Advanced Medical Solutions Group plc

("AMS" or the "Group" or the "Company")

Unaudited preliminary results for the year ended 31 December 2023

~ AMS set for strong growth in 2024, underpinned by implementation of commercial initiatives, product launches, as well as a transformational surgical acquisition announced today ~

Winsford, UK: Advanced Medical Solutions Group plc (AIM: AMS), a world-leading specialist in tissue-healing technologies, today announces its unaudited preliminary results for the year ended 31 December 2023.

Financial Summary:

Business Highlights (including post period end):

AMS is pleased to report results in line with updated guidance and significant commercial, regulatory and clinical progress as it continues to build its platform for growth and invest in its portfolio of next-generation products.

Operational

·    Successful implementation of new route to market strategy for US LiquiBand^® that is delivering accelerated growth expectations in Q1 2024 and gives the Board confidence in achieving record US LiquiBand^® sales in 2024

·      FDA approval for LIQUIFIX^TM, the first atraumatic hernia fixation device in the US with the full in-market launch with TELA Bio Inc ("TELA Bio") progressing very well and attracting significant market interest

·      Completion of the first SEAL-G^® and SEAL-G^® MIST human clinical trials with initial data showing promising improvement in comparison to reported leak rates

·      Acquisition of Peters Surgical SAS ("Peters Surgical") for a total maximum cash consideration of ?141.4 million (£121 million) announced today - See separate announcement

·      Acquisition of Syntacoll GmbH ("Syntacoll") for ?1 million on 1^st March 2024, a specialist manufacturer of drug-eluting collagens that strengthens the Group's existing Biosurgical business

·      Acquisition of Connexicon Ltd ("Connexicon") on 1^st February 2023, increasing the Group's ability to develop and commercialise innovative and differentiated adhesive and sealant technologies

Financial

·      Group revenue increased by 2% to £126.2 million (2022: £124.3 million) with strong organic growth partly offset by de-stocking of US LiquiBand^® and reduced royalties, as guided in September 2023

·      Adjusted profit before tax decreased by 9% to £25.9 million (2022: £28.5 million) whilst reported profit before tax decreased by 18% to 21.2 million (2022: £25.9 million) as margins were impacted by the temporary reduction in US LiquiBand^® revenue and lower royalty income

·      Net cash decreased to £60.2 million (2022: £82.3 million) following the acquisition of Connexicon, planned inventory build and the purchase of shares by the Employee Benefit Trust

·      Investment in R&D increased to £12.6 million (2022: £12.3 million), representing 10% of revenues (2022: 10%), as the Group maintains investment in new products and Medical Device Regulation ("MDR")

·      Surgical Business Unit revenues increased to £79.1 million (2022: £74.9 million), an increase of 6% at reported and constant currency

·      Woundcare Business Unit revenues decreased to £47.1 million (2022: £49.5 million), a decrease of 5% at reported and constant currency

·      Reflecting management's ongoing confidence in the Group's outlook, the Board proposes an increased final dividend of 1.66p per share (2022: 1.51p) bringing the total proposed dividend to 2.36p per share (2022: 2.15p)

Commenting on the results Chris Meredith, Chief Executive Officer of AMS, said: "I am very pleased with the progress we made in 2023 with a number of key initiatives setting a strong foundation for growth for the next five years. The recently signed US distribution agreements are already having a positive impact on the LiquiBand^® franchise. Also, market feedback through our new US partner for LIQUIFIX^TM validates the confidence we have in the commercial potential for this unique product. Outside the US, we continue to make excellent progress as we strengthen our position in established markets and drive growth through geographic expansion.

"The acquisition of Peters Surgical is a transformational step in the history of AMS. The expansion of our portfolio while leveraging the direct sales, distribution network, R&D capability and manufacturing base of both businesses will transform the Group into a major player in the field of tissue-healing. The Group has never been in such a strong position given the quality of our products and breadth of our portfolio. As a result, we are also increasing our dividend, demonstrating our commitment to drive shareholder value. I am extremely proud of the AMS employees who have worked so hard to get us to this point and I look forward to working closely with our new colleagues at Peters Surgical and Syntacoll and our other partners as we embark on this exciting new phase of the business."

Analyst briefing

A briefing for sell-side analysts will take place at 10am this morning. Please contact AMS@consilium-comms.com for further details.

Notes

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 £0.2 million (2022: £0.8 million credit)

3.     Net cash consists of cash and cash equivalents with nil debt (2022: £nil debt)

- End -

For further information, please visit www.admedsol.com or contact:

About Advanced Medical Solutions Group plc

AMS 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 , bone substitutes and internal sealants, which it markets under its brands LiquiBand^®, RESORBA^®, LiquiBandFix8^®, LIQUIFIX^TM 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.

AMS'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, 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. For more information, please see www.admedsol.com.

Chief Executive's Review

In 2023, the Group has performed in line with updated guidance with a strong underlying performance from the surgical Business Unit. Importantly, AMS has now successfully optimised its commercial partnerships for US LiquiBand^®, achieved FDA approval for LIQUIFIX^TM 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.

Surgical Business Unit

The Surgical Business Unit includes tissue adhesives, sutures, biosurgical devices and internal fixation devices marketed under the AMS brands LiquiBand^®, RESORBA^®, LiquiBandFix8^®, LIQUIFIX^TM and Seal-G^®.

