Balancing the near- and long-term view

EMIS Group 10 September 2020 Update
Download PDF

EMIS Group

Balancing the near- and long-term view

H120 results

Software & comp services

10 September 2020

Price

1,128p

Market cap

£714m

Net cash (£m) at end H120 excluding lease liabilities

44.1

Shares in issue

63.3m

Free float

98%

Code

EMIS

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

7.4

9.7

1.6

Rel (local)

7.7

14.6

20.3

52-week high/low

1,226p

813p

Business description

EMIS is a software supplier to the UK healthcare market, with two divisions. EMIS Health supplies integrated care technology to the NHS, including primary, community, acute and social care. EMIS Enterprise is a business-to-business software provider to the healthcare market, including medicines management, partner businesses, patient-facing services and UK healthcare blockchain.

Next events

FY20 trading update

January 2021

Analyst

Katherine Thompson

+44 (0)20 3077 5730

EMIS is a research client of Edison Investment Research Limited

EMIS reported respectable results for H120 considering the uncertainty in the NHS and COVID-19 restrictions. The company expects to meet consensus estimates for FY20 and announced an interim dividend of 16p (+3% yoy). We have made minor changes to forecasts. Work on the product roadmap is ongoing with the first new data analytics product due in Q4. In our view, the rapid shift to digital working during the pandemic supports and potentially accelerates the adoption of technology within healthcare in the longer term.

Year end

Revenue (£m)

PBT*
(£m)

Diluted EPS*
(p)

EMIS adj dil EPS** (p)

DPS
(p)

P/E
(x)

12/18

149.7

33.4

40.4

45.0

28.4

27.9

12/19

159.5

41.0

53.5

51.1

31.2

21.1

12/20e

158.8

43.3

55.7

49.3

32.0

20.2

12/21e

164.1

44.0

56.4

53.1

34.0

20.0

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. **EMIS adjusted EPS – cash accounts for development costs and excludes exceptional items and amortisation of acquired intangibles.

Critical supplier to the NHS

EMIS took action early to prepare its workforce for lockdown and was able to provide support to its customers as they dealt with the pandemic. No staff were furloughed or made redundant. EMIS maintained market leading positions in all served healthcare markets and successfully transitioned over to the GP IT Futures framework in England. As expected, it was tougher to sign new business and revenue declined 2.1% y-o-y in H120; good cost control contained the decline in adjusted operating profit to 2.4% y-o-y. End H120 net cash was £44.1m and the company suggested it may consider more sizeable strategic M&A. Reflecting lower demand for Enterprise products in H1, we have reduced our revenue forecasts resulting in a 3% reduction to our adjusted EPS forecasts in FY21 and FY22.

Product development roadmap on track

In H1, EMIS balanced short-term work on software to manage COVID-19-related issues with continued investment in the strategic roadmap. The company announced the imminent launch of its first data analytics product from the newly unveiled EXA suite, providing medium-term growth opportunities for EMIS and a tool to help healthcare providers gain insights to provide better patient outcomes.

Valuation: Earnings growth to drive re-rating

The share price is essentially flat year-to-date and is 39% higher than its low of 813p on 18 March. Compared to a global group of healthcare software peers, EMIS trades at a premium on an EV/sales basis, and at a discount on all other metrics. EMIS generates significantly higher operating profit margins, but with slightly slower revenue growth, generates lower earnings growth. Its dividend yield is significantly ahead of the group. Key to closing the P/E discount will be evidence that revenue growth is returning to the company’s medium-term goal of mid- to high single-digit, in turn driving stronger earnings growth. We note that EMIS has good visibility (recurring revenue was 81% in H120) and a strong balance sheet with no debt.

