Company Announcements

                                                                                                                     18 March 2021

EMIS Group plc

("EMIS Group", "the Group" or "EMIS")

Final Results for the year ended 31 December 2020

EMIS Group plc (AIM: EMIS.L), the UK leader in connected healthcare software and services, today announces its final results for the year ended 31 December 2020.

Financial highlights

¹   For an explanation of the alternative performance measures used in this report, please refer to the appendix. 

Business highlights

Resilient financial performance and further strategic progress:

·    Revenues, adjusted operating profit and adjusted operating margin maintained while recurring revenue, cash flow and reported operating profit all increased

·    Successful transition to GP IT Futures framework, with leadership positions maintained or improved in key NHS markets

·    Resilient business model with recurring revenue up 4% to £130.0m, representing 82% of total revenue (2019: 78%), £28m of new business delivered in the period and strong cash position of £53.0m (2019: £31.1m)

·    Increased final dividend for tenth consecutive year

Well positioned to meet evolving requirements of healthcare sector today and in the future:

·    The Group's Pinnacle product became the system used by healthcare professionals throughout England delivering Covid-19 vaccinations to capture and share essential immunisation information

o  deployed in almost 1,400 vaccination centres and has supported 14.9m vaccinations (as at 1 March 2021)

·    Positive response to EMIS-X Analytics since launch in October 2020

o  supported large-scale epidemiological Covid-19 research with NHS England, Oxford University and the London School of Tropical Hygiene & Medicine

o  contracted with Oxford University and a global, science-led biopharmaceutical business to undertake a major clinical research project in the treatment of Covid-19

·    Significantly increased usage of services provided by the Patient Access app and website, driven by increased demand for digital routes to healthcare during the pandemic, providing platform for future growth

·    Supported community pharmacies to play a greater role in alleviating pressure on the NHS through managing and delivering repeat prescriptions and offering digital consultations

·    Partner programme performed strongly with increasing choice of accredited software systems and services, further developing this powerful ecosystem

Outlook

·    EMIS Group is well positioned to respond to the challenges our customers face with a combination of innovative technology, 82% recurring revenue and leading market shares

·    EMIS-X offers significant potential to grow the business in both the NHS and life sciences sectors in the mid-term

·    Flexible business model will enable the Group to adapt to proposed changes to NHS organisational structure

·    Current trading in line with expectations, with a good pipeline of opportunities

·    Expect to return to growth in 2021, with new product developments leading to opportunities for higher growth levels in 2022 and beyond

Andy Thorburn, Chief Executive Officer of EMIS Group, said:

"2020 has been another year of positive progress for EMIS Group, during which healthcare has been at the centre of the global agenda. The front line response to the pandemic has been outstanding and I am proud of all my colleagues who have stepped up and helped our NHS heroes in every possible way, from supporting the clinicians delivering patient care on the front line to playing a vital role in England's vaccination programme.

"While Covid-19 presented unprecedented challenges to the sector, it has also been a catalyst for change, leading to a more rapid adoption of digital healthcare that is here to stay. We believe that EMIS Group is well positioned to respond to the challenges our customers face, with a combination of our innovative technology, leading market shares and strong recurring revenues that enable us to invest with confidence.

"Our product development investment means our current and emerging software is well suited to meet the evolving requirements of the healthcare sector. We remain focussed on the vision of a digital, connected healthcare world and we look forward to achieving great results for our customers, colleagues and shareholders."

There will be a webcast and conference call of the results today at 9.00am for analysts and investors. Please contact Pandora Yadgaroff at MHP Communications on 020 3128 8168 or email emis@mhpc.com for details.

Enquiries:

For further information, contact:

EMIS Group plc                                                                                     Tel: 0330 024 1269

Andy Thorburn, CEO

Peter Southby, CFO

www.emisgroupplc.com

@EMISGroup

Numis Securities Limited (Nominated Adviser & Broker)               Tel: 020 7260 1000

Oliver Hardy/Simon Willis/James Black

MHP Communications                                                                         Tel: 020 3128 8168

Reg Hoare/Giles Robinson/Florence Mayo/Pandora Yadgaroff            emis@mhpc.com   

Information for investors, including analyst consensus forecasts, can be found on the Group's website at www.emisgroupplc.com/investors.

