TIDMCRW
RNS Number : 6750Y
Craneware plc
07 March 2017
Craneware plc
("Craneware", "the Group" or the "Company")
Interim Results
7 March 2017 - 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 2016.
Financial Highlights (US dollars)
-- Revenue increased 16% to $26.8m (H1 2016: $23.1m)
-- Adjusted EBITDA1 increased 16% to $8.2m (H1 2016: $7.1m)
-- Profit before tax increased 23% to $7.5m (H1 2016: $6.1m)
-- Adjusted basic EPS increased 15% to 21.6 cents per share (H1 2016: 18.8 cents per share)
-- Strong cash position maintained at $45m (H1 2016: $45m) following dividend payment of $3.2m and investments of
$4.5m made during the period
-- Proposed interim dividend increased 16% to 8.7p (H1 2016: 7.5p 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
-- Consensus for the need to drive value in US Healthcare provides supportive market dynamics
-- Continued growth supported by underlying sales and sales pipelines
-- Expansion of the Value Cycle solution suite on track with initial components of the cloud-based Trisus Enterprise
Value Platform being rolled out during the calendar year
-- Positive progress with Craneware Healthcare Intelligence, a new solution set developed to address the significant
market opportunity for healthcare cost analytics
-- Total visible revenue of over $55.4m for the current year and $155.5m for the three year period to June 2019 (H1
2016 same three year period: $128.1m)
-- Board confident in outlook for the year
Keith Neilson, CEO of Craneware plc commented, "The first half
of the year has been a period of successful execution against our
stated growth strategy, delivering accelerated growth at both the
revenue and adjusted EBITDA level. During the period we have taken
significant strides forward in terms of delivering our expanded
product suite, educating our market place and also further
investing in our people. These ongoing achievements mean we are
well positioned to deliver against a market opportunity that is now
considerably larger than at any other point in our history.
"Against a backdrop of the recent US Presidential election, the
overriding consensus for the need to drive value in US Healthcare
has been re-affirmed. There is ongoing support for the move to
value-based care and increasing consumerism. Our Value Cycle
software suite will continue to help US Healthcare providers meet
the challenges they will face as they navigate the ongoing
re-imbursement model changes.
"These supportive market drivers, our investment for the future
and our continued profitable growth give us confidence in
continuing to deliver value for our stakeholders."
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 McConnachie
Josh Royston
About Craneware
Craneware enables healthcare providers to improve margins and
enhance patient outcomes so they can continue to provide quality
outcomes for all.
Craneware is the leader in automated value cycle solutions that
help US Healthcare provider organisations discover, convert and
optimise assets to achieve best clinical outcomes and financial
performance. Founded in 1999, Craneware is headquartered in
Edinburgh, Scotland with offices in Atlanta, Boston and Phoenix
employing over 250 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
I am pleased to report on a positive first half of the year,
trading slightly ahead of expectations. Revenue increased 16% to
$26.8m (H1 2016: $23.1m) and adjusted EBITDA increased 16% to $8.2m
(H1 2016: $7.1m), showing an acceleration from the growth achieved
in the prior year. It is particularly pleasing to be able to
deliver these levels of growth, whilst continuing to invest for the
future. Healthy levels of cash generation in the period resulted in
cash reserves of $45m (H1 2016: $45m) after returning $3.2m to
shareholders in dividends and investing c.$4.5m into new product
development and our Employee Benefit Trust.
Continued sales success and renewals remaining within the
expected range support continued future growth. In accordance with
the Company's revenue recognition policy, the majority of revenue
resulting from sales in the period will be recognised over future
periods, adding to the Group's long-term visibility of revenue
under contract.
Our new CTO has integrated into the business well. With his
guidance, the expansion of our Value Cycle solutions has continued
during the period. The launch of the first products on the
cloud-based Trisus platform have recently moved from beta users to
revenue generating early adopters and are on track for general
release in the coming months. The expansion of our Craneware
Healthcare Intelligence team and completion of their products are
progressing according to plan.
