Returning to innovative roots

EMIS Group 26 March 2019 Update
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EMIS Group

Returning to innovative roots

FY18 results

Software and comp services

26 March 2019

Price

1,044p

Market cap

£661m

Net cash (£m) at end FY18

15.6

Shares in issue

63.3m

Free float

98%

Code

EMIS

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

10.6

20.8

34.0

Rel (local)

11.1

12.4

30.9

52-week high/low

1,050p

788p

Business description

EMIS is a clinical software supplier to the primary, community and acute care markets in the UK and provides software to the community pharmacy and specialist ophthalmology markets. Its Patient business provides medical and wellbeing information as well as transactional services to patients.

Next events

H119 trading update

July 2019

Analyst

Katherine Thompson

+44 (0)20 3077 5730

EMIS Group is a research client of Edison Investment Research Limited

After a year of improving the customer-facing elements of the business and investing in development resources, EMIS has entered FY19 ready to accelerate the pace of innovation in healthcare technology. Its presence in each care setting gives it a strong position from which to develop software that provides a single view of the patient as well as applications that mitigate the pressures on front-line clinicians and allow patients to manage their own care more effectively.

Year end

Revenue (£m)

PBT*
(£m)

Dil EPS*
(p)

EMIS adj. dil. EPS** (p)

DPS
(p)

P/E
(x)

12/17

160.4

35.2

43.1

47.0

25.8

24.2

12/18

170.1

35.1

42.7

47.3

28.4

24.5

12/19e

178.7

42.3

54.2

51.3

30.0

19.3

12/20e

187.2

46.2

59.3

56.5

32.0

17.6

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.

FY18: Fixing problems, starting technology upgrade

EMIS reported FY18 revenues and profits substantially in line with our forecasts. Net cash was higher than forecast due to a lower final cost to fix the NHS Digital support issues as well as lower working capital requirements. Much of the year was spent improving customer service across the group and developing the technology roadmap to upgrade EMIS Web and align with the NHS Long-Term Plan. We have revised our forecasts to reflect slightly better growth in Community Pharmacy (CP) and Acute, upgrading adjusted diluted EPS by 3.6% in FY19 and 3.5% in FY20.

Outlook: Evolving technology to meet NHS requirements and drive growth from other sources

With previous customer support issues resolved and the customer service function strengthened across the group, the business is now focused on driving innovation in healthcare software. By April, half of EMIS’s developers will be working on the build of the EMIS-X platform. By the summer, the company should know if it has been selected for the IT Futures framework for GP software in England – our forecasts assume no change in market share or revenue per practice. The Patient marketplace is scheduled for launch in H219; this is a key plank in the company’s strategy to drive growth from the private sector.

Valuation: IT Futures decision the next catalyst

The share price has gained 21% over the last three months, following confirmation that the NHS Digital service issue had been resolved within the budgeted provision, but EMIS continues to trade at a discount to peers on P/E basis. Uncertainty over the outcome of IT Futures is likely to weigh on the share price in the short term (decision expected in the summer); while we think it highly unlikely that EMIS would not be selected for the framework, there is still uncertainty around pricing, technical requirements and the future competitive environment. In the longer term, evidence that the company is making progress towards the targets set at the recent capital markets day will be the key catalyst for share price upside.

Review of FY18 results

Exhibit 1: FY18 results highlights

£000s

FY17

FY18e

FY18

Change

y-o-y

Revenues

160,354

170,420

170,070

(0.2%)

6.1%

Normalised operating profit

34,895

36,360

34,709

(4.5%)

(0.5%)

Reported operating profit

10,640

28,642

28,740

0.3%

170.1%

EMIS adjusted* operating profit

37,406

37,336

37,608

0.7%

0.5%

Normalised EPS (p)

43.1

45.4

42.7

(6.1%)

(0.9%)

Reported EPS (p)

12.8

36.2

36.1

(0.4%)

181.7%

EMIS adjusted EPS (p)

47.0

47.0

47.3

0.6%

0.5%

Net cash/(debt)

13,991

4,196

15,620

272.3%

11.6%

Source: EMIS, Edison Investment Research. Note: *Cash accounts for development costs and excludes exceptional items and amortisation of acquired intangibles.

