A 26 per cent rise in pre-tax profits at the half-year stage indicates that Synergy Health has been successful in carrying through measures to improve the group's overall performance. A management reorganisation and investment in commercial teams helped to boost the bid pipeline and the forward order book by 5 per cent to £890m. Operational efficiences helped increase underlying operating margins by 143 basis points at 14.9 per cent, and with operating cash flow remaining strong, net borrowings have been cut by £15m to £117m since the end of March.
Synergy Healthcare specialises in providing outsourced support services to the healthcare sector, principally sterilisation of medical devices and infection control, and while turnover was down slightly - a result of non-core disposals - underlying revenue grew 2.5 per cent to £133.7m. And focusing on decontamination and sterilisation is already paying dividends, notably in the UK and Ireland, where revenue grew by 15.4 per cent and 7.7 per cent, respectively. Although currently a relatively small part of group, Asia and Africa is an important medium-term growth area and revenues in the region rose by 29.9 per cent to £5.6m.
Investec Securities is forecasting full-year normalised pre-tax profits of £37.6m and EPS of 51.6p (£32.6m and 45p in 2010), rising to £40.8m and 56p, respectively, the year after.
| SYNERGY HEALTH (SYR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 750p | MARKET VALUE: | £412m | |
| TOUCH: | 746-750p | 12-MONTH HIGH: | 799p | LOW: 548p |
| DIVIDEND YIELD: | 1.9% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 479p* | NET DEBT: | 45% | |
| Half-year to 26 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 143 | 11.8 | 16.6 | 4.9 |
| 2010 | 139 | 14.9 | 21.6 | 6.0 |
| % change | -3 | +26 | +30 | +22 |
Ex-div: 10 Nov Payment: 10 Dec *Includes intangible assets of £229m, or 417p a share | ||||
