Surgical Innovations Group (LSE:SUN) — Full Year Results

0:00 Good morning, and welcome to the SURGICAL INNOVATIONS GROUP PLC investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and could be submitted at any time via the q and a tab situated on the right hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to David Marsh, CEO. Good morning, sir. Good morning, everybody, and welcome to our, surgical innovations presentation for the year end results for 2025. Thank you very much for taking the time to join us. We'll start our presentation looking at our 2025 results, and where the impact of, how that affected the business.

0:51 Let's move the slides forward. So in 2025, we delivered revenues of 11.6, which were broadly flat for the year. And that was in part due to some headwinds we faced, but it also masked a number of important positives that the business achieved throughout the year. For example, in Europe, we demonstrated very strong growth, 23%, and that was based on our the on our sustainability messaging, which continues to resonate and is actually growing in key markets like The UK and and European market as well. And it's interesting to see that as tenders come up, sustainability is becoming more and more of a key feature of those tenders.

1:40 And so we're helping a lot of our partners to write those tendered responses, and we're beginning to see some some successes there. UK third party sales grew by 14%, and this is particularly impressive when you consider that during the end of twenty twenty four and early twenty twenty five, we actually, dropped out of a number of of number of distribution agreements, for sort of low margin, low volume products like synthetic mesh, for example, which also took a long time for evaluations. So that third party sales was based on new products that came into the into the portfolio as well as some of our long term relationships like MicroLine where we saw sales growth.

2:26 So particularly impressive performance there. Some of the headwinds we faced, we saw, SI branded sales impacted by, tariffs in The US, and we also had a major upheaval within our Indian partner. So they had a complete structural sales change, where they lost their sales team at the beginning of the year, and have been rebuilding it over the last twelve months. And we've obviously worked closely with them to train to train that sales team. The industrial action in The UK, that has also impacted the volume of elective surgery. And it's it's important to remember that, you know, sort of a typical five day strike, they stop elective surgery two days beforehand, and they don't start it until two days afterwards. So it's a longer period than the, five days or whatever the period of the strike is. So it does impact our business quite significantly.

3:23 Our OEM sales, were down as we anticipated and had previously guided. This was because, in 2024, we had a strong result, which included the clearance of backorders from the previous year. This last year's performance was further hindered by some supply chain constraints around a component which was supplied free of charge to us by our OEM partner. That's unfortunately now been resolved, but it did impact sales in quarter four for our OEM business. Another upside for the business is that we saw our gross margins improved to 34% in part from product mix, but also in in as we saw some of the cost reduction programs coming through and, you know, sort of we worked very close or very carefully on the business to manage our cost base.

4:19 We also achieved our MDR certification, and I'll talk the the importance of that a little bit later. But this does underscore our commitment to quality, patient safety, and, you know, sort of and and compliance as well. And it does position us, well for the for the future. We've spent the year focusing on delivering fundamentals of the business around sales, around profits, and cash, But all of this is around the, is is driving sales throughout the last year and into this year as well. So if we take a quick look at the the financials, I'll give you the headlines, and then Brent will give you details of those further in on the presentation.

5:04 So as I mentioned, we had revenues of 11,600,000. We improved the margins to nearly, 34. We made an EBITDA loss at sort of higher than last year, or the previous year. Sorry. But we had a a net inflow of cash to, 600,000, and we improved our working capital position. We look at our operational highlights. So so MDR, you know, so that was critical for the business. And and the reasons behind that are that it allows us to, one, we've we've now sort maxed maximized the cost, but it allows us to focus on delivering new products.

5:51 Throughout the period of MDR, the r and d team were focused on delivering, the relevant documents for the MDR process. We also see an advantage in that. It allows us to sell products clearly into the into the European market. But what it what what where we will see an advantage is that we will see competitors begin to drop out as they fail to achieve MDR, and that will come to a a high point in 2028. So we continue to leverage our NHS, relationships in in The UK, and that's allowed us to attract new technologies because we we work very closely with both clinicians and and the NHS.

