Giving Nature
a Helping Hand.
Advanced Medical Solutions Group plc
Annual Report and Accounts 2004
Advanced Medical Solutions Group plc   Annual Report and Accounts 2004
Advanced Medical Solutions Group plc
Road 3, Winsford Industrial Estate
Winsford, Cheshire, CW7 3PD, UK
Tel: +44 (0)1606 863500  Fax: +44 (0)1606 863600
E-mail: info@admedsol.com  Web: www.admedsol.com Advanced Woundcare
AMS provides a full range of advanced
woundcare products for sale in hospitals,
nursing homes and community care. The main
indications are for chronic wounds such as
ulcers and pressure sores.
These products utilise the concept of moist
wound healing whereby it has been shown that
wounds heal faster and with less pain and
scarring if they remain moist. They protect the
wound, deal with tissue fluids and provide an
optimal environment for healing to occur.
Wound Closure
Products based upon superglue adhesives
technology are provided for closing wounds
following trauma or surgical incisions.
These tissue adhesives offer significant
benefits over conventional ways of closing
wounds such as sutures, staples and
adhesive strips.
They are simple to use, non-invasive, help
to reduce the risk of infection, minimise
trauma to the patient and provide good
clinical and cosmetic outcomes.
Our Products
1 Highlights
2 Chairman’s Statement
6 Chief Executive’s Review
10 Financial Review
12 Board of Directors
13 Committees and Advisers
14 Report of the Directors
16 Remuneration Report
18 Corporate Governance
21 Independent Auditor’s Report
22 Consolidated Profit and Loss Account
23 Statement of Total Recognised Gains
and Losses
24 Balance Sheets
25 Consolidated Cash Flow Statement
26 Notes Forming Part of the Financial
Statements
42 Five Year Summary
43 Notice of Meeting
Contents
Designed and Printed by Jones & Palmer Limited, Birmingham. tel: (0121) 236 9007 Highlights
Advanced Medical Solutions Group plc
Annual Report and Accounts 2004
 Group revenues up 22% to £11.0 million
(2003: £9.0 million)
 EBITDA at break-even
(2003: £1.3 million loss)
 Pre-tax losses halved to £1.0 million
(2003: £2.3 million) 
 Post-tax losses reduced to £0.4 million
(2003: £2.1 million)
 Positive cash flow in second half-year resulting in
cash of £3.2 million at year end, sufficient to take
Group through to profitability (2003: £3.6 million)
 Management strategy of broadening routes to
market covering branded partners, private label
distributors and direct UK business proving
successful both during the period and post-year end
– Johnson & Johnson Wound Management
launches silver alginate range in US in April and
Europe in February 2005
– Further licensing and distribution deals signed
including three year supply agreement with
Cardinal Health for private label woundcare
products in the US in July
– Collaborative agreement signed with Nitto
Medical for Japan in May
– Good progress made with UK direct business:
– LiquiBand
™
tissue adhesive range broadened
– ActivHeal
®
advanced woundcare range widely
available throughout NHS following inclusion
on contracts for England in December and
Scotland in January 2005
1 2 2
“Management’s strategy of broadening routes to market
is proving to be successful in generating growth.”
Overview
I am pleased to report that AMS has
made considerable progress during
2004. Group turnover of £11.0 million
was up 22% on prior year with growth
being achieved across both business
units, Advanced Woundcare and Wound
Closure, and all geographic regions. 
The broadening of its routes to market
offers a win-win situation for AMS, its
customers and its partners. Improved
revenues and margins are available to
AMS from offering a generic woundcare
range direct to the NHS in the UK and
through private label distributors in
overseas markets. These generic
products address the increasing cost
pressures on healthcare budgets and the
savings made by customers allow them
to purchase new generation products.
The Group continues to fund the
development of new differentiated
products for licensing to its major
woundcare partners for sale under their
leading brands.
Pre-tax losses were halved to £1.0
million. Post-tax losses were reduced to
£0.4 million following recognition of
R&D tax credits and deferred tax assets.
The Group reached EBITDA break-even.
This is a major milestone in moving the
Group to profitability.
Operating Review
The Group’s core focus remains the
development and manufacture of
advanced woundcare and wound closure
products for sale in hospitals and long-
term care facilities. Advanced woundcare
products are marketed and distributed
into the $1.5 billion global market
through either major woundcare
companies, such as 3M, Johnson &
Johnson, Smith & Nephew and
Mölnlycke, under their leading brands, or
through private label distributors such as
Cardinal Health. Products based upon
super-glue technology address the
emerging tissue adhesives segment of
the $5 billion wound closure market.
This market is currently accessed
through a direct sales force in the UK
and through distribution partners in
Europe. The direct UK sales force also
carries a full range of standard advanced
woundcare products for sale into the
NHS hospital and community care
markets under our ActivHeal
®
brand.
The Group has made steady progress in
reducing its dependence on the
performance of its major branded
partners for delivering revenue growth
and profit. The strategy of broadening its
routes to market by complementing
these relationships with the provision of
private label standard products to major
distributors and expanding its direct
sales presence in the UK home market is
proving to be successful.
Chairman’s Statement 3
Advanced Woundcare
Sales of £8.9 million were up 20%,
double the current woundcare market
growth rate. This growth was spread
across partners in Europe and the US
and provides a solid business base for
the future. New partners were added
during the period with the Group
establishing a broad presence in the
important Far East market.
The launch of our fibre based silver
alginate technology into the US and
Europe by Johnson & Johnson Wound
Management under their SilverCel™
brand provides AMS with a strong entry
into this dynamic market segment.
Silver is a broad spectrum antimicrobial
that helps to prevent infection. In
combination with alginate, a biopolymer
derived from seaweed, AMS can provide
products ideally suited to treat a wide
variety of acute and chronic wounds.
The three-year agreement with Cardinal
Health announced in July is a major step
forward in building our private label
business. AMS will provide a full range
of advanced woundcare products for
Cardinal Health, for US distribution,
under its Allegiance
®
brand.
The inclusion of our ActivHeal
®
advanced
woundcare range on the NHS contracts
for England and Scotland at the year end
was earlier than expected and illustrates
the commitment of the NHS to cost
management of woundcare budgets.
Response to our offering from senior
management, purchasing officers and
pharmacists of hospital Trusts has been
very positive and conversion on the back
of technical and clinical evaluations at
the user level is already under way in a
number of centres.
ActivHeal
®
AMS is a leading provider of advanced
woundcare products for sale through
marketing and distribution partners
under their brands or private labels.
In response to cost constraints on
woundcare budgets, AMS has put
together a range of standard products
under the ActivHeal
®
brand that offers
significant savings to end users without
compromising quality.
The range is sold directly into the NHS
in our UK home market.
This approach allows healthcare
providers a cost management strategy
whereby savings made on the use of
these standard products for routine
procedures, allow funding of higher
technology products for problematic
wounds.
Explained.
3
Advanced Medical Solutions Group plc
Annual Report and Accounts 2004 4 4
“The Group is well positioned to grow and to
reach profitability within current cash.”
Wound Closure
The tissue adhesive business continues
to show good growth with sales up 33%
at £2.1 million maintaining our market
leadership position in the use of
adhesives in the UK Accident and
Emergency (A&E) arena. Adhesives are
routinely used for closing facial and
scalp wounds, particularly children’s,
and our LiquiBand™ product is being
used to close around 30,000 wounds per
month in the UK.
The launch of SkinLink™, an anchored
adhesive strip, has strengthened our
product portfolio and allows us to
address the majority of wounds
traditionally closed with stitches, staples
and adhesive strips.
The introduction of LiquiBand Surgical™
throughout Europe during 2004 for
closure of surgical incisions in the
operating room arena has taken our
adhesive technology into the largest
segment of the $5 billion wound 
closure market.
Outlook
The outlook for the Group remains
positive. With an established business
base covering leading edge advanced
woundcare and wound closure products
and technology, and a direct sales team
focusing on the UK home market
supported by strong branded and private
label partners, the Group is well
positioned to continue to grow and to
reach profitability within current cash.
Whilst the prime focus remains taking
the Group through to sustainable
profitability, the Board continues to
review all strategic options to increase
shareholder value.
I would like to thank all AMS employees
for their efforts over the past year.
The Group looks forward to delivering a
high value woundcare technology
company for our stakeholders.
Dr Geoffrey N Vernon
Chairman
14 March 2005
Chairman’s Statement continued 5
LiquiBand™
Super-glue based medical adhesives
are a relatively recent innovation for
closing wounds. These have evolved to
a point where they are now used to
close and seal the outer skin layer of a
wide variety of trauma and surgical
wounds as an alternative to sutures,
staples and adhesive strips.
LiquiBand™ tissue adhesive was first
introduced in the late 1990’s in the UK
and is now market leader in the
Accident and Emergency (A&E) area
with over 30,000 wounds being closed
per month.
Developments in the adhesive,
methods of application and the
sterilisation process have led to a wide
range of products now being available
for sale in A&E and Operating Rooms
throughout Europe.
Explained.
5
Advanced Medical Solutions Group plc
Annual Report and Accounts 2004 6 6
“Our technology
programmes are
moving the Group 
to higher value
products.”
Broadening its routes to market 
and moving to higher value technology
remain the two key drivers to future
earnings growth for AMS. The Group has
made considerable progress in both of
these areas during 2004.
Technology Platforms
The Group has established a broad range
of material technologies for advanced
woundcare and wound closure with
strong IP protection, manufactured in
dedicated state-of-the-art medical device
facilities in the UK.
In advanced woundcare, a full range of
materials are available covering: alginate,
film, foam, hydrocolloid and hydrogel.
A major trend in the market is the
inclusion of antimicrobials such as silver
into the wound dressings to help prevent
infection from a wide range of micro-
organisms including MRSA. AMS has
evaluated a number of silver
technologies as a way of upgrading our
base woundcare range with higher value
products.
A silver fibre based alginate range has
been licensed exclusively on a global
basis to Johnson & Johnson Wound
Management, who launched this into the
US market in April under their
SilverCel™ brand. Following receipt of
European regulatory approval at year
end, this product has now also been
introduced into the European market.
In response to demand from existing
partners for the addition of silver to their
current alginate range, a new product
has been developed utilising a different
silver technology. 510(k) clearance for
US sale was obtained in August and this
product has now been introduced by a
number of partners. This product will be
progressed through European regulatory
approval during 2005.
With two distinct silver technologies, the
Group is well placed to address the
dynamic silver market.
