Well positioned to weather the storm

EMIS Group 20 March 2020 Update
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EMIS Group

Well positioned to weather the storm

FY19 results

Software & comp services

20 March 2020

Price

814p

Market cap

£515m

Net cash (£m) at end FY19

31.1

Shares in issue

63.3m

Free float

98%

Code

EMIS

Primary exchange

AIM

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(33.5)

(27.1)

(15.0)

Rel (local)

(0.8)

9.9

22.3

52-week high/low

1,242p

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

H120 trading update

July 2020

Analyst

Katherine Thompson

+44 (0)20 3077 5730

EMIS Group is a research client of Edison Investment Research Limited

EMIS has made good progress in a number of areas in FY19: it completed a restructuring programme, sold the Specialist & Care business, and was successfully appointed to GP frameworks in England and Scotland. The company continues to invest in developing the EMIS-X platform to support the growth of both the Health and Enterprise divisions. The group reported FY19 results slightly ahead of our forecasts, with revenue growth of 6.5% and adjusted EPS growth of 13.4%. We have taken a more conservative approach to forecasts to reflect short-term risks to new business while the NHS focuses on dealing with the coronavirus crisis.

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

20.1

12/19

159.5

41.0

53.5

51.1

31.2

15.2

12/20e

159.8

39.9

51.2

48.9

32.6

15.9

12/21e

169.8

43.7

56.0

54.7

34.0

14.5

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.

FY19: A year of progress

The group was restructured in FY19 to better reflect the way health services are commissioned and to provide more efficient support to customers. The company also hit an important milestone with its appointment to the GP IT Futures framework in England. Revenues grew 6.5% y-o-y, of which 78% were recurring. Adjusted operating profit grew 9.4% y-o-y with margin expanding by 0.6pp to 24.6%. Net cash doubled to end the year at £31.1m.

FY20: Injecting a note of caution

The high level of recurring revenues with the NHS as the main customer means that EMIS entered 2020 with good visibility. Management highlighted that the coronavirus crisis is likely to make signing up new business more difficult and has reduced guidance for FY20. We have reduced our FY20 and FY21 revenue forecasts by 3.4% and 1.8%, respectively, which results in adjusted EPS cuts of 7.1% and 3.8%, respectively. With a strong net cash position plus access to debt, the company is well positioned to weather any short-term working capital issues.

Valuation: Decline overdone

Even after reducing our forecasts to reflect coronavirus uncertainty, EMIS is trading at a discount to peers on all profitability multiples despite higher profitability. The stock has declined 34% over the last month, compared to a 31% decline in the FTSE 100 and a 40% decline in the AIM All Share Index. Considering the high level of recurring revenues, strong balance sheet and longer-term direction of the NHS in terms of IT investment, this decline appears overdone.

Review of FY19 results

Exhibit 1: EMIS results highlights

£'000s

FY18

FY19e

FY19

Diff

y-o-y

Revenues

149,710

157,962

159,507

1.0%

6.5%

Normalised operating profit

32,991

39,769

40,794

2.6%

23.7%

Normalised operating margin

22.0%

25.2%

25.6%

0.4%

Reported operating profit

27,680

27,552

26,827

(2.6%)

(3.1%)

EMIS adjusted operating profit

35,890

38,388

39,273

2.3%

9.4%

Adjusted operating margin

24.0%

24.3%

24.6%

0.3%

Normalised EPS - p

40.4

51.5

53.5

3.9%

32.2%

Reported EPS - p

36.1

36.7

36.0

(1.9%)

(0.1%)

EMIS diluted adjusted EPS - p

45.0

49.3

51.1

3.7%

13.4%

Dividend per share - p

28.4

31.2

31.2

0.0%

9.9%

Net cash/(debt) - excluding lease liabilities

15,620

30,856

31,099

0.8%

99.1%

Source: EMIS accounts, Edison Investment Research estimates. 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.