Exhibit 2: Divisional revenues and profitability

 £m

FY17

FY18e

FY18

Difference

y-o-y

Revenues

 

 

 

 

 

Primary, Community & Acute Care

117.6

122.3

121.7

(0.5%)

3.5%

Community Pharmacy

21.9

24.6

25.0

1.8%

14.4%

Specialist & Care (S&C)

18.0

20.2

20.4

0.7%

13.2%

Patient

2.9

3.3

3.0

(9.2%)

3.9%

Total revenues

160.4

170.4

170.1

(0.2%)

6.1%

Adjusted operating profit

 

 

 

 

 

Primary, Community & Acute Care

34.9

33.8

33.6

(0.7%)

-3.7%

Community Pharmacy

5.6

7.3

7.6

4.2%

34.6%

Specialist & Care

0.1

1.0

1.1

8.7%

699.3%

Patient

(1.9)

(3.4)

(3.2)

(5.1%)

71.3%

Central costs

(1.4)

(1.4)

(1.5)

3.8%

7.1%

Total adjusted operating profit

37.4

37.3

37.6

0.7%

0.5%

Reported operating profit

 

 

 

 

 

Primary, Community & Acute Care

9.5

25.2

24.7

(2.1%)

160.5%

Community Pharmacy

4.8

6.0

6.4

5.6%

34.3%

Specialist & Care

(0.7)

0.4

0.5

24.5%

(161.6%)

Patient

(1.5)

(1.5)

(1.3)

(14.8%)

(11.8%)

Central costs

(1.4)

(1.4)

(1.5)

3.8%

7.1%

Total reported operating profit

10.6

28.7

28.7

0.3%

170.1%

Adjusted operating margin

 

 

 

 

 

Primary, Community & Acute Care

29.7%

27.7%

27.6%

(0.1%)

(2.1%)

Community Pharmacy

25.7%

29.6%

30.2%

0.7%

4.5%

Specialist & Care

0.8%

5.1%

5.5%

0.4%

4.7%

Patient

(64.9%)

(102.2%)

(106.9%)

(4.7%)

(42.0%)

Total adjusted operating margin

23.3%

21.9%

22.1%

0.2%

(1.2%)

Source: EMIS, Edison Investment Research

EMIS reported 6.1% revenue growth in FY18, marginally below our forecast. Recurring revenues made up 83% of total revenues and grew 5.4% y-o-y. Primary, Community and Acute Care revenues came in slightly below our forecast, but were up 3.5% year-on-year, helped by the signing of a perpetual licence in the acute business for legacy software. CP saw strong growth of 14.4%, as it benefited from the roll-out of ProScript Connect to its direct customer base. Specialist and Care grew 13.2% y-o-y, as new contracts signed in FY17 took full effect in FY18. Patient revenues only grew 3.9% y-o-y, with H218 revenues flat versus H118. The company noted that changes in Google algorithms reduced traffic in H2.

Adjusted operating profit was marginally ahead of our forecast, resulting in an adjusted operating margin of 22.1%. This declined from the 23.3% achieved in FY17 mainly due to increased investment in headcount to deal with the customer support issues, but also to support the development of the EMIS-X platform.

Adjusted diluted EPS of 47.3p was slightly higher than we forecast and grew 0.5% y-o-y, tracking the growth in adjusted operating profit.

The company announced a final dividend of 14.2p per share, to make a full year dividend of 28.4p (+10% y-o-y).

On a reported basis, the company benefited from a £1.7m exceptional credit. In FY17, the company had made an £11.2m provision to cover the costs of the NHS Digital service issue uncovered early last year. The company ended up resolving the issues for a total cost of £9.5m. This credit was offset by higher than expected amortisation of capitalised development costs – overall reported EPS was substantially in line with our forecast.

At year-end, net cash stood at £15.6m, c £11m ahead of our forecast. Of the difference, £1.7m was accounted for by the lower than expected exceptional charge. The remainder was due to lower than expected working capital at year-end.

Update on strategic priorities

With the customer support issue in England now resolved, EMIS’s strategic priorities are:

Being selected for the IT Futures framework. The pre-procurement phase has several weeks more to run after which the formal 45-day procurement phase starts. The company expects to hear whether it has been successful in the summer. EMIS believes it is well positioned going into this phase, as the core capabilities required for the new framework are largely already available in EMIS Web. In addition, it has been developing solutions to meet the non-core capabilities.

