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Supporting a more proactive health service

EMIS Group 22 March 2022 Update
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EMIS Group

Supporting a more proactive health service

FY21 results

Software & comp services

22 March 2022

Price

1,332p

Market cap

£843m

Net cash (£m) at end FY21

64.0

Shares in issue

63.3m

Free float

98%

Code

EMIS

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

8.7

3.7

20.7

Rel (local)

9.3

3.7

11.3

52-week high/low

1,460p

1,090p

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 healthcare analytics.

Next events

AGM

5 May

Analyst

Katherine Thompson

+44 (0)20 3077 5730

EMIS Group is a research client of Edison Investment Research Limited

EMIS reported FY21 results ahead of our recently raised forecasts, with revenue up 6% y-o-y, adjusted operating profit up 11% and adjusted EPS up 10%. EMIS-X analytics is being adopted by both EMIS Health and EMIS Enterprise customers, supporting a more proactive approach to healthcare, and enhancements to the platform underpin the company’s integrated care systems strategy. Reflecting FY21 performance and recent bolt-on acquisitions, we upgrade our adjusted EPS forecasts by c 3% in FY22 and FY23.

Year end

Revenue (£m)

PBT*
(£m)

Diluted EPS*
(p)

EMIS adj dil EPS** (p)

DPS
(p)

P/E
(x)

12/20

159.5

43.4

56.4

50.4

32.0

23.6

12/21

168.2

43.5

55.0

55.5

35.2

24.2

12/22e

176.8

48.0

61.2

59.7

36.0

21.8

12/23e

186.0

52.5

63.1

59.9

37.0

21.1

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.

FY21 results: Back to business as usual

While EMIS continued to support its customers with COVID-19-related activities during FY21, it saw more normal trading patterns return. EMIS Health revenue was essentially flat year-on-year (lower hardware sales offset higher other sales) while EMIS Enterprise revenue rebounded 16% with better margins in both divisions. Since year-end, EMIS has made two bolt-on acquisitions totalling £20m in cash. We have revised our forecasts to reflect the most recent acquisition and FY21 results, with adjusted diluted EPS upgrades of 3.3% in FY22 and 3.0% in FY23.

EMIS-X driving growth and efficiency

The EMIS-X platform and analytics applications are proving popular across both divisions. In EMIS Health, EMIS-X is helping the NHS to move from reactive to proactive by analysing the use of healthcare services and identifying at-risk patients. In EMIS Enterprise, life sciences companies are using EMIS-X analytics to identify cohorts for research programmes, improving the speed and efficiency of drug trials, and to identify at-risk patients for screening, with the resulting data fed back to GPs. The platform also supports EMIS’s integrated care systems strategy with several interoperability technology enhancements released in FY21 and Q122.

Valuation: Earnings growth to drive upside

Compared to a global group of healthcare software peers, EMIS trades at a discount on all profitability valuation 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 discount will be evidence of sustained revenue growth that meets the company’s medium-term goal of mid- to high single digits, in turn driving stronger earnings growth. We note that with a strong balance sheet, 80% recurring revenue, no material overseas exposure and no debt, the company is well positioned to weather current economic and geopolitical pressures.

Review of FY21 results

Exhibit 1: FY21 results highlights

£'000s

FY20

FY21e

FY21

Diff

y-o-y

Revenues

159,453

166,813

168,226

0.8%

5.5%

Normalised operating profit

43,020

42,662

43,246

1.4%

0.5%

Normalised operating margin

27.0%

25.6%

25.7%

0.1%

Reported operating profit

35,776

34,507

35,785

3.7%

0.0%

EMIS adjusted operating profit

39,266

41,962

43,533

3.7%

10.9%

Adjusted operating margin

24.6%

25.2%

25.9%

0.7%

Normalised dil EPS (p)

56.4

54.8

55.0

0.4%

(2.4%)

Reported basic EPS (p)

48.1

44.8

46.2

3.0%

(4.0%)

EMIS adjusted dil EPS (p)

50.4

53.9

55.5

2.9%

10.0%

Dividend per share (p)

