TIDMCRW
RNS Number : 7619G
Craneware plc
06 March 2018
Craneware plc
("Craneware", "the Group" or the "Company")
Interim Results
6 March 2018 - Craneware (AIM: CRW.L), the market leader in
Value Cycle solutions for the US healthcare market, announces its
unaudited results for the six months ended 31 December 2017.
Financial Highlights (US dollars)
-- Revenue increased 16% to $31.1m (H1 2017: $26.8m)
-- Adjusted EBITDA(1) increased 18% to $9.7m (H1 2017: $8.2m)
-- Profit before tax increased 16% to $8.7m (H1 2017: $7.5m)
-- Adjusted basic EPS increased 18% to 25.4 cents per share (H1 2017: 21.6 cents per share)
-- Cash position of $52m (H1 2017: $45m) following dividend payment of $4.1m
-- Proposed interim dividend increased 15% to 10p (H1 2017: 8.7p per share)
1. Adjusted EBITDA refers to earnings before interest, tax,
depreciation, amortisation, share based payments and acquisition
and share transaction related costs.
Operational Highlights
-- Two significant contracts secured in the half, with a further two announced post period end
-- Continued supportive market environment as the US healthcare
market evolves towards value-based care, with a critical dependency
on accurate financial and operating data
-- Continued high levels of customer acquisition and retention
-- Increasing market engagement with our newly launched cloud-based platform, Trisus(TM)
-- Strong sales and opportunities across the product suite and
across all classes of hospital providers, including for the first
Trisus product: Trisus Claims Informatics
-- Early adopters reporting positive results for our new Cost
Analytics and Resource Efficiency software (Trisus CARE), the next
Trisus software release
Outlook
-- Record sales pipeline for the current financial year
-- Total visible revenue of over $63.1m for the current
financial year and $179.4m for the three-year period to June 2020
(H1 2017 same three year period: $149.1m)
-- Board confident in outlook for the year
Keith Neilson, CEO of Craneware plc commented, "Our extensive
expertise and experience in the US healthcare market means we are
well positioned to provide actionable insight for our customers. By
combining their financial and operational data in unique ways, our
solutions ensure they can continue to thrive in the new era of
value-based care.
"The investments made into Craneware's product suite and
operations in recent years means we are now delivering growth rates
which are outperforming our industry. We are seeing growing
interest across our enlarged product suite and are particularly
pleased with the high levels of interest and opportunities across
our customer base for our newly launched cloud-based platform,
Trisus.
"With an ongoing, growing market opportunity, a record sales
pipeline and increasing long-term revenue visibility, we enter the
second half of the year with great confidence for the future and
the ongoing success of the business."
For further information, please contact:
Craneware Peel Hunt Alma
plc
+44 (0)131 +44 (0)20 +44 (0)208
550 3100 7418 8900 004 4218
Keith Neilson, Dan Webster Caroline Forde
CEO
Craig Preston, Adrian Trimmings Hilary Buchanan
CFO George Sellar Robyn Fisher
About Craneware
Craneware (AIM: CRW.L) is the market leader in software and
supporting services that help healthcare providers improve margins
so they can invest in quality patient outcomes. The Company's
flagship solution, Chargemaster Toolkit(R), has earned the KLAS
No.1 ranking in Revenue Cycle - Chargemaster Management since 2006
and is part of Craneware's value cycle management suite, which
includes patient engagement, charge capture and pricing, claims
analysis, revenue recovery and retention, and cost analytics
solutions.
Founded in 1999, Craneware is headquartered in Edinburgh,
Scotland with offices in Atlanta, Boston and Pittsburgh employing
over 250 staff.
Learn more at www.craneware.com.
Chairman's Statement
We are delighted to confirm another very positive trading period
for the Group. We are seeing initial returns from investments made
in recent years, with the Group delivering a growth rate which is
outperforming the broader US healthcare IT market. Revenue
increased 16% to $31.1m (H1 2017: $26.8m) and adjusted EBITDA
increased 18% to $9.7m (H1 2017: $8.2m). Continued cash generation
resulted in cash reserves of $52m at the end of the period (H1
2017: $45m) after returning $4.1m to shareholders in dividends and
investing a further $2.1m into new product development.
Continued sales success, combined with renewals remaining above
100% (by dollar value) has delivered very high levels of revenue
visibility that supports our continued future growth. Importantly,
we are seeing increasing evidence of the validation of our strategy
- the move into the Value Cycle. This has seen investment of
significant resources into the expansion of our product suite into
complementary areas of hospital operations, providing tools to
ensure our customers gain a greater understanding of their
financial and operational data. In an era of increasing scrutiny
and the need to drive value in healthcare, this increased insight
will be crucial to ensure our customers' long-term financial health
and their ability to deliver better clinical outcomes for all their
communities.
We announced two large contracts in the first half of the year;
the first entails us hosting one of our solutions for the use of
all the customer's 75 hospitals, the second sees the expansion of
an existing relationship with the customer implementing additional
Craneware solutions as they expand their hospital network, both
further demonstrating our growing strategic value to our
customers.
Following the launch at the end of the last financial year of
Trisus Claims Informatics, which was the first product on our newly
developed cloud-based platform, we are pleased to report we have
seen good initial sales in the period and continue to build a
healthy pipeline of opportunities. We are particularly pleased to
note how both our existing customer base and the wider healthcare
provider market have responded positively to the technological
evolution of the Craneware solution set, delivered on the Trisus
platform. This provides us with confidence in the successful
long-term transition of all our products to the platform.
