million - Synergy Health

Synergy Health plc 

Annual Report & Financial Statements 2011 

a global leader 

in outsourced 

sterilisation 

services

Synergy Health delivers a range of specialist 

outsourced services to healthcare providers 

and other customers concerned with health 

management. These services are aimed 

at supporting our customers to improve the 

quality and efficiency of their activities, whilst 

reducing risks to their patients and clients. 

70 million 

reusable surgical 

instruments 

processed 

every year 

2nd largest 

global provider 

of outsourced 

sterilisation 

services 

99 sites 

across 13 

countries 

0.5 million 

items of healthcare 

linen processed 

every day

Financial highlights 

Financial 

Revenues up 0.3% to £287.3 million 

(2010: £286.4 million) 

Operating profit 1 up 8.3% to £43.0 million 


Profit before tax1 up 17.3% to £38.3 million 


EBITDA up 4.7% to £78.4 million 


Cash generated from operations up 9.5% to £83.7 million 


Adjusted basic earnings per share up 17.1% to 53.54p 

(2010: 45.74p) 

Basic reported earnings per share up 28.5% to 52.10p 

(2010: 40.56p) 

Dividend per share for the full year up 20% to 15.84p 

(2010: 13.2p) 

visit www.synergyhealthplc.com for more information 

1 Before amortisation of acquired intangibles and non-recurring items. 


Annual Report & Financial Statements 2011 1 

Who we are 

01 Financial highlights 

02 Strong track record 

03 Chairman’s statement 

04 An overview 

Our strategy 

06 Chief Executive’s review 

09 Delivering our strategy 

10 Internationalisation 

12 High value added services 

14 Differentiation through our people 

Operating and financial review 

16 Chief Executive’s review 

– Regional review 

18 Finance Director’s report 

22 Principal risks and uncertainties 

24 Corporate Social Responsibility 

Governance 

30 Board of Directors and Advisors 

32 Report of the Directors 

34 Corporate Governance 

39 Remuneration report 

Financials 

44 Independent auditors’ report 

45 Consolidated income statement 

46 Consolidated statement of 

comprehensive income 

47 Consolidated statement of 

financial position 

48 Consolidated cash flow statement 

49 Statement of changes in equity 

50 Notes to the consolidated 

financial statements 

81 Company balance sheet 

82 Notes to the financial statements 

89 Financial calendar 

Financials Governance Operating and financial review 

Our strategy 

Who we are

2 



Strong track record 

Higher revenue growth rates, 

supported by sustainable improved 

margins and strong cash generation, 

leave the business well positioned 

to continue to deliver 

Turnover £m 

£287.3 

17.1%CAGR 1 

£38.3 

22.7%CAGR 1 

1 Compound Annual Growth Rate 

11 287.3 

10 

09 

08 

07 

Profit before taxation, amortisation and non-recurring item £m 

Adjusted basic earnings per share pence 

53.54p 

16.4%CAGR 1 

Cash generated from operations £m 

£83.7 

23.9%CAGR 1 

152.6 

225.0 

286.4 

274.1 

11 38.3 

10 

32.6 

09 

26.1 

08 

24.9 

07 

16.9 

11 53.54 

10 

45.74 

09 

37.1 

08 

35.5 

07 

29.2 

11 83.7 

10 

76.5 

09 

60.1 

08 

46.8 

07 

35.5

Chairman’s statement 

Our focus on outsourced sterilisation 

services to the medical device and 

healthcare industries is serving the 

business well 

2011 has been a good year for Synergy Health, continuing the 

improvement in operating performance and at the same time making 

incremental progress towards our strategy of becoming a leading 

global provider of outsourced sterilisation and other niche services. 

Despite the markets in Europe and the UK remaining challenging 

due to restrained public expenditure, our business has performed 

well with good underlying growth in each of our regions. 

Reported revenues for the period were £287.3 million (2010: £286.4 

million). Underlying revenue growth, after currency effects and the 

removal of non-core businesses, was 4.1%. Adjusted operating 

margins were up by 1.1% to 15.0% (2010: 13.9%) resulting in 

profit before tax, amortisation and non-recurring items increasing 

by 17.3% to £38.3 million (2010: £32.6 million). 

In late 2010 we won a court case in respect of a fire at our Dunstable 

linen operation in 2007 resulting in an exceptional pre-tax gain of £5.6 

million. In addition, two acquisitions were undertaken and the costs of 

these were expensed as non-recurring items. After taking account of 

amortisation and non-recurring items, profit before tax increased by 

49.7% to £36.7 million (2010: £24.5 million). 

As part of a strategy to continue to expand our international network, 

during the year we acquired Gamma Service Produktbestrahlung 

GmbH (‘GSP’), a gamma and electron beam sterilisation business 

in Germany. We took a further step just after the year end with the 

acquisition of BeamOne LLC (‘BeamOne’) in the USA, making Synergy 

the second largest global provider of outsourced sterilisation services. 

Both businesses have been integrated successfully and are performing 

ahead of expectations. 

The acquisitions were funded from operating cash flow, enabling us to 

retain a strong balance sheet at the year end. Net debt has reduced by 

£21.1 million to £112.3 million (2010: £133.4 million) but remained 

similar to last year’s net debt position after taking into account the 

BeamOne acquisition completed on the 7 April 2011. We will shortly 

be completing new unsecured five year revolving credit facilities, to 

replace the existing facility which is due to mature in January 2012. 

During the year, new contracts and contract renewals of £114 million 

have been achieved, increasing the forward order book to £920 million. 

EPS and dividend 

Adjusted basic earnings per share (before amortisation of acquired 

intangibles and non-recurring items) were 53.54p (2010: 45.74p), 

an increase of 17.1%. After taking account of amortisation and 

non-recurring items, basic earnings per share were 52.10p 

(2010: 40.56p), an increase of 28.5%. 

The Board is proposing a final dividend of 9.84p, which together with 

the interim dividend of 6.00p would give dividends for the year totalling 

15.84p (2010: 13.2p) representing a 20% increase. If approved, the 

dividend will be paid on 6 September 2011 to shareholders on the 

register at 12 August 2011. 

Employees 

To ensure the long term sustainability of the business we have 

continued to invest in our teams with the expansion of our talent 

management programme. Our ability to support the growth of our 

business through internal appointments is being greatly enhanced 

by the evolution of our graduate programme, increased investment 

in front line management programmes, and the development of our 

senior leadership community. We are also taking steps to improve the 

attractiveness of Synergy to new recruits from a broader range of the 

community, with a clear and well executed diversity strategy. 

The Board continues to be impressed with the efforts and 

commitment of our teams and this is very much reflected in the 

improved operating and financial performance that we have achieved 

during the year. We would also like to welcome our new colleagues 

from GSP in Germany and from BeamOne in the USA and Costa Rica. 

On behalf of the Board, I would like to thank all of our employees for 

their continued dedication and their achievements during the year. 

Outlook 

Our underlying growth rate is progressing, supported by our strategy 

to further internationalise the business. In Europe and the UK we are 

not anticipating any significant change in the economic environment 

and as a result we expect to see a similar trading performance in the 

current financial year, whilst in Asia and the Americas we continue 

to see much stronger growth. 

Our focus on outsourced sterilisation services to the medical device 

and healthcare industries is serving the business well, with the new 

financial year having started strongly. We anticipate a similarly strong 

performance in this new financial year. 

Robert E Lerwill 

Chairman 

7 June 2011 




Our strategy 

Who we are

4 



An overview 

Global footprint 

UK & Ireland Europe & Middle East 

– 2,300 employees 

– 40 sites across the UK and Ireland 

– Market leader in outsourced hospital sterilisation 

– Strong medical device sterilisation growth 

Core services 

Hospital sterilisation 

Outsourced hospital sterilisation provides a decontamination service for 

reusable medical and surgical equipment used in operating theatres. This 

service also extends across other hospital departments, primary care facilities 

and orthopaedic loan set suppliers. Synergy Health is the largest provider of 

outsourced decontamination services in Europe. 

Medical device sterilisation 

Outsourced sterilisation services are provided for businesses including a large 

number of multinational medical device manufacturers using a full range 

of sterilisation technologies, including gamma radiation, electron beam 

and ethylene oxide. Its customers are mainly drawn from the medical, 

pharmaceuticals and biological markets. Synergy Health is the world’s 

second largest provider of outsourced medical device sterilisation services. 

Healthcare solutions 

Healthcare solutions provides a range of services involved in managing the 

environment in a healthcare setting. The services primarily involve infection 

control with services such as linen management, hand hygiene and hard 

surface systems, occupational health and laboratory services. 

– 1,800 employees 

– 50 sites in the Netherlands, France, Germany, 

Belgium and the UAE 

– Expanding capacity at Venlo, the Netherlands 

– Construction of new gamma facility started at 

Marcoule, France 

– Acquisition of GSP in Dresden, Germany 

£9.6m p.a. 

Annualised value of new contracts won in the UK this year 

£1.8m p.a. 

Annualised value of new contracts won in China this year 

No 1 

Market leader in Dutch healthcare linen management

Asia & Africa North & Central America 

– 220 employees 

– 4 sites in China, Malaysia, Thailand and South Africa 

– Hospital sterilisation progressing well, servicing over 

30 Chinese hospitals 

– Additional medical device sterilisation capacity has 

been commissioned 

Activity 

Sterilisation of reusable medical devices, 

equipment and surgical instrumentation, 

and related outsourced services 

Activity 

Sterilisation, validation and related outsourced 

services from an extensive international network 

Activity 

Infection control 

Linen management 

Patient hygiene 

Wound care 

Surgical 

Occupational health 

Pathology, toxicology and microbiology 

Markets 

Acute, community and private hospitals 

Primary care providers 

Surgical instrument suppliers 

Dentistry 

Markets 

Medical devices 

Pharmaceuticals 

Industrial 

Veterinary 

Food 

Cosmetics 

Laboratories 

Markets 

Acute and community hospitals 

Primary care providers 

Residential homes 

Laboratories, clean rooms 

Occupational health 

Blue chip corporates 

Government bodies 

Facility locations 

UK 

Belgium 

The Netherlands 

China 


UK Ireland 

France Germany 

The Netherlands Malaysia 

China South Africa 

Thailand 

USA 

Costa Rica 


UK 

The Netherlands 

Middle East 



– BeamOne acquired post year end 

– 130 employees 

– 4 sites in the USA and 1 in Costa Rica 

– Strong management team to support growth plans 

– Close relationship with US-based medical 

device manufacturers 


Our strategy 

Who we are

6 



Chief Executive’s review 

Our services are mission-critical 

to our customers, and for 

this reason the demand 

for outsourcing is growing 

Synergy Health is an expert in outsourced sterilisation 

services to the medical device market as well as to 

hospitals and other healthcare providers. In addition, 

the business provides other outsourced services such as 

healthcare linen, pathology and specialist laboratory services. 

By focusing on niche outsourced services, the Group has 

the benefit of significant barriers to entry, good cash 

generation and long term contracts.

Global medical device sterilisation revenue Global hospital sterilisation revenue 

£70.1m +13.9% £56.9m +13.8% 

Introduction 

During the year we exceeded our expectations in terms of margin 

progression, but the uplift in revenue growth was slower to come 

through. We have now seen growth filtering through during the early 

part of this new financial year. 

The Group performed well during the year, meeting our expectations 

in all areas with the exception of our products based business in the 

UK. Underlying revenues were up 4.1% on last year after taking into 

account currency effects and the closure of non-core businesses. 

Gross margins were up by 2.0% to 38.2% (2010: 36.2%) and 

adjusted operating margin was up 1.1% on last year to 15.0% (2010: 

13.9%). The strategy is serving the business well with solid underlying 

growth, geographic diversification and a focus on niche outsourcing 

services, which will enable us to sustain our operating margins at the 

current levels. 

There are however still challenges to be faced, and we are taking 

proactive steps to address these. Growth in Europe and the UK is 

more subdued as a result of our mature linen businesses operating in 

mature markets, and the general state of the economy. Our strategy of 

focusing more resources on Asia is paying off with growth outstripping 

the other two regions. Asia and Africa make up 4.7% of global 

revenues, up from 3.8% last year. Meanwhile, Europe and the Middle 

East’s contribution was steady at 41.3% (2010: 41.0%), and the UK 

and Ireland’s share reduced to 53.9% from 55.2%. Asia’s share of 

revenue generation is increasing in line with our strategy. Our entry into 

the Americas will provide further opportunity for fast growth within our 

core services, as well as supporting our Asian business through closer 

links with large US-based medical device manufacturers. Another 

challenge is our products based business, which faced a further 

decline in revenues in the UK this year, holding back Group revenue 

growth. We are focusing very heavily on cost leadership within the UK 

and directing investment into our international markets where growth 

will be stronger. 

Overall, the Group is in good shape with an internationally diversified 

business providing long term contracted, high value added services 

with a forward order book of £920 million (2010: £850 million). The 

business has a strong balance sheet and excellent cash generation. 

Strategy 

We set out a strategy three years ago that has resulted in Synergy 

becoming one of the leading global providers of niche outsourced 

services to health related markets. Our core service is the provision 

of outsourced sterilisation for medical device manufacturers and for 

healthcare providers such as acute hospitals. In addition, we are 

leading providers of healthcare linen services in the UK and the 

Netherlands, manufacturers of infection control products and 

providers of specialist laboratory services. 

Underlying global revenues (excluding non-core businesses) for 

medical device sterilisation and hospital sterilisation were up 13.9% 

and 13.8% respectively. Our healthcare solutions businesses declined 

by 2.9%, reflecting our strategy to direct our investments towards 

sterilisation services, as well as some difficult trading in the UK 

products business. 

Looking ahead, our strategic objectives are threefold. Firstly, we will 

continue to expand the business internationally, making Synergy a 

truly global business. Secondly, we will focus on high value added 

outsourced services that have high barriers to entry. Thirdly, we will 

differentiate Synergy from its competitors through its people, and at 

the same time maintain a cost leadership strategy to ensure that we 

achieve greater levels of efficiency. 



1. Internationalisation 

Synergy is the leading provider of sterilisation services to hospitals, 

having created the market in the UK in 1996. Today we have facilities 

in the UK, Europe, and China, and our strategy is to continue to 

increase our total market share in each country as well as to continue 

our international expansion in Asia and in due course in the 

United States. 

Following the recent acquisitions of GSP and BeamOne, we are now 

the second largest global provider of sterilisation services to medical 

device manufacturers. Our strategy is to continue to expand our 

presence in Asia where multinational medical device companies are 

focusing their investments, and healthcare providers are focusing on 

reducing infection risks. We are targeting a quarter of our income to 

come from the Asian region. At the same time we will be extending 

our presence in the Americas, with the expansion of our sterilisation 

services for both medical device manufacturers, and for healthcare 

providers. In the short term, we are focusing on medical device 

opportunities in Central America, with a medium term objective to 

develop our hospital sterilisation services in the United States. In the 

medium term we expect to see a quarter of our income coming from 

the Americas region. 

We are leading providers of healthcare linen services in the 

Netherlands and in the UK. Our intention is to operate these 

businesses efficiently but not to expand them outside of these two 

countries. Similarly our small laboratory businesses, which operate 

in the UK and in the Netherlands, will continue to be developed 

within these countries. 

We also manufacture infection control and other consumable 

products for the international healthcare market. This business has 

encountered a number of challenges over the last three years and 

continues to face considerable headwinds. The business is partway 

through a restructuring programme to lower its cost base to support 

a predominantly internationally based growth strategy. 

2. High Value Added Services 

Our strategy is to focus solely on niche services that have high 

barriers to entry, significant value added content and a global potential. 

Presently just under three quarters of our income is derived from 

sterilisation services to the medical device and hospital markets. 

The outsourcing of these services is driven by an increasing regulatory 

burden that makes outsourcing to highly specialised providers such 

as Synergy economically effective. 

The barriers to entry within the sterilisation businesses are 

considerable. For example, the service we provide to the global 

medical device manufacturers requires Synergy to have experience, 

competence and a network to provide mission-critical services. 

Synergy is recognised as one of the world’s leading providers of 

medical device sterilisation services with an extremely positive 

reputation for the quality of its services. In addition, we are the world’s 

largest operator of radiation sterilisation facilities, relatively protected 

by licensing requirements which are becoming ever more stringent. 

There are similarly high barriers to entry for the sterilisation of reusable 

medical devices for hospitals. The service is again mission-critical, with 

much of the challenge based on managing the complex logistics of 

supplying thousands of different types of surgical instruments. Synergy 

has addressed and met the challenge with our proprietary software 

systems that manage the logistics and ensure that the inherent risks 

in the service are controlled. Synergy has an unparalleled record of 

service delivery, reflecting its strong position in the UK and its 

expanding services in Europe and China. 


Our strategy Who we are

8 




We have very strong and defendable positions with our linen services 

in the Netherlands and the UK, where we are number one and two 

respectively. As the markets have been consolidated down to two 

players in each case, there are significant barriers to entry with scale 

and experience, as well as with customers being contracted on five to 

seven year terms. 

Looking further ahead, we are researching other niche areas where 

Synergy’s core competencies could be used to create similarly 

attractive operating models. We are attracted to services that integrate 

more closely with clinical service provision and where there are 

benefits from scale and expertise. 

3. Differentiation and cost leadership 

Two of Synergy’s longstanding strategic principles have been to 

operate a cost leadership programme as well as to competitively 

differentiate certain aspects of our services. We continue to 

benchmark our performance against competitors including in-house 

services, and with our investments in technology and innovation, 

we continue to lead our markets in the cost-effective delivery of 

outsourced services. 

In parallel we continue to invest in our teams to expand and deepen 

a talent pool that will enable Synergy to differentiate itself from its 

competitors through its people. Our partnerships with Warwick 

Business School and the Chartered Management Institute are 

important investments that enable us to create sustainable leadership, 

as well as a culture that differentiates Synergy based on the quality of 

its people. We have a global senior leadership community that plays an 

active role in the implementation of our strategy. In addition we have 

an expanding graduate programme that is recruiting a new talent pool 

from which to develop our future leaders. 

Forward order book 

£920m 2010: £850m 

Outlook 

Last year we decided to make a transition to a regionally managed 

business, enabling us to have greater strategic oversight of each 

region, to improve efficiencies by extracting cost synergies, and to 

build a management structure that would facilitate the creation of 

a fourth region in the Americas. All of these objectives were fulfilled 

during the year, with margins sustainably restored to an appropriate 

level, improved oversight of both organic and acquisitive growth 

opportunities, and, just after the year end, the establishment of the 

Americas region with the acquisition of BeamOne. 

Synergy’s focus is on the provision of niche outsourcing services 

that create significant value for our customers. Our services are 

mission-critical to our customers and for this reason the demand 

for outsourcing is growing. Looking ahead we expect that rising 

regulatory and technical standards will continue to underpin 

demand together with the cost efficiency of Synergy’s services. 

Our strategy to expand Synergy’s reach with the objective of becoming 

a global business is also working well. We are continuing to see 

stronger growth in Asia compared to our traditional markets and 

we expect this trend to continue. Our recent expansion into the 

Americas also provides a second source of significant growth for 

Synergy. For example, we have agreed an exclusive supply agreement 

in Costa Rica for sterilisation services to an important medical device 

business park, enabling us to double our electron beam capacity as 

well as add EtO services over the next year. Growth in the Americas, 

in combination with Asia, will see the Group’s overall revenue growth 

edge up towards double digit rates over the next 12 to 18 months. 

Higher revenue growth rates, supported by sustainable margins and 

strong cash generation, leave the business well positioned to continue 

to deliver its earnings objectives. 

Dr Richard M Steeves 

Chief Executive

Delivering our strategy 

1. to expand the business 

internationally 

2. to focus on high value 

added services 

3. differentiation from our 

competitors through 

our people 



9 



10 



Internationalisation 

Expanding our 

global footprint 

At the start of the year, we signalled our 

intention to increase capacity and enter 

new markets via both organic growth and 

bolt-on acquisitions. 

In late 2010, we acquired Gamma Service 

Produktbestrahlung GmbH (‘GSP’), an electron 

beam and gamma irradiation business based in 

Saxony, Germany. 

This acquisition builds our capacity in Germany, 

and enables Synergy to add electron beam 

processing to our service offering in mainland 

Europe. In addition, GSP’s proximity to Poland 

and the Czech Republic provides Synergy with 

a route to enter new markets in eastern Europe. 

Germany could become a key market for Synergy 

and we are actively bidding for a number of 

hospital sterilisation contracts there. 

In April 2011, after the end of the financial 

period, we acquired BeamOne LLC (‘BeamOne’). 

BeamOne is the largest provider of outsourced 

electron beam medical device sterilisation 

services in the USA. BeamOne has FDA 

approved sites in San Diego, California; Denver, 

Colorado; Lima, Ohio; Saxonburg, Pennsylvania; 

and a fifth site in Costa Rica. 

The acquisition of BeamOne is Synergy’s first 

expansion into the US sterilisation market, 

estimated to be worth US$600 million per 

annum. As well as acquiring a well established 

and growing business in a key market, 

BeamOne’s respected relationships with USbased, 

global medical device manufacturers, 

should enable Synergy to deepen further its 

relationships and capture greater sterilisation 

business for its operations in Asia, and in 

particular China. 

Furthermore, the acquisition will provide a 

platform from which Synergy can start to research 

and develop the provision of its world-class 

hospital sterilisation services to American 

hospitals and healthcare providers. 

This is a significant step for Synergy, providing us 

with an entry into one of the world’s largest and 

most established sterilisation markets. BeamOne 

is the leading electron beam sterilisation provider 

in the USA, and by adding it to our network 

we have created the second largest global 

outsourced sterilisation business in the world.

€9.5 million 

Enterprise value of Gamma 

Service Produktbestrahlung 

GmbH (‘GSP’) when acquired. 

4 Irradiation facilities 

Built according to GSP’s own 

plans as modern and highly 

productive service centres. 

1 bis 10 kGy/h 

Dose rate at the Gamma 

Irradiation Facility GS 60. 

1st entry 

To North and Central America. 

10 MeV 

Energy output of BeamOne’s 5 

electron beam irradiators. 





12 



High value added services 

With over 30 years’ experience in the sterilisation 

industry, Synergy Health has a wealth of 

knowledge to share with its customers. Offering a 

complete range of sterilisation technologies, we 

are able to offer advice on the development of 

new products and materials, and on the seamless 

integration of our services into our customers’ 

manufacturing process. In the past year we have 

hosted a number of education days across our 

businesses, to share this knowledge. 

As an example, in 2011 we held an event in Ireland 

to help medical device manufacturers understand 

the effects of electron beam irradiation on 

commonly used polymers, and our approach to 

processing and validation. Manufacturers gained 

an understanding of emerging technologies, taking 

into account material compatibility and packaging 

requirements. We were delighted to welcome 

speakers from AIT, RAPRA, Boston Scientific and 

SteriPack, as well as in-house experts from both 

our UK and Ireland sites. In the UK we held a 

similar event which focused on ethylene oxide 

sterilisation. 

This year we broadened the education events to 

our hospital sterilisation customers, providing an 

insight into the principles and regulations of good 

cleanroom practice. Our laboratory business also 

provided similar insights into microbiological 

validation and compliance. 

These events have been well received, and when 

combined with our record of operational excellence, 

have proved a catalyst for achieving joint success. 

A foundation 

for joint success

High value added services 

Focus on hospital sterilisation 

Leicester 

Opened in February 2011, our new 1,472m 2 

(nearly 16,000ft 2 ) sterile service ‘supercentre’ is 

capable of processing 6 million instruments per 

year and will employ over 60 people. It is already 

handling Leicester Royal Infirmary’s full output, 

plus key areas of Leicester General Hospital, with 

Glenfield General Hospital due to follow in April 

2012. Operating 24 hours per day, the unit is 

capable of processing more than three times the 

daily demand from these three main hospitals. 

Built to service the University Hospitals of Leicester 

NHS Trust’s sterilisation requirements for the next 

15 years, the unit is Synergy’s most efficient yet in 

respect of carbon consumption per instrument 

processed. Synergy worked together with principal 

contractor Merit Merrell Technology and equipment 

supplier Getinge to develop a facility that combines 

optimal energy consumption with the best possible 

process flow. 

Following completion of the main building works, 

a ‘soft opening’ took place in November 2010 when 

Trust stakeholders were invited to view the facility 

and appreciate its capabilities. It was also the 

first opportunity for many Trust employees to 

experience their new place of work. Before the 

Leicester site could process any instruments, 

it required an audit to assess compliance with 

the Medical Device Directive and appropriate 

international standards. 

The auditor commented that in the thirteen years 

he had been performing inspections, Synergy’s 

Leicester facility was his very first site with ZERO 

non-conformances. 

The new Synergy unit will take over the activity of 

two existing Sterile Services Departments (SSDs), 

delivering services to the three hospitals within 

the Trust. The first SSD to transfer was based at 

Leicester Royal Infirmary, while the workload from 

the Glenfield General Hospital SSD will follow in two 

months’ time. 

Leicester’s Low Carbon Footprint 

• Steam boilers that recover waste heat and 

transfer it back to the boiler water feed 

• A ‘free air’ steriliser cooling capability that 

utilises low ambient air temperatures to 

supplement the cooler capacity 

• A ‘sleep’ mode for the control system when 

the cleanroom is unoccupied and air flow 

rates that can be adjusted to reflect varying 

occupancy levels 

• Lighting that maximises energy efficiency 

throughout the unit 

• Compressors that are 35% more efficient 

than standard models 

6m 

Capable of processing 6 million instruments per year 

1,472m 2 

(nearly 16,000ft 2 ) sterile service 

‘supercentre’ 

60 

Employs over 60 people 





14 



Differentiation through our people 

On the button 

with talent 

management

Synergy aims to attract, retain and develop 

talented people to ensure we are ready to deliver 

the business strategy and take advantage of 

business opportunities. 

Last year our focus was on building leadership 

capability, and ensuring that we have the 

competence and performance management 

frameworks in place through which to manage 

and develop our Senior Leadership Community. 

A leadership competence model 

has enabled us to assess levels 

of competence and track 

performance improvement to 

develop leadership potential 

We have achieved this in relation to the Leadership 

Community, where 95% of senior leaders from 

UK, Europe and Asia have been through our 

Leadership Development centres. A leadership 

competence model has enabled us to assess 

levels of competence and track performance 

improvement to develop leadership potential 

and plan for future succession. 

Focused graduate recruitment resulted in an 

increased graduate intake in September, with plans 

to increase the number of places on the programme 

each year to continue to feed into the talent pipeline. 

These initiatives will contribute to a global talent 

management programme with development aligned 

to the organisational strategy and objectives and 

ensure that talent management and development 

remain as priorities for the business. 

During the year, we identified a need to further 

invest in the supervisors and team leaders within our 

hospital sterilisation and linen divisions, to engage 

and develop them for the future. We have delivered 

a training programme covering 100% of the target 

population during the year. 

We are committed to ongoing investment in 

developing our senior manager and graduate 

communities to improve their leadership capability. 

To deliver this, we have established management 

development programmes with the Chartered 

Management Institute, with Warwick Business 

School, and also with Henley Management College. 





16 




Regional review 

Last year we restructured the business into three 

geographic regions: the UK and Ireland; Europe and 

the Middle East; and Asia and Africa. The creation 

of these regions has resulted in cost synergies as well 

as improving our local market understanding and 

responsiveness. 

Following the acquisition of BeamOne in the United 

States and Costa Rica, we will be reporting a fourth 

region – the Americas. 

UK and Ireland 

The strategy for this region is primarily organically driven; promoting 

outsourcing that generates improved quality and efficiency. 

Revenue £m 

11 154.9 

10 

09 

08 

135.0 

158.0 

160.3 

Despite modest underlying growth in the region of 2.3%, the 

core sterilisation business has grown strongly at 12.0%. Reported 

revenues were held back by the closure of £12 million of non-core 

businesses, poor winter weather, and further declines in our product 

manufacturing business. Reported revenues were £154.9 million 

(2010: £158.0 million). Operating profits increased by 7.2% to £25.0 

million (2010: £23.3 million) with margins increasing by 1.3% to 16.1% 

(2010: 14.8%). 

Sterilisation revenues for both the medical device and hospital markets 

were strong, both recording double digit growth. Within the medical 

device sector we have seen further capacity utilisation of the new 

electron beam facility in Ireland, and good underlying growth in the 

majority of our existing sterilisation facilities. We anticipate that we will 

need to add further sterilisation capacity in the region towards the end 

of the year. 

Our hospital sterilisation service in the UK benefited from opening the 

Leicester facility in February, and growth will be sustained with a further 

three new facilities in the new financial year. This year we have won new 

contracts with an annual value of £9.6 million. The bid pipeline remains 

strong in the UK, and with the NHS clearly having to seek ways of 

improving efficiency, we see further momentum in this service 

particularly once the current political and structural uncertainties are 

addressed. An outstanding bid for hospital sterilisation in Ireland is 

unlikely to proceed at the present time because of the economic 

troubles in the country. 

The UK linen business has focused on restoring operating margins 

during the year and as a result revenues were flat. The business is 

operating well and has been successful in competitively differentiating 

itself by focusing on quality. Customer retention is strong and we expect 

to see some modest growth in circumstances where customers place 

a higher value on quality than price. 

The laboratory business, which had previously seen a reduction in 

demand because of its dependence on the UK economy, has returned 

to growth. Prospects for pathology and occupational health testing 

remain positive. 

Our Healthcare Solutions business, which manufactures infection 

control and other consumable healthcare products, has struggled with 

an over reliance on the UK market, which has seen very challenging 

trading conditions. The team is currently restructuring its operations, 

and lowering the cost base by reducing the number of sites from four 

to two. In addition, changes to the senior management structure are 

facilitating a much more internationally focused growth strategy that 

in combination with more progressive cost leadership should 

see a return to revenue growth.

Europe and the Middle East 

Our strategy in Europe is to expand the full range of our sterilisation 

services to hospitals and medical device manufacturers, primarily 

through organic growth. 

Revenue £m 

11 118.8 

10 

09 

08 

82.7 

117.4 

104.7 

Underlying revenues for Europe and the Middle East were up 5.4% 

before currency effects. Reported revenues were £118.8 million (2010: 

£117.4 million). Operating profits were up 15.6% to £20.5 million (2010: 

£17.8 million) with margins increasing by 2.2% to 17.3% (2010: 15.1%), 

reflecting the increased cost synergies from the new regional structure. 

The Dutch linen business continued to operate efficiently and effectively. 

As the market leader, our scale advantage has enabled us to improve 

cost efficiencies and cash generation. Throughout the year our primary 

competitor has been using a price-driven strategy in an attempt to gain 

market share but this is being countered by our relentless focus on 

quality and efficiency. 

Revenue growth was primarily derived from the sterilisation business, 

principally the medical device market. Synergy is the leading provider of 

medical device sterilisation services in this region. We have a particular 

strength in gamma radiation but we have been expanding our services 

to include ethylene oxide (EtO) and electron beam. Our first Continental 

EtO facility in Venlo reached capacity during the year, and additional 

capacity has now been commissioned. To support further growth we 

have started building a new gamma facility in Marcoule, France, which 

will significantly improve our competitive position in southern Europe. 