32.0

35.2

35.2

0.0%

10.0%

Net cash

53,008

63,972

64,042

0.1%

20.8%

Source: EMIS, Edison Investment Research

EMIS reported an FY21 trading update in January, at which point we upgraded our numbers to reflect better-than-expected performance and the Edenbridge Healthcare acquisition. Full FY21 results were better than these upgraded forecasts, with revenue 1% and adjusted operating profit 4% ahead of our forecasts. Revenue grew 6% y-o-y, with recurring revenue making up 80% of the total. Adjusted operating profit grew 11% y-o-y with the margin expanding by 1.3pp. Adjusted diluted EPS increased 10% y-o-y. The company confirmed a final dividend of 17.6p, taking the full year dividend to 35.2p, up 10% y-o-y. Net cash improved 21% y-o-y, even after the delayed £7.3m VAT payment in the year.

Exhibit 2: Divisional performance

£m

FY20

FY21e

FY21

Diff

y-o-y

Revenues

 

 

 

 

 

EMIS Health

107.8

106.7

108.0

1.2%

0.2%

EMIS Enterprise

51.7

60.1

60.3

0.3%

16.6%

Total

159.5

166.8

168.2

0.8%

5.5%

Adjusted operating profit

 

 

 

 

 

EMIS Health

25.1

25.6

26.3

2.8%

4.9%

EMIS Enterprise

15.7

18.2

18.9

4.2%

20.6%

Central costs

(1.5)

(1.8)

(1.7)

-4.7%

13.6%

Total adjusted operating profit

39.3

42.0

43.5

3.7%

10.9%

Reported operating profit

 

 

 

 

 

EMIS Health

23.8

21.9

22.1

0.6%

(7.4%)

EMIS Enterprise

13.5

14.4

15.4

7.4%

14.7%

Central costs

(1.5)

(1.8)

(1.7)

-4.7%

13.6%

Total reported operating profit

35.8

34.5

35.8

3.7%

0.0%

Adjusted operating margin

 

 

 

 

 

EMIS Health

23.3%

24.0%

24.4%

0.4%

1.1%

EMIS Enterprise

30.4%

30.2%

31.4%

1.2%

1.0%

Total adjusted operating margin

24.6%

25.2%

25.9%

0.7%

1.3%

Reported operating margin

 

 

 

 

 

EMIS Health

22.1%

20.5%

20.4%

(0.1%)

(1.7%)

EMIS Enterprise

26.1%

23.9%

25.6%

1.7%

(0.4%)

Total reported operating margin

22.4%

20.7%

21.3%

0.6%

(1.2%)

Source: EMIS, Edison Investment Research

On a divisional basis, EMIS Health revenue was essentially flat year-on-year. In FY20, this division saw high demand for hardware to help GP practices to continue working through the COVID-19 pandemic; these revenues declined in FY21. As hardware is lower margin than software, this also explains the 1.1pp increase in the adjusted operating margin year-on-year. In FY20, EMIS Enterprise saw a revenue decline of 11.9% due to the pandemic; in FY21 revenue rebounded, growing 16.6% y-o-y and 2.8% compared to FY19, supporting a 1pp increase in the adjusted operating margin. The company noted that last year, there were 25 pilots running for EMIS-X Analytics. In FY21, many of these converted into commercial contracts, with 27 contracts signed in total over the year. While these are spread across customers of both divisions (12 in EMIS Health and 15 in EMIS Enterprise), all revenue is reported in EMIS Enterprise.

Business update

EMIS Health: Strong position maintained

In Primary Care, EMIS slightly improved its share of UK GP practices from 57% to 58%. In England, the GP IT Futures framework is due for renewal in March 2023. This will only test the financial viability of companies on the framework, a test that we believe EMIS should easily pass. When the new framework was introduced, GP practices were able to continue with their incumbent supplier without running a formal competitive process until October 2022. The company expects this period to be extended by 18 months due to the impact of the pandemic. EMIS was recently appointed to the Digital Health and Care Wales framework after having not been selected in 2018. Despite not being on the framework, EMIS did not lose any Welsh practices and in fact has recently gained a few. In Northern Ireland, EMIS extended the primary care contract until 2023.

