Medical devices distributor IMD reported losses for the year to August, though investors have yet to see the best of recent acquisitions and analysts are predicting profits this year.

The group completed two acquisitions this year. Response, bought in April, is a distributor of cardio-respiratory products, whilst EMS is an ‘Aged Care’ products company that was acquired only a month before the year-end. Accordingly last year's financials failed to reflect the growth potential of the group.

Losses of £280,000 were incurred on £3.8m turnover, but the numbers included only 11 months worth of the Acute Care products business acquired in September 2005, a mere 5 months from Response, and a solitary month from EMS. Adjusted earnings amounted to 0.31p per share and net assets stood at £15.7m at the year-end.

Furthermore, IMD operates in a highly fragmented market dominated by small players, yet estimated to be worth £4bn, of which more than 40% pertains to IMD’s business areas. The group is looking to consolidate its position by acquiring two to three businesses per year, focusing on targets that are profitable, have annual sales of more than £2m and which will enhance earnings. Management also hope to extend current distribution channels and appoint distributors abroad for eventual expansion into North America and to further the company’s presence in Europe.

House broker Corporate Synergy believes sales for this year could hit £11m, yielding adjusted pre-tax profits of more than £1m and earnings of 0.37p a share for IMD. Those forecasts place IMD on a forward p/e of 8.5 times and the shares could reward a long-term punt. Speculative buy.

International Medical Devices	AIM	£2.94m	0.88p	0.00p
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