Notes to Editors

EMIS Group is the UK leader in connected healthcare software and systems. Its solutions are widely used across every major UK healthcare setting. EMIS Group's aim is to join up healthcare through innovative technology, helping to deliver better health outcomes to the UK population, supporting longer and healthier lives.

EMIS Group has two core business segments: EMIS Health and EMIS Enterprise.

EMIS Health is a supplier of innovative integrated care technology to the NHS, including primary, community, acute and social care.

EMIS Enterprise is focussed on growth in the business-to-business technology sector within the healthcare market, including management of medicines, partner businesses, life sciences and patient-facing services.

LEI: 213800K474ZZK76NX913

CHIEF EXECUTIVE OFFICER'S STATEMENT

Overview

2020 has been another year of positive progress for EMIS Group. While Covid-19 presented unprecedented challenges to the healthcare sector, it has also been a catalyst for change, leading to a more rapid adoption of digital healthcare that is here to stay. EMIS reacted quickly to the changing needs of our customers with a focus on supporting both the NHS and our colleagues through the pandemic in every way we can.

EMIS Group delivered a resilient financial performance during the period, with revenue and adjusted operating profit at very similar levels to 2019, while reported operating profit grew strongly. Over the year we increased our cash position by 70% and are pleased to be able to recommend an increased final dividend for the tenth consecutive year. 

Our NHS and community pharmacy customers have done an incredible job in 2020, as have all our partners in the UK healthcare sector. The front line response to the pandemic has been outstanding and I am delighted to say that all my colleagues at EMIS have stepped up and helped our NHS heroes in every possible way, making a strong social contribution by supporting the clinicians that are delivering patient care on the front line.

Operational execution

EMIS's responsiveness and adaptability during the pandemic has enabled us to manage the business well throughout this challenging time. Early preparation meant that we moved 99% of our people to homeworking in both the UK and India ahead of the first formal lockdown announcement in March 2020. We received positive feedback from our customers throughout this period and were pleased to support the NHS front line appropriately.

Our combination of homeworking and on-site working enabled us to continue to provide technical support to our end users during this busy time without any interruption to service. Importantly, no staff were furloughed and no redundancies took place during lockdown.

Our robust business model has been the foundation for our performance this year, with 82% recurring revenue (2019: 78%). In addition, our account management and sales model has yielded good results with £28m of new business delivered in the year.

The new business product mix delivered during 2020 was different to what we had expected at the start of the year, as a direct consequence of the pandemic. For example, we saw higher than usual hardware sales resulting from the need for rapid deployment of mobile working solutions during lockdown. Growth was delayed in some areas of the business, such as in the uptake of Patient marketplace services and sales in the community pharmacy market, as patients made fewer visits to community pharmacies during the first lockdown.

We have made further improvements in our customer support area, with formal service level agreement (SLA) performance significantly improving year on year. We are focussed on continuous improvement in customer and partner satisfaction in 2021 and beyond.

Pinnacle acquisition and integration

The business was strengthened in March 2020 with the acquisition of Pinnacle, owners and operators of the widely-used PharmOutcomes platform. The company has integrated well into the Group, both culturally and operationally, especially considering it was acquired at the beginning of the pandemic. Almost immediately following the acquisition, Pinnacle began working with the Patient team to provide a new GP patient referral service as part of Patient Access for Professionals, called Patient Access Connect. This allows practice staff to triage patients and refer them to a community pharmacist in instances where they do not need to see a GP, such as for a minor illness consultation.

Interoperability is progressing well between Pinnacle's core PharmOutcomes system and our existing community pharmacy system, ProScript Connect. In the summer, the two systems began to successfully exchange data to enable pharmacists to check for shielding patients who needed their medicines to be home delivered during the pandemic.

