TIDMSUN
RNS Number : 0622A
Surgical Innovations Group PLC
21 September 2022
Surgical Innovations Group plc
("SI", the "Group" or "the Company")
Half-year Report
Interim results for the six-months ended 30 June 2022
Surgical Innovations Group plc (AIM: SUN), the designer,
manufacturer and distributor of innovative medical technology for
minimally invasive surgery, reports its unaudited financial results
for the six-month period ended 30 June 2022 ("2022 H1") and
provides an update on current trading and the outlook for the
Group's business.
Commercial and operational highlights:
-- Geographical expansion and sustainability programmes
providing further opportunities for growth
-- Investment in Sales & Marketing, with a focus of driving
forward new initiatives in key markets
-- Strategies to address the challenges of retaining and
attracting key personnel are having a positive impact
-- Further investment in key processes and people to ensure that
the Company remains on track for Medical Device Regulations
(MDR)
-- Capex on equipment to build and enhance manufacturing capabilities and efficiencies
-- Maintaining higher than normal levels of inventory and dual
sourcing of materials and parts to mitigate supply chain
disruptions
Financial highlights (1) :
-- Revenues increased 28% on prior year to GBP5.41m and amounted
to 106% of the comparable pre-pandemic period in 2019 (H1 2021:
GBP4.22m, 2019 H1: GBP5.10m(1) )
-- Strong sales in the UK & APAC (excluding OEM) region,
particularly Japan, providing significant growth in H1, up 39% on
prior year (2022 H1: GBP3.17 m, 2021 H1: GBP2.28m, 2019 H1:
GBP2.42m) and providing a good foundation for growth
-- Commercial gross margins improving at 45.3% compared to 2021
H1 despite inflationary pressures (2021 H1: 42.36%; 2019 H1:
44.5%(1) )
-- Adjusted EBITDA(2) profit of GBP0.29m (2021 H1: GBP0.21m; 2019 H1: GBP0.65m(1) )
-- Small adjusted operating loss(2) of GBP0.01m (2021 H1:
GBP0.15m loss; 2019 H1: GBP0.22m profit(1) )
-- Adjusted EPS amounted to a loss(2) of 0.004p per share (2021
H1: loss of 0.004p; 2019 H1: earnings of 0.023p per share(1) )
-- Cash generated from operations at GBP0.22m (full year 2021: GBP0.53m cash used)
-- Net cash(3) at end of period of GBP1.53m (as at 31 Dec 2021: GBP1.76m)
1 Comparative information is shown for the six months ended 30
June 2021, except where otherwise stated. Further comparative
information for the six months ended 30 June 2019 has been included
to provide a comparison with pre-pandemic trading.
2 Adjusted EBITDA, adjusted operating (loss)/ profit and
adjusted EPS are stated before deducting non-recurring exceptional
costs of GBP0.03m (2021 H1: nil, 2019 H1: GBP0.1m), amortisation
and impairment of intangible acquisition costs of GBPnil (2021 H1:
nil, 2019 H1: GBP0.18m) and share based payment costs of GBP0.02m
(2021 H1 GBP0.01m, 2019 H1: GBP0.10m).
3 Net cash equals cash less bank debt and HP leases only.
Current Trading and Outlook
-- Revenues have exceeded management expectations in the UK and
are largely recovering towards pre-pandemic levels in most
markets
-- Group revenues for the first two months of the second half
are approximately 113% above the level seen in the comparable
period last year, and 116% ahead of that seen for the same period
in 2019 (pre-pandemic), with an increased level of backorders at
GBP0.7m
-- The Group continues to trade profitably at the level of
adjusted EBITDA, notwithstanding an increasing overhead base
-- Further opportunity in UK hospitals is expected as the
well-documented increasing backlogs begin to be addressed - sales
backlog, forward order book and new conversions are expected to
provide growth and further underpin sustainability strategy
-- Growth in new markets, along with new collaborative
partnerships, are anticipated for the remainder of 2022 and
beyond
-- Strong sales in the UK and Japan provide a good foundation for growth
-- Planned investment in new product development, facilitating
key product launches in the second half of the current financial
year
Chairman of SI, Nigel Rogers, said:
" Revenues in the period to 31 August 2022 have continued to
grow and strengthen, significantly increasing by approximately 113%
above the level achieved in the prior year, and around 116% ahead
of the corresponding pre-pandemic period of 2019, despite being
suppressed by a large sales backorder of GBP0.7m which is to be
shipped in the second half of the year . Production activity has
been challenging with extended supply chain lead times and a
reduction of skilled labour, but investment in capital expenditure
and people should increase the capacity and improve efficiency in
the second half of the year. The increasing overhead base has put
pressure on the business, but the Group remains profitable at
adjusted EBITDA, and this will continue to improve with further
growth opportunities.