Alongside the expansion of our core product suite and the move
to Trisus, we are also further expanding our offering through the
provision of cost analytics, via our Group Company, Craneware
Healthcare Intelligence (CHI). The aim of the business is to
provide our customers with an understanding of the true cost of
every episode of care given to their patients. CHI has built a cost
analytics platform that has the ability to identify and analyse
charges from each patient encounter from beginning to end. Early
adopters have now integrated their live data into the platform and
are reporting some exciting results. We remain on track for the
launch of the initial product this calendar year.
With our healthy cash balance and a $50m funding facility, we
have the resources to execute upon our strategic vision should an
acquisition target arise. Strict criteria continue to be applied to
potential acquisition targets to ensure that they enhance our
product roadmap and are accretive to the financial strength of the
Group.
The sales momentum we saw in the first half of this financial
year has continued into the second half, with two further
significant contracts announced in February 2018. The sales
pipeline continues at record levels, with opportunities across all
sizes and types of hospitals and for all areas of our product
suite.
We remain positive that the business environment in the US will
continue to be supportive for Craneware, given our unique ability
to support our customers. Our expanded market opportunity,
accelerating growth rates, record sales pipeline and increasing
long-term revenue visibility provide the Board with confidence in
achieving a successful outcome to the year as a whole and
beyond.
George Elliott
Chairman
5 March 2018
Strategic Report
Introduction
We have enjoyed another strong first half to the year,
delivering increasing revenues and EBITDA growth while continuing
to invest in the expansion of the business. In addition to the
financial success, the sales performance was very positive, and
this has continued into the second half of our financial year
adding to our future visible revenues, supporting further
growth.
The US healthcare industry continues to evolve towards the
provision of value-based care, putting the emphasis onto the
healthcare provider to ensure they are delivering the right care,
in the right place and at the right cost. This is a significant
shift away from the historic fee-for-service environment and
requires every hospital CFO to have a far greater understanding of
their costs and the value they provide.
The combination of our significant expertise and experience in
the US healthcare industry and continued investment into the
expansion of our product suite means we are well positioned to
provide the insight our customers need to thrive in this new era of
value-based care.
Market and Strategy
The need to drive value in healthcare, and the challenges this
brings, remains a key topic of focus in the US, providing an
ongoing supportive market environment for Craneware due to our
ability to help our customers meet these challenges. The Value
Cycle is the process and culture by which healthcare providers
pursue quality patient outcomes and optimal financial performance,
through the management of clinical, operational and financial
assets. Craneware's Value Cycle solutions provide the financial
insight and actionable data needed to navigate this evolving
landscape and ongoing healthcare reform.
Our strategy is to continue to build on our established
market-leading position in revenue cycle solutions and expand our
product suite coverage of the Value Cycle. By expanding our
offerings into operational areas of the hospital, incorporating
cost management and combining this with data from the revenue
cycle, we will provide a comprehensive insight into the management
and analysis of clinical and operational data, providing the best
possible outcomes for all.
The expansion of our solutions is being achieved through a
combination of extensions to the current product set; building
products through internal development; targeting potential
acquisitions and partnering with other technology and services
companies.
Product Roadmap
We continue to make progress in all fours areas of our product
roadmap: the development of our cloud-based Trisus Enterprise Value
Platform; the continued evolution and support of our existing
market-leading product suite as we migrate to Trisus; the
development of new products to sit upon the Trisus Platform; and
the development of our cost analytics software, Trisus CARE. All of
these solutions will increase our key areas of the Value Cycle and
therefore addressable market.
Trisus Enterprise Value Platform
In 2017 we launched the Trisus Enterprise Value platform. This
cloud-based platform enables a suite of solutions for healthcare
providers to identify and take action on risks related to revenue,
cost, and compliance. It is designed to be versatile and
expandable, growing alongside our customers as the healthcare
industry continues to evolve. The platform provides an environment
to gather, process, and deliver data across the continuum of care
with an open architecture and common components, allowing for
synergies between applications.
The first product on the platform, Trisus Claims Informatics,
was released in June 2017, with a good level of early sales secured
during the first half of the current financial year. This product
enables hospitals and healthcare systems to drive revenue growth
and increase compliance by automating claims review and analysing
claims for completeness, accuracy, and patterns of changing
charging behaviour.
We are executing on a roadmap to migrate all our solutions onto
the Trisus platform, as well as continuing to look for innovative
combinations of our data sets into new unique product offerings. As
part of this roadmap we expect to see further hybrid solutions
combining the best of existing software and elements of the Trisus
platform; new Trisus products; and new early adopter Trisus enabled
versions of other existing solutions; all on track for releases
throughout the current calendar year and beyond.
Cost Analytics and Resource Efficiency (Trisus CARE)
In the second half of financial year 2016, Craneware formed a
new wholly owned Group company, Craneware Healthcare Intelligence,
LLC, to develop and market Cost Analytics and Resource Efficiency
(CARE) software to the US healthcare industry. CARE is a vital
component within the emerging value cycle solutions market. The
insight into costs, combined with correct reimbursement will enable
our customers to better understand and improve their margins.
