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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Surgical Innovations Group Plc | LSE:SUN | London | Ordinary Share | GB0004016704 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.50 | 0.40 | 0.60 | 0.50 | 0.50 | 0.50 | 237,044 | 08:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Surgical,med Instr,apparatus | 11.34M | 264k | 0.0003 | 16.67 | 4.66M |
From Apr 2019 to Apr 2024
TIDMSUN
RNS Number : 4727I
Surgical Innovations Group PLC
31 August 2016
Surgical Innovations Group plc
("SI", "the Company", or the "Group")
Interim results for the six months ended 30 June 2016
Surgical Innovations Group plc (AIM: SUN), the designer and manufacturer of innovative medical technology for minimally invasive surgery, reports much improved interim results for the six month period ended 30 June 2016, showing robust growth, a return to profit and a return to a net cash bank position.
Highlights:
-- Healthy export-led revenue growth - up 16.9% to GBP3.04m (2015H1: GBP2.60m) -- Further margin improvements through productivity gains (2016H1: 26.6%, 2015H2: 19.1%)
-- Returned to profitability at operating level (Adjusted EBITDA 2016H1: GBP0.50m, 2015 full year : GBP0.24m)
-- Inventory reduced to within target range (June 2016: GBP1.28m, Dec 2015: GBP1.92m) -- Strong cash generation from operations (2016H1: GBP1.77m, 2015 H1: GBP0.60m)
-- Moved to net cash at bank position (June 2016: GBP0.43m, Dec 2015: Net debt of GBP1.00m)
-- New product development well placed for launch in second half
Executive Chairman, Nigel Rogers, said:
"The rate of revenue growth was pleasing led by strong exports, especially in the US market. Gross margins and profitability were driven up by productivity gains, and cash generation was sufficient to eliminate net bank borrowings by the end of the period.
"Our focus on innovation, productivity, exporting and excellence in products and service continue to deliver improving results and open new opportunities to develop the business. Accordingly we look forward with confidence."
For further information please contact:
Surgical Innovations Group plc www.sigroupplc.com Nigel Rogers, Executive Chairman Tel: 0113 230 7597 Melanie Ross, Group FD & Managing Director, SI Ltd WH Ireland Limited (NOMAD & Broker) Tel: 0113 394 6600 Tim Feather Liam Gribben Walbrook PR (Financial PR & Investor Tel: 020 7933 8780 or si@walbrookpr.com Relations) Paul McManus Mob: 07980 541 893 Natalie Bruce Mob: 07884 666 994
Surgical Innovations Group plc
Chairman's Statement
For the six month period ended 30 June 2016
I am pleased to report that the Company delivered a robust trading performance in the first half of the year, and has started the second half with confidence.
The rate of revenue growth was pleasing led by strong exports, especially in the US market. Gross margins and profitability were driven up by productivity gains, and cash generation was sufficient to eliminate net bank borrowings by the end of the period.
We have sustained our commitment to investment in new product development, with an overall spend equivalent to almost 15% of revenues (before applicable tax relief). This activity has placed the Company well to launch new branded product ranges in the latter part of this year and next, whilst maintaining close links with our key OEM partners, and ensuring the successful transition into Phase II due to a collaboration in the field of Precision Engineering.
Brand identity, innovation and global reach
SI is recognised as a provider of high quality products offering surgeons robust, reliable and ergonomic solutions. Our reputation is built upon meeting or exceeding stringent quality and regulatory standards, and designing and manufacturing devices and instruments that fulfil all of the requirements of a demanding customer base. We have an excellent track record in supporting the development of advanced clinical techniques due to the valued input of our Clinical Advisory Board, led by Prof. Mike McMahon.
Through strong relationships with a loyal distribution base in more than 30 countries, we have a global reach that ensures that more than 70% of SI branded product is exported. We aim to continue to serve the increasing needs of our marketplace through consultation with clinicians, distributors and procurement specialists, and by building on our strong product portfolio and brand recognition.
Financial Overview
Revenue increased by 16.9% to GBP3.04m (2015H1: GBP2.60m), with export sales up by 19.1% to GBP2.18m (2015H1: GBP1.83m) despite sluggish conditions in Continental Europe. Manufacturing output increased at a faster rate, as the programme of inventory reduction initiated in 2014 was brought within target range by the period end. The effects of increased output, coupled with other productivity, efficiency and purchasing gains, was to further improve average gross margins for the period to 26.6% of revenues, compared with 19.1% for the second half of last year.
