Press Release

18 April 2011

LIDCO GROUP PLC

("LiDCO" or the "Company")

Preliminary Results for the year to 31 January 2011

LiDCO (AIM:LID), the UK-based hemodynamic monitoring company, today announces its Preliminary Results for the year to 31 January 2011.

Financial Highlights

·	Total revenue increased by 16% to £6.24m (2009/10: £5.37m)
·	UK sales increased 29% to £2.36m (2009/10: £1.82m)
·	Traded profitably in H2
·	EBITDA positive in year £141,000
·	Gross profit up 28% to £4.22m; gross margin 68% (2009/10: 61%)
·	Recurring revenues of £3.68m, representing 59% of total revenues
·	Loss before tax down 68% to £490,000 (2009/10: £1.55m)
·	Lowest ever annual cash outflow before financing at £433,000 (2009/10: £1.04m)
·	Cash balance of £1.40m (2009/10: £1.85m)
·	Loss per share 0.22p (2009/10: 0.87p)

Operational Highlights

·	524 monitors sold/placed - installed base of 2,001 units at year end *
·	Disposable sales of 47,948 units - up 26% (2009/10: 37,918)
·	Studies published showing use reduces mortality in shock patients
·	LiDCOrapid v1.03 and blood pressure module completed in September
·	LiDCO monitors now have connectivity to both Philips and GE's Centricity Clinical Information Systems

Post Period End

·	Argon appointed LiDCO as UK distributor for critical care business in March 2011

* The installed base has been restated on the basis of the number of units sold/placed on a rolling 7 years - a period likely to be representative of the monitors actively contributing to disposable sales. The rebased number for Jan 2011 therefore excludes the 291 monitors sold in 2003.

Commenting on the results Terry O'Brien, Chief Executive, said: "The Board is pleased to announce that sales have continued to grow while costs have been kept tightly controlled, resulting in the Company reporting record low cash usage and operating loss. This was a milestone year for us. The worldwide market for our product is significant. Evidence for, and awareness of, the benefits of LiDCO's technology are growing stronger. As our ongoing product development continues to enhance the Company's offering, we are well placed for further growth together with our strong distribution partners."

The investor presentation "LiDCO's Preliminary Results - year to 31 January 2011" will be available from today on the LiDCO website (www.lidco.com).

-ENDS-

For further information, please contact:

LiDCO Group Plc
Terry O'Brien (CEO)	Tel: +44 (0)20 7749 1500
Paul Clifford (Finance Director)
Theresa Wallis (Chairman)	www.lidco.com

FinnCap

Geoff Nash / Henrik Persson

Stephen Norcross (broking)

Tel: +44 (0)20 7600 1658

www.finncap.com

Media enquiries:

Abchurch

Sarah Hollins / Adam Michael / Joanne Shears /

Simone Elviss / Claire Dickinson

Tel: +44 (0) 20 7398 7728

simone.elviss@abchurch-group.com

www.abchurch-group.com

About LiDCO Group Plc

LiDCO is a supplier of minimally invasive hemodynamic equipment to hospitals, to monitor the amount of blood flowing around the body and ensure that vital organs are adequately oxygenated. LiDCO's products facilitate the measurement, analysis, audit, training and sharing of real-time and historic hemodynamic data, in both critical care units and the operating theatre.

Scientific evidence is increasingly linking the optimization of patients' hemodynamic status with better outcomes and reduced hospital stays and LiDCO's computer-based technology, developed at St Thomas' Hospital in London, has been shown to significantly reduce morbidity and complications, length of stay and overall costs associated with major surgery.

Key Products:

LiDCOplus: a computer-based platform monitor used in the Intensive Care Unit for real-time continuous display of hemodynamic parameters including cardiac output, oxygen delivery and fluid-volume responsiveness (PPV% and SVV%)
LiDCOrapid: a cardiac output monitor designed specifically for use in the operating theatre for fluid and drug management. The monitor enables anesthetists to get accurate and immediate feedback on the patient's fluid and hemodynamic status - a key measure of overall well-being before, during and after surgery. The LiDCOrapid provides:
	early and rapid warning of hemodynamic change to aid choice of therapeutic route: fluid or drug
	quantification of hemodynamic response,
	guidance on effective delivery of fluids to ensure the right amount at the right time
LiDCOview: an easy-to-use graphical display of historical LiDCOplus and LiDCOrapid hemodynamic data.

All LiDCO monitors use single-patient disposables (sensors or smartcards) which provide an ongoing revenue stream.

