REG - Craneware plc - Half-year Report
Craneware plc
("Craneware" or the "Company" or the "Group")
Interim Results
5 March 2019 - 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 2018.
Financial Highlights (US dollars)
· Revenue increased 15% to $35.8m (H1 2018: $31.1m)
· Adjusted EBITDA1 increased 20% to $11.6m (H1 2018: $9.7m)
· Profit before tax increased 7% to $9.3m (H1 2018: $8.7m)
· Adjusted basic EPS increased 19% to 30.2 cents per share (H1 2018: 25.4 cents per share)
· Cash position of $38.7m (H1 2018: $52.2m), following significant returns to shareholders and investments in the period
· Proposed interim dividend increased 10% to 11p (H1 2018: 10p 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
· Supportive market environment as the US healthcare market evolves towards value-based care, with a critical dependency on accurate financial and operating data
· Strong sales activity and opportunities across the product suite and across all classes of hospital providers
· Increasing market engagement with our newly launched cloud-based platform, Trisus™:
o With 600 hospitals represented at the Craneware Healthcare Summit, 50% of customers that attended are looking to transfer to the Trisus platform within twelve months
· First three Trisus products are now available on general release with a fourth scheduled for release in the second half of the financial year
Outlook
· Strong sales pipeline for the current financial year
· Total visible revenue over $70.0m for the current financial year and $196.2m for the three-year period to June 2021 (H1 2018 same three year period: $174.3m)
· Board confident in outlook for the current year and beyond
Keith Neilson, CEO of Craneware plc commented, "We are delighted to report another strong set of results, delivering against our growth strategy. The strength of our trading performance to date and double-digit rate of growth demonstrate the ongoing momentum we are experiencing in the business and the growing market opportunity we see.
"As we enter the second half of the financial year we do so with excitement as we continue to build the business in line with the large market opportunity available to us. We believe that the breadth of our customer base and the quantity and quality of data within our solutions gives us the opportunity to sit at the heart of the move to value-based economics; collating and analysing the information that will support hospital-wide decision making and ultimately have a positive impact on the quality of healthcare.
"Our growing market opportunity, the strength of our sales pipeline and increasing long-term revenue visibility, mean we enter the second half of the financial year with great confidence for the future and the ongoing success of Craneware."
For further information, please contact:
Craneware plc
Peel Hunt
Investec Bank
Alma
(NOMAD & Joint Broker)
(Joint Broker)
(Financial PR)
+44 (0)131 550 3100
+44 (0)20 7418 8900
+44 (0)20 7597 5970
+44 (0)203 405 0212
Keith Neilson, CEO
Dan Webster
Patrick Robb
Caroline Forde
Craig Preston, CFO
George Sellar
Sebastian Lawrence
Hilary Buchanan
Guy Pengelley
Henry Reast
Helena Bogle
About Craneware
Craneware develops and provides financial improvement & operational optimisation software that enables US 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 and Pittsburgh employing over 320 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's Statement
We are delighted to confirm another very positive trading period for the Group, delivering strong financial results and continued execution of our growth strategy. Revenue increased 15% to $35.8m (H1 2018: $31.1m) and adjusted EBITDA1 increased 20% to $11.6m (H1 2018: $9.7m). Compared to H1 2018, cash reserves have reduced (albeit remain healthy) from $52m to $38.7m following a $15.4m share buyback completed in January 2018 and further investments in the period. Operating cash conversion of adjusted EBITDA remains strong and was in line with the Company's target of 100% over a 12 month period, with a further $10m of the December 2018 outstanding receivables collected post period end. Having completed the share buy back in January 2018, $4.7m was returned to shareholders in dividends, commission payments increased corresponding to the previous record sales year and investments of $9.1m in research & development (including $4.4m which has been capitalised) were made, all within the period. Sales successes, combined with renewals continuing above 100% (by dollar value) have delivered high levels of revenue visibility that support our continued future growth ambitions.
It is clear that Craneware has an exciting opportunity to support healthcare providers in the transition to value-based care and we continue to make good progress with the expansion of our offering to facilitate the Value Cycle. Developments of note in the half include the progress towards launch of two further products on our cloud-based Trisus platform and continued positive results from the first two customers for our Trisus Healthcare Intelligence platform. With almost the entirety of our existing customer base now able to access the power of our new cloud-based platform alongside our existing on-premise solutions via the Trisus Bridge, we are confident in the successful long-term transition of all our products to the new platform.
