Half Yearly Report

RNS Number : 4947N

EMIS Group PLC

02 September 2011

 



                                                                                                                      2 September 2011

EMIS Group plc

("EMIS Group" or "the Group")

Half Year Results for the Six Months ended 30 June 2011

EMIS Group plc (AIM: EMIS), the UK's leading supplier of healthcare software to GPs and a major software supplier to high street pharmacies, today announces its unaudited results for the six months ended 30 June 2011.

Financial highlights

	*H1 2011	H1 2010	Increase
Revenue	£35.5m	£28.7m	24%
§ Recurring revenue	£29.9m	£23.3m	28%
Operating profit	£10.2m	£8.0m	27%
§ Adjusted operating profit	£10.2m	(1)£9.0m	14%
Cash generated from operations	£20.5m	£18.5m	£2.0m
Net cash	£12.8m	£10.5m	£2.3m
EPS from continuing operations	13.10p	9.91p	32%
§ Adjusted EPS from continuing operations	13.10p	(2)11.38p	15%
Interim Dividend	6.2p	5.6p	11%

⁽¹⁾          Excludes flotation and other transaction costs of £0.96m.

⁽²⁾          Excludes flotation and other transaction costs of £0.96m less related tax relief of £0.16m.

^*        Includes Rx Systems as set out in note 9(b) of the financial statements below.

Operational highlights

·     UK GP software, market leading position maintained with 5,506 sites (53.4%) using EMIS

·     Major UK high street pharmacy software supplier with 31% market share

·     EMIS continues to perform well, in particular, 117 GP practices deployed in Scotland in the period

·     EMIS Web controlled roll-out progressing and the Group continues to build infrastructure to support further development and increase roll-out

·     Rx Systems, the Group's pharmacy system provider, continues to grow market share

·     Canadian exit completed in all material respects

Sean Riddell, Chief Executive of EMIS Group, said:

"The NHS focus on the exchange and usage of information throughout all elements of primary and secondary care plays very much to EMIS Group's strengths and our strategy of delivering cross-organisational healthcare systems through EMIS Web, Healthcare Gateway and Rx Systems. The Group is well positioned to continue to support the NHS to achieve cost and time savings and improved patient outcomes.

The outlook for the year as a whole remains positive and we are confident of the Group's long term growth prospects."

There will be an analyst meeting at 0900 on 2 September 2011 at Evolution Securities, 100 Wood Street, London EC2V 7AN.  Please contact James White at MHP on 020 3128 8100 for details.

For further information, contact:

EMIS Group plc Sean Riddell, CEO	Tel: [phone]
www.emis-online.com
Evolution Securities Limited Leeds	Tel: [phone]
Joanne Lake/Peter Steel
London	Tel: [phone]
Alex Garton
MHP Communications	Tel: [phone]
Reg Hoare/James White/Giles Robinson

Notes to Editors

EMIS Group is the UK's leading supplier of healthcare software to GP practices and a major supplier to high street pharmacies. 53.4%^* of GP Practices in the UK use EMIS clinical software to support their care of approximately 39 million^* patients. In addition, 31%^* of high street pharmacies have Rx Systems' software.

The Group's core activities include software licensing and support, hardware support and maintenance services, hardware sales, third party software sales and training services.

The Group's software includes all core functionality specified in NHS accreditation standards for GPs, including holding the patient's cradle to grave electronic healthcare record, practice appointment booking systems and consultation and intelligent prescribing modules as well as a full range of high street pharmacy software products and related services.

EMIS Web represents the next generation of clinical software systems and the Directors believe it has the potential to transform the delivery of healthcare by enabling GPs and other healthcare practitioners to connect with each other and securely share access to a patient's cradle to grave electronic health record.

Established in 1987, EMIS Group shares were listed on AIM under the trading symbol EMIS.L following a successful fundraising in March 2010.

(^*EMIS GP data estimated based on company records showing customers installed or ordered (by contract or letter of intent) as at 30 June 2011. Rx Systems pharmacy total market is based on NHS Information Centre statistics in England and Scotland and Welsh Government statistics (all as at March 2010).  Rx Systems pharmacy market share is based on company records to 30 June 2011)

Chief Executive's Overview

Our business has continued to perform well.  EMIS Group remains the leading software supplier for GP practices and a major provider of high street pharmacy software across the UK. 

