Transforming,
Innovating,
Accelerating
Growth
Annual Report & Accounts 2023
Contents
Company Overview
02 Highlights
04 At a Glance
View the latest results
online at admedsol.com/
investor-relations
Strategic Report
06 Chair’s Statement
07
Transforming through
Acquisitions
Our Business Model
10
12 Growth Drivers
14 Chief Executive’s Q&A
16 Strategy
22
24
Key Performance Indicators
Environmental, Social
and Governance
37 Climate-Related
Governance
66
68
70
72
78
81
85
Governance Overview
Board of Directors
Senior Management Team
Corporate Governance Report
Nomination Committee Report
Audit Committee Report
Remuneration
Committee Report
96 Directors’ Report
48
52
Financial Disclosures
Operating Review –
Surgical Business Unit
Operating Review –
Woundcare Business Unit
s172 (Stakeholder Engagement)
Financial Review
54
58
61 Risk Management
Financial Statements
99
107
108
Independent Auditor’s Report
Consolidated Income Statement
Consolidated Statement
of Comprehensive Income
Consolidated Statement
of Financial Position
Consolidated Statement
of Changes in Equity
Consolidated Statement
of Cash Flows
Notes forming part
of the Consolidated
Financial Statements
Company Statement
of Financial Position
Company Statement
of Changes in Equity
Notes to the Company
Financial Statements
109
110
111
112
140
141
142
147 Five-Year Summary
147
Alternative
Performance Measures
148 Advisers
Despite significant challenges, we
achieved our updated guidance in
2023 and lived our values of Care,
Fair and Dare. 2024 has started
very strongly. Sales of LiquiBand®
have surged and we believe
Peters Surgical provides us with
a highly complementary and
transformational opportunity.
Chris Meredith
Chief Executive Officer
Introducing our new website
Modern aesthetic and refreshed content,
providing investors and other stakeholders
with comprehensive and up-to-date content on
our activities as we manage transformational
change in the coming years.
admedsol.com
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
01
OVERVIEWFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT Highlights
2023 was a year of significant accomplishments, but
also several challenges. Yes, we missed our original
projections, but our strategic rethink has paid off, and
the acquisition of Peters Surgical will be transformational,
driving both growth and significant operational synergies.
Liz Shanahan
Chair
Revenue
(£ million)
£126.2m
2%
(+2% at constant currency1)
(2022: £124.3m)
Adjusted² profit before tax
(£ million)
£25.9m
9%
(2022: £28.5m)
Profit before tax margin
(%)
Diluted earnings per share
(p)
7.25p
22%
(2022: 9.30p)
16.8%
4pp
(2022: 20.8%)
Financial
• Group revenue increased by 2% to £126.2 million (2022: £124.3 million).
• Adjusted profit before tax decreased by 9% to £25.9 million (2022: £28.5 million)
and reported profit before tax decreased to £21.2 million (2022: £25.9 million)
as impacted by lower royalty income and the temporary reduction in
US LiquiBand®.
• Investment in the Connexicon acquisition, planned inventory build and
share purchases by the Employee Benefit Trust resulted in net cash reducing
to £60.2 million (2022: £82.3 million).
• Investment in R&D increased to £12.6 million (2022: £12.3 million).
• Proposed increased final dividend of 1.66p per share (2022: 1.51p) bringing
the total proposed dividend to 2.36p per share (2022: 2.15p).
02
Advanced Medical Solutions Group plc Annual Report & Accounts 2023
Adjusted² profit before
tax margin (%)
Adjusted² diluted earnings
per share (p)
20.5%
2.4pp
(2022: 22.9%)
9.39p
10%
(2022: 10.47p)
Profit before tax
(£ million)
£21.2m
18%
(2022: £25.9m)
Net operating cash flow
(£ million)
£12.3m
54%
(2022: £26.9m)
Net cash3
(£ million)
£60.2m
27%
(2022: £82.3m)
Proposed full-year dividend
per share (p)
2.36p
10%
(2022: 2.15p)
Operational
• Successful implementation of new US LiquiBand® route-to-market
strategy that is set to deliver record US LiquiBand® sales in 2024.
• FDA approval for LiquiFix™ and in-market US launch with TELA Bio.
• Completion of the first SEAL-G® human clinical trials with initial
data showing an improvement in leak rates.
• 1 February 2023: Acquisition of Connexicon increasing our
portfolio of adhesive and sealant technologies.
Post period-end
• Announced 13 March 2024
(Expected completion mid 2024):
Transformational acquisition of
Peters Surgical strengthening our
position as a leading global specialist
in tissue repair and skin closure.
• Acquisition of SyntaColl GmbH
(‘SyntaColl’) for €1 million on 1 March
2024, a specialist manufacturer
of drug-eluting collagens that
strengthen the Group’s existing
biosurgical business.
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 amortisation of acquired intangible assets which was £4.9 million (2022: £3.4 million) and the movement in long-term liabilities
recognised on acquisitions which was a credit of £0.2 million (2022: £0.8 million credit).
3. Net cash consists of cash and cash equivalents with nil debt (2022: £nil debt).
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
03
OVERVIEWFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT 11
1
3
2
9
AMS at a Glance
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.
Our mission:
• To develop.
• To make a real difference.
• To add value.
Headquartered in the UK, we are a world-
leading specialist in tissue-healing technologies
employing over 850 people in 13 locations1.
1 Winsford, UK HQ
2 Plymouth, UK
3 Stafford, UK
4 Etten Leur, Netherlands
5 Nuremberg, Germany
8 Haifa, Israel
9 Nantes, France
10 Vienna, Austria
11 Dublin, Ireland
12 Saal an Der Donau, Germany
6 Domazlice, Czech Republic
13 Moscow, Russia2
7 Neustadt, Germany
Key for Map2:
R&D
Manufacturing
Sales
1. Former Syntacoll site included (post year-end). Peters Surgical sites are excluded.
2. Small legacy sales office contributing less than 1% of operating profit.
AMS in numbers:
Manufacturing
and R&D locations
11
Employees
>850
Countries
sold into
>80
Group Sales
Distribution
Partners
>100
£126.2m
04
Advanced Medical Solutions Group plc Annual Report & Accounts 2023
4
7
6
12
5
10
Acquiring Peters Surgical
makes us a real powerhouse in
our field. We have been looking
for an acquisition of this scale
and synergy for some time,
and Peters provides us with
the perfect opportunity.
13
8
Our Cultural Values:
Care
Fair
Dare
Respect colleagues, encourage
and value all contributions.
Focus on the bigger picture.
Open-minded and take
appropriate action.
Take accountability
and responsibility.
Transparent and open in
communication and actions.
Act as a team player to
deliver outcomes.
Demonstrate determination
and persistence.
Use critical thinking and
creativity to find solutions.
Find value-added
improvements.
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
05
OVERVIEWFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT Chair’s Statement
It’s an honour to be part
of AMS’s success story
as it continues to make
a real difference to
patient outcomes.
Dear Shareholder,
I am incredibly honoured to have been appointed as Chair of
AMS and to become part of its success story as it continues
to make a real difference to patient outcomes. I join a Group
with an impressive leadership team and talented individuals
throughout the business.
2023 was a challenging year. Despite this, I believe we made
good progress with a number of key initiatives, setting a
strong foundation for growth for the next five years. The
strategic realignment of our LiquiBand® franchise in the US,
which the Board unanimously endorsed, is already having
a positive impact and the market feedback on LiquiFix™ in
the US validates the confidence we have in the commercial
potential of this unique product.
The geopolitical environment in which we operate remains
unstable and the final quarter of 2023 was particularly difficult
for our small team in Israel. All those affected in both Israel
and Gaza, and wider region, are in our thoughts.
The acquisition of Peters Surgical marks the next stage of
growth and transformation for AMS. We have been looking
for an acquisition of this scale for a period of time. It is a truly
synergistic acquisition and we believe it provides us with
great opportunities.
The progress that AMS has made would not have been possible
without the hard work, drive and unwavering commitment of
our employees and leadership team, for which I would like to
thank them on behalf of the Board, and I would also like to
thank our shareholders for their continued support.
The Peters Surgical acquisition creates a more stable and
enlarged Group that is well placed to navigate the ongoing
macroeconomic uncertainties to continue to strengthen its
competitive position and to successfully deliver sustainable
and profitable growth into the medium term. We have a
very bright future and look forward to all our stakeholders
benefitting from our success.
Liz Shanahan
Chair
1 May 2024
06
06
Advanced Medical Solutions Group plc Annual Report & Accounts 2023
STRATEGIC REPORT
Transforming through Acquisitions
On 13 March 2024, AMS announced
the proposed transformational
acquisition of Peters Surgical, a
leading European provider of specialty
surgical products, for a maximum
consideration of €141 million.
Following completion, expected
mid-2024, the deal will strengthen
the Group’s position as a leading,
global specialist in tissue repair
and skin closure.
Peters Surgical is an excellent strategic fit,
aligning with the strategy of expanding
the Group’s presence in the operating
room, increasing the portfolio and sales
of AMS branded products, increasing
direct selling capabilities and volumes
and expanding its global footprint.
Peters offers complementary expertise,
global reach, cross-selling opportunities
and potential synergies, significantly
broadening AMS’s portfolio, by:
• Extending its portfolio of surgical
products, increasing diversity and
reducing reliance on single markets.
Increasing its portfolio of
own-brand products.
•
• Strengthening its direct sales force
•
•
capability in key markets.
Increasing its global footprint in
target markets.
Integrating a cash-generative
business to provide substantial
commercial and cost synergies.
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
0707
FINANCIAL STATEMENTSGOVERNANCEOVERVIEWSTRATEGIC REPORT Transforming through Acquisitions continued
Complementary portfolio of surgical products
The complementary nature of Peters Surgical products significantly strengthens AMS’s existing brands and with both businesses
targeting the same end-users, creates significant cross-selling opportunities. Peters Surgical generated revenues of €84 million
in the 12 months to 31 December 2023.
Sutures (47% of 2023 Peters revenue)
The Peters range of specialist sutures, focusing on
cardiovascular, dental and ophthalmic applications,
combined with our range of RESORBA® sutures, creates a
comprehensive product offering that can compete more
effectively with global market leaders. The joint portfolio
establishes a major regional player in Europe, APAC and
the Middle East, while new US approvals for the Peters
Surgical range anticipated in 2025 are expected to
become a significant growth-driver for the business.
Internal Fixation and Sealants (4% of 2023
Peters revenue)
Peter’s range of novel internal adhesives has the potential
to generate high levels of growth. Their hexyl-based
cyanoacrylate formulations are ideally suited for wet
environments and internal use, being more flexible and
resorbable, which allows them to be used in a wide range of
applications, including bariatric surgery and prolapse repair.
Combined with AMS’s expertise in device design, this expanded
portfolio is expected to further enhance AMS’s rapidly growing
LiquiBandFix8®/LIQUIFIX™ hernia repair franchise.
Haemostasis (33% of 2023 Peters revenue)
Peter’s range of innovative, haemostatic vascular clip
technology and clamps complements AMS’s range
of biosurgical and haemostatic products, with both
portfolios targeting the same surgical procedures
and end-users.
Other (10% of Peters Surgical revenue)
Peters range of outsourced, complementary surgical
devices will combine with the portfolio of products
gained via the acquisition of AFS Surgical in 2022. This will
establish a comprehensive range of surgical instruments
that can be exploited to enhance other key target areas.
Significant Operational Synergies
The Peters Surgical acquisition substantially increases the Group’s manufacturing and R&D capabilities and expertise. The
complementarity between the two portfolios presents significant opportunities to improve operational efficiency across the
combined Group over the coming years.
List of manufacturing countries:
13%
54%
• France
• Germany
• Thailand
•
India
Hub Americas
• Algeria
13%
54%
Direct Distribution Countries
Key Distributors
Hub Americas
Hub Europe
54%
64%
13%
54%
12%
13%
54%
13%
12%
54%
Hub Americas
54%
2023 revenue
contribution
by geography
Hub Europe
Hub Americas
64%
54%
Hub Americas
Hub Europe
54%
64%
Hub Middle East
64%
64%
Hub Middle East
Hub Europe
% direct revenue
by hub
64%
Americas
13%
Europe
54%
Middle East
12%
APAC
21%
21%
12%
21%
Hub APAC
Hub Middle East
18%
64%
Hub APAC
18%
Hub Americas
Hub Europe
Hub Middle East
Hub APAC
54%
64%
64%
18%
54%
12%
21%
08
08
Advanced Medical Solutions Group plc Annual Report & Accounts 2023
Advanced Medical Solutions Group plc Annual Report & Accounts 2023
64%
64%
18%
Hub Europe
Hub Middle East
Hub APAC
12%
21%
Hub Middle East
Hub APAC
64%
18%
21%
Hub APAC
18%
OVERVIEW
STRATEGIC REPORT
GOVERNANCE
FINANCIAL STATEMENTS
Enhancing Direct Sales and Global
Commercial Footprint
The acquisition of Peters Surgical will significantly enhance
the Group’s geographic footprint and its ability to penetrate
key markets.
Increased direct sales presence in key markets
The addition of Peter’s established direct sales presence in
France, Benelux, Germany, Poland and India to AMS’s existing
direct markets of the UK, Germany, Austria and the Czech
Republic, represents a significant opportunity for the Group’s
product offering and global reach. Cross-selling of both
portfolios through this enlarged direct salesforce is expected
to significantly enhance profitability and the Group’s ability
to expand into key markets.
Stronger and Broader Distribution Channels
Peters has already established distribution channels across key
markets such as China, Japan, South-East Asia, the Middle-East
and Africa where AMS has yet to make significant in-roads.
Harnessing these networks presents significant opportunities
for AMS’s LiquiBand®, LiquiBandFix8® and RESORBA® brands
in accelerating penetration in these lucrative territories.
In the US, Peters operates a hybrid model similar to AMS with
locally based specialists supporting a network of distributors
and partners. New product approvals and launches are expected
to further leverage this model and critical market in the short,
medium and long term.
Commercial Synergies: Combined Specialist Portfolio – Doubling Surgical Revenues
z –
z –
Topical surgical glues:
Major player in cyanoacrylate
sealant technology
z LiquiBand® branded
z LiquiBand® XL
Sutures:
Leading specialist suture provider:
z z Absorbable/Non-absorbable
z z Focus on key specialty segments
z Cardiovascular
z z Dental
z z Ophthalmic
35%
23%
2023 pro-forma
Surgical revenue
£152m
combined
Biosurgicals:
Range of biological
surgical scaffolds
z RESORBA® branded
z Collagen devices with
drug- eluting technology
z Synthetic bone substitutes
The chart shows the addition
of Peters FY23 revenues with
AMS Surgical FY23 revenues
on a pro-forma basis.”
15%
11%
5%
10%
Vascular Temporary
Occlusion & Clips:
Innovative and novel clip
technology
z Ligating clips
z Clamps
Internal Fixation:
Leader in the fast-growing
internal glue market
z LiquiBand Fix8® / LIQUIFIX™
for hernia mesh fixation
z Complementary Ifabond® for
internal use for hernia repairs
and other applications
Other:
Range of specialist surgical
devices and instruments
z AMS’ ‘Other Distributed
products’ including AFS
z Peters Surgical range of
distributed and sourced
complementary devices
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
0909
FINANCIAL STATEMENTSGOVERNANCEOVERVIEWSTRATEGIC REPORT Our Business Model
AMS develops, manufactures and distributes
innovative tissue-healing technology designed
to improve clinical outcomes while providing
overall cost savings in surgery, emergency
rooms and other healthcare settings.
Our enablers
Our value-chain
Innovation and acquisitions
We develop, manufacture and distribute
innovative tissue-healing technology,
marketed through five key brands: LiquiBand®,
LiquiBandFIX8® (LiquiFix™ in the US),
RESORBA®, Seal-G® and ActivHeal®.
We continue to expand our portfolio through
innovation and acquisitions, generating a
robust and sustainable growth profile.
Growing market opportunity
We operate in global healthcare markets
with consistent and rising demand.
More information on Pages 48 to 53
The surgical and woundcare products we offer
are used on a daily basis, making our business
highly cash-generative with recurring revenues.
Strong financials
Proven track record of top-line growth, good
profitability and underlying cash generation,
excluding non-recurring changes to inventory
levels, after payment of dividend enables us
to invest in long-term growth opportunities
through organic growth and acquisitions.
Technical expertise and
specialist facilities
Our high-level of technical expertise,
lean manufacturing practices and
quality processes throughout our
specialist facilities allows us to
deliver top-quality products and
excellent service to a broad
range of customers.
p p r o v a l
2
Extensive investment in
regulatory infrastructure ensures
a smooth transition of new
products into the market at
a time of increasing global
regulatory requirements.
Regulat o r y a
D
&
R
d
n
a
n
o
i
t
a
v
o
n
n
I
1
Ongoing investment in innovation
through specialist R&D centres located
within our manufacturing facilities
enables us to expand our portfolio.
6
R&D innovation
centres
10%
% of sales
invested in R&D
Track record of
robust and resilient
financial performance
Underpinned by
our ESG Framework
For more information on our ESG
Policies see Pages 24 to 36
Planet
People
10
Advanced Medical Solutions Group plc Annual Report & Accounts 2023
Our Strategic Priorities
Our strategic priorities drive consistent long-term growth through innovation and acquisition,
supported by our people, operational excellence and sustainability commitments:
Growth
Innovation
Operational
excellence
People and
culture
Growing
sustainably
For more
information
on Strategy
in Action see
Pages 16 to 21
Our value-chain
Value for stakeholders
Almost all of our products are manufactured
across 10 specialist, multi-national locations.
10
Manufacturing facilities
Manufa
ct
u
ri
n
g
4
R
o
u
t
e
s
t
o
m
a
r
k
et
3
5
n t
t m e
s
e
I n v
We optimise our strategy for each
product and territory, including direct
sales forces, distributors, hybrid
strategies and OEM partnerships
to ensure a targeted and focused
sales approach.
>100
Distribution partners
We invest funds generated by our business
model into the business through:
• Reinvestment for organic growth
• Targeted acquisitions
Targeted acquisitions
Key acquisitions of SyntaColl and
Peters Surgical (expected June 2024),
we invest in expanding our portfolio
and strengthening our biosurgical
manufacturing capabilities.
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 technologies 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
Getting involved in
our communities and
minimising our impact
on the environment.
Our Supply Chain
Developing strong, mutually
beneficial relationships with
our supply chain.
Product
Policy
A
M
S
Advancing sustainability
Minimising environmental impact
Socially responsible
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
11
FINANCIAL STATEMENTSGOVERNANCEOVERVIEWSTRATEGIC REPORT
Growth Drivers
Key categories to drive growth,
underpinned by the implementation
of commercial initiatives, product
launches and key acquisitions.
Advanced Closure
Internal Fixation & Sealants
Revitalised US distribution and
LiquiBand® XL set to drive growth
US launch to drive accelerated
growth from 2024
Growth expected to accelerate
further under AMS ownership
AMS has built a leading position in the
$300m global tissue adhesives market
with LiquiBand®, a range of products used
to close, seal and protect topical wounds.
Having secured a strong position in the
key US market, in 2023 we revitalised our
US distribution network with the aim to
double market share in the coming years.
The drivers of this will be:
• New agreements signed with
our three hospital partners, while
establishing the first foothold for
an AMS house brand.
• The recent roll-out of LiquiBand® XL,
for use in long wounds up to 66cm,
which establishes a position in this
fast-growing $70m segment.
• Additional expansion in the EU,
APAC and LATAM regions, alongside
conversion from the use of sutures
and staples to less invasive adhesives.
LiquiBandFix8TM/LiquiFixTM uses
cyanoacrylate adhesive to fix mesh to
the abdominal wall during open and
laparoscopic hernia surgical repair.
This novel technology avoids the use
of invasive tacks and staples, minimising
pain and other potential complications
while providing greater intraoperative
flexibility and potential cost benefits.
The drivers of growth in this $400m
global market will be:
• Continued growth in Europe,
following the acquisition of AFS
Medical and NICE recommendation
in the UK.
• US launch in 2024, supported by the
commercialisation agreement with
Tela Bio Inc; the fastest-growing
hernia specialist in the US with the
largest dedicated hernia sales force.
10 year revenue CAGR
5 year revenue CAGR
15%
19%
Ifabond® is an innovative internal
glue for mesh and tissue fixation in
abdominal wall and prolapse repair and
bariatrics, complementary to LiquiFixTM.
• AMS’s expertise can be used to
develop improved applicators for
IFABOND® to further enhance
growth potential.
Further details on Ifabond® can be
found on Pages 8 to 9.
Gathering data to build
long-term potential
Seal-G®/Seal-G® MIST presents an
opportunity to address a significant
unmet clinical need through an
effective sealant during GI surgery.
Key developments include:
• Novel technology entering a soft-
launch phase and generating low
levels of revenue, following receipt
of a CE mark.
• Promising clinical data in 2023 has
led to further trials in 2024 that
should allow this technology to gain
traction in a £1 billion market.
12
Advanced Medical Solutions Group plc Annual Report & Accounts 2023
Key drivers positioning AMS for future growth,
with US LiquiBand® and LIQUIFIX™ set for
significant progress in 2024.
Biosurgical
Sutures
Collagen devices and bone
substitutes driving strong growth
Expanding geographic
reach for sutures
One of fastest growing suture
providers in Europe
Our biosurgical business includes
collagen/haemostatic devices for use
in surgical and dental reconstructive
applications, and a range of synthetic
bone substitutes which provide
orthopaedic surgeons with void fillers
for use during reconstructive surgery.
Growth-drivers in the coming year
will be:
AMS targets a subset of the global suture
market with a direct market presence in
Germany and the UK, while supplying
customers in specialist applications. The
Group’s ongoing strategy to expand the
geographic reach of existing products
beyond European markets will make a
significant impact on the future growth
potential for these products.
• New collagen approvals for antibiotic
surgical dressings in Europe.
10 year revenue CAGR
• Expansion into new
territories continues.
• US launch of a new RESORBA®-
branded bone range, expected
to further enhance the portfolio’s
growth potential.
4%
Peters Surgical manufactures of a wide
range of high quality speciality sutures:
• Cardiovascular
• Dental
• Ophthalmic
Peters has direct market presence
in France, Poland, Benelux, India
and Germany.
The combination of RESORBA® and
Peters Surgical positions AMS as one
of the most diverse speciality suture
providers in the world in a market with
favourable conditions for growth.
10 year revenue CAGR
13%
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
13
FINANCIAL STATEMENTSGOVERNANCEOVERVIEWSTRATEGIC REPORT
Q&A Chris Meredith,
with
CEO
performance in 2023?
Q How do you view AMS’s progress and
A The Group has performed in line with updated guidance
in 2023 with a strong underlying performance from
the surgical business unit. Importantly, AMS has successfully
optimised its commercial partnerships for US LiquiBand®,
achieved FDA approval for LIQUIFIXTM and launched the
product in the US with our specialist partner TELA Bio, and
made significant clinical progress with SEAL-G® and SEAL-G®
MIST. The Group is now positioned for strong revenue growth
in 2024 and continues to maintain its investment in innovative
products that will reinforce our position as a world-leading
specialist in tissue-healing technologies.
growth with US LiquiBand® partners?
Q What progress has been made to accelerate
A As announced in October 2023, the new US LiquiBand®
route-to-market strategy is fully operational following
the successful signing of all three hospital distribution
agreements.
The structure of each of these five-year agreements has
been designed to accelerate market-share gains and build
on the underlying momentum already established by AMS
and its partners in this growing $270 million market. This new
strategy will enable more product and brand differentiation,
that will be further strengthened following the expected
approval of the Connexicon range in 2024.
Furthermore, the new route-to-market strategy has established
a stronger marketing platform to enable the recently launched
LiquiBand® XL to gain traction in the US market through all
three distribution channels and to build on the success that
the product has already achieved, further accelerating overall
LiquiBand® growth.
Our partners have completed the transition to the new agreements
and throughout the transition, end-user sales have not been
affected and there has been no impact on customers. In addition,
normal order patterns have resumed for all three partners.
I have been very pleased with the impact of the new strategy
on 2024 partner ordering and commitment and remain
confident of achieving record US LiquiBand® revenue.
14
14
Advanced Medical Solutions Group plc Annual Report & Accounts 2023
A number of key initiatives in 2023
have set a strong foundation for
growth over the next five years,
supported by the transformational
acquisition of Peters Surgical.
LiquiBandFix8®/LIQUIFIXTM in the US?
Q What is the update on the launch of
A 2023 was an important year for AMS’s hernia mesh
fixation device, completing a 284-patient clinical study, US
approval and an agreement with TELA Bio for the marketing and
distribution of LiquiBandFix8® across the high-value US market
under the brand name LIQUIFIXTM. The US launch of LIQUIFIXTM
is progressing very well with TELA Bio having completed an
extensive training programme among its specialist hernia sales
force and good progress across a number of significant Group
Purchasing Organisation (‘GPO’) systems. The initial response
from surgeons has been very positive and US orders received
to date are ahead of expectations.
on acquisitions?
Q What progress has been made
A During 2023 the Group continued to strengthen its
market mapping and pipeline of potential acquisitions
with commercial synergies, strong R&D and manufacturing
capabilities. AMS acquired Connexicon on 1st February 2023
and, after the period end, AMS acquired SyntaColl and agreed
to acquire Peters Surgical with completion, following Foreign
Direct Investment review, expected in the middle of 2024.
In looking to continually improve our collagen expertise and
capabilities, we acquired the assets of SyntaColl, a highly
synergistic competitor, from administration and retained
a number of its Production, Quality and R&D employees.
With an existing revenue stream manufacturing Collatamp
(collagen with gentamicin) for SERB Pharmaceuticals and
a potential opportunity for XaraColl in the US, we expect
SyntaColl to be profitable in the first year.
Peters is a leading global manufacturer and distributor
of high-quality surgical closure devices including sutures,
haemostatic clips, haemostatic clamps and internal glues.
Headquartered in France, Peters was founded in 1926 and
today employs approximately 650 people around the world.
Peters operates a fully integrated business model including
R&D, regulatory and clinical affairs, device manufacture,
distribution, commercial and after-sales service, with
manufacturing in France, Thailand, India and Germany.
Peters sells products in over 90 countries with direct sales
infrastructure in France, Belgium, Germany, Poland and
India; and a hybrid sales model in the US. Peters generated
revenues of €75.5 million in 2022 and €84.0 million in 2023.
during the year?
Q How has the Group’s ESG strategy progressed
A We continue to make significant progress on our ESG
activities, building on the foundations reported in our
FY22 Annual Report, further developing our Net Zero Strategy
and Pathway and agreeing key targets that will drive this
activity, for example: to be Net Zero by 2045.
We also strengthened preparations for Climate-Related
Financial Disclosures (‘CFD’) and, in conjunction with our
ESG consultants, continue to progress this area.
In addition, numerous and wide-ranging ESG activities continue
to take place across the Group driven by employee suggestions
and actions, as well as Board and ESG Committee initiatives.
and beyond?
Q What is the outlook for AMS in 2024
A Trading in 2024 started strongly with the Group’s key
drivers performing well. Management is particularly
pleased with the orders received and commitment received
from its US LiquiBand® partners since the new agreements
were signed last year. This provides validation of the new
route-to-market strategy and gives the Board confidence
in achieving record US LiquiBand® sales in 2024.
The US launch of LIQUIFIXTM is underway with very good
progress across a number of significant Group Purchasing
Organisations (‘GPO’) systems in the US. AMS’s commercial
partner TELA Bio has completed an extensive training
programme among its specialist hernia sales force and
initial orders are ahead of expectations.
These promising US marketing initiatives, good progress in
AMS’s established non-US markets and ongoing geographical
expansion means AMS is primed to generate double-digit
revenue growth in 2024, in line with expectations, and is well
placed for strong growth in the short, medium and long-term.
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
15
FINANCIAL STATEMENTSGOVERNANCEOVERVIEWSTRATEGIC REPORT Strategy
Growth
Our growth strategy is to exploit
opportunities from multiple
routes to market across numerous
geographies with our diverse and
expanding portfolio of innovative
tissue-healing products, which
add value to patients and payers
and deliver equal or better
clinical performance to
market-leading products.
Link to risk
1. Growth
4. Forecast
2. R & D
8. Cyber
3. Acquisitions
For information on our
Principal Risks see
Pages 63 to 65
Key KPIs
• Revenue movement.
• Growth in EPS.
For information on our
Key Performance Indicators
see Pages 22 to 23
Strategy in Action
US LiquiBand®
US LiquiBand® has been a key contributor to the success of
the Group as it secured a significant share of the available
market, but its lower growth in recent years prompted the
Group to assess and streamline its routes to market and
product offering in 2023 in order to drive much stronger
growth going forward.
The objective of the new strategy was to increase partner
engagement and commitment by offering more product
and brand differentiation, made possible by the acquisition
of Connexicon in 2023. The strategy also aimed to
establish a stronger marketing platform to enable the
recently launched LiquiBand® XL to gain traction in the
US market through all three distribution channels, and
to build on the success that the product had already
achieved, further accelerating overall LiquiBand® growth.
This required us to secure new agreements with our
hospital partners which would be designed to accelerate
market share gains and build on the underlying momentum
already established by AMS and its partners in this growing
$270 million market.
Unfortunately, US LiquiBand® revenue was significantly
impacted in 2023 due to partner de-stocking, predominantly
driven by contractual changes in inventory ownership and
revenue recognition points but, by the end of 2023, our
partners had completed the transition to the new agreements
with no impact on end-sales . Customers and all three
partners had resumed normal ordering patterns.
2024 is already seeing significant benefits from the new
strategy in terms of partner ordering and commitment
and the Group remains confident of achieving record
US LiquiBand® revenues for the year and of achieving
its medium-term aim of doubling its current US
LiquiBand® revenues.
16
Advanced Medical Solutions Group plc Annual Report & Accounts 2023
Innovation
Developing or acquiring high-quality
products provides the opportunity for
expansion into new markets. We aim to
develop and market intuitive products
that provide more effective, efficient,
safer and less traumatic experiences
for patients and surgeons. We invest
in developing the talent capable of
delivering innovation for the business.
Link to risk
2. R&D
9. Talent
6. Regulatory
10. Israel
For information on
our Principal Risks
see Pages 63 to 65
Key KPIs
• % revenue spend on
R&D and Innovation.
• % of sales from new
products launched
in previous five years.
For information on our
Key Performance Indicators
see Pages 22 to 23
Strategy in Action
LiquiBandFix8®/ LIQUIFIX™
LiquiBand Fix8® was developed as a less traumatic solution for
patients to fix hernia meshes inside the body in comparison to
traditional sutures, tacks and staples and thereby reducing the risk
of trapped nerves, post-operative pain and other complications.
LiquiBandFix8® continues to perform well in Europe and ROW with
strong revenue growth and a growing presence in many countries.
For some years, the Group has been working toward achieving
regulatory approval for the product into the bigger more
lucrative US market and achieved several key milestones in 2023;
completion of its 284-patient clinical study, gaining US approval,
and signing up its marketing and distribution partner, TELA Bio.
LiquiBandFix8® will be marketed in the US under the brand name
LIQUIFIX™ and the launch is progressing very well, with TELA Bio
having completed an extensive training programme among its
specialist hernia sales force and good progress having been made
across a number of significant GPO systems in the US. The initial
response from surgeons and from AMS’s partner has been very
positive and US orders received to date are ahead of expectations.
TELA Bio’s rapidly growing sales presence in the US hernia
repair market and its focus on new technologies complement
AMS’ strengths and aspirations to improve quality outcomes for
patients and value for payers, makes it the perfect partner to
launch and commercialise LIQUIFIX™ in the US.
There is significant excitement about LIQUIFIX™ in the US in 2024
and we are optimistic about its prospects for 2024 and beyond.
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
17
FINANCIAL STATEMENTSGOVERNANCEOVERVIEWSTRATEGIC REPORT Strategy continued
Operational
Excellence
Operational Excellence is focused on
delivering a culture of continuously
improving operations to drive down
cost and improve margin while
consistently supplying high-quality
products through an optimised, agile
and adaptable supply chain. We excel
when we work together.
Link to risk
3. Acquisitions
9. Talent
7. Supply
10. Israel
For information on our
Principal Risks see
Pages 63 to 65
Key KPIs
• Customer Service
(OTIF – ‘On-Time-In-Full’).
• Year-over-year change
in our standard cost base.
For information on our
Key Performance Indicators
see Pages 22 to 23
Strategy in Action
AMS is committed to continually improving its
customer service and consequently has been
working on a programme of increasing and
optimising its inventory levels with a view to
improving its On Time in Full (‘OTIF’) % and
reducing back orders. Consequently, the value
of the Group’s inventory has been increasing but
is expected to stabilise at seven months of supply
from the end of 2023 onwards.
On-Time-In-Full (OTIF)
88%
(2022: 87%)
This has resulted in improved OTIF and reduced back
orders in 2023 with both measures trending towards
further improvements in 2024.
Due to the high number of SKUs, from a supply-chain
perspective, Traditional Closure (Sutures) is the most
challenging part of the Group’s portfolio. For this reason,
this has been the main focus of the Group’s initiative to
increase and re-balance its inventories; this has resulted in
increased OTIF and reduced back orders for this category
which has contributed to much higher revenue growth in
2023 with solid growth in its core German market and much
higher growth outside of Germany, with notable success in
Eastern Europe and the US.
The agreement in March 2024 to acquire Peters Surgical
significantly strengthens our Traditional Closure portfolio
and routes to market and the Group expects strong
sustainable growth from the category going forward.
The RESORBA® collagen portfolio has very different
characteristics, with a much smaller suite of products that
have significantly higher technical and quality challenges
18
Advanced Medical Solutions Group plc Annual Report & Accounts 2023
given the animal-derived and often drug-eluting
nature of the product that had an element of
supply risk from our existing collagen factory.
In looking to continually improve collagen
expertise and capabilities, on 1 March 2024,
AMS acquired the assets of Syntacoll, a highly
synergistic competitor in this space that
specialises in manufacturing collagen-based
absorbable surgical implants in a 4,800m2, Good
Manufacturing Practice (‘GMP’) compliant, state-
of-the-art collagen facility with a class 1 licence
for collagen-based drugs.
Syntacoll has significant in-house capability
in drug-loaded collagens as well as analysis,
profiling and quality control processes
which will help to strengthen the Group’s
existing collagen business. The new
manufacturing facility will also be a
second site of manufacture for some of
AMS’ s existing key products which will
help to address the risk of sole supply.
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
19
FINANCIAL STATEMENTSGOVERNANCEOVERVIEWSTRATEGIC REPORT Strategy continued
People
and Culture
Our employees drive our success.
We actively promote our Care, Fair,
Dare values, measure employee
engagement and develop
engagement plans. We encourage
internal promotion and invest in
apprenticeships to build our future
talent. We are stronger together.
Link to risk
9. Talent
10. Israel
For information on our
Principal Risks see Pages
63 to 65
Key KPIs
• Employee attrition.
• Employee
Engagement Score.
For information on
our Key Performance
Indicators see
Pages 22 to 23
Strategy in Action
Employee Engagement
AMS focuses strongly on employee engagement and is
now in its third year of running a comprehensive Group
wide survey for all employees in conjunction with Culture
Amp. The results from each year are used to drive year-
on-year improvements by focusing on areas raised by
the employees themselves.
