Surgical Innovations Group (LSE:SUN) — Full year results for the year ended 31 December 2022

0:00 Good afternoon 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 can be submitted at any time by the Q and A tab situated in 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 will review all questions submitted today and publish responses where it is appropriate to do so. Before we begin, I would like to submit the following poll. I'd now like to hand you over to David Marsh, CEO. Good afternoon, sir. Good afternoon, everybody, and thank you for joining us today. I'm joined by Charmaine Day, our Chief Financial Officer, and we will run through the last year's results for you. So we will start with our presentation on the commercial and operational highlights.

0:56 And moving on to the next slide. You can see that we had strong sales in The UK, Japan And Europe has been particularly pleasing because that's a return to growth for us. Investment appears a lot on this slide, and the company has invested very heavily in sales and marketing during the year to help drive opportunities and create the bandwidth to allow us to have some geographical expansion as well. We've invested heavily in our CapEx to to drive efficiencies through the factory and also to enable us to run some cost down projects through the business, which will filter through to the bottom line in the coming coming months and towards the end of the year.

1:44 We've also invested heavily in regulatory. We're obviously in a clear clearly, heavily regulated market. And and that by investing so quickly in people and processes, we're well on our track to the MDR transition. Now I'm gonna run through some of the headwinds that we faced last year. We talked about these at the interim results and talked about the the same headwinds that I think most companies have had last year around recruitment and retention of key personnel, supply chain disruptions, and, of course, the regulatory burden that we face as a med medical device company. In terms of recruitment and retention, we run a number of initiatives last year, introducing a four day week trial, some loyalty incentives, and some increased financial packages in line with the industry norms.

2:43 And what we've seen as a consequence of that is a more stabilized retention of our key personnel, and we're we're seeing it much easier to reach retain and where necessary recruit people than we did last year. Of course, the cost of living pressures still apply, and we will see those impacting salaries through this year. From a supply chain point of view, we ran a number of strategies to to mitigate any disruption to customers. The first and most obvious was running a higher than normal level of inventory, and we will continue to do that going into 2023 just as these pressures begin to ease. We also looked at dual sourcing a number of materials and parts, and that has played a significant benefit in making sure that the back order situation we suffered in the first half of the year is considerably in the second and going into this year.

3:42 And from a supply chain point of view as well this year, we have seen some of those disruptions carry on, but they are mitigated by the fact that we have alternative sources now. And during quarter two, we will see those ease, and we should be back to normal levels of supply chain. The regulatory burden that we find ourselves in as a med tech company, we've addressed this really rapidly. We've invested heavily in people and processes, and we're on track for that. And I'll cover in more detail specific slide later in the presentation. But we have made significant progress to achieving MDR, and we believe we will be one of the first med tech companies to be MDR compliant.

4:34 So looking at the various markets that we operate in, The UK has been particularly successful last year. We had sales growth of over 29 and a half percent over over last year. And if you measure that against the pre pandemic years of 2019, we're up 2020%. Now this is in the backdrop of elective surgery still not being back at the levels of 2019. And so our business has grown on the back of new account conversions and underpinned by the sustainability message, which continues to drive growth not just in The UK, but in other key markets as well. We've invested heavily in sales and marketing through this through through the last year.

5:22 We've rebuilt the sales team. Introduced a new, more dynamic marketing team, and that's benefited The UK, particularly with positions like the national accounts manager who has enhanced our relationships with the supply chain, the private sector, and the framework agreements, and we can see real benefit coming from that now as we move into evaluation phase with some of the key private sector. The good news is the growth has continued into quarter one of this year, and sales are already up on the same period last year. If we look at The US, this has been slightly more problematic than most other areas, and that's been in part down to elective surgery being reduced by COVID in quarter one of last year.

