Synergy announced their mid-year (six-months to 30 September) financial result last week (Synergy six month result 30 Sept 2006).

Synergy revenues were up 4% on the prior period a year ago at NZ$18.03 million and the operating surplus before tax (EBIT) was NZ$1.219 million – an approximate 6.8% EBIT margin.

Our valuation (Synergy Valuation) assumed 3% annual revenue growth and a 5.0% EBIT margin.

We believe this is further evidence that our valuation is about right.  We will see where Synergy is at year-end before we would look to make any changes our valuation.  5% EBIT margins should be the bare minimum that Synergy is looking to achieve.

Synergy placed a lower valuation on the shares in a release to shareholders in August (Synergy valuation notice).  We are comfortable with our analysis and still believe Synergy’s advice to shareholders at the low end of any valuation range.

This entry was posted on Monday, October 30th, 2006 at 4:37 pm and is filed under Synergy, Unlisted Market. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.