Improved alginate, foam and
hydrocolloid products have been
developed during 2004 and discussions
are in progress to start commercialising
these technologies in 2005. Good
progress has been made in expanding
our scar therapy business based on our
proprietary foam technology. Building on
the success of the product supplied to
Novartis Spain for treating Caesarean
section scars, a clinical trial was
conducted in Holland with good results
on a variety of scars. Based on this data
the product range has been launched
into Sweden and into the US private
label OTC market through a strategic
partner.
A major technology platform for AMS is
medical grade cyanoacrylate (super-glue)
tissue adhesives, which is the basis of
our market leading LiquiBand™ range in
the UK Accident and Emergency (A&E)
arena.
A product aimed specifically at closing
surgical incisions in the operating room
environment, LiquiBand Surgical™, was
launched at the beginning of 2004. This
product comprises a fast-setting adhesive
for closing the incision and a liquid
bandage which is painted over the wound
Chief Executive’s Review
Technology Platforms:
Advanced Woundcare
Technology Platforms:
Wound Closure
Film Foam Hydrocolloid
LiquiBand Flowcontrol™ LiquiBand™ to protect it against moisture and
infection. Clear benefits over stitches and
staples have been demonstrated to the
surgeon, post-operative nursing staff and
patients, particularly with large incisions
such as Caesarean sections, breast
surgery and total hip replacements,
where prevention of infection and
cosmetic outcome are key considerations.
Many surgical procedures are now
conducted by laparascopic or keyhole
surgery. A product specifically targeting
wound closure following minimally
invasive surgery has been developed and
is expected to be introduced throughout
Europe during 2005. These procedures
are becoming increasingly popular in
many countries and this product will
complement the use of LiquidBand
Surgical™ which is more suited to larger
wounds.
The licensing and UK launch of a unique
skin closure system, Skinlink™
announced in December, significantly
strengthens our wound closure product
portfolio. The product, licensed from
Canadian company Biogentis, consists of
a perforated adhesive strip on which an
anchoring adhesive is applied. This
offers significant benefits over current
products such as sutures, staples or
conventional adhesive strips in closing
wounds where medical glues are
inappropriate, for instance where there is
significant swelling, tissue loss or skin
tension such as over joints.
Development activity continues utilising
our liquid film technology. Projects with
partners are under way for products used
for protecting skin from breakdown and
for treating minor cuts and grazes. 
Routes to Market
AMS has commercialised its advanced
woundcare technology through branded
partners using a business to business
model.
Whilst allowing a broad global presence
to be built with major global and regional
partners under their brands, it has proved
to be challenging for the Company to
achieve consistent growth in revenues
and margins and to extract sufficient
value for its R&D investments.
One of the synergies of the acquisition of
the MedLogic tissue adhesives business in
2002 was that it brought a direct UK sales
and marketing infrastructure that could be
exploited for taking the Group’s advanced
woundcare products direct to the NHS. 
Additionally, the market trend identified last
year, whereby major distributors are looking
to source standard woundcare products
under their private labels whilst the major
woundcare companies are increasingly
focusing on higher value products, has
significantly strengthened.  AMS remains
ideally placed to take advantage of this
trend and is actively doing so.
AMS’s strategy to broaden its routes to
market by offering its new differentiated
products to the major players as they
upgrade their product range, whilst
providing generic products through private
label distributors or direct to the NHS in
its home market, is proving successful
and has contributed to the increased
growth in sales achieved in 2004.
7
Sales and Distribution
Partners
7
Advanced Medical Solutions Group plc
Annual Report and Accounts 2004
– B Braun
– Cardinal Health
– DKSH
– InterPharma
– Johnson & Johnson
– Mölnlycke
– Novartis
– Smith+Nephew
– TEVA
Hydrogel
Alginate Silver Alginate
LiquiBand Surgical™ SkinLink™ 8 8
“Our direct sales
force in the UK
has established
market leadership for
LiquiBand
™
tissue
adhesive for wound
closure in A&E
departments.”
The introduction into the US and Europe
of a silver fibre alginate dressings range
by Johnson & Johnson Wound
Management under their SilverCel™
brand, as part of their active wound
dressings range, is a good example of
licensing new, differentiated technology
to a major player. With their strong
global presence and commitment to
inventive products for chronic and acute
wound management, they are an ideal
partner for the marketing and
distribution of this technology.
Significant private label activity has
been seen in 2004 with many of the
major US distributors contracting for
supply of standard woundcare products.
AMS is currently working with a number
of these, with the three-year Cardinal
agreement signed in July being a major
step forward to entering this market
segment. Cardinal Health is a leading
provider to the healthcare industry and is
ranked 17 in the Fortune 500 (2004).
Good progress has been made in
accessing the Far East market. A
collaboration agreement was signed in
May with Nitto Medical, a division of
Japan’s £2 billion turnover Nitto Denko
Group. This agreement allows Nitto to
undertake market evaluation and
regulatory approval of a number of
AMS’s woundcare products with the
option of entering into marketing and
distribution agreements for Japan. Two
product groups have been identified
initially with one of these submitted for
regulatory approval. New marketing and
distribution agreements were signed 
with InterPharma for Australia and
DKSH for Malaysia, Hong Kong, Vietnam
and Pakistan.
The launch of our branded ActivHeal
®
woundcare range into the NHS offers
AMS a major growth opportunity. It is
estimated that the NHS currently spends
in excess of £100 million on advanced
woundcare dressings for use in hospitals,
nursing homes and community care.
ActivHeal
®
is a rational response to the
high profile cost pressures on woundcare
budgets whereby savings made on
standard products for routine wounds
allow funding of higher technology
products for problematic wounds.
As a UK-based technology company with
a major focus on advanced woundcare 
R&D and manufacturing, AMS is ideally
placed to become a new generation
supplier through a balance of innovation
and cost management by integrating
with the end user market. This allows
significant cost savings to be achieved
by the NHS along the lines of the highly
successful generic pharmaceutical
model, limited only by the ability of
individual hospital trusts to grasp the
opportunity. ActivHeal
®
was included on
the NHS hospital contract for England in
December, Scotland in January 2005
and is available on the Drug Tariff
allowing the products to be prescribed. 
Chief Executive’s Review continued
510(k) for liquid bandage
and supply agreement for
Australia with InterPharma
Distribution deal with Endo
Plus UK for LiquiBand
Surgical
TM
in orthopaedics
US introduction of
silver alginate by
Johnson & Johnson
Wound Management
Newsflow
January 2004
Resorba deal 
for LiquiBand
™
in Germany Broadening routes to market
9
The key driver of the UK direct business
continues to be the LiquiBand™ tissue
adhesive range. LiquiBand™ and
LiquiBand Surgical™ have now been
introduced into many countries in
Europe. A distribution deal was signed
with Resorba Clinica GmbH who
launched in Germany in June and
regular business is now being achieved
from distributors in Italy, Denmark and
Norway. Discussions are well advanced
for Spain and France. Opportunities for
collaborations with strategic partners for
regulatory approval and introduction of
these products into the US and Japanese
markets are under discussion. In both
markets the regulatory approval pathway
is lengthy and expensive.
There has been a high level of interest
from potential partners for the US who
see the opportunity of replicating the
success achieved in the highly
competitive UK market in the much
larger developed US market. This 
market is estimated to be approaching
$100 million.
Summary
Woundcare is a $15 billion market
growing at 10%, of which AMS is
actively participating in an available
market of around $400 million.
The Group has broadened its routes to
market during 2004 and is well
positioned to exploit key market trends
towards advanced woundcare dressings
containing antimicrobials such as silver
and the use of tissue adhesives for
closing wounds.
With strong technology platforms and an
improved financial position, AMS is well
positioned to deliver a high value
woundcare technology company.
Dr Don W Evans
Chief Executive Officer
14 March 2005
Supply agreement for
Far East with DKSH
510(k) for new
silver alginate
NHS Framework
Agreement for England
Collaboration with Nitto
Medical for Japan
Private label woundcare
range for Cardinal
Health for US market
Biogentis deal
SkinLink™ launch
December 2004
9
Advanced Medical Solutions Group plc
Annual Report and Accounts 2004
UK Direct
Private Label Partners
Branded Partners Marketing
Three tier strategy to increase
revenue and margins
Distributor
End User
New concepts
Cost management
Manufacturer:
AMS 10 10
Sales
Turnover for the year was £11.0 million
(2003: £9.0 million), an increase of
22%. Sales into the US continued to be
affected by the weak dollar which
depreciated 12% against sterling year on
year. Adjusting for this effect, underlying
sales growth would have been 25%.
Growth was seen in both business units,
with advanced woundcare increasing 
by 20% and wound closure increasing 
by 33%. 
Margin
The gross margin for the Group improved
to 37.3% (2003: 35.6%). Adjusting for
the exchange effect, the gross margin
would have shown an improvement to
38.6%. Gross margins of wound closure
products improved to 71% from 69%
while gross margins on the advanced
woundcare business improved to 29%.
(2003: 28%). 
Operating expenses
Net operating expenses decreased to
£5.2 million (2003: £5.6 million)
reflecting a reduction in sales and
marketing expense supporting the
consumer business, and a more focused
spend on patents and research and
development. The Group continues to
launch and develop new products
including the new silver alginate,
utilising an ionic silver technology and
the SkinLink™ product for closing
wounds with swelling and tissue loss.
Some of this expenditure qualifies for a
tax credit. 
Losses
The operating loss for the year was £1.1
million a 56% reduction on the prior
year (2003: £2.4million). EBITDA was
break-even for the full year compared
with a £1.3 million loss in 2003.
Interest and taxation
The net interest received in the year was
unchanged at £0.1 million.
The Group has recognised a tax credit 
on qualifying R&D amounting to £0.1
million (2003: £0.2 million). In
recognition that profitability is
anticipated, the Group has also
recognised a deferred tax asset in
accordance with FRS19, which has given
rise to a tax credit of £0.4 million.
The overall loss for the Group is £0.4
million, an improvement of 80% and the
loss per share is 0.3p (2003: 1.5p).
Balance sheet and cash flow
Working capital excluding cash, as a
percentage of sales increased to 21.6%
(2003: 21.4%). Stock increased by
£0.2 million to £1.5 million but
remained at the same level as the half
year. The stock turn of 4.6 is at a similar
level to last year (2003: 4.5). Trade
debtors increased by £0.3 million in 
line with the growth in business and
debtor days outstanding were 54 
(2003: 51). Creditors reduced by £0.3
million and creditor days were 90
(2003: 91).
