TIDMSUN
RNS Number : 7816L
Surgical Innovations Group PLC
15 September 2021
Surgical Innovations Group plc
("SI", the "Group" or "the Company")
Half-year Report
Interim results for the six-months ended 30 June 2021
Surgical Innovations Group plc (AIM: SUN), the designer,
manufacturer and distributor of innovative medical technology for
minimally invasive surgery, reports its unaudited financial results
for the six-month period ended 30 June 2021 ("2021 H1") and
provides an update on current trading and the outlook for the
Group's business.
Commercial and Operational highlights:
-- Healthcare providers returning towards normal activity levels following Covid-19 pandemic
-- Service levels, cost base and R&D output benefiting from
streamlined operational and regulatory processes
-- Strengthened international market exposure through closer relationships
-- Distribution network in key US market re-organised and expanded
-- Environmentally sustainable product ranges continued to gain global market traction
-- Further strengthened executive team through addition of new Sales & Marketing Director
-- CAPEX investment in manufacturing to address current and future demands
-- Relocation of UK distribution business ("Elemental") to Leeds
facility to be completed in second half
Financial highlights (1) :
-- Revenues up 63% on prior at GBP4.22m and amounted to 83% of
the comparable pre-pandemic period in 2019 (H1 2020: GBP2.59m,
2019H1: GBP5.10m(1) )
-- Direct gross margin (before net manufacturing cost) slightly
lower at 42.4% (2020H1:44.5%; 2019H1:44.5%(1) )
-- Adjusted EBITDA(2) profit of GBP0.21m (2020H1: GBP0.46m loss; 2019H1: GBP0.65m profit(1) )
-- Adjusted operating loss(2) of GBP0.15m (2020H1: GBP0.87m loss; 2019H1: GBP0.22m profit(1) )
-- Adjusted EPS amounted to a loss(2) of 0.004p per share
(2020H1: loss of 0.112p; 2019H1: earnings of 0.023p per share(1)
)
-- Planned reflation of working capital; cash used in operations
managed at GBP0.17m (Full year to Dec 2020: cash generated of
GBP1.07m)
-- Net cash(3) at end of period of GBP2.66m (as at 31 Dec 2020: GBP3.10m)
1 Comparative information is shown for the six months ended 30
June 2020, except where otherwise stated. Further comparative
information for the six months ended 30 June 2019 has been included
to provide a comparison with pre-pandemic trading.
2 Adjusted EBITDA, adjusted operating (loss)/ profit and
Adjusted EPS are stated before deducting non-recurring exceptional
costs of GBPnil (2020 H1: nil, 2019 H1: GBP0.1m), amortisation and
impairment of intangible acquisition costs of GBPnil (2020 H1:
GBP1.59m, 2019 H1: GBP0.18m) and share based payment costs of
GBP0.01m (2020 H1 GBP0.06m, 2019 H1: GBP0.10m).
3 Net cash equals cash less bank debt only.
Current Trading and Outlook
-- Revenues are now recovering towards pre-pandemic levels in most markets
-- Group level revenues for the first two months of the second
half are approximately 45% above the level seen in the comparable
period last year, and slightly ahead of that seen for the same
period in 2019 (pre-pandemic) albeit against seasonally low
comparables
-- Encouraging YTD trading at 88% of the 2019 pre-pandemic level
reflects the resilience of the business in light of the returning
demand
-- The UK is representative of the global healthcare market,
with progress back to pre-Covid levels recently, but likely to
continue the intermittent growth pattern experienced earlier in
2021 as countries come to terms with managing the longer-term
impact of the virus
-- The Group continues to trade profitably at the level of
adjusted EBITDA, supported by production activity returning to more
normal levels and a reduced overhead base
-- Further growth in the hospital activity is expected to have a
gradual return to pre-pandemic revenue levels going into 2022
Chairman of SI, Nigel Rogers, said:
" A strong recovery in trading is evident from the results for
the first half of the year, and this view is further reinforced by
the continued improvement in revenues in post-period trading. The
steps taken by management last year, initially to protect the
business and subsequently to simplify and strengthen our
operational and regulatory processes, are having demonstrably
positive effects on the financial and commercial effectiveness of
the business.
" With a strengthened management team, and further improved
distribution network and product range, we firmly believe that the
Group is well placed to continue its recovery to pre-pandemic
levels in most major markets in the coming months. Our
differentiated 'Resposable' product offering is gaining traction
and the Board sees encouraging prospects for 2022 and beyond."
