Surgical Innovations Group PLC Final Results (3320Z)

TIDMSUN

RNS Number : 3320Z

Surgical Innovations Group PLC

14 March 2017

Surgical Innovations Group plc

("SI", "the Company" or the "Group")

Final results for the year ended 31 December 2016

Surgical Innovations Group plc (AIM: SUN), the designer and manufacturer of innovative medical technology for minimally invasive surgery, reports strong results for the year ended 31 December 2016. In a breakout year for the Group, results were ahead of market expectations and the balance sheet moved to a healthy net cash position with ample unutilised banking facilities.

Highlights:

   --     Healthy export-led revenue growth - up 11% to GBP6.09m (2015: GBP5.47m) 
   --     Gross margins restored to within target range to 33.8% (2015: 14.0 %) 
   --     Adjusted EBITDA of GBP1.41m (2015: GBP0.24m) 
   --     Operating profit of GBP0.47m (2015: operating loss of GBP1.98m) at operating margin of 7.7% 
   --     Profit before tax of GBP0.28m (2015: loss of GBP2.13m) 
   --     Earnings per share of 0.15 pence (2015: loss per share of 0.42 pence) 
   --     Strong cash generation from operating activities of GBP2.85m (2015: GBP1.51m) 
   --     GBP1m loan notes converted to equity in December 2016 
   --     Moved to net cash position of GBP0.72m (2015: net debt of GBP2.26m) 

-- New products in pipeline for 2017, including those acquired through Surgical Dynamics in Nov 2016

Executive Chairman, Nigel Rogers, said: "Management have now demonstrated a track record of financial success, and built a robust platform for future development of the business.

"Recent regulatory changes have increased barriers for new market entrants, and strengthened the market position of those with the skills and experience to meet more stringent requirements.

"Our core market in laparoscopic surgery is not completely immune from the effects of economic uncertainty, but health spending in this area in the UK and other developed markets is forecast to continue to grow ahead of inflation. We aim to outperform the sector as a whole by increasing market penetration through opening new territories and introducing additional products and ranges, both organically and through additional partnerships and carefully selected acquisition activity."

This announcement includes inside information as defined in Article 7 of the Market Abuse Regulation No.596/2014 and is disclosed in accordance with the Company's obligations under Article 17 of those Regulations.

For further information please contact:

 
 Surgical Innovations Group plc                              www.sigroupplc.com 
 Nigel Rogers, Executive Chairman                            Tel: [phone] 
 Melanie Ross, COO & CFO 
 
 WH Ireland Limited (NOMAD & Broker)                         Tel: [phone] 
 Tim Feather 
 
 Walbrook PR (Financial PR & Investor   Tel: [phone] or [e-mail] 
  Relations) 
 Paul McManus                                                Mob: [phone] 
 Lianne Cawthorne                                            Mob: [phone] 
 

Chairman's Statement

The Group is pleased to report strong results in 2016, with profitability ahead of market year-end expectations. The Group returned to profitability at the pre-tax level and increased cash generation, resulting in a positive cash position at the year-end.

Robust top line growth has been achieved by leveraging the strong relationships with distributors, as well as fostering associations in new territories. Gross margins improved considerably in the year, following a strong second half in 2015. This resulted from a return to normal manufacturing output as stock levels regularised. Cost control has been a key focus, enabling the business to deliver improved profitability and cash generation during the year.

In the final quarter of the year, the bank debt put in place at the end of 2014 was repaid. This was considerably earlier than the November 2017 due date. The loan note holders also converted the notes into shares during this period. The strong cash generation of the Group meant that the business closed the financial year with net cash of GBP0.72m (2015: net debt of GBP2.26m).

Brand identity, innovation and global reach

The SI Brand was further enhanced in the year by the much-anticipated launch of the Yelloport(TM) Elite range, a new port access system utilising universal seal technology giving significantly improved performance for surgeons and theatre staff. The Group remains focused on innovation and development of its portfolio of products, brand recognition and the identification of as yet unmet clinical needs in order to drive the product roadmap effectively.

