Interim Management Statement

Q3 Interim Management Statement

Tuesday 1 February 2011

Synergy Health PLC

("Synergy" or "the Company")

Synergy (SYR.L), a leading provider of specialist outsourced support services to health related markets in the UK and Ireland, Europe and Middle East and Asia and Africa is pleased to provide an update on its progress since 26 September 2010.

Overall trading in the third quarter has been in line with the Board's expectations and the Company remains on track to achieve the Board's expectations for the full year.

Despite the impact of adverse weather conditions experienced in the UK and Northern Europe, underlying revenues, excluding currency effects and non-core business, grew by 4.4% for the nine months to 2 January 2011. As anticipated, the gradual wind down of non-core business in Healthcare Solutions resulted in reported revenues of £215.1 million remaining broadly flat for the nine months to 2 January (YTD 2009/10: £215.9m). Operating margins have been maintained at the strong levels reported for the first half year.

Underlying revenues in the operating regions were as follows:

In the UK and Ireland, underlying year to date revenue growth in decontamination was 12.4%, with the adverse weather conditions impacting growth during the period. We have reached financial close with the two Lincolnshire Acute Trusts - United Lincolnshire Hospitals and North Lincolnshire and Goole, and expect to commence services at the end of this calendar year. The contracts are for a period of 15 years with combined revenues of approximately £4.0 million per annum. In addition, we have been selected as preferred bidder on two other contracts with a combined annual value of £2.0 million. The bid book for decontamination remains strong with a number of active bids in progress. Sterilisation services in the UK and Ireland continue to perform well with year to date growth of 9.2%. Underlying revenues in linen remained broadly flat. The wind down of Healthcare Solutions non-core revenues continues to depress the consolidated service line growth rate for the region although non-core revenues are expected to be fully unwound by the end of the year.

In Europe and Middle East, revenue growth has been supported by a strong performance from sterilisation services, resulting in a year to date growth rate of 14.7%. On 13 December we announced the acquisition of Gamma-Service-Produktbestrahlung GmbH "GSP". GSP provides gamma and e-beam sterilisation services to the healthcare and industrial sectors. Since acquisition, the business has performed in line with our expectations and its integration into the wider Synergy business is proceeding well. The quarter includes some revenue from GSP which, when excluded, results in a growth rate for sterilisation of 11.3%. The good growth in sterilisation services across the region supports our plans to increase capacity with a new gamma facility in France, as well as an expansion of our ETO facility in the Netherlands. We are progressing plans to expand decontamination services within the region, with particular focus on Germany, and continue to expect associated revenue growth in 2011/12.

Revenue growth in Asia and Africa has remained strong, particularly in Malaysia and South Africa. China sterilisation processing continues to increase, and opportunities with existing and new customers are expected to support further revenue progression in 2011/12. We continue to expand the number of hospitals and healthcare institutions that are provided with decontamination services from China and remain in active dialogue on a number of additional opportunities to provide decontamination services in new locations, both within China and other countries in Asia.

Net debt at £118.6m is similar to that reported at the half year and the Group continues to operate well within its agreed covenants.

We look forward to reporting further progress at the end of the next quarter in April 2011 and in our preliminary results in June 2011.

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