annual report
and financial statements for
year ended 31 May 2008
system C
passionate about healthcare contents
3 Mission and Goals
4 Financial highlights of the year
5 Operating highlights
6 Chairman’s statement
8 Chief Executive Officer’s review
12 Financial review
14 Corporate responsibility statement
16 Board of Directors
18 Directors’ report
22 Corporate governance statement
26 Directors’ remuneration report
32 Auditors’ report
34 Group income statement
35 Group balance sheet
36 Group statement of changes in shareholders’ equity
37 Group cash flow statement
38 Company balance sheet
39 Company statement of changes in shareholders’ equity
40 Company cash flow statement
41 Notes to the financial statements
75 Company information
who we are
System C Healthcare plc (“System C”), a leading supplier of healthcare 
products and services, announces its results for the year ended 31 May 2008.
Celebrating its 25th year in 2008, System C specialises in the provision of 
healthcare information systems, implementation services and consulting. 
Our aim is to help improve patient care through the effective use of IT 
solutions and innovative consulting services. annual report and financial statements 2008 | System C 3
mission and goals
System C aims to be a leader in supporting the evolving health 
agenda by developing world class software, delivering effective IT 
deployment services and employing innovative consulting solutions.
Our vision is to use the expertise gained over twenty five years to 
make a positive difference to the delivery of public health both 
within and outside the UK.
Remaining 
an employer
of choice in 
healthcare
Continued
growth and 
financial
success
Focusing on
what we do best  
whilst adapting
our solutions to 
the needs of
the market
Providing
premium and
high-value
products
and services
Our goal is to provide long-term value for all our major stakeholders. 
This means: Revenues increased by 34%
to £18.1m (2007: £13.5m)
including 27% (£3.7m) organic growth
Gross margin of 55% at £10.1m,
an increase of £3.7m on the prior
year (2007: £6.4m)
Product revenues 
increased by 66% to 
£5.8m (2007: £3.5m)
Profit from operations up 292% 
to £2.4m (2007: £0.6m)
Basic EPS up 135% at 2.56p (2007: 1.09p)
financial highlights of the year
Services revenues increased 
by 23% to £12.3m (2007: £10m)
Strong cash generation 
with a net cash position 
as at 31 May 2008
of £12.4m (2007: £10m)
outstanding debt 
repaid during the year
System C | annual report and financial statements 2008 4 The Services Division continued to enhance its reputation 
for delivery, successfully completing nearly 200 projects in 
the course of the year and for the first time achieving full 
national coverage. It expanded its client base, working 
on a wide range of complex deployments within the 
National Programme for IT (“NPfIT”), as well as directly 
with NHS Trusts and within the independent and private 
healthcare markets.
The company delivered phase one of the Isle of Man’ s 
£7.5m Patient Administration System and Electronic Patient 
Record (“PAS/EPR”) on time and to budget. The modules 
delivered so far include Patient Administration, Emergency 
Care, Maternity and Business Intelligence.
The Products Division focused on the development 
of the new generation Medway Sigma product range.  
The bulk of the phase one development is complete 
and the Emergency Care, Master Patient Index,  
Maternity and Business Intelligence modules are 
now installed and in live use. 
T wo important strategic acquisitions were completed 
during the year. IQ Systems Services Ltd and Care Records 
Ltd were acquired for an aggregate cash consideration 
of £1.8m, plus up to an additional £4m dependant upon 
future performance. These acquisitions took the System C 
Group into the independent sector healthcare market and 
expanded its portfolio of clinical products and expertise.
The company achieved significant success in the new NHS 
Additional Services Capability and Capacity (“ASCC”) 
contract. System C was selected as a preferred supplier 
under the framework agreement in all 16 categories it 
tendered for, including the key PAS category.
operational highlights for the year
annual report and financial statements 2008 | System C 5 System C | annual report and financial statements 2008 6
Building on its reputation as a premier healthcare 
IT services Group, System C has this year achieved 
full geographical coverage in England and increased 
its services revenues by 23%. The Group now has a 
substantial presence across all five English National 
Programme clusters. 
At the same time, System C has continued to make 
excellent progress in product development and delivery, 
with Product revenues up 66% on 2007. The Group 
successfully deployed its MedWay Patient Administration 
and Electronic Patient Record System (“PAS/EPR”) in 
the Isle of Man. The development team also completed 
the process of converting most of the MedWay suite 
of software into Microsoft’s latest .net technology, 
generating new product sales opportunities in the UK 
and overseas.        
Acquisitions 
During the year we acquired two businesses, IQ Systems 
Services Ltd and Care Records Ltd, and successfully 
integrated them into the System C Group. These 
strategic acquisitions brought with them new products, 
new clients and high calibre teams, and accelerated the 
Group’s expansion into the specialist clinical systems and 
the independent sector healthcare markets. 
We see scope for further acquisitions provided they 
meet our strict investment criteria and promise strong 
returns to our shareholders.
People and the Board  
We are primarily a people business. Our staff are 
dedicated, professional and passionate about 
healthcare. It is these qualities which have enabled us 
to build and maintain our reputation. The Board would 
like to take this opportunity to thank everyone for the 
commitment and hard work that made the year such 
a success. 
System C is also committed to high standards of 
corporate governance. As an AIM-listed Group, 
although we are not bound by the Combined Code on 
Corporate Governance, we have voluntarily adopted 
many of its provisions.
2007/8 has been a very successful 
year for System C. The Group 
has increased its client base, 
won new contracts, completed 
two strategic acquisitions and 
achieved significant organic 
growth in revenues, profitability 
and cash generation.  
chairman’s statement annual report and financial statements 2008 | System C 7
Dividend 
The Board is recommending a final dividend of 0.36p, 
giving a total dividend of 0.54p for the year. This 
represents an increase of 50% on 2007 and reflects the 
strong financial performance and cash generation of the 
business. If approved by the shareholders at the Annual 
General Meeting on 6 November 2008, the final dividend 
will be paid on 10 November 2008 to those shareholders 
on the register on 3 October 2008.
Current Trading and Outlook 
We have had a good start to the new financial year, and 
anticipate another good performance in 2008/9. 
System C has a substantial order book for products and 
services for 2008/9 and beyond, and a healthy pipeline 
of opportunities. By growing and diversifying both our 
client base and our sources of revenue we have reduced 
risk and expanded our opportunities for further progress. 
The Board considers that market prospects for 
healthcare services and products to be favourable, and is 
confident of achieving continued growth.
Jim Horsburgh Chairman
9 September 2008
chairman’s statement
“
System C people have helped 
me resolve all kinds of problems 
and challenges in a professional and 
flexible manner. I can tell you it is 
most refreshing
”
Sue Wilson Head of EPR 
at Sandwell & West Birmingham NHS Trust System C | annual report and financial statements 2008 8
System C has performed well this 
year and I am pleased to report 
that we have made progress in 
each area of our business. Group 
revenues increased 34% to 
£18.1m, profit from operations 
increased to £2.4m (2007: 
£0.6m), and we closed the year 
with a strong net cash balance 
of £12.4m (2007: £10m). A large 
proportion of the revenue growth 
(£3.7m) was organic and the cash 
balance was net of the £1.8m 
consideration paid for acquisitions 
during the year. 
chief executive officer’s review
Since the early days of the National Programme for 
IT when System C was focused on a small number 
of key customers, the Group has worked hard to 
increase the breadth and diversity of its client base. 
2007/8 saw good progress in this respect with 
additional product sales, a significant move into 
the independent healthcare sector and the Group 
securing two major new services clients.
One of the key strengths of our business is that we 
combine a substantial and experienced services delivery 
capability with a broad, high quality product range. 
Our Product and Services divisions work together 
to maximise the cross-sharing of knowledge about 
delivery, workflow methodologies, technical skills and 
deployment, and we have continued to apply this 
combined resource to the benefit of our clients. For 
example, during 2007/8 we used our MedWay product 
design skills in support of NPfIT projects, while our 
Services deployment teams helped implement MedWay 
and other systems. The entire Group benefits from 
this synergy, and it has contributed to the creation of 
an efficient and cost-effective delivery service able to 
handle complex and high volume projects. 
Services and delivery capability
Revenue from our Services Division grew 23% to £12.3m 
in the year due to new business and increased demand 
from existing customers.
The Services division has continued to enhance its 
reputation for taking on and resolving the most complex 
issues. The team has delivered over 200 work packages 
in the course of the year, providing help in areas ranging 
from training to data migration. With new contract wins 
in London, the Group has achieved full national coverage 
for the first time. The Group’s experience across care 
settings continues to grow. The team has worked 
extensively with acute hospitals, primary care trusts, GP 
practices, diagnostic centres, ambulance trusts and a 
broad range of clinical departments. annual report and financial statements 2008 | System C 9
chief executive officer’s review
The major services contract signed with NHS Connecting 
for Health (“CFH”) in May 2007 continues to progress 
well, and CFH has recently signed a 12 month extension. 
In addition, services staff continue to work for Local 
Service Providers (“LSPs”) and NHS trusts across the 
country supporting all aspects of National Care Record 
System (“NCRS”) deployments.
Outside of the National Programme, the division 
worked in support of the Government’s Independent 
Sector Diagnostics Programme by delivering a complex 
patient management and imaging system to 28 static 
and mobile sites across London. It is now working on a 
similar project for PET/CT imaging (“Position Emission 
Tomography and Computed Tomography”).The 
division is also providing direct services support to the 
companies acquired by the Group and, in an example 
of the synergies between System C and its acquisitions, 
is now providing significant levels of consultancy and 
deployment support to the new clients brought into the 
Group when the companies were purchased.
Launch of Perigon Consulting
In March 2008 we launched Perigon, a new consultancy 
service aimed at helping healthcare organisations meet 
the challenges posed by the Government’s reform 
agenda. This service utilises the clinical and healthcare 
management skills and experience of our employees, 
but its remit extends beyond IT to the broad operational 
issues associated with clinical change and service 
improvement. Perigon’s focus is on improving services 
to patients through innovative clinical practice and 
associated business efficiencies. Areas of specialisation 
include the design and delivery of clinical assessment 
services, the redesign of clinical and business processes 
and public/employee engagement, a key component in 
the delivery of clinical assessment services.
This new offering has been formed by combining the 
expertise of Perigon Healthcare, an existing independent 
healthcare consulting partnership specialising in 
‘future state’ healthcare development, with System C’s 
healthcare consulting service. Perigon operates as a 
division of System C Healthcare, and has access to all of 
System C’s people and resources.
This initiative has already secured its first contracts and 
Perigon promises to develop into a significant new line 
of business in the coming years.
Products
Revenues within the Products division grew by £2.3m 
to £5.8m in the year, driven both by organic growth of 
£1.4m (40%) and by the IQ and Care Records acquisitions 
which together contributed £0.9m of revenue.
During 2007/8, the Product teams focused on the 
deployment and support of existing healthcare products 
and on the development of the new generation 
Medway Sigma product range.
In November 2007, our product and Services divisions 
combined to deliver our own MedWay Electronic Patient 
Record system to Nobles and Ramsey hospitals on 
the Isle of Man. This was the first phase of the Group’s 
£7.5m 5-year contract to computerise healthcare across 
the island and included PAS, Accident and Emergency, 
maternity, document tracking, data warehouse and 
reporting systems. This was an extremely successful 
deployment, delivered on time and within budget in just 
eight months, and brought the Group significant positive 
publicity in the UK market.
We continue to support our existing clients with our 
MedWay software suite and have made many significant 
improvements to the product over the course of the year, 
including a new service to support the government’s 18 
week Referral to Treatment Time (“RTT”) programme, 
enhanced support for clinicians via the integration of the 
Map of Medicine, and the integration of clinical systems 
such as electronic prescribing and maternity.
> System C | annual report and financial statements 2008 10
< 
Product development
System C recognises the value of continuous 
development of its healthcare products and has taken 
advantage of the Group’s strong financial position to 
expand its development programme at a time when 
many UK healthcare systems providers have curbed 
their investment.
The software development teams continue to 
make excellent progress with the redevelopment 
of the healthcare software suites into Microsoft .net 
technologies. Most of the modules have now been 
completed on schedule and within budget and the first 
Patient Administration modules (master patient index, 
emergency care, electronic casenote, clinical coding, 
clinical letters, patient tracking and data warehouse) 
were installed in June 2008, three months earlier than 
planned. The new systems are performing well 
and are popular with clinical, administrative and 
management users. The upgraded product is known 
as Medway Sigma.
The move to a Microsoft based.net system is a significant 
achievement with many important benefits. The 
development provides full integration with Microsoft’s 
core product set (including SQL Server, Exchange, 
Office Communications Server, Office, SharePoint and 
PerformancePoint), and gives users all of the benefits 
of these products from within Medway Sigma software. 
Medway Sigma also becomes the first trust-wide product 
available in the UK to standardise on the new Common 
User Interface (“CUI”) developed jointly by Microsoft 
and the NHS. The look and feel of the new product 
set is clean and modern and adherence to Microsoft 
and CUI standards means that the solutions are 
familiar to NHS users. This has the benefit of reducing 
training requirements for customers whilst enhancing 
functionality and usability.
Appointed supplier under Additional Services 
Capacity and Capability Contract (“ASCC”)
In April 2008 System C secured a major framework 
agreement to provide a range of IT products and 
services to the NHS.
The business was successful in all of the 16 categories 
that it bid for, and now holds framework contracts for its 
PAS, maternity and A&E systems, as well as for a wide 
range of clinical software. System C was also successful 
in its bid to provide associated consultancy services such 
as deployment, data migration, training and interfacing 
for all of the above. Winning these contracts gives the 
Group a significant advantage in the English market.
The new ASCC framework contracts are for a four year 
duration. They will allow NHS organisations and other 
NHS-funded establishments, such as Independent 
Treatment Centres, a faster and easier route to procure 
IT systems and services from suppliers who have 
demonstrated experience in the health sector. ASCC can 
be used to support both NPfIT related work and wider 
IT-related projects.
Acquisitions
Our strategy is to identify acquisition opportunities 
which meet our stringent investment criteria and provide 
System C with new clients in related markets and/or 
strategic technologies for use within our Medway Sigma 
product range.
We acquired IQ Systems Services Ltd in July 2007 for 
a cash consideration of £0.9m with further amounts 
payable on achievement of specific performance criteria. 
This company develops and markets the IQUtopia 
patient management and clinical system to independent 
treatment centres. The acquisition has furthered  
System C’s expansion into the private healthcare market 
and the synergies between IQ and the Group has also 
meant that System C staff are now contracting directly 
with IQ clients. Our focus on strengthening IQ’s business 
development activities has led to considerable interest 
in the product range from private healthcare providers in 
the UK and overseas. 
 
chief executive officer’s review annual report and financial statements 2008 | System C 11
Our strategy
Over the last two years, we have consolidated our 
position as one of the UK’s premier healthcare IT services 
supplier, and have developed an excellent reputation for 
the delivery of complex IT solutions in both the public 
and the private sectors.
We are also expanding our consultancy services into 
general healthcare consulting, leveraging our skills and 
experience in clinical and healthcare management. In 
parallel, we have completed a significant redevelopment 
of our product range that positions us well for future 
patient management and clinical systems sales 
opportunities both in the UK and overseas.
We continue to evaluate acquisition opportunities 
to enhance our consulting, services and products 
businesses on a selective basis.
These are exciting times, with considerable 
opportunities for expansion, and we would like to thank 
our customers, our employees and our shareholders for 
their continued support.
Care Records Ltd was acquired in January 2008 for a cash 
consideration of £0.9m with additional amounts payable 
on the achievement of specific performance criteria. 
Care Records is a developer of leading-edge technology 
for the design and development of clinical IT systems. 
It has used this core technology to produce the Eclipse 
maternity system and a diabetes management system, 
both of which have been installed in UK hospitals. 
Further clinical modules are currently 
under development.
The Care Records clinical products are in the process 
of being integrated into the Medway Sigma product 
set and will advance the availability of extended clinical 
functionality into Sigma by several years.
Key performance indicators (KPIs)
The Directors believe that the KPIs of the business are 
revenues, average revenue per head, gross margins, 
operating profit margins, earnings per share and cash 
generation. This information is summarised below:
chief executive officer’s review
 Year ended 31 May 2008 2007
 Revenue £18.1m £13.5m
 Average revenue per head
1
 £101,685 £85,816
 Gross margin
2
 55% 47%
 Margin on profit from operations
3
 13% 4%
 Basic EPS 2.56p 1.09p
 Net cash balance £12.4m £10m
 Cash generated from operations £4.5m £2.1m
Note 1:   Average revenue per head is defined as the total revenue
in the year divided by the average monthly number of employees.
Note 2:  Gross margin is defined as gross profit divided by total revenue.
Note 3:   Margin on profit from operations is defined as the profit from
operations divided by total revenue.
Additional comments on the movement in the Group’s 
KPIs is contained within the Financial Review.
The Board sets target measures and monitors progress 
against these measures, and other operational 
measures on a regular basis. System C | annual report and financial statements 2008 12
Revenue
Our Group delivered total revenues of £18.1m, an 
increase of £4.6m. This was driven by organic growth 
within both our Services and Product divisions, as well 
as the acquisition of IQ Systems and Care Records as 
illustrated in the table below:
The System C Group has 
achieved a year of significant 
growth with revenue up by 
34% to £18.1m (2007:£13.5m). 
PBT rose by 146% to £3.3m 
(2007:£1.3m) and earnings per 
share grew by 1.47p to 2.56p per 
share (2007:1.09p). 
financial review
  2008 2007
 Year ended 31 May Audited Audited
 System C Products 
 (excluding acquisitions) £4.9m £3.5m
 System C Services £12.3m £10.0m
 System C Healthcare Sub-total £17.2m £13.5m
 IQ Systems Services and 
 Care Records (acquisitions) £0.9m -
 Total Revenue £18.1m £13.5m
 Gross profit £10.1m £6.4m
 Profit from operations £2.4m £0.6m
 Net financial income £0.9m £0.7m
 Profit before Tax £3.3m £1.3m
 Tax (£1.1m) (£0.4)
 Profit after Tax £2.2m £0.9m
 Basic EPS 2.56p 1.09p
We have continued to focus on expanding our client 
base. We have taken on new public sector clients, 
increased our geographic coverage to include London, 
delivered the first phase of our PAS/EPR system to the 
Isle of Man and through the acquisition of IQ Systems 
we secured new opportunities with Independent Sector 
Treatment Centre providers such as Care UK and 
Circle Healthcare. annual report and financial statements 2008 | System C 13
financial review
Gross margin
Gross margin increased to 55% from 47% in 2007, 
reflecting growth of higher margin product revenues 
within System C, as well as the impact of the acquisition 
of IQ Systems.
