Advanced Medical Solutions Group plc

("AMS" or the "Group")

Unaudited Preliminary Results for the year ended 31 December 2019

Winsford, UK: Advanced Medical Solutions Group plc (AIM: AMS), the surgical and advanced woundcare specialist company, today announces its unaudited preliminary results for the year ended 31 December 2019.

Financial Highlights:

Business Highlights:

·      Despite significant challenges in 2019, growth was achieved across multiple categories, but was offset by previously reported the downturn in US LiquiBand^®, and Group revenue of £102.4 million was flat on 2018. Key drivers were:

o  US LiquiBand^® sales reduced by 23% to £17.7 million (2018: £23.0 million) and by 25% at constant currency

o  EU/ROW LiquiBand^® revenue increased by 24% at reported and constant currency to £10.8 million (2018: £8.7 million)

o  Fix8™ sales increased by 27% at reported and constant currency to £2.6 million (2018: £2.1 million)

o  Biosurgical sales increased by 9% to £9.4 million (2018: £8.6 million) and by 10% at constant currency

o  Suture sales increased by 8% to £14.4 million (2018: £13.3 million) and by 9% at constant currency

o  Sales of antimicrobial dressings increased by 4% to £20.6 million (2018: £19.7 million) and by 3% at constant currency

·      Investment in acquisitions and increased research and development, regulatory and clinical activity is establishing a bedrock for future growth:

o  Acquisition of Sealantis in January 2019 for US$25 million (£19 million) strengthened our internal sealants R&D pipeline

o  Acquisition of Biomatlante in November 2019 for €8 million (£7 million) strengthened our biosurgical portfolio and enters us into the synthetic bone substitutes market with a differentiated product

o  Broadened and more diverse portfolio of innovative internally developed products

·      Adjusted operating margin down 180 bps to 26.4% (2018: 28.2%) and adjusted profit before tax down 7% to £26.6 million (2018: £28.8 million) due to investment in the product pipeline including Sealantis, adverse sales mix and currency contracts.

·      The Group maintains its solid balance sheet and the Board proposes an increased final dividend of 1.05p per share to be paid on 19 June 2020 to shareholders on the register at the close of business on 29 May 2020, making a total dividend for the year of 1.55p per share (2018: 1.32p), an increase of 17%.

Commenting on the results Chris Meredith, Chief Executive Officer of AMS, said: "2019 was a challenging year and despite the setbacks we faced, I am pleased with the overall performance of the Group, other than for US LiquiBand^® sales, which were disappointing. We look forward to regaining positive momentum in our US LiquiBand^® business given the recent approval of LiquiBand^® Rapid and the anticipated approval of LiquiBand^® XL and we expect to realise significant commercial benefits in coming years following the successful acquisitions of Sealantis and Biomatlante. Our strong pipeline of R&D innovation further expands our addressable market and has never been stronger. We continue to be optimistic about our growth prospects in the growing global health care market."

- End -

Note 1   Constant currency removes the effect of currency movements by re-translating the current year's performance at the previous year's exchange rates

Note 2   Adjusted profit before tax is shown before exceptional items which were £1.1 million (2018: £0.4 million), amortisation of acquired intangible assets which was £1.7 million (2018: £0.1 million) and change in fair value of long-term debt, a £0.3 million credit (2018: £nil) as defined in the Financial Review. Adjusted operating margin is shown before exceptional items and amortisation of acquired intangible assets

Note 3   Net cash is defined as cash and cash equivalents plus short term investments less financial liabilities and bank loans

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 and technologically advanced products for the global surgical and woundcare markets, focused on quality outcomes for patients and value for payers. AMS has a wide range of surgical products including tissue adhesives, sutures, haemostats, and internal fixation devices, which it markets under its brands LiquiBand^®, RESORBA^®, and LiquiBand^® Fix8^TM. AMS also supplies wound care dressings such as silver alginates, alginates and foams through its ActivHeal^® brand as well as under white label. In 2019, the Group made two acquisitions: Sealantis, an Israeli medical device company with a patent-protected sealant technology platform; and Biomatlante, an established developer and manufacturer of innovative surgical biomaterial technologies based in France.

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, Germany, France and Israel. Established in 1991, the Group has more than 700 employees. For more information, please see www.admedsol.com.