The NHS has continued to make progress towards a "connect all" rather than "replace all" IT strategy and EMIS Group is working with the NHS to help deliver the efficiencies and cost savings required by healthcare organisations.

The Government has confirmed the ring-fencing of the public health budget and the increase in real terms of NHS spending whilst emphasising that the sharing of information is the key to achieving better care outcomes and reduced costs. 

The Government is also seeking to devolve power for commissioning services to local consortia of GPs and other clinicians (Clinical Commissioning Groups, CCGs). The Directors welcome these moves within the NHS to put responsibility for decision-making and commissioning of services in the hands of CCGs, as the NHS progresses from a centralised approach to IT to a more plural one, allowing improved healthcare through interoperability between different systems.

The changes within the NHS are opening up new markets for the Group. For example, EMIS has been successful in securing strategic contracts in extended primary care and community services, including Central & Eastern Cheshire Primary Care Trust (PCT).

Financial Review

Total group revenue in the period was £35.5m (2010 H1: £28.7m), including recurring revenue of £29.9m - 84% of total revenue (2010 H1: £23.3m - 81%). The recurring revenue includes Hosting to Connecting for Health Standards ("Accredited Hosting") amounting to £2.7m (2010 H1: £1.9m).

2011 H1 includes the first full half year contribution from Rx Systems. Revenue amounted to £6.4m (2010 H1: nil), including recurring revenue of £5.4m - also representing 84% of total revenue for the period.

Group revenue regarded as non-recurring (hardware, training and other discretionary spending) was flat at £5.6m, including £1.0m from Rx Systems (2010 H1: £5.5m).

Group operating profit amounted to £10.2m (2010 H1 adjusted for flotation and other transaction costs of £0.96m: £9.0m), an increase of 13.8%.

During the period the Group generated cash from operations, net of internal costs capitalised, of £18.9m (2010 H1: £16.5m). Deferred income balances continued to increase and at 30 June 2011 amounted to £19.7m (31 December 2010: £10.9m). Capital expenditure, including Accredited Hosting assets acquired, amounted to £2.3m.

The Group continued to be highly cash generative with cash of £18.0m and bank debt of £5.2m at 30 June 2011 (31 December 2010: cash £7.4m; bank debt £5.8m).

Earnings per share from continuing operations increased by 15.1% to 13.1p (2010 H1 adjusted: 11.38p).

Operational Review

EMIS

Our core clinical systems software business continued to perform well.  EMIS remains the software supplier of choice for GP practices across the UK. 

In particular, in Scotland, during the first half we implemented 117 systems including those at 82 GP practices in NHS Greater Glasgow and Clyde. A further 150 deployments are anticipated in H2 2011 and into H1 2012.  Scotland continues to represent a significant area of new business growth for EMIS, particularly for add-on services.

EMIS' GP practice market share in the UK is broadly unchanged at 53.4% (2010 H1 53.8%).  Over 65% of our GP users have subscribed to EMIS for over 10 years, which reflects the importance and embedded nature of the offering to our customers. As anticipated in our annual report and accounts for 2010, the GP System of Choice framework agreement was extended on 28 March 2011 until 31 March 2013. 

In England, the NHS has maintained progress towards a "connect all" rather than "replace all" IT strategy. The Government has further confirmed the ring-fencing of the public health budget, the increase in real terms of NHS spending, sharing of information being the key to better care outcomes and reduced cost, and devolved power for commissioning services passing to local consortia of GPs and other clinicians.

This transformation of healthcare delivery has opened up new markets for EMIS Web in community and extended primary care. Initial successes in these markets have included a five year £1.8m contract in January 2011 to provide an electronic patient record across Cheshire in acute trust and community settings. We are also negotiating with other PCTs and CCGs about the use of EMIS Web in extended primary care and community services and by the period end, had begun a number of pathfinder projects.

During 2011 H1, the roll-out of EMIS Web to GP practices progressed as expected with 107 deployments. At the period end, there were 9,089 EMIS Web GP and extended primary care users, with around 28.3 million patient records. There were also 1,130 orders for EMIS Web, 2,091 GP practices in the Familiarisation Service and 150 GP practices with EMIS Web installed. Between the period end and 30 August 2011 EMIS Web has been deployed in a further 78 GP practices.

The Group is in the process of building the extensive infrastructure necessary to enable and support an accelerated roll-out of EMIS Web and its further development for use in GP practices, extended primary care and community services which will continue in H2 2011 and beyond.  We have also strengthened our management team to address the EMIS Web growth opportunities.

