other Woundcare sites.
Successful MDR Audits across Plymouth and Winsford sites.
Invested in a platform to manage candidates electronically through the
recruitment process with an ability to reach international job boards to
attract high quality talent into our business.
Key KPIs
Customer Service (OTIF – ‘On-Time-In-Full’).
Year-over-year change in our standard cost base.
See pages 20 to 21
Risks
Key KPIs
Employee attrition.
Employee Engagement Score.
See pages 20 to 21
Risks
Continued supply chain/cost Inflation impact, vulnerability to single
source supply, weak talent management, poor acquisition integration.
Weak talent management, insufficient progress on ESG and climate
change, poor acquisition integration, impact of Russia/Ukraine conflict.
See pages 47 to 51
See pages 47 to 51
Advanced Medical Solutions Group plc Annual Report & Accounts 2021 11
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STRATEGIC REPORT
Exploiting
opportunities
from multiple routes
to market
12 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
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We continue to increase the
market share of our key products,
particularly in large markets such
as the US, by demonstrating a
strong combination of high quality
products delivering improved
performance and value for money
versus market-leading competitors.
Growth
Our growth strategy is to exploit
opportunities from multiple routes to
market across numerous geographies
with our diverse portfolio of innovative
tissue-healing products, which add
value to patients and payors and deliver
equal or better clinical performance to
market-leading products.
Growth in action in 2021 – US LiquiBand® is
a strong story of recovery
The US is a key market for LiquiBand®. Sales were
particularly strong, driven by increased market demand,
the launch of LiquiBand® Rapid, a refocused marketing
strategy and partner inventory replenishment. We
achieved record end-user sales and overall sales of
£22.4m, an increase of 72% at constant currency.
Optimism for the future of LiquiBand®
We expect the 510(k) approval for LiquiBand® XL to be
granted in H1 2022 as we work to submit responses to
the FDA’s final questions. This approval will provide us
with the portfolio we need for further penetration into
the US market. Internationally, we grew total LiquiBand®
sales by 53% including a launch in India which had been
a long-term strategic target due to the population size,
developing healthcare provision and growing middle-
class. LiquiBand® is positioned for further growth in
the future.
How we are going to achieve our
Growth ambitions moving forward:
• Expand our global footprint effectively and
efficiently, prioritising opportunities with high
ROI and probability of success and increasing the
market share of our high-quality products that
deliver improved performance and value for money
versus competitors.
• Achieve product approvals in new geographies,
leveraging our regulatory expertise to take
advantage of higher barriers to entry and
expanding capabilities for faster US registrations.
• Provide value-added support to our global partners
to expand claims and clinical evidence for success,
exploiting best in class implementation support and
developing five-year development plans.
• Expand and offer comprehensive portfolios around
product centres and technologies.
• Offer commercial flexibility to capitalise on a range
of market opportunities at various stages of the
product value stream, building brand strategy into
product launches.
• Embed health economics mindset into our
commercial and support activities.
•
Identify and deliver strategically aligned acquisitions
providing surgical product synergies or routes to
market, or woundcare technologies to leverage our
customer base.
• Grow acquisitions, delivering on multiple growth
opportunities and exploit the inherent commercial,
operational and regulatory synergies.
Advanced Medical Solutions Group plc Annual Report & Accounts 2021 13
Strategy in Action
STRATEGIC REPORT
Innovative
products
by investing in R&D
through our five hubs
14 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
Strategy in Action Innovative
products
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We aim to continue to strengthen our portfolio by
developing or acquiring high-quality products that allow
us or our partners to make market share gains in high
value segments. We invest in hiring and developing talent
capable of delivering innovation for the business.
Innovation
Developing or acquiring high-quality products
provides the opportunity for expansion into
new markets. We expect to develop and market
intuitive products that provide more effective,
efficient and safer experiences for surgeons and
patients. We invest in developing talent capable
of delivering innovation for the business.
Innovation in action in 2021 – As our markets show
signs of recovery , we continue to invest
As our markets continued to recover and elective surgery and
wound treatment volumes continued to rebuild towards pre-
pandemic levels, it is important we are prepared and are making
clinical progress by investing in our portfolio of next-generation
products. Investment in R&D increased to £9.3 million (2020:
£7.9 million), representing 8.6% of revenues, as progress continued
across key projects throughout the Group.
2
Optimism for the future for our products and pipeline
We are well positioned for further growth with a promising
pipeline of next-generation products. The Seal-G® and Seal-G®
MIST clinical study is progressing well. The final results are on
track to be released in H2 2022 after which they will be used
to market the technology during the full commercial launch.
Recruitment for the US clinical trial of LiquiBandFIX8® has now
been completed and the Premarket Approval (PMA) filing remains
on track for 2022. Our Innovation has also led to a number of
other new product launches such as Silver HPD and new approval
submissions such as a CMC PHMB (510(k) submitted in 2021) and
Bio-Regen (510(k) submission expected in 2022). We will make
significant further investment in R&D and Innovation in 2022.
How we are going to achieve our
Innovation ambitions moving forward:
• Develop and engage Clinical Advisory Boards.
• Expand relationships with Key Opinion
Leader panels to provide expert input into the
innovation process and exchange information
to ensure our innovation output meets
clinical needs.
• Partnering with strategic customers to
understand their needs earlier in the process
and influence our development focus.
• Establish Centres of Excellence for Innovation
and ensure resources and ideas from across
the Group are better utilised.
• Create differentiated products that have fewer
complications and provide more effective
experiences for both clinician and patient.
•
Improve New Product Development (NPD)
process with greater surgeon involvement
and market analysis.
• Exploit technology for continuous
improvement and iterative innovation.
•
Invest and focus our people and processes
in light of increasing global regulatory and
clinical requirements. Centralising resources
to drive innovation and best practice
while streamlining processes to maximise
output and utilise knowledge and learnings
from acquisitions.
Advanced Medical Solutions Group plc Annual Report & Accounts 2021 15
Strategy in Action
STRATEGIC REPORT
Continuous
improvement
with our high quality
product portfolio
16 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
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Through a strategy that begins with focusing
on what our customers need and value, we will
pursue a culture of continuous improvement to
enable lower operational risk, lower operating costs,
and increased revenues.
Operational Excellence
Operational Excellence is focused on
delivering a culture of continuously
improving operations to drive out cost
and improve margin while consistently
supplying high-quality products through
an optimised, agile and adaptable supply
chain. We excel when we work together.
Operational Excellence in action in 2021 – Supply
chain resilience was critical to our recovery
We successfully maintained supply of product to our
patients, clinicians and partners, successfully completed
audits and devoted significant efforts to supplier
engagement. We worked with our suppliers and the rest
of our supply chain resulting in an OTIF (‘On-Time-In-Full’)
of 88% despite the impact of COVID-19 and Brexit being
significantly higher than the last non-COVID-19 impacted
year (2019: 80%, 2020: 89%). These results were even
more impressive when considering the integration of
Raleigh and the significant volume increase against 2020,
enabling us to meet customer expectations.
Optimism that we are prepared for the future
The foundations are in place for the future with our
manufacturing expansion and culture of continuous
improvement to drive future growth with a strong pipeline
of products. As we plan for full scale manufacturing
of Seal-G, US LiquiBandFIX8® volumes and ongoing
LiquiBand® growth, we have commenced the
development of our Plymouth facility. Construction
started in 2022 at an estimated cost of £2 to £3 million
over a two-year period. Our resilient supply chain, clinical
projects, increased investment and focus on R&D forms
the basis for future growth.
How we are going to achieve our
Operational Excellence ambitions
moving forward:
• Deliver a cost competitive, high quality
product portfolio allowing AMS to win
business in competitive markets.
• Build a strong continuous improvement
culture driving year-over-year business
process improvement, delivering cost
reduction and improved quality.
• Deliver efficient supply chains with
appropriate capacity and high levels of
reliability and repeatability, optimised
inventory and high levels of customer service,
with customer satisfaction scores improving
year-over-year.
• Focus on our Product Development Process
1
through right first time product approval,
delivering improved speed to market.
• Deliver improved capability for effective
project priorities, resourcing and execution.
• Maintain regulatory certification of products
with clear strategy on Notified Bodies and
audit readiness at all sites.
• Ensuring we have the right organisation and
people to drive success while developing our
current processes and capabilities to grow
and add value to our customer base.
Advanced Medical Solutions Group plc Annual Report & Accounts 2021 17
Strategy in Action
STRATEGIC REPORT
Our
employees
are our greatest asset and
drive the success of AMS
18 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
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We are focused on our
Care, Fair, Dare values and to
creating a high performance
culture by engaging with
and investing in people.
Culture
Our employees drive the success of AMS.
We actively promote our Care, Fair, Dare
values and measure our employees’
engagement in our Culture through
annual surveys. We encourage internal
promotion of employees on a global
basis and have invested in apprenticeship
programmes to build future talent for our
business. We are all stronger together.
Culture in action in 2021 – Adapted our Culture
during recovery from COVID-19
In 2021 we applied our Care, Fair, Dare values to continue
to manage our way through COVID-19 and launched
an employee engagement tool to better understand
the needs of our employees. As our employees are our
greatest asset we have supported them with flexible
working arrangements and a focus on their mental
wellbeing. Our ESG Framework has helped guide a
number of key cultural activities and the ESG Steering
Committee has started to embed ESG across the Group.
Evolving our Mission, Vision and ESG framework
for a future we are optimistic about
In response to feedback from our employee engagement
survey, we have refreshed our Mission, Vision and
Objectives. These have been communicated out through
employee forums to ensure they are fully understood.
We will continue to evolve our culture and policies
moving forward. This will be positively impacted by the
embedding of our ESG Framework and Principles, details
of which can be found on pages 33 and 37.
How we are going to achieve our
Culture ambitions moving forward:
Achieving a positive culture in our business by
focusing on Care, Fair, Dare and implementing
our six-point plan:
• Talent attraction: We require highly skilled
teams to bring innovative products to market
ahead of our competition. We are committed
to diversity and attracting the right talent with
appropriate remuneration and benefits.
• Talent management: Developing and
retaining talent allows us to build skills for a
culture of innovation and to retain knowledge.
• ESG: Our Principles and Framework will allow
us to focus on key areas which will make AMS
a place where employees are proud to work.
• Values and behaviours: Care, Fair, Dare
provides a cultural framework to support how
we interact and achieve success.
• Open communication: Listening to all views,
taking feedback and pro-actively providing
information to allow us to remain agile and
customer-centric.
• Health and Safety: Maintaining the highest
levels of health and safety within our business
ensures employees feel safe and secure
within the working environment.
Advanced Medical Solutions Group plc Annual Report & Accounts 2021 19
Strategy in Action
STRATEGIC REPORT
Measuring success
The Group has a range of Key Performance Indicators (KPIs) to monitor
Group performance and measure progress against our strategy.
Financial KPIs
Revenue movement at constant currency1 %
Adjusted2 diluted earnings per share (EPS)
movement %
+29%
2021
2020
2019
2018
2017
-15%
-1%
12%
13%
29%
+78%
2021
2020
2019
2018
2017
-45%
-8%
13%
23%
78%
Definition
Net revenue adjusted for movement in constant currency1.
Strategic linkage
Continued growth in revenue demonstrates the successful execution
of the Group’s strategy. It is a contributing factor to our aim of providing
long-term value for our shareholders.
Progress made in the year
Revenue increased to £108.6 million (2020: £86.8 million) with strong
performances reported across all key product categories and territories
as levels of elective surgery and wound treatment volumes continued
to rebuild towards pre-pandemic levels. This represents an increase of
25% on a reported and 29% on a constant currency basis.
Definition
Movement in adjusted2 diluted EPS achieved in the year.
Strategic linkage
EPS is a measure of corporate profitability and the Group’s financial
progress. It is also an important factor to our aim of providing value for
our shareholders.
Progress made in the year
Adjusted diluted earnings per share increased by 78% to 9.66p (2020:
5.44p) reflecting the Group’s increased earnings as increased sales
volumes, mainly caused by COVID-19 recovery, drove significant
improvements in operational leverage and operating margins.
Year-over-year change of our average
standard cost3 %
+0.1%
2021
0.1%
2020
-0.1%
2019
2018
2017
No data available
2.8%
2.4%
Non-Financial KPIs
Customer Service (OTIF) %
88%
2021
2020
2019
2018
2017
88%
89%
80%
83%
93%
Definition
Measures the movement in standard cost base3 against prior year.
Strategic linkage
Continued improvements in cost reduction demonstrate the successful
execution of our strategy and are important for the sustainability of
the Group.
Progress made in the year
The standard cost base increased by 0.1% in 2021 (2020: decrease
of 0.1%) as operational leverage was impacted by volumes that were
still somewhat deflated due to COVID-19 and cost improvement
activities were offset by significant inflationary pressures. For 2022,
we are targeting operational cost improvements of 4% to minimise
the impact of inflationary pressures.
Definition
On-Time-In-Full (OTIF) is a measure of whether we delivered on our
commitment to provide excellent service to our customers.
Strategic linkage
OTIF is important both in terms of contractual commitment and
customer retention.
Progress made in the year
Despite delivering on our systems and business process commitments
in 2021, our group OTIF performance was 88% (2020: 89%).
This result was largely driven by a strong recovery in customer demand,
whilst in parallel we experienced global raw material supply disruptions
with many of our key suppliers, predominantly due to COVID-19. For
2022 OTIF will remain a focus and will see us target greater than 92%.
1 Constant currency removes the effect of currency movements by re-translating the current year’s performance at the previous year’s exchange rates.
2 Certain financial measures, including adjusted results above, are not defined under IFRS and are alternative performance measures as described on page 131.
3 Change in average standard cost of production assuming no change in product mix.
20 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
Key Performance Indicators
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Key to strategic linkage in this report
Growth
Innovation
Operational
Excellence
Culture
% of revenue spend on R&D and Innovation
% of sales from new products launched in the
previous five years
8.6%
2021
2020
2019
2018
2017
8.6%
9.1%
12.8%
2021
2020
2019
2018
2017
6.3%
5.8%
4.4%
12.8%
19.8%
23.6%
24.6%
23.7%
Definition
Spend on R&D, Innovation and Regulatory Affairs as a % of sales in
the financial year.
Strategic linkage
As a developer of innovative and technologically advanced products
investing resources in this area is critical to fulfilling the strategic goals
of the business.
Progress made in the year
Investment in R&D increased to £9.3 million (2020: £7.9 million),
representing 8.6% of revenues (2020: 9.1%), as progress continued
across key projects throughout the Group.
Definition
This is a measure of the % of sales the Group is generating from
products launched in the prior five years.
Strategic linkage
As a Group focused on innovation with a number of patented products
and technologies, this is an important measure of the success of our
innovation programme, a stated strategic aim.
Progress made in the year
12.8% of 2021 sales were from new products (2020: 19.8%). This
measure temporarily reduced due to the impact of COVID-19, while
new large scale products such as LiquiBand® XL, LiquiBandFIX8™ in
the US and Seal-G® are developed and prepared for launch.
Employee attrition %
Employee Engagement Score %
10%
2021
2020
2019
2018
2017
No data available
7%
10%
10%
12%
76%
2021
2020
2019
2018
76%
78%
48%
41%
2017
No data available
Definition
The % of employees who have left the Group during the year
(gross number of leavers).
Strategic linkage
Low levels of employee turnover are important for the future success
of the business. Low levels of turnover increase employee engagement
and the embedding of the Care, Fair, Dare values. However, an element
of turnover is considered beneficial, to support new ideas and best
practices from outside the Group.
Progress made in the year
The increase in attrition this year, as economies opened up post
COVID-19 was 10% (2020: 7%). This level is considered acceptable and
the business aims to continue to pro-actively work with employees to
retain quality talent.
Definition
Of the employees who responded to the Employee Survey, the % of
employees who had seen positive action from the implementation of
our Care, Fair, Dare culture.
Strategic linkage
How successfully we have embedded our culture. An increasing score
indicates more engaged employees leading to more productivity and
happiness, leading to higher retention.
Progress made in the year
The engagement score in 2021 decreased by 2% to 76% (2020: 78%).
Participation in the survey increased to 69% (2020: 45%), providing
a broader range of employees views. In 2021 we also improved our
Employee Engagement Survey to use Culture Amp software which
allows us to benchmark our engagement with other companies.
Based on the external benchmark our engagement score for neutral
or positive employees is 83%.
Advanced Medical Solutions Group plc Annual Report & Accounts 2021 21
Key Performance Indicators
STRATEGIC REPORT
Operating Review Surgical Business Unit
Surgical
Our exciting R&D
pipeline makes us
confident of delivering
strong growth as well
as providing meaningful
benefits to patients.
Surgical Business Unit
The Surgical Business Unit includes tissue
adhesives, sutures, biosurgical devices and
internal fixation devices marketed under
the AMS brands LiquiBand®, RESORBA®,
LiquiBandFIX8® and Seal-G®.
The recovery of global elective surgery
volumes continued throughout 2021
supporting significant revenue growth
in the year. Revenue increased by 29%
in the period to £64.6 million (2020:
£50.2 million) and by 34% on a constant
currency basis.
Advanced Closure
LiquiBand® is a range of topical skin
adhesives, incorporating medical grade
cyanoacrylate in combination with
purpose-built applicators. These products
are used to close and protect a broad
variety of surgical and traumatic wounds.
Revenues increased to £33.1 million (2020:
£22.8 million), representing strong growth
of 46% on a reported basis and 53% on a
constant currency basis. This was achieved
despite restricted access to hospitals, for
both our direct sales teams and those of
our distribution partners, which impacted
our ability to win new business.
US LiquiBand® sales were particularly
strong, up 60% with record high end
sales volumes, driven by increased
market demand and the replenishment of
inventory at our marketing partners that
had been reduced in 2020. The availability
of LiquiBand® Rapid, our new accelerated
Topical Skin Adhesive technology, and a
refocusing of the marketing strategy also
helped to support the performance of this
product group. AMS expects the 510(k)
approval for LiquiBand®XL to be granted in
the first half of 2022 as it responds to the
FDA’s final questions.
LiquiBand® sales in the UK and Germany
also recovered strongly as underlying
demand for the product returned while
the rollout of LiquiBand® Rapid during
the year continued to strengthen the
brand’s market position. Following
successful pilots with Key Opinion Leaders,
LiquiBand® XL was launched into the UK
in late 2021 and the EU launch will follow
in the first half of 2022. Approvals for
LiquiBand® XL have also recently been
granted in New Zealand and Australia
with launch planning underway in both
markets. Surgeon feedback from this
large wound product continues to be
very positive.
Surgical Business Unit
Advanced Closure
2021
£ million
2020
£ million
Reported
change
Change at
constant
currency
Advanced Closure
Internal Fixation and Sealants
Traditional Closure
Biosurgical Devices
TOTAL
33.1
2.6
14.9
14.0
64.6
22.8
2.1
13.0
12.3
50.2
46%
23%
15%
14%
29%
53%
24%
18%
17%
34%
22 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
2021
£ million
2020
£ million
Reported
change
22.4
6.3
4.5
33.1
13.9
5.0
3.9
22.8
60%
27%
16%
46%
Change at
constant
currency
72%
28%
17%
53%
Americas
UK/Germany
ROW
TOTAL
Operating Review Surgical Business Unit
Leverage of the LiquiBand® brand also
continues in the Rest of the World with
initial sales to the Group’s new Indian
partner in the period and further new
LiquiBand® territories expected to follow
in 2022 and beyond.
Internal Fixation and Sealants
LiquiBandFIX8® is used to fix hernia
meshes placed inside the body with
accurately delivered individual drops
of cyanoacrylate adhesive, instead of
traditional tacks and staples. Revenues
increased by 23% on a reported basis
and 24% on a constant currency basis to
£2.6 million (2020: £2.1 million). Demand
continued to improve, although it remains
heavily suppressed in comparison to
pre-pandemic levels, reflecting the non-
essential nature of the majority of hernia
surgery. We expect to further increase
penetration in existing markets, utilising
the combined experience of our sales
team and, following its acquisition, the
AFS sales team.
AMS continues to prepare the
US Premarket Approval (PMA) for
LiquiBandFIX8® now that recruitment into
the clinical trial is complete. The Group
still anticipates that the PMA filing will
be finalised in the second half of 2022
once the 12-month patient follow-up is
complete and continues to believe that US
approval and launch of this product will be
a significant milestone for the Group.
Seal-G® MIST (laparoscopic surgery) and
Seal-G® (open surgery) are novel, internal,
biological sealants used to seal tissue
during gastrointestinal surgery to reduce
bleeding and leakage of fluid. As previously
announced, AMS obtained CE mark for
both of these products in the first half of
2021. Since then, the first human clinical
trial with the technology has begun with
approximately 25% of patients recruited to
date. With an additional five trial sites now
recruiting patients, results are expected to
be released in H2 2022.
The Group does not anticipate significant
revenues until it can start to market the
clinical trial results as part of the full
European launch. Key Opinion Leader
feedback continues to be very positive and
AMS remains confident that the device is
a good solution to the high unmet patient
need for an effective GI sealant.
Traditional Closure
RESORBA® branded absorbable and
non-absorbable suture ranges are used
in general surgery and a wide range of
surgical specialties including dental and
ophthalmic surgery. Revenue increased
by 15% to £14.9 million and by 18% at
constant currency (2020: £13.0 million).
We continue to make small additions to
our comprehensive range of sutures and
to look for growth opportunities in existing
and new territories.
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Biosurgical Devices
The Biosurgical Devices category
comprises antibiotic-loaded collagen
sponges, collagen membranes and
cones, oxidised cellulose, synthetic bone
substitutes and bio-absorbable screws.
Revenues increased by 14% to £14.0
million (2020: £12.3 million) and by 17%
at constant currency.
Demand for collagen and bone-
substitutes increased during the year
as elective procedures started to
return towards normal levels. Dental
and orthopaedic surgical procedures
continued to be significantly affected and
slower to recover following the restrictions
caused by COVID-19. This is reflected in
the sales of these products.
Antibiotic-loaded collagens, used to locally
deliver antibiotics, remain an important
part of AMS’ biosurgical portfolio. The
company has extended the CE mark
for Gentamycin until 2024 under the
Medical Devices Directive (MDD) while it
progresses the work required for Medical
Device Regulation (MDR) approval.
The Group is working towards its first
collagen approval in the US with 510(k)
submission expected in H1 2023 for a
dental application to support haemostasis
and healing following tooth extraction.
The RESORBA® branded bone substitutes
range was sold into six new EU countries
in 2021 following its initial launch in 2020
with more territories to follow in 2022.
The Group has been assessing approval
options for its newly developed freeze-
dried bone substitute (FDBS), which
can be mixed with fluids and moulded
for optimal placement in orthopaedic
and spine surgery. In response to the
changing regulatory environment in
Europe and the US, AMS has decided to
modify its strategy to pursue wider, more
commercially attractive claims in the long-
term, rather than apply for more limited,
specific applications in the short-term.
Consequently, more development and
regulatory work will be required before
this technology can be commercialised.
Image above:
1. Surgical product range
Advanced Medical Solutions Group plc Annual Report & Accounts 2021 23
STRATEGIC REPORT
Operating Review Woundcare Business Unit
Woundcare
Investment in
developing next-
generation products
and geographical
expansion.
1
Woundcare Business Unit
The Woundcare Business Unit is
comprised of the Group’s multi-product
portfolio of advanced woundcare
dressings sold under its partners’ brands
and the ActivHeal® label, plus a portfolio of
specialist medical bulk materials including
multi-layer woundcare and bio diagnostics
products following the acquisition of
Raleigh Coatings in late 2020.
Global wound treatment volumes
continue to recover towards pre-
pandemic levels in 2021 and helped to
drive growth in the Woundcare Business
Unit. Revenue increased by 20% in the
period to £44.0 million (2020: £36.6
million) and by 23% on a constant
currency basis. A healthy order book is
in place heading into 2022 suggesting
that a level of confidence is returning in
many markets.
Infection Management
The infection management category
comprises advanced woundcare dressings
that incorporate antimicrobials such as
Silver and Polyhexamethylene Biguanide
(PHMB). Revenue reduced by 1% on a
reported basis but increased by 1% on a
constant currency basis to £15.1 million
(2020: £15.3 million).
Sales were impacted by the renegotiation
of a long-standing commercial
agreement for one of the Group’s novel
silver alginates, which resulted in there
being no orders for this product in H1
2021. Sales restarted in H2 2021 but at
a lower level than in previous years. The
new five-year contract agreement is
non-exclusive, allowing AMS to promote
the product directly in most markets and
the Group has already made progress in
gaining new business with this product.
Woundcare Business Unit
Infection Management
Exudate Management
Other Woundcare
TOTAL
2021
£ million
2020
£ million
Reported
change
15.1
21.7
7.2
44.0
15.3
15.4
5.9
36.6
-1%
41%
22%
20%
Change at
constant
currency
1%
43%
28%
23%
24 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
In the first half of 2021, AMS obtained
enhanced anti-microbial 510(k) approval
for its patent-protected Silver High
Performance Dressing. This product is
now being sold via two US partners and
into a number of ActivHeal® territories
whilst discussions continue with other
interested partners.
Good progress has been made in
the development of AMS’ innovative
antimicrobial high gelling product with
anti-biofilm activity. The 510(k) submission
has now been made to the FDA and US
approval and launch is anticipated at the
end of 2022.
The Group’s Silicone PHMB foam
range, which provides high efficacy and
sustained performance, was CE mark
approved in 2020, is now being sold
into the EMEA region and is expected to
launch with a US partner and multiple
APAC distributors in 2022.
Operating Review Woundcare Business Unit
Exudate Management
Exudate Management comprises
advanced woundcare dressings and
gels which do not incorporate any
antimicrobial elements. Revenue
increased by 41% on a reported basis
and 43% on a constant currency basis to
£21.7 million (2020: £15.4 million) which
incorporated £5.5 million of Raleigh sales
(2020: £0.7 million).
Following its acquisition in November
2020, the integration of Raleigh continues
to progress well, including the in-sourcing
of woundcare manufacturing processes
which are expected to come on stream
and save costs in 2022. New commercial
opportunities arising from the acquisition
have also been evaluated and a number
of existing customers have already signed
multi-year contracts with the Group.
AMS made good progress in expanding
the commercialisation of its ActivHeal®
portfolio, having signed multiple
agreements with distributors in APAC and
the Gulf States and were successful with a
tender in the Kingdom of Saudi Arabia.
The Woundcare Business Unit has also
expanded its distribution network in the
period by appointing a distribution partner
in the Republic of Ireland to fulfil contract
awards with the Health Service Executive,
including products within both Infection
Management and Exudate Management.
AMS continues to develop a customer-
specific negative pressure dressing which
requires 510(k) submission by our partner
with submission and launch still planned
for 2022. The Group sees considerable
medium-term potential in the negative
pressure wound treatment space.
AMS has continued to develop the
application of its biosurgical, collagen
technology into a tissue scaffold designed
to treat hard to heal and stalled wounds
such as diabetic foot ulcers and venous
leg ulcers. The 510(k) submission to the
FDA remains on-track for H2 2022 and
a number of commercial partners have
expressed an interest in this technology.
Other Woundcare
Other Woundcare comprises royalties,
fees and woundcare sealants. Revenue
increased by 22% at reported currency and
by 28% at constant currency to £7.2 million
(2020: £5.9 million) due to higher royalties
from Organogenesis.
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Image above:
1. ActivHeal® AquaFibre Extra, part of our woundcare dressing range
Advanced Medical Solutions Group plc Annual Report & Accounts 2021 25
STRATEGIC REPORT
s172 (Stakeholder Engagement)
Engagement
AMS considers its stakeholders as integral to its success and is committed to actively engaging and
collaborating with them throughout the value chain. This engagement with our core stakeholders
ensures that their views inform our business strategy, enabling us to understand their priorities,
and use their feedback to shape our business. Additionally, we summarise below, and reference
throughout this Annual Report, how our Directors fulfil their duties in relation to Section 172 of the
Companies Act 2006 and engage with key stakeholder groups in their decision making processes.
Section 172
The Directors, as required by Section 172
of the Companies Act 2006, must act in
the way they consider, in good faith, would
most likely promote the success of the
company for the benefit of its shareholders.
In so doing, the Directors must have
regards, amongst other matters, to the:
1
2
3
4
5
Likely consequences of any decision
in the long-term.
Interests of the company’s employees.
Need to foster the company’s business
relationships with suppliers, customers
and others.
Impact of the company’s actions on
the community and environment.
Desirability of the company
maintaining a reputation for high
standards of business conduct.
6
Need to act fairly between members
of the company.
Our stakeholders
Listening, engaging and partnering with our stakeholders,
illustrated in the diagram below and further explained on pages 27
to 29, helps us to address our business impacts and improve the
outcomes for those different groups.
nities &
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26 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
s172 (Stakeholder Engagement)
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Patients
Employees
Investors
The patient is at the heart of everything
we do. We develop innovative products
to improve patient outcomes, to minimise
complications and improve patient safety
and comfort.
We are a people-centric, equal
opportunity business which aims to
enable our employees to develop and
thrive whilst maintaining their safety and
supporting their wellbeing.
We give high priority to communicating
effectively with investors, brokers and
analysts on strategy, governance and
financial forecasts.
Engagement activities in 2021
• Worked closely with industry bodies
to keep informed of trends or changes
affecting our patients.
• Seal-G® and LiquiBandFIX8® US
Engagement activities in 2021
• Focused on a COVID-19 safe
workplace for our employees,
customers, suppliers and sub-
contractors.
Pre-Market Approval clinical studies
to enable the commercialisation
of products designed to improve
surgical outcomes.
• Enhanced Environment, Heath and
Safety (EHS) and Environmental, Social
and Governance (ESG) reporting to
the Board.
• Post-market surveillance to garner
• Employee Forums, Works Council
end user feedback.
• Recruitment for clinical studies
to validate products to improve
patient experience.
Outcomes
• Gained real world data on products as
part of the product lifecycle.
• Certification of a number of
new products.
• Endorsement from Tissue Viability
Society on education and training.
and Safety Committees provided
closer engagement with employees
and further embedded Care, Fair,
Dare culture.
• Communication with employees
through intranet, newsletters,
SMT portal, CEO roundtables
and Whistleblowing Policy.
Outcomes
• Updated COVID-19 information
for employees and developed a
health and wellbeing platform for
mental health.
• Significantly improved our safety
performance (AMS All Incident Rate
(AIR) 1.7 (2020: 2.8)).
Engagement activities in 2021
• More than 80 investor or analyst
meetings covering areas including
results, strategy, markets, R&D
pipeline, product approvals,
acquisitions and dividends.
• Consulted with major shareholders on
issues such as Director independence,
tenure, Board refreshment, number
of Board appointments, Directors’
remuneration and ESG.
• Notified of any concerns of retail
shareholders, providing guidance
on drivers for investment.
• AGM allows engagement on
performance and activities.
• Trading updates, full and half-year
announcements, product approvals
and COVID-19 updates informed
shareholders on performance
and progress.
Outcomes
• Board refreshment and succession
plan implemented for the Non-
Executive members following feedback
from shareholders and proxy agencies.
•
Introduced environmental and energy
management systems.
• Development of an ESG framework
which meets shareholder expectations.
• Women in all recruitment selection
•
pools and on all interview panels with
diversity a focus.
• Designated Non-Executive Director
for workforce engagement reviewed
ongoing activities.
•
In 2022 a review of culture is
planned to assess understanding
and perception.
Improved guidance to market on impact
of COVID-19, financial performance,
product approvals and R&D pipeline,
clinical studies, acquisitions and impact
of MDR and Brexit.
•
Increased investment in R&D and
regulatory projects and continued to
look for further acquisitions that meet
our investment criteria.
• Better insight into what our
shareholders expect.
Advanced Medical Solutions Group plc Annual Report & Accounts 2021 27
STRATEGIC REPORT
s172 (Stakeholder Engagement) continued
Clinicians
Partners
Regulators
We work with Clinicians and Key Opinion
Leaders to ensure our products are
effective, easy to use and clinically safe,
and meet regulatory requirements as
swiftly as possible.
Our network of OEM and distribution
partners allow us to meet the clinical
needs of patients that we cannot
reach directly.
We engage with Competent Authorities
and Notified Bodies to operate within
regulatory and legal frameworks and
ensure our products have approval in
key markets.
Engagement activities in 2021
•
Invested in industry-leading training
and education (ActivHeal® Academy)
and other digital platforms to deliver
externally endorsed educational
programmes.
• Expanded subscription database to
inform about our brands and current
activities and developed our tools for
Clinician engagement.
• Developed Clinical Advisory Boards
for guidance and clinical trial
development for Seal-G®.
• Conducted virtual symposia, training
and market surveys and ‘Voice of
Customer’ for key surgical products.
Outcomes
•
Increased loyalty and positive feedback
in the market for ActivHeal® and
increased social media engagement.
• ActivHeal® awards for best website and
finalist for best education campaign.
• Expanded use of clinicians and
advisory bodies to expedite product
approvals.
• Re-education of surgeons on key
products to increase skill levels and
knowledge of products due to lack of
contact in 2020.
Engagement activities in 2021
• Ensured partners have the opportunity
to speak to key employees at any time
regarding any concerns.
Engagement activities in 2021
• Committed to being open and
transparent and work closely
with regulators.
• Worked in partnership with Notified
Bodies to gain further understanding
of the regulatory landscape to ensure
more efficient product approvals,
including monthly meetings, clear
contacts and lines of communication,
and attending workshops.
• Worked with multiple Notified Bodies
on MDR product approvals.
• Utilised external expertise to
strengthen understanding and
engagement with regulators.
Outcomes
• Gained increased understanding of
regulatory requirements, improving
regulatory guidance and service to
partners and clinicians.
•
Improved chance of success on new
product approvals in existing and
new markets.
• Broader understanding of MDR, FDA
requirements and other legislation
affecting the Group.
• Continued to inform Board of key
drivers of regulatory requirements,
which lead to increased investment.
•
Improved chance of success
with expert input to calls with
Notified Bodies.
• Provided education and training
through dedicated websites and
online tools.
• Globalised our market and selling tools
and introduced a Brand Hub.
• Provided value-based incentives and
pricing to create win/win relationships.
• Prepared Best in Class Launch and B2B
Support Materials and initiated audit
and five-year development plans.
• Provided masterclasses for Key
Opinion Leaders to better understand
our products. Participated in industry
clinician groups.
• Aligned our pipeline of new products,
value-added services and customer
support programmes.
Outcomes
• Embraced virtual tools for meetings,
engagement and access to clinical
data, reducing our carbon footprint.
• Following clinical feedback, we
further developed our ‘best in class’
packaging.
• Remote ‘Voice of Customer’ and focus
groups to regularly receive feedback
on products and ideas.
• Leveraged ‘best in class’ LiquiBand®
evaluation support tools for
training to support evaluation and
implementation of products.
• Established clinician/advisory panels
to identify technologies to meet
clinical needs.
28 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
s172 (Stakeholder Engagement) continued
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Communities & Environment
Supply Chain
Our values encourage us to contribute
to our local communities and charitable
causes, reduce our environmental
impact and help to stop climate change.
These are key components of our
ESG framework.
We strengthen our supply chain
resilience through robust supply
agreements, minimising sole suppliers
and a comprehensive supplier audit
programme, monitoring compliance
with our Ethical Sourcing Policy.
Engagement activities in 2021
• Encouraged employees to participate
Engagement activities in 2021
• Adapted how we engaged suppliers
and sub-contractors to de-risk the
supply chain, moving to remote
working and business briefings,
discussing forward ordering, safety
stock levels, customer forecasts
and working to understand their
operational concerns.
• Enhanced sourcing function to
support R&D in project delivery
and de-risking the supply chain.
• Awareness of importance of
complying with agreed payment
terms and requirements to disclose
payment terms.
Outcomes
• Risk mitigation plans resulted in
minimal disruption, continuity of
supply and mutually beneficial
arrangements. Working to increase
safety stocks and providing expertise
in areas such as logistics.
• Closer working relationships with
suppliers and second sourcing
where possible.
• Robust supplier audit schedule to
enhance regulatory compliance and
supply chain resilience.
• AMS payment practices compare
favourably with industry norms.
in local communities through
charitable giving and other activities.
• Allocated matching charity funding to
sites and employees.
• Maintained long-standing relationships
with charities despite COVID-19
impact on fund-raising.
• Sponsored local community events
and sports teams, and teams of
employees and close family members.
• Undertaken environmental initiatives,
including an environmental pledge
programme, and implemented
ISO50001 at selected sites.
• Local community iniatives (beach
cleaning, wild flower planting and site
biodiversity study).
• Reviewed environmental processes
with Environment Agency.
• Customer discussions on
environmental impact and emissions.
Outcomes
• Employees gained a better
understanding of the needs of their
local community and chosen charities.
• Substantially increased focus on
charities and charitable giving.
• Activities by employees personally
to reduce their carbon footprint.
• Positive external feedback from
Environment Agency.
• Key customers had positive view of
our environmental responsibility.
Advanced Medical Solutions Group plc Annual Report & Accounts 2021 29
STRATEGIC REPORT
s172 (Stakeholder Engagement) continued
Principal decisions
The Board considered the interests of and the impact on all
stakeholders when making a number of key decisions during
the year, as demonstrated by the following examples.
PRINCIPAL DECISION 1
Board refreshment and appointment
of new Non-Executive Directors
The Board approved the appointment
of Grahame Cook in February 2021
and Douglas Le Fort in August 2021.
The Board placed great importance
on stakeholder interests during the
process. The Nomination Committee
undertook an extensive search, engaging
with or having regard to the following
stakeholder groups:
Stakeholder considerations
• Executive recruitment consultancy
– a search firm who had delivered
good quality candidates in the past
was retained with a clear brief as to
the backgrounds sought in the new
Non-Executive Directors (Grahame
Cook – to become new Chair of
the Audit Committee, Douglas Le
Fort – provide commercial expertise).
The agency initially delivered a list of
candidates for consideration by the
Nomination Committee, and advised
the Committee as it proceeded
through the selection process.
• Key Employees – an agreed shortlist
of prospective candidates were
then interviewed by the members
of the Board.
• Shareholders – preferred
candidates were reviewed by AMS’
Nominated Advisor, to consider the
appropriateness of appointment,
prior to Board approval. In reaching
its decision to appoint Grahame
Cook and Douglas Le Fort, the Board
considered carefully their backgrounds
and experience (see page 53 for bios).
The impact on the long-term
sustainable success of the Group
The Board appointments will support our
high standards of corporate governance
and compliance with the 2018 UK
Corporate Governance Code. They
will assist the Board move into the next
phase of development, helping to focus
on supporting AMS’s growth strategy,
providing strategic advice as the business
builds on its position in the UK and
internationally and drive significant value
creation. They will be extremely valuable
additions to our Board as AMS looks to
grow and meet future challenges.
Outcome
Our Board has returned to what we
consider to be the appropriate size and
provides the necessary blend of skills,
experience and tenure, both from an
internal perspective and the perspective
of our investors, equipping us to grow
and meet future challenges. The next
phase of Board refreshment will focus
on diversifying the Board to meet the
expectations of the market and support
the Group’s long-term goals.
Penny Freer will retire from the Board at
the 2022 AGM and our commitment to
equality and diversity will be a key part of
the recruitment process.
PRINCIPAL DECISION 2
Development of ESG Framework
and establishing ESG Steering
Committee
In April 2021 the Board approved the
publication of an ESG Report in the
2020 Annual Report and committed to
developing an ESG Framework. We have
developed this framework internally after
engagement with multiple stakeholder
groups, including shareholders,
employees, customers and our internal
auditors. This included independent
research and interviews with internal and
external participants. This foundation,
framework, approach and our progress is
detailed on pages 32 to 43 of this Report.
Stakeholder considerations
•
Investors – significant shareholders
were offered the opportunity to
engage directly on ESG and a number
of calls were held, with their views
reflected in the work carried out in
2021 on our framework and by the
ESG Steering Committee.
• Employees – we engaged the views
of our employees and established an
ESG Steering Committee to reflect the
views from across the Group, both by
site and by function.
• Customers – we have received
significantly increasing ESG
expectations from across our
customer base, both from the public
sector (NHS) and large customers
(predominantly US based). Their
requirements, views and best practice
proposals are reflected in the detail of
the framework.
• Communities and Environment –
the work already being carried out
in our communities was reviewed
and the need to further engage was
highlighted by charity matching
funding being made available
to employees at each site. Our
commitment to reducing our carbon
footprint was endorsed by the decision
to become operationally carbon
neutral in 2022 and developing a
‘Pathway to Net Zero’.
30 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
s172 (Stakeholder Engagement) continued
The impact on the long-term
sustainable success of the Group
The Board believe the ESG Framework
provides a good building block to further
develop our targets in relation to ESG.
The ever-increasing external expectations
from customers are being met, allowing
us to maintain current relationships. By
being proactive in many areas we believe
we will continue to be a company that
can be invested in by any private individual
or investment fund and project a positive
view of the Group. Our work and goals in
this area will need to be further developed
over the next year to ensure we are
meeting our responsibilities as a good
corporate citizen and are in line with
market and best practice.
Outcome
The development of an ESG Framework
which sets out our strategy and plans for
ESG. We believe our activities in this area
meet the expectations of our investors
and other stakeholders.