Chief Executive's Statement

Group performance

Whilst 2019 proved a challenging year for the Group, with the previously reported downturn of US LiquiBand^® and the third-party sterilisation failure at the end of 2019 which was resolved in early 2020, I am pleased to report that good growth in other areas of the business enabled the Group to deliver revenues of £102.4 million, broadly in line with 2018.

Adjusted profit before tax decreased by 7% to £26.6 million due to our operational investment in Sealantis, adverse sales mix and currency contracts. This contributed to a decrease of 8% in adjusted diluted earnings per share.

As previously stated, Surgical Business Unit sales were restricted by US LiquiBand^® performance, resulting in a 1% decrease in revenue to £56.5 million and by 2% at constant currency. We have made progress on the two key product approvals needed to support the recovery of LiquiBand^® in the US. LiquiBand^® Rapid™ was recently approved by the FDA and the LiquiBand^® XL pilot clinical study is in progress and will be concluded by the end of Q1 2020.

Our Woundcare business grew 1% to £45.8 million but was flat at constant currency. We strengthened our woundcare portfolio in the year with US approvals for our antimicrobial PHMB foam and silver high-performance dressings, both of which were signed to partners and launched to the market in Q4 2019.

The acquisition of Biomatlante demonstrates our strategy of utilising our strong cash position to acquire businesses with complementary products, exciting technologies and new routes to market and the acquisition of Sealantis demonstrates our willingness to invest in longer term growth opportunities.

Market

Favourable global healthcare and demographic trends are likely to continue to drive growth in our large global surgical and advanced woundcare markets in the longer term, both of which provide AMS with significant future opportunities.

In recent years, the advanced woundcare market has reported lower market growth rates as well as increased price pressure and ongoing reviews of reimbursement levels in various European countries, all of which will create headwinds for our Woundcare Business Unit.

We have increased the size of our addressable part of the surgical market with our two acquisitions in 2019. Commercialisation of Sealantis is expected in 2021 and will open up the US$1 billion internal sealants market. Biomatlante provides innovative complementary products and immediate access to the US$0.5 billion synthetic bone substitutes market

In addition, we are starting to see opportunities due to competitor product withdrawals in our surgical and woundcare markets as a result of the enhanced regulatory environment. We are confident of strong growth as we continue to expand our product portfolio, enter new geographies and increase our share in each market.

Strategy

Our strategy continues to be based on four pillars: Growth, Innovation, Operational Excellence and Culture.

Growth

Our Growth strategy is to harness the opportunities from our multiple routes to market across multiple geographies with products that add value to patients and payers through delivery of equal or better clinical performance without compromising care or outcomes. We continue to increase our investment in major R&D and regulatory projects to enable future growth opportunities.

Innovation

For Innovation we continue to strengthen our portfolio by developing or acquiring high quality products that allow us or our partners to make market share gains in high value segments.

Operational excellence

Our operational strategy is centred around the needs of our customers and aims to reduce operating costs and operational risk whilst producing high quality products and increasing capacity. This will allow us to continue to drive out cost and improve margins.

Culture

We operate to the highest ethical standards with our values of Care, Fair, Dare embedded in all we do:

·      Caring about the work we undertake and the real-life differences we can make

·      Acting with integrity and ensuring we are fair in all aspects of business

·      Moving boundaries and challenging constructively to build on others' ideas

Acquisitions

The acquisition of Sealantis has provided an important pipeline of significant products, intellectual property, a strong R&D team and access to markets in which we have not previously operated. The internal sealants market is large (greater than US$1 billion) and growing, and Sealantis has developed a range of products that reduce leakage of blood or fluid following gastrointestinal surgery. Integration is now successfully complete, and the project team are currently engaging with regulators as we prepare clinical trials. We expect to record a low level of sales to key opinion leaders in 2020 with first commercial product launches planned for 2021.

The acquisition of Biomatlante enhances our product offering and market access into orthopaedic, spinal, dental and sports surgery. It has a range of innovative, revenue generating biomaterial products including, MBCP^®, a biphasic calcium phosphate synthetic bone substitute which has a unique micro and macroporous structure that most closely resembles the architecture of natural human bone. The technology is supported by more than 650 published studies and 30 years of clinical experience, which validate its superior performance in comparison to competitor products. The Group expects Biomatlante to be earnings enhancing in 2020. Integration is progressing well and the potential for further commercial synergies has been confirmed in post-completion commercial reviews.

