Wright Health Group, the Scottish dental equipment maker chaired by Sir Angus Grossart, saw profits recover sharply in 2014 after three years of decline.

The group, which employs more than 100 people in Dundee, saw turnover rise by five per cent to £51.7m, while pre-tax profit lifted from £915,000 to £1.3m, a rise of 43per cent, according to accounts just published at Companies House.

Net debt however rose during the year from £3.7m to £5m, most of it in bank overdraft, more than twice its 2012 level. The dividend was cut from £498,000 to £332,000.

The directors led by Sir Angus and managing director Ian Matheson said market conditions continued to be very challenging for the group. “Nevertheless it delivered solid growth in the provision of dental materials through the strategic expansion of its sales teams. However, in common with its major competitors, sales of capital equipment were difficult as both state and private dentists curtailed their levels of capital investment.” The devaluation of the South African rand of almost 18 per cent during the year also impacted the group’s three sales and distribution subsidiaries in the country, which accounted for £17.5m or around one third of turnover.

Wright Health Group also operates a manufacturing facility in Hungary, and laboratory materials distribution in the US where sales were £1.1m.

Gross margins tightened again, by one point to 28.9per cent, down from 33.1per cent in 2011, due to a combination of product mix and increased price competition in all major markets. Costs were cut by two per cent, as staff numbers were reduced to 346, down from 419 in 2011.

The directors said higher borrowings were due to continued investment in the business, and gearing was now at 30 per cent. Sales growth had triggered greater working capital requirement, but the group continued to monitor the area closely and maintain a focus on strengthening its balance sheet. Shareholder funds rose from £15.8m to £16m.

The group expects the current year to follow a similar pattern. “Our customers face the challenge of reduced state funding and potential changes in the sophistication of treatment plans due to the pressures on disposable incomes of patients and their families. Exchange rate fluctuations may contribute additional costs to the practices and their laboratories.”

But the directors say the group continues to operate from a solid platform, with a strong balance sheet allowing organic investment and the “ability to seize appropriate acquisitions as and when they arise”.