Keyhole surgery firm shows improvement as it returns to the black in 2017

Surgical Innovations' executive chairman Nigel Rogers is overseeing a return to profit

The Leeds-based firm said revenues rose 10 per cent and exceeded £6m in the year to December 31.

Gross margins showed continued improvement and the net result for the year is expected to show a return to profitability at the pre-tax profit level.

The group said the integration of the laparoscopic business and assets of Surgical Dynamics, which it bought in November, is continuing and progress is satisfactory. This work is expected to continue through the first quarter of 2017, with manufacture of these additional products underway in Leeds by the end of March.

Nigel Rogers, executive chairman, said bank borrowings were fully repaid prior to the end of the financial year and year end net cash balances were £800,000.

The group will announce its 2016 results in mid-March.

Analyst Eric Burns at WH Ireland said: “A positive update this morning noting that 2016 trading has been slightly ahead of management expectations.

“Surgical offers investors an IP-led platform for growth in the medtech space and 2017 is likely to be an active year both organically and corporately, building on November’s purchase of Surgical Dynamics.

"Our upgraded 5p target price reflects Surgical’s substantial turnaround potential coupled with rarity value of being both profitable and fast growing in the Healthcare sector.“

Surgical has had a torrid time in the past but is now well into its recovery.

The firm is seeing healthy export-led growth and the business has returned to profit and is now cash positive.

Its past difficulties were due to unrealistic expectations of stock sales, which led to excess inventory of £5m on the books. These have now been sold through and regularised to £1.2m.