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| Share Name | Share Symbol | Market | Type |
|---|---|---|---|
| Synergy Brands | AMEX:SYR | AMEX | Ordinary Share |
| Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.00 | - |
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RNS Number:7408R
Synergy Healthcare PLC
06 November 2003
Synergy Healthcare plc
Interim Results for the 26 weeks ended 28 September 2003
Pre-Tax profit up 81% on record organic growth and new business wins
Synergy Healthcare ("Synergy") is the largest provider of sterile and
decontamination services for surgical instruments for the NHS. It is also the
largest focussed supplier of linen management services to the NHS.
* Revenues increased 25.4% to #15.3 million (H1 2002: #12.2 million)
* Profit before taxation increased 81.2% to #1.74 million (H1 2002:
#0.96 million)
* Basic earnings per share rose 68.8% to 5.35p (H1 2002: 3.17p)
* Interim dividend increased 22.2% to 1.1p (H1 2002: 0.9p)
* Synergy awarded 35-year contract for new Derby hospital
* Synergy has been selected as a preferred partner for a second large
PFI project
* Positive start to bidding process for decontamination contracts for
NHS hospitals
* Strong forward "order book" of over #230 million
Dr Richard Steeves, Chief Executive, commented:
"The first half of the year has been a period of great activity for Synergy and
this excellent performance reflects a successful business model and operational
structure.
"We enter the second half having achieved record organic growth and an increase
in operating margin. Winning new business from the NHS has lifted our forward
order book to over #230 million with sales activity remaining high across the
business.
"Contract opportunities are accelerating due to the Department of Health's plan
to outsource the decontamination services of all hospitals throughout the
country. We hope to announce further good news in the coming months."
6 November 2003
ENQUIRIES:
Synergy Healthcare plc Tel: 01332 387 100
Dr Richard Steeves Today: 0207 457 2020
College Hill Tel: 020 7457 2020
Nicholas Nelson/Corinna Dorward
CHAIRMAN'S STATEMENT
I am pleased to report that Synergy has covered significant ground during the
first half of the current financial year. In addition to excellent financial
results, we have continued to expand our share of all markets in which we
operate.
Results & Dividend
Revenues for the period were #15.3 million (H1 2002: #12.2 million)
representing an increase of 25.4% over the corresponding period last year.
Continued focus on operational efficiencies and the drive for "cost leadership"
led to an increase of 1.0% in gross margins to 33.8% whilst operating margins
(pre-exceptionals and goodwill) rose to 12.1% (H1 2002: 9.4%) giving an
operating profit (pre-exceptionals and goodwill) of #1.85 million (H1 2002:
#1.15 million).
Profit before taxation increased 81.2% to #1.74 million (H1 2002: #0.96
million) and basic earnings per share rose 68.8% to 5.35p (H1 2002: 3.17p).
Based on this strong performance the Board has declared an interim dividend of
1.1p per share (H1 2002: 0.9p), an increase of 22.2%. The dividend will be paid
on 5 December 2003 to shareholders on the register as at 14 November 2003.
Business Review
This has been another strong period for Synergy with record organic growth and a
significant increase in operating margin in both the Healthtex and Surgical
businesses. Sales in Healthtex increased 17.1% whilst operating margins
improved 2.2%. In the Surgical business, which provides sterilisation services
for surgical instruments to the NHS, sales increased 35.9% whilst operating
margins improved 2.7%.
The Company has won further new business lifting the forward "order book" to
over #230 million. Sales activity remains high at present within both the
Surgical and Healthtex businesses and continued expansion of the order book is
anticipated.
The Southern Derbyshire Acute Hospitals NHS Trust announced in early September
that, starting this year, a new hospital would be built in Derby to replace the
existing Derby Royal Infirmary and Derby City General Hospital - this will be
the UK's largest PFI hospital to date. In September Synergy was awarded a
35-year contract (extending an existing arrangement) under which it will be
responsible for the hospital's sterile services. This contract together with a
contract for linen management services will have a value of over #2.5 million
per annum.
We are pleased to report that Synergy was recently selected as preferred partner
to a large PFI hospital project for sterile services and linen management. The
combined contract is larger than the Derby PFI, and if financial closure were
achieved on time, would begin in 2005. Further details will be announced
towards the end of November.
