[PPT] - EMIS Group plc H1 2013 Results Presentation Chris Spencer CEO PowerPoint Presentation

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Healthcare without boundaries

EMIS Group plc H1 2013 Results Presentation

Chris Spencer – CEO Peter Southby – CFO

September 2013

SLIDE 2

Introduction

Chris Spencer CEO

SLIDE 3

Agenda

Introduction

Chris Spencer

Financial Review

Peter Southby

Operational Review

Chris Spencer

Summary and Outlook

Chris Spencer

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SLIDE 4

Financial review

Peter Southby CFO

SLIDE 5

Financial highlights

Total revenue of £47.1m (2012 H1: £42.3m), up 11%
Recurring revenue of £36.0m (2012 H1: £34.4m), up 5%
Group operating profit:
Reported - £12.1m (2012 H1: £12.1m)
Adjusted(1) - £11.6m (2012 H1: £11.5m)
Net cash generated from operations(2) of £19.0m (2012 H1:

£21.7m)

Net cash at £14.8m (2012 H1: £17.7m)
EPS:
Reported – 15.62p (2012 H1: 16.32p)
Adjusted(1) – 14.89p (2012 H1: 15.58p)
Interim dividend 8.0p (2012 H1: 7.1p), up 13%

(1)

Excludes capitalisation and amortisation of development costs and amortisation of acquired intangibles. For EPS also adjusts for related tax impact.

(2)

Stated after deduction of development costs capitalised of £2.7m (2012 H1: £2.2m).

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£m H1 2012 H2 2012 H1 2013

% Change

Vs. H1 2012

% Change

Vs. H2 2012

Revenue 42.3 44.0 47.1

11% 7%

Adjusted operating profit 11.5 11.3 11.6

2%

Capitalised development costs 2.2 3.1 2.7 Amortisation (1.7) (1.9) (2.2) Exceptionals/other 0.1 (0.5) (0.1) Profit before tax 12.1 12.0 12.0 Tax (2.3) (2.3) (2.7) MI/other (0.3) (0.3) (0.2) Earnings 9.5 9.4 9.1 Adjusted EPS 15.6p 15.2p 14.9p

4%
2%

Reported EPS 16.3p 16.2p 15.6p

4%
3%

Income statement

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Revenue increase driven by EMIS Web roll-out
Adjusted operating profit ahead despite 22% staff costs increase and reduced Defence revenues
2013 underlying tax rate 22% excluding deferred tax rate change
EPS comparatives affected by deferred tax rate change in 2012 – H2 2013 similar effect anticipated

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Segmental analysis

£m (rounded) EMIS RX Total

% Change

Vs. H1

„12 % Change

Vs. H2

„12

H1 „12 H2 „12 H1 „13 H1 „12 H2 „12 H1 „13 H1 „12 H2 „12 H1 „13

Revenue

34.2 35.6 38.7 8.1 8.4 8.4 42.3 44.0 47.1

11% 7%

Recurring revenue

28.2 28.5 29.0 6.2 6.5 7.0 34.4 35.0 36.0

5% 3%

Segmental

perating profit

11.0 11.5 10.9 1.3 1.7 1.6 12.3 13.2 12.5

Capitalised development costs

(2.2) (3.1) (2.7)

(2.2)

(3.1) (2.7)

Amortisation

1.2 1.5 1.7 0.4 0.4 0.5 1.6 1.9 2.2

Adjusted segmental profit

10.0 9.9 9.9 1.7 2.1 2.1 11.7 12.0 12.0

Group costs

(0.2) (0.7) (0.4)

Adjusted operating profit

11.5 11.3 11.6

2%

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EMIS growth driven by EMIS Web roll-out including hosting, training but lower Defence revenues
Cost base scaled up with average staff numbers 20% higher vs H1 2012
RX benefited from growth in estate and Multepos acquisition

