Surgical Innovations Group (LSE:SUN) — Interim Results

0:01 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. Just simply type in your questions and press send. The company may not be in a position to answer every question received in the meeting itself. However, the company can review all the 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 afternoon to you, sir.

0:32 Good afternoon. Good afternoon, everybody. Thank you for joining this I IMC event. First of all, I'd like to take this opportunity to introduce Chris Martin, who is our new CFO, joined at the beginning beginning of June and is has has been a great help to to me, particularly in my role as as CEO. So I'd like to welcome Chris as part of a wider wider audience. If we could move on, please, to the so we'll start today reviewing our commercial and operational highlights. And then Chris will take us through the first half year financial results. And then obviously, we will sum up and take questions at the end.

1:21 So moving on to the next slide. So strong sales in our SI branded products. This is particularly important because they help drive efficiencies in the facility. Additionally, the OEM performed, well above plan, as we address the supply chain issues, and we've got a resolution on those and we're able to clear the back order. Implementation of our operational improvement plan to improve margins and efficiencies, that's well in place now. We're beginning to see those filter through, and they should filter through continuing through h two and into 2025. New product development has seen successful rollout of a number of new products with further opportunities to come as we open up new markets for these products, and I'll touch on in greater detail on a later slide.

2:19 One of the other things that we've continued to work on is reducing our inventory. You may recall that during COVID and the supply chain challenges of '22 and '23, we held a higher stock base than we should or that we would normally do. And throughout this year, particularly second half of the year, we're looking to improve that and get it down to reasonable levels so that we'll return working capital to the business. And then I've got a slide on the sustainability and how that continues to resonate as we grow our SI branded products and gain traction in in new markets. So looking at the market overviews, we'll start with the The UK and as mental health care.

3:07 We had a challenging start in in The UK. There's no question about that. First of all, the doctor strikes impacted elective surgery, and then we found that the NHS supply chain moved to a lower inventory holding and moved to a more of a just in time position. And as a consequence of that, we had virtually zero sales from the supply chain in January and February. What's returned now is a a much more balanced purchasing pattern where they will purchase similar amounts each month, which actually helps us in the long run-in terms of manufacturing and manufacturing efficiencies and also in inventory as well. We a number of other things that we've we've done in the first half of the year, we switched to our own brand, GASTROUP calibration tube, and we've seen that that product has whilst it's allowed us to secure the business, the average selling price of that as competition has come in has dropped significantly.

4:15 And so we've we've seen a a drop in overall sales, although our overall margin has increased. And then we took the strategic decision not to source a new alternative synthetic mesh. It's a low cost, low margin product, and it's allowed the sales team to focus more on the, SI branded products where we where we receive a higher margin.

4:46 Sustainability remains a key driver in the in The UK, and that continues, and that's helping us drive new accounts. What it allows us to do is to focus on sustainability leads and clinicians in the in the NHS rather than procurement where your first conversation is around price. So that's particularly important for us. And then also within The UK, we've introduced a number of new third party products, and that will provide significant opportunity in the second half of the year. I've got a slide later on that actually breaks out those in a little more detail for you. Moving on to The USA. Despite some growth in that market, it does remain frustrating for us. The instrument business outside of the 11 states in the Southeast covered by Adler instruments has proved really difficult to find new partners and be able to find opportunities to grow the business.

5:47 We've explored options looking at national companies, but those it's very difficult to get focus from those companies. And so we're we're looking at we're continuing to look at a number of opportunities to grow that business. We do have a significant opportunity with LogiTube as we go into the end of q four and 2025, But we're just waiting on regulatory approval to be able to launch that. And as always, that's a little more complicate complicated than we would like it to be, but we should have that by the end of q four. The access devices are yellow pool products, which as you know, go through MicroLine Surgical. That again is a big frustration to us.

6:34 We thought that we would have better traction by now. We've gone back in and working with MicroLine to develop a new incentive scheme for their sales team, put put in further training, and also a a a program of co traveling, which when we've done it in the past has given some impetus and we've managed to gain some accounts then. So it's just making sure that we can keep the the momentum going there and and getting them focused on our product. And moving on to Europe, strong performance here, and this shows the the benefits of focusing on training, self support, and co traveling, and getting our distribution partners in Europe to use our sustainability tools.

