Annual Report
2019
Contents
Strategic Report
Chairmans Statement & Strategy
Operating & Financial review
Governance
Board of Directors
Chairman’s corporate governance statement
Corporate Governance Report
Directors’ Report
Financial Statements
Independent auditor’s report
Consolidated statement of comprehensive income
Consolidated statement of changes in equity
Consolidated balance sheet
Consolidated cash flow statement
Notes to the consolidated financial statements
Company balance sheet
Company statement of changes in equity
Notes to the Company financial statements
Shareholder information
Advisers
More information can be found at
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About us
Surgical Innovations Group Plc specialises in the
design and manufacture of creative solutions for use in
minimally invasive surgery (MIS) and industrial markets.
The YelloPort Elite trocar system
is a high quality, semi-disposable
alternative to expensive, fully
disposable trocars.
High quality reusable
trocar system with
disposable universal
seal
ResposableTM Products reduce waste
by 70% compared to expensive, fully
disposable alternatives.
Strategic Report
Chairman’s Statement
Surgical Innovations Group plc
For the year ended 31 December 2019
I am pleased to report improved results in the second half of
what turned out to be a more challenging year than we had
anticipated. Management were faced with some difficult
conditions and uncertainties, mostly in relation to planning
for Brexit, building up the regulatory resource to meet an
ever increasing burden, and a continuation of funding and
resource constraints in the NHS. Much has been achieved
towards building strong foundations for a return to growth,
and we believe that the environmental and economic
credentials of many of our products are winning acceptance
to a degree not previously experienced.
The results for the year were in line with the Board’s
expectations, and since the year end we have continued to
be cash generative. In the final quarter of 2019, the Group
concluded agreements to extend important contractual
relationships, including the manufacture of the Fix-8 device
for Advanced Medical Solutions plc until June 2024, and the
exclusive UK distribution of the Dexter robot for Distalmotion
SA until October 2022.
Subsequent to the year-end, we currently face
unprecedented uncertainty as a consequence of the
Covid-19 pandemic, and its effects on non-elective
surgery, and are planning for the short-term disruption
to our business to be severe. We have a highly capable
management team and a committed workforce, who are
quickly adjusting to these extraordinary challenges, and
dealing with problems promptly and effectively as they arise.
In addition, our key trading partners, bankers and selected
institutional shareholders are already providing indications of
support, and the Board believes that Government measures
already announced will make a significant difference in
alleviating the worst effects of the sudden downturn.
Financial Overview
Revenue for the second half of the year was 10% higher
than the first half, and the total for the full year reduced
marginally to £10.73m (2018: £10.97m).
Market conditions continued to be challenging in the UK for
much of the year, with NHS waiting lists for elective surgery
increasing in both quantum and duration. Sales in Asia
Pacific showed a decline, although this was largely due to
1
unusually high revenues in 2018 relating to changes in route
to market. This weakness was partly offset by growth in
USA and Rest of World regions. European sales fell slightly,
although to a lesser extent than expected given delays in
the availability of fully disposable products due to continuing
regulatory bottlenecks.
Gross margin for the year held within target range at 40.4%
(2018: 42.6%), although a controlled de-stocking exercise
commenced in the final quarter of the year following the
reduced risk of a no-deal Brexit. This affected the overall
result by around 2% as a consequence of reduced factory
output. Other income in 2018 related to compensation for
the early termination of a distribution contract and was non-
recurring.
Operating expenses, excluding depreciation and
amortisation, impairment of intangibles, exceptional costs
and share based payments, increased by approximately
£0.35m, resulting in Adjusted EBITDA* of £1.45m (2018:
£2.36m), and Adjusted PBT* of £0.38m (2018: £1.43m).
Exceptional items relate to payments made to a former
Director in relation to termination, and abortive acquisition
costs totalling £0.18m (2018:nil).
Transition to IFRS 16 has been applied using the “modified
retrospective” transition approach. As a result the
comparative information is not on a like for like basis in
respect of the treatment of leases. The adoption of IFRS
16 leads to an increase in cost of £0.04m for the year to
31 December 2019, reflecting depreciation and interest
charges of £0.28m being £0.04m higher than the lease
expenses which would have been recorded prior to the
adoption of the new standard. At EBITDA level, the adoption
of IFRS 16 gives a benefit of £0.25m being the elimination of
the rental charges.
Cash conversion was good, leading to net cash at the year-
end of £0.47m (2018: £0.38m).
*Reconciliation of adjusted KPI measures included in the
Operating and Financial Review on page 6.
Brexit Planning
During the year, the business executed contingency
arrangements to de-risk in the event that the UK exited
the EU on 29 March 2019 without reaching an appropriate
withdrawal agreement, only to repeat the exercise in
October.
The additional working capital investment incurred in
inventory was largely unwound by the end of the year.
There continues to be some uncertainty regarding the
conduct of trade with EU member states following the end
of the transitional period, although there is a reasonable
expectation that medical devices will be traded with minimal
regulatory divergence or delays.
Coronavirus
The speed and extent to which the Covid-19 pandemic has
taken hold in Europe and North America greatly exceeds
what might have been expected earlier this month. Whilst
Surgical Innovations Group PLC Annual Report and Accounts 2019 there is no evidence at present of any significant delays
or other disruption to the supply chain for components or
distribution products into the UK, we must anticipate that
these are likely to become problematic, and we are working
closely with our key vendors to optimise deliveries based
on latest forecasts. Management are continuing to monitor
security of supply of critical items very closely.
The anticipated effect of more widespread coronavirus
infection in key end user markets is now becoming more
apparent, as hospitals rightly free up capacity to cope
with seriously ill patients. These necessary actions will
inevitably lead to delays and cancelation of routine surgical
procedures such as those announced in the NHS over the
last week. Management have devised a series of mitigating
actions, designed to preserve cash resources, maintain
delivery of essential products to our customers and
distributors, and protect our workforce from the health risks
and economic impact. We will continue to take all steps
possible in these challenging circumstances, and ensure
that all support mechanisms available to our company from
outside agencies are accessed in order to preserve value
and capability, and ameliorate the impact on business, its
partners and customers, and our workforce.
Further commentary to these uncertainties are set out in
the section entitled ‘Principal risks and uncertainties’ in the
Operating and Financial review.
Environmental and economic considerations
Despite the current climate outlined above, senior
management, procurement and clinicians within our
customer base are becoming increasingly aware that our
resposable product ranges (which are part re-usable, part
disposable) offer a dramatic reduction in clinical waste, are
cost effective when compared with expensive fully disposable
alternatives, and have a very low impact on the environment.
The NHS has actively encouraged suppliers to join a national
campaign to turn the tide on plastic waste. Our resposable
product ranges were recently showcased at the NHS
Sustainability Campaign roadshow in Manchester, where
recognition was acknowledged of their suitability as a key
part of the ‘For a Greener NHS’ agenda. We firmly believe
that such initiatives will become more widespread once
normality is restored, and will present a major opportunity
to significantly increase our market share in the UK and
internationally. There has been a similar reaction to the
compelling business case surrounding both sustainability and
economy through distribution partners in some of our key
markets, notably the US and Japan, where evaluations and
planning for market roll out are underway, albeit the launch of
which is uncertain due to the pandemic.
Acquisition activity
Management have rightly maintained primary focus on
optimising the commercial and operational aspects of
current business streams over acquisition activity during
Chairman’s Statement
the year. Although a select number of targets have been
evaluated and not progressed, we will continue to seek
businesses which offer complementary opportunities to
accelerate the rate of growth of the Group’s activities,
either through new products and/or geographies.
Understandably, however, we do not expect any significant
activity to be likely in coming months.
People
Following changes in Board structure last year, there
have been a number of key appointments to the senior
management team, each of whom have made a significant
contribution to the strengthening of the business. On behalf
of the Board, I recognise that the success of the Group
relies upon the dedication and professionalism of all of our
people, and applaud their enduring commitment. Current
events are testing their resilience beyond a level seen
before, and the Board is both proud and grateful for the
progress being made in such adversity.
Going Concern and funding
Prior to the substantial impact of Covid-19 on the entire
business community, the Directors had carried out an
evaluation of financial forecasts, sensitised to reflect a
rational judgement of the level of inherent risk. This exercise
concluded that adequate financial resources were available
to ensure that the Company could meet its obligations
for a twelve month period with reasonable certainty. It
has subsequently become clear that there will need
to be reliance upon outside agencies including the UK
Government, Yorkshire Bank, and possibly others, to ensure
that these conditions continue to apply.
This fundamental uncertainty will be common, in varying
degrees, to almost all businesses in every sector. It is
premature to be able to determine with precision the level
of support that may ultimately be required, as events are
moving rapidly. Our bankers have moved extremely quickly
in providing short-term relief from capital repayments and
covenant compliance, and stand willing to support our
immediate liquidity requirements. These actions are an
important precursor to enabling access to funding through
the Coronavirus Business Interruption Loan Scheme in
coming weeks. Furthermore, the announcements by the
Chancellor of the Exchequer on 20 March 2020 relating
to various forms of government assistance will provide
substantial help. In addition, we have received expressions
of support from some of our key trading partners and
institutional shareholders.
Accordingly, the directors conclude that it continues to be
appropriate to prepare the Annual Report and Accounts on
a going concern basis, whilst acknowledging the material
uncertainty that now exists and has been explained in
this statement and further described in the principal risks
and uncertainties, the directors report and in the financial
statements disclosure note 21.
2
Surgical Innovations Group PLC Annual Report and Accounts 2019 Current trading and outlook
UK revenues in the current year to date have started to
show signs of a slowdown in elective surgery within the
NHS, although other key markets are not yet showing any
similar effects. This will undoubtedly accelerate rapidly as
the impact of the pandemic is fully recognised, and we are
preparing to respond to these unprecedentedconditions.
Our product ranges are becoming increasingly recognised
as a key part of a sustainable approach to surgery, and
this offers significant medium term growth potential. Our
business has net cash and is operationally sound. We have
strong partnerships with the NHS, our major distributors,
OEM customers and key vendors, based upon mutual
cooperation and shared success.
Accordingly, the Board remain confident that, following
an inevitable period of serious disruption requiring careful
navigation, there continues to be strong recovery and
growth drivers within our business, indicating that the
medium to long term outlook is positive.
Nigel Rogers
Non-Executive Chairman
30 March 2020
3
Surgical Innovations Group PLC Annual Report and Accounts 2019 Strategy
The Group specialises in the design, manufacture,
sale and distribution of innovative, high quality medical
products, primarily for use in minimally invasive surgery.
Our product and business development is guided and
supported by a key group of nationally and internationally
renowned surgeons across the spectrum of minimally
invasive surgical activity.
We design and manufacture and source our branded
port access systems, surgical instruments and retraction
devices which are sold directly in the UK home market
through our subsidiary, Elemental Healthcare, and
exported widely through a global network of trusted
distribution partners. Many of our products in this field are
based on a “resposable” concept, in which the products
are part re-usable, part disposable, offering a high quality
and environmentally responsible solution at a cost that is
competitive against fully disposable alternatives.
Elemental also has exclusive UK distribution for a select group
of specialist products employed in laparoscopy, bariatric and
metabolic surgery, hernia repair and breast reconstruction.
In addition, we design and develop medical devices for carefully
selected OEM partners, and have also collaborated with a
major UK industrial partner to provide precision engineering
solutions to complex problems outside the medical arena.
We aim for our brands to be recognised and respected by
healthcare professionals in all major geographical markets in
which we operate. We provide by development, partnership
or acquisition a broad portfolio of cost effective, procedure
specific surgical instruments and implantable devices
that offer reliable solutions to genuine clinical needs in the
operating theatre environment.
4
Surgical Innovations Group PLC Annual Report and Accounts 2019 5
Surgical Innovations Group PLC Annual Report and Accounts 2019 Operating and Financial Review
David Marsh
Chief Executive Officer
30 March 2020
Key Performance Indicators
The Group considers the key performance indicators of the business to be:
Underlying Revenue
Growth
Adjusted for the effect of
acquisition
Gross Profit Margin
Gross profit / revenue
Adjusted Operating
Margin
Adjusted operating profit /
revenue
Cash conversion
Cash generated from operations
/ adjusted operating profit
2019
-2.2%
40.4%
5.0%
127%
2018
12.0%
42.6%
13.9%
118%
Net Cash/(Net Debt)
Cash less debt
£0.47m
£0.38m
Reconciliation of adjusted KPI / measures;
Target Measure
>8%
>40%
>12%
>85%
N/A
As reported
£1.08m
£(2.44)m
£(2.60)m
*EBITDA
Operating Profit
Profit before
taxation
£0.35m
£0.63m
£1.63m
£0.19m
£0.18m
£0.54m
£0.35m
£0.63m
£1.63m
£0.19m
£0.18m
£0.38m
Amortisation of intangible acquisition costs
Impairment of product development intangibles
Impairment of Goodwill
Share based payments
Exceptional items
Adjusted Measure
Earnings per share
Basic EPS
Loss attributable to shareholders
Add: Share based payments
Add: Amortisation of intangible acquisition costs
Add: Exceptionals
Add: Impairment of product development intangibles
Add: Impairment of Goodwill
Adjusted profit attributable to shareholders
Adjusted EPS
-
-
-
£0.19m
£0.18m
£1.45m
EPS
(0.33)p
(£2.62)m
£0.19m
£0.35m
£0.18m
£0.63m
£1.63m
£0.36m
0.05p
*EBITDA is defined as earnings before interest, taxation, depreciation and amortisation ( including impairment) . EBITDA is calculated as operating profit of
£(2.44)m adding back depreciation £0.62m, amortisation £0.64m and impairment £2.25m.
6
Surgical Innovations Group PLC Annual Report and Accounts 2019 Use of adjusted measures
Adjusted KPIs are used by the Group to understand
underlying performance and exclude items which distort
comparability, as well as being consistent with broker
forecasts and measures. The method of adjustments is
consistently applied but may not be comparable with those
used by other companies.
Revenue and margins
Operating and Financial Review
Adjusted measures do not take precedence over the IFRS
measures. The company has elected to apply IFRS16 using
the modified retrospective approach. The accounts are not
restated and IFRS figures and Adjusted profit measures
are not comparable to the prior year. At EBITDA level, the
adoption of IFRS 16 gives a benefit of £0.25m being the
elimination of the rental charges.
Revenues reduced by 2% to £10.73m (2018: £10.97m). Gross margins remained within target range at 40.4% of revenue
(2018: 42.6%) with the slight reduction attributable to reduced factory activity in the final two months of the year to
facilitate modest de-stocking.
£m
SI Brand
Distribution
OEM
Total
2019
5.84
3.10
1.79
10.73
2018
6.09
3.04
1.84
10.97
% change
- 4%
+2%
- 3%
- 2%
Revenues from the sale of Surgical Innovations Brand
products reduced by 4% during the year overall. Market
conditions showed no significant improvement in the UK,
however there is clear evidence of political will to provide
more favourable long term funding for health and social care
in coming years. Sales in Continental Europe steadied after
declining in the prior year, as distributors began to make
headway introducing YelloPort Elite, our next generation
Resposable® port access system for use in minimally
invasive surgery (MIS), to replace fully disposable competitor
products.
SI Brand sales in the US grew by 9%, mostly as a result
of significant gains in market share for surgical scissors.
YelloPort Elite will launch fully in the US market in the current
year following FDA approval last year.
SI Brand revenues from the APAC region showed a
reduction, although this was largely a consequence of
timing differences resulting from structural changes to our
distribution arrangements. Strong growth is anticipated in
the current year, led by Japan. SI brand sales in the Rest of
the World was up by 17%. SI brand is experiencing strong
growth in South Africa where a new distributor was appointed
at the end of 2019 and is anticipated in the Middle East
where three new distributors have been appointed.
OEM revenues showed a small reduction in the year, with
both precision engineering (non-medical) and medical virtually
unchanged. We anticipate growth in medical OEM sales in
the current year, but at this early stage have no visibility of
further precision engineering revenues.
Distribution sales grew by 2% year on year which reflected
a continuation of constrained activity levels in the NHS,
especially for elective procedures. We are expecting an
improvement in the hospital bed situation over the course
of 2020 which will allow more elective operations as a
consequence of increased funding. The drive for a more
sustainable healthcare system, encapsulated in the Greener
NHS agenda is very beneficial for the range of distribution
products and the Group is engaged at the highest levels of
the NHS in encouraging the adoption of its Resposable®
distribution products.
Adjusted EBITDA
The adjusted EBITDA is a measure of the business
performance. The Group uses this as a proxy for
understanding the underlying performance of the Group. This
measure also excludes the items that distort comparability
including the charge for share based payments as this is a
non-cash expense normally excluded from market forecasts.
Adjusted EBITDA decreased to £1.45m (2018: £2.36m),
mainly as a result of additional operating overheads to
strengthen the operational capabilities of the business, and
particularly to meet the regulatory demands of transition from
the EU Medical Device Directive to Medical Device Regulation
2017/745 . The reported operating result was a loss of
(£2.44m) (2018: profit of £0.62m), with an adjusted operating
profit of £0.54m (2018: £1.53m), before deduction
Melanie Ross
Chief Financial Officer
12 March 2018
7
Surgical Innovations Group PLC Annual Report and Accounts 2019 Operating and Financial Review
The adjusted EBITDA is a measure of the business
performance. The Group uses this as a proxy for
understanding the underlying performance of the Group. This
measure also excludes the items that distort comparability
including the charge for share based payments as this is a
non-cash expense normally excluded from market forecasts.
Adjusted EBITDA decreased to £1.45m (2018: £2.36m),
mainly as a result of additional operating overheads to
strengthen the operational capabilities of the business, and
particularly to meet the regulatory demands of transition
from the EU Medical Device Directive to Medical Device
Regulation 2017/745 . The reported operating result was a
loss of (£2.44m) (2018: profit of £0.62m), with an adjusted
operating profit of £0.54m (2018: £1.53m), before deduction
of exceptional costs, amortisation relating to acquisition,
impairment of intangible assets and share based payments,
and an adjusted operating margin of 5.0% (2018: 13.9%).
Capital expenditure on tangible assets continued to reflect a
policy of required replacement only during the year at £0.20m
(2018: £0.09m) set against a depreciation charge of £0.42m
(2018: £0.48m). Whilst there are no major capex plans
currently in place, several improvements to the manufacturing
facilities were implemented in Leeds in 2019 and further
modest expenditure is expected this year.
Interest on bank and finance lease obligations for 2019
resulted in net interest payable of £0.16m (2018: £0.11m).
During the year the company repaid £0.30m of bank
indebtedness in accordance with the original repayment
schedule, and also prepaid a further £1.0m on the 31
October not due until July 2022.
products. A number of the latter were due for imminent
launch, which has been delayed. Accordingly, the Directors
have adopted a cautious approach to forecasting future net
inflows for this cash generating unit.
Subsequent to the year end, the potential effects of the
Covid-19 outbreak and consequential impact on the
availability of NHS resources, may have a further and more
significant impact on the Directors’ view of short to medium
term cash flows. This has not yet been quantified, as there
is insufficient data on which to base such a judgement.
Nevertheless, it is recognised by the Directors that further
impairment is likely to be necessary in 2020, therefore a non-
adjusting post balance sheet event has been recognised. The
financial effect of this adjustment cannot be estimated.
Development expenditure was tested for impairment and
given the resource contraints, complexity of developing a
device and regulatory challenges, particually in relation to the
Medical Devices Regulation (MDR) transition, an impairment
of £0.63m (2018:nil) has been recognised.
The Group recorded a corporation tax credit of £0.001m
(2018: credit of £0.03m) and a deferred tax charge of £0.02m
(2018: credit £0.18m). The tax credit represents an enhanced
Research and Development claim in respect of 2017, electing
to exchange tax losses for cash refunds. The tax charge
on Elemental Healthcare has been relieved through Group
losses. Overall the Group continues to hold substantial tax
losses on which it holds a cautious view, and consequently
the Group has chosen not to recognise those losses fully.
During the year the Group submitted an enhanced Research
and Development claim in respect of 2018. This claim has
been offset against taxable profits during 2018.
Following an impairment review of the goodwill arising on
the acquisition of Elemental Healthcare, an impairment
charge of £1.63m was recongnised in the period. The
trading environment in the UK market has become more
challenging during 2019, due to both a progressive tightening
of NHS funding for elective surgery as well as the extended
time taken to rebuild the distribution sales of Cellis branded
Trade receivables were lower at the year end than 2018,
reflected by a timing difference relating to changes in route to
market in the final months of the prior year. Inventories were
higher at £2.9m compared to £2.0m in 2018. Stock holdings
increased during 2019 to ensure safety stocks supported
incremental customer requirements; however, as revenue
subsequently decreased, stock holdings were affected.
Transition to IFRS16
The adoption of this new standard has resulted in the
Group recognising a right-of-use asset and related liability in
connection with all former operating leases with the exception
of those identified as low-value or having a remaining
lease term of less than 12 months from the date of initial
application.