Bringing in high-quality people and products to our Group is a crucial part of our strategy and we are working with the existing management in both acquired businesses to maximise their potential in the coming years.

The Group continues to actively seek acquisitions that deliver value for shareholders and meet our criteria of being:

·    Products or technologies that enable us to leverage our woundcare customer base or surgical routes to market, or

·    Surgically focused companies with product synergies, strong R&D capability and ownership of their products

We have an internal team working to identify, appraise and progress acquisition opportunities and continue to explore options to accelerate growth through select targets.

Regulatory

The transition phase of the new European Medical Devices Regulation (MDR) runs until May 2024. MDR stipulates stricter requirements for product safety and performance, clinical evaluation and post-market clinical evidence. In the past eighteen months, the Group has successfully completed the Medical Device Directive (MDD) recertification of the RESORBA^® ranges, the LiquiBand^® portfolio, and all of our significant woundcare products providing extended time to implement MDR. This demonstrates our capability to navigate the increasingly challenging regulatory framework as we complete our MDR implementation as part of our robust Group wide regulatory plan. During the MDR transition period, the Group expects to continue to incur an increasing level of costs associated with regulatory activity.

The Group is beginning to see opportunities arising from the impact of the MDR and, given our extensive preparations, we remain confident in our ability to exploit them. To support future geographic growth, our regulatory teams added more than one hundred new international registrations for our surgical and woundcare products in the year, across Latin America, the Middle East, the Far East and Australasia.

During the year, we successfully transitioned to MDSAP (Medical Device Single Audit Program) and, following audits at each of our sites, our certificates were received in the second half of 2019.

Brexit

The Group is well prepared for the possible end of the Brexit transition period on 31 December 2020. UK product certificates have been reassigned to BSI Netherlands so that our products retain their EU approval, Advanced Medical Solutions BV has been appointed as our EU Authorised Representative and we will continue to hold increased inventory levels on all sites. Under WTO rules, there would be no duty on our finished goods and steps are in place to mitigate any additional duty costs on raw materials.

COVID-2019

In response to the ongoing outbreak of COVID-19 the Group has set-up a designated team to closely monitor and risk assess its supply chain. The team is working proactively with employees, customers and suppliers to monitor any potential disruption and, to date, expects no significant supply issues. The Group has also assessed the risks for its employees and has reiterated published guidance such as good personal hygiene practices. Our forward-looking financial guidance assumes no significant impact from the COVID-19 outbreak.

Stakeholders

We continue to be grateful for the support and hard work of our committed staff, partners and other stakeholders.

Outlook

The Group expects to deliver more than 10% revenue growth in 2020 driven by new product launches, strong underlying demand for our surgical portfolio and opportunities arising from the transition to MDR. US LiquiBand^® is expected to return to growth in 2020 given the recent approval of LiquiBand^® Rapid and the anticipated approval of LiquiBand^® XL which is expected in H2. Notwithstanding that, we see the low reported market growth and increasing reimbursement challenges as potential headwinds for our Woundcare Business Unit, which will also be impacted by uneven ordering patterns associated with Brexit. Operationally the business is in robust strength, our recent acquisitions are providing new market and product opportunities and the Board remains optimistic about AMS's future growth prospects from both an organic and acquisitive standpoint.

Business Unit performance

As announced in our Financial Statements for the year ended 31 December 2018, we adjusted our Business Units at the start of 2019 to enable increased focus and unlock commercial and R&D synergies. Comparative segment information has been restated to align with the new Business Unit structure.

Surgical Business Unit

The Surgical Business Unit reports sales of all surgical devices. Overall, revenue decreased by 1% to £56.5 million (2018: £57.1 million) and by 2% at constant currency. Whilst the Business Unit delivered strong growth in Internal Fixation and Sealants, Traditional Closure, Biosurgical devices and OEM Sealants, this was offset by the previously reported decline in Advanced Closure.

Advanced Closure 

LiquiBand^® topical skin adhesives incorporating medical cyanoacrylate adhesives in combination with purpose-built applicators used to close and protect a broad variety of surgical and traumatic wounds.