Each department analysed the results of the 2022
Employee Engagement Survey and created initiatives
and action plans for improvement during 2023.
The senior management team chose ‘AMS Group is a
great Company for me to make a contribution to my
development’ as its area of focus for engagement for the
year which involved focused work on Development, Role
Definition, Individual Performance, Values and Recognition
for individuals in the business.
The 2023 Employee Engagement Survey was completed
in Q4 2023 with an increased participation rate of 80%
of employees and each department will again use these
results to drive further improvement in 2024.
20
Advanced Medical Solutions Group plc Annual Report & Accounts 2023
Engagement survey
participation
80%
(2022: 74%)
Employee attrition rate
12%
(2022: 13%)
Growing
Sustainably
Meeting the changing needs of
a reducing resource landscape,
operating ethically and responsibly
whilst developing our products
to fit into a circular economy.
Link to risk
2. R&D
9. Talent
For information on our
Principal Risks see
Pages 63 to 65
Key KPIs
• % of revenue spend
on R&D & Innovation.
• Employee
Engagement Score.
For information on our
Key Performance Indicators
see Pages 22 to 23
Strategy in Action
Our Growing Sustainability strategy
As we integrate our Net Zero strategy we are focused on
ethical and sustainable growth, taking into consideration
our customers, competitors, costs, communities and culture,
and allowing us to meet future global challenges. Sustainable
growth is endorsed at the highest level as we strive to deliver
new technologies, innovative products and reach our Net
Zero objectives.
Sustainable growth begins as part of the R&D process for all new
products. In order to deliver this we need to understand our
social, environmental, and economic responsibilities. In addition
to integrating sustainability into innovation and operational
excellence, energy reduction, recycling and manufacturing
techniques are also critical areas of focus. We recognise that
integrating sustainability into our people and culture will have
a significant impact, both internally and outside of AMS.
Having the correct tools and knowledge to make sustainable
growth decisions is key. Climate risk must be proactively
assessed and managed. Providing our teams with knowledge and
empowering them to make sustainable decisions can both allow
AMS to grow sustainably and provide a competitive advantage.
As well as supporting internal development we also consider
our external stakeholders and how we can meet their ever
increasing and diversified expectations, as the world becomes
more aware of the benefits of sustainable systems and growth.
We consider our customers’ current needs, how those may
evolve in the future and consider that a competitor today
could be an ally tomorrow. Through building strategies to
reduce expenses and improve end-user experience, we are
developing a reputation as a good corporate citizen with a
change-adaptive culture.
As a continually developing and evolving business we act in
an ethical and responsible manner to guarantee resources are
there for both our current and future communities. We ensure
that all activities we undertake can be repeated tomorrow and
into the future, with minimal waste and impact on resources. By
developing and repeating our processes across the Group at a
multitude of locations, we aim to meet these risks head-on and
view this as a key to longevity within the medical device market.
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
21
FINANCIAL STATEMENTSGOVERNANCEOVERVIEWSTRATEGIC REPORT Our Key Performance Indicators
The Group has a range of Key Performance
Indicators (‘KPIs’) which are used to monitor
Group performance and measure progress
against our strategy.
Financial KPIs
Revenue movement at
constant currency1 %
+2%
%
9
2
%
2
%
0
1
3
2
0
2
2
2
0
2
1
2
0
2
%
1
9
1
0
2
%
5
1
-
0
2
0
2
Adjusted2 diluted
earnings per share
(‘EPS’) movement %
-10%
%
8
7
%
8
2
2
0
2
1
2
0
2
%
0
1
-
3
2
0
2
%
8
-
9
1
0
2
%
5
4
-
0
2
0
2
Definition
Net revenue (% movement)
adjusted for constant currency1.
Definition
Movement in adjusted2 diluted
EPS achieved in the year.
Strategic linkage
Revenue growth is a key
factor in providing long-term
value for our shareholders
and demonstrates the
successful execution
of the Group’s strategy.
Progress made in the year
Group revenue increased to
£126.2 million (2022: £124.3
million), an increase of 2%,
both reported and at constant
currency, driven by strong
organic growth partly offset by
de-stocking of US LiquiBand®
and reduced royalties.
Strategic linkage
EPS growth is a measure
of financial progress and
an important factor in our
aim of providing value for
our shareholders.
Progress made in the year
Adjusted diluted earnings per
share decreased by 10% to
9.39p (2022: 10.47p) reflecting
the Group’s lower earnings
after tax. Diluted earnings
per share decreased by 22%
to 7.25p (2022: 9.30p), as
margins were impacted by
the temporary reduction in US
LiquiBand® revenue and lower
royalty income.
% of revenue spend on
R&D & Innovation
10%
%
0
1
%
9
9
.
%
1
%
.
9
6
8
.
%
1
.
9
%
3
6
.
%
3
6
.
3
2
0
2
2
2
0
2
1
2
0
2
0
2
0
2
9
1
0
2
Year-over-year
change in our average
standard cost3 %
+4.3%
%
3
4
.
3
2
0
2
%
7
3
.
%
1
.
0
2
2
0
2
%
8
2
.
9
1
0
2
%
1
.
0
1
2
0
2
%
1
.
0
-
0
2
0
2
Definition
Spend on R&D, Innovation &
Regulatory Affairs as a % of
sales in the financial year.
Definition
Measures the change
in standard cost base3
against prior 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
AMS continued increased
investment in innovation
and regulatory to £12.6
million of gross R&D spend
in the period (2022: £12.3
million) representing 10.0%
of sales (2022: 9.9%).
Strategic linkage
Controlling our product
Standard Costs is important
for the sustainability of the
Group and demonstrates
the successful execution
of our strategy.
Progress made in the year
The standard cost base
increased by 4.3% in 2023
(2022: 3.7%) despite operational
improvements. This increase
was driven by inflationary
factors and planned inventory
stabilisation (following the
inventory build in recent
years). We plan for this to fall
in 2024 as inflation eases and
the actions taken in 2023 are
annualised and built on.
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 amortisation of acquired intangible assets which was £4.9 million (2022: £3.4 million) and the movement in long-term liabilities
recognised on acquisitions which was a credit of £0.2 million (2022: £0.8 million credit) and exceptional items which were £nil (2022: £nil), as reconciled in the Financial
Review (see pages 58 to 60).
3. Net cash consists of cash and cash equivalents with nil debt (2022: £nil debt).
22
Advanced Medical Solutions Group plc Annual Report & Accounts 2023
Financial KPIs
Non-Financial KPIs
Strategic pillars:
Growth
Innovation
Operational
Excellence
Culture
Sustainability
% of sales from new
products launched in
the previous five years
12.4%
Customer
Service (OTIF) %
88%
Employee
attrition %
12%
Employee
Engagement Score %
83%
%
6
3
2
.
%
8
9
1
.
%
4
5
1
.
%
4
2
1
.
%
8
2
1
.
%
8
8
%
7
8
%
8
8
%
9
8
%
0
8
%
3
1
%
2
1
%
2
1
%
3
8
%
4
8
%
6
7
%
8
7
%
0
1
%
7
%
8
4
3
2
0
2
2
2
0
2
1
2
0
2
0
2
0
2
9
1
0
2
3
2
0
2
2
2
0
2
1
2
0
2
0
2
0
2
9
1
0
2
3
2
0
2
2
2
0
2
1
2
0
2
0
2
0
2
9
1
0
2
3
2
0
2
2
2
0
2
1
2
0
2
0
2
0
2
9
1
0
2
Definition
This is a measure of the % of
sales the Group is generating
from products launched in the
five years prior to that year.
Strategic linkage
Development and
commercialisation of new
products to address unmet
patient needs and grow the
business is a fundamental
part of strategy.
Progress made in the year
As a result of a number of
products falling outside the
five year period, sales of
new products decreased to
12.4% (2022: 15.4%). The new
distribution agreements signed
in 2023 for US LiquiBand are
expected to drive an increase
in 2024 and beyond, with
LiquiBand® XL growth and
the launch of LiquiBandFix8®
expected to contribute further.
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
High OTIF ensures that
patients have access to our
products and enable us
to retain customers, meet
contractual commitments
and protect growth.
Progress made in the year
OTIF improvements were
delivered in most product
categories with an increase
to 88% (2022: 87%). Most
notably sutures OTIF improved
and back orders reduced,
which was a significant factor
in supporting accelerated
growth in Traditional Closure.
It is expected that ongoing
initiatives, including increasing
inventory levels, will enable us
to target higher OTIF levels for
2024 and beyond.
Definition
The % of employees who have
left the Group during the year
(gross number of leavers).
Strategic linkage
Reasonable levels of employee
turnover are important for the
future success of the business
and to help to embed its’
culture. It can be considered
beneficial, supporting new ideas
and to introduce best practices
from outside the Group.
Progress made in the year
AMS continues to attract
quality talent and attrition
decreased to 12% (2022:
13%), despite cost of
living challenges and
labour mobility. Increased
employee engagement and
communication, together
with the growth and career
development opportunities
created by recent acquisitions,
are expected to keep
attrition manageable.
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
2023 was 83% (2022: 84%) at
the same time as participation
increased to 80% (2022:
74%). We used Culture Amp
software for engagement
feedback which will help to
implement tangible plans to
maintain engagement. We are
particularly proud to maintain
the engagement level given
some difficult messages we
have delivered to employees
about company performance.
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
23
FINANCIAL STATEMENTSGOVERNANCEOVERVIEWSTRATEGIC REPORT
Environmental, Social and Governance
Embedding a
sustainable and
ethical approach
in everything
we do
Message from our Board
“ESG is a focus area for our stakeholders and we
continue to devote significant time and resource to our
ESG strategy. Building an innovative, sustainable and
resilient business is more important than ever, and as
we continue to grow we must do so in a sustainable
way by reducing our emissions (having set a Net Zero
target of 2045), improving our products and packaging
and ensuring we achieve this with an ethical approach
as a diverse and inclusive business. We are striving to
deliver sustainable environmental, financial and social
value, responsibly.”
Eddie Johnson,
Chief Financial Officer & ESG Lead
A
M
S
Advancing sustainability
Minimising environmental impact
Socially responsible
AA
MSCI ESG rating
Net Zero
carbon target - 2045
70%
renewable/low
carbon energy mix
(inc nuclear)
(2022: 46%)
83%
Positive or neutral
responses based on the
external benchmark of
our Engagement Score
24
Advanced Medical Solutions Group plc Annual Report & Accounts 2023
ESG Principles
1
Operate in an
ethical and
responsible
manner
Minimise
any negative
impact on
the environment
3
5
Have a positive
impact on the
local communities
in which
we operate
Contribute to society
by developing
products to
improve
patient
outcomes
Offer our
employees
a safe,
supportive working
environment with a
positive culture
Uphold
the highest
standards of
corporate
governance and
responsibility
7
Build and develop
an ESG reporting
framework
with meaningful
targets
Ensure
that ESG is
at the heart
of our business
2
4
6
8
ESG Governance and Integration
Board-level consideration of ESG
• Covered in Board Agenda with regular updates
• Consideration on risks and opportunities
I
Committee
• ESG strategy
G ESG Steering
N
M
R
O
F
N
& implementation
• Disclosure & compliance
The Board delegates ESG matters to Committees
Remuneration
Committee
• ESG targets as part
of incentives (Personal
objectives in 2023)
Audit
Committee
• Risk management
• Financial statements
Senior Management
Team
• Operational
responsibility
I
ESG Champions
• Drives sustainability and communicate ESG priorities
• Ensure each site understands what is expected
Operational Management
• Dissemination of information and raise issues
• Enable ESG actions to be implemented at local level
Operations
• Implement initiatives, policies & share best practice
while meeting site-level targets
• Raise issues directly with management
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
G
N
I
T
R
O
P
E
R
25
FINANCIAL STATEMENTSGOVERNANCEOVERVIEWSTRATEGIC REPORT Environmental, Social and Governance
continued
ESG Framework
Building on engagement with stakeholders and our understanding of our most material ESG sustainability issues, we have
developed a strategic framework aimed at delivering sustained environmental, financial and social value.
Environment
Social
Governance
Planet
People
Product
Policy
Principles
• Minimise any negative
impact on the environment.
• Uphold the highest standards
of corporate responsibility.
• 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.
Stakeholder engagement
• Communities and
• Patients, Partners,
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,
reuse materials.
• Expand scope of
ISO Certification.
• Promote Environmental
Pledge Scheme.
ESG metrics
Clinicians.
• 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
Employee Assistance
Programme (‘EAP’) and
mental wellness app.
• Provide financial support
for employees’ charity
work, chosen charities and
community volunteering.
• Regulators.
• Supply Chain.
• Investors.
• Partners.
• Employees.
• 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
• 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
packaging, apply regulations
and certification.
Compact, embed Ten
Principles across business.
• Pathway to reduce
emissions, Scope 3 plan.
• CO2e emissions per £k
sales (kg).
• Charitable donations.
• YOY Health & Safety score.
• Employee
Engagement score.
• Gas usage, water, electricity
• Training and
• Number of new products
• Reported cases of bribery,
released per year.
• % new products released
with recyclable packaging.
• Product safety rates
corruption or fraud.
• Whistleblowing reports.
(total, by person).
• Waste (landfill).
development spend.
in market.
• Participation in Employee
• % suppliers signed up to
Share Plan.
Supplier Charter.
UN Sustainable Development Goals
Our ESG Framework is built around our Mission:
To develop
To make a real difference
To add value
26
Advanced Medical Solutions Group plc Annual Report & Accounts 2023
CASE STUDY
Development and installation
of improved technologies
In 2022 our Neustadt site in Germany began to plan for the introduction of a new
sterilisation unit to replace an aged unit that had serviced the site for over 25 years.
This project involved multiple work streams from EHS, Operations, Regulatory,
R&D & Quality teams. The brief was to install a modern, future-state system with
capacity for business growth, that is more energy efficient and operates in a more
sustainable way.
AMS, along with its’ chosen supplier, have
installed a system with six times the capacity
of the old system, but with technological
advances and processes. These have
removed the need for contaminated water
to be collected and sent for further processing
as the waste product has been removed.
There is also a reduction in ethaline oxide
concentrations needed which makes this
sterilisation system energy efficient and
sustainable in use:
• Reduction in Ethylene Oxide strength from
15% to 5%.
• Local environmental permit allowing
operation issued with no conditions
placed on AMS.
• Zero Health & Safety events reported
during the project.
• Zero environmental incidents reported
within the project.
• Zero complaints from neighbouring
businesses and/or other local
area users.
Link to Our Growing Sustainably Strategy. For more information see Page 21
UN Sustainability Development 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
•
Improve patient outcomes.
• Focus on employees (mental,
wellbeing, Employee Assistance
Programme, flexible working).
Ensure gender equality and
empower all women and girls
• Ensure equal opportunities during
recruitment and promotion.
• Equality, Diversity and
Inclusion programme.
Ensure inclusive and equitable
quality education and promote
lifelong learning opportunities
for all
• Work closely with clinicians and
partners investing in industry-
leading training and education.
Other key ESG activities
Modern Slavery Act
AMS takes its responsibility
to protect human rights very
seriously. We do not tolerate slavery
or human trafficking either internally
or in our supply chain. We will
never knowingly deal with any
organisation which is connected
to slavery or human trafficking.
Our full compliance statement can
be found on the Company website
www.admedsol.com
Promote innovative and
sustainable economic growth,
full and productive employment
and decent work for all
• Ensure employees are engaged,
skilled and motivated.
• Pay living wage and
support lower earners.
Gender Pay Gap Reporting –
Ensuring Opportunities for All
AMS believes in being an inclusive
and diverse employer.
Ensure sustainable
consumption and
production patterns
• Ensure all products meet
highest standards of quality,
safety and efficiency, and are
ethically sourced.
Take urgent action to
combat climate change
and its impacts
• Committed to reduce our carbon
footprint, reduce waste and utilise
renewable energy, where possible.
We remain confident that
employees are paid equally for
doing equivalent jobs, and have
opportunities for development
and advancement.
Our latest report under the
Gender Pay Gap Regulations
is available on the Company
website www.admedsol.com
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
27
FINANCIAL STATEMENTSGOVERNANCEOVERVIEWSTRATEGIC REPORT Environmental, Social and Governance
continued
Carbon
Reduction Plan
Emission reduction targets
AMS aims to achieve Net Zero Scope 1, 2 and 3 emissions by
2045, compared to a 2021 baseline.
In order to continue progress to achieving Net Zero, we have
adopted the following carbon reduction targets.
• 42% reduction in Scope 1 and 2 GHG emissions by 2030
• 72% of suppliers to have science-based targets by 2028
• Reduce Category 12 – End-of-Life Treatment of Sold
Products GHG emission 30% per tonne product sold by 2033
We project that Scope 1 and 2 emissions will decrease over
the next five years to 2,066 tCO2e by 2028. This is a 33%
reduction compared to our base year of 2021.
Four focus areas have been identified to action AMS's
emissions, and short-, medium-and long-term actions
for each focus area have been set out. Actions have been
mapped for each focus area to ensure near- and long-term
targets can be met.
Decarbonisation Roadmap Summary
Decarbonisation focus areas
Products
Supply
Chain
Sites and
buildings
People
Short-term
Gather
product
data
Conduct
LCAs
Customer
engagement
Medium-term
Product
design review
Long-term
Insetting
Short-term
Employee
engagement
workshops
Review travel
system and
policy
Transition on
site vehicles
Medium-term
Incentivising
green
commuting
Short-term
Energy saving
actions
Energy
efficiency
actions
Staff
training and
awareness
Medium-term
Solar PV
installation
Strat to
replace gas
boilers
Long-term
Offsetting
Short-term
Supply
analysis
Supplier
engagement
Update
procurement
policy
Medium-term
Request
product
and journey
specific
data from
suppliers
Long-term
Insetting
Purchase
low-carbon
products
Scope 3
Scope 2
Scope 1
Net-zero 2045
Scope 2
Scope 1
SBTi 1.5C
Net Zero pathway
60,000
50,000
40,000
30,000
20,000
10,000
0
2 0 21
2 0 23
2 0 25
2 0 27
2 0 29
2 0 31
2 0 35
2 0 37
2 0 39
2 0 41
2 0 4 3
2 0 45
2 0 47
2 0 4 9
Scope 1 and 2 near-term pathway
3,500
3,000
2,500
2,000
1,500
1,000
500
0
2021
2022
2023
2024
2026
2027
2028
2029
2030
Recognition
‘AA’ rating in the
MSCI ESG Ratings
assessment
Assessed to be at ‘Low Risk’ of
experiencing material financial impacts
from ESG factors by Sustainalytics -
Top 5% of Healthcare companies
Achieved Silver
Sustainability rating
from EcoVadis - Top
25% of companies
We maintained and
developed ISO 14001
and 50001 Certification
28
Advanced Medical Solutions Group plc Annual Report & Accounts 2023
In 2023 we published the Carbon Reduction Plan,
setting out our commitments to reach Net Zero by
2045. To achieve our target, we require a 90% reduction
in Scopes 1, 2 & 3 emissions (3.75% annually against our
2021 baseline year). The final 10% of emissions require
investment in low carbon activities and manufacturing
processes, using sustainable offsetting and insetting
within our own value chain.
Our work on Net Zero and Carbon Reduction is a key part
of our ESG Strategy, but only part of a wide range of
activities for which we have gained positive recognition
(as outlined below). We continue to work to implement
all areas of our ESG Strategy and our ESG Lead has
addressed some key ESG issues in his Q&A (see right).
We have a culture based
on the principles of Care,
Fair, Dare, where our
people take accountability
and responsibility and, like
our approach to ESG,
do the right thing.
We are a Sedex B
membership and worked
towards the ETI basecode
Q&A
with
Eddie Johnson,
Chief Financial Officer
and ESG Lead
on ESG?
Q How would you summarise progress
A AMS has continued to make positive progress on ESG,
building on the foundations reported last year, further
developing our Net Zero Strategy and agreeing key
targets that will drive this activity, for example: to
be Net Zero by 2045. AMS has also strengthened its
preparations for Climate-Related Financial Disclosures
(‘CFD’) and in conjunction with our ESG consultants,
will continue to progress this area. There are also
numerous and wide-ranging ESG activities driven by
employee suggestions and actions, as well as Board
and ESG Committee initiatives.
commitments in 2024?
Q How will you further strengthen your ESG
A Our commitment to sustainable business practices on
important topics such as human rights, environmental
stewardship and ethical behaviours extends to all
those we work with – colleagues and through our
global supply chain. At AMS, we are committed to
building stakeholder trust and confidence by meeting
standards that demonstrate our ESG commitments.
To further demonstrate this to stakeholders we will
join the UN Global Compact in 2024.
a focus?
Q Is Equality, Diversity, Inclusion still
A We further strengthened Board diversity with the
appointment of a new Chair at the beginning of
2024. While we focus on recruiting on merit, it is
the Board’s intention to work towards both gender
and ethnic diversity in line with external targets. We
are committed to drive equality, diversity, inclusion
across AMS and recognise that if we harness the
power of our differences and encourage diverse
thinking we can deliver more for our stakeholders.
We help our colleagues around us grow, develop
and thrive, so they can fulfil their potential as we
build a diverse workforce.
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
29
FINANCIAL STATEMENTSGOVERNANCEOVERVIEWSTRATEGIC REPORT 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.
Emissions per £k sales
20.83 CO2e
Scope 1 (direct)/Scope 2 (indirect)
emissions intensity
(2022: 19.51 CO2e per £k sales)
0.96 tons/employee
total waste
(2022: 0.92 tons/employee)
2,486,522 kg CO2e
Scope 1 and 2 emissions
(2022: 2,268,009 CO2e)
38 m³/employee
total water usage
(2022: 38m³)
70%
reduction year-on-year
Scope 1&2 energy use
(2022: 11% increase in units)
0%
waste to landfill
(2022: 0%)
Highlights
Completed ESOS Phase 3 audits across UK sites.
Continued investment in Heating, Ventilation, and Air
Conditioning (HVAC) to maintain zero F-gas losses.
Increase in Scope 1 emissions due to a site which is not
on the main line using fuel oil at the same level as 2021.
Electricity use at this site also increased and our solar panels
at Plymouth were not as efficient as 2022. Our Carbon
Reduction Plan can be seen on Pages 28 to 29.
Continued to develop and ingrain our ISO Management
Systems at our certificated locations.
Developed and published our Carbon Reduction Plan
endorsed at the highest levels.
Continued with our electric car lease scheme in the UK and
electric bike schemes in Germany. All pool cars in the UK
changed to either plug in hybrid or electric.
Developed our risk and mitigations around our CFD reporting.
Reduced year-on-year energy requirements based on UK
location based conversion factors.
Reviewed and developed internal waste recycling processes
across several locations.
Encouraged employee participation in ESG activities and
idea generation.
Looking forward
• Develop data reporting systems moving to proactive
energy management and resource forecasting.
• Review and where applicable develop our metrics to
show developing and emerging trends and react to
stakeholder questions.
• Continuing our waste review process, look at where waste
can be repurposed into the circular economy.
• Work on our opportunities for energy reduction, increasing
our sustainability and meeting our Net Zero commitments,
internally with our customers and within in supply chains.
30
Advanced Medical Solutions Group plc Annual Report & Accounts 2023
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.
80%
employee engagement survey
response rate
(2022: 74%)
83%
positive or neutral responses
based on the external benchmark
of our Engagement Score¹
(2022: 87%)
0
reported incident of discrimination
(2022: 0)
29%
invested in the
Employee Share Plan
(2022: 21%)
2
Lost Time
Incidents ( ‘LTIs‘ ) >7days)
(2022: 4)
3.04
H&S (AMS Accident
Incident Rate)
(2022: 3.3)
Highlights
The actions progressed from the employee engagement
survey in 2022 resulted in positive results in the 2023 survey.
Positive or neutral responses fell in 2023, although the fall was
not significant considering the challenges faced in 2023.
Completed two SEDEX/Smeta ethical-based audits within our
estate and received no adverse reports.
Completed EDI/Unconscious bias training across Group,
utilising an interactive platform to test understanding of the
topic as they progressed through the topic.
Celebrated World H&S Day with several events around sites
promoting safety, wellbeing and developing Environment,
Health and Safety (‘EHS’) knowledge.
Looking forward
• Further expand our support for the mental wellbeing of our
employees. Continuous review of our benefits proposition.
Increase training and development budget to develop
key staff.
•
• Focus on building our approach to charitable giving and
engagement by development of the Communities Strategy.
• Further expand work and profile of Altogether AMS, our
Diversity and Inclusion Programme, and EDI Committee.
Board refreshment indicates progress at the highest level.
Employee gender diversity
Female
Male
Board
20%
Senior Management
Team
Employees
44%
45%
56%
55%
80%
1. As defined by the Culture Amp software.
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
31
FINANCIAL STATEMENTSGOVERNANCEOVERVIEWSTRATEGIC REPORT
Environmental, Social and Governance
continued
Product
We are committed to contributing
to society by developing products
to improve patient outcomes.
£12.6m
dedicated investment in R&D
(2022: £12.3m)
10%
of revenue spend on R&D and innovation
(2022: 9.9%)
1
new product released in 2023
(2022: 2)
95%
of key1 materials suppliers met
with, visited and/or audited
in the past year
(2022: 98%)
0
deaths caused in the
market by AMS products
(2022: 0)
Highlights
Began engagement in the supply chain and reviewing
potential short-to-medium and long-term risks through
the CFD process.
The CFD process has enabled us to identify and exploit
potential opportunities within our supply chain.
Completed processing of customer and supplier data to
deepen our understanding of our supply chain’s Net Zero and
sustainability objectives.
Engaged successfully with several customers from across the
globe in their Net Zero, ESG and sustainability studies.
Shared our Ethical audit and EcoVadis reports with customers.
Looking forward
• Develop a plan for lifecycle analysis to begin (this is crucial
in NHS plans and we expect increased customer requests).
• Plan, prepare and complete a Modern Slavery Assessment
using the Modern Slavery Assessment Tool (‘MSAT’).
• Launch our combined code of conduct and
commitment charter.
• Share with our customers and suppliers our carbon
Reduction Plan and our new ESG reporting areas on the
AMS website.
• Develop working relationships with customer sustainability
teams to see how AMS and our customers/suppliers
targets support each other.
• Look at developing new technologies that reduce resource
requirements, can be produced via sustainable methods,
and could be developed to fit into a circular economy.
1. Ranked critical, crucial or major.
32
Advanced Medical Solutions Group plc Annual Report & Accounts 2023
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.
0 fines
and non-monetary sanctions from
non-compliance with environmental laws
and/or regulations
(2022: 0)
4
ESG Steering Committee Meetings
held during 2023
(2022: 5)
0
reported incidents of human rights
violations in our supply chain
(2022: 0)
£0
spend on political campaigns,
lobbying or think tanks
(2022: £0)
0 incidents
of bribery,
corruption or fraud
(2022: 0 incidents)
0
whistleblowing
reports
(2022: 0)
Highlights
Continued adherence to the UK Corporate Governance
Code, explaining where AMS does not comply with the Code
(see Pages 76 to 77).
Appointment of Liz Shanahan as Chair and progressed through
appointment process for a new Non-Executive Director, which
will further diversify the Board.
ESG Steering committee supporting, developing, and putting
in place sustainable actions within AMS, including the
completion and compliance with CFD reporting.
Review, updating and issuing of several policies that
have been uploaded and shared to customers and other
stakeholders on request.
Continual development of our Health & Safety and
Environment & Energy policies.
Compliance training rolled out Group-wide and further
expanded to include environmental considerations.
Successful ISO 50001 and ISO 14001 audits at a number of sites.
Looking forward
• Risk-based assessment on the development of Energy and
Environmental ISO-certificated locations.
• Continual engagement with the SEDEX and EcoVadis
Platform, giving us the ability to centrally control data and
share successes with those parties we share our data with.
• Develop and refine our CFD risk and opportunity registers
and develop our short-to-medium-and longer-term
mitigation plans.
• Continuation of integrating AMS processes and policies as
well as operating expectations into our new acquisitions.
• Formally sign up to the UN Global Compact which
commits us to standards on human rights, labour
standards, environmental goals and anti-corruption.
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
33
FINANCIAL STATEMENTSGOVERNANCEOVERVIEWSTRATEGIC REPORT Environmental, Social and Governance
continued
Becoming a more
sustainable business.
Environmental Review of 2023
In 2019 AMS completed its first Streamlined Energy and Carbon
Reporting (‘SECR’) review and set its SECR reporting baseline.
Although we have seen small increases in total emissions against
2022, we are starting to see our investments in energy reduction
techniques show results, with an 11% reduction in energy
consumption (gas & electric kWh consumed).
Environmental Impact
We have seen increases in emissions from gas and oil, and an
overall increase in the use of electrics that has is in contrast
to other areas such as reduction in business travel, zero F-gas
emissions. Our gross emissions are still lower than calculated
for our SECR reporting baseline of 2019 with 6% reduction in
emissions (TCO2e).
AMS relies on Natural gas in several locations and fuel oil
within one site in Germany, a fuel oil increase of 73% in
emissions through increased use on 2022 figures. AMS has
identified gas and fuel oil use as a key area to look at in 2024
and beyond.
Our new reporting process, using a cost-based review of
Scope 3, increases the levels of emissions. This can be seen in
our Carbon Reduction Plan and can be viewed on our website
www.admedsol.com. This plan will support our improvements
and reductions.
Our high-level findings for 2023 are presented below.
Total AMS Emissions per year (TCO2e)
e
2
O
C
T
3,500
3,000
2,500
2,000
1,500
1,000
500
0
Total Scope 1,2 & 3 (TCO2e)
2023
2022
2021
2020
2,628.37
2,425.31
2,981.22
1,899.00
Environmental Development
In 2023 we committed to establishing a Net Zero target and
developing actions around carbon reduction; this has been
achieved and in Q2 2023 we published our first Carbon
Reduction Plan making this publicly available on our website.
We have further developed our Environmental and Energy
Policies which drive our ambitions and ensure that environmental
and energy reduction are built into our projects (highlighted by
the Case Study on new sterilising system technology in Germany
(Page 27). We have continued to see an increase in customer and
other stakeholder requests around environmental data, which we
have responded to comprehensively. We have completed our
first EcoVadis submission, providing a more efficient way to share
ESG data and, in the long-term, allow us to see the progress
suppliers, customers and other linked parties are making in their
environmental and sustainability journeys.
2023
2022
20211
2023 Targets
No breaches of environmental permits
or consents
Set Net Zero target date and publish
Carbon Reduction Plan
Retain and develop ISO 14001 and ISO
50001 programmes
Compliance with changes around
packaging process and procedures
Achieved
Achieved
Achieved
Achieved
CFD reporting and compliance
Achieved
34
Advanced Medical Solutions Group plc Annual Report & Accounts 2023
Future development
Our future developments revolve around progressing our
ambitions set out in our Carbon Reduction Plan:
• Engagement with our customers and suppliers around
their specific Net Zero ambitions.
• We plan to develop the works around our CFD opportunities
and risk mitigation processes. If we can realise our
opportunities, we should be able to reduce our risks.
• Develop our sustainability programme based around our
EcoVadis action plans.
• Develop plans for life cycle analysis as this is an area where
we need to develop our actions and responses.
• Work with our suppliers and customers using the principle
that we can support each other with carbon reduction
plans. We are all intrinsically linked as part of each other’s
Scope 3 emissions (those out-side of our control and
upward and downward supply chain systems).
By the end of 2024 we hope to report our Scope 3 emissions
are falling in line with base year Scope 1 and Scope 2 processes.
The work we have done to increase sustainable awareness,
developed our systems to fit more into the circular economy
and reducing risk to habitats, including resource scarcity.
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 our SECR reporting requirements, we report
within AMS’s report the following recognised Scopes.
These Scopes are listed within ISO 14064-1, 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
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 in June 2022. We report all our Scope 1 and
Scope 2 emissions. Following a commitment in 2019, we
report some elements of Scope 3.
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
35
FINANCIAL STATEMENTSGOVERNANCEOVERVIEWSTRATEGIC REPORT Environmental, Social and Governance
continued
The table below covers the total emissions from AMS activities for all locations in 2023, it also offers a comparison to both 2022
and our base year data 2020.
Emissions type/scope
Total Scope 1 (kg CO2e)
Natural gas (kg CO2e)
Gas oil (kg CO2e)
Yearly comparison (kg CO2e)
2023
2022
2021
Commentary
1,340,831 1,272,869 1,726,938
978,472
996,411
899,415 Gas emissions based on usage in all but one
geographical location
125,489
33,626
145,425 Emissions through use of oil powered heating and
AMS Company cars (kg CO2e)
236,870
242,832
supply system in one AMS location
248,891 Emissions generated from AMS owned vehicles, this is
combined petrol, diesel, hybrid and electric emissions
F-gas loses (kg CO2e)
Total Scope 2 (kg CO2e)
Location based electricity (kg CO2e)
0
0
433,207 Emissions captured through F-gas loses across AMS
systems (HVAC systems upgraded in 2022)
1,145,691
995,141 1,111,481
1,145,691
995,141
1,111,481 Electricity emissions based on use in each
geographical location
Total Scope 3 (kg CO2e)
141,849
157,301
142,798
Electricity, transmission and distribution
loss (kg CO2e)*
Water in (kg CO2e)
99,120
91,033
97,136 Covers loses within network and usage
5,818
5,009
4,501 Water delivered to AMS locations for all types of use
Private business miles (kg CO2e)*
17,796
40,997
ranging from manufacturing processes to sanitary use
19,751 Business miles completed in privately owned vehicles,
based on the definition of a medium sized car
powered by petrol, diesel, hybrid or electric
Waste processing, all types (kg CO2e)
19,115
20,262
19,130 Emissions generated through waste processing based
on types of waste generated, both recycled and
non recyclable
2,628,371 2,425,311 2,981,217
20.83
0.08
19.51
0.08
27.45 kg CO2e emissions per £ of sales
0.03 kg CO2e emissions per unit (eaches) produced
0
70
29
0
46
22
2.2 Percentage of waste that cannot be recycled, further
processed but has to go to landfill
51 Percentage of Electricity from renewable sources (inc
Nuclear), with contract renewals driving improvement
30
Total Scope 1, 2 & 3 (kg CO2e)
Intensity measure -(£K Sales) (kg CO2e)
Intensity measure - Eaches (kg CO2e)
Intensity measure - Percentage of waste
to landfill (% T)
Intensity measure - Percentage of Energy
from renewable sources (%)
Renewable energy excluding Nuclear (%)
1. Raleigh included for first time in 2021.
2. COVID-19 impacted year.
36
Advanced Medical Solutions Group plc Annual Report & Accounts 2023
Non-Financial and Sustainability Information Statement
Climate-related Financial Disclosures Report
Our Board of Directors has full responsibility for all ESG
matters. In 2021, the Board established our ESG Steering
Committee to guide our ESG strategy, and its implementation,
and to manage our climate reporting. The Committee
identifies, assesses, and manages climate-related risks and
opportunities. The Committee communicates directly with
the Board to update them on climate-related risks and
opportunities, progress of mitigation plans, and new ESG
regulatory changes. The members of the Committee include
the Chief Financial Officer, the Company Secretary, the Group
Health and Safety Manager, the Group Operations Director and
several other Senior Managers from operations, supply chain,
sales and marketing, and meets at least quarterly.