7:27 And we have got some you know, we've we've done some really groundbreaking work with sustainability across the globe, but Europe is where it's really paid off in that first half of the year. In addition, we have a number of opportunities with some new products. LogiTube, we're rolling out across Europe, and there are further opportunities in the second half of the year. And the yellow Hortelita XL cannula, which is a product developed for bariatric surgery, we have a number of opportunities in Europe, especially in Germany where we're currently taking part in a sick center trial for for green surgery. So it's it's a real opportunity for us there.

8:15 In APAC, modest growth, 2% in the first half of the year. That's in part because we had strong sales in the second half of twenty four sorry, '23, which led to both Japan and India balancing rebalancing their inventories. However, we're back to more normalized purchasing patterns, and we've seen already sort of some significant opportunities. In Japan, for example, they've bought logic instrument demo kits for all of their sales team, and that was delivered in September. So we expect to see some some real progress in q four on logic instruments, which will be good. India have converted a number of significant accounts. And it's important to remember in India, an account in The UK, a good laparoscopic account would do a thousand, maybe 1,200 cases a year. In India, they'll do four to 6,000 a year. So, you know, you went in an account in India, and it's it's it's it's really sort of dial changing from that perspective.

9:20 Rest of the world, we've had shown good good growth. That's primarily Canada and Israel. Now our Canadian partners who we appointed midway through last year have really taken the sustainability messaging to heart, and we're really seeing strong growth around sustainability and account conversions. So we see real opportunity in the second half of the year. And in Israel, we have very strong logitube sales, so gastric calibration. They seem to be a little bit bigger than the market would indicate there, so we're not entirely sure why and what's happening. But, you know, sort of they continue to order, which is great.

10:07 Our OEM business had a a really strong first half of the year. As I said earlier, this is in May down to the resolution of the supply chain issues that we had and then being able to clear the back order. We're seeing a much more normalized order book for the second half of the year. But on top of that, we are seeing some opportunities with some of our other OEM partners. We create a valve which ultimately ends up in an Olympus product. We've managed to redesign it, take some cost out of it, and improve margins. And there are a couple of other areas where we on our OEM side where we've managed to improve margins and and and make it a a lot more effective for us.

10:59 So moving on to compliance and the road to MDR. There's not a huge amount to report other than that. We still remain on track and within the timetable. We are seeing delays in responses from the notified bodies because that's the extension on MDR to 2028. They are focusing on more immediate priorities, and so it's taking longer for us to get responses from them. But where, as I said, you know, we are on track. We don't see any areas where we will come under pressure, and that moves on on nicely. A reminder that we have our UKCA mark on all SI branded products, which is great. It means Elemental can continue to sell the products in The UK.

11:50 In the meantime, we go through our normal audits. We passed our empty set with only two minor nonconformities, which is is about exactly where you want to be.

12:05 So sustainability. Over the past few years, I I've talked a lot about sustainability and how the messaging is resonating in different countries across the globe. And so I thought this time around, I'd give you some examples of how that messaging is really resonating and how it's generating business. And the first one on here is is India. And I know that's probably not everybody's first thought when it comes to sustainable health care. But the Indian government is really, really on the case of reducing plastic waste in in all sectors of life, but in particular in health care. And we've conducted a project with the SURGAN GROUP hospital in Delhi, which is a large hospital. They do about six thousand cases a year.

12:54 And we've put together and demonstrated clearly that they can reduce their CO two footprint by about 5.1 tons per year and the subsequent reduction in plastic waste. And we've been able to show them quite clearly using the the data, the validated data that we have that this this cost saving, and it's helped us convert this hospital to yellow port elite. The next one along is the pre galleon nomination award for medical innovation. And this was we've put this one up on here because it it shows that the clinical data that we've we've pulled together, we've had validated by independent sources and had a clinical paper published in the Royal Royal College of Surgeons Journal.

13:46 It shows how important that is and how that message is beginning to impact the decision making of health care health care providers around the world. It's a real opportunity for us to differentiate ourselves from from the competition. And then the final one on there is is this is actually Oxford Hospital. And we've been working with them now for a number of years, and we've gradually increased across specialties and across the various hospitals in the trusts. We now have virtually all the business there. And we've been able to do that by clearly demonstrating the reduction in c o two and the reduction in plastic waste and what effect that that would have on their overall sustainability plan.

14:35 And we're using this kind of case study now, particularly in The UK, but in other areas to generate business. So new product development. As I mentioned earlier, we've had a number of successful roll product rollouts. The first one is the gastric calibration tube LOGICube.