From a technology perspective, the company has completed the first phase of the EMIS-X technology refresh. The next phase of cloud infrastructure upgrades is planned over the next two years, which should improve efficiency and expand margins. The A&E system was upgraded to enable better interoperability and GP software was updated to improve customer satisfaction.

EMIS Enterprise: Seeing good take-up of EMIS-X Analytics

The EMIS-X platform and related analytics are supporting an increasing number of applications. To support health services during the pandemic, EMIS participated in the OpenSAFELY programme. By analysing GP interactions, EMIS has been able to provide data that have helped to update prescribing guidelines and protocols for long COVID. EMIS-X is also being used by NHS organisations to analyse emergency department attendance, peak times and demographic details of patients. EMIS has several projects underway in research and life sciences, including with Pfizer and Bristol Myers Squibb, where it is being used to identify cohorts for clinical research and identify patients at risk of certain conditions.

Community Pharmacy increased its market share from 38% to 39% during the year. Pinnacle’s Outcomes4Health software was used to record more than 100m COVID-19 vaccinations, which was 86% of all vaccinations given. Pinnacle contributed £7.4m to revenue in FY21 compared to £2.2m in FY20. The company expects this to decline by c £2m in FY22 as set-up-related revenues will not recur. As well as continuing to support whatever vaccination programmes the NHS decides to offer, Pinnacle will refocus on its core business of supporting pharmacies to offer consulting room services. EMIS released several new services during FY21 including Pro Delivery Manager (home delivery services management), Centred Solutions (a third-party dispensing workflow solution), PharmaSelf 24 (an automated prescription-collection system, available 24/7) and Golden Tote (an automated repeat prescription process provided for Numark, a division of Phoenix Healthcare Distribution). ProScript Connect was successfully transitioned to the cloud.

Hospital Pharmacy maintained its number two position with market share of 35%, down from 36% in FY20.

New services were made available through Patient Access during FY21, including home-testing kits and diagnostic services. In the year, 51,060 services were booked through marketplace. Registered users increased to 14m from 11.7m in FY20, with 22m repeat prescriptions ordered (FY20: 23.5m), 1.5m face-to-face GP appointments booked (FY20: 2.5m) and 49,000 community pharmacy consultations booked (FY20: 41,000). The number of GP appointments booked declined as practices shifted to online triage, phone consultations and signposting to self-help where appropriate, and community pharmacies provided more treatment of minor illnesses and guidance. Patient.info had 96m unique users viewing 187m pages (FY20: 80m users, 166m page views).

Bolt-on acquisitions: Edenbridge Health, FourteenFish

The company had already announced the acquisition of Edenbridge Healthcare in January, paying £4m in cash with a potential further £6m in contingent consideration. Edenbridge generated revenue of £1m and profit of £0.2m last year. Edenbridge provides business intelligence tools to GP practices, federations and commissioners, and expands EMIS’s capabilities in the data and analytics market, providing real-time insight to support GP practice access, efficiency, transformation and workforce planning. Integration between product sets is underway.

With FY21 results, the company announced a second acquisition, FourteenFish, for £15.8m in cash. FourteenFish is a medical appraisals specialist and is the chosen training system of the Royal College of General Practitioners. FourteenFish generated revenue of £2.4m and profit of £1.4m last year.

Formalising ESG strategy

In FY21, the company formalised its ESG strategy, setting the target of becoming carbon neutral by 2030. A newly formed ESG committee will develop the strategy further, building social value targets and ambitions into corporate strategy.

Outlook and changes to forecasts

The company views EMIS-X technologies as offering good potential to accelerate efficiency and growth in both divisions. It is focused on delivering consistent revenue growth and expanding margins. Management noted that it intends to retire some legacy products, particularly in EMIS Health, which we would expect to have a negative impact on revenue, but less so on profitability.

In terms of M&A, the company has a bolt-on strategy and expects to make further acquisitions of a size similar to its recent deals. With net cash of c £44m (£64m at the end of FY21 less the £20m spent on the two acquisitions) as well as undrawn bank facilities of £30m and a further £30m accordion facility, the company is well funded to pursue this strategy.