Profit from operations
Profit from operations was £2.4m, a significant increase 
from prior year (2007:£0.6m), the increase in revenue and 
gross margins combined with the continued control of 
operating costs has lead to an increase in the margin on 
profit from operations to 13% from 4% in the prior year.
The growth in overall administrative expenses includes 
£0.2m in respect of amortisation of intangibles, as well 
as the impact of the acquisition of Care Records and IQ 
Systems. The Group continues to focus on ensuring that 
the core cost base is maintained at an appropriate level.
Net financial income
Interest receivable on customer contracts relates mainly 
to our long term contracts where an element of the 
charge includes a recovery for finance costs. Offsetting 
this income is the interest on financing loans taken out to 
fund the contract assets. The financing loans amounting 
to £0.9m at the start of the year were fully repaid during 
the year. Interest receivable also includes interest 
generated on our cash balances.
Taxation
The taxation charge was £1.1m, equating to 32% of 
PBT. During the year the company utilised brought 
forward tax losses, and as a result the deferred tax 
assets, available to offset against future Corporation Tax 
liabilities, decreased to £0.02m at the year 
end (2007: £0.9m).
Earnings per share
Basic earnings per share increased to 2.56p (2007:1.09p). 
The weighted average number of shares during the 
period used for the EPS calculation was 
87,243,442 (2007: 87,148,360).
Dividends
An interim dividend of 0.18p (2007: 0.12p) was declared 
and paid during the year. The Board proposes a final 
dividend of 0.36p (2007 0.24p) per share bringing the 
total for the year to 0.54p per share (2007: 0.36p).
Cash and treasury
  2008  2007
  £m  £m
 Cash generated from operations 4.5 2.1
 Net financial income 0.8 0.7
 Acquisition of subsidiaries (1.8) - 
 Capital expenditure  (0.7) (0.5)
 Net cash inflow before 
 financing activities 2.8 2.3
 Financing (0.9) (1.3)
 Net cash inflow 1.9 1.0
The Group continued to generate strong cashflow with 
net cash generated from operating activities of £4.5m 
(2007:£2.1m).
On 2 July 2007 the Group acquired 100% of the share 
capital of IQ Systems Services Ltd and on 28 January 
2008 the Group acquired 100% of the share capital of 
Care Records Ltd. The total cash outlay in the year for 
these acquisition was £1.8m (including acquisition costs). 
Further consideration may be payable depending on the 
achievement of demanding performance criteria. System C | annual report and financial statements 2008 14
corporate responsibility statement
People
System C is a business based on people, from the 
teams that design and deliver our products and services 
to the patients that ultimately benefit from them. 
We place a very high priority on the impact that we 
have as a business on our staff and on the healthcare 
customers and communities that we serve, both directly 
and indirectly.
Employee recruitment and retention 
We recognise that our success is founded upon the 
commitment, dedication and expertise of 
our employees.
Our employment policy focuses on recruiting and 
retaining high-calibre candidates who have the 
appropriate skills to complement our organisational 
culture and values. It is essential for all our staff to have a 
real affinity with the requirements of the modern NHS.
We understand that to achieve the most from our 
employees they must receive the best support, 
encouragement and supportive environment possible. 
Personal development and employee well-being are of 
paramount importance to the Group.
System C operates a comprehensive system of staff 
development and appraisal and this process is intended 
to benefit both the individual and the Group. This 
ensures that employee contributions and performance 
are measured, recognised and followed up with 
appropriate development and career advancement.
We have implemented a dedicated training and 
development strategy to benefit all our staff. In addition, 
we have a number of ‘well-being’ and knowledge 
sharing initiatives amongst teams and groups from 
across the organisation to facilitate well motivated 
and well informed teams of people and a supportive 
environment. System C is accredited under the Investors 
in People (“IiP”) scheme, providing external recognition 
for our commitment to training and development.
Equal opportunities
We are committed to providing equal opportunities for 
all employees and applicants for employment, and to 
promote an employment environment that is free from 
discrimination and harassment.
Employee equity participation
We believe in the principle of employee equity 
participation, subject to the relevant share dealing 
guidelines and rules. A number of employees have an 
interest in the shares of System C, either directly or 
indirectly through share options and, since the 
flotation of System C in June 2005, through the 
Sharesave Schemes.
Employee communication and consultation
We are committed to providing timely, appropriate and 
accurate communications to our staff on an equitable 
basis. Several initiatives are in place to facilitate 
information sharing and communication including 
internal events, newsletters and bulletins and employee 
satisfaction surveys.
Health and safety
We are committed to ensuring the highest standards 
of health and safety for all our employees. The Group 
recognises its duty to comply with the Health and 
Safety at Work Act 1974 and the Management of Health 
and Safety at Work Regulations 1999. Employees are 
made aware of their responsibilities in terms of Health 
and Safety and we work together to ensure a safe and 
productive environment is available to employees, 
whether based in one of System C’s offices, travelling 
between sites, working at customer locations 
or elsewhere. annual report and financial statements 2008 | System C 15
corporate responsibility statement
Quality Management System
At the heart of our business is a commitment to quality in 
every aspect of our operations. We work to fully certified 
quality standards, including standards for software 
design and development, documentation, project 
management, implementation, training and support.  
The working processes surrounding these standards  
are fully documented and published on the Group 
intranet and a full-time Quality Manager ensures 
our adherence to Quality Standards. System C has 
enterprise-wide accreditation to ISO 9001 and TickIT 
standards and its Training Academy holds the Institute  
of IT Trainers accreditation.
Environmental
Whilst our activities have a low impact on the 
environment, we believe that operating in a socially and 
environmentally conscious manner is an important part 
of the way we do business.
In order to conserve resources and reduce the impact of 
the Group’s operations on its surroundings, 
System C adheres to an environmental policy which is 
regularly updated and communicated to all employees. 
Key areas of this policy are:
•  to store waste safely and securely and ensure it is 
handled by an authorised agent.
•  to recycle resources where possible and ensure that 
recycling facilities are made available to all office- 
based staff. Indeed, a key product that we provide is 
the introduction of paperless records in hospitals, a 
feature which of course lessens the need for recycling.
•  to seek to meet and exceed the requirements 
of ISO 14001.
Social and ethical
We have always encouraged an ethos of giving, 
not least since we operate in an industry dedicated 
to caring, and we employ people who embrace this 
philosophy. Many individuals within the organisation 
undertake and participate in charity events for a range 
of worthwhile causes, often encouraged and supported 
financially by System C.
Investors 
Following the admission to AIM in June 2005, we have 
continued to implement procedures that assist in the 
adoption of best practice in terms of reporting and 
communication. Our website has been enhanced to 
include a section devoted to investors and this will be 
continually updated. In 2007 we also adopted IFRS a year 
earlier than required to facilitate a greater comparability 
of our results.
Suppliers
Our work often involves a great degree of interaction 
with other suppliers and partners and we value a positive 
working relationship. Our policy is to pay suppliers 
promptly and to seek to foster constructive, transparent 
and preferably long-term commercial relationships.
Ian Denley Chief Executive Officer 
9 September 2008  
Jane Conner Company Secretary
9 September 2008 System C | annual report and financial statements 2008 16
board of directors
Markus Bolton Sales and Strategy 
Director Aged 51
Markus is one of the UK’s leading 
specialists in the development 
and delivery of clinically focused, 
enterprise-wide patient management 
systems for the NHS. He is the 
original architect of the MedWay 
Electronic Patient Record system,  
has published numerous papers  
and articles on healthcare informatics 
and has advised Government on 
NHS IT issues. Markus founded 
System C in 1983 and it has 
since become a UK leader in the 
development and implementation 
of healthcare IT solutions. At 
System C, Markus is responsible for 
sales strategy  and for developing 
healthcare market opportunities. 
Jane Conner
Company Secretary and Director of 
Human and Corporate Resources* 
Aged 45
Jane joined System C in 1985. 
She is responsible for developing 
and implementing the Company’s 
human resources strategy. She 
oversees all employee relations, 
including recruitment and retention. 
She is also responsible for Health 
and Safety, office management and 
oversees the General Administration 
Department. She has held the post 
of Company Secretary since 1992.
*Jane is not a statutory board director of 
System C Healthcare PLC.
Andrew Coll Finance Director 
Aged 38
Andrew qualified as a 
chartered accountant with 
PricewaterhouseCoopers LLP in 
1996 before moving into a senior 
finance position in Cable & Wireless 
PLC in the UK. He was seconded to 
undertake overseas strategic finance 
projects in the Far East. Immediately 
prior to joining System C he was 
the Chief Operating Officer of the 
Education Technology Division 
of Enterprise PLC, where he held 
responsibility for commercial and 
financial matters. Andrew joined 
System C as Finance Director in 
February 2006. Since then he has led 
on a number of projects including the 
transition from UK GAAP to reporting 
under IFRS, the realignment of the 
Group’s cost base, as well as on a 
range of commercial negotiations. 
Andrew works closely with Ian and 
the Board in determining the M&A 
strategy and led the execution of the 
IQ Systems Services Ltd and Care 
Records Ltd acquisitions.  annual report and financial statements 2008 | System C 17
board of directors
Jim Horsburgh 
Non-Executive Chairman Aged 56
Jim has been with System C since 
2000. He was previously Senior 
Vice President of Visio Corporation 
which was listed on NASDAQ and 
he played a key role in its sale 
to Microsoft for approximately 
$1.5 billion in 2000. Prior to 
joining Visio, Jim was Managing 
Director at the European start 
up Central Point Software, which 
was sold to Symantec in 1993. 
Before that he was responsible for 
International Marketing and Business 
Development at Lotus Development. 
Jim is responsible for leading the 
Board and ensuring its effectiveness 
and moved to the role of  
Non-Executive Chairman on  
1 September 2007.
Dr Ian Denley 
Chief Executive Officer Aged 44
Ian has been with System C since 
1997. Prior to taking on his current 
role as Chief Executive Officer, Ian 
worked as Director of Development, 
where he was responsible for the 
strategic direction of the MedWay 
product range, and latterly as 
Director of Operations where he 
was responsible for the Group’s 
implementation and customer 
support services. Ian was appointed 
Chief Executive Officer in 2003, and 
since then has overseen the Group’s 
expansion into the professional 
services market, its listing on AIM, 
and its continued investment 
in healthcare IT products. Ian is 
responsible for the Group’s strategic 
operations as well as leading the 
Group’s M&A strategy. He is a 
member of the Intellect Healthcare 
Council, and has a PhD in Human 
Computer Interaction.  
Ian is responsible for the strategic 
and operational management of  
the business.
Dr John Forrest Non-Executive 
Director N A R Aged 65
John joined System C as a Non-
Executive Director in February 2005. 
He graduated with an MA from 
Cambridge University and a DPhil 
from Oxford University. In 1984 he 
joined Marconi Defence Systems as 
Technical Director and later became 
Director of Engineering at the 
Independent Broadcasting Authority. 
He led the privatisation to create 
the communications company NTL, 
becoming its first Chief Executive. 
In 1996 he joined the venture capital 
company, 3i PLC, and served on the 
board and its associated committees 
until 2004. John is Deputy Chairman 
of Surrey Satellite Technology Ltd 
and Omniglobe Networks Ltd 
(Canada) as well as Pro-Chancellor of 
the University of Surrey. John is our 
Senior Independent Director, and 
was appointed to the role of Deputy 
Chairman to the Board on  
1 September 2007. 
Thomas Chambers Non-Executive 
Director N A R Aged 47
Thomas joined System C as a 
Non-Executive Director in February 
2005. He is Chief Financial Officer 
for Symbian Limited (provider of 
operating systems for advanced 
mobile phones) and up to February 
2007, was Chairman of Swedish based 
UIQ Technology AB. Prior to Symbian, 
Thomas was the Chief Financial 
Officer of First Telecom Group PLC, 
arranging its sale to Atlantic Telecom 
Group PLC in 2000. Thomas was 
the Chief Financial Officer of Robert 
Walters PLC through its listing on 
the London Stock Exchange in 1996 
and its acquisition in 1998 by the 
US NASDAQ listed StaffMark Inc. 
and spent six years in the Corporate 
Finance Department of Dresdner 
Kleinwort Benson Limited. He is a 
Fellow of the Institute of Chartered 
Accountants and an Associate of The 
Association of Corporate Treasurers.
Dr Christopher McLaren 
Non-Executive Director N A R 
Aged 74
Christopher has been on the Board 
of System C since 1988. Christopher 
served as Deputy Chairman of the 
Board of System C until 1 September 
2007, when our current Senior 
Independent Director John Forrest 
was appointed to the role. He has 
an MA from Cambridge University 
with first class honours in Mechanical 
Sciences and is a barrister at law. 
He was a business consultant for 
many years and has wide commercial 
experience. He was Chairman of 
the Board of Southbank University 
during its formative years of 1989 - 
1999, Chancellor from 1992 - 1999, 
and was Treasurer of the English 
speaking Union from 1996 -2002, and 
Honorary Secretary from 2005.
note: 
N = Nomination Committee 
A = Audit Committee 
R = Remuneration Committee
1
2
3
4
5
6
8
7
1 Markus Bolton
2 Jane Conner
3 Andrew Coll
4 Jim Horsburgh
5 Dr Ian Denley
6 Dr John Forrest
7 Thomas Chambers
8 Dr Christopher McLaren System C | annual report and financial statements 2008 18
directors’ report
Principal activities, review of business and 
future developments
The Group’s sole activity during the year was the design, 
development and implementation of computer hardware 
and software in the healthcare sector. There has been 
no change in the principal activity of the Group since 
the year end.
The Chairman’s Statement, the Chief Executive Officer’s 
Review and the Financial Review give further information 
regarding the performance of the Group during the year 
ended 31 May 2008 and the future prospects of 
the business.
Acquisitions
During the year, the Company purchased the entire 
issued share capital of IQ Systems Services Limited 
and Care Records Limited which are both engaged 
in the provision of the design, development and 
implementation of computer hardware and software 
in the healthcare sector. Further details of these 
acquisitions are given in note 22.
Dividends
An interim dividend of 0.18p per ordinary share 
was declared and paid in the year (2007: 0.12p per 
ordinary share).
The Directors have recommended a final dividend of 
0.36p per ordinary share (2007: 0.24p per ordinary share).  
The Group’s accounting policy for dividends is set out in 
note 1.
Directors and their interests
The Directors of the Group who served during the year 
ended 31 May 2008, all of whom have been Directors 
for the whole of the year ended on that date unless 
otherwise stated, are listed below:
• Jim Horsburgh
• Dr Ian Denley
• Markus Bolton
• Andrew Coll
• Dr Christopher McLaren
• Dr John Forrest
• Thomas Chambers
The Directors have pleasure 
in presenting their Annual 
Report and the audited financial 
statements of the Group for the 
year ended 31 May 2008. 
System C Healthcare PLC (‘the 
Company’) is a public company 
incorporated and registered 
in England and Wales, whose 
shares are listed on AIM, a 
market of that name operated by 
the London Stock Exchange PLC. 
The Group consists of System 
C Healthcare PLC and its two 
wholly owned subsidiaries, IQ 
Systems Services Limited and 
Care Records Limited, which 
were acquired during the year 
under review (‘the Group’).
These financial statements 
are presented in Sterling, the 
functional currency of the Group. annual report and financial statements 2008 | System C 19
directors’ report
Details of Directors’ interests in the share capital and 
share options of System C Healthcare PLC are given in 
the Directors’ Remuneration Report.
Research and development
The Board considers that the Group’s research and 
development activity plays an important role in the 
operational and financial success of the business.
The Group continues to commit resources to researching 
potential improvements in Electronic Patient Record 
systems. Ongoing work includes improvements to 
patient tracking, paperless procedures and practices, 
and patient safety.
System C has invested in the ongoing development 
of its MedWay software, utilising the skills of qualified 
clinicians and software developers. Expenditure on 
research and development is accounted for as stated 
in note 1 to the financial statements and the amounts 
incurred in this respect are disclosed in note 5 to the 
financial statements.
Creditor payment policy
The Group has agreed a variety of payment terms with 
its suppliers. It is, and will remain, the policy of the Group 
that payments to a supplier are made in accordance 
with the general conditions of purchase agreed with the 
supplier, provided the supplier complies materially with 
all relevant terms and conditions and presents invoices 
on a timely basis.
The average creditor payment period for the 
Company during the year ended 31 May 2008 was 
21 days (2007: 39 days).
Financial risk management and financial instruments
The Group’s policies and strategies in relation to financial 
risk and financial instruments are explained in note 17 to 
the financial statements.
Accounting policies in respect of financial instruments 
are detailed in note 1 to the financial statements.
Business risk factors
Our business is influenced by a number of key risks and 
the financial and operating performance of our business 
can be adversely affected by these risks and other risks 
not mentioned that may be beyond our control. 
The Board continually reviews risk through its own 
systems and controls, and where possible mitigates the 
risks that may impact our business, prospects, people, 
financial results and share price. The more significant 
risks are described below:
Public sector spending/political changes
There has been recent speculation that a tightening 
of public spending given the current economic 
environment will lead to a reduction in UK Government 
investment in consulting and IT projects. It is probably 
too early to identify with any certainty what the impact 
may be at this stage. However we firmly believe that 
technology is an essential enabler of more effective 
patient care. Investment in IT products, services and 
infrastructure is paramount in helping the NHS to 
achieve its strategic objectives as well as the detailed 
targets against which it is constantly monitored.
