EMIS Group Plc Annual Report and Accounts 2020
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EMIS Group plc EMIS Group Annual report and accounts 2020 and accounts report Annual Supporting our customers EMIS Group plc Annual report and accounts 2020 The UK leader in connected healthcare software and systems SUPPORTING CUSTOMERS GROWTH EMIS Group supports the healthcare sector EMIS Group delivered resilient results during with technology that drives improvements to the pandemic, maintaining its track record of efficiency and enables better patient outcomes. increasing dividends every year since flotation. Strategic report Governance Financial statements 1 Highlights 46 Board of Directors 82 Independent auditor’s report 2 At a glance 48 Chair’s introduction to governance 88 Group statement of 4 Covid-19 response 49 Corporate governance statement comprehensive income 6 Chair’s statement 55 Report of the audit committee 89 Group and parent company balance sheets 8 Chief Executive Officer’s statement 60 Report of the nomination committee 90 Group and parent company 10 Business model 62 Report of the remuneration committee statements of cash flows 12 Stakeholder engagement 65 Directors’ remuneration report 91 Group and parent company statements 16 Markets 77 Directors’ report of changes in equity 18 Strategy 80 Viability statement 92 Notes to the financial statements 20 Key performance indicators 81 Statement of Directors’ responsibilities 115 Five-year Group financial summary 22 Alternative performance measures 116 Shareholder information 24 Operational review IBC Glossary 28 Principal risks and uncertainties 34 Sustainability 42 Financial review Visit our website at www.emisgroupplc.com Highlights Business Financial Resilient financial performance and further Total revenue Recurring revenue1 strategic progress: • Revenues, adjusted operating profit and adjusted – +4% operating margin maintained while recurring revenue, £159.5m £130.0m cash flow and reported operating profit all increased Reported operating profit Adjusted operating profit1 • Successful transition to GP IT Futures framework, with leadership positions maintained or improved in key NHS markets £35.8m +33% £39.3m – • Resilient business model with recurring revenue up 4% to £130.0m, representing 82% of total revenue Reported cash generated Adjusted cash generated (2019: 78%), £28m of new business delivered from operations from operations1 in the period and strong cash position of £53.0m (2019: £31.1m) +28% +27% • Increased final dividend for tenth consecutive year £64.1m £58.9m Reported EPS Adjusted EPS1 48.1p +34% 51.0p -1% Net cash1 Total dividend for the year +70% +3% £53.0m 32.0p 1 Recurring revenue, adjusted operating profit, adjusted cash generated from operations, adjusted EPS and net cash are all alternative performance measures. See page 22 for further details and reconciliation to the relevant IFRS number. We have the No. 1 market share in primary care, A&E and community pharmacy EMIS Group plc | Annual report and accounts 2020 1 STRATEGIC REPORT At a glance PURPOSE Connecting care settings to improve patient experience Enable better and health outcomes Empowering people through online access to clinically care through authored content and approved services technology Delivering insight for clinicians to improve UK innovation health and wellness Segments EMIS HEALTH EMIS ENTERPRISE Primary, community Medicines Partners, analytics Patient-facing and acute care management and other services services 68% 22% 9% 1% of revenue in 2020 of revenue in 2020 of revenue in 2020 of revenue in 2020 in primary care #1 #1 in community pharmacy 143 accredited partners #1 patient services app #2 in community #2 in hospital pharmacy #1 in A&E #1 in community pharmacy service management solutions 2 EMIS Group plc | Annual report and accounts 2020 Our investment case Strong positions in specialist markets Growing the business • Market leader delivering at scale: growing or maintaining • Return to growth expected in 2021 with continuation market shares, number one or two in key UK healthcare markets of building momentum over the coming years • Aligned with the NHS Long Term Plan, providing growth • Strong pandemic response in EMIS Health validates potential drivers for increasing investment into technology for the NHS to grow in this part of the business • 30-year track record as a provider of complex specialist clinical • Positive opportunities in EMIS Enterprise in digital, analytics systems with high barriers to entry for potential competitors and expanding partner programme to drive future growth • Appointed on 15 NHS contractual frameworks in England, • Commitment to invest for the mid-term with EMIS-X will Wales, Scotland and Northern Ireland deliver growth opportunities through the deployment of • Strategic