Offering the best value GP Systems of Choice software, having the highest number of electronic patient records and offering the cross-organisational functionality of EMIS Web, EMIS remains well positioned for future growth.

To ensure the entrepreneurial focus needed to address additional commercial opportunities, EMIS is making senior management appointments both from within and externally. As part of this process, to drive forward patient knowledge and patient transactional services (e.g. online medical information, web appointment booking and prescription requesting) EMIS has appointed a commercial director for patient.co.uk, the patient-facing element of the business. In addition, EMIS' business intelligence operation has been rebranded as EMIS IQ and a commercial director appointed. A commercial director is also being sought for the Group's engineering business, Egton.

·     Licensing and software support

Within EMIS, the core business, recurring licence and software support, income was £17.1m compared with £15.4m in 2010 H1, an 11% increase, reflecting deployments in Scotland and increased Accredited Hosting income.

·     Hardware sales, engineering services and training

EMIS core business income was £10.4m (2010 H1: £12.0m), affected by the ongoing pressure on NHS budgets and some reluctance to commit to spending on existing services in anticipation of EMIS Web.  We expect pressure on NHS budgets to continue.

·     Australia
Our involvement in developing and implementing an electronic health information system for the Australian Defence Force as part of the JEDHI project is continuing according to plan.

Rx Systems

Rx Systems has deployed its software at 675 sites in the period and grown its market share to 3849 sites (31%) (2010 H1 2603 sites (21%)).

Towards the period end, the installation, hardware supply, maintenance and support of Rx Systems' contracted maintenance customers was in the process of migration to Egton, with the aim of completing the migration in September 2011.  Rx Systems also began to pilot electronic point of sale software with selected pharmacy users.

The Board believes that Rx Systems represents a key strategic opportunity for EMIS Group to further develop its presence in the healthcare IT market and to progress its objective of joining up healthcare IT.

Canada

As announced on 26 April 2011, the Board agreed to sell the majority of the Group's remaining assets in Canada and that sale has now been completed in all material respects. All costs, in line with the previous announcement, will be expensed in the current financial year.

Healthcare Gateway

Healthcare Gateway, the 50:50 joint venture company we established with INPS in 2010 to facilitate the sharing of patient data via a medical interoperability gateway, has successfully completed phase 1 of pilots with NHS Cumbria (Out of Hours integrated access to GP detailed care records) and NHS Westminster (portal access to GP detailed care records).  

Dividend

In line with its progressive dividend policy, the Board has resolved to pay an interim dividend of 6.2p per share (H1 2010: interim 5.6p) on the ordinary shares of 1p each in the share capital of the Group on 21 October 2011 to shareholders on the register at the close of business on 16 September 2011.

Summary and Outlook

We welcome moves within the NHS to putresponsibility for decision-making and commissioning of services in the hands of GPs and other clinicians, as the NHS progresses from a centralised approach to IT to a more plural one, allowing delivery of improved healthcare through interoperability between different systems. 

Our strategy of delivering cross-organisational healthcare systems through EMIS Web, Healthcare Gateway and Rx Systems, remains fully in line with NHS strategy for the future and EMIS Group remains well placed to assist healthcare professionals to securely share patient data in a time efficient and cost effective manner.

EMIS Group continues to trade in line with management expectations.  We have significant revenue visibility into the second half with recurring revenues expected to be maintained at high levels.  We remain optimistic for the full year and we are confident of the Group's long term growth prospects. 

The Board is encouraged by the achievements and performance of the business to date and would particularly like to thank our employees and customers. 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 for the six months ended 30 June 2011

