TIDMEMIS
RNS Number : 7664I
EMIS Group PLC
02 September 2016
2 September 2016
EMIS Group plc
("EMIS Group" or "the Group")
Half Year Results for the six months ended 30 June 2016
EMIS Group plc (AIM: EMIS.L), the UK leader in connected
healthcare software and services, today announces its unaudited
results for the six months ended 30 June 2016.
Financial highlights
2016 H1 2015 H1 Change
Revenue
Total revenue GBP78.7m GBP77.8m +1%
Recurring revenue GBP64.0m GBP60.5m +6%
Operating profit
Adjusted(1) GBP17.7m GBP16.9m +5%
Reported post exceptional items GBP12.1m GBP13.8m -12%
Cash flow and debt
Cash generated from operations(2) GBP27.5m GBP27.5m
Net cash GBP0.7m GBP1.3m
Earnings per share
Adjusted(1) 22.2p 20.5p +8%
Reported post exceptional items 14.9p 16.6p -10%
Interim dividend 11.7p 10.6p +10%
(1) Excludes exceptional items, the capitalisation and
amortisation of development costs and amortisation of acquired
intangibles. Earnings per share calculations also adjust for the
related tax and non-controlling interest impact. The exceptional
item excluded in 2016 H1 relates to a GBP2.2m charge in respect of
the Group's cost reduction programme.
(2) Stated before the cash impact of the exceptional item of
GBP1.8m (2015 H1: GBPnil) and after deduction of capitalised
development costs of GBP2.9m (2015 H1: GBP3.1m).
Operational highlights - H1 results broadly in line with the
Board's expectations
-- Continued growth in profit, recurring revenue and further progress in operating margin
-- Maintained strong market share positions across the EMIS
Group, increased Child, Community and Mental Health (CCMH) market
share, prepared for future growth in Community Pharmacy and EMIS
Care
-- Group-wide cost reduction measures and operational
improvements within Secondary Care largely complete - benefits
expected to come through in H2
-- Strong revenue visibility and momentum in order book and pipeline
Primary & Community Care - solid financial performance
-- Market leading position within the UK primary care market
maintained with 55% market share (31 December 2015: 55%)
-- EMIS Web roll-out programme progressing in Northern Ireland and Scotland in procurement
-- Further increase in CCMH market share to 14% (31 December
2015: 12%), making excellent progress toward full year 15% target
despite slower rate of larger contract awards
Community Pharmacy - profitability and market share
maintained
-- Market leading 36% share of the combined supermarket and
independent market maintained (31 December 2015: 36%)
-- Lloyds Pharmacy/AAH Pharmaceuticals contract
pre-implementation activity on track to grow market share to close
to 50%
-- Next generation dispensary pharmacy management product pilots
continue, accreditation secured in Wales and Scotland and
progressing well in England, pilot roll-out begun in Wales and
Scotland
Secondary & Specialist Care - mixed performance
-- Secondary Care performed broadly in line with expectations
-- Secondary Care secured formal award of a contract for a
Patient Administration System in Northampton and a place on the
GBP15m Hospital Electronic Prescribing and Medicines Administration
(HEPMA) framework
-- Slower rate of larger contract awards continues to affect Secondary Care
-- Specialist & Care material contract wins - significant
pipeline in place but profit held back by implementation costs
Current Trading & Outlook - in line with the Board's
expectations
-- Good order books and pipelines across every segment
-- Revenue visibility remains strong with 81% recurring revenue
-- Cost reduction measures expected to benefit second half performance
-- Responding positively to political and economic uncertainty
-- Growth opportunities in all markets
Chris Spencer, Chief Executive Officer of EMIS Group, said:
"EMIS Group has again reported good underlying profit growth in
the first half. The Board's outlook for the full year remains
unchanged, with strong revenue visibility, growing market shares
especially in CCMH and Community Pharmacy, and good momentum in our
order books and pipelines. We are confident that the cost reduction
measures we have taken will benefit our financial performance as
the year progresses.
"Despite ongoing, post-referendum, political and economic
uncertainty, the NHS continues to affirm EMIS Group's strategy of
providing change-delivering digital technology helping to create
faster, better, cheaper care. Matthew Swindells, NHS England's new
national director for commissioning operations and information
announced, in his first major speech on 5 July, that funding would
be available for 'change projects' that require new technology and
information to improve the quality and efficiency of care as part
of an 'ecosystem for innovation' controlled by the patient."
There will be an analyst meeting today at 9.30am at Numis
Securities, 10 Paternoster Square, London EC4M 7LT. Please contact
Charlie Barker at MHP Communications on 0203 128 8540,
emis@mhpc.com, for details.
Enquiries:
For further information, contact:
EMIS Group plc Tel: 0113 380 3000
Chris Spencer, CEO
Peter Southby, CFO
www.emisgroupplc.com
@CEO_EMISGroup
Numis Securities Limited (Nominated Adviser & Broker) Tel: 020 7260 1000
Oliver Hardy/Simon Willis/James Black
MHP Communications Tel: 020 3128 8540
Reg Hoare/Giles Robinson/Charlie Barker
Notes to Editors
EMIS Group is the UK leader in connected healthcare software and
services. Its solutions are widely used across every major UK
healthcare setting from primary and community care, to high street
pharmacies, secondary care and specialist services. EMIS Group
helps clinicians in over 10,000 organisations share vital
information, facilitating better, more efficient healthcare and
supporting longer and healthier lives.
EMIS Group serves the following healthcare markets under the
EMIS Health brand:
-- Primary and Community Care, the UK leader in clinical IT
systems for GPs and commissioners. EMIS Health products, including
the flagship EMIS Web, hold over 40 million patient records and are
used by nearly 6,000 healthcare organisations, including
community-based teams.
