Half Yearly Report

18 November 2010

Avia Health Informatics Plc

("Avia" or the "Company")

Interim Results

Avia (AIM: AVIA), the AIM-listed developer and provider of clinical decision support systems worldwide, announces its interim results for the six months ended 30 September 2010. Comparative figures relate to the six months ended 30 September 2009 unless otherwise stated.

Highlights

• Revenue of £1.0m (2009: £1.1m)

• Operating loss of c. £260k (2009: £150k)

• Cash position of £252k after outflow of £223k (2009: £31k after outflow of £168k)

• Successful development of a Microsoft .NET based clinical content platform allowing Odyssey products to be deployed in multiple clinical settings and physical environments, across various devices

• New product launch of Odyssey TeleAssess on the .NET platform, supported by a new eLearning programme, with international sales achieved including to WorkCare Inc in the US and to GP Access in Australia

• Commenced the pilot trial of Odyssey MarineAssess with INTRESCO, the European shipping management group, aboard certain of its ships

·; Announcement of new contracts, international reseller and USA operation separately

Barry Giddings, Executive Chairman of Avia, commented:

"During the six month period Avia has had to meet the challenges of the uncertain world economic situation and its impact upon the UK, which has delayed anticipated sales growth. The short term outlook within the UK remains challenging and as a result Avia is forecasting slightly lower full year revenues than previously expected which will render modest losses.

Post the Comprehensive Spending Review, the Company is confident that as GP commissioning widens the Company's market opportunity in areas such as care homes, face-to-face assessments in nurse-led clinics, walk-in centres and GP-led health centres will increase. This is in addition to the opportunities in global shipping and healthcare provisioning in developing countries. Avia has successfully developed and delivered new products such as the new Odyssey TeleAssess to WorkCare Inc in the US and the new Odyssey MarineAssess being piloted with INTRESCO. In order to capitalise on the expanding opportunity Avia is therefore exploring funding opportunities to provide growth capital to address the considerable markets its new products are able to serve."

Enquiries:

Notes to editors

Avia Healthcare Informatics Plc (AIM: AVIA) ("Avia") is a developer and provider of clinical decision support systems worldwide. Its Odyssey product range is for use by clinicians and non-clinically trained personnel in various environments around the world. The delivery of Odyssey can be in static or mobile format from a PC, laptop, tablet or mobile device.

Odyssey products are designed to interact with leading patient administration systems and other key systems used by the primary healthcare providers, as well as to be capable of being embedded as a white label solution in other providers' software and service offerings.

Avia is seeking to achieve global market penetration for the Company's Odyssey software products. Avia delivers Odyssey clinical content, training and other services via web-deployed, cloud-enabled, mobile and PC technologies. This is achieved through direct sales and the engagement of resellers and added value partners. Avia's strategy is focused on:

·; Driving organic growth in the sale of the software product range

·; Working with partners and resellers to develop and increase penetration in new markets

Product Range

The Odyssey range is built on a common medical content database which has been developed over the past 15 years. The Odyssey range is continually updated, tailored with question and answer sets and a user interface adapted for the particular user groups and the environment in which it is used. The range includes:

·; Odyssey CareAssess to support decisions made by care assistants or clinicians in the Care Home environment

·; Odyssey FaceToFace for face to face assessments in nurse-led clinics, walk-in centres, GP-led health centres and other services

·; Odyssey FirstAssess is specifically for use in prison/jails and secure environments

·; Odyssey MarineAssess for use on cargo vessels travelling the globe for use by the ship's captain or master in the event of illness or injury

·; Odyssey ParaMedic to empower paramedics to make safe assessments in emergency situations

·; Odyssey PatientAssess is specifically for use within doctor's surgeries to reduce demand for same day appointments

·; Odyssey Reception is utilised by non-clinical staff to prioritise patient queues and identify potential emergencies quickly and safely

·; Odyssey SelfAssess is to allow patients to self-assess their symptoms prior to consultation with clinical services

·; Odyssey TeleAssess supports telephone triage by nurses call centre operations, out of hours services, ambulance trusts, the MoD and other services

·; Odyssey VillageAssess to support those with limited or no clinical expertise working in remote villages and locations

Please visit: www.ahi-plc.com and www.plainhealthcare.com for more information.

Chairman's Statement

Introduction

During the period under review, the principal activity of the parent company has changed from being a holding company to a trading company, engaged in developing, building and maintaining the Odyssey clinical decision support systems. Avia is now selling these products directly and through international partners around the world.