Developing the EMIS-X platform.1 Development of the platform is well underway, with close to half of developers to be focused on it from April. This will be the core platform that all EMIS software will be based on. It is being developed to align with the NHS Long-Term Plan, which recognises that the NHS needs a single view of a patient’s interactions across the entire healthcare spectrum. The company has also boosted its clinical team to 64 – this includes doctors, nurses, consultants and pharmacists – to ensure its products not only work well with existing clinical processes but also maintain the highest levels of patient safety. The company has received approval from NHS Digital to shift data from its own datacentres to Amazon Web Services.

Business update

Primary, Community and Acute Care (72% of FY18 revenues)

In Primary Care, the company grew its share of the UK GP market by 1% to 57%. The company was selected for the NHS National Services Scotland (NSS) framework to supply software to Scottish GPs (where it has a market share of c 54%). The company expects to develop software on the EMIS-X platform to meet the requirements of the new framework.

Since the start of 2018, the company has been working to strengthen its customer support function. It has invested in a new service management software solution, ServiceNow, which will be used across all three care settings and by Egton; the roll-out started towards the end of Q1. The software will provide one online portal for all support and training requirements.

In conjunction with Patient and Primary Care, Egton launched the Online Triage solution towards the end of last year; 74 practices have since signed up to use it. Egton is also seeing strong demand for its digitisation service (converting paper records to digital records).

The Community Care business grew its market share from 17% to 20% over the year and maintained its number two position, with 100% customer retention. As highlighted at interim results last year, the business completed all 18 outstanding legacy contracts by year end. The business has 37 customers and won 90 new deals in FY18, which ranged from new software installations to training packages. Management sees scope for growing this market, with various greenfield areas that it could supply. An example is the hospice sector; it supplied clinical systems to 11 additional hospices in FY18.

The direction of the NHS is towards increasing interoperability between different care settings. Within primary care, via EMIS Web GP users can access 149 partner products from 104 different partners. In community care, all customers can use EMIS software to securely exchange data with other local services. The business is focused on working with the recently formed integrated care system areas – these evolved out of the sustainability and transformation partnerships that were formed in 2016 – and bring together NHS organisations and local councils.

The Acute business moved to a joint leadership position in A&E (from 19% to 22% market share) and maintained its number two position in hospital pharmacy (from 29% to 36% market share). As for community care, the vast majority of legacy contracts were completed (29 out of 30, with the remaining project expected to be completed in H119). Aside from the sale of a perpetual licence for legacy software to the Northern Territory Government of Australia, the business also won two new contracts for Symphony and one to deploy EMIS Health software into hospital pharmacy. It has also re-engaged in the national rollout of Symphony in Wales.

Community Pharmacy (15% of FY18 revenues)

This business continues to perform well. A market share of 37% was maintained, as was its position as joint market leader. The rollout of ProScript to direct customers is 95% complete. In FY18 CP signed up 54 new group customer branches and c £1.4m in contracted value.

The work the group has undertaken to improve customer service was extended to CP. The division saw a 16% reduction in support calls per customer per month in 2018 and a 19% improvement in its overall customer service satisfaction score.

Specialist and Care (12% of FY18 revenues)

The Specialist software business maintained its leadership position for diabetic retinopathy screening software in England, although its share slipped to 74% from 76%. It is working with the national NHS diabetic eye screening programme to increase screening intervals to free up capacity and increase the number of patients that can be screened.

The Care screening business maintained its leading position in outsourced diabetic eye screening. It extended contracts with Central Mersey and Ireland DESP and won a new contract for digital surveillance of optical coherence tomography for Ireland. The profitability of this business improved as a result of the restructuring and the ramp up of new contracts that started in 2017.

Patient (2% of FY18 revenues)

As planned, the business launched version two of the Patient Access app in H118. This means that video consultation and online triage can be offered via the app. Over H218, unique users booking appointments with the app increased by 25% and those ordering repeat medications increased by 44%.

The majority of revenues in this business are generated from advertising. Since the end of H118, a change in Google algorithms reduced traffic to the patient.info site and had a negative impact on advertising revenues in H218, such that Patient H218 revenues were marginally lower than in H118. We note that Patient.info has been affected by Google search algorithms changing in the past; in our view this is an ongoing cost of doing business when the majority of traffic is generated via Google.