Clinical Validation & Education

LiDCO has been selected as the sole technology for two ongoing multi-centre government-funded studies in the UK and US. OPTIMISE is sponsored by the UK Government for optimizing cardiovascular management in high-risk abdominal surgery patients and in the US, MOnIToR is a US Government sponsored transplantation donor organ optimization study. The Company has also developed a hemodynamic workshop at St George's Hospital, London.

LiDCO Distribution Network:

LiDCO's strategy is to sell directly to hospitals in the UK, and through a network of specialty critical care and anesthesia distributors in the rest of the world. LiDCO's sales office is in Cambridge, its manufacturing facility and headquarters are in London and its shares are traded on AIM. For more information please see www.lidco.com.

Chief Executive's Statement

LiDCO had another very good year. The monitor base increased by a net 233 units (13%) to 2001 units, with 524 units sold or placed during the year. Disposables income increased in our intensive care and surgery markets by 8% and 39% respectively. Overall revenues were up 16% on the previous year to £6.24m with gross profit up 28% to £4.22m. Expenses were kept under tight control resulting in administration costs reducing by 2%. Average product margins were maintained at 76%. Cash outflows before financing were at a record low with the Group trading profitably during the second half of the year. Over the prior year the loss fell by over £1m with the loss per share reducing by 75% to £0.22.

The market

The Directors estimate that the potential number of patients in Europe who could benefit from hemodynamic monitoring is six times the number currently being monitored. The cost of critical care continues to grow. Heightened awareness of the benefits from the use of LiDCO's technology such as reductions in infections, length of stay and costs are all contributing to increased sales.

The market for minimally invasive hemodynamic monitors breaks down into three categories: intensive care (ICU), high risk surgery and alternate sites such as trauma and 'outreach' (i.e. outside the ICU) care sites. LiDCO monitors have the potential to play major roles in each of these arenas.

Reducing surgical complications such as infections is a key growth driver for our business. In the US, it is estimated that surgical site infections alone cost US$10bn per annum. The need to prevent central line infection and septic complications has led to a drive to reduce the use of invasive central venous catheters. Use of LiDCO's technology can reduce central venous catheter use by up to 80% in high risk surgery (Green D, Paklet L (2010) Latest developments in peri-operative monitoring of the high-risk major surgery patient. International Journal of Surgery 8 90-99).

With a US$1.2bn market potential in surgery and intensive care, the global market for minimally invasive hemodynamic monitoring products is large and growing. The experience level of clinicians in the ICU is declining due to the retirement of staff experienced in the use of older invasive catheter based technologies. Consequently there is a growing need for reliable, accurate and easily adoptable products that can deliver more cost effective care. The minimally invasive market now represents 53% of the European hemodynamic monitoring market value, followed by the invasive and non-invasive markets which represent 42% and 5% of sales respectively.

It is projected that the European minimally invasive hemodynamic monitoring market will grow at a compound rate of 12% per annum; from US$51m today to US$112m by 2017 (iData 2011 patient monitoring research report). The UK represents the biggest European market for, and fastest rate of adoption of, minimally invasive technology. Sales in the UK are projected to grow by an average of 17% per annum from US$14m in 2010 to US$42m in 2017. The NHS in the UK is now the largest healthcare organization in the world, with an annual spend of £100bn. LiDCO has a direct sales force in the UK where our sales revenues increased last year by a noteworthy 29%. We are resourced to take advantage of this fast growing domestic market opportunity. Acquiring the sales and marketing rights to the Argon critical care products has further broadened and strengthened our hemodynamic offering to our UK customers.

Evidence and awareness

The minimally invasive hemodynamic market is documented as the fastest growing sector in the European hospital monitoring field. The potential size of the market, its growth rate and the increasing presence of clinical guidelines for adoption of hemodynamic monitoring is inevitably resulting in an increasing appetite from the major corporate players to participate in providing these advanced products.

The pressure on hospitals to reduce costs while improving efficiency is intensifying. In the UK, the NHS QIPP (Quality, Innovation, Productivity and Prevention) and ERAS (Enhanced Recovery After Surgery) programs have resulted in a higher focus on adopting advanced hemodynamic monitoring technology. For example, in a 2010 survey of UK hospitals by the British Intensive Care Society, 77% of hospitals had, or were planning to implement, fluid-optimization of their colorectal cancer surgery patients. The three most important issues determining their choice of technology were ease of use/adoption, trending accuracy and suitability of use for the broadest variety of patients. The LiDCOrapid was specifically designed to be easy to set up and usable in the fluid and drug management of any patient with arterial line access. Our surgical product is proving very adoptable, with UK sales of LiDCOrapid disposables increasing by 137% in the year.

