Investors take fright at Surgical profit fall

The Leeds-based group, which makes devices for use in minimally invasive surgery, blamed the fall in revenues on tough comparisons with last year when the group received a large order that hasn’t been repeated.

Surgical’s chairman Doug Liversidge said: “There is a very sound reason for the reduction in the first half performance. The first half of last year had a very large industrial order.

“That takes account for all the revenue downturn.

“The reduction in profits is directly a result of the impact from that order.”

Analyst Eric Burns at WH Ireland said: “The market has taken fright at the first half outcome, focusing on the headline 10 per cent decline in revenue and 25 per cent drop in pre-tax profits.

“This misses the point. The comparative includes £670,000 of revenue from a one-off engineering contract.

“Critically, the higher margin Surgical Innovations brand business has performed strong- ly.

“The second half outlook is robust and, although we pare back our full year numbers slightly, the drivers (including product pipeline and the shift from 5mm instrumentation to 3mm) are as strong as ever.”

Last night Surgical’s shares fell 17 per cent to 10.6p.

In the six months to June 30, revenues fell from £3.6m to £3.2m and pre-tax profits were down from £770,000 to £470,000.

Surgical’s chief executive Graham Bowland said: “This has been an encouraging start to the year with good progress across the business, and with significant growth in SI branded prod- ucts.”