Surgical Innovations : Proposed Fundraise

THIS ANNOUNCEMENT, INCLUDING THE APPENDICES AND THE INFORMATION CONTAINED HEREIN, IS RESTRICTED AND IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO OR FROM THE UNITED STATES, AUSTRALIA, CANADA, THE REPUBLIC OF SOUTH AFRICA, JAPAN OR ANY JURISDICTION IN WHICH THE SAME WOULD BE UNLAWFUL. THIS ANNOUNCEMENT SHALL NOT CONSTITUTE AN OFFER TO SELL OR ISSUE OR THE SOLICITATION TO BUY, SUBSCRIBE FOR OR OTHERWISE ACQUIRE ANY ORDINARY SHARES OF SURGICAL INNOVATIONS GROUP PLC IN ANY JURISDICTION IN WHICH ANY SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL.

THE SECURITIES TO WHICH THIS ANNOUNCEMENT RELATE HAVE NOT BEEN REGISTERED UNDER THE US SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES ABSENT REGISTRATION OR AN EXEMPTION FROM, OR A TRANSACTION NOT SUBJECT TO, REGISTRATION UNDER THE SECURITIES ACT. THERE WILL BE NO PUBLIC OFFERING OF THE SECURITIES IN THE UNITED STATES.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF THE MARKET ABUSE REGULATION (596/2014/EU) ("MAR"). IN ADDITION, MARKET SOUNDINGS (AS DEFINED IN MAR) WERE TAKEN IN RESPECT OF CERTAIN OF THE MATTERS CONTAINED IN THIS ANNOUNCEMENT, WITH THE RESULT THAT CERTAIN PERSONS BECAME AWARE OF SUCH INSIDE INFORMATION, AS PERMITTED BY MAR. UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN AND SUCH PERSONS SHALL THEREFORE CEASE TO BE IN POSSESSION OF INSIDE INFORMATION.

For immediate release

17 September 2020

Surgical Innovations Group plc

("SI", the "Group" or the "Company")

Proposed Fundraise

Launch of Placing via Accelerated Bookbuild

Surgical Innovations Group plc (AIM: SUN), the designer, manufacturer and distributor of innovative technology for minimally invasive surgery, announces a proposed non-pre-emptive fundraise to raise gross proceeds of not less than £1.8m, at a price of 1.6 pence per new Ordinary Share (the "Issue Price") by way of a Placing and Subscription (together, the "Fundraise").

The Fundraise is being arranged within the Company's existing non pre-emptive authority and will therefore not be subject to shareholder approval.

The Placing is being conducted through an accelerated bookbuild ("ABB") process, to be launched immediately following this Announcement, and is subject to the terms and conditions set out in the Appendix to this Announcement.

Nplus1 Singer Capital Markets Limited (together with its associates, "N+1 Singer") is acting as sole broker in connection with the Fundraise.

Highlights

• The Fundraise will allow the Company to benefit from the organic growth opportunities available to it, and strengthen the balance sheet with increased available financial headroom from cash in addition to its existing borrowing facilities.

• The Fundraise follows the recovery in revenues experienced in the third quarter, and the further expected increase in levels of elective surgery being reported by key healthcare providers in the U.K. and overseas, as described in the Company's recent interim results announcement.
• The net proceeds will enable the Company to reinflate working capital as further anticipated recovery in activity occurs, and to invest in additional growth opportunities including new product development and the sustainability agenda that is driving awareness of interest in products such as the Company's Resposable range.
• The Fundraise is expected to include support from existing and new institutional and other investors, including substantial shareholder, Getz Healthcare.
• Certain Directors intend to participate in the Placing. Further details will be provided in the announcement of the result of the Fundraise.
• The Issue Price represents a discount of c.11.1 per cent. to the closing price of 1.8 pence on 16 September (being the last practicable trading day prior to release of this Announcement).
• The Fundraise is being implemented using the Company's existing non pre-emptive authority granted by shareholders at its Annual General Meeting held on 19 June 2019, enabling the issue of up to 157,513,235 new Ordinary Shares of 0.1p pence each (the "Fundraise Shares") (representing up to approximately 19.81 per cent. of its existing issued share capital).
• A binding commitment (the "Subscription Agreement") to subscribe at the Issue Price for Subscription Shares at an aggregate subscription amount of £400,000 has been received by the Company from Getz Healthcare, representing a subscription for 25,000,000 new Ordinary Shares (such commitment being included, along with firm indications received in connection with the Placing, in the minimum proposed Fundraise size of £1.8 m at the Issue Price).
• The timing of the closing of the book and allocations are at the absolute discretion of N+1 Singer and the Company. The result of the Fundraise will be announced as soon as practicable after the close of the ABB. The Placing is not being underwritten (in whole or in part) by N+1 Singer or any other person
• The Fundraise Shares will, when issued, be fully paid and will rank pari passu in all respects with each other and with the existing issued Ordinary Shares of the Company, including, without limitation, the right to receive all dividends and other distributions declared, made or paid after the date of issue.
• Application will be made to the London Stock Exchange (the "LSE") for admission of the Fundraise Shares to trading on AIM ("Admission"), which is expected to take place on or before 8.00 a.m. on 22 September 2020.
• The Fundraise is conditional upon, among other things, Admission becoming effective. The Placing is conditional upon the Subscription Agreement becoming unconditional and the Subscription Agreement is conditional upon the Placing Agreement becoming unconditional. Additionally, the Placing is conditional upon the placing agreement between the Company and N+1 Singer (the "Placing Agreement") not being terminated in accordance with its terms. Appendix 1 to this Announcement sets out further important information relating to the terms and conditions of the Placing.