For further information please contact:
Surgical Innovations Group Plc www.sigroupplc.com
David Marsh, CEO Tel: +44 (0)113 230 7597
Charmaine Day, Co Sec & GFC
Walbrook PR Tel: +44 (0)20 7933 8780 or si@walbrookpr.com
(Financial PR & Investor Relations)
Paul McManus / Lianne Cawthorne Mob: +44 (0)7980 541 893 / +44 (0)7584
391 303
Singer Capital Markets
(Nominated adviser &Broker) +44 (0)20 7496 3000
Aubrey Powell / Rachel Hayes
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 (' Elemental '), and exported widely through a global
network of trusted distribution partners. Many of our products in
this field are based on a " resposable (TM)" 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. The opportunity
to reduce plastic waste in surgery substantially through the use of
resposable products in preference to their single-use plastic
equivalents is well established across the UK NHS and many other
developed markets. This is increasingly a factor in tender
processes, limiting the range and number of suppliers able to offer
a comprehensive range of resposable products with similar or, in
some cases, better utility whilst delivering significant overall
cost savings to healthcare providers.
Our wholly-owned subsidiary, Elemental, also has exclusive UK
distribution rights 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 utilising our expertise to find innovative
solutions to the challenges faced by Surgeons. We have a number of
long-term relationships with key partner including the design,
development and manufacture of the FIX8 device for AMS. The Group
are currently working on a new collaboration with a Robotic Company
to design and develop an access device for their unique
instrumentation, it is anticipated that this will be launched in Q4
2021.
We aim for our brands to be recognised and respected by
healthcare professionals in all major geographical markets in which
we operate. We seek to 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. Elemental Healthcare,
based in Berkshire, was acquired by the Group on 1 August 2017, and
provides direct sales representation in the UK home market and a
range of third-party products for UK distribution. Commercial
activities including marketing, UK distribution and international
sales and marketing are currently based at Elemental's premises,
however consultations are underway to relocate these activities to
Leeds to enable the company to operate from a single site.
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 2021
A strong recovery in trading is evident from the results for the
first half of the year, and this view is further reinforced by the
continued improvement in revenues in post-period trading. The steps
taken by management last year, initially to protect the business
and subsequently to simplify and strengthen operational and
regulatory processes, are having demonstrably positive effects on
the financial and commercial effectiveness of the business.
With a strengthened management team, and further improved
distribution network and product range, we firmly believe that the
Group is well placed to continue its recovery to pre-pandemic
levels and beyond in the coming months.
Financial Overview
Trading in the first half of the year continued to build towards
pre-pandemic levels, with Group revenues at 83% of the comparable
pre-Covid 2019 period at GBP4.22m (2019 H1: GBP5.10m), and up 63%
on the comparable period last year (2020 H1: GBP2.59m).
UK revenues from SI branded products were GBP0.58m (2020 H1:
GBP0.39m, 2019 H1: GBP0.75m), and UK distribution sales were
GBP1.30m (2020 H1: GBP0.84m, 2019 H1: GBP1.49m), indicating
increased activity levels of 52% across the half year compared to
2020 and trending around 84% of the equivalent 2019 period. The
impact of the second wave negatively impacted the first quarter
with the initial focus on treating more urgent cancer related
cases, whilst adapting to manage the Covid-19 infection patients.
However, the second quarter has continued to improve, with
increased access to hospitals and as a consequence the Group
recorded monthly sales in the UK at the highest level since
September 2019.
First half revenues in Europe were 88% above the level achieved
last year at GBP0.57m (2020 H1: GBP0.31m) and around 89% of
pre-Covid levels (2019 H1: GBP0.65m). Elective surgery remains at
reduced levels, however there is a slight increase in activity,
albeit volumes remain lower.
Revenues from the US in the first half increased to GBP0.78m
(2020 H1: GBP0.29m, 2019 H1: GBP0.85m), with substantial stocking
orders in the first quarter. Sales activity levels in hospitals
continue return to normal as the US team makes progress with
significant general procurement organisations ("GPOs") and
healthcare providers as operating rooms ("OR") become accessible.
New evaluations are anticipated to increase in the second half,
however there are some states where access remains restricted as a
result of Covid challenges.
The APAC region generated strong revenue growth, and this is
continuing in the second half, with revenues doubling to GBP0.41m
from pre-Covid 2019 levels (2019 H1: GBP0.16m), a 27% increase on
the comparable period (2020 H1: GBP0.32m). Our distributor in Japan
continues to gain market share and a substantial stocking order in
the first quarter boosted the growth achieved. Strong- sales
activity continues with significant interest in the resposable@(TM)
product range.
OEM revenues for the half increased to GBP0.45m (2020H1:
GBP0.33m) but remain significantly down compared to pre- Covid
levels by 56% (2019 H1: GBP1.01m), as our key OEM partners in the
medical sector experienced similar pressures to those in our own
portfolio, and the significant order for non-medical products
delivered in 2018 and 2019 were not repeated this year. We
anticipate a small recovery in order patterns as the second half
progresses.
