TIDMCRW
RNS Number : 9256R
Craneware plc
06 March 2023
Craneware plc
("Craneware" or the "Company" or the "Group")
Interim Results
06 March 2023 - Craneware (AIM: CRW.L), the market leader in
Value Cycle solutions for the US healthcare market, is pleased to
announce its unaudited results for the six months ended 31 December
2022 (H1 FY23).
Financial Highlights (US dollars)
-- Revenues for the six months increased 6% to $84.7m (H1 FY22: $80.2m)
-- Adjusted EBITDA(1) increased 8% to $25.5m (H1 FY22: $23.7m)
-- Adjusted profit before tax(2) of $15.7m (H1 FY22: $17.1m)
-- Profit before tax of $5.2m (H1 FY22: $6.2m)
-- Adjusted Basic EPS of 41.0 cents per share (H1 FY22: 43.5
cents per share), reflecting the impact of increased interest
rates
-- Annual Recurring Revenue(3) of $166.4m, demonstrating the
Group's continued high levels of contracted revenue visibility
-- Cash reserves of $38.6m (H1 FY22: $41.7m)
-- Total Bank Debt of $107.9m (H1 FY22: $114.6m)
-- Interim dividend of 12.5p (15.13 cents) per ordinary share (FY22 Interim dividend 12.5p)
(1) Adjusted EBITDA refers to earnings before interest, tax,
depreciation, amortisation, share based payments and acquisition
and share transaction related costs
(2) Adjusted profit before tax refers to profit before tax,
amortisation of acquired intangibles and acquisition and share
transaction related costs
(3) Annual Recurring Revenue includes the annual value of
licence and related recurring revenues including transaction
revenues as at 31 December 2022 that are subject to underlying
contracts and where revenue is being recognised at the reporting
date
Operational Highlights
-- Trisus Chargemaster ranked first in the "2023 Best In KLAS
Awards: Software & Services" for the 13th year, underlining
Craneware's long-standing position as industry leaders
-- The migration of customers onto cloud based Trisus platform
has been a primary focus in the period and is now largely
complete
-- Customer retention strong, at above 90% in the period
-- Continued expansion and cross-sales, including to both small
rural facilities and multi-site medical systems
-- Continued investment in R&D and innovation to capitalise on growing market opportunity
-- Appointment of Group CTO and an additional Non-executive
Director, bringing further US healthcare market insight
-- Craneware customers have seen in excess of $0.5 billion
benefit from utilising our solutions in the period, helping to
stretch scarce healthcare resources as far as possible
Outlook
-- Building blocks in place for growth acceleration as the
current pressures within the US healthcare market abate
-- We are confident in delivering results for the year in line
with current consensus and look to the future with confidence
Keith Neilson, CEO of Craneware plc, commented,
"We remain acutely conscious of the ongoing challenges faced by
our customers and partners, in particular the impact of
inflationary pressures and staffing shortages. The pressures they
are experiencing strengthens our commitment to providing the tools
to more accurately manage their operations and finances, as we seek
to transform the business of US healthcare together .
"We are financially strong, with healthy cash reserves and a
solid foundation of Annual Recurring Revenue. This, combined with
our market leading solutions, breadth of customer base, the scale
of data flowing through our platform and the industry drive to
achieve better value in healthcare, means we remain confident in
our ability to deliver acceleration in our growth rates as the
current pressures within the US healthcare market abate ."
For further information, please contact:
Craneware plc +44 (0)131 550 3100
Keith Neilson, CEO
Craig Preston, CFO
Alma (Financial PR) +44 (0)20 3405 0205
Caroline Forde, Joe Pederzolli, Kinvara Verdon craneware@almapr.co.uk
Peel Hunt (NOMAD and Joint Broker) +44 (0)20 7418 8900
Dan Webster, Andrew Clark
Investec Bank PLC (Joint Broker) +44 (0)20 7597 5970
Patrick Robb, Henry Reast, Sebastian Lawrence
Berenberg (Joint Broker ) +44 (0)20 3207 7800
Mark Whitmore, Richard Andrews, Dan Gee-Summons
About Craneware
We at The Craneware Group of companies, including our latest
additions Sentry Data Systems and Agilum Healthcare Intelligence,
passionately believe we can impact healthcare profoundly by
delivering the insights healthcare organisations need to also
transform the business of healthcare. Our shared vision is to be
the operational and financial partner for US healthcare
providers.
Our combined suite of applications and industry-leading team of
experts help our customers contextualise operational, financial,
and clinical data, providing insights that clearly demonstrate what
great looks like. These value cycle insights deliver revenue
integrity and 340B compliance, as well as margin and operational
intelligence - something no other single partner can provide.
Together, approximately 40% of registered US hospitals are now
our customers, including more than 12,000 US hospitals, health
systems and affiliated retail pharmacies and clinics. Our customers
are operating with a financial impact of nearly half a trillion
dollars. We have data sets from customers covering more than 165
million unique patients encounters.
Learn more at www.thecranewaregroup.com
Chair's Statement
I am pleased to report on a period of continued progress,
against continuing difficult market conditions for our customers.
The Group has delivered a solid financial performance in line with
the Board's expectations for the period, although these results
have yet to highlight our true potential as we deliver on the
considerable market opportunity for the Group.
US hospitals continue to face a range of macro pressures as they
build back post pandemic, primarily salary and supplies cost
inflation. These factors are combining to put pressure on hospital
margins, impacting their delivery of care. Against this backdrop,
the underlying need for our software solutions only continues to
grow, as our focus on transforming the business of healthcare will
be key to our customers navigating these external market
pressures.
Steady, profitable growth
Group Revenues in H1 FY23 increased by 6% to $84.7m (H1 FY22:
$80.2m) and adjusted EBITDA by 8% to $25.5m (H1 FY22: $23.7m).
Software revenue and customer retention continues to be healthy
across the Group's offerings, resulting in Annual Recurring Revenue
("ARR") at H1 FY23 of $166.4m , demonstrating the Group's continued
high levels of contracted revenue visibility.
Importantly, customer retention rates remain high, at above 90%
across the Group, reflecting the central role our software plays in
the optimised financial and operational performance of our
customers.
The Group closed the period with cash reserves of $38.6m (H1
FY22: $41.7m), and total Bank Debt of $107.9m (H1 FY22: $114.6m),
providing a solid basis for the continued execution of our growth
strategy. These amounts are after the return of $6.6m (H1 FY22:
$7.2m) to shareholders through dividends, the investment in R&D
of $22.7m (H1 FY22: $21.6m), debt repayment and interest of $6.8m
(H1 FY22: $5.3m).
A valuable position from which to build
With approximately 40% of registered US hospitals as Craneware
customers, including more than 12,000 US hospitals, health systems,
affiliated retail pharmacies and clinics, and data sets covering
more than 165 million unique patients encounters, we hold an
enviable central position within the US healthcare industry.
Looking ahead, we will continue to seek ways to extend our Trisus
platform, through product development, partnerships and
M&A.