Although the recent change of administration within the US may
change some of the details of healthcare reform, it is clear that
the fundamentals driving the reform are consistent with those of
the previous administration. A greater number of people need access
to the healthcare system regardless of any pre-existing medical
condition, a greater proportion of the population will soon reach
the end of their working life and the cost of delivering healthcare
is increasing, all putting an unsustainable burden on the US and
its citizens. This is driving the need for hospitals to have
additional insight into their operational, clinical and financial
data - insight our Value Cycle solutions provide, together with the
tools they need to effect change.
We have continued to invest in our teams, organisation and
infrastructure in the US and UK as they are all crucial elements of
our build, buy or partner strategy as we develop our Value Cycle
platform. Craneware Healthcare Intelligence is an example of a cost
effective investment in building a unique cost analytics solution
which enhances our primary purpose, to help US Healthcare providers
improve margins so they can invest in quality patient outcomes.
With our healthy cash balances and a $50m funding facility we
have the resources to execute upon our strategic vision whilst
keeping net debt at reasonable levels should either build or
partnership not be the appropriate option. 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.
With over 75% of our investment in the US and our continued
commitment to grow both our US and UK operations, we remain
positive that the business environment in the US will continue to
be supportive of our Group. While always mindful of the global and
US macro environment, the growth in the period, high levels of
revenue visibility, continued cash generation and a healthy sales
pipeline, gives the Board confidence in meeting market expectations
for the full year.
George Elliott
Chairman
6 March 2017
Introduction
We have enjoyed a strong first half of the year, delivering
against our short and long-term strategic objectives. Trading has
been positive and there is much excitement within the business
around the development of Trisus and our Craneware Healthcare
Intelligence product suites. Through investment in our people,
products and infrastructure, we have put in place the foundations
for long-term growth and scalability. We are now building upon this
as we see our strategy become a reality. Against the backdrop of
the wider macro environment, we have executed strongly and believe
the Company is well positioned for continued growth.
Market & Strategy
The US healthcare landscape continues to evolve. A recent survey
by KPMG found that 50% of hospital groups in the US are already
receiving some form of value-based reimbursement, putting providers
at risk for the cost and quality of care they deliver. This is
clear evidence that the anticipated change towards value-based care
is now a reality. These major, long-term structural changes in
reimbursement and care delivery models require a mission critical,
new way of thinking. A hospital provider must understand and reduce
the cost of care, increase margins so they can invest in future
care delivery and simultaneously improve patient outcomes.
Craneware delivers solutions that help healthcare providers
maintain their financial health so they can concentrate on what
matters most. 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 in operational areas of the hospital, incorporating
cost management 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, providing the best possible
outcomes for all.
Our expansion will be achieved through a combination of
extensions to the current product set; building products through
internal development, targeting potential acquisitions to buy and
partnering with other technology and services companies.
The fundamentals driving a long-term evolving landscape remain
the same, and the nearer-term reforms to healthcare in the US in
light of a change in administration remain consistent with the need
to move toward value-based care - in line with Craneware's
strategy.
The new administration in the US has currently laid out five
principles for their healthcare reform of which Craneware can be a
meaningful component in delivering all of these.
The five principles for Healthcare reform as laid out by
President Trump;
"Firstly, we should ensure that American citizens with
pre-existing conditions have access to coverage, and that we have a
stable transition for those currently enrolled in the healthcare
exchanges.
"Secondly, we should help American citizens purchase their own
coverage, through the use of tax credits and expanded Health
Savings Accounts --- but it must be the plan they want, not the
plan forced on them by the Government.
"Thirdly, we should give State Governors the resources and
flexibility they need with Medicaid to make sure no one is left
out.
"Fourthly, we should implement legal reforms that protect
patients and doctors from unnecessary costs that drive up the price
of insurance - and work to bring down the artificially high price
of drugs and bring them down immediately.
