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Emis offsets health services weakness

The software specialist is awaiting a decision on its bid for the GP IT Futures framework
Emis offsets health services weakness

Emis's (EMIS) recurring revenues edged up by 1 per cent – constituting just over three-quarters of the top line growth – helping it to deliver an 8 per cent rise in adjusted operating profits during the first half. 

IC TIP: Buy at 1112p

That was despite adjusted operating profits at Emis health – which generates sales by providing software to NHS organisations – sinking 3.6 per cent, following investment in development costs for the new software platform ‘EMIS-X’. Thankfully, Emis enterprise saw profits rise by over a fifth to £8.1m, buoyed by various commercial licence deals.

Emis is aiming for mid-to-high single-digit revenue growth and margins “towards” 30 per cent in the mid-term. Near-term, management’s full-year outlook has not changed. Cash from operations did decline by 15 per cent to £29.8m, but this stemmed from timing changes in working capital and a strong comparative. Chief executive Andy Thorburn says that a couple of transactions towards the end of the period have been billed, but not yet paid and he is confident of having a good year-end cash position.

Numis expects adjusted EPS of 50.8p for 2019 (up from 45p last year).

EMIS (EMIS)    
ORD PRICE:1,112pMARKET VALUE:£704m
TOUCH:1,112-1,118p12-MONTH HIGH:1,262pLOW: 853p
DIVIDEND YIELD:2.7%PE RATIO:30
NET ASSET VALUE:160p*NET CASH:£26.7m
Half-year to 30 JunTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201874.412.616.114.2
201979.812.116.615.6
% change+7-4+3+10
Ex-div:26 Sep   
Payment:01 Nov   
*Includes intangible assets of £85.5m or 135p a share