Review of H120 results

Exhibit 1: EMIS Group results highlights

£m

H119

H120

y-o-y

Revenues

79.8

78.1

(2.1%)

Gross margin

91.1%

85.3%

(5.8%)

EBITDA

25.8

25.2

(2.6%)

EBITDA margin

32.4%

32.2%

(0.2%)

Normalised EBIT

18.9

20.4

8.1%

EMIS adjusted EBIT

18.2

17.8

(2.4%)

Reported EBIT

12.0

16.6

38.2%

Normalised EBIT margin

23.6%

26.1%

2.4%

EMIS adjusted EBIT margin

22.8%

22.8%

(0.1%)

Reported EBIT margin

15.1%

21.3%

6.2%

Net interest income

(0.3)

(0.1)

(56.8%)

Normalised PBT

18.9

20.7

9.4%

Reported PBT

12.1

17.7

46.7%

Tax

(2.2)

(3.4)

50.6%

Normalised net income after MI

15.6

17.1

9.9%

Reported net income after MI

10.4

14.4

38.1%

Normalised diluted EPS (p)

24.5

27.1

10.3%

EMIS adjusted diluted EPS (p)

23.5

22.9

(2.6%)

Reported basic EPS (p)

16.6

22.9

38.0%

Net cash excluding lease liabilities

26.7

44.1

65.3%

Source: EMIS. Note: Normalised: excludes amortisation of acquired intangibles, share-based payments and exceptionals; Adjusted: cash accounts for development costs, excludes amortisation of acquired intangibles and exceptionals.

EMIS reported H120 results in line with board expectations. Group revenue declined 2.1% y-o-y and the increased sale of lower-margin hardware resulted in a decline in the gross margin year-on-year. Recurring revenue increased 5% y-o-y to make up 81% of revenue (vs 76% in H119).

The company controlled costs well so that adjusted operating profit only declined 2.4% and adjusted EPS by 2.6% over the same period. Normalised operating profit and EPS were higher due to a step down in amortisation of capitalised development costs (£1.7m vs £3.6m in H119) and a step up in capitalised development costs (£4.1m vs £3.5m in H120). The reported tax charge of 19.2% was in line with the UK tax rate of 19%.

The company acquired community pharmacy software business Pinnacle in March. The acquisition contributed revenue of £0.7m and operating profit of £0.2m in H120, which implies that group organic revenue growth declined 3.0% y-o-y and adjusted operating profit declined 3.5% y-o-y.

Net cash excluding £7.3m of lease liabilities at the end of H120 stood at £44.1m. The company generated cash from operations of £36.6m; the company benefited from deferring a £7.3m VAT payment until 2021. Adjusted for capitalised development costs and the payment of previously accrued exceptional items, underlying cash from operations was £33.8m (+23% y-o-y).

The company spent £0.9m on tangible fixed assets, capitalised £1.7m of development costs and spent £0.1m on software licences. The business saw several cash inflows: £2.5m from the sale of the head office building in Leeds and £0.8m contingent consideration from the sale of the Specialist & Care business (treated as exceptional income). The company paid £2.9m (net of cash acquired) for the Pinnacle acquisition in March and paid £0.8m in contingent consideration for Dovetail (acquired in FY18).

The company announced an interim dividend of 16p per share, up from the 15.6p paid last year, demonstrating management’s confidence in the business.

Exhibit 2: Divisional performance

 £m

H119

H120

y-o-y

Revenues

 

 

 

EMIS Health

50.3

54.0

7.4%

EMIS Enterprise

29.5

24.1

(18.3%)

Total

79.8

78.1

(2.1%)

Adjusted operating profit

 

 

 

EMIS Health

10.8

11.9

10.4%

EMIS Enterprise

8.1

6.5

(19.9%)

Central costs

-0.7

-0.7

(7.8%)

Total adjusted operating profit

18.2

17.8

(2.4%)

Reported operating profit

 

 

 

EMIS Health

7.2

13.1

81.0%

EMIS Enterprise

5.5

4.2

(23.9%)

Central costs

-0.7

-0.7

(7.8%)