The new standard has been applied using the “modified
retrospective” transition approach. There is no adjustment
to the opening balance of retained earnings for the current
period, however reclassifications arising from the new
standard have been recognised in the opening balances as
at 1 January 2019. Prior periods have not been restated,
as permitted under the specific transitional provisions in the
standard.
Prior to the adoption of IFRS 16 rental payments were
charged to the income statement on a straight-line basis,
under IFRS 16 rental charges in the income statement are
replaced with depreciation on the right-of-use asset and
interest charges on the lease liability. The adoption of IFRS
16 therefore gives rise to a net cost of £0.04m in the twelve
months to 31 December 2019, reflecting depreciation and
interest charges of £0.28m being £0.04m higher than the net
rental charges which would have been incurred prior to the
adoption of the new standard. At EBITDA level, the adoption
of IFRS 16 gives a benefit of £0.25m being the elimination of
the rental charges.
8
Surgical Innovations Group PLC Annual Report and Accounts 2019 Operating and Financial Review
Amount due from associate
In 2020, an agreement, subject to contract, will allow all the costs incurred via the amount due from associate, Illuminno Ltd
£0.17m (2018:£0.08m) to be re-imbursed to the Group and once legally binding, the costs in Illuminno Ltd will be transferred on
the balance sheet as intangible product development costs.
Principal risks and uncertainties
The management of the business and the nature of the Group’s strategy are subject to a number of risks which the Directors seek
to mitigate wherever possible. The principal risks are set out below.
Issue
Funding risk
Indication
of risk on
prior year
Risk and description
Mitigating actions
The Group currently has a mixture of
borrowings comprising a £0.8m loan
and a £0.5m rolling credit facility. The
Group remains dependent upon the
support of these funders and there is
a risk that failure in particular to meet
covenants attaching to the rolling credit
facility could have severe financial
consequences for the Group.
Liquidity and covenant compliance
is monitored carefully across varying
time horizons to facilitate short term
management and also strategic planning.
This monitoring enables the management
team to consider and to take appropriate
actions within suitable time frames.
In March 2020, the funder agreed to
convert the existing loan with a three year
committed Revolving Credit Facility (“RCF”)
with additional headroom ,a facility limit of
£1m, and less stringent covenants than the
current facilities. This agreement was made
with credit approval and full knowledge
of the considerable challenge presented
by Covid-19. In the event, the company
decided not to proceed with this change,
and instead agreed with the funder to
accept a temporary waiver of all covenants
at 31 March 2020, and relief from the
capital repayment of £75,000 due in March
2020.
The funder has indicated that they are
not aware of any reason why the offer to
convert to RCF at a later date would not
be made available, but that fresh credit
approval would be required.
Furthermore, the funder has confirmed
that they are supportive of acting as a
conduit to channel additional liquidity to
the company under the auspices of the
Coronavirus Business Interruption Loan
Scheme which the company considers
may offer advantages over the proposed
move to the RCF.
Finally, the company has received an
unsolicited indication of support from
a substantial institutional shareholder,
although this is not binding at this
early stage, and no proposal has been
formulated.
Melanie Ross
Chief Financial Officer
12 March 2018
9
Surgical Innovations Group PLC Annual Report and Accounts 2019
Operating and Financial Review
Covid-19
and business
interruption
The recent escalation in the spread of
Covid-19 in the UK poses a threat to the
continuation of business operations if
there is a widespread infection in any of
our facilities or amongst the workforce.
All government guidance has been
monitored closely and followed immediately
by advisory notices to all employees, and
provision of the appropriate guidance and
cleaning materials to minimise any effect.
Customer
concentration
Foreign
exchange risk
The Group exports to over thirty
countries and distributors around
the world, but certain distributors are
material to the financial performance
and position of the Group. As disclosed
in note 2 to the financial statements,
one customer accounted for 11.4% of
revenue in 2019 and the loss, failure or
actions of this customer could have a
severe impact on the Group.
The Group’s functional currency is UK
Sterling; however, it makes significant
purchases in Euros and US Dollars.
The US Dollars are mitigated by US
Dollar sales by creating a natural
hedge. The Group transferred their Euro
customers onto a Euro based pricing
structure in 2018 to mitigate risk by
again, creating a natural hedge.
Where staff members or their close
contacts have presented with symptoms
they have been asked to self-isolate
away from company premises and
inform us quickly of any contact with
other employees which may be cause for
concern.
Recent government information also
provides for relief from a substantial portion
of the wage costs of any staff members on
sick leave, in self-isolation, or furloughed
due to a diminution in their current
workload as a consequence of Covid-19.
Management have devised a series of
mitigating actions, designed to preserve
cash resources and maintain delivery of
essential products to our customers and
distributors.
The majority of distributors, including
the most significant, are well established
and their relationship with the Group
spans many years. Credit levels and
cash collection is closely monitored by
management, and issues are quickly
elevated both within the Group and with
the distributor.
The Group monitors currency exposures on
an on-going basis and enters into forward
currency arrangements where considered
appropriate to mitigate the risk of material
adverse movements in exchange rates
impacting upon the business. Euro and
US Dollar cash balances are monitored
regularly and spot rate sales into sterling
are conducted when significant currency
deposits have accumulated. The
accounting policy for foreign exchange is
disclosed in accountancy policy 1d.
10
Surgical Innovations Group PLC Annual Report and Accounts 2019 Regulatory
approval
Brexit
Operating and Financial Review
As an international business a significant
proportion of the Group’s products
require registration from national or
federal regulatory bodies prior to being
offered for sale. The majority of our
major product lines have FDA approval
in the US and we are therefore subject
to their audit and inspection of our
manufacturing facilities.
The Group has a dedicated Quality
department which assists product
development teams with support as
required to minimise the risk of regulatory
approval not being obtained on new
products and ensures that the Group
operates processes and procedures
necessary to maintain relevant regulatory
approvals.
There is no guarantee that any product
developed by the Group will obtain and
maintain national registration or that
the Group will always pass regulatory
audit of its manufacturing processes.
Failure to do so could have severe
consequences upon the Group’s ability
to sell products in the relevant country.
The Group exports to a number of
different countries with sales to Europe
accounting for 11.9% of 2019 revenue.
As well as exporting, the Group
imports goods both for re-sale through
Distribution revenue, as well as some
raw materials used in manufacturing.
Whilst there is no guarantee that this will
be sufficient, the Group has invested in
people with the appropriate experience
and skills in this area which mitigates this
risk significantly.
The Group has successfully reassigned all
of the Company’s product certifications
from BSI Notified Body 0086 (UK) to BSI
Netherlands Notified Body 2797, in order
to mitigate any risk to regulatory clearance
both in the EU and in the UK.
Although the UK has now exited the
EU, the current trade rules remain in
place until the end of the transition
period on 1 January 2021. Dependent
on the arrangements made between the
UK and EU following this period, this
could pose risks of delayed customs
clearance which could in turn have a
negative impact on the Group’s supply
chain.
Any risk to a delay in supply chain has
also been mitigated by the successful
application of Approved Economic
Operator Status, which we received in
March 2019.
In addition to the above, a contingency
plan has been implemented to increase
inventory levels to ensure any delays
caused by increased customs clearance
will not impact the Group’s supply chain.
Key: Risk levels on prior year
Risk increased on prior year
Existing risk remains at the same
level from prior year
Risk has reduced from prior year
11
Surgical Innovations Group PLC Annual Report and Accounts 2019 Board of Directors
Nigel Rogers, Non-Executive Chairman
David Marsh, Chief Executive Officer
Nigel joined the Group in October 2015 as Executive Chairman and
relinquished his executive responsibilities to become Non-Executive
Chairman in February 2019 after the appointment of the CEO.
David joined the Group as Group Commercial Director in August
2017 as apart of the acquisition of Elemental Healthcare Ltd. In
February 2019 David was appointed CEO.
Nigel qualified as a Chartered Accountant in 1983 spending eight
years with PwC before moving into industry, initially as Group
Finance Director and later CEO at AIM-listed electronics company,
Stadium Group plc. He was appointed as Group CEO at 600
Group Plc in 2012 and led the turnaround of the AIM-quoted global
machine tool business before embarking on a plural career in April
2015. In addition to his role as Chairman, Nigel is Chairman of
Transense Technologies plc, and Senior Independent Director at
Solid State PLC.
David has over 25 years’ experience within the medical industry,
20 of which have been in senior management positions. David
joined Auto Suture (Medtronic ) in 1991 before being appointed
Sales Director then General Manager of SkyMed Ltd. Following
the acquisition of SkyMed by Gyrus David was appointed
Managing Director of the Direct Operations in U.K. Benelux
and Germany, before assuming the position of Vice President
of Sales and Marketing for Europe. As part of the Gyrus Senior
Management team David was involved in the many acquisitions
made by the Company and led the European integration of the
enlarged business. During his career David has been responsible
for the introduction of a number of key technologies across a
broad spectrum of specialities. In 2006 David was Co-Founder of
Elemental Healthcare Ltd.
Adam Power, Group Development Director
Adam joined the Group as Group Development Director in August
2017 as apart of the acquisition of Elemental Healthcare Ltd. Since
February 2019 Adam is responsible for all commercial and business
development activities within the Group.
Adam has over 25 years’ experience managing companies selling
Medical Devices. He has been responsible for the introduction
into the UK of some of the most innovative solutions for surgical
problems in the past two decades. Adam and his team introduced
the Gastric Band for obesity, the Intuitive daVinci robot and
Endovascular Aneurysm repair, all of which have become adopted
by the NHS. Following the successful sale of his company, Mantis
Surgical, Adam co-founded Elemental Healthcare with David
Marsh in 2006. Elemental Healthcare has continued this tradition
of innovation and growth, with the launch of a number of new
technologies such as the Endobarrier endoluminal device for
the surgical control of T2 Diabetes and the continued growth of
Elemental’s key suppliers.
Professor Mike McMahon – Non-Executive Clinical Director
Mike, a founder Director of Surgical Innovations Ltd, became Non-
executive Clinical Director in October 2007. He is an Emeritus Prof
of Surgery at the University of Leeds, and practices as a Consultant
Surgeon at the Nuffield Hospital, Leeds. He has carried out research
and development of laparoscopic surgery and has demonstrated
operative techniques in many countries. He is past President of the
Association of Laparoscopic Surgeons of Great Britain and Ireland
and was also Tutor in MIS at the Royal College of Surgeons and
Director of the Leeds Institute for Minimally Invasive Therapy.
12
Surgical Innovations Group PLC Annual Report and Accounts 2019 Board of Directors
Paul Hardy – Non-Executive Director
Alistair Taylor – Non-Executive Director
Paul Hardy joined the Group in January 2016 as a Non Executive
Director. Paul in his capacity as a qualified Chartered Accountant
chairs the Audit committee.
After qualifying as a Chartered Accountant in 1984, Paul moved
into the engineering industry which culminated in leading the private
equity-backed management buyout of BI Engineering Limited, a
£60m turnover group of aerospace and med-tech businesses in the
UK and US. The medical division was subsequently sold to a US
venture capital buyer for in excess of US$200m. Since 2003, he has
owned and led Hardy Transaction Management Limited, a boutique
provider of merger and acquisition lead advisory services.
Alistair Taylor joined the Group in January 2016 as a Non Executive
Director. Alistair chairs the Renumeration committee.
Alistair is a vastly experienced director in life science companies
with exposure to both pharmaceutical and med-tech sectors. After
forging a successful career with Beecham Group Limited and
Pfizer Inc., he has gone on to lead a number of public and private
businesses in the medical field in the UK and internationally, initially
as CEO of Biocompatibles plc, and later as Chairman of Lombard
Medical Technology plc, and Phytopharm plc amongst others.
Charmaine Day – Company Secretary /
Group Financial Controller
Charmaine qualified as a Chartered Certified Accountant in
2012. Beginning her career in finance for Eville & Jones Ltd
whilst qualifying as an Accounting Technician. Charmaine then
progressed in various roles and moved on to Ellis Fairbank PLC
as a Management Accountant and has been working for Surgical
Innovations as a Financial Controller since 2012, taking on the
role of Company Secretary in 2017. In July 2019 Charmaine was
appointed Finance director for the subsidiary Companies and is
responsible for the finance of the Group.
The Board are mindful of the need to keep skills and experience up
to date, each board member actions this through a combination of
courses, continuing professional development through professional
bodies, reading and on the job experience.
13
Surgical Innovations Group PLC Annual Report and Accounts 2019
Chairman’s corporate governance statement
I am pleased to introduce the corporate governance section
of our report.
Each of the Board’s standing Committees (Audit, Nomination
and Remuneration) continued to be active during the year.
As Chairman, one of my principal concerns is to maintain
excellent relationships with our shareholders. During the
year I continued to make myself available to shareholders to
discuss strategy and governance matters and was pleased
to again have individual meetings with some of the Group’s
major shareholders.
The Board has a pro-active investor relations programme
and believes in maintaining good communication with all
stakeholders including institutional and private shareholders,
analysts and the press. This includes making the Executive
Directors available to meet with institutional shareholders
and analysts following the announcement of interim and final
results. The Board receives feedback from these meetings
and uses this to refine its approach to investor relations.
The QCA Code is constructed around ten broad principles
which focus on the pursuit of medium to long-term value for
shareholders without stifling the entrepreneurial spirit in which
the company was created. These ten principles are set out
from page 15.
As a Company we strive to fulfil these ten broad principles,
and our website and this Annual Report and Accounts cover
this.
Surgical Innovations Group PLC remains committed to high
standards of corporate governance in all of its activities and
reports against the Quoted Companies Alliance Corporate
Governance Code, a full version of which is available at
the QCA website https://www.theqca.com. The Board
recognises the value of the Code and good governance and
as far as is practicable and appropriate for a public company
of the size and nature of Surgical Innovations Group PLC,
adheres to it. The Board regularly reviews guidance from
regulatory bodies, supported by its Nominated Adviser,
and responds as appropriate. As a business traded on
the Alternative Investment Market of the London Stock
Exchange and operating in markets based on regulatory
frameworks, the Group is familiar with the benefits and
challenges associated with maintaining strong and effective
governance. In this regard the Board remains focused on the
need for a system of corporate governance which delivers
compliance with regulation whilst enhancing the performance
of the Group. This includes recognising the need to manage
and mitigate the risks faced by the business across all of its
activities.
The Group operates on the premise that best practice is
normal practice striving to ensure that regulatory standards
are met and, where possible, exceeded. The Company
sets clear policy and objectives on its expectations on
corporate social responsibility from the Board, to the top of
the management team and throughout the organisation.
We are proud of our culture, where all staff feel responsible
for making a difference in delivering high standards within
the organisation and to our customers, stakeholders and
local communities. To ensure that the business achieves
its objectives we invest in people and the business.
We recognise the need for continual development and
improvement in all our standards and measure performance
year-on-year.
14
Surgical Innovations Group PLC Annual Report and Accounts 2019 Corporate Governance Report
The group aims to operate to high standards of moral and
ethical behavior. All members of the board fully support the
value and importance of good corporate governance and
in our accountability to all of the company’s stakeholders,
including shareholders, employees, customers (including
patients and healthcare professionals), distributors, suppliers,
regulators and the wider community.
The corporate governance framework which the group
has set out, including board leadership and effectiveness,
remuneration and internal control, is based upon practices
which the board believes are proportionate to the risks
inherent to the size and complexity of group operations.
The board considers it appropriate to adopt the principles
of the Quoted Companies Alliance Corporate Governance
Code (“the QCA Code”) published in April 2018. The extent
of compliance with the ten principles that comprise the
QCA Code, together with an explanation of any areas of
non-compliance, and any steps taken or intended to move
towards full compliance, are set out below:
Principle
1.Establish a strategy and
business model which
promote long term value
for shareholders.
Extent of
current
compliance
Fully compliant
Commentary
Mitigating actions
Group business strategy is summarised in the
Mission Statement approved by the board in
February 2018, entitled “Inspired by surgeons for the
benefit of patients”.
Go to www.sigroupplc.com
and follow About Us then
Our Business Activities
Strategic issues, and the appropriate business
model to exploit opportunities and mitigate risks, are
under continuous review by the board, and reported
periodically.
Strategic Report section of
the Annual Report
2.Seek to understand and
meet shareholder needs
and expectations
Fully compliant
Fully compliant
3.Take into account wider
stakeholder and social
responsibilities and their
implications for long term
success
Fully compliant
4.Embed effective risk
management, considering
both opportunities and
threats, throughout the
organisation
15
Go to www.sigroupplc.com
and follow Investor Centre
then Meetings & Voting
Go to www.sigroupplc.
com and follow About
Us then Corporate Social
Responsibility
Principal Risks and
Uncertainties section of
Annual Report
Key risks and mitigating actions are detailed in
the Principal risks and uncertainties section of the
Annual Report
Regular meetings are held with institutional and
private shareholders, during which structured
feedback is sought and, where considered
appropriate, acted upon.
Shareholder liaison is principally undertaken by the
Non-Executive Chairman, the Chief
Executive Officer and the Company Secretary in her
capacity as Group Financial Controller.
Directors and employees adopt a broad view during
decision making to take meaningful account of the
impact of our business on all key stakeholder groups.
The Board recognises that the Company’s long- term
success is reliant on the efforts of its employees,
customers and suppliers and through maintaining
relationships with its regulators.
Feedback from employees, customer groups,
suppliers and others is actively encouraged.
The group operates a system of internal controls
designed (to the extent considered appropriate) to
safeguard group assets and protect the business
from identified risks, including risk to reputation.
Financial risks, including adequacy of funding and
exposure to foreign currencies, are identified and
subject to examination during the annual external
audit process.
Once identified the process will evaluate identified
risks to establish root causes, financial and non-
financial impacts and likelihood of occurrence.
Noting that there has been significant changes in the
nature of the principal risks for the Group in relation
to Covid 19 in 2020.
Surgical Innovations Group PLC Annual Report and Accounts 2019 Principle
5.Maintain the board as a
well-functioning, balanced
team led by the chair
Extent of
current
compliance
Fully compliant
Fully compliant
6.Ensure that between
them the directors have
the necessary up-to-date
experience, skills and
capabilities
Corporate Governance Report
Commentary
Mitigating actions
Board section of Annual
Report
Corporate Governance
section of Annual Report
Board section of Annual
Report
Audit Committee in
Corporate governance
The board comprises six directors and a Company
Secretary; three non-executive directors, two full
time executive directors, and the Non-Executive
Chairman. The Chairman and two of the non-
executive directors are considered to be fully
independent (Alistair Taylor and Paul Hardy).
The board is supported by appropriate board
committees which are each chaired by one of the
independent non-executive directors.
An annual record of attendance at board meetings
is included in the Annual Report at the conclusion of
each year (page 19)
The Non-Executive Chairman’s responsibilities
approximate to one day per week, other Executive
Directors are expected to work full time. Non-
executive directors are expected to commit sufficient
time to fulfill their role – this is a minimum of 2 days
per month.
The attendance by the members of the Board at the
meetings is recorded and reviewed annually.
The board is satisfied that the current composition
provides the required degree of skills, experience,
diversity and capabilities appropriate to the needs
of the business. Steps are taken to challenge the
status quo, and encourage proper consideration
of any dissenting opinion. Board composition and
succession planning are subject to continuous review
taking account of the potential future needs of the
business.
The Board has not taken any specific external
advice on a specific matter, other than in the normal
course of business as an AIM quoted company. The
Directors rely on the Company’s advisory team to
keep their skills up to date and through attending
market updates and other seminars provided by the
advisory team, the London Stock Exchange plc and
other intermediaries.
The Company Secretary ensures that the Board
and its committees are supplied with papers to
enable them to consider matters in good time for
meetings and to enable them to discharge their
duties. Procedures are in place for the Directors in
the furtherance of their duties to take independent
professional advice, if necessary at the Company’s
expense.
The Chair of the Audit Committee in his capacity of
being independent provides advice and support to
the board.
16
Surgical Innovations Group PLC Annual Report and Accounts 2019 Corporate Governance Report
Commentary
Mitigating actions
Board evaluation is carried out as part of a formal
process. The Board is responsible for setting the
Group’s policy on Directors’ remuneration and
the Remuneration Committee decides on the
remuneration package of each Executive Director.
The primary objectives of the Group’s policy
on executive remuneration are that it should be
structured so as to attract and retain executives
of a high calibre with the skills and experience
necessary to develop the Company successfully and,
secondly, to reward them in a way which encourages
the creation of value for the shareholders. The
performance measurement of the Executive Directors
and the determination of their annual remuneration
package is undertaken by the Remuneration
Committee. No Director is involved in setting their
own remuneration.
The Chairman has actively encouraged self-
evaluation by all board members, and feedback on
the conduct and content of board meetings.
The Non-Executive Directors have the opportunity
to meet without the Executive Directors in order
to discuss the performance of the Board, its
committees and individual Directors.
All Directors are required to stand for re-election
every year. The terms and conditions of appointment
of the Non- Executive Directors are available for
inspection at our registered office.
The board promotes high ethical and moral
standards which are set out in the Mission
Statement. The board and all employees expect to
be judged by, and accountable for, their actions.
