Gyg Share Discussion Threads

[thefod] 14/9/2006 14:33

Maddox, jebenn1 and WJCCGHCC I presume you are all holders. Aren't you worried that GYG paid £275m for a company which contributes just £50m turnover and 09.m profit to the cause.

[wjccghcc] 14/9/2006 13:58

Actually, under IFRS you don't have to amortise anymore. You make fair value adjustments instead.

[jebenn1] 14/9/2006 13:57

thefod - my appologies for being grumpy and overly critical. I just jumped to the conclusion that your comments were cynical deramping.
Very hungover and not capable of rational thought - a poor excuse but an excuse nonetheless.

[maddox] 14/9/2006 13:55

thefod,

Amortisation is not a cash item. So if you wish to view it as a 51% reduction to 2.5p rather than the 54% increase to 7.7p it is on adjusted eps basis - that is fine. However, when the underlying growth, again being masked by the Dollar decline, shows through as it will in irrefutable cash then Gyrus' value will clear to all.....even a doubting little Thomas.

Regards, Maddox

[thefod] 14/9/2006 12:29

A snippet from the interims

Financial Highlights


* Group revenues up 127% to #107.4m (H1 2005: #47.3m) - 116% on a constant
currency basis

* Legacy Gyrus business revenue up 17% to #55.3m (H1 2005: #47.3m) - 12%
on a constant currency basis

* Operating profit pre-restructuring costs and amortisation of acquired
intangible assets up 200% to #17.1m (H1 2005: #5.7m)

* Operating profit margin before restructuring costs and amortisation of
acquired intangible assets rises to 15.9% (H1 2005: 12.1%)

* Operating profit up 82% to #10.4m (H1 2005: #5.7m)

* Basic EPS (including restructuring costs and amortisation of intangible
assets) falls 51% to 2.5p (H1 2005: 5.1p)

* Adjusted EPS (excluding restructuring costs, amortisation of acquired
intangible assets and deferred taxation) rises 54% to 7.7p (H1 2005: 5.0p)

To me that reads Basic EPS down 51% to 2.5p. Amortisation of intangibles will be an annual charge for a number of years.

[wjccghcc] 14/9/2006 11:55

PE is 22 on adjusted EPS dropping to 18 in 07.

[thefod] 14/9/2006 11:49

jebenn1

I was just expressing my opinion. Would you like to contribute and tell me why this share should be valued at a PE of 73 (366 / 5) with little or no prospect of a dividend for a number of years.

[jebenn1] 14/9/2006 11:04

thefod - being generous not "been generous"

I will be seriously amazed if this stock hits 1 pound at any time in the near future. And since you are presumably not a holder of the stock at present I would suggest you take your negative (deramping) comments elsewhere where they are appreciated (if you can find anywhere).

No thankyou and goodbye.

[thefod] 13/9/2006 22:44

Surely this is so overpriced its ridiculous. Basic earnings down to 2.5p for the 6 months. £9m of intangiibles to be written off each year. £360 million of goodwill and intangibles out of assets of £460m. Finance costs of nearly £5m for first 6 months.

Obviously seriously overpaid for the aquistion and this will come back to haunt them.

Fair value £1 and that's been generous!!!

[gre] 12/9/2006 16:52

Maddox,

Thanks for your thoughts on the matter.

I entirely agree with you and can see nothing in these results which would tempt me to sell. I have almost doubled my money on these and can see further gains ahead. For the moment though they appear to be fairly priced on a forward p/e of about 22 - slightly ahead of others in the sector. My only slight disappointment is that there is still no prospect of a dividend, but hey you can't have everything in life!

[maddox] 12/9/2006 13:23

Huttonr,

The effects of the Medronic case is not just the legal fees - it also effected the ENT sales. All in all an unwelcome distraction and expense.

Regards, Maddox

[maddox] 12/9/2006 12:43

gre,

Difficult to explain the drop, the Dollar trends are clear to see and the results are bang in line with the pre-close trading statement of the 14th July. So no real surprises.

Surely, the key point is the excellent performance that has been achieved whilst integrating a size-doubling US acquisition. Also, positive evidence and outlook statement on new products launched and in development. Move into more general surgery offers huge market opportunity. I can't see any negatives to rationalise selling the shares - can you?

Regards, Maddox

[huttonr] 12/9/2006 11:34

gre et al - this note is from last years report:

"Approximately £1.9 million (2004: £0.4 million) was expensed in the continuing
preparation and prosecution of the Group's legal defence against the previously
disclosed intellectual property infringement action brought against the ENT
division by Medtronic."

So - it looks like £1.1M in the last 6 months plus £2.3M previously ie 3.4M in total - a good job that its finished now.
I assume that Medtronic would have spent a similar amount so it's definitely better to invest in legal services.