Financial Review
19%
16%
65%
Turnover Analysis
 Branded Partners
 Private Label
 UK Direct
United Kingdom
6
5
4
3
2
1
0
£ million
USA Rest of Europe Rest of World
2003 2004
Growth
Turnover Growth 11
Operating cash flow being the net of
earnings before interest, tax,
depreciation and amortisation and
working capital movements amounted to
an outflow of £0.6 million (2003: £1.7
million). The Group had a cash inflow
from operating activities of £0.4 million
in the second half-year. Capital
expenditure was £0.3 million (2003:
£0.4 million). The Group had £3.2
million of cash at the year end (2003:
£3.6 million) and net funds of £2.8
million (2003: £3.2 million).
Treasury 
The Group’s main exposure is to the US
dollar. The Group’s policy is to hedge
significant transaction exposure to the
dollar by using forward contracts and
options and has options in place to the
end of 2005. The Group does not hedge
the exposure arising from the translation
of overseas assets as they are a small
proportion of the Group’s assets. The
Group is able to mitigate its exposure to
the Euro by sourcing raw materials from
Europe.
The Group invests funds which are
surplus to short-term requirements in
fixed rate deposits operating within
parameters for credit ratings and credit
limits for individual institutions that are
approved and monitored by the Board.
International Financial Reporting
Standards (IFRS)
The Group will be required to report
under IFRS for the year ending 
31 December 2007. Work has been
progressing to identify the changes that
will be needed. The principal areas
where there may be a significant impact
on the reported results of the Group are:
Intangible assets (IAS38)
Certain development expenditure is
required to be capitalised. Current Group
policy is to write off such expenditure as
it is incurred.
Share-based payment (IFRS2)
The fair value of share options issued
will be required to be charged to the
profit and loss account over the relevant
measurement period. The UK standard
FRS20 captures the same requirements
and the Group will be required to report
under this standard for the year ending
31 December 2006. 
Mary G Tavener
Finance Director
14 March 2005
Working Capital Cash Outflow
Group Sales/Net Loss/Gross Profit: 1999–2004 Net Cash flow 1999–2004
11
Advanced Medical Solutions Group plc
Annual Report and Accounts 2004
1999
12
6
0
£ million
-6
2000 2001 2002 2003 2004
40
20
0
-20
Wound Closure Advanced Woundcare Net Loss Gross Profit %
%
1999
2
0
-2
-4
£ million
-6
2000 2001 2002 2003 2004
Working Capital EBITDA Capex Interest Taxation Net 12
Board of Directors
12
Directors
01 Dr G N Vernon
Non-Executive Chairman
02 Dr D W Evans
Chief Executive Officer 
03 M G Tavener
Finance Director
04 R S Harris
Non-Executive Director
Dr Geoffrey N Vernon 
Non-Executive Chairman 
BPharm, PhD, MBA 
Dr Vernon is a former Executive Director
of Rothschild Asset Management and
partner of the venture capital group
Advent Limited. He joined AMS as a
non-executive director in July 1998 and
became Chairman in January 2001.
He has over 20 years’ experience in
healthcare and life sciences. He is a
non-executive chairman and director of a
number of quoted and privately owned
companies. He is a Chartered Director of
the Institute of Directors.
In 2004, he became chairman of XL
TechGroup GP, LLC and XL TechGroup
Inc, AIM quoted companies based in the
USA and Genable Ltd, a private drug
development company based in Eire. He
also resigned as non-executive director
from Bionex Investments plc.
Dr Don W Evans 
Chief Executive Officer
BChemEng, MASc, PhD 
After completing a degree in Chemical
Engineering at the University of
Queensland and a PhD in Biomedical
Engineering at the University of Toronto,
Dr Evans joined Johnson & Johnson UK
where he worked for 19 years in
Research & Development and
Manufacturing. He was subsequently
appointed as Vice-President of European
Operations for Johnson & Johnson
Professional. Dr Evans joined AMS in
1997 as Operations Director and was
appointed Managing Director of
Advanced Woundcare in January 1999.
He became Group Chief Executive in
January 2000.
Mary G Tavener
Finance Director
ACMA, MCT, BA (Hons) Chem (Oxon)
Ms Tavener joined AMS as Finance
Director in 1999. Prior to this she was
the Group Financial Controller at BTP
plc during a period of considerable
corporate activity and was involved in
the acquisition and disposal of several
businesses that repositioned BTP plc as
a fine chemical company. Her experience
has been gained in manufacturing and
she has held financial positions with
Cadburys Ltd and Parker Hannifin, a US
Engineering Corporation. Prior to BTP
plc, she was the Finance Director of
Churchill Tableware Ltd.
R Stephen Harris
Non-Executive Director
BPharm, FRPharmS 
Mr Harris was appointed as a non-
executive director of AMS in January
2001. His career has been in both
prescription and consumer healthcare
sectors, with sales, marketing and
general management experience with
MSD, Lilly, Boots and Reckitt & Colman
before becoming a main Board Director
of Medeva plc. In 1995 he set up his
own consultancy business. He now holds
non-executive appointments with a
number of quoted and privately owned
healthcare companies, including
SkyePharma plc and Sinclair
Pharmaceuticals plc. 
01 03 04 02 13
Advanced Medical Solutions Group plc
Annual Report and Accounts 2004
Committees and Advisers
13
Corporate Governance Standing
Committees
Audit Committee
Dr G N Vernon, Chairman 
R S Harris
Remuneration Committee
R S Harris, Chairman 
Dr G N Vernon
Nominations Committee
Dr G N Vernon, Chairman 
R S Harris
Dr D W Evans
Company Secretary
M G Tavener
Registered Office
Road Three, Winsford Industrial Estate,
Winsford, Cheshire, CW7 3PD
Registered Number
2867684
Financial Adviser
Robert W Baird, Mint House,
77 Mansell Street, London, E1 8AF
Stockbrokers
Robert W Baird, Mint House,
77 Mansell Street, London, E1 8AF
Auditors
Baker Tilly
No. 1 Old Hall Street, Liverpool, L3 9SX
Solicitors
Wragge & Co, 55 Colmore Row,
Birmingham, B3 2AS
Registrars and Transfer Office
Capita IRG Plc, The Registry, 
34 Beckenham Road, Beckenham, 
Kent, BR3 4TU
Bankers
HSBC Bank plc, City Branch, 
4 Dale Street, Liverpool, L69 2BZ
Patent Attorneys
Marks & Clerk, Manchester Office, 
Sussex House, 83–85 Mosley Street,
Manchester, M2 3LG
Foley & Lardner, 1530 Page Mill Road,
Palo Alto, California 94304 1125 14
Report of the Directors
for the year ended 31 December 2004 
The directors present their report and
the audited financial statements for the
year ended 31 December 2004.
Dividends
The Group made a loss for the year to
31 December 2004 of £0.4 million. The
directors do not recommend the payment
of a dividend and the whole of the loss
will be transferred to reserves.
Principal activities, trading review and
future developments
The principal activity of the Group
comprises the design, development and
manufacture of novel high performance
polymers (both natural and synthetic)
and medical adhesives for the healthcare
market. A review of the operations for
the year and future developments is
contained within the Chief Executive’s
review on pages 6 to 9 and the financial
review on pages 10 and 11.
Research and Development
The Group spent £1,220k (2003:
£1,413k) in the year ended 
31 December 2004 on research and
development, all of which has been
written off to the profit and loss account. 
Creditors payment policy
The Group’s policy for the year to 
31 December 2004, for all suppliers, is
to fix terms of payment when agreeing
the terms of each business transaction,
to ensure the supplier is aware of those
terms, and to abide by the agreed terms
of payment provided that the supplier
performs its obligations. Where terms
have not been specifically agreed, it is
the Group’s practice to settle invoices in
line with local and industry
requirements. The Group’s trade
creditors at 31 December 2004
represented approximately 90 days of
purchases (2003: 91 days).
Charitable and political contributions
The Group did not make any charitable
or political contributions during the year.
Directors
The directors of the Company at 
31 December 2004 and their interests,
all of which are beneficially held, in the
share capital of the Company were: 
Ordinary shares Ordinary shares
of 5p each of 5p each
31 December 2004 31 December 2003
Options Shares Options Shares
G Vernon — 675,164 — 545,164
D Evans 1,366,666 517,680 2,600,000 517,680
M Tavener 675,000 51,562 1,275,000 51,562
S Harris — 197,857 — 197,857
There have been no changes in directors’ interests between the end of the financial
year and 18 April 2005 being less than one month prior to the date of notice of the
Annual General Meeting.
Reappointment
At the forthcoming Annual General Meeting, Geoffrey Vernon will retire by rotation
and, being eligible, will be proposed for reappointment. Details of the current
directors of the Company are shown on page 12. 15
Advanced Medical Solutions Group plc
Annual Report and Accounts 2004
Share capital and issue of 
ordinary shares
The authorised and issued share capital
of the Company is set out in Note 23 to
the accounts on pages 38 and 39.
Employees
The Group’s policy is to consult and
discuss with employees, through
meetings, those matters likely to affect
employees’ interests. The Employees’
Consultative Committee, which comprises
representatives of employees and
management, meets regularly to discuss
business issues and areas of concern.
Employees are encouraged directly
through share option schemes,
performance reviews, and training and
development opportunities. Each line
manager is responsible for implementing
this approach.
It is the Group’s policy to give full and
fair consideration to all applications for
employment from disabled persons
having regard to their particular
aptitudes and abilities and to encourage
the training and career development of
all personnel employed by the Group,
including disabled persons. Should an
employee become disabled, the Group
would, where practicable, seek to
continue the employment and arrange
appropriate training.
Health and Safety and the Environment
The Group is committed to high
standards in health, safety and
environmental performance. It is the
Group policy to abide by all laws,
directives and regulations pertinent to its
field of operations, and to act in a
manner so as to minimise the effects of
its operations on the environment.
Regular audits are undertaken to
evaluate compliance with Health &
Safety laws and Company policy. The
Group will be working to obtain ISO
14001 accreditation in 2005.
Directors’ interests in contracts
None of the directors had an interest in
any contract of significance to which the
Group or a subsidiary undertaking was a
party during the financial year.
Auditors
Resolution 2 to reappoint Baker Tilly as
auditors to the Company will be
proposed at the Annual General Meeting
and authorises the directors to agree
payment for their services. 
Special business at the Annual 
General Meeting
Resolution 4 proposes the adoption of a
Long Term Incentive Plan by Advanced
Medical Solutions Group plc, the details
of which are set out in Appendix I to the
Chairman’s letter, which accompanies
this Annual Report. 