From December onwards, Pinnacle's Outcomes4Health system became the system used by healthcare professionals throughout England delivering vaccinations to capture and share essential immunisation information. It is being used by healthcare professionals in GP-led primary care, community pharmacy and mass vaccination centres, linking directly with the National Immunisation Management Service (NIMS) for vital data exchange and sharing Covid-19 vaccination data back into the GP record. By 1 March 2021, Outcomes4Health had been deployed in almost 1,400 vaccination centres and has supported 14.9m vaccinations, as well as underpinning the NHS daily reporting on vaccination delivery.

Our product roadmap

We continued to bring new talent into our global development team during the pandemic and now have 687 people in our core product development team representing 45% of our employees, with our team in Chennai continuing to go from strength to strength. This number has increased from 417 in 2018, with the growth funded through efficiency enhancements in other parts of our business.

Technology development continued in line with our product roadmap, including the early release of EMIS-X Analytics during the year, and we remain committed to continuing investment in new technology through 2021 and beyond.

The positive customer response to EMIS-X Analytics has been particularly encouraging since its launch in October 2020. We have secured pilot contracts with 25 NHS organisations for use of our Explorer analytics product to analyse and drive improvements to healthcare in local populations, including winter planning and identifying Covid-19 hotspots in the local area. We have been supporting large-scale epidemiological Covid-19 research with NHS England and researchers from Oxford University and the London School of Tropical Hygiene & Medicine, and have contracted with Oxford University and a global, science-led biopharmaceutical business to help recruit and screen patients for a major clinical research project in the treatment of Covid-19.

In addition we are collaborating with one of the top five global pharmaceutical companies to implement a neural network, and the first non-image based artificial intelligence deployed in healthcare, into EMIS Web to aid early detection of atrial fibrillation and reduce occurrence of strokes across the UK population.

Our culture

Our culture continues to evolve positively. During 2020 we moved to a flexible working culture, becoming a primarily homeworking business with plans for our office spaces to be transformed into collaboration hubs for team working, meetings and cross-group teamwork. We made this change in consultation with our staff, after our mid-year survey showed that 96% of UK staff were happy to work from home.

Following an employee survey on our culture at the beginning of 2020, we launched our updated corporate values in the second half of the year. The values are supportive, responsible, transformative and collaborative and they capture the essence of what makes EMIS a great place to work both in the UK and in India. We are committed to embedding these values as part of our Group culture through employee engagement and communication as we look to live the values during 2021 and beyond.

We believe it is very important to recognise our team members for the positive contributions they make on a daily basis, and so employee reward and recognition was another key focus area for us in 2020. This included the launch of a new "on demand" system where managers can immediately recognise great behaviour or achievements and reward the individual on the spot.

Employee wellbeing was also a big focus for us during 2020, with 28 volunteers trained as mental health first aiders for their colleagues. Their proactive engagement this year has made a notable difference across the business with a number of staff members personally recognising the invaluable support these volunteers have delivered in this area.

Focus on growth

With these solid foundations in place, the senior management team is focussed on translating our product development investment into growth. We expect to return to growth in 2021 and to build market momentum with our new product developments, which will lead to opportunities for higher levels of growth in 2022 and beyond.

Evolution of NHS structure

Integrated Care System (ICS) organisations have been growing in importance in recent years. These organisations are responsible for strategic plans to improve care for their local populations, including a focus on digital health. To succeed, ICSs will need effective, integrated solutions that enable data to flow between different healthcare settings and systems, including shared care records and population-level analytics. Our product development strategy is aligned with these priorities, for both existing and new products, and we have already restructured our sales and account teams in response to the growing importance of ICSs.

In February 2021, the Secretary of State for Health and Social Care proposed that ICSs be formalised as statutory legal bodies, in a White Paper entitled "Integration and Innovation: working together to improve health and social care for all." Under these proposals, ICSs would replace Clinical Commissioning Groups (CCGs) and partner with hospital trusts and social care services, holding the local budget. ICSs would be required to demonstrate integrated care pathways, underpinned by a new data sharing strategy.

We continue to closely monitor changes to the NHS organisational structure and as always, we will respond accordingly and adapt our business model as appropriate. We do not believe that the changes proposed in the White Paper are likely to have any material impact on the Group.

Summary and outlook

It is a privilege to lead EMIS Group.

