Surgical Innovations cheers results

SI's products in use during a gallbladder removal

The Leeds-based firm said trading was solid in the second half of the year to date and said it has ambitious plans for the future and confidence in its ability to deliver further success.

The group's chief operating officer and chief financial officer Melanie Ross said the first half performance has exceeded the whole of last year.

"These results reflect all the investment and the hard work over the past few years," she said.

"We anticipate our own SI brand sales will grow."

SI reported good progress on the integration of Elemental Healthcare, which it bought last month.

"Elemental is going really well ," said Ms Ross.

"Having Adam Power and David Marsh join the board has brought a new view of commercial. They have some great ideas."

SI bought Elemental Healthcare, an NHS medical products supplier, for £9.4m. Elemental was already well known to the firm as the exclusive distributor of SI branded products in the UK. As part of the deal, Mr Power and Mr Marsh joined SI's board.

SI reported a 14 per cent increase in revenue to £3.5m in the six months to June 30, led by strong OEM performance and UK sales growth.

It made a pre-tax profit of £300,000, up from a loss of £60,000 in the first half last year and an annual profit of £280,000 last year.

"We think the first half of the year has gone really well and we hit the upper range of our expectations," said Ms Ross.

"We are confident in our ability to turn our product road map into reality."

The group has faced constraints caused by a more demanding regulatory environment across the industry in the past few months, but said it is well placed to cope with the challenges.

"New players are having a tougher time than we are," said Ms Ross.

Analyst Eric Burns at WH Ireland said: "Surgical innovations' interims are strong with first half revenue growth of 14 per cent.

"The firm is delivering on its strategy of building a healthcare business of scale on AIM. Strong underlying growth combined with its first major acquisition mean that the full year should continue this trend whilst a robust balance sheet means it is well placed for further M&A in the sector."

Analyst Chris Glasper at N+1 Singer added: "Surgical Innovations has issued a strong set of interims, with revenues up 14 per cent and a move back into sustainable profits confirmed.

"Ahead of the acquisition of Elemental in August, net cash increased to £1.2m. We make no changes to our forecasts at this stage after upgrading materially for the Elemental deal, which we continue to view as transformational for the group.

"We see plenty of mileage in the story and reiterate our 'buy' recommendation."