TIDMEMIS
RNS Number : 1816L
EMIS Group PLC
09 September 2021
9 September 2021
EMIS Group plc
("EMIS Group" or "the Group")
Half year results for the six months ended 30 June 2021
"A positive first half in line with our strategic focus on
growth."
EMIS Group plc (AIM: EMIS.L), the UK leader in connected
healthcare software and systems, today announces its unaudited
results for the six months ended 30 June 2021.
Financial highlights
2021 H1 2020 H1 Change
Revenue
Total revenue GBP83.5m GBP78.1m +7%
Recurring revenue(1) GBP65.8m GBP63.5m +4%
Operating profit
Adjusted(1) GBP20.0m GBP17.8m +13%
Reported GBP16.3m GBP16.6m -2%
Cash flow and net cash
Cash generated from operations
- adjusted(1) GBP14.9m GBP33.8m -56%
Cash generated from operations
- reported GBP17.0m GBP36.6m -53%
Net cash(1) GBP48.0m GBP44.1m +9%
Earnings per share
Adjusted(1) 25.6p 23.1p +11%
Reported 20.8p 22.9p -9%
Interim dividend 17.6p 16.0p +10%
(1) For an explanation of the alternative performance measures
used in this report, please refer to the appendix.
H1 results - slightly ahead of the Board's expectations
-- A positive H1 with revenue and adjusted operating profit
ahead of both 2020 H1 and 2019 H1's results
-- Building solid foundations for the future with recurring
revenue increasing by 4%, representing 79% of total revenue
-- Cash flow reduced by one-off working capital factors,
including the repayment of GBP7.3m VAT deferred from 2020 H1
-- Good performance from sales, account management and delivery
teams, returning to business as usual
-- EMIS Enterprise boosted by use of the Outcomes4Health
solution to support the Covid-19 vaccination roll-out in
England
-- Dividend growth returns to pre-Covid-19 levels of 10%
Operational highlights - focus on growth
-- EMIS Group is engaged with senior NHS and enterprise business
leaders on the future of the healthcare market post Covid-19
-- Well positioned to meet the emerging integrated care systems'
(ICSs') needs through the investments made in technology,
especially analytics, data integration and interoperability
capabilities
-- Continued focus on improving customer experience with good
progress in the period, particularly with respect to the success of
digital support channels
-- On track to complete the next stage of EMIS-X through
deployment of the fast healthcare interoperability resource (FHIR)
layer as planned
Group outlook - confidence in future performance
-- A clear line of sight to meet Board expectations for the second half of the year*
-- The Group's connected care strategy positively reflects the
needs of the market both now and post Covid-19, working closely
with customers to develop the capabilities they require
-- Focussed on consistent growth in the next stage of the
Group's evolution organically, with strategic partners, as well as
through targeted M&A
Andy Thorburn, Chief Executive Officer of EMIS Group, said:
"It has been a positive first half with good performance from
the business, particularly in the sales, account management and
delivery teams in both EMIS Health and EMIS Enterprise. We are
returning to business as usual following the challenges of the
pandemic during 2020 and we have maintained our investment in, and
focus on, growth.
"We believe our connected care strategy positively reflects the
needs of the healthcare market as it emerges from Covid-19, with an
increased focus on data capabilities. We are working closely with
our customers at both strategic and local levels to address their
priorities.
"We have a clear line of sight to meet Board expectations for
the second half of the year and look forward to the future with
confidence."
There will be a hybrid results presentation today at 9.00am for
analysts, with the option to dial into the webcast and conference
call or to physically attend the presentation. Please contact
Florence Mayo at MHP Communications on 020 3128 8572, or email
emis@mhpc.com for details.
Enquiries:
For further information, contact:
EMIS Group plc Tel: 0113 380 3000
Andy Thorburn, CEO
Peter Southby, CFO
www.emisgroupplc.com
@EMISGroup
Numis Securities Limited (nominated adviser and broker) Tel: 020 7260 1000
Josh Hughes/Simon Willis/James Black
MHP Communications Tel: 020 3128 8572
Reg Hoare/James Bavister/Florence Mayo emis@mhpc.com
* Information for investors, including analyst consensus
forecasts, can be found on the Group's website at
www.emisgroupplc.com/investors .
Notes to editors
EMIS Group is the UK leader in connected healthcare software and
systems. Its solutions are widely used across every major UK
healthcare setting. EMIS Group's aim is to join up healthcare
through innovative technology, helping to deliver better health
outcomes to the UK population, supporting longer and healthier
lives.
EMIS Group has two core business segments: EMIS Health and EMIS
Enterprise.
EMIS Health is a supplier of innovative integrated care
technology to the NHS, including primary, community, acute and
social care.
EMIS Enterprise is focussed on growth in the
business-to-business technology sector within the healthcare
market, including management of medicines, partner businesses,
patient-facing services and analytics.
LEI: 213800K474ZZK76NX913
CHIEF EXECUTIVE OFFICER'S OVERVIEW
EMIS Group has had a positive first half of the year. Trading
for the period has been slightly ahead of the Board's expectations
and recurring revenue continues to grow. We have seen operational
activities return to business as usual despite the continuing
challenges of Covid-19, whilst maintaining a strong market share in
our key business areas and continuing investment for future growth.
Both revenue and adjusted operating profit were ahead of the
comparative period last year and 2019. Reported operating profit
was slightly lower than the comparative period.
The EMIS Health segment reported small increases in both
recurring and non-recurring revenues. The business continues to
deliver the requirements of the GP IT Futures contract to its core
primary care market, meeting the immediate needs of NHS Digital
(NHSD), aligning with GP users' needs for now and the future and
continuing to support the national Covid-19 programme of work.
The EMIS Enterprise segment reported strong growth in both
recurring and non-recurring revenue. This performance was boosted
by a positive contribution from the Pinnacle business (acquired in
March 2020) supporting the Covid-19 vaccination roll-out in
England. The business continues to focus on growth in
patient-facing digital services, analytics and pharmacy and through
the partner programme.
Connected care strategy
The future of the healthcare sector is connected care. We
anticipate that the focus on integrated care systems (ICSs) will
develop over the next few years as policies begin to take shape at
both central and local NHS level.
Initial discussions indicate that data management will be at the
heart of the NHS ICS strategy, which aligns with our investments in
EMIS-X Analytics, FHIR and our connected care capabilities. We also
continue to invest in connecting up our digital, pharmacy and life
sciences capabilities to drive future growth.
The Group's development roadmap continues at pace. We have
detailed development plans for all of our product areas, utilising
an agile development approach to bring new applications and product
enhancements to market more quickly with a combination of in-house
development and partner technology in a composite model. Updated
product roadmaps will be released across all key market settings
during the second half of 2021.
We are on track to complete the next stage of EMIS-X this year
through deployment of the national standard interoperability layer,
FHIR, as planned.
During the first half of 2021 we completed Patient's transition
into the matrix structure of EMIS Group. This enables us to
continue moving forward as one joined-up organisation, reflecting
our connected care strategy in alignment with NHS policy.
