Surgical Innovations Group Plc · LSE:SUN
Surgical Innovations — FY2020 Earnings Presentation
31 slides from Surgical Innovations's earnings presentation, March 2021
Slide 1: Surgical Innovations Group plc Year end 2020 Results
Surgical Innovations Group plc Year end 2020 Results Nigel Rogers, Non-Exec Chairman David Marsh, CEO Charmaine Day, Financial Controller and Company Secretary March 2021
Slide 2: Financial highlights
Financial highlights • Revenue down 41% as elective surgery postponed across global market • Recovery in second half - up 44% on H1 • Underlying gross margin improved 110bps to 44.4% of revenue • OPEX reduced and CJRS1 relief obtained in mitigation • Adjusted EBITDA loss of £0.66m; returned to break
Slide 3: Operational highlights
Operational highlights • Strong financial platform • Protected core skills and capabilities throughout pandemic • Streamlined and improved operational and regulatory processes • Reinforced international distribution partnerships • Broad international engagement provides diversification of risk effec
Slide 4: Company overview
Company overview • Specialists in the design, development and manufacture of creative solutions for minimally invasive surgery (MIS) - well established techniques allowing for better patient outcomes and shorter hospital stays • The SI product portfolio, including access devices and laparoscopic ins
Slide 5: Financial Overview Year Ending 2020
Financial Overview Year Ending 2020
Slide 6: Revenue Analysis
Gross margins Revenue Analysis Revenue analysis HY1 2020 HY2 2020 2019 £m £m £m • HY2 revenue averaged 70% of HY2 19 Revenue 2.59 3.74 10.73 • Averaging around 70% on prior year in HY2 • Current trading-revenue up 11% on prior YTD 6
Slide 7: Revenue by territory
Gross margins Revenue by territory • HY2 revenue up 44% from HY1 £3.74m (H1:£2.59m) • UK and US markets recovering Half year comparison £'m 1.6 • APAC-healthy growth, led by Japan 1.4 • European demand is more muted 1.2 1 0.8 0.6 0.4 0.2 0 SI UK SI US SI EUR SI APAC SI ROW Distribution (UK) HY1 2020
Slide 8: Gross Margins
Gross margins Gross Margins Gross Margin analysis 2020 2019 Gross margin analysis 2020 £'000 £’m £’m 120 Revenue 6.33 10.73 270 Contribution Margin Cost of Sales (3.52) (6.08) 1,272 Underlying Gross Margin 2.81 4.65 1,148 Cost of Sales Underlying Gross Margin % 44.39% 43.33% Net Cost of Manufacturin
Slide 9: Operating Expenses
Operating Expenses Operating Expenses Analysis 2020 2019 £’m £’m Gross Margin 1.27 4.33 Operating Expenses (5.06) (6.77) Other Income 0.62 - Adjusted EBITDA (0.66) 1.45 Impairment of intangibles & goodwill 1.31 2.26 Amortisation & Depreciation 0.97 1.26 Exceptionals 0.11 0.18 Share based payments 0.
Slide 10: Net result
Net result Net result: 2020 2019 Half year comparison 2020 £'m £’m £’m 0.00 Adjusted EBITDA (0.66) 1.45 HY1 HY2 Less Depeciation & Amortisation1 (0.81) (0.91) -0.20 Adjusted Operating (Loss)/Profit (1.47) 0.54 Net finance costs (0.14) (0.16) -0.40 Adjusted (Loss)/Profit before Tax (1.61) 0.38 -0.60
Slide 11: Financial Position
Financial Position 2020 2019 £m £m 2021 Tangible assets 1.44 1.96 • Inventory £2.17m, depletion of stock holdings to Intangible assets 6.17 7.61 release cash Increase in Total non-current assets 7.62 9.57 • Debtors £0.96m, significant decrease due to working capital Inventories 2.17 2.93 Managed rev
Slide 12: Outlook and Opportunities
ai Surgical Innovations Outlook and Opportunities
Slide 13: Opportunities in post COVID world
Opportunities in post COVID world • Anticipate strong recovery as elective surgery backlog tackled • Increasing focus on sustainable solutions to plastic waste • Expanding our product range • Strengthening our international network • Operational agility • Innovations in surgery through 3rd party par
Slide 14: UK Market in a post COVID world
UK Market in a post COVID world • UK saw strong rebound in Q3 following first wave, sustained to YE • Sales impacted, to a lesser extent, by 2 nd wave UK Sales – Monthly Trend • UK business in strong position for recovery ▪ Significant backlog of patients awaiting surgery, estimated between 8.4m* an
Slide 15: US Market in a post COVID world
US Market in a post COVID world • USA impacted by COVID but stable rebound USA Sales – Monthly Trend • Change in distribution channels and US Customs issues impacted sales in December • Reshaped routes to US market: Adler Instrument Company (AIC) ▪ Scissor and Flex Instruments ▪ Provide nationwide U
Slide 16: APAC Markets in a post COVID world
APAC Markets in a post COVID world APAC Sales – Monthly Trend • APAC performed consistently, primarily Japan. • Revenue up approx. 50% over prior year • Strong and effective partner in Japan • Environmental message having impact AUS/NZ • Significant opportunities in region Strong start to 2021 Jan F
Slide 17: EU & RoW Markets in a post COVID world