Substantial shareholdings
The Company’s major shareholders at 28 February 2005 are:
Number of
Shares Per cent
Newton Investment Management 19,572,870 13.78
Invesco 14,574,938 10.26
Close Finsbury Asset Management 9,397,983 6.61
Cavendish Asset Management 8,225,000 5.79
Electra Investment Trust 5,882,352 4.14
Noble Asset Managers Limited 5,888,352 4.14
Aerion Fund Management 5,677,972 4.00
SG Asset Management 4,900,000 3.45
William Samual Clive Richards OBE 4,600,000 3.24
Resolution 5 establishes the Advanced
Medical Solutions Employee Trust details
of which are set out in Appendix II to
the Chairman’s letter which accompanies
this Annual Report. 
The effect of Resolution 6 to be
proposed at the meeting would be to
disapply the statutory pre-emption rights
conferred by Section 89 of the
Companies Act 1985 to a limited extent,
that is to say:
 in connection with generally pre-
emptive issues; or
 in respect of shares having an
aggregate nominal value of
£355,206.34 representing
approximately 5 per cent of the
nominal value of the Company’s
current issued ordinary share capital.
The resolution will cease to have an
effect at the conclusion of the
Company’s Annual General Meeting to be
held in 2006 or, if earlier, fifteen
months after the date of the passing of
this resolution.
Annual General Meeting
The Annual General Meeting will be held
at The Park Royal Hotel, Stretton Road,
Stretton, Warrington, Cheshire, 
WA4 4NS, on 24 May 2005 at 
11.00 a.m. Details of the notice of the
Annual General Meeting are given on
pages 43 and 44. The Annual General
Meeting provides an opportunity for
private shareholders to question your
Board and to meet informally with the
executive management after the
meeting.
By order of the Board
M G Tavener
Company Secretary
14 March 2005 16
Remuneration Report
The members of the Remuneration
Committee are all non-executive
directors of the Group and have no
personal financial interest arising from
cross-directorship and no day-to-day
involvement in running the business.
The Board has accepted the
Remuneration Committee’s
recommendations in full.
The Remuneration Committee, on behalf
of the Board and in consultation with the
Chief Executive, determines the Group’s
policy on executive remuneration,
employment conditions and the
individual remuneration packages of
executive directors and management
earning in excess of £50,000 per annum
and administers the Share Option
Schemes. 
The Group has complied during the year
with Section 1B ‘Directors’
Remuneration’ of the provisions of the
Combined Code and the Schedules 
A & B to the Combined Code. 
Remuneration policy
The remuneration policy is based on the
need to offer competitive packages to
attract and retain senior executives of
the highest calibre. Regular reviews of
the policy are carried out, supported by
independent advice, to ensure that the
range and level of emoluments and
incentive schemes continue to match
current market practice.
Salary
Salaries are measured against
performance and market mediums.
Annual performance bonus
The service agreements provide that
each executive director shall be entitled
to receive an annual bonus to be
determined by the Remuneration
Committee based on the Group’s
financial and operating performance.
Each participant may receive up to 40%
of his or her salary dependent upon
performance measured against targets
resulting from the completion of the
Group’s  business plan and the
performance of the Group as measured
by total shareholder return compared
with the FTSE Small Cap Index.
Long-term incentives
All executive directors, together with
employees, are eligible to join the
Executive Share Option Scheme and/or
the Unapproved Scheme. The policy of
the Group is to grant options to all
employees. Options granted under these
Schemes are not offered at a discount.
The exercising of options under these
schemes is conditional on certain
performance conditions which are pre-
determined by the Remuneration
Committee and which accord with the
Joint Statement from the Investment
Committees of the Association of British
Insurers and the National Association of
Pension Funds.
Shareholders are invited to approve all
new long-term incentive schemes which
potentially commit Shareholders’ funds
over more than one year or dilute their
equity.
Pension
Executive directors are entitled to
become a member of the Group Pension
and Life Assurance Scheme, which was
set up with effect from 1 February
1999. This covers all employees and
requires a contribution of 3% by the
employee and 6% by the Group.
Executive directors may contribute up to
10%, which is matched by the Group.
The Pension Plan is a money purchase
scheme.
Service agreements.
The service agreements for Don Evans
and Mary Tavener are terminable by
either party giving not less than 12
months’ notice in writing.
Private healthcare
Executive directors are entitled to private
healthcare and permanent health
insurance.
Car
The Company has reviewed its policy in
providing company vehicles to executive
directors and now considers that it is no
longer market practice. As leases
become due for renewal on executive
directors’ cars, these will no longer be
renewed. 17
Advanced Medical Solutions Group plc
Annual Report and Accounts 2004
Non-executive directors
The fees of the non-executive directors
are determined by the executive
directors. Non-executive directors receive
travel expenses but do not participate in
any incentive arrangements. The non-
executive directors have entered into
terms of appointment. Geoffrey Vernon’s
appointment is terminable by either
party upon six months’ notice in writing.
Steve Harris’s appointment is terminable
by either party upon three months’
notice in writing.
Directors’ detailed emoluments Total Total
Paid to year year
Salary & Annual Compensation third ending ending
fees bonus Benefits Pension for loss parties 2004 2003
£’000 £’000 £’000 £’000 of office £’000 £’000 £’000
Executive
Don Evans 160 — 15 15 — — 190 188
Graeme Brookes ——————— 61
Mary Tavener 104 — 9 10 — — 123 120
Non-Executive
Geoffrey Vernon ————— 44 44 47
Steve Harris ————— 26 26 24
264 — 24 25 — 70 383 440
Interests in share options
Details of Grant Option Price D W Evans M G Tavener
Unapproved Executive Share 
Option Scheme 
21 May 2002 8.75p 750,000 375,000
15 July 2004 9.00p 616,666 300,000
At 31 December 2004 1,366,666 675,000
The opening share price for the year was 10.75p and the closing price on the last trading day of 2004 (31 December) was 8.25p.
The range during the year was 12.25p (high) and 7.5p (low). (Source: daily official list of the London Stock Exchange.)
Share Performance
Since Advanced Medical Solutions Group plc announced the acquisition of MedLogic Global Holdings Ltd and associated
Intellectual Property Rights on 28 March 2002, its share price has outperformed the FTSE All Share by 9%, FTSE Techmark by
8% and FTSE Health by 1% and underperformed the the FTSE Small Cap Index by 10% and AIM by 32%.
By order of the Board
Mary Tavener
Company Secretary
14 March 2005 18
Corporate Governance
The Board is committed to the principles
of corporate governance and has
continued to apply the Combined Code
in a manner which it considers
appropriate for the size of the Group. In
compliance with the Code, the narrative
below describes how the Group applied
the principles. The second part of the
statement details where the Group has
not complied with the provisions of the
Combined Code and the reasons for this.
The Board of directors
The Board retains full and effective
control of the Group and has a schedule
of matters specifically reserved for its
decision. The Board meets on a formal
basis regularly, and met six times in
2004.  Prior to each Board Meeting,
directors are sent an agenda including
monthly management accounts and
accompanying reports from the executive
directors. The Board is responsible for
formulating the Group’s corporate
strategy, approval of budgets, monitoring
financial performance, approval and
review of major capital expenditure and
corporate governance matters.
Operational control is delegated to the
executive directors. All directors have
access to the advice and services of the
Company Secretary and can take
independent professional advice, if
necessary, at the Group’s expense. The
non-executive directors are able to
contact the executive directors at any
time for further information.
The Board comprises two executive
directors and two non-executive
directors. The Board considers this
adequate to deal with the management
of a Group of this size but this matter
continues to be reviewed. The Chairman
is one of the non-executive directors and
there is a clear division of responsibility
between the Chairman and Chief
Executive. The non-executive directors
are independent of the executive
management. All directors are required
to stand for re-election at the first
annual general meeting following their
appointment and, as a minimum, every
three years thereafter. 
Board Committees
The Board has delegated specific
authority to the Remuneration
Committee, the Nominations Committee
and the Audit Committee. The non-
executives are the only members of the
Remuneration and Audit Committees.
The Audit Committee is chaired by
Geoffrey Vernon and met twice in 2004.
The Committee considers the
appointment and fees of the auditors
and discusses the scope of the audit and
its findings. It is also responsible for
monitoring the Group’s accounting
policies, assessing the Group’s internal
controls and reviewing the annual and
interim statements prior to their
submission for approval by the Board.
The Committee has the right of access to
the external auditors without the
attendance of the executive directors.
The size of the Audit Committee is not
in strict compliance of the Combined
Code but is appropriate for a Group of
this size.
The Audit Committee also undertakes a
formal assessment of the auditor’s
independence which includes:
 A review of non-audit services
provided to the Group and related
fees.
 Discussion with the auditors of a
written report detailing all
relationships with the Company and
any other parties that could affect
independence or the perception of
independence.  19
Advanced Medical Solutions Group plc
Annual Report and Accounts 2004
 A review of the auditor’s own
procedures for ensuring the
independence of the audit firm and
partners and staff involved in the
audit, including the regular rotation of
the audit partner.
 Obtaining written confirmation from
the auditors that, in their professional
judgement, they are independent.
 An analysis of the fees payable to the
external audit firm in respect of both
audit and non-audit services during
the year is set out in note 4 of the
financial statements.
The Remuneration Committee is chaired
by Steve Harris and, in consultation with
the Chief Executive, determines the
Group’s policy on executive
remuneration, employment conditions
and the individual remuneration
packages of executive directors and
senior management earning in excess of
£50,000 per annum. It approves all
grants of options under the Group’s
Share Option Schemes. The
Remuneration Committee met four times
in 2004 and its report is included on
pages 16 and 17.
The Nominations Committee nominates
and recommends the appointment of
new directors to the Board. The
Committee is chaired by the Chairman of
the Group and comprises the non-
executive directors and the Chief
Executive. The Nominations Committee
did not meet in 2004.
Investor Relations
The Group maintains a regular dialogue
with institutional shareholders, mainly in
the periods following the announcement
of the interim and final results, but also
at other times during the year. Existing
and potential institutional investors are
encouraged to visit the Group to improve
their understanding of the Group’s
business. The Board encourages the
participation of shareholders at its annual
general meeting, notice of which is sent
to shareholders at least 20 working days
before the meeting. The AMS website
‘www.admedsol.com’ is regularly updated
and provides additional information on
the Group including information of the
Group’s products and technology.
Internal Control
The Board is responsible for the Group’s
system of internal control and for
reviewing its effectiveness. In the
context of the Group’s business any such
system can only reasonably be expected
to manage rather than eliminate risks
arising from its operations. It can
therefore only provide reasonable and
not absolute assurance against material
loss or misstatement.
The Combined Code required directors to
review the effectiveness of the Group’s
system of internal control in the wider
sense, encompassing operational and
compliance matters in addition to the
traditional financial issues.
Key features of the internal control
system are as follows:
 The Group has an organisational
structure with clearly established
responsibilities and lines of
accountability. The Group promotes
the values of integrity and
professionalism.