The distribution network has continued to expand in 2016 with the addition of five new territories. There are more potential distributors in the pipeline who are currently going through the required regulatory and compliance processes in order to join our distribution network in the coming year.

Financial Overview

Revenue increased by 11% to GBP6.09m (2015: GBP5.47m), with growth in branded product sales up by 11% to GBP4.66m (2015: GBP4.18m) and Precision Engineering also generating significantly increased activity with revenue of GBP0.21m (2015: GBP0.05m). Reported gross margins have continued to show substantial improvement as a result of operational gearing and foreign exchange gains.

Adjusted EBITDA for the full year (being profit before taking account of exceptional costs, interest, depreciation, amortisation and taxation) amounted to GBP1.41m, showing strong growth against GBP0.24m in 2015. The net operating profit for the year was GBP0.47m (2015: loss of GBP1.98m). There were no exceptional costs in the year (2015: GBP1.29m). The net profit and total comprehensive income for the year amounted to GBP0.72m (2015: loss of GBP2.03m), after a taxation credit of GBP0.44m (2015: GBP0.09m), resulting in earnings per share of 0.15p (2015: loss of 0.42p).

At the end of the year, the Group had returned to a positive cash position of GBP0.72m (2015: net indebtedness of GBP2.26m). The Group had available cash resources of GBP0.78m with additional headroom of GBP1.3m of unused facilities, and was in compliance with all financial covenants.

People

SI has continued to invest in our people and their training. Amongst other initiatives we have undertaken in 2016 is a year-long programme of lean manufacturing training for all employees which is already delivering improvements throughout the business. Employee numbers have increased, predominantly strengthening manufacturing, assembly and production engineering which all reflect the increased manufacturing output.

Current trading and outlook

Trading results for the first two months of the current year have shown further increases in revenue and profitability compared with the corresponding period last year.

The overall market for minimally invasive surgical products is cost competitive, however it is also forecast to grow at an annual rate of 6.5% in the medium term. We continue to seek opportunities to exceed this rate of revenue growth by increased market share through product range development, high levels of customer service and opening new sales territories.

We also continue to evaluate further opportunities to enhance our product range and market penetration by forging strategic partnerships, including potential acquisition of carefully selected complementary businesses.

Nigel Rogers

Executive Chairman

14 March 2017

Surgical Innovations Group plc

Strategic Report

Whilst the Group's core strategy remains the sale of branded laparoscopic instrumentation, we have recently seen a shift away from the sole development and manufacture of these devices in-house and reached out to selected partners who have demonstrated the ability to work with SI to offer novel solutions in areas of instrumentation where SI has not traditionally operated. One of the first products to come out of this new direction was launched in early 2017. This has enabled SI to begin offering a range of ligation products to complement the existing product portfolio. We are conscious of the fact that the reputation of the Group is built upon our ability to offer surgeons instruments of high quality at reasonable prices. We are now in an era when there is increasing pressure on the costs of healthcare leading to ever more careful scrutiny of prices by purchasing authorities worldwide. Our strategy is to concentrate on the development or acquisition of instruments that surgeons tell us that they need and to introduce efficiency and innovation into the manufacturing process to enable us to provide them at competitive prices.

In November 2016, the Group completed the acquisition of the laparoscopic instruments business and related assets of Surgical Dynamics Limited. This transaction brought not only new products to the SI portfolio but also specialist production processes including metal injection moulding of device components. The assets have now been transferred into the SI site and machining trials are underway.

The Group has continued to foster excellent relationships with our distribution network, engaging our partners through involvement in product development, supporting them in end user trials and gathering with them at several conferences and exhibitions throughout the year. This included a new product launch conference at the Medica trade show in Germany in the last quarter of the 2016 which garnered strong positive feedback on both the new products emerging from SI as well as our performance as a partner. The Group recognises the value in this feedback and relationship and will continue to exceed our customers' expectations in 2017.

