Last close As at 05/08/2026
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— 0.00 (0.00%)
Market capitalisation
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Research: TMT
EMIS’s AGM update confirms the business is trading in line with expectations. As expected, new business is taking a back seat while the NHS concentrates on fighting the COVID-19 pandemic and EMIS has dedicated resources to helping frontline staff as well as supporting research efforts. As long as new business gradually improves through H2, EMIS anticipates meeting FY20 expectations; we maintain our estimates.
EMIS Group |
Supporting the fight against COVID-19 |
AGM update |
Software & comp services |
6 May 2020 |
Share price performance
Business description
Next events
Analyst
EMIS is a research client of Edison Investment Research Limited |
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EMIS’s AGM update confirms the business is trading in line with expectations. As expected, new business is taking a back seat while the NHS concentrates on fighting the COVID-19 pandemic and EMIS has dedicated resources to helping frontline staff as well as supporting research efforts. As long as new business gradually improves through H2, EMIS anticipates meeting FY20 expectations; we maintain our estimates.
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 |
25.5 |
12/19 |
159.5 |
41.0 |
53.5 |
51.1 |
31.2 |
19.3 |
12/20e |
159.8 |
39.9 |
51.2 |
48.9 |
32.6 |
20.1 |
12/21e |
169.8 |
43.7 |
56.0 |
54.7 |
34.0 |
18.4 |
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.
Providing support to the NHS
EMIS is focused on supporting its customer base in dealing with the COVID-19 pandemic. As well as meeting its regular service-level obligations, the company has created a dedicated team to support requests from NHS and community pharmacy customers for functionality changes and patient-related, data-driven insights. This includes involvement in the PRINCIPLE trial (run by the Nuffield Department of Primary Care at the University of Oxford and the Royal College of GPs) that is testing treatments for high-risk patients who have just started to show symptoms. The Patient Access service has seen the number of registered users grow to 10 million from 8.4 million at the end of FY19 and Patient’s coronavirus hub has been accessed 3.4m times by 2.6 million people.
Development plans unchanged; strong cash position
Trading in the year to date is in line with expectations: recurring revenues are on track while new business is lower than in FY19 with a focus on lower-margin hardware. EMIS is closely controlling costs but has no plans to furlough staff and will maintain its investment in EMIS-X. As long as new business gradually improves through H2, EMIS anticipates meeting market expectations for FY20. Net cash at the end of April was £40m with undrawn banking facilities of £60m available.
Valuation: Well supported
The stock is 27% higher than the trough in March and trades at a discount to peers on a P/E basis despite having superior profitability. It is further supported with a dividend yield of 3%. With a strong balance sheet, a high level of recurring revenues (c 80%) and technology that is likely to be in strong demand during and after the pandemic, we view this stock as one of the safer places to invest during this crisis.
Exhibit 1: 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 |
||
Average 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, Edison Investment Research
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Research: Consumer
Given the recent loss of revenue from Switzerland and the tough comparative of Q119, growth in Q120 was expected to be negative. The outbreak of COVID-19 and subsequent cancellation of many sporting events compounded the forecast negative growth rate. Comparatives become easier as the year progresses and management has acted quickly to reduce unnecessary costs, so the company’s guidance for FY20 has been reiterated. Our forecasts remain broadly unchanged. The prospective yield of 6.3%, which is well supported by cash, continues to look attractive.