"Finally, the time has come to give Americans the freedom to
purchase health insurance across State lines --- creating a truly
competitive national marketplace that will bring cost down and
provide far better care."
So how does Craneware address the five principles of reform for
providers?
Achieving the first, second and third principles requires
providers to ensure financial strength while investing in care
settings that will often deal with patients who have costly chronic
conditions. Overall, volumes of care demand would be expected to
increase. The proportion of funding for treatment that is routed
from the patient (rather than directly from government agencies or
insurers) to the provider is likely to continue to increase
(driving consumerisation). Overall payments to providers may well
decrease, particularly for low income patients and children,
through a reduction in Medicaid. To that end, care delivered to
these populations must be done in a cost effective way that is
scalable, enables affordable insurance coverage and surety of
collection to allow this model to be sustainable. This has been the
primary purpose of Craneware's core products demonstrated over the
last 18 years.
Within our extended product set there are further examples of
our growing relevance to providers. Craneware Healthcare
Intelligence (CHI) allows providers to gain a greater understanding
of the true cost of individual patient care episodes. This is
critically important as the cost of care can vary dramatically from
patient to patient. When pre-existing conditions are taken into
consideration this variance will be greater. This perhaps
highlights the need for variable pricing for pre-existing
conditions which will most likely be proposed, tied to breaks in
patient coverage due to a change in employment or other
circumstances.
The expected continuation of the increasing trend in
high-deductible health plans and a growing out-of-pocket burden for
patients means providers must find a way to collect this
fast-growing share of revenue. Craneware Trisus Patient Payment
addresses this opportunity by giving providers the ability to
verify eligibility and enrol patients in convenient payment plans
that automatically adjust from estimate to final bill, overall
simplifying the billing process with bill consolidation and text
notifications.
The most likely outcome of the intention to move more control to
State level is block grants for Medicaid. This will add a layer of
financial complexity that increases further as Insurance Companies
from different States can operate across State borders as proposed
in the fifth principle and will introduce a further level of
complexity and sophistication to be required within Enterprise wide
solutions. Craneware is uniquely positioned to provide strategic
guidance through insight gleaned across its nationwide customer
footprint - allowing providers to manage how they handle care when
dealing with insurers in multiple jurisdictions, and deal with
varying reimbursement and differing margins.
The fourth principle appears to support efforts to reduce
malpractice insurance and tort reform, which on the surface doesn't
immediately impact Craneware. However, Craneware Healthcare
Analytics leverages physician variability information to provide
the transparency into clinical behaviour needed to achieve the best
possible patient outcomes, monitor and then educate and reinforce
what "good" looks like for clinical staff, reducing the likelihood
of malpractice. There also appears to be some intent to decrease
regulation with an eye toward measuring "quality" while the
provider still needs to measure activity, productivity and margin -
the primary goal of most Craneware products. Pharmacy Chargelink
and Supply Chargelink help providers tackle high drug costs by
providing insight and tools needed to manage any drug or supply
price change, and suggest cheaper generic and clinical equivalence
alternatives when appropriate.
Craneware's Value Cycle solutions provide the financial insight
and actionable data needed to navigate this evolving landscape and
healthcare reform should continue to drive a growing demand for all
our products.
Approximately a quarter of all US hospitals are existing
Craneware customers, providing us with a valuable platform for
growth. The insight they provide us is what is driving our strategy
and we are committed to providing them with long-term strategic
support.
Product Roadmap
The move to Trisus
We continue to invest in our current solutions set. However,
alongside this investment we have a roadmap to move all these
solutions to a new cloud-based platform, the Trisus Enterprise
Value Platform. Trisus combines revenue integrity, cost management
and decision enablement functionality in a versatile, customisable
solution that fully delivers on Craneware's primary purpose, to
help healthcare providers improve margins and enhance patient
outcomes.