In addition, we acquired GSP, near Dresden, Germany, giving us our first 

Continental electron beam facility in the region, as well as much needed 

gamma capacity to service the eastern European market. The 

acquisition has integrated well and outperformed expectations to date. 

Our hospital sterilisation business operates from two of the largest 

hospitals in the Netherlands and Belgium. Whilst we are operating 

successful services, the markets have been slow to develop. We 

continue to bid on a selective basis for additional contracts with a 

particular focus on Germany, but progress has been slower than we had 

anticipated, in part because we have prioritised the expansion of our 

medical device sterilisation network. However, we are continuing to look 

for opportunities to further expand our hospital sterilisation business in 

Europe and the Middle East, and we may consider an acquisition to 

accelerate market entry. 

Asia and Africa 

The Asia and Africa region is one of our most promising, with 

a combination of very positive macroeconomics as well as an 

underlying demand by certain Asian countries to dramatically 

improve the quality of their healthcare services. 

Revenue £m 



11 13.6 

10 

11.0 

09 

9.1 

08 

7.3 

Our facilities are located in South Africa, Malaysia, Thailand and China. Our 

strategy is to invest in each of these countries to support continued organic 

growth as well as to expand our geographic presence across the region. 

Underlying revenues in Asia and Africa were up 16.3% before currency 

effects. Revenues were £13.6 million (2010: £11.0 million) with good 

growth across the region. Operating profits were up 25.1% to £2.7 million 

(2010: £2.2 million) with operating margins flat at 19.9% (2010: 19.8%). 

The region’s revenues are derived from sterilisation services to both the 

medical device and hospital sterilisation markets. The medical device 

volumes have improved again on last year, demonstrating a robust 

recovery from the impact of the financial crisis two years ago. We have 

made progress improving the capacity utilisation of our new facility in 

Suzhou, China, and we expect to have the site operating at near 

to capacity within the next 18 months. The majority of our Suzhou 

customers are subsidiaries of large multinational manufacturers 

headquartered in the United States. For example, we are contracting with 

two of the top ten largest US manufacturers for work with an annualised 

value of £1.8 million. The acquisition of BeamOne was an important 

step to deepen our relationships with these customers. We have also 

commissioned additional capacity in our existing Malaysian facility and 

we intend to broaden our reach by establishing capacity in Kuala Lumpur. 

We have also seen reasonable growth in Thailand although there is 

presently a surplus of gamma capacity in the country. We are planning 

to broaden our technology offering as a means of further differentiating 

Synergy and to meet the requirements of our existing customers. 

Our hospital sterilisation volumes have improved in China. We now 

process equipment through the Suzhou facility for over 30 hospitals and 

smaller healthcare institutions. Our service is widely recognised by the 

Chinese Provincial Government as playing a key role in lifting sterilisation 

standards and reducing infection risks particularly in medium sized, class 

two hospitals. However, we have not been able to make sufficient progress 

expanding our network beyond Suzhou and our plans for expansion will 

take longer than initially anticipated. One of the key issues is that the 

Chinese healthcare market is going through a major transition driven by 

the Government’s new five year plan that will see China become one 

of the world’s largest national health systems by the end of the decade. 

Whereas three years ago healthcare policy makers were focusing on risk 

management, today the focus of attention is on the RMB 12.3 billion 

(£1.2 billion) investment to expand capacity. We are still committed to 

achieving our medium term objectives of establishing a sizeable network 

in China and we are increasing our investment to support the project. 

Elsewhere in Asia we are developing a strategy to expand our hospital 

sterilisation services. In Malaysia for example, the Government has 

initiated a pilot outsourcing project and Synergy has been actively 

engaged with local companies that could ultimately become long term 

partners in the region. 

Financials Governance Operating and financial review Our strategy 

Who we are

18 



Finance Director’s report 

Overall, Synergy is in a good shape, 

with an internationally diversified 

business providing high value added 

services on long term contracts, 

and an order book of nearly 

£1.0 billion 

Overview 

Our business delivered a good financial performance in 2011 with reported revenue 

growing 0.3% to £287.3 million and adjusted operating profit increasing by 8.3% to 

£43.0 million. Adjusted operating margin increased by 110 basis points to 15.0%. 

Our results were impacted by currency and non-core businesses; excluding these, 

underlying revenue growth was 4.1% and adjusted operating profit growth was 12.1%. 

Adjusted operating profit and adjusted profit before tax are stated before amortisation 

of acquired intangibles and non-recurring items. 

Adjusted earnings per share grew by 17.1% to 53.54p. We have also recognised a 

non-recurring gain of £4.7 million relating to the settlement of our Dunstable insurance 

claim less acquisition transaction costs expensed to the income statement as required 

under ‘IFRS 3 (Revised) Business combinations’. 

Cash generated from operations increased by 9.5% to £83.7 million (2010: £76.5 

million) contributing to a reduction of net debt by £21.1 million to £112.3 million from 

the 2010 year end position. After including debt to fund the acquisition of BeamOne 

(completed 7 April 2011), net debt was broadly unchanged at £133.8 million (2010: 

£133.4 million). Adjusted operating returns on average capital employed increased to 

10.8% (2010: 9.7%).

1. Income statement 

Synergy’s income statement is summarised in figure 1, below. 

Figure 1: Income statement 

Year ended 

3 April 2011 

£m 

Year ended 

28 March 2010 

£m Change 

Revenue 287.3 286.4 +0.3% 

Gross profit 109.7 103.6 +5.8% 

Administrative expenses (66.7) (63.9) 

Adjusted operating profit 43.0 39.7 +8.3% 

Net finance costs (4.7) (7.1) 

Adjusted profit before tax 38.3 32.6 +17.3% 

Amortisation of acquired intangibles (6.3) (6.2) 

Non-recurring items 4.7 (1.9) 

Profit before tax 36.7 24.5 +49.7% 

Tax (7.9) (2.4) 

Profit for the period 28.8 22.1 +30.0% 

Effective tax rate 1 22.7% 23.5% 

Adjusted earnings per share – basic 53.54p 45.74p +17.1% 

Earnings per share – basic 52.10p 40.56p +28.5% 

Adjusted earnings per share – diluted 52.64p 44.99p +17.0% 

Earnings per share – diluted 51.23p 39.90p +28.4% 

Dividend per share 15.84p 13.20p +20.0% 

1 The effective tax rate is calculated excluding amortisation on acquired intangibles and non-recurring items. 

1.1 Revenue 

Revenue of £287.3 million (2010: £286.4 million) represents a growth 

rate, excluding non-core businesses and currency effects, of 4.1% over 

the previous year. The Group has revenue from operations that we are 

winding down and exiting, primarily relating to business streams within 

the UK’s Healthcare Solutions products business. During the year 

these business streams contributed revenues of £11.8 million (2010: 

£18.0 million). The change in currency exchange rates over the last 12 

months has had a negative effect on reported revenues; the weakening 

of the Euro against Sterling contributed to a reduction in reported 

revenue due to currency movements of £3.8 million. 

Underlying revenues grew across all our business segments (excluding 

non-core business and currency effects) with the UK and Ireland at 

2.3%, Europe and Middle East at 5.4%, and Asia and Africa at 16.3%. 

Growth in the UK and Ireland was 9.2% when we exclude the 

Healthcare Solutions products business. Global growth in our two main 

service lines remained strong with hospital sterilisation growing at 

13.8% and medical device sterilisation at 13.9%. Device sterilisation 

benefited from the acquisition of GSP at the end of the third quarter; 

excluding this acquisition, medical device sterilisation sales grew by 

9.9% over the previous year. 

1.2 Gross profit 

Gross profit increased by 5.8% to £109.7 million (2010: £103.6 

million), representing a gross profit margin of 38.2%, an increase 

of 200 basis points over the previous year. 

1.3 Adjusted operating profit 

Adjusted operating profit increased by 8.3% to £43.0 million, 

representing an adjusted operating profit margin of 15.0%, an 

increase of 110 basis points over last year. 



1.4 Non-recurring items 

During the year we received a summary court judgement in our favour 

on the insurance claim arising from the fire at the Dunstable facility 

in early 2007. Following an unsuccessful appeal process by the 

defendants, we are in a position to report non-recurring profit and 

cash proceeds as part of our year end results. A non-recurring gain of 

£5.6 million reflects the recognition of insurance proceeds received, 

less costs associated with the claim and final additional costs of 

working not previously written down. The insurance claim included 

court awarded recovery of interest income of £1.4 million. 

As per ‘IFRS 3 (Revised) Business combinations’ we have recognised 

transaction fees of £0.9 million in the income statement. These costs 

relate primarily to the acquisition of GSP in late 2010 and BeamOne, 

which completed just after the year end. 

1.5 Net finance costs 

The Group’s adjusted net finance costs were £4.7 million compared 

with £7.1 million in the previous year, a decrease of £2.4 million. The 

decrease is largely due to a reduction in average borrowings during the 

year and the natural cessation of fixing arrangements taken out when 

interest rates were significantly higher. The average interest rate of the 

main syndicated facility and other Group facilities is estimated at 3.7%. 

1.6 Adjusted profit before tax 

Adjusted profit before tax was £38.3 million (2009: £32.6 million), an 

increase of 17.3%. The adjusted profit before tax margin was 13.3% 

(2010: 11.4%), an increase of 190 basis points. 


Who we are

20 



Finance Director’s report 

1.7 Amortisation of acquired intangibles 

Amortisation of acquired intangibles relates to intangible assets 

identified on acquisitions, being the value of trade names and 

customer contracts and relationships. 

1.8 Tax 

The tax charge (excluding amortisation of acquired intangibles and 

non-recurring items) of £8.7 million (2010: £7.7 million) represents 

an effective rate of 22.7% (2010: 23.5%). Including amortisation 

of acquired intangibles and non-recurring items, the tax charge is 

£7.9 million (2010: £2.4 million), with the increase mostly due to 

a non-recurring tax credit realised in the prior year. 

Our effective rate reflects profits arising from a mix of territories, a 

number of which have a lower rate of taxation than the UK. Different 

territorial growth rates and our recent entry into the Americas will 

change this mix of profits in the future. 

1.9 Earnings per share (EPS) 

Adjusted basic earnings per share and adjusted diluted earnings 

per share, after adjusting for amortisation of intangibles, increased 

by 17.1% and 17.0% respectively. After amortisation of acquired 

intangibles, basic and diluted earnings per share increased by 28.5% 

and 28.4% respectively. 

2. Dividend 

Our policy is to increase the total dividend each year in line with the 

increase in underlying earnings. The Board has proposed a final 

dividend of 9.84p, representing an increase on the 2010 dividend of 

18.6%, and bringing the total dividend for the year to 15.84p, growth 

of 20.0%. 

3. Cash flow 

Figure 2 summarises the Group cash flow. 

Figure 2: Cash flow 

Year ended 

3 April 2011 

£m 

Year ended 

28 March 2010 

£m 

Adjusted operating profit 43.0 39.7 

Non cash items 35.4 35.2 

Adjusted EBITDA 78.4 74.9 

Working capital movement (0.1) 2.5 

Non-recurring cash flow movement 5.4 (0.9) 

Cash generated from operations 83.7 76.5 

Interest (3.0) (7.4) 

Tax 

Net maintenance expenditure on tangible 

(6.3) (2.4) 

and intangible assets (21.8) (19.4) 

Free cash flow 

Acquisition of subsidiaries, net of cash 

52.6 47.3 

acquired 

Net investment expenditure on tangible 

(1.6) – 

and intangible assets (15.0) (7.7) 

Financing 3.9 (34.0) 

Dividends paid (7.8) (6.4) 

Proceeds from share issues 1.2 1.5 

Exchange differences (0.8) – 

Net increase in cash and cash equivalents 32.5 0.7 

Note: Adjusted EBITDA is earnings before interest, tax, depreciation, 

intangible amortisation and other non-cash items. 

3.1 Cash generated from operations 

Cash generated from operations in the year increased by 9.5% to 

£83.7 million (2010: £76.5 million) reflecting a conversion of EBITDA 

into cash of 107% (2010: 102%). 

3.2 Interest 

Net interest paid was £3.0 million (2010: £7.4 million), reflecting 

lower borrowing costs and a reduction in net debt. This amount 

includes the receipt of £1.4 million interest relating to the Dunstable 

insurance settlement. 

3.3 Tax 

Tax paid was £6.3 million (2010: £2.4 million). Cash tax is below 

the equivalent charge in the income statement as a result of timing 

differences in respect of tangible assets and on payments made on 

account. Over time we would expect cash tax to move closer to the 

income statement charge. 

3.4 Net expenditure on tangible and intangible assets 

The Group has continued to invest in new capacity during the course 

of the year, as well as continuing to upgrade and maintain its existing 

infrastructure. Total net capital additions of £36.8 million (2010: 

£27.1 million) were made during the year. 

We analyse capital expenditure between ‘maintenance’ and 

‘investment’ expenditure. Maintenance capital expenditure is the 

capital required to replace the existing capital base. Investment 

capital expenditure enhances the capacity or efficiency of the 

Group’s capital base. 

The main items of necessary ongoing capital expenditure are cobalt 

60 for medical device sterilisation services as the radiation source 

for gamma sterilisation plants, textiles for the linen business, and 

general replacement of plant and machinery around the Group. 

Total maintenance capital expenditure was £21.8 million of which 

£4.7 million and £10.7 million were spent on cobalt and textiles 

respectively. The remaining balance comprised plant and machinery 

and IT. 

Total investment capital expenditure was £15.0 million, of which 

£7.3 million relates to construction of new UK hospital sterilisation 

facilities, £4.6 million relates to cobalt and £3.1 million was spent on 

textiles, plant and machinery, and IT capital expenditure. 

We expect to see investment capital expenditure increase in the 

current year as we expand global sterilisation capacity, continue 

to build new hospital sterilisation facilities in the UK and invest in 

standardised IT systems to support the business as it grows 

internationally. 

3.5 Financing 

The movement in financing resulted primarily from a small net 

drawdown of borrowings on the revolving credit facility.

4. Net debt and funding 

4.1 Net debt 

Strong cash generation contributed to the reduction in net debt during 

the period from £133.4 million to £112.3 million. 

The movement in the net debt is reconciled below: 

Figure 3: Movement in net debt 

Net debt as at 28 March 2010 133.4 

Exchange rate impacts 1.8 

Free cash flow (52.6) 

Investment capital expenditure 15.0 

Acquisitions 8.1 

Dividends paid 7.8 

Proceeds from share issues (1.2) 

Net debt as at 3 April 2011 112.3 

4.2 Funding 

Existing facility 

The Group’s current banking agreement comprises a facility of 

£160 million split equally between a bullet facility and revolving credit 

facility. Under the terms of that agreement the Group can borrow up 

to £232 million, provided this does not exceed 3.0 times EBITDA. 

This facility is due to expire in January 2012. The Group is, and 

confidently expects to remain, well within its banking covenant 

limits for the remainder of the facility term. 

As at 3 April 2011, the Group had total available facilities of 

£197 million of which £151 million was drawn. The drawn amount 

included £127 million under the main facility, together with finance 

leases, local lending lines in overseas subsidiaries and overdrafts. 

The debt is held mainly in Sterling, Euros and US Dollars, with the 

currency mix and the level of fixed interest debt within each currency 

as at 3 April 2011 being as follows: 

Figure 4: Composition of gross debt as at 3 April 2011 

Level of debt 

£m 

£m 

Level of fixed 

interest debt 

£m 

Sterling 53.6 9.2 

Euros 65.6 10.5 

US Dollar 23.6 – 

Chinese Yuan 8.3 – 

Total 151.1 19.7 

Gross debt at 3 April 2011 was significantly higher than net debt due 

to funds having been drawn for the anticipated completion of the 

acquisition of BeamOne. 

Refinancing 

We are in advanced discussions with an identified club of banks 

in respect of new unsecured five year revolving credit facilities to 

replace the existing facility. The main points of the new multi-currency 

facilities agreement have been agreed and the legal documentation 

is being finalised. 

5. Pensions 

The Group operates three final salary schemes in the UK, one in 

the Netherlands, and one in Germany, following the acquisition of GSP. 

The Group also operates several defined contribution schemes. 

The movement in defined benefit pension scheme liabilities 

is shown below: 

Figure 5: Defined benefit pension schemes 

Year ended 

3 April 2011 

£m 

Year ended 

28 March 2010 

£m 

Synergy Healthcare plc Retirement 

Benefits Scheme 1.2 1.5 

Shiloh Group Pension Scheme 1.0 1.9 

Vernon Carus Limited Pension and 

Assurance Scheme 8.2 10.3 

Isotron BV Pension and Assurance 

Scheme 1.3 1.7 

GSP 0.6 – 

Balance sheet liabilities 12.3 15.4 

In the UK the Group is required to maintain a final salary pension 

scheme for employees who have transferred from the NHS, which has 

to be acceptable to the Government’s Actuary Department. With the 

exception of NHS transfers, the Group’s defined benefit schemes are 

closed to new entrants. Effective from 1 April 2011 we have closed the 

three UK schemes to future accruals; active members have been 

transferred to deferred status and invited to join the Group’s UK 

defined contribution scheme. 

At 3 April 2011, the net liability arising from our defined benefit scheme 

obligations was £12.3 million (2010: £15.4 million). An increase in the 

asset base and a small reduction in liabilities due to a change in 

inflation assumptions are the primary reasons for the fall in the 

total deficit. 

Gavin Hill 

Group Finance Director 



Who we are 

Our strategy 

Financials Governance Operating and financial review

22 



Principal risks and uncertainties 

Since 2007 the Group has continued to expand and enhance its 

Risk Management efforts that identify, assess and mitigate against 

the main challenges it faces. This effort is led by the Director of Risk 

Management who works closely with the senior directors and 

managers around the Group to find the best solutions to the risks 

that arise in a rapidly changing business environment. 

The Senior Executive Board (‘SEB’) is responsible for setting and 

communicating an acceptable level of risk. They are also responsible 

for ensuring that systems remain in place, through appropriate 

delegation into the management chain, for managing risks whilst 

avoiding actions that could stifle business expansion. 

Well established risk groups exist in each business sector and carry 

out regular reviews of the specific risks they face. These groups 

produce detailed risk registers that clearly identify the most serious 

threats to the business and communicate this message back to the 

SEB. The groups are also responsible for developing and implementing 

solutions and contingency plans to reduce all risks to a level that 

matches the Group’s risk appetite. 

Progress is monitored by the SEB to ensure that actions are taken 

within agreed timescales. The process is fully contained and self 

regulating through the processes of review, report, action, monitor and 

report again. As individual risk scores drop to become less significant 

they are archived and then go into a two year review cycle. As a result, 

the risk registers do not become too large, and focus on the most 

significant current challenges facing the business. 

During the past year the turmoil in the world markets continued to 

throw up situations that required us to modify our risk programme. 

Those which have been deemed to pose the highest threat are listed 

below under the following headings: 

• Commercial 

• Financial 

• Operational 

• Legal compliance 

• People 

Commercial 

Business retention and expansion 

A number of different factors come together to make trading conditions 

more uncertain across our different sectors. The serious economic 

conditions in Ireland could pose a threat to our medical device 

sterilisation services business should any fiscal changes make it a less 

attractive market for US multinational device manufacturers to do 

business there. Low cost imports and changing buying patterns in the 

NHS pose a threat to our Healthcare Solutions business in retaining 

and expanding its product offerings. Similarly, the UK Government’s 

proposals to replace 152 primary care trusts with GP consortia will 

require us to understand how we can maintain our success in offering 

outsourced sterilisation services to hospitals. 

Mitigation 

By ensuring that we maintain our cost leadership approach and can 

demonstrate value for money combined with excellence of service, 

there is no reason why we cannot continue to capture new business. 

The recent acquisition of GSP gives our Europe and Middle East region 

access to new markets and expansion opportunities. Rationalising 

and consolidating our manufacturing processes should also drive 

down costs and improve quality and delivery. 

Commodity prices 

Increasing demand, especially from Asia, for oil and other raw 

materials, coupled with natural disasters, and unrest in the Middle 

East, has resulted in sharp price increases. At the same time economic 

recession is putting downward pressure on prices and squeezing 

margins. The recent floods in Pakistan resulted in the loss of much 

of the cotton harvest and our linen businesses in the UK and the 

Netherlands are seeing rising costs and less availability. Oil prices 

continue to rise making energy dependent processes and distribution 

operations more expensive. 

Mitigation 

A two fold strategy on energy has enabled us to contain some of the 

recent increases. Our efforts to drive down energy use through a 

structured energy management programme combined with hedging 

a proportion of our energy costs have been effective in this regard. 

Further, certain of our customer contracts allow for prices to be 

index-linked to utility prices. Our competitors are facing the same 

pressures and it is our challenge to out-perform them and be in a 

position to capture new business based on cost and quality of service. 

Financial 

New business – financial control and reporting 

As the Group expands into new markets and jurisdictions, the risk 

of not being able to maintain adequate financial controls increases. 

This risk includes potential local tax problems, as well as ensuring 

that new investments realise their anticipated potential. Making sure 

that financial reporting from new businesses is accurate and complies 

with current approved practices will be key elements in avoiding 

financial under-performance and impact on profits and long term 

shareholder value. 

Mitigation 

The teams in our Asia and Africa and Americas regions, where the 

fastest growth is expected, include employees with extensive financial 

experience who have worked in the region over many years. We also 

take local professional advice and have well established relationships 

in all territories. Improvements, including peer reviews, are planned 

for 2012. Both in Asia and elsewhere, Synergy closely evaluates the 

strategic effects of its investments by forming multidisciplinary teams 

who are tasked with ensuring that new ventures are compatible with 

the long term goals of the business. 

Legacy risks 

As an acquisitive business, Synergy faces the risk of inheriting 

outstanding debts and liabilities. One area where we face some 

exposure is in the UK final salary pension scheme deficits for the 

former Shiloh, Vernon Carus and Synergy Healthcare parts of 

our business. 

Mitigation 

We have been actively developing a strategy of deficit reduction 

through better and more proactive management of the schemes. 

With the exception of NHS transfers, the Group’s defined benefit 

schemes are closed to new entrants and with effect from 1 April 2011, 

we have closed all three UK schemes to future accruals; active 

members have been transferred to deferred status, and invited to join 

the Group’s defined contribution scheme. 

In other areas, extensive due diligence is carried out to make sure that 

any acquisitions, whilst offering opportunities for growth, represent 

a sound investment and will not threaten the financial health of 

the Group.

Operational 

Security and safety of critical facilities 

Cost leadership requires us to carefully consider all new investment 

and to maximise the return we can obtain from existing assets. Our 

success in capturing new business across all our operational sectors 

increases the pressure on individual facilities to maintain high levels of 

service. The sudden unexpected loss of a facility, due to fire or natural 

disaster, could impact on service and compromise the Group’s ability 

to meet customer expectations. Customers are becoming more 

sophisticated in evaluating their suppliers in areas such as contingency 

planning, and we need to be able to demonstrate that our response to 

disaster will be adequate to satisfy their requirements. 

Mitigation 

Throughout the past year we have continued to evaluate and develop 

our Business Continuity Planning. We remain committed to treating 

this as an area of continual improvement, so we can not only meet but 

exceed the expectations of our customers. Throughout the coming 

year we will work with our risk management partners to find better 

solutions to potential scenarios where we may need to initiate disaster 

recovery processes. Combined with this programme, we also strive to 

improve our control of the working environment and implement risk 

reduction measures to minimise the likelihood of any loss occurring. 

Information Technology (‘IT’) 

The increasing size and sophistication of the Group’s operations 

inevitably leads to a greater dependence on IT systems. These 

systems include financial and ERP systems which are used widely 

across the business, integrating with plant control software that may 

have its use limited to a single site or key piece of plant. Inevitably, 

these systems and the platforms they rely on can become outdated, 

redundant or unable to cope with the increased demand resulting 

from business growth. The Group is exposed to risks arising from 

outdated systems inherited through acquisitions, which could slow 

its growth and development. 

Mitigation 

The Group has initiated ‘Project Olympic’, which is designed to deliver 

a new worldwide financial system, to replace our older ERP systems 

and some operational control systems, and to provide central support 

on a modern platform that will be able to expand as the Group grows. 

A project board sponsored by the Group Finance Director has been set 

up to complete this project in 2012. The completion of this project is 

expected to eliminate many of the potential IT-related concerns and 

improve the efficiency of financial reporting. It will also create 

opportunities for improved innovation, scalability and cost reduction. 

Quality risks 

Our business relies on maintaining the highest level of quality 

assurance to protect patient safety. There can be no compromises 

in our commitment to deliver world class quality by developing and 

implementing procedures and training. When errors do occur, it is 

essential that lessons are learnt and where necessary, procedures and 

work methods are adapted to prevent repetition. Failure to achieve this 

would result in a loss of confidence by our customers and increasing 

difficulty in retaining existing business and attracting new customers. 



Mitigation 

The Group continues to invest in improving its quality assurance 

programmes. The appointment of a Quality Director for the UK and 

Ireland emphasises this commitment towards excellence. Synergy will 

continue to evaluate and develop both its human and technological 

resources so it can exceed the minimum requirements set under 

international standards and those expected by our customers. 

Legal compliance 

Changes in legislation 

Maintaining legal compliance in respect of financial, environmental, 

health and safety, and other requirements, worldwide, is a significant 

challenge. European Directives set the framework for national laws 

within the EU but the interpretation and application can vary widely 

in differing national jurisdictions. Responding inappropriately to new 

regulations can expose the Group to censure and uninsurable losses 

if fines are imposed. In the UK, the Corporate Manslaughter and 

Corporate Homicide Act 2007 and The Bribery Act 2010 impose risk 

exposures on the Company and its officers. Understanding and 

reacting correctly to these new laws will be an essential requirement in 

avoiding legal sanction. 

Mitigation 

The Group has appointed senior directors and managers to take 

responsibility for maintaining legal compliance within the different 

jurisdictions where we operate. This extends to corporate governance, 

safety and environmental areas. Our Company Secretary, in 

partnership with selected specialist advisers, ensures that our 

standards of corporate governance reach the highest standards. 

Though our risk management processes the implications of new 

regulations are assessed and required changes and mitigation put 

in place. 

People risks 

Loss of critical knowledge 

The Group operates in a number of specialist areas providing 

outsourced services for companies who do not wish to invest directly 

in the expertise and technology required to carry out these services for 

themselves. As such Synergy has an interest in attracting and retaining 

the best people. Failure to continue to do this could compromise the 

successful growth of the Group into new markets and impact on 

long term shareholder value. 

Mitigation 

Synergy has long recognised the importance of its employees and has 

sought to provide an attractive and exciting environment for individuals 

to develop and prosper by contributing to the success of the business. 

The introduction of development and leadership programmes, along 

with our graduate recruitment programme underline this commitment. 

In 2011 we have appointed a Group Talent Manager to co-ordinate and 

improve our current efforts further. 

Who we are 

Our strategy 

Financials Governance Operating and financial review

24 



Corporate Social Responsibility 

Overview 

Synergy is expanding its engagement with issues of 

Corporate Social Responsibility (‘CSR’), recognising the 

importance of managing day-to-day activities in a 

responsible way, being accountable for the impact of all 

operational activities on the environment and our local 

communities, and creating a working environment in which 

our colleagues can flourish. CSR is a business approach 

that creates value by embracing opportunities and 

managing risks deriving from economic, environmental 

and social developments whilst maintaining global 

competitiveness and brand reputation. 

We recently received a rating of 87/100 in the FTSE4good index, 

which is designed to measure the performance of companies that 

meet globally recognised corporate social responsibility standards. 

In early 2011, we developed a Group CEO-led team to implement a 

CSR Programme, which consists of representatives from different 

areas of our business. To ensure the standards are cascaded 

effectively throughout our business, the plc and Senior Executive 

Boards are updated on progress within the programme on a 

regular basis. 

In the past year, a second team has worked on a project to link 

Synergy’s core values to its brand, with the objective of creating a 

sustainable culture and leadership environment. We chose our 

name Synergy as an expression of the way we can work together 

with our colleagues, customers and other stakeholders. We want to 

achieve improved business outcomes by working collaboratively, and 

it is important that we share common values as we expand globally. 

Employee success 

Winning the Greater China Business Award 

We have taken into account the needs of our stakeholders and 

prioritised the key areas within our CSR programme listed below. 

Community relationships Using our knowledge 

Charitable partnerships and giving Educating others 

Employee fundraising Help to healthcare 

Community projects 

Workplace environment Environmental issues 

Diversity at work Energy and carbon reduction 

Employee training and development Transport pollution 

Health of employees Recycling 

Employee retention Materials 

Health and safety Waste management 

Risk management 

Quality management 

We have also analysed our current performance to create a list of 

objectives to meet the responsibilities of our business: 

• Involving our business and employees in supporting the community 

• Supporting healthcare related charities 

• Using our knowledge and experience to interact at healthcare 

related events 

• Enhancing our internal communication methods, which will assist 

in improving our business performance 

• Using employee engagement surveys to understand the areas of 

improvement to continue our successful employee relationships 

• Continuing the improvement of our health and safety performance 

• Managing and minimising the waste and use of materials from 

our services 

• Continuing to improve the efficiency of our energy use globally 

Synergy Health was announced as the proud winner of 

the Greater China Rising Star Award at the Greater China 

Achievement in International Trade Awards organised by 

the UK Trade Investment (UKTI) on Friday 4th February 

at the Lowry Theatre in Salford, UK. 

The panel of judges praised Synergy Health, who have 

developed local partnerships with Chinese hospitals to 

help them comply with healthcare standards introduced 

by the Chinese Ministry of Health in 2009.

Talent management 

Training across the business 

Synergy continues to invest in its 

teams to expand and deepen the 

Group’s talent pool. 

An introduction from the Chief Executive 

Corporate Social Responsibility is integral to the future of our business, 

and we have developed both Internal Branding and Corporate Social 

Responsibility teams to progress these aspects of our business. 

I am pleased to sponsor both of these programmes and to provide 

supportive leadership. 

Our internal branding team has been responsible for defining and 

articulating the values that define Synergy and then set out a 

programme that will see these values embedded within the Synergy 

Health brand. One of the key objectives of developing our internal 

brand identity is to create a sustainable, Group-wide culture that lives 

beyond a small number of senior leaders in our business. In time we 

also expect that this will create a source of competitive advantage as 

we seek to differentiate Synergy through the actions of our people. 

Our CSR team is tasked with developing Group-wide policies that will 

see Synergy more engaged with its local communities, reducing the 

impact of its operations on the environment and creating a positive 

environment for its employees. 

We are delighted at the success of our education days in the past year 

for external audiences. Building relationships is very important to our 

business, and we would like to see improvements in establishing 

community relationships, along with more involvement in charitable 

work. We shall be encouraging our employees to choose a Company 

charity in the coming months. 