Most hospitals' accounting systems are set up to collect
financial data in aggregate and average metrics. This structure,
while useful in a fee-for-service system, does not adequately
support the shift to a value-based, quality-centric healthcare
delivery system. Our CARE platform unites cost and operational
information across the provider organisation, delivering revenue,
cost, and operational information for each patient encounter. It
enables understanding of the critical components of operational
metrics and expenses across the entire episode of care.
We believe this area of the value cycle represents a market
opportunity several times larger than that of our existing product
portfolio.
The first early adopters of the platform have now combined our
initial models and algorithms with live hospital data. The results
of this phase will provide us with invaluable insight as we
approach general launch of the initial product scheduled for later
this year.
Sales and Marketing
We have seen very positive sales momentum, securing a high level
of new sales in the period across all sizes and classes of hospital
and type of hospital customer. This sales momentum has continued
into the second half of our financial year and the sales pipeline
continues to be at record highs, all combining to provide further
confidence of accelerated revenue and profit growth by supplying
products that are meeting real world customer needs.
The average length of new hospital contracts continues to be
consistent with our historical norms of five years. At the end of
the contract term, we expect and continue to see our renewal rates
remain at their current high levels (well above 100% by dollar
value), along with incremental additional sales, as customers move
to the improvements brought to them by the Trisus platform.
Significant contract wins
We were delighted to secure two significant contracts during the
period. The first, announced in October 2017 was a renewal and
significant expansion of an existing contract with a growing
hospital operator in the US. This $6m win sees the extension of a
relationship that has been in place since 2007, with the renewal of
the customer's existing value cycle solutions and the roll out of
these same solutions to further facilities that have been recently
acquired by this hospital network. The contract is expected to
deliver $3.5m of incremental revenue, in addition to the $2.5m of
'renewal' revenue, over this new five year term as the hospital
network rolls out these solutions at its additional facilities
demonstrating the significant relevance of Craneware as the market
continues its consolidation trend.
The second contract, announced in early January 2018, is
expected to deliver in excess of $16m of revenue over its initial
five year term as Craneware's Value Cycle solutions are utilised by
over 75 facilities across the network. Having previously contracted
to utilise Craneware's software in a small number of its hospitals,
the customer carried out an assessment of the potential financial
and operational impact Craneware's solution could bring to its
entire network. This has resulted in the roll out of Craneware's
software across the entire network, with Craneware hosting the
solution as part of the network's strategic financial performance
plans. This demonstrates both the relevance of Craneware at an
enterprise-wide level with one of the largest healthcare operators
in the US and the importance of Craneware Value Cycle solutions to
new customers that are looking for innovation to help them realise
their strategic financial goals as they evolve in a value-based
world.
We continue to see further sales successes in the second half of
our financial year with two additional significant contracts
announced in February 2018. These contracts add further new
hospitals to Craneware's customer base, the first with a large blue
chip healthcare provider, the second with an innovative surgical
hospital, together demonstrating the strategic value Craneware's
solutions can bring to all sizes and classes of US hospital
providers. Combined, these contracts are expected to add a further
$8.5m to revenue over their initial terms.
Awards
Chargemaster Toolkit(R) was named Category Leader in the
"Revenue Cycle - Chargemaster Management" market category for the
twelfth consecutive year in the annual "2018 Best in KLAS Awards:
Software & Services." KLAS's annual "Best in KLAS" report
provides unique insight gathered from thousands of healthcare
organisations across the US. The report includes client
satisfaction scores and benchmark performance metrics.
Acquisitions
The Board continues to assess acquisition opportunities to
complement the Group's organic growth strategy and increase our
product coverage of the Value Cycle. The Board adheres to a
rigorous criteria to evaluate acquisition opportunities, including
quality of earnings, strategic fit and product offering. In
addition to the Company's cash reserves, an undrawn $50 million
funding facility provides the Company with available resources to
carry out strategic acquisitions if, and when, these criteria are
met.
Financial Review
Revenue
We are pleased to announce an increase in revenue in the period
of 16% to $31.1m (H117: $26.8m). Our prudent approach to revenue
recognition means this increase in revenue does not fully represent
the sales success we have seen in the period. The vast majority of
the benefit of these sales will be reported in future year's
revenue, as a result of our Annuity SaaS business model.
Our Annuity SaaS business model and associated revenue
recognition policy is designed to focus on the long-term growth and
stability of the Group. It does this, in part, by taking the
software licence associated to each new sale and recognising the
revenue as the customer receives the benefit of the software during
the life of the underlying contract (which for a new hospital sale
is an average of five years). Our software sales also include
professional services and this revenue is recognised as we deliver
the services i.e. on a percentage of completion basis. There are a
number of benefits of this conservative revenue recognition model
including high levels of cash conversion, high levels of future
years' revenue visibility and, as we renew our customer base at
over 100% (by dollar value), each new sale adds to the Group's
"annuity base of revenue".
We have seen a strong level of sales growth to both existing and
new customers that will continue to support future revenue growth
expectations as these sales are converted to Group revenue via our
Annuity SaaS business model. We have continued to renew those
customers whose multi-year contracts came to an end in the period
with a higher percentage of cross sell (new products) and upsell
(contract price increases due to the passage of time). Renewal
rates by dollar value are above the top end of our historical range
(normally 85% to 115%) as a result.
Earnings
The increase in revenue, combined with efficient investments has
delivered an associated increase in the adjusted EBITDA of 18% to
$9.7m (H117: $8.2m). This has ultimately led to a 18% increase in
adjusted earnings per share to 25.4 cents per share compared with
21.6 cents per share for this same period last year. All underlying
metrics continue to be in line with, or above, our historical
norms.
