Surgical Innovations Regulatory News (SUN)

28 Sep 2005 06:00

Press Release 28 September 2005 Surgical Innovations Group plc Interim ResultsSurgical Innovations Group plc ("Surgical") ("AIM: SUN"), the designer andmanufacturer of innovative surgical devices, today reports its Interim Resultsfor the six months ended 30 June 2005.Highlights¢â‚¬¢ Turnover of ‚£1.432m (2004: ‚£1.425m) ¢â‚¬¢ Operating profit of ‚£117,000 (2004: ‚£74,000) ¢â‚¬¢ Pre-tax profit 120% higher at ‚£90,000 (2004: ‚£41,000) ¢â‚¬¢ Overall net debt reduced by ‚£92,000 to ‚£547,000 ¢â‚¬¢ Earnings per share increased by 54% to 0.035p (2004: 0.016p) ¢â‚¬¢ Strategic supply agreement with Aesculap (Germany) extended for a further 2 years ¢â‚¬¢ Core patent successfully protected against infringement, strengthening royalty revenue ¢â‚¬¢ MIS technology successfully transferred to engineering sector via 2004/5 development projects with Rolls-Royce (and subsequent ten-year deal, announced on 19 September) Commenting on the outlook, Doug Liversidge, Non-executive Chairman, said: "Not only has financial performance continued to improve due to sales of ourcore surgical products, but the Company is also poised for significant growthin an entirely new sector - engineering. Development projects successfullycompleted in the period to 30 June 2005, and a ten-year agreement withRolls-Royce, have established a platform for substantial increases in operatingprofit for the second half of the year and beyond." - Ends - For further information: Surgical Innovations Group plc Doug Liversidge CBE, Chairman Tel: +44 (0) 779 889 2918 Stuart Moran, Technical Director Tel: +44 (0) 771 561 2064 stuart.moran@surginno.co.uk www.sigroupplc.com Westhouse Securities Tim Feather Tel: +44 (0) 161 838 9140 tim.feather@westhousesecurities.com www.westhousesecurities.com Media enquiries:Abchurch Sarah Hollins Tel: +44 (0) 113 203 1342 Justin Heath sarah.hollins@abchurch-group.com www.abchurch-group.com Chairman's Statement I am pleased to report that, for the six months to 30 June 2005, the Group madean operating profit of ‚£117,000 on turnover of ‚£1.432 million. Allowing fornet interest payable of ‚£27,000, the retained profit for the period was 120%higher at ‚£90,000 (2004: ‚£41,000). Our financial performance continues to improve. This has been enhanced by therepayment of the remaining ‚£110,000 of the 6.5% convertible loan notes througha combination of share issues and cash payments. Overall, net debt has reducedby ‚£92,000 in the six months to June 2005 and we anticipate a further reductionin the second half as cash inflows from operating activities continue toimprove. During this period, significant work has been undertaken to establish aplatform for substantial increases in operating profit for the second half ofthe year and beyond. Last week we announced the signing of a ten-yearagreement with Rolls-Royce to develop instruments that incorporate our advancedsurgical device technology for use within the aero engine maintenance field,which will contribute towards our turnover and earnings over the second half ofthe year. Because of this, we have increased the resources in our designfunction. Sales of our core Minimally Invasive Surgery (MIS) products were 16% lower thanlast year at ‚£993,000, albeit 12% higher than our budget. This decrease hasbeen caused by sales of YelloPort to Cardinal Health in the US beingsignificantly lower than in the comparable period in 2004, as a result ofover-ambitious forecasting within Cardinal's own business model. Our budgetreflected the Cardinal position and this improvement on budget gives usconfidence in our ability to further improve our performance to December 2005. The growth of our MIS business is dependent on the relationships with our keystrategic partners. In this respect, in June, we importantly signed anextension to our contract with Aesculap for the continued supply of single useinstrumentation, including a new range of fully disposable instruments. We take our responsibilities to defend our intellectual property extremelyseriously. During the first half of the year, we incurred costs of ‚£53,000 ina successful pursuit against infringement of our EndoFlex patent. This successfurther strengthens the EndoFlex