Our success over the past 20 years has been derived from the 

creative, committed and talented people that we have within our 

Group. We continue to make a commitment to broaden the training, 

support, and development opportunities that our employees deserve 

at all levels of the business. In addition we are committed to reviewing 

and improving the working environment in support of our diversity 

policy and our objectives of ensuring that we attract and retain the 

very best people. 

We have made progress in the past few years to improve the effect of 

our services environmentally, which has resulted in reducing the level 

of total carbon emissions by over 7% in the past financial year, in part 

resulting in the award of the Carbon Trust Standard. Looking ahead we 

will continue to improve our energy utilisation and broaden our efforts 

in 2012 to make progress on improving our waste management 

controls, enabling the business to reduce the levels of absolute waste, 

along with providing and using more recycling facilities. This will give us 

a great base to continue to improve our environmental performance. 

Despite the challenging economic climate and the broader ambitions 

of the Group, we are pleased to have achieved so much progress in 

the past year, and we look forward to making further progress in the 

coming year. 

Community relationships 

Charitable relationships 

There are many examples of Synergy’s employees organising 

charitable events internally. The Company has also supported 



charitable activities such as donating funds for important 

healthcare equipment. 

There is scope for further development within this area, which will 

start by the implementation of a Company charity to be chosen by 

employees. To ensure the partnership is effective, the Company is 

donating employee time for charitable activities. 

Even though there will be a designated Company charity, we will 

continue to support employees who are involved in other fundraising 

exercises. In the past individual facilities have arranged fundraising 

events and we are encouraging this to continue in the future. 

Work in the community 

We believe in supporting and building relationships within local 

communities. We feel it is important for more people to understand the 

work we do and to understand the commitment we have to improving 

safety and reducing risk through our high quality services. 

A prime example is our sterilisation business, which recently held a 

student educational day in conjunction with the Swindon Academy. 

Sixth-form students from the academy were provided with a tour of 

the Gamma site at Elgin and the South Marston laboratory, as well 

as receiving presentations from key personnel in the business. 

Additionally, our Senior Management team has been active in 

providing talks and advice for university students looking for 

recruitment opportunities in the upcoming year. 

We look to build on these achievements by continuing to offer such 

educational days for local schools, and build stronger relationships with 

hospitals in return for their continued support of our services. 

Thought leadership 

Help to healthcare 

Our vision is to build a lasting reputation as the trusted experts in 

global health-related markets by differentiating our services and 

products through the way we work. The healthcare sector has 

provided a platform to build a successful business, and we would like 

to continue to work within the industry to share ideas and energy to 

inspire continuous improvement through innovative change. 

We work within a wide range of locations with different standards of 

healthcare, and there are plenty of opportunities for us to improve 

these standards on a global basis. We are proud of our work in China 

to aid the development of safety standards in Chinese hospitals. 

We recently entered into a formal partnership with the China Britain 

Education Centre in a project to promote mutual exchanges in ideas, 

knowledge and innovation amongst medical professions. 

To underline our achievements in this area, we have been awarded the 

‘Greater China Rising Star Award’ at the Greater China Achievement in 

International Trade ceremony, and the ‘Most Promising New Business 

Award’ by the British Chamber of Commerce in China. We were 

praised for developing local partnerships with Chinese hospitals to help 

them comply with healthcare standards introduced by the Chinese 

Ministry of Health in 2009, and the unique proposition to China’s 


Who we are

26 




healthcare community as well as commitment to developing the 

Chinese management skills through our graduate programme. 

We are targeting closer working relationships with selected universities 

to aid development within the healthcare sector, and provide 

opportunities to help medical professionals with their development. 

For example, we have been working in partnership with Queen’s 

University, Belfast providing electron beam services for a research 

project on bioresorbable polymers. After our recent American 

acquisition, we intend to develop a strategy to help reduce infection 

rates within the USA, and continue our work to improve healthcare 

standards in China. 

Educating stakeholders in our markets 

Since the Company was formed in 1991, our business and employees 

have built up a wide range of knowledge in sterilisation, infection 

control and other health related areas. We are committed to sharing 

this knowledge with a variety of people to educate them in the fields 

of our services. 

For example, in the past year our sterilisation business has held a 

series of education days to broaden knowledge in this complex field 

and to ultimately raise standards within the healthcare sector. These 

education days have included: 

• Microbiological validation and compliance for medical devices 

• Electron beam featuring a tour of our Tullamore facility 

• A Good Cleanroom Practice and Environmental Monitoring day 

• An analysis of the various sterilisation processing techniques, 

along with discussing effects on polymers and the usage of 

electronic components 

• Ethylene oxide education day introducing theory and technology 

as well as a practical insight into the validation process 

Looking ahead we shall continue to hold our successful education 

days as well as broaden our contribution and thought leadership to 

both global and local healthcare markets. 

Workplace environment 

Our values 

To progress the Branding and CSR Programmes, we have outlined 

the common values in our business. A leadership model has been 

developed that includes our four core values and our intention is to 

have these values embedded within the Synergy brand. 

Innovation 

Thinking 

Analytical thinking 

Innovation 

Information seeking 

Oraganisation awareness 

and alignment 

Technical and 

professional expertise 

Developing 

self & others 

Adaptability 

Concern for accuracy 

Decisiveness 

Resilience 

Self-development and 

coaching others 

Achievement 

Integrity 

Driving forward 

Customer focus 

Commercial acumen 

Initiative and pro-activity 

Planning and organising 

Focusing on results 

Leading 

& interacting 

Communication 

Influencing and 

persuading 

Interpersonal skills 

Relationship building 

Teamwork 

Leadership 

Accountability 

Achievement – We believe our success comes from our focus on 

exceeding expectations and our commitment to go that extra mile, 

however small the difference may seem. 

Accountability – We take personal responsibility for our actions and 

are equipped to take the right course of action. 

Integrity – We believe that the way we work is as important as what we 

do. We care deeply about the quality of our work and inspire trust by 

delivering on promises. 

Innovation – We achieve the best possible results by working with 

customers to develop new ways of solving problems and reducing risk. 

Our ethics policy can be found online at: 

http://www.synergyhealthplc.com/investor-relations/code-of-ethics.aspx

Training and development 

It takes a certain type of person to work at Synergy, one who 

understands the importance of the work we do, recognises the 

implications of their actions, and can make a difference with the 

development of the business. We understand that our employees 

are a core asset to our continued success, and we are focused on 

attracting and retaining talented and committed personnel. Strong 

growth within the business has given opportunities for our employees 

to develop their skills, and progress their career within the business. 

Our Human Resources department works closely with managers 

and employees to meet their aspirations for personal growth and 

development. We perform an organisational capability review to assess 

the management team’s performance against the skills required, along 

with development centres to access their potential, and assist them to 

create development plans. Our employees have semi-annual and 

annual performance reviews. 

At our Senior Executive Board meetings, a minimum of four talent 

reviews are undertaken per year where the Board discusses the talent 

within the business with a view to how they can develop further. 

An example of our desire to grow and develop our talent pool is our 

Graduate Management Training Programme, which has been in place 

since 2008 to recruit and develop high calibre graduates. 

We are expanding the use of 360-degree feedback in all business 

areas and using development centres to monitor the skills and 

development areas of our employees. We aim to put KPIs in place 

which measure people’s mobility in the Company. As part of our 

diversity programme we have informal mentoring schemes in place, 

and we will be setting out support networks to assist women and other 

specific groups in the business to further advance their careers. 

Employee opinions 

Employee engagement is important and we have a number of systems 

in place that enable us to understand the views of our employees. 

These include employee forums, works councils and engagement 

surveys. The next major survey is in 2011 where we intend to more 

fully understand the perception of our business in relation to our 

brand values. 

The Company has a Senior Leadership Community, which involves the 

top 65 managers from across the Group. The community is in place to 

build cross-divisional working practices and ensure that information 

and expertise is shared across the different businesses, along with 

engaging management, and developing their leadership skills. We are 

looking to increase the visibility and interaction of senior management 

across the business. 

Diversity at work 

Our leadership embraces diversity, creating the right environment 

for people from all walks of life to contribute to our pool of talent. 

We passionately believe that our future success is dependent on 

attracting and retaining people from a cross section of our communities 

and in doing so, we will create competitive advantage for Synergy. We 

promote a supportive and inclusive culture for all our employees and 

third-party business partners. However, we also recognise that there is 

a need to create the right environment to support our diversity strategy, 

and the senior leadership of Synergy together with the CSR team are 

looking at how we develop our business to improve its attractiveness to 

new recruits as well as to provide support networks for minority groups 

within our business to positively support their personal development. 

Senior leadership 

This year we welcomed Constance Baroudel to the plc Board as the 

first of two appointments that will see a more appropriate balance 

between men and women on the Board. Within our Senior Leadership 

Community, which represents our top global 65 leaders, women 

represent just 17% of the community. Whilst we are not intending to 

set targets per se, we are putting in place support networks to ensure 

that all of our people who have senior leadership potential are given 

adequate support and to ensure that there are not artificial barriers that 

would impede their career development within Synergy. We take a 

similar view towards ethnicity, where we believe we would benefit from 

a much more diverse population of senior leaders. 

Ethnicity 

There is a wide range of ethnic groups within the business, largely 

due to our spread of facilities around the globe. The UK and Ireland, 

and Europe in particular consist of mainly white employees, and as 

these regions account for a high proportion of our workforce, it 

disproportionately influences the overall ethnic diversity of our Group. 

The Group is looking to introduce a mobility policy with the intention 

of broadening employees’ international experience and creating the 

opportunity for minority groups to achieve senior leadership roles. 

Ethnicity % 

UK & Ireland 

Europe & Middle East 

Asia & Africa 

Americas 

Total 

Age 

Our business possesses a number of strong teams to carry out and 

improve our day-to-day services. The age profile by region is set out 

below, and the data is used for development and succession planning 

to ensure the long term sustainability of the Group. 

Age comparison % 

UK & Ireland 


Asia & Africa 

Americas 

Total 

0% 20% 40% 60% 80% 100% 

White Asian Black Asian 

(Chinese, 

Thai) 



Hispanic Mixed 

Race/ 

Other 

0% 20% 40% 60% 80% 100% 

Under 30 30-39 40-49 50-59 Over 60 


Who we are

28 




Gender 

We promote a supportive and inclusive culture within our business, 

with equal opportunities for both genders. 54% of our workforce 

are women. 

Gender comparison % 

UK & Ireland 


Asia & Africa 

Americas 

Total 

0% 20% 40% 60% 80% 100% 

Male Female 

Health and safety 

Synergy is committed to upholding high standards of health and safety 

consistently around the globe. Our track record is strong, meeting and 

in most cases exceeding externally benchmarked standards. 

Our Group Safety Standard was introduced in 2009 to assist managers 

to understand and implement safe systems of work across the Group. 

Core activities, such as hazard assessment, manual handling, and 

contractor control are seen as essential requirements in attaining a 

safe workplace. Training has been provided to managers and other 

employees to further improve performance. We have continued to 

implement an independent audit system across our sites, with every 

site fully inspected and reports prepared that clearly identify where 

improvements can be achieved. 

The CSR Programme will aid our progress in raising health and 

safety standards with our healthcare customers as well as reinforce 

our diligence within the business. We are improving the availability 

of health and safety data to our employees and will use these statistics 

to help identify and achieve best practice. 

Environmental issues 

Energy and carbon reduction 

We are committed to ensuring that our services minimise their impact 

on the environment. There will always be a need for a substantial level 

of energy use given the nature of our services; however it is important 

that we continue to reduce carbon emissions and our environmental 

impact. Our initiatives have resulted in some substantial reductions 

in our carbon footprint this year as well as recognition for our efforts 

and approach. 

In October 2010 we were accredited with the Carbon Trust Standard. 

The accreditation was awarded following Company wide dedication to 

achieving carbon emission reductions. The level of carbon emissions 

from the business has fallen between 2010 and 2011, and the changes 

in consumption by type of utility are shown in the table below. 

In relative terms the change in emissions per unit of activity (weighted 

to total energy consumption) across the Group is down 7.1%. The 

overall reduction in tonnes of CO2 per £ of revenue is 2.9% in real 

terms after adjusting for price inflation. Each measure indicates that 

our carbon emission reduction targets for 2011 have been exceeded. 

The outcomes from this year indicate a growing and sustainable 

carbon management and reduction culture in our organisation as a 

whole. The table below shows the absolute carbon emissions along 

with the total utility usage. 

2009/10 2010/11 Variance Variance % 

Absolute Carbon 

Emissions (tC02) 48,700 46,200 (2,500) (5.1%) 

– UK and Ireland 

– Europe and 

14,000 12,100 (1,900) (13.4%) 

Middle East 30,500 29,400 (1,100) (3.4%) 

– Asia and Africa 

Total Utilities 

4,200 4,600 405 9.7% 

(mWh) 190,300 181,900 (8,400) (4.4%) 

– Electricity 47,000 43,700 (3,300) (7.1%) 

– Gas 141,700 136,900 (4,800) (3.4%) 

– Oil 1,600 1,300 (300) (18.8%) 

The use of gas accounts for 75% of our total energy consumption with 

the majority of the 4.4% reduction in overall energy coming from gas 

and electricity. The reduction in gas was led by changes in production 

within our Dutch linen business (-6%) and Thorne sterilisation facility 

(-16%). Electricity consumption fell 7% by 3.3 million kWh, almost half 

of which came from reconfiguring work in our sterilisation facilities. 

We are pleased with our achievement in reducing our energy use 

and carbon emissions and we will continue to work at reducing these 

levels. We are analysing our operational performance to identify areas 

in which to minimise our usage further.

Environmental accreditation 

The Carbon Trust Standard 

Synergy Health plc has been accredited 

with the prestigious Carbon Trust Standard. 

The accreditation was awarded to the 

specialist outsourced service provider 

following company wide dedication to 

achieving carbon emission reductions. 

In order to achieve the Standard, 

the company established a Carbon 

Management Team comprising of 

representatives from each division. 

Transport 

Transportation is pivotal to our services, especially in ensuring a fast- 

track turnaround for medical instruments to our hospital customers. 

Each of our facilities has an objective to provide our logistics services 

as efficiently as possible with a minimum impact on the environment. 

Our vehicle capacity utilisation rates are monitored, trucks are 

increasingly fitted with wind deflectors and we are investigating 

alternative energy sources. We have adopted a company car policy 

which has reduced the number of cars and C02 levels between 2010 

and 2011. The following table shows statistics on our car and 

commercial fleet usage levels. 

Cars 

Commercial 

fleet 

2010 2011 2010 2011 

Number of cars 

Average C02 

78 66 72 77 

per vehicle 

Total C02 

306 270 324 297 

for fleet 11,940 8,900 23,327 22,850 

The business has expanded its video conferencing technology to 

reduce the need for travel, and further conferencing units will be 

installed at existing sites, as well as our recently acquired BeamOne 

facilities in the USA and Costa Rica. 

Recycling and waste management 

This year the CSR team has launched a new initiative to reduce 

the amount of waste that the Group generates and to increase 

the level of recycling. Whilst the Group complies with its waste 

management obligations, this new initiative will set targets to reduce 

waste production, further reducing the impact our business has on 

the environment. 



Quality management 

Our businesses are heavily regulated by local and international 

standards. An independent Quality Management System (QMS) 

has been developed within each sector of the business, with 

experienced quality management professionals working closely with 

their operational colleagues to implement documented systems that 

comply with all applicable standards. All our sites are certified to 

the appropriate standards, giving our customers the assurance that 

they are receiving a quality service. Our hospital sterilisation sites are 

CE certified for medical device processing, and our medical device 

sterilisation facilities are approved to the necessary ISO standards. 

This commitment to quality was demonstrated when our site at Suzhou 

became the first hospital sterilisation facility in China to be accredited 

to ISO 13485 and ISO 9001. 

There are a number of internal audits implemented throughout the 

year, which provide the opportunity to implement best practice and 

reduce non-compliance rates to the lowest practicable levels possible. 

We recognise the long term success of the Group depends on its 

ability to consistently provide services of the highest quality. Last year 

this approach resulted in a number of successful new business 

projects including: 

• The certification of a new hospital sterilisation site in Leicester. 

• The granting of a pharmaceutical manufacturing licence to our 

Healthcare Solutions facility in Chorley. 

These developments prove our commitment to quality and our ability 

to obtain all necessary regulatory approval required by the business, 

and by our customers. 


Who we are

30 



Board of Directors 

1 Robert Lerwill 

Non-executive Chairman 

Robert was appointed as a non-executive 

Director of the Company in January 2005 and 

Chairman in September 2010. He is currently 

a non-executive Director and Chairman of the 

audit committee of BAT plc and non-executive 

Director and Chairman of the audit committee 

of Transcom Worldwide SA. Until November 

2008, Robert was Chief Executive of Aegis 

Group plc. Between 1997 and 2003 Robert 

was an executive Director of Cable & Wireless 

plc, and prior to that was Group Finance 

Director of WPP Group plc. Robert qualified as 

a chartered accountant with Arthur Andersen. 

He is Chairman of the Company’s Nomination 

and Audit Committees and a member of the 

Remuneration Committee. 

2 Richard Steeves 

Group Chief Executive 

Richard founded the business in 1991 and 

was appointed Chief Executive in 1992. 

Previously he was corporate development 

manager for Braithwaite plc, a plant hire 

company, and associate consultant with 

strategic consultants, LEK Consulting. 

Richard has a PhD in biochemistry from 

St John’s College, Cambridge and a BSc 

(1st Class Hons) in human physiology from 

the University of British Columbia in 

Vancouver, Canada. Richard is a Companion 

of the Chartered Management Institute. 

3 Gavin Hill 


Gavin joined the Group as Finance Director 

in April 2010. He was previously Director, 

Corporate Finance for Serco Group plc 

following a number of divisional Finance 

Director and Commercial roles. Prior to 

Serco, Gavin worked for Syngenta AG and 

AstraZeneca plc in both Finance and 

Corporate Treasury. Gavin is a chartered 

accountant and associate member of the 

Association of Corporate Treasurers. 

4 Sir Duncan K Nichol 

Non-executive Director 

Duncan became a non-executive Director in 

November 2002. He was Chief Executive of 

the National Health Service Management 

Executive between 1989 and 1994, and a 

non-executive Director of BUPA between 

1994 and 2002. Duncan is currently a 

non-executive Director of Lorica Group, 

Deltex Medical Group plc, the Christie NHS 

Foundation Trust and UKAS. He is also 

Chairman of Skills for Justice. Duncan was 

Chairman of HM Courts Service Board for 

England and Wales between April 2008 

and March 2011. He is Chairman of the 

Company’s Remuneration Committee and 

a member of the Audit and Nomination 

Committees. 

5 Constance Baroudel 

Non-executive Director 

Constance was appointed to the Board as a 

non-executive Director in September 2010. 

She is the Group Director of Strategic 

Marketing at De La Rue plc. Prior to De La 

Rue she was a senior consultant for Strategic 

Decisions Group. Constance attended 

l’Institut d’Etudes Politiques de Paris where 

she majored in corporate finance and 

international relations. Constance also has 

an MSc in International Accounting and 

Finance from the London School of 

Economics. Constance is a member of 

the Audit, Nomination and Remuneration 

Committees. 

1 2 3 5 4

Senior Executive Board and Advisors 

Senior Executive Board 

Richard Steeves 

Group Chief Executive 

Gavin Hill 


Company registration number: 

3355631 

Registered office: 

Ground Floor Stella 

Windmill Hill Business Park 

Whitehill Way 

Swindon Wiltshire SN5 6NX 

Secretary: 

T C Mason MA, FCIS, MCIPD 

6 Marcello Smit 

CEO Europe and Middle East 

7 Paul Santing 

Group Commercial Director 

8 Tim Mason 

Group Company Secretary 

Advisors 

Bankers: 

Lloyds TSB Bank plc 

25 Gresham Street 

London EC2V 7HN 

The Royal Bank of 

Scotland plc 

Third Floor 

3 Temple Back East 

Bristol BS1 6DZ 

Joint brokers: 

Investec Bank 

(UK) Ltd 

2 Gresham Street 

London EC2V 7QP 

Morgan Stanley & Co 

International plc 

20 Bank Street 

Canary Wharf 

London E14 4AD 

9 Glenn Thibault 

CEO Americas 

10 Adrian Coward 

CEO UK and Ireland 

Paul Wynne 

CEO Asia and Africa 

Auditors: 

KPMG Audit plc 

St Nicholas House 

Park Row 

Nottingham NG1 6FQ 

Registrars: 

Computershare 

Investor Services plc 

The Pavilions 

Bridgwater Road 

Bristol BS99 6ZZ 

6 7 8 9 10 



Solicitors: 

Taylor Wessing LLP 

5 New Street Square 

Blackfriars 

London EC4A 3TW 

DLA Piper UK LLP 

Victoria Square House 

Victoria Square 

Birmingham B2 4DL 

Who we are 

Our strategy 


Financials Governance

32 



Report of the Directors 

The Directors present their management report together with financial 

statements for the period ended 3 April 2011. 

Principal activity 

The principal activities of the Group are the provision of outsourced 

healthcare support services and contract sterilisation services. 

Business review 

The Business Review comprises the chairman’s statement on page 3, 

the Chief Executive’s review on page 6 and the Finance Director’s report 

on page 18. 

A separate report on page 22 sets out the principal risks and 

uncertainties facing the Group. 

A further separate report on page 24 sets out Corporate and Social 

Responsibility activities. 

The Chief Executive’s report on page 6 sets out the main trends and 

factors likely to affect the future development, performance and position 

of the Group’s business. 

Results and dividends 

There was a profit for the period after taxation amounting to 

£28,799,000 (2010: £22,159,000). An interim dividend of £3,298,000 

(2010:£2,676,000) was paid on 10 December 2010. A final dividend 

of £5,421,000 (2010: second interim £4,540,000) is proposed by 

the Board for the period ended 3 April 2011. The final dividend will, 

subject to shareholders’ approval, be paid on 6 September 2011 to 

shareholders on the register at 12 August 2011. A review of the Group’s 

performance for the period ended 3 April 2011 is contained in the 

Chairman’s statement, the Chief Executive’s review and the Finance 

Director’s report. 

Share capital 

As at 3 April 2011 the Company’s authorised share capital consisted 

of one class of 106,000,000 ordinary shares of 0.625 pence each of 

which there were 55,090,782 ordinary shares in issue. No shares were 

held in Treasury. At that date the authority granted to the Company 

for the purchase of up to 5,479,520 ordinary shares remained in force 

and unused. 

The rights and obligations attached to the Company’s ordinary shares, 

and restrictions on the transfer of shares in the Company, are set out in 

the Company’s Articles of Association, copies of which can be obtained 

from Companies House in the UK or the Company Secretary. 

Shareholders are entitled to receive dividends, when declared; to receive 

the Company’s reports and accounts; to attend and speak at general 

meetings of the Company; to appoint proxies; and to exercise voting 

rights. 

No person holds securities in the Company carrying special rights with 

regard to control of the Company. The Company is not aware of any 

agreements between the holders of securities that may result in 

restrictions on the transfer of securities or on voting rights. Unless 

expressly specified to the contrary in the Articles of Association of the 

Company, the Company’s Articles of Association may be amended by 

a special resolution of the Company’s shareholders. 

The Company issued 386,569 ordinary shares of 0.625p each during 

the period for an aggregate consideration of £1,189,000 in respect of 

options exercised under the Company’s share option schemes. 

Directors 

The present Directors of the Company are shown on pages 30 and 31. 

G Hill was appointed to the Board on 26 April 2010 and I M Jacques 

resigned on that date. C F Baroudel was appointed to the Board on 

22 September 2010 and both S G Wilson and M L M Smit resigned 

on that date. No other Director served during the period. In accordance 

with the recommendations set out in the UK Corporate Governance 

Code, all the elected Directors will submit themselves for re-election 

at the Annual General Meeting. C F Baroudel, having been appointed 

since the last Annual General Meeting, submits herself for election. 

Details of the Directors’ service contracts are given in the Remuneration 

report on page 39. 

The interests of the Directors in the shares of the Company as at 3 April 

2011 and 28 March 2010 were as follows: 

3 April 2011 

ordinary shares 

of 0.625p each 

28 March 2010* 

ordinary shares 

of 0.625p each 

R M Steeves 2,477,674 2,455,934 

G Hill 16,300 – 

R E Lerwill 3,000 3,000 

D K Nichol – – 

C F Baroudel – – 

*or at date of appointment. 

There was no change in the shareholding of any Director between the 

end of the financial period and the date of this report. Details of options 

held by Directors are contained within the Remuneration report. 

Statement of Directors’ responsibilities in respect of the Annual 

Report and the financial statements 

All the Directors are responsible for preparing the Annual Report and 

the Group and Parent Company financial statements in accordance with 

applicable law and regulations. 

Company law requires the Directors to prepare Group and Parent 

Company financial statements for each financial period. Under that law 

the Directors are required to prepare the Group financial statements in 

accordance with International Financial Reporting Standards (‘IFRS’) as 

adopted by the EU and applicable law and have elected to prepare the 

Parent Company financial statements in accordance with UK 

Accounting Standards and applicable law (UK Generally Accepted 

Accounting Practice). 

Under company law the Directors must not approve the financial 

statements unless they are satisfied that they give a true and fair view of 

the state of affairs of the Group and Parent Company and of their profit 

or loss for that period. 

In preparing each of the Group and Parent Company financial 

statements, the Directors are required to: 

•� Select suitable accounting policies and then apply them consistently; 

•� Make judgements and estimates that are reasonable and prudent; 

•� For the Group financial statements, state whether they have been 

prepared in accordance with IFRSs as adopted by the EU; 

•� For the Parent Company financial statements, state whether 

applicable UK Accounting Standards have been followed, subject to 

any material departures disclosed and explained in the financial 

statements; and 

•� Prepare the financial statements on the going concern basis unless it 

is inappropriate to presume that the Group and the Parent Company 

will continue in business.

The Directors are responsible for keeping adequate accounting records 

that are sufficient to show and explain the Parent Company’s 

transactions and disclose with reasonable accuracy at any time the 

financial position of the Parent Company and enable them to ensure 

that its financial statements comply with the Companies Act 2006. They 

have general responsibility for taking such steps as are reasonably open 

to them to safeguard the assets of the Group and to prevent and detect 

fraud and other irregularities. 

Under applicable law and regulations, the Directors are also responsible 

for preparing a Directors’ Report, Directors’ Remuneration Report and 

Corporate Governance statement that comply with that law and those 

regulations. 

The Directors are responsible for the maintenance and integrity of the 

corporate and financial information included on the Company’s website. 

Legislation in the UK governing the preparation and dissemination of 

financial statements may differ from legislation in other jurisdictions. 

Employee engagement 

The Group recognises the impact that positive employee engagement 

has on developing a culture of excellence, maintaining organisational 

stability and fostering an environment in which people feel valued and 

included. 

The Group is an equal opportunities employer. Equal opportunities are 

offered to all regardless of race, colour, nationality, ethnic origin, sex 

(including gender reassignment), marital or civil partnership status, 

disability, religion or belief, sexual orientation, age or trade union 

membership. 

The Group gives full and fair consideration to applications for 

employment from people with disabilities. The policy is to offer equal 

opportunity to all disabled candidates and employees who have a 

disability or become disabled in any way during the course of their 

employment. A full assessment of the individual’s needs is undertaken 

and reasonable adjustments are made to the work environment or 

practices in order to assist those with disabilities. 

All candidates and employees are treated equally in respect of 

recruitment, promotion, training, pay and other employment policies 

and conditions. All decisions are based on relative merits and abilities. 

The Group continues to employ multiple channels of communication 

and is committed to improving these channels so that all employees 

have access to information, as well as having an opportunity to express 

their views and ideas on matters affecting their employment and the 

Group. Channels include: 

•� Employee Forums and where appropriate, Works Councils 

•� ‘Touch Point’ the Group intranet site 

•� Regular Leadership briefings – followed by communication 

cascades/team briefings 

•� An Employee Satisfaction Survey 

•� Regular business updates via circulars 

Employment policies are updated in a timely way to reflect legislative 

changes and training to communicate or embed change is developed 

and rolled out as appropriate. 

Training is provided as required to ensure that we have a skilled 

workforce – this requires a balance of training for the work our 

employees do now and developing and preparing people for the future. 



For several years the Company has operated a Savings Related Share 

Option Scheme, which gives employees an opportunity to enter into a 

savings contract for a fixed period with an opportunity to acquire shares 

in the Company at the end of that period. 

Directors’ indemnity 

In accordance with the Company’s Articles of Association, Directors 

have been granted a continuing indemnity issued by the Company to 

the extent permitted by law in respect of liabilities incurred as a result of 

their office. The indemnity would not provide any coverage to the extent 

that the Director is proved to have acted fraudulently or dishonestly. 

Directors’ and officers’ liability insurance 

During the period the Company maintained insurance cover for 

Directors’ and officers’ liability as permitted under Section 233 of the 

Companies Act 2006. 

Corporate and Social Responsibility 

The statement on Corporate and Social Responsibility on page 24 

contains disclosures concerning environmental matters, employee 

involvement and social and community issues. 

Substantial shareholders 

At the date of this report the Company had been notified of the following 

holdings of voting rights attaching to the Company’s ordinary shares of 

0.625p each in accordance with the Disclosure and Transparency 

Rules: 

Name Shareholding % 

AXA S.A. 7,660,171 13.90 

Prudential plc group of companies 3,458,504 6.28 

Global AEGON Asset Management Group 3,296,843 5.98 

INVESCO Asset Management Ltd 3,154,839 5.73 

F & C Asset Management plc 2,726,059 4.95 

Black Rock Advisors 2,705,645 4.91 

Artemis Investment Management Limited 2,688,327 4.88 

Old Mutual Asset Managers (UK) Limited 2,599,250 4.72 

Newton Investment Management 2,561,177 4.65 

R M Steeves 2,477,674 4.50 

Legal & General Group plc 2,084,368 3.78 

Contractual relationships or other arrangements 

The Company has no contractual relationships or other arrangements 

with contractors, customers or suppliers that are critical to the business. 

Policy and practice on payment of creditors 

All Group companies are responsible for establishing terms and 

conditions with their suppliers and it is Group policy that payments are 

made within such agreed terms and conditions. Trade creditors at the 

period end amount to 58 days (2010: 57 days) of average supplies for 

the period. 

Political and charitable donations 

During the period the Group made charitable donations totalling 

£17,000 (2010: £5,000). No political donations were made during 

the period (2010: £nil). Further information on the Group’s charitable 

donations is contained in the Corporate and Social Responsibility report 

on page 24. 

Treasury and risk management 

The Group’s treasury and financial risk management objectives, and 

details in respect of the Group’s exposure to these risks are detailed in 

note 19 to the financial statements. 