Commercial margins achieved on sales continued to be within
target range of 40-45% overall. The reported gross margin, which
reflects the under-recovery of factory overheads due to reduced
activity levels, remains lower at 33.9% (2020 H1: 26.5%, 2019 H1:
43.1%). Inventory levels were depleted towards the end of 2020, and
manufacturing recoveries remained low during the early months of
2021 until revenue growth trends were better established. The
planned increase in manufacturing activity improved the margins in
the second quarter, and this will continue to improve throughout
the second half of the year as revenue activity increases.
Other operating expenses were reported to show a decrease to
GBP1.62m (2020 H1: GBP3.54m), however the prior year included a
significant goodwill impairment of GBP1.44m. Excluding the effects
of the goodwill impairment adjustment and share based payments,
operating expenses decreased by GBP0.43m to GBP1.60m. (2020
H1:2.03m). A natural reduction in the sales team, combined with
Covid restricted travel and marketing activities, facilitated an
adjusted EBITDA profit for the period of GBP0.21m (2020 H1:
GBP0.46m loss, 2019H1: GBP0.65m profit). These costs are
anticipated to increase during the second half of the year as Covid
restrictions are relaxed and revenues return towards pre-pandemic
levels.
Adjusted operating loss before tax (before exceptional and
acquisition related costs and share based payment charges) for the
period was GBP0.15m (2020 H1: GBP0.87m, 2019 H1: profit of
GBP0.22m). The reported net loss before taxation amounted to
GBP0.22m against a net loss before taxation of GBP2.58m in the
corresponding period last year.
The Group reported a tax credit in the period of GBP0.13m (2020
H1: credit of GBP0.03m) which related to an enhanced research and
development claim for the year ending 2019. In terms of deferred
tax, the Group continues to hold substantial corporation tax losses
on which management takes a cautious view and consequently the
Group does not recognise a corresponding deferred tax asset.
Adjusted net earnings per share amounted to 0.004p (2020 H1:
GBP0.112p, 2019 H1: earnings of 0.023p). The net total
comprehensive income for the period amounted to a loss of GBP0.09m
(2020 H1: loss of GBP2.55m, 2019 H1: loss of GBP0.30m).
The Company continues to take sensible precautions to protect
the availability of cash resources and ensured a planned approach
to the reflation of the working capital which used GBP0.17m of cash
from operations (Full year 2020: GBP1.07m generated, H1 2020:
GBP0.54m generated). As of 30 June 2021, the Company had available
cash balances (excluding the unused GBP0.5m revolving credit
facility) of GBP4.69m (31 December 2020: GBP5.28m), net cash
resources (taking into account bank loans outstanding) of GBP2.66m
(31 December 2020: GBP3.10m), and financial headroom (comprising
net cash plus undrawn facilities) of GBP3.16m (31 December 2020:
GBP3.60m). Financial covenants have been complied with in full and
will continue to be tested on a quarterly basis. The Board is
satisfied that this provides the appropriate platform to support
the anticipated recovery in demand in the coming months.
Market landscape
The rate of elective surgery in the UK NHS continued to suffer
disruption in the first half of the year, as hospitals dealt with
increasing caseloads of Covid patients during the second wave.
Covid hospitalisations peaked at almost 40,000 beds in the first
quarter of the year but reduced to below 5,000 beds in the second.
By the end of the period, hospital access for our sales team was
improving, and the activity levels of elective surgery is now
estimated to be at around 80% of pre-Covid levels, with cancer
treatments a priority. There remains a substantial and growing
backlog of elective surgery, diagnosis and treatment across a broad
range of procedures, and the UK government and its agencies are
taking steps to streamline processes and provide additional funding
to tackle this issue.
Our sustainability and commercial advantages relative to single
use plastics have resulted in multiple hospital trials. In the
current year there have been five successful trials for SI
Reposable(TM) products. Furthermore, it is anticipated that the
increase in volumes of elective surgery and greater access to the
OR will allow the team to conclude the fifteen ongoing and
scheduled evaluations for SI Resposable(TM) devices. Together, if
successful, these new opportunities may represent material growth
for the Company.
The UK team at SI has worked hard to strengthen relationships
with our suppliers and this has seen a new three-year exclusive UK
distribution agreement with Microline Surgical, announced in March
2021, under which SI distributes Microline Surgical's complementary
portfolio of high-quality instruments also aimed at the MIS market
with a focus on the Resposable (TM) ethos of cost and
sustainability. This agreement consolidates this long-term
synergistic partnership and further endorses our sustainability
messaging for the UK market.
