TIDMEMIS
RNS Number : 6132Z
EMIS Group PLC
16 March 2017
16 March 2017
EMIS Group plc
("EMIS Group" or "the Group")
Final Results for the year ended 31 December 2016
EMIS Group plc (AIM: EMIS.L), the UK leader in connected
healthcare software and services, today announces its final results
for the year ended 31 December 2016.
Financial highlights
2016 2015 Change
Revenue
Total revenue GBP158.7m GBP155.9m +2%
Recurring revenue GBP128.5m GBP123.0m +4%
Operating profit
Adjusted(1) GBP38.8m GBP36.6m +6%
Reported GBP23.5m GBP11.4m +106%
Cash flow and net debt
Cash generated from operations(2) GBP38.0m GBP36.5m +4%
Net debt GBP0.4m GBP9.1m -GBP8.7m
Earnings per share
Adjusted(1) 49.4p 45.3p +9%
Reported 30.4p 7.2p +320%
Dividends
Proposed final 11.7p 10.6p +10%
Total for year 23.4p 21.2p +10%
(1) Excludes capitalisation and amortisation of development
costs, amortisation of acquired intangibles and exceptional items.
Operating exceptional items comprise cost reduction programme
charges of GBP3.6m (2015: GBPnil) and non-cash impairment charges
of GBP4.6m (2015: GBP18.5m). Earnings per share calculations also
adjust for the related tax and non-controlling interest impact.
(2) Stated after deduction of capitalised development costs of
GBP5.7m (2015: GBP6.2m) and of the cash impact of the cost
reduction programme of GBP3.1m (2015: GBPnil).
Operational highlights - solid financial performance with
improvement in all key metrics
-- Continued growth in revenue, recurring revenue, operating
profit and improved operating margin
-- Strong market share maintained across the Group and Child,
Community and Mental Health (CCMH) above target
-- Cost reduction measures and operational improvements within
Secondary Care complete with benefits seen in H2
-- Integration of Primary Care, CCMH, and Secondary Care begun at end of 2016
-- Growth plans for Patient Platform (Patient.info/Patient Access)
Primary & Community Care - strong financial performance
-- UK primary care market leading position maintained at 55% market share (2015: 55%)
-- EMIS Web roll-out programme progressing in Northern Ireland and Scotland in pre-procurement
-- CCMH market share of 16% (2015: 12%) exceeded full year
target despite slower rate of larger contract awards
Community Pharmacy - strong financial performance
-- Market leading share of the combined supermarket/independent
market increased to 37% (2015: 36%), expected to grow to close to
50% in 2018
-- Next generation dispensary pharmacy management product
(ProScript Connect) accredited throughout the UK and independent
pharmacy roll-out begun
-- Lloyds Pharmacy/AAH Pharmaceuticals ProScript Connect
acceptance testing expected to complete by Q2 2017 with accelerated
roll-out thereafter
Secondary & Specialist Care - mixed performance
-- Secondary Care largely in line with expectations after first half restructuring
-- Secondary Care NHS environment remains difficult to predict
but secured a number of important contract wins
-- Specialist Care contract wins of GBP19m and significant
implementation activity ongoing but profit held back by related
costs and operational inefficiencies
Current Trading & Outlook - in line with the Board's
expectations
-- Strong revenue visibility with 81% recurring revenue
-- Solid order books and pipelines across every segment
-- Structural re-organisation, in Primary Care, CCMH, and
Secondary Care, to improve efficiency and better align the Group
and its customers
-- Responding positively to political and economic uncertainty
-- Growth in CCMH, EMIS Care and Community Pharmacy markets with
further opportunities in new models of care and Patient
Platform
Chris Spencer, Chief Executive Officer of EMIS Group, said:
"Overall our businesses continue to deliver results in line with
our expectations. This is despite headwinds created by the NHS
funding gap which create a difficult operating environment for the
Group with delays to the pace and level of procurement
activity.
We remain clear market leaders in Primary Care and have again
increased our market share in CCMH. Our new Community Pharmacy
product is being rolled out into independent pharmacies and
implementation of the AAH/Lloyds contract will see our market share
grow close to 50%.
The NHS's plans to bridge its funding gap continue to cause
sluggishness in immediate discretionary procurements. However, that
planning process highlights the Group's unique ability to help
bridge the gap. To quote the recent Wachter Report* commissioned by
Jeremy Hunt, Secretary of State for Health:
'In order for the National Health Service to continue to provide
a high level of healthcare at an affordable cost it simply must
modernise and transform. ... But none of the changes are likely to
be as sweeping, as important, or as challenging as creating a fully
digitised NHS.'
In light of the proactive operational steps we are taking,
including structural reorganisation to improve efficiency and
better align the Group with its customer base, investment in a
patient-centred digital platform, and continued strong revenue
visibility alongside a solid order book and pipeline, we remain
confident in overcoming short term headwinds and securing a
positive outlook in 2017 and beyond."
(*) Making IT Work: Harnessing the Power of Health Information
Technology to Improve Care in England
There will be an analyst meeting today at 9.30am at Numis
Securities, 10 Paternoster Square, London EC4M 7LT. Please contact
Francesca Rommel at MHP Communications on 020 3128 8838,
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 care services. EMIS Group
helps healthcare professionals 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 & Community Care, as the UK leader in clinical
management systems for healthcare providers and commissioners. EMIS
Health products, including the flagship EMIS Web, hold over 40
million patient records and are used by more than 100,000
professionals in nearly 6,000 healthcare organisations.
-- Secondary & Specialist Care, as 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.
-- Community Pharmacy, with the UK's single most used integrated
community pharmacy and retail system.
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, hardware and engineering services, and non-clinical
software into health and social care.
-- under the EMIS Care brand, providing healthcare screening
programmes such as diabetic eye screening.
CHIEF EXECUTIVE'S OVERVIEW
Overall, performance for the year was in line with the Board's
expectations with strong profitability and cash generation. The
Group continues to benefit from strong revenue visibility, loyal
customers, quality products, leading and growing market shares and
a solid order book and pipeline.
The gap continues to widen between the health demands of a
growing population with more long term conditions year-on-year and
a governmental desire to slow the rate of growth in NHS funding.
Perhaps counter-intuitively the development of Sustainability and
Transformation Plans (STPs) - intended to show how the NHS and
local authorities will bridge that gap by remodelling healthcare
and later merging health and social care - has caused another
hiatus in the deployment of planned funds for NHS IT
transformation.
