Interim Results

SURGICAL INNOVATIONS GROUP plc Interim results announcement for the six months ended 30 June 2004 Surgical Innovations Group plc ('SI'), the Leeds-based designer and manufacturer of innovative surgical devices for minimally invasive abdominal surgery and autologous blood transfusion products, today announces its interim results for the six months ended 30 June 2004. Financial Highlights: * Turnover at £1.43m (2003: £1.16m) - up 23% * Operating profit at £74,000 (2003: £43,000) - up 73% * Pre-tax profits at £41,000 (2003: £23,000) - up 78% * Earnings per ordinary share at 0.016p (2003: 0.009p) - up 78% Operational Highlights: * European sales doubled * USA sales up 87% * Sales of Minimally Invasive Surgery (MIS) devices up 75% * Growing prospects in Obesity Surgery * Increasing opportunities in Autologous Blood Transfusion (ABT) following donated blood scares Commenting on the results, Doug Liversidge CBE, Chairman of SI, said: 'We have made strong progress in the past six months with firm contracts in place and incremental business coming through. Our focus on product development, the key to the future success of your Group, continues and is underpinned by the current royalty stream. Early next month, we plan to launch the QuickCut fully disposable scissors, the initial product in a suite of fully disposable instrumentation.' For further information contact: Surgical Innovations Group plc 0113 230 7597 Graham Bowland, Finance Director Stuart Moran, Technical Director Westhouse Securities LLP 0161 838 9140 Philip Johnson Binns & Co 020 7786 9600 Ben Knowles Simon Mountford Communications 01347 844844 Simon Mountford/ Alison Crawford CHAIRMAN'S STATEMENT I am pleased to report that, for the six months to 30 June 2004, your Group made an operating profit of £74,000 on turnover that increased by 23% to £ 1.425m. Allowing for net interest payable of £33,000, the retained profit for the period was 78% higher at £41,000. This significant increase in retained profit was achieved despite the weakness of the US Dollar. Your Group has made good progress in all markets, with sales of core Minimal Invasive Surgery (MIS) products up by 75% to £1.15m. We have continued our steady penetration into the substantial US market, where sales are up by 87% and in Europe sales have more than doubled. The performance of our key strategic partners, Aesculap and Teleflex, has resulted in a 264% increase in global sales of Logic single-use scissors. European and North American sales of the renowned YelloPort reusable port access system have surged ahead. In Europe, there was an increase of 69%, following changes in the way the product is sold. In the US, the increase was 47%, as a result of the strengthening strategic partnership with Cardinal Health. Furthermore, your Group's MIS product range is ideally placed to take advantage of the rapidly emerging opportunities in obesity surgery. At this stage, sales of Variglide, our single use port access system, have been slower than originally anticipated. However, following enhancements relating to the use of the system in obesity surgery, we expect sales to return to forecast levels in 2005. Sales of post-operative blood products increased by 22%. The case for using Autologous Blood Transfusion (ABT) in the UK has been reinforced by potential national blood shortages, resulting from warnings over the impact of vCJD on blood donations, scares associated with the risks of blood transfusions and the continued rise in cost of banked blood. Your Group is well positioned to increase its market share in this area. We have advanced strongly in the past six months, with firm contracts in place and incremental business coming through. Our focus on product development, the key to the future success of your Group, continues and is underpinned by the current royalty stream. Early next month, we plan to launch the QuickCut fully disposable scissors, the initial product in a suite of fully disposable instrumentation. Historically, the majority of your Group's turnover occurs in the second half of the year and your Board is confident that, with the continued support of our