The business operates in a highly regulated
environment, which promotes the benefits of high
moral standards and rewards good behaviour over
the long term.
The Board have recognised that culture is an
important aspect of its strategic priorities which
ultimately drives the Group towards its Mission.
The board promote agility, innovation, hard work
and ethical behaviours underpinned by the Group’s
framework of ethical codes. The board invest in
the employees training and development with
clear progression and career plans that allow them
to flourish. The board deliver consistent training,
communication and policy across the Group and
within different work groups. The board recognise
that it is advantageous to promote differing cultures
within different functions of the organisation which all
contribute to the overall culture of the business.
Extent of
current
compliance
Fully compliant
Principle
7.Evaluate board
performance based
on clear and relevant
objectives, seeking
continuous improvement
8.Promote a corporate
culture that is based
on ethical values and
behaviours
Fully compliant
17
Surgical Innovations Group PLC Annual Report and Accounts 2019 Corporate Governance Report
Extent of
current
compliance
Fully compliant
Principle
9.Maintain governance
structures and processes
that are fit for purpose and
support good decision-
making by the board
Commentary
Mitigating actions
The board as a whole share responsibility for sound
governance practices.
Board section of Annual
Report
The Chief Executive Officer reports to the board. In
addition to his collective responsibilities as a director,
he is responsible for the oversight of the strategic
and operating performance of the group.
Corporate Governance
Section of Annual Report
Fully compliant
10.Communicate how
the company is governed
and is performing by
maintaining a dialogue
with shareholders
and other relevant
stakeholders
The Group Financial Controller/Company Secretary
reports to the Chief Executive Officer. In addition
to her collective responsibilities as a director to
the subsidiaries, she is primarily responsible for all
aspects of financial reporting to the board and key
stakeholders,as well as maintaining communication
with investors and other key stakeholders.
Details of the audit, remuneration and nomination
committees are set out in the Corporate Governance
section of the website. The Non-Executive
Directors comprise the membership of each of the
committees.
The Board attaches great importance to providing
shareholders with clear and transparent information
on the Group’s activities and strategy. Details of
all shareholder communications are provided on
the Company’s website, including historical annual
reports and governance related material together
with notices of all general meetings for the last five
years. The Company discloses outcomes of all
general meeting votes.
The Company has appointed a professional Financial
Public Relations firm with an office in London to
advise on its communications strategy and to assist
in the drafting and distribution of regular news and
regulatory announcements.
Regular announcements are made regarding the
Company’s investment portfolio as well as other
relevant market and regional news.
The Company lists contact details on its website
and on all announcements released via RNS, should
shareholders wish to communicate with the Board.
Go to www.sigroupplc.com
and follow Investor Centre
then Meetings & Voting
18
Surgical Innovations Group PLC Annual Report and Accounts 2019 Board and Committee Meetings
The Board meets on a formal basis regularly, and the members are presented with financial and operational information in
advance of these meetings. During 2019 there were 10 Board Meetings, 5 Renumeration Committee meetings and 2 Audit
Committee meetings.
No Nomination Committee meetings were held during 2019 – Mike McMahon is Chairman of this committee on the occasions
when it is felt necessary to convene.
Corporate Governance Report
The Directors attended the following meetings in the year to 31 December 2019
Board Meeting
Remuneration Committee
Audit Committee
Nigel Rogers
Paul Hardy
Mike McMahon
David Marsh
Adam Power
Melanie Ross
Alistair Taylor
Charmaine Day**
10
8
10
10
9
6
9
7
*Chair of Committee
**Charmaine Day returned from maternity leave from April 2019
Audit Committee
5
5
1
3*
1
2
2*
2
2
The Audit Committee is chaired by Paul Hardy, along with members Nigel Rogers and Charmaine Day. This committee meets
as required, but at least twice a year.
The Committee is responsible for:
• monitoring the integrity of the financial statements and any formal announcements relating to the company’s financial
performance, and reviewing significant financial reporting judgements contained in them;
• providing advice on whether the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable, and
provides the information necessary for shareholders to assess the company’s position and performance, business model
and strategy;
reviewing the company’s internal financial controls and internal control and risk management systems;
•
• considering annually whether there is a need for an internal audit function and reporting its view and findings to the Board;
• conducting the tender process and making recommendations to the Board, about the appointment, reappointment and
•
•
removal of the external auditor, and approving the remuneration and terms of engagement of the external auditor;
reviewing and monitoring the external auditor’s independence and objectivity;
reviewing the effectiveness of the external audit process, taking into consideration relevant UK professional and regulatory
requirements; and
• developing and implementing policy on the engagement of the external auditor to supply non-audit services, ensuring there
is prior approval of non-audit services, considering the impact this may have on independence, taking into account the
relevant regulations and ethical guidance in this regard, and reporting to the Board on any improvement or action required.
The Audit Committee discharges its responsibilities through receiving reports from management and advisers, working closely
with the auditors, carrying out and reviewing risk assessments and taking counsel where appropriate in areas when required to
make a judgement.
The Board has overall responsibility for the Group’s system of internal controls and for monitoring its effectiveness. Such
a system is designed to manage rather than eliminate risk of failure to achieve business objectives and can only provide
reasonable and not absolute assurance against material misstatement or loss. The internal controls are considered within the
principal risk and uncertainties section of the Strategic Report on pages 10 to 11.
19
Surgical Innovations Group PLC Annual Report and Accounts 2019 In addition to reviewing the Annual Report and Financial Statements and the Interim Report prior to their submission to the
Board for approval, it keeps the scope, cost effectiveness (including monitoring the level of non-audit fees), independence and
objectivity of the external auditors under review. It provides a forum through which external auditors report to the board and
assists the board in ensuring that appropriate policies, internal controls and compliance procedures are in place.
Corporate Governance Report
Remuneration Committee
The Committee is chaired by Alistair Taylor and comprises of two other members Nigel Rogers and Mike McMahon, the
committee is responsible for determination of service contracts, remuneration, other benefits and remuneration policy for
the Company’s executive directors and senior executives. Details of the remuneration are disclosed in note of the financial
statements on page 47.
Key activities of the Remuneration Committee
The key activities of the Remuneration Committee consist of:
• Reviewing the Group Remuneration Policy, ensuring continuedeffectiveness
• Reviewing salaries for Executive and Non-Executive Directors and senioremployees
• Reviewing the performance of the Executive Directors and sets the scale and structure of their remuneration
• Review and approval of long-term incentive plans such as share options to employees
• Approving awards under the Group’s long-term incentive plans
The Executives service agreements, and notice periods, are reviewed with due regards to the interests of the shareholders. The
Executive Directors are all currently on rolling 12 month notice periods.
All Non-Executive Directors have letters of appointment with the Company and their remuneration is determined by the Board,
having considered the level of fees in similar companies.
Nominations Committee
The Nominations Committee considers succession planning, reviews the structure, size and composition of the Board and
nominates candidates to fill Board vacancies.
20
Surgical Innovations Group PLC Annual Report and Accounts 2019 Statement under Section 172 of the Companies Act
The Board acknowledges its responsibility under section 172(1) of the Companies Act 2006 and below sets out the key
processes and considerations that demonstrate how the Directors promote the success of the Company.
The below statement sets out the requirements of the Act, section 172(1), and note how the Directors discharge their duties.
Corporate Governance Report
As noted in the Corporate Governance Report the Board meet monthly with papers circulated in advance to allow the Directors
to fully understand the performance and position of the Group, alongside matters arising for decision. Each decision that is
made by the Directors is supported by papers which analyse the possible outcomes so that an educated decision can be made
based upon the likely impact on the Group, so a decision can be made which best promotes the success of the Company and
considers the impact on the wider stakeholder group.
The following factors are taken into account during the decision making process:
(a) The likely consequences of any decision in the long term, by reference to financial forecasts and longer term financial and
non- financial strategic objectives,
(b) The interests of the Company’s employees, by reference to the short and long term implications on likely levels of
employment, job security, personal development and succession planning
(c) The need to foster the Company’s business relationships with suppliers, customers and others, by fostering partnerships
with long term mutual benefit and win:win solutions,
(d) The impact of the Company’s operations on the community and environment, recognising that best practise is evolving in
this area and there are opportunities for further improvement,
(e) The desirability of the company maintaining a reputation for high standards of business conduct. The Directors and the
Company are committed to high standards of business conduct and governance, and the board seeks at all times to lead by
example. Where there is a need to seek advice on particular issues, the Board will seek advice from its lawyers and nominated
advisors to ensure the consideration of business conduct, and its reputation is maintained.
(f) The need to act fairly between members of the Company, by regularly meeting with investors and give equal access to all
investors and potential investors, and ensuring all relevant materials are made available with equal access. Through its advisors,
the Directors seek and obtain feedback from meeting with the investors and incorporate feedback into its decision making
processes.
The following disclosure describes how the directors have had regard to the matters set out in section 172(1)(a) to (f) and forms
the directors ’statement required under section 414CZA of The Companies Act 2006.
Stakeholder engagement
Investors
The major interests in our shares are set out in page 24 of our directors ’report. Key metrics for our shareholders are the share
price, adjusted profit before taxation, and adjusted earnings per share. Through the publication of our half year and full year
financial reports and engagement with shareholders we look to provide insight were possible into the group strategy and how
we look to create value for our shareholders by generating strong and sustainable results that translate into earnings. We seek
to promote an investor base that is interested in a long term holding in the company.
Investor engagement includes the AGM, one on one investor meetings with the board of directors, on site group investor
meetings and also discussions with investors when questions are asked. Other than our routine engagement with investors
on topics of strategy, governance and performance, the only other specific matter discussed included changes to board and
management structure during the year.
Customers and users of our products
Our direct customer comprises distributors of our products in overseas territories, and healthcare providers in the UK market.
Indirectly, our products are used by clinicians and, most important of all, patients.
We aim to supply products of high quality that deliver differentiated benefits to end users, offer cost effective solutions to
healthcare providers, and provide the opportunity for our distributors to make an appropriate return on capital employed.
We meet these objectives by maintaining facilities that meet or exceed the compliance requirements of relevant regulatory
bodies, and encouraging feedback from customers and end users upon which we take action where appropriate.
21
Surgical Innovations Group PLC Annual Report and Accounts 2019
Corporate Governance Report
Suppliers
We have a select group of local and international suppliers that are fundamental to the quality of our products, the availability of
our products and to ensure that as a business we meet the high standards we expect of ourselves. We regularly engage with
our suppliers to discuss performance, price and how we can continue to improve our supply chain. Key topics of engagement
for the year were price and supply with the potential disruption that Brexit may cause and plans were agreed to help minimise
any disruption to the supply chain.
Employees
Employees are those individuals who are contracted to work for the company both full and part time. The group’s success is
reliant on the commitment of our employees to our strategy and to maintain and deliver the high standards that the group sets
for itself. We pride ourselves on a friendly and safe working environment. Given the nature of our manufacturing business we
take health and safety extremely seriously. We have policies and procedures in place to look after the welfare of our employees.
We offer training where it is considered beneficial to the employee and the company.
Principal decisions
We define principal decisions as both those that are material to the group, but also those that are significant to any of our
key stakeholder groups. For detail as to how we established and defined our key stakeholder groups see page 1. In making
the following principal decisions the board considered the outcome from its stakeholder engagement as well as the need to
maintain a reputation for high standards of business conduct and the need to act fairly between the members of the company.
Principal decision 1 - setting of annual financial budget and periodic changes to forecasting
The board receives regular financial reports from the executive management team, both historic and forward looking, and sets out to
meet or exceed expectations where possible, and to communicate to the market through appropriate channels where it becomes
evident that these cannot be achieved.
The annual financial budget for the Group was approved in January 2019, indicating a reasonable view that the results for the financial
year would meet or exceed market expectation. In June 2019, the board recognised that actual results to date were below the level
budgeted, and reappraised the likely outturn for the full year. This resulted in a trading update to this effect.
A further review and downgrade became evident at the time of the interim results announcement in September 2019, following an
unexpected downturn in revenues over the summer months.
The final results included herewith were in line wth expectations set in September 2019.
Decisions relating to budgets and forecasts have an effect on the company’s share price, which is adverse in the event that market
expectations are not met in full. The company mitigated this impact as far as practical by working in conjunction with the Nominated
Advisor and brokers to communicate promptly with the market via Regulated News Service, and arrange meetings with investors to
explain the underlying circumstances and answer questions.
Principal decision 2 - changes to board and senior management structure
The directors seek to ensure that the composition of the board and senior executive management team is appropriate to the current
circumstances, and has sufficient capacity to manage growth and succession planning.
In February 2019, David Marsh was appointed CEO having previously been engaged as Commercial Director, and Nigel Rogers
became Non-Executive Chairman, having previously been Executive Chairman.
During the year, the senior executive team was strengthened through the appointment of an Operations Director and a Compliance
Director for the Leeds site. Melanie Ross, preciously COO/CFO resigned from the board in June 2019, and her responsibilities in
finance were handed over to Charmaine Day, Company Secretary and Group Financial Controller.
Decisions relating to board and management structure affect all stakeholder groups, and are intended to improve the long term
prospects of the business for the mutual advantage of all stakeholders.
Principal decision 3 - Banking facilities
The group has a proactive and constructive relationship with its bankers, Yorkshire Bank. During the year, a proportion of the remaining
term loan drawn in 2017 was prepaid, as the board determined that the Group had sufficient net cash resources to maintain flexibility
without this additional indebtedness. Further potential changes in the structure and flexibility of facilities and desired headroom have
been discussed with Yorkshire Bank in March 2020. It has been mutually agreed that it is preferable to postpone any significant
changes until the second quarter of 2020 when the board are better placed to select the most appropriate debt package. Yorkshire
Bank have indicated their board support, although there is no current contractual obligation to increase or extend facilities other than
those currently in place and described in the going concern note in the Directors report on page 23 and in the principal risk and
uncertainties on page 9.
The adequacy of funding facilities has a direct effect on all stakeholders. The board seek to ensure that finance is available to meet all
current needs, and provide sufficient headroom for approved development activities and unexpected events.
Nigel Rogers
Non-Executive Chairman
30 March 2020
22
Surgical Innovations Group PLC Annual Report and Accounts 2019 Directors’ Report
Charmaine Day
Company Secretary
The Directors’ present their annual report, together with the audited financial statements, for the year ended 31 December 2019.
Principal activities
The Company is the holding Company of a Group whose principal activities in the year involved the design, development,
manufacture and sale of devices for use in minimally invasive surgery (SI Brand), along with own label products through original
equipment manufacturer (OEM) relationships including precision engineering markets (PE). The Group sells branded products
through Elemental Healthcare Ltd (Distribution) and independent healthcare distributors across the world.
Results and dividends
The Consolidated statement of comprehensive income for the year is set out on page 32.
Given the results for the financial year, the Directors do not recommend the payment of a dividend (2018: £nil).
Substantial shareholdings
Other than the Directors’ own holdings, the Board has been notified that, as at 31 December 2019, the following shareholders
on the Company’s share register held interests of 3% or more of the issued ordinary share capital of the Company:
Number of shares £’000 (%)
109,063 (13.7%)
60,300 (7.6%)
60,000 (7.5%)
39,579 (4.9%)
37,573 (4.7%)
33,281 (4.2%)
33,158 (4.2%)
32,812 (4.1%)
31,307 (3.9%)
31,250 (3.9%)
26,645 (3.4%)
25,863 (3.3%)
Getz Bros. & Co. (BVI) Inc.
BGF Investments
Ruffer LLP
Healthinvest Partners AB
Liontrust Asset Mgt
Hargreaves Lansdown Asset Mgt
Mr CWN John
Cavendish
Mr A Power
Mr D Marsh
Unicorn AIM VCT plc
Interactive Investor
23
Surgical Innovations Group PLC Annual Report and Accounts 2019 Directors’ Report
Directors’ interests
The interests in the share capital of the Company of those Directors in office at the end of the year were as follows:
Ordinary shares of 1p each
P Hardy
M J McMahon
N F Rogers
A Taylor
A Power
D Marsh
31 December 2019
Beneficial
7,108,711
18,669,129
6,610,000
1,074,266
31,307,302
31,250,000
1 January 2019
Beneficial
5,808,711
18,669,129
6,610,000
1,074,266
31,307,302
31,250,000
Details of Directors’ interests in respect of share options are set out on page 47. There were no other changes in Directors’
interests between the year end and 30 March 2020. Other than as disclosed in note 18, no Director has an interest in any
material contract, other than contracts of service and employment, to which the Group was a party.
Directors indemnities
Directors’ and officers’ insurance cover has been established for all Directors to provide appropriate cover for their reasonable
actions on behalf of the Company. A deed was executed indemnifying each of the Directors of the Company and/or its
subsidiaries as a supplement to the Directors’ and officers’ insurance cover. The indemnities, which constitute a qualifying third-
party indemnity provision as defined by section 236 of the Companies Act 2006, were in force during the 2019 financial year
and remain in force for all current and past Directors of the Company.
Research and development
The Group’s activities in this area have focused principally on the continuing development of innovative instruments for use in
the field of Minimally Invasive Surgery (MIS).
Employees
The commitment and ability of our employees are key factors in achieving the Group’s objectives. Employment policies are
based on the provision of appropriate training, whilst personal appraisals support skill and career development. The Board
encourages management feedback at all levels to facilitate the development of the Group’s business. The Group seeks to keep
its employees informed on all matters affecting them by regular management and departmental meetings.
It is the Group’s policy to give full and fair consideration to all applications for employment from disabled persons having regard
to their particular aptitudes and abilities and to encourage the training and career development of all personnel employed by
the Group, including disabled persons. Should an employee become disabled, the Group would, where practicable, seek to
continue the employment and arrange appropriate training.
Financial risk management policies
The Group’s activities expose it to a variety of financial risks as set out below with further quantitive analysis in note 14.
a) Exchange rate risk: The principal financial risk exposure relates to importing and exporting goods in US Dollars and importing
goods in Euros.
b) Credit risk: The Group is exposed to credit risk through offering extended credit terms to those customers operating in
markets where extended payment terms are themselves taken by local government and state organisations. The Group is also
exposed to credit risk through customer concentration. Both of these aspects of credit risk are managed through constant
review and personal knowledge of the customer concerned. Payment plans are agreed and monitored in all such cases to
minimise credit risk.
c) Liquidity risk: The Group manages its liquidity needs by carefully monitoring all scheduled cash outflows. Liquidity needs
are monitored in various time bands, on a day-to-day and week-to-week basis, as well as on the basis of a rolling 13 week
projection. Longer-term needs are monitored as part of the Group’s regular rolling monthly re-forecasting process. Funding
for long-term liquidity is secured by an adequate amount of committed credit both through working capital and asset finance
facilities.
d) Interest rate cash flow risk: The Group has both interest-bearing assets and interest-bearing liabilities. Interest-bearing assets
include only cash and cash equivalents which are held on deposit at both fixed and floating rates. Interest-bearing liabilities
include hire-purchase liabilities which are at fixed interest rates, and also bank borrowings which are at floating rates of interest.
24
Surgical Innovations Group PLC Annual Report and Accounts 2019 Directors’ Report
Future Developments
The future developments of the Group are discussed in the strategic report.
Going concern
The Directors have prepared forecasts for the period to March 2021. Prior to the substantial impact of Covid-19 on the entire
business community, the directors had carried out an evaluation of financial forecasts, sensitised to reflect a rational judgement
of the level of inherent risk. This exercise concluded that adequate financial resources were available to ensure that the
Company could meets its obligations for a twelve month period with reasonable certainty. It has subsequently become clear
that there will need to be reliance upon outside agencies including the UK Government, Yorkshire Bank, and possibly others to
ensure that these conditions continue to apply.
As at period end, the Group had access to banking facilities, which comprised a committed £0.5m revolving credit facility.
Hire purchase agreements are utilised where required. The revolving credit facility of £0.5m may be used towards meeting the
Group’s general working capital and other commitments. It is subject to compliance with financial covenants which measure the
ratio of cashflow to debt service and EBITDA. In March 2020, the funder agreed to convert the existing loan facility into a three
year committed Revolving Credit Facility (“RCF”) with additional headroom, a facility limit of £1m, and less stringent covenants
than the current facilities. This agreement was made with credit approval and full knowledge of the considerable challenge
presented by Covid-19. In the event, the company decided not to proceed with this change, and instead agreed with the funder
to accept a temporary waiver of all covenants at 31 March 2020, and relief from the capital repayment of £75,000 due in March
2020.
The funder has indicated that, while they are not aware of any reason why the offer to convert all debt to RCF at a later date
would not be made available, a fresh credit approval would be required. Furthermore, the funder has confirmed that they are
supportive of acting as a conduit to channel additional liquidity to the company under the auspices of the Coronavirus Business
Interruption Loan Scheme,which the company considers may offer advantages over the lender- proposed move to the RCF.
Finally, the company has received an unsolicited indication of funding support from a substantial institutional shareholder,
although this is not binding at this early stage, and no proposal has been formulated.