We were delighted to welcome a new Non-executive Director to the
Board in November, Anne McCune. Anne is a recognised leader in the
US Healthcare industry, having served as a senior executive for
several leading academic hospital and physician centres and as a
managing director in consulting firms. Anne is currently a
Community Board member of the Strategy and Transformation committee
at Salinas Valley Memorial Healthcare System in California.
While healthcare providers, both globally and in the US,
continue to face many challenges, building back post pandemic and
coping with inflationary pressures, the long-term drivers for the
need of Craneware's software continue to strengthen. Through the
increased financial and operational insight our offerings provide
to our customers, we are well placed to support them through these
difficult times and ultimately deliver on our growth ambitions.
The Group remains financially strong, benefitting from high
operating margins, a strong balance sheet, and with a robust base
of recurring revenue. We are confident in delivering results for
the year in line with current market consensus and look to the
future with confidence.
Will Whitehorn
Chair
6 March 2023
Strategic Report
We are pleased to report on a solid performance during the first
half, in which we have navigated a challenging macroeconomic
environment, delivering growth in both revenue and EBITDA. Software
revenues remain healthy, and we have seen almost universal adoption
of Trisus, our cloud-based platform, within our customer base,
despite our end market suffering the ongoing effects of
inflationary pressures.
In the near term we expect the percentage of revenue that is
derived from software to increase from its historical norm of
80-85% (approximately 92% in the period). We do not expect the
uptake of the Group's professional services to return, as a
percentage of revenue, to previous levels in the short-term as
healthcare providers attempt to control inflation through reduction
in contracted labour. While, we do expect that levels of
professional services revenue will increase in the mid to long
term, the stronger software revenue growth, will continue to
positively impact the overall revenue mix, resulting in ARR growth
and further predictable revenue visibility.
While professional services revenue not returning to
pre-pandemic levels has impacted the full year revenue expectations
of the Group, as previously announced, we see a growing market
opportunity, with the need for Craneware products greater than
ever.
Our products continue to deliver outstanding levels of return on
investment (ROI) for our customers, and we were delighted to
announce in February that Trisus Chargemaster, one of our core
offerings, has once again ranked first in its category of the "2023
Best In KLAS Awards: Software & Services". These awards
highlight the top-performing healthcare IT solutions, as determined
by extensive evaluations and conversations with thousands of
healthcare providers. This marks the 13th year our solution has
achieved the top ranking, more than any other vendor in our space,
underlining our long-standing position as industry leaders.
We continue to enhance our product set, transition customers to
the cloud and find new ways to provide our customers with means to
protect their margins, so that they can deliver on their healthcare
missions. The migration of our customers onto Trisus has been a
primary focus in the period and is now effectively complete. With
almost all customers on the platform, we are well-placed to
identify further areas in which our Trisus applications can help
hospitals protect their margins, to ensure they have the financial
strength to continue to deliver on their healthcare mission.
We would like to take this opportunity to thank all our
employees and customers for their continued hard work amidst a
difficult trading environment. We continue to see a significant
market opportunity for Craneware and the Board is confident of
ongoing future success.
A complex and evolving market
The same financial pressures being felt around the world have
likewise hindered the recovery of the US healthcare market post the
COVID pandemic; reduced patient volumes; shortage of staff; wage,
medications and supplies inflation have all weighed heavily on
hospital margins.
While this backdrop means that our customers are currently
reducing their use of contracted labour and therefore are not
currently in position to fully benefit from our consultancy
support, the need for accurate financial data, supporting analytics
and the insights those analytics can bring, along with the
efficiency of our technology solutions, has never been more
important.
Our products and systems, which are built on the insights of our
data, enhance efficiency and help ensure that both operational and
administrative functions of a hospital are working optimally,
enabling the existing teams to be more effective and efficient in
their roles. Through these insights our solutions deliver real
financial returns and free up resource with a more targeted
approach, that can be re-invested and re-deployed by healthcare
providers to support the clinical care for their communities.
As an example, in a recent sample of hospitals ranging in size
from 200 - 3,000 patient beds, it was found that Trisus Supply, one
of our applications which assists hospitals in the efficient
purchasing of supplies, saved a lifetime potential gross total
impact of over $8m per hospital, representing a lifetime ROI over
9:1. In just 12 months, 75% of these hospitals had each identified
over $1m of potential gross total impact - funds which could be
reinvested back into the delivery of care.
We therefore believe both the Group and our products are well
placed to help our customers deal with the current economic
challenges , by transforming the business of US healthcare.
Growth Strategy - innovation to profoundly impact US healthcare
operations, which will drive demand and expand our addressable
market.
To date, our growth has been driven through increases in market
share and product set penetration (land and expand). In recent
years, we have invested in the development of the Trisus platform;
a sophisticated cloud delivered data aggregation and intelligence
platform which will be the foundation for our future growth as we
build on top of Trisus to strengthen our current products, leverage
our data assets to expand our offering, integrate third party
solutions to the platform and benefit from the scalability of
cloud-technology.
Two Growth Pillars
Our growth strategy has two fundamental growth pillars:
1. The transition of our customers to cloud delivered solutions,
to act as a gateway to the additional applications on the Trisus
platform and the benefits they deliver
We are now effectively a cloud-based software provider, with 93%
of our customers on the Trisus platform (rising to 98% at the date
of this report) and a comparative amount of our annual recurring
revenue being delivered from cloud-based solutions (31 December
2021: 67%). This has been led by the migration of our Chargemaster
Toolkit customers onto the Trisus platform. We anticipate the small
number of remaining customers to have transitioned by the end of
the fiscal year.
We are seeing continuing uptake of our Trisus Chargemaster
offering, the cloud version of Chargemaster Toolkit product, and
our significant recent enhancements to the product were
acknowledged during the period, as we returned to first place in
the Chargemaster Management category of the "2023 Best In KLAS
Awards: Software & Services." The recognised enhancements
included performance, scalability and depth of solution, proving
valuable drivers in prompting our customers to migrate, as well as
winning new customers, competitive wins and winning back old
customers.
Pharmacy operations within healthcare providers is the largest
cost area for US hospitals outside of staff costs and an area where
we see considerable opportunity to scale our value-focused
solutions. As announced at the time of our FY22 Final Results in
September, we have replaced our existing non 340B pharmacy
offerings with four new applications, Trisus Medications Financial
Management, Trisus Medication Formulary, Trisus Medication Claims
and Trisus Medication Compare . As well as providing further
benefits to customers of our existing pharmacy products, these new
Business of Pharmacy applications enhance our 340B offering leading
to both competitive wins of new customers and cross sell
opportunities within our existing customer base.
2. Value Driven Customer Expansion
We continue to develop additional applications and tools to
expand our capabilities and provide benefits to our customers.
Having neared completion of the original cloud based enhancements
for existing products we can now turn our focus to new products and
enhancements.
ARR at 31 December 2022 stands at $166.4m, demonstrating the
Group's continued high levels of contracted revenue visibility. We
continue to see the opportunity for accelerated ARR growth over the
medium term, as we unlock the considerable cross and upsell
opportunities within our enlarged customer base. Customer retention
has always been strong, and we continued to see our customer
retention rate remain above 90% in the period.
