EMIS Group plc Half year results presentation 2018
Introduction Encouraging first half performance • Introduction • Financial review • Operational review Andy Thorburn Peter Southby Chief Executive Officer Chief Financial Officer • Summary and outlook 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. EMIS Group plc Half year results presentation for the six months ended 30 June 2018 2
Financial review Peter Southby Chief Financial Officer
Financial highlights Encouraging H1 progress in line with expectations Total revenue Recurring revenue Adjusted operating Adjusted operating profit 1 profit excluding Patient £84.5m £69.4m £17.6m £19.3m +7% +4% +1% +8% 2017 H1: £79.2m 2017 H1: £66.8m 2017 H1: £17.5m 2017 H1: £17.8m Net cash Adjusted EPS 1 Interim dividend Cash generated from operations 2 £32.3m 22.2p 14.2p £32.2m +£21.8m unchanged +10% +24% 2017 H1: £10.5m 2017 H1: 22.2p 2017 H1: 12.9p 2017 H1: £26.0m 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). EMIS Group plc Half year results presentation for the six months ended 30 June 2018 4
Financial review – income statement Solid financial performance H1 H2 H1 £m 2017 2017 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 (0.1) (0.2) (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 5
Financial review – segmental analysis Balance of growth and investment Primary, Community & Community Specialist Acute Care Pharmacy & 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%) 22.1% 24.5% 20.8% (107.3%) (111.1%) 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 (2.8) (2.7) (2.7) (0.3) (0.3) (0.3) (0.3) (0.3) (0.3) – – – (3.4) (3.3) (3.3) assets • 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 6
Financial review – revenue analysis Strong recurring mix H1 H2 H1 £m Nature 2017 2017 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 7
Financial review – cash flow Strong positive cash flows in the period H1 H2 H1 £m 2017 2017 2018 • Reported cash from operations up 24% to £32.2m. Operating profit before exceptionals 13.0 14.6 12.9 Depreciation and amortisation 10.0 10.8 11.0 • Adjusted cash from operations (before exceptionals) up 17% to £33.6m. Working capital 7.4 (2.4) 12.1 • Strong working capital inflow as usual in H1. Share-based payments 0.4 0.2 0.4 • Cash cost of exceptionals relates to reorganisation costs and NHS Cash flow from operating activities 30.8 23.2 36.4 Digital service level reporting provision utilisation. Development costs capitalised (2.1) (2.3) (2.8) • Capex unchanged and is principally related to computer Adjusted cash from operations 28.7 20.9 33.6 equipment. Cash cost of exceptionals (2.7) (2.5) (1.4) • Cash tax reduced due to tax deductibility of 2017 provision reflected in reduced instalments paid in H1 2018. Cash from operations 26.0 18.4 32.2 • Net cash at £32.3m (£18.3m improvement from last year end). 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 EMIS Group plc Half year results presentation for the six months ended 30 June 2018 8
Financial review – balance sheet Solid balance sheet gives confidence H1 H2 H1 £m 2017 2017 2018 • Strong debt-free balance sheet with £32.3m net cash. Goodwill 50.3 50.3 50.3 Acquired intangible assets 33.1 29.7 26.4 • Debt facilities extended to June 2021 (£30.0m RCF/overdraft plus £30.0m accordion). Development costs 19.8 17.9 16.5 • Increased deferred income provides good revenue visibility. Property, plant and equipment and 24.2 25.0 24.0 purchased intangible assets • Provision reflects estimate of service level reporting charges expected to be paid during H2. Joint venture and other current assets 44.8 43.0 44.4 • Cost of interim dividend £8.9m. 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 EMIS Group plc Half year results presentation for the six months ended 30 June 2018 9
Financial review – financial guidance and trends Factors affecting future financial performance Patient Share-based payments Dividends • Expect H2 result to be at broadly similar • No significant change in run rate charge • 10% increase for interim dividend (£8.9m level to H1. expected in H2. in November) historically matched for final dividend. Staff costs Tax rate IFRS 16 leases • Increased staff levels and investment • Expected to remain close to UK statutory expected to feed through into higher H2 rate. • Will result in most of the Group’s leases and 2019 cost. (vehicle and property) coming onto the • Cash tax to increase in H2 and also in balance sheet in 2019. 2020 (transitional year to new HMRC Development costs payment arrangements). • Expected new balance sheet asset c. £7.0m and lease liability c. £8.0m so £1.0m reduction in net assets on • Expect amortisation to continue to track Capital expenditure transition. ahead of capitalisation, although increased Patient/EMIS Web upgrade • Expected net neutral impact on income • Expect current run rate to be maintained costs likely to narrow gap in H2. statement with increase in depreciation for 2018 and into 2019. and reduction in operating expenses of c. Contract assets £1.5-£2.0m, together with small additional Working capital finance cost. • Deferred income release and related • Expect seasonal reversal of H1 working depreciation to remain similar in H2 and capital in H2 with broadly neutral full year 2019. position. EMIS Group plc Half year results presentation for the six months ended 30 June 2018 10
Operational review Andy Thorburn Chief Executive Officer
Recommend
More recommend