Cash
We continue to maintain healthy cash reserves which at the
period end were $52m (H117: $45m) after returning $4.1m to our
shareholders through dividends and investing $2.1m in new product
development which has been capitalised. We continue to target
conversion of 100% of adjusted EBITDA to operating cash over the
full financial year. Following exceptionally high levels of cash
collection in the prior year, we anticipated lower cash conversion
levels in the period under review, however the conversion of 62% of
our adjusted EBITDA to operating cash, results in cash conversion
levels of over 100% over the last 12 months, which more accurately
reflects our cash conversion performance. We have continued to
collect our period end debtors with a further $8.2m collected since
the period end.
As a result of these significant cash reserves, continued high
levels of cash conversion and management's ongoing confidence in
the performance of the Group, in January 2018 we returned $15.4m to
shareholders through a share buy-back. Through this process, the
Company re-purchased and then cancelled 628,869 ordinary shares at
a price of GBP17.69 ($24.45) per share.
Revenue Visibility
To demonstrate the high levels of visible revenue generated
through new sales and our business model, at the end of each
financial year, the Group reports it's Three Year Visible Revenue
KPI. This KPI also demonstrates the underlying annuity revenue
stream that is also building as a result of sales and these revenue
recognition policies. At each subsequent half year reporting
period, we report how that metric for the same three year period
has progressed and therefore show how visible revenue for the
current and future years is building towards our expectations.
We now have visibility of revenues of $63.1m for the current
year before any further sales (including those announced in
February 2018) are made in the second half. In regard to total
visible revenue for the three year period 1 July 2017 to 30 June
2020 this has grown 20% to $179.4m from $149.1m for the same
forward three year period at H1 2017.
Our total visible revenue of $179.4m comprises $146.1m 'Revenue
under Contract', $32.7m 'Renewal Revenue' and $0.6m of 'Other
Recurring Revenue'. 'Revenue under Contract', relates to revenues
that are supported by ongoing underlying contracts. 'Renewal
Revenue' relates to the amount of revenue which is potentially
available for renewal and will be recognised in that financial year
provided the underlying contracts are renewed. In calculating this,
we assume a 100% dollar value renewal level. As we sign the renewal
contracts the aggregated related revenue for the new multi-year
term moves from 'Renewal Revenues' to 'Revenue under Contract'. The
final element is 'Other Recurring Revenue', this relates to revenue
that is not subject to long term contracts, which can be billable
'per transaction' or a set monthly amount and is usually invoiced
on a monthly basis, however it is reasonable to expect it to be
recurring in nature.
As we show our 'Renewal Revenue' in our revenue visibility graph
at 100% of dollar value, we track and publish our 'Renewal Rate by
dollar value KPI' to ensure our 100% assumption in producing our
revenue visibility KPI is still appropriate. This KPI measures the
average value of customers renewing in the relevant period,
including cross sell and upsell to those renewing customers.
R&D
These high levels of visible revenue provide certainty in
investment decisions. These investments include our investment in
R&D of $7.8m (H117: $6.3m) of which $5.7m relates to products
currently available for sale and as such has been expensed in the
period. The balance of $2.1m (H117: $1.5m) relates to new product
development and as such has been capitalised. We continue to make
these and other investment decisions as appropriate for the future
growth of the Group, whilst consistently ensuring the efficiency of
all expenditures. This has contributed to our adjusted EBITDA
margin, which for the period is 31%. The adjustments we make to
both EBITDA and EPS are those normally expected and include costs
related to acquisition and share activity in the period.
Currency
We continue to report the results (and hold the cash reserves)
of the Group in US Dollars, whilst having approximately twenty five
percent of our costs, mainly our UK employees and UK purchases,
denominated in Sterling. The average exchange rate for the Company
during the reporting period was $1.32/GBP1 which compares to
$1.27/GBP1 in the corresponding period last year.
Dividend
The Board has resolved to pay an interim dividend of 10p (13.5
cents) per ordinary share on 20 April 2018 to those shareholders on
the register as at 3 April 2018 (FY17 Interim dividend 8.7p). The
ex-dividend date is 29 March 2018.
The interim dividend of 10p per share is capable of being paid
in US dollars subject to a shareholder having registered to receive
their dividend in US dollars under the Company's Dividend Currency
Election, or who has registered to do so by the close of business
on 3 April 2018. The exact amount to be paid will be calculated by
reference to the exchange rate to be announced on 3 April 2018. The
interim dividend referred to above in US dollars of 13.5 cents is
given as an example only using the Balance Sheet date exchange rate
of $1.35/GBP1 and may differ from that finally announced.
Outlook
Our extensive expertise and experience in the US healthcare
market means we are well positioned to provide actionable insight
for our customers. By combining their financial and operational
data in unique ways, our solutions ensure they can continue to
thrive in the new era of value-based care.
The investments made into Craneware's product suite and
operations in recent years means we are now delivering growth rates
which are outperforming our industry. We are seeing growing
interest across our enlarged product suite and are particularly
pleased with the high levels of interest and opportunities across
our customer base for our newly launched cloud-based platform,
Trisus.
With an ongoing, growing market opportunity, a record sales
pipeline and increasing long-term revenue visibility, we enter the
second half of the financial year with great confidence for the
future and the ongoing success of the business.