We are continuing the expansion of our core product suite and its move to Trisus. Combining these solutions with the data that the Craneware software has collected over the past twenty years and the strong relationships we have forged with our customers gives us the opportunity to sit at the heart of the transition taking place in the US healthcare industry. Our solutions are providing genuine insight into the economics of healthcare provision.
Strict criteria continue to be applied to potential acquisition targets to ensure they enhance our product roadmap and are accretive to the financial strength of the Group. With our healthy cash balance, financial position and a $50m funding facility, we are in a strong position to execute upon our strategic vision.
Our expanding market opportunity, double digit growth rates, strong sales pipeline and increasing long-term revenue visibility provide the Board with confidence in achieving a successful outcome to the current year and beyond.
George Elliott
Chairman
4 March 2019
Strategic Report
Once again, the investments we have made into our people, products and operations have resulted in another strong trading performance in the first half of the year. The combination of our significant expertise and experience in the US healthcare industry, the data that our solutions have gathered, and the continued investment into the expansion of our product suite means we are well positioned to provide the insight our customers need to thrive in this new era of value-based care and make a meaningful impact on the quality of US healthcare.
Market and Strategy
The ongoing evolution of the US healthcare industry towards the provision of value-based care puts the emphasis onto the healthcare provider to ensure they are delivering the right care, in the right place and at the right cost for the best patient outcome. This is a significant shift away from the historic fee-for-service environment (transactional based per episode of care) and requires every hospital to have a far greater understanding of their costs, the value they provide and their impact on the total cost of care.
The need to drive value in healthcare, and the challenges this brings, provide an ongoing supportive environment for Craneware due to our ability to help our customers meet these challenges.
Our strategy is to continue to build on our established market-leading position in revenue cycle solutions to expand our product suite coverage of the Value Cycle. The Value Cycle is the process and culture by which healthcare providers pursue quality patient outcomes and optimal financial performance, through the management of clinical, operational and financial data assets. By expanding our offerings into operational areas of the hospital, incorporating cost management and combining this with data from the revenue cycle, we will provide a comprehensive insight into the management and analysis of clinical and operational data, providing the best possible outcomes for all.
The expansion of our solutions is being achieved through a combination of extensions to the current product set; building products through internal development; targeting potential acquisitions and partnering with other technology and services companies.
The breadth of our offering, combined with 20 years of data within a sophisticated cloud platform, provides us with a strong competitive position across our target product areas.
Product Roadmap
We continue to make progress in all areas of our product roadmap: the development of our cloud-based Trisus Enterprise Value Platform; the continued evolution and support of our existing market-leading product suite as we migrate to Trisus; and the development of new products to sit upon the Trisus Platform including the further development of our cost analytics software. All of these solutions will increase our coverage of the key areas of the Value Cycle and therefore increase our addressable market.
Trisus Enterprise Value Platform
We are now more than a year into the launch of the Trisus Enterprise Value platform and are experiencing growing levels of interest across our market. This cloud-based platform provides a suite of solutions for healthcare providers to identify and take action on risks related to revenue, cost, and compliance. It is designed to be versatile and expandable, growing alongside our customers as the healthcare industry continues to evolve. The platform provides an environment to gather, process, and deliver data across the continuum of care with an open architecture and common components, allowing for synergies between applications.
We are particularly pleased to note how both our existing customer base and the wider healthcare provider market have responded positively to the technological evolution of the Craneware solution set, delivered on the Trisus platform. The Trisus Bridge, the connector layer linking their existing on premise Craneware solutions to the advanced functionality of Trisus in the cloud has proven a valuable introduction to customers on the potential the Platform can offer them. After positive interactions with the platform via the Trisus Bridge, available for all our customers, of over 600 hospitals that were represented, 50% of customers that recently attended the Craneware Healthcare Financial Summit are looking to transfer to the Trisus platform within twelve months. This provides us with confidence in the successful long-term transition of all our products and customers to the cloud platform. As we have seen other smaller cloud-vendors also making good progress in the US healthcare market, we believe this demonstrates that there is a growing acceptance by our industry for the cloud.
