Surgical Innovations Group Plc · LSE:SUN
Surgical Innovations — FY2021 Earnings Presentation
27 slides from Surgical Innovations's earnings presentation, March 2022
Slide 1: 2021 Year End Results
LUNCH 2021 Year End Results David Marsh, Chief Executive Officer Charmaine Day, Chief Financial Officer 1
Slide 2: Company Overview
Company Overview • Founded by Prof. Michael McMahon, leading in laparoscopic surgery • Design and manufacturing expertise in innovative surgical devices British based MedTech company designing and manufacturing • Focus on Minimally Invasive Surgery (MIS) innovative and sustainable surgical • Leading
Slide 3: Financials
Financials 3
Slide 4: Financial Highlights
Financial Highlights 2021 Change 2020 Change 2019 • Inventory levels optimised due to supply chain vs. prior year vs pre- pre- issues; cash used in operation £0.43m pandemic pandemic (2020: net cash generated of £1.04m) Revenues1 £9.13m +44.2% £6.33m 85.1% £10.73m • Increased investment in capital e
Slide 5: Revenue Analysis
Revenue Analysis Revenue FY comparative £'m • Sales for SI brand at 82.4% of relative normal levels 12.00 • Distribution sales increased now back at 2019 levels 10.00 • OEM: slow start with increased activity in HY2 • 2022 year to date revenue is slightly ahead of pre- 8.00 pandemic levels of 2019 6
Slide 6: Revenue Analysis By Territory
Revenue Analysis By Territory Revenue by territory £'m 12.0 • Recovery overall stronger in HY2 • UK market excluding OEM towards Q4 back to 10.0 normal pre-pandemic levels • US and APAC substantial stocking HY1, slower than 8.0 anticipated • Europe demand remains more muted 6.0 4.0 2.0 0.0 2021 2020
Slide 7: Margin Analysis
Margin Analysis Gross Margin • Underlying gross margin within target range 2021 2020 2019 Analysis • Factory levels still at reduced levels, much improved £’000 £’000 £’000 from 2020 • Increasing people costs and the reduction of available Revenue 9.13 6.33 10.73 skilled labour resource is affecting
Slide 8: Operating Expenses
Operating Expenses Adjusted operating expenses1 £'m • Adjusted operating expenses1 similar cost base to 2020 3.90 as costs remained controlled 3.80 • Further investment into sales and marketing • Increased headcount in regulatory for MDR2 3.70 certification 3.60 • Anticipated to be back at 2019 leve
Slide 9: Net Result
Net Result Net Result £'m HY1 HY2 2021 2020 2019 2.00 Adjusted Operating (1.60) (1.76) (3.36) (3.36) (3.79) 1.50 expenses1 1.00 Adjusted EBITDA1 0.21 0.29 0.50 (0.66) 1.45 0.50 Adjusted Operating (loss)/profit before (0.21) (0.12) (0.33) (1.61) 0.38 0.00 tax1 2021 2020 2019 -0.50 • Profitable at adj
Slide 10: Financial Position
Financial Position 2021 2020 £’m £’m • Investment in capex in the year with further Tangible assets 1.20 1.44 commitment in 2022 up to £0.6m Intangible assets 6.22 6.17 Total non-current assets 7.41 7.62 • Investment into R&D to continue at similar levels to Inventories 2.96 2.17 support further gro
Slide 11: Operational & Commercial
Operational & Commercial 11
Slide 12: Operational & Commercial Highlights
Operational & Commercial Highlights • Resumption of elective surgery in key markets driving strong sales in Q4 and into Q1 • Restructure and focus of Sales and Marketing As elective surgery resumes the Company is well placed • Ongoing investment in manufacturing capacity to take advantage of and eff
Slide 13: Key Market Update – Overview
Key Market Update – Overview OEM ROW 13% 4% UK148% APAC 8% Established sales in key markets globally, EU 11% and through our direct operation in the UK USA 16% UK USA EU APAC ROW OEM 1. Elemental sales include SI brand and Distribution products 13
Slide 14: Key Market Update - UK
Key Market Update - UK Elemental Sales1 • Strong recovery in Q4 21, above pre-pandemic levels - continued into Q1 22 • Refocused sales strategy to key products 5.00 4.50 • Sustainability continues to drive growth 4.00 opportunities £m’s 3.50 • Significant pipeline of evaluations either in progress 3
Slide 15: Key Market Update - USA
Key Market Update - USA USA • Strong H1 21 restocking orders • Sales normalised in H2 2.00 • Omicron variant impacted late Q4 21 and early Q1 1.80 22 sales 1.60 • Some States reported staffing shortages reducing £m’s 1.40 1.20 OR activity by 50% 1.00 • Elective Surgery recovering in February 0.80 0.
