Half Yearly Report

RNS Number : 6140S

EMIS Group PLC

14 September 2010

 



                                                                                                                  14 September 2010

EMIS Group plc

Half Year Results for the Six Months ended 30 June 2010

EMIS Group plc ("EMIS" or "Group"), the UK's leading supplier of software and related services to GP practices, today announces its unaudited results for the six months ended 30 June 2010.

Financial highlights

·    Revenue of £29.0m (2009 H1: £28.9m)

·    Recurring revenue of 81% (2009 H1: 74%)

·    Accredited Hosting commenced at start 2010 and growing strongly

o Recurring revenue £1.88m in 2010 H1

·    EBITDA⁽¹⁾ £8.8m (2009 H1: £8.8m) with £9.8m (2009 H1: £9.8m) from core UK business net of flotation costs

·    Normalised EBIT⁽²⁾ of £8.3m (2009 H1: £7.1m)

·    Cashflow from operations £18.5m (2009 H1: £11.8m)

·    Cash net of bank term loans £10.5m

·    EPS of 7.89p (2009 H1: 7.37p)

·    Interim dividend of 5.6p per share

(1) EBITDA refers to profit before interest, taxation, depreciation and amortisation other than depreciation of Accredited Hosting assets

(2)  Normalised EBIT includes adjustment for flotation costs and accrued holiday pay

Operational highlights

·    Successful admission to AIM, raising £50 million gross

·    UK GP software market leader with 53.8% market share

o 5,592 GP sites utilising EMIS

·    Market share in Scotland increased from 12.7% to 46.9%

·    50:50 JV formed with INPS to facilitate the sharing of patient data via a medical interoperability gateway ("MIG")

·    Canada - recent headcount reduction from 44 to 16 with continuing strategic review

·    Acquisition in August of 78.9% of Rx Systems - community pharmacy software and services

·    EMIS Web accredited on 7 September 2010

·    Commencing a controlled roll-out of EMIS Web

·    Key future growth opportunities arising from the publication of the coalition government's white paper "Equity and Excellence: Liberating the NHS"

Sean Riddell, Chief Executive of EMIS, said:

"Following our successful IPO, we have delivered on our key promises, namely the successful accreditation of EMIS Web, ahead of schedule, the significant increase in our market share in Scotland, the delivery on interoperability through the joint venture with INPS and the bolt-on acquisition of Rx Systems.

"We are now commencing the controlled roll-out of EMIS Web, working with GPs and commissioning groups to deliver on the requirements set out in the recent Government White Paper on the NHS. Our main priority is to build on the foundations we have put in place to increase the scale of the roll-out of EMIS Web. We are already seeing a high level of intent from customers to upgrade to our transformational, next generation system.

"Despite the cut backs being seen within the NHS, we are confident we can help healthcare professionals to deliver more for less." 

There will be an analyst meeting at 9.00am today at Evolution Securities, 100 Wood Street, London, EC2V 7AN.  Please contact Giles Robinson at Hogarth on 020 7357 9477 for details.

Enquiries:

For further information, contact:

EMIS Group plc                                                         Tel: [phone]

Sean Riddell, Chief Executive

Evolution Securities Limited            

Leeds                                                                           Tel: [phone]

Joanne Lake/Peter Steel

London                                                                        Tel: [phone]

Andrew Fairclough/Adam Strachan

Hogarth                                                                      Tel: [phone]

Sarah MacLeod/James White/Giles Robinson

Notes to Editors

EMIS Group is the UK's leading supplier of software and related services to GP practices. 53.8% of GPs in the UK use an EMIS system.

EMIS' 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 of the 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.

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' shares were listed on AIM under the trading symbol EMIS.L following a successful fundraising in March 2010.

In August 2010, EMIS acquired 78.9% of Rx Systems Limited, a supplier of integrated pharmacy and retail systems for community pharmacies. Rx has a significant customer base of over 2,500 pharmacies, representing a 20.5% share of this market.

Chief Executive's Overview

The NHS has undergone a combination of political upheaval and austerity challenges and increasingly moved its position away from the development of centralised national systems and to a "connect all" rather than "replace all" strategy. This has been further defined in the White Paper published by the Government entitled "Equity and excellence: Liberating the NHS" which confirms 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 GP practices.