Fundamental uncertainty will be common in varying degrees to almost all businesses in every sector at the present time. It is
premature to be able to determine with precision the level of support that may ultimately be required , as events are moving
rapidly. Our bankers have moved extremely quickly in providing short-term relief from capital repayments and covenant
compliance, and stand willing to support our immediate liquidity requirements. These actions are an important precursor to
enabling access to funding through the Coronavirus Business Interruption Loan Scheme in coming weeks. Furthermore, the
announcements by the Chancellor of the Exchequer on 20 March 2020 relating to various forms of government assistance
will provide substantial help. In addition, we have received expressions of support from some of our key trading partners and
institutional shareholders.
Based on the forecasts, the Board has a reasonable expectation that the Company and the Group have adequate resources
and support to continue in operational existence for the foreseeable future, considered to be at least 12 months for the date
of approval from the financial statements, whilst acknowledging that there are material uncertainties that do exist in preparing
these financial statements.
Post balance sheet events
A non-adjusting post balance sheet event has been recognised with the anticipated financial effect of more widespread
coronavirus infection having significant impact on the Group in relation to the following accounting treatments:
Goodwill impairment
Subsequent to the year end, the potential effects of the Covid-19 outbreak and consequential impact on the availability of NHS
resources, may have a further and more significant impact on the directors view of short to medium term cash flows. This has
not been quantified, and there is not yet sufficient experience to make such a judgement. Nevertheless, it is recognised by
the directors that further impairment is likely to be necessary in the year ending 31 December 2020. The financial effect of this
adjustment cannot be estimated.
25
Surgical Innovations Group PLC Annual Report and Accounts 2019 Directors’ Report
Going concern and funding
Management have to make judgements on various uncertain future outcomes of events or conditions, consideration when
determining whether or not the Group can prepare its financial statements on the going concern basis:
The degree of uncertainty associated with the outcome of Coronavirus increases significantly the further into the future.
Management will assess all available information and will continually assess the situation.
The nature and condition of the Group and the degree to which it is affected by external factors affect the judgement regarding
the outcome of Coronavirus. Key end user markets is now becoming more apparent, as hospitals rightly free up capacity
to cope with seriously ill patients. These necessary actions will inevitably lead to delays and cancelation of routine surgical
procedures such as those announced in the NHS over the last week. Management have devised a series of mitigating actions,
designed to preserve cash resources, maintain delivery of essential products to our customers and distributors, and protect our
workforce from the health risks and economic impact.
Any judgement about the future is based on information at the time at which the judgement is made. Subsequent events may
result in outcomes that are inconisistent with judgements that were reasonable at the time they were made. Management will
continually assess the information available at the time of publication.
The directors had carried out an evaluation of financial forecasts, sensitised to reflect a rational judgement of the level of
inherent risk. This exercise concluded that adequate financial resources were available to ensure that the Company could
meet its obligations for a twelve month period with reasonable certainty. It has subsequently become clear that there will need
to be reliance upon outside agencies including the UK Government, Yorkshire Bank, and possibly others to ensure that these
conditions continue to apply. The financial effect of further funding cannot be estimated.
Directors’ responsibilities statement
The directors are responsible for preparing the Annual Report, the Directors’ Report and the Group and parent company
financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare Group and parent company financial statements for each financial year. As
required by the AIM Rules of the London Stock Exchange they are required to prepare the Group financial statements in
accordance with IFRSs as adopted by the EU and applicable law and have elected to prepare the parent company financial
statements in accordance with UK Accounting Standards and applicable law (UK Generally Accepted Accounting Practice),
including FRS 101 Reduced Disclosure Framework.
Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and
fair view of the state of affairs of the Group and parent company and of their profit or loss for that period. In preparing each of
the Group and parent company financial statements, the directors are required to:
•
select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable and prudent;
•
•
for the Group financial statements, state whether they have been prepared in accordance with IFRSs as adopted by the EU
and;
for the parent company financial statements, state whether applicable UK Accounting Standards have been followed,
subject to any material departures disclosed and explained in the financial statements.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the parent
company’s transactions and disclose with reasonable accuracy at any time the financial position of the parent company and
enable them to ensure that its financial statements comply with the Companies Act 2006. They have general responsibility for
taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and
other irregularities.
26
Surgical Innovations Group PLC Annual Report and Accounts 2019 Directors’ Report
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the
company’s website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.
The Directors of the Company who held office at the date of approval of this Annual Report as set out above each confirm that:
• so far as each Director is aware, there is no relevant audit information of which the Company’s auditors are unaware; and
• each Director has taken all the steps that they ought to have taken as a Director in order to make themselves aware of any
relevant audit information and to establish that the Company’s auditors are aware of that information.
Website publication
The directors are responsible for ensuring the annual report and the financial statements are made available on a website.
Financial statements are published on the company’s website in accordance with legislation in the United Kingdom governing
the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The
maintenance and integrity of the company’s website is the responsibility of the directors. The directors’ responsibility also
extends to the ongoing integrity of the financial statements contained therein.
Auditor
BDO LLP was appointed as auditor in January 2018 and a resolution for their re-appointment as independent auditor will be
proposed at the 2020 AGM.
By order of the Board
Charmaine Day
Company Secretary
30 March 2020
27
Surgical Innovations Group PLC Annual Report and Accounts 2019 Independent auditor’s report to the members of Surgical
Innovations Group Plc
Opinion
We have audited the financial statements of Surgical Innovations Group plc (the ‘Parent Company) and its subsidiaries (the
‘Group’) for the year ended 31 December 2019 which comprise the consolidated statement of comprehensive income, the
consolidated and company statements of changes in equity, the consolidated and company balance sheets, the consolidated
cash flow statement and the notes to the financial statements, including a summary of significant accounting policies.
The financial reporting framework that has been applied in the preparation of the Group financial statements is applicable law
and International Financial Reporting Standards (IFRSs) as adopted by the European Union. The financial reporting framework
that has been applied in the preparation of the Parent Company financial statements is applicable law and United Kingdom
Accounting Standards including Financial Reporting Standard 101 Reduced Disclosure Framework (United Kingdom Generally
Accepted Accounting Practice).
In our opinion:
•
the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at 31
December 2019 and of the Group’s loss for the year then ended;
the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;
the Parent Company financial statements have been properly prepared in accordance with United Kingdom Generally
Accepted Accounting Practice; and
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
•
•
•
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our
responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial
statements section of our report. We are independent of the Group and the Parent Company in accordance with the ethical
requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied
to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that
the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Material uncertainty related to going concern
We draw attention to note 1(a) of the financial statements, which describes the Going Concern view of the Director’s and their
considerations and impacts from the current Covid-19 pandemic, which is likely to lead to significant short to medium term
disruption to the business model. As stated in note 1(a), these events or conditions indicate that a material uncertainty exists
that may cast significant doubt on the Group and Parent Company’s ability to continue as a going concern. Our opinion is not
modified in respect of this matter.
Going concern was identified as a Key Audit Matter given the conditions and uncertainties identified below:
• During the year the Group failed to meet its bank covenant test at the end of June 2019 and again at the end of September
2019. These breaches were subsequently waived by the bank, prior to the end of the year. During October 2019, the
Group renegotiated its covenant test for 31 December 2019 and at the same time made an advanced repayment of £1.0m
against the bank borrowings. At the year-end the Group owed £812k (2018: £2,107k) in bank loans.
• Management prepared forecasts for the period to 31 March 2021 having regard for the financial covenants in respect of
banking facilities, which showed the Company and Group expected to operate within its existing facilities.
Subsequent to the year-end, the Covid-19 situation, as described extensively in this Annual Report, has required the business
to make further assessments of the potential effects of this and any mitigating actions that could be taken.
Given the Key Audit Matter identified, we performed the following work as part of our audit:
• Obtained and examined management’s forecasts for the period to 31 March 2021 and considered this alongside the
Board’s own going concern paper. We subsequently also reviewed the sensitised forecasts that management produced in
their considerations, post Covid-19 impacts.
• We checked the outcome of covenant tests during the period and assessed whether it is still appropriate to classify
amounts due to the bank as non-current liabilities.
• We challenged management’s assumptions used in the forecast period by considering available evidence, including the
28
Surgical Innovations Group PLC Annual Report and Accounts 2019
ability to grow revenue, improve gross profit margin and manage costs within the Group. We considered realistic scenarios
as sensitivities to understand the robustness of the forecast trading model and the ability to meet financial covenant tests
which occur at each quarter end through to 31 March 2021, based on both the base case forecasts and sensitised
forecasts.
Auditor’s Report
• We considered the latest position in relation to banking arrangements and any subsequent discussions and agreements
with the bank.
• We discussed with management the impact of the Covid-19 virus on the Group, specifically in relation to the ability to
generate the expected future revenues as set out in their forecast and mitigating actions that could be taken. We compared
this to expectations based on historical forecasting accuracy and our knowledge of the business. This took into account
the latest public information in relation to the pandemic which included the decision to postpone elective operations from
15 April 2020 onwards.
• We reviewed the disclosures made both in the front-end statements of the Annual Report and in note 1(a) to the financial
statements. We assessed whether these adequately and completely disclose the basis of the judgements taken and the
view formed by management with respect to the going concern basis of preparation and material uncertainties that arise.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due
to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources
in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of
the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these
matters. In addition to the going concern key audit matter in the Material uncertainty related to going concern section above,
the following key audit matter was identified:
Key audit matter
How our audit addressed the key audit matter
Impairment of goodwill and related investment in
Elemental Healthcare Limited
Refer to note 10 to the group financial statements and
note 1 to the company financial statements.
In line with the requirements of applicable accounting
standards, management test goodwill balances annually
for impairment.
The annual impairment test includes areas of estimation
uncertainty and judgement over the future performance
of the business for example forecast future trading
results and cash flows and specific assumptions such as
discount rates and long- term growth rates.
Changes to these assumptions or adverse performance
could have a significant impact on the available
headroom and any impairment that may be required
We assessed the method applied by management in their
value in use calculation with reference to the requirements of
applicable accounting standards.
We performed procedures to assess and agree the key
inputs to the valuation derived from the value in use
calculation , including:
- Testing the integrity of the impairment model and
underlying data to approved forecasts;
-Analysing the historical accuracy of the forecasts to actual
results for a 3-year period to determine whether forecast
cash flows are reliable based on past experience;
- Challenging management on the forecasts of cash flows
for future periods and in particular how management
expect to achieve the growth levels anticipated taking into
consideration factors such as committed future orders and
post year end trading results;
There is also an associated risk in the Parent Company
only balance sheet over the potential impairment of
the investment in Elemental Healthcare Limited as a
subsidiary undertaking. The same forecasts and value in
use calculations were used in this assessment as for the
Goodwill calculations noted above.
- We engaged our internal valuations team to assess the
reasonableness of the key inputs in the WACC calculation
model including the use of an appropriate beta value and
risk premiums in arriving at the discount rate;
- Checking that growth rates and risk factors have been
appropriately estimated/identified; and
Both a Goodwill impairment charge (see note 10) and
a Company Investment impairment (see note 2 to the
Company Balance Sheet) have been recorded during
the year. Post year- end considerations in respect of
Covid-19 have also been included in note 21.
- Assessing the completeness and accuracy of disclosures
made in the financial statements in relation to the impairment
of goodwill and investment balance in relation to Elemental
Healthcare Limited.
Key observations:
Based on the procedures performed, we consider the
impairment of the goodwill and the related investment to
be reasonable. We also reviewed and agreed with the post
balance sheet events disclosure in respect to these matters.
29
Surgical Innovations Group PLC Annual Report and Accounts 2019 Auditor’s Report
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements.
For planning, we consider materiality to be the magnitude by which misstatements, including omissions, could influence
the economic decisions of reasonable users that are taken on the basis of the financial statements. In order to reduce to an
appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level, performance
materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not necessarily be
evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances of
their occurrence, when evaluating their effect on the financial statements as a whole.
The materiality for the Group financial statements as a whole was set at £58,000 (2018: £97,000). This was determined with
reference to a benchmark of an Adjusted EBITDA, of which this represents 4% (2018: 4%), which we consider to be one of the
principal considerations for members of the Parent Company in assessing the financial performance of the business.
The materiality for the Parent Company financial statements was set at £15,000 (2018: £90,000). This was determined with
reference to a benchmark of 3% (2018: 3%) of net assets limited to either the maximum component materiality set for the audit
of the Group or restricted further to ensure the aggregate of component materiality’s was appropriate when compared to Group
materiality and the number of significant components identified.
Component materiality ranged from £5,000 to £50,000 (2018: £10,000 to £90,000).
Performance materiality has been set at £37,700 (2018: £63,000) representing 65% (2018: 65%) of the above materiality. This
has been assessed on criteria such as the number of material estimates, known and likely misstatements, management’s
attitude towards adjusting misstatements and the overall control environment of the Group and Parent Company.
We agreed with the Audit Committee that we would report to the committee all individual audit differences in excess of £1,160
(2018: £2,000). We also agreed to report differences below this threshold that, in our view, warranted reporting on qualitative
grounds.
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the Group and its environment, including the Group’s system
of internal control, and assessing the risks of material misstatement in the financial statements at the Group level. We also
addressed the risk of management override of internal controls, including assessing whether there was evidence of bias by the
directors that may have represented a risk of material misstatement due to fraud.
There were three significant components within the Group, including the Parent Company, which were subject to a full scope
audit. There was one non-significant component, which was subject to a desktop review. The Group audit team performed all
procedures.
Other information
The directors are responsible for the other information. The other information comprises the information included in the
annual report and accounts, other than the financial statements and our auditor’s report thereon. Our opinion on the financial
statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in
the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material
misstatements, we are required to determine whether there is a material misstatement in the financial statements or a
material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
•
the information given in the strategic report and the directors’ report for the financial year for which the financial statements
are prepared is consistent with the financial statements; and
the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.
•
30
Surgical Innovations Group PLC Annual Report and Accounts 2019 Auditor’s Report
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and the Parent Company and its environment obtained in the
course of the audit, we have not identified material misstatements in the strategic report or the directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report
to you if, in our opinion:
• adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been
received from branches not visited by us; or
the Parent Company financial statements are not in agreement with the accounting records and returns; or
•
• certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement, within the directors’ report, set out on page [23], the directors
are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for
such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s and the Parent Company’s ability
to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the Group or the Parent Company or to cease operations, or have
no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s
website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Use of our report
This report is made solely to the Parent Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the Parent Company’s members those
matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the Parent Company and the Parent Company’s members as a
body, for our audit work, for this report, or for the opinions we have formed.
Mark Langford (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
Leeds
United Kingdom
30 March 2020
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127)
31
Surgical Innovations Group PLC Annual Report and Accounts 2019 Consolidated statement of comprehensive income
for the year ended 31 December 2019
Revenue
Cost of sales
Gross profit
Other operating expenses
Other Income
Adjusted EBITDA
Amortisation of intangible assets
Impairment of intangible assets
Depreciation of tangible assets
Exceptional items
Share based payments
Operating (loss) / profit
Finance costs
Finance income
(Loss) / Profit before taxation
Taxation (charge) / credit
(Loss) / Profit and total comprehensive Income
(Loss) / Earnings per share, total and continuing
Basic
Diluted
2018
£’000
10,969
(6,297)
4,672
(4,327)
275
2,364
(1,141)
(2)
(481)
-
(120)
620
(105)
-
515
210
725
Notes
2019
£’000
2
10,733
(6,400)
4,333
(6,772)
-
1,446
(642)
(2,253)
(618)
(184)
(188)
(2,439)
(162)
5
(2,596)
(23)
(2,619)
3
3
10
10
9
3
15
3
5
6
7
8
8
(0.33p)
(0.33p)
0.09p
0.09p
The Consolidated statement of comprehensive income above relates to continuing operations.
Adjusted EBITDA is defined as earnings before interest, taxation, depreciation, amortisation, impairment, share based payments
and exceptional items.
Profit and total comprehensive income relate wholly to the owners of the parent Company.
Notes on pages 36 to 65 form part of these financial statements.
32
Surgical Innovations Group PLC Annual Report and Accounts 2019
Consolidated statement of changes in equity
for the year ended 31 December 2019
Balance as at 1 January 2018
Employee share based payment
Total – transactions with owners
Profit and total comprehensive income for the period
Balance as at 31 December 2018
Employee share based payment
Issue of share capital
Total – transactions with owners
Loss and total comprehensive income for the period
Notes
15
15
Share
capital
£’000
Share
premium
£’000
Capital
reserve
£’000
Merger
reserve
£’000
Retained
earnings
£’000
Total
£’000
7,826
5,831
329
1,250
(1,658)
13,578
-
-
-
-
-
-
-
-
-
-
-
-
120
120
725
120
120
725
7,826
5,831
329
1,250
(813)
14,423
-
127
127
-
-
73
73
-
-
-
-
-
-
-
-
-
188
-
188
188
200
388
(2,619)
(2,619)
Balance as at 31 December 2019
7,953
5,904
329
1,250
(3,244)
12,192
33
Surgical Innovations Group PLC Annual Report and Accounts 2019 Consolidated statement of changes in equity
Consolidated balance sheet
at 31 December 2019
Assets
Non-current assets
Property, plant and equipment
Right of use assets
Intangible assets
Deferred tax asset
Current assets
Inventories
Trade and other receivables
Amount due from associate
Cash at bank and in hand
Total assets
Equity and liabilities
Equity attributable to equity holders of the parent company
Share capital
Share premium account
Capital reserve
Merger reserve
Retained earnings
Total equity
Non-current liabilities
Borrowings
Deferred tax liabilities
Dilapidation provision
Lease liability
Current liabilities
Trade and other payables
Accruals
Borrowings
Lease liability
Total liabilities
Total equity and liabilities
Notes
2019
£’000
2018
£’000
9
9
10
7
11
12
12
718
1,241
934
-
7,613
10,191
-
91
9,572
11,216
2,925
2,359
173
1,282
6,739
2,083
2,961
79
2,491
7,614
16,311
18,830
15
16
7,953
5,904
7,826
5,831
329
329
16
1,250
1,250
(3,244)
(813)
12,192
14,423
13
7
21
17
515
31
165
1,086
1,797
1,820
98
165
-
2,083
14
1,518
1,556
13
17
317
297
190
481
287
-
2,322
4,119
2,324
4,407
16,311
18,830
The accompanying accounting policies and notes form part of the financial statements.
The consolidated financial statements on pages 31 to 65 were approved by the Board of Directors on 30 March 2020 and
were signed on its behalf by:
N F Rogers
Director
D Marsh
Director
Company registered number: 02298163
34
Surgical Innovations Group PLC Annual Report and Accounts 2019 Consolidated cash flow statement
for the year ended 31 December 2019
Cash flows from operating activities
Profit after tax for the year
Adjustments for:
Taxation
Finance income
Finance costs
Depreciation of property, plant and equipment
Amortisation and impairment of intangible assets
Depreciation Right of Use assets
Share-based payment charge
Gain on disposal of fixed assets
Foreign exchange
(Increase)/decrease in inventories
Decrease/(increase) in trade and other receivables
(Decrease)/increase in payables
Cash generated from operations
Taxation paid
Interest received
Interest paid
Net cash generated from operating activities
Cash flows from investing activities
Payments to acquire property, plant and equipment
Acquisition of intangible assets
Net cash used in investment activities
Repayment of bank loan
Net proceeds from issue of share capital
Repayment of lease liabilities
Repayment of obligations under finance leases
Net cash used in financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Effective exchange rate fluctuations on cash held
Cash and cash equivalents at end of year
35
Notes
2019
£’000
2018
£’000
(2,619)
725
7
9
10
9/17
7
9
10
23
(5)
162
415
2,895
203
188
1
(56)
(842)
508
(203)
670
1
5
(82)
594
(199)
(317)
(516)
13
(1,300)
17
14
201
(244)
-
(1,343)
(1,265)
2,491
56
1,282
(210)
-
89
481
1,143
-
120
6
48
384
(1,027)
48
1,807
(68)
-
(89)
1,650
(88)
(398)
(486)
(318)
-
-
(16)
(334)
830
1,709
(48)
2,491
Surgical Innovations Group PLC Annual Report and Accounts 2019 Consolidated cash flow statement
Notes to the consolidated financial statements
1. Group accounting policies under IFRS
(a) Basis of preparation
Surgical Innovations Group PLC (the “Company”) is a public AIM listed company incorporated, domiciled and registered in
England in the UK. The registered number is 02298163 and the registered address is Clayton Wood House, 6 Clayton Wood
Bank, Leeds, LS16 6QZ.
These financial statements have been prepared on the basis of the International Financial Reporting Standards (IFRS)
accounting policies set out below. The financial statements have been prepared in accordance with IFRS as adopted for use
by the European Union, including IFRIC interpretations, and in line with those provisions of the Companies Act 2006 applicable
to companies reporting under IFRS. The preparation of financial statements in conformity with IFRS requires the use of certain
critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s
accounting policies. The financial statements have been prepared under the historical cost convention, are presented in Sterling
and are rounded to the nearest thousand.
