Analyst Presentation 29 March 2010 1 EMIS Group Table of Contents - - PDF document

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Analyst Presentation 29 March 2010 1 EMIS Group Table of Contents - - PDF document

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healthcare without boundaries Analyst Presentation 29 March 2010 1 EMIS Group Table of Contents Page EMIS Group - Presentation Team 3 Investment Opportunity 4 Company Background and History 5 Current Products and Services 6

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1 healthcare without boundaries

Analyst Presentation

29 March 2010

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2 healthcare without boundaries

EMIS Group – Table of Contents

Page EMIS Group - Presentation Team 3 Investment Opportunity 4 Company Background and History 5 Current Products and Services 6 Products and Services – 2009 Income Breakdown 7 Revenue Model 8 EMIS – The Market Leader 9 The Healthcare IT Environment 10 EMIS Web – The Opportunity 11 EMIS Web – Revenue Model 12 EMIS Web – In Action 13 EMIS Web – Liverpool PCT Roll-out 14 Strategy and Opportunity 15 Financial Summary 16 Financials – Profit and Loss Account 17 Financials – Balance Sheet 18 Financials – Cash Flow 19 Summary 20 Appendices 21-29

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3 healthcare without boundaries

EMIS Group – Presentation Team

  • Sean Riddell, Chief Executive, 45

– BSc in Psychology – 20 years’ experience of healthcare IT – Joined EMIS in 1989 (CEO since 2006)

  • Phillip Woodrow, Finance Director, 62

– Chartered Accountant – Baker Tilly 1965-2008 (Partner since 1972) – Joined EMIS in April 2008 as Finance Director

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EMIS has been delivering healthcare to patients since 1987.

EMIS

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4 healthcare without boundaries

Investment Opportunity

  • Trusted, market-dominant healthcare software business
  • Profitable and highly cash generative
  • 20+ year track record of organic growth
  • High visibility of earnings with substantial recurring revenues
  • History of successful product development
  • Experienced management team
  • Clear growth strategy - organic + acquisition
  • Dividend paying

“Written by Doctors for Doctors”

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EMIS named best technology supplier of the year 2009 in the UK IT industry awards.

EMIS award win

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5 healthcare without boundaries

Company Background and History

  • Established in 1987
  • Based in Yorkshire
  • Canadian operations established 2005
  • 774 employees
  • UK market share of 52%
  • 2009 turnover of £58m; £15.8m EBIT*
  • Strong cash conversion

* IFRS

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“ EMIS has made the data sharing process simple. Feedback from the practices has been excellent.”

S ue Manifold, Midway Medical Cent re

EMIS PCS

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6 healthcare without boundaries

Current Products and Services

Hosting Other Hardware Sales and Training Support Services Software Licences GP Practices

Medical records Appointment booking Consultation mode Intelligent prescribing Decision support Installation Call centre support Maintenance Hardware Training 3rd party software Patient arrival screens Appointment recall screens Patient kiosks c13 million patient records in data centres CfH accredited (PCS WAN)

Supporting GPs’ management of cradle to grave electronic health records

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Over 2,000 practices are now actively using EMIS Access online services.

EMIS Access

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7 healthcare without boundaries

Products and Services – 2009 Income Breakdown

UK Revenue by Product/Service

Recurring revenues – £42.7m Other – £14.5m

75% 25%

Percentage of Recurring Revenues

Total - £57.2m

0% 50% 100% Other Recurring £40.4m 95% 53%

Gross Margin – £48.1m

£7.7m

Support Services – 27% Hardware sales and Training – 16% Hosting – 6% Other – 6% Software Licences – 45%

45% 27% 16% 6% 6%

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In December 2009, 500,000 patients logged in to EMIS Access.

EMIS Access

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8 healthcare without boundaries

Revenue Model

  • Average annual revenue per GP Practice of approximately £10,000

64% of customers have been with EMIS for >10 years

10 00 60 00 70 00 80 00 90 00 10 00 30 00 40 00 50 00 20 00 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000 £

Software Licences £4,700 Support Services £1,100 Other Recurring Income £1,700 Hardware Sales and Training £1,600 Other Sales £900

75% Recurring 25% Non-recurring

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Over one million repeat prescriptions requests were submitted

  • nline using

EMIS Access July

  • December

2009.

