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Last close As at 03/02/2023
GBP18.78
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GBP1,179m
Research: TMT
EMIS made steady progress in H122, completing two acquisitions within the EMIS Enterprise business and reporting organic growth in group revenue and adjusted operating profit. A proposed interim dividend of 17.6p is payable on 3 November. The company anticipates that the takeover will complete in Q422.
EMIS Group |
On track |
H122 results |
Software and comp services |
29 September 2022 |
Share price performance
Business description
Next events
Analyst
For the purposes of the Takeover Code, Edison Investment Research is deemed to be connected with EMIS Group. |
EMIS made steady progress in H122, completing two acquisitions within the EMIS Enterprise business and reporting organic growth in group revenue and adjusted operating profit. A proposed interim dividend of 17.6p is payable on 3 November. The company anticipates that the takeover will complete in Q422.
Year end |
Revenue (£m) |
PBT* |
Diluted EPS* |
EMIS adj. dil. EPS** (p) |
DPS |
P/E |
12/18 |
149.7 |
33.4 |
40.4 |
45.0 |
28.4 |
46.7 |
12/19 |
159.5 |
41.0 |
53.5 |
51.1 |
31.2 |
35.3 |
12/20 |
159.5 |
43.4 |
56.4 |
50.4 |
32.0 |
33.5 |
12/21 |
168.2 |
43.5 |
55.0 |
55.5 |
35.2 |
34.3 |
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.
Organic revenue growth of 3% in H122
EMIS reported revenue of £87.3m in H122, up 5% y-o-y and 3% on an organic basis. Adjusted operating profit of £22.4m was 12% higher y-o-y or 9% higher on an organic basis. The adjusted operating margin increased by 1.7pp to 25.7%. Net cash at the end of H122 was £53.6m, down from £64.0m at the end of FY21. During H122, the company acquired Edenbridge and FourteenFish for a combined net cash payment of £18.4m and together they contributed revenue of £1.64m and adjusted operating profit of £0.64m in H122.
Takeover progress: Expected to complete in Q422
On 17 June 2022, the boards of Bordeaux and EMIS announced that they had reached agreement on the terms of a recommended all-cash offer pursuant to which Bordeaux, an affiliate of Optum UK and a wholly owned subsidiary of UnitedHealth Group, will acquire the entire issued and to be issued ordinary share capital of EMIS for a price of 1,925p per share. All resolutions were approved by the requisite majorities at both the court meeting and the general meeting held on 9 August, with 99.5% voting in favour of the proposal. A notification has been made and accepted under the NS&I Act and the Secretary of State has confirmed that no further action will be taken in relation to the acquisition. Subject to the Scheme receiving the sanction of the Court, the filing of the Court Order with the Registrar of Companies and the satisfaction of or, where applicable, the waiver of the other Conditions, the Scheme is expected to become effective by the end of 2022.
H122 results review
Exhibit 1 summarises H122 results and Exhibit 2 shows divisional performance.
Exhibit 1: Half-yearly results highlights
£m |
H122 |
H121 |
y-o-y |
Revenues |
87.3 |
83.5 |
4.5% |
Gross margin |
91.4% |
90.3% |
1.1% |
EBITDA |
27.9 |
25.7 |
8.5% |
EBITDA margin |
31.9% |
30.8% |
1.2% |
Normalised EBIT |
22.9 |
20.4 |
12.1% |
EMIS adjusted EBIT |
22.4 |
20.0 |
12.1% |
Reported EBIT |
15.3 |
16.3 |
(6.5%) |
Normalised EBIT margin |
26.2% |
24.4% |
1.8% |
EMIS adjusted EBIT margin |
25.7% |
24.0% |
1.7% |
Reported EBIT margin |
17.5% |