 The Board has a schedule of matters
expressly reserved for its
consideration. This schedule includes
acquisitions, major capital projects,
treasury, risk management policies
and approval of budgets.
 An ongoing risk management process
has been implemented which
identifies the key business risks
facing the Group including both
financial and operational risks. 20
Corporate Governance continued
 The controls in place to minimise the
occurrence of the risk are
documented and analysed for
effectiveness. These include
procedures for the approval of major
expenditure or commitment of
resources.
 The Board monitors the activities of
the Group through the management
accounts forecasts and other reports
on current activities and plans. The
executive management regularly
monitors financial and operational
performance in detail and takes any
necessary corrective action.
 The Board specifically reserves an
item on the agenda to review areas of
the business in the light of the results
of the risk analysis.
The Board reviews and continues to
review the effectiveness of the Group’s
procedure in managing risk and,
therefore, believes it meets the
requirements of the Guidance.
The Board has considered the need for
internal audit. It is of the opinion that,
given the size and nature of the Group’s
operations and the other controls in
place, it would not be appropriate at the
present time. The matter continues to be
reviewed. The Group does call on the
services of external bodies to review the
controls in certain areas of the Group.
The British Standards Institute (BSI)
reviews and reports on the quality
assurance systems every 6 months. The
British Safety Council also reviews and
reports on the Health and Safety
Systems in the Group each year.
Going Concern
The directors are of the opinion that the
Group has adequate resources to
continue in operational existence for the
foreseeable future. For this reason, they
continue to adopt the going concern
basis in preparing the accounts.
Compliance with the Combined Code
During the year ended 31 December
2004, the Group has been in
compliance with the requirements of the
Combined Code, except in the following
areas:
 The Board believes that given its size
and complexity it is not appropriate to
specify a ‘senior’ non-executive
director.
 The Group has only two non-
executives. Consequently, the Audit
Committee does not comprise at least
three non-executive directors.
Statement of Directors’ Responsibilities
Company law requires that the directors
prepare financial statements for each
financial year which give a true and fair
view of the state of affairs of the
Company and the Group as at the end of
the financial year and of the profit or
loss of the Group for that period.
In preparing the financial statements for
the year ended 31 December 2004, the
directors confirm that:
 Suitable accounting policies have
been used and applied consistently.
 Judgements and estimates that are
reasonable and prudent have been
made.
 Applicable accounting standards have
been followed.
The directors are responsible for keeping
proper accounting records, for
safeguarding the assets of the Company
and of the Group and hence for taking
reasonable steps for the prevention and
detection of fraud and other
irregularities.
By order of the Board
Mary G Tavener
Company Secretary
14 March 2005 21
Advanced Medical Solutions Group plc
Annual Report and Accounts 2004
We have audited the financial
statements on pages 22 to 41. 
This report is made solely to the
Company’s members, as a body, in
accordance with section 235 of the
Companies Act 1985. 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.
Respective responsibilities of directors
and auditors
The directors’ responsibilities for
preparing the Annual Report and the
financial statements in accordance with
applicable law and United Kingdom
Accounting Standards are set out in the
Statement of Directors’ Responsibilities.
Our responsibility is to audit the
financial statements in accordance with
relevant legal and regulatory
requirements and United Kingdom
Auditing Standards.
We report to you our opinion as to
whether the financial statements give a
true and fair view and are properly
prepared in accordance with the
Companies Act 1985. We also report to
you if, in our opinion, the Directors’
Report is not consistent with the
financial statements, if the Group has
not kept proper accounting records, if we
have not received all the information and
explanations we require for our audit, or
if information specified by law regarding
directors’ remuneration and transactions
with the Company is not disclosed.
We read other information contained in
the Annual Report, and consider whether
it is consistent with the audited financial
statements. This other information
comprises only the Directors’ Report, the
Chairman’s Statement, the Chief
Executive’s Review, the Financial
Review, the Remuneration Report and
the Corporate Governance Statement. We
consider the implications for our report if
we become aware of any apparent
misstatements or material
inconsistencies with the financial
statements. Our responsibilities do not
extend to any other information.
Basis of opinion
We conducted our audit in accordance
with Auditing Standards issued by the
Auditing Practices Board. An audit
includes examination, on a test basis, of
evidence relevant to the amounts and
disclosures in the financial statements.
It also includes an assessment of the
significant estimates and judgements
made by the directors in the preparation
of the financial statements, and of
whether the accounting policies are
appropriate to the Group’s
circumstances, consistently applied and
adequately disclosed.
We planned and performed our audit so
as to obtain all the information and
explanations which we considered
necessary in order to provide us with
sufficient evidence to give reasonable
assurance that the financial statements
are free from material misstatement,
whether caused by fraud or other
irregularity or error. In forming our
opinion we also evaluated the overall
adequacy of the presentation of
information in the financial statements.
Opinion
In our opinion the financial statements
give a true and fair view of the state of
the Group’s affairs at 31 December
2004 and of its loss for the year then
ended and have been properly prepared
in accordance with the Companies Act
1985.
Baker Tilly
Registered Auditor
Chartered Accountants
Liverpool
14 March 2005
Independent Auditor’s Report to the Members 
of Advanced Medical Solutions Group plc 22
Consolidated Profit and Loss Account
For the year ended 31 December 2004
Year ended Year ended
31 December 31 December
2004 2003
Note £’000 £’000
Turnover 2 11,019 9,015
Cost of sales (6,913) (5,809)
Gross profit 4,106 3,206
Distribution costs (153) (86)
Administration costs (5,352) (5,859)
Other operating income 3 328 304
Operating loss 4 (1,071) (2,435)
Interest receivable and similar income 7 114 152
Interest payable and similar charges 8 (33) (35)
Loss on ordinary activities before taxation (990) (2,318)
Taxation 9 573 234
Loss sustained for the year 10 (417) (2,084)
Basic and fully diluted loss per share 11 (0.3)p (1.5)p
The above results relate to continuing operations.
There is no difference between reported and historical profits and losses.
The notes on pages 26 to 41 form part of these financial statements. 23
Advanced Medical Solutions Group plc
Annual Report and Accounts 2004
Statement of Total Recognised Gains and Losses
For the year ended 31 December 2004
Group
Year ended Year ended
31 December 31 December
2004 2003
£’000 £’000
Loss for the financial year (417) (2,084)
Currency translation differences on foreign currency net investments (13) (19)
Total losses recognised since last annual report (430) (2,103)
Reconciliation of Movements in Shareholders’ Funds
For the year ended 31 December 2004
Group Company
Year ended Year ended Year ended Year ended
31 December 31 December 31 December 31 December
2004 2003 2004 2003
£’000 £’000 £’000 £’000
Opening shareholders’ funds 12,004 14,107 12,758 14,430
Loss for the financial year (417) (2,084) (304) (1,672)
Currency translation differences on
foreign currency net investments (13) (19) — —
Closing shareholders’ funds 11,574 12,004 12,454 12,758
The loss for the Company includes an exceptional write-down in the value of investments of £427k (2003: £1,842k). 24
Balance Sheets
At 31 December 2004
Group Company
2004 2003 2004 2003
Note £’000 £’000 £’000 £’000
Fixed assets
Intangible assets 12 2,070 2,238 — —
Tangible assets 13 3,706 4,373 — —
Investments 14 — — 9,589 9,427
5,776 6,611 9,589 9,427
Current assets
Stocks 15 1,506 1,279 — —
Debtors — due within one year 16 2,754 2,793 72 35
— due after more than one year 16 638 200 200 200
Cash at bank and in hand 3,160 3,608 2,755 3,223
8,058 7,880 3,027 3,458
Creditors: amounts falling due within one year 17 (1,884) (2,139) (162) (127)
Net current assets 6,174 5,741 2,865 3,331
Total assets less current liabilities 11,950 12,352 12,454 12,758
Creditors: amounts falling due after more than one year 18 (376) (348) — —
11,574 12,004 12,454 12,758
Capital and reserves
Called up share capital 23 11,782 11,782 11,782 11,782
Share premium account 24 37,978 37,978 37,978 37,978
Other reserve 24 1,531 1,531 — —
Profit and loss account 24 (39,717) (39,287) (37,306) (37,002)
Equity shareholders’ funds 11,574 12,004 12,454 12,758
These financial statements were approved by the Board on 14 March 2005.
Dr D W Evans
Chief Executive Officer
The notes on pages 26 to 41 form part of these financial statements. 25
Advanced Medical Solutions Group plc
Annual Report and Accounts 2004
Consolidated Cash Flow Statement
For the year ended 31 December 2004
Year ended Year ended
31 December 31 December
2004 2003
Note £’000 £’000
Net cash outflow from operating activities 26 (595) (1,708)
Returns on investments and servicing of finance
Interest received 102 158
Interest element of finance lease rental and hire purchase payments (3) (5)
Interest paid (30) (30)
Net cash inflow from returns on investments and servicing of finance 69 123
Taxation 389 153
Capital expenditure and financial investment
Purchase of tangible fixed assets (284) (400)
Sale of tangible fixed assets — 7
Net cash outflow for capital expenditure and financial investment (284) (393)
Cash outflow before use of liquid resources and financing (421) (1,825)
Management of liquid resources
Sale of term deposits 203 2,249
Financing
Repayment of secured loan 28 (11) (10)
Net movement of capital element of finance lease rental
and hire purchase payments 28 (3) (94)
Net cash outflow from financing (14) (104)
(Decrease)/increase in cash 27 (232) 320
The notes on pages 26 to 41 form part of these financial statements 26
Notes Forming Part of the Financial Statements
1. Accounting policies
The financial statements have been prepared in accordance with applicable Accounting Standards in the United Kingdom
and under the historical cost convention. The Company has taken advantage of the exemption from presenting its own
profit and loss account. A summary of the more important Group accounting policies, which have been applied
consistently, is set out below.
Basis of consolidation
The consolidated accounts include the financial statements of Advanced Medical Solutions Group plc and all of its
subsidiary undertakings made up to 31 December 2004. The Group uses both the acquisition and the merger method of
accounting to consolidate the results of subsidiary undertakings. Intra-Group sales and profits are eliminated fully on
consolidation.
Merger accounting
Where merger accounting is used, the investment is recorded in the Company’s balance sheet at the nominal value of the
shares issued together with the fair value of any additional consideration paid.
In the Group accounts, merged subsidiary undertakings are treated as if they had always been a member of the Group. The
results of such a subsidiary in the year it joins the Group are included for the whole period. Any difference between the
nominal value of the shares acquired by the Group and those issued by the Group to acquire them is taken to reserves.