We are encouraged to see the percentage of new sales in the
period from brand new customers increase by approximately 30% to
21% of total new sales, however as a percentage of our total new
sales this is still behind historical norms. With 79% of new sales
in the period being expansion sales to existing customers, we
demonstrate the positive response of our customers to the increased
ROI derived from the uptake of additional cloud modules. Expansion
sales within the period include to both small rural facilities and
multi-site academic medical systems, demonstrating the
applicability of our offerings across the breadth of the US
healthcare provider market.
In the period we have formalised our partnering processes, with
the aim of hosting third party application providers on the
platform. We continue to evaluate partnership opportunities. The
current challenging market environment is hindering new customer
acquisition by smaller software providers, and we therefore
anticipate their inclusion on the Trisus platform will be
increasingly attractive to them, providing access to our customer
base. In turn, our customers will benefit from complementary
applications which will help them derive greater insight into their
operations and financial performance while we benefit from a
revenue share with the partner.
While organic growth across our portfolio remains a priority, we
continue to evaluate the market for M&A opportunities and will
continue to pursue strategically aligned companies that will
accelerate our growth strategy, although it is unlikely that any
acquisitions in the short-term will be of the relative scale of
Sentry. We maintain the same four key acquisition criteria of which
target companies must fit into at least one, being: the addition of
relevant data sets; the extension of the customer base; the
expansion of expertise; and the addition of applications suitable
for the US hospital market. We view our partnering programme as a
potential for building a pipeline of future M&A activity based
on the mutual benefits derived by both partners.
The strength of the enlarged businesses is already delivering
further benefits and confidence to our customers, for example, a
significant Sentry customer has agreed a 5 year agreement with The
Craneware Group, moving from their original annually renewable
contract. In doing so they have significantly expanded their use of
340B software and are now exploring more of our Business of
Pharmacy products.
We are confident that we will be able to further increase sales
activity in the future with our broadened and improved products and
add to our substantial existing customer base.
Our People and Community
We have been delighted to welcome the Sentry and Agilum teams to
The Craneware Group and now benefit from a fully integrated team.
There are clear synergies between the businesses, and we have seen
strong collaboration between the teams in cementing existing and
establishing new customer relationships. Our combined management
team is working well, and we are benefitting from a larger team and
improved competitive positioning.
We are proud of the manner in which the challenges of
integrating businesses of comparable size have been dealt with by
the team, achieving comparatively strong staff retention rates and
we have successfully achieved the scale and level of integration we
had been targeting. Our commitment to our people has always been at
the centre of what we do since formation. As part of the
integration, we reviewed our work practices to ensure that all our
employees are receiving maximum support in a fair and equitable
manner.
The Group continues to invest in its team and operations,
including the appointment of a Group CTO, Abhilesh Gandhi, who will
oversee the Engineering Group, reporting into the CEO. Mr Gandhi
has over 20 years of Engineering experience including leading
engineering teams in Cerner Corporation and Sentry Data Systems Inc
before taking a leading role on the Product Board of The Craneware
Group.
With the addition of Anne McCune to the Board and Abhilesh's
appointment, we are confident their combined understanding of the
US healthcare market will provide us with valuable insight and
strategic guidance as we continue to transform the business of
healthcare.
Craneware continues to develop many social initiatives, such as
Craneware Cares and the Craneware Cares Foundation which is driven
by our employees. We have also become directly involved with the
340B Matters initiative. This program aims to give back to local
communities with vulnerable populations and educate the market with
regards to the importance of the 340B program.
We are uniquely positioned to provide the insights our customers
need to manage their operations more efficiently and mitigate risk
while they focus on delivering increased levels of care.
Importantly, in the period our customers have seen in excess of a
$0.5 billion in benefit from utilising our solutions, helping to
stretch scarce federal resources as far as possible, reach more
eligible patients and provide more comprehensive services.
Financial Review
Financial Year 2023 represents the first full year of the
enlarged Craneware Group, with Sentry successfully integrated and a
combined management team leading the organisation from 12 July
2021, these results reflect the scale of the enlarged Group. As
healthcare providers across the globe including in the US emerge
from their pandemic response, they have immediately been faced with
new macro-economic challenges including rising wage, medication,
and supply cost inflation as well as key staffing shortages.
We are reporting, including a full six months contribution from
Sentry, 6% growth in our Revenue to $84.7m (H1 FY22: $80.2m) which
has delivered an 8% increase in Adjusted EBITDA in the period,
growing to $25.5m (H1 FY22: $23.7m). If we had owned Sentry from
1(st) July 2021 (i.e. had a full prior six months of ownership in
H1 FY22), our revenue growth would have appeared more modest at 2%,
however Adjusted EBITDA would have been unaffected at 8% growth.
The challenges for our customers have impacted on Craneware,
primarily through our professional services in the period not
recovering to the expected pre-pandemic levels as a percentage of
our revenues.
Craneware has also been subject to the same macro-economic
challenges all businesses currently face. Whilst we have been
successful in navigating the inflationary challenges in the period,
our Adjusted earnings per share has been impacted by the
significant increases in interest rates that have occurred.
Primarily as a result of the increased interest charges, adjusted
basic earnings per share has reduced to 41.0 cents per share (H1
FY22: 43.5 cents per share). On a constant interest charge basis,
adjusted basic EPS would have grown by 4%.
The increased scale and our enlarged portfolio of products mean
we can do even more to support our customers as they look beyond
the impact of the pandemic. The need for accurate financial data,
supporting analytics and the insights those analytics can bring has
never been more important. Our solutions deliver real financial
returns that can be re-invested by the hospital to support the
clinical care for their communities. It is therefore essential we
continue to make the right investments in our future as we develop
further ways of supporting our customers. We have continued to
invest in R&D, increasing spend in the period by 5% to $22.7m
(H1 FY22: $21.6m). The amount of this investment capitalised in the
period has remained consistent in percentage terms at 31% of the
total investment, being $7.0m (H1 FY22: $6.8m), the balance of
$15.7m (H1 FY22: $14.8m) has been expensed as incurred. We maintain
strong controls in regard to the amounts we invest in R&D,
including any that are capitalised to ensure that they will bring
future economic benefit to the Group, and we confirm this by
monitoring the value of contracts sold for these new products, once
launched comparing these against the costs that have been invested.
Already, the total value of sales contracts for Trisus products
exceed the total investment made into the platform, with further
sales enhancing the investment case.
We continue to maintain healthy cash reserves, which at the
period end were $38.6m (H1 FY22: $41.7m), in addition we hold a
further $52.2m (H1 FY22: $9.3m) of restricted cash on behalf of our
customers and total bank debt of $107.9m, which represents a
comfortable level of debt for the business given our levels of
EBITDA. From our cash reserves, we have returned $6.6m to our
shareholders through dividends and made the $22.7m investments in
R&D detailed above. Our business model is highly cash
generative, and we continue to target operating cash conversion of
100% of adjusted EBITDA to operating cash over a 12-month period.
In the last 12 months we achieved 77% cash conversion. It is
historically normal to see lower levels of cash conversion in the
first half of any financial year; in the current period this was
exacerbated as hospitals have faced financial challenges including
the removal of previous pandemic stimulus funding. We have not,
though, experienced any significant bad debts. We have continued to
collect cash post the period end, having already collected over
$18m related to the period and are confident of an improved overall
cash performance over the full year and a return to our normal high
cash conversion.