6:15 It's it's I think we all we all forget the co how how recent COVID was, but this time last year that The US was still suffering. And, you know, sort of that continued a little bit into quarter two, but then in the second half of the year, was mitigated. Evaluations were obviously hindered by COVID, but also by the ongoing hospital staff shortages. We saw that a lot in The UK, but it's even a bigger problem in The US. So breaking it down now into our two channels to market. Access devices, as you know, go through MicroLine Surgical. The first half of the year was disrupted by supply chain issues. And in the second half of the year, we could we rectified those, and we could deliver the initial stocking orders that they required to to begin traction.

7:11 The yellow port elite five millimeter and optical trocars, which we launched during the year, they will have a strong impact on sales in the in The US, and we're beginning to see momentum now with some early account conversions. The instrument sales, the scissor sales going through Adler, that's not been as as productive as we would have liked to have been. Adler historically looked after the Southeast of the country and then built an alliance of similar type businesses throughout the rest of The US. And I think there's been some struggles in managing that business and presenting a united front, particularly in conversations with GPOs where sort of this umbrella organization of Adler caused a few challenges in terms of clarity of route to market.

8:09 So we have plans to to look at the way that we do The US business, our scissor business there. Part of that may be working more closely with some of the the other dealers in in the country, but also we're looking at the opportunities for surgical innovations to take control of the GPOs, and then the dealers can buy through that. If we move on to Europe, Europe, as I said earlier, was a really strong point for us. The business grew 28% and has returned to sort of some serious growth. We found that the sustainability messaging has been really effective in Europe and particularly in some of the key southern European states.

9:00 So if you take Spain, for example, our partners, they're prem. They run a managed service for laparoscopic trays that include our reusable instruments. And we've now added the handles and the and the hardware for the trocars, and then we get the disposable pull through as a consequence. And that business is growing really well in 2022, and we're looking at that as a model for some of the other countries as well. As I said, the sustainability resonates in that area. And so sales and marketing have spent a lot of time and a lot of focus driving some initiatives in Europe, and we can see that that that we're gaining benefit from those. And that includes as well appointing a new distributor in Germany, which is the first time that we've had a dealer there, and it's beginning to gain some traction.

9:52 So we've had some early successes, and that business is looking very positive. The APAC region continues to grow. We're up 24.6 on the previous year. Japan still underpins that region, and registration for the FIGHTMAN OPTIAL IN QUARTER four will will provide further opportunities. The AMCO, our dealer there, have invested heavily in the LOGICAL INNOVATIONS, and we anticipate that that will continue and and generate further income in the second half of this year. And we have an upside in APAC as well in that India who we appointed. So Peter Surgical in India, who we appointed at the tail end of last year, they have we now have registration for the product, and they're beginning evaluations in a number of hospitals, primarily private hospitals.

10:50 But they they're going really, really well. In the rest of the world, that business means still remains suppressed, particularly compared to 2019. It's primarily the Middle Eastern business with the add ons of Canada and Israel. And the tender business there, there's a there's a lack of visibility of what's happening, but it is a small part of our business. And so we've focused most of our sales and marketing activity into markets where we feel we can get a faster return. OEM. So the OEM business has grown and is nearly back at 2019 levels. It grew 45% last year.

11:40 And that was supported by all of our key partners, so AMS, CMR, and BD as well, which is the the old care fusion business. In addition to that, the collaboration that we have with CMR to develop the yellow port elite not only opens opportunity within robotics, but it's also allowed opportunity in some new territories. And so the new geographical territories of India and Germany have been built on the back of the installed Versus robot base. And so we go in with Cambridge Medical robots, and we convert that those accounts to using YellowPort Elite for their robotic cases, and then we roll it out into the rest of the into the rest of the hospital.

12:34 So with our OEM partners, we do still have some residual supply chain issues, but we have solutions in place and there will be a resolution for those and any back order will be cleared in quarter two of this year. In addition to that, we have a very strong order book for quarter two, and we see that business remaining strong throughout the year. So sustainability remains a key driver for growth for the company. We've worked long and hard in drumming the message of sustainability, and we are beginning to see some of the benefits of that campaign. We've continued to develop enhanced sales and marketing tools to reinforce that messaging. And one one of those tools which is working particularly effectively is the introduction of the environmental and financial calculator.