The company reported FY19 results slightly ahead of our forecasts. Revenues grew 6.5% y-o-y and were 1% ahead of our forecast. Normalised and adjusted operating profit were 2.6% and 2.3% ahead of forecast and increased 23.7% and 9.4%, respectively, year-on-year. Adjusted diluted EPS was 3.7% ahead of our forecast, mainly due to a lower than expected tax charge. Reported EPS was lower than expected mainly due to higher than forecast exceptional costs (£5.36m versus £3.15m forecast). The company announced a final dividend of 15.6p, resulting in a full year dividend of 31.2p (+10% y-o-y). Net cash at year-end was £31.1m, an increase of £15.5m over the year. Adjusting out the cash costs of exceptional items, cash flow from operations was £1.4m lower year-on-year reflecting a one-off working capital increase at the end of FY19 as the payment arrangements switched from GPSoC to GP IT Futures.

Divisional update

Exhibit 2: Divisional performance

£m

FY18

FY19e

FY19

Diff

y-o-y

Revenues

 

 

 

 

 

EMIS Health

99.3

100.8

100.9

0.1%

1.6%

EMIS Enterprise

50.4

57.2

58.6

2.6%

16.3%

Total

149.7

158.0

159.5

1.0%

6.5%

Adjusted operating profit

 

 

 

 

 

EMIS Health

25.2

24.3

23.3

(4.3%)

(7.7%)

EMIS Enterprise

12.8

15.8

17.5

11.0%

37.0%

Central costs

(2.1)

(1.7)

(1.5)

(11.4%)

(28.0%)

Total adjusted operating profit

35.9

38.4

39.3

2.3%

9.4%

Reported operating profit

 

 

 

 

 

EMIS Health

19.2

18.2

16.0

(12.0%)

(16.4%)

EMIS Enterprise

10.6

11.0

12.3

11.4%

16.2%

Central costs

(2.1)

(1.7)

(1.5)

(11.4%)

(28.0%)

Total reported operating profit

27.7

27.6

26.8

(2.6%)

(3.1%)

Adjusted operating margin

 

 

 

 

 

EMIS Health

25.4%

24.1%

23.1%

(1.1%)

(2.3%)

EMIS Enterprise

25.4%

27.6%

29.9%

2.3%

4.5%

Total adjusted operating margin

24.0%

24.3%

24.6%

0.3%

0.6%

Reported operating margin

 

 

 

 

 

EMIS Health

19.3%

18.1%

15.9%

(2.2%)

(3.4%)

EMIS Enterprise

21.0%

19.3%

21.0%

1.7%

(0.0%)

Total reported operating margin

18.5%

17.4%

16.8%

(0.6%)

(1.7%)

Source: EMIS accounts, Edison Investment Research estimates

EMIS Health: Investment reduces profitability

EMIS Health saw 1.6% revenue growth but a 7.7% decline in adjusted operating profit year-on-year. This was mainly due to increased investment in developing the EMIS-X platform. On an operational basis:

Primary care

The company maintained its 57% market share of UK GPs.

In October 2019, EMIS was appointed to the GP IT Futures framework in England, which went into effect on 1 January 2020 and replaced the previous GP System of Choice (GPSoC) framework. EMIS Web was updated in 2019 to meet the initial contract requirements and will be further developed in 2020.

Earlier in 2019, EMIS was also appointed to the Scottish GP framework (NSS) and is currently working to deliver the technology required for this framework.

In Northern Ireland, EMIS has completed the roll-out of EMIS Web.

In Wales, the company continues to support its existing customer base, despite not being selected for the new framework. As one of the selected suppliers has since had its contract cancelled by NHS Wales, GP practices have not yet been able to shift away from EMIS.

Community care

EMIS increased its market share from 20% to 21% and remains the number two provider in this market.

Acute care

EMIS increased its share of the A&E market from 22% to 23% moving to market leadership.

Support and service

The division migrated its support and service function onto a single customer and internal platform, ServiceNow, and co-located two of its support teams to improve efficiency. By offering improved digital-first options for support, the company has been able to reduce headcount in this area.

Digitisation

Egton saw strong sales of its service to digitise legacy paper records. The market is working towards the target of being fully digitised by 2024.