Good levels of sales continued in the first half for Trisus Claims Informatics. Having been released in an early adopter version last year, Trisus Supply, was recently launched and will join Trisus Pricing Analyzer™ and Trisus® Healthcare Intelligence on the platform. With Trisus Supply, providers can ensure their high-dollar medical devices and supplies are accounted for, managed, and reimbursed properly increasing both compliance, transparency of cost and revenue. While Trisus Pricing Analyzer™ assists healthcare organisations to create transparent, defensible, and competitive pricing strategies.
We are executing on a roadmap to migrate all our solutions onto the Trisus platform, as well as continuing to look for innovative combinations of our data sets into new unique product offerings. As part of this roadmap we expect to see further hybrid solutions combining: the best of existing software regardless of the development origin, including outside of Craneware; elements of the Trisus platform; new Trisus products; and new early adopter Trisus enabled versions of other existing solutions.
Trisus® Healthcare Intelligence
Trisus® Healthcare Intelligence is a cost analytics decision support tool that integrates revenue, cost, clinical, and hospital operational information for each patient encounter, throughout the journey of their medical condition, accumulating all patient costs from patient activities and services consumed during their care. The aim of the tool is to provide our customers with an understanding of the true cost of every episode of care given to their patients.
Most hospitals' accounting systems account for cost in aggregate and average these, allocating cost on a volumetric basis. This structure, while useful in a fee-for-service system, does not adequately support the shift to quality-centric healthcare delivery system that provides true value where a greater degree of insight and thereby more granularity of the data is required.
Our initial customers for this solution are fully implemented and using it to improve the operations of their hospitals. From the pipeline of opportunities that have grown for this product we are very pleased with the effectiveness of our investment in this product area and believe that we will be able to report that we will see a return on this investment within a relatively short period of time.
This is a vital component within the emerging value cycle solutions market, representing a market opportunity several times larger than that of our existing product portfolio.
Sales and Marketing
We have seen positive sales momentum, securing new sales in the period across all sizes, classes and types of hospital customer. We continued to secure strong levels of sales for both our core products, Chargemaster Toolkit and Pharmacy ChargeLink, and encouraging sales of our first Trisus products. The sales activity has continued into the second half of the year and the sales pipeline continues to grow at record levels, all combining to provide further confidence in continued long term growth.
The average length of contracts with new customers continues to be in-line with our historical norms of approximately five years. With the adoption of the Trisus Bridge by the majority of our customer base, we are in a strong position to offer customers a viable and secure method of transitioning to our cloud based platform at a pace that suits them.
At the end of any contract term, we expect to see our renewal rates remain at their current high levels (above 100% by dollar value), along with additional sales, as customers move to the improvements brought to them by the Trisus platform.
Financial Review
We are pleased to announce an increase in adjusted EBITDA of 20% to $11.6m (H118: $9.7m) driven by an increase in revenues in the period of 15% to $35.9m (H118: $31.1m). These results are reflective of both our continued efficient approach to investments across all areas of the company and our prudent approach to revenue recognition, through our Annuity SaaS business model (described below).
This has ultimately led to a 19% increase in adjusted earnings per share to 30.2 cents per share compared with 25.4 cents per share for this same period last year. All underlying metrics continue to be in line with, or above, our historical norms.
In January 2018, we completed a share buyback returning $15.4m to shareholders. In the period we have returned $4.7m to our shareholders through dividends, invested $9.1m in research and development (including $4.4m in new product development which has been capitalised) and made the commission payments relating to the sales announced in the prior year. We continue to maintain healthy cash reserves which at the period end were $38.7m (H118: $52.2m), meeting our 100% of adjusted EBITDA to operating cash over the trailing 12 month period target. Following exceptionally high levels of cash collection in the second half of the prior financial year, cash conversion levels in the period were as anticipated, with a further $10m of December 2018 outstanding receivables collected since the period end.
In the period, the Group has, for the first time, adopted IFRS 15 "Revenue from Contracts with Customers", which has not resulted in any material changes to our historical approach to revenue recognition. To ensure compliance the Group has tested revenue recognised under its Annuity SaaS business model against the five-step model determined by the standard.