A further extension to the agreement with DistalMotion for
exclusive distribution of the Dexter robot in the UK has been
recently signed, taking the relationship through to September 2024.
The partnership with DistalMotion continues to strengthen and,
whilst training has been impacted by travel restrictions, 15
surgeons have evaluated Dexter at the facility in Lausanne, with a
further six currently planned before the end of the year. There
remains a strong pipeline of opportunities but, with the NHS
presently still focused on Covid, the procurement process has been
extended. However, progress is being made on this process in a
number of NHS Trusts and in time we anticipate product demand to
develop as the product supports greater efficiency and control in
laparoscopic surgery at a lower price point than other robotic
solutions.
Additionally, a new agreement for UK distribution with Venclose
Inc has been signed. Venclose manufactures a Radio Frequency device
for the treatment of chronic venous insufficiency (varicose vein)
and is estimated to address a market valued in excess of GBP6m per
annum in the UK.
Revenues in the OEM segment continued to be suppressed, although
there was some growth over the level achieved in the first half of
2020. Predominately revenue from the FIX8 device for AMS ,
restricted access and business development activities have been
impacted by non-essential surgical volumes due to Covid. Despite
demand remaining heavily suppressed compared to pre-pandemic levels
sales continues to improve with anticipated growth in the US
following pre-market approval in 2022.
In the US, the effects of the second wave of Covid on hospital
activity levels have been more geographically patchy, and also
slightly later than in the UK in timescale. In December 2020, we
announced the extension of our distribution agreement with Adler
Instrument Company Inc. covering our full range of handheld
surgical instruments with effect from 1 February 2021. This was
followed by an additional five-year US distribution agreement with
Microline Surgical Inc., also in February 2021, covering the
distribution of our range of YelloPort + and YelloPort Elite access
devices.
In both cases, our distributors are now fully equipped and
trained, and are active in initiating evaluations and conversion of
new accounts. US revenues in the first half of the year were above
pre-pandemic levels, and we anticipate building on this success in
the second half of the year and into 2022.
There has been further success in Japan, despite elective
surgery being at reduced levels. Our distributor has had limited
access to hospitals, yet several accounts have been converted and
further evaluations are scheduled when conditions are suitable ,
which is hoped will be the case later in the second half. Overall,
sales in the region exceeded pre-pandemic levels and are expected
to continue this upward momentum.
Activity in Europe reflects the same challenges as other regions
, with elective surgery intermittingly being interrupted by further
spikes in Covid hospitalisation and access to the OR remaining
challenging in some countries. However, sales are beginning to
return to pre-Covid levels in certain countries. In addition, it is
encouraging that an increase in promoting the sustainability
messaging has resulted in an increased number of product
evaluations in a number of key markets.
Operational, Regulatory and Development activities
We have continued to take all necessary steps to ensure the
safety and well-being of all employees, and the continuity of
supply to our customers through subsequent waves of the pandemic,
keeping disruption to a minimum. Many of the new methods of working
are now established practice offering efficiency benefits and will
be continued beyond the pandemic where appropriate.
In particular, the management of our UK sales and distribution
channel has increasingly been conducted remotely, with a reduction
in the utilisation of our facility at Hungerford. Accordingly,
consultations are now underway to relocate all UK sales, marketing
and customer service activities to the Leeds site, supplemented by
remote working from home where appropriate. This will enable us to
consolidate inventory and supply chain management, regulatory
activity and shipping costs, and will bring considerable operating
efficiencies across the company. Furthermore, operating from a
single site will better utilise the facility, bringing sales
training and clinical workshops adjacent to our production
facility, thus improving our integrated support to customers.
Investment in the site at Leeds has been stepped up, and we are
in the process of choosing a design partner to improve to the
fabric of the building and, in addition, the upgrading of
manufacturing equipment is underway with total expenditure over the
next twelve months anticipated to be up to GBP0.6m. This
expenditure will be phased and made, as appropriate, in parallel
with business improvements over the coming months and into the next
financial year and will further enhance our capabilities and market
presence.
In Quality Assurance and Regulatory Affairs (QA/RA), ongoing
planning for the transition to Medical Devices Regulatory (MDR)
framework remains on track, whilst our team has continued to
support new product development activities to enable key product
line extensions to progress under a rapid pathway under the Medical
Device Directive (MDD). Our approvals are expected to transition
from MDD to MDR by March 2023.
