Surgical's operation is paying off

The Leeds-based group’s shares rose 7 per cent on the news that 2016 revenues are “significantly ahead” of last year.

Executive chairman Nigel Rogers said: “2015 was a year of transition. In the first half of the year we were still dealing with the challenges. In the second half of the year we were positioning the company for growth.

“We saw good revenue growth as the business rebounded from the low point in 2014. The business is now profitable at the EBITDA level.”

2015 revenues rose 36 per cent to £5.5m and the group reduced its pre-tax loss from £9.8m to £2.1m. Adjusted EBITDA for the full year was £240,000, an improvement on the £50,000 loss in 2014.

“The worst is behind us,” said Mr Rogers.

“The low point was late 2014/early 2015. A lot of superfluous cost was taken out.” Surgical lost its way when it failed to sort out a bottleneck in its US distribution chain. The company became too reliant on other firms launching its products but Mr Rogers, a respected turnaround specialist, is now setting up new US partnerships.

He has also persuaded finance director Melanie Ross, who had been going to leave, to stay on in the role. Ms Ross was brought in by former interim managing director Chris Rea, the entrepreneur behind Rotherham-based mechanical seals maker AESSEAL.

Surgical specialises in making ‘resposable’ instruments – which contain long-lasting reusable parts and cheap throwaway parts that are only used once.

The firm said that its net operating loss for 2015 was £2m following exceptional costs relating to long-term debtor provisions, stock provisions, impairment of intangibles and restructuring costs of £1.3m.

Mr Rogers and Ms Ross have taken a lot of superfluous costs out of the business.

“The areas that were protected were sales, marketing and core manufacturing skills in Yorkshire,” said Mr Rogers.

“The business had accumulated a lot of extra costs.”

Ms Ross said: “We had 120 people in 2014 –a lot was temporary labour. Job losses were 35 to 37 people and that took place in late 2014.

“January 2015 took us to a headcount of 48 to 50 people and we gradually started building back up. We now have around 55 people. The hope is to continue to increase our head count.”

The group’s shares rose 0.1p to 1.5p.

“The business is very strong in identifying what surgeons need and has a very strong history,” said Ms Ross.

Mr Rogers said; “We are looking forward to 2016 with confidence where the business is profitable at the EBITDA level and cash generative.”

Mr Rogers was chief executive of Leeds-based machine tools maker The 600 Group between 2012 and 2015.

During this time he turned the group around by disposing of operations in Poland and South Africa and selling surplus property assets in the UK.

Before that he was CEO of electronics manufacturer Stadium Group.

When he joined Stadium was heavily indebted, had expanded into China through acquisitions and was a diversified industrial in need of focus.

Mr Rogers focused the company on electronics and sold off non-core businesses.