Development of the Trisus platform has progressed well during
the period. The Trisus Patient Payment solution is now available to
early adopters. The solution effectively addresses growing
consumerisation within healthcare. The past five years have seen an
explosion of high-deductible health plans and an increasing
out-of-pocket burden for patients. In many hospitals, patient
payments represents a fast growing proportion of their revenue, yet
is the most difficult and expensive portion to collect with a high
reputational risk associated with pursuing delinquent individuals.
The Trisus Patient Payment Module is a solution designed to
increase patient billing satisfaction through the provision of
flexible, web and mobile-friendly payment options and
simplification of the billing process, while also improving
point-of-service collection rates. Following successful completion
of the early adopter phase we expect full general release later
this calendar year.
Trisus Claims Informatics will be released on the platform in
the current fiscal year. This has just moved from beta phase to the
recruitment of early adopters. Further components of Trisus will be
released throughout the current calendar year and beyond. With the
componentised nature of the Trisus architecture we expect the
roadmap for future releases to accelerate as we complete on these
initial solutions.
Craneware Healthcare Intelligence
In the second half of the last fiscal year, Craneware formed a
new Group company, Craneware Healthcare Intelligence, to develop
and market cost analytics software to the US healthcare industry.
Cost analytics is a vital component within the emerging value cycle
solutions market. The understanding of costs, combined with correct
reimbursement will enable our customers to better understand and
improve their margin; allowing greater resources to be available to
invest and in turn driving better patient outcomes both today and
for the future. With the additional insight our products provide
into Physician variability across the continuum of care, Craneware
is able to demonstrate the tangible and valuable benefits of
combining financial, operational and clinic data particularly in
better patient outcomes. We believe this area of the value cycle
represents a market opportunity several times larger than that of
our existing product portfolio.
Under the leadership of our SVP, Health Analytics, progress has
continued at pace within this newly formed business. We now have a
team of people in place with the initial phase of product
development complete and customer discussions underway. The next
phase of development is to combine our initial models and
algorithms with live hospital data. The results of this phase will
provide us with invaluable insight as we approach product
launch.
Sales and Marketing
We were pleased to secure a good level of new sales in the
period across all strata of hospital. The sales pipeline continues
to be at record highs, 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.
The average length of new hospital contracts continues to be
consistent 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
eleventh consecutive year in the annual "2017 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 look for 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 set of criteria to evaluate acquisition opportunities,
including quality of earnings, strategic fit and product offering.
In addition to the Company's cash reserves, a $50 million funding
facility provides the Company with available resources to carry out
strategic acquisitions if and when these criteria are met.
Financial Review
We are pleased to announce revenues in the period of $26.8m
(H116: $23.1m) a 16% increase. This increase was matched at the
adjusted EBITDA level which also increased 16% to $8.2m (H116:
$7.1m). This has ultimately led to a 15% increase in adjusted
earnings per share to 21.6 cents per share compared with 18.8 cents
per share for this same period last year. All underlying metrics
continue to be in line with our historical norms.
We continue to deliver high levels of cash generation and are on
target to convert 100% of adjusted EBITDA to operating cash over
the full fiscal year. In the period, as is expected, we converted
90% of our adjusted EBITDA to operating cash. From this cash
generation we have:
-- returned $3.2m to our shareholders by way of dividends (H116: $3.1m),
-- paid $3.4m in tax (H116: $1.6m) which includes additional payments on account in the US,
-- invested an additional $1.3m on new product development, in addition to our normal R&D spend, and
-- Invested $3.1m in our Employee Benefit Trust which purchased shares to fulfil future Long Term Incentive
exercises.
We have made these investments whilst maintaining cash reserves
of $45m (H116: $45m) at the period end.
