The sexual health and patient hygiene products provider Sutherland Health Group has reported a maiden annual profit of £29,336 for the year to 31st March 2010. During the year the group achieved a 6% increase in revenues to £0.96 million on gross margins that were 5.4 bps higher at 52.3%. This improvement in margins alongside an 8% reduction in administrative expenses saw it reverse last year’s losses per share of 0.18p to 0.05p of earnings. No dividend payment was recommended for the year.

At the year-end the company held net current liabilities of £85,127 and net liabilities of £2,154 – a situation that has been transformed by the raising of £217,000 via a placing since the 31st March year-end.

The firm said its new financial year had gotten off to a good start, with first quarter trading ahead of the previous year. Since the year-end the business had made further progress with it receiving funding in order to research the development of new products and winning NHS contracts for the supply of its Thixo-D nutritional supplements. Furthermore, the second-half performance is set to be boosted by the launch of new gynaecology diagnostics products.

At the current 2.375p mid-price the firm is capitalised at £1.5 million. The significantly stronger balance sheet, improved second-half prospects and management’s focus on controlling the cost base mean that we expect a good set of interim results. What’s more the company’s operational gearing should mean that profits advance further as revenues grow. Long-term buy<.strong>.