Underlying Business Model and Professional Services
The new software contracts we sign with our hospital customers
provide a licence for the customer to access specified products
throughout their licence period. At the end of an existing licence
period, or at a mutually agreed earlier date, we look to renew
these contracts with our customers.
In addition to the core licences, our 340B customers can add
further licences to provide 340B coverage to eligible patients who,
rather than return to the hospital for their prescriptions, have
these filled at local contract pharmacies or mail order specialised
pharmacies. These further licences often include transactional
based licence fees and other services. Due to the transactional
nature of these licences, revenue recognition begins after the
pharmacy go-live rather than, the standard, on contract signature
and software becoming available. These transactional services,
whilst highly dependable, will see some variation period to period
dependent on volume of transactions.
Under the Group's business model, we recognise software licence
revenue and any minimum payments due from our 'other long term'
contracts evenly over the life of the underlying contract term.
Transactional services are recognised as we provide the service,
and we are contractually able to invoice the customer.
In addition to the licence revenues recognised in any year, we
also expect revenue to be recognised from providing services to our
customers. These revenues are usually recognised as we deliver the
service to the customer, on a percentage of completion basis.
Annual Recurring Revenue
By renewing our underlying contracts, and ensuring we continue
to deliver the transactional services to our customers we sustain a
highly visible recurring revenue base, which means sales bookings
of new products to existing customers or sales bookings to new
hospital customers add to this recurring revenue. Following the
acquisition of Sentry, we introduced an Annual Recurring Revenue
("ARR") KPI to supplement the existing financial KPI's we present.
This KPI was defined as the annual value of licence and related
recurring revenues including transactional revenues that are
subject to underlying contracts at the reporting date.
In the period, to better align future growth of ARR to near term
revenue growth as well as facilitate the future calculation of a
Net Revenue Retention metric, the calculation methodology has been
tightened to only include contracts that have generated revenue by
the reporting date. This primarily relates to the exclusion of
contract pharmacy bookings where go live has not yet happened and
therefore they have not contributed to revenue in the period as
described above.
As a result, ARR is now defined as the annual value of licence
and related recurring revenues including transaction revenues as at
31 December 2022 that are subject to underlying contracts and where
revenue is being recognised at the reporting date. Under our new
tighter calculation criteria, the Group's ARR at 31 December 2022
is $166.4m (H1 FY22 (previous calculation criteria): $165m) ,
demonstrating the Group's continued high levels of contracted
revenue visibility.
Functional Currency
We continue to report the results (and hold the cash reserves)
of the Group in US Dollars, whilst having approximately 20% 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 $1.18/GBP1 which compares to $1.36/GBP1 in the
corresponding period last year. The exchange rate at the Balance
Sheet date was $1.21/GBP1 (H1 FY22: $1.35/GBP1).
Dividend
The Board has declared a dividend of 12.5p (15.13 cents) per
ordinary share, payable on 14 April 2023 to those shareholders on
the register as at 24 March 2023 (FY22 Interim dividend 12.5p). The
ex-dividend date is 23 March 2023.
The interim dividend of 12.5p 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 24 March 2023. The exact amount to be paid will be calculated by
reference to the exchange rate to be announced on 24 March 2023.
The interim dividend referred to above in US dollars of 15.13 cents
is given as an example only using the Balance Sheet date exchange
rate of $1.21/GBP1 and may differ from that finally announced.
Outlook
We remain acutely conscious of the ongoing challenges faced by
our customers and partners, in particular the impact of
inflationary pressures and staffing shortages. The pressures they
are experiencing strengthens our commitment to providing the tools
our customers need to more accurately manage their operations and
finances, as we seek to transform the business of US healthcare
together . In the short term, we anticipate the challenging
professional service market to continue but remain confident in the
strength of our software offering and the quality of our teams.
We are financially strong, with a solid foundation of Annual
Recurring Revenue. This, combined with our market leading
solutions, breadth of customer base, the scale of data flowing
through our platform and the industry drive to achieve better value
in healthcare, means we remain confident in our ability to deliver
acceleration in our growth rates as the current pressures within
the US healthcare market abate. We are confident in delivering
results for the year in line with current market consensus and look
to the future with confidence.
Keith Neilson Craig Preston
Chief Executive Officer Chief Financial Officer
6 March 2023 6 March 2023
Consolidated Statement of Comprehensive Income
unaudited unaudited audited
H1 2023 H1 2022 FY 2022
Notes $'000 $'000 $'000
--------------------------------------------- ------ ---------- ---------- -----------
Revenue from contracts with customers 1 84,671 80,175 165,544
Cost of sales (12,415) (9,839) (23,178)
---------- ---------- -----------
Gross profit 72,256 70,336 142,366
Other income 13 6 551
Operating expenses (63,674) (62,528) (124,324)
Net impairment charge on financial
and contract assets (190) (150) (461)
---------- ---------- -----------
Operating profit 8,405 7,664 18,132
Analysed as:
Adjusted EBITDA(1) 25,467 23,679 51,757
Share-based payments (1,227) (1,013) (2,116)
Depreciation of property, plant and
equipment (1,712) (1,511) (3,259)
Amortisation of intangible assets
- other (3,632) (2,653) (5,905)
Amortisation of intangible assets
- acquired intangibles (10,468) (8,919) (20,239)
Exceptional costs(2) (23) (1,919) (2,106)
--------------------------------------------- ------ ---------- ---------- -----------
Finance income 35 1 1
Finance expense (3,221) (1,431) (5,031)
---------- ---------- -----------
Profit before taxation 5,219 6,234 13,102
Tax on profit on ordinary activities (1,287) (1,514) (3,693)
---------- ---------- -----------
Profit for the period attributable
to owners of the parent 3,932 4,720 9,409
Other comprehensive income/(expense)
Items that may be reclassified subsequently
to profit or loss
Currency Translation Reserve movement - 27 42
---------- ---------- -----------
Total items that may be reclassified
subsequently to profit or loss - 27 42
--------------------------------------------- ------ ---------- ---------- -----------
Total comprehensive income attributable
to owners of the parent 3,932 4,747 9,451
--------------------------------------------- ------ ---------- ---------- -----------
(1) See note 16 for explanation of Alternative Performance Measures.
(2) Exceptional items relate to legal and professional fees associated
with a successful acquisition in FY22. (FY22: Exceptional items
relate to legal and professional fees associated with a successful
acquisition and related integration costs.)