During the six month period Avia has had to meet the challenges of the uncertain world economic situation and its impact upon the UK healthcare market, which has delayed anticipated sales growth. While this has presented a challenge in the short term, the Company also feels this is an opportunity as the entire Odyssey range supports the delivery of effective healthcare with the potential to achieve considerable cost savings when compared to existing practices.

New Technology / Platform Development

The Company has completed the development and launch of a .NET platform, which allows global delivery of its clinical content in any language and in any setting. The milestone use of service oriented architecture (SOA) allows expansion of revenues both from Odyssey and third party applications in all target sectors. Utilising this platform, the Odyssey TeleAssess product which supports telephone triage has been re-launched and sold within the half year period to sites including the UK, USA and Australia.

Building on our secure and robust SOA platform, the Company has added 'occasionally-connected' functionality allowing assessments to be completed irrespective of internet connectivity, whilst at the same time providing a centralised monitoring service.

The Company has re-designed the Odyssey user-interface for use with touchscreen technology to enhance the mobility of the application. Additionally it has re-structured the clinical content so that multiple languages and character sets are better supported.

During the period the clinical development team has developed additional clinical content for new regions and markets including specific content for the Australian environment and the shipping industry.

The programmes and processes have been further developed to undertake localisation and translation along with a major clinical database management tool, to allow efficient management of multiple versions of the clinical content. This will be more cost effective and above all better protects the Company's IPR.

This period has also seen the launch of Avia's eLearning programme which allows remote learning to international markets thus expanding our reach and reducing implementation time and cost for the Company, its partners and customers alike. This makes Odyssey products much more attractive and accessible internationally.

Market Development

The new Odyssey products coming on stream will reduce the Company's reliance upon the UK healthcare sector and Avia is already seeing international sales in the USA and Australia as well as progress in the recruitment of resellers. However sales in the UK continue, with renewals or contract extensions including the sale of additional Odyssey licences of FaceToFace, TeleAssess and Reception.

By virtue of improved methods of product and service deployment via the internet, Avia has established new routes to market. This has helped us generate interest in Odyssey products from contacts across the world, including the rapidly growing BRIC countries (Brazil, Russia, India and China). The process of localisation and translation has been started in support of a number of specific international sales opportunities.

Product Development

During the period Avia successfully developed the new Odyssey MarineAssess product targeted at global cargo shipping companies. The product is expected to be used to guide the assessment of unwell or injured crew members, and to avoid the considerable costs associated with unnecessary diversion of or evacuation from a vessel in the event of injury or illness. A pilot trial with INTRESCO, the European shipping management group, aboard certain of its ships using a rugged touchscreen tablet, began in August and is expected to highlight these prospective benefits to vessel owners, managers and insurers and crew management companies.

Avia also recently completed the successful piloting of Odyssey SelfAssess, the product which allows patients to self-assess their symptoms prior to consultation with clinical services. Substantial benefits were demonstrated for patients and clinical services in terms of enhancing patients' capacity to self-care and so reducing the demand for healthcare. The Company anticipates that both the Odyssey MarineAssess and Odyssey SelfAssess products will be fully launched within the second half of the current financial year.

Organisation

Professor Jeremy Dale, Professor of Primary Care at the University of Warwick and one of the founders of Plain Healthcare, has been appointed to the executive post of Clinical Director. This appointment adds to the strengthening of the board; the addition of Roger Lane-Smith as a non-executive director occurred just prior to the start of the new financial year.

Avia has taken the operational management for international sales by reorganising into four sales regions (the Americas, Far East, UK and the rest of the world) by the appointment of key executives for each of these regions. In September the following management appointments were made:

Avia

·; Vice President Sales - America. Andrew Jobson joined Avia on 1 November 2010 and is based in Florida, North America.

Andrew Jobson has over 35 years' experience in medical sales and marketing having worked in global markets in cardiology, emergency medicine, radiology and telemedicine. He has held senior management positions at Abbott Labs, Oxford Instruments, General Electric Medical Systems, Schiller and Vitaphone. For the past four years Andrew was President with Vitaphone USA and was instrumental in establishing their business in the US in the area of telemedicine.

·; Director of Sales - EMEA, ANZ, CIS, Indian Sub-Continent. Chris Coyne, previously International Business Director of Plain, was appointed to this position on the 6th September 2010.

Plain

·; Managing Director. Tim Morris, previously UK Operations Director, was appointed to this position on the 6th September 2010.

The Company has also taken the operational management for international marketing with the appointment of a Marketing Manager on the 6th September 2010. To support the expanding group and development of financial governance a Financial Controller was appointed on the 20th September 2010.