Who we are 

Our strategy 



34 



Report of the Directors Corporate Governance 

Going concern 

The Company’s business activities, together with the factors likely to 

affect its future development, performance and position are set out in 

the Business Review on pages 4 to 17. The financial position of the 

Company, its cash flows, liquidity position and borrowing facilities 

are described in the Finance Director’s Report on pages 18 to 21. 

In addition, notes 18 to 19 to the financial statements include the 

Company’s objectives, policies and processes for managing its capital; 

its financial risk management objectives; details of its financial 

instruments and hedging activities; and its exposure to credit risk 

and liquidity risk. 

The Company has considerable financial resources together with 

long term contracts with a number of customers and suppliers across 

different geographic areas and market places. As a consequence, the 

Directors believe that the Company is well placed to manage its 

business risks successfully despite the current uncertain economic 

outlook. The Directors have a reasonable expectation that the Company 

has adequate resources to continue in operational existence for the 

foreseeable future. Thus they continue to adopt the going concern basis 

of accounting in preparing the annual financial statements. 

This statement in respect of the business as a going concern has 

been prepared in accordance with Going Concern and Liquidity Risk: 

Guidance for Directors of UK Companies 2009, published by the 

Financial Reporting Council in October 2009. 

Disclosure of information to auditors 

The Directors who held office at the date of approval of this report 

confirm that so far as they are each aware, there is no relevant audit 

information of which the Group’s auditors are unaware; and each 

Director has taken all steps that he ought to have taken as a Director to 

make himself aware of any relevant audit information and to establish 

that the Group’s auditors are aware of that information. 

Auditors 

A resolution for the reappointment of KPMG Audit Plc as auditors of the 

Company is to be proposed at the forthcoming Annual General Meeting. 

Annual General Meeting 

The Annual General Meeting will be held on 27 July 2011 at the offices 

of Investec Bank plc, 2 Gresham Street, London, EC2V 7QP. The notice 

convening the meeting together with explanatory notes for the special 

business are set out in a shareholder circular, which will be posted with 

the Annual Report and Financial Statements and proxy voting papers. 

Full details of all the resolutions to be proposed are provided in the 

Notice of Meeting. 

Responsibility statement of the Directors in respect of the annual 

financial report 

We confirm that to the best of our knowledge: 

•� The financial statements, prepared in accordance with the applicable 

set of accounting standards, give a true and fair view of the assets, 

liabilities, financial position and profit or loss of the Company and the 

undertakings included in the consolidation taken as a whole; and 

•� The Directors’ report includes a fair review of the development 

and performance of the business and the position of the issuer and 

the undertakings included in the consolidation taken as a whole, 

together with a description of the principal risks and uncertainties 

that they face. 

On behalf of the Board 

T C Mason 

Group Company Secretary 

7 June 2011 

Combined Code Compliance 

The Board is committed to the highest standards of Corporate 

Governance, the system by which the Company is directed, managed 

and controlled in the interests of its stakeholders. In the year to 3 April 

2011, the Company was subject to the Combined Code on Corporate 

Governance (‘Combined Code’) published in June 2008 by the 

Financial Reporting Council (‘FRC’). The Directors are of the opinion 

that the Company has been in compliance with the conditions of the 

Combined Code up to the date of this report except where any noncompliance 

is disclosed and explained. 

In May 2010, the FRC published its new corporate governance code 

(dated June 2010) replacing the Combined Code which will now be 

known as the UK Corporate Governance Code. From 4 April 2011, 

the Company is subject to the UK Corporate Governance Code. 

The Board has carefully considered the UK Corporate Governance Code 

and is confident that its corporate governance policies and procedures 

are appropriate and will ensure that it remains able to comply with (or 

explain clearly any divergences from) the proposed new UK Corporate 

Governance Code. 

The following statements set out the principles and methods to which 

they adhere. 

The statement of Directors responsibilities in respect of the Annual 

Report and the financial statements is set out in the Report of the 

Directors on page 32. 

The Board 

As at 3 April 2011, and as at the date of this report, the Board of 

Directors was made up of five members, comprising a non-executive 

chairman, two further non-executive Directors and two executive 

Directors. The non-executive Directors are considered by the Board 

to be independent of management and free of any relationship which 

could materially interfere with the exercise of their independent 

judgement. The non-executive Directors are considered to reflect 

a suitable breadth of skills, knowledge and experience. D K Nichol is 

the senior independent Director. 

Biographical details of the Directors currently in office are shown on 

page 30. The Company’s policy relating to the terms of appointment 

and the remuneration of both executive and non-executive Directors is 

detailed in the Remuneration Report on page 39. 

The procedure for appointing Directors is detailed in the Nomination 

Committee section below. 

The Board meets regularly during the year as well as on an ad hoc basis 

as required. The Board met 11 times during the year, and attendance 

for each is set out on page 37. 

The Board’s primary role is to provide entrepreneurial leadership and 

to review the overall strategic development of the Group as a whole. 

In addition the Board sets the Group’s values and standards and 

ensures that it acts ethically and that its obligations to its shareholders 

are understood and met. 

The Board has a formal schedule of matters reserved to it for decision, 

which it reviews and agrees annually but also delegates specific 

responsibilities to a senior committee, the Senior Executive Board 

(‘SEB’) and certain Board committees.

Specific responsibilities reserved for the Board include: 

•� Setting and amending the Group’s overall business strategy, 

strategic business plan and the annual operating budget. 

•� Approval of the Annual Report & Financial Statements, interim 

dividends and recommendation of the final dividend. 

•� Approval of any changes to the Company’s capital structure 

including the raising of additional capital and the purchase of the 

Company’s shares. 

•� Approval of any significant changes in accounting policies 

or practices. 

•� Approval of contracts with annual revenue in excess of £5 million. 

•� Approval of any investment or disposal of the share capital of another 

company greater than 5% of the Company’s share capital. 

•� Approval of the acquisition of assets with a consideration in excess 

of £10 million, and any disposal of assets greater than £2.5 million. 

•� Approval of any capital expenditure in excess of £10 million. 

•� Major changes in the rules of the company pension schemes, 

or changes of trustees or fund management arrangements. 

•� Approval of changes to the employee share and other incentive 

schemes and the allocation of executive share options. 

•� All Stock Exchange related issues including approval of 

communications to the Stock Exchange. 

•� Establishing Board membership and powers including the 

appointment and removal of Board members and the Group 

Company Secretary. 

•� Establishing Terms of Reference and membership of the 

Board committees. 

•� Approval of all Related Party Transactions. 

•� Setting the remuneration of the auditors and making 

recommendations for the appointment or removal of auditors. 

•� Approving any major changes in policy with respect to risks covered 

by insurance. 

•� Approving all treasury matters including the setting of policies to enter 

into contracts that are not in the ordinary course of business and 

authorising bank facilities (including bank borrowing, other loans and 

internal rate swaps), and approval of all foreign currency transactions 

in excess of £5 million. 

•� Overseeing the Group’s main controls and their effectiveness. 

•� Other matters including health and safety and risk management. 

The Board sets aside at least two consecutive days each year to 

conduct a review of its strategy with the SEB and other senior executives 

in attendance for certain sessions as appropriate. 

Directors receive papers several days in advance of Board meetings and 

also have access to the advice and services of the Company’s advisers. 

The Board has established a procedure for Directors, if deemed 

necessary, to take independent professional advice at the Company’s 

expense in the furtherance of their duties. This is in addition to the 

access that every Director has to the Group Company Secretary, 



who is charged with ensuring that the Board procedures are followed 

and that good corporate governance and compliance is implemented 

within the Group. Together with the Group Chief Executive and the 

Group Company Secretary, the Chairman ensures that the Board is 

kept properly informed and consulted on all issues reserved for it. 

The role of Chairman and Group Chief Executive is separate and 

clearly defined with the division of responsibilities set out in writing 

and approved by the Board. The Chairman’s principal responsibilities 

are to chair the Board and shareholder meetings and to ensure the 

effective running of the Board. The Group Chief Executive’s principal 

responsibility is leading the SEB in the day to day running of the Group’s 

business. The Chairman and Group Chief Executive meet regularly 

between meetings. 

In accordance with best practice the Chairman addresses the 

developmental needs of the Board as a whole, with a view to developing 

its effectiveness as a team and ensures that each Director refreshes and 

updates his or her individual skills, knowledge and expertise. 

During the year, the Board conducted a detailed evaluation of its own 

performance and that of the Audit, Nomination and Remuneration 

Committees by means of a written questionnaire. The evaluation 

focused on several areas including Board structure, meeting 

administration, meetings (and their content), strategy, Board 

committees, communication and information, and governance. 

The results of the evaluation were considered and discussed by 

the Board. Performance evaluations, including skills brought to the 

Board and the contributions each Director made to it, were carried 

out for each Director. 

There was a change in Chairman during the year. The non-executive 

Directors have not yet held formal meetings to consider the Chairman’s 

performance but this will be undertaken during the forthcoming 

financial year. 

The Board has arranged to hold Board meetings at Group business 

locations to help all Board members gain a deeper understanding of the 

business. This also provides senior managers from across the Group 

with the opportunity to present to the Board as well as to meet the 

Directors on more informal occasions. The non-executive Directors 

are also invited to attend the Group’s Leadership Conference, which 

is held annually. 

Succession planning is a matter for the whole Board rather than for a 

committee. The Company’s Articles of Association provide that one 

third of the Directors will seek re-election at the AGM every three years. 

However, all Directors will now submit themselves for annual re-election 

by shareholders at the Company’s AGM in accordance with the UK 

Corporate Governance Code. Additionally, new Directors may be 

appointed by the Board but are subject to election by shareholders 

at the first opportunity after their appointment. 

Following their appointment, a formal comprehensive and tailored 

induction is given to all Directors, including visits to key locations 

within the Group and meetings with members of the SEB and other 

key executives. 

Although the non-executive Directors are not formally required to meet 

the shareholders of the Company, their attendance at presentations of 

the annual and interim results is encouraged. 

Who we are 

Our strategy 



36 



Corporate Governance 

Board committees 

The SEB comprises the Group Chief Executive, Group Finance Director, 

the Group Company Secretary, the Group Commercial Director and the 

CEOs of each of the Regions of the Group and meets at least monthly. 

The SEB is primarily responsible for: 

•� The management of all the Group’s businesses; 

•� Delivering the strategy and the agreed business plans and budgets 

which have been signed off by the Board; 

•� Making key commercial decisions within the framework of the agreed 

business plan and strategy; 

•� Monitoring all risks (operational, financial and reputational); 

•� Reviewing and maintaining the effectiveness of the Group’s system 

of internal control on a day to day basis; and 

•� Managing the business in a manner appropriate for a FTSE 250 

company. 

Remuneration Committee 

At the date of this report, the Remuneration Committee comprises 

D K Nichol (Chairman) and the two non-executive Directors, R E Lerwill 

and C F Baroudel, all of whom were independent in accordance with 

the definition set out in the Combined Code. The Committee met four 

times during the year and Directors’ attendance for each meeting is 

shown in the table on page 37. The Chairman of the Remuneration 

Committee attends the Annual General Meeting to respond to any 

questions that might be raised on the Committee’s activities. 

The Remuneration Committee has the following key duties: 

•� Reviewing and making recommendations on the Company’s 

framework of executive remuneration and cost including all 

emoluments, pension entitlements and other benefits of the 

executive Directors and as appropriate other senior executives. 

This includes agreeing the level of cash bonuses that are paid; 

•� Determining, on behalf of the Board, the executive Directors’ 

remuneration by reference to individual performance and 

market data; 

•� Setting and confirming the rewards under the Group’s Long Term 

Incentive Plan (LTIP); and 

•� Reviewing the operation of executive share option schemes and the 

granting of such options. 

Audit Committee 

At the date of this report the Audit Committee comprised R E Lerwill 

(Chairman) and also the two non-executive Directors D K Nichol and 

C F Baroudel all of whom were independent in accordance with the 

definition set out in the Combined Code. 

The Company recognises the fact that in accordance with the 

Combined Code, following his appointment as Chairman of the 

Company, R E Lerwill should not also chair the Audit Committee. 

An additional suitably qualified non-executive Director is being sought 

via external recruitment consultants, to chair the Audit Committee. 

It is hoped that an appointment will be made in the near future. 

The appointment of an additional non-executive Director will be 

considered within the terms of reference of the Nomination Committee. 

Each member of the Committee brings relevant financial experience 

from senior executive levels. The expertise and the experience of the 

members of the Committee are summarised on page 30. 

The Committee met three times during the year and the Directors’ 

attendances for each meeting is shown in the table below. Executive 

Directors are invited to attend meetings and provide reports as and 

when considered appropriate. The Committee meets with external 

auditors without management present at least once during the year. 

The Committee has direct access to the Group’s auditors and liaises 

with executive management to review the effectiveness of internal 

controls. 

KPMG Audit plc were appointed as Auditors to the Company in 2006, 

and are re-appointed annually by shareholders. To ensure objectivity, 

key members of the audit team rotate off the Company’s audit. During 

the year, the Committee reviewed KPMG Audit plc’s fees, effectiveness 

and whether the agreed audit plan had been fulfilled and the reasons 

for any variation from the plan. The Committee also considered its 

robustness and the degree to which KPMG Audit plc was able to 

assess key accounting and audit judgements and the content of the 

management letter. The Committee concluded that the audit was 

effective and that the relationship and effectiveness of the external 

Auditor be kept under review. KPMG Audit plc also audits the 

subsidiaries of the Group. 

The Committee has developed and implemented a policy on the 

supply of non-audit services by the external auditors to ensure their 

continued objectivity and independence. The Committee is satisfied 

that the provision by KPMG Audit plc of non-audit services does not 

impair their independence or objectivity. The Committee has approved 

the range of services that may be provided by KPMG Audit plc. 

These include transaction due diligence and accountancy assistance 

on projects. Subject to approved authorisation limits, the services 

require prior authority from either the Group Finance Director, the 

Chairman of the Audit Committee or the full Audit Committee. 

The Chairman of the Audit Committee attends the Annual General 

Meeting to respond to any shareholder questions that might be raised 

on the Committee’s activities. 

The Audit Committee has the following key duties: 

•� To review the annual financial statements and interim reports prior to 

approval, focusing on changes in accounting policies and practices, 

major judgemental areas, significant audit adjustments, going 

concern and compliance with accounting standards, Stock Exchange 

and legal requirements; 

•� To monitor the Group’s systems of internal control; 

•� To consider the appointment of the auditors and their remuneration 

(including allocation of non-audit fees) to ensure that their 

independency and objectivity is maintained; 

•� To meet with the auditors to discuss the scope of the audit issues 

arising from their work and any matters the auditors wish to raise; and 

•� To review the Group’s corporate review procedures and any 

statement on internal controls prior to endorsement by the Board. 

Nomination Committee 

The Nomination Committee meets when required and at the date of this 

report comprised R E Lerwill (Chairman) and also the non-executive 

Directors D K Nichol and C F Baroudel. Only members of the 

Committee are entitled to be present at meetings but others may be 

invited by the Committee to attend if appropriate. 

The Nomination Committee is responsible for considering all potential 

appointments to the Board and for making suitable proposals to the 

Board in relation to potential appointments. It meets as and when Board 

appointments or other senior positions within the Group are made.

The Board has agreed formal, rigorous and transparent procedures 

to be followed by the Committee in making its recommendations 

and appointments to the Board. The Committee has access to such 

information and advice both within the Group and externally, at the 

cost of the Company, as it considers necessary. This may include the 

appointment of external executive search consultants where considered 

appropriate. The Committee met twice during the year. 

For the appointment of C F Baroudel as non-executive Director 

on 22 September 2010, the Company engaged a firm of external 

search consultants, to handle the search and recruitment process. 

The Nomination Committee was fully involved with both the recruitment 

and assessment of potential candidates. A shortlist of candidates was 

put through a rigorous assessment process and final candidates were 

interviewed by the whole Nomination Committee. 

The Group Company Secretary acts as secretary to all Board 

committees. 

Directors’ attendance record 

The attendance of Directors at relevant meetings of the Board and its 

Committees was as follows: 

Board 

Audit 

Committee 

Remuneration 

Committee 

Nomination 

Committee 

Total number of meetings 11 3 4 2 

R E Lerwill 10 of 11 3 of 3 4 of 4 2 of 2 

R M Steeves 11 of 11 – – – 

G Hill (i) 10 of 10 – – – 

D K Nichol 11 of 11 2 of 3 4 of 4 2 of 2 

C F Baroudel (ii) 4 of 6 2 of 2 1 of 1 – 

I M Jacques (iii) 0 of 1 – – – 

S G Wilson (iv) 3 of 5 1 of 1 1 of 3 2 of 2 

M L M Smit (v) 2 of 5 – – – 

Notes: 

(i) G Hill was only entitled to attend 10 Board meetings following his appointment as a 

Director on 26 April 2010. 

(ii) C F Baroudel was only entitled to attend 6 Board meetings following her appointment as a 

Director on 22 September 2010. 

(iii) I M Jacques resigned as a Director on 26 April 2010. 

(iv) S G Wilson resigned as a Director on 22 September 2010. 

(v) M L Smit resigned as a Director on 22 September 2010. 

Directors’ conflict of interest 

There are procedures in place to deal with Directors’ conflict of interest 

arising under Section 175 of the Companies Act 2006 and such 

procedures have operated effectively during the year. 

Articles of Association 

The Company’s Articles of Association may only be amended by Special 

Resolution at a General Meeting of shareholders. 

Internal control 

The Directors acknowledge that they have overall responsibility for the 

Group systems of internal control and for reviewing the effectiveness of 

those controls. 

The Board has taken into account the relevant provisions of the 

Combined Code, the Turnbull report and the Listing Rules and an 

ongoing process has been established for identifying, managing and 

evaluating the risks faced by the Group. 



The systems are designed to manage rather than eliminate risk of failure 

to achieve the Group’s objectives. The systems provide reasonable, 

not absolute, assurances against material mis-statement or loss. 

Such systems are reviewed by the Board to deal with changing 

circumstances. 

The Group does not have an internal audit function, although this is 

continually under review by the Board and the Audit Committee. The 

Board is presently of the view that having reviewed and considered the 

current control environment, it is still adequate given the Group’s size 

and range of businesses. 

The Group has a Group finance function that reports to the Group 

Finance Director and is independent of the business units to ensure 

objectivity and control when preparing Group financial information. 

The Group finance function undertakes financial reviews of the regional 

finance functions on an ad hoc basis and provides technical and 

commercial support when required. 

Assessment of business risk 

A system of business risk identification, assessment and evaluation 

has been in place during the year within the management process 

throughout the Group, through a formal risk management framework 

led by the Group Director of Risk Management. This is explained in the 

reports of Principal Risks and Uncertainties and Corporate and Social 

Responsibility on pages 22 and 24 respectively. The Board regularly 

reviews strategic risks. 

Control environment 

The Group’s operating procedures include a comprehensive system for 

reporting financial and non-financial information to the Board including: 

•� The definition of authorisation limits, both financial and otherwise. 

Detailed appraisal documents are produced for any major capital 

projects; 

•� A review of annual budgets and forecasts against budgets that are 

produced at least twice a year; 

•� A review of monthly management accounts at Group and operational 

level, including financial performance, together with balance sheet 

and cash flow analysis, which are reported against budget, forecasts 

and prior year with major variances explained; 

•� A risk management report for each Board meeting, focusing on any 

new risks arising and management of existing risks. 

On an annual basis the Group finance function undertakes a review 

of financial controls as part of its year end process, which is considered 

by the Board. The annual review gives a comprehensive update on 

the previous year’s report and outlines actions taken to redress any 

weaknesses in each regional business and across Group functions. 

The review also highlights areas where improved controls have been 

implemented and key actions to be addressed in the coming financial 

year, which are monitored by both the Board and the Audit Committee. 

Control procedures 

Detailed operational procedures that embody key controls have been 

developed for each of the Group’s businesses. The implications of 

change in law and regulations are taken into account within those 

procedures. 

Who we are 

Our strategy 



38 



Corporate Governance 

Monitoring process 

There are clear procedures for monitoring the system of key controls. 

The significant components are: 

•� Cyclical and random reviews of operational and financial controls 

by the Director of Risk Management, the Group’s quality managers, 

the Head of IT, senior finance managers and the Group finance team; 

•� Review by the Audit Committee of the process for identifying and 

assessing risks and of the effectiveness of controls via the work 

of external audit and direct access to Group and operational 

management. 

The Board confirms that it has considered the effectiveness of the 

Group’s system of internal controls described above for the financial 

year and up to the date of this report. 

Relationship with shareholders 

The Group Chief Executive, Group Finance Director and the Group 

Company Secretary are responsible for ensuring effective 

communication with shareholders. The Company places considerable 

importance on communication with the shareholders, including its 

employee shareholders. 

Apart from the Annual General Meeting, the Company communicates 

with its shareholders by way of the Annual Report & Financial 

Statements, which are available to all shareholders either in paper 

form or electronically and can be accessed via the Company’s website 

http://www.synergyhealthplc.com. The Group’s annual and interim 

results, as well as all announcements issued by the London Stock 

Exchange, are published on the Company’s website. 

The Company also communicates with its institutional shareholders 

through a combination of analysts’ briefings throughout the year but 

particularly at the interim and year end results stage. 

Business at the Company’s Annual General Meeting will cover the 

Annual Report & Financial Statements, the Directors’ Remuneration 

Report, election and re-election of Directors, re-appointment and 

remuneration of auditors, political donations and political expenditure, 

authority to allot shares, disapplication of pre-emption rights, purchase 

by the Company of its own shares, notice period for general meetings 

and re-approval of the Save As You Earn Share Option Scheme. 

Full details and an explanation of these resolutions are set out in the 

Notice of Meeting. The proxy votes for and against each resolution, as 

well as abstentions are counted before the Annual General Meeting and 

the results will be made available at the meeting after shareholders have 

voted on each resolution on a show of hands. All results, statements and 

Company announcements are accessible to all shareholders via the 

Group’s website http://www.synergyhealthplc.com. 

All shareholders are invited to the Annual General Meeting at which they 

have the opportunity to put questions to the Board.

Remuneration report 

The Board presents its Remuneration report, which has been prepared 

on the recommendation of the Remuneration Committee and in 

accordance with the requirements of the Companies Act 2006. 

Composition of the Remuneration Committee 

The Remuneration Committee of the Board is chaired by D K Nichol 

and also comprises the non-executive Directors, R E Lerwill and 

C F Baroudel. S G Wilson served on the Committee until 22 September 

2010. When appropriate, the Committee also invites the views of the 

Chief Executive, the Group Finance Director and the Company 

Secretary. 

Remuneration policy 

The Group is committed to meeting best practice in areas of corporate 

governance and executive remuneration. The Company’s executive 

remuneration policy is in line with the Company’s overall practice on 

pay and benefits, which is to reward employees competitively. In setting 

executive salaries, the Committee takes into account a number of 

factors, including market conditions, salaries in comparable companies 

in similar industries, and affordability, in order to attract and retain 

competent executives. The Committee also considers general pay 

and employment conditions of all employees within the Group and is 

sensitive to them, to prevailing market conditions and to governance 

trends when assessing the level of salaries and the remuneration 

packages of executive Directors. Remuneration is considered with 

regard to personal performance, responsibilities and experience and 

this is benchmarked alongside independently compiled salary survey 

information. 

The Committee recognises the need to link an executive’s remuneration 

package to individual and corporate performance and considers it has 

achieved a balance between basic salary, annual bonuses to reward 

individual performance during the period and share options and long 

term incentive plans to encourage longer term career planning within 

the Group and future participation in its growth. 

The Committee does not consider that the targets that are included 

in the executive’s remuneration package are incompatible with the 

Director’s responsibility for environmental, social and governance 

matters. Whilst the Committee’s terms of reference do not require 

specific targets on these matters, the Committee is obliged to ensure 

that, when setting remuneration policy, appropriate incentives are 

provided to encourage enhanced performance in a fair and reasonable 

manner. 

The Committee has determined that the Company’s executive Directors 

are appointed to the Board on terms of a contract that can be 

terminated by the Company with 12 months’ notice after the first year 

of service. The Committee believes that this arrangement provides a 

measure of stability in that it provides an opportunity for the recruitment 

of replacement executives and an orderly hand over of duties. 

The service contracts of all the executive Directors, which are rolling 

contracts, contain a provision, exercisable at the option of the Company, 

to pay an amount on early termination of employment. The Company 

will use the pay in lieu of notice provisions when the speed, certainty 

and protection of restrictive covenants afforded by such clauses are 

thought to be in the best interests of the Company and the 

circumstances surrounding the departure of the relevant Director justify 

their use. The Committee’s policy is that payments to Directors on 

termination should reflect the circumstances that prevail at the time, 

also taking account of, if applicable and appropriate, the Director’s duty 

to mitigate. The Committee continuously reviews its policies of executive 

remuneration and severance in the best interests of shareholders. 

Guidance on best practice expectations is taken into account prior to 

agreeing Directors’ contractual provisions. 



Executive Directors are eligible to participate in the appropriate defined 

contribution pension schemes and other regular employee benefit plans 

including health and life insurance. Only base salary is included in the 

calculation of pension contributions. 

The details of individual components of the remuneration package and 

service contracts are disclosed below. 

Components of executive Directors’ remuneration 

Overview 

The principal components of executive Directors’ remuneration 

packages are base salary, which is the only element of pay on which 

pension benefits are calculated, annual bonus scheme, long term 

incentive plan and pension benefits. Each of these components is 

explained further below. 

Salary 

The Committee meets at least once a year in order to consider and set 

the annual salaries for executive Directors. The Committee also reviews 

the policies adopted regarding remuneration across the Group. Last 

year the Committee initiated a benchmark exercise to ensure levels of 

Directors’ Remuneration were competitive with the market. The guide 

adopted was the Hewitt New Bridge Street guide for FTSE 250 

remuneration for 2009 with the appropriate benchmark for the 

Company being the FTSE 250 bottom half, with a median market 

capitalisation of £375 million. 

Incentive arrangements 

Annual bonus scheme 

The executive Directors participate in the Group’s performance-related 

annual bonus scheme. Bonuses are currently awarded for achieving 

profit and cash flow targets set by the Board, together with an element 

related to achieving personal objectives during the year. The executive 

Directors are entitled to receive their full bonus if all of these objectives 

have been achieved. Maximum potential bonuses, as a percentage of 

annual base salary, were 100% in respect of R M Steeves and 55% in 

respect of G Hill. No bonus payments are pensionable. 

The Board aims to achieve a balance between short term targets that 

are rewarded by an annual cash bonus payment and longer term 

targets that are rewarded by share-based incentives. 

Long term Incentive Plan (LTIP) 

The Long term Incentive Plan for executive Directors and senior 

executives was approved by shareholders in 2005. The principal 

features are as follows: 

All executive Directors and senior executives nominated by the 

Committee are entitled to be considered for the grant of awards under 

the LTIP. The awards take the form of an option over shares (‘LTIP 

option’), where granting the option is conditional upon the performance 

of the Company over the measurement period. 

The performance conditions were chosen because the Committee 

believes that these targets are aligned and compatible with the interests 

of shareholders and the creation of shareholder value. 

An award under the LTIP to a nominated participant will take two forms. 

(1) The first type of award is a right to acquire a specified number of 

shares by way of an option (‘LTIP Option’), with award conditional upon 

the performance of the Company over the measurement period. The 

Remuneration Committee has discretion to set the level of conditional 

award up to a maximum of 450% of basic salary. The initial conditional 

award granted in June 2005 in respect of R M Steeves and I M Jacques 

was 450% of basic salary and that of M L M Smit was 150% of basic 

salary. The maximum conditional awards for 2006 and 2007 did not 

Who we are 

Our strategy 



40 




exceed 150% of basic salary. In accordance with the conclusion of the 

Remuneration Committee reported in last year’s Remuneration report 

that a conditional award of 200% of basic salary is appropriate for the 

Chief Executive, a conditional award of 200% of salary was made to 

R M Steeves. Conditional awards of 150% of salary were made to 

I M Jacques and M L M Smit. 

The Remuneration Committee carried out a detailed review of the level 

of awards under this scheme in July 2009 and adjusted the levels of the 

award so that Conditional awards were reduced to 150% of salary in 

respect of R M Steeves and 125% of salary in respect of I M Jacques 

and M L M Smit. Performance targets were also amended as detailed 

in the table below. The Committee considered that in the current 

economic conditions the targets needed to be achievable in order to 

provide the necessary motivation for the executive Directors. It should 

be noted that the targets remain very demanding, notably that, in order 

to receive the maximum award relating to the part of the award 

described in note (a) below, the earnings per share must grow by 

20% on a compound basis over the three year measurement period. 

These changes were made following consultation with the Company’s 

top ten shareholders, who all confirmed that they were supportive of the 

proposed changes. 

The vesting of the shares will be dependent on the extent to which 

the following performance targets have been satisfied: 

(a) 50% of the LTIP Option is determined by a comparison of the 

earnings per share figure at the end of the measurement period with 

that at the start. For these purposes earnings per share will be adjusted 

for amortisation of intangibles, non-recurring items, share option 

charges and any other items deemed reasonable by the Committee. 

(b) The other 50% of the LTIP Option is determined by the Total 

Shareholder Return generated by the Company in comparison to that 

generated by companies in the FTSE 250 Index. A table ranking the 

companies in order of performance will be produced in July of each 

year of the measurement period to establish the ranking of the 

Company. Awards in previous years used the FTSE Small Companies 

(excluding investment trusts) index, but the FTSE 250 Index is now 

considered more appropriate following the Company’s admission to 

the Full List in July 2008. 

The shares in each element of the conditional award will vest in 

accordance with the following table: 

Awards made up to June 2008 

Vesting level EPS growth Position in the TSR table 

Vesting at 100% 25% Top 10% 

Vesting on straight line basis Between 20% Top 25% but 

between 50% and 100% and 25% outside top 10% 

Vesting on straight line basis Between 15% Top 50% but 

between 25% and 50% and 20% outside top 25% 

None of the shares will vest Below 15% Below top 50% 

Awards made from July 2009 onwards 

Vesting level EPS growth Position in the TSR table 

Vesting at 100% 20% Top 25% 

Vesting on straight line basis Between 15% 

between 50% and 100% and 20% 

Vesting on straight line basis Between 10% 

between 25% and 50% and 15% 

Vesting on straight line basis 

Top 50% but 

between 25% and 100% 

outside top 25% 

None of the shares will vest Below 10% Below top 50% 

(2) The second type of award takes the form of a ‘co-invest’ 

arrangement and requires that the participant to whom the award is 

to be made invests in shares in the Company and continues to hold 

those shares throughout the measurement period (‘LTIP Co-invest’). 

At the end of the measurement period, depending upon the growth 

in earnings per share (adjusted as above) of the Company over the 

measurement period, the participant will receive a number of free 

‘matching’ shares under the LTIP Co-invest. 

The maximum amount that a participant may invest is the bonus 

achieved under the annual bonus scheme during the previous 

financial period. 

