Final Results

SYNERGY HEALTH PLC

("Synergy", the "Company" or the "Group")

PRELIMINARY RESULTS FOR THE TWELVE MONTHS ENDED 1 APRIL 2012

Synergy Health plc (LSE: SYR), a leading global provider of specialist outsourced support services to health related markets in the UK & Ireland, Europe & Middle East, Asia & Africa, and Americas, announces its preliminary results for the year ended 1 April 2012.

Financial Highlights

·; Strong revenue growth of 8.6% and underlying revenue growth (excluding non-core revenue and currency effects) of 12.3%

·; Good organic underlying revenue growth of 5.4%; 7.5% on like-for-like basis (excluding the 53rd week in the comparator)

·; Adjusted operating profit* margin up by 0.7% to 15.7% (2011: 15.0%)

·; Cash generated from operations increased 8.5% to £85.0 million (2011: £78.3 million)

·; Net debt increased to £173.5 million (2011: £112.3 million), reflecting recent debt-funded acquisitions

·; Total dividend up 13.6%, reflecting growth in adjusted earnings

Operational Highlights

·; Strong organic underlying growth across key service lines with Applied Sterilisation Technologies growing by 8.9% and Hospital Sterilisation Services by 10.1%

·; Increased global presence in Applied Sterilisation with acquisitions in the Americas, Malaysia and Switzerland resulting in total underlying revenue growth of 35.8%

·; Good underlying revenue growth with UK & Ireland at 9.7%; Europe & Middle East at 2.4%; Asia & Africa at 31.7% and Americas at 28.5% (pro forma)

·; 9.8% of revenue now generated outside the UK & Ireland and Europe & Middle East regions

·; All acquisitions integrated well and performing in line with expectations

·; Entry into the US hospital sterilisation market

·; Good progress in China with development of hospital sterilisation opportunities

·; Rationalisation of manufacturing and linen facilities driving margin improvement

·; Entered into Merger Agreement with SRI/Surgical Express, Inc ('SRI') to acquire its fully-diluted share capital for $3.70 per share, valuing SRI at US$25.1 million (£16.2 million)

Outlook

·; Good opportunities in Asia and the Americas offsetting economic headwinds in Europe

·; Entry into US hospital sterilisation market expected to support growth rates

·; Cautiously optimistic that our strategy to expand internationally will sustain current growth rates

Richard Steeves, Chief Executive of Synergy Health, said:

"Our focus is on the provision of niche outsourcing services that create significant value for our customers. Our services are mission-critical to our customers, and for this reason demand remains robust, despite obvious economic headwinds in Europe."

"We are excited by the opportunities that we have in China and the US for the expansion of our Hospital Sterilisation Services, and we believe that global demand for our Applied Sterilisation Technologies will remain strong."

*Note: Adjusted operating profit, adjusted profit before tax and adjusted earnings per share exclude amortisation of acquired intangibles, non-recurring items and acquisition-related costs, as shown in the Group's consolidated income statement and the accompanying notes. Operating cash flow is before non-recurring items and acquisition-related costs.

Further information:

There will be a meeting for analysts at 9.30 am today, 7 June 2012, at the offices of Investec. For further information please contact Juliet Lushington at Investec on 020 7597 5147.

For further information:

CHAIRMAN'S STATEMENT

As Synergy Health celebrates its 20th anniversary, I am pleased to report that the Group has continued to grow and prosper despite challenging conditions in the UK and Europe. Notwithstanding these headwinds, we have continued to achieve good organic growth, as well as expand our geographic coverage as part of our strategy to become a leading global provider of outsourced sterilisation and other niche services.

Results

Reported revenues for the year were £312.0 million (2011: £287.3 million), up 8.6%. Underlying organic revenue growth on a constant currency basis was 5.4%, which is in line with expectations after allowing for a 53 week comparator last year. Adjusted operating margins were up 0.7% to 15.7% (2011: 15.0%) resulting in adjusted profit before tax increasing by 13.4% to £43.4 million (2011: £38.3 million).

Four acquisitions were made during the year and the costs of these were expensed as 'non-recurring items and acquisition-related costs'. In addition, we closed and consolidated four facilities during the year, sustainably reducing operating costs. The combined effects of the acquisitions and the facility closures resulted in non-recurring costs of £3.5 million. After taking account of amortisation, non-recurring items and acquisition-related costs, profit before tax decreased by 11.6% to £32.5 million (2011: £36.7 million). Last year's profit before tax benefited from an exceptional gain of £4.7 million, due primarily to the recognition of insurance proceeds arising from the Dunstable insurance claim.

Acquisitions

As part of our strategy to expand the geographic coverage of our Applied Sterilisation business, we acquired BeamOne LLC ('BeamOne') in the US, Sinagama II Technologies Sdn Bhd ('Sterilgamma') in Malaysia, and LEONI Studer Hard AG ('LSH') in Switzerland. These three acquisitions are consistent with Synergy's strategy to expand its Applied Sterilisation business internationally. We also acquired MSI Surgical Solutions LLC ('MSI'), a small hospital sterilisation business in the US, effectively accelerating our plan to enter the US market one year earlier than anticipated.

The four acquisitions had a combined consideration of £84.0 million (including deferred consideration) and were funded from operating cash flow and an increased utilisation of our existing debt facilities. Net debt for the year increased by £61.2 million to £173.5 million (2011: £112.3 million), and we remain well within our bank facility covenants.

Synergy has announced today that it has entered into a Merger Agreement with SRI/Surgical Express, Inc ('SRI') to acquire its fully-diluted share capital for $3.70 per share, valuing SRI at US$25.1 million (£16.2 million). The consideration, including the assumption of its net debt, is approximately US$38.5 million (£24.9 million). SRI is a NASDAQ-listed service provider of sterile surgical gown rental, instrument set rental and instrument processing services. The acquisition will provide Synergy with scale, broad market access and infrastructure in an attractive core service market for us.

EPS and Dividend

Adjusted basic earnings per share before intangibles, amortisation, non-recurring items and acquisition-related costs were 60.32p (2011: 53.54p), an increase of 12.7%. After taking account of amortisation, non-recurring items and acquisition-related costs, basic earnings per share were 44.51p (2011: 52.10p), a decrease of 14.6%.

The Board is proposing a final dividend of 11.18p, which together with the interim dividend of 6.82p would give dividends for the year totaling 18.00p (2011: 15.84p) representing a 13.6% increase. If approved, the dividend will be paid on 6 September 2012 for shareholders on the register at 10 August 2012.

Our People

The translation of our vision and values into reality is only achievable through the inspiration and diligence of our 4,600 employees across the Group worldwide. We continuously strive to attract, develop, and retain the best people who wish to share in the mission, values, and success of the Group.