6:37 The strong European momentum, was a real highlight of last year, you know, 23% growth in that region, and we're continuing to see that, throughout, q one. We're maximizing our distribution network. What do we mean by that? So if you look at, NeoMed, who look our Benelux region, they have a number of, companies in Scandinavia in and and we've recently bought those businesses on board, and we've seen some real benefits from that already as evaluations are being undertaken in Sweden and in Denmark. And, of course, our sustainability messaging, you know, that continues to resonate in key markets, you know, both in The UK, both in, and also in Europe.

7:27 And as I said earlier, you know, sort of a lot of tenders now include sustainability criteria, and we can you know, we we tick that box very clearly. We've invested in our sales team throughout the end of last year and into this year. That's been The UK team has been restructured. It's got better sales management. We've increased the resource in sales internationally, so that can be focused on key markets. And we'll continue to drive, our international distributor network, and that's, you know, the sales efforts, and we support them in those. We're looking at, exploring our our US opportunities. We're speaking to a number of companies that have nationwide, distribution.

8:16 Sorry. My screen's just gone. And, you know, that that gives us a significant opportunity for next year. And, of course, we've restructured the company, both the board, and key positions within the company as well. And we're currently recruiting for a new CFO as Brent steps away from the business later this year. Sorry. So one of the the strategies of the year has been focusing on the fundamentals of the business. And so what does that mean? That means driving sales, which is the key key components of this, investing in the sales organization, leveraging our relationships, not just in the NHS, but also with clinicians, distribution partners, and opportunities around the world.

9:14 It's about focusing on how we can change The US from what has historically been a problem child for us into a, you know, a significant opportunity. And to focus on the high margin products, that deliver both high value, high margin, and create value to the business as well. And then increasing the product offering that we have and that we're able to offer both through the UK team, but also our international partners. It's about increasing profits, improving the operational fit and efficiency of the organization and driving those product margins both through cost down projects, but also for also bringing in greater products for our distribution network.

10:05 So what we do is we're we're reducing costs all the time. We're looking at areas that we can reduce costs. Some of this is through areas like the clean room where we've taken out a number of temps and not backfilled those positions. And it's amazing how well the business can adapt and cope with reduced manpower in in areas like that. And we also we constantly review the structure for opportunities where we can take cost out and whether that's, you know, some whether that's something like the the clean room or whether that's sort of adding in operational automation or robotics or whether that's taking headcount elsewhere out in the business.

10:52 And, of course, the important thing is improving our working capital. We do that by reducing inventory, and I'll touch on how we've done that later. And Brent will allude to in great detail. It's about managing our creditors, and debtors, and the the finance team have done a really good job of controlling that now. So we're in better shape than we we've ever been. And it's also about improving the the supply chain management, the terms that we have with our suppliers, both and and also our customers as well. And so that leads us into, developing a future strategy, developing a vision for the business, where we want to go, how we want to get that. Sorry. The slide's playing up.

11:39 Developing a and executing a strategy for The US. You know, sort of we we clearly need to do something there. It's a big part of our market. And then also, as I talked about earlier, is is building that r and d, development pipe pipeline so that we are always producing new technology for the market. So as we break down into more detail on those those four pillars that we talked about, So the sales organizer to to drive sales. So we've improved the sales organization, in terms of the number of people that we have in there, the management of it, the accountability of the sales team.

12:26 So we've expanded the areas that we cover effectively. The UK team now now has, is fully manned. There is a very experienced sales manager in place. We have the product managers in place, and we're also looking at where where there are more opportunities. For example, with the Aspen range, we now have a product specialist for, for energy systems. And if if that grows the way we see, we anticipate it will, we'll add head around that as well. Improved geographical spread. So that's that's sort of, as we've increased the number of international salespeople, we can put them into dedicated areas, make them accountable for that. But it's also about looking at opportunities now.

13:15 MDR is completed that we can look at countries where registration is more complex, more long term, and we can build a pipeline that way. But we can also look at opportunities that are, you know, more immediate opportunities like the scan the Scandinavian opportunities that we have. We're looking at accelerating our sustainability programs, and some of that is, you know, sort of working with our partners in Europe. We have a clinical trial in The U in Germany at the moment, which is around green surgery, and we're one of the key partners in that. And so all of this data feeds back to our sustainability programs. And then a real opportunity that we've got, and we've already started this, is to drive some third party products through our dealer network. So we have a really well established dealer network, particularly in Europe, and we can leverage that network to pick up third party products both for The UK, but also to feed through to our dealer network.