We continue to see a good level of sales which support our
growth expectations. During the period sales were evenly split
between new hospitals and existing customers. The lower percentage
of sales to customers on renewal as compared to other types of sale
is reflective of the lower than usual number of renewals due in the
period and the size of those customers due to renew. This is purely
a factor of timing. Renewal rates at 99% by dollar value are again
within our historical range of 85% to 115% and are reflective of
the number and mix of customers that were due to renew in the
period.
Our Annuity SaaS business model and associated revenue
recognition policy 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 therefore show how visible
revenue for the current and future years is building towards our
expectations.
We now have visibility of revenues of $55.4m for the current
year before any further sales are made in the second half. In
regards to total visible revenue for the three year period 1 July
2016 to 30 June 2019 has grown to $155.5m from $128.1m for the same
three year period at 31 December 2015.
Our total visible revenue of $155.5m comprises $127.9m 'Revenue
under Contract', $27.1m 'Renewal Revenue' and $0.5m of 'Other
Recurring Revenue'. '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).
These high levels of visible revenue provide certainty in
investment decisions. However following the Brexit vote, we saw
significant volatility in exchange rates and as such took the
decision to hedge our sterling requirements for the fiscal year,
thereby providing certainty to the cost side of our investment
decisions as well. We continue to make these 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.
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 $1.27/GBP1 which compares to
$1.53/GBP1 in the corresponding period last year.
Dividend
The Board has resolved to pay an interim dividend of 8.7p (10.7
cents) per ordinary share on 20 April 2017 to those shareholders on
the register as at 31 March 2017 (FY16 Interim dividend 7.5p). The
ex-dividend date is 30 March 2017.
The interim dividend of 8.7p 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 31 March 2017. The exact amount to be paid will be calculated by
reference to the exchange rate to be announced on 31 March 2017.
The interim dividend referred to above in US dollars of 10.7 cents
is given as an example only using the Balance Sheet date exchange
rate of $1.23/GBP1 and may differ from that finally announced.
Outlook
The first half of the year has been a period of successful
execution against our stated growth strategy, delivering
accelerated growth at both the revenue and adjusted EBITDA level.
During the period, we have taken significant strides forward in
terms of delivering our expanded product suite, educating our
market place and further investing in our people. These ongoing
achievements mean we are well positioned to deliver against a
market opportunity that is now considerably larger than at any
other point in our history.
Against a backdrop of the recent US Presidential election, the
overriding consensus for the need to drive value in US Healthcare
has been re-affirmed. There is ongoing support for the move to
value-based care and increasing consumerism. Our Value Cycle
software suite will continue to help US Healthcare providers meet
the challenges they will face as they navigate the ongoing
re-imbursement model changes.
These supportive market drivers, our investment for the future
and our continued profitable growth give us confidence in
continuing to deliver value for our stakeholders.
Keith Neilson Craig Preston
Chief Executive Officer Chief Financial Officer
6 March 2017 6 March 2017
Craneware PLC
Interim Results FY17
Consolidated Statement
of Comprehensive Income
H1
2017 H1 2016 FY 2016
Notes $'000 $'000 $'000
------------------------------------ ------- --------- --------- ---------
Revenue 26,790 23,117 49,846
Cost of sales (1,619) (1,319) (3,011)
--------- --------- ---------
Gross profit 25,171 21,798 46,835
Net operating expenses (17,751) (15,699) (33,024)
--------- --------- ---------
Operating profit 7,420 6,099 13,811
Analysed as:
Adjusted EBITDA(1) 8,217 7,065 15,863
Acquisition costs and share
related transactions (26) (165) (556)
Share-based payments (127) (116) (251)
Depreciation of plant and
equipment (353) (217) (442)
Contingent consideration
on business combination - - 1,005
Amortisation of intangible
assets (291) (468) (1,808)
--------------------------------------------- --------- --------- ---------
Finance income 88 44 112
--------- --------- ---------
Profit before taxation 7,508 6,143 13,923
Tax charge on profit on
ordinary activities (1,884) (1,520) (3,348)
--------- --------- ---------
Profit for the period attributable
to owners of the parent 5,624 4,623 10,525
Other comprehensive income
Items that may be reclassified
subsequently to profit
or loss
Cash flow hedge reserve
movement, net of tax (527) - -
Currency Translation Reserve
movement 183 - -
--------- --------- ---------
Total items that may be
reclassified subsequently
to profit or loss (344) - -
------------------------------------ ------- --------- --------- ---------
Total comprehensive income
attributable to owners
of the parent 5,280 4,623 10,525
--------------------------------------------- --------- --------- ---------
(1) Adjusted EBITDA is defined as operating
profit before, share based payments, depreciation,
amortisation, acquisition costs and share related
transactions.
