18th Apr 2007 07:01
Synergy Healthcare PLC18 April 2007 18 April 2007 SYNERGY HEALTHCARE PLC ("Synergy" or "the Company") Trading update Performance in line with market expectations Synergy Healthcare plc (AIM: SYR), a leading provider of outsourced healthcaresupport services in the UK, Europe, Asia and South Africa today provides anupdate on trading prior to the release of its results for the year ended 1 April2007. These results will be announced on 12 June 2007. Group Performance Trading has met management's expectations during the second half of thefinancial year and the results are therefore expected to be in line with marketexpectations. The performance of the business has been broadly based with aparticularly strong performance in the Netherlands. On 2 January 2007 the acquisition of Isotron plc was declared unconditionalthereby extending Synergy's services and giving access to a wider geographicmarket. Isotron too has performed in line with expectations. Integration of Isotron The integration of Isotron is progressing to plan. Around £1 million of annualcost synergies have been identified and these will give rise to an exceptionalcost of not more than £2 million mainly arising in the current financial year.Paul Santing, who was the European Regional Director for Isotron, has now takenover as Managing Director. The primary reason for acquiring Isotron was to enjoy the benefits of growthsynergies by extending Synergy's hospital services into European and Asianregions where Isotron has a presence, and by lifting the organic growth rate ofIsotron. Following our initial due diligence the prospects for achieving bothgrowth objectives over the coming two to three years look very promising and wewill outline further details later in the year. In the near term the new ETO plant in Venlo (Netherlands) remains on schedule tostart commercial operations in Q3, whilst the new gamma plant in Marcoule(France) remains on course to open in late Q4. JMJ Laboratories, which as part of the Isotron group provided microbiology andpathology contract services, including workplace drug testing, has beenrepositioned as a separate division within Synergy as part of our strategy todevelop wider pathology services for healthcare markets. Patient Care Services Patient Care has performed well as it increases its focus on infection control.Margins have continued to improve and the objective of meeting the wider grouptarget by the end of the current financial year is ahead of schedule despite asubstantial increase in marketing costs. AirCleanse, our air decontamination system acquired in November, was formallylaunched in January and has got off to a good start with several orders from UKhospitals. The technology is being incorporated into isolation wards for theprevention of the spread of healthcare-acquired infections ("HCAI") such asClostridium difficile and MRSA. LTS in the Netherlands has performed very well with strong sales growth. As themarket leader LTS continues to look for opportunities to broaden its serviceoffering similar to the UK. Healthtex, a leading UK healthcare linen supplier, has also performed wellduring the year. However the business suffered a fire at one of its facilitiesin Dunstable. Contingency plans were swiftly put into action and as a resultthere have been no material adverse service issues affecting customers. WhilstDunstable is being restored Healthtex has sufficient capacity to continue toexpand the business and has won a small number of new contracts which will startduring this financial year. Surgical Support Services Surgical Support has met management expectations despite the NHS' reducedactivity levels to help address its financial imbalances. Activity levels areexpected to increase during the new financial year to meet the Government's 18week waiting list targets. Despite the lack of growth in the underlying levelof activity, the business has been successfully winning additional work fromboth the acute and PCT sectors in the UK. The UK team continues actively to bid for both National Decontamination projectsas well as independent NHS projects. Synergy remains short-listed on a numberof significant projects which should reach conclusion early in the summer.Meanwhile Manchester is on course to open in November and Lancashire is due toreach financial close shortly. In the Netherlands a number of discussions with potential new customers are atan advanced stage following the successful start of the sterilisation contractfor the Academic Medical Centre in Amsterdam. Once the integration with Isotronwithin the Synergy group is complete the combined team will exploreopportunities to accelerate the development of new hospital sterilisationprojects in Europe. Synergy Managed Equipment Services (SMES) Following the acquisition of Isotron and the increased emphasis on internationalexpansion the SMES business, with sales of c.£3.3m, was sold to Findel plc'shealthcare division for a cash consideration of up to £1.4m on 2 April 2007. Dr Richard Steeves, Chief Executive of Synergy Healthcare plc, commented: "Much of the second half of the year has been focused on the acquisition andsubsequent integration of Isotron. I am very pleased with the quality of theIsotron business and in particular the enthusiasm with which our growth strategyhas been embraced by the team. The opportunities in Europe and Asia lookparticularly promising both for the development of hospital services andincreased organic growth for medical device sterilisation services." "During the year Synergy has successfully progressed its core infection controland surgical strategies in the UK. It is a particularly exciting time in thedevelopment of Synergy as the result of this work becomes amplified by theinternational opportunities in Europe and Asia over the coming years." ENDS For further information: Synergy Healthcare plc 07768 020202Dr Richard Steeves, Chief Executive 01332 387140Ivan Jacques, Finance Director Brewin Dolphin 0113 241 0130Mark BradyAndrew Emmott Financial Dynamics 020 7831 3113David Yates / Ben Brewerton This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
SYR.L