strategic partners, this again will be the case. As a result of the slower than anticipated sales of Variglide, profitability for the full year will be below current market expectations, but it still should be ahead of last year. Doug Liversidge CBE Chairman 30 September 2004 CONSOLIDATED PROFIT AND LOSS ACCOUNT For the 6 months ended 30 June 2004 Unaudited Unaudited Audited 6 months to 6 months to Year to 30.06.04 30.06.03 30.12.03 £000 £000 £000 Turnover 1,425 1,160 2,750 Cost of sales (652) (543) (1,312) ---------- ---------- ---------- Gross profit 773 617 1,438 Administrative expenses (699) (574) (1,255) ---------- ---------- ---------- Operating profit 74 43 183 Net interest payable (33) (20) (47) ---------- ---------- ---------- Profit on ordinary activities before 41 23 136 taxation Tax on profit on ordinary activities 0 0 3 ---------- ---------- ---------- Retained profit attribute to ordinary 41 23 139 shareholders ====== ====== ====== Earnings per ordinary share 0.016p 0.009p 0.05p ====== ====== ====== CONSOLIDATED BALANCE SHEET As at 30 June 2004 Unaudited Unaudited Audited As at As at As at 30.06.04 30.06.03 30.12.03 £000 £000 £000 Fixed Assets Tangible Assets 827 725 892 ---------- ---------- ---------- Current Assets Stock 751 598 721 Debtors 1,267 968 1,245 ---------- ---------- ---------- 2,018 1,566 1,966 Creditors: amounts falling due within one (1,029) (709) (1,111) year ---------- ---------- ---------- Net current assets 989 857 855 ---------- ---------- ---------- Total assets less current liabilities 1,816 1,582 1,747 Creditors: amounts falling due after more (350) (309) (352) than one year ---------- ---------- ---------- Net assets 1,466 1,273 1,395 ====== ====== ====== Capital and reserves Called up share capital 2,573 2,556 2,559 Share premium account 16,064 16,045 16,048 Capital reserve 329 329 329 Accumulated losses (17,500) (17,657) (17,541) ---------- ---------- ---------- Equity shareholders' funds 1,466 1,273 1,395 ====== ====== ====== CONSOLIDATED CASHFLOW STATEMENT For the 6 months ended 30 June 2004 Unaudited Unaudited Audited 6 months to 6 months to Year to 30.06.04 30.06.03 30.12.03 £000 £000 £000 Net cash inflow from ordinary activities 49 226 265 Returns on investments and servicing and (33) (20) (47) finance Taxation 18 37 37 Capital Expenditure (9) (47) (158) ---------- ---------- ---------- Cash inflow before financing 25 196 97 Financing 7 (24) (66) ---------- ---------- ---------- Increase in cash in the period 32 172 31 ====== ====== ====== Reconciliation of net cash flow to movement in net debt Increase in cash in the period 32 172 31 Cash outflow from finance leases and loans 45 27 66 ---------- ---------- ---------- Change in net debt resulting from cash 77 199 97 flows New finance leases (61) (63) (178) ---------- ---------- ---------- Movement in net debt in the period 16 136 (81) Net (debt) at the beginning of the year (640) (559) (559) ---------- ---------- ---------- Net (debt) at the end of the period (624) (423) (640) ====== ====== ====== Net cash inflow from operating activities Operating profit 74 42 183 Depreciation 113 45 104 (Increase) in stocks (30) (36) (159) (Increase) / decrease in debtors (40) 68 (206) (Decrease) / increase in creditors (68) 107 343 ---------- ---------- ---------- Net cash inflow from operating 49 226 265 activities ====== ====== ====== NOTES 1. The consolidated financial information does not constitute full accounts within the meaning of the Companies Act 1985 and has not been reported on by the auditors or delivered to the Registrar of Companies. The figures for the year ended 31 December 2003 have been extracted from the full accounts for that year, on which the auditors gave an unqualified report and which have been delivered to the Registrar of Companies. 2. The directors have not declared an interim dividend. 3. The earnings per share is based on the weighted average number of shares in issue during the period. The total number of shares in issue at 30 June 2004 was 257,338,914 at 31 December 2003 was 255,892,311 and at 30 June 2003 was 255,642,311.

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