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Core business analysis

£m H1 2012 % of sales H2 2012 % of sales H1 2013 % of sales

% Change

Vs. H1

2012 % Change

Vs. H2

2012

Licenses & software support 17.8

42%

18.6

42%

19.1

40% 7% 3%

Other support services 9.9

23%

12.2

28%

11.6

25% 17%

5%

Hosting 3.9

9%

5.1

12%

6.3

13% 62% 24%

Hardware and training 7.0

17%

6.1

14%

7.9

17% 13% 30%

Other 3.7

9%

2.0

4%

2.2

5%

41%

10%

Total 42.3

100%

44.0

100%

47.1

100% 11% 7%

Recurring 34.4

81%

35.0

80%

36.0

76% 5% 3%

Non-recurring 7.9

19%

9.0

20%

11.1

24% 41% 23%

Total 42.3

100%

44.0

100%

47.1

100% 11% 7%

Recurring revenue growth in both EMIS and RX
Non-recurring revenue growth in Egton Network Services, Training
Growth in hosting and training driven by EMIS Web roll-out
Other includes Defence business

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SLIDE 9

Cash flow

£m H1 2012 H2 2012 H1 2013 Operating profit 12.1 12.1 12.1 Depreciation and amortisation 4.0 4.5 5.1 Working capital 7.8 (7.8) 4.5 Cash flow from operating activities 23.9 8.8 21.7 Development costs capitalised (2.2) (3.1) (2.7) Cash from operations 21.7 5.7 19.0 Business combinations (0.8)

(0.7)

Net capex (5.9) (6.9) (5.2) Transactions in own shares 0.2 (2.0) 0.2 Tax paid (1.9) (2.7) (2.1) Dividends (3.6) (4.1) (4.1) Change in net cash 9.7 (10.0) 7.1 9

Working capital impact of NHS

reorganisation resolved post period

Cash from operations at £19.0m
Business combinations for Multepos

acquisition (Digital Healthcare £3.1m post period)

Capex includes:
Hosting assets (£2.6m)
Warehouse purchase (£1.5m)
Motor vehicles (£0.5m)
Net cash increased to £14.8m

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Balance sheet

£m H1 2012 H2 2012 H1 2013 Goodwill 22.0 22.0 22.6 Other intangible assets 29.1 30.8 31.6 Property, plant & equipment 18.4 22.1 24.1 Associate and other current assets 17.0 19.2 23.8 Deferred income (22.0) (15.9) (24.6) Other current liabilities (16.6) (14.3) (15.1) Deferred tax (7.5) (7.5) (7.6) Net cash 17.7 7.7 14.8 Net assets 58.1 64.1 69.6 10

Strong balance sheet with £17.8m in

cash/£3.0m debt

Goodwill on Multepos acquisition
Investment in PPE slowing
Temporary debtor increase now

reversed

Increase in deferred income provides

good revenue visibility

Deferred tax balance doesn‟t yet

reflect future corporation rate change to 20%

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Financial Guidance and Trends

Tax rate:
Impact of deferred tax rate change in H2 (c. £1.0m)
Presentational change with “Above the line” R&D tax credits
Development costs:
Continued capitalisation only where IFRS criteria met
Amortisation increasing with EMIS Web roll-out
Share-based payment charge to increase with recent awards and Remuneration Committee

review of senior incentivisation

Capex reduced in H2, together with improved debtor position, expected to produce positive

cash flow despite usual seasonality

Digital Healthcare revenue c. £3.4m p.a., expecting double-digit margin in 2014
Overall H2 performance expected to be stronger than H1, driven by EMIS segment
2014 will see reduction in the revenue and costs associated with EMIS Web roll-out

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SLIDE 12

Operational Review

Chris Spencer CEO

SLIDE 13

Operational Highlights

UK GP software market leading position maintained:
UK market share 52.4% (5,170 GP practices) (2012 H2: 51.2% (5,113 GP Practices))
EMIS Web GP roll-out proceeding as planned - by the period end:
2,580 GP practices live (2012 H2: 1,635)
948 unfulfilled orders (2012 H2: 1,252)
1,663 practices in EMIS Web GP familiarisation service (2012 H2: 2,564)
New GP sites wins:
174 migrations from iSoft in England
Roll-out of EMIS Web in Wales begun
RX Systems:
High street pharmacy estate grown with market share of 34.9% (4,727 pharmacies) (2012 H2:

34.8% (4,595 pharmacies))

EMIS Web CCMH projects start to bear fruit e.g. in Glasgow
Healthcare Gateway pilots continue to turn to full agreements and TPP agreement

signed

Digital Healthcare acquisition concluded

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Operational review – EMIS GP systems

EMIS Web roll-out continues on plan
Business continues to perform well despite competition
UK market leading position extended
PCT to CCG transition managed
GP Systems of Choice framework agreement – extension in hand
Hub office in Scotland opened
iSoft/NHS Wales opportunities

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EMIS Web GP

Accelerated roll-out to GPs maintained:
2,580 GP practices live (2012 H2: 1,635)
948 unfulfilled orders (2012 H2: 1,252)
1,663 practices in EMIS Web GP familiarisation service (2012 H2:

2,564)

Total orders as at 5 September 2013: 3,625
Gross wins circa 220 practices
Gross losses circa 60 practices
West London 130 sites at risk
Maximum delivery capability of 200 EMIS Web practices and

likely average of 150 maintained

EMIS Web Mobile released

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Rx Systems

Estate grown with market share at

34.9% (4,727 pharmacies (2012 H2: 34.8% (4,595 pharmacies))

Since acquisition RX has almost

doubled its revenues, profits, customer base and market share

Acquired and successfully integrated

Multepos in January 2013

Piloted Medicine Manager sites in

EMIS Web GP

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EMIS Web CCMH & Integrated Care

Director of CCMH appointed and ring

fenced development and sales resource further strengthened

CCMH Pathfinder projects progressing

well but commercial return remains slower than expected

Glasgow project commenced
By period end, 202 (2012 H2:195)

healthcare services using EMIS Web for the delivery of integrated care

Digital Healthcare acquisition for £3.1m
Healthcare Gateway concludes

agreement with TPP

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SLIDE 18

Digital Healthcare

Leading provider of diabetic retinopathy screening and other
phthalmology-related solutions
England and Wales market share in excess of 75%
Strong position in profitable niche market adjacent to Group's core in GP

and Community Pharmacy core

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Matches cross-organisational

healthcare strategy

Group opportunities:
Hosted services
Full managed Diabetic

Retinopathy screening service

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NHS Mandate – EMIS Group at the fore

Foreword: “Never in its history has the NHS had to face such a profound shift in our needs and expectations. “An ageing population, rising costs of treatments, and a huge increase in the number of us with long-term, often multiple conditions are rewriting our relationship with health and care, all at a time of acute pressure on public finances.” Enhancing quality of life for people with long-term conditions “By 2018 nearly three million people, mainly older people, will have three or more conditions all at once. “By March 2015, we expect the Board to have made particular progress in four key areas: (i) involving people in their own care; (ii) the use of technology; (iii) better integration of services; and (iv) the diagnosis, treatment and care of those with dementia.”

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EMIS Group Integrated Products and Markets Strategy

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EMIS Group‟s strategy is to improve

patient health by providing cross-

rganisational healthcare systems
It will do that by providing “Enduring”

and “Supportive” products

Enduring products are required

despite political/structural change

Supportive products underpin

Enduring products

EMIS Group will act to exploit

integrated care opportunities in primary, community and other adjacent markets, whether by acquisition, partnering or strategic investment

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Summary

UK GP software market leading position

maintained

EMIS Web GP roll-out proceeding as

planned

RX Systems estate increased
EMIS Web CCMH projects start to bear

fruit

Healthcare Gateway agreements including

TPP

Digital Healthcare acquisition concluded

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Outlook

Trading in-line with management expectations

since the period end

Strong revenue visibility
EMIS Web GP accelerated roll-out continues
Continued development of EMIS Web into the

wider NHS

Exciting prospects delivering integrated care

systems

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EMIS Group is making significant progress towards delivery of its strategic vision of cross-organisational healthcare systems

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Q & A

SLIDE 24

APPENDICES

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EMIS GP market share by country

25 Country EMIS estate

%

InPS estate

%

TPP estate

%

iSoft estate

%

Other

%

Total England 4,331

53.8

1,319

16.4

2,090

26.0

150

1.9

154

1.9

8,044 Scotland 512

51.4

484

48.6

996

Wales 150

31.9

253

53.8

63

13.4

4

0.9

470 Northern Ireland 177

50.9

113

32.5

32

9.2

26

7.4

348 UK Total 5,170

52.4

2,169

22.0

2,090

21.2

245

2.5

184

1.9

9,858

(EMIS and competitor data estimated based on company records showing customers installed as at 30 June 2013)

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EMIS Web GP – Post Migration Survey

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How would you compare EMIS Web to your previous system?

50 100 150 200 250 Better Too early to tell Worse (blank) Grand Total

Survey source: EMIS internal post migration survey of all EMIS Web Sites going live in July 2013.

50 100 150 200 250 No Not yet Yes (blank) Grand Total

Would you recommend EMIS Web to another practice?

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EMIS Web GP – KLAS report Findings

KLAS interviewed providers from 102 GP practices to offer greater transparency into supplier system performance.

EMIS Web “rated highest of all fully rated GP solutions, and

customers are satisfied with the platform overall. “

“EMIS scored highest for their support due in part to their support
staff. One provider stated, „EMIS has been doing this for such a

long time, and they are pretty solid....It can‟t get any better than

that. We have complete continuity.‟
„The program is very easy to use. It has a lot of functionality,

including functionality for community health services. Also, it gives users the ability to write very powerful searches and reports. And I like the ability we have to provide a patient interface.‟

Over 90% of customers reported that their current supplier was

part to their long term plans”

Source: UK GP System Performance 2013. Making an Informed Decision. www.KLAS research.com

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Proven benefits

Safer patient care

“With the help of EMIS Web we are able to target specific groups of patients that we see regularly and proactively manage their care” Tony Oram, practice manager, Nottingham.

Improved clinical efficiency

“We‟re saving at least 10 minutes of nurse time per annual review” Pamela Taylor, practice nurse, Leeds.

Seamless migration

The simple move to EMIS Web saved Mike Tasker, informatics manager, Grimbsy, approximately two weeks: “I exported all our documents and templates into EMIS Web with just a couple of clicks.”

Access anywhere, at anytime

With EMIS Mobile you can view core elements of the system whatever the care setting. Nearly eight minutes per patient could be saved by using EMIS Mobile - that‟s 5.6 working days saved every year.

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Proven benefits

Reducing emergency admissions

NHS Oldham has built a risk-profiling database to help GPs identify and manage patients at risk of emergency admission, using data extracted from 47 practices.

Reducing health inequalities

Automated data extracts have helped public health nurses target children missing MMR vaccinations, seeing a rise in vaccination rates from 80 to over 95% - making East London and the City one of the highest performing boroughs in London.

Improving management of long-term conditions

GP practices across East London and the City have improved diabetic control, with a 6- 7% improvement in the recording of blood tests across the borough since implementing a call and recall programme.

Improved efficiency

Quarterly reporting and data collection for NHS Health Checks take 90% less time for NHS Stoke on Trent.

Optimised medications

Deliver more responsive, cost-effective care by using data extracts to identify and reduce prescribing waste spent on high-cost drugs and target high-cost patients.

Measuring performance against targets

In real-time, CCGs in London have built searches to see the immediate impact of specific initiatives like call and recall rates, rather than using out-of-date QOF data.

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EMIS Web:

England‟s most popular clinical system in primary care

SLIDE 31

EMIS Web:

for community, children‟s and mental health

SLIDE 32

EMIS Web:

for community, children‟s and mental health

PATIENTS BENEFITING:

IN BRISTOL IN NORTH MERSEY IN THE NORTH EAST & LONDON