Going concern
The Directors have considered the available cash resources of the Group and its current forecasts and has a reasonable
expectation that the Group have adequate resources and support to continue in operational existence for the foreseeable
future, considered to be at least 12 months for the date of approval from the financial statements, whilst acknowledging that
there are material uncertainties that do exist in preparing these financial statements. Further details of the Directors’ assessment
are provided in the Chairman’s Statement, the Operating and Financial Review and Directors’ report. The Directors draw
attention to this extensive disclosure which indicates the current uncertainty in respect of the Covid-19 global pandemic.
This event or condition indicates that a material uncertainty exists that may cast significant doubt on the Company’s ability to
continue as a Going Concern.
New standards and amendments to standards adopted in the year
During the year the Group adopted the following standard effective from the 1 January 2019. The Group has applied this
standard in the preparation of the financial statements, and has not adopted any new or amended standards early:
IFRS 16 ‘Leases’ The standard is effective for periods beginning on or after 1 January 2019 and is EU endorsed.
Leases has been adopted by the Group for the financial year starting on 1 January 2019 ( see note 17). The new standard has
been applied using the “modified retrospective” transition approach.
The Group has material operating lease commitments as set out in note 17 and therefore the adoption of the standard has a
material impact on the Financial Statements of the Group.
There is no adjustment to the opening balance of retained earnings for the current period however reclassifications arising from
the new standard have been recognised in the opening balances as at 1 January 2019. Prior periods have not been restated,
as permitted under the specific transitional provisions in the standard. Accordingly the Group is not required to present a third
statement of financial position as at that date.
Other new amended standards and interpretations issued by the IASB that apply to the financial statements do not impact the
group as they are either not relevant to the group’s activities or require accounting which is consistent with the group’s current
accounting policies.
A number of new standards and amendments to standards and interpretations have been issued but are not yet effective and in
some cases have not yet been adopted by the EU. The Directors do not expect that the adoption of these standards will have a
material impact on the financial statements of the Group in future periods.
(b) Consolidation
Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable
returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. In
assessing control, the Group takes into consideration potential voting rights. The acquisition date is the date on which control
is transferred to the acquirer. The financial statements of subsidiaries are included in the consolidated financial statements from
the date that control commences until the date that control ceases.
Transactions eliminated on consolidation
Intra-Group balances and transactions, and any unrealised income and expenses arising from intra-Group transactions, are
eliminated.
36
Surgical Innovations Group PLC Annual Report and Accounts 2019 Notes to the consolidated financial statements
Associates
Where the Group has the power to participate in (but not control) the financial and operating policy decisions of another
entity, it is classified as an associate. Associates are initially recognised in the consolidated statement of financial position
at cost. Subsequently associates are accounted for using the equity method, where the Group’s share of post-acquisition
profits and losses and other comprehensive income is recognised in the consolidated statement of profit and loss and other
comprehensive income (except for losses in excess of the Group’s investment in the associate unless there is an obligation to
make good those losses).
Profits and losses arising on transactions between the Group and its associates are recognised only to the extent of unrelated
investors’ interests in the associate. The investor’s share in the associate’s profits and losses resulting from these transactions is
eliminated against the carrying value of the associate.
Where there is objective evidence that the investment in an associate has been impaired the carrying amount of the investment
is tested for impairment in the same way as other non-financial assets.
(c) Business combinations
Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which
control is transferred to the Group.
The Group measures goodwill at the acquisition date as the fair value of the consideration transferred; less the fair values of
the identifiable assets acquired and liabilities assumed. When the excess is negative, a bargain purchase gain is recognised
immediately in profit or loss.
Costs related to the acquisition are expensed as incurred. Any contingent consideration payable is recognised at fair value at
the acquisition date. Any subsequent changes to the fair value of the contingent consideration classified as a financial liability are
recognised in profit or loss.
(d) Foreign currency translation
Transactions and balances
Foreign currency transactions are translated into the functional currency of Sterling using the exchange rates prevailing at the
dates of transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the
translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the
Consolidated statement of comprehensive income. The Group does use forward contracts in relation to foreign exchange but at
the year end had no outstanding contracts (2018: None).
(e) Property, plant and equipment
Property, plant and equipment are stated at the cost of acquisition less any provision for depreciation. Cost includes
expenditure that is directly attributable to the acquisition of the item.
The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances
indicate that the carrying value may not be recoverable.
The assets residual values, useful lives and depreciation methods are reviewed at each financial year end and adjusted where
the expected asset utilisation differs significantly from the depreciation method applied.
Depreciation is charged so as to write off the cost of property, plant and equipment less estimated residual value over their
estimated useful economic lives at the following rates:
Office and computer
equipment
Plant and machinery
Tooling
Placed equipment
Leasehold
improvements
–
–
–
–
–
10–33% per annum
10-20% per annum
10–20% per annum
33.3% per annum
Over the remaining term of
the lease
37
Surgical Innovations Group PLC Annual Report and Accounts 2019
Notes to the consolidated financial statements
(f) Intangible assets and goodwill
Goodwill
Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash-generating units and is not
amortised but is tested annually for impairment.
Amortisation
Amortisation is charged to the income statement on a straight-line basis over the estimated useful lives of intangible assets
unless such lives are indefinite. Goodwill is systematically tested for impairment at each balance sheet date. Other intangible
assets are amortised from the date they are available for use. The estimated useful lives are as follows:
Capitalised development costs
–
5-10 years
Single use product knowledge transfer –
5 years
Exclusive supplier agreements
–
1-3 years
Single use product knowledge transfer
Single use product knowledge transfer relates to manufacturing know how and expertise to benefit the Group’s business in the
medium term, not only by completing the product design but by enhancing production techniques. This will be amortised over
the life cycle of the product design.
Research and development
Expenditure on research activities is recognised as an expense in the period in which it is incurred. Development expenditure
arising from the Group’s development activities is capitalised and amortised over the life of the product only if the Group can
demonstrate the following:
• the technical feasibility of completing the intangible asset so it will be available for use or sale;
• the intention to complete the intangible asset and use or sell it;
• the ability to use or sell the intangible asset;
• that it is probable that the asset created will generate future economic benefits;
• there is the availability of adequate technical, financial and other resources to complete the development and to use or sell
the intangible asset; and
• the development cost of the asset can be measured reliably.
Where no intangible asset can be recognised, development expenditure is recognised as an expense in the period in which it
is incurred. Capitalised development costs are amortised over the life of the product within other operating expenses, which is
usually between five and ten years.
Intangible assets acquired on business combination
Intangible assets are recognised on business combinations if they are separable from the acquired entity or give rise to other
contractual/legal rights. The amounts ascribed to such intangibles are arrived at by using appropriate valuation techniques (see
section related to critical judgements and estimates).
(g) Impairment of non-financial assets (excluding inventories)
For goodwill an impairment review is carried out annually. Impairment reviews are carried out on other intangible assets and
plant and equipment where there are indicators of impairment. An asset’s carrying amount is written down immediately to its
recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount. The recoverable amount is
the higher of an asset’s fair value less costs to sell and its value in use.
(h) Inventories
Inventories are stated at the lower of cost (using weighted average) and net realisable value. Cost is the purchase cost, including
transport, for raw materials, together with a proportion of manufacturing overheads based on normal levels of activity, for
finished goods.
Net realisable value is based on estimated normal selling price, less further costs expected to be incurred to completion and
sale. Impairment provisions are made for obsolete, slow moving or defective items where appropriate. Such provisions are
based upon established future sales and historical experience.
38
Surgical Innovations Group PLC Annual Report and Accounts 2019 Notes to the consolidated financial statements
(i)Financial Instruments
Classification and measurement of IFRS9 has changed to a more principle based approach to classify financial assets as either
held at amortised cost, fair value through other comprehensive income (FVOCI) or fair value through profit or loss, dependent on
the business model and cash flow characteristics of the financial asset.
Financial Assets
The Group classifies its financial assets as subsequently measured at amortised cost under IFRS 9 if it meets both of the
following criteria:
–– Hold to collect business model test – The asset is held within a business model whose objective is to hold the financial
asset in order to collect contractual cash flows; and
–– Solely payments of principal and interest (SPPI) contractual cash flow characteristics test – The contractual terms of the
financial asset give rise to cash flows that are SPPI on the principal amount outstanding on a specified date.
Financial assets include:
• Trade receivables
• Amounts due from associate
• Cash and cash equivalents
Trade receivables
Trade receivables that do not contain a significant financing component and are recognised initially at fair value and thereafter at
amortised costs less provision for impairment.
The Group is required to judge when there is sufficient objective evidence to require the impairment of individual trade
receivables. It does this on a specific basis with reference to of the age of the relevant receivables, external evidence of the
credit status of the customer entity and the status of any disputed amounts. The Group will also review the previous payment
profile of the customer. In addition, the Group recognises lifetime expected credit losses (‘ECL’) for trade receivables which
are estimated based on the Group’s historical credit loss experience, adjusted for factors that are specific to the (‘ECL’) trade
receivables, general economic conditions and an assessment of both the current as well as the forecast direction of conditions
at the reporting date.
Amount due from associates
Amount due from associate is initially recognised at fair value and therefore at amortised costs less provisions for impairment.
Impairment is assessed in accordance with the expected credit loss model as required in accordance with the three stage
model in IFRS9.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, deposits held on call at banks and bank overdrafts. Bank overdrafts are
shown within borrowings in current liabilities on the balance sheet.
Financial Liabilities
Financial liabilities are classified as either:
–– Financial liabilities at amortised cost; or
–– Financial liabilities as at fair value through profit or loss (FVTPL).
All financial liabilities are measured at amortised cost and include:
•
•
•
Trade and other payables
Bank borrowings
Lease liabilities
Trade and other payables
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest
rate.
Lease liabilities
Refer to note (o)
Borrowings
Borrowings, which comprised bank loans are initially recognised at fair value, net of transaction costs incurred. Borrowings are
subsequently carried at amortised cost; any difference between the proceeds (net of transaction costs) and the redemption
value is recognised in the income statement over the period of the borrowings using the effective interest method.
39
Surgical Innovations Group PLC Annual Report and Accounts 2019 Notes to the consolidated financial statements
Fees paid on the arrangement of the loan facilities and revolving credit facilities are recognised as transaction costs over the life
of the agreement.
Borrowings are derecognised when it is extinguished which will be when the obligation in the contract is discharged, cancelled
or expired.
(j) Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown
in equity as a deduction, net of tax, from proceeds.
(k) Exceptional items
Exceptional items are costs or Group of costs which are non-recurring in nature which the Directors believe should be
separately identified in the financial statements to enable the reader to properly understand the underlying trading performance
of the business.
(l) Income tax
The charge for current tax is based on the results for the period as adjusted for items which are non-assessable or disallowed
and any adjustment to tax payable in respect of previous years. It is calculated using rates that have been enacted or
substantively enacted by the balance sheet date.
Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising from
differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax
basis used in the computation of taxable profit. In principle, deferred tax liabilities are recognised for all taxable temporary
differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available
against which deductible temporary differences can be utilised.
Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill (or
negative goodwill) or from the initial recognition (other than in business combination) of other assets and liabilities in a
transaction which affects neither the taxable profit nor the accounting profit.
Tax benefits are not recognised unless the tax positions are probable of being sustained. Once considered to be probable,
management reviews each material tax benefit to assess whether a deferred tax asset should be recognised, based on
the ability under tax statute to recover those tax losses and through the assessment of probable future taxable profits
against which those tax losses can be recovered.
Deferred tax is calculated at the rates that are enacted or substantively enacted at the balance sheet date. Deferred tax is
charged or credited in the Consolidated statement of comprehensive income, except when it relates to items credited or
charged directly to equity, in which case the deferred tax is also dealt with in equity.
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the
Group intends to settle its current tax assets and liabilities on a net basis. Information as to the calculation of the income
tax expense is included in note 7.
(m) Employee benefits
Pension obligations
The Group provides pension benefits to its employees through contributions to defined contribution Group personal pension
policies. The amounts charged to the Consolidated statement of comprehensive income are the contributions payable in the
period.
Share-based compensation
The Group issues equity settled share options to Directors and employees which are measured at fair value and recognised as
an expense in the Consolidated statement of comprehensive income with a corresponding increase in profit and loss reserve.
The fair value of the employee services received in exchange for the grant of the options is treated as remuneration in respect
of the individual. The total amount to be expensed over the vesting period is determined by reference to the fair value of the
options granted.
The fair values of these payments are measured at the dates of grant and are recognised over the period during which
employees become unconditionally entitled to the awards which is usually the vesting period. At each balance sheet date,
the Group revises its estimate of the number of options that are expected to vest. It recognises the impact of the revision to
original estimates, if any, in the Consolidated statement of comprehensive income, with a corresponding adjustment to retained
earnings.
40
Surgical Innovations Group PLC Annual Report and Accounts 2019 Notes to the consolidated financial statements
(n) Income recognition
Revenue comprises the fair value of the consideration received or receivable for the provision of goods in accordance with the
Group’s primary revenue stream as set out below. Revenue is shown net of Value Added Tax.
Sales of goods SI Brand/OEM/Distribution
Goods are recognised at the point of acceptance by the customer reflecting fulfilment of the sole performance obligation to the
customer. Typically SI Brand and OEM are contracted on FCA incoterms 2010 and therefore control passes at the point the
goods are shipped. In Distribution the goods have to be delivered in order for control to be passed to the customer.
Contracts with customers are typically fixed price based on agreed amounts and invoiced upon despatch of the goods in line
with the standard term and conditions of the Group. Typically the Group’s standard payment terms are 60 days at the date
of the invoice for SI Brand and OEM and 30 days at the date of invoice for Distribution. There are no long term contract or
financing arrangements in place across the Group.
Assurance type warranties are provided for manufactured goods up to two years from the date of sale. These warranties do not
give rise to a seperate performance obligation.
The Group is assessed operationally and financially under three revenue streams. The Directors do not therefore consider there
to be a lower relevant level of revenue disaggregation than that disclosed in Note 2, Segmental Reporting. There are material
concentrations of revenue by customers, £1,226,000 (11.4%) of the Group’s revenue was depended on one distributor in the SI
Brand segment (2018: £1,177,000 (10.7%) ).
Provision of services - Precision Engineering
The Group has a limited number of short term projects that relate to precision engineering. Typically within each contract
specific milestones are included for defined phases of work such as the design and build of instruments. Each phase
is considered to be a distinct performance obligation. Once each milestone has been achieved and, as such each
performance obligation satisfied, the Group invoices the customer. Standard payment terms are typically 90 days at the
date of invoice.
Revenue is typically recognised for each performance obligation over time using the output method. This is because the
designs and instruments created have no alternative use for the Group. Contracts would require payment to be received
for the time and effort spent by the Group on progressing the contracts in the event of the customer cancelling the
contract prior to completion for any reason other than the Group’s failure to perform its obligations under the contract.
There are no outstanding performance obligations at the year end (2018: None).
Interest income
Interest income is recognised using the effective interest rate method.
Other income
Other income relates to amounts recorded in relation to compensation for the termination of a supplier agreement. The
conditions of the termination agreed with the supplier provide ongoing obligations to the Group for the total amount
of compensation. On this basis the income received for compensation is spread over the period to which the ongoing
obligations relate. Other income not yet recognised in profit and loss is included within deferred income.
(o) Leases
As described in note 1, the Group has applied IFRS 16 using the modified retrospective approach with effect from 1 January
2019 and therefore comparative information has not been restated.
The portfolio of leases mainly consists of property along with vehicle leases, plant and IT equipment. Lease terms are negotiated
on an individual basis and contain a wide range of different terms and conditions. The lease arrangements do not impose any
covenants, but leased assets may not be used as security for borrowing purposes.
Accounting policy applicable before 1 January 2019:
Rentals applicable to operating leases where substantially all of the benefits and risks of ownership do not transfer to the lessee
are charged to the income statement on a straight line basis over the period of the lease.
41
Surgical Innovations Group PLC Annual Report and Accounts 2019 Notes to the consolidated financial statements
Accounting policy applicable from 1 January 2019:
For any new contracts entered into on or after 1 January 2019, the Group considers whether a contract is, or contains a lease.
A lease is defined as ‘a contract, or part of a contract, that conveys the right to use an asset (the underlying asset) for a period
of time in exchange for consideration’. To apply this definition the Group assesses whether the contract meets the following
criteria:
• The contract contains an identified asset, which is either explicitly identified in the contract or implicitly specified by being
identified at the time the asset is made available to the Group
• The Group has the right to obtain substantially all of the economic benefits from use of the identified asset throughout the
period of use, considering its rights within the defined scope of the contract
• The Group has the right to direct the use of the identified asset throughout the period of use.
At the lease commencement date, the Group recognises the lease as a right-of-use asset and a corresponding liability on the
statement of financial position.
The right-of-use asset is measured at cost, which is made up of the initial measurement of the lease liability, any initial direct
costs incurred by the Group, the amount of any provision recognised where the Group is contractually required to dismantle,
remove or restore the leased asset and any lease payments made in advance of the lease commencement date (net of any
incentives received).
The Group depreciates the right-of-use assets on a straight line basis from the lease commencement date to the earlier of the
end of the useful life of the right-of-use asset or the end of the lease term. The Group also assesses the right-of-use asset for
impairment when such indicators exist.
At the commencement date, the Group measures the lease liability at the present value of the lease payments unpaid at that
date, discounted using the interest rate implicit in the lease if that rate is readily available, or the lease specific incremental
borrowing rate. Subsequent to initial measurement, the liability will be reduced for payments made and increased for interest.
Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the income statement
over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each
period. The liability is remeasured to reflect any reassessment or modification, or if there are changes in in-substance fixed
payments. When the liability is remeasured, the corresponding adjustment is reflected in the right-of-use asset, or the income
statement if the right- of-use asset is already reduced to zero.
For low value and short term leases the Group decided to apply the recognition exemptions to short term leases of vehicles
and low value IT equipment. Payments associated with short term leases and leases of low-value assets are recognised on a
straight line basis as an expense in the income statement. Short term leases are leases with a term of 12 months or less. Low-
value assets comprise IT and copying equipment with a value of less than £5,000.
The overall financial results in the year ending 31 December 2019 are adversely impacted by £35,000 due to the front end
loading of interest compared to smooth operating lease rental expenses.
(p) Significant management judgement in applying accounting policies
The following are significant management judgements made in applying the accounting policies of the Group that have the
most significant effect on the financial statements. Critical estimation uncertainties are described in note (q).
Going concern
It is the responsibility of management to make an assessment of whether the going concern presumption is appropriate or not
when preparing financial statements. Particulary in times of economic difficulties management have to make judgements on
various uncertain future outcomes of events or conditions, consideration when determing whether or not the Group can prepare
its financial statements on the going concern bases:
The degree of uncertainty associated with the outcome of Coronavirus increases significantly the further into the future.
Management will assess all available information and will continually assess the situation.
The nature and condition of the Group and the degree to which its is affected by external factors affect the judgement regarding
the outcome of Coronavirus. Key end user markets is now becoming more apparent, as hospitals rightly free up capacity
to cope with seriously ill patients. These necessary actions will inevitably lead to delays and cancelation of routine surgical
procedures such as those announced in the NHS over the last week. Management have devised a series of mitigating actions,
designed to preserve cash resources, maintain delivery of essential products to our customers and distributors, and protect our
workforce from the health risks and economic impact.
Any judgement anout the future is based on information at the time at which the judgement is made. Subsequent events may
result in outcomes that are inconisistent with judgements that were reasonable at the time they were made. Management will
continually assess the information available at the time of publication.
Internally generated research and development assets
Management monitors the progress of internal research and development projects using the accounting system and through
timesheet records. Judgement is required in determining and distinguishing the research phase from the development
42
Surgical Innovations Group PLC Annual Report and Accounts 2019 Notes to the consolidated financial statements
phase. Research costs are incurred during the concept phase of the project which is fully expensed in the period. Prior to
the commencement of the product development phase, it is Group policy that capital expenditure approval is obtained from
the appropriate level; this enables the Group to ensure that projects are financially viable after taking account of the cost of
development. Costs incurred subsequent to this are recognised as an intangible asset when all relevant criteria are met.
Management performs an impairment review of capitalised development annually. The impairment review includes a significant
degree of judgement, in particular determining the revenue streams relevant to a particular project. Many of the Group’s
products operate in conjunction with each other, particularly where the Resposable® concept applies. Management have
reviewed the capitalised development and given the resource contraints, complexity of a device and regulatory challenges
particually in relation to the MDR transition an impairment of £628,000 (2018:2,000) has been recognised as at 31 December
2019, any further impairment identified in future periods could have a material impact on the Group’s results.
(q) Estimation uncertainty
When preparing the financial statements management determines a number of estimates and assumptions about recognition and
measurement of assets, liabilities, income and expenses. The actual results may differ from the estimates and assumptions made
by the Group and will seldom equal the estimated results. Information about significant estimates and assumptions that have the
most significant effect on recognition and measurement of assets, liabilities, income and expenses are discussed below.
Inventories
As described in note (g) management performs an impairment review on the net realisable value of inventories. Provisions are made
for obsolete, slow moving or defective items where appropriate. Such provisions are based upon established future sales and
historical experience.
