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Oasis Healthcare PLC (OSH)

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Tuesday 28 November, 2006

Oasis Healthcare PLC

Interim Results

Oasis Healthcare PLC
28 November 2006


Oasis Healthcare PLC

Interim results for the six months to 30 September 2006


Oasis Healthcare PLC, the UK's leading corporate dentistry operator, with 132
practices, today announces its interim results for the year ended 30 September
2006.  The financials are reported today for the first time under IFRS.


                                                            2006                   2005                    %
                                                              £m                     £m               Change

Turnover                                                    44.3                   40.7                  +9%
Group EBITDA                                                 4.7                    3.5                 +34%
EBIT                                                         3.3                    2.3                 +42%
Profit before tax                                            2.3                    0.4                +444%
Earnings per share                                           1.9                    0.8                +153%



•   Continued strong financial performance

       -   Debt down since 31 March 2006 by a further £ 1.7m to £35.4m
       -   Operating cash generated after interest of £4.4m
       -   EBITDA (annualised) to debt multiple improves to 3.8 times from 5.7
           times


•   Strategy delivering profitable growth

       -   Clustering strategy continues to deliver benefits and sustainable
           performance
       -   NHS contracts for 14 new practices will deliver volume and improving
           margin
       -   Skegness and Corby opened


•   Strong pipeline of new sites

       -   Chepstow opens December, Worcester, Pershore and Penzance open Jan/
           Feb


•   Actively pursuing new opportunities

       -   First practice acquisition completed 1 November in Uckfield.
       -   Contracts exchanged for second acquisition



•   Current trading continues to be strong




Stephen Lambert, Chief Executive, said:

"The current year has begun well with the trends established in the first half
continuing. Having demonstrated our ability to deliver growth from the existing
estate Oasis is now entering a new phase where it is actively seeking
incremental opportunities.

Overall the business is in the great shape. The Board is confident of reporting
further progress for the year as a whole."



28 November 2006





ENQUIRIES:

Oasis Healthcare PLC
Stephen Lambert, Chief Executive                   Today: 020 7457 2020

                                                   Thereafter: 01603 599600
College Hill
Matthew Smallwood                                  Tel: 020 7457 2020




Chairman's Review



Introduction

It is pleasing to report continued strong performance across the 129 practices
in the Group for the half year to 30 September 2006.  Indeed, Group profit
before tax is one and a half times that recorded for the whole of the previous
financial year.  Our balanced clinical/commercial approach to operating dental
practices has started to deliver sustainable earnings growth and allowed the
management team to focus on broadening the scope of the business rather than
just focussing on the existing estate.



Results

The results are reported, for the first time, under International Financial
Reporting Standards ("IFRS").

Group turnover grew by £3.6m to £44.3m (2005: £40.7m).  This represents a 9%
increase reflecting the success of our growth initiatives.

Operating profit was £3.3m (2005: £2.3m) an increase of 42%.

Profit after taxation was £1.6m (2005: £0.6m) and fully diluted earnings per
ordinary share were 1.8p (2005: 0.8p).

The underlying performance of the Group resulted in a net inflow of cash from
operating activities (excluding interest) of £5.8m (2005: £2.5m) of which £2.8m
(2005: £0.9m) has been invested in capital expenditure.  The net debt (excluding
fair value movements on the derivative financial instruments) of the Group over
the six months to 30 September 2006 has been reduced by £1.7m to £35.4m (2005:
£39.8m).  Our strong cash generation position is underlined by a net increase in
cash of £1.4m even with the increased levels of investment in our practices.


International Financial Reporting Standards ("IFRS")

These are the first set of results the Group has reported under IFRS, adopted
one year earlier than our obligation.

The comparative information for earlier periods has been restated and
reconciliations between these unaudited restated numbers and the results
previously reported under UK Generally Accepted Accounting Practice ("UK GAAP")
are set out in the notes to this interim report.


As a result we have been required to:


  • Review goodwill for impairment rather than amortising it on a straight
    line basis over 20 years;
  • Recognise the fair value of share options issued as a charge to the income
    statement over the period in which the share options vest;
  • Recognise the change in the fair value of the derivatives arising from our
    interest rate swap and cap mechanisms;
  • Recognise a holiday pay prepayment;
  • Reclassify software as a separate intangible asset rather than aggregating
    it with the associated fixed asset; and
  • Change our accounting policy with respect to deferred tax, resulting in
    all available tax losses, for which recoverability can be demonstrated,
    being recognised as a deferred tax asset. Under UK GAAP, we only recognised
    losses which were expected to be accessed within the next 12 months. We have
    also been required to recognise deferred tax on the fair value of our
    derivative financial instruments.


