EMIS Group: Strengthening The Core
Edison | Mar 19, 2018 07:43AM ET
Emis Group's (LON:EMISG) recent restructuring enabled it to report FY17 adjusted profits in line with forecasts, despite revenues below our expectations. The company’s immediate focus is on strengthening its core business, both in the wake of the recent customer support issue, but also to ensure it can maintain its market-leading position in the UK primary care market. Lower revenue growth and increased costs to support near-term projects reduce our earnings forecasts for FY18 and FY19. Management is working on detailed plans for growth, which it expects to share later this year.
Slower revenue growth partially offset by cost-cutting
Group revenues grew 1.0% y-o-y (2.8% below our forecast), while adjusted operating profit declined 3.5%. Excluding the investment in Patient, adjusted profit grew 5% y-o-y, benefiting from cost reductions from the now completed reorganisation programme. Net cash of £14m at year-end was ahead of our £7m forecast due to lower working capital consumption. The one-off £11.2m cost to fix the previously announced customer support issue exceeded our £9m estimate.
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