Ultrasis Plc Regulatory News (ULT)

8 November 2011

Ultrasis plc

("Ultrasis" or the "Company")

Final results for the year ended 31 July 2011

Highlights

·; Turnover of £2,839,000 (2010: £3,186,000) the despite challenging economic climate. Market conditions in the NHS remain problematic as NHS reorganisation and changes to commissioning result in the postponement of purchasing decisions.

·; Profit before tax of £17,000 (2010: £595,000)

·; Strong cash position - with year end balances of £2,368,000 (2010: £2,383,000), maintaining resources for continued investment in developing new markets. The group remains debt free.

·; Significant deal secured with UPMC, a major US integrated healthcare insurer and provider, which invested US$1.0m to create a US version of "Beating the Blues" for use across their services and to launch in the wider US market in October 2011.

·; Strong progress in diversifying into new markets at home and abroad with both "GetFit Wellness" solutions and "Beating the Blues".

New Markets: Expansion and Development

·; Launched U2 Interactive ("USquared Interactive"), a 50/50 owned joint venture company, with UPMC to sell "Beating the Blues US" to the wider USA market.

·; Secured national contract with the New Zealand Ministry of Health to provide "Beating the Blues" (BtB) throughout primary care. Rollout is virtually complete, providing BtB for prescription on every GP's desktop in New Zealand.

·; Following selection of BtB by the Department of Health in Northern Ireland we have completed the national rollout and BtB is now available to all GP's for prescription from their desktop.

·; Commenced pilot with US military for use of BtB as part of their management of post-traumatic stress disorder and depression.

·; GetFit health manager selected by PPC Worldwide (a division of United Health) for integration in to their international employee assistance program in the UK, India and Australia with further countries to come on stream in 2012.

·; Major success with Legal & General Insurance of GetFit Health Manager, reducing absenteeism by 15% in the initial pilot. This success has led to the introduction of the GetFit health and wellness solution on a national basis to all L&G employees.

·; GetFit.com launched; a direct to consumer offering with affiliate programme for extended promotion. Twitter feed launched for GetFit.com.

Chief Executive, Nigel Brabbins commented on the results:

"In the current economic climate I am pleased to be able to report that we remain profitable, debt free and have maintained a strong cash position. Uncertainty persists in our main market, the NHS, where restructuring and uncertainty over policy changes in the NHS, our main market, continue to impact adversely on revenues. In response to these pressures, we have continued to focus our efforts on, and have been successful in, diversifying our business, thus laying the foundations for the future development of the Group, broadening our range of sales channels and the economies in which we operate. The balance of our business is shifting to international markets, which accounted for 41% of revenue this year compared to 4% in 2010.

2011 saw important progress with the development of a US version of BtB in partnership with UPMC, a $9.0bn per annum integrated healthcare provider in Pittsburgh and the formation with UPMC of a 50/50 JV, USquared Interactive to market BtB US to the wider USA market. The potential market opportunity in the US is huge, with approximately 60 million American adults suffering a depression or anxiety related condition in any given year (NIMH (USA)). The adverse economic consequences of untreated depression are increasingly recognised and I am pleased to report that USquared Interactive is engaged in discussions with a number of potential customers of significance that recognise the benefits that deploying BtB US would bring to their business by either widening access to treatment or reducing their costs of delivery. Beating the Blues has now gone live across UPMC Health Plan and plans are in place for wider dissemination.

We have made significant progress in other countries this year too, including establishing national programmes in Northern Ireland and New Zealand, where BtB has been made available direct from all GP desktops; the Netherlands, where BtB has been accepted by the majority of health insurers as a first-line treatment in primary care and most recently in Malta with the Minister of Health launching BtB in the private pay market."

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Chairman and Chief Executive's Statement

Highlights

The board of directors of Ultrasis (the "Board") has continued its strategy of forging new partnerships, developing new markets and services for Ultrasis' products in the UK and internationally. In very challenging economic conditions, we are pleased to report full year profit before tax of £17,000 (2010: £595,000), we remain debt free and as at 31 July 2011 have cash reserves of £2,368,000 (2010: £2,383,000). Revenue was £2,839,000 (2010: £3,186,000).