For the full year to 31 March 2006 the net impact of the IFRS adjustments is an
increase in profit before tax of £1.8m and for the six months to 30 September
2006 an increase in profit before tax of £1.4m.



Operations

Organic growth within the existing practices continues to be successfully
delivered. An increasing range of products and services have been developed and
are now being offered to our customers dependent on local market demand.  Growth
has been achieved by the award of additional National Health Service ("NHS")
growth contracts with an equivalent annual value of £3.4m.  These are serviced
within our existing practices, and are delivering improved profit margins by
providing more volume with little additional overhead cost.

We continue to drive operational performance improvement through the now
established cluster structure.  In addition to improving the performance of
existing practices this structure has facilitated the easy establishment and
integration of the new practices.

Our ability to recruit dentists has improved and we are able to fill vacancies
as and when we open new practices.

Oasis continues to be very cash generative which has enabled the Group to
actively pursue opportunities to add practices to our estate.  These
opportunities broadly fall into two categories.

Firstly, changes introduced by the NHS from the start of this financial year
have presented an opportunity to tender for and open new, modern well-equipped
NHS practices.  We have demonstrated our ability to find new sites, fully fit
out and open them to budget within a period of twelve weeks. The financial
benefit, from the practices opened earlier this year, even during the start up
period, are very encouraging and are included in our results for this interim
period.  To date we have also been successful in tenders for a further 6
practices of which two have been opened in Skegness and Corby, and the remainder
are currently in the contracting and build phase.  The total annual value of the
NHS contracts for the 14 practices is £8.4m.

Secondly, we are actively pursuing opportunities to acquire practices whether
they be private, NHS or provide mixed services so long as they can deliver
strategic benefit or economic leverage opportunities to Oasis.  The first
acquisition was completed on 1 November 2006 for an NHS practice in Uckfield
with four operational surgeries.  This practice has an annual NHS contract value
of £0.5m.    We have also exchanged contracts on a further acquisition which is
due for completion shortly.



People

We continue to develop and train our staff informally and through structured
programmes.  In this period we have focussed on Practice Managers both
clarifying the role requirements and commencing training to bridge any gaps.
Additionally, dental nurses have been required to register with the General
Dental Council ("GDC") since July 2006 and we are supporting them both
financially by paying registration fees and from a training perspective so that
they are all qualified by 2008.

The first performance related bonus was paid to our practice based staff against
the results of the financial year to 31 March 2006.



Customers

Patient communication has been very important in the first six months of the
financial year. Given the significance of the changes to the NHS contract,
particularly with respect to treatment bandings and pricing, we have worked hard
to help patients understand the rationale and impact of the structures.

In the context of our new sites we have received excellent feedback from
patients. We have also been innovative in deploying a variety of channels to
allow patients to access our practices without the need to queue, and we now
routinely involve patient interest groups in the design and development of these
new practices.


Future

The current year has begun well with the trends established in the first half
continuing. We will remain focussed on building our business, associate and
staff relationships to further improve the service we provide to our customers
whilst continuing to pursue growth in patient numbers and practices.  We
continue to create new product offerings for trial later in the year and
seasonal promotional activities are currently being offered.

Overall the business is in the best shape it has ever been and the Board is
confident of reporting further progress for the year as a whole.



Ron Trenter
Chairman
28 November 2006




Unaudited Group Income Statement
for the 6 months ended 30 September 2006

                                                               6 months ended    6 months ended       Year ended
                                                                 30 September      30 September         31 March        
                                                                         2006              2005             2006
                                                                    Unaudited         Unaudited      Unaudited *
                                                                        £'000             £'000            £'000

Revenue                                                                44,264            40,673           82,486
Cost of sales                                                        (25,586)          (24,656)         (49,704)
Gross profit                                                           18,678            16,017           32,782
Administrative expenses                                              (15,355)          (13,682)         (28,285)
Operating profit                                                        3,323             2,335            4,497
Other finance costs                                                   (1,292)           (1,306)          (2,761)
Fair value adjustments in respect of financial assets           
and liabilities                                                           263             (608)            (269)
Total finance costs                                                   (1,029)           (1,914)          (3,030)
Profit before taxation                                                  2,294               421            1,467
Taxation                                                                (731)               191              644
Profit for the period                                                   1,563               612            2,111

Earnings per share (page 12)
Basic                                                                    1.90p             0.75p            2.59p
Diluted                                                                  1.84p             0.75p            2.57p


All income and expenses arise from continuing operations.

* For basis of preparation see note 1.