15:02 We started that in The UK at the very end of 2023, and that has successfully we've successfully transferred the business that we had with Bariatric Solutions to an SI branded product, and that has been really successful. We're now rolling that out in European countries, into The Middle East. We've just in September, we conducted our training product training with our new dealer there and and also in Australia as well. And as I've mentioned earlier, we're hoping to roll that out to The US at the tail end of this year. We've had a couple of product extensions, five mil cutting shielded trocar, which we've rolled out to particularly for gynecology, and that's helped us in Oxford. You know, the case study I gave you earlier. One of the departments we were missing was gynecology, and we've now been able to complete that conversion, which has been really useful.

16:03 We do have the yellow port elite XL cannula, which is used in bariatric surgery. So, again, that adds to our portfolio of elite products and gives us much greater opportunities to have complete conversions.

16:20 And the work we're doing in Germany will will help support that going forward. Couple of other projects that we're looking at, we're looking at an illuminated version of the logic tube, and we're hoping that that will come out probably in the middle of next year. But that is for more complex bariatric cases where the anatomy is not as clear and the surgeon is looking for some key point indicators. So the tube is then attached to a light source and illuminates and are able to identify exactly where it sits in the stomach pouch. And then we continue to look at opportunities around new materials. So a lot of the valve material that we use currently is silicon and is manufactured by third parties.

17:06 We're looking at being able to manufacture it out of TPE, which brings significant cost advantages, but also allows us to injection mold in house as well. So that will give us greater efficiencies in house.

17:22 So I talked about some of the third party opportunities that we have developed, particularly for The UK team. Two distribution contracts already signed are with SIFER SIRGICAL and ASPEN SIRGICAL. Cypher is a small UK company. They have a a very nominal existing revenue in The UK, but they've struggled with their sales and marketing bandwidth. And so putting the product with a bigger team like Elemental, we're expecting some significant growth as our new product comes out. That will probably be q one next year where we see real impact.

18:04 Aspen Surgical is a significant US company. They've got a revenue of about 400,000. And over the past three or four years, they've acquired a lot of different businesses, some well established brands in the medical world. And they've ended up with a large number of distribution partners in The UK, and they want to consolidate that under one distribution partner. And they've chosen Elemental Healthcare to be that that company. So we see real opportunity there. Some of the brands they they have, for those of you within the industry, they have the Bovie electrosurgery products. They have the book haul to retraction systems, and they're really significant brands that will give us good opportunities.

18:54 And then we're in conversation with a number of other companies. We're in com conversation with a Taiwanese company to bring in a five mil clip into The UK, which will complement our existing clip business and also a polymer clip as well. We're looking at a surgical stapling device, which will allow us to complement our bariatric portfolio. We're looking at insufflation system, which will allow us to actively target robotic cases. So we're quite excited by that. And we're also looking at our products, a morcellation product for solid organ morcellation in a special retrieval bag laparoscopically.

19:41 So some significant deals that will give the the elemental sales team a lot to go at in q four

19:50 and into the first half of next year. So I will pass you over to Chris now who will take us through the financials. Thank you, David. So looking at our revenue, we were at 6,200,000 for the first half of the year, which was up 9% on the prior period. I'll go through a little breakdown of that on the next slide. In terms of gross margin, we maintained our gross margin at 33%, which compares equally to the same period of the prior year. Our adjusted EBITDA was positive by 189,000, which compared to 95,000 for the prior period.

20:40 We have gotten an adjusted operating loss of 128,000 for the first six months. Difference between our adjusted EBITDA and our adjusted operating loss is purely the depreciation and amortization of development costs. That's led to adjusted loss on earnings per share of point zero two. The shares in circulation are the same, but it's purely down to the loss itself. Overall, we have a a loss after tax of 487,000. The draw from the adjusted operating profit or loss, sorry, of $12.08 to the loss after tax is purely down to one off costs, which relate to our redundancy program,

21:32 which will lead to further improvements in the second half of the year. In terms of a breakdown of our revenue, our SI branded sales, increased by six point 16% to 3,300,000. And in terms of, where those increases happened, as as David went through earlier, in terms of the areas of significance, UK was up 16, Europe up 28, US up 15, APAC up two, and the rest of the world was up 23% on the prior period. Our distribution sales in elemental declined by nearly 18%.

22:17 As David's been through, some of that relates to the logitube changeover from buying that product into manufacturing ourselves and also issues with the NHS supply chain, as he discussed earlier, and our move away from synthetic mesh as a product line. We have a very strong OEM sales up 63%. And again, that was driven partly by backlog in orders from last year, which we've now manufactured and shipped. The strong thing on the the upside or the benefit of strong SI branded sales and the OEM sales is that we've now you know, it's giving us a a good efficiency through our throughput through our factory, and and that's improved our efficiencies and our recoveries.

