(The following article is an example of executive interviews by Alliance News journalists. Our EXTRA features are available only on Alliance News professional services.)
27 Sep 2021, 14:29:01 BST
(Alliance News) – Medica Group PLC expects to outperform its market and progressively increase dividends in years to come, and more funding rounds are unlikely to be needed, executives said in an interview on Monday.
The Hastings, England-based company, which provides services such as x-ray and MRI scan analysis to hospitals, had earlier reported a surge in revenue and profit in the first half of 2021. Earnings recovered from last year’s initial pandemic slump, when medical scans were cancelled as hospitals focused on Covid patients.
Revenue in the first half of 2021 increased 56% year-on-year to GBP26.4 million from GBP17.0 million. Pretax profit jumped 69% to GBP2.2 million from GB1.3 million.
“We haven’t given guidance for the rest of the year…going forward, we expect our business in the UK to grow at 12% to 14% revenue levels, and for our acquisitions to be slightly above that at 15% growth. You’ll see the market in the UK, probably in Ireland as well, growing around 10%, so that means that we’ll be growing at above market rates,” Chief Executive Stuart Quin told Alliance News.
Chief Financial Officer Richard Jones added that analysts now expect about GBP63 million revenue and GBP10.8 million pretax profit in 2021, after upgrading their by around 3% because of the interim results. Those would be record earnings, although that includes the effect of two acquisitions in Ireland and the US in the past 12 months.
On a like-for-like basis, “we expect a little bit of [pretax profit] growth versus 2019 in the core business, plus the positive impact of Ireland and the US,” Jones said.
In the first half of 2019, Medica made GBP22.0 million in revenue and GBP4.7 million in pretax profit.
On Monday, the company lifted its interim dividend per share by 4.7% to 0.89p from 0.85p per share.
“Our earnings are progressive and we expect our dividend policy to remain progressive…It’s reasonable to expect a similar rate of growth for the full-year dividend. And then next year the board will have a look at how well we’re doing on our earnings and look at an appropriate level of dividend, looking to grow it,” Jones said.
The company is targeting organic growth but will consider acquisitions, the executives said. But there are unlikely to be any more debt or equity funding rounds, after the firm issued GBP15.5 million in shares in March, to buy US company RadMD.
Medica has a revolving credit facility of GBP30 million with the option to increase that by GBP22.5 million, Jones said, while net debt was only GBP35,000 on June 30.
“We’ve got a flexible facility, and that’s principally how we would think to fund opportunities. They would have to be very large potential opportunities before we start thinking about a mixture of debt and equity,” he said.
By Ivan Edwards; ivanedwards@alliancenews.com
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