TIDMCRW
RNS Number : 3214R
Craneware plc
08 March 2016
Craneware plc
("Craneware", "the Group" or the "Company")
Interim Results
8 March 2016 - 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 2015.
Financial Highlights (US dollars)
-- Value of 'new sales' contracts signed in the period increased 15% compared to H1 2015
-- Revenue increased 7% to $23.1m (H1 2015: $21.6m)
-- Adjusted EBITDA(1) increased 12% to $7.1m (H1 2015: $6.3m)
-- Profit before tax increased 15% to $6.1m (H1 2015: $5.3m)
-- Adjusted basic EPS increased 14% to 18.8 cents per share (H1 2015: 16.5 cents per share)
-- Cash at period end increased 24% to $45m (H1 2015: $36.4m)
-- Proposed interim dividend increased 19% to 7.5p (H1 2015: 6.3p 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
-- Continued sales momentum and record pipeline
-- Positive industry response to the Value Cycle
-- Chargemaster Toolkit named Best in Klas for the 10(th)
consecutive year in "2016 Best in KLAS Awards"
-- Pharmacy ChargeLink, now selling 1:1 with Chargemaster Toolkit
-- Progress on delivering Trisus product roadmap:
o Development of Patient Engagement and Access gateway product
on track
o Reseller agreement signed post half-year end with US based
VestaCare, an automated payment technologies and services company
to offer accelerated payment and patient engagement solutions
-- $7.5m contract win signed post half year end with an operator of 50 US hospitals
Keith Neilson, CEO of Craneware commented:
"Major changes in reimbursement and care delivery models have
made understanding and reducing the cost of care, while providing
quality patient outcomes, mission-critical for every healthcare
provider in the US. With 50% of healthcare payments anticipated to
have a value-based component by 2018, our offerings are expanding
to meet the challenges of this value-driven healthcare market and
pioneer the Value Cycle. We are confident that our position as a
trusted financial performance partner will strengthen and provide
us with the opportunity for accelerated long term growth.
"The strong sales performance in the first half of the year, and
our high levels of recurring revenues coupled with a record sales
pipeline provide us with confidence for the second half of the year
and beyond."
For further information, please contact:
Craneware plc Peel Hunt Alma
+44 (0)131 550 +44 (0)20 7418
3100 8900 44 (0)208 004 4218
Keith Neilson, Dan Webster Caroline Forde
CEO
Craig Preston, Richard Kauffer Hilary Buchanan
CFO
About Craneware
Craneware is the leader in automated value cycle solutions that
help US provider organisations discover, convert and optimise
assets to achieve best clinical outcomes and financial performance.
Founded in 1999, Craneware has headquarters in Edinburgh, Scotland
with offices in Atlanta, Boston and Phoenix employing over 200
staff. Craneware's market-driven, SaaS solutions normalise
disparate data sets, bringing in up-to-date regulatory and
financial compliance data to deliver value at the points where
clinical and operational data transform into financial
transactions, creating actionable insights that enable informed
tactical and strategic decisions. To learn more, visit
craneware.com and thevaluecycle.com.
Chairman Statement
We are pleased to report another positive performance in the
first half of the financial year, delivering strong sales growth
and steady progress with our product expansion strategy. Ongoing
sales success has delivered an increase of 15% in the value of new
sales contracts signed in the period compared to the same period
last year and renewals by dollar value continued at significantly
over 100%. In accordance with the Company's revenue recognition
policy, the majority of revenue resulting from these sales will be
recognised over future periods, adding to the Group's long term
visibility of revenue under contract.
Adjusted EBITDA increased 12% to $7.1m and revenue increased 7%
to $23.1m (H1 2015: $21.6m). High levels of cash generation in the
period resulted in cash reserves of $45m (H115: $36.4m) having
returned $3.1m to shareholders in dividends in the period.