PRINCIPAL DECISION 3
Engaging with significant
shareholders on Directors’
Remuneration
In 2021 we engaged directly with
significant shareholders on proposed
changes to Directors’ remuneration
and updating our Remuneration Policy,
outlining our plans and offering the
chance to comment on these changes
through a meeting with our Remuneration
Committee Chair. This engagement is
invaluable to AMS and the majority of
our significant shareholders responded,
with a number requesting changes to the
initial proposals. The Board considered
the feedback received, both positive and
negative, when finalising the changes
which were implemented.
Outcome
A Remuneration Policy supported by
significant investors that ensures we are
able to attract, motivate and retain the
talent we need to deliver on our strategy.
Details of these changes is outlined in our
Remuneration Report on pages 69 to 80.
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Non-Financial Reporting Statement
This Annual Report contains the information required to comply with the Companies,
Partnerships and Groups (and Non-Financial Reporting) Regulations 2016, as
contained in sections 414CA and 414CB of the Companies Act 2006. The table
below provides key references to information that, taken together, comprises the
Non-Financial Reporting Statement for 2021.
Reporting
requirement
Group Policies that
guide our approach
Information and risk management,
with page references
Environmental
matters
– Environmental Policy
– Ethical Sourcing Policy
Reporting environmental impact/
SECR disclosures – pages 42 and 43
– ESG Policy
Our Business Model –
pages 2 and 3
Risk Management –
pages 47 to 51
Employees and
social matters
– Equality, Diversity
and Inclusion Policy
Reporting on our environmental
impact – pages 42 and 43
– Community Support
– Health and Safety Policy
– Environmental Policy
– Ethical Sourcing Policy
Our Business Model –
pages 2 and 3
Risk Management –
pages 47 to 51
Stakeholder Engagement –
pages 26 to 31
Our Strategy – pages 10 to 19
Respect for
human rights
– Anti-Slavery Policy
– Ethical Sourcing Policy
Corporate Governance Report –
pages 56 to 61
– Modern Slavery Act Policy
Anti-corruption
and anti-bribery
matters
– Anti-Bribery Policy
– Gift Policy
– Sanctions Policy
– Whistleblowing Policy
– Ethical Sourcing Policy
Description of the business model
Description of the principal risks in relation to the
above matters, including business relationships,
products and services likely to affect those areas
of risk, and how we manage the risks
Audit Committee Report –
pages 65 to 68
Risk Management –
pages 47 to 51
Our Business Model –
pages 2 and 3
Risk Management –
pages 47 to 51
Non-financial key performance indicators
Key Performance Indicators –
pages 20 and 21
Advanced Medical Solutions Group plc Annual Report & Accounts 2021 31
STRATEGIC REPORT
Environmental, Social and Governance
E
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POLICY
PLANET
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PRODUCT
PEOPLE
SOCIA L
In 2021 we committed
to developing an
Environmental, Social
and Governance (ESG)
Framework as a key part
of our ESG Journey.
Minimising
our impact
on the environment
A
M
S
dvancing sustainability
inimising environmental impact
ocially responsible
Our contribution to the United Nations Sustainable
Development Goals
These areas where our business can have the most meaningful impact:
Our ESG Framework is based on our
4 Ps (Planet, People, Product, Policy) and
focuses on key commitments that are
meaningful and aligned to our Mission
and the United Nations Sustainable
Development Goals (SDGs). Our approach
to ESG is a core part of our mission and
strategy and is supported by Increased
resources and improved organisational
effectiveness.
For more information see page 41
32 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
Environmental, Social and Governance
ESG Framework
ENVIRONMENT
SOCIAL
GOVERNANCE
PLANET
PEOPLE
PRODUCT
POLICY
Minimising
our impact
Principles
• Minimise any negative
impact on the environment.
• Uphold the highest
standards of corporate
responsibility.
Stakeholder engagement
• Communities and
Environment.
Supply Chain.
Investors.
•
•
Commitments
• Minimise negative
environmental impact,
combat climate change.
• Manage energy use more
efficiently and increase
renewable and sustainable
resources.
• Reduce waste, protect
water, improve recycling,
re-use materials.
Expand scope of ISO
Certification.
Promote Environmental
Pledge Scheme.
•
•
ESG metrics
•
Pathway to reduce
emissions, plan for scope 3.
• CO2e emissions per £k sales
(KG).
• Gas usage, water, electricity
•
(total, by person).
• Waste (recycle, landfill,
incinerate).
UN Sustainable Development Goals
• Having a positive impact
on the local communities
in which we operate.
• Offer our employees a
safe, supportive working
environment with a
positive culture.
• Operate in an ethical and
responsible manner.
• Contribute to society by
developing products to
improve patient outcomes.
• Uphold the highest
standards of corporate
governance.
• Build and develop an ESG
reporting framework with
meaningful targets.
•
•
Patients, Partners,
Clinicians.
Employees.
• Regulators.
•
Supply Chain.
•
•
•
Investors.
Partners.
Employees.
•
•
• Attract, retain and develop
our talent to support
future growth.
Promote equality, diversity
and inclusion.
Support employees on
health, safety and all forms
of wellbeing, including EAP
Programme and mental
wellness app.
Provide financial support
for employees’ charity
work, chosen charities and
community volunteering.
•
• Charitable donations.
•
•
YOY Health & Safety score.
Employee Engagement
score.
Training and
development spend.
• % training in EDI/
Unconscious bias.
• Uphold ethical standards
across our value chain.
• Work with patients,
partners and clinicians to
identify unmet needs.
Improve transition of early
stage R&D, reduce waste.
•
• Manufacture products
focused on quality,
customer safety, welfare.
Transition to recyclable
packaging, apply
regulations and
certification.
•
• Uphold external standards
to protect human rights.
Zero tolerance towards
bribery, corruption
and fraud.
•
• Robust data governance
•
•
and compliance.
Ensure equal pay
regardless of gender,
ethnicity or disability.
Enrol in UN Global
Compact, embed Ten
Principles across business.
• Number of new products
• Compliance with UN
released per year.
• % new products released
with recyclable packaging.
Product safety rates
in market.
•
• % suppliers signed up to
Supplier Charter.
Global Compact principles.
• Reported cases of bribery,
corruption or fraud.
• Whistleblowing reports.
Advanced Medical Solutions Group plc Annual Report & Accounts 2021 33
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Environmental, Social and Governance continued
We have further developed our processes and plans for issues that are
meaningful to us, with particular focus on our metrics, monitoring,
reporting and management of performance.
In addition to our ESG framework in 2021, we have:
Post period end in Q1 2022 we:
• Expanded data capture and improved
management systems and processes
to ensure the continued improvement
and accuracy of data.
• Formalised our approach and strong
governance of ESG issues with
the formation of an ESG Steering
Committee and expanded the
role of our Group H&S Manager
to encompass ESG.
•
Integrated ESG factors into key
employees personal objectives, key
results and executive remuneration.
•
Increased reporting scope and
transparency, including reporting
in reference to established global
reporting frameworks such as the
UN SDGs within this Report.
• Commenced a review of Task Force
of the Climate-related Financial
Disclosure (TCFD) requirements
to identify climate risk and aligned
opportunities.
• Further increased our use of
• Engaged our internal auditor RSM to
renewable energy.
•
Implemented pro-active approach to
COVID-19, remaining fully operational.
• Rolled out real time Environmental,
Health and Safety IEHS) reporting,
EHS maturity plan and significantly
reduced health and safety incidents.
conduct an ESG Maturity Assessment,
the output of which is reflected in
this Report.
AMS is an environmentally conscious organisation
which acknowledges the impact our operations and
services may have on the environment.
Looking forward
We are accelerating progress of our ESG roadmap, and we are proud to have achieved so much already in 2021. While we
celebrate our achievements, we recognise that this is a journey and there is always more that can be done, and more to aim
for. A selection of our focus areas for 2022 include:
On the following pages we describe
our approach to our 4 Ps, key
highlights, metrics, and next steps
for each of our key issues, as outlined
in our ESG Framework.
More information and detail is also on our
Website (www.admedsol.com) and queries
can be directed to esg@admedsol.com
• Extensive Board discussion led
• Continue to build performance
to a decision to work with an
external consultant to implement a
‘Pathway to Net Zero’ (see page 42
for further details).
• Further engage our stakeholders, in
particular Investors and Employees,
to further develop the materiality
work carried out and refine our
ESG Framework.
• Continue to assess and meet
current and upcoming trends,
including adapting our ESG
Framework to consider the Global
Reporting Initiative (GRI) and TCFD
requirements and SDGs and reflect
best practice.
• Build on robust governance
processes.
reporting and monitoring systems
with improved data.
• Feasibility studies of energy
saving and environmentally
beneficial projects.
• Build on our role in the medical
device market through growth in
provision of our quality products
to the market, supported by the
sustainability goals and external
accreditation.
• Adopt UN Global Compact
and the Ten Principles.
• Our Roadmap will outline the
pathway and milestones in
subsequent annual reports.
34 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
Environmental, Social and Governance continued
PLANET
We are committed to minimising any
negative impact on the environment
and upholding the highest standards
of corporate responsibility.
EN
VIR
O
N
M
E
N
T
PLANET
Emissions per £k sales
27.45CO2e
net scope 1 (direct) and scope 2 (indirect) emissions intensity1
(2020: 20.72 CO2e, 2019 25.14 CO2e emissions per £k sales)
2,838,419 kg CO2e1
scope 1 and 2 emissions (2020:
1,876,157 CO2e, 2019: 2,717,061 CO2e)
51%
renewable/low carbon energy mix
(including nuclear) (2020: 42%)
53 m3/employee
total water usage (2020: 42m³)
2.2%
waste to landfill (2020: No data)
1.25 tons/employee
total waste (2020: 0.76 tons/employee)
1
2021 emissions influenced by acquisition of Raleigh (36% of total gas usage in 2021 – gas accounts for 52% of Group scope 1 emissions). Raleigh scope 1 and 2 emissions
were 423,398 CO2e (15% of Group), £250k invested on obsolete HVAC systems that created a 200% increase in f-gas losses in 2021. The comparator year (2020) was heavily
impacted by COVID-19, resulting in lower utilities water and waste metrics.
Highlights
Continued development of energy and
climate change strategy and action plans.
Board decisions to work with external
consultant on a Pathway to Net Zero.
Commenced roll out of more in-depth
recycling processes.
Improvements made to data management
and collection.
Reduced business car mileage by improved
communication and processes.
First electric car charger purchased.
Review of potential future impact of TCFD
commenced (Q1 2022).
Invested in solvent recovery to reduce risk
of environmental spillage.
Launched Environmental Pledge Scheme
across the Group to encourage employees to
reduce their own carbon footprint.
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Looking forward
•
Improve and expand data collection and analysis to enable
targeted improvements.
• Refine internal targets and embed climate change risk, including
risk register (renewable energy target: 70% by 2025).
•
•
Focus on waste management (recycle, landfill, incineration).
Further embed role of ‘ESG Champions’ for local and global
awareness, initiatives and support.
• Review of renewable energy and other activities to align with
mission, strategy and values.
•
•
Expand implementation of ISO 14001 and ISO 50001
certification across the Group.
Further promote Environmental Pledge Scheme, measure
impact and communicate key ideas.
Advanced Medical Solutions Group plc Annual Report & Accounts 2021 35
STRATEGIC REPORT
Environmental, Social and Governance continued
PEOPLE
We are committed to having a positive
impact on the local communities
in which we operate and offering our
employees a safe, supportive working
environment with a positive culture.
76%
of employees were neutral or positive about AMS living their Care, Fair,
Dare values in the engagement survey (2020: 78%)
PEOPLE
S
O
C
IA
L
69%
employee engagement
survey response rate
(2020: 45%)
83%
positive or neutral
responses based on the
external benchmark of our
Engagement Score¹
64%
training in Equality, Diversity
and Inclusion/unconscious
bias (employees with email,
35% of all employees)
1
As defined by the Culture Amp software.
1
reported incident of
discrimination (2020: 0)
20%
invested in the Employee
Share Plan (2020: 21%)
2.1
H&S (AMS Accident Incident
Rate) (2020: 2.8)
0
Lost Time Incidents (LTIs)
(2020: 5)
Highlights
New approach to charitable giving and donations, aligned to our mission,
locations and activities.
£30k donated to charitable and community activities through product and
monetary donations (2020: £16k).
Strategic partnership plan with charities working in areas aligned with our
values and maximise impact.
Employee gender diversity
17%
50%
54%
83%
50%
46%
Board
members
Senior
Management Team
All
employees
MALE
FEMALE
Highlights
Looking forward
•
EDI/unconscious bias training linked to launch of Altogether AMS, our
Diversity and Inclusion Programme, and launch of EDI Committee.
• Work to embed EDI across the Group, in particular
in recruitment.
• Redesigned Executive bonus scheme to focus more on personal
• Continuous review of our benefits proposition.
objectives and within that ESG progress.
• Continued improvement and formalisation of processes including
employee inductions, training requirement assessment and role clarity.
•
Improved EHS governance, data capture processes and internal
H&S communications.
• Continued embedding of health and safety culture.
•
Extensive COVID-19 controls to maintain safe working environments
for our staff.
•
•
•
•
Increase training and development budget to drive
employee satisfaction and develop key staff.
Promote expanded Employee Assistance Programme
(EAP) and actions to improve access to support for
mental wellbeing.
Increase frequency of company-wide EHS events
including annual EHS day and site ‘EHS focus days’.
Focus on building approach to charitable giving and
engagement by development of communities strategy.
36 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
Environmental, Social and Governance continued
ESG Principles
2
Minimise any
negative impact on
the environment
4
Offer our employees
a safe, supportive
working environment
with a positive
culture
5
3
Have a positive
impact on the local
communities in which
we operate
Contribute to society
by developing
products to improve
patient outcomes
6
Uphold the highest
standards of corporate
governance and
responsibility
8
Ensure that ESG is
at the heart of our
business
7
Build and develop
an ESG reporting
framework with
meaningful targets
1
Operate in an ethical
and responsible
manner
CASE STUDY
Reducing our
environmental impact
In 2021 our Plymouth site undertook a project looking at
energy consumption which resulted in the installation of
494 photovoltaic solar panels on the roof of the building
to provide a substantial renewable source of energy
to the site. This was a key step in becoming a more
sustainable business and the panels now provide 19%
of site electricity per year, the equivalent carbon saving
in excess of 1,900 trees per annum, and supporting
the local economy as the project was developed and
planned in conjunction with a local provider.
The site has now entered the next phase and received
planning permission to create capacity for additional
volumes for Seal-G®, LiquiBandFIX8®, LiquiBand
XL® volumes and further R&D capability. ESG was
at the heart of the project. The site went through
an extensive biodiversity survey; material selection
reflected environmental requirements, and solar
panels were part of the structural design. The internal
specifications also reflect the requirements of our ESG
and sustainability goals.
68.7
MWh generated
19%
of the site’s
electricity
Find out more on our website www.admedsol.com
Advanced Medical Solutions Group plc Annual Report & Accounts 2021 37
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Environmental, Social and Governance continued
PRODUCT
We are committed to contributing to society by
developing products to improve patient outcomes.
PRODUCT
CIAL
O
S
£9.3m
dedicated investment in R&D
2020: £7.9m
8.6%
of revenue spend on R&D and innovation
(2020: 9.1%)
3
new products released in 2021
(2020: 3)
94%
of key1 materials suppliers met with,
visited and/or audited in the past year
1 Ranked critical, crucial or major.
0
deaths caused in the market
by AMS products (2020: 0)
$10.6 billion
potential total annual achievable market
estimation (see pages 8 and 9 for more
information)
Highlights
Significant progress in key R&D projects to
meet unmet patient needs (LiquiBandFIX8®
PMA for distribution in the US and Seal-G®
and Seal-G® MIST – see page 6 for
further details).
Further development of strategic approach
to technology and innovation aligned to
business growth plans.
Successful supply chain management
and contingency planning throughout
coronavirus pandemic.
Assessed plans to implement strict standards of
sustainable sourcing.
Group-wide review of packaging and
statutory packaging requirements.
Looking forward
•
•
Further develop collaboration strategies with academia and
research institutes.
Increasing focus on process efficiency and product
quality innovation.
• Continued investigation and assessment of alternative raw
material supplies to further strengthen security of supply and
supply chain resilience.
• Review considerations for health care economics to
consider the best ways to distribute product in an ethical way
to meet ethical needs.
• Continued focus on responsible and sustainable sourcing
of raw materials.
38 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
Environmental, Social and Governance continued
POLICY
We are committed to operating in an ethical
and responsible manner, upholding the highest
standards of corporate governance and to building
and developing an ESG reporting framework with
meaningful targets.
E
C
N
A
POLICY
VER N
O
G
0 fines
and non-monetary sanctions from non-compliance with environmental
laws and/or regulations (2020: 0)
First ESG Steering Committee
Meeting held (Three as at Q1 2022)
First formal annual ESG
reporting initiated
0 incidents
of bribery, corruption or fraud (2020:
0 incidents)
0
whistleblowing reports (2020: 0)
£0
spend on political campaigns, lobbying
or think tanks (2020: £0)
0
reported incidents of human rights
violations in our supply chain (2020: 0)
Highlights
Continued adherence to the UK Corporate
Governance Code (see pages 56 to 61).
Appointment to the Board of Grahame
Cook and Douglas Le Fort as Non-Executive
Directors.
Updated and revised Annual Compliance
training on data protection, modern slavery
and the policies listed on the right of this page.
ESG Steering Committee formation
complete; development of robust ESG data
collection and management processes.
Explicit establishment of ESG (including
climate risk) in Risk Register.
ISO 50001 and ISO 14001 action plan
commenced.
Review and refresh of policies:
i) Anti-Bribery, Anti-Money Laundering, Anti-
Facilitation of Tax Evasion, Competition Law.
ii) Whistleblowing.
iii) Market Abuse, Gifts and Hospitality.
iv) Health and Safety, and Environmental and
Energy policies.
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Looking forward
•
•
Formally sign up to UN Global Compact (see page 40).
Sustainability and ESG related policy development.
• Assessment and progress of ISO 50001 and 14001 standards
implementation and expansion to other sites.
• Assessment of current processes and performance reporting to
external, best practice benchmarks.
• Re-launch of updated Compliance training.
• Development of a formal Code of Conduct for all employees.
• Continued integration of acquisitions to ensure all policies are
adopted and embedded.
Advanced Medical Solutions Group plc Annual Report & Accounts 2021 39
STRATEGIC REPORT
Environmental, Social and Governance continued
Established an ESG Steering Committee
Topics reviewed by the ESG Steering Committee
EDI training
Employee engagement
Mental wellbeing
Packaging review
Waste energy management
Expanded EAP Programme
Supplier charter
Training and development
Protect Human Rights
Bribery and corruption
New products for unmet needs
SDGs
ESG Inputs
ESG Outputs
Stakeholder interests
EDI (Committee, Altogether AMS)
ESG Principles
Board oversight
ESG Framework
Right thing to do
ESG Champions across sites
ESG Steering
Committee
ESG metrics
Environmental Pledge Scheme
Charity and community work
External Accreditation
COMMITMENT
TO IMPLEMENT A
‘PATHWAY TO NET ZERO’
T I - C O R R U P T ION
10
N
A
1
H
U
M
A
N R
I
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Our commitment to
ESG is underpinned by
our decision to adopt
the UN Global Compact
Ten Principles.
E
N
V
I
R
O
N
M
E
N
T
8
9
7
H
T
S
2
3
4
D A R DS
N
6
5
A
T
R S
L A B O U
40 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
Principles 1 and 2 – Human Rights
Support and protect human rights
and avoid abuses
Principles 3 to 6 – Labour Standards
Uphold freedom of association
and right to collective bargaining,
eliminate forced, compulsory and
child labour and discrimination
Principles 7 to 9 – Environment
Take action on environmental
challenge, promote environmental
responsibility and encourage
environmentally-friendly technologies
Principle 10 – Anti-Corruption
Work against all forms of corruption
Environmental, Social and Governance continued
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UN Sustainability Development Goals
Selection of an appropriate reporting framework
Following a review of recognised external reporting frameworks, we concluded that
one of the most relevant primary reference frameworks for AMS was the United Nations
Sustainable Development Goals (UN SDGs), the 17 goals which were adopted by all UN
Member States in 2015, as part of the 2030 Agenda for Sustainable Development, which
sets out a 15-year plan to achieve the Goals.
The SDGs which we consider to be most relevant to AMS are:
UN Goal
How AMS contributes
Ensure healthy lives and
promote wellbeing for
all at all ages
Ensure gender equality
and empower all women
and girls
AMS supply innovative tissue-healing
technologies which ensure the best clinical
outcome for the patient and improve the
patient experience. Both patient and clinician
experience are focus areas. Mental wellbeing is
a focus with increased levels of flexible working
and the launch of an expanded Employee
Assistance Programme in 2022.
AMS is committed during recruitment,
promotion, and other selection processes to
ensuring equal opportunities for all, irrespective
of gender. Our Equality, Diversity and Inclusion
programme, Altogether AMS, will promote
gender equality and a culture of inclusion.
Ensure inclusive and
equitable quality
education and promote
lifelong learning
opportunities for all
AMS works closely with clinicians and
partners, investing in industry-leading training
and education, using a variety of digital
platforms to deliver externally endorsed
educational programmes.
Promote sustained,
inclusive and sustainable
economic growth, full and
productive employment
and decent work for all
AMS employs more than 700 people working
together to deliver our mission, vision and long-
term sustainable growth. AMS recognises that
ensuring employees are engaged, skilled and
motivated is critical for successful delivery of
strategy. We are committed to paying the living
wage and to the training and development of
our employees in a safe working environment.
Ensure sustainable
consumption and
production patterns
Take urgent action to
combat climate change
and its impacts
Through our quality management system and
supply chain management activities, AMS aims
to ensure that all its products meet the highest
standards of quality, safety and efficacy, meeting
audit requirements and adhering to policies on
anti-bribery, anti-slavery and ethical sourcing.
AMS is committed to taking action against
climate change and keeping the global average
temperature increase below 1.5C. We are
focused on reducing carbon emissions,
increasing the proportion of renewable
sources in our energy mix, reducing waste and
embedding climate change risk. Our investment
in a ‘Pathway to Net Zero’ will drive further
progress in the short to medium term.
Other key ESG activities
Modern Slavery Act
Prior to the introduction of the legislation,
we implemented an Ethical Sourcing
Policy and the requirements of the Modern
Slavery Act 2015 build on that policy.
During 2021, we took the following key
steps to implement the requirements of
the Modern Slavery Act 2015:
• Group-wide communication of the
Anti-Slavery and Human Trafficking
Policy through compliance training.
• Reinforcement of existing policies
covering ethical business practices and
legal compliance.
• Contractual commitments from supply
chain partners to act in accordance with
our Ethical Sourcing Policy.
• Routine audits of suppliers include an
assessment of compliance.
• Continuing liaison with suppliers,
contractors and business partners
to establish their commitment to
the eradication of slavery and
human trafficking.
• Ensured Anti-Slavery, Human Trafficking
and Forced Labour Policies are a focus
for the ESG strategy.
The full compliance statement can
be found on the company website
www.admedsol.com.
Gender Pay Gap Reporting –
Ensuring Opportunities for All
AMS believes in being an inclusive and
diverse employer, where individuals
are provided opportunities to develop
and reach their full potential. We
remain confident that employees are
paid equally for doing equivalent jobs
across the business, as well as having
equal opportunities for development
and advancement.
Our latest report under the Gender
Pay Gap Regulations is available on the
company website www.admedsol.com
Advanced Medical Solutions Group plc Annual Report & Accounts 2021 41
STRATEGIC REPORT
Environmental, Social and Governance continued
Becoming a more sustainable business.
Environmental Review of 2021
We are required to comply with the Companies (Directors’ Report)
and Limited Liability Partnerships (Energy & Carbon Report)
Regulations, 2018, this covers Stream lined Energy and Carbon
Reporting (SECR). In 2019, we measured our environmental
impact in line with the SECR requirements to develop our base line
results. These baseline results determine our ultimate performance
from our base year figures to our most current reporting period.
Our 2020 report showed improvements through reduction
in overall Carbon Dioxide equivalent (CO2e) emissions to the
atmosphere in both of our intensity ratios and helped to shape
our objectives for 2021. Our 2021 report now includes Raleigh
Coatings which was acquired at the end of 2020. Our high-level
findings are presented below.
Environmental Impact
In 2021 AMS emitted 2,981 TCO2e into the atmosphere, an
increase on both 2019 (2,797 TCO2e) and 2020 (1,899 TCO2e).
This has been impacted by the growth of the business leading
to more sites and higher levels of production, including the
acquisitions of Raleigh and Biomatlante.
Total Scope 1,2 & 3 (TCO2e)
20212
20201
2019
2,981.22
1,899.00
2,797.16
1 Raleigh included for first time in 2021.
2 COVID-19 impacted year.
Environmental Development
e
2
O
C
T
3,500
3,000
2,500
2,000
1,500
1,000
500
0
In 2021 we committed to investing time and resources into
becoming both more sustainable and more carbon efficient.
2021 Targets
Total AMS Emissions per year (T CO2e)
20211
20202
2019
We use our Environmental Policy to guide decisions and our
Board are committed to our environmental plans and objectives.
As part of our commitments outlined on page 33 we implemented
the International Standards (ISO) for Energy and Environmental
Management (ISO 14001 & ISO 50001) and received a positive
report at stage 1, allowing us to undertake final certification
audits H1 2022.
No breaches of environmental
permits or consents
Achieved
Policy adoption (Environmental/
Energy Management)
Achieved
Endorsed at Board level
Implementation of ISO 14001 &
ISO 50001 across the Group
Achieved
See left
ESG Framework
Installation of Solar panels at
AMS Plymouth
Launch of Environmental
Pledge programme
Achieved
Outlined on page 33
Achieved
Outlined on page 37
Partially achieved
Launched in conjunction with the
ESG Champions in Q1 2022
Future development
In line with our ESG framework and commitment to reduce our
environmental burden, in 2022 AMS will develop our approach to
sustainability by:
• Set site-based targets to support our ambitions and promote
how AMS can help and play a part in keeping global warming
potential under the Science-Based Target of 1.5C
• Work with an external consultant to review where we can
reduce our Scope 1 and 2 emissions and assess/scope our
Scope 3 emissions, both up and down the supply chain.
• Establish a process to move towards Net Zero via the
feasibility assessment outlined above and report to the
Board on resource required to drive AMS’
long-term sustainability.
During 2021 we received a significant number of requests from
our stakeholders for environmental and ESG related data. We
spent a lot of time reviewing progress on our ESG journey and
how our stakeholders perceive us. In 2022 we will build on this
and undertake activities that support our projects, focusing on
reducing our emissions, minimising use of natural resources
and reducing risks to biodiversity and habitats, including
resource scarcity.
42 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
Environmental, Social and Governance continued
Our reporting
Our emissions reporting represents all core business operations
within scope of our Consolidated Financial Statements. Primary
data from energy suppliers has been used wherever possible.
Following the Companies (Directors’ Report) and Limited Liability
Partnerships (Energy & Carbon Report) Regulations, 2018 and to
meet out SECR reporting requirements, we report within AMS’
report the following recognised scopes.
These scopes are listed within ISO 14069:2013, which describes
the principles, concepts and methods relating to the quantification
and reporting of direct and indirect greenhouse gas (GHG)
emissions for an organisation.
Scope 1 – All Direct Emissions from the activities of an
organisation or under their control, including fuel combustion on
site such as gas boilers, fleet vehicles and air-conditioning leaks.
Scope 2 – Indirect Emissions from electricity purchased and used
by the organisation. Emissions created during the production of
the energy eventually used by the organisation.
Scope 3 – All Other Emissions from activities of the organisation,
occurring from sources that they do not own or control.
Our calculations are based on records we hold and use location-
based emissions in compliance with the factors published by BEIS/
DEFRA from June 2020 and June 2021. We report all our Scope
1 and Scope 2 emissions. In 2019 we also committed to start
reporting on some elements of Scope 3.
The table below covers the total emissions from AMS activities for
all locations in 2021, it also offers a comparison to both 2020 and
our base year data 2019.
Emissions type/scope
Total Scope 1 (kg CO2e)
Natural gas (kg CO2e)
Yearly comparison (kg CO2e)
20211
20202
2019
Commentary
1,726,938
565,517
1,394,419
899,415
104,794
465,928
Gas oil (kg CO2e)
145,425
143,456
234,813
AMS Company cars (kg CO2e)
248,891
172,504
406,308
F-gas losses (kg CO2e)
433,207
144,763
287,370
Total Scope 2 (kg CO2e)
Location based electricity (kg CO2e)
1,111,481
1,310,640
1,322,642
1,111,481
1,310,640
1,322,642
Total Scope 3 (kg CO2e)
Electricity, transmission and distribution loss
(kg CO2e)
Water in (kg CO2e)
142,798
22,838
80,094
97,136
N/A
N/A
4,501
10,799
9,998
Water processed for reuse/trade effluent
(kg CO2e) (Winsford only)
Private business miles (kg CO2e)
2,280
N/A
19,751
N/A
N/A
N/A
Waste processing, all types (kg CO2e)
19,130
12,039
70,096
Total Scope 1, 2 & 3 (kg CO2e)
Intensity measure – COGS (£K) (kg CO2e)
Intensity measure – Eaches (kg CO2e)
Intensity measure – Percentage of waste
to landfill (% T)
2,981,217
1,898,995
2,797,155
27.45
0.03
2.2
22.23
0.02
N/A
25.14
0.04
N/A
Intensity measure – Renewable/low carbon
energy mix (including nuclear)
51%
42%
N/A
Renewable energy mix (excluding nuclear)
30%
35%
N/A
1 Raleigh included for first time in 2021.
2 COVID-19 impacted year.
Gas emissions based on usage in all but one
geographical location.
Emissions through use of oil powered heating
and supply system in one AMS location.
Emissions generated from AMS owned vehicles,
this is combined petrol, diesel and hybrid emissions.
Emissions captured through F-gas losses across
AMS systems.
Electricity emissions based on use in each
geographical location.
Not captured before 2021 covers loses within
network and usage.
Water delivered to AMS locations for all types of use
ranging from manufacturing processes to sanitary use.
Not captured before 2021, covering treatment of water
used across our locations.
Not captured before 2021, covers business miles
completed in privately owned vehicles, based on
the definition of a medium sized car.
Emissions generated through waste processing based
on types of waste, both recycled and non-recyclable.
kg CO2e emissions per £ of sales.
kg CO2e emissions per unit (eaches) produced.
Percentage of waste that cannot be recycled,
further processed but has to go to landfill.
Percentage of electricity supplied to locations
from renewable sources (including nuclear).
Advanced Medical Solutions Group plc Annual Report & Accounts 2021 43
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STRATEGIC REPORT
Financial Review
Recovery of volumes driving
increased profitability and cash
generation despite R&D investment
Adjusted1 profit before tax
£25.6m
+92%
Net operating cash flow
£31.0m
+44%
Eddie Johnson, Chief Financial Officer
Summary
The Group delivered record sales of £108.6 million supported by
commercial success, despite the ongoing impact of COVID-19 on
elective surgery, wound treatment volumes and hospital access.
In comparison to 2019, this included a positive net revenue impact
of £6 million from acquisitions and foreign exchange movements.
Gross margin improved to 56.2% (2020: 53.0%) as a result of
higher throughput at our manufacturing facilities reducing the
cost to manufacture our products and as a result of a strong
recovery of sales in our higher margin goods.
Administration expenses increased to £37.0 million (2020:
£34.5 million) inclusive of foreign exchange movements due to
higher amortisation of intangible assets and a return to more
routine levels of business activity, partially offset by favourable
currency hedges in the year.
The Group incurred £9.3 million of gross R&D spend in the period
(2020: £7.9 million), representing 8.6% of sales (2020: 9.1%),
reflecting increased investment in innovation and in meeting
the increasing regulatory standards.
No exceptional costs were incurred (2020: £0.8 million relating to
both the acquisition of Raleigh and our participation in a process in
which AMS was unsuccessful).
Amortisation of acquired intangible assets increased to
£3.2 million in 2021 (2020: £2.3 million) due to the full period
effect of the acquisition of Raleigh in November 2020.
£0.4 million was recorded in relation to the long-term liability
expense recognised on acquisition of Sealantis in 2019 (2020:
£0.2 million).
Adjusted operating profit which excludes amortisation of acquired
intangibles and exceptional costs, increased by 89.3% to £26.2
million (2020: £13.8 million) whilst the adjusted operating margin
increased by 880 bps to 24.1% (2020: 15.9%) due to the negative
impact of the COVID-19 pandemic on the Group’s revenues in the
prior period.
The Group generated adjusted profit before tax of £25.6 million
(2020: £13.4 million) and profit before tax of £22.0 million (2020:
£10.1 million).
1
Adjusted profit before tax is shown before exceptional items which were £nil (2020: £0.8 million, 2019: £1.1 million), amortisation of acquired intangible assets which was
£3.2 million (2020: £2.3 million, 2019: £1.7 million) and long-term liability expense of £0.4 million (2020: £0.2 million, 2019: credit of £0.3 million) as defined in the Financial
Review. Adjusted operating margin is shown before exceptional items and amortisation of acquired intangible assets.
44 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
Financial Review
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Reflecting the Group’s strong net cash position and confidence
in the Group’s prospects, the Board is proposing an increased
final dividend of 1.37p per share, to be paid on 17 June 2022 to
shareholders on the register at the close of business on 27 May
2022. This follows the interim dividend of 0.58p per share paid on
22 October 2021 and would, if approved, make a total dividend for
the year of 1.95p per share (2020: 1.70p) an increase of 15%.
Operating result by business segment
Year ended 31 December 2021
Revenue
Segment operating profit
Amortisation of
acquired intangibles
Adjusted¹ segment
operating profit
Adjusted¹ operating margin
Surgical
£’000
64,630
18,298
2,005
20,303
31.4%
Woundcare
£’000
43,971
5,420
1,174
6,594
15.0%
1
Adjusted for exceptional items and amortisation of acquired intangible assets.
Table is reconciled to statutory information in Note 4 of the Financial Information.
Year ended 31 December 2020
Revenue
Segment operating profit
Amortisation of
acquired intangibles
Adjusted¹ segment
operating profit
Adjusted¹ operating margin
Surgical
£’000
50,169
6,962
2,132
9,094
18.1%
Woundcare
£’000
36,627
5,220
137
5,357
14.6%
To provide the clearest possible insight into our performance, the
Group uses alternative performance measures. These measures
are not defined in International Financial Reporting Standards (IFRS)
and, therefore, are considered to be non-GAAP (Generally Accepted
Accounting Principles) measures. Accordingly, the relevant IFRS
measures are also presented where appropriate. AMS uses such
measures consistently and reconciles them as appropriate. The
measures used in this statement include constant currency revenue
growth, adjusted operating margin, adjusted profit before tax and
adjusted earnings per share, allowing the impacts of exchange
rate volatility, exceptional items, amortisation and the change in
long-term liability expense to be separately identified. Net cash is
an additional non-GAAP measure used. For further information on
Alternative Performance Measures see page 131.
Reconciliation of profit before tax
to adjusted profit before tax
Profit before tax
Amortisation of
acquired intangibles
Long-term liability expense
Exceptional items
Adjusted¹ profit before tax
2021
£’000
21,984
3,179
426
–
25,589
2020
£’000
10,089
2,269
167
834
13,359
The Group’s effective corporation tax rate, reflecting the blended
tax rates in the countries where we operate and including UK
patent box relief, increased to 20.5% (2020: 14.9%). The increase
on the previous period has arisen as the Group was able to
retrospectively claim for patent box relief as a result of the
granting of patents on LiquiBand® Exceed in the first half of 2020.
Additionally, the substantive enactment of the higher tax rate in
the UK from April 2023 has increased the valuation of the deferred
tax liability and contributed an additional 2.6 percentage points to
the effective tax rate.
Adjusted diluted earnings per share increased by 78% to 9.66p
(2020: 5.44p) and diluted earnings per share increased by 103% to
8.01p (2020: 3.94p), reflecting the Group’s increased earnings.
Image above:
Commitment to R&D with significant increase in investment in 2021.
Advanced Medical Solutions Group plc Annual Report & Accounts 2021 45
STRATEGIC REPORT
Financial Review continued
Despite the ongoing COVID-19 impacts, the Group
delivered strong revenue growth, profit and cash
generation while continuing to invest in key projects.
Surgical
Surgical revenues increased by 29% to £64.6 million (2020:
£50.2 million) at reported currency and 34% at constant currency.
Adjusted operating margin increased by 1,330 bps to 31.4%
(2020: 18.1%) as higher sales allowed the Group to achieve
greater operational leverage compared with the previous period.
Woundcare
Woundcare revenues increased by 20% to £44.0 million (2020:
£36.6 million) at reported currency and by 23% at constant
currency. Adjusted operating margin increased by 400 bps to
15.0% (2020: 14.6%) as the general recovery was partially offset
by reduced Silver Alginate volumes.
Currency
The Group hedges significant currency transaction exposure by
using forward contracts, and aims to hedge approximately 80% of
its estimated transactional exposure for the next 12 to 18 months.
In the year, approximately one third of sales was invoiced in US
dollars and approximately 30% was invoiced in Euro.
The Group estimates that a 10% movement in the £:US$ or £:€
exchange rate will impact Sterling revenues by approximately 3.4%
and 2.9% respectively and, in the absence of any hedging, this
would have an impact on the Group operating margin of 2.8%
and 0.3% percentage points respectively.
Cash flow
The Group continued to generate significant amounts of cash
through operations as strong net cash inflow from operating
activities grew to £31.0 million (2020: £21.5 million) as the
business recovered from the impact of the COVID-19 pandemic
without significantly increasing working capital.
Reconciliation of net cash inflow from
operating activities to adjusted net cash
inflow from operating activities
Net cash inflow from
operating activities
Add back exceptional items
Adjusted net cash inflow
from operating activities
Year ended
31 December 2021
£’000
Year ended
31 December 2020
£’000
31,025
221
21,511
613
31,246
22,124
At the end of the period, the Group had net cash of £73.0 million
(31 December 2020: £53.8 million).
Working capital decreased during the year, despite the sales
growth achieved during the year. An increase in receivables as
a result of higher sales has been offset by reduced inventory
levels and increased payables. Inventory cover reduced to
4.9 months of supply (2020: 5.7 months) following a period
of increased demand and supply chain disruption. To mitigate
against ongoing supply disruption, the Group intends to rebuild
inventory back to the higher levels held during the Brexit
transition period and earlier stages of the COVID-19 pandemic.
Debtor days reduced marginally to 44 days (2020: 45 days)
whilst Creditor days increased to 37 days (2020: 30 days)
mainly due to the timing of payments.
Capital investment in equipment, R&D and regulatory costs
increased to £6.5 million (2020: £5.3 million) as the Group
continues to invest in its future pipeline.
Cash outflow relating to taxation increased to £4.1 million (2020:
£3.7 million) which is £0.4 million lower than tax in the income
statement. This is due to the timing of payments on account and
the non-cash impact of the upwards revaluation in the Deferred
Tax Liability following the enactment of higher tax rates in the UK
from April 2023. Despite a significantly higher tax expense in the
year as the Group’s taxable profits grew, the prior period included
accelerated payments on account in the UK resulting in only a
marginal increase in cash outflow relating to taxation. The UK
Government’s enactment of a 25% tax rate from April 2023 will
result in an increased group effective tax rate from FY2023.
The Group paid its final dividend for the year ended 31 December
2020 of £2.6 million in June 2021 (2020: for the year ending 2019,
£2.3 million in June 2020), and its interim dividend for the six
months ended 30 June 2021 of £1.2 million in October 2021 (for
the 6 months ended 30 June 2020: £1.1 million in October 2020).
The Group has an undrawn unsecured £80 million credit facility
provided jointly by Natwest and HSBC which will be renewed
before its end date of December 2022. This facility carries an
annual interest rate of the applicable reference rate such as SONIA
in the case of sterling plus a margin that varies between 0.60%
and 1.70% depending on the Group’s net debt to EBITDA ratio.
The credit facility will be replaced in Q4 2022.
Eddie Johnson
Chief Financial Officer
46 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
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Risk Management
We continuously identify,
analyse, manage and
monitor existing and
emerging risks
Operating in the current environment, it has never been more important
to ensure that a rigorous and disciplined approach to risk management
is embedded across our business. The success and sustainability of AMS
is underpinned by our ability to identify, manage and mitigate those risks
which may prevent us from delivering our mission and strategic plans.
Risk and uncertainty are an inherent part of doing business
which could impact our business, brands, assets, revenue, profits,
liquidity and capital resources. To meet our strategic objectives,
build shareholder value and promote our stakeholders’ interests,
we must manage this risk.
An effective and successful risk management process balances
risk and reward and is dependent on the judgement of the
likelihood and impact of the risk involved. The Board has overall
responsibility for ensuring there is an effective risk management
framework, which underpins our business model.
The Business Units, Senior Management Team (SMT), Audit
Committee and Board review risks throughout the year. These
risks are documented in the Risk Register which is formally
reviewed by the SMT, external auditor and the Board twice
annually. The plans and actions assigned to the Executive
Directors and SMT members are reviewed to ensure progress is
being made with risk actions and mitigation plans.