Impairment of Intangibles assets
As described in note (g) previously, the Group is required to test, on an annual basis, whether goodwill is impaired. The recoverable
amount is determined based on a value in use calculation for the one cash generating unit that has goodwill. The use of this
method requires the estimation of future cash flows and the determination of a discount rate in order to calculate the present value
of the cash flows.
Future cash flows are estimated based on operating margins using past experience and future expectations in the light of
anticipated economic and market conditions. Discount rates are based on the Group’s WACC adjusted to reflect management’s
assessment of specific risks related to the cash generating unit. Growth rates beyond the first five years are based on economic
data pertaining to the relevant region, which is the UK. The discount rate and growth rates used are disclosed in note 10 to the
financial statements.
Lease accounting – incremental borrowing rate
IFRS 16 “Leases” requires lease payments to be discounted using the lessee’s incremental borrowing rate. The Group’s
incremental borrowing rate, as at the date of adoption of IFRS 16, has been based on 6% which is in the range for longer term
funding.
(r) Equity
Equity includes the elements listed below:
•
•
• of expenses of share issues;
•
“Share capital” represents the nominal value of equity shares;
“Share premium” represents the excess over nominal value of the fair value of consideration received for equity shares, net
“Capital reserve” represents the excess over nominal value of the fair value consideration attributed to equity shares issued
in part settlement for subsidiary company shares acquired;
“Merger reserve” represents the excess over the nominal value of the fair value consideration attributed to equity shares
issued as part of an Acquisition; and
“Retained earnings” represents the accumulated profits and losses of the Group less dividends paid.
•
•
(s) Post balance sheet event
In the event a post balance sheet event occurs, which could be favourable or unfavourable, that occurs between the end of the
reporting period and the date that the financial statements are authorised for issue. The Group considers whether or not the
conditions existed at the reporting period or arose after the reporting period.
Adjusting events are recognised after the reporting period that provides further evidence of conditions that existed at the end
of the reporting period, including an event that indicates that the going concern assumption is not appropriate in relation to the
Group or its subsidiaries.
Non-adjusting event are recognised after the reporting period that is indicative of a condition that arose after the end of the
reporting period. Further details are noted in disclosure note 21.
43
Surgical Innovations Group PLC Annual Report and Accounts 2019 Notes to the consolidated financial statements
2.Segmental Reporting (continued)
Information reported to the Board, as Chief Operating Decision Makers,and for the purpose of assessing performance and making
investment decisions is organised into three operating segments. The Group’s operating segments under IFRS 8 are as follows:
SI Brand
OEM
-
-
Distribution
-
the research, development, manufacture and distribution of SI branded minimally invasive devices
the research, development, manufacture and distribution of minimally invasive devices for third party
medical device companies through either own label or co-branding. This now incorporates
Precision Engineering, the research, development, manufacture and sale of minimally invasive
technology products for precision engineering applications
distribution of specialist medical products sold through Elemental Healthcare Ltd
The measure of profit or loss for each reportable segment is gross margin less amortisation of product development costs.
Assets and working capital are monitored on a Group basis, with no separate disclosure of asset by segment made in the
management accounts, and hence no separate asset disclosure is provided here. The following segmental analysis has been
produced to provide a reconciliation between the information used by the chief operating decision maker within the business
and the information as it is presented under IFRS.
Year ended 31 December 2019
Revenue
Result
Segment result
Unallocated expenses
(Loss) from operations
Finance income
Finance costs
(Loss) before taxation
Tax charge
(Loss) for the year
SI Brand
£’000
Distribution
£’000
OEM
£’000
Total*
£’000
5,840
3,101
1,792
10,733
1,510
(792)
720
1,438
(3,977)
(2,439)
5
(162)
(2,596)
23
(2,619)
*There were no revenues transactions between the segments during the year
Included within the segment/operating results are the following significant non-cash items:
Year ended 31 December 2019
Amortisation of intangible assets
Impairment of intangible assets
Additions to intangibles
Additions to tangibles
SI Brand
£’000
Distribution
£’000
OEM
£’000
291
628
317
189
351
1,625
-
10
-
-
-
-
Total
£’000
642
2,253
317
199
Unallocated expenses for 2019 include sales and marketing costs (£293,000), research and development costs
(£922,000), central overheads (£1,004,000), Direct (Elemental Healthcare) sales & marketing overheads (£1,427,000),
share based payments (£188,000), exceptionals (£184,000), less Right of Use (£41,000).
Year ended 31 December 2018
Revenue
Result
Segment result
Unallocated expenses
Profit from operations
Finance income
Finance costs
Profit before taxation
Tax credit
Profit for the year
*There were no revenues transactions between the segments during the year
SI Brand
£’000
Distribution
£’000
OEM
£’000
Total*
£’000
6,088
3,037
1,844
10,969
1,733
1,059
737
3,529
(2,909)
620
-
(105)
515
210
725
44
Surgical Innovations Group PLC Annual Report and Accounts 2019
Included within the segment results are the following items:
Year ended 31 December 2018
Amortisation of intangible assets
Additions to intangibles
Additions to tangibles
Notes to the consolidated financial statements
SI Brand
£’000
Distribution
£’000
OEM
£’000
Total
£’000
230
398
65
788
125
1,143
-
23
-
-
398
88
Unallocated expenses for 2018 include sales and marketing costs (£260,000), research and development costs
(£618,000), central overheads (£908,000), Direct (Elemental Healthcare) sales & marketing overheads (£1,278,000), share
based payments (£120,000) less Other Income (£275,000).
Disaggregation of revenue
The Group has disaggregatated revenues in the following table:
Year ended 31 December 2019
United Kingdom
Europe
US
Rest of World
APAC
Year ended 31 December 2018
United Kingdom
Europe
US
Rest of World
APAC
SI Brand
£’000
Distribution
£’000
OEM
£’000
1,613
1,283
1,852
636
456
3,101
1,497
-
-
-
-
-
295
-
-
Total
£’000
6,211
1,283
2,147
636
456
5,840
3,101
1,792
10,733
SI Brand
£’000
Distribution
£’000
OEM
£’000
1,692
1,347
1,704
560
785
3,037
1,426
-
-
-
-
-
418
-
-
Total
£’000
6,155
1,347
2,122
560
785
6,088
3,037
1,844
10,969
Revenues are allocated geographically on the basis of where revenues were received from and not from the ultimate final
destination of use. During 2019 £1,226,000 (11.4%) of the Group’s revenue depended on one distributor in the SI Brand segment
(2018: £1,177,000 (10.7%)).
Sales of goods were £10,374,000 (2018: £10,325,000) and sales relating to services in the UK were £359,000 (2018: £644,000).
3. Operating profit
The operating profit for the year is stated after charging/(crediting):
Depreciation of owned assets
Amortisation and impairment of capitalised development costs
Amortisation of exclusive supplier agreements
Depreciation of Right of use assets
Impairment of goodwill
Research and development costs – non capitalised expenditure
Foreign exchange (losses) / gains
Auditor’s remuneration:
– fees payable to the Company’s auditor for the audit of the Company’s annual financial statements
– fees payable to the Company’s auditor for the audit of the subsidiary undertakings
– fees payable to the Company’s auditor for the non audit fees relating to tax services
Operating lease rentals:
– land and buildings
– low value leases
– Expiring leases less than 12 months
Exceptional items
2019
£’000
415
919
351
203
1,625
922
(56)
24
31
9
179
14
28
184
2018
£’000
481
355
788
-
-
618
37
19
29
9
178
-
-
-
Exceptional items within 2019 relate to termination payments made to a former Director of £159,000 (inclusive of NI), £3,000
legal fees in relation to termination payments, and abortive acquisition costs of £22,000. These items are not representative of
underlying operations and will not be expected to be incurred again.
45
Surgical Innovations Group PLC Annual Report and Accounts 2019 Other operating expenses comprised:
Notes to the consolidated financial statements
Sales & marketing
Direct (Elemental Healthcare) sales & marketing overheads
Administrative expenses
Research & Development costs (non capitalised expenditure)
Exceptionals
Share based payments
Amortisation and impairment
Other Income comprised:
Novadaq
2019
£’000
293
1,411
879
922
184
188
2,895
6,772
2019
£’000
-
2018
£’000
260
1,278
908
618
-
120
1,143
4,327
2018
£’000
275
The Group received a £300k settlement from Novadaq in December 2017. This represented the expected margin for 12
months of selling their products. Due to the lock out period the Group recognised this compensation payment over the 12
months from December 2017 to November 2018.
4. Employees and Directors’ emoluments
The average monthly number of employees (including Executive Directors) employed by the Group during the year was as follows:
Directors
Production
Development
Sales
Administration
The costs incurred in respect of these employees were:
Wages and salaries
Social security costs
Pension costs
2019
Number
2018
Number
3
34
17
15
14
83
4
28
18
14
12
76
2019
£’000
2018
£’000
3,043
2,537
306
92
241
74
3,441
2,852
46
Surgical Innovations Group PLC Annual Report and Accounts 2019
Directors’ emoluments (continued)
Details of Directors’ emoluments for the year are as follows:
Notes to the consolidated financial statements
Salary
and fees
2019
£’000
Bonus
2019
£’000
Benefits
2019
£’000
Compensation
for loss of
office
2019
£’000
Total
emoluments
2019
£’000
Total
emoluments
2018
£’000
Pension
contributions
2019
£’000
Pension
contributions
2018
£’000
Executive
M Ross
A Power
D Marsh
Non-executive
M J McMahon
P Hardy
A Taylor
N F Rogers
Total
63
152
173
20
20
20
49
497
-
-
-
-
-
-
-
-
10
12
12
-
-
-
-
143
-
-
-
-
-
-
216
164
185
20
20
20
49
141
158
158
20
20
20
60
14
1
1
-
-
-
-
12
3
3
-
-
-
-
34
143
674
577
16
18
Benefits received consist of the provision of motor cars and related expenses, and private health insurance. Pension contributions represent
payments made to defined contribution schemes. Non-executive Directors are not entitled to retirement benefits. Remuneration of the Non-
executive Directors is determined by the Board.
Directors’ share options
Details of the share options held by Directors serving at 31 December 2019 are as follows:
At 1January 2019
Exercised during
year
Granted during
the year
At 31 December
2019
Option price
Date granted
N Rogers
M McMahon
A Power
D Marsh
1,750,000
1,750,000
6,000,000
6,000,000
-
-
-
-
1.
Share options are exercisable between three and ten years from the date of the grant.
-
-
-
-
1,750,000
1,750,000
6,000,000
6,000,000
3.25p October 20171
3.25p October 20171
3.25p October 20171
3.25p October 20171
The market price of the Company’s shares at the end of the financial year was 2.05p (2018: 2.80p) and the range of market
prices during the year was between 1.90p (2018: 2.675p) and 4.15p (2018: 4.05p).
Key management including Non-executive Directors:
Salaries
Social security costs
Pension costs
Exceptional cost
Share-based payments
Key management comprises of all Board Directors.
47
2019
£’000
530
67
15
143
133
888
2018
£’000
502
50
18
-
61
631
Surgical Innovations Group PLC Annual Report and Accounts 2019 5. Finance costs
On finance leases
On bank borrowing
Total
6. Finance income
Interest received
7. Taxation
Current tax (credit):
Prior year adjustment
Total current tax (credit)
Deferred tax (credit)/charge:
Origination and reversal of temporary timing differences
Changes in tax rates
Reversal/(previously unrecognised) deferred tax
Deferred tax charge / (credit) during the year
Total tax charge / (credit)
Notes to the consolidated financial statements
2019
£’000
86
76
162
2019
£’000
5
2019
£’000
(1)
-
(1)
(86)
-
110
24
23
2018
£’000
105
-
105
2018
£’000
-
2018
£’000
(36)
5
(31)
(150)
-
(29)
(179)
(210)
Factors affecting the tax charge for the year
The taxation assessed for the year is lower (2018: lower) than the standard rate of Corporation tax in the UK at 19%
(2018: 19%). The differences are explained as follows:
(Loss) / Profit on ordinary activities before taxation
Corporation tax at standard rate of 19% (2018: 19%)
Effects of:
2019
£’000
(2,596)
(493)
2018
£’000
515
98
Net impact of research and development enhanced expenditure
(178)
(237)
Expenses not tax deductible
Exercise of share options*
Trading losses not recognised
Deferred tax asset reversal
Total tax charge / (credit) for the year
*Relief on EMI shares
Deferred taxation
The movement in the deferred taxation (liability)/asset during the year was:
Balance brought forward-(liability)/asset
Consolidated statement of comprehensive income movement during the year
Balance carried forward - (liability)/asset
355
(32)
261
110
23
44
-
(86)
(115)
(210)
2019
£’000
(7)
(24)
(31)
2018
£’000
(186)
179
(7)
48
Surgical Innovations Group PLC Annual Report and Accounts 2019
The deferred taxation calculated in the financial statements at 17% (2018: 17%) is set out below:
Notes to the consolidated financial statements
Trade losses
Plant and Equipment
Capitalised development expenditure
Share options
Deferred tax asset
Intangibles
Net deferred tax liability
2019
£’000
(80)
15
70
(5)
-
31
31
2018
£’000
190)
26
73
-
(91)
98
7
At the balance sheet date, the Group has unused tax losses of £21.3 million (2018: £21.1 million) available for offset
against certain future profits. This represents an unrecognised deferred tax asset of £3.4m (2018: £3.4m). The timing
differences has given rise to a deferred tax liability of £220,000 (2018 DTL: £197,000) in addition a deferred tax asset
relating to brought forward losses has been used to offset this liability. No deferred tax asset has been recognised in
respect of the remaining £21.3 million (2018: £21.1 million) due to the future taxable losses expected by the Group. The
unsused tax losses do not expire and can be carried forward indefinitely as long as trade continues.
8. Earnings per ordinary share
Basic earnings per ordinary share
The calculation of basic earnings per ordinary share for the year ended 31 December 2019 was based upon the (loss)/
profit attributable to ordinary shareholders of (£2,619,000) (2018: £725,000) and a weighted average number of ordinary
shares outstanding for the year ended 31 December 2019 of 789,845,629 (2018: 782,566,177).
Diluted earnings per ordinary share
The calculation of diluted earnings per ordinary share for the year ended 31 December 2019 was based upon the (loss)/
profit attributable to ordinary shareholders of (£2,619,000) (2018: £725,000) and a weighted average number of ordinary
shares outstanding for the year ended 31 December 2019 of 891,313,476 (2018: 829,578,416). The anti dilutive effect of
unexcercised shares options has not been taken into account and therefore the diluted earnings per share is equal to the
basic earning per share.
Adjusted earnings per ordinary share
The calculation of adjusted earnings per ordinary share for the year ended 31 December 2019 was based upon the
adjusted profit attributable to ordinary shareholders (profit before exceptional and amortisations and impairment costs
relating to the acquisition of Elemental Heathcare, impairment of capitalised development costs and share based
payments) of £355,000 (2018: £1,633,000) and a weighted average number of ordinary shares outstanding for the year
ended 31 December 2019 of 789,845,629 (2018: 782,566,177).
No. of shares used in calculation of earnings per ordinary share (’000s)
Basic earnings per share
Dilutive effect of unexercised share options
Diluted earnings per share
2019
No. of shares
2018
No. of shares
789,846
101,467
891,313
782,566
47,012
829,578
49
Surgical Innovations Group PLC Annual Report and Accounts 2019 9. Property, plant and equipment
Notes to the consolidated financial statements
Plant and
machinery
£’000
Office and
computer
equipment
£’000
Placed
equipment
£’000
Improvements
to leasehold
property
£’000
Right of
Use assets
£’000
Cost
At 1 January 2018
Additions
Disposals
Tooling
£’000
1,594
19
-
3,669
1,079
456
15
(3)
51
-
-
-
At 1 January 2019
1,613
3,681
1,130
456
Initial recognition as at 1 January
2019
Additions
Disposals
Accumulated depreciation
At 1 January 2018
Charge for the year
Disposals
At 1 January 2019
Charge for the year
Disposals
40
-
95
(9)
30
-
-
-
1,653
3,767
1,160
456
1,337
2,724
1,010
456
81
-
317
(2)
54
-
-
-
1,418
3,039
1,064
456
77
-
277
(9)
46
-
-
-
At 31 December 2019
1,495
3,307
1,110
456
Net Book amount
At 31 December 2019
At 31 December 2018
At 1 January 2018
Security
158
195
257
460
642
945
50
66
69
-
-
-
Total
£’000
7,226
88
(3)
7,311
1,394
249
(9)
-
-
-
-
1,394
50
-
1,444
8,945
-
-
-
-
203
-
203
1,241
-
-
5,898
481
(2)
6,377
618
(9)
6,986
1,959
934
1,328
428
3
-
431
34
-
465
371
29
-
400
15
-
415
50
31
57
At 31 December 2019 and at 31 December 2018, the assets of the Group are subject to a floating charge debenture in
favour of the Group’s banking facilities. At the 31 December 2019 there was no drawdown (2018: £nil) on the rolling credit
facility agreement therefore no liability was held at this point in time.
50
Surgical Innovations Group PLC Annual Report and Accounts 2019 10. Intangible assets
Cost
At 1 January 2018
Additions
At 1 January 2019
Additions
At 31 December 2019
Accumulated amortisation
At 1 January 2018
Charge for the year
Impairment provision
At 1 January 2019
Charge for the year
Impairment provision
At 31 December 2019
Carrying amount
At 31 December 2019
At 31 December 2018
At 1 January 2018
Notes to the consolidated financial statements
Capitalised
development
costs
£’000
Single use
product
knowledge
transfer
£’000
Exclusive
Supplier
Agreements
£’000
Goodwill
£’000
Total
£’000
12,701
398
13,099
317
13,416
(11,471)
(353)
(2)
(11,826)
(291)
(403)
(12,520)
896
1,273
1,230
225
-
225
-
225
-
-
-
-
-
(225)
(225)
-
225
225
8,180
1,799
22,905
-
8,180
-
8,180
-
-
-
-
-
(1,625)
(1,625)
6,555
8,180
8,180
-
398
1,799
23,303
-
317
1,799
23,620
(498)
(788)
-
(11,969)
(1,141)
(2)
(1,286)
(13,112)
(351)
-
(642)
(2,253)
(1,637)
(16,007)
162
513
1,301
7,613
10,191
10,936
Goodwill and intangibles are allocated to the cash generating unit (CGU) that is expected to benefit from the use of the
asset.
Capitlaised development costs
Capitalised development costs represent expenditure incurred in developing new products that fulfil the requirements met for
capitalisation as set out in paragraph 57 of IAS38. These costs are amortised over the future commercial life of the product,
commencing on the sale of the first commercial item, up to a maximum product life cycle of ten years, and taking account of
expected market conditions and penetration.
An impairment review is carried out annually, due to the complexity of a device and regulatory challenges particularly in relation
to the Medical Device Regulation (MDR) transition an impairment of £0.24m has been recognised.
Single use product knowledge transfer
Single use product knowledge transfer relates to the acquisition and of the single use laparoscopic instrumentation products
of Surgical Dynamics Ltd in 2016. Additional expenditure of £168,000 in relation to this has been included in Capitalised
development costs.
An impairment review is carried out annually, due to the constraints on funding the project was a low priority during 2019. With
further expenditure on hold a subsequent review was taken and concluded that, with the continued pressure on resources
and no likelihood of making significant progress without the required investment, the project has been closed. The impairment
for this project combining the Single Use product knowledge transfer and additional expenditure on capitalised development
expenditure is £0.40m.
Goodwill
The Group tests goodwill at each reporting date for impairment and whenever events or changes in circumstances indicate
that the carrying value may not be recoverable. The recoverable amount of a cash generating unit (CGU) is determined based
on value in use calculations. These calculations use cash flow projections based on five year financial budgets approved by
management. Cash flows beyond the five year period are extrapolated using estimated long term growth rates.
An impairment review is carried out annually for goodwill. Goodwill arose on the acquisition of Elemental Healthcare Limited in
2017 and is related to both the Distribution and SI Brand segments of the Group. Elemental Healthcare Limited is considered
to be a separate CGU of the Group whose recoverable amount has been calculated on a value in use basis by reference to
discounted future cash flows over a five year period plus a terminal value. Principal assumptions underlying this calculation are
the growth rate into perpetuity of 1.5% (2018:2%) and a pre-tax discount rate of 15% (2018:15%) applied to anticipated cash
flows.
51
Surgical Innovations Group PLC Annual Report and Accounts 2019 In addition the value in use calculation assumes a gross profit margin of 40.6% (2018:48.8%) using past experience of sales
made and future sales that were expected at the reporting date based on anticipated market conditions.
Notes to the consolidated financial statements
The trading environment in the UK market became more challenging during 2019, due to a progressive tightening of NHS
funding for elective surgery, and the extended time taken to rebuild the distribution sales of Cellis branded products, including
those due for imminent launch which have been delayed. Accordingly, the directors have adopted a cautious approach to
forecasting future net inflows for this CGU.