Unaudited Group Statement of Recognised Income and Expense
for the 6 months ended 30 September 2006

                                                                  6 months          6 months            Year 
                                                                     ended             ended           ended
                                                              30 September      30 September        31 March
                                                                      2006              2005            2006
                                                                 Unaudited         Unaudited     Unaudited *
                                                                     £'000             £'000           £'000

  Profit for the period                                              1,563               612           2,111
Deferred tax on share options taken directly to equity                 222                 -               -
Net gain not recognised in income statement                            222                 -               -
Total recognised income for the period                               1,785               612           2,111



All recognised income is attributable to the equity shareholders of the parent.

* For basis of preparation see note 1.





Unaudited Group Balance Sheet
at 30 September 2006
                                                                   As at              As at            As at
                                                       30 September 2006  30 September 2005    31 March 2006
                                                               Unaudited          Unaudited      Unaudited *
                                                                   £'000              £'000            £'000
Assets
Non-current assets
Goodwill                                                          36,747             37,040           36,761
Intangible assets                                                    137                143               87
Property, plant and equipment                                     15,434             13,244           14,426
Deferred tax assets                                                1,425              1,014            1,553
                                                                  53,743             51,441           52,827
Current assets
Inventories                                                        1,645              1,449            1,494
Trade and other receivables                                        5,045              4,841            5,087
Financial assets - derivative financial                               17                 15               13
instruments
Cash and cash equivalents                                          1,297                688              772
                                                                   8,004              6,993            7,366
Liabilities
Current liabilities
Financial liabilities - Borrowings                               (2,750)            (4,241)          (2,602)
Financial liabilities - Finance leases                             (701)              (631)            (599)
Financial liabilities - derivative                                  (23)              (623)            (282)
financial instruments
Trade and other payables                                        (10,024)            (6,864)          (9,953)
Current tax liabilities                                            (614)                  -            (263)
Provisions                                                         (333)              (135)            (422)
                                                                (14,445)           (12,494)         (14,121)
Net current liabilities                                          (6,441)            (5,501)          (6,755)





Unaudited Group Balance Sheet (continued)
at 30 September 2006

                                                                  As at            As at 30           As at
                                                           30 September           September        31 March
                                                                   2006                2005            2006
                                                              Unaudited           Unaudited     Unaudited *
                                                                  £'000               £'000           £'000
Non-current liabilities
Financial liabilities - Borrowings                              (31,799)           (34,485)         (33,643)
Financial liabilities - Finance leases                           (1,434)            (1,273)          (1,054)
Other payables                                                     (925)              (215)            (200)
Provisions                                                             -              (162)                -
Deferred tax liability                                              (30)              (177)                -
                                                                (34,188)           (36,312)         (34,897)
Net assets                                                        13,114              9,628           11,175

Shareholders' equity
Ordinary shares                                                      824                816              816
Share premium                                                     13,639             13,569           13,569
Retained deficit                                                 (1,349)            (4,757)          (3,210)
Total shareholders' equity                                        13,114              9,628           11,175

* For basis of preparation see note 1.



Unaudited Group Statement of Changes in Shareholders' Equity
for the 6 months ended 30 September 2006


                                                       Ordinary          Share       Retained         Total
                                                         shares        premium       earnings        equity

                                                      Unaudited      Unaudited      Unaudited   Unaudited *
                                                          £'000          £'000          £'000         £'000

At 1 April 2005                                             816         13,569        (5,418)         8,967

Profit for the period                                         -              -            612           612
Employee share options:
- value of employee services                                  -              -             49            49
At 30 September 2005                                        816         13,569        (4,757)         9,628

At 1 April 2005                                             816         13,569        (5,418)         8,967

Profit for the period                                         -              -          2,111         2,111
Employee share options:
- value of employee services                                  -              -             97            97
At 31 March 2006                                            816         13,569        (3,210)        11,175

At 1 April 2006                                             816         13,569        (3,210)        11,175

Profit for the period                                         -              -          1,563         1,563
Employee share options:
- value of employee services                                  -              -             76            76
- deferred tax on share options taken to equity               -              -            222           222             
New share capital issued                                      8             70              -            78

At 30 September 2006                                        824         13,639        (1,349)        13,114


* For basis of preparation see note 1.




