Trading Statement

13 October 2014

SYNERGY HEALTH PLC("Synergy" or "the Company") 

Trading Update

Synergy (SYR.L), a leading provider of specialist outsourced support services to health-related markets, is pleased to provide a trading update for the six months ended 28th September 2014. As a result of positive progress with the implementation of its strategy, the performance of the group is in line with the Board's expectations.

Today the Boards of Steris Corporation ("Steris") and Synergy also announced that they have reached agreement of the terms of a recommended combination of Synergy and Steris (the "Combination Announcement"). Shareholders should also read the full contents of the Combination Announcement, within which the contents of this announcement are contained.

Trading Update

Underlying trading, for the six months to 28 September 2014 was up 7.4% on a constant currency basis with a particularly strong performance from Applied Sterilisation Technologies (AST). Reported revenues were £197.6 million (2013: £192.1 million), up by 2.8%. Reported revenue was impacted by £8.8 million of adverse currency translation effects.

Underlying revenue by service line stated at constant currency was as follows:

AST

Our AST business has continued to make progress implementing its strategy, lifting underlying growth from 13.6% in Q1 to 17.5% for the entire half year despite the partial loss of capacity in Malaysia. We anticipate the Malaysia facility to be back to full capacity by the end of the financial year. The increased growth is principally driven by a strong performance in the Americas (up 15.8%), x-ray (up 56%), the new gamma facility in Marcoule, and from the acquired Bioster Group benefiting from integration with the Synergy network. Earlier this year the group announced plans to expand capacity throughout our international network, including new facilities in San Francisco and Saxonburg, in keeping with our objective to achieve sustainable growth of 10-12% per annum.

HSS

Underlying revenue in HSS grew by 5.8% over the comparative period in H1 2014, driven by the start of new contracts, partially offset by exiting from £6 million of non-core, low margin legacy product distribution business in the US. The Sterilmed contract has been implemented well, albeit two months later than originally envisaged. Synergy's processing expertise in this market segment has been well received by the customer.

During 1H we won £6 million per annum of new HSS contracts and a further £2 million per annum is at preferred bidder stage. In September, we launched a new initiative in the UK to lower operating costs with the use of new innovative software and RFID technology. The initial reception has been positive, generating new leads and opportunities worth more than £10 million per annum at this early stage.

In the US, interest in HSS outsourcing remains strong, with our bid book now over £80 million per annum, reinforcing our confidence in this business. Our US development team is managing a large number of outsourcing proposals which we are confident will convert to full outsourcing contracts as the year progresses.

Healthcare Solutions

Healthcare Solutions, which principally represents healthcare linen rental services, improved its performance during the second quarter, with revenue declining 2.1% for the full half year period compared with 4.1% for the first quarter. We are continuing to implement our new strategy in the Netherlands that will improve our competitive position and broaden the available market in a bid to prevent a reoccurrence of the price war that has dominated performance of this division for the last three years.

Net Debt

Net debt during the period increased from £147.6 million at 30 March 2014 to circa £172 million on 28 September 2014, principally as a result of the Bioster Group acquisition which completed in May 2014.

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