-- Community Pharmacy, the UK's single most used integrated
community pharmacy and retail system.
-- Secondary and Specialist Care, a leading software provider to
NHS Acute Trusts and Boards, focused primarily on Hospital
Pharmacy, A&E (holding over 30 million patient records), and
Patient Administration Systems as well as England's leading
provider of diabetic eye screening software and other
ophthalmology-related solutions.
These markets are also supported by other EMIS Group
businesses:
-- under the Patient brand, the UK's leading independent
provider of patient-centric medical and well-being information and
related transactional services.
-- under the Egton brand, providing specialist ICT
infrastructure, software, hardware and engineering services.
-- under the EMIS Care brand, providing healthcare screening
programmes such as diabetic eye screening programmes.
CHIEF EXECUTIVE'S OVERVIEW
The half year results were broadly in line with the Board's
expectations. The Group continued to benefit from its usual strong
revenue visibility. Market share and momentum in order books and
pipelines were maintained despite the uncertainty created by the EU
Referendum and the ongoing slower than expected rate of contract
awards in larger NHS procurements.
Jeremy Hunt, the Secretary of State for Health, announced in
February 2016 that GBP4.2bn - including an apparent GBP1.3bn of new
funding - would be spent on NHS IT over the five years of the
current parliament. The distribution of this funding will be linked
to the Sustainability and Transformation Plans (STPs) that trusts
are drawing up to implement the Forward View and the Local Digital
Roadmaps that support the STPs. Circa GBP1.8bn is expected to be
allocated to the paperless NHS agenda and circa GBP0.5bn to the
completion of National Programme for IT contracts.
OPERATIONAL REVIEW
A leading provider of UK healthcare software, information
technology and related services, EMIS Group has again maintained or
grown its strong market shares in every major area of healthcare.
This enables the Group to help deliver the NHS's ongoing connected
care strategy across healthcare in Primary & Community,
Community Pharmacy and Secondary & Specialist.
Primary & Community Care - Revenue up 4%, Adjusted Operating
Profit up 10%
EMIS Health - Primary Care (EHPC)
The Group delivered another solid performance in primary care. A
UK market share of 55% (31 December 2015: 55%) was supported by
loyal customers with 75% of the Group's English GP practices being
EMIS Health users for over a decade. The number of 100% EHPC
Clinical Commissioning Groups (CCGs) rose to 45 by the end of the
period enabling seamless connection of primary care and other
healthcare data across the whole of their local health economy.
Implementation of EMIS Web for primary care is still planned to
begin in Northern Ireland before the end of 2016 and is expected to
conclude in 2017. The first EMIS Web pilot site in Northern Ireland
went live on 16 August 2016 and is performing well. In Wales,
discussions are ongoing for renewal of the primary care framework
agreement. Existing Welsh call off agreements' expiry dates range
from 2019 to 2020. Engagement for the procurement of EMIS Web in
place of the Group's older PCS software in Scotland has now
begun.
EMIS Health - Child, Community & Mental Health (CCMH)
Despite political uncertainty and the ongoing sluggishness of
larger procurements the Group's CCMH team grew market share to 14%
(31 December 2015: 12%).
A further seven material contract wins were secured in the
period plus an additional two subsequently:
-- Stockport - Community (former national Programme from CSC)
-- South Tyneside - Child Health (former national Programme from TPP)
-- Barts Health - Child Health (no prior incumbent)
-- East Cheshire - Child Health (from Health Service Wales)
-- Central London Community Healthcare NHS Trust - Community (from TPP)
-- Croydon - Community/Child Health (upgrade from EMIS Health)
-- Jersey Hospice - Community. (no prior incumbent)
These were all for initial terms of five years and had an
aggregate total contract value in excess of GBP3.5m. There is also
a strong pipeline of CCMH opportunities for the remainder of 2016
and into 2017.
Building out from the 45 100% EHPC CCGs, the Group now has 23
CCGs where EMIS Health is the only supplier in both primary care
and CCMH. This emphasises and enhances the Group's unique position
in connected care.
Patient
Patient.info is an online resource providing trusted
clinician-authored information to help patients proactively manage
their own health and wellbeing. This "pre-primary care" is
increasingly a key focus for healthcare strategies in the UK and
internationally.
The Patient domain was moved from Patient.co.uk to Patient.info
(a top level domain) in June 2015 to accelerate the growth of
Patient especially internationally. Although, as expected, the
short term effect of the domain move was to reduce overall traffic,
this has now returned to pre-move levels at 18.3m unique monthly
visitors. As at 30 June 2016 international visits accounted for 70%
of the total (2015 H1: 55%), with visitors from the USA
representing 38% of the total. An experienced digital chief
executive has been recruited to lead the Patient business and
create further engagement and monetisation opportunities.
Egton - Non-clinical ICT solutions and services
Egton Digital (formerly Pinbellcom Group Limited, acquired in
July 2015) continues to perform well providing a range of software
and services including administration and compliance software for
primary and secondary care and GP practice websites. Egton has also
increasingly been providing GP practice Wi-Fi. Since the period end
Egton has been awarded a four year contract with a total value in
excess of GBP5m to provide IT support, maintenance and hardware to
all GP practices in Herts Valleys, East and North Herts, Luton and
Bedfordshire.
Community Pharmacy - Revenue up 6%, Adjusted Operating Profit up
13%
EMIS Health - Community Pharmacy (EHCP)
EHCP, the provider of the single most widely used community
pharmacy dispensary management system in the UK, also posted good
results as it prepared for future market share growth over the next
18 months from 36% to nearly 50% after the implementation of the
agreement signed in December 2015 with AAH Pharmaceuticals. In
addition, PCT Healthcare and Cohens agreed to transfer to EHCP
acquired pharmacies totalling 100 sites from competitor systems
(Cegedim (52) and PSL (48) respectively) for implementation during
2016. The total estate size was 4,972 sites at 30 June 2016 (31
December 2015: 4,910 sites).