Growth opportunities

Odyssey supports the cost-effective delivery of healthcare, which is increasingly sought after in economies with well-established healthcare provision in order to cope with the demands of an ageing population. At the same time, the developing world looks to deliver improved access to affordable healthcare. Odyssey up-skills and empowers clinical staff at varying levels of experience to provide rapid, safe assessment and up-to-date clinical advice, in varying care environments.

The new ability of the Odyssey product suite, utilising the .NET platform, to deliver clinical decision support in healthcare delivery outside traditional healthcare environments is making assessment and support available to both clinicians and non-clinically trained users. Our pilot Odyssey MarineAssess with worldwide shipping company INTRESCO, designed to support the ship's captain or master in assessing and managing the health needs of the crew, illustrates an early application of the technology in remote medical environments. Subject to satisfactory completion of the pilot, early indications of demand for this product are encouraging.

The Company has also completed the piloting of Odyssey SelfAssess which confirmed its potential to reduce patient dependency on traditional health services and empower individuals to self-care. This product has considerable potential to reduce costs in private and publicly funded healthcare.

Strategy

Avia's primary focus is to achieve global market penetration for the Company's Odyssey software products. Avia delivers Odyssey clinical content, training and other services via web-deployed, cloud-enabled, mobile and PC technologies. Sales growth is being targeted through a direct sales force and the engagement of resellers and added value partners, the latter particularly being pursued to increase penetration in new markets.

Marketing and Sales

The Company has increased its focus on marketing and sales in order to increase international brand awareness and sales through strategic partnerships. Avia is now engaged in international advertising, promotion and relationship building with potential resellers, partners and direct customers, through direct contact and attendance at major industry events internationally.

The newly expanded and redeveloped website (at www.plainhealthcare.com) is intended to support the Company's international marketing efforts as well as benefit the direct sales team.

Outlook

"During the six month period Avia has had to meet the challenges of the uncertain world economic situation and its impact upon the UK, which has delayed anticipated sales growth. The short term outlook within the UK remains challenging and as a result Avia is forecasting slightly lower full year revenues than previously expected which will render modest losses.

Post the Comprehensive Spending Review, the Company is confident that as GP commissioning widens the Company's market opportunity in areas such as care homes, face-to-face assessments in nurse-led clinics, walk-in centres and GP-led health centres will increase. This is in addition to the opportunities in global shipping and healthcare provisioning in developing countries.

Avia is leveraging its technology platform and experience in UK and European markets and has successfully developed and delivered new products which are opening up new opportunities worldwide. This includes the creation of product and deployment methods aimed at allowing delivery of the Odyssey clinical support system to multiple types of user groups, in varying environments regardless of location.Avia continues to work with its prospective customers and partners to this end. Avia has successfully developed and delivered new products such as the new Odyssey TeleAssess to WorkCare Inc in the US and the new Odyssey MarineAssess being piloted with Intresco. In order to capitalise on the expanding opportunity Avia is therefore exploring funding opportunities to provide growth capital to address the considerable markets its new products are able to serve."

Barry Giddings, Chairman, 17 November 2010

Financial Report

The consolidated results for the six months period to 30th September show a revenue of £987k (2009: £1048k) this was some £170k below management expectation level due to delays in customer procurement within the UK market. However by keeping tight control of overheads the operating loss for the period has been held at £(255k) (2009: £(83k) prior to the merger). This was some £93k better than management expectations.

The gross profit margin at 48% (previous period 2009: 48%) continues to hold up well. Product development costs continue to be capitalised in the period at £109k but at a reduced rate.

The loss per share for the period was 5.00 pence per share (previous full year 2010: was 6.11 pence per share). The cash balances in the group stood at £252k at the end of the period.

Profit and Loss

Balance Sheet

Cashflow

Notes to Interim Report

1. Introduction

This report was approved by the directors on 17 November 2010.

The information relating to the six month periods to 30 September 2010 and 30 September 2009 are unaudited.

The information relating to the year ended 31 March 2010 is extracted from the audited accounts of the Company which have been filed at Companies House and on which the auditors issued an unqualified audit report.

2. Accounting policies

Basis of accounting

These financial statements have been prepared in accordance with International Financial Reporting Standards and IFRIC interpretations and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The financial statements have been prepared under the historical cost convention.

Basis of consolidation and reverse acquisition

On 16 November 2009 following the admission of its shares to trading on AIM, a market operated by the London Stock Exchange, the Company became the legal parent of Plain Healthcare Limited.