Earnings per share for the period attributable to equity holders
- Basic ($ per share) 3 0.112 0.135 0.268
- *Adjusted Basic ($ per share)(1) 3 0.410 0.435 0.890
- Diluted ($ per share) 3 0.111 0.133 0.265
- *Adjusted Diluted ($ per share)(1) 3 0.406 0.430 0.881
--------------------------------------------- ------ ---------- ----------- ----------
Consolidated Statement of Changes in Equity
Capital
Share Share Redemption Merger Other Retained
Capital Premium Reserve Reserve Reserves Earnings Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000
------------------ ------------- ------------- ------------- ------------- ------------- ------------- --------
At 1 July 2021 624 21,097 9 186,993 4,728 46,828 260,279
Total
comprehensive
income - profit
for the period - - - - - 4,720 4,720
Total other
comprehensive
income - - - - - 27 27
Transactions with
owners
Share-based
payments - - - - 884 - 884
Share issue 34 75,871 - (12) - - 75,893
Impact of share
options and
awards
exercised/lapsed - - - - - (311) (311)
Dividend - - - - - (7,227) (7,227)
At 31 December
2021 658 96,968 9 186,981 5,612 44,037 334,265
------------------ ------------- ------------- ------------- ------------- ------------- ------------- --------
Total
comprehensive
income - profit
for the period - - - - - 4,689 4,689
Total other
comprehensive
expense - - - - - 15 15
Transactions with
owners
Share-based
payments - - - - 1,410 - 1,410
Share issue 1 236 - - - - 237
Purchase of own
shares through
EBT - - - - - (1,726) (1,726)
Deferred tax
taken directly
to equity - - - - - (366) (366)
Impact of share
options and
awards
exercised/lapsed - - - - (1,089) 1,336 247
Dividend - - - - - (5,749) (5,749)
At 30 June 2022 659 97,204 9 186,981 5,933 42,236 333,022
------------------ ------------- ------------- ------------- ------------- ------------- ------------- --------
Total
comprehensive
income - profit
for the period - - - - - 3,932 3,932
Transactions with
owners
Share-based
payments - - - - 1,244 - 1,244
Impact of share
options and
awards
exercised/lapsed - - - - - (695) (695)
Dividend - - - - - (6,645) (6,645)
------------------ ------------- ------------- ------------- ------------- ------------- ------------- --------
At 31 December
2022 659 97,204 9 186,981 7,177 38,828 330,858
------------------ ------------- ------------- ------------- ------------- ------------- ------------- --------
Consolidated Balance Sheet as at 31 December 2022
unaudited unaudited audited
H1 2023 H1 2022 FY2022
Notes $'000 $'000 $'000
------------------------------------------ ------- ---------- ---------- --------
ASSETS
Non-Current Assets
Property, plant and equipment 7,975 10,608 8,819
Intangible assets - goodwill 4 237,646 243,368 237,646
Intangible assets - acquired intangibles 4 176,789 189,109 187,257
Intangible assets - other 4 46,393 43,179 43,430
Trade and other receivables 5 2,992 3,673 3,234
471,795 489,937 480,386
---------- ---------- --------
Current Assets
Trade and other receivables 5 45,209 68,349 40,001
Cash and cash equivalents 38,607 41,696 47,157
Restricted cash 52,203 9,338 1,251
---------- ---------- --------
136,019 119,383 88,409
---------- ---------- --------
Total Assets 607,814 609,320 568,795
------------------------------------------ ------- ---------- ---------- --------
EQUITY AND LIABILITIES
Non-Current Liabilities
Borrowings 7 99,908 107,081 103,589
Leased property 747 2,223 1,206
Hire purchase equipment 104 713 290
Deferred tax 47,606 44,498 47,606
Other provisions 433 893 568
---------- ---------- --------
148,798 155,408 153,259
---------- ---------- --------
Current Liabilities
Borrowings 7 8,000 7,491 8,000
Deferred income 56,375 86,079 58,722
Trade and other payables 6 63,783 26,077 15,792
128,158 119,647 82,514
------------------------------------------ ------- ---------- ---------- --------
Total Liabilities 276,956 275,055 235,773
------------------------------------------ ------- ---------- ---------- --------
Equity
Share capital 8 659 658 659
Share premium account 97,204 96,968 97,204
Capital redemption reserve 9 9 9
Merger reserve 186,981 186,981 186,981
Other reserves 7,177 5,612 5,933
Retained earnings 38,828 44,037 42,236
------------------------------------------ -------
Total Equity 330,858 334,265 333,022
---------- ---------- --------
Total Equity and Liabilities 607,814 609,320 568,795
------------------------------------------ ------- ---------- ---------- --------
Consolidated Statement of Cash Flow for the six months ended 31
December 2022
unaudited unaudited audited
H1 2023 H1 2022(3) FY 2022
Notes $'000 $'000 $'000
----------------------------------------- ------ ---------- ------------ ----------
Cash flows from operating activities
Cash generated from operations 9 15,282 12,593 32,943
Tax paid (1,483) (2,511) (5,979)
----------------------------------------- ------ ---------- ------------ ----------
Net cash generated from/(used
in) operating activities 13,799 10,082 26,964
Cash flows from investing activities
Acquisition of subsidiary, net
of cash acquired - (293,493) (293,288)
Purchase of property, plant and
equipment (336) (249) (353)
Capitalised intangible assets (7,045) (6,847) (13,680)
Interest received 35 1 1
----------------------------------------- ------ ---------- ------------ ----------
Net cash used in investing activities (7,346) (300,588) (307,320)
Cash flows from financing activities
Dividends paid to company shareholders (6,645) (7,227) (12,976)
Share issue professional fees - (263) (263)
Paid up share capital - - 236
Proceeds from borrowings - 120,000 120,000
Loan arrangement fees - - (268)
Repayment of borrowings (4,000) (4,000) (8,000)
Interest on borrowings (2,824) (1,341) (3,080)
Purchase of own shares by EBT (36) - (1,726)
Payment of lease liabilities (1,498) (1,246) (2,027)
----------------------------------------- ------ ---------- ------------ ----------
Net cash generated from/(used
in) financing activities (15,003) 105,923 91,896
Net (decrease)/increase in cash
and cash equivalents (8,550) (184,583) (188,460)
Cash and cash equivalents at the
start of the period 47,157 235,617 235,617
Cash and cash equivalents at
the end of the period 38,607 51,034(3) 47,157
----------------------------------------- ------ ---------- ------------ ----------
(3) H1 2022 includes restricted cash within the cash and cash
equivalents balance. Excluding restricted cash in H1 2022 would
result in cash generated from operations of $4.93m, acquisition of
subsidiary, net of cash acquired of $295.17m and cash and cash
equivalents at the period end of $41.70m.
Notes to the Financial Statements
1. Revenue from contracts with customers
The chief operating decision maker has been identified as the
Board of Directors. The Group revenue is derived almost entirely
from the sale of software licences, professional services
(including installation) and transactional fees to hospitals and
affiliated pharmacies within the United States of America.
Consequently, the Board has determined that Group supplies only one
geographical market place and as such revenue is presented in line
with management information without the need for additional
segmental analysis. All of the Group's assets are located in the
United States of America with the exception of the Parent
Company's, the net assets of which are located in the United
Kingdom.
Restated
unaudited unaudited audited
H1 2023 H1 2022 FY 2022
$'000 $'000 $'000
----------------------- ---------- ----------- ---------
Software licencing 70,395 67,269(4) 137,956
Professional services 6,758 6,558(4) 13,893
6,348
Transactional fees 7,518 (4) 13,695
Total revenue 84,671 80,175 165,544
----------------------- ---------- ----------- ---------
(4) Restated to show updated comparative split between
categories based on finalisation of acquisition accounting.