Earnings per share for the period attributable
to equity holders
- Basic ($ per share) 1a 0.209 0.172 0.394
- *Adjusted Basic ($ per
share)(2) 1a 0.216 0.188 0.429
- Diluted ($ per share) 1b 0.205 0.170 0.389
- *Adjusted Diluted ($
per share)(2) 1b 0.212 0.186 0.423
------------------------------------ ------- --------- --------- ---------
(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 FY17
Consolidated Statement of Changes in Equity
-----------------------------------------------------------------------------------
Share Share Other Retained
Capital Premium Reserves Earnings Total
$'000 $'000 $'000 $'000 $'000
--------------------------- --------- --------- ---------- ---------- --------
At 1 July 2015 536 17,356 378 29,360 47,630
Total comprehensive
income - profit
for the period - - - 4,623 4,623
Transactions with
owners
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
--------------------------- --------- --------- ---------- ---------- --------
Total comprehensive
income - profit
for the period
Transactions with
owners - - - 5,952 5,952
Share-based payments - - 136 210 346
Impact of share
options exercised - 76 (41) (41) 76
Dividend - - - (2,856) (2,856)
At 30 June 2016 536 17,451 555 34,266 52,808
--------------------------- --------- --------- ---------- ---------- --------
Total comprehensive
income - profit
for the period - - - 5,624 5,624
Total other comprehensive
income
Transactions with
owners - - - (344) (344)
Treasury shares
upon consolidation
of employee share
trusts - - - (3,083) (3,083)
Share-based payments - - 127 - 127
Impact of share
options exercised 1 481 (71) 68 479
Dividend - - - (3,246) (3,246)
At 31 December
2016 537 17,932 611 33,285 52,365
--------------------------- --------- --------- ---------- ---------- --------
Craneware PLC
Interim Results FY17
Consolidated Balance Sheet as at
31 December 2016
H1 2017 H1 2016 FY2016
Notes $'000 $'000 $'000
------------------------------ ------- -------- -------- -------
ASSETS
Non-Current Assets
Plant and equipment 1,392 1,205 1,213
Intangible assets 17,510 16,505 16,535
Trade and other receivables 2 4,172 2,527 4,581
Deferred Tax 1,819 1,697 1,685
24,893 21,934 24,014
-------- -------- -------
Current Assets
Trade and other receivables 2 17,679 13,427 20,953
Current tax assets - 79 -
Cash and cash equivalents 45,098 44,980 48,812
62,777 58,486 69,765
-------- -------- -------
Total Assets 87,670 80,420 93,779
------------------------------ ------- -------- -------- -------
EQUITY AND LIABILITIES
Non-Current Liabilities
Deferred income 20 480 4
20 480 4
-------- -------- -------
Current Liabilities
Deferred income 27,649 24,049 28,963
Current tax liabilities 490 1,459 2,353
Trade and other payables 3 7,146 5,142 9,651
35,285 30,650 40,967
-------- -------- -------
Total Liabilities 35,305 31,130 40,971
-------- -------- -------
Equity
Called up share capital 4 537 536 536
Share premium account 17,932 17,375 17,451
Other reserves 611 460 555
Retained earnings 33,285 30,919 34,266
Total Equity 52,365 49,290 52,808
-------- -------- -------
Total Equity and Liabilities 87,670 80,420 93,779
------------------------------ ------- -------- -------- -------
Craneware PLC
Interim Results FY17
Consolidated Statement of Cash Flow for the
six months ended 31 December 2016
H1 H1
2017 2016 FY 2016
Notes $'000 $'000 $'000
------------------------------------- ------ -------- -------- --------
Cash flows from operating
activities
Cash generated from operations 5 7,411 8,771 17,564
Interest received 88 44 112
Tax paid (3,403) (1,620) (2,254)
------------------------------------- ------ -------- -------- --------
Net cash from operating
activities 4,096 7,195 15,422
Cash flows from investing
activities
Purchase of plant and
equipment (512) (182) (418)
Capitalised intangible
assets (1,452) (788) (2,166)
------------------------------------- ------ -------- -------- --------
Net cash used in investing
activities (1,964) (970) (2,584)
Cash flows from financing
activities
Dividends paid to company
shareholders (3,246) (3,097) (5,953)
Proceeds from issuance
of shares 483 20 95
Treasury shares upon consolidation
of employee
Share trusts (3,083) - -
------------------------------------- ------ -------- -------- --------
Net cash used in financing
activities (5,846) (3,077) (5,858)
Net (decrease)/increase
in cash and cash equivalents (3,714) 3,148 6,980
Cash and cash equivalents
at the start of the period 48,812 41,832 41,832
Cash and cash equivalents
at the end of the period 45,098 44,980 48,812
------------------------------------- ------ -------- -------- --------
Craneware PLC
Interim Results FY17
Notes to the Financial Statements
1. Earnings per Share
(a) Basic
Basic earnings per share is calculated by dividing
the profit attributable to equity holders of
the Company by the weighted average number
of ordinary shares in issue during the period.