14:23 And we're already seeing that with products like SURGICAL, where we're beginning to introduce that to some of our partners, and we're beginning to see some activity already. And we see that as an opportunity, going into 2026 to get some real, incremental third party sales. And then, you know, this business is all about relationships, and it's it's, you know, sort of it's key that we leverage those to the max. So in The UK, we have really good opportunities with the n a sorry. Really good relationships with the NHS, and also with the private, health care providers as well. But we're strengthening our clinical relationships as well. So as we bring new technologies, we can go to these key opinion leaders and understand how how this will impact their practices and how we can, sort of leverage that that relationship to to grow the business.

15:22 And it will allow us to attract new technologies. For example, we we have, a product which we're reviewing at the moment and they're over next week. And we will be taking them to see clinicians, in The UK, and show them basically the the depth of our relationships in The UK. So it will help us attract new technologies too. I talked about The US, and this is an opportunity, but which we really have to capitalize on. So at the moment, we're active in five states in the Southeast in a market that accounts for 43% of the global MIS market. So we we are looking at opportunities now with major companies that have nationwide coverage in The US that we can piggyback on.

16:14 And we're in conversation with a couple of companies around that, and, hopefully, we will be able to see some some real benefit through this year. Talked about the the growth in sales of third party products with within elemental and how we had taken we had walked away from some low margin, low volume products, synthetic mesh being a classic one, to focus on some of these higher margin. And some of the products we get from Aspen, the you know, that that are higher margin. They're actually a higher value as well. And so they give us real opportunities to drive sales as we go forward. And it's diversifying that product range as well. So they have to remain within, you know, sort of the the operating room, but that, you know, sort of we can move into other specialties, and Aspen helps us with that as they have multi specialty products, and different types of products within the portfolio to help us drive that.

17:17 And then there's expanding the SI portfolio, you know, this year, and I'll I'll talk about them later on, But there's, you know, sort of there's a number of products that we're adding that are SI branded products. We're looking at opportunities to increase that amongst our r and d work as well. So increasing profitability. I mean, that that's that's an obvious aim of the business, and we look at that through improving our operations. We have a new operations director that is very enthusiastic, very metric orientated, and we're introducing key new key metrics that are really measurable, and we can measure all aspects of this.

18:06 And that brings us into the lean operations as well. So, you know, sort of the operations team are now far more accountable than they have been in the past. They're driving costs out of the business and looking at a operate looking at ways that we can improve all operational aspects. We're looking at ways to increase product margins, and that's, you know, focusing on markets where we can achieve higher pricing. For example, Japan, you can achieve a higher price in Japan. Sort of some of the other markets are lower prices, and so we but we tailor our our activities to to maximize our opportunities from a margin point of view. We've had through the year, we've implemented price increases, and that will continue through this year where with the new framework agreement with the NHS supply chain, we've managed to get price increases there as well. And so when you consider 60% of the elemental business comes through supply chain and framework agreements, you know, you can see that that will impact the business positively throughout the year.

19:16 That comes into effect from August. And then we're constantly looking at ways that we can reduce our overheads. And that's, you know, sort of through greater integration in the business is creating a flexible workforce. So, you know, sort of there is nobody that is tied to the workshop or tied to the clean room or tied to packing or tied to inspection. We can, you know, we can multiscale people so that we can move them around the facility as demand as as demand indicates. So improving working capital. So the the first target is reducing the inventory. And, you know, in previous years, we carried higher inventory than necessary, to deal with the supply chain challenges that the world faced.

20:08 Well, now it's time to reduce that and bring it back to working levels, and the team are working very hard. And we're already on our way to that £1,500,000 target for the year. We're doing this by actively managing, the suppliers, and that is, getting the supplies where we have to buy hard volumes to achieve pricing is to get the suppliers to carry the inventory, not us. And then we can call off as and when we need that. And and it's sort of, you know, making sure that the inventory that we buy in is going to be used in a relatively short period of time. Most of the inventory is obviously SI related. Elemental is fairly easy to manage. It's finished goods and, you know, sort of it consists on the shelf, and we can turn it around in a in a short period of time.