The Group continues to work closely with strategic partnerships on OEM projects which challenge our Design and Development teams and complement the core competencies that the Group demonstrates.

The greater emphasis placed on new product introduction culminated in the launch of the Yelloport (TM) Elite range in the final quarter of 2016, this will be followed by further additions to this range in Q2 2017 as well as two more projects launching before the end of H1. The Group is excited to be able to offer these products to the market and remains committed to expanding the portfolio of products available further in 2017 and beyond.

The Group has continued to deliver against a backdrop of a challenging economic climate, but by offering consistently high customer service levels, excellent products and being adaptable in the face of market and customer feedback, the Board believes the business is well placed to continue to deliver value to the shareholder base.

Operating and Financial Review

Revenues

Group revenues increased by 11% to GBP6.09m (2015: GBP5.47m) demonstrating the ongoing focus of the organisation in improving and expanding its distributor relationships.

 
 
    GBPm       2016    2015    % change 
-----------  ------  ------  ---------- 
  SI Brand     4.66    4.18        +11% 
  OEM          1.22    1.24         -2% 
  PE           0.21    0.05       +320% 
-----------  ------  ------  ---------- 
  Total        6.09    5.47        +11% 
-----------  ------  ------  ---------- 
 

SI Brand

SI Brand sales rose by 11% to GBP4.66m (2015: GBP4.18m) with the strongest growth areas being sales to the US and Rest of the World.

Strong growth in the US has come both from the success of the additional distributor engaged at the beginning of the fiscal year, the continued efforts of the incumbent distributor and from gains in exchange as the US dollar moved more favorably against the Sterling.

OEM

OEM sales remained broadly in line with the prior year at GBP1.22m (2015: GBP1.24m). Although underlying sales from continuing relationships continue to grow strongly, these were offset by agreements which ended by mutual consent in 2015 and were not repeated in 2016. Although impacting the overall turnover of the OEM business negatively in the period, the conclusion of these agreements delivered a margin uplift as the non-repeated sales were low or no margin business.

Precision Engineering (PE)

The Group undertook further PE projects in the period adding GBP0.21m to turnover (2015: GBP0.05m). Revenue from this segment is unpredictable, but the Group remains interested in this field and continues to work with new and existing partners to identify innovative projects on which to collaborate.

Gross margin

Gross margin improved significantly, reaching 33.8% (2015: 14.0%) overall in the year, but delivering 41% in the second half, demonstrating that the production was more in line with demand as the stock levels normalised somewhat in comparison to the over stocking in prior years.

Operating expenses

Excluding exceptional items in the prior year, operating expenses increased to GBP1.59m (2015: GBP1.45m), resulting from an increase in headcount and annual performance related bonus costs.

Adjusted EBITDA and operating profit

The adjusted EBITDA is a key performance measure of the business. The Group uses this as a proxy for understanding the underlying performance of the Group. This measure also excludes the items that distort comparability.

The Group achieved a positive adjusted EBITDA of GBP1.41m for 2016, against a comparable adjusted EBITDA (before exceptional items) of GBP0.24m in 2015. Operating profit for the year was GBP0.47m (2015: loss of GBP1.98m), reflecting the trade of the Group and there were no exceptional items in the year (2015: GBP1.29m).

Finance costs

Interest on bank and finance lease obligations for 2016 resulted in interest payable of GBP0.19m (2015: GBP0.15m). Due to the payback of the loan and the conversion of the loan notes in the final quarter of 2016, the finance costs going forward will be much reduced.