This transformation of healthcare delivery opens up new markets for EMIS Web. Extended care currently covers approximately 292,000 staff, representing an additional market for EMIS on top of the 157,000 staff currently based in GP practices. EMIS Web is already live in this new market with strategic healthcare partners including the NHS in Tower Hamlets, Cumbria and Liverpool where we have successfully linked patient information from 100 GP practices, representing 450,000 patients, to clinicians working across all of its urgent care services. Within this project, we have successfully linked primary, out of hours and secondary care IT systems. This will improve patient care and deliver significant efficiencies by providing vital patient information at the point of need. With the formal accreditation process for EMIS Web now complete, this is a model that we will be replicating in other healthcare communities.

Financial Review

Revenue in the period was £29.0 million (2009 H1: £28.9 million). 

Hosting to Connecting for Health standards ("Accredited Hosting") recurring revenue commenced at the end of December 2009 and amounts to £1.9 million in 2010 H1.  In recent months the profitability of this new revenue stream has been offset by a reduction in PCT discretionary spending, albeit mainly on lower margin hardware and services.  Accredited Hosting revenue is growing strongly and in H2 is expected to be circa £2.8 million.

Total recurring revenue amounted to £23.3 million - 81% of total revenue (2009 H1: £21.7 million - 76%).

EBIT, adjusted for flotation and other transaction costs of £0.96 million and holiday pay (in accordance with IAS 34) that reverses in 2010 H2 of £0.43 million, was £8.3 million (2009 H1: £7.1 million), an increase of 17.1%.

In March 2010, the flotation raised £50 million gross, £25 million for the Group (£23.2 million net of costs) and £25 million for existing shareholders.  The net proceeds were used principally to repay founder shareholder loans amounting to £23 million. 

During the half year to date the Group has generated cash of £16.5 million from operations (net of internal costs capitalised).  Founder shareholder and bank interest payments amounted to £0.7 million and tax paid was £2.3 million.  Capital expenditure, including Accredited Hosting assets acquired, amounted to £2.4 million.

At 30 June 2010, the Group had gross cash of £16.8 million, which equates to £10.5 million net of bank term borrowings.

Earnings per share increased by 7.1% to 7.89p (2009 H1: 7.37p). 

Our percentage tax charge is high due to the Canadian losses, for which no relief is available in the UK.  The overall rate should reduce over the second half year as the benefit of the recent

Canadian restructuring takes effect.

Operational Review

The core EMIS business is very stable and continues to perform well, largely unaffected by ongoing change within the NHS.  Our market share in the UK has increased from 52.5% to 53.8%, maintaining the long term growth trend.  The loyalty of our customer base continues with 64% of users having been with EMIS for over 10 years.

We have gained 385 GP practices in the year to date, including 352 in Scotland.  We are in negotiation with a number of PCTs and GP Commissioning groups regarding the implementation of EMIS Web for extended primary care functionality.  With the best value GP Systems of Choice software, the highest number of electronic patient records and the cross organisational functionality of EMIS Web, EMIS is well positioned for future growth following the recent announcement of proposed NHS organisational changes.

Licensing and software support

Recurring income was £15.4 million compared to £13.7 million in 2009 H1, an increase of 12.4%, arising mainly from Accredited Hosting deployments.

Hosting annuity revenues and profitability have increased as 372 practices moved onto EMIS-hosted servers in 2010 H1. This is expected to continue with a further 110 practices scheduled to move in 2010 H2.

Hardware sales, engineering services and training

Total income was £11.6 million (2009 H1: £13.2 million).  The discretionary spend on hardware, engineering services and training has been affected by pressure on NHS budgets and the political uncertainty at the beginning of the year. It also appears that some spend has been deferred in anticipation of EMIS Web.  We expect that pressure on NHS budgets will continue to impact discretionary sales. 

Scotland 

Scotland represents a significant area of new business growth for the future.  NHS Scotland is replacing the current GP System ("GPASS") used by 683 practices across Scotland by March 2012.  As a result, our market share in Scotland has grown from 12.7% to 46.9%.