Software licensing and professional services are recognised over
time. Transactional fees are recognised at a point in time.
2. Business combination
On 12 July 2021, the Group acquired 100% of the voting rights of
SDS Holdco, Inc., the ultimate holding company of Sentry Data
Systems, Inc. ('Sentry'), a leader in the pharmacy procurement,
compliance and utilisation management, based in Florida, USA. For
further information on the reasons for the acquisition see Note 25
of the annual report for the year ended 30 June 2021. The aggregate
consideration for the acquisition of Sentry on a cash free/ debt
free basis subject to an adjustment against a benchmark level of
working capital on the date of acquisition as calculated and
determined in accordance with the terms of the agreement relating
to the acquisition.
The deal was funded by $299.1m (as adjusted) of cash and $75.9m
raised via the issue of 2,507,348 new ordinary shares at fair value
on 12 July 2021 (measured using the closing market price of the
Company's ordinary shares on that date). The cash consideration was
funded from the Group's existing cash resources, $120m from a new
debt facility and $187.3m net proceeds from a share placing
completed in June 2021.
Details of the purchase consideration, net assets acquired and
goodwill, as per the FY22 annual report are as follows:
$'000
--------------------------------------------- --------
Cash paid (net of working capital adjusted) 297,015
Shares issued (fair value) 75,905
Total purchase consideration 372,920
----------------------------------------------- --------
The fair values for assets and liabilities recognised as a
result of the acquisition as per the FY22 annual report are as
follows:
Fair value
$'000
----------------------------------------- -----------
Non-Current assets
Property, plant and equipment 9,179
Intangible assets - customer relations 151,000
Intangible asset - proprietary software 51,496
Intangible assets - trademarks 5,000
Intangible assets - other 3,762
Other contract assets 376
------------------------------------------- -----------
Total non-current assets 220,813
------------------------------------------- -----------
Current assets
----------------------------------------- -----------
Trade and other receivables 13,671
Cash and cash equivalents 3,727
Restricted cash 1,880
------------------------------------------- -----------
Total current assets 19,278
------------------------------------------- -----------
Non-current liabilities
----------------------------------------- -----------
Leased property > 1 year 1,540
Leased equipment > 1 year 1,146
Deferred tax 51,874
------------------------------------------- -----------
Total non-current liabilities 54,560
------------------------------------------- -----------
Current liabilities
Deferred income 27,164
Trade and other payables 11,905
------------------------------------------- -----------
Total current liabilities 39,069
------------------------------------------- -----------
Net identifiable assets acquired 146,462
Add: goodwill 226,458
Total consideration 372,920
------------------------------------------- -----------
The goodwill is attributable to Sentry's strong position in the
market and synergies expected to arise after the company's
acquisition of these new subsidiaries.
The fair value of the acquired customer list and customer
contracts of $151m, proprietary software of $51.5 and trademarks of
$5.0m have been valued as per the details in Note 2 of the annual
report for the year ended 30 June 2022. Deferred tax of $37.8m,
$12.9m and $1.2m has been provided respectively in relation to
these intangible assets.
Acquisition related costs of $0.02m (FY22: $2.1m) are included
within exceptional costs in profit and loss.
The fair value of trade and other receivables is $13.7m and
includes trade receivables with a fair value of $9.5m. The gross
contractual amount for trade receivables due is $12.7m of which
$3.2m is expected to be uncollectible.
Sentry contributed revenue of $94.7m and net profit of $1.6m to
the Group for the period from 13 July 2021 to 30 June 2022. If the
acquisition had occurred on 1 July 2021, consolidated revenue and
consolidated profit after tax for the year ended 30 June 2022 would
have been $168.2m and $9.5m respectively.
3. Earnings per Share
The calculation of basic and diluted earnings per share is based
on the following data:
Weighted average number of shares
unaudited unaudited audited
H1 2023 H1 2022 FY 2022
No. of
Shares No. of Shares No. of Shares
000s 000s 000s
--------------------------------------- ---------- -------------- --------------
Weighted average number of Ordinary
Shares for the purpose of basic
earnings per share 35,194 35,034 35,110
--------------------------------------- ---------- -------------- --------------
Effect of dilutive potential Ordinary
Shares: share options and LTIPs 310 412 367
--------------------------------------- ---------- -------------- --------------
Weighted average number of Ordinary
Shares for the purpose of diluted
earnings per share 35,504 35,446 35,477
--------------------------------------- ---------- -------------- --------------
The Group has one category of dilutive potential Ordinary
shares, being those granted to Directors and employees under the
share schemes.
Shares held by the Employee Benefit Trust are excluded from the
weighted average number of Ordinary shares for the purposes of
basic earnings per share.
Profit for period
unaudited unaudited audited
H1 2023 H1 2022 FY 2022
$000's $'000s $000's
---------------------------------------------- ---------- ---------- ---------
Profit for the period attributable to
equity holders of the parent 3,932 4,720 9,409
Acquisition and associated share placing
costs (tax adjusted) - 1,321 1,279
Acquisition integration costs (tax adjusted) 28 290 325
Amortisation of acquired intangibles (tax
adjusted) 10,468 8,919 20,238
---------------------------------------------- ---------- ---------- ---------
Adjusted profit for the period attributable
to equity holders of the parent 14,428 15,250 31,251
---------------------------------------------- ---------- ---------- ---------
Basic earnings per share are calculated by dividing the profit
attributable to equity holders of the Company by the weighted
average number of shares in issue during the period.
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.
Earnings per share
unaudited unaudited audited
H1 2023 H1 2022 FY 2022
cents cents Cents
---------------------- ---------- ---------- ---------
Basic EPS 11.2 13.5 26.8
Diluted EPS 11.1 13.3 26.5
Adjusted basic EPS 41.0 43.5 89.0
Adjusted diluted EPS 40.6 43.0 88.1
---------------------- ---------- ---------- ---------
4. Intangible assets
Customer Proprietary Development Computer
Goodwill Relationships Software Trademarks Costs Software Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000
--------------- --------- -------------- --------------- ------------- --------------- --------------- --------
Cost
At 1 July 2022 237,896 153,964 52,724 5,000 56,096 4,840 510,520
Additions - - - - 6,979 66 7,045
Reallocation
to hardware - - - - - (450) (450)
--------------- --------- -------------- --------------- ------------- --------------- --------------- --------
At 31 December
2022 237,896 153,964 52,724 5,000 63,075 4,456 517,115
---------------
Accumulated amortisation and impairment
At 1 July 2022 250 12,706 11,187 538 15,607 1,899 42,187
Charge for the
period - 5,033 5,158 277 3,027 605 14,100
Amortisation - - - - - - -
on disposal
--------------- --------- -------------- --------------- ------------- --------------- --------------- --------
At 31 December
2022 250 17,739 16,345 815 18,634 2,504 56,287
---------------
Net book value
at 31
December 2022 237,646 136,225 36,379 4,185 44,441 1,952 460,828
--------------- --------- -------------- --------------- ------------- --------------- --------------- --------
Net book value
at 30 June
2022 237,646 141,258 41,537 4,462 40,489 2,941 468,333
--------------- --------- -------------- --------------- ------------- --------------- --------------- --------
5. Trade and other receivables
unaudited unaudited audited
H1 2023 H1 2022 FY 2022
$'000 $'000 $'000
------------------------------------------- ---------- ---------- ---------
Trade receivables 38,257 43,161 34,730
Less: provision for impairment of trade
receivables (6,075) (5,584) (5,855)
---------- ---------- ---------
Net trade receivables 32,182 37,577 28,875
Unbilled contract revenue - 18,725 -
Other receivables 1,383 3,348 827
Current tax receivable 3,547 2,723 3,349
Prepayments and accrued income 6,131 3,441 4,714
Deferred contract costs 4,958 6,208 5,470
---------- ---------- ---------
48,201 72,022 43,235
Less non-current prepaid loan arrangement
fees - - (26)
Less non-current deferred contract costs (2,992) (3,673) (3,208)
---------- ---------- ---------
Trade and other receivables 45,209 68,349 40,001
---------- ---------- ---------
------There is no material difference between the fair value of
trade and other receivables and the book value stated above. All
amounts included within trade and receivables are classified as
financial assets at amortised cost.