Development focus

The division is focused on the development of EMIS-X, which it wants to deploy first in the Scottish and English GP markets when ready. This is likely to be in 2021.

EMIS Enterprise: Helped by one-off licence sales

EMIS Enterprise saw revenue growth of 16.3% in FY19 with adjusted operating profit increasing 37.0% and the margin increasing from 25.4% to 29.9%. Revenue growth was mainly due to the signing of several perpetual licences for current products and some that were about to go end-of-life. High-margin licences boosted divisional operating profit.

Community pharmacy

Despite seeing a small reduction in market share (from 37% to 36%) as a few sites decided not to upgrade to ProScript Connect, the company now has sole leadership of this market. The rollout of ProScript Connect was completed during 2019, reaching nearly 5,200 pharmacies, and means that all pharmacies are using the same system, which should result in efficiencies for product support and development.

Two solutions for the Falsified Medicines Directive (FMD) were released to the community pharmacy and hospital pharmacy customer base. A pilot of the Patient Group Directions (PGD) functionality was completed and the company plans to launch this as part of ProScript Connect.

Hospital pharmacy

The company continued to develop its existing Electronic Prescribing and Medicines Administration (ePMA) system and is working with customers to bring them all onto the same version of the software.

Patient Access

The number of Patient Access registered users increased by 40% to 8.4 million by year-end; 6.7m GP appointments and 20.2m repeat prescriptions were booked via the app. After a successful pilot, EMIS has launched the ability to book community pharmacy appointments through the app. In H219, 14,000 appointments were booked by 11,500 users, and in February 2020 the service was live with more than 800 pharmacy branches across 22 organisations. The community pharmacy booking services is the first service available from the group’s marketplace and uses the EMIS-X appointment engine. Pharmacists that use ProScript Connect are able to send an electronic consultation summary back to the patient record held within EMIS Web.

Community pharmacy acquisition post year-end

On 9 March, the company acquired Pinnacle Health Partnership LLP and Pinnacle Systems Management Ltd, owners and operators of the PharmOutcomes platform. PharmOutcomes is a web-based service management solution used by more than 11,000 community pharmacies to record and manage nationally and locally commissioned patient services such as flu vaccinations, the Community Pharmacist Consultation Service and hospital discharge referral management. The platform supports local and national level analysis and reporting on the effectiveness of commissioned services.

EMIS paid £3m on a cash and debt free basis, with up to £4m in contingent consideration payable in cash if certain performance targets are met in FY20 and FY21. In FY19, the business generated revenue of £1.9m and profit of £0.4m.

The company believes this service will integrate well with its existing Community Pharmacy business and may open up the possibility of selling to more pharmacies than the group’s existing 5,200 base.

Coronavirus impact

The company is moving to remote working for all staff and does not see any reason why delivery of recurring software and services should be disrupted.

To support the NHS and community pharmacy customers, the company is providing the following:

Free access to software for video consultations via Patient Access

New coronavirus-related functionality within EMIS Web

EMIS Anywhere application, which allows full access to EMIS Web from a mobile device

Coronavirus insights for GPs and content for Patient.Info

The group reported 78% recurring revenues in FY19, providing a strong revenue base entering into FY20. The company has sounded a note of caution over new business, as there are likely to be restrictions on who can enter hospitals, and healthcare providers are likely to be focused on dealing with the coronavirus in the short term rather than on IT investment.

Outlook and changes to forecasts

We have reduced our revenue forecasts to reflect a lower level of new business in FY20, which results in substantially flat revenues versus FY19. We assume growth resumes in FY21. As the company is not planning on changing headcount over the course of this year, other than to skew the mix more in favour of developers, we do not see any reason to reduce cost forecasts. This results in a decrease in our adjusted operating profit forecast for FY20 of 7.5% and for FY21 of 4.4%. Despite the reduction, we still expect the company to be able to generate an adjusted operating margin of 23.8% in FY20.

The company is maintaining its longer-term forecast for mid-to high-single-digit revenue growth and operating margins approaching 30%.