In January 2010, EMIS was selected by NHS Scotland as one of the two systems to which GPASS practices can upgrade. A number of Health Boards have already recommended EMIS software to replace the GPASS system.  This includes the largest Health Board, NHS Greater Glasgow and Clyde, covering 243 GP practices.

Canada

EMIS Inc, the Group's Canadian subsidiary, responsible for 1% of Group revenues, has not made the progress expected during the period. Staff numbers have therefore been reduced from 44 to 16 and the Group continues its strategic review of this business.

Healthcare Gateway Joint Venture

Healthcare Gateway, a 50:50 joint venture company, was established with INPS in June to facilitate the sharing of patient data via a medical interoperability gateway ("MIG").  The MIG allows real time interoperability between GPs using EMIS Web, those using INPS and other healthcare professionals within the NHS. It has the potential to significantly increase efficiency in the NHS as well as improve patient care. EMIS and INPS software users in the UK represent circa 75% of GP practices and together hold approximately 46 million electronic patient health records.

The development of this medical interoperability gateway has been driven by demand from the NHS and other healthcare providers to move to a "connect all" ethos. The need for wider access to a critical mass of birth-to-grave patient records is increasingly important given the drive to deliver more NHS services in the community. It is expected that both the NHS and other software providers will buy services from Healthcare Gateway Limited to further connect up the computer systems in the NHS.

Rx Systems Limited

In August 2010, EMIS acquired 78.9% of Rx Systems Limited ("Rx") , a supplier of integrated pharmacy and retail systems for high street pharmacies. Rx has a significant UK-wide customer base of 2,500 pharmacies, representing a 20.5% share of this market and the Group's alignment team has already identified a number of significant synergies that can be exploited by both businesses. The acquisition of Rx represents a unique strategic opportunity for EMIS to develop further its presence in this adjacent segment of the healthcare IT market and progress its objective of joining up healthcare IT.

EMIS Web

During the period, EMIS focused on the accreditation of EMIS Web for GP use which represents a key milestone for the Group. As at 7 September 2010, orders had been received from 985 GP practices for the familiarisation service, allowing them to run EMIS Web alongside their existing system before upgrading, and 142 orders for the upgrade itself.

The controlled roll-out of EMIS Web has now commenced and the next priority is to build on the foundations already in place to maximise the roll-out rate whilst satisfying customer expectations for our next generation system.

Dividend

The Board has resolved to pay a maiden, interim dividend of 5.6p per share on the ordinary shares of 1p each of the Group on 25 October 2010 to shareholders on the register at the close of business on 24 September 2010.

Summary and outlook

We welcome the recent Government White Paper review of the NHS. EMIS' product and service strategy is well suited to the transfer of PCT budgets to GP consortia and the focus on the patient rather than the administrative organisation. 

We continue to see strong revenue visibility into the second half with recurring revenues expected to remain high and trading for the full year remains in line with the Board's expectations. We anticipate that the current pressure on customers' discretionary hardware and engineering services spend will continue in the second half.  However, we expect this to continue to be offset by further growth in hosting revenues and profitability, which will be augmented by the controlled roll-out of EMIS Web.

We are confident that we have put in place the framework for significant future growth.  We will continue to build on this and are very pleased with our achievements and performance to date of which our employees can be rightfully proud.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 for the six months ended 30 June 2010

	6 months to 30 June 2010 Unaudited £'000	6 months to 30 June 2009 Unaudited £'000		Year ended 31 December 2009  Audited £'000
Continuing Operations
Revenue	29,021	28,941		57,696
Costs:
Changes in inventories	28	(26)		(498)
Cost of goods	(4,050)	(5,233)		(9,022)
Staff costs	(11,534)	(11,333)		(21,820)
Flotation and other transaction costs	(959)	-		-
Other operating expenses
- (including contract asset depreciation of   £675,000 - 2009 H1 nil, 2009 full year £85,000)	(3,692)	(3,528)		(6,209)
Earnings before interest, taxes, depreciation and amortisation ("EBITDA")	8,814	8,821		20,147
Depreciation of property, plant and equipment	(831)	(1,103)		(2,299)
Amortisation of intangible assets	(1,038)	(1,037)		(2,074)
Operating profit	6,945		6,681	15,774
Finance income	25		39	62
Finance costs	(313)		(1,052)	(1,572)
Share of profit of associate	33		99	198
Profit before taxation	6,690		5,767	14,462
Income tax expense	(2,404)		(2,083)	(4,521)
Profit for the period and Total comprehensive income- attributable to equity holders of the parent	4,286		3,684	9,941
Earnings per share
- Basic and diluted	7.89p		7.37p	19.88p
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.

