TIDMSUN
RNS Number : 2500J
Surgical Innovations Group PLC
21 December 2020
Surgical Innovations Group plc
("Surgical Innovations", "SI" or the "Company")
Trading update
Improvement in revenues from H1
Demand for elective surgery is building
Surgical Innovations Group plc (AIM: SUN) the designer,
manufacturer and distributor of innovative medical technology for
minimally invasive surgery ("MIS"), provides an update on current
trading for the financial year ending 31 December 2020.
Revenues in the second half of the year have recovered in line
with management expectations, with Group revenue for the full year
now expected to exceed GBP6 million. Direct gross margins (before
manufacturing volume variances) have been maintained at around 44%
of revenues. Production recommenced in October to service ongoing
customer requirements, and direct costs and overheads continue to
be managed under close control, enabling the Company to trade close
to the cash breakeven level.
The Company raised equity of GBP2.05m (net of associated costs)
in September 2020 to provide investment capital and additional
financial headroom. At 30 November 2020, net cash balances amounted
to GBP3.38m(1) , an increase of GBP2.69m since our interim report
as at 30 June 2020 (GBP0.69m).
The Global Healthcare market continues to build some resilience
to the ongoing effects of the COVID-19 pandemic, with improved
pathways for treating patients with Coronavirus enabling elective
surgery to resume to some degree in most markets in the second half
of 2020. Elective surgery in the NHS, whilst still reduced compared
to pre-COVID-19 levels, has been less impacted by the second wave
compared to the first. The USA remains strong despite the
well-documented COVID-19 situation and we continue to see sales at
levels close to those seen last year. APAC has performed well in
2020 despite COVID-19 and is on plan for the year, and the company
expect this to be another key area for us in 2021. Europe is still
slower to recover than most markets but we are seeing consistent,
albeit lower, levels of ordering by key partners.
Whilst the various COVID-19 vaccines are welcome news, it is
anticipated that roll out will take some months. Recent
developments suggest that it is reasonable to anticipate greater
seasonal pressure on beds, and further reductions in elective
surgery over the winter. The Company is well positioned to conserve
resources during this period of continued subdued demand, and then
benefit from an expected recovery, with a return to normalised
activity levels towards the end of 2021.
Since the interim results in September 2020, significant
progress has been made across various growth initiatives,
including:
-- Consolidating routes to market in the USA via:
- The new agreement announced last week with Adler Instruments
Inc. ("Adler"), our longest tenured US partner, for the
distribution of our Logicut and Eco-Cut scissor brands worth
approximately $12m over five years. Adler is a highly experienced
distribution company with access to nationwide coverage and has
already made some exciting account conversions; and
- Ongoing progress in developing a partnership with a key MIS
player to distribute our range of Elite and YP+ access devices in
the US, with a training and evaluation phase anticipated to
successfully conclude in Q1 2021. The global trocar market is
estimated to be worth $561m in sales in 2020, with the US
accounting for approximately $152m or 27%(2)
-- Further data being generated to support sustainability positioning:
- The recently announced further collaboration with the Centre
for Sustainable Healthcare ("CSH") will enable validation of the
environmental benefits messaging for our products and demonstrate
the quantifiable cost and environmental savings from a 'greener'
operating room
- Data generated will help develop information and training for
NHS hospitals and staff as they seek to fulfil their NHS 'Net Zero'
obligations on sustainability; our range of Resposable(TM) surgical
instruments reduces plastic waste by approximately 70% compared to
that generated from commonly used competing products, whilst still
providing class leading quality and functionality
- Additionally, CSH's global network will help direct the
Company's efforts to promote the green
credentials of its Resposable(TM) product portfolio to existing and new international partners
-- New product launches and new product development:
- The full launch of Cellis Breast was recently announced,
following favourable early evaluations by clinicians and positive
post-operative outcomes, providing an opportunity to capitalise on
a UK market worth approximately GBP16 million per year. The Company
expects to see strong growth through 2021 from both Cellis Breast
and Cellis AWR (Abdominal Wall Reconstruction) which addresses a
similar size UK market. These opportunities reflect the close
collaboration of the Group's subsidiary, Elemental Healthcare, with
the manufacturer, Meccellis BioTech, and key UK surgeons over a
number of years to facilitate development
- Surgical Innovations is developing a pipeline of both line
extensions and new devices to market over the next 18 months,
including larger diameter YP+ trocars to accommodate other devices
that are more routinely used in this market and the associated
introduction of an Optical 5mm trocar from H2 2021
- Collaborations on early stage projects with a number of
robotic manufacturers who have recognised the Company's expertise
in access devices and instruments; these represent exciting
opportunities over the longer term
David Marsh, CEO of Surgical Innovations, said: "We are pleased
with the work we carried out to mitigate against the challenges of
COVID-19 pandemic, taking advantage of the production hiatus to
streamline operational and regulatory processes. This has been
beneficial for the Group as we continue to be at the forefront of
the sustainability agenda with our Resposable(TM) product
portfolio. Recent progress suggests our product portfolio is well
aligned with the needs of healthcare practitioners and providers
and so, notwithstanding the ongoing effects of the pandemic, we are
optimistic for the medium to long term outlook."
The Company expects to release its audited results for the year
ended 31 December 2020 in late March 2021.
Notes:
1. Net cash equals cash less bank debt
2. Research and Markets report, Trocars - Global Market Trajectory & Analytics, Sept. 2020
For further information please contact:
Surgical Innovations Group plc www sigroupplc com
David Marsh, CEO Tel: 0113 230 7597
Charmaine Day, Co Sec & GFC
N+1 Singer (Nominated Adviser
& Broker) Tel: 020 7496 3000
Aubrey Powell (Corporate Finance)
Rachel Hayes (Corporate Broking)
Walbrook PR (Financial PR & Investor
Relations) Tel: 020 7933 8780 or si@walbrookpr.com
Mob: 07980 541 893 / 07584 391
Paul McManus / Lianne Cawthorne 303
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END
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