	6 months to 30 June 2011 Unaudited £'000	6 months to 30 June 2010 Unaudited £'000	Year ended 31 December2010  Audited £'000
Continuing Operations
Revenue	35,459	28,719	61,900
Costs:
Changes in inventories	117	20	(29)
Cost of goods	(5,619)	(3,872)	(8,817)
Staff costs	(12,758)	(10,657)	(21,965)
Flotation and other transaction costs	-	(959)	(1,258)
Other operating expenses
- (including contract asset depreciation of £844,000 - 2010 H1 £675,000, 2010 full year £1,503,000)	(4,822)	(3,408)	(7,748)
Earnings before interest, taxes, depreciation and amortisation ("EBITDA")	12,377	9,843	22,083
Depreciation of property, plant and equipment	(653)	(760)	(1,317)
Amortisation of intangible assets	(1,479)	(1,038)	(2,433)
Operating profit	10,245	8,045	18,333
Finance income	12	25	51
Finance costs	(91)	(313)	(426)
Share of profit of associate	58	33	109
Profit before taxation	10,224	7,790	18,067
Income tax expense	(2,430)	(2,404)	(4,868)
Profit from continuing operations	7,794	5,386	13,199
Discontinued operations
- Loss from discontinued operations	(1,839)	(1,100)	(1,961)
Total comprehensive income/profit for the period	5,955	4,286	11,238
Attributable to:
- equity holders of the parent	5,833	4,286	11,194
- non-controlling interest in subsidiary company	122	-	44
Total comprehensive income	5,955	4,286	11,238
Earnings per share attributable to equity holders of the parent - basic and diluted:	Pence per share	Pence per share	Pence per  share
- from continuing operations	13.10	9.91	23.31
- from discontinued operations	(3.14)	(2.02)	(3.47)
	9.96	7.89	19.84
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.

CONSOLIDATED BALANCE SHEET

as at 30 June 2011

	30 June 2011 £'000	30 June 2010 £'000	31 December 2010 £'000
ASSETS
Non-current assets Goodwill	21,951	15,853	21,951
Other intangible assets	28,038	22,046	29,284
Property, plant and equipment	12,628	10,396	12,058
Investment in associate	2,719	2,585	2,661
	65,336	50,880	65,954
Current assets
Inventories	687	702	668
Trade and other receivables	11,544	5,412	9,082
Cash and cash equivalents	18,008	16,829	7,442
	30,239	22,943	17,192
Total assets	95,575	73,823	83,146
LIABILITIES
Current liabilities
Trade and other payables	(5,672)	(5,903)	(5,169)
Current tax liabilities	(7,061)	(2,400)	(5,103)
Bank loans	(1,184)	(1,184)	(1,184)
Contingent consideration re acquisition	(757)	-	(189)
Deferred income	(19,707)	(12,821)	(10,888)
	(34,381)	(22,308)	(22,533)
Non-current liabilities
Bank loans	(3,988)	(5,172)	(4,580)
Contingent consideration re acquisition	-	-	(757)
Deferred tax liability	(7,747)	(6,532)	(8,494)
	(11,735)	(11,704)	(13,831)
Total liabilities	(46,116)	(34,012)	(36,364)
NET ASSETS	49,459	39,811	46,782
EQUITY
Ordinary share capital	586	583	586
Share premium account	24,767	24,062	24,767
Own shares held in trust	(120)	-	(120)
Retained earnings	21,351	15,166	18,796
Equity attributable to owners of the parent	46,584	39,811	44,029
Non-controlling interests	2,875	-	2,753
TOTAL EQUITY	49,459	39,811	46,782
The above consolidated balance sheet should be read in conjunction with the accompanying notes.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the six months ended 30 June 2011

	Share  capital		Share premium	Retained earnings	Non -controlling interest	Own shares held in trust	Total  Equity
	£'000		£'000	£'000	£'000	£'000	£'000
Group
Balance at 1 January 2010	500		-	10,880	-	-	11,380
Transactions with owners
- proceeds from shares issued	83		24,062	-	-	-	24,145
Total comprehensive income
- profit for the period	-		-	4,286	-	-	4,286
Balance at 30 June 2010	583		24,062	15,166	-	-	39,811
Arising on acquisition of RX Systems		-	-	-	2,709	-	2,709
Share acquisitions less sales	-		-	-	-	(120)	(120)
Transactions with owners
- proceeds from shares issued	3		705	-	-	-	708
Total comprehensive income
-profit for the period	-		-	6,908	44	-	6,952
Dividend (note 11)	-		-	(3,278)	-	-	(3,278)
Balance at 31 December 2010	586		24,767	18,796	2,753	(120)	46,782
Total comprehensive income
-profit for the period	-		-	5,833	122	-	5,955
Dividend (note11)	-		-	(3,278)	-	-	(3,278)
Balance at 30 June 2011	586		24,767	21,351	2,875	(120)	49,459
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