20:56 So, you know, managing the SI inventory is is absolutely key. And, you know, the team are accountable for that, and we are seeing progress, as I said earlier. But the easiest way to reduce inventory, of course, is driving sales. You know, it comes back to point one. We drive sales. We can reduce inventories because we can release what was on in stock. We can release that to cash. We're managing cash far more effectively than we have done. And, you know, so Brent's team are have, you know, put in place very strong cash management and, you know, proactively chasing receivables and managing effectively payables as well. So that will continue, and we'll continue to see that improve that position improve.

21:46 And, again, you know, sort of about the supply chain management, you know, sort of this is this is a key part of the inventory improvements and a key part of improving working capital. You know, we're managing terms both of suppliers to elemental, but also suppliers to SI. And then the reverse of that is we're managing the terms that we we have with our customers. Sorry. I skipped a slide there. So as as we move forward, it's it's about developing and executing a future strategy. So it it's about creating a vision and, the direction for the business to focus on, and that focus has to be around the customer. You know, the customer is critical, obviously critical to the business, and we have two customers.

22:39 We have the clinician, and we have the the patient as well. So it's making sure that we identify what we're good at, how we can differentiate ourselves from the competition, and deliver on those in a in a timely fashion. It's about identifying products that find solutions for the clinicians and how we develop and source those products. It's about e three, really. It's excellent in every everything we do every day, and it's delivering that by driving sales globally and making sure that the business is forward thinking as opposed to, you know, sort of the MDR kept us focused looking inwards. We can now start looking outwards and developing new products and understanding what the drivers of the business are. It is relationships.

23:30 You know, relationships are critical to the business. The NHS relationship is critical. It accounts for 60% of Elemental's business. Sorry. 80% of Elemental's business, but the supply chain is 60% of that. But it's also relationships with those clinicians and and driving and our suppliers and understanding that. It's creating and expanding on the strong sales channels that we have, you know, sort of that we we need to start really leveraging the ability that that we have within our our networks and and being able to drive that and balancing out the geographical sales. So, you know, we're strong in Europe. We're strong in The UK. We're strong in Japan, but our US business needs attention.

24:16 Our Middle East business needs attention, and we're putting in strategies to to develop that as we go forward. R and D can now focus on a a road map for new products. You know, sort of our our company name is SURGICAL INNOVATIONS, and we need to get back to innovating. And, you know, that's a key part of how we move forward. Talked earlier about clinical leadership. You know, we we can't do the product innovation without clinical leadership, without people having those relationships with surgeons, without understanding and addressing what their challenges are. And that, you know, sort of our our business is very much razor razor blade. And so it's driving the consumable sales, to make sure that, you know, sort of we can, deliver on the revenues and their sustainable revenues and predictable revenues as well.

25:12 And so bringing everything into operating from a lean, effective, manufacturing facility. So just looking at sort of where we are on the new product road map, you know, sort of this will begin to be filled with more technologies, more sort of changing technologies that will allow us to really leverage our our term surgical innovations. We're looking to invest, in high impact projects, things that drive the marketplace, that change the marketplace, and create value for the business. We're looking at at new materials, and I've spoken before about some of the new materials as we move from silicon to TPE.

25:59 We're also looking at different manufacturing processes for silicon, and we're looking at different materials. So we're working very closely with Leeds University on some new sustainable materials. And, you know, so that will give us an opportunity to create more of our sustainability story and also to take costs out of the business. And so this year, we will see the launch of the illuminated calibration tube, and this is very much a US centric product as well. So, you know, this will help us with our plans in The US. And effectively, what this does is allows a surgeon to have a much more effective guide for gastric for gastric sleeves procedures.

26:48 And then where the long awaited extension of the logee range. So at the moment, we sell about a 120,000 logee cut scissors a year, but we need to be able to add graspers and bisectors to to that range. And so these products will be added by the end of the year and will give us a real opportunity in all key markets. Thanks, David. Good morning, everybody. So when we reflect on twenty twenty five's performance, I think there's really two two key things really to speak to. I think one is is around financial stability and creating financial stability within the business, within the p and l in terms of how we manage all elements of the p and l. We spoke to revenues, but certainly around our cost base, around operational efficiencies, but also how we manage the balance sheet.