In 2016 the Group took appropriate steps in relation to reducing
the cost base in Secondary Care and in harmonising employee pay and
conditions. 2017 will see an internal transformation to anticipate
the NHS's sharing of back-office functions and the acceleration in
the creation of "new models of care". To that end, the Group's
Primary, Community and Secondary Care businesses will be combined
and integrated by the end of Q1 2017. The Group is also investing
in the building of a patient-centric digital platform based on its
existing Patient.info business.
The Group has continued to demonstrate its commitment to and
alignment with NHS strategy, whether stated centrally through the
Wachter Report or locally through the STPs, which continues to
endorse the facilitation of connected patient-centric care through
the mobilisation of health and care related data using integrated
and interoperable software systems. EMIS Group remains at the
forefront of this market.
OPERATIONAL REVIEW
EMIS Group is a leading provider of UK healthcare software,
information technology and related services. It has again
maintained or grown strong market share positions in every major
area of healthcare facilitating the NHS's ongoing connected care
strategy across primary, community, secondary and specialist
healthcare and community pharmacy.
Primary & Community Care - Revenue up 6%, Adjusted Operating
Profit up 9%
EMIS Health - Primary Care (EHPC)
Primary Care maintained its record of steady growth from a loyal
customer base, with almost three-quarters of the Group's English GP
practices being EMIS Health users for over ten years. EMIS Health's
leading market share of 55% (2015: 55%) was increasingly supported
by a local NHS strategy to consolidate clinical management systems
and the number of 100% EHPC Clinical Commissioning Groups (CCGs)
again rose from 46 to 51. This common strategy creates a platform
for STPs to seamlessly connect primary, community and other
healthcare data.
The estate-wide deployment and utilisation of nationally-created
electronic services in England, such as electronic prescriptions
and the transfer of GP records, reached an all-time high for EMIS
Health, further facilitating connected care that involves primary
care professionals. These NHS national programmes also include
Patient Access, with 5.1 million citizens registered to interact
with GP services online by the end of 2016.
In Northern Ireland, implementation of EMIS Web for primary care
began slowly, with the first pilot sites live on 16 August 2016,
however the roll-out is expected to be completed in 2017. In
Scotland, EMIS Web is being offered in place of the Group's older
software and pre-procurement engagement has begun for likely
implementation in 2018. In Wales, re-procurement of the primary
care framework agreement has begun although it is worth noting that
existing EMIS Web agreements will continue until 2019 - 2020.
Working with Diabetes UK, EMIS Health helped GPs and practice
nurses across the country innovatively improve care for patients
with Type 2 diabetes by providing "information prescriptions" that
not only alert clinicians to key information on their patients'
condition during consultations, but also give patients the tailored
information they need to self-manage at home. This innovative
service helps provide faster and better care for the 3.5 million
diagnosed patients as well as helping reduce the over GBP11bn
annual cost to the NHS.
EMIS Health - Child, Community & Mental Health (CCMH)
CCMH market share grew to 16% (2015: 12%), exceeding the Group's
internal target despite the general sluggishness of the market as a
whole.
A number of previously unannounced material contract wins were
secured in the year including:
-- Isle of Man Department of Health and Social Care - Community
-- First Community Health & Care - Community and Mental Health
-- Central Manchester University Hospitals NHS Foundation Trust - Community and Mental Health
-- Tameside Hospital Foundation Trust - Community
Including those previously announced, 2016 wins had an aggregate
total contract value in excess of GBP11m with a strong pipeline of
opportunities in 2017 as former National Programme for IT CCMH
contracts continue to be re-procured. Two material CCMH contracts
(Bridgewater Community Healthcare and Central Surrey) have already
been secured in early 2017.
The CCMH team has secured 38 CCGs where EMIS Health is the sole
supplier in primary care as well as having a strong presence in
CCMH. This further supports the Group's strategy of helping
delivery of connected care. As an example, a multidisciplinary team
in Ayrshire of more than 50 staff - including doctors, nurses and
allied health professionals such as physiotherapists - switched
from paper records to EMIS Web. This helped transform patient care
and within six months the team had reduced the average length of
hospital stay for frail patients by twelve days, enabling them to
care for 30% more patients.
Egton - ICT infrastructure, engineering, and non-clinical
software
Egton performed well, providing a range of software, hardware
and services, including health administration, compliance software
and GP practice websites.
On 22 December 2016 Egton extended the Group's capability into
social care through the acquisition of Intrelate for GBP0.8m net of
cash acquired. The business was immediately integrated within Egton
to provide its Carista administrative software in social care.
Carista is a mobile software platform helping carers (paid and
unpaid) to plan, monitor, manage and measure social care outcomes.
This extends the Group's capability into directly helping deliver
integrated health and social care.
Another exciting area of growth for Egton in 2017 will be the
securing and implementation of CCG-funded NHS WiFi in GP practices,
with a current order book of GBP1.8m.
Patient - patient-centric medical and well-being
information/transactional services
Patient.info is already the UK's leading independent provider to
consumers of medical and well-being information with 18.3m unique
monthly visitors (2015: 11.5m) and advertising revenues of GBP2.1m
(2015: GBP1.7m). Patient helps people proactively manage their own
health and wellbeing often in a "pre-primary care" setting.
The number of visitors to Patient has grown strongly as planned
in 2016 especially from international visitors who at the end of
2016 accounted for 74% of the total.
To accelerate Patient's growth and ensure its consumer focus
Jason Keane joined Patient as Digital CEO in October 2016. He has
extensive digital media experience in a number of senior roles
including at Saffron Digital, Universal Networks Interactive, and
Yahoo! Answers. Following his appointment, work immediately began
to optimise Patient's existing media business and inventory
including new site design, an improved content management system,
initial changes to the user experience and user interface, and
ongoing improvements to the organic search position.
On 1 January 2017 Patient became an independent legal entity
with a plan to grow its publishing/media business and to expand
into a market-place e-commerce platform connecting Patient's global
audience to a network of digital healthcare services. A detailed
business plan is in place for an investment of up to GBP7m over the
next two years against appropriate performance milestones. This is
mainly for the people costs to deliver the media content and
platform environment needed to drive growth over the next five
years toward a targeted annual revenue of GBP50m.
Community Pharmacy - Revenue up 7%, Adjusted Operating Profit up
15%
EMIS Health - Community Pharmacy (EHCP)
EHCP, the provider of the UK's single most widely used community
pharmacy dispensary management system, delivered strong results. It
also continued to prepare for future market share growth over the
next 18 months (from 37% at the year end to approximately 50% by
2018) through the implementation of the agreement with AAH
Pharmaceuticals/Lloyds.
The Group's next generation pharmacy dispensary management
product, ProScript Connect, has now been accredited in England,
Scotland, and Wales. As well as having a pipeline of opportunities
in the independent pharmacy space, ProScript Connect had been
installed in 25 independent pharmacies by the end of 2016.
