We were braced for weaker results from Emis (EMIS) after the healthcare software group advised in January that it had identified a failure to meet certain reporting obligations with NHS Digital. This related to Emis’s web product for GPs. At the time, management anticipated a financial impact “in the order of upper single digits of millions of pounds”. In the event, the provision came in at £11.2m. This should cover potential financial settlement and any costs involved. Operating profit consequently dropped by over a half, from £23.5m to £10.6m, although the figure still came up short of the 2016 comparative when adjusted for exceptional items.
Chief executive Andy Thorburn arrived last May, and is focusing on improving operating performance. There were encouraging signs. Recurring revenue rose 4 per cent, and now comprises 83 per cent of group sales. That visibility is to be welcomed, but Emis also swung from a £0.4m net debt position to net cash of £14m. Segmentally, specialist and care maintained its leading market position in English diabetic retinopathy screening, lifting sales 26 per cent to £18m. Primary, community & acute care – the largest division – saw adjusted operating profit rise 3 per cent despite a dip in revenue, thanks to cost-cutting.
Analysts at Numis forecast pre-tax profit of £37.4m and EPS of 46.3p for 2018, down from £37.7m and 47p in 2017.
| EMIS (EMIS) | ||||
| ORD PRICE: | 774p | MARKET VALUE: | £490m | |
| TOUCH: | 771-775p | 12-MONTH HIGH: | 1,034p | LOW: 689p |
| DIVIDEND YIELD: | 3.3% | PE RATIO: | 60 | |
| NET ASSET VALUE: | 162p* | NET CASH: | £14m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2013 | 106 | 24.6 | 32.6 | 16.0 |
| 2014 | 138 | 28.5 | 35.3 | 18.4 |
| 2015 | 156 | 10.9 | 7.2 | 21.2 |
| 2016 | 159 | 25.3 | 30.4 | 23.4 |
| 2017 | 160 | 10.9 | 12.8 | 25.8 |
| % change | +1 | -57 | -58 | +10 |
| Ex-div: | 29 Mar | |||
| Payment: | 4 May | |||
| *Includes intangible assets of £101m, or 159p a share | ||||
