Sysgroup Regulatory News (SYS)

23 Jan 2008 07:01

System C Healthcare plc23 January 2008 System C Healthcare plc Interim results for the six months ended 30 November 2007 System C Healthcare plc ("the group"), a leading independent provider of ITimplementation solutions for the UK healthcare sector, announces its unauditedinterim results for the six months ended 30 November 2007. Financial Highlights The financial highlights for the six months ended 30 November 2007 are: • Revenue up 29% at £8.4m (2006: £6.5m) • Profit from operations increase to £1.1m compared to a break even position in the prior year • PBT significantly ahead at £1.5m (2006: £0.3m) • EPS grows substantially to 1.14p per share (2006: 0.25p per share) • Strong cash generation from operating activities of £2.5m (2006: £0.6m) • Strong cash position with cash net of borrowings of £11.4m (2006: £8.6m) • Interim dividend of 0.18 pence per share, a 50% increase on prior year (2006: 0.12 pence per share) • Full year profits expected to be at or around the top end of market expectations Chief Executive's Statement Commenting on these results, Chief Executive Ian Denley said: "The Group hasturned in a strong all-round performance over the period, and I am very pleasedto be able to announce significant growth, improved profitability and a robustcash balance. We have continued to secure new clients and contracts in both public and privatesector healthcare organisations, and have played a significant role in most ofthe major go-lives within the National Programme for IT throughout England. In July we completed the acquisition of IQ Systems Services Ltd. Thisacquisition has enabled us to enter new markets in healthcare IT, as the companyhas a number of major clients in the Independent Sector Treatment Centre("ISTC's") including Circle Health and Care UK. In addition, the first stage of the Group's £7.5m IT project computerising theIsle of Man's healthcare services has gone live on time and within budget withover 1,300 users receiving training. The Group's strong performance reflects our focus on delivering quality servicesin partnership with our clients, successfully adapting our business to ourchanging market place, and is a direct result of the hard work and effort of allour employees. We now aim to build on our current position through furtherorganic growth, strategic acquisitions and continued investment in new productsand services. Trading has continued to progress well since the end of the interim period onboth the services and products sides of the business. We look forward withconfidence to a good performance for the full financial year and beyond." For further information please contact System C Healthcare plc Dr Ian Denley, Chief ExecutiveAndrew Coll, Finance Director Tel: 01622 691 616 Maitland Emma Burdett Tel: 020 7379 5151Richard Farnsworth Collins Stewart Europe Limited Mark Connelly Tel: 020 7523 8304 Notes to Editors System C Healthcare plc (www.systemc.com), established in 1983, specialises inthe provision of information systems and solutions to the healthcare sector. Itsemployees have an average of 15 years' healthcare experience and can provide allaspects of systems design, development and deployment services. System C isfounded upon the belief that IT solutions, when effectively implemented, cansignificantly contribute towards improving patient care. System C is a specialist developer and supplier of Patient Administration andElectronic Patient Record Systems to the health service. The Group's MedWayproduct is successfully installed at a number of NHS hospitals including Noble'sHospital Isle of Man, University Hospitals Aintree, Swindon and Marlborough NHSTrust, Tameside Hospitals NHS Trust and the Christie, one of the UK's leadingcancer hospitals. System C has helped to install healthcare systems at over 150 NHS Trusts andoffers a wide range of services to the NHS, other healthcare providers andthird-party suppliers. Services include programme/project/change management,design, build and test, implementation, training, data migration, interfacingand helpdesk/support services. Within the National Programme for IT (NPfIT),System C people have been involved in 75% of secondary care go-lives to date aswell as many GP, community, Single Assessment Programme and child healthdeployments Chairman's Statement I am pleased to report that System C has had a good first half of the year,making strong progress on all fronts. During the period, the company hasdiversified its client base, secured new contracts, contained costs and madesignificant progress with major product developments. On the financial side we have achieved an increase of 29% in revenues to £8.4m,profit before income tax of £1.5m (2006: £0.3m) and an increase in cash net ofborrowings to £11.4m (2006: £8.6m). This performance reflects an increase in revenues in both our services andproducts divisions as well as a well-managed cost base. Services Sales of services were strong during the period. In addition to contractedservices revenue the Group generated more than £4m through additional workwithin existing framework contracts or through entirely new business. New business wins included a contract