--------------------------------------------------------------------
H1
H1 2017 2016 FY 2016
--------------------------------------- -------- ------- --------
Profit attributable to equity
holders of the Company ($'000) 5,624 4,623 10,575
Weighted average number of
ordinary shares in issue (thousands) 26,908 26,833 26,838
Basic earnings per share ($
per share) 0.209 0.172 0.394
-------- ------- --------
Profit attributable to equity
holders of the Company ($'000) 5,624 4,623 10,575
Tax adjusted acquisition costs,
share related transactions
and amortisation of acquired
intangibles ($'000) 190 419 937
-------- ------- --------
Adjusted Profit attributable
to equity holders ($'000) 5,814 5,042 11,512
-------- ------- --------
Weighted average number of
ordinary shares in issue (thousands) 26,908 26,833 26,838
Adjusted Basic earnings per
share ($ per share) 0.216 0.188 0.429
-------- ------- --------
(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 2017 2016 FY 2016
--------------------------------------- -------- ------- --------
Profit attributable to equity
holders of the Company ($'000) 5,624 4,623 10,575
Weighted average number of
ordinary shares in issue (thousands) 26,908 26,833 26,838
Adjustments for: - share options
(thousands) 490 329 345
Weighted average number of
ordinary shares for diluted
earnings per share (thousands) 27,397 27,162 27,183
Diluted earnings per share
($ per share) 0.205 0.170 0.389
-------- ------- --------
1. Earnings per share (Cont.)
H1
H1 2017 2016 FY 2016
--------------------------------------- -------- ------- --------
Profit attributable to equity
holders of the Company ($'000) 5,624 4,623 10,575
Tax adjusted acquisition costs,
share related transactions
and amortisation of acquired
intangibles ($'000) 190 419 937
Adjusted Profit attributable
to equity holders ($'000) 5,814 5,042 11,512
-------- ------- --------
Weighted average number of
ordinary shares in issue (thousands) 26,908 26,833 26,838
Adjustments for: - share options
(thousands) 490 329 345
Weighted average number of
ordinary shares for diluted
earnings per share (thousands) 27,397 27,162 27,183
Adjusted Diluted earnings per
share ($ per share) 0.212 0.186 0.423
-------- ------- --------
2. Trade and other receivables
H1
H1 2017 2016 FY 2016
$'000 $'000 $'000
-------------------------------- -------- -------- --------
Trade Receivables 14,389 10,051 16,504
Less: provision for impairment
of trade receivables (1,244) (789) (1,135)
-------- -------- --------
Net trade receivables 13,145 9,262 15,369
Other Receivables 176 90 1,177
Prepayments and accrued income 2,808 3,240 2,950
Deferred Contract Costs 5,722 3,362 6,038
-------- -------- --------
21,851 15,954 25,534
Less non-current receivables:
Deferred Contract Costs (4,172) (2,527) (4,581)
-------- -------- --------
Trade and other receivables 17,679 13,427 20,953
-------- -------- --------
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 2017 2016 FY 2016
$'000 $'000 $'000
-------- ------ --------
Trade Payables 1,247 776 1,473
Social Security and PAYE 205 373 496
Derivatives used for Hedging 658 - -
Other Payables 66 33 63
Accruals 4,970 3,960 7,619
Trade and other payables 7,146 5,142 9,651
------ ------ ------
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 other assets or liabilities have been
measured at fair value.
4. Called up share
capital
H1 2017 H1 2016 FY 2016
