Surgical Innovations Group expects flat annual revenues

Surgical Innovations Group's shares tumbled Tuesday after the company said 2012 revenues were hit by manufacturing capacity constraints and delays in regulatory approvals in the final quarter.

Shares fell almost 15% on the morning of the announcement as the group said it expected total revenue last year to come to £7.6m, unchanged from 2011.

The designer and manufacturer of solutions for surgery said manufacturing capacity constraints its UK facility in Leeds and a delay in US regulatory approval impacted revenues towards the end of the financial year. As a result, revenues of £1.0m were not seen until January.

Nevertheless, trading improved 85% to £5.6m during the last half of the year, driven by an increase in product orders.

The company's SI Brand business represented 68% of overall revenues, compared to 62% in 2011.

Gross margins were anticipated to have improved by three basis points to 50.3%, up from 47.3% the year earlier.

Adjusted earnings before interest, tax, depreciation, and amortisation (EBITDA) for the period was projected to reach £2.85m, up from £2.8m.

The firm ended the year with short term borrowings of £1.4m against bank facilities provided by HSBC of £2.0m.

Graham Bowland, Chief Executive Officer, said: "I am pleased with the strong sales performance that we've achieved in the second half of the year.

"There is no doubt that the manufacturing capacity constraints we experienced in the final quarter of 2012 justify the need for our proposed new facility part funded by the award of the £5.0m regional growth fund."

RD