CONSOLIDATED BALANCE SHEET

as at 30 June 2010

	At 30 June 2010 £'000	At 30 June 2009 £'000	At 31 December 2009 £'000
ASSETS
Non-current assets Goodwill	15,853	15,853	15,853
Other intangible assets	22,046	19,832	21,055
Property, plant and equipment	10,396	7,057	9,506
Investment in associate	2,585	2,453	2,552
	50,880	45,195	48,966
Current assets
Inventories	702	1,072	674
Trade and other receivables	5,412	6,853	7,500
Cash and cash equivalents	16,829	11,534	5,221
	22,943	19,459	13,395
Total assets	73,823	64,654	62,361
LIABILITIES
Current liabilities
Trade and other payables	(5,903)	(7,397)	(3,381)
Current tax liabilities	(2,400)	(1,669)	(3,516)
Bank loans	(1,184)	(2,484)	(1,184)
Other financial liability	-	(524)	-
Deferred income	(12,821)	(8,430)	(7,613)
	(22,308)	(20,504)	(15,694)
Non-current liabilities
Bank loans	(5,172)	(10,057)	(5,763)
Other loans	-	(23,000)	(23,000)
Deferred tax liability	(6,532)	(5,970)	(6,524)
	(11,704)	(39,027)	(35,287)
Total liabilities	(34,012)	(59,531)	(50,981)
NET ASSETS	39,811	5,123	11,380
EQUITY
Ordinary share capital	583	500	500
Share premium account	24,062	-	-
Retained earnings	15,166	4,623	10,880
TOTAL EQUITY	39,811	5,123	11,380
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 2010

	Share  capital	Share premium	Retained  earnings	Total  Equity
	£'000	£'000	£'000	£'000
Balance at 1 January 2009	500	-	939	1,439
Total comprehensive income for the period		-	3,684	3,684
Balance at 30 June 2009	500	-	4,623	5,123
Total comprehensive income for the period	-	-	6,257	6,257
Balance at 31 December 2009	500		10,880	11,380
Issue of share capital for cash on flotation of company	83	24,062		24,145
Total comprehensive income for the period	-	-	4,286	4,286
Balance at 30 June 2010	583	24,062	15,166	39,811
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 2010

	6 months to 30 June 2010 Unaudited £'000	6 months to 30 June 2009 Unaudited £'000	Year ended  31 December 2009  Audited £'000
Cash flows from operating activities:
Operating profit	6,945	6,681	15,774
Amortisation of intangible assets	1,038	1,037	2,074
Depreciation of property, plant and equipment	1,485	1,112	2,384
Decrease (increase) in inventory	(28)	99	498
(Increase) in trade and other receivables	1,928	(1,963)	(1,959)
(Decrease) increase in trade and other payables	1,926	3,688	(2,235)
Increase in deferred income	5,208	1,133	3,328
Cash generated from operations	18,502	11,787	19,864
Interest paid	(731)	(1,780)	(2,161)
Settlement of financial derivative	-	-	(524)
Interest received	26	39	62
Tax paid	(2,329)	(1,203)	(3,127)
Net cash generated from operating activities	15,468	8,843	14,114
Cash flows from investing activities
Purchase of property, plant and equipment	(2,537)	(237)	(4,113)
Proceeds from sale of property, plant and equipment	161	142	295
Internally developed software	(2,029)	(2,260)	(4,520)
Net cash used in investing activities	(4,405)	(2,355)	(8,338)
Cash flows from financing activities
Proceeds from issue of ordinary shares	24,145	-	-
Bank term loan	(600)	(1,023)	(6,625)
Shareholder loans repaid	(23,000)	-	-
Net cash used in financing activities	545	(1,023)	(6,625)
Net (decrease)/increase in cash and cash equivalents	11,608	5,465	(849)
Cash and cash equivalents at beginning of period	5,221	6,070	6,070
Cash and cash equivalents at end of period	16,829	11,535	5,221
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 6 BA.