On behalf of the Board, I would like to welcome all new employees to Synergy, in particular those based in the Americas, Switzerland, and Malaysia who joined the Group through acquisitions during the year. The Board would further like to thank all our employees around the world for their dedication and commitment to making 2012 another successful year for Synergy Health.

The Board

Liz Hewitt joined the Board as a non-executive director on 1 September 2011 and is a welcome addition to the team. Liz is a chartered accountant and has become Chairman of the Audit Committee as well as being a member of both the Remuneration and Nomination Committees. Liz has previously held senior roles at Smith & Nephew plc and 3i Group plc and is also a non-executive director and member of the Audit Committee of Novo Nordisk A/S.

As announced earlier this year, I retire from the Board on 7 June and am handing over to Sir Duncan Nichol. Duncan's years of service on the board, together with his broad business experience, ensures that there will be continuity of leadership. The Board plans to review its membership during the year taking into account the Group's strategy of expanding internationally.

The Board has always recognised the paramount importance of having a wide range of views reflected at Board level and the Company's commitment to diversity and the blend of the right skills and experience is shown in the make up of the Board whereby women comprise one third of its members. The Board hopes the Group should be in a position to maintain this level of representation when renewing Board membership over the coming years.

The Board takes its Corporate Governance responsibilities very seriously, and I can confirm that the Board is compliant with the principles of the UK Corporate Governance Code relating to leadership and effectiveness. The Board also continues to ensure that there is clear distinction between the Board and the Executive leadership of the Company lead by the Chief Executive Officer, Dr Richard Steeves.

Detailed terms of reference for the Board and its committees clearly set out their respective responsibilities. There continues to be a rigorous and transparent procedure for the appointment of new directors. The effectiveness of the Board, its committees, and directors is assessed annually through a formal evaluation process.

Corporate responsibility

The Board recognises that Synergy's ability to achieve its financial objectives is based not simply on how Synergy makes its customers feel, but also how the wider communities in which it operates feel about the Group. The public's perception of Synergy is determined by what we are able to give back to those communities.

Outlook

I am proud of what Synergy has achieved since I joined the Board in January 2005. We are in a strong position and well prepared to tackle the challenges ahead. Our decision to invest in Asia and the Americas has proved an effective strategy to offset more challenging conditions in the UK and Europe. The decision to bring forward our investment in the hospital sterilisation market in the US increases our exposure to what we believe will be a fast growing market.

We have to acknowledge that Europe's difficulties could worsen in the coming year, with many EU countries mired in recession. We remain confident that our strategy to expand internationally adequately addresses these risks, and as a result we are cautiously optimistic that our current growth rates will be sustained, especially given our clear objectives, strong management, and talented employees. We anticipate continued good underlying earnings growth in this new financial year.

It just remains for me to express my appreciation to my fellow Board members for their contribution and support, not just during this year but since I have been Chairman, and to say how grateful I am for the confidence of our shareholders, customers and suppliers.

I save my final words for our employees. In the challenging global economic climate of recent years, everyone within Synergy has shown resilience and dedication, and there is so much enthusiasm and commitment for what we do that it is impossible not to be inspired. I have greatly enjoyed my time at Synergy, and I wish the Group and all our employees every success in the future.

Robert Lerwill

Chairman

7 June 2012

CEO REPORT

Introduction

Synergy is a global leader in outsourced sterilisation services using a range of technologies. In addition, Synergy provides other niche outsourced services such as healthcare linen, pathology and specialist laboratory services. All of our businesses have the benefit of significant barriers to entry, stable long-term contracts, and good cash generation.

We have made further progress implementing our strategy through increasing investment in the faster growing Asian and American markets, expanding our geographic coverage with acquisitions in the US, Malaysia and Switzerland, and bringing forward our plans to enter the US hospital sterilisation market. We were also pleased that organic growth improved during the first half of the year but this has since reduced slightly, reflecting the economic downturn in Europe. In response to the risk of declining growth, we took the opportunity in November to further reduce our cost base and that has fed through into sustainably improved operating margins.

The Group achieved reported revenue growth of 8.6%. Underlying organic revenue growth, excluding currency effects and non-core businesses, was 5.4%. After allowing for the 53rd week in last year's comparator, organic growth was 7.5% compared with 4.1% for the year ending 2011. The success of our strategy to internationalise Synergy is reflected in our reported growth rate. UK & Ireland and Europe & Middle East grew at 2.2% and 3.8% respectively. Asia & Africa and the Americas grew at 31.6% and 24.6% (pro forma) respectively. As we continue to implement our strategy, our reliance on the UK and Europe reduces, with Asia and the Americas accounting for 9.8% of total revenue compared to 4.7% last year.

During the second half of the year we focused on reducing our cost base in the face of concerns around the macroeconomic environment in Europe. Four facilities were closed and their operations merged into other facilities. These closures, together with other efficiency gains, assisted in increasing margins to new levels for the Group. Gross margins were up by 1.7% to 39.9% (2011: 38.2%) and adjusted operating margin was up 0.7% on last year to 15.7% (2011: 15.0%).

I am pleased to say that issues within our UK products based business are being resolved, and whilst this business did not make a material contribution to the overall Group profit, margins in the final quarter began to recover sharply and we expect the business to achieve the Group's minimum financial targets in the new year.

The Group is in a good position with an internationally diversified business providing high value-added services, underpinned by long-term contracts and excellent cash generation. Our balance sheet remains strong, with gearing well below our internal ceiling for net debt to EBITDA of 2.5 times.

Strategy

The Board set out its strategy four years ago and believes the successful outcomes that have been achieved endorse the plan. To recap, there are four strands to the strategy: internationalisation; focus on high value-added services with high barriers to entry; differentiation through our people and the way we deliver our services; and cost leadership.

Our core service is the provision of outsourced sterilisation for medical device manufacturers ('Applied Sterilisation') and for healthcare providers such as acute hospitals ('Hospital Sterilisation'). In addition, we are a leading provider of linen services in the UK and the Netherlands, a manufacturer of infection control products and a provider of specialist laboratory services ('Healthcare Solutions').

The growth of our Applied Sterilisation business has been a priority and this is reflected in global reported revenue for this service up 36.1% to £95.4 million (2011: £70.1 million). Hospital Sterilisation revenue was up 10.5% to £62.8 million (2011: £56.9 million), whilst healthcare linen revenue was flat at £112.0 million (2011: £112.9 million). During the year we sold a small Scottish distribution business and we have seen the full year effect of rationalising non-core businesses. As a result, revenue within the combined Healthcare Solutions business declined to £153.7 million (2011: £160.4 million).

