EMIS Group plc 2015 final results presentation

Introduction & Agenda

Introduction Chris Spencer Financial review Peter Southby Operational review Chris Spencer Summary and outlook Chris Spencer

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Overview – another strong year for EMIS Group

•  Major provider of UK healthcare software, information technology and related services •  Strong revenue visibility, order book and pipeline - 20% growth in recurring revenue •  Maintained or grown already strong market share in every major area of healthcare: Primary &

Community, Community Pharmacy and Secondary & Specialist •  Clinical software businesses rebranded as EMIS Health - simplifies branding message and

emphasises strategic commitment to integrated solutions helping connect care

•  Can facilitate the NHS’s connected care strategy across every major UK healthcare setting through organic growth, partnering or acquisition

•  In a unique position

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Peter Southby Chief Financial Officer EMIS Group

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Financial highlights

1 Excludes impairment charges, release of contingent acquisition consideration, capitalisation and amortisation of development costs and amortisation of acquired intangibles. EPS calculations also adjust for related tax and non-controlling interest impact.

2 Stated after deduction of capitalised development costs of £6.2m (2014: £6.5m).

Results in line with the Board’s expectations •  Positive contribution from organic growth and acquisitions

Total revenue

£155.9m + 13% (organic 5%) 2014: £137.6m

Recurring revenue

£123.0m + 20% (organic 8%) 2014: £102.7m

Adjusted group operating profit1

£36.6m + 12% (organic 7%) 2014: £32.6m Reported: £11.4m (2014: £29.1m)

Cash generated from operations2

£36.5m - 5% 2014: £38.3m

Net debt

£9.1m - £2.7m 2014: £11.8m

Adjusted EPS1

45.3p + 15% 2014: 39.5p Reported: 7.1p (2014: 35.3p)

Total dividend

21.2p + 15% 2014: 18.4p Including final dividend of 10.6p (2014: 9.2p)

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Financial review - income statement

•  Revenue increase driven by acquisitions and community, children’s and mental health (CCMH) wins - total organic increase 5% despite lower EMIS Web for GP roll-out related revenues.

•  Adjusted operating profit up by 12% - 7% organic. •  Exceptionals in H2 2015 relate to impairment charges for Secondary Care business (£16.2m) and minority

investment in Pharmacy2U (£2.3m). In 2014, credit reflects release of contingent acquisition consideration. •  2015 effective tax rate 20.2%.

£m H1 H2 FY FY % 2015 2015 2015 2014 change

Revenue 77.8 78.1 155.9 137.6 13% Adjusted operating profit 16.9 19.7 36.6 32.6 12%

Capitalised development costs 3.1 3.1 6.2 6.5 Amortisation – development costs (3.0) (3.3) (6.3) (4.7)

Amortisation – acquired intangibles (3.2) (3.3) (6.5) (6.2) Finance costs (0.2) (0.3) (0.5) (0.5) Exceptionals/other - (18.6) (18.6) 0.8 Profit before tax 13.6 (2.7) 10.9 28.5

Tax (2.8) (2.8) (5.6) (5.7) Non-controlling interest (0.4) (0.4) (0.8) (0.7) Earnings 10.4 (5.9) 4.5 22.1 Adjusted EPS 20.5p 24.8p 45.3p 39.5p 15% Reported EPS 16.6p (9.5p) 7.2p 35.3p

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Financial review - organic/acquisitions income statement

•  Consistent organic growth with strong focus on cost complemented by strategic bolt-on acquisitions.

1 Includes results from acquisitions of Indigo 4 (July 2014), Medical Imaging (December 2014) and Pinbellcom (July 2015).

£m Organic Organic Organic % Acquisitions Acquisitions

2015 2014 Increase 20151 20141

Revenue 142.2 136.0 5% 13.7 1.6

Recurring revenue 110.1 101.6 8% 12.9 1.1

Cost of sales (12.9) (12.7) 2% - (0.1)

Staff costs (including capitalised development costs) (67.6) (64.1) 5% (6.1) (1.0)

Other operating expenses (18.8) (18.8) - (5.4) (0.1)

Contract asset depreciation (3.2) (3.8) -16% - -

Depreciation/amortisation of software used internally (5.1) (4.4) 29% (0.2) -

Adjusted operating profit 34.6 32.2 7% 2.0 0.4

Development costs capitalised 6.2 6.5 -5% - -

Amortisation of development costs (6.3) (4.7) 47% - -

Amortisation of acquired intangibles (5.6) (6.0) -11% (0.9) (0.2)

Operating profit (pre-exceptional items) 28.9 28.0 3% 1.1 0.2

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Financial review - segmental analysis

•  Primary & Community Care growth driven by new contracts in community, children’s and mental health (CCMH) and by completion of EMIS Web GP roll-out in England and Wales.