We have increased our forecast tax rate to 19% from FY20 reflecting the government’s decision to maintain the rate at 19% rather than reducing it to 17% as previously planned.

We have factored in sale proceeds of £2.5m for the former head office, which was sold post year-end. We have added in the Pinnacle acquisition, with a £3m cash payment in FY20 and contingent consideration of £4m on the balance sheet.

Exhibit 3: Changes to forecasts

£'000s

FY20e

FY20e

Change

y-o-y

FY21e

FY21e

Change

y-o-y

FY22e

y-o-y

Old

New

Old

New

New

Revenues

165,324

159,752

(3.4%)

0.2%

172,813

169,787

(1.8%)

6.3%

176,886

4.2%

Normalised operating profit

42,795

39,505

(7.7%)

(3.2%)

45,582

43,111

(5.4%)

9.1%

48,261

11.9%

Normalised operating margin

25.9%

24.7%

(1.2%)

26.4%

25.4%

(1.0%)

27.3%

Reported operating profit

34,468

31,378

(9.0%)

17.0%

38,992

36,721

(5.8%)

17.0%

43,425

18.3%

EMIS adjusted operating profit

41,143

38,069

(7.5%)

(3.1%)

44,270

42,339

(4.4%)

11.2%

45,850

8.3%

Adjusted operating margin

24.9%

23.8%

(1.1%)

25.6%

24.9%

(0.7%)

25.9%

Normalised EPS - p

55.3

51.2

(7.4%)

(4.2%)

59.0

56.0

(5.1%)

9.3%

62.6

11.8%

Reported EPS - p

45.6

40.9

(10.2%)

13.6%

52.0

47.9

(7.8%)

17.1%

56.6

18.0%

EMIS adjusted EPS - p

52.7

48.9

(7.1%)

(4.2%)

56.9

54.7

(3.8%)

11.9%

58.8

7.3%

Dividend per share - p

32.6

32.6

0.0%

4.5%

34.0

34.0

0.0%

4.3%

35.0

2.9%

Net cash/(debt) - excl lease liabilities

38,732

39,841

2.9%

28.1%

54,818

52,793

(3.7%)

32.5%

69,145

31.0%

Source: Edison Investment Research

Valuation

EMIS is trading at a discount to peers on all profitability multiples despite higher profitability. The stock has declined 34% over the last month, compared to a 31% decline in the FTSE 100 and a 40% decline in the AIM All Share Index. Considering the high level of recurring revenues, strong balance sheet and longer-term direction of the NHS in terms if IT investment, this decline appears overdone.

Exhibit 4: Peer multiples

 

 Year-end

EV/sales (x)

P/E (x)

EV/EBIT (x)

EV/EBITDA (x)

Dividend yield

19

20e

21e

19

20e

21e

19

20e

21e

19

20e

21e

19

20e

21e

EMIS

31/12

3.0

3.0

2.8

14.7

15.4

14.1

11.6

12.0

11.0

8.5

8.9

8.3

4.0%

4.1%

4.3%

EMIS (cash R&D)

15.4

16.1

14.4

12.1

12.5

11.2

 

 

 

 

 

AllScripts

31/12

0.9

0.9

0.9

8.2

7.6

6.9

9.6

9.9

9.1

5.7

5.4

5.2

0.0%

0.0%

0.0%

Cegedim

31/12

1.0

1.0

1.0

16.7

8.9

8.0

17.1

12.6

11.1

6.4

5.9

5.5

0.0%

0.5%

3.4%

Cerner

31/12

3.4

3.3

3.1

22.3

19.0

16.9

18.2

15.8

14.2

11.0

10.3

9.5

0.6%

1.2%

1.4%

Craneware

30/06

5.5

5.1

4.8

28.1

26.8

24.6

19.2

18.2

17.0

16.3

15.5

14.3

1.9%

2.1%

2.2%

CompuGroup

31/12

4.3

4.1

3.8

24.4

21.5

19.7

22.3

21.0

18.8

17.0

15.5

14.2

1.0%

1.1%

1.2%

Nexus

31/12

2.5

2.3

2.2

35.8

23.8

20.9

21.4

15.7

14.1

12.6

10.2

9.4

0.7%

0.8%

0.9%

NexGen Healthcare

31/12

0.7

0.7

0.7

6.7

7.0

7.0

6.0

5.6

5.5

5.2

4.0

3.9

0.0%

0.0%

0.0%

 