Total reported operating profit

12.0

16.6

38.2%

Adjusted operating margin

 

 

 

EMIS Health

21.5%

22.1%

0.6%

EMIS Enterprise

27.6%

27.0%

(0.6%)

Total adjusted operating margin

22.8%

22.8%

-0.1%

Reported operating margin

 

 

 

EMIS Health

14.4%

24.3%

9.9%

EMIS Enterprise

18.7%

17.4%

(1.3%)

Total reported operating margin

15.1%

21.3%

6.2%

Source: EMIS

Exhibit 3: Half-yearly revenues by sub-segment

Source: EMIS (based on pie charts in results presentation)

EMIS Health: Supporting the NHS

EMIS Health reported a strong performance in H1, with revenue growth of 7.4% y-o-y and adjusted operating profit growth of 10.4%, resulting in a 0.6pp increase in the margin to 22.1%.

Through a combination of home-working and limited on-site visits, the business was able to provide front-line technical support as required. The previous switch to using ServiceNow for support proved prescient, as this enabled support staff to work from home.

The division developed and delivered COVID-19 updates into all of its major software products and continued to provide software updates for non-COVID-19-related functionality.

Primary Care: Strong demand for COVID-19 support

The group’s market leading position with 57% share of UK GP practices was maintained. The company transitioned smoothly to the GP IT Futures framework from 1 January 2020. To help during lockdown, EMIS supplied free access to video consultation software, not only for all of its GP practices but also for 5,200 community pharmacies. The business saw a significant uptick in the use of its digital triage product, Online Consult, which was used on average 68,000 times per week during lockdown compared to 2,400 times per week prior to lockdown.

Revenues increased year-on-year as the business sold products to help with the new ways of working. This included EMIS Mobile and Anywhere Connect software and hardware. The higher volume of hardware sales, which are lower margin, reduced the group gross margin during H1.

The company’s contract in Wales was extended until 21 July 2021; previously EMIS had not been chosen for the new framework agreement, but as one of the selected suppliers failed to deliver software in line with the agreement, NHS Wales extended EMIS’s contract until a new procurement process could be completed. The contract is currently worth c £2m revenue per annum and our forecasts had assumed this would fall to zero by the end of 2021. We are now factoring in a slower decline in revenue; it is possible that EMIS could be reselected although we are not assuming this in our forecasts.

Community & Acute Care

The business maintained its number two position in the community market with 20% share (end 2019: 21%) and its number two position A&E software was maintained with a share of 22% (end 2019: 23%).

EMIS Enterprise: Tougher to sign new business

This division saw a weaker performance in H1, with revenues down 18.3% y-o-y and adjusted operating profit down 19.9% y-o-y. The decline was due to lower levels of new business in H120 combined with a tough comparison in H119 when several one-off licences were signed.

Medicines management: lower footfall reduced community pharmacy revenue. The business has started to integrate PharmOutcomes (software from the recently acquired Pinnacle business) with ProScript Connect. The business maintained its 37% share and market leadership within community pharmacy, and number two position in hospital pharmacy, growing its share from 35% at end FY19 to 37%.

Partners: although the number of accredited partners increased from 113 to 125 during H1, lower volumes of regular healthcare activity reduced revenues year-on-year.

Patient: Patient Access saw its registered user base grow from 8.4 million at the end of 2019 to 10.0 million by the end of H120 and repeat prescriptions grew by 2m y-o-y to 11.7m. EMIS offered up-to-date public advice and guidance on Patient.info, including a COVID-19 symptom checker. However, the lower number of people able to go out reduced the potential for Patient marketplace services.

Strategic product development maintained

The company is keen to invest in its digital capabilities to ensure it remains at the forefront of NHS modernisation. During H120 it continued to invest in developing the EMIS-X platform and hired more developers for its Indian team. Product development now makes up 41% of total headcount.