Focussed on growth
The Group is focussed on delivering consistent growth in the
coming years. EMIS Health is formally approved on 15 NHS
frameworks, meaning we are well placed to serve the requirements of
ICSs for interoperable technology systems that not only serve
frontline clinicians but are capable of supporting healthcare
analytics at scale for risk stratification, resource planning and
machine learning to support clinical decision making. Data
management will be at the heart of this and our investments in
EMIS-X Analytics and EMIS-X interoperability capabilities position
us well for the emerging ICS market.
In EMIS Enterprise we are focussed on four key areas for
growth:
-- increasing our digital patient-facing services;
-- expanding the partner programme;
-- growth and investment into pharmacy; and
-- developing the life sciences market with EMIS-X Analytics.
There are opportunities in community pharmacy as this sector
takes on increased responsibility for frontline care under the
patient group directions (PGD) initiative, which will see an
increasing range of healthcare services provided in a pharmacy
setting. This will lead to growth in the number and breadth of
patient-facing services that are available to book via Patient
Access. The EMIS partner programme is expected to drive growth
through the creation of a complete technology ecosystem for
customers.
Working effectively during the pandemic
I continue to be impressed by the dedication and commitment of
our employees in the UK and India, particularly during successive
lockdowns. Our people are passionate about supporting the NHS in
its delivery of patient care, and we continued to see our
high-performing teams fulfil this despite the challenges of the
pandemic. In recognition of the exceptional efforts to support our
customers through the pandemic, we rewarded all team members with a
one-off cash bonus in the first half of this year.
We continued to make employee wellbeing a priority during the
first half of 2021, with a focus on internal communications and on
promoting our established mental health first aider programme. We
encourage a strong ethos of supporting each other and this is a
cornerstone of EMIS's flexible working culture. An employee survey
in June 2021 showed that 86% agree or strongly agree that as part
of a remote workforce they feel engaged with the business.
Another important focus for the first half of 2021 has been
developing our environmental, social and governance (ESG)
proposition, drawing together a number of existing initiatives
already underway in the Group. The Board has approved the plan and
we will shortly create a formal committee to strengthen and develop
our ESG strategy.
Summary and outlook
EMIS Group continues to be well positioned for growth, with
rapidly evolving technology and data platforms that are aligned
with the evolution of the healthcare market.
With our connected care strategy and focus on the areas of
analytics, data integration and interoperability, we are well
positioned to deliver the connected care solutions that will be
required by the emerging ICSs.
The Pinnacle acquisition in 2020 has strengthened our community
pharmacy proposition; we will continue to grow the Group
organically through and with partners and, additionally, with
targeted acquisitions.
EMIS Group continues to increase its strong recurring revenue as
a foundation for investment for growth. We are engaged with senior
NHS and enterprise business leaders on the future of the healthcare
market following the pandemic. Our clinical systems have been
central to the UK's testing and vaccination programmes and, just as
we are able to deliver the NHS's digital requirements for the
national Covid-19 programme of work, our strategic roadmap aims to
do the same for the NHS's long-term modernisation agenda.
EMIS Group retains significant cash resources and bank
facilities to consider further acquisitions to build both the scale
and capabilities of the Group in existing and adjacent markets.
We have a clear line of sight to meet Board expectations for the
second half of the year and look forward to the future with
confidence.
OPERATIONAL REVIEW
EMIS Health
The EMIS Health segment comprises business areas where revenue
is generated from NHS organisations. This includes the primary,
community and emergency care markets as well as specialist ICT
infrastructure, hardware and engineering services and non-clinical
software. There have been no material changes to market shares in
key markets.
Supporting NHS Digital
The Group is working in close partnership with NHSD as it
continues to develop its national interoperability strategy, with
EMIS enabling the technical delivery of plans. The clinical coding
standard, SNOMED CT, is now aligned to international standards
under NHSD's direction and EMIS is an early phase partner for new
GP Connect capabilities, focussed on the FHIR standard for
exchanging healthcare information.
As well as delivering against the GP IT Futures framework, the
business continued to support NHSD with Covid-19-related projects.
Its online test results system, Keystone, was scaled up to manage
the transmission of up to 10 million test results per day into GP
records through interoperability. EMIS released new technology to
support GPs through the vaccination programme and supported NHS
England with its daily Covid-19 reporting requirements.
Regional update
EMIS Health continues to compete successfully across its estate.
The Group is well placed for the framework mini-tender processes
that are anticipated to occur through the coming years in both
Scotland and England.
In Scotland, as an approved supplier on the NHS National
Services Scotland (NSS) framework, EMIS Health continues to work
closely with NSS to deliver the technology to support its health
and care strategy.
In Northern Ireland, EMIS Health continues to supply EMIS Web to
GP customers, who are now benefiting from GP2GP functionality,
which allows patients' electronic health records to be transferred
securely and quickly between their old and new practices when they
change GPs.
EMIS Health continues to support its customers in Wales, pending
the outcome of the new Digital Health and Care Wales primary care
framework tender process. No end users have moved away from EMIS
systems since the framework altered in early 2018.
Strong performance in support and service
EMIS continues to prioritise customer experience and has
dedicated teams working to take the performance to the next level.
The use of digital support channels continued to increase, with 70%
of tickets received and resolved digitally (2020: 50%), following
the Group's 2019 investment into ServiceNow.
During the period the Group accelerated the pace of end user
software update releases, to deploy new functionality to customers
in a faster timeframe. The business also began to use the advanced
data science technology of EMIS-X Analytics to analyse reporting
trends and spot potential problems at an early stage, to be able to
speed up resolving or preventing unexpected issues.
EMIS Enterprise
The EMIS Enterprise segment comprises business areas where
revenue is predominantly from private sector sources, including
medicines management across both community and hospital pharmacies,
life sciences, the partner programme and patient-facing digital
services.
There have been no material changes in the market shares of any
key markets in which EMIS Enterprise operates.
Supporting the Covid-19 vaccination programme
In late 2020 EMIS adapted the Outcomes4Health system (acquired
with the Pinnacle business) to build a national vaccination system
at an unprecedented pace.
During the first half of the year, Outcomes4Health was the only
point of care system able to record vaccinations in a non-hospital
setting. To date, 66 million vaccinations have been recorded in
Outcomes4Health, transferred through interoperability to the
National Immunisation Management System (NIMS) and then into GP
clinical systems the next day. This enables crucial vaccination
status information to be shared with GP records and patients via
the NHS App or Patient Access.
Continued use of the platform is expected as the UK moves into
the next phases of the vaccination programme, with developments
planned to support the delivery of both flu and Covid-19
vaccinations.
Community pharmacy
The community pharmacy area of the business continued to perform
well during the first half of 2021.
The NHS Long Term Plan, published in January 2019, outlined the
intention for a greater range of clinical services to be provided
in a community pharmacy setting to alleviate pressure on primary
care. Secure exchange of data between systems will be key and EMIS
has boosted its capacity to develop and deliver interoperability
features into its pharmacy systems.