6. Trade and other payables
unaudited unaudited audited
H1 2023 H1 2022 FY 2022
$'000 $'000 $'000
------------------------------------- ---------- ---------- ---------
Trade payables 3,349 5,545 3,587
Lease creditor due < 1 year 1,150 1,272 2,439
Other provisions < 1 year 89 - 17
Social security and PAYE 1,491 2,452 2,705
Other creditors 676 1,016 128
Amounts held on behalf of customers 51,358 8,867 672
Accruals 5,670 6,925 6,222
Advanced payments - - 22
---------- ---------- ---------
Trade and other payables 63,783 26,077 15,792
---------- ---------- ---------
No derivatives have been entered into in the current reporting
period. No other assets or liabilities have been measured at fair
value. Trade and other payables are classified as financial
liabilities at amortised cost.
7. Borrowings
In June 2021, the Group entered into a new debt facility to
finance the purchase of Sentry Data Systems, Inc. The total
available amount under the facility is $140m, of which $120m was
drawn down on 12 July 2021.
The debt facility comprises a term loan of $40m which is
repayable in quarterly instalments over 5 years up to 30 June 2026,
and a revolving loan facility of $80m which expires on 7 June 2025.
The Group has the ability to extend the revolving loan facility for
an additional one year term. Interest is charged on the facility on
a daily basis at margin and compounded reference rate. The margin
rate was fixed at 2.55% for the initial 9 months of the facility
term. Following this initial period, the margin is related to the
leverage of the Group as defined in the loan agreement. As the
leverage of the Group strengthens, the applicable margin
reduces.
The facility agreement is secured by a Scots law floating charge
granted by the Company, an English law debenture granted by the
Company and a New York law security agreement to which the Company
and certain of its subsidiaries are parties. The securities granted
by the Company and the relevant subsidiaries provide security over
all assets of the Company and specified assets of the Group.
Reconciliation of profit before taxation to net cash generated from operations:
unaudited unaudited audited
H1 2023 H1 2022 FY 2022
$'000 $'000 $'000
------------------------------------------------------- ------------- ------------- ---------
Current interest bearing borrowings 8,000 7,491 8,000
Non current interest bearing borrowings 99,908 107,081 103,589
Total 107,908 114,572 111,589
------------------------------------------------------- ------------- ------------- ---------
Arrangement fees paid in advance of the setting up of the
facility are being recognised over the life of the facility in
operating costs. The remaining balance of unamortised fees and
interest at 31 December 2022 is $2.9m.
Loan covenants
Under the facilities the Group is required to meet quarterly
covenants tests in respect of:
a) Adjusted leverage which is the ratio of total net debt on the
last day of the relevant period to adjusted EBITDA;
b) Cash flow cover which is the ratio of cashflow to net finance
charges in respect of the relevant period.
The Group complied with these ratios throughout the reporting
period.
Financing arrangements
The Group's undrawn borrowing facilities were as follows:
unaudited unaudited audited
H1 2023 H1 2022 FY 2022
$'000 $'000 $'000
------------------------------ ---------- ---------- ---------
Term loan - - -
Revolving facility 20,000 20,000 20,000
---------- ---------- ---------
Undrawn borrowing facilities 20,000 20,000 20,000
---------- ---------- ---------
8. Called up share capital
unaudited unaudited audited
H1 2023 H1 2022 FY 2022
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 35,542,169 659 35,526,539 658 35,542,169 659
9. Cash generated from operations
Reconciliation of profit before taxation to net cash generated from operations:
unaudited unaudited audited
H1 2023 H1 2022(5) FY 2022
$'000 $'000 $'000
----------------------------------------------------------- ---------- ------------ ---------
Profit before taxation 5,219 6,234 13,102
Finance income (35) (1) (1)
Finance expense 3,221 1,431 5,031
Depreciation on property, plant and equipment 1,712 1,511 3,259
Amortisation on intangible assets - other 3,632 2,653 5,905
Amortisation on intangible assets - acquired intangibles 10,468 8,919 20,239
Gain on disposals (7) - (5)
Share-based payments 1,227 1,013 2,116
Movements in working capital:
(Increase)/Decrease in trade and other receivables (4,767) (15,343) (3,203)
Increase/(Decrease) in trade and other payables (5,388) 6,176 (13,500)
Cash generated from operations 15,282 12,593(5) 32,943
----------------------------------------------------------- ---------- ------------ ---------
(5) H1 2022 includes restricted cash within the cash and cash
equivalents balance. Excluding restricted cash in H1 2022 would
result in a (decrease) in trade and other payables of $1.49m and
cash generated from operations of $4.93m.
10. Cash and cash equivalents and restricted cash
For the purpose of the statement of cash flows, cash and cash
equivalents comprise cash held by the Group and short-term bank
deposits.
unaudited unaudited audited
H1 2023 H1 2022 FY 2022
$'000 $'000 $'000
-------------------------- ---------- ---------- ---------
Cash at bank and in hand 38,607 41,696 47,157
-------------------------- ---------- ---------- ---------
Restricted cash balances comprise amounts held on behalf of
customers as part of services provided in connecting them to their
contract pharmacy network. These amounts are generally held by the
Group for less than 45 days. The Group retains fees from the
restricted cash accounts for services provided to customers in
managing the transfer of cash and for reconciliation services. The
related creditor is held within other creditors in Note 6.
unaudited unaudited audited
H1 2023 H1 2022 FY 2022
$'000 $'000 $'000
----------------- ---------- ---------- ---------
Restricted cash 52,203 9,338 1,251
----------------- ---------- ---------- ---------
11. 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 2022 and the
changes outlined below in Note 14. Those accounts, with an
unqualified audit report, have been delivered to the Registrar of
Companies.
The interim financial statements have been prepared on a going
concern basis. The Group's activities and an overview of the
development of its products, services and the environment in which
it operates together with an update on the Group's financial
performance and position are set out in the Financial Review.