CONSOLIDATED STATEMENT OF CASH FLOWS

for the six months ended 30 June 2011

	6 months to 30 June 2011 Unaudited £'000	6 months to 30 June 2010 Unaudited £'000	Year ended  31 December 2010  Audited £'000
Cash flows from operating activities:
-     Continuing operations	21,164	19,761	24,212
-     Discontinued operations (loss)	(631)	(1,259)	(2,031)
Cash generated from operations	20,533	18,502	22,181
Interest paid	(91)	(731)	(409)
Interest received	12	26	51
Tax paid	(2,280)	(2,329)	(3,889)
Net cash generated from operating activities	18,174	15,468	17,934
Cash flows from investing activities
Continuing operations:
- Purchase of property, plant and equipment	(2,464)	(2,530)	(5,603)
- Proceeds from sale of property, plant and equipment	199	161	291
- Internally developed software	(1,674)	(2,029)	(3,801)
- Purchase of subsidiary - net of cash acquired	-	-	(3,144)
Discontinued operations	209	(7)	(8)
Net cash used in investing activities	(3,730)	(4,405)	(12,265)
Cash flows from financing activities
Proceeds from issue of ordinary shares	-	24,145	24,146
Transactions in own shares held in trust	-	-	(116)
Bank term loan repayments	(600)	(600)	(1,200)
Shareholder loans repaid	-	(23,000)	(23,000)
Dividend paid	(3,278)	-	(3,278)
Net cash used in financing activities	(3,878)	545	(3,448)
Net increase in cash and cash equivalents	10,566	11,608	2,221
Cash and cash equivalents at beginning of period	7,442	5,221	5,221
Cash and cash equivalents at end of period	18,008	16,829	7,442
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.

Notes to the Financial Statements

1. General information          

The Company is a public limited liability company registered in England (no. 06553923). The address of its registered office is Fulford Grange, Micklefield Lane, Rawdon, Leeds LS19 6BA.

The Company has a listing on AIM, a market operated by the London Stock Exchange.

This interim financial information has been prepared using the recognition and measurement principles of International Accounting Standards, International Financial Reporting Standards and Interpretations adopted for use in the European Union (collectively, Adopted IFRSs).

The financial information for the six months ended 30 June 2011 and the six months ended 30 June 2010 do not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006.  The information is unaudited and does not constitute the Group's statutory financial statements for those periods. The comparative financial information for the year ended 31 December 2010 has, however, been derived from the audited statutory financial statements for that year. A copy of those statutory financial statements has been delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified, did not include any matters in relation to which auditors draw attention by way of emphasis without qualifying their report and did not require any statement under section 498 of the Companies Act 2006.

These condensed consolidated interim financial results were approved for issue by the Board of Directors on 1 September 2011.  

2. Basis of preparation

These condensed consolidated interim financial statements for the half-year ended 30 June 2011 have been prepared in accordance with the AIM Rules for Companies and comply with IAS 34, 'Interim Financial Reporting' as adopted by the European Union and should be read in conjunction with the annual financial statements for the year ended 31 December 2010, which have been prepared in accordance with IFRSs as adopted by the European Union.

After careful enquiry and review of available financial information the directors have formed the conclusion that the Group has adequate resources to continue to operate for the foreseeable future and that it is therefore appropriate to continue to adopt the going concern basis of accounting in the preparation of these consolidated interim financial statements.

The financial information is presented in Sterling, which is the functional currency of the EMIS Group. All financial information presented in Sterling has been rounded to the nearest thousand. 

3. Accounting policies

The accounting policies used in preparing these interim financial results are those the Group expects to apply in its financial statements for the year ended 31 December 2011 and are consistent with those disclosed in the Group's annual report and financial statements for the year ended 31 December 2010.

Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual earnings.

4. Critical accounting estimates and judgements

Accounting estimates and judgements are based on past experience and expectations relating to and evaluation of future events and are believed to be reasonable at the time of making.  Due to the inherent uncertainty involved in making these estimates and judgements, actual future outcomes can be different.

Within the 2010 Group annual report and financial statements there are set out details of those critical estimates, assumptions and judgements made at that time in arriving at the amounts recognised in those financial statements which have a significant risk of causing a material adjustment to the carrying values of assets and liabilities within the subsequent financial year. 

The critical accounting estimates and judgements made in these condensed consolidated interim financial statements do not differ materially from those applied within the 2010 Group annual report and financial statements.

5. Principal risks and Uncertainties

The Group set out in its 2010 annual report and financial statements the principal risks and uncertainties that could impact its performance relating to governmental policy and the development and roll out of hosted software; these remain unchanged since the annual report was published and accordingly are valid for these interim financial statements.  The Group operates a structured risk management process, which identifies and evaluates risks and uncertainties and reviews mitigation activity.