EMIS continues to integrate Pinnacle systems with its flagship
clinical systems for GPs and community pharmacies. This includes
functionality to support the NHS GP Community Pharmacist
Consultation Service (GP CPCS), supporting triage from primary care
into community pharmacy for minor illnesses.
The business also launched a new solution to support the
national Discharge Medicines Service (DMS) across England,
supporting secure transfer of clinical information at the point of
patient discharge from hospital clinical systems to their chosen
community pharmacy.
Moving forwards with digital patient-facing services
Patient Access remains the number one app for primary care
patient-facing services in England and increased its registered
users to 13.0 million during the period (31 December 2020: 11.7
million ) . Patients continue to utilise digital solutions to
access primary care services, with 11.5 million repeat
prescriptions ordered in the first half of 2021, in line with the
comparative period (2020: 11.7 million).
Patient Access is evolving from its strong foundations as the
leading provider of primary care digital services into a healthcare
ecosystem app with a broader range of services. This includes a new
opt-in service for personalised healthcare content to support
medication compliance through increased knowledge. Smart Pharmacy,
a new pilot service, enables patients to order, track and opt for
home delivery of their medications from their local pharmacy.
Community pharmacy appointment booking continues to develop,
with the service now live in 1,600 branches of 248 pharmacy
organisations. The business continues to expand the range of
bookable services through the Patient Access marketplace, including
blood and Covid-19 testing, and to increase the network of service
providers.
The evolution of the partner programme
To offer customers a greater range of functionality, the
business continues to proactively seek third party partners to add
new and different capabilities to the overall ecosystem.
As a focus area of growth, EMIS has evolved the programme into
two different types of partner relationships. Elite partners will
bring strategically important core capabilities such as document
management, video consulting and referral functionality to "plug
into" in-house technology and provide the fully rounded EMIS
solution.
Resale partners continue to offer a wide range of products and
services that interoperate and exchange data seamlessly with EMIS
clinical systems, including clinical devices such as spirometry and
ECG monitors. The partner programme will continue to grow in line
with end user requirements and NHS strategy, to drive business
growth and promote core customer retention.
EMIS-X Analytics
We believe that the future of preventative healthcare will be
driven through analysis of data. National and local strategy will
be informed by proactively identifying patients most at risk, to
focus resources where they are most needed.
EMIS-X Analytics technology generates insights from data, which
can be integrated back into the clinical workflow, to build in
artificial intelligence (AI) that can help improve patient outcomes
on both a national level and at the point of care.
EMIS continues to work on a pilot programme with one of the top
five global pharmaceutical companies to implement AI into EMIS Web
via EMIS-X Analytics technology. The collaboration aids early
detection of atrial fibrillation to reduce occurrence of strokes
across the UK population and is an example of how EMIS-X Analytics
technology can identify conditions that have not yet been
detected.
EMIS's strategy for EMIS-X Analytics is in alignment with
policy: two recently released policy papers from the Department of
Health and Social Care and the Department for Business, Energy and
Industrial Strategy highlight the requirement for the integration
of clinical research into the healthcare industry and provision of
secure access for healthcare professionals.
The positive customer response to EMIS-X Analytics continues
since its launch in October 2020. Following completion of a
successful six-month pilot, many pilot customers have moved to the
next stage of adopting the technology, ranging from simplified
access to data for population health to appointment planning during
the pandemic. We have closed two EMIS-X Analytics deals in the
first half of 2021 and we expect more to follow.
Supporting research into Covid-19 with EMIS-X Analytics
technology
A collaboration between EMIS and the national open-source
research platform OpenSAFELY is delivering important new insights
into Covid-19, including findings on the underreporting of long
Covid. EMIS and OpenSAFELY have created a secure, trusted research
environment within EMIS-X Analytics to support this.
Other research projects in this collaboration are investigating
the uptake of the UK Covid-19 vaccination programme, including
analysis of regional and demographic coverage.
FINANCIAL REVIEW
It was pleasing to see the improved momentum of the latter part
of 2020 maintained into the first half of 2021, despite the further
lockdown in the early months of this year. The Group's revenue,
recurring revenue, adjusted operating profit and margin were all
higher compared to both the comparative period and 2019 H1. As
expected, reported operating profit and margin were slightly lower
and cash flow was less strong than the comparative period as
Covid-19-related VAT deferrals unwound and investment in the
business to deliver future growth was maintained.
Group revenue increased by 7% to GBP83.5m (2020 H1: GBP78.1m),
including revenue of GBP3.3m (2020 H1: GBP0.7m) from the March 2020
Pinnacle acquisition. Recurring revenue grew by 4% to GBP65.8m
(2020 H1: GBP63.5m), representing 79% (2020 H1: 81%) of the Group's
total revenue.
Adjusted operating profit for the period was GBP20.0m (2020 H1:
GBP17.8m), with increases in both recurring and non-recurring
revenue and a more normalised gross margin sales mix partly offset
by higher staff costs and increased operating expenses. With a
lower level of development costs capitalised, reported operating
profit reduced to GBP16.3m (2020 H1: GBP16.6m).
Segmental performance
In EMIS Health, revenue reflected a more normalised trading
period for the segment with the comparative period having included
higher than usual hardware sales. Overall revenue was marginally
higher at GBP54.3m (2020 H1: GBP54.0m) but within this recurring
revenue increased by 3%. This higher quality revenue mix resulted
in an increased adjusted operating profit of GBP12.5m (2020 H1:
GBP11.9m), delivered while continuing to invest in developing the
strategic roadmap. Conversely, reported divisional operating profit
was lower at GBP10.6m (2021 H1: GBP13.1m) due to a reduction in the
level of capitalised development costs.
In EMIS Enterprise, revenue increased by 21% to GBP29.3m (2020
H1: GBP24.1m) and recurring revenue increased by 6%, reflecting an
improved market and a relatively weak comparative period which was
affected by the first lockdown. With the segment focussed on
executing in the areas of patient-facing services, analytics and
pharmacy, including supporting the NHS Covid-19 vaccination
programme through its Pinnacle software, adjusted operating profit
increased by 28% to GBP8.4m (2020 H1: GBP6.5m) and reported
operating profit also increased to GBP6.6m (2020 H1: GBP4.2m).
Revenue
The analysis of revenue is summarised below with full segmental
revenue analysis set out in note 9 .
-- software subscription and support revenue increased to
GBP50.9m (2020 H1: GBP48.9m), reflecting higher revenue from the
Group's existing customers;
-- interface and connectivity charges increased to GBP12.1m
(2020 H1: GBP9.7m), as a result of increased on-boarding within the
partner programme;
-- other services revenue was higher at GBP7.9m (2020 H1:
GBP6.7m), principally due to increased activity in digitisation
projects and growth in analytics;
-- hardware and related services revenue reduced to a more
normal level at GBP6.4m (2020 H1: GBP9.6m), after the pandemic had
driven higher short-term demand in the primary care market in the
comparative period; and
-- perpetual licences, training, consultancy and implementation
revenue was higher at GBP6.2m (2020 H1: GBP3.2m), with an
increasing level of project work across the business including
one-off revenues in relation to the NHS Covid-19 vaccination
programme.