Implementation continues mainly to be done remotely, to minimise
resource requirements at each location and enable "out of hours"
upgrades where appropriate, while more complex sites, for example
those with robotic systems, are likely to require on-site
attendance. Healthways Chemist which upgraded from ProScript to
ProScript Connect found that the new system helped the pharmacy
spend less time on administration and offer a better service to
their busy and time-pressured customer base.
The business is also preparing for implementation in the Lloyds
estate. The first three ProScript Connect pilot sites in the AAH
independent estate also went live by the end of December and are
performing in line with expectations.
The total dispensary management estate size grew to 5,091 sites
(2015: 4,910 sites) through incremental gains from competitors as
well as growth of existing customers. After the year end, EHCP
secured a 6 year contract with a total contract value of GBP1.4m
with a further supermarket customer
Commercial and technical models are being considered following
piloting of EMIS Web for community pharmacy. This will enable
pharmacies to diversify into extended primary care services (for
example smoking cessation, influenza injections) and monitoring of
long term conditions.
Secondary & Specialist Care - Revenue down 10%, Adjusted
Operating Profit down 21%
EMIS Health - Secondary Care (EHSC)
EHSC performed largely in line with expectations following the
various cost-improvement measures taken in the first half of 2016
and taking into account the sluggishness of the NHS secondary care
market for mid-sized procurements. In addition, the transfer of
revenues and profits associated with the ePEX (acute mental health)
product to EHPC and the lack of one-off implementation revenues
compared with 2015 meant that performance in EHSC was held back.
Until the effects of the STPs become clearer, including increased
merger activity between hospital trusts, the NHS procurement
environment will continue to be difficult to predict. The Wachter
Report, while strongly supporting investment in the digitisation of
secondary care, also served to slow small to mid-sized procurements
in favour of predominantly large-scale implementations in Global
Digital Exemplars (GDEs).
Despite that, as previously announced, EHSC:
-- was awarded a contract for a Patient Administration System in
Northampton in April 2016 with a total contract value of
GBP6.7m;
-- in association with the UK's other major hospital pharmacy
software provider, has created an electronic procurement hub to
enable 75% of UK hospitals to replace the manual processing of home
care pharmacy; and
-- is one of two suppliers on the NHS Scotland Hospital
Electronic Prescribing and Medicines Administration framework,
worth GBP15m over two years.
The strategic decision, announced on 15 February 2016, for EHSC
to focus on core markets and products with a related reduction in
costs and staff numbers was largely implemented in the UK and in
Kenya by the end of the first half.
As well as providing discrete software systems, EHSC is also
active in linking, monitoring, and managing its own and third party
systems. Working with Nottinghamshire Healthcare NHS Foundation
Trust, which was seeking data on how their service was performing,
EHSC has replaced the manual creation of bespoke reports - finding
data from a number of separate systems and combining it - and
reduced the time taken to create new reports from a few days to a
matter of minutes.
During 2017, EHSC is also expected to benefit from an NHS
England initiative to centrally fund upgrades to the latest version
of EMIS Health's hospital pharmacy product. In addition, EMIS
Health is working as the principal supplier with University
Hospitals of Southampton NHS Foundation Trust as they formulate
their plan as a GDE. In September 2016 NHS England announced GBP10m
funding for each of 12 initial GDEs to help them become paperless
by 2020. Funding and contracts are expected to be released in the
second half of 2017. A "Fast Follower" programme is also expected
to be announced allowing other NHS Trusts to access a smaller pot
of centrally matched funding for adopting the technologies
pioneered by the GDEs. EMIS Health is directly engaged with a
further three GDEs and indirectly involved, as a supporting
supplier, with three more.
EMIS Health - Specialist & Care (EHS&C)
EMIS Health Specialist has maintained its position as the
leading software provider in English diabetic retinopathy screening
with a 77% market share (2015: 79%).
Public Health England has initiated a procurement process to
develop a national screening platform intended to achieve
standardised local programme operation through common IT system
design and core functionality. Although intended to begin with
diabetic eye screening, the platform is designed to encompass all
systematic screening services. Should the procurement conclude it
would provide an opportunity for EHS&C to secure the rest of
the English diabetic eye screening market.
EMIS Care remains the clear market leader in outsourced diabetic
eye screening and ophthalmology imaging services with an 18% market
share (2015: 19%). In 2016 EMIS Care was awarded further 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)*
-- Bath, Swindon and Wiltshire (from the NHS and Virgin Care)
-- Surrey (from Virgin Care)
-- Plymouth (from the NHS)
* indicates awards previously announced
These mainly three year initial term contracts, with an initial
total contract value of GBP19m, will see EMIS Care's market share
rise to 26%. Some of the new contracts were implemented during the
second half of 2016 and the remainder will be implemented in the
first half of 2017.
As previously announced, this unprecedented level of tender and
implementation activity has held back and will continue to hold
back financial performance through sub-optimal cost bases and
operational practices and the incurring of implementation costs.
This is especially so in the case of contracts previously operated
by the NHS. As operational efficiencies are delivered over the life
of the contracts, the division is building the foundations
necessary to improve the profit profile. Pending that improvement,
the Board has decided to recognise an impairment charge of GBP4.6m
relating to the goodwill of the EMIS Care (Medical Imaging)
business to reflect the delay in contribution created by those
additional costs.
Integrated Care
The Group continued to make progress during the year in
integrating health and social care by connecting its own and third
party products helping the NHS to facilitate faster, better,
cheaper care. The Group's Partner programme reached 80
participating suppliers, generating over GBP5m in revenue in 2016
for the Primary Care business.
EMIS Health also worked with many NHS and allied organisations
to share securely vital data. For example in the East Cheshire
Hospice in Macclesfield, as part of the national Electronic
Palliative Care Co-ordination System, EMIS Web is being used across
multiple care settings including securely sharing medical
information and care plans, enabling access to the Cheshire Care
Record (data from The Christie Hospital and social care partners
with North West Ambulance Service joining in the future) recording
information about and views of patients/family/carers, and enabling
community wide multi-disciplinary care planning meetings.
The publication of STPs in June 2016 and the subsequent debate
and activity showed the clearest sign yet that the NHS is actively
embracing integrated care especially with a primary/community care
focus. This not only reinforces EMIS Group's strategy in existing
markets but also provides new market opportunities in the short and
medium term. Those opportunities include in-hospital and
out-of-hospital markets like urgent and emergency care, out of
hours and medicines management.
Internal reorganisation
In December 2016, the Group began to bring together EHPC and
EHSC. This will combine Primary, Community and Secondary Care into
a single operating unit under the leadership of Duane Lawrence
formerly managing director of secondary care. This is intended to
align the Group with the NHS's need to deliver more integrated care
between hospitals, GP practices, and community services and
optimise the Group's cost base.