Share premium attributable to the subsidiary is included as Other Reserve.
Acquisition accounting
The results of the subsidiary undertakings are included from the date control passes. On acquisition of a subsidiary, all of
the subsidiary’s assets and liabilities that exist at the date of acquisition are recorded at their fair values reflecting their
condition at that date. All changes to those assets and liabilities, and the resulting gains and losses that arise after the
Group has gained control, are charged to the post-acquisition profit and loss account. Goodwill arising on the acquisition of
subsidiaries in previous years has been written off immediately against reserves and has not been reinstated on the
introduction of Financial Reporting Standard (FRS) 10.
Investments
Investments in subsidiary undertakings are stated at cost less provision for any loss in value considered permanent.
Goodwill
Goodwill arising on acquisitions made after 1 April 1998 is capitalised and amortised over the estimated useful economic
life of 20 years. Goodwill previously eliminated against reserves has not been reinstated, but will be charged to the profit
and loss account on subsequent disposal of the businesses to which it relates. Negative goodwill, being the difference
between the purchase consideration in subsidiary undertakings and the Group’s share of the fair value of the net assets
acquired is included on the balance sheet and is credited to the profit and loss account in the periods in which the
acquired non-monetary assets are recovered.
Turnover
Turnover represents sales and royalty income received under licence agreements from external customers at invoiced
amounts less value added tax.
Other operating income
Operating income represents non-refundable upfront licence payments received for the grant of rights for the development
and marketing of products, contributions received to research and development, Government grants of a revenue nature
and other sundry income.
Tangible fixed assets
Depreciation is provided to write off the cost, less estimated residual values, of all tangible fixed assets, over their expected
useful lives from the date that the asset is brought into use. It is calculated at the following rates:
Freehold property — 4% per annum
Leasehold improvements — over the length of the lease
Motor vehicles — 25% per annum on cost
Plant and machinery — 10 to 33.3% per annum on cost
Fixtures and fittings — 6.67 to 20% per annum on cost
Computers — 33.3% per annum on cost
No depreciation is provided on freehold land. 27
Advanced Medical Solutions Group plc
Annual Report and Accounts 2004
Intangible fixed assets
Intangible fixed assets that are acquired and which can be separately identified and valued are capitalised and amortised
over their estimated useful economic lives, usually not exceeding 18 years. In determining the useful economic life, each
asset is reviewed separately and consideration given to the period over which the Group expects to derive economic benefit
from the asset.
Stock
Stocks are valued at the lower of cost or net realisable value. Cost is calculated as follows:
Raw materials — cost of purchase on first in, first out basis
Work in progress and
finished goods — cost of raw materials and labour and attributable overheads.
Net realisable value is based on estimated selling price less further costs to completion and disposal.
Research and development
Expenditure on pure and applied research is charged to the profit and loss account in the period in which it is incurred.
Development costs are also charged to the profit and loss account in the period of expenditure.
Deferred taxation
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet
date where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the
future have occurred at the balance sheet date. Timing differences are differences between the Group’s taxable profits and
its results as stated in the financial statements.
Deferred tax is measured at the average tax rates that are expected to apply in the periods in which timing differences are
expected to reverse, based on tax rates and laws that have been enacted or substantially enacted by the balance sheet
date. Deferred tax is measured on a discounted basis.
Government grants
Grants relating to expenditure on tangible fixed assets are credited to the profit and loss account at the same rate as the
depreciation on the assets to which the grants relate. The deferred element of grants is included in creditors as deferred
income.
Grants of a revenue nature are credited to the profit and loss account in the period to which they relate.
Leases
Where assets are financed by leasing agreements that give rights approximating to ownership (finance leases), the assets
are treated as if they had been purchased outright. The amount capitalised is the present value of the minimum lease
payments payable over the term of the lease. The corresponding leasing commitments are shown as amounts payable to the
lessor. Depreciation on the relevant assets is charged to the profit and loss account.
Lease payments are analysed between capital and interest components so that the interest element of the payment is
charged to the profit and loss account over the period of the lease and represents a constant proportion of the balance of
capital repayments outstanding. The capital part reduces the amounts payable to the lessor. All other leases are treated as
operating leases. Their annual rentals are charged to the profit and loss account on a straight-line basis over the term of
the lease.
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 profit and loss account represents the
contributions payable to the scheme in respect of the accounting period.
Foreign currency
Assets, liabilities and transactions of subsidiaries in foreign currencies are translated into sterling at rates of exchange
ruling at the end of the financial year. Differences on exchange arising from the translation of the opening net investment
in subsidiary companies are taken to reserves and are reported in the statement of total recognised gains and losses. All
other foreign exchange differences are taken to the profit and loss account in the year in which they arise.
Liquid resources
Liquid resources comprise variable term deposits that are accessible with less than 12 months’ notice. 28
Notes Forming Part of the Financial Statements continued
2. Segmental information
Turnover by geographical customers:
Turnover
2004 2003
£’000 £’000
United States of America 2,259 2,167
Rest of Europe 5,481 4,789
United Kingdom 2,810 1,918
Rest of World 469 141
11,019 9,015
Turnover by business unit:
Turnover
2004 2003
£’000 £’000
Advanced woundcare 8,893 7,412
Wound closure 2,126 1,603
11,019 9,015
It is not possible to identify loss before taxation and net asset by business unit because of the use of common services. 
Turnover, loss before tax and net assets by origin:
2004 2004 2004 2003 2003 2003
Turnover Loss Net Assets Turnover Loss Net Assets
£’000 £’000 £’000 £’000 £’000 £’000
United Kingdom 11,019 (879) 11,576 9,015 (2,217) 11,996
United States — (111) (2) — (101) 8
Group 11,019 (990) 11,574 9,015 (2,318) 12,004
The turnover and loss before taxation is wholly attributable to the principal activity of the Group.
3. Other operating income
Year ended Year ended
31 December 31 December
2004 2003
£’000 £’000
Licence fees 61 220
Grants received — 48
Development fees 267 36
328 304 29
Advanced Medical Solutions Group plc
Annual Report and Accounts 2004
4. Operating loss
Year ended Year ended
31 December 31 December
2004 2003
£’000 £’000
Operating loss arrived at after charging/(crediting):
Government grants — (50)
Depreciation 953 942
Amortisation 168 168
Profit on sale of fixed assets — (2)
Operating lease rentals — plant and machinery 89 104
— land and buildings 294 274
Auditors’ remuneration — audit services 29 28
— non-audit services 23 15
Research and development 1,220 1,413
Exchange loss 30 17
5. Employees
The average monthly number of employees of the Group during the year, including executive directors, was as follows:
Year ended Year ended
31 December 31 December
2004 2003
Number Number
Production 113 110
Research and development 19 25
Sales and marketing 24 21
Administration 21 19
177 175
Sales and marketing includes 1 person (2003: 1) employed in the United States.
Year ended Year ended
31 December 31 December
2004 2003
£’000 £’000
Staff costs for all employees, including executive directors, consist of:
Wages and salaries 4,360 4,185
Social Security costs 440 407
Pension costs 186 176
4,986 4,768 30
Notes Forming Part of the Financial Statements continued
6. Directors’ emoluments
Year ended Year ended
31 December 31 December
2004 2003
£’000 £’000
Remuneration for management services 288 291
Pension 25 29
Amounts paid to third parties 70 71
Compensation for loss of office — 49
383 440
Retirement benefits are accruing to the following number
of directors under money purchase schemes 2 2
The disclosures required in relation to the highest paid director are contained within the Remuneration Report on pages 16 to 17.
7. Interest receivable and similar income
Year ended Year ended
31 December 31 December
2004 2003
£’000 £’000
Bank interest 108 144
Rent deposit interest 6 8
114 152 
8. Interest payable and similar charges
Year ended Year ended
31 December 31 December
2004 2003
£’000 £’000
Finance leases and hire purchase contracts 3 5
Other loan interest 30 30
33 35 31
Advanced Medical Solutions Group plc
Annual Report and Accounts 2004
9. Taxation on loss on ordinary activities
Year ended Year ended
31 December 31 December
2004 2003
£’000 £’000
(a) Analysis of credit for the year
Current tax:
UK corporation tax 135 234
Deferred tax:
Origination and reversal of timing differences 504 —
Discount (66) —
Tax on loss on ordinary activities 573 234
(b) Factors affecting tax credit for the year
The tax credit assessed for the year is lower than the standard
rate of corporation tax in the UK (30%) as explained below:
Loss on ordinary activities before tax (990) (2,318)
Loss on ordinary activities multiplied by the standard rate of corporation
tax in the UK of 30% (2003: 30%) (297) (695)
Effects of:
Expenses not deductible for tax purposes 38 38
Deductions allowed (74) —
Depreciation for period less than capital allowances (72) (118)
Expensive leased cars disallowed costs 2 1
Loss on disposal of fixed assets — 1
Trading losses carried forward 201 146
Trading losses utilised 202 627
Research and development relief (135) (234)
Current tax credit for the year (note 9(a)) (135) (234)
10. Loss for the financial year
Year ended Year ended
31 December 31 December
2004 2003
£’000 £’000 
Loss dealt with in the accounts of the parent company (304) (1,672)
Loss retained by subsidiary undertakings (599) (2,327)
Consolidation adjustment 486 1,915
(417) (2,084)
The Company has taken advantage of section 230 of the Companies Act 1985 not to publish its own profit and loss account. 32
Notes Forming Part of the Financial Statements continued
11. Loss per share
The basic loss per share has been calculated on a weighted average number of shares in issue during the year, namely 142,082,536
(2003: 142,082,536) and loss of £417k (2003: £2,084k). 
12. Intangible fixed assets
Intellectual
Property
Rights
£’000
Group
Cost
At beginning and end of year 2,518
Amortisation
At beginning of year 280
Charged in year 168
At end of year 448
Net book value
At 31 December 2004 2,070
At 31 December 2003 2,238
The intellectual property rights have been amortised over their useful economic lives which averages 15 years. 33
Advanced Medical Solutions Group plc
Annual Report and Accounts 2004
13. Tangible assets
Freehold land, Short Fixtures
property and leasehold Plant and and Motor
improvements improvements machinery fittings vehicles Total
£’000 £’000 £’000 £’000 £’000 £’000
Group
Cost
At beginning of year 865 1,143 8,130 535 44 10,717
Additions — — 284 2 — 286
Disposals — — (16) — — (16)
At end of year 865 1,143 8,398 537 44 10,987
Depreciation
At beginning of year 35 624 5,227 426 32 6,344
Provided for the year 20 18 882 22 11 953
Disposals — — (16) — — (16)
At end of year 55 642 6,093 448 43 7,281
Net book value
At 31 December 2004 810 501 2,305 89 1 3,706
At 31 December 2003 830 519 2,903 109 12 4,373
The net book value of tangible fixed assets includes £Nil of motor vehicles (2003: £8k) and £178k of plant and machinery (2003:
£212k) held under finance leases and hire purchase contracts. The related depreciation charge for the year was £8k for motor
vehicles (2003: £11k) and £38k for plant and machinery (2003: £36k).