In addition to these line extensions, our development team are
working closely with a UK-based company to design and build port
access devices for exclusive use in conjunction with their range of
surgical robots, which are due for launch in Q4 2021
Current trading and outlook
Revenues in the period to 31 August 2021 have continued to
improve, increasing by approximately 45% above the level achieved
in the prior year, and approximately 3% ahead of the corresponding
pre-pandemic period of 2019, although these were a seasonally low
base. The UK is representative of the global healthcare market,
with progress returning to pre-Covid levels recently, but likely to
continue the volatile pattern experienced earlier in 2021 as
countries come to terms with managing the longer-term impact of the
virus. An encouraging YTD trading of 88% of pre-pandemic levels
reflects the strength of the business, and its ability to recover
quickly as demand returns. We anticipate that H2 will generate
stronger revenues than H1 but will continue to be interrupted by
sporadic temporary dips in demand caused by measures taken in
hospitals to manage spikes. Production activity has now returned to
normal levels such that manufacturing recoveries are no longer
diluting margins to a material extent, and with a reduced overhead
base, the Group is once again profitable at adjusted EBITDA.
With most major markets recovering, and our product range
gaining market share, the prospects for 2022 and beyond look
encouraging.
Nigel Rogers
Chairman
15 September 2021
Unaudited consolidated income statement
for the six months ended 30 June 2021
Unaudited Unaudited Audited
six months six months Year
ended ended Ended
30 June 30 June 31 December
2021 2020 2020
Notes GBP'000 GBP'000 GBP'000
--------------------------------- ------ ----------- ----------- ------------
Revenue 3 4,218 2,593 6,329
Cost of sales (2,788) (1,906) (5,057)
--------------------------------- ------ ----------- ----------- ------------
Gross profit 2 1,430 687 1,272
Other operating expenses (1,615) (3,536) (5,063)
Other income 4 25 329 621
--------------------------------- ------ ----------- ----------- ------------
Adjusted EBITDA profit/(loss)
* 206 (460) (661)
Amortisation of intangible
assets (117) (266) (412)
Impairment of intangible assets - (1,444) (1,314)
Depreciation of tangible assets (234) (288) (559)
Exceptional items - - (108)
Share based payments (15) (62) (116)
--------------------------------- ------ ----------- ----------- ------------
Operating loss (160) (2,520) (3,170)
Finance costs 5 (63) (64) (138)
Finance income - 1 1
--------------------------------- ------ ----------- ----------- ------------
Loss before taxation (223) (2,583) (3,307)
Taxation credit/(charge) 6 129 28 31
--------------------------------- ------ ----------- ----------- ------------
Loss and total comprehensive
income (94) (2,555) (3,276)
--------------------------------- ------ ----------- ----------- ------------
Earnings per share
Basic 7 (0.01p) (0.32p) (0.39p)
Diluted 7 (0.01p) (0.32p) (0.39p)
--------------------------------- ------ ----------- ----------- ------------
* Adjusted EBITDA is earnings before interest, depreciation,
amortisation (including impairment) and exceptional items.
Unaudited consolidated statement of changes in equity
for the six months ended 30 June 2021
Share Share Capital Merger Retained
Notes capital premium reserve reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------ ------------ -------- -------- -------- -------- --------- --------
Balance as at 1 January 2021 9,328 6,587 329 1,250 (6,404) 11,090
Employee share-based payment
charge - - - - 15 15
-------------------------------------------- -------- -------- -------- -------- --------- --------
Total - Transaction with
owners 9,328 6,587 329 1,250 (6,389) 11,105
-------------------------------------------- -------- -------- -------- -------- --------- --------
Loss and total comprehensive
income for the period - - - - (94) (94)
-------------------------------------------- -------- -------- -------- -------- --------- --------
Unaudited balance as at 30
June 2021 9,328 6,587 329 1,250 (6,483) 11,011
-------------------------------------------- -------- -------- -------- -------- --------- --------
Unaudited consolidated balance sheet
as at 30 June 2021
Unaudited Unaudited Audited
30 June 30 June 31 December
2021 2020 2020
Notes GBP'000 GBP'000 GBP'000
-------------------------------- ------ ---------- ---------- -------------------------
Assets
Non-current assets
Property, plant and equipment 336 565 412
Right of Use Assets 920 1,135 1,030
Intangible assets 6,234 6,145 6,173
7,490 7,845 7,615
-------------------------------- ------ ---------- ---------- -------------------------
Current assets
Inventories 2,362 2,948 2,167
Trade and other receivables 10 1,529 1,039 1,283
Cash at bank and in hand 4,692 2,942 5,278
-------------------------------- ------ ---------- ---------- -------------------------
8,583 6,929 8,728
-------------------------------- ------ ---------- ---------- -------------------------
Total assets 16,073 14,774 16,343
-------------------------------- ------ ---------- ---------- -------------------------