ProScript Connect, EHCP's next generation pharmacy dispensary
management product, secured accreditation in both Wales and
Scotland. The live pilots in Wales and then Scotland began in the
second quarter and accreditation in England is planned for
completion by the end of 2016. Implementation focus is primarily on
remote data conversion and deployment to minimise resource
requirements at each location. More complex sites such as those
with robotic systems, are likely to require on-site upgrades. The
first ProScript Connect pilot site in the Lloyds estate has now
gone live.
EMIS Web for Community Pharmacy is now in pilot in nine
pharmacies. This offers functionality and data to assist community
pharmacies seeking to provide extended primary care services (e.g.
smoking cessation, influenza injections) and monitoring of long
term conditions.
Secondary & Specialist Care - Revenue down 8%, Adjusted
Operating Profit down 35%
EMIS Health - Secondary Care (EHSC)
EHSC performed largely in line with expectations, taking into
account the transfer of revenues and profits associated with the
ePEX (acute mental health) product to Primary & Community Care
and a strong comparative period for one-off implementation
revenues. The NHS environment remains very difficult to predict,
especially in larger procurements. In addition, increased merger
activity between hospital trusts means that many 2016/2017
investment plans are being re-visited.
Nevertheless, on 29 April 2016, EHSC was awarded a contract for
a Patient Administration System in Northampton for delivery in 2016
and has maintained a strong flow of mid-size to smaller contracts.
The business is also creating an electronic procurement hub in
association with the UK's other major hospital pharmacy software
provider. This is expected to enable 75% of UK hospitals in the
first phase of deployment to replace the manual processing of home
care pharmacy, minimise errors, improve care and reduce NHS costs.
EHSC is one of just two suppliers on the NHS Scotland HEPMA
(Hospital Electronic Prescribing and Medicines Administration)
framework, worth GBP15m over two years, which is rolling out
electronic medicines management across hospitals. It means that
health boards are free to choose EHSC's fully integrated suite of
HEPMA, e-prescribing, medicines management and hospital pharmacy
systems.
EHSC's hospital pharmacy system is already used in seven
Scottish health boards, and the company has a 51.5% share of the GP
market in Scotland.
The strategic decision, announced on 15 February 2016, for EHSC
to focus on core markets and products with a related reduction in
staff numbers has now largely been implemented in the UK and Kenya.
Arrangements to ensure an appropriate hand-over of the Australian
service continue to be negotiated.
EMIS Health - Specialist & Care (EHS&C)
EHS&C reported continued revenue growth but was less
profitable in the period due to higher implementation costs for new
contracts in EMIS Care.
EMIS Care remains the clear market leader in outsourced diabetic
eye screening and ophthalmology imaging services. It has also been
awarded further five year contracts for screening provision in:
-- Lancashire Lot 1 (East Lancashire & Preston - from the NHS)
-- Lancashire Lot 2 (North Lancashire & Fylde Coast - from the NHS)
-- West Yorkshire Lot 2 (Bradford, Huddersfield & Calderdale
- from the NHS, EMIS Care and 1(st) Retinal Screen)
These three year initial term contracts, which have an aggregate
total contract value in excess of GBP10m, will be implemented
during the second half of 2016 and 2017. This unprecedented level
of tender and implementation activity held back financial
performance through the incurring of additional implementation
costs, especially in the taking on of contracts previously operated
by the NHS. As operational efficiencies are realised over the life
of the contracts, the profit profile is expected to improve.
EMIS Health Specialist has maintained its position as the
leading software provider in English diabetic retinopathy screening
with an 79% market share (31 December 2015: 79%).
Public Health England has initiated a pre-tender process to
solicit feedback on developing a national English diabetic eye
screening programme software solution (intended to achieve
standardised local programme operation through common IT system
design and core functionality) by October 2017. This provides an
opportunity for EHS&C to secure the rest of the English
market.
Integrated Care, Products and Services
The Group continued to make progress during the first half in
integrating care by connecting its own and third party products
helping the NHS to facilitate faster, better, cheaper care.
Examples include:
-- EHS&C working on GP integration to support the EMIS Care
Lancashire service go-live on 1 October 2016. This region is 100%
EMIS Web in Primary Care and will be the first full integration
between EHS&C and EHPC; Blackpool Teaching Hospitals NHS
Foundation Trust whose use of EMIS Web means community staff no
longer have to fill in duplicate information in different forms -
they can do it all with one simple template, meaning more time to
focus on patient care;
-- Bromley Healthcare Community Interest Company where more than
300 clinicians are accessing real-time vital patient notes at the
point of care using EMIS Mobile on an iPad, at an estimated saving
of an hour a day for each clinician.
FINANCIAL REVIEW
Overall the Group's financial performance for the half year
ended 30 June 2016 was broadly in line with the Board's
expectations despite some unexpected external and internal
challenges in the period.
Financial Summary
Group revenue increased by 1% to GBP78.7m (2015 H1: GBP77.8m).
While the rate of growth was lower than in recent periods, this
reflected in part a limited contribution from acquisitions (GBP0.7m
in the period) and also revenue headwinds in NHS spending on
hardware, hosting contract asset revenues, the Australian business
and a strong comparative period for project delivery in Secondary
Care. Recurring revenue nonetheless grew by 6% to GBP64.0m (2015
H1: GBP60.5m) representing 81% of total revenue.