Keith Neilson Craig Preston
Chief Executive Officer Chief Financial Officer
5 March 2018 5 March 2018
Craneware PLC
Interim Results FY18
Consolidated Statement
of Comprehensive Income
H1
H1 2018 2017 FY 2017
Notes $'000 $'000 $'000
------------------------------------ ------- --------- --------- ---------
Revenue 31,138 26,790 57,796
Cost of sales (1,593) (1,619) (3,582)
--------- --------- ---------
Gross profit 29,545 25,171 54,214
Net operating expenses (21,048) (17,751) (37,588)
--------- --------- ---------
Operating profit 8,497 7,420 16,626
Analysed as:
Adjusted EBITDA(1) 9,689 8,217 18,002
Acquisition costs and share
related transactions - (26) -
Share-based payments (165) (127) (283)
Depreciation of plant and
equipment (292) (353) (478)
Amortisation of intangible
assets (735) (291) (615)
--------------------------------------------- --------- --------- ---------
Finance income 169 88 258
--------- --------- ---------
Profit before taxation 8,666 7,508 16,884
Tax charge on profit on
ordinary activities (1,990) (1,884) (3,359)
--------- --------- ---------
Profit for the period attributable
to owners of the parent 6,676 5,624 13,525
Other comprehensive income
Items that may be reclassified
subsequently to profit
or loss
Cash flow hedge reserve
movement, net of tax - (527) -
Currency Translation Reserve
movement (19) 183 40
--------- --------- ---------
Total items that may be
reclassified subsequently
to profit or loss (19) (344) 40
--------------------------------------------- --------- --------- ---------
Total comprehensive income
attributable to owners
of the parent 6,657 5,280 13,565
--------------------------------------------- --------- --------- ---------
(1) Adjusted EBITDA is defined as operating
profit before, share based payments, depreciation,
amortisation, acquisition costs and share related
transactions.
Earnings per share for the period attributable
to equity holders
- Basic ($ per share) 1a 0.248 0.209 0.502
- *Adjusted Basic ($ per
share)(2) 1a 0.254 0.216 0.514
- Diluted ($ per share) 1b 0.242 0.205 0.491
- *Adjusted Diluted ($
per share)(2) 1b 0.248 0.212 0.503
------------------------------------ ------- --------- --------- ---------
(2) Adjusted Earnings per share calculations allow for the tax
adjusted acquisition costs and share related transactions together
with amortisation on acquired intangible assets to form a better
comparison of the underlying performance with previous periods.
Craneware PLC
Interim Results FY18
Consolidated Statement of Changes in Equity
-----------------------------------------------------------------------------------
Share Share Other Retained
Capital Premium Reserves Earnings Total
$'000 $'000 $'000 $'000 $'000
--------------------------- --------- --------- ---------- ---------- --------
At 1 July 2016 536 17,451 555 34,266 52,808
Total comprehensive
income - profit
for the period - - - 5,624 5,624
Total other comprehensive
income - - - (344) (344)
Transactions with
owners
Company shares
acquired by employee
benefit trust - - - (3,083) (3,083)
Share-based payments - - 127 - 127
Impact of share
options exercised
/ lapsed 1 481 (71) 68 479
Dividend - - - (3,246) (3,246)
--------------------------- --------- --------- ---------- ---------- --------
At 31 December
2016 537 17,932 611 33,285 52,365
--------------------------- --------- --------- ---------- ---------- --------
Total comprehensive
income - profit
for the period - - - 7,901 7,901
Total other comprehensive
income - - - 384 384
Transactions with
owners
Share-based payments - - 392 1,078 1,470
Impact of share
options exercised
/ lapsed - 42 (45) 348 345
Dividend - - - (3,110) (3,110)
At 30 June 2017 537 17,974 958 39,886 59,355
--------------------------- --------- --------- ---------- ---------- --------
Total comprehensive
income - profit
for the period - - - 6,676 6,676
Total other comprehensive
income
Transactions with
owners - - - (19) (19)
Share-based payments - - 480 814 1,294
Impact of share
options exercised
/ lapsed - (2) (7) - (9)
Dividend - - - (4,066) (4,066)
At 31 December
2017 537 17,972 1,431 43,291 63,231
--------------------------- --------- --------- ---------- ---------- --------
Craneware PLC
Interim Results FY18
Consolidated Balance Sheet as at
31 December 2017
H1 2018 H1 2017 FY2017
Notes $'000 $'000 $'000
------------------------------ ------- -------- -------- -------
ASSETS
Non-Current Assets
Plant and equipment 1,264 1,392 1,375
Intangible assets 21,542 17,510 19,845
Trade and other receivables 2 4,683 4,172 4,278
Deferred Tax 4,073 1,819 3,102
31,562 24,893 28,600
-------- -------- -------
Current Assets
Trade and other receivables 2 22,356 17,679 15,381
Cash and cash equivalents 52,205 45,098 53,170
74,561 62,777 68,551
-------- -------- -------
Total Assets 106,123 87,670 97,151
------------------------------ ------- -------- -------- -------
EQUITY AND LIABILITIES
Non-Current Liabilities
Deferred income 48 20 -
48 20 -
-------- -------- -------
Current Liabilities
Deferred income 32,173 27,649 29,803
Current tax liabilities 1,531 490 198
Trade and other payables 3 9,140 7,146 7,795
42,844 35,285 37,796
-------- -------- -------
Total Liabilities 42,892 35,305 37,796
-------- -------- -------
Equity
Called up share capital 4 537 537 537
Share premium account 17,972 17,932 17,974