EMIS Access

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9 healthcare without boundaries

EMIS – The Market Leader

  • 39 million Electronic Patient Records on EMIS’ platform
  • Further opportunities for market share expansion:
  • Scotland / legacy system share erosion / PCT driven consolidation

1000 2000 3000 4000 5000 6000 7000 8000 9000

England Northern Ireland Scotland Wales EMIS InPS iSoft TPP Other

(Allocation of competitor data estimated)

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“ It has reduced the pressure on

  • ur reception

staff and given patients new services at their

  • fingertips. It’ s a

win-win.”

Malcolm S canlan, Windmill Healt h Cent re

EMIS Access

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10 healthcare without boundaries

The Healthcare IT Environment

  • The NHS National Programme for IT / Connecting for Health
  • Objective: national care record service – single, centralised patient record
  • Method : ruthless standardisation – “rip and replace”
  • Focused on hospital IT as the solution (not cradle to grave record)
  • Two LSPs withdrawn
  • Well documented issues surrounding delivery of LSP systems
  • £500m spending cuts for NPfIT
  • Outcome: classed now as a failed IT programme
  • New policy: “connect all” rather than “replace all”*
  • New opportunity: EMIS Web
  • Focus on cradle to grave record
  • Connecting healthcare professionals
  • Delivering efficiency and cost savings
  • NHS ordered “familiarisation service” in 2010

*NHS – Informatics Planning 2010/2011

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A total of 52 EMIS PCS Enterprise hosted systems host data for 2.9 million registered patients.

EMIS PCS Enterprise

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11 healthcare without boundaries

EMIS Web represents the future of healthcare software

EMIS Web – The Opportunity

  • Upgrade our existing GP practices in England to EMIS Web
  • NHS accreditation for GP use expected H2 2010, growth to be reflected in 2011
  • Convert non-EMIS GP practices
  • Penetrate new areas of NHS
  • Benefits
  • Shared cradle to grave record
  • Reduces waiting times
  • Saves admin time – cost saving
  • Reduces risk of errors – LIFE SAVING
  • Successful roll out to date
  • Liverpool – minor surgery wait times cut from 9 months to 1 day in some cases
  • Gateshead – primary care records of 206,000 patients accessible by out of hours clinicians
  • Tower Hamlets – physio team saving 7 admin hours per week
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EMIS Web now contains c13 million patient records.

EMIS Web

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12 healthcare without boundaries

EMIS Web - Revenue Model

  • 2012 illustrative average annual revenue per GP Practice of £13,000

10 00 60 00 70 00 80 00 90 00 10 00 30 00 40 00 50 00 20 00 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000 £

Software Licences Support Services Other Recurring Income Hardware Sales and Training Other Sales £800

78% Recurring 22% Non-recurring

EMIS Web = incremental revenue opportunity

11000 12000 13000

£3,500 Hosting and EMIS Web £300 £5,000 £1,400 £2,000

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“ The physiotherapy admin team is saving seven hours each week thanks to EMIS Web.”

Mark Caulfield, NHS Tower Hamlet s

EMIS Web

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13 healthcare without boundaries

EMIS Web – In Action

Real time, multidirectional, cost effective flow of information

Before EMIS Web After EMIS Web

Limited electronic information flow, slow and costly Diabetes Patient

Extended Primary Care Contact team

GP Specialist Nurse Dietician

£425 per seat pa

Psychologist Diabetic Specialist Podiatrist

Patient Record

Pharmacist

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Patients of the Liverpool minor surgery service have seen waiting times slashed from nine months to less than one day in some cases.

