News Column

Synergy Health Raises Dividend As Contract Wins Boost Profit

June 4, 2014

Hana Stewart-Smith

LONDON (Alliance News) - Synergy Health PLC Wednesday raised its total dividend and expressed confidence in its strategy to speed up earnings growth, as it saw pretax profit rise in the year ended March 30.

The company, which provides outsourced support services to the healthcare market, proposed a total dividend for the year of 22.77 pence, up from 20.70 pence in the previous year.

Synergy Health posted a pretax profit of GBP42.9 million, up from GBP38.0 million, as revenue rose to GBP380.5 million from GBP361.2 million, driven by new contract wins. New contracts added GBP500 million to the company's forward order book, which now stands GBP1.5 billion when including contracts at the preferred bidder stage, Synergy said.

During the year the company opened a new gamma irradiation facility in France, and after the year end acquired Bioster Group for EUR29 million, expanding its Applied Sterilisation Technologies businesses into Italy and Eastern Europe.

The company said that over a quarter of its revenue is now derived from the Americas, Asia and Africa regions, increased from 22% in 2013, which it expects to continue.

Although the company's results were strong, it noted that the year had been difficult as there was little growth in developed countries, mostly caused by the Affordable Care Act in the US, better known as "Obamacare", and austerity measures in the UK and Europe.

Synergy's Dutch linen business continued to decline, seeing revenues fall 11%. It completed the restructuring of the linen business during the year, closing a further two facilities during the year, leading to one off costs of GBP3.3 million.

Looking ahead, the company said its strategy is to grow revenue and earnings by around 15% per year through organic growth and acquisitions. To do this, the company is continuing to expand its territories, growth its Hospital Sterilisation Services business and linen services, and move into a third market.

It is presently focused on the inspection, testing and certification market, and acquired UK food-testing laboratory Genon Ltd during the year as a first step in this direction.

Synergy said it intends to make further acquisitions to move into this space, and expects the new service to begin gaining momentum in 2015.

"I am confident that Synergy's updated strategy will build on the success we have seen in recent months with new contract wins," said Chief Executive Richard Steeves in a statement.

Synergy will begin GBP48 million of new work over the next 18 months, and this combined with its bid book of over GBP100 million per year underpins the company's confidence to accelerate its earnings growth, it said.

Shares in Synergy were down 2.1% Wednesday at 1,290.00 pence.

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Source: Alliance News

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