In H218, the business focused on building Patient Access for Professionals (known as the Patient marketplace). This will include community pharmacy and other health professional services such as physiotherapy and is due for launch in H219, at which point we would expect revenues to start to ramp up.

Product development

In addition to the work underway to build the EMIS-X platform, product development is ongoing within each business line. Examples include:

EMIS Mobile: app for community care, available on Apple, Android and Windows devices.

Digital child health functionality to support the NHS Healthy Children programme.

A solution to enable sharing of data from GPs and the Child Protection Information Service with A&E.

Falsified Medicines Directive module for ProScript Connect.

Technology to support the delivery of Patient Group Direction services within pharmacies, eg smoking cessation, flu jabs, travel vaccinations. This will link into the upcoming Patient marketplace.

As a result of the acquisition of Dovetail in October 2018, the company is developing blockchain technology and expects to provide more information on this in the coming months.

The company now has a core technology team totalling 450, up 150 over the year, and expects nearly half this number will be working on the development of EMIS-X by 1 April.

Outlook and changes to forecasts

The company expects to generate revenue growth at a similar rate to FY18 and adjusted operating profit growth in the mid-single digits. We have revised our forecasts to take account of the following:

Revenues: we have reduced our forecasts for Patient to reflect the lower level of traffic in H218. We have increased our revenue growth assumption for CP and Acute Care based on a higher than expected rate of growth in FY18. Overall, our revenue forecast increases by 1.1% in FY19 and 1.6% in FY20.

Adjusted operating profit: higher revenues result in an increase in adjusted operating profit of 3.1% in FY19 and 4.3% in FY20.

Adjusted EPS: higher operating profitability drives adjusted EPS increases of 3.6% in FY19 and 3.5% in FY20.

Operating leases: the company will report according to IFRS 16 from 1 January 2019. It had previously expected to capitalise c £7.5m of operating leases with c £8m in related financial liabilities. It has now reduced this to c £3.5m with a smaller impact on lease costs and depreciation.

Capex: we have reduced FY19 and FY20 tangible capex from £7.0m per year to £6.2m per year.

Capitalised development costs: we have increased the rate of capitalisation in FY19 and FY20 from £5.5m per year to £7.0m. We have also increased the related amortisation.

Dividend: we have slightly increased our dividend forecasts for FY19 (29.8xp to 30.0p) and FY20 (31.4p to 32.0p) reflecting a pay-out ratio of c 55%.

Net cash: we forecast higher net cash at the end of FY19 and FY20 due to the higher than expected net cash position at the end of FY18. The company guided to close to neutral cash impact from working capital in FY19, compared to the cash inflow of £8.2m from working capital in FY18.

Exhibit 3: Changes to forecasts

£'000s

FY19e

FY19e

Change

y-o-y

FY20e

FY20e

Change

y-o-y

FY21e

y-o-y

Old

New

Old

New

New

Revenues

176,780

178,742

1.1%

5.1%

184,144

187,170

1.6%

4.7%

195,906

4.7%

Normalised operating profit

38,999

41,846

7.3%

20.6%

42,180

45,790

8.6%

9.4%

48,482

5.9%

Reported operating profit

31,281

33,122

5.9%

15.2%

34,701

37,305

7.5%

12.6%

41,234

10.5%

EMIS adjusted operating profit

38,797

39,993

3.1%

6.3%

42,207

44,015

4.3%

10.1%

47,852

8.7%

Normalised diluted EPS - p

49.8

54.2

8.8%

27.0%

54.5

59.3

8.7%

9.3%

62.7

5.8%

Reported basic EPS - p

40.2

43.2

7.5%

19.7%

45.1

48.5

7.7%

12.5%

53.6

10.4%

EMIS adjusted diluted EPS - p

49.5

51.3

3.6%

8.5%

54.6

56.5

3.5%

10.1%

61.7

9.3%

Dividend per share - p

29.8

30.0

0.7%

5.6%

31.4

32.0

1.9%

6.7%

34.0

6.3%

Net cash/(debt)

10,686

26,628

149.2%

70.5%

23,454

40,205

71.4%

51.0%

60,154

49.6%

Source: Edison Investment Research

Valuation

The EMIS share price has increased 21% over the last 18 months, following confirmation that the NHS Digital service issue had been resolved within the budgeted provision. However, it continues to trade at a discount to peers on a P/E, EV/EBIT and EV/EBITDA basis for FY19e and FY20e (we use our normalised forecasts to calculate these multiples, as we believe this is on the same basis as consensus forecasts for peers). The company generates operating margins at the top end of its peer group, but generates revenue growth just below the average for the group.