" The momentum in UK and Japan is indicative of the successful
investment in Sales and Marketing which has been driving our
sustainability initiatives. With further growth opportunities in
the second half of the year as major markets continue to recover,
and the launch of new products into new and existing key markets,
the prospects are certainly encouraging. "
For further information please contact:
Surgical Innovations Group Plc www.sigroupplc.com
David Marsh, CEO Tel: +44 (0)113 230 7597
Charmaine Day, CFO
Walbrook PR Tel: +44 (0)20 7933 8780 or si@walbrookpr.com
(Financial PR & Investor Relations)
Paul McManus / Lianne Applegarth Mob: +44 (0)7980 541 893 / +44 (0)7584
391 303
Singer Capital Markets
(Nominated adviser &Broker) +44 (0)20 7496 3000
Aubrey Powell / Rachel Hayes
About Surgical Innovations Group plc
Strategy
The Group specialises in the design, manufacture, sale and
distribution of innovative, high quality medical products,
primarily for use in minimally invasive surgery. Our product and
business development is guided and supported by a key group of
nationally and internationally renowned surgeons across the
spectrum of minimally invasive surgical activity.
We design and manufacture and source our branded port access
systems, surgical instruments and retraction devices which are sold
directly in the UK home market through our subsidiary, Elemental
Healthcare, and exported widely through a global network of trusted
distribution partners. Many of our products in this field are based
on a "resposable" concept, in which the products are part reusable,
part disposable, offering a high quality and environmentally
responsible solution at a cost that is competitive against fully
disposable alternatives.
Elemental also has exclusive UK distribution for a select group
of specialist products employed in laparoscopy, bariatric and
metabolic surgery, hernia repair and breast reconstruction. In
addition, we design and develop medical devices for carefully
selected OEM partners. We have a number of long-term relationships
with key partner including the design, development and manufacture
of the FIX8 device for AMS and more recently for a new
collaboration with a Robotic company, CMR Surgical ('CMR') to
design and develop and access device for their unique
instrumentation. We have in the past worked with and continue to
maintain a relationship with a major industrial partner to provide
precision engineering solutions to complex problems outside the
medical arena.
We aim for our brands to be recognised and respected by
healthcare professionals in all major geographical markets in which
we operate and provide by development, partnership or acquisition a
broad portfolio of cost effective, procedure specific surgical
instruments and implantable devices that offer reliable solutions
to genuine clinical needs in the operating theatre environment.
Operations
The Group currently employs approximately 100 people across one
site in the UK. Elemental Healthcare was acquired by the Group on 1
August 2017 and provides direct sales representation in the UK home
market and a range of third-party products for UK distribution.
Elemental was originally based in Berkshire and was successfully
relocated in 2021, so all operations are now located at the Leeds
site.
Further information
Further details of the Group's businesses are available on
websites:
www.sigroupplc.com
www.surginno.com , and
www.elementalhealthcare.co.uk
Investors and others can register to receive regular updates by
email at si@walbrookpr.com
Surgical Innovations Group plc
Chairman 's Statement
For the six-month period ended 30 June 2022
Financial Overview
Trading in the first half of the year increased 28% to GBP5.41m
on the comparable period last year (2021 H1: GBP4.22m) and more
encouragingly, revenue growth exceeded pre-pandemic levels, with
Group revenues at 106% of the comparable pre-Covid period (2019 H1:
GBP5.10m).
Demand in the UK market continues to be strong: SI branded
products were GBP0.68m (2021 H1: GBP0.58m, 2019 H1: GBP0.75m), and
UK distribution sales were GBP2.01m (2021 H1: GBP1.30m, 2019 H1:
GBP1.49m), up a combined 43% on the prior corresponding period and
achieving robust growth of 120% against the pre-Covid comparable in
2019. The impetus on the sustainability advantages of our
Resposable(TM) product ranges is driving business wins. This range
is well-placed for further growth as the NHS focus on the
implementation of its 'Net Zero' commitment on sustainability and
implement measures to address the increasing backlog of patients on
waiting lists.
First half revenues in Europe were 2% above the level achieved
last year at GBP0.59m (2021 H1: GBP0.57m) and around 91% of
pre-Covid levels (2019 H1: GBP0.65m). While some countries have
been slower to recover, with focus and investment in Sales and
Marketing and an emphasis on the SI product range, we are seeing
underlying sales growth rates in other countries which are
exceeding internal expectations. New product launches during Q4 in
key countries will provide opportunity for further growth.
Revenues from the US for SI branded products in the first half
decreased to GBP0.59m (2021 H1: GBP0.75m, 2019 H1: GBP0.77m), this
in part due to substantial stocking orders in the first quarter of
2021. Restricted hospital access affected evaluations at the
beginning of the year, increasing activity is being seen in H2 and
expected to continue at a level in line with expectations for the
year. Further investment into the appointment of the international
heads has provided emphasis on supporting the dealer network, and
in conjunction with new product launches, further sales training
and marketing material will be rolled out across the network in the
second half of this year.