Throughout the period we have continued to invest in our IT systems, which we
see as essential to our market leading position. In particular we have continued
to deploy our sterile services management system TrakStarTM throughout our
business. We are also investing in Healthtex, to ensure that the highest
standards of quality are maintained and to support our customers' needs as we
continue to strive for operating efficiency gains. The overall increase in net
operating margins (pre-exceptionals and goodwill) to 12.1% is testimony to the
effective implementation of these strategies.
Cash flow
Given our continued commitment to investing in the future of our business, cash
generation during the period was pleasing with operating cash flows increasing
to #2.9 million from #1.9 million in the same period a year earlier.
Capital expenditure amounted to #2.5 million, of which #1.6 million was invested
in the expansion of capacity at existing Healthtex sites and in equipment
designed to increase the operating efficiency and capacity of existing surgical
facilities. Approximately #0.9 million was invested in circulating inventory.
Employees and management
We continue our initiative to expand the management team ahead of the next
growth phase as we push for a leading share of the NHS contracts coming up for
tender over the next four years. I am pleased to welcome our new commercial
development team together with four new members of the IT development team.
During the period, the Company created a new post on the operating board of
Chief Operating Officer. We are currently recruiting for this post following
the recent departure of Tony Woolgar. I would also like to thank all our
employees for their tremendous commitment during the last six months.
Board Changes
We are pleased that Mr Ivan Jacques, previously a Chief Finance Officer and
latterly Chief Operating Officer at Fujitsu Consulting Northern Europe, is
taking on the role of Finance Director of Synergy and will join the Board on 1
December. Mr Jacques, (39), has considerable knowledge of outsourcing and
service industries as well as M&A, IT and international development. He has
held senior positions over the last four years within Fujitsu's UK and Northern
European IT consultancy, software integration and managed services businesses.
Mr Jacques replaces Synergy's current Finance Director, Julia Wilson, who has
decided to leave the company today to pursue other interests. Julia joined
Synergy Healthcare in June 2002 and has made an important contribution to the
business and Board affairs during a crucial stage in the Company's development.
We wish her well with her future endeavours.
Outlook
In June 2003 the Department of Health announced its strategy for modernising the
provision of hospital decontamination services and, as a result, the traditional
NHS run sterilisation units will begin a phased transfer to the private sector.
Synergy is the UK market leader in the provision of sterile services, operating
twelve sites, and is very well positioned to take advantage of the significant
opportunities presented by this development. The Company has been short-listed
for the Leeds Bradford decontamination service, which is the initial pathfinder
project under the new national strategy. The Department of Health has indicated
that it will encourage a competitive market for services in this important new
area and because of this it may not follow that Synergy will win this initial
contract, despite our credibility and leadership in this market. However, we
remain focussed on winning one or more of the next "wave" of five projects,
which were announced on 23 October 2003.
The linen services market remains very active and we are certain that the
Healthtex operation, with its focus on quality and service, will continue to win
market share.
In conclusion, therefore, your Board looks forward with confidence to a strong
full year performance.
Stephen Wilson
Chairman
CONSOLIDATED PROFIT AND LOSS ACCOUNT
26 weeks ended 26 weeks ended 52 weeks ended
28 September 29 September 30 March
2003 2002 2003
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Turnover
Continuing operations 15,316 11,965 26,590
Discontinued operations - 248 521
15,316 12,213 27,111
Cost of sales (10,141) (8,203) (18,253)
Gross profit 5,175 4,010 8,858
Net administrative expenses (3,322) (2,859) (5,790)
Non- recurring costs - (103) (252)
Goodwill (134) (120) (249)
Total net administrative expenses (3,456) (3,082) (6,291)
Continuing operations 1,719 971 2,702
Discontinued operations - (43) (135)
Operating profit 1,719 928 2,567
Loss on closure of discontinued operations - - (255)
Profit on ordinary activities before interest 1,719 928 2,312
Net interest 20 33 32