Revenue decreased by 10% to £28.5 million (2018: £31.7 million), and by 11% at constant currency despite strong growth in all territories except the US which was impacted by a combination of factors, as previously reported:

·      Destocking due to lost business with two large Group Purchasing Organisations and a slowdown in new evaluations as a result of not having a combined glue and tape device for large wound closure in the AMS portfolio.

·      Third party sterilisation issue.

US LiquiBand^® is expected to return to growth in 2020 following the launches of LiquiBand^® Rapid™ and LiquiBand^® XL. Following its recent approval, we are launching LiquiBand^® Rapid™ with one of our main partners in Q2 2020. This will enable AMS to regain ground with an improved product. The LiquiBand^® XL device will allow us to compete in the large wound market for the first time and unlock further growth potential in our LiquiBand^® business with all partners. LiquiBand^® XL will finish its critical pilot study by the end of Q1 2020 providing confirmation that we have a device and formulation that meets the key criteria of 10-day wear time. The successful product from the pilot study will enter a full GLP study in April which would keep us on track to file for a 510k by the end of Q2 2020.

Internal Fixation and Sealants

LiquiBand^® Fix8™ devices are indicated for the internal fixation of hernia meshes using our LiquiBand^® technology. Through the accurate delivery of individual drops of cyanoacrylate adhesive, LiquiBand^® Fix8™ is used to hold hernia meshes in place within the body instead of traditional tacks and staples.

Revenue increased by 27% to £2.6 million (2018: £2.1 million) predominately driven by demand for the laparoscopic device. The open hernia mesh fixation device, approved in in late 2018, has received very positive surgeon feedback reinforcing our decision to access the substantial portion of the global hernia market dedicated to open hernia surgery. Following the soft launch of the open hernia mesh device at the start of the year, we have made significant progress during the year in building clinical evidence and developing a base of high-profile key opinion leaders which should create a platform for success in 2020.

In May 2019 we received the US Investigational Device Exemption (IDE) for laparoscopic Fix8™ which allowed us to start the clinical trial that will provide the safety and effectiveness data required to support our premarket approval (PMA). The clinical trial is progressing very well in terms of surgeon feedback on the product and its performance. Patient recruitment commenced in August 2019 at our first site but was initially slower than anticipated. We have now increased the number of clinical sites to five, increased the number of investigators at the sites and expect to complete all surgical procedures by the end of 2020. We expect to file for FDA approval in H2 2021. We continue to be excited about the long-term prospects for the LiquiBand^® Fix8™ portfolio and entry into the US will be a significant landmark for the Group.

The acquisition of Sealantis, in January 2019, provided AMS with a unique product platform to access the $1 billion internal sealants market. We are working on navigating the regulatory environment and on some product design enhancements to maximise commercial success and expect:

·      soft launch to key opinion leaders in H2 2020

·      150 patient study across three major markets in H2 2020

·      commercial product launch planned for 2021

·      larger pivotal study to support FDA approval to start in H2 2021

Traditional Closure

RESORBA^® branded Absorbable and Non-absorbable Sutures.

Revenue increased by 8% to £14.4 million (2018: £13.3 million) and by 9% at constant currency. Growth was delivered in various European territories and in the US.

Biosurgical Devices

Our biosurgical portfolio has been significantly expanded by the acquisition of Biomatlante which has added synthetic bone substitutes, cross-linked collagen membranes and bioabsorbable screws to our existing biosurgical ranges which include RESORBA^® Gentacoll^® used in Orthopaedic and Cardiac applications, and collagen fleeces and cones used in Dental applications. 

Revenue increased by 9% to £9.4 million (2018: £8.6 million) and by 10% at constant currency, predominately driven by growth in Europe and Latin America, a number of new customers notably in the Far East and by Biomatlante revenue (£0.4 million) following its acquisition at the end of November 2019.

Antibiotic loaded collagens providing local drug delivery is a key product development focus for AMS and we are working on development and regulatory activities for alternative antibiotics for orthopaedic and cardiac applications. We have submitted our CE mark application for collagen with vancomycin and approval is expected in H2 2020. Our antibiotic collagen pouch for cardiovascular devices, which is currently sold under prescription in Germany, is scheduled for an FDA review meeting in Q2 2020 with a view to finalising the product indications and regulatory pathway for 510k approval.

OEM Sealants

Surgical sealants sold under partner brands.

Revenue increased by 12% in 2019 to £1.5 million (2018: £1.4 million) partly due to partner ordering patterns.

