Last close As at 06/08/2026
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Market capitalisation
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Research: TMT
In H117 EMIS traded in line with expectations. Primary Care, Community Care and Community Pharmacy are progressing well whereas Acute is still seeing budgetary pressure. The development of the Patient business is underway and likely to cost less than originally expected. Cash generation is on track and management expectations for the full year are unchanged. We make no change to our underlying forecasts; interim results are due on 1 September.
EMIS Group |
Steady progress |
Trading update |
Software & comp services |
19 July 2017 |
Share price performance
Business description
Next events
Analyst
EMIS Group is a research client of Edison Investment Research Limited |
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In H117 EMIS traded in line with expectations. Primary Care, Community Care and Community Pharmacy are progressing well whereas Acute is still seeing budgetary pressure. The development of the Patient business is underway and likely to cost less than originally expected. Cash generation is on track and management expectations for the full year are unchanged. We make no change to our underlying forecasts; interim results are due on 1 September.
Year |
Revenue (£m) |
PBT* |
Dil. EPS* |
EMIS adj. dil. EPS** (p) |
DPS |
P/E |
Yield (%) |
12/15 |
155.9 |
36.6 |
46.0 |
45.1 |
21.2 |
20.3 |
2.3 |
12/16 |
158.7 |
39.2 |
49.4 |
49.2 |
23.4 |
18.9 |
2.5 |
12/17e |
166.2 |
37.3 |
46.0 |
46.8 |
24.4 |
20.3 |
2.6 |
12/18e |
175.4 |
40.2 |
49.4 |
51.1 |
25.4 |
18.9 |
2.7 |
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.
H1 trading in line
Trading in H117 was in line with management’s expectations with H1 revenues slightly ahead year-on-year. The company maintained market share in Primary Care; the roll out of EMIS Web is underway in Northern Ireland and procurement for EMIS Web has started in Scotland. CCMH won two new contracts in H1. Since Andy Thorburn joined as CEO in May, the existing internal reorganisation programme has been expanded. This should generate cost savings in H2 to offset weakness in the Acute business. In Specialist & Care, five new diabetic screening contracts (won in 2016) were implemented, and notice was given on an unprofitable contract, which should expire in H218. Plans to develop the Patient business are underway, and the company now expects to be able to carry out development work more cost efficiently than previously budgeted.
Strong balance sheet; outlook unchanged
EMIS ended H117 with net cash of £10.5m, versus net debt of £0.4m at the end of FY16. The company also negotiated a three-year £60m revolving credit facility with Barclays and Lloyds providing resources should any acquisition opportunities arise. Management remains confident in the outlook for the business and expectations for the full year are unchanged. Our estimates are unchanged bar a £1m increase in FY17 exceptional charges to reflect the expanded reorganisation plan.
Valuation: Trading at a discount
EMIS is trading on an FY17e P/E of 20.3x, which is at a c 20% discount to its peer group. Although EMIS is more profitable than its peers, the forecast decline in earnings in FY17 is weighing on the valuation. Evidence of a resumption in earnings growth will be key to share price upside – in the short term, this could include improvement in Acute and Specialist Care, and in the longer term, evidence that the investment in Patient is paying off. We believe the NHS’s digital agenda continues to support long-term growth for EMIS. Strong cash generation underpins the nearly 3% dividend yield.
Exhibit 1: Financial summary
£'000s |
2012 |
2013 |
2014 |
2015 |
2016 |
2017e |
2018e |
||
Year end 31 December |
|||||||||
PROFIT & LOSS |
|||||||||
Revenue |
|
|
86,333 |
105,542 |
137,639 |
155,898 |
158,712 |
166,168 |
175,354 |
Cost of Sales |
(10,891) |
(11,780) |
(12,782) |
(12,955) |
(14,151) |
(16,534) |
(18,237) |
||
Gross Profit |
75,442 |
93,762 |
124,857 |
142,943 |
144,561 |
149,634 |
157,117 |
||
EBITDA |
|
|
33,178 |
38,885 |
47,645 |
51,964 |
52,288 |