19.5% |
(2.1%) |
Normalised PBT |
23.1 |
20.5 |
12.3% |
Reported PBT |
15.4 |
16.4 |
(6.1%) |
Normalised net income |
18.8 |
16.5 |
14.2% |
Reported net income |
12.3 |
13.1 |
(6.5%) |
Normalised dil. EPS (p) |
29.5 |
26.0 |
13.8% |
EMIS adjusted diluted EPS (p) |
28.9 |
25.3 |
14.2% |
Reported basic EPS (p) |
19.4 |
20.8 |
(6.7%) |
Net cash |
53.6 |
48.0 |
11.6% |
Source: EMIS
Exhibit 2: Divisional performance, H121-H122
£m |
H121 |
H221 |
H122 |
y-o-y |
h-o-h |
Revenues |
|
|
|
|
|
EMIS Health |
54.3 |
53.7 |
51.3 |
(5.4%) |
-4.4% |
EMIS Enterprise |
29.3 |
31.0 |
35.9 |
22.8% |
15.9% |
Total |
83.5 |
84.7 |
87.3 |
4.5% |
3.0% |
Adjusted operating profit |
|
|
|
|
|
EMIS Health |
12.5 |
13.8 |
12.5 |
(0.0%) |
(9.8%) |
EMIS Enterprise |
8.4 |
10.6 |
10.7 |
28.3% |
(20.7%) |
Central costs |
(0.8) |
(0.9) |
(0.8) |
(7.1%) |
(4.1%) |
Total adjusted operating profit |
20.0 |
23.5 |
22.4 |
12.1% |
(14.9%) |
Reported operating profit |
|
|
|
|
|
EMIS Health |
10.6 |
11.5 |
11.8 |
11.4% |
(7.8%) |
EMIS Enterprise |
6.6 |
8.9 |
8.5 |
29.6% |
(25.9%) |
Central costs |
(0.8) |
(0.9) |
(0.8) |
(7.1%) |
(4.1%) |
Exceptional items |
0 |
0 |
(4.3) |
N/A |
N/A |
Total reported operating profit |
16.3 |
19.5 |
15.3 |
(6.5%) |
(16.2%) |
Adjusted operating margin |
|
|
|
|
|
EMIS Health |
23.0% |
25.8% |
24.3% |
1.3% |
(1.5%) |
EMIS Enterprise |
28.6% |
34.0% |
29.9% |
1.3% |
(4.2%) |
Total adjusted operating margin |
24.0% |
27.8% |
25.7% |
1.7% |
(2.1%) |
Reported operating margin |
|
|
|
|
|
EMIS Health |
19.5% |
21.4% |
23.0% |
3.5% |
1.6% |
EMIS Enterprise |
22.5% |
28.6% |
23.7% |
1.2% |
(4.9%) |
Total reported operating margin |
19.5% |
23.0% |
17.5% |
(2.1%) |
(5.5%) |
Source: EMIS
EMIS reported H122 revenue growth of 5% y-o-y and recurring revenue growth of 9% y-o-y. The two acquisitions made in H1, Edenbridge and FourteenFish, together contributed revenue of £1.64m, implying organic revenue growth of 3% y-o-y. Adjusted operating profit increased by 12% y-o-y (9% organic) and the margin increased by 1.7pp y-o-y. The company reported exceptional charges totalling £4.3m: £1.8m for the technology transformation programme (the shift to the cloud) and £2.5m relating to the ongoing takeover of the company; this was the main reason for the year-on-year decline in reported operating profit and EPS. The effective tax rate was 19% in the period. EMIS adjusted EPS increased 14% y-o-y.
On a divisional basis:
■
EMIS Health: H122 revenue declined 5% y-o-y, reflecting a reduction in hardware sales and a planned reduction in lower-margin resale partner activity. Adjusted operating profit was flat year-on-year due to a better-quality revenue mix and cost control and the margin expanded by 1.3pp y-o-y.
■
EMIS Enterprise: H122 revenue increased 23% y-o-y, or 17% excluding Edenbridge and FourteenFish. Growth was driven mainly by analytics and partners. Adjusted operating profit increased 28% y-o-y (21% organic) with the margin expanding by 1.3pp y-o-y.
The company reported net cash of £53.6m at the end of H122. The main cash flows in H1 included:
■
operating cash inflow: £28.4m, which is after cash exceptional costs of £1.1m;
■
M&A: paid £18.4m for the two acquisitions in H1 and paid £2m in contingent consideration for Pinnacle;
■
capex: capitalised development costs of £2.1m and other capex of £1.3m; and
■
dividends: £11.1m.
The company has proposed an interim dividend of 17.6p per share (flat y-o-y) payable on 3 November to shareholders as at 7 October.