Market procurement
The National Programme for IT remains the 
Government’s main vehicle for the delivery of 
transformational IT to the healthcare sector. The 
Programme has undergone significant change since its 
inception, and there remains speculation as to whether 
this current procurement model will be subject to change 
in the future.
We remain committed to the success of the National 
Programme, and work closely with the LSPs, NHS 
Connecting for Health, NHS Trusts and Strategic Health 
Authorities to achieve the objectives of the Programme. 
One potential change to the current procurement 
model could be the opening up of the market to greater 
competition to augment the National Programme 
through contracts such as the ASCC which will allow 
access to a broader based supply community and is 
aimed at complementing and supporting the work 
already underway under the NPfIT.
> System C | annual report and financial statements 2008 20
directors’ report
<
We believe that we are well positioned given our 
reputation and delivery capability to benefit significantly 
in the medium to long term from a broadening of direct 
suppliers to the NHS and from other changes to the 
procurement model.
Ability to secure new business
The key to growth is the ability to secure new business. 
We recognise that it is essential to constantly broaden 
our customer base to diminish reliance on one or two key 
customers. We have achieved success in broadening our 
client base as detailed in the Chief Executive Officer’s 
Review and we will continue to focus on securing 
new business within the NHS as well as through the 
expansion of the private sector and will strengthen the 
capabilities and experience of our senior team in order 
to achieve this.
Staff retention
Over the past year we have noted increased competition 
to attract the best people with the relevant IT Healthcare 
experience. We are addressing these risks to the 
business by offering a wide range of remuneration 
benefits, investment in training and development 
combined with a focus on the individual and their 
career development. These efforts contributed towards 
the Group’s reaccreditation to the Investors in People 
scheme in May 2008.
Delivery
Over many years System C has built a strong reputation 
for the successful delivery of IT products and services 
to the healthcare sector. Our products and services 
operate in intense, life-critical environments and any 
failure to meet contracted commitments and/or client 
expectations could damage our reputation and impact 
on our financial results/position.
To mitigate this risk, we monitor our performance 
continuously against contracted commitments and 
expectations, and deploy a wide range of experienced 
technical specialists and Programme Directors to 
evaluate performance. We appoint a Project Board for 
any high risk projects with a combination of resources 
as appropriate from technical, delivery, finance and 
commercial expertise.
Client concentration
A large proportion of our revenue has historically been 
generated from our top five clients, and the loss of a 
major client can have a negative impact on revenue. As 
demonstrated this year we focused substantial efforts 
on broadening our client base as well as broadening our 
product range and consultancy offerings. This has been 
done in order to mitigate this risk going forward.
Accreditation
Much of our work relies on maintaining accreditations 
to international standards such as the ISO9001/TickIT 
Quality Assurance standard. System C employs a full-
time Quality Manager to ensure adherence to Quality 
Standards, to monitor progress against improvement 
initiatives and to monitor customer satisfaction. 
The Group has been ISO accredited since 1999 and 
was re-certificated in 2006.
Acquisitions
We recognise that selected acquisitions will play a key 
role in future growth of the business, as illustrated by 
the recent acquisition of IQ Systems Services Ltd and 
Care Records Ltd. There are inherent risks in acquiring 
businesses and we have successfully integrated both 
companies into the System C Group in order to ensure 
that our strategic objectives and targets are achieved.
Share capital and share issues
Details of share capital and shares issued during the year 
are given in note 18 to the financial statements.
Employees, health, safety and environment
These areas are discussed in detail in the Corporate 
Responsibility Statement. annual report and financial statements 2008 | System C 21
directors’ report
Political and charitable donations
The Group made no political donations during the year 
(2007: £nil). 
Charitable donations amounting to £7,951 were made to 
various organisations during the year (2007: £8,128).
Post balance sheet events
Details of post balance sheet events are given in note 25 
to the financial statements.
Substantial interests in shares
As at 17 August 2008, the Company had been notified 
of the following holdings of 3 per cent or more in its 
ordinary shares in accordance with sections 198 to 208 of 
the Companies Act 1985.
 Name of shareholder  % of total allotted 
  ordinary shares
 BlackRock Investment Management (UK) Ltd 8.46
 Guy Hands
1
 8.45
 Liontrust Asset Management plc 7.33
 AXA Framlington Investment Management 7.16
 Argos Investment Managers S.A. 5.90
 Schroder Investment Management 5.90
 Markus Bolton
2
 4.61
 Artemis Investment Management Ltd 4.16
 Gartmore Investment Management 3.55
 New Star asset Management Ltd 3.26
 Note 1: Includes 3,248,334 shares held by spouse 
 Note 2: includes 321,557 shares held by spouse
As at the date referred to above, the Company is not 
aware of any person or entity that, directly or indirectly, 
jointly or severally, will or could exercise control of  
the Company.
Going concern
After making appropriate enquiries, the Directors 
believe that the Group and the Company has adequate 
resources to continue in operational existence for the 
foreseeable future. Consequently the Directors believe 
that it is appropriate for the Consolidated and Parent 
Company’s financial statements to continue to be 
prepared on the going concern basis.
Annual General Meeting
The notice convening the Annual General Meeting to 
be held at Brenchley House, Week Street, Maidstone, 
Kent, ME14 1RF at 11:00am on 6 November 2008, 
together with an explanation of the resolutions to be 
proposed at the meeting is contained in a separate 
circular to shareholders.
Auditors
A resolution to reappoint PricewaterhouseCoopers LLP 
as auditors will be proposed at the Annual General 
Meeting.
By Order of the Board
Jane Conner Company Secretary
9 September 2008 System C | annual report and financial statements 2008 22
corporate governance statement
Principles of good governance
As an entity quoted on AIM, System C is not required 
to comply with the Combined Code on Corporate 
Governance (the “Code”). However, following the 
admission of its shares to AIM in 2005, the Company 
adopted many of the best practice provisions contained 
in the Code and continues to make considerable 
progress in improving its procedures in this respect.
The Board strongly believes in providing a framework 
for establishing good corporate governance and 
accountability and has identified the policies and 
procedures described below to support this approach.
The Board
The Board has ultimate responsibility and accountability 
for the Group’s operations. During the year the Board 
comprised the Chairman, the Chief Executive Officer, 
the Sales and Strategy Director, the Finance Director 
and three non-executive Directors. The Chairman’s 
role changed from an executive to a non-executive 
position on 1 September 2007. During the year 12 Board 
meetings, 2 Audit Committee meetings, 4 Remuneration 
Committee meetings and 2 Nomination Committee 
meetings were held. The Directors attended these 
meetings as follows:
 Director  Board  Audit  Remuneration  Nomination  
  meetings Committee Committee Committee
 Jim Horsburgh 12 - 2 -
 Dr Ian Denley 10 - - -
 Markus Bolton 10 - - -
 Andrew Coll 11 2 - -
 Dr Christopher McLaren 9 1 4 2
 Dr John Forrest 10 2 4 2
 Thomas Chambers 9 2 4 2
The Board believes its current structure is appropriate for the scale of the business and enables the Group to be 
managed efficiently.
The specific responsibilities reserved to the 
Board include, but are not limited to:
•  Setting strategy and approving an annual budget and 
medium-term projections;
• Reviewing operational and financial performance;
•  Approving any acquisitions, divestments and material 
capital expenditure;
•  Reviewing the Group’s systems of financial control and 
risk management;
•  Ensuring that appropriate management development 
and succession plans are in place;
•  Reviewing the environmental, health and safety 
performance of the Group;
•  Approving appointments to the Board and the 
Company Secretary; 
•  Approving policies relating to Directors’ remuneration 
and the severance of Directors’ contracts; and 
•  Ensuring that an appropriate and constructive 
dialogue takes place with shareholders. annual report and financial statements 2008 | System C 23
corporate governance statement
The Board has a procedure through which the Directors 
are able to take independent advice at the Company’s 
expense in the furtherance of their responsibilities.
The Directors also have access to the advice and services 
of the Company Secretary. The Company Secretary 
is responsible for ensuring that Board procedures are 
followed and that applicable rules and regulations are 
complied with.
The Group has adopted a share dealing code for 
Directors and senior employees on the same terms as 
the Model Code appended to the Listing Rules of the  
UK Listing Authority.
Chairman, Chief Executive Officer and 
independent Non-Executive Directors
Different individuals hold the posts of Chairman and 
Chief Executive Officer and there is a clear division
of responsibilities.
The Chairman is responsible for leading the Board and 
ensuring its effectiveness.
The Chief Executive Officer is responsible for running the 
business and for ensuring that accurate, timely and clear 
information is presented at the Board meetings or when 
otherwise appropriate.
The role of Chairman was an executive role throughout 
the year ended 31 May 2007 and up until 31 August 
2007, which was a departure from the Code in terms of 
the independence criteria outlined. As mentioned in the 
Annual reports of previous years the role of an executive 
chairman was deemed appropriate for a period following 
the admission of the Company’s ordinary shares to AIM. 
The requirement for this role is no longer considered 
necessary and following recommendations from the 
Nomination Committee Jim Horsburgh assumed the role 
of a non-executive Chairman on 1 September  2007.
The Board is balanced by an appropriate non-executive 
element. All of the Non-Executive Directors, save for 
Dr Christopher McLaren by virtue of his significant 
interest in the ordinary shares and his longstanding 
involvement with the Company, are considered by the 
Board to be independent and have no relationships 
interfering with their independent judgment.  
The share options held by Jim Horsburgh and the 
additional performance related fees in relation to Dr 
John Forest and Thomas Chambers referred to on page 
28 are not in the Boards view of a nature or scale to 
impact their independence.
Professional development
The Chairman is responsible for the process to ensure 
that Directors keep their skills and knowledge up to 
date and to encourage their professional development. 
The Group ensures that adequate time and financial 
resources are available for Directors to attend 
appropriate training. New Directors are encouraged to 
participate in the Group’s induction programme and to 
meet senior managers and staff. In addition, all Directors 
are encouraged to attend Company events and take a 
proactive role in informing themselves about the Group 
through a variety of means, including the intranet, 
newsletters, site visits, the business’s events  
and attendance at appropriate stakeholder meetings.
Relations with shareholders
The Chairman, Chief Executive Officer and Finance 
Director are the principal points of contact for investors, 
analysts, fund managers, media and other interested 
parties. Access is available to the Non-Executive 
Directors if this is required. Meetings with analysts and 
institutional investors are held following the interim and 
preliminary results announcements.
The Board are kept appraised about shareholder 
relations and have full access to reports from the 
Company’s nominated adviser, Collins Stewart, and 
financial public relations advisors, Maitland Consultancy.
> System C | annual report and financial statements 2008 24
The Remuneration Committee meets formally at least 
twice each year and otherwise as required.
The Remuneration Committee considers all material 
elements of remuneration policy, remuneration 
and incentives of executive Directors and senior 
management with reference to independent 
remuneration research and professional advice in 
accordance with the Combined Code.
The Remuneration Committee is responsible for setting 
any performance criteria in relation to the exercise of 
options granted to the Executive Directors as referred to 
in the Directors’ Remuneration Report.
No Director is permitted to participate in discussions 
or decisions concerning his own remuneration, and 
the remuneration of members of the Remuneration 
Committee shall be determined in accordance with good 
practice by the remaining Board members.
Details of Directors’ service contracts are provided in the 
Directors’ Remuneration Report.
Nomination Committee
The Nomination Committee is chaired by  
Dr John Forrest and also comprises 
Dr Christopher McLaren and Thomas Chambers.
The Nomination Committee has responsibility for 
considering the size, structure and composition of the 
Board, the retirement and appointment of Directors and 
will make appropriate recommendations to the Board in 
relation to these matters. The Nomination Committee 
meets formally as required.
Potential candidates to the Board are interviewed either 
by the Nomination Committee or a panel appointed by 
that Committee. An appointment requires final approval 
by the Board prior to an offer being forwarded.
< 
Board Committees
The Board has established three committees to deal 
with matters in accordance with written terms of 
reference which are available on request from the 
Company Secretary. They are the Audit Committee, a 
Remuneration Committee and a Nomination Committee. 
A majority of the members of the Committees are 
independent Non-Executive Directors.
Audit Committee
The Audit Committee is chaired by Thomas Chambers 
and also comprises Dr Christopher McLaren and 
Dr John Forrest.
No members of the Committee have any links with 
System C’s external auditors.
The Audit Committee formally meets two times per 
year and otherwise as required. The Audit Committee 
considers all matters relating to financial controls and 
reporting, internal and external audits, the scope 
and results of the audits, the independence and 
objectivity of the auditors and also keeps under review 
the effectiveness of the Company’s controls and risk 
management. The ultimate responsibility for reviewing 
and approving the annual report and financial statements 
and interim statements remains with the Board. The 
Chairman, Chief Executive Officer, other Directors and 
representatives from the finance function may attend and 
speak at meetings of the Audit Committee.
Details of the amounts paid to the external auditors 
during the year for audit and other services are set out in 
note 5 to the financial statements.
Remuneration Committee
The Remuneration Committee is chaired by 
Dr Christopher McLaren and also comprises 
Thomas Chambers and Dr John Forrest. 
Since the role of Chairman became a non-executive 
position, Jim Horsburgh may attend meetings conducted 
by the Remuneration Committee.
corporate governance statement
> annual report and financial statements 2008 | System C 25
corporate governance statement
Internal control
In accordance with the guidance of the Turnbull 
Committee the Board accepts responsibility for the 
Group’s system of internal control; sets appropriate 
policies on internal control; seeks regular assurance that 
enables it to satisfy itself that the system is functioning 
effectively; and ensures that the system of internal 
control is effective in managing risks in the manner which 
it has approved.
The Directors continue to review the effectiveness of 
the Group’s system of financial and non-financial 
controls, including operational and compliance controls, 
risk management and the Group’s high level internal 
control arrangements. These reviews include an 
assessment of internal controls and, in particular, internal 
financial controls.
The Board views the careful management of risk as a key 
management activity. Managing business risk to deliver 
opportunities is a key element of all activities. These 
business risks, which may be strategic, operational, 
reputational, financial or environmental, should be 
understood and visible.
The Board approves the Group’s annual budget which 
is prepared in the context of the Board approved 
business plan. 
The Board receives monthly financial reports which 
assess performance in comparison with the annual 
budget and in relation to periodic re-forecasts. Key 
performance indicators are regularly reviewed at Board 
level and by senior managers responsible for key areas of 
the business.
The Group has implemented a whistle-blowing policy as 
part of its ongoing review of risk policies.
The Group does not currently have an internal audit 
function however the Board will consider the need to 
create one as the business grows.  System C | annual report and financial statements 2008 26
Remuneration policy
The Remuneration Committee makes recommendations 
to the Board on the executive remuneration policy and 
determines specific remuneration packages for each of 
the Executive Directors with the objective of providing 
total remuneration packages that attract, retain and 
motivate Executive Directors of the appropriate calibre. 
This policy intends to reward excellent performance, 
be commercially competitive and also aims to align the 
interests of the executives with those of shareholders to 
create value.
This report sets out the Group’s policy on executive 
remuneration. The policy may change in future years as 
it is important that it should retain flexibility in view of 
possible changes in the business environment and in 
remuneration practice. The policy should also allow for 
any special arrangements which may be necessary in the 
future in order to recruit a director of appropriate calibre. 
The principal elements of the executive remuneration 
package are detailed below:
Basic salary and benefits
Basic salaries and benefits are, with the help of 
external consultants where appropriate, based on an 
estimate of an appropriate market level for similar 
levels of responsibility and achievement in comparable 
companies. Salaries and benefits are reviewed annually 
at the start of each financial year or, if earlier, when an 
individual changes position or responsibility.
Performance related bonus arrangements
Bonus arrangements are determined by the 
Remuneration Committee. Bonus entitlements are 
currently a maximum of 75 per cent of basic salary for 
Executive Directors and are payable on the basis of a 
sliding scale towards achievement of defined financial 
targets. Targets are set on the basis of advancing total 
shareholder value.
In addition, the Committee has the discretion to make 
ad hoc bonus payments to reflect special circumstances 
or exceptional performance.
As an entity quoted on 
AIM, System C is not 
required to comply with the 
Directors’ Remuneration 
Report Regulations 2002. 
Notwithstanding this fact, the 
Board has adopted many of the 
best practice provisions set out in 
the Regulations and accordingly 
has established a number of the 
policies and procedures referred 
to in this section.
directors’ remuneration report annual report and financial statements 2008 | System C 27
directors’ remuneration report
The Group operates a number of share option schemes 
established to provide a continuing incentive for 
Executive Directors and employees, to align their 
interests with those of the shareholders, and to ensure 
that the Group will attract and retain Directors and other 
executives of the highest calibre.
Further information on the above plans is given in 
note 19 to the financial statements.
Pensions
The Group provides access to a stakeholder pension 
scheme. All staff are eligible to join the scheme 
upon commencing employment and the Group 
makes matching contributions of up to 6 per cent of 
pensionable pay. In relation to certain of the Executive 
Directors, the Group makes an equivalent maximum 10 
per cent contribution into their private pension schemes.
Directors’ service contracts
(a) Chairman
Until 1 September  2007, Jim Horsburgh was employed 
as Non-Executive Chairman on a part-time basis (three 
days per week) under a service agreement dated 17 
October 2001, as amended by a deed of variation dated 
3 November 2004. The service agreement provided 
System C with the right to place Jim Horsburgh on 
garden leave, to pay him basic salary in lieu of notice and 
to summarily dismiss him in a number of circumstances 
(e.g. persistent breach of the service agreement, 
bankruptcy, gross misconduct etc). From 1 September 
2007, Jim moved into the role of Non-Executive 
Chairman under an Annual Letter of Appointment 
dated 1 September 2007 which stipulates a minimum 
notice period of three months or to expiry of term. Jim 
Horsburgh’s annual salary as at 31 May 2008 was £55,000.