During November 2023, the ESG Steering Committee held
two climate workshops with third-party ESG consultancy,
Inspired ESG. The workshops included training and a materiality
assessment of the climate risks and opportunities. The work
in these workshops later produced our climate risk register.
In 2024, our priority will be to assign risk owners with the
responsibility to manage our response to each risk, and to
expand the risk register further to include a value-based
estimate, which will help us in our financial planning.
This financial year, the Board reviewed the climate-related
risks and opportunities in October and December. The Board
signed off on the climate risk register, prepared by our ESG
Steering Committee and our ESG consultancy, Inspired ESG.
Furthermore, Inspired ESG held a training session for our Board
that covered information about global warming, policy and
legal actions, and climate risks.
Since August 2023, climate risk has been regularly discussed in
Board meetings and in December 2023, the Board signed off
on the climate risk register.
Remuneration
Starting in 2022 and continued into 2023, to drive our ESG
objectives forward, delivery of ESG targets was included in the
personal objectives for our Executive Team. This ensures that
our Senior Managers are committed to reducing the business
carbon impact and aligning business actions with the latest
climate goals.
Opening Statement
The Companies (Strategic Report) Climate-related Financial
Disclosure (CFD) Regulations 2022 (the Regulations), require
certain publicly quoted companies and large private companies
to incorporate climate disclosures in their annual reports.
As a company with more than 500 employees, which is
listed in the Alternative Investment Market (AIM), Advanced
Medical Solutions is captured by the Climate-related Financial
Disclosure (CFD) Regulations and is required to implement the
reporting recommendations.
In 2023, we have complied with all eight of the reporting
disclosure requirements of CFD. We are currently working to
further understand our emissions and climate change KPIs,
before setting further targets.
Overview
Advanced Medical Solutions Group plc (AMS) is a UK-based
world-leading specialist in tissue-healing technologies. It
operates globally, with over 850 employees. Its operations
include manufacturing, sales, and R&D, spread across multiple
countries, including the UK, Germany, France, Ireland, and
the Netherlands.
The coronavirus pandemic has highlighted the importance of
the resilience of the healthcare sector, including its providers.
Similarly, climate change poses a tangible financial risk to
the business and to local communities, which highlights the
importance of preventing global warming from reaching
threatening levels. AMS is committed to understanding the
physical and transitional climate-related risks to the company,
developing and implementing long-term business strategies,
and introducing green initiatives into our daily operations.
This financial year, we have followed the guidelines of the CFD
Regulations, that relies on the recommendation of the Task
Force on Climate-related Financial Disclosures (TCFD), for
the first time to evaluate the company’s climate-related risks
and opportunities. Operating in a sustainable manner is very
important to the Group, aiming to make year-on-year progress,
as part of our target to become Net Zero by 2045 as a global
business. For additional details, see Page 45, in our Metrics &
Targets section.
Governance
Environmental, Social and Governance (ESG) matters extend
to all areas and levels of the business. It is ingrained within our
Board structures, and our governance framework is further
fortified by Committees comprised of employees engaged
in diverse ESG activities. Our staff, empowered to initiate and
propel enhancements, play a pivotal role. Engagement at all
levels is essential for attaining our objectives.
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
37
FINANCIAL STATEMENTSGOVERNANCEOVERVIEWSTRATEGIC REPORT Non-Financial and Sustainability Information Statement
continued
Risk Management
Navigating the current post-COVID landscape, further
influenced by the conflicts in Ukraine and the Middle East, we
persist in integrating a thorough and methodical approach
to risk management throughout our operations. We are
convinced that recognising and addressing key risks, will
underpin the success and longevity of AMS across the short,
medium and long-term horizons.
The Business Units, Senior Management Team (SMT), Audit
Committee and the Board review risks throughout the financial
year. These risks are documented in the Risk Register, which
is formally reviewed by the SMT and the Board at least 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. It was noted
that we need to incorporate climate risk into this process with
the emergence of threats to our operation from climate change.
A robust methodology is used to identify key risks across the
Group. This is a continuous four-stage process, conducted in
accordance with the relevant provisions, outlined in the UK
Corporate Governance Code.
Figure 1: AMS Risk Management Cycle
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Identify ris k
s existin g c
s
s
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Risk
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Identifying, assessing, and managing climate-related risks.
In 2023, we worked with Inspired ESG, an ESG consultancy,
to perform an assessment of the impact climate risk may
have on our physical sites globally. Also, we explored the risks
associated with the transition to a decarbonised economy.
The climate-related risks were identified at the company
level by first considering all risks that the TCFD suggested,
followed by two risk-scoring workshops to identify key
material risks. Subsequently, we determined the risks that
were material to AMS’s operations. The climate-related risk
identification discussions were held in two workshop sessions,
in conjunction with climate change training for our teams, to
ensure that they consider climate change in their day-to-day
work, from material sourcing to energy usage. The risk scoring
was subject to the same methodology we use to rate business
risks, assessing the likelihood and significance as follows:
Table 1: AMS risk significance and likelihood rating
Significance rating from 1-5 Likelihood rating from 1-5
5 > £20m
4 £10.1m - £19.9m
3 £3.1m - £10.0m
2 £1.0m - £3.0m
1
< £1.0m
5 > 70% - 100%
4 > 50% - 70%
3 > 30% - 50%
2 > 10% - 30%
1
< 10%
Climate-related risks that were rated four and above in either
likelihood or significance were deemed material and therefore
are heightened risks to monitor and manage. Material risks
were evaluated, to identify the root causes, financial, and
non-financial impacts. Then, effectiveness, adequacy of
controls and mitigating actions are assessed, and if additional
controls or actions are required, these are identified, and
mitigation steps are assigned to the relevant teams.
We have controls in place to limit the financial exposure of
climate-related risks. In 2024, we will assign risk owners to
the individual risks. Assigning risk owners who will lead the
mitigation plans and assist in implementing our Net Zero Plan
by 2045. This will ensure that our risk controls, align with
delivering our carbon reduction ambitions.
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 review of
the Group’s Risk Register. Climate risk is reviewed as part
of this process.
This year, as agreed by the board, climate change was not
identified as a principle or emerging risk, because of the low
likelihood assigned to it by our ESG Steering Committee.
Thus, our climate risk register and our normal risk register
were monitored separately. In 2024, we will assess if climate
change should be incorporated as an individual risk in the
business risk register or reviewed as an emerging risk. This
will be determined by the SMT and the ESG Steering Group
according to the financial materiality assessment we will
conduct in 2024.
38
Advanced Medical Solutions Group plc Annual Report & Accounts 2023
Strategy – Building Climate Resilience into
Business Strategy
In 2023, AMS conducted a comprehensive analysis to determine
the climate-related risks relevant to our business. To guide our
risk analysis, we partnered with an ESG consultancy, Inspired
ESG, to conduct climate change training for our employees and
to incorporate a rigorous risk analysis on various parts of our
global operations.
As this is our first year of aligning with the reporting
requirements of the CFD, before embedding sustainable
approaches, we wanted to focus on assessing the magnitude
of the impact climate-related risks could pose on our revenue
and costs. Hence, Inspired ESG held a climate risk workshop
for the relevant teams at AMS, where we developed a climate
risk register for both transition and physical risks. The risk
register screens climate impact across our direct global
operation. In the next financial year we aim to include our
key suppliers. Where possible, the potential financial impacts
of the assessed climate-related risks will be considered and
disclosed in 2024.
Transition risks are associated with the impact on our business
in the time during which we decarbonise the economy, and it
has four areas of consideration: policy and legal, technology,
market, and reputation. Physical risks are associated with the
physical impacts of weather events on our manufacturing
sites, warehouses, staff, and customers. Our patients are of
our utmost importance. Understanding the physical risks of
climate change to our staff, local communities, assets, and
the supply chain is crucial. By adopting a proactive approach,
we aim to reduce reactive responses and minimize disruptions
caused by extreme weather events throughout our operations
and value chain.
The physical risks were assessed against the locations of 12
sites. If a site was near a historic climate event impact, we
considered the site to be vulnerable, as these types of events
in the vicinity of our sites, will impact our supply routes.
Aligned with the CFD guidelines, we tried to forecast the
future to estimate the potential impact on our business, using
three possible future scenarios and global warming pathways.
Global Warming Scenarios
The climate scenario analysis explores three distinct scenarios;
Proactive (<2°C), Reactive (2-3°C), and Inactive (>3°C), based
on projected increases in global average temperature by 2100
compared to pre-industrial levels to correspond with the goals
in the Paris Agreement. A climate scenario depicts potential
future climate conditions that may directly or indirectly impact
business operations, such as through regulatory changes,
evolving market dynamics, or acute weather events such as
storms and wildfires.
To conduct climate scenario analysis, several climate models
and internationally established frameworks were used.
These included the International Energy Agency’s World
Energy Models (WEM), the Shared Socioeconomic Pathways
(SSPs): Climate Natural Catastrophe Damage Model, the
Co-ordinated Regional Climate Downscaling Experiment
(CORDEX) forecasts, Central Banks and Supervisors
Network for Greening the Financial System (NGFS) and
Integrated Assessment Models (IAM). These models provide
comprehensive insights into global climate and energy
systems, and therefore integrate various socioeconomic,
environmental, and technological factors to assess the
long-term consequences of different climate policies and
mitigation strategies.
The table below explains what conditions impacted our
forecasts. Each scenario identifies critical thresholds beyond
which aspects of the climate may not revert to their previous
state, known as a tipping point. Tipping points represent
components of the Earth’s system that can undergo sudden
and irreversible changes in response to warming. Even a
minor alteration can signify a point of no return, leading to
permanent shifts in climate patterns. Our climate modelling
extends until 2052 and aligns with the UK’s net zero target of
2050. We have divided the risk register into three time frames
(Table 2).
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
39
FINANCIAL STATEMENTSGOVERNANCEOVERVIEWSTRATEGIC REPORT Non-Financial and Sustainability Information Statement
continued
Table 2 – Climate Scenario Analysis Timeframes.
Time Horizons
Short Term (2023-2027)
In this timeframe, we gain insights into imminent climate change implications, guiding decisions
for enhanced resilience. We anticipate strict enforcement of transition risks, as we move towards a
low-carbon economy.
Medium Term (2028-2037) The effects of climate change are anticipated to become more noticeable, particularly in terms
of Reactive and Inactive scenarios for physical risks. Transition risks will intensify in this period,
requiring governmental responses to tackle evolving challenges.
Long Term (2038-2052)
The most substantial threat arises from physical risks, especially in reactive and inactive scenarios.
Businesses need comprehensive preparation to navigate and manage the resulting outcomes in
these situations. This timeframe is consistent with the UK Government’s Net Zero pledge by 2050.
Table 3 – Three Temperature Warming Scenarios
Scenarios Warming Pathway
Below 2°C (“Proactive”):
Organisations begin to align
more closely with the Paris
Agreement and Science
Based Targets initiative
(1.5°C), for an orderly and
coordinated transition to a
low-carbon economy.
Between 2-3°C (“Reactive”):
Businesses respond to
patchwork policies, with
intermittent action, aligning
with current forecasts.
In this scenario, there is a concerted effort to address climate change. Governments, industries,
and the public collaborate to ensure that the global average temperature rise remains significantly
below 2°C by the year 2100. Organisations proactively align with the Paris Agreement and the
Science-Based Target Initiative, working towards achieving net zero emissions by 2050. While there
are notable transition risks associated with this scenario, the proactive measures taken can mitigate
the severity of the long-term physical hazards of climate change.
The outcomes of COP26 are likely to steer us towards this scenario. In this context, the response
to climate change is characterised by delays and ad-hoc measures, resulting in a projected
global warming of 2-3°C by the year 2100. Governments implement policies and legislation
in an unstructured manner, contributing to heightened transition risks in the medium term.
Short-term business operations persist as usual, with decarbonisation efforts concentrated
primarily in high-emission sectors. This trajectory carries the highest transition risks, due to a lack
of coordinated efforts from governments, amplifying the severity of physical impacts as specific
tipping points are reached.
Above 3°C (“Inactive”):
The business-as-usual
scenario.
The Bank of England models
a recession; minimal climate
action and global emissions
rise unchecked.
Under this scenario, business operations persist without significant changes, and emissions
continue to climb until 2040, resulting in a global temperature increase surpassing 3°C. Public
pressure and a rise in physical climate change events compel governments to finally take decisive
climate action. The energy and fuel markets experience high levels of volatility. Long-term policies
are introduced in a piecemeal fashion, creating a patchwork of initiatives. Governments resort
to costly low-carbon technologies, such as carbon capture and storage, as a solution to address
the climate crisis. This scenario witnesses the surpassing of several tipping points, leading to an
escalation in the severity of physical impacts.
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Advanced Medical Solutions Group plc Annual Report & Accounts 2023
Transition and Physical risks identified
Six transition risks (policy and legal, market, and technology)
and three physical risks (heatwaves, flooding and sea level
rise) were deemed material to our business. Transition risks
are expected to be most relevant in the near-term and the
below 2°C scenario or 2-3°C scenario, as the government
introduces more policies and regulations to mitigate climate
change. Physical risks are more severe in the medium to
long-term and, expectedly, in the higher warming pathways
of 2-3°C scenario and above 3°C.
Our priorities for 2024, involve evaluating both types of risks
against a revenue-based assessment and to include our
suppliers’ sites in the physical risk assessment. The climate-
related metrics that are used to measure and manage our
climate-related risks can be found in the Metrics and Targets
section of this report.
Our resilience to the identified risks
As detailed in the table below, the business-as-usual scenario
(above 3°C) that was modelled is expected to bring a more
substantial impact on our operation, and hence, can increase
our costs and reduce our revenue. However, since the
physical risks are only material in the long term, between
2038 and 2052, they are not currently considered to pose
a high financial exposure to our revenue and assets. Given
the nature of our business, we cannot replace suppliers
quickly, as this will require new FDA or MDR approvals
which take time to process. Therefore, every year, we will
monitor any developments in the physical risks posed to our
manufacturing sites, to ensure we deliver the best results to
our patients and stakeholders.
Transition risks are deemed more important to us in the near
future, because of recent changes in increasing legislation
in the past few years. For example, we are captured under
the CFD, and the Streamlined Energy and Carbon Reporting
(SECR). If the governments in any of our operational locations
globally decide to accelerate climate mitigation, we want
to be prepared to respond to these demands. Therefore,
we partnered with Inspired ESG in 2021, to guide our work
around climate reporting. Inspired ESG monitors recent
regulatory developments and provides updates, to ensure that
we comply with all mandatory reporting. Furthermore, our
internal ESG governance has been adapted, to work internally
to mitigate transition risk, which is monitored by our Board
of Directors. Given the risks and opportunities identified and
laid out below, and the scenarios considered, management are
satisfied that the business strategy is resilient to climate change.
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
41
FINANCIAL STATEMENTSGOVERNANCEOVERVIEWSTRATEGIC REPORT Non-Financial and Sustainability Information Statement
continued
Table 3- Identified Climate-related Risks: Transition and Physical Risks
Climate-related
Risk
Proximity
Global
Warming
Scenario
Potential Impact
and Risk Rating
Policy & Legal
Increase
in regulation
due to
climate
change
Short -
Medium Term
(2023-2037)
<2°C
2-3°C
• Costs
increase.
• Reduced
profit.
• Loss of
reputation.
Significance: 1
Likelihood: 5
Mandates
on and
regulation
of existing
products and
services
Short-
Medium Term
(2023-2037)
<2°C
2-3°C
• Costs
increase.
Significance: 1
Likelihood: 5
Business Response
to Climate-related
Risks
• We engage with
a third-party ESG
Consultancy.
We will annually
review the
reporting
requirements for
CSRD.
• We adapted
our internal
governance
structure to
manage climate
risks.
• In 2023, we
developed a Net
Zero reduction
plan, with the
help of our ESG
consultants,
Inspired ESG.
AMS aspires to
become a Net-
Zero company
by the end of
2045.
We plan to
monitor this
risk annually, to
ensure that any
levies imposed
on AMS for plastic
or packaging are
not substantial.
Impact Description
Transition Risks
Actual Risks:
• AMS is impacted by government regulation which has been
introduced to reduce energy use and emissions. Introduced
regulation includes SECR and more recently CFD regulation.
Currently, AMS’s annual climate-compliance costs with
its ESG consultancy are less than £30,000.
• LEZ: There is a risk of increased operational expenditures as the
distribution supply fleet is exposed to low-emission zones in London.
Potential Risks:
• Increased compliance costs: Operational costs and resources
required to ensure AMS remains compliant with additional reporting
and to manage internal climate initiatives, are likely to increase.
• In the event of non-compliance with regulations, there is a
potential risk of financial claims, penalties, awards of damages, or
fines. AMS is exposed to increased regulation across all its locations
in the UK, EU, Israel and Russia.
• Germany plans to implement a Single-Use Plastics Tax (the
EWKFondsG) from 1 January 2024 and requires that Companies
which operate in Germany appoint a responsible person to report
the produced waste by May 2025, according to type and mass
(kilograms). The tax varies between the type of waste and material.
• AMS has two sites in Germany: Nuremberg (collagen production
from animals), and Hamburg (suture manufacturing, packaging
and sterilisation). Currently, AMS is not affected by this law or by
a similar requirement in the Netherlands, which targets food and
beverage containers, plastic bags, wet wipes, and tobacco filters.
However, if it is expanded, AMS will need to report its packaging
quantities. A non-compliance fine could reach €100,000.
• AMS do not currently meet the reporting threshold for Corporate
Sustainability Reporting Directive (CSRD). Reporting under CSRD
would result in significant costs and the potential need for an
increase in internal resources.
Actual Risks:
• The impact of Climate Change could increase the impact of
the UK’s Plastic Packaging Tax (PPT) on organisations that
manufacture or import ten or more tonnes of finished plastic
packaging material applies if the packaging does not contain at
least 30% recycled plastic. Therefore, the organisation will be
charged at a rate of £210.82/tonne.
Potential Risks:
AMS’s main packaging materials are cardboard, plastic and foil.
• UK EPR (Extended Producer Responsibility): AMS may be impacted
by EPR, which will be introduced in the UK in 2024. This policy is
designed to transfer a £1.7 billion financial burden of household
packaging waste collection.
• Germany’s single-use plastic tax (the EWKFondsG): If the taxes
on packaging and plastic are expanded to more products, it will
impose financial risks to AMS, which uses plastic for its packaging
(according to the law’s draft, the levy rate would be €0.180/kg for
non-deposited beverage containers up to three litres or €3.790/kg
for lightweight plastic carrier bags).
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Advanced Medical Solutions Group plc Annual Report & Accounts 2023
Climate-related
Risk
Proximity
Global
Warming
Scenario
Potential Impact
and Risk Rating
Market
Changing
customer
behaviour
Medium Term
(2028-2037)
<2°C
2-3°C
Increased
cost of
energy and
raw materials
Short -
Medium Term
(2023-2037)
<2°C
2-3°C
• Costs
increase.
• Loss of
competitive
advantage.
• Erosion of
revenue.
• Reputational
damage.
Significance: 5
Likelihood: 2
• Costs
increase.
• Loss of
competitive
advantage.
• Erosion of
revenue.
• Market
expectations
missed.
Significance: 4
Likelihood: 2
Technology
Substitute
existing
products
and services
with lower
emissions
alternates
Short –
Medium Term
(2023-2037)
<2°C
2-3°C
• Costs
increase.
Significance: 2
Likelihood: 4
Impact Description
Transition Risks continued
Potential Risks:
• With ESG growing in importance, some healthcare providers,
including the NHS, are prioritising and even substituting medical
supplies that correspond with their GHG emissions Scope 3
reduction targets.
• Failure to effectively predict and respond to changes could affect
AMS’s financial performance.
Potential Risks:
• Raw materials: A potential Introduction of the carbon border tax,
will increase the costs of high carbon-impact products imported
into the UK and EU. EU’s Carbon Border Adjustment Mechanism
(CBAM) has already entered into force, but until 2026 it will
only include import of raw materials that are not relevant to our
business. For example, hydrogen, steel, aluminium, fertilisers, and
cement. If this increases the price of electricity it will increase our
operating expenditures.
• The UK has not introduced a similar policy yet, but this financial
year they stated it was under review.
• Levies on fossil fuels will increase the cost of energy, leading to
increased operational spending. This risk is currently heightened,
supply chain costs may increase as physical climate risks cause
impact to the mining and extraction of raw materials and global
transportation networks.
• General inflation may increase the price of raw materials and
energy. If climate events or chronic changes in climate are more
frequent, it is likely that costs will increase even further.
Potential Risks
• Increase in initial Capex investments: The costs to ensure
our products are sustainable are likely to increase as we may
need to invest in more carbon friendly technology, materials,
and packaging.
• Increased capital spend on low carbon products compared with
conventional technology.
• Cost of upgrading entire portfolio to more efficient technology.
• Shifting to more efficient technology and sustainable products
may require a write-off or the retirement of existing assets at a
high impact on businesses and increased capital investments over
time, due to a reduced demand for existing products and services
that is high emitting.
Short –
Medium Term
(2023-2037)
<2°C
2-3°C
Costs to
transition
to lower
emissions
technology
• Costs
increase.
Significance: 2
Likelihood: 4
Potential Risks
• There is a risk that an investment initiated today would be
outdated by an even more advance solution closer to the
investment decision.
• Increased capital cost of lower emission technology
• Increased operational disruption as new technology takes
time to successfully integrate into business processes
Business Response
to Climate-related
Risks
In 2021, we
commenced
our pathway to
become Net
Zero by 2045.
We completed the
work in 2023 and
are now working
to implement
sustainability
targets.
We have installed
95.3 MWh of
renewable (solar)
energy generation
capacity at one
of our sites that
has supplied 21%
of our electricity
needs, which
reduced our
dependency on
market prices.
This has helped to
reduce our Scope
2 emissions.
AMS continuously
monitors
developments
that could impact
the cost of our
products. Our
improved planning
processes and
risk management
controls guarantee
that we are
prepared for
any potential
costs to invest
in substituting
current products
to lower-emissions
alternatives.
AMS will evaluate
the cost and
benefits of
low-emission
technology,
assessing the
associated
payback periods.
AMS will also
continue to
engage with third-
party consults
to support the
transition towards
lower-emissions
technology.
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
43
FINANCIAL STATEMENTSGOVERNANCEOVERVIEWSTRATEGIC REPORT Non-Financial and Sustainability Information Statement
continued
Climate-related
Risk
Proximity
Global
Warming
Scenario
Potential Impact
and Risk Rating
Impact Description
Physical Risks
Acute
Heatwaves/
Extreme heat
Short -
Long Term
(2023-2052)
2-3°C
• Inability
>3°C
to supply
product.
All 12 sites will experience heatwaves in the short and long term in
the Reactive and Inactive scenarios.
• Extreme heat/heatwaves may adversely impact staff, causing a
• Shortfall in
decrease in productivity.
profit.
• In extreme heat, governments can impose restrictions on outside
• Reputational
work, like for manual labour.
Increased
Severity of
Flooding
Medium -
Long Term
(2028 – 2052)
loss.
Significance:
3-4
Likelihood: 1
• To maintain optimal temperatures for staff, there may be an
increased demand for cooling through air-conditioning units,
leading to an increase in energy costs and Scope 1 and 2 emissions.
• Employees may want to work for other companies that provide
cooling during extreme heat events.
• Certain construction materials and their properties may change
under extreme heat conditions, leading to increased maintenance
or repair costs.
• Increased risk of supply disruption to transport as roads melt and
rails buckle.
• Increased operational spend on water/ice for keeping employees
and/or stock cool.
>3°C
• Inability
Actual Risks:
to supply
product.
• Shortfall
in profit.
• Reputational
loss.
• Expenditures
– Increased
direct and
indirect costs.
• There are nine sites (Etten-Leur, Haifa, Moscow, Neustadt,
Nuremberg, Plymouth, Stafford, Winsford and Teesdorf) that
could be indirectly affected by the high flood risk zones disrupting
transport routes, affecting accessibility of suppliers and employees
reaching the sites.
Potential risks:
• Located in a high flood-risk zone may cause an increase in
property insurance premiums, as resources show globally
that premiums are expected to rise by 29% by 2040 due to
climate change.
Significance: 5
• Flooding can impact local infrastructure, impacting transport,
Likelihood: 1
telecommunication and energy networks.
• Long-term effects could cause the building’s physical structure to
be damaged and lengthy ongoing repairs.
• Increased cost of maintaining drainage systems.
• Increased capital cost of installing building flood defences.
Business Response
to Climate-related
Risks
Our offices,
manufacturing
sites, and
warehouses are
all equipped with
HVAC (Heating,
Ventilation and
Air Conditioning)
systems. This
ensures that AMS
are equipped to
handle days of
extreme heat and
that our inventory
is kept in the
best condition,
which reflects
our commitment
to providing the
best quality to our
customers.
AMS will conduct
an analysis of the
company’s sites
to determine the
financial impact
on sites that are
most at risk from
flooding.
Chronic
Sea Level
Rise
Long Term
(2038 – 2052)
>3°C
• Costs
increase.
• Inability to
supply.
Significance: 4
Likelihood: 1
• Sea level rise increases the risk of erosion and storm surges. As sea
level rises, damage to sites could lead to closures and increased
insurance premiums.
• Damage and disruption to major transport routes may prevent staff
from being able to access a site and supplies being transported.
• Sea level rise may lead to damage to ports, roads, railways, and
other logistical infrastructure related to suppliers, resulting in the
delay of purchased goods.
• Climate-related economic disruption may have knock-on impacts
AMS will conduct
climate scenario
analysis annually
to assess the
potential impact
that sea level rise
may have on the
business.
on consumer spending.
• This risk could be more impactful to AMS’s supply chain and
supply routes.
44
Advanced Medical Solutions Group plc Annual Report & Accounts 2023
Table 4 – Identified Climate-related Opportunities
Opportunity
Area
Technology
Opportunity
Timeline
Potential Impact
Impact Description
Use of lower-
emission
sources of
energy to
reduce costs.
Short –
Medium Term
(2023-2037)
Reduction in operating
expenses and increased
revenue as a result of
increased efficiency.
Energy savings from off-site and on-site energy generation systems
in the medium- to long-term, due to the transition to renewable
energy sources. Potential to sell excess renewable power back to
the grid.
Policy & Legal Use of more
efficient
suppliers and
diversifying
AMS’s supply
chain.
Reputational
gain.
Reputation
Short –
Medium Term
(2023-2037)
Reduction in Scope 3
GHG emissions.
Our suppliers constitute our Scope 3 emissions. If we collaborate
with suppliers in transitioning to a decarbonised operation, this will
reduce our Scope 3 emissions and help us achieve our net zero target.
Short –
Medium Term
(2023-2037)
Positive external impact
among customers
and stakeholders.
Reputational stability from implementing lower emission
technologies. Increased share price and market cap.
Metrics & Targets
In 2023, we completed our long-term plan to become a Net Zero business by 2045. AMS aims to achieve absolute Net Zero
Scope 1, 2 and 3 emissions by 2045, compared to a 2021 baseline. Our targets have not yet been validated by SBTi, however
we will begin the validation process towards the end of 2024. Net Zero requires a concerted effort over time to eliminate GHG
emissions, with compensatory measures as an ultimate step for any emissions that cannot be reduced. The SBTi net-zero
standard requires a 90% absolute reduction in emissions prior to any residual offsets, up to 10% of the baseline, being offset
using carbon removal offsets. These metrics and targets will help to reduce our climate-related risks outlined in Table 3.
To continue progress to achieving Net Zero, we have adopted the following carbon reduction targets, all based on a 2021
baseline year:
• 42% absolute reduction in Scope 1 and 2 GHG emissions by 2030.
• 72% of suppliers to have science-based targets by 2028.
• Reduce Scope 3 Category 12 – End-of-Life Treatment of Sold Products GHG emissions by 30% per tonne product sold by 2033.
Moving forward, we commit to annual reporting on our environmental performance. We started this process in 2023, when we
launched an extensive data collection effort to comprehensively measure our GHG emissions and ensure transparency with our
stakeholders. In 2024, we will expand our sustainability metrics to include KPIs (Key Performance Indicators) that will measure
our resource use against our production and a year-on-year progress in carbon reduction.
AMS aims to act in a sustainable manner, and we project that our Scope 1 and 2 emissions will decrease over the next five years
to 2,066 tCO2e by 2028. This is a 33% reduction compared to our base year of 2021. Baseline emissions are a record of the
greenhouse gases that have been produced in the past and were produced prior to the introduction of any strategies to reduce
emissions. Baseline emissions are the reference point against which our emissions reduction will be measured.
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
45
FINANCIAL STATEMENTSGOVERNANCEOVERVIEWSTRATEGIC REPORT Non-Financial and Sustainability Information Statement
continued
Streamlined Energy and Carbon Reporting (‘SECR’)
In accordance with SECR requirements, the information below summarises AMS’s energy usage, associated emissions, energy
efficiency actions, and energy performance, across its sites in the UK, France, Germany, Czech Republic and the Netherlands.
Carbon emissions are categorised as follows:
• Scope 1: Consumption and emissions related to direct combustion of natural gas, fuels utilised for transportation operations,
such as company vehicle fleets and refrigerant gases.
• Scope 2: Consumption and emissions from indirect emissions, relating to the consumption of purchased electricity in daily
business operations.
• Scope 3: consumption and emissions cover emissions from sources not directly owned by AMS, i.e., grey fleet business travel
undertaken in employee-owned vehicles only.
Energy efficiency measures have included new heating, ventilation, and air conditioning (HVAC) system and building management
systems in place around the site. Further energy efficiency measures included LED lighting, warehouse sites have been fitted
with PIR sensors, we have provided energy knowledge and behavioural change initiatives.
Table 5 – Scope 1, 2 and 3 (SECR) emissions
Emissions Scope
Scope 1
Natural Gas, Other Fuels, & Refrigerant
Transportation
Scope 2
Grid-Supplied Electricity
Scope 3
Transportation (grey fleet)
Total
FY2021 tCO2e (baseline)
(location-based)
FY2022 tCO2e
(location-based)
FY2023 tCO2e
(location-based)
Progress since 2021
Baseline
1,716
1,467
249
1,352
1,352
18
18
3,086
1,401
1,157
243
1,313
1,313
22
22
2,736
1,342
1,110
233
1,344
1,344
17
17
2,703
-21.8%
-24.3%
-6.4%
-0.6%
-0.6%
-11.1%
-11.1%
-12.4%
Table 6 – Scope 1 and 2 and transport only for Scope 3 (SECR)
tCO2e/FTE
FTE
4.41
700
3.08
889
3.14
860
-28.8%
FY2021 tCO2e (baseline)
(location-based)
FY2022
(location-based)
FY2023
(location-based)
Progress since 2021
Baseline
Monitoring our energy consumption in FY2023
Table 7 – Total Reportable Energy Supplies Consumption (kWh) for Global Operations
Emissions Scope
2021 (baseline) Consumption (kWh)
2022 Consumption (kWh)
2023 Consumption (kWh)
Scope 1
6,597,290.84
Natural Gas & Other Fuels
5,560,313.51
Transportation
Scope 2
1,036,977.33
5,234,687.50
6,991,155.48
6,019,863.75
971,291.73
5,149,507.20
6,749,191.99
5,810,892.19
938,299.80
5,548,823.89
46
Advanced Medical Solutions Group plc Annual Report & Accounts 2023
Scope 1 and 2 greenhouse gas emissions have been calculated according to the 2019 UK Government environmental reporting
guidance. Consistent with the guidance, relevant emissions factors published in the UK Government’s Department for Business,
Energy and Industrial Strategy (BEIS) “Greenhouse gas reporting: conversion factors” database-specific reporting year have been
used. The tCO2 equivalent conversion factor has been used throughout and, where applicable, the kWh gross calorific value
(CV) was used. A third party uses the Company’s data to calculate emissions, but no formal assurance is provided.
Carbon Balance Sheet
AMS began measuring its full carbon footprint in 2021, following the guidelines of the Greenhouse Gas Protocol. Eleven of the
fifteen Scope 3 categories are applicable to AMS. AMS has no leased assets not already included in Scope 1 and 2 (8: Upstream
Leased Assets) or franchises (14: Franchises. Additionally, none of AMS’s products consume energy during their use (11: Use
of Sold Products), and AMS has no investments (15. Investments). All applicable categories have been quantified. In FY24,
the focus will be on continuing to improve Scope 3 data quality and working with suppliers to collect their own Scope 1, 2
and 3 emissions.
Table 8 – Carbon Balance Sheet for 2021, 2022 and 2023
2021 tCO2e
2022 tCO2e
2023 tCO2e
Progress since 2021
baseline
Emissions
Scope 1
Scope 2 – location-based
Scope 3
1: Purchased Goods and Services
2: Capital Goods
3: Fuel-related Emissions
1,716
1,352
46,649
19,060
6,130
705
4: Upstream Transportation and Distribution
5,063
5: Waste Generated in Operations
6: Business Travel
7: Employee Commuting
8: Upstream Leased Assets
326
86
825
N/A
9: Downstream Transportation and Distribution 4,515
10: Processing of Sold Products
11: Use of Sold Products
12: End-of-life Treatment of Sold Products
13: Downstream Leased Assets
14: Franchises
15: Investments
9,751
N/A
125
61
N/A
N/A
1,401
1,313
48,070
18,280
9,676
612
4,722
21
383
1,102
N/A
4,956
8,171
N/A
75
73
N/A
N/A
1,342
1,344
50,503
19,726
12,661
594
5,102
25
369
1,042
N/A
4,780
6,047
N/A
83
73
N/A
N/A
-21.8%
-0.6%
+8.3%
+3.5%
+106.5%
-15.7%
+0.8%
-92.3%
+329.1%
+26.3%
N/A
+5.9%
-38.0%
N/A
-33.6%
+19.7%
N/A
N/A
+7%
Total Scope 1, 2 and 3 (location-based)
49,715
50,783
53,189
Since 2021, our Scope 1 emissions have decreased by 21.8% and our Scope 2 emissions have decreased by 0.6%. Therefore,
our total Scope 1 and 2 emissions have decreased by 12.5% from a 2021 baseline. We will continue to invest in energy saving
initiatives to help meet our Scope 1 and 2 reduction target of a 42% absolute reduction by 2030. Also, we have reduced our
Scope 3 Category 12 - End-of-Life Treatment of Sold Products by 33.6% since 2021 (baseline). Please see Page 46 for our
energy efficiency improvements.
Waste Management and Plastic
AMS will continue to look at waste management processes and separation to further increase the amount of waste product that
can be re-used within a circular economy. Within the UK, working with our packaging compliance partners, in order to meet
the requirements of Extended Producer Responsibility (EPR), which is part of the Packaging Waste Regulations which came into
force in the UK in 2023, we will promote the re-use of packaging and other recyclable materials.
Next steps for FY2024
Looking forward, AMS plans to focus on four different areas of our operation to reduce our carbon footprint: Product, Supply
Chain, People, and Sites and Buildings. Our actions to reduce emissions will be split across the short-, medium- and long-term
for each focus area that we have set out. We will continue to report on our GHG emissions and progress towards our targets in
line with the GHG Protocol guidance for defining and calculating our carbon footprint in 2024.