Regional Review

Synergy operates its business as four geographic regions. The structure provides the depth and resilience necessary to operate a geographically diverse business, as well as providing responsive leadership as close to the customer as possible. The continuing strategy of internationalisation will also play an important role going forward, mitigating the impact of economic uncertainties in Europe, and also providing opportunities for growth in the faster growing regions of the world.

UK & Ireland

The UK & Ireland businesses continued to perform well with both of the sterilisation businesses showing good growth in line with historic trends. The rationalisation of the UK products business, together with the disposal of a small non-core business, resulted in a reduced rate of revenue growth of 2.2%, with reported revenues of £158.3 million (2011: £154.9 million). Operating profits increased by 13.0% to £28.3 million (2011: £25.0 million) with margins increasing 1.8% to 17.9% (2011: 16.1%).

During the year we opened a new hospital sterilisation facility in Sheffield and began the construction of two more facilities, in Lincoln and Grimsby. Surgical volumes held up well with a number of waiting list initiatives undertaken throughout the year. The outsourcing of hospital sterilisation continues to be seen as attractive with a strong bid pipeline of approximately £17 million per annum. However, decision making has remained slow as the Government's policies on the future of the NHS were delayed. During the year we sponsored a research paper on outsourcing in the public sector that was launched at the House of Lords, and this research, together with four case studies from our most recent facilities, will become a catalyst to expedite the conversion of current bids.

Applied Sterilisation facilities continued to perform well, albeit with more limited capacity for growth. We have drafted plans for additional capacity in the region but we may delay implementation whilst there is some uncertainty around the outlook for Europe.

The healthcare linen business continued to perform well with consistent margins and growth, primarily from price indexation. Our strategy is to maintain our existing customer base and limit bidding to the remaining NHS hospitals that are closing their in-house facilities. During the year we won an NHS outsourcing contract that commenced in the current financial year. In parallel with the surgical volumes, overall hospital linen volumes have held up well.

The UK laboratory business returned to positive growth in both revenue and margin. Prospects for the pathology segment look positive, but during the second half of the year growth in occupational health testing slowed, reflecting the economic pressures in the UK.

Our UK products business, which manufactures infection control and other consumable products, was restructured in November and as a result has returned to profitability. We remain committed to broadening its international market penetration, expanding the success we have enjoyed in the Middle East and in Asia to other parts of the world.

Europe & Middle East

Europe has become a challenging market for Synergy, in part because of the region's economic issues and in part because of very strong competitive conditions within the Dutch linen market. Our objectives remain unchanged, however, with an ambition to continue expanding our geographic coverage in both Applied Sterilisation Technologies and Hospital Sterilisation Services.

Reported revenue for Europe & Middle East was up 3.8% to £123.3 million (2011: £118.8 million). Operating profits however were down 5.1% to £19.5 million (2011: £20.5 million) with margins decreasing 1.5% to 15.8%.

The reduction in the regional margin reflects price erosion in the Dutch linen business. Although we maintained market share we have seen price deflation initiated by our major competitor in the Netherlands. To address the competitive threat we closed two linen facilities, and as a result have seen margins recover. We also have the benefit of cost synergies within the region and whilst organic growth will be held back again this year as a result of price deflation, we expect the restored margins to be maintained as a result of our aggressive cost management.

This year, we have made further progress with our Applied Sterilisation business. Growth during the first half of the year was very strong, resulting in most of our facilities coming up against capacity constraints. New capacity has now been added to the ethylene oxide facility in Venlo, the Netherlands, and the gamma radiation facility in Marcoule, France remains on track to open towards the end of 2012. Early in 2012 we acquired the LSH gamma radiation and x-ray facility from LEONI Group, as part of our objective to expand our geographic presence in Europe. Switzerland has a large, value-added medical device manufacturing market similar in size to Ireland's, and it is important to have a presence in this market. The x-ray facility is the first of its type in the world, and whilst utilisation is presently low, we expect that there will be a rapid adoption of this sterilisation technology by the manufacturers of high value-added medical devices.

During the year we invested in the sales and commercial development team of Hospital Sterilisation Services, with the objective of expanding beyond our two core services in the Netherlands and Belgium. We are making progress, with increased bidding activity in Germany and in Turkey, where we are in advanced negotiations on a large PFI hospital bid. However, across the continent the pace of development continues to be slower than expected. We will continue to market our services in Europe to raise Synergy's profile, but given the current economic climate, we are likely to direct resources to the opportunities opening up to us in the US.

Asia & Africa

The Asia & Africa region continues to be one of our more promising opportunities for sustained growth. China in particular is seeing growth in healthcare expenditure of 18% to 20% per annum, more than double its GDP growth rate. The creation of a national health service, where basic services will be provided free by the state, will drive demand for our Hospital Sterilisation Services, as well as the consumption of sterile medical devices.

In addition to China, we have facilities in Malaysia, Thailand, and South Africa. To support our growth plans we recently announced the appointment of a new Regional CEO. His level of regional and industry experience will help us achieve our medium-term objective for Asia to generate at least a quarter of the Group's income.

Reported revenues in Asia and Africa were up 31.6% to £17.4 million (2011: £13.3 million), with good growth across the region. Operating profits were up 43.5% to £3.8 million (2011: £2.7 million) with operating margins up 1.9% to 22.0%.

In Malaysia we completed the acquisition of Sterilgamma from receivership in July, expanding our applied sterilisation services to Kuala Lumpur and Kulim. We now have four facilities in Malaysia, offering both gamma radiation and ethylene oxide services. During the year we evaluated the hospital sterilisation market and considered establishing a joint venture with a local Malaysian business, but our experience suggests that the market is not yet ready for outsourcing at this stage.

Our Applied Sterilisation operations in South Africa and Thailand continue to show steady growth. In South Africa we have expanded our services to include microbiological laboratory services and we are evaluating an increase in our capacity.

In Suzhou, China, our ethylene oxide sterilisation facility continues to attract additional customers and we expect the facility to be largely full within the year. Under the guidance of the new Regional CEO we are actively looking to establish additional sites in strategic locations as part of our ambition to be a major outsourced sterilisation service provider in China. The Hospital Sterilisation Services business also continues to gain momentum. During the year we have continued to progress opportunities, on both a sole-bidder and joint venture basis, and have been selected to provide services for a large new PFI hospital campus in Shanghai, a private hospital group in Beijing, and a hospital group in Chengdu.

Americas

The Americas is also a promising region, being the largest medical device manufacturing and consuming market in the world. We are very pleased with the level of growth in Applied Sterilisation revenue. The increase in capacity in Central America and our recent expansion into Hospital Sterilisation in the US sets the region up for a period of sustained growth.

