Synergy Health finals

Delivers a range of specialist outsourced services to healthcare providers and other clients concerned with health management. Such as hospital sterilisation services; applied sterilisation technologies for single-use medical devices; reusable surgical solutions for daily delivery of sterile reusable gowns and towels; clinical pathology, toxicology and microbiological services; chemical and microbiological analysis; linen management services for healthcare facilities and product solutions designed for infection prevention and control, patient hygiene, surgical procedures and wound care.  I have a holding in my growth portfolio (epic code: SYR)

Synergy announced their final results yesterday with revenue of £380.5m up 5.3%, and after removing the impact of currency movements was up 4.1%.

 

Gross margins were up 190bps to 40.9% and adjusted EPS up 7.6% to 70.59p, with diluted EPS at 57.05p an increase of 9.8%.  Management are Proposing a final dividend of 14.20p, which together with the interim dividend would give dividends for the year totaling 22.77p representing an increase of 10.0%.

 

In 2013/2014, they state that the company won a number of contracts that in aggregate added £0.5bn to their forward order book, which now stands at £1.5bn, giving the company substantial visibility going forward.

 

Free cash flow was again strong at £39.4m compared to £34.4m last year, with net debt being reduced by £29.7m to £147.6m, representing gearing of 43% and covered 54% by their operating cash flow. 

 

Management expect that their new contracts wins of £43 million per annum will be implemented over the next sixteen months and this will raise their growth rate, although due to investments in R&D they expect to see their operating margins reduce by 50bps.  They do though expect their growing bid books and bid conversions, that will ultimately drive top-line growth, to off-set this investment in R&D. 

 

I have held SYR for 9 years now and they have been a good growth stock, with their share price over that time growing by over 14% compound per annum.  Today at 1311p they look fully priced at 16.8x this year's forecast EPS of 77.9p.  Those forecasts are for 10.4% growth for this year and just 5.8% to 82.4p in 2016.  There may be better prospects elsewhere, so I may part company with my longest held growth stock.