27th Mar 2008 07:00
Synergy Healthcare PLC27 March 2008 27 March 2008 SYNERGY HEALTHCARE PLC ("Synergy" or "the Company") Trading update Strong sales growth and expanding capacity for the future Synergy Healthcare plc (AIM: SYR), a leading provider of outsourcedsterilisation and infection control services in the UK, Ireland, ContinentalEurope, Asia and South Africa, today provides an update on trading prior to therelease of its results for the year ended 30 March 2008. These results will beannounced on 5 June 2008. The business has continued to grow strongly with sales growth to the end ofFebruary up 50% on the previous year, and up 17% on an underlying basis beforethe acquisitions of Isotron and Vernon Carus. The markets in which Synergyoperates have all continued to perform consistently well and have not beenaffected by macroeconomic events. Synergy's sales are largely driven by thenumbers of patients treated around the world together with new contract wins. Patient Care Patient Care has continued to enjoy strong growth in the second half with threecontract wins worth a total of £2.3 million per annum within its linenmanagement business. We are pleased to confirm that the linen processingfacility in Dunstable, which suffered a fire in February last year, was reopenedin December on schedule and is now achieving production levels ahead of itsprevious position. Demand for infection control and wound care products and services have remainedrobust during the second half contributing to a strong overall performancewithin this division. The acquisition of Vernon Carus, which has been clearedby the OFT, remains on course to be fully integrated in the Spring. Theintegration includes relocating the Patient Care UK head office to Vernon Carus'office as well as rationalising other facilities. We expect the relocation tobe completed by the end of April and Vernon Carus to be earnings enhancing fromthat point onwards. Surgical As expected, we have grown sales in Surgical during the second half of the yearwith strong demand for decontamination and sterilisation services in both theacute and primary care sectors. The division has been focusing heavily on theinternational expansion of its business to provide diversification alongside itsvery strong established position in the UK market. We are pleased to announcethat Synergy has been recently selected as preferred bidder for a large contractin the Netherlands and for its first contract in Belgium, which in combinationwith new contracts awarded in the UK, would amount to more than £7 million perannum of new work. Approximately £4 million of these new contracts will startduring the first quarter of the new financial year. The new commercial andhospital sterilisation development in China remains on schedule to open justafter the Chinese New Year in 2009. The new super centre in Manchester was opened on time in November and became thefirst facility under the UK's "national decontamination programme" to assimilateall of the customers. Commercial Isotron sales growth has remained consistent during the second half of the year.We have taken the decision at our new facility in Venlo, which is on theborder of the Netherlands and Germany, to focus on validating the sterilisationprocesses for all of our customers ahead of commencing full operations in April.This has marginally reduced planned sales growth during the period. Thischange is consistent with Synergy's approach to opening new sites, shorteningthe period required to achieve site profitability. Our new facility in China isnow under construction and will open and commence validation during the lastquarter of the new financial year. Our investment in sales and marketing iscreating new opportunities for the business and we expect to be able to announcenew strategic partnerships later in the year. Banking Facilities During the second half of the year we increased our available loan facilities to£200 million with a permitted level of indebtedness of £220 million. Our maindebt facility was increased to £160 million with renegotiated terms including areduced margin and more flexible repayment arrangements. This main facility wassuccessfully syndicated in December to five relationship banks and is committeduntil 2012. We continue to enjoy a strong balance sheet with net debt on 24February at £144 million. Outlook Sales growth has been strong throughout the year. November and December saw theimplementation of three new, large facilities: the surgical sterilisation supercentre in Manchester, the medical device sterilisation facility in Venlo and thereopening of the linen management facility in Dunstable. Despite a small impacton operating margins from the collective, upfront costs of commissioning thesenew projects, in particular in the linen management business, we expect EPS forthe full year ended 30 March 2008 to be broadly in line with marketexpectations. Good progress is being made at each of these three major facilities and, takentogether with the contracts starting in the new financial year, we remainconfident of further good growth in the coming financial year. Move to the Main Market As previously announced we expect to make the transition from AIM to the mainmarket in the new financial year. It is anticipated that our application willbe submitted to the UKLA in June with admission to the main market six to eightweeks later. Director's Share Holdings Following the recent changes to UK personal tax, certain Directors have madechanges to their holdings as part of a tax planning strategy whilstintentionally avoiding any reduction in their beneficial holding. Dr Richard Steeves, Chief Executive of Synergy Healthcare plc, commented: "The demand for infection control products and services remains robust,unaffected by the recent macroeconomic events, and we saw strong growth inrevenues during the second half of the year. We are continuing to investsignificantly in the business with three new, large facilities coming on streamand a further two under construction in China, providing substantial additionalcapacity for the future. With new contracts about to commence in both thePatient Care and Surgical divisions, the Board is confident of further growth inthe coming year." ENDS For further information:Synergy Healthcare plc 01793 891891Dr Richard Steeves, Chief Executive 07768 020202 Ivan Jacques, Finance Director 07714 012514 Morgan Stanley 020 7677 2395Peter Moorhouse Investec 020 7597 5970Patrick Robb Financial Dynamics 020 7831 3113David Yates / Ben Brewerton This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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