We believe that the policies, procedures and monitoring systems
that are in place are sufficient to effectively manage the risks faced
by our business.
The Board has applied principles 28 and 29 of the 2018 UK
Corporate Governance Code (Code) by establishing a continuous
process for identifying, evaluating and managing the significant
risks the Group faces, as outlined on page 48, and for determining
the nature and extent of the significant risks it is willing to take in
achieving our strategic objectives.
Advanced Medical Solutions Group plc Annual Report & Accounts 2021 47
STRATEGIC REPORT
Risk Management continued
A robust methodology is used to identify key risks across the Group.
This is a continuous process carried out in accordance with the relevant
provisions set out in the UK Corporate Governance Code.
Identif y
Identify ris k
s existin g c
s
s
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Assess m
Score m
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Risk
Management
Process
M
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ution
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n r e sponsibilit
p action pla
M a nage
e l o
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A s s i g
D e
Identifying risks
A robust methodology is used to identify key risks across the Group; in Business Units,
operations and during projects. This is an ongoing process, and is carried out in accordance
with the relevant provisions set out in the Code.
Analysing risks
Once identified, the process will evaluate identified risks to establish root causes, financial
and non-financial impacts and likelihood of occurrence. We use a scoring system to assess
the likelihood of a risk materialising and the potential financial impact on the Group. The risks
are prioritised in terms of severity based on the scoring and a mitigation plan is prepared to
reduce the risk. Once controls and mitigating factors are considered, the risk is reassessed
and re-scored (mitigated score) to ascertain the net exposure.
Managing risk
The SMT and the Board review the Risk Register formally at least twice a year, assessing
whether the risks are still the most significant facing the Group and whether new risks have
arisen. Effectiveness, adequacy of controls and mitigating actions are assessed and if additional
controls or actions are required, these are identified and actions assigned. The Risk Register
documents this.
Monitoring and reporting risk
The SMT is responsible for monitoring progress to mitigate key risks. The risk management process is continuous; key risks and risk mitigation plans
and progress are reported to and reviewed by the Board, following the SMT’s bi-annual review of the Group’s Risk Register.
Internal Audit
Additionally, the Board is supported by a programme of Internal Audits. Internal Audit reports to the Audit Committee on the progress of control or
process improvements following Internal Audit recommendations.
Emerging risks
Emerging risks are newly developing risks that cannot yet be fully assessed but that could, in the future, affect the viability of our strategy. We identify
these risks by encouraging reporting of potential risks up the organisation and discussing them openly in a specific SMT Risk Review. We discuss
whether critical assumptions underlying the strategy are becoming, or have become, invalid. Risks are then either managed within the organisation
or elevated to the Risk Register for further discussion by the Board.
Key roles and responsibilities
Implementation and compliance responsibility
Board
Audit
Committee
Senior Management
Team
Business Units and
Other Functions
• Overall responsibility for
• Assessing the effectiveness of
• Management of the business and
• Execution of actions associated
corporate strategy, governance,
performance, internal controls
and risk management.
• Identification, review and
management of identified
Group strategic risks.
• Defining risk appetite.
the risk management processes
adopted across the Group.
• Ensuring compliance with
financial and reporting
legislation, rules and regulations
and ensuring the Annual Report
is fair and balanced.
• Assessing the effectiveness of
the risk management processes
adopted across the Group.
• Challenging the content of the
Risk Register.
• Monitoring compliance with
internal control systems and
co-ordinating Internal Audit.
• Monitoring and oversight of
internal and external audit.
delivery of strategy.
with managing risk.
• Identification and monitoring of the
key risk indicators, taking action.
• Ensuring implementation of the
• Timely reporting on the
implementation and progress
of agreed action plans.
Group’s actions and mitigation plans
required to manage risk.
• Identification and reporting of
strategic risks to the SMT.
• Challenging the appropriateness and
adequacy of plans to mitigate risk.
• Analysing the aggregation of risk
across the Group.
• Provision of cross-functional resource
to effectively mitigate risk.
• Implementation of a risk
management approach
which promotes the ongoing
identification, evaluation,
prioritisation, mitigation and
monitoring of operational risk.
Monitoring and reporting responsibility
48 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
Risk Management continued
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Financial
Strategic
Poor ROI
from R&D
–
Lack of growth
Delivery against
forecast
+
+
Acquisitions/
Integration
E
+
Supply chain/
cost inflation
Regulatory
ESG and
Climate Change
Single source
supply
+
E
Russia
Talent management
–
Cyber-risk
Operational
Risk heat map – Principal risks
While we continue to monitor and manage a wider range of risks, the risk heat map summarises those risks considered to have the
greatest potential impact if they were to materialise.
Risk Size
Likelihood
Large
Medium
Small
High
Low
Trend (net position
of risk vs 2020):
+
–
Increase from 2020
Decrease from 2020
Static since 2020
E
Emerging risk
Advanced Medical Solutions Group plc Annual Report & Accounts 2021 49
STRATEGIC REPORT
Risk Management continued
Strategic risks
Risk
Potential impact
Key controls and mitigating factors
Status
1
Lack of growth
• Income shortfall.
• Market capitalisation
impacted.
• Reduced profit.
• Loss of competitive
advantage.
• Development and launch of new products to secure existing and new customers
and drive future growth.
• Making accretive synergistic acquisitions to help fuel growth.
• Diversified approach reduces the impact on any one project, partner or product.
• Contracts with agreed set minimum which allow terms to be renegotiated or
agreements terminated for poor performance.
• Loss of key partners.
• Evaluation of opportunities to broaden reach into new markets or adjacent
sectors and new product claims.
• Ongoing evaluation of incoming technologies for licensing.
• Full-service offering including strong regulatory and quality assurance, product
development, product differentiation and clinical support to mitigate a pure cost
of supply proposition.
Strong pipeline and
well positioned for
strong growth as
markets continue
to recover. Active
M&A screening
process.
2
Poor return
on investment
from R&D
• Income shortfall.
• Market capitalisation
• Focusing on unmet needs and large market opportunities.
• Pipeline of new products/technologies identified to provide growth and
impacted.
differentiation.
• Loss of reputation as
an innovator.
• Unique products protected by know-how, IP and enforcement.
• Improved front-end business planning process including robust business cases
No change
• Loss of competitive
and marketing plans.
advantage.
• Loss of key partners.
• Loss of market share.
• Misidentification of new,
competitive technology.
• Commercial value
of products not
maximised.
• Risk of impairment
of assets.
• Impact on Group
performance and
market capitalisation.
• Reputational loss.
• Effective alignment of strategy to consider the market changes and promote
quality and cost savings.
• Marketing strategy to support partners and products.
• Implementation of processes to ensure R&D projects progress to plan.
• Strong links with partners, including Universities, to reduce the risk of missed
opportunities.
• Investment in clinical research, personnel, symposia, and Key Opinion Leaders
to foster new approaches.
• Utilise licensing and outsourcing options.
• Strategy set, M&A objectives defined and advisors appointed.
• Detailed market intelligence and identification of targets.
• Extensive due diligence process established.
• Integration plan in place with key milestones.
• Internal resource being added to improve target mapping.
3
Making the
wrong or no
acquisition/poor
integration
Financial risks
4
Delivering against
forecast – internal
accuracy
• Loss of income.
• Increased internal
costs.
• Shortfall in profit.
• Market expectations
• Demand forecasting software further improved in 2021.
• Regular dialogue with investors, advisors and analysts.
• Robust annual budget process, SMT and Board reviews and monthly
pragmatic bottom up reforecasting.
• Monthly demand review and SOP process evolved to ensure cross-
missed.
functional alignment, content and process.
• Market capitalisation
impacted.
No change
No change
50 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
Risk Management continued
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Strategic linkage to risks
Growth
Innovation
Continuous Improvement
Culture
Operational risks
Risk
Potential impact
Key controls and mitigating factors
Status
5
Supply chain/
cost inflation
6
Regulatory risk
• Inability to supply product.
• Reduced demand for
elective surgeries.
• Loss of income.
• Shortfall in profit.
• Market expectations missed.
• Improved forecasting and forward planning.
• Regular communication and forward-ordering with suppliers.
• Business continuity plans and chain of command in place.
• Contractual rights enforced with customers to minimise impact.
• Recovery of cost inflation from customers during annual
contract negotiations.
• Inability to supply product.
• Product approvals and
launches delayed.
• Loss of product claims.
• Loss of reputation.
• Stringent regulatory regime with an experienced team.
• Clear regulatory strategy to manage MDR.
• Additional resource for MDR assigned and ringfenced.
• Strong regulatory pathway to gain approvals.
• Work with partners and distributors to utilise local expertise.
• Strictly controlled Quality Management System.
Supply chain resilience under
cost and logistical pressure.
Challenging MDR regulations
and timeline.
7
Vulnerability to
single source supply
• Inability to supply
specific products.
• Increased cost of
supply and exposure
to cost increases.
• Dual source key components wherever possible.
• Strong Vendor Risk Assessment process.
• Forward ordering and holding inventory prevent operational issues.
• Business Interruption Insurance in place.
• Working closely with suppliers and increasing audits.
Regulatory requirements
make alternative suppliers
challenging.
8
Cyber-Risk
• Systems and data
compromised.
• Financial loss.
• Business interruption.
• Loss of reputation.
• Implementation of audit and testing recommendations.
• IT administrator access levels tightened.
• Increased segregation of duties.
• Cyber Security training for all employees.
• Engaged consultants and achieved Cyber Essential Certification.
9
Talent management
• Loss of key staff.
• Insufficient talent pool for
succession planning.
• Market conditions result in
difficulty filling open roles.
• Succession and talent management processes.
• Developed a grade system to improve career paths.
• Integrated total reward, performance and culture strategy to drive
attraction, retention and employee engagement.
• Introduced changes to long-term working arrangements.
• Increased employee engagement and clarified mission and vision.
Increased resource, mitigating
actions and certification
offset by increased global risk.
(ransomware, Russia).
Increased acceptance of
remote working presents
retention risks.
Emerging risks
10
ESG & Climate
Change
• Loss of reputation.
• Lose customers and
access to tenders.
• Shareholders cannot invest.
• Market capitalisation
impacted.
• Developed ESG Framework and strategy.
• Embedded ESG and our principles at the heart of the business.
• Implemented ESG activities, including an ESG Steering Committee.
• Engaged with external ratings agencies.
• Maturity Assessment by internal auditor to support progress.
NEW
Increased ESG and climate
change expectations offset
by significant ESG progress.
11
Russia
• Potential loss of
approximately 1% of
Group operating profit
historically been provided
by small legacy sales office
in Moscow.
Ongoing review of all activities relating to Russia:
• Reputational risk.
• Payment risks.
• Supply chain risks.
• Employees in Russia.
NEW
Increased due to conflict
and sanctions.
The Strategic Report has been prepared solely to provide information for shareholders to assess how the Directors have performed their
duty to promote the success of the Group and contains forward-looking statements. These statements are made by the Directors in good
faith based on the information available to them up to the approval of this report and such statements should be treated with caution due to
the inherent uncertainties, including both economic and business risk factors, underlying any such forward-looking information. The Group
Strategic Report, which encompasses pages 5 to 51 was approved by the Board of Directors and signed on its behalf by:
Eddie Johnson
Chief Financial Officer
14 April 2022
Advanced Medical Solutions Group plc Annual Report & Accounts 2021 51
GOVERNANCE
Board of Directors
Biography
NR
N
Peter Allen
Non-Executive Chairman
Chris Meredith
Chief Executive Officer
Eddie Johnson
Chief Financial Officer
Peter Allen has extensive
experience in the healthcare
industry, having held key
senior positions in a number
of companies and playing
a significant role in their
development. This includes
12 years at Celltech Group plc
(1992–2004) as CFO and Deputy
CEO, six years as Chairman
(2007–2013) of ProStrakan Group
plc (Interim CEO 2010–11), three
years as Chairman of Proximagen
Neurosciences plc (2009–12),
five years as Non-Executive
Chairman at Diurnal plc (2015-
2020) and nine years as Non-
Executive Chairman of Clinigan
Group plc. He is a qualified
Chartered Accountant.
Chris Meredith joined AMS as
Group Commercial Director in
July 2005 following a successful
18-year career in international
healthcare sales, marketing
and business development. His
experience covered business-to-
business contract manufacturing,
product development and
clinical research, as well as
branded product sales all
within the medical device,
pharmaceutical or consumer
healthcare markets. Chris has
previously held senior positions
at Smiths Industries, Cardinal
Health, Banner Pharmacaps, and
Aster Cephac. He was appointed
Managing Director of Advanced
Woundcare in February 2008,
became Chief Operating
Officer in January 2010 and was
appointed as Chief Executive
Officer in January 2011.
Eddie Johnson joined AMS in
October 2011. He was appointed
Group Financial Controller in
November 2012 and became
Chief Financial Officer in January
2019. Prior to this he gained a
first class degree in Maths and
Computer Science from Keele
University in 1993 and qualified
as a Chartered Accountant in
1996. Since moving into industry
in 1996 Eddie has held a number
of senior finance roles in various
industry sectors including, more
recently, Head of Commercial
Finance at Norcros plc and
Western European Financial
Controller for Sumitomo
Electrical Wiring Systems.
Term of office
Peter Allen was appointed to the
Board in December 2013 and
as Non-Executive Chairman in
January 2014.
Chris Meredith was appointed to
the Board in April 2006.
Eddie Johnson was appointed to
the Board in January 2019.
External appointments
Peter Allen is currently the
Non-Executive Chairman of AIM
listed Abcam plc, together with
Oxford Nanopore Technologies
plc and Istesso Limited.
None.
Chris Meredith was appointed
Chairman of Arterius, a UK
based pre-commercial, none
competitive medical device
company, in January 2022. He
left his role as a Non-Executive of
Creavo Medical Technology Ltd
in November 2021.
52 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
Board of Directors
Committee
membership key
A Audit Committee
R Remuneration Committee
N Nomination Committee
Committee Chair
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Penny Freer
Senior Independent
Non-Executive Director
Grahame Cook
Non-Executive Director
Douglas Le Fort
Non-Executive Director
With 25 years’ experience in
investment banking, Penny
was formerly Head of Equities
for Robert W Baird in London,
and prior to this held senior
positions at Credit Lyonnais and
NatWest Markets.
Grahame Cook has 18 years’
experience in investment banking
in global equity capital markets
and M&A and corporate advisory.
He advised the London Stock
Exchange on the creation of
TechMark, the specialist segment
of the Main Market focusing
on innovative technology and
healthcare companies and has
healthcare experience, most
recently as a Non-Executive
Director of Morphogenesis Inc
and Chairman of Sinclair Pharma
plc. He also held Board positions
at Horizon Discovery plc, MDY
Healthcare plc and Crawford
Healthcare Holdings Limited.
He is a qualified Chartered
Accountant.
Douglas Le Fort has more
than 20 years of senior
executive leadership, with
expertise in business strategy,
operational management and
M&A. Most recently, he was
CEO of MedTrade Products, a
woundcare products business
and prior to that served in
various senior executive
roles at ConvaTec Group plc,
including five years on the
Executive Committee for
the Group. At ConvaTec he
was Senior Vice President for
Corporate Development, and
prior to that Vice President
and General Manager with
P&L responsibility for the
global Ostomy business. He
has an MBA from Henley
Management College and is
a Chartered Management
Accountant.
Penny Freer joined the Board
in March 2010 as Senior
Independent Non-Executive
Director.
Grahame Cook was appointed
as a Non-Executive Director in
February 2021.
Douglas Le Fort was appointed
as a Non-Executive Director in
August 2021.
Penny Freer is Chairman of AP
Ventures LLP a global venture
capital fund. She is also a Non
Executive Director of Empresaria
Group plc and Chairman of
Crown Place VCT plc and of The
Henderston Smaller Companies
Investment Trust.
Grahame Cook is a Non-
Executive Director of Attraqt
plc, Draper Espirit plc, Minoan
Group plc, Pirtsemit Limited
and Sapience Communications
Limited and a member at T and
JK Estates LLP, TJK Holdings LLP
and KS Halkins LLP.
Douglas Le Fort is currently an
Operating Partner for Revival
Healthcare Capital Partners,
an investor in medical device
and diagnostics businesses,
as well as a Non-Executive
Director at Trio Healthcare,
a manufacturer of ostomy
products.
Advanced Medical Solutions Group plc Annual Report & Accounts 2021 53
GOVERNANCE
Senior Management Team
In addition to the CEO and CFO,
the SMT consists of Business Unit
and functional heads committed
to long-term sustainable growth
Simon Coates
IT Director
Rose Guang
Vice President – Regulatory, Quality
and Clinical
Ross McDonald
Business Unit Director, Surgical
Biography
Simon joined AMS in 2002 as
Group Information Systems
Manager and, during the
Company’s growth since then,
he has overseen many key IT
projects including implementing
ERP systems across the Group,
integrating acquisitions and
relocating the business into its
existing Winsford site.
Simon has over 25 years’
experience in IT infrastructure,
systems implementation and
software development. Prior to
joining AMS he was Worldwide IT
manager at Whitford Plastics Ltd,
a manufacturer of fluropolymer
coatings, supporting them
through a period of rapid
growth, managing multiple sites
and key IT projects including
ERP implementation.
Simon was appointed to the
Senior Management Team in 2015.
Rose joined AMS in May 2013 as
Group QA/RA Director having
completed her Masters Degree
in Precision Engineering from
Nanyang Technology University
in Singapore. Rose has over
20 years’ experience working
for medical device companies
and has a strong background
in setting up effective quality
systems. Rose has worked for
Bausch & Lomb International
Healthcare, Nypro and spent
nine years at Medical House
Products plc as Director of
Quality, Regulatory Affairs and
Operations. Prior to joining AMS,
Rose was Head of Quality and
Regulatory Affairs at Bespak, part
of Consort Medical plc.
Rose is also a Six Sigma Master
Black Belt.
Ross joined AMS in January 2006
having graduated with a BSc
from University of Glasgow and
MSc in Entrepreneurial Studies
from Glasgow Caledonian
University. Prior to joining AMS,
Ross spent five years in the
Pharmaceutical industry.
Upon joining AMS, from 2006
to 2012, Ross worked across
direct and distributed sales
functions, both in UK Sales,
before taking on responsibility
for the European Woundcare
Business. In 2012 he relocated
to the US and as National Sales
Manager Americas contributed
to a period of sustained and
high growth for LiquiBand®.
In October 2016 Ross returned
to the UK to take up a new role
as Director of Sales for US, UK
and Germany and quickly moved
into the Global Sales Director
role, both for the Surgical
Business Unit.
In January 2021, Ross was
appointed as Business Unit
Director of the Surgical
Business Unit.
54 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
Senior Management Team
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Alan Richardson
Chief Operations Officer
Cathy Tomlinson
Group HR Director
Becky Walmsley
Business Unit Director, Woundcare
Owen Bromley
Company Secretary
Alan joined AMS in November
2018 as Chief Operations Officer.
Alan graduated with a B Eng
honours degree in Chemical
Engineering from Bradford
University. Alan joined Yorkshire
Chemicals as a Chemical
Engineer and has since had
25 years of experience in the
Medical Device, Pharmaceutical,
Contract Research and Chemical
Industries having worked for
both Bristol-Myers Squibb and
ConvaTec. Prior to joining AMS,
Alan spent 11 years at ConvaTec
and held a number of roles
including Director, New Product
Integration; Vice President
Quality and Operations and
Vice President of Advanced
Woundcare Operations.
Cathy joined AMS in May 2017
as Group HR Director. Cathy
graduated with a degree in
Business Studies from Liverpool
John Moores University and
completed a Masters in Business
Administration (MBA) at Strathclyde
University. She spent five years
working for Amazon and was head
of HR for their final mile delivery
business, a start-up business
for Amazon.
Prior to this Cathy held senior HR
roles for Xerox – supporting the
outsourcing of managed services
from government and blue-
chip organisations to Xerox and
Emirates Airline, based in Dubai,
where she supported the growth
of the airline in new geographies
and acquisitions.
Becky joined AMS in July 2015 as
Business Unit Director of OEM and
Bulk Materials (now Woundcare).
Becky graduated with a degree in
Modern Languages (French and
German) with International Studies
from South Bank University in
1993 and completed an Executive
Masters of Business Administration
at Lancaster University in 2000.
Becky has more than 13 years’
experience in the Medical Device
sector, having held various
senior management roles, most
recently as European Sales
Director for Scapa Healthcare.
Owen joined AMS in April
2012 as Assistant Company
Secretary and became
Deputy Company Secretary
in October 2013. Having
completed a BA (Hons)
in International Business
and Masters in Business
Administration (MBA), he
helped to launch a licensed
Corporate Service Provider on
the Isle of Man in 2006 and
qualified through the Institute
of Chartered Secretaries
and Administrators (ICSA)
in 2007, now the Chartered
Governance Institute. He
moved to the UK in 2010,
working at Eversheds LLC and
GB Group plc prior to AMS.
In January 2021, Owen
was appointed as
Company Secretary.
Advanced Medical Solutions Group plc Annual Report & Accounts 2021 55
GOVERNANCE
Corporate Governance Report
An enhanced focus on ESG within
our governance framework
Dear Shareholder,
On behalf of the Board, I am pleased
to present the Corporate Governance
Report for the year ended 31 December
2021. This year has seen a focus on our
ESG strategy alongside a continued
emphasis on compliance with corporate
governance requirements. Our
Remuneration Committee Report on
pages 69 to 80 outlines how we have
engaged with shareholders regarding
attracting and maintaining talent to
continue the success of AMS. We believe
that our revised Remuneration Policy
reflects those views alongside good
corporate governance principles.
The Board believes that shareholder
engagement and strong corporate
governance are critical to the success of
our strategy outlined on pages 10 to 19,
and to delivering long-term, sustainable
shareholder value.
Changes to the Board and
succession planning
In 2021 we continued to refresh the
composition of Non-Executives on the
Board with extensive searches leading to
the appointments of Grahame Cook and
Douglas Le Fort to the Board.
Penny Freer will retire from the Board
at the 2022 AGM. The Board would
like to thank Penny for her significant
contribution to the success of AMS over
the last twelve years. The Report of the
Nomination Committee on pages 62
to 64 details the work we have done to
continue with the Board refreshment and
how we will give regard to diversity with
the ongoing refreshment process.
Corporate Governance
We choose to comply with the UK
Corporate Governance Code (Code) as
far as is practicable and appropriate for
a public company of the Group’s size.
We remain committed to maintaining
high standards of corporate governance
which is key to generating shareholder
value, protecting stakeholders interests
and long-term sustainable growth.
A breakdown of our compliance with
the Code can be seen on page 60 and
on our website at www.admedsol.com.
The Code reinforces the need to
understand the views of our stakeholders
and consider these as part of our decision
making. This has remained a focus of
the Group for 2021, highlighted by our
revised Remuneration Policy. Details of
how we engage with our stakeholders
are set out on pages 26 to 31.
Environmental, Social and
Governance (ESG)
ESG is a focus area for our stakeholders
and we have devoted significant time and
resource to our ESG strategy during 2021.
We have developed an ESG framework
which allows us to make progress in ESG
over future years. The Board have begun
work to define our Pathway to Net Zero.
Details of our ESG framework and how
it will be applied by the Group is set out
on pages 32 to 43. During the year, we
conducted an employee engagement
survey and improved communication of
our Vision and Mission, which continued
in 2022.
Recognition and looking forward
It has been another challenging year with
COVID-19 disruption, albeit at a lower
level than the first wave in 2020. On
behalf of the Board I would like to express
my appreciation for the dedication,
hard work and adaptability of all of our
colleagues in 2021.
Despite the ongoing challenges, we have
taken significant steps to progress our
strategy and I strongly believe that AMS
remains well positioned to take advantage
of opportunities as they arise. During
the coming year, in addition to further
strengthening our corporate governance,
the Board will focus on:
• Supporting the Group during the
continued transition back to a normal
way of doing business following the
disruption of the pandemic.
• Supporting the management
team with the refinement and
implementation of our ESG strategy.
Peter Allen
Chairman
14 April 2022
We continue to
review and improve
our corporate
governance
arrangements, to
ensure they remain
robust, fit for
purpose and support
our long-term
strategic interests.
56 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
Corporate Governance Report
Chairman’s introduction to
Corporate Governance
The Board is committed to the principles
of good corporate governance which
encompass leadership, effectiveness,
accountability, remuneration and
shareholder relations. Our shares are
quoted on the AIM market and are
subject to the AIM Admission Rules
of the London Stock Exchange.
Throughout the year
The Board met nine times during the year.
All meetings were held in the UK or
by video conference. The Directors’
attendance is shown (table to the right).
As part of the focus on key stakeholders,
the Board has spent significant time
discussing ESG in 2021. This has
resulted in the development of our
ESG Framework which can be seen
on page 33 in our ESG Report. Penny
Freer was appointed as the designated
Non-Executive Director for workforce
engagement in 2020 and there was
increased engagement with employees
in 2021, with a group wide engagement
survey, CEO video conferences with
each site and regular updates from
our COVID-19 Committee despite
some aspects of physical workforce
engagement being restricted due to
Board member
Peter Allen
Grahame Cook2
Penny Freer
Eddie Johnson
Douglas Le Fort3
Chris Meredith
Steve Bellamy (retired 8 June 2021)
Board
Audit
Committee1
Remuneration1
Committee1
Nomination
Committee
9/9
9/9
9/9
9/9
3/3
9/9
5/5
3/31
3/3
3/3
3/31
2/2
3/31
1/1
4/4
4/4
4/4
3/41
2/2
4/41
1/1
4/4
4/4
4/4
4/41
2/2
4/4
n/a
1 Invited.
2 Appointed as Non-Executive Director on 1 February 2021.
3 Appointed as Non-Executive Director on 2 August 2021.
COVID-19. Management have regularly
updated the Board on employee
engagement throughout the year.
The engagement score in our 2021
employee engagement survey indicates
a high overall level of satisfaction in
the workforce and in 2022, we will be
focusing on proactive ways to further
increase this.
As in previous years, the implementation of
strategy has been an area of focus in our
Board meetings. The Executive Directors
have provided regular updates, allowing
the Board to be informed of our view on
the successes and challenges throughout
the Group and review future direction
through five-year strategic plans. In the
current regulatory environment there has
been significant focus on the Medical
Devices Regulation (MDR). We have also
engaged directly with our significant
shareholders on ESG, Remuneration Policy
and Board refreshment. Details of our
principal risks are set out on pages 50 to
51. The Risk Register and principal risks are
regularly assessed by the Board and Audit
Committee. Further information regarding
the principal matters discussed by the
Board during 2021 are set out on page 59.
Board activities and the governance, culture and mission influences
The UK Corporate
Governance Code
Risk management
Monitoring the performance
of the business
Setting strategy
Approving business plans
and budgets
Our culture –
Care, Fair, Dare
External influences
Board activities
Internal influences
The AIM Rules
Considering and communicating
with stakeholders
Overseeing corporate culture
Considering strategic acquisitions
Considering strategic disposals
Our mission –
Develop,
Make a real difference,
Add value
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Vision
A world where the outcome of every patient can benefit from our products and
a company where every employee feels invested and valued
Advanced Medical Solutions Group plc Annual Report & Accounts 2021 57
GOVERNANCE
Corporate Governance Report continued
2022 AGM
In 2022, we will put forward all Directors for re-election in
accordance with Code Provision 18, with the exception of Penny
Freer who will retire from the Board. No Non-Executive Director
other than Penny Freer has a tenure of more than nine years, the
limit outlined in Code Provision 10.
Peter Allen and Penny Freer own shares in the Company as
shown on page 79. These holdings have been highlighted to
shareholders and are small. They are not considered to impact
Non-Executive Director independence under Code Provision 10.
Role of the Board
The role of the Board is to establish the vision and strategy for
the Group, to deliver shareholder value and take responsibility for
the long-term, sustainable success of the Company. Individual
members of the Board have equal responsibility for the overall
stewardship, management and performance of the Group and
for the approval of its long-term objectives and strategic plans.
Division of responsibilities
There is a clear division of responsibilities between the role of
the Chairman and the Chief Executive Officer of the Company.
The roles are clearly set out in writing.
Chairman
Peter Allen
• Leadership and management of the Board.
• Setting the Board’s agenda, style and tone
of discussions.
• Ensuring the Board’s effectiveness in all
aspects of its role.
• Working closely with the Chief Executive
Officer on developing the Group’s strategy,
and providing general advice and support.
• Facilitating active engagement by
all members.
• Participating in shareholder communications.
• Promoting high standards of corporate
governance.
Senior Independent Director
Penny Freer
• Acting as an intermediary for other Directors
when necessary.
• Available to meet with shareholders and aid
communication of shareholder concerns
when normal channels of communication
are inappropriate.
• Chairing meetings of Non-Executive
Directors, if and when required.
• All responsibilities of a Non-Executive
Director (as outlined to the right).
Chief Executive Officer
Chris Meredith
• Managing the Group’s business.
• Developing Group strategy for consideration
and approval by the Board.
• Leading the Senior Management Team (SMT)
in delivering the Group’s strategic and day-
to-day operational objectives.
• Leading and maintaining communications
with all stakeholders.
Non-Executive Directors
Grahame Cook, Douglas Le Fort
• Constructively challenging and contributing
to the development of strategy.
• Monitoring the integrity of financial
information, financial controls and systems of
risk management to ensure they are robust.
• Reviewing the performance of Executive
Management.
• Formulating Executive Director remuneration.
58 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
Corporate Governance Report continued
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Matters considered by the Board in 2021 included:
Continuing impact of the COVID-19 pandemic.
Group delegation of authority policy
Environmental, Social, Governance (ESG).
Risk review including disaster recovery and business interruption.
Impacts of Brexit.
Strategic plans, including five-year review.
Vision, mission and values.
Dividend policy.
Acquisition strategy including potential acquisition targets
and valuations.
Major capital expenditure including an expansion of our Plymouth
manufacturing site.
MDR and regulatory pathways.
Finance and operations review.
Board evaluation and Board support.
Reports from the Board Committees.
Health and Safety.
Annual budget, results, forecast updates.
UK Corporate Governance Code compliance.
Organisation and senior management structure.
Board refreshment.
Directors’ responsibilities.
Shareholder base and investor engagement.
Registrar and share scheme structure and administration.
The Board also delegates a number of its responsibilities to
Committees and management as described below.
All Directors have access to the advice and services of the
Company Secretary. The Board approves the appointment
and removal of the Company Secretary and appointed Owen
Bromley on 1 January 2021. The Non-Executive Directors are
able to contact the Executive Directors, Company Secretary or
Senior Managers at any time for information about the Group.
The Non-Executive Directors
Each of the Non-Executive Directors is free from any relationship
with the Executive Management and from any business or other
relationship that could affect or appear to affect the exercise
of their independent judgement. The Board considers that all
of the Company’s Non-Executive Directors are Independent
Directors, in both character and judgement, in accordance with
the recommendations of the Code. The Chairman, Peter Allen,
was considered independent on his appointment.
The operation of the Board
The Board has the responsibility for ensuring that the Group is
appropriately managed and achieves the strategic objectives it
sets. To achieve this the Board reserves certain matters for its
own determination, including matters relating to Group strategy,
approval of interim and annual financial results, dividends, major
capital expenditure, budgets, monitoring business and financial
performance, treasury policy, risk management, corporate
governance and the effectiveness of its internal control systems.
It has a schedule of matters specifically reserved for its approval.
Matters are delegated to the Board Committees, Executive
Directors and the Senior Management Team where appropriate,
and the Group’s delegation of authority policy was reviewed
and updated within the year to ensure it continues to align with
best practice. The Board performs its responsibilities through an
annual programme of meetings and by continuous monitoring
of the performance of the Group.
Board Committees
The Board has delegated authority to the Audit, Remuneration
and Nomination Committees. Penny Freer, Grahame Cook
and Douglas Le Fort are members of the Audit, Remuneration
and Nomination Committees. Peter Allen is a member of the
Remuneration and Nomination Committees. Chris Meredith is
a member of the Nomination Committee.
Board composition
The Board comprises the Non-Executive Chairman, two
Executive Directors and three Non-Executive Directors. The
Directors’ profiles on pages 52 and 53 detail their experience
and suitability for leading and managing the Group. Together
they bring a valuable range of expertise and experience to the
Group. No individual or group of individuals dominates the
Board’s decision making process. The Chairman fosters a climate
of open debate in the boardroom, built on his challenging but
supportive relationship with the Chief Executive Officer which
sets the tone for Board interaction and discussions.
Appointment of Non-Executive Directors
Non-Executive Directors are appointed to the Board following
a formal, rigorous and transparent process, involving external
recruitment agencies, to select individuals who have a depth
and breadth of relevant experience to ensure that they can
make an effective contribution to the Board. Details of how the
Nomination Committee managed the process for appointing
Grahame Cook and Douglas Le Fort can be found on page 64.
Diversity
We recognise the importance of diversity at Board level. The
Board has a wide range of skills and experiences from a variety
of business backgrounds. The female Board representation at
31 December 2021 was 16.7%. The Hampton-Alexander target
(33%) is considered during the succession planning process.
The SMT also has diverse experience. It is comprised of several
nationalities and female representation is 43%. Our Group
Equality, Diversity and Inclusion (EDI) Policy ensures diversity
is considered at all levels and across the Group. We took initial
steps to further engage with employees on EDI through 2021
and launched an EDI Committee in early 2022 which reports
into the ESG Steering Committee. We continue to take steps to
further promote diversity amongst our employees at all levels.
Advanced Medical Solutions Group plc Annual Report & Accounts 2021 59
GOVERNANCE
Corporate Governance Report continued
Compliance with the UK Corporate Governance Code
As a large AIM quoted company, AMS has chosen to follow the Code and is compliant in the majority of areas. The Company does
not comply with Provision 36 (formal policy for post-employment shareholding), as there is no policy in place at this time and
Provision 38 (pension contribution rates for Executive Directors, or payments in lieu, should be aligned with those available to the
workforce). The Committee does not consider the current contributions of 10% to be excessive and will review this for any new
appointments. Whilst we comply with the objective of Provision 31, we do not prepare a formal viability statement as we believe
that the information provided on Going Concern and elsewhere in the Annual Report satisfies the Provision.
Terms of appointment and time commitment
All Non-Executive Directors are appointed for an initial term of three-years subject to satisfactory performance. After this time they
may serve additional three-year terms following review by the Board. Notwithstanding such three-year terms, all Non-Executive
Directors are proposed annually to shareholders for reappointment in accordance with best practice. All Non-Executive Directors are
expected to devote such time as is necessary for the proper performance of their duties. Directors are expected to attend all Board
meetings and Committee meetings of which they are members and any additional meetings as required.
Further details of their terms and conditions are summarised in the Remuneration Report on pages 69 to 80 and the full terms and
conditions of appointment of the Non-Executive Directors are available at the Company’s Registered Office.
Tenure chart
Date of appointment
1
2
3
4
5
6
7
8
9
10+
Peter Allen
4 December 2013
Grahame Cook
1 February 2021
Penny Freer
1 March 2010
Eddie Johnson
1 January 2019
Douglas Le Fort
2 August 2021
Chris Meredith
11 April 2006
Steve Bellamy
1 February 2007
Date of election
or next re-election
8 June 2022
8 June 2022
Retiring at AGM
8 June 2022
8 June 2022
8 June 2022
Retired in 2021
The Board was comprised of either five or six members
throughout 2021. The Board tenure is shown below.
Induction and professional development
Each New Director is given a formal induction process including
details of how the Board and Committees operate, meetings
with Senior Management, information on Group strategy,
products and performance and access to policies and other
key documents. Further details on the induction can be found
in the Nomination Committee Report on page 63.
Training and development needs of Directors are reviewed
regularly. The Directors are kept appraised of developments
in legal, regulatory and financial matters affecting the Group
by the Company Secretary and the Group’s external auditors
and advisors.
Professional advice, indemnities and insurance
There is provision for Directors to take independent professional
advice relating to the discharge of their responsibilities, with the
Company paying for such advice. The Company has arranged
Directors’ and Officers’ liability insurance against certain liabilities
and defence costs. However, the Directors’ insurance does not
provide protection in the event of a Director being found to have
acted fraudulently or dishonestly.
Board and Committee evaluation
The performance evaluation of the Board, its Committees
and Directors is undertaken by the respective Committee
Chair’s annually and more detail on this evaluation is set out in
the Report of the Nomination Committee on page 64.
Audit, Nomination, and Remuneration Committees
The Committee Reports can be found on pages 65 to 68, 62 to
64 and 69 to 80 respectively.
60 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
Corporate Governance Report continued
Going Concern
In carrying out their duties in respect of going concern, the
Directors have carried out a review of the Group’s financial
position and cash flow forecasts for the next 12 months from
the signing of the accounts. These have been based on a
comprehensive review of revenue, expenditure and cash flows,
taking into account specific business risks and the current
economic environment. The Directors are confident the
business can withstand the challenges and is a going concern,
due to the significant headroom available.
With regard to the Group’s financial position, it had net cash
at the year-end of £73.0 million (2020: £53.8 million) and an
undrawn, unsecured £80 million credit facility provided jointly by
NatWest and HSBC which will be renewed before its end date of
December 2022.
Demand for the Group’s products is strong as levels of elective
surgery and wound treatment volumes continue to rebuild
towards pre-pandemic levels with contracts in place with
customers such as government agencies and global healthcare
companies across different geographic regions who have
substantial financial resources.
The Group is closely monitoring the global supply chain crisis
and striving to mitigate its impacts by holding higher levels
of critical raw materials and forward planning as much as
possible and the impacts from the Omicron COVID-19 variant
are expected to be less severe than previous variants due to
high vaccination rates, the generally milder symptoms and the
resultant lower strain on healthcare systems.
Having considered the above, the Directors have concluded
that the Group is well placed to manage its business risks in the
current economic environment. Accordingly, they continue
to adopt the going concern basis in preparing the Financial
Statements.
Remuneration
The level of remuneration of the Directors is set out in the
Remuneration Report on pages 69 to 80.
Relations with shareholders
The Strategic Report, which incorporates the Chairman’s
Statement, Chief Executive’s Q&A, Financial Review, Section 172
Statement, Stakeholder Engagement, Risk Management and
Sustainability/ESG sections, together with other information in
the Annual Report of the Group, provides a detailed review of the
business. The views of both institutional and private shareholders
are important, and these can be varied and wide-ranging,
as is their interest in the Company’s strategy, reputation and
performance. The Executive Directors have overall responsibility
for ensuring effective shareholder communication and the
Company maintains a regular dialogue with its shareholders,
which is described in the Stakeholder Engagement section on
pages 26 to 31.
During the year we engaged significantly with shareholders
regarding proposed updates to our Remuneration Policy. Details
of this engagement process and the resulting proposed updates
to our Remuneration Policy are outlined in the report of the
Remuneration Committee on pages 69 to 80.
The Notice for the Annual General Meeting is sent to
shareholders at least 20 working days before the meeting.
The AMS website ‘www.admedsol.com’ is regularly updated
and provides additional information on the Group including
information on the Group’s products and technology.
Annual General Meeting
The 2022 AGM will be convened at 11.00am on the 8th June
2022. We are currently hopeful that the 2022 Annual General
Meeting will not have any COVID-19 specific restrictions on
attendance and participation, but this will be kept under review
and we shall follow Government guidelines and best practice
at all times. The Health and Safety of shareholders, as well
as employees and customers, is of paramount importance.
Details of the AGM will be outlined in the AGM Notice, on the
Company’s website ‘www.admedsol.com’ and through RNS
announcements to the market.
The results of the AGM will be announced to the London Stock
Exchange and placed on the AMS website ‘www.admedsol.com’,
in the usual way, as soon as practicable after the conclusion
of the AGM.
The Board would like to thank all shareholders for their
continued support and understanding.
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Advanced Medical Solutions Group plc Annual Report & Accounts 2021 61
GOVERNANCE
Nomination Committee Report
Good progress in strengthening
the Board for future challenges
Dear Shareholder,
As Chair of the Nomination
Committee, I am pleased to present
the Committee’s report for the year
ended 31 December 2021. The report
outlines the Committee’s work to fulfil
our responsibilities for reviewing Board
composition and balance, considering
the skills and capabilities required for
each new Board appointment, leading
the process for the Board in relation
to new appointments and reviewing
succession planning for the Board and
senior management. The Committee
continues to perform this with utmost
professionalism and diligence.
The Committee met four times during
the year and was chaired by myself, with
Penny Freer as the other Committee
member who was in place throughout
the year. In 2020 we outlined that, in
accordance with the 2018 UK Corporate
Governance Code (‘Code’), the Group
intended to refresh the composition
of the Non-Executive Directors. Steve
Bellamy left the Committee following
his retirement at the 2021 AGM.
Grahame Cook and Douglas Le Fort
were appointed as Non-Executive
Directors on 1 February and 2 August
2021 respectively and were appointed
to the Committee immediately.
The Committee remains focused on this
programme of Board refreshment and
Penny Freer will not put herself forward
for re-election at the 2022 AGM. The
Committee is following the process of
Non-Executive Director recruitment
outlined on page 64, taking into account
the Hampton-Alexander report and our
commitment to equality and diversity.
