EMIS Group - Internal review uncovers support issue

In an otherwise in-line trading statement, EMIS announced an issue within its customer and product support processes for EMIS Web where it has not been fully meeting the service level and reporting requirements set by NHS Digital in England. This will result in an exceptional charge (our estimate £9m) and potentially higher ongoing costs in the Primary Care business. A 5% reduction in EPS in FY18e and FY19e is more than discounted in the current share price. Further clarity that the scale and cost of this issue are contained should provide support to the share price.