Other reserves 1,431 611 958
Retained earnings 43,291 33,285 39,886
Total Equity 63,231 52,365 59,355
-------- -------- -------
Total Equity and Liabilities 106,123 87,670 97,151
------------------------------ ------- -------- -------- -------
Craneware PLC
Interim Results FY18
Consolidated Statement of Cash Flow for the
six months ended 31 December 2017
H1 H1
2018 2017 FY 2017
Notes $'000 $'000 $'000
------------------------------------- ------ -------- -------- --------
Cash flows from operating
activities
Cash generated from operations 5 6,046 7,411 23,068
Interest received 169 88 258
Tax paid (821) (3,403) (5,474)
------------------------------------- ------ -------- -------- --------
Net cash from operating
activities 5,394 4,096 17,852
Cash flows from investing
activities
Purchase of plant and
equipment (183) (512) (654)
Capitalised intangible
assets (2,110) (1,452) (3,925)
------------------------------------- ------ -------- -------- --------
Net cash used in investing
activities (2,293) (1,964) (4,579)
Cash flows from financing
activities
Dividends paid to company
shareholders (4,066) (3,246) (6,356)
Proceeds from issuance
of shares - 483 524
Treasury shares upon consolidation
of employee
Share trusts - (3,083) (3,083)
------------------------------------- ------ -------- -------- --------
Net cash used in financing
activities (4,066) (5,846) (8,915)
Net (decrease)/increase
in cash and cash equivalents (965) (3,714) 4,358
Cash and cash equivalents
at the start of the period 53,170 48,812 48,812
Cash and cash equivalents
at the end of the period 52,205 45,098 53,170
------------------------------------- ------ -------- -------- --------
Craneware PLC
Interim Results FY18
Notes to the Financial Statements
1. Earnings per Share
(a) Basic
Basic earnings per share is calculated by dividing
the profit attributable to equity holders of
the Company by the weighted average number
of ordinary shares in issue during the period.
--------------------------------------------------------------------
H1
H1 2018 2017 FY 2017
--------------------------------------- -------- ------- --------
Profit attributable to equity
holders of the Company ($'000) 6,676 5,624 13,525
Weighted average number of
ordinary shares in issue (thousands) 26,962 26,908 26,934
Basic earnings per share ($
per share) 0.248 0.209 0.502
-------- ------- --------
Profit attributable to equity
holders of the Company ($'000) 6,676 5,624 13,525
Tax adjusted acquisition costs,
share related transactions
and amortisation of acquired
intangibles ($'000) 165 190 329
-------- ------- --------
Adjusted Profit attributable
to equity holders ($'000) 6,841 5,814 13,854
-------- ------- --------
Weighted average number of
ordinary shares in issue (thousands) 26,962 26,908 26,934
Adjusted Basic earnings per
share ($ per share) 0.254 0.216 0.514
-------- ------- --------
(b) Diluted
For diluted earnings per share, the weighted
average number of ordinary shares calculated
above is adjusted to assume conversion of all
dilutive potential ordinary shares. The Group
has one category of dilutive potential ordinary
shares, being those granted to Directors and
employees under the share option scheme.
--------------------------------------------------------------------
H1
H1 2018 2017 FY 2017
--------------------------------------- -------- ------- --------
Profit attributable to equity
holders of the Company ($'000) 6,676 5,624 13,525
Weighted average number of
ordinary shares in issue (thousands) 26,962 26,908 26,934
Adjustments for: - share options
(thousands) 613 490 590
Weighted average number of
ordinary shares for diluted
earnings per share (thousands) 27,575 27,397 27,524
Diluted earnings per share
($ per share) 0.242 0.205 0.491
-------- ------- --------
1. Earnings per share (Cont.)
H1
H1 2018 2017 FY 2017
--------------------------------------- -------- ------- --------
Profit attributable to equity
holders of the Company ($'000) 6,676 5,624 13,525
Tax adjusted acquisition costs,
share related transactions
and amortisation of acquired
intangibles ($'000) 165 190 329
Adjusted Profit attributable
to equity holders ($'000) 6,841 5,814 13,854
-------- ------- --------
Weighted average number of
ordinary shares in issue (thousands) 26,962 26,908 26,934
Adjustments for: - share options
(thousands) 613 490 590
Weighted average number of
ordinary shares for diluted
earnings per share (thousands) 27,575 27,397 27,524
Adjusted Diluted earnings per
share ($ per share) 0.248 0.212 0.503
-------- ------- --------
2. Trade and other receivables
H1
H1 2018 2017 FY 2017
$'000 $'000 $'000
-------------------------------- -------- -------- --------
Trade Receivables 19,556 14,389 13,102
Less: provision for impairment
of trade receivables (1,630) (1,244) (1,353)
-------- -------- --------
Net trade receivables 17,926 13,145 11,749
Other Receivables 288 176 144
Prepayments and accrued income 2,212 2,808 1,826
Deferred Contract Costs 6,613 5,722 5,940
-------- -------- --------
27,039 21,851 19,659
Less non-current receivables:
Deferred Contract Costs (4,683) (4,172) (4,278)
-------- -------- --------
Trade and other receivables 22,356 17,679 15,381
-------- -------- --------
There is no material difference between the fair value of trade
and other receivables and the book value stated above.