to build and deploy a patient booking andelectronic X-ray system (PACS) for a client which has won a major procurement toprovide diagnostic services to the NHS. Another is a deployment contract toinstall a third party community and mental health system in Guernsey. We havealso been awarded significant amounts of deployment and support work by NHSTrusts across the country. The Group has continued to enhance its hard-won reputation for deploying complexsystems quickly and safely. On the basis of our track record, System C employeesare now working extensively with NHS Connecting for Health (CFH) and LocalService Provider teams to support the majority of the go-lives across thecountry. The Group has successfully extended its support into most caresettings, and is now working with acute, community and mental health hospitalsas well as with Ambulance and Primary Care Trusts. In addition, the Group ismoving into many areas of deployment support, including the Government's newSummary Care Record and clinical systems deployment. We are delighted to beinvolved in such a strategic project from the outset. A notable achievement over the period was the deployment team's delivery of acomplex patient management and imaging system to 28 static and mobile imagingfacilities across London. This contract was awarded in support of theGovernment's Independent Sector Diagnostics Programme. Products and Software Development The operational performance within the products division has been strong. An important milestone was reached in late 2007 when the product and servicesteams combined to deliver our own MedWay Electronic Patient Record system toNobles and Ramsey Hospitals on the Isle of Man in just eight months. This wasthe first phase of the Group's 7 year £7.5m contract to computerise healthcareacross the island. The deployment included a Patient Administration System(PAS), Accident and Emergency, maternity, and document tracking and reportingsystems. Additional modules including ambulance, theatres and community andsocial services systems will be rolled out during the course of 2008. This has also been a very good period for the System C software team, withsignificant progress on all of its software development programmes. Our close relationship with Microsoft continues to bring benefits to softwaredevelopment, both in our use of new technologies from the .Net framework and theintegration of standard Microsoft applications into our healthcare product set.We have also benefited from working with Microsoft in the NHS/Microsoftcollaboration to produce a Common User Interface (CUI) for healthcareapplications. Medway Sigma, the Group's five year redevelopment of its Electronic Record andPatient Management systems to comply with Microsoft technologies, is now closeto completion and will be launched in 2008. Customer reaction to early releasesof the software has been positive, and we are expecting good take-up both in theUK and overseas. European partners are already translating Medway Sigma for usein their home markets. The first Sigma module, the Microsoft version of the HealthData Managerreporting solution, was delivered in November 2007 to the Isle of Man. This wasan important development milestone for the business. We have also secured twonew contracts to supply HealthData Manager to English hospitals. The Group has continued to develop and support the existing MedWay suite and hasmade over 100 major improvements in the year, including a new service to supportthe Government's 18 week Referral to Treatment Time (RTT) programme. Acquisitions Our ongoing acquisition strategy is to identify opportunities which provideSystem C with new clients in related markets and strategic related technologiesfor use within the Medway Sigma product range. We acquired IQ Systems Services Ltd ("IQ") in July 2007. This company developsand markets the IQUtopia patient management and clinical system to independenttreatment centres. The acquisition has furthered System C's expansion into theprivate healthcare market. We have successfully integrated IQ into the Group,and in the period IQ contributed revenues of £420k and PBT of £122k. We havebeen working closely with IQ clients such as Circle Health and Care UK toenhance product functionality and capability. The close synergies between IQ andthe Group has also meant that System C staff are being contracted directly to IQclients. Our focus on strengthening IQ's business development activities has ledto considerable interest in the product range from private healthcare providersin the UK and overseas. Market In England, the National Programme for IT is gathering momentum with anincreasing number of successful deployments. This has translated into work forthe Group in a wide range of geographic and product areas. The deployment ofpatient management systems into acute hospitals, which is much more complex andresource intensive than the equivalent deployments in the mental health andcommunity sectors, is now underway and a number of hospitals have gone livesuccessfully over the past year. The coming year is expected to see an increase in the installation of acutesystems, the area of System C's greatest expertise, and this