We will report to shareholders on the
outcome of this recruitment process
once it is complete and ensure that there
is a smooth and effective handover for
Penny’s responsibilities as Chair of the
Remuneration Committee and Senior
Independent Director.
I continue to believe that the actions we
are taking will ensure that the Board’s
size and composition is appropriate
for a Group of AMS’ size, complexity
and nature and will put us in the best
possible position to drive long-term
sustainable growth for the benefit of our
stakeholders. We are pleased with the
progress made in 2021 and that AMS
continues to attract great people.
Peter Allen
Chair of the
Nomination Committee
14 April 2022
The Committee
has focused on
succession planning
and developing its
plans for orderly and
progressive Board
refreshment.
Attendance record and tenure in 2021
Member
Peter Allen (Chair)
Grahame Cook (joined 1 February 2021)
Penny Freer
Douglas Le Fort (joined 2 August 2021)
Chris Meredith
Steve Bellamy (retired in June 2021)
Number of
meetings held
during the year
Number of
meetings
attended
4
4
4
2
4
0
4
4
4
2
4
0
Committee
tenure
8 years
11 months
12 years
5 months
11 years
15 years
62 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
Nomination Committee Report
Board composition
1
2
Non-Executive Chairman
Executive Directors
Independent Non-Executive Directors
Board tenure
2
1
0-3 years
3-6 years
>6 years
Board gender diversity
1
Female
Male
Senior Management Team
gender diversity
3
Female
Male
3
3
5
3
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Board members were unanimous in
appointing both Grahame and Douglas.
Following their appointments they
received a comprehensive and tailored
induction programme to enhance
their knowledge and understanding
of the Company’s business, strategy
and governance structure, as well as
their own duties and responsibilities.
They spent time with the Executive
Directors, Non-Executive Directors,
Senior Management Team, Company
Secretary and other key personnel. They
also received a briefing on their role and
duties as a Director of a publicly traded
company from external advisers.
Non-Executive Director
appointment process
Board composition is central to the
effective leadership of the Group and
therefore prior to commencing any
search for prospective Board members,
the Committee draws up a specification,
reflecting on the Board’s current balance
of skills and experience and that will
promote diversity on the Board, including
gender, social and ethnic backgrounds,
cognitive and personal strengths, and
those that would be conducive to the
delivery of the Company’s strategy.
Selection for Board appointments is
made on merit against this specification.
We have again appointed a search
consultancy to support this process.
Gender diversity
Following the Board changes in the year,
female representation on the Board
stands at 16.7%. AMS continues to see the
development of female executive talent
as important, which is reflected in the
increased female representation in the
Senior Management Team (50%).
Penny Freer will retire from the Board at
the 2022 AGM and our commitment to
equality and diversity will be a key part of
the recruitment process.
Board changes in the year
The Committee oversaw a rigorous
recruitment process for a Non-Executive
Director to take over as Audit Committee
Chair. We were delighted to welcome
Grahame Cook to the Board on 1
February 2021. His appointment followed
an extensive search which the Chairman
led with an executive search consultancy,
Dzaleta Consulting, who specialise in Life
Sciences. A shortlist of candidates were
interviewed by all members of the Board.
Grahame is a Chartered Accountant
and was an investment banker for
18 years, focusing on global equity
capital markets, M&A and corporate
advisory. For the past 18 years, he has
been a Non-Executive Director, most
recently with Horizon Discovery plc and
Morphogenesis Inc, and Chairman of
Sinclair Pharma plc. He brings significant
financial experience, knowledge of the
healthcare sector and his experience
of driving significant value creation at
healthcare companies will be invaluable
in the next stage of AMS’s growth.
Following Grahame’s appointment the
Board assessed their composition, skills
and experience and decided it would be
beneficial to make a further appointment
to provide additional sector specific
commercial knowledge and market
intelligence. Douglas Le Fort was short-
listed during the recruitment process
for Grahame and having completed
interviews with all members of the Board,
was appointed on 2 August 2021.
Douglas has expertise in business
strategy, including commercial business
execution, operational management
and M&A. He is an Operating Partner
for Revival Healthcare Capital Partners,
an investor in medical device and
diagnostics businesses, as well as a Non-
Executive Director at Trio Healthcare,
a manufacturer of ostomy products.
Most recently, he was CEO of MedTrade
Products, a woundcare products business
and prior to that served in various senior
executive roles at ConvaTec Group plc,
including five years on the Executive
Committee for the Group. He has an MBA
from Henley Management College and is
a Chartered Management Accountant.
Advanced Medical Solutions Group plc Annual Report & Accounts 2021 63
GOVERNANCE
Nomination Committee Report continued
Activity in the year
The Committee has been focused on
the appointment of Non-Executive
Directors to implement our programme
of Board refreshment and inducting
and onboarding those appointed. We
have appointed Dzaleta Consulting
for all executive searches in 2021
and 2022. Dzaleta Consulting has no
connection with AMS or any individual
Directors, other than having provided
Executive search services for prior
AMS Board appointments.
We undertook a Board Evaluation and
Committee Self-Assessment during
2021. The overall findings from the
effectiveness reviews concluded that
AMS’ Board, Committees and individual
Directors continue to operate
effectively and the Board actively
discussed any recommendations
arising out of the evaluations.
Priorities for 2022
The Committee will support the
appointment and onboarding of at
least one new Non-Executive Director.
In addition, we will continue to assess
the support required to develop the
Senior Management Team and potential
succession internally, as well as the
activity to drive a broader equality,
diversity and inclusion action plan.
Appointment process
SCOPING
Nomination Committee discussion
(Both scheduled and ad hoc meetings include Executive Directors where appropriate)
Considerations
•
Identification of a vacancy
• The needs of the organisation, currently and in the future
• The personal skills and qualifications required
• The dynamics of the current Board
Appointment of an Executive Search Consultancy
Considerations
• Market reputation
• Reach
• Understanding of the AMS culture, mission, vision and values
SEARCH
Production of a long list
Considerations
• Skillset
• Experience
• Gender, ethnicity and background
Production of a short list
Considerations
• Specific skills
• Experience
• Potential for overboarding
APPOINTMENT
Nomination Committee recommendation to the Board
Considerations
• Due diligence findings
POST APPOINTMENT
Induction programme
Considerations
• Directors duties and responsibilities
• Familiarisation with the business
• Meetings with key employees
64 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
Audit Committee Report
Governance and risk management
play a key role in supporting delivery
of our long-term strategy
Dear Shareholder,
As Chair of the Audit Committee, I am
pleased to present the Committee’s
report for the year ended 31 December
2021. This report highlights the work
done by the Committee in the year, to
fulfil our responsibilities to shareholders
and other stakeholders and assist the
Board in providing effective governance
over the Group. In meeting these
responsibilities, the Committee continues
to reflect the provisions of the 2018
UK Corporate Governance Code, FRC
Guidance for Audit Committees and
other best practice.
Strong governance of audit and risk
management is critical to the Group, to
allow it to deliver the strategy outlined in
further detail through our Strategic Pillars
in the Our Strategy section on pages 10
to 19.
The impacts of the pandemic including
global supply chain disruption have
highlighted the importance of the
Committee’s role and the need for robust
internal controls and risk management
systems to ensure that the Group
remains resilient in the face of change,
while remaining operationally agile and
adaptable. The Committee has been ably
supported during the year, by our external
auditors, Deloitte and our internal
auditors, RSM.
I took over the Committee Chair position
following Steve Bellamy’s retirement
at the 2021 AGM. Penny Freer was a
member of the Committee throughout
the year, with Douglas Le Fort becoming
a member of the Committee on his
appointment as a Non-Executive Director
on 2 August 2021. The Chairman, Peter
Allen, commonly attends meetings
of the Committee as his accounting
background and general experience is
valuable to the Committee.
The Committee met three times in
2021. In addition, there were a number
of ad hoc meetings with the external
and internal auditors. I am confident
that the Committee is well-balanced,
with the necessary skills and experience
to perform its critical oversight and
governance function within the Group.
Looking ahead, the Committee will
continue to monitor the potential impact
of the pandemic and global events on our
financial performance whilst maintaining
a focus on internal controls and our risk
management approach.
Grahame Cook
Chair of the Audit Committee
14 April 2022
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Attendance record and tenure in 2021
Member
Grahame Cook (Chair – joined 1 February 2021)
Penny Freer
Douglas Le Fort (joined 2 August 2021)
Steve Bellamy (retired in June 2021 at the AGM)
Number of meetings
held during the year
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Number of
meetings attended
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3
2
1
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tenure
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12 years
5 months
15 years
Advanced Medical Solutions Group plc Annual Report & Accounts 2021 65
GOVERNANCE
Audit Committee Report continued
Aims and objectives
The aim of the Committee is to monitor the integrity of the Group’s Financial Statements and announcements, its accounting
processes, and the effectiveness of its internal controls and risk management system. The Committee assists the Board in fulfilling
its responsibility to ensure that the Group’s financial systems provide accurate, up-to-date information on its financial position and
in its consideration as to whether the Group’s published Financial Statements are fair, balanced and understandable.
The Audit Committee is required to:
• Oversee and advise the Board on the risk exposures of the Company and related risk management strategies.
• Oversee Internal Audit and review internal control policies and procedures for the identification, assessment and reporting of
material financial and non-financial risks.
• Review the Group’s procedures for detecting and preventing fraud, prevention of bribery and corruption and ensure
arrangements are in place to enable employees to raise matters of possible impropriety in confidence.
• Review the content of the Annual Report and advise the Board whether, taken as a whole, it is fair, balanced and understandable
and provides the information necessary for shareholders to assess the Group’s position, performance, business model
and strategy.
• Review the engagement, effectiveness and independence of the External Auditor, and consider a tender process.
• Review audit and non-audit services provided by the external auditor and fees for such services.
• Review the Terms of Reference annually to ensure all key areas are being considered and that the Committee’s remit and
activities are in line with best practice. These were last updated in December 2021.
Audit Committee activities
To discharge its responsibilities, during the year, the Committee has undertaken the following activities:
Topic
2021 main activities and key areas of focus
Financial
Statements
and Reports
• Reviewed and approved the External Audit fees for 2021.
• Reviewed the annual and half-yearly financial reports and related statements.
• Assessed key accounting judgements, including the number of cash generating units, capitalisation of
development and recertification costs and the impact of COVID-19.
• Reviewed all significant matters in relation to the Financial Statements and how these have been addressed
including:
– Going Concern – Code Provision 31 requires the Directors to explain in the Annual Report how they assessed
the prospects of the Company, over what period and why that period is appropriate. The Committee considered
a wide range of information relating to present and future projections of profitability, cash flows, capital
requirements and capital resources. These considerations include stressed scenarios that reflect the uncertainty
that COVID-19 may have on the Group’s operations. The statement to be made by the Directors was considered
and it was concluded that the Group and Parent Company will be able to continue in operation and meet
liabilities as they fall due, and that it is appropriate that the long-term viability statement covers a period of at
least 12 months beyond the date of the Financial Statements.
– Assessed risk management, risk appetite, internal controls, the risk and control reporting structure and the
ongoing process to monitor the principal risks of the Group. As part of these reviews, consideration has been
given to the ongoing impact of COVID-19.
– Reviewed changes to the Group’s Cash Generating Units (CGUs), to reduce the number from five to two to
better align to how the Group now operates, including consideration of the impact of this change on impairment
modelling. A summary of the rationale for reducing the number of CGU’s was received and challenged and
proactive communication of the proposal was made to the External Auditors to ensure that the change was
appropriately considered by all parties. Key inputs and methodologies used in the Impairment testing was received
and challenged, with a key focus on the cashflows included within the forecasts and the discount rates used. The
Committee also challenged management’s key judgements and considered the reasonableness of the outcomes
as a sense check against the business forecasts and strategic objectives of the Group.
– The Committee considered and challenged management’s judgements relating to the capitalisation of
development and recertification costs including the relevant amortisation period. Summary information is
provided to the Committee before a decision is taken whether to capitalise significant new projects.
66 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
Audit Committee Report continued
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External Audit
• Monitored the independence and ensured the objectivity of the External Auditor, approved the Audit Plan for the
2021 audit, reviewed the performance of the External Auditor, considered the re-appointment of Deloitte LLP as
auditor for 2022 and recommended their re-appointment to the Board. In line with Best Practice as the incumbent
Audit Partner has served five years a new Audit Partner will commence in April 2022.
Internal Audit
• Continued the rolling internal audit plan from RSM, including reports on treasury and cash management,
post-Brexit and VAT customs treatment and on business continuity and disaster planning.
Risk
Management
Effectiveness
of External
Auditor
• Reviewed and considered key risks to the Group, the plans and controls to mitigate these risks and scoring criteria.
An annual performance review of the External Auditor was undertaken in December 2021 to assess:
• Effectiveness of the audit process.
• Resource quality – ensuring the right quality and balance of audit team resource and that the team provides
continuity, knowledge and a fresh perspective through new team members.
• Effective communication – ensuring key audit judgements are communicated at the earliest opportunity
to promote discussion and challenge between the External Auditors, management and the Committee.
Communication regarding good practice, changes to reporting requirements and accounting standards enables
the Group to be fully and properly prepared. Timely provision of audit papers enables adequate management
review, Committee consideration and feedback.
• Scoping and planning – timely provision of the External Audit plan and timetable.
• Fees – ensuring they are transparent, appropriate and communicated prior to the commencement of any work
being undertaken. Variations are challenged at the earliest opportunity to enable dialogue and agreement.
• Auditor independence – the Committee monitors the External Auditor’s compliance with ethical guidelines and
considers their independence and objectivity. It is agreed that the External Auditor will generally not be considered
for external due diligence type support, but that any non-audit services would typically be assurance related. The
Committee received and reviewed written confirmation from the External Auditor that there were no relationships
that, in their judgement, may impact their independence. The External Auditor has confirmed that they consider
themselves independent within the meaning of UK regulatory and professional requirements.
The Audit Committee provides effective
governance over the Group’s internal controls,
financial reporting and risk management, to give
assurance to shareholders and other stakeholders
that their interests are protected.
Aims and objectives
The aim of the Committee is to monitor the integrity of the
Group’s Financial Statements and announcements, its accounting
processes, and the effectiveness of its internal controls and risk
management system. The Committee assists the Board in fulfilling
its responsibility to ensure that the Group’s financial systems
provide accurate, up-to-date information on its financial position
and in its consideration as to whether the Group’s published
Financial Statements are fair, balanced and understandable.
The Audit Committee is required to:
• Oversee and advise the Board on the risk exposures of the
Company and related risk management strategies.
• Oversee Internal Audit and review internal control policies
and procedures for the identification, assessment and
reporting of material financial and non-financial risks.
• Review the Group’s procedures for detecting and preventing
fraud, prevention of bribery and corruption and ensure
arrangements are in place to enable employees to raise
matters of possible impropriety in confidence.
• Review the content of the Annual Report and advise the
Board whether, taken as a whole, it is fair, balanced and
understandable and provides the information necessary for
shareholders to assess the Group’s position, performance,
business model and strategy.
• Review the engagement, effectiveness and independence of
the External Auditor, and consider a tender process.
• Review audit and non-audit services provided by the external
auditor and fees for such services.
• Review the Terms of Reference annually to ensure all key
areas are being considered and that the Committee’s remit
and activities are in line with best practice. These were last
updated in December 2021.
Non-audit services
The External Auditor may provide non-audit services where
it is in the Group’s best interests, provided certain criteria are
met. The External Auditor must not audit their own work, make
management decisions for the Group, create a conflict of
interest or find themselves in the role of an advocate for the
Group. OEPI rules prevent the External Auditor from performing
due diligence. The Committee’s view is that any non-audit
service performed by the External Auditor should be assurance
related, where there is limited scope for such conflict.
Advanced Medical Solutions Group plc Annual Report & Accounts 2021 67
GOVERNANCE
Audit Committee Report continued
There was one project in 2021 where expenditure exceeded
the £10,000 threshold for approval by the Committee, which
was the £31,500 fee for audit related assurance services relating
to the review of the Interim Statements, which is a permitted
service. The Company’s policy on non-audit services complies
with the FRC’s 2019 Revised Ethical Standard.
Deloitte LLP has been the External Auditor for 14 financial years.
A performance, effectiveness and independence evaluation led
the Committee to recommend the re-appointment of Deloitte
LLP as the Group’s External Auditor for the next financial year.
Internal Audit
Internal Audit is delivered by RSM against an agreed plan under
the guidance of the Committee. RSM report directly into the
Committee, to avoid undue influence from management, and
focuses on areas of potential risk and process improvement. As
noted in last year’s Committee Report, a two year Internal Audit
Plan with RSM was agreed in December 2020 to cover 2021 and
2022. The Committee:
• Ensures the function has the necessary resources,
independence and access to information, employees,
the Board and the Committee Chair’s to enable it to
fulfil its mandate.
• Approves the Internal Auditor appointment and termination.
• Reviews and assesses the Internal Audit work plan and
receives a report at least twice per year.
• Reviews and monitors management’s responsiveness to the
Internal Auditor’s findings and recommendations.
• Monitors and reviews the effectiveness of controls in relation
to the overall risk management system.
All reports are discussed with the Committee and the External
Auditor. Recommendations are considered and acted upon as
appropriate. RSM attends Committee meetings twice a year and
provides an update in writing ahead of each meeting.
In 2021 the Internal Auditor undertook a series of reviews in line
with the Internal Audit Plan agreed in December 2020. These
reviews led to RSM reporting to the Committee on:
• Treasury and cash management controls.
• Post-Brexit and VAT Customs, following the end of the
transition phase for the UK leaving the European Union on
31 December 2020.
• Business continuity and disaster recovery, including
evaluating the ongoing impact of COVID-19 on the Group’s
business processes, systems and resources.
These reports highlighted to the Committee that, although the
Group’s internal controls generally give very good assurance,
there are some specific non-critical improvements that could
be made within the Internal Controls Framework and Risk
Management Strategy. These have now been implemented.
This Framework and Strategy is updated regularly and is available
on the Company’s Intranet. Policies are updated and formally
approved by the Committee at least once a year, including
where necessary to give the Committee stronger assurance
about areas of key risk.
The Group also calls on the services of external bodies to review
the controls in certain areas of the Group. The quality assurance
systems are reviewed by the Group’s Notified Bodies, the British
Standards Institute (BSI), TÜV Rheinland, TÜV Sud, DEKRA
Certification GmbH and PCBC.
Risk management and internal controls
The Board, taking guidance from the Committee, monitors and
reviews all material controls including financial, operational
and compliance controls. Only reasonable and not absolute
assurances can be made against material loss or misstatement.
Key features of the internal control systems are:
• The Group has an organisational structure with clear
responsibility and accountability.
• The Board has a schedule of matters reserved for its
consideration which includes potential acquisitions, significant
capital projects, appointment of senior management,
treasury policies, risk management, approval of budgets and
re-forecasts, Health and Safety, Corporate Governance and
Environmental, Social and Governance (ESG).
• The Board monitors the activities of the Group through
monthly management accounts, half-year and full-year
forecasts, and reports on current activities and plans. The
Senior Management Team also regularly monitors financial
and operational performance.
• The Group has set appropriate levels of authorisation which
must be adhered to. These levels were comprehensively
reviewed by the Board and the Committee during the year,
with an updated authorisation matrix issued to the Group in
January 2022.
• An Enterprise Resource Planning (ERP) system, with in-built
controls over process and authority, minimising manual
intervention, is in place in the UK, the Netherlands and
Germany, with equivalent systems in other jurisdictions.
• The Group operates a ‘Whistleblowing’ Policy enabling
individuals to report any concerns to Senior Management or
the Board. This policy allows for reporting to be made on a
confidential basis if necessary.
Any weaknesses identified in the Group’s internal control system
are reported to the Committee and corrective actions agreed.
Creating long-term shareholder value is the reward for taking
controlled risk. Risk management is crucial to the Group’s
success and is given a high priority to ensure that adequate
systems are in place to evaluate and limit risk exposure.
The Committee, Board and Management each formally review
the Risk Register at least twice a year. Risks are evaluated for
both likelihood and financial impact, helping to identify the
most significant risks the business faces. Actions are agreed to
mitigate the risks and progress is regularly assessed. The process
for identifying, evaluating and managing the risks faced by the
Group is ongoing throughout the year. As part of the External
Auditor’s annual review process, any key risks and areas of audit
focus are also identified and agreed with the Committee.
68 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
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Remuneration Committee Report
Attracting, motivating and retaining
strong talent is absolutely critical to
delivering the Group’s strategy
Dear Shareholder,
I am pleased to present the Remuneration
Committee Report for the year ended
31 December 2021. The Committee
was made up of myself and Peter Allen
throughout the year. Steve Bellamy was a
member until his retirement at the 2021
AGM. Grahame Cook and Douglas Le
Fort were appointed as Non-Executive
Directors on 1 February and 2 August
2021 respectively and were appointed to
the Committee with immediate effect.
The Committee formally met four times
during 2021.
The Committee’s role is to ensure that
our Remuneration Policy is appropriate
for a successful, growing business with
the size and profile of AMS, reflecting
the need to engage the right calibre of
employees to deliver our strategy in a
complex and challenging economic and
regulatory environment.
The Board and the Committee take
governance seriously and we remain
committed to high standards of
corporate governance, putting this report
to an advisory vote each year at the AGM.
During the year I, and other members of
the Board, have engaged with the Group’s
largest institutional investors and proxy
voting agencies on various governance
matters, including remuneration.
We proposed a number of changes to our
Remuneration Policy, designed to ensure
that we are able to attract, motivate and
retain the talent we need to deliver on
the Group’s strategy. We took account of
the balance of feedback received and this
Remuneration Policy reflects the result of
the engagement.
A resolution will be put to shareholders
at the AGM on 8 June 2022 asking
shareholders to consider and approve
this Report.
As I will be retiring from the Board at the
2022 AGM, it is expected that Douglas
Le Fort will take over as Chair of the
Committee. Douglas has been working
closely with me since he joined the
Committee in 2021.
Penny Freer
Chair of the Remuneration Committee
14 April 2022
Aligning our Remuneration Policy to reflect the
views of our shareholders, whilst supporting the
Group to deliver long-term, sustainable growth.
Number of meetings
held during the year
when the Director was a
member
Number of
meetings attended
4
4
4
2
1
4
4
4
2
1
Committee
tenure
12 years
8 years
11 months
5 months
15 years
Advanced Medical Solutions Group plc Annual Report & Accounts 2021 69
Attendance record and tenure in 2021
Member
Penny Freer (Chair)
Peter Allen
Grahame Cook (joined 1 February 2021)
Douglas Le Fort (joined 2 August 2021)
Steve Bellamy (retired in June 2021)
GOVERNANCE
Remuneration Committee Report continued
Remuneration for 2021
The annual bonus awards and Long-Term Incentive Plan (‘LTIP’)
vesting in 2021 for the Executive Directors were as follows:
Annual bonus
The performance conditions for the annual bonus for the
last financial year were based on the achievement of three
financial targets of which threshold was only met for two
(Revenue, Adjusted PBT and EPS – accounted for 85% of
the total bonus) and personal objectives accounted for 15%.
In view of performance, the Committee determined:
• Revenue of £108.6m was below the threshold figure
(£110.3m).
• Adjusted PBT of £25.6 million was in line with the threshold
figure (£25.6 million).
• EPS of 9.66p was above the threshold figure of (9.47p).
• Personal objectives are linked to corporate, financial,
strategic and non-financial objectives (see page 76). The
Committee determined these objectives were met in full.
LTIP
LTIPs awards granted to Chris Meredith and Eddie Johnson in
April 2018 were due to vest in 2021 with performance criteria
and weightings as follows:
• TSR (50%) – the performance period ended on 12 April 2021.
The Company ranked below the median (44th out of 63
comparators) which resulted in a vesting of 0%.
• EPS (50%) – the growth in EPS was calculated over the three
financial years to 31 December 2020. The average annual
growth was -13.27%, below the threshold level of 5% which
resulted in a vesting of 0%.
• Overall across both elements the final vesting result was 0%.
The Committee believes these outcomes were not a fair
reflection of Group performance over the vesting period and
that the Executive Directors performed well, in particular when
managing the impact of COVID-19. Despite this the Committee
did not use discretion and maintained a Nil vesting.
Implementation of Remuneration Policy in 2021
The Committee undertook a review of the Remuneration Policy
(‘Policy’) in 2021: we reviewed salaries; the bonus scheme;
the LTIP; and engaged with significant shareholders to seek
feedback. As a result of this review and shareholder engagement
we have made the following changes:
Chris Meredith’s salary was increased from £307,545 to
£350,000 (an increase of 14%), to bring him into line with the
market median for CEOs of comparable AIM listed companies.
Eddie Johnson’s salary was raised from £174,000 to £210,000
(an increase of 21%). This increase brings Eddie’s salary to around
the 25th percentile for equivalent CFOs, and it is expected
that his salary will continue to increase over time as he gains
experience in the role, dependent on his future performance.
These changes both took effect from 1 July 2021.
The Committee also reviewed the format of the Executive
Directors’ annual bonus scheme, and proposed certain
changes to this scheme to better enable the Committee to
incorporate key non-financial objectives (such as ESG targets)
into the Executive Directors’ bonus targets. From 2022 Eddie
Johnson’s maximum bonus potential is to be increased to
100% of salary (up from 75%), to bring him in line with the
market median for CFO bonus potential. At the same time,
the Committee has agreed that Senior Management Team
bonus potential should increase from 50% to 75% of salary.
Consequently, in 2022 the annual bonus scheme applying
to Executive Directors will be as follows:
• Annual bonus opportunity shall be 150% for Chris Meredith
and 100% for Eddie Johnson. 70% of the total bonus will be
based on stretch revenue and adjusted PBT targets (35% for
each). The formal EPS target has been removed. The balance
of 30% will be based on personal objectives (including
specific ESG targets) where exceptional achievement may
result in the award of a bonus even if financial objectives
have not been achieved.
Finally, a review of the LTIP resulted in an increase in Eddie
Johnson’s maximum award from 100% of salary to 125% of salary.
Chris Meredith’s maximum award remains at 200% of salary.
Compliance with the 2018 UK Corporate Governance
Code (‘Code’)
As a large AIM quoted company, AMS has chosen to follow
the Code and is compliant in the majority of areas including
malus and clawback provisions and share ownership guidelines
(Executive Shareholding Policy).
In consideration for the changes highlighted elsewhere in
this Remuneration Policy, and in order to comply further with
the Code, specifically Provisions 36 (share awards granted for
Executive Directors should be subject to a total vesting and
holding period of five years or more) and 37 (remuneration
schemes should include provisions that would enable the
Company to recover and/or withhold sums or share awards),
the Committee has agreed that the structure of LTIP awards will
change from 2022 onwards. These will now be subject to a total
vesting and holding period of five years (three years vesting plus
two additional years holding), in line with the Code and the trend
for FTSE main market companies. Both deferred bonus and LTIP
awards will also contain malus and clawback provisions.
Full details of the share schemes offered to the Executive
Directors can be found on page 74. Provision 38 of the Code
outlines that pension contribution rates for Executive Directors,
or payments in lieu, should be aligned with those available to
the workforce. The Committee does not consider the current
contributions of 10% to be excessive and this issue will be
addressed for any new appointments. Full details of compliance
with the Code is on the Company’s website (www.admedsol.
com). When determining the Policy the Committee is aware
of the Code requirements for clarity, simplicity, risk mitigation,
predictability, proportionality and alignment to culture.
We believe that these requirements are met as follows:
70 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
Remuneration Committee Report continued
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Clarity
• Our Policy is well understood with a clear aim; support
the delivery of strategy and promote long-term
sustainable growth.
• To achieve this the Policy aims to be strategically aligned,
promotes pay for performance, is competitive in the market
and provides a commitment to employees to pay fairly and
in a clear, transparent and simple way.
• Each component of remuneration is clearly explained in the
Policy table, including its purpose, how it is operated, the
maximum potential and any relevant performance measures,
which are disclosed for shareholders’ consideration.
Simplicity
• The Policy reflects standard UK market practice with an
annual performance bonus and LTIPs.
• All payments are in the form of cash or AMS shares and no
artificial structure is used to deliver remuneration.
Risk
• The Committee can use its discretion to override the
formulaic outcomes of the incentive plans if it is felt
appropriate in extreme circumstances.
• Malus and clawback provisions operate in the LTIP and
Deferred Annual Bonus plan (DAB) allowing payments to be
adjusted or withheld, and LTIP awards now include a market-
standard vesting and holding period totalling five years.
• There is an appropriate mix of financial, non-financial and
share price measures to avoid undue risk taking.
Predictability
• Appropriate limits are set out in the Policy and within
the respective share scheme rules so outcomes can
be predicted.
•
In operating the Policy, the Committee continually monitors
the performance of share scheme awards so that it is aware
of potential outcomes and forewarned of potential issues.
Proportionality
• The outcomes of our share schemes are aligned to delivery
of strategy and are measured against various metrics.
Alignment of culture
A focus of the Policy is long-term sustainable growth which
is reflected in our Care, Fair, Dare values. The change to 2022
annual bonus requirements is intended to further ensure that
the Executive Directors take account of and reflect these
values (including ESG strategy) in their roles, over and above
pure financial performance. We voluntarily seek advisory
shareholder approval for our Remuneration Report and
feedback helps inform the Committee’s approach. Specific
comments on the Policy can be sent to the Company Secretary
(companysecretary@admedsol.com).
As an AIM-quoted Company, Advanced Medical Solutions Group
plc is not required to comply with the Directors’ Remuneration
Report regulations requirements under Main Market UK Listing
Rules or those aspects of the Companies Act applicable to listed
companies. The following disclosures are made voluntarily.
The Committee comprises three Non-Executive Directors and
the Chairman of the Board. Biographical information on the
members is set out on pages 52 and 53. They have no personal
financial interest in decisions other than as shareholders, no
conflict of interest from cross-Directorships and no day-to-day
involvement in running the business. They do not participate in
bonus, share option or pension arrangements.
On behalf of the Board the Committee, in consultation with
the Chief Executive Officer, determines the policy for Directors
remuneration and setting remuneration for the Company’s Chair
and Executive Directors and Senior Management, including the
Company Secretary, and recruitment at SMT level or for other
senior role where shares are included in the joining package.
The Committee administers the share option schemes,
determines the design of performance-related pay schemes,
sets targets and approves payments under such schemes. The
Board has accepted the Committee’s recommendations in full.
The Terms of Reference of the Committee are available on the
Company’s website www.admedsol.com.
The activities the Remuneration Committee undertook in 2021 were:
Month
February
Principal Activities
• Review of 2020 personal objectives and implications for bonus and Deferred Annual Bonus awards.
• Discussion on 2021 personal objectives for the Executive Directors and review of 2021
corporate objectives.
• Review of 2021 LTIP and share option awards for 2021 (Executive Directors, SMT and key employees).
• Review of LTIP Scheme and how this combines with the bonus.
• Review of Gender Pay Gap Report.
• Decision to run the Deferred Share Bonus Scheme twice in 2021 (April and October).
June
• Review of Remuneration Policy provided by external consultant (Ellason LLP).
• Ratification of 2021 personal objectives for Executive Directors.
• Ratification of LTIP and share option awards for 2021 (Executive Directors, SMT and key employees).
• Review of compliance with Executive Shareholding Policy and ratification of zero vesting for 2018 LTIP.
• Review and approval of Executive Shareholding Policy and Good Leaver delegation rules.
June-August
• Significant shareholder consultation on Remuneration Policy.
Advanced Medical Solutions Group plc Annual Report & Accounts 2021 71
GOVERNANCE
Remuneration Committee Report continued
Month
October
Principal Activities
• Ratification of LTIP, bonus, and overall compensation packages agreed post shareholder consultation.
• Reviewed progress of 2021 personal objectives for Executive Directors.
• Reviewed status of 2021 bonus.
• Renewal of Executive Shareholding Policy and Good Leaver Delegation Policy.
December
• Discussed 2022 salaries for the Executive Directors, SMT and workforce overall and 2022 personal
objectives for the Executive Directors.
• Consideration of the bonus structure for 2022.
• Initial review of 2021 personal objectives and corporate objectives.
• Discussion regarding 2022 personal objectives for Executive Directors.
• Review of results of Committee Self Assessment questionnaire.
• Reviewed Terms of Reference, Directors’ Expenses Policy and 2021 Remuneration Committee
Meeting dates.
Remuneration Policy
The objective of the Policy is to attract, retain and motivate
management of the calibre required to develop and implement
the strategy and enhance earnings over the long-term without
paying more than is necessary, having regard to views of
shareholders and other stakeholders. The choice of financial,
non-financial and strategic measures is important, as is the
exercise of independent judgement and discretion when
determining remuneration awards, taking account of Group and
individual performance and wider circumstances. The Policy
aims to conform to best practice as far as reasonably practicable
and the Committee retains the right to exercise discretion.
From 2022 the Policy will include criteria related to ESG which
will increasingly be a key component of Executive Director
remuneration moving forward in line with market practice.
There are four key aspects to the Policy:
• Strategically aligned – Aligned with our strategy and culture.
Share ownership drives the right long-term behaviour.
Executive Directors and Senior Management are required to
build a significant shareholding aligning their interests with
the stakeholders’ interests. Design of long-term incentives
will be prudent and will not expose shareholders to
unreasonable financial risk.
• Pay for performance – Senior Management remuneration
promotes long-term success and reward value creation
for our stakeholders. Assessment of short-term incentives
under the Annual Performance Bonus is made against
corporate, financial, strategic and other non-financial
objectives. A proportion of the bonus is deferred for
Executive Directors and Senior Management for three-years.
Long-term incentives are linked to long-term financial and
strategic objectives, and now include a five year total vesting
and holding period.
• Market competitive – All elements of our remuneration
are reviewed regularly to ensure they remain market
competitive to attract and retain talent, as well as to avoid
excessive overpayment.
• Employee commitment – We are committed to paying our
people fairly and in a clear, transparent and simple way.
The Policy supports strategy and promotes long-term
sustainable success. Executive remuneration is aligned to
strategy and performance and the Care, Fair, Dare values
are linked to the delivery of this long-term strategy. The
Policy enables the use of discretion to override formulaic
outcomes and to withhold sums or share awards under
appropriate specified circumstances. In considering reward
elements, account will be taken of both Group performance
and the performance of each individual Executive Director.
Discretion can also be used when making grant awards.
The Committee appointed Ellason LLP in 2021 to provide
independent advice on the remuneration of Executives,
Non-Executive Directors and SMT. Details of the work
carried out by Ellason are set out below. Executive Director
remuneration consists of basic salary, bonus, LTIPs, health
and insurance benefits, and pension contributions. A balance
between fixed and performance-related remuneration elements
is maintained.
Enhanced shareholding guidelines
Executive Directors and Senior Management are expected to
accumulate and maintain a significant shareholding. The holding
requirements for the Executive Shareholding Policy are 200%
and 100% of salary respectively for the Executive Directors and
Senior Management in order to align their interests with our
stakeholders and encourage share ownership. All Executive
Directors and Senior Management Team (SMT) members met
or exceeded the shareholding target in 2021, except for three
SMT members who have been with the Company for less than
five years. If a SMT member does not comply at the end of the
five-year period the Committee retains discretion to decide
on any sanction, which may include a simple ‘warning’ or a
reduction in the next LTIP grant or bonus opportunity.
Ellason LLP was engaged in May 2021 to provide guidance
and benchmarking for Executive, Non-Executive and SMT
remuneration packages. Ellason was the only advisor who
provided material assistance to the Committee during 2021
as below:
Advisors
Ellason LLP
Fees for Committee assistance
£18,312
72 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
Remuneration Committee Report continued
Consideration of employment conditions elsewhere in the Group
The Committee considers the general basic salary increase for the broader employee population when determining the annual salary
increases and remuneration of Executive Directors. The cost of living increase for the 2021 financial year was 1% for the SMT and the
broader employee population, which took effect from 1 January 2021. Additionally, the Group awarded a small number of merit-
based increases over and above this cost of living increase to employees at various levels of the organisation. Details of the increases
awarded to Executive Directors are set out above and were separate to the cost of living increase, which the Executive Directors did
not receive. Non-Executive Director salaries and fees were also reviewed and increased during the year. Details of these increases are
provided below.
The Committee will continue to review Executive Director and Non-Executive Director salaries against industry benchmarks
during 2022.
Statement of voting at Annual General Meeting (AGM)
At the 2021 AGM the percentages of votes cast ‘for’, and ‘against’ in respect of the Directors’ Remuneration Report were:
Resolution
Number of shares voted
Votes cast ‘for’
Votes cast ‘against’
To approve the Directors’ Remuneration Report
120,394,128
99.73
0.27
Overview of Director and Senior Management Remuneration Policy
Element of remuneration
Purpose and how it supports strategy
Base salary
To provide competitive fixed
remuneration.
To attract, retain and motivate
Executive Directors and Senior
Management of the right calibre
to deliver the Company’s strategy
and to provide a core level of
reward for the role.
Framework used to assess performance
Where there is a change in
responsibility, progression in the
role, change in size or structure
of the Group or increased
experience of the Executive
Director or member of Senior
Management, the Committee
retains the discretion to award a
higher increase than the standard
increase for the UK workforce.
How the element operated and
maximum opportunity
In line with the Policy salary
levels are set taking into account
experience, responsibilities
and performance, both from
an individual and business
perspective and from
utilising external market data
(benchmarking).
Salaries are reviewed annually.
Changes are usually effective
from 1 January, although in 2021
changes were made effective
from 1 July 2021. Current salaries
of the Executive Directors are set
out on page 70. A review was last
carried out in June 2021.
Benefits
Annual Performance Bonus
To provide a competitive level of
benefit provision.
Executive Directors and their
families receive private medical
insurance. No maximum cost.
N/A
To drive and reward performance
against annual financial and
operational goals which are
consistent with the medium to
long-term strategic needs of
the business.
Executive Directors are entitled to
receive an Annual Performance
Bonus to be determined by the
Committee based on the Group’s
financial performance and the
achievement of specific personal
targets set by the Committee.
There is no financial underpin,
which allows the Committee a
greater level of discretion when
determining the payment of a
bonus in respect of personal
objectives.
The maximum percentages of
salary achievable are set out on
page 76.
In 2022 both financial and non-
financial measures are used for
Executive Directors,. Financial
targets are set against Group
revenue (35%), PBT (35%) and
personal objectives (30% based on
non-financial objectives, including
ESG and Care, Fair, Dare values).
Business need may alter future
bonus measures or weightings.
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Advanced Medical Solutions Group plc Annual Report & Accounts 2021 73
GOVERNANCE
Remuneration Committee Report continued
Element of remuneration
Purpose and how it supports strategy
Deferred Annual Bonus (DAB)
Provides mechanism to exercise
malus provisions.
How the element operated and
maximum opportunity
Framework used to assess performance
The DAB requires Executive
Directors and SMT to defer up to
25% of their Annual Performance
Bonus for three years.
N/A
Deferred Share Plan Bonus (DSB) To align the interests of all
employees with shareholders,
incentivise long-term
value creation and act as
a retention tool.
Long-Term Incentive Plan (LTIP) To align the interests of the
Executive Directors and SMT with
shareholders and to incentivise
long-term value creation.
The DAB includes malus
provisions which are laid out on
page 75. Clawback provisions
also apply to the DAB.
The DSB is available to all
employees and allows investment
of bonus and/or salary into shares.
It also allows for the provision of
matching (free) shares if the shares
are held for a set period.
The LTIP permits an annual grant
that vests subject to performance
and employment.
Under LTIP rules, the maximum
annual award is 200% of salary.
Details of the award levels for
2021 are set out below. Awards
under the LTIP may be granted
in the form of nil-cost options
or cash (where they cannot be
settled in shares). Awards have a
£1 consideration.
50% of the vesting is based on the
Total Shareholder Return (TSR)
performance compared with the
AIM Healthcare Share Index over
the three-year period and 50% of
the vesting is determined by the
growth in the average Earnings
Per Share (EPS) per year of the
Group over a three-year period.
The calculation analyses the 90
dealing day period to the date of
grant measured against the 90
dealing day period prior to the
three-year anniversary following
the date of grant.
The 2014 LTIP scheme introduced
malus provisions which are laid
out below. The scheme has
also been revised to allow for
clawback provisions.
N/A
No shares shall vest from
the proportion of the Award
determined by reference to the
AIM Healthcare Share Index if
the Company is ranked below
median. Awards vest on a sliding
scale from 25% to 100% for
performance from median to
upper quartile.
Performance against EPS will be
based on the percentage increase
in the Group’s EPS over a three-
year period commencing on
1 January of the year in which the
Award is made. Awards vest on
a sliding scale from 25% to 100%
for an average annual EPS growth
rate over the vesting period of
a minimum of 5% rising to 20%.
No awards will be made for an
average annual growth rate below
the 5%.
The Committee has flexibility to
make adjustments to performance
conditions to ensure the Award
achieves its purpose. Vesting
is subject to the Committee
being satisfied that the Group’s
performance on these measures is
consistent with the performance
of the business.
74 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
Remuneration Committee Report continued
Element of remuneration
Purpose and how it supports strategy
Pension
To provide a market competitive
remuneration package to enable
the recruitment and retention of
Executive Directors and Senior
Management.