(b) Executive Directors 
The Executive Directors have entered into service 
agreements under which they are to remain employed 
on an ongoing basis, summaries of which are set  
out below:
Dr Ian Denley
Dr Ian Denley is employed under a service agreement 
dated 20 October 2003, although his period of 
continuous employment with System C began on 
2 January 1997. Under the terms of the service 
agreement, Dr Ian Denley’s employment is terminable by 
either party giving to the other not less than six months’ 
prior written notice. The service agreement provides 
System C with the right to place Dr Ian Denley on garden 
leave, to pay him basic salary in lieu of notice and to 
summarily dismiss him in a number of circumstances as 
mentioned above. Dr Ian Denley’s annual salary as at 
31 May 2008 was £139,880.
Markus Bolton
Markus Bolton is employed under a service agreement 
dated 17 October 2001, although his period of 
continuous employment with System C began on 
1 September 1983. Under the terms of the service 
agreement, Markus Bolton’s employment is terminable 
by either party giving to the other not less than 6 
months’ prior written notice. The service agreement 
provides System C with the right to place Markus 
Bolton on garden leave, to pay him basic salary in lieu 
of notice and to summarily dismiss him in a number of 
circumstances as mentioned above. Markus Bolton’s 
annual salary as at 31 May 2008 was £139,880.
> System C | annual report and financial statements 2008 28
<
Andrew Coll
Andrew Coll is employed under a service agreement 
dated 6 February 2006. Under the terms of the service 
agreement, Andrew Coll’s employment is terminable by 
either party giving to the other not less than 6 months’ 
prior written notice. The service agreement provides 
System C with the right to place Andrew on garden 
leave, to pay him basic salary in lieu of notice and to 
summarily dismiss him in a number of circumstances as 
mentioned above. Andrew Coll’s annual salary as at 31 
May 2008 was £118,560.
The service agreements of the Executive Directors also 
stipulate an automatic retirement age of 65 and provide 
for the following additional benefits:
• 25 or 30 days holiday;
• Car allowance of between £7,200 and £9,000 
 per annum;
• Pension contributions of up to 10% of eligible salary;
• Membership of any share option scheme the 
 Group operates;
• PHI, life assurance and private individual/family 
 medical insurance; and
• Annual or discretionary bonuses as determined by 
 the Remuneration Committee.
directors’ remuneration report
(c) Non-Executive Directors 
The following non-executive Directors’ term of 
employment terminated on 21 June 2008:
• Christopher McLaren 
• John Forrest 
• Thomas Chambers
All of these non-executive Directors have been 
re-appointed to the Company for a further 
12 month period under letters of appointment which are 
in a similar format and are dated 21 June 2008.
The letters, which are based on the sample letter of non-
executive Director appointment set out in the Combined 
Code, provide, in each case, that the 
non-executive Directors’ time commitment to the 
business is approximately one day per month, although 
in practice more time than that is spent. Further, each of 
the Non-Executive Directors’ appointments is terminable 
by either party giving to the other not less than one 
months’ prior written notice (subject to System C having 
the right to terminate the appointment in a range of 
circumstances, such as the material or persistent breach 
of the terms of their appointment).
The fees paid to these non-executive Directors are set 
at a level which will attract and retain individuals with the 
necessary experience and ability to make a significant 
contribution to the Group’s affairs, and reflect the time 
demands of their Board duties.
Dr Christopher McLaren is entitled to receive fees of 
£21,528 per annum, whereas Thomas Chambers and 
Dr John Forrest were each entitled to receive fees of 
£32,292 per annum. Further, Thomas Chambers and  
Dr John Forrest were entitled to additional fees payable 
annually depending upon their performance and that of 
the Group for each of the three financial years ended 
31 May 2008 up to a cumulative maximum for this 
three year period of three times their respective annual 
fee. Such additional fees expired in June 2008 with no 
payments being made. annual report and financial statements 2008 | System C 29
Directors’ interests in share options
Only the following Directors had an interest in share options over the ordinary shares of System C during the financial 
year ended 31 May 2008:
 
   Granted Lapsed 
  1 June during during 31 May  Exercise 
  2007 year year 2008 Exercise period Price
 Jim Horsburgh 540,000 - (540,000) - 23 06 2008 - 23 06 2015 54p
  250,000 - (250,000) - 20 09 2009 - 19 09 2019 24.5p
 Sub total 790,000 - (790,000) -
 Dr Ian Denley 410,000 - - 410,000 23 06 2008 - 23 06 2015 54p
  300,000 - - 300,000 20 09 2009 - 19 09 2019 2 4 . 5 p
  - 521,000 - 521,000 18 10 2010 - 17 10 2017 28p
  - 494,508 - 494,508 29 01 2011 - 28 01 2018 29.5p
 Sub total 710,000 1,015,508 - 1,725,508
 Markus Bolton 360,000 - - 360,000 23 06 2008 - 23 06 2015 54p
  300,000 - - 300,000  20 09 2009 - 19 09 2019 24.5p
  - 521,000 - 521,000 18 10 2010 - 17 10 2017 28p
  - 494,508 - 494,508 29 01 2011 - 28 01 2018 29.5p
 Sub total 660,000 1,015,508 - 1,675,508
 Andrew Coll 300,000 - - 300,000 23 05 2009 - 23 05 2016 23.5p
  100,000 - - 100,000 20 09 2009 - 19 09 2019 24.5p
  - 444,857 - 444,857 18 10 2010 - 17 10 2017 28p
  - 422,237 - 422,237 29 01 2011 - 28 01 2018 29.5p
 Sub total 400,000 867,094 - 1,267,094 
 Total 2,560,000 2,898,110 (790,000) 4,668,110
There were no exercises of share options by the Directors during the year ended 31 May 2008 and there have been 
no changes in the interests of the Directors in the shares or the share options since 31 May 2008.
>
directors’ remuneration report System C | annual report and financial statements 2008 30
< 
Directors’ interests in shares
The Directors’ beneficial interest in the share capital of the Company at any point during the year ended 
31 May 2008 was as follows:
 Interest in ordinary shares  1 June 2007 and 31 May 2008
 Jim Horsburgh  300,000
 Dr Ian Denley  435,626
 Markus Bolton
1
  4,130,994
 Dr Christopher McLaren  2,116,387
 Dr John Forrest  22,223
 Thomas Chambers  22,223
  7,027,453
Note 1: Beneficial interests include 321,557 ordinary shares held by spouse throughout the year.
The following part of the remuneration report contains audited information.
No director waived any emoluments in respect of the year ended 31 May 2008 (2007: £nil).
At the year end there were three Directors to whom retirement benefits are accruing under defined contribution 
pension schemes (2007: three).
directors’ remuneration report
 Directors’ emoluments
  Year ended 31 May 2008                      Year ended 31 May 2007
  Salary, fees  Benefits 
  and bonus  in kind  Subtotal  Pension  Total  Subtotal
1
  Pension  Total
  £ £ £ £ £ £ £ £
 Executive:
 Jim Horsburgh
2
 73,815 3,447 77,262 4,069 81,331 113,656 6,193 119,849
 Dr Ian Denley 250,341 10,489 260,830 9,025 269,855 142,411 8,048 150,459
 Markus Bolton 250,342 12,834 263,176 11,630 274,806 145,366 8,048 153,414
 Andrew Coll  213,100 8,192 221,292 7,771 229,063 121,542 8,902 130,444
 Sub total 787,598 34,962 822,560 32,495 855,055 522,975 31,191 554,166
 Non-Executive:
 Dr Christopher McLaren 21,459 - 21,459 - 21,459 20,467 - 20,467
 Dr John Forrest
 3
 32,189 - 32,189 - 32,189 30,963 - 30,963
 Thomas Chambers 32,189 - 32,189 - 32,189 30,963 - 30,963
 Total 873,435 34,962 908,397 32,495 940,892 605,368 31,191 636,559
Note 1: Includes salary, fees, bonus and benefits in kind.
Note 2: Became non-executive from 1 September 2007.
Note 3: Fees are paid to Leparin Ltd, a company controlled by Dr John Forrest. annual report and financial statements 2008 | System C 31
Statement of Directors’ Responsibilities in respect 
of the Annual Report and the Financial Statements
The Directors are responsible for preparing the Annual 
Report and the financial statements in accordance with 
applicable law and regulations.
Company law requires the Directors to prepare financial 
statements for each financial year. Under that law the 
Directors have prepared the Group and Parent Company 
financial statements in accordance with International 
Financial Reporting Standards (IFRSs) as adopted by the 
European Union. The financial statements are required 
by law to give a true and fair view of the state of affairs of 
the Group and the Company and of the profit or loss of 
the Group and the Company for that period.
In preparing those 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;
• state that the financial statements comply with IFRSs 
 as adopted by the European Union; and
• prepare the financial statements on the going 
 concern basis, unless it is inappropriate to presume 
 that the Group will continue in business, in which 
 case there should be supporting assumptions or 
 qualifications as necessary. 
The Directors confirm that they have complied with 
the above requirements in preparing the financial 
statements.
The Directors are responsible for keeping proper 
accounting records that disclose with reasonable 
accuracy at any time the financial position of the Group 
and the Company and to enable them to ensure that 
the financial statements comply with the Companies Act 
1985 and as regards the Group Financial Statements, 
Article 4 of the IAS Regulation. They are also responsible 
for safeguarding the assets of the Group and the 
Company and hence for taking reasonable steps for 
the prevention and detection of fraud and 
other irregularities.
directors’ remuneration report
So far as each Director is aware, there is no relevant 
audit information (as defined by Section 234ZA of the 
Companies Act 1985) of which the Company’s auditors 
are unaware. Each Director has taken all the steps that 
they ought to have taken as a Director in order to make 
themselves aware of any relevant audit information and 
to establish that the Company’s auditors are aware of 
that information.
The Directors are responsible for the maintenance and 
integrity of the Company’s website and legislation in 
the United Kingdom governing the preparation and 
dissemination of financial statements may differ from 
legislation in other jurisdictions.
By Order of the Board
Jane Conner Company Secretary
9 September 2008 We have audited the Group and Parent Company financial statements (the ‘‘financial statements’’) of System C 
Healthcare PLC for the year ended 31 May 2008 which comprise the Group Income Statement, the Group and Parent 
Company Balance Sheets, the Group and Parent Company Statements of Changes in Equity, the Group and Parent 
Company Cash Flow Statements and the related notes. These financial statements have been prepared under the 
accounting policies set out therein. 
Respective responsibilities of directors and auditors
The directors’ responsibilities for preparing the Annual Report and the financial statements in accordance with 
applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union are set out 
in the Statement of Directors’ Responsibilities.
Our responsibility is to audit the financial statements with relevant legal and regulatory requirements and 
International Standards on Auditing (UK and Ireland). This report, including the opinion, has been prepared for and 
only for the Company’s members as a body in accordance with Section 235 of the Companies Act 1985 and for no 
other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any 
other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior 
consent in writing.
We report to you our opinion as to whether the financial statements give a true and fair view and have been properly 
prepared in accordance with the Companies Act 1985. We also report to you whether in our opinion the information 
given in the Directors' Report is consistent with the financial statements.
In addition we report to you if, in our opinion, the Company has not kept proper accounting records, if we have not 
received all the information and explanations we require for our audit, or if information specified by law regarding 
directors’ remuneration and other transactions is not disclosed.
We read the other information contained in the Annual Report and consider whether it is consistent with the audited 
financial statements. The other information comprises only the Chairman’s Statement, the Chief Executive Officer’s 
Review, the Financial Review, the Corporate Responsibility Statement, the Board of Directors, the Directors’ Report, 
the Corporate Governance Statement and the Directors Remuneration Report. We consider the implications for our 
report if we become aware of any apparent misstatements or material inconsistencies with the financial statements. 
Our responsibilities do not extend to any other information.
Basis of audit opinion
We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the 
Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and 
disclosures in the financial statements. It also includes an assessment of the significant estimates and judgments made 
by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate 
to the Group’s and Company’s circumstances, consistently applied and adequately disclosed.
Independent Auditors’ Report to the Members of 
System C Healthcare PLC
auditors’ report
System C | annual report and financial statements 2008 32 We planned and performed our audit so as to obtain all the information and explanations which we considered 
necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are 
free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also 
evaluated the overall adequacy of the presentation of information in the financial statements.
Opinion
In our opinion:
• the Group financial statements give a true and fair view, in accordance with IFRSs as adopted by the 
 European Union, of the state of the Group’s affairs as at 31 May 2008 and of the Group’s profit and cash 
 flows for the year then ended;
•  the Parent Company financial statements give a true and fair view, in accordance with IFRSs as adopted 
 by the European Union as applied in accordance with the provisions of the Companies Act 1985, of the state of the 
Parent Company’s affairs as at 31 May 2008 and of its cash flows for the year then ended;
• the financial statements have been properly prepared in accordance with the Companies Act 1985; and
• the information given in the Directors' Report is consistent with the financial statements.
PricewaterhouseCoopers LLP
 
Chartered Accountants and Registered Auditors 
Gatwick
9 September 2008
auditors’ report
annual report and financial statements 2008 | System C 33 group income statement
System C | annual report and financial statements 2008 34
Year Ended Year Ended
31 May 31 May
08 07
Note £’000 £’000
Revenue 1, 2 18,128 13,473
Cost of sales (8,075) (7,061)
Gross proﬁt 10,053 6,412
Selling and marketing costs (379) (487)
Research and development costs (1,105) (1,045)
Administration and general overheads (6,126) (4,257)
Proﬁt from operations 2,443 623
Financial income 4 891 803
Financial expense 4 (48) (92)
Proﬁt before taxation 5 3,286 1,334
Taxation 6 (1,052) (384)
Proﬁt for the ﬁnancial year 2,234 950
Earnings per ordinary share
– Basic 7 2.56 1.09
– Diluted 7 2.54 1.08
The results above relate entirely to continuing operations. group balance sheet
annual report and financial statements 2008 | System C 35
At 31 May At 31 May
08 07
Note £’000 £’000
Assets
Non-current assets
Goodwill 8 1,884 -
Property, plant and equipment 9 415 673
Intangible assets 10 2,250 351
Deferred tax assets 6 23 927
Trade and other receivables 12 428 774
5,000 2,725
Current assets
Trade and other receivables 12 6,489 6,492
Cash and cash equivalents 13 12,427 10,574
18,916 17,066
Total assets 23,916 19,791
Liabilities
Current liabilities
Trade and other payables 14 4,010 3,154
Deferred consideration 22 680 -
Current tax liability 6 162 92
Borrowings 15 - 528
4,852 3,774
Non-current liabilities
Deferred consideration 22 670 -
Deferred tax liability 6 414 -
Provisions and other liabilities 16 104 102
1,188 102
Total liabilities 6,040 3,876
Net assets 17,876 15,915
Shareholders’ equity
Share capital 18 895 895
Share premium account 20 9,766 9,757
Capital redemption reserve 20 3,127 3,127
Own shares held in trust 20 (1,235) (1,235)
Retained earnings 20 5,323 3,371
Total equity 17,876 15,915
The financial statements on pages 34 to 75 were approved by the Board of Directors on 9 September 2008 and signed 
on its behalf by:
Dr Ian Denley Chief Executive Officer group statement of changes in shareholders’ equity
System C | annual report and financial statements 2008 36
 
Share 
capital
£’000
Share 
premium 
account 
£’000
Capital 
redemption 
reserve
£’000
Own shares 
held in trust
£’000
Retained 
earnings
£’000
Total 
equity
£’000
As at 1 June 2006 893 9,732 3,127 (1,235) 2,756 15,273
Profit for the financial year - - - - 950 950
Share-based payment credit - - - - (53) (53)
Deferred tax - - - - 14 14
Issue of new shares 2 - - - - 2
Premium on issue of new shares - 25 - - - 25
Dividends - - - - (296) (296)
As at 31 May 2007 895 9,757 3,127 (1,235) 3,371 15,915
Profit for the financial year - - - - 2,234 2,234
Share-based payment charge - - - - 72 72
Deferred tax - - - - 12 12
Premium on issue of new shares - 9 - - - 9
Dividends - - - - (366) (366)
As at 31 May 2008 895 9,766 3,127 (1,235) 5,323 17,876
Further details in respect of share capital and reserves are given in notes 18 and 20 to the financial statements. group cash flow statement
annual report and financial statements 2008 | System C 37
Year ended
31 May 08
£’000
Year ended
31 May 07
£’000
Cash ﬂows from operating activities
Cash generated from operations 4,712 2,109
Financial expense (21) (92)
Income tax paid (184) -
Net cash generated by operating activities 4,507 2,017
Cash ﬂows from investing activities
Acquisition of subsidiaries net of overdrafts required (1,669) -
Overdrafts acquired with subsidiaries (135) -
Purchases of property, plant and equipment (122) (227)
Capitalised development costs (591) (299)
Financial income 748 796
Net cash (used in)/generated from investing activities (1,769) 270
Cash ﬂows from ﬁnancing activities
Repayment of borrowings (528) (992)
Issue of equity share capital 9 27
Dividends paid (366) (296)
Net cash used in financing activities (885) (1,261)
Net increase in cash and cash equivalents 1,853 1,026
Cash and cash equivalents at beginning of year 10,574 9,548
Cash and cash equivalents at end of year 12,427 10,574
Notes to the cash ﬂow statement: Cash ﬂows from operating activities
Year ended
31 May 08
£’000
Year ended
31 May 07
£’000
Profit for the financial year 2,234 950
Taxation 1,052 384
Financial income (891) (803)
Financial expense 48 92
Proﬁt from operations 2,443 623 
Share-based payments charge/(credit) 72 (53) 
Depreciation of property, plant and equipment 387 575 
Amortisation of intangible assets 352 110 
Decrease in trade and other receivables 752 196 
Increase in trade and other payables 702 637 
Loss on disposal of property, plant and equipment 2 -
Net movement on provisions 2 21 
Cash generated from operations 4,712 2,109  company balance sheet
38
At 31 May 08 At 31 May 07
Note £’000 £’000
Assets
Non-current assets
Property, plant and equipment 9 409 673
Intangible assets 10 772 351
Investments 11 2,992 -
Deferred tax assets 6 23 927
Trade and other receivables 12 428 774
4,624 2,725
Current assets
Trade and other receivables 12 6,125 6,492
Amounts due from group undertakings 24 542 -
Cash and cash equivalents 13 12,219 10,574
18,886 17,066
Total assets 23,510 19,791
Liabilities
Current liabilities
Trade and other payables 14 3,864 3,154
Current tax liability 6 133 92
Deferred consideration 22 680 -
Borrowings 15 - 528
4,677 3,774
Non-current liabilities
Deferred consideration 22 670 -
Provisions and other liabilities 16 104 102
774 102
Total liabilities 5,451 3,876
Net assets 18,059 15,915
Shareholders’ equity
Share capital 18 895 895
Share premium account 20 9,766 9,757
Capital redemption reserve 20 3,127 3,127
Own shares held in trust 20 (1,235) (1,235)
Retained earnings 20 5,506 3,371
Total equity 18,059 15,915
The financial statements on pages 34 to 75 were approved by the Board of Directors on 9 September 2008 and signed 
on its behalf by:
Dr Ian Denley Chief Executive Officer
System C | annual report and financial statements 2008 company statement of changes in shareholders’ equity
annual report and financial statements 2008 | System C 39
Share 
capital
Share 
premium 
account
Capital
redemption
reserve
Own 
shares 
held in 
trust
Retained 
earnings
Total 
equity
£’000 £’000 £’000 £’000 £’000 £’000
As at 1 June 2006
893 9,732 3,127 (1,235) 2,756 15,273
Profit for the financial year - - - - 950 950
Share-based payments charge - - - - (53) (53)
Deferred tax - - - - 14 14
Issue of new shares 2 - - - - 2
Premium on issue of new shares - 25 - - - 25
Dividends - - - - (296) (296)
As at 31 May 2007 895 9,757 3,127 (1,235) 3,371 15,915
Profit for the financial year - - - - 2,417 2,417
Share-based payments charge - - - - 72 72
Deferred tax - - - - 12 12
Premium on issue of new shares - 9 - - - 9
Dividends - - - - (366) (366)
As at 31 May 2008 895 9,766 3,127 (1,235) 5,506 18,059
Further details in respect of share capital and reserves are given in Notes 18 and 20 to the financial statements. System C | annual report and financial statements 2008 40
Year ended Year ended
31 May 08 31 May 07
£’000           £’000
Cash ﬂows from operating activities
Cash generated from operations 4,298 2,109
Financial expense (21) (92)
Income tax paid (116) -
Net cash generated by operating activities 4,161 2,017
Cash ﬂows from investing activities
Purchases of property, plant and equipment (122) (227)
Purchase of subsidiary undertakings (1,669) -
Capitalised development costs (591) (299)
Financial income 751 796
Net cash (used in)/generated from investing activities (1,631) 270
Cash ﬂows from ﬁnancing activities
Repayment of borrowings (528) (992)
Issue of equity share capital 9 27
Dividends paid (366) (296)
Net cash used in financing activities (885) (1,261)
Net increase in cash and cash equivalents 1,645 1,026
Cash and cash equivalents at beginning of year 10,574 9,548
Cash and cash equivalents at end of year 12,219 10,574
Notes to the cash ﬂow statement: Cash ﬂows from operating activities
Year ended Year ended
31 May 08 31 May 07
£’000 £’000
Profit for the financial year 2,417 950
Taxation 1,073 384
Financial income (889) (803)
Financial expense 46 92
Proﬁt from operations 2,647 623 
Share-based payment charge/(credit) 72 (53) 
Depreciation of property plant and equipment 380 575 
Amortisation of intangible assets 170 110 
Decrease in trade and other receivables 315 196 
Increase in trade and other payables 710 637 
Loss on disposal of property, plant and equipment 2 -
Net movement on provisions 2 21 
Cash generated from operations 4,298 2,109 
company cash flow statement annual report and financial statements 2008 | System C 41
notes to the financial statements
1 Principal accounting policies
The principal accounting policies adopted in the 
preparation of these financial statements are set out 
below. Unless otherwise stated, these policies have been 
applied to all years presented.
