EMIS Group plc Half year results presentation 2018 Introduction - - PowerPoint PPT Presentation

EMIS Group plc Half year results presentation 2018

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Introduction

Encouraging first half performance

• Introduction
• Financial review
• Operational review
• Summary and outlook

Andy Thorburn Chief Executive Officer Peter Southby Chief Financial Officer

EMIS Group plc Half year results presentation for the six months ended 30 June 2018

EMIS Group is moving to the next stage of its development. This is a demanding yet encouraging time for the business and we look forward to meeting and exceeding our customers’, users’ and shareholders’ expectations over time.

Financial review

Peter Southby Chief Financial Officer

Financial highlights

Encouraging H1 progress in line with expectations

Total revenue

£84.5m

+7%

Recurring revenue

£69.4m

+4%

Adjusted operating profit1

£17.6m

+1%

Adjusted operating profit excluding Patient

£19.3m

+8%

• 1. Excludes the capitalisation and amortisation of development costs, amortisation of acquired intangibles and exceptional items. EPS calculations also adjust for the related tax

and non-controlling interest impact.

• 2. Stated after deduction of capitalised development costs of £2.8m (2017 H1: £2.1m) and of the cash impact of exceptional items of £1.4m (2017 H1: £2.7m).

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2017 H1: £79.2m 2017 H1: £66.8m 2017 H1: £17.5m 2017 H1: £17.8m

Net cash

£32.3m

2017 H1: £10.5m

+£21.8m

Adjusted EPS1

22.2p

2017 H1: 22.2p

unchanged

Interim dividend

14.2p

2017 H1: 12.9p

+10%

Cash generated from operations2

£32.2m

+24%

2017 H1: £26.0m

EMIS Group plc Half year results presentation for the six months ended 30 June 2018

EMIS Group plc Half year results presentation for the six months ended 30 June 2018 5

Financial review – income statement

Solid financial performance

£m H1 2017 H2 2017 H1 2018

Revenue 79.2 81.2 84.5 Adjusted operating profit 17.5 19.9 17.6 Capitalised development costs 2.2 2.2 2.8 Amortisation – development costs (3.3) (4.2) (4.2) Amortisation – acquired intangibles (3.4) (3.3) (3.3) Finance costs (0.2) (0.1) (0.2) Joint venture 0.4 0.2 0.3 Exceptionals (2.5) (14.5)

• Profit before tax

10.7 0.2 13.0 Tax (2.1)

‐

(2.4) Non-controlling interest (0.4) (0.4) (0.5) Earnings 8.2 (0.2) 10.1 Adjusted EPS 22.2p 25.0p 22.2p Reported EPS 13.1p (0.3p) 16.1p

• Revenue increase all organic, with growth in all segments and boost from Northern Territory (NT) exit arrangements.
• Heavier cost base in responding to NHS Digital service level reporting issues.
• Adjusted operating profit up by 1% but excluding Patient investment up 8%.
• No exceptionals in period (exceptionals in 2017 relate to reorganisation and to NHS Digital service level provision).
• 2018 effective tax rate 19.1%.

EMIS Group plc Half year results presentation for the six months ended 30 June 2018 6

Financial review – segmental analysis

Balance of growth and investment

Primary, Community & Acute Care Community Pharmacy Specialist & Care Patient Total

£m H1 2017 H2 2017 H1 2018 H1 2017 H2 2017 H1 2018 H1 2017 H2 2017 H1 2018 H1 2017 H2 2017 H1 2018 H1 2017 H2 2017 H1 2018

Revenue 58.5 59.1 60.6 10.9 11.0 12.3 8.4 9.6 10.1 1.4 1.5 1.5 79.2 81.2 84.5 Recurring revenue 49.2 47.2 48.6 9.1 9.8 10.2 8.3 9.4 10.0 0.2 0.3 0.6 66.8 66.7 69.4 Adjusted segmental profit 16.1 18.8 16.1 2.6 3.0 3.5 (0.1) 0.3 0.4 (0.3) (1.6) (1.7) 18.3 20.5 18.3 Group costs (0.8) (0.6) (0.7) Adjusted operating profit 17.5 19.9 17.6 Adjusted operating margin