EMIS Web

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14 healthcare without boundaries

EMIS Web – Liverpool PCT Roll-out

Multidisciplinary Teams

Liverpool PCT Community Matrons EMIS: LV/PCS InPS Feed Messaging and/or Viewing iSOFT MMT End of Life GP System Primary Care Interfaces AED Diversion – Royal Liverpool Anti Coag Minor Surgery Outside of Hospitals Services – Primary & Community ABPI (April Go Live) Emergency Department – Royal Liverpool Walk-In Centres Weight Management Joint Injections Dermatology (April Go Live) ENT Gynaecology (April Go Live) North Mersey Clinical Pathways – spanning numerous Health and Social Care Services Out of Hours GP Child Health (V&I) COPD PCI Clinic Coronary Care Heart Emergency Centre Acute Medical Unit In Patient Out Patient Pharmacy Diabetes Heart Failure Cancer Treatment Rooms IV Therapy AED Diversion – Alder Hey Emergency Department – Alder Hey Emergency Department – Aintree Emergency Renal Surgical Assessment Unit Emergency Care Secondary Care Services

KEY Installed Underway Planned

Social Care / SAP Mental Health

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EMIS Web

Waiting times for ultrasound appointments have been slashed from nine months to two weeks because of EMIS Web streamlined appointment booking.

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15 healthcare without boundaries

Strategy and Opportunity

  • Growth of existing business
  • Scotland
  • Upgrades
  • New products
  • Replacement of legacy GP systems
  • Roll out of EMIS Web
  • Sale to other (non-GP) healthcare professionals
  • Conversion of current GP customer base over 2-4 year period
  • Addition of current non-EMIS GPs
  • Acquisitions - healthcare software and service providers
  • Overseas - Canada provides foothold in North American market
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Patient discharges from the Acute Medical Unit are quicker, with 2-4 hours a day saved not contacting practices for patient information.

EMIS Web

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16 healthcare without boundaries

Financial Summary

  • Growth business (despite NPfIT)
  • High visibility of earnings
  • c75% recurring revenues
  • Long-term growth trend
  • End user loyalty
  • Stable and secure customer base
  • Annual licence fees; quarterly invoicing

mainly in advance

  • Consistently strong cash generation
  • Healthy balance sheet

8 year sales history - UK GAAP 30.0 35.0 40.0 45.0 50.0 55.0 60.0 2002 2003 2004 2005 2006 2007 2008 2009 8 year EBITDA history - UK GAAP 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 2002 2003 2004 2005 2006 2007 2008 2009

NPfIT NPfIT

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“ Using EMIS Web means patient care can become safer and more efficient.”

Dr William Lumb, S edbergh Healt h Cent re

EMIS Web

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17 healthcare without boundaries

Financials – Profit and Loss Account

(all in £ millions) Year ended 31 December 2009 IFRS 2008 IFRS 2007 IFRS Turnover 57.7 55.4 48.5 EBITDA 20.1 10.1 7.0 EBITDA Margin 34.8% 18.2% 14.4% EBIT 15.8 5.9 5.1 EBIT Margin 27.4% 10.6% 10.5%

  • Growth in revenue driven primarily by increase in software licences / support fees
  • Strengthening EBITDA margin as costs reduce
  • Consistently profitable
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“ Our patients think the service is wonderful. We’ ve cut down

  • n call volumes

and queues at

  • reception. A

great result all round.”

Zoe Clarke, Melrose S urgery

EMIS Medicine Manager

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18 healthcare without boundaries

Financials – Balance Sheet

(all in £ millions) At 31 December 2009 IFRS 2008 IFRS 2007 IFRS Fixed assets 49.0 44.9 10.8 Current assets Cash at bank and in hand 5.2 6.1 25.1 Other current assets 8.2 6.7 6.7 Total current assets 13.4 12.8 31.8 Current liabilities (15.7) (16.1) (13.2) Long-term liabilities (35.3) (40.2)

  • Net assets

11.4 1.4 29.4

  • Low net working capital requirement
  • 10 year founder loan - £23 million - to be repaid in full on admission
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“ I am able to view patients’ records before

  • visiting. It’ s

timesaving and cost effective.”