We have revised our forecasts to reflect FY21 performance and the FourteenFish acquisition and we introduce forecasts for FY24. We have reduced our capex and capitalised development costs and related depreciation and amortisation forecasts for FY22 and FY23. Overall, we upgrade revenue by 1.1% in FY22 and 0.7% in FY23 and adjusted diluted EPS by 3.3% and 3.0% respectively. We note that EPS growth in FY23 and FY24 is lower than EBIT growth due to the increase in UK corporation tax rates from 19% to 25% from April 2023.

Exhibit 3: Changes to forecasts

£'000s

FY22e

FY22e

Change

y-o-y

FY23e

FY23e

Change

y-o-y

FY24e

y-o-y

Old

New

Old

New

New

Revenues

174,941

176,792

1.1%

5.1%

184,648

186,023

0.7%

5.2%

195,705

5.2%

Normalised operating profit

46,881

47,793

1.9%

10.5%

49,858

52,232

4.8%

9.3%

56,217

7.6%

Normalised operating margin

26.8%

27.0%

0.2%

27.0%

28.1%

1.1%

28.7%

Reported operating profit

40,981

41,592

1.5%

16.2%

44,990

46,964

4.4%

12.9%

53,362

13.6%

EMIS adjusted operating profit

44,981

46,593

3.6%

7.0%

47,958

49,532

3.3%

6.3%

52,417

5.8%

Adjusted operating margin

25.7%

26.4%

0.6%

26.0%

26.6%

0.7%

26.8%

Normalised dil. EPS - p

60.2

61.2

1.7%

11.2%

64.0

63.1

(1.3%)

3.2%

66.6

5.5%

Reported basic EPS - p

53.2

53.8

1.2%

16.5%

55.1

57.3

4.1%

6.6%

63.8

11.3%

EMIS adjusted dil. EPS - p

57.8

59.7

3.3%

7.5%

58.1

59.9

3.0%

0.4%

62.1

3.7%

Dividend per share - p

36.0

36.0

0.0%

2.3%

37.0

37.0

0.0%

2.8%

39.0

5.4%

Net cash

70,086

60,873

(13.1%)

(4.9%)

87,004

78,610

(9.6%)

29.1%

95,907

22.0%

Source: Edison Investment Research

Valuation

Our peer group includes companies involved in clinical, healthcare analytics and medicines management software. The tables below show how EMIS compares in terms of financial performance (Exhibit 4) and valuation metrics (Exhibit 5). EMIS is at the top of its peer group in terms of EBIT margins but is at the lower end in terms of revenue growth and consequently earnings growth. It trades at a discount to the peer group average/median on all profitability metrics, with a dividend yield at the top end of the group. Acceleration of revenue growth will be a key driver of upside. We note that with a strong balance sheet, 80% recurring revenue, no material overseas exposure and no debt, the company is well positioned to weather current economic and geopolitical pressures.

Exhibit 4: Peer financial metrics

Company

EBIT margin (%)

EBITDA margin (%)

Revenue growth (%)

EPS growth (%)

CY

NY

CY

NY

CY

NY

CY

NY

EMIS

27.0

28.1

32.5

32.8

5.1

5.2

11.2

3.2

Allscripts Healthcare Solutions

11.8

11.5

19.0

19.4

1.6

2.1

-31.8

5.8

Cegedim

7.7

8.2

20.6

20.9

5.1

3.8

15.2

13.2

Computer Programs and Systems

17.9

13.9

18.6

19.5

10.2

5.7

4.1

11.5

Craneware

22.6

22.8

29.5

29.4

129.4

8.7

30.1

7.9

CompuGroup

14.6

16.7

22.7

24.3

5.5

4.9

10.7

17.3

Health Catalyst

-20.6

-18.0

-1.1

3.0

20.2

20.6

Nexus

14.3

15.6

22.5

23.3

12.9

10.7

27.3

21.9

NextGen Healthcare

14.3

13.9

19.4

19.1

6.6

5.3

0.8

3.2

Omnicell

12.3

14.8

17.9

20.0

23.4

12.7

-0.1

21.2

OPTIMIZERx Corp

6.5

2.7

17.0

21.7

34.4

37.7

63.1

80.6

Pharmagest Interactive

27.5

28.1

32.7

33.3

10.3

9.9

20.1

13.0

Tabula Rasa HealthCare

-10.2

-9.7

6.4

7.4

11.8

12.6

Average

9.9

10.0

18.8

20.1

22.6

11.2

14.0

19.6

Median

13.3

13.9

19.2

20.5

11.1

9.3

12.9

13.1

Source: Edison Investment Research, Refinitiv (at 17 March)