Profitability and dividend
Adjusted operating profit increased by 13% to GBP20.0m (2020 H1:
GBP17.8m) with the adjusted operating margin increasing to 24.0%
(2020 H1: 22.8%), reflecting the stronger sales mix.
The Group employed 1,515 staff at 30 June 2021, with the
decrease from 1,591 at 31 December 2020 principally as a result of
vacancies in the Indian development team which are expected to be
filled in the second half of the year. Average staff costs
increased with the timing and quantum of bonus and share scheme
charges. Other operating expenses increased with additional costs
associated with the technology transformation programme, including
Microsoft and AWS.
With a lower level of capitalisation of development costs due to
teams focussing more on improving customer experience, and with
amortisation overall remaining broadly consistent, reported
operating profit was lower at GBP16.3m (2020 H1: GBP16.6m).
The tax charge for the period was GBP3.3m (2020 H1: GBP3.4m),
including GBP0.3m resulting from the recalculation of deferred tax
at the increased future rate of 25%. The tax charge represented an
effective rate of tax before the deferred tax rate change, other
income and share of result of joint venture and associate of 19.1%
(2020 H1: 19.2%).
Adjusted basic and diluted EPS increased by 11% and 10% to 25.6p
and 25.3p respectively (2020 H1: 23.1p and 22.9p). The reported
basic and diluted EPS were both lower at 20.8p and 20.6p
respectively (2020 H1: 22.9p and 22.8p).
The Board has carefully considered the more encouraging trading
environment experienced in 2021, together with the consistent
underlying growth of the Group and its future prospects, and has
declared a 10% increase in the interim dividend to 17.6p per share
(2020 H1: 16.0p), payable on 4 November 2021 to shareholders on the
register at the close of business on 8 October 2021.
Cash flow, net cash and financing
Cash generated from operations was GBP17.0m (2020 H1: GBP36.6m),
with the decrease due principally to working capital movements. In
particular, this reflected the repayment of GBP7.3m of VAT, the
deferral of which had benefitted the comparative period, and also
some short-term delayed debtor payments which were received in
early July. Adjusted cash from operations, stated after deducting
capitalised development costs and adjusting for the cash impact of
any exceptional items where appropriate, decreased to GBP14.9m
(2020 H1: GBP33.8m).
Gross capital expenditure on property, plant and equipment and
purchased software excluding capitalised development costs remained
tightly controlled at GBP1.6m (2020 H1: GBP0.9m).
The Group paid GBP2.0m of deferred consideration in respect of
the 2020 acquisition of the Pinnacle business and GBP2.4m to
acquire shares to satisfy future requirements of employee share
schemes, partially offset by GBP0.6m received for shares
transferred to employees.
After finance costs, lease payments, tax, and dividends, the
Group ended the period with net cash of GBP48.0m (31 December 2020:
GBP53.0m; 2020 H1: GBP44.1m).
As at 30 June 2021, the Group had available undrawn bank
facilities of GBP15.0m in place until 30 June 2022. An accordion
arrangement is in place to increase the quantum up to GBP30.0m if
required.
INDEPENT REVIEW REPORT TO EMIS GROUP PLC
Conclusion
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly results for the six
months ended 30 June 2021 which comprises the group statement of
comprehensive income, group balance sheet, group statement of cash
flows, group statement of changes in equity and the related
explanatory notes.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly report for the six months ended 30 June 2021 is
not prepared, in all material respects, in accordance with IAS 34
Interim Financial Reporting as adopted for use in the UK and the
AIM Rules.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity issued by the Auditing Practices Board for use in the
UK. A review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures. We read the other information contained in the
half-yearly report and consider whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
Directors' responsibilities
The half-yearly report is the responsibility of, and has been
approved by, the directors. The directors are responsible for
preparing the half-yearly report in accordance with the AIM
Rules.
As disclosed in note 2, the latest annual financial statements
of the group were prepared in accordance with international
accounting standards in conformity with the requirements of the
Companies Act 2006 and the next annual financial statements will be
prepared in accordance with UK-adopted international accounting
standards. The directors are responsible for preparing the
condensed set of financial statements included in the half-yearly
report in accordance with IAS 34 as adopted for use in the UK.
Our responsibility
Our responsibility is to express to the company a conclusion on
the condensed set of financial statements in the half-yearly report
based on our review.
The purpose of our review work and to whom we owe our
responsibilities
This report is made solely to the company in accordance with the
terms of our engagement. Our review has been undertaken so that we
might state to the company those matters we are required to state
to it in this report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the company for our review work, for this
report, or for the conclusions we have reached.
Francis Simpson
for and on behalf of KPMG LLP
Chartered Accountants
1 Sovereign Square, Sovereign Street, Leeds, LS1 4DA
8 September 2021
Group statement of comprehensive income
for the six months ended 30 June 2021
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2021 2020 2020
Unaudited Unaudited Audited
Notes GBP'000 GBP'000 GBP'000
----------------------------------- ----- ---------- ---------- -----------
Revenue 9 83,512 78,118 159,453
Costs:
Changes in inventories 51 940 (47)
Cost of goods and services (8,159) (12,426) (20,288)
Staff costs (36,864) (29,680) (63,374)
Other operating expenses (13,662) (12,002) (22,628)
Depreciation of property, plant
and equipment (2,173) (2,601) (5,089)
Amortisation of intangible assets (6,391) (5,718) (12,251)
----------------------------------- ----- ---------- ---------- -----------
Adjusted operating profit 20,011 17,772 39,266
Development costs capitalised 2,112 4,096 6,590
Amortisation of intangible assets1 (5,809) (5,237) (11,100)
Release of contingent acquisition
consideration - - 1,020
----------------------------------- ----- ---------- ---------- -----------
Operating profit 16,314 16,631 35,776
Finance income 11 201 89
Finance costs (241) (322) (590)
Share of result of joint venture
and associate 361 424 858
Other income2 - 782 782
----------------------------------- ----- ---------- ---------- -----------
Profit before taxation 16,445 17,716 36,915
Income tax expense 10 (3,335) (3,384) (6,794)
----------------------------------- ----- ---------- ---------- -----------
Profit for the period 13,110 14,332 30,121
----------------------------------- ----- ---------- ---------- -----------
Other comprehensive income
Items that may be reclassified
to profit or loss:
Currency translation differences (120) 76 (41)
----------------------------------- ----- ---------- ---------- -----------
Other comprehensive income (120) 76 (41)
----------------------------------- ----- ---------- ---------- -----------
Total comprehensive income for
the period 12,990 14,408 30,080
----------------------------------- ----- ---------- ---------- -----------
Attributable to:
- equity holders of the parent 12,990 14,479 30,207
- non-controlling interest in
subsidiary company - (71) (127)
----------------------------------- ----- ---------- ---------- -----------
Total comprehensive income for
the period 12,990 14,408 30,080
----------------------------------- ----- ---------- ---------- -----------
Earnings per share attributable
to equity holders of the parent Pence Pence Pence
--------------------------------- ----- ----- -----
Basic 11 20.8 22.9 48.1
Basic diluted 11 20.6 22.8 47.6
Adjusted 11 25.6 23.1 51.0
Adjusted diluted 11 25.3 22.9 50.4
--------------------------------- ----- ----- -----
1 Excluding amortisation of computer software used internally of
GBP582,000 (2020 H1: GBP481,000; 2020 FY: GBP1,151,000).