As we approach an era where 50% of all US healthcare payments
will have a value-based component, the Group's strategy is to
expand its offering by providing deeper insight into a broad range
of a hospital operations, enabling hospitals to analyse and manage
data from across their organisation to ensure both enhanced levels
of care as well as increased efficiencies. We will utilise a
combination of in-house development expertise, partnerships and
targeted acquisitions to add solutions that further support our
customers in this new value-based reimbursement environment.
We have made good progress towards delivering this vision in the
first half of the year. Internal operations are being optimised to
support the strategy and our marketing efforts are already
resulting in increased interest around "the value cycle" as it is
adopted as a regular industry blog topic. In January, we were
pleased to announce a funding facility from the Bank of Scotland of
up to $50m, giving us the resources to execute upon our strategic
vision whilst keeping net debt at reasonable levels. As with all
previous potential acquisitions, strict criteria will continue to
be applied to targets to ensure they both deliver against the
product roadmap while being accretive to the financial strength of
the Group.
The reseller agreement with VestaCare, announced post-period
end, is an example of the flexible manner in which we will seek to
enhance our product suite and strategic value to customers. This
partnership, combined with the mobile platform provided by the 2014
acquisition of Kestros, deepens Craneware's reach within the early
stages of Patient Engagement, an area of the healthcare market set
to grow as patients assume a greater level of financial
responsibility for their care and have closer interactions with
their healthcare providers.
With growth in the period in line with management's
expectations, high levels of cash generation and a clear strategic
vision, the Board is confident in meeting market expectations for
the full year and delivering significant growth.
George Elliott
Chairman
7 March 2016
Strategic Report: Operational & Financial Review
We have enjoyed a strong first half of the year, delivering both
operationally and at the strategic level, where we are making
concrete progress on our long-term strategic roadmap.
We have seen another increase in the level of new sales and have
a record pipeline to support accelerated future growth. Importantly
we have experienced good early indicators of support from our
marketplace for the Value Cycle, our vision for the process and
culture by which US healthcare providers pursue quality patient
outcomes and optimal financial performance. A growing number of
tenders now incorporate value-based reimbursement terminology and
our customer discussions are widening away from a focus on the
revenue cycle into how healthcare providers can deliver value-based
care through understanding more about their clinical and
operational, as well as financial, data.
Market Overview
Major changes in reimbursement and care delivery models have
made understanding and reducing the cost of care mission-critical
for every healthcare provider in the US. The new, value-driven
healthcare market in the US is reorienting around best outcomes for
best cost, which means the risks which hospital CFOs now need to
manage are increasing significantly.
We see the main areas of risk as being a) alternative types of
reimbursement models, and b) healthcare consumerisation. Our
strategy is to develop our product suite to directly address these
two areas of risk.
Alternative reimbursement models
The introduction of alternative types of reimbursement models
mean a less predictable cash flow, with payments being tied to
clinical outcome and quality. For example, Medicare recently
announced the finalised rules for the Comprehensive Care Joint
Replacement (CCJR) Program. Under this program the healthcare
provider is now effectively measured on a number of criteria around
the success of the most common joint replacement surgeries (hips
& knees) over a period of 90 days post procedure. The ultimate
payment they receive for all CCJR procedures carried out within the
year are then adjusted according to the effectiveness of the
patients' outcome, taking into account total cost of the procedure
including follow ups. This requires CFOs to balance care, cost and
payment to ensure financial viability.
Healthcare consumerisation
Meanwhile, the introduction of a consumer healthcare model that
shifts significant payment responsibility to the patient, via means
such as high deductible plans, means hospitals that historically
have managed several business relationships (State and Federal
authorities, insurance companies and large employers) for their
reimbursement must now face a considerable business to consumer
(the patient) model. The implications of this new purchaser of
healthcare is a different kind of transparency demand; healthcare
consumerisation.
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In order to be successful in this environment, hospitals will
need to face two challenges: provide competitive pricing for
patients while continuing to deliver optimal clinical outcomes.