Adjusted operating profit for the period was GBP17.7m (2015 H1:
GBP16.9m), an increase of 5% including a GBP0.3m contribution from
the July 2015 Pinbellcom acquisition.
Segmental Performance
The Primary & Community Care business again demonstrated
strong growth, aided by the transfer of GBP0.7m of revenues
associated with the ePEX mental health product previously reported
in EHSC. On a like-for-like basis, revenues grew more slowly in
EHPC as expected with the roll-out programme for EMIS Web for GPs
in England and Wales now completed, but significant momentum for
CCMH was maintained.
Performance in the Community Pharmacy division was again solid
in anticipation of the rollout of its new ProScript Connect product
into the Lloyds Pharmacy estate over the coming months.
The Secondary & Specialist Care division delivered profits
behind expectation mainly due to additional costs in EMIS Care
associated with the implementation of new contracts in geographical
areas previously operated by the NHS. However, focus on delivering
operational efficiencies is expected to improve the profit profile
over the life of the contracts.
Revenue
Revenue is analysed in the following categories:
-- licences, which increased to GBP26.8m (2015 H1: GBP24.7m),
due principally to growth in the Group's estates, including
CCMH;
-- maintenance & software support, which grew to GBP18.9m (2015 H1: GBP18.6m);
-- other support services, where revenues fell to GBP14.7m (2015
H1: GBP15.3m), with lower levels of project engineering;
-- training, consultancy and implementation, which grew to
GBP7.6m (2015 H1: GBP7.5m), reflecting increased activity in CCMH
offsetting a quieter period in Secondary Care;
-- hosting, which reduced to GBP6.4m (2015 H1: GBP6.7m), as a
result of lower levels of income in respect of contract assets
(offset by lower depreciation); and
-- a reduction in hardware revenues to GBP4.3m (2015 H1:
GBP5.0m) with a lower level of NHS purchasing.
Profitability and Dividend
The adjusted operating margin improved from 21.7% to 22.5% as a
consequence of tight cost control, including the previously
announced cost reduction programme. The Group employed 1,858 staff
at 30 June 2016, a reduction from 1,897 at 31 December 2015 despite
the addition of 79 new staff in the growing India development team
(previously outsourced).
Adjusted operating profit for the period was GBP17.7m (2015 H1:
GBP16.9m). This is before accounting for GBP2.2m of one-off costs
incurred in the cost reduction programme, which was expanded in the
UK in response to increased political and economic uncertainty and
which is a groupwide programme, while addressing primarily
Secondary & Specialist Care. After accounting for this charge,
for the capitalisation and amortisation of development costs and
for the amortisation of acquired intangibles, operating profit was
GBP12.1m (2015 H1: GBP13.8m).
The tax charge for the period was GBP2.4m (2015 H1: GBP2.8m),
representing an effective rate of tax of 19.6% (2015 H1:
20.4%).
Adjusted basic and diluted EPS increased by 8% to 22.2p and
22.1p respectively (2015 H1: 20.5p for both measures). As a result
principally of the exceptional cost, the reported basic and diluted
EPS were lower at 14.9p and 14.8p respectively (2015 H1: 16.6p for
both measures).
The Board remains positive on the outlook for the Group and has
therefore resolved to increase the interim dividend by 10% to 11.7p
(2015 H1: 10.6p) per share, payable on 28 October 2016 to
shareholders on the register at the close of business on 23
September 2016.
Cash Flow and Net Cash
Net cash generated from operations after capitalised development
costs but before the GBP1.8m cash cost of the exceptional charges
was unchanged at GBP27.5m (2015 H1: GBP27.5m). Net capital
expenditure excluding capitalised development costs reduced to
GBP2.9m (2015 H1: GBP3.5m), including GBP1.6m of NHS funded hosting
assets. After finance costs, tax, dividends, Employee Benefit Trust
transactions and the GBP3.0m final payment for the Medical Imaging
acquisition, the Group ended the period with net cash of GBP0.7m
(31 December 2015: net debt of GBP9.1m; 2015 H1: net cash of
GBP1.3m).
The balance sheet has subsequently been further strengthened by
the GBP1.5m net proceeds from the sale of the Group's minority
investment in Pharmacy2U completed on 2 July 2016.
SUMMARY AND OUTLOOK
EMIS Group has again reported good underlying profit growth in
the first half. The Board's outlook for the full year remains
unchanged, with strong revenue visibility, growing market shares
especially in CCMH and Community Pharmacy, and good momentum in our
order books and pipelines. We are confident that the cost reduction
measures we have taken will benefit our financial performance as
the year progresses.