The APAC region continues to generate strong revenue growth to
GBP0.48m, a 19% increase on the comparable period (2021 H1:
GBP0.41m) and surpassing levels seen in the first half of 2019
(2019 H1: GBP0.17m). We continue to work closely with our Japanese
distributor as they gain market share. The focus on sustainability
continues to gain traction here also, initial stocking orders have
been placed for launching the Logic reusable instrument range which
are expected to be shipped in the final quarter of 2022.
OEM revenues for the first half more than doubled to GBP0.92m
(2021 H1: GBP0.45m), nearly recovering to pre-Covid levels (2019
H1: GBP1.01m). This reflects the general recovery trend experienced
by our long-standing key OEM partners in the medical sector, but
also the supply chain challenges faced in the first half of the
year which have started to improve in Q3. New collaborations with
CMR Surgical have been successful; the initial stocking order for
YelloPort Elite (TM) was launched in the second quarter of this
year and we expect momentum to continue in the second half with a
strong orderbook from our partners AMS, CMR and Becton Dickinson/
Carefusion.
Commercial or underlying margins remained within target range at
45.3%, with inflationary pressures from material suppliers
mitigated and passed on where possible. However, the reported gross
margin of 34.6% (2021: H1 33.9%, 2019: H1 43.1%), which includes
the net cost of manufacturing, reflects the increased inflationary
challenges on labour costs. In addition, and as a consequence of
the shortage of skilled labour and extended supply chain lead
times, manufacturing productivity reduced and costs were
under-recovered. To mitigate this partially, inventory levels have
been maintained at higher levels; as at 30 June 2022 GBP3.04m (31
Dec 2021: GBP2.97m).
Other operating expenses increased to GBP1.93m (2021 H1:
GBP1.62m), due to investment in Sales and Marketing and Regulatory
functions, combined with increased employee remuneration as a
result of inflationary pressures. Excluding the effects of
exceptional items and share based payments, operating expenses
increased by GBP0.28m to GBP1.88m (2021 H1: 1.60m). Despite these
increases, the Group is trading at an adjusted EBITDA profit for
the period of GBP0.29m (2021 H1: GBP0.21m). The full effect of
these additional costs will impact the second half of the year but
the Group will continue to be profitable at the adjusted EBITDA
level.
Adjusted operating loss before tax for the period (before
exceptional items, acquisition related costs and share based
payment charges) was close to breakeven at GBP0.01m (2021 H1: loss
of GBP0.15m, 2019 H1: profit of GBP0.22m). The reported net loss
before taxation amounted to GBP0.11m against a net loss before
taxation of GBP0.22m in the first half last year.
The Group reported a tax credit in the period of GBP0.09m (2021
H1: credit of GBP0.13m) which related to an enhanced research and
development ("R&D") claim for 2020. We anticipate submitting
the claim for 2021 before the end of this year. In terms of
deferred tax, the Group continues to hold substantial corporation
tax losses on which management takes a cautious view, and
consequently, the Group does not recognise a corresponding deferred
tax asset.
Adjusted net earnings per share amounted to 0.004p (2021 H1:
GBP0.004p, 2019 H1: loss of earnings 0.023p). The net total
comprehensive income for the period amounted to a loss of GBP0.01m
(2021 H1: loss of GBP0.09m, 2019 H1: loss of GBP0.30m).
In March 2022, the Group refinanced its borrowing facilities,
and as a result, the GBP1.5m Coronavirus Business Interruption
scheme (CBILS) loan was extended to be repayable in May 2026. In
addition, to replace the existing loan and RCF facility, an invoice
discounting facility of GBP1.0m was agreed. This facility provides
headroom for the Group and remains undrawn to date.
For the first half of 2022, cash generated from operations was
GBP0.22m (full year 2021: GBP0.53m used, 2021 H1: GBP0.17m used).
After continued investment into R&D of GBP0.17m (full year
2021: GBP0.45m, 2021 H1: GBP0.18m), capital expenditure of GBP0.34m
(full year 2021: GBP0.21m, 2021 H1: GBP0.17m) and the refinancing
of the existing bank loan, the Company had available cash balances
including the unused invoice discounting facility of GBP1.0m
totalling GBP4.04m (31 Dec 2021 GBP4.04m). Financial covenants have
been complied with in full and continue to be tested on a quarterly
basis. The Board is satisfied that the current financial position
and borrowing arrangement provide ample headroom to support the
business.