The company has shifted 2.5bn documents to the cloud (documents related to patient records such as letters from consultants). The company expects to make upgrades to EMIS-Web and develop new applications for EMIS-X for launch in 2021.

Analytics suite unveiled

The company announced that it had been developing its EMIS-X Analytics (EXA) data analytics suite for the last two years. The team is based in the UK to ensure that all data is managed in a GDPR-compliant manner and to avoid any Brexit-related issues. Explorer, the first product from the suite, is currently being piloted by various customers and is due to officially launch in Q4. The software can be used to analyse large quantities of healthcare data (ie 40 million patient records from 4,000 GP practices) to provide insights to improve patient outcomes at a regional and national level. The pricing mechanism is still being formulated but is likely to comprise fixed and variable components. For now, the target market is the NHS.

Outlook and changes to forecasts

While its customers focused on dealing with COVID-19 during March to June, since the start of H2 the company is seeing signs of life for projects that were in the pipeline. Management expects to meet consensus forecasts for FY20 revenue and to generate FY20 adjusted operating profit slightly below the FY19 level. From FY21, the company expects business to return to more normal behaviour and for profit growth at the previously expected mid- to high-single-digit percentage level.

With its strong cash position and access to up to £60m from bank facilities, management highlighted that it would consider further acquisitions. They stated that these are more likely to be established businesses with growing revenues and profitability as opposed to start-ups, and could include larger companies that would be of a more strategic nature.

We have revised our forecasts to reflect H120 performance. Overall, we have changed the mix of revenue in favour of EMIS Health with a small decline in our FY20 forecast. We have reduced FY21 and FY22 revenue to reflect slower growth in the Enterprise division, resulting in lower adjusted operating profit and adjusted EPS forecasts for FY21 and FY22.

Only affecting normalised and reported forecasts, we have reduced our forecasts for amortisation of capitalised development costs to align with management’s guidance for FY20. This increases all normalised and reported profitability metrics in FY20. Conversely, we have increased our amortisation forecast for FY22 assuming that products will have been launched by then, triggering higher levels of amortisation.

We have slightly reduced our dividend forecast for FY20 from 32.6p to 32.0p.

Exhibit 4: Changes to forecasts

£'000s

FY20e

FY20e

Change

y-o-y

FY21e

FY21e

Change

y-o-y

FY22e

FY22e

Change

y-o-y

Old

New

Old

New

Old

New

Revenues

159,752

158,807

(0.6%)

(0.4%)

169,787

164,130

(3.3%)

3.4%

176,886

169,626

(4.1%)

3.3%

Normalised operating profit

39,505

42,847

8.5%

5.0%

43,111

43,443

0.8%

1.4%

48,261

45,413

(5.9%)

4.5%

Normalised operating margin

24.7%

27.0%

2.3%

25.4%

26.5%

1.1%

27.3%

26.8%

(0.5%)

Reported operating profit

31,378

34,543

10.1%

28.8%

36,721

36,417

(0.8%)

5.4%

43,425

39,941

(8.0%)

9.7%

EMIS adjusted operating profit

38,069

37,847

(0.6%)

(3.6%)

42,339

40,843

(3.5%)

7.9%

45,850

43,813

(4.4%)

7.3%

Adjusted operating margin

23.8%

23.8%

0.0%

24.9%

24.9%

(0.1%)

25.9%

25.8%

(0.1%)

Normalised EPS - p

51.2

55.7

8.8%

4.2%

56.0

56.4

0.8%

1.2%

62.6

58.9

(5.8%)

4.5%

Reported EPS - p

40.9

46.2

13.0%

28.3%

47.9

47.5

(0.8%)

2.8%

56.6

52.1

(7.9%)

9.5%

EMIS adjusted EPS - p

48.9

49.3

0.8%

(3.4%)

54.7

53.1

(3.1%)

7.6%

58.8

56.9

(3.2%)

7.2%

Dividend per share - p

32.6

32.0

(1.8%)