Unaudited Group Cash Flow Statement
for the 6 months ended 30 September 2006

                                                          6 months ended       6 months ended      Year ended
                                                       30 September 2006    30 September 2005   31 March 2006
                                                               (6 months)           (6 months)
                                                               Unaudited            Unaudited     Unaudited *
                                                                   £'000                £'000           £'000
Cash flows from operating activities
Cash generated from operations                                     5,777                2,541           7,828
Interest received                                                    646                  135             719
Interest paid                                                    (1,862)              (1,346)         (3,226)
Interest element of hire purchase payments                         (122)                 (78)           (168)
Net cash from operating activities                                 4,439                1,252           5,153


Cash flows from investing activities
Purchase of property, plant and equipment                        (2,774)                (857)         (1,813)
Purchase of intangible assets                                       (98)                 (26)            (26)
Proceeds from sale of property, plant and                            
equipment                                                              -                   99             100
Government grants received                                         1,026                   30              29
Net cash used in investing activities                            (1,846)                (754)         (1,710)
Cash flows from financing activities
Net proceeds from issue of ordinary share                             
capital                                                               78                    -               -
Repayment of borrowings                                            (875)                (500)         (1,000)
Finance lease principal payments                                   (419)                (446)           (798)
Payment of deferred consideration                                      -                (123)           (116)
Net cash used in financing activities                            (1,216)              (1,069)         (1,914)
Net increase/(decrease) in cash and cash                      
equivalents                                                        1,377                (571)           1,529
Cash and cash equivalents at beginning of                         
period                                                              (80)              (1,609)         (1,609)
Cash and cash equivalents at end of period                         1,297              (2,180)            (80)


* For basis of preparation see note 1.





Reconciliation between Profit after Tax and Net Cash Flow from Operating
Activities

for the 6 months ended 30 September 2006


                                                               6 months ended  6 months ended      Year ended
                                                                 30 September    30 September        31 March
                                                                         2006            2005            2006
                                                                    (6 months)      (6 months)    
                                                                     Unaudited       Unaudited     Unaudited *

                                                                         £'000           £'000           £'000

Profit after tax                                                         1,563             612           2,111
Adjustments for:
Taxation                                                                   731           (191)           (644)
Total finance costs                                                      1,029           1,914           3,030
Depreciation of property, plant and equipment                            1,284           1,049           2,187
Impairment of goodwill                                                      14              23             302
Amortisation of intangible fixed assets                                     48              82             138
Government grant amortisation                                            (106)            (21)            (42)
Loss/(profit) on disposal of property, plant and equipment                   7            (26)            (26)
(Increase)/decrease in inventories                                       (151)              56              11
Decrease in trade and other receivables                                     42             768             432
Increase/(decrease) in payables                                          1,240         (1,774)             232
Share option charges - value of employee services                           76              49              97
Cash generated from operations                                           5,777           2,541           7,828


* For basis of preparation see note 1.




Analysis of Net Debt
for the 6 months ended 30 September 2006

                                                      As at     Cash flow         Non-cash             As at
                                                   31 March                      movements      30 September
                                                       2006                                             2006
                                                  Unaudited     Unaudited        Unaudited         Unaudited
                                                      £'000         £'000            £'000             £'000

Cash and cash equivalents                               772           525                -             1,297
Derivative financial assets - current                    13             -                4                17
Overdraft                                             (852)           852                -                 -
                                                       (67)         1,377                4             1,314
Debt:
Borrowings - current                                (1,750)           875          (1,875)           (2,750)
Borrowings - non-current                           (33,643)             -            1,844          (31,799)
Finance leases - current                              (599)           419            (521)             (701)
Finance leases - non-current                        (1,054)             -            (380)           (1,434)
Derivative financial instruments -                    (282)                            259              (23)
current
                                                   (37,395)         2,671            (669)          (35,393)


Earnings per Share
for the 6 months ended 30 September 2006
                                                             6 months ended     6 months ended      Year ended
                                                               30 September       30 September        31 March
                                                                       2006               2005            2006
                                                                  Unaudited          Unaudited       Unaudited
                                                                      £'000              £'000           £'000

Profit for basic and diluted earnings calculation                     1,563                612           2,111

                                                                        No.                No.             No.
Weighted average number of shares in issue                       82,065,343         81,646,081      81,646,081
Dilutive impact of share options                                  3,032,706             74,684         453,869
Total shares for calculating diluted profit per share            85,098,049         81,720,765      82,099,950

                                                        Per-share amount in   Per-share amount       Per-share
                                                                      pence           in pence amount in pence


Basic earnings per share                                              1.90p              0.75p           2.59p
Diluted earnings per share                                            1.84p              0.75p           2.57p





Notes to the Interim Financial Report


1.        Basis of Preparation and principal accounting policies


Basis of preparation

The September 2006 interim consolidated financial report of Oasis Healthcare plc
is for the six months ended 30 September 2006 and is unaudited. It has been
prepared in accordance with the accounting policies the Group expects to adopt
in its 2007 Annual Report. These accounting policies are based on the EU-adopted
International Financial Reporting Standards ("IFRS") and International Financial
Reporting Interpretation Committee ("IFRIC") interpretations that the Group
expects to be applicable at that time. The IFRS and IFRIC interpretations that
will be applicable at 31 March 2007, including those that will be applicable on
an optional basis, are not known with certainty at the time of preparing the
interim financial information and therefore may change. Comparative information
presented for the periods ended 30 September 2005 and 31 March 2006 has been
restated to conform to the same basis of preparation; however this comparative
information is unaudited.