23:07 So while we've got strong sales, we've also got an improved performance within our manufacturing facilities. In terms of margin analysis,

23:22 commercial margins have been dropping due to cost pressures on materials. You can see from half year last year, we were at 40%, which is on the roll called underlying gross margin percentage. We were at 40% on the first half. For the year, we were 38, and now we've it's dropped to 34. So you can see we're under pressure from a cost view. We haven't put through some price increases. They've already been implemented. We've got further increases to come as contracts come up for renewal, both in terms of later on in half two of this year and then into the early part of next year. Manufacturing productivity, despite some of the challenges that we had previously, have improved.

24:11 And as I've just discussed with some rationalization in manufacturing, cost reduction, some automations, and also strong sales throughput, we've been able to actually maintain the overall contribution margin. Previously, we had some under recoveries in our factory performance. Now that we're recovering better, getting better efficiencies, while we've got an underlying margin sort of decrease, the performance in our facility is helping. And that brings us back to having a contribution margin of 33%, which is in line with where we were at the same period, last year. This will also mean that we will see the benefits of this improvement running into half two then into a full year benefit for next year.

25:04 In terms of our operating expenses, the adjusted operating expenses are in line with last year, more or less identical at 2,160,000 on a like for like basis.

25:16 We have had £300,000 worth of one off redundancy costs also, but I that's not shown on a like for like basis. We maintain our investment in sales and marketing and training. Regulatory costs continue to be higher due to the end the switch to MDR, but we are coming through the majority of those costs now, and we shouldn't the cost shouldn't be quite as high as as we move forward, certainly into next year. Where we can, inflationary pressures have been mitigated. We just have to operate in expenses expected as a result of the restructure. So the restructure has happened, but in terms of our admin costs and our back office costs, we haven't really seen the benefit of that come through yet.

26:08 We will see that in half two, and we will see the full year benefit of that, next year.

26:18 Then if we look at our cash position, investment capital expenditure is has been kept at at a minimum level of only 37,000. We are managing our cash position tightly. One of the big tasks for us is to try and reduce our inventory by year end. It's currently, as you can see, at £3,300,000. We are we intend to get that back down to the prior year levels of £2,850,000. In doing this, we are looking at our reorder levels and minimizing those reorder levels. We are looking at our safety stock and trying to run with more efficient levels of safety stock.

27:03 Overall, our cash headroom, as you can see, cash is at point two three currently. We have headroom in our facility of one one million. So overall, the total headroom is 1,200,000. The big task going forward, because I say, cash has been managed tightly. We need to reduce our stock, get it back to last year levels. We will have reduced MDR costs. We are now running on a lower cost base having made those cost reductions. Our sales are still growing. We are maintaining our margin. This will put us in a much better position going into half two and follow through into next year. And that will mean improved profitability in half two, but also an improved cash position.

27:58 David, am I passing back to you for summer? Yeah. So just just in summary on on all of that. So we've continued strong sales growth in SI and our OEM sectors. We expect improvement in our distribution products as we go forward and as we add to the portfolio. We've had a successful rollout of new products in global markets, and we can see the the opportunities that we have in new markets in the second half of the year and into next year, and they are really significant opportunities as well. We've continued our regulatory progress on MDR. It's a lot slow slower than we would like, but that's because of notified bodies, not because of anything that we're doing.

28:48 As Chris just alluded to that, we've responded effectively to the operational challenges, and we should see the benefits of those beginning to filter down through the business over the coming months and again into next year. We've continued throughout the year in terms of investing in improvements in efficiencies and cost down initiatives from an r and d perspective, and we're looking at, you know, getting those to to to really sort of take cost out of our some of our products in in the second half of this year and into next year. And as I alluded to, know, we've we've signed some significant distribution contracts for The UK. Some of them have existing revenue, and the opportunities for the sales team are

29:41 quite extensive. And we we look forward to being able to report on those in March next year as they begin to to gain traction. So very happy to take questions now.