A new management structure was designed and the senior
management team was established in early January 2017 while
collective consultation for other affected staff began in the
second week of February. The majority of the integration exercise
is expected to be completed by the end of the first quarter of
2017. The exercise is expected to reduce headcount by over 100
people at a cost of around GBP3.0m and will deliver an estimated in
year cost-saving of GBP3.0m, rising to GBP4.0m on an annual
basis.
Board changes
As announced on 12 December 2016, Chris Spencer, the Group's
Chief Executive, intends to retire from his position and from the
Board by the end of 2017. The formal search for his successor has
already identified a number of credible candidates and interviews
are underway. On the same date, although unrelated, the Group also
announced the appointment of David Sides as an additional
independent non-executive director with effect from 1 January 2017.
David is currently CEO of Streamline Health Solutions, a provider
of transformational data-driven solutions to healthcare providers,
and before that his career included 17 years in senior roles at
Cerner Corporation.
SUMMARY AND OUTLOOK
Overall our businesses have continued to deliver results in line
with our expectations. This was despite headwinds created by the
NHS funding gap, which resulted in a difficult operating
environment for the Group with delays to the pace and level of
procurement activity.
We remain clear market leaders in Primary Care with the further
roll-out of EMIS Web ongoing and have once again increased our
market share in CCMH. Our new Community Pharmacy product is now
being rolled out into independent pharmacies, pending
implementation of the AAH/Lloyds contract that will see our market
share grow close to 50%.
Current trading remains in line with the Board's expectations
and the outlook is encouraging with strong revenue visibility
provided by 81% recurring revenue and solid order books and
pipelines across every segment. Structural re-organisation,
bringing together Primary Care, CCMH, and Secondary Care, will
improve efficiency and better align the Group and its customers. We
are looking for growth from the implementation of existing
contracts in EMIS Care and Community Pharmacy with further growth
opportunities in CCMH, new models of care and Patient.
The NHS's plans to bridge its funding gap continue to cause
sluggishness in immediate discretionary procurements. However, that
planning process highlights the Group's unique ability to help
address the challenges in the NHS.
In light of the proactive operational steps we are taking and
our investment in a patient-centred digital platform we remain
confident in overcoming short term headwinds and securing a
positive outlook in 2017 and beyond.
FINANCIAL REVIEW
In the year ended 31 December 2016 the Group delivered a solid
financial performance with sustained improvement in all key
financial metrics, despite a more challenging market
environment.
Adjusted operating profit for the year, as set out in the table
below, was GBP38.8m (2015: GBP36.6m) with statutory operating
profit, reduced by exceptional charges for the cost reduction
programme and by an impairment charge, at GBP23.5m (2015:
GBP11.4m). A reconciliation between the operating profit measures
is given in the Group statement of comprehensive income.
Segmental performance
Group revenue increased by 2% to GBP158.7m (2015: GBP155.9m),
including revenue from the 2015 Pinbellcom acquisition in Primary
& Community Care of GBP1.2m (2015: GBP0.7m).
The revenue growth in the year included varied performance from
the Group's segments. The Primary & Community Care business
delivered 6% organic revenue growth and 8% organic profit growth,
driven by good progress in market share in CCMH, the Partner
programme and Patient revenues.
Performance in the Community Pharmacy business was again strong,
boosted by some paid-for development work in connection with the
new ProScript Connect product, in advance of the accelerated roll
out into the estate being delivered in 2017 and 2018.
Results in the Secondary & Specialist Care segment were
behind expectations, with the slowdown in Secondary Care
procurements and the transfer of GBP1.9m Mental Health revenues to
the Primary & Community Care segment resulting in a reduction
in revenues overall. However, the actions taken early in the year
to address the cost base for the Secondary Care business resulted
in an improvement in underlying profitability. In Specialist,
strong revenue growth was secured with new contracts won by EMIS
Care, but profit reduced due to additional costs associated with
the implementation of those 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 as described in the Operational
review, thereby positioning it for stronger financial performance
ahead.
Selected financial extracts
2016 2015
--------------------------------------------- ---------------------------------------------
Primary & Secondary Primary & Secondary
Community Community & Specialist Community Community & Specialist
Care Pharmacy Care Total Care Pharmacy Care Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------------ ---------- ---------- ------------- ------ ---------- ---------- ------------- ------
Revenue 99.6 21.4 37.7 158.7 93.9 20.0 42.0 155.9
------------------------ ---------- ---------- ------------- ------ ---------- ---------- ------------- ------
Adjusted segmental
operating profit 32.2 4.9 3.3 40.4 29.6 4.3 4.2 38.1
------------------------ ---------- ---------- ------------- ------ ---------- ---------- ------------- ------
Group expenses (1.6) (1.5)
------------------------ ---------- ---------- ------------- ------ ---------- ---------- ------------- ------
Adjusted operating
profit(1) 38.8 36.6
------------------------ ---------- ---------- ------------- ------ ---------- ---------- ------------- ------
Adjusted operating
margin 32.3% 22.8% 8.7% 24.4% 31.5% 21.2% 10.0% 23.4%
------------------------ ---------- ---------- ------------- ------ ---------- ---------- ------------- ------
1. Excludes capitalisation and amortisation of development
costs, amortisation of acquired intangibles and exceptional
items.
Revenue mix
Group recurring revenue, principally licences, maintenance &
software support, hosting and other support services, was GBP128.5m
(2015: GBP123.0m), representing 81% of total revenue (2015: 79%).
This high level of recurring revenue and the strength of the
Group's customer relationships continue to provide an excellent
foundation for the business to invest with confidence in developing
future products and services, as well as providing good visibility
of future financial performance.
The drivers of revenue change within the Group included the
following:
-- licences, driven significantly higher to GBP54.8m (2015:
GBP50.3m), principally as a result of growth in Primary &
Community Care, particularly in the Partner programme and Patient,
but also with some one-off development revenues in Community
Pharmacy;
-- maintenance & software support, which increased slightly
overall to GBP38.6m (2015: GBP37.9m) with growth in CCMH;
-- other support services, where the GBP1.8m year on year
revenue growth from new contracts won in EMIS Care was more than
offset by a reduction in project engineering revenues and lower
levels of supporting revenues in Secondary Care and Community
Pharmacy, resulting in broadly flat total revenues of GBP29.3m
(2015: GBP30.6m);
-- training, consultancy and implementation, which reduced to
GBP14.6m (2015: GBP16.1m), with fewer large implementation projects
in Secondary Care;
-- hosting, which was unchanged at GBP13.1m (2015: GBP13.1m), as
a result of a reduction in funded hosting asset revenues offset by
CCMH hosting growth; and
-- hardware revenues, which increased to GBP8.3m (2015: GBP7.9m)
with higher sales of the EMIS Anywhere mobile product.
Profitability
Adjusted operating profit increased by 6% to GBP38.8m (2015:
GBP36.6m). The 6% organic profit growth in the year was delivered
by stronger growth in the Primary & Community Care and
Community Pharmacy businesses, partly offset by lower than expected
results in Specialist Care.
The operating margin nonetheless increased to 24.4% (2015:
23.4%) with a strong focus on cost control in staff costs
delivering this improvement in the context of a lower pace of
revenue growth than in recent years.
Group staff costs increased with staff numbers at the year-end
increasing to 1,922 (2015: 1,897), including 15 from the Intrelate
business acquired at the end of the year. The average headcount
increased to 1,875 (2015: 1,863). The increase has been driven by
growth in EMIS Care to support the new programmes implemented
during the year and the planned expansion of the Indian development
team, numbering 128 at the end of 2016, building upon a
subcontracted arrangement in place during 2015.
The Group has recognised three exceptional items in arriving at
profit before tax in 2016. The first relates to the cost reduction
programme carried out during the year. This programme was initially
focussed on the Secondary Care business, but was expanded to
encompass other parts of the Group in response to the more
challenging trading conditions which emerged during the year. The
programme, which resulted in a charge of GBP3.6m in the year,
delivered a cost-saving of GBP3.0m in 2016, rising to over GBP5.0m
on an annual basis, and has directly reduced headcount by 110.
The second, a non-cash charge of GBP4.6m, relates to the
carrying value of goodwill arising on the Medical Imaging (EMIS
Care) acquisition, and reflects the fact that the business has not
yet delivered the financial returns expected when the business
joined the Group in 2014.
The third is a credit of GBP1.5m, recognised after operating
profit, and relates to the profit realised on the disposal of the
Group's minority investment in Pharmacy2U during the year.
After accounting for the operating exceptional items, the
capitalisation and amortisation of development costs, and for the
amortisation of acquired intangibles, statutory operating profit
was GBP23.5m (2015: GBP11.4m).
Taxation
The tax charge for the year of GBP5.2m (2015: GBP5.6m) includes
a credit of GBP0.4m, arising from the finalisation of prior years'
tax returns. Excluding this credit and a small deferred tax
adjustment in respect of the lowering of future tax rates, the
effective tax rate for the year was 20.0% (2015: 20.2%) on profit
before tax and the non-deductible/taxable exceptional items.
Earnings per share (EPS)
Adjusted basic and diluted EPS increased by 9% to 49.4p and
49.2p respectively (2015: 45.3p and 45.1p). The statutory basic and
diluted EPS were 30.4p and 30.3p respectively (2015: 7.2p for both
measures).
Dividend
Subject to shareholder approval at the Annual General Meeting on
28 April 2017, the Board proposes an increase in the final dividend
to 11.7p (2015: 10.6p) per ordinary share, payable on 3 May 2017 to
shareholders on the register at the close of business on 31 March
2017. This would make a total dividend of 23.4p (2015: 21.2p) per
ordinary share for 2016. This is 10% higher than in the prior year,
reflecting the Board's commitment to increasing dividends in line
with growth in adjusted EPS and its continued confidence in the
Group's prospects.
Cash flow and net debt
The principal movements in net debt were as follows:
2016 2015
GBPm GBPm
---------------------------------------------- ------- -------
Cash from operations:
Cash generated from operations 43.7 42.7
Less: internal development costs capitalised (5.7) (6.2)
---------------------------------------------- ------- -------
Net cash generated from operations 38.0 36.5
Business combinations (3.8) (5.2)
Net capital expenditure (5.9) (7.2)
Transactions in own shares 0.6 0.6
Tax (7.7) (6.9)
Dividends (14.0) (12.4)
Other 1.5 (2.7)
---------------------------------------------- ------- -------
Change in net debt in the year 8.7 2.7
---------------------------------------------- ------- -------
Net debt at end of year (0.4) (9.1)
---------------------------------------------- ------- -------
Net cash generated from operations increased by 4% to GBP38.0m
(2015: GBP36.5m), with a lower level of working capital outflow
compared to the prior year. Net cash from operations is stated
after expensing the GBP3.1m cash cost of the cost reduction
programme in the year. On an adjusted basis, adding back this cost,
cash flow from operations was 12% higher than in 2015.
The Group completed the acquisition of Intrelate in the year for
net cash consideration of GBP0.8m and also paid GBP3.0m of
contingent consideration in respect of the 2014 Medical Imaging
acquisition. There are no outstanding acquisition related payments
on the year end balance sheet.
Net cash spent on capital expenditure (excluding capitalised
development costs) reduced to GBP5.9m (2015: GBP7.2m). Capital
additions in the year included GBP5.0m on computer equipment
(GBP2.6m of which related to hosting contract assets).
The Group's Employee Benefit Trust received GBP0.6m (2015:
GBP0.6m) for shares transferred in connection with the Group's
share schemes. After tax, dividends and other payments, including
the GBP1.5m receipt relating to the disposal of the Group's
minority interest in Pharmacy2U in the year, the total net cash
inflow of GBP8.7m resulted in a year-end net debt position of
GBP0.4m (2015: GBP9.1m), comprised of cash of GBP4.3m and bank
overdraft and debt of GBP4.7m. At 31 December 2016, the Group had
available bank facilities of GBP18.0m committed until 30 June 2017.
The Group has commenced a process to secure replacement facilities
to provide flexibility to meet day-to-day working capital
requirements, support the Group's organic growth, secure M&A
opportunities and provide appropriate levels of cash return to
shareholders in line with the Group's capital allocation
policy.
Group statement of comprehensive income
for the year ended 31 December 2016
2016 2015
Notes GBP'000 GBP'000
----------------------------------------------------------------- ------ --------- ---------
Revenue 2,3 158,712 155,898
Costs:
Changes in inventories 609 (344)
Cost of goods and services (14,760) (12,611)
Staff costs(1) (71,197) (67,465)
Other operating expenses(2) (31,750) (45,873)
Depreciation of property, plant and equipment (4,504) (4,665)
Amortisation of intangible assets 8 (13,571) (13,510)
Adjusted operating profit 38,753 36,553
Development costs capitalised 8 5,684 6,183
Amortisation of intangible assets(3) 8 (12,652) (12,806)
Cost reduction programme 4 (3,630) -
Impairment of goodwill 4 (4,616) (16,183)
Impairment of investment 4 - (2,317)
Operating profit 2 23,539 11,430
Finance income 188 28
Finance costs (425) (477)
Share of result of associate - (388)
Share of result of joint venture 499 339
Gain on sale of associate 4 1,532 -
Profit before taxation 25,333 10,932
Income tax expense 5 (5,208) (5,558)
------------------------------------------------------------------ ------ --------- ---------
Profit for the year 20,125 5,374
------------------------------------------------------------------ ------ --------- ---------
Other comprehensive income
Items that may be reclassified to profit or loss
Currency translation differences 27 (111)
Other comprehensive income 27 (111)
------------------------------------------------------------------ ------ --------- ---------
Total comprehensive income for the year 20,152 5,263
------------------------------------------------------------------ ------ --------- ---------
Attributable to:
- equity holders of the parent 19,128 4,432
- non-controlling interest in subsidiary company 1,024 831
Total comprehensive income for the year 20,152 5,263
------------------------------------------------------------------ ------ --------- ---------
Earnings per share attributable to equity holders of the parent 6 Pence Pence
----------------------------------------------------------------- ------ --------- ---------
Basic 30.4 7.2
Diluted 30.3 7.2
------------------------------------------------------------------ ------ --------- ---------
(1) Including cost reduction programme costs of GBP3,387,000
(2015: GBPnil).
(2) Including contract asset depreciation of GBP1,955,000 (2015:
GBP3,175,000), cost reduction programme costs of GBP243,000 (2015:
GBPnil), goodwill impairment of GBP4,616,000 (2015: GBP16,183,000)
and investment impairment of GBPnil (2015: GBP2,317,000).
(3) Excluding amortisation of computer software used internally
of GBP919,000 (2015: GBP704,000).
Group balance sheet
as at 31 December 2016
2016 2015
Notes GBP'000 GBP'000
-------------------------------------- ------ --------- ---------
ASSETS
Non-current assets
Goodwill 50,336 54,388
Other intangible assets 8 60,617 66,995
Property, plant and equipment 22,187 22,032
Investment in joint venture and
associate 152 131
-------------------------------------- ------ --------- ---------
133,292 143,546
-------------------------------------- ------ --------- ---------
Current assets
Inventories 1,815 1,206
Trade and other receivables 39,970 33,893
Cash and cash equivalents 10 4,303 4,701
-------------------------------------- ------ --------- ---------
46,088 39,800
-------------------------------------- ------ --------- ---------
Total assets 179,380 183,346
-------------------------------------- ------ --------- ---------
LIABILITIES
Current liabilities
Trade and other payables (21,089) (17,777)
Current tax liabilities (1,918) (3,183)
Bank loans 10 (1,951) (5,402)
Bank overdraft 10 (2,782) (6,457)
Contingent acquisition consideration - (3,000)
Deferred income (28,418) (28,000)
-------------------------------------- ------ --------- ---------
(56,158) (63,819)
-------------------------------------- ------ --------- ---------
Non-current liabilities
Bank loans 10 - (1,951)
Deferred tax liability (9,080) (10,530)
(9,080) (12,481)
-------------------------------------- ------ --------- ---------
Total liabilities (65,238) (76,300)
-------------------------------------- ------ --------- ---------
NET ASSETS 114,142 107,046
-------------------------------------- ------ --------- ---------
EQUITY
Ordinary share capital 633 633
Share premium 51,045 51,045
Own shares held in trust (2,275) (2,929)
Retained earnings 58,239 52,848
Other reserve 2,027 2,000
-------------------------------------- ------ --------- ---------
Equity attributable to owners of
the parent 109,669 103,597
Non-controlling interest 4,473 3,449
-------------------------------------- ------ --------- ---------
TOTAL EQUITY 114,142 107,046
-------------------------------------- ------ --------- ---------
Group statement of cash flows
for the year ended 31 December 2016
2016 2015
Notes GBP'000 GBP'000
Cash generated from operations 9 43,657 42,711
Finance costs (328) (450)
Finance income 4 28
Tax paid (7,655) (6,896)
Net cash generated from operating
activities 35,678 35,393
---------------------------------------- ------ --------- ---------
Cash flows from investing activities
Purchase of property, plant and
equipment (5,413) (6,145)
Proceeds from sale of property,
plant and equipment 527 644
Development costs capitalised 8 (5,684) (6,183)
Purchase of software 8 (987) (1,730)
Dividends received 400 -
Business combinations (3,849) (5,231)
Proceeds from sale of associate 1,532 -
Net cash used in investing activities (13,474) (18,645)
---------------------------------------- ------ --------- ---------
Cash flows from financing activities
Transactions in own shares held
in trust 579 589
Bank loan repayments (5,500) (11,500)
Non-controlling interest dividend
paid - (2,110)
Dividends paid 7 (14,006) (12,422)
Net cash used in financing activities (18,927) (25,443)
---------------------------------------- ------ --------- ---------
Net increase/(decrease) in cash
and cash equivalents 3,277 (8,695)
Cash and cash equivalents at beginning
of year (1,756) 6,939
---------------------------------------- ------ --------- ---------
Cash and cash equivalents at end
of year 10 1,521 (1,756)
---------------------------------------- ------ --------- ---------
Cash and cash equivalents of GBP1,521,000 comprise cash of
GBP4,303,000 and a bank overdraft of GBP2,782,000.
Group statement of changes in equity
for the year ended 31 December 2016
Own
shares
held
Share Share in Retained Other Non-controlling Total
capital premium trust earnings reserve interest equity
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 year - - - 4,543 - 831 5,374
Transactions with owners
Share acquisitions
less sales - - 789 (200) - - 589
Share-based payments - - - 684 - - 684
Deferred tax in relation
to share-based payments - - - 134 - - 134
Dividends paid (note
7) - - - (12,422) - (2,110) (14,532)
Other comprehensive
income
Currency translation
differences - - - - (111) - (111)
At 31 December 2015 633 51,045 (2,929) 52,848 2,000 3,449 107,046
Profit for the year - - - 19,101 - 1,024 20,125
Transactions with owners
Share acquisitions
less sales - - 654 (75) - - 579
Share-based payments - - - 473 - - 473
Deferred tax in relation
to share-based payments - - - (102) - - (102)
Dividends paid (note
7) - - - (14,006) - - (14,006)
Other comprehensive
income
Currency translation
differences - - - - 27 - 27
-------- -------- -------- --------- -------- --------------- ---------
At 31 December 2016 633 51,045 (2,275) 58,239 2,027 4,473 114,142
-------------------------- -------- -------- -------- --------- -------- --------------- ---------
Notes to the preliminary announcement
for the year ended 31 December 2016
1. Basis of preparation
The financial information set out in this preliminary
announcement does not constitute the company's statutory financial
statements for the years ended 31 December 2016 or 2015 but is
derived from those financial statements.
Statutory financial statements for 2015 have been delivered to
the registrar of companies and those for 2016 will be delivered in
due course. The auditors have reported on those financial
statements; their reports were (i) unqualified (ii) did not include
a reference to any matters to which the auditor drew attention by
way of emphasis without qualifying their report and (iii) did not
contain a statement under section 498 (2) or (3) of the Companies
Act 2006.
The statutory financial statements for the year ended 31
December 2016 will be posted no later than 29 March 2017 to
shareholders and, once approved, will be delivered to the Registrar
of Companies following the Annual General Meeting on 28 April
2017.
Copies of the Annual Report and financial statements for the
year ended 31 December 2016 will be available on the company's
website (https://www.emisgroupplc.com/investors) from 29 March 2017
and from the Company Secretary, EMIS Group plc, Rawdon House, Green
Lane, Yeadon, Leeds LS19 7BY.
2. Segmental information
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 costs, cash and cash equivalents and bank loans
and overdrafts are not allocated to segments, as group and
financing activities are not segment specific.
2016 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 99,615 21,425 37,672 158,712 93,860 20,013 42,025 155,898
---------------- ------------ --------- ------------- -------- ------------ --------- ------------- --------
Segmental
operating
profit as
reported
internally 32,202 4,876 3,292 40,370 29,603 4,248 4,182 38,033
Development
costs
capitalised 1,882 1,927 1,875 5,684 3,031 1,017 2,135 6,183
Amortisation of
development
costs (4,497) - (1,516) (6,013) (5,396) - (901) (6,297)
Amortisation of
acquired
intangible
assets (1,054) (576) (5,009) (6,639) (923) (577) (5,009) (6,509)
Cost reduction
programme (1,162) (140) (2,328) (3,630) - - - -
Impairment of
goodwill - - (4,616) (4,616) - - (16,183) (16,183)
---------------- ------------ --------- ------------- -------- ------------ --------- ------------- --------
Segmental
operating
profit/(loss) 27,371 6,087 (8,302) 25,156 26,315 4,688 (15,776) 15,227
---------------- ------------ --------- ------------- -------- ------------ --------- ------------- --------
Group operating
expenses (1,617) (1,480)
Impairment of
investment - (2,317)
---------------- ------------ --------- ------------- -------- ------------ --------- ------------- --------
Operating profit 23,539 11,430
Net finance
costs (237) (449)
Share of result
of associate - (388)
Share of result
of joint
venture 499 339
Gain on sale of
associate 1,532 -
---------------- ------------ --------- ------------- -------- ------------ --------- ------------- --------
Profit before
taxation 25,333 10,932
---------------- ------------ --------- ------------- -------- ------------ --------- ------------- --------
Revenue excludes intra-group transactions on normal commercial
terms from the Primary & Community Care segment to the
Community Pharmacy segment totalling GBP4,254,000 (2015:
GBP3,750,000), from the Primary & Community Care segment to the
Secondary & Specialist Care segment totalling GBP411,000 (2015:
GBP883,000), and from the Secondary & Specialist Care segment
to the Primary & Community Care segment totalling GBPnil (2015:
GBP33,000).
Revenue of GBP112,396,000 (2015: GBP112,786,000) is derived from
the NHS and related bodies.
Revenue of GBP7,270,000 (2015: GBP6,942,000) is derived from
customers outside the United Kingdom.
2016 2015
3. Revenue analysis GBP'000 GBP'000
------------------------------------------ --------- ---------
Licences 54,762 50,300
Maintenance and software support 38,654 37,887
Other support services 29,340 30,611
Training, consultancy and implementation 14,572 16,128
Hosting 13,120 13,075
Hardware 8,264 7,897
158,712 155,898
------------------------------------------ --------- ---------
2016 2015
4. Exceptional items GBP'000 GBP'000
--------------------------- --------- ---------
Cost reduction programme (3,630) -
Impairment of goodwill (4,616) (16,183)
Impairment of investment - (2,317)
Gain on sale of associate 1,532 -
(6,714) (18,500)
--------------------------- --------- ---------
The cost reduction programme relates to redundancy and
restructuring costs, primarily within the Secondary &
Specialist Care segment.
The impairment of goodwill in 2016 relates to the EMIS Care
(Medical Imaging) cash-generating unit (CGU), as a result of a
reduction in its projected cash flows, and reflects the fact that
the current financial returns are below the level expected when the
business joined the Group in 2014. While a change in management
team during 2016 has made significant progress in turning around
the financial performance of the business, given the long term
nature of its contracts, it will take some time to return the
business to the anticipated level of profit contribution.
The impairment of goodwill in 2015 relates to the Secondary Care
(Ascribe) CGU, as a result of a reduction in its projected cash
flows. The impairment of investment in 2015 relates to a full
impairment of the carrying value in the group's minority investment
in Pharmacy2U, as a result of a reduction in its projected cash
flows following a difficult trading period. This investment was
subsequently disposed of in 2016, giving rise to the gain on sale
of associate.
2016 2015
5. Income tax expense GBP'000 GBP'000
------------------------------------------------------------------------ --------- ---------
Income tax:
- current year tax charge 7,307 7,943
- adjustment in respect of prior years (422) -
Total current tax 6,885 7,943
------------------------------------------------------------------------ --------- ---------
Deferred tax:
- current year (1,677) (2,385)
------------------------------------------------------------------------ --------- ---------
Total deferred tax (1,677) (2,385)
------------------------------------------------------------------------ --------- ---------
Total tax charge in Group statement of comprehensive income 5,208 5,558
------------------------------------------------------------------------ --------- ---------
Factors affecting the tax charge for the year
Profit before taxation 25,333 10,932
------------------------------------------------------------------------ --------- ---------
Taxation at the average UK corporation tax rate of 20% (2015: 20.25%) 5,067 2,214
Tax effects of:
- expenses/income not allowable/taxable in determining taxable profit 707 3,726
- adjustment in respect of prior years (422) -
- joint venture reported net of tax (100) -
- deferred tax rate change (44) (382)
Tax charge for the year 5,208 5,558
------------------------------------------------------------------------ --------- ---------
6. Earnings per share (EPS)
The calculation of basic and diluted EPS is based on the following earnings and numbers of
shares:
2016 2015
Earnings GBP'000 GBP'000
------------------------------------------------------------------------- ---------- ---------
Basic earnings attributable to equity holders 19,101 4,543
Cost reduction programme 3,630 -
Impairment of goodwill 4,616 16,183
Impairment of investment - 2,317
Gain on sale of associate (1,532) -
Development costs capitalised (5,684) (6,183)
Amortisation of development costs and acquired intangible assets 12,652 12,806
Tax and non-controlling interest effect of above items (1,776) (1,266)
Adjusted earnings attributable to equity holders 31,007 28,400
------------------------------------------------------------------------- ---------- ---------
2016 2015
Number Number
Weighted average number of ordinary shares '000 '000
------------------------------------------------------------------------- ---------- ---------
Total shares in issue 63,311 63,311
Shares held by Employee Benefit Trust (502) (576)
For basic EPS calculations 62,809 62,735
Effect of potentially dilutive share options 215 230
For diluted EPS calculations 63,024 62,965
------------------------------------------------------------------------- ---------- ---------
2016 2015
EPS Pence Pence
------------------ ------- -------
Basic 30.4 7.2
Adjusted 49.4 45.3
Basic diluted 30.3 7.2
Adjusted diluted 49.2 45.1
------------------ ------- -------
7. Dividends 2016 2015
GBP'000 GBP'000
------------------------------------------------------------ ---------- ---------
Final dividend for the year to 31 December 2014 of 9.2p - 5,771
Interim dividend for the year to 31 December 2015 of 10.6p - 6,651
Final dividend for the year to 31 December 2015 of 10.6p 6,656 -
Interim dividend for the year to 31 December 2016 of 11.7p 7,350 -
------------------------------------------------------------ ---------- ---------
14,006 12,422
------------------------------------------------------------ ---------- ---------
A final dividend for the year to 31 December 2016 of 11.7p
amounting to approximately GBP7,354,000 will be proposed at the
Annual General Meeting on 28 April 2017. If approved, this dividend
will be paid on 3 May 2017 to shareholders on the register on 31
March 2017. The dividend is not accounted for as a liability in
these financial statements and will be accounted for as an
appropriation of distributable reserves in the year to 31 December
2017.
8. 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 1,730 6,183 - - 7,913
Acquisition of business - - 844 928 1,772
------------------------- ----------------- -------------- -------------- --------------- --------
At 31 December 2015 4,540 34,843 36,061 36,041 111,485
Additions 987 5,684 - - 6,671
Acquisition of business - - 259 263 522
------------------------- ----------------- -------------- -------------- --------------- --------
At 31 December 2016 5,527 40,527 36,320 36,304 118,678
------------------------- ----------------- -------------- -------------- --------------- --------
Accumulated amortisation and impairment
At 1 January 2015 665 7,300 13,002 10,013 30,980
Charged in year 704 6,297 3,469 3,040 13,510
------------------------- ----------------- -------------- -------------- --------------- --------
At 31 December 2015 1,369 13,597 16,471 13,053 44,490
Charged in year 919 6,013 3,553 3,086 13,571
------------------------- ----------------- -------------- -------------- --------------- --------
At 31 December 2016 2,288 19,610 20,024 16,139 58,061
------------------------- ----------------- -------------- -------------- --------------- --------
Net book value
At 31 December 2016 3,239 20,917 16,296 20,165 60,617
At 31 December 2015 3,171 21,246 19,590 22,988 66,995
At 1 January 2015 2,145 21,360 22,215 25,100 70,820
------------------------- ----------------- -------------- -------------- --------------- --------
9. Cash generated from operations
2016 2015
GBP'000 GBP'000
------------------------------------------------------- --------- ---------
Profit before taxation 25,333 10,932
Finance income (188) (28)
Finance costs 425 477
Share of result of associate - 388
Share of result of joint venture (499) (339)
Gain on sale of associate (1,532) -
Operating profit 23,539 11,430
Adjustment for non-cash items:
Amortisation of intangible assets 13,571 13,510
Depreciation of property, plant and equipment 6,459 7,840
Impairment of goodwill 4,616 16,183
Impairment of investment - 2,317
Profit on disposal of property, plant and equipment (229) (44)
Share-based payments 473 684
Operating cash flow before changes in working capital 48,429 51,920
Changes in working capital:
(Increase)/decrease in inventory (609) 344
Increase in trade and other receivables (6,369) (3,945)
Increase/(decrease) in trade and other payables 1,915 (3,246)
Increase/(decrease) in deferred income 291 (2,362)
Cash generated from operations 43,657 42,711
------------------------------------------------------- --------- ---------
10. Change in net debt
Finance
2015 Cash flow costs 2016
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- --------- ---------- --------- ---------
Cash and cash equivalents 4,701 (398) - 4,303
Bank overdraft (6,457) 3,675 - (2,782)
Bank loans due within one year (5,402) 3,500 (49) (1,951)
Bank loans due after one year (1,951) 2,000 (49) -
Net debt (9,109) 8,777 (98) (430)
-------------------------------- --------- ---------- --------- ---------
11. Business combinations
On 22 December 2016 the Group acquired 100% of the share capital
of Intrelate Limited, a provider of mobile social care software.
The acquisition is in line with the Group's strategy of providing
connected health and social care IT for patients and those involved
in their care.
The provisional fair values of the net assets acquired,
consideration paid and goodwill arising on the transaction are
shown in the table below:
GBP'000
----------------------------------- --------
Goodwill 564
Intangible assets acquired:
- computer software 259
- customer relationships 263
Property, plant and equipment 2
Trade and other receivables 101
Cash and cash equivalents 196
Trade and other payables (93)
Deferred income (127)
Deferred tax (120)
-------------------------------------- --------
Total net assets 1,045
Consideration:
Cash consideration 1,045
Total consideration 1,045
Cash and cash equivalent balances
acquired (196)
Net cash cost of acquisition paid
in year 849
-------------------------------------- --------
Goodwill relates principally to the experienced staff within the
business.
Provisional fair values of assets and liabilities represent the
best estimate of the fair values at the date of acquisition. As
permitted by IFRS 3 (Revised) 'Business Combinations', these
provisional amounts can be amended for a period of up to 12 months
following acquisition if subsequent information becomes available
which changes the estimates of fair values at the date of
acquisition.
The post-acquisition contribution of the acquired business to
Group revenue and adjusted operating profit is not material to the
year under review as the business was only acquired on 22 December
2016, immediately prior to the year end. Had the acquisition
occurred on 1 January 2016, the Group's revenue and adjusted
operating profit for the year would have been GBP159,719,000 and
GBP38,764,000 respectively.
In relation to the acquisition, costs of GBP30,000 have been
expensed in the statement of comprehensive income.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR GMGMFRKDGNZM
(END) Dow Jones Newswires
March 16, 2017 03:00 ET (07:00 GMT)
Emis (LSE:EMIS)
Historical Stock Chart
From Apr 2024 to May 2024
Emis (LSE:EMIS)
Historical Stock Chart
From May 2023 to May 2024