On this basis, the recoverable amount of the cash-generating unit does not exceed its carrying value and in view of this excess,
the Directors consider the impairment calculation to be unduly sensitive to changes to the above assumptions, and are of the
opinion that a provision for impairment is required of £1.63m.
Subsequent to the year end, the potential effects of the Covid-19 outbreak and consequential impact on the availability of NHS
resources, may have a further and more significant impact on the directors view of short to medium term cash flows. This has
not been quantified, and there is not yet sufficient experience to make such a judgement. Nevertheless, it is recognised by the
directors that further impairment is likely to be necessary in the following year, therefore a non-adjusting post balance sheet
event has been recognised (note 21).
In the longer term, the directors remain confident that: (1) Elemental Healthcare has a robust role as a key vendor to the NHS
for a range of elective procedures; (2) gains in market share are likely as a result of the environmental and cost advantages
of key products; and (3) a growing backlog of elective procedures will be adequately funded and carried out once the
current challenges in the NHS have been overcome. Whilst it will not be appropriate in future to re-instate goodwill that has
been impaired as a result of current market conditions, the directors continue to place significant value on the business and
operations of Elemental as an integral part of the group strategy.
11. Inventories
Raw materials and work in progress
Finished goods
Net Inventory
2019
£’000
2018
£’000
1,246
1,123
1,679
960
2,925
2,083
Included in the analysis above are impairment provisions against inventory amounting to £1,461,000 (2018: £1,282,000),
which represents 33.3% (2018: 38.1%) of gross inventory.
In 2019 a total of £6,082,000 of inventories was included in profit and loss as an expense within cost of sales (2018:
£6,097,000). Cost of sales included a provision release of £5,000 (2018: £232,000 provision release). There was no
exceptional charge in the Administrative expenses relating to relating to the write off of specific inventories for which no
future sale is likely and also the creation of a provision for all other inventory based upon product age (2018: £nil).
Inventories are pledged as securities for bank facilities.
12. Trade and other receivables
Falling due in less than one year
Trade receivables
Prepayments
Amount due from associate*
Other debtors
2019
£’000
2018
£’000
1,945
2,584
330
173
84
348
79
29
2,532
3,040
Of the current trade receivables, £905,014 relates to the top three customers (2018: £957,601). The carrying value of
trade receivables is considered to be a reasonable approximation of fair value.
*Amount due from associate represents development expenses incurred in collaboration with an associated Company
Illuminno Ltd of which Surgical Innovations Group Plc holds 33% shareholding. The value of the investment is £33 and
is not considered material to the Group. In 2020, an agreement, subject to contract, will allow all the costs incurred
via Illuminno Ltd to be re-imbursed to the Group and once legally binding, the costs in Illuminno Ltd will be transferred
on the balance sheet as intangible product development costs. Provided that these are supportable to be amortised
against from future income, the directors are therefore satisfied that the amount due from the associated company at 31
December 2019 is recoverable.
52
Surgical Innovations Group PLC Annual Report and Accounts 2019
13. Borrowings
Bank Loan
Current liabilities
Non-current liabilities
Lease liabilities
Current liabilities
Non-current liabilities
Bank loan
Notes to the consolidated financial statements
2019
£’000
297
515
190
1,086
2018
£’000
287
1,820
-
-
2,088
2,107
The sterling bank loan provided by Yorkshire Bank on 1 August 2017 for a five year term was split into two loan agreements
A and B. Loan A of £1.5m is subject to quarterly payments of £0.075m which commenced on 31 October 2017, totaling
repayments £0.3m per annum at an interest rate of LIBOR plus 3% per annum. Loan B of £1m is interest only at a rate of
LIBOR plus 3.5% per annum with a repayment in full by the termination date of 31 July 2022. On 31 December 2019 the
remaining balance of the term loans was £0.812m. The bank has made available a Revolving Credit Facility (RCF) of up to
£0.5m for working capital and other purposes.
The RCF and loan agreements are subject to compliance with financial covenants which measure cash flow to debt service and
EBITDA, interest cover and leverage. If the RCF is drawndown the rate of interest applicable to each loan for its interest period
will be LIBOR plus 2.8% per annum and it will be secured by a floating charge over the assets of the Group. At 31 December
2019, no amount was drawndown (2018: £nil).
During 2019 the Board elected to repay £1.0m of term Loan B in advance of the due date, from available cash resources.
Changes in liabilities arising from financing activities
At 1 January 2019
Cash flows
Transfer between non-current and current
Interest accruing in the period
At 31 December 2019
Non-current
loans and
borrowings
Current
loans and
borrowings
Obligations
under
finance
leases
1,820
(1,000)
(300)
(5)
515
287
(300)
300
10
297
-
-
-
-
-
Total
2,107
(1,300)
-
5
812
In March 2020, the funder agreed to convert the existing loan with a three year committed Revolving Credit Facility (“RCF”)
with additional headroom, a facility limit of £1m, and less stringent covenants than the current facilities. This agreement was
made with credit approval and full knowledge of the considerable challenge presented by Covid-19. In the event, the company
decided not to proceed with this change, and instead agreed with the funder to accept a temporary waiver of all covenants
described below at 31 March 2020, and relief from the capital repayment of £75,000 due in March 2020.
In respect of the borrowing facilities in place at the reporting date, the group is required to comply with the following financial
covenants at each quarter end in respect of the prior 12 month period:
- Cash flow to debt service ratio of no less than 1.25:1
- Interest cover ratio of no less than 4:1
- Leverage ratio of no greater than 2:1
14. Financial instruments
The financial assets of the Group are categorised as follows:
At amortised cost
Trade receivables
Amount due from associate
Cash and cash equivalents
53
2019
£’000
1,945
173
1,282
3,400
2018
£’000
2,584
79
2,491
5,154
Surgical Innovations Group PLC Annual Report and Accounts 2019 The financial assets of the Group are categorised as follows:
Notes to the consolidated financial statements
At amortised cost
Trade payables
Other payables
Lease liabilities-Current
Lease liabilities -Non-current
Bank borrowings-Current
Bank borrowings-Non current
Trade and other payables
Trade payables
Corporation tax payable
Other tax and social security
Other payables
2019
£’000
2018
£’000
1,026
1,083
319
190
1,086
297
515
3,433
317
-
-
287
1,820
3,507
2019
£’000
2018
£’000
1,026
1,083
-
173
319
-
156
317
1,518
1,556
The Group and Company’s financial liabilities have contractual maturities (including interest payments where applicable) which
are summarised below.
As at 31 December 2019
Trade payables
Other payables
Lease liabilities-Current
Lease liabilities -Non-current
Bank borrowings-Current
Bank borrowings-Non current
As at 31 December 2018
Trade payables
Other payables
Bank borrowings-Current
Bank borrowings-Non current
Amounts due in
less than 1 year
£’000
Amounts due in
less than 2-5
years
£’000
Amounts due in
less than 5-10
years
£’000
Total financial
liabilities
£’000
1,026
319
250
-
328
-
1,923
-
-
-
785
-
546
1,331
-
-
-
547
-
-
547
1,026
319
250
1,332
328
546
3,801
Amounts due in less
than 2-5
years time
£’000
Total financial
liabilities
£’000
Amounts due in less
than 1 year
£’000
1,083
317
382
-
1,782
-
-
-
2,054
2,054
1,083
317
382
2,054
3,836
54
Surgical Innovations Group PLC Annual Report and Accounts 2019 Notes to the consolidated financial statements
14. Financial instruments (continued)
Financial risk management objectives and policies
Overview
The Group has exposure to the following risks arising from financial instruments:
• Foreign currency sensitivity;
• credit risk;
•
•
liquidity risk; and
interest rate risk.
The Group is exposed to market risk through its use of financial instruments. The Group’s risk management is coordinated by
the Directors who focus actively on securing the Group’s short to medium-term cash flows through regular review of all the
operating activities of the business. Long-term financial investments are managed to generate lasting returns. The Group does
not actively engage in the trading of financial assets for speculative purposes nor does it write options. The most significant
financial risks to which the Group is exposed are described in the following sections.
Foreign currency sensitivity
Exposures to currency exchange rates arise from the Group’s overseas sales and purchases, most of which are denominated in
Euros and Dollars. To mitigate the Group’s exposure to foreign currency risk, cash flows in Euros and Dollars are monitored on
an ongoing basis. Foreign currency denominated financial assets and liabilities are set out below:
Financial assets
Financial liabilities
Short-term exposure
2019
€’000
249
(146)
103
2018
€’000
261
(175)
86
2019
$’000
2018
$’000
825
1,026
(374)
(669)
451
357
The Group has exposure to the movements in the exchange rates in the Euro and Dollar at 31 December 2019. An analysis
of the effect of a reasonable possible movement in exchange rates shows that a movement of 5% in the exchange rate could
result in foreign currency gains or losses of £9,000 (2018: £8,000) against the Euro and £34,000 (2018: £28,000) against the
Dollar.
The Group gives consideration to the use of forward currency contracts to reduce foreign currency exposure. No forward
currency contracts were in place at the balance sheet date (2018: £nil).
Credit risk analysis
The Group’s exposure to credit risk is limited to the carrying amount of financial assets recognised at the balance sheet date,
which are set out below:
Trade receivables
2019
£’000
2018
£’000
1,945
2,584
1,945
2,584
The Group continually monitors defaults of customers and other counterparties and incorporates this information into its credit
risk controls. In terms of customer concentration the Group does hold some credit risk as disclosed in note 12.
The Group measure lifetime expected credit losses using the simplified approach at all times using a provision matrix. The
provision matrix is based on the Group’s historical default rates over the expected life of the trade receivables and is adjusted for
forward-looking estimates.
At 31 December 2019 £25,000 (2018: £27,000) of the Group’s trade receivables were past due. A credit loss provision of
£9,000 (2018: £9,000) is held to mitigate the exposure to potential bad and doubtful debts.
55
Surgical Innovations Group PLC Annual Report and Accounts 2019 14. Financial instruments (continued)
The ageing of the Group’s trade receivables is as follows:
As at 31 December 2019
Not more than one month
More than one month but not more than three months
More than three months but not more than one year
More than a year but not more than five years
Total past due trade receivables
Total receivables not yet past due
Total gross trade receivables
Expected credit loss
Total net trade receivables (note 12)
Notes to the consolidated financial statements
2019
£’000
2018
£’000
-
-
25
-
25
-
22
5
-
27
1,929
1,954
(9)
2,566
2,593
(9)
1,945
2,584
The Group’s management considers that all the above financial assets that are not impaired or past due for each of the
reporting dates under review are of good quality. The ageing profile above is the profile used by management in reviewing the
ledger however it is the expected credit loss model which is used to calculate the provision as 31 December 2019.
As 31 December 2019 the lifetime expected loss provision for trade receivables is as follows:
Expected loss rate
Gross carrying amount £’000
Expected credit loss provision
Current
More than
30 days
past due
More than
60 days
past due
More than
90 days
past due
More than
120 days
past due
Total £’000
0.4%
1,788
7
0.4%
124
1
0.4%
(10)
-
0.4%
3.05%
2
-
25
1
1,929
9
The Group applies the IFRS 9 simplified approach to measuring expected credit losses using a lifetime expected credit loss
provision for trade receivables. To measure expected credit losses on a collective basis, trade receivables are Grouped based
on similar credit risk and aging. The expected loss rates are based on the Group’s historical credit losses experienced over the
one year period prior to the period end. The historical loss rates are then adjusted for current and forward-looking information
on macroeconomic factors affecting the Group’s customers.
The amount outstanding at the year end in relation to the amount due from associate was £173k (2018: £79k). Management
have assessed this for impairment using the general approach and consider the asset to be classified as stage 1. Impairment at
the year end is considered to be £nil (2018: £nil).
A reconciliation of the movement in the impairment allowance for receivables under the expected credit loss model is shown
below.
Expected credit loss provision as at 31 December 2018
Amounts released *
Amounts provided
Expected credit loss provision as at 31 December 2019
£’000
9
(9)
9
9
Liquidity risk analysis
The Group manages its liquidity needs by carefully monitoring all scheduled cash outflows. Liquidity needs are monitored in
various time bands, on a day-to-day and week-to-week basis, as well as on the basis of a rolling 13-week projection. Longer
term needs are monitored as part of the Group’s regular rolling monthly re-forecasting process.
Funding for long-term liquidity is additionally secured by an adequate amount of committed credit both through asset finance
facilities and loans. Further analysis of long-term borrowings is provided in note 13.
56
Surgical Innovations Group PLC Annual Report and Accounts 2019 14. Financial instruments (continued)
Notes to the consolidated financial statements
The Group’s liabilities have contractual cash flows which are summarised below:
31 December 2019
Trade and other payables
Bank loans
31 December 2018
Trade and other payables
Bank loans
Current
Within 6
Months
£’000
1,268
165
1,433
Non-
Current
Over 12
months
£’000
Within
6 -12
Months
£’000
77
-
163
546
240
546
Within 6
Months
£’000
Within
6 -12
Months
£’000
Over 12
months
£’000
1,384
16
-
192
190 2,054
1,576 206 2,054
Interest rate risk analysis
Due to the level of the Group’s borrowings no interest rate swaps or other forms of interest risk management has been
undertaken. The Group regularly reviews its exposure to fluctuations in underlying interest rates and will take appropriate
action if required to minimise any impact on the performance and financial position of the Group. Further analysis of long-term
borrowings is provided in note 13.
Maturity profile of borrowings
Gross bank loan payments not later than one year
Later than one year but not more than five years
Future finance charges
Present value of bank borrowings
2019
£’000
328
2018
£’000
382
546
2,054
(62)
(329)
812
2,107
57
Surgical Innovations Group PLC Annual Report and Accounts 2019 14. Financial instruments (continued)
Notes to the consolidated financial statements
Current assets
Cash at bank and in hand
Trade receivables
Amount due from associate
Current liabilities
Trade and other payables: financial liabilities measured at amortised cost
Other short-term financial liabilities measured at amortised cost
Accruals
Lease liability
Borrowings measured at amortised cost
Non-current liabilities
Borrowings measured at amortised cost
Lease liability
Other non-current liabilities measured at amortised cost
Net financial assets and liabilities
2019
£’000
2018
£’000
1,282
1,94
173
2,491
2,584
79
3,400
5,154
1,345
1,400
-
317
190
297
-
481
-
287
2,149
2,168
515
1,820
1,086
-
1,601
(350)
-
-
1,820
1,166
Capital management
The Group’s capital management objectives are:
• to ensure its ability to continue as a going concern; and
• to provide an adequate return to shareholders by pricing products and services commensurately with the level of risk.
The Group manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk
characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Group may issue new shares or
sell assets to reduce debt. Historically, the Group has primarily been funded through cash reserves and hire purchase financing
and accordingly no target for gearing levels has been set. Capital as monitored by the Group for the reporting periods under
review is summarised as follows:
Bank Loan
Obligations under lease liabilites *
Less: cash and cash equivalents
Net debt/(cash)
Total equity
Total capital
2019
£’000
2018
£’000
812
2,107
1,276
-
(1,282)
(2,491)
806
(384)
14,477
14,423
15,283
14,039
* Note IFRS16 transition has been adopted in 2019, therefore the underlying net cash comparable with prior year removing the
impact on IFRS16 is £470,000.
The Group’s capital management is likely to change in 2020 due to the events after the reporting period disclosed in note 21.
58
Surgical Innovations Group PLC Annual Report and Accounts 2019 15. Share capital
Notes to the consolidated financial statements
2019
£’000
2018
£’000
Authorised, allotted, called up and fully paid 782,566,177
(2018: 782,566,177) ordinary shares of 1p each
7,953
7,826
Shares in issue reconciliation
Opening no of shares in issue
Issued in lieu of remuneration
Issued in relation to acquisition of Elemental Healthcare
Issued in satisfaction of share options exercised
Closing number of shares in issue
Share-based payments
At 31 December 2019, the following share options were outstanding:
2019
2018
782,566,177
782,566,177
-
-
12,750,000
795,316,177
-
-
-
782,566,177
At
1 January
2019
1,000,000
400,000
560,000
200,000
1,100,000
15,000,000
26,000,000
Number of shares
Exercise dates
Granted
in yr
Exercise
in yr
Lapsed
in yr
At 31
December
2019
Option price
per 1p share
Date from which
option may be
exercised
Date on which
option expires
-
-
-
-
-
-
-
-
-
-
-
-
(12,750,000)
-
-
-
-
-
-
(1,000,000)
(400,000)
-
-
(90,000)
470,000
200,000
1,100,000
-
-
-
1.5p
1.7p
7.2p
9.0p
5.1p
November 2009
January 2019
November 2009
November 2019
June 2015
June 2022
June 2015
June 2022
June 2016
June 2023
2,250,000
1.575p
December 2018 December 2025
(5,000,000)
21,000,000
3.25p
October 2020
October 2027
(2,500,000)
8,050,000
3.5p
March 2022
March 2029
-
4,999,998
(1,000,000)
-
6.9p
5.1p
January 2018
January 2023
June 2016
June 2023
-
5,000,000
3.25p
October 2020
October 2027
(1,500,000)
-
3.5p
March 2022
March 2029
-
10,550,000
4,999,998
1,000,000
5,000,000
-
-
-
-
1,500,000
Scheme and date of grant
Non-executive
unapproved
January 2009
November 2009
Enterprise management
June 2012
June 2012
June 2013
December 2015
October 2017
March 2019
Other option awards
January 2013
June 2013
October 2017
March 2019
Share options were granted during the year to certain employees. The exercise price of the granted options is equal to
market price at grant, and options are conditional upon completing a three year service period from the date of grant.
During the year 12,750,000 shares were exercised, 4,750,000 related to a former director and the remainder were exercised
by employees.
59
Surgical Innovations Group PLC Annual Report and Accounts 2019 15. Share capital (continued)
Movements in the number of share options outstanding and their related weighted average exercise price are as follows:
Notes to the consolidated financial statements
At 1 January
Exercised
Granted
Lapsed
At 31 December
2019
2018
Average
exercise
price
pence
Options
’000s
Average
exercise
price
pence
Options
’000s
3.2
55,260
3.2
55,320
1.6
(12,750)
-
-
3.5
12,050 -
-
3.3
(11,490)
7.2
(60)
3.8
43,070
3.2
55,260
The weighted average contractual life remaining on the options is 7.2 years.
The weighted average fair value of options granted in prior years was determined using either the Black-Scholes valuation
model or the monte carlo valuation method. The significant inputs into the Black-Scholes model were share price at the
date of grant, exercise price as set out above, volatility of 40%, an expected option life varying between three and five
years and an annual risk-free interest rate of 2.5%. Volatility was calculated with reference to statistical analysis of the
historic daily share price. Share options issued in 2017 for senior management were based on performance targets being
reached. As such the black-scholes method of calculation was deemed not to be appropriate to measure the share
based payment charge and so the Monte Carlo method was used. The significant inputs into the model were share price
at the date of grant, exercise price as set out above, volatility of 69% and an expected life over 6 years. A risk free rate of
0.92% was used.
After taking account of leavers, the total share-based payment charge for the year was £188,000 (2018: £120,000).
60
Surgical Innovations Group PLC Annual Report and Accounts 2019 16. Reserves
Share premium
Balance as at 31 December 2018
Issue of ordinary share capital
Balance as at 31 December 2019
Share
premium
£’000
5,831
73
5,904
Notes to the consolidated financial statements
Share premium comprises the cumulative difference between the net proceeds and nominal value of the Company’s
issued equity share capital.
Merger Reserve
Balance at 31 December 2018
Issue of ordinary share capital
Balance as at 31 December 2019
Merger
reserves
£’000
1,250
-
1,250
Merger reserve represents the excess over the nominal value of the fair value consideration attributed to equity shares
issued as part of an Acqusition.
Capital reserve
Capital reserve balance at the year end is £329k (2018:£329k). It is derived from the accumulated capital surplus of the
Group created out of capital profit.
17. Contingent liabilities and financial commitments
These are as follows:
(a) Transition to IFRS16
This note explains the impact of the adoption of IFRS 16 ‘Leases’ on the Group’s financial statements and discloses the
new accounting policy that has been applied from 1 January 2019. IFRS 16 replaces IAS 17 ‘Leases’ along with three
Interpretations (IFRIC 4 ‘Determining whether an Arrangement contains a lease’, SIC 15 ‘Operating Leases-Incentives’
and SIC 27 ‘Evaluating the Substance of Transactions Involving the Legal Form of a Lease’).
The adoption of this new Standard has resulted in the Group recognising a right-of-use asset and related liability in
connection with all former operating leases with the exception of those identified as low-value or having a remaining lease
term of less than 12 months from the date of initial application.
The new standard has been applied using the “modified retrospective” transition approach. There is no adjustment to the
opening balance of retained earnings for the current period however reclassifications arising from the new standard have
been recognised in the opening balances as at 1 January 2019. Prior periods have not been restated, as permitted under
the specific transitional provisions in the standard.
For contracts in place at 1 January 2019, the Group has elected to apply the definition of a lease from IAS 17 and IFRIC 4
and has not applied IFRS 16 to arrangements that were previously not identified as leases under IAS 17 and IFRIC 4.