27.5% 31.8% 26.6% 23.8% 27.6% 28.5% (0.7%) 2.0% 3.7% (22.6%)

(107.3%) (111.1%)

22.1% 24.5% 20.8% Development costs capitalised 2.2 1.6 1.7 – – – – – – – 0.6 1.1 2.2 2.2 2.8 Amortisation of development costs (3.2) (4.1) (3.8) (0.1) (0.1) (0.3) – – – – – (0.1) (3.3) (4.2) (4.2) Amortisation of acquired intangible assets (2.8) (2.7) (2.7) (0.3) (0.3) (0.3) (0.3) (0.3) (0.3) – – – (3.4) (3.3) (3.3)

• Primary, Community & Acute Care: NT revenue helped to fund NHS Digital

recovery plan costs and maintain profit levels.

• Community Pharmacy: market growth as ProScript Connect roll-out continues

at pace.

• Specialist & Care: further operational improvement being delivered.
• Patient: results reflect investment in building platforms for future growth.

EMIS Group plc Half year results presentation for the six months ended 30 June 2018 7

Financial review – revenue analysis

Strong recurring mix

£m Nature H1 2017 H2 2017 H1 2018

Recurring 66.8 66.7 69.4 Non-recurring 12.4 14.5 15.1 Total 79.2 81.2 84.5 Software and software licences mainly recurring 27.4 27.7 32.0 Maintenance and software support recurring 20.6 20.8 19.7 Other support services mainly recurring 16.1 16.4 18.1 Hosting recurring 5.6 6.0 5.8 Training/consultancy/implementation non-recurring 5.5 6.9 4.5 Hardware non-recurring 4.0 3.4 4.4 Total 79.2 81.2 84.5

• Recurring revenue growth delivered again, providing solid foundation and visibility.
• Software and software licences growth from market and NT sale.
• Reduction in maintenance and software support from exiting legacy products.
• EMIS Care driving higher other support services revenues.
• Lower levels of new business activity in Acute Care reflected in Training/consultancy/implementation.

EMIS Group plc Half year results presentation for the six months ended 30 June 2018 8

Financial review – cash flow

Strong positive cash flows in the period

£m H1 2017 H2 2017 H1 2018

Operating profit before exceptionals 13.0 14.6 12.9 Depreciation and amortisation 10.0 10.8 11.0 Working capital 7.4 (2.4) 12.1 Share-based payments 0.4 0.2 0.4 Cash flow from operating activities 30.8 23.2 36.4 Development costs capitalised (2.1) (2.3) (2.8) Adjusted cash from operations 28.7 20.9 33.6 Cash cost of exceptionals (2.7) (2.5) (1.4) Cash from operations 26.0 18.4 32.2 Net capital expenditure (3.6) (3.0) (3.6) Transactions in own shares (0.1) 0.1 0.2 Tax (3.7) (4.4) (2.2) Dividends (7.4) (8.1) (8.1) Other (0.3) 0.5 (0.2) Change in net cash 10.9 3.5 18.3 Closing net cash 10.5 14.0 32.3

• Reported cash from operations up 24% to £32.2m.
• Adjusted cash from operations (before exceptionals) up 17% to

£33.6m.

• Strong working capital inflow as usual in H1.
• Cash cost of exceptionals relates to reorganisation costs and NHS

Digital service level reporting provision utilisation.

• Capex unchanged and is principally related to computer

equipment.

• Cash tax reduced due to tax deductibility of 2017 provision

reflected in reduced instalments paid in H1 2018.

• Net cash at £32.3m (£18.3m improvement from last year end).