Balancing quality outcomes with optimal financial performance will
likely only be achieved through a greater use of data analytics,
and with the increase of high-deductible plans hospitals will need
to use mobile technology to increase the ease of securing payment
from patients. Healthcare organizations in the US will be expected
to be able to measure clinical outcomes and the cost of care at
both a granular and macro level in order to receive proper
reimbursement.
We call 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, the Value Cycle.
Delivering the Value Cycle
Our strategy is to build on the trust and data assets we have
established through our market-leading position in revenue cycle
solutions to expand our product suite. By expanding into the cost
management component of hospital operations and combining this with
data from the revenue cycle we will provide a unique insight into
the management and analysis of clinical and operational data. Our
aim is to provide facilities with the ability to understand the
risk component of managing the healthcare for large community
populations and how most effectively to provide high quality care
in a sustainable financial model. The expansion will be achieved
through a combination of extensions to the current product set,
internal product development, partnerships with other technology
providers and targeted acquisitions.
The business continues to be aligned behind the Value Cycle
strategy, across product development, sales, customer support and
at a management level and will be optimised to be able to deliver
scale with the recent appointment of an organisational design
expert as Executive Vice President of Organisational
Development.
As Craneware's tools are updated and expanded, they will each
sit as a constituent part on a new cloud-based platform, the Trisus
Enterprise Value Suite. Trisus will combine revenue integrity, cost
management and decision enablement functionality in a versatile,
customisable solution that fully delivers on Craneware's primary
purpose to help healthcare systems improve margins and enhance
patient outcomes. Development of the Trisus platform continues with
a release of the first elements of the platform scheduled to take
place during calendar 2017.
Our initial area of focus for expansion is within the area of
patient access and engagement - addressing the growing
consumerisation within healthcare.
Patient Access and Engagement
Development of a new fourth gateway product within the patient
access and engagement area has progressed well in the period, on
track for launch in calendar 2016.
In January 2016, post the period end, the Company announced the
signing of an exclusive value added reseller agreement with
US-based automated payment technologies and services company,
VestaCare. VestaCare's VestaPay technology will be integrated with
Craneware's medical necessity and price estimation products, to
deliver enhanced patient engagement solutions, a key element of
Craneware's product roadmap. These will be delivered via
Craneware's mobile patient engagement platform, which has been
developed following the acquisition of Kestros in 2014.
The enhanced solutions will help providers better address the
financial risks associated with the rapidly changing role of
patient financial responsibility in the era of the Value Cycle. By
integrating with providers' financial systems to adjust patients'
outstanding balances on their accounts in real time, providers can
offer the individual a compassionate, flexible program of
repayments to address patient responsibility, dramatically reducing
the hospitals' exposure to "self-pay" debt. In addition, providers
benefit from improved patient satisfaction, better pricing
transparency and accelerated revenue. Craneware will receive an
annual license fee from customers with an additional revenue share
agreement based on patient collection improvements.
Acquisitions
The Board continues to assess opportunities to complement the
Group's organic growth strategy and increase speed to market for
new products through acquisition. The Board adheres to a rigorous
set of criteria to analyse acquisition opportunities, including
quality of earnings and product offering. The $50 million funding
facility provided by the Bank of Scotland announced previously,
provides the Company with the firepower to carry out strategic
acquisitions when these criteria are met.
Sales and Marketing
On top of the sales success witnessed during the period we were
delighted to secure a significant contract win with a new customer
just after the end of the period. The contract is expected to
deliver $7.5m revenue over the initial five year term. The new
customer is a growing hospital operator and consolidator that
manages in excess of 50 hospitals across multiple US states
primarily in non-urban communities. Chargemaster Corporate
Toolkit(R) will be used by the group to establish and manage
corporate standardisation across its entire portfolio of owned and
managed facilities. This will enable system-wide reporting
efficiencies and the timely submission of accurate claims whilst
managing billing compliance risk.