The five-step model is as follows
1) Identify the contract(s) with a customer
2) Identify the performance obligations in the contract
3) Determine the transaction price
4) Allocate the transaction price to the performance obligations in the contract
5) Recognise revenue when or as the entity satisfies its performance obligations
The Group's Annuity SaaS business model and associated revenue recognition policy has always been designed to focus on the long-term growth and stability of the Group. The main revenue element of new sales relates to software licenses, where results in performance obligations are being met over time and as such revenue is being recognised over the period the license is provided to the customer (which for a new hospital sale is an average of five years). In addition, other revenue generated through new sales relates to consulting services and training which are also satisfied over time as the service is provided or the project is delivered.
We have previously identified that there are a number of benefits to this revenue recognition model including high levels of cash conversion, high levels of future years' revenue visibility and, by renewing our customer base at over 100% (by dollar value), each new sale adds to the Group's annuity base of revenue. This continues to be the case and having completed our assessment, we did not identify any material differences between the requirements of IFRS 15 and our existing revenue recognition policy.
To demonstrate the high levels of visible revenue generated as a result of new sales under our business model the Group reports its Three Year Visible Revenue KPI. This KPI also demonstrates the underlying annuity revenue stream that is also building as a result of sales and these revenue recognition policies.
Total visible revenue for the three year period 1 July 2018 to 30 June 2021 has grown 13% to $196.2m from $174.3m for the same three year period at 31 December 2017. Of this $196.2m, $157.3m relates to 'Revenue under Contract', $38.4m 'Renewal Revenue' and $0.5m of 'Other Recurring Revenue'. 'Revenue under Contract', relates to revenues that are supported by ongoing underlying contracts. 'Renewal Revenue' relates to the amount of revenue which is potentially available for renewal and will be recognised in that fiscal year provided the underlying contracts are renewed. In calculating this, we assume a 100% dollar value renewal level. As we sign renewals the aggregated related revenue for the new multi-year term moves from 'renewal revenues' to 'revenue under contract'. The final element is 'Other Recurring Revenue', this relates to revenue that is not subject to long term contracts, which can be billable 'per transaction' or a set monthly amount and is usually invoiced on a monthly basis, however it is reasonable to expect it to be recurring in nature.
As we show our 'Renewal Revenue' in our revenue visibility graph at 100% of dollar value, we track and publish our 'Renewal Rate by dollar value KPI' to ensure our 100% assumption in producing our revenue visibility KPI is still appropriate. This KPI measures the average value of customers renewing in the relevant period (including cross sell and upsell to those renewing customers) and was 101% in this current period under review.
These high levels of visible revenue provide certainty in investment decisions. These investments include our investment in R&D of $9.1m (H118: $7.8m) of which $4.6m relates to products currently available for sale and as such has been expensed in the period. The balance of $4.4m (H118: $2.1m) relates to new product development and as such has been capitalised. We continue to make these and other investment decisions as appropriate for the future growth of the Group, whilst consistently ensuring the efficiency of all expenditures. This has contributed to our adjusted EBITDA margin, which for the period is 32%. 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 UK purchases, denominated in Sterling. The average exchange rate for the Company during the reporting period was $1.30/£1 which compares to $1.32/£1 in the corresponding period last year.
Dividend
The Board has resolved to pay an interim dividend of 11p (14.0 cents) per ordinary share on 11 April 2019 to those shareholders on the register as at 15 March 2019 (FY18 interim dividend 10p). The ex-dividend date is 14 March 2019.
The interim dividend of 11p 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 15 March 2019. The exact amount to be paid will be calculated by reference to the exchange rate to be announced on 15 March 2019. The interim dividend referred to above in US dollars of 14.0 cents is given as an example only using the Balance Sheet date exchange rate of $1.27/£1 and may differ from that finally announced.
Outlook
As we enter the second half of the financial year we do so with excitement as we continue to build the business in line with the large market opportunity available to us. The business continues to deliver strong growth rates, powered by the expansion of our product suite. We believe that the breadth of our customer base and the quantity and quality of data within our solutions means we have the opportunity to sit at the heart of the move to value-based economics; collating and analysing the information that will support hospital-wide decision making and ultimately have a positive impact on the quality of healthcare.