Covid-19 has put healthcare at the centre of the global agenda. We believe that EMIS is well positioned to respond to the challenges our customers face in 2021 and beyond, with a combination of our innovative technology, leading market shares and strong recurring revenues that enable us to invest with confidence. The product development investment we have made in recent years means our current and emerging software is well suited to meet the evolving requirements of the healthcare sector both today and in the future.

As we now move forward, our customers require innovation and new solutions. EMIS remains focussed on the vision of a digital, connected healthcare world and we look forward to achieving great results for our customers, colleagues and shareholders.

OPERATIONAL REVIEW

EMIS Health

The EMIS Health segment comprises business areas where revenues are generated from NHS organisations. This includes the primary, community and acute A&E markets and operates under the EMIS brand.

Market shares

EMIS maintained its UK GP market leadership position with a market share of 57% (2019: 57%). The Group holds a joint market leadership position in Acute A&E at 21% (2019: 23%) and the number two market position in community at 20% (2019: 21%).

NHS primary care frameworks

EMIS transitioned to the GP IT Futures framework in January 2020. The framework governs the provision of the majority of EMIS Group's clinical IT system-related services to GPs in England and is due for review in March 2023. The related Digital Buying Catalogue, which facilitates procurement, will run on an ongoing basis.

EMIS developed a number of enhanced features in EMIS Web during 2020 in response to the framework, including capability for Fast Healthcare Interoperability Resource (FHIR) - a standard for exchanging healthcare information - an upgrade to the SNOMED CT clinical coding standard and integration with the Medicines and Healthcare products Regulatory Agency (MHRA) Yellow Card for reporting medication contraindications.

Framework mini-tender processes are anticipated to occur on a regular basis through the coming years in both Scotland and England. This has reinforced the clear focus of the Group to provide products that exceed customer expectations and to excel in customer service and delivery.

In Scotland, as an approved supplier on the NHS National Services Scotland (NSS) framework, EMIS continues to work closely with NSS to deliver the technology to support its health and care strategy. EMIS continues to keep the existing GP system, PCS, up to date for its Scottish customers, such as adding new clinical code terms to support the management of Covid-19, raising flags for patients on the shielding list and delivering population data for Public Health Scotland.

In Northern Ireland, EMIS has secured an extension to the GP Systems of Choice (GPSoC) framework until April 2022 so that it can continue to provide GP systems under the existing arrangements. EMIS is working on various Northern Ireland-specific enhancements to EMIS Web and continues to support its Covid-19 response.

EMIS has agreed a further extension to provide primary care systems in Wales as NHS Wales Informatics Service (NWIS) published its new framework in March 2021. EMIS and NWIS continue to work together on strategic projects to accelerate the digitisation of unscheduled care, such as refreshing the technology infrastructure.

Continued focus on EMIS-X

The development of EMIS-X continues. The development roadmap is linked to strategic customer priorities, with close alignment of the product, development and delivery functions. EMIS's 89-strong clinical team (2019: 71) continues to play a vital role throughout the development process, ensuring that EMIS's products and systems deliver what front line clinicians need on a daily basis.

Working with technology partners, EMIS-X will bring to the market the very best combination of in-house and partner technology as the platform for all future EMIS clinical systems.

Improving customer experience

EMIS is focussed on its relationships with customers in all major markets, with the intention that all customer touchpoints provide a high-quality experience for the end user.

In 2019, EMIS upgraded its support and service platform to ServiceNow, enabling support to be delivered digitally as well as through more traditional routes such as ringing into a call centre. During 2020 usage of digital support channels increased, with 66% of support incidents being logged digitally by the end of the year (2019: 30%).

EMIS's support services will continue to improve during 2021. The Group's new in-house dashboard will give a detailed insight into support performance, helping to pinpoint emerging trends before they become a problem and enabling more proactive management of issues. It will give a greater oversight of call and digital chat statistics, to highlight where any improvements can be made to make customer service even better.

Enhanced features for Symphony customers

EMIS continues to develop new functionality into existing systems, particularly to enable interoperability.