The sales pipeline continues to be at a record high across all
strata of hospital, providing confidence that we are on the right
path towards accelerated revenue and profit growth in future
years.
The sales mix remained healthy throughout the period with
comparable level of sales between new customers and existing
customers, both mid-contract and at renewal time. Following a
strong performance by our Pharmacy ChargeLink product we saw equal
levels of sales of Chargemaster Toolkit and Pharmacy ChargeLink for
the first time in the period. We would expect to see all families'
percentage of sales split equally in future years, as the Value
Cycle gains further traction.
The average length of new hospital contracts continues to be
in-line with our historical norms of approximately five years.
Where Craneware enters into new product contracts with its existing
customers, contracts are occasionally made co-terminus with the
customer's existing contracts, and as such, the average length of
these contracts remains greater than three years, in line with our
expectations.
Awards
Chargemaster Toolkit(R) was named Category Leader in the
"Revenue Cycle - Chargemaster Management" market category for the
tenth consecutive year in the annual "2015/2016 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.
Financial Review
Revenues increased 7% to $23.1m (H115: $21.6m) and adjusted
EBITDA 12% to $7.1m (H115: $6.3m) for the six month period to 31
December 2015. This has ultimately seen a 14% increase in adjusted
basic earnings per share to 18.8 cents (H115: 16.5 cents). From
this, we continue to see high levels of cash generation with our
adjusted EBITDA to operating cash conversion exceeding 120%. This
has resulted in cash at the period end of $45m (H115: $36.4m).
Whilst it is expected that cash conversion will fluctuate year on
year, our continued focus on a long term average of 100% EBITDA to
operating cash conversion ensures the quality of underlying
earnings.
A further highlight of the period has been the continued
positive sales momentum, which has resulted in the value of new
sales contracts written in the period increasing by 15% as compared
to this same period last year. This achievement was continued
following the period end, with the signing of a significant deal,
announced on 2 February 2016, which is expected to deliver over
$7.5m of revenue over its initial five year term. The Group's
conservative Annuity SaaS business model means the vast majority of
the benefit from these sales are not seen in the period under
review or indeed the current year, instead they add to 'revenue
visibility for future years which support the future growth of the
Group.
The Annuity SaaS revenue recognition model results in software
licence revenue being recognised over the life of the underlying
contract (which for a new hospital sale is an average of five
years) and any associated professional services revenue is
recognised as we deliver the services i.e. on a percentage of
completion basis. The benefit of this conservative revenue
recognition model is it retains focus on the long term growth and
stability of the Group.
At the end of each financial year, the Group reports its Three
Year Visible Revenue KPI. This KPI shows the strength of the
underlying annuity revenue stream that is building as a result of
sales and these revenue recognition policies. At the subsequent
half year reporting period, we report how that metric for the same
three year period has progressed and built. This demonstrates both
the effect of new sales and renewals in the period, although it is
only a three year 'snapshot' which does not fully demonstrate the
value of the underlying contracted revenue or the annuity. The
total visible revenue for the three year period 1 July 2015 to 30
June 2018 has grown during this six month period to $130.8m from
$123.4m at 30 June 2015. This comprises $107.4m 'Revenue under
Contract', $22.3m 'Renewal Revenue' and $1.0m of 'Other Recurring
Revenue'. Rolling this KPI forward to 31 January 2016 to take into
account new sales contracts signed in January, including the
significant contract win detailed above, the total visible revenue
for the same three year period has increased to $136.8m.
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'Revenue under Contract', relates to revenues that are supported
by underlying contracts. 'Renewal Revenue' relates to the amount of
revenue which is potentially available for renewal and could be
recognised in each fiscal year provided the underlying contracts
are renewed. In calculating this, we assume a 100% dollar value
renewal level. As we sign renewal contracts for on average over
three years, as the renewals occur the aggregated related revenue
for all of the three years shown 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). We
normally expect to see this KPI fluctuate year on year within our
historic range being 85% to 115%.
