Surgical Innovations Group PLC Trading Update (4562B)
June 07 2019 - 1:00AM
UK Regulatory
TIDMSUN
RNS Number : 4562B
Surgical Innovations Group PLC
07 June 2019
Surgical Innovations Group plc
(the "Group" or the "Company")
Trading Update
Surgical Innovations Group plc (AIM: SUN), the designer,
manufacturer and distributor of innovative technology for minimally
invasive surgery, provides an update on current trading.
Following the strong final quarter of 2018, trading in the first
quarter ended 31 March 2019 was in line with the Board's
expectations and showed modest growth in revenues compared with the
equivalent period last year. This momentum has not carried into the
second quarter, with orders in the UK and EU markets lower than
expected. The disruption to order patterns by distributors and end
users caused by Brexit uncertainties has made visibility of true
demand more difficult than normal, and it is anticipated that this
volatility is likely to continue until matters are resolved.
Revenues in export markets elsewhere remain unaffected, especially
the US where growth has been strong.
Demand in the UK market more generally continues to be muted by
the level of activity in the NHS. Whilst a funding crisis was
largely avoided last winter, hospitals continue to deliver a
reduced level of elective procedures. The British Medical
Association reported on 2 May 2019 that more than 20,000 elective
cases were cancelled during the last quarter of 2018 (the latest
quarter for which data was available), and that there were 4.3
million people waiting for treatment, including an increase in
those waiting over 18 weeks by more than a fifth*. Whilst our UK
distribution business continues to have success in winning new
accounts in the NHS, the overall volume of UK activity is a
continuing concern, especially in the current political
climate.
Sales of one of our key distribution product ranges, Cellis,
have been slower to ramp up than expected following renewed
regulatory approval being received in September 2018. Nevertheless,
current trends in sales give us confidence in the potential for
this key product range going forward and we are excited about the
positive reception of new products in the range.
Surgical Innovations Limited underwent a comprehensive
regulatory audit in May 2019, as a result of which we are able to
proceed with recertification for ISO13485: 2016 and ISO9001: 2015.
Importantly, certification for the Medical Device Single Audit
Program (MDSAP) was also granted, streamlining market access in the
US, Canada, Australia, Japan and Brazil. In addition, FDA approval
for the core Elite range has been granted, which will enable a US
market launch of these products later in the year.
Regulatory approvals are becoming increasingly challenging to
achieve and provide a formidable barrier to prospective new
entrants. They also place an increasing burden on operational and
technical resources, and we continue to build a strong and expert
team in this area. Recent redeployment of key personnel to support
this activity has inevitably had a short-term impact on the
introduction of new products, as well as line extensions of our
current range. Delays in the regulatory approval process are
symptomatic of the severe contraction in the number of approved
regulatory bodies in Europe. In addition, extra resources will be
put in place as we move towards Medical Device Regulation. This is
likely to affect both the cost and timescale of introduction of new
products across the industry.
Taking these factors into account, the Board considers that
growth in revenues in the second half of the year is unlikely to
fully counter the relatively weaker second quarter to date. Full
year expectations for revenue will exceed those of the prior year
by a more modest rate of growth than previously anticipated. Whilst
margins are expected to remain in line, overheads will reflect the
investment in additional resources devoted to operational and
regulatory matters. Accordingly, adjusted profit before tax is
expected to be below the level achieved in 2018. The Group
currently holds net cash and continues to be cash generative.
We continue to invest in operational excellence and innovative
product development as the main drivers of organic growth, and to
evaluate the potential for enhanced growth by acquisition. The
directors recognise that the impact of the above external market
factors on the Group is disappointing; however, as significant
shareholders in the Group we continue to look to the future with
confidence.
* source: British Medical Association: NHS Pressures - Winter
2018/19: A hidden crisis, 2 May 2019
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) No 596/2014.
For further information please contact:
Surgical Innovations Group Plc www.sigroupplc.com
David Marsh, Chief Executive Officer Tel: 0113 230 7597
Melanie Ross, Chief Financial Officer
N+1 Singer (Nominated Advisor Tel: 020 7496 3000
and Broker)
Richard Lindley
Rachel Hayes
Walbrook PR (Financial PR & Investor Tel: 020 7933 8780 or si@walbrookpr.com
Relations)
Paul McManus Mob: 07980 541 893
Lianne Cawthorne Mob: 07584 391 303
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END
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