Cumulatively more than 100 publications are in print referencing our technology. During 2010 alone 25 research abstracts and papers on the use of LiDCO monitors were presented and published. Using LiDCO technology for high-risk surgery patients has been shown to help reduce complications - particularly infections - by more than a third, reducing hospital stay by an average of 12 days per patient and costs by £4,800 per patient (Pearse et al. Early goal-directed therapy after major surgery reduces complications and duration of hospital stay. A randomized, controlled trial. Crit. Care 2005, 9 (6) 687-693).

In September 2010, the Journal of Critical Care published the findings of a study from the University of Iowa, showing that using the LiDCOplus monitor significantly reduced the mortality rate in patients treated for shock (Hata et al. Reduced mortality with noninvasive hemodynamic monitoring of shock, Journal of Critical Care, 26:2, pages 224.e1-224.e8). Treatment of patients using LiDCO's monitor significantly reduced the observed mortality rate to 13% against 32% and 20% in the two invasively monitored groups and 37% in the unmonitored patient groups. These results add to the previous findings of Pearse et al who reported that supportive care guided by LiDCO's lithium dilution and arterial waveform assessments of cardiac output was associated with reduced peri-operative morbidity compared with conventional assessment.

Two further large multi-centre outcome trials are progressing well. In the UK, the LiDCOrapid cardiac output monitor was chosen as the sole monitoring system to be used in OPTIMISE, a government-supported trial which aims to improve surgical outcomes by optimizing a patient's cardiovascular management. The trial, covering 12 centers, is the largest of its type to date; it is underway and currently recruiting patients.

The LiDCOplus is the sole hemodynamic monitor used in a 960 patient US-Government funded multi-centre trial - MOnIToR (Monitoring Organ donors to Improve Transplantation Results). The results of earlier studies using LiDCOplus to monitor and develop a treatment protocol designed to improve the hemodynamic status of donors generated considerable interest within the US transplantation community. As with the OPTIMISE trial, the MOnIToR trial is progressing well.

To facilitate adoption and productive use of its equipment, LiDCO's monitoring products are also supported by excellence in clinical education. In April 2010 LiDCO established a Hemodynamic Workshop in collaboration with doctors at St George's Hospital in London aimed at teaching hemodynamic optimization techniques to senior physicians. This course is accredited by the UK's Royal College of Anesthetists for continuing medical education points. The course has been very well received by all the consultant level attendees and we have seen a high degree of participation and take up by our European distributors of places for courses held this year. In July LiDCO received accreditation from the Royal College of Nursing (RCN) for its LiDCOplus monitor competency-based study day. The course is designed for all critical care nurses, nurse educators, professional development nurses, nurse consultants and junior doctors. Our plans are to considerably expand both of these educational activities.

Products and applications

LiDCO applies several common criteria to its products. They must be innovative, protectable, and applicable to significant clinical applications. They must have a large addressable market and deliver significant margins. The manufacturing process must also be low cost with very high reliability.

Each LiDCO monitor addresses a particular market. Launched in 2008, the LiDCOrapid principally focuses on high risk surgery patients with arterial lines, but also addresses alternate site use - for example in trauma, obstetrics and shock. The LiDCOplus is used mainly in the intensive care arena.

During the year several new product developments were introduced, for example:

·	a software upgrade to the LiDCOrapid, including a module to expand access to blood pressure data;
·	a translation facility to convert information from English into 22 languages; and
·	improved communication with Philips and GE hospital information systems.

Sales and distribution

Revenue was up 16% to £6.24m (2009/10: £5.37m). A similar number of LiDCO monitors were sold or placed in the year (524 vs. 565 units in 2009/10) with monitor capital income up 5%. The monitor base at the year end was 2,001units, with a net increase of 233 units (13%) in the year. As explained in the Financial Review, from this year we are now reporting our installed base as the net number of sold and placed units over the last seven years. Our monitors have an expected life of seven years in use, so we have decided to assume all monitors over seven years old will no longer be disposable income generating. From here on the installed base will only increment by the difference between those monitors sold in the year and those retired i.e. that were sold 8 years ago. The LiDCOrapid portion of the installed base grew by 474 units and now represents in excess of 50% of the monitor base.

Disposables income was higher for both our intensive care and surgery markets by 8% and 39% respectively and by 18% overall. Disposables numbers were also up 26% at 47,938 units (2009/10, 37,918 units). Export sales represent 62% of total income - slightly down from 66% in the prior period, reflecting the very strong UK sales growth seen in the period as well as economic weakness in some parts of continental Europe.