In the period we have seen this renewal rate by dollar value
exceed 115%. Whilst this reflects the renewal success in the period
we do not believe it alters our expectations of our normal range of
85% to 115%. As previously flagged, this period saw a lower than
usual number of customers due to renew.
We continue to target our investment as appropriate for the
future growth of the Group, whilst ensuring the efficiency of all
expenditures. This has contributed to our adjusted EBITDA margin
which for the period is 30% as compared to 29% in the same period
in the prior year. Ultimately the increase in EBITDA has resulted
in the adjusted basic EPS increasing by 14% to 18.8 cents per share
(H115: 16.5 cents) and adjusted diluted EPS increasing to 18.6
cents (H115: 16.4 cents). The adjustments we make to both these
metrics are those normally expected and include costs related to
acquisition and share activity in the period.
The Group continues to maintain a strong balance sheet and
significant cash reserves of $45m ($36.4m at 31 December 2014 and
$41.8m at 30 June 2015). The cash levels reported are after
returning $3.1m to shareholders by way of dividends and tax
payments of $1.6m in the period.
In our trading update on 22 January 2016 we also announced the
Group had secured a funding facility from the Bank of Scotland of
up to $50m. This combined with the Group's cash reserves provide
opportunities for further future investment and enables the Board
to continue to investigate strategic opportunities to further its
growth strategy. During the period under review, no draw down of
this facility was made.
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 purchases,
denominated in Sterling. The average exchange rate for the Company
during the reporting period was $1.53/GBP1 which was compares to
$1.63/GBP1 in the corresponding period last year.
Dividend
The Board has resolved to pay an interim dividend of 7.5p (11.1
cents) per ordinary share in the Company on 1 April 2016 to those
shareholders on the register as at 18 March 2016 (FY15 Interim
dividend 6.3p). The ex-dividend date is 17 March 2016.
The interim dividend of 7.5p 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 18 March 2016. The exact amount to be paid will be calculated by
reference to the exchange rate to be announced on 18 March 2016.
The interim dividend referred to above in US dollars of 11.1 cents
is given as an example only using the Balance Sheet date exchange
rate of $1.48/GBP1 and may differ from that finally announced.
Outlook
Major changes in reimbursement and care delivery models have
made understanding and reducing the cost of care, while providing
quality patient outcomes, mission-critical for every healthcare
provider in the US. With 50% of healthcare payments anticipated to
have a value-based component by 2018, our offerings are expanding
to meet the challenges of this value-driven healthcare market and
pioneer the Value Cycle. We are confident that our position as a
trusted financial performance partner will strengthen and provide
us with the opportunity for accelerated long term growth.
The strong sales performance in the first half of the year, our
high levels of recurring revenues coupled with a record sales
pipeline provide us with confidence for the second half of the year
and beyond.
Keith Neilson Craig Preston
Chief Executive Officer Chief Financial Officer
7 March 2016 7 March 2016
Craneware PLC
Interim Results FY16
Consolidated Statement
of Comprehensive Income
H1
2016 H1 2015 FY 2015
Notes $'000 $'000 $'000
------------------------------------ ------- --------- --------- ---------
Revenue 23,117 21,573 44,817
Cost of sales (1,319) (1,181) (2,421)
--------- --------- ---------
Gross profit 21,798 20,392 42,396
Net operating expenses (15,699) (15,179) (29,984)
--------- --------- ---------
Operating profit 6,099 5,213 12,412
Analysed as:
Adjusted EBITDA(1) 7,065 6,293 14,356
Acquisition costs and share
related transactions (165) (154) (219)
Share-based payments (116) (117) (247)
Depreciation of plant and
equipment (217) (259) (467)
Amortisation of intangible
assets (468) (550) (1,011)
--------------------------------------------- --------- --------- ---------
Finance income 44 41 84
--------- --------- ---------
Profit before taxation 6,143 5,254 12,496
Tax charge on profit on
ordinary activities (1,520) (1,260) (3,108)
--------- --------- ---------
Profit for the period attributable
to owners of the parent 4,623 3,994 9,388
--------------------------------------------- --------- --------- ---------
Total comprehensive income
attributable to owners
of the parent 4,623 3,994 9,388
--------------------------------------------- --------- --------- ---------
(1) Adjusted EBITDA is defined as operating
profit before, share based payments, depreciation,
amortisation, acquisition costs and share related
transactions.
