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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 | 0.00 | 01:00:00 |
| 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 : 3234A
Surgical Innovations Group PLC
11 September 2018
Surgical Innovations Group plc
("SI" or the "Group")
Half-year Report
Interim results for the six months ended 30 June 2018
Surgical Innovations Group plc (AIM: SUN), the designer, manufacturer and distributor of innovative medical technology for minimally invasive surgery, reports financial results for the six month period ended 30 June 2018. The Group has delivered growth in revenues and profit in the first half of the year despite some significant headwinds in the market and regulatory environment, primarily due to the acquisition of Elemental Healthcare in August 2017.
The Group has continued to broaden its product base by investing in product innovation, and by entering into both new and extended distribution agreements. Cash flow from trading has been enhanced by significant reductions in inventory, enabling the repayment of net debt by the end of the period.
Financial highlights:
-- Revenues up 52.4% to GBP5.28m (2017H1: GBP3.47m), primarily due to the acquisition of Elemental Healthcare
-- Adjusted EBITDA* up 13.3% to GBP0.94m (2017H1: GBP0.83m) -- Adjusted operating profit* up 35.5% to GBP0.42m (2017H1: GBP0.31m)
-- Reported PBT (after acquisition related amortisation costs and share based payment charges) of GBP0.09m
-- Adjusted earnings per share of 0.05p (2017H1: 0.06p) -- Net cash at end of period of GBP0.02m (31 Dec 2017: net debt GBP0.73m)
* Adjusted EBITDA and Adjusted operating profit are stated before deducting amortisation of intangible acquisition costs of GBP0.22m (2017H1: GBPnil) and share based payment costs of GBP0.06m (2017H1: GBPnil).
Executive Chairman of SI, Nigel Rogers, said: "The Group has emerged from a challenging period with improved financial results, a strong balance sheet, and net indebtedness incurred in the Elemental acquisition last year fully eliminated. We have implemented measures to strengthen important distribution relationships, and support the development of our international business through an expanded core range of branded products and a competitive pricing model. This is supplemented by close partnerships with our key OEM customers, who are well positioned to generate further growth.
"Our UK distribution business continues to fulfil a vital role in the direct sale of branded products in our home market, and is also building a valuable portfolio of specialised products that offer substantial advantages to surgeons, healthcare professionals and patients. The ability to obtain detailed first-hand knowledge of the reception of our product ranges from a large cohort of surgeons, who offer suggestions for improvements to existing products and ideas for innovation, is proving to be a valuable asset.
"With these initiatives in process, we continue to look forward to the second half of the year and beyond with confidence."
For further information please contact:
Surgical Innovations Group plc www.sigroupplc.com Nigel Rogers, Executive Chairman Tel: 0113 230 7597 Melanie Ross, COO&CFO WH Ireland Limited (NOMAD & Broker) Tel: 0113 394 6600 Tim Feather Chris Viggor Walbrook PR (Financial PR & Investor Tel: 020 7933 8780 or si@walbrookpr.com Relations) Paul McManus Mob: 07980 541 893 Lianne Cawthorne Mob: 07584 391303
Notes for editors:
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 re-usable, 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, and have also collaborated with a major UK 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 two sites in the UK. Product design, engineering and manufacturing are carried out at the SI site in Yorkshire. Commercial activities including marketing, UK distribution and international sales and marketing are based at Elemental Healthcare in Berkshire.
Elemental Healthcare was acquired by the Group on 1 August 2017, providing direct sales representation in the UK home market and a range of distribution products.
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 2018
I am pleased to report that the Group has delivered growth in revenues and profit in the first half of the year despite some significant headwinds in the market and regulatory environment, primarily due to the acquisition of Elemental Healthcare.
The Group has continued to broaden its product base by investing in product innovation, and by entering into both new and extended distribution agreements. Cash flow from trading has been enhanced by significant reductions in inventory, enabling the repayment of net debt by the end of the period.