In September 2020, EMIS's Symphony became the first system accredited by NHS Digital to support direct electronic appointment booking from 111. Call handlers send referral appointments directly into an Emergency Department, urgent treatment centre or same day emergency care environment using Symphony. This supports the NHS Long Term Plan for the 111 service to become the first line of defence for urgent care.

As well as integration with 111, Symphony 3.0 was updated to enable improved workflows and help manage social distancing.

EMIS Enterprise

The EMIS Enterprise segment comprises business areas where revenues are derived predominantly from business-to-business healthcare sector sources, including medicines management across both community and hospital pharmacy, the Patient business and the life sciences sector. It operates under the EMIS and Patient brands.

Market shares

The Group improved its market-leading position in community pharmacy during 2020 at 38% (2019: 36%) and its number two market position in hospital pharmacy with a market share of 36% (2019: 35%).

Supporting community pharmacies to play a greater role

The NHS Long Term Plan outlined the intention for a greater range of clinical services to be provided in a community pharmacy setting to alleviate pressure on primary care.

During 2020, EMIS launched Clinical Service Hub (CSH) in ProScript Connect, which enables customers to deliver and record services they provide under the Patient Group Direction (PGD) initiative. Patients are able to book these services via Patient Access.

CSH is the first cloud-based ProScript Connect module to be developed, offering the potential for further interoperability and additional services in future.

The pandemic changed the way community pharmacists deliver their services and EMIS successfully provided solutions to manage and deliver repeat prescriptions and offer digital consultations.

Patient: delivering digitally

During 2020, as a direct consequence of the pandemic, the UK public needed digital routes to healthcare more than ever before. This was reflected in increased usage of the healthcare services provided by the Patient Access app and website.

Registered users increased during the year to 11.7m and subsequently to 12.0m in February 2021 (2019: 8.4m):

·    booking 2.5m digital or face-to-face GP appointments (2019: 6.7m), a reduction from the previous year reflecting the lower numbers of GP appointments across the sector due to the pandemic;

·    ordering 23.5m repeat prescriptions (2019: 20.2m); and

·    booking 41,415 private pharmacy consultations and 15,356 pharmacy NHS flu vaccinations across web, iOS and Android (2019: 14,000 pharmacy consultations and 8,700 flu vaccinations).

Patient.info continues to be one of the UK's leading medical information sites, offering more than 6,000 patient-facing and professional articles including over 100 about Covid-19. 80m unique users viewed 166m pages during 2020 (2019: 42m users, 109m page views).

The increase in usage of both the website and the existing Patient Access services provides a platform for growth of future Patient Access offerings, as the NHS increasingly looks to provide the UK public with a digital front door to healthcare services.

Patient Access will be launching its new Smart Pharmacy service during 2021, which will enable patients to order, track, and opt for home delivery of their medications from their local pharmacy. It offers community pharmacies a strong proposition in the face of increasing online competition as Smart Pharmacy will provide patients with regular updates on the progress of their prescription, taking pressure from the front desk of busy GP practices.

Another new service successfully launched recently has been a Patient and Pinnacle co-developed solution for community pharmacists to provide minor ailment treatments under the Public Health England Community Pharmacy Consultation Service (CPCS) framework. A new signposting feature in EMIS Web, called Patient Access Connect, allows clinicians and surgery staff to directly refer patients to their local pharmacy.

The partner programme: a powerful ecosystem

The partner programme continued to perform strongly in 2020 with the number of partners offering products that interoperate with EMIS clinical systems increasing to 143 (2019: 113). The Group continues its approach of partnering with best of breed technology to provide solutions to its customers. No single business can offer everything in a market as complex and varied as healthcare, but together EMIS's ecosystem can solve problems for customers in a better and faster way. EMIS already offers a strong proposition through EMIS Web and in future the business will develop even more integration through EMIS-X.

With the increased focus on the digitisation of healthcare, the EMIS partner programme has been strengthened during 2020 with the addition of companies such as Arc Health, providing technology to enable video consultation in care homes.