Group statement of comprehensive income
for the six months ended 30 June 2016
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
Unaudited Unaudited Audited
Notes GBP'000 GBP'000 GBP'000
------------------------------------------------- ----- ---------- ---------- -----------
Revenue 9 78,670 77,806 155,898
Costs:
Changes in inventories 536 (31) (344)
Cost of goods and services (7,480) (6,911) (12,611)
Staff costs (37,243) (34,467) (67,465)
Other operating expenses(1) (13,356) (13,661) (45,873)
Depreciation of property, plant and equipment (2,258) (2,390) (4,665)
Amortisation of intangible assets (6,728) (6,498) (13,510)
Adjusted operating profit 17,692 16,917 36,553
Development costs capitalised 2,882 3,093 6,183
Amortisation of intangible assets(2) (6,281) (6,162) (12,806)
Cost reduction programme(3) (2,152) - -
Impairment of goodwill - - (16,183)
Impairment of investment - - (2,317)
Operating profit 12,141 13,848 11,430
Finance income - 26 28
Finance costs (231) (256) (477)
Share of result of associate - (172) (388)
Share of result of joint venture 271 106 339
------------------------------------------------- ----- ---------- ---------- -----------
Profit before taxation 12,181 13,552 10,932
Income tax expense 10 (2,386) (2,759) (5,558)
------------------------------------------------- ----- ---------- ---------- -----------
Profit for the period 9,795 10,793 5,374
------------------------------------------------- ----- ---------- ---------- -----------
Other comprehensive income
Items that may be reclassified to profit or
loss
Currency translation differences 99 (61) (111)
------------------------------------------------- ----- ---------- ---------- -----------
Other comprehensive income 99 (61) (111)
------------------------------------------------- ----- ---------- ---------- -----------
Total comprehensive income for the period 9,894 10,732 5,263
------------------------------------------------- ----- ---------- ---------- -----------
Attributable to:
- equity holders of the parent 9,450 10,353 4,432
- non-controlling interest in subsidiary company 444 379 831
------------------------------------------------- ----- ---------- ---------- -----------
Total comprehensive income for the period 9,894 10,732 5,263
------------------------------------------------- ----- ---------- ---------- -----------
Earnings per share attributable to equity holders
of the parent Pence Pence Pence
Basic 11 14.9 16.6 7.2
Diluted 11 14.8 16.6 7.2
-------------------------------------------------- ----- ----- -----
(1) Including contract asset depreciation of GBP1,251,000 (2015
H1: GBP1,735,000, 2015 FY: GBP3,175,000), and, for 2015 FY only,
including impairments of goodwill (GBP16,183,000) and of investment
(GBP2,317,000).
(2) Excluding amortisation of computer software used internally
of GBP447,000 (2015 H1: GBP336,000, 2015 FY: GBP704,000).
(3) The cost reduction programme relates to redundancy and
restructuring costs, primarily within the Secondary and Specialist
Care segment.
Group balance sheet
as at 30 June 2016
30 June 30 June 31 December
2016 2015 2015
Unaudited Unaudited Audited
Notes GBP'000 GBP'000 GBP'000
ASSETS
Non-current assets
Goodwill 54,388 68,577 54,388
Other intangible assets 13 63,539 68,158 66,995
Property, plant and equipment 21,198 22,975 22,032
Investment in joint venture and associate 402 2,533 131
-------------------------------------------- ----- ---------- ---------- -----------
139,527 162,243 143,546
-------------------------------------------- ----- ---------- ---------- -----------
Current assets
Inventories 1,742 1,519 1,206
Trade and other receivables 35,782 32,906 33,893
Cash and cash equivalents 4,568 9,121 4,701
-------------------------------------------- ----- ---------- ---------- -----------
42,092 43,546 39,800
-------------------------------------------- ----- ---------- ---------- -----------
Total assets 181,619 205,789 183,346
-------------------------------------------- ----- ---------- ---------- -----------
LIABILITIES
Current liabilities
Trade and other payables (22,336) (22,698) (17,777)
Current tax liabilities (2,081) (1,828) (3,183)
Bank loans (3,902) (3,902) (5,402)
Bank overdraft - - (6,457)
Contingent acquisition consideration - (3,000) (3,000)
Deferred income (32,646) (37,872) (28,000)
-------------------------------------------- ----- ---------- ---------- -----------
(60,965) (69,300) (63,819)
-------------------------------------------- ----- ---------- ---------- -----------
Non-current liabilities
Bank loans - (3,902) (1,951)
Deferred tax liability (9,763) (11,747) (10,530)
(9,763) (15,649) (12,481)
-------------------------------------------- ----- ---------- ---------- -----------
Total liabilities (70,728) (84,949) (76,300)
-------------------------------------------- ----- ---------- ---------- -----------
NET ASSETS 110,891 120,840 107,046
-------------------------------------------- ----- ---------- ---------- -----------
EQUITY
Ordinary share capital 633 633 633
Share premium 51,045 51,045 51,045
Own shares held in trust (2,531) (3,125) (2,929)
Retained earnings 55,752 65,130 52,848
Other reserve 2,099 2,050 2,000
-------------------------------------------- ----- ---------- ---------- -----------
Equity attributable to owners of the parent 106,998 115,733 103,597
Non-controlling interests 3,893 5,107 3,449
-------------------------------------------- ----- ---------- ---------- -----------
TOTAL EQUITY 110,891 120,840 107,046
-------------------------------------------- ----- ---------- ---------- -----------
Group statement of cash flows
for the six months ended 30 June 2016
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
Unaudited Unaudited Audited
Notes GBP'000 GBP'000 GBP'000
------------------------------------------------ ----- ---------- ---------- ------------
Cash generated from operations 28,576 30,574 42,711
Finance costs (207) (208) (450)
Finance income - 26 28
Tax paid (3,465) (2,889) (6,896)
------------------------------------------------ ----- ---------- ---------- ------------
Net cash generated from operating activities 24,904 27,503 35,393
------------------------------------------------ ----- ---------- ---------- ------------
Cash flows from investing activities
Purchase of property, plant and equipment (2,827) (3,003) (6,145)
Proceeds from sale of property, plant and
equipment 337 267 644
Development costs capitalised (2,882) (3,093) (6,183)
Purchase of software (388) (743) (1,730)
Business combinations (3,000) (2,250) (5,231)
------------------------------------------------ ----- ---------- ---------- ------------
Net cash used in investing activities (8,760) (8,822) (18,645)
------------------------------------------------ ----- ---------- ---------- ------------