The Group has elected to measure the right-of-use assets at 1 January 2019 at an amount equal to the lease liability,
adjusted for any prepaid or accrued lease payments that existed at the date of transition. The liabilities were measured at
the present value of the remaining lease payments, discounted at an incremental borrowing rate of 6%.
On transition, for leases previously accounted for as operating leases with a remaining lease term of less than 12 months
and for leases of low-value assets the Group has applied the optional exemptions to not recognise right-of- use assets
but to account for the lease expense on a straight-line basis over the remaining lease term.
The Group has benefited from the use of hindsight for determining the lease term when considering options to extend and
terminate leases.
61
Surgical Innovations Group PLC Annual Report and Accounts 2019 17. Contingent liabilities and financial commitments (continued)
The following is a reconciliation of total operating lease commitments at 31 December 2018 (as disclosed in the financial
statements to 31 December 2018) to the lease liabilities recognised at 1 January 2019:
Notes to the consolidated financial statements
Total operating lease commitments disclosed at 31 December 2018
Recognition exemptions at 1 January 2019: leases less than 12 months or low value
Leases committed to at 31 December 2018 but not commenced at 1 January 2019
Commitments not meeting the definition of a right of use asset
Operating lease liabilities before discounting
Discounting effects using incremental borrowing rates as at 1 January 2019
Operating lease liabilities after discounting as at 1 January 2019
Of which are:
Current lease liabilities
Non-current lease liabilities
£’000
1,766
(42)
-
-
1,724
(330)
1,394
162
1,232
At 1 January 2019 the recognised right-of-use assets all relate to Property and Car leases. Instead of performing
an impairment review on the right-of-use assets at the date of initial application, the Group has relied on its historic
assessment as to whether leases were onerous immediately before the date of initial application of IFRS 16. This
assessment did not identify any onerous lease contracts requiring an adjustment to the right-of-use asset at the date of
initial application.
The adoption of IFRS 16 has impacted the following items:
Impact on the statement of financial position
As at 1 January 2019
As at 31 December 2019
Assets
Liabilities
Assets
Liabiities
Right of use assets and lease liabilites
Of which are:
Current lease liabilites
Non-Current lease liabilites
Impact on Equity
£’000
1,394
Total impact on statement of financial position
1,394
£’000
1,394
162
1,232
-
1,394
£’000
1,241
1,241
£’000
1,276
190
1,086
(35)
1,241
The adoption of IFRS 16 on 1 January 2019 had a nil impact on the net assets of the Group due to applying the modified
retrospective approach. As at 31 December 2019 lease liabilities of £1.3m do not match the value of the right-of-use
assets due to the depreciation charge in the period being lower than the lease repayments (net of interest charges).
A reconciliation of the value of right-of-use assets and lease liabilities from 1 January 2019 to 31 December 2019 is
presented below:
Right of use assets
Property
Plant
IT
equipment
Car leases
Total
Right of use assets as at 1 January
2019:
Additions
Disposals
Depreciation
Right of use assets as at 31 December
2019
£’000
1,249
-
-
(144)
1,105
£’000
£’000
-
17
-
(3)
14
11
-
-
(4)
7
£’000
134
33
-
(52)
115
£’000
1,394
50
-
(203)
1,241
62
Surgical Innovations Group PLC Annual Report and Accounts 2019
Transition to IFRS16 (continued)
Notes to the consolidated financial statements
Lease liabilities
Property
Plant
IT
equipment
Car leases
Total
Lease liabilities as at 1 January 2019:
Additions
Lease interest
Lease payments
Lease liabilities as at 31 December 2019
Impact on Income statement:
£’000
1,249
-
68
(179)
1,138
£’000
£’000
-
17
1
(3)
15
11
-
1
(4)
8
Other operating expenses
Impact on EBITDA
Depreciation
Finance costs
Impact on profit before tax
£’000
134
33
6
(58)
115
£’000
1,394
50
76
(244)
1,276
12 months to 31
December 2019
£’000
41
245
(203)
(77)
(35)
Prior to the adoption of IFRS 16 rental payments were charged to the income statement on a straight-line basis, under
IFRS 16 rental charges in the income statement are replaced with depreciation on the right-of-use asset and interest
charges on the lease liability. The adoption of IFRS 16 therefore gives rise to a net cost of £35,000 in the twelve months
to 31 December 2019, reflecting depreciation and interest charges of £280,000 being £35,000 higher than the net rental
charges which would have been incurred prior to the adoption of the new standard. At EBITDA level, the adoption of IFRS
16 gives a benefit of £245,000 being the elimination of the rental charges.
At the date of transition a provision for dilapadations had already been recognised in relation to property lease. On
transition to IFRS16 no amendment to this provision has been recognsed and no additional amount recorded within the
right of use asset.
(b) Capital commitments
At 31 December 2019 the Group had capital commitments totaling £7,000 (2018: £nil)
63
Surgical Innovations Group PLC Annual Report and Accounts 2019 18. Transactions with related parties
The Group have identified a list of related parties and a summary of the transactions during the year, along with
outstanding amounts at the balance sheet date is as follows:
Notes to the consolidated financial statements
Getz Healthcare1
Getz Healthcare1
Hardy Transaction Management Ltd2
Amounts
invoiced
to/(by) the
Group
Amounts
payable/
(receivable)
31 December
2019
Amounts
invoiced
to/(by) the
Group
Amounts
payable/
(receivable)
31 December
2019
£’000
2019
£’000
2018
£’000
2018
£’000
(13)
(3)
(226)
(9)
67
-
-
-
15
-
-
-
Transactions with related parties during the current and prior year were as follows:
1.
Getz Healthcare (Hong Kong) Ltd formally known as ACP acts as the master distributor for Surgical Innovations in the Far East. During the year Surgical
Innovations invoiced ACP £13,000 for products and at 31 December 2019 there was an amount owing to Surgical Innovations of £3,000. During the year an
agreement was reached whereby The Group would invoice the end Distributor directly moving forwards, and as such commission payments were made to ACP for
£67,000 up to end June 2019. No further commission payments are to be made. Getz Bros. & Co. Inc. is the ultimate beneficial owner of Getz Healthcare (Hong
Kong) Ltd who is a substantial shareholder representing 13.7% interest in the Group. The registered address is:
Getz Healthcare (Hong Kong) Ltd
Unit 2-3, 11F, No 1 Hung To Road
Kwun Tong
Kowloon
Hong Kong
2
Charges in current year relate transactional services in relation to abortive acquisiton costs, provided by Hardy Transaction Management Ltd. The registered
address is:
Hardy Transaction Management Ltd
Suite One Sixth Floor
St James House
Vicar Lane
Sheffield
S1 2EX
Registered in England & Wales: 04887548
There is no controlling party of Surgical Innovations Group Plc.
19. Pensions
The Company currently operates a defined contribution Group personal pension plan for the benefit of employees.
Company contributions in 2019 were £92,000 (2018: £74,000). As at 31 December 2019 amounts due to the pension
scheme were £nil (2018: £nil).
20.Dilapadtion provision
Provision for Dilapidation as at the year ending 31 December 2018
Amounts released
Amounts provided
Provision for Dilapidation as at 31 December 2019
£’000
165
-
-
165
Dilapidation costs relate to the building lease held by the Group. The property lease was renewed in April 2019 and is held
on a 10 year lease agreement with a 5 year break clause.
64
Surgical Innovations Group PLC Annual Report and Accounts 2019
Notes to the consolidated financial statements
21 Post balance sheet events
A non-adjusting post balance sheet event has been recognised with the anticipated financial effect of more widespread
coronavirus infection having significant impact on the Group in relation to the following accounting treatments:
Goodwill impairment
Subsequent to the year end, the potential effects of the Covid-19 outbreak and consequential impact on the availability of NHS
resources, may have a further and more significant impact on the directors view of short to medium term cash flows. This has
not been quantified, and there is not yet sufficient experience to make such a judgement. Nevertheless, it is recognised by
the directors that further impairment is likely to be necessary in the year ending 31 December 2020. The financial effect of this
adjustment cannot be estimated.
Going concern and funding
Management have to make judgements on various uncertain future outcomes of events or conditions, consideration when
determing whether or not the Group can prepare its financial statements on the going concern basis:
The degree of uncertainty associated with the outcome of Coronavirus increases significantly the further into the future.
Management will assess all available information and will continually assess the situation.
The nature and condition of the Group and the degree to which it is affected by external factors affect the judgement regarding
the outcome of Coronavirus. Key end user markets is now becoming more apparent, as hospitals rightly free up capacity
to cope with seriously ill patients. These necessary actions will inevitably lead to delays and cancelation of routine surgical
procedures such as those announced in the NHS over the last week. Management have devised a series of mitigating actions,
designed to preserve cash resources, maintain delivery of essential products to our customers and distributors, and protect our
workforce from the health risks and economic impact.
Any judgement about the future is based on information at the time at which the judgement is made. Subsequent events may
result in outcomes that are inconisistent with judgements that were reasonable at the time they were made. Management will
continually assess the information available at the time of publication.
The directors had carried out an evaluation of financial forecasts, sensitised to reflect a rational judgement of the level of inherent
risk. This exercise concluded that adequate financial resources were available to ensure that the Company could meets its
obligations for a twelve month period with reasonable certainty. It has subsequently become clear that there will need to
be reliance upon outside agencies including the UK Government, Yorkshire Bank, and possibly others to ensure that these
conditions continue to apply. The financial effect of further funding cannot be estimated.
65
Surgical Innovations Group PLC Annual Report and Accounts 2019 Company balance sheet
as at 31 December 2019
Assets
Non-current assets
Investments
Right of use assets
Current assets
Other receivables
Cash at bank
Total assets
Equity & liabilities
Equity attributable to equity holders of the company
Share capital
Share premium account
Merger reserve
Retained earnings
Total Equity
Non-current liabilities
Lease liabilities
Dilapidation provision
Current liabilities
Trade & other payables
Lease liabilities
Total liabilities
Total equity & liabilities
Notes
2019
£’000
Restated*
2018
£’000
2
4
3
8,099
1,021
9,120
1,624
46
1,670
10,790
10,374
-
10,374
2,470
55
2,525
12,899
6
7,953
7,826
5,904 5,831
1,250
1,250
(5,637)
(2,343)
9,470
12,564
4
5
5
4
947
165
1,112
106
102
208
1,320
10,790
-
165
165
170
-
335
12,899
The loss after tax for the company for the year ended 31 December 2019 was £3,482,000 (2018: £973,000).
Under s408 the Company has chosen not to disclose the statement of profit and loss.
The financial statements on pages 66 to 71 were approved by the Board of Directors on 30 March 2020 and were signed on its
behalf by:
David Marsh
Director
Company registered number: 02298163
66
Surgical Innovations Group PLC Annual Report and Accounts 2019 Statement of changes in equity
for the year ended 31 December 2019
Balance as at 1 January 2018
Employee share-based payment options
Total – transactions with owners
Share
capital
£’000
7,826
-
-
Loss and total comprehensive deficit for the period reinstated
-
Share
premium
£’000
Merger
Reserve
£’000
Retained
earnings
£’000
Total
£’000
5,831
1,250
(1,490)
13,417
-
-
-
-
-
-
120
120
120
120
(973)
(973)
Balance as at 31 December 2018
Employee share-based payment
Issue of share capital
Total – transactions with owners
Loss and total comprehensive deficit for the period
7,826
5,831
1,250 (2,343)
12,564
-
127
127
-
-
73
73
-
-
-
-
-
188
-
188
188
200
388
(3,482)
(3,482)
Balance as at 31 December 2019
7,953
5,904
1,250
(5,637)
9,470
67
Surgical Innovations Group PLC Annual Report and Accounts 2019 Statement of changes in equity
Notes to the Company financial statements
as at 31 December 2019
1. Accounting policies
(a) Basis of preparation
These financial statements were prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework
(“FRS 101”). The amendments to FRS 101 issued in July 2015 and effective immediately have been applied.
In preparing these financial statements, the Company applies the recognition, measurement and disclosure requirements of
International Financial Reporting Standards as adopted by the EU (“Adopted IFRSs”), but makes amendments where necessary
in order to comply with Companies Act 2006 and has set out below where advantage of the FRS 101 disclosure exemptions has
been taken.
In these financial statements, the company has applied the exemptions available under FRS 101 in respect of the following
disclosures
• Comparative period reconciliations for share capital;
• a Cash Flow Statement and related notes;
• Disclosures in respect of transactions with wholly owned subsidiaries ;
• The effects of new but not yet effective IFRSs;
• An additional balance sheet for the beginning of the earliest comparative period following the retrospective change in
accounting policy
• Disclosures in respect of the compensation of Key Management Personnel; and
• Disclosures of transactions with a management entity that provides key management personnel services to the company.
As the consolidated financial statements of Surgical Innovations Group PLC include the equivalent disclosures, the Company has
also taken the exemptions under FRS 101 available in respect of the following disclosures
IFRS 2 Share Based Payments in respect of Group settled share based payments
•
The Company proposes to continue to adopt the reduced disclosure framework of FRS 101 in its next financial statements.
The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in these
financial statements.
The company has adopted the following IFRSs in these financial statements:
The definition of a ‘related party’ is extended to include a management entity that provides key management personnel services to
the reporting entity, either directly or through a Group entity.
The financial statements are prepared on the historical cost basis.
(b) Investment in subsidiary undertakings
Amounts owed by group undertakings are stated after any provision for expected credit loss in line with the three stage model in
IFRS 9.
(c) Share-based transactions
Share-based payment arrangements in which the Company receives goods or services as consideration for its own equity
instruments are accounted for as equity-settled share-based payment transactions, regardless of how the equity instruments are
obtained by the Company.
The grant date fair value of share-based payments awards granted to employees is recognised as an employee expense, with
a corresponding increase in equity, over the period in which the employees become unconditionally entitled to the awards. The
fair value of the awards granted is measured using an option valuation model, taking into account the terms and conditions upon
which the awards were granted. The amount recognised as an expense is adjusted to reflect the actual number of awards for
which the related service and non-market vesting conditions are expected to be met, such that the amount ultimately recognised
as an expense is based on the number of awards that do meet the related service and non-market performance conditions at the
vesting date. For share-based payment awards with non-vesting conditions, the grant date fair value of the share-based payment
is measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes.
(d) Pension obligations
The Group provides pension benefits to its employees through contributions to defined contribution Group personal pension
policies. The amounts charged to the Consolidated statement of comprehensive income are the contributions payable in the
period.
68
Surgical Innovations Group PLC Annual Report and Accounts 2019 2. Investments
Investments
Notes to the company financial statements
As at 31 Dec
2018
As at 31 Dec
2019
£’000
£’000
£’000
£’000
Cost
Additions
Impairment
Net book
value
10,374
133
(2,408)
8,099
Additions
Increases in share based payments charges for contributions relating to share options granted to employees in the relevant
subsidiary, these options are held in the parent Company.
Impairment
With reference to the goodwill impairment noted the Group accounts, disclosure note 10
The trading subsidiaries of the Group comprise:
Company
Description of shares held
Nature of business
Country of incorporation
and operation
Proportion
Held
Surgical Innovations Limited Ordinary £1 shares
Haemocell Limited
Ordinary £1 shares
Elemental Healthcare Ltd
Ordinary £1 shares
Design and manufacture of
minimally invasive devices
Great Britain
Design and manufacture of
autologous blood products
Great Britain
Distribution of innovative
Medical products
Great Britain
100%
100%
100%
All subsidiaries are included in the consolidated financial statements of the Group. The registered address for all the above
Subsidiaries are held at Clayton wood house, 6 Clayton wood bank, Leeds, LS16 6QZ.
3. Receivables
Prepayments and accrued income
Other debtors
Amounts due from subsidiary undertakings
All amounts receivable are within one year.
2019
£’000
2018
£’000
31
46
1
7
1,592
2,417
1,624
2,470
Amounts due from subsidiary undertakings are unsecured, interest free and repayable on demand. Expected credit loss
provision at 31 December 2019 was £nil (2018: £nil).
69
Surgical Innovations Group PLC Annual Report and Accounts 2019 4. Transition to IFRS 16
Note 17(a) in the Group disclosures explains the impact of the adoption of IFRS 16 ‘Leases’ on the Group’s financial statements
and discloses the new accounting policy that has been applied from 1 January 2019.
The adoption of IFRS 16 for the property lease has impacted the following items:
Impact on the statement of financial position
As at 1 January 2019
As at 31 December 2019
Notes to the company financial statements
Right of use assets and lease liabilites
1,145
1,145 1,021
1,049
Assets
£’000
Liabilities
£’000
Assets
£’000
Liabiities
£’000
Of which are:
Current lease liabilites
Non-Current lease liabilites
Impact on Equity
96
1,049
-
102
947
(28)
Total impact on statement of financial position
1,145
1,145 1,021
1,021
The adoption of IFRS 16 on 1 January 2019 had a nil impact on the net assets of the Group due to applying the modified
retrospective approach. As at 31 December 2019 lease liabilities of £1.1m do not match the value of the right-of-use assets due to
the depreciation charge in the period being lower than the lease repayments (net of interest charges).
A reconciliation of the value of right-of-use assets and lease liabilities from 1 January 2019 to 31 December 2019 for a property
lease is presented below:
Right of use assets and lease liabilities as at 1 January 2019:
Additions
Disposals
Depreciation
Lease interest
Lease payments
Right of use assets and lease liabilities as at 31 December 2019
5. Current liabilities
Accruals and deferred income
Other creditors
Non-Current liabilities
Dilapidation provision
Right of use
assets
£’000
1,145
-
-
(124)
-
-
1,021
Lease
liabilites
£’000
1,145
-
-
-
63
(187)
1,021
2018
£’000
140
30
170
2019
£’000
76
30
106
165
165
165
165
Dilapidation costs relate to the building lease held by the Group. The property lease was renewed in April 2019 and is held on a 10
year lease agreement with a 5 year break clause.
70
Surgical Innovations Group PLC Annual Report and Accounts 2019
6. Share capital
Allotted, called up and fully paid:
795,316,177, ordinary shares of 1p each (2018: 782,566,177)
7. Employees and Directors’ emoluments
Notes to the company financial statements
2019
£’000
2018
£’000
7,953
7,826
The average monthly number of employees (including Executive Directors) employed by the Group during the year was as
follows:
Directors
The costs incurred in respect of these employees were:
Wages and salaries
Social security costs
Pension costs
8. Transactions with related parties
2019
2018
3
4
2019
£’000
422
57
16
2018
£’000
517
46
18
495
581
Amounts
invoiced
to/(by)
the
Group
2019
£’000
Amounts
payable/
(receivable)
31 December
2019
£’000
15
-
Amounts
invoiced
to/(by)
the
Group
2018
£’000
-
Amounts
payable/
(receivable)
31 December
2018
£’000
-
Hardy Transaction Management Ltd1
Transactions with related parties during the current and prior year were as
follows:
1.
Charges in current year relate transactional services in relation to abortive acquisiton costs, provided by Hardy Transaction Management Ltd. The registered
address is:
Hardy Transaction Management Ltd
Suite One Sixth Floor
St James House
Vicar Lane
Sheffield
S1 2EX
Registered in England & Wales: 04887548
In these financial statements, the company has applied the exemption available under FRS 101 in respect of the following
disclosures.
• Disclosures in respect of transactions with wholly owned subsidiaries.
9. Post balance sheet events
A non-adjusting post balance sheet event has been recognised with the anticipated financial effect of more widespread
coronavirus infection having significant impact on the Company. Refer to disclosure note 21 in the Group accounts.
71
Surgical Innovations Group PLC Annual Report and Accounts 2019
Advisors
Company Secretary and registered office
Charmaine Day
Clayton Wood House
6 Clayton Wood Bank
Leeds LS16 6QZ
Registered number
02298163
Nominated adviser
N+1 Singer
1 Batholomew Lane
London
EC2N 2AX
Solicitors
CMS Cameron Mckenna Nabarro Olswang LLP
1 South Quay
Victoria Quays
Sheffield S2 5SY
Auditor
BDO LLP
Central Square
29 wellington street
Leeds LS1 4DL
Registrars
Neville Registrars Limited
Neville House
18 Laurel Lane
Halesowen B63 3DA
Bankers
Yorkshire Bank
1st Floor
94-96 Briggate
Leeds LS1 6NP
72
Surgical Innovations Group PLC Annual Report and Accounts 2019 73
Surgical Innovations Group PLC Annual Report and Accounts 2019 74
Surgical Innovations Group PLC Annual Report and Accounts 2019 Surgical Innovations Group plc
Clayton Wood House
6 Clayton Wood Bank
Leeds LS16 6QZ
T. +44 (0) 113 230 7597
F. +44 (0) 113 230 7598
W. www.sigroupplc.com
Reg No. England 02298163
For investor relations enquiries please email:
si@surginno.co.uk
For sales enquiries please email:
sales@surginno.co.uk
For general enquiries please email:
si@surginno.co.uk
Annual Report 2019
v