(a) Basis of preparation
The financial information for the year ended 31 May 
2008 has been prepared in accordance with International 
Accounting Standards (“IAS”) and International 
Financial Reporting Standards (“IFRS”) as adopted by 
the European Union (“EU”) and also as issued by the 
International Accounting Standards Board, International 
Financial Reporting Interpretations Committee (“IFRIC”) 
interpretations and with those parts of the Companies 
Act 1985 applicable to companies reporting under IFRS. 
The financial statements have been prepared under the 
historical cost convention.
As permitted by Section 230 of the Companies Act 1985, 
no separate income statement has been presented in 
respect of the Parent Company. The profit for the year 
dealt with in the financial statements of the Company 
was £2,417,000 (2007: £950,000).
The preparation of financial statements in conformity 
with generally accepted accounting principles requires 
the use of estimates and assumptions that affect the 
reported amounts of assets and liabilities at the date 
of the financial statements and the reported amounts 
of revenues and expenses during the reporting period. 
Although these estimates are based on management’s 
best knowledge of the amount, events or actions, the 
actual results ultimately may differ from those estimates.
(b) Basis of consolidation
These financial statements consolidate the financial 
statements of the Company and all its subsidiary 
undertakings as at 31 May each year and are prepared 
under IFRS using consistent accounting policies. The 
results of subsidiaries are included in the Group income 
statement from the date the Group has the power 
to govern the financial and operating policies of the 
acquired entity. Intra-group transactions and balances 
are eliminated on consolidation.
(c) Adoption of new and revised standards
In the current year, the Group adopted IFRS 7 “Financial 
Instruments: Disclosures” which is effective for annual 
reporting periods beginning on or after 1 January 2007, 
and the related amendment to IAS 1 “Presentation of 
Financial Statements”. The impact of the adoption of 
IFRS 7 and the amendments to IAS 1 has been to expand 
the disclosures provided in the financial statements 
regarding the Group’s financial instruments and 
management of capital (see note 17).
In addition to the above there are four Interpretations 
issued by the International Financial Reporting 
Interpretations Committee that are effective for the 
current period. These are:
IFRIC 8 Scope of IFRS 2.
IFRIC 9 Reassessment of embedded derivatives.
IFRIC 10 Interim financial reporting and impairment.
IFRIC 11  IFRS 2 Group and Treasury 
Share Transactions.
The adoption of the above Interpretations has not had 
any impact on the Group.
(d) Standards, amendments and interpretations 
published by date of approval of these ﬁnancial 
statements which may be relevant but are not yet 
effective and have not been early adopted by 
the Group
IFRS 2 Amendment (Share-based payment)
IFRS 3 Revised (Business combinations)
IFRS 8 Operating segments
IAS 1  Revised and amended (Presentation of 
financial statements)
IAS 14 Revised (Operating segments)
IAS 23 Revised (Borrowing costs)
IFRIC 12 Service concession arrangements
IFRIC 13 Customer loyalty programmes
IFRIC 14  The limit on a defined benefit asset minimum 
funding requirements and their interaction
IFRIC 15 Agreements for the construction of real estate
IFRIC 16  Hedges of a net investment in a 
foreign operation notes to the financial statements
System C | annual report and financial statements 2008 42
The directors are currently assessing the impact of these 
Standards and Interpretations on future periods but 
currently anticipate that they will have no material impact 
on the financial statements of the Group other than the 
additional disclosures required by IFRS 8 (applicable for 
accounting periods commencing on or after  
1 January 2009) and the impact of IFRS 3 (Revised) on 
future business combinations (applicable for accounting 
periods beginning on or after 1 July 2009).
(e) Revenue recognition
Revenue is measured at the fair value of consideration 
received or receivable and represents amounts 
receivable for goods and services provided to third 
parties in the normal course of business during the 
period, net of value added tax and discounts and result 
from the principal activity of the Group.
Each element of revenue (described below) 
is recognised only when:
•	 	 Delivery	of	goods	or	pr ovision	of	services 
has occurred;
•	 The	consideration	r eceivable	is	fixed	or	determinable;
•	 	 Ther e	ar e	no	significant	vendor	obligations	r emaining;	
and
•	 	 Collection	of	the	amount	due	fr om	the	customer 
is reasonably assured.
Revenue from the sale of software licences is recognised 
in the income statement as the system modules are 
installed. Typically the sale will match the project 
implementation timescale in accordance with specified 
contract milestones.
Revenue from the related implementation is recognised 
in the income statement proportionally over the 
implementation period as those services are provided.
Revenue from maintenance, support and other services 
is recognised over the contracted term of supply.
Hardware revenue is recognised in line with, and 
approximates to, the depreciation charge on such assets, 
as capitalised within property, plant and equipment and 
disclosed as contract assets.
Revenue from healthcare consultancy services is 
recognised when the service is delivered and approved 
by the client.
Revenue which has been recognised by the Group but 
has not been invoiced as at the period end is included 
within accrued income.
Invoices raised in advance of the provision of goods/
services to customers are recorded in the balance 
sheet as deferred income and included within trade 
receivables. Such amounts are recognised in the income 
statement as those goods/services are provided to 
the customer.
(f) Interest receivable on contracts
An element of the amounts invoiced to certain 
customers in respect of contracts to supply Electronic 
Patient Records (“EPR”) systems and other ancillary 
items is disclosed within financial income as other 
interest. Such amounts are based on the Group’s net 
investment in the contracts taking into account payments 
received from the customer to date.
(g) Employee beneﬁts
Pension obligations
The Group operates a stakeholder pension scheme 
and the assets of the scheme are held separately from 
those of the Group in an independently administered 
fund. In addition to this the Group contributes to the 
personal pension plans of certain employees. 
The Group has no further obligations once the 
contributions have been paid.
The pension cost charge for the period is reflected in the 
income statement and represents contributions payable 
to the defined contribution pension scheme plus 
amounts payable by the Group to the personal pension 
plans of certain employees based on a percentage of 
basic salary.
Any shortfall or excess in the contributions payable by 
the Group in relation to the pension cost charge for the 
year are included in accruals or prepayments 
as appropriate. annual report and financial statements 2008 | System C 43
notes to the financial statements
Profit sharing and bonus plans
The Group recognises a liability and an expense for 
bonuses/profit sharing only where there is a contractual 
obligation or where there is a constructive obligation 
arising from past practice or other events that existed at 
the balance sheet date.
Termination benefits
Termination benefits are payable when employment is 
terminated by the Group before an individual’s normal 
retirement date, or whenever an employee accepts 
voluntary redundancy in exchange for those benefits. 
The Group recognises termination benefits when it is 
demonstrably committed to either: terminating the 
employment of current employees according to a 
detailed formal plan without possibility for withdrawal; 
or providing termination benefits as a result of an offer 
made to encourage voluntary redundancy. Benefits falling 
due more than one year after the balance sheet date are 
discounted to their present value where material.
Share-based payments
The Group operates both equity-settled and cash-settled 
share option schemes. 
For equity-settled share options, the services received 
from employees are measured by reference to the fair 
value of the share options granted. The fair value is 
calculated at grant date and recognised in the income 
statement, together with a corresponding increase in 
shareholders’ equity, on a straight-line basis over the 
vesting period, based on an estimate of the number 
of options that will eventually vest. Vesting conditions, 
other than market conditions, are not taken into account 
when estimating the fair value. 
For cash-settled arrangements, the services received 
from employees are measured at the fair value of the 
liability and recognised in the income statement on a 
straight-line basis over the vesting period. The fair value 
of the liability is measured at each balance sheet date 
and at the date of settlement with changes in fair value 
recognised in the income statement.
IFRS 2 “Share-based payment” has been applied to 
equity-settled share-based payment arrangements 
granted after 7 November 2002 that had not 
unconditionally vested with employees by the 
date of the Group’s transition to IFRS and to all 
cash-settled awards.
The proceeds received, net of any directly 
attributable transaction costs, are credited to share 
capital (nominal value) and share premium when the 
options are exercised.
(h) Own shares held in trust
The Company’s shares owned by The System C 
Healthcare PLC Employee Benefits Trust are presented 
as a reduction of shareholders’ equity (see note 20).
(i) Cash and cash equivalents 
Cash and cash equivalents include cash in hand, deposits 
held at call with banks, other short-term highly liquid 
investments with original maturities of three months or 
less, and bank overdrafts. 
Bank overdrafts or loans where there is no right of set-off 
are shown within borrowings in current or non-current 
liabilities on the balance sheet as appropriate.
(j) Business combinations
Goodwill arising on a business combination is not 
amortised but tested for impairment on an annual 
basis. The carrying value of goodwill is reduced by any 
impairment amount recorded.
Intangible assets arising on a business combination 
are separately identified and valued, and subject to 
amortisation over their estimated economic lives.
(k) Goodwill
Goodwill represents the excess of the cost of an 
acquisition over the fair value of the Group’s share of the 
net identifiable assets of the acquired subsidiary at the 
date of acquisition. Goodwill on business combinations 
is tested annually for impairment and carried at cost less 
accumulated impairment losses. notes to the financial statements
System C | annual report and financial statements 2008 44
(l) Property, plant and equipment 
All property, plant and equipment (“PPE”) is shown at 
original cost less accumulated depreciation and any 
accumulated impairment losses. 
Cost includes expenditure that is directly attributable to 
the acquisition of the items. 
Depreciation on assets is calculated using the straight-
line method to allocate the cost of each asset less its 
residual value, if any, over its estimated useful life, as 
follows: 
•	 Leasehold	impr ovements	 Over	the	term	of	lease	
•	 Fixtur es	and	fittings	 15%	straight-line
•	 Plant	and	equipment	 25%	straight-line		
•	 Computer	equipment	 25%	straight-line
•	 Contract	assets	 25%	straight-line 
  (included in cost of sales)
(m) Leases
Leases of property, plant and equipment where the 
Group has substantially all the risks and rewards of 
ownership are classified as finance leases. Finance leases 
are capitalised at the lease’s inception at the lower of 
the fair value of the leased asset and the present value 
of the minimum lease payments. Each lease payment 
is allocated between the liability and finance expenses 
so as to achieve a constant rate on the finance balance 
outstanding. The corresponding rental obligations, net 
of finance expenses, are included within borrowings. 
Property, plant and equipment acquired under finance 
leases is depreciated over the shorter of the asset’s 
useful life and the lease term.
Leases where the lessor retains substantially all the risks 
and rewards of ownership are classified as operating 
leases. Payments made under operating leases (net of 
any incentives received from the lessor) are charged to 
the income statement on a straight-line basis over the 
period of the lease.
(n) Impairment of non-current assets
In accordance with IAS 36 “Impairment of assets” a 
review for impairment of non-current assets is carried 
out if events or changes in circumstances indicate 
that the carrying amount of such an asset may not be 
recoverable. Impairment reviews comprise a comparison 
of the carrying amount of the asset with its recoverable 
amount (the higher of net realisable value and value in 
use). To the extent that the carrying amount exceeds 
the recoverable amount, the asset is impaired and an 
impairment loss is recognised in the income statement.
(o) Intangible assets
Customer contracts
Existing customer contracts are capitalised at fair 
value as at the date of acquisition using the multi 
period excess earnings approach. They are carried 
at their fair value less accumulated amortisation and 
any accumulated impairment losses. Amortisation is 
calculated using the straight-line method to allocate 
the fair value of customer contracts over their estimated 
economic life of 4 to 5 years.
Software
Software relates to the fair value of software acquired by 
the Group on purchase of subsidiary undertakings and 
the cost of internally developed software. 
Software acquired as part of a business combination is 
capitalised at fair value at the date of acquisition using 
the relief from royalty approach. Such software is then 
carried at fair value less accumulated amortisation and 
any accumulated impairment losses. Amortisation is 
calculated using the straight-line method to allocate the 
fair value of the software over the estimated economic 
life of up to 7 years.
Computer software licences purchased by the Group are 
capitalised on the basis of the costs incurred to acquire 
and bring into use the specific software. These costs 
are amortised over their estimated useful lives which 
typically do not exceed four years. Costs associated 
with developing and maintaining computer software 
programmes are recognised as an expense in the 
income statement as incurred. annual report and financial statements 2008 | System C 45
notes to the financial statements
Software development costs
Costs relating to the design and testing of new or 
improved software products are recognised as intangible 
assets from the point it is probable that the project 
will be a success, considering its commercial and 
technological feasibility, and costs can be measured 
reliably. Software development costs primarily comprise 
employee costs and are amortised over the expected 
period over which the Group is expected to benefit from 
the capitalised asset and typically range between three 
and five years.  
Development costs that have initially been recognised 
as an expense in the income statement (as IAS 38 
criteria are not met), but where subsequently the IAS 38 
criteria are deemed to have been satisfied, are not then 
recognised as an asset in a subsequent period.
Research expenditure on software is recognised as an 
expense in the income statement in the period in which 
it is incurred. 
(p) Investments 
In the Company’s financial statements, investments 
in subsidiary undertakings are stated at cost less any 
impairment losses.
(q) Taxation including deferred tax 
Corporation tax, where payable, is provided on taxable 
profits at the current rate.
Deferred tax is provided on all temporary differences at 
the balance sheet date between the tax bases of assets 
and liabilities and their carrying amounts for financial 
reporting purposes.
Deferred tax assets are recognised for all deductible 
temporary differences, carry-forward of unused tax 
assets and unused tax losses, to the extent that it is 
probable that taxable profit will be available against 
which the deductible temporary differences, and the 
carry-forward of unused tax assets and unused tax losses 
can be utilised. The carrying amount of deferred income 
tax assets is reviewed at each balance sheet date and 
reduced to the extent that it is no longer probable that 
sufficient taxable profit will be available to allow all or 
part of the deferred income tax asset to be utilised.
Deferred tax assets and liabilities are measured at the 
tax rates that are expected to apply to the year when 
the asset is realised or the liability is settled, based 
on tax rates (and tax laws) that have been enacted 
or substantively enacted at the balance sheet date. 
Tax relating to items recognised directly in equity is 
recognised in equity and not in the income statement.  
Deferred tax balances are not subject to discounting.
