Chairman's Statement

"Following strategic investment into the Group’s revenue channels in the US, there has been an increased exposure to the SI branded product offering, underpinning the overall 12% increase in Group revenue.” 

 

Doug Liversidge CBE, Chairman

 

 

Summary of Chairman’s statement

 

Demand for Resposable®
technology drives SI branded
revenues by 22%.

 

Recent appointment of
Richard Tattersall as Director
of Manufacturing proving
invaluable to our manufacturing
and planning operations.

 

New improved production
processes have now
been introduced.

 

 

 

 

 

chairman

 

 

 

Results and Operating Review

 

We are pleased to report that, following
strategic investment into the Group’s
revenue channels in the US, there has been
an increased exposure to the SI branded
product offering, which has underpinned
the overall 12% increase in Group revenue
to £8.55 million (2012: £7.64 million).

 

The appointment of Rick Barnett, President
of US Sales and Operations, as reported
previously, has driven this growth and the
Board is encouraged by the further
opportunities that this market offers SI.
Overall there has been an increase in the
demand for the Group’s Resposable®
technology as SI branded product revenues
have grown by 22%. The growth in revenue of
consumable elements reflects an important
measure of our performance worldwide.

 

As previously announced, due to the
considerable demand for the Group’s
products and the step change in
manufacturing volumes in the final
quarter of 2013, the Group experienced
difficulties in delivering the quantities
required. Significant management time
was invested in resolving these issues and
the Board is pleased to report that new
improved production processes have now
been introduced. Following this investment,
output capabilities are improving, whilst
maintaining the exacting standards
required for medical devices. Underpinning
this is the recent appointment of Richard
Tattersall as Director of Manufacturing.
Richard brings with him a wealth of
experience and knowledge within large‑scale
manufacturing that is already proving
invaluable to our manufacturing and
planning operations.

 

 


 

 


 

 


 

 

 

 

 

 

 

The Group’s profitability was adversely
affected by the combined effect of the
US Dollar exchange rate in the final quarter
of 2013 and the necessary improvements
in manufacturing operations designed of individual product lines, in particular to
support the 73% growth in US revenues.
As a result, operational capacity was
initially reduced, inevitably impacting on
manufacturing contribution to profitability,
before being re-established at the end of
the year to deal with the order backlog. These changes in the product processes
initially resulted in higher than anticipated
levels of material wastage, but subsequently,
following the validation of production lines,
substantial improvements are now evident.
The consequence of the above is overall
lower Group profitability than expected, with
an adjusted EBITDA (excluding exceptional
items) for the year ended 31 December 2013
of £2.51 million (2012: £2.89 million).
Retained profit for the year was £800,000
(2012: £686,000) and basic earnings per
share were 0.20p (2012: 0.17p).

 

The bank overdraft position at the year end
was £2.58 million (2012: £1.41 million). Since
the year end, the Board has successfully
concluded a refinancing of bank facilities,
providing the necessary working capital
headroom for the foreseeable future.

 

Outlook

The first quarter of 2014 has seen a focus
on further improvement in manufacturing
operations to ensure the Group is
positioned to support the execution and
implementation of the Group’s clinical
and development strategy.
By working towards a unique product
offering within a developing area of
laparoscopic surgery, the Board looks
forward to the future with confidence.

 

 

 

Doug Liversidge CBE
Chairman
14 April 2014