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 2010 and the six months ended 30 June 2009 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 2009 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 13 September 2010.  

2. Basis of preparation 

These interim financial results for the half-year ended 30 June 2010 have been prepared in accordance with the AIM Rules for Companies and with IAS 34, 'Interim Financial Reporting' as adopted by the European Union. This interim condensed consolidated financial report should be read in conjunction with the annual financial statements for the year ended 31 December 2009, which have been prepared in accordance with IFRSs as adopted by the European Union.

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 2010 and are consistent with those disclosed in the Group's Annual Report and Financial Statements for the year ended 31 December 2009, except as described below.

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

(a) Adoption of new and revised standards

The following new standards and amendments to standards are mandatory for the first time for the financial year beginning 1 January 2010.

IFRS 3 (revised), 'Business combinations', and consequential amendments to IAS 27, 'Consolidated and separate financial statements', IAS 28, 'Investments in associates', IAS 31, 'Interests in joint ventures', are effective prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after 1 July 2009.  

The revised standard continues to apply the acquisition method to business combinations but with some significant changes compared with IFRS 3.  EMIS Group has had no such transactions in the half year to 30 June 2010, but consideration will need to be given to the accounting treatment and presentation of the recent Rx acquisition in the accounts for the full year.  In particular, IFRS 3 (revised) requires that all acquisition related costs be expensed.      

(b) Standards, amendments and interpretations to existing standards effective in 2010 but not relevant to the Group

·    IFRIC 17, 'Distributions of non-cash assets to owners', effective for annual periods beginning on or after 1 July 2009.  This is not currently applicable to the Group, as it has not made any non-cash distributions.

·    IFRIC 18, 'Transfers of assets from customers', effective for transfer of assets received on or after 1 July 2009.  This is not relevant to the Group, as it has not received any assets from customers.

·    Improvements to International Financial Reporting Standards 2009 were issued in April 2009.  The effective dates vary standard by standard but most are effective 1 January 2010.

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 2009 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 Interim Financial Statements do not differ materially from those applied within the 2009 Group Annual Report and Financial Statements.

5. Principal risks and Uncertainties

The Group set out in its 2009 Annual Report and Financial Statements the principal risks and uncertainties that could impact its performance; 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.

The main areas of potential risk and uncertainty on a short-term forward-looking basis over the remainder of the financial year are in relation to the level of UK government spending on IT relating to healthcare delivery.  In light of various pronouncements focusing on reducing the public sector budgetary deficit, the rate of growth in expenditure on healthcare-related IT may reduce significantly. This may have an adverse effect on the Group's future performance, financial condition or business prospects. However, the Directors believe the Group is well placed to benefit from targeted IT healthcare spending due to the potential for the NHS to generate cost savings and healthcare improvements through the use of its products. 

The Group continues to be very well placed to significantly increase revenues through the development of its next generation software for use in primary care and into extended primary and secondary care settings.  The recent acquisition of Rx Systems limited ("Rx") should also lead to significant further growth in revenue in the adjacent community pharmacy market. 

The Group is also in a position to realize significant synergies arising from the acquisition of Rx.

6. 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.

7. 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 2010 a provision amounting to £426,000 (30 June 2009 - £431,000) has been necessary.  This additional first half year cost is then added back in calculating profits of the second half.  

8. 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 group considers that this role is performed by the main board of directors. 

The group has two distinct geographical segments, namely (a) the principal business, being its operations in various parts of the world but mainly in the UK and all conducted from the UK, with the exception of (b) the Canadian operation (Emis Inc).  EMIS Inc. is engaged in an economic environment that is subject to risks and returns that are different to those of the UK principal business.

Although the Canadian segment does not meet the quantitative thresholds required by IFRS 8, management has concluded that this segment should be reported, as it is closely monitored by the board as a distinct and separate operation and has had a material effect on Group results.