Slide 16: Key Market Update - EU
Key Market Update - EU • Slower recovery compared to UK 1.4 • COVID still impacting activity in France, controlled access to the OR 1.2 • Order patterns slowly returning to normal to 2021 1 £m’s 0.8 • Launch of YelloPort™ Elite 5mm in Q3, pending registration 0.6 • Sustainability message positively
Slide 17: Key Market Update - APAC
Key Market Update - APAC • Similar to USA with strong H1 21 restocking orders 0.8 0.7 • COVID still impacting activity, controlled access to the OR 0.6 • Seeing consistent order patterns, similar to 2021 0.5 £m’s 0.4 • Launched Logic, initial stocking order placed 0.3 • Launch of YelloPort™ Elite 5m
Slide 18: Key Market Update - ROW
Key Market Update - ROW • Remains challenging, with limited visibility 0.7 • Tender based business with contracts extended 0.6 • NPD may provide opportunity to relaunch 0.5 • APAC and ROW Dealer meeting planned for late £m’s 0.4 Q3 0.3 0.2 0.1 0 2019 2020 2021 18
Slide 19: Key Market Update - OEM
Key Market Update - OEM OEM • Strong recovery in Q4 21, 70% of pre-pandemic levels • Strong order book for 2020 1.80 • New OEM partners 1.60 1.40 • CMR – Access Device £m’s 1.20 • BD – Fast Clamp 1.00 0.80 • Future partnership opportunities in Robotics 0.60 0.40 0.20 0.00 2019 2020 2021 2019 include
Slide 20: Sales and Marketing
Sales and Marketing Group Sales & Marketing Director International Sales Operation UK National Sales International International Marketing Manager Manager Sales Manager Sales Manager Manager With the global resumption in elective National Account 8x Marketing Product Manager surgery, Manager Sales T
Slide 21: Geographical Expansion
Geographical Expansion • USA – Partnership in UK with Microline has led to reciprocal agreement in USA for YelloPort™ Elite access devices Leveraging strong relationships with global partners has enabled access to • India – Strong UK relationship with Peters key growth markets Surgical has opened op
Slide 22: New Product Pipeline
New Product Pipeline • Initial focus on Medical Device Directive (MDD) approvals Exciting R&D pipeline of new products launching into global markets during • Q1 2022 – YelloPort™ Elite 5mm Access Device 2022. • Q2 2022 – Optical trocar for use with YelloPort™ Elite 5mm • H2 2022 – Logi™ Dissect and
Slide 23: Robotics Opportunities
Robotics Opportunities • YelloPort™ Elite 5mm represents our first collaboration with CMR Surgical to develop a Collaboration with Robotic specific access device to function effectively with companies to leverage our expertise robotic instrumentation in Access Devices, Instruments and Flex technolog
Slide 24: Regulatory Update
Regulatory Update • Increased regulation raises bar to market entry, less capable companies exiting market • Class I device transition completed • Technical files for Class IIa and IIb on track for MDR continues to be submission May 2022 a core focus consuming significant • Full QMS conversion on tr
Slide 25: CAPEX Investment
CAPEX Investment • Commissioned March 22 - Citizen L32 lathe • On order - New injection moulding machine to provide greater capacity and flexibility as new products come online • Laser Welder, required as replacement • Machining studies currently underway on a new grinding machine • Cleaning trials
Slide 26: Summary and Outlook
Summary and Outlook • Key markets resuming elective surgery with high backlog Organisational changes • SI brand products gaining market share through waste reduction - meeting sustainability agenda and ongoing investment and reducing cost of ownership in key functions • Exciting new products and par
Slide 27: Appendix Cashflow Statement
2021 2020 £’m £’m Cashflow from operating activities Operating loss (0.46) (3.17) Depreciation & amortisation 0.70 0.81 Impairment of intangibles 0.15 1.47 Other - 0.13 Working Capital (0.93) 1.82 Cash generated from Operations (0.53) 1.07 Appendix Taxation received/ (paid) Interest paid ( Net) 0.13
Surgical Innovations Group — FY2021 Earnings Presentation on 6ix