Market overview and new product development opportunities
Strong substantial sales growth is evident in the UK,
underpinned by our sustainability and commercial advantages
relative to single use plastics, which have resulted in multiple
hospital trials and conversions. In one case study for a UK NHS
Trust, we have mapped a four-month break-even point for the Trust,
with an 85% reduction in plastic waste and 6.4 tonnes of carbon
dioxide emissions saved. Despite this, the UK NHS is suffering from
a gap in its workforce which is impacting the substantial and
ever-growing backlog of elective surgery, diagnosis and treatment
across a broad range of procedures. The UK Government and its
agencies are taking steps to streamline processes and provide
additional funding to deal with this issue, including using private
hospitals for capacity as one of the solutions. In addition, record
NHS waiting times appear to be increasing the number of people
paying for private care. As part of the investment into Sales and
Marketing, we have a restructured our resource and now have an
experienced and dedicated sales head to support this area of
activity and take advantage of the pent-up demand.
Globally, markets are still recovering from Covid at different
rates. In the US and EU specifically, restrictions have impacted
hospital activity levels in Q1 and evaluations have been pushed
back as hospital access was limited. However, sales activity
continues, and recovery levels are getting closer to those seen in
the pre pandemic period of 2019. The Group's investment in Sales
and Marketing is driving our sustainability messaging initiatives
and traction continues. Having a dedicated resource to focus more
on training and supporting key distributors is expected to drive
future growth, with training of the US network being rolled out in
H2.
Over the past 18 months, one of our key focuses has been on new
product development, and we are delighted to fully launch in the US
and key EU markets in H2 with the Yell oPort(TM)Elite 5mm ('access
device') and the Optical Trocar. In the US, these products will see
a full launch in Q4 through the Microline sales team. Adding
enhanced sustainable products to the range in H2 2023 will further
bolster the range and growth potential in these markets.
In Germany, where there is a significant installed base of CMR
customers, we have been developing a partnership with a specialist
distribution company and anticipate initial evaluations this
autumn.
In the APAC region, specifically Japan, the market continues to
show strong and significant growth, and this is set to continue as
we extend the sustainable product portfolio and launch the Logic
reusable instrumentation line, along with the Yell oPort(TM)Elite
5mm and Optical Trocar, towards the end of the year.
Underlying revenues in the OEM segment, with which we have long
standing relationships, continue to be somewhat suppressed, not by
demand, but due to supply chain constraints. These issues have
hindered sales in the first half of the year, but have improved in
Q3. New collaborations with CMR Surgical (CMR) continue to
strengthen and grow, with their first significant order placed in
Q2. Further substantial orders have been placed for the second half
of the year which give us opportunities to expand into new markets.
For example we are building a new partnership in India, leveraging
the CMR relationship, and expect to complete product registration
and training in Q4. The momentum with the CMR partnership is set to
continue throughout the remainder of the year and beyond. In
addition, the Group intends to leverage its instrument expertise
and exploit opportunities within robotics so we can extend the
product range offered.
Operational and Regulatory activities
This year has brought challenges in retaining key skilled
manufacturing personnel, with employee turnover at its highest
level for a number of years, combined with the well publicised
challenges of attracting new staff. To address these issues, the
Company has introduced a number of initiates with the
implementation of a four-day working week trial, which started at
the beginning of August, being the most significant. The trial is
supported by the UK pilot programme and has been carefully managed
to ensure five-day continuity of service and support. The scheme is
set to benefit from improved productivity levels from improved
employee wellbeing. Efficiency initiatives are also being rolled
out to ensure that the trial remains operationally effective. In
addition, financial packages were increased to be comparable with
market rates which have been exacerbated by the current
inflationary pressures. Since the trial has started, there have
been successful hires and employee turnover has lowered.
Supply chain disruptions continue; lead times on materials and
parts needed for new machinery have been lengthier than historical
norms. As a consequence, this has impacted manufacturing
efficiencies and delayed sales orders. At the end of August,
backorders remained high, however, the management team is working
hard to mitigate the risks where possible and, in some cases, have
dual sourced suppliers to maintain supply. Inventory holdings will
also remain at higher levels in the short term to alleviate the
pressure. Recently hired skilled labour should improve the capacity
and efficiencies over the coming months, and combined with
investment made into new plant and machinery soon to be fully
operational, will bring some of the manufacturing processes back in
house and provide additional capacity. The improvements made will
certainly provide the capabilities to deal with the pent-up demand
and future growth opportunities of the business.
The regulatory pathway continues to be on track with the EU
Medical Device Regulation (MDR), and additional resource has been
brought in to support the process over the coming months. In
August, the Company successfully completed a quality management
system (QMS) audit. The completion of the MDR QMS audit is si
gnificant achievement towards attaining certification in March
2023. In April, the Company received Medical Device Single Audit
Programme (MDSAP) recertification, maintaining access to the key
strategic markets of Canada, USA, Japan and Australia for a further
three years. As previously reported, there is a significant cost
burden associated with the evolving regulatory requirements which,
whilst challenging, represents an increasing barrier to entry. Some
competitors may not be able to attain the new standards, thus
providing more opportunities to capitalise on our market share.