Profit on ordinary activities before taxation 1,739 961 2,344
Taxation on profit on ordinary activities (556) (297) (751)
Profit for the period 1,183 664 1,593
Dividends (243) (197) (639)
Retained profit for the period 940 467 954
Earnings per ordinary share
Basic 5.35p 3.17p 7.42p
Diluted 5.09p 2.99p 7.11p
Adjusted basic 5.76p 3.74p 9.98p
Adjusted diluted 5.48p 3.53p 9.57p
CONSOLIDATED BALANCE SHEET
As at As at As at
28 September 29 September 30 March
2003 2002 2003
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Fixed assets
Intangible assets 4,855 5,146 4,989
Tangible assets 18,332 17,453 17,175
23,187 22,599 22,164
Current assets
Stocks 1,130 983 1,252
Debtors 4,982 4,769 3,839
Cash at bank and in hand 6,276 2,079 6,653
12,388 7,831 11,744
Creditors: amounts falling due within one year (8,964) (6,532) (7,949)
Net current assets 3,424 1,299 3,795
Total assets less current liabilities 26,611 23,898 25,959
Creditors: amounts falling due after more than one
year (1,120) (238) (1,422)
Provisions for liabilities and charges (644) (334) (644)
24,847 23,326 23,893
Capital and reserves
Called up share capital 138 137 138
Share premium account 21,075 20,982 21,061
Merger reserve 430 430 430
Profit and loss account 3,204 1,777 2,264
Shareholders' funds 24,847 23,326 23,893
CONSOLIDATED CASH FLOW STATEMENT
As at As at As at
28 September 29 September 30 March
2003 2002 2003
(unaudited) (unaudited) (audited)
#'000 #'000 #'000
Net cash inflow from operating activities 2,862 1,897 6,314
Returns on investments and servicing of finance
Interest received 76 55 118
Interest paid - - (8)
Hire purchase contract interest paid (55) (22) (78)
Net cash inflow from returns on investments and
servicing of finance 21 33 32
Taxation - - (340)
Capital expenditure and financial investment
Purchase of tangible fixed assets (2,529) (4,710) (4,241)
Sale of tangible fixed assets 66 - 8
Net cash outflow from capital expenditure and
financial investment (2,463) (4,710) (4,233)
Acquisitions - (11,312) (10,929)
Equity dividends paid (442) (259) (456)
Management of liquid resources 4,500 4,500 750
Financing
Issue of share capital 14 12,000 12,080
Issue costs - (790) (790)
Capital element of hire purchase contracts (369) (140) (385)
Net cash (outflow)/ inflow from financing (355) 11,070 10,905
Increase in cash 4,123 1,219 2,043
Reconciliation of net cashflow to movements in net funds
Increase in cash 4,123 1,219 2,043
Cash outflow from hire purchase contracts 369 140 385
Cash (inflow) from liquid resources (4,500) (4,500) (750)
Change in net funds resulting from cashflows (8) (3,141) 1,678
Inception of hire purchase contracts - - (1,640)
Movement in net funds in the period (8) (3,141) 38
Net funds at beginning of period 4,786 4,748 4,748
Net funds at end of period 4,778 1,607 4,786
Notes to the interim results for the twenty six weeks ended
28 September 2003
1. The interim results have been prepared on the basis of the accounting
policies set out in the audited financial statements for the 52 weeks ended 30
March 2003.
2. The directors have declared an interim dividend of 1.1p (2002: 0.9p)
per share payable on 5 December 2003 to shareholders on the register on 14
November 2003.
3. The taxable charge is calculated for the period by applying an
estimated effective tax rate of 32% (2002: 31%) for the 52 weeks to 28 March
2004 to the profit before taxation for the period.
4. The calculation of earnings per share is based on the profit after
taxation for the period divided by 22,106,313 (2002: 20,964,908, 2003:
21,482,355) shares being the weighted average number of shares in issue during
the period. The diluted earnings per share has been calculated using 23,225,354
(2002: 22,194,423, 2003: 22,410,846) shares which includes the weighted average
number of dilutive shares in respect of share options outstanding during the
period of 1,119,041 (2002: 1,229,515, 2003: 928,491). Basic and diluted
earnings per share before goodwill amortisation use profit on ordinary
activities after taxation adjusted for goodwill amortisation.
5. The financial information set out above does not constitute financial
statements. The statutory financial statements for the year ended 30 March 2003
have been delivered to the Registrar of Companies and the auditor's report on
those financial statements was unqualified and did not contain statements under
section 240 of the Companies Act 1985. The financial information for the 26
weeks ended 28 September 2003 and 29 September 2002 are unaudited.
6. This interim report is being sent to all shareholders and is
available to the public from the company's registered office, Ascot Drive,
Derby, DE24 8HE on 20 November 2003.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR FSUFWISDSEIF
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