Our growing market opportunity, the strength of our sales pipeline and increasing long-term revenue visibility, mean we enter the second half of the financial year with great confidence for the future and the ongoing success of Craneware.
Keith Neilson Craig Preston
CEO CFO
4 March 2019 4 March 2019
Craneware PLC
Interim Results FY19
Consolidated Statement of Comprehensive Income
H1 2019
H1 2018
FY 2018
Notes
$'000
$'000
$'000
Revenue
35,853
31,138
67,067
Cost of sales
(2,292)
(1,593)
(3,407)
Gross profit
33,561
29,545
63,660
Net operating expenses
(24,376)
(21,048)
(44,968)
Operating profit
9,185
8,497
18,692
Analysed as:
Adjusted EBITDA1
11,578
9,689
21,611
Share-based payments
(740)
(165)
(663)
Depreciation of plant and equipment
(308)
(292)
(578)
Amortisation of intangible assets
(1,345)
(735)
(1,678)
Finance income
114
169
241
Profit before taxation
9,299
8,666
18,933
Tax charge on profit on ordinary activities
(1,590)
(1,990)
(3,136)
Profit for the period attributable to owners of the parent
7,709
6,676
15,797
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Currency Translation Reserve movement
22
(19)
(10)
Total items that may be reclassified subsequently to profit or loss
22
(19)
(10)
Total comprehensive income attributable to owners of the parent
7,731
6,657
15,787
1Adjusted EBITDA is defined as operating profit before, share based payments, depreciation and amortisation.
Earnings per share for the period attributable to equity holders
- Basic ($ per share)
- *Adjusted Basic ($ per share)2
1a
1a
0.289
0.302
0.248
0.254
0.590
0.602
- Diluted ($ per share)
- *Adjusted Diluted ($ per share)2
1b
1b
0.283
0.296
0.242
0.248
0.579
0.591
2 Adjusted Earnings per share calculations allow for the tax adjusted acquisition costs and share related transactions (if applicable in the year) together with amortisation on acquired intangible assets.
Craneware PLC
Interim Results FY19
Consolidated Statement of Changes in Equity
Share Capital
Share Premium
Capital Redemption Reserve
Other Reserves
Retained Earnings
Total
$'000
$'000
$'000
$'000
$'000
$'000
At 1 July 2017
537
17,974
-
958
39,886
59,355
Total comprehensive income - profit for the period
-
-
-
-
6,676
6,676
Total other comprehensive income
-
-
-
-
(19)
(19)
Transactions with owners
Share-based payments
-
-
-
480
814
1,294
Impact of share options exercised / lapsed
-
(2)
-
(7)
-
(9)
Dividend
-
-
-
-
(4,066)
(4,066)
At 31 December 2017
537
17,972
-
1,431
43,291
63,231
Total comprehensive income - profit for the period
-
-
-
-
9,121
9,121
Total other comprehensive income
-
-
-
-
9
9
Transactions with owners
Company share movement in employee benefit trust
-
-
-
-
(4,248)
(4,248)
Buyback and cancellation of shares
(9)
-
9
-
(15,378)
(15,378)
Share-based payments
-
-
-
1,023
(180)
843
Impact of share options exercised / lapsed
6
1,805
-
(370)
378
1,819
Dividend
-
-
-
-
(3,751)
(3,751)
At 30 June 2018
534
19,777
9
2,084
29,242
51,646
Total comprehensive income - profit for the period
-
-
-
-
7,709
7,709
Total other comprehensive income
-
-
-
-
22
22
Transactions with owners
Share-based payments
-
-
-
740
607
1,347
Impact of share options exercised / lapsed
1
244
-
-
-
245
Dividend
-
-
-
-
(4,713)
(4,713)
At 31 December 2018
535
20,021
9
2,824
32,867
56,256
Craneware PLC
Interim Results FY19
Consolidated Balance Sheet as at 31 December 2018