13:29 This gives health care providers all of the data and the metrics that they need to be able to demonstrate clearly to their stakeholders within the hospital the benefits of the disposable technology. And this is done by so we we have this app in place now where the hospital will input their own data. So they'll input their pricing data. They'll input their volume data, and they'll also let us know which products they're currently using. The calculator then will give them their c o two readings. It'll give them their plastic readings, and then it will compare it to our devices and giving them their c o two saving and the reduction in plastic waste and also the cost saving as well.

14:18 And so a hospital has a key document that will have all of the data that they need compiled in one place, and it can become a valuable part of the tender and the tender process as well. We also use this document as part of our revised training program for our partners, and we're beginning to see that the the our partners around the world are picking this document up and using it to develop relationships within their health care market. So in terms of new product development, in 2022, we launched two two products enabling us to to complete the yellow port family.

15:03 So the five millimeter elite yellow port elite five millimeter and five millimeter optical trocar were designed for key markets. The the trocar itself was designed to address the demand of robotic surgery, and the optical trocar was designed to enhance patient safety. So it gives a surgeon visualization as they enter the abdominal cavity. But what these products do is they they complete the offering in some of our key target markets. So in The UK and Japan, in The US, in Australia, these are all markets that require an optical trocar, and they also require the the slightly larger diameter to accommodate some of the energy devices that are now appearing on the market.

15:59 In addition to new product launches of last year, we're looking to to run a number of cost down initiatives on Yellow Port Elite. So as part of our investment in new machinery and tooling, we're we're now able to look at the existing products that we have and see if ways if there are ways of enhancing our manufacturing, but also taking components out or changing the materials. And if you look at the graphic on the right hand side, just below the yellow cap, there's a a silicon bellow, and we're looking to replace the material that we use there. Firstly, it will allow us to bring manufacturing in house. And secondly, it will be a a lot more cost effective and environmentally friendly material.

16:48 And it will reduce the cost of that one component alone from about £1.20 to about 10 p. So you can see there are significant opportunities for us to begin to take costs out of our existing product range. I talked a little bit about completing the yellow port elite family. And another plan for our new product launch this year is to complete the Logi disposable range. So we have a Logi scissor, and we're now adding to it a range of dissecters and graspers to complete that range, and those will be available later on in this year. We had planned to introduce those last year, but because they're a new product, we had to develop them under MDR.

17:35 And so we had to wait for our quality management system to be approved, which brings me nicely onto compliance and and regulatory. So first of all, I'll talk about where we are with the where we are with our current MDR status. We have our quality management system approved now and certificated. We have three product groups under review. The first product group has been approved, and we've got the certification. The second product group is imminent. I had hoped that we would have that done by now, but there's been a few delays, and we anticipate that in the next week or so. And then the final product group is well on the pathway to approval, and we anticipate that early in quarter two.

18:25 So you can see that the investment in personnel and processes has really paid off. We're substantially down the road for MDR, and we believe we will be one of the first medical devices device companies to be fully MDR compliant. Now many of you will have heard about the extension to the MDR transition timeline and the impact that that will have on us. So it's important to understand that the extension to CE certification under MDD is only extended to companies that are in the process of achieving MDR, and you have to be significantly down the down the pathway to it to allow for that extension. So now being able to extend the MDR process allows sorry. The MDD process allows us also to extend our UKCA mark.

19:21 And so that is a really positive step for us. It means that we don't have to go through further validation at least until we've completed m d MDR. The other thing that this does, this whole process does, is it does raise the barrier for new entrants into the market even with the extension for well, any new entrants in the market, for example, has to be under MDR. Any existing device has to either be in the process of obtaining MDR or to be MDR compliant. And so what we are seeing now is fewer new entrants coming into the market, but we're also seeing existing med devices that are currently available being slowly withdraw, particularly in implants like some synthetic measures.