29:59 Perfect. David, Chris, thank you very much for the presentation. What I'll do at this point is I'll just bring your cameras back up. Ladies and gentlemen, please do continue to submit your questions. You can do that just by using the q and a tab, which is situated on the top right hand corner of your screen. But just while the company take a few moments to see the questions that have been submitted today, I'd like to remind you the recording of this presentation along with a copy of the slides and the published q and a can be accessed via your investor dashboard. As you can see, we have received questions throughout today's presentation. And, Paul, if I could just hand over to to chair the q and a, that'd be great, and I'll pick up from you at the end. Thank you. Janice, I've got some questions that I'll come to in a moment, perhaps for you, Chris, regarding cost cutting measures and cash position, etcetera, some of which you touched on, also and about whether the new labor government has any implication. But there were some pre submitted questions, so I'll just start with one of those.

30:45 First question was when will we see you paying dividends? Interesting question. I think I think at the moment, our cash is better invested back into the business. Clearly, we've undertaken lot of restructuring, and we're looking to see those restructuring filtered through to the bottom line over the coming months. So I would say that for the time being, we'll we'll continue to invest in the business rather than in dividends. Thank you. The the other question was, as you stated last time, the share price will recover when we see consistent results. These results seem a little underwhelming and the share prices react accordingly.

31:31 Is there any light at the end of the tunnel for shareholders? I would hope so. And I would I would hope, you know, sort of the the operational plan that we've highlighted that's been implemented in the first half of this year will demonstrate that those cost savings that the improved profitability of the business, will continue to grow. We'll see that throughout the the rest of this year and into next year. You know, sort of I I think it is one of those those situations where, you know, when we talk about consistent results, it's not over a six month period. It's gonna be I think everybody is looking for six, twelve, eighteen months of consistent results and profitability. And I think going forward, we'll be able to demonstrate that.

32:23 You're not profitable yet, but with inflation down, with long waiting lists in place, and with the labor government in power, is that likely to change things? Does that have an impact with the labor government or the the new new policies within the NHS see a rise in orders for you? Well, we're not we're not really seeing a huge impact of labor. I mean, to be fair to them, they've only just, I think, a hundred and two days, isn't it, in power. So the the health care policy is beginning to filter through, but the impact of that is is is not really being seen in the moment. I think the question here is is around the long waiting lists. And, you know, there is no question that they're continuing to get bigger, not smaller, which shows that they are not addressing the the waiting list.

33:17 But where we where we believe we are strong is now adapting a lot of our efforts within the private sector, and we've been really successful building relationships and winning contracts with the private sector where waiting list initiatives are going to be directed. So the the routine surgeries, the lap chole, the hernias, those routine ones which are you could say are our bread and butter are being done more and more in the private sector. And we've recently, you know, sort of at the year end results, I talked about some of the contracts with one with Spire on a number of products, supply agreements, so like AT and CLIP on access devices, and we're implementing that as we speak.

34:07 You know, sort of the team are going in and converting those hospitals now to switch to SI branded product. So I think the the the waiting list initiatives that have been in place, and I hope labor keep in place, are, you know, sort of are going to help drive the business forward. But we don't, you know, sort of to be honest, the last thing the NHS needs is another government coming in and doing another top down review of the NHS and changing things because that will take time to get up and running and and sorted. In terms of the inflation bit, I would say, you know, sort of inflation headline inflation is down, but supply chain cost inflation is not necessarily coming down as quickly.

34:54 And, you know, we are still seeing sort of some of the supply chain increases. They're not as bad as they were maybe a year ago, two years ago, but there are still some significant supply chain costs being imposed on us, if you like, emails. There's a question here, which I realized you can't answer, but it's a question about your cash position where you are. One investor was saying, does that mean that there's a placing likely? And I realized you won't comment on that. But perhaps you could just reiterate your cash position now, the the the points you made in presentation regarding cash headroom and and the cash position you're you're looking towards for the second half. Yeah. Look, I think we we've consumed a million pounds of cash since the beginning of last year.

35:43 Half of that is in the losses and half of that is in increased inventory. We've looked at that inventory. We're reassessing that inventory, and the plan is to get that inventory back to the level that was at the end of the year. So that should bring in, you know, reduced working capital and give us another chunk of cash back, 3 to 400,000, let's say. Within that, then we have got the facility there of a million pounds to call on, but we intend through the better p and l performance on top of the stock reduction then that will start to generate cash and get us back into a cash positive situation.