The interim financial report does not constitute statutory financial statements
within the meaning of Section 240 of the Companies Act. Statutory accounts for
the year ended 31 March 2006, which were prepared under UK Generally Accepted
Accounting Practice ("UK GAAP"), have been delivered to the Registrar of
Companies and are available on request from the Company Secretary at the
Company's registered office. The auditors' report on these accounts was
unqualified and did not contain any statement under Section 237(2) or Section
237(3) of the Companies Act 1985.

The Group has established the policies it expects to apply to its 31 March 2007
financial statements and has applied these to all periods presented.
Reconciliations and descriptions of the effect of the transition from UK GAAP to
IFRS on the Group's equity and its net income and cash flows are provided in
note 2 and note 3.

The Group has chosen to utilise the exemption available under IFRS 1, 'First
time adoption of IFRS', for restating previous acquisitions. The goodwill
arising on business combinations of the Group therefore remains as reported at
31 March 2005 but subject to annual impairment review. There is no such
exemption from the transition date, being 1 April 2005, so any future
acquisitions will have to be accounted for under IFRS 3, 'Business
Combinations'.

The Group has also elected to utilise the exemption under IFRS 1 and not
calculate the fair value of share options granted prior to 7 November 2002 and
those which had vested by 1 April 2005.



Principal accounting policies


Basis of consolidation

The consolidated financial information includes the financial information of the
Company and its subsidiary undertakings. The results of companies and businesses
acquired are included in the consolidated income statement from the date control
passes. Intra-Group sales and profits are eliminated fully on consolidation.

On acquisition of a company or business, all assets and liabilities that exist
at the date of acquisition are recorded at their fair values reflecting their
condition at that date. All changes to those assets and liabilities, and the
resulting gains and losses, which arise after the Group has gained control of
the business, are credited or charged to the post acquisition income statement.



Goodwill

Goodwill arising on business combinations is capitalised and is subject to
annual impairment review. Goodwill represents the excess of the fair value of
the consideration given over the fair value of the identifiable net assets
acquired at the date of acquisition.


Impairment of assets

Assets that have an indefinite useful life are not subject to amortisation but
are tested annually for impairment. Assets that are subject to amortisation or
depreciation are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. An
impairment loss is recognised in the income statement for the amount by which
the asset's carrying amount exceeds its recoverable amount.

For the purposes of assessing impairment, assets are grouped at the lowest
levels for which there are separately identifiable cash flows ("cash-generating
units").  The recoverable amount is the higher of an asset's 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 the Group's pre-tax
weighted average cost of capital.

In respect of assets other than goodwill, an impairment loss is reversed if
there has been a change in the estimates used to determine the recoverable
amount. An impairment loss is reversed only to the extent that the asset's
carrying amount does not exceed the carrying amount that would have been
determined, net of depreciation or amortisation, if no impairment loss had been
recognised.  Impairment losses in respect of goodwill are not reversed.


Property, plant and equipment

Property, plant and equipment is stated at cost less accumulated depreciation
and any accumulated impairment losses. The assets' residual values and useful
lives are reviewed annually, and adjusted as appropriate. Depreciation is
provided so as to write off the cost of tangible fixed assets, less their
estimated residual values, over the expected useful economic lives of the assets
in equal annual instalments at the following principal rates:


Freehold property                                              2% Straight line
Leasehold property                                   Over the life of the lease
Fixtures fittings and equipment                         10% - 20% Straight line
Computer equipment                                      20% - 33% Straight line


Intangible fixed assets

Intangible assets comprise computer software and are recorded at cost less
accumulated depreciation and any accumulated impairment losses.  The assets'
residual values and useful lives are reviewed annually, and adjusted as
appropriate. Depreciation is provided so as to write off the cost of intangible
fixed assets, less their estimated residual values, over the expected useful
economic lives of the assets in equal annual instalments at 20% - 33%.


Finance and operating leases

Leasing arrangements that transfer to the Group substantially all of the
benefits and risks of ownership of an asset are capitalised and included as part
of property, plant and equipment. They are depreciated over their useful lives
or the lease term (if shorter). The capital elements of future obligations under
finance leases are included as liabilities in the balance sheet. The interest
element of the rental obligations is charged to the income statement over the
period of the lease and represents a constant proportion of the balance of
capital repayments outstanding. Rentals payable under operating leases are
charged to the income statement on a straight-line basis over the term of the
lease.


