Surgical Innovations Group plc · LSE:SUN
Surgical Innovations — FY2017 Earnings Presentation
21 slides from Surgical Innovations's earnings presentation, March 2018
Slide 1: Final Results 2017
Final Results 2017 For the year ended 31 December 2017 Nigel Rogers – Executive Chairman Melanie Ross – COO & CFO March 2018
Slide 2: Mission Statement
2 Mission Statement “Inspired by surgeons for the benefit of patients” • Aim to provide a broad portfolio of products • Cost effective, procedure specific instruments and devices • Developed in-house, and through partners and acquisition • Manufacture & design: innovative and user-friendly • Integri
Slide 3: Business model & segmentation
3 Business model & segmentation • SI Branded products as core activity • Sold direct in UK home market via Elemental • Distribution in over 35 countries worldwide via third parties • UK distribution of complementary product ranges from other manufacturers via Elemental • OEM – design & manufacture o
Slide 4: Key markets
4 Key markets Branded and distributed Sales 2017 FY proforma Fields of use • Laparoscopy UK Distribution • Obesity UK Branded • Breast & AW reconstruction RoW • Hernia repair Europe USA Notes
Slide 5: Progress in 2017
5 Progress in 2017 • Financial results in line with upgraded forecasts • Acquired Elemental Healthcare: integration completed • New board appointments: commercial leadership • Overseas distribution relationships strengthened • Yelloport® Elite launched & roll out progressing well • Managed transitio
Slide 6: Income statement
6 Income statement Revenue growth of 44%, includes 8% like for like 2017 2016 and 3% due to FX £m £m Revenue 8.75 6.09 Gross margin 42.5% Cost of sales (5.03) (4.03) (33.8% in prior year) Gross profit 3.72 2.06 Other operating expenses (3.16) (1.59) Increases in OPEX Other Income 0.02 - reflect addi
Slide 7: Income statement - detail
7 Income statement - detail 10 10 Revenue Bridge (£m) 9 0.15 9 8 8 2.02 7 8.75 Revenue by Segment 7 0.15 10 0.35 6 8 6 6.09 6 5 2016 Organic Organic EHL FX 2017 4 Growth SI Growth OEM Acquisition 2 0 2014 2015 2016 2017 SI Branded OEM Third Party Sales Notes
Slide 8: Income statement – EBITDA Bridge (£m)
Income statement – EBITDA Bridge (£m) 8 2.50 0.51 2.00 0.27 0.18 0.21 1.50 £,000 2.22 1.00 1.71 1.41 0.50 - 2016-EBITDA Organic Growth Margin OPEX 2017-EBITDA Acquisition 2017-Adjusted Improvement EBITDA Base Fall Rise Base Notes
Slide 9: Segmental – SI Brand
9 Segmental – SI Brand • Overview/Recap • Route to market • Port access devices • Direct Sales force (UK) • Surgical Instruments • 3rd Party Distribution (RoW) • Retraction • Resposable® concept • Key Achievements Revenues £m • Revenue up 15% 6 5 • Yelloport® Elite launch 4 • Regulatory Challenges 3
Slide 10: Segmental – UK Distribution
10 Segmental – UK Distribution • Overview/Recap • Key vendors • Elemental acquired August • Microline Inc 2017 • Meccellis Biotech • SI Branded direct sales • Péters Surgical • Complementary MIS devices • Cousin Biotech • New/Innovative developments • Bariatric Solutions • GID/Novadaq now ceased • R
Slide 11: Case Study - Meccellis
11 Case Study - Meccellis What is Cellis ® Acellular Dermal Matrix (ADM) ADM’s are soft tissue matrix grafts created by a process that results in decellularization but leaves the Collagen matrix intact. The matrix is purified from its genetic elements (cells, DNA, RNA, epitopes) allowing optimal sup
Slide 12: Segmental – OEM
12 Segmental – OEM • Overview/Recap • Key Products • Design & Build for key partners • Fix-8 device for hernia repair (AMS plc) • Now also includes precision • Valves and Seals for a SILS device sold engineering previously reported by a global medical company separately • R&D collaboration with UK b
Slide 13: Cash Flow
13 Cash Flow 2017 2016 £m £m Cash flows from operating activities Operating profit 0.58 0.47 Increased amortisation due in main to Exceptional items 0.01 0.00 amortising the intangibles relating to Depreciation & amortisation 1.41 0.94 the acquisition (see appendix) Other 0.01 0.08 Operating cash fl
Slide 14: Cash Flow
14 Cash Flow 2017 2016 £m £m Net cash generated from operations 1.60 2.85 Cash flows from investing activities (8.34) (0.78) Capex on tangible FA (0.25) (0.16) Capitalised development costs (0.38) (0.44) Acquisition (7.71) (0.18) Cash flows from financing activities 7.70 (2.20) Issue of equity 5.31
Slide 15: Balance Sheet
15 Balance Sheet 2017 2016 £m £m Tangible fixed assets 1.33 1.58 Intangibles £m 11.01 1.60 Capitalised development costs 1.27 Intangible assets Product Knowledge 0.19 Total non-current assets 12.34 3.18 Goodwill 8.59 Inventories 2.47 1.50 Supplier Agreements 0.96 Trade receivables 1.54 1.10 11.01 Ot
Slide 16: Future Plans
16 Future Plans • Current Trading • Initiatives • FY18Q1 affected by NHS • Elite promotion to encourage take up a contraints in UK success • Signs of normalising now • Enhanced international sales resource evident • New product lines for UK • Prospects remain positive • Expect uplift in OEM • M&A Cr
Slide 17: Appendices
17 Appendices Notes
Slide 18: Board of Directors
18 Board of Directors • Nigel Rogers (Executive Chairman) – FCA, 20+ years as FD/CEO/NED/Chair of various AIM- listed businesses, including SDM, SIXH and TRT • Melanie Ross (COO/CFO) – member of CIMA, previously at AESSEAL plc and Eaton Cooper Lighting & Safety • Adam Power (Group Development Direct
Slide 19: Major Shareholders
19 Major Shareholders As at 27 February 2018 % Getz Bros 13.0% Directors 12.3% Ruffer LLP 9.6% Healthinvest Partners AB 5.1% CWN John 5.1% Marlborough 4.9% Unicorn AIM VCT plc 3.4% Notes
Slide 20: Foreign Currency
20 Foreign Currency FX Exposure • Current Position • The group has a natural hedge in place on $ 120% where SI sell and EHL buy negating the need for financial hedging. 100% • No such natural hedge in place with € where 80% EHL buy but SI have limited distributors on € price lists. 60% • Net buyers
Slide 21: Acquisition of Elemental Healthcare
21 Acquisition of Elemental Healthcare • In August 2017 SI Group plc acquired 100% of the equity of EHL for £9.375m • £1.875m shares retained by vendors • £5m equity raised in the market • £2.5m new loan facility • In the 2017 FY accounts this is shown as • £1.29m Intangibles to be written off over
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