EMIS Group plc Half year results presentation for the six months ended 30 June 2018 9

Financial review – balance sheet

Solid balance sheet gives confidence

£m H1 2017 H2 2017 H1 2018

Goodwill 50.3 50.3 50.3 Acquired intangible assets 33.1 29.7 26.4 Development costs 19.8 17.9 16.5 Property, plant and equipment and purchased intangible assets 24.2 25.0 24.0 Joint venture and other current assets 44.8 43.0 44.4 Deferred income (37.4) (33.7) (42.6) Other current liabilities (21.3) (20.2) (24.0) Provision

• (11.2)

(10.5) Deferred tax (8.4) (6.8) (5.8) Net cash 10.5 14.0 32.3 Net assets 115.6 108.0 111.0

• Strong debt-free balance sheet with £32.3m net cash.
• Debt facilities extended to June 2021 (£30.0m RCF/overdraft plus

£30.0m accordion).

• Increased deferred income provides good revenue visibility.
• Provision reflects estimate of service level reporting charges

expected to be paid during H2.

• Cost of interim dividend £8.9m.

EMIS Group plc Half year results presentation for the six months ended 30 June 2018 10

Financial review – financial guidance and trends

Patient

• Expect H2 result to be at broadly similar

level to H1.

Staff costs

• Increased staff levels and investment

expected to feed through into higher H2 and 2019 cost.

Development costs

• Expect amortisation to continue to track

ahead of capitalisation, although increased Patient/EMIS Web upgrade costs likely to narrow gap in H2.

Contract assets

• Deferred income release and related

depreciation to remain similar in H2 and 2019.

Share-based payments

• No significant change in run rate charge

expected in H2.

Tax rate

• Expected to remain close to UK statutory

rate.

• Cash tax to increase in H2 and also in

2020 (transitional year to new HMRC payment arrangements).

Capital expenditure

• Expect current run rate to be maintained

for 2018 and into 2019.

Working capital

• Expect seasonal reversal of H1 working

capital in H2 with broadly neutral full year position.

Dividends

• 10% increase for interim dividend (£8.9m

in November) historically matched for final dividend.

IFRS 16 leases

• Will result in most of the Group’s leases

(vehicle and property) coming onto the balance sheet in 2019.

• Expected new balance sheet asset
• c. £7.0m and lease liability c. £8.0m so

£1.0m reduction in net assets on transition.

• Expected net neutral impact on income

statement with increase in depreciation and reduction in operating expenses of c. £1.5-£2.0m, together with small additional finance cost.

Factors affecting future financial performance

Operational review

Andy Thorburn Chief Executive Officer

EMIS Group plc Half year results presentation for the six months ended 30 June 2018 12

H1 2018 overview – encouraging progress

• Encouraging top line growth and recurring revenues.
• Underlying profit performance moving forward

positively.

• NHS Digital settlement expected to be within provision

levels.

• Leading market share positions.
• Good progress on legacy issues.
• Improved execution overall, especially with key

products and market developments.

EMIS Group plc Half year results presentation for the six months ended 30 June 2018 13

Encouraging progress with key products and market developments

Primary, Community & Acute Care

Primary – monthly service packs delivering 1,175 software enhancements and fixes

Specialist & Care

Continued our improved service performance

Community Pharmacy

Continued the successful roll-

• ut of ProScript Connect

Patient

Launch of Patient Access 2.0

Primary, Community & Acute Care

Community – released new Windows-based mobile app for community clinicians on the go

Primary, Community & Acute Care

Acute – released a software upgrade to Symphony

Primary, Community & Acute Care

Partners – released new GP analytics platform in limited availability

Primary, Community & Acute Care

Egton – launched Lloyd George patient record digitisation product

Primary Care: Acute Care Pharmacy: Community Care: Acute Care A&E: Community Pharmacy: Specialist & Care EMIS Care:

EMIS Group plc Half year results presentation for the six months ended 30 June 2018 14

• Primary Care stable post SLA issue.
• Continued progress in Community Care.
• Improvements in Acute Care.
• Community Pharmacy retained leading

position.

• Specialist & Care recovery continues.
• Patient Access KPIs improving

No change

56%

at to to at

+1% 18% +3% 32%

No change

26%

at

19%

31 December 2017: 56% 31 December 2017: 29% 31 December 2017: 17% 31 December 2017: 19% 31 December 2017: 37%

Market shares increased or maintained

31 December 2017: 26%

37%

No change No change

at

H1 2018 overview – maintained market leading positions

EMIS Group plc Half year results presentation for the six months ended 30 June 2018 15

Improvement in Patient Access usage

Bi Big im improvement in in engagem engagement and and lo logi gins 201 2018 H1 H1 vs vs 2017 2017 H1 H1

H1 H1 2017 2017 H1 H1 2018 2018 % In Increase YoY Avg. Monthly Users 1,351,326 1,813,901 34% YoY Logins 27,201,000 32,881,310 21% YoY view medical record 8,261,034 12,313,881 49% YoY Appts booked 2,618,430 2,984,130 14% YoY Rpt Prescriptions 5,812,257 7,393,261 27% Volume of nominated pharmacies N/A 74,106 N/A

RO ROSU SU (Engl ngland) nd) monthly monthly tra transactio ions ha has bee been grow growin ing at at 2. 2.3% mont monthly hly

• ver
• ver th

the la last 18 18 mont months hs

3.3m 3.2m 3.7m 3.5m 3.7m 3.6m 3.7m 3.8m 3.8m 4.1m 4.1m 3.7m 4.7m 4.2m 4.8m 4.7m 4.6m 4.9m

3.0m 3.2m 3.4m 3.6m 3.8m 4.0m 4.2m 4.4m 4.6m 4.8m 5.0m

Monthly CAGR = 2.3%

EMIS Group plc Half year results presentation for the six months ended 30 June 2018 16

Focus on the future – strategic development for the next stage of growth

• Focus on moving to the next stage of business growth

by identifying long term market opportunities.

• Focus on securing GP IT Futures in England.
• Integrated care in the NHS continues to be important.
• Pharmacy and electronic prescribing major UK topics.
• New partnering and care models will add increasing

value to the NHS and private sector.

• Technology roadmap and innovation are key enablers

to improve models of care.

EMIS Group plc Half year results presentation for the six months ended 30 June 2018 17

Summary and outlook – remain confident in delivering the Board’s expectations for the year

EMIS Group is moving to the next stage of its development. This is a demanding yet encouraging time for the business and we look forward to meeting and exceeding our customers’, users’ and shareholders’ expectations over time.

• Encouraging H1 performance with good visibility for the rest of the year.
• Focus on improving execution continues.
• Legacy issues being resolved.
• Focus turning to future growth.

Questions?

Appendix

EMIS Group plc Half year results presentation for the six months ended 30 June 2018 20

Strong market share positions maintained

Primary Care:

EMIS Health 56% TPP 30% Vision (Cegedim) 13% Others 1%

Specialist Care:

EMIS Health 76% Health Intelligence 15% Health Information Systems 8%

Community Pharmacy:

EMIS Health 37% Cegedim 37% Lloyds 9%

EMIS Group 2018 H1 revenue

Source: EMIS Group and competitor data estimated based on company records as at 30 June 2018.

Care:

NHS 58% EMIS Care 26% Health intelligence 16%

Patient Community Care:

TPP 23% EMIS Health 18% Servelec 9% DXC Technology 8%

Acute Care:

Pharmacy JAC 46% EMIS Health 32% HP Enterprise Services 3% A&E DXC Technology 23% EMIS Health 19% Cerner 12% System C 11%

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Five-year Group financial summary

• 1. Excludes exceptional items, the capitalisation and amortisation of development costs, and the amortisation of acquired intangibles. EPS calculations also adjust for the related

tax and non-controlling interest impact.

• 2. Stated after deduction of capitalised development costs and of the cash impact of exceptional items.

EMIS Group plc Half year results presentation for the six months ended 30 June 2018