SYS Sysgroup Plc

total dividend of 0.75p (2009: 0.66p) for the year. This represents an increase 
of 14% on 2009 and reflects the strong financial performance and cash generation 
of the business.  If approved by the shareholders at the Annual General Meeting 
on 10 November 2010, the final dividend will be paid on 15 November 2010 to 
those shareholders on the register on 15 October 2010. 
 
Current trading and outlook 
The structural changes proposed for the NHS in the Government's White Paper, 
Equality and Excellence: Liberating the NHS, are extensive and likely to impact 
most areas of healthcare provision and associated services. Health Minister 
Simon Burns has since made clear that all acute Trusts will be free to manage 
their own IT projects on the principle of connected systems and interoperability 
with a plural system of suppliers. The details of the Government's strategy will 
become clearer again over the coming months. 
 
The market for IT products in the NHS is already opening up to a wider range of 
suppliers. The Company is currently experiencing a significant increase in 
interest for its hospital products and is active in a number of PAS/EPR 
procurements. As we made clear in our trading update in September, negotiation 
periods for these large scale contracts are inevitably protracted and revenues 
from sales of the new hospital-wide system are expected to come on stream in the 
second half of the current financial year and beyond. The opening up of IT 
procurements following changes in the National Programme for IT is a significant 
opportunity for the Group and we intend to take a long term view to maximise our 
position in such a market. 
 
The Directors recognise that in the short term, Government spending cuts present 
a risk to revenues, particularly services revenues.  The timing of NHS 
procurements and deployments will have a significant impact on the Company's 
performance during the current year as System C continues its transition into a 
product-led company. During this period the Company will be focused in 
particular on cost management to ensure that costs remain in line with the 
revenue streams.  As at 31 May 2010 the Company had net cash balances of 
approximately GBP18.6 million. 
 
The Board considers there to be significant product opportunities in the medium 
term, which will lead to greater prominence of product revenues, improved 
margins and increased predictability in services utilisation. 
 
Chief executive officer's review 
I was very pleased with the performance of the Group across the board this year 
as we made significant progress in all areas.  This is very much a time of 
transition for System C as we adjust to the slowdown in National Programme 
deployment activity and the corresponding rise in large system procurements by 
individual NHS Trusts.  There is no doubt that the next 18 months will be a key 
time in the Group's development. 
As I have explained in previous annual reports, the Group has been investing 
heavily in product development over the last five years.  We have been working 
to a detailed strategy to broaden the capability of the Group through a 
long-term investment programme aimed at delivering sustained profitable growth. 
At the core of this strategy was the need to drive organic growth through the 
development of new products, enhanced by our services capability and capacity 
and supported by an on-going programme of acquisitions.  I am excited to see our 
next generation Medway product suite come to the market and secure early 
contract wins at a time when the market is opening up. 
 
Products - new technologies for changing markets 
The product division has performed very well in the year. With revenues of 
GBP20.6m (2009: GBP6.5m), it now accounts for approximately 54% of total Group 
revenues (2009: 30%).  We are pleased with this progress and expect to see an 
increasing percentage of our revenues coming from our own products in the coming 
years. 
 
We are delighted with the market response to our next-generation Medway 
software.  Demonstrations of the software have been well-received and we 
achieved a significant strategic win with the Royal Devon & Exeter NHS 
Foundation Trust to supply our Medway order communications and 
electronic-prescribing software, a first step in the implementation of a 
complete EPR system. 
 
One of Medway's key selling points is that it is very advanced technically and 
this was recognised by Microsoft in July when System C was named world-wide 
winner of the prestigious 2010 Microsoft Partner of the Year award in the 
category 'Public sector health partner'. The award recognises outstanding 
innovation and solutions which deliver real benefits to a customer's business, 
and System C was chosen from nearly 3,000 entries drawn from all around the 
world. The entire Medway product range - which also includes PAS, EPR and 
numerous departmental systems including A&E and maternity - is based on the 
latest Microsoft technologies. 
 