Exhibit 3: Financial summary
£'000s |
2018 |
2019 |
2020 |
2021 |
||
Year end 31 December |
||||||
PROFIT & LOSS |
||||||
Revenue |
|
|
149,710 |
159,507 |
159,453 |
168,226 |
Cost of Sales |
(14,236) |
(15,407) |
(20,335) |
(16,255) |
||
Gross Profit |
135,474 |
144,100 |
139,118 |
151,971 |
||
EBITDA |
|
|
48,919 |
55,632 |
53,536 |
54,707 |
Operating Profit (before amort. of acq. intang, SBP and except.) |
32,991 |
40,794 |
43,020 |
43,246 |
||
EMIS adjusted operating profit |
|
|
35,890 |
39,273 |
39,266 |
43,533 |
Amortisation of acquired intangibles |
(6,202) |
(7,317) |
(6,824) |
(5,673) |
||
Exceptionals |
1,657 |
(5,360) |
1,802 |
0 |
||
Share-based payments |
(766) |
(1,290) |
(1,440) |
(1,788) |
||
Operating Profit |
27,680 |
26,827 |
36,558 |
35,785 |
||
Net Interest |
(180) |
(498) |
(501) |
(426) |
||
Profit Before Tax (norm) |
|
|
33,426 |
41,038 |
43,377 |
43,547 |
Profit Before Tax (FRS 3) |
|
|
28,115 |
27,071 |
36,915 |
36,086 |
Tax |
(5,355) |
(5,022) |
(6,794) |
(7,010) |
||
Profit After Tax (norm) |
26,447 |
33,697 |
35,658 |
35,065 |
||
Profit After Tax (FRS3) |
22,760 |
22,049 |
30,121 |
29,076 |
||
Average Number of Shares Outstanding (m) |
63.0 |
62.9 |
62.9 |
63.0 |
||
EPS - normalised & diluted (p) |
|
|
40.4 |
53.5 |
56.4 |
55.0 |
EPS - EMIS adjusted & diluted (p) |
|
|
45.0 |
51.1 |
50.4 |
55.5 |
EPS - FRS 3 (p) |
|
|
36.1 |
36.0 |
48.1 |
46.2 |
Dividend (p) |
28.4 |
31.2 |
32.0 |
35.2 |
||
Gross Margin (%) |
90.5% |
90.3% |
87.2% |
90.3% |
||
EBITDA Margin (%) |
32.7% |
34.9% |
33.6% |
32.5% |
||
Operating Margin (before GW and except.) (%) |
22.0% |
25.6% |
27.0% |
25.7% |
||
BALANCE SHEET |
||||||
Fixed Assets |
|
|
117,920 |
101,089 |
105,518 |
95,584 |
Intangible Assets |
96,807 |
82,345 |
85,295 |
76,535 |
||
Tangible Assets |
21,000 |
18,399 |
19,870 |
18,694 |
||
Other fixed assets |
113 |
345 |
353 |
355 |
||
Current Assets |
|
|
53,107 |
67,278 |
87,170 |
101,359 |
Stocks |
1,264 |
657 |
613 |
530 |
||
Debtors |
36,223 |
33,047 |
29,993 |
32,057 |
||
Cash |
15,620 |
31,099 |
53,008 |
64,042 |
||
Current Liabilities |
|
|
(60,169) |
(55,700) |
(63,370) |
(61,665) |
Creditors |
(60,169) |
(55,060) |
(62,380) |
(60,762) |
||
Lease liabilities |
0 |
(640) |
(990) |
(903) |
||
Short term borrowings |
0 |
0 |
0 |
0 |
||
Long Term Liabilities |
|
|
(8,199) |
(8,469) |
(10,180) |
(6,801) |
Long term borrowings |
0 |
0 |
0 |
0 |
||
Lease liabilities |
0 |
(3,294) |
(5,891) |
(5,013) |
||
Other long-term liabilities |
(8,199) |
(5,175) |
(4,289) |
(1,788) |
||
Net Assets |
|
|
102,659 |
104,198 |
119,138 |
128,477 |
CASH FLOW |
||||||
Operating Cash Flow |
|
|
49,873 |
50,059 |
64,138 |
50,059 |
Net Interest |
(214) |
(93) |
(54) |
(64) |
||
Tax |
(5,830) |
(4,466) |
(11,684) |
(7,483) |
||
Capex |
(12,767) |
(13,119) |
(9,491) |
(6,405) |
||
Acquisitions/disposals |
(9,269) |
5,152 |
(953) |
(1,990) |
||
Financing |
906 |
(2,369) |
1,324 |
(780) |
||
Dividends |
(21,070) |
(18,745) |
(19,860) |
(21,146) |
||
Net Cash Flow |
1,629 |
16,419 |
23,420 |
12,191 |
||
Opening net debt/(cash) |
|
|
(13,991) |
(15,620) |
(31,099) |
(53,008) |
Finance leases initiated |
0 |
(940) |
(1,511) |
(1,157) |
||
Other |
0 |
0 |
0 |
0 |
||
Closing net debt/(cash) |
|
|
(15,620) |
(31,099) |
(53,008) |
(64,042) |
Source: EMIS
|
|
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