2.6%

34.0

34.0

0.0%

6.3%

35.0

35.0

0.0%

2.9%

Net cash

39,841

45,061

13.1%

44.9%

52,793

55,518

5.2%

23.2%

69,145

69,540

0.6%

25.3%

Source: Edison Investment Research

Valuation

The share price is essentially flat year-to-date and is 39% higher than its low of 813p on 18 March. The tables below show how EMIS is trading compared to a global group of healthcare software peers. On an EV/sales basis, EMIS trades at a premium, and on all other metrics, EMIS trades at a discount to the peer group. EMIS generates significantly higher operating profit margins than the average, but with slightly slower revenue growth, generates lower earnings growth. Its dividend yield is significantly ahead of the whole group.

Key to closing the P/E discount will be evidence that revenue growth is returning to the company’s medium-term goal of mid- to high-single digits; this in turn should drive stronger earnings growth.

Exhibit 5: Peer group valuation metrics

 

Year-end

EV/sales (x)

P/E (x)

EV/EBIT (x)

EV/EBITDA (x)

Dividend yield (%)

CY

NY

NY+1

CY

NY

NY+1

CY

NY

NY+1

CY

NY

NY+1

CY

NY

NY+1

EMIS

31/12

4.3

4.2

4.0

20.2

20.0

19.1

15.9

15.7

15.0

12.7

12.3

11.7

2.8%

3.0%

3.1%

EMIS (cash R&D)

4.3

4.2

4.0

22.9

21.3

19.8

18.0

16.7

15.6

 

 

 

AllScripts

31/12

1.4

1.3

1.3

13.2

11.2

9.8

13.9

11.9

11.0

7.8

7.2

6.7

0.0%

0.0%

0.0%

Cegedim

31/12

1.2

1.2

1.1

22.1

16.7

13.8

19.4

15.8

13.6

6.1

5.6

5.3

0.0%

0.0%

0.0%

Cerner

31/12

4.2

4.0

3.7

25.4

22.3

19.9

21.1

18.8

17.0

13.2

12.1

11.2

1.1%

1.1%

0.5%

Craneware

30/06

8.2

7.8

7.4

35.3

35.7

34.2

29.2

27.8

27.7

24.1

23.6

22.6

0.0%

0.0%

0.0%

CompuGroup

31/12

4.9

4.5

4.3

32.0

30.1

28.0

25.9

23.4

21.7

18.9

17.1

16.3

0.7%

0.8%

0.8%

Nexus

31/12

3.9

3.6

3.3

48.0

39.9

34.0

30.4

25.9

22.4

16.9

15.2

13.8

0.5%

0.5%

0.5%

NexGen Healthcare

31/03

1.6

1.5

1.4

16.4

14.9

13.9

12.2

11.4

10.1

8.8

8.2

7.5

0.0%

0.0%

0.0%

 

 

Average

3.6

3.4

3.2

27.5

24.4

21.9

21.7

19.3

17.7

13.7

12.7

11.9

0.3%

0.3%

0.3%

Median

3.9

3.6

3.3

25.4

22.3

19.9

21.1

18.8

17.0

13.2

12.1

11.2

0.0%

0.0%

0.0%

 Premium/(discount) to average

 

19% 

22%

25%

(26%)

(18%)

(13%)

(27%)

(18%)

(18%)

(7%)

(3%)

(2%)

 

 

 

Source: Edison Investment Research, Refinitiv (as at 7 September)

Exhibit 6: Peer group financial metrics

Market
cap m

EBIT margin

EBITDA margin

Revenue growth

EPS growth

CY

NY

NY+1

CY

NY

NY+1

CY

NY

NY+1

CY

NY

NY+1

EMIS

£714

27.0%

26.5%

26.8%

33.8%

33.7%

34.4%

-0.4%

3.4%

3.3%

4.2%

1.2%

4.5%

EMIS (cash R&D)