Current trading and outlook
Revenues in the two-month period to 31 August 2022 have
continued to grow and strengthen, significantly increasing by
approximately 113% above the level achieved in the comparable
period last year. The recent two months' performance is also around
116% ahead of the corresponding pre-pandemic period of 2019,
despite being suppressed by a large sales backorder of GBP0.7m
which is to be shipped in the second half of the year. Production
activity has continued to be challenging with increased supply
chain lead times and a reduction in the availability of skilled
labour, but investment in capital expenditure and people should
increase capacity and improve efficiency over the course of the
second half. The increasing overhead base has put pressure on the
business, but the Group remains profitable at the adjusted EBITDA
level, and this will continue to improve with growth
opportunities.
The momentum in UK and Japan is indicative of the successful
investment in Sales and Marketing which has been key to driving our
sustainability initiatives. Further growth opportunities persist in
the second half of the year, as major markets continue to recover
and with the launch of new products into new and existing markets,
providing encouraging prospects for the Group.
Nigel Rogers
Chairman
21 September 2022
Unaudited consolidated income statement
for the six months ended 30 June 2022
Unaudited Unaudited Audited
six months six months Year
ended ended ended
30 June 30 June 31 December
2022 2021 2021
Notes GBP'000 GBP'000 GBP'000
--------------------------------- ------ ------------ ------------ -------------
Revenue 3 5,413 4,218 9,126
Cost of sales (3,540) (2,788) (5,995)
--------------------------------- ------ ------------ ------------ -------------
Gross profit 2 1,873 1,430 3,131
Other operating expenses (1,933) (1,615) (3,611)
Other income - 25 25
--------------------------------- ------ ------------ ------------ -------------
Adjusted EBITDA profit * 287 206 500
Amortisation of intangible
assets (129) (117) (257)
Impairment of intangible assets - - (145)
Depreciation of tangible assets (164) (234) (445)
Exceptional items (32) - (78)
Share based payments (22) (15) (30)
--------------------------------- ------ ------------ ------------ -------------
Operating loss (60) (160) (455)
Finance costs 4 (51) (63) (130)
Finance income - - -
--------------------------------- ------ ------------ ------------ -------------
Loss before taxation (111) (223) (585)
Taxation credit/(charge) 5 97 129 129
--------------------------------- ------ ------------ ------------ -------------
Loss and total comprehensive
income (14) (94) (456)
--------------------------------- ------ ------------ ------------ -------------
Earnings per share
Basic 6 (0.002p) (0.010p) (0.049p)
Diluted 6 (0.002p) (0.010p) (0.049p)
--------------------------------- ------ ------------ ------------ -------------
* Adjusted EBITDA is earnings before interest, depreciation,
amortisation (including impairment) and exceptional items.
Unaudited consolidated statement of changes in equity
for the six months ended 30 June 2022
Notes Share Share premium Capital Merger Retained Total
capital reserve reserve earnings
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------- ------- --------- -------------- --------- --------- ---------- --------
Balance as at 1 January 2022 9,328 6,587 329 1,250 (6,830) 10,664
Employee share-based payment
charge - - - - 22 22
------------------------------------------ --------- -------------- --------- --------- ---------- --------
Total - Transaction with owners 9,328 6,587 329 1,250 (6,808) 10,686
------------------------------------------ --------- -------------- --------- --------- ---------- --------
Loss and total comprehensive
income for the period - - - - (14) (14)
------------------------------------------ --------- -------------- --------- --------- ---------- --------
Unaudited balance as at 30
June 2022 9,328 6,587 329 1,250 (6,822) 10,662
------------------------------------------ --------- -------------- --------- --------- ---------- --------
Unaudited consolidated balance sheet
as at 30 June 2022
Unaudited Unaudited Audited
30 June 30 June 31 December
2022 2021 2021
Notes GBP'000 GBP'000 GBP'000
------------------------------- ---------- ---------- ---------- -------------------------
Assets
Non-current assets
Property, plant and equipment 623 336 366
Right of Use Assets 795 920 832
Intangible assets 6,255 6,234 6,216
7,673 7,490 7,414
------------------------------- ---------- ---------- ---------- -------------------------
Current assets
Inventories 3,040 2,362 2,965
Trade and other receivables 9 2,054 1,529 1,695
Cash at bank and in hand 3,040 4,692 3,644
------------------------------- ---------- ---------- ---------- -------------------------
8,134 8,583 8,304
------------------------------- ---------- ---------- ---------- -------------------------
Total assets 15,807 16,073 15,718
------------------------------- ---------- ---------- ---------- -------------------------
Equity and liabilities
Equity attributable to
equity holders of the parent
company
Share capital 9,328 9,328 9,328
Share premium account 6,587 6,587 6,587
Capital reserve 329 329 329
Merger reserve 1,250 1,250 1,250
Retained earnings (6,822) (6,483) (6,830)
------------------------------- ---------- ---------- ---------- -------------------------
Total equity 10,662 11,011 10,664
------------------------------- ---------- ---------- ---------- -------------------------
Non-current liabilities
Dilapidation provision 165 165 165
Right of Use lease liability 705 833 750
Borrowings 8 1,117 - -
------------------------------- ---------- ---------- ---------- -------------------------