Uncertainty over the outcome of IT Futures is likely to weigh on the share price in the short term; although we think it is highly unlikely the company would not be selected for the framework, there is still uncertainty around the price that can be charged and the precise requirements of the software as well as the future competitive environment. In the longer term, evidence that the company is making progress towards the targets set at the recent capital markets day (revenue growth 5–9%, operating margins approaching 30%) will be the key catalysts for share price upside.

Exhibit 4: Peer group valuation multiples

 

EV/Sales (x)

P/E (x)

EV/EBIT (x)

EV/EBITDA (x)

Div yield

LY

CY

NY

LY

CY

NY

LY

CY

NY

LY

CY

NY

LY

CY

NY

EMIS

3.4

3.2

3.1

23.9

18.8

17.2

16.6

13.8

12.6

11.2

10.3

9.6

2.8%

2.9%

3.1%

EMIS (cash R&D)

3.4

3.2

3.1

21.5

19.9

18.0

15.4

14.4

13.1

 

 

 

AllScripts

1.3

1.2

1.2

13.8

14.7

13.2

8.3

12.1

11.3

5.6

7.1

6.6

0.0%

0.0%

0.0%

Cegedim

1.1

1.1

1.1

17.7

13.6

11.2

17.6

13.7

11.8

6.8

6.4

5.9

0.0%

2.5%

3.8%

Cerner

3.4

3.2

3.0

23.2

21.8

19.9

17.9

17.1

15.7

11.6

10.7

9.9

0.0%

0.0%

0.0%

Craneware

10.5

8.9

7.7

47.5

39.8

34.6

37.5

31.2

27.0

32.8

27.5

23.9

1.2%

1.3%

1.5%

CompuGroup

4.3

4.2

4.2

21.5

21.2

21.4

20.5

16.9

15.9

15.5

1.0%

0.9%

1.0%

Nexus

2.7

2.5

2.3

36.5

29.8

25.3

20.3

18.1

15.8

13.9

11.5

10.5

0.7%

0.7%

0.8%

NexGen Healthcare

2.0

1.9

1.8

22.4

20.6

17.6

16.7

15.0

11.7

12.3

11.3

10.1

0.0%

0.0%

0.0%

 

 

 

 

Average

3.6

3.3

3.0

26.8

23.1

20.4

19.7

18.4

16.3

14.3

12.9

11.8

0.4%

0.8%

1.0%

Median

2.7

2.5

2.3

22.8

21.5

19.9

17.8

17.1

15.7

12.3

11.3

10.1

0.0%

0.7%

0.8%

Discount to peer average

(9%)

(17%)

(14%)

(16%)

(25%)

(22%)

(21%)

(20%)

(18%)

Source: Edison Investment Research, Refinitiv. Note: Priced at 25 March.

Exhibit 5: Peer group financial metrics

 

 

Market cap

EBIT margin

EBITDA margin

Rev growth

EPS growth

Y/E

m

LY

CY

NY

LY

CY

NY

LY

CY

NY

LY

CY

NY

EMIS

31-Dec

£661

20.4%

23.4%

24.5%

30.2%

31.3%

32.1%

6.1%

5.1%

4.7%

(0.9%)

27.0%

9.3%

EMIS (cash R&D)

22.1%

22.4%

23.5%

0.5%

10.1%

9.3%

 

 