Cash flows from financing activities
Transactions in own shares held in trust 336 272 589
Bank loan and overdraft repayments (3,500) (11,000) (11,500)
Non-controlling interest dividend paid - - (2,110)
Dividends paid 12 (6,656) (5,771) (12,422)
------------------------------------------------ ----- ---------- ---------- ------------
Net cash used in financing activities (9,820) (16,499) (25,443)
------------------------------------------------ ----- ---------- ---------- ------------
Net increase/(decrease) in cash and cash
equivalents 6,324 2,182 (8,695)
Cash and cash equivalents at beginning of
period (1,756) 6,939 6,939
------------------------------------------------ ----- ---------- ---------- ------------
Cash and cash equivalents at end of period 14 4,568 9,121 (1,756)
------------------------------------------------ ----- ---------- ---------- ------------
Cash generated from operations
Operating profit 12,141 13,848 11,430
Adjustment for non-cash items:
Amortisation of intangible assets 6,728 6,498 13,510
Depreciation of property, plant and equipment 3,509 4,125 7,840
Impairment of goodwill - - 16,183
Impairment of investment - - 2,317
Profit on disposal of property, plant and
equipment (140) (53) (44)
Share-based payments 310 342 684
Operating cash flow before changes in working
capital 22,548 24,760 51,920
Changes in working capital:
(Increase)/decrease in inventory (536) 31 344
Increase in trade and other receivables (2,665) (4,000) (3,945)
Increase/(decrease) in trade and other payables 4,583 1,909 (3,246)
Increase/(decrease) in deferred income 4,646 7,874 (2,362)
------------------------------------------------ ----- ---------- ---------- ------------
Cash generated from operations 28,576 30,574 42,711
------------------------------------------------ ----- ---------- ---------- ------------
Group statement of changes in equity
for the six months ended 30 June 2016
Own shares Non-
Share Share held Retained Other controlling Total
in
capital premium trust earnings reserve interest equity
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------- ----- ------- ------- ---------- -------- ------- ----------- -------
At 1 January 2015 633 51,045 (3,718) 60,109 2,111 4,728 114,908
Profit for the period - - - 10,414 - 379 10,793
Transactions with owners
Share acquisitions less sales - - 593 (39) - - 554
Share-based payments - - - 342 - - 342
Deferred tax in relation to
share-based payments - - - 75 - - 75
Dividends paid - - - (5,771) - - (5,771)
Other comprehensive income
Currency translation differences - - - - (61) - (61)
At 30 June 2015 633 51,045 (3,125) 65,130 2,050 5,107 120,840
(Loss)/profit for the period - - - (5,871) - 452 (5,419)
Transactions with owners
Share acquisitions less sales - - 196 (161) - - 35
Share-based payments - - - 342 - - 342
Deferred tax in relation to
share-based payments - - - 59 - - 59
Dividends paid 12 - - - (6,651) - (2,110) (8,761)
Other comprehensive income
Currency translation differences - - - - (50) - (50)
At 31 December 2015 633 51,045 (2,929) 52,848 2,000 3,449 107,046
Profit for the period - - - 9,351 - 444 9,795
Transactions with owners
Share acquisitions less sales - - 398 (61) - - 337
Share-based payments - - - 310 - - 310
Deferred tax in relation to
share-based payments - - - (40) - - (40)
Dividends paid 12 - - - (6,656) - - (6,656)
Other comprehensive income
Currency translation differences - - - - 99 - 99
--------------------------------- ----- ------- ------- ---------- -------- ------- ----------- -------
At 30 June 2016 633 51,045 (2,531) 55,752 2,099 3,893 110,891
--------------------------------- ----- ------- ------- ---------- -------- ------- ----------- -------
Notes to the half year financial statements
1. General information
The financial statements for the six months ended 30 June 2016
and the six months ended 30 June 2015 do not constitute statutory
accounts within the meaning of Section 434 of the Companies Act
2006. Statutory accounts for the year ended 31 December 2015 were
approved by the Board of Directors on 15 March 2016 and delivered
to the Registrar of Companies. The auditor's report on those
accounts was unqualified, did not contain an emphasis of matter
paragraph and did not contain any statement under section 498 (2)
or (3) of the Companies Act 2006.
These condensed half year financial statements were approved for
issue by the board of directors on 1 September 2016.
2. Basis of preparation
These condensed half year financial statements for the half year
ended 30 June 2016 have been prepared in accordance with the AIM
Rules for Companies, comply with IAS 34 'Interim Financial
Reporting' as adopted by the European Union and should be read in
conjunction with the annual financial statements for the year ended
31 December 2015, which have been prepared in accordance with IFRS
as adopted by the European Union.
The Group is profitable and it is anticipated that this will
continue. There is a high and continuing level of recurring revenue
and high cash conversion is anticipated for the foreseeable future.
The Group's existing significant cash resources provide additional
comfort that it will continue to be able to meet its bank term loan
repayment obligations of GBP1m per quarter.
Accordingly, after careful enquiry and review of available
financial information, the directors have formed the conclusion
that the Group has adequate resources to continue to operate for
the foreseeable future and that it is therefore appropriate to
continue to adopt the going concern basis of accounting in the
preparation of these consolidated half year financial
statements.
The financial information is presented in sterling, which is the
functional currency of EMIS Group. All financial information
presented has been rounded to the nearest thousand.
3. Accounting policies
The accounting policies used in preparing these half year
financial statements are those the Group expects to apply in its
financial statements for the year ending 31 December 2016 and are
consistent with those disclosed in the Group's annual report and
accounts for the year ended 31 December 2015.
Current taxes on income in the half year period are accrued
using the tax rates that would be applicable to expected total
annual profits. Deferred taxes on income are calculated based on
the standard rates that are enacted as at the balance sheet
date.
4. Critical accounting estimates and judgements
Accounting estimates and judgements are based on past experience
and expectations relating to and evaluation of future events and
are believed to be reasonable at the time of making. Due to the
inherent uncertainty involved in making these estimates and
judgements, actual future outcomes can be different.