The combination has been accounted for as a reverse acquisition as if Plain Healthcare Limited acquired Avia Health Informatics plc. Although these Group financial statements have been issued in the name of the legal parent, the Group's activity is in substance a continuation of that of the legal subsidiary, Plain Healthcare Limited, because after the transaction the former owners of Plain Healthcare Limited gained control of the Group and of the legal parent. The following accounting treatment has been applied in respect of the reverse acquisition:

a) the assets and liabilities of the legal subsidiary are recognised and measured in the Group financial statements at the pre-combination carrying amounts;

b) the retained losses and other equity balances recognised in the Group financial statements to the date of the reverse acquisition reflect the retained loss and other equity balances of Plain Healthcare Limited immediately before the reverse acquisition, and its results for the period from 1 April 2009 to the date of the reverse acquisition. However, the equity structure appearing in the Group financial statements reflects the equity structure of the legal parent, including the equity instruments issued under the share for share exchange to effect the business combination on 16 November 2009. The effect of using the equity structure of the legal parent gives rise to the reverse acquisition reserve;

c) comparative amounts presented in the Group financial statements are those reported in the financial statements of the legal subsidiary, Plain Healthcare Limited, for the period ended 31 March 2009; and

d) no goodwill or fair value adjustments are reflected in the consolidated financial statements because the parent company had not traded prior to the acquisition and did not meet the definition of a business in accordance with IFRS3. A business combination as defined by this standard was not therefore considered to have taken place. All differences arising on consolidation are hence taken to the reverse acquisition reserve.

Revenue recognition

The Group sells rights to use its software products under an inclusive licence and maintenance agreement. The fee received from the customer entitles the user to use the software for a limited period of time (typically one year) together with office hours software support and maintenance and ongoing updates to the technical content of the software and any upgrades made to the software functionality. An additional fee is rendered to those customers requiring out of office hours support services.

The Group estimates the value of software sales attributable to ongoing support and upgrades by calculating the direct costs of providing these services and adding a reasonable profit margin of 25%. This proportion of the fee received from the customer is recognised on a straight line basis over the period covered by the invoice to the customer with appropriate amounts being recognised as deferred income. The balance of the fee received is recognised immediately in income. Fees generated for separate out of hours support contracts are recognised on a straight line basis over the period covered by the amounts invoiced to the customer.

Intangible assets - Research and development

The Group has incurred substantial sums in developing and upgrading the Group's products in the period since incorporation and over the period covered by this financial information. One of the criteria for the recognition of development expenditure as an asset is that is must be possible to measure development costs reliably.

In common with many companies of a similar size and which have previously applied UK Generally Accepted Accounting Practice, all development costs incurred up to 31 December 2008 were charged as an expense against profit because the Group had not maintained records which would enable it to retrospectively measure, on a reliable basis, those costs relating to development expenditure, which might otherwise have met the criteria for recognition as an intangible asset in accordance with International Accounting Standard 18.

Since 1 January 2009 the Group has maintained records which identify costs attributable to individual development projects. Costs are capitalised as intangible assets when they meet the criteria specified below.

Development activities involve a plan or design for the production of new or substantially improved computer software. Development expenditure is capitalised only if development costs can be measured reliably, the software programme is technically and commercially feasible, future economic benefits are probable and the Group intends to have sufficient resources to complete the development and to use, lease or sell the asset. The expenditure capitalised includes only the cost

of gross direct labour costs that are directly attributable to preparing the asset for its intended use. Other development expenditure is recognised in profit or loss as incurred.

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, or internally generated goodwill and brands, is recognised in profit or loss as incurred.

Expenditure on research activities is recognised as an expense in the period in which it is incurred.

Expenditure is accounted for over the period it is anticipated that revenues will be generated from the products produced. This is estimated to be five years from the date the product is complete and available for sale.

Impairment

At each balance sheet date, the Group reviews the carrying amounts of its tangible assets to determine whether there is any indication that those assets have suffered any impairment loss. If any such indications exist, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately, unless the relevant asset is carried at a revalued amount in which case the impairment loss is treated as a revaluation decrease.

Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised as income immediately, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment is recognised in equity.

Taxation

The tax expense as a charge or credit to profit or loss represents the sum of the tax currently payable and deferred tax. Tax is recognised to the extent that it relates to items recognised directly in equity, in which case it is recognised in the statement of comprehensive income.

Current tax is based on taxable profit for the period, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it related to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.

3. Earnings per share

The earnings per share for the six months ended 30 September 2010 have been calculated based on the profit on ordinary activities after taxation by the weighted average number of shares in issue during the period. As there are no dilutive factors, earnings per share is equivalent to the basis loss per share.

4. Segmental Information

A segment is a distinguishable component of the Group that is engaged in providing services in a particular economic environment which have different potentials for future development. The Group operates in only one segment and though there is export revenue this is all within Europe and the Company classifies its operations as a single segment.