(r) Provisions
In accordance with IAS 37 “Provisions, contingent 
liabilities and contingent assets”, provisions for liabilities 
are recognised when the Group has a present legal or 
constructive obligation as a result of past events, and 
it is considered more likely than not that an outflow of 
resources will be required to settle that obligation, and 
the amount can be reliably estimated. The expense 
relating to any provision is presented in the income 
statement net of any reimbursement.
Provisions are measured at the present value of the 
directors’ best estimate of the expenditure required to 
settle the present obligation at the balance sheet date 
and discounted where the effect is considered material.
(s) Dividend distributions
Interim dividends in respect of equity shares are 
recognised in the financial statements in the period in 
which they are paid.
Final dividends in respect of equity shares are 
recognised in the financial statements in the period that 
the dividends are formally approved by the 
Company’s members. notes to the financial statements
System C | annual report and financial statements 2008 46
(t) Financial instruments
Financial assets and financial liabilities are recognised in 
the Group’s balance sheet when the Group becomes a 
party to the contractual provisions of the instrument.
Borrowings and borrowing costs
All borrowings are initially stated at the fair value of 
the consideration received after deduction of issue 
costs. Issue costs together with other finance costs 
such as premiums on redemption are charged to the 
income statement over the term of the borrowings 
and represent a constant proportion of the balance of 
capital repayments outstanding. Accrued finance costs 
attributable to borrowings are included in accrued 
charges within current liabilities, unless the finance cost 
is only repayable on redemption in which case the 
accrued finance costs are included within the carrying 
value of borrowings.
Trade receivables
Trade receivables are recognised initially at fair value 
and subsequently measured at amortised cost using the 
effective interest method less provision for impairment. 
A provision for impairment is established when there is 
objective evidence that the Group will not be able to 
collect all amounts due according to the original terms 
of the receivables. Any changes in the amount of the 
provision are recognised in the income statement during 
the year.
Trade payables
Trade payables are recognised initially at fair value and 
subsequently measured at amortised cost using the 
effective interest method.
(u) Share capital and share premium
Ordinary shares issued are shown as share capital at 
nominal value. The premium received on the issue 
of shares in excess of the nominal value is credited 
to the share premium account and included within 
shareholders’ equity.
(v) Segmental reporting
A business segment is considered to be a group of 
assets and operations engaged in providing products 
or services that are subject to risks and returns that 
are different to those of other business segments. A 
geographical segment is engaged in providing products 
or services within a particular economic environment that 
is subject to risks and returns that are different to that in 
other economic environments.
(w) Key areas of judgement
The Group makes estimates and assumptions concerning 
the future. The resulting accounting estimates will by 
definition, seldom equal the related actual results. The 
estimates and assumptions that may have an element of 
risk causing an adjustment to the carrying amounts 
of assets and liabilities within the next year include those 
that relate to the capitalisation of development costs, 
impairments of current and non-current assets and the 
components of the Group’s calculation for 
share-based payments. annual report and financial statements 2008 | System C 47
notes to the financial statements
2 Segmental information
The Group’s primary format for segmental reporting is business segment. As the business only operates 
in the UK the Group does not have a secondary reporting format. 
The Group’s sole activity is the design, development and implementation of computer hardware and software. 
The directors consider it appropriate to analyse the results and financial position of the Group in three distinct 
segments as this reflects how the business is managed:
•	 	 The	Pr oducts	segment	r elates	to	business	wher e	the	Gr oup	contracts	dir ectly	with	local	NHS	T rusts	and 
other clinical organisations;
•	 	 The	Services	segment	r elates	to	the	business	wher e	the	Gr oup	is	subcontracted	to	perform	work	on	behalf	of	other	
organisations where the end customer is also either the NHS or other clinical organisations;
•	 	 Development	and	Shar ed	Services	r elates	to	the	Gr oup’ s	central	r esear ch	and	development	activities	and	support	
services provided to the Products and Services segments.
Group 
Year ended 31 May 2008
Products
£’000
Services
£’000
Development and 
Shared Services
£’000
Total
£’000
Revenue 5,790 12,338 - 18,128
Proﬁt/(loss) from operations 2,316 4,992 (4,865) 2,443
Financial income 294 - 597 891
Financial expense (20) - (28) (48)
Proﬁt/(loss) before taxation 2,590 4,992 (4,296) 3,286
Total assets 3,261 3,267 17,388 23,916
Total liabilities (1,148) (755) (4,137) (6,040)
Net assets 2,113 2,512 13,251 17,876
Other segmental disclosures:
Capital expenditure - PPE 47 - 75 122
Capital expenditure - Intangible assets 27 - 564 591
Depreciation of tangible assets 213 - 174 387
Amortisation of intangible assets 142 - 210 352
Share-based payment charge - - 72 72
  System C | annual report and financial statements 2008 48
notes to the financial statements
Group
Year ended 31 May 07
Products
£’000
Services
£’000
Development and 
Shared Services
£’000
Total
£’000
Revenue 3,488 9,985 - 13,473
Proﬁt/(loss) from operations 1,358 4,125 (4,860) 623
Financial income 318 - 485 803
Financial expense (88) - (4) (92)
Proﬁt/(loss) before taxation 1,588 4,125 (4,379) 1,334
Total assets 4,442 3,024 12,325 19,791
Total liabilities (1,694) (269) (1,913) (3,876)
Net assets 2,748 2,755 10,412 15,915
Other segmental disclosures
Capital expenditure - PPE 224 - 3 227
Capital expenditure - Intangible assets 61 - 239 299
Depreciation of tangible assets 373 - 202 575
Amortisation of intangible assets 87 - 23 110
Impairment of trade receivables (13) - - (13)
Share-based payment credit - - (53) (53)
The profit/(loss) before taxation of each segment includes any revenue and expenses directly attributable to or able to 
be allocated to each such segment on a reasonable basis. 
Segment assets and liabilities are those assets and liabilities directly attributable or which can be allocated to each 
such segment on a reasonable basis. annual report and financial statements 2008 | System C 49
notes to the financial statements
3 Employee and director costs
Staff numbers
The average monthly number of people (including Executive Directors) employed during the year is as follows:
Group Company
Year ended Year ended Year ended Year ended
31 May 08 31 May 07 31 May 08 31 May 07
Number Number Number Number
Products 65 31 40 31
Services 97 95 97 95
Development and shared services 35 31 35 31
Staff costs 197 157 172 157
Staff costs for the above persons during the year have been as follows:
Group Company
Year ended Year ended Year ended Year ended
31 May 08 31 May 07 31 May 08 31 May 07
£’000 £’000 £’000 £’000
Wages and salaries 8,210 7,386 7,623 7,386
Social security costs 892 841 807 841
Other pension costs (see below) 359 191 350 191
Redundancy costs 11 105 11 105
Staff costs excluding share-based payment 9,472 8,523 8,791 8,523
Share-based payment charge/(credit) (note 19) 72 (53) 72 (53)
Total staff costs 9,544 8,470 8,863 8,470 notes to the financial statements
System C | annual report and financial statements 2008 50
Key management compensation
Staff costs in relation to senior management and executive directors are as follows:
Group Company
Year ended Year ended Year ended Year ended
31 May 08 31 May 07 31 May 08 31 May 07
£’000 £’000 £’000 £’000
Salaries and short-term benefits 1,311 913 1,173 913
Post retirement benefits 55 45 48 45
Share based payment 48 (43) 48 (43)
1,414 915 1,269 915
Key management comprises those individuals involved in major strategic decision making and includes all directors of 
the Parent Company and its subsidiaries.  
Directors’ emoluments
A detailed numerical analysis of Directors’ remuneration and share options, showing the highest paid director and 
the number of directors accruing benefits under defined contribution pension schemes is included in the Directors’ 
Remuneration Report and forms part of these financial statements.
Fees in respect of Non-Executive Directors are also disclosed in the Directors’ Remuneration Report.
Pensions
The Group operates a stakeholder pension scheme in which all employees are eligible to participate from the 
commencement of their employment. The funds are invested with Friends Provident and are separately held and 
administered. In addition to this arrangement the Group also contributes to the personal pension schemes of  
certain employees.
Employee contributions to the stakeholder pension scheme/personal pension schemes of employees are matched by 
the	Gr oup	to	a	maximum	of	4%	(or	10%	in	the	case	of	certain	senior	executives	and	dir ectors)	of	eligible	salary	costs.	
There are no other post retirement benefit arrangements for employees of the Group. annual report and financial statements 2008 | System C 51
notes to the financial statements
4 Financial income and expenses
                                             Group
Year ended Year ended
31 May 08 31 May 07
£’000 £’000
Interest receivable on bank and short term deposits 597 485
Other interest 294 318
Financial income 891 803
Interest payable on bank loans and overdrafts (2) (5)
Unwinding of discount on deferred consideration (27) -
Interest payable on financing loans (note 15) (19) (87)
Financial expense (48) (92)
Net interest 843 711
                                              Group
Year ended Year ended
31 May 08 31 May 07
£’000 £’000
Staff costs excluding share-based payments (note 3) 9,472 8,523
Share-based payments charge/(credit) 72 (53)
Research and development expenditure 1,105 1,045
Depreciation of property, plant and equipment:
- Contract assets 212 373
- Other assets 175 202
Amortisation of intangible assets: 352 110
Operating lease rentals:
- Land and buildings 217 190
- Motor vehicles and other leases 55 78
Loss on disposal of property, plant and equipment 2 -
5 Proﬁt before taxation
The following items have been included in arriving at profit before taxation: In addition to the research and 
development expenditure disclosed above, £591,000 was capitalised in respect of software development in 
accordance with IAS 38 (2007: £299,000). notes to the financial statements
System C | annual report and financial statements 2008 52
Services provided by the Company’s auditors
During the year the Group obtained the following services from its auditors at cost as detailed below:
                                                Group
Year ended Year ended
31 May 08 31 May 07
£’000 £’000
Audit services
Fees payable to the Group’s auditors for the 
audit of the Group and Parent Company financial 
statements 50 55
Fees payable to the Group’s auditors for the audit 
of the financial statements of the subsidiaries 20 -
Non-audit services
Fees payable for services relating to taxation 24 7
Fees payable for other regulatory reporting - 13
                                                Group
Year ended Year ended
31 May 08 31 May 07
£’000 £’000
Current tax:
United	Kingdom	corporation	tax	at	28%/30% 164 92
Adjustments in respect of previous years 24 -
Total current tax charge (note 6(c)) 188 92
Deferred tax:
Current year 822 301
Adjustments in respect of previous years 42 (9)
Total deferred tax charge (note 6(d)) 864 292
Total tax charge in the income statement (note 6(b)) 1,052 384
Tax on items credited to equity:
Deferred tax on share-based payment (12) (14)
6 Taxation
(a) Analysis of tax charge in the year annual report and financial statements 2008 | System C 53
(b) Factors affecting the tax charge for the year
The	total	tax	char ge	for	the	year	dif fers	fr om	the	standar d	rate	of	UK	Corporation	T ax	of	28%	(2007:	30%) 
as explained below:
                                                 Group
Year ended Year ended
31 May 08 31 May 07
£’000 £’000
Profit before tax 3,286 1,334
Profit before tax multiplied by standard rate of UK 
Corporation	T ax	of	28%/30% 920 400
Effects of:
-  Permanent differences 117 71
-  Rate differences on current tax - (53)
-  Tax difference arising on treatment of 
share options
- (25)
- Amortisation of intangibles not deductible (51) -
-  Adjustments in respect of prior years - Current tax 24 -
-  Adjustments in respect of prior years - 
Deferred tax
42 (9)
Total tax charge (note 6(a)) 1,052 384
(c) Current tax liability
Group Company
31 May 08 31 May 07 31 May 08 31 May 07
£’000 £’000 £’000 £’000
UK Corporation Tax liability
At 1 June 92 - 92 -
Arising on acquisitions 66 - - -
Charged to income statement during the year 188 92 157 92
Paid during the year (184) - (116) -
At 31 May 162 92 133 92
notes to the financial statements System C | annual report and financial statements 2008 54
notes to the financial statements
(d) Deferred tax reconciliation
Group Company
31 May 08 31 May 07 31 May 08 31 May 08
£’000 £’000 £’000 £’000
At 1 June (net) 927 1,205 927 1,205
Arising on acquisitions (note 22) (466) - - -
Charged to the income statement (864) (292) (916) (292)
Credited to shareholders’ equity 12 14 12 14
At 31 May (net) (391) 927 23 927
(e) Analysis of deferred tax balances in 
the balance sheet
Group Company
31 May 08 31 May 07 31 May 08 31 May 07
£’000 £’000 £’000 £’000
Deferred tax asset:
Accelerated capital allowances 98 106 99 106
Unutilised losses 74 884 74 884
Short term timing differences (149) (63) (150) (63)
23 927 23 927
Deferred tax liability:
Intangible assets (414) - - -
Net (391) 927 23 927
Deferred tax assets have been recognised in respect of all tax losses and other temporary differences giving rise to 
deferred tax assets because it is probable that those assets will be recovered. 
Deferred tax assets and liabilities are only offset where there is a legally enforceable right of offset and there is an 
intention to settle the balances net. annual report and financial statements 2008 | System C 55
notes to the financial statements
7 Earnings per share
Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted 
average number of ordinary shares outstanding during the year, excluding those that are held in the employee share 
trust, which are treated as cancelled.
For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume 
conversion of all dilutive potential ordinary shares that have satisfied the appropriate criteria as at 31 May 2008. 
A reconciliation between the weighted average number of shares used in the calculations of basic and diluted 
earnings per share is set out below:
Year ended 31 May 08 Year ended 31 May 07
Earnings
£’000
Weighted 
average 
number of 
shares
Number
Per share 
amount
Pence
Earnings
£’000
Weighted 
average 
number of 
shares
Number
Per share 
amount
Pence
Basic EPS
Earnings attributable to 
ordinary shareholders 2,234 87,243,442 2.56 950 87,148,360 1.09
Effect of dilutive shares 526,856 (0.02) 451,949 (0.01)
Diluted EPS 2,234 87,770,298 2.54 950 87,600,309 1.08 System C | annual report and financial statements 2008 56
notes to the financial statements
8 Goodwill
Group £’000
Cost and net book amount
At 1 June 2007 -
Additions arising from acquisitions in the period (note 22) 1,884
At 31 May 2008 1,884
Business combinations have had their intangible assets separately identified and any remaining goodwill has been 
capitalised separately in accordance with IFRS 3 “Business Combinations”. Goodwill is tested annually for impairment.
On 2 July 2007 System C purchased IQ Systems Services which created goodwill of £1,413,000. Additional goodwill of 
£471,000 was created on 28 January 2008 when the Group purchased Care Records Limited.
An impairment review of the goodwill above has not identified any impairment of goodwill.
The goodwill has been allocated to cash-generating units and a summary of the carrying amounts of goodwill by 
business segment (representing cash-generating units) at 31 May 2008 is given below:
Group
Products
£’000
Services
£’000
Development 
and shared 
services
£’000
Total
£’000
Goodwill 1,884 - - 1,884
Goodwill allocated to the above cash-generating units of the Group has been measured based on synergies each 
segment is expected to gain from the business combinations, as well as the benefits of an integrated product range 
based on the Microsoft technology platform.
The recoverable amounts were based on value in use. The key assumptions in the value in use calculations are those 
r egar ding	the	discount	and	gr owth	rates.	The	discount	rate	assumed	is	11%	using	after	tax	rates	that	r eflect	the	curr ent	
market assessments of the time value of money and the risks specific in the business using budgets approved by the 
management for the financial year 2008/9 and forecasts for 2 years beyond that. Cash flows beyond 3 years are based 
on	a	gr owth	rate	of	5%.	
As the value in use is greater than the carrying value there is no impairment in the period and the carrying value of 
goodwill represents the excess of acquisition over the fair value of the Group’s share of the net identifiable assets of 
the acquired subsidiaries at the date of acquisition. annual report and financial statements 2008 | System C 57
notes to the financial statements
9 Property, plant and equipment
Group
Leasehold 
improvements
£’000
Fixtures & 
ﬁttings
£’000
Plant & 
equipment
£’000
Computers
£’000
Contract 
assets
£’000
Total
£’000
Cost
At 1 June 2007 181 164 55 692 3,183 4,275
Additions - - 11 65   46 122
Acquisitions - 2 7 - - 9
Disposals - - - (290) - (290)
At 31 May 2008 181 166 73 467 3,229 4,116
Depreciation
At 1 June 2007 136 119 46 555 2,746 3,602
Charge for the year 37 19 7 112 212 387
Disposals - - - (288) - (288)
At 31 May 2008 173 138 53 379 2,958 3,701
Net book amount
At 31 May 2008 8 28 20 88 271 415
At 31 May 2007 45 45 9 137 437 673
Company
Leasehold 
improvements
£’000
Fixtures & 
ﬁttings
£’000
Plant & 
equipment
£’000
Computers
£’000
Contract 
assets
£’000
Total
£’000
Cost
At 1 June 2007 181 164 55 692 3,183 4,275
Additions - - 9 63   46 118
Disposals - - - (290) - (290)
At 31 May 2008 181 164 64 465 3,229 4,103
Depreciation
At 1 June 2007 136 119 46 555 2,746 3,602
Charge for the year 37 18 1 112 212 380
Disposals - - - (288) - (288)
At 31 May 2008 173 137 47 379 2,958 3,694
Net book amount
At 31 May 2008 8 27 17 86 271 409
At 31 May 2007 45 45 9 137 437 673
Depreciation is charged to the following lines in the income statement:
                                                     Group
Year ended Year ended
31 May 08 31 May 07
£’000 £’000
Cost of sales 212 373
Administration and general overheads 175 202
387 575 System C | annual report and financial statements 2008 58
notes to the financial statements
10 Intangible assets
Group
Customer 
contracts
£’000
Software
£’000
Own 
software
£’000
Contract
software
£’000
Total
£’000
Cost
At 1 June 2007 - 808 120 144 1,072
Additions at cost - 591 - - 591
Acquisitions (see note 22) 212 1,448 - - 1,660
Disposals - (330) - - (330)
At 31 May 2008 212 2,517 120 144 2,993
Amortisation
At 1 June 2007 - 495 88 138 721
Charged in the year 45 281 22 4 352
Disposals - (330) - - (330)
At 31 May 2008 45 446 110 142 743
Carrying value
At 31 May 2008 167 2,071 10 2 2,250
At 31 May 2007 - 313 32 6 351
Software relates to the cost of internally developed software and the fair value of software acquired by the Group on 
the purchase of subsidiary undertakings.  annual report and financial statements 2008 | System C 59
notes to the financial statements
Company
          
Software
£
Own 
software
£
Contract
software
£
Total
£
Cost
At 1 June 2007 808 120 144 1,072
Additions at cost 591 - - 591
Disposals (330) - - (330)
At 31 May 2008 1,069 120 144 1,333
Amortisation
At 1 June 2007 495 88 138 721
Charged in the year 144 22 4 170
Disposals (330) - - (330)
At 31 May 2008 309 110 142 561
Carrying value
At 31 May 2008 760 10 2 772
At 31 May 2007 313 32 6 351
Amortisation is charged to the following lines in the income statement:
                                             Group
Year ended Year ended
31 May 08 31 May 07
£’000 £’000
Cost of sales 142 87
Administration and general overheads 210 23
352 110 System C | annual report and financial statements 2008 60
notes to the financial statements
11 Investments
Interests in subsidiary undertakings
Company £000
Cost and net book amount at 1 June 2007 -
Additions (note 22) 2,992
Cost and net book amount at 31 May 2008 2,992
The additions comprise of £2,145,000 in respect of IQ Systems Services Ltd and £847,000 in respect of  
Care Records Ltd.