EU & RoW Markets in a post COVID world • EU sales remain inconsistent as struggles managing COVID persist • BENELUX positive start to 2021 Outlook uncertain in H1 but anticipate a robust return in H2 notwithstanding ongoing COVID concerns Rest of the World visibility remains problematic and unlikely
Slide 18: Sanda
18 Sanda single operation can generate more waste than a family of four produces in one week. “It's fight that the N c supp! sete Pa thes national campaign to 2 on plastic was will be good for our environment. for our patients and for taxpayers who fund our NHS.” ». Doing so * Wastage of supplies an
Slide 19: Sustainability Programme – Published Paper
Sustainability Programme – Published Paper Environmental impact and life cycle financial cost of hybrid (reusable/ single-use) instruments versus single-use equivalents in laparoscopic cholecystectomy That’s the equivalent of over 30 metrics tons of plastic waste LCA Carbon footprint of hybrid devic
Slide 20: Sustainability Programme – Activity 2021
Sustainability Programme – Activity 2021 Launched in conjunction with RCS NHS to be first healthcare provide Working with MRI as a case study England and Scotland, CSH, NIHR to be Net Zero by 2045 in conjunction with NHSSC to and CSH provide a template for cost A platform to promote initiatives NHS
Slide 21: Sustainability Programme Driving UK and International Sales
Sustainability Programme Driving UK and International Sales Globally COVID slowed speed of evaluations International United Kingdom • EU utilising sustainability as a USP with positive • 3 major University Hospitals converted campaigns in BENELUX and France. • 12 Evaluations in progress or about to
Slide 22: Strategic NPD Opportunities
Strategic NPD Opportunities Phase 1 • Immediate market opportunity • Defined Regulatory pathway under MDD • Condensed development process YP 5mm XL Valve • Accommodate new generation of Energy Devices and general adoption of large diameter Instrument • Address nuance of USA market • Allow introducti
Slide 23: Strategic NPD Opportunities
Strategic NPD Opportunities Phase 2 • Market Innovations • Extended Regulatory pathway under MDR Existing Illuminno™ Design Illuminno™ Platform Eisenhammer Rectal Retractor & Breast Exploring opportunities for a multi-application Retractor Illumination device to compete with market • Redesign in Res
Slide 24: Strategic Distribution Opportunities
24 Strategic Distribution Opportunities Dexter Robot Enhancing Womens Health Portfolio Gynae-Oncololgy Mout Uterine Manipulators T-lift in-situ retraction device CE Certification awarded in December 2020 Devices expected to become available in H2 2021 * Expected 2 devices placed in 2021 Elemental bu
Slide 25: Operational
Operational QA/RA Manufacturing • Onerous Regulatory Audit Program Efficiency Program • Continuation of QMS streamlining • Automation platforms in Scissor line • MDR Pathway and Packing room • 1st device (Class I) MDR approved by May 2021 Refurbishment program • Completed PMA for Fix8 • Assembly and
Slide 26: OEM
OEM Medical Initially impacted by COVID Seeing a return to forecasting and growing demand Building relationships with New Partners Leveraging expertise in Instrument design and manufacture to support robotics AMS Sale oFix8 sales impacted by reduction in Elective Surgery 2021 seeing increasing deman
Slide 27: Positive start to 2021 despite ongoing COVID challenges
(~ ») ¢ Positive start to 2021 despite ongoing COVID challenges ¢ Buoyant order and forecasting schedule from Q2 ¢ Strong NPD Pipeline for delivery in 2021 ¢ Ongoing investment in R&D ¢ Stable financial platform ¢ Well positioned for recovery and growth ¢ Strengthened Partnerships in USA Ne yy, 27
Slide 28: Appendices: Income Statement
2020 2019 Income Statement £m £m Revenue 6.33 10.73 Cost of sales (5.06) (6.40) Appendices Gross profit 1.27 4.33 Other operating expenses (5.06) (6.77) Other Income 0.62 Adjusted EBITDA (0.66) 1.45 Amortisation of intangible R&D costs (0.25) (0.29) Depreciation of tangible assets (0.56) (0.61) Adju
Slide 29: Appendices: Cashflow Statement
Cashflow 2020 2019 Statement £m £m Cash flows from operating activities Operating loss (3.17) (2.43) Depreciation & amortisation 0.81 0.91 Impairment of Intangibles 1.47 2.60 Appendices Other Working Capital 0.13 1.82 0.13 (0.54) Cash generated from operations 1.07 0.67 Taxation received / (paid) 0.
Slide 30: References
References • https://www.thelancet.com/journals/lanrhe/article/PIIS2665- 9913(21)00001-1/fulltext • https://www.kingsfund.org.uk/press/press-releases/impact-covid-19- waiting-times-NHS-patients • https://www.medrxiv.org/content/10.1101/2021.03.10.21253268v1 30
Slide 31: Disclaimer
Disclaimer Thi s presentation (the “Presentation”) has been prepared by Surgical Innovations Group plc (the “Company”) for i nformation purposes only. By a ttending this Presentation or by reading the Presentation, you agree to be bound by the following conditions. Thi s Presentation is preliminary
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