2 During the prior period the Group received GBP782,000 of
previously unrecognised additional consideration in relation to the
2019 disposal of the Specialist & Care business.
Group balance sheet
as at 30 June 2021
30 June 30 June 31 December
2021 2020 2020
Unaudited Unaudited Audited
Notes GBP'000 GBP'000 GBP'000
-------------------------------- ----- --------- --------- -----------
Non-current assets
Goodwill 52,177 52,146 52,177
Other intangible assets 13 28,914 36,801 33,118
Property, plant and equipment 18,959 20,591 19,870
Investment in joint venture and
associate 714 769 353
-------------------------------- ----- --------- --------- -----------
100,764 110,307 105,518
-------------------------------- ----- --------- --------- -----------
Current assets
Inventories 664 1,600 613
Current tax assets 3,274 247 3,556
Trade and other receivables 45,343 32,414 29,993
Cash and cash equivalents 48,044 44,122 53,008
-------------------------------- ----- --------- --------- -----------
97,325 78,383 87,170
-------------------------------- ----- --------- --------- -----------
Total assets 198,089 188,690 192,688
-------------------------------- ----- --------- --------- -----------
Current liabilities
Trade and other payables (26,810) (26,050) (31,219)
Deferred income (39,836) (37,017) (29,161)
Other financial liabilities 14 (2,000) (2,480) (2,000)
Lease liabilities 15 (867) (973) (990)
-------------------------------- ----- --------- --------- -----------
(69,513) (66,520) (63,370)
-------------------------------- ----- --------- --------- -----------
Non-current liabilities
Deferred tax liability (2,245) (1,711) (2,289)
Other financial liabilities 14 - (5,268) (2,000)
Lease liabilities 15 (5,398) (6,307) (5,891)
-------------------------------- ----- --------- --------- -----------
(7,643) (13,286) (10,180)
-------------------------------- ----- --------- --------- -----------
Total liabilities (77,156) (79,806) (73,550)
-------------------------------- ----- --------- --------- -----------
Net assets 120,933 108,884 119,138
-------------------------------- ----- --------- --------- -----------
Equity
Ordinary share capital 633 633 633
Share premium 51,045 51,045 51,045
Own shares held in trust (5,434) (4,810) (3,594)
Retained earnings 73,015 61,948 69,260
Other reserve 1,674 (137) 1,794
-------------------------------- ----- --------- --------- -----------
Equity attributable to owners
of the parent 120,933 108,679 119,138
Non-controlling interest - 205 -
-------------------------------- ----- --------- --------- -----------
Total equity 120,933 108,884 119,138
-------------------------------- ----- --------- --------- -----------
Group statement of cash flows
for the six months ended 30 June 2021
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2021 2020 2020
Unaudited Unaudited Audited
Notes GBP'000 GBP'000 GBP'000
Profit before taxation 16,445 17,716 36,915
Finance income (11) (201) (89)
Finance costs 241 322 590
Share of result of joint venture (361) (424) (858)
Other income - (782) (782)
-------------------------------------- ----- ---------- ---------- -----------
Operating profit 16,314 16,631 35,776
Adjustment for non-cash items
Amortisation of intangible assets 6,391 5,718 12,251
Depreciation of property, plant
and equipment 2,173 2,601 5,089
(Profit)/loss on disposal of
property, plant and equipment (7) 32 43
Share-based payments 824 230 1,440
-------------------------------------- ----- ---------- ---------- -----------
Operating cash flow before changes
in working capital 25,695 25,212 53,579
Changes in working capital
(Increase)/decrease in inventory (51) (940) 47
(Increase)/decrease in trade
and other receivables (13,857) 2,619 3,197
(Decrease)/increase in trade
and other payables (4,407) 2,508 7,751
Increase/(decrease) in deferred
income 9,637 7,169 (436)
-------------------------------------- ----- ---------- ---------- -----------
Adjusted cash generated from
operations 14,905 33,775 58,851
Development costs capitalised 2,112 4,096 6,590
Cash costs of exceptional items - (1,303) (1,303)
-------------------------------------- ----- ---------- ---------- -----------
Cash generated from operations 17,017 36,568 64,138
Finance costs (42) (82) (141)
Finance income 10 86 87
Tax paid (3,789) (7,723) (11,684)
-------------------------------------- ----- ---------- ---------- -----------
Net cash generated from operating
activities 13,196 28,849 52,400
-------------------------------------- ----- ---------- ---------- -----------
Cash flows from investing activities
Purchase of property, plant and
equipment (1,501) (850) (2,449)
Proceeds from sale of property,
plant and equipment 7 2,478 2,500
Development costs capitalised (2,112) (4,096) (6,590)
Purchase of software (75) (96) (452)
Dividends received - - 850
Business combination - (2,880) (2,880)
Disposal of discontinued operation,
net of cash disposed of - 782 782
-------------------------------------- ----- ---------- ---------- -----------
Net cash used in investing activities (3,681) (4,662) (8,239)
-------------------------------------- ----- ---------- ---------- -----------
Cash flows from financing activities
Transactions in own shares held
in trust (1,840) 211 474
Payment of lease liabilities 15 (573) (777) (1,511)
Contingent consideration (2,000) (800) (800)
Dividends paid 12 (10,066) (9,798) (19,860)
Acquisition of non-controlling
interest - - (555)
-------------------------------------- ----- ---------- ---------- -----------
Net cash used in financing activities (14,479) (11,164) (22,252)
-------------------------------------- ----- ---------- ---------- -----------
Net (decrease)/increase in cash
and cash equivalents (4,964) 13,023 21,909
Cash and cash equivalents at
beginning of period 53,008 31,099 31,099
-------------------------------------- ----- ---------- ---------- -----------
Cash and cash equivalents at
end of period 48,044 44,122 53,008
-------------------------------------- ----- ---------- ---------- -----------
Group statement of changes in equity
for the six months ended 30 June 2021
Own shares Non-
held
Share Share in Retained Other controlling Total
capital premium trust earnings reserve interest equity
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------- ----- ------- ------- ---------- -------- ------- ----------- --------
At 1 January 2020 633 51,045 (5,021) 57,118 147 276 104,198
Profit for the period - - - 14,403 - (71) 14,332
Transactions with owners
Share acquisitions less
sales - - 211 - - - 211
Share-based payments - - - 230 - - 230
Deferred tax in relation
to share-based payments - - - (5) - - (5)
Dividends paid - - - (9,798) - - (9,798)
Contingent acquisition
consideration - - - - (320) - (320)
Option over non-controlling
interest - - - - (40) - (40)
Other comprehensive income
Currency translation differences - - - - 76 - 76
--------------------------------- ----- ------- ------- ---------- -------- ------- ----------- --------
At 30 June 2020 633 51,045 (4,810) 61,948 (137) 205 108,884
Profit for the period - - - 15,845 - (56) 15,789
Changes in ownership interest
Non-controlling interest
acquisition - - - (406) - (149) (555)
Transactions with owners
Share acquisitions less
sales - - 1,216 - - - 1,216
Share-based payments - - - 1,210 - - 1,210
Deferred tax in relation
to share-based payments - - - 45 - - 45
Dividends paid 12 - - - (10,062) - - (10,062)
Contingent acquisition
consideration - - - 680 (680) - -
Option over non-controlling
interest - - - - 2,728 - 2,728
Other comprehensive income
Currency translation differences - - - - (117) - (117)
--------------------------------- ----- ------- ------- ---------- -------- ------- ----------- --------
At 31 December 2020 633 51,045 (3,594) 69,260 1,794 - 119,138
Profit for the period - - - 13,110 - - 13,110
Transactions with owners
Share acquisitions less
sales - - (1,840) - - - (1,840)
Share-based payments - - - 824 - - 824
Deferred tax in relation
to share-based payments - - - (113) - - (113)
Dividends paid 12 - - - (10,066) - - (10,066)
Other comprehensive income
Currency translation differences - - - - (120) - (120)
--------------------------------- ----- ------- ------- ---------- -------- ------- ----------- --------
At 30 June 2021 633 51,045 (5,434) 73,015 1,674 - 120,933
--------------------------------- ----- ------- ------- ---------- -------- ------- ----------- --------
Notes to the half year financial statements
1. General information
The financial statements for the six months ended 30 June 2021
and the six months ended 30 June 2020 do not constitute statutory
accounts within the meaning of Section 434 of the Companies Act
2006. Statutory accounts for the year ended 31 December 2020 were
approved by the Board of Directors on 17 March 2021 and delivered
to the Registrar of Companies. The auditor's report on those
accounts was unqualified, did not contain an emphasis of matter
paragraph and did not contain any statement under Section 498 (2)
or (3) of the Companies Act 2006.