The number of matching shares will be determined in accordance with 

the following table: 

Growth in earnings per share Ratio of matching shares received 

Over 15% each year Two shares for each one purchased 

Between 10% and 15% each year One share for each one purchased 

Before the end of the last financial period the Committee consulted with 

the Company’s advisors in view of the changes to U.K. taxation 

arrangements coming into effect on 6 April 2010. Having received 

appropriate advice and having conservatively estimated the likely level 

of awards under the scheme in July 2010, the Committee amended the 

rules of the LTIP scheme to permit the early exercise of awards under 

the EPS element of the LTIP Option and the option under the LTIP 

Co-invest arrangements, subject to a clawback agreement in the event 

that the option did not vest fully following the completion of the audit of 

the accounts. Accordingly, options were exercised by R M Steeves and 

I M Jacques as described in the detailed schedules below. 

Pensions 

The Company makes pension contributions equivalent to 10% of the 

base annual salary for G Hill and 15% of the base annual salary for 

R M Steeves into defined contribution schemes. 

M L M Smit participated in a multi-employer industry-wide defined 

benefits scheme. As the Company’s share of the underlying assets 

and liabilities of the scheme cannot be accurately determined the 

Company’s share of the overall surplus/deficit of the scheme is treated 

as defined contribution in nature. Pension contributions in respect of 

M L M Smit were equivalent to 17% of his basic salary. 

Service contracts 

The contract details for the current executive Directors are as follows: 

Effective date Unexpired term Notice period 

R M Steeves 1 November 1999 12 months 12 months 

G Hill 26 April 2010 12 months 12 months 

I M Jacques, who resigned as a Director on 26 April 2010, also had 

a service contract with 12 months’ notice on which he gave notice 

to terminate in November 2009. Mr Jacques left the Company on 

30 October 2010. He was paid the balance of his contracted salary 

entitlement on that date. 

M L M Smit, who resigned from the Board on 22 September 2010 but 

continues to be a member of the Company’s Senior Executive Board 

has a service contract that requires six months’ notice to be given to the 

Company and 12 months’ notice to be given by the Company. If the 

Company serves notice then in addition to such notice M L M Smit is 

entitled to compensation of not less then 24 months’ salary and 

benefits, plus the bonus for the previous calendar year.

R M Steeves and G Hill will stand for re-election at the Company’s forthcoming Annual General Meeting and the unexpired term of their service 

contracts is disclosed above. 

Non-executive Directors’ remuneration 

The remuneration of non-executive Directors is established by the whole Board. Details of each non-executive Director’s remuneration is included 

below. The non-executive Directors do not receive any pension or other benefits. All non-executive Directors are engaged on letters of appointment 

that set out their duties and responsibilities and confirm their remuneration. In the event that either party wishes to terminate the appointment, 

six months’ notice is required. The Company may terminate each of these appointments at any time without the payment of compensation other 

than the notice payment. 

The following information has been audited: 

Directors’ remuneration 

The remuneration of the Directors, who served throughout the period except where indicated, for the period to 3 April 2011, is as follows: 

Salary 

£’000 

Bonus 

£’000 

Benefit in kind 

£’000 

2011 Total 

(Excl Pension) 

£’000 

2010 Total 

(Excl Pension) 

£’000 

R M Steeves (5) 420 420 10 850 563 63 181 

G Hill (1) 225 132 17 374 – 22 – 

I M Jacques (2) 150 – 4 154 392 15 24 

C F Baroudel (3) 26 – – 26 – – – 

R E Lerwill 63 – – 63 32 – – 

D K Nichol 45 – – 45 32 – – 

M L M Smit (4) 92 31 9 132 326 18 41 

S G Wilson (4) 35 – – 35 44 – – 

1,056 583 40 1,679 1,389 118 246 

Notes: 

(1) Appointed 26 April 2010. (2) Resigned 26 April 2010. (3) Appointed 22 September 2010. (4) Resigned 22 September 2010. (5) During the previous financial year R M Steeves sacrificed 

salary and bonus related emoluments amounting to £123,000 which were paid into his pension scheme. Without that sacrifice the disclosures for total remuneration and pension would have 

been £686,000 and £58,000 respectively. 

The Committee considered the performance of the executive Directors against each of the elements of the targets set for them and concluded that 

the maximum bonus was payable in each case. For M L M Smit the disclosure relates to that part of the bonus earned during the period in which 

he was a Director of the Company. 

The total Directors’ compensation in relation to other long term benefits (LTIP) and other share-based payments was £501,000 (2010: £745,000), 

calculated in accordance with IFRS 2 Share based payments. 

R M Steeves also served as non-executive Deputy Chairman of CareTech Holdings plc until his resignation from this position on 15 April 2010. 

He received a fee of £3,000 (2010: £39,000) for his services. 

Share options 

Details of the Company’s share option schemes are set out in note 26 to the financial statements. 

The following Directors hold options over ordinary shares of 0.625p in the Company’s share option schemes as follows: 

Options held at 

28 March 2010 

Options granted 

during the period 

Options 

exercised 


Options lapsed 


2011 

Pension 

£’000 

2010 

Pension 

£’000 

Options held at Exercise price Market value at 

3 April 2011 (pence) date of exercise Date from which exercisable Expiry date 

R M Steeves 

Sharesave (1) G Hill 

2,950 – – – 2,950 527p – 1 February 2015 1 August 2015 

Sharesave (1) I M Jacques 

– 2,313 – – 2,313 658p – 1 February 2016 1 August 2016 

Sharesave (1) 1,377 – – 1,377 – 686p – 1 November 2010 1 May 2011 

Approved scheme (2) 4,000 – 4,000 – – 279p 625p 1 December 2005 1 December 2013 

Notes: 

(1) ‘Sharesave’ refers to the Savings Related Share Option Scheme. 

(2) ‘Approved scheme’ refers to the Approved Share Option Plan. 

These schemes are described in detail in note 26 to the accounts. 



Who we are 

Our strategy 



42 




Directors’ interest in Long term Incentive Plan shares 

(a) LTIP options 

Date of award 

Maximum number 

of options as at 

28 March 2010 


of options granted 


Number of options 

exercised during 

the period 

Number of options 

lapsing during 

the period 


of options as at 

3 April 2011 

Mid-market share 

price on date 

of award 

Mid-market share 

price on date 

of exercise Note 

R M Steeves 

12.6.2007 72,487 – 35,240 37,247 – 776.0p See note 5 1 

30.6.2008 104,603 – – – 104,603 738.5p – 2 

14.7.2009 114,841 – – – 114,841 504.5p – 3 

14.6.2010 

G Hill 

– 101,559 – – 101,559 620.33p – 4 

14.6.2010 

I M Jacques 

– 38,689 – – 38,689 620.33p – 4 

12.6.2007 45,425 – 22,084 23,341 – 776.0p See note 6 1 

30.6.2008 49,163 – – 49,163 – 738.5p – 2 

14.7.2009 

M L M Smit 

59,972 – – 59,972 – 504.5p – 3 

12.6.2007 28,117 – 13,669 14,448 – 776.0p See note 7 1 

30.6.2008 38,370 – – – 38,370 738.5p – 2 

14.7.2009 50,339 – – – 50,339 504.5p – 3 

14.6.2010 – 43,030 – – 43,030 620.33p – 4 

Notes: 

(1) This award was made on 12 June 2007 over shares that have a value of 150% of the relevant Director’s salary. The measurement period for this award ran from this date to 12 June 2010. 

(2) This award was made on 30 June 2008 over shares that have a value of 200% of the salary of R M Steeves and 150% of the salary of I M Jacques and M L M Smit. The measurement 

period for this award runs from this date to 30 June 2011. 

(3) This award was made on 14 July 2009 over shares that have a value of 150% of the relevant Director’s salary. The measurement period for this award runs from this date to 14 July 2012. 

(4) This award was made on 14 June 2010 over shares that have a value of 150% of the salary of R M Steeves, 125% of the salary of M L M Smit and 100% of the salary of G Hill. 

The measurement period for this award runs from this date to 14 June 2013. 

(5) R M Steeves exercised 16,310 of these shares on 31 March 2010 under the arrangements described earlier when the mid market price was 600.75 and 18,930 on 30 June 2010 when the 

mid market price was 646.25p. 

(6) I M Jacques exercised 10,221 of these shares on 31 March 2010 under the arrangements described earlier when the mid market price was 600.75 and 11,863 on 15 July 2010 when the 

mid market price was 670p. 

(7) M L M Smit exercised these shares on 14 July 2010 when the mid market price was 666.5p.

(b) LTIP co-invest 

Date of award 


of matching 

options as at 

28 March 2010 


of matching 

options granted 


Number of matching Number of matching 

options exercised options lapsing during 


the period 


of matching 

options as at Price paid by Director 

3 April 2011 for co-invest shares 

Mid-market 

price on date 

of exercise 

R M Steeves 

12.6.2007 36,500 – 36,500 – – 790.0p 600.75p 

30.6.2008 59,420 – – – 59,420 710.0p – 

21.7.2009 28,896 – – – 28,896 501.25p – 

14.6.2010 

G Hill 

– 86,890 – – 86,890 668p – 

14.6.2010 

I M Jacques 

– 32,600 – – 32,600 See note 2 – 

12.6.2007 5,000 – 5,000 – – 790.0p 600.75p 

30.6.2008 5,000 – – 5,000 – 710.0p – 

30.10.2008 

M L M Smit 

20,000 – – 20,000 – 350.0p – 

12.6.2007 2,000 – 2,000 – – 858.0p 666.5p 

30.10.2008 28,000 – – – 28,000 350.0p – 

22.7.2009 1,500 – – – 1,500 510.0p – 

14.6.2010 – 17,976 – – 17,976 667p – 

Notes: 

(1) The actual number of matching shares that will vest is contingent on the performance targets described earlier. 

(2) G Hill purchased shares on three separate occasions at prices of 656p, 674p and 675p. 

The aggregate amount of gains made by the executive Directors on the exercise of share options was £728,000 (2010: £2,107,000). The market 

price of the 0.625p ordinary shares was 823p at 3 April 2011. The market price ranged from 562.5p to 948p during the period. 

Performance graph 

The graph below shows the Group’s performance for the five-year period to 3 April 2011 measured by total shareholder return (‘TSR’), compared 

with the performance of the FTSE Small Cap index (excluding investment trusts) also measured by TSR, which is defined as share price growth 

plus reinvested dividends. The FTSE Small Cap index has been chosen because it provides a basis for comparison against companies in a relevant 

broad based equity index in which the Group would have been a constituent member if it had been on the full list of the London Stock Exchange 

for the whole measurement period. 

Share Price (p) 

250 

200 

150 

100 

50 

Apr-06 Oct-06 Apr-07 Oct-07 Apr-08 Oct-08 Apr-09 Oct-09 

Synergy Health 

FTSE 250 Ex Investment Trust 

D K Nichol 

Chairman of the Remuneration Committee 



Apr-10 Oct-10 Mar-11 

Source: Datastream 

Who we are 

Our strategy 



44 



Independent auditors’ report to the members of Synergy Health plc 

We have audited the financial statements of Synergy Health plc for the 

period ended 3 April 2011 set out on pages 45 to 89. The financial 

reporting framework that has been applied in the preparation of the 

Group financial statements is applicable law and International Financial 

Reporting Standards (IFRSs) as adopted by the EU. The financial 

reporting framework that has been applied in the preparation of the 

parent company financial statements is applicable law and UK 

Accounting Standards (UK Generally Accepted Accounting Practice). 

This report is made solely to the Company’s members, as a body, 

in accordance with Chapter 3 of Part 16 of the Companies Act 2006. 

Our audit work has been undertaken so that we might state to the 

Company’s members those matters we are required to state to them 

in an auditors’ report and for no other purpose. To the fullest extent 

permitted by law, we do not accept or assume responsibility to anyone 

other than the Company and the Company’s members, as a body, 

for our audit work, for this report, or for the opinions we have formed. 

Respective responsibilities of Directors and auditors 

As explained more fully in the Directors’ responsibilities statement set 

out on page 32, the Directors are responsible for the preparation of the 

financial statements and for being satisfied that they give a true and fair 

view. Our responsibility is to audit, and express an opinion on, the 

financial statements in accordance with applicable law and International 

Standards on Auditing (UK and Ireland). Those standards require us to 

comply with the Auditing Practices Board’s (APB’s) Ethical Standards 

for Auditors. 

Scope of the audit of the financial statements 

A description of the scope of an audit of financial statements is provided 

on the APB’s website at www.frc.org.uk/apb/scope/private.cfm. 

Opinion on financial statements 

In our opinion: 

•� The financial statements give a true and fair view of the state of the 

Group’s and of the Parent Company’s affairs as at 3 April 2011 and 

of the Group’s profit for the period then ended; 

•� The Group financial statements have been properly prepared in 

accordance with IFRSs as adopted by the EU; 

•� The Parent Company financial statements have been properly 

prepared in accordance with UK Generally Accepted Accounting 

Practice; and 

•� The financial statements have been prepared in accordance with the 

requirements of the Companies Act 2006; and, as regards the Group 

financial statements, Article 4 of the IAS Regulation. 

Opinion on other matters prescribed by the Companies Act 2006 

In our opinion: 

•� The part of the Directors’ remuneration report to be audited has been 

properly prepared in accordance with the Companies Act 2006; and 

•� The information given in the Directors’ report for the financial period 

for which the financial statements are prepared is consistent with the 

financial statements; and 

•� The information given in the Corporate Governance Statement set 

out on page 34, with respect to internal control and risk management 

systems in relation to financial reporting processes and about share 

capital structures, is consistent with the financial statements. 

Matters on which we are required to report by exception 

We have nothing to report in respect of the following: 

Under the Companies Act 2006 we are required to report to you if, 

in our opinion: 

•� Adequate accounting records have not been kept by the Parent 

Company, or returns adequate for our audit have not been received 

from branches not visited by us; or 

•� The Parent Company financial statements and the part of the 

Directors’ Remuneration Report to be audited are not in agreement 

with the accounting records and returns; or 

•� Certain disclosures of Directors’ remuneration specified by law are not 

made; or 

•� We have not received all the information and explanations we require 

for our audit; or 

•� A Corporate Governance Statement has not been prepared by the 

company. 

Under the Listing Rules we are required to review: 

•� The Directors’ statement, set out on page 34, in relation to going 

concern; 

•� Certain elements of the report to shareholders by the Board on 

Directors’ remuneration, and 

•� The part of the Corporate Governance Statement on page 34 relating 

to the Company’s compliance with the nine provisions of the June 

2008 Combined Code specified for our review. 

Wayne Cox (Senior Statutory Auditor) 

for and on behalf of KPMG Audit plc, Statutory Auditor 

Chartered Accountants 

St Nicholas House 

Park Row 

Nottingham 

NG1 6FQ 

7 June 2011

Consolidated income statement 

For the period ended 3 April 2011 

Note 

Before 

amortisation 

of acquired 

intangibles and 

non-recurring 

items 

£’000 

Amortisation 

of acquired 


non-recurring 

items 

(note 4) 

£’000 

2011 2010 

Total 

£’000 



Before 

amortisation 

of acquired 


non-recurring 

items 

£’000 

Amortisation 

of acquired 


non-recurring 

items 

(note 4) 

£’000 

Continuing operations 

Revenue 3 287,314 – 287,314 286,421 – 286,421 

Cost of sales (177,633) – (177,633) (182,736) – (182,736) 

Gross profit 109,681 – 109,681 103,685 – 103,685 

Administrative expenses 

– Administration expenses excluding amortisation 

of acquired intangibles (66,637) 3,278 (63,359) (63,943) (1,903) (65,846) 

– Amortisation of acquired intangibles – (6,265) (6,265) – (6,200) (6,200) 

Total 

£’000 

(66,637) (2,987) (69,624) (63,943) (8,103) (72,046) 

Operating profit 43,044 (2,987) 40,057 39,742 (8,103) 31,639 

Finance income 6 4,205 1,446 5,651 2,579 – 2,579 

Finance costs 7 (8,975) – (8,975) (9,687) – (9,687) 

Net finance costs (4,770) 1,446 (3,324) (7,108) – (7,108) 

Profit before tax 4 38,274 (1,541) 36,733 32,634 (8,103) 24,531 

Income tax 8 (8,686) 752 (7,934) (7,661) 5,289 (2,372) 

Profit for the year 29,588 (789) 28,799 24,973 (2,814) 22,159 

Attributable to: 

Equity holders of the parent 29,406 (789) 28,617 24,846 (2,814) 22,032 

Non-controlling interests 182 – 182 127 – 127 

29,588 (789) 28,799 24,973 (2,814) 22,159 

Earnings per share 

Basic 10 52.10p 40.56p 

Diluted 10 51.23p 39.90p 

Who we are 

Our strategy 


Governance 

Financials

46 



Consolidated statement of comprehensive income 


Profit for the year 28,799 22,159 

Other comprehensive income/(expense) for the year: 

Exchange differences on translation of foreign operations (2,647) (3,068) 

Cash flow hedges – derivative instrument effective portion 438 2,029 

Actuarial gain/(loss) on defined benefit pension plans 27 2,454 (6,695) 

Provision for deferred tax on defined benefit pension plans (932) 1,875 

Note 

2011 

£’000 

2010 

£’000 

(687) (5,859) 

Total comprehensive income for the year 28,112 16,300 

Attributable to: 

Equity holders of the parent 28,029 16,287 

Non-controlling interests 83 13 

28,112 16,300

Consolidated statement of financial position 

At 3 April 2011 

Non-current assets 

Goodwill 11 193,577 194,778 

Other intangible assets 12 39,380 44,119 

Property, plant and equipment 13 209,829 200,028 

Investment property 14 970 980 

Trade and other receivables 17 1,361 1,144 

Total non-current assets 445,117 441,049 

Current assets 

Inventories 16 13,513 12,717 

Trade and other receivables 17 48,673 47,162 

Cash and cash equivalents 38,781 6,275 

Total current assets 100,967 66,154 

Total assets 546,084 507,203 

Capital and reserves attributable to the Group’s equity holders 

Share capital 23 344 342 

Share premium account 63,531 62,344 

Translation reserve 45,438 47,986 

Cash flow hedging reserve (112) (550) 

Merger reserve 106,757 106,757 

Retained earnings 72,634 48,928 

Equity attributable to equity holders of the parent 288,592 265,807 

Non-controlling interest 644 561 

Total equity 289,236 266,368 

Current liabilities 

Interest-bearing loans and borrowings 18 139,414 12,998 

Trade and other payables 21 60,254 56,728 

Derivative financial instruments 112 550 

Current tax liabilities 9,539 5,308 

Short term provisions 22 375 631 

Total current liabilities 209,694 76,215 

Non-current liabilities 

Interest-bearing loans and borrowings 18 11,689 126,705 

Retirement benefit obligations 27 12,251 15,403 

Deferred tax liabilities 20 12,171 13,725 

Provisions 22 10,705 8,405 

Deferred government grants 338 382 

Total non-current liabilities 47,154 164,620 

Total liabilities 256,848 240,835 

Total equity and liabilities 546,084 507,203 

The consolidated financial statements on pages 45 to 80 were approved by the Board on 7 June 2011 and signed on its behalf by: 

R M Steeves G Hill 

Director Director 



Note 

2011 

£’000 

2010 

£’000 

Who we are 

Our strategy 


Governance 

Financials

48 



Consolidated cash flow statement 


Profit for the year 28,799 22,159 

Adjustments 54,932 54,340 

Cash generated from operations 83,731 76,499 

Income tax paid (6,262) (2,414) 

Net cash generated from operating activities 77,469 74,085 

Cash flows from investing activities 

Acquisition of subsidiary – net of cash 24 (1,560) – 

Purchases of property, plant and equipment (PPE) (37,599) (27,911) 

Purchase of intangible assets (569) (275) 

Proceeds from sale of PPE 1,293 1,047 

Receipt of government grants 63 63 

Interest received 2,856 112 

Net cash used in investing activities (35,516) (26,964) 

Cash flows from financing activities 

Dividends paid (7,838) (6,372) 

Proceeds from borrowings 90,531 4,261 

Repayment of borrowings (82,784) (35,634) 

Repayment of hire purchase loans and finance leases (3,880) (2,558) 

Interest paid (5,863) (7,560) 

Proceeds from issue of shares 1,189 1,469 

Net cash used in financing activities (8,645) (46,394) 

Net increase in cash and bank overdrafts 33,308 727 

Cash and bank overdrafts at beginning of period 6,275 5,542 

Exchange differences (802) 6 

Cash and bank overdrafts at end of period 38,781 6,275 

Cash generated from operations 

Profit for the period 28,799 22,159 

Adjustments for: 

– depreciation and impairments 33,799 33,665 

– amortisation of intangible assets 6,591 6,445 

– equity-settled share-based payments 1,088 1,506 

– loss/(gain) on sale of tangible fixed assets 156 (271) 

– finance income (5,651) (2,579) 

– finance costs 8,975 9,687 

– income tax expense 7,934 2,372 

Changes in working capital: 

– inventories (769) 153 

– trade and other receivables (1,332) (1,146) 

– trade, other payables and provisions 2,028 3,501 

Cash generated from recurring operations 81,618 75,492 

Increase in other payables from non-recurring items 2,113 1,007 

Cash generated from operations 83,731 76,499 

The comparative has been restated to reclassify interest paid from operating activities to financing activities. 

Note 

2011 

£’000 

2011 

£’000 

2010 

(restated) 

£’000 

2010 

£’000

Statement of changes in equity 

For the period 3 April 2011 

Share 

capital 

£’000 

Share 

premium 

£’000 

Merger 

reserve 

£’000 

Cash flow 

hedging 

reserves 

£’000 

Translation 

reserve 

£’000 

Retained 

earnings 

£’000 



Total 

attributable to 

equity holders 

of the parent 

£’000 

Non-controlling 

interest 

£’000 

Balance at 29 March 2009 

Consolidated statement of 

337 60,880 106,757 (2,579) 50,940 35,905 252,240 548 252,788 

comprehensive income – – – 2,029 (2,954) 17,212 16,287 13 16,300 

Dividends paid – – – – – (6,372) (6,372) – (6,372) 

Issue of shares 5 1,464 – – – – 1,469 – 1,469 

Share-based payments (net of tax) – – – – – 2,183 2,183 – 2,183 

Balance at 28 March 2010 

Consolidated statement of 

342 62,344 106,757 (550) 47,986 48,928 265,807 561 266,368 

comprehensive income – – – 438 (2,548) 30,139 28,029 83 28,112 

Dividends paid – – – – – (7,838) (7,838) – (7,838) 

Issue of shares 2 1,187 – – – – 1,189 – 1,189 

Share-based payments (net of tax) – – – – – 1,405 1,405 – 1,405 

Balance at 3 April 2011 344 63,531 106,757 (112) 45,438 72,634 288,592 644 289,236 

The cash flow hedging reserve of £112,000 debit (2010: £550,000 debit and 2009: £2,579,000 debit) represents the fair value gains and losses 

on hedging arrangements that are effective and qualify for cash flow hedge accounting. The brought forward reserve of £550,000 debit unwound 

during the year and revaluation of existing instruments at the balance sheet date gave rise to the closing reserve. 

The share-based payment credit of £1,405,000 (2010: £2,183,000) includes a debit of £211,000 (2010: credit £110,000) relating to deferred 

taxation and a credit of £481,000 (2010: credit £567,000) relating to current taxation. 

The accompanying accounting policies and notes form part of these financial statements. 

Total 

equity 

£’000 

Who we are 

Our strategy 


Governance 

Financials

50 



Notes to the consolidated financial statements 


1 General information 

Synergy Health plc (‘the Company’) and its subsidiaries (together ‘the Group’) deliver a range of specialist outsourced services to healthcare 

providers and other customers concerned with health management. The Company is registered in the United Kingdom under company 

registration number 3355631 and its registered office is Ground Floor Stella, Windmill Hill Business Park, Whitehill Way, Swindon, Wilts, SN5 6NX. 

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company 

(its subsidiaries) made up to the nearest weekend to 31 March each year. The current accounting period is 53 weeks in length 

(2010: 52 weeks in length). 

The financial statements are rounded to the nearest thousand pounds and have been prepared and approved by the Directors in accordance 

with International Financial Reporting Standards as adopted for use in the EU (‘IFRS’). The Company has elected to prepare its Parent Company 

financial statements in accordance with UK GAAP. These are presented on pages 81 to 89. 

2 Accounting policies 

Basis of accounting 

The Group financial statements have been prepared in accordance with IFRS and therefore comply with Article 4 of the EU IAS Regulation. 

Basis of consolidation 

Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain 

benefits from its activities. 

The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date 

of acquisition or up to the effective date of disposal, as appropriate. 

Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used in line with those 

used by the Group. 

All intra-Group transactions, balances, income and expenses are eliminated on consolidation. 

Jointly-controlled entities are those entities over whose activities the Group has joint control, established by contractual agreement. 

The consolidated financial statements include the Group’s proportionate share of the entities’ assets, liabilities, revenue and expenses, 

with items of a similar nature on a line-by-line basis, from the date that joint control commences until the date that joint control ceases. 

Measurement convention 

The financial statements are prepared on the historical cost basis except for derivative financial instruments, which are stated at their fair value 

through profit and loss. 

Going concern 

The Group’s business activities, together with the factors likely to affect its future development, performance and position are set out in the Chief 

Executive’s review, and the financial position of the Group and its cash flows and borrowing requirements are described in the Finance Director’s 

report, both of which are set out in the Business review section of the Annual Report. The Finance Director’s report and note 19 to the financial 

statements include the Group’s objectives, policies and processes for managing its capital, financial risks and hedging activities together with its 

exposure to credit and liquidity risks. 

The current global economic conditions create uncertainty particularly over the level of demand for the Group’s products, the price of its raw 

materials for certain business areas, and the carrying value of Group debt denominated in foreign currency. 

The Directors have reviewed the Group’s medium term forecasts through to June 2012 and beyond, along with reasonable possible changes 

in trading performance and foreign exchange rates arising from these uncertainties to determine whether the committed banking facilities are 

sufficient to support the Group’s projected liquidity requirements, and whether the forecast earnings are sufficient to meet the covenants associated 

with the banking facilities. 

The Group’s committed banking facilities are due for renewal in January 2012 and the Directors have good reasons to believe that they will 

be renewed. The Group is in advanced discussions with an identified club of banks in respect of new unsecured five year revolving credit facilities 

to replace the existing facility. The main points of the new multi-currency facilities agreement have been agreed and the legal documentation is 

being finalised. 

Business combinations 

From 28 March 2010 the Group has applied IFRS 3 Business combinations (revised) in accounting for business combinations. The acquisition 

of subsidiaries is accounted for using the purchase method. The cost of the acquisition is measured at the aggregate of the fair values, at the date 

of exchange, of assets given, liabilities incurred or assumed and equity instruments issued by the Group in exchange for control of the acquiree. 

The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition are recognised at their fair value at 

the acquisition date. Provisional fair value allocations are reviewed and if necessary adjusted no later than one year from the acquisition date. 

Costs relating to the acquisition, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with 

a business combination, are expensed as incurred.



2 Accounting policies continued 

Goodwill 

Goodwill arising on consolidation represents the excess of the cost of acquisition over the Group’s interest in the fair value of the identifiable assets 

and liabilities of a subsidiary at the date of acquisition. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less 

any accumulated impairment losses. 

Goodwill which is recognised as an asset is reviewed for impairment at least annually. Any impairment is recognised immediately in profit or loss 

and is not subsequently reversed. 

For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating units expected to benefit from the synergies of 

the combination. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently where there is 

an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the 

impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to other assets of the unit pro rata on 

the basis of the carrying amount of each asset in the unit. 

On disposal of a subsidiary, the attributable goodwill is included in the determination of the profit or loss on disposal. 

Goodwill arising on acquisitions before the date of transition to IFRS has been retained at the previous UK GAAP amounts subject to being tested 

for impairment at that date. 

Intangible assets 

Intangible assets that are acquired by the Group are initially capitalised at fair value as at the date of the acquisition, and subsequently stated at 

cost less accumulated amortisation and impairment losses. 

Amortisation is charged to the income statement on a straight-line basis over the estimated useful lives of intangible assets unless such lives are 

indefinite. Intangible assets with an indefinite useful life are systematically tested for impairment at each balance sheet date. Intangible assets with 

a finite life are tested for impairment if there is indication of impairment. Intangible assets are amortised from the date they are available for use. 

The estimated useful lives of the identified intangible assets are as follows: 

Customer-related intangibles 5–15 years 

Trade names 10 years 

Costs incurred in setting up long term agreements are capitalised as intangible assets and amortised over the life of the contract to which the costs 

relate. Technology licences are amortised from the date that they generate economic benefit and over the period of that benefit. 

Revenue recognition 

Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services 

provided in the normal course of business, net of discounts, VAT and other sales related taxes. 

The principal activity of the Group is the provision of services but sometimes goods are also supplied, usually as part of a service offering. Revenue 

is recognised once the service has been completed and the Group has transferred the significant risks and rewards of ownership of the goods to 

the buyer. The Group does not participate in activities which need to be accounted for under long term contract accounting rules. 

Finance charges and income 

Interest charges and income are accounted for on an accruals basis. Financing transaction costs that relate to financial liabilities are charged 

to interest expense by reference to the effective interest rate method and are recognised within the carrying value of the related financial liability 

on the balance sheet. Fees paid for the arrangement of credit facilities are recognised through the finance expense over the term of the facility. 

Where assets or liabilities on the Group balance sheet are carried at net present value, the increase in the amount due to unwinding the 

discount is recognised as a finance expense or finance income as appropriate. 

Leasing 

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. 

All other leases are classified as operating leases. 

Assets held under hire purchase contracts are recognised as assets of the Group at their fair value or, if lower, the present value of the minimum 

lease payments, each determined at the inception of the lease. The corresponding liability to the lessor is included in the balance sheet as 

a finance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve 

a constant rate of interest on the remaining balance of the liability. 

Rentals payable under operating leases are charged to income on a straight-line basis over the term of the relevant lease. 

Benefits received and receivable as an incentive to enter into an operating lease are also spread on a straight-line basis over the lease term. 

Foreign currencies 

The individual financial statements of each Group company are presented in the currency of the primary economic environment in which 

it operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each Group 

company are expressed in pounds Sterling, which is the functional currency of the Company, and the presentation currency for the consolidated 

financial statements. 

Who we are 

Our strategy 


Governance 

Financials

52 





In preparing the financial statement of the individual companies, transactions in currencies other than the entity’s functional currency (foreign 

currencies) are recorded at rates of exchange prevailing at the dates of the transactions. At each balance sheet date, monetary assets and liabilities 

that are denominated in foreign currencies are retranslated at the rates prevailing on the balance sheet date. Non-monetary items that are 

measured in terms of historical cost in a foreign currency are not retranslated. 

Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are included in profit or loss for 

the period. 

In order to manage its exposure to certain foreign exchange risks, the Group enters into forward contracts and options (see below for the details 

of the Group’s accounting policies in respect of such derivative financial instruments). 