With other operating expenses continuing to be tightly controlled, EBITDA for the first half of the year (being profit before taking account of interest, depreciation, amortisation and taxation) amounted to GBP0.50m, which compares favourably with an Adjusted EBITDA (also before allowing for exceptional costs) of GBP0.24m for the full year of 2015. There were no exceptional items in the current period. The net operating profit for the period was GBP0.03m (2015 full year: loss of GBP1.97m, after exceptional costs relating to long term debtor provisions, stock provisions, impairment of intangibles and restructuring costs of GBP1.29m).
The net profit and total comprehensive income for the year amounted to GBP0.25m (2015 full year: loss and deficit of GBP2.03m), resulting in net earnings per share of 0.05p (2015 full year: loss of 0.42p).
Inventories at the end of the period stood at GBP1.28m (December 2015: GBP1.92m), which is within the upper limits of our target range for inventory holdings at the current level of activity. This indicates that production output in the second half of the year will increase further to come broadly into line with cost of sales.
Net cash flow from operating activities amounted to GBP1.77m (2015 full year: GBP1.51m), reflecting increased profitability and more efficient use of working capital. At the end of the period, the Group had available cash at bank of GBP0.43m, and was in full compliance with all financial covenants. Total net indebtedness, taking account of convertible loan capital and finance leases outstanding, reduced to GBP0.72m (December 2015: GBP2.26m) and gearing reduced to 17.0% (December 2015: 57.6 %)
Product development
The first phase products for the new YelloPort Elite range are currently awaiting CE approval and are expected to launch in the UK in the third quarter of the year, and across European markets early in 2017. Clinical feedback has been positive with surgeons keen to try the product range in surgery. Further products are well advanced through internal development, and we are evaluating a number of factored products to broaden the portfolio in a shorter timescale.
Through work with our world leading industrial partners, the Company has identified a number of further potential applications for our core retraction know-how in the precision engineering field which are being explored.
Current trading and outlook
Revenues in the second half of the year to date have continued to outperform the corresponding period last year, and indications of customer demand for the remainder of the year are satisfactory. Margins are expected to benefit from recent fluctuations in currency, with the majority of exports priced in local currencies and a cost base primarily priced in Sterling. With net inventory levels now within target range, production output has been progressively increased, which is expected to further improve gross margins and provide scope to counter competitive pressures.
Our focus on innovation, productivity, exporting and excellence in products and service continue to deliver improving results and open new opportunities to develop the business. Accordingly we look forward with confidence.
Nigel Rogers
Executive Chairman
31 August 2016
Unaudited consolidated income statement
for the six months ended 30 June 2016
Hot Features
Premium
Unaudited Unaudited Audited
six months six months Year
ended ended Ended
30 June 30 June 31 December
2016 2015 2015
Notes GBP'000 GBP'000 GBP'000
---------------------------------------- ------ -------------------- ----------- ------------
Revenue 2 3,037 2,597 5,468
Cost of sales (2,228) (2,380) (4,704)
---------------------------------------- ------ -------------------- ----------- ------------
Gross profit 809 217 764
Other operating expenses (775) (2,045) (2,739)
---------------------------------------- ------ -------------------- ----------- ------------
EBITDA * 497 (48) 242
Depreciation and amortisation (463) (486) (927)
Exceptional items - (1,294) (1,290)
---------------------------------------- ------ -------------------- ----------- ------------
Operating profit/(loss) 34 (1,828) (1,975)
Finance costs (92) (80) (153) Finance income - 2 3 ---------------------------------------- ------ -------------------- ----------- ------------ Loss before taxation (58) (1,906) (2,125) Taxation credit 3 304 - 92 ---------------------------------------- ------ -------------------- ----------- ------------ Profit/(Loss) and total comprehensive income for the period attributable to the owners of the parent 246 (1,906) (2,033) ---------------------------------------- ------ -------------------- ----------- ------------ Earnings/(loss) per share Basic 4 0.05p (0.39)p (0.42)p Diluted 4 0.05p (0.39)p (0.42)p ---------------------------------------- ------ -------------------- ----------- ------------
* EBITDA is earnings before interest, depreciation, amortisation and exceptional items.