is expected tocontinue until 2010/11 and beyond. In parallel with the acute PAS activity, theLSPs are expected to begin the deployment and roll out of clinical systems thisyear and these programmes of work are likely to generate continued ongoing workfor our teams. Outside the National Programme, there is a growing enthusiasm for the nextgeneration of healthcare systems and we are getting increased interest in our.Net Electronic Patient Record solutions from within the UK and overseas. Thenew applications integrate traditional healthcare software with the newMicrosoft open architecture for its Office products and we believe this isbecoming a clear direction of travel for the market as a whole. System C will belaunching "ready to install" products into this market in 2008. Staff The improved performance could not have been achieved without the dedication andexpertise of our employees, and I would like to thank all of them for theirsignificant contribution throughout the period. We continue to develop ourposition as the employer of choice in healthcare IT, and have achieved ourInvestors in People reaccreditation this year. We are currently looking toincrease our staff capacity to support the top-line growth we are achieving. Earnings per Share and Dividends The Board is pleased to declare a interim dividend of 0.18 pence per share, a50% increase on prior year (2006: 0.12 pence per share). The dividend will bepaid on 12 March 2008 to those shareholders on the register at the close ofbusiness on 15 February 2008. Outlook and Current Trading We have strengthened our competitive position within the healthcare IT marketplace as demonstrated in our improved operating performance, broader clientbase, strategic acquisition and strong cash generation. Our objective for 2008is to further enhance this position through organic growth, continued investmentin new products and services, and a programme of strategic acquisitions. Trading has continued to progress well since the end of the interim period, withboth the services and products sides of the business performing well, andcontinued strong cash generation. On this basis, and given the strong firsthalf, the Board expects that profits for the full financial year will be at oraround the top end of market expectations. Jim Horsburgh, ChairmanSystem C Healthcare plc Consolidated Income Statement For the six months ended 30 November 2007 Six months Six months ended ended 30 Nov 30 Nov 2007 2006 (unaudited) (unaudited) £000 £000 Revenue 8,357 6,482Cost of sales (4,023) (3,389) ---------- ----------Gross profit 4,334 3,093Selling and marketing costs (125) (346)Research and development costs (573) (631)Administration and general overheads (2,550) (2,160) ---------- ----------Profit /(loss) from operations 1,086 (44)Interest receivable 427 385Interest payable (16) (59) ---------- ----------Profit before income tax 1,497 282Income tax expense (501) (59) ---------- ----------Profit for the period 996 223 ---------- ----------Earnings per ordinary share- basic 1.14p 0.25p- diluted 1.13p 0.25p All of the activities of the Group are continuing. Notes 1 to 13 form an integral part of this condensed consolidated half-yearlyfinancial information. Consolidated Balance Sheet As at 30 November 2007 At 30 Nov 2007 At 31 May 2007 At 30 Nov 2006 (unaudited) (audited) (unaudited) £000 £000 £000ASSETSNon-current assetsProperty, plant andequipment 529 673 822Goodwill 1,749 - -Intangible assets 1,079 351 198Deferred income tax assets 496 927 1,190Trade and other receivables 699 774 1,036 ----------- ----------- ----------- 4,552 2,725 3,246 ----------- ----------- -----------Current assetsTrade and other receivables 5,667 6,491 5,925Cash and cash equivalents 11,621 10,574 9,579 ----------- ----------- ----------- 17,288 17,065 15,504 ----------- ----------- -----------TOTAL ASSETS 21,840 19,790 18,750 ----------- ----------- ----------- LIABILITIESCurrent liabilitiesTrade and other payables 3,157 3,153 2,242Deferred consideration 680 - -Current income taxliabilities 188 92 42Borrowings 198 528 827 ----------- ----------- ----------- 4,223 3,773 3,111 ----------- ----------- ----------- Non-current liabilitiesBorrowings - - 198Deferred consideration 643 - -Deferred income taxliabilities 150 - -Provisions and otherliabilities 95 102 86 ----------- ----------- ----------- 888 102 284 ----------- ----------- ----------- ----------- ----------- -----------TOTAL LIABILITIES 5,111 3,875 3,395 ----------- ----------- ----------- ----------- ----------- -----------NET ASSETS 16,729 15,915 15,355 ----------- ----------- ----------- SHAREHOLDERS' EQUITYShare capital 895 895 894Share premium account 9,767 9,757 9,752Capital redemption reserve 3,127 3,127 3,127Own shares held in trust (1,235) (1,235) (1,235)Retained earnings 4,175 3,371 2,817 ----------- ----------- -----------TOTAL EQUITY 16,729 15,915 15,355 ----------- ----------- ----------- Notes 1 to 13 form an integral part of this condensed consolidated half-yearlyfinancial information. Consolidated Statement of Changes in Equity For the six months ended 30 November 2007 and 30 November 2006 Own Share Capital shares Share premium redemption held in Retained Total capital