Our Americas' Applied Sterilisation business was acquired at the start of the financial year. Reported revenues for the region were up 24.6% on a pro forma basis to £13.0 million (2011 pro forma: £10.4 million; 2011 reported: £0.4 million). Operating profits were up 49.9% on a pro forma basis to £3.3 million (2011 pro forma: £2.2 million; 2011 reported: £0.04 million). Operating margins improved 4.3% to 25.7% as a result of improved benefits of scale from our capacity expansions.

Our Applied Sterilisation business benefited from improved capacity utilisation, particularly in the Costa Rican facility. Our strategy is to continue to increase our capacity in the region. In July 2012 we will open a new electron beam facility and a new ethylene oxide facility. These two facilities, together with future investments planned in the region, will continue to support high levels of growth.

During the year we conducted a review of the hospital sterilisation market in the US, triggered by the FDA's consultation on the regulatory environment in May 2011. Following our research, we decided to bring forward our investment in the US hospital sterilisation market with the acquisition of MSI in New York. The outsourced hospital sterilisation market is still in its infancy, and MSI represented the second largest of only two businesses active in the US. We are increasing our level of investment on the back of this acquisition, initially to promote education and awareness, but ultimately to create a more developed outsourcing market. We believe that Synergy's expertise in this niche market will be well received by the healthcare market where high levels of flash sterilisation are known to create significant risk for patients undergoing surgery.

Outlook

Synergy's focus is on the provision of niche outsourcing services that create significant value for our customers. Our outsourced sterilisation services are mission-critical to our customers and for this reason demand continues to hold up well, despite clear economic headwinds in certain parts of the world, particularly Europe. We are particularly excited by the opportunities that we have in China and the US for the expansion of our Hospital Sterilisation Services business, and we believe that the global demand for our Applied Sterilisation Technologies business will continue to be strong.

Our strategy to extend Synergy's reach has progressed well with the expansion of our services in the Americas, Switzerland and Malaysia. The business is well positioned and we remain committed to strong underlying revenue growth with sustainable margins.

Dr Richard Steeves

Group CEO

7 June 2012

FINANCE DIRECTOR'S REPORT

Our business delivered a good financial performance in 2012 with reported revenue growing 8.6% to £312.0 million and adjusted operating profit increasing by 13.8% to £49.0 million. Excluding currency effects and non-core businesses, underlying revenue growth was 12.3% (5.4% organic) and adjusted operating profit growth was 13.4%. Our adjusted operating margin increased by 70 basis points to 15.7%. Adjusted earnings per share grew by 12.7% to 60.32p.

We have recognised a non-recurring cost relating to the closure of certain operating and manufacturing facilities of £2.6 million. In addition, we have recognised acquisition-related costs of £0.9 million, of which £0.6 million relate to transaction costs. An increase in expected deferred contingent consideration payable for BeamOne LLC ('BeamOne'), owing to its financial performance being ahead of initial expectations, results in a charge to the income statement of £0.3 million under 'IFRS 3 (Revised) Business combinations'. Under previous accounting guidance, this amount would have been treated as an increase to goodwill and would not have had any impact on the income statement.

Cash generated from operations (before non-recurring and acquisition-related costs) increased by 8.5% to £85.0 million (2011: £78.3 million) reflecting a conversion of adjusted EBITDA into operating cash of 97%. Funding for acquisitions increased net debt at the end of the year to £173.5 million, representing a net debt to EBITDA ratio of 1.95 times, comfortably within our banking covenant of net debt to EBITDA of 3.25 times.

Adjusted operating returns on average capital employed, on an annualised basis, increased to 11.5% (2011: 10.8%).

Adjusted operating profit is stated before amortisation of acquired intangibles, non-recurring items and acquisition-related costs.

1. Income statement

The Group's income statement is summarised in Figure 1 below.

Table 1: Income statement

1 The effective tax rate is calculated excluding amortisation on acquired intangibles, non-recurring items and acquisition-related costs

1.1 Revenue

Reported revenue of £312.0 million (2011: £287.3 million) grew by 8.6%, representing an underlying growth rate, excluding non-core businesses and currency effects, of 12.3% over the previous year.

The Group had non-core businesses that we exited during the last financial year. These were primarily in the UK products business and contributed revenues of £1.0 million (2011: £11.8 million).

The change in currency exchange rates over the last 12 months has had a small positive effect on reported revenues; the strengthening of the Euro against Sterling (against the comparative period) contributed to an increase in reported revenue due to currency movements of £1.4 million.

Underlying revenues grew across all our business segments, with the UK & Ireland at 9.7%, Europe & Middle East at 2.4% and Asia & Africa at 31.7%. On a pro forma basis, growth in our new Americas business was 28.5%.

Underlying organic revenues, which exclude the impact of acquisitions, increased by 5.4%. On a like-for-like basis, excluding the impact of last year's extra week, underlying organic growth was 7.5%. Our main service lines experienced good organic and reported growth. Global underlying and organic growth for Applied Sterilisation Technologies were 35.8% and 8.9% respectively. Hospital Sterilisation Services grew, on an underlying basis, by 10.4%.

1.2 Gross profit

Gross profit increased by 13.4% to £124.4 million (2011: £109.7 million), representing a gross profit margin of 39.9%, an increase of 170 basis points over the previous year.

1.3 Adjusted operating profit

Adjusted operating profit increased by 13.8% to £49.0 million, representing an adjusted operating profit margin of 15.7%, an increase of 70 basis points over last year. The benefit of currency on adjusted operating profit was £0.2 million.

1.4 Non-recurring items

Restructuring costs

During the year we closed two linen facilities in the Netherlands, incurring a charge of £1.5 million, principally relating to redundancy costs. We also rationalised manufacturing facilities within our UK products based business, resulting in the closure of two sites with an associated charge of £1.1 million.

In the comparative period the Group recognised an exceptional gain of £4.7 million, due primarily to the recognition of insurance proceeds arising from the Dunstable insurance claim.

IFRS 3 (Revised) Business Combinations

The acquisition of BeamOne took place on 7 April 2011. The consideration consisted of an initial outlay of £16.5 million together with a contingent cash consideration up to a maximum of £12.3 million dependent on the financial performance of the business for the year ending 1 April 2012.

The acquired business had a strong financial performance ending the year above that expected in the acquisition business case. Under 'IFRS 3 (Revised) Business Combinations' the difference between the contingent consideration payable and the acquisition date fair value is reflected in the income statement. This results in an increase to the level of contingent consideration payable against that previously estimated and an income statement charge of £0.3 million in non-recurring items and acquisition-related costs. Prior to the introduction of 'IFRS 3 (Revised) Business Combinations', such an increase in deferred consideration would have been accounted for as an adjustment to goodwill, with no consequent income statement impact.

