UDG Healthcare's (UDG) profit surge was driven by double-digit growth in its two operating divisions, Ashfield and Sharp. Ashfield, which provides ‘commercialisation services’ for the healthcare industry, experienced a 24 per cent operating profit lift, helped by contributions from acquisitions made last year within its communications and advisory business. UDG nevertheless expects “lower activity levels than previously anticipated” across the group during its second half, as a result of the pandemic.
Trading activity has been sound, but the focus has turned to capital management. The group closed out the period with $151m (£124m) in cash, backed by a strengthening conversion rate (97 per cent), an increasingly important metric prior to the resumption of full commercial activity. The timing of customer prepayments led to a $20.3m working capital decrease that helped drive UDG’s net operating cash inflow up 53 per cent, although this was partially offset by changes in UK tax legislation that nearly doubled UDG’s income tax bill to $17.3m. These timing differences will unwind in UDG’s second half, according to broker Peel Hunt.
Peel Hunt forecasts full-year 2020 adjusted pre-tax profits of $162.7m and earnings per share of 51.5¢, rising to $187.6m and 58.9¢ in 2021.
| UDG HEALTHCARE (UDG) | ||||
| ORD PRICE: | 648p | MARKET VALUE: | £1.63bn | |
| TOUCH: | 647-649p | 12-MONTH HIGH: | 846p | LOW: 423p |
| DIVIDEND YIELD: | 3.6% | PE RATIO: | 22 | |
| NET ASSET VALUE: | 377¢* | NET DEBT: | 17%** | |
| Half-year to 31 Mar | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
| 2019 | 657 | 30.3 | 9.32 | 4.46 |
| 2020 | 694 | 62.3 | 22.1 | nil |
| % change | +6 | +106 | +137 | - |
| Ex-div: | na | |||
| Payment: | na | |||
| £1=$1.22 *Includes intangible assets of $801m, or 319¢ a share **Includes lease liabilities of $98.9m | ||||