It is anticipated that trading conditions will continue to improve, and recent positive developments will enable the Group to deliver an enhanced growth rate in the second half of the year.
Financial Overview
Revenues increased by 52.4% to GBP5.28m (2017H1: GBP3.47m), predominantly through the additional revenues relating to Elemental Healthcare acquired in August 2017.
Revenues from SI branded products grew by 13.1%to GBP2.80m (2017H1: GBP2.48m), which included the incremental revenue arising in the UK from direct sales previously handled through distribution by Elemental. Market conditions in the UK were challenging. In the first quarter of the year, NHS hospitals carried out a substantially reduced number of elective surgical procedures following the winter capacity crisis and ongoing spending constraints. This pressure eased somewhat in the second quarter, although activity has only recently returned to a more normalised level.
Revenues from the US in the first half reduced by 25% to GBP0.79m, although much of this reduction was a result of timing differences in distributor stocking, and we anticipate a return to growth for the full year. Revenues from Europe held steady in the period at GBP0.73m (2017H1: GBP0.71m). There was strong growth of 76% in the rest of the world sales to GBP0.67m (2017H1: GBP0.38m). Additional sales resources have been deployed in our international business, and we have also simplified routes to some key markets, most importantly in Japan.
OEM revenues were broadly similar to the corresponding period in 2017 at GBP0.98m (2017H1: GBP0.99m). Within this segment, revenues from the manufacture of Liquiband Fix-8 devices reduced temporarily due to the introduction of design changes, however this was more than offset by the sale of initial production units of test rigs in Precision Engineering. With the successful re-launch of Fix-8 and a follow on order for test rigs in place, we expect a return to strong growth in the second half.
UK Distribution sales amounted to GBP1.51m (2017H1: GBPnil), and were held back in part by spending constraints in the NHS. This was exacerbated by a disruption to the supply of CELLIS breast and abdominal wall products arising from regulatory delays in re-approval on a change of notified body by the manufacturer announced in May. All current products, together with an innovative new range, were re-certified in August and will come back on-stream in the last quarter of the year.
Gross margins continued to track within our target range at 39.1% of revenues (2017H1: 37.9%, 2017 full year: 42.5%). The reduction in gross margin compared with the second half of the prior year arose as a result of lower production recoveries, whilst inventory reductions of 25% to GBP2.00m (Dec 2017: GBP2.50m) were achieved, releasing cash resources.
Other operating expenses increased by GBP1.07m to GBP2.08m reflecting overheads relating to Elemental Healthcare which were not reflected in the first half of the prior year. Adjusted operating profit (before acquisition related costs and share based payment charges) for the period was GBP0.42m (2017H1: GBP0.31m) at an operating margin of 8.0%. Net profit before taxation amounted to GBP0.09m against a net profit before taxation of GBP0.30m in the corresponding period last year.
The Group reported a tax credit in the period of GBP0.04m (2017 FY: credit of GBP0.08m) which relates to claims for enhanced Research and Development in respect of 2016. The Group has substantial corporation tax losses and continues to review the extent to which a deferred tax asset should be recognised based on the estimated future taxable profits of the Group. A deferred tax asset of GBP0.06m was recognised at year end and no adjustment has been made to this asset in the following period. The Group are in the process of preparing an enhanced Research and Development claim for 2017, this will depend on the amount of current year tax losses that can be elected to exchange for cash, if any.
The net profit and total comprehensive income for the period amounted to GBP0.13m (2017H1: GBP0.30m), resulting in an adjusted net earnings per share of 0.05p (2017H1: 0.06p).
Net investment in working capital was virtually unchanged at GBP2.11m (31 December 2017: GBP2.23m) with operating cash conversion of 93% of EBITDA (2017: 72%).
Net cash flow from operating activities increased to GBP1.02m (2017H1: GBP0.85m), stated before outflows of GBP0.26m on investing activities (2017: GBP8.34m). At the end of the period, the Group had available cash at bank of GBP2.30m, and was in full compliance with all financial covenants. Total net cash resources, taking into account both loan and finance leases outstanding, increased to GBP0.02m (31 December 2017: deficit of GBP0.73m).
Regulatory framework
During the first half of the year, the business has completed a change of notified body, and also prepared for audits in relation to the uplifting of both its ISO13485 and ISO9001 certificates to the latest standards which have subsequently been completed. We are now awaiting the outcomes of the review of this work by our notified body, and are optimistic that these new certificates will be issued before the end of the year.
There have been several other changes in relation to regulatory compliance which have impacted the business in the year, most notably the change of the Canadian Authorities to move to the new Medical Device Single Audit Programme regime and away from its own Canadian Medical Device Conformity Assessment System. We have been working with our notified body to prepare for the change and are well placed to complete this work within the timescales defined by the Canadian authorities.
The next change on the horizon will then be the movement away from the Medical Device Directive to new Medical Device Regulations, a significant change by the European Commission, and one that will take several years to complete. We are expecting to be fully compliant and transitioned in 2021, and work is already underway to ensure that our documentation, quality procedures and business ethos are aligned as required to this new regulatory pathway.
New products
Following the successful launch of the new YelloPort Elite(R) in the UK market, rollout to our international network gathered pace in the first half of the year. This has been well received, and led to a decision to apply for 510k approval in preparation for a US market launch next year. Expansion of this important product range continues, with beta trials of a new optical trocar in progress, and further trocar variants and a range of disposable cannulae in the pipeline.
In September 2018 at the London Breast meeting of the Royal College of Physicians, we launched the new CELLIS Breast Pocket, an innovative dermal matrix which facilitates a pre-pectoral breast reconstruction procedure. The CELLIS Breast Pocket has been developed in close conjunction with leading surgeons from Guy's Hospital, and is designed to facilitate ease of placement, reduction in post-operative complications and improved cosmetic appearance. A programme of training workshops is planned during the last quarter of the year, enabling a roll-out to NHS and private hospitals to take place shortly thereafter.
This initiative forms a central pillar in an expanding range of distribution products, with special emphasis on the treatment of breast cancer patients. This range also includes illuminated retractors to enable surgeons to improve efficiency and accuracy, and products for the effective post-operative drainage of fluid, significantly reducing infection risk for the patient, and maximising the utilisation of nursing resources for the healthcare provider.
Brexit
The Board continue to follow progress in Brexit negotiations, and we are making contingency plans in the event that the UK exits the EU in March 2019 without completing an appropriate withdrawal agreement. In April 2018, we transitioned all relevant European distributors to price lists denominated in Euros, and this provides a natural hedge against cash outflows on components purchased in the EU.
Default arrangements under World Trade Organisation rules generally levy no tariffs on medical products, and the Group has submitted an application to obtain Authorised Economic Operator status to allow quicker customs clearance if required. This is expected to be completed before the end of 2018.
We have been assured by our UK notified body that arrangements are in place to rapidly re-register all current CE marks to a domicile within the EU for regulatory purposes in the event that this becomes necessary.
We remain hopeful that this situation will be avoided and that, as a minimum, trade with EU entities will be unaffected for the duration of a transitional period.
Corporate Governance
The Group aims to operate to high standards of moral and ethical behavior. All members of the board fully support the value and importance of good corporate governance and in our accountability to all of the Group's stakeholders, including shareholders, employees, customers (including patients and healthcare professionals), distributors, suppliers, regulators and the wider community.
The corporate governance framework which the Group has set out, including board leadership and effectiveness, remuneration and internal control, is based upon practices which the board believes are proportionate to the risks inherent to the size and complexity of group operations.
The board considers it appropriate to adopt the principles of the Quoted Companies Alliance Corporate Governance Code ("the QCA Code") published in April 2018. The extent of compliance with the ten principles that comprise the QCA Code, together with an explanation of any areas of non-compliance, and any steps taken or intended to move towards full compliance, are set out on at the end of this announcement.
Outlook
The Group has emerged from a challenging period with improved financial results, a strong balance sheet, and net indebtedness incurred in the Elemental acquisition last year fully eliminated. We have implemented measures to strengthen important distribution relationships, and support the development of our international business through an expanded core range of branded products and a competitive pricing model. This is supplemented by close partnerships with our key OEM customers, who are well positioned to generate further growth.
Our UK distribution business continues to fulfil a vital role in the direct sale of branded products in our home market, and is also building a valuable portfolio of specialised products that offer substantial advantages to surgeons, healthcare professionals and patients. The ability to obtain detailed first-hand knowledge of the reception of our product ranges from a large cohort of surgeons, who offer suggestions for improvements to existing products and ideas for innovation, is proving to be a valuable asset.
With these initiatives in process, we continue to look forward to the second half of the year and beyond with confidence.
Nigel Rogers
Executive Chairman
11 September 2018
Unaudited consolidated income statement
for the six months ended 30 June 2018
Hot Features
Premium
Unaudited Unaudited Audited
six months six months Year
ended ended Ended
30 June 30 June 31 December
2018 2017 2017
Notes GBP'000 GBP'000 GBP'000
-------------------------------------------- ------ ----------- ------------------------- ------------
Revenue 2 5,284 3,467 8,752
Cost of sales (3,217) (2,151) (5,033)
-------------------------------------------- ------ ----------- ------------------------- ------------
Gross profit 2,067 1,316 3,719
Other operating expenses (2,079) (1,011) (3,163)
Other income 150 - 25
-------------------------------------------- ------ ----------- ------------------------- ------------
Adjusted EBITDA * 938 831 2,221
Amortisation of intangible R&D costs (269) (261) (523)
Depreciation of tangible assets (247) (265) (556)
Adjusted operating profit 422 305 1,142
Exceptional items - - (216)
Amortisation of intangible acquisition
costs (224) - (327) Share based payments (60) - (18) Operating profit 138 305 581 Finance costs (44) (4) (39) Finance income - - - -------------------------------------------- ------ ----------- ------------------------- ------------ Profit before taxation 94 301 542 Taxation credit 3 36 - 84 -------------------------------------------- ------ ----------- ------------------------- ------------ Profit and total comprehensive income for the period attributable to the owners of the parent 130 301 626 -------------------------------------------- ------ ----------- ------------------------- ------------ Earnings per share Basic 4 0.02p 0.06p 0.10p Diluted 4 0.02p 0.06p 0.10p Adjusted 4 0.05p 0.06p 0.19p -------------------------------------------- ------ ----------- ------------------------- ------------
* EBITDA is earnings before interest, depreciation, amortisation and exceptional items.
Unaudited consolidated statement of changes in equity
for the six months ended 30 June 2018
Share Share Capital Merger Retained
capital premium reserve reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------- -------- -------- -------- -------- --------- --------
Balance as at 1 January 2018 7,826 5,831 329 1,250 (1,520) 13,716
Issue of shares - - - - - -
Employee share-based payment
charge - - - - 60 60
--------------------------------- -------- -------- -------- -------- --------- --------
Total - Transaction with owners 7,826 5,831 329 1,250 (1,460) 13,776
Profit and total comprehensive
income for the period - - - - 130 130
--------------------------------- -------- -------- -------- -------- --------- --------
Unaudited balance as at 30
June 2018 7,826 5,831 329 1,250 (1,330) 13,906
--------------------------------- -------- -------- -------- -------- --------- --------
Unaudited consolidated balance sheet
as at 30 June 2018
Unaudited Unaudited Audited
30 June 30 June 31 December
2018 2017 2017
GBP'000 GBP'000 GBP'000
---------------------------------------------- ---------- ---------- ------------
Assets
Non-current assets
Property, plant and equipment 1,139 1,426 1,328
Intangible assets 10,717 1,547 11,009
Deferred tax asset 62 - 62
11,918 2,973 12,399
---------------------------------------------- ---------- ---------- ------------
Current assets
Inventories 1,969 1,622 2,467
Trade receivables and other current assets 2,132 1,293 1,964
Cash and cash equivalents 2,300 1,188 1,709
---------------------------------------------- ---------- ---------- ------------
6,401 4,103 6,140
---------------------------------------------- ---------- ---------- ------------
Total assets 18,319 7,076 18,539
---------------------------------------------- ---------- ---------- ------------
Equity and liabilities
Equity attributable to equity holders of the
parent company
Share capital 7,826 5,344 7,826
Share premium account 5,831 2,365 5,831
Capital reserve 329 329 329
Merger reserve 1,250 - 1,250
Retained earnings (1,330) (1,854) (1,520)
---------------------------------------------- ---------- ---------- ------------
Total equity 13,906 6,184 13,716
---------------------------------------------- ---------- ---------- ------------
Non-current liabilities
Borrowings 1,975 - 2,125
Obligations under finance leases - 2 -
Deferred tax liabilities 141 - 183
2,116 2 2,308
---------------------------------------------- ---------- ---------- ------------
Current liabilities
Trade and other payables 1,132 386 1,580
Obligations under finance leases 3 29 16
Accruals 862 475 619
Borrowings 300 - 300
---------------------------------------------- ---------- ---------- ------------
2,297 890 2,515
---------------------------------------------- ---------- ---------- ------------
Total liabilities 4,412 892 4,823
---------------------------------------------- ---------- ---------- ------------
Total equity and liabilities 18,319 7,076 18,539
---------------------------------------------- ---------- ---------- ------------
Unaudited consolidated cash flow statement
for the six months ended 30 June 2018
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 June 30 June 31 December
2018 2017 2017
GBP'000 GBP'000 GBP'000
--------------------------------------------------- ----------- ----------- -----------------
Cash flows from operating activities
Operating profit 130 305 634
Adjustments for:
Tax (36) (84)
Finance Costs 44 39
Depreciation of property, plant and equipment 247 265 556
Amortisation of intangible assets 493 261 850
Share-based payment charge 60 9 18
Other Income 300
Loss on disposal of fixed assets 1
Foreign Exchange 6 (17) 29
Equity share options issued - (32)
--------------------------------------------------- ----------- ----------- -----------------
Operating cash flows before movement in working
capital 1,245 823 2,010
(Increase) / decrease in inventories 505 (234) (238)
(increase)/ decrease in current receivables (167) 94 263
Increase/(decrease) in trade and other payables (555) 168 (131)
--------------------------------------------------- ----------- ----------- -----------------
Cash generated from operations 1,028 851 1,904
Taxation (paid) / received 36 - (206)
Interest paid (44) (6) (90)
--------------------------------------------------- ----------- ----------- -----------------
Net cash generated from operating activities 1,020 845 1,608
--------------------------------------------------- ----------- ----------- -----------------
Cash flows from investing activities
Payments to acquire property, plant and equipment (60) (112) (250) Acquisition of intangible assets (200) (210) (381) Consideration for Surgical Dynamics assets and laparoscopic business - (105) (144) Acquisition of Elemental Healthcare net of cash acquired - - (7,135) Deal costs - - (431) --------------------------------------------------- ----------- ----------- ----------------- Net cash (used in) investing activities (260) (427) (8,341) --------------------------------------------------- ----------- ----------- ----------------- Cash flows from financing activities New bank borrowings - - 2,500 Repayment of bank loan (150) - (75) Net proceeds from issue of share capital - - 5,307 Repayment of obligations under finance leases (13) (22) (36) --------------------------------------------------- ----------- ----------- ----------------- Net cash (used in)financing activities (163) (22) 7,696 --------------------------------------------------- ----------- ----------- ----------------- Net increase in cash and cash equivalents 597 396 963 Cash and cash equivalents at beginning of period 1,709 775 775 Effective exchange rate fluctuations on cash held (6) 17 (29) --------------------------------------------------- ----------- ----------- ----------------- Net cash and cash equivalents at end of period 2,300 1,188 1,709 --------------------------------------------------- ----------- ----------- ----------------- Analysis of net borrowings: Cash at bank and in hand 2,300 1,188 1,709 Bank loan - (2,425) Loan notes 2017 (2,275) - - Obligations under finance leases (3) (31) (16) Net cash/(debt) at end of period 22 1,157 (732) --------------------------------------------------- ----------- ----------- -----------------
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 on11 September 2018. 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 2017, 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 group has considered the new standards effective from 01 January 2018, IFRS 15 'Revenue from Contracts with Customers' and IFRS 9 'Financial Instruments'.
IFRS 15, 'Revenues from Contracts with Customers', introduces a five-step approach to the timing of revenue recognition based on the performance obligations of customer contracts. The group has considered the impact of the new standard to be non-material to the Group's Financial Statements.
IFRS 9, 'Financial instruments' replaces IAS39 'Financial instruments: Recognition and Measurement.' The group has considered IFRS 9 to only impact the impairment of trade receivables. Following assessment, it has been concluded that the use of the expected credit loss approach will not have a material impact on the Group's Financial Statements.
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 2017 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. Segmentalreporting
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 and Precision Engineering, the research, development, manufacture and sale of minimally invasive technology products for precision engineering applications.
-- Distribution -the distribution of specialist medical products sold through Elemental Healthcare Ltd.
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 chief operating decision maker within the business and the information as it is presented under IFRS.
Six months ended 30 June 2018 (unaudited) SI Brand Distribution OEM Total
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------ -------- ------------ ------- -------
Revenue 2,805 1,504 975 5,284
------------------------------------------ -------- ------------ ------- -------
Result
Segment result 497 700 378 1,575
Exceptional items -
Unallocated expenses (1,437)
------------------------------------------ -------- ------------ ------- -------
Profit from operations 138
Finance costs (44)
Finance income -
------------------------------------------ -------- ------------ ------- -------
Profitbefore taxation 94
Tax 36
------------------------------------------ -------- ------------ ------- -------
Profit for the period 130
------------------------------------------ -------- ------------ ------- -------
Included within the segment/operating results are the following significant non-cash items:
SI Brand Distribution OEM Total
Six months ended 30 June 2018 (unaudited) GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------ -------- ------------ ------- -------
Amortisation of intangible assets 206 224 63 493
Additions to intangibles 200 - - 200
Additions to tangibles 54 6 - 60
------------------------------------------ -------- ------------ ------- -------
Six months ended 30 June 2017 (unaudited) SI Brand OEM Total
GBP'000 GBP'000 GBP'000
------------------------------------------ -------- ------- -------
Revenue 2,478 989 3,467
------------------------------------------- -------- ------- -------
Result
Segment result 720 335 1,055
Exceptional items -
Unallocated expenses (750)
------------------------------------------- -------- ------- -------
Profit from operations 305
Finance costs (4)
Finance income -
------------------------------------------ -------- ------- -------
Profitbefore taxation 301
Tax -
------------------------------------------ -------- ------- -------
Profit for the period 301
------------------------------------------- -------- ------- -------
Included within the segment/operating results are the following significant non-cash items:
SI Brand OEM Total
Six months ended 30 June 2017 (unaudited) GBP'000 GBP'000 GBP'000
------------------------------------------ -------- ------- -------
Amortisation of intangible assets 198 63 261
------------------------------------------- -------- ------- -------
SI Brand Distribution OEM Total
Year ended 31 December 2017 (audited)
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------------- ------------ ------------ ------------ -------------
Revenue 5,349 1,802 1,601 8,752
---------------------------------------- ------------ ------------ ------------ -------------
Result
Segment result 1,352 1,002 515 2,869
Unallocated expenses (2,288)
---------------------------------------- ------------ ------------ ------------ -------------
Profit from operations 581
Finance income -
Finance costs (39)
---------------------------------------- ------------ ------------ ------------ -------------
Profit before taxation 542
Tax 84
---------------------------------------- ------------ ------------ ------------ -------------
Profit for the period 626
---------------------------------------- ------------ ------------ ------------ -------------
Included within the segment/operating results are the following significant non-cash items:
SI Brand Distribution OEM Total
Year ended 31 December 2017 (audited) GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------- ---------- ------------ ------- -----------
Amortisation of intangible assets 398 327 125 850
Additions to intangibles 381 - - 381
Additions to tangibles 245 5 - 250
-------------------------------------- ---------- ------------ ------- -----------
Unallocated expenses include those costs that cannot be split between segments and which are not separately analysed in themanagement accounts including concept department, sales and marketing, and head office overheads.
Geographicalanalysis
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 June 30 June 31 December
2018 2017 2017
GBP'000 GBP'000 GBP'000
---------------- ----------- ----------- ------------
United Kingdom 3,097 1,322 4,337
Europe 731 719 1,527
US 790 1,047 2,066
Rest of World 667 379 822
---------------- ----------- ----------- ------------
5,285 3,467 8,752
---------------- ----------- ----------- ------------
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
The Group reported a tax credit in the period of GBP0.04m (2017 FY: credit of GBP0.08m) which relates to claims for enhanced Research and Development in respect of 2016.The Group are in the process of preparing an enhanced Research and Development claim for 2017, this will depend on the amount of current year tax losses that can be elected to exchange for cash, if any.
Deferred Tax
At the balance sheet date, the Group has unused tax losses of GBP21.5 million available for offset against certain future profits. The timing differences in the fixed assets has given rise to a deferred tax liability of GBP183,000.A deferred tax asset of GBP0.06m was recognised at year end and no adjustment has been made to this asset in the following period.
4. Earnings per share
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 June 30 June 31 December
2018 2017 2017
-------------------- ----------- ----------- ------------
Earnings per share
Basic 0.01p 0.06p 0.10p
Diluted 0.01p 0.06p 0.10p
Adjusted 0.05p 0.06p 0.19p
-------------------- ----------- ----------- ------------
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 costs relating to the acquisition of Elemental Healthcare and share based payments) 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
2018 2017 2017
'000s '000s '000s
-------------------------------------- ----------- ----------- ------------
Basic earnings per share 782,566 533,835 637,570
Dilutive effect of unexercised share
options 16,327 11,006 24,588
-------------------------------------- ----------- ----------- ------------
Diluted earnings per share 798,893 544,841 662,158
-------------------------------------- ----------- ----------- ------------
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 2018, SI invoiced ACP GBP289,000 for products and as at 30 June 2018 there was an amount owing to the Group of GBP135,000.
6. Interim Report
This interim report is available at www.sigroupplc.com.
Surgical Innovations Group plc
Statement of compliance with QCA code on Corporate Governance
Principle Extent of Commentary Further disclosure(s)
current compliance
Establish a strategy Fully compliant Group business strategy Go to www.sigroupplc.com
and business is summarised in the and follow About
model which promote Mission Statement Us then Our Business
long term value approved by the board Activities
for shareholders. in February 2018,
entitled "Inspired Strategic Report
by surgeons for the section of the
benefit of patients". Annual Report
Strategic issues,
and the appropriate
business model to
exploit opportunities
and mitigate risks,
are under continuous
review by the board,
and reported periodically.
-------------------- -------------------------------- ----------------------------
Seek to understand Fully compliant Regular meetings are Go to www.sigroupplc.com
and meet shareholder held with institutional and follow Investor
needs and expectations and private shareholders, Centre then Meetings
during which structured & Voting
feedback is sought
and, where considered
appropriate, acted
upon.
-------------------- -------------------------------- ----------------------------
Take into account Fully compliant Directors and employees Go to www.sigroupplc.comand
wider stakeholder adopt a broad view follow About Us
and social responsibilities during decision making then Corporate
and their implications to take meaningful Social Responsibility
for long term account of the impact
success of our business on
all key stakeholder
groups. Feedback from
employees, customer
groups, suppliers
and others is actively
encouraged.
-------------------- -------------------------------- ----------------------------
Embed effective Fully compliant The group operates Principal Risks
risk management, a system of internal and Uncertainties
considering both controls designed section of Annual
opportunities (to the extent considered Report
and threats, appropriate) to safeguard
throughout the group assets and protect
organisation the business from
identified risks,
including risk to
reputation. Financial
risks, including adequacy
of funding and exposure
to foreign currencies,
are identified and
subject to examination
during the annual
external audit process.
-------------------- -------------------------------- ----------------------------
Maintain the Fully compliant The board comprises Board section
board as a well-functioning, seven directors; three of Annual Report
balanced team non-executive directors, (commencing 2018).
led by the chair three full time executive
directors, and the
Executive Chairman
(whose responsibilities
approximate to one
day per week). Two
of the non-executive
directors are considered
to be fully independent
(Alistair Taylor and
Paul Hardy).
The board is supported
by appropriate board
committees which are
each chaired by one
of the independent
non-executive directors.
An annual record of
attendance at board
meetings will be included
in the Annual Report
at the conclusion
of each year.
-------------------- -------------------------------- ----------------------------
Ensure that between Fully compliant The board is satisfied Board section
them the directors that the current composition of Annual Report
have the necessary provides the required (commencing 2018).
up-to-date experience, degree of skills,
skills and capabilities experience, diversity
and capabilities appropriate
to the needs of the
business. Steps are
taken to challenge
the status quo, and
encourage proper consideration
of any dissenting
opinion. Board composition
and succession planning
are subject to continuous
review taking account
of the potential future
needs of the business.
-------------------- -------------------------------- ----------------------------
Evaluate board Partially Board evaluation has N/A
performance based compliant not been carried out
on clear and as part of a formal
relevant objectives, process, although
seeking continuous the Chairman has actively
improvement encouraged self-evaluation
by all board members,
and feedback on the
conduct and content
of board meetings.
The board will consider
whether a more structured
approach is required
in future.
-------------------- -------------------------------- ----------------------------
Promote a corporate Fully compliant The board promotes Go to www.sigroupplc.com
culture that high ethical and moral and follow About
is based on ethical standards which are Us then Our Business
values and behaviours set out in the Mission Activities
Statement. The board
and all employees
expect to be judged
by, and accountable
for, their actions.
The business operates
in a highly regulated
environment, which
promotes the benefits
of high moral standards
and rewards good behaviour
over the long term.
-------------------- -------------------------------- ----------------------------
Maintain governance Fully compliant The board as a whole Board section
structures and share responsibility of Annual Report
processes that for sound governance (commencing 2018).
are fit for purpose practices. The roles
and support good and responsibilities
decision-making of each of the directors
by the board (including committee
memberships) are clearly
set out in their job
descriptions and any
particular responsibilities
communicated and understood.
-------------------- -------------------------------- ----------------------------
Communicate how Fully compliant Regular meetings with Go to www.sigroupplc.com
the company is shareholders and other and follow Investor
governed and key representative Centre then Meetings
is performing groups provide a specific & Voting
by maintaining opportunity for raising
a dialogue with any concerns related Board section
shareholders to corporate governance, of Annual Report
and other relevant including any significant (commencing 2018).
stakeholders votes cast against
or abstaining from
shareholder resolutions.
A record of meetings
held to engage with
shareholders will
be included in each
Annual Report.
-------------------- -------------------------------- ----------------------------
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.
END
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September 11, 2018 02:00 ET (06:00 GMT)
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