EMIS Interims, AstraZeneca and Brexit

Healthcare technology company EMIS Group (EMIS) issued some interim results this morning. This is one of my longest standing holdings first purchased in 2011 although it has not been one of my greatest investments – overall total return over the years of only 9% per annum. But I did buy some more in March as I considered it would be a defensive share during the epidemic and might actually benefit from the medical crisis. That has turned out to be generally true.

Revenue was down by 2% however and adjusted profits likewise and it appears that business-to-business activity has been constrained but the share price has risen by 5% today (at the time of writing). Some effort has clearly been put into meeting new requirements from the epidemic but a new EMIS-X module was announced (EMIS-X is a new modular platform they are developing). However, it does seem that EMIS-X is slow in arriving in comparison with my expectations.

The health system is becoming more digitised so EMIS is in a good place and unlike other companies who are chopping their dividends, EMIS announced a 3% increase in the interim dividend.

For those who are not big consumers of health services like me it is truly revolutionary how the world has changed of late. Email discussions with GPs and video conversations are now enabled and the whole health system is more responsive. But it is getting more difficult to actually see a doctor in person which is sometimes still required.

Edison have published a video interview with the CEO of EMIS which you can watch here: https://www.edisongroup.com/edison-tv/emis-group-executive-interview/

As regards the epidemic AstraZeneca have indicated they have put their clinical trial of a vaccine on hold due to a possible adverse reaction in one patient. It may purely be a random effect. But with lots of competitors for a vaccine and a low probability of any one making money, this is not necessarily significant news.

Brexit

I was very amused to see Government Minister Brandon Lewis admitting in Parliament that it will break international law over the Brexit withdrawal treaty, in an attempt to “rewrite” it or “clarify” it depending on who you care to listen to. I would not rate Mr Lewis very highly in terms of his knowledge of the law having met him when he was a Government Minister in a different role. We discussed the use of police waivers of prosecutions for speeding offences which I consider an abuse and a perversion of justice. He simply suggested it was a form of “plea bargain”. Not that they are part of the UK judicial system of course so it was a very odd response.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson  )

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Coronavirus News, AstraZeneca Vaccine, Bowling Alleys and Boeing 747s Retired

The UK death count from the Covid-19 virus is now 45,233. At least that’s the latest figure available because daily reports of deaths have now been suspended because the statistic is now known to be unreliable. Anyone who was identified as a Covid-19 infected person but later died from any cause is identified as a Covid-19 death. The result is that someone who was at death’s door from cancer before infection is counted as a Covid-19 death. Even someone who is run over by a bus is likewise included. This is truly bizarre and the Government has ordered an investigation.

The good news is that a second vaccine candidate looks like it might be effective. This is the one produced by Oxford University and which AstraZeneca (AZN) is gearing up to manufacture and distribute in volume. The share price of the company perked up on Friday as a result based on press reports and rumours although the trial results are not due to be published in the Lancet until Monday. Whether they will really make any money from this product remains to be seen. I only hold a few shares in the company and will wait to see a clearer view before buying more.

The other good news is that bowling alleys and other similar entertainment venues such as casinos will be able to reopen on the 1st August. But there will be restrictions on bowling alleys with only alternate lanes open, players limited to groups of 6 and they will be offered gloves to wear. Also bowling shoes are out.

I always thought the provision of shoes was a bit odd now that everyone is wearing trainers or other rubber/plastic soled shoes as I thought the original purpose was to protect the wooden runway. It seems that bowling shoes also enable the players to slide along the surface but only professionals actually do that. Bowling shoes may now die out.

CFO of Hollywood Bowl Lawrence Keen was quoted by the BBC as saying: “At 50% capacity, the company will still be profitable, albeit just”. I own a few shares in both Hollywood Bowl (BOWL) and Ten Entertainment (TEG) but again I think it is best to wait and see whether the players return before buying more shares.

Other news was the announcement by BA that they are “retiring” their entire fleet of Boeing 747s. With 31 planes they are the largest operator of the planes in the world.

As airline passenger numbers are much reduced from the epidemic impact, BA clearly sees little chance of filling the planes in future, and you need to fill a 747 to make them economic operationally. Boeing 747s were first made operational in about 1970 and unbelievably are still being manufactured, albeit with a lot of updates such as improved engines. They are still in demand for cargo flights due to their large capacity. What’s the price of a good second-hand 747-400? About $12 million, although I suspect prices are falling rapidly.

Memories: I recall the original promotional videos for the plane which featured lots of space to walk around in “lounges” with a bar at one end. In reality they soon crammed in as many passengers as possible and were hence not particularly comfortable, particularly in economy class. Some planes were configured to use the “upper deck” which one reached via stairs and I do recall at least one trip in that location. But the large number of passengers always meant it took a long time to unload and load, with long queues at passport control resulting.  Certainly a plane to avoid for passengers in my opinion even if you were flying business or first class. There was a certain comfort in having four engines in case one or two failed, but aircraft engines improved in reliability over the years so the initial doubts about flying more fuel efficient twin-engined planes soon vanished.

Roger Lawson (Twitter: https://twitter.com/RogerWLawson  )

You can “follow” this blog by clicking on the bottom right in most browsers or by using the Contact page to send us a message requesting. You will then receive an email alerting you to new posts as they are added.

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