Taxation

The Group recorded a corporation tax credit of GBP0.44m (2015: GBP0.09m) and a deferred tax credit of GBPnil (2015: GBPnil). In overall terms the Group has substantial tax losses on which it continues to take a cautious view. Consequently the losses have not been recognised and result in an overall effective rate of tax of 157.7% credit (2015: 4.3% credit). During 2016 the Group submitted enhanced Research and Development claims in respect of 2014 and 2015, electing to exchange tax losses for cash refunds totaling GBP0.44m which were received in June and December 2016.

Intangible and tangible assets

Capitalised development costs at 31 December 2016 increased slightly to GBP1.47m (2015: GBP1.36m) reflecting the focus placed on new product development, whilst controlling those costs appropriately. Research and development expenditure continues to be incurred, and a portion has been capitalised in respect of specifically identifiable products amounting to GBP0.44m (2015: GBP0.27m). These products are due for launch in the current year.

Capital expenditure on tangible assets continued to reflect a policy of required replacement only during the year at GBP0.16m (2015: GBP0.17m) and there are no major capex plans currently under consideration.

In addition during the period the Group acquired certain trade and assets of Surgical Dynamics Limited for GBP0.36m, which included intangible assets of GBP0.23m being recognised.

Working capital

Working capital further reduced by GBP0.97m to GBP2.04m (2015: GBP3.01m). The continued focus on cash and rebalancing the business drove the stock reduction by a further 22% to GBP1.50m (2015: GBP1.92m), whilst current trade receivables reduced to GBP1.10m (2015: GBP1.30m), despite 11% growth in turnover. Trade creditors reduced to GBP0.34m (2015: GBP0.41m) as the business focused on reducing costs and harnessing its increased buying power to negotiate better terms as manufacturing activity increased. This is expected to increase in 2017 in line with the rise in spending on materials to support increased manufacturing activity as new products are brought online and additional stock holding is required, though not to the levels seen in previous years.

Cash flow, financing and net debt

The Group generated cash from operations of GBP2.40m (2015: GBP1.58m) primarily as a result of the working capital movements described above. Cash used in investment was GBP0.78m (2015: GBP0.45m) resulting in a cash inflow before financing of GBP2.00m (2015: GBP1.06m).

This inflow was utilised by the business to facilitate early repayment of the term loan put in place in 2014. This loan was originally due for repayment in November 2017, but the business was in a position to repay this debt early and so in conjunction with the bank, transitioned to a rolling credit facility of GBP1.30m to be drawn down as the business requires. None of this facility had been drawn down by the year-end.

At 31 December 2016, total gross indebtedness was GBP0.05m (2015: GBP3.24m) and the Company had available cash resources of GBP0.78m (2015: GBP0.98m).

Going concern

The Directors have prepared forecasts for the period to March 2018, which demonstrate a positive cashflow. The Group have access to banking facilities, which comprise of a committed GBP1.30m revolving credit facility. Hire purchase agreements are utilised where required. The commitment of the revolving credit facility of GBP1.30m may be used towards meeting the Group's general working capital and other commitments. It is subject to compliance with financial covenants which measure the ratio of cashflow to debt service and EBITDA starting quarterly from December 2016.

Based on the forecasts, the Board has a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. The Board has also concluded that there are no material uncertainties and that the going concern basis should be adopted in preparing these financial statements.

Melanie Ross

Chief Finance Officer

14 March 2017

 
Consolidated statement of comprehensive income 
 for the year ended 31 December 2016 
                                                                       2016                 2015 
                                                           Notes          GBP'000           GBP'000 
------------------------------------------------  --------------  ---------------  ---------------- 
Revenue                                                        2       6,089            5,468 
Cost of sales                                                        (4,029)          (4,704) 
================================================  ==============  ===============  ================ 
Gross profit                                                           2,060             764 
Other operating expenses                                    3 33      (1,591)        (2,739) 
Adjusted EBITDA                                                         1,408             242 
Exceptional items                                                             -       (1,290) 
Amortisation of intangible assets                                       (429)            (426) 
Depreciation of tangible assets                                         (510)            (501) 
------------------------------------------------  --------------  ---------------  ---------------- 
Operating profit/(loss)                                        3         469          (1,975) 
Finance costs                                                  5        (192)            (153) 
Finance income                                                 6            1                3 
================================================  ==============  ===============  ================ 
Profit/(loss) before taxation                                            278          (2,125) 
Taxation credit                                                7          438               92 
================================================  ==============  ===============  ================ 