EMIS-X Analytics opportunities in enterprise markets

In 2020, Explorer and Visualiser, the first products from the EMIS-X Analytics suite, were launched to the market. EMIS-X Analytics is a high performance cloud analytics suite that provides a range of powerful processing tools designed to curate, aggregate and query large healthcare data sets at speed and scale. It offers significant potential for EMIS Group to grow the business over time with opportunities in both the NHS and life sciences.

EMIS-X Analytics has been used to facilitate a number of national and regional Covid-19 research programmes, such as NHS England's OpenSAFELY programme, a collaboration between the University of Oxford, the London School of Tropical Hygiene and Medicine and system suppliers. Led by NHS doctors Ben Goldacre and Liam Smeeth, OpenSAFELY is a new secure analytics platform for electronic health records in the NHS, created to deliver urgent results during the pandemic. 

FINANCIAL REVIEW 

The results for the year ended 31 December 2020 represent a creditable performance given the challenges faced by the business during the Covid-19 lockdown periods. The Group's revenues, adjusted operating profit and adjusted operating margin were unchanged on the comparative period while recurring revenue, cash flow and reported operating profit and margin all increased.

Group revenue of £159.5m (2019: £159.5m) included revenue of £2.2m from the Pinnacle acquisition, completed on 9 March 2020. Recurring revenue grew by 4% to £130.0m (2019: £125.0m), representing 82% (2019: 78%) of the Group's total revenue.

Adjusted operating profit for the year, as set out in the table below, was £39.3m (2019: £39.3m), including £0.7m from Pinnacle. Reported operating profit, in the absence of any exceptional charges and including the release of contingent acquisition consideration of £1.0m, increased to £35.8m (2019: £26.8m). A reconciliation between the operating profit measures is given in the Group statement of comprehensive income and in the appendix to this report.

Segmental performance

The table below sets out the summary segmental performance:

1.     Excludes capitalisation and amortisation of development costs, amortisation of acquired intangibles and exceptional items.

Driven in part by higher than usual hardware sales resulting from the need for rapid deployment of mobile working solutions during lockdown, revenue increased by 7% in EMIS Health to £107.8m (2019: £100.9m). These additional sales and reduced operating costs delivered an 8% increase in adjusted operating profit to £25.1m (2019: £23.3m), notwithstanding the Group's continued investment in developing its strategic roadmap.

While recurring revenue increased, performance in the EMIS Enterprise division reflected a subdued market and a strong comparative period. In the absence of significant licence deals and with delayed implementations during lockdown, revenue was 12% lower at £51.7m (2019: £58.6m) and adjusted operating profit reduced by 10% to £15.7m (2019: £17.5m).

Revenue

The NHS GP IT Futures framework, governing over a quarter of the Group's revenues, took effect in 2020. This introduced a single "software as a service payment" for GP systems in England and therefore, in order to better reflect the evolution of the business and its core revenue streams monitored internally, the Group has revised the way in which it analyses revenue. The revised analysis of revenue from continuing operations is summarised below:

·    software subscription and support, higher at £99.5m (2019: £94.2m), reflecting the inclusion of the acquired Pinnacle revenues and higher revenues from the Group's existing customers;

·    interface and connectivity charges, lower at £20.3m (2019: £21.8m) with business growth offset by a particularly strong comparative period for partner on-boarding;

·    hardware and related services, which grew to £17.3m (2019: £13.2m) as a result of Covid-19 related hardware sales in the primary care market;

·    other services, where revenues were higher at £13.4m (2019: £12.0m) with increased digitisation project work; and

·    perpetual licences, training, consultancy and implementation, where lower revenues of £9.0m (2019: £18.3m) reflected the unusually high level of licence deals in the comparative period and reduced implementation activity during the Covid-19 lockdowns.

The high level of recurring revenue and the strength of the Group's customer relationships give the business confidence to invest in developing future products and services, while providing good visibility of future financial performance.

Profitability

Adjusted operating profit was unchanged on the comparative period at £39.3m (2019: £39.3m). This was delivered despite a lower gross margin revenue mix by careful cost control through the year, while at the same time increasing the level of investment in development to £21.2m (2019: £20.7m). The adjusted operating margin was also consistent with the comparative period at 24.6% (2019: 24.6%).