1,987 998 915
------------------------------- ---------- ---------- ---------- -------------------------
Current liabilities
Trade and other payables 9 1,945 1,456 1,614
Accruals 653 423 488
Right of Use lease liability 167 156 157
Borrowings 8 393 2,029 1,880
------------------------------- ---------- ---------- ---------- -------------------------
3,158 4,064 4,139
------------------------------- ---------- ---------- ---------- -------------------------
Total liabilities 5,145 5,062 5,054
------------------------------- ---------- ---------- ---------- -------------------------
Total equity and liabilities 15,807 16,073 15,718
------------------------------- ---------- ---------- ---------- -------------------------
Unaudited consolidated cash flow statement
for the six months ended 30 June 2022
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 June 30 June 31 December
Notes 2022 2021 2021
GBP'000 GBP'000 GBP'000
-------------------------------------- ------ ------------------- ------------------- ----------------
Cash flows from operating activities
Loss after tax for the year (14) (94) (456)
Adjustments for:
Taxation (97) (129) (129)
Finance Income - - (-)
Finance Costs 4 51 63 130
Other Income-CBILS interest
grant - (23) (23)
Depreciation of property, plant
and equipment 80 134 258
Amortisation and impairment
of intangible assets 129 117 402
Depreciation of right of use
assets 84 99 187
Share-based payment charge 22 15 30
Foreign Exchange (loss)/gain (87) 22 12
Increase in inventories (75) (196) (802)
Increase in current receivables (360) (246) (412)
Increase in trade and other
payables 487 64 276
-------------------------------------- ------ ------------------- ------------------- ----------------
Cash generated / (used) from
operations 220 (174) (527)
Taxation received 5 97 129 129
Interest received - - -
Interest paid (32) (10) (35)
-------------------------------------- ------ ------------------- ------------------- ----------------
Net cash generated / (used)
from operating activities 285 (55) (433)
-------------------------------------- ------ ------------------- ------------------- ----------------
Payments to acquire property,
plant and equipment (337) (58) (212)
Acquisition of intangible assets (168) (178) (445)
-------------------------------------- ------ ------------------- ------------------- ----------------
Net cash used in investment
activities (505) (236) (657)
-------------------------------------- ------ ------------------- ------------------- ----------------
Repayment of bank loan 8 (493) (150) (300)
HP leases 8 131 - -
Payments to Right of Use lease
liabilities 7 (109) (123) (232)
-------------------------------------- ------ ------------------- ------------------- ----------------
Net cash (used)/generated in
financing activities (471) (273) (532)
-------------------------------------- ------ ------------------- ------------------- ----------------
Net (decrease)/increase in
cash and cash equivalents (691) (564) (1,622)
Cash and cash equivalents at
beginning of period 3,644 5,278 5,278
Effective exchange rate fluctuations
on cash held 87 (22) (12)
-------------------------------------- ------ ------------------- ------------------- ----------------
Net cash and cash equivalents
at end of period 3,040 4,692 3,644
-------------------------------------- ------ ------------------- ------------------- ----------------
Analysis of net borrowings:
Cash at bank and in hand 3,040 4,692 3,644
Bank loan 8 - (529) (380)
CBILS 8 (1,383) (1,500) (1,500)
Obligations under HP leases (127) - -
Obligations under right of
use lease liabilities (872) (989) (907)
Net Cash/(debt) at end of period 658 1,674 857
-------------------------------------- ------ ------------------- ------------------- ----------------
Notes to the Interim Financial Information
1. Basis of preparation of interim financial information
The interim financial information was approved by the Board of
Directors on 21 September 2022. The financial information set out
in the interim report is unaudited.
The interim financial information has been prepared in
accordance with the AIM Rules for Companies and on a basis
consistent with the accounting policies and methods of computation
as published by the Group in its annual report for the year ended
31 December 2021, which is available on the Group's website.
The Group has chosen not to adopt IAS 34 Interim Financial
Statements in preparing these interim financial statements and
therefore the interim financial information is not in full
compliance with International Financial Reporting Standards as
adopted for use in the European Union.
The financial information set out in this interim report does
not constitute statutory financial statements as defined in section
434 of the Companies Act 2006. The figures for the year ended 31
December 2021 have been extracted from the statutory financial
statements which have been filed with the Registrar of Companies.
The auditor's report on those financial statements was unqualified
and did not contain a statement under sections 498(2) and 498(3) of
the Companies Act 2006.
Going concern and funding
The Directors have considered the available cash resources of
the Group, with the additional secured funding in March 2022 and
the current internal anticipated forecasts the Directors have a
reasonable expectation that the Group have adequate resources. The
Group is expected to continue to generate cash from operations over
the next 12 months as inventory levels reduce and operational
efficiencies improve, therefore providing ample support and
continue in operational existence for the foreseeable future,
considered to be at least 12 months for the date of approval from
the financial statements.