The 2015 Group annual report and accounts includes details of
the critical estimates, assumptions and judgements made at that
time in arriving at the amounts recognised in those financial
statements, which have a significant risk of causing a material
adjustment to the carrying values of assets and liabilities within
the subsequent financial year.
The critical accounting estimates and judgements made in these
condensed consolidated half year financial statements do not differ
materially from those applied within the 2015 Group annual report
and accounts.
5. Principal risks and uncertainties
The 2015 Group annual report and accounts describes the
principal risks and uncertainties that could impact the Group's
performance. These relate to healthcare structure and procurement
changes, integration, software development and hosting, and
recruitment and retention. These remain unchanged since the annual
report was published and accordingly are valid for these half year
financial statements. The Group operates a structured risk
management process, which identifies and evaluates risks and
uncertainties and reviews mitigation activity. During the period
under review, this included reviewing the impact of Brexit, which
is not expected to have a material impact on the Group, given its
focus on the UK market.
6. Financial risk management
The Group's activities expose it to financial risks including
credit risk, liquidity risk, interest rate risk and price risk.
These condensed consolidated half year financial statements do
not include all financial risk management information and
disclosures required in the annual financial statements and
therefore should be read in conjunction with the 2015 Group annual
report and accounts.
The Group does not engage in significant levels of hedging
activity and holds no material derivative financial instruments.
Carrying value approximates to fair value for all financial
instruments. During 2016 there has been no significant change in
business or economic circumstances that affects the fair value of
the Group's financial assets and financial liabilities, nor have
there been any reclassifications of financial assets or
liabilities, nor have there been any changes in any of the Group's
risk management policies. Accordingly, the directors, having
reviewed IFRS 13 'Fair Value Measurement' and IAS 34 'Interim
Financial Reporting', are of the opinion that no additional
disclosure is required.
7. Forward-looking statements
Certain statements in this half year report are forward-looking.
Although the Group believes that the expectations reflected in
these forward-looking statements are reasonable, it can give no
assurance that these expectations will prove to have been correct.
Because these statements involve risks and uncertainties, actual
results may differ materially from those expressed or implied by
these forward-looking statements.
8. Segmental reporting
IFRS 8 'Operating Segments' provides for segmental information
disclosure on the basis of information reported internally to the
chief operating decision-maker for decision-making purposes. The
Group considers that this role is performed by the main Board.
The Group has three operating segments, all involved with the
supply and support of connected healthcare software and
services:
(a) Primary & Community Care;
(b) Community Pharmacy; and
(c) Secondary & Specialist Care.
Each operating segment is assessed by the Board based on a
measure of adjusted operating profit. This measurement basis
excludes exceptional items, the effect of capitalisation and
amortisation of development costs, and the amortisation of acquired
intangible assets, as the Board considers this to provide the best
measure of underlying performance. Group operating expenses,
finance income and finance costs are not allocated to segments, as
group and financing activities are not segment-specific.
Six months ended Six months ended
30 June 2016 30 June 2015
Primary Secondary Primary Secondary
& Community Community & Specialist & Community Community & Specialist
Care Pharmacy Care Total Care Pharmacy Care Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------- ------------ --------- ------------- ------- ------------ --------- ------------- -------
Revenue 48,983 10,348 19,339 78,670 46,895 9,778 21,133 77,806
-------------------- ------------ --------- ------------- ------- ------------ --------- ------------- -------
Segmental operating
profit
as reported
internally 14,745 2,214 1,469 18,428 13,408 1,962 2,263 17,633
Development costs
capitalised 1,052 895 935 2,882 1,594 460 1,039 3,093
Amortisation of
development
costs (2,315) - (646) (2,961) (2,578) - (395) (2,973)
Amortisation of
acquired
intangible assets (527) (288) (2,505) (3,320) (396) (288) (2,505) (3,189)
Cost reduction
programme (412) (107) (1,633) (2,152) - - - -
-------------------- ------------ --------- ------------- ------- ------------ --------- ------------- -------
Segmental operating
profit/(loss) 12,543 2,714 (2,380) 12,877 12,028 2,134 402 14,564
-------------------- ------------ --------- ------------- ------- ------------ --------- ------------- -------
Group operating
expenses (736) (716)
Operating profit 12,141 13,848
Net finance costs (231) (230)
Share of result of
associate - (172)
Share of result of
joint
venture 271 106
-------------------- ------------ --------- ------------- ------- ------------ --------- ------------- -------
Profit before
taxation 12,181 13,552
-------------------- ------------ --------- ------------- ------- ------------ --------- ------------- -------
Revenue excludes intra-group transactions on normal commercial
terms from the Primary & Community Care segment to the
Community Pharmacy segment totalling GBP2,405,000 (2015 H1:
GBP1,809,000), from the Primary & Community Care segment to the
Secondary & Specialist Care segment totalling GBP131,000 (2015
H1: GBP441,000), and from the Secondary & Specialist Care
segment to the Primary & Community Care segment totalling
GBPnil (2015 H1: GBP32,000).
Revenue of approximately GBP56,246,000 (2015 H1: GBP55,784,000)
is derived from the NHS and related bodies. Revenue of GBP3,343,000
(2015 H1: GBP3,741,000) is derived from customers outside the
United Kingdom.
9. Revenue
Revenue is analysed as follows:
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
----------------------------------------- ---------- ---------- ------------
Licences 26,849 24,686 50,300
Maintenance and software support 18,850 18,626 37,887
Other support services 14,703 15,319 30,611
Training, consultancy and implementation 7,585 7,522 16,128
Hosting 6,425 6,637 13,075
Hardware 4,258 5,016 7,897
78,670 77,806 155,898
----------------------------------------- ---------- ---------- ------------
10. Income tax expense
The tax expense recognised reflects management estimates of the
tax charge for the period and has been calculated using the
estimated average tax rate of UK corporation tax for the financial
year of 20% (2015: 20.25%) and, in relation to deferred tax, at an
estimated average future rate of 18.9% (2015 H1: 20%).