27:49 And, of course, when we refer to the balance sheet, it's cash and and working capital levels, and I'll speak to more to this in a moment. But also throughout 2025, the the actions undertaken throughout the year, it's it's really created the foundation and the platform to then progress into 2026 and deliver improved financial performance throughout this year as a result of actions taken last year. And then you can see on the headline figures here, despite slightly lower sales at '25 versus '24, and and of course, like any business, despite there being ongoing pressures on our on our cost base and our supply chain, we have seen and do report improvements in our in our gross margin. We have seen operating losses reduced from 0.8 to point 7,000,000 year over year. We are now reporting positive operating cash flows of 600,000 in in the year, and our net debt has has held firm on a year over year basis.

28:47 So it's certainly not a case of job done, but I think it it kind of illustrates how we are benefiting from many of the actions taken throughout the year. So I mean, looking at this revenue analysis slide, I mean, I won't spend too much time on this as David has spoken at length about revenue performance. But I think, again, it's just a good visual to kind of illustrate that whilst we are in 2025 reporting softer sales than in the prior year, actually, there's several revenue streams which are very positive. So David has spoken about positive sales growth in in, I suppose, in in distribution and and mostly offsetting what we've seen in OEM and and our SI branded. So there are green shoots, and we are optimistic that as we move through 2026, we will be able to deliver stronger sales performance, which will, of course, support the wider business financial performance.

29:45 So looking at the margin analysis, I mean, there's two kind of cuts really of the margin that we we should look at. I mean, in terms of the the underlying gross margin, so so sales less cost of sales. As David spoken to, you can see year over year, we've increased from almost 31% to 34. So a noticeable increase, almost 300 basis points. And really, that's kind of driven by several factors. I mean, one is is a is a different sales mix. So, stronger lales stronger levels of distributor sales, has supported margins. But beyond that, we have seen, pricing a better benefit of stronger pricing year over year, which is which is an achievement in in the very competitive markets within which we operate. So I think to see any pricing upside is is, you know, a kind of reflection of our of our capabilities.

30:35 But also, we're we're kind of driving efficiencies throughout operations. And so there's kind of three tiers really which are supporting gross margins and will continue to support margins as we move through 2026. When we reflect on contribution margin slightly lower, which essentially is gross margin less than overheads, you can kind of see there's been a reduction from 28.8% to 26.3%. And really what's driving that is that line which you see is net cost of manufacturing. And and kind of one of the drivers here really is that throughout 2025, we proactively sought to reduce our inventory holdings, and and that's something we, we must do and continue to do. But an offset to reducing inventory levels, it supports working capital, which in turn supports cash flow.

31:25 But what that means is throughout the year, it means in real terms, there's less, there's less, activity running through operations. You're recovering less cost into your overheads. So almost it's a largely a onetime correction where we reduce inventory holdings to the right level. But what that means is almost like, let's say, a a blip in the year in 2025 where, therefore, we were less reduced we recover less costs in our in our p and l, and so we see the contribution margin dip slightly. But we do expect that to kind of recover as we move into 2026. And and whilst we're talking about 2025, I think it is good to kind of speak in detail about some of the actions undertaken last year that that will bring tangible benefits to to 2026. So we know that throughout last year, we utilized extensively temporary resources, temporary headcount.

32:17 And and as we move throughout the year, we actually concluded the year with having no temporary resource in the business at all. And so as a result, we expect to see anywhere between $305,100 k of savings to our p and l in 2026. And the reason we will see that benefit is we've reduced the use of temporary staffing, but at the same time, we have not backfilled that headcount with permanent heads. We've not increased our underlying headcount overall. So they are going to be real savings that we will see on a year over year basis. We'll also see the benefits of several cost down exercises. And so essentially, we have reengineered some of the materials and some of the processes that underpin our our products. Some of those initiatives were introduced and executed late last year. So the benefits were running through our p and l in q four, and we'll continue continue to see benefits as we move through 2026 on a year over year basis.