Review of revenue and units sold & placed

	Year to 31 Jan 2011	Year to 31 Jan 2010	Increase/ (decrease)	Increase/ (decrease) %
Revenue by type (£'000)
- Monitors	1,953	1,855	98	5%
- Sensors/cards/use fees	3,681	3,125	556	18%
- License Fees and other income	603	387	216	56%
- Total Revenues	6,237	5,367	870	16%
Monitors (Units)	524	565	(41)	(7%)
Sold	515	536	(21)
Placed	9	29	(20)
Sensor, smart card and Fee per Use Sales (Units)	47,938	37,918	10,020	26%
Monitor Base (7 year net)	2,001	1,768	233	13%

LiDCO's strategy is to sell directly to the high value, high growth UK hospital market via its strong, direct sales force and is expecting to take a significant share of the domestic market growth. In export territories we are focusing on addressable markets i.e. those where we expect good growth and where we have access to specialist distribution partners with the attributes and commitment to sell our products and develop our market within their territory. These include the, US, Japan, Scandinavia, Eastern Europe, the Middle East and Latin America.

In the US there are almost 5,000 hospitals performing surgery and within these hospitals there are over 100,000 intensive care beds. In addition to the challenge of selling to this large and geographically spread out hospital market, there are a significant number of regional and/or national accounts to work with. Once sales traction is gained in the US, these hospital groups and group purchasing organizations (such as Premier and Novation) become increasingly important customers.

Over the years it is clear that fully accessing the growing USA hemodynamic monitoring market has become logistically and financially impossible for the smaller and even larger sized companies. Therefore, in order to address a significant share of this opportunity we have established a distribution agreement in the US with the Respiratory and Monitoring division of Covidien plc ("Covidien"). Covidien has a long standing and substantial existing oximetry monitoring business and more recently made significant investment in the monitoring market, acquiring two additional US monitoring companies (Aspect and Somanetics) with a very significant total investment of $460m. Collectively the Respiratory and Monitoring division now has one of the largest monitoring equipment sales forces available today in the US. Importantly this group sells into over 80% of operating rooms in the major hospitals. In the US Covidien is now able to offer customers a suite of monitoring systems that can collectively monitor respiratory function, brain oxygenation and through the LiDCOrapid the underlying hemodynamic status. These products are a natural fit together and offer, in particular, advantages to the management of high risk surgery patients. Accordingly, we believe that the commitment by Covidien to promoting LiDCO's LiDCOrapid monitor along side their own products is strong. Covidien achieved the first year's minimum sales requirements and our business with them grew 26% over the prior year. This was a good result, as inevitably amalgamations of this scale take a lot of effort and time out from the field. Indeed, training of the new members of the consolidated sales force and internal national accounts sales teams on LiDCO's product is still taking place. We expect the number of evaluations and pipeline to continue to build as the recently trained representatives also start to contribute to the sales efforts. Clearly Covidien has made a significant investment in the monitoring field and has the interest, infrastructure, resources and products necessary to access in particular a significant share of the high risk surgery hemodynamic monitoring market.

Geographic sales & trading

UK sales summary

	Total revenue up 29% at £2.36m (2009/10: £1.82m)
	Monitor revenue up 52% to £0.50m (2009/10: £0.33m) - ICU - LiDCOplus monitor revenue up 49% to £0.30m - Surgery - LiDCOrapid monitor revenue up 118% to £0.20m
	Disposables sales of £1.80m up 21% (2009/10: £1.49m)
	Other income £55,000 (2009/10: nil)

Our focus last year was to maintain our ICU business and grow our LiDCOrapid surgery interest. Our direct sales force had a very good year achieving both these goals. Total income was up 29% to £2.36m, with the UK representing 38% of our total worldwide sales. Monitor and disposables income increased across both the ICU and surgery markets. As expected the greatest growth was experienced in the surgery segment where LiDCOrapid monitor sales were up 118% and smart card disposables up 137%. The monitor base increased by a net 24 units (9%) to 300 units in the UK, with 61 units sold or placed during the year. The total number of disposables sold increased from 14,055 to 17,605.

In the UK there will be intense pressure on the NHS in terms of revenue and capital spend in the new financial year starting this month. We believe this will continue to drive hospitals to focus on reducing costs while improving efficiency. ERAS programs within the NHS will most likely continue to be prioritized, despite the worsening economic conditions. We expect these conditions will deliver sales growth of our surgery product in particular. Fluid and hemodynamic monitoring is already adopted, or planned in the majority of UK hospitals. Additional sales growth should come from increasing use in a number of surgical procedures.