Principal subsidiary undertakings
Details of the principal subsidiary undertakings of the Company, which are included in these consolidated financial 
statements, are set out below:
Country of 
incorporation
Description of 
shares held
Proportion of nominal 
value of shares held
Group
%
Company
%
IQ Systems Services Limited Great Britain Ordinary 100 100
Care Records Limited Great Britain Ordinary 100 100
Perigon Limited Great Britain Ordinary 100 100
IQ Systems Services Limited provides Patient Administration Systems to the independent healthcare sector, whilst 
Care Records Limited provides Maternity Information Systems to the NHS.
Perigon Limited was incorporated on 28 January 2008 and has not traded in the period to 31 May 2008. annual report and financial statements 2008 | System C 61
notes to the financial statements
12 Trade and other receivables
Group Company
31 May 08 31 May 07 31 May 08 31 May 07
£’000 £’000 £’000 £’000
Current:
Trade receivables 2,850 2,961 2,525 2,961
Less: provision for impairment - (24) - (24)
Trade receivables - net 2,850 2,937 2,525 2,937
Other receivables 173 19 161 19
Prepayments 335 333 308 333
Accrued income 3,131 3,203 3,131 3,203
Total current 6,489 6,492 6,125 6,492
31 May 08 31 May 07 31 May 08 31 May 07
£’000 £’000 £’000 £’000
Non-current:
Accrued income 428 774 428 774
 
Further analysis of trade receivables is given below.
Group Company
31 May 08 31 May 07 31 May 08 31 May 07
£’000 £’000 £’000 £’000
Gross trade receivables can be
analysed as follows:
Fully performing 1,738 2,151 1,451 2,151
Past due 1,112 782 1,074 782
Impaired - 28 - 28
2,850 2,961 2,525 2,961
Ageing of past due receivables:
1 to 90 days 1,112 741 1,074 741
Over 90 days - 41 - 41
1,112 782 1,074 782
  System C | annual report and financial statements 2008 62
notes to the financial statements
13 Cash and cash equivalents
Group Company
31 May 08 31 May 07 31 May 08 31 May 07
£’000 £’000 £’000 £’000
Cash at bank and in hand 3,427 1,552 3,219 1,552
Cash on short term deposit 9,000 9,022 9,000 9,022
12,427 10,574 12,219 10,574
14 Trade and other payables
Group Company
31 May 08 31 May 07 31 May 08 31 May 07
£’000 £’000 £’000 £’000
Current:
Trade payables 196 440 188 440
Other taxation and social security 1,047 947 980 947
Accruals 2,076 927 2,038 927
Deferred income 691 840 658 840
4,010 3,154 3,864 3,154
15 Borrowings
Group Company
31 May 08 31 May 07 31 May 08 31 May 07
£’000 £’000 £’000 £’000
Financing loans repayable in less than one year - 528 - 528
The financing loans represented gross borrowings of £4.5m obtained in order to finance certain of the Group’s 
contracts. £1m of such financing loans was repayable in 60 equal monthly instalments commencing 29 May 2002 and 
carried	inter est	at	a	fixed	rate	of	8%.	The	r emaining	£3.5m	was	obtained	in	a	number	of	tranches	each	of	which	was	
repayable in 60 equal monthly instalments. The first repayment began in August 2003 and each tranche also carried a 
fixed	inter est	rate	of	8%.	The	financing	loans	wer e	secur ed	over	the	contract	assets	and	contract	softwar e	as	disclosed	
in notes 9 and 10 respectively. The financing loans were fully repaid during the year.
16 Provisions
Group and Company
Property 
dilapidations
£’000
National Insurance 
provision for share-
based payments
£’000
Total
£’000
At 1 June 2007 82 20 102
(Credit)/provided during the year (2) 5 3
Utilised in year - (1) (1)
At 31 May 2008 80 24 104
Dilapidations provisions are being built up over the period to the next break clauses within the relevant leases.  
The National Insurance provision is expected to be utilised as employees exercise share options. annual report and financial statements 2008 | System C 63
notes to the financial statements
17 Financial Instruments
The Group’s accounting policies in respect of financial instruments is given in note 1(t).
The Group’s financial liabilities comprise borrowings (repaid during the year), (deferred considerations) and trade and 
other payables. The main purpose of these financial instruments is to provide finance for the Group’s operations. The 
Group also has other financial liabilities which are disclosed as provisions in note 16 and relate to amounts provided for 
leasehold property dilapidations and National Insurance charges relating to share-based payment incentives. These 
provisions are considered to be financial liabilities on which no interest is paid. This is because, in establishing these 
provisions, the cash flows were not discounted.
The Group’s financial assets comprise cash and cash equivalents (amounts on short term deposit which are repayable 
within three months without penalty), trade receivables and other receivables which arise directly from its operations. 
The Company’s financial assets also include amounts receivable from subsidiaries.
The Group does not enter into derivative transactions (such as interest rate swaps and forward contracts), and it is, and 
has been throughout the year under review, the Group’s policy that no trading in financial instruments shall  
be undertaken.
The Group has not engaged in any foreign currency transactions during the year and accordingly all information in 
respect of financial instruments relates to items denominated entirely in Sterling.
The main risks arising from the Group’s financial instruments are interest rate risk, liquidity risk and credit risk.  
The Board reviews and agrees policies for managing each of these risks as summarised below:
Interest rate risk
The Group finances its operations through a mixture of bank borrowings and other borrowings as necessary. 
The Group borrows at both fixed and floating rates of interest in order to generate the desired interest rate profile. 
At the year end the Group’s borrowings had been fully repaid.
Liquidity risk
The Group’s policy is to achieve continuity of funding by ensuring that adequate loan facilities are in place appropriate 
to meet its forecast requirements. Where possible the Group seeks to put committed facilities in place.
Credit Risk
The Group’s primary credit risk is attributable to its trade receivables. It has policies in place to ensure sales are made 
to customers with appropriate credit histories. Management believe no further credit risk provision is required in 
excess of the normal provision for doubtful receivables as disclosed in note 12.  
Borrowing facilities
The Group had no undrawn committed borrowing facilities during the year (2007: £nil).
Fair values of non-derivative ﬁnancial assets and liabilities
Where market values are not available, fair values have been calculated by discounting expected cash flows at 
appropriate rates of interest. Set out below is a summary of methods and assumptions used for each category of 
financial instruments. System C | annual report and financial statements 2008 64
notes to the financial statements
Group Company
31 May 08 31 May 07 31 May 08 31 May 07
Book 
value
£’000
Fair 
value
£’000
Book 
value
£’000
Fair 
value
£’000
Book 
value
£’000
Fair 
value
£’000
Book 
value
£’000
Fair 
value
£’000
Primary ﬁnancial instruments 
held or issued to ﬁnance the 
Group’s operations:
Borrowings (current) - - (528) (528) - - (528) (528)
Trade and other payables 
(current) (4,010) (4,010) (3,154) (3,154) (3,864) (3,864) (3,154) (3,154)
Amounts due from subsidiary 
undertakings (current) - - - - 542 542 - -
Deferred consideration
(current) (680) (680) - - (680) (680) - -
Deferred consideration
(non-current) (670) (670) - - (670) (670) - -
Trade and other payables 
(current) 6,489 6,489 6,492 6,492 6,125 6,125 6,492 6,492
Trade and other receivables 
(non-current) 428 397 774 716 428 397 774 716
Cash and cash equivalents 12,427 12,427 10,574 10,574 12,219 12,219 10,574 10,574 annual report and financial statements 2008 | System C 65
notes to the financial statements
Summary of methods and assumptions
(a) Short term borrowings
Short	term	borr owings	comprise	the	curr ent	portion	of	financing	loans	which	bear	inter est	at	a	fixed	rate	of	8%.	The	fair	
value approximates to the carrying amount because they have a short maturity and bear commercial rates of interest.
The fair value of any accrued finance costs is also considered to approximate to the carrying value.
(b) Trade and other receivables/payables, amounts owed to subsidiary undertakings and cash and 
cash equivalents
The fair value of the current portion of such amounts is deemed to equate to the book value as such items can be 
realised or fall due for payment in less than one year.  
The fair value of the non-current portion of trade and other receivables has been calculated by discounting the 
balance	by	8%.	Cash	and	cash	equivalents	ar e	deposited	with	banks	or	similar	institutions	and	attract	a	variable	rate	of	
interest based on market rates. The book value of the non-current portion of deferred consideration is equal to the fair 
value as it has been subject to discounting. 
Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern 
in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimum capital 
structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to 
shareholders, return capital to shareholders, issue new shares or sell assets to reduce net debt or increase net cash.
18 Share capital
Company 31 May 08 31 May 07
Authorised: Number £’000 Number £’000
1p ordinary shares 405,000,000 405,000 405,000,000 405,000
31 May 08 31 May 07
Allotted, called up and fully paid: Number £’000 Number £’000
1p ordinary shares
- At beginning of year 89,480,964 895 89,276,464 893
- Allotments 67,500 - 204,500 2
- At end of year 89,548,464 895 89,480,964 895
67,500 ordinary shares were issued during the year as a result of the exercise of share options as disclosed in note 19. 
The total cash consideration received on the exercise of such options was £9,900 which resulted in a credit of £675 to 
the share capital account and £9,225 to the share premium account. System C | annual report and financial statements 2008 66
notes to the financial statements
19 Share-based payment
Share-based payment incentives have been granted to 
certain employees and shareholders to acquire ordinary 
shares of 1p each under The System C Healthcare 
PLC Employee Share Option Scheme, The System 
C Healthcare PLC Enterprise Management Incentive 
Scheme, the System C Healthcare PLC Company Share 
Option Plan, The System C Healthcare PLC Sharesave 
Plans and various stand alone option agreements.
(a) The System C Healthcare PLC Employee Share 
Option Scheme (“ESOS”)
This scheme provides for the grant of unapproved 
options to acquire ordinary shares in the Company to 
employees and executive directors of the Group.
Options were granted with an exercise price equal to 
the market value of the shares at the time of grant and in 
relation to options to subscribe for shares, the exercise 
price could not be less than the nominal value of 
the shares.
Under the rules of the Unapproved Scheme the 
Unapproved Options become exercisable between 
the third and tenth anniversary of the relevant date of 
grant (unless otherwise stated in the relevant Option 
Certificate). As a condition of exercise, the Unapproved 
Option Holders must make a payment to the Company 
of the aggregate exercise price due. Income tax and 
employee National Insurance Contributions will be due 
on exercise of the Unapproved Options which must be 
recovered from the Option Holders. Employer’s National 
Insurance contributions will be payable by the Company 
on the exercise of such options by an employee.
(b) The System C Healthcare PLC Enterprise 
Management Incentive Scheme (“EMI”)
The Company entered into agreements for the grant 
of Enterprise Management Incentive options to certain 
of its key executives and employees subject to the EMI 
legislation over ordinary shares in the Company. 
The EMI Plan rules were adopted by the Company on 
16 January 2008.
In January 2008 options were granted under the EMI 
Scheme to the Executive Directors, subject to the EMI 
legislation over ordinary shares in the Company.
The price at which the options were granted, was based 
on the average market value on the date of grant. 
This method was approved by HMRC.
The conditions of the EMI provide that the options be 
granted on terms that their exercise will be subject to the 
satisfaction of performance criteria. The Remuneration 
Committee will be required to be satisfied that over 
a period of three years commencing on the date of 
grant of the option there has been an increase in the 
Company’ s	earnings	per	shar e,	after	inflation	(RPI)	of	4%.
The EMI option holders must make a payment to the 
Company of 29.5 pence to exercise the options, together 
with a payment (or evidence satisfactory to the Board of 
arrangements for the payment) of any tax and employee 
National Insurance liability due on exercise of the 
EMI Options.
(c) The System C Healthcare PLC Company Share 
Option Plan (“CSOP”)
The CSOP was adopted on 2 June 2005 and is split into 
two parts:
Part 1
Part 1 of the CSOP has been approved by HMRC under 
Schedule 4 to the Income Tax (Earnings and Pensions) 
Act 2003 and provides for the grant of approved options. 
This scheme is open to all employees of the Company 
and those executive directors that are required to work 
not less than 25 hours per week.
The conditions of the CSOP provide that options may be 
granted on terms that their exercise will be subject to the 
satisfaction of performance criteria following admission 
to AIM that earnings per share increases (on average) 
over	thr ee	years	by	4%	per	annum	above	the	gr owth	in	
the Retail Price Index. Options may be granted on terms 
that their exercise will be subject to the option holder 
paying any Employer’s National Insurance liability arising 
pursuant to the exercise. Additionally, options may be 
granted by the trustees of the Company’s employee 
benefit trust. annual report and financial statements 2008 | System C 67
notes to the financial statements
The price at which an option holder may acquire ordinary 
shares on the exercise of an option is determined by 
the Board, but shall be not less than the greater of the 
market value of an ordinary share at the time of grant 
and its nominal value.
No option may be granted to an eligible employee 
under Part I which would result in the aggregate exercise 
prices of ordinary shares comprised in all outstanding 
options granted to him/her under the CSOP when 
aggregated with outstanding options held under 
any HMRC approved executive share option scheme 
established by the Company exceeding the HMRC limit 
(currently £30,000). In addition, (both under Part I and 
Part II) the aggregate exercise price of options granted 
to an individual under any discretionary share option 
scheme operated by the Company in any calendar year 
shall not exceed one times his/her annual salary for 
that year (ignoring, where relevant, options to rights to 
acquire shares granted before or on admission of the 
Company’s ordinary shares to AIM).
Options will normally only be exercisable by an option 
holder who is still an eligible employee of the Company 
after the third anniversary of its date of grant and before 
the tenth anniversary of its date of grant.
Earlier exercise is permitted if the option holder dies 
or leaves the Company through injury, disability, 
redundancy or retirement on or after reaching the age 
of 55. In such circumstances options can be exercised 
notwithstanding the fact that fewer than three years have 
passed since the date of grant. 
Additionally, early exercise may be allowed at the 
discretion of the Board in other circumstances. Early 
exercise is also permitted in the event of a takeover, 
reconstruction or voluntary winding up of the Company.
In the event of an early exercise the Remuneration 
Committee shall determine whether, and the extent to 
which, options may be exercised, taking account of the 
Company’s performance up to that time.
If the performance conditions attaching to an option 
have not been satisfied at the end of a performance 
period then the option will lapse two months after 
that date, or if earlier, on the date the Board (subject 
to guidance from the Remuneration Committee) 
determines that the performance conditions have not 
been satisfied.
The terms of the CSOP may be amended by the Board in 
any way, subject to certain conditions and prior approval 
from HMRC.
Part II
Part II of the CSOP provides for the grant of unapproved 
share options. This enables options to be granted 
under the same terms as Part I of the CSOP but without 
complying with the particular requirements of the 
legislation applicable to HMRC approved company 
share option plans. The provisions of the CSOP that 
do not apply under Part II include the £30,000 limit, the 
requirements for executive directors to work not less 
than 25 hours per week and the need to seek approval 
from HMRC for the scheme and any subsequent 
amendments to it. 
(d) The System C Healthcare PLC Sharesave 
Plan 1 (“SSP1”)
The System C Healthcare PLC Sharesave Plan 1 was 
established on 2 June 2005. The rules of this plan 
have been approved by HMRC under Schedule 3 to 
the Income Tax (Earnings and Pensions) Act 2003 and 
provide for the grant of approved share options.
All employees and full-time directors of the Group, who 
have been in continuous service for such period of time 
(not exceeding five years) as may be determined by the 
Board prior to the relevant date of grant of an option 
and who are liable to UK income tax, will be eligible to 
participate in this plan. Participation may also be offered, 
at the discretion of the Board, to other employees or 
directors who otherwise do not satisfy all of the above 
criteria, although non-executive directors are not eligible 
to participate. System C | annual report and financial statements 2008 68
notes to the financial statements
The price at which an option holder may acquire ordinary 
shares on the exercise of an option shall be determined 
by the Board but shall not be less than the greater of 
80%	of	the	market	value	of	an	or dinary	shar e	at	the	time	
of grant and its nominal value.
Under the terms of this plan, options may be granted 
by the Board or the trustee of an employee benefit 
trust. Upon applying for an option, the participant is 
required to enter into an approved Sharesave contract 
with a savings institution nominated by the Group which 
lasts for a period of either three, five or seven years. 