[gre] 12/9/2006 10:45

The answer to the above question is given in today's announcement. They paid out approximately £1.1m in respect of litigation costs associated with the Medtronic claim. I suppose it could have been a lot worse if they had lost the case.

Presumably the fall in the share price today is down to the caution expressed by the Chairman over the declining dollar? The long term outlook still looks encouraging though with increased cost savings following the acquisition of ACMI.

[wad collector] 08/9/2006 14:22

Yes fair enough , but I wish I had some shares in legal services.

[maddox] 08/9/2006 00:43

Come on wad,

Medtronix have had to drop their suit and to undertake not to try it on again. Gyrus have made no concessions - that's as good a capitulation as you could wish for.

Regards, Maddox

[wad collector] 01/9/2006 09:23

Thanks for that.
All I'm saying is that the there is an enthusiastic embracing of laparoscopes for everything , and for some procedures the outcome may be worse for the patient.In time , with more trial results , there may prove to be more procedures that should be done openly not laparoscopically.
Not withstanding that , I agree they will have a big market .

[maddox] 27/8/2006 09:49

Wad,

If you want to see an independent view of the market potential have a look my post above (no. 30) on a BBC R4 Case Notes broadcast.

Regards, Maddox

[wad collector] 25/8/2006 17:53

I think they have a very secure long term place in the market as long as they keep up their R and D .The demand for surgery isn't going to disappear and they seem to have good name in the marketplace.I'm holding long term.

[maddox] 25/8/2006 00:10

Wad,

The very minor procedure is probably not appropriate to the Gyrus proposition and there are natural limits to their market. However, I agree the trends are in Gyrus' favour. The move is towards more keyhole surgery even in general surgery rather than just specialist areas. Also the cheap disposables market has been there all along, they do not work with Gyrus' generator and cannot infringe Gyrus' patents. Surgeons will demand high quality and the cost/benefit justifies - with right first time surgery, fast recovery and quick turn around.

Nice to have some company on here - what is your view of their market - longer term?

Regards, Maddox

[wad collector] 24/8/2006 21:01

Ther is an old saying in surgery "you make big mistakes through small holes".There is a swing away from laparoscopic surgery in some fields like hernia surgery, but with pressure from managers to minimise in hospital stay, it is hard to avoid concluding that there remains a big (albeit not entirely defined ) place for their products.
Another pressure on the medical instrument industry is the move away from reusable instruments.The latest UK infection control guidelines insist on disposable instruments or an identifiable number instrument sterilisation chain ( In practice this is chaos if the hospital does not have its own Sterile Supplies Unit - and many district hospitals don't anymore), I think this is mandatory in April 07.Almost all minor surgery instruments- a big part of the market including primary care- are probably going to end up being metal disposable.Unfortunately for Gyrus most of these are made in South Asia cottage industries and the huge mark up goes to the salesmen.But it must be good for Gyrus in some way.
Anyway , having held these for about 8 years ( and just about even now ) , I am happy to sit on these for the very long term....

[maddox] 18/8/2006 20:57

The Times reports - Gyrus Group, the maker of medical devices, stood out with an 11¼p rise to 363p, despite its exposure to a weak dollar, amid talk of US predatory interest.

I can't say I'm surprised - I just pray it doesn't happen. There is a lot of milage in Gyrus and I want to see it get into the price.

Interim results 12th Sept.

Regards, Maddox

[johnroger] 06/7/2006 14:39

Morgan Stanley initiated coverage of Gyrus Group shares with an "overweight" stance and a 426p price target. The shares rose 1.75p to 348.75p. The broker said it thought that near-term concerns were clouding the long-term growth story at Gyrus. Moreover, Morgan Stanley said it believed its numbers were reasonably conservative and that it saw upside potential in all three major divisions. The broker thought concerns over weak hospital capital spending seemed misplaced. The broker argued that consensus expectations were too be low and it thought this could be a catalyst for 2007 earnings upgrades.

[maddox] 04/7/2006 21:20

04.07.06 :+1.75, (348.75) initiated 'overweight' at Morgan Stanley with a price target of 426 pence, dealers said. In a note to clients, the broker said near-term concerns, such as weak hospital capital spending, are clouding the long-term growth story at Gyrus. Moreover, it believes its numbers are reasonably conservative and sees upside potential in all the group's three major divisions. Morgan Stanley added management target is for 10% organic sales growth a figure the broker thinks is achievable if Gyrus beats its expectations, particularly for the general surgery opportunity. Furthermore, an update on its new general surgery effort in September could be the catalyst. The broker expects an update on the new general surgery product roll-out at the interim results. As a result, the broker said consensus expectations appear to be low and this could be a catalyst for 2007 earnings upgrades.

Keep the faith, Maddox