Acquisitions had a big impact on hospital sterilisation specialist Synergy Health (SYR) last year. Expansion into the US market through the purchase of SRI last summer and MSI Surgical in March, helped the company to offset a marked slowdown in the UK and Dutch healthcare markets. As a result, adjusted operating profits rose by 15 per cent to £56.2m, but underlying revenue only rose by 1 per cent after stripping out the benefit of acquisitions.
The low sales growth reflects the fact that Synergy is facing a slowdown in its core markets in the UK & Ireland, along with Europe and the Middle East. These regions account for 77 per cent of total revenues and it was obvious that the company struggled to achieve any traction. For instance, a drought of hospital sterilisation contracts meant UK revenues were flat at £158m, with cost control the main reason for a 20 per cent rise in operating profits to £34m. In Holland, the previously stable linen market has seen intense price competition recently and this was the main reason for a 13 per cent decline in European profits to £16.8m.
Canaccord Genuity forecasts current year adjusted pre-tax profits of £53.1m and EPS of 67.5p, up from £50.3m and 66.8p in 2013.
SYNERGY HEALTH (SYR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,099p | MARKET VALUE: | £643m | |
| TOUCH: | 1,097-1,100p | 12-MONTH HIGH: | 1,136p | LOW: 800p |
| DIVIDEND YIELD: | 1.9% | PE RATIO: | 20 | |
| NET ASSET VALUE: | 586p* | NET DEBT: | 51% | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 225 | 18.9 | 28.2 | 10.1 |
| 2010 | 286 | 24.5 | 40.6 | 13.2 |
| 2011 | 287 | 36.7 | 52.1 | 15.8 |
| 2012 | 312 | 32.5 | 44.5 | 18.0 |
| 2013 | 361 | 38.8 | 54.1 | 20.7 |
| % change | +16 | +19 | +22 | +15 |
Ex-div: 7 Aug Payment: 5 Sep *Includes intangible assets of £280m, or 478p a share | ||||