These condensed half year financial statements were approved for
issue by the Board of Directors on 8 September 2021.
2. Basis of preparation
These condensed half year financial statements for the half year
ended 30 June 2021 have been prepared in accordance with the AIM
Rules for Companies, comply with IAS 34 Interim Financial Reporting
and should be read in conjunction with the annual financial
statements for the year ended 31 December 2020, which have been
prepared in accordance with international accounting standards in
conformity with the requirements of the Companies Act 2006
("adopted IFRS").
The financial information is presented in sterling, which is the
functional currency of EMIS Group. All financial information
presented has been rounded to the nearest thousand.
Going concern
The Group is profitable and cash generative and it is
anticipated that this will continue. There is a high and continuing
level of recurring revenue and high cash conversion.
The Directors have prepared cash flow forecasts covering a
period of at least twelve months from the date of approval of these
condensed half year financial statements. These forecasts,
including consideration of reasonably possible downside scenarios
linked to the principal risks and uncertainties set out in the
strategic report of the Group's annual report and accounts for the
year ended 31 December 2020, show that the Group will continue to
operate with significant cash reserves and would not need to
utilise the facility in place under any of the scenarios
considered. Based on this assessment the Directors have a
reasonable expectation that the Group has adequate resources to
continue in existence for at least twelve months from the date of
approval of these half year financial statements and therefore
continue to adopt the going concern basis of accounting in
preparing these condensed half year financial statements.
3. Accounting policies
The accounting policies applied in these interim financial
statements are the same as those applied in the Group's annual
report and accounts for the year ended 31 December 2020.
Current taxes on income in the half year period are accrued
using the tax rates that would be applicable to expected total
annual profits. Deferred taxes on income are calculated based on
the standard rates that are enacted as at the balance sheet
date.
4. Critical accounting judgements and key sources of estimation
uncertainty
In preparing the 2021 half year financial statements no
significant judgements have been made in the process of applying
the Group's accounting policies, and no significant estimations
have been made that could have a material effect on the amounts
recognised in the financial statements.
5. Principal risks and uncertainties
The 2020 Group annual report and accounts describes the
principal risks and uncertainties that could impact the Group's
performance. These risks relate to healthcare structure and
procurement changes, software (product) development, people and
culture, information governance and cyber security, and clinical
safety. These remain unchanged since the annual report was
published and are not expected to change for the remaining six
months of the financial year. The Group operates a structured risk
management process, which identifies and evaluates risks and
uncertainties and reviews mitigation activity.
Covid-19 was described as an emerging risk in the 2020 Group
annual report; however, the Board no longer regards this as an
emerging risk which could materially impact the business, as the
Group has proven its ability to continue to operate normally over
an extended period of time including homeworking and video
conferencing.
6. Financial risk management
The Group's activities expose it to financial risks including
credit risk, liquidity risk, interest rate risk and price risk.
These condensed consolidated half year financial statements do
not include all financial risk management information and
disclosures required in the annual financial statements and
therefore should be read in conjunction with the 2020 Group annual
report and accounts.
7. Forward-looking statements
Certain statements in this half year report are forward-looking.
Although the Group believes that the expectations reflected in
these forward-looking statements are reasonable, it can give no
assurance that these expectations will prove to have been correct.
Because these statements involve risks and uncertainties, actual
results may differ materially from those expressed or implied by
these forward-looking statements.
8. Segmental reporting
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 Directors have presented segmental information to reflect
the Group's structure, activities and the markets being served. The
Group has two operating and reportable segments, both involved with
the supply and support of connected healthcare software and
systems:
-- EMIS Health; and
-- EMIS Enterprise.
Each operating segment is assessed by the Board based on an
adjusted measure of operating profit, as defined in the appendix.
Group operating expenses, finance income and costs, cash and cash
equivalents, and current and deferred taxes are not allocated to
segments, as income tax, group and financing activities are not
segment-specific.
Six months ended Six months ended
30 June 2021 30 June 2020
Unaudited Unaudited
----------------------------- -----------------------------
EMIS EMIS EMIS EMIS
Health Enterprise Total Health Enterprise Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------ ------- ----------- ------- ------- ----------- -------
Revenue 54,254 29,258 83,512 54,003 24,115 78,118
------------------------------------ ------- ----------- ------- ------- ----------- -------
Segmental operating profit
as reported internally 12,484 8,367 20,851 11,929 6,521 18,450
Development costs capitalised 1,286 826 2,112 3,737 359 4,096
Amortisation of development
costs (1,555) (991) (2,546) (844) (880) (1,724)
Amortisation of acquired intangible
assets (1,633) (1,630) (3,263) (1,717) (1,796) (3,513)
------------------------------------ ------- ----------- ------- ------- ----------- -------
Segmental operating profit 10,582 6,572 17,154 13,105 4,204 17,309
Group operating expenses (840) (678)
------------------------------------ ------- ----------- ------- ------- ----------- -------
Operating profit 16,314 16,631
Net finance costs (230) (121)
Share of result of joint venture
and associate 361 424
Other income - 782
------------------------------------ ------- ----------- ------- ------- ----------- -------
Profit before taxation 16,445 17,716
------------------------------------ ------- ----------- ------- ------- ----------- -------
Revenue excludes intra-group transactions on normal commercial
terms from the EMIS Health segment to the EMIS Enterprise segment
totalling GBP1,185,000 (2020 H1: GBP1,399,000).