Inventories

Inventories comprise of raw materials, consumables and goods held for resale,
and are stated at the lower of cost and net realisable value. Net realisable
value is based on estimated selling price less further costs expected to be
incurred to disposal. Where necessary, provision is made for obsolete, slow
moving and defective stocks.


Taxation

The tax charge for the period comprises both current and deferred tax. Taxation
is recognised in the income statement except to the extent that it relates to
items recognised directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the period and
any adjustment to tax payable in respect of previous periods.

Deferred tax is provided in full, using the balance sheet liability method, on
temporary differences arising between the tax bases of assets and liabilities
and their carrying value for accounting purposes.  Deferred tax is determined
using tax rates that have been enacted or substantially enacted by the balance
sheet date and are expected to apply when the related deferred tax asset is
realised or deferred tax liability is settled.  Deferred tax is not accounted
for if it arises from initial recognition of an asset or liability that at the
time of the transaction does not affect either accounting or taxable profit.

Deferred tax is calculated on each share option granted based upon the
difference between the current market value of the associated share and the
option's exercise price multiplied by the appropriate rate of tax.  Where the
market value of the share exceeds the fair value of the option, the
corresponding excess deferred tax is recognised in equity.

A deferred tax asset is recognised only to the extent that it is probable that
sufficient taxable profit will be available to utilise the temporary difference.


Cash and cash equivalents

Cash and cash equivalents comprise cash in hand and deposits with banks that
have maturity of three months or less from the date of inception.


Provisions

The Group makes provision for liabilities and charges when it has a legal or
constructive obligation arising from a past event. Provisions are not discounted
on the basis of materiality.


Retirement benefit costs

The Group makes contributions to stakeholder and employee personal pension
schemes. These costs are charged to the income statement in the period to which
they relate.


Share based payments

The Group has in issue a number of share option equity instruments. In
accordance with IFRS 2, 'Share based payment', the fair value of each equity
instrument is measured at grant date and charged to the income statement over
the option's vesting period.  The fair value of the share options is measured
using an option-pricing model taking into account any terms and conditions
attached to the equity instruments.  When the option is exercised, the proceeds
received are credited to share capital and the share premium account.

The Group makes charges to the income statement for any potential employer's
National Insurance liability on options granted, based on an estimate of the
fair value of the option.  The charge is spread over the vesting period of the
option.


Revenue

Revenue represents the fair value of dentistry goods or services supplied.
Under the former NHS arrangements, operational until 31 March 2006, revenue was
recognised based on the completion of each piece of treatment carried out, with
the exception of orthodontic treatment which was recognised based on the stage
of completion reached during the course of treatment. Amounts due from the
Dental Practices Board ("DPB") were claimed in arrears, therefore treatment in
progress at the year end was recorded as a debtor.  Under the new NHS contract
arrangements, which are effective for all practices from 1 April 2006, the
annual contract value is recognised on a straight line basis in the income
statement. Provision is made against revenue for claw back for underperformance
against activity level targets inherent within the contracts. The annual
contract value is remitted monthly in arrears, therefore the difference between
revenue recognised and cash received is recorded as a debtor. Private treatment
is recognised based on the stage of completion, with cash received in arrears.


Government grants

Grants received to assist with the purchase of property, plant and equipment are
amortised over a period to match the life of the asset acquired.  Revenue grants
are recognised in the income statement in the period in which they are received.


Financial instruments

Financial assets and financial liabilities are recognised on the Group's balance
sheet when the Group becomes a party to the contractual provisions of the
instrument.


(a) Trade receivables

Trade receivables are non-interest bearing and are stated at their nominal
value, as reduced by appropriate allowances for estimated irrecoverable amounts.


(b) Financial Liabilities and Equity

Financial liabilities and equity instruments are classified according to the
substance of the contractual arrangements entered into. An equity instrument is
any contract that gives a residual interest in the assets of the Group after
deducting all of its liabilities.


(c) Interest-bearing borrowings

Interest-bearing bank loans and overdrafts are initially recorded at the
proceeds received, net of associated transaction costs. Subsequent to initial
recognition, interest-bearing borrowings are stated at amortised cost with any
difference between cost and redemption value being recognised in the income
statement over the period of the borrowings.


(d) Trade payables

Trade payables are not interest bearing and are stated at their nominal value.


(e) Equity Instruments

Equity instruments issued by the Company are recorded at the proceeds received,
net of direct issue costs.