50,473 |
54,007 |
Operating Profit (before amort. of acq. intang, SBP and except.) |
27,619 |
30,482 |
34,787 |
37,123 |
38,897 |
36,960 |
39,794 |
||
EMIS adjusted operating profit |
|
|
22,910 |
26,260 |
32,639 |
36,553 |
38,753 |
37,496 |
40,854 |
Amortisation of acquired intangibles |
(2,983) |
(4,198) |
(6,269) |
(6,509) |
(6,639) |
(6,697) |
(6,697) |
||
Exceptionals |
(435) |
(1,144) |
873 |
(18,500) |
(6,714) |
(4,000) |
0 |
||
Share-based payments |
(90) |
(195) |
(270) |
(684) |
(473) |
(1,000) |
(1,000) |
||
Operating Profit |
24,111 |
24,945 |
29,121 |
11,430 |
25,071 |
25,263 |
32,097 |
||
Net Interest |
(76) |
(242) |
(543) |
(449) |
(237) |
(150) |
(50) |
||
Profit Before Tax (norm) |
|
|
27,567 |
30,172 |
34,206 |
36,625 |
39,159 |
37,309 |
40,243 |
Profit Before Tax (FRS 3) |
|
|
24,059 |
24,635 |
28,540 |
10,932 |
25,333 |
25,612 |
32,546 |
Tax |
(4,625) |
(4,706) |
(5,719) |
(5,558) |
(5,208) |
(5,251) |
(6,672) |
||
Profit After Tax (norm) |
23,191 |
25,179 |
27,617 |
29,801 |
32,175 |
29,661 |
31,993 |
||
Profit After Tax (FRS3) |
19,434 |
19,929 |
22,821 |
5,374 |
20,125 |
20,362 |
25,874 |
||
Average Number of Shares Outstanding (m) |
58.2 |
59.4 |
62.8 |
62.7 |
62.8 |
62.8 |
62.8 |
||
EPS - normalised & diluted (p) |
|
|
39.0 |
41.4 |
42.8 |
46.0 |
49.4 |
46.0 |
49.4 |
EPS - EMIS adjusted & diluted (p) |
|
|
30.7 |
34.0 |
39.4 |
45.1 |
49.2 |
46.8 |
51.1 |
EPS - FRS 3 (p) |
|
|
32.5 |
32.6 |
35.3 |
7.2 |
30.4 |
31.3 |
39.8 |
Dividend (p) |
14.2 |
16.0 |
18.4 |
21.2 |
23.4 |
24.4 |
25.4 |
||
Gross Margin (%) |
87.4% |
88.8% |
90.7% |
91.7% |
91.1% |
90.1% |
89.6% |
||
EBITDA Margin (%) |
38.4% |
36.8% |
34.6% |
33.3% |
32.9% |
30.4% |
30.8% |
||
Operating Margin (before GW and except.) (%) |
32.0% |
28.9% |
25.3% |
23.8% |
24.5% |
22.2% |
22.7% |
||
BALANCE SHEET |
|||||||||
Fixed Assets |
|
|
77,673 |
153,838 |
166,415 |
143,546 |
133,292 |
125,082 |
116,172 |
Intangible Assets |
52,789 |
126,468 |
139,397 |
121,383 |
110,953 |
101,843 |
92,233 |
||
Tangible Assets |
22,144 |
24,610 |
24,313 |
22,032 |
22,187 |
23,087 |
23,787 |
||
Other fixed assets |
2,740 |
2,760 |
2,705 |
131 |
152 |
152 |
152 |
||
Current Assets |
|
|
27,538 |
27,046 |
37,221 |
39,800 |
46,088 |
55,732 |
74,984 |
Stocks |
1,243 |
1,431 |
1,550 |
1,206 |
1,815 |
1,815 |
1,815 |
||
Debtors |
15,188 |
21,448 |
28,732 |
33,893 |
39,970 |
41,883 |
44,199 |
||
Cash |
11,107 |
4,167 |
6,939 |
4,701 |
4,303 |
12,033 |
28,970 |
||
Current Liabilities |
|
|
(30,598) |
(54,530) |
(67,665) |
(63,819) |
(56,158) |
(54,658) |
(56,367) |
Creditors |
(30,202) |
(46,628) |
(54,763) |
(51,960) |
(51,425) |
(50,925) |
(53,634) |
||
Short term borrowings |
(396) |
(7,902) |
(12,902) |
(11,859) |
(4,733) |
(3,733) |
(2,733) |
||
Long Term Liabilities |
|
|
(10,548) |
(22,231) |
(21,063) |
(12,481) |
(9,080) |
(9,080) |
(9,080) |
Long term borrowings |
(3,000) |
(9,756) |
(5,854) |
(1,951) |
0 |
0 |
0 |
||
Other long term liabilities |
(7,548) |
(12,475) |
(15,209) |
(10,530) |
(9,080) |
(9,080) |
(9,080) |
||
Net Assets |
|
|
64,065 |
104,123 |
114,908 |
107,046 |
114,142 |
117,076 |
125,709 |
CASH FLOW |
|||||||||
Operating Cash Flow |
|
|
32,732 |
38,725 |
44,856 |
42,711 |
43,657 |
44,060 |
54,401 |
Net Interest |
(60) |
(580) |
(445) |
(422) |
(324) |
(50) |
50 |
||
Tax |
(4,566) |
(5,073) |
(5,247) |
(6,896) |
(7,655) |
(7,648) |
(8,250) |
||
Capex |
(18,342) |
(15,025) |
(15,161) |
(14,058) |
(12,084) |
(12,000) |
(12,000) |
||
Acquisitions/disposals |
(512) |
(57,315) |
(9,959) |
(4,587) |
(1,790) |
0 |
0 |
||
Financing |
(1,816) |
27,212 |
(1,578) |
492 |
881 |
(500) |
(500) |
||
Dividends |
(7,735) |
(9,146) |
(10,792) |
(14,532) |
(14,006) |
(15,131) |
(15,764) |
||
Net Cash Flow |
(299) |
(21,202) |
1,674 |
2,708 |
8,679 |
8,730 |
17,937 |
||
Opening net debt/(cash) |
|
|
(8,026) |
(7,711) |
13,491 |
11,817 |
9,109 |
430 |
(8,300) |
HP finance leases initiated |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
||
Other |
(16) |
0 |
0 |
0 |
0 |
0 |
0 |
||
Closing net debt/(cash) |
|
|
(7,711) |
13,491 |
11,817 |
9,109 |
430 |
(8,300) |
(26,237) |
Source: EMIS, Edison Investment Research
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