Equity and liabilities
Equity attributable to equity
holders of the parent company
Share capital 9,328 7,953 9,328
Share premium account 6,587 5,904 6,587
Capital reserve 329 329 329
Merger reserve 1,250 1,250 1,250
Retained earnings (6,483) (5,737) (6,404)
-------------------------------- ------ ---------- ---------- -------------------------
Total equity 11,011 9,699 11,090
-------------------------------- ------ ---------- ---------- -------------------------
Non-current liabilities
Borrowings 9 - 2,034 1,879
Deferred tax liabilities - 3 -
Dilapidation provision 165 165 165
Right of Use lease liability 833 996 907
-------------------------------- ------ ---------- ---------- -------------------------
998 3,198 2,951
-------------------------------- ------ ---------- ---------- -------------------------
Current liabilities
Trade and other payables 10 1,456 1,046 1,449
Accruals 423 425 369
Right of Use lease liability 156 190 298
Borrowings 9 2,029 216 186
-------------------------------- ------ ---------- ---------- -------------------------
4,064 1,877 2,302
-------------------------------- ------ ---------- ---------- -------------------------
Total liabilities 5,062 5,075 5,253
-------------------------------- ------ ---------- ---------- -------------------------
Total equity and liabilities 16,073 14,774 16,343
-------------------------------- ------ ---------- ---------- -------------------------
Unaudited consolidated cash flow statement
for the six months ended 30 June 2021
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 June 30 June 31 December
Notes 2021 2020 2020
GBP'000 GBP'000 GBP'000
-------------------------------------- ------ ------------------- ----------- ----------------
Cash flows from operating activities
Loss after tax for the year (94) (2,555) (3,276)
Adjustments for:
Taxation (129) (28) (31)
Finance Income - - (1)
Finance Costs 5 63 64 138
Other Income-CBILS interest
grant (23) - (27)
Depreciation of property, plant
and equipment 134 183 348
Amortisation and impairment
of intangible assets 117 1,710 1,726
Depreciation of right of use
assets 99 105 211
Share-based payment charge 15 63 116
Foreign Exchange gain/(loss) 22 65 42
(Increase)/decrease in inventories (196) (23) 758
(Increase)/decrease in current
receivables (246) 1,320 1,076
Increase/(decrease) in trade
and other payables 64 (364) (10)
-------------------------------------- ------ ------------------- ----------- ----------------
Cash (used)/ generated from
operations (174) 540 1,070
Taxation received 6 129 - -
Interest received - - -
Interest paid (10) (15) (28)
-------------------------------------- ------ ------------------- ----------- ----------------
Net cash (used)/generated from
operating activities (55) 525 1,042
-------------------------------------- ------ ------------------- ----------- ----------------
Payments to acquire property,
plant and equipment (58) (30) (42)
Acquisition of intangible assets (178) (70) (113)
-------------------------------------- ------ ------------------- ----------- ----------------
Net cash used in investment
activities (236) (100) (155)
-------------------------------------- ------ ------------------- ----------- ----------------
Repayment of bank loan 9 (150) (75) (150)
CBILS 9 - 1,500 1,500
Net proceeds from issue of
share capital - - 2,052
Payments to Right of Use lease
liabilities (123) (125) (251)
-------------------------------------- ------ ------------------- ----------- ----------------
Net cash (used)/generated in
financing activities (273) 1,300 3,151
-------------------------------------- ------ ------------------- ----------- ----------------
Net (decrease)/increase in
cash and cash equivalents (564) 1,725 4,038
Cash and cash equivalents at
beginning of period 5,278 1,282 1,282
Effective exchange rate fluctuations
on cash held (22) (65) (42)
-------------------------------------- ------ ------------------- ----------- ----------------
Net cash and cash equivalents
at end of period 4,692 2,942 5,278
-------------------------------------- ------ ------------------- ----------- ----------------
Analysis of net borrowings:
Cash at bank and in hand 4,692 2,942 5,278
Bank loan 9 (529) (750) (677)
CBILS 9 (1,500) (1,500) (1,500)
Obligations under right of
use lease liabilities (989) (1,186) (1,093)
-------------------------------------- ------ ------------------- ----------- ----------------
Net Cash/(debt) at end of period 1,674 (494) 2,008
-------------------------------------- ------ ------------------- ----------- ----------------
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 on15 September 2021. 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 2020, 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 2020 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.
Going concern and funding
The Directors have considered the available cash resources of
the Group, with the additional secured funding in 2020 and the
current internal anticipated forecasts the Directors have a
reasonable expectation that the Group have adequate resources and
support to continue in operational existence for the foreseeable
future, considered to be at least 12 months for the date of
approval from the financial statements.