20:12 And as I as I mentioned earlier, it's important to understand that for us to develop new products, we had to have an MDR approved quality management system. So we've talked a lot about investments, and there there was significant investment in our capital CapEx expenditure. We invested nearly 660,000 to update and increase capacity. We haven't invested in the facility for some time for reasons which are obvious. We have now started to reinvest in the business. It's increasing our capacity. It's allowing us to bring more manufacturing in house, and it's driving efficiencies. Also, the investment in tooling has enabled us to run these cost down initiatives. And for example, some of the tooling we've we've moved from a four cavity injection molding molding tool to a 16 cavity.

21:10 So instantly, you've got a cost saving there. And we're looking at other savings throughout the year that will take substantial cost out to some of our key key products. And the plan is to continue with the rolling CapEx expenditure as we go into this year and into 2024. So we're gonna constantly be driving efficiencies and also driving our cost down projects too. So now I'll hand you over to Charmaine to address the financial highlights of the business. Good afternoon, everybody. So I'm gonna talk you through the financial highlights. So overall, the revenue for the year was 11,340,000, extremely positive uplift from the prior year at 24%.

21:59 If we look at that 2019 number, which is our pre pandemic comparative year, we're at 10.73 against us at 6% up in terms of trading. So we're really pleased with that growth. In terms of the commercial margin, the underlying gross margin uplift from the previous year, which we're pleased with, and we're in that target range between 4045%. The overall increased sales activity has led to an adjusted EBITDA of 700,000, and that is in line with our expectations and an improvement from last year. In terms of that adjusted operating profit, we've got a marginal profit against a an adjusted operating loss of 330,000 in the previous year.

22:48 Overall, we've looked at increasing our CapEx expenditure and continuing our new product development, and that's led to a net cash of 990,000 for the year. In terms of revenue analysis, David talked about the kind of geographical split, and I'm gonna look at where we are in terms of that brand segment. So in the green column on the right hand side, which is our SI branded product, that is nearly 50% of our sales, which is at our highest margin. That has increased from the previous year, predominantly UK based, as Dave talked about, but obviously, increments in other regions as well. And then we've got the distribution business, which is showing stronger signs of growth at 4.4 zero four million, and that's an increasing proportion from the prior year as well. In terms of the OEM revenue, it's increased from the prior year up 45% and the comparative to the 2019 numbers nearly at the the pre pandemic level.

23:56 So we're really pleased with that. In terms of margin analysis, we look at this into two levels, really. We look at the commercial margin and and then the kind of overall contribution margin. So the commercial margin at the 42.5%, an uplift from the prior year, 42.3%. We have increased the manufacturing overhead rate during the year, but have mitigated this cost pressure and passed on where possible to customers. In terms of the overall contribution margin, that hasn't been impacted by the net cost of manufacturing, so reflecting the under recovery of factory overheads. So we've had challenges through shortage of skilled labor, extended lead times. They have improved into the second half of the year, and we continue continue to see that improving into 2023.

24:53 So we will be expecting that 34.6% to be back up towards 40% towards the end of the year, creeping back up. I don't think we'll necessarily get back to the 40%, but I'm hoping that we can start making our way up towards increasing that efficiency. In terms of overall operating expenses, we have increased those operating expenses from 2021 at 3,300,000 to 3,800,000 as expected, and we talked about this in the interims. So we've increased investment in sales and marketing to support that growth, and we'll continue to do that in 2023. The overall kind of regulatory and compliance cost is a considerable amount of that both 2021 and 2022 cost as well. That will continue into 2023, and we'll hope to see that easing into 2024.