Profit/(loss) and total comprehensive deficit                            716          (2,033) 
================================================  ==============  ===============  ================ 
 
  Profit/(loss) per share, total and continuing 
Basic                                                          8      0.15p           (0.42)p 
Diluted                                                        8      0.14p           (0.42)p 
================================================  ==============  ===============  ================ 
 
  The Consolidated statement of comprehensive income above relates to 
  continuing operations. 
 
 

Adjusted EBITDA is defined as earnings before interest, taxation, depreciation, amortisation and exceptional items.

Consolidated statement of changes in equity

for the year ended 31 December 2016

 
                                          Share    Share  Capital    Retained 
                                        capital  premium  reserve    earnings          Total 
                                        GBP'000  GBP'000  GBP'000     GBP'000        GBP'000 
--------------------------------------  -------  -------  -------  ----------  ------------- 
Balance as at 1 January 2015              4,851    1,634      329       (695)          6,119 
Employee share-based payment options          -        -        -       (175)          (175) 
Equity placing for cash proceeds             12        7        -           -             19 
                                                 -------  -------  ----------  ------------- 
Total - transactions with owners             12        7        -       (175)          (156) 
Loss and total comprehensive income 
 for the period                               -        -        -     (2,033)        (2,033) 
--------------------------------------  -------  -------  -------  ----------  ------------- 
Balance as at 31 December 2015            4,863    1,641      329     (2,903)          3,930 
Employee share-based payment                  -        -        -          23             23 
Equity issues                               471      698        -           -          1,169 
--------------------------------------  -------  -------  -------  ----------  ------------- 
Total - transactions with owners            471      698        -          23         1,192 
Profit and total comprehensive income 
 for the period                               -        -        -         716            716 
--------------------------------------  -------  -------  -------  ----------  ------------- 
Balance as at 31 December 2016            5,334    2,339      329     (2,164)          5,838 
--------------------------------------  -------  -------  -------  ----------  ------------- 
 
 
Consolidated balance sheet 
 at 31 December 2016 
 
                                                            2016         2015 
                                                         GBP'000      GBP'000 
====================================================  ==========  =========== 
Assets 
Non-current assets 
Property, plant and equipment                              1,579        1,827 
Intangible assets                                          1,597        1,361 
                                                           3,176        3,188 
====================================================  ==========  =========== 
Current assets 
Inventories                                                1,496        1,916 
Trade receivables                                          1,098        1,301 
Other current assets                                         289          389 
Cash at bank and in hand                                     775          976 
====================================================  ==========  =========== 
                                                           3,658        4,582 
====================================================  ==========  =========== 
Total assets                                               6,834        7,770 
====================================================  ==========  =========== 
Equity and liabilities 
Equity attributable to equity holders of the parent 
 company 
Share capital                                              5,334        4,863 
Share premium account                                      2,339        1,641 
Capital reserve                                              329          329 
Retained earnings                                        (2,164)      (2,903) 
====================================================  ==========  =========== 
Total equity                                               5,838        3,930 
====================================================  ==========  =========== 
Non-current liabilities 
Borrowings                                                     -        2,982 
Obligations under finance leases                               8           62 
Deferred tax liabilities                                       -          - - 
====================================================  ==========  =========== 
                                                               8        3,044 
====================================================  ==========  =========== 
Current liabilities 
Trade and other payables                                     337          408 
Obligations under finance leases                              45          196 
Accruals                                                     606          192 
====================================================  ==========  =========== 
                                                             988          796 
====================================================  ==========  =========== 
Total liabilities                                            996        3,840 
====================================================  ==========  =========== 
Total equity and liabilities                               6,834        7,770 
====================================================  ==========  =========== 
 