'IFRS 3 (Revised) Business Combinations' also requires incremental acquisition related costs to be expensed; total costs relating to acquisitions made in the year were £0.6 million.

1.5 Net finance costs

The Group's net finance costs totalled £5.6 million (2011: £4.7 million), an increase of £0.9 million. The principal reason for this increase is additional loans raised to finance acquisition activity, combined with an increase in margin paid on our core facility, following the refinancing in July 2011. The average interest rate of the main syndicated facility and other Group facilities is approximately 4.2%.

1.6 Adjusted profit before tax

Adjusted profit before tax was £43.4 million (2011: £38.3 million), an increase of 13.4%. The adjusted profit before tax margin was 13.9% (2011: 13.3%), an increase of 60 basis points.

1.7 Amortisation of acquired intangibles

Amortisation of acquired intangibles relates to intangible assets identified on acquisitions, being the value of customer contracts and relationships. The increase over the previous year principally reflects the intangibles recognised with the acquisition of BeamOne.

1.8 Tax

The tax charge (excluding amortisation of acquired intangibles and non-recurring items) of £9.9 million (2011: £8.7 million) represents an effective rate of 22.7% (2011: 22.7%). Including amortisation of acquired intangibles and non-recurring items, the tax charge is £7.7 million (2011: £7.9 million).

Our effective rate reflects profits arising from a mix of territories, a number of which have a lower rate of taxation than the UK. Different territorial growth rates will change this mix of profits, and the resulting tax rate, in the future.

1.9 Earnings per share (EPS)

Adjusted basic earnings per share and adjusted diluted earnings per share, after adjusting for amortisation of intangibles, increased by 12.7% and 12.5% respectively. Afteramortisation of acquired intangibles, non-recurring and acquisition-related costs, basic and diluted earnings per share decreased by 14.6% and 14.7% respectively.

Our policy is to increase the total dividend each year in line with the increase in underlying earnings. The Board has proposed a final dividend of 11.18p, representing an increase on the 2011 final dividend of 13.6%, and bringing the total dividend for the year to 18.00p, growth of 13.6%. The final dividend will be paid, subject to shareholder approval, on 6 September 2012 to shareholders on the register as at 10 August 2012.

3. Cash flow

Figure 2 summarises the Group cash flow.

Table 2: Cash flow

Note: Adjusted EBITDA is earnings before interest, tax, depreciation, intangible amortisation and other non-cash items

3.1 Cash generated from operations

Cash generated from operations (before non-recurring and acquisition-related costs) in the year increased by 8.5% to £85.0 million (2011: £78.3 million) reflecting a conversion of Adjusted EBITDA into cash of 97% (2011: 100%).

3.2 Interest

Net interest paid increased to £5.1 million (2011: £3.0 million), principally reflecting higher net debt following acquisitions made in the period.

3.3 Tax

Tax paid was £13.0 million (2011: £6.3 million). The prior year comparative benefited from the one-off recognition of tax repayments. Cash tax is higher than the equivalent income tax charge in the income statement as a result of timing differences on payments.

3.4 Net expenditure on tangible and intangible assets

We analyse capital expenditure between 'maintenance' and 'investment' expenditure. Maintenance capital expenditure is the capital required to replace the existing capital base. Investment capital expenditure enhances the capacity or efficiency of the Group's capital base.

The main items of necessary ongoing capital expenditure are cobalt 60 for Applied Sterilisation Technologies as the radiation source for gamma sterilisation plants, textiles for the linen business, and general replacement of plant & machinery around the Group.

Total maintenance capital expenditure was £22.7 million of which £6.6 million and £12.2 million was spent on cobalt and textiles respectively. The remaining balance of £3.9 million comprised plant and machinery, principally within the linen and Applied Sterilisation businesses.

This year saw a rise in investment capital expenditure to support the growing Applied Sterilisation business. We incurred construction costs of £14.9 million on new and expanded facilities. Within the Americas we have spent £7.3 million on two new ethylene oxide facilities, one in Costa Rica and the other in Florida, as well as an additional electron beam facility in Costa Rica. Investments in Europe consisted of £6.1 million for a new gamma radiation facility in Marcoule, France and an additional ethylene oxide chamber in Venlo, Netherlands. Costs have also been incurred on the construction of a new ethylene oxide chamber in Malaysia.

Within the UK we have incurred costs of £5.8 million completing the new Sheffield hospital sterilisation facility and constructing facilities to support the new contracts for the North Lincolnshire and Goole Trust and the United Lincoln Hospitals Trust. Other investments include £2.9 million of additional cobalt, £1.9 million on plant and machinery and £1.7 million on our ERP implementation project.

3.5 Financing

The movement in financing is primarily due to acquisition funding.

4 Acquisitions

On 7 April 2011, the Group acquired BeamOne, the largest provider of outsourced electron beam services in the US. The initial cash cost of the acquisition was £16.5 million (US$ 26.7 million) together with deferred contingent cash consideration of up to a maximum of £12.3 million (US$ 20.0 million). The contingent cash payments are dependent on the delivery of financial performance targets for the year to 1 April 2012. The acquisition gave rise to goodwill of £14.4 million. This is £1.4 million higher than the goodwill disclosed within our 2011 interim statements, due to two factors; a £3.1 million increase to our calculation of fair value ascribed to customer relationship intangible assets, and a £4.5 million increase to total consideration due to the incorrect inclusion of Florida ethylene oxide start-up costs within the assessment of the fair value of deferred contingent consideration payable at the acquisition date, which was concluded in the first half of the year. In the 2012 interim statements we will restate the fair value of the acquisition resulting in an increase to goodwill of £4.5 million in the 2011 comparative period. Intangible assets arising on the acquisition have been recognised at £11.0 million and will be amortised on a straight-line basis over their expected lives.

On 11 July 2011, the Group acquired Sinagama II Technologies Sdn Bhd ('Sterilgamma'), a provider of applied sterilisation services in Malaysia. The consideration was £12.3 million (MYR 59.3 million). The acquisition gave rise to goodwill of £1.1 million. Intangible assets arising on the acquisition have been recognised at £3.5 million and will be amortised on a straight-line basis over their expected lives.

On 19 March 2012, the Group acquired LEONI Studer Hard ('LSH') from LEONI AG. LSH operates a gamma radiation and x-ray facility in Switzerland. The consideration was £41.0 million (€48.3 million). The acquisition gave rise to goodwill of £14.0 million. Intangible assets arising on the acquisition have been recognised at £9.9 million and will be amortised on a straight-line basis over their expected lives.

On 21 March 2012, the Group acquired MSI Surgical Solutions LLC ('MSI'), an operator of a hospital sterilisation facility in the US for a cash consideration of £3.9 million (US$ 6.2 million). The acquisition gave rise to goodwill of £1.5 million. Intangible assets arising on the acquisition have been recognised at £1.9 million and will be amortised on a straight-line basis over their expected lives.