licence agreement, now assigned to CardinalHealth, and safeguards our future royalty stream. Since its inception in 1998,the EndoFlex licence agreement has provided royalties and licence fees inexcess of ‚£2 million. As a consequence of our increased emphasis on manufacturing, we have taken theopportunity to more accurately reflect relevant overheads, which werepreviously shown under administrative expenses, in the cost of sales. Theeffect on the 2004 results for the equivalent period if these expenses had beentreated in the same way, would have resulted in gross profit of ‚£679,000 andoperating profit of ‚£74,000. We expect to see further improvement in the Group's profitability during thesecond half of the year through the development of our core business and ournew relationship with Rolls-Royce.Doug Liversidge CBEChairman28 September 2005Surgical Innovations Group plcConsolidated Profit and Loss Account Unaudited Unaudited Audited 6 months to 6 months to 12 months to 30.6.05 30.6.04 30.12.04 ‚£000 ‚£000 ‚£000 Turnover 1432 1425 3032 Cost of sales (716) (652) (1432) Gross Profit 716 773 1600 Administrative expenses (599) (699) (1358) Operating profit 117 74 242 Net interest payable (27) (33) (68) Profit on ordinary activities before taxation 90 41 174 Tax on profit on ordinary activities 0 0 38 Retained profit attributable to ordinary shareholders 90 41 212 Earnings per ordinary share 0.035p 0.016p 0.08p Surgical Innovations Group plcConsolidated Balance Sheet Unaudited Unaudited Audited As at As at As at 30.6.05 30.6.04 30.12.04 Fixed Assets Tangible Assets 724 827 811 Current Assets Stock 1,270 751 881 Debtors 1,152 1,267 1,215 Cash at bank and in hand - - 1 2,422 2,018 2,097 Creditors: amounts falling due within one year (1,199) (1,029) (1,043) Net current assets 1,223 989 1,054 Total assets less current liabilities 1,947 1,816 1,865 Creditors: amounts falling due after more than one year (164) (350) (215) Net assets 1,783 1,466 1,650 Capital and reserves Called up share capital 2,591 2,573 2,580 Share premium account 16,102 16,064 16,070 Capital Reserve 329 329 329 Accumulated Losses (17,239) (17,500) (17,329) Equity shareholders' funds 1,783 1,466 1,650 Note: The balance sheet at 30th June 2005 reflects the issue of 1,136,294 shares in the period Surgical Innovations Group plcConsolidated Cash Flow Statement Unaudited Unaudited Audited 6 months to 6 months to 12 months to 30.6.05 30.6.04 30.12.04 Net cash inflow from operating activities 115 49 130 Returns on investments and servicing of finance (27) (33) (68) Taxation 0 18 18 Capital Expenditure (38) (9) (21) Cash inflow before financing 50 25 59 Financing (127) 7 (60) (Decrease) / increase in cash in the period (77) 32 (1) Reconciliation of net cash flow to movement in net debt (Decrease) / increase in cash in the period (77) 32 (1) Cash outflow from finance leases and loans 59 45 103 Cash Outflow from Loan Note redemption 110 0 0 Change in net debt resulting from cash flows 92 77 102 Conversion of loan notes 0 0 0 New finance leases 0 (61) (101) Movement in net debt in the period 92 16 1 Net (debt) at the beginning of the year (639) (640) (640) Net (debt) at the end of the period (547) (624) (639) Net cash inflow/(outflow) from operating activities Operating profit 117 74 242 Depreciation 125 113 203 (Increase) in stocks (388) (30) (160) (Increase) / decrease in debtors 63 (40) 51 (Decrease) / increase in creditors 198 (68) (206) Net cash inflow from operating activities 115 49 130 Notes: 1. The consolidated financial information does not constitute full accountswithin the meaning of the Companies Act 1985 and has not been reported on bythe auditors or delivered to the Registrar of Companies. The figures for theyear ended 31 December 2004 have been extracted from the full accounts for thatyear, on which the auditors gave an unqualified report and which have beenfiled with the Registrar of Companies. 2. The directors have not declared an interimdividend. 3. The earnings per share is based on the weighted average number of shares inissue during the period. The total number of shares in issue at 30 June 2005was 259,151,188 at 31 December 2004 was 258,014,894 and at 30 June 2004 was257,338,914. ENDSURGICAL INNOVATIONS GROUP PLC