account reserve trust earnings equity (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) (unaudited) £000 £000 £000 £000 £000 £000 --------- --------- --------- --------- --------- ---------As at 1 June 2006 893 9,732 3,127 (1,235) 2,757 15,274Profit for the period - - - - 223 223Share-basedpayment charge - - - - 29 29Issue of new shares 1 - - - - 1Premium on issue of new shares - 20 - - - 20Dividends - - - - (192) (192) --------- --------- --------- --------- --------- ---------As at 30 November 2006 894 9,752 3,127 (1,235) 2,817 15,355 --------- --------- --------- --------- --------- --------- As at 1 June 2007 895 9,757 3,127 (1,235) 3,371 15,915Profit for the period - - - - 996 996Share-basedpayment charge - - - - 30 30Premium onissue of new shares - 10 - - - 10Deferred tax - - - - (13) (13)Dividends - - - - (209) (209) --------- --------- --------- --------- --------- ---------As at 30November 2007 895 9,767 3,127 (1,235) 4,175 16,729 --------- --------- --------- --------- --------- --------- Notes 1 to 13 form an integral part of this condensed consolidatedhalf-yearly financial information. Consolidated Cash flow StatementFor the six months ended 30 November 2007 Six months Six months ended ended 30 Nov 30 Nov 2007 2006 (unaudited) (unaudited) £000 £000Cash flows from operating activitiesCash generated from operations 2,541 638Interest paid (16) (59)Income tax paid (52) - ----------- ------------Net cash generated by operating activities 2,473 579 ----------- ------------ Cash flows from investing activitiesAcquisition of subsidiary, net of cashacquired (913) -Purchases of property, plant and equipment (57) (164)Capitalised development costs (269) (98)Interest received 343 381 ----------- ------------Net cash (utilised in)/generated frominvesting activities (896) 119 ----------- ------------ Cash flows from financing activitiesRepayment of borrowings (330) (496)Issue of equity share capital 10 21Dividends paid (210) (192) ----------- ------------Net cash utilised by financing activities (530) (667) ----------- ------------ Net increase in cash and cash equivalents 1,047 31 Cash and cash equivalents at beginning ofperiod 10,574 9,548 ----------- ------------Cash and cash equivalents at end of period 11,621 9,579 ----------- ------------ Cash flows from operating activities Six months Six months ended ended 30 Nov 30 Nov 2007 2006 (unaudited) (unaudited) £000 £000 Profit for the period 996 223Taxation 501 58Financial income (427) (384)Financial expense 16 59 ------------ -----------Profit /(loss) from operations 1,086 (44)Decrease in trade and other receivables 1,239 498Increase/(decrease) in trade and otherpayables 1,224 (277)Net movement on provisions (7) 5Deferred consideration (1,323) -Share-based payment charge 30 29Depreciation of property, plant andequipment 207 366Amortisation of intangible assets 85 61 ------------ -----------Net cash inflow from operatingactivities 2,541 638 ------------ ----------- Notes 1 to 13 form an integral part of this condensed consolidatedhalf-yearly financial information. Notes 1. General information The Company is a limited liability company incorporated and domiciled in the UK.The address of its registered office is Brenchley House, Week Street, Maidstone,Kent, ME14 1RF. The Company has its primary listing on AIM, a market of that name operated bythe London Stock Exchange. This condensed consolidated half-yearly financial information was approved forissue on 22 January 2008. These interim financial results do not comprise statutory accounts within themeaning of Section 240 of the Companies Act 1985. Statutory accounts for theyear ended 31 May 2007 were approved by the Board of Directors on 11 September2007 and delivered to the Registrar of Companies. The Report of the Auditors onthose accounts was unqualified, did not contain an emphasis of matter paragraphand did not contain any statement under Section 237 of the Companies Act 1985. 2. Basis of preparation This condensed consolidated half-yearly financial information for the half-yearended 30 November 2007 has been prepared in accordance with the AIM Rules forCompanies and with IAS 34, 'Interim Financial Reporting' as adopted by theEuropean Union. This half-yearly condensed consolidated financial report shouldbe read in conjunction with the annual financial statements for the year ended31 May 2007, which have been prepared in accordance with IFRSs as adopted by theEuropean Union. 3. Accounting policies The accounting policies adopted are consistent with those of the annualfinancial statements for the year ended 31 May 2007, as described in thoseannual financial statements. The following new standards, amendments to standards or interpretations aremandatory for the first time for the financial year ending 31 May 2008. • IFRIC 10, 'Interims and impairment', effective for annual periods beginning on or after 1 November 2006. This interpretation has not had any impact on the timing or recognition of impairment losses as the Group already accounted for such amounts using principles consistent with IFRIC 10. • IFRIC 11, 'IFRS 2 - Group and treasury share transactions', effective for annual periods beginning on or after 1 March 2007. This interpretation is not relevant to the Group at the current time. • IFRS 7, 'Financial instruments: Disclosures', effective for annual periods beginning on or after 1 January 2007 and IAS 1, 'Amendments to capital disclosures', effective for annual periods beginning on or after 1 January 2007. As this interim report contains only condensed financial statements, and as there are no material financial instrument related transactions in the period, full IFRS 7 disclosures are not required at this stage. The full IFRS 7 disclosures, including the sensitivity analysis to market risk and capital disclosures required by the amendment to IAS 1, will be given in the annual financial statements. 