33:17 But there are also other r and d and engineering initiatives which are in flight, which are expected to conclude round about the midyear stage, which in turn will give us further benefits. Again, these are projects which are underway right now, and and if successful, will generate further cost savings, which in turn will support our p and l. And so in those cost down initiatives, we would expect year over year savings of several £100,000, which will support our contribution margin and, of course, will support the p and l overall. As we look at operating expenses, there's actually not so much to kind of call out here. I mean, what you can see is total operating expenses have decreased slightly from 4,100,000 in 2024 to 3,900,000 in 2025.

34:08 And in most spend areas, the kind of level of spend has kind of held flat. As you may recall, in in 2024, the business took the very difficult decision of undertaking restructuring and as a result removed cost from the business. And so, of course, it was critically important that as we move throughout 2025, we were very careful about the costs we reintroduced into the business. Having taken that difficult exercise, we just need to be very careful about how we progress throughout 2025, and that is why we see most spend areas. We decrease the spend or spend held flat. The only outlier is really our investment in sales and marketing, where, again, as we progress through 2025, we're very mindful of making sure we align that cost base with top line growth. And, again, we do want to kind of burden the the p and l with ex extensive and unnecessary headcount. We kind of watch carefully as we progress throughout 2025.

35:06 As we concluded the year and and with more confidence around the the the marketplace and and understanding clearly what our requirements are, we have proceeded with investment in our sales and marketing footprint. We recruited several hires in the sales space into the business in November and December of last year, and with further hires in January 2026. So we have moved forward of investing in headcount in sales and marketing space, and that investment will underpin the sales growth that we expect to see in 2026. But just more generally, this speaks to the theme I I opened with, which is around the the rigor and diligence with which we manage our cost base. You know, we're just kind of being very careful, very considered, and doing all the things you'd expect a high performing business to do, manage our costs, empower our department heads to own their cost base, scrutiny around all cost lines, processes, efficiencies, and so on and so forth.

36:09 I mean, as we reflect on our financial position, I mean, I think there's a couple of key areas really. I mean, I think as David spoke to and I touched upon, really is the focus upon working capital. So working capital being, yes, inventories, but also receivables and trade payables. And, again, it's just having that rigor around the supporting processes. So in terms of trade receivables, meaning maintaining good relationships with our customers so that customers do not become we do not see excessive levels of of overdue invoices. We've got really good customers, and they will pay to time. We just make need to make sure that we continue to manage them and and and chase them where appropriate. And if we do that, we stay on top of our receivables. There will be no overdue balances.

36:55 In terms of trade payables, of course, we ensure that we pay our suppliers to time and to terms to maintain those good trading relationships. But at the same time, we engage in discussions with them around credit terms, around cost increases that they may wish to pass on to us to, again, to optimize the levels of working capital in that space. And certainly a success story has been around, inventory levels and inventory holdings. I mean, we've seen inventory reduced from 3,000,000 to 2,200,000 year over year, and and that really has been a reflection of efforts undertaken within the business. We have sought to reduce inventories to levels that are appropriate for the business at size to ensuring that we have all the right process in place. We have a lean methodology, of course, but what we're really doing is ensuring we have a very robust sales forecasting process to know what lays ahead for the next three to six months, which in turn will guide us on the levels of finished goods that we need to manufacture.

37:54 We ensure that we know our supply chain well, so we know minimum order quantities. We know lead times. At the same time, we also know what the levels of buffer stock, emergency stock we need to hold on our shelves to ensure that we can satisfy customers. And at the same time, if there is a spike in demand, we can be responsive and satisfy customer demands. So we've done that very in a very considered manner, but at the same time as a result of that, we have seen a reduction in inventory, which will support and has supported working capital levels, and then that in turn supports the levels of free cash we have at our disposal. We've also seen borrowings reduced. It's reduced from 500,000 as we entered the year to, 150,000 at the year end, and this reflects a a CBILS loan, that exists and we continue to repay.

38:44 This will be fully repaid in May 2026, and that will also give us back about £400,000 a year to our cash flow because that loan will be fully repaid. And it's worth noting that, we have and continue to have very good relations with our our bank, and they continue to be a very supportive stakeholder in this exercise. So we're seeing a much stronger cash position. And and should we see that cash position continue to improve as will be expected from sales growth about 2026. It just allows us to have better conversations around how we might invest, whether it be in r and d, whether it be in sales opportunities, capital, the facility, our workforce, and so on and so forth.