(f) Derivative financial instruments

The Group uses derivative financial instruments to hedge its exposure to
interest rate risks arising from operational and financing activities. The Group
does not hold or issue derivative financial instruments for trading purposes,
however if derivatives do not qualify for hedge accounting they are accounted
for as such.

Derivative financial instruments are recognised initially at cost. Subsequent to
initial recognition, derivative financial instruments are stated at fair value.
The fair value of derivative financial instruments is determined by reference to
market values for similar financial instruments, or by discounted cash flows or
using option valuation models.  Any gains or losses on re-measurement are
immediately recognised in the income statement.


2.      Reconciliation of profit/(loss) and net assets under UK GAAP to IFRS

Oasis Healthcare plc reported under UK GAAP in its previously published
financial statements for the year ended 31 March 2006 and its unaudited interim
financial information dated 30 September 2005. The analysis below shows a
reconciliation of shareholders' equity and losses as reported under UK GAAP as
at, and for the period ended, 31 March 2006 and 30 September 2005 to the revised
shareholders' equity and profits under IFRS as reported in this interim
financial information. In addition, there is a reconciliation of shareholders'
equity under UK GAAP to IFRS at the transition date for the Group, being 1 April
2005.

                                                                                                   6 months
                                                                                  Year ended          ended
                                                                       Note         31 March   30 September
                                                                                        2006           2005
Reconciliation of (loss)/profit for the period                                         £'000          £'000

Loss for the period as reported under UK GAAP                                           (73)          (122)
Share option charges, including National Insurance                         (a)         (109)           (55)
Goodwill amortisation                                                      (b)         2,258          1,148
Impairment charge                                                          (b)          (47)           (23)
Holiday pay prepayment                                                     (c)             -             90
Fair value adjustment in respect of derivative financial assets            (d)            13             15
Fair value adjustment in respect of derivative financial liabilities       (d)         (282)          (623)
Deferred tax adjustment in respect of derivative financial instruments     (e)            80            182
Deferred tax adjustment in respect of recognised losses                    (e)           271              -
Profit for the period as reported under IFRS                                           2,111            612




                                                         Note           As at          As at         As at
                                                                     31 March   30 September       1 April
                                                                         2006           2005          2005
                                                                        £'000          £'000         £'000
Reconciliation of shareholders' equity
Shareholders' equity as reported under UK GAAP                          8,906          8,857         8,979
National Insurance charge in respect of share options      (a)           (24)           (18)          (12)
Goodwill amortisation                                      (b)          2,258          1,148             -
Impairment charge                                          (b)           (47)           (23)             -
Holiday pay prepayment                                     (c)              -             90             -
Fair value adjustment in respect of derivative             
financial assets                                           (d)             13             15             -
Fair value adjustment in respect of derivative            
financial liabilities                                      (d)          (282)          (623)             -
Deferred tax adjustment in respect of derivative          
financial instruments                                      (e)             80            182             -
Deferred tax adjustment in respect of recognised          
losses                                                     (e)            271              -             -
Shareholders' equity as reported under IFRS                            11,175          9,628         8,967




Explanation of reconciling items between UK GAAP and IFRS


(a)    Share option charges, including National Insurance


In accordance with IFRS 2 'Share-based payment', a charge is made for all share
based payments, including share options based on the fair value of the
instrument issued.  This charge is spread over the vesting period, with a
corresponding increase in equity.  A charge has been recognised for all awards
granted after 7 November 2002 and not vested by 1 April 2005.  It is charged to
the same expense category as the costs of the employee to whom the share has
been made.  Under UK GAAP, the charge to the income statement is based on the
difference between the exercise price and the market price on the date of the
grant.  The Group has historically granted options where the share price at the
date of the grant equals the exercise price, hence there has been no charge
recorded under UK GAAP.

Under UK GAAP the potential liability for employer's National Insurance on share
options was calculated at each period end based on the current employer's
National Insurance rate and the number of share options that had an exercise
price below the share price at the period end.  Under IFRS the potential
liability for employer's National Insurance is calculated based upon the fair
value of each option at the period end and the current employer's National
Insurance rate.  The liability is spread over the vesting period.



(b)    Goodwill amortisation and impairment charges

IFRS 3 'Business Combinations' prohibits the amortisation of goodwill; instead
goodwill is subject to annual impairment reviews.  Under UK GAAP goodwill was
systematically amortised over its estimated life of 20 years.

Under the transitional provisions of IFRS 1, the goodwill balance at 31 March
2005 has been frozen and hence amortisation charges booked in the year to 31
March 2006 under UK GAAP have been reversed.  Impairment previously recognised
under UK GAAP has not been reversed.  The further impairment charges recognised
under IFRS are due to the adding back of amortisation charges booked in FY 2006.