Consolidated cash flow statement

for the year ended 31 December 2016

 
                                            2016     2015 
                                         GBP'000  GBP'000 
---------------------------------------  -------  ------- 
Cash flows from operating activities 
Operating profit/(loss)                      469  (1,975) 
Adjustments for: 
Non-cash exceptional items                     -    1,152 
Depreciation of property, plant and 
 equipment                                   510      501 
Amortisation of intangible assets            429      426 
Share-based payment charge                    23        - 
Grant income                                (10)     (50) 
Foreign exchange                              65        6 
Decrease in inventories                      797    1,586 
Decrease in current receivables              178      472 
Decrease in payables                        (61)    (538) 
---------------------------------------  -------  ------- 
Cash generated from operations             2,400    1,580 
Taxation received                            531        - 
Interest paid                               (86)     (68) 
---------------------------------------  -------  ------- 
Net cash generated from operating 
 activities                                2,845    1,512 
---------------------------------------  -------  ------- 
 
  Cash flows from investing activities 
Payments to acquire property, plant 
 and equipment                             (161)    (172) 
Acquisition of intangible assets           (440)    (275) 
Acquisition of Surgical Dynamics 
 assets and laparoscopic business          (182)        - 
---------------------------------------  -------  ------- 
Net cash used in investment activities     (783)    (447) 
Conversion of Loan Notes 2017                  -      500 
Repayment of bank loan                   (2,000)  (1,000) 
Cash received from issue of shares             -       19 
Repayment of obligations under finance 
 leases                                    (198)    (280) 
---------------------------------------  -------  ------- 
Net cash used in financing activities    (2,198)    (761) 
---------------------------------------  -------  ------- 
Net (decrease) / increase in cash 
 and cash equivalents                      (136)      304 
Cash and cash equivalents at beginning 
 of year                                     976      678 
Effective exchange rate fluctuations 
 on cash held                               (65)      (6) 
---------------------------------------  -------  ------- 
Cash and cash equivalents at end 
 of year                                     775      976 
=======================================  =======  ======= 
 

Notes to the consolidated financial statements

1. Group accounting policies under IFRS

Basis of preparation

The audited financial statements have been prepared on the basis of the IFRS accounting policies set out herein. The financial statements have been prepared in accordance with IFRS as adopted for use by the European Union, including IFRIC interpretations, and in line with those provisions of the Companies Act 2006 applicable to companies reporting under IFRS. The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. The financial statements have been prepared under the historical cost convention, are presented in Sterling and are rounded to the nearest thousand.

The Directors have considered the available cash resources of the Group and its current forecasts and are satisfied that the Group has adequate resources to continue in operational existence and that there are no material uncertainties casting doubt over the going concern status of the Group. Accordingly, the financial statements are prepared on a going concern basis.

The following Adopted IFRSs have been issued but have not been applied by the Group in these financial statements. Their adoption is not expected to have a material effect on the financial statements:

   --              IFRS 9 Financial Instruments (effective date 1 January 2018). 
   --              IFRS 15 Revenue from Contract with Customers (effective date 1 January 2018). 
   --              IFRS 16 Leases (effective date 1 January 2019). 

The financial information set out in this preliminary announcement does not constitute the Company's Consolidated Financial Statements for the financial years ended 31 December 2016 or 31 December 2015 but are derived from those Financial Statements. Statutory Financial Statements for 2015 have been delivered to the Registrar of Companies and those for 2016 will be delivered following the company's AGM. The auditors, KPMG LLP, have reported on those financial statements. Their reports were unqualified, did not draw attention to any matters by way of emphasis without qualifying their report and did not contain statements under Section 498(2) or (3) of the Companies Act 2006 in respect of the financial statements for 2015 or 2016.