Participants will be required to make contributions to the 
plan of a minimum of £5 per month and a maximum of 
£250 per month. The total exercise price of the ordinary 
shares over which the option is granted may not exceed 
the aggregate of the monthly contributions and the 
bonus payable at the end of the participant’s related 
Sharesave contract.
Options will normally be exercisable during a period of 
six months following the allocation of a bonus under the 
related Sharesave contract and will normally lapse on 
cessation of employment. Earlier exercise is, however, 
permitted if the participant dies or leaves employment 
through injury, disability, redundancy or retirement, 
or in the event of a takeover or voluntary winding up of 
the Company.
The number of ordinary shares over which options may 
be granted under the Plan on any date of grant shall 
be limited so that the total number of ordinary shares 
issued or capable of being issued in any ten year period 
under all the Company’s employee share schemes is 
r estricted	to	10%	of	the	Company’ s	issued	or dinary	
shares calculated at the relevant time. Any options or 
rights to acquire shares granted before or on admission 
of the Company’s ordinary shares to AIM are excluded 
from this limit.
The terms of the Plan may be amended by the Board in 
any way, subject to certain conditions and prior approval 
from HMRC.
(e) The System C Healthcare PLC Sharesave 
Plan 2 (“SSP2”)
The System C Healthcare PLC Sharesave Plan 2 was 
established on 16 February 2007 and operates in a 
manner that is substantially similar to that of The System 
C Healthcare PLC Sharesave Plan 1.
(f) Share-based payment incentives for 
non-executive directors
In addition to the schemes above, the Company had 
established a share-based payment incentive for two of 
its non-executive directors, Thomas Chambers and 
Dr John Forrest.
Under the terms of this arrangement the two individuals 
were entitled to a cash payment based on the increase 
in the share price of the Company at the end of each of 
the three financial years ended on 31 May 2008, subject 
to a minimum share price of 54p (being the market 
price of the ordinary shares on the admission to AIM) 
and a maximum cash payment not to exceed the total 
fees payable to these individuals for their services as 
non-executive directors over the same 3 year period. 
Other than this scheme, which is a cash settled share-
based payment transaction in accordance with IFRS 2 
“Share-based payment”, all other share-based payment 
incentives are deemed to be equity settled. annual report and financial statements 2008 | System C 69
notes to the financial statements
No payments have been made to the non-executive directors under this arrangement as the requisite performance 
criteria were not met.
Further details of all the share options granted by the Company under its various schemes and standalone 
arrangements are given in the tables below.
Number of ordinary shares of 1p each
Date of 
grant
Period of 
exercise
Exercise 
price in 
pence
 At 31 
May 07 Exercised Granted Lapsed
At 31 
May 08 Scheme
25.05.99 1.04.02 - 31.03.09 14.031 130,000 - - - 130,000 ESOP
2.07.99 1.03.03 - 27.02.10 14.031 160,000 - - - 160,000 ESOP
10.08.01 No limit imposed 33 50,000 - - - 50,000 -
10.08.01 No limit imposed 33 50,000 - - - 50,000 -
1.10.01 4.10.04 - 3.10.11 14 109,000 - - - 109,000 ESOP
1.07.02 1.07.05 - 30.06.12 14 29,000 - - - 29,000 ESOP
6.05.03 6.05.06 - 5.05.13 14 16,666 (16,666) - - - ESOP
6.05.03 6.05.07 - 5.05.14 14 16,667 (16,667) - - - ESOP
6.05.03 6.05.08 - 5.05.15 14 16,667 (16,667) - - - ESOP
1.07.04 1.07.07 - 30.06.14 14 10,000 (10,000) - - - ESOP
24.11.04 before 24.11.14 14 50,000 - - - 50,000 ESOP
2.06.05 1.09.08 44 82,683 - - (10,335) 72,348 SSP1
22.07.05 22.06.08 - 21.06.15 54 2,260,000 - - (890,000) 1,370,000 CSOP
25.05.06 25.05.08 - 24.05.15 23.5 300,000 - - - 300,000 CSOP
20.09.06 20.09.10 - 19.09.19 24.5 950,000 - - (250,000) 700,000 CSOP
16.02.07 1.04.10 20 1,103,700 (7,500) - - 1,096,200 SSP2
6.07.07 6.07.10 - 5.07.17 34 - - 450,000 - 450,000 CSOP
18.10.07 18.10.10 - 17.10.17 28 - - 1,486,857 - 1,486,857 CSOP
29.01.08 29.01.11- 28.01.18 29.5 - - 813,559 - 813,559 EMI
29.01.08 29.01.11- 28.01.18 29.5 - - 597,694 - 597,694 CSOP
 5,334,383 (67,500) 3,348,110 (1,150,335) 7,464,658 System C | annual report and financial statements 2008 70
notes to the financial statements
The	total	number	of	shar e	options	outstanding	as	at	31	May	2008	r epr esent	appr oximately	8.4%	of	the	issued	shar e	
capital	of	the	Par ent	Company	(2007:	5.96%).
The Group’s share-based payment incentive plans are subject to continued employment and employee share options 
generally lapse 1 year after an individual’s employment with the Company has ceased unless a different arrangement 
has been mutually agreed. The lapses disclosed in the table above include voluntary withdrawals by employees from 
the Group’s Sharesave Plans.
To the extent that shares in such plans are to be purchased by employees below fair value, a charge calculated in 
accordance with IFRS 2 “Share-based payment” is included within administration and general overheads in the income 
statement, with the corresponding entry being to provisions (in the case of cash-settled arrangements) or a credit to 
retained earnings (in the case of equity-settled arrangements). A charge to the income statement of £72,000 arose for 
the year ended 31 May 2008 (2007: credit of £52,000) and relates entirely to equity-settled arrangements. 
In calculating the amounts above the Group has taken advantage of the exemption allowed under IFRS 2 “Share-
based payment” and only applied this standard to equity-settled awards made since 7 November 2002 but that have 
not vested by 1 June 2005, the date of its transition to IFRS.
Share options were exercised by employees at various times during the year. The weighted average share price at the 
time of the exercise of the options was 31.5p (2007: 27p).
The Group has a provision for National Insurance contributions of £24,000 (2007: £20,000) in respect of liabilities arising 
from the above share-based payment transactions in respect of its employees.
None of the cash-settled share-based payment incentives had vested by the end of the financial year (2007: none).  
The following table summarises the key assumptions used in calculating the share-based payment charge for the year:
Share-based payment incentives
(References are to schemes detailed above)
ESOS EMI CSOP SSP1 SSP2 Other
Option pricing model used
Black 
Scholes
Black 
Scholes
Black 
Scholes
Black 
Scholes
Black 
Scholes
Black 
Scholes
Weighted average fair value 5p 5p 19p 13p 6p 4p
Weighted average share price 12p 23p 45p 45p 21p 20p
Weighted average exercise price 14p 28p 54p 44p 20p 25p
Basis of expected volatility 60% 40% 60% 40p 40% 40%
Risk-free rate 4.3% 5% 4.3% 4.3% 4.3% 4.3%
Expected option term (years) 5 - 5 3 3 3
Expected dividends per year 2% 2% 2% 2% 2% 2%
Assumptions on expected volatility and expected option term have been made on the basis of historical data, 
wherever available, for the period corresponding with the vesting period of the option. Best estimates have been used 
where historical data is not available in this respect. annual report and financial statements 2008 | System C 71
notes to the financial statements
20 Reserves
The movement on individual reserves is set out in the statement of changes in shareholders’ equity on pages 36 
and 39. 
Own shares held in trust 
The System C Healthcare PLC Employee Benefit Trust (the “Trust”) holds 2,287,741 ordinary shares of 1p each with a 
cost of £1,235,000 and a market value as at 31 May 2008 of £806,000 (2007: £818,000). The Trust acquired these shares 
at 54p each on the placing and admission of the Company’s ordinary shares to AIM in June 2005.
The Trust used the funds loaned to it by System C Healthcare PLC to meet the obligations under the various share 
option schemes that the Group operates. Share options are granted to the employees at the full discretion of the 
Trustees after consultation with the Company, although the Trustees are not legally bound to follow the advice arising 
from such consultations with the Company. The loan provided to the Trust will be repaid from the proceeds payable by 
employees to exercise share options, which are equal to the placing price of 54p.
As at 31 May 2008 1,830,000 (2007: 1,830,000) of the total ordinary shares held by the Trust had been allocated to the 
Directors and senior management under the CSOP with a nominal value of 1p each (2007: 1p) and a market value of 
54p and 23.5p for those options allotted on 22 June 2005 and 24 May 2006 respectively. None of these shares had 
unconditionally vested with the employees as at 31 May 2008. The Trust has waived its right to dividends.
21 Dividends
Year ended Year ended
31 May 08 31 May 07
Group and Company £’000 £’000
£1 ordinary shares:
Final paid 0.24p per share in relation to year ended 31 May 2007 (2007: 
0.22p in relation to the year ended 31 May 2006) 209 192
Interim paid 0.18p per share in relation to the year ended 31 May 2008 
(2007: paid 0.12p per share in relation to the year ended 31 May 2007) 157 104
366 296
In addition, the Directors are proposing a final dividend in respect of the financial year ended 31 May 2008 of 36p per 
share which will absorb an estimated £322,000 of shareholders’ equity.
If approved, it will be paid on 10 October 2008 to those shareholders who are on the register of members on 
3 October 2008. System C | annual report and financial statements 2008 72
notes to the financial statements
22 Acquisitions  
(a) IQ Systems Services Limited
On 2 July 2007, the Company purchased the entire issued share capital of IQ Systems Services Limited for £822,000 in 
cash (including acquisition expenses of £36,000) plus further potential deferred consideration of £1,360,000 (fair value 
of £1,323,000 after effect of discounting) dependent on the achievement of certain performance criteria. 
The table below sets out the Group’s assessment of the fair values of assets and liabilities acquired. Adjustments have 
been made to separately identify intangible assets acquired.
Book value per 
management accounts
£’000
Adjustments to 
fair values
£’000
Provisional fair
value to the Group
£’000
Intangible assets:
- Customer contracts - 188 188
- Intellectual property - 825 825
Property, plant and equipment 7 - 7
Trade and other receivables 257 - 257
Borrowings (overdraft) (90) - (90)
Trade and other payables (170) - (170)
Deferred tax on intangible assets - (285) (285)
Net assets acquired 4 728 732
Goodwill (note 8) 1,413
Consideration 2,145
Of the total consideration disclosed above, £822,000 (including expenses of £36,000) was paid in cash at the time 
of the acquisition, with the remainder of £1,323,000 being contingent on the achievement of specific performance 
criteria. In its last financial period of six months to 30 June 2007, IQ Systems Services Limited made a profit before 
tax of £72,000. 
Between the date of acquisition and 31 May 2008 IQ Systems Services Limited’s results were as follows:
£’000
Revenue 900
Cost of sales (200)
Gross profit 700
Operating expenses (572)
Profit from operations 128
Financial income 1
Financial expense (1)
Profit before taxation 128
Taxation (30)
Proﬁt for the period after taxation 98
If IQ Systems Services had been included in the Group from the start of the financial year it is expected that revenue 
and profit before tax would have been approximately £962,000 and £92,000. annual report and financial statements 2008 | System C 73
notes to the financial statements
(b) Care Records Limited
On 28 January 2008, the Company purchased the entire issued share capital of Care Records Limited for £847,000 in 
cash (including acquisition expenses of £77,000) plus further potential deferred consideration of £2,600,000 dependent 
on the achievement of certain performance criteria. The Company does not currently believe that the performance 
criteria regarding further potential consideration will be achieved and this has been excluded in arriving at goodwill.
The table below sets out the Group’s provisional assessment of the fair values of assets and liabilities acquired. 
Adjustments have been made to separately identify intangible assets acquired.
Book value per 
management accounts
£’000
Adjustments to 
fair values
£’000
Provisional fair 
value to the Group
£’000
Intangible assets:
- Customer contracts - 24 24
- Intellectual property - 623 623
Property, plant and equipment 3 - 3
Trade and other receivables 2 - 2
Borrowings (overdraft) (45) - (45)
Trade and other payables (50) - (50)
Deferred tax on intangible assets - (181) (181)
Net assets acquired (90) 466 376
Goodwill (note 8) 471
Consideration 847
In its last financial year to 31 December 2007, Care Records Limited made a loss before tax of £156,000. 
Between the date of acquisition and 31 May 2008 Care Records Limited’s results were as follows:
£’000
Revenue 24
Cost of sales -
Gross profit 24
Operating expenses (171)
Operating loss and loss before and after tax (147)
If Care Records Limited had been included in the Group from the start of the financial year it is expected that revenue 
and the loss before tax would have been approximately £157,000 and £278,000. System C | annual report and financial statements 2008 74
notes to the financial statements
23 Operating lease commitments
The total future minimum lease payments in respect of non-cancellable leases based on date of expiry are 
as follows:
Group Company
31 May 08 31 May 07 31 May 08 31 May 07
£’000 £’000 £’000 £’000
Land and buildings leases
Within one year 217 190 190 190
Within two to five years 159 311 120 311
376 501 310 501
Motor vehicle and other leases
Within one year 55 78 55 78
Within two to five years 44 96 44 96
99 174 99 174
Total
Within one year 272 268 245 268
Within two to five years 203 407 164 407
475 675 409 675
24 Related party transactions
The following transactions with related parties occurred during the year ended 31 May 2008:
(a) Transactions with shareholders
During the year, professional services were provided to the Group by Medical Information Research Limited of which S 
W Smith, a shareholder of the Parent Company, is a director. Total fees levied by Medical Information Research Limited 
in the year amounted to £26,000 (2007: £26,000). At the year end, the balance due from the Group to S W Smith 
amounted to £nil (2007: £8,000). During the year legal services were provided to the Group by a shareholder, L Brooks. 
Total fees levied by L Brooks in the year amounted to £106,000 (2007: £51,000). At the year end, the balance due from 
the Group to L Brooks amounted to £nil (2007: £nil).
During the year, ad hoc services were provided to the Company by a shareholder, T Sackville, a consultant specialising 
in healthcare opportunities. Total fees levied by T Sackville in the year amounted to £7,500 (2007: £5,625). At the year 
end, the balance due from the Group to T Sackville amounted to £nil (2007: £nil). During the year, professional services 
were provided to the Company by Brains Direct Limited of which M Kinton, a shareholder of the Parent Company, is 
a director. Total fees charged by Brains Direct Limited in the year amounted to £272,000 (2007: £222,474). At the year 
end, the balance due from the Group to Brains Direct Ltd amounted to £nil (2007: £nil).
(b) Transactions with directors
During the year professional services were provided to the Company by N Willmore, a consultant specialising in public 
relations, and spouse of M S Bolton, a director of the Parent Company. Total fees levied by N Willmore in the year 
amounted to £20,000 (2007: £300). At the year end, the balance due from the Group to N Wilmore amounted to £1,950 
(2007: £nil). annual report and financial statements 2008 | System C 75
notes to the financial statements
Registered auditors
PricewaterhouseCoopers LLP
First Point, Buckingham Gate
Gatwick RH6 0PP
Principal bankers
Barclays Bank PLC
Maidstone Corporate Banking Centre
PO Box 427, 40-46 High Street
Maidstone, Kent ME14 1TW
Nominated advisor and broker
Collins Stewart Europe Limited
9th Floor, 88 Wood Street
London EC2V 7QR
Registrars and transfer ofﬁce
Computershare Investor Services PLC
PO Box 859, Corporate Actions
The Pavilions, Bridgwater Road
Bristol BS99 1XZ
Share quotation
The Company’s shares are listed on AIM, a market of that 
name operated by the London Stock Exchange PLC.
Solicitors
Travers Smith
10 Snow Hill
London EC1A 2AL
(c) Transactions with subsidiaries
The Group has taken advantage of the exemption under IAS 24 ‘Related party disclosures’ not to disclose transactions 
and balances between Group entities that have been eliminated on consolidation.
At the year end, balances due from subsidiaries to the Company amounted to £542,000 (2007: £nil). The amounts due 
from subsidiary undertakings are unsecured, interest free and repayable on demand.
There are no other transactions that require disclosure in accordance with the requirements of IAS 24 “Related party 
disclosures”.
25 Post balance sheet events
Details of dividends proposed after the balance sheet date are given in note 21.
Directors
Markus Bolton
Andrew Coll
Dr Ian Denley
Jim Horsburgh
Thomas Chambers
Dr John Forrest
Dr Christopher McLaren
Company secretary
Jane Conner
Registered number 01754990
Registered ofﬁce
Brenchley House, Week Street
Maidstone, Kent ME14 1RF
Tel: 01622 691616
Fax: 01622 691241
E-mail: investors@systemc.com
company information
Directors
Markus Bolton
Andrew Coll
Dr Ian Denley
Jim Horsburgh
Thomas Chambers
Dr John Forrest
Dr Christopher McLaren
Company secretary
Jane Conner
Registered number 01754990
Registered ofﬁce
Brenchley House, Week Street
Maidstone, Kent ME14 1RF
Tel: 01622 691616
Fax: 01622 691241
E-mail: investors@systemc.com
Registered auditors
PricewaterhouseCoopers LLP
First Point, Buckingham Gate
Gatwick RH6 0PP
Principal bankers
Barclays Bank PLC
Maidstone Corporate Banking Centre
PO Box 427, 40-46 High Street
Maidstone, Kent ME14 1TW
Nominated advisor and broker
Collins Stewart Europe Limited
9th Floor, 88 Wood Street
London EC2V 7QR
Registrars and transfer ofﬁce
Computershare Investor Services PLC
PO Box 859, Corporate Actions
The Pavilions, Bridgwater Road
Bristol BS99 1XZ
Share quotation
The Company’s shares are listed on AIM, a market of that 
name operated by the London Stock Exchange PLC.
Solicitors
Travers Smith
10 Snow Hill
London EC1A 2AL System C Healthcare plc 
Brenchley House 
Week Street 
Maidstone 
Kent ME14 1RF
t: 01622 691616 
w: www.systemc.com 
e: info@systemc.com
© System C Healthcare plc 2008 
Information correct at time of going to press September 2008
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