Earnings per share for the period attributable
to equity holders
- Basic ($ per share) 1a 0.172 0.149 0.350
- *Adjusted Basic ($ per
share)(2) 1a 0.188 0.165 0.378
- Diluted ($ per share) 1b 0.170 0.148 0.348
- *Adjusted Diluted ($
per share)(2) 1b 0.186 0.164 0.375
------------------------------------ ------- --------- --------- ---------
(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 FY16
Consolidated Statement of Changes in Equity
----------------------------------------------------------------------------------
Share Share Other Retained
Capital Premium Reserves Earnings Total
$'000 $'000 $'000 $'000 $'000
-------------------------- --------- --------- ---------- ---------- --------
At 1 July 2014 539 15,496 235 28,646 44,916
Total comprehensive
income - profit
for the period - - - 3,994 3,994
Transactions with
owners
Share-based payments - - 117 - 117
Impact of share
options exercised - 40 (54) 54 40
Issue of Ordinary
shares related
to business combination 4 1,820 - - 1,824
Buy back of Ordinary
shares (7) (3,572) - - (3,579)
Dividend - - - (2,864) (2,864)
-------------------------- --------- --------- ---------- ---------- --------
At 31 December
2014 536 13,784 298 29,830 44,448
-------------------------- --------- --------- ---------- ---------- --------
Total comprehensive
income - profit
for the period
Transactions with
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owners - - - 5,394 5,394
Share-based payments - - 130 182 312
Impact of share
options exercised - 3,572 (50) (3,522) -
Dividend - - - (2,524) (2,524)
At 30 June 2015 536 17,356 378 29,360 47,630
-------------------------- --------- --------- ---------- ---------- --------
Total comprehensive
income - profit
for the period
Transactions with
owners - - - 4,623 4,623
Share-based payments - - 115 - 115
Impact of share
options exercised - 19 (33) 33 19
Dividend - - - (3,097) (3,097)
At 31 December
2015 536 17,375 460 30,919 49,290
-------------------------- --------- --------- ---------- ---------- --------
Craneware PLC
Interim Results FY16
Consolidated Balance Sheet as at
31 December 2015
H1 2016 H1 2015 FY2015
Notes $'000 $'000 $'000
------------------------------ ------ -------- -------- -------
ASSETS
Non-Current Assets
Plant and equipment 1,205 1,147 1,242
Intangible assets 16,505 15,956 16,196
Trade and other receivables 2 2,527 2,193 2,432
Deferred Tax 1,697 1,810 1,510
21,934 21,106 21,380
-------- -------- -------
Current Assets
Trade and other receivables 2 13,427 16,041 15,010
Current tax assets 79 110 -
Cash and cash equivalents 44,980 36,374 41,832
58,486 52,525 56,842
-------- -------- -------
Total Assets 80,420 73,631 78,222
------------------------------ ------ -------- -------- -------
EQUITY AND LIABILITIES
Non-Current Liabilities
Deferred income 480 1,355 819
480 1,355 819
-------- -------- -------
Current Liabilities
Deferred income 24,049 22,254 22,460
Current tax liabilities 1,459 1,351 1,289
Trade and other payables 5,142 4,223 6,024
30,650 27,828 29,773
-------- -------- -------
Total Liabilities 31,130 29,183 30,592
-------- -------- -------
Equity
Called up share capital 3 536 536 536
Share premium account 17,375 13,784 17,356
Other reserves 460 298 378
Retained earnings 30,919 29,830 29,360
Total Equity 49,290 44,448 47,630
-------- -------- -------
Total Equity and Liabilities 80,420 73,631 78,222
------------------------------ ------ -------- -------- -------
Craneware PLC
Interim Results FY16
Consolidated Statement of Cash Flow for the
six months ended 31 December 2015
H1 H1
2016 2015 FY 2015
Notes $'000 $'000 $'000
--------------------------------- ------ -------- -------- --------
Cash flows from operating
activities
Cash generated from operations 4 8,771 11,772 22,025
Interest received 44 41 84
Tax paid (1,620) (1,218) (2,527)
--------------------------------- ------ -------- -------- --------
Net cash from operating
activities 7,195 10,595 19,582
Cash flows from investing
activities
Purchase of plant and
equipment (182) (74) (378)
Acquisition of subsidiary,
net of cash acquired 5 - (247) (247)
Capitalised intangible
assets (788) (110) (811)
--------------------------------- ------ -------- -------- --------
Net cash used in investing
activities (970) (431) (1,436)
Cash flows from financing
activities
Dividends paid to company
shareholders (3,097) (2,864) (5,388)
Buy back of Ordinary shares - (3,579) (3,579)
Proceeds from issuance
of shares 20 40 40
--------------------------------- ------ -------- -------- --------
Net cash used in financing
activities (3,077) (6,403) (8,927)
Net increase in cash and
cash equivalents 3,148 3,761 9,219
Cash and cash equivalents
at the start of the period 41,832 32,613 32,613
Cash and cash equivalents
at the end of the period 44,980 36,374 41,832
--------------------------------- ------ -------- -------- --------
Craneware PLC
Interim Results FY16
Notes to the Financial Statements
1. Earnings per Share
(a) Basic
Basic earnings per share is calculated by dividing
the profit attributable to equity holders of
the Company by the weighted average number
of ordinary shares in issue during the period.