Costs remain tightly controlled; however, we have invested in new product development and improvements to existing products in supporting UK and international market development. We have gained a significant entry point in to the largest healthcare market in the world, the US, through the joint venture with UPMC, a leader in the field of depression research. The move in to the US is a significant step for Ultrasis and one that has been achieved at very little cost to shareholders. Whilst the NHS remains a key market we will continue to address, we are now moving away from our previous high reliance.

UK market

As we reported previously, the uncertainty surrounding the Coalition Government's new policy initiatives to remove Strategic Health Authorities and devolve commissioning responsibility to GPs has continued to impact negatively on our revenue. GPs are moving at differing paces in determining how they are going to commission services and with whom, with many "service companies" lining up to offer multi-faceted solutions to manage GP services and practices.

Ultrasis continues to see renewals of embedded contracts where BtB is a proven solution in tackling anxiety and depression in communities and we are delighted that providers continue to experience successful outcomes with BtB. However, the majority of practices that have not yet adopted BtB as part of their treatment regime continue to delay purchasing this NICE approved treatment, either saving on their budgets or committing expenditure in other areas. We expect our revenue base to remain stable and that as new commissioning policy and practices bed down prospects for growth in the NHS will improve. We continue to promote the financial and health benefits to the Department of Health and GPs of making BtB available to the general population.

We are now seeing significant interest and support for our GetFit health and wellbeing programmes, with contract successes in the US with leading health coaching company, Hummingbird Coaching Services (now acquired by Humana Inc, an US$14bn market capitalisation, NYSE listed, insurance healthcare company), to provide users with highly personalised exercise and activity programs and in the UK where LA Fitness is offering GetFit to its 220,000+ individual members and corporate clients to assist in supporting personal health and wellbeing goals.

In January 2011 GetFit Health Manager was selected by PPC Worldwide for integration into its international employee assistance programme "EAP" in the UK, India and Australia, with other countries planned for the near future. PPC Worldwide is the leading provider of global EAP services and deploys its range of products and services in over 140 countries, covering seven million employees in over 3,000 organisations. GetFit Health Manager was chosen to bring about sustainable behavioural change and to demonstrate the economic value of companies investing in their employees' wellbeing.

Legal & General has been similarly impressed with GetFit Health Manager, where it has been deployed in a recent pilot across 1,000 employees. The results of the pilot study showed a reduction in sickness absence of 15% and cost savings of nearly £70,000 leading to the programme being rolled out nationally across the company.

In light of these successes we decided to offer GetFit Health Manager, under the banner of www.GetFit.com, to the 'direct to consumer' market in order for individual consumers to benefit from this award winning programme to improve their health and wellbeing. The internet delivered programme includes personalised health and wellbeing reports, sets personalised health goals, provides online motivational support and gives access to interactive support programmes to help users with diet, activity and weight management goals, plus emotional wellbeing programmes on stress, insomnia, anxiety and depression. We have also launched a Twitter feed to encourage participation and support. (http://twitter.com/#!/getfitdotcom

International market

United States

Of most significance to Ultrasis this year is the ground breaking partnership forged with UPMC, a circa US$9.0 billion per annum integrated health enterprise with global reach, based in Pittsburgh, Pennsylvania. UPMC, an accepted leader in the field of depression research in the US and one of the leading US healthcare systems, assessed computer delivered therapies worldwide and selected Beating the Blues as the most effective treatment based on its evidence base, patient outcomes and the strength of the Ultrasis team. UPMC subsequently invested US$1.0 million to develop a US specific version of BtB, which has been completed and we have now commenced implementation across multiple healthcare services within UPMC.

UPMC recognise the lack of an available cost effective treatment for depression and anxiety in the US and therefore agreed to the formation of a joint venture company with Ultrasis to market and drive sales opportunities of BtB in the wider US. This new 50/50 JV company has been incorporated - Usquared Interactive LLC , www.U2interactive.com. Representatives from both parents make up the management board, operating procedures have been finalised, marketing materials produced and initial staff have been employed including a US based Vice President of Sales. We are now actively promoting BtB in the US market, where a number of discussions with key potential partners are well underway. Discussions with potential US customers have also identified significant interest in our GetFit wellbeing solutions.

On the back of our US development, BtB has been selected by the US Army for a pilot study, "STEPS UP", which will test the effectiveness of a systems-level approach to primary care recognition and management of post-traumatic stress disorder ("PTSD") and depression in the US military health system, with the overall aim of improving healthcare for service members with PTSD and/or depression.