3. Trade and other payables
H1
H1 2018 2017 FY 2017
$'000 $'000 $'000
-------- ------ --------
Trade Payables 493 1,247 759
Social Security and PAYE 327 205 54
Derivatives used for Hedging - 658 -
Other Payables 124 66 47
Accruals 8,196 4,970 6,935
Trade and other payables 9,140 7,146 7,795
------ ------ ------
Derivatives held for hedging have been measured at fair value.
The inputs used in determining the fair value are based on
observable market data therefore the balances are categorised as
level 2 under IFRS 13. No derivatives have been entered into in the
current reporting period. No other assets or liabilities have been
measured at fair value.
4. Called up share
capital
H1 2018 H1 2017 FY 2014
Number $'000 Number $'000 Number $'000
---------------------- ----------- ------ ----------- ------ ----------- ------
Authorised
Equity share capital
Ordinary shares
of 1p each 50,000,000 1,014 50,000,000 1,014 50,000,000 1,014
Allotted called-up
and fully paid
Equity share capital
Ordinary shares
of 1p each 26,961,709 537 26,961,709 537 26,961,709 537
5. Consolidated Cash Flow generated
from operating activities
Reconciliation of profit before taxation
to net cash inflow from operating
activities:
H1 2018 H1 2017 FY 2017
$'000 $'000 $'000
-------------------------------- -------- -------- --------
Profit before taxation 8,666 7,506 16,884
Finance income (169) (88) (258)
Depreciation on plant
and equipment 292 353 478
Amortisation on intangible
assets 735 291 615
Share-based payments 165 127 283
Movements in working
capital:
(Increase)/Decrease in
trade and other receivables (7,380) 3,682 6,146
Increase/(Decrease) in
trade and other payables 3,737 (4,460) (1,080)
Cash generated from operations 6,046 7,411 23,068
-------------------------------- -------- -------- --------
6. Basis of Preparation
The interim financial statements are unaudited and do not
constitute statutory accounts as defined in S435 of the Companies
Act 2006. These statements have been prepared applying accounting
policies that were applied in the preparation of the Group's
consolidated accounts for the year ended 30th June 2017. Those
accounts, with an unqualified audit report, have been delivered to
the Registrar of Companies.
7. Segmental Information
The Directors consider that the Group operates in predominantly
one business segment, being the creation of software sold entirely
to the US Healthcare Industry, and that there are therefore no
additional segmental disclosures to be made in these financial
statements.
8. Significant Accounting Policies
The significant accounting policies adopted in the preparation
of these statements are set out below.
Reporting Currency
The Directors consider that as the Group's revenues are
primarily denominated in US dollars the principal functional
currency is the US dollar. The Group's financial statements are
therefore prepared in US dollars.
Currency Translation
Transactions denominated in foreign currencies are translated
into US dollars at the rate of exchange ruling at the date of the
transaction. Monetary assets and liabilities expressed in foreign
currencies are translated into US dollars at rates of exchange
ruling at the Balance Sheet date ($1.3459/GBP1). Exchange gains or
losses arising upon subsequent settlement of the transactions and
from translation at the Balance Sheet date, are included within the
related category of expense where separately identifiable, or in
administrative expenses.
Revenue Recognition
The Group follows the principles of IAS 18, "Revenue
Recognition", in determining appropriate revenue recognition
policies. In principle revenue is recognised to the extent that it
is probable that the economic benefits associated with the
transaction will flow into the Group.
Revenue is derived from sales of, and distribution agreements
relating to, software licenses and professional services (including
installation). Revenue is recognised when (i) persuasive evidence
of an arrangement exists; (ii) the customer has access and right to
use our software; (iii) the sales price can be reasonably measured;
and (iv) collectability is reasonably assured.
'White-labelling' or other 'Paid for development work' is
generally provided on a fixed price basis and as such revenue is
recognised based on the percentage completion or delivery of the
relevant project. Where percentage completion is used it is
estimated based on the total number of hours performed on the
project compared to the total number of hours expected to complete
the project. Where contracts underlying these projects contain
material obligations, revenue is deferred and only recognised when
all the obligations under the engagement have been fulfilled.
Revenue from standard licensed products which are not modified
to meet the specific requirements of each customer is recognised
from the point at which the customer has access and right to use
our software. This right to use software will be for the period
covered under contract and, as a result our annuity based revenue
model, recognises the licensed software revenue over the life of
this contract. This policy is consistent with the Company's
products providing customers with a service through the delivery
of, and access to, software solutions (Software-as-a-Service
("SaaS")), and results in revenue being recognised over the period
that these services are delivered to customers. Incremental costs
directly attributable in securing the contract are charged equally
over the life of the contract and as a consequence are matched to
revenue recognised. Any deferred contract costs are included in
both current and non-current trade and other receivables.
Revenue from all professional services is recognised as the
applicable services are provided. Where professional services
engagements contain material obligation, revenue is recognised when
all the obligations under the engagement have been fulfilled. Where
professional services engagements are provided on a fixed price
basis, revenue is recognised based on the percentage completion of
the relevant engagement. Percentage completion is estimated based
on the total number of hours performed on the project compared to
the total number of hours expected to complete the project.
Software and professional services sold via a distribution
agreement will normally follow the above recognition policies.
Should any contracts contain non-standard clauses, revenue
recognition will be in accordance with the underlying contractual
terms which will normally result in recognition of revenue being
deferred until all material obligations are satisfied.