36:28 So, you know, I you look at the numbers and we're sort of at the bottom of the cycle of consuming cash. Now we should be certainly not consuming any more cash and starting to build a little bit of cash. But that's going to run into next year, and we'll see the full benefit of that into next year. I'm staying with you, Chris. There's a question regarding the cost cutting measures. I appreciate you you mentioned this in your margin analysis slide. But what measures have been introduced to improve your margins? But also the the question is, are there others? And where would they come into play when we see the benefits? Yeah. Look, said, the the measures we've taken so far are sort of mainly the cost of staffing, both in terms of our manufacturing facility and in terms of admin and our regular rate departments, so back office department. So, you know, we've probably reduced cost there by up to 15%.

37:32 And and we've taken those actions. There's kinda no further no further short term actions on that. Well, we need to see the the cost savings come through from that line. There are other actions that we can take. I think that's more to do with the cost of the product itself in terms of switching material types, substituting materials. We have some ideas of some of the things we want to do already. They need a little bit of investment to do it, but cash is relatively tight. So we need to earn a bit of cash back, and then we can make those investments, and and then we can see further improvements. Just a few other questions outside of the financial side.

38:17 Do you see any issues in moving from silicon to TPE from a regulatory or performance standpoint? There's there's no regulatory issues at all. TPE is a widely accepted medical product. It's used in a lot of medical devices. The key, obviously, here is performance and functionality. The tests that we've run so far show that there is there is no change in performance. So it's it's around it will be around the valve technology, and it's so the the challenges historically have been that TPE is a stiffer material, and so it wouldn't close to keep the c m two in the abdominal cavity. Now the way that we can injection mold it changes that and slight changes to the design.

39:10 So from a functionality point of view, we don't see any any challenges at all. Otherwise, we wouldn't be pursuing it. A question regarding Israel. In terms of the exceptional take up there, is that because they found a secondary use of the product, or are they selling it outside the country? There's a question from any investor. Okay. I'm not sure about secondary use. So no. I mean, it it's it's being used and and that they they have a reasonable bariatric market, but I think and, you know, so they're still buying all of our other products at the same volume that they have historically. So whilst we anticipated, for obvious reasons, that we might see a decline in the business in Israel over the last twelve months, the business has been very stable, and then it's grown sort of quite a bit from the calibration tube business, the logic tube business that I put.

40:08 We we're obviously not sending anybody out there to to have business meetings. We're meeting with them in Medicare in November. We'll ask the question why, what they're what they're doing with the calibration tube, but we're happy to supply. How are you going about seeking regional partners and distributors in The US? So number of number of plans, you know, sort of there's the networking, you know, sort of within the company. We have significant years experience in the business. You know, I've been in the business. We had to fill in a tender the other day, which I had put my CV down and it worked on a calculator. I've been in the industry for thirty three years, which seems like an awful long time.

40:56 There are so we have a lot of experience in the business work to network. We're also looking at partnerships with the British Department of Trade. We're looking at exhibitions. We're talking to national and smaller regional companies. So we're looking we're looking at all sorts. Our big problem as a business in all areas is around scale, and that includes sales and marketing. And we put a lot of investment and time into Europe and into India and into Japan, and that's paid off. So some of the time going forward will be some of that time will be put into The US to try and drive new opportunities there. But it's a difficult market because it's the the national companies really don't want want your product. They just want to to build a portfolio.

41:51 The smaller companies are going for low cost, and they can get that from China now. That's come into the to The US. And so it's it's very difficult to find significant you know, a good opportunity, a good purse good team that you can work with, but we continue to look. Talking of finding a team to work with, how's the search for a new nonexec going is one question. So that's really a question for for John, but we we haven't you know, so for the last three, four months, we've been, you know, working our way through implementing the operation improvement plan. So we we haven't looked for new nonexec.

42:38 The new nonexec when when we do is gonna have to be I'd imagine it would have to be of a financial background because it would be for the audit committee, but where it's not something that we've we've actually made any progress on. Thank you. Well, that wraps up our our q and a. So if I could hand back to you, David, to provide a final summary. Yeah. So, again, thank you very much for for listening to what we've had to say and some very interesting questions. In summary, I would like to say that, you know, sort of the the business is on the right tracks. We've we've made the right decisions back at base. We've taken a lot of cost out of the business, and we've looked at efficiencies and and the functions of the business. And I think that coming through the second half of the year and particularly into next year, you will see that begin to filter through, and the company will return to profit and be well placed in 2025.

43:44 So thank you for your patience with us, and we are we are putting things right. That's great. David, Chris, thank you very much for updating investors today. Could I please ask investors not to close this session as you now be automatically redirected to provide your feedback in order the management team can better understand your views and expectations? This then 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.