We announced in March 2011 that LiDCO was appointed by Argon Medical Devices Inc. ("Argon") to take over their existing UK critical care sales. Argon acquired the critical care business of Becton Dickinson ("BD") in late 2010. We are delighted that Argon has decided to extend the relationship we previously established with BD's Japanese critical care group. We expect to start selling Argon's products from June 2011. UK customers will then be able to buy an expanded and related group of critical care and surgery products including the arterial pressure transducer necessary for use with our monitors.

USA sales summary

●	Distribution revenue up 26% to £1.89m (2009/10: £1.50m)
●	LiDCOrapid monitor revenue steady £0.68m (2009/10: £0.68m)
●	LiDCOrapid smart card sales up 54% to £0.83m (2009/10: £0.54m)
●	License fee and other income of £0.38m up 35% (2009/10: £0.28m)

Sales to Covidien were up 26% during the period. Comparisons across the period are complicated by the stocking orders taken in both periods and the subsequent temporary sales disruption from acquisition and integration of the Aspect and Somanetics sales forces. We are pleased to report that Covidien has achieved the minimum sales in the first year of our contract. Overall Covidien have purchased 657 LiDCOrapid monitors representing both sales stock and a demonstration / evaluation pool. Covidien has shown a high level of commitment to developing the high risk surgical market opportunity and is putting a significant amount of time into training and incentivizing the sales force.

LiDCO has retained sales responsibility for the ICU-focused LiDCOplus product sales in the US with our direct sales force. Direct sales have decreased to £464,000 (2009/10 £773,000) with £111,000 of the fall the inevitable result of the transfer to Covidien of LiDCOrapid sales in accounts that were previously a direct sales business. Capital revenues (i.e. new monitor sales) from the LiDCOplus fell from £184,000 to £83,000 due to the reduced sales effort as four of the LiDCO sales team transferred to Covidien. LiDCOplus sensor sales declined from £422,000 to £341,000, a consequence of some customers now purchasing the LiDCOrapid - where previously they would have purchased the LiDCOplus - and reduced geographic sales coverage outside our key accounts.

LiDCOplus consumable sales to our key accounts (i.e. accounts where we can support the business) declined modestly - by only £43,000. Most of this decline was due to product substitution in a small number of accounts towards use of the LiDCOrapid. Going forward we expect the core key account direct business to be supportable and maintainable while we focus on the bigger and more addressable surgery opportunity for the LiDCOrapid. We continue to believe there is a significant ICU market in the US for our more precise and sensor calibrated monitor.

Continental Europe sales summary

·	Total revenue down by 13% to £0.86m (2009/10: £0.99m)
	Monitor sales revenue of £0.32m down 40% (2009/10: £0.53m)
	Sensor/Smartcard sales up 17% to £0.54m (2009/10: £0.46m)

We reported at the interims stage that the economic climate in Europe had been weak, delaying capital and disposable purchases in some countries. Where economic conditions have been poor this has affected our distributors' business. In contrast, where finances are stronger, e.g. in Eastern Europe, we have seen a very significant increase in sales. The results are therefore very mixed; ranging from increases of 71% in Slovenia to an 82% fall in business in Italy, previously our best performing territory. Despite the challenging conditions, underlying disposable income was up by 17%. We expect sales to increase modestly in 2011 as the economic climate gradually improves.

Rest of World & License Fee Income

·	Total revenue up 135% at £0.66m (2009/10:£0.28m)
	Monitor revenue up 225% to £0.39m (2009/10: £0.12m)
	Sensor/Smartcard sales up by 117% to £0.13m (2009/10: £0.06m)
	License fee and other income of £0.14m (2009/10: £0.10m)

Sales in the ROW were up 135%, reflecting increases across the board in license fees, monitor and disposable revenues. This was a good performance with particularly good results seen Brazil and the Middle East.

Minimally invasive hemodynamic monitoring is becoming well established in Japan. We believe the Japanese hemodynamic monitoring high risk surgery market has a potential market value of US$285 million per annum, with reimbursement currently available. With respect to our distribution arrangements in Japan, in October 2010 Argon announced that it had acquired the critical care division of BD. LiDCO had signed a distribution agreement with BD in April 2009 for sales of the LiDCOrapid in Japan and a registration application file for product approval has been prepared for submission. We expect registration and reimbursement to be approved late 2011/ early 2012. Negotiations with distribution parties in Japan are well advanced and a Heads of Agreement has been signed - we expect to be able to further update shareholders in the near future.

FINANCIAL REVIEW

Operating results

Turnover increased by 16% to £6.24m (2009/10: £5.37m). Losses after tax decreased significantly by 73% to £390,000 (2009/10: £1,427,000) and the loss per share was reduced to 0.22 pence (2009/10: 0.87 pence). Exports rose by 9% to £3.88m but with a strong increase in sales in the UK represented 62% of sales, down from 66% the previous year.