25:49 And then we talked about improving that employee compensation and well-being, which obviously has impacted those operating expenses as well. As we kinda go into 2023, we are still seeing some wage inflation pressure, so we will be able to mitigate this by increased efficiencies in that manufacturing gross margin. Overall, I think if we go into 2023 and talk about profitability, we will try and maintain that profitability as we go into 2023. We anticipate to be profitable. And as we kinda look towards the financial position of the business. So David talked about capital expenditure.

26:35 So we've heavily invested in CapEx, which we haven't done for a number of years. And we continue to do this into 2023, so there's another £500,000 expected to go into that 2023 number. Some of this is gonna be deposits for some larger equipment into 2024, so you'll see that increasing. The investment in r and d will be at similar levels as we have done since 2022 and continue that development program. And in terms of those higher inventory levels, they are maintained at the moment to mitigate the supply chain delays. We're hoping that this will ease throughout the course of the year, and we'll be able to lease some of that additional working capital to reinvest in the business.

27:22 We had a debt refinance at the beginning of March that gives an additional headroom of in terms of that invoice discount invoice discount facility. This remains undrawn, so we're not actually using that cash at the moment. So we've got plenty of headroom if needed. Overall, that net cash balance at the end of the year was naught 990,000. We would expect this to improve over the course of the year, continue to generate cash, but reinvest that into the business on further CapEx and product development. I'm gonna hand you back over to David for the summary and outlook. Thank you, Charlene. So just in conclusion, the company has made significant progress on MDR, which is a key factor for us in the last year and the coming years.

28:14 We've been responsive to the supply chain and inflationary challenges, and in fact, all of the headwinds that we faced last year. And I believe that we've dealt with those really effectively as a team. We've continued to invest in the business, improving our efficiencies. And importantly, now we're able to turn to some cost out initiatives too, and we'll see those benefiting the bottom line as we go through this year and into next year. Our order book remains strong. It's in line with our management expectations. And we continue to see the key parts of the business, sales growth, motoring, and we feel we're in a really strong position from that perspective. So we had strong sales growth in 2022. We returned to profit, albeit marginal.

29:02 And we feel that the company is now positioned well to continue to deliver robust organic growth going into '23 and beyond. And so I'm happy to take questions. There's a number of them being presubmitted, and I'll run through those first as as you can type in your questions. Okay. Do you want to put the screen back the cameras back on now, please? Yes. Sorry. David Charmaine, you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions just by using the Q and A tab which is situated in the top right hand corner of your screen. But just while the company take a few minutes 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 via your investor dashboard.

29:53 David, as you said, there have been a number of questions both live and pre submitted. And if I could just hand over to you to read those and give responses where it is appropriate to do so, I'll pick up from you both at the end. Okay. Thank you. Okay. So the first question is, please, can you discuss your CapEx currently in progress or have completed recently? You have previously stated that due to supply chain issues, etcetera, you have had delays in implementing some automation. And then the second part of the question is, can you discuss CapEx CapEx projects for the year ahead and what benefits you expect to see. So I think I've touched on these, but just to to clarify, we invested about 660,000 into CapEx.

30:38 It's it's probably a little bit more than that if you take into account the injection molder that we financed. So we bought a new injection molder, a new lathe, and a new laser welder. We've also invested heavily in tooling as well to improve the quality and the reduced cost of of those products of the products that they make. In terms of ongoing CapEx projects, we're looking at another lathe to improve capacity and allow us to bring even more manufacturing in house so we can benefit from the recoveries. And, also, we're looking at a a new grinder for the scissor blades. That's hopefully, that will provide some efficiencies because it will be newer than the one we've currently got, but it's also sort of for business continuation that that one won't come in.