 

 

Average

2.6

2.5

2.3

20.3

16.4

14.9

16.3

14.1

12.8

10.6

9.5

8.8

0.6%

0.8%

1.3%

Median

 

2.5

2.3

2.2

22.3

19.0

16.9

18.2

15.7

14.1

11.0

10.2

9.4

0.6%

0.8%

1.2%

Premium (discount) to average

13%

19%

(28%)

(6%)

(29%)

(15%)

(20%)

(7%)

Source: Edison Investment Research, Refinitiv (as at 19 March)

Exhibit 5: Peer group financial metrics

 

Market cap (m)

EBIT margin

EBITDA margin

Revenue growth

EPS growth

19

20e

21e

19

20e

21e

19

20e

21e

19

20e

21e

EMIS

£515

25.6%

24.7%

25.4%

34.9%

33.3%

33.5%

6.5%

0.2%

6.3%

32.2%

-4.2%

9.3%

EMIS (cash R&D)

24.6%

23.8%

24.9%

13.4%

-4.2%

11.9%

 

 

 

AllScripts

$895

9.8%

9.5%

10.0%

16.7%

17.4%

17.6%

1.2%

1.0%

3.3%

-6.9%

8.7%

10.1%

Cegedim

€298

6.1%

8.0%

8.8%

16.5%

17.2%

17.8%

7.7%

3.8%

3.8%

217.5%

86.2%

11.2%

Cerner

$18,676

18.5%

20.7%

22.0%

30.6%

31.7%

32.8%

6.1%

3.2%

4.9%

9.4%

17.4%

12.3%

Craneware

£374

28.7%

28.2%

28.0%

33.6%

33.2%

33.2%

-6.5%

6.9%

7.9%

-4.7%

5.0%

9.1%

CompuGroup

€2,770

19.2%

19.4%

20.2%

25.2%

26.3%

26.7%

4.0%

4.9%

7.4%

13.5%

8.7%

Nexus

€389

11.8%

15.0%

15.6%

20.0%

23.0%

23.4%

8.2%

7.9%

6.9%

0.0%

50.7%

13.5%

NexGen Healthcare

$376

12.2%

12.8%

12.5%

14.2%

17.6%

17.5%

-2.9%

3.0%

4.5%

5.0%

-4.7%

-0.7%

 

 

 

Average

15.2%

16.2%

16.7%

22.4%

23.8%

24.2%

2.6%

4.4%

5.5%

36.7%

25.3%

9.2%

Median

 

12.2%

15.0%

15.6%

20.0%

23.0%

23.4%

4.0%

3.8%

4.9%

2.5%

13.5%

10.1%

Source: Edison Investment Research, Refinitiv (as at 19 March)

Exhibit 6: 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

159,752

169,787

176,886

Cost of Sales

(14,151)

(14,674)

(14,236)

(15,407)

(15,695)

(17,314)

(18,466)

Gross Profit

144,561

145,680

135,474

144,100

144,058

152,473

158,420

EBITDA

 

 

52,288

49,222

48,919

55,632

53,269

56,839

60,450

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

38,897

34,895

32,991

40,794

39,505

43,111

48,261

EMIS adjusted operating profit

 

 

38,753

37,406

35,890

39,273

38,069

42,339

45,850

Amortisation of acquired intangibles

(6,639)

(6,717)

(6,202)

(7,317)

(6,827)

(5,090)

(3,536)

Exceptionals

(6,714)

(16,988)

1,657

(5,360)

0

0

0

Share-based payments

(473)

(550)

(766)

(1,290)

(1,300)

(1,300)

(1,300)

Operating Profit

25,071

10,640

27,680

26,827

31,378

36,721

43,425

Net Interest

(237)

(299)

(180)

(498)

(300)

(200)