Framework used to assess performance
N/A
How the element operated and
maximum opportunity
Executive Directors contribute
up to 10% of salary into a defined
contribution plan with the Group
contributing a fixed 10%. All
other UK employees contribute a
minimum of 3% which is matched
by a Company contribution of
6%. An employee may substitute
pension contributions for salary if
they are impacted by limitations
on the size of individual personal
pension funds.
It is intended that any new
Executive Directors will have a
pension in line with the workforce.
Malus and clawback provisions – 2014 LTIP/DAB
The 2014 LTIP and DAB incorporate malus provisions. The Committee may, in its absolute discretion, resolve to vary an Award in
the event that any of the Financial Statements or results for the Company, or for any Group Company, are materially restated (other
than restatement due to a change in accounting policy or to rectify a minor error) or if, in the reasonable opinion of the Committee
and following consultation with the relevant employing Group Company, a participant has deliberately misled the management of
the Company and/or the market and/or the Company’s shareholders regarding the financial performance of any Group Company
or any Subsidiary, or a participant’s actions amount to serious misconduct or conduct which causes significant financial loss for
the Company, any Group Company and/or the participant’s Business Unit. If it is determined that the malus provision applies
then the number of shares comprised in an Award that are not vested and/or vested shares in the case of an unexercised Option
should be reduced (to Nil if appropriate). Following the consultation with shareholders during the year, the Committee has agreed
to incorporate clawback provisions into DAB and LTIP awards from 2022. These would allow for clawback of previously granted
Awards in the same circumstances as set out above.
Directors emoluments – single figure of remuneration (2020 and 2021)
Salary
and fees
Annual
Performance
Bonus
Deferred
Bonus
LTIPs
vested
Gains on
DSB vested1
Benefits
Pensions
Total
remuneration
Chris Meredith
Eddie Johnson
Peter Allen
Penny Freer
Steve Bellamy2
Grahame Cook
Douglas Le Fort
Total
21
329
192
83
49
22
44
18
737
20
21
20
305
173
75
45
45
–
–
150
45
–
–
–
–
–
6623 195
–
–
–
–
–
–
–
–
21
19
6
–
–
–
–
–
25
20
21
20
192
41
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
21
11
37
–
–
–
–
–
20
9
33
–
–
–
–
–
42
21
20
1
1
–
–
–
–
–
2
1
1
–
–
–
–
–
2
21
33
19
–
–
–
–
–
52
20
30
17
–
–
–
–
–
47
21
543
300
83
49
22
44
18
20
537
265
75
45
45
Nil
Nil
1,059
9863
233
48
1 Gains on DSBs vested is based on the share price at vesting date. Details of the DSB can be found on page 74.
2 Steve Bellamy retired on 8 June 2021.
3 Includes £19,000 of fees paid to Peter Steinmann prior to his retirement on 10 June 2020.
The table above summarises the payments made and amounts earned by the Executive and Non-Executive Directors for the 2020
and 2021 financial years. The fees for the Chairmen of the Audit Committee and Remuneration Committees (Grahame Cook
and Penny Freer) include a fee of £8,000 for chairing a Committee from 1 July 2021 (previously £3,000) and a £3,000 fee for the
Senior Independent Director from 1 July 2021 (Penny Freer – previously no fee). No Annual Performance Bonus was payable for
2020. The Executive Directors were granted LTIPs as detailed on page 76. All Directors have confirmed that they have not received
remuneration save as disclosed above.
Salaries and fees
Details of 2021 salaries for the Executive Directors are outlined on page 70 and for the prior year in the table above.
Advanced Medical Solutions Group plc Annual Report & Accounts 2021 75
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GOVERNANCE
Remuneration Committee Report continued
Annual Performance Bonus and Deferred Annual Bonus
Details of the Annual Performance Bonus and Deferred Annual Bonus are outlined on pages 73 and 74.
The personal objectives for the Executive Directors for the year ended 31 December 2021 included progress in new products
launches, development of the SMT and progress with the successful integration of recent acquisitions. The table below summarises
2021 performance against the targets:
Performance measures
Group Revenue
Adjusted Profit Before Tax
Adjusted fully diluted Earnings Per Share
Personal objectives/ values assessment
Total
Weighting
28.33%
28.33%
28.33%
15%
100%
The bonus for 2021 is payable in April 2022, as a % of salary is:
Threshold
£m
Target
£m
Stretch
£m
Achievement
£m
2021 result
(% of maximum)
110.3
25.6
9.47
121.9
29.0
10.88
Committee assessed that the Executive
Directors fully achieved their objectives
116.1
27.6
10.37
108.6
25.6
9.66
Maximum
Director
Chris Meredith
Eddie Johnson
Revenue
0%
0%
PBT
11.7%
5.9%
EPS
14.1%
7.0%
Objectives
22.5%
11.3%
2022 objectives are commercially sensitive and not detailed in this Report.
2021 bonus payments in respect of 2020 were as follows:
0%
27.6%
33.1%
15%
Total %
48.3%
24.2%
Director
Chris Meredith
Eddie Johnson
Bonus paid in 2021
(FY 2020)
£Nil
£Nil
Deferred
£Nil
£Nil
Percentage of salary
(total bonus)
0%
0%
Maximum %
of salary
150%
100%
Vesting of LTIPs for the year ended 31 December 2021
Details of the LTIP performance conditions for the LTIPs granted on 13 April 2018, which produced a Nil vesting result on 13 April
2021, are shown on page 70.
Directors’ interests in the LTIP
On 16 April 2021 the Committee approved LTIP awards as outlined below. Eddie Johnson was awarded 25% above his indicated
award level to reflect strong performance and that his remuneration package is towards the lower end of the market. Eddie Johnson’s
maximum award for future years has been increased to 125%, as detailed on page 70.
Director
Chris Meredith
Eddie Johnson
Type of
award
Basis of grant
awarded
Share price at date
of grant (£)
Number of shares
granted
Nil-cost option
200% of salary
Nil-cost option
100% of salary
2.574
2.574
238,963
67,706
Face value of
grant (£)
615,090.73
174,275.24
Vesting determined
by performance over
3 years
See page 74
See page 74
76 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
Remuneration Committee Report continued
Outstanding Share Awards – Maximum under the LTIP
Director
Chris Meredith
Eddie Johnson
As at
1 January 2021
Exercised in
the year
Issued in
the year
Lapsed in
the year
As at
31 December 2021
Market price at
grant date (p)
First vesting date
146,939
129,628
80,096
90,344
182,510
254,812
–
34,235
28,126
17,379
19,603
38,783
72,197
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
238,963
–
–
–
–
–
–
67,706
–
–
–
90,344
–
–
–
–
–
–
19,603
–
–
–
146,939
129,628
80,096
–
182,510
254,812
238,963
34,235
28,126
17,379
–
38,783
72,197
67,706
151.50 10 September 2018 (vested)
184.60
246.69
308.00
328.75
239.00
257.40
132.00
184.60
246.69
308.00
328.75
239.00
257.40
18 April 2019 (vested)
6 April 2020 (vested)
13 April 2021 (vested)
24 April 2022
14 April 2023
16 April 2024
2 April 2018 (vested)
18 April 2019 (vested)
6 April 2020 (vested)
13 April 2021 (vested)
24 April 2022
14 April 2023
23 April 2024
Neither Chris Meredith or Eddie Johnson exercised any Nil LTIPs in 2021 (2020: Nil). Awards have no performance re-testing facility.
Approach to remuneration of Executive Directors at the time of recruitment
When appointing an Executive Director the Committee may utilise all existing remuneration components. Salary will reflect
experience, skills, market data and current salary. They will be eligible for a personal pension, medical insurance and share schemes.
In line with the Code, it is the intention that pension contributions will be set at a rate available to the wider workforce in respect of
future Executive Director appointments.
Non-Executive Directors
Non-Executive Directors are appointed under arrangements that may be terminated by either party on six months’ notice. Their fees
are determined by the Executive Directors, taking into account the time and responsibility of the role. They receive travel expenses,
do not participate in incentive arrangements and have confirmed they have not received any other remuneration in 2021 save as
disclosed on page 75.
Following our consultation with shareholders, it was agreed that Non-Executive Directors should have their remuneration increased in
line with other similar AIM-listed companies. Consequently, it was agreed that the Chairman’s fee should be increased from £75,000
to £90,000, the Non-Executive Director base fee should remain at £42,000, a Senior Independent Director fee of £3,000 should be
introduced and the fee for chairing the Remuneration or Audit Committee should be increased from £3,000 to £8,000. Further details
of Non-Executive Director fees are below:
Element of remuneration
Purpose and how it supports strategy
Non-Executive Director Fees.
Reflects time commitments and
responsibilities of each role.
How the element operated and
maximum opportunity
There is no maximum annual
increase. The Board is guided by
the market and broader employee
population. On occasion they may
need to recognise an increase
in the scale or scope of the role.
Fees were increased in 2021 in
line with comparable AIM listed
companies, as detailed above.
Framework used to assess performance
Non-Executive Directors do
not participate in variable pay
arrangements and do not receive
retirement benefits.
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Advanced Medical Solutions Group plc Annual Report & Accounts 2021 77
GOVERNANCE
Remuneration Committee Report continued
Service agreements
Executive Director service contracts are not fixed term, are terminable by either party giving not less than 12-months’ written notice
and can be viewed at the Company’s registered office and at the AGM. The Committee reviews the contractual terms for new
Executive Directors to ensure they reflect best practice. Details of the service contracts are as follows:
Executive Director
Chris Meredith
Eddie Johnson
Non-Executive Directors
Peter Allen
Penny Freer
Grahame Cook
Douglas Le Fort
Date of contract
Unexpired term (months) or
rolling contract
Notice period (months)
1 July 2005 (updated 1 July 2021) Rolling Contract
1 January 2019 (updated 1 July
2021)
Rolling Contract
4 December 2013
1 March 2010
1 February 2021
2 August 2021
Rolling contract
Rolling contract
Rolling contract
Rolling contract
12
12
6
6
6
6
Policy on Payment for Loss of Office – Executive Directors
The Committee considers individual cases of early termination and determines compensation on a case-by-case basis. There are
no special provisions in the event of loss of office or for Payment in Lieu of Notice (PILON). If such circumstances were to arise,
the Executive Director would have no claim against the Company for damages or any other remedy in respect of the termination.
The Committee would apply principles of mitigation to any payment made to a departing Executive Director.
Whilst the Committee retains overall discretion for ‘Good Leaver’ status, it typically defines a ‘Good Leaver’ for the Annual
Performance Bonus and 2014 LTIP as retirement, ill health or injury, disability, redundancy or the employing company ceasing to
be under the control of the Group. The 2014 DAB defines a ‘Good Leaver’ as ceasing to be a Director or employee of a Group
Company where that individual is not a ‘Bad Leaver’. A ‘Bad Leaver’ is defined as a Director or employee leaving the business due
to the Financial Statements requiring restatement. Final treatment is subject to the Committee’s discretion.
No payments were made to past Directors or for loss of office during the year ended 31 December 2021.
Event
Bonus/DAB
Good Leaver
Bad Leaver
Change of Control
LTIP
Good Leaver
Bad Leaver
Change of Control
Timing of vesting/award
Calculation of vesting/payment
Annual Performance Bonus payment
would be negotiated as part of the leaving
arrangements (at the discretion of the
Remuneration Committee).
No automatic entitlement to Annual
Performance Bonus on a pro-rata basis –
it is at the discretion of the Remuneration
Committee.
Unvested Deferred Annual Bonus share
awards vest at the normal vesting
date (or earlier at the Remuneration
Committee’s discretion).
Not applicable.
Individuals lose the right to their Annual
Performance Bonus and unvested Deferred
Annual Bonus shares.
Annual Performance Bonuses are paid and
unvested Deferred Share Bonus shares vest
on the date of change of control notification
to the Executive Directors.
Annual Performance Bonus is paid to the
extent that performance conditions have been
satisfied and are pro-rated to the effective
date of change of control.
On normal vesting date (or earlier at the
Remuneration Committee’s discretion).
Unvested awards lapse on cessation
of employment.
Unvested awards vest on the date of
notification to the Executive Directors
regarding the change of control.
Unvested awards vest to the extent that
performance conditions have been satisfied
and are reduced pro-rata to account for any
part of the vesting period remaining.
Unvested awards lapse on cessation
of employment.
Unvested awards vest and a pro-rata
reduction applies for the proportion of
the vesting period not served.
78 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
Remuneration Committee Report continued
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Upon a Director’s exit or a change of control situation, Deferred Share Bonus (DSB) awards will be treated in line with the DSB plan
rules. If employment is terminated by the Company, an Executive Director may have a legal entitlement to additional amounts, which
would need to be met. The Committee retains discretion to settle other amounts reasonably due to the Executive Director.
The Committee may approve new contractual arrangements with departing Executive Directors including (but not limited to)
settlement and/or consultancy arrangements which will be used sparingly and only where it is in the best interests of the Company
and shareholders. There are no agreements between the Group and its Directors or employees for loss of office or employment
(whether through resignation, purported redundancy or otherwise) which may occur as a result of a takeover bid.
Statement of Directors’ shareholdings and share interests
Director
Chris Meredith
Eddie Johnson
Peter Allen
Penny Freer
Grahame Cook
Douglas Le Fort
Beneficially
owned* at
31 December
2020
Beneficially
owned* at
31 December
2021
Outstanding
LTIP awards at
31 December
2021
Outstanding
DAB awards at
31 December
2021
Outstanding
share awards
under DSB at
31 December
2021
Shareholding
as a % of issued
Share Capital at
31 December
2021
1,515,241
118,938
50,000
13,888
Nil
1,528,893
141,648
50,000
13,888
Nil
1,032,948
258,426
–
–
–
Nil
Nil
–
34,608
10,854
–
–
–
–
71,114
46,094
–
–
–
–
0.71%
0.06%
–
–
–
–
*
Includes all shares beneficially held by the Executive Director (or their spouse and children) and vested DSBs.
Executive Directors are required under the Executive Shareholding Policy to hold shares equivalent in value to 200% of pre-tax annual
salary. Compliance with this policy as at 31 December 2021 is shown below, using the share price at that date:
Director
Shares held*
Vested DSBs
Chris Meredith
Eddie Johnson
1,480,127
25,732
48,500
96,723
LTIP (50%
of vested/
unexercised
LTIPs)
178,332
39,870
DAB awards
Total shares
Shareholding
target (£)
Shareholding
value (£)
% holding
vs target
34,608
10,854
1,741,567
£700,000 £5,886,496
173,179
£420,000
£585,354
841%
139%
*
Includes all shares beneficially held by the Executive Director (or their spouse and children) and vested DSBs.
CEO total remuneration
The total remuneration figure for the Chief Executive Officer during each of the last five financial years is shown below.
Total remuneration includes salary, Annual Performance Bonus, gains on DSBs in that year and LTIP awards vesting in the year.
The Annual Performance Bonus and LTIP vesting level as a percentage of the maximum opportunity is given for each year.
Year ended 31 December
Total remuneration (£’000)
Annual Performance Bonus (% of maximum)
LTIP vesting (% of maximum)
Relative importance of spend on pay
Year ended 31 December
Staff costs
Dividends*
Tax
Profits for year attributable to owners of the parent
* The dividend figures relate to amounts payable in respect of the prior year.
2017
1,040
82.6%
76.9%
2018
896
50.6%
87.3%
2019
770
0%
2020
537
0%
90.3%
73.1%
2021
543
32.2%
0%
2020 (£m)
2021 (£m)
Change %
35.8
3.3
1.5
8.6
39.7
3.8
4.5
17.5
11%
15%
200%
103%
£1,572,000 (2020: £1,043,000) of staff costs relate to pay for the Directors, of which £965,000 relates to the highest paid Director
(2020: £590,000). Total pension contributions were £1,407,000 (2020: £1,349,000) and for the highest paid Director £33,000
(2020: £30,000).
During 2021, distributions to shareholders included a dividend of £2,579,000 paid on 18 June 2021 (2020: £2,256,000) and
£1,266,000 paid on 22 October 2021 (2020: £1,081,000). It is proposed that a dividend of 1.37p per share be paid on 17 June 2022.
Further details are provided in Note 14 on page 112.
Advanced Medical Solutions Group plc Annual Report & Accounts 2021 79
GOVERNANCE
Remuneration Committee Report continued
Private healthcare
Executive Directors and other senior employees are entitled to private healthcare and permanent health insurance.
Share options
Employees may be granted share options under the 2019 Share Option Plan (SOP). Options granted under the SOP are not offered at
a discount. The exercise of options is conditional on performance conditions, normally after the third anniversary of the date of grant
and no later than the tenth anniversary of grant. Full details are included in Note 29 on pages 117 to 118.
The SOP allows employees to be granted approved or unapproved options. Under the approved part of the SOP, UK employees can receive up
to £30,000 worth of shares by market value of the shares on the grant date and benefit from the growth in value of those shares.
Share performance – 2022
The opening share price for 2021 was 243p and the closing price, on the last trading day of the year, was 338p. The range during the
year was 341p (high) and 222.5p (low) (Source: Daily Official List of the London Stock Exchange).
Five-year share performance
For the five-year period ending 28 February 2022, the Advanced Medical Solutions Group plc share price outperformed the FTSE
All-Share Index by 30% and FTSE All-Share Health Care Index by 7%, the FTSE Small Cap Index by 5% and the FTSE AIM All-Share Index
by 21%.
250
200
150
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AMS
FTSE AIM All Share
FTSE Small Cap
FTSE All Share
FTSE All Share Health Care
2018
2019
2020
2021
2022
For the five-year period ending 28 February 2022, the Advanced Medical Solutions Group plc Total Shareholder Return (TSR), share
price growth plus reinvested dividends, outperformed the FTSE All-Share Index by 13% and the FTSE AIM All-Share Index by 17%.
TSR underperformed the FTSE All-Share Health Care Index by 14% and FTSE Small Cap Index by 12%.
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2017
2018
2019
2020
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FTSE AIM All Share
FTSE Small Cap
FTSE All Share
FTSE All Share Health Care
80 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
Directors’ Report
For the year ended 31 December 2021
This Directors’ Report includes disclosures required under the Companies Act 2006, the Large and Medium-sized Companies and
Groups (Accounts and Reports) Regulations 2008 and the 2018 UK Corporate Governance Code (Code). Additional information can
be located as follows:
Disclosure
Principal activities, business review and future developments
Results
Corporate Governance
Directors’ remuneration including Directors’ interest
in the share capital of the Company
Principal Risks and Uncertainties
Financial instruments and risk management
Research and development activities
Shareholder, employee and stakeholder engagement
Environmental, Social and Governance, Health and Safety and SECR report
Key Performance Indicators
Company’s capital structure
Long Term Incentive Plan and share schemes
Events after the balance sheet date
Significant subsidiary undertakings
Non-Financial Reporting Statement
Location
Throughout the Strategic Report – pages 5 to 51
Financial Statements – pages 84 to 130
Corporate Governance Report – pages 56 to 61
Remuneration Report – pages 69 to 80
Principal Risks and Uncertainties – pages 47 to 51
Note 24 to the Financial Statements – pages 121 to 123
and in the Strategic Report – pages 47 to 51
Strategic Report – pages 5 to 51.
Financial review on pages 44 to 46
Stakeholder Engagement Report – pages 26 to 31
ESG Report – pages 32 to 41
Key Performance Indicators – pages 20 to 21
Consolidated Statement of Changes in Equity – page 94
Financial Statements – Note 27 on page 124
Remuneration Report – pages 69 to 80
Financial Statements – Note 31 on page 130
Financial Statements – Note 3 on pages 135 to 136
Page 31
Dividends
The Group made a profit before tax for the year to 31 December
2021 of £22.0 million (2020: £10.1 million). The Directors are
recommending a final dividend of 1.37p per share (2020: 1.20p
per share). The final dividend will, subject to shareholders’
approval, be paid on 17 June 2022 to shareholders on the
register at the close of business on 27 May 2022. This would
make a total dividend of 1.95p for the full year (2020: 1.70p).
The Board will continue to review the Group’s dividend policy,
with future distributions reflecting the cash generation and
capital needs of the Company.
Events after the reporting date
Since the date of the balance sheet, the Group has agreed
to acquire AFS Medical GmbH, a specialist distributor of
minimally invasive surgical devices headquartered in Vienna,
strengthening its direct sales footprint, capabilities, and product
portfolio. Consideration will be an initial cash purchase price
of €4.5 million, including debt, with a further cash deferred
consideration of up to €1.5 million, based on EBITDA delivery in
2022-2024. The acquisition is expected to complete in mid-
2022 following the required regulatory clearances. It is expected
to add approximately €4 million to Group revenues in 2023 and
to be earnings enhancing.
Capital structure
The Group has an undrawn unsecured £80 million credit facility
provided jointly by NatWest and HSBC which will be renewed
before its end date of December 2022. Ordinary Shares are
admitted to, and traded on, the Alternative Investment Market
(AIM), a market operated by the London Stock Exchange.
Further information regarding the Company’s share capital,
including movements during the year, are set out in Note 27
to the Financial Statements on page 124.
Going Concern
The Directors continue to adopt the Going Concern basis in
preparing the Financial Statements. Details of Going Concern
can be found on page 61 and in the Notes Forming Part of the
Financial Statements on page 97.
Creditor Payment Policy
It is the policy and normal practice of the Group to make
payments due to suppliers in accordance with agreed terms and
conditions, generally less than 60 days. Where suppliers offer
early settlement discounts, these may be taken advantage of.
This policy will also be applied for 2022.
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Advanced Medical Solutions Group plc Annual Report & Accounts 2021 81
GOVERNANCE
Directors’ Report continued
For the year ended 31 December 2021
Share capital and issue of Ordinary Shares
At 31 March 2022 the Group’s issued share capital is set out below:
Ordinary shares of 5p each
Number
£’000 % of issued Share Capital
216,071,141
10,804
100
Substantial shareholdings
Details of the interests in voting rights in the Company’s shares with substantial interests of 3% or more in the Ordinary Share capital of
the Company as at 31 March 2022, in accordance with the Disclosure and Transparency Rules:
31 March 2022 % of issued Share Capital
12.59
6.93
5.21
4.91
4.29
3.93
3.25
27,213,358
14,984,109
11,264,331
10,600,458
9,258,803
8,484,197
7,011,957
6,744,656
3.12
Employees and other stakeholders
The Group has chosen, in accordance with section 414(c)(ii)
of the Companies Act 2006 to set out in the Strategic Report
the following which the Directors believe to be of significant
importance:
• Review of the business.
• Relevant aspects of Section 172 statement (Sch 7.11(1)(b).
• Employee engagement and Sch 7.11B(1) – Business
relationships).
Further policies relating to employees are discussed in the
ESG section of the Strategic Report. See pages 26 to 31 for
disclosure of employee engagement and other stakeholder
engagement statements.
Political donations
In line with the established policy, the Group made no
political donations.
Annual General Meeting
The AGM will be held at 11.00 am on 8 June 2022. Further
details are outlined in the AGM Notice, which is a separate
circular to shareholders.
Octopus Investments Limited
Canaccord Genuity Group Inc
Charles Stanley Group
Investec Group
Invesco
AXA SA
Groupama
Rathbone plc
Re-election of Directors
The Chairman has determined that each Director demonstrates
commitment to their role and displays effective performance
and is recommending the re-election of all Directors seeking
to remain on the Board. AMS has elected to comply with 2018
Code Provision 18 and therefore all Directors will retire and shall
stand for re-election at the AGM to be held on 8 June 2022, with
the exception of Penny Freer who will retire in accordance with
the succession plan outlined on page 56.
The Board has procedures for Directors’ conflicts of interest.
Only Directors who have no interest in the matter under
consideration are able to take the relevant decision. The
Board will report annually on the Company’s procedures for
ensuring that the Board’s power of authorisation in respect of
conflicts of interest operated effectively. None of the Directors
had any conflicts of interest during or at the end of the year
in any contract relating to the business of the Company or
its subsidiaries.
Directors’ and Officers’ Liability Insurance
Insurance cover is in force in respect of the personal liabilities
that may be incurred by Directors and Officers of the Company
in the course of their service with the Group, as permitted by
the Companies Act 2006. No cover is provided in respect of any
fraudulent or dishonest act.
Employees – Equal opportunities and development
AMS is an equal opportunities employer committed to
eliminating all forms of discrimination and to giving fair and
equal treatment to all employees and job applicants. An Equality,
Diversity and Inclusion Policy, to reflect best practice in this area,
is in force. Further detail on this area can be found in the ESG
Report on pages 32 to 43.
82 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
Directors’ Report continued
Responsibility Statement
We confirm that to the best of our knowledge:
•
•
•
the Financial Statements, prepared in accordance with the
relevant financial reporting framework, give a true and fair
view of the assets, liabilities, financial position and profit or
loss of the company and the undertakings included in the
consolidation taken as a whole;
the Strategic Report includes a fair review of the
development and performance of the business and the
position of the company and the undertakings included
in the consolidation taken as a whole, together with a
description of the principal risks and uncertainties that they
face; and
the Annual Report and Financial Statements, taken as a
whole, are fair, balanced and understandable and provide
the information necessary for shareholders to assess the
company’s position and performance, business model
and strategy.
Provision of information to the independent Auditors
Each of the persons who is a Director at the date of approval of
this Annual Report confirms that:
•
•
so far as the Director is aware, there is no relevant audit
information of which the Company’s Auditor is unaware; and
the Director has taken all the steps that he/she ought to have
taken as Director in order to make himself/herself aware
of any relevant audit information and to establish that the
Company’s Auditor is aware of that information.
This confirmation is given and should be interpreted in
accordance with the provisions of Section 418 of the Companies
Act 2006.
Independent Auditors
Deloitte LLP has expressed their willingness to continue in office
as Auditor and a resolution to re-appoint them will be proposed
at the forthcoming Annual General Meeting.
The Directors’ Report has been approved by the Board and
authorised for issue and is signed on its behalf by.
Owen Bromley
Company Secretary
14 April 2022
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Directors’ Responsibilities Statement
The Directors are responsible for preparing the Annual Report
and the Financial Statements in accordance with applicable law
and regulations.
Company law requires the directors to prepare Financial
Statements for each financial year. Under that law the Directors
are required to prepare the Group Financial Statements in
accordance with International Financial Reporting Standards
(IFRSs) as adopted by the United Kingdom and have elected to
prepare the parent company financial statements in accordance
with United Kingdom Generally Accepted Accounting Practice
(United Kingdom Accounting Standards and applicable law),
including FRS 101 “Reduced Disclosure Framework”. Under
company law the Directors must not approve the accounts
unless they are satisfied that they give a true and fair view of the
state of affairs of the company and of the profit or loss of the
company for that period.
In preparing the Parent Company Financial Statements, the
Directors are required to:
•
select suitable accounting policies and then apply them
consistently;
• make judgments and accounting estimates that are
reasonable and prudent;
•
state whether applicable UK Accounting Standards have
been followed, subject to any material departures disclosed
and explained in the Financial Statements; and
• prepare the Financial Statements on the going concern basis
unless it is inappropriate to presume that the company will
continue in business.
In preparing the Group Financial Statements, International
Accounting Standard 1 requires that Directors:
• properly select and apply accounting policies consistently;
• present information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information;
• provide additional disclosures when compliance with the
specific requirements in IFRSs are insufficient to enable users
to understand the impact of particular transactions, other
events and conditions on the entity’s financial position and
financial performance; and
• make an assessment of the company’s ability to continue as
a Going Concern.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the company’s
transactions and disclose with reasonable accuracy at any time
the financial position of the company and enable them to ensure
that the financial statements comply with the Companies Act
2006. They are also responsible for safeguarding the assets of
the company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
company’s website. Legislation in the United Kingdom governing
the preparation and dissemination of financial statements may
differ from legislation in other jurisdictions.
Advanced Medical Solutions Group plc Annual Report & Accounts 2021 83
FINANCIAL STATEMENTS
Independent Auditor’s Report
To the members of Advanced Medical Solutions Group Plc
1. Opinion
In our opinion:
•
the Financial Statements of Advanced Medical Solutions Group plc (the ‘Parent Company’) and its subsidiaries (the
‘Group’) give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 31 December
2021 and of the Group’s profit for the year then ended;
the Group Financial Statements have been properly prepared in accordance with United Kingdom adopted
International Accounting Standards;
the Parent Company Financial Statements have been properly prepared in accordance with United Kingdom
Generally Accepted Accounting Practice, including Financial Reporting Standard 101 “Reduced Disclosure
Framework”; and
the Financial Statements have been prepared in accordance with the requirements of the Companies Act 2006.
•
•
•
We have audited the Financial Statements which comprise:
•
•
•
•
•
•
•
the Consolidated Income Statement;
the Consolidated Statement of Comprehensive Income;
the Consolidated and Parent Company Statements of Financial Position;
the Consolidated and Parent Company Statements of Changes in Equity;
the Consolidated Statement of Cash Flows;
the related Consolidated Financial Statement Notes 1 to 31; and
the related Parent Company Financial Statement Notes 1 to 7.
The Financial reporting framework that has been applied in the preparation of the Group Financial Statements is applicable law
and United Kingdom adopted international accounting standards. The Financial reporting framework that has been applied
in the preparation of the Parent Company Financial Statements is applicable law and United Kingdom Accounting Standards,
including FRS 101 “Reduced Disclosure Framework” (United Kingdom Generally Accepted Accounting Practice).
2. Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law.
Our responsibilities under those standards are further described in the auditor’s responsibilities for the audit of the Financial
Statements section of our report.
We are independent of the Group and the Parent Company in accordance with the ethical requirements that are relevant to our
audit of the Financial Statements in the UK, including the Financial Reporting Council’s (the ‘FRC’s’) Ethical Standard as applied to
listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
84 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
Independent Auditor’s Report
3. Summary of our audit approach
Key audit matters
The key audit matters that we identified in the current year were:
• Revenue Recognition
• Carrying Value of Goodwill
Within this report, key audit matters are identified as follows:
Similar level of risk
Materiality
Scoping
Significant changes
in our approach
The materiality that we used for the Group Financial Statements was £1 million which was determined on the
basis of 5% of pre-tax profit.
We focused our group audit scope on the UK, Germany, the Netherlands, France and Israel with the AMS
Ltd (UK) and Resorba Medical GmbH (Germany) entities subject to a full scope audit, and Advanced Medical
Solutions B.V. (Netherlands), Biomatlante SA (France), Advanced Medical Solutions Israel (Sealantis) Limited
(Israel) and Raleigh Adhesive Coatings (UK) subject to specified procedures. As a consequence of the audit
scope determined, we achieved coverage of approximately 99% of revenue, 99% of profit before tax and 99%
of net assets.
The following changes to our approach occurred this year:
• Change to the benchmark used for materiality (see section 6 for further details);
• We no longer consider Going Concern to be a key audit matter given the levels of headroom in the
financial forecasts (see section 4 for further details);
• Removed the key audit matter of acquisition accounting given there were no acquisitions in the year under
audit; and
• Raleigh Adhesive Coatings was a identified as a new component throughout the year following acquisition
in November 2020 and thus audited by the group team (see section 7 for further details).
4. Conclusions relating to Going Concern
In auditing the Financial Statements, we have concluded that the Directors’ use of the Going Concern basis of accounting in the
preparation of the Financial Statements is appropriate.
Our evaluation of the Directors’ assessment of the Group’s and Parent Company’s ability to continue to adopt the Going
Concern basis of accounting included:
• obtained an understanding and corroborated the available, uncommitted, financing facilities including nature of the facilities,
repayment terms and covenants;
linked the assessment and the forecasts to business model and medium-term risks;
•
• assessed the reasonableness and appropriateness of the assumptions used in the forecasts;
• corroborated the amount of headroom in the forecasts (cash and covenants);
• evaluated the appropriateness of, and headroom within, the sensitivity analysis; and
• assessed the sophistication of the model used to prepare the forecasts, testing of clerical accuracy of those forecasts and our
assessment of the historical accuracy of forecasts prepared by management.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that,
individually or collectively, may cast significant doubt on the Group’s and Parent Company’s ability to continue as a Going
Concern for a period of at least twelve months from when the Financial Statements are authorised for issue.
Our responsibilities and the responsibilities of the Directors with respect to Going Concern are described in the relevant sections
of this report.
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Advanced Medical Solutions Group plc Annual Report & Accounts 2021 85
FINANCIAL STATEMENTS
Independent Auditor’s Report continued
To the members of Advanced Medical Solutions Group Plc
5. Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the Financial
Statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to
fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy, the allocation
of resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the Financial Statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
5.1. Revenue recognition
Key audit
matter description
The Group sells medical devices across a number of geographical regions generating revenue of
£108.6 million (2020: £86.8 million).
How the scope of
our audit responded
to the key audit matter
The timing of when revenue is recognised is relevant to the reported performance of the Group. There is risk of
material misstatement due to error or fraud as a result of misstating the allocation of revenue between periods.
This timing of revenue recognised, in particular around year end, is a focus for material Group revenue streams.
Pressures to meet stakeholder expectations could provide incentives to record revenues where risk and reward
have not passed.
We have specifically focused this key audit matter on cut-off and occurrence of revenue recorded within
November and December 2021 and January 2022. We have also considered other one-off material revenue
transactions based on our understanding of monthly peaks in sales reported and the associated credit terms
with those, and other major, customers.
The associated disclosure is included within Note 4 to the Financial Statements. For specific detail on the
Groups accounting policy, please see Note 3 to the Financial Statements.
We obtained an understanding of the relevant controls over the revenue process.
We tested a sample of individual sales transactions and traced to despatch notes, including consideration of
the specific shipping terms attached to the sale, and subsequent cash receipt or other supporting documents.
We performed a detailed analysis of revenue trends within each Business Unit including:
•
inquiry of management and obtaining evidence of management reviews of actual revenue to budget; and
• performing enquiries of management and key members of the commercial team to identify any key
changes to sales terms in force compared to the previous year.
To evaluate cut off and occurrence of revenue within the risk period:
• we identified the population upon which a risk of material misstatement could be likely and for the
population identified we evaluated a sample of sales transactions to despatch records, or alternative
evidence, to confirm timing and occurrence of the transaction;
• we reviewed material journal amounts to revenue within the risk period and assessed reasonableness;
• we interrogated and analysed any credit notes post year end which may contradict occurrence of
revenue; and
• we analysed the receivables ledgers at year end and post year end to identify and interrogate any material
overdue debts.
Key observations
Based on the work performed we concluded that revenue has been recognised appropriately.
86 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
Independent Auditor’s Report continued
5.2. Carrying Value of Goodwill
Key audit
matter description
How the scope of
our audit responded
to the key audit matter
Key observations
During 2019, the Group acquired a business (Advanced Medical Solutions Israel (Sealantis) Limited) which
registered it’s first sales at the end of 2021 but is predominantly still within the development stage. The Group
has significant values of goodwill (£9.3 million, (2020: £9.2 million)) and intangible assets (£9.9 million (2020:
£13 million)) in relation to this acquisition.
Advanced Medical Solutions Israel (Sealantis) Limited was previously recognised as its own cash generating
unit, however following the change in CGUs during the year, described further in Note 19, this now sits within
the Surgical CGU.
Following the change in CGUs we consider there to be a fraud risk in relation to the change in CGUs being
completed to potentially disguise or hide an impairment within a CGU prior to the reorganisation. In particular
the risk is in relation to the inherent estimation uncertainty in forecasting future sales of the entity given it is in
the development stage.
We have considered the carrying value and indicators of impairment at the point immediately prior to the
change in CGU in accordance with IAS 36 Impairment of assets.
A pre-tax discount rate of 10% (2020: 17.5%) has been applied in determining the net present value.
As well as preparing impairment models using the new CGUs, management has assessed if any indicators
of impairment immediately prior to the transition. Management has used a 5 year period plus 2% growth
into perpetuity to forecast their results. Within the initial 5 year forecast, management has assumed various
growth rates based on their expectations underpinned by ongoing discussions with potential customers
and due diligence completed prior to the acquisition and that the entity will return a positive EBITDA from
2025 onwards.
The associated disclosure is included within Note 19 to the Financial Statements. For specific detail on the
Group’s accounting policy, please see Note 3 to the Financial Statements.
We obtained an understanding of the controls relevant to management’s impairment review.
We have understood and challenged the rationale behind the change in CGU to assess whether the approach
is compliant with IAS 36 and was performed for appropriate business rationale as past acquisitions become
embedded within the wider business model. We have reviewed and challenged management’s assessment,
considering both corroboratory and contradictory evidence in assessing the appropriateness of the
conclusions reached.
We have involved internal valuation specialists in evaluating the appropriateness of the risk adjusted discount
rate used within management’s model by benchmarking against other competitors in the market and assessed
whether the rate used lies within our acceptable range.
We challenged the underlying assumptions included within the budgets by discussing with management and
corroborating committed plans through review of management papers and underlying evidence. We assessed
the potential impact to EBITDA of changes in the market and internal hurdles in the development process,
including understanding the current status of product approvals from relevant notified bodies.
We have compared the forecasts to a range of third party market evidence and reports and evaluated
management’s justifications for future cash flows which supported the cash flows applied by management are
reasonable. We evaluated the forecast period used by management in their model.
We re-performed the sensitivity analysis and performed additional sensitivities on the time impact of delaying
results, or considering the impact reduced revenue growth, considering what data was available from third
parties to support market growth rates and the group’s potential market share.
Based on the work performed we concluded that no impairment should be recorded and that goodwill is
fairly stated.
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Advanced Medical Solutions Group plc Annual Report & Accounts 2021 87
FINANCIAL STATEMENTS
Independent Auditor’s Report continued
To the members of Advanced Medical Solutions Group Plc
6. Our application of materiality
6.1. Materiality
We define materiality as the magnitude of misstatement in the Financial Statements that makes it probable that the economic
decisions of a reasonably knowledgeable person would be changed or influenced. We use materiality both in planning the scope
of our audit work and in evaluating the results of our work.
Based on our professional judgement, we determined materiality for the Financial Statements as a whole as follows:
Materiality
Basis for determining
materiality
Rationale for the
benchmark applied
PBT £22m
Group Financial Statements
£1 million (2020: £1 million).
5% of pre-tax profit (2020: 1.2% of revenue).
Revenue and profit continue to be key performance
indicators to the group and thus of most focus to the
stakeholders. Historically we had used 5% of profit
before tax as the benchmark, but following the impact of
COVID-19, we did not believe this to be an appropriate
basis in the prior year, with profits being more severely
impacted than revenues due to the relative fixed cost
base. As a fairer reflection of trade, we believed that
revenue represented the next best measure and is
considered to be a key focus of the users of the financial
statements. Following return to more stable trading
patterns, we have returned to the historical benchmark
of pre-tax profit.
Parent Company Financial Statements
£0.6 million (2020: £0.9 million).
The Parent Company materiality represents less
than 1% of Group’s net assets (2020: less than 1%
of Group’s net assets) which is capped at 90% of
Group performance materiality (2020: 90% of
Group materiality).
As a non-trading Parent Company, net assets
is the key driver of the company. In the current
year we have opted to cap Parent Company
materiality at 90% of the Group performance
materiality, which represents a change in rationale
since last year based on auditor judgement
because we consider this to better represent the
focus of the users of the Financial Statements.
Group materiality
£1m
Component
materiality range
£0.4m to £0.6m
Audit Committee
reporting threshold
£0.05m
PBT
Group materiality
6.2. Performance materiality
We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate, uncorrected and
undetected misstatements exceed the materiality for the Financial Statements as a whole.
Performance materiality
Basis and rationale
for determining
performance materiality
Group Financial Statements
70% (2020: 70%) of group materiality.
In determining performance materiality, we considered the following factors:
Parent Company Financial Statements
100% (2020: 70%) of parent company materiality.
•
the quality of the control environment; and
• our past experience of the audit, which has indicated a low number of corrected and uncorrected
misstatements identified in prior periods.
6.3. Error reporting threshold
We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of £0.05 million
(2020: £0.05 million), as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds.
We also report to the Audit Committee on disclosure matters that we identified when assessing the overall presentation of the
Financial Statements.
88 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
Independent Auditor’s Report continued
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7. An overview of the scope of our audit
7.1. Identification and scoping of components
Our Group audit was scoped by obtaining an understanding of the Group and its environment, including Group-wide controls,
and assessing the risks of material misstatement at the Group level.
Based on this assessment, we focused our Group audit scope on the UK, Germany, the Netherlands, France and Israel, with the
UK, Germany, the Netherlands, France and Israel with the AMS Ltd (UK) and Resorba Medical GmbH (Germany) subject to a full
scope audit, and Advanced Medical Solutions B.V. (Netherlands), Biomatlante SA (France), Advanced Medical Solutions Israel
(Sealantis) Limited (Israel) and Raleigh Adhesive Coatings (UK) subject to specified procedures. As a consequence of the audit
scope determined, we achieved coverage of 99% (2020: 99%) of the group’s revenue, 99% (2020: 99%) of the group’s profit
before tax and 99% (2020: 99%) of the group’s net assets. Our audit work at each location was executed at levels of materiality
applicable to each individual entity which was lower than Group materiality. Component materiality ranged from £0.4 million to
£0.6 million (2020: £0.4 million to £0.9 million).
7.2. Our consideration of climate-related risks
In planning our audit, we have considered the potential impact of climate change on the Group’s business and its Financial
Statements.