(c)    Holiday pay prepayment

The Group's holiday period runs from 1 April to 31 March and hence coincides
with the financial year.  The Group does not allow carry over of holiday into
the next year.  Under UK GAAP holiday pay accruals were not calculated, however
under IAS 19, 'Employee Benefits', recognition is required.  A prepayment has
been recognised at the interim period end since, on aggregate, employees have
taken more holiday than their entitlement.  No such balance exists at the year
end since the holiday year ends on 31 March.


(d)    Fair value adjustments in respect of derivative financial instruments

Under IAS 39, 'Financial Instruments: Recognition and measurement', derivative
financial instruments are stated at fair value. Any gains or losses on
re-measurement in respect of derivatives that do not qualify for hedge
accounting are immediately recognised in the income statement.  Under UK GAAP
such financial instruments were not reflected on the balance sheet.


(e)    Deferred tax adjustments

Under UK GAAP deferred tax was recognised in respect of all timing differences
that had originated but not reversed by the balance sheet date and which could
give rise to an obligation to pay more or less taxation in the future.  Deferred
tax under IAS 12 'Income Taxes' is recognised in respect of all temporary
differences as at the balance sheet date between the tax bases of assets and
liabilities and their carrying value for financial reporting purposes.

A deferred tax asset has been recognised in accordance with IAS 12, Income
Taxes, on the difference between the carrying value of derivative financial
instruments in the balance sheet and the tax base of £nil.  This asset was not
previously recorded because derivative financial instruments were not reflected
on the balance sheet under UK GAAP.

Under UK GAAP the Group's policy was to recognise deferred tax on losses
expected to be accessed within 12 months.  However, under IFRS deferred tax
should be recognised in full to the extent the losses are regarded as
recoverable.  Consequently, at 31 March 2006 an additional £271,000 of deferred
tax in respect of losses has been recognised based on evidence available at that
date.




3.      Reconciliation of cash flows under UK GAAP to IFRS


The cash flow statement for the period ended 31 March 2006 and 30 September 2005
as presented in this interim financial information has been subject to a number
of presentational adjustments following the transition to IFRS. There is no
impact on the net increase/(decrease) in cash and cash equivalents for each
period as reported under IFRS compared with that originally reported under UK
GAAP.



Independent Review Report to Oasis Healthcare plc

Introduction


We have been instructed by the Company to review the financial information for
the six months ended 30 September 2006 which comprises the unaudited Group
income statement, the unaudited Group statements of recognised income and
expense, the unaudited Group balance sheet as at 30 September 2006, the
unaudited statement of changes in shareholders' equity, the unaudited Group cash
flow statement and related notes. We have read the other information contained
in the interim report and considered whether it contains any apparent
misstatements or material inconsistencies with the financial information.


Directors' responsibilities

The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the directors.

As disclosed in note 1, the next annual financial statements of the Group will
be prepared in accordance with International Financial Reporting Standards as
adopted for use in the European Union. This interim report has been prepared in
accordance with the basis set out in Note 1.

The accounting policies are consistent with those that the directors intend to
use in the next annual financial statements. As explained in note 1, there is,
however, a possibility that the directors may determine that some changes are
necessary when preparing the full annual financial statements for the first time
in accordance with International Financial Reporting Standards as adopted for
use in the European Union. The IFRS standards and IFRIC interpretations that
will be applicable and adopted by the European Union at 31 March 2007 are not
known with certainty at the time of preparing this interim financial
information.


Review work performed

We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board for use in the United Kingdom. A review
consists principally of making enquiries of group management and applying
analytical procedures to the financial information and underlying financial data
and, based thereon, assessing whether the disclosed accounting policies have
been applied. A review excludes audit procedures such as tests of controls and
verification of assets, liabilities and transactions. It is substantially less
in scope than an audit and therefore provides a lower level of assurance.
Accordingly we do not express an audit opinion on the financial information.
This report, including the conclusion, has been prepared for and only for the
company and for no other purpose. We do not, in producing this report, 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.


Review conclusion

On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 September 2006.



PricewaterhouseCoopers LLP
Chartered Accountants
Norwich
28 November 2006



Notes:

(a) The maintenance and integrity of the Oasis Healthcare PLC web site is the
responsibility of the directors; the work carried out by the auditors does not
involve consideration of these matters and, accordingly, the auditors accept no
responsibility for any changes that may have occurred to the interim report
since it was initially presented on the web site.

(b) Legislation in the United Kingdom governing the preparation and
dissemination of financial information may differ from legislation in other
jurisdictions.



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