Surgical Innovations' results showed the benefit of the company's entirely novel approach of developing and selling keyhole surgery equipment that contains important disposable parts. The resulting repeat revenue from these high-margin replaceable components grew by 36 per cent year on year and now account for £4m of total sales. Overall, the solid underlying performance, which lacked big one-off contracts, and entry into the US market, confirms Surgical's long-term potential.
Last year's rise in profits was driven by 22.7 per cent sales growth of branded products to £4.72m, reflecting a growing presence in the US medical market. In fact, Surgical will book US sales of more than $10m (£6.2m) over the next four years after concluding two new distribution agreements with Mediflex and main distributor SI US. Surgical also launched its Pretzelflex product in Europe in the fourth quarter and a large number of the new devices have been shipped.
Surgical's other original equipment manufacturing business increased revenues by 12 per cent to £2.8m. Although the equipment is sold under other brand names, management said this often leads to enquiries about SI's own-label products.
Broker WH Ireland forecasts current year pre-tax profits of £2.55m and EPS of 0.61p (from £1.71m and 0.44p in 2011).
SURGICAL INNOVATIONS (SUN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 10.1p | MARKET VALUE: | £40.7m | |
| TOUCH: | 10-10.25p | 12-MONTH HIGH: | 13.8p | LOW: 8p |
| DIVIDEND YIELD: | nil | PE RATIO: | 24 | |
| NET ASSET VALUE: | 3.1p* | NET DEBT: | 9% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2007 | 4.77 | 0.73 | 0.24 | nil |
| 2008 | 4.31 | 0.82 | 0.17 | nil |
| 2009 | 4.54 | 0.26 | 0.14 | nil |
| 2010 | 7.04 | 1.55 | 0.48 | nil |
| 2011 | 7.60 | 1.70 | 0.44 | nil |
| % change | +8 | +10 | -8 | - |
*Includes intangible assets of £5.2m, or 1.3p a share | ||||