According to the NIMH (USA), approximately 60 million American adults will suffer from a depression or anxiety related condition in any given year. More than 120 million prescriptions are written for antidepressants each year, making them the most prescribed class of drug in the USA and this trend continues to grow. In light of these statistics and the move of healthcare policy in the US towards payment based on outcomes rather than "fee for service" we believe Ultrasis is well placed to capitalise on these opportunities.

Other countries

New Zealand and Australasia:-

In September 2010, we were pleased to announce that BtB had been selected for a National E-Therapy Service in New Zealand, funded by the New Zealand Ministry of Health. The three-year contract, which has a total value of NZ$2.1 million (Ultrasis' share being NZ$1.0 million), was proposed by a consortium led by New Zealand's leading health technology company Medtech Global Ltd, in response to a national tender. Medtech Global Limited is the leading and preferred solutions provider of patient management and eHealth solutions to New Zealand General Practices with over 85% using Medtech solutions.

Beating the Blues is being made available through Medtech's revolutionary "Manage My Health" patient centric eHealth technology system and the national rollout is virtually complete, with all GP's being able to prescribe BtB to patients directly from their desktop. Medtech is also the second largest solutions provider to GPs in Australia and we will be building on this contract win and are currently looking to open up new markets in Australia, India and Asia.

Netherlands:-

In September 2011 our Dutch partner, Innohealth BV ("Innohealth"), formed a joint venture with Medic Info, itself a joint venture between two of the Netherlands' largest health insurers, CZ and VGZ, which, collectively, provide insurance to 7.6 million Dutch citizens.

This new company, 'Psyhealth Direct', provides a direct route to market and will be offering BtB across its membership. BtB is a much lower cost solution to treating depression and anxiety conditions than traditional face to face services in the Netherlands and we believe that Dutch insurance companies will now be able to incentivise practitioners to use BtB as the treatment of first choice.

The development of this joint venture follows the Dutch government's decision to save EUR600 million on mental health care expenditure.

Malta:-

On 10 October 2011, World Mental Health Day, we announced our partnership agreement with Maia Psychology Centre to make BtB, available in the private pay market in Malta. The service was launched by the Maltese Minister for Health, Hon Dr Joseph Cassar MP and Parliamentary Secretary Hon Mario Galea.

There is a significant shortage of Cognitive Behavioural Therapy ("CBT") trained Psychotherapists in Malta and an ever increasing demand for access to affordable treatment, with 29% of the working population of Malta identified as having mental health difficulties. Making BtB available at an affordable cost will allow us to address this gap in local provision.

It is our intention to use this opportunity to gather local outcome data that will demonstrate the cost benefits of BtB being adopted by the wider public health system. This 'practice led' approach has proved very successful in both New Zealand and Northern Ireland, where national contracts were subsequently entered into by Ultrasis.

Comment:

Our growing success internationally demonstrates that the exceptional evidence base, ease of use, superior administration system and patient data safety aspects of "Beating the Blues" is the reason why the program remains the product of choice in leading healthcare systems looking for affordable treatment solutions.

Research & new product development:

Optimi: "Online predictive Tools for Intervention in Mental Illness" is a European Research Grant to develop new solutions to identify and alleviate the symptoms of high stress and mild depressive symptoms in order to prevent further progression. The development is progressing well and the European partners have developed wearable devices which are currently being tested. Ultrasis is developing a new CCBT programme for stress which will be tested alongside these devices in a pilot stress management trial.

ENACT: "Exploiting Social Networks to Augment Cognitive Behavioural Therapy" is a research grant to develop a CCBT package for the treatment of insomnia using online social networks, social computer games and mobile technology. The programme is currently being specified.

Funding has been gained from the BBRC (Biotechnology and Biological Sciences Research Council) for a PhD student at the University of Bristol to work on the project - Building Psychological Resilience through Bio-Feedback Psychoeducation - in collaboration with the charity "Kids Company".

In addition to these research led initiatives we have continued to invest in improvements and enhancements across our whole product range, to ensure they remain at the forefront of developments, incorporate changing technology and meet customer needs.

Financial results:

Ultrasis and its subsidiaries (together the "Group") reports a full year profit before tax of £17,000 (2010: £595,000), with Group revenue of £2,839,000 (2010: £3,186,000) despite a difficult economic climate and continued upheaval in policy direction and commissioning in the NHS.