Total staff costs excluding exceptional reorganisation costs were 1% lower than in 2019, although year-end staff numbers increased to 1,591 (2019: 1,527) and the average headcount was also marginally higher at 1,579 (2019: 1,575). The increase in staff numbers was driven principally by the expansion of the Indian development team to 410 people (2019: 332).

Reported operating profit increased by 33% to £35.8m (2019: £26.8m), reflecting the release of contingent consideration no longer payable on the 2018 Dovetail acquisition, the absence of exceptional reorganisation costs in 2020, and lower levels of capitalised development cost amortisation charge.

During the year a final contingent payment under the sale agreement of £0.8m was received from the acquirer for the Specialist & Care business, disposed of in 2019, and this payment was recognised as other income.

Taxation

The tax charge for the year was £6.8m (2019: £5.0m). The effective tax rate for the year before the deferred tax rate change, release of contingent acquisition consideration, other income and share of result of joint venture and associate was 19.1% (2019: 19.2%).

Earnings per share (EPS)

Adjusted basic and diluted EPS were 1% lower at 51.0p and 50.4p respectively (2019: 51.4p and 51.1p). The statutory basic and diluted EPS were both higher at 48.1p and 47.6p respectively (2019: 36.0p and 35.8p).

Dividend

Subject to shareholder approval at the Annual General Meeting on 6 May 2021, the Board proposes an increase in the final dividend to 16.0p (2019: 15.6p) per ordinary share, payable on 14 May 2021 to shareholders on the register at the close of business on 16 April 2021. This would make a total dividend of 32.0p (2019: 31.2p) per ordinary share for 2019. This is 3% higher than in the prior year, reflecting a balance of the challenging trading environment experienced in 2020 with the consistent underlying growth of the Group and its positive future prospects.

Cash flow and net cash

The principal movements in net cash (rounded) were as follows:

Cash generated from operations increased to £64.1m (2019: £50.1m). Adjusted cash from operations is stated after adding back the cash cost of items relating to the 2019 exceptional reorganisation costs of £1.3m (2019: £3.6m) and after deducting capitalised development costs. On this adjusted basis, cash flow from operations was 27% higher than in 2019, due to improved working capital including £7.3m of VAT payments deferred until 2021.

The Group completed the acquisition of the Pinnacle business during the year for initial cash consideration, net of cash acquired, of £2.9m. It also paid a final balance of £0.8m of deferred contingent consideration further to the 2018 Dovetail acquisition and £0.6m for the acquisition of the remaining 10% share capital of Dovetail. The Group received £0.8m of consideration in respect of the 2019 disposal of the Specialist & Care business.

Net cash spent on capital expenditure (excluding capitalised development costs) was tightly controlled at £0.4m (2019: £5.6m). Capital additions in the year included £1.8m on computer equipment, £0.4m on internal systems and software and £0.7m on property assets offset by proceeds from sales (principally of the former head office property) of £2.5m (2019: £0.2m).

After transactions in own shares, tax, dividends, lease payments and finance/other transactions, the total net cash inflow of £21.9m resulted in a year-end net cash position of £53.0m (2019: £31.1m). At 31 December 2020, the Group had available undrawn bank facilities of £30.0m committed until June 2021, reducing to £15.0m for the twelve-month period ending 30 June 2022. An accordion arrangement is in place to increase the quantum up to £60.0m, reducing to £30.0m for the twelve-month period ending 30 June 2022.

Group statement of comprehensive income

for the year ended 31 December 2020

¹  Including exceptional reorganisation costs of £nil (2019: £4,160,000).

²   Including an exceptional credit from release of contingent acquisition consideration of £1,020,000 (2019: £nil) and exceptional reorganisation costs of £nil (2019: £1,200,000)

³  Excluding amortisation of computer software used internally of £1,151,000 (2019: £884,000).

⁴ During the year the Group received £782,000 of previously unrecognised additional consideration in relation to the prior year disposal of the Specialist & Care business.
 

Group balance sheet

as at 31 December 2020

Group statement of cash flows

for the year ended 31 December 2020

Group statement of changes in equity

for the year ended 31 December 2020