5 Net debt and funding

5.1 Net debt

Net debt increased by £61.2 million to £173.5 million. The increase was principally a result of funding the acquisitions of BeamOne, Sterilgamma, LSH and MSI. The acquisitions were funded from our committed bank facilities.

The movement in the net debt is reconciled below:

Table 3: Movement in net debt

5.2 Funding

The Group refinanced its main committed bank facility in July 2011 signing a new 5 year unsecured Multi-currency Revolving Facilities Agreement. Our new facilities consist of a Sterling denominated multi-currency facility of £105 million and a Euro denominated multi-currency facility of €130 million.

On the 1 June 2012, the Group signed a two year Euro denominated multi-currency facility of €18 million with the same covenants as in the July 2011 Agreement.

The Group remains comfortably within its lending covenants.

The debt is held mainly in Sterling, Euros and United States Dollars, with the currency mix and the level of fixed interest debt within each currency as at 1 April 2012 being as follows:

Table 4: Composition of gross debt as at 1 April 2012

6 Pensions

At the start of the year the Group operated five final salary schemes; three in the UK, one in the Netherlands, and one in Germany. During the year, the acquisition of LSH in Switzerland brought an additional scheme into the Group. The Group also operates several defined contribution schemes.

In the UK the Group is required to maintain a final salary pension scheme for employees who have transferred from the NHS, which has to be acceptable to the Government Actuary's Department. With the exception of NHS transfers and the scheme in Switzerland, the Group's defined benefit schemes are closed to new entrants. The three UK schemes are closed to future accruals with active members transferred to deferred status and invited to join the Group's UK defined contribution scheme.

At 1 April 2012, the net liability arising from our defined benefit scheme obligations was £18.3 million (2011: £12.3 million) on a pension scheme asset base of £51.9 million. A fall in the discount rate used to calculate the liabilities results in an increase in liabilities that is only partially offset by an increase in the asset base. The latest triennial review will be undertaken this year and we expect to agree any changes to funding levels with the Trustees by the end of March 2013.

Table 5: Defined benefit pension schemes

Gavin Hill

Group Finance Director

7 June 2012

Consolidated income statement

For the period ended 1 April 2012

Consolidated statement of comprehensive income

For the period ended 1 April 2012

Consolidated statement of financial position

At 1 April 2012

Consolidated cash flow statement

For the period ended 1 April 2012

Statement of changes in equity

For the period ended 1 April 2012

The cash flow hedging reserve of £1,341,000 debit (2011: £112,000 debit and 2010: £550,000 debit) represents the fair value gains and losses on hedging arrangements that are effective and qualify for cash flow hedge accounting. The brought forward reserve of £112,000 debit unwound during the year and revaluation of existing instruments at the balance sheet date gave rise to the closing reserve.

The share-based payment credit of £2,052,000 (2011: £1,405,000) includes a debit of £325,000 (2011: debit £211,000) relating to deferred taxation and a credit of £420,000 (2011: credit £481,000) relating to current taxation.

The accompanying accounting policies and notes form part of these financial statements.

1 General information

Synergy Health plc ('the Company') and its subsidiaries (together 'the Group') deliver a range of specialist outsourced services to healthcare providers and other customers concerned with health management. The Company is registered in the United Kingdom under company registration number 3355631 and its registered office is Ground Floor Stella, Windmill Hill Business Park, Whitehill Way, Swindon, Wilts, SN5 6NX.

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to the nearest weekend to 31 March each year. The current accounting period is 52 weeks in length (2011: 53 weeks in length).

The financial statements are rounded to the nearest thousand pounds and have been prepared and approved by the Directors in accordance with International Financial Reporting Standards as adopted for use in the EU ('IFRS').

Statutory accounts for the year ended 1 April 2012 will be filed with the Registrar of Companies following the Company's Annual General Meeting. Statutory accounts for the year ended 3 April 2011 have been delivered to the Registrar of Companies. The auditors have reported on those accounts and their report was unqualified and did not contain statements under S498(2) or S498(3) of the Companies Act 2006.

2 Basis of accounting

Other than as set out below, the financial information for the period to 1 April 2012 has been prepared on the basis of the accounting policies set out in the Group's latest annual financial statements for the period ended 3 April 2011. These accounting policies are drawn up in accordance with the recognition and measurement requirements of International Financial Reporting Standards (IFRS) as adopted for use in the European Union.

3 Critical accounting estimates and judgements

The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. Where estimates and associated assumptions are made they are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Key areas of estimate uncertainty are set out below:

• In relation to the Group's cobalt provision costs of future disposal are based on contractual arrangements with third parties and latest disposal cost estimates.

• The Group cobalt depreciation policy is based on the actual physical decay of the cobalt 60 isotope.

• In relation to the Group's property, plant and equipment, useful economic lives and residual values of assets have been established using historical experience and an assessment of the nature of the assets involved.

• Impairment tests have been undertaken with respect to goodwill using commercial judgement and a number of assumptions and estimates have been made to support their carrying amounts.

• In relation to the Group's defined benefit pension schemes, actuarial assumptions are established using relevant market benchmark data and with the advice of external qualified actuaries.

• Customer related intangibles that are acquired as part of an acquisition are valued based on the forecast discounted cash flows arising from these customers taking account of historically observed customer attrition rates.

• The Group operates in a number of countries, all of which have their own tax legislation. Deferred tax assets and liabilities are recognised at the current tax rate which may not be the tax rate at which they unwind. The Group has available tax losses, some of which have been recognised and some of which have not, based upon management's best estimates of the ability of the Group to utilise those losses.

4 Segmental information

The Group is organised into four operating segments, and information on these segments is reported to the chief operating decision maker ('CODM') for the purposes of resource allocation and assessment of performance. The CODM has been identified as the Board of Directors. The four operating segments are: the UK and Ireland, Europe and Middle East, Asia and Africa, and the Americas.

The segments derive their revenues from the same range of products and services - being the provision of Healthcare Services, Applied Sterilisation Technologies (formerly termed Medical Device Sterilisation services), and Hospital Sterilisation Services. The CODM monitors the performance of the operating segments based on adjusted operating profit, being operating profit excluding the impact of amortisation on acquired intangibles and non-recurring items.

Segment information about these divisions is presented below:

The comparative figures for the previous year are shown below. The Americas segment has been created in the period by the acquisition of MSI and BeamOne (see note 14); as a consequence, US revenues and profit disclosed within Asia in the prior year figure have been restated.