Other than in relation to the Canadian geographical segment, the group operates as a single segment.

(b) Geographical Segmental reporting

	Six months ended 30 June 2010			Six months ended 30 June 2009
	Revenue	EBITDA	Revenue		EBITDA
	£'000	£'000	£'000		£'000
Continuing operations
EMIS - UK and world (excluding Canada)	28,719	9,843	28,648		9,842
EMIS Inc. - Canadian market	302	(1,029)	293		(1,021)
Total segments	29,021	8,814	28,941		8,821
Depreciation of property, plant and equipment		(831)			(1,103)
Amortisation of intangible assets		(1,038)			(1,037)
Finance costs less finance income		(288)			(1,013)
Share of profit of associate		33			99
Profit for the period before taxation		6,690			5,767

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

		EMIS  £'000	EMIS Inc £'000	Total  £'000	EMIS  £'000	EMIS Inc  £'000	Total  £'000
Total segmental net assets		42,978	604	43,582	38,225	510	38,735
Unallocated assets:
Investment in associate				2,585			2,453
Unallocated liabilities
- bank and other loans				(6,356)			(35,541)
- other financial liability				-			(524)
Shareholders equity				39,811			5,123

9. Income tax 

The tax expense recognised is based on management estimates of the tax charge for the period and has been calculated using the standard rate of UK Corporation Tax of 28% (2009: 28%).

10. Earnings per share

The basic earnings per share ("EPS") arises from continuing operations and has been calculated by dividing the net profit attributable to Ordinary shareholders by the weighted average number of shares in issue during the relevant period as follows:

	Six months ended 30 June 2010			Six months ended 30 June 2009
	Earnings £'000	No. of shares	Amount per share	Earnings £'000	No. of shares	Amount per share
Basic EPS:
Earnings attributable to ordinary shareholders	4,286	54,327,809	7.89p	3,684	50,000,000	7.37p

The issued ordinary share capital of the company was subdivided from £1 shares into one penny shares on 29 March 2010.  However, for consistency, the number of shares shown above assumes that one penny shares were in issue throughout.

The number of shares stated for 2010 takes into account the issue of 8,333,334 shares of one penny each on 29 March 2010.

11. Dividend

The Directors are proposing an interim dividend of 5.60 pence per share payable on 25 October 2010 to shareholders who are on the register at 24 September 2010.  This interim dividend amounting to £3,278,800 has not been recognized as a liability in this interim report. 

12. Capital expenditure

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

Six months ended 30 June 2009	Tangible and Intangible assets (unaudited)
	£'000
Opening net book amount 1 January 2009	42,535
Additions:
- Internally generated software	2,260
- Data centre hosting contract assets	-
- Other acquisitions	237
Net book value of disposals	(141)
Depreciation and amortisation	(2,149)
Closing net book amount 30 June 2009	42,742

13. Share capital

On 29 March 2010 the company issued 8,333,334 ordinary one penny shares at a price of £3.00 a share, raising £24,150,311 net of amounts charged to share premium account of £849,689. 

14. Post balance sheet events

Acquisition of Rx Systems Limited ("Rx")

On 19 August 2010 the company acquired 78.9% of the issued share capital of Rx, a pharmacy software and services company, for a total consideration of up to £9.95 million.

The initial consideration was £9.0 million, comprising a cash payment of £8.3 million made at completion, funded from existing cash resources, and a further £0.7 million, satisfied by the issue of 216,683 ordinary shares of one penny each in EMIS at 326.3 pence per ordinary share. 

A maximum of £0.95 million contingent deferred consideration is also payable, dependent on achievement of certain levels of operating profit over the 17 months following completion.

For the year ended 31 January 2010, Rx reported revenues of £9.97 million and generated a normalised profit before tax of £1.50 million.

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 half-yearly financial report for the six months ended 30 June 2010 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 half-yearly financial 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 half-yearly financial report, is the responsibility of, and has been approved by the directors.  The directors are responsible for preparing and presenting the half-yearly financial 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 half-yearly financial 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 half-yearly financial 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 half-yearly financial report for the six months ended 30 June 2010 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

13 September 2010

 

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