Exhibit 5: Peer valuation metrics

Share

Market

EV/Sales (x)

EV/EBITDA (x)

EV/EBIT (x)

P/E (x)

Dividend yield

price

Cap m

CY

NY

CY

NY

CY

NY

CY

NY

CY

NY

EMIS

£13.32

843

4.5

4.3

13.9

13.1

16.7

15.3

21.8

21.1

2.7%

2.8%

EMIS - adjusted profitability

4.5

4.3

13.9

13.1

17.1

16.1

22.3

22.2

2.7%

2.8%

Allscripts Healthcare Solutions

$22.00

2557

1.8

1.7

9.4

9.0

15.1

15.1

22.6

21.3

0.0%

0.0%

Cegedim

€ 27.55

383

1.1

1.1

5.5

5.2

14.7

13.3

14.2

12.6

0.0%

0.0%

Computer Programs and Systems

$33.95

496

1.9

1.8

10.2

9.2

12.1

10.9

4.7%

Craneware

£16.80

592

4.9

4.5

16.7

15.4

21.9

19.9

25.0

23.1

0.0%

0.0%

CompuGroup

€ 48.82

2604

3.0

2.9

13.2

11.7

20.5

17.1

22.6

19.3

1.2%

1.4%

Health Catalyst

$22.56

1204

3.2

2.7

0.0%

0.0%

Nexus

€ 53.70

849

4.0

3.6

17.8

15.5

27.9

23.2

38.7

31.7

0.4%

0.4%

NextGen Healthcare

$19.76

1321

2.1

2.0

11.0

10.7

15.0

14.6

20.0

19.4

Omnicell

$136.69

6072

4.4

3.9

24.7

19.7

36.1

26.6

35.9

29.6

OPTIMIZERx Corp

$38.81

694

7.4

5.4

43.5

24.8

113.2

201.9

52.9

29.3

Pharmagest Interactive

€ 78.50

1182

5.6

5.1

17.1

15.3

20.3

18.1

26.6

23.5

1.6%

1.7%

Tabula Rasa HealthCare

$4.51

116

1.2

1.1

19.2

14.7

Average

3.4

3.0

17.1

13.7

31.6

38.9

27.1

22.1

0.5%

1.0%

Median

3.1

2.8

16.7

14.7

20.5

18.1

23.8

22.2

0.0%

0.2%

Source: Edison Investment Research, Refinitiv (at 17 March)

Exhibit 6: Financial summary

£'000s

2018

2019

2020

2021

2022e

2023e

2024e

Year end 31 December

PROFIT & LOSS

Revenue

 

 

149,710

159,507

159,453

168,226

176,792

186,023

195,705

Cost of sales

(14,236)

(15,407)

(20,335)

(16,255)

(17,435)

(19,369)

(20,884)

Gross profit

135,474

144,100

139,118

151,971

159,357

166,654

174,821

EBITDA

 

 

48,919

55,632

53,536

54,707

57,493

61,032

64,517

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

32,991

40,794

43,020

43,246

47,793

52,232

56,217

EMIS adjusted operating profit

 

 

35,890

39,273

39,266

43,533

46,593

49,532

52,417

Amortisation of acquired intangibles

(6,202)

(7,317)

(6,824)

(5,673)

(4,301)

(3,268)

(755)

Exceptionals

1,657

(5,360)

1,802

0

0

0

0

Share-based payments

(766)

(1,290)

(1,440)

(1,788)

(1,900)

(2,000)

(2,100)

Operating profit

27,680

26,827

36,558

35,785

41,592

46,964

53,362

Net Interest

(180)

(498)

(501)

(426)

(500)

(500)

(500)

Profit before tax (norm)

 

 

33,426

41,038

43,377

43,547

48,020

52,459

56,444

Profit before tax (FRS 3)

 

 

28,115

27,071

36,915

36,086

41,819

47,191

53,589

Tax

(5,355)