AllScripts

31-Dec

$1,696

15.2%

10.2%

10.5%

22.5%

17.4%

17.9%

16.8%

2.8%

3.8%

16.1%

-6.7%

11.9%

Cegedim

31-Dec

€ 373

6.4%

8.0%

9.0%

16.6%

17.2%

17.8%

2.3%

3.6%

3.5%

66.7%

29.6%

21.8%

Cerner

31-Dec

$18,476

18.8%

18.5%

18.8%

29.3%

29.5%

29.7%

4.4%

7.0%

7.0%

2.9%

6.6%

9.4%

Craneware

30-Jun

£674

28.1%

28.5%

28.5%

32.1%

32.3%

32.2%

18.5%

18.7%

15.3%

15.1%

19.4%

14.9%

CompuGroup

31-Dec

€ 2,795

0.0%

19.7%

20.7%

25.4%

26.4%

27.4%

23.1%

1.7%

-0.7%

1.5%

Nexus

31-Dec

€ 397

13.4%

13.9%

14.9%

19.6%

21.8%

22.4%

14.6%

8.5%

7.2%

11.3%

22.7%

17.7%

NexGen Healthcare

31-Mar

$1, 750

12.2%

12.8%

15.5%

16.5%

17.1%

18.1%

-0.8%

5.4%

5.9%

6.0%

8.6%

17.0%

 

 

Average

13.5%

15.9%

16.8%

23.1%

23.1%

23.6%

11.3%

6.8%

6.0%

19.7%

13.4%

13.5%

Median

 

 

13.4%

13.9%

15.5%

22.5%

21.8%

22.4%

14.6%

5.4%

5.9%

13.2%

14.0%

14.9%

Source: Edison Investment Research, Refinitiv. Note: As at 25 March.


Exhibit 6: Financial summary

£'000s

2014

2015

2016

2017

2018

2019e

2020e

2021e

Year end 31 December

PROFIT & LOSS

Revenue

 

 

137,639

155,898

158,712

160,354

170,070

178,742

187,170

195,906

Cost of Sales

(12,782)

(12,955)

(14,151)

(14,674)

(14,686)

(17,106)

(18,240)

(19,434)

Gross Profit

124,857

142,943

144,561

145,680

155,384

161,637

168,930

176,472

EBITDA

 

 

47,645

51,964

52,288

49,222

51,361

55,990

60,118

63,255

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

34,787

37,123

38,897

34,895

34,709

41,846

45,790

48,482

EMIS adjusted operating profit

 

 

32,639

36,553

38,753

37,406

37,608

39,993

44,015

47,852

Amortisation of acquired intangibles

(6,269)

(6,509)

(6,639)

(6,717)

(6,860)

(7,724)

(7,485)

(6,248)

Exceptionals

873

(18,500)

(6,714)

(16,988)

1,657

0

0

0

Share-based payments

(270)

(684)

(473)

(550)

(766)

(1,000)

(1,000)

(1,000)

Operating Profit

29,121

11,430

25,071

10,640

28,740

33,122

37,305

41,234

Net Interest

(543)

(449)

(237)

(299)

(185)

(200)

(200)

(200)

Profit Before Tax (norm)

 

 

34,206

36,625

39,159

35,192

35,139

42,282

46,226

48,918

Profit Before Tax (FRS 3)

 

 

28,540

10,932

25,333

10,937

29,170

33,558

37,741

41,670

Tax

(5,719)

(5,558)

(5,208)

(2,074)

(5,548)

(6,376)

(7,171)

(7,917)

Profit After Tax (norm)

27,617

29,801

32,175

27,989

27,854

34,249

37,443

39,624

Profit After Tax (FRS3)

22,821

5,374

20,125

8,863

23,622

27,182

30,570

33,753

Ave. Number of Shares Outstanding (m)

62.8

62.7

62.8

62.9

63.0

63.0

63.0

63.0

EPS - normalised & diluted (p)

 

 

42.8

46.0

49.4

43.1

42.7

54.2

59.3

62.7

EPS - EMIS adjusted & diluted (p)

 

 

39.4

45.1

49.2

47.0

47.3

51.3

56.5

61.7

EPS - FRS 3 (p)

 

 

35.3

7.2

30.4

12.8

36.1

43.2

48.5

53.6

Dividend (p)

18.4

21.2

23.4

25.8

28.4

30.0

32.0

34.0

Gross Margin (%)

90.7%

91.7%

91.1%

90.8%

91.4%

90.4%

90.3%

90.1%

EBITDA Margin (%)

34.6%

33.3%

32.9%

30.7%

30.2%

31.3%

32.1%

32.3%

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

25.3%

23.8%

24.5%

21.8%

20.4%

23.4%

24.5%

24.7%

BALANCE SHEET

Fixed Assets

 