As noted on page 51 the Group has assessed the risk and opportunities relevant to climate change and has identified an
emerging risk in relation to the potential loss of reputation, loss of customers and access to tenders and ultimately a potential
impact to market capitalisation.
We have held discussions with the Company Secretary and with the Directors to understand the process of identifying climate-
related risks, the determination of mitigating actions and the impact on the Group’s Financial Statements.
We performed our own qualitative risk assessment of the potential impact of climate change on the Group’s account balances
and classes of transactions, and did not identify any additional risks of material misstatement beyond those identified by
management above. Our procedures included reading disclosures included in the Strategic Report to consider whether
they are materially consistent with the Financial Statements and our knowledge obtained in the audit.
7.3. Working with other auditors
Audit work to respond to the risks of material misstatement was performed directly by the group audit engagement team except
for Germany which is audited by the component auditor Deloitte & Touche GmbH. During the year and subsequent to the year
end, senior members of the Group audit team have engaged in regular communications with Deloitte & Touche GmbH. We
included the component audit team in our team briefing, discussed their risk assessment, had a virtual planning meeting, virtually
attended the close meeting and reviewed their documentation of the findings from their work virtually. We do not consider our
interactions with the component auditor to be impacted significantly due to COVID-19.
At the Group level we also tested the consolidation process and carried out analytical procedures to confirm our conclusion that
there were no significant risks of material misstatement of the aggregated financial information of the remaining components
(Russia, Czech Republic and the US components) not subject to audit.
8. Other information
The other information comprises the information included in the Annual Report, other than the Financial Statements and
our auditor’s report thereon. The Directors are responsible for the other information contained within the Annual Report.
Our opinion on the Financial Statements does not cover the other information and, except to the extent otherwise explicitly
stated in our report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially
inconsistent with the Financial Statements or our knowledge obtained in the course of the audit, or otherwise appears to
be materially misstated.
If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives
rise to a material misstatement in the Financial Statements themselves. If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
9. Responsibilities of Directors
As explained more fully in the Directors’ Responsibilities Statement, the Directors are responsible for the preparation of the
Financial Statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors
determine is necessary to enable the preparation of Financial Statements that are free from material misstatement, whether
due to fraud or error.
In preparing the Financial Statements, the Directors are responsible for assessing the Group’s and the Parent Company’s ability to
continue as a Going Concern, disclosing as applicable, matters related to Going Concern and using the Going Concern basis of
accounting unless the Directors either intend to liquidate the Group or the Parent Company or to cease operations, or have no
realistic alternative but to do so.
Advanced Medical Solutions Group plc Annual Report & Accounts 2021 89
FINANCIAL STATEMENTS
Independent Auditor’s Report continued
To the members of Advanced Medical Solutions Group Plc
10. Auditor’s responsibilities for the audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the Financial Statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or
in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these
Financial Statements.
A further description of our responsibilities for the audit of the Financial Statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
11. Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which
our procedures are capable of detecting irregularities, including fraud is detailed below.
11.1. Identifying and assessing potential risks related to irregularities
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with
laws and regulations, we considered the following:
•
•
the nature of the industry and sector, control environment and business performance including the design of the Group’s
remuneration policies, key drivers for Directors’ remuneration, bonus levels and performance targets;
results of our enquiries of management, internal audit and the Audit Committee about their own identification and
assessment of the risks of irregularities;
• any matters we identified having obtained and reviewed the Group’s documentation of their policies and procedures
relating to:
– identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-
compliance;
– detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or
alleged fraud;
– the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations;
•
the matters discussed among the audit engagement team including significant component audit teams and relevant internal
specialists, including valuations and IT regarding how and where fraud might occur in the Financial Statements and any
potential indicators of fraud.
As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for fraud
and identified the greatest potential for fraud within revenue recognition and carrying value of goodwill (specifically the change
in CGUs) due to possible pressures to meet stakeholder expectations could provide incentives to record revenues where risk and
reward have not passed.
In common with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of
management override.
We also obtained an understanding of the legal and regulatory frameworks that the Group operates in, focusing on provisions
of those laws and regulations that had a direct effect on the determination of material amounts and disclosures in the Financial
Statements. The key laws and regulations we considered in this context included the UK Companies Act, AIM Listing Rules,
pensions legislation and tax legislation.
In addition, we considered provisions of other laws and regulations that do not have a direct effect on the Financial Statements
but compliance with which may be fundamental to the Group’s ability to operate or to avoid a material penalty, such as those set
out by the relevant regulatory bodies.
11.2. Audit response to risks identified
As a result of performing the above, we identified revenue recognition and carrying value of goodwill as key audit matters related
to the potential risk of fraud. The key audit matters section of our report explains those matters in more detail and also describes
the specific procedures we performed in response to those key audit matters.
90 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
Independent Auditor’s Report continued
In addition to the above, our procedures to respond to risks identified included the following:
•
reviewing the Financial Statement disclosures and testing to supporting documentation to assess compliance with provisions
of relevant laws and regulations described as having a direct effect on the Financial Statements;
• enquiring of management, the Audit Committee and legal counsel concerning actual and potential litigation and claims;
• performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material
•
•
misstatement due to fraud;
reading minutes of meetings of those charged with governance and reviewing internal audit reports; and
in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and
other adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential bias;
and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members
including internal specialists and significant component audit teams, and remained alert to any indications of fraud or non-
compliance with laws and regulations throughout the audit.
Report on other legal and regulatory requirements
12. Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
•
the information given in the strategic report and the Directors’ Report for the Financial year for which the Financial
Statements are prepared is consistent with the Financial Statements; and
the Strategic Report and the Directors’ Report have been prepared in accordance with applicable legal requirements.
•
In the light of the knowledge and understanding of the Group and the Parent Company and their environment
obtained in the course of the audit, we have not identified any material misstatements in the strategic report or the
Directors’ Report.
13. Matters on which we are required to report by exception
13.1. Adequacy of explanations received and accounting records
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• we have not received all the information and explanations we require for our audit; or
• adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been
received from branches not visited by us; or
the Parent Company Financial Statements are not in agreement with the accounting records and returns.
•
We have nothing to report in respect of these matters.
13.2. Directors’ remuneration
Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures of Directors’ remuneration
have not been made.
We have nothing to report in respect of this matter.
14. Use of our report
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act
2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to
state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or
for the opinions we have formed.
Rachel Argyle (Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
Manchester
14 April 2022
Advanced Medical Solutions Group plc Annual Report & Accounts 2021 91
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FINANCIAL STATEMENTS
Consolidated Income Statement
For the year ended 31 December 2021
Revenue
Cost of sales
Gross profit
Distribution costs
Administration costs
Other income
Operating profit
Finance income
Finance costs
Profit before taxation
Income tax
Profit for the year attributable to
equity holders of the parent
Earnings per share
Basic
Diluted
Year ended 31 December 2021
Year ended 31 December 2020
Before
exceptional
items
£’000
Exceptional
items
(Note 6)
£’000
108,601
(47,531)
61,070
(1,483)
(36,970)
381
22,998
84
(1,098)
21,984
(4,503)
17,481
8.11p
8.01p
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Before
exceptional
items
£’000
Exceptional
items
(Note 6)
£’000
86,796
(40,756)
46,040
(1,071)
(33,658)
253
11,564
220
(861)
10,923
(1,505)
–
–
–
–
(834)
–
(834)
–
–
(834)
–
Total
£’000
108,601
(47,531)
61,070
(1,483)
(36,970)
381
22,998
84
(1,098)
21,984
(4,503)
Total
£’000
86,796
(40,756)
46,040
(1,071)
(34,492)
253
10,730
220
(861)
10,089
(1,505)
17,481
9,418
(834)
8,584
8.11p
8.01p
4.38p
4.32p
(0.39p)
(0.38p)
3.99p
3.94p
Note
4
4, 5
11
12
13
15
15
The above results relate to continuing operations.
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2021
Profit for the year
Items that will potentially be reclassified subsequently to profit and loss:
Exchange differences on translation of foreign operations
(Loss)/gain arising on cash flow hedges
Deferred tax credit/(charge) arising on cash flow hedges
Other comprehensive (expense)/income for the year
Year ended
31 December
2021
£’000
Year ended
31 December
2020
£’000
17,481
8,584
(5,194)
(1,548)
290
(6,452)
3,507
842
(160)
4,189
Note
24
18
Total comprehensive income for the year attributable to equity holders of the parent
11,029
12,773
92 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
Consolidated Statement of Financial Position
At 31 December 2021
Assets
Non-current assets
Acquired intellectual property rights
Intangible assets
Software intangibles
Development costs
Goodwill
Property, plant and equipment
Trade and other receivables
Current assets
Inventories
Trade and other receivables
Current tax assets
Cash and cash equivalents
Total assets
Liabilities
Current liabilities
Trade and other payables
Current tax liabilities
Lease liability
Non-current liabilities
Trade and other payables
Deferred tax liabilities
Lease liability
Total liabilities
Net assets
Equity
Share capital
Share premium
Share-based payments reserve
Investment in own shares
Share-based payments deferred tax reserve
Other reserve
Hedging reserve
Translation reserve
Retained earnings
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Note
2021
£’000
2020
£’000
16
16
16
16
19
17
21
20
21
22
23
23
23
18
23
27
28
28
28
28
9,118
19,256
2,107
10,477
66,032
27,441
105
9,879
22,357
2,437
7,368
68,911
30,064
364
134,536
141,380
19,300
21,016
1,692
72,965
114,973
21,025
21,107
1,214
53,829
97,175
249,509
238,555
14,958
897
1,153
17,008
3,679
7,438
8,707
19,824
36,832
13,139
319
1,257
14,715
3,229
8,536
9,864
21,629
36,344
212,677
202,211
10,804
36,996
13,180
(164)
933
1,531
(21)
(1,936)
151,354
10,769
36,288
11,142
(162)
430
1,531
1,237
3,258
137,718
Equity attributable to equity holders of the parent
212,677
202,211
The Financial Statements of Advanced Medical Solutions Group plc (registration number 2867684) on pages 92 to 130 were
approved by the Board of Directors and authorised for issue on 14 April 2022 and were signed on its behalf by:
Chris Meredith
Chief Executive Officer
Advanced Medical Solutions Group plc Annual Report & Accounts 2021 93
FINANCIAL STATEMENTS
Consolidated Statement of Changes in Equity
Attributable to equity holders of the Group
At 31 December 2019
Consolidated profit for the year to
31 December 2020
Other comprehensive income
Total comprehensive income
Share-based payments (Note 29)
Share options exercised (Note 29)
Shares purchased by EBT
Shares sold by EBT
Dividends paid (Note 14)
At 31 December 2020
Consolidated profit for the year to
31 December 2021
Other comprehensive income
Total comprehensive income
Share-based payments (Note 29)
Share options exercised (Note 29)
Shares purchased by EBT
Shares sold by EBT
Dividends paid (Note 14)
At 31 December 2021
Share capital
£’000
10,745
Share
premium
£’000
36,226
Share-based
payments
£’000
9,466
–
–
–
–
24
–
–
–
–
–
–
–
62
–
–
–
10,769
36,288
–
–
–
–
35
–
–
–
–
–
–
–
708
–
–
–
10,804
36,996
–
–
–
1,611
65
–
–
–
11,142
–
–
–
1,979
59
–
–
–
13,180
Investment
in own shares
£’000
Share-based payments
deferred tax
(159)
–
–
–
–
–
(542)
539
–
(162)
–
–
–
–
–
(366)
364
–
(164)
£’000
649
(219)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
503
Other
reserve
£’000
1,531
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Hedging
reserve
£’000
555
–
682
682
–
–
–
–
–
1,237
–
(1,258)
(1,258)
–
–
–
–
–
(21)
Translation
reserve
£’000
(249)
–
3,507
3,507
3,258
–
(5,194)
(5,194)
–
–
–
–
–
–
–
–
–
–
Retained
earnings
£’000
132,471
8,584
8,584
(3,337)
137,718
17,481
17,481
–
–
–
–
–
–
–
–
–
–
(3,845)
151,354
Total
£’000
191,235
8,584
4,189
12,773
1,392
151
(542)
539
(3,337)
202,211
17,481
(6,452)
11,029
2,482
802
(366)
364
(3,845)
212,677
933
1,531
(1,936)
430
1,531
94 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
Consolidated Statement of Changes in Equity
At 31 December 2019
Consolidated profit for the year to
31 December 2020
Other comprehensive income
Total comprehensive income
Share-based payments (Note 29)
Share options exercised (Note 29)
Shares purchased by EBT
Shares sold by EBT
Dividends paid (Note 14)
At 31 December 2020
Consolidated profit for the year to
31 December 2021
Other comprehensive income
Total comprehensive income
Share-based payments (Note 29)
Share options exercised (Note 29)
Shares purchased by EBT
Shares sold by EBT
Dividends paid (Note 14)
At 31 December 2021
Share capital
£’000
10,745
Share
premium
£’000
36,226
Share-based
payments
£’000
9,466
Investment
in own shares
£’000
(159)
10,769
36,288
11,142
–
–
–
–
24
–
–
–
–
–
–
–
–
–
–
35
–
–
–
–
–
–
–
62
–
–
–
–
–
–
–
708
1,611
65
–
–
–
–
–
–
1,979
–
–
–
59
–
–
–
10,804
36,996
13,180
–
–
–
–
–
(542)
539
–
(162)
–
–
–
–
–
(366)
364
–
(164)
Share-based payments
deferred tax
£’000
649
–
–
–
(219)
–
–
–
–
430
–
–
–
503
–
–
–
–
933
Other
reserve
£’000
1,531
–
–
–
–
–
–
–
–
1,531
–
–
–
–
–
–
–
–
1,531
Hedging
reserve
£’000
555
–
682
682
–
–
–
–
–
1,237
–
(1,258)
(1,258)
–
–
–
–
–
(21)
Translation
reserve
£’000
(249)
–
3,507
3,507
–
–
–
–
–
Retained
earnings
£’000
132,471
8,584
–
8,584
–
–
–
–
(3,337)
Total
£’000
191,235
8,584
4,189
12,773
1,392
151
(542)
539
(3,337)
3,258
137,718
202,211
–
(5,194)
(5,194)
–
–
–
–
–
17,481
–
17,481
–
–
–
–
(3,845)
17,481
(6,452)
11,029
2,482
802
(366)
364
(3,845)
(1,936)
151,354
212,677
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Advanced Medical Solutions Group plc Annual Report & Accounts 2021 95
FINANCIAL STATEMENTS
Consolidated Statement of Cash Flows
For the year ended 31 December 2021
Cash flows from operating activities
Profit from operations
Adjustments for:
Depreciation
Amortisation – intellectual property rights
– software intangibles
– development costs
Decrease (increase) in inventories
(Increase)/decrease in trade and other receivables
Increase/(decrease) in trade and other payables
Share-based payments expense
Taxation
Net cash inflow from operating activities
Cash flows from investing activities
Purchase of software
Capitalised research and development
Purchases of property, plant and equipment
Disposal of property, plant and equipment
Interest received
Acquisition of subsidiaries (net of cash acquired)
Net cash used in investing activities
Cash flows from financing activities
Dividends paid
Repayment of principal under lease liabilities
Repayment of bank loan
Issue of equity shares
Shares purchased by EBT
Shares sold by EBT
Interest paid
Net cash used in financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Effect of foreign exchange rate changes
Cash and cash equivalents at the end of the year
96 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
Year ended
31 December
2021
£’000
Year ended
31 December
2020
£’000
Note
22,998
10,730
17
16
16
16
29
14
3,893
3,179
529
1,247
941
(1,769)
2,105
1,979
(4,077)
31,025
(254)
(4,441)
(1,768)
53
84
–
(6,326)
(3,845)
(1,281)
–
723
(366)
364
(700)
(5,105)
19,594
53,829
(458)
3,467
2,269
563
533
(1,892)
10,262
(2,292)
1,611
(3,740)
21,511
(126)
(2,788)
(2,346)
136
277
(21,924)
(26,771)
(3,337)
(1,150)
(664)
65
(542)
539
(735)
(5,824)
(11,084)
64,751
162
72,965
53,829
Notes Forming Part of the Consolidated
Financial Statements
1. Reporting entity
Advanced Medical Solutions Group plc (‘the Company’) is a public limited company incorporated and domiciled in England and
Wales (registration number 2867684). The Company’s registered address is Premier Park, 33 Road One, Winsford Industrial Estate,
Cheshire, CW7 3RT.
The Company’s Ordinary Shares are traded on the AIM market of the London Stock Exchange plc. The Consolidated Financial
Statements of the Company for the twelve months ended 31 December 2021 comprise the Company and its subsidiaries
(together referred to as the ‘Group’).
The Group is primarily involved in the design, development and manufacture of innovative tissue-healing technology, focused
on quality outcomes for patients and value for payers. The Group has a has a wide range of surgical products including tissue
adhesives, sutures, haemostats, internal fixation devices and internal sealants, which it markets under its brands LiquiBand®,
RESORBA®, LiquiBandFix8® and Seal-G®. The Group also supplies wound care dressings such as silver alginates, alginates and
foams through its ActivHeal® brand as well as under white label. Since 2019, the Group has made three acquisitions: Sealantis,
an Israeli medical device company with a patent-protected sealant technology platform; Biomatlante, an established French
developer and manufacturer of innovative surgical biomaterial technologies and Raleigh, a UK leading coater and converter of
materials predominately for woundcare and bio-diagnostics products.
2. Basis of preparation
The Group financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs),
as adopted by the UK. The Financial Statements have been prepared on the historical cost basis of accounting except as
disclosed in the accounting policies set out below. The individual Financial Statements for each Group Company are presented
in the currency of the primary economic environment in which it operates (its ‘functional currency’). For the purpose of the
Consolidated Financial Statements, the results and financial position of each Group Company are expressed in Pounds Sterling,
which is the functional currency of the Company and the presentation currency for the Consolidated Financial Statements.
In the current year the Group has applied amendments to IFRSs issued by the IASB. Their adoption has not had a material impact
on the disclosures or on the amounts reported in the Annual Financial Statements. The following amendments were applied:
•
Interest Rate Benchmark Reform (Amendments to IAS 39 and IFRS4, IFRS7, IFRS9 and IFRS16).
Going Concern
In carrying out their duties in respect of Going Concern, the Directors have carried out a review of the Group’s financial
position and cash flow forecasts for a period of twelve months from the date of signing the accounts. These have been
based on a comprehensive review of revenue, expenditure and cash flows, taking into account specific business risks and the
current economic environment. In light of the ongoing COVID-19 pandemic, sensitivity analysis has been prepared to stress
test forecasts and the Directors are confident the business can withstand the challenges and is a Going Concern, due to the
significant headroom available.
Whilst the COVID-19 pandemic continues to cause the cancellation or postponement of elective surgeries, the Group has
experienced strong revenue growth in the year, is profitable and cash generative. With regards to the Group’s financial position,
it had cash and cash equivalents at the year-end of £73.0 million. The Group has an undrawn £80 million, multi-currency credit
facility with a £20 million accordion option. The credit facility is provided jointly by HSBC UK Bank PLC and NatWest Bank PLC
and is in place until December 2022. It is unsecured and has not been drawn down. This facility carries an annual interest rate of
the applicable reference rate such as SONIA in the case of sterling plus a margin that varies between 0.60% and 1.70% depending
on the Group’s net debt to EBITDA ratio as well as certain financial covenants that need to be complied with. In all instances of
the Going Concern Sensitivity analysis the Group was able to comply with the financial covenants in place, however given that
the facility expires on 31 December 2022, no reliance has been placed on this facility in the Going Concern assessment.
While the current economic environment is very uncertain, in particular in relation to COVID-19, the Group operates in markets
whose demographics are favourable, underpinned by an increasing need for products to treat chronic and acute wounds.
Consequently, market growth is predicted as the impact of COVID-19 subsides. The Group has a large number of contracts
with customers across different geographic regions and also with substantial financial resources, ranging from government
agencies through to global healthcare companies.
Having taken the above into consideration, the Directors have reached a conclusion that the Group is well placed to manage
its business risks in the current economic environment, including COVID-19. Accordingly, they continue to adopt the Going
Concern basis in preparing the accounts.
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Advanced Medical Solutions Group plc Annual Report & Accounts 2021 97
FINANCIAL STATEMENTS
Notes Forming Part of the Consolidated
Financial Statements continued
3. Accounting policies
Critical Accounting Judgements and Key Sources of Estimation Uncertainty
The preparation of Financial Statements, in conformity with adopted IFRS, requires management to make judgements, estimates
and assumptions that affect the application of accounting policies and the reported value of assets and liabilities, income and
expense. Actual results may differ from these estimates. In preparing these Financial Statements, no key sources of estimation
uncertainty and two critical accounting judgements have been identified that could potentially have a material adjustment to the
carrying amounts of assets and liabilities in future financial years. No critical accounting judgement or key sources of estimation
uncertainty have been identified in relation to COVID-19.
Carrying value of Goodwill
The Group has consolidated the number of cash generating units (CGU) in the current year to two (2020: five) and now reports
CGUs on the same basis as the group’s operating segments. Cash generating units should be the smallest identifiable group
of assets that generates cash inflows that are largely independent of the cash inflows from other assets of groups of assets.
This requires use of judgement which could have a material impact and as such the decision to reduce the number of cash
generating units has been deemed to be a critical accounting judgement. The reasons for the change to two cash generating
units are summarised in note 19.
Carrying value of development and recertification costs
The Group capitalises development and recertification costs once it can be demonstrated that the product or process is clearly
identifiable, technically and commercially feasible and will generate future economic benefits. There is judgement involved in
determining the point at which capitalisation commences and that the product or process is at a point where is it technically and
commercially feasible and that future economic benefits will be generated.
Basis of consolidation
Subsidiaries are entities controlled by the Group. Control exists when the Group has the power to govern the financial and
operating policies of an entity so as to retain benefits from its activities. The Financial Statements of the subsidiaries are included
in the Consolidated Financial Statements on the basis of acquisition accounting, from the date that control commences until the
date that control ceases. All entities within the Group have the same year-end.
Intercompany transactions and balances between Group entities are eliminated upon consolidation.
Business combinations
The acquisition of subsidiaries is accounted for using the acquisition method. The cost of the acquisition is measured at the
aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, the equity instruments issued
by the Group in exchange for control of the acquiree, plus any costs directly attributable to the issue of debt or equity. Acquisition
related expenses are accounted for as expenses in the period in which the costs are incurred and the services rendered, with the
exception of directly attributable costs incurred as a result of raising equity, which are off-set against share premium, and raising
debt, which are capitalised and amortised over the term of the debt. The acquiree’s identifiable assets, liabilities and contingent
liabilities that meet the conditions for recognition under IFRS 3 are recognised at their fair value at the acquisition date, except for
non-current assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 Non-Current Assets Held for
Sale and Discontinued Operations, which are recognised and measured at fair value less costs to sell.
Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of
the business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent
liabilities recognised. If, after reassessment, the Group’s interest in the net fair value of the acquiree’s identifiable assets,
liabilities and contingent liabilities exceeds the cost of the business combination, the excess is recognised immediately
in the Income Statement.
Goodwill
Goodwill arising on consolidation represents the excess of the cost of acquisition over the Group’s interest in the fair value of the
identifiable assets and liabilities of a subsidiary, associate or jointly controlled entity at the date of acquisition. Goodwill is initially
recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment losses. Goodwill which is
recognised as an asset is reviewed for impairment at least annually on the basis of the recoverable amount for the relevant cash-
generating unit. In assessing recoverable amount, the estimated future cash flows are discounted to their present value using a
discount rate that reflects the current market assessments of the time. Any impairment is recognised immediately in the Income
Statement and is not subsequently reversed.
98 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
Notes Forming Part of the Consolidated
Financial Statements continued
Revenue recognition
The Group manufactures and sells a range of innovative and technologically advanced products for the global surgical,
woundcare and wound closure markets. Sales are recognised when control of the products has transferred to the customer in
accordance with the contractual shipping terms, the customer has discretion over the channel and price to sell the products
in accordance with the sales contract, and there is no unfulfilled obligation that could affect the customer’s acceptance of the
products. Transfer occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have
been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract,
the acceptance provisions have lapsed or the Group has objective evidence that all criteria for acceptance have been satisfied.
Occasionally, the products are sold with volume discounts based on aggregate sales over a twelve month period. Revenue from
these sales is recognised based on the price specified in the contract, net of the estimated volume discounts. Accumulated
experience and customer-provided forecasts is used to estimate and provide for the discounts, using the expected value method,
and revenue is only recognised to the extent that it is highly probable that a significant reversal will not occur. No element of
finance is deemed present as the sales are made with a credit term of up to 90 days, which is consistent with market practice.
A receivable is recognised when the goods are transferred as this is the point in time that the consideration is unconditional
because only the passage of time is required before the payment is due.
The Group also recognises revenue from royalty income receivable under licence agreements from external customers at
amounts excluding value added tax as the products under licence are sold and the revenue can be reliably measured. For the
year ended 31 December 2021, £4.7 million (2020: £3.9 million) revenue from royalty income was recognised.
Other income
Other income relates to tax credits received under the UK Research and Development Expenditure Credit (RDEC) scheme and
is recognised in the Income Statement in the same period in which the expense is incurred.
Grants
Grants are recognised only when there is reasonable assurance that the Group will comply with the conditions attached to them
and that the grants will be received. Grants related to income are presented as a deduction of the related cost. Grants that are
receivable as compensation for expenses already incurred are recognised in the Income Statement in the period in which they
become receivable. No amounts are included in the Income Statement in the year relating to funds received from the COVID-19
Job Retention scheme (2020: £Nil).
Exceptional items
Exceptional items are those items that are significant for separate disclosure by virtue of their size, nature or incidence, or that
the Directors consider should be disclosed separately to enable a full understanding of the Group’s financial performance.
This includes non-recurring transaction costs (see Note 6). Exceptional items have been presented separately on the face of
the Income Statement. The Directors consider that this presentation gives a fairer presentation of the results of the Group.
Finance income
Finance income relates to interest earned on cash and cash equivalents. Interest income is accrued on a time basis, by reference
to the principal outstanding and at the effective interest rate applicable.
Finance costs
Finance costs arise from interest on the Group’s credit facilities, lease liabilities and financial liabilities. They are recognised in the
Income Statement as they accrue using the effective interest method.
Finance costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that
necessarily take a substantial period of time to get ready for their intended use, are added to the cost of those assets, until such
time as the assets are substantially ready for their intended use.
Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is
deducted from the borrowing costs eligible for capitalisation.
Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable
that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be
made of the amount of the obligation.
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Advanced Medical Solutions Group plc Annual Report & Accounts 2021 99
FINANCIAL STATEMENTS
Notes Forming Part of the Consolidated
Financial Statements continued
3. Accounting policies continued
Foreign currencies
Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies at the Statement of Financial Position date are translated at the foreign
exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the Income Statement.
Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the
exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are
stated at fair value are translated at foreign exchange rates ruling at the date the fair value was determined.
The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on consolidation, are
translated at foreign exchange rates ruling at the Statement of Financial Position date. The revenue and expenses of foreign
operations are translated at an average rate for the period unless exchange rates fluctuate significantly. Exchange differences
arising on consolidation are recognised in equity within the Group’s translation reserve. Such translation differences are
recognised as income or expense in the period in which the operation is disposed of.
Hedging
The Group designates certain hedging instruments, which include derivatives in respect of foreign currency risk, as cash flow
hedges. Hedges of foreign exchange risk on firm commitments are accounted for as cash flow hedges. At the inception of the
hedge relationship, the entity documents the relationship between the hedging instrument and the hedged item, along with its
risk management objectives and its strategy for undertaking various hedge transactions in order to confirm the principle of an
‘economic relationship’ exists. Note 24 sets out details of the fair values of the derivative instruments used for hedging purposes.
The effective portion of changes in the fair value of derivatives and other qualifying hedging instruments that are designated
and qualify as cash flow hedges is recognised in other comprehensive income and accumulated under the heading of cash
flow hedging reserve, limited to the cumulative change in fair value of the hedged item from inception of the hedge. The gain
or loss relating to the ineffective portion is recognised immediately in the Income Statement.
Amounts previously recognised in other comprehensive income and accumulated in equity are reclassified to the Income
Statement in the periods when the hedged item affects the Income Statement, in the same line as the recognised hedged
item. Furthermore, if the Group expects that some or all of the loss accumulated in the cash flow hedging reserve will not be
recovered in the future, that amount is immediately reclassified to the Income Statement.
The Group discontinues hedge accounting only when the hedging relationship (or a part thereof) ceases to meet the qualifying
criteria (after rebalancing, if applicable). This includes instances when the hedging instrument expires or is sold, terminated or
exercised. The discontinuation is accounted for prospectively. Any gain or loss recognised in other comprehensive income and
accumulated in cash flow hedge reserve at that time remains in equity and is reclassified to the Income Statement when the
forecast transaction occurs. When a forecast transaction is no longer expected to occur, the gain or loss accumulated in the
cash flow hedge reserve is reclassified immediately to the Income Statement.
The Group’s risk management strategies and hedge documentation are aligned with the requirements of IFRS 9.
Taxation
Taxation expense includes the amount of current income tax payable and the charge for the year in respect of deferred taxation.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the Income
Statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes
items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted
or substantively enacted by the end of the reporting period.
A provision is recognised for those matters for which the tax determination is uncertain but it is considered probable that there
will be a future outflow of funds to a tax authority. The provisions are measured at the best estimate of the amount expected to
become payable. The assessment is based on the judgement of tax professionals within the Company supported by previous
experience in respect of such activities and in certain cases based on specialist independent tax advice.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and
liabilities in the Financial Statements and the corresponding tax bases used in the computation of taxable profit, and is accounted
for using the liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred
tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary
differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial
recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable
profit nor the accounting profit. In addition, a deferred tax liability is not recognised if the temporary difference arises from the
initial recognition of goodwill.
100 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
Notes Forming Part of the Consolidated
Financial Statements continued
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Deferred tax is charged or credited to the Income Statement, except when it relates to items charged or credited directly to
equity, in which case it is dealt with within equity.
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, and
interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable
that the temporary difference will not reverse in the foreseeable future. Deferred tax assets arising from deductible temporary
differences associated with such investments and interests are only recognised to the extent that it is probable that there will be
sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the
foreseeable future.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised
based on tax laws and rates that have been enacted or substantively enacted at the reporting date.
The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which
the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax
liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current
tax assets and liabilities on a net basis.
Current tax and deferred tax for the year
Current and deferred tax are recognised in the Income Statement, except when they relate to items that are recognised in
other comprehensive income or directly in equity, in which case the current and deferred tax are also recognised in other
comprehensive income or directly in equity respectively. Where current tax or deferred tax arises from the initial accounting
for a business combination, the tax effect is included in the accounting for the business combination.
Intangible assets
Acquired intellectual property rights
Intellectual property rights that are acquired in a business combination are initially recognised at their fair value. Intellectual
property rights purchased outright are initially recognised at cost. Intellectual property rights are capitalised and amortised
over their estimated useful economic lives, usually not exceeding 18 years. In determining the useful economic life each asset
is reviewed separately and consideration given to the period over which the Group expects to derive economic benefit from
the asset.
Other intangible assets
Other intangibles consist mainly of research and device technologies and customer-related intangible assets acquired on
acquisition and are initially recognised at their fair value. Other intangibles are amortised over their estimated useful economic
lives, between 9 and 12 years. In determining the useful economic life each asset is reviewed separately and consideration given
to the period over which the Group expects to derive economic benefit from the asset.
Development costs
Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge, is recognised
in the Income Statement as an expense in the period in which it is incurred.
Expenditure on development activities, where research findings are applied to a plan or design for the production of new or
substantially improved products and processes, is capitalised once it can be demonstrated that the product or process is clearly
identifiable, technically and commercially feasible, will generate future economic benefits, that the development costs of the
asset can be measured reliably and the Group has sufficient resources to complete development. Expenditure capitalised is
stated as the cost of materials and direct labour less accumulated amortisation.
Where development expenditure results in new or substantially improved products or processes and it is probable that recovery
will take place, it is capitalised and amortised on a straight-line basis over the product’s useful life starting from the date on which
serial production commences, which is between one and ten years. Patents and trademarks are measured initially at purchase
cost and are amortised on a straight-line basis over their estimated useful lives, which is between three and twenty years.
Regulatory certification costs
Expenditure on regulatory certification costs, where the certificate allows a product to be sold into a market for a period of
time greater than one year, is capitalised once it can be demonstrated that the product is clearly identifiable, technically and
commercially feasible, will generate future economic benefits, that the certification costs of the asset can be measured reliably
and the Group has sufficient resources to complete certification. Expenditure capitalised is stated as the cost of materials less
accumulated amortisation. Internal costs relating to regulatory certification costs are not capitalised unless they can be identified
as directly attributable to the certification process. Capitalised certification costs are amortised over the term of the certificate
which is deemed to be the useful economic life. Clinical and regulatory data supporting the certification are amortised over ten
years reflecting the useful economic life.
Advanced Medical Solutions Group plc Annual Report & Accounts 2021 101
FINANCIAL STATEMENTS
Notes Forming Part of the Consolidated
Financial Statements continued
3. Accounting policies continued
Software intangibles
Where computer software is not integral to an item of property, plant or equipment its costs are capitalised as intangible assets
when there is sufficient levels of customisation and control of future economic benefits or where other contractual rights exist.
Amortisation is provided on a straight-line basis over its useful economic life, which is in the range of three to ten years.
Property, plant and equipment
Land and buildings and plant and equipment held for use in the production of goods and services or for administrative purposes
are carried in the Statement of Financial Position at cost less any subsequent accumulated depreciation and subsequent
accumulated impairment losses.
The Group elected to use the fair value as the deemed cost in respect of land and buildings at the date of transition to IFRS.
Fair value was calculated by reference to their existing use at the date of transition.
Depreciation is provided to write off the cost, less estimated residual values, of all property, plant and equipment, over the
expected useful life of the asset from the date that the asset is brought into use. It is calculated at the following rates:
• Freehold property and improvements
• Leasehold improvements and Right-of-use assets
• Plant and machinery
• Fixtures and fittings
• Motor vehicles
– 4% per annum on cost
– Shorter of useful economic life and unexpired period of the lease
– 6.7% to 33.3% per annum on cost
– 33.3% per annum on cost
– 25% per annum on cost
Property, plant and equipment in the course of construction for production are carried at cost, less any recognised impairment
loss. Depreciation of these assets, on the same basis as other property, plant and equipment assets, commences when the assets
are ready for their intended use.
No depreciation is provided on freehold land.
Impairment of tangible and intangible assets
At each reporting date, the Group reviews the carrying amounts of its property, plant and equipment and intangible assets to
determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the
recoverable amount of the asset is estimated to determine the extent of the impairment loss (if any). Where the asset does not
generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating
unit to which the asset belongs. When a reasonable and consistent basis of allocation can be identified, corporate assets are also
allocated to individual cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for
which a reasonable and consistent allocation basis can be identified.
Intangible assets with an indefinite useful life are tested for impairment at least annually and whenever there is an indication at the
end of a reporting period that the asset may be impaired.
Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying
amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised
immediately in the Income Statement, unless the relevant asset is carried at a revalued amount, in which case the impairment
loss is treated as a revaluation decrease and to the extent that the impairment loss is greater than the related revaluation surplus,
the excess impairment loss is recognised in the Income Statement.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased
to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying
amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in
prior years. A reversal of an impairment loss is recognised immediately in the Income Statement to the extent that it eliminates
the impairment loss which has been recognised for the asset in prior years. Any increase in excess of this amount is treated as
a revaluation increase.
102 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
Notes Forming Part of the Consolidated
Financial Statements continued
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Reversal of impairment
An impairment loss in respect of a receivable carried at amortised cost is reversed if the subsequent increase in recoverable
amount can be related objectively to an event occurring after the impairment loss was recognised.
In respect of other assets, an impairment loss is reversed when there is an indication that the impairment loss may no longer exist
and there has been a change in the estimates used to determine the recoverable amount.
An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that
would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
Inventory
Inventory is valued at the lower of cost or net realisable value. Cost comprises direct materials and, where applicable, direct
labour costs that have been incurred in bringing the inventories to their present location and condition and an attributable
proportion of manufacturing overheads based on normal levels of activity.
Net realisable value is based on estimated selling price less further costs to completion and disposal.
The Group makes provision for inventory deemed to be irrecoverable or where the net realisable value is lower than cost.
This provision is established on a stock keeping unit (SKU) basis by reference to the age of the stock, the forward order book,
management’s experience and its assessment of the present value of estimated future cash flow.
Financial instruments
Classification of financial instruments
Financial instruments are classified as financial assets, financial liabilities or equity instruments.
Financial instruments issued by the Group are treated as equity only to the extent that they meet the following two conditions:
•
they include no contractual obligations upon the Group to deliver cash or other financial assets that are potentially
unfavourable to the Group; and
• where the instrument will or may be settled in the Group’s own equity instruments, it is either a non-derivative that includes
no obligation to deliver a variable number of the Group’s own equity instruments or is a derivative that will be settled by the
Group exchanging a fixed amount of cash or other financial assets for a fixed number of its own equity instruments.
To the extent that this definition is not met, the proceeds of issue are classified as a financial liability.
Recognition and valuation of financial assets
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand and cash deposits and amounts under short-term guarantees,
usually three months or less, that are held for the purpose of meeting short-term cash commitments and are subject to
insignificant risk in change in value and which are readily convertible to a known amount of cash. Cash held in accounts
with more than 90 days’ notice that are not required to meet short-term cash commitments are shown as an investment.
Trade and other receivables
Trade and other receivables are stated initially at fair value and subsequent to initial recognition they are measured at amortised
cost including a provision for expected credit losses. The Group measures the provision at an amount equal to lifetime expected
credit losses, estimated by reference to past experience and relevant forward-looking factors. The Group writes off a receivable
when there is objective evidence that the debtor is in significant financial difficulty and there is no realistic prospect of recovery,
for example, when a debtor enters bankruptcy or financial reorganisation.
The Group recognises a loss allowance for expected credit losses on investments in debt instruments that are measured at
amortised cost or at fair value through other comprehensive income. The amount of expected credit losses is updated at each
reporting date to reflect changes in credit risk since initial recognition of the respective financial instrument.
The Group always recognises lifetime expected credit losses (ECL) for trade receivables. The expected credit losses on these
financial assets are estimated using a provision matrix based on the Group’s historical credit loss experience, adjusted for factors
that are specific to the debtors, general economic conditions and an assessment of both the current as well as the forecast
direction of conditions at the reporting date, including time value of money where appropriate. The Group’s approach to
ensuring credit worthiness of counter-parties and use of proforma terms at times has enabled the Group to record relatively
low levels of credit losses.
For all other financial instruments, the Group recognises lifetime ECL when there has been a significant increase in credit
risk since initial recognition. However, if the credit risk on the financial instrument has not increased significantly since initial
recognition, the Group measures the loss allowance for that financial instrument at an amount equal to twelve-month ECL.
Lifetime ECL represents the expected credit losses that will result from all possible default events over the expected life of
a financial instrument. In contrast, twelve-month ECL represents the portion of lifetime ECL that is expected to result from
default events on a financial instrument that are possible within twelve months of the reporting date.
Advanced Medical Solutions Group plc Annual Report & Accounts 2021 103
FINANCIAL STATEMENTS
Notes Forming Part of the Consolidated
Financial Statements continued
3. Accounting policies continued
De-recognition of financial assets:
The Group de-recognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it
transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group
neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the
Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains
substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial
asset and also recognises a collateralised borrowing for the proceeds received.
On de-recognition of a financial asset measured at amortised cost, the difference between the asset’s carrying amount and
the sum of the consideration received and receivable is recognised in the Income Statement. In addition, on de-recognition
of an investment in a debt instrument classified as FVTOCI, the cumulative gain or loss previously accumulated in the
investments revaluation reserve is reclassified to the Income Statement. In contrast, on de-recognition of an investment in
an equity instrument which the Group has elected on initial recognition to measure at FVTOCI, the cumulative gain or loss
previously accumulated in the investments revaluation reserve is not reclassified to the Income Statement, but is transferred
to retained earnings.
Recognition and valuation of equity instruments
Equity instruments are stated at par value. Any premium on issue is taken to the share premium account.
Recognition and valuation of financial liabilities
Financial liabilities are classified according to the substance of the contractual arrangements entered into.
Trade payables
Trade payables are initially recognised at fair value and are subsequently recognised at amortised cost using the effective
interest method.
Other loans
Other loans are initially recognised at fair value and are subsequently recognised at amortised cost using the effective
interest method.
Financial liabilities at Fair Value Through Profit or Loss (‘FVTPL’)
A derivative that is not designated and effective as a hedging instrument is classified as held for trading. Financial liabilities are
classified as FVTPL where the financial liabilities are held for trading.
Financial liabilities at FVTPL are stated at fair value, with any resultant gain or loss recognised in the Income Statement. Fair value
is determined in the manner described in Note 24.
Derivative financial instruments
The Group enters into foreign exchange forward contracts to manage its exposure to foreign exchange rate risk. Further details
of derivative financial instruments are disclosed in Note 24 to the Financial Statements.
Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured
to their fair value at each Statement of Financial Position date. The resulting gain or loss is recognised in the Income Statement,
within administrative costs, immediately unless the derivative is designated and effective as a hedging instrument, in which event
the timing of the recognition in the Income Statement depends on the nature of the hedge relationship. The Group currently
designates certain derivatives as hedges of highly probable forecast transactions or hedges of foreign currency risk of firm
commitments (cash flow hedges). A derivative with a positive fair value is recognised as a financial asset whereas a derivative
with a negative fair value is recognised as a financial liability.
Derivatives with remaining maturity of less than twelve months are presented as current assets or current liabilities.
Leased assets
For all assets, the lessee recognises a right-of-use asset and a corresponding liability at the date at which the leased asset is
available to use. Assets and liabilities arising from a lease are initially measured on a present value basis using the interest rate
implicit in the lease or, if that rate cannot be readily determined, the incremental borrowing rate. Lease payments are allocated
between the liability and finance expense. The finance expense is charged to profit and loss over the lease period so as to
produce a constant periodic rate of interest on the remaining balance of the liability for each period, The right-of-use asset is
depreciated over the shorter of the asset’s useful life and the lease term on a straight line basis. Payments associated with leases
with a lease term of twelve months or less and leases of low-value assets are recognised as an expense in the Income Statement
on a straight-line basis.
104 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
Notes Forming Part of the Consolidated
Financial Statements continued
Pensions
The Group operates a money purchase pension scheme. The assets of the scheme are held separately from those of the Group
in an independently administered fund. The amount charged against the Income Statement represents the contributions payable
to the scheme in respect of the accounting period.
Share-based payments
The group issues equity-settled share-based payments to certain employees. Equity-settled share-based payments are
measured at fair value at the date of grant. The fair value, as determined at the grant date of equity-settled share-based payments,
is expensed on a straight-line basis over the vesting period, based on the Group’s estimate of options that will eventually vest.
At each Statement of Financial Position date the Group revises its estimate of the number expected to vest as a result of the
effect of non-market based vesting conditions. The impact, if any, is recognised in the Income Statement with a corresponding
adjustment to reserves.
Fair value is measured by use of a Black-Scholes Merton or Monte Carlo model. The expected life used in the model has been
adjusted, based on management’s best estimate, for the effect of non-transferability, exercise restrictions and behavioural
considerations.
Capital management
For the year ended 31 December 2021, the Group had net funds with no borrowings (2020: net funds with no borrowings).
Working capital is managed in order to generate maximum conversion of profits into cash and cash equivalents thereby
maintaining capital. As the Group had net funds with no external borrowings a reconciliation of net debt is not provided.
Capital includes share capital, share premium, investment in own shares, share-based payments reserve, share-based
payments deferred tax reserve, other reserve, translation reserve and retained earnings reserve. There are no externally imposed
capital requirements on the Group. The Group returns cash to shareholders by means of dividends whilst ensuring the Group
has the cash available to develop the products and services provided by the Group in order to provide an adequate return
to shareholders.
Employee Benefit Trusts
The Group operates an Employee Benefit Trust (EBT): ‘Advanced Medical Solutions Group plc UK Employee Benefit Trust’.
The Group has de facto control of the assets, liabilities and shares held by the Trust and bear their benefits and risks. The Group
records assets and liabilities of the Trust as its own.
In compliance with IAS 32 ‘Financial Instruments: Presentation Group’, shares held by the EBT are included in the Consolidated
Statement of Financial Position as a reduction in equity. Gains and losses on Group shares are recognised directly in reserves.
IFRS not yet effective and not adopted early
Certain new accounting standards and interpretations have been published that are not mandatory for 31 December 2021
reporting periods and have not been early adopted by the Group. These standards are not expected to have a material impact
on the Group in the current or future reporting periods or on foreseeable future transactions.
The IASB has issued a number of minor amendment to IFRSs effective 1 January 2022 and in later years. These amendments
are not expected to have a material impact on the Group.
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Advanced Medical Solutions Group plc Annual Report & Accounts 2021 105
FINANCIAL STATEMENTS
Notes Forming Part of the Consolidated
Financial Statements continued
4. Segment information
During the year ended 31 December 2021, the Group continued to operate under two business units. The Surgical Business Unit
focused on selling, marketing, research, development and innovation of all our surgical products. Woundcare focused on all
advanced woundcare sales, marketing, research, development and innovation of all woundcare devices, regardless of whether
they are sold under an AMS or a partner brand name.
Year ended 31 December 2021
Revenue
Result
Adjusted segment operating profit
Amortisation of acquired intangibles
Segment operating profit
Unallocated expenses
Exceptional costs
Operating profit
Finance income
Finance costs
Profit before tax
Tax
Profit for the year
Year ended 31 December 2021
Other information
Capital additions:
Software intangibles
Research & Development
Property, plant and equipment
Depreciation and amortisation
At 31 December 2021
Statement of Financial Position
Assets
Segment assets
Unallocated assets
Consolidated total assets
Liabilities
Segment liabilities
Surgical
£’000
Woundcare
£’000
Consolidated
£’000
64,630
43,971
108,601
20,303
(2,005)
18,298
6,594
(1,174)
5,420
26,897
(3,179)
23,718
(720)
–
22,998
84
(1,098)
21,984
(4,503)
17,481
Surgical
£’000
Woundcare
£’000
Consolidated
£’000
145
2,922
1,028
(5,579)
109
1,519
740
(3,269)
254
4,441
1,768
(8,848)
159,442
89,944
249,386
123
249,509
22,651
14,181
36,832
106 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
Notes Forming Part of the Consolidated
Financial Statements continued
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Revenue
Result
Adjusted segment operating profit
Amortisation of acquired intangibles
Segment operating profit
Unallocated expenses
Exceptional costs
Operating profit
Finance income
Finance costs
Profit before tax
Tax
Profit for the year
Year ended 31 December 2020
Other information
Capital additions:
Software intangibles
Research & Development
Property, plant and equipment
Depreciation and amortisation
At 31 December 2020
Statement of Financial Position
Assets
Segment assets
Unallocated assets
Consolidated total assets
Liabilities
Segment liabilities
Surgical
£’000
50,169
9,094
(2,132)
6,962
Woundcare
£’000
Consolidated
£’000
36,627
86,796
5,357
(137)
5,220
14,451
(2,269)
12,182
(618)
(834)
10,730
220
(861)
10,089
(1,505)
8,584
Surgical
£’000
Woundcare
£’000
Consolidated
£’000
74
1,659
1,367
(4,709)
52
1,129
979
(2,123)
126
2,788
2,346
(6,832)
155,301
82,999
238,300
255
238,555
20,354
15,990
36,344
Geographical segments
The Group operates in the UK, Germany, the Netherlands, France, the Czech Republic and Israel with sales offices in Russia and
a sales presence in the US. In presenting information on the basis of geographical segments, segment revenue is based on the
geographical location of customers. Segment assets are based on the geographical location of the assets.
The following table provides an analysis of the Group’s sales by geographical market, irrespective of the origin of the goods or
services, based upon location of the Group’s customers:
Year ended 31 December
United Kingdom
Germany
France
Rest of Europe
United States of America
Rest of World
2021
£’000
18,454
20,863
4,161
18,752
36,712
9,659
108,601
2020
£’000
16,748
18,888
4,369
18,027
23,690
5,074
86,796
Advanced Medical Solutions Group plc Annual Report & Accounts 2021 107
FINANCIAL STATEMENTS
Notes Forming Part of the Consolidated
Financial Statements continued
4. Segment information continued
The following table provides an analysis of the Group’s total assets by geographical location:
As at 31 December
United Kingdom
Germany
France
Rest of Europe
United States of America
Israel
5. Profit from operations
Profit from operations is arrived at after charging/(crediting):
Depreciation of property, plant and equipment
Amortisation of:
– acquired intangible assets
– software intangibles
– development costs
Research and development costs expensed to the income statement
Cost of inventories recognised as expense
Write down of inventories expensed
Staff costs
Net foreign exchange (gain)/loss
2021
£’000
142,056
67,389
9,674
7,853
1,984
20,553
2020
£’000
125,343
71,752
9,703
7,224
3,370
21,163
249,509
238,555
Year ended
31 December
2021
£’000
Year ended
31 December
2020
£’000
3,893
3,467
3,179
529
1,247
3,841
47,530
1
39,691
(2,017)
2,269
563
533
3,727
40,397
359
35,828
376
6. Exceptional items
During 2021, no costs have been incurred which are deemed to be exceptional in nature (2020: £834,000 of exceptional costs
were incurred mainly relating to the acquisition of Raleigh Adhesive Coatings Limited and transaction costs to participate in
another potential process which was ultimately unsuccessful).
7. Auditor’s remuneration
Amounts payable to Deloitte LLP and their associates in respect of both audit and non-audit services:
Fees payable to the Company’s auditor and their associates for the audit of the Company’s annual accounts
Fees payable to the Company’s auditor and their associates for other audit services to the Group
and the audit of the Company’s subsidiaries
Total audit fees
Audit related assurance services – Interim review
Total non-audit fees
Year ended
31 December
2021
£’000
Year ended
31 December
2020
£’000
23
217
240
32
32
272
23
155
178
22
22
200
108 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
Notes Forming Part of the Consolidated
Financial Statements continued
Fees payable to the Company’s auditor, Deloitte LLP and its associates, for non-audit services to the Company are not required
to be disclosed in subsidiaries’ accounts because the Consolidated Financial Statements are required to disclose such fees on a
consolidated basis.
A description of the work of the Audit Committee is set out in the Governance section of the Annual Report which includes
explanations of how the audit objectivity and independence is safeguarded when non-audit services are provided by the Auditor.
8. Employees
The average monthly number of employees of the Group during the year, including Executive Directors, was as follows:
Production
Research & Development
Sales and marketing
Administration
Staff costs for all employees, including Executive Directors, consists of:
Wages and salaries
Social Security costs
Pension costs
Share-based payments (see Note 29)
9. Directors’ emoluments
Remuneration for management services
Pension costs
Amounts paid to third parties
Share-based payments
Year ended
31 December
2021
Number
Year ended
31 December
2020
Number
396
66
129
128
719
379
59
133
119
690
Year ended
31 December
2021
£’000
Year ended
31 December
2020
£’000
31,903
4,402
1,407
1,979
39,691
28,554
4,314
1,349
1,611
35,828
Year ended
31 December
2021
£’000
Year ended
31 December
2020
£’000
958
52
–
562
643
47
19
334
1,572
1,043
The Group’s highest paid Director is disclosed in the Remuneration Report on page 75.
Retirement benefits are accruing to the following number of Directors under money purchase schemes
2
2
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Advanced Medical Solutions Group plc Annual Report & Accounts 2021 109
FINANCIAL STATEMENTS
Notes Forming Part of the Consolidated
Financial Statements continued
10. Remuneration of Key Management Personnel
The key management of the Group comprises the Directors of the Group together with senior members of the management
team. Their aggregate compensation is shown below:
Salaries, fees and short-term employee benefits
Pension costs
Share-based payments
11. Finance income
Bank interest
12. Finance costs
Amortisation of facility fees
Finance lease interest
Other interest
Long-term liability expense
Year ended
31 December
2021
£’000
Year ended
31 December
2020
£’000
2,040
106
891
3,037
1,667
106
595
2,368
Year ended
31 December
2021
£’000
Year ended
31 December
2020
£’000
84
220
Year ended
31 December
2021
£’000
Year ended
31 December
2020
£’000
299
352
21
426
1,098
299
375
20
167
861
The long-term liability expense relates to movements in the long-term liabilities arising on the acquisition of Sealantis in 2019.
The expense occurs as the liabilities unwind. (See Note 24 for further information on how these liabilities are calculated).
13. Taxation
The Group is subject to taxation in several jurisdictions and makes estimates of the taxation charges before completing tax
returns at a later date. The Group’s approach to transfer pricing is to apply OECD guidelines. Estimates are based on tax rates
enacted in law and calculations are prepared with the assistance of professional advisors. Therefore, the taxation charge is not
deemed to be a key source of estimation uncertainty.
110 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
Notes Forming Part of the Consolidated
Financial Statements continued
a) Analysis of charge for the year
Current tax:
Tax on ordinary activities – current year
Tax on ordinary activities – prior year
Deferred tax:
Tax on ordinary activities – current year
Tax on ordinary activities – prior year
Effect of increase in UK corporation tax rates to 25% (2020: 19%)
Year ended
31 December
2021
£’000
Year ended
31 December
2020
£’000
4,936
(323)
4,613
(490)
(190)
570
(110)
1,514
21
1,535
(3)
(27)
–
(30)
Tax charge for the year
4,503
1,505
b) Factors affecting tax charge for the year
The Group has chosen to use a weighted average country tax rate rather than the UK tax rate for the reconciliation of the charge
for the year to the profit per the Income Statement. The Group operates in several jurisdictions, some of which have a tax rate in
excess of the UK tax rate. As such, a weighted average country tax rate is believed to provide the most meaningful information to
the users of the Financial Statements.
The tax assessed for the year is lower (2020: lower) than the weighted average Group tax rate of 23.0% (2020: 24.6%) as
explained below:
Profit before taxation
Weighted average Group tax rate 23.0% (2020: 24.6%)
Effects of:
Expenses not deductible for tax purposes and other timing differences
Patent Box Relief
Net impact of deferred tax on capitalised development costs and R&D relief
Share-based payments
Adjustments in respect of prior year – current tax
Adjustments in respect of prior year and rate changes – deferred tax
Taxation
Year ended
31 December
2021
£’000
Year ended
31 December
2020
£’000
21,984
5,053
10,089
2,481
7
(652)
(123)
161
(323)
380
4,503
268
(1,091)
(186)
39
21
(27)
1,505
During the year, the UK Government has substantively enacted an increase in the UK corporation tax to 25% from April 2023.
The Group has applied the appropriate rate to the UK Deferred Tax Liability based on the expected timing of the unwind.
In addition to the amounts charged to the Income Statement and the Statement of Comprehensive Income, the Group
has recognised directly in equity:
• Excess tax deductions related to share-based payments on exercised options.
• Changes in excess deferred tax deductions related to share-based payments, totalling £503,000 deficit:
(2020: £219,000 surplus).
A Deferred tax credit arising on cash flow hedges is included in other comprehensive income totalling £290,000
(2020: Deferred tax charge £160,000).
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Advanced Medical Solutions Group plc Annual Report & Accounts 2021 111
FINANCIAL STATEMENTS
Notes Forming Part of the Consolidated
Financial Statements continued
14. Dividends
Amounts recognised as distributions to equity holders in the period:
Final dividend for the year ended 31 December 2020 of 1.20p (2019: 1.05p) per Ordinary Share
Interim dividend for the year ended 31 December 2021 of 0.58p (2020: 0.50p) per Ordinary Share
Proposed final dividend for the year ended 31 December 2021 of 1.37p (2020: 1.20p) per Ordinary Share
Year ended
31 December
2021
£’000
Year ended
31 December
2020
£’000
2,579
1,266
3,845
2,960
2,256
1,081
3,337
2,585
The proposed final dividend is subject to approval by the shareholders and has not been included as a liability in these
Financial Statements.
15. Earnings per share
The calculation of basic and diluted earnings per share, based on statutory earnings and adjusted earnings, is based on the
following data:
Year ended 31 December
Weighted average number of Ordinary Shares for the purposes of basic earnings per share
Effect of dilutive potential Ordinary Shares: share options, deferred share bonus and LTIPs
Weighted average number of Ordinary Shares for the purposes of diluted earnings per share
Profit for the year attributable to equity holders of the parent
Amortisation of acquired intangible assets
Long term liability expense
Exceptional costs
Adjusted profit for the year attributable to equity holders of the parent pre exceptional costs
Earnings per share
Basic
Diluted
Adjusted basic
Adjusted diluted
2021
000
Number of
shares
2020
000
Number of
shares
215,677
215,126
2,635
2,705
218,312
217,831
£’000
17,481
3,179
426
–
21,086
pence
8.11
8.01
9.78
9.66
£’000
8,584
2,269
167
834
11,854
pence
3.99
3.94
5.51
5.44
112 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
Notes Forming Part of the Consolidated
Financial Statements continued
16. Acquired intellectual property rights, software intangibles and development costs
2021
Cost
At beginning of year
Additions
Disposals
Exchange differences
At end of year
Amortisation
At beginning of year
Charged in the year
Disposals
Exchange differences
At end of year
Net book value
At 31 December 2021
At 31 December 2020
Acquired
intellectual
property rights
£’000
Intangible
assets
£’000
Software
intangibles
£’000
13,748
–
–
(727)
26,044
–
–
(29)
13,021
26,015
3,869
130
–
(96)
3,903
9,118
9,879
3,687
3,049
–
23
6,759
19,256
22,357
5,629
254
(36)
(107)
5,740
3,192
529
(36)
(52)
3,633
2,107
2,437
Development
and
recertification
Costs
£’000
11,202
4,441
–
(129)
Total
£’000
56,623
4,695
(36)
(992)
15,514
60,290
3,834
1,247
–
(44)
5,037
14,582
4,955
(36)
(169)
19,332
10,477
40,958
7,368
42,041
Acquired intellectual property rights were initially recognised on the acquisition of MedLogic Global Limited representing patents
and on the acquisition of RESORBA® representing brand names and customer listings and contracts. Other intangible assets
were recognised on the acquisition of Sealantis Limited and represent technological based know-how and on the acquisition
of Biomatlante which represent technological based know-how, patents and customer listings.
Intellectual property rights on acquisition in 2020 relate to technological based know-how and customer listings arising on the
acquisition of Raleigh Coatings.
Intangible assets are amortised on a straight-line basis and the amortisation is recognised within administration costs. The
RESORBA® brand name has a carrying value of £8,731,000 and is not being amortised as the Directors believe it has an unlimited
useful economic life. In reaching this assessment, the Directors have considered that the RESORBA® brand has existed for
over 80 years and is widely recognised as a market leader in the surgical market. An asset is also recognised in respect of the
GENTA-COLL® brand name and is being amortised over fifteen years with five years remaining.
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Advanced Medical Solutions Group plc Annual Report & Accounts 2021 113
FINANCIAL STATEMENTS
Notes Forming Part of the Consolidated
Financial Statements continued
16. Acquired intellectual property rights, software intangibles and development costs continued
2020
Cost
At beginning of year
On acquisition
Additions
Exchange differences
At end of year
Amortisation
At beginning of year
Charged in the year
Exchange differences
At end of year
Net book value
At 31 December 2020
At 31 December 2019
17. Property, plant and equipment
Acquired
intellectual
property rights
£’000
Other intangible
assets
£’000
Software
intangibles
£’000
Development
costs
£’000
13,138
–
–
610
17,584
8,710
–
(250)
5,417
–
126
86
8,333
–
2,788
81
Total
£’000
44,472
8,710
2,914
527
13,748
26,044
5,629
11,202
56,623
3,660
132
77
3,869
9,879
9,478
1,599
2,137
(49)
3,687
22,357
15,985
2,585
563
44
3,192
2,437
2,832
Fixtures
and
fittings
£’000
962
122
(28)
(29)
1,027
755
80
(28)
(23)
784
243
207
3,294
533
7
3,834
7,368
5,039
Motor
vehicles
£’000
684
–
(218)
(32)
434
373
38
(172)
(26)
213
221
311
11,138
3,365
79
14,582
42,041
33,334
Total
£’000
56,042
1,991
(1,164)
(1,221)
55,648
25,978
3,893
(1,118)
(546)
28,207
27,441
30,064
2021
Cost
At beginning of year
Additions
Disposals
Exchange adjustment
At end of year
Depreciation
At beginning of year
Provided for the year
Disposals
Exchange adjustment
At end of year
Net book value
At 31 December 2021
At 31 December 2020
Freehold land,
property and
improvements
£’000
Right-of-use
assets
£’000
Short
leasehold
improvements
£’000
Plant and
machinery
£’000
6,032
74
(3)
(288)
5,815
1,320
185
(3)
(121)
1,381
15,031
223
(500)
(265)
14,489
4,474
1,403
(500)
(86)
5,291
113
76
–
(7)
182
10
10
–
–
20
33,220
1,496
(415)
(600)
33,701
19,046
2,177
(415)
(290)
20,518
4,434
4,712
9,198
10,557
162
103
13,183
14,174
Freehold land which has a carrying value of £1,317,000 is not depreciated (2020: £1,317,000).
At 31 December 2021, the Group had entered into contractual commitments for the acquisition of property, plant
and equipment amounting to £399,000 (2020: £414,000).
114 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
Notes Forming Part of the Consolidated
Financial Statements continued
The net book value of plant and equipment includes £62,000 within plant and machinery (2020: £83,000) of capitalised
borrowing costs relating to the Winsford site.
2020
Cost
At beginning of year
On acquisition
Additions
Disposals
Exchange adjustment
At end of year
Depreciation
At beginning of year
Provided for the year
Disposals
Exchange adjustment
At end of year
Net book value
At 31 December 2020
At 31 December 2019
Freehold land,
property and
improvements
£’000
Right-of-use
assets
£’000
Short
leasehold
improvements
£’000
5,785
–
6
–
241
6,032
1,065
191
–
64
1,320
4,712
4,720
12,496
645
1,876
(141)
155
15,031
3,314
1,266
(141)
35
4,474
10,557
9,182
113
–
–
–
–
113
10
–
–
–
10
103
103
Plant and
machinery
£’000
30,117
584
2,300
(54)
273
33,220
17,148
1,843
(29)
84
19,046
14,174
12,969
Fixtures
and
fittings
£’000
Motor
vehicles
£’000
922
3
40
(21)
18
962
671
92
(21)
13
755
207
251
995
–
–
(353)
42
684
513
75
(247)
32
373
311
482
Total
£’000
50,428
1,232
4,222
(569)
729
56,042
22,721
3,467
(438)
228
25,978
30,064
27,707
18. Deferred tax
The following are the major deferred tax liabilities and assets recognised by the Group and movements thereon.
At 31 December 2019
Credit/(charge) to income
Credit to equity
Exchange adjustment
Acquisition of subsidiary
At 31 December 2020
Credit/(charge) to income
Charge to equity
Exchange adjustment
At 31 December 2021
Share-based
payments
£’000
Advanced
capital
allowances
£’000
Intangible
assets
£’000
Research and
Development
Assets
£’000
1,132
130
(219)
–
–
1,043
616
503
–
2,162
(697)
(177)
(3)
–
(55)
(932)
(109)
–
–
(5,638)
341
–
(144)
(1,655)
(7,096)
233
–
195
(1,007)
(248)
–
–
–
(1,255)
(636)
–
–
(1,041)
(6,668)
(1,891)
Other
£’000
(103)
(179)
–
(14)
–
(296)
296
–
–
–
Total
£’000
(6,313)
(133)
(222)
(158)
(1,710)
(8,536)
400
503
195
(7,438)
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Advanced Medical Solutions Group plc Annual Report & Accounts 2021 115
FINANCIAL STATEMENTS
Notes Forming Part of the Consolidated
Financial Statements continued
18. Deferred tax continued
Certain deferred tax assets and liabilities have been offset where there is a legal, enforceable right to do so. The following is the
analysis of the deferred tax balances (after offset) for financial reporting purposes:
Deferred tax liabilities
2021
£’000
2020
£’000
(7,438)
(8,536)
At the Statement of Financial Position date, the Group has approximately £12.4 million of unused tax losses (2020: £9.8 million),
relating to Biomatlante and Sealantis, available for offset against future profits. These have not been recognised in the Statement
of Financial Position as there is not currently sufficient evidence to prove that sufficient taxable profit will be available to utilise
these losses. The losses do not have time limits.
19. Goodwill
Cost
At 1 January
Acquisitions
Exchange differences
At 31 December
2021
£’000
2020
£’000
68,911
–
(2,879)
66,032
53,558
13,170
2,183
68,911
The Group has consolidated the number of cash generating units (CGU) in the current year to two (2020: five) and now reports
CGUs on the same basis as the group’s operating segments (See note 4). At the point of transition to two CGUs a review of
impairment indicators was performed with no indicators identified. The reasons for the change in number are as follows:
The Surgical business unit sales structure has been formally amended during the year to categorise customers by geographical
location rather than product category. It is becoming more common for a distributor to source a range of products from
a number of AMS legal entities and the quantities and pricing will be jointly negotiated. The Group also leverages it’s direct
sales team in the UK, Germany, Czech Republic and Russia as well as its sales and marketing function in France to maximise
the Group’s return using the full range of AMS Surgical products. Therefore the cash inflows are no longer felt to be largely
independent and thus the surgical business unit now represents the smallest identifiable group of assets that are largely
independent of the cash inflows from other group of assets.
The Woundcare business unit has been consolidated to a single sales structure and all Woundcare sites provide goods and
services to other AMS entities. Customer needs are frequently met by using more than one AMS site meaning the cash inflows
are not independent of those sites. Thus the woundcare business unit now represents the smallest identifiable group of assets
that are largely independent of the cash inflows from other group of assets.
As part of the ‘One AMS’ program the Group has transitioned to entering into a single contract covering multiple Group entities
with a customer. The performance and profitability of a contract are assessed at a business unit level.
Following the acquisition of Sealantis and Biomatlante in 2019 and Raleigh in 2020, all operations have been sufficiently
integrated into the Group to no longer be deemed standalone CGU’s.
The revised CGUs now reflects the way the Group and goodwill is viewed and monitored by the chief operating decision makers
and the financial performance of business units has a significant impact on decisions regarding the allocation of resources.
Comparative information has been presented on the basis of 5 CGU’s as applied in the comparative period.
One CGU exists for the Surgical business unit (2020: three CGU’s) whereby goodwill has been aggregated. One CGU’s exists for
the Woundcare business unit (2020: two CGU’s) whereby goodwill has been aggregated.
116 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
Notes Forming Part of the Consolidated
Financial Statements continued
Goodwill in the Surgical CGU arose on the acquisition of RESORBA® on 22 December 2011, the acquisition of Sealantis Limited
on 31 January 2019 and on the acquisition of Biomatlante SA on 30 November 2019. Goodwill in the Woundcare CGU arose on
the acquisition of Advanced Medical Solutions B.V. on 30 September 2009 and on the acquisition of Raleigh Adhesive Coatings
Limited on 23 November 2020. The goodwill and intangible assets with indefinite useful economic life have been allocated to
the relevant CGU based upon the underlying identification of operations and assets to which the goodwill and intangible assets
relate to.
The following table demonstrates the allocation and key assumptions used for the purose of management’s impairment test:
At 31 December 2021
Surgical CGU
Woundcare CGU
Consolidated
At 31 December 2020
Surgical: CGU1
Surgical: CGU2
Surgical: CGU3
Woundcare: CGU1
Woundcare: CGU2
Consolidated
Discount Rate
Inflation rate
10.0%
10.0%
2.0%
2.0%
Assumed life of
CGU (years)
Discount Rate
Average sales
growth rate
20
20
20
20
N/A
6.8%
17.5%
7.4%
6.6%
N/A
6.8%
53.2%
6.4%
3.2%
N/A
Intangible
assets with
indefinite
useful life
£’000
8,731
–
8,731
Carrying value
£’000
58,756
16,007
74,763
Intangible assets
with indefinite
useful life
£’000
9,330
–
–
–
–
9,330
Total
£’000
48,668
9,242
4,143
3,018
13,170
78,241
Goodwill
£’000
50,025
16,007
66,032
Goodwill
£’000
39,338
9,242
4,143
3,018
13,170
68,911
The Group tests goodwill annually for impairment, or more frequently if there are indications that goodwill might be impaired.
The recoverable amounts have been determined based on a value-in-use calculation on a cash generating unit basis, which
uses cash flow projections based on financial budgets approved by the Directors covering a 12-month period. These budgets
have been adjusted for specific risk factors that take into account sensitivities of the projection. The base 12-month projection
is extrapolated using reasonable growth rates specific to each cash generating unit up to year five of between 6% and 7%.
A terminal value calculation is then prepared to complete the value-in-use calculation using a 2% long-term inflation rate.
A discount rate of 10% per annum (2020: between 6.6% and 17.5%), being the Group’s current pre-tax weighted average cost
of capital adjusted for the risk of each CGU, has been applied to these cash flows, being an estimation of current market risks
and the time value of money. The discount rate used for each CGU reflects the current market assessments of the time value
of money.
The Group has conducted a sensitivity analysis on the impairment tests of both CGU’s as set out below. The changes required
to key assumptions to generate an impairment charge within these CGUs are not considered to be reasonably possible changes
and as such the assumptions are not considered to give rise to a key source of estimation uncertainty.
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Advanced Medical Solutions Group plc Annual Report & Accounts 2021 117
FINANCIAL STATEMENTS
Notes Forming Part of the Consolidated
Financial Statements continued
19. Goodwill continued
Sensitivity analysis independently conducted on each key assumption has been prepared for all CGUs and the following inputs if
individually amended would eliminate headroom in the impairment assessments:
At 31 December 2021
Surgical CGU
Woundcare CGU
At 31 December 2020
Surgical: CGU1
Surgical: CGU2
Surgical: CGU3
Woundcare: CGU1
20. Inventories
Raw materials
Work in progress
Finished goods
Discount rate
Growth rate
28.0%
30.0%
-18.0%
-20.0%
Business
continuity
period (years)
15
11
8
3
Discount rate
11.3%
24.8%
21.0%
50.0%
Growth rate
2.8%
27.2%
-5.0%
-25.0%
2021
£’000
7,859
4,969
6,472
2020
£’000
8,585
5,879
6,561
19,300
21,025
There is no material difference between the replacement cost of stock and the amount at which it is stated in the
Financial Statements.
Included above are finished goods of £nil (2020: £nil) carried at net realisable value.
Total gross inventories
Inventory impairment
Net inventory
2021
£’000
21,602
(2,302)
19,300
2020
£’000
23,060
(2,035)
21,025
The group performs a detailed assessment of all inventory and provisions are made for items identified as obsolete or
slow moving.
118 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
Notes Forming Part of the Consolidated
Financial Statements continued
21. Trade and other receivables
Current assets
Trade receivables
Other receivables
Derivative financial instruments
Prepayments and accrued income
Non-current assets
Derivative financial instruments
Prepayments and accrued income
Amount receivable for the sale of goods
Loss allowance
Net trade receivables
2021
£’000
17,515
1,688
–
1,813
21,016
25
80
105
2021
£’000
17,740
(225)
17,515
2020
£’000
17,663
621
1,320
1,503
21,107
207
157
364
2020
£’000
17,859
(196)
17,663
The Group’s principal financial assets are cash and trade receivables. The Group’s credit risk is primarily attributable to its
trade receivables.
No interest is charged on receivables within the contracted credit period. Thereafter, interest may be charged at 2% per month
on the outstanding balance. In determining the recoverability of a trade receivable the Group considers any change in the credit
quality of the trade receivable from the date credit was initially granted up to the reporting date. The concentration of credit risk
is limited due to the Group’s large and unrelated customer base. Accordingly, the Directors believe that there is no further credit
provision required in excess of the loss allowance.
Before accepting any new customer, the Group assesses the potential customer’s credit quality and defines credit limits by
customer. Limits are reviewed on an ongoing basis and reflect current payment history.
Receivables are written off when there is no reasonable expectation of recovery. Indicators that there may be no reasonable
expectation of recovery include, ageing of the debt past 180 days, unwillingness to engage in correspondence and insolvency
events of the counterparty.
The Group believes that the unimpaired amounts that are past due are still collectible in full, based on historic payment behaviour
and extensive analysis of customer credit risk. A large proportion of debts overdue over 30 days were recovered post the
Statement of Financial Position date. The Group does not hold any collateral or other credit enhancements over these balances.
No expected credit loss provision is believed to be required for trade and other receivables and accrued income (2020: £nil).
The carrying amount and ageing of these debtors is summarised below:
Ageing of overdue but not impaired receivables
31 to 60 days overdue
61 to 90 days overdue
> 90 days overdue
Total
2021
£’000
1,821
218
7
2,046
2020
£’000
665
740
43
1,448
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Advanced Medical Solutions Group plc Annual Report & Accounts 2021 119
FINANCIAL STATEMENTS
Notes Forming Part of the Consolidated
Financial Statements continued
21. Trade and other receivables continued
Movement in loss allowance for trade receivables
Balance at the beginning of the year
Impairment losses recognised
Amounts written off as uncollectible
Amounts recovered during the year
Balance at the end of the year
Year ended
31 December
2021
£’000
Year ended
31 December
2020
£’000
196
146
(40)
(77)
225
161
75
(35)
(5)
196
Analysis of customers
In the year ended 31 December 2021, no customer accounted for more than 10% of the Group’s revenue (2020: no customer
with more then 10% revenue).
22. Cash and cash equivalents
Cash held at banks
2021
£’000
2020
£’000
72,965
53,829
Cash and cash equivalents comprise cash and short-term bank deposits with an original maturity of 90 days or less. The carrying
amount of these assets is approximately equal to their fair value.
23. Trade and other payables
Current liabilities
Trade payables
Other payables
Derivative financial instruments
Lease liabilities
Accruals and deferred income
Non-current liabilities
Other payables
Lease liabilities
2021
£’000
2020
£’000
4,878
3,623
46
1,153
6,411
6,791
2,138
–
1,257
4,210
16,111
14,396
3,679
8,707
3,229
9,864
12,386
13,093
Trade payables principally comprise amounts outstanding for trade purchases and ongoing costs.
Other payables principally comprise amounts due in respect of payroll taxes, pension costs and indirect taxes yet to be remitted.
Accruals and deferred income principally comprise amounts outstanding for trade purchases and ongoing costs but not yet
invoiced and amounts received from customers but not yet recognised as revenue.
No interest is charged on trade payables that are within pre-agreed credit terms. Thereafter, interest may be charged on the
outstanding balances at various interest rates. The Group has financial risk management procedures in place to ensure that all
payables are paid within the pre-agreed credit terms.
The Directors consider that the carrying amount of trade payables approximates to their fair value.
120 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
Notes Forming Part of the Consolidated
Financial Statements continued
24. Financial instruments
Categories of financial instruments
All financial instruments held by the Group, as detailed in this Note, are classified as Trade and other receivables, Cash and cash
equivalents and Derivative instruments in designated hedge accounting relationships, ‘Financial Liabilities Measured at Amortised
Cost’ (trade and other payables and financial liabilities), ‘Derivative Instruments in Designated Hedge Accounting Relationships’
(cash flow hedges) and ‘Fair Value Through Profit and Loss (FVTPL)’ under IFRS 9 ‘Financial Instruments’ and lease liabilities under
IFRS 16 ‘Leases’.
Carrying value
Financial assets
Trade and other receivables
Cash and cash equivalents
Derivative instruments in designated hedge accounting relationships
Financial liabilities
Derivative instruments in designated hedge accounting relationships
Financial liabilities measured at amortised cost
Lease liabilities
2021
£’000
2020
£’000
19,203
72,965
25
18,284
53,829
1,527
46
18,591
9,860
–
16,368
11,121
Within financial liabilities measured at amortised cost are non-current liabilities which arose on the acquisition of Sealantis in 2019
and relate to contingent consideration and amounts due to the Israeli Innovation Authority (“IIA”).
Contingent consideration is based on future sales of existing products in development at the time of acquisition and are due
until the end of 2027. The liability is calculated based on the net present value of future sales projections with a 7.1% discount rate
applied. The discount rate used to calculate the liability is the Group’s weighted average cost of capital.
Royalties payable to the IIA are linked to grants received prior to acquisition and are based on future sales of existing
products in development. The liability is calculated based on the net present value of future sales projections with a 7.1%
discount rate applied.
Amounts due to the IIA are payable based on a percentage of future sales and subject to at least 10% of manufacturing being
retained in Israel. The Group expects to continue to perform at least 10% of manufacturing in Israel of the relevant products. The
liability is calculated based on the net present value of future sales projections with a 7.1% discount rate applied on the basis that
the liability does not expire until the liability is settled.
The change in the valuation of the liabilities occur as the liabilities unwind and sales projections are updated, impacting the timing
of repayments to the IIA. These expenses are recognised in finance costs (see Note 12).
In December 2019 the Group entered into a multi-currency facility with NatWest Bank PLC and HSBC UK Bank PLC. The principle
features of the facility are:
It is unsecured.
• The committed value of the facility is £80 million.
• There is an uncommitted accordion of an additional £20 million.
•
• The facility will expire in December 2022.
• The interest payable on drawings under the loan is based on applicable reference rates such as SONIA in the case of Sterling
plus a margin that varies between 0.6% and 1.7% depending on the Group’s net debt to EBITDA ratio. The margin would
currently be 0.60%.
• The facility has two covenants – interest cover (ratio of EBITDA to net finance charges) must be above 4:1 and leverage
(ratio of Total Net Debt to adjusted EBITDA) should not exceed 3:1.
It was undrawn at the end of the year. The covenants continue to apply in the event that the facility is undrawn.
•
The Risk Management section on pages 47 to 51 provides an explanation of the financial risks faced by the Group and the
objectives and policies for managing those risks. The information below deals with the financial assets and liabilities.
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Advanced Medical Solutions Group plc Annual Report & Accounts 2021 121
FINANCIAL STATEMENTS
Notes Forming Part of the Consolidated
Financial Statements continued
24. Financial instruments continued
(a) Maturity of financial liabilities
The maturity profile of the Group’s financial liabilities, of which finance lease liabilities are at fixed rates and denominated in
Sterling whilst derivative financial instruments are non-interest bearing, is as follows:
At 31 December 2021
Trade and other payables
Lease liabilities
Financial Derivatives
At 31 December 2021
At 31 December 2020
Trade and other payables
Lease liabilities
At 31 December 2020
On demand
or within
one year
£’000
14,912
1,146
46
16,104
On demand
or within
one year
£’000
13,139
1,257
14,396
Between
one and
two years
£’000
58
983
–
1,041
Between
one and
two years
£’000
71
1,088
1,159
Between
two and
five years
£’000
988
2,693
–
3,681
Between
two and
five years
£’000
763
2,920
3,683
Five
years
or more
£’000
2,633
5,038
–
7,671
Five
years
or more
£’000
2,396
5,856
8,252
Total
financial
liabilities
£’000
18,591
9,860
46
28,497
Total
financial
liabilities
£’000
16,368
11,121
27,489
The Group enters lease arrangements to acquire right-of-use assets, predominately relating to premises from which the Group
operates, vehicles and office equipment. Material leases include the lease of the Group’s headquarters, factory and distribution
centre in Winsford, UK and a factory in Etten-Leur, the Netherlands.
The Winsford leases were entered into in 2017 and expire in 2032. They have a total lease liability net present value of £7.0 million
(2020: £7.6 million) and attract increases at five year intervals linked to market rate. The incremental borrowing rate is 4%.
The Etten-Leur lease was entered into in 2020 and expires in 2033 and has a lease liability net present value of £1.8 million (2020:
£2.1 million). Rent increases are indexed linked on an annual basis. The incremental borrowing rate is 0.62%.
(b) Interest rate and currency of financial assets
The Group’s interest rate risk is not considered to be a significant risk.
Cash and cash equivalents
Currency and interest rate profile of the financial assets
Currency
Sterling
US Dollar
Euro
Israeli Shekel
At 31 December 2021
Currency
Sterling
US Dollar
Euro
Israeli Shekel
At 31 December 2020
122 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
Floating rate
deposits
£’000
Non-interest
bearing
£’000
44,525
407
4,072
–
15,509
6,318
2,008
126
Total
£’000
60,034
6,725
6,080
126
49,004
23,961
72,965
Floating rate
deposits
£’000
Non-interest
bearing
£’000
36,399
371
3,018
–
39,788
11,165
1,004
1,758
114
Total
£’000
47,564
1,375
4,776
114
14,041
53,829
Notes Forming Part of the Consolidated
Financial Statements continued
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Trade and other receivables
The Directors consider that the carrying amount of trade and other receivables approximates to their fair value.
Trade and other receivables excluding derivative instruments and prepayments are in the following currencies:
Sterling
US Dollar
Euro
Israeli Shekel
2021
£’000
7,130
7,966
4,037
70
2020
£’000
8,814
5,696
3,742
32
19,203
18,284
The financial assets all mature within one year. Credit risk is discussed in Note 21.
(c) Currency exposures
The Group hedges significant currency transaction exposure by using forward contracts, and aims to hedge approximately 80%
of its estimated transactional exposure for the next 12 to 18 months.
Risk sensitivity
The Group estimates that a 10% movement in the £:US$ or £:Euro exchange rate would have impacted 2021 Sterling revenues
by approximately 3.4% and 2.9% respectively and in the absence of any hedging this would have had an impact on profit margin
percentage of 2.8% and 0.3%.
Forward foreign exchange contracts
It is the policy of the Group to enter into forward foreign exchange contracts to cover specific foreign currency payments
and receipts.