(200)

Profit Before Tax (norm)

 

 

39,159

35,192

33,426

41,038

39,947

43,653

48,803

Profit Before Tax (FRS 3)

 

 

25,333

10,937

28,115

27,071

31,820

37,263

43,967

Tax

(5,208)

(2,074)

(5,355)

(5,022)

(6,046)

(7,080)

(8,354)

Profit After Tax (norm)

32,175

27,989

26,447

33,697

32,357

35,359

39,531

Profit After Tax (FRS3)

20,125

8,863

22,760

22,049

25,774

30,183

35,613

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

51.2

56.0

62.6

EPS - EMIS adjusted & diluted (p)

 

 

49.2

47.0

45.0

51.1

48.9

54.7

58.8

EPS - FRS 3 (p)

 

 

30.4

12.8

36.1

36.0

40.9

47.9

56.6

Dividend (p)

23.4

25.8

28.4

31.2

32.6

34.0

35.0

Gross Margin (%)

91.1%

90.8%

90.5%

90.3%

90.2%

89.8%

89.6%

EBITDA Margin (%)

32.9%

30.7%

32.7%

34.9%

33.3%

33.5%

34.2%

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

24.5%

21.8%

22.0%

25.6%

24.7%

25.4%

27.3%

BALANCE SHEET

Fixed Assets

 

 

133,292

122,979

117,920

101,089

100,740

94,965

92,281

Intangible Assets

110,953

100,844

96,807

82,345

82,254

76,237

73,311

Tangible Assets

22,187

22,037

21,000

18,399

17,399

16,899

16,399

Other fixed assets

152

98

113

345

1,087

1,829

2,571

Current Assets

 

 

46,088

56,900

53,107

67,278

78,388

94,524

112,510

Stocks

1,815

1,633

1,264

657

657

657

657

Debtors

39,970

40,148

36,223

33,047

35,890

39,074

40,708

Cash

4,303

13,991

15,620

31,099

39,841

52,793

69,145

Current Liabilities

 

 

(56,158)

(65,131)

(60,169)

(55,700)

(58,489)

(61,039)

(63,564)

Creditors

(51,425)

(65,131)

(60,169)

(55,060)

(57,849)

(60,399)

(62,924)

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)

(10,063)

(7,974)

(6,180)

Long term borrowings

0

0

0

0

0

0

0

Lease liabilities

0

0

0

(3,294)

(2,419)

(1,544)

(669)

Other long term liabilities

(9,080)

(6,734)

(8,199)

(5,175)

(7,644)

(6,430)

(5,511)

Net Assets

 

 

114,142

108,014

102,659

104,198

110,576

120,476

135,047

CASH FLOW

Operating Cash Flow

 

 

43,657

48,834

49,873

50,059

52,675

57,224

61,342

Net Interest

(324)

(356)

(214)

(93)

(300)

(200)

(200)

Tax

(7,655)

(8,139)

(5,830)

(4,466)

(8,557)

(8,294)

(9,273)

Capex

(12,084)

(11,342)

(12,767)

(13,119)

(12,500)

(12,300)

(12,300)

Acquisitions/disposals

(1,790)

329

(9,269)

5,152

(1,005)

(1,020)

0

Financing

881

571

906

(2,369)

(500)

(500)

(500)

Dividends

(14,006)

(15,476)

(21,070)

(18,745)

(20,196)

(21,083)

(21,842)

Net Cash Flow

8,679

14,421

1,629

16,419

9,617

13,827

17,227

Opening net debt/(cash)

 

 

9,109

430

(13,991)

(15,620)

(31,099)

(39,841)

(52,793)

Finance leases initiated

0

0

0

(940)

(875)

(875)

(875)

Other

0

0

0

0

(0)

0

0

Closing net debt/(cash)

 

 

430

(13,991)

(15,620)

(31,099)

(39,841)

(52,793)

(69,145)

Source: EMIS Group accounts, 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 £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

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60325 Frankfurt

Germany

London +44 (0)20 3077 5700

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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

95 Pitt Street, Sydney

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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

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

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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