...from EMIS Group the healthcare software provider today. This came in their half year results today which saw revenues, operating profits and earnings all up by between 16 &18%. On the back of this they increased their interim dividend by 15% to 10.6p which compares to full year forecast dividend growth of just over 10% to 20.3p. Given that they have historically paid two equal dividends each year they seem to be signalling their confidence in this growth continuing and therefore a full year dividend of 21.2p. At this morning's unchanged price of around 936p this would put it on a yield of 2.26%.
One aspect of this type of software company that I like is the amount of recurring revenue that they generate and in these results this proportion increased to more than 77%. Otherwise the fact that they have large market shares in GP and Primary Care areas and are benefiting from the trend towards the NHS using technology to save money and increase efficiencies is also attractive. They have also seen the expected earnings enhancement from last year acquisitions and they completed another one this July which is also expected to be immediately earnings enhancing too.
Strong cash flow saw them end the half year with £1.3m in cash but the July acquisition for £3m will help to utilize this and some of the likely cash generation in the second half, thus the balance sheet seems fine which also helps to underpin the dividend.
Summary & Conclusion
A decent set of numbers from EMIS Group, as expected, given their prior pre-close update. Since the company suggest they continue to trade in line with their expectation is seem unlikely, apart from the dividend, that we'll see that much in the way of earnings upgrades. Thus it remains a quality stock on a fairly full rating as it trades on around a 20x with the 2.26% yield indicated above on the back of mid teens expected growth for this year. Given it has out performed strongly in the recent market correction by rising back towards it highs it seem that there may not be that much to go for in the short term. Beyond that though, if it can break resistance from its old highs around current levels and move back down to a 2% prospective yield again, then it could perhaps achieve 1050p or so.
For a good overview of the results and the groups activities see also an interview with the CEO Chris Spencer.