Woundcare Business Unit

The Woundcare Business Unit is comprised of our multi-product portfolio of advanced woundcare dressings and bulk materials sold under partner brands plus the AMS branded ActivHeal^® range sold predominately to the NHS.

Revenue increased by 1% to £45.8 million (2018: £45.5 million) and was in line with prior year at constant currency.

Infection Management

Advanced woundcare dressings that incorporate antimicrobials such as Silver and Polyhexamethylene Biguanide (PHMB).

Revenue increased by 4% to £20.6 million (2018: £19.7 million) and by 3% at constant currency with growth driven mainly by additional sales of PHMB dressings including a number of new customers and the first shipment of our atraumatic PHMB foam dressing into the US following its approval in July 2019. Our atraumatic PHMB foam range demonstrates enhanced product performance in terms of rapid microbial activity and eradication of pathogens and enters the growing antimicrobial foam market which exceeds £100 million.

Silver High Performance Dressing, our next generation antimicrobial gelling fibre technology with excellent performance and patent protected construction, received US approval in the second half of 2019 and has been signed up by a number of our US partners with launch orders predominately expected to ship in the first half of 2020.

Our Moisture Wicking Fabric with silver, indicated for use in the management of skin folds and skin-on-skin friction, was approved for the US and EU in the second half of 2019 and gives AMS and its partners access to a new market of more than $25 million with initial orders expected in the first half of 2020.

Following customer feedback, we have improved the design of our silver post-operative dressing which launched with a US partner in 2018 and expect increased ordering from multiple partners in 2020.

Looking forward, the Group is working on developing next generation high-gelling products with differentiated antibiofilm claims.

Exudate Management

The exudate management category comprises advanced woundcare dressings which do not incorporate any antimicrobial elements and includes the majority of our ActivHeal^® range. Revenue was impacted by one of our main partners significantly altering its inventory levels due to its assessment of the risk of Brexit related supply disruption. This major partner ordered significantly more than usual in Q4 2018 and H1 2019 followed by much lower demand in H2 2019. Revenue consequently declined by 6% to £19.3 million (2018: £20.4 million) and by 6% at constant currency.

During the year, we expanded our Lite foam portfolio with a range of shapes and sizes for the acute post-surgery market, extended the claims on our silicone foam range to include pressure ulcer prevention in the US and gained a number of new customers in the EU and Latin America.

The Group is seeing strong progress from its initiative to exploit ActivHeal^® opportunities in select overseas markets. We continue to navigate the approval process in multiple new markets including the Middle East and Latin America. This initiative has generated significant distribution partner interest and validates the decision to realign our Business Units at the start of 2019.

We are confident that the above actions, coupled with our ability to meet the demands of MDR, will continue to counteract the ongoing challenging market conditions in the advanced woundcare market.

Other Woundcare

Other woundcare comprises the gels and sealants used in woundcare, royalties and other fee income. Revenue increased by 13% to £6.0 million (2018: £5.3 million) and by 9% at constant currency predominately due to increased Organogenesis royalties of £2.9 million (2018, impacted by lower reimbursement: £1.8 million).

Chris Meredith

Chief Executive Officer
 

Financial Review

Summary

In 2019 the Group delivered reported revenue in-line with prior year and a 1% decrease at constant currency. Profit before tax decreased 14% due to operational investment in Sealantis, adverse sales mix and currency contracts and increased amortisation due to the acquisition of Sealantis at the start of the year.

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. We use such measures consistently at the half year and full year and reconcile them as appropriate. The measures used in this statement include constant currency revenue growth, adjusted operating margin, adjusted profit before tax and adjusted net cash inflow from operating activities, allowing the impacts of exchange rate volatility, exceptional items, amortisation and the change in fair value of long-term debt to be separately identified. Net cash is an additional non-GAAP measure used.

Administration costs were impacted by foreign exchange movements and increased by 3.8% to £34.6 million (2018: £33.3 million) excluding exceptional items. Foreign exchange movements, predominately driven by exchange rates on currency contracts increased administration costs by approximately £3 million with underlying administration costs lower than in 2018 as the Group controlled its discretionary administrative expenditure. The Group, however, continued to increase its investment in research and development including through Sealantis and incurred £6.5 million of gross R&D, regulatory and clinical spend in the year (2018: £6.0 million), representing 6.3% of sales (2018: 5.8%).

