Final Results

Surgical Innovations Group PLC 26 March 2002 26 March 2002 SURGIAL INNOVATIONS IN PROFIT Surgical Innovations Group plc ('Surgical') today announces that it has gone into profit for the year ended 31 December 2001. Highlights - Turnover up at £1.847m (2000: £1.790m) - Gross profit up at £1.001m (2000: £0.952m) - Operating profit up at £101k (2000: loss of £145k) - Pre tax profit up at £36k (2000: loss of £57k) - Earnings per share up at 0.033p (2000: loss of 0.02p) - Distribution contract worth c£2.5m in turnover over the next three years was won with US company Aesculap, Inc for Surgical's disposable scissors range - SMART award won from the DTI for the development of an innovative port system - Design and development (ION) placed at the core of the Group's future development Commenting on the outlook for the group, Graham Bowland Managing Director said: 'Our objectives are clear: we will continue with strong organic growth, building upon the established relationships with our key global partners, whilst considering all serious acquisition and strategic opportunities as and when they arise.' For further information Doug Liversidge, Chairman, Tel: 0113 230 7597 Surgical Innovations Plc Graham Bowland, Managing Director Tel: 0113 230 7597 Surgical Innovations Plc Philip Johnson, Brown Shipley Tel: 0161 214 6540 Keeley Middleton/ Sophie Morton Tel: 0113 242 1171 Binns & Co PR Ltd CHAIRMAN'S STATEMENT I am delighted to report that your Group made an operating profit of £101k on turnover of £1,847k and a pre tax profit of £36k, after net interest received of £7k and after £72k of costs on an aborted acquisition. These figures continue the improving trend we experienced during the year 2000 and are the results of the firm foundations put in place arising from the strategic review carried out at the beginning of the previous financial year. The results have been achieved against a background where, compared with the previous year, the Genzyme licensing fee (£129k) had ended and there was no contribution from the write-back of the interest provision on the convertible loan stock (£63k). Although the turnover of the Group has not grown significantly, a detailed breakdown of the sales figures shows 170% increase in MIS (Minimally Invasive Surgery) instrument sales and a 38% increase in blood product sales. These increases in core product sales, together with a continuing healthy royalty income, have been at the very heart of our strategy for growth, which has been backed by a continuing investment in new products. The profit figure has been achieved after a significant investment in research and development of £264k. The management team has continued in its efforts to reduce the cost base. Administrative costs are now some £430k less than when the strategic review was implemented. However, these costs are now likely to increase in line with the continued expansion of the Group. The design and development team is now the very core of the Group. The emphasis during the year has been on internal product development, which has continued apace. Therefore, the management team has taken the decision, for the time being, not to seek external product development contracts under the 'ION' banner. The internal product developments in progress will give rise to substantial benefits later in the year. Major long-term contracts have been signed with key US customers for our range of MIS instruments and there has been a significant increase in blood product sales, particularly to Russia. Other milestones during the year include the receipt of a SMART Award from the Department of Trade and Industry for our development of an innovative port system featuring a unique universal seal device. I am also proud to announce that Surgical Innovations was the recipient of the 'Yorkshire Insider Annual Report Award' in the 'Smaller Quoted Companies' category for its Annual Report 2000. During the year we examined several opportunities for corporate development and in one case we spent a considerable amount of time and effort in trying to bring a possible acquisition to fruition. In the event we were not able to go forward but nevertheless we continue to look for appropriate acquisition opportunities that would enhance shareholder value. At the present time the order book is at its highest level and we believe that this will lead to substantial organic growth both in turnover and profit during the coming year. It is my view that the Group is in the strongest position yet in its history. Major contracts have already been won, new developments are proving highly successful and the Executive Directors, Stuart Moran and Graham Bowland, have welded into a highly efficient and effective management team. I would therefore like to pay tribute and offer special thanks, on behalf of all shareholders, to the management team and all the Group's employees for producing an excellent result this year and creating a sound base for the coming year. I would also like to thank the shareholders for their continuing support; we are looking forward to an exciting period in the Group's history. DOUGLAS B LIVERSIDGE CBE CHAIRMAN CONSOLIDATED PROFIT AND LOSS ACCOUNT For the year ended 31 December 2001 2001 2001 2001 2000 Pre- exceptional Exceptional Items Items Total Total Notes £000 £000 £000 £000 Turnover (including licence fees and royalties) 1,847 - 1,847 1,790 Cost of sales (846) - (846) (838) Gross profit 1,001 - 1,001 952 Administrative expenses (900) - (900) (1,097) Abortive