Interim Management Statement

Friday 17 January 2014

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 29 September 2013.

Trading Update

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

Reported revenue for the nine months to 29 December 2013 increased by 8.4% to £286.9 million (Q3 2012/13: £264.7 million). Underlying revenue, excluding currency effects, increased by 6.0% to £280.5 million.

Underlying revenue in the operating regions was as follows:

*Underlying revenue excludes the impact of currency effects.

Operating margin has increased by 50 basis points over the comparative period.

Americas

The Americas region has performed generally well, although trading over the Christmas period, which is traditionally strong in the United States, has been slower than expected. Underlying revenue has increased by 40.2% with growth supported by the full year effect of the acquisition of SRI. During the period, as announced on 16 December 2013, we won two Hospital Sterilisation Services (HSS), two Reusable Surgical Services (RSS) and two Applied Sterilisation Technology (AST) contracts, together worth £230 million over the term of the contracts. All of these contracts are now being implemented, with the larger HSS contract deploying interim services on 1 February 2014 and full operation of the centralised service commencing in February 2015.

We are also pleased to report that the RSS business has been selected as preferred bidder for an eleven year outsourcing contract worth £23 million per annum. The contract is expected to reach financial close by the end of the fiscal year with implementation commencing in Q1 2014/15.

UK & Ireland

Underlying revenue growth in the UK and Ireland increased by 1.4% reflecting a solid performance across the region. Good revenue growth in our AST business was supported by a strong performance from our gamma and electron beam technologies. HSS revenue also increased, supported by the award of two private hospital contract wins. Our pipeline of new business opportunities remains healthy, however NHS decision making remains slow. Following four new contract wins, announced in our half-year results, our UK Linen business is working with our customers towards implementing these contracts. Our Healthcare Solutions business has performed well over recent months with modest revenue growth and improved margins.

Europe and the Middle East

Underlying revenue in the region decreased by 4.2%, reflecting strong organic growth from the AST business, offset by the continued effect of market price erosion in the Dutch linen business. Our new AST facility in Marcoule, France, has now obtained its operating licence and we expect to begin servicing customers during February. Our linen business is showing signs of stabilising, and under the leadership of a new managing director we are cautiously optimistic that we are reaching a period of stability. Our cost reduction programme will include further facility rationalisation this year.

Asia & Africa

Underlying revenue growth in Asia & Africa increased by 6.6%, which is lower than we were expecting, in part because of decreased demand from the United States. However, a new AST contract started in Thailand during January, and three HSS facilities in China will commence trading over the coming months. In addition, our Chinese marketing joint venture with Sinopharm continues to be productive, generating new opportunities for our HSS business. We have seen a turn-around in the Malaysian surgical glove market that will improve our future financial performance in this key market.

With our contract wins to date our forward order book has increased to approximately £1.35 billion and this establishes the Group in a strong position for sustainable growth. Synergy will provide a further update at the end of the next quarter in April 2014 and will report preliminary results on 4 June 2014.

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