Group Company
2004 2003 2004 2003
£’000 £’000 £’000 £’000
Commitments for capital expenditure
Authorised for future capital expenditure  
and not provided in the financial statements 299 143 — —  34
Notes Forming Part of the Financial Statements continued
14 Fixed asset investments
2004 2003
£’000 £’000
Company
Loans to Group undertakings 9,589 9,427
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.
Proportion of
voting rights
and ordinary
Country of share capital
Name operation held Nature of business
Advanced Medical Solutions Limited England 100% Development and
manufacture of
medical products
Advanced Medical Solutions (UK) Limited England 100% Holding Company
Advanced Healthcare Systems Limited England 100%* Dormant
Innovative Technologies Limited England 100% Dormant
Flowers Park Limited England 100%‡ Dormant
Advanced Medical Solutions Group Inc. USA 100%† Holding Company
Advanced Medical Solutions (Delaware) Inc. USA 100%§ Development and
manufacture of
medical products
MedLogic Global Holdings Limited England 100%¶ Holding Company
MedLogic Global Limited England 100% Development and
manufacture of
medical products
* Held indirectly through Advanced Medical Solutions Limited.
‡ Held indirectly through MedLogic Global Holdings Limited.
† Held indirectly through Advanced Medical Solutions (UK) Limited.
§ Held indirectly through Advanced Medical Solutions Group Inc.
¶ Held indirectly through MedLogic Global Limited.
15. Stocks
Group Company
2004 2003 2004 2003
£’000 £’000 £’000 £’000
Raw materials 698 666 — —
Work in progress 459 365 — —
Finished goods 349 248 — —
1,506 1,279 — —
There is no material difference between the replacement cost of stock and the amount at which it is stated in the financial statements. 35
Advanced Medical Solutions Group plc
Annual Report and Accounts 2004
16. Debtors
Group Company
2004 2003 2004 2003
£’000 £’000 £’000 £’000
Due within one year
Trade debtors 2,098 1,836 — —
Corporation tax 119 373 — —
Other debtors 203 238 — —
Prepayments and accrued income 334 346 72 35
2,754 2,793 72 35
Due after more than one year
Other debtors — leasehold rental deposit 200 200 200 200
Deferred tax asset (note 22) 438 — — —
638 200 200 200
17. Creditors: amounts falling due within one year
Group Company
2004 2003 2004 2003
£’000 £’000 £’000 £’000
Trade creditors 1,216 1,450 56 57
Taxation and social security 245 260 — —
Other loans 12 11 — —
Other creditors 4 4 — —
Obligations under finance leases
and hire purchase contracts 4 3 — —
Accruals and deferred income 403 411 106 70
1,884 2,139 162 127
18. Creditors: amounts falling due after more than one year
Group Company
2004 2003 2004 2003
£’000 £’000 £’000 £’000
Obligations under finance leases and hire
purchase contracts 12 14 — —
Deferred income 42 — — —
Other loans 322 334 — —
376 348 — —
The maturity profile of the Group’s financial liabilities is described in note 20(a). 36
Notes Forming Part of the Financial Statements continued
19. Analysis of borrowings
The maturity by currency of total borrowings comprised:
(i) Finance leases and hire purchase contracts
Less than 2–5 Total Less than 2–5 Total
1 year years 2004 1 year years 2003
£’000 £’000 £’000 £’000 £’000 £’000
Sterling 41216 31417
(ii) Other loans
See note 20(a).
The loan is secured by a fixed charge on the freehold property. It is repayable in monthly instalments and interest is payable at 8
1
/
2
%
fixed rate.
20. Derivatives and other financial instruments
Page 11 of the Financial Review provides an explanation of the financial risks faced by the Group and the objectives and policies for
managing those risks. The information below deals with the financial assets and liabilities. Short-term debtors and creditors have been
excluded from the analysis as permitted by FRS13. The carrying value of the Group’s financial assets and liabilities equals their 
fair value.
(a) Maturity of financial liabilities
The maturity profile of the Group’s financial liabilities, of which other loans and finance lease creditors and hire purchase contracts are
at fixed rates and denominated in sterling, is as follows:
On demand Between Between Total Total
or within one one and two and Five years medium/ financial Interest
year two years five years or more long-term liabilities rate
£’000 £’000 £’000 £’000 £’000 £’000 %
Group
Other loans 12 13 46 263 322 334 8.5
Finance lease creditors and 
hire purchase contracts 4 5 7 — 12 16 15.5
At 31 December 2004 16 18 53 263 334 350 —
Other loans 11 12 43 279 334 345 8.5
Finance lease creditors and
hire purchase contracts 3 4 10 — 14 17 15.8
At 31 December 2003 14 16 53 279 348 362 — 37
Advanced Medical Solutions Group plc
Annual Report and Accounts 2004
20. Derivatives and other financial instruments continued
2004 2003
Financial Financial
liabilities on liabilities on
Fixed rate which no Fixed rate which no
financial interest financial interest
liabilities is paid liabilities is paid
Weighted Weighted
average Weighted average Weighted
period average period average
for which period until for which period until
rate is fixed maturity rate is fixed maturity
Years Years Years Years
Other loans 15 — 16 —
Finance lease creditors and 
hire purchase contracts 3— 4—
(b) Interest rate and currency of financial assets
The currency and interest rate profile of the financial assets of the Group is as follows:
Fixed rate
weighted
Non-interest average
Total Floating Fixed bearing interest rate
£’000 £’000 £’000 £’000 %
Currency
Sterling 2,881 57 2,646 178 4.6
US Dollar 110 110———
Euro 169 169———
At 31 December 2004 3,160 336 2,646 178 —
Sterling 3,175 77 2,863 235 3.9
US Dollar 344 344———
Euro 89 89———
At 31 December 2003 3,608 510 2,863 235 —
The floating rate financial assets comprise bank deposits bearing interest at commercial rates.
The financial assets all mature within one year.
(c) Currency exposures
At 31 December 2004 the Group had unhedged US Dollar currency exposures of £64k (2003: £491k) and unhedged Euro currency
exposures of £137k (2003: £168k). 38
Notes Forming Part of the Financial Statements continued
21. Foreign exchange rates
Average rate Closing rate Percentage change
Average Closing
2004 2003 2004 2003 % %
Currency
US Dollar 1.832 1.635 1.920 1.791 12.0 7.2
Euro 1.474 1.446 1.413 1.420 1.9 (0.5)
22. Deferred tax 
2004 2003
£’000 £’000
Balance at 1 January — —
Transfer to profit and loss account 438 —
Balance at 31 December 438 —
Provision for deferred tax has been made as follows:
Provision
Excess of tax allowances over depreciation 44 83
Sundry timing differences (3) (2)
Unutilised tax losses carried forward (41) (81)
——
Asset
Tax losses 504 —
Discount (66) —
Discounted deferred tax asset 438 —
A discounted deferred tax asset of £438k (2003: Nil) has been recognised which is the extent to which recoverability can be foreseen
with reasonable probability.
There is approximately a further £10.3 million (2003: £10.8 million) of tax losses at future rates of tax which have not been recognised.
23. Share capital
Group and Company
2004 2003
£’000 £’000
Authorised
300,000,000  (2003: 300,000,000) ordinary shares of 5p each 15,000 15,000
Group and Company
2004 2003
£’000 £’000
Allotted, called up and fully paid
142,082,536 (2003: 142,082,536) ordinary shares of 5p each
and 93,553,394 (2003: 93,553,394) deferred shares of 5p each 11,782 11,782 39
Advanced Medical Solutions Group plc
Annual Report and Accounts 2004
23. Share capital continued
Shares to be issued
Options have been granted over the following number of ordinary shares which were outstanding at 31 December 2004.
Number of Options Number of Options
At 1 At 31 
Date of Option January December
Grant Price 2004 Issued Lapsed 2004
Unapproved Executive Share Option Scheme
26.10.98 41.35p 781,122 — 781,122 —
01.12.98 36.56p 195,280 — 195,280 —
17.12.98 36.56p 74,777 — 74,777 —
19.05.99 28.29p 11,487 — 11,487 —
21.06.99 25.68p 11,487 — 11,487 —
15.07.99 26.99p 574,354 — 574,354 —
19.07.99 38.30p 371,530 — 371,530 —
25.01.00 25.50p 156,945 — 156,945 —
26.05.00 13.50p 908,514 — 908,514 —
21.05.02 8.75p 75,000 — — 75,000
14.04.03 8.75p 30,000 — — 30,000
15.07.04 9.00p — 279,842 — 279,842
Executive Share Option Scheme
19.07.99 38.30p 93,507 — 93,507 —
19.01.00 25.50p 125,500 — 125,500 —
08.05.01 18.25p 128,000 — 128,000 —
Enterprise Management Incentive Scheme
21.05.02 8.75p 2,043,000 — 220,000 1,823,000
09.10.02 8.75p 491,000 — 30,000 461,000
14.04.03 8.75p 460,000 — — 460,000
07.10.03 11.50p 207,000 — 17,000 190,000
07.04.04 10.00p — 103,000 11,000 92,000
15.07.04 9.00p — 1,189,003 27,576 1,161,427
16.07.04 9.00p — 9,824 — 9,824
16.09.04 9.00p — 62,000 — 62,000
6,738,503 1,643,669 3,738,079 4,644,093
In normal circumstances, the options granted under the Unapproved Executive Share Option Scheme and the Executive Share Option
Scheme are exercisable subject to the satisfaction of the relevant performance criteria, not earlier than 3 and not later than 7 years
after the date of the grant.  40
Notes Forming Part of the Financial Statements continued
24. Share premium account and reserves
Share Profit
premium Other and loss
account reserve account
£’000 £’000 £’000
Group
As at 1 January 2004 37,978 1,531 (39,287)
Loss for the year — — (417)
Currency translation differences on
foreign currency net investments — — (13)
As at 31 December 2004 37,978 1,531 (39,717)
Company
As at 1 January 2004 37,978 — (37,002)
Loss for the year — — (304)
As at 31 December 2004 37,978 — (37,306)
The other reserve represents Advanced Medical Solutions Limited’s share premium account arising from merger accounting (see note 1).
The cumulative goodwill written off to reserves is £5,586k (2003: £5,586k).