H1 2019
H1 2018
FY2018
Notes
$'000
$'000
$'000
ASSETS
Non-Current Assets
Plant and equipment
1,351
1,264
1,223
Intangible assets
26,359
21,542
23,267
Trade and other receivables
2
5,253
4,683
5,275
Deferred Tax
4,599
4,073
3,831
37,562
31,562
33,596
Current Assets
Trade and other receivables
2
20,852
22,356
12,503
Cash and cash equivalents
38,668
52,205
52,833
59,520
74,561
65,336
Total Assets
97,082
106,123
98,932
EQUITY AND LIABILITIES
Non-Current Liabilities
Deferred income
-
48
-
-
48
-
Current Liabilities
Deferred income
33,094
32,173
35,371
Current tax liabilities
420
1,531
80
Trade and other payables
3
7,312
9,140
11,835
40,826
42,844
47,286
Total Liabilities
40,826
42,892
47,286
Equity
Called up share capital
4
535
537
534
Share premium account
20,021
17,972
19,777
Capital redemption reserve
9
-
9
Other reserves
2,824
1,431
2,084
Retained earnings
32,867
43,291
29,242
Total Equity
56,256
63,231
51,646
Total Equity and Liabilities
97,082
106,123
98,932
Craneware PLC
Interim Results FY19
Consolidated Statement of Cash Flow for the six months ended 31 December 2018
H1 2019
H1 2018
FY 2018
Notes
$'000
$'000
$'000
Cash flows from operating activities
Cash generated from operations
5
(3,527)
6,046
33,110
Interest received
114
169
227
Tax paid
(1,413)
(821)
(3,349)
Net cash from operating activities
(4,826)
5,394
29,988
Cash flows from investing activities
Purchase of plant and equipment
(436)
(183)
(434)
Capitalised intangible assets
(4,435)
(2,110)
(4,258)
Net cash used in investing activities
(4,871)
(2,293)
(4,692)
Cash flows from financing activities
Dividends paid to company shareholders
(4,713)
(4,066)
(7,817)
Proceeds from issuance of shares
245
-
1,810
Company shares acquired by employee benefit trust
-
-
(4,248)
Buy back of ordinary shares
-
-
(15,378)
Net cash used in financing activities
(4,468)
(4,066)
(25,633)
Net (decrease)/increase in cash and cash equivalents
(14,165)
(965)
(337)
Cash and cash equivalents at the start of the period
52,833
53,170
53,170
Cash and cash equivalents at the end of the period
38,668
52,205
52,833
Craneware PLC
Interim Results FY19
Notes to the Financial Statements
1. Earnings per Share
(a) Basic
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the period.
H1 2019
H1 2018
FY 2018
Profit attributable to equity holders of the Company ($'000)
7,709
6,676
15,797
Weighted average number of ordinary shares in issue (thousands)
26,682
26,962
26,790
Basic earnings per share ($ per share)
0.289
0.248
0.590
Profit attributable to equity holders of the Company ($'000)
7,709
6,676
15,797
Tax adjusted acquisition costs, share related transactions and amortisation of acquired intangibles ($'000)
353
165
329
Adjusted Profit attributable to equity holders ($'000)
8,062
6,841
16,126
Weighted average number of ordinary shares in issue (thousands)
26,682
26,962
26,790
Adjusted Basic earnings per share ($ per share)
0.302
0.254
0.602
(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 2019
H1 2018
FY 2018
Profit attributable to equity holders of the Company ($'000)
7,709
6,676
15,797
Weighted average number of ordinary shares in issue (thousands)
26,682
26,962
26,790
Adjustments for: - share options (thousands)
561
613
492
Weighted average number of ordinary shares for diluted earnings per share (thousands)
27,243
27,575
27,282
Diluted earnings per share ($ per share)