6. Financial risk management

The Group's activities expose it to financial risks including credit risk, liquidity risk, interest rate risk, foreign currency risk and price risk. 

These interim condensed consolidated financial statements do not include all financial risk management information and disclosures required in the annual financial statements, and should be read in conjunction with the Group's annual financial statements as at 31 December 2010.

During 2011 there has been no significant change in the business or economic circumstances that affect the fair value of the Group's financial assets and financial liabilities, nor has there been any reclassifications of financial assets or liabilities and there have been no changes in the risk management department or in any of the Group's risk management policies. 

7. Forward-looking statements

Certain statements in this interim 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. Holiday pay

International Accounting Standard 19 Employee Benefits requires that accumulating compensated absences be recognized in financial statements.

The Group has a calendar year holiday cycle and entitlement cannot be carried forward from one year to the next.  Accordingly, as at 31 December each year no provision for the cost of outstanding holiday entitlement is required.  As at 30 June 2011 a provision amounting to £383,000 (30 June 2010 - £426,000) has been necessary

9. Segmental reporting

(a) Operating segments

IFRS 8 provides for segmental information disclosure on the basis of information reported internally to the chief operating decision-maker for decision-making purposes. The Board considers that this role is performed by the Board itself. 

The Board considers the business from both a product and geographic perspective and following the closure of the Canadian operation during the period, considers that there are now two principal operating segments, both involved in the supply and support of software and related services, namely (a) the EMIS business, principally relating to primary care, extended primary care and community services and (b) the RX Systems business, relating to community pharmacies.

Healthcare Gateway Limited (HGL) was formed during 2010 and is a joint venture with In Practice Systems Limited to enable the sharing of patient data via a medical interoperability gateway. Although the project is still at an early stage, it is a distinct activity from which significant revenue flows are anticipated, and the Board has concluded that, although it does not meet the quantitative thresholds required by IFRS 8, it closely monitors this segment and should be reported.

Each operating segment is assessed by the Board based on a measure of adjusted operating profit, excluding the effects of non-recurring expenditure from the operating segments such as restructuring costs and goodwill impairments. Interest income and expenditure, cash and cash equivalents and bank and other loans are not allocated to segments, as this type of activity is managed by the Board.

Information regarding the discontinued Canadian operation is provided in note 10.

(b) Segmental reporting

Revenue excludes intra-group transactions and is from external customers.

	Six months ended 30 June 2011					Six months ended 30 June 2010
	Revenue		Operating  profit		Revenue		Operating  profit
	£'000		£'000		£'000		£'000
Continuing operations
EMIS	29,065		9,925		28,719		9,083
RX  Systems	6,394		705		-		-
HGL - joint venture expenses	-		(82)		-		-
Total segments	35,459		10,548		28,719		9,083
Group operating expenses			(303)				(79)
Flotation and other transaction costs			-				(959)
Total operating profit			10,245				8,045
Finance costs less finance income			(79)				(288)
Share of profit of associate			58				33
Profit for the financial year before taxation			10,224				7,790
Depreciation and amortisation is charged in  the  above segmental analysis as follows:
- EMIS				2,517			2,473
- RX Systems				459			-

	30 June 2011					30 June 2010
	EMIS  £'000			RX  £'000	Total  £'000	EMIS  £'000	RX  £'000	Total  £'000
Total segmental assets	59,973			14,552	74,525	53,871	-	53,871
Total segmental liabilities	(32,405)			(7,531)	(39,936)	(27,588)	-	(27,588)
	27,568			7,021	34,589	26,283	-	26,283
Unallocated net assets(liabilities):
-  Discontinued operation					112			470
-  Group/Joint venture					(40)			-
-  Investment in associate					2,719			2,585
-  Cash  and  equivalents					18,008			16,829
-  Bank and other loans					(5,172)			(6,356)
-  Contingent consideration			(757)					-
Shareholders' equity					49,459			39,811

10. Discontinued operations

On 26 April 2011 the Group announced that it had entered into an agreement to sell the majority of the assets of its Canadian operation, EMIS Inc., a wholly owned Canadian-incorporated subsidiary, and, as notified in the trading update issued on 14 July 2011, that sale has been completed in all material respects. 

The results of EMIS Inc. are presented in this interim financial information as a discontinued operation.