24.6%

23.8%

24.9%

-3.4%

7.6%

7.2%

AllScripts

$1,434

9.8%

11.2%

11.7%

17.4%

18.5%

19.4%

-5.5%

1.6%

3.6%

-0.2%

17.6%

14.1%

Cegedim

€371

6.3%

7.5%

8.4%

20.1%

21.0%

21.6%

0.0%

3.7%

3.8%

498.8%

32.6%

21.3%

Cerner

$21,991

19.7%

21.1%

21.9%

31.4%

32.7%

33.4%

-3.2%

5.1%

6.1%

5.9%

13.9%

12.1%

Craneware

£471

27.9%

28.2%

26.8%

33.9%

33.2%

32.8%

0.0%

4.1%

5.8%

0.2%

-1.0%

4.2%

CompuGroup

€3,924

18.8%

19.4%

19.8%

25.7%

26.5%

26.4%

11.0%

7.1%

5.8%

7.6%

6.3%

7.5%

Nexus

€658

12.8%

13.7%

14.8%

23.0%

23.4%

24.0%

10.2%

9.1%

7.2%

26.1%

20.3%

17.5%

NexGen Healthcare

$863

12.9%

13.2%

14.2%

17.9%

18.2%

19.2%

0.0%

4.8%

4.0%

-5.1%

10.6%

7.3%

Average

15.5%

16.3%

16.8%

24.2%

24.8%

25.3%

1.8%

5.1%

5.2%

76.2%

14.3%

12.0%

Median

12.9%

13.7%

14.8%

23.0%

23.4%

24.0%

0.0%

4.8%

5.8%

5.9%

13.9%

12.1%

Source: Edison Investment Research, Refinitiv (as at 7 September)

Exhibit 7: Financial summary

£'000s

2016

2017

2018

2019

2020e

2021e

2022e

Year end 31 December

PROFIT & LOSS

Revenue

 

 

158,712

160,354

149,710

159,507

158,807

164,130

169,626

Cost of Sales

(14,151)

(14,674)

(14,236)

(15,407)

(21,217)

(15,965)

(17,225)

Gross Profit

144,561

145,680

135,474

144,100

137,591

148,164

152,401

EBITDA

 

 

52,288

49,222

48,919

55,632

53,747

55,343

58,313

Operating Profit (before amort. of acq. intang, SBP and except.)

38,897

34,895

32,991

40,794

42,847

43,443

45,413

EMIS adjusted operating profit

 

 

38,753

37,406

35,890

39,273

37,847

40,843

43,813

Amortisation of acquired intangibles

(6,639)

(6,717)

(6,202)

(7,317)

(7,304)

(5,726)

(4,172)

Exceptionals

(6,714)

(16,988)

1,657

(5,360)

782

0

0

Share-based payments

(473)

(550)

(766)

(1,290)

(1,000)

(1,300)

(1,300)

Operating Profit

25,071

10,640

27,680

26,827

35,325

36,417

39,941

Net Interest

(237)

(299)

(180)

(498)

(300)

(200)

(200)

Profit Before Tax (norm)

 

 

39,159

35,192

33,426

41,038

43,289

43,985

45,955

Profit Before Tax (FRS 3)

 

 

25,333

10,937

28,115

27,071

35,767

36,959

40,483

Tax

(5,208)

(2,074)

(5,355)

(5,022)

(6,796)

(7,022)

(7,692)

Profit After Tax (norm)

32,175

27,989

26,447

33,697

35,064

35,628

37,224

Profit After Tax (FRS3)

20,125

8,863

22,760

22,049

28,971

29,937

32,791

Ave. Number of Shares Outstanding (m)

62.8

62.9

63.0

62.9

63.0

63.0

63.0

EPS - normalised & diluted (p)

 

 

49.4

43.1

40.4

53.5

55.7

56.4

58.9

EPS - EMIS adjusted & diluted (p)

 