--------------------------------------------------------------------
H1
H1 2016 2015 FY 2015
--------------------------------------- -------- ------- --------
Profit attributable to equity
holders of the Company ($'000) 4,623 3,994 9,388
Weighted average number of
ordinary shares in issue (thousands) 26,833 26,797 26,815
Basic earnings per share ($
per share) 0.172 0.149 0.350
-------- ------- --------
Profit attributable to equity
holders of the Company ($'000) 4,623 3,994 9,388
Tax adjusted acquisition costs,
share related transactions
and amortisation of acquired
intangibles ($'000) 419 422 749
-------- ------- --------
Adjusted Profit attributable
to equity holders ($'000) 5,042 4,416 10,137
-------- ------- --------
Weighted average number of
ordinary shares in issue (thousands) 26,833 26,797 26,815
Adjusted Basic earnings per
share ($ per share) 0.188 0.165 0.378
-------- ------- --------
(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 2016 2015 FY 2015
--------------------------------------- -------- ------- --------
Profit attributable to equity
holders of the Company ($'000) 4,623 3,994 9,388
Weighted average number of
ordinary shares in issue (thousands) 26,833 26,797 26,815
Adjustments for: - share options
(thousands) 329 162 188
Weighted average number of
ordinary shares for diluted
earnings per share (thousands) 27,162 26,959 27,003
Diluted earnings per share
($ per share) 0.170 0.148 0.348
-------- ------- --------
1. Earnings per Share (Cont.)
H1
H1 2016 2015 FY 2015
--------------------------------------- -------- ------- --------
Profit attributable to equity
holders of the Company ($'000) 4,623 3,994 9,388
Tax adjusted acquisition costs,
share related transactions
and amortisation of acquired
intangibles ($'000) 419 422 749
Adjusted Profit attributable
to equity holders ($'000) 5,042 4,416 10,137
-------- ------- --------
Weighted average number of
ordinary shares in issue (thousands) 26,833 26,797 26,815
Adjustments for: - share options
(thousands) 329 162 188
Weighted average number of
ordinary shares for diluted
earnings per share (thousands) 27,162 26,959 27,003
Adjusted Diluted earnings per
share ($ per share) 0.186 0.164 0.375
-------- ------- --------
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2. Trade and other receivables
H1
H1 2016 2015 FY 2015
$'000 $'000 $'000
-------------------------------- -------- -------- --------
Trade Receivables 10,051 11,975 11,917
Less: provision for impairment
of trade receivables (789) (778) (779)
-------- -------- --------
Net trade receivables 9,262 11,197 11,138
Other Receivables 90 95 99
Prepayments and accrued income 3,240 4,128 3,032
Deferred Contract Costs 3,362 2,814 3,173
-------- -------- --------
15,954 18,234 17,442
Less non-current receivables:
Deferred Contract Costs (2,527) (2,193) (2,432)
-------- -------- --------
Trade and other receivables 13,427 16,041 15,010
-------- -------- --------
There is no material difference between the fair value of trade
and other receivables and the book value stated above.
3. Called up share
capital
H1 2016 H1 2015 FY 2015
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 26,836,032 536 26,832,582 536 26,832,582 536
4. Consolidated Cash Flow generated
