REG - Surgical Innovations - Year-end Trading Update

Surgical InnovationsAnnouncement

17/01/2022 07:05

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RNS Number : 5474Y  Surgical Innovations Group PLC  17 January 2022

Surgical Innovations Group plc

("Surgical Innovations", or the "Group")

 

Year-end Trading Update

 

Surgical Innovations Group plc (AIM: SUN), the designer, manufacturer and
distributor of innovative
technology for minimally invasive surgery, provides an update on trading
for the year ended 31 December 2021.

 

Financials

Sales for the second half of the year were approximately 16% higher than the
first half, resulting in revenue for the full year expected to be
approximately £9.1m. This compares with full year revenues of £6.3m in 2020
and £10.7m in 2019 as a pre-pandemic comparative. Underlying gross margin
(before net manufacturing costs) remains within target range and the Group
expects to report positive adjusted(1) EBITDA with a small adjusted loss
before tax(1), both in line with market expectations.

 

The closing net cash(2) balances of the Group stood at approximately £1.8m at
31 December 2021 (30 June 2021: £2.66m). The Group optimised the timing of
its reflation of net working capital in line with increased activity levels
and the effects of UK and international supply chain issues. In addition,
further investment was made into new product development.

 

Stronger second half performance

The UK had a strong finish to the year with H2 sales up 38% on H1, matching
pre-COVID levels.  Annual sales for the UK (excluding OEM) reached 94% of
pre-pandemic levels, benefitting from a strong Q4.

 

SI branded sales (excluding UK) had a slower H2 compared with H1, down 15%.
This was in part due to the high level of re-stocking orders to the USA and
Japan placed in Q1. We experienced a more normalised order pattern from these
regions during H2, with sales running close to 80% of pre-pandemic levels.

 

OEM sales had a very strong H2, up 69% over H1. This reflected a return to
more normalised patterns, and forecasted demand for OEM sales in 2022 is
anticipated to be at or around pre-COVID levels.

 

Overall Group sales in the fourth quarter recovered rapidly to approximately
90% of pre-pandemic levels following the effects of the delta variant of
COVID-19, and before the emergence of significant hospitalisation from the
Omicron variant wave.

 

Current trading and outlook

Global Healthcare markets continue to be buffeted by COVID-19 and the
emergence of the Omicron variant represents an additional challenge for
hospitals trying to manage staff absences as they self-isolate. The start of
this year has seen a number of NHS Trusts reduce or postpone elective surgery,
and consequently we remain cautious as a combination of seasonal flu and
Omicron could further slow hospital activity in elective surgery in the coming
months. A similar picture globally is being reported by our international
partners. Reflecting these factors and uncertainty regarding the timing and
scale of recovery from Omicron, the Board considers that formal earnings
guidance should continue to be withheld until final results are announced in
March.

 

David Marsh, CEO of Surgical Innovations Group Plc said: "Our performance in
2021 has been credible in the context of the pandemic and related issues, and
reflects management action to contain the financial effects of reduced
activity to a manageable level, whilst reinforcing the commercial and
operational capabilities of the business to emerge in a stronger competitive
position. While we anticipate that Q1 sales may reduce down to 80% of
pre-pandemic levels, we do however expect a return to normalised hospital
activity in Q2 and see prospects for improved momentum in H2. Overall, we
anticipate that annualised sales by year end 2022 will exceed the level of
revenue in 2019 as a pre-pandemic benchmark. This reflects anticipated
progress on the adoption of our innovative Resposable(TM) technology to reduce
waste and cost in elective surgery."

 

1    Adjusted EBITDA is earnings before interest, tax, depreciation and
amortization and adjusted by deducting non-recurring exceptional costs,
impairment of intangible acquisition costs and share based payment costs.
Adjusted loss before tax is the loss before tax adjusted by the same items.

 

2    Net cash equals cash less bank debt excluding IFRS16 lease obligations

 

For further information please contact:
 
 Surgical Innovations Group plc    www sigroupplc com (http://www.sigroupplc.com/)
 David Marsh, CEO                  Tel: 0113 230 7597
 Charmaine Day, CFO

 Singer Capital Markets (Nominated Adviser & Broker)                                 Tel: 020 7496 3000
 Aubrey Powell / Rachel Hayes

 Walbrook PR (Financial PR & Investor Relations)               Tel: 020 7933 8780 or si@walbrookpr.com
 Paul McManus / Lianne Applegarth  Mob: 07980 541 893 / 07584 391 303

 
 
About Surgical Innovations Group plc

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 reusable, 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.

Further information

Further details of the Group's businesses and products are available on the
following websites:

www.sigroupplc.com (http://www.sigroupplc.com)

www.surginno.com (http://www.surginno.com)

www.elementalhealthcare.co.uk (http://www.elementalhealthcare.co.uk)

 

To receive regular updates by email, please contact si@walbrookpr.com

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