31:37 Okay. Next question. I appreciate that you will do this to some extent. However, for shareholders who are very keen to hear, please, can you discuss in detail as much as you can about all the partnerships, etcetera? I would particularly like to hear about The USA, Japan and India, given the high growth potentials in these areas. So again, I think I touched on these during the presentations. The USA is an important market for us. We have two routes to market. Access devices are through MicroLine Surgical, who we have a a long time relationship with in buying product from them for The UK market. We also go through Adler, who are a a distribution company, and they have an overarching umbrella organization called the Alliance, which is made up of multiple dissimilar type distribution companies, and that gives us coverage of The US.

32:38 I think I explained that this wasn't going quite the way we anticipated, and so we're looking at tweaking that model over the coming months. Japan is a long term partner, a company called AMCO. They're very effective. They have continued to grow the business. They continue to invest in sales and marketing, and they've been very supportive partner for us. India, as I said, we go through Peter's Surgical, another company that we have bought product from over the years for our UK market. They have an Indian operation. We recently received registration, and so we're in the early days of of that partnership. Question three. Please, can you update shareholders on the progress you have had around conversion and conversion to sales with UK private hospitals, e. G, Spire, Ramsay, as discussed in the last presentation?

33:31 So this is this is part of our ongoing investment in sales and marketing and in introducing our national sales national accounts manager. And they work specifically with groups like Spire, Ramsay. And at the moment, without giving too much commercial information away, we're working very closely with one of these two groups that you've mentioned. And we are in evaluation stage in a number of key hospitals for both CLIP, scissors, and trocars. We're starting with the trocars, and then we're rolling out the other products as those become successful. So we anticipate that this this will continue throughout the year, and we'll gradually convert each one of their hospitals and build that business.

34:25 Question four. Can you can you commit here today that we that the AGM will have an online attendance op option to allow shareholders who cannot physically attend the opportunity to engage and hear what you are saying in the meeting? The answer to that is, yes. We are investigating a number of different options. We had a good conversation with this platform about how that could work, and it is our intention to do that. Question five. Are you able to quantify or can you at least discuss progress on the uptake of your products in NHS trusts around the country? In the last meeting, you stated that you have a very close relationship with the NHS supply chain who are giving you more introductions, etcetera.

35:13 Please, can you help shareholders to understand what is the lead time on average between introductions and getting to the point of ordering from you? I wish I could give you an average lead time. That that that's simply not that's simply the NHS isn't that efficient to work the same in every single account. So where are we? We work very closely with the supply chain, and the level of their introductions start around looking at so they look at ways that they can save individual NHS trusts money. And so if you take scissors, for example, because it's an easy an easy comparison, they will look at what Saint Thomas's Hospital are buying, and then they will look and see what alternatives there are in the marketplace.

36:01 And then they will talk to the procurement department and say, you guys need to be talking to Elemental Healthcare because you have this opportunity to save x amount on scissors, and, also, it will help you with your sustainability argument as well. And that allows us to get in and start generating a conversation. So that's where the the introduction is. It's it's a a quite a quite a a hands off level, and then it's up to us to go and then start doing the work around that. So we are constantly in process of evaluations. They are obviously business critical at the moment. We don't want competition to know where we're working and what we're doing. But the sales team are conducting evaluations, you know, on a continuous cycle. So as soon as they've completed one, they'll be moving on to the next one. Not all of them are successful, but we we tend to do rather well on them.

37:01 Now in the past, an evaluation may take five, six weeks, particularly for something simple like a a pair of scissors. Now because of the delays in elective surgery, the delays, the shortages of staff, we are finding that the evaluations are taking longer than they did twenty four months, thirty six months ago. And so where we would anticipate an evaluation being completed in a relatively short time, it is taking longer to get through. Question six, have you achieved your MDR certificates yet as you indicated in your January update?

37:47 We're nearly there. So we've completed them on our QMS first product group. The second product group is imminent, and the third product group will be completed by the very we've the the in Next question. Great set of results. Positive reported, not adjusted normalized numbers in the P and L as well as operating cash flows. How confident are you that these two items will remain positive and grow going forward? Okay. So in terms of kind of our market expectations that we have released, so we anticipate to be profitable both at adjusted EBITDA and adjusted profit before tax.