4. Segmental reporting The Group's primary format for segmental reporting is business segment. As thebusiness only operates in the UK the Group does not have a secondary reportingformat. Six months ended 30 Nov 2007 Development and Products Services Shared Services Total (unaudited) (unaudited) (unaudited) (unaudited) £000 £000 £000 £000 Revenue 2,818 5,539 - 8,357Profit beforetax 1,568 1,848 (1,919) 1,498Net assets 3,090 2,361 11,278 16,729 Six months ended 30 Nov 2006 Development and Products Services Shared Services Total (unaudited) (unaudited) (unaudited) (unaudited) £000 £000 £000 £000 Revenue 1,763 4,719 - 6,482Profit beforetax 450 1,781 (1,949) 282Net assets 2,788 2,493 10,074 15,355 5. Capital expenditure Six months ended 30 November 2007 Tangible and Intangible assets (unaudited) £000Opening net book amount 1 June 2007 1,024Additions 2,625Depreciation and amortisation (292) ----------Closing net book amount 30 November 2007 3,357 ---------- The fixed asset additions primarily relate to the acquisition of IQ SystemsServices Ltd (£2,299,000) and the capitalisation of internally generateddevelopment costs (£269,000). Six months ended 30 November 2006 Tangible and Intangible assets (unaudited) £000Opening net book amount 1 June 2006 1,182Additions 262Depreciation and amortisation (424) ----------Closing net book amount 30 November 2006 1,020 ---------- The fixed asset additions relate to new contract assets (£164,000) and thecapitalisation of internally generated development costs (£98,000). 6. Share capital The Group has 89,548,464 ordinary 1p shares in issue with a nominal value of£895,000 (2006 - £894,000). Employee share options exercised during the six months to 30 November 2007resulted in 67,500 shares being issued (2006 - 151,000), with exercise proceedsof £10,000 (2006 - £21,000). The related weighted average price at the time ofexercise was 31.5p (2006 - 27.83p) per share. 7.Income tax The tax expense recognised is based on management estimates of the tax chargefor the period. 8. Earnings per share Earnings per share attributable to equity shareholders of the company arisesfrom continuing operations as follows: Six months Six months ended ended 30 Nov 30 Nov 2007 2006 (unaudited) (unaudited)Earnings per share for profit from continuingoperations attributable to the equity of theCompany- basic 1.14p 0.25p- diluted 1.13p 0.25p The calculation of earnings per share excludes 2,287,741 ordinary shares held byThe System C Healthcare plc Employee Benefit Trust in accordance with IAS 33'Earnings per share'. 9. Dividends A dividend that related to the year ended 31 May 2007 and amounted to £209,000was paid on 9 November 2007. In addition, the Directors propose an interim dividend of 0.18p per sharepayable on 12 March 2008 to shareholders who are on the register at 15 February2008 (2006: 0.12p per share) This interim dividend amounting approximately to£157,000 has not been recognised as a liability in this half-yearly financialreport. 10. Business combinations On 2 July 2007 the Group acquired 100% of the share capital of IQ SystemsServices Ltd, a company that provides Patient Administration Systems to theindependent healthcare sector, for an initial cash consideration of £787,000with potential additional consideration of up to £1,360,000 that is dependent onthe achievement of certain performance criteria. The acquired business contributed revenues of £420,000 and profit after tax of£97,000 to the Group for the period from acquisition to 30 November 2007. If theacquisition had occurred on 1 June 2007, consolidated revenue and consolidatedprofit after tax for the six months ended 30 November 2007 would have been£8,419,000 and £992,000 respectively. Details of net assets acquired andgoodwill are as follows: (unaudited) £000- cash paid 787- direct costs relating to the acquisition 36- fair value of deferred consideration 1,323 ---------Total purchase consideration 2,146- provisional fair value of net identifiable assets acquired (see below) (397) ---------Goodwill 1,749 --------- The goodwill is attributable to the strong position and product capability of IQSystems Services Ltd within the independent sector treatment market in the UK. The Group has yet to finalise the amount of the fair value of the netidentifiable assets acquired, however further details of the provisional fairvalues in respect of this acquisition are given below. Acquiree's carrying Provisional amount fair value (unaudited) (unaudited) £000 £000Property, plant