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.

Peters Surgical

The acquisition of Peters Surgical for a maximum consideration of ?141.4 million, announced separately today, will transform our Surgical Business Unit, adding ?84 million of revenue⁴ at healthy gross margins, a highly synergistic product range and commercial and operational structure.

4.     Based on unaudited financial information extracted from management information for the financial year to 31 Dec 2023

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.

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 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 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 that they need 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 and is being positioned for approval in China, which would be AMS's first tissue adhesive approval in this very large market. The clinical trial is progressing well and Chinese approval is anticipated at around the end of 2025.

The new agreements also enable the promotion of 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 increase market share for the LiquiBand^® brand as a whole. 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 during the Period, 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 also contributing to growth. 

Internal Fixation and Sealants

LiquiBandFix8^®/LIQUIFIX^TM 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 ("AFS").

2023 was an important year for AMS's hernia mesh fixation device, with the completion of a 284-patient clinical study, US approval in June and an agreement secured in September with TELA Bio for the marketing and distribution of LiquiBandFix8^® across the high value United States market under the brand name LIQUIFIX^TM. The launch of LIQUIFIX^TM 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.

SEAL-G^® MIST is a novel, internal, biological sealant used to seal tissue to reduce leakage of fluid during internal surgery. We are very pleased with the results from 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 very early.

Unfortunately, the discontinuation of a component required to connect the laparoscopic to an external gas supply is restricting commercialisation for the time being and limiting our activities to just 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 the Period, increasing by 13% to £18.1 million and by 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 with much 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 at the time of the RESORBA^® acquisition.

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.

Acquisition of Syntacoll GmbH ("Syntacoll") post Period end

In looking to continually improve its collagen expertise and capabilities, the Group became aware of the opportunity to acquire certain assets of Syntacoll GmbH, a highly synergistic competitor in this space, from administration and the transaction was completed on 1^st March 2024 with a business combination for ?1 million and the retention of a number of employees with expertise in Production, Quality and R&D. 

Syntacoll is a company based near Munich in Germany that specialises in collagen-based absorbable surgical implants that has a 4,800m², GMP compliant, state of the art collagen manufacturing 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 set up as a second site of manufacture for some of AMS' existing key products which will help to address the risk of sole supply. 

A significant restructuring process of the business has already been completed prior to the acquisition and Syntacoll is expected to report a small profit in the first year under AMS' ownership and additional revenues from ongoing sales of Collatamp, a gentamicin-collagen implant.

The business also has manufacturing rights for XaraColl, a bupivacaine hydrochloride-collagen implant for the US market which could deliver substantial revenues in the coming years.

The Board expects to deliver strong growth in 2024 from the combined RESORBA^® and Syntacoll Biosurgical portfolio.

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.

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.  

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.

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.

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 has 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).

Acquisition strategy

The Group's strategy is to seek acquisitions that deliver additional value for shareholders and meet the criteria of being accretive businesses with strong R&D and manufacturing capabilities, and/or that have products or customers that offer significant synergies particularly in the surgical sector.

Regulatory

Despite enforcement dates for the Medical Devices Regulation (MDR) being delayed until 2027-2028, AMS has continued with its previously established schedule of work to meet the new standards. The Group continues to make good progress and the phasing of its capitalisation of R&D costs relating to MDR are broadly unchanged.

Environmental, Social & Governance

AMS continues to make positive progress on its ESG activities building on the foundations reported in its FY22 Annual Report, further developing its Net Zero Strategy and Pathway and agreeing key targets that will drive this activity, for example: to be Net Zero by 2045.

AMS has also strengthened its preparations for Task Force on Climate-Related Financial Disclosures (TCFD) and in conjunction with its ESG consultants will continue to progress this area in advance of its FY23 reporting in April 2024.

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.

Stakeholders

On behalf of the Board, I would like to thank the Group's staff, partners and other stakeholders, without whose help and commitment, the achievements of this year, and the years prior, would not have been possible.

Outlook (before financial impact from acquisitions announced today)

Trading in Q1 2024 has started strongly with the Group's key drivers performing well. Management is particularly pleased with the orders already received and commitment demonstrated by 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 LIQUIFIX^TM is now underway and very good progress has been made across a number of significant Group Purchasing Organizations (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 received 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.  

Chris Meredith

Chief Executive Officer

Financial Review

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 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).

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 US LiquiBandFix8^®. 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.

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 5 to 10 years.

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 Connexicon⁴. 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.

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%.

^{Note 4: Note 7 of the financial information contains further information regarding the acquisition accounting for Connexicon.}

^{Note 5: Adjusted for amortisation of acquired intangible assets.}

^{Table is reconciled to statutory information in note 3 of the financial information.}

Surgical

Surgical revenues increased by 6% to £79.1 million (2022: £74.9 million) at reported currency and by 6% at constant currency. 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. 

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 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 US Dollar.

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 & 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 has 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 6 months ended 30 June 2022: £1.4 million in October 2022).

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 Company's cash. See separate announcement for further information.

^{Note 6: Adjusted for amortisation of acquired intangible assets and movement in long-term acquisition liabilities.}

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION