Last checked at 29 Sep 2009 07:00
| Press Release | 29 September 2009 |
Surgical Innovations™ Group plc
("SI" or "the Group")
Interim Results
Surgical Innovations™ Group plc (AIM: SUN), the designer and manufacturer of innovative surgical devices, today reports its interim results for the six months ended 30 June 2009.
Highlights
| • | Revenue increased by 14% to £1.99 million (2008: £1.74 million) |
| • | Operating profit increased by 185% to £234,000 (2008: £82,000) |
| • | Pre-tax profit increased by 95% to £215,000 (2008: £110,000) |
| • | Basic earnings per share of 0.05p (2008: 0.03p) |
| • | Secured a £90,000 government grant for capital investment |
| • | Launched the new Logi™Flex product for obesity surgery in Europe |
| • | Improved trading with OEM partners |
Doug Liversidge, Non-executive Chairman, commented:
"This has been an exciting period for the Group and sales of both our Surgical Innovations' branded and OEM products have been strong. The strategy to bring manufacturing in-house has proven to be highly successful providing the platform for increased revenues and profitability. The global market for laparoscopic surgery continues to see significant growth and I am confident that the Group will take full advantage of the opportunities ahead."
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For further information:
| Surgical Innovations Group plc | |
| Graham Bowland, Finance Director | Tel: +44 (0) 113 230 7597 |
| graham.bowland@surginno.co.uk | www.surginno.com |
| Doug Liversidge, Non-Exec Chairman | Tel +44 (0) 113 230 7597 |
| Hanson Westhouse Limited | |
| Tim Feather / Matthew Johnson | Tel: +44 (0) 113 246 2610 |
| tim.feather@hansonwesthouse.com | www.hansonwesthouse.com |
Media enquiries:
| Abchurch | |
| Sarah Hollins / Stephanie Cuthbert / Simone Alves | Tel: +44 (0) 20 7398 7718 |
| stephanie.cuthbert@abchurch-group.com | www.abchurch-group.com |
CHAIRMAN'S STATEMENT
The Group's performance has been excellent during the first half of the year and I am delighted to report substantially improved results. Strong sales have resulted in a 14% revenue increase to £1.99 million (2008: £1.74 million). The decision to bring our manufacturing facilities in-house has proven highly effective and the subsequent cost savings have increased our operating profit margins to 11.71% (2008: 4.71%) resulting in a 95% increase in pre-tax profit to £215,000 (2008: £110,000).
I am also pleased to report that the Group has successfully secured a £90,000 government grant against future capital investment, which will enable it to increase volume production and take advantage of the opportunities ahead.
Operations
Sales of the Logi™Cut scissors have continued to be robust, particularly in the US. In the current economic climate hospitals and surgeons are becoming increasingly cost conscious. As a result we have seen an increased demand for SI's Logi™ range, a cost effective instrument which combines a reusable handle with a disposable insert for optimum performance.
The new Logi™Flex product, which aids surgeons in the deployment of gastric bands in obesity surgery, was recently launched at the world's largest obesity congress, the International Federation for the Surgery of Obesity and Metabolic Disorders (IFSO) in Paris. The rise in obesity has led to a significant increase in the number of gastric band procedures and we are now well placed to become a major provider to both obesity surgeons and manufacturers of gastric bands.
The Group's port access system, YelloPort Plus, has seen an increase in sales of the single use elements, justifying the resposable strategy. The Group must now continue to develop the user base and further new markets through increased marketing and exhibitions. The US continues to be challenging for the product line as we experience substantial competition from the major US single use port access companies. Opportunities with both procedure tray companies and key hospitals are being explored to enhance the YelloPort Plus brand.
The Group has seen significant growth from its OEM business, manufacturing laparoscopic devices for a number of leading international medical device companies. We intend to develop this strategy and seek opportunities for our products and development portfolio with various companies. Our latest device is due for OEM release in October 2009 and we look forward to reporting on this in the near future.
The Group continues to invest in developing innovative products and I am delighted with the pipeline of projects currently under development. Our reputation as an innovator of high quality medical devices enables us to create relationships with major medical companies and leading surgeons alike. To provide further assistance in the expansion of the Group's device portfolio, we have established a relationship with Medipex Ltd ("Medipex"), an NHS innovation hub, to help our design team gain access to a pool of innovative UK surgeons. Medipex provides technology transfer services to the NHS in the Yorkshire and Humber region.
In line with our strategy, the Group continues to invest in machinery and infrastructure. Since relocating to our new in-house manufacturing facility in Leeds last year, we have commenced the building of a class 100,000 assembly cleanroom. This cleanroom will improve the efficiency and quality of our manufacturing processes and provide sufficient capacity to assemble increased volumes of single-use devices. Importantly, it will enable the Group to move into the next phase of its manufacturing strategy; which is in-house plastic injection moulding. This phase is expected to commence during the first half of 2010.
The first half of the year has also seen an increase in opportunities from industrial partners. We have made initial investments in prototype development work, undertaken by our in-house design team, which may lead to significant orders for bespoke devices. These are ad-hoc projects and we continue to explore opportunities for industrial solutions with our partners.
Outlook
As minimally invasive surgical procedures become more popular, the global market for laparoscopic surgery continues to see significant growth. Importantly, the drive for cost effective solutions can be met by our philosophy for resposable devices and the Group is well placed to take advantage of this culture change within the surgical community.
The Group continues to be encouraged by the progress we are making in both our manufacturing and design strategies and short term objectives have already been achieved.
The foundations are now in place to increase revenues and earnings significantly in the coming years. We have made solid, sustainable progress and are optimistic that in the coming year we will continue to increase our share of the laparoscopic surgery market. The Group looks to the future with confidence.
Doug Liversidge, Non-executive Chairman
29 September 2009
Unaudited consolidated interim statement of comprehensive income
for the six months ended 30 June 2009
| Unaudited | Unaudited | Audited | ||
| 6 months ended | 6 months ended | Year ended | ||
| 30 June | 30 June | 31 December | ||
| 2009 | 2008 | 2008 | ||
| Notes | £'000 | £'000 | £'000 | |
| Revenue | 1,989 | 1,741 | 4,312 | |
| Cost of sales | (1,267) | (971) | (2,032) | |
| Gross profit | 722 | 770 | 2,280 | |
| Other operating expenses | (488) | (688) | (1,500) | |
| Operating profit | 234 | 82 | 780 | |
| Finance costs | (25) | (40) | (78) | |
| Finance income | 6 | 68 | 118 | |
| Profit before tax | 215 | 110 | 820 | |
| Taxation | 2 | (23) | (15) | (190) |
| Profit and total comprehensive income for the period attributable to the owners of the parent | 192 | 95 | 630 | |
| Earnings per share | ||||
| Basic | 3 | 0.05p | 0.03p | 0.17p |
| Diluted | 3 | 0.05p | 0.03p | 0.17p |
Unaudited consolidated interim Balance Sheet
as at 30 June 2009
| Unaudited | Unaudited | Audited | |
| 30 June | 30 June | 31 December | |
| 2009 | 2008 | 2008 | |
| £'000 | £'000 | £'000 | |
| ASSETS | |||
| Non-current assets | |||
| Property, plant and equipment | 1,438 | 926 | 1,343 |
| Other intangible assets | 1,506 | 862 | 1,174 |
| Deferred tax asset | 134 | 134 | 134 |
| 3,078 | 1,922 | 2,651 | |
| Current assets | |||
| Inventories | 2,056 | 1,626 | 1,716 |
| Trade receivables | 2,250 | 2,550 | 3,164 |
| Other current assets | 634 | 445 | 344 |
| Cash and cash equivalents | 2,355 | 3,016 | 3,232 |
| 7,295 | 7,637 | 8,456 | |
| Total assets | 10,373 | 9,559 | 11,107 |
| EQUITY AND LIABILITIES | |||
| Equity attributable to equity holders of the parent company | |||
| Share capital | 3,738 | 3,738 | 3,738 |
| Share premium account | 18,809 | 18,809 | 18,809 |
| Capital reserve | 329 | 329 | 329 |
| Retained earnings | (14,644) | (15,371) | (14,836) |
| Total equity | 8,232 | 7,505 | 8,040 |
| Non-current liabilities | |||
| Obligations under finance leases and hp loans | 259 | 17 | 224 |
| 259 | 17 | 224 | |
| Current liabilities | |||
| Bank overdraft and loans | 589 | 1,145 | 1,537 |
| Trade and other payables | 807 | 573 | 787 |
| Obligations under finance leases and hp loans | 89 | 72 | 177 |
| Current tax liabilities | 187 | 27 | 164 |
| Provisions | 210 | 220 | 178 |
| 1,882 | 2,037 | 2,843 | |
| Total liabilities | 2,141 | 2,054 | 3,067 |
| Total equity and liabilities | 10,373 | 9,559 | 11,107 |
Unaudited consolidated interim cash flow statement
for the six months ended 30 June 2009
| Unaudited | Unaudited | Audited | |
| 6 months ended | 6 months ended | Year ended | |
| 30 June | 30 June | 31 December | |
| 2009 | 2008 | 2008 | |
| £'000 | £'000 | £'000 | |
| Cash flows from operating activities | |||
| Operating profit | 234 | 82 | 780 |
| Adjustments for: | |||
| Depreciation of property, plant and equipment | 128 | 79 | 187 |
| Amortisation of intangible assets | 100 | 20 | 60 |
| Operating cash flows before movement in working capital | 462 | 181 | 1,027 |
| (Increase)/decrease in inventories | (340) | 190 | 100 |
| Decrease/(increase) in receivables | 624 | (349) | (862) |
| Increase/(decrease) in trade and other payables | 52 | (314) | (142) |
| Cash generated from operations | 798 | (292) | 123 |
| Interest paid | (25) | (40) | (78) |
| Tax paid | - | - | (38) |
| Net cash from/(used in) operating activities | 773 | (332) | 7 |
| Cash flows from investing activities | |||
| Interest received | 6 | 68 | 118 |
| Acquisition of non-current assets | (655) | (496) | (961) |
| Net cash used in investment activities | (649) | (428) | (843) |
| Cash flows from financing activities | |||
| Repayment of bank loans | (6) | (11) | (25) |
| Repayment of obligations under finance leases and hp loans | (53) | (78) | (178) |
| Net cash used in financing activities | (59) | (89) | (203) |
| Net increase/(decrease) in cash and cash equivalents | 65 | (849) | (1,039) |
| Cash and equivalents at beginning of period | 1,701 | 2,740 | 2,740 |
| Cash and cash equivalents at end of period | 1,766 | 1,891 | 1,701 |
Unaudited consolidated interim statement of changes in equity
for the six months ended 30 June 2009
| Share | Share | Capital | Retained | ||
| capital | premium | reserve | earnings | Total | |
| £'000 | £'000 | £'000 | £'000 | £'000 | |
| Balance as at 1 January 2009 | 3,738 | 18,809 | 329 | (14,836) | 8,040 |
| Profit and total comprehensive income for the | - | - | - | 192 | 192 |
| Unaudited balance as at 30 June 2009 | 3,738 | 18,809 | 329 | (14,644) | 8,232 |
Notes to the financial statements
1. Basis of preparation of interim financial information
The interim financial information was approved by the Board of Directors on 28 September 2009. The financial information set out in the interim report is unaudited.
The interim financial statements have been prepared in accordance with the AIM Rules for Companies and on a basis consistent with the accounting policies (except for the adoption of IAS 1Presentation of Financial Statements (Revised 2007) and IFRS 8 Operating Segments) and methods of computation as published by the group in its annual report for the year ended 31 December 2008, 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.
The adoption of IAS 1 (Revised 2007) does not affect the financial position or profits of the Group, but gives rise to additional disclosures. The measurement and recognition of the Group's assets, liabilities, income and expenses is unchanged, however some items that were recognised directly in equity are now recognised in other comprehensive income, for example revaluation of property, plant and equipment. IAS 1 (Revised 2007) affects the presentation of owner changes in equity and introduces a 'Statement of comprehensive income'. In accordance with the new standard the entity does not present a 'Statement of recognised income and expenses (SORIE)'. Further, a 'Statement of changes in equity' is presented.
The adoption of IFRS 8 has not changed the segments that are disclosed in these interim financial statements because in the previous annual and interim financial statements, segments were already based on the internal management reporting information that is regularly reviewed by the chief operating decision maker.
The financial information set out in this interim report does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. The figures for the year ended 31 December 2008 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 Section 237(2) of the Companies Act 1985
2. Taxation
The charge for current tax is based on the results for the period as adjusted for items which are non-assessable or disallowed and any adjustment to tax payable in respect of previous years. It is calculated using the estimated effective rate for the period, based on the mainstream rate of 28% and on a basis consistent with that to be used in the full year.
3. Earnings per share
| Unaudited | Unaudited | Audited | |
| 6 months ended | 6 months ended | Year ended | |
| 30 June | 30 June | 31 December | |
| 2009 | 2008 | 2008 | |
| Earnings per share (pence) | |||
| Basic | 0.05p | 0.03p | 0.17p |
| Diluted | 0.05p | 0.03p | 0.17p |
Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of shares in issue during each period.
The Group has one category of dilutive potential ordinary shares, those share options granted where the exercise price is less than the average price of the Company's ordinary shares during the period. The dilution has no effect on basic earnings per share.
Weighted average number of shares:
| Unaudited | Unaudited | Audited | |
| 6 months ended | 6 months ended | Year ended | |
| 30 June | 30 June | 31 December | |
| 2009 | 2008 | 2008 | |
| For basic earnings per share | 373,841,902 | 373,841,902 | 373,841,902 |
Earnings attributable to ordinary shareholders used in the calculation of basic and diluted earnings per share is as follows:
| Unaudited | Unaudited | Audited | |
| 6 months ended | 6 months ended | Year ended | |
| 30 June | 30 June | 31 December | |
| 2009 | 2008 | 2008 | |
| £'000 | £'000 | £'000 | |
| Profit for the period | 192 | 95 | 630 |
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