For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign operations are translated at 

exchange rates prevailing on the balance sheet date. Income and expense items are translated at the average exchange rates for the period, 

unless exchange rates fluctuate significantly during that period, in which case the exchange rates at the date of transactions are used. Exchange 

differences arising, if any, are classified as equity and transferred to the Group’s translation reserve. Such translation differences are recognised 

as income or expenses in the period in which the operation is disposed of. 

Borrowing costs 

Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a 

substantial period of time to get ready for their intended use, are added to the cost of those assets until such time as the assets are substantially 

ready for their intended use. 

Government grants 

Government grants towards staff retraining costs are recognised as income over the periods necessary to match them with the related costs and 

are deducted in reporting the related expense. 

Government grants relating to property, plant and equipment are treated as deferred income and released to profit or loss over the expected useful 

lives of the assets concerned. 

Operating profit 

Operating profit is stated before investment income and finance costs and before any profit/losses on business disposals. 

Retirement benefit costs 

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due. Payments made to state-managed 

retirement benefit schemes are dealt with as payments to defined contribution schemes where the Group’s obligations under the schemes are 

equivalent to those arising in a defined contribution retirement benefit scheme. 

For defined benefit schemes, the cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuations being 

carried out at each balance sheet date. Actuarial gains and losses are recognised in full in the period in which they occur, and presented in the 

Statement of comprehensive income. 

Past service cost is recognised immediately to the extent that the benefits are already vested, and otherwise is amortised on a straight-line basis 

over the average period until the benefits become vested. 

The retirement benefit obligation recognised in the balance sheet represents the present value of the defined benefit obligation as adjusted for 

unrecognised past service cost, and as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to past 

service cost, plus the present value of available refunds and reductions in future contributions to the scheme. 

Tax 

The tax expense represents the sum of the tax currently payable and deferred tax. 

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported in the income statement because it 

excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. 

The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. 

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial 

statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the liability method. Deferred tax 

liabilities are recognised for taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits 

will be available against which deductible temporary differences can be utilised. 

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and joint ventures except where the 

Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable 

future. Deferred tax is not recognised on taxable temporary differences arising on the initial recognition of goodwill or for temporary differences 

arising from the initial recognition of assets and liabilities in a transaction that is not a business combination and that affect neither accounting nor 

taxable profit. 

Deferred tax is calculated at the tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax is charged or 

credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt 

with in equity.




Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and 

when they relate to income taxes levied by the same tax authority and the Group intends to settle its current tax assets and liabilities on a net basis. 

Property, plant and equipment 

Land and buildings held for use in the production or supply of services or goods, or for administrative purposes, are stated in the balance sheet at 

their book value, being cost less any subsequent accumulated depreciation and subsequent accumulated impairment losses. 

Fixtures and equipment are stated at cost less accumulated depreciation and any recognised impairment loss. 

Land is not depreciated. Depreciation is charged so as to write off the cost over their estimated useful lives, using the straight-line method (with the 

exception of cobalt), on the following bases: 

Freehold property 50 years 

Leasehold improvements Period of lease 

Plant and machinery 3–20 years 

Office equipment 3–5 years 

Cobalt 15 years 

Circulating inventory 1–5 years 

Assets in the course of construction are not depreciated. Assets held under finance leases are depreciated over their expected useful lives on the 

same basis as owned assets or, where shorter, over the term of the relevant lease. 

Cobalt is depreciated over 15 years as follows. The reducing balance is used for the first eight years. The residual net book value at the end of year 

eight is then depreciated on a straight-line basis over the remaining seven years of the asset’s useful life. Potential decommissioning costs are 

capitalised and amortised over the estimated residual working life of the cobalt on a straight-line basis. A corresponding provision is recognised 

in the balance sheet. Circulating inventory mainly comprises linen textile assets provided to customers on a rental service basis. 

Impairment of tangible and intangible assets excluding goodwill 

At each balance sheet date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any 

indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in 

order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, 

the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. An intangible asset with an indefinite useful life 

is tested for impairment annually and whenever there is an indication that the asset may be impaired. 

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are 

discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks 

specific to the asset for which the estimates of future cash flows have not been adjusted. 

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset 

(cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately. 

Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate 

of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined 

had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised as 

income immediately. 

Investment property 

Investment properties are properties (land and buildings) which are held either to earn rental income or for capital appreciation or for both. 

Investment properties are stated at cost less accumulated depreciation. Depreciation is charged so as to write off the cost of the buildings 

over 50 years. Land is not depreciated. 

Inventories 

Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials and, where applicable, direct labour costs and 

those overheads that have been incurred in bringing the inventories to their present location and condition. Net realisable value represents the 

estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution. 

Financial instruments 

Financial assets and financial liabilities are recognised on the Group’s balance sheet when the Group becomes a party to the contractual provisions 

of the instrument. 

Who we are 

Our strategy 


Governance 

Financials

54 





Trade receivables Trade receivables are non-derivative financial assets which arise when the Group provides goods or services directly to a third 

party, and where there is no intention of trading the financial asset. The receivables are initially recognised at fair value. They are subsequently 

measured at amortised cost using the effective interest method, less provision for impairment. Any change in their value through impairment 

or reversal of impairment is recognised in the income statement. 

Provision against trade receivables is made when objective evidence is received that the Group will not be able to collect all amounts due to it in 

accordance with the original terms of those receivables. The amount of the write down is determined as the difference between the asset’s carrying 

amount and the present value of estimated future cash flows. 

Cash and cash equivalents Cash and cash equivalents comprise cash on hand and demand deposits, and other short term highly liquid 

investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. 

Overdrafts that are repayable on demand and form an integral part of the Group’s cash management are netted off against cash. 

Financial liabilities and equity instruments Financial liabilities and equity instruments are classified according to the substance of the contractual 

arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of 

its liabilities. 

Bank borrowings Interest-bearing bank loans and overdrafts are initially recorded at fair value, net of direct issue costs. Finance charges, including 

premiums payable on settlement or redemption and direct issue costs, are accounted for on an accrual basis in profit or loss using the effective 

interest rate method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise. 

Trade payables Trade payables are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest 

rate method. 

Equity instruments Equity instruments issued by the Company are recorded at the proceeds received net of direct issue costs. 

Derivative financial instruments and hedge accounting The Group’s activities expose it to the financial risks of changes in foreign currency 

exchange rates and interest rates. The Group uses floating to fixed interest rate swaps and foreign exchange forward contracts to manage these 

exposures. Some of these contracts are designated as cash flow hedges under IAS 39. The Group does not use derivative financial instruments 

for speculative purposes. Derivative financial instruments are measured at fair value. 

Changes in the fair value of derivative financial instruments that are designated and effective as hedges of future cash flows or against net 

investment in overseas subsidiaries are recognised directly in equity and any ineffective portion is recognised immediately in the income statement. 

If the cash flow hedge of a firm commitment or forecasted transaction results in the recognition of a non-financial asset or liability, then, at the time 

the asset or liability is recognised, the associated gains or losses on the derivative that had previously been recognised in equity are included in the 

initial measurement of the asset or liability. For hedges that do not result in the recognition of an asset or a liability, amounts deferred in equity are 

recognised in the income statement in the same period in which the hedged item affects net profit or loss. 

Changes in the fair value of derivative financial instruments that do not qualify for hedge accounting are recognised in the income statement as 

they arise. 

Hedge accounting is discontinued when the hedging instrument expires, or is sold, terminated, or exercised, or no longer qualifies for hedge 

accounting. At that time any cumulative gain or loss on the hedging instrument recognised in equity is retained in equity until the forecasted 

transaction occurs. If a hedged transaction is no longer expected to occur, the net cumulative gain or loss recognised in equity is transferred to the 

income statement. 

Derivatives embedded in other financial instruments or other host contracts are treated as separate derivatives when their risks and characteristics 

are not clearly related to those of the host contracts and the host contracts are not carried at fair value, with gains or losses reported in the income 

statement. 

Provisions 

Provisions are recognised when the Group has a present obligation as a result of a past event, and it is probable that the Group will be required to 

settle that obligation. Provisions are measured at the Directors’ best estimate of the expenditure required to settle the obligation at the balance sheet 

date, and are discounted to present value where appropriate. 

Share-based payments 

The Group has applied the requirements of IFRS 2 Share-based payments. In accordance with the transitional provisions, IFRS 2 has been applied 

to all grants of equity instruments after 7 November 2002 that were unvested at 3 April 2005. 

The Group issues equity-settled share-based payments to certain employees. Equity-settled share-based payments are measured at fair value 

(excluding the effect of non-market-based vesting conditions) at the date of grant. The fair value determined at the grant date of the equity-settled 

share-based payments is expensed on a straight-line basis over the vesting period, based on the Group’s estimate of shares that will eventually vest 

and adjusted for the effect of non-market-based vesting conditions. 

Fair value is measured by use of a Black-Scholes model, except for the Long-Term Incentive Plan awards which are subject to a Total Shareholder 

Return performance condition where a model following similar principles to the Monte Carlo approach is used. The expected life used in the model 

has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioural 

considerations.




Critical accounting estimates and judgements 

The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect 

the application of policies and reported amounts of assets and liabilities, income and expenses. Where estimates and associated assumptions are 

made they are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of 

which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. 

Actual results may differ from these estimates. 

The estimates and underlying assumptions are reviewed on an ongoing basis. Key areas of estimate uncertainty are set out below. 

•� In relation to the Group’s cobalt provision, costs of future disposal are based on contractual arrangements with third parties and latest disposal 

cost estimates. 

•� The Group cobalt depreciation policy is based on the actual physical decay of the cobalt 60 isotope. 

•� In relation to the Group’s property, plant and equipment (note 13), useful economic lives and residual values of assets have been established 

using historical experience and an assessment of the nature of the assets involved. 

•� Impairment tests have been undertaken with respect to goodwill (note 11) using commercial judgement and a number of assumptions and 

estimates have been made to support their carrying amounts. 

•� In relation to the Group’s defined benefit pension schemes, actuarial assumptions are established using relevant market benchmark data and 

with the advice of external qualified actuaries. 

•� In relation to compensation received from third parties for insurance receipts, it can be uncertain how the amount received relates to specific 

items of property, plant and equipment that were impaired, lost or given up. 

Adoption of new standards: 

In the current year, the Group has adopted the following new standards and interpretations: 

•� IFRS 3 Business combinations (revised), IFRIC 16 Hedges of a net investment in a foreign operation, and consequential amendments to IAS 27 

‘Consolidated and separate financial statements’ and IAS 31 ‘Interests in Joint Ventures’. 

The following new standards, amendments to standards or interpretations must be applied for the first time by the Group for the period ending 

3 April 2011 but are not currently relevant: 

•� Amendments to IFRS 2 Group cash-settled share-based payment transactions. 

•� Amendments to IAS 32 Rights of issue. 

•� Amendments to IAS 39 Embedded derivatives. 

•� IFRIC 15 Agreements for the construction of real estate. 

•� IFRIC 17 Distribution of non-cash assets to owners. 

•� IFRIC 18 Transfers of assets from customers. 

•� IAS 28 Investments in associates. 

In addition to the above, amendments to a number of standards under the annual improvements project to IFRS, which are mandatory for the 

period ending 3 April 2011, have been adopted in the year. None of these amendments has had a material impact on the Group’s financial 

statements. 

The following standards and interpretations have been published, endorsed by the EU, and are available for early adoption but have not yet been 

applied by the Group in these financial statements: 

•� IFRIC 19 Extinguishing financial liabilities with equity instruments – deals with how entities should measure equity instruments issued in a debt 

for equity swap. It addresses the accounting for such a transaction by the debtor only. 

•� IAS 24 Related parties – effective for periods commencing on or after 1 January 2011 – provides an exemption to all government related entities, 

which is not applicable to the Group, however the revised standard also amends the definition of a related party, which will be applicable. 

Management is currently assessing the impact of these standards and interpretations on the financial statements. These amendments and the 

new standards are not expected to impact the Group significantly, although additional disclosure may be required. 

Who we are 

Our strategy 


Governance 

Financials

56 




3 Segmental information 

The Group is organised into three operating segments, and information on these segments is reported to the chief operating decision maker 

(‘CODM’) for the purposes of resource allocation and assessment of performance. The chief operating decision maker has been identified as the 

Board of Directors. These three operating segments are: the UK and Ireland, Europe and Middle East, and Asia and Africa. Subsequent to the 

balance sheet date, the Americas was created as a fourth operating segment, due to the acquisition of BeamOne. 

The segments derive their revenues from the same range of products and services – being the provision of healthcare services, medical device 

sterilisation services, and hospital sterilisation services. The CODM monitors the performance of the operating segments based on adjusted 

operating profit, being operating profit excluding the impact of amortisation on acquired intangibles and non-recurring items. 

Segment information about these divisions is presented below: 


2011 

£’000 

Europe and 

Middle East 

2011 

£’000 


2011 

£’000 

Revenue from external customers 154,916 118,764 13,634 287,314 

Segment profit 25,010 20,548 2,708 48,266 

Segment depreciation 14,014 16,427 3,358 33,799 

Segment assets 260,180 207,485 78,419 546,084 

The comparative figures for the previous year are shown below: 


2010 

£’000 

Europe and 

Middle East 

2010 

£’000 


2010 

£’000 

Revenue from external customers 158,034 117,426 10,961 286,421 

Segment profit 23,327 17,769 2,165 43,261 

Segment depreciation 12,612 16,560 2,726 31,898 

Segment assets 234,491 203,128 69,584 507,203 

The table below reconciles the total segment profit above, to the Group’s operating profit and profit before tax: 

Total segment profit 

Unallocated amounts: 

48,266 43,261 

– Corporate expenses (5,222) (3,519) 

– Non-recurring costs 3,278 (1,903) 

Amortisation of acquired intangibles (6,265) (6,200) 

Operating profit 40,057 31,639 

Net finance costs (3,324) (7,108) 

Profit before tax 36,733 24,531 

The table below analyses the Group’s revenues from external customers between the three principal product/service groups: 

Healthcare solutions 160,380 174,631 

Hospital sterilisation services 56,860 50,004 

Medical device sterilisation services 70,074 61,786 

287,314 286,421 

IFRS 8 Operating segments requires the Group to disclose information about the extent of its reliance on its major customers. The Group has no 

single customer making up more than 10% of total revenues. 

2011 

£’000 

2011 

£’000 

Total 

2011 

£’000 

Total 

2010 

£’000 

2010 

£’000 

2010 

£’000

3 Segmental information continued 

The table below analyses the Group’s revenues from external customers, and non-current assets other than financial instruments, investment 

properties, deferred taxation and rights under insurance, by geography: 

Revenue 

£’000 

2011 2010 

Non-current 

assets 

£’000 

Revenue 

£’000 

Non-current 

assets 

£’000 

UK 141,732 146,926 146,394 143,785 

Netherlands 104,547 135,312 106,145 142,034 

Rest of World 41,035 161,909 33,882 154,250 

287,314 444,147 286,421 440,069 

4 Profit before tax 

Profit before tax has been arrived at after charging/(crediting): 



Release of government grants received (107) (61) 

Depreciation of property, plant and equipment 33,799 31,898 

Depreciation of investment property 10 10 

Amortisation of acquired intangibles 6,265 6,200 

Amortisation of purchased intangible assets 326 245 

Cost of inventories recognised as expense 39,858 48,936 

Staff costs (note 5) 113,487 105,860 

Foreign exchange gains (190) (280) 

Auditors’ remuneration for audit services 362 344 

Non-recurring items of £3,278,000 (2010: £1,903,000 charge) have been credited in arriving at operating profit. The table and accompanying 

notes provide further details: 

Costs incurred on the acquisition of businesses 889 

Gain (net of costs) on legal case (4,167) 

(3,278) 

Transaction costs incurred on the acquisition of businesses have been recognised in the income statement. These costs relate primarily to the 

acquisition of GSP in late 2010 and BeamOne, which completed just after the year end. These acquisitions are disclosed in more detail in notes 24 

and 29 respectively. 

During the year the Group received a summary court judgment in our favour relating to an insurance claim arising from a fire at our Dunstable 

facility in early 2007. The non-recurring gain of £4,167,000 reflects the recognition of insurance proceeds received, less costs associated with the 

claim and final additional costs of working not previously written down. 

In addition to the above, a non-recurring credit of £1,446,000 (2010: £nil) relating to court awarded interest on the Dunstable insurance case has 

been recognised in finance income. 

The total impact of non-recurring items on profit after tax is a credit of £3,153,000. 

In the prior year, non-recurring items of £1,903,000 were charged in arriving at operating profit. The table and accompanying notes provide 

further details: 

Partial closure of Harwell sterilisation plant 

£’000 

609 

Closure of a UK linen management facility 400 

Closure of Dutch treasury operation 252 

Other restructuring costs 642 

1,903 

2011 

£’000 

2010 

£’000 

£’000 

Who we are 

Our strategy 


Governance 

Financials

58 




4 Profit before tax continued 

The costs associated with closing a UK linen management facility increased on the amounts reported in 2009, due to the deterioration in the 

UK commercial property market. The costs included future liabilities under the property lease. The costs associated with the partial closure of the 

Harwell medical device sterilisation facility include staff redundancy costs, decommissioning costs, and future liabilities under the property lease. 

Both closures are part of a programme of cost rationalisation in the UK business. 

Other restructuring costs were incurred to generate ongoing reductions in the operating cost base in order to restore operating margins throughout 

the Group’s businesses. 

In the prior year we also recognised a non-recurring tax credit of £3,020,000. This relates to a tax credit received on a foreign exchange movement 

on inter-company Sterling borrowings within a Euro-denominated legal entity. Tax clearances have been received by the Dutch and UK authorities, 

and we have also received the associated repayment. The foreign exchange movement on which the tax credit was derived was taken direct to 

equity in accordance with applicable international accounting standards. 

The total impact of non-recurring items to profit after tax in the prior year was a credit of £1,700,000. 

A more detailed analysis of auditors’ remuneration is provided below: 

Audit services 

– audit of these financial statements 62 62 

– audit of financial statements of subsidiaries 300 282 

362 344 

– audit-related regulatory reporting 18 2 

– other services 58 18 

5 Staff costs 

The average number of monthly employees employed by the Group during the year, including executive Directors, was as follows: 

Production 3,632 3,485 

Selling and distribution 101 85 

Administration 568 427 

Their aggregate remuneration comprised: 

4,301 3,997 

Wages and salaries 97,363 89,134 

Social security costs 11,166 9,887 

Share-based payments 1,088 1,674 

Other pension costs 3,870 5,165 

6 Finance income 

113,487 105,860 

Interest on bank deposits 1,410 463 

Expected return on defined benefit pension plan assets 2,795 2,116 

Interest on insurance receipts 1,446 – 

5,651 2,579 

2011 

£’000 

2011 

Number 

2011 

£’000 

2011 

£’000 

2010 

£’000 

2010 

Number 

2010 

£’000 

2010 

£’000

7 Finance costs 



On bank loans and overdrafts 4,683 6,375 

Finance charges in respect of hire purchase loans 720 578 

Other interest payable and similar charges 131 100 

Total external borrowing costs 5,534 7,053 

Unwinding of discount on provisions 266 111 

Interest on defined benefit plan obligations 3,175 2,729 

Total financing cost 8,975 9,893 

Less: amounts included in the cost of qualifying assets – (206) 

8,975 9,687 

During the previous year, borrowing costs on specific and general borrowings were included in the cost of qualifying assets. An average 

capitalisation rate of 5.3% was applied to expenditure on such assets. 

8 Tax 

Current tax: 

UK tax 4,598 4,297 

Overseas tax 6,375 2,649 

Adjustment in respect of prior years (233) (3,299) 

Total current tax 

Deferred tax: 

10,740 3,647 

Origination and reversal of temporary differences (109) (493) 

Adjustment in respect of prior years (1,856) (782) 

Effect of rate change (841) – 

Total deferred tax (2,806) (1,275) 

Total tax in income statement 7,934 2,372 

UK corporation tax is calculated at 28% (2010: 28%) of the estimated assessable profit for the year. Taxation for overseas operations is calculated 

at the local prevailing rates. 

On 23 March 2011 the Chancellor announced the reduction in the main rate of UK corporation tax to 26% with effect from 1 April 2011. 

This change became substantively enacted on 29 March 2011 and therefore the effect of the rate reduction creates a reduction in the deferred 

tax liability which has been included in the figures above. 

The charge for the year can be reconciled to the profit before tax per the income statement as follows: 

Profit before tax 36,733 24,531 

Tax at the UK corporation tax rate of 28% (2010: 28%) 

Effect of: 

10,285 6,869 

Expenses not deductible for tax purposes 866 108 

Different tax rates on overseas earnings (1,096) (942) 

Overseas withholding tax – 113 

Adjustment in respect of prior years (2,090) (4,140) 

Effect of change in UK corporation tax rate (633) – 

Previously unrecognised unused tax losses 602 364 

Tax charge for year 7,934 2,372 

The adjustment in respect of prior years in 2010 includes a non-recurring tax credit of £3,020,000. This relates to a tax credit received on a foreign 

exchange movement on inter-company Sterling borrowings within a Euro-denominated legal entity. Tax clearances have been received by the 

Dutch and UK authorities; we have also received the associated repayment. 

2011 

£’000 

2011 

£’000 

2011 

£’000 

2010 

£’000 

2010 

£’000 

2010 

£’000 

Who we are 

Our strategy 


Governance 

Financials

60 




9 Dividends 

Amounts recognised as distributions to equity holders in the period: 

Final dividend for the year ended 29 March 2009 of 6.8p per share – 3,696 

Second interim dividend for the year ended 28 March 2010 of 8.3p per share 4,540 – 

Interim dividend for the period ended 3 April 2011 of 6.0p (2010: 4.9p) per share 3,298 2,676 

7,838 6,372 

The Group paid a second interim dividend on 1 April 2010, in lieu of a final dividend for the year ended 28 March 2010. The Board of Directors 

will recommend to the shareholders a final dividend in respect of the period ended 3 April 2011 of 9.84p. 

10 Earnings per share 

Earnings 

Earnings for the purposes of basic earnings per share being net profit attributable to equity holders of the parent 28,617 22,032 

Number of shares 

Weighted average number of ordinary shares for the purposes of basic earnings per share 

Effect of dilutive potential ordinary shares: 

54,923 54,318 

Share options 940 903 

Weighted average number of ordinary shares for the purposes of diluted earnings per share 

Earnings per ordinary share 

55,863 55,221 

Basic 52.10p 40.56p 

Diluted 51.23p 39.90p 

2011 

£’000 

2011 

£’000 

Shares 

’000 

2010 

£’000 

2010 

£’000 

Shares 

’000 

£’000 £’000 

Adjusted earnings per share 

Operating profit 40,057 31,639 

Amortisation of acquired intangible assets 6,265 6,200 

Non-recurring items (3,278) 1,903 

Adjusted operating profit 43,044 39,742 

Net finance costs (4,770) (7,108) 

Adjusted profit on ordinary activities before taxation 38,274 32,634 

Taxation on adjusted profit on ordinary activities (8,686) (7,661) 

Non-controlling interest (182) (127) 

Adjusted net profit attributable to equity holders of the parent 29,406 24,846 

Adjusted basic earnings per share 53.54p 45.74p 

Adjusted diluted earnings per share 52.64p 44.99p

11 Goodwill 

Cost and carrying amount 

At 29 March 2009 197,114 

Exchange differences (2,336) 

At 28 March 2010 194,778 

Exchange differences (1,858) 

Recognised on acquisition of businesses 657 

At 3 April 2011 193,577 

Goodwill acquired on a business combination is allocated, at acquisition, to the cash-generating units (‘CGUs’) that are expected to benefit 

from that business combination. The carrying amount of goodwill has been allocated as shown in the table below. This table also provides the 

assumptions used by management in assessing the carrying value of these amounts. Goodwill arising on the acquisition of Gamma Service 

Produktbestrahlung GmbH during the year (note 24) has been allocated to the Rest of Europe sterilisation services segment. 

Pre-tax 

discount 

rate 

(%) 

Long term 

growth 

rates 

(%) £’000 



£’000 

2011 2010 

Pre-tax 

discount 

rate 

(%) 

Long term 

growth 

rates 

(%) £’000 

UK segment 

Healthcare solutions 9.4 2–5 23,556 10.6 2–5 23,156 

Hospital sterilisation services 9.2 5 4,654 10.4 5 4,654 

Medical device sterilisation services 

Rest of Europe segment 

9.1 5 32,586 10.3 5 33,185 

Healthcare solutions 8.9 3–4 29,314 10.1 3–4 29,928 

Medical device sterilisation services 8.6 5 79,992 9.8 5 80,825 

Rest of World (a single CGU) 8.9 5 23,475 10.1 8 23,030 

193,577 194,778 

The Group tests goodwill annually for impairment, or more frequently if there are indications that goodwill might be impaired. An impairment test is 

a comparison of the carrying value, of the assets of a CGU, to their recoverable amount based on a value in use calculation. Where the recoverable 

amount is less than the carrying value, an impairment results. During the year the goodwill for each CGU was separately assessed and tested for 

impairment, with £nil (2010: £nil) impairment charges resulting. 

As part of testing goodwill for impairment, detailed forecasts of operating cash flows for a period of five years are derived from the most recent 

financial forecasts approved by management. Cash flows for the period beyond the financial forecasts are extrapolated based on estimates of future 

growth rates as disclosed above. For each CGU the future growth rates used in the recoverable amount calculation do not exceed the long term 

average growth rates for the markets to which the CGU is dedicated. 

A number of key assumptions are used as part of impairment testing. These key assumptions are made by management reflecting past experience 

combined with their knowledge as to future performance and relevant external sources of information. 

In determining the recoverable amount of each CGU the key assumptions are discount rate, long term growth rate, future sales prices and 

volumes, new business won and the cost structure of each business. 

Sensitivity analysis as at 3 April 2011 has indicated that no reasonable foreseeable change in the key assumptions used in the impairment model 

will result in a significant impairment charge being recorded in the financial statements. 

Who we are 

Our strategy 


Governance 

Financials

62 




12 Other intangible assets 

Trade 

name 

£’000 

Customer 

contracts and 

relationships 

£’000 

Cost 

At 29 March 2009 9,635 56,132 2,791 68,558 

Exchange differences (72) (849) – (921) 

Additions – – 275 275 

At 28 March 2010 9,563 55,283 3,066 67,912 


Additions – – 569 569 

Acquired on acquisition of businesses – 1,767 – 1,767 

At 3 April 2011 9,489 56,513 3,635 69,637 

Amortisation 

At 29 March 2009 2,470 14,372 656 17,498 

Exchange differences 2 (152) – (150) 

Charge for the year 971 5,229 245 6,445 

At 28 March 2010 3,443 19,449 901 23,793 


Charge for the year 970 5,295 326 6,591 

At 3 April 2011 4,404 24,626 1,227 30,257 

Carrying Amount 

At 3 April 2011 5,085 31,887 2,408 39,380 

At 28 March 2010 6,120 35,834 2,165 44,119 

At 29 March 2009 7,165 41,760 2,135 51,060 

Amortisation of intangible assets is included in administrative expenses in the income statement. 

Other 

£’000 

Total 

£’000

13 Property, plant and equipment 

Freehold and 

long leasehold 

property 

£’000 

Short 

leasehold 

property 

£’000 

Plant, 

machinery 

and office 

equipment 

£’000 

Cobalt 

£’000 



Circulating 

inventory 

£’000 

Assets in 

course of 

construction 

£’000 

Cost 

At 29 March 2009 63,744 6,997 130,265 62,472 48,950 20,698 333,126 

Additions 3,028 88 10,088 5,182 10,356 668 29,410 

Exchange differences (1,011) – (2,082) (233) (1,253) (794) (5,373) 

Disposals (3,667) (6) (10,307) (3,661) (16,560) (49) (34,250) 

Transfers 6,438 – 6,764 – – (13,202) – 

At 28 March 2010 68,532 7,079 134,728 63,760 41,493 7,321 322,913 

Additions 445 5,212 12,207 9,707 10,486 421 38,478 

Acquisitions 1,884 – 4,125 2,343 – – 8,352 

Exchange differences (1,086) – (1,376) (629) (615) (219) (3,925) 

Disposals (1,167) (6) (5,174) (3,119) (13,182) (22,648) 

Transfers (158) – 693 (20) 691 (2,074) (868) 

At 3 April 2011 68,450 12,285 145,203 72,042 38,873 5,449 342,302 

Accumulated depreciation and impairment 

At 29 March 2009 14,866 1,454 58,561 19,468 31,083 – 125,432 

Charge for the year 2,237 714 11,886 5,944 11,117 – 31,898 

Exchange differences (504) – (1,499) (295) (883) – (3,181) 

Disposals (1,823) (5) (9,595) (3,642) (16,199) – (31,264) 

At 28 March 2010 14,776 2,163 59,353 21,475 25,118 – 122,885 

Charge for the year 2,414 2,153 12,195 6,640 10,397 – 33,799 

Exchange differences (312) – (834) (567) (462) – (2,175) 

Disposals (331) – (4,819) (2,863) (13,155) – (21,168) 

Transfers 566 – (1,434) – – – (868) 

At 3 April 2011 17,113 4,316 64,461 24,685 21,898 – 132,473 

Carrying amount 

At 3 April 2011 51,337 7,969 80,742 47,357 16,975 5,449 209,829 

At 28 March 2010 53,756 4,916 75,375 42,285 16,375 7,321 200,028 

At 29 March 2009 48,878 5,543 71,704 43,004 17,867 20,698 207,694 

The carrying amount of the Group’s plant and equipment includes an amount of £12.2 million (2010: £13.6 million) in respect of assets held 

under hire purchase loan contracts. 

The Group has pledged land and buildings having a carrying amount of approximately £13.9 million (2010: £18.8 million) to secure banking 

facilities and other loans granted to the Group. 

At 3 April 2011, the Group had entered into contractual commitments for the acquisition of property, plant and equipment amounting to 

£8.0 million (2010: £8.0 million). 

Included in the cost of property, plant and equipment is £805,000 (2010: £805,000) of capitalised interest. 

Total 

£’000 

Who we are 

Our strategy 


Governance 

Financials

64 




14 Investment property 

Cost 

At 29 March 2009, 28 March 2010 and 3 April 2011 

Accumulated depreciation 

1,000 

At 29 March 2009 10 

Charge for the year 10 

At 28 March 2010 20 

Charge for the year 10 


Carrying amount 

30 

At 3 April 2011 970 

At 28 March 2010 980 

At 29 March 2009 990 

Based on discussions with the Group’s professional advisors, the Directors estimate the fair value of the investment property to be £1,000,000 

(2010: £1,000,000). 