The Statutory accounts will be available on the Company's website at www.siggroupplc.com with effect from 14 March 2017 and will be posted to selected shareholders at the end of April. Shareholders wishing to request a copy can contact the Company's registered office.

2. Segmental Reporting

Geographical analysis of revenues

 
                    2016     2015 
                 GBP'000  GBP'000 
---------------  -------  ------- 
United Kingdom     1,920    1,922 
Europe             1,287    1,286 
US                 1,876    1,539 
Rest of World      1,006      721 
---------------  -------  ------- 
                   6,089    5,468 
---------------  -------  ------- 
 

Revenues are allocated geographically on the basis of where revenues were received from and not from the ultimate final

destination of use. During 2016 GBP1,235,000 (20.3%) of the Group's revenue depended on one distributor in the SI Brand segment (2015: GBP1,140,000 (20.8%)).

Sales of goods during 2016 were GBP5,883,000 and sales relating to services in the UK were GBP206,000.

3. Earnings per ordinary share

Basic earnings per ordinary share

The calculation of basic earnings per ordinary share for the year ended 31 December 2016 was based upon the profit attributable to ordinary shareholders of GBP716,000 (2015: loss of GBP2,033,000) and a weighted average number of ordinary shares outstanding for the year ended 31 December 2016 of 487,924,227 (2015: 485,070,920).

Diluted earnings per ordinary share

The calculation of diluted earnings per ordinary share for the year ended 31 December 2016 was based upon the profit attributable to ordinary shareholders of GBP716,000 (2015: loss of GBP2,033,000) and a weighted average number of ordinary shares outstanding for the year ended 31 December 2016 of 494,001,073 (2015: 485,070,920).

 
  No. of shares used in calculation of earnings                    2016                         2015 
   per ordinary share ('000s)                             No. of Shares                No. of Shares 
Basic earnings per share                                        487,924                      485,071 
Dilutive effect of unexercised share options                      6,077                            - 
================================================  =====================  =========================== 
Diluted earnings per share                                      494,001                      485,071 
================================================  =====================  =========================== 
 

4. Net cash/borrowings

 
                                       2016      2015 
                                    GBP'000   GBP'000 
---------------------------------  --------  -------- 
 Total borrowings                        53     3,240 
 Less: cash and cash equivalents      (775)     (976) 
---------------------------------  --------  -------- 
 Net (cash)/debt                      (722)     2,264 
 Total equity                         5,838     3,930 
---------------------------------  --------  -------- 
 Total capital                        5,116     6,194 
---------------------------------  --------  -------- 
 

Bank loan

The sterling bank loan provided by Yorkshire Bank on 17 November 2014, which was due to be repaid November 2017 was subject to quarterly payments of GBP0.1m, totaling GBP0.3m in the year. On the 22 December 2016 the remaining balance of the term loan of GBP1.70m was repaid from available cash resources, and the bank has made available a Revolving Credit Facility (RCF) of up to GBP1.30m for working capital and other purposes until 31 March 2020.

The RCF is subject to compliance with financial covenants which measure cash flow to debt service and EBITDA. If the bank loan is drawdown the rate of interest applicable to each loan for its interest period will be LIBOR plus 2.8% per annum and it will be secured by a fixed and floating charge over the assets of the Group. At the 31 December 2016, no amount was drawndown.

Loan notes 2017

On the 21 December 2016 all of the outstanding unsecured fixed rate convertible loan notes ("Loan Notes") amounting to GBP1.00m, together with accrued interest of GBP0.11m were converted into 44,259,178 ordinary shares of 1p each at a conversion price of 2.5p per share. The Loan Notes were originally created on 17 November 2014 and were repayable on 17 November 2017 unless converted into equity at an earlier date.

This information is provided by RNS

The company news service from the London Stock Exchange

END

FR SFFFUDFWSEDD

(END) Dow Jones Newswires

March 14, 2017 03:00 ET (07:00 GMT)