2. Disaggregation of gross margin
The Group has disaggregated margins Six months Six months 12 months
in the following table: ending ending 30 ending
30 June June 2021 31 Dec
2022 2021
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
------------------------------------- --------------- -------------- ----------------
Revenue 5,413 4,218 9,126
Cost of Sales (2,959) (2,431) (5,268)
Underlying Gross Margin 2,454 1,787 3,858
Underlying Gross Margin % 45.34% 42.36% 42.28%
Net Cost of Manufacturing (581) (357) (727)
------------------------------------- --------------- -------------- ----------------
Contribution Margin 1,873 1,430 3,131
------------------------------------- --------------- -------------- ----------------
Contribution Margin % 34.60% 33.90% 34.31%
------------------------------------- --------------- -------------- ----------------
Underlying gross margin (excluding net costs of manufacturing)
is an adjusted KPI measure. Nets costs of Manufacturing are
overheads that have not been effectively absorbed due to reduced
productivity.
Adjusted KPIs are used by the Board to understand underlying
performance and exclude items which distort comparability. The
method of adjustments are consistently applied but are not defined
in International Financial Reporting Standards (IFRS) and,
therefore, are considered to be non-GAAP (Generally Accepted
Accounting Principles) measures. Accordingly, the relevant IFRS
measures are also presented where appropriate.
3. Disaggregation of revenue
The Group has disaggregated revenues in SI Brand Distribution OEM Total
the following table:
Six months ended 30 June 2022 (unaudited) GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------- ------------- ------------- -------- --------------
United Kingdom 679 2,006 676 3,361
Europe 587 - - 587
US 596 - 240 836
APAC 484 - - 484
Rest of World 145 - - 145
------------------------------------------- ------------- ------------- -------- --------------
2,491 2,006 916 5,413
------------------------------------------- ------------- ------------- -------- --------------
SI Brand Distribution OEM Total
Six months ended 30 June 2021 (unaudited) GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------- ------------- ------------- -------- --------------
United Kingdom 582 1,295 408 2,285
Europe 574 - - 574
US 750 - 37 787
APAC 406 - - 406
Rest of World 166 - - 166
------------------------------------------- ------------- ------------- -------- --------------
2,478 1,295 445 4,218
------------------------------------------- ------------- ------------- -------- --------------
SI Brand Distribution OEM Total
Year ended 31 December 2021 (audited) GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------- ------------- ------------- -------- --------------
United Kingdom 1,306 3,116 1,008 5,430
Europe 1,075 - - 1,075
US 1,333 - 189 1,522
APAC 743 - - 743
Rest of World 356 - - 356
--------------------------------------- ------------- ------------- -------- --------------
4,813 3,116 1,197 9,126
--------------------------------------- ------------- ------------- -------- --------------
Revenues are allocated geographically on the basis of where
revenues were received from and not from the ultimate final
destination of use.
4. Finance Costs
Finance costs: Six month Six month 12 months
ended ended 30 ended 31
30 June June Dec
2022 2021 2021
GBP'000 GBP'000 GBP'000
---------- ---------- ----------
On bank borrowings 24 33 74
---------- ---------- ----------
On right-of-use assets 26 30 56
---------- ---------- ----------
On HP leases 2 - -
---------- ---------- ----------
51 63 130
---------- ---------- ----------
5. Tax
Current taxation
During 2021 the Group submitted an enhanced Research and
development claim in respect of 2020 amounting to GBP0.97m this was
paid in the current year.
Deferred taxation
Overall, the Group continues to hold substantial tax losses on
which it holds a cautious view and consequently the Group has
chosen not to recognise those losses fully.
6. Earnings per share
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 June 30 June 31 December
2022 2021 2021
-------------------- ----------- ----------- ------------
Earnings per share
Basic (0.002p) (0.010p) (0.049p)
Diluted (0.002p) (0.010p) (0.049p)
Adjusted 0.004p 0.004p (0.022p)
-------------------- ----------- ----------- ------------
Basic earnings per share is calculated by dividing the earnings
attributable to ordinary shareholders by the weighted average
number of shares in issue. Diluted earnings per share is calculated
by dividing the earnings attributable to ordinary shareholders by
the diluted weighted average number of shares in issue. Adjusted
Earnings per share is calculated by dividing the adjusted earnings
attributable to ordinary shareholders (profit before exceptional
and amortisation and impairment costs relating to the acquisition
of Elemental Healthcare and share based payments) by the weighted
average number of shares in issue.
The anti-dilutive effect of unexercised shares options has not
been taken into account and therefore the diluted earnings per
share is equal to the basic earnings per share.
The Group has one category of dilutive potential ordinary shares
being share options issued to Directors and employees. The impact
of dilutive potential ordinary shares on the calculation of
weighted average number of shares is set out below.