15 Interest in jointly-controlled entity 

As part of the acquisition of Isotron plc and its group in 2007, the Group obtained a 50% interest in a jointly-controlled entity, Isotron Logistics BV, 

whose principal activity is the provision of logistics consultancy. This jointly-controlled entity is incorporated and operates in the Netherlands and is 

proportionately consolidated into the Group financial statements on a line-by-line basis. Included in the consolidated financial statements are the 

following items that represent the Group’s interests in the assets, liabilities, revenue and expenses of the jointly-controlled entity: 

Current assets 117 131 

Current liabilities (48) (81) 

Net assets 69 50 

Income 481 453 

Expenses (including interest and tax) (401) (397) 

Profit from operations 80 56 

16 Inventories 

Raw materials 3,284 2,965 

Work-in-progress 94 127 

Finished goods 8,386 7,958 

Process consumables 1,749 1,667 

13,513 12,717 

The value of stock recognised as cost of sales is shown in note 4. The write down of inventories to net realisable value amounted to £96,000 

(2010: £124,000). The write down is included in cost of sales. 

17 Trade and other receivables 

Current 

Amounts receivable for the sale of goods and services 43,000 40,051 

Other receivables 1,907 3,361 

Prepayments and accrued income 3,766 3,750 

Non-current 

48,673 47,162 

Prepayments 1,361 1,144 

Total 50,034 48,306 

The average credit period taken on sales of goods and services is 47 days (2010: 47 days). The Directors consider that the carrying amounts of 

trade and other receivables approximate their fair value. 

2011 

£’000 

2011 

£’000 

2011 

£’000 

£’000 

2010 

£’000 

2010 

£’000 

2010 

£’000

18 Interest-bearing loans and borrowings 

This note provides information about the contractual terms of the Group’s interest-bearing loans and borrowings. For more information about 

the Group’s exposure to interest rate and foreign currency risk, see note 19. The Directors consider that the carrying amount of the Group’s 

interest-bearing loans and borrowings approximates to their fair value. 

Current liabilities 

Bank loans 136,786 9,610 

Other interest-bearing loans 397 495 

Finance lease liabilities 2,231 2,893 

Long term liabilities 

139,414 12,998 

Bank loans 4,793 119,162 

Other interest-bearing loans 1,265 1,694 

Finance lease liabilities 5,631 5,849 

11,689 126,705 

Total 

Analysis of borrowings by currency: 

151,103 139,703 

Total 

£’000 

Sterling 

£’000 

Euros 

£’000 

2011 

£’000 

US Dollars 

£’000 

2010 

£’000 

Chinese 

Renminbi 

£’000 

2011 

Bank loans 141,579 46,407 63,344 23,519 8,309 

Other interest-bearing loans 1,662 – 1,662 – – 

Finance lease liabilities 7,862 7,238 624 – – 

151,103 53,645 65,630 23,519 8,309 

2010 

Bank loans 128,772 61,012 59,851 – 7,909 

Other interest-bearing loans 2,189 – 2,189 – – 

Finance lease liabilities 8,742 6,062 2,680 – – 

The weighted average interest rates paid were as follows: 



139,703 67,074 64,720 – 7,909 

Bank overdrafts 2.3 2.3 

Bank and other loans 3.5 4.5 

Terms and debt repayment schedule 

1. Bank loans under the main syndicated facility of £160 million are due for renewal on 15 January 2012 and all fall due for repayment in total 

on that date. The loans are unsecured. These loans attract a floating rate of interest although fixing arrangements have been entered into as 

described in note 19. 

2. Certain Euro-denominated loans outside of the main syndicated facility totalling £6.9 million are secured by mortgages on certain Dutch 

freehold properties. The loans attract both floating and fixed rates of interest. 

3. At 3 April 2011 the Group had available £33.5 million of undrawn committed borrowing facility. 

4. In addition the Group had undrawn overdraft and other uncommitted facilities totalling £12.3 million which it expects to renew during the 

financial year. 

2011 

% 

2010 

% 

Who we are 

Our strategy 


Governance 

Financials

66 




18 Interest-bearing loans and borrowings continued 

Financial liabilities gross maturity 

The following are the contractual cash flows of financial liabilities, including interest payments: 

2011 

Carrying 

value 

£’000 

Total 

£’000 

0–6 months 

£’000 

6–12 months 

£’000 

Trade payables 21,007 21,007 21,007 – – – 

Non-trade payables and accrued expenses 39,247 39,247 39,247 – – – 

Bank loans less than one year 136,786 139,350 1,368 137,982 – – 

Other interest-bearing loans less than one year 397 406 225 181 – – 

Finance leases less than one year 2,231 2,462 1,370 1,092 – – 

Bank loans greater than one year 4,793 5,338 90 90 4,596 562 

Other interest-bearing loans greater than one year 1,265 1,363 16 16 951 380 

Finance leases greater than one year 5,631 5,829 – – 3,692 2,137 

Financial liabilities (excluding derivative instruments) 211,357 215,002 63,323 139,361 9,239 3,079 

Forward exchange contracts 27 27 24 3 – – 

Interest rate swaps 85 85 5 80 – – 

Financial liabilities 211,469 215,114 63,352 139,444 9,239 3,079 

2010 

Carrying 

value 

£’000 

Total 

£’000 

0–6 months 

£’000 

6–12 months 

£’000 

Trade payables 15,716 15,716 15,716 – – – 

Non-trade payables and accrued expenses 41,012 41,012 41,012 – – – 

Bank loans less than one year 9,610 9,647 1,280 8,367 – – 

Other interest-bearing loans less than one year 495 498 272 226 – – 

Finance leases less than one year 2,893 3,469 1,955 1,514 – – 

Bank loans greater than one year 119,162 123,528 1,319 1,193 119,797 1,219 

Other interest-bearing loans greater than one year 1,694 1,760 12 12 1,350 386 

Finance leases greater than one year 5,849 6,076 – – 4,524 1,552 

Financial liabilities (excluding derivative instruments) 196,431 201,706 61,566 11,312 125,671 3,157 

Forward exchange contracts (69) (69) (69) – – – 

Derivative financial assets 619 619 72 357 190 – 

Financial liabilities 196,981 202,256 61,569 11,669 125,861 3,157 

Finance lease liabilities 

Finance lease liabilities are payable as follows: 

Minimum lease 

payments 

£’000 

Interest 

£’000 

1–3 years 

£’000 

1–3 years 

£’000 

>3 years 

£’000 

>3 years 

£’000 

2011 2010 

Principal 

£’000 

Minimum lease 

payments 

£’000 

Less than one year 2,462 (231) 2,231 3,469 (576) 2,893 

Between one and five years 5,829 (198) 5,631 6,076 (227) 5,849 

8,291 (429) 7,862 9,545 (803) 8,742 

All finance lease liabilities are contracted at fixed rates of interest, in both years. 

Interest 

£’000 

Principal 

£’000

19 Financial instruments 

Financial instruments carried at fair value are required to be measured by reference to the following levels: 

Level 1: quoted prices in active markets for identical assets or liabilities 

Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) 

or indirectly (i.e. derived from prices) 

Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs). 

All financial instruments have been measured by a Level 2 valuation method. 

a) Financial risk management objectives and policies 

The Group’s principal financial instruments, other than derivatives, comprise bank loans, finance leases and cash. The main purpose of these 

financial instruments is to raise finance for the Group’s operations. The Group also has various other financial instruments such as trade 

receivables and trade payables, which arise directly from its operations. 

The Group also enters into derivative transactions, primarily interest rate swaps and forward currency contracts. The purpose is to manage the 

interest rate and currency risks arising from the Group’s operations and its sources of finance. 

It is, and has been throughout the period under review, the Group’s policy that no trading in financial instruments shall be undertaken. 

The main risks arising from the Group’s financial instruments are interest rate risk, foreign currency risk, credit risk and liquidity risk. The Board 

reviews and agrees policies for managing each of these risks and they are summarised below. 

b) Interest rate risk 

The Group is subject to fluctuations in interest rates on its loans and surplus cash deposits. At 3 April 2011 the Group held hedging arrangements 

in order to fix the interest charge on £10.3 million of its bank debt. 

The swap arrangements cover: 

Debt covered Millions Fixed rate Expiry 

£1.50 4.76% 3 May 2011 

€10.00 2.30% 13 January 2012 

Amounts to be paid or received under these arrangements will be recognised in the interest expense consistent with the terms of the agreement. 

The expiry of each agreement is disclosed in the table above. 

The arrangements are fully effective in fixing the interest on the underlying debt. In revaluing them to fair value, the Group has recognised £85,000 

(2010: £619,000) in current liabilities and equity. 

The following table demonstrates the sensitivity to a reasonable possible change in interest rates on the element of the total Group interest which is 

not subject to fixed interest arrangements. The reasonable change is based on the difference between current market interest rates and one year 

forward rates: 

Increase/(decrease) 

in basis points 



Effect on profit after tax and equity 

£’000 

2011 97/(97) (874)/874 

2010 87/(87) (674)/674 

c) Foreign currency risk 

The Group has exposure to foreign currency risk where it has investment in overseas operations which are affected by foreign exchange 

movements. The Group is not exposed to significant transactional foreign currency risk in respect of its overseas operations. 

Whilst the exposure is limited, the Group’s principal currency exposure is to fluctuations in the exchange rate between Sterling and the Euro. 

During the 12 months to March 2011 the average exchange rate for Sterling against the Euro strengthened by 4% in comparison to the 12 month 

average to March 2010. A 4% strengthening in the average exchange rate for Sterling against the Euro over the entire year to March 2011 would 

have resulted in reduced adjusted operating profit of £1.0 million (2010: a 7% weakening, which would have led to an increase of £1.8 million). 

This analysis assumes that all other variables remain constant. A 4% weakening in the average exchange rate for Sterling against the Euro would 

have an equal but opposite effect. 

The Board considers that the costs of mitigating any exposure to movements in foreign currency earnings from subsidiaries currently would 

outweigh the benefits. 

Where the Group subsidiaries make significant purchases in non-functional currencies, such as US and Canadian Dollars, the Group enters 

into forward exchange currency contracts to manage this exposure. During the 12 months to March 2011 the average exchange rate for Sterling 

against the US Dollar has weakened by 3% in comparison to the 12 months average to March 2010. A 3% weakening in the average exchange 

rate for Sterling against the US Dollar over the entire year to March 2011 would have resulted in increased adjusted operating profit of £0.1 million 

(2010: a 9% weakening, which would have led to a reduction of £0.4 million). This analysis assumes all other variables remain constant. 

A 3% strengthening in the average exchange rate for Sterling against the US Dollar would have an equal but opposite effect. 

Who we are 

Our strategy 


Governance 

Financials

68 




19 Financial instruments continued 

Currency derivatives: The Group utilises currency derivatives to hedge significant future transactions and cash flows in foreign currencies and 

is a party to a variety of foreign currency forward contracts in the management of its exchange rate exposures. The instruments purchased are 

denominated in the functional currencies of the Group’s trading entities and its suppliers. 

The Group does not trade in derivatives. The derivatives held hedge specific exposures and have maturities designed to match the exposures 

they are hedging. It is the intention to hold the financial instruments giving rise to the exposure and the underlying hedged item until maturity 

and therefore no net gain or loss is expected to be realised. 

Additionally, the Group holds Euro-denominated loans in UK companies totalling £70.4 million (2010: £63.0 million). This represents a fully 

effective designated net investment hedge against the first £70.4 million of the Group’s Euro-denominated net assets of £235.3 million (2010: 

£194.4 million). The revaluation of these loans resulted in a loss of £2.2 million (2010: gain of £4.8 million) which has been posted to the 

translation reserve. 

d) Credit risk 

The Group’s principal financial assets are bank balances and cash and trade and other receivables. The Group’s credit risk is primarily attributable 

to its trade receivables. The amounts presented in the balance sheet are net of allowances for impairment. 

The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks with high credit ratings assigned 

by international credit rating agencies. 

The Group has no significant concentration of credit risk, with exposure spread over a large number of counterparties and customers. 

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations 

and arises principally from the Group’s receivables from customers. 

Management has credit policies in place to manage risk and to monitor exposure to risk on an ongoing basis. These include the use of customer 

specific credit limits based on third party credit reports and in cases of customer default or requests for credit above agreed limits the use of pro 

forma invoices to secure payment in advance of delivery. Given these factors and based on extensive past experience, the Group believes that its 

financial assets are of good credit quality. 

Exposure to credit risk: The carrying amount of financial assets represents the maximum credit exposure. Therefore, the maximum exposure 

to credit risk at the balance sheet date was £83,688,000 (2010: £49,687,000) being the total trade and other receivables and cash and cash 

equivalents in the balance sheet. This figure is higher than last year as a result of the cash drawn down to fund the acquisition of BeamOne after 

the period end. 

The Group’s customer base mainly comprises major medical device companies, commercial distributors, NHS Trusts and healthcare providers, 

including public sector, private sector and charitable organisations, throughout the world. No single customer or top 10 customer grouping 

accounts for a significant proportion of the Group’s trade receivables. The Group has in place an insurance policy to cover the majority of its 

Healthcare solutions UK export customers. 

Credit quality of trade receivables and impairment losses 

At the balance sheet date, the ageing of trade receivables was: 

Group 

Current 33,110 30,339 

1–30 days overdue 7,740 7,032 

31–60 days overdue 1,290 1,155 

61–90 days overdue 573 1,034 

More than 90 days overdue 287 491 

43,000 40,051 

Financial assets are reviewed for impairment at the balance sheet date and a full provision for impairment is made against trade receivables that 

are not considered to be recoverable. The total provision against trade receivables at the period end was £418,000 (2010: 614,000). 

No further analysis has been provided for cash and cash equivalents, trade receivables from Group companies, other trade receivables and other 

financial assets as there is limited exposure to credit risk and no provisions for impairment have been recognised. 

Liquidity risk 

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. 

Details of the maturity of the Group’s financial liabilities are given in note 18. 

2011 

Gross 

£’000 

2010 

Gross 

£’000

19 Financial instruments continued 

Capital management 

The Group’s objectives when managing capital are: 

i. to safeguard the entity’s ability to continue as a going concern so that it can continue to provide returns for shareholders and benefits to other 

stakeholders, and 

ii. to provide an adequate return to shareholders by (a) pricing products and services commensurate with the level of risk and (b) ensuring returns 

on new investment programmes will maintain or increase shareholder returns. 

The Group manages its capital structure and makes adjustments to it in light of changes in economic conditions. To maintain or adjust the capital 

structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares, if required. No changes 

were made in the objectives, policies or processes during the periods ended 3 April 2011 and 28 March 2010. 

The table below presents the quantitative data for the components the Group manages as capital: 

Shareholders’ funds 288,592 265,807 

Finance leases 7,862 8,742 

Bank loans 141,579 128,772 

Other interest-bearing loans 1,662 2,189 

439,695 405,510 

20 Deferred tax 

The following are the major deferred tax liabilities and assets recognised by the Group and movements thereon during the current and prior 

reporting period. 

Accelerated capital 

allowances 

£’000 

Recognition of 

intangibles 

£’000 

Share-based 

payments 

£’000 



Other temporary 

differences 

£’000 

At 29 March 2009 9,536 12,179 (420) (1,514) (2,780) 17,001 

Charge/(credit) to income 197 (1,535) (469) 123 409 (1,275) 

Charge/(credit) to equity – – (110) – (1,875) (1,985) 

Exchange differences 19 – – – (35) (16) 

At 28 March 2010 9,752 10,644 (999) (1,391) (4,281) 13,725 

Charge/(credit) to income (373) (2,246) (270) (334) 304 (2,919) 

Charge/(credit) to equity – – 211 – 932 1,143 

Acquired with business during the period – – – 499 (152) 347 

Exchange differences (125) – – – – (125) 

At 3 April 2011 9,254 8,398 (1,058) (1,226) (3,197) 12,171 

The Group has deferred tax assets of £2,552,000 (2010: £1,364,000) in respect of tax losses that have not been recognised as their recoverability 

is uncertain. Deferred tax assets and liabilities have been offset where appropriate. 

On 23 March 2011 the Chancellor announced the reduction in the main rate of UK corporation tax to 26% with effect from 1 April 2011. 

This change became substantively enacted on 29 March 2011 and therefore the effect of the rate reduction creates a reduction in the deferred 

tax liability which has been included in the figures above. 

The Chancellor also proposed changes to further reduce the main rate of corporation tax by 1% per annum to 23% by 1 April 2014, but these 

changes have not yet been substantively enacted and therefore are not included in the figures above. 

2011 

£’000 

Pension 

schemes 

£’000 

2010 

£’000 

Total 

£’000 

Who we are 

Our strategy 


Governance 

Financials

70 




21 Trade and other payables 

Trade payables 21,007 15,716 

Non-trade payables and accrued expenses 39,247 41,012 

2011 

£’000 

2010 

£’000 

60,254 56,728 

Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. The average credit period taken 

for trade purchases is 58 days (2010: 57 days). 

The Directors consider that the carrying amount of trade payables approximates to their fair value. 

22 Provisions 

Cobalt 

disposal costs 

£’000 

Environmental 

provision 

£’000 

Other 

provisions 

£’000 

At 29 March 2010 2,792 2,994 3,250 9,036 

Additional provision in the year 114 – 1,078 1,192 

Unwinding of discounting 150 116 – 266 

Utilised in the year – (17) (1,196) (1,213) 

Acquired with businesses during the period 1,092 359 364 1,815 

Exchange differences 34 (53) 3 (16) 

At 3 April 2011 4,182 3,399 3,499 11,080 

Included in current liabilities 375 

Included in non-current liabilities 10,705 

11,080 

The brought forward environmental provision was agreed with the vendor of Lips Textielservice Holding B.V. as part of the acquisition completion 

accounts. To the extent that the environmental provision is not utilised by 30 July 2012 it is to be paid to the vendor together with interest at the rate 

of Euribor plus 0.75%. Accordingly, the interest to date has been accrued and reflected in the income statement. 

The cobalt disposal cost provision recognises a potential decommissioning liability in respect of particular types of cobalt used at medical device 

sterilisation sites. It is anticipated that the provision will be utilised as the cobalt to which the provision relates reaches the end of its useful 

economic life. 

Other provisions include provisions against vacated properties and other restructuring costs. 

23 Share capital 

Allotted, called up and fully paid 344 342 

The Company has issued 386,569 ordinary shares (2010: 787,104 ordinary shares) of 0.625p during the year in respect of options exercised 

under share option schemes. Total share proceeds amounted to £1,189,000 (2010: £1,469,000). The difference between the total consideration 

and the total nominal value of shares issued has been credited to the share premium account. 

The holders of ordinary shares are entitled to receive dividends from time to time and are entitled to one vote per share at meetings of the Group. 

2011 

£’000 

Total 

£’000 

2010 

£’000



24 Acquisition of subsidiary 

With effect from 1 November 2010, the Group acquired the entire issued share capital of Gamma Service Produktbestrahlung GmbH (‘GSP’), 

a company incorporated in Germany. GSP is located in Saxony and provides sterilisation services. 

The fair value of the net assets acquired and the related consideration were as follows: 

Fair value 

£’000 

Property, plant and equipment 8,352 

Intangible assets 1,767 

Inventories 33 

Trade and other receivables 619 

Cash and cash equivalents 1,310 

Trade and other payables (284) 

Pension provisions (539) 

Other provisions (1,815) 

Deferred tax liabilities (347) 

Finance leases (150) 

Loans (6,305) 

Fair value of assets acquired 2,641 

Cash consideration 2,870 

Deferred consideration 428 

Total consideration 3,298 

Goodwill arising on acquisition 657 

The deferred consideration is due for payment one year after the date of acquisition. 

The goodwill arising on the acquisition of GSP is attributable to the assembled workforce and the synergies that can be generated following the 

integration of GSP into the Group. 

In accordance with IFRS 3 Business combinations (revised), management have made adjustments to the book value of net assets acquired 

to arrive at the fair values disclosed above. The most significant of these are the recognition of intangible assets (customer lists) and adjustments 

to the carrying value of provisions for the disposal of cobalt. 

Acquisition costs of £169,000 have been expensed within non-recurring items. 

The GSP business contributed £2,492,000 to revenue and £439,000 to operating profit for the period. Had the business been owned for the entire 

year, the contribution to revenue and operating profit would have been £5,117,000 and £922,000 respectively. 

Summary of cash flow associated with the acquisition of GSP: 


Cash acquired with business (1,310) 

Acquisition of subsidiaries – net of cash 1,560 

Who we are 

Our strategy 


Governance 

Financials

72 




25 Operating lease arrangements 

Minimum lease payments under operating leases recognised in income for the year 4,685 3,500 

At the balance sheet date, the Group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, 

which fall due as follows: 

In one year or less 3,903 1,934 

Between one and five years 7,824 4,427 

In five years or more 14,851 19,051 

2011 

£’000 

2011 

£’000 

2010 

£’000 

2010 

£’000 

26,578 25,412 

Operating lease payments represent rentals payable by the Group for certain of its properties, vehicles and equipment. 

26 Share-based payments 

The Group recognised total expenses of £1,088,000 related to share-based payment transactions in 2011, and £1,506,000 in 2010. In 2011, 

£nil related to cash-settled share-based payments, with the balance relating to equity-settled share-based payments. In 2010, £73,000 related 

to cash-settled share-based payments, with the balance relating to equity-settled share-based payments. 

The Group operates seven separate share option schemes, as follows: 

The Executive Share Option Scheme 2007 

A new share option scheme was adopted on 3 July 2007 and was approved by the Inland Revenue on 12 July 2007. It is administered by the 

Board and is open to all employees, and to Directors who devote not less than 25 hours per week to their duties. 

Options are exercisable at a price equal to the average quoted market price of the Company’s shares on the three dealing days prior to the date 

of grant. The vesting period is three years. If the options remain unexercised after a period of ten years from the date of grant, the options expire. 

Options are forfeited if the employee leaves the Group before the options vest except in the case of retirement, redundancy or similar situations. 

Options granted to a participating individual are Approved options to the extent that, when taken together with any other Approved options held 

by that individual, they do not exceed £30,000 in value. Any option granted in excess of that figure is Unapproved. 

Exercise of the options is subject to performance conditions determined by the Remuneration Committee linked to a sustained and significant 

improvement in the underlying financial performance of the Company over a three year period. Options granted during the year will vest in 

accordance with an increase in the Company’s earnings per share, adjusted for the amortisation of acquired intangibles, and non-recurring items. 

Details of the share options outstanding during the year are as follows: 

Number of 

share options 

(£) 

Weighted average 

exercise price 

(£) 

2011 2010 

Number of 

share options 

(£) 



(£) 

Outstanding at beginning of period 587,289 6.74 447,475 7.61 

Granted during the period 9,049 7.49 205,341 5.21 

Forfeited during the period (67,415) 6.85 (65,527) 7.32 

Exercised during the period (27,847) 7.49 – – 

Outstanding at end of period 501,076 6.76 587,289 6.74 

Exercisable at end of period 195,196 7.93 – –

26 Share-based payments continued 

The weighted average share price at the date of exercise for share options exercised during the period was £8.59 (2010: £nil). 

The options outstanding at 3 April 2011 were exercisable at prices between £5.04 and £7.96 and had a weighted average remaining contractual 

life of 7.3 years (2010: 8.3 years). During the year ended 3 April 2011 options were granted on 6 July 2010. The aggregate of the estimated 

fair values of the options granted at that date is £0.04 million. During the year ended 28 March 2010 options were granted on 15 July 2009, 

7 September 2009, 23 September 2009, 2 November 2009, 9 December 2009 and 16 February 2010. The aggregate of the estimated fair 

values of the options granted on those dates is £0.2 million. The weighted average fair value of options granted in the year is £1.06 (2010: £1.39). 

The inputs into the Black-Scholes model for grants during the year are as follows: 

2011 2010 

Weighted average share price £6.72 £5.29 

Weighted average exercise price £6.63 £5.20 

Expected volatility 27.75% 39.48% 

Expected life in years 3.0 3.0 

Risk free rate 1.38% 2.19% 

Dividend yield 2.24% 1.77% 

Expected volatility was determined by calculating the historical volatility of the Group’s share price over the previous three years at the date of grant. 

The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise 

restrictions, and behavioural considerations. 

The approved share option plan 

The approved share option plan was adopted on 13 July 2001 and was approved by the Inland Revenue on 3 August 2001. It is administered by 

the Board and was open to all employees, and to Directors who devote not less than 25 hours per week to their duties. No further options will be 

granted under this scheme. 

Options are exercisable at a price equal to the average quoted market price of the Company’s shares on the three dealing days prior to the date of 

grant. The vesting period is between three and four years. If the options remain unexercised after a period of ten years from the date of grant, the 

options expire. Options are forfeited if the employee leaves the Group before the options vest. 


Number of 

share options 

(£) 



(£) 



2011 2010 

Number of 

share options 

(£) 



(£) 


Forfeited during the period – – (15,271) 6.92 

Exercised during the period (53,459) 4.05 (78,450) 3.93 


Exercisable at end of period 38,370 4.12 91,829 4.08 

The weighted average share price at the date of exercise for share options exercised during the period was £7.20 (2010: £6.14). 


life of 4.0 years (2010: 5.1 years). 

The unapproved share option plan 

The unapproved share option plan was adopted on 30 November 1999 and was not submitted for approval by the Board to the Inland Revenue. 

The scheme was open to all employees. No further options will be granted under this scheme. 


of grant. The vesting period is between three and four years. If the options remain unexercised after a period of seven years from the date of grant, 

the options expire. Options are forfeited if the employee leaves the Group before the options vest. 

Who we are 

Our strategy 


Governance 

Financials

74 






Number of 

share options 

(£) 



(£) 

2011 2010 

Number of 

share options 

(£) 



(£) 








life of 2.2 years (2010: 3.0 years). 

The Save As You Earn scheme 

The Save As You Earn scheme was adopted on 13 July 2001 and is open to all employees and full-time Directors who have at least six months 

service with the Group. Options are granted for a period of either three, five or seven years. 


of grant discounted by 20%. Options are forfeited if the employee leaves the Group before the options vest except in the case of retirement, 

redundancy or similar situations. 


Number of 

share options 

(£) 



(£) 

2011 2010 

Number of 

share options 

(£) 



(£) 






Exercisable at end of period 3,856 4.58 – – 



life of 2.78 years (2010: 1.2 years). During the year ended 3 April 2011 options were granted on 1 February 2011. The aggregate of the estimated 

fair values of the options granted on this date is £0.19 million. During the year ended 28 March 2010 options were granted on 5 December 2009. 

The aggregate of the estimated fair values of the options granted on this date is £0.2 million. The weighted average fair value of options granted in 

the year is £2.74 (2010: £1.98). 

The inputs into the Black-Scholes model for grants during the year are as follows: 

2011 2010 








restrictions and behavioural considerations.


Long Term Incentive Plan (‘LTIP’) 

The LTIP for executive Directors and senior executives was approved at the Annual General Meeting on 28 June 2005 and is described in the 

Remuneration report on page 39. 


Number of 

share options 

(£) 



(£) 

2011 2010 

Number of 

share options 

(£) 



(£) 

Outstanding at beginning of period 1,059,766 0.01 1,068,116 0.01 




Outstanding at end of period 1,073,654 0.01 1,059,766 0.01 

Exercisable at end of period – – – – 


The options outstanding at 3 April 2011 were exercisable at a price of £0.01, being the nominal value of the ordinary shares and had a weighted 

average remaining contractual life of 1.4 years (2010: 1.4 years). 

During the year ended 3 April 2011 options were granted on 14 June 2010 and 14 July 2010. The aggregate of the estimated fair values of the 

options granted on those dates is £1.15 million. During the year ended 28 March 2010 options were granted on 14 July 2009, 22 July 2009, 

1 September 2009 and 24 September 2009. The aggregate of the estimated fair values of the options granted on this date is £0.5 million. 

The weighted average fair value of options granted in the year is £6.08 (2010: £4.94). 

The fair value of an award of shares under the LTIP has been adjusted to take into account TSR as a market-based performance condition, using 

a pricing model that takes into account expectations about volatility and the correlation of share price returns in the comparator group. The model 

follows similar principles as the Monte Carlo approach and takes into account that TSR vesting and share price performance are not independent. 

The inputs into the fair value models are as follows: 

2011 2010 







Expected volatility was determined by calculating the historical volatility of the Group’s share price over the previous three years at the date of grant. 


restrictions and behavioural considerations. 

The Performance Share Plan (PSP) 

Following the acquisition of Isotron plc, the Group allowed members of the Isotron PSP scheme to roll forward their entitlement into an identical 

scheme based on Synergy shares. The vesting period is three years. The vesting of 75% of the options was subject to the relative performance of 

Isotron’s Total Shareholder Return and 25% is subject to the Group achieving growth in earnings per share. Under the terms of the scheme, the 

vesting conditions were waived as a result of the acquisition by Synergy Health plc. If the options remain unexercised after a period of ten years 

from the date of grant the options expire. No new options will be granted under this scheme. 


Number of 

share options 

(£) 



(£) 

2011 2010 

Number of 

share options 

(£) 



(£) 


Forfeited during the period (1,430) 0.01 (764) 0.01 




The weighted average share price at the date of exercise for PSP options exercised during the period was £8.69 (2010: £5.52). 



Who we are 

Our strategy 


Governance 

Financials

76 





The options outstanding at 3 April 2011 were exercisable at an exercise price of 0.83p and had a weighted average remaining contractual life of 

5.3 years (2010: 6.1 years). No options have been granted under this scheme since the acquisition. The fair values of the options granted remain 

unchanged post-acquisition. 

‘Phantom’ Performance Share Plan (‘Phantom PSP’) 

Phantom PSP was adopted by the Group in a similar manner to the PSP scheme following the acquisition of Isotron plc. It is available to certain 

overseas employees of the Group. ‘Phantom’ options are issued and the vesting conditions of the scheme are identical to the PSP. No new options 

will be granted under this scheme. The scheme is cash-settled. 


Number of 

share options 

(£) 



(£) 

2011 2010 

Number of 

share options 

(£) 



(£) 


Forfeited during the period (851) 0.01 (2,558) 0.01 




The weighted average share price at the date of exercise for Phantom PSP options exercised during the period was £7.42 (2010: £6.02). 

The options outstanding at 3 April 2011 were exercisable at an exercise price of £0.83p and had a weighted average remaining contractual life 

of 5.0 years (2010: 6.2 years). No options have been granted under this scheme since acquisition. 


restrictions and behavioural considerations. 

27 Retirement benefit schemes 

Defined contribution schemes 

The Group contributes towards a number of defined contribution and stakeholder schemes. The assets of these schemes are administered by 

trustees in funds independent from those of the Group. 

The total cost charged to income of £2,850,000 (2010: £1,390,000) represents contributions payable to these schemes by the Group at rates 

specified in the rules of the plans. 

Defined benefit schemes 

During the year the Group operated four defined benefit pension schemes for the benefit of certain employees of its subsidiaries in the UK and 

the Netherlands. A fifth defined benefit pension scheme, for the benefit of certain employees and ex-employees in Germany, was added during 

the year with the acquisition of GSP. In addition, the Group participates in a multi-employer scheme in the Netherlands. 

Scheme 1 – Synergy Health plc Retirement Benefits Scheme The scheme is a defined benefit (final salary) funded pension scheme. 