•  Community Pharmacy growth supporting investment in new ProScript Connect product for launch later this year.

•  Secondary & Specialist Care has grown profit despite challenging period for Secondary.

•  Margin improvement in organic business and more to come from Secondary & Specialist.

£m

2015 2014 Primary &

Community Care

Community Pharmacy

Secondary & Specialist

Care Total

Primary & Community

Care Community Pharmacy

Secondary & Specialist Care Total

Revenue 93.9 20.0 42.0 155.9 89.7 18.4 29.5 137.6

Recurring revenue 77.3 16.6 29.1 123.0 69.6 15.3 17.8 102.7

Adjusted segmental profit 29.6 4.3 4.2 38.1 26.4 3.9 3.4 33.7

Group costs (1.5) (1.1)

Adjusted operating profit 36.6 32.6

Adjusted operating margin

31.5% 21.2% 10.0% 23.4% 29.5% 21.0% 11.6% 23.7%

Development costs capitalised 3.1 1.0 2.1 6.2 4.0 0.8 1.8 6.6

Amortisation of development costs (5.4) - (0.9) (6.3) (4.3) - (0.4) (4.7)

Amortisation of acquired intangible assets (0.9) (0.6) (5.0) (6.5) (1.1) (0.7) (4.4) (6.2)

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Financial review - revenue analysis

•  Good visibility through recurring revenue growth of £20.3m – organic £8.5m, acquisitions £11.8m.

•  Acquisitions impact mainly other support services (Medical Imaging).

•  Achieving full EMIS Web roll-out in England and Wales results in lower training/consultancy/implementation revenues.

£m Nature 2015 2014

Licences mainly recurring 50.3 43.8

Maintenance and software support recurring 37.9 33.4

Other support services mainly recurring 30.6 21.6

Training/consultancy/implementation non-recurring 16.1 16.9

Hosting recurring 13.1 14.0

Hardware non-recurring 7.9 7.9

Total 155.9 137.6

Recurring 123.0 102.7

Non-recurring 32.9 34.9

Total 155.9 137.6

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Financial review - cash flow

•  Cash from operations at £36.5m, slightly down on 2014

•  Working capital outflows in particular: •  Reduction in creditors (£2.5m one off supplier

balances and £1.1m bonus accrual at end of 2014 not repeated in 2015)

•  Reduction in deferred income (£2.6m net release to revenue for funded hosting assets (offset by lower CapEx) and £1.3m release for Defence licences paid in advance)

•  Increase in debtors (£0.8m growth in CCMH, £0.5m timing of GPSoC payments)

•  Business combinations: •  Final Ascribe earnout payment (£2.25m) •  Pinbellcom (£3.0m)

•  Capex includes: •  Secondary Care office fit out (£1.6m) •  Other property improvements (£1.5m) •  Computer equipment (£2.9m) •  ERP system (£1.3m)

•  Other includes £2.1m minority shareholder dividend

£m 2015 2014

Operating profit 11.4 29.1

Depreciation and amortisation 21.3 19.0

Impairment charges 18.5 -

Release of contingent acquisition consideration - (0.9)

Working capital (9.2) (2.7)

Share based payments 0.7 0.3

Cash flow from operating activities 42.7 44.8

Development costs capitalised (6.2) (6.5)

Cash from operations 36.5 38.3

Business combinations (5.2) (10.3)

Net capital expenditure (7.2) (8.3)

Transactions in own shares 0.6 (1.5)

Tax (6.9) (5.2)

Dividends (12.4) (10.8)

Other (2.7) (0.5)

Change in net debt 2.7 1.7

Closing net debt (9.1) (11.8)

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Financial review - balance sheet

•  Strong balance sheet maintained after impairment charges, with low gearing (£4.7m in cash / £13.8m debt).

•  Bank facilities secured to 2017 (£22.0m Term/RCF/overdraft).

•  Deferred income provides good revenue visibility.

•  Contingent consideration is for Medical Imaging.

•  Cost of final dividend £6.7m.

£m 2015 2014

Goodwill 54.4 68.6

Acquired intangible assets 42.6 47.3

Development costs 21.2 21.4

Property, plant and equipment and computer software used internally 25.2 26.5

Associate, JV and other current assets 35.2 32.9

Deferred income (28.0) (30.0)

Contingent consideration (3.0) (5.3)

Other current liabilities (20.9) (22.0)

Deferred tax (10.5) (12.7)

Net debt (9.1) (11.8)

Net assets 107.1 114.9

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Financial review - financial guidance and trends

Acquisitions •  Pinbellcom acquired July 2015 for net £3.0m cash consideration and with last financial year revenues of £1.2m and

profit of £0.4m. Contract assets •  Revenue and related depreciation expected to remain broadly level in 2016 (subject to timing of CapEx). Staff costs •  Redundancy costs taken in H1 with benefit accruing in H2. Share-based payments •  Charge increasing into 2016 with recent awards.