0.283
0.242
0.579
1. Earnings per share (Cont.)
H1 2019
H1 2018
FY 2018
Profit attributable to equity holders of the Company ($'000)
7,709
6,676
15,797
Tax adjusted acquisition costs, share related transactions and amortisation of acquired intangibles ($'000)
353
165
329
Adjusted Profit attributable to equity holders ($'000)
8,062
6,841
16,126
Weighted average number of ordinary shares in issue (thousands)
26,682
26,962
26,790
Adjustments for: - share options (thousands)
561
613
492
Weighted average number of ordinary shares for diluted earnings per share (thousands)
27,243
27,575
27,282
Adjusted Diluted earnings per share ($ per share)
0.296
0.248
0.591
2. Trade and other receivables
H1 2019
H1 2018
FY 2018
$'000
$'000
$'000
Trade Receivables
16,670
19,556
9,215
Less: provision for impairment of trade receivables
(1,172)
(1,630)
(1,072)
Net trade receivables
15,498
17,926
8,143
Other Receivables
521
288
230
Prepayments and accrued income
2,487
2,212
1,904
Deferred Contract Costs
7,599
6,613
7,501
26,105
27,039
17,778
Less non-current receivables: Deferred Contract Costs
(5,253)
(4,683)
(5,275)
Trade and other receivables
20,852
22,356
12,503
------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 2019
H1 2018
FY 2018
$'000
$'000
$'000
Trade Payables
841
493
824
Social Security and PAYE
425
327
461
Other Payables
215
124
41
Accruals
5,831
8,196
10,509
Trade and other payables
7,312
9,140
11,835
Derivatives held for hedging have been measured at fair value. The inputs used in determining the fair value are based on observable market data therefore the balances are categorised as level 2 under IFRS 13. No derivatives have been entered into in the current reporting period. No other assets or liabilities have been measured at fair value.
4. Called up share capital
H1 2019
H1 2018
FY 2018
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
26,681,612
535
26,961,709
537
26,662,271
534
5. Consolidated Cash Flow generated from operating activities
Reconciliation of profit before taxation to net cash inflow from operating activities:
H1 2019
H1 2018
FY 2018
$'000
$'000
$'000
Profit before taxation
9,299
8,666
18,933
Finance income
(114)
(169)
(241)
Depreciation on plant and equipment
308
292
578
Amortisation on intangible assets
1,345
735
1,678
Share-based payments
740
165
663
Movements in working capital:
(Increase)/Decrease in trade and other receivables
(8,327)
(7,380)
1,881
Increase/(Decrease) in trade and other payables
(6,778)
3,737
9,608
Cash generated from operations
(3,527)
6,046
33,110
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 2018. Those accounts, with an unqualified audit report, have been delivered to the Registrar of Companies.
7. Segmental Information
The Directors consider that the Group operates in predominantly one business segment, being the creation of software sold entirely to the US Healthcare Industry, and that there are therefore no additional segmental disclosures to be made in these financial statements.
8. Changes to Significant Accounting Policies
Except as described below, the accounting policies applied in these interim financial statement are the same as those applied in the Group's consolidated financial statements as at and for the year ended 30 June 2018.
The changes in accounting policy set out below will also be reflected in the Group's consolidated financial statements for the year ended 30 June 2019.
IFRS 15 Revenue from contracts with Customers
The Group has adopted IFRS 15 Revenue from Contracts with Customers from 1 July 2018 using the cumulative effect transition method. Under the cumulative effect method, the impact of initially applying the standard will be reflected as an adjustment to the opening balance of retained earnings as of 1 July 2018 and the comparative period will not be restated.
The new standard requires revenue to be recognised using a five-step model which requires the transaction price for each contract to be apportioned to separate performance obligations arising under the contract either when the performance obligation in the contract has been performed (point in time recognition) or over time as control of the performance obligation is transferred to the customer. The five-step model is as follows
1) Identify the contract(s) with a customer
2) Identify the performance obligations in the contract
3) Determine the transaction price
4) Allocate the transaction price to the performance obligations in the contract
5) Recognise revenue when or as the entity satisfies its performance obligations
The Group's main revenue category is the sale of software licenses which results in performance obligations being met over time, with revenue recognised over the period the license is provided to the customer. Other revenue relates to consulting services and training which are also satisfied over time as the service is provided or the project is delivered.
The Group has completed its assessment of IFRS 15 and has not identified any material differences between the requirements of IFRS 15 and the previous revenue recognition policy. Accordingly no financial restatement has been made.
IFRS 9 Financial Instruments
The Group has adopted IFRS 9 Financial Instruments from 1 July 2018, replacing IAS 39 Financial Instrument: Recognition and Measurement.
IFRS 9 replace the existing credit loss model with a forward looking expected credit loss model for assessing the impairment of financial assets. Adopting this new model has not had a material impact and accordingly no financial restatement has been made. The new standard has not had a significant effect on the Group's accounting policy.
IFRS 9 largely retains the existing requirements in IAS 39 for the classification and measurement of financial liabilities and has not had a significant effect on the Group's accounting policy.
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 news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.ENDIR EAEDLEFKNEAF
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