Friday 27 January 2012

SYNERGY HEALTH PLC

("Synergy" or "the Company") 

Q3 Interim Management Statement

Synergy (SYR.L), a leading provider of specialist outsourced support services to health related markets, is pleased to provide an update on trading performance since 2 October 2011. 

Trading Update

Synergy is trading in line with the Board's expectations for the full year.

Reported revenues for the nine months to 1 January 2012 increased by 8.1% to £232.5 million compared to the same period last year, which benefited from an extra week of trading (Q3 2010/11: £215.1 million).  On a like for like basis, the reported revenue would have increased by 10.8%.

Underlying revenues, excluding currency effects and prior year non-core business, were £229.5 million, 11.5% above last year (Q3 2010/11 £205.9 million).  On a like for like basis excluding the extra week, the organic underlying revenue would have increased by 7.4%.

Underlying revenues in the operating regions were as follows:

* 39 weeks vs. 39 weeks

** proforma growth

Operating margins are up 0.3% on the comparative period and net debt reduced to £145 million, from £149 million at 2 October 2011.

European Cost Reduction Programme

Whilst the operating environment in Europe continues to be relatively stable, the macroeconomic risks are perceived to have increased. We have therefore been focused on maximising our cost efficiencies and have recently carried out a re-organisation that will reduce our cost base by approximately £2.0 million on an annualised basis.  The redundancy costs of this exercise have been expensed in the period.  In addition, we have closed four facilities and consolidated processing and manufacturing into other facilities to achieve scale benefit. A surplus property will also be sold.  As a result there will be a non-recurring exceptional charge of approximately £2.3 million taken in the year ending 1 April 2012.

UK & Ireland

Revenue growth increased slightly following the opening of a new Hospital Sterilisation Service (HSS) facility with the North Lincolnshire & Goole Trust in November 2011.  The associated contract with the United Lincoln Hospitals Trust will go live as planned in May 2012. NHS patient volumes have returned to normal levels and remained robust.  Applied Sterilisation Technology (AST), Linen and Healthcare Solutions all remained steady in the period.

Europe

AST revenues grew by 27.8%, (11.1% organic), reflecting good growth across all our countries.  Our EtO capacity expansion in Venlo is progressing to plan and the new gamma plant in Marcoule will open on time in September. The competitive environment in our Dutch linen business remains challenging and as a result the business declined by 4.2%.  Since the start of Q4 however, we have taken a more aggressive stance in the market winning €1.1 million p.a. of new work.  

Asia & Africa

Revenue growth in Asia & Africa continued to be strong, increasing by 31.1%.  Our EtO capacity expansion in Kuala Ketil, Malaysia, is progressing to plan.  We are in the final stages of recruiting a new, very experienced person to be our Asia & Africa CEO, underlining our commitment to this region.

Americas

The Americas continues to perform well and in line with expectations.  Revenues are up 29.0% on a pro forma basis.  Our new EtO plant in Florida is now open and the new EtO plant in Costa Rica remains on course to open in the autumn.

Synergy will provide a further update at the end of the next quarter in April 2012 and will report preliminary results in June 2012.

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