During the year a total of 524 monitors (2009/10: 565 monitors) were sold or placed. Historically the reported installed base has represented the total monitors sold or placed since the first sales in 2001. It is inevitable that some of the earlier monitors will now have been replaced by newer models or may simply be no longer in use and in common with some other companies in our sector, the installed base has been restated based on the number of units sold or placed within the last 7 years. The restated installed base of monitors at the year end was 2,001 (2009/10: 1,768) representing a net increase in the year of 233 monitors. Some of the installed base will be demonstration and evaluation monitors sold to distributors. The monitors sold/placed in the year comprised 474 LiDCOrapid monitors and 50 LiDCOplus monitors with 515 (2009/10: 536) of the monitors being sold and 9 (2009/10: 29) being placed.

Recurring revenues from the sales of disposables, service contracts and fees for use increased by 18% to £3.68m (2009/10: £3.13m) and represent 59% of total revenues. The number of disposables sold increased by 26% to 47,938 (2009/10: 37,918).

The average product margin across all products after external procurement costs increased slightly during the period from 75% to 76%. Future profitability will significantly depend on margins achieved on disposables and these have remained high during the year. Margins achieved on LiDCOplus sensors remained steady at 86% and on LiDCOrapid smartcards increased marginally to 93% (2009/10; 92%).

Sales of LiDCOrapid smartcards which rose by 39% will be an important growth revenue stream in future years. In the UK where hemodynamic output monitoring has been demonstrated to help to reduce hospital costs and where we have detailed usage information, we have seen the average use rate increase from 3.5 to 4.7 uses per monitor per month with use in some hospitals as high as 15 uses per monitor per month.

The overall gross margin on sales was 67%, up from 61% in the previous year largely due to reduced Med One payments in the period which amounted to amounted to £526,000 (2009/10: £688,000). Med One payments are expected to reduce to about £230,000 in 2011/12 and be minimal in the following year. Total overheads fell by £118,000 (2%) compared with the previous year. As noted previously, the comparative effect of transferring most of the US sales force to Aspect (now Covidien) in July 2009 was to reduce costs by about £325,000. This reduction was offset most significantly by additional sales and marketing costs in the UK where sales increased by 29%.

Taxation

As the Group is still at the pre-profit stage there was no tax charge for the year and in addition the Group has a deferred tax asset of £5.6m although this has not been recognized in the accounts. The Group qualifies for research and development tax credits, which are estimated as £109,000 (2009/10: £122,000) and are shown in the income statement.

Cash, financing and working capital

The net cash outflow before financing activities was £433,000 (2009/10: £1,044,000), its lowest rate since flotation in July 2001. Cash balances at 31 January amounted to £1,404,000 and the Company has no bank borrowings. The Board anticipates that this will be sufficient to see the Company through to profitability and positive cashflow.

Stock at the year end decreased slightly to £1.05m and represents 18% (2009/10: 22%) of non-license fee revenue. Expenditure on fixed and intangible assets in the year of £556,000 compares with £608,000 the previous year and is below the charge for depreciation and amortization of £639,000. Expenditure on fixed and intangible assets is not expected to rise significantly in the foreseeable future.

New product development

The latest revision of the LiDCOrapid software, version 1.03 and the development of the universal pressure waveform module were completed in the year. The new software release introduced a number of features focused on further developing the LiDCOrapid graphical user interface and simplifying use of, and connectivity to, our monitors.

Summary of developments concluded during 2010

Universal pressure waveform module: this allows wider hospital use of our technology by allowing a broader range of arterial blood pressure catheters to be accessed.

LiDCO monitor language localization: converts the information on the LiDCOrapid monitors' screens from English into 22 languages

RS232 communication changes: allowing the LiDCOrapid Monitor to communicate with a wider range of hospital information systems. One such communication project, announced in October, was to connect to GE's Centricity Clinical Information Systems in Europe, the Middle East and Africa. This follows our previous software development enabling a link between LiDCO's proprietary stand-alone monitoring system and Philips' patient monitors via the Philips VueLink.

LIDCO software evolution

Given the growing interest in fluid management and hemodynamic monitoring we are exploring further refining the graphical user interface and core algorithm software architecture to allow for potential OEM solutions whereby elements of the software could be more easily licensed to third parties. Research is also underway into the performance of the core algorithm with alternate, often less high fidelity, signal sources with the objective of widening the patient applications and thereby increasing the addressable market for our technology.

Regarding our intensive care product the LiDCOplus we intend to update the LiDCOplus monitor software to v 4.02. This will involve updating the operating system, adding the blood pressure module option and further improving ease of use and calibration methodology.