In 2024, we aim to progress with key mitigation steps to respond to the most significant climate risks relevant to our operation
and strengthen our resilience to global warming.
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
47
FINANCIAL STATEMENTSGOVERNANCEOVERVIEWSTRATEGIC REPORT Operating Review
Surgical
Business Unit
The Surgical Business Unit includes
tissue adhesives, sutures, biosurgical
devices and internal fixation devices
marketed under the AMS brands
LiquiBand®, RESORBA®, LIQUIFIXTM,
LiquiBandFix8® and Seal-G®.
Surgical Business Unit Revenue
£79.1m
(2022: £74.9m Change: +6%)
Traditional Closure
+13%
(2022: +7%)
Scan to read more about
our Surgical Business Unit
Growth in the Surgical Business was driven by strong
performances from LiquiBand® outside the US, Traditional
Closure, Other Distributed and Internal fixation products.
Revenue increased to £79.1 million (2022: £74.9 million)
during the Period, an increase of 6% on a constant currency
and reported basis.
Surgical Business Unit
Advanced closure
Internal Fixation
and Sealants
Other Distributed
Traditional Closure
Biosurgical Devices
Total
2023
£ million
2022
£ million
Reported
Growth
Change at
constant
currency
34.6
36.0
5.0
5.0
18.1
16.4
79.1
4.1
2.9
16.0
15.8
74.9
-4%
21%
72%
13%
4%
6%
-4%
21%
69%
15%
3%
6%
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.
Advanced Closure
Americas
UK/Germany
ROW
Connexicon
Total
48
Advanced Medical Solutions Group plc Annual Report & Accounts 2023
2023
£ million
2022
£ million
Reported
Growth
18.2
8.2
6.8
1.4
34.6
23.4
7.3
5.3
0.0
36.0
Change at
constant
currency
-21%
11%
28%
-22%
12%
28%
-4%
-4%
LiquiBand® revenues decreased in the period by 4% as
strong ex-US growth was offset by US de-stocking linked to
the implementation of the new route-to-market strategy,
with the Group renegotiating its three principal hospital
distribution agreements.
The new agreements will enable more product and brand
differentiation for each of the Group’s partners including the
first solely AMS branded product in the US, which represents
a significant milestone for LiquiBand®. Taking over direct
marketing control for one of the distribution channels
allows AMS to offer LiquiBand® solutions in US hospital sales
channels where the Group’s two Acute Strategic Partners’
relationships are less robust. This has involved AMS setting
up and maintaining its own locally-based inventory in the
US. The switching of inventory ownership is now complete,
but the resulting de-stocking undertaken by its partner and
additional inventory disruption during negotiations with
other partners resulted in a £5m revenue impact during
2023. Throughout this process end-user sales have been
uninterrupted and there has been no impact on customer
order fulfilment.
The Connexicon acquisition in February 2023 will support the
enhanced LiquiBand® partner agreements by providing the
product exclusivity and differentiation required to significantly
expand market penetration. The US approval process for
these products is progressing well and remains on track for
completion in H2 2024. Connexicon continues to perform
well in Europe and ROW; the clinical trial is progressing well
and it is being positioned for approval in China at around
the end of 2025, which would be AMS’s first tissue adhesive
approval in this market.
Growth driven by strong
performances from
LiquiBand® outside the US,
Traditional Closure, Other
Distributed and Internal
fixation products.
The new agreements promote LiquiBand® XL in all three
hospital distribution channels providing access to the fast
growing $70 million long-wound market and facilitating the
conversion of new accounts and increased market share
for the LiquiBand® brand. The pipeline of evaluations and
conversions for LiquiBand® XL continues to increase rapidly
and surgeon feedback on the efficacy and ease of use for the
product remains very positive.
The Board has been very pleased with the impact of the new
strategy on 2024 partner ordering and commitment and
remain confident of achieving record US LiquiBand® revenues
for the year.
Outside the US, the LiquiBand® brand continued to
perform very strongly, with underlying growth of 11% in UK/
Germany and 28% in the Rest of the World markets, as new
territories continue to make a positive impact on financial
performance. LiquiBand® XL is being well received in these
markets and early-stage traction is contributing to growth.
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
49
FINANCIAL STATEMENTSGOVERNANCEOVERVIEWSTRATEGIC REPORT Operating Review continued
Internal Fixation and Sealants
+21%
(2022: Change: +60%)
Other Distributed Products
+72%
(2022: n/a)
Internal Fixation and Sealants
LiquiBandFix8®/LIQUIFIXTM is used to fix hernia meshes placed
inside the body with accurately delivered individual drops of
cyanoacrylate adhesive, instead of traditional sutures, tacks
and staples.
LiquiBandFix8® continued to perform strongly in Europe
and ROW with revenues increasing by 21% to £5.0 million
(2022: £4.1 million) in the period due to deeper market
penetration and, to a lesser extent, the annualised impact of
the acquisition of AFS Medical.
2023 was an important year for AMS’s hernia mesh fixation
device, with the completion of a 284-patient clinical study,
US approval and an agreement secured with TELA Bio for
the marketing and distribution of LiquiBandFix8® across the
high-value US market under the brand LIQUIFIXTM. The launch
is progressing very well with TELA Bio having completed an
extensive training programme among its specialist hernia
sales force and good progress across a number of significant
GPO systems in the US. The initial response from surgeons
and from AMS’s partner has been very positive and US orders
received to date are ahead of expectations.
SEAL-G® MIST is a novel, internal, biological sealant used
to reduce leakage of fluid during internal surgery. We are
very pleased with the first SEAL-G® clinical study of 160
gastrointestinal (‘GI’) surgery patients that was completed in
2023, although not a randomised controlled trial, initial data
confirmed that reports of serious leakages with SEAL-G® were
significantly lower than those from published studies with
standard of care treatments.
In 2024, we have chosen to move into a clinical study for
pancreatic surgery, which is a high-risk procedure with
higher leakage rates and thus lower patient population
to demonstrate results. This study is underway and initial
feedback is encouraging, albeit at an early stage.
50
Advanced Medical Solutions Group plc Annual Report & Accounts 2023
Acquisition of Peters
Surgical will transform
the Business Unit, with
healthy gross margins, a
highly synergistic product
range and commercial and
operational structure.
Other Distributed Products
The Other Distributed category comprises bought-in
minimally invasive access ports and laparoscopic instruments
predominately sold by AFS. Revenues were significantly
boosted by annualisation following the acquisition of AFS
in H1 2022 and increased to £5.0 million during the Period
(2022: £2.9 million), growth of 72% on a reported basis and
69% at constant currency.
Unfortunately, the discontinuation of a component required
to connect the laparoscopic to an external gas supply is
restricting commercialisation and limiting our SEAL-G®
activities to critical clinical work and KOL surgeon evaluations.
With no short-term solution we are now trying to expedite
the development of the next generation laparoscopic device
that does not need a gas supply connection.
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.
Revenues grew strongly during 2023, increasing by 13% to
£18.1 million and 15% at constant currency (2022: £16.0
million) as the Group continues to have success with its
strategy of delivering solid suture growth in its core German
market combined with higher growth outside of Germany,
with notable success in Eastern Europe and the US. This has
resulted in ex-Germany suture sales exceeding German sales
for the first time, in comparison to the suture business that
was heavily German weighted when RESORBA® was acquired.
Biosurgical Devices
Biosurgical Devices comprise antibiotic-loaded collagen
sponges, collagen membranes and cones, oxidised cellulose,
synthetic bone substitutes and bio-absorbable screws. Revenues
increased to £16.4 million (2022: £15.8 million) with the reported
increase deflated by a strong FY22 comparative period linked to
MDR related ordering and uneven phasing of shipments but with
much stronger growth expected again in 2024.
End-user demand for collagens in Europe remains and the
RESORBA® branded bone substitutes range is now established
in over 20 countries creating a platform for accelerated
growth and following the 2023 US independent rep pilot
launch of bone substitutes, a dedicated US based manager
has been recruited to drive this growth opportunity. Adding
further US approvals for further Biosurgical devices remains a
priority and the Group continues to work towards its first US
510(k) submission for collagen, initially in a dental application.
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
51
FINANCIAL STATEMENTSGOVERNANCEOVERVIEWSTRATEGIC REPORT Operating Review
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.
Woundcare Business Unit Revenue
£47.1m
(2022: £49.5m Change: -5%)
Infection and Exudate
Management
£39.5m
(2022: £38.9m Change: +2%)
Scan to read more about our
Woundcare Business Unit
Revenues decreased by 5% to £47.1 million (2022: £49.5
million) on a reported and constant currency basis due to a
steep decline in the Organogenesis royalty stream and ongoing
challenging market conditions relating to pricing pressure, low-
cost competition and reimbursement issues related to Infection
Management products. A restructuring of the Business Unit was
completed in Q1 2024 in order to focus on driving growth with
prudent cost control measures now in place.
Woundcare Business Unit
2023
£ million
2022
£ million
Reported
Growth
Change at
constant
currency
Infection
and Exudate
Management
39.5
38.9
+2%
+2%
Other Woundcare
Total
7.6
47.1
10.6
49.5
-28%
-5%
-27%
-5%
Infection and Exudate Management
Infection and Exudate Management revenue increased by 2%
to £39.5 million (2022: £38.9 million) with growth driven from
AMS’s own ActivHeal® range and from the pipeline of specialist
materials that came with the 2020 Raleigh acquisition.
52
Advanced Medical Solutions Group plc Annual Report & Accounts 2023
Other Woundcare
Other Woundcare comprises royalties, fees and
woundcare sealants. Revenue reduced by 28% at reported
currency and by 27% at constant currency to £7.6 million
(2022: £10.5 million) as a result of significantly reduced
royalty from Organogenesis following US reimbursement
reviews announced in 2023.
Royalties from Organogenesis have continued to
fall sharply throughout the period. Given the current
trajectory and expected near-term implementation of the
reimbursement changes, AMS continues to guide towards
minimal royalty in its expectations for the remainder of the
patent life (2024-2026).
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 2023.
Reporting
requirement
Group Policies that
guide our approach
Environmental
matters
• Environmental
Policy
Employees and
social matters
• Ethical Sourcing
Policy
• ESG Policy
• Equality, Diversity
and Inclusion
Policy
• Community
Support
• Health and Safety
Policy
• Environmental
Policy
• Ethical Sourcing
Policy
Respect for
human rights
• Anti-Slavery Policy
• Ethical Sourcing
Anti-corruption
and
anti-bribery
matters
Policy
• Modern Slavery
Act Policy
• 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
Climate-Related
Financial Disclosures (CFD)
Non-financial Key
Performance Indicators
Information and risk
management,
with page references
Reporting
environmental
impact/SECR
disclosures –
Pages 46 to 47
Reporting on our
environmental
impact – Pages 34
to 36
Our Business Model
– Pages 10 and 11
Risk Management –
Pages 61 to 65
Stakeholder
Engagement –
Pages 54 to 57
Our Strategy –
Pages 16 to 21
Corporate
Governance Report
– Pages 72 to 77
Audit Committee
Report – Pages 81
to 84
Risk Management –
Pages 61 to 65
Our Business Model
– Pages 10 and 11
Risk Management –
Pages 61 to 65
CFD - Pages 37 to 47
Key Performance
Indicators – Pages
22 and 23
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
53
FINANCIAL STATEMENTSGOVERNANCEOVERVIEWSTRATEGIC REPORT S172 (Stakeholder 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. We summarise below,
and reference throughout this Annual Report, how our Directors’
engagement with stakeholders on key decisions also fulfils their
duties in relation to Section 172 of the Companies Act 2006.
Our stakeholders
Listening, engaging and partnering with our stakeholders,
illustrated in the diagram below and further explained on
Pages 55 to 56, helps us to address our business impacts
and improve the outcomes for those different groups.
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 stakeholders. In so doing, the Directors
must have regards, amongst other matters, to the:
1
2
3
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.
4 Impact of the Company’s actions on
the community and environment.
5
Desirability of the Company
maintaining a reputation for high
standards of business conduct.
6
Need to act fairly between
members of the Company.
ers
tn
r
a
P
&
E
n
C
o
m
v
i
m
r
u
o
n
n
i
m
t
i
e
e
s
n
t
C h a i n
p l y
p
S u
Employee
s
Board of
Directors
P
a
t
i
e
n
t
s
s
r
o
st
e
Inv
R
e
gulators
s
n
c i a
i n i
C l
54
Advanced Medical Solutions Group plc Annual Report & Accounts 2023
Employees
Patients
Investors
Clinicians
We are a people-centric,
equal-opportunity business
which aims to enable our
employees to develop and
thrive whilst protecting
their safety and wellbeing.
Material topics
•
Increased Employee
Engagement
• Opportunities to
share ideas
• Financial support during
the cost-of-living crisis
• Opportunities for
career development
• Flexible working
How we engage
Our CEO Live global
webcasts enable employees
to freely raise questions.
Questions can also be
asked through a Senior
Management Team (‘SMT’)
Portal. Employee Inclusion
Groups can be approached
regarding issues at site-
level. An annual Employee
Engagement Survey provides
an opportunity to give
feedback anonymously. The
Company newsletter enables
employees to be updated
by colleagues, and we have
appointed a Board Director to
be responsible for Workforce
Engagement.
The patient is at the heart
of everything we do. We
develop innovative products
to minimise complications and
improve patient outcomes.
Material topics
• Products to address unmet
patient needs and improve
their outcomes
• Post-market surveillance
• Clinical studies
• Monitor trends
and changes
We give high priority
to communicating
effectively with investors,
brokers and analysts on
strategy, governance and
financial forecasts.
Material topics
• Financial and
operational performance
• Business strategy
and acquisitions
• Market conditions
• R&D pipeline and
product approvals
• Dividend
We work with Clinicians
and Key Opinion Leaders
to ensure our products
are effective, easy to use,
clinically safe and meet
patient needs.
Material topics
• Clinical Advisory Boards
•
Industry-leading training
• Subscription database
• Virtual symposia
How we engage
We work closely with
customers, clinicians, Key
Opinion Leaders and industry
bodies to understand patient
needs. We are investing in
clinical studies which enable
the commercialisation of
products to address unmet
needs, such as Seal-G® and
our US LiquibandFIX8® Pre-
Market Approval.
How we engage
We maintain regular
communications with
shareholders, analysts
and brokers in line with
our regulatory duties. We
have twice-yearly results
roadshows and engage on an
ad-hoc basis on issues such
as remuneration, governance
and ESG. We hold an Annual
General Meeting and provide
updates in between via RNS
alerts our website and contact
through our advisers.
How we engage
Clinical Advisory Boards
help to provide guidance
and clinical trial development
for key products.
We have a focus on training
and education with ActivHeal®
Academy and other digital
platforms, including increased
social media engagement.
For key surgical products we
conduct virtual symposia and
Voice of Customer activities.
We provide clinical updates
to surgeons on products
to increase skill levels.
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
55
FINANCIAL STATEMENTSGOVERNANCEOVERVIEWSTRATEGIC REPORT S172 (Stakeholder Engagement) continued
Partners
Supply Chain
Regulators
We engage with Competent
Authorities and Notified
Bodies to operate within
regulatory and legal
frameworks and ensure our
products have approval
in key markets.
Material topics
• Compliance
with legislation
• Maintain high standards
• Medical Devices
Regulation (‘MDR’)
• Working relationships with
Notified Bodies
Communities
& Environment
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.
Material topics
• Pathway to Net Zero
• CFD
•
Involvement in local
organisations
• Sponsorship
• Environmental initiatives
• Customer discussions on
environmental impact
and emissions
Our network of OEM and
distribution partners allow
us to meet the clinical needs
of patients that we cannot
reach directly.
Material topics
• Relationship development
• Education and training
• Opportunities to
share ideas
• Align pipeline of
new products, value-
added services and
customer support
How we engage
In a highly regulated
industry we maintain
good relationships with
our regulators by working
openly and in a transparent
way, promoting
a partnership approach
to further understand the
regulatory landscape.
How we engage
Actively engaging in local
communities by encouraging
employees to participate.
Provide sponsorship and
charity matching where
employees are involved
locally. Environmental pledge
programme and ISO50001 at
selected sites help to reduce
our local environmental
impact and we take part in
environmental initiatives
local to our sites.
How we engage
We try to ensure that partners
have the opportunity to speak
to key employees at any
time. We use remote ‘Voice
of Customer’, Key Opinion
Leader masterclasses and
focus groups to gain feedback
on products and ideas.
Websites, online tools
and Brand Hubs provide
further direct engagement.
We participate in Industry
clinician groups.
56
Advanced Medical Solutions Group plc Annual Report & Accounts 2023
We strengthen our supply
chain resilience through
increased inventory levels,
robust supply agreements,
minimising sole suppliers,
a comprehensive supplier
audit programme and
monitoring compliance with
our Ethical Sourcing Policy.
Material topics
• Supply chain resilience
through increased
inventory levels and
dual sourcing
• Security of supply
Improving OTIF
•
Impact of cost inflation
•
• Auditing of suppliers
including plan to
incorporate ethical matters
How we engage
We hold regular meetings
with key suppliers and have
strengthened our key supplier
audit process, making
it more robust and building
closer working relationships.
Principal decisions in 2023
The Board considered the interests of, and the impact on, all stakeholders
when key decisions were made during the year, as demonstrated below.
Principal decision 1
Strategic acquisition
Extensive Board discussion led to a decision to acquire Peters
Surgical, a leading global provider of specialty surgical sutures,
mechanical haemostasis and internal cyanoacrylate devices.
Why was this decision important to the Board?
As a larger, more transformative acquisition than other recent
deals, Peters delivers on our long-stated goal of utilising our
cash reserves for a significant acquisition.
Peters is an ideal fit for AMS in terms of its complementary
expertise, global reach and potential for synergies with AMS’s
existing portfolio. As well as broadening our portfolio, AMS
will benefit from the shared capabilities of the two companies,
including direct sales channels, distribution networks, and
manufacturing locations. The Board were unanimous in
believing this acquisition would significantly benefit the
Company and that it was in the strategic and long-term
interests of all our stakeholders.
Which s172 factors were key to this decision?
(a) the likely consequences of any decision in the long term;
(b) the interests of the Company’s employees; and
(c) the need to foster the Company’s business relationships with
suppliers, customers and others.
Which stakeholders does this decision impact?
Investors, People, Customers and Suppliers.
Outcome and impact on long-term
sustainable success
The acquisition is expected to complete in mid 2024 following
the completion of the requirement for French Foreign Direct
Investment screening, which the Directors are confident will be
approved without condition.
This transformational deal aligns perfectly with our acquisition
strategy, expanding our presence in the operating room,
increasing the portfolio, sales of AMS-branded products, direct-
selling capabilities and expanding its global footprint. It will drive
significant opportunities for our employees across the Group.
Acquiring Peters adds significant revenue, profit and cash
generation and earnings accretion. In addition, its growing
recurring revenue streams will be a key element of AMS’ long-
term sustainable growth and reduce the Group’s reliance on
individual distribution partners.
Principal decision 2
Board review of Climate-Related Financial Disclosures
(‘CFD’) and selection of reporting format
In 2023 extensive Board discussions led to a decision to work
with an external consultant (Inspired plc) to implement the
requirements of CFD.
This work required two Board workshops with Inspired. CFD
requires certain publicly quoted Companies to incorporate
climate disclosures in their Annual Reports. As a Company with
more than 500 employees and listed on AIM, AMS is captured by
the Climate-related Financial Disclosure (‘CFD’) regulations and
is required to report.
Why was this decision important to the Board?
AMS complies with the UK Corporate Governance Code
and with all requirements of being an AIM-listed Company,
exceeding these requirements in a number of areas.
As CFD focuses on climate-related risks across the Group, and
we view risk as a critical part of long-term sustainable success, it
was decided that this should be a critical exercise guided by an
external party which could highlight some long-term risks which
have not been considered in the bi-annual Risk Register review.
Which s172 factors were key to this decision?
(a) the likely consequences of any decision in the long term;
(c) the need to foster the Company’s business relationships
with suppliers, customers and others; and
(e) the desirability of the Company maintaining a reputation
for high standards of business conduct.
Which stakeholders does this decision impact?
Investors, Customers, and Communities and Environment.
Outcome and impact on long-term
sustainable success
AMS has included an extensive eleven page CFD report which
covers our reporting requirements. It was decided that a full 30-
40-page report is not required at this stage.
This process has identified a number of risks which will be
discussed during Risk Register reviews in 2024. The key
categories covered by CFD, including fire risk, sea-level rising
and flood risk, will be considered within the key risks on a bi-
annual basis. The Board feel this was a valuable exercise.
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
57
FINANCIAL STATEMENTSGOVERNANCEOVERVIEWSTRATEGIC REPORT Financial Review
FY23 results in line with
updated guidance and
significant progress made
in building a platform
for growth.
SUMMARY
IFRS reporting
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 at
the half-year and full-year and reconciles them to statutory
measures 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 movement
in long-term acquisition liabilities to be separately identified.
Net cash is an additional non-GAAP measure used.
Overview
Revenue increased by 2% at both reported and constant
currency to £126.2 million (2022: £124.3 million) including
£1.4 million from Connexicon (2022: £ Nil).
Gross margin decreased to 55.6% (2022: 59.0%) due to
reduced sales of LiquiBand® into the US as well as the
reduced Organogenesis royalty. The annualised impact of
AFS, whilst adding sales and profit to the Group, dilutes gross
margin given its position as a distributor. The acquisition
of Connexicon has had a further dilutive effect on gross
margin due to its current low volumes which are at a lower
margin than achieved elsewhere in the Group. We expect
Connexicon gross margins to improve as volumes increase
and manufacturing is in-sourced to our Plymouth factory.
Inflationary increases continue to have an impact on gross
margin percentage although inflationary pressures are not as
substantial as those experienced in recent years.
Administration expenses increased to £50.7 million (2022:
£47.4 million) due to the addition of Connexicon and the full
year impact of AFS. Selling and marketing costs increased in
the year as investment into growth areas has continued as
well as launch activity for LiquiFix® in the US. Whilst the Group
hedges significant foreign exchange exposure, a residual risk
remains on the revaluation of foreign currency receivables into
GBP which had an adverse impact on administration expenses
in the year. However, this was offset by a lower bonus
provision for employees attributable to the below expected
financial performance of the Group. Acquisition costs relating
to Connexicon amounted to approximately £0.2 million.
58
Advanced Medical Solutions Group plc Annual Report & Accounts 2023
The Group incurred £12.6 million of gross R&D spend in
the period (2022: £12.3 million), representing 10.0% of sales
(2022: 9.9%), maintaining investment in innovation and in
meeting the increasing regulatory standards. As shown in the
table below, part of this cost is capitalised and amortised over
the following five to ten years.
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 24.9% (2022:
21.2%) due to the UK Government’s enactment of a 25%
tax rate from April 2023 and a higher effective tax rate in
Germany due to the reduced Organogenesis royalty.
Adjusted diluted earnings per share decreased by 10% to 9.39p
(2022: 10.47p) and diluted earnings per share decreased by 22%
to 7.25p (2022: 9.30p), reflecting the Group’s reduced earnings.
Reflecting its confidence in the Group’s prospects, the Board
is proposing an increased final dividend of 1.66p per share
(2022 final dividend: 1.51p), to be paid on 21 June 2024 to
shareholders on the register at the close of business on 31
May 2024. This follows the interim dividend of 0.70p per share
(2022 interim dividend: 0.64p) paid on 24 October 2023 and
would, if approved, make a total dividend for the year of 2.36p
per share (2022: 2.15p) an increase of 10%.
Operating result by business segment
Year ended 31 December 2023
Revenue
Segment operating profit
Amortisation of acquired intangibles
Adjusted segment operating profit1
Adjusted operating margin1
Year ended 31 December 2022
Revenue
Segment operating profit
Amortisation of acquired intangibles
Adjusted segment operating profit1
Adjusted operating margin1
Surgical
£’000
Woundcare
£’000
79,093
16,041
3,944
19,985
25.3%
74,861
19,333
2,469
21,802
29.1%
47,117
4,374
943
5,317
11.3%
49,469
6,687
945
7,632
15.4%
1. Adjusted for amortisation of acquired intangible assets.
Table is reconciled to statutory information in Note 4 of the Financial Statements.
Surgical
Surgical revenues increased by 6% to £79.1 million (2022:
£74.9 million) at reported currency and by 6% at constant
currency) including £1.4 million from Connexicon (2022:
£ Nil). Adjusted operating margin decreased by 380 bps
to 25.3% (2022: 29.1%) due to the impact of temporary
LiquiBand® destocking at US partners, the addition of
Connexicon and full year of AFS at lower operating margin
and the adverse margin impact of inflation.
Total investment in Research and
Development, Regulatory and Clinical
Of which:
Charged to the profit and loss account
Capitalised, to be amortised over
5-10 years
2023
£’000
2022
£’000
12,621
12,301
6,405
6,149
6,216
6,152
Amortisation of acquired intangible assets increased to
£4.9 million (2022: £3.4 million) due to the acquisition of
Connexicon in February 2023.
Other Income which relates to R&D claims in the UK and
Ireland grew to £0.9 million (2022: £0.5 million). The growth
in the year is largely due to the addition of Connexicon which
has invested heavily in R&D in relation to its US FDA approval.
In the period, finance income grew by £2.1 million to £3.8
million (2022: £1.7 million), largely due to a £1.7 million
increase in interest income on our bank deposits. Finance
costs increased to £1.5 million (2022: £0.7 million) due to the
movement in long-term acquisition liability expense which
is higher due to the unwind of contingent consideration
arising on acquisition of Connexicon. A net credit of £0.2
million (2022: £0.8 million credit) was recorded in relation to
movements in the long-term liabilities relating to deferred
consideration and earnout from the Sealantis, AFS and
Connexicon acquisitions.
Adjusted profit before tax which excludes amortisation of
acquired intangibles and movements in long term liabilities
recognised on acquisition, decreased by 9% to £25.9
million (2022: £28.5 million) whilst the adjusted PBT margin
decreased by 240 bps to 20.5% (2022: 22.9%) due to lower
gross margin, higher administration expenses and adverse
foreign exchange movements as discussed above.
Reported profit before tax decreased by 18% to £21.2 million
(2022: £25.9 million) which includes additional amortisation
of intangible assets following the acquisition of Connexicon
in the year.
Reconciliation of profit before tax to adjusted
profit before tax
Profit before tax
Amortisation of acquired intangibles
Movement in long-term
acquisition liabilities
Adjusted profit before tax
(Unaudited)
2023
£’000
Audited
2022
£’000
21,157
25,910
4,887
3,414
(186)
(840)
25,858
28,484
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
59
FINANCIAL STATEMENTSGOVERNANCEOVERVIEWSTRATEGIC REPORT
Financial Review continued
Woundcare
Woundcare revenues decreased by 5% to £47.1 million (2022:
£49.5 million) at reported currency and 5% at constant currency.
Adjusted operating margin decreased by 410 bps to 11.3%
(2022: 15.4%) due to the reduced Organogenesis royalty stream
and ongoing challenging market conditions relating to pricing
pressure, low-cost competition and reimbursement issues.
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
18 months. In the financial year, approximately one third of
sales were invoiced in Euros and approximately one quarter
were invoiced in Dollars.
The Group estimates that a 10% movement in the £:US$
or £:€ exchange rate will impact Sterling revenues by
approximately 2.6% and 3.6% respectively and, in the
absence of any hedging, this would have an impact on
the Group operating margin of 1.9% and 0.4% percentage
points respectively.
Cash flow
Net cash inflow from operating activities in the period
was £12.3 million, which was lower than prior year (2022:
£26.9 million) due to decreased operating profit and
increased investment in inventory to mitigate supply chain
issues and enhance our commercial capabilities. In particular
we have seen an improvement in our OTIF (‘On-time-in-
full’) performance metric as we have available inventory
to immediately fulfil a higher proportion of orders.
Net cash used in investing activities in the period was
£20.3 million, which has increased from prior year (2022:
£11.9 million) due to the acquisition of Connexicon, which is
inclusive of the initial consideration and a further £7.0 million
contingent consideration paid during the year following
delivery of several research and development, regulatory
and commercial milestones. £0.4 million of contingent
consideration was also paid in the year as AFS achieved its
2022 EBITDA milestone. These items were partially offset by
higher interest received on our cash balance.
Net cash used in financing activities in the period was
£13.6 million, which has increased from prior year (2022: £6.3
million) due to shares purchased by the Employee benefit
trust (“EBT”) and a 10% increase in dividends paid.
At the end of the period, as a result of the above movements,
the Group had net cash of £60.2 million (31 December 2022:
£82.3 million), a decrease of £22.1 million in the period.
Working capital increased during the year. Inventory cover
increased to 7.1 months of supply (2022: 6.2 months) due
to planned increases in stock levels to fulfil anticipated
commercial demand and to continue to build supply chain
resilience. Receivables increased by £3.8 million (2022:
£1.4 million increase) due to the impact of favourable hedging
contracts and the addition of Connexicon. Debtor days have
remained broadly consistent with prior period at 45 days
(2022: 44 days). Creditor days reduced to 35 days (2022:
37 days) due to timing of payments. Total payables increased
as a result of the addition of Connexicon and the associated
contingent consideration and increased by £0.5 million
(2022: £5.7 million increase).
Capital investment in equipment, R&D and regulatory costs
of £9.8 million (2022: £9.9 million) has continued at a similar
level as the Group continues to invest in growth.
Cash outflow relating to taxation increased to £4.4 million
(2022: £3.3 million) due to the timing of payments on account.
The Group paid its final dividend for the year ended 31
December 2022 of £3.3 million in June 2023 (for the year
ending December 2021, £3.0 million in June 2022), and its
interim dividend for the six months ended 30 June 2023 of
£1.5 million in October 2023 (for the six months ended 30
June 2022: £1.4 million in October 2022).
The proposed acquisition of Peters Surgical in 2024 will be
funded by a new debt facility which includes a £60 million
term loan facility and £30 million revolving credit facility,
together (the ‘New Debt Facility’) with the balance of the
consideration to be funded by the Company’s cash.
E Johnson
Chief Financial Officer
1 May 2024
Following the acquisition
of Peters Surgical, we
expect the initial proforma
net debt to EBITDA ratio
of the enlarged Group
to be approximately 1.5x
and to reduce materially
thereafter.
60
Advanced Medical Solutions Group plc Annual Report & Accounts 2023
Risk Management
We continuously review
and mitigate historical
risks as well as new
emerging risks.
We continue to embed a rigorous
and disciplined approach to
risk management across our
business. We believe that
identification and mitigation
of key risks will support the
success and sustainability
of AMS in the short,
medium and long-term.
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 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 and Board at least 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 62,
and for determining the nature and extent of the significant
risks it is willing to take in achieving our strategic objectives.
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
61
FINANCIAL STATEMENTSGOVERNANCEOVERVIEWSTRATEGIC 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.
Emerging risks
Emerging risks are 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 the 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.
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 rescored (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
or been identified. 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 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 controls or process improvements following
Internal Audit recommendations.
Identif y
Identify ris k
ss existin g c
s
e
s
s
A
r o l s
t
n
o
A
n
a
l
y
s
e
c
S
Assess mitig
Score m
iti
o
g
r
e
r
i
s
a
t
k
e
s
d
a
t
e
f
a
d
c
r
t
i
s
o
k
s
r
s
Risk
Management
Process
M
o
n
i
t
o
r
M
o
n
i
t
o
f
o
r
e
a
c
ti
o
x
e
c
n
s
ution
a
n
d Report
y
n
n responsibilit
p action pla
M a nage
e l o
v
A s s i g
D e
62
Advanced Medical Solutions Group plc Annual Report & Accounts 2023
Key roles and responsibilities
Implementation and compliance responsibility
Board
Audit
Committee
Senior Management
Team
Business Units and
Other Functions
R
e
p
o
r
t
i
n
g
• Overall responsibility for
corporate strategy,
governance, performance,
internal controls and risk
management.
• Identification, review and
management of identified
Group strategic risks.
• Defining risk appetite.
• Assessing the effectiveness
of the risk management
processes adopted across
the Group.
• Challenging the content
of the Risk Register.
• Assessing the effectiveness
of 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.
• Monitoring compliance with
internal control systems and
co-ordinating Internal Audit.
• Monitoring and oversight of
Internal and External Audit.
• Management of the business
• Execution of actions
and delivery of strategy.
associated with managing risk.
• Identification and monitoring
of the key risk indicators,
taking action.
• Timely reporting on the
implementation and progress
of agreed action plans.
• Ensuring implementation of
the Group’s actions and
mitigation plans required to
manage risk.
• Challenging the
appropriateness and
adequacy of plans to
mitigate risk.
• Identification and reporting of
strategic risks to the SMT.
• Implementation of a risk
management approach
which promotes the ongoing
identification, evaluation,
prioritisation, mitigation and
monitoring of operational risk.
• Analysing the aggregation of
risk across the Group.
• Provision of cross-functional
resource to effectively
mitigate risk.
Monitoring and reporting responsibility
i
g
n
m
r
o
f
n
I
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.
Financial
Strategic
1 Lack of growth
Trend (net position of
risk vs 2022):
2
1
2 Poor ROI from R&D
3 Acquisitions/integration
4 Delivery against forecast
5 Supply chain/cost inflation
6 Regulatory
7 Single source supply
3
8 Cyber-risk
9 Talent management
10 Supply from Israel
–
–
+
+
Increase from 2022
Static since 2022
–
E
Decrease from 2022
Emerging risk
Likelihood
Risk Size
High
Low
Large Medium Small
4
7
10
9
8
6
5
Operational
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
63
FINANCIAL STATEMENTSGOVERNANCEOVERVIEWSTRATEGIC REPORT
Risk Management continued
Strategic linkage to risks
G Growth I Innovation O Operational Excellence C Culture S Sustainability
Potential impact
Key controls and mitigating factors
Status
• Income shortfall.
• Market capitalisation
impacted.
• Reduced profit.
• Loss of competitive
advantage.
• Loss of key partners.
• Cost increase.
• Development and launch of new products to secure existing
and new customers and drive future growth.
• Making both accretive synergistic acquisition and significant
acquisitions to help fuel growth.
• Diversified approach reduces the impact on any one project,
partner or product.
• Contract minimas allow agreements to be renegotiated or
terminated for poor performance.
• Evaluation of opportunities to broaden reach into new
markets or adjacent sectors.
• 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.
• Income shortfall.
• Market capitalisation
• Focusing on unmet needs and large market opportunities.
• Pipeline of new products/technologies identified to provide
impacted.
growth and differentiation.
• Loss of reputation
as an innovator.
• Loss of competitive
advantage.
• Loss of key partners.
• Loss of market share.
• Misidentification of
new, competitive
technologies.
• Commercial value
of products not
maximised.
• Impairment of assets.
• Impact on Group
performance and
market capitalisation.
• Reputational loss.
• Unique products protected by IP and enforcement.
• Improved front-end business planning process.
• Effective alignment of strategy to consider market
changes and promote quality and cost savings.
• Marketing strategy to support partners and products.
• 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.
• Dedicated internal resources allocated to M&A.
• 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.
Positive US
LiquiBand® and
LiquiFix® progress.
Woundcare facing
challenging market.