39:30 So there has been good progress made throughout 2025, and we expect that journey to continue through 2026. Thank you, Brent. Can you click the next slide? Thank you. So, we'll just run through that summary, and then we'll be happy to take questions. So the investment in sales that we've, you know, we've talked about, a lot during this presentation, we're we're seeing that beginning to drive early momentum, in in most of our markets. So that's a really positive start to the year. The strong cash management, that Brent has talked about, you know, that's allowed us as as we continue to to keep those, that management in place, that allows us to provide, flexibility to to invest and to take advantage of other opportunities, whether that be r and d or whether that be investments in, sort of, sales or wherever it's needed within the business.

40:33 The MDR is a significant achievement for the business, and, you know, sort of I'll I'll keep waxing lyrical about this because it it really changes the dynamics of the business. Product that we can continue to sell in Europe, it gives us an advantage over, our competitors and, you know, it really strengthens the regulatory credibility of of the business. And it now allows us to start focusing on new products. You know, for many years, we were hindered by the, you know, sort of the constraints of MDR. We're now we've now unlocked that. We can now develop a a nice pipeline of of new technology. We're beginning to leverage the distribution network that we've got throughout the throughout the the world, particularly in Europe, and drive some third party products through, through this network. The other advantage of it is is it makes Elemental more attractive to US based companies because they can see that, they've got an opportunity for an English speaking partner to drive all of their European business. And that so these smaller high-tech companies coming from America are looking for a partner like Elemental that can help them, you know, sort of establish a base in in the whole of Europe. So it's a real opportunity for us to leverage that.

41:55 The growing demand we see for SI branded products in, in Europe is significant. It's supported by our sustainability messaging, which, you know, that that begins to resonate in other key markets as well. And we have to work hard now to make sure that we can, transfer that success in Europe to to other key markets. We continue to sign new long term agreements with key suppliers. We have some under discussion as as we as, you know, as we speak now. We strengthened our agreements with Aspen, and we strengthened our agreements with MicroLine, and they really underpin the The UK distribution model. It's a real sort of strength of the business, that we can attract these technologies, and our relationships allow them to to to keep those relationships as agreements as well.

42:48 And then the operational efficiencies that we're driving through the business to keep costs down, to drive initiatives, to continue to drive initiatives to to, improve margin and then create a more streamlined structure that, again, delivers cost savings, and will improve profitability. So the company has worked very hard during 2025 to get the building blocks in place. And it's, you know, sort of we focus very much on the fundamentals, focusing on the fundamentals, and drive the business forward. And now it's about the, now it's about the the execution of all of these plans and strategies that we've had in place and to deliver value. So that concludes our presentation. We're happy to take questions.

43:36 That's great. Thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab situated on the right hand corner of your screen. Just while the company take a few moments to review those questions submitted today, I'd like to remind you that recording of this presentation along with a copy of the slides and the published q and a can be accessed by our investor dashboard. And, Leanne, could I please just ask you to read out the questions to share with the team, and I'll pick up from you at the end? Yeah. No problem. Okay. So first question, will the company see share price growth with a dividend? Obviously, mine will be able to comment on the share price, but perhaps comment on future dividend prospects. Yeah. I mean, I I think, you know, sort of when you look at sort of the size of surgical innovations and and and dividends, you know, at the moment, we're talking about investment back in into the business.

44:21 So cash flow is available. We are investing back into the business. We're investing in, you know, sort of the structure of it. We're investing in the sales teams, and it's about driving and delivering driving sales and delivering value. So sort of for the I would say for the foreseeable future, this is about investing back into the business, is a is a key part of our our focus. Can you elaborate on the European momentum that you're experiencing? Is this mainly from new existing oh, existing markets or new markets? It's it's a bit of both. So we are moving into new markets. We we've got a better footprint in Scandinavia, and that is that's definitely driving some momentum there.

