Interim Management Statement

28 July 2010

SYNERGY HEALTH PLC

("Synergy" or "the Company")

Q1 Interim Management Statement

Synergy Health PLC (SYR.L), a leading provider of specialist outsourced services to healthcare providers and customers concerned with health management in UK and Ireland, Europe and the Middle East and Asia and Africa, will hold its Annual General Meeting at 10.30 am at Investec Bank plc, 2 Gresham Street, London today. Steve Wilson, the Company's Chairman, will make the following statement on current trading:

"Trading has been in line with the Board's expectations for the first quarter and remains on track to achieve the Board's expectations for the full year. Underlying revenues grew at 1.7% whilst adjusted operating margins improved 40 basis points. We expect to see improved revenue growth in the second half of the fiscal year.

As anticipated, revenues in the quarter to 27 June declined by 2.9% to £70.4 million (Q1 2009/10: £72.6.million), as a result of the gradual winding down of non-core operations. Underlying revenues grew 1.7% excluding currency effects and non-core business, with notably strong growth in Asia. Underlying revenues in the Company's operating regions were as follows:

In the UK and Ireland, revenue growth in decontamination and sterilisation was 19% and 6% respectively. We reached financial close to provide a £5 million p.a. decontamination service to the Sheffield Teaching Hospital's NHS Trust and the Children's Hospital Trust in June. Construction of the new facility has started and operations are expected to commence in May 2011. We are also preferred bidder with a number of other acute and Primary Care Trusts with revenues of approximately £3 million p.a. The bid book for decontamination services remains very substantial with more than ten active bids worth approximately £25 million p.a. in aggregate. Sterilisation services in the UK and Ireland remain strong and in line with the general growth of the medical device markets. Revenues in the UK linen business were unchanged on the prior period, with the business focusing instead on margin improvement. 

In Europe and the Middle East, revenue growth has been muted by the linen business in the Netherlands. Underlying revenue growth in sterilisation services increased by 3.2%, driven by growth at our ETO facility in the Netherlands. Further capacity will be added to this ETO facility towards the end of this financial year. As previously announced a new gamma facility will be constructed in France in 2011, to create much needed capacity in line with the anticipated growth of the medical device market in that country. Synergy is planning to expand its decontamination services from the Netherlands and Belgium into other European countries where the outsourcing markets are well established. These combined initiatives in sterilisation and decontamination are expected to translate into improved revenue growth in 2011/12.

Revenue growth in Asia and Africa has been strong, reflecting the recovery of the sterilisation market, as well as our growing decontamination business in China. The team are progressing a number of opportunities to expand both the decontamination and sterilisation services in the region in line with our stated strategy.

Net debt was reduced from £133 million at 28 March 2010 to £131 million and the Group continues to operate very comfortably within its agreed banking covenants.

Synergy substantially increased investment in its commercial teams during the first quarter of this calendar year and we are confident that we will see improved revenue growth in the second half of this fiscal year as a result. We remain positive about the opportunities that we see across all our markets and geographies, and are confident in achieving the planned revenue and earnings growth for the year.

We look forward to reporting further progress at our Interim results on 4 November 2010."

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