Peters Surgical
offers significant
growth
opportunities
No change
No change.
Reduced risk after
acquiring Peters
Surgical with stable
revenues and meets
acquisition criteria.
Increased risk
regarding significant
integration project
Potential impact
Key controls and mitigating factors
Status
• Loss of income.
• Increased costs.
• Shortfall in profit.
• Market expectations
missed.
• Market capitalisation
impacted.
• 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 crossfunctional alignment, content and process.
No change.
Trading update in
September 2023
reset expectations
Strategic risks
Risk
1
Lack of growth
G
2
Poor return
on investment
from R&D
G I S
3
Making the
wrong or no
acquisition/poor
integration
G O
Financial risks
Risk
4
Delivering against
forecast –
internal accuracy
G
64
Advanced Medical Solutions Group plc Annual Report & Accounts 2023
Strategic linkage to risks
G Growth I Innovation O Operational Excellence C Culture S Sustainability
Operational risks
Risk
Potential impact
Key controls and mitigating factors
Status
5
Supply chain/
cost inflation
O
6
Regulatory risk
I
• Inability to
supply product.
• Loss of income.
• Shortfall in profit.
• Market expectations
missed.
• Proactive management of supply chain.
• Improved forecasting and forward planning.
• Regular communication and forward-ordering with suppliers.
• 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.
• Regulatory strategy and additional resource to manage
MDR assigned and ringfenced.
• Strong regulatory pathway to gain approvals.
• Work with partners and distributors to utilise local expertise.
• Strictly controlled Quality Management System.
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.
O
8
Cyber-risk
G
9
Talent
management
I O C S
10
Supply from
Israel
I O C
• 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.
• Extensive schedule of upgrades and threat analysis.
• Loss of key staff.
• Insufficient talent
pool for succession
planning.
• Market conditions
result in difficulty
filling open roles.
•
Inability to
supply product.
• Loss of income.
• Shortfall in profit.
• Market expectations
missed.
• 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.
• Open lines of communication.
• Further flexible working implemented.
• Continuous monitoring of impact on site and ability
to manufacture.
• Ongoing review of alternate manufacturing options.
Inflationary
pressures and
delayed deliveries
are generally
easing
MDR extension
to 2027/28.
Extensive FDA
interaction
No change
No change
No change
Potential political
risk to shipping
products and
further employee
call-ups
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 6 to 65 was approved
by the Board of Directors and signed on its behalf by:
E Johnson
Chief Financial Officer
1 May 2024
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
65
FINANCIAL STATEMENTSGOVERNANCEOVERVIEWSTRATEGIC REPORT Governance Overview
Focused on delivering
transformational growth
and ensuring AMS delivers
on its vision and plans.
Q&A
with
Liz Shanahan, Chair
of Chair?
Q How do you feel about taking on the role
A I am delighted to have assumed the role of Chair
during this pivotal time with a refreshed Board. It is clear
to me that the business has the ambition and capabilities
to execute on the attractive long-term growth
opportunities in its markets. This is underpinned by the
team’s drive and expertise. I look forward to working
with the Board at such an exciting time with such a
transformative acquisition as Peters Surgical.
for future success following the period of
Board refreshment ?
Q Do you feel the Board is well prepared
A The programme of Board refreshment to develop a
diverse Board, taking into account the FTSE Women
Leaders Review and our commitment to equality and
diversity, is in the final stages and we will complete the
recruitment process for a new Non-Executive Director
in the near future. I believe the Board’s size and
composition is appropriate for AMS’s 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, and these skills are outlined
below. We are focused on ensuring AMS continues
to be a great place to work and attract great people,
and on achieving our strategic goals through good
governance and integrity across our entire business.
Skills and experience
Strategy and
transformation
Global business
Listed board
experience
Leadership
Operational
Finance
Healthcare
Technology and
innovation
M&A
ESG and
sustainability
5
5
5
5
5
5
5
5
4
4
Board gender diversity
1
4
Female
Male
Board tenure
1
1
3
0-3 years
>6 years
3-6 years
66
Advanced Medical Solutions Group plc Annual Report & Accounts 2023
Governance framework
Our governance framework, which includes the Board and its three
committees, is set out below with their responsibilities.
• Oversees the
long-term success
of the Group and
ensuring that there
is a framework of
appropriate and
effective governance
and controls
which enables risk
to be assessed
and managed.
Board
• Sets the Group’s
strategic aims,
allocates resource
to ensure that the
necessary financial
and human resources
are in place to meet
its objectives and
reviews management
performance.
• Determines the
Group’s purpose and
values and monitors
and assesses the
Group’s culture
and ensures that
its obligations to
shareholders and
other stakeholders
are understood
and met.
Nomination
Committee
Audit
Committee
Remuneration
Committee
• Reviews Board
composition and
• proposes Board
appointments
• Considers Board
and Senior
Management
succession
planning.
• Oversees diversity
and inclusion
targets for Board
and Senior
Management.
• Oversees integrity
of the Group’s
financial reporting,
internal controls and
risk management
framework.
• Ensures the Group
complies with
legal, regulatory
and governance
requirements.
• Assesses the
independence
and effectiveness
of external and
internal auditors.
• Ensures the
Remuneration
Policy supports the
Group’s strategy and
promotes long-term
sustainable success.
• Oversees Policy
implementation
for Executive
Directors and Senior
Management.
• Reviews workforce
remuneration and
related policies.
Senior Management Team
•
Implements
strategy for the
Group’s long-term
success, monitoring
performance and
significant business
projects initiatives
against budget
and strategy.
• Assists the CEO in
• Monitors cultural
executing authority
delegated by the
Board, making and
implementing day-
to-day operational
decisions and
oversight of the
commercial issues.
activities, execution
against the ESG
strategy and day-
to-day behaviours
to ensure they are
aligned with the
Group’s Mission,
Vision and values.
Governance highlights
Board
• Retirement of long-standing Chairman and
appointment of a new Chair.
• Consideration of, and agreement for, the
•
acquisitions of Peters Surgical and SyntaColl.
Implementation of key long-term strategy
relating to LiquiBand® in the US market.
• Consideration of 2023 performance and
expectations of the market, both in the short
and medium-term.
• Ongoing review of other M&A opportunities.
• Oversight and review of execution against the
Strategic Pillars and Budget.
• Discussion and approval of capital expenditure.
• Oversight of progress made by the ESG
Steering Committee.
• Consideration of Risk Register changes.
• Held workshops and assessed CFD requirements.
Nomination Committee
• Review of Committee composition, considering
Directors’ skills, knowledge and experience.
• Consideration of progress of diversity, equality
and inclusion across the Group.
• Oversight of rigorous recruitment processes
which led to appointment of a new Chair and
progress on appointing a new Non-Executive
Director, both taking into account best practice
and FTSE Womens Leaders Review.
• Review of succession and talent at Board and
Senior Management levels.
Audit Committee
• Consideration of Group’s internal
controls environment.
• Review of interim and full-year results statements
prior to recommending to the Board for approval.
• Oversight of risk management framework
and reporting.
• Review of corporate governance and audit
reform proposals.
• Review of CFD and other
non-financial disclosures.
• Review and approval of audit plan for 2023
external audit.
• Review 2023 internal audit reports and
2024-26 audit plan.
• Evaluation of the effectiveness of the external
auditor and internal audit function.
Remuneration Committee
• Review, selection and appointment of
remuneration advisers.
ESG Steering Committee
• Consideration of shareholder feedback from
• An Executive
Committee chaired
by the Chief Financial
Officer that drives the
ESG agenda within
the Group, monitoring
ESG performance and
regularly reporting to
the Board.
• Representatives from
across the Group,
including all sites and
key functions (HR,
Supply Chain, EHS,
marketing) to consider
issues from across the
Group and improve
communication.
• Meets regularly
throughout the
year with a number
of Committees or
groups reporting in
(Altogether AMS (EDI),
Net Zero Committee,
ESG Champions).
2023 AGM.
• Developed Remuneration Policy taking into
account best practice, external advice and
shareholder views.
• Review of remuneration arrangements under
the LTIP and annual bonus scheme.
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
67
FINANCIAL STATEMENTSSTRATEGIC REPORTOVERVIEWGOVERNANCE Board of Directors
A diversely skilled Board with
proven leadership capabilities and
relevant healthcare, operational,
transformation and financial skills
and experience.
Committee
membership key:
A Audit Committee
R Remuneration Committee
N Nomination Committee
Committee Chair
Term of office
External appointments
Liz Shanahan
Chair
Chris Meredith
Chief Executive Officer
Eddie Johnson
Chief Financial Officer
Grahame Cook
Senior Independent
Non-Executive Director
Douglas Le Fort
Non-Executive Director
N
R
N
A
N
R
A
N
R
Liz Shanahan is a life sciences
entrepreneur with extensive
experience advising leading
global pharmaceutical and
healthcare organisations on their
communications. Most recently,
she was a Non-Executive
Director of UDG Healthcare plc,
a Company that was listed on
the London Stock Exchange and
a constituent of the FTSE 250
up until its £2.8 billion takeover
in August 2021. Until 2014, she
was Global Head of Healthcare
& Lifesciences at the NYSE-listed
management consultancy, FTI
Consulting Inc., which in 2007
acquired the communications
business Sante Communications,
founded by Liz in 1995. Liz is a
Trustee of CW, the charitable
arm of Chelsea & Westminster
Foundation Trust Hospital
in London and a member of
the organisations Innovations
Advisory Board.
Alongside her Board
appointments, she is a business
advisor and Executive coach.
Liz Shanahan was appointed
as Non-Executive Chair of the
Group in January 2024
Liz Shanahan is currently a
Non-Executive Director of
Inspiration Healthcare Group plc
and Celadon Pharmaceuticals
plc (previously Summerway
Capital plc), both of which are
AIM-listed.
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 was appointed as
Grahame Cook has 18 years
Douglas Le Fort is a seasoned
Chief Financial Officer in January
of experience in investment
veteran in the medical and life
2019. He joined AMS in October
banking focusing on global
science industry, with more than
2011 and was appointed Group
equity capital markets and
Financial Controller in November
M&A and corporate advisory
20 years of senior executive
leadership. He has expertise
2012. Prior to this he gained a
services. He was a Managing
in business strategy, including
first-class degree in Maths and
Director at UBS and Joint Chief
commercial business execution,
Computer Science from Keele
Executive of Panmure Gordon.
operational management and
University in 1993 and qualified as
He advised the London Stock
M&A. Most recently, he was
a Chartered Accountant in 1996.
Exchange on the creation of
CEO of MedTrade Products, a
Since moving into industry in 1996
Eddie has held a number of senior
finance roles in various sectors
including, more recently, Head of
Commercial Finance at Norcros
plc and Western European
Financial Controller for Sumitomo
Electrical Wiring Systems.
TechMark, the specialist segment
woundcare products business,
of the Main Market focusing
and prior to that served in
on innovative technology and
various senior executive roles at
healthcare companies. He has
ConvaTec Group plc, including
experience in the healthcare
five years on the Executive
sector, most recently as Chair
Committee for the Group.
of Sinclair Pharma plc and as
At ConvaTec he was Senior
Non-Executive Director of
Vice President for Corporate
Morphogenesis Inc. and Horizon
Development, and prior to that
Discovery plc. He has also held
Vice President and General
Board positions in a number
Manager with P&L responsibility
of other Companies including
for the global Ostomy business.
MDY Healthcare plc and
Crawford Healthcare.
He has an MBA from
Henley Management
He holds a double first-class
College and is a Chartered
degree from Oxford University
Management Accountant.
and is a member of the Institute
of Chartered Accountants.
Chris Meredith was appointed
to the Board in April 2006.
Eddie Johnson was appointed
Grahame Cook was appointed
Douglas Le Fort was appointed
to the Board in January 2019.
as Non-Executive Director of
as Non-Executive Director of
AMS in February 2021.
AMS in August 2021.
Chris Meredith was appointed
Chair of Arterius, a UK-based pre-
commercial, non-competitive
medical device company, in
January 2022. He left his role
as a Non-Executive Director of
Creavo Medical Technology Ltd
in November 2021.
None.
Grahame Cook is Chair of Molten
Douglas Le Fort is currently an
plc, a FTSE 250 Company,
Operating Partner for Revival
and a Non-Executive Director
Healthcare Capital Partners, an
of Minoan plc and Sapience
investor in medical device and
Communications Limited.
diagnostics businesses, as well as
a Non-Executive Director at Trio
Healthcare, a manufacturer of
ostomy products, Clinisupplies,
a UK-based manufacturer of
chronic care products and The
Insides Company Ltd, a start-up
addressing intestinal failure
based in New Zealand.
68
Advanced Medical Solutions Group plc Annual Report & Accounts 2023
Liz Shanahan
Chair
N
R
Chris Meredith
Chief Executive Officer
Eddie Johnson
Chief Financial Officer
Grahame Cook
Senior Independent
Non-Executive Director
Douglas Le Fort
Non-Executive Director
N
A
N
R
A
N
R
Eddie Johnson was appointed as
Chief Financial Officer in January
2019. He joined AMS in October
2011 and was appointed Group
Financial Controller in November
2012. 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 sectors
including, more recently, Head of
Commercial Finance at Norcros
plc and Western European
Financial Controller for Sumitomo
Electrical Wiring Systems.
Term of office
Liz Shanahan was appointed
Chris Meredith was appointed
as Non-Executive Chair of the
to the Board in April 2006.
Eddie Johnson was appointed
to the Board in January 2019.
External appointments
None.
Liz Shanahan is a life sciences
Chris Meredith joined AMS as
entrepreneur with extensive
Group Commercial Director
experience advising leading
in July 2005 following a
global pharmaceutical and
successful 18-year career
healthcare organisations on their
in international healthcare
communications. Most recently,
sales, marketing and business
she was a Non-Executive
development. His experience
Director of UDG Healthcare plc,
covered business-to-business
a Company that was listed on
contract manufacturing, product
the London Stock Exchange and
development and clinical
a constituent of the FTSE 250
research, as well as branded
up until its £2.8 billion takeover
product sales all within the
in August 2021. Until 2014, she
medical device, pharmaceutical
was Global Head of Healthcare
or consumer healthcare
& Lifesciences at the NYSE-listed
markets. Chris has previously
management consultancy, FTI
held senior positions at Smiths
Consulting Inc., which in 2007
Industries, Cardinal Health,
acquired the communications
Banner Pharmacaps, and Aster
business Sante Communications,
Cephac. He was appointed
founded by Liz in 1995. Liz is a
Managing Director of Advanced
Trustee of CW, the charitable
Woundcare in February 2008,
arm of Chelsea & Westminster
became Chief Operating Officer
Foundation Trust Hospital
in January 2010 and was
in London and a member of
appointed as Chief Executive
the organisations Innovations
Officer in January 2011.
Advisory Board.
Alongside her Board
appointments, she is a business
advisor and Executive coach.
Group in January 2024
Liz Shanahan is currently a
Non-Executive Director of
Chris Meredith was appointed
Chair of Arterius, a UK-based pre-
Inspiration Healthcare Group plc
commercial, non-competitive
and Celadon Pharmaceuticals
medical device company, in
plc (previously Summerway
January 2022. He left his role
Capital plc), both of which are
as a Non-Executive Director of
AIM-listed.
Creavo Medical Technology Ltd
in November 2021.
Grahame Cook has 18 years
of experience in investment
banking focusing on global
equity capital markets and
M&A and corporate advisory
services. He was a Managing
Director at UBS and Joint Chief
Executive of Panmure Gordon.
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. He has
experience in the healthcare
sector, most recently as Chair
of Sinclair Pharma plc and as
Non-Executive Director of
Morphogenesis Inc. and Horizon
Discovery plc. He has also held
Board positions in a number
of other Companies including
MDY Healthcare plc and
Crawford Healthcare.
He holds a double first-class
degree from Oxford University
and is a member of the Institute
of Chartered Accountants.
Douglas Le Fort is a seasoned
veteran in the medical and life
science industry, with more than
20 years of senior executive
leadership. He has expertise
in business strategy, including
commercial business execution,
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.
Grahame Cook was appointed
as Non-Executive Director of
AMS in February 2021.
Douglas Le Fort was appointed
as Non-Executive Director of
AMS in August 2021.
Grahame Cook is Chair of Molten
plc, a FTSE 250 Company,
and a Non-Executive Director
of Minoan plc and Sapience
Communications Limited.
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, Clinisupplies,
a UK-based manufacturer of
chronic care products and The
Insides Company Ltd, a start-up
addressing intestinal failure
based in New Zealand.
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
69
FINANCIAL STATEMENTSSTRATEGIC REPORTOVERVIEWGOVERNANCE 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
Andy Donnelly
Group R&D
Director
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.
Andy joined AMS in July 2022 as Group R&D
Director. Originally trained as a pharmacist
with a PhD in drug delivery, Andy has over
25 years of R&D experience leading teams
with responsibilities ranging from drug
product development, device development
and drug-device combination products.
Simon has over 25 years of experience in
IT infrastructure, systems implementation
and software development gained from
a number of different industries. 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 and adoption of the
Euro for the European offices.
Simon was appointed to the Senior
Management Team in January 2015.
Andy served 17 years at AstraZeneca, where
he also gained international experience
through roles based in the UK, Sweden
and the USA. After leaving AstraZeneca he
joined Bespak, spending eight years at their
Innovation Centre in Cambridge, UK.
Prior to joining AMS, Andy was Vice
President Innovation at Bespak (part of
the Recipharm Group).
Lynaye
Reynolds
Group Quality
Director
Cathy
Tomlinson
Group HR
Director
Lynaye joined AMS in February 2023 as
Group Quality Director. She has over
13 years’ experience working within the
medical device industry, having held various
senior roles, most recently as Worldwide
Quality Director at Peli BioThermal.
Lynaye has a strong background in
the implementation of effective quality
systems with specific focus in compliance,
harmonisation across multiple sites,
alignment of quality initiatives to strategic
business goals, driving operational
improvement, cost reduction, and
developing a consistent quality culture.
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 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).
70
Advanced Medical Solutions Group plc Annual Report & Accounts 2023
Brian Dowd
Vice President -
Corporate Business
Development
Rose Guang
Group Quality
Assurance/
Regulatory Affairs
(‘QA/RA’) Director
Ross
McDonald
Business Unit
Director, Surgical
Brian joined AMS in July 2009 as GM of the
US to initiate a surgical business and launch
LiquiBand®. Brian graduated with honours
and a degree in Marketing/Communications
and Entrepreneurial studies from Babson
College in 1997 and earned an Executive MBA
from the Sawyer School of Management,
Suffolk University in 2005.
Brian has over 20 years’ experience in
Medical Devices; his first 10 at Tyco/Covidien
mostly involved with dental and advanced
woundcare products. Since joining AMS Brian
has been the GM of the US business in which
he developed the US team and grew to +20%
market share; he has also served as Global
Director of Marketing for the Surgical BU
prior to taking his current post in early 2022.
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 6 Sigma Master Black Belt.
Prior to joining AMS in January 2006 Ross
graduated with his BSc from University
of Glasgow and then completed an MSc
in Entrepreneurial Studies from Glasgow
Caledonian University. Following university,
Ross then spent five years within the
Pharmaceutical industry.
From 2006 to 2012, Ross worked across our
direct and distributed sales functions both in
the UK Sales organisation, before taking on
responsibility for the European Woundcare
Business in 2010. In 2012 Ross relocated to
the US. In his role as National Sales Manager
Americas, he contributed to a period of
sustained and high growth for the LiquiBand®
franchise. 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 for
the Surgical Business Unit.
In January 2021, Ross was appointed to the
Business Unit Director role for the Surgical
Business Unit.
Becky Walmsley
Business Unit
Director,
Woundcare
Jonathan White
Group Operations
Director
Owen Bromley
Company
Secretary
Becky joined AMS in July 2015 as
Business Unit Director of OEM and
Bulk Materials. 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.
Jonathan joined AMS in January 2022 as
Operations Director for Woundcare and
became Group Operations Director in
March 2023. He has over 30 years’ experience
in various operating roles in both FMCG and
Medical Device environments. After ten years
with Nestle, Jonathan moved to Diageo
where he was involved in two high-profile
acquisitions in Africa, subsequently led the
Manufacturing Excellence programme for
the Guinness business before moving into
a role as Operations Director for Guinness
Packaging. More recently he was Site
Director at Convatec’s Deeside site.
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 a 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.
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
71
FINANCIAL STATEMENTSSTRATEGIC REPORTOVERVIEWGOVERNANCE Corporate Governance Report
We believe that sound
corporate governance
and effective oversight
provide the foundations
of a successful and
sustainable business.
Dear Shareholder,
On behalf of the Board, I am pleased to present the Corporate
Governance Report for the year ended 31 December 2023.
Strong Corporate Governance remains critical for AMS as we
start to integrate the acquisitions announced in March 2024
and begin to reap the rewards of the new US LiquiBand®
strategy and US LiquiFix® launch whilst continuing to invest
in innovation and progressing our ESG strategy.
The Board believes that shareholder engagement and
strong corporate governance are critical to the success of
our strategy, outlined on Pages 16 to 21, and to delivering
long-term, sustainable shareholder value.
Changes to the Board and Succession Planning
In 2023, having been Chair for more than the nine years as
recommended by the UK Corporate Governance Code, Peter
Allen retired as Chairman on 31 December. I am honoured to
have been appointed as his successor, following an extensive
search, which included both internal and external candidates.
Knowing some of our strategic ambitions, we are in the process
of appointing a Non-Executive Director with the skills we
require moving forward and to further diversify the Board.
I believe the Board has the skills and experience to guide the
future success of the business and steer us through a critical
period while we continue to implement our new US LiquiBand®
strategy with the three key partners which was announced in
2023 and embed the transformational acquisition of Peters
Surgical, which will make significant changes to the Group
in the coming years.
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 pages 76 and 77 and on our website www.admedsol.com.
The Code reinforces the need to understand shareholder
views and consider these as part of our decision-making.
Details of how we engage with our stakeholders are set
out on Pages 55 to 56.
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Advanced Medical Solutions Group plc Annual Report & Accounts 2023
A diversely skilled Board
with proven capabilities
and relevant healthcare,
operational and financial
skills and experience.
Environmental, Social and Governance (‘ESG’)
ESG is a focus area for our stakeholders and we continued
to devote significant time and resource to our ESG
strategy in 2024, including arranging an ESG Internal
Audit conducted by RSM to cover current reporting
and assess our progress against commitments, supply
chain engagement, reporting frameworks and Net
Zero commitments made by peer companies. Our ESG
framework provides the basis for us to continue to make
progress on ESG in future years, progressing our Pathway
to Net Zero, which has a commitment date of 2045 and
increasing our focus on the Social and Governance parts
of ESG. Details of our progress is set out in the ESG Report
on Pages 28 to 29.
Recognition and Looking Forward
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 2023 in facing the challenges
facing the Group.
We have taken significant steps to progress our strategy,
in particular completing the critical new US LiquiBand®
route-to-market strategy that will be the cornerstone of
our growth in 2024.
I strongly believe that AMS remains well positioned to
take advantage of opportunities as they arise, and that the
strategically critical acquisition of Peters Surgical, which will
change the size and scope of our future opportunities, is
the catalyst to drive long-term sustainable growth. During
the coming year, in addition to further strengthening our
corporate governance, the Board will focus on:
Integrating the acquisition of Peters Surgical.
•
• Driving growth of US LiquiBand® and LiquiFix® in the US.
• Continuing to progress the implementation of our
ESG strategy.
Liz Shanahan
Chair
1 May 2024
Corporate Governance Report
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 of the meetings
were held in the UK. The Directors attended the following
meetings in the year ended 31 December 2023:
Board member
Board
Peter Allen
Grahame Cook
Eddie Johnson
Douglas Le Fort
Chris Meredith
Liz Shanahan
9/9
9/9
9/9
9/9
9/9
9/9
In 2023, as part of the focus on key stakeholders, the Board
has continued to focus on ESG making progress as outlined in
the ESG Report on pages 24 to 36, with a focus on developing
our Pathway to Net Zero. We have committed to becoming
Net Zero by 2045.
Liz Shanahan was designated as the Non-Executive Director
for workforce engagement following her appointment,
and employee engagement remained high, with a Group-
wide engagement survey which achieved record levels of
participation, and CEO video conferences with each site.
Management have regularly updated the Board on employee
engagement throughout the year. The engagement score
in our 2023 employee engagement survey indicates a high
overall level of satisfaction in the workforce, if slightly lower
than 2022 driven by the Group performance in 2023 and
change of strategy in the US, confirming our expectation
that the actions taken from the output of the 2022 survey
had been positively received. In 2024 we will be focusing
on proactive ways to further increase engagement.
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’) in recent years and, despite the MDR deadlines being
moved back, we continue to work towards the original timeline.
Direct engagement with our significant shareholders in recent
years on ESG, Remuneration Policy and Board refreshment
meant that our plans have been clearly communicated, and will
continue to be moving forward. There was further engagement
outside of the usual discussion with management in 2023,
relating to a Trading Update issued on 4 September 2023.
Details of our principal risks are set out on Pages 63 to 65. 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 2023 is set out
on Page 76.
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
73
FINANCIAL STATEMENTSSTRATEGIC REPORTOVERVIEWGOVERNANCE Corporate Governance Report continued
Board activities
The UK Corporate
Governance Code
Risk management
Monitoring business performance
Setting strategy
Approving business plans and budgets
Development of ESG
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
Vision
A world where the outcome of every patient can benefit from our products
and a company where every employee feels invested and valued
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.
2024 AGM
In 2024, we will put forward all Directors for re-election
in accordance with Code Provision 18.
Liz Shanahan owns shares in the Company as shown
on Page 94. These holdings have been highlighted to
shareholders and are small. Although not an issue for
the Chair, they would not be considered to impact Non-
Executive Director independence under Code Provision 10.
The 2024 AGM will be convened at 11.00am on 12 June 2024.
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 AGM results 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.
Relations with Shareholders
The Strategic Report, which incorporates the Chair’s
Statement, Chief Executive’s Q&A, Financial Review, Section
172 Statement, Stakeholder Engagement, Risk Management,
Sustainability/ESG and Climate-Related Financial Disclosures
(‘CFD’) 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 54 to 57.
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 was relaunched
in February 2024 with a contemporary design, refreshed
content, an enhanced user experience and SEO-Ready
functionality. It is regularly updated and provides additional
information on the Group, including information on the
Group’s products, technology and work on sustainability/ESG.
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Advanced Medical Solutions Group plc Annual Report & Accounts 2023
Division of Responsibilities
There is a clear division of responsibilities between the role of the Chair and the Chief Executive Officer of the Company.
The roles are clearly set out in writing. The information below reflects the Board at the time of issuing the Annual Report
in 2024.
Liz Shanahan,
Chair
Chris Meredith,
Chief Executive
Officer
• 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.
• 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.
Grahame Cook,
Senior Independent
Director
Douglas
Le Fort,
Non-Executive
Director
• 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 (see right).
• Chairs meetings of the Nominations Committee
when it is considering succession to the Chair.
• Provides a sounding board for the Chair and
conducts the Chair’s annual evaluation.
• 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.
• Responsibility for Workforce Engagement
(by appointment).
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
75
FINANCIAL STATEMENTSSTRATEGIC REPORTOVERVIEWGOVERNANCE Corporate Governance Report continued
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.
Both Peter Allen, who retired as Chair on 31 December 2023,
and Liz Shanahan, who was appointed as Chair on 1 January
2024, were considered independent upon their 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, corporate governance, risk management, development
of Environmental, Social and Governance strategy 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.
The Board also delegates a number of its responsibilities to
Committees and management as described below.
Peter Allen retired as Chairman on 31 December 2023. Upon
her appointment as Chair on 1 January 2024, Liz Shanahan
stepped down from the Audit Committee.
Board Composition
The Board comprises the Non-Executive Chair, two Executive
Directors and three Non-Executive Directors. The Directors’
profiles on Pages 68 and 69 detail their experience and
suitability for leading and managing the Group. Together
they bring a valuable range of expertise and experience.
No individual or group of individuals dominates the Board’s
decision making process. Both the previous Chairman and
new Chair foster a climate of open debate in the Boardroom,
built on a 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, usually involving an
external recruitment agency, 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
Liz Shanahan and commenced the process to appoint a new
Non-Executive Director can be found on Page 80.
Diversity
We recognise the importance of diversity. The Board has a
wide range of skills and experiences from a variety of business
backgrounds and a number of nationalities. The female Board
representation at 31 December 2023 was 20%. The FTSE
Womens Leaders Review target (40%) is being considered
during the recruitment process for a new Non-Executive
Director and is a key part of the succession planning process.
All Directors have access to the advice and services of the
Company Secretary. The Non-Executive Directors are able to
contact the Executive Directors, Company Secretary or Senior
Managers at any time for information about the Group.
Board Committees
The Board has delegated authority to the Audit, Remuneration
and Nomination Committees. Grahame Cook, Douglas
Le Fort and Liz Shanahan were members of the Audit,
Remuneration and Nomination Committees. Peter Allen was
a member of the Remuneration and Nomination Committees.
Chris Meredith is a member of the Nomination Committee.
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
launched an EDI Committee in early 2022 which has made
further progress in 2024 and reports into the ESG Steering
Committee. We continue to take steps to further promote
diversity amongst our employees at all levels.
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.
Matters considered by the Board in 2023 included:
• Strategic plans.
• EBT/share buyback.
• Acquisition strategy including potential acquisition targets
and valuations (specifically Peters Surgical and SyntaColl).
Impact of inflation and rising cost of living.
•
• Supply chain resilience.
• Environmental, Social, Governance (‘ESG’).
• Climate-Related Financial Disclosures (‘CFD’).
• Dividend policy.
• MDR and regulatory pathways.
• Health and safety.
• UK Corporate Governance Code compliance.
• Board refreshment.
• Directors’ responsibilities.
• Group delegation of authority policy.
• Risk review.
• Major capital expenditure.
• Finance and operations review.
• Board evaluation and Board support.
• Reports from the Board Committees.
• Annual budget, results, forecast updates.
• Organisation and Senior Management structure.
• Shareholder base and investor engagement.
• Development of new Corporate Website.
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Advanced Medical Solutions Group plc Annual Report & Accounts 2023
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
Company does not consider the current contributions of 10%
to be excessive and will review this for any new appointments.
We are unable to comply with Provision 31 as we do not
prepare a formal viability statement. Please see references to
Going Concern on Pages 77, 83, 100 and 112.
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 93 to 95 and the full
terms and conditions of appointment of the Non-Executive
Directors are available at the Company’s Registered Office.
Tenure Chart
The Board was comprised of six members throughout 2023,
decreased to five on 1 January 2024. The Board tenure during
2023 is shown below.
Date of appointment
1
2
3
4
5
6
7
8
9
10+
Peter Allen (retired)
4 December 2013
Grahame Cook
1 February 2021
Chris Meredith
11 April 2006
Eddie Johnson
1 January 2019
Douglas Le Fort
2 August 2021
Liz Shanahan
1 August 2022
Date of election
or next re-election
N/a
12 June 2024
12 June 2024
12 June 2024
12 June 2024
12 June 2024
Induction and Professional Development
Each new Director is given a formal induction process
covering how the Board and Committees operate, meetings
with Senior Management, information on strategy, products
and performance and access to policies and other key
documents. Further details can be found in the Nomination
Committee Report on Page 79.
Training and development needs of Directors are reviewed
regularly. The Directors are kept appraised of developments
in legal, regulatory and financial matters 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.
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
of £60.2 million at December 2023 (31 December 2022:
£82.3 million). To fund the acquisition of Peters Surgical,
which is expected to complete in mid-2024, the Group has
arranged new £90 million debt facilities that mature in March
2027 and thereafter can be extended by two consecutive
twelve-month periods. The Directors expect the initial
proforma net debt to EBITDA ratio of the enlarged Group to
be approximately 1.5x and given its strong cash generation
profile expect leverage to reduce materially thereafter.
Demand for the Group’s products remains strong. Contracts
are in place with key customers that include government
agencies and global healthcare companies across different
geographic regions that have substantial financial resources.
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 80.
The Group continues to closely monitor the global supply chain,
although the issues seen in the last two years appear to have
subsided; inflation has fallen significantly in most countries
which has eased the cost-of-living crisis, although workforce
issues remain in the NHS and other healthcare systems.
Audit, Nomination and Remuneration Committees
The Committee Reports can be found on Pages 81 to 84, 78
to 80 and 85 to 95 respectively.
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.
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. The Going Concern assessment
considered both the scenario that the Peters acquisition is
completed and does not complete.
Remuneration
The level of remuneration of the Directors is set out in the
Remuneration Report on Pages 91 to 95.
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
77
FINANCIAL STATEMENTSSTRATEGIC REPORTOVERVIEWGOVERNANCE Nomination Committee Report
A successful period
of refreshment,
creating a Board
with the skills and
experience to drive
future growth.
Dear Shareholder,
As Chair of the Nomination Committee, I am pleased to present
the Committee’s report for the year ended 31 December 2023. I am
presenting this report as I was appointed as Chair of the Group, and
Chair of the Committee, on 1 January 2024 following the retirement
of Peter Allen.
As a Board we recognise that a balanced and diverse Board, with
a broad range of skills, experience and knowledge, is more likely
to be an effective Board. In support of our vision of a world where
the outcome of every patient can benefit from our products and a
company where every employee feels invested and valued, and with
the ultimate aim of creating sustainable value for all our stakeholders,
we continue to focus on ensuring that we have that right balance of
skills, knowledge and diversity, both on the Board and within our SMT.
An equally important role for the Committee is ensuring that we
have an appropriate pipeline of future talent within the business.
The Committee regularly reviews succession plans, not only for
the Board, but also for the SMT.
The Committee met six times during the year and was chaired
by Peter Allen, with myself, Grahame Cook, Douglas Le Fort and
Chris Meredith as the other Committee members throughout
the year.
Since 2020 we have implemented our plan to refresh the composition
of the Board is progressing well with my appointment as Chair
and the ongoing process to appoint a Non-Executive Director.
The appointments considered the FTSE Women Leaders Review
and our commitment to equality and diversity.
I believe that the actions taken ensure that the Board’s size and
composition is appropriate for a Group of AMS’s size, complexity
and nature, with a positive mix of nationalities and genders. We
now look forward to a period of Board stability and at developing
the Board, as all of the Non-Executives have been in place for less
than three years.
We are now in the best possible position to drive long-term
sustainable growth for the benefit of our stakeholders, with the
leadership required to drive the success of the new, enlarged Group
following the transformational acquisition of Peters Surgical which
was announced in March 2024.
Liz Shanahan
Chair of the Nomination Committee
1 May 2024
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Advanced Medical Solutions Group plc Annual Report & Accounts 2023
The Committee will
focus on the embedding
and development the
Board following
significant change.
Following Liz’s appointment, the Board assessed their
composition, skills and experience and decided that a new
Non-Executive Director be recruited to bring the Board back
to six members (including three Non-Executive Directors).
Liz took on responsibility for leading this process, which is
progressing well.
The new Non-Executive Director will take on responsibility for
Workforce Engagement, following Liz’s appointment as Chair.