(5,022)

(6,794)

(7,010)

(7,946)

(11,090)

(13,397)

Profit after tax (norm)

26,447

33,697

35,658

35,065

38,896

40,131

42,333

Profit after tax (FRS3)

22,760

22,049

30,121

29,076

33,873

36,101

40,191

Average Number of Shares Outstanding (m)

63.0

62.9

62.9

63.0

63.0

63.0

63.0

EPS - normalised & diluted (p)

 

 

40.4

53.5

56.4

55.0

61.2

63.1

66.6

EPS - EMIS adjusted & diluted (p)

 

 

45.0

51.1

50.4

55.5

59.7

59.9

62.1

EPS - FRS 3 (p)

 

 

36.1

36.0

48.1

46.2

53.8

57.3

63.8

Dividend (p)

28.4

31.2

32.0

35.2

36.0

37.0

39.0

Gross Margin (%)

90.5%

90.3%

87.2%

90.3%

90.1%

89.6%

89.3%

EBITDA Margin (%)

32.7%

34.9%

33.6%

32.5%

32.5%

32.8%

33.0%

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

22.0%

25.6%

27.0%

25.7%

27.0%

28.1%

28.7%

BALANCE SHEET

Fixed assets

 

 

117,920

101,089

105,518

95,584

109,885

107,320

108,767

Intangible assets

96,807

82,345

85,295

76,535

91,334

88,767

89,712

Tangible assets

21,000

18,399

19,870

18,694

18,194

18,194

18,694

Other fixed assets

113

345

353

355

357

359

361

Current assets

 

 

53,107

67,278

87,170

101,359

100,538

120,045

139,200

Stocks

1,264

657

613

530

530

530

530

Debtors

36,223

33,047

29,993

32,057

33,905

35,676

37,532

Cash

15,620

31,099

53,008

64,042

60,873

78,610

95,907

Current Liabilities

 

 

(60,169)

(55,700)

(63,370)

(61,665)

(62,657)

(65,882)

(69,263)

Creditors

(60,169)

(55,060)

(62,380)

(60,762)

(61,754)

(64,979)

(68,360)

Lease liabilities

0

(640)

(990)

(903)

(903)

(903)

(903)

Short term borrowings

0

0

0

0

0

0

0

Long Term Liabilities

 

 

(8,199)

(8,469)

(10,180)

(6,801)

(6,555)

(5,779)

(5,265)

Long term borrowings

0

0

0

0

0

0

0

Lease liabilities

0

(3,294)

(5,891)

(5,013)

(4,856)

(4,699)

(4,542)

Other long-term liabilities

(8,199)

(5,175)

(4,289)

(1,788)

(1,699)

(1,080)

(723)

Net Assets

 

 

102,659

104,198

119,138

128,477

141,212

155,704

173,437

CASH FLOW

Operating cash flow

 

 

49,873

50,059

64,138

50,059

58,636

62,486

66,042

Net Interest

(214)

(93)

(54)

(64)

(500)

(500)

(500)

Tax

(5,830)

(4,466)

(11,684)

(7,483)

(8,535)

(11,709)

(13,754)

Capex

(12,767)

(13,119)

(9,491)

(6,405)

(7,500)

(8,500)

(9,500)

Acquisitions/disposals

(9,269)

5,152

(953)

(1,990)

(21,800)

0

0

Financing

906

(2,369)

1,324

(780)

225

225

225

Dividends

(21,070)

(18,745)

(19,860)

(21,146)

(22,539)

(23,109)

(24,058)

Net cash flow

1,629

16,419

23,420

12,191

(2,012)

18,893

18,455

Opening net debt/(cash)

 

 

(13,991)

(15,620)

(31,099)

(53,008)

(64,042)

(60,873)

(78,610)

Finance leases initiated

0

(940)

(1,511)

(1,157)

(1,157)

(1,157)

(1,157)

Other

0

0

0

0

0

(0)

(0)

Closing net debt/(cash)

 

 

(15,620)

(31,099)

(53,008)

(64,042)

(60,873)

(78,610)

(95,907)

Source: EMIS, Edison Investment Research


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 £60,000 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 2022 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 £60,000 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 2022 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

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