Unaudited consolidated statement of changes in equity
for the six months ended 30 June 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 2016 4,863 1,641 329 (2,903) 3,930
Issue of shares 17 13 - - 30
Employee share-based payment charge - - - 12 12
------------------------------------- -------- -------- -------- --------- --------
Total - Transaction with owners 4,880 1,654 329 (2,891) 3,972
Profit and total comprehensive
income for the period - - - 246 246
------------------------------------- -------- -------- -------- --------- --------
Unaudited balance as at 30 June
2016 4,880 1,654 329 (2,645) 4,218
------------------------------------- -------- -------- -------- --------- --------
Unaudited consolidated balance sheet
as at 30 June 2016
Unaudited Unaudited Audited
30 June 30 June 31 December
2016 2015 2015
GBP'000 GBP'000 GBP'000
---------------------------------------------- -------------------- -------------------- ------------
Assets
Non-current assets
Property, plant and equipment 1,622 1,949 1,827
Intangible assets 1,357 1,476 1,361
2,979 3,425 3,188
---------------------------------------------- -------------------- -------------------- ------------
Current assets
Inventories 1,282 2,865 1,916
Trade receivables 892 809 1,301
Other current assets 587 319 389
Cash and cash equivalents 2,214 1,457 976
---------------------------------------------- -------------------- -------------------- ------------
4,975 5,450 4,582
---------------------------------------------- -------------------- -------------------- ------------
Total assets 7,954 8,875 7,770
---------------------------------------------- -------------------- -------------------- ------------
Equity and liabilities
Equity attributable to equity holders of the
parent company
Share capital 4,880 4,851 4,863
Share premium account 1,654 1,634 1,641
Capital reserve 329 329 329
Retained earnings (2,645) (2,776) (2,903)
---------------------------------------------- -------------------- -------------------- ------------
Total equity 4,218 4,038 3,930
---------------------------------------------- -------------------- -------------------- ------------
Non-current liabilities
Borrowings 2,788 3,976 2,982
Obligations under finance leases 17 168 62
2,805 4,144 3,044
---------------------------------------------- -------------------- -------------------- ------------
Current liabilities
Trade and other payables 270 157 257
Deferred income - government grant 151 151 151
Obligations under finance leases 128 230 196
Accruals 382 155 192
---------------------------------------------- -------------------- -------------------- ------------
931 693 796
---------------------------------------------- -------------------- -------------------- ------------
Total liabilities 3,736 4,837 3,840
---------------------------------------------- -------------------- -------------------- ------------
Total equity and liabilities 7,954 8,875 7,770
---------------------------------------------- -------------------- -------------------- ------------
Unaudited consolidated cash flow statement
for the six months ended 30 June 2016
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
GBP'000 GBP'000 GBP'000
--------------------------------------------------- ------------------- ----------- ------------
Cash flows from operating activities
Operating profit/(loss) 34 (1,828) (1,975)
Adjustments for:
Exceptional item - 1,331 1,152
Depreciation of property, plant and equipment 258 251 501
Amortisation of intangible assets 205 235 426
Share-based payment charge 12 - -
Grant income (10) (37) (50)
Operating cash flows before movement in working
capital 499 (48) 54
Decrease in inventories 659 953 1,586
Decrease in current receivables 449 437 472
Increase/(decrease) in trade and other payables 215 (686) (538)
--------------------------------------------------- ------------------- ----------- ------------
Cash generated from operations 1,822 656 1,574
Taxation received - - -
Interest paid (48) (58) (68)
--------------------------------------------------- ------------------- ----------- ------------
Net cash generated from operating activities 1,774 598 1,506
--------------------------------------------------- ------------------- ----------- ------------
Cash flows from investing activities
Payments to acquire property, plant and equipment (52) (43) (172)
Acquisition of intangible assets (201) (157) (275)
--------------------------------------------------- ------------------- ----------- ------------
Net cash (used in) investing activities (253) (200) (447) --------------------------------------------------- ------------------- ----------- ------------ Cash flows from financing activities Issue of Loan Notes 2017 - 500 500 Cash received from issue of shares 30 - 19 Cash received from government grant - 37 - Repayment of bank loan (200) - (1,000) Repayment of obligations under finance leases (113) (157) (280) --------------------------------------------------- ------------------- ----------- ------------ Net cash (used in) financing activities (283) 380 (761) --------------------------------------------------- ------------------- ----------- ------------ Net increase in cash and cash equivalents 1,238 779 298 Cash and cash equivalents at beginning of period 976 678 678 --------------------------------------------------- ------------------- ----------- ------------ Net cash and cash equivalents at end of period 2,214 1,457 976 --------------------------------------------------- ------------------- ----------- ------------ Analysis of net borrowings: Cash at bank and in hand 2,214 1,457 976 Bank loan (1,788) (2,976) (1,982) Loan notes 2017 (1,000) (1,000) (1,000) Obligations under finance leases (145) (399) (258) Net borrowings at end of period (719) (2,918) (2,264) --------------------------------------------------- ------------------- ----------- ------------
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 30 August 2016. 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 2015, 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 2015 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.