The table below reconciles the total segment profit above, to the Group's operating profit and profit before tax:

The table below analyses the Group's revenues from external customers between the three principal product/service groups:

IFRS 8 Operating segments requires the Group to disclose information about the extent of its reliance on its major customers. The Group has no single customer making up more than 10% of total revenues.  

The table below analyses the Group's revenue from external customers, and non-current assets other than financial instruments, investment properties, deferred taxation and rights under insurance, by geography:

5 Profit before tax

Profit before tax has been arrived at after charging/(crediting):

Non-recurring items of £3,476,000 (2011: £3,278,000 credit) have been charged in arriving at operating profit. The table and accompanying notes provide further details:

Transaction costs incurred on the acquisition of businesses have been recognised in the income statement. These costs relate primarily to the acquisition of four businesses: BeamOne, Sterilgamma, LSH, and MSI. These acquisitions are disclosed in more detail in note 14. Included in this charge is a loss of £70,000 recognised on the disposal of a subsidiary undertaking in July 2011. The discontinued activity relating to this disposal has been included in the income statement.

The table below provides further details:

During the period the Group incurred costs in restructuring its healthcare solutions business in the UK and Europe. These costs related mainly to employee termination payments and property costs.

As detailed in note 14, the Group has a liability in respect of deferred contingent consideration of BeamOne. Based on BeamOne's performance for the year, the amount of such consideration to be paid is in excess of that recognised at the date of acquisition. In accordance with 'IFRS3 (revised) Business Combinations', this increase has been recognised in the income statement. The total impact of non-recurring items on profit after tax is a charge of £3,393,000.  

In the prior year, non-recurring items of £3,278,000 were credited in arriving at operating profit. The table and accompanying notes provide further details:

Transaction costs incurred on the acquisition of businesses in the prior year have been recognised in the income statement. These costs related primarily to the acquisition of GSP in late 2010 and BeamOne, which completed early in the current year. These acquisitions are disclosed in more detail in note 14.

During the prior year the Group received a summary court judgement in our favour relating to an insurance claim arising from a fire at our Dunstable facility in early 2007. The non-recurring gain of £4,167,000 reflects the recognition of insurance proceeds received, less costs associated with the claim and final additional costs of working not previously written down. In addition to the above a non-recurring credit of £1,446,000 in respect of court awarded interest on the Dunstable insurance case was recognised in finance income. The total impact of non-recurring items to profit after tax in the prior year was a credit of £3,153,000.

A more detailed analysis of auditors' remuneration is provided below:

6 Staff costs

The average number of monthly employees employed by the Group during the year, including executive Directors, was as follows:

Their aggregate remuneration comprised:

7 Finance income

8 Finance costs

9 Taxation

UK corporation tax is calculated at 26% (2011: 28%) of the estimated assessable profit for the year. Taxation for overseas operations is calculated at the local prevailing rates.

On 23 March 2012, the Chancellor of the Exchequer announced the reduction in the main rate of UK corporation tax to 24% with effect from 1 April 2012. This change was enacted on 26 March 2012 under the Provisional Collection of Taxes Act 1968. The effect of the rate reduction creates a reduction in the deferred tax liability which has been included in the figures above.

On 23 March 2012, the Chancellor of the Exchequer also announced the reduction in the main rate of UK corporation tax to 23% for the year starting 1 April 2013. It is expected that this change will be substantially enacted in June or July 2012.

The charge for the year can be reconciled to the profit before tax per the income statement as follows:

10 Dividends

The Board of Directors will recommend to the shareholders a final dividend for the period ended 1 April 2012 of 11.18 pence (2011: 9.84 pence).

11 Earnings per share

12 Property, plant and equipment

During the period ended 1 April 2012, the Group purchased tangible fixed assets with a total cost of approximately £51.0 million.

13 Related party transactions

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.

One of the Group's customers owns a minority share of one of the Group's subsidiaries. During the year, revenue with this customer amounted to £468,000 (2011: £410,000). An amount payable of £1,131,000 is outstanding at the end of the year (2011: £974,000). During the year, the Group's transactions with this subsidiary amounted to a management charge of $33,000 (2011: £974,000), all of which remains unpaid at the end of the year.

The remuneration of key personnel (including Directors) of Synergy Health plc was:

Key personnel (including Directors) comprise the executive and non-executive Directors and six senior executives (2011: six). Four of the senior executives are directly responsible for the Group's operating regions. The others are the Group Commercial Director and the Group Company Secretary.

On 7 April 2011, the Group acquired all the members' interests in BeamOne LLC (see note 14). Subsequently, one of these members assumed a role with the Group qualifying as 'key personnel'. All acquisition-related transactions between this individual and the Group have been conducted on an arms-length basis and in accordance with the terms of the Sale and Purchase Agreement.

14 a) Acquisition of subsidiary - MSI

With effect from 21 March 2012, the Group acquired the entire issued share capital of MSI Surgical Solutions LLP ('MSI'), a company incorporated in the US, as part of our strategy to enter the US hospital sterilisation market. Since acquisition the company has been renamed Synergy Health HSS LLC.

The fair value of the net assets acquired and the related consideration were as follows:

The goodwill arising on the acquisition of MSI is attributable to the assembled workforce and the synergies that can be generated following the integration of MSI into the Group. The goodwill arising will be tax deductible in the US.

In accordance with 'IFRS 3 (revised) Business Combinations', management have made adjustments to the book value of net assets acquired to arrive at the fair values disclosed above. The most significant of these is the recognition of intangible assets (customer lists).

Total acquisition costs of £32,000 were incurred in the acquisition of MSI and have been expensed within non-recurring items.

The MSI business contributed £195,000 to revenue and £45,000 to operating profit for the period. Had the business been owned for the entire year, the contribution to revenue and operating profit would have been £2,600,000 and £600,000 respectively.

Summary of cash flows associated with the acquisition of MSI:

14 b) Acquisition of subsidiary - LSH

With effect from 19 March 2012, the Group acquired the entire issued share capital of LEONI Studer Hard AG ('LSH'), an applied sterilisation technology business incorporated in Switzerland, as part of our strategy to expand the geographic coverage of our Applied Sterilisation business. Since acquisition the company has been renamed Synergy Health Daniken AG.

The fair value of the net assets acquired and the related consideration were as follows:

The deferred consideration is due for payment within one year.

The quantum of the deferred contingent consideration will be determined by the extent to which a specific non-operating tax asset held by the acquired business is recovered. This tax asset is included within the deferred tax liability in the table above. Overall, the Group is not exposed to any financial risk on this item. It is anticipated that the deferred contingent consideration will fall due for payment within one year.

The goodwill arising on the acquisition of LSH is attributable to the assembled workforce and the synergies that can be generated following the integration of LSH into the Group, and to gaining access to new sterilisation technologies.