Background and Reasons for the Fundraise

The suspension of elective surgery in the UK and several other geographies in which the Company operates has resulted in short-term reductions in the Company's revenues in the first half of 2020. However, the Company has undertaken various cost-cutting / mitigation measures to manage its cash

resources, including: a large furloughing of staff and salary reductions for all personnel above the furlough threshold; and a reduction in operating expenses as a result of lower activity levels.

Additionally, the Company has rescheduled its debt repayment terms and obtained relief on financial covenants on its existing term loan facilities, and drawn down an additional £1.5m under the Coronavirus Business Interruption Loan Scheme (CBILS) from its lender, on less onerous covenant terms. These facilities are repayable in May 2022.

Since May 2020, the Company has seen an increase in its revenue resulting from a gradual re-opening of operating theatres for elective surgeries, a trend that is expected to continue in H2 2020 and beyond. Management considers the Company's existing financial headroom, consisting of £3.65m available to it in cash and undrawn bank debt (as at 31 August 2020) to be sufficient for current purposes.

The Fundraise is expected to provide additional financial flexibility to the Company to further support its growth through investment in new product development as well as capitalise on the growing drive towards sustainability within Global Healthcare Systems. The proceeds will be used to finance:

• New product development;
• Re-inflationof working capital; and
• Investment in sustainability support initiatives.

At the Issue Price, the maximum gross proceeds from the Fundraise (assuming full use of the available existing authority to allot new shares for cash at the Issue Price) would be £2.52 million.

Current Trading and Outlook

The following text is extracted from the Company's interim results for the six months ended 30 June 2020, announced on 8 September 2020.

Revenues for the first half of the year were significantly below the corresponding period last year at £2.59m (2019: £5.10m). As explained in the 28 May trading update, the Board indicated short-term reductions in revenues in the current year due to the suspension of elective surgery in the UK and several other major international markets in response to the Covid-19 pandemic. The overall effect was a reduction in revenues of approximately 50%, with the low point experienced in May.

Since the period end (six months ended 30 June 2020), revenues have continued to improve. In the current quarter to date, sales have recovered to a level exceeding 70% of that achieved in the corresponding period in the prior year, and there are good indications that this can be built upon going into the final quarter. We estimate that fourth quarter sales activity will range from 65% to 85% of prior year levels in our core markets. This encouraging picture underpins our planned return to normal working practices for sales and marketing teams imminently, and for operational activities to resume by the end of October 2020. Our people have shown huge commitment to the Company's future success, and we look forward to welcoming them back to full-time working.

The demand for elective surgery in all of our key markets continues to build; indeed, there is a growing backlog of urgent cases and an increasing recognition that safe working practices to segregate Covid- 19 treatment from regular caseloads is essential. This pent-up demand, coupled with the sustainable and economic credentials of our resposable product offering, lead us to be confident of the prospects for continuing recovery and a return to profitable growth in coming months.

1. Each of the times and dates in the above timetable is subject to change. If any of the above times and/or dates change, the revised times and/or dates will be notified to shareholders by announcement on a Regulatory Information Service.
2. All of the above times, and other time references in this Announcement, refer to London time.

Principal risks and uncertainties

Any investment in the Company's Ordinary Shares involves risks. The principal risks and uncertainties set out on pages 9 to 11 in the Company's most recent annual report (https://www.sigroupplc.com/wp-content/uploads/2020/06/Annual-Report-2019.pdf)are those that the Directors believe are most relevant to consider when making an investment in the Ordinary Shares. The list of risks and uncertainties outlined in the annual report is not exhaustive.

The Appendix to this Announcement (which forms part of this Announcement) contains, amongst other things, details of the Terms and Conditions of the Placing and should be read in its entirety.

For the purposes of MAR and Article 2 of Commission Implementing Regulation (EU) 2016/1055, this Announcement is being made on behalf of the Company by Charmaine Day, Group Financial Controller and Company Secretary.

For further information, please contact:

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