 

166,415

143,546

133,292

122,979

117,920

113,387

105,910

98,525

Intangible Assets

139,397

121,383

110,953

100,844

96,807

89,538

82,425

75,404

Tangible Assets

24,313

22,032

22,187

22,037

21,000

23,100

22,100

21,100

Other fixed assets

2,705

131

152

98

113

749

1,385

2,021

Current Assets

 

 

37,221

39,800

46,088

56,900

53,107

70,569

87,118

108,106

Stocks

1,550

1,206

1,815

1,633

1,264

1,264

1,264

1,264

Debtors

28,732

33,893

39,970

40,148

36,223

39,176

41,023

42,938

Cash

6,939

4,701

4,303

13,991

15,620

30,128

42,830

61,904

Current Liabilities

 

 

(67,665)

(63,819)

(56,158)

(65,131)

(60,169)

(63,861)

(66,793)

(69,033)

Creditors

(54,763)

(51,960)

(51,425)

(65,131)

(60,169)

(62,986)

(65,918)

(68,158)

Short term borrowings

(12,902)

(11,859)

(4,733)

0

0

(875)

(875)

(875)

Long Term Liabilities

 

 

(21,063)

(12,481)

(9,080)

(6,734)

(8,199)

(8,741)

(3,437)

(1,440)

Long term borrowings

(5,854)

(1,951)

0

0

0

(2,625)

(1,750)

(875)

Other long term liabilities

(15,209)

(10,530)

(9,080)

(6,734)

(8,199)

(6,116)

(1,687)

(565)

Net Assets

 

 

114,908

107,046

114,142

108,014

102,659

111,354

122,798

136,158

CASH FLOW

Operating Cash Flow

 

 

44,856

42,711

43,657

48,834

49,873

56,054

61,203

64,380

Net Interest

(445)

(422)

(324)

(356)

(214)

(200)

(200)

(200)

Tax

(5,247)

(6,896)

(7,655)

(8,139)

(5,830)

(7,659)

(12,800)

(9,039)

Capex

(15,161)

(14,058)

(12,084)

(11,342)

(12,767)

(13,700)

(13,700)

(13,000)

Acquisitions/disposals

(9,959)

(4,587)

(1,790)

329

(9,269)

(1,000)

(800)

(800)

Financing

(1,578)

492

881

571

906

(500)

(500)

(500)

Dividends

(10,792)

(14,532)

(14,006)

(15,476)

(21,070)

(18,487)

(19,626)

(20,893)

Net Cash Flow

1,674

2,708

8,679

14,421

1,629

14,508

13,577

19,949

Opening net debt/(cash)

 

 

13,491

11,817

9,109

430

(13,991)

(15,620)

(26,628)

(40,205)

HP finance leases initiated

0

0

0

0

0

(3,500)

0

0

Other

0

0

0

0

0

0

0

(0)

Closing net debt/(cash)

 

 

11,817

9,109

430

(13,991)

(15,620)

(26,628)

(40,205)

(60,154)

Source: EMIS, Edison Investment Research


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This report has been commissioned by EMIS and prepared and issued by Edison, in consideration of a fee payable by EMIS. 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.

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Frankfurt +49 (0)69 78 8076 960

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London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1,185 Avenue of the Americas

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United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

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General disclaimer and copyright

This report has been commissioned by EMIS and prepared and issued by Edison, in consideration of a fee payable by EMIS. 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 Edison analyst 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 2019 Edison Investment Research Limited (Edison). All rights reserved FTSE International Limited (“FTSE”) © FTSE 2019. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

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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.

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Neither this document and associated email (together, the "Communication") constitutes or form part of any offer for sale or subscription of, or solicitation of any offer to buy or subscribe for, any securities, nor shall it or any part of it form the basis of, or be relied on in connection with, any contract or commitment whatsoever. Any decision to purchase shares in the Company in the proposed placing should be made solely on the basis of the information to be contained in the admission document to be published in connection therewith.

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 (nor will such persons be able to purchase shares in the placing).

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

The Investment Research is a publication distributed in the United States by Edison Investment Research, Inc. Edison Investment Research, Inc. is registered as an investment adviser with the Securities and Exchange Commission. 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

1,185 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

1,185 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

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