2. Disaggregation of gross margin
The Group has disaggregated margins Six months Six months 12 months
in the following table: ending ending ending
30 June 30 June 31 Dec
2021 2020 2020
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
------------------------------------- --------------- -------------- ----------------
Revenue 4,218 2,593 6,329
Cost of Sales (2,431) (1,440) (3,519)
Underlying Gross Margin 1,787 1,153 2,810
Underlying Gross Margin % 42.4% 44.5% 44.4%
Net Cost of Manufacturing (357) (466) (1,538)
------------------------------------- --------------- -------------- ----------------
Contribution Margin 1,430 687 1,272
------------------------------------- --------------- -------------- ----------------
Contribution Margin % 33.9% 26.5% 20.1%
------------------------------------- --------------- -------------- ----------------
3. Disaggregation of revenue
The Group has disaggregated revenues in SI Brand Distribution OEM Total
the following table:
Six months ended 30 June 2021 (unaudited) GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------- ------------- ------------- -------- --------------
United Kingdom 582 1,295 408 2,285
Europe 574 - - 574
US 750 - 37 787
APAC 406 - - 406
Rest of World 166 - - 166
------------------------------------------- ------------- ------------- -------- --------------
2,478 1,295 445 4,218
------------------------------------------- ------------- ------------- -------- --------------
SI Brand Distribution OEM Total
Six months ended 30 June 2020 (unaudited) GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------- ------------- ------------- -------- --------------
United Kingdom 391 840 281 1,512
Europe 305 - - 305
US 291 - 47 338
APAC 320 - - 320
Rest of World 118 - - 118
------------------------------------------- ------------- ------------- -------- --------------
1,425 840 328 2,593
------------------------------------------- ------------- ------------- -------- --------------
SI Brand Distribution OEM Total
Year ended 31December 2020 (audited) GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------- ------------- ------------- -------- --------------
United Kingdom 889 2,311 457 3,657
Europe 726 - - 726
US 882 - 151 1,033
APAC 681 - - 681
Rest of World 232 - - 232
-------------------------------------- ------------- ------------- -------- --------------
3,410 2,311 608 6,329
-------------------------------------- ------------- ------------- -------- --------------
SI Brand Distribution OEM Total
Six months ended 30 June 2019 (unaudited) GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------- ------------- ------------- -------- --------------
United Kingdom 754 1,489 923 3,166
Europe 648 - - 648
US 769 - 82 851
APAC 160 - - 160
Rest of World 278 - - 278
------------------------------------------- ------------- ------------- -------- --------------
2,609 1,489 1,005 5,103
------------------------------------------- ------------- ------------- -------- --------------
Revenues are allocated geographically on the basis of where
revenues were received from and not from the ultimate final
destination of use.
4. Other Income
Other Income: Six month Six month 12 months
ended ended 30 ended 31
30 June June Dec
2020 2020 2020
GBP'000 GBP'000 GBP'000
---------- ---------- ----------
CJRS 2 329 594
---------- ---------- ----------
CBILS-Interest free (12 months) 23 - 27
---------- ---------- ----------
25 329 621
---------- ---------- ----------
5. Finance Costs
Finance costs: Six month Six month 12 months
ended ended 30 ended 31
30 June June Dec
2020 2020 2020
GBP'000 GBP'000 GBP'000
---------- ---------- ----------
On bank borrowings 33 29 70
---------- ---------- ----------
On right-of-use assets 30 35 68
---------- ---------- ----------
63 64 138
---------- ---------- ----------
6. Tax
Current taxation
During 2020 the Group submitted an enhanced Research and
development claim in respect of 2019 amounting to GBP0.13m this was
paid in the current year.
Deferred taxation
Overall the Group continues to hold substantial tax losses on
which it holds a cautious view and consequently the Group has
chosen not to recognise those losses fully.
7. Earnings per share
Unaudited Unaudited Audited
six months six months year
ended ended ended
30 June 30 June 31 December
2021 2020 2020
-------------------- ----------- ----------- ------------
Earnings per share
Basic (0.010p) (0.322p) (0.393p)
Diluted (0.010p) (0.322p) (0.393p)
Adjusted 0.004p (0.112p) (0.189p)
-------------------- ----------- ----------- ------------
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 and impairment costs relating to the acquisition
of Elemental Healthcare and share based payments) by the weighted
average number of shares in issue.
The anti-dilutive effect of unexercised shares options has not
been taken into account and therefore the diluted earnings per
share is equal to the basic earnings per share.