The scheme is only open to new employees transferring their employment from NHS Trusts. The employer expects to contribute £730,000 for the 

year starting 4 April 2011. The current arrangements as regards to contribution levels are described in the Scheme’s Schedule of Contributions 

dated 24 June 2010. 

The last full actuarial valuation for the scheme was conducted as at 31 March 2009. This has been updated to 3 April 2011 by a qualified 

independent actuary. 

Scheme 2 – Shiloh Group Pension Scheme The scheme is a defined benefit (final salary) funded pension scheme. The scheme is closed to future 

accrual. The employer expects to contribute £345,000 for the year starting 4 April 2011. The current arrangements as regards to contribution 

levels are described in the scheme’s Schedule of Contributions dated 22 March 2010. 


independent actuary. 

Scheme 3 – Isotron BV Pension Plan The scheme is a defined benefit (career average salary) funded pension scheme. The scheme is closed 

to new entrants. An actuarial valuation of the scheme was carried out at 3 April 2011 by a qualified independent actuary. 

Scheme 4 – Vernon-Carus Limited Pension and Assurance Scheme The scheme is a defined benefit (final salary) funded pension scheme. 

The scheme is closed to future accrual. The employer expects to contribute £1,546,000 for the year starting 4 April 2011. The current 

arrangements as regards to contribution levels are described in the scheme’s Schedule of Contributions dated 7 May 2010. 


independent actuary.

27 Retirement benefit schemes continued 

Scheme 5 – Gamma Service Produktbestrahlung Scheme The scheme is a defined benefit funded pension scheme. The scheme is closed to new 

entrants. An updated actuarial valuation of the scheme was carried out at 3 April 2011 by a qualified independent actuary. 

Scheme 6 – Lips Textielservice Our Dutch linen business participates in a multi-employer industry-wide defined benefit scheme. The plan is 

managed by the industry pension fund and obligations are reinsured. In the event that there is an under-funding position the trustees of the 

scheme can take a range of actions including increasing employee contributions and reducing member benefits as well as asking employers to 

increase their contributions. 

It is not possible to identify the share of the underlying assets, liabilities, and overall surplus/deficit of the plan attributable to the business, because 

the plan is industry-wide. However, to the extent that a surplus or deficit in the plan may affect the amount of future contributions, the Company will 

be required to recognise its share of these obligations. Under the specific exemptions within IAS 19, the scheme is therefore treated as a defined 

contribution scheme within the Group financial statements. The total cost charged to the income statement in respect of this scheme was 

£2,482,000 (2010: £2,235,000). 

IAS 19 disclosures 

The key weighted average assumptions used by the actuary and the Directors for the significant pension schemes were: 

Rate of increase in salaries 3.4 4.0 

Rate of increase for pensions in payment 3.2 3.4 

Inflation 3.0 3.7 

Discount rate for liabilities 5.6 5.6 

Expected rate of return on scheme assets 6.4 6.6 

In assessing the Group’s post-retirement liabilities the Group monitors mortality assumptions and uses up-to-date mortality tables. The following 

mortality tables have been used: 

– PA92: year of birth, long cohort with a minimum improvement of 1% per annum and scaling factor of between 125% and 130%. 

– Dutch Standard Table (2006) minus two year age range offset. 

It has been assumed that the remaining average lifespan of a plan member if they retire at a normal retirement age is on average 22 years. 

The mortality assumptions for the schemes are updated regularly. Allowance is made for expected future increases in life expectancy. 

Amounts recognised in income in respect of these defined benefit pension schemes are as follows: 

Current service cost less employee contributions 1,020 777 

Of the charge for the year, £475,000 (2010: £376,000) has been included in cost of sales and £545,000 (2010: £401,000) has been included in 

administrative expenses. Actuarial gains and losses have been reported in the statement of recognised income and expense. 

The other finance costs/income charged comprises: 

Expected return on pension scheme assets (2,795) (2,116) 

Interest on pension scheme liabilities 3,175 2,729 

Net charge to income statement 380 613 

The amount recognised in the consolidated statement of comprehensive income is: 

Actual return less expected return on pension scheme assets (1,437) 7,154 

Experience (losses)/gains arising on scheme liabilities – 589 

Changes in assumptions underlying the present value of the scheme liabilities 3,891 (14,438) 

2,454 (6,695) 

The actual gain on the scheme assets was £1,358,000 (2010: £9,270,000). 



2011 

% 

2011 

£’000 

2011 

£’000 

2011 

£’000 

2010 

% 

2010 

£’000 

2010 

£’000 

2010 

£’000 

Who we are 

Our strategy 


Governance 

Financials

78 





The amount included in the balance sheet arising from the Group’s obligation in respect of its defined benefit retirement benefit schemes is 

as follows: 

Present value of defined benefit obligations (55,916) (56,723) 

Fair value of scheme assets 43,665 41,320 

Deficit in scheme (12,251) (15,403) 

Liability recognised in the balance sheet (12,251) (15,403) 

Movements in the present value of defined benefit obligations were as follows: 

Beginning of year (56,723) (41,516) 

Service cost (970) (777) 

Interest cost (3,175) (2,729) 

Contributions from scheme members (251) (254) 

Actuarial gains and losses 3,891 (13,849) 

Benefits paid 1,889 2,322 

Losses on settlements and curtailments (50) – 

Obligation transferred on acquisition of subsidiary (593) – 

Exchange adjustments 66 80 

End of year (55,916) (56,723) 

None of the schemes has contingent liabilities. 

Movements in the fair value of scheme assets were as follows: 

Beginning of year 41,320 32,220 

Expected return on scheme assets 2,795 2,116 

Actuarial (losses)/gains (1,437) 7,154 

Contributions from sponsoring companies 2,627 1,948 

Contributions from scheme members 251 254 

Benefits paid (1,889) (2,322) 

Fair value of assets transferred on acquisition of subsidiary 51 – 

Exchange adjustments (53) (50) 

End of year 43,665 41,320 

The analysis of the scheme assets and the expected rates of return at the balance sheet date were as follows: 

Rate of return 

% 

2011 

£’000 

2011 

£’000 

2011 

£’000 

2010 

£’000 

2010 

£’000 

2010 

£’000 

2011 2010 

Value 

£’000 

Rate of return 

% 

Equities 8.5 15,490 8.0 23,532 

Bonds 5.1 19,060 5.5 11,552 

Other assets 5.5 9,115 5.3 4,137 

Cash 4.5 – 0.5 2,099 

Total market value of assets 43,665 41,320 

Value 

£’000


The assets of these schemes are administered by trustees in funds independent from those of the Group. The scheme assets do not include 

investments issued by the Group nor any properties occupied by the Group. The overall expected rate of return on the scheme assets has been 

based on the average expected return for each asset class, weighted by the amount of assets in each class. 

The five year history of experience gains and losses is: 

Present value of defined benefit obligations (55,916) (56,723) (41,516) (40,692) (17,420) 

Fair value of scheme assets 43,665 41,320 32,220 36,749 14,421 

Deficit in the scheme 

Experience adjustments on scheme liabilities: 

(12,251) (15,403) (9,296) (3,943) (2,999) 

Amount (£’000) – 589 1,578 6,831 47 

Percentage of the present value of the scheme liabilities 

Experience adjustments on scheme assets: 

0% 1% 4% 17% 0% 

Amount (£’000) (1,437) 7,154 (8,000) (4,157) (459) 

Percentage of scheme assets (3%) 17% (25%) (11%) (3%) 

Following the announcement by the Government on 8 July 2010 of their intention to use CPI rather than RPI to calculate statutory minimum 

increases in both deferred pensions and pensions in payment, the Company has given due consideration, including discussions with its legal 

advisors and the trustees, to the impact of the change on the valuation of the scheme liabilities as at 3 April 2011. Management have concluded 

that for two of the UK schemes a change to CPI is permitted under the scheme rules and this has been recognised as a change in assumption 

through the consolidated statement of comprehensive income during the period. 

28 Related party transactions 

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed 

in this note. The Group’s share of the net assets and income of the jointly-controlled entity are disclosed in note 15. 

Remuneration of key management personnel 

The remuneration of key personnel (including Directors) of Synergy Health plc was: 

2011 

£’000 

2010 

£’000 



Short term benefits 2,768 2,170 

Post-employment benefits 219 322 

Share-based payments 651 962 

3,638 3,454 

Key personnel (including Directors) comprise the executive and non-executive Directors and six senior executives (2010: five). Three of the senior 

executives are directly responsible for the Group’s operating regions. The others are the Group HR Director, the Group Commercial Director, and 

the Group Company Secretary. 

2009 

£’000 

2008 

£’000 

2011 

£’000 

2007 

£’000 

2010 

£’000 

Who we are 

Our strategy 


Governance 

Financials

80 




29 Post-balance sheet event – acquisition of subsidiary 

With effect from 7 April 2011, the Group acquired the entire issued share capital of BeamOne LLC (‘BeamOne’), a company incorporated in the 

US. BeamOne has sites in San Diego, California; Denver, Colorado; Lima, Ohio; Saxonburg, Pennsylvania; with a fifth site in Costa Rica. 

The fair value of the net assets acquired and the related consideration were as follows: 

Fair value 

£’000 

Property, plant and equipment 5,397 

Investment 429 

Intangible assets 5,003 

Trade and other receivables 2,575 

Cash and cash equivalents 589 

Trade and other payables (1,582) 

Other provisions (643) 

Loans (4,278) 

Fair value of assets acquired 7,490 


Deferred consideration 8,582 

Total consideration 24,923 

Goodwill arising on acquisition 17,433 

The deferred consideration is due for payment 14 months after the date of acquisition. 

The goodwill arising on the acquisition of BeamOne is attributable to the assembled workforce and the synergies that can be generated following 

the integration of BeamOne into the Group. 

In accordance with IFRS3 (revised) Business combinations, management have made adjustments to the book value of net assets acquired to 

arrive at the fair values disclosed above. The most significant of these are the recognition of intangible assets (customer lists). 

Acquisition costs of £608,000 related to BeamOne have been expensed during the period within non-recurring items. 

Had BeamOne been owned for the entire year, the contribution to revenue and operating profit would have been £8,800,000 and 

£2,200,000 respectively. 

Summary of cash flow associated with the acquisition of BeamOne: 


Cash acquired with business (589) 

Acquisition of subsidiaries – net of cash 15,752

Company balance sheet 

As at 3 April 2011 

Fixed assets 

Tangible assets 4 403 329 

Investments 5 359,293 358,719 

359,696 359,048 

Current assets 

Debtors 6 58,001 38,040 

Current investments – – 

Cash at bank and in hand – – 

58,001 38,040 

Creditors: amounts falling due within one year 7 (157,016) (26,869) 

Net current (liabilities)/assets (99,015) 11,171 

Total assets less current liabilities 260,681 370,219 

Creditors: amounts falling due after one year 8 – (111,283) 

Net assets 260,681 258,936 

Capital and reserves 

Called up share capital 9 344 342 

Share premium account 10 63,531 62,344 

Merger reserve 10 106,757 106,757 

Cash flow hedging reserve 10 (112) (550) 

Profit and loss account 10 90,161 90,043 

Shareholders’ funds 11 260,681 258,936 

The Company financial statements on pages 81 to 89 were approved by the Board on 7 June 2011 and signed on its behalf by: 

R M Steeves G Hill 

Director Director 

The notes on pages 82 to 89 form part of these financial statements 



Notes 

2011 

£’000 

2010 

£’000 

Who we are 

Our strategy 


Governance 

Financials

82 



Notes to the financial statements 

1 Principal company accounting policies 

The term ‘Company’ refers to Synergy Health plc. The separate financial statements of the Company are presented as required by the Companies 

Act 2006 (‘the Act’). As permitted by the Act, the separate financial statements have been prepared in accordance with UK Generally Accepted 

Accounting Principles (‘UK GAAP’). 

The following accounting policies have been applied consistently in dealing with items that are considered material in relation to the Company’s 

financial statements. 

Basis of accounting 

The financial statements presented under UK GAAP are prepared under the historical cost convention and in accordance with applicable 

accounting standards. 

Under Section 408 of the Act, the Company is exempt from the requirement to present its own profit and loss account. The Company’s profit 

for the financial year is disclosed in note 2. 

Goodwill 

Purchased goodwill is capitalised and amortised over its estimated useful economic life. 

Intangible assets 

Intangible assets that are acquired by the Company are stated at cost less accumulated amortisation and impairment losses. Costs incurred 

in setting up long term arrangements are capitalised as intangible assets and amortised over the life of the contract to which the costs relate. 

Tangible fixed assets and depreciation 

Tangible fixed assets are stated at cost, net of depreciation and any provision for impairment. Freehold land is not depreciated. For all assets 

depreciation is provided on a straight-line basis over the estimated useful lives of the assets. 

The estimated useful lives are as follows: 

Leasehold improvements Period of lease 

Plant and Machinery 3–20 years 

Office equipment 3–5 years 

Stocks 

Stocks are stated at the lower of cost and net realisable value. 

Deferred taxation 

Except where otherwise required by accounting standards, full provision, without discounting, is made for all timing differences between the 

treatment of certain items for taxation and accounting purposes which have arisen but not reversed by the balance sheet date. Deferred tax assets 

are recognised when it is more likely than not that they will be recovered. Deferred tax is measured using rates of tax that have been enacted or 

substantively enacted by the balance sheet date. 

Financial instruments 

Financial assets and liabilities are recognised on the Company’s balance sheet when the Company becomes a party to the contractual provisions 

of the instrument. 

Trade and other receivables Trade and other receivables are stated at fair value. They are subsequently measured at amortised cost using the 

effective interest method, less provision for impairment. 

Trade and other payables Trade and other payables are initially measured at fair value and are subsequently measured at amortised cost, using the 

effective interest rate method. 

Equity instruments Equity instruments issued by the Company are recorded at the proceeds received net of direct issue costs. 

Derivative financial instruments and hedge accounting The Company’s activities expose it to the financial risks of changes in foreign currency 

exchange rates and interest rates. The Company uses foreign exchange forward contracts and interest rate swap contracts to hedge these 

exposures. The Company does not use derivative financial instruments for speculative purposes. The use of financial derivatives is governed 

by the Company’s treasury policy as approved by the Board of Directors. 

Derivative financial instruments are recognised initially at fair value. The gain or loss on remeasurement to fair value is either recognised 

immediately in the profit and loss account or, if the underlying derivative qualifies for cash flow hedge accounting, then the gain or loss 

is recognised in equity to the extent that the hedge is effective.



1 Principal company accounting policies continued 

Financial instruments continued 

If the cash flow hedge of a firm commitment or a forecast transaction results in the recognition of an asset or a liability, then, at the time the asset 

or liability is recognised, the associated gains or losses on the derivative that had previously been recognised in equity are included in the initial 

measurement of the asset or liability. For cash flow hedges that do not result in the recognition of an asset or liability, amounts deferred in equity 

are recognised in the profit and loss account in the same period in which the hedged item affects the profit and loss account. 

When a cash flow hedging instrument expires or is sold, terminated or exercised but the hedged forecast transaction is still expected to occur, 

the cumulative gain or loss at that point remains in equity and is recognised in accordance with the above policy when the transaction occurs. 

If the hedged transaction is no longer expected to take place, the cumulative unrealised gain or loss recognised in equity is recognised immediately 

in the profit and loss account. 

Retirement benefits 

Defined contribution pension schemes The pension costs charged against operating profits are the contributions payable to the schemes in respect 

of the accounting period. 

Government grants 

Government grants in respect of capital expenditure are credited to a deferred income account within creditors and are released to the profit and 

loss account by equal annual instalments over the expected useful lives of the relevant assets. 

Government grants of a revenue nature are credited to the profit and loss account in the same period as the related expenditure. 

Leased assets 

Assets held under hire purchase contracts are capitalised in the balance sheet and depreciated over their expected useful lives. 

The interest element of leasing payments represents a constant proportion of the capital balance outstanding and is charged to the profit and loss 

account over the period of the lease. 

All other leases are regarded as operating leases and the payments made under them are charged to the profit and loss account on a straight-line 

basis over the lease term. 

Investments 

In the Company’s financial statements, investments in subsidiary undertakings are stated at cost except where they have experienced a permanent 

diminution in value. Where shares have been issued to acquire a subsidiary, the cost of the investment is the market value of the Company’s 

shares on the date the transaction took place. 

Share-based payments 

The Company has applied the requirements of FRS 20 Share-based payment. The Company issues equity-settled share-based payments to 

certain employees. Equity-settled share-based payments are measured at fair value at the date of grant. The fair value of options granted is 

recognised as an employee expense with a corresponding increase in equity. 

The fair value is measured at the date of grant of the equity-settled share-based payments and is spread over the period during which the 

employees become unconditionally entitled to the options. The fair value of the options granted is measured using both the Black-Scholes and 

Monte Carlo models, taking into account the terms and conditions upon which the options were granted. The amount recognised as an expense 

is adjusted to reflect the actual number of share options that vest except where forfeiture is only due to growth in the Company’s total shareholder 

return not achieving the growth threshold for vesting. 

The Company also provides employees with the option to purchase the Company’s ordinary shares at a discount of 20% of market value on the 

date of grant. The fair value of the options granted is measured using the Black-Scholes model. 

In accordance with the transitional provisions, FRS 20 has been applied to all grants of equity instruments after 7 November 2002 that were 

unvested as of 3 April 2005. 

Where the Company grants options over its own shares to the employees of its subsidiaries, it recognises, in its individual financial statements, 

an increase in the cost of investment in its subsidiaries equivalent to the equity-settled share-based payment charge recognised in its consolidated 

financial statements, with the corresponding credit being recognised directly in equity. 

Financial guarantees 

Where the Company enters into financial guarantee contracts to guarantee the indebtedness of other companies within the Group, the Company 

considers these to be insurance arrangements and accounts for them as such. In this respect, the Company treats the guarantee contract as a 

contingent liability until such time as it becomes probable that the Company will be required to make a payment under the guarantee. 

Cash flow and related party transactions 

Under the provisions of FRS 1 Cash flow statements (revised), the Company has not presented a cash flow statement because the consolidated 

financial statements contain a cash flow statement. 

Under the provisions of FRS 8 Related party disclosures, the Company has not disclosed details of inter-Group transactions because consolidated 

financial statements have been prepared. 

Who we are 

Our strategy 


Governance 

Financials

84 




2 Profit and loss account 

The Directors have taken advantage of the exemption available under Section 408 of the Act and not presented a profit and loss account for the 

Company alone. A profit of £6,740,000 (2010: profit £16,642,000) is included within the consolidated financial statements. Audit fees and 

expenses paid to the Company’s auditors were £62,000 (2010: £72,000). 

Amounts receivable by the Company’s auditor in respect of services to the Company, other than the audit of the Company’s financial statements 

have not been disclosed as the information is required instead to be disclosed on a consolidated basis in the consolidated financial statements. 

3 Dividends 

Amounts recognised as distributions to equity holders in the period: 

Final dividend for the year ended 29 March 2009 of 6.8p per share – 3,696 

Second interim dividend for the year ended 28 March 2010 of 8.3p per share 4,540 – 

Interim dividend for the period ended 3 April 2011 of 6.0p (2010: 4.9p) per share 3,298 2,676 

7,838 6,372 

The Group paid a second interim dividend on 1 April 2010, in lieu of a final dividend for the year ended 28 March 2010. The Board of Directors 

will recommend to the shareholders a final dividend in respect of the period ended 3 April 2011 of 9.84p. 

4 Tangible fixed assets 

Short leasehold 

properties 

£’000 

2011 

£’000 

Plant, machinery 

and office 

equipment 

£’000 

Cost 

At 28 March 2010 78 688 766 

Additions – 232 232 

Disposals – (44) (44) 


Depreciation 

78 876 954 

At 28 March 2010 78 359 437 

Charge for the year – 114 114 

Disposals – – – 

At 3 April 2011 78 473 551 

Net book value at 3 April 2011 – 403 403 

Net book value at 28 March 2010 – 329 329 

The net book value of Company plant, machinery and office equipment includes £nil (2010: £nil) in respect of assets held under finance leases. 

Depreciation of £nil (2010: £nil) was charged on such assets. 

5 Fixed asset investments 

Investments in subsidiary undertakings held by Synergy Health plc as at 3 April 2011 are: 

Shares in Group 

undertakings 

£’000 

Balance at 28 March 2010 358,719 

Additions 574 

Balance at 3 April 2011 359,293 

2010 

£’000 

Total 

£’000



5 Fixed asset investments continued 

The Company holds, either directly or through subsidiary companies, 100% (except where shown) of the issued share capital of the following 

principal subsidiaries: 

Equity owned by 

the Company 

% Country of incorporation Principal activity 

Synergy Health Holdings Limited 100 England Holding company 

Synergy Health (UK) Limited 100 England Healthcare products and services 

Isotron Limited 100 England Device sterilisation and holding company 

Synergy Health Systems Limited 100 England Provision of IT services 

Fast-Aid Products Limited 100 Scotland Healthcare product distribution 

Synergy Health Laboratory Services Limited 100 England Laboratory services 

Synergy Healthcare Holdings B.V. 100 The Netherlands Holding company 

Synergy Health (Europe) B.V. 100 The Netherlands Healthcare products and services 

Lips Textielservice Holding B.V. 100 The Netherlands Holding company 

Lips Alkmaar B.V. 100 The Netherlands Provision of linen management services 

Lips Bergen op Zoom B.V. 100 The Netherlands Provision of linen management services 

Lips Bombeke B.V. 100 The Netherlands Provision of linen management services 

Regilabs BV 100 The Netherlands Laboratory services 

Lips Emmen B.V. 100 The Netherlands Provision of linen management services 

Lips Duiven B.V. 100 The Netherlands Provision of linen management services 

Lips Gemert B.V. 100 The Netherlands Provision of linen management services 

Lips Gezondheidszorg B.V. 100 The Netherlands Holding company 

Lips Goes B.V. 100 The Netherlands Provision of linen management services 

Lips Hoorn B.V. 100 The Netherlands Provision of linen management services 

Lips Linnenmanagement B.V. 100 The Netherlands Provision of linen management services 

Lips Rijnmond B.V. 100 The Netherlands Provision of linen management services 

Lips Salland B.V. 100 The Netherlands Provision of linen management services 

Lips Sittard B.V. 100 The Netherlands Provision of linen management services 

Lips Tiel B.V. 100 The Netherlands Provision of linen management services 

Lips Tilburg B.V. 100 The Netherlands Provision of linen management services 

Lips Voorburg B.V. 100 The Netherlands Provision of linen management services 

Lips Hengelo B.V. 100 The Netherlands Provision of linen management services 

Lips Kerkhoffs B.V. 100 The Netherlands Provision of linen management services 

Synergy Health Belgium N.V. 100 Belgium Healthcare products and services 

Gamma Service Produkbestrahlung GmbH 100 Germany Medical device sterilisation 

Isotron Investments Limited 100 England Holding company 

Isotron Ireland Limited 100 Republic of Ireland Medical device sterilisation 

Isotron Westport Limited 100 Republic of Ireland Medical device sterilisation 

Isotron Nederland B.V. 100 The Netherlands Medical device sterilisation 

Isotron Holding S.A.S. 100 France Holding company 

Isotron France S.A.S. 100 France Medical device sterilisation 

Isotron Deutschland GmbH 62.5 Germany Medical device sterilisation 

Isotron (Malaysia) Sdn Bhd 100 Malaysia Medical device sterilisation 

Isotron (Thailand) Limited 100 Thailand Medical device sterilisation 

Isotron South Africa (Pty) Limited 100 South Africa Medical device sterilisation 

Synergy Health (Suzhou) Limited 100 China Hospital sterilisation 

Synergy Health (Suzhou) Sterilisation Technologies Limited 100 China Medical device sterilisation 

Isotron Logistics B.V. 50 The Netherlands Logistics consultant 

A full list of the Group companies is available for inspection at the Company’s registered office. All the above companies are included in the 

consolidated financial statements. 

Who we are 

Our strategy 


Governance 

Financials

86 




6 Debtors 

Amounts falling due within one year: 

Amounts owed by Group undertakings 53,474 35,610 

Prepayments and accrued income 586 801 

Corporation tax receivable 3,357 1,071 

Deferred taxation 584 558 


2011 

£’000 

2010 

£’000 

58,001 38,040 


Balance at 28 March 2010 558 277 

Credit to the profit and loss account 9 224 

Charge to equity 17 57 

Balance at 3 April 2011 584 558 

The amounts provided for deferred taxation for the Company are analysed below: 

Accelerated capital allowances 81 81 

Share-based payments 28 11 

Other timing differences 475 466 

7 Creditors: amounts falling due within one year 

2011 

£’000 

2011 

£’000 

2010 

£’000 

2010 

£’000 

584 558 

Bank overdraft 2,689 6,817 

Bank loans 126,522 – 

Trade creditors 61 181 

Amounts owed to Group undertakings 26,666 17,122 

Other creditors including taxation and social security 378 431 

Accruals and deferred income 588 1,699 

Derivative financial instruments 112 619 

2011 

£’000 

2010 

£’000 

157,016 26,869

8 Creditors: amounts falling due after one year 

Loans – 111,283 

Obligations under bank loans 

Amounts falling due: 

Between one and two years – 111,283 

Between two and five years – – 

2011 

£’000 

2010 

£’000 

– 111,283 

Long term loans are due for renewal in January 2012 and fall due for full repayment on that date. 

Bank overdraft facilities of £10 million (2010: £10 million) were available to the Company subject to the Group overdraft pool not exceeding 

£5 million (2010: £5 million). The Group pool is shared with other UK subsidiaries. Overall, none of the UK overdraft pool was utilised at 

3 April 2011 (2010: £nil). 

The interest rates are disclosed in note 19 of the consolidated financial statements. 

9 Share capital 

Issued and fully paid 

55,090,782 (2010: 54,704,213) ordinary shares of 0.625p each 344 342 

The consideration received in respect of the ordinary shares issued under the share option schemes was £1,191,000 (2010: £1,469,000). 

10 Reserves 

Share premium 

account 

£’000 



Merger reserve 

£’000 

2011 

£’000 

Cash flow hedging 

reserve 

£’000 

2010 

£’000 

Profit and loss 

account 

£’000 

Balance at 29 March 2009 60,880 106,757 (2,582) 77,868 

Profit for the financial year – – – 16,642 

Dividends – – – (6,372) 

Arising on issue of new share capital 1,464 – – – 

Cash flow hedges – derivative instruments – – 2,032 – 

Expense in relation to equity-settled share-based payments – – – 1,905 

Balance at 28 March 2010 62,344 106,757 (550) 90,043 

Profit for the financial year – – – 6,740 

Dividends – – – (7,838) 

Arising on issue of new share capital 1,187 – – – 

Cash flow hedges – derivative instruments – – 438 – 

Expense in relation to equity-settled share-based payments – – – 1,216 

Balance at 3 April 2011 63,531 106,757 (112) 90,161 

The profit in the Company is £6,740,000 (2010: profit £16,642,000) after tax and before dividends. 

In the year to 30 March 2008, a surplus arose on a Group reorganisation in the sum of £73,629,000 which was credited to profit and loss account 

but was considered to be unrealised and therefore non-distributable. 

Who we are 

Our strategy 


Governance 

Financials

88 




11 Reconciliation of movements in shareholders’ funds 

Profit for the financial year 6,740 16,642 

Dividends (7,838) (6,372) 

(1,098) 10,270 

New share capital 1,189 1,469 

Expense in relation to share-based payments 1,216 1,905 

Cash flow hedges – derivative instruments 438 2,032 

Net increase in shareholders’ funds 1,745 15,676 

Opening shareholders’ funds 258,936 243,260 

Closing shareholders’ funds 260,681 258,936 

12 Financial instruments 

The disclosure requirements of FRS 25 are covered by the disclosure requirements of IFRS 7 Financial instruments: disclosures. Financial 

instruments included in the Company are included in the Group disclosure in note 19 of the consolidated financial statements. 

As at 3 April 2011, the Company held forward exchange contracts which are deemed to be fully effective in managing the foreign exchange 

exposures to which they relate. On revaluing the contracts to fair value the Company has recognised £27,000 in current liabilities and equity 

(2010: £69,000 in current assets). 

Elements of the interest hedging arrangements described in note 19b to the consolidated financial statements were held in the name of Synergy 

Health plc. The arrangements are deemed to be fully effective in fixing the interest on the underlying debt and in revaluing them to fair value. 

The Company has recognised £85,000 in current liabilities and equity (2010: £619,000). 

The Directors consider that the fair value of the Company’s financial assets and liabilities is equivalent to the value at which they are carried in the 

Company’s financial statements. 

13 Other commitments 

Financial guarantees 

Where the Company enters into financial guarantee contracts to guarantee the indebtedness of other companies within the Group, the Company 

considers these to be insurance arrangements and accounts for them as such. In this respect, the Company treats the guarantee contract as a 

contingent liability until such time as it becomes probable that the Company will be required to make a payment under the guarantee. 

14 Pensions 

The Company operates a number of defined contribution pension schemes for all eligible employees. Company contributions are charged to the 

profit and loss account in the period in which they relate. The charge for the period in respect of the defined contribution schemes was £151,000 

(2010: £123,000). 

15 Share-based payments 

The requirements of FRS 20 Share-based payment have been applied to grants of equity instruments made since 7 November 2002 outstanding 

at 3 April 2005. The disclosure requirements of FRS 20 are identical to those of IFRS 2 Share-based payment and share-based payments included 

in the Company are included in the Group disclosure. Full IFRS 2 disclosures are provided in note 26 to the consolidated financial statements. 

The charge in the Company only accounts in relation to equity-settled share-based payments was £514,000 (2010: £884,000). In addition the 

Company recognised £574,000 (2010: £790,000) in the cost of investment in its subsidiaries of which £574,000 (2010: £665,000) relates to the 

equity-settled share-based payment charge recognised in its consolidated financial statements with the corresponding credit being recognised 

directly in equity and £nil (2010: £125,000) relates to the cash-settled element where the credit is recognised in liabilities. 

2011 

£’000 

2010 

£’000

Financial calendar 

AGM 27 July 2011 

Group results 

Interim results announced November 2011 

Full year results announced June 2012 

Dividend dates 

Interim dividend for 2012 announced November 2011 

Interim dividend for 2012 payable January 2012 

Designed and produced by Radley Yeldar www.ry.com 



89 

Financials Governance Operating and financial review Our strategy Who we are

Synergy Health plc www.synergyhealthplc.com 

Group Head Office 

Ground Floor Stella 

Windmill Hill Business Park 

Whitehill Way 

Swindon, Wiltshire 

SN5 6NX 

Tel + 44 (0) 1793 891880 

Fax + 44 (0) 1793 891892 

enquiries@synergyhealthplc.com 

Registrars 

Computershare 

Investor Services plc 

The Pavilions 

Bridgwater Road 

Bristol 

BS99 6ZZ 

Helpline 0870 7036273 

www.computershare.com

million - Synergy Health

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