38:42 In terms of the cash generation, we would anticipate to continue to generate cash and reinvest that into the business. So in terms of that net cash, where it stands at the end of December at naught 990,000, We anticipate that to be a little bit higher than where it stands. Okay. You mentioned that you had some longer lead times causing revenue deferral. Can you talk to us about this and how long you anticipate this to be an issue? I think I mentioned in the presentation. So it's primarily around two parts. One of them is is holding up is holding up more value in orders than the other. We have a solution to this problem. We expect to take delivery of the part that is causing delays in in May, and we anticipate that the backlog will be eradicated by the end of quarter two.

39:43 For those of us who don't have a medical sector knowledge, please can you reiterate who is the target customer? Who the target customer is in the NHS, e. G. Trusts, CCPs, etcetera. Please, can you tell us what progress you are making with the NHS? E. G, we're in x amount of hospitals representing x amount of market currently. Thank you. So our target customer multiple. So within that so we we don't sell to CCGs. We sell to NHS trusts. We sell to the hospital. And within that, we will sell to procurement, to surgeons, to theater staff, and sustainability trusts, and also business managers.

40:28 And the importance of each of those roles varies from hospital to hospital. In terms of the progress we're making, we continue to make good so look look take you back to the sales that we made last year. So we grew our business significantly in The UK. 85, 90% of that business is sold into the NHS. So that shows you that most of our growth is coming within the NHS. And in terms of where that is from a number of hospitals we represent, it it will vary depending on the trust that we work in and the the overall volume of acute surgery that is is being undertaken.

41:14 The advantage that we have is that we are only a really small company, and we're up against huge organizations like Johnson and Johnson, Medtronic, Applied Medical. And so we have a relatively small market share, which gives us the ability to go after significant market share growth. So whereas they're trying to maintain sort of an equilibrium between the three companies, we can go in and start picking the business that we want and that gives us real value. So I think at the moment, we're we're we have that advantage of being a small fleet of foot organization that can take advantage of the fact that the business is dominated by slower moving organizations. Can you go into more detail about product delays in new markets, which you mentioned in your results?

42:05 So the product delays so there were supply chain issues, which delayed us delivering product to MicroLine in The US until the second half of the year. That's now being rectified. And as I mentioned, we're seeing momentum there and some early account conversions. And then the other real problem was was I've just reiterated was around the some legacy supply chain issues, which should be resolved in May and cleared by the end of quarter two. What is the typical difference in margin between SI and distribution segments? So, typically, your distribution segment's between 40 to 45%, and the SI branded products around 60 to 70% because we've got that direct UK market, which obviously helps with margin.

42:59 David, Charmaine, thank you very much for that. I think you actually managed to address every single question from investors today. And, of course, the company will review all the questions submitted, and we'll publish those responses on the investor meet company platform. But just before redirecting investors to provide you with their feedback, which I know is particularly important to you both, David, could I just ask you for a few closing comments? Yes. Firstly, again, thank you for joining us this afternoon. I I think you can see from what the achievements we've made during the last year that the company is now really well placed. You know, we're seeing sort of a a significant backlog of surgery being required in most markets. And, you know, with our MDA program sorry, MDR progress, with investments in efficiencies and capacity, we are well placed to take advantage of that. And we see that this year will be a a real opportunity for the company to demonstrate how effective fleet we've managed through the headwinds of last year and COVID as well.

43:58 So once again, thank you very much for your time, and look forward to speaking to you probably at September in the interims. Thank you. David, Charmaine, thank you once again for updating investors today. Could I please ask investors not to close this session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This will only take a few moments to complete, but some should be greatly valued by the company. On behalf of the management team of SURGICAL INNOVATIONS GROUP PLC, we'd like to thank you for attending today's presentation, and good afternoon to you all.