We believe that there is a significant market for a combined graphical user interface that can realize the clinical synergy between Covidien's Bispectral Index (BIS) depth of anesthesia product and the LiDCOrapid monitor. The former ensures the correct depth of anesthesia is achieved, and the LiDCOrapid is used to restore and maintain blood pressure and cardiac output to appropriate levels after anesthesia induction and during surgery. A prospective study at King's College Hospital, London, strongly suggested that this combination display could significantly improve the management of patients' levels of anesthesia, fluid and hemodynamic status. The project to develop a combined graphical user interface (GUI) is advancing with a communication interface already developed. Work is now progressing to finalize the screen design. This development project is expected to conclude around the last quarter of 2011. Patent applications have been filed on both the basic structure of the LiDCOrapid monitor GUI and this has been followed by a second application on the combined hemodynamic and depth of anesthesia GUI display.

Regulatory and quality review

During the year LiDCO Ltd. was successfully audited against the requirements of ISO13485:2003, ISO9001:2008, the EU Medical Devices Directive and the Health Canada Medical Device Regulations, allowing continued certification of the Company and our products. Also during the year, LiDCO was successfully inspected by the UK MHRA, to ensure continued compliance with Good Distribution Practice requirements.

Our activities and products comply with the requirements of all relevant EU Directives - the Waste Electrical & Electronic Equipments (WEEE) regulations; the Restrictions of the use of certain Hazardous Substances in Electrical and Electronic Equipment (RoHS) regulations; the Registration, Evaluation and Authorization of Chemicals (REACH) regulations; the Waste Batteries and Accumulators regulations; the Batteries and Accumulators (Placing on the Market) regulations; the Machinery Directive and the Eco Design Directive.

LiDCO's products are registered in a number of major territories and registration of LiDCO products is ongoing in Japan.

Outlook and prospects

We are pleased to be reporting another year of considerable progress. Looking ahead, independent research shows that cardiac output monitoring is now the fastest growing sector within the European monitoring market with the minimally invasive products now representing more than 50% of sales (source: 2011 iData Research). With our pressure waveform based technology, international distribution partners and increasing evidence and awareness, we are confident of continuing commercial progress. We traded profitably in the second half of the year and for the full year on an EBITDA basis. We look forward to building on this and making further progress in 2011 and beyond.

On a personal note my co-founder and Scientific Director, Dr David Band, has retired from the Board this month. David has worked with me on the Board since the Company's foundation and has contributed enormously to bringing the Company to its current position. His many contributions to medical science over the last 50 years have had a profound impact on the management of high risk patients. We thank David for all he has done. I am delighted to say he will be staying with us and continue advising LiDCO with regards to product development.

CONSOLIDATED comprehensive INCOME STATEMENT

For the year ended 31 January 2011

	Year ended 31 January 2011 £'000	Year ended 31 January 2010 £'000
Revenue	6,237	5,367
Cost of sales	(2,021)	(2,074)
Gross profit	4,216	3,293
Administrative expenses	(4,714)	(4,832)
Loss from operations	(498)	(1,539)
Finance income	8	5
Finance expense	-	(11)
Loss before tax	(490)	(1,545)
Income Tax	100	118
Loss and total comprehensive expense for the year attributable to equity holders of the parent	(390)	(1,427)
Loss per share (basic and diluted) (pence)	(0.22)	(0.87)

All transactions arise from continuing operations.

There were no recognized gains or losses other than the loss for the financial year.

CONSOLIDATED Balance Sheet

At 31 January 2011

	2011 £'000	2010 £'000
Non-current assets
Property, plant and equipment	513	587
Intangible assets	755	764
	1,268	1,351
Current assets
Inventory	1,047	1,094
Trade and other receivables	1,607	1,649
Current tax	109	120
Cash and cash equivalents	1,404	1,846
	4,167	4,709
Current liabilities
Trade and other payables	(767)	(603)
Deferred income	(74)	(614)
Borrowings	(10)	(10)
	(851)	(1,227)

Net current assets	3,316	3,482
Total assets less current liabilities	4,584	4,833

Equity attributable to equity holders of the parent
Share Capital	870	869
Share premium	25,393	25,393
Merger reserve	8,513	8,513
Retained earnings	(30,196)	(29,956)
Total equity	4,580	4,819

Non-current liabilities
Finance lease liability	4	14
Total non-current liabilities	4	14