acquisition costs - (72) (72) - Operating profit/(loss) 101 (72) 29 (145) Interest receivable 13 25 Interest payable (6) 63 Profit/(loss) on ordinary activities for the year before taxation 36 (57) Tax on profit/(loss) on ordinary activities 48 - Retained profit/(loss) for the year 84 (57) Earnings/(loss) per ordinary share 2 0.033p (0.02p) The consolidated profit and loss account above relates to continuing operations. The Group has no material recognised gains and losses other than the profits above and therefore no separate statement of total recognised gains and losses has been presented. SURGICAL INNOVATIONS GROUP PLC CONSOLIDATED BALANCE SHEET At 31 December 2001 31 December 31 December 2001 2000 £000 £000 £000 £000 Fixed assets Tangible assets 282 272 Current assets Stocks 549 428 Debtors 825 601 Cash at bank 170 374 1,544 1,403 Creditors: amounts falling due within one year (574) (508) Net current assets 970 895 Total assets less current liabilities 1,252 1,167 Creditors: amounts falling due after more than one year: Convertible debt (111) (111) Net assets/(liabilities) 1,141 1,056 Capital and reserves Called up share capital 2,540 2,540 Share premium account 16,030 16,029 Capital reserve 329 329 Accumulated losses (17,758) (17,842) (1,399) (1,484) Equity shareholders' funds 1,141 1,056 SURGICAL INNOVATIONS GROUP PLC CONSOLIDATED CASH FLOW STATEMENT For the year ended 31 December 2001 2001 2000 Notes £000 £000 £000 £000 Net cash (outflow) from operating activities 3 (121) (417) Returns on investments and servicing of finance Interest received 14 25 Interest paid (6) 83 Net cash inflow from returns on investments and servicing of finance 8 108 Capital expenditure Purchase of tangible fixed assets (88) (57) Net cash outflow from capital expenditure (88) (57) Net cash outflow before financing (201) (366) Financing Principle repayments under finance leases and loans - (9) Net cash (outflow) from financing - (9) (Decrease) in cash 4 (201) (375) SURGICAL INNOVATIONS GROUP PLC Notes to the accounts 1. Accounting Policies The principal accounting policies which remain unchanged from the previous year, except for the adoption of FRS 17 and 18 which have had no material effect on the financial statements, are as follows: a) Basis of accounting The financial statements have been prepared under the historical cost basis of accounting and in accordance with applicable Accounting Standards in the United Kingdom. b) Basis of consolidation The Group financial statements consolidate those of the Company and of its subsidiary undertakings drawn up to 31 December 2001. The results of subsidiaries accounted for under the acquisition accounting method are included in the consolidated profit and loss account from the date of their acquisition. The results of subsidiaries, accounted for under the merger accounting method, are included in the consolidated profit and loss account as if they had always been part of the Group. Intra-Group sales and results are eliminated on consolidation and all sales and results relate to external transactions only. 2. Earnings/ (Loss) Per Ordinary Share The earnings/loss per Ordinary Share have been calculated by dividing the profit /(loss) attributable to ordinary shareholders for the year ended 31 December 2001 of £84,000 (2000: loss £57,000) by the weighted average number of Ordinary Shares in issue during that year of 254,028,882 (2000: 244,329,194) and amounted to 0.033 pence per share (2000: loss 0.02 pence per share). The Group has two categories of dilutive potential ordinary shares, those share options granted where the exercise price is less than the average price of the Company's ordinary shares during the year and the remaining convertible loan notes. The dilution has no material effect on the basic earnings per share and is not reported. 3. Net cash outflow from operating activities 2001 2000 £'000 £'000 Operating profit/(loss) 29 (145) Depreciation of tangible fixed assets 78 96 Loss on disposal of tangible fixed assets - 1 (Increase) in stocks (121) (79) (Increase) in trade debtors (58) (203) (Increase) in prepayments (51) (4) (Increase) in other debtors (67) (17) Increase in trade creditors 64 90 Increase/(decrease) in other creditors and social security and (9) 40 other taxes Increase/(decrease) in accruals 14 (196) Net cash outflow from operating activities (121) (417) 4. Reconciliation of net cash flow to movement in net debts 2001 2000 £'000 £'000 (Decrease) in cash in the year (201) (375) Cash outflow from finance leases and loans - 9 Change in net funds resulting from cash flows (201) (366) Conversion of loan notes - 1,855 Movement in net funds in the year (201) 1,489 Net funds at beginning of year 252 (1,237) Net funds at end of year 51 252 5. Analysis of changes in net debt At 1 At 31 January December 2001 Cash flow 2001 £'000 £'000 £'000 Cash at bank and in hand 374 (204) 170 Bank overdrafts (11) 3 (8) Loans (111) - (111) 252 (201) 51 The Annual General Meeting of the Company will be held at the Village Hotel and Leisure Club, 186 Otley Road, Headingley Leeds LS16 5PR at 12.30 on Friday, 26 April 2002. The Annual Report and Financial Statements will be posted to shareholders shortly. Additional copies of the Annual Report and of this announcement will be available at the Company's registered office: Clayton Park, Clayton Wood Rise, Leeds, LS16 6RF This information is provided by RNS The company news service from the London Stock Exchange

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