Tax rate •  Expected to remain close to UK statutory rate. Development costs •  Expect capitalisation and amortisation to continue to be broadly equal. Capital expenditure •  Expect 2016 to be higher with an increase in funded hosting CapEx. Working capital •  Some expansion with business growth, but at lower levels than seen in 2015.

Dividends •  Progressive dividend policy maintained with growth tracking EPS.

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Chris Spencer Chief Executive Officer EMIS Group

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EMIS Health Primary Care Revenue up 5%, adjusted operating profit up 12%

Strong financial performance: •  Loyal customers:

•  74% of Group’s English GP practices used an EMIS Health system for over 10 years

•  Clear market leader: •  market share rose again to 55% •  21% of CCGs now 100% EMIS Health

Primary Care

•  Secure funding: •  GPSoC funding in place •  Lot 3 successfully concluded supporting

connected care strategy

•  EMIS Web roll-out increases revenue and mobilises data:

•  England and Wales – complete •  Northern Ireland – in preparation •  Scotland – in prospect

•  Patient Access an NHS priority: •  enabled by 99% of all GP practices •  revenue generating •  benefits to NHS being realised •  innovation ongoing

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EMIS Health Community, Children’s and Mental Health Market share up to 12%, contract wins of over £10m

•  Market share growth to 12% - significantly ahead of 10% target - 2016 target 15%

•  Implementing wins

•  NME 180 CCMH opportunities ongoing •  CSC “North, Midlands and East” National Programme

contract re-procurement includes circa 180 opportunities

•  USP is connected care across EMIS Health: •  delivering faster, better, cheaper care •  already sole supplier across primary care and CCMH in

over 10% of CCGs

•  Total contract value of wins in 2015 in excess of £10m

•  Recent wins include (from): •  East Lancashire Hospitals NHS Trust (CSC/iSoft) •  Trafford CCG (Civica) •  Central Manchester Foundation Trust (CSC/iSoft) •  Pennine Acute Hospitals NHS Trust (CSC/iSoft) •  Southport & Ormskirk Hospitals NHS Trust (CSC/iSoft) •  Blackpool Teaching Hospitals NHS Foundation Trust

(extension to existing contract) •  Bristol Community Health CIC (extension to existing

contract) •  South Tyneside NHS Trust (TPP) •  Stockport NHS Foundation Trust (extension to existing

contract)

•  Strong and growing pipeline

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Patient and Egton

Patient •  Helps patients proactively manage their own care - key

part of UK healthcare strategy

•  Improved global reach through move to top level domain: •  international now nearly 70% of visits

•  Monthly traffic increasing:

•  13m unique visitors, 25m page views

•  Exploring engagement strategies and monetisation beyond advertising

•  Recruitment of digital leader underway

Egton •  Non-clinical ICT solutions and services

•  Pinbellcom purchased:

•  adds intranet administration and compliance platform •  complements existing GP non-clinical offerings •  rebranded as Egton Digital:

•  administration/compliance software for primary and secondary care

•  pre-existing software and services including GP practice websites

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EMIS Health Community Pharmacy Revenue up 9%, adjusted operating profit up 10%

Profitability and market share maintained:

•  Clear market leader in independent market: •  36% share of overall market

•  Lloyds Pharmacy contract win: •  moves business into “supermarkets” •  increases overall market share close to 50%

over next 18 months

•  Next generation dispensary management product, ProScript Connect:

•  for independents and supermarkets •  enables “Hub and Spoke” •  now piloting

•  Integrated products - available across whole estate – connect pharmacies, GPs and patients:

•  Medicines Manager •  GP Record Viewer •  My Local Pharmacy App

•  EMIS Web for Community Pharmacy:

•  assists pharmacies providing extended primary care services

•  completed internal testing, piloting for 2017 launch

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EMIS Health Secondary & Specialist Care Revenue up 42%, adjusted operating profit up 22%

EMIS Health Secondary Care:

•  Revenue growth but mixed performance despite acquisition contributions

•  New management team appointed

•  Focus on: •  operational improvements •  product set rationalisation •  exiting non-core geographies / targeted

redundancies •  convergence with EMIS Health Framework to

deliver improved and connected services for customers and enhanced prospects for the business

•  Recent contract wins include: •  Hospital Pharmacy - North Midlands Trust •  Patient Administration System - preferred bidder •  E-prescribing and medicines administration - St

Andrew’s •  Endoscopy solution - Epsom & St Helier Hospital •  Document management solution – East Cheshire