25. Commitments under operating leases
As at 31 December 2004, the Group had annual commitments under non-cancellable operating leases as set out below:
2004 2004 2003 2003
Land and Land and
buildings Other buildings Other
£’000 £’000 £’000 £’000
Operating leases which expire:
Within one year —13 —7
In two to five years 259 30 —32
Greater than five years —— 259 —
259 43 259 39
26. Reconciliation of operating loss to net cash outflow from operating activities
Year ended Year ended
31 December 31 December
2004 2003
£’000 £’000
Operating loss (1,071) (2,435)
Depreciation 953 942
Amortisation of intangible fixed assets 168 168
Profit on sale of fixed assets — (2)
Increase in stocks (227) (361)
Increase in debtors (203) (274)
(Decrease)/increase in creditors (215) 254
Net cash outflow from operating activities (595) (1,708) 41
Advanced Medical Solutions Group plc
Annual Report and Accounts 2004
27. Reconciliation of net cash flow to movement in net funds (note 28)
Year ended Year ended
31 December 31 December
2004 2003
£’000 £’000
(Decrease)/increase in cash in year (232) 320
Cash outflow from reductions in debt and finance leases 14 104
Cash inflow from decrease in liquid resources (203) (2,249)
Change in net funds resulting from cash flows (421) (1,825)
New finance leases (2) (19)
Translation difference (13) (19)
Movement in net funds in year (436) (1,863)
Net funds at 1 January 2004 3,246 5,109
Net funds at 31 December 2004 2,810 3,246
28. Analysis of net funds
1 January Cash Non-cash Exchange 31 December
2004 flows changes movements 2004
£’000 £’000 £’000 £’000 £’000
Cash 761 (232) — (13) 516
Term deposits 2,847 (203) — — 2,644
Cash at bank and in hand 3,608 (435) — (13) 3,160
Debt due within one year (11) (1) — — (12)
Debt due after one year (334) 12 — — (322)
Finance leases (17) 3 (2) — (16)
Total 3,246 (421) (2) (13) 2,810 42
Five Year Summary
2004 2003 2002 2001 2000
£m £m £m £m £m
Consolidated profit and loss account
Turnover 11.0 9.0 8.4 7.4 7.8
Operating loss (before exceptional items) (1.1) (2.4) (1.7) (1.9) (3.1)
Net interest receivable 0.1 0.1 0.2 0.3 0.4
Retained loss (0.4) (2.1) (1.4) (1.5) (2.7)
Basic loss per share (0.3)p (1.5)p (1.1)p (1.6)p (2.9)p
Weighted average number on shares in issue after
adjusting for rights issue 142.1m 142.1m 126.1m 93.6m 93.2m
Consolidated balance sheet
Net assets employed
Fixed assets 5.8 6.6 7.3 4.8 5.4
Cash and other net current assets 6.2 5.7 7.3 7.4 8.4
Creditors due after one year (0.4) (0.3) (0.5) (0.2) (0.3)
Net assets 11.6 12.0 14.1 12 13.5
Capital and reserves
Called up share capital 11.8 11.8 11.8 9.4 9.4
Share premium account 38.0 38.0 38.0 36.9 36.9
Other reserve 1.5 1.5 1.5 1.5 1.5
Profit and loss account (39.7) (39.3) (37.2) (35.8) (34.3)
Equity shareholders’ funds 11.6 12.0 14.1 12 13.5 43
Advanced Medical Solutions Group plc
Annual Report and Accounts 2004
Notice of Meeting
Notice is hereby given that the eleventh
Annual General Meeting of the Company
will be held at 11.00 a.m. on 24 May
2005 at The Park Royal Hotel, Stretton
Road, Stretton, Warrington, Cheshire,
WA4 4NS.
As ordinary business:
1. To receive the Report of the Directors
and the Financial Statements of the
Company for the year ended 
31 December 2004 (together with
the report of the auditors thereon).
2. To reappoint Baker Tilly as auditors
and to authorise the directors to fix
their remuneration.
3. To re-elect Geoffrey Vernon (who
retires by rotation in accordance with
the Articles of Association) as a
director of the Company.
As special business:
To consider and, if thought fit, to pass
Resolutions 4 and 5, which will be
proposed as ordinary resolutions and
Resolution 6, which will be proposed as
a special resolution.
4. That the rules of the proposed
Advanced Medical Solutions Group
plc Long Term Incentive Plan ("Plan")
the principal features of which are
summarised in Appendix I to the
Chairman's letter contained in the
Circular dated 15 April 2005 (a draft
of which is produced to the meeting
and initialled by the Chairman for the
purposes of identification) be and are
hereby approved and the directors be
and are hereby authorised to do all
things necessary or expedient to carry
the Plan into effect.
5. That the deed establishing the
Advanced Medical Solutions
Employee Trust ("Trust") the principal
features of which are summarised in
Appendix II to the Chairman's letter
contained in the Circular dated 15
April 2005 (a draft of which is
produced to the meeting and
initialled by the Chairman for the
purposes of identification) be and is
hereby approved and any two officers
are authorised to execute the same.
6. That the directors be empowered
pursuant to and in accordance with
Section 95 of the Companies Act
1985 (“Act”) to allot equity
securities pursuant to the authority
conferred by a special resolution of
the Company dated 19 May 2004 as
if Section 89(1) of the Act did not
(insofar as it would otherwise do)
apply to any such allotment, provided
that:
i) this power shall expire on the date
fifteen months after the date of
passing of this resolution or at the
conclusion of the next Annual
General Meeting of the Company,
whichever is the earlier, save that the
Company may before such expiry
make any offer or agreement which
would or might require equity
securities to be allotted after such
expiry and the directors may allot
equity securities in pursuance of
such an offer or agreement as if this
power had not expired and provided
further that such allotments would
have fallen within the limit
hereinafter mentioned if made before
such expiry;
ii) equity securities allotted otherwise
than in connection with a Pro Rata
Offer (as defined below) or a scrip
dividend alternative offered in
accordance with Article 151 of the
Company’s Articles of Association or
pursuant to the terms of any share
option scheme for employees
approved by the members in general
meeting shall not exceed an
aggregate nominal value of
£355,206.34 and for this purpose
an issue of securities convertible into
ordinary shares shall be deemed to
be an allotment of the number of
shares which would be required to
satisfy the conversion rights attached
to those securities in full at the
initial conversion price provided for
in the terms and conditions of the
issue.
In this resolution:
(a) words and expressions shall be
construed in accordance with Part IV
of the Act; and
(b) the expression “Pro Rata Offer”
means an offer of equity securities
open for acceptance for a period
fixed by the directors to holders of
ordinary shares on the register on a
fixed record date in proportion (or as
nearly as may be) to their then
holdings of such ordinary shares (but
subject to such exclusions or other
arrangements as the directors may
consider necessary or expedient in
relation to fractional entitlements or
on account either of legal problems
under the laws of any territory or the
requirements of any recognised
regulatory body or any other stock
exchange).
By order of the Board
Mary G Tavener
Company Secretary
14 March 2005
Registered office:
Road Three
Winsford Industrial Estate
Winsford
Cheshire
CW7 3PD 44
Notice of Meeting
Notes
1. A member entitled to attend and vote
at the Meeting is entitled to appoint
one or more proxies to attend and, on
a poll, vote instead of him or her. A
proxy need not be a member of the
Company. 
2. A form of proxy is enclosed for use
by members. To be effective, it must
be completed and deposited at the
offices of the Company’s Registrars,
Capita Registrars (Proxies), PO Box
25, Beckenham, Kent, BR3 4BR, not
less than 48 hours before the time
fixed for the Meeting.
3. The register of directors’ interests in
the shares of the Company will be
available for inspection at the
registered office of the Company
during usual business hours on any
weekday (public holidays excepted)
until the date of the Meeting and
also on that date and at the place of
the Meeting from 9.00 a.m. until the
conclusion of the Meeting.
4. The Company, pursuant to Regulation
41 of the Uncertificated Securities
Regulations 2001, specifies that only
those shareholders registered in the
Register of Members of the Company
as at 6.00 p.m. on 22 May 2005
shall be entitled to attend or vote at
the aforesaid general meeting in
respect of the number of shares
registered in their names at that
time. Changes in the entries in the
relevant register of Securities after
6.00 p.m. on 22 May 2005 shall be
disregarded in determining the rights
of any person to attend or vote at the
meeting.
5. The Board reserves the right up to
the commencement of the Annual
General Meeting to make such
amendments and additions to the
rules of the Plan or the terms of the
Trust as they may consider necessary
or desirable, provided such
amendments do not conflict in any
material respect with the summary
set out in the Circular which
accompanies this Annual Report. A
full copy of the rules of the Plan and
the draft deed establishing the Trust
as proposed is available for
inspection at the Company's
registered office. Advanced Woundcare
AMS provides a full range of advanced
woundcare products for sale in hospitals,
nursing homes and community care. The main
indications are for chronic wounds such as
ulcers and pressure sores.
These products utilise the concept of moist
wound healing whereby it has been shown that
wounds heal faster and with less pain and
scarring if they remain moist. They protect the
wound, deal with tissue fluids and provide an
optimal environment for healing to occur.
Wound Closure
Products based upon superglue adhesives
technology are provided for closing wounds
following trauma or surgical incisions.
These tissue adhesives offer significant
benefits over conventional ways of closing
wounds such as sutures, staples and
adhesive strips.
They are simple to use, non-invasive, help
to reduce the risk of infection, minimise
trauma to the patient and provide good
clinical and cosmetic outcomes.
Our Products
1 Highlights
2 Chairman’s Statement
6 Chief Executive’s Review
10 Financial Review
12 Board of Directors
13 Committees and Advisers
14 Report of the Directors
16 Remuneration Report
18 Corporate Governance
21 Independent Auditor’s Report
22 Consolidated Profit and Loss Account
23 Statement of Total Recognised Gains
and Losses
24 Balance Sheets
25 Consolidated Cash Flow Statement
26 Notes Forming Part of the Financial
Statements
42 Five Year Summary
43 Notice of Meeting
Contents
Designed and Printed by Jones & Palmer Limited, Birmingham. tel: (0121) 236 9007 Giving Nature
a Helping Hand.
Advanced Medical Solutions Group plc
Annual Report and Accounts 2004
Advanced Medical Solutions Group plc   Annual Report and Accounts 2004
Advanced Medical Solutions Group plc
Road 3, Winsford Industrial Estate
Winsford, Cheshire, CW7 3PD, UK
Tel: +44 (0)1606 863500  Fax: +44 (0)1606 863600
E-mail: info@admedsol.com  Web: www.admedsol.com