S usan Tay, Liverpool PCT Provider S ervices

EMIS Web

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19 healthcare without boundaries

Financials – Cash Flow

(all in £ millions) At 31 December 2009 IFRS 2008 IFRS 2007 IFRS Cash generated from operations 19.9 10.9 1.2 Interest (2.6) (2.1) 1.6 Tax (3.1) (2.8) (1.2) Net capital expenditure (3.9) (1.2) (2.3) Software development (4.5)

  • Purchase of subsidiary
  • (30.9)
  • Net financing ex dividends

(6.6) 14.0

  • Dividends
  • (7.0)
  • Net decrease

(0.8) (19.0) (0.8) B/F at 1 January 6.1 25.1 25.9 C/F at 31 December 5.3 6.1 25.1

  • Highly cash generative
  • Free cash flow allows sensible dividend
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Up to eight hours a week are saved by community matrons using EMIS Web, enabling them to spend more time with patients.

EMIS Web

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20 healthcare without boundaries

Summary

  • Profitable and highly cash generative
  • Strength of market share
  • High visibility of earnings and substantial recurring revenues
  • Growth of existing business
  • Potential of EMIS Web
  • Dividend paying
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21 healthcare without boundaries

Appendices

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22 healthcare without boundaries

EMIS Group Structure

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23 healthcare without boundaries

The History of EMIS Group

1987: Development of core EMIS Software 2008: Roll out of EMIS Web commences (non GP) 1997: EMIS MoD GP systems contract signed 1998: Launch of LV ‐ text based version with GUI Interface 2006 EMIS Web Development starts August 2007: GPSoC Signed 2006: DMICP MoD Contract signed for both GP and Dental software

1987

1999/2002: Launch of EMIS PCS – Windows and MS SQL based GP product LAN then WAN 1999: Egton set up as separate trading division to concentrate on hardware support

2010

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24 healthcare without boundaries

Market Share

Country EMIS estate EMIS % InPS estate InPS % iSoft estate iSoft % TPP estate TPP % Other Other % England 4936 59.0% 1545 18.5% 832 9.9% 731 8.7% 321 3.8% Northern Ireland 149 40.8% 82 22.5% 72 19.7% 0% 62 17.0% Scotland 132 12.7% 203 19.6% 25 2.4% 0% 673 65.0% Wales 160 31.7% 242 47.9% 99 19.6% 2 0% 3 1% UK TOTAL 5377 52.4% 2072 20.2% 1028 10.0% 733 7.1% 1059 10.3% Country MOD Overseas Isle of Man Channel Islands EMIS Canada EMIS Web projects EMIS Non GP EMIS Dental (Non MOD) HMP Customer Number 634 4 13 16 26 140 108 2 36

Total:6356

Other areas Market Share by Geography

(Allocation of competitor data estimated)

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25 healthcare without boundaries

Market Share – Last 10 Years

GP Supplier Yr 1999 % Yr 2000 % Yr 2005 % Yr 2009 % EMIS

3,030 28% 3734 35% 5541 49% 5377 52.4%

InPS

1,871 17% 1683 16% 1695 15% 2072 20.2%

iSOFT

2,294 21% 2095 19% 1825 16% 1028 10.0%

GPASS

933 9% 922 9% 861 8% 673 6.6%

TPP

110 1% 733 7.1%

Other

2,748 25% 2378 22% 1361 12% 386 3.8%

UK Total 10876 10812 11393 10269 (Allocation of competitor data estimated)

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26 healthcare without boundaries

EMIS Award Wins

Finalist 2009

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27 healthcare without boundaries

ISO Accreditation

ISO 9001:2008 Tickit

MoD and Overseas & international

ISO 9001:2008

Egton

ISO 27001

Information Security Quality Management System EMIS including Egton

ISO 20000 IT Service Management

Egton

ISO 20000 IT Service Management

EMIS (Hosted product)

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28 healthcare without boundaries

EMIS Group - Probono

  • LV in use by Africaid medics
  • Qresearch.org
  • Qsurveillance.org
  • Qrisk.org
  • Signtranslate.com
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29 healthcare without boundaries

Barriers to Entry

  • Longevity of customer relationships – disincentive to move
  • Less expensive than competitor products
  • Dominant market share and consolidation of PCTs
  • Supplier accreditations
  • EMIS Web core development effort largely complete – significant

development costs for a new entrant

  • Data mobilisation benefits