Revenue of GBP54,173,000 (2020 H1: GBP55,826,000) is derived
from the NHS and related bodies. Revenue of GBP1,765,000 (2020 H1:
GBP1,861,000) is derived from customers outside the United
Kingdom.
9. Revenue analysis
Revenue is analysed as follows:
Six months ended Six months ended
30 June 2021 30 June 2020
Unaudited Unaudited
----------------------------- -----------------------------
EMIS EMIS EMIS EMIS
Health Enterprise Total Health Enterprise Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- ------- ----------- ------- ------- ----------- -------
Software subscription and
support 38,909 11,975 50,884 38,075 10,794 48,869
Interface and connectivity
charges 3,007 9,088 12,095 2,234 7,483 9,717
Other services 5,124 2,788 7,912 4,168 2,582 6,750
Hardware and related services 3,693 2,692 6,385 7,607 2,013 9,620
Perpetual licences, training,
consultancy and implementation 3,521 2,715 6,236 1,919 1,243 3,162
-------------------------------- ------- ----------- ------- ------- ----------- -------
54,254 29,258 83,512 54,003 24,115 78,118
-------------------------------- ------- ----------- ------- ------- ----------- -------
10. Income tax expense
The tax expense recognised reflects management estimates of the
tax charge for the period and has been calculated using the
estimated average tax rate of UK corporation tax for the financial
year of 19% (2020: 19%). In March 2021 the UK government announced
that the UK corporation tax rate for large companies would rise to
25% from 1 April 2023. This resulted in a one-off deferred tax
charge of GBP261,000 in the period, with a corresponding increase
in the Group's net deferred tax liability.
11. Earnings per share (EPS)
The calculation of basic and diluted EPS is based on the
following earnings and numbers of shares:
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2021 2020 2020
Unaudited Unaudited Audited
Earnings GBP'000 GBP'000 GBP'000
------------------------------------------------ ---------- ---------- -----------
Profit for the period 13,110 14,332 30,121
Total comprehensive income attributable to
non-controlling interest - 71 127
------------------------------------------------ ---------- ---------- -----------
Basic earnings attributable to equity holders 13,110 14,403 30,248
Development costs capitalised (2,112) (4,096) (6,590)
Amortisation of development costs and acquired
intangible assets 5,809 5,237 11,100
Release of contingent acquisition consideration - - (1,020)
Other income - (782) (782)
Tax and non-controlling interest effect of
above items (703) (258) (925)
------------------------------------------------ ---------- ---------- -----------
Adjusted earnings attributable to equity
holders 16,104 14,504 32,031
------------------------------------------------ ---------- ---------- -----------
Number Number Number
Weighted average number of ordinary shares '000 '000 '000
------------------------------------------------ ---------- ---------- -----------
Total shares in issue 63,311 63,311 63,311
Shares held by Employee Benefit Trust (346) (479) (447)
------------------------------------------------ ---------- ---------- -----------
For basic EPS calculations 62,965 62,832 62,864
Effect of potentially dilutive share options 582 368 634
------------------------------------------------ ---------- ---------- -----------
For diluted EPS calculations 63,547 63,200 63,498
------------------------------------------------ ---------- ---------- -----------
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2021 2020 2020
Unaudited Unaudited Audited
EPS Pence Pence Pence
----------------- ---------- ---------- -----------
Basic 20.8 22.9 48.1
Basic diluted 20.6 22.8 47.6
Adjusted 25.6 23.1 51.0
Adjusted diluted 25.3 22.9 50.4
----------------- ---------- ---------- -----------
12. Dividends
In relation to the 2020 financial year, an interim dividend of
16.0p was paid on 5 November 2020 amounting to GBP10,062,000,
followed by a final dividend of 16.0p on 14 May 2021 amounting to
GBP10,066,000.
For the 2021 financial year, the Directors are proposing an
interim dividend of 17.6p, which will be payable on 4 November 2021
to shareholders on the register at 8 October 2021. This interim
dividend, which will amount to approximately GBP11,085,000, has not
been recognised as a liability in these half year financial
statements.
13. Other intangible assets
Computer Computer
Computer software software
software developed acquired
used for external on business Customer
internally sale combinations relationships Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------------- ---------- ------------ ------------ ------------- -------
Cost
At 1 January 2020 7,798 58,098 40,341 30,984 137,221
Additions 96 4,096 - - 4,192
Acquisition of business - - 2,989 962 3,951
---------------------------------------- ---------- ------------ ------------ ------------- -------
At 30 June 2020 7,894 62,194 43,330 31,946 145,364
Additions 356 2,494 - - 2,850
---------------------------------------- ---------- ------------ ------------ ------------- -------
At 31 December 2020 8,250 64,688 43,330 31,946 148,214
Additions 75 2,112 - - 2,187
---------------------------------------- ---------- ------------ ------------ ------------- -------
At 30 June 2021 8,325 66,800 43,330 31,946 150,401
---------------------------------------- ---------- ------------ ------------ ------------- -------
Accumulated amortisation and impairment
At 1 January 2020 5,167 43,676 31,281 22,721 102,845
Charged in period 481 1,724 2,202 1,311 5,718
---------------------------------------- ---------- ------------ ------------ ------------- -------
At 30 June 2020 5,648 45,400 33,483 24,032 108,563
Charged in period 670 2,552 2,210 1,101 6,533
---------------------------------------- ---------- ------------ ------------ ------------- -------
At 31 December 2020 6,318 47,952 35,693 25,133 115,096
Charged in period 582 2,546 2,210 1,053 6,391
---------------------------------------- ---------- ------------ ------------ ------------- -------
At 30 June 2021 6,900 50,498 37,903 26,186 121,487
---------------------------------------- ---------- ------------ ------------ ------------- -------
Net book value
At 30 June 2021 1,425 16,302 5,427 5,760 28,914
At 31 December 2020 1,932 16,736 7,637 6,813 33,118
At 30 June 2020 2,246 16,794 9,847 7,914 36,801
At 1 January 2020 2,631 14,422 9,060 8,263 34,376
---------------------------------------- ---------- ------------ ------------ ------------- -------
14. Other financial liabilities
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2021 2020 2020
Unaudited Unaudited Audited
GBP'000 GBP'000 GBP'000
------------------------------------------------ ---------- ---------- -----------
Current
Contingent acquisition consideration - Pinnacle 2,000 2,000 2,000
Contingent acquisition consideration - Dovetail - 480 -
------------------------------------------------ ---------- ---------- -----------
Total 2,000 2,480 2,000
------------------------------------------------ ---------- ---------- -----------
Non-current
Contingent acquisition consideration - Pinnacle - 2,000 2,000
Contingent acquisition consideration - Dovetail - 540 -
Option over non-controlling interest - 2,728 -
------------------------------------------------ ---------- ---------- -----------
Total - 5,268 2,000
------------------------------------------------ ---------- ---------- -----------
In respect of the Pinnacle contingent acquisition consideration,
a payment of GBP2,000,000 was made during the period, and a
liability of GBP2,000,000 was reclassified from non-current to
current liabilities.