The following table details the forward foreign currency contracts outstanding as at the year-end:
Outstanding contracts
Cash flow hedges
Sell US dollars
Less than 3 months
3 to 6 months
7 to 12 months
Over 12 months
Sell Euros
Less than 3 months
3 to 6 months
7 to 12 months
Over 12 months
Average contract rate
Foreign currency
Fair value
2021
USD:£1
2020
USD:£1
2021
USD ‘000
2020
USD ‘000
2021
£’000
2020
£’000
1.32
1.38
1.36
1.34
1.30
1.30
1.27
1.31
10,000
7,000
19,000
7,500
43,500
8,000
6,500
14,000
6,000
34,500
152
(114)
(184)
14
(132)
Average contract rate
Foreign currency
Fair value
2021
EUR:£1
2020
EUR:£1
2021
EUR ‘000
2020
EUR ‘000
1.11
1.15
1.15
1.14
1.15
1.14
1.11
1.10
700
900
1,800
600
4,000
600
600
1,200
600
3,000
2021
£’000
43
24
32
12
111
312
235
805
205
1,557
2020
£’000
(16)
(16)
(1)
3
(30)
The fair value amounts (classified under level two of the fair value hierarchy) presented above are the difference between the
market value of equivalent instruments at the Statement of Financial Position date and the contract value of the instruments.
No profits or losses are included in operating profit in the year (2020: £nil) in respect of FVTPL contracts. The loss of £1,548,000
(2020: £842,000 gain) in respect of cash flow hedges has been taken to reserves.
25. Fair value of financial assets and liabilities
The Directors consider that the fair value of the Group’s financial instruments do not differ significantly from their book values.
Advanced Medical Solutions Group plc Annual Report & Accounts 2021 123
FINANCIAL STATEMENTS
Notes Forming Part of the Consolidated
Financial Statements continued
26. Foreign exchange rates
The Group uses the average of exchange rates prevailing during the period to translate the results and cash flows of overseas
subsidiaries into Sterling and period end rates to translate the net assets of those entities. The currencies which most influence
these translations and the relevant exchange rates were:
Currency
US Dollar
Euro
27. Share capital
Number of Ordinary Shares of 5p each
At 1 January 2020
Share capital allotted for share schemes
At 31 December 2020
Share capital allotted for share schemes
At 31 December 2021
Average rate
Closing rate
Percentage change
2021
2020
2021
2020
Average
%
Closing
%
1.38
1.16
1.28
1.13
1.35
1.19
1.37
1.11
7%
3%
(1%)
7%
Allotted, called up and fully paid
‘000
214,890
493
215,383
688
216,071
At the Statement of Financial Position date, 371,498 (2020: 403,239) shares are retained by the Trust to meet the matching
requirements of the scheme. For further information on the Share option plans, see Note 29.
Ordinary Shares of 5p each
At 1 January 2020
Share capital allotted for share schemes
At 31 December 2020
Share capital allotted for share schemes
At 31 December 2021
Allotted, called up and fully paid
£’000
10,745
24
10,769
35
10,804
28. Reserves
Investment in own shares
This is the nominal value of the shares held in trust on behalf of employees in respect of the DSB scheme.
Other reserve
This represents Advanced Medical Solutions Limited’s share premium account arising from merger accounting.
Hedging reserve
The hedging reserve represents the cumulative amount of gains and losses on hedging instruments deemed effective in cash
flow hedges. The cumulative deferred gain or loss on the hedging instruments are recognised in the Income Statement only
when the hedged transaction impacts the Income Statement or is included as a basis adjustment to the non-financial hedged
item, consistent with the applicable accounting policy.
Translation reserve
Exchange differences relating to the translation of the net assets of the Group’s foreign operations, which relate to subsidiaries
only, from their functional currency into the parents functional currency, being Sterling, are recognised directly in the translation
reserve. Gains and losses on hedging instruments that are designated as hedges of net investments in foreign operations are
included in the translation reserve.
A £5,194,000 loss has been recorded in the translation reserve during the period, which would otherwise have been recognised
in Administration costs (2020: £3,507,000 gain) if hedge accounting had not been adopted.
124 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
Notes Forming Part of the Consolidated
Financial Statements continued
29. Share-based payments
The charge for share based payments under IFRS 2 arises across the following schemes:
Unapproved Executive Share Option Scheme and Company Share Option Scheme
Long-Term Incentive Plan
Deferred Share Bonus Scheme and Deferred Annual Bonus Scheme
2021
£’000
336
1,006
637
1,979
2020
£’000
253
705
653
1,611
Unapproved Executive Share Option Scheme and Company Share Option Plan (CSOP)
The fair value of the executive options is calculated based on a Black-Scholes Merton model assuming the inputs below:
Grant Date
Share price at grant date
Exercise price
Expected life
Contractual life
Risk free rate
Expected volatility
Expected dividend yield
Fair value of options
Grant Date
Share price at grant date
Exercise price
Expected life
Contractual life
Risk free rate
Expected volatility
Expected dividend yield
Fair value of options
26/04/2013
15/04/2014
19/09/2014
02/04/2015
18/04/2016
06/04/2017
77.5p
77.5p
3 yrs
10 yrs
0.36%
36%
0.7%
15p
115.75p
115.75p
3 yrs
10 yrs
0.80%
36%
0.7%
23p
121.75p
121.75p
3 yrs
10 yrs
0.80%
36%
0.7%
24p
132.0p
132.0p
3 yrs
10 yrs
0.80%
31%
0.7%
22p
184.6p
184.6p
3 yrs
10 yrs
0.67%
25%
0.4%
25p
246.7p
246.7p
3 yrs
10 yrs
0.18%
23%
0.4%
29p
13/04/2018
24/04/2019
14/04/2020
25/09/2020
23/04/2021
308.0p
308.0p
3 yrs
10 yrs
0.94%
34%
0.7%
41p
328.75p
328.75p
3 yrs
10 yrs
0.75%
26%
0.4%
48p
239.0p
239.0p
3 yrs
10 yrs
0.08%
36%
0.6%
46p
214.5p
214.5p
3 yrs
10 yrs
0.08%
36%
0.6%
42p
257.0p
257.0p
3 yrs
10 yrs
0.12%
35%
0.6%
47p
Under the terms of the Company’s Share Option Schemes, approved by shareholders in 2019, the Board may offer options to
purchase Ordinary Shares in the Company to all employees of the Company at the market price on a date determined prior
to the date of the offer. Individuals who are entitled to awards under the LTIP are not eligible to receive options under the
Company’s Share Option Schemes.
Performance targets are assessed over a three-year period from the date of grant. Once options have vested they can be
exercised during the period up to ten years from the date of grant.
The expected volatility was determined by calculating the historic volatility of the Group’s share price over the previous
three years.
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Advanced Medical Solutions Group plc Annual Report & Accounts 2021 125
FINANCIAL STATEMENTS
Notes Forming Part of the Consolidated
Financial Statements continued
29. Share-based payments continued
Options have been granted over the following number of Ordinary Shares which were outstanding at 31 December 2021:
Date of
grant
Unapproved Executive
Share Option Scheme
15.04.14
19.09.14
02.04.15
18.04.16
06.04.17
13.04.18
24.04.19
14.04.20
25.09.20
23.04.21
Company Share
Option Plan
15.04.11
08.09.11
26.04.13
15.04.14
02.04.15
18.04.16
06.04.17
13.04.18
24.04.19
14.04.20
23.04.21
Option
price (p)
115.75
121.75
132.00
184.60
246.70
308.00
328.75
239.00
214.50
257.40
88.00
86.25
77.50
115.75
132.00
184.60
246.70
308.00
328.75
239.00
257.40
Number of
options
as at
1 January
2021
Remaining
life (years)
1 January
2021
102,000
28,000
80,000
166,991
427,061
349,021
384,856
770,027
34,872
3.3
3.7
4.2
5.3
6.3
7.3
8.3
9.3
9.7
–
–
792,145
6,000
1,000
1,000
13,000
12,727
66,798
186,332
129,781
125,880
265,992
–
0.3
0.7
2.3
3.3
4.2
5.3
6.3
7.3
8.3
9.3
–
–
–
–
–
–
–
–
–
–
314,355
Issued
Lapsed
Exercised
Number of
options
as at
31 December
2021
Remaining
life (years)
31 December
2021
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(13,316)
(83,300)
–
(27,000)
–
–
–
–
–
–
–
(5,403)
(10,421)
(21,293)
(9,000)
–
–
(20,000)
–
(151,687)
(26,157)
–
–
–
102,000
28,000
60,000
166,991
275,374
322,864
371,540
686,727
34,872
–
765,145
(6,000)
(1,000)
–
–
(7,727)
–
(82,093)
(8,356)
–
–
–
–
1,000
13,000
5,000
66,798
104,239
116,022
115,459
244,699
–
305,355
2.3
2.7
3.2
4.3
5.3
6.3
7.3
8.3
8.7
9.3
–
–
1.3
2.3
3.2
4.3
5.3
6.3
7.3
8.3
9.3
3,151,338
1,106,500
(169,733)
(303,020)
3,785,085
The weighted average remaining contractual life of the options outstanding at 31 December 2021 is 7.4 years (2020: 7.5 years).
The weighted average exercise price of options in the year was £3.09 (2020: £2.42).
Outstanding at beginning of the year
Issued
Exercised
Lapsed
Outstanding at end of the year
Exercisable at end of the year
2021
Number of
Options
2020
Number of
Options
3,151,338
1,106,500
(303,020)
(169,733)
2,309,046
1,145,891
(50,513)
(253,086)
3,785,085
3,151,338
1,261,288
1,090,909
126 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
Notes Forming Part of the Consolidated
Financial Statements continued
Long Term Incentive Plan (LTIP)
The fair value of the LTIP options is calculated based on a binomial tree model assuming the inputs below:
Grant date
Share price at grant date
Exercise price
Expected life
Contractual life
Risk free rate
Expected volatility
Expected dividend yield
Probability of performance conditions
Fair value of option
Grant date
Share price at grant date
Exercise price
Expected life
Contractual life
Risk free rate
Expected volatility
Expected dividend yield
Probability of performance conditions
Fair value of option
06/06/2014
02/04/2015
10/09/2015
18/04/2016
06/04/2017
117.0p
0p
3 yrs
10 yrs
0.80%
36%
0.7%
75%
85.9p
132.0p
0p
3 yrs
10 yrs
0.80%
29%
0.7%
80%
64.4p
151.5p
0p
3 yrs
10 yrs
0.80%
27%
0.7%
80%
75.5p
184.6p
0p
3 yrs
10 yrs
0.67%
25%
0.4%
64%
159.0p
246.7p
0p
3 yrs
10 yrs
0.18%
23%
0.4%
64%
220.0p
24/04/2019
14/04/2020
25/09/2020
23/04/2021
328.75p
0p
3 yrs
10 yrs
0.75%
26%
0.4%
50%
297.0p
239.0p
0p
3 yrs
10 yrs
0.08%
36%
0.6%
62%
217.0p
214.5p
0p
3 yrs
10 yrs
0.08%
36%
0.6%
62%
185.0p
280.5p
0p
3 yrs
10 yrs
0.12%
36%
0.6%
62%
217.0p
The expected volatility was determined by calculating the historic volatility of the Group’s share price over the previous
three years.
The entitlement to shares under the LTIP is subject to achieving the vesting conditions referred to on page 74. The numbers
shown are maximum entitlements and the actual number of shares issued (if any) will depend on performance against the
vesting criteria being achieved.
Date of grant
Long-Term Incentive Plan
06.06.14
02.04.15
10.09.15
18.04.16
06.04.17
02.11.17
13.04.18
24.04.19
14.04.20
25.09.20
23.04.21
Market
price at
date of
grant (p)
Number of
LTIPs at
1 January
2021
Remaining
life (years)
1 January
2021
Issued
Lapsed
Exercised
Number of
LTIPs at
31 December
2021
Remaining
life (years)
31 December
2021
117.00
132.00
151.50
184.60
246.70
344.70
308.00
328.75
239.00
214.50
257.40
38,450
99,270
146,939
218,078
165,219
2,196
361,339
437,469
629,910
22,476
–
3.4
4.2
4.7
5.3
6.3
6.8
7.3
8.3
9.3
9.7
–
–
–
–
–
–
–
–
–
–
–
626,365
–
–
–
–
–
–
(361,339)
(31,315)
(44,211)
–
(26,541)
–
–
–
(11,500)
(42,212)
(2,196)
–
(16,279)
(4,546)
–
–
38,450
99,270
146,939
206,578
123,007
–
–
389,875
581,153
22,476
599,824
2,121,346
626,365
(463,406)
(76,733)
2,207,572
2.4
3.2
3.7
4.3
5.3
5.8
6.3
7.3
8.3
8.7
9.3
The weighted average exercise price of the Long-Term incentive Plan in the year was £2.38 (2020: £2.35).
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Advanced Medical Solutions Group plc Annual Report & Accounts 2021 127
FINANCIAL STATEMENTS
Notes Forming Part of the Consolidated
Financial Statements continued
29. Share-based payments continued
The weighted average remaining contractual life of the LTIPs outstanding at 31 December 2021 is 7.2 years (2020: 7.4 years).
Outstanding at beginning of the year
Issued
Exercised
Lapsed
Outstanding at end of the year
Exercisable at end of the year
2021
Number of
Options
2020
Number of
Options
2,121,346
626,365
(76,733)
1,784,244
652,386
(187,646)
(463,406)
(127,638)
2,207,572
2,121,346
614,244
670,152
The exercise price of these options is £1 for each issue of LTIPs.
Deferred Share Bonus Scheme (DSB)
The fair value of the DSB shares are calculated based on a Black-Scholes Merton model assuming the inputs below:
Grant date
12/04/2007
02/05/2008
23/04/2009
05/05/2010
11/05/2011
10/05/2012
Share price at grant date
Exercise price
Expected life
Risk-free rate
Expected volatility
Expected dividend yield
Probability of performance conditions
Fair value of option
18.25p
0p
3.5 yrs
5.00%
27%
0%
100%
14p
35.50p
0p
3.5 yrs
5.00%
38%
0%
100%
30p
34.00p
0p
3 yrs
2.40%
30%
0%
100%
72p
40.32p
0p
5 yrs
2.40%
34%
0%
100%
61p
83.00p
0p
5 yrs
1.92%
18%
0.7%
100%
72p
70.625p
0p
5 yrs
0.39%
34%
0.7%
100%
61p
Grant date
02/07/2013
30/04/2014
29/04/2015
03/05/2016
02/05/2017
13/04/2018
Share price at grant date
Exercise price
Expected life
Risk-free rate
Expected volatility
Expected dividend yield
Probability of performance conditions
Fair value of option
Grant date
Share price at grant date
Exercise price
Expected life
Risk-free rate
Expected volatility
Expected dividend yield
Probability of performance conditions
Fair value of option
74.125p
0p
5 yrs
0.69%
36%
0.7%
100%
63p
126.0p
0p
5 yrs
0.80%
36%
0.7%
100%
110p
141.5p
0p
5 yrs
0.80%
31%
0.7%
100%
124p
183.0p
0p
5 yrs
0.67%
25%
0.4%
100%
160p
264.1p
0p
5 yrs
0.18%
23%
0.4%
100%
233p
306.8p
0p
5 yrs
0.94%
25%
0.4%
100%
266p
29/04/2019
05/05/2020
16/11/2020
11/05/2021
15/11/2021
328.75p
0p
5 yrs
0.75%
26%
0.4%
100%
296p
244.97p
0p
5 yrs
0.08%
36%
0.6%
100%
253p
218.40p
0p
5 yrs
0.08%
36%
0.6%
100%
190p
272.09p
0p
5 yrs
0.12%
36%
0.6%
100%
238p
328.29p
0p
5 yrs
0.12%
36%
0.6%
100%
288p
The expected volatility was determined by calculating the historic volatility of the Group’s share price over the previous
three years.
The entitlement to shares under the DSB is subject to a three-year holding period. Additionally, for certain levels of share
matching, additional performance conditions also need to be achieved. The actual number of shares that will be matched will
depend on these performance conditions being met. Details on the DSB are given on page 74.
128 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
Notes Forming Part of the Consolidated
Financial Statements continued
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Date of grant
Deferred Share Bonus Plan
12.04.07
02.05.08
23.04.09
05.05.10
11.05.11
10.05.12
02.07.13
30.04.14
29.04.15
03.05.16
02.05.17
13.04.18
29.04.19
05.05.20
16.11.20
11.05.21
15.11.21
Market
price at
date of
grant (p)
Number of
DSB matching
shares at
1 January
2021
Issued
Lapsed
Exercised
18.25
35.50
34.00
40.32
83.00
70.63
74.13
126.00
141.50
183.00
264.10
306.77
328.75
244.97
218.40
272.09
328.29
6,759
9,415
15,497
12,400
3,537
8,662
49,968
43,356
92,523
133,847
172,386
162,296
240,431
357,736
97,219
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
298,558
95,553
–
–
–
–
–
–
(337)
–
–
–
–
–
(18,721)
(10,575)
(2,791)
(17,070)
–
–
–
(146)
–
(361)
(1,062)
(10,911)
(11,474)
(38,950)
(31,890)
(60,894)
(19,545)
(8,009)
(5,118)
(457)
(661)
–
Number of
DSB matching
shares at
31 December
2021
6,759
9,415
15,351
12,400
3,176
7,600
38,720
31,882
53,573
101,957
111,492
142,751
213,701
342,043
93,971
280,827
95,553
1,406,032
394,111
(49,494)
(189,478)
1,561,171
The weighted average exercise price of the Deferred Share Bonus Plan in the year was £2.79 (2020: £2.39).
Outstanding at beginning of the year
Issued
Exercised
Lapsed
Outstanding at end of the year
Exercisable at end of the year
2021
Number of
Options
1,406,032
394,111
(189,478)
2020
Number of
Options
1,345,777
461,687
(363,271)
(49,494)
(38,161)
1,561,171
1,406,032
535,076
548,350
The exercise price of the matching shares is £nil.
Deferred Annual Bonus Scheme (DAB)
The fair value of the DAB options are calculated based on a Black-Scholes Merton model assuming the inputs below:
Grant date
Share price at grant date
Exercise price
Expected life
Contractual life
Risk-free rate
Expected volatility
Expected dividend yield
Probability of performance conditions
Fair value of option
21/05/14
115.4p
0p
3 yrs
10 yrs
0.80%
31%
0.7%
100%
115p
15/04/15
129.0p
0p
3 yrs
10 yrs
0.80%
31%
0.7%
100%
129p
18/04/16
184.6p
0p
3 yrs
10 yrs
0.67%
25%
0.4%
100%
183p
06/04/17
246.7p
0p
3 yrs
10 yrs
0.18%
23%
0.4%
100%
250p
13/04/18
308.0p
0p
3 yrs
10 yrs
0.94%
25%
0.4%
100%
308p
24/04/19
328.75p
0p
3 yrs
10 yrs
0.75%
26%
0.4%
100%
329p
Advanced Medical Solutions Group plc Annual Report & Accounts 2021 129
FINANCIAL STATEMENTS
Notes Forming Part of the Consolidated
Financial Statements continued
29. Share-based payments continued
The expected volatility was determined by calculating the historic volatility of the Group’s share price over the previous
three years.
The DAB scheme began on 21 May 2014. Participants compulsorily defer part of their bonus for the relevant financial year and
they vest at the end of a three-year period from the time of grant.
Market
price at
date of
grant (p)
Number of
DAB matching
shares at
1 January
2021
Remaining
life (years)
1 January
2021
Date of grant
Issued
Lapsed
Exercised
Number of DAB
matching
shares at
31 December
2021
Remaining
life (years)
31 December
2021
Deferred Annual Bonus Plan
21.05.2014
15.04.2015
18.04.2016
06.04.2017
13.04.2018
24.04.2019
115.40
129.00
184.60
246.70
308.00
328.75
520
6,095
5,971
36,956
63,037
36,721
149,300
3.3
4.3
5.3
6.3
7.3
8.3
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(27,788)
(33,127)
(3,952)
520
6,095
5,971
9,168
29,910
32,769
(64,867)
84,433
2.3
3.3
4.3
5.3
6.3
7.3
Those senior executives who are required to defer a portion of their bonus did not receive a bonus in 2020 or 2021 and therefore
no Deferred Annual Bonus arose.
The weighted average exercise price of the Deferred Annual Bonus Plan options in the year was £2.55 (2020: £2.45).
The weighted average remaining contractual life of the DAB options outstanding at 31 December 2021 is 6.2 years (2020: 7.1).
Outstanding at beginning of the year
Issued
Exercised
Lapsed
Outstanding at end of the year
Exercisable at end of the year
2021
Number of
Options
149,300
–
(64,867)
2020
Number of
Options
196,023
–
(46,723)
–
–
84,433
149,300
51,664
49,542
30. Related party transactions
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation.
There are no other related party transactions to disclose.
31. Events after reporting period
Subsequent to the 31 December 2021 the Group entered into an agreement to acquire AFS Medical as disclosed on page 81.
Consideration will be an initial cash purchase price of €4.5 million, including debt, with a further cash deferred consideration
of up to €1.5 million based on EBITDA delivery in 2022-2024. The acquisition is expected to complete in mid-2022 following
the required regulatory clearances. It is expected to add approximately €4 million to Group revenues in 2023 and to be
earnings enhancing.
Subsequent to 31 December 2021, an armed conflict between Russia and Ukraine has developed, the risks of which have
been considered on page 51.
There have been no other material events subsequent to the end of the reporting period ended 31 December 2021.
130 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
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Company Statement of Financial Position
At 31 December 2021
Non current assets
Investments in subsidiaries
Trade and other receivables
Loans and other financial assets
Current assets
Trade and other receivables
Cash and cash equivalents
Current liabilities
Trade and other payables
Net current assets
Net assets
Equity shareholders’ funds
Share capital
Share premium
Share-based payments reserve
Investment in own shares
Retained earnings
Equity attributable to equity holders of the parent
Note
2021
£’000
3
4
4
58,017
21,482
–
14,485
62,518
77,003
79,499
58,140
2020
£’000
58,017
–
123
46,871
46,880
93,751
(5,995)
87,756
5
(11,838)
65,165
6
144,664
145,896
10,804
36,996
13,180
(164)
83,848
10,769
36,288
11,142
(162)
87,859
144,664
145,896
The Company reported a net loss for the year ended 31 December 2021 of £166,000 (2020: profit of £13,274,000).
The Financial Statements of Advanced Medical Solutions Group plc (registration number 2867684) on pages 131 to 138 were
approved by the Board of Directors and authorised for issue on 14 April 2022 and were signed on its behalf by:
Chris Meredith
Chief Executive Officer
Advanced Medical Solutions Group plc Annual Report & Accounts 2021 131
FINANCIAL STATEMENTS
Company Statement of Changes in Equity
For the year ended 31 December 2021
At 1 January 2020
Share-based payments*
Share options exercised
Shares purchased by EBT
Shares sold by EBT
Total comprehensive income
Dividends paid‡
At 31 December 2020
Share-based payments*
Share options exercised
Shares purchased by EBT
Shares sold by EBT
Total comprehensive expense
Dividends paid‡
At 31 December 2021
* See note 7 and note 29 of the consolidated financial statements.
‡ See note 14 of the consolidated financial statements.
Share
capital
£’000
10,745
–
24
–
–
–
–
10,769
–
35
–
–
–
–
Share-based
payments
£’000
Investment in
own shares
£’000
9,466
1,611
65
–
–
–
–
11,142
1,979
59
–
–
–
–
(159)
–
–
(542)
539
–
–
(162)
–
–
(366)
364
–
–
Share
premium
£’000
36,226
–
62
–
–
–
–
36,288
–
708
–
–
–
–
Retained
earnings
£’000
77,922
–
–
–
–
13,274
(3,337)
Total
£’001
134,200
1,611
151
(542)
539
13,274
(3,337)
87,859
145,896
–
–
–
–
(166)
(3,845)
1,979
802
(366)
364
(166)
(3,845)
10,804
13,180
(164)
36,996
83,848
144,664
132 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
Notes to the Company Financial Statements
Year ended 31 December 2021
1. Significant accounting policies
Basis of preparation
In preparing these Financial Statements, the Company applies the recognition, measurement and disclosure requirements of
International Financial Reporting Standards, but makes amendments where necessary in order to comply with Companies
Act 2006 and has set out below where advantage of the FRS 101 disclosure exemptions has been taken. The Financial Statements
have been prepared on the historical cost basis of accounting except as disclosed in the accounting policies set out below.
As permitted by FRS 101, the Company has taken advantage of the disclosure exemptions available under that standard in relation
to share-based payments, financial instruments, capital management, presentation of a Cash Flow Statement, presentation of
comparative information in respect of certain assets, standards not yet effective, impairment of assets, business combinations,
discontinued operations and related party transactions.
Critical judgements in applying the Company’s accounting policies and areas of key estimation uncertainty
In the process of applying the Company’s accounting policies, which are described below, no judgements have been made by
the Directors, nor do any areas of key estimation uncertainty exist that have a significant effect on the amounts recognised in the
Financial Statements.
Impairment of investments and intragroup receivables
Investments and receivables carrying values are reviewed for impairment if events or changes in circumstances indicate that
the carrying amount of an asset or cash generating unit is not recoverable. Recoverable amount is the higher of fair value, as
supported by management valuation, less costs to sell and value in use. In assessing value in use, the estimated future cash flows
are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of
money and risks specific to the asset for which the estimates of future cash flows have not been adjusted.
Investments in subsidiaries
Investments in subsidiaries are shown at cost less provision for impairment.
Foreign currencies
Transactions in currencies other than Pounds Sterling are recorded at the rates of exchange prevailing on the dates of the
transactions. At each Statement of Financial Position date, monetary assets and liabilities that are denominated in foreign
currencies are retranslated at the rates prevailing on the Statement of Financial Position date. Non-monetary items that are
measured in terms of historical cost in a foreign currency are not retranslated. Gains and losses arising on retranslation are
included in the Income Statement for the period.
Taxation
Tax on the profit or loss for the period comprises current and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in profit or
loss because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items
that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or
substantively enacted by the end of the reporting period.
A provision is recognised for those matters for which the tax determination is uncertain but it is considered probable that there
will be a future outflow of funds to a tax authority. The provisions are measured at the best estimate of the amount expected to
become payable. The assessment is based on the judgement of tax professionals within the Company supported by previous
experience in respect of such activities and in certain cases based on specialist independent tax advice.
Deferred tax
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for taxation purposes. Temporary differences in respect of the initial recognition of
assets and liabilities that affect neither accounting nor taxable profit are not provided for. The amount of deferred tax provided is
based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted
or substantively enacted at the reporting date.
Trade and other creditors
Trade and other creditors are non-interest bearing and recognised initially at fair value. Subsequent to initial recognition they are
measured at amortised cost using the effective interest method.
Finance charges
Finance charges comprise interest payable on interest-bearing loans and borrowings and fair value losses on interest rate swap
derivative financial instruments. Finance charges are recognised in the Income Statement on an effective interest method.
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Advanced Medical Solutions Group plc Annual Report & Accounts 2021 133
FINANCIAL STATEMENTS
Notes to the Company Financial Statements continued
Year ended 31 December 2021
1. Significant accounting policies continued
Financial instruments
Financial assets and financial liabilities are recognised in the Company’s Statement of Financial Position when the Company
becomes a party to the contractual provisions of the instrument. Financial assets are de-recognised when the contractual rights
to the cash flows from the financial assets expire or are transferred. Financial liabilities are derecognised when the obligation
specified in the contract is discharged, cancelled or expires.
Derivatives
The Company uses derivative financial instruments to hedge its exposure to currency risks arising from operational, financing and
investment activities. In accordance with its treasury policy, the Company does not hold or issue derivative financial instruments
for trading purposes. However, derivatives that do not qualify for hedge accounting are accounted for as trading instruments.
Derivative financial instruments are recognised initially at fair value and re-measured at each period end. The gain or loss on
re-measurement to fair value is recognised immediately in the Income Statement. The Company has elected not to apply hedge
accounting. Forward currency contracts are recognised at fair value in the Statement of Financial Position with movements in
fair value recognised in the Income Statement for the period. The fair value of the instruments is the estimated amount that the
Company would receive or pay to terminate the swap at the reporting date, taking into account current interest rates and the
respective risk profiles of the swap counterparties.
Derivatives are presented as assets when the fair values are positive and as liabilities when the fair values are negative.
A derivative is presented as a non-current asset or a non-current liability if the remaining maturity of the instrument is more than
twelve months and it is not expected to be realised or settled within twelve months.
Share-based payments
The Company has applied the requirements of IFRS 2 Share-based payments.
The Company issues equity-settled share-based payments to certain employees. Equity-settled share-based payments are
measured at fair value at the date of grant. The fair value determined at the grant date of the equity-settled share-based
payments is expensed on a straight-line basis over the vesting period. At each Statement of Financial Position date, the
Company revises its estimate of the number of equity instruments expected to vest as a result of the effect of non-market
based vesting conditions. The impact of the revision of the original estimates, if any, is recognised in the Income Statement
such that the cumulative expense reflects the revised estimates with a corresponding adjustment to the equity-settled
employee benefits reserve.
Income Statement
2.
As permitted by section 408 of the Companies Act 2006, the Company has elected not to present its own Income Statement
for the year. Advanced Medical Solutions Group plc reported a loss for the financial year ended 31 December 2021 of £166,000
(2020: Profit of £13,274,000).
The Auditor’s remuneration for audit and other services is disclosed in Note 7 to the Consolidated Financial Statements.
The average monthly number of employees in the year was 16 (2020: 16), all of whom were classified as Administration (2020:
same). The Directors’ remuneration is detailed in Note 9 to the Consolidated Financial Statements.
Staff costs for all employees, including Executive Directors, consists of:
Wages and salaries
Social Security costs
Pension costs
Share-based payments (see Note 29 to the Consolidated Financial Statements)
Year ended
31 December
2021
£’000
Year ended
31 December
2020
£’000
3,891
578
98
1,979
2,155
168
89
1,611
6,546
4,023
134 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
Notes to the Company Financial Statements continued
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3.
Investments in subsidiaries
Cost
At 1 January 2021
At 31 December 2021
Provisions for impairment
At 1 January 2021
At 31 December 2021
Net Book value
At 31 December 2021
At 31 December 2020
Investments in
subsidiaries
£’000
86,687
86,687
28,670
28,670
58,017
58,017
Shares in Group undertakings and loans to Group undertakings have been written down to recognise losses in
subsidiary companies. Written down loans to Group undertakings form part of the net investment.
The following were subsidiary undertakings at the end of the year and have all been included in the consolidated accounts.
Name
Proportion of
voting rights and
Ordinary Share
capital held
Country of
operation
Nature of business
Registered address
Advanced Medical Solutions Limited
England
100%
Development and
manufacture of
medical products
Advanced Medical Solutions (UK) Limited
England
100%
Holding Company
AMS Trustee Company Limited
England
100%
Trustee Company
Advanced Medical Solutions (Plymouth) Limited
England
100%
Dormant
Advanced Healthcare Systems Limited
England
100%*
Dormant
MedLogic Global Holdings Limited
England
100%*
Holding Company
Innovative Technologies Limited
England
100%‡
Dormant
Raleigh Adhesive Coatings Limited
England
100%*
Development and
manufacture of
medical products
Premier Park, 33 Road One,
Winsford Industrial Estate,
Winsford, Cheshire, CW7 3RT,
United Kingdom
Premier Park, 33 Road One,
Winsford Industrial Estate,
Winsford, Cheshire, CW7 3RT,
United Kingdom
Premier Park, 33 Road One,
Winsford Industrial Estate,
Winsford, Cheshire, CW7 3RT,
United Kingdom
Premier Park, 33 Road One,
Winsford Industrial Estate,
Winsford, Cheshire, CW7 3RT,
United Kingdom
Premier Park, 33 Road One,
Winsford Industrial Estate,
Winsford, Cheshire, CW7 3RT,
United Kingdom
Premier Park, 33 Road One,
Winsford Industrial Estate,
Winsford, Cheshire, CW7 3RT,
United Kingdom
Premier Park, 33 Road One,
Winsford Industrial Estate,
Winsford, Cheshire, CW7 3RT,
United Kingdom
Premier Park, 33 Road One,
Winsford Industrial Estate,
Winsford, Cheshire, CW7 3RT,
United Kingdom
Advanced Medical Solutions Group plc Annual Report & Accounts 2021 135
FINANCIAL STATEMENTS
Notes to the Company Financial Statements continued
Year ended 31 December 2021
3.
Investments in subsidiaries continued
Name
Proportion of
voting rights and
Ordinary Share
capital held
Country of
operation
Advanced Medical Solutions BV
Netherlands
100%
Nature of business
Registered address
Development and
manufacture of
medical products
Munnikenheiweg 35, 4879 NE
Etten-Leur, Netherlands
Advanced Medical Solutions (Germany) GmbH
Germany
100%^
Holding Company
Resorba Medical GmbH
Germany
100%#
Resorba s.r.o.
Resorba ooo
Czech
Republic
100%#
Russia
100%#
Advanced Medical Solutions Israel (Sealantis) Limited
Israel
100%*
Biomatlante S.A
France
100%
MPN Medizin Produkte Neustadt GmbH
Germany
100%#
Advanced Medical Solutions (USA) Inc
USA
100%*
Advanced Medical Solutions (Europe) Limited
England
100%
Am Flachmoor 16, 90475
Nuremberg, Germany
Am Flachmoor 16, 90475
Nuremberg, Germany
Haltravska No. 9/578, 34401,
Domazlice, Czech Republic
Development and
manufacture of
medical products
Manufacture and
sales office of
medical products
Sales office of
medical products
Fadeeva Str. 5, 125047
Moscow, Russia
Development and
manufacture of
medical products
Development and
manufacture of
medical products
Malat Building, Technion City,
Haifa, Israel 3200004
5, Rue Edouard Belin, 44360
Vigneux de Bretagne, France
Manufacture of
medical products
Sierkdorfer Str. 15, 23730,
Neustadt in Holstein, Germany
Marketing support of
medical products
Providing financial
support to other
Group entities
2711 Centerville Road, Suite
400, Wilmington, Newcastle,
19808, Delaware, USA
Premier Park, 33 Road One,
Winsford Industrial Estate,
Winsford, Cheshire, CW7 3RT,
United Kingdom
* Held indirectly through Advanced Medical Solutions Limited.
‡ Held indirectly through MedLogic Global Holdings Limited.
^ s.291 of German Commercial Code invoked: No consolidated financial statements prepared for the German companies.
# Held indirectly through Advanced Medical Solutions (Germany) GmbH.
The above table reflects the situation at the year-end. The Company is the ultimate parent within the Group.
136 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
Notes to the Company Financial Statements continued
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4. Trade and other receivables
Non-current assets
Amounts due from Group undertakings
Current assets
Prepayments and accrued income
Amounts due from Group undertakings
Derivative financial instruments
Amounts Owed by Group undertakings
At 1 January
Movement
At 31 December
Provisions for impairment
At 1 January
At 31 December
Net book value
At 31 December
2021
£’000
2020
£’000
21,482
–
2021
£’000
2020
£’000
199
14,175
111
287
46,584
–
14,485
46,871
2021
£’000
48,924
(10,927)
37,997
2020
£’000
26,763
22,161
48,924
2,340
2,340
2,340
2,340
35,657
46,584
Amounts owed by Group undertakings relates primarily to funds provided to Advanced Medical Solutions Limited, a related party,
to make acquisitions. The borrowings are typically repayable on demand and attract no interest. A revised facility was provided to
Advanced Medical Solutions Limited in the year of £40 million, reducing to £20 million on 31 December 2022. The Company also
acts as the central treasury hub providing short-term working capital and longer term funding to other Group entities depending
on the specific needs of the individual entity. All amounts due from intercompany undertakings are unsecured.
5. Creditors: amounts falling due within one year
Amounts owed to group undertakings
Accruals and deferred income
2021
£’000
8,929
2,909
11,838
2020
£’000
4,823
1,172
5,995
Amounts due to group undertakings are repayable on demand and attract no interest expense.
6. Share capital
Details of the share capital of the Company are provided in Note 27 on page 124 in the Notes to the Group’s accounts.
Advanced Medical Solutions Group plc Annual Report & Accounts 2021 137
FINANCIAL STATEMENTS
Notes to the Company Financial Statements continued
Year ended 31 December 2021
7. Share-based payments
The charge for share-based payments under IFRS 2 arises across the following schemes:
Unapproved Executive Share Option Scheme, Enterprise Management Incentive Scheme and
Company Share Option Scheme
Long-Term Incentive Plan
Deferred Share Bonus Scheme
2021
£’000
336
1,006
637
2020
£’000
253
705
653
1,979
1,611
Details on the share-based payments of the Company are provided in Note 29 on pages 125 to 130 in the Notes to the
Group’s accounts.
138 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
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Five Year Summary
Consolidated Income Statement
Revenue
Profit from operations (Pre-exceptional)
Profit attributable to equity holders of the parent
(Pre-exceptional)
Basic earnings per share (Pre-exceptional)
Consolidated Statement of Financial Position
Net assets employed
Non-current assets
Current assets
Total liabilities
Net assets
Shareholders’ equity
Share capital & investment in own shares
Share-based payments reserve
Share-based payments deferred tax reserve
Share premium account
Other reserve
Hedging reserve
Translation reserve
Retained equity
Equity attributable to equity holders of the parent
2021
£m
108.6
23.0
17.5
8.1p
134.5
115.0
(36.8)
212.7
10.6
13.2
0.9
37.0
1.5
–
(1.9)
151.4
212.7
2020
£m
86.8
11.6
9.4
4.4p
141.4
97.2
(36.4)
202.2
10.6
11.1
0.4
36.3
1.5
1.2
3.3
137.7
202.2
2019
£m
102.4
25.3
20.0
9.3p
115.2
111.8
(35.7)
191.3
10.6
9.5
0.6
36.2
1.5
0.6
(0.2)
132.5
191.3
2018
£m
102.6
28.9
22.9
10.7p
86.0
119.2
(32.5)
172.7
10.5
7.3
0.7
35.2
1.5
(2.4)
3.3
116.6
172.7
2017
£m
96.9
25.2
20.1
9.5p
84.5
94.5
(26.7)
152.3
10.5
4.7
0.8
34.8
1.5
0.6
2.8
96.6
152.3
Alternative performance measures
The Group’s performance is assessed using a number of financial measures which are not defined under IFRS and are therefore
non-GAAP (or alternative) performance measures. These are set out as follows:
• Constant currency measures revenue when excluding the effects of currency movements on non-pounds sterling sales.
• Adjusted measures are believed by the Directors to enable a reader to obtain a more effective year-on-year comparison
and fuller understanding of routine business operations since they exclude large, unusual activities, in particular as a result
of business combinations, which if included may distort a third parties perception of the profitability of the business.
The principles to identify adjusting items have been applied to the current and prior year comparative numbers on a
consistent basis.
• Adjusted profit before tax is shown before exceptional items which were £nil (2020: £0.8 million), amortisation of
acquired intangible assets which was £3.2 million (2020: £2.3 million) and a long-term liability expense of £0.4 million
(2020: £0.2 million) as reconciled in the Financial Review (see page 45).
• Adjusted operating margin is shown before exceptional items and amortisation of acquired intangible assets as reconciled
in the Financial Review (see page 45).
• Margin percentages (which are calculated by dividing the relevant profit figure by revenue) for each of the relevant profit
metrics provide management with an insight into relative year-on-year performance.
• Adjusted earnings per share measures are derived from adjusted profit after tax with the rationale for their use being the same
as for adjusted profit metrics and are reconciled to their IFRS equivalent in note 15 to the consolidated financial statements.
• Adjusted net cash inflow from operating activities are derived from excluding items which are not reflective of the normal
course of business with the rationale for their use being the same as for adjusted profit metrics as reconciled in the Financial
Review (see page 46).
• Net cash is defined as cash and cash equivalents plus short term investments less bank loans and financial liabilities excluding
those relating to IFRS16.
Further information regarding the profit adjusting items an be found in the notes to the Group Financial Statements:
• Exceptional items (Note 6).
• Amortisation of acquired intangible assets which was (Note 16).
• Change in long-term liability expense (Note 12).
Advanced Medical Solutions Group plc Annual Report & Accounts 2021 139
Nominated Advisor and Broker
Investec Bank plc
30 Gresham Street
London EC2V 7QN
Bankers
HSBC
99-101 Lord Street
Liverpool L2 6PG
Broker
HSBC
Level 2, 8 Canada Square
London E14 5HQ
Auditor
Deloitte LLP
Independent Auditor
The Hanover Building
Corporation Street
Manchester M4 4AH
Tax Advisor
Grant Thornton UK LLP
Landmark, St Peter’s Square
1 Oxford Street
Manchester M1 4PB
Registrars and Transfer Office
Link Registrars
The Registry
34 Beckenham Road
Beckenham
Kent BR3 4TU
NatWest
2nd Floor
1 Spinningfields Square
Manchester M3 3AP
Patent Attorneys
Marks & Clerk
Manchester Office
1 New York Street
Manchester M1 4HD
Foley & Lardner LLC
975 Page Mill Square
Palo Alto CA 94304-1013
Public Relations
Consilium Strategic
Communications
41 Lothbury
London EC2R 7HG
140 Advanced Medical Solutions Group plc Annual Report & Accounts 2021
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Advanced Medical Solutions Group plc
Registered Office:
Premier Park, 33 Road One
Winsford Industrial Estate
Winsford, Cheshire CW7 3RT
Company Number: 2867684
Tel: +44 (0)1606 863500
Fax: +44 (0)1606 863600
e-mail: info@admedsol.com
www.admedsol.com