The potential for keyhole surgery to cut costs should place Surgical Innovations (SUN) in a key niche at a time when hospitals need to save money - although these figures demonstrate the lumpiness of the group's revenues. For example, second-half sales grew 85 per cent on the preceding period, driven a concentrated marketing effort on 10 key suppliers and through the launch of new products.
Part of the challenge facing the group - and a major reason for the profit fall - is how to manage the switch from original equipment (OEM) sales to third party companies to higher margin own-branded products. A 13 per cent rise in own-branded equipment sales to £5.33m in the period wasn't enough to offset the impact from a 21.5 per cent fall in OEM revenues. A new product for the US market faced regulatory delays, too, mostly because of administrative problems - that pushed back £1m of revenue into the current financial year. Chief executive Graham Bolland said Surgical Innovations was seeing more interest in the savings that its products could generate, particularly in the NHS where winning new contracts is considered difficult. Up to seven NHS hospitals bought the group's equipment during 2012.
Broker Panmure Gordon expects pre-tax profit for 2013 of £1.8m, giving EPS of 0.4p (from £1.5m/0.3p in 2012).
SURGICAL INNOVATIONS (SUN) | ||||
|---|---|---|---|---|
| ORD PRICE: | 5.18p | MARKET VALUE: | £21m | |
| TOUCH: | 5.1-5.25p | 12-MONTH HIGH: | 11.4p | LOW: 5.1p |
| DIVIDEND YIELD: | nil | PE RATIO: | 30 | |
| NET ASSET VALUE: | 3.4p* | NET DEBT: | 19% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 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 | 1.71 | 0.44 | nil |
| 2012 | 7.64 | 1.23 | 0.17 | nil |
| % change | +1 | -28 | -61 | - |
Ex-div:- Payment:- *Includes intangible assets of £6.39m, or 1.6p a share | ||||