Exceptional items of £1.1 million in the year (2018: £0.4 million) relate to the Sealantis and Biomatlante acquisitions as well as other business development activities.

Adjusted operating margin decreased by 180 bps to 26.4% (2018: 28.2%) and operating margin decreased by 410 bps to 23.7% (2018: 27.8%) due to lower US LiquiBand^® sales, adverse currency contracts and the continued investment in Sealantis.

Adjusted profit before tax decreased by 7% to £26.6 million (2018: £28.8 million) and profit before tax decreased by 14% to £24.3 million (2018: £28.3 million).

The Group adopted IFRS 16 (Leases) in 2019 and the comparative period has been restated, which reduced profit before tax by £0.1 million in the year (2018: £0.2 million). There is no overall impact on the Group's cash and cash equivalents as a result of IFRS 16.

The Group's effective tax rate in the Income Statement, reflecting the blended tax rates in the countries where we operate and including UK patent box relief, increased to 22.0% (2018: 20.3%) mainly due to some of the exceptional items in the period not being deductible for tax purposes and to Sealantis operating losses not being offset against profits elsewhere in the Group.

Adjusted diluted earnings per share decreased by 8% to 9.83p (2018: 10.63p) and diluted earnings per share decreased by 16% to 8.72p (2018: 10.41p).

The Board is proposing a final dividend of 1.05p per share, to be paid on 19 June 2020 to shareholders on the register at the close of business on 29 May 2020. This follows the interim dividend of 0.50p per share paid on 25 October 2019 and would, if approved, make a total dividend for the year of 1.55p per share (2018: 1.32p), a 17% increase on 2018.

^{Note 4: Adjusted for exceptional items and amortisation of acquired intangible assets}

^{Table is reconciled to statutory information in note 4 of the financial information.}

Surgical

The adjusted operating margin of the Surgical Business Unit decreased by 350 basis points to 28.4% (2018: 31.9%), impacted by the US LiquiBand^® sales reduction, Sealantis losses and adverse currency movements.

Woundcare

The adjusted operating margin of the Woundcare Business Unit remained consistent at 24.8% (2018: 24.8%), as an increased royalty from Organogenesis in the period was offset by adverse currency movements.

Currency

More than one third of Group revenues are invoiced in US Dollars and approximately one quarter are invoiced in Euros. The Group hedges significant currency transaction exposure by using forward contracts and aims to hedge approximately 80% of its estimated transactional exposure for the next 12 to 18 months. The Group estimates that a 10% movement in the £:US$ or £:€ exchange rate will impact Sterling revenues by approximately 3.4% and 2.7% respectively and in the absence of any hedging this would have an impact on profit of 2.7% and 1.0%.

Cash flow

Adjusted net cash inflow from operating activities increased by 3% to £22.8 million (2018: £22.1 million). Net cash inflow from operating activities, impacted by exceptional items, were in line with the previous year at £21.7 million (2018: £21.7 million).

Working capital increased during the year, mainly due to increased inventory levels and lower payables. Inventory increased to 5.1 months of supply (2018: 4.7 months) with high inventories to mitigate Brexit and recertification further impacted by goods awaiting sterilisation following the delay at a third-party facility. Payables decreased in value due to controlled discretionary expenditure, however creditor days increased to 34 days (2018: 31 days). Debtor days increased marginally to 49 days (2018: 47 days).

Capital investment in equipment, R&D and regulatory costs increased to £5.9 million (2018: £4.7 million).

Cash outflow relating to taxation increased to £5.9 million (2018: £3.8 million) due to the timing of tax payments, in particular in Germany and the US.

The Group paid its final dividend for the year ended 31 December 2018 of £1.9 million in June 2019 (2018: for the year ending 2017, £1.6 million), and its interim dividend for the six months ended 30 June 2019 of £1.1 million (for the 6 months ended 30 June 2018: £0.9 million) in October 2019.

The Group has an undrawn unsecured £80 million credit facility provided jointly by The Royal Bank of Scotland and HSBC which is in place until December 2023. This facility carries an annual interest rate of LIBOR or EURIBOR plus a margin that varies between 0.60% and 1.70% depending on the Group's net debt to EBITDA ratio.

^{Note 5: See note 3 in the notes to the condensed consolidated financial statements}

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION