EMIS Group plc Full year results presentation 2017

Transcription

1 EMIS Group plc Full year results presentation 2017

2 Introduction Strong financial position with underlying growth despite one off costs Introduction Financial review Operational review Summary and outlook Andy Thorburn Chief Executive Officer Peter Southby Chief Financial Officer EMIS Group plc Full year results presentation

3 Financial review Peter Southby Chief Financial Officer

4 Financial highlights Underlying results in line with the Board s expectations despite one off costs of 17m Total revenue Recurring revenue Adjusted operating profit 1 Adjusted operating profit excluding Patient 160.4m 133.5m +1% +4% 37.4m 39.3m -3% +5% 2016: 158.7m 2016: 128.5m 2016: 38.8m 2016: 37.3m Cash generated from operations m +17% 2016: 38.0m Net cash 14.0m m 2016: 0.4m net debt Adjusted EPS p 2016: 49.4p -4% Total dividend 25.8p 2016: 23.4p +10% 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 of 4.4m (2016: 5.7m) and of the cash impact of exceptional items of 5.2m (2016: 3.1m). EMIS Group plc Full year results presentation

5 Financial review income statement Steady progress maintained H1 H2 FY FY % m change Revenue % Adjusted operating profit % Capitalised development costs Amortisation development costs (3.3) (4.2) (7.5) (6.0) Amortisation acquired intangibles (3.4) (3.3) (6.7) (6.7) Finance costs (0.2) (0.1) (0.3) (0.3) JV/associate Exceptionals (2.5) (14.5) (17.0) (6.7) Profit before tax Tax (2.1) - (2.1) (5.2) Non-controlling interest (0.4) (0.4) (0.8) (1.0) Earnings 8.2 (0.2) Adjusted EPS 22.2p 25.0p 47.2p 49.4p Reported EPS 13.1p (0.3p) 12.8p 30.4p Revenue increase includes 0.9m from 2016 Intrelate acquisition and varied performance across the Group. Headline adjusted operating profit down by 3% but this includes 3.5m investment in Patient. Excluding this, underlying profit was up by 5%. Exceptionals relate to reorganisation costs ( 5.8m) and service level reporting charges ( 11.2m) effective tax rate 19.8%. EMIS Group plc Full year results presentation

6 Financial review segmental analysis Balance of business progress and investment m Primary, Community & Acute 2017 Primary, Community & Acute 2016 Community Pharmacy 2017 Community Pharmacy 2016 Specialist & Care 2017 Specialist & Care 2016 Revenue Recurring revenue Adjusted segmental profit (1.9) Patient 2017 Patient 2016 Total 2017 Total 2016 Group costs (1.4) (1.6) Adjusted operating profit Adjusted operating margin 29.7% 28.0% 25.7% 22.8% 0.8% 1.5% (65.9)% 58.2% 23.3% 24.4% Development costs capitalised Amortisation of development costs (7.3) (6.0) (0.2) (7.5) (6.0) Amortisation of acquired intangible assets (5.5) (5.4) (0.6) (0.6) (0.6) (0.7) - - (6.7) (6.7) Primary, Community & Acute Care: reduced revenue in Acute and some discretionary Primary Care streams, but cost control ensured profit growth. Community Pharmacy: continued growth with ProScript Connect roll-out. Specialist & Care: new contracts driving revenue growth. Profit held back in short term by implementation costs but improving trend during year. Patient: results reflect investment in building platforms for future growth. EMIS Group plc Full year results presentation

7 Financial review revenue analysis Stronger recurring mix m % change Recurring % Non-recurring % Total % m Nature % change Licences mainly recurring % Maintenance and software support recurring % Other support services mainly recurring % Training/consultancy/implementation non-recurring % Hosting recurring % Hardware non-recurring % Total % Good visibility through sustained recurring revenue growth of 5m in year. Maintenance and software support growth also reflects stability and growth in core estate. EMIS Care driving higher other support services revenues. Quieter period in Primary, Community & Acute Care for new implementations. Lower discretionary NHS spending, e.g. on hosting and hardware. EMIS Group plc Full year results presentation

8 Financial review cash flow Strong positive cash flows delivered again m Operating profit before exceptionals Depreciation and amortisation Working capital 5.0 (5.3) Share based payments Cash flow from operating activities Development costs capitalised (4.4) (5.7) Adjusted cash from operations Cash cost of exceptionals (5.2) (3.1) Cash from operations Business combinations - (3.8) Net capital expenditure (6.6) (5.9) Transactions in own shares Tax (8.1) (7.7) Dividends (15.5) (14.0) Other Change in net cash/(debt) Reported cash from operations up 17% to 44.4m (2016: 38.0m) Adjusted cash from operations (before exceptionals) up 21% to 49.6m Both measures stated after Patient investment. Working capital improvement on 2016, particularly driven by increase in deferred income. Cash cost of exceptionals relates to reorganisation/cost reduction programme costs only. Capex includes: 4.0m of computer equipment (of which 1.2m is funded). 1.0m of programme assets in EMIS Care. Other in 2016 includes 1.5m proceeds from sale of Pharmacy2U associate. Net cash at 14.0m (improved from 0.4m net debt at last year end). Closing net cash/(debt) 14.0 (0.4) EMIS Group plc Full year results presentation

9 Financial review balance sheet Solid balance sheet provides resilience m Goodwill Acquired intangible assets Development costs Property, plant and equipment and computer software used internally JV and other current assets Deferred income (33.7) (28.4) Other current liabilities (20.2) (23.0) Strong debt-free balance sheet with 14.0m net cash. New debt facilities secured in June 2017 at reduced cost ( 30.0m RCF/overdraft plus 30.0m accordion, three-to-five year term). Increased deferred income provides good revenue visibility. Provision reflects estimate of service level reporting charges expected to be paid in No remaining acquisition consideration. Cost of final dividend 8.1m. Provision (11.2) - Deferred tax (6.8) (9.1) Net cash/(debt) 14.0 (0.4) Net assets EMIS Group plc Full year results presentation

10 Financial review guidance and trends Factors affecting future financial performance Patient Share-based payments IFRS 15 Revenue Increased H level of investment to be maintained in Staff costs Staff numbers and costs likely to increase with additional investment in development and customer-facing functions. Development costs Expect amortisation to continue to track ahead of capitalisation, although higher level of capitalisation of costs likely from EMIS Web clinical system upgrade. Contract assets Deferred income release and related depreciation to remain at similar level in Charge expected to increase in 2018 with recent awards with annual run rate of c. 1.0m. Tax rate Expected to remain close to UK statutory rate. Capital expenditure Expect 2018 to be at similar or slightly higher level to recent periods. Working capital Expect to be broadly neutral in Dividends 10% increase for final dividend ( 8.1m in May 2018). No material changes expected on adoption of new revenue recognition standard, effective IFRS 9 Financial instruments No material changes expected on adoption of new revenue recognition standard, effective IFRS 16 Leases Will result in most of the Group s operating leases coming onto the Balance Sheet, effective Further guidance on impact to be provided at the half year. EMIS Group plc Full year results presentation

11 Operational review Andy Thorburn Chief Executive Officer

12 2017 overview Solid underlying financial performance in a year of change Focus on operational execution in H2 Share price negatively impacted due to SLA issue communicated to market in January 2018 Group financially strong with high recurring revenues EMIS Group plc Full year results presentation

13 Execution what we delivered in 2017 Primary, Community & Acute Care Community Pharmacy Specialist & Care Patient Primary Care market leadership maintained, with growth to 56% Moved to joint market leadership with 37% market share Maintained market leading position in Specialist (76%) and Care (26%) Website upgrade attracting 15 million unique users per month Community market share growth to 17% - moving up to number two position Roll out of ProScript Connect on track Revenue growth and operational efficiencies New Patient Access app built and in final NHS approvals Maintained market share in Acute, improvements in revenue and cost control Focus on EMIS Web for Pharmacy to open up Patient Group Directions market Returned to profit in H2 Marketplace design completed; focus on Pharmacy solutions first EMIS Group plc Full year results presentation

14 Strong market share positions maintained Community: TPP 22% EMIS Health 17% DXC 10% Servelec 9% Community Pharmacy: EMIS Health 37% Cegedim 37% Lloyds 9% Acute: Pharmacy JAC 50% EMIS Health 29% HP Enterprise Services 4% A&E DXC Technology 24% EMIS Health 19% Cerner 12% System C 10% Care: NHS 59% EMIS Care 26% Health intelligence 15% Specialist Care: EMIS Health 76% Health Intelligence 15% Health Information Systems 8% Patient PAS DXC Technology 38% System C 13% Cerner 12% Silverlink 8% EMIS Health 6% Primary: EMIS Health 56% TPP 30% Vision 13% Others 1% EMIS Group 2017 revenue Source: EMIS Group and competitor data estimated based on company records as at 31 December EMIS Group plc Full year results presentation

15 EMIS Health GP market share by country Country EMIS Health % TPP % INPS % Other % Total England 4, , ,367 Scotland Wales Northern Ireland UK Total 5, , , ,093 EMIS Health and competitor data estimated based on company records showing number of practices installed as at 31 December Wales loss starts to reduce market share from 2019 More than 4,500 practices using EMIS Web in the UK 57% England market share is a new record for Primary Care EMIS Group plc Full year results presentation

16 2018 key projects 1. IT Futures GPSoC extended to December 2018, in discussion to extend to December 2019 Formal procurement process for replacement contract, IT Futures, expected to begin later this year 2. EMIS Web upgrade Meet the emerging new models of care Flexible and adaptable software platform 3. NHS Digital SLA issues Working collaboratively on settlement and prevention of future issues Reviews of other contracts, to date no other material breaches found EMIS Group plc Full year results presentation

17 NHS Digital SLA impact 11.2m exceptional cost in 2017 Settlement with NHSD Backlog remediation Professional fees Operational cost increase for key projects 3m in m in 2019 Normalised in 2020

18 2018 market drivers Primary, Community & Acute Care Community Pharmacy Specialist & Care Patient Efficiency is essential: demand on NHS services rising by 4% p.a. as spend per person is falling Patient Group Directions (PGD) minor clinical services delivered by pharmacies Increased diabetes spending predicted 1 in 10 people with type 2 diabetes by 2034 NHS Forward View promotes increased patient self-care to reduce pressure on NHS Community care increasingly important Drive for new revenue streams NHS focused on outsourced model More long term conditions driving citizen demand New models of care mean data sharing is increasingly important 2016 Murray Review drive to integrate pharmacy with other healthcare sectors NHS spending on diabetes increased by 72% from 2006/7 to 2016/17 NHS Innovation Accelerator promotes innovation in the self-care space EMIS Group plc Full year results presentation

19 Opportunities for growth Patient investment continues building foundations for future growth Focus on Dispensing Doctors growth opportunity following formal approval Develop our Acute medicines management business EMIS Group plc Full year results presentation

20 Opportunities for growth Build on our number two position in Community with more growth expected Execute our growth model in Community Pharmacy with expanded capabilities Continue our operational improvement plan in Specialist & Care EMIS Group plc Full year results presentation

21 2018 outlook and summary 2017 underlying profit growth continued >90% of 2017 revenue already secured for 2018 Improving performance culture Business impacted by legacy issues (and exceptional charges) which we are resolving Focus on executing key projects including IT Futures, EMIS Web upgrade and SLA settlement Continued execution of our market development and growth opportunities Strengthen alignment with strategic priorities of key customers At the heart of the connected IT future of the NHS EMIS Group plc Full year results presentation

22 Questions? 22

23 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 of 4.4m (2016: 5.7m) and of the cash impact of exceptional items of 5.2m (2016: 3.1m). EMIS Group plc Full year results presentation