Surgical Innovations Group plc · LSE:SUN
Surgical Innovations — H1 2021 Earnings Presentation
25 slides from Surgical Innovations's earnings presentation, September 2021
Slide 1: Interim results 2021
David Marsh Chief Executive Officer Interim results 2021 Charmaine Day Group Financial Controller and Company Secretary 1
Slide 2: Operational Highlights
Operational Highlights • Healthcare providers returning towards normal (pre-pandemic) activity levels • Service levels, cost base and R&D output benefiting from streamlined operational and regulatory processes • Strengthened international market exposure through closer relationships with key partner
Slide 3: Financial Highlights
Financial Highlights 2021 H1 Change vs. 2020 H1 % of pre- 2019 H1 comparable pandemic (pre-pandemic) Revenues £4.22m +63% £2.59m 82.6% £5.10m Direct Gross Margin1 42.4% -2.1% pts 44.5% 97.9% 44.5% Adj. EBITDA2 £0.21m +0.67 £(0.46)m 32.3% £0.65m Adj. operating loss (£0.15m) +1.02 £(0.87)m 11.2% £0.22
Slide 4: Revenue Analysis
Revenue Analysis • Revenue H1 £4.22m up 63% on prior (2020H1:£2.59m) • 83% of pre-pandemic levels in 2019 (2019H1:£5.10m) • Averaging around 3% over pre Covid levels in the same comparable period since the start H2 • YTD averaging 87% over pre Covid levels • Stronger revenue in H2 anticipated, but m
Slide 5: Gross margins / Revenue by territory
Gross margins Revenue by territory • UK continuing to improve into HY2 • APAC - strong growth, led by Japan • US activity levels continue with new anticipated evaluations • European - elective surgery at reduced levels 5
Slide 6: Gross Margins
Gross margins Gross Margins Gross margin analysis H1 2021 H1 2020 2020 £’000 £’000 £’000 Revenue 4.22 2.59 6.33 Cost of Sales (2.43) (1.44) (3.52) Underlying Gross Margin 1.79 1.15 2.81 Underlying Gross Margin % 42.40% 44.50% 44.40% Net Cost of Manufacturing (0.36) (0.47) (1.54) Contribution Margin
Slide 7: Operating Expenses
Operating Expenses • Adjusted Operating Expenses1 decreased by £0.43m • Decrease due to natural reduction in sales heads combined with Covid restricted travel and marketing costs • Increased expenditure in sales and marketing anticipated in H2 1 Adjusted operating expenses excluding goodwill impairm
Slide 8: Net result
Net result H1 2021 H1 2020 2020 Net result: £’m £’m £’m Adjusted EBITDA profit/(loss) 0.21 (0.46) 0.65 Less depreciation & amortisation 1 (0.35) (0.41) (0.43) Adjusted operating (loss)/profit (0.15) (0.87) 0.22 Net finance costs (0.06) (0.06) (0.09) Adjusted (loss)/profit before tax (0.21) (0.93) 0.
Slide 9: Financial Position
Financial Position 2021 H1 2020 £m £m • Planned reflation of working capital Tangible assets 1.26 1.44 • Cash used in operations £0.17m (FY2020:£1.07m 6.23 6.17 generated) Intangible assets Total non-current assets 7.49 7.62 • Adjusted net cash £2.66m1 (31 Dec 2020:£3.10m) Inventories 2.36 2.17 • Fi
Slide 10: Trading environment & outlook
Trading environment & outlook 10
Slide 11: Current Trading
Current Trading • Strong Q1 international sales aided by Group Sales £'m restocking in USA and Japan 6.0 5.0 • UK recovery in Q2 as elective surgery resumes 4.0 • Healthcare providers better prepared for Covid 3.0 • Evaluations and conversions in all key 2.0 geographical areas 1.0 • Sustainability c
Slide 12: Trading Environment - UK
Trading Environment - UK £500 45 UK Sales v COVID Hospitalisations Thousands Thousands £450 40 £400 35 • Hospital access improving £350 30 £300 25 • Activity estimated to be at 80% pre-COVID levels £250 £200 20 £150 15 • Cancer treatment a priority £100 £50 10 5 £- 0 Jul-20 Jun-20 Dec-20 Jun-21 Apr-
Slide 13: Trading Environment - USA
Trading Environment - USA Adler • Consortium trained and active US Sales £'m • 15 new accounts 0.9 • Activity in Key GPOs and Healthcare Providers 0.8 0.7 0.6 Microline Surgical 0.5 • Sales team trained and active 0.4 • Pipeline of evaluations 0.3 0.2 0.1 0 Challenges H1 2019 H1 2020 H1 2021 • 6 sta
Slide 14: Trading Environment - APAC