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 June 30 June 31 December
2022 2021 2021
'000s '000s '000s
-------------------------------------- ----------- ----------- -------------------------
Basic earnings per share 932,816 931,573 936,564
Dilutive effect of unexercised share
options 5,049 1,243 2,220
-------------------------------------- ----------- ----------- -------------------------
Diluted earnings per share 937,865 932,816 938,784
-------------------------------------- ----------- ----------- -------------------------
7. IFRS16
Impa ct on the statement of financial position
30 June 2022 30 June 2021 31 December 2021
Assets Liabilities Assets Liabilities Assets Liabilities
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Right of use assets and
lease liabilities 795 872 920 989 833 907
Of which are:
Current lease liabilities 167 156 157
Non-Current lease liabilities 705 833 750
Impact on Equity (77) (69) (74)
------------------------------- -------- ------------ -------- ------------ -------- ------------
Total impact on statement
of financial position 795 795 920 920 833 833
------------------------------- -------- ------------ -------- ------------ -------- ------------
8. Net borrowings
At amortised cost Six month Six month 12 months
ended ended ended 31
30 June 30 June Dec
2022 2021 2021
GBP'000 GBP'000 GBP'000
Cash & cash equivalents 3,040 4,692 3,644
Bank borrowings-Current (352) (2,029) (1,880)
Bank borrowings-Non-current (1,031) - -
Obligations under HP leases-Current (41) - -
Obligations under HP leases-Non-Current (86) - -
Adjusted Net Cash 1,530 2,663 1,764
Right of Use Lease liabilities-Current (167) (156) (157)
Right of Use Lease liabilities Non-current (705) (833) (750)
Net Cash 658 1,674 857
-------------------------------------------- ---------- ---------- ----------
In March 2022, the Group refinanced the existing debt with
Yorkshire bank consisting of the following:
-- Extension to the CBILS of GBP1.5m repayable in May 2026,
Interest rate of 2.94% repayable monthly. Monthly installments are
GBP0.029m.
-- Covenants attached to the CBILS comprise of EBITDA to debt
servicing costs minimum 1.25x. First test 30 June 2022 (last 6
months), then September 22 (9 months), then rolling 12m
afterwards.
-- Additional headroom with an Invoice Discounting facility
GBP1.0m across the Group, to replace loan A and the RCF, 2.5% on
margin with a maximum of nominal administration fee of a maximum of
GBP0.018m if not utilised. As at the date of this announcement this
facility remains undrawn.
9. Financial Instruments
The financial assets of the Group are categorised as
follows:
At amortised cost Six month Six month 12 months
ended ended 30 ended 31
30 June June Dec
2022 2021 2021
GBP'000 GBP'000 GBP'000
---------- ---------- ----------
Trade receivables 1,681 1,200 1,395
---------- ---------- ----------
Cash and cash equivalents 3,040 4,692 3,644
---------- ---------- ----------
4,721 5,892 5,039
---------- ---------- ----------
The financial liabilities of the Group are categorised as
follows:
At amortised cost Six month Six month 12 months
ended ended 30 ended 31
30 June June Dec
2022 2021 2021
GBP'000 GBP'000 GBP'000
---------- ---------- ----------
Trade payables 1,427 1,000 1,090
---------- ---------- ----------
Other payables 280 321 294
---------- ---------- ----------
Deferred creditors - 20 -
---------- ---------- ----------
Lease liabilities - Current 167 156 157
---------- ---------- ----------
Lease liabilities - Non-current 705 833 750
---------- ---------- ----------
Bank borrowings - Current 352 2,029 1,880
---------- ---------- ----------
Bank borrowings - Non-current 1,032 - -
---------- ---------- ----------
Obligations under finance leases-current 41 - -
---------- ---------- ----------
Obligations under finance leases--Non-current 86 - -
---------- ---------- ----------
4,090 4,359 4,171
---------- ---------- ----------
Trade and other payables Six month Six month 12 months
ended ended 30 ended 31
30 June June Dec
2022 2021 2021
GBP'000 GBP'000 GBP'000
---------- ---------- ----------
Trade payables 1,427 1,000 1,090
---------- ---------- ----------
Other tax and social security 238 115 230
---------- ---------- ----------
Corporation tax - - -
---------- ---------- ----------
Other payables 280 321 294
---------- ---------- ----------
Deferred creditors - 20 -
---------- ---------- ----------
1,945 1,456 1,614
---------- ---------- ----------
10. Interim Report
This interim report is available at www.sigroupplc.com .
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
IR BCGDCUUDDGDG
(END) Dow Jones Newswires
September 21, 2022 02:02 ET (06:02 GMT)
Surgical Innovations (LSE:SUN)
Historical Stock Chart
From Jan 2025 to Feb 2025
Surgical Innovations (LSE:SUN)
Historical Stock Chart
From Feb 2024 to Feb 2025
