The group has adopted a conservative dividend policy to ensure that it has funds to grow through both research and development and acquisition. It has deliberately increased its dividend cover from 1.4 times earnings in the early 1990s to its current target minimum level of just over three times.
Mr Stephenson said the health sciences company felt that cover of three to four times earnings was more appropriate for a growth business. Now that this had been achieved, the company would allow dividends to grow more closely in line with earnings, he said. Even so, he said, this would only be 'by something between UK inflation and what earnings per share growth we can achieve.'
Amersham made pre-tax profits of more than pounds 43.5m in the year to the end of March, a 65 per cent increase on 1993. Exchange rate gains were a significant contributor, accounting for more than pounds 13.2m of the increase. The successful acquisition of US Biochemical also boosted the figures, adding pounds 3.1m to profits. Excluding both factors, underlying organic growth was more than 9 per cent and the City reacted favourably to profits that were at the top end of expectations, pushing the share price up 33p to 971p.
Turnover rose 20 per cent to pounds 324.2m, including a pounds 30.7m first- time contribution from US Biochemical, bought for dollars 60m in April last year. It also reflected a pounds 23.8m drop in turnover from the now-sold Clinical Reagents.
Amersham, which specialises in sophisticated laboratory tools and high-tech nuclear diagnostic equipment and drugs, saw sales of Metastron, its innovative bone cancer drug, leap from pounds 2m to pounds 14.4m on the back of a co-promotion deal with Zeneca, the former ICI drug group. Myoview, a product that enables doctors to see what is happening in a patient's heart, is showing promising growth. It has achieved regulatory approval in Europe and Japan, and expects US approval shortly.
Bill Castell, the chief executive, said cardiac diagnosis was the largest market in nuclear medicine, worth more than pounds 200m a year.
Amersham had net cash flow of pounds 5m after paying pounds 10.6m. It had net cash of pounds 7.7m at the year end.
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