and equipment 6 6Intangible assets - 544Trade and other receivables 257 257Bank overdraft (90) (90)Trade and other payables (170) (170) - (150) ------------ ---------Deferred income tax liabilities ------------ ---------Net identifiable assets acquired 3 397 ------------ --------- Outflow of cash to acquire business, net of cash acquired:- Cash consideration 787- Cash and cash equivalents insubsidiary acquired (overdraft) 90 ---------Cash outflow on acquisition 877 --------- 11. Related party transactions Key management compensation amounted to £605,000 for the six months to 30November 2007 (2006 - £517,000) Six months Six months ended ended 30 Nov 2007 30 Nov 2006 (unaudited) (unaudited) £000 £000Salaries and other short-term benefits 573 493Pension 32 24 ---------- ----------- 605 517 ---------- ----------- Transactions between the Company and its subsidiary, which are related parties,have been eliminated on consolidation and are not disclosed in this note. 12. Events occurring after the balance sheet date Details of the interim dividend proposed are given in Note 9. 13. Statement of Directors' Responsibilities The Directors confirm that this condensed set of financial statements has beenprepared in accordance with IAS 34 as adopted by the European Union and the AIMRules for Companies. The Directors of System C Healthcare plc are listed in the System C Healthcareplc Annual Report for the year ended 31 May 2007. A list of current directors ismaintained on the System C Healthcare plc website: www.systemc.com. By Order of the Board Name Title Date Independent Review Report to System C Healthcare plc Introduction We been engaged by the company to review the condensed set of financialstatements in the half-yearly financial report for the six months ended 30November 2007, which comprises the consolidated income statement, theconsolidated balance sheet, the consolidated statement of changes in equity, theconsolidated cash flow statement and related notes. We have read the otherinformation contained in the half-yearly financial report and considered whetherit contains any apparent misstatements or material inconsistencies with theinformation in the condensed set of financial statements. Directors' responsibilities The half-yearly financial report is the responsibility of, and has been approvedby, the directors. The directors are responsible for preparing the half-yearlyfinancial report in accordance with the AIM Rules for Companies. As disclosed in note 2, the annual financial statements of the group areprepared in accordance with IFRSs as adopted by the European Union. Thecondensed set of financial statements included in this half-yearly financialreport has been prepared in accordance with International Accounting Standard34, "Interim Financial Reporting", as adopted by the European Union. Our responsibility Our responsibility is to express to the company a conclusion on the condensedset of financial statements in the half-yearly financial report based on ourreview. This report, including the conclusion, has been prepared for and onlyfor the company for the purpose of the AIM Rules for Companies and for no otherpurpose. We do not, in producing this report, accept or assume responsibilityfor any other purpose or to any other person to whom this report is shown orinto whose hands it may come save where expressly agreed by our prior consent inwriting. Scope of review We conducted our review in accordance with International Standard on ReviewEngagements (UK and Ireland) 2410, 'Review of Interim Financial InformationPerformed by the Independent Auditor of the Entity' issued by the AuditingPractices Board for use in the United Kingdom. A review of interim financialinformation consists of making enquiries, primarily of persons responsible forfinancial and accounting matters, and applying analytical and other reviewprocedures. A review is substantially less in scope than an audit conducted inaccordance with International Standards on Auditing (UK and Ireland) andconsequently does not enable us to obtain assurance that we would become awareof all significant matters that might be identified in an audit. Accordingly, wedo not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believethat the condensed set of financial statements in the half-yearly financialreport for the six months ended 30 November 2007 is not prepared, in allmaterial respects, in accordance with International Accounting Standard 34 asadopted by the European Union and the AIM Rules for Companies. PricewaterhouseCoopers LLPChartered AccountantsGatwick22 January 2008 Notes:(a) The maintenance and integrity of the System C Healthcare plc web site is theresponsibility of the directors; the work carried out by the auditors does notinvolve consideration of these matters and, accordingly, the auditors accept noresponsibility for any changes that may have occurred to the interim reportsince it was initially presented on the web site. (b) Legislation in the United Kingdom governing the preparation anddissemination of financial information may differ from legislation in otherjurisdictions. This information is provided by RNS The company news service from the London Stock Exchange