•  Strong pipeline

•  Order communications (formerly Indigo 4) continued to perform well

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EMIS Health Specialist and EMIS Care Ophthalmology software and screening - a strong set of results

EMIS Health Specialist: •  market lead in retinopathy screening software

maintained (79% of programmes)

•  opportunity with intended single solution retinopathy software procurement for England

EMIS Care:

•  outsourced screening services: •  Medical Imaging - performed well - now

rebranded EMIS Care

•  contract wins worth £28m secure five year retinopathy screening services in:

•  South West London •  Newcastle & Gateshead •  Arden, Herefordshire & Worcestershire

•  further outsourcing opportunities from 2016 tenders

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EMIS Health Integrated Care Considerable progress

•  Gibraltar whole healthcare economy Phase 1 live and phase 2 progressing. Integrates Group products in:

•  accident and emergency, outpatient clinics and patient administration system

•  community services •  primary care •  community pharmacy •  order communications

•  Wolverhampton CCG: •  financially supporting activation of Pharmacy Access •  enables ProScript pharmacies to:

•  request repeat prescriptions electronically from GPs using EMIS Web

•  view key clinical data in the GP record

•  USP in CCMH, Community Pharmacy and Secondary is integration with EMIS Web for primary care

•  Commitment to internal integration and third party interoperability

•  Connected care delivering on promise of faster, better, cheaper care.

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EMIS Group Markets & Competitors

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EMIS Group Organic Growth Opportunities •  Primary Care & Commissioning

•  Northern Ireland •  Scotland •  Patient Access •  Patient

•  CCMH •  NME/North 180 •  targeting 15% overall market share

•  Community Pharmacy •  implementation of “supermarket” estate •  enhanced integrated product offerings

•  Secondary & Specialist •  hospital procurements post NHS National Programme for IT •  ophthalmology screening outsourcing

•  Integrated care •  Federations •  interoperability/partner programme •  Unscheduled Care

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Summary and outlook

•  Good underlying profit growth in line with the Board's expectations, derived from organic and acquisitive mix

•  Group continues to trade in line with the Board's expectations

•  Outlook encouraging: •  Strong revenue visibility with 79% recurring revenue •  Good order book and pipelines in all segments •  Secondary Care improved financial performance expected in 2016 •  Growth opportunities across all markets

“This Government will increase spending in real terms every year in this Parliament. The NHS will receive £10 billion more per year in real terms by 2020-2021 than in 2014-15. This investment backs in full the Five Year Forward View and will mean patients receive a truly seven-day health service, with the services people need being offered in hospitals at the weekend and people able to access a GP at evenings and weekends … NHS England should support the NHS to make better use of digital services and technology to transform patients’ access to and use of health and care, including online access to their personal health records.” 2016 Mandate to NHS England

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Questions?

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Appendix

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5 year financial record

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1 Excludes impairment charges, release of contingent acquisition consideration, capitalisation and amortisation of development costs and amortisation of acquired intangibles. Earnings per share calculations also adjust for the related tax and non-controlling interest impact. 2 Stated after deduction of capitalised development costs.

EMIS Health GP market share by country

(EMIS and competitor data estimated based on company records showing customers installed as at 31 December 2015)

Country EMIS Health % InPS % TPP % Other % Total

England 4,303 55.9 684 8.9 2,613 33.9 102 1.3 7,702 Scotland 509 51.6 477 48.4 - - - - 986 Wales 201 44.9 247 55.1 - - - - 448 Northern Ireland 197 56.3 125 35.7 - - 28 8.0 350

UK Total 5,210 54.9 1,533 16.2 2,613 27.5 130 1.4 9,486

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The Leeds PHR Project

A smartphone pilot study has highlighted a potential solution for White Coat Syndrome - the medical phenomenon that increases some patients' blood pressure in the GP surgery. Patient Angela Howard was able to prove that her surgery blood pressure test results were uncharacteristically high and not an accurate reflection of her actual health in a month-long trial of the Personal Health Record (PHR) within EMIS Health's Patient Access app. Angela collected blood pressure readings at home and shared them electronically with Dr Walling, her GP. The results of blood pressure tests taken at home were normal, proving that she did not need further treatment. Angela said: "Taking part in this trial has been brilliant because it has proven that I don't really have high blood pressure and can now get on with doing the things I want to do in order to improve my health, such as going to the gym. I'd recommend using the Patient Access Personal Health Record to anyone. It's so easy to use and it has provided me with real peace of mind." Dr Walling said the PHR could enable GPs to make better-informed decisions when treating patients with a range of problems, including asthma, diabetes and weight issues.

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What does connected care do?

wLong term Condition Management

vDischarge Summaries

uUnscheduled Care & Referrals

x

y

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NHS England - New Models of Care - 1

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NHS England - New Models of Care - 2

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NHS England - New Models of Care - 3

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