Trading Environment - APAC Japan • Elective surgery at reduced levels APAC Sales £'m • Access limited but relaxing 0.45 0.4 0.35 0.3 Surgeon Conversions YTD 0.25 0.2 • 28 YelloPort+ new Surgeonss 0.15 - 17 YelloPort Elite 0.1 - 3 YelloPort Single Use 0.05 0 • Evaluations scheduled: H1 2019 H1 2020 H
Slide 15: Trading Environment - Europe
Trading Environment - Europe • Elective surgery intermittently interrupted Europe Sales £'m • Access allowed to OR in key countries 0.7 0.6 0.5 0.4 0.3 • Sustainability messaging resonates in BENELUX 0.2 • Sustainability partnership programme being 0.1 developed for launch in 2022 0 H1 2019 H1 2020
Slide 16: Trading Environment - OEM
Trading Environment - OEM Medical OEM Sales £’m • Sales suppressed from pre-COVID levels but £1.20 £1.00 responding in H2 £0.80 • Significant opportunities for collaborations with £0.60 robotic company £0.40 £0.20 £0.00 H1 2019 H1 2020 H12021 Medical Industrial Industrial • Aerospace inspection devi
Slide 17: The Sustainability Agenda
The Sustainability Agenda • Launch of the Green Surgery Challenge • RCS Seminar “Sustainability in surgery – Disposable vs. Reusable" • Publication of Key Clinical Paper* (similar to follow) • Case study awaiting publication (similar outcome) • Enhanced sustainable marketing /training material • Cha
Slide 18: Operational Improvements – Key Projects
Operational Improvements – Key Projects Integration of Elemental Facilities upgrades • Operational efficiencies • Investment in manufacturing (capex) ➢ Nominal reduction in headcount ➢ Increase injection moulding & machining ➢ Reduction in operating costs capacity to allow for line extensions • Regu
Slide 19: New Product Development – Phase One
New Product Development – Phase One 5mm YelloPort Elite • Focus opportunities for MDD* pathway • Key line extensions to capitalise on market opportunities • Partnering with robotic company for development of access device • Establishing pipeline NPD that comes under MDD* *Medical Devices Directive 9
Slide 20: New Product Development
New Product Development Phase Two Future Opportunities • Requirement for MDR* pathway for approval • Ligating devices • Illuminno™ range • Collaborations within robotics • Close to design freeze • Energy based devices • Exploring sustainable options • Potential partnership options with • Collaborati
Slide 21: 3rd Party Opportunities
3rd Party Opportunities • Treatment of varicose veins • New 3-year distribution agreement • Estimated £6m market in UK • Progress slowed by NHS focus on COVID • Only one like-for-like competitor • 2 NHS Trusts in mid-stage procurement cycle • Improved technology • 15+ surgeons evaluated Dexter, 6 mo
Slide 22: Summary
Summary • Activity and revenues returning to pre-pandemic levels in most major markets • New and extended distribution agreements signed • Operational and regulatory improvements positively impacting business • Strengthened senior management team • Effective NPD planning • Investment in plant, facil
Slide 23: Appendices – Income Statement
Appendices Income Statement 2021 H1 £m 2020 H1 £m 2019 H1 £m Revenue 4.22 2.59 5.10 Cost of sales (2.79) (1.91) (2.90) Gross profit 1.43 0.69 2.20 Other operating expenses (1.62) (3.54) (2.43) Other Income 0.02 0.33 - 1 Adjusted EBITDA 0.21 (0.46) 0.65 Amortisation of intangible R&D costs (0.12) (0.
Slide 24: Appendices – Cashflow Statement
Cashflow 2021 H1 2020 Appendices Statement Cash flows from operating activities £m £m Operating loss (0.16) (3.17) Depreciation & amortisation 0.35 0.81 Impairment of Intangibles - 1.47 Other 0.02 0.13 Working Capital (0.38) 1.82 Cash (used in)/ generated operations (0.17) 1.07 Taxation received 0.1
Slide 25: Disclaimer
Disclaimer The information contained in these slides and the accompanying oral presentation (together, the “Presentation”) has been prepared by Surgical Innovations Group plc (the “Company”). The Presentation is subject to updating, completion, revision and amendment without notice and as such it ma
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