The year also marked our 17th year of partnership with Aintree University 
Hospitals NHS Foundation Trust, building a fully-integrated PAS/EPR solution 
across one of the country's largest acute Trusts. The partnership has already 
delivered many millions of pounds of benefits to Aintree, and the Trust is now 
looking to realise a further GBP5m over the lifetime of the next generation of 
Medway software.  The close working relationship with Aintree has enabled System 
C to engage in continuous development and enhancement of its Medway PAS/EPR 
products to meet the NHS's evolving needs and to capitalise on opportunities 
offered by new technology. 
 
Over the course of the year we celebrated our 50th Medway deployment when Mid 
Cheshire Hospitals NHS Foundation Trust went live with a Medway maternity 
information system. 
 
Other recent product installations have included multiple deployments of the 
Company's clinical dashboard, web portal, maternity, accident and emergency, and 
other departmental modules. The latter stages of the deployment of a wide range 
of health and social care systems on behalf of the Isle of Man Government have 
also gone to plan, and it is expected that the final elements of this 
large-scale programme will be completed successfully by the end of calendar year 
2010. 
 
Liquidlogic has begun integrating its product and marketing efforts with System 
C's healthcare ranges and has made its first sale of a Medway dashboard to a 
social care client.  System C and Liquidlogic have also produced the UK's first 
health and social care link under NHS Connecting for Health's new standards for 
systems integration. Spending constraints present a challenge in the social care 
market, but the procurement pipeline for social care systems is strong. 
 
Conscia, acquired in October last year, successfully developed a new health 
portal for NHS Scotland which offers health and social care professionals 
on-line access to a vast knowledgebase of clinical guidelines, evidence 
materials, training and professional development resources. Launched by Nicola 
Sturgeon, Scottish Cabinet Secretary for Health and Wellbeing, the portal is 
also aimed at patients and members of the public, giving them the latest 
information about a condition, for example, symptoms and treatment. In addition 
to providing access to over 12 million resources, the portal offers a range of 
collaborative features such as social bookmarking, shared interests, and tag 
clouds. 
 
Another landmark was the collaboration with GP software supplier EMIS, which has 
resulted in University Hospital Aintree in Merseyside being able to seamlessly 
link patient information from 100 GP practices, representing 450,000 patients, 
to clinicians working across all of its urgent care services. The project - the 
first in the UK to link two different primary and secondary care IT systems on 
this scale - is designed to improve patient care and deliver significant 
efficiencies by providing vital patient information at the point of need. 
 
In 2008, we were successful in our bid to be awarded framework contracts in 16 
categories in the UK Government's Additional Services Capability and Capacity 
(ASCC) procurement.  This was an important win for the Company because only 
companies included in the framework contract catalogue are eligible to bid in 
ASCC procurements. 
 
System C has won a number of high value ASCC contracts since that time, most 
notably last year's dashboard contract for NHS Connecting for Health.  ASCC 
procurements, particularly for Trusts looking to replace PAS, EPR and clinical 
systems in a streamlined procurement process, have been slower off the ground 
than anticipated. However, in recent months the pace has picked up considerably. 
 NHS Connecting for Health is now running its own ASCC procurement for 
community, ambulance and acute systems on behalf of a large number of Trusts in 
the South of England. In addition, many individual Trusts are running or 
planning  ASCC procurements. 
 
Services - world-class delivery capability and capacity 
Services revenue at GBP17.8m is 16% higher than last year (2009: GBP15.4m).We 
continue to have a well-earned reputation for providing successful deployments 
both on time and on budget across our own products and across a range of third 
party systems.  System C staff have been involved with many of the major acute 
system go-lives during the year including Lorenzo and Cerner Millennium 
deployments.  This breadth makes us unique in our market. 
 
In recent months we have seen a slowing down of new services enquiries and of 
ongoing work from existing clients as public sector budgets come under further 
review. We have taken steps to control our cost base in the short term while 
keeping the ability to expand our services capability as the economy recovers. 
However, our services capacity and capability is also a key selling advantage 
for our product sales team and we are expecting substantial increases in 
Medway-related services activity with the first wave of procurements. 
 
Future strategy 

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