2. Segmental reporting
Information reported to the Board and for the purpose of assessing performance and making investment decisions is organised into three operating segments. The Group's operating segments under IFRS 8 are as follows:
SI Brand - the research, development, manufacture and distribution of SI branded minimally invasive devices.
OEM - the research, development, manufacture and distribution of minimally invasive devices for third party medical device companies through either own label or co-branding.
PE - (Precision Engineering formerly Industrial.) The research, development, manufacture and sale of precision engineering applications.
The measure of profit or loss for each reportable segment is gross margin less attributable amortisation of product development costs.
Assets and working capital are monitored on a Group basis, with no separate disclosure of asset by segment made in the management accounts, and hence no separate asset disclosure is provided here. The following segmental analysis has been produced to provide reconciliation between the information used by the key decision makers within the business and the information as it is presented under IFRS.
*The segment result calculation has been changed to reflect a more representative apportionment of the allocation of manufacturing overheads.
Six months ended 30 June 2016 (unaudited) SI Brand OEM PE Total
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------ -------- ------- ------- -------
Revenue 2,470 526 41 3,037
------------------------------------------ -------- ------- ------- -------
Result
Segment result* 503 74 27 604
Exceptional items -
Unallocated expenses (570)
------------------------------------------ -------- ------- ------- -------
Operating profit 34
Finance costs (92)
Finance income -
------------------------------------------ -------- ------- ------- -------
Loss before taxation (58)
Tax 304
------------------------------------------ -------- ------- ------- -------
Profit for the period 246
------------------------------------------ -------- ------- ------- -------
Included within the segment/operating results are the following significant non-cash items:
SI Brand OEM PE Total
Six months ended 30 June 2016 (unaudited) GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------ -------- ------- ------- -------
Amortisation of intangible assets 142 63 - 205
------------------------------------------ -------- ------- ------- -------
Six months ended 30 June 2015 (unaudited) SI Brand OEM PE Total
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------ -------- ------- ------- -------
Revenue 2,119 478 - 2,597
------------------------------------------ -------- ------- ------- -------
Result
Segment result* (63) 45 - (18)
Exceptional items (1,294)
Unallocated expenses (516)
------------------------------------------ -------- ------- ------- -------
Operating loss (1,828)
Finance costs (80)
Finance income 2
------------------------------------------ -------- ------- ------- -------
Loss before taxation (1,906)
Tax -
------------------------------------------ -------- ------- ------- -------
Loss for the period (1,906)
------------------------------------------ -------- ------- ------- -------
Included within the segment/operating results are the following significant non-cash items:
SI Brand OEM PE Total
Six months ended 30 June 2015 (unaudited) GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------ -------- ------- ------- -------
Amortisation of intangible assets 155 81 - 235
------------------------------------------ -------- ------- ------- -------
Year ended 31 December 2015 (audited) SI Brand OEM PE Total
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------- ---------- ---------- --------- -----------
Revenue 4,175 1,243 50 5,468
-------------------------------------- ---------- ---------- --------- -----------
Result
Segment result* 282 6 50 338
Unallocated expenses (2,313)
-------------------------------------- ---------- ---------- --------- -----------
Operating loss (1,975)
Finance income 3
Finance costs (153)
-------------------------------------- ---------- ---------- --------- -----------
Loss before taxation (2,125)
Tax 92
-------------------------------------- ---------- ---------- --------- ----------- Loss for the period (2,033) -------------------------------------- ---------- ---------- --------- -----------
Included within the segment/operating results are the following significant non-cash items:
SI Brand OEM Industrial Total
Year ended 31 December 2015 (audited) GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------- ---------- -------- ---------- -----------
Amortisation of intangible assets 282 144 - 426
-------------------------------------- ---------- -------- ---------- -----------
Unallocated expenses include those costs that cannot be split between segments and which are not separately analysed in the management accounts including concept department, sales and marketing, and head office overheads.