The excess of amounts invoiced over revenue recognised are
included in deferred income. If the amount of revenue recognised
exceeds the amount invoiced the excess is included within accrued
income.
Intangible Assets
(a) Goodwill
Goodwill arising on consolidation represents the excess of the
cost of acquisition over the fair value of the identifiable assets
and liabilities of a subsidiary at the date of acquisition.
Goodwill is capitalised and recognised as a non-current asset in
accordance with IFRS 3 and is tested for impairment annually, or on
such occasions that events or changes in circumstances indicate
that the value might be impaired.
Goodwill is allocated to cash-generating units for the purpose
of impairment testing. The allocation is made to those
cash-generating units that are expected to benefit from the
business combination in which the goodwill arose.
(b) Proprietary software
Proprietary software acquired in a business combination is
recognised at fair value at the acquisition date. Proprietary
software has a finite life and is carried at cost less accumulated
amortisation. Amortisation is calculated using the straight-line
method to allocate the associated costs over their estimated useful
lives of 5 years.
(c) Contractual Customer relationships
Contractual customer relationships acquired in a business
combination are recognised at fair value at the acquisition date.
The contractual customer relations have a finite useful economic
life and are carried at cost less accumulated amortisation.
Amortisation is calculated using the straight-line method over the
expected life of the customer relationship which has been assessed
as 10 years.
(d) Research and Development Expenditure
Expenditure associated with developing and maintaining the
Group's software products is recognised as incurred. Where,
however, new product development projects are technically feasible,
production and sale is intended, a market exists, expenditure can
be measured reliably, and sufficient resources are available to
complete such projects, development expenditure is capitalised
until initial commercialisation of the product, and thereafter
amortised on a straight-line basis over its estimated useful life,
which has been assessed as 5 years. Staff costs and specific third
party costs involved with the development of the software are
included within amounts capitalised.
(e) Computer software
Costs associated with acquiring computer software and licensed
to-use technology are capitalised as incurred. They are amortised
on a straight-line basis over their useful economic life which is
typically 3 to 5 years.
Impairment of non-financial assets
At each reporting date the Group considers the carrying amount
of its tangible and intangible assets including goodwill to
determine whether there is any indication that those assets have
suffered an impairment loss. If there is such an indication, the
recoverable amount of the asset is estimated in order to determine
the extent of the impairment loss (if any) through determining the
value in use of the cash generating unit that the asset relates to.
Where it is not possible to estimate the recoverable amount of an
individual asset, the Group estimates the recoverable amount of the
cash generating unit to which the asset belongs.
If the recoverable amount of an asset is estimated to be less
than its carrying amount, the impairment loss is recognised as an
expense.
Where an impairment loss subsequently reverses, the carrying
amount of the asset is increased to the revised estimate of its
recoverable amount, but so that the increased carrying amount does
not exceed the carrying amount that would have been determined had
no impairment loss been recognised for the asset. A reversal of an
impairment loss is recognised as income immediately. Impairment
losses relating to goodwill are not reversed.
Cash and Cash Equivalents
For the purpose of the Statement of Cash flow, cash and cash
equivalents comprise of cash on hand, deposits held with banks and
short term high liquid investments.
Share-Based Payments and Taxation Implications
The Group grants share options and / or conditional share awards
to certain employees. In accordance with IFRS 2, "Share Based
Payments", equity-settled share based payments are measured at fair
value at the date of grant. Fair value is measured using the
Black-Scholes pricing model or the Monte Carlo pricing model, as
appropriately amended, taking into account the terms and conditions
of the share based awards. The fair value determined at the date of
grant of the equity-settled share based payments is expensed on a
straight-line basis over the vesting period, based on the Group's
estimate of the number of shares that will eventually vest.
Non-market vesting conditions are included in assumptions about the
number of options that are expected to vest. At the end of each
reporting period, the entity revises its estimates of the number of
options that are expected to vest based on the non-market vesting
conditions. It recognises the impact of the revision to original
estimates, if any, in the Statement of Comprehensive Income, with a
corresponding adjustment to equity. When the options are exercised
and are satisfied by new issued shares, the proceeds received net
of any directly attributable transaction costs are credited to
share capital and share premium.
The share based payments charge is included in 'operating
expenses' with a corresponding increase in 'Other reserves'.
In the UK and the US, the Group is entitled to a tax deduction
for amounts treated as compensation on exercise of certain employee
share options and on the vesting of conditional share awards under
each jurisdiction's tax rules. A compensation expense is recorded
in the Group's Statement of Comprehensive Income over the period
from the grant date to the vesting date of the relevant options and
conditional share awards. As there is a temporary difference
between the accounting and tax bases a deferred tax asset is
recorded. The deferred tax asset arising is calculated by comparing
the estimated amount of tax deduction to be obtained in the future
(based on the Company's share price at the Balance Sheet date) with
the cumulative amount of the compensation expense recorded in the
Statement of Comprehensive Income. If the amount of estimated
future tax deduction exceeds the cumulative amount of the
remuneration expense at the statutory rate, the excess is recorded
directly in equity against retained earnings.
9. Availability of announcement and Half Yearly Financial
Report
Copies of this announcement are available on the Company's
website, www.craneware.com. Copies of the Interim Report will be
posted to shareholders, downloadable from the Company's website and
available from the registered office of the Company shortly.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR EANDSEEPPEFF
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