Following any appointment, the new Non-Executive Director
will receive a tailored induction programme to develop their
understanding of AMS, strategy and governance structure, as
well as their own duties and responsibilities. They will spend
time with the Executive Directors, Non-Executive Directors,
Senior Management Team, Company Secretary and other
key personnel. They will also receive 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 effective leadership of the
Group and 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 conscious of the desire to promote Board
diversity, including gender, social and ethnic backgrounds,
cognitive and personal strengths, and being conducive to the
delivery of the Company’s strategy. Reference is made to the
FTSE Women Leaders Review and, prior to this the Hampton-
Alexander guidance. Selection for Board appointments is
made on merit against this specification.
Attendance record and tenure in 2023
Grahame Cook
Tenure: 3 years
Meetings attended:
6/6
Chris Meredith
Tenure: 13 years
Meetings attended:
6/6
Peter Allen (Chair)
(retired 31 Dec 2023)
Tenure: 10 years
Meetings attended:
6/6
Douglas Le Fort
Tenure: 2.5 years
Meetings attended:
6/6
Liz Shanahan
Tenure: 18 months
Meetings attended:
6/6
Board changes in the year
The Committee oversaw a rigorous recruitment process for
the appointment of a Chair following the retirement of Peter
Allen on 31 December 2023. At the conclusion of this process
we were delighted that Liz Shanahan was appointed as Chair
on 1 January 2024, having initially joined the Board on 1 August
2022. Her appointment followed an extensive search which
the Chair led with an executive search consultancy, Dzaleta
Consulting, who specialise in Life Sciences. Dzaleta has no
connection with the Company or any individual Director.
A shortlist of candidates, both internal and external, were
interviewed by members of the Board.
Liz is a life sciences entrepreneur with extensive experience
advising leading global pharmaceutical and healthcare
organisations on their communications. Most recently, she
was a Non-Executive Director of UDG Healthcare plc, a
company that was listed on the London Stock Exchange and a
constituent of the FTSE 250 up until its £2.8 billion takeover in
August 2021. Until 2014, she was Global Head of Healthcare &
Lifesciences at the NYSE-listed management consultancy, FTI
Consulting Inc., which in 2007 acquired the communications
business Santé Communications, founded by Liz in 1995. Liz is
a Trustee of CW, the charitable arm of Chelsea & Westminster
Foundation Trust Hospital in London and a member of the
organisation’s Innovations Advisory.
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
79
FINANCIAL STATEMENTSSTRATEGIC REPORTOVERVIEWGOVERNANCE Nomination Committee Report continued
Gender diversity
Following the appointment of a new Chair, female
representation on the Board is 20% (2022: 16.7%). AMS
views development of female Executive talent as important,
which is reflected in the female representation in the Senior
Management Team, which stands at 43% (2022: 43%).
Board composition
Board tenure
2
1
2
1
1
3
Non-Executive Chair
Executive Directors
Independent Non-Executive
Directors
0-3 years
3-6 years
>6 years
Board gender diversity
Senior Management
Team gender diversity
1
4
4
5
Female
Male
Female
Male
Appointment process
SCOPING
Nomination Committee discussion
(Both scheduled and ad hoc meetings)
Identification of a vacancy.
Considerations
•
• Needs of the organisation, current and future.
• The personal skills and qualifications required.
• The dynamics of the current Board.
Appointment of an Executive Search Consultancy
Considerations
• Market reputation.
• Reach.
• AMS Mission, Vision, Values and Culture.
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.
Activity in the year
The Committee focused on the appointment of a new Chair
in 2023. We appointed Dzaleta Consulting for all executive
searches in 2023. Dzaleta Consulting has no connection with
AMS or any individual Directors, other than having provided
Executive search services for prior AMS Board appointments.
APPOINTMENT
Recommendation to the Board
Considerations
• Due diligence findings.
We undertook a Board Evaluation and Committee
Self-Assessment during 2023. The overall findings
from the effectiveness reviews concluded that AMS’s
Board, Committees and individual Directors continue to
operate effectively and the Board actively discussed any
recommendations arising out of the evaluations.
Priorities for 2024
The Committee will continue to support the embedding of
the new Chair in 2024, as well as developing the Board as
all of the Non-Executives have been in place for three years
or less. We will also continue to assess the support required
to develop the Senior Management Team and potential
succession internally, as well as the activity necessary to
drive a broader equality, diversity and inclusion action plan.
POST APPOINTMENT
Induction programme
Considerations
• Directors’ duties and responsibilities.
• Familiarisation with the business.
• Meetings with key employees.
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Advanced Medical Solutions Group plc Annual Report & Accounts 2023
Audit Committee Report
Strong governance and
risk management, protect
shareholders’ interests
and support long-term
sustainable growth.
Dear Shareholder,
As Chair of the Audit Committee, I am pleased to present the
Committee’s report for the year ended 31 December 2023.
Douglas Le Fort and Liz Shanahan were members of
the Committee throughout the year. Liz stepped down
from the Committee upon her appointment as Chair
on 1 January 2024, in line with best practice.
The Committee formally met three times during 2023,
as well as a number of ad hoc meetings with the external
and internal auditors.
This report sets out 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. The Committee continues to reflect
the provisions of the UK Corporate Governance Code, FRC
Guidance for Audit Committees and other best practice. The
Committee’s Terms of Reference are available on our Website.
The Committee has a structured programme of activities
focused on the Group’s reporting cycle, principal risks and
future strategy, as outlined in Our Strategy on Pages 16 to
21. Robust internal controls and risk management systems
help ensure the resilience of the Group, while remaining
operationally agile and adaptable. Our work is supported by
our External Auditors, Deloitte, and our Internal Auditors, RSM.
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.
Grahame Cook
Chair of the Audit Committee
1 May 2024
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
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FINANCIAL STATEMENTSSTRATEGIC REPORTOVERVIEWGOVERNANCE Audit Committee Report continued
Attendance record and tenure in 2023
Douglas Le Fort
Tenure: 2.5 years
Meetings attended:
3/3
Grahame Cook
(Chair)
Tenure: 3 years
Meetings attended:
3/3
Liz Shanahan
Tenure: 18 months
Meetings attended:
3/3
Key objectives of the Audit Committee
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’s responsibilities include:
• 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
periodically consider a tender process.
• Review audit and non-audit services provided by
the external auditor and fees for such services.
• Review the Committee’s Terms of Reference annually
to ensure all key areas are considered and that the
Committee’s remit and activities are in line with best
practice. These were last updated in December 2023.
Progress has been made to
deliver assurance on ESG
reporting, resilience, risk
management and controls.
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, or create
conflicts. 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.
There was one project in 2023 where expenditure exceeded
the £10,000 threshold for approval by the Committee,
which was the £31,000 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 16 financial years.
A performance, effectiveness and independence evaluation led
the Committee to recommend the reappointment of Deloitte
LLP as the Group’s External Auditor for the next financial year.
In accordance with best practice, the audit partner rotates
every 5 years.
Periodic consideration is given to tendering the position of
external auditor. In the opinion of the Committee Deloitte
continues to provide an effective service.
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Advanced Medical Solutions Group plc Annual Report & Accounts 2023
Audit Committee activities
During 2023 the Committee undertook the following activities:
Topic
2023 main activities and key areas of focus
Financial
Statements
and Reports
• Reviewed and approved the External Audit fees for 2023.
• Reviewed the annual and half-yearly financial reports and related statements.
• Assessed key accounting judgements.
• 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 any
external uncertainties 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, internal controls, the risk and control reporting structure and the ongoing
process to monitor the principal risks of the Group.
– Assessed preparation for the Climate-Related Financial Disclosures (CFD).
External
Audit
• Monitored the independence and ensured the objectivity of the External Auditor, approved the Audit Plan for the
2023 audit, reviewed the performance of the External Auditor, considered the reappointment of Deloitte LLP as
Auditor for 2024 and recommended their reappointment to the Board. The Audit Partner responsibility rotated
in April 2022. In line with best practice, the Committee meets periodically with the External Auditor without
management being present.
Internal
Audit
Risk
Management
Effectiveness
of External
Auditor
• Continued the rolling Internal Audit Plan from RSM, including reports on supply chain and a follow-up
on business continuity and disaster planning.
• 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 2023 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 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 support, with non-audit services typically being 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.
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
83
FINANCIAL STATEMENTSSTRATEGIC REPORTOVERVIEWGOVERNANCE Audit Committee Report continued
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.
A three-year Internal Audit Plan with RSM was agreed in
December 2023 to cover 2024–2026. The Committee:
• Ensures the Internal Audit 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 a report for each meeting.
In 2023 the Internal Auditor undertook reviews in line with
the Internal Audit Plan previously agreed by the Committee.
In 2023 the principal areas were:
• Environmental, Social and Governance (‘ESG’).
• Acquisition integration.
These reports highlighted to the Committee that, although the
Group’s internal controls 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 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.
• 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 Company Chair. This policy allows for reporting to
be made on a confidential basis if necessary. This was last
updated in December 2023.
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.
The Committee also reviewed an External Assurance List, a
summary of all audits and checks of various functions (such
as IT) conducted by external parties in 2023, and a list of
all Group insurance Policies, to ensure there is sufficient
coverage in all key areas. These reviews will continue be
held annually.
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Advanced Medical Solutions Group plc Annual Report & Accounts 2023
Remuneration Committee Report
Our remuneration policy
focuses on our performance,
values and delivery of long-
term sustainable growth by
aligning the interests of
our key stakeholders.
Dear Shareholder,
I am pleased to present the Remuneration Committee Report
for the year ended 31 December 2023.
Peter Allen, Grahame Cook and Liz Shanahan were members
of the Committee throughout the year. At the end of 2023
Peter Allen stepped down as Chairman of AMS and I would
like to thank him for his valuable service to the Committee.
The Committee formally met three times during 2023.
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.
AMS takes governance seriously and we remain committed
to high standards of corporate governance. Our Remuneration
Policy is designed to ensure that we are able to attract, motivate
and retain the talent we need to ensure the resilience of the
Group. The Committee continues to be committed to positive
and proactive engagement with shareholders, as we have
shown in prior years with a number of consultations.
A resolution will be put to shareholders at the AGM on
12 June 2024 asking shareholders to consider and approve
this Report. I hope that we can count on your support.
Shareholders considered a similar resolution at the 2023
AGM and supported it by 98.78% of the votes cast.
On behalf of the Committee, I would like to thank you
for your support and I trust you will find the Directors’
Remuneration report useful and informative.
Douglas Le Fort
Chair of the Remuneration Committee
1 May 2024
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
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FINANCIAL STATEMENTSSTRATEGIC REPORTOVERVIEWGOVERNANCE Remuneration Committee Report continued
Attendance record and tenure in 2023
This is a concern in terms of retention and future recruitment as
the Policy focuses on lower base salaries and higher incentives.
Douglas Le Fort
(Chair)
Tenure: 2.5 years
Meetings attended:
3/3
Grahame Cook
Tenure: 3 years
Meetings attended:
3/3
Peter Allen
(retired 31 Dec 2023)
Tenure: 10 years
Meetings attended:
3/3
Liz Shanahan
Tenure: 18 months
Meetings attended:
3/3
Remuneration for 2023
The annual bonus awards and Long-Term Incentive Plan (‘LTIP’)
vesting in 2023 for the Executive Directors were as follows:
Annual bonus
The performance conditions for the Executives 2023 annual
bonus were based on the achievement of two financial
targets (Revenue and Adjusted PBT – accounting for 70% of
the total bonus) and an assessment of the delivery of personal
objectives (accounting for 30% of the total bonus). In view of
performance, the Committee determined:
• Revenue of (£126.2m) was below the threshold (£129.2m)
and target (£136.0m).
• Adjusted PBT of £25.9 million was below the threshold
figure of £31.3 million.
• Personal objectives are linked to corporate, financial,
strategic and non-financial objectives (see Pages 89 and 91).
The Committee determined that 70% of these objectives
were achieved.
LTIP
LTIP awards granted to Chris Meredith and Eddie Johnson
in April 2020 vested in 2023 with performance criteria and
weightings as follows:
• TSR (50%) – the performance period ended on 14 April
2023. The Company ranked just above the median (29th
out of 61 comparators) which resulted in a vesting of 35%.
• EPS (50%) – the growth in EPS was calculated over the
three financial years to 31 December 2022. The average
annual growth was 13.77%, above the threshold level of 5%
which resulted in a vesting of 68.8%.
• Overall across both elements the final vesting result was 51.9%.
Implementation of Remuneration Policy in 2023
The Committee undertook a review of the Remuneration Policy
(‘Policy’) in 2022 which reviewed salaries and the bonus scheme.
In January 2023 Chris Meredith’s salary was increased from
£364,000 to £378,560, an increase of 4% in line with the
workforce. In line with the longstanding commitment to
bring Eddie’s salary to around the 50th percentile for equivalent
CFOs, given his experience and strong performance, his salary
was increased to £250,000 in January 2023.
The Committee reviewed the Policy in December 2023,
focusing on the incentives (annual bonus and LTIP) which
have both seen low pay-outs and vesting in recent years.
LTIP
• Minor amendments to TSR and EPS calculations in line
with market practice and guidance from Ellason.
• Reviewed and selected a more appropriate peer group to
determine the proportion of the Award vesting under Total
Shareholder Return (TSR).
• For Senior Managers apart from the Executive Directors,
introduced a Conditional Award alongside the existing
Performance Conditions (Total Shareholder Return and EPS
growth), providing a proportion for continued employment
throughout the vesting period (Good Leaver provisions
outlined in the LTIP rules apply).
Bonus
• Bonus minimum and maximum thresholds ranges will be
standardised at +/-5% for around both Revenue and PBT.
Compliance with the 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).
The Code was updated in January 2024. We will implement
the changes required with effect from 1 January 2025 and
report on any areas where we do not comply.
Full details of the share schemes offered to the Executive
Directors can be found on Page 91 and 92. 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 can be found 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:
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,
promote pay for performance, be 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.
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Advanced Medical Solutions Group plc Annual Report & Accounts 2023
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 annual bonus
requirements ensures 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 Chair of the Board. Biographical information on the
members is set out on Pages 68 and 69. 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 roles 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
2023 are outlined below:
Month
March
Principal activities
• Review of 2022 personal objectives and implications for Bonus and Deferred Annual Bonus awards.
• Discussion on 2023 personal objectives for the Executive Directors and review of 2023 Corporate Objectives.
• Review and ratification of amended 2023 annual bonus scheme.
• Review of 2023 LTIP and share option awards for 2023 (Executive Directors, SMT and key employees).
• Review of Gender Pay Gap Report.
• Decision on how to run the Share Incentive Plan in 2023 and set investment limits.
October
• Reviewed progress of 2023 personal objectives for Executive Directors.
• Reviewed status of 2023 bonus.
• Ratification of an additional award of share options for key employees.
• Review of results of Committee Self Assessment questionnaire.
• Renewal of Executive Shareholding Policy and Good Leaver Delegation Policy.
• Cost-of-Living and 2024 Budget planning discussion.
December
• Discussed 2024 salaries for the Executive Directors, SMT and workforce overall.
• Discussed implications of the cost-of-living increase for 2024.
• Review of Remuneration Policy and LTIP renewal.
• Initial review of achievement of 2023 personal objectives and Corporate Objectives.
• Discussion regarding 2024 personal objectives for Executive Directors.
• Review of compliance with Executive Shareholding Policy.
• Review of Gender Pay analysis.
• Reviewed Terms of Reference, Directors’ Expenses Policy and 2024 Remuneration Committee Meeting dates.
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
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FINANCIAL STATEMENTSSTRATEGIC REPORTOVERVIEWGOVERNANCE Remuneration Committee Report continued
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 SMT members met or
exceeded the shareholding target in 2023, except for five SMT
members. Three of the SMT members have been with the
Company for less than five years and the remaining two are
marginally beneath the target, impacted by the lower share
price in December 2023.
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 were not engaged in 2023 to provide guidance.
However, they were engaged in January 2024 post period-
end. Ellason are the only adviser which provides material
assistance to the Committee:
Advisors
Ellason LLP
Fees for Committee assistance
£Nil (2022: £Nil)
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 2023 financial
year was 4% for the SMT and the broader employee
population, which took effect from 1 January 2023.
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 on Page
86. Non-Executive Director fees were also increased by 4%.
Details of these increases are provided below. The Committee
will continue to review Executive Director and Non-Executive
Director salaries against industry benchmarks during 2024.
In the second half of 2022, AMS started to provide additional
financial support to its lower-paid employees across the
Group to help them to cope with the cost-of-living crisis.
This support continued in 2023.
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.
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 previously 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.
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Advanced Medical Solutions Group plc Annual Report & Accounts 2023
Statement of voting at Annual General Meeting (AGM)
At the 2023 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
136,108,441
98.78%
1.22%
Overview of Director and Senior Management Remuneration Policy
Element of
remuneration
Base salary
Purpose and how it
supports strategy
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.
How the element operated
and maximum opportunity
Framework used to
assess performance
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.
Current salaries of the Executive Directors
are set out on Page 91. A review was last
carried out in December 2023.
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.
Benefits
To provide a competitive level
of benefit provision.
Executive Directors and their families
receive private medical insurance. No
maximum cost.
N/A
Annual
Performance
Bonus
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 92.
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.
Deferred
Annual
Bonus (DAB)
Provides mechanism to exercise
malus provisions.
The DAB requires Executive Directors and
SMT to defer up to 25% of their Annual
Performance Bonus for three years.
N/A
The DAB includes malus provisions
which are laid out on Page 91. Clawback
provisions also apply to the DAB.
Share
Incentive
Plan (SIP)
To align the interests of all
employees with shareholders,
incentivise long-term
value creation and act as
a retention tool.
The SIP is available to all employees and
allows investment of bonus and/or salary
into shares. It also allows for the provision
of matching shares and free shares if the
shares are held for a set period.
N/A
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
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FINANCIAL STATEMENTSSTRATEGIC REPORTOVERVIEWGOVERNANCE Remuneration Committee Report continued
Element of
remuneration
Purpose and how it
supports strategy
How the element operated
and maximum opportunity
Framework used to
assess performance
No shares shall vest from
the proportion of the Award
determined by reference
to the a selection of peer
companies (previously 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 performance
against targets in pence 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 (previously
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%. The
conditional award provides
full vesting for employment
throughout the vesting period.
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.
Vesting is subject to the
Committee being satisfied that
the Group’s performance on
these measures is consistent
with the performance of
the business.
N/A
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 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 2023 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.
For Senior Management apart from the
Executive Directors and below, these
elements are reduced to 25% each and a
conditional award of 50% is awarded for
continuous employment in the vesting
period. There are malus and clawback
provisions in place.
In 2024 and moving forward, there will
be minor amendments to the awards
as outlined on page 86 in line with
market practice.
Pension
To provide a market-competitive
remuneration package to enable
the recruitment and retention
of Executive Directors and
Senior Management.
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.
90
Advanced Medical Solutions Group plc Annual Report & Accounts 2023
Malus and clawback provisions – 2014 LTIP/DAB
The 2014 LTIP and DAB incorporate malus and clawback 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). The clawback provisions allow
for clawback of previously granted Awards in the same circumstances as set out above.
Directors’ emoluments – single figure of remuneration (2022 and 2023)
Salary and fees
Annual
Performance
Bonus
Deferred
Bonus
Gains on
SIP vested1
Benefits
Pensions
23
22
23
22
23
Chris Meredith
Eddie Johnson
379
250
339
218
Peter Allen
Penny Freer2
Grahame Cook
Douglas Le Fort
Liz Shanahan3
97
–
57
54
46
94
27
53
48
18
Total
883
797
–
–
–
–
–
–
–
–
218
95
–
–
–
–
–
313
–
–
–
–
–
–
–
–
LTIPs vested1
23
317
90
22
112
24
–
–
–
–
–
–
–
–
–
–
22
73
32
–
–
–
–
–
23
78
49
–
–
–
–
–
22
55
20
–
–
–
–
–
Total
remuneration
23
22
813
415
832
412
97
–
57
54
46
94
27
53
48
18
23
38
25
–
–
–
–
–
22
34
22
–
–
–
–
–
23
1
1
–
–
–
–
–
2
22
1
1
–
–
–
–
–
2
105
407
136
127
75
63
56 1,482 1,484
1. Gains on SIPs vested is based on the share price at vesting date. Details of the SIP can be found on Page 89.
2. Penny Freer retired on 8 June 2022.
3. Liz Shanahan was appointed to the Board on 1 August 2022.
The table above summarises the payments made and amounts earned by the Executive and Non-Executive Directors for the
2022 and 2023 financial years. The fees for the Chair of the Audit Committee and Remuneration Committees (Grahame Cook
and Douglas Le Fort) include a fee of £8,000 for chairing a Committee and a £3,000 fee for the Senior Independent Director
(Grahame Cook). The Executive Directors were granted LTIPs as detailed on Page 92. All Directors have confirmed that they
have not received remuneration save as disclosed above.
Salaries and fees
Details of 2023 salaries for the Executive Directors are outlined on Page 86 and for the prior year in the table above.
Annual Performance Bonus and Deferred Annual Bonus
Details of the Annual Performance Bonus and Deferred Annual Bonus are outlined on Page 86. The personal objectives
for the Executive Directors for the year ended 31 December 2023 included the successful conclusion of negotiations with
US distributors to put the business in a stronger position from the beginning of 2024, progress in OTIF and backorder,
enhanced M&A market mapping and intelligence, and submission of files for MDR review in line with the original timeline.
The table below summarises 2023 performance against the targets:
Performance measures
Group Revenue
Adjusted Profit Before Tax
Personal objectives/values assessment
Total
Weighting
35%
35%
30%
100%
Threshold
£m
129.2
31.3
Target
£m
136.0
31.8
142.8
33.4
Committee assessed that the
Executive Directors achieved
70% of their objectives
Stretch
£m
Achievement
£m
2023 result
(% of
maximum)
126.2
25.9
70%
0%
0%
0%
0%
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
91
FINANCIAL STATEMENTSSTRATEGIC REPORTOVERVIEWGOVERNANCE Remuneration Committee Report continued
The bonus for 2023, which would have been payable in April 2024, is £Nil as the threshold for PBT was not achieved. Despite this the
Remuneration Committee still assessed the Personal Objectives for Chris Meredith and Eddie Johnson, with both achieving 70%.
Director
Chris Meredith
Eddie Johnson
Revenue
PBT
Objectives
Total %
0%
0%
0%
0%
70%
70%
0%
0%
2024 objectives are commercially sensitive and not detailed in this Report.
2023 bonus payments in respect of 2022 were as follows:
Director
Chris Meredith
Eddie Johnson
Bonus paid
in 2023
(FY 2022)
Percentage
of salary
(total bonus)
Maximum %
of salary
Deferred
£217,753
£72,584
£94,601
£31,534
86%
58%
150%
100%
Vesting of LTIPs for the year ended 31 December 2023
Details of the LTIP performance conditions for the LTIPs granted on 14 April 2020, which produced a 51.9% vesting result on 14
April 2023, are shown on Page 86.
Directors’ interests in the LTIP
On 14 April 2023 the Committee approved LTIP awards as outlined below.
Director
Chris Meredith
Eddie Johnson
Type of award
Basis of grant awarded
Share price at
date of grant
(£)
Number of
shares granted
Face value
of grant
Vesting
determined by
performance
over 3 years
Nil-cost option
200% of salary
Nil-cost option
125% of salary
2.331
2.331
324,805
£757,120
See Page 90
134,063
£312,501
See Page 90
Outstanding Share Awards – Maximum under the LTIP
Director
Chris Meredith
Eddie Johnson
As at 1 January
2023
Exercised in
the year
Issued in
the year
254,812
238,963
239,552
–
34,235
28,126
17,379
8,221
72,197
67,706
89,832
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
324,805
–
–
–
–
–
–
–
134,063
Lapsed in
the year
122,565
–
–
–
–
–
–
–
34,727
–
–
–
As at 31
December
2023
Market price
at grant date
(p)
132,247
238,963
239,552
324,805
34,235
28,126
17,379
8,221
37,470
67,706
89,832
134,063
239.00
257.40
303.90
233.10
132.00
184.60
246.69
328.75
239.00
257.40
303.90
233.10
First vesting date
14 April 2023 (vested)
23 April 2024
14 April 2025
14 April 2026
2 April 2018 (vested)
18 April 2019 (vested)
6 April 2020 (vested)
24 April 2022 (vested)
14 April 2023 (vested)
23 April 2024
14 April 2025
14 April 2026
Chris Meredith exercised Nil LTIPs in 2023 (2022: 395,355). Eddie Johnson exercised Nil LTIPs in 2023 (2022: Nil). Awards have
no performance re-testing facility.
92
Advanced Medical Solutions Group plc Annual Report & Accounts 2023
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 2023 save as disclosed on Page 91. Further details of Non-Executive Director fees are below:
Element of remuneration
Non-Executive
Director Fees
Purpose and how it
supports strategy
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 scales or scope of the role.
Fees were increased by 4% in 2023, in line with
the workforce.
Framework used to assess
performance
Non-Executive Directors
do not participate in
variable pay arrangements
and do not receive
retirement benefits.
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:
Date of contract
Unexpired term (months) or rolling contract
Notice period
(months)
Executive Director
Chris Meredith
Eddie Johnson
Non-Executive Directors
Grahame Cook
Douglas Le Fort
1 July 2005 (updated 1 July 2021)
Rolling contract
1 January 2019 (updated 1 July 2021)
Rolling contract
1 February 2021
2 August 2021
Rolling contract
Rolling contract
Liz Shanahan
1 August 2022 (updated 1 January 2024)
Rolling contract
12
12
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.
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
93
FINANCIAL STATEMENTSSTRATEGIC REPORTOVERVIEWGOVERNANCE Remuneration Committee Report continued
No payments were made to past Directors or for loss of office during the year ended 31 December 2023.
Event
Bonus/DAB
Good Leaver
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).
Bad Leaver
Not applicable.
Individuals lose the right to their Annual
Performance Bonus and unvested Deferred
Annual Bonus shares.
Change of Control
LTIP
Good Leaver
Bad Leaver
Change of Control
Annual Performance Bonuses are paid and
unvested Share Incentive Plan 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 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 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 and a pro-rata reduction
applies for the proportion of the vesting period
not served.
Upon a Director’s exit or a change of control situation, Share Incentive Plan awards will be treated in line with the 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 (retired 31 December 2023)
Grahame Cook
Douglas Le Fort
Liz Shanahan
Beneficially
owned1 at
31 December
2022
Beneficially
owned1 at
31 December
2023
Outstanding
LTIP awards at
31 December
2023
Outstanding
DAB awards at
31 December
2023
Outstanding
share awards
under SIP at
31 December
2023
Shareholding as
a % of issued
Share Capital at
31 December
2023
1,748,478
1,788,221
157,742
50,000
Nil
Nil
Nil
125,721
50,000
Nil
Nil
54,785
935,567
417,032
37,357
26,265
144,296
96,106
0.82%
0.06%
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1. Includes all shares beneficially held by the Executive Director (or their spouse and children) and vested SIPs.
94
Advanced Medical Solutions Group plc Annual Report & Accounts 2023
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 2023 is shown below, using the share price at that date:
Director
Chris Meredith
Eddie Johnson
Shares
held*
1,713,912
46,906
Vested
SIPs
92,179
119,111
LTIP (50%
of vested/
unexercised
LTIPs)
66,124
62,176
DAB
awards
Total
shares
Shareholding
target
(£)
Shareholding
value
(£)
37,357
1,909,572
£757,120
3,991,004
26,265
254,998
£500,000
543,945
% holding
vs target
527%
107%
*
Includes all shares beneficially held by the Executive Director (or their spouse and children).
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 SIPs 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.
2019
770
0%
2020
537
0%
90.3%
73.1%
2021
543
32.2%
0%
2022
(£m)
46.1
4.3
5.5
20.4
2022
832
57.8%
21.2%
2023
(£m)
49.0
4.8
5.3
15.9
2023
813
86%
51.9%
Change
%
6%
9%
-4%
-22%
£1,582,000 (2022: £1,960,000) of staff costs relate to pay for the Directors, of which £874,000 relates to the highest-paid Director
(2022: £1,185,000). Total pension contributions were £1,615,000 (2022: £1,497,000) and for the highest-paid Director £38,000
(2022: £34,000).
During 2023, distributions to shareholders included a dividend of £3,265,000 paid on 9 June 2023 (2022: £2,960,000) and
£1,510,000 paid on 27 October 2023 (2022: £1,381,000). It is proposed that a dividend of 1.66p per share be paid on 21 June
2024. Further details are provided in Note 14 on Page 125.
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 (‘GSOP’). Options granted under the GSOP 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 135 to 138.
The GSOP allows employees to be granted approved or unapproved options. Under the approved part of the GSOP, UK employees
can receive up to £60,000 by market value of the shares on the grant date and benefit from the growth in value of those shares.
This limit increased from £30,000 in April 2023.
Share performance – 2023
The opening share price for 2023 was 259p and the closing price, on the last trading day of the year, was 207.50p.
The range during the year was 274.50p (high) and 177.20p (low) (Source: Daily Official List of the London Stock Exchange).
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
95
FINANCIAL STATEMENTSSTRATEGIC REPORTOVERVIEWGOVERNANCE Directors’ Report
For the year ended 31 December 2023
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
Location
Principal activities, business review and future developments
Throughout the Strategic Report – Pages 6 to 65
Results
Corporate Governance
Directors’ remuneration including Directors’ interest in the share
capital of the Company
Financial Statements – Pages 99 to 147
Corporate Governance Report – Pages 72 to 77
Remuneration Committee Report – Pages 85 to 95
Principal Risks and Uncertainties
Principal Risks and Uncertainties – Pages 63 to 65
Financial instruments and risk management
Research and development activities
Note 24 to the Financial Statements – Pages 132 to 134
and in the Strategic Report – Pages 61 to 65
Strategic Report – Pages 6 to 65
Financial Review on Pages 58 to 60
Shareholder, employee and stakeholder engagement
Stakeholder Engagement Report – Pages 54 to 57
Environmental, Social and Governance, Health and Safety and
Streamlined Energy and Carbon Reporting (‘SECR’) report
ESG Report – Pages 24 to 36
Climate-Related Financial Disclosures (‘CFD’)
CFD Report – Pages 37 to 47
Key Performance Indicators
Company’s capital structure
Key Performance Indicators – Pages 22 to 23
Consolidated Statement of Changes in Equity – Page 110
Financial Statements – Note 27 on Page 135
Long Term Incentive Plan and share schemes
Remuneration Report – Pages 85 to 95
Events after the balance sheet date
Significant subsidiary undertakings
Non-Financial Reporting Statement
Financial Statements – Note 33 on Page 139
Financial Statements – Note 3 on Page 144 to 145
Page 53
Dividends
The Group made a profit before tax for the year to
31 December 2023 of £21.2 million (2022: £25.9 million).
The Directors are recommending a final dividend of 1.66p
per share (2022: 1.51p per share). The final dividend will,
subject to shareholders’ approval, be paid on 21 June 2024
to shareholders on the register at the close of business on
31 May 2024. This would make a total dividend of 2.36p for
the full year (2022: 2.15p). The Board will continue to review
the Group’s dividend policy.
Events after the Reporting Date
Since the date of the balance sheet, on 1 March 2024 the
Group acquired certain assets of Syntacoll GmbH for €1
million and on 13th March agreed to acquire Peters Surgical
SAS for a total maximum cash consideration of €141.4 million.
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 77 and in the Notes Forming Part of the
Financial Statements on Page 112.
Capital Structure
As at 31 December 2023 the Group had net cash of £60.2 million
(2022: £82.3 million). To fund the acquisition of Peters Surgical,
which is expected to complete in mid 2024, new debt facilities
have been arranged which comprise:
(i) a £60 million amortising term loan facility; and
(ii) a £30 million revolving credit facility.
Both the term loan and the revolving credit facility mature
in March 2027 and thereafter can be extended by two
consecutive twelve-month periods. Interest on drawn funds
will be charged at the SONIA interest rate plus an initial bank
margin of 1.75%, with this margin expected to reduce in 2025
in line with forecasted leverage reductions. The Directors
expect the initial proforma net debt to EBITDA ratio of the
enlarged Group to be approximately 1.5x and to reduce
materially thereafter.
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 135.
96
Advanced Medical Solutions Group plc Annual Report & Accounts 2023
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 2024.
It is the policy of the Group that the training, career
development and promotion of disabled persons should, as
far as possible, be identical to that of an able-bodied person
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 our ESG Report on Pages 24 to 36.
Share Capital and Issue of Ordinary Shares
At 28 March 2024 the Group’s issued share capital is:
Number
£’000
% of issued
Share Capital
Ordinary Shares
of 5p each
217,328,785
10,866
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 28 March 2024, in
accordance with the Disclosure and Transparency Rules:
28 March
2024
% of issued
Share Capital
Octopus Investments Limited
28,129,599
12.94
Rathbone plc
20,533,361
Canaccord Genuity Group Inc
17,251,382
Charles Stanley Group
Invesco
AXA SA
10,529,674
8,780,600
6,548,776
9.45
7.94
4.84
4.04
3,01
Re-election of Directors
The Chair has determined that each Director demonstrates
commitment to their role and displays effective performance,
and is recommending the re-election of all Directors. 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 12 June 2024.
The Board has procedures for Directors’ conflicts of interest.
Only Directors who have no interest in the matter under
consideration participate in the decision. The Board report
annually on the 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. In the
event of existing employees becoming disabled, every effort
is made to ensure that their employment with the Group
continues, and that appropriate training is arranged.
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 are important:
• Review of the business;
• Relevant aspects of Section 172 statement (Sch 7.11(1)(b); and
• Employee engagement and Sch 7.11B(1) –
Business relationships).
Further employee policies are discussed in the ESG Report.
See Pages 26 to 33 for disclosure of employee engagement
and stakeholder engagement statements. We provide some
basic information on page 71. We provide monthly updates
to employees through a SMT communication session, which
includes details of financial and economic factors, and is
uploaded to the Intranet, where a Portal is also available to
ask questions to the SMT. We have an Employee Consultative
Group across all sites in the UK, and a number of other sites
outside of the UK, which allow employees to share their views
and any concerns. We run a number of share schemes, as
outlined on Pages 89 to 90, including a Share Incentive Plan,
which is open to all employees and we encourage investment
by offering both lump sum and monthly contributions.
Political Donations
In line with the established policy, the Group made no
political donations.
Annual General Meeting
The AGM will be held at 11.00am on 12 June 2024. Further
details are outlined in the AGM Notice.
Directors’ Responsibilities Statement
The Directors are responsible for preparing the Annual Report
and 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 United Kingdom adopted
international accounting standards. The financial statements
also comply with International Financial Reporting Standards
(IFRSs) as issued by the IASB. The directors have chosen
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 Financial Statements unless they are satisfied
that they give a true and fair view of the state of affairs of the
Company and of profit or loss of the Company for the period.
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
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FINANCIAL STATEMENTSSTRATEGIC REPORTOVERVIEWGOVERNANCE Director’s Report continued
In preparing the Parent Company Financial Statements the
Directors are required to:
Responsibility Statement
We confirm that to the best of our knowledge:
• select suitable accounting policies and then apply
them consistently;
• make judgements 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;
• present information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information;
• provide disclosures when compliance with specific
requirements of the financial reporting framework 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.