Geographical analysis
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
GBP'000 GBP'000 GBP'000
---------------- ----------- ----------- ------------
United Kingdom 863 771 1,922
Europe 663 680 1,286
US 1,031 758 1,539
Rest of World 480 388 721
---------------- ----------- ----------- ------------
3,037 2,597 5,468
---------------- ----------- ----------- ------------
Revenues are allocated geographically on the basis of where revenues were received from and not from the ultimate final destination of use.
3. Taxation
Current Tax
During 2015 the Group submitted enhanced Research and Development claims in respect of 2014 and elected to exchange tax losses for a cash refund of GBP304,000 which was received in August 2016.
Deferred Tax
At the balance sheet date, the Group has unused tax losses of GBP21.7 million (year ending 31 December 2015: GBP21.5 million) available for offset against certain future profits. The recoverability of the deferred tax asset is dependent on future taxable profits in excess of those arising from the reversal of deferred tax liabilities. The recognition of the deferred tax assets is based upon the estimate of future availability of suitable profits. Certain deferred tax assets and liabilities have been offset.
4. Earnings per share
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
----------------------------- ----------- ----------- ------------
Earnings per share
Basic 0.05p (0.39)p (0.42)p
Diluted 0.05p (0.39)p (0.42)p
Adjusted earnings per share
Basic (0.01)p (0.13)p (0.17)p
Diluted (0.01)p (0.13)p (0.17)p
----------------------------- ----------- ----------- ------------
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 adjusted earnings attributable to ordinary shareholders as set out below by the weighted average number of shares in issue.
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
2016 2015 2015
'000s '000s '000s
--------------------------------------------- ----------- ----------- ------------
Weighted average number of ordinary
shares 486,539 485,064 485,071
Dilutive effect of share options in 1,294 - -
issue
--------------------------------------------- ----------- ----------- ------------
Diluted weighted average number of ordinary
shares 487,833 485,064 485,071
--------------------------------------------- ----------- ----------- ------------
Earnings attributable to ordinary shareholders used in the calculation of basic and diluted earnings per share together with a reconciliation to adjusted earnings attributable to ordinary shareholders is as follows:
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
GBP'000 GBP'000 GBP'000
------------------------------ ----------- ----------- ------------
Loss before taxation (58) (1,906) (2,125)
Exceptional items - 1,294 1,290
Adjusted loss for the period (58) (612) (835)
------------------------------ ----------- ----------- ------------
Adjusted earnings per share has been calculated so as to exclude the impact of exceptional items and a one-off deferred tax adjustment in prior periods which are one-off in nature and thus have a distortive impact on the ordinary calculation of earnings per share.
5. Related Party Transaction
Getz Bros and Co (BVI) Inc. ("Getz") is a substantial shareholder of Surgical Innovations Group plc. Getz is the ultimate beneficial owner of Asia Cardiovascular Products Limited ("ACP").
ACP acts as the master distributor for SI in the Far East. During the six months ended 30 June 2016, SI invoiced ACP GBP125,000 for products and as at 30 June 2016 there was an amount owing to the Group of GBP34,000.
As previously advised in the annual report for 2015, Getz subscribed for GBP500,000 of loan note funding during November 2014 and March 2015.
The principal amount of the loan notes, together with accrued interest, is due for repayment on 17 November 2017. The interest accruing on the loan notes was 3% per annum until 17 November 2015 and 7.5% per annum thereafter.
6. Interim Report
This interim report is available at www.sigroupplc.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR BLGDIGSXBGLG
(END) Dow Jones Newswires
August 31, 2016 02:00 ET (06:00 GMT)
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