player in the UK healthcare market central to new technology-based solutions supporting customers through the pandemic response • Acquisitions, such as the 2020 Pinnacle deal, accelerate speed to market years providing front line technology 30+ to the healthcare sector 14.9m Covid-19 vaccinations supported by EMIS High levels of earnings visibility Excellent financial strength and track record and cash generation • Unbroken track record of increasing dividend each year since IPO • Robust business model with high recurring revenue, • Compound growth rates since flotation in 2010 of 10% typically around 80% in revenue and 8% in adjusted operating profit • Long-term contracts in place across all major markets • Strong balance sheet with no debt • Loyal customer base with low churn rates • Bank facilities in place • Consistent strong cash generation • Investment will not impact progressive dividend policy or require significant leverage £53.0m net cash 82% recurring revenue New technology driving future growth Brands and efficiency • Investing for the future through the EMIS-X technology transformation programme • Focussed on developing new, standards based, capabilities to connect care settings across the UK The clinical software The UK’s leading independent • EMIS-X platform leverages new and existing in-house business, supplying provider of patient-centric capabilities with the best of partner capabilities essential technology medical and wellbeing • Significant progress in the development of new solutions to 10,000 healthcare information and digital and public cloud based capabilities as well as upgrades to organisations across every front door services for existing systems major UK health sector. the UK public. • EMIS-X delivers profit growth through new sales and more efficient platform and system maintenance £21.2m R&D investment EMIS Group plc | Annual report and accounts 2020 3 STRATEGIC REPORT Covid-19 response Our proactive strategy in challenging circumstances The NHS faced one of the biggest challenges in its 72-year history with the outbreak of Covid-19. Technology played a pivotal role in the response and, as a major IT supplier to the NHS, EMIS Group had the tools to help the NHS front line and the reach to make a difference. Guiding principle Helping the UK public It was clear from the outset that Covid-19 would have a huge impact. In the first two months of the pandemic, the Covid-19 information on EMIS Group had one guiding principle to navigate through the Patient.info had 7.1 million views and the coronavirus symptom checker pandemic: to do the right thing at all times by both customers and was used more than 700,000 times. colleagues. The Group was committed to helping NHS front line staff in Patient Access was a vital digital tool for many patients to access as many ways as it could, while supporting colleagues to balance work healthcare services. Registered users increased from 8.4 million to and family life, especially during lockdown periods. 11.7 million during 2020, reaching 12 million in February 2021. Protecting colleagues Vital research The health and wellbeing of colleagues was an absolute priority. The EMIS is playing a key role to facilitate critical research into Covid-19. Group moved to homeworking in both the UK and India before the first Explorer, from the EMIS-X Analytics suite, was used by: lockdown was announced. Some key workers were required to visit customer sites during lockdown and EMIS supported them by providing • a number of NHS organisations for use cases including a Covid-19 full PPE and safety training. data intelligence hub and winter operational planning; • the NHS England OpenSAFELY Covid-19 research project, a Supporting the NHS user base collaboration between the University of Oxford, the London School There was a 90% reduction in face-to-face GP appointments during the of Hygiene & Tropical Medicine and system suppliers operating under first lockdown, driving a need for digital alternatives for front line care. direction from the Secretary of State; and EMIS made video consultation capability available free of charge across England for the first three months of the pandemic and then helped • the Oxford Royal College of General Practitioners (RCGP) Research customers continue using the service under NHS England funding. Its and Surveillance Centre, to support national surveillance of Covid-19 digital triage system, Online Consult, was free to use in Scotland and and for recruitment into the University of Oxford’s PRINCIPLE clinical trial. was widely used across England. EMIS continues to support a number of Covid-19 research programmes Behind the scenes, EMIS made rapid changes to core software systems, alongside academic and life science partners. including new SNOMED-CT codes, shielded patient capability