Financial information relating to the Canadian operation for the period to date is set out below.

The income statement and statement of cash flow distinguish discontinued operations from continuing operations. Comparative figures have been restated.

	Six months ended
	30 June 2011	30 June 2010
Income statement for discontinued operation
Revenue	138	302
Costs	(924)	(1,402)
Impairment of intangible assets	(1,442)	-
Loss before income tax from discontinued operations	(2,228)	(1,100)
Taxation: deferred tax release on impaired intangible assets	389	-
Loss from discontinued operations	(1,839)	(1,100)
Cash flows for discontinued operation
Net cash generated in operating activities	(631)	(1,259)
Net cash from investing activities	209	(7)
Effect on cash flows	(422)	(1,266)

11. Income tax 

The tax expense recognised is based on management estimates of the tax charge for the period and has been calculated using the estimated average annual tax rate of UK Corporation Tax of 26.5% (2010: 28%) and in relation to deferred taxation, at the rate of 26%.

12. Dividends

In relation to the 2010 financial year, an interim dividend of 5.6p was paid on 25 October 2010 amounting to £3,278,800, followed by a final dividend of 5.6p on 30 May 2011 amounting to £3,277,900.

As regards 2011, the Directors are proposing an interim dividend of 6.2p, which will be payable on 21 October 2011 to shareholders on the register at 14 September 2011.  This interim dividend, which will amount to £3,630,000, has not been recognized as a liability in this interim report.  

13. Capital expenditure

Six months ended 30 June 2011	Tangible and Intangible assets (unaudited)
	£'000
Opening net book amount 1 January 2011	63,293
Additions:
- Internally generated software	1,674
- Data centre hosting contract assets	770
- Other acquisitions	1,694
Net book value of disposals	(236)
Depreciation and amortisation	(3,136)
Discontinued operation - impairment of intangible assets	(1,442)
Closing net book amount 30 June 2011	62,617

Six months ended 30 June 2010	Tangible and Intangible assets (unaudited)
	£'000
Opening net book amount 1 January 2010	46,414
Additions:
- Internally generated software	2,029
- Data centre hosting contract assets	1,496
- Other acquisitions	1,042
Net book value of disposals	(142)
Depreciation and amortisation	(2,544)
Closing net book amount 30 June 2010	48,295

14. Share capital

On 29 March 2010 the company issued 8,333,334 ordinary shares of one penny each (representing 14.29% of the enlarged equity at that time) at a price of £3.00 a share, raising £24,150,311 net of amounts charged to share premium account of £849,689. 

On 19 August 2010 the company issued 216,683 ordinary shares of one penny each at 326.3 pence per ordinary share.

15. Business combinations

Prior periods:

Acquisition of RX Systems Limited ("RX")

The company acquired 78.9% of the issued share capital of RX, a pharmacy software and services company, on 19 August 2010 for a total consideration of up to £9.95 million.  Details of this business combination were disclosed in note 33 of the Group's annual financial statements for the year ended 31 December 2010.   

 

Independent Review Report to EMIS Group plc

Introduction

We have been engaged by the Company to review the condensed set of financial statements in the interim report for the six months ended 30 June 2011 which comprises the Consolidated Statement of Comprehensive Income, Consolidated Balance Sheet, Consolidated Statement of Changes in Equity, Consolidated Statement of Cash Flows and the related explanatory notes.  We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the Company 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. Our review work has been undertaken so that we might state to the Company those matters we are required to state to them in an independent review 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 formed.

Directors' Responsibilities

The interim report, is the responsibility of, and has been approved by the directors.  The directors are responsible for preparing and presenting the interim report in accordance with the AIM Rules of the London Stock Exchange.

As disclosed in note 2, the annual financial statements of the Group are prepared in accordance with International Financial Reporting Standards and International Financial Reporting Interpretations Committee pronouncements as adopted by the European Union.  The condensed set of financial statements included in this interim report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting" as adopted by the European Union.

Our Responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the interim report based on our review.

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 United Kingdom.  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.  A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) 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.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the interim report for the six months ended 30 June 2011 is not prepared, in all material respects, in accordance with International Accounting Standard 34 "Interim Financial Reporting" as adopted by the European Union, and the AIM Rules of the London Stock Exchange.

Baker Tilly UK Audit LLP

Chartered Accountants

2 Whitehall Quay

Leeds LS1 4HG

1 September 2011

 

END

 

 

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