 

49.2

47.0

45.0

51.1

49.3

53.1

56.9

EPS - FRS 3 (p)

 

 

30.4

12.8

36.1

36.0

46.2

47.5

52.1

Dividend (p)

23.4

25.8

28.4

31.2

32.0

34.0

35.0

Gross Margin (%)

91.1%

90.8%

90.5%

90.3%

86.6%

90.3%

89.8%

EBITDA Margin (%)

32.9%

30.7%

32.7%

34.9%

33.8%

33.7%

34.4%

Operating Margin (before GW and except.) (%)

24.5%

21.8%

22.0%

25.6%

27.0%

26.5%

26.8%

BALANCE SHEET

Fixed Assets

 

 

133,292

122,979

117,920

101,089

109,035

104,451

100,421

Intangible Assets

110,953

100,844

96,807

82,345

86,769

81,943

77,671

Tangible Assets

22,187

22,037

21,000

18,399

21,179

20,679

20,179

Other fixed assets

152

98

113

345

1,087

1,829

2,571

Current Assets

 

 

46,088

56,900

53,107

67,278

83,395

95,948

111,234

Stocks

1,815

1,633

1,264

657

657

657

657

Debtors

39,970

40,148

36,223

33,047

35,677

37,772

39,037

Cash

4,303

13,991

15,620

31,099

45,061

55,518

69,540

Current Liabilities

 

 

(56,158)

(65,131)

(60,169)

(55,700)

(63,698)

(64,757)

(66,904)

Creditors

(51,425)

(65,131)

(60,169)

(55,060)

(63,058)

(64,117)

(66,264)

Lease liabilities

0

0

0

(640)

(640)

(640)

(640)

Short term borrowings

(4,733)

0

0

0

0

0

0

Long Term Liabilities

 

 

(9,080)

(6,734)

(8,199)

(8,469)

(11,118)

(8,183)

(5,543)

Long term borrowings

0

0

0

0

0

0

0

Lease liabilities

0

0

0

(3,294)

(5,474)

(3,874)

(2,274)

Other long term liabilities

(9,080)

(6,734)

(8,199)

(5,175)

(5,644)

(4,309)

(3,269)

Net Assets

 

 

114,142

108,014

102,659

104,198

117,614

127,458

139,207

CASH FLOW

Operating Cash Flow

 

 

43,657

48,834

49,873

50,059

58,895

55,327

59,195

Net Interest

(324)

(356)

(214)

(93)

(300)

(200)

(200)

Tax

(7,655)

(8,139)

(5,830)

(4,466)

(9,307)

(8,357)

(8,731)

Capex

(12,084)

(11,342)

(12,767)

(13,119)

(13,500)

(12,300)

(12,300)

Acquisitions/disposals

(1,790)

329

(9,269)

5,152

(420)

(1,020)

0

Financing

881

571

906

(2,369)

200

(500)

(500)

Dividends

(14,006)

(15,476)

(21,070)

(18,745)

(20,006)

(20,893)

(21,842)

Net Cash Flow

8,679

14,421

1,629

16,419

15,562

12,057

15,622

Opening net debt/(cash)*

 

 

9,109

430

(13,991)

(15,620)

(31,099)

(45,061)

(55,518)

Finance leases initiated

0

0

0

(940)

(1,600)

(1,600)

(1,600)

Other

0

0

0

0

0

0

0

Closing net debt/(cash)*

 

 

430

(13,991)

(15,620)

(31,099)

(45,061)

(55,518)

(69,540)

Source: EMIS, Edison Investment Research. Note: *Excluding lease liabilities.


General disclaimer and copyright

This report has been commissioned by EMIS Group and prepared and issued by Edison, in consideration of a fee payable by EMIS Group. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2020 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by EMIS Group and prepared and issued by Edison, in consideration of a fee payable by EMIS Group. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2020 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Share this with friends and colleagues

You may be interested in