15. Leases
Set out below are the carrying amounts of the Group's
right-of-use assets and lease liabilities and the movements during
the period:
Lease
Right-of-use assets liabilities
--------------------------------------- -----------
Fixtures,
Land fittings
and and Motor
buildings equipment vehicles Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------- --------- --------- -------- ------- -----------
As at 1 January 2020 2,639 46 886 3,571 (3,934)
Additions 3,391 - 389 3,780 (3,780)
Acquisition of business 151 - - 151 (156)
Depreciation expense (367) (16) (294) (677) -
Interest expense - - - - (191)
Payments - - - - 777
Effect of movements in exchange
rates (6) - - (6) 4
--------------------------------- --------- --------- -------- ------- -----------
As at 30 June 2020 5,808 30 981 6,819 (7,280)
Additions 31 - 270 301 (301)
Depreciation expense (491) (16) (269) (776) -
Interest expense - - - - (195)
Payments - - - - 731
Effect of movements in exchange
rates (134) - - (134) 164
--------------------------------- --------- --------- -------- ------- -----------
As at 31 December 2020 5,214 14 982 6,210 (6,881)
Additions - - 10 10 (10)
Remeasurement of lease asset and
liability - - (154) (154) 154
Depreciation expense (315) (14) (198) (527) -
Interest expense - - - - (180)
Payments - - - - 573
Effect of movements in exchange
rates (66) - - (66) 79
--------------------------------- --------- --------- -------- ------- -----------
As at 30 June 2021 4,833 - 640 5,473 (6,265)
--------------------------------- --------- --------- -------- ------- -----------
Appendix: Alternative performance measures (APMs)
This report contains certain financial measures (APMs) that are
not defined or recognised under IFRS but are presented to provide
readers with additional financial information that is evaluated by
management and investors in assessing the performance of the
Group.
This additional information presented is not uniformly defined
by all companies and may not be comparable with similarly titled
measures and disclosures by other companies. These measures are
unaudited and should not be viewed in isolation or as an
alternative to those measures that are derived in accordance with
IFRS.
Recurring revenue
Recurring revenue is the revenue that annually repeats either
under contractual arrangement or by predictable customer habit. It
highlights how much of the Group's total revenue is secured and
anticipated to repeat in future periods, providing a measure of the
financial strength of the Group. It is a measure that is well
understood by the Group's investor and analyst community and is
used for internal performance reporting.
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2021 2020 2020
GBP'000 GBP'000 GBP'000
---------------------- ---------- ---------- -----------
Reported revenue 83,512 78,118 159,453
Non-recurring revenue (17,690) (14,640) (29,410)
---------------------- ---------- ---------- -----------
Recurring revenue 65,822 63,478 130,043
---------------------- ---------- ---------- -----------
Adjusted operating profit, adjusted operating margin, and
adjusted earnings per share
Adjusted operating profit is operating profit from continuing
operations excluding exceptional items, the effect of
capitalisation and amortisation of development costs, and the
amortisation of acquired intangible assets. The same adjustments
are also made in determining the adjusted operating margin of the
Group and its segments and in determining adjusted earnings per
share (EPS). The EPS calculation further adjusts for the profit
impacts of discontinued operations and the related tax and
non-controlling interest impacts of the operating profit
adjustments.
The Board considers this adjusted measure of operating profit to
provide the best metric of assessing underlying performance,
as:
-- it excludes exceptional items (items are only classified as
exceptional due to their nature or size);
-- it excludes any one-off goodwill impairment;
-- by expensing capitalised development costs (and also not
amortising these costs) it reflects the underlying in-year cash
cost of development of software for external sale, as development
is considered to be a core ongoing operating function of the
business; and
-- it excludes the amortisation of acquired intangibles arising
from business combinations which varies year on year dependent on
the timing and size of any acquisitions. This is consistent with
the presentation of the amortisation of the Group's own software
intangibles.
These metrics are used internally for reporting business unit
performance and in determining management and executive
remuneration. They are commonly used by other software companies,
and are also well understood by the Group's investor and analyst
community.
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2021 2020 2020
GBP'000 GBP'000 GBP'000
---------------------------------------------- ---------- ---------- -----------
Reported operating profit 16,314 16,631 35,776
Development costs capitalised (2,112) (4,096) (6,590)
Amortisation of computer software developed
for external sale 2,546 1,724 4,276
Exceptional release of contingent acquisition
consideration - - (1,020)
Amortisation of intangible assets arising
on business combinations 3,263 3,513 6,824
---------------------------------------------- ---------- ---------- -----------
Adjusted operating profit 20,011 17,772 39,266
---------------------------------------------- ---------- ---------- -----------
A reconciliation of adjusted earnings used in the adjusted EPS
calculations is shown below:
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2021 2020 2020
GBP'000 GBP'000 GBP'000
----------------------------------------------- ---------- ---------- -----------
Profit attributable to equity holders 13,110 14,403 30,248
Development costs capitalised (2,112) (4,096) (6,590)
Amortisation of computer software developed
for external sale 2,546 1,724 4,276
Amortisation of intangible assets arising
on business combinations 3,263 3,513 6,824
Exceptional release of contingent acquisition
consideration - - (1,020)
Other income - (782) (782)
Tax and non-controlling interest effect of
above items (703) (258) (925)
----------------------------------------------- ---------- ---------- -----------
Adjusted profit attributable to equity holders 16,104 14,504 32,031
----------------------------------------------- ---------- ---------- -----------
Adjusted cash generated from operations
The Group's adjusted cash generated from operations adjusts for
capitalised development cost expenditure and the cash costs of
exceptional items, consistent with the adjusted operating profit
metric used by the Group. This provides a meaningful metric for the
underlying cash the Group generates having accounted for the cash
cost of all development expenditure and adding back the cash cost
of non-recurring exceptional items.
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2021 2020 2020
GBP'000 GBP'000 GBP'000
---------------------------------------- ---------- ---------- -----------
Reported cash generated from operations 17,017 36,568 64,138
Development costs capitalised (2,112) (4,096) (6,590)
Cash cost of exceptional items - 1,303 1,303
---------------------------------------- ---------- ---------- -----------
Adjusted cash generated from operations 14,905 33,775 58,851
---------------------------------------- ---------- ---------- -----------
Net cash/(debt)
The Group uses net cash/(debt), defined as cash and cash
equivalents less total borrowings (excluding IFRS 16 lease
liabilities), as a supplementary measure in evaluating its
liquidity, as it indicates the level of cash available to the Group
and provides an indicator of the overall balance sheet strength. It
is used in the calculation of the leverage ratio under its bank
facility arrangements. For the six months ended 30 June 2021 the
Group was in a net cash position, with no borrowings.
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END
IR DKFBPABKDACK
(END) Dow Jones Newswires
September 09, 2021 02:00 ET (06:00 GMT)
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