Synergy says Q1 growth limited by currency translation

Synergy Health, a provider of outsourced sterilisation services, disappointed investors by admitting headline growth in the first quarter had been held back by currency translation with the devaluation of the euro.

It was by no means all bad news, however, with improved margins offsetting the impact of slower reported revenue growth.

Reported revenue increased by 3.5% to £79.3m compared to the same period last year (2011: £76.6m), whilst adjusted operating margins improved by 220 basis points to 16.7% (2011: 14.4%).

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Underlying sales grew in all regions, up 3.0% in the UK and Ireland, 5.5% in Europe and the Middle East, 32.9% in Asia and Africa, and 32.4% in the Americas.

The UK and Ireland were affected by extended public holidays, although revenue for Applied Sterilisation Technologies (AST) showed good growth of 7.4% with particularly strong growth in Ireland.

Europe and the Middle East improved slightly on the last quarter with AST growth partially mitigated by continued price competition in the Dutch linen market.

A strong performance in Asia and Africa was seen as the firm continues to progress a number of opportunities and expects to reach financial close within the next few months with associated revenue commencing in 2013/14.

In the Americas the new plant in Florida is now processing product and will double in capacity towards the end of the summer, the firm said.

Net debt at July 1st had decreased to £167.7m from £173.5m at April 1st. Following the acquisition of SRI, net debt has since increased to £191m, corresponding to a net debt to EBITDA ratio of around 2.0 times, comfortably within its banking covenant of 3.25 times.

The share price fell 3.26% to 918.50p by 11:19.

NR