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
2021 2020 2020
'000s '000s '000s
-------------------------------------- ----------- ----------- ------------------
Basic earnings per share 931,573 795,316 834,763
Dilutive effect of unexercised share
options 1,243 1,610 2,061
-------------------------------------- ----------- ----------- ------------------
Diluted earnings per share 932,816 796,926 836,824
-------------------------------------- ----------- ----------- ------------------
8. IFRS16
Impact on Income statement: Unaudited Unaudited Audited
6 Months 6 Months 12 months
to to to 31
30 June 30 June December
2021 2020 2020
GBP'000 GBP'000 GBP'000
---------- ---------- ----------------------
Impact on EBITDA 123 125 251
---------- ---------- ----------------------
Depreciation (99) (105) (211)
---------- ---------- ----------------------
Finance costs (30) (35) (68)
---------- ---------- ----------------------
Impact on profit before tax (6) (15) (28)
---------- ---------- ----------------------
9. Net borrowings
At amortised cost Six month Six month 12 months
ended 30 ended 30 ended 31
June 2021 June 2020 Dec
2020
GBP'000 GBP'000 GBP'000
----------- ----------- ----------
Cash & cash equivalents 4,692 2,942 5,278
----------- ----------- ----------
Bank borrowings-Current (2,029) (216) (298)
----------- ----------- ----------
Bank borrowings-Non-current - (2,034) (1,879)
----------- ----------- ----------
Adjusted net cash 2,663 692 3,101
----------- ----------- ----------
Lease liabilities-Current (156) (190) (186)
----------- ----------- ----------
Lease liabilities Non-current (833) (996) (907)
----------- ----------- ----------
Net Cash/(debt) 1,674 (494) 2,008
----------- ----------- ----------
The sterling bank loan provided by Yorkshire Bank on 1 August
2017 for a five-year term was split into two loan agreements A and
B. During 2019 the Board elected to repay GBP1.0m of term Loan B in
advance of the due date, from available cash resources.
Loan A of GBP1.5m is subject to quarterly payments of GBP0.075m
which commenced on 31 October 2017, totalling repayments GBP0.3m
per annum at an interest rate of LIBOR plus 3% per annum. On 31
December 2020 the remaining balance of the term loans was GBP0.68m.
The bank has made available a Revolving Credit Facility (RCF) of up
to GBP0.5m for working capital and other purposes.
In May 2020 the Company agreed with its bankers to suspend
normal capital repayments of GBP0.075m per quarter under the
existing loan facility of GBP0.75m until 31 October 2020, and to
maintain the flexibility of the existing GBP0.50m revolving credit
facility. In addition to secure further funding, the Company agreed
a new facility of GBP1.50m under the Coronavirus Business
Interruption Loan Scheme. The aggregate balance as at the 30 June
2021 is GBP2.03m and both loans are repayable in May 2022.
Financial covenants will continue to be tested on a quarterly basis
with ample headroom at drawdown.
10. Financial Instruments
The financial assets of the Group are categorised as
follows:
At amortised cost Six month Six month 12 months
ended ended 30 ended 31
30 June June Dec
2021 2020 2020
GBP'000 GBP'000 GBP'000
---------- ---------- ----------
Trade receivables 1,200 598 963
---------- ---------- ----------
CJRS receivable - 111 -
---------- ---------- ----------
Cash and cash equivalents 4,692 2,942 5,278
---------- ---------- ----------
5,892 3,651 6,241
---------- ---------- ----------
The financial liabilities of the Group are categorised as
follows:
At amortised cost Six month Six month 12 months
ended ended 30 ended 31
30 June June Dec
2021 2020 2020
GBP'000 GBP'000 GBP'000
---------- ---------- ----------
Trade payables 1,000 298 749
---------- ---------- ----------
Other payables 321 303 294
---------- ---------- ----------
Deferred creditors 20 298 242
---------- ---------- ----------
Lease liabilities - Current 156 190 186
---------- ---------- ----------
Lease liabilities - Non-current 833 996 907
---------- ---------- ----------
Bank borrowings - Current 2,029 216 298
---------- ---------- ----------
Bank borrowings - Non-current - 2,034 1,879
---------- ---------- ----------
4,359 4,335 4,555
---------- ---------- ----------
Trade and other payables Six month Six month 12 months
ended ended 30 ended 31
30 June June Dec
2020 2020 2020
GBP'000 GBP'000 GBP'000
---------- ---------- ----------
Trade payables 1,000 298 749
---------- ---------- ----------
Other tax and social security 115 147 164
---------- ---------- ----------
Corporation tax - - -
---------- ---------- ----------
Other payables 321 303 294
---------- ---------- ----------
Deferred creditors 20 298 242
---------- ---------- ----------
1,456 1,046 1,449
---------- ---------- ----------
11. Interim Report
This interim report is available at www.sigroupplc.com .
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END
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September 15, 2021 02:00 ET (06:00 GMT)
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