Total equity and non-current liabilities	4,584	4,833

consolidated Cash flow Statement

For the year ended 31 January 2011

	Year ended 31 January 2011 £'000	Year ended 31 January 2010 £'000
Loss before tax	(490)	(1,545)
Net finance (income)/costs	(8)	6
Depreciation and amortization charges	639	672
Share based payments	150	46
Decrease/(increase) in inventories	47	(41)
Decrease in receivables	42	37
Increase/(decrease) in payables	164	(302)
Decrease/(increase) in deferred income	(540)	577
Interest paid	-	(11)
Income tax credit received	111	118
Net cash inflow/(outflow) from operating activities	115	(443)
Cash flows from investing activities
Purchase of property, plant & equipment	(127)	(132)
Purchase of intangible fixed assets	(429)	(474)
Interest received	8	5
Net cash used in investing activities	(548)	(601)
Net cash outflow before financing	(433)	(1,044)
Cash flows from financing activities
Repayment of finance lease	(10)	(10)
Issue of ordinary share capital	1	3,021
Invoice discounting financing facility	-	(364)
Net cash outflow/(inflow) from financing activities	(9)	2,647
Net (decrease)/increase in cash and cash equivalents	(442)	1,603
Opening cash and cash equivalents	1,846	243
Closing cash and cash equivalents	1,404	1,846

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

For the year ended 31 January 2011

	Share capital £'000	Share premium £'000	Merger reserve £'000	Retained earnings £'000	Total equity £'000
At 1 February 2000	710	22,531	8,513	(28,575)	3,179
Issue of share capital	159	2,862	-	-	3,021
Share based payment expense	-	-	-	46	46
Transactions with owners	159	2,862	-	46	3,067
Loss and total comprehensive expense for the year	-	-	-	(1,427)	(1,427)
At 31 January 2010	869	25,393	8,513	(29,956)	4,819
Issue of share capital	1	-	-	-	1
Share based payment expense	-	-	-	150	150
Transactions with owners	1	-	-	150	151
Loss and total comprehensive expense for the year	-	-	-	(390)	(390)
At 31 January 2011	870	25,393	8,513	(30,196)	4,580

The share premium account represents the excess over the nominal value for shares allotted.

The merger reserve represents a non distributable reserve arising from historic acquisitions.

The accompanying accounting policies and notes form an integral part of these financial statements.

NOTES TO THE FINANCIAL STATEMENTS

1. NATURE OF THE FINANCIAL INFORMATION

This financial information has been prepared in accordance with the principal accounting policies adopted by the Group, which have been prepared under International Financial Reporting Standards (IFRS) and International Financial Reporting Interpretations (IFRIC) as adopted by the EU and those parts of the Companies Act 2006 applicable to companies reporting under IFRS and were approved by the Board on 15 April 2011. They are presented in sterling, which is the functional currency of the parent company and the Group. The preparation of financial statements in accordance with IFRS requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent 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 current events and actions, actual results may ultimately differ from those estimates.

These results are audited, however the financial information does not constitute statutory accounts as defined under section 434 of the Companies Act 2006. The financial information for the year ended 31 January 2010 has been derived from the Group's statutory accounts for that year, as filed with the Registrar of Companies. The auditors' report on the statutory accounts for the year ended 31 January 2011 was unqualified and did not contain statements under section 498 of the Companies Act 2006.

The Group's business activities, together with a review of the market and the Group's distribution channels are set out in the Chief Executive Officer's Statement. The Group has a number of customers across different geographic areas and considerable recurring revenue streams through the sales of its disposable sensors and smartcards which represented 59% of its total revenues in the year to January 2011. The Group finances its operations through shareholders funds and has no borrowings. The directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future based on forecasts for the two years to January 2013. Thus they continue to adopt the going concern basis of accounting in preparing the annual financial statements.

The accounting policies used in completing this financial information have been consistently applied in all periods shown. These accounting policies are detailed in the Group's financial statements for the year ended 31 January 2010 which can be found on the Group's website.

2. DIVIDENDS

The directors do not recommend payment of a dividend (2009/10: nil)

3. LOSS PER SHARE

The basic loss per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of ordinary shares in issue during the year. The Group had no dilutive potential ordinary shares in either year and therefore the basic and diluted loss per share is the same.

The loss per share for the year is based on a loss after tax of £390,000 (2009/10: £1,427,000) and weighted average number of shares in issue of 173,963,000 (2009/10: 164,597,000).

4. DISTRIBUTION

Copies of this statement will be available for collection free of charge from the Group's registered office at 16 Orsman Road, London N1 5QJ. An electronic version will be available on the Group's website, www.lidco.com. Copies of the Annual report and accounts will be posted to shareholders in May together with the notice of the Annual General Meeting.

- Ends -