45:09 Our existing markets are also growing as well. So, you know, sort of a lot of the European markets are around tender based systems. And as sustainability becomes a key part of that, we we're, you know, driving that messaging with our partners. We're providing them with the clinical data, and we're able to really leverage that sustainability as a key driver for the business. So the answer to the simple answer to the question is it's both. It's both existing business and it's new business that we're seeing growth from. Are you able to find any more detail on The UK sales reorganization? Yes. So so we we now have so we have seven territories in The UK which are fully manned. We have one energy specialist because we see a real opportunity with the Aspen Energy devices.

46:08 This is slightly out of our normal call point in that it tends to be clinics. And, you know, the sort of that that's that's an opportunity which we're exploring, and we expect that to to to perform really well this year. So we have, someone that manages the national accounts, so the NHS supply chain, the private sector, and they do an outstanding job there. So our relationships with supply chain and private sector are really, really strong. And I can give you an example of that, actually. So many of you will be aware that, Stryker suffered a a cyber attack, and they had a supply chain, issue.

46:54 And we were the first company that the supply the NHS supply chain contacted to, to go through our portfolio of products and see what we could drop in place to pick up that shortfall of of strike product. So, you know, sort of it's it's key it's building key relationships like that with both the supply chain and NHS supply chain and the private sector that are key. We have a a really good sales manager in place, and he's sort of the the key to this for me was to make him a field sales manager. I don't want somebody that's sitting in an office. I want somebody that is actively out there helping the sales team, developing new opportunities for us, and helping the sales team close business as well. So it's it's a really, I would say, it's a really progressive sales team structure that we've got in place now, and, you know, we we are beginning to see the momentum, develop from that.

47:52 A question on conference attendance. Did SURGICAL attend the AORN Global Surgical Conference earlier this month, and are you attending SBMS in San Antonio in May? I'm not familiar with the SBMS, but we our partners were at the AORN, so we had representation there. And our, our international guy that looks after The US was at the, a r AORN. Brilliant. Have you got FDA approval for logic tube? We do. Brilliant. That was very quick. We don't let me sorry. Let me just clarify that. So as I mentioned in the presentation, we the illuminated version of that is, is really focused at The US market. It's something that The US, clinicians look look to have.

48:48 And whilst we don't have FDA approval at the moment, it is going through FDA approval. So we would hope to have that, I would say, early second half of the year. How is the search for the new CFO going? Do you see any issues on this front? No. We we we are sort of at, an advanced stage, in this process. Feels mean talking about it in front of you. I think. Fine. But, yeah, we're at we're at an advanced stage, and and we'll obviously notify the markets when when we've got something more tangible to say. And then finally, again, probably won't be able to answer directly, but do you see any requirements for a fundraise in the next twelve months? So as as part of the strategy that we're we're building at the moment, it's it's looking at all areas of the business, and, you know, sort of looking to see if there are areas where we would need incremental funds. As the business stands at the moment, we see we don't have a need for it.

49:49 But, you know, sort of, you you know, if if and when that that becomes a possibility, we'll obviously, notify the markets. But, you know, so we we're in a very strong position for for now. Thank you. That's all the questions. Okay. That's great. Thank you for answering all those questions you can from investors. And, of course, the company can review all questions submitted today, and we'll publish those responses on the investor meet company platform. Just before redirecting investors to provide you with their feedback, which I know is particularly important to the company, David, can I please just ask you for a few closing comments? Yeah. Firstly, thank you everybody for, staying the course and and listening to the presentation. I'd like so when we look back, sort of 2025 has has been very much about putting building blocks in place, focusing on the fundamentals of the business and, you know, making sure that as we enter 2026, it's about driving the driving the sales, driving the operation, and creating accountability and profitability within the business.

50:51 And I think, you know, sort of the the early so the the early stages of 2026 are looking very, you know, they're looking positive. We've got momentum in sales. We're improving efficiencies throughout the the plant, and, you know, sort of we're keeping a tight control of of costs and cash. And so, you know, the business is well placed now, to start growing and to start, you know, really delivering on our value. So thank you very much, and look forward to seeing you in September. That's great. Thank you for updating investors today. Now please ask investors not to close the session and should now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This may take a few moments to complete, and I'm sure it'll be greatly valued by the company. On behalf of the management team, we'd like to thank you for attending today's presentation, and good afternoon to you all.