• 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 and Responsibility Statement has been
approved by the Board and authorised for issue and is signed
on its behalf by:
Owen Bromley
Company Secretary
1 May 2024
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Advanced Medical Solutions Group plc Annual Report & Accounts 2023
Independent auditor’s report
to the members of Advanced Medical Solutions Group Plc
Report on the audit of
the financial statements
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 2023 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 33; 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.
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
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GOVERNANCESTRATEGIC REPORTOVERVIEWFINANCIAL STATEMENTS Independent auditor’s report continued
to the members of Advanced Medical Solutions Group Plc
3. Summary of our audit approach
Key audit matters
The key audit matters that we identified in the current year were:
• Revenue recognition
• Acquisition accounting
Within this report, key audit matters are identified as follows:
Newly identified
Increased level of risk
Similar level of risk
Decreased level of risk
Materiality
Scoping
The materiality that we used for the group financial statements was £1m which was determined on the
basis of 5% of pre-tax profit.
We focused our group audit scope on Advanced Medical Solutions Limited (UK) and Resorba Medical
GmbH (Germany) subject to a full scope audit, and other traders within the group were subject to
specified procedures. As a consequence of the audit scope determined, we achieved coverage of
approximately 81% of revenue, 94% of profit before tax and 97% of net assets.
Significant changes
in our approach
No significant changes in our approach as compared to prior year with the exception of the current year
acquisition accounting key audit matter which relates to the acquisition of Connexicon Medical Limited
rather than AFS Medical GmbH which occurred in the prior year.
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:
• obtaining an understanding of the available, uncommitted, financing facilities including nature of the facilities, repayment
terms and covenants;
•
linking the assessment and the forecasts to the business model and medium-term risks;
• assessing the reasonableness and appropriateness of the assumptions used in the forecasts;
• assessing the impact of the expected macroeconomic information to assess whether there were indicators of
management bias;
• assessing the impact of the proposed acquisition on the group forecasts and cash flows;
• assessing the amount of headroom in the forecasts;
• evaluating the appropriateness of, and headroom within, the sensitivity analysis; and
• assessing the sophistication of the model used to prepare the forecasts, testing of clerical accuracy of those forecasts and
assessing 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 2023
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 £126.2
million (2022: £124.3 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 a risk of material misstatement due to error or fraud as a result of misstating the allocation of revenue
between periods. This timing of revenue recognition, 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 control has not passed.
We have specifically focused this key audit matter on the timing of recognition of revenue recorded
within November, December 2023 and January 2024. 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
group’s accounting policy, 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 the timing of revenue recognised 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 record to confirm
timing and occurrence of the transaction;
• we assessed reasonableness of material journal amounts
• we evaluated revenue transactions outside non standard shipping revenue streams;
• we investigated and analysed any credit notes post year end which may contradict recognition of
revenue; and
• we analysed the receivables ledgers at year end and post year end to identify and consider if any
material overdue debts were deemed irrecoverable.
Key observations
Based on the work performed we concluded that revenue has been recognised appropriately.
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
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GOVERNANCESTRATEGIC REPORTOVERVIEWFINANCIAL STATEMENTS Independent auditor’s report continued
to the members of Advanced Medical Solutions Group Plc
5.2. Acquisition accounting
Key audit matter
description
How the scope
of our audit
responded to the
key audit matter
During the year, the group acquired Connexicon Medical Limited. Accounting for acquisitions under
IFRS 3 Business Combinations is complex as management is required to separately identify and value
the intangible assets acquired. This involves a high level of estimation uncertainty, particularly with
regards to valuation model inputs such as growth rate, discount rate and cash flow forecasts, hence
management engaged a third party expert to support. The acquisition resulted in £8.5m of separately
identifiable intangible assets and £11.0m of goodwill.
The associated disclosure is included within Note 32 to the Financial Statements. For specific detail on
the group’s accounting policy, see Note 3 to the Financial Statements.
We obtained an understanding of the relevant controls over acquisition accounting.
We read the sale and purchase agreement, other transactional documentation and third party purchase
price allocation reports to evaluate the goodwill and intangible assets recognised and to evaluate the
consideration paid.
With the involvement of our valuation specialists, we evaluated the valuation techniques and the
reasonableness of assumptions applied. We assessed the reasonableness of valuation assumptions such
as discount rate, long-term growth rate and valuation multiples.
We challenged the discount rates used by independently setting expectations based on various
competitors to the group and third party information available, such as beta values, risk-free rates and
cost of debt and premiums based on the size of the acquisition or the risk profile of the entity.
We reviewed the key assumptions in the cash flow forecasts, including assessing the potential impact of
market developments and strategic plans allowing us to consider sensitivities and whether they reflect a
reasonable possible change.
We evaluated the competence, capabilities and objectivity of the third party expert engaged.
We evaluated whether the policies and disclosures for acquisition accounting within the Financial
Statements are consistent with the principles of IFRS 3 Business Combinations and whether they have
been applied appropriately.
Key observations
Based on the work performed we are satisfied that the intangible assets and goodwill generated on
acquisition have been valued appropriately. The assumptions around the growth rate, discount rate and
cash flow forecasts are reasonable.
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:
Group financial statements
Parent company financial statements
Materiality
£1.0m (2022: £1.3m)
£0.9m (2022: £0.8m)
Basis for
determining
materiality
5% of pre-tax profit (2022: 5% of pre-tax profit)
Rationale for the
benchmark applied
Profit before tax is determined to be the most
relevant performance measure to the users of the
financial statements as a key driver of the equity
share price.
Parent company materiality is based on 2% of
the company’s net assets, however this was
capped at 90% of group materiality (2022: 90%
of group materiality).
As a non-trading parent company, net assets is
the key driver of the company.
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Advanced Medical Solutions Group plc Annual Report & Accounts 2023
PBT £21.16m
Group materiality
£1.00m
Component
materiality range
£0.35m to £0.90m
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
Parent company financial statements
70% (2022: 70%) of group materiality
70% (2022: 70%) of parent company materiality
In determining performance materiality, we considered the following factors:
• 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 £0.05m (2022: £0.07m),
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.
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 Advanced Medical Solutions Limited (UK) and Resorba Medical
GmbH (Germany) subject to a full scope audit, other traders within the group were subject to specified audit procedures. As a
consequence of the audit scope determined, we achieved coverage of approximately 81% (2022: 84%) of revenue, 94% (2022:
91%) of profit before tax and 97% (2022: 99%) of 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 £0.35 million
to £0.9 million (2022: £0.5 million to £0.9 million).
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 full scope audit or specified audit procedures.
7.2. Our consideration of the control environment
We involved our IT specialists to gain an understanding of the IT environment and general IT controls. In assessing the IT
environment, we identified deficiencies in general IT controls which resulted in no controls reliance being taken. Whilst our risk
assessment and design of further audit procedures took into account our assessment of the control environment, the audit we
performed was fully substantive. We have reported the identified control deficiencies to management and the Audit Committee.
We understand that management intends to remediate the deficiencies as they develop the IT environment as referenced in the
Audit Committee Report, see Page 84.
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
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GOVERNANCESTRATEGIC REPORTOVERVIEWFINANCIAL STATEMENTS Independent auditor’s report continued
to the members of Advanced Medical Solutions Group Plc
7.3. 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.
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, see Page 38. 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.
7.4. 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 virtually attended planning and close meetings, reviewed audit file remotely and reviewed their reporting documentation.
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.
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.
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Advanced Medical Solutions Group plc Annual Report & Accounts 2023
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, the directors and the audit committee about their own identification
and assessment of the risks of irregularities, including those that are specific to the group’s sector;
• 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 specialists 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 due to possible pressures to meet stakeholder
expectations that could provide incentives to record revenues where performance obligations have not been satisfied.
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 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 as a key audit matter related to the potential risk of fraud.
The key audit matters section of our report explains the matter in more detail and also describes the specific procedures we
performed in response to that key audit matter.
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.
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
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GOVERNANCESTRATEGIC REPORTOVERVIEWFINANCIAL STATEMENTS Independent auditor’s report continued
to the members of Advanced Medical Solutions Group Plc
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.
Christopher Aylott (Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
Cambridge
1 May 2024
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Advanced Medical Solutions Group plc Annual Report & Accounts 2023
Consolidated Income Statement
For the year ended 31 December 2023
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
The above results relate to continuing operations.
Note
4
4, 5
11
12
13
15
15
2023
£’000
126,210
(56,070)
70,140
(1,520)
(50,669)
931
18,882
3,786
(1,511)
21,157
(5,268)
15,889
7.36p
7.25p
2022
£’000
124,330
(50,914)
73,416
(1,626)
(47,378)
478
24,890
1,691
(671)
25,910
(5,504)
20,406
9.42p
9.30p
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
107
GOVERNANCESTRATEGIC REPORTOVERVIEWFINANCIAL STATEMENTS Consolidated Statement of Comprehensive Income
For the year ended 31 December 2023
Profit for the year
Items that will potentially be reclassified subsequently to profit and loss:
Exchange differences on translation of foreign operations
Gain/(loss) arising on cash flow hedges
Deferred tax charge arising on cash flow hedges
Other comprehensive income for the year
Total comprehensive income for the year attributable
to equity holders of the parent
Note
28
24
18
2023
£’000
15,889
(3,126)
3,984
(465)
393
2022
£’000
20,406
6,940
(1,297)
(201)
5,442
16,282
25,848
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Advanced Medical Solutions Group plc Annual Report & Accounts 2023
Consolidated Statement of Financial Position
At 31 December 2023
Assets
Non-current assets
Intangible assets
Goodwill
Property, plant and equipment
Deferred tax asset
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
Note
2023
£’000
2022
£’000
16
19
17
18
21
20
21
22
23
23
23
18
23
27
28
28
28
28
55,864
80,435
29,601
356
593
166,849
36,046
25,728
388
60,160
122,322
289,171
19,254
1,165
1,164
21,583
4,400
11,013
7,973
23,386
44,969
48,373
70,859
29,015
–
937
149,184
27,911
21,553
184
82,262
131,910
281,094
20,671
948
1,059
22,678
3,510
9,593
8,691
21,794
44,472
244,202
236,622
10,865
37,473
18,649
(6,877)
150
1,531
2,000
1,878
178,533
10,843
37,269
15,711
(167)
531
1,531
(1,519)
5,004
167,419
Equity attributable to equity holders of the parent
244,202
236,622
The financial statements of Advanced Medical Solutions Group plc (registration number 2867684) on pages 107 to 139 were
approved by the Board of Directors and authorised for issue on 1 May 2024 and were signed on its behalf by:
E Johnson
Chief Financial Officer
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
109
GOVERNANCESTRATEGIC REPORTOVERVIEWFINANCIAL STATEMENTS Consolidated Statement of Changes in Equity
Attributable to equity holders of the Group
Share
capital
£’000
Share
premium
£’000
Share-
based
payments
£’000
At 1 January 2022
10,804 36,996
13,180
Consolidated profit for the
year to 1 January 2022
Other comprehensive
(expense)/income
Total comprehensive
(expense)/income
Share-based payments (Note 29)
Share options exercised
(Note 29)
Own shares purchased
Own shares sold
Dividends paid (Note 14)
–
–
–
–
39
–
–
–
–
–
–
–
273
–
–
–
–
–
–
2,439
92
–
–
–
At 31 December 2022
10,843
37,269
15,711
Consolidated profit for the
year to 31 December 2023
Other comprehensive
income/(expense)
Total comprehensive
income/(expense)
Share-based payments (Note 29)
Share options exercised
(Note 29)
Own shares purchased
Dividends paid (Note 14)
–
–
–
–
22
–
–
–
–
–
–
–
–
–
2,916
204
–
–
22
–
–
–
(6,710)
–
Invest-
ment
in own
shares
£’000
(164)
Share-
based
payments
deferred
tax
£’000
933
Other
reserve
£’000
1,531
Hedging
reserve
£’000
Trans-
lation
reserve
£’000
Retained
earnings
£’000
Total
£’000
(21)
(1,936) 151,354 212,677
–
–
–
–
–
(392)
389
–
(167)
–
–
–
–
–
–
–
(402)
–
–
–
–
–
–
– 20,406 20,406
–
(1,498)
6,940
–
5,442
–
–
–
–
–
–
(1,498)
6,940 20,406 25,848
–
–
–
–
–
–
–
–
–
–
–
2,037
–
–
–
(4,341)
404
(392)
389
(4,341)
531
1,531
(1,519)
5,004 167,419 236,622
–
–
–
(381)
–
–
–
–
–
– 15,889 15,889
–
3,519
(3,126)
–
393
–
–
–
–
–
3,519
(3,126) 15,889
16,282
–
–
–
–
–
–
–
–
–
2,535
–
–
(4,775)
248
(6,710)
(4,775)
At 31 December 2023
10,865
37,473 18,649
(6,877)
150
1,531
2,000
1,878 178,533 244,202
110
Advanced Medical Solutions Group plc Annual Report & Accounts 2023
Consolidated Statement of Cash Flows
For the year ended 31 December 2023
Cash flows from operating activities
Operating profit
Adjustments for:
Depreciation
Amortisation - acquired intangibles
- software intangibles
- development costs
Increase in inventories
Increase in trade and other receivables
(Decrease)/Increase in trade and other payables
Share-based payments expense
Taxation paid
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)
Payment of contingent consideration
Net cash used in investing activities
Cash flows from financing activities
Dividends paid
Repayment of principal under lease liabilities
Repayment of borrowings
Issue of equity shares
Own shares purchased
Own shares sold
Interest paid
Net cash used in financing activities
Net (decrease)/increase 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
Note
2023
£’000
2022
£’000
18,882
24,890
17
16
16
16
29
32
32
14
32
4,375
4,887
522
1,004
(8,064)
(2,515)
(5,249)
2,916
(4,413)
12,345
(89)
(6,216)
(3,544)
42
2,470
(5,529)
(7,399)
4,049
3,414
502
879
(7,087)
(596)
1,711
2,439
(3,324)
26,877
(73)
(6,152)
(3,739)
46
820
(2,781)
–
(20,265)
(11,879)
(4,775)
(1,472)
(480)
181
(6,710)
–
(362)
(13,618)
(21,538)
82,262
(564)
60,160
(4,341)
(1,295)
(331)
266
(392)
389
(617)
(6,321)
8,677
72,965
620
82,262
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
111
GOVERNANCESTRATEGIC REPORTOVERVIEWFINANCIAL STATEMENTS
Notes Forming Part of the Consolidated Financial Statements
1 Reporting entity
Advanced Medical Solutions Group plc (’the Company’) is
a public limited Company, limited by shares, 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 and widely held. There
is no single ultimate controlling party. The Consolidated
Financial Statements of the Company for the twelve months
ended 31 December 2023 comprise the Company and its
subsidiaries (together referred to as the ’Group’).
The Group is a world-leading independent developer and
manufacturer of innovative tissue-healing technology,
focused on quality outcomes for patients and value for
payers. AMS 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®, LIQUIFIX™ and
Seal-G®. AMS 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 five acquisitions: Sealantis, an Israeli developer of
innovative internal sealants; Biomatlante, a French developer
and manufacturer of surgical biomaterials, Raleigh, a leading
UK coater and converter of woundcare and bio-diagnostics
materials, AFS Medical, an Austrian specialist surgical business
and Connexicon, an Irish tissue adhesives specialist.
The Group’s products, manufactured in the UK, Germany, France,
the Netherlands, the Czech Republic and Israel, are sold globally
via a network of multinational or regional partners and distributors,
as well as via AMS’s own direct sales forces in the UK, Germany,
Austria, the Czech Republic and Russia. The Group has R&D
innovation hubs in the UK, Ireland, Germany, France and Israel.
Established in 1991, the Group has more than 800 employees.
2 Basis of preparation
The Group’s financial statements have been prepared in
accordance with the United Kingdom adopted international
accounting standards and with International Financial Reporting
Standards (’IFRSs’) as issued by the International Accounting
Standards Board ('IASB').
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:
• Amendments to IFRS 17 Insurance Contracts including the
Extension of the Temporary Exemption from Applying IFRS
9 (Amendments to IFRS 4)
Initial Application of IFRS 17 and IFRS 9 – Comparative
Information (Amendment to IFRS 17)
•
• Deferred Tax related to Assets and Deferred Tax related
to Assets and Liabilities arising from a Single Transaction
(Amendments to IAS 12)
• Definition of Accounting Estimates (Amendments to
IAS 8); and
• Disclosure of Accounting Policies (Amendments to IAS 1
and Practice Statement 2)
Going Concern
With regards to the Group’s financial position, it had cash and
cash equivalents at the 31 December 2023 of £60.2 million and
continues to be profitable with positive operational cash flow.
The proposed acquisition of the entire issued share capital
of Peters Surgical will be funded by a new debt facility which
includes a £60 million term loan facility and £30 million revolving
credit facility, together (the “New Debt Facility”) with the balance
of the consideration to be funded by the Group’s cash.
Both the term loan and the revolving credit facility mature
in March 2027 and thereafter can be extended by two
consecutive twelve months periods. Interest on drawn funds
will be charged at the SONIA interest rate plus an initial bank
margin of 1.75%, with this margin expected to reduce in 2025
in line with forecasted leverage reductions.
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 12 months
from the date of signing the accounts including a review of
cash flow forecasts should the Peters Surgical acquisition
not proceed. 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. Sensitivity analysis has been prepared to stress
test forecasts and the Directors are confident the business
is a going concern given the significant headroom available.
The Directors also considered whether any factors exist that
might reasonably impact the Group's ability to continue as
going concern beyond the period of 12 months from the date
of signing the financial statements, with no factors considered
reasonably possible.
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. 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. The
proposed acquisition of Peters Surgical will further expand
AMS’s product portfolio, add additional direct sales capability
in key territories, improve manufacturing efficiency and
further expand the Group’s specialist development and
commercialisation function.
112
Advanced Medical Solutions Group plc Annual Report & Accounts 2023
2 Basis of preparation continued
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.
Accordingly, they continue to adopt the going concern basis
in preparing the financial statements.
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, two critical accounting judgments and one key
source of estimation uncertainty have been identified that
could potentially have a material adjustment to the carrying
amounts of assets and liabilities in future financial years.
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 it is technically and commercially feasible and that
future economic benefits will be generated. The recoverable
amount is determined based on a value-in-use calculation
at a product category level which involves the use of critical
accounting judgments. Judgments may involve an estimation
of future costs to complete the asset as well as future sales,
cost of sales and an allocation of operating costs. A discount
rate is applied reflecting the time value of money.
Valuation of assets acquired on acquisition
Upon acquisition of Connexicon in the year, the Group
has identified assets and liabilities arising on acquisitions
and determined fair values for them (see Note 32). Third-
party valuation specialists were engaged to assist in the
identification and valuation of separable intangible assets.
Management considers that the methodologies adopted
in the valuation are supportable and reasonable but there
are inherent sources of estimation uncertainty due to the
inclusion of future cash flows in the valuation which include
estimates of sales growth, production costs and operating
expenditure. Discount rates used in determining the fair values
are based on management’s assessment of risk inherent in the
current business model and are an area of judgment.
Impairment of Goodwill and Intangible assets
In carrying out impairment reviews of goodwill and intangible
assets, a number of significant assumptions have to be
made when preparing cash flow projections which include
market growth rates, size and share, discount rates and
CGU profitability. If actual results should differ or changes
in expectations arise, impairment charges may be required.
Management has identified that for the goodwill related to
the Woundcare CGU a reasonably possible change in cash
flow forecasts could cause the carrying amount to exceed
the recoverable amount.
See note 19 for further information on impairment
of goodwill.
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 offset 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.
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
113
GOVERNANCESTRATEGIC REPORTOVERVIEWFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTOVERVIEWFINANCIAL STATEMENTS 3 Accounting policies 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 12 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
are 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 2023, £4.2 million (2022:
£6.6 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.
Exceptional items
Exceptional items are those items that are sufficiently
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. 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. No exceptional costs
were incurred during the year (2022: £nil).
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.
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.
114
Advanced Medical Solutions Group plc Annual Report & Accounts 2023
Notes Forming Part of the Consolidated Financial Statements continued 3 Accounting policies continued
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.
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.
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.
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.
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 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.
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.
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
115
GOVERNANCESTRATEGIC REPORTOVERVIEWFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTOVERVIEWFINANCIAL STATEMENTS 3 Accounting policies continued
Taxation continued
Deferred tax continued
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
15 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, usually not exceeding 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 unless there
is commercial evidence demonstrating that this will not be a
materially appropriate allocation, in which case amortisation is
allocated based on a five year revenue forecast to ensure the
expense is allocated against the benefit arising from the asset.
Patents and trademarks are measured initially at purchase
cost and are amortised on a straight-line basis.
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 can be up to
five years and is deemed to be the useful economic life. Clinical
and regulatory data supporting the certification are amortised
over ten years reflecting the estimated useful economic life.
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 land
Freehold property
and improvements
Leasehold improvements and
Right-of-use assets
Plant and machinery
Not depreciated
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
Fixtures and fittings
33.3% per annum on cost
Motor vehicles
25% per annum on cost
116
Advanced Medical Solutions Group plc Annual Report & Accounts 2023
Notes Forming Part of the Consolidated Financial Statements continued 3 Accounting policies continued
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.
Calculation of recoverable amount
The recoverable amount is the higher of fair value less
costs to sell or value-in-use. In assessing value-in-use, the
estimated future cash flows are discounted to their present
value using a discount rate that reflects the current market
assessments of the time value of money.
Impairment of tangible and intangible assets
excluding goodwill
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.
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.
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
117
GOVERNANCESTRATEGIC REPORTOVERVIEWFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTOVERVIEWFINANCIAL STATEMENTS 3 Accounting policies continued
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.
An allowance for expected credit losses is recognised for
expected lifetime credit losses that result from the failure
or inability of customers to make required payments. It is
not necessary for a credit event to have occurred before
credit losses are recognised. Instead, the Group accounts
for expected lifetime credit losses and changes in those
expected lifetime credit losses. In determining the allowance,
consideration includes the probability of recoverability
based on past experience, general economic factors
and adjustments for specific customers whose specific
circumstances indicate a higher or lower risk of default.
The amount of expected credit losses, if any, are required
to be updated at each reporting date.
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.
Contingent consideration
Contingent consideration arising from a business combination
is recognised at fair value on acquisition. Contingent
consideration classified as a liability is a financial instrument
and within the scope of IFRS 9 – Financial Instruments and is
subsequently measured at fair value, with the changes in fair
value recognised in the Consolidated Income Statement.
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 (administrative costs) immediately
unless the derivative is designated and effective as a hedging
instrument, in which event the timing of the recognition
118
Advanced Medical Solutions Group plc Annual Report & Accounts 2023
Notes Forming Part of the Consolidated Financial Statements continued 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 two Employee Benefit Trusts (’EBT’).
The ’Advanced Medical Solutions Group plc UK Employee
Benefit Trust’ was created in 2006 to establish a trust for the
employee share ownership plan.
The Group has de facto control of the assets, liabilities and
shares of 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 are recorded at cost and as
a reduction in equity. Gains and losses on Group shares are
recognised directly in reserves.
The Group established a second EBT (The Advanced Medical
Solutions Group PLC Employee Benefit Trust) in July 2023
to enable shares to be bought in the market to satisfy the
demand from share awards under the Group’s employee
share plans. The EBT is a separately administered trust and
is funded by loans from Group companies. The assets of the
trust comprise shares in the Group and cash balances. The
Group recognises the assets and liabilities of the trust in the
Consolidated Financial Statements and shares held by the
trust are recorded at cost as treasury shares as a deduction
from shareholders’ equity. Consideration received for the
sale of shares held by the trust is recognised in equity, with
any difference between the proceeds from the sale and the
original cost being taken to retained earnings.
IFRS not yet effective and not adopted early
Certain new accounting standards, amendments and
interpretations have been published that are not mandatory
for 31 December 2023 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.
3 Accounting policies continued
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 12 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 12
months or less and leases of low-value assets are recognised
as an expense in the Income Statement on a straight-line basis.
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 2023, the Group had net
funds with no borrowings (2022: 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.
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
119
GOVERNANCESTRATEGIC REPORTOVERVIEWFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTOVERVIEWFINANCIAL STATEMENTS 4 Segment information
During the year ended 31 December 2023, the Group continued to operate under two business units. Internal reporting provided
to the Group’s Chief Operating Decision Maker (‘CODM’) is prepared on this basis. The Group’s Board of Directors (‘the Board’)
is the Group’s Chief Operating Decision Maker, as defined by IFRS 8, and all significant operating decisions are taken by the
Board. The Surgical Unit focused on selling, marketing, research, development and innovation of all our surgical products and the
Woundcare unit 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's brand name.
Year ended 31 December 2023
Revenue
Result
Adjusted segment operating profit
Amortisation of acquired intangibles
Segment operating profit
Unallocated expenses
Operating profit
Finance income
Finance costs
Profit before tax
Tax
Profit for the year
Year ended 31 December 2023
Other information
Capital additions:
Software intangibles
Research & development
Property, plant and equipment
Depreciation and amortisation
At 31 December 2023
Statement of Financial Position
Assets
Segment assets
Liabilities
Segment liabilities
Year ended 31 December 2022
Revenue
Result
Adjusted segment operating profit
Amortisation of acquired intangibles
Segment operating profit
Unallocated expenses
Operating profit
Finance income
Finance costs
Profit before tax
Tax
Profit for the year
120
Advanced Medical Solutions Group plc Annual Report & Accounts 2023
Surgical
£’000
79,093
Woundcare
£’000
Consolidated
£’000
47,117
126,210
19,985
(3,944)
16,041
5,317
(943)
4,374
25,302
(4,887)
20,415
(1,533)
18,882
3,786
(1,511)
21,157
(5,268)
15,889
Surgical
£’000
Woundcare
£’000
Consolidated
£’000
47
5,222
2,337
(7,504)
42
994
1,207
(3,284)
89
6,216
3,544
(10,788)
207,647
81,524
289,171
34,810
10,159
44,969
Surgical
£’000
74,861
Woundcare
£’000
Consolidated
£’000
49,469
124,330
21,802
(2,469)
19,333
7,632
(945)
6,687
29,434
(3,414)
26,020
(1,130)
24,890
1,691
(671)
25,910
(5,504)
20,406
Notes Forming Part of the Consolidated Financial Statements continued 4 Segment information continued
Year ended 31 December 2022
Other information
Capital additions:
Software intangibles
Research & development
Property, plant and equipment
Depreciation and amortisation
At 31 December 2022
Statement of Financial Position
Assets
Segment assets
Liabilities
Segment liabilities
Surgical
£’000
Woundcare
£’000
Consolidated
£’000
34
4,617
2,258
(5,759)
39
1,535
1,481
73
6,152
3,739
(3,085)
(8,844)
190,456
90,638
281,094
29,786
14,686
44,472
Geographical segments
The Group operates in the UK, Germany, the Netherlands, France, the Czech Republic, Ireland and Israel with a sales office in
Russia, as a distributor in Austria and with 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
Rest of Europe
United States of America
Rest of World
2023
£’000
17,385
26,365
38,933
31,875
11,652
2022
£’000
15,321
23,025
32,333
43,387
10,264
126,210
124,330
Several international distributors with material sales have changed their shipping location during the year. To ensure a like for
like comparison, the prior year sales by geographical market has been represented to categorise these specific customers as if
they had always been based in the amended shipping location.
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
2023
£’000
140,039
80,942
11,761
37,782
1,256
19,231
2022
£’000
151,817
78,877
11,934
16,670
451
21,345
291,011
281,094
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
121
GOVERNANCESTRATEGIC REPORTOVERVIEWFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTOVERVIEWFINANCIAL STATEMENTS 5 Profit from operations
Year ended 31 December
Profit from operations is arrived at after charging:
Depreciation of property, plant and equipment
Amortisation of:
• acquired intellectual property rights and other intangible assets
• software intangibles
• development costs
Research and development costs expensed excluding regulatory costs
Cost of inventories recognised as expense
Write-down of inventories expensed
Staff costs
Net foreign exchange loss
2023
£’000
2022
£’000
4,375
4,049
4,887
522
1,004
5,597
55,733
337
49,024
1,955
3,414
502
879
4,323
50,663
251
46,065
1,683
6 Exceptional items
During 2023, no costs have been incurred which are deemed to be exceptional in nature (2022: £nil). Whilst no exceptional
items have been incurred in the current or prior year, the Group treats exceptional items as a profit adjusted item when
calculating alternative performance measures.
7 Auditor’s remuneration
Amounts payable to Deloitte LLP and their associates in respect of both audit and non-audit services:
Year ended 31 December
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
Total non-audit fees
2023
£’000
23
301
324
35
35
359
2022
£’000
23
276
299
34
34
333
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:
Year ended 31 December
Production
Research and development
Sales and marketing
Administration
Year ended 31 December
Staff costs for all employees, including Executive Directors, consists of:
Wages and salaries including bonuses
Social Security costs
Pension costs
Share-based payments (see Note 29)
122
Advanced Medical Solutions Group plc Annual Report & Accounts 2023
2023
Number
2022
Number
440
92
155
158
845
2023
£’000
38,777
5,716
1,615
2,916
401
78
146
144
769
2022
£’000
37,131
4,998
1,497
2,439
49,024
46,065
Notes Forming Part of the Consolidated Financial Statements continued 9 Directors’ emoluments
Year ended 31 December
Remuneration for management services
Pension costs
Share-based payments
The Group’s highest paid Director is disclosed in the Remuneration Report on page 91.
Year ended 31 December
Retirement benefits are accruing to the following number of
Directors under money purchase schemes
2023
£’000
883
63
636
1,582
2022
£’000
1,217
56
687
1,960
2023
2022
2
2
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:
Year ended 31 December
Salaries, fees and short-term employee benefits
Pension costs
Share-based payments
11 Finance income
Year ended 31 December
Movement in Long-term acquisition liability credit
Bank interest
12 Finance costs
Year ended 31 December
Amortisation of facility fees
Finance lease interest
Other interest
Movement in Long-term acquisition liability expense
2023
£’000
1,983
126
1,002
3,111
2023
£’000
1,313
2,473
3,786
2023
£’000
–
364
20
1,127
1,511
2022
£’000
2,427
112
1,101
3,640
2022
£’000
872
819
1,691
2022
£’000
272
327
39
33
671
The movement in long-term acquisition liabilities expense and credit relate to movements in the long-term liabilities arising on
the acquisition of Sealantis in 2019, AFS in 2022 and Connexicon in 2023. Changes in the liabilities occur as the liabilities unwind
and as the probability of a performance condition being met changes based on actual and estimated performance subsequent
to acquisition. See Note 24 for further information on how these liabilities are calculated.
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
123
GOVERNANCESTRATEGIC REPORTOVERVIEWFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTOVERVIEWFINANCIAL STATEMENTS 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.
a) Analysis of charge for the year
Year ended 31 December
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 rate
2023
£’000
5,516
(540)
4,976
(183)
475
–
292
2022
£’000
5,655
6
5,661
(84)
(73)
–
(157)
Tax charge for the year
5,268
5,504
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 Group has applied the appropriate rate to the Deferred Tax Liability, measured using the tax rates that are expected to apply
when the liability is settled or the asset realised based on the tax rates that have been enacted or substantively enacted by the
balance sheet date.
The tax assessed for the year is lower (2022: lower) than the weighted average Group tax rate of 28.0% (2022: 22.8%) as
explained below:
Year ended 31 December
Profit before taxation
Weighted average Group tax rate 28.0% (2022: 22.8%)
Effects of:
Expenses not deductible for tax purposes and other timing differences
Utilisation and recognition of trading losses
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
2023
£’000
21,157
5,918
605
(526)
(817)
(245)
398
(540)
475
2022
£’000
25,910
5,911
243
(269)
(554)
32
208
6
(73)
Taxation
5,268
5,504
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 £0.4 million surplus:
(2022: £0.4 million surplus).
124
Advanced Medical Solutions Group plc Annual Report & Accounts 2023
Notes Forming Part of the Consolidated Financial Statements continued 14 Dividends
Amounts recognised as distributions to equity holders in the period:
Year ended 31 December
Final dividend for the year ended 31 December 2022 of 1.51p (2021: 1.37p) per Ordinary Share
Interim dividend for the year ended 31 December 2023 of 0.70p (2022: 0.64p) per Ordinary Share
Proposed final dividend for the year ended 31 December 2023 of 1.66p
(2022: 1.51p) per Ordinary Share
2023
£’000
3,265
1,510
4,775
2022
£’000
2,960
1,381
4,341
3,608
3,275
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
Basic weighted average number of Shares held by EBT
Effect of dilutive potential Ordinary Shares: share options, deferred share bonus and LTIPs
2023
000
Number of
shares
2022
000
Number of
shares
217,093
216,512
(1,195)
3,391
–
2,969
Weighted average number of Ordinary Shares for the purposes of diluted earnings per share
219,289
219,481
Profit for the year attributable to equity holders of the parent
Amortisation of acquired intangible assets
Movement in long-term acquisition liabilities
£’000
15,889
4,887
(186)
£’000
20,406
3,414
(840)
Adjusted profit for the year attributable to equity holders of the parent pre exceptional costs
20,590
22,980
Earnings per share
Basic
Diluted
Adjusted basic
Adjusted diluted
Pence
7.36
7.25
9.54
9.39
Pence
9.42
9.30
10.61
10.47
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
125
GOVERNANCESTRATEGIC REPORTOVERVIEWFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTOVERVIEWFINANCIAL STATEMENTS 16 Acquired intellectual property rights, software intangibles and development costs
2023
Cost
At beginning of year
On acquisition
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 2023
At 31 December 2022
Acquired Intangible assets
Customer
related
£’000
Product
related
£’000
Software
intangibles
£’000
Development
and
recertification
costs
£’000
Total
£’000
22,699
22,917
5,875
21,854
73,345
587
7,951
–
–
–
–
(308)
(1,013)
–
89
(35)
(31)
–
6,216
–
(63)
8,538
6,305
(35)
(1,415)
22,978
29,855
5,898
28,007
86,738
3,823
1,476
–
(42)
10,968
4,186
3,411
–
(437)
522
(34)
(18)
5,995
1,004
–
20
24,972
6,413
(34)
(477)
5,257
13,942
4,656
7,019
30,874
17,721
18,876
15,913
11,949
1,242
1,689
20,988
55,864
15,859
48,373
In the current year, acquired intangible assets have been re-categorised as either customer related intangible assets or product
related intangible assets. The prior year comparative has been restated to ensure comparability. Customer related intangible
assets consist of customer lists, brands and other marketing-related intangible assets. Product related intangible assets primarily
consist of patents and technology based know-how.
Customer and product related intangible assets arising on acquisition in 2023 relate to technology-based and customer-related
assets arising on the acquisition of Connexicon (see note 32).
The acquisition of AFS in 2022 resulted in the addition of customer and marketing-related intangible assets.
Intangible assets are amortised on a straight-line basis and the amortisation is recognised within administration costs with
the exception of the RESORBA® brand name. The RESORBA® brand name has a carrying value of £9.0 million 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
four years remaining.