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 26,958,488 537 26,836,032 536 26,850,248 536
5. Consolidated Cash Flow generated
from operating activities
Reconciliation of profit before taxation
to net cash inflow from operating
activities:
H1 2017 H1 2016 FY 2016
$'000 $'000 $'000
-------------------------------- -------- -------- --------
Profit before taxation 7,506 6,143 13,923
Finance income (88) (44) (112)
Depreciation on plant
and equipment 353 217 442
Amortisation on intangible
assets 291 468 1,808
Share-based payments 127 116 251
Movements in working
capital:
Decrease/(Increase) in
trade and other receivables 3,682 1,501 (8,065)
(Decrease)/Increase in
trade and other payables (4,460) 370 9,317
Cash generated from operations 7,411 8,771 17,564
-------------------------------- -------- -------- --------
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.
'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 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.
Business combinations
The acquisition of subsidiaries is accounted for using the
purchase method. The cost of the acquisition is measured at the
aggregate of the fair values, at the acquisition date, of assets
given, liabilities incurred or assumed, and the equity issued by
the Group. The consideration transferred includes the fair value of
any assets or liability resulting from a contingent consideration
and acquisition costs are expensed as incurred.
Any contingent consideration to be transferred by the Group is
recognised at fair value at the acquisition date. Subsequent
changes to the fair value of the contingent consideration that is
deemed to be an asset or liability is recognised in accordance with
IAS 39 in the Statement of Comprehensive Income. Contingent
consideration that is classified as equity is not re-measured and
its subsequent settlement is accounted for within equity.
Goodwill arising on the acquisition is recognised as an asset
and initially measured at cost, being the excess of fair value of
the consideration over the Group's assessment of the net fair value
of the identifiable assets and liabilities recognised.
If the Group's assessment of the net fair value of a
subsidiary's assets and liabilities had exceeded the fair value of
the consideration of the business combination then the excess
('negative goodwill') would be recognised in the Statement of
Comprehensive Income immediately. The fair value of the
identifiable assets and liabilities assumed on acquisition are
brought onto the Balance Sheet at their fair value at the date of
acquisition.
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 are 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
Cash and cash equivalents include cash in hand, deposits held
with banks and short term highly liquid investments. 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 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 by use of the Black-Scholes pricing
model as appropriately amended. 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 the Company issues new 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 net operating
expenses and is also included 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 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. 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 EANDKEESXEFF
(END) Dow Jones Newswires
March 07, 2017 02:00 ET (07:00 GMT)
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