The estimated impact of the future reduction in the UK
corporation tax rate, announced in the recent budget, to 17% in
2020, would be to reduce the Group's deferred tax liability by
GBP0.1m. As this reduction had not been substantively enacted as at
30 June 2016, the impact is therefore not reflected in these half
year financial statements.
11. Earnings per share (EPS)
The calculation of basic and diluted earnings per share is based
on the following earnings and numbers of shares:
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
Unaudited Unaudited Audited
Earnings GBP'000 GBP'000 GBP'000
---------------------------------------------------------- ---------- ---------- -----------
Basic earnings attributable to equity holders 9,351 10,414 4,543
Cost reduction programme 2,152 - -
Impairment of goodwill - - 16,183
Impairment of investment - - 2,317
Development costs capitalised (2,882) (3,093) (6,183)
Amortisation of development costs and acquired intangible
assets 6,281 6,162 12,806
Tax and non-controlling interest effect of above items (985) (598) (1,266)
---------------------------------------------------------- ---------- ---------- -----------
Adjusted earnings attributable to equity holders 13,917 12,885 28,400
---------------------------------------------------------- ---------- ---------- -----------
Number Number Number
Weighted average number of ordinary shares '000 '000 '000
---------------------------------------------------------- ---------- ---------- -----------
Total shares in issue 63,311 63,311 63,311
Shares held by Employee Benefit Trust (517) (597) (576)
---------------------------------------------------------- ---------- ---------- -----------
For basic EPS calculations 62,794 62,714 62,735
Effect of potentially dilutive share options 293 185 230
---------------------------------------------------------- ---------- ---------- -----------
For diluted EPS calculations 63,087 62,899 62,965
---------------------------------------------------------- ---------- ---------- -----------
Earnings per share Pence Pence Pence
---------------------------------------------------------- ---------- ---------- -----------
Basic 14.9 16.6 7.2
Adjusted 22.2 20.5 45.3
Basic diluted 14.8 16.6 7.2
Adjusted diluted 22.1 20.5 45.1
---------------------------------------------------------- ---------- ---------- -----------
12. Dividends
In relation to the 2015 financial year, an interim dividend of
10.6p was paid on 30 October 2015 amounting to GBP6,651,000
followed by a final dividend of 10.6p on 29 April 2016 amounting to
GBP6,656,000.
For 2016, the directors are proposing an interim dividend of
11.7p, which will be payable on 28 October 2016 to shareholders on
the register at 23 September 2016. This interim dividend, which
will amount to approximately GBP7,350,000, has not been recognised
as a liability in these half year financial statements.
13. Other intangible assets
Computer Computer
software software
Computer developed acquired
software for external on business Customer
used internally sale combinations relationships Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------------- ---------------- ------------- ------------- -------------- -------
Cost
At 1 January 2015 2,810 28,660 35,217 35,113 101,800
Additions 743 3,093 - - 3,836
---------------------------------------- ---------------- ------------- ------------- -------------- -------
At 30 June 2015 3,553 31,753 35,217 35,113 105,636
Additions 987 3,090 - - 4,077
Acquisition of businesses - - 844 928 1,772
---------------------------------------- ---------------- ------------- ------------- -------------- -------
At 31 December 2015 4,540 34,843 36,061 36,041 111,485
Additions 388 2,882 - - 3,270
Exchange differences 2 - - - 2
---------------------------------------- ---------------- ------------- ------------- -------------- -------
At 30 June 2016 4,930 37,725 36,061 36,041 114,757
---------------------------------------- ---------------- ------------- ------------- -------------- -------
Accumulated amortisation and impairment
At 1 January 2015 665 7,300 13,002 10,013 30,980
Charged in period 336 2,973 1,692 1,497 6,498
---------------------------------------- ---------------- ------------- ------------- -------------- -------
At 30 June 2015 1,001 10,273 14,694 11,510 37,478
Charged in period 368 3,324 1,777 1,543 7,012
---------------------------------------- ---------------- ------------- ------------- -------------- -------
At 31 December 2015 1,369 13,597 16,471 13,053 44,490
Charged in period 447 2,961 1,777 1,543 6,728
---------------------------------------- ---------------- ------------- ------------- -------------- -------
At 30 June 2016 1,816 16,558 18,248 14,596 51,218
---------------------------------------- ---------------- ------------- ------------- -------------- -------
Net book value
At 30 June 2016 3,114 21,167 17,813 21,445 63,539
At 31 December 2015 3,171 21,246 19,590 22,988 66,995
At 30 June 2015 2,552 21,480 20,523 23,603 68,158
At 1 January 2015 2,145 21,360 22,215 25,100 70,820
---------------------------------------- ---------------- ------------- ------------- -------------- -------
14. Change in net debt
At 31 December Finance At 30
2015 Cash flow costs June 2016
GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- -------------- --------- -------- ----------
Cash and cash equivalents 4,701 (133) - 4,568
Bank overdraft (6,457) 6,457 - -
Bank loans due within one year (5,402) 1,500 - (3,902)
Bank loans due after one year (1,951) 2,000 (49) -
Net (debt)/cash (9,109) 9,824 (49) 666
------------------------------- -------------- --------- -------- ----------
15. Event after the reporting period
On 2 July 2016, the Group disposed of its minority investment in
Pharmacy2U for net cash proceeds of GBP1.5m.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR LBMBTMBAMTJF
(END) Dow Jones Newswires
September 02, 2016 02:00 ET (06:00 GMT)