126
Advanced Medical Solutions Group plc Annual Report & Accounts 2023
Notes Forming Part of the Consolidated Financial Statements continued 16 Acquired intellectual property rights, software intangibles and development costs continued
2022
Cost
At beginning of year
On acquisition
Additions
Disposals / impairment
Exchange differences
At end of year
Amortisation
At beginning of year
Charged in the year
Disposals / impairment
Exchange differences
At end of year
Net book value
At 31 December 2022
At 31 December 2021
Acquired Intangible assets
Customer
related
£’000
Product
related
£’000
Software
intangibles
£’000
Development
and
recertification
costs
£’000
Total
£’000
18,018
3,948
–
–
733
22,699
2,577
1,211
–
35
21,018
5,740
15,514
60,290
–
–
–
1,899
22,917
8,085
2,203
–
680
–
73
(8)
70
–
6,152
–
188
3,948
6,225
(8)
2,890
5,875
21,854
73,345
3,633
502
(8)
59
5,037
879
–
79
19,332
4,795
(8)
853
3,823
10,968
4,186
5,995
24,972
18,876
15,441
11,949
12,933
1,689
2,107
15,859
10,477
48,373
40,958
17 Property, plant and equipment
Freehold land,
property and
improvements
£’000
Right-of-use
assets
£’000
Plant and
machinery
£’000
Fixtures
and
fittings
£’000
Motor
vehicles
£’000
Total
£’000
2023
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 2023
At 31 December 2022
7,542
15,101
36,054
1,160
419
60,276
–
61
–
(87)
15
914
(513)
(108)
785
3,092
(284)
(175)
–
391
(37)
(10)
–
–
(35)
(12)
800
4,458
(869)
(392)
7,516
15,409
39,472
1,504
372
64,273
1,688
187
–
(18)
5,796
1,548
(513)
(49)
22,692
2,335
(235)
(74)
881
275
(37)
(7)
204
30
(35)
4
31,261
4,375
(820)
(144)
1,857
6,782
24,718
1,112
203
34,672
5,659
5,854
8,627
9,305
14,754
13,362
392
279
169
215
29,601
29,015
Freehold land which has a carrying value of £1.2 million is not depreciated (2022: £1.3 million).
At 31 December 2023, the Group had entered into contractual commitments for the acquisition of property, plant and
equipment amounting to £0.4 million (2022: £0.4 million).
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
127
GOVERNANCESTRATEGIC REPORTOVERVIEWFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTOVERVIEWFINANCIAL STATEMENTS 17 Property, plant and equipment continued
Freehold land,
property and
improvements
£’000
Right-of-use
assets
£’000
Plant and
machinery
£’000
Fixtures
and
fittings
£’000
Motor
vehicles
£’000
Total
£’000
2022
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 2022
At 31 December 2021
5,997
14,489
33,701
1,027
434
55,648
–
1,332
(5)
218
225
1,212
(955)
130
17
2,270
(316)
382
–
119
(9)
23
–
18
(51)
18
242
4,951
(1,336)
771
7,542
15,101
36,054
1,160
419
60,276
1,401
188
(5)
104
1,688
5,854
4,596
5,291
1,412
(955)
48
20,518
2,344
(288)
118
5,796
22,692
9,305
9,198
13,362
13,183
784
87
(9)
19
881
279
243
213
28,207
18
(43)
16
4,049
(1,300)
305
204
31,261
215
221
29,015
27,441
18 Deferred tax
The following are the major deferred tax liabilities and assets recognised by the Group and movements thereon.
At 1 January 2022
(Charge)/credit to income
Charge to equity
Exchange adjustment
Acquisition of subsidiary
At 31 December 2022
Credit/(charge) to income
Charge to equity
Exchange adjustment
Acquisition of subsidiary
At 31 December 2023
Share-based
payments
£’000
2,162
(267)
(402)
–
–
1,493
109
(381)
–
–
Advanced
capital
allowances
£’000
(1,041)
192
–
–
–
(849)
(333)
–
–
–
Research
and
development
assets
£’000
(1,891)
(726)
–
–
–
(2,617)
(672)
–
–
–
Intangible
assets
£’000
(6,668)
638
–
(409)
(986)
(7,425)
830
–
162
(672)
Other
£’000
–
6
(201)
–
–
(195)
358
(465)
–
–
Total
£’000
(7,438)
(157)
(603)
(409)
(986)
(9,593)
292
(846)
162
(672)
1,221
(1,182)
(7,105)
(3,289)
(302)
(10,657)
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
Deferred tax assets
2023
£’000
2022
£’000
(11,013)
(9,593)
356
–
(10,657)
(9,593)
At the Statement of Financial Position date, the Group has approximately £25 million of unused tax losses (2022: £18 million),
relating to tax losses in Israel, France, Austria and Ireland 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.
128
Advanced Medical Solutions Group plc Annual Report & Accounts 2023
Notes Forming Part of the Consolidated Financial Statements continued 19 Goodwill
Cost
At 1 January
Acquisitions
Exchange differences
At 31 December
2023
£’000
2022
£’000
70,859
11,040
(1,464)
80,435
66,032
1,452
3,375
70,859
The Group has two cash generating units (’CGU’) whereby goodwill has been allocated (2022: two) and reports CGUs on the
same basis as the Group’s reportable segments (See note 4).
Following the acquisition of Connexicon in the year they have been deemed to be sufficiently integrated into the Surgical CGU.
See note 32 for details of assets arising on acquisition.
Goodwill in the Surgical CGU also arose on the acquisition of RESORBA® in 2011, the acquisition of Sealantis Limited in 2019, the
acquisition of Biomatlante SA in 2019 and the acquisition of AFS Medical GmbH in 2022.
Goodwill in the Woundcare CGU arose on the acquisition of Advanced Medical Solutions B.V. in 2009 and on the acquisition of
Raleigh Adhesive Coatings Limited in 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 in management’s impairment test:
At 31 December 2023
Surgical CGU
Woundcare CGU
Consolidated
At 31 December 2022
Surgical CGU
Woundcare CGU
Consolidated
Discount
rate
Long-term
growth rate
12.8%
11.8%
2.0%
2.0%
Discount
rate
Long-term
growth rate
12.6%
12.6%
2.0%
2.0%
Intangible
assets with
indefinite
useful life
£’000
9,019
–
9,019
Intangible
assets with
indefinite
useful life
£’000
9,198
–
9,198
Carrying value
£’000
73,366
16,088
89,454
Carrying value
£’000
64,062
15,995
80,057
Goodwill
£’000
64,347
16,088
80,435
Goodwill
£’000
54,864
15,995
70,859
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 CGU 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 based on a combination of past experience and market growth data, specific to
each CGU, 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 12.8% per annum for the Surgical CGU and 11.8% for the
Woundcare CGU (2022: 12.6%), 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 Group has conducted a sensitivity analysis on the impairment tests of both CGU's. The changes required to generate an
impairment charge within the Surgical CGU 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.
For the goodwill related to the Woundcare CGU, a reasonably possible change in discount rate alone would not cause
impairment. A reasonably possible change in revenue forecasts could cause the carrying amount to exceed the recoverable
amount. Whilst the value in use calculation at 31 December 2023 has headroom of £6.7 million, a 10% decline in revenue alone
would cause an impairment of £1.2 million, a 8% reduction in revenue would eliminate headroom. A 1% long-term growth rate
would reduce headroom to £1.1 million whilst the combined impact of a 10% decline in revenue, reduction in long-term growth
rate to 1% and increase in discount rate to 12.3% would result in an impairment of £8.4 million.
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
129
GOVERNANCESTRATEGIC REPORTOVERVIEWFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTOVERVIEWFINANCIAL STATEMENTS 20
Inventories
At 31 December
Raw materials
Work in progress
Finished goods
2023
£’000
13,243
7,796
15,007
36,046
2022
£’000
11,544
6,772
9,595
27,911
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 (2022: £nil) carried at net realisable value.
At 31 December
Total gross inventories
Inventory provision
Net inventory
2023
£’000
39,303
(3,257)
36,046
2022
£’000
30,704
(2,793)
27,911
The Group performs a detailed assessment of all inventory and provisions are made for items identified as obsolete or slow-moving.
21 Trade and other receivables
At 31 December
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
2023
£’000
2022
£’000
20,908
1,383
2,145
1,292
25,728
520
73
593
2023
£’000
21,268
(360)
20,908
17,709
2,501
–
1,343
21,553
865
72
937
2022
£’000
17,984
(275)
17,709
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 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.
130
Advanced Medical Solutions Group plc Annual Report & Accounts 2023
Notes Forming Part of the Consolidated Financial Statements continued 21 Trade and other receivables continued
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 other receivables and accrued income. 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
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
2023
£’000
913
85
476
1,474
2022
£’000
1,367
202
166
1,735
Year ended
31 December
2023
£’000
Year ended
31 December
2022
£’000
275
333
(82)
(166)
360
225
218
(55)
(113)
275
Analysis of customers
In the year ended 31 December 2023, no customer accounted for more than 10% of the Group’s revenue (2022: no customer
with more then 10% revenue).
22 Cash and cash equivalents
Cash held at banks
2023
£’000
2022
£’000
60,160
82,262
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
2023
£’000
2022
£’000
6,227
9,109
–
1,164
3,918
6,416
5,359
2,183
1,059
6,713
20,418
21,730
4,400
7,973
3,510
8,691
12,373
12,201
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.
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
131
GOVERNANCESTRATEGIC REPORTOVERVIEWFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTOVERVIEWFINANCIAL STATEMENTS 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’.
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
Carrying value
2023
£’000
2022
£’000
22,291
60,160
2,665
–
23,654
9,137
20,210
82,262
865
2,183
21,998
9,750
Financial liabilities measured at amortised cost include contingent consideration which arose on a number of acquisitions.
Contingent consideration arising on the acquisition of Sealantis in 2019 relate to contingent consideration as well as amounts
due to the Israeli Innovation Authority (’IIA’). They are 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 9.4% discount rate applied. The discount rate used to calculate the liability is the Group’s weighted average cost
of capital.
Amounts due to the IIA are linked to grants received prior to acquisition and are payable based on a percentage of the net
present value of future sales projections with a 9.4% discount rate applied 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 9.4% discount rate applied on the
basis that the liability does not expire until the liability is settled. At 31 December 2023 the estimated fair value of contingent
consideration arising on the acquisition of Sealantis is £1.2 million (2022: £2.5 million).
Contingent consideration arose on the acquisition of AFS in respect of up to €1.5 million which is payable subject to EBITDA
delivery in 2022-2024. The milestones were met in 2022 and subsequently paid in 2023 and also met for 2023 with payment to
be made in 2024. At 31 December 2023 the estimated fair value of contingent consideration arising on the acquisition of AFS is
£0.8 million (2022: £1.3 million).
Contingent consideration arose on the acquisition of Connexicon in respect of up to €18 million which is payable subject
to delivery of certain research & development, regulatory and commercial milestones between 2023 and 2027. During the
period subsequent to acquisition several milestones were met resulting in payment of €8.0 million of contingent consideration.
£7.6 million is the estimated fair value at 31 December 2023 (2022: £nil). See note 32 for further information on Connexicon
acquisition accounting.
The Risk Management section on pages 61 to 65 provides an explanation of the financial risks faced by the Group and the
objectives and policies for managing those risks including hedging practices adopted. The information below deals with the
financial assets and liabilities.
132
Advanced Medical Solutions Group plc Annual Report & Accounts 2023
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 2023
Trade and other payables
Lease liabilities
Financial derivatives
At 31 December 2023
At 31 December 2022
Trade and other payables
Lease liabilities
Financial derivatives
At 31 December 2022
On demand
or within
one year
£’000
19,254
1,164
–
Between
one and
two years
£’000
1,497
1,326
–
Between
two and
five years
£’000
1,620
3,088
–
Five
years
or more
£’000
1,283
3,559
–
Total
financial
liabilities
£’000
23,654
9,137
–
20,418
2,823
4,708
4,842
32,791
On demand
or within
one year
£’000
18,488
1,059
2,183
Between
one and
two years
£’000
449
1,207
–
Between
two and
five years
£’000
1,262
3,018
–
Five
years
or more
£’000
1,799
4,466
–
Total
financial
liabilities
£’000
21,998
9,750
2,183
21,730
1,656
4,280
6,265
33,931
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
£5.9 million (2022: £6.5 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 £1.7 million
(2022: £1.8 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.
The currency and interest rate profile of the financial assets of the Group is as follows:
Cash and cash equivalents
Currency
Sterling
US Dollar
Euro
Israeli Shekel
At 31 December 2023
2023
£’000
2022
£’000
54,269
71,506
771
4,988
132
4,891
5,771
94
60,160
82,262
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 are in the following currencies:
Sterling
US Dollar
Euro
Israeli Shekel
2023
£’000
12,525
7,194
6,563
39
2022
£’000
5,983
7,776
6,405
46
26,321
20,210
The financial assets all mature within one year. Credit risk is discussed in Note 21.
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
133
GOVERNANCESTRATEGIC REPORTOVERVIEWFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTOVERVIEWFINANCIAL STATEMENTS 24 Financial instruments continued
(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 18 months.
Risk sensitivity
The Group estimates that a 10% movement in the £:US$ or £:Euro exchange rate which is believed to be a reasonable
approximation of possible changes, would have impacted 2023 Sterling revenues by approximately 2.6% and 3.6% respectively
and in the absence of any hedging this would have had an impact on profit margin percentage of 1.9% and 0.4%.
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
6 to 12 months
Over 12 months
Sell Euros
Less than 3 months
3 to 6 months
6 to 12 months
Over 12 months
Average contract rate
Foreign currency
Fair value
2023
USD:£1
2022
USD:£1
2023
USD ’000
2022
USD ’000
2023
£’000
2022
£’000
1.26
1.15
1.15
1.24
1.28
1.31
1.30
1.15
7,500
7,500
18,500
22,500
56,000
11,500
9,000
18,500
22,500
61,500
51
617
1,468
520
2,656
(540)
(550)
(1,040)
890
(1,240)
Average contract rate
Foreign currency
Fair value
2023
EUR:£1
2022
EUR:£1
2023
EUR ’000
2022
EUR ’000
2023
£’000
2022
£’000
1.14
1.13
–
–
1.14
1.15
1.15
1.14
600
600
–
–
1,200
600
600
1,200
1,200
3,600
5
4
–
–
9
(9)
(15)
(29)
(26)
(79)
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 (2022: £nil) in respect of FVTPL contracts. The gain of £4.0 million
(2022: £1.3 million loss) 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.
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
Average rate
Closing rate
Percentage change
2023
2022
2023
2022
Average
%
Closing
%
1.24
1.15
1.24
1.18
1.27
1.15
1.21
1.13
(0)
(3)
5
2
134
Advanced Medical Solutions Group plc Annual Report & Accounts 2023
Notes Forming Part of the Consolidated Financial Statements continued 27 Share capital
Number of Ordinary Shares of 5p each
At 1 January 2022
Share capital allotted for share schemes
At 31 December 2022
Share capital allotted for share schemes
At 31 December 2023
Allotted,
called up
and fully paid
’000
216,071
807
216,878
451
217,329
At the Statement of Financial Position date, 3.5 million (2022: 0.4 million) 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 2022
Share capital allotted for share schemes
At 31 December 2022
Share capital allotted for share schemes
At 31 December 2023
Allotted,
called up
and fully paid
£’000
10,804
39
10,843
22
10,865
28 Reserves
Investment in own shares
The shares held in trust on behalf of employees in respect of the Share Incentive Plan by The Advanced Medical Solutions Group
PLC Employee Benefit Trust are held at nominal value.
The shares held in trust on behalf of employees in respect of the Long Term Incentive Plan by The Advanced Medical Solutions
Group PLC Employee Benefit Trust were shares purchased in the open market and held at the weighted average cost of
the shares.
The Advanced Medical Solutions Group PLC Employee Benefit Trust was established in July 2023. During the year, 3.2 million
shares (2022: nil) were purchased by the Trust at an average price of £2.12 (2022: £nil) and remain held at 31 December 2023.
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 parent’s 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 £3.1 million loss has been recorded in the translation reserve during the period, which would otherwise have been recognised
in Administration costs (2022: £6.9 million gain) if hedge accounting had not been adopted.
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
Share Incentive Plan and Deferred Annual Bonus Scheme
2023
£’000
564
1,161
1,191
2,916
2022
£’000
441
1,218
780
2,439
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
135
GOVERNANCESTRATEGIC REPORTOVERVIEWFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTOVERVIEWFINANCIAL STATEMENTS 29 Share-based payments continued
Unapproved Executive Share Option Scheme and Company Share Option Plan (’CSOP’)
The following table reconciles the number of share options outstanding:
Outstanding at beginning of the year
Issued
Exercised
Lapsed
Outstanding at end of the year
Exercisable at end of the year
2023
Number of
Options
2022
Number of
Options
4,692,677
3,785,085
3,650,616
1,461,100
(151,476)
(663,682)
(129,692)
(423,816)
7,528,135
4,692,677
1,979,510
1,449,398
The weighted average remaining contractual life of the options outstanding at 31 December 2023 is 7.9 years (2022: 7.1 years).
The weighted average exercise price of options exercised in the year was £2.34 (2022: £2.78).
The weighted average exercise price of options remaining is £2.38 (2022: £2.68) with a range of exercise prices from £1.17 to
£3.29. The weighted average exercise price of options exercisable is £2.67 (2022: £2.59).
The fair value of the executive options is calculated based on a Black-Scholes Merton model. The following table gives the
assumptions applied to the options granted in the respective period:
Share price at grant date
Exercise price
Expected life
Contractual life
Risk free rate
Expected volatility
Expected dividend yield
Fair value of options
November
2023
182.2p
182.2p
3 yrs
10 yrs
3.66%
33.5%
0.9%
38p
May
2023
239.5p
239.5p
3 yrs
10 yrs
3.66%
33.5%
0.9%
50p
May
2022
304.0p
304.0p
3 yrs
10 yrs
1.64%
36%
0.7%
63p
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.
Long Term Incentive Plan (’LTIP’)
The following table reconciles the number of share options outstanding:
Outstanding at beginning of the year
Issued
Exercised
Lapsed
Outstanding at end of the year
Exercisable at end of the year
2023
Number of
Options
2022
Number of
Options
2,152,706
2,207,572
1,117,968
720,853
(63,419)
(367,369)
(421,792)
(353,927)
2,839,886
2,152,706
537,770
277,100
The exercise price of these options is £1 for each issue of LTIPs.
The weighted average exercise price of the Long-Term incentive Plan in the year was £2.24 (2022: £2.75).
The weighted average remaining contractual life of the LTIPs outstanding at 31 December 2023 is 7.7 years (2022: 7.7 years).
136
Advanced Medical Solutions Group plc Annual Report & Accounts 2023
Notes Forming Part of the Consolidated Financial Statements continued 29 Share-based payments continued
The fair value of the LTIP options is calculated using the monte carlo method. The following table gives the assumptions applied
to the options granted in the respective period:
Share price at grant date
Exercise price
Expected life
Contractual life
Risk free rate
Expected volatility
Expected dividend yield
Fair value of option
2023
2022
239.5p
280.5p
0p
3 yrs
10 yrs
3.66%
33%
0.90%
211p
0p
3 yrs
10 yrs
1.64%
36%
0.70%
251p
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 performance conditions referred to on page 90.
The numbers shown are maximum entitlements and the actual number of shares issued (if any) will depend on these
performance conditions being achieved.
Share Incentive Plan (’SIP’)
The following table reconciles the number of share options outstanding:
Outstanding at beginning of the year
Issued
Exercised
Lapsed
Outstanding at end of the year
Exercisable at end of the year
The exercise price of the matching shares is £nil.
2023
Number of
Options
1,910,151
987,828
(203,798)
(32,482)
2022
Number of
Options
1,561,171
545,635
(161,961)
(34,694)
2,661,699
1,910,151
814,287
599,842
The fair value of the SIP shares are calculated based on a Black-Scholes Merton model. The following table gives the
assumptions applied to the options granted in the respective period:
Share price at grant date
Exercise price
Expected life
Risk-free rate
Expected volatility
Expected dividend yield
Fair value of option
October 2023
May 2023
182.0p
0p
5 yrs
3.66%
33%
0.9%
156p
251.1p
0p
5 yrs
3.66%
33%
0.9%
218p
November
2022
270.5p
0p
5 yrs
1.64%
36%
0.7%
251p
May 2022
270.5p
0p
5 yrs
1.64%
36%
0.7%
251p
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 SIP is subject to a three-year holding period. The actual number of shares that will be
matched will depend on these performance conditions being met. Details on the SIP are given on page 89.
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
137
GOVERNANCESTRATEGIC REPORTOVERVIEWFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTOVERVIEWFINANCIAL STATEMENTS 29 Share-based payments continued
Deferred Annual Bonus Scheme (’DAB’)
The following tables reconcile the number of share options outstanding
Outstanding at beginning of the year
Issued
Exercised
Lapsed
Outstanding at end of the year
Exercisable at end of the year
2023
Number of
Options
2022
Number of
Options
57,221
72,198
(2,275)
–
84,433
18,268
(45,480)
–
127,144
57,221
37,349
38,953
The weighted average exercise price of the Deferred Annual Bonus Plan options in the year was £2.51 (2022: £2.75).
The weighted average remaining contractual life of the DAB options outstanding at 31 December 2023 is 7.6 years
(2022: 6.0 years).
The fair value of the DAB options are calculated based on a Black-Scholes Merton model. The following table gives the
assumptions applied to the options granted in the respective periods shown.
Share price at grant date
Exercise price
Expected life
Contractual life
Risk-free rate
Expected volatility
Expected dividend yield
Fair value of option
2023
2022
239.5p
303.9p
0p
3 yrs
10 yrs
3.66%
33%
0.9%
208p
0p
3 yrs
10 yrs
1.64%
36%
0.7%
252p
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.
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.
The remuneration of the Directors, is set out in the Remuneration Committee Report on pages 85 to 95. The remuneration
of all key management personnel, which includes Directors, is disclosed in note 10 to the consolidated financial statements.
31 Audit Exemption
The Company is entitled to exemption from audit for its subsidiaries under Section 479A of the Companies Act 2006 for the
period ended 31 December 2023.
The Directors have applied this exemption for the following subsidiaries:
Company Name
Raleigh Adhesive Coatings Limited
Advanced Medical Solutions (Europe) Limited
Company number
02300965
08819564
Advanced Medical Solutions Group PLC will guarantee all outstanding liabilities that these subsidiaries are subject to as at the
period ended 31 December 2023 in accordance with Section 479C of the Act, as amended by the Companies and Limited
Liability Partnerships (Accounts and Audit Exemptions and Change of Accounting Framework) Regulations 2012.
138
Advanced Medical Solutions Group plc Annual Report & Accounts 2023
Notes Forming Part of the Consolidated Financial Statements continued 32 Acquisition
On 1 February 2023, the Group acquired 99% of the Share Capital of Connexicon Medical Limited (“Connexicon”), a tissue
adhesive technology specialist based in Dublin, Republic of Ireland for an initial up-front payment of € 7 million, with options
in place to acquire the remaining 1% of Share Capital. The remaining 1% of Share Capital not acquired by AMS have no-voting
rights and the options are linked to future contingent considerations up to a potential €18 million, dependent on the delivery
of certain research & development, regulatory and commercial milestones between 2023 and 2027. The acquisition further
strengthens AMS's position in the global tissue adhesive market, expands its product portfolio and significantly enhances its
technical and R&D capabilities in cyanoacrylate technology.
In the eleven-month period from acquisition to 31 December 2023, Connexicon contributed £1.4 million of revenue to the
Group and £0.4 million of operating profit. In addition, amortisation of intangible assets of £1.3 million and £1.1 million of
finance expense relating to the unwind of contingent consideration have been recorded within the Group as a result of the
acquisition. A number of the commercial milestones set out in the Option Agreements were fulfilled, and therefore exercised,
resulting in contingent consideration payments of €8 million (£7.0 million) in the period. The results, assets and liabilities of
Connexicon have been included in the Surgical business unit segment.
Identifiable net assets acquired
Customer related Intangible asset
Technology-based Intangible asset
Property, plant and equipment
Trade and other receivables
Inventory
Cash and cash equivalents
Trade and other payables
Lease liabilities
Borrowings
Deferred tax on intangible asset
Total net assets acquired
Goodwill arising on acquisition
Satisfied by
Cash consideration
Contingent consideration (Fair value)
Net cash flow on acquisition
Cash consideration
Cash acquired
£’000
587
7,951
800
754
466
846
(1,204)
(8)
(487)
(674)
9,031
11,040
20,071
£’000
6,375
13,696
20,071
£’000
6,375
(846)
5,529
Contingent consideration arose on the acquisition in respect of up to €18 million which is payable subject to delivery of certain
research & development, regulatory and commercial milestones between 2023 and 2027. £13.7 million was the estimated fair
value of the contingent consideration at the acquisition date and £7.6 million is the fair value at 31 December 2023.
None of the goodwill on the acquisition is expected to be deductible for income tax.
In addition to the contingent consideration payment in relation to Connexicon, €0.5 million (£0.4 million) was paid in the year
relating to AFS.
33 Events after reporting period
With the exception of the proposed acquisition of Peters Surgical for a maximum consideration of €141.4 million as discussed
on page 7 and the acquisition of certain assets of Syntacoll GmbH for €1 million as discussed on page 19, there have been no
material events subsequent to 31 December 2023.
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
139
GOVERNANCESTRATEGIC REPORTOVERVIEWFINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORTOVERVIEWFINANCIAL STATEMENTS Company Statement of Financial Position
At 31 December 2023
Non current assets
Investments in subsidiaries
Trade and other receivables
Current assets
Trade and other receivables
Cash and cash equivalents
Current liabilities
Trade and other payables
Current tax liabilities
Net current assets
Net assets
Equity shareholders’ funds
Share capital
Share premium
Share-based payments reserve
Investment in own shares
Retained earnings
Note
3
4
4
5
6
2023
£’000
58,017
34,271
92,288
546
52,446
52,992
(2,661)
(741)
(3,402)
49,590
141,878
10,865
37,473
18,649
(6,877)
81,768
2022
£’000
58,017
36,617
94,634
237
64,801
65,038
(12,637)
–
(12,637)
52,401
147,035
10,843
37,269
15,711
(167)
83,379
Equity attributable to equity holders of the parent
141,878
147,035
The Company reported a net gain for the year ended 31 December 2023 of £3.2 million (2022: gain of £3.9 million).
The Financial Statements of Advanced Medical Solutions Group plc (registration number 2867684) on pages 140 to 146 were
approved by the Board of Directors and authorised for issue on 1 May 2024 and were signed on its behalf by:
E Johnson
Chief Financial Officer
140
Advanced Medical Solutions Group plc Annual Report & Accounts 2023
Company Statement of Changes in Equity
For the year ended 31 December 2023
At 1 January 2022
Share-based payments
Share options exercised
Own shares purchased
Own shares sold
Total comprehensive income
Dividends paid
At 31 December 2022
Share-based payments
Share options exercised
Own shares purchased
Total comprehensive income
Dividends paid
At 31 December 2023
Share capital
£’000
10,804
–
39
–
–
–
–
10,843
–
22
–
–
–
Share-based
payments
£’000
Investment in
own shares
£’000
Share
premium
£’000
Retained
earnings
£’000
Total
£’001
13,180
2,439
92
–
–
–
–
15,711
2,916
22
–
–
–
(164)
36,996
83,848
144,664
–
–
(392)
389
–
–
–
273
–
–
–
–
–
–
–
–
3,872
(4,341)
2,439
404
(392)
389
3,872
(4,341)
(167)
37,269
83,379
147,035
–
–
(6,710)
–
–
–
204
–
–
–
–
–
–
3,164
(4,775)
2,916
248
(6,710)
3,164
(4,775)
10,865
18,649
(6,877)
37,473
81,768
141,878
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
141
GOVERNANCESTRATEGIC REPORTOVERVIEWFINANCIAL STATEMENTS Notes to the Company Financial Statements
Year ended 31 December 2023
1. Significant accounting policies
Basis of preparation
These Financial Statements were prepared in accordance
with Financial Reporting Standard 101 Reduced Disclosure
Framework (’FRS 101’).
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, revenue, 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.
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.
142
Advanced Medical Solutions Group plc Annual Report & Accounts 2023
1. Significant accounting policies continued
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 remeasured at each period end. The
gain or loss on remeasurement 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 12 months and it is not expected to be realised or
settled within 12 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 gain for the year ended 31 December 2023 of £3.2 million
(2022: gain of £3.9 million) which includes Other Comprehensive Income of £0.1 million (2022: £0.1 million).
The Auditor’s remuneration for audit and other services is disclosed in Note 7 to the Consolidated Financial Statements.
The average number of employees in the year was 18 (2022: 17), all of whom were classified as Administration (2022: 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 including bonuses
Social Security costs
Pension costs
Share-based payments (see Note 29 to the Consolidated Financial Statements)
Year ended
31 December
2023
£’000
Year ended
31 December
2022
£’000
2,538
363
92
2,916
5,909
4,922
330
90
2,439
7,781
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
143
GOVERNANCESTRATEGIC REPORTOVERVIEWFINANCIAL STATEMENTS Notes to the Company Financial Statements
continued
3.
Investments in subsidiaries
Cost
At 1 January 2023
At 31 December 2023
Provisions for impairment
At 1 January 2023
At 31 December 2023
Net book value
At 31 December 2023
At 31 December 2022
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.
The following were subsidiary undertakings at the end of the year and have all been included in the consolidated accounts.
Nature of business
Registered address
Name
Advanced Medical
Solutions Limited
Advanced Medical
Solutions (UK) Limited
Advanced Medical
Solutions Trustee
Company Limited
Advanced Medical
Solutions (Plymouth)
Limited
Advanced Healthcare
Systems Limited
MedLogic Global
Holdings Limited
Innovative
Technologies Limited
Raleigh Adhesive
Coatings Limited
Advanced Medical
Solutions BV
Proportion
of voting
rights and
Ordinary Share
capital held
Country of
operation
England
100%
Development and
manufacture of
medical products
England
100%
Holding Company
England
100%
Trustee Company
England
100%
Dormant
England
100%*
Dormant
England
100%*
Holding Company
England
100%‡
Dormant
England
100%*
Netherlands
100%
Development and
manufacture of
medical products
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
Munnikenheiweg 35, 4879 NE Etten-
Leur, Netherlands
Am Flachmoor 16, 90475
Nuremberg, Germany
Am Flachmoor 16, 90475
Nuremberg, Germany
Advanced Medical
Solutions (Germany) GmbH
Germany
100%^
Holding Company
Resorba Medical GmbH
Germany
100%#
Development and
manufacture of
medical products
Resorba s.r.o.
Resorba ooo
Czech
Republic
Russia
100%#
100%#
Manufacture and sales
office of medical products
Haltravska No. 9/578, 34401,
Domazlice, Czech Republic
Distribution of
medical products
Fadeeva Str. 5, 125047
Moscow, Russia
144
Advanced Medical Solutions Group plc Annual Report & Accounts 2023
Nature of business
Registered address
3.
Investments in subsidiaries continued
Proportion
of voting
rights and
Ordinary Share
capital held
Country of
operation
Israel
100%*
Name
Advanced Medical
Solutions Israel
(Sealantis) Limited
Biomatlante S.A
France
100%
MPN Medizin Produkte
Neustadt GmbH
Germany
100%#
AFS Medical GmbH
Austria
100%*
Development and
manufacture of
medical products
Development and
manufacture of
medical products
Manufacture of
medical products
Distribution of
medical products
Advanced Medical
Solutions (USA) Inc
Connexicon
Medical Limited
USA
100%*
Marketing support of
medical products
Ireland
100%*
Development and
manufacture of
medical products
Advanced Medical
Solutions (Europe) Limited
England
100%
Providing financial support
to other Group entities
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.
Malat Building, Technion City, Haifa,
Israel 3200004
5, Rue Edouard Belin, 44360 Vigneux
de Bretagne, France
Sierkdorfer Str. 15, 23730, Neustadt
in Holstein, Germany
Gewerbepark B17/II, Straße 1/3, 2524
Teesdorf, Austria
2711 Centerville Road, Suite 400,
Wilmington, Newcastle, 19808,
Delaware, USA
Synergy Centre, TU Dublin, Tallaght,
Dublin 24, D24 A386, Ireland
Premier Park, 33 Road One, Winsford
Industrial Estate, Winsford, Cheshire,
CW7 3RT, United Kingdom
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
145
GOVERNANCESTRATEGIC REPORTOVERVIEWFINANCIAL STATEMENTS Notes to the Company Financial Statements
continued
4. Trade and other receivables
Non-current assets
Amounts due from Group undertakings
Current assets
Prepayments and accrued income
Amounts due from Group undertakings
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
2023
£’000
2022
£’000
34,271
36,618
2023
£’000
256
290
546
2023
£’000
38,957
(2,056)
36,901
2022
£’000
237
–
237
2022
£’000
37,997
961
38,958
2,340
2,340
2,340
2,340
34,561
36,618
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 £30 million facility
is available to Advanced Medical Solutions Limited until 31 December 2026 primarily to finance acquisitions. 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
Derivative financial instruments
2023
£’000
1,939
633
89
2022
£’000
9,191
3,366
80
2,661
12,637
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 135 in the Notes to the Group’s accounts.
7. 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
Share Incentive Plan and Deferred Annual Bonus Scheme
2023
£’000
564
1,161
1,191
2022
£’000
441
1,218
780
2,916
2,439
Details on the share-based payments of the Company are provided in Note 29 on pages 135 to 138 in the Notes to the
Group’s accounts.
146
Advanced Medical Solutions Group plc Annual Report & Accounts 2023
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
2023
£m
126.2
18.9
15.9
7.3p
166.9
122.3
(45.0)
244.2
4.0
18.6
0.2
37.5
1.5
2.0
1.9
178.5
244.2
2022
£m
124.3
24.9
20.4
9.4p
149.2
131.9
(44.5)
236.6
10.7
15.7
0.5
37.3
1.5
(1.5)
5.0
167.4
236.6
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
Whilst no exceptional items have been incurred in the current or prior year, the Group treats exceptional items as a profit
adjusted item when calculating alternative performance measures.
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 by retranslating non-pounds
sterling sales using foreign exchange rates from the previous financial year.
• Adjusted measures are believed by the Directors to provide the reader with additional information and an alternative
year-on-year comparison to further understand routine business operations since they exclude large, unusual or one-off
activities, in particular as a result of business combinations, which if included may distort the underlying performance 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 (2022: £nil), amortisation of acquired intangible
assets which was £4.9 million (2022: £3.4 million) and a movement in long-term liabilities recognised on acquisition income
of £0.2 million (2022: income of £0.8 million) as reconciled in the Financial Review (See page 59).
• Adjusted operating margin is shown before exceptional items and amortisation of acquired intangible assets as reconciled in
the Financial Review (See page 59).
• 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.
• Net cash consists of cash and cash equivalents with nil debt (2022: £nil debt).
Further information regarding the profit adjusting items can 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 liabilities credit/expense (Note 12)
Annual Report & Accounts 2023 Advanced Medical Solutions Group plc
147
GOVERNANCESTRATEGIC REPORTOVERVIEWFINANCIAL STATEMENTS Advisors
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
Computershare Registrars
The Pavilions
Bridgwater Road
Bristol BS13 8AE
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
148
Advanced Medical Solutions Group plc Annual Report & Accounts 2023
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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
Tel: +44 (0)1606 863600
E-mail: info@admedsol.com
www.admedsol.com