Cash reserves remained strong with a year-end net cash position of £2,368,000 (2010: £2,383,000), therefore maintaining resources for continued investment in developing new markets and positioning us well to capitalise on further acquisition opportunities. We remain debt free.

Outlook

In this period of change and challenging economic climate, we shall continue the move away from our reliance on the NHS and concentrate our development on new markets for GetFit and Beating the Blues at home and abroad.

The board's policy is to extend Ultrasis' reach and exploit the more rewarding opportunities in the US and internationally, with partners that are specialists in their market and operate on a larger international base, securing relationships that allow us to grow revenues and profitability. We intend to continue our policy of partnering with companies that want to operate on a partnership basis, sharing risk and reward but also intent on broadening the potential market for our products and services. Our experience is that this approach develops long-term, cost-effective and sustainable income streams.

We will continue to protect shareholder interests and maintain good stewardship of available finances. We will continue to assess our market and review potential acquisition opportunities that add value to the business and are revenue and profit enhancing.

We remain focused on continuing our policy of building a company of high value with a long term future and believe the additional foundations we have laid this year have set us well on that path. The Board believes that, despite the challenging economic environment within the sector in which the Company operates, the overall outlook for the Company's future is positive.

Gerald Malone Nigel Brabbins

Non Executive Chairman Chief Executive Officer

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME for the year ended 31 July 2011

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the year ended 31 July 2011

CONSOLIDATED STATEMENT OF FINANCIAL POSITION as at 31 July 2011

CONSOLIDATED STATEMENT OF CASH FLOWS for the year ended 31 July 2011

Notes to the preliminary statement

1. Nature of financial information

The financial information set out in this announcement does not comprise the Group's statutory accounts for the years ended 31 July 2011 or 31 July 2010.

The financial information has been extracted from the statutory accounts of the Company for the years ended 31 July 2011 and 31 July 2010. The auditors reported on those accounts; their reports were unqualified and did not contain a statement under either Section 498 (2) or Section 498 (3) of the Companies Act 2006 and did not include references to any matters to which the auditor drew attention by way of emphasis.

The statutory accounts for the year ended 31 July 2010 have been delivered to the Registrar of Companies, whereas those for the year ended 31 July 2011 were approved by the Board on 7 November 2011 and will be delivered to the Registrar of Companies once they have been distributed to shareholders.

The financial information set out in this announcement has been prepared on a basis consistent with the accounting policies for year ended 31 July 2011 which were substantially unchanged from the year ended 31 July 2010 and were disclosed in the Annual Report and Accounts for that year.

2. Segment information

Management has determined the operating segments by considering the business from both a geographic and operational perspective. The Company currently considers there to be only one operational class of business, interactive healthcare. The Group's operations are in two geographical segments, the United Kingdom and abroad. These divisions are the business segments for which the Group reports its segment information internally to the Board of Directors.

Management considers there to be one type of customer being providers and/or users of physical and emotional wellbeing technologies.

During the year 35% of the Groups external revenue reported within the UK geographical segment came from two customers. During the prior year no single customer contributed more than 10% of the Groups revenue.

3. Taxation

i. Tax charge

The tax charge for the period comprises:

ii. Deferred tax assets: 

Deferred tax assets have been recognised based on management's projections of future taxable profits against which they are expected to be utilised.

The Group has deferred tax assets of £1,973,000 (2010: £2,049,000), of which £1,926,000 relates to accumulated tax losses (2010: £2,002,000) and £47,000 relates to depreciation in excess of capital allowances (2010: £47,000), both of which are available for offset in future periods.

The potential effect of future changes in tax rates that have been announced but not substantially enacted is a reduction in the value of deferred tax assets at the balance sheet date of approximately £73,000.

iii) Factors Affecting Tax charge for the Current Year

The tax assessed for the year is higher/(lower) than that resulting from applying the standard rate of corporation tax (26%). The differences are explained below:

iv) Factors that may affect the future tax charge

4. Earnings per share

Alternative basic earnings per share is calculated based on earnings after interest but excludes the charges for share based payments which have a non-cash effect.

The calculation of diluted alternative earnings per share assumes conversion of all potentially dilutive ordinary shares, all of which arise from share options.

The calculations of earnings per share are based on the following loss and numbers of shares:

5. Annual Report and Accounts

Copies of the annual report and accounts for the year ended 31 July 2011 will be posted to shareholders in due course and will be available to download from the Company's website, www.ultrasis.com.