from operating activities
Reconciliation of profit before taxation
to net cash inflow from operating
activities:
H1 2016 H1 2015 FY 2015
$'000 $'000 $'000
-------------------------------- -------- -------- --------
Profit before taxation 6,143 5,254 12,496
Finance income (44) (41) (84)
Depreciation on plant
and equipment 217 259 467
Amortisation on intangible
assets 468 550 1,011
Share-based payments 116 117 247
Movements in working
capital:
(Decrease in trade and
other receivables 1,501 4,635 5,422
(Increase in trade and
other payables 370 998 2,466
Cash generated from operations 8,771 11,772 22,025
-------------------------------- -------- -------- --------
5. Acquisition of subsidiary: Kestros Ltd
On 26(th) August 2014, the Company acquired 100% of the issued
share capital of Kestros Ltd. The total consideration for the
acquisition along with the fair value of the identified assets and
assumed liabilities is shown below:
Fair Value
Adjustments Provisional
Book Value 31-Dec-14 Fair
Recognised amounts of Value
identifiable assets acquired $'000 $'000
and liabilities assumed $'000
-------------------------------- ------------- ------------- --------------
2 - 2
101 1,720 1,821
33 - 33
43 - 43
(35) - (35)
------------- ------------- --------------
144 1,720 1,864
------------- ------------- --------------
250
--------------
2,114
--------------
Tangibles fixed assets
Plant and Equipment
Intangibles assets
Proprietary Software
Other assets and liabilities
Trade and other receivables
Bank and cash balances
Trade and other payables
Goodwill
Fair Value
Satisfied by $'000
-------------------------------------------------------------- ------------------
Cash 290
Ordinary Shares issued - 211,539 shares
at $8.623 (GBP5.20) 1,824
------------------
2,114
------------------
Bank balances and cash acquired 43
Cash consideration (290)
-------------------------------------------------------------- ------------------
Net Cash on acquisition (247)
-------------------------------------------------------------- ------------------
The value of the equity consideration is subject
to revenue performance criteria through to 31
July 2016 and in the unlikely event that these
Revenue targets are not meet then a proportion
of the consideration is repayable. Management
believe that the revenue targets are easily
achievable and as such the Fair Value of the
transaction is deemed to be equal to the amount
paid at acquisition. The acquisition costs,
including all due diligence costs that relate
to the transaction have been expensed as operating
costs in compliance with IFRS 3 (revised). Had
Kestros Ltd been consolidated from 1 July 2014,
the consolidated statement of comprehensive
income would be materially unaffected.
Goodwill of $250,000 has been recognised on
acquisition and is attributable to the assembled
workforce.
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 2016. 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 a
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 ($1.4802/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
general and 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.
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.
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