In accordance with 'IFRS 3 (revised) Business Combinations', management have made adjustments to the book value of net assets acquired to arrive at the fair values disclosed above. The most significant of these are the recognition of intangible assets (customer lists), the recognition of prospective tax assets, and provisions for dividends declared prior to acquisition.

Total acquisition costs of £193,000 were incurred in the acquisition of LSH and have been expensed within non-recurring items.

The LSH business contributed £691,000 to revenue and £212,000 to operating profit for the period. Had the business been owned for the entire year, the contribution to revenue and operating profit would have been £7,201,000 and £2,137,000 respectively.

Summary of cash flows associated with the acquisition of LSH:

14 c) Acquisition of subsidiary - Sterilgamma

On 11 July 2011, the Group acquired the entire issued share capital of Sinagama II Technologies Sdn Bhd ('Sterilgamma'), a company incorporated in Malaysia, as part of our strategy to expand the geographic coverage of our Applied Sterilisation business. Since acquisition the company has been renamed Synergy Sterilisation KL (M) Sdn Bhd. Sterilgamma operates from a number of applied sterilisation technology plants across Malaysia.

The fair value of the net assets acquired and the related consideration were as follows:

The goodwill arising on the acquisition of Sterilgamma is attributable to the assembled workforce and the synergies that can be generated following the integration of Sterilgamma into the Group.

In accordance with 'IFRS 3 (revised) Business Combinations', management have made adjustments to the book value of net assets acquired to arrive at the fair values disclosed above. The most significant of these are the recognition of intangible assets (customer lists) and adjustments to the carrying value of assets not deemed to be recoverable.

Total acquisition costs of £34,000 were incurred in the acquisition of Sterilgamma and have been expensed within non-recurring items.

The Sterilgamma business contributed £2,983,000 to revenue and £768,000 to operating profit for the period. Had the business been owned for the entire year, the contribution to revenue and operating profit would have been £4,152,000 and £1,353,000 respectively.

Summary of cash flows associated with the acquisition of Sterilgamma:

14 d) Acquisition of subsidiary - BeamOne

On 7 April 2011, the Group acquired all of the members' interests of BeamOne LLC ('BeamOne'), an applied sterilisation business incorporated in the US, as part of our strategy to expand the geographic coverage of our Applied Sterilisation business. Since acquisition the company has been renamed Synergy Health AST LLC. BeamOne operated from sites in San Diego, California; Denver, Colorado; Lima, Ohio; Saxonburg, Pennsylvania; and a fifth site in Costa Rica.

The fair value of the net assets acquired and the related consideration were as follows:

The acquisition of BeamOne was included as a post balance sheet event (note 29) in the prior year financial statements. When presenting this note, a number of estimates were made before the completion of a fair value exercise, which have since been replaced with actual fair value figures.

The deferred contingent consideration is a multiple of first year EBITDA. The deferred contingent consideration is due for payment in June 2012. In accordance with 'IFRS 3 (revised) Business Combinations', the amount of consideration due to be paid has been estimated at the balance sheet date. The movement in this estimate from the date of acquisition has been recognised in non-recurring items within the income statement.

The acquisition gave rise to goodwill of £14.4 million. This is £1.4 million higher than the goodwill disclosed within our 2011 interim statements, due to two factors; a £3.1 million increase to our calculation of fair value ascribed to customer relationship intangible assets, and a £4.5 million increase to total consideration due to the incorrect inclusion of Florida EtO start-up costs within the estimate of deferred consideration payable. In the 2012 interim statements we will restate the fair value of the acquisition consideration, resulting in an increase to goodwill of £4.5 million in the 2011 comparative period.

The goodwill arising on the acquisition of BeamOne is attributable to the assembled workforce and the synergies that can be generated following the integration of BeamOne into the Group, and also to gaining access to the US market. The goodwill arising will be tax deductible in the US.

In accordance with IFRS 3 Business combinations (revised), management have made adjustments to the book value of net assets acquired to arrive at the fair values disclosed above. The most significant of these are the recognition of intangible assets (customer lists) and adjustments to the carrying value of property restitution provisions. Total acquisition costs in the period have been covered by accruals booked within non-recurring items in the prior year (2011 - £608,000 charge).

The BeamOne business contributed £12,121,000 to revenue and £3,166,000 to operating profit for the period.

Summary of cash flows associated with the acquisition of BeamOne:

14 e) Acquisition of subsidiary - GSP

With effect from 1 November 2010, the Group acquired the entire issued share capital of Gamma Service Producktbestrahlung GmbH ('GSP'), a company incorporated in Germany, as part of our strategy to expand the geographic coverage of our Applied Sterilisation business. Since acquisition the company has been renamed Synergy Health (Radeberg) GmbH. The Company is located in Saxony and provides applied sterilisation technology services.

The fair value of the net assets acquired and the related consideration were as follows:

The deferred consideration due has been increased by £132,000 based on a re-assessment of circumstances which existed at the date of acquisition. All deferred consideration has now been paid.

The goodwill arising on the acquisition of GSP is attributable to the assembled workforce and the synergies that can be generated following the integration of GSP into the Group.

In accordance with 'IFRS 3 (revised) Business Combinations', management have made adjustments to the book value of net assets acquired to arrive at the fair values disclosed above. The most significant of these are the recognition of intangible assets (customer lists) and adjustments to the carrying value of provisions for the disposal of cobalt.

Total acquisition costs of £44,000 (2011 - £169,000) were incurred in the acquisition of GSP and have been expensed within non-recurring items.

The GSP business contributed £2,292,000 to revenue and £439,000 to operating profit for the period.

Summary of cash flows associated with the acquisition of GSP:

15 Annual report

The annual report and financial statements for the year ended 1 April 2012 will be posted to the shareholders on 29 June 2012, and will be delivered to the Registrar of Companies following the Company's Annual General Meeting.

16 Forward-looking statements

Certain statements made in this announcement are forward-looking statements. These forward-looking statements are not historical facts but rather are based on the Company's current expectations, estimates, and projections about its industry; its beliefs; and assumptions. Words such as 'anticipates,' 'expects,' 'intends,' 'plans,' 'believes,' 'seeks,' 'estimates,' and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties, and other factors, some of which are beyond the Company's control, are difficult to predict, and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. The Company cautions shareholders and prospective shareholders not to place undue reliance on these forward-looking statements, which reflect the view of the Company only as of the date of this announcement. The forward-looking statements made in this announcement relate only to events as of the date on which the statements are made. The Company will not undertake any obligation to release publicly any revisions or updates to these forward-looking statements to reflect events, circumstances, or unanticipated events occurring after the date of this announcement except as required by law or by any appropriate regulatory authority.