Despite difficult market conditions for customers and cost
inflation pressure, the Group is profitable, cash generative and
has a robust base of recurring revenue. An overview of the impact
of the post pandemic macro pressures on the Group in the period are
contained in the Strategic Report, and details were also contained
in the Group's Annual Report and Financial Statements for the year
ended 30 June 2022. The Board continues to carefully monitor the
impact of inflationary pressures on the operations of the Group.
The Viability Statement and the Board's Going Concern assessment
contained the Annual Report for the year ended 30 June 2022 are
still considered to be appropriate by the Board. The SaaS business
model with its underlying long-term contracts as described earlier
in the Financial Review, high levels of cash generation and
long-term focus on customer success provides a foundation of
revenue for future periods. This foundation of contracted revenue
forms the basis of the scenarios considered by the Directors in
making this assessment.
The Directors, having made suitable enquiries and analysis of
the interim financial statements, including the consideration of:
net debt; continued cash generation; compliance with loan facility
covenants; and SaaS business model; have determined that the Group
has adequate resources to continue in business for the foreseeable
future and that it is therefore appropriate to adopt the going
concern basis in preparing the interim financial statements.
12. 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.
13. Risks and uncertainties
The principal risks and uncertainties, as set out on pages 15 to
24 of the Annual Report for the year ended 30 June 2022, remain
unchanged. The unchanged risks are:
-- Data & Cyber Security
-- Data Protection
-- Intellectual Property Risk
-- US Healthcare: Complexity, Evolution and Reform
-- Regulatory Environment
-- Complex Market Dynamics
-- Competitive Landscape
-- Management of Growth
-- Acquisition Risk
-- Macro-economic Environment
-- Compliance with debt finance facility covenants
The Directors regularly review these risks and uncertainties and
appropriate actions are taken to manage them. Included within the
Strategic Report section is more detail on the outlook for the
Group for the remaining six months of the year.
14. Changes to Significant Accounting Policies, Judgements and
Estimates
The accounting policies, significant judgements and key sources
of estimation applied in these interim financial statements are the
same as those applied in the Group's consolidated financial
statements as at and for the year ended 30 June 2022.
15. Availability of Half Yearly Financial Report
Copies of this Half Yearly Financial Report are available for
download from the Company's website, www.thecranewaregroup.com . A
printed copy can be obtained on request from the registered office
of the Company.
16. Alternative performance measures
The Group's performance is assessed using a number of financial
measures which are not defined under IFRS and are therefore
non-GAAP (alternative) performance measures.
The Directors believe these measures enable the reader to focus
on what the Group regard as a more reliable indicator of the
underlying performance of the Group since they exclude items which
are not reflective of the normal course of business, accounting
estimates and non-cash items. The adjustments made are consistent
and comparable with other similar companies.
Adjusted EBITDA
Adjusted EBITDA refers to earnings before interest, tax,
depreciation, amortisation, exceptional items and share based
payments.
unaudited unaudited audited
H1 2023 H1 2022 FY 2022
$'000 $'000 $'000
--------------------------------------- ---------- ---------- ---------
Operating profit 8,405 7,664 18,132
Depreciation of property, plant and
equipment 1,712 1,511 3,259
Amortisation of intangible assets
- other 3,632 2,653 5,905
Amortisation of intangible assets
- acquired intangibles 10,468 8,919 20,239
Share based payments 1,227 1,013 2,116
Exceptional items - acquisition and
associated share placing 23 1,573 1,705
Exceptional items - integration costs - 346 401
---------------------------------------
Adjusted EBITDA 25,467 23,679 51,757
--------------------------------------- ---------- ---------- ---------
Adjusted earnings per share (EPS)
Adjusted earnings per share (EPS) calculations allow for the tax
adjusted acquisition costs and share related transactions together
with amortisation on acquired intangibles via business
combinations. See Note 3 for the calculation.
Adjusted PBT
Adjusted PBT refers to profit before tax adjusted for
exceptional items and amortisation of acquired intangibles.
unaudited unaudited audited
H1 2023 H1 2022 FY 2022
$'000 $'000 $'000
--------------------------------------- ---------- ---------- ---------
Profit before taxation 5,219 6,234 13,102
Amortisation of intangible assets
- acquired intangibles 10,468 8,919 20,239
Exceptional items - acquisition and
associated share placing 23 1,573 1,705
Exceptional items - integration costs - 346 401
---------------------------------------
Adjusted PBT 15,710 17,072 35,447
--------------------------------------- ---------- ---------- ---------
Net Debt
New Debt refers to net balance of short term borrowings, long
term borrowings and cash and cash equivalents (excluding restricted
cash).
unaudited unaudited audited
H1 2023 H1 2022 FY 2022
$'000 $'000 $'000
------------------------------------- ---------- ---------- ----------
Cash and cash equivalents (Note 10) 38,607 41,696 47,157
Borrowings (Note 7) (107,908) (114,572) (111,589)
-------------------------------------
Net Debt (69,301) (72,876) (64,432)
------------------------------------- ---------- ---------- ----------
Lease liabilities are excluded from borrowings for the purpose
of net debt.
Total Sales
Total Sales refer to the total value of contracts signed in the
year, consisting of New Sales and Renewals.
New Sales
New Sales refers to the total value of contracts with new
customers or new products to existing customers at some time in
their underlying contract.
Annual Recurring Revenue
Annual Recurring Revenue includes the annual value of licence
and transaction revenues as at 31 December 2022 that are subject to
underlying contracts.
% Annual Recurring Revenue from the Cloud
Annual Recurring Revenue from the Cloud is the Annual Recurring
Revenue as described above relating specifically to cloud-based
products expressed as a percentage of total Annual Recurring
Revenue.
Revenue Growth
Revenue Growth is the increase in Revenue in the current period
compared to the previous period expressed as a percentage of the
previous period Revenue.
Cautionary statement
Certain statements in this report are forward-looking
statements. These forward-looking statements are made by the
Directors in good faith based on the information available to them
up to the time of their approval of this report. However, such
statements should be treated with caution due to the inherent
uncertainties, including both economic and business risk factors,
underlying any such forward-looking information that could cause
actual events or results to differ materially from any expected
future events or results expressed or implied in these
forward-looking statements. Unless otherwise required by applicable
law or regulation, Craneware plc does not undertake any obligation
to publicly update or revise any forward-looking statements,
whether as a result of new information, future developments or
otherwise.
Directors, Secretary, Advisors and Subsidiaries
Directors Company Secretary and Registered Office
W Whitehorn (non-executive, Chair) C T Preston
K Neilson 1 Tanfield
C T Preston Edinburgh
I Urquhart EH3 5DA
C Blye (senior independent director)
R Rudish (non-executive)
A Erskine (non-executive)
D Kemp (non-executive)
A McCune (non-executive) (appointed 16 November 2022)
Nominated Advisors Registrars Independent Auditors Financial PR
and Joint Stockbroker
Peel Hunt LLP Link Group PricewaterhouseCoopers Alma PR
100 Liverpool 10(th) Floor LLP 71-73 Carter Lane
Street 29 Wellington Atria One London
London Street 144 Morrison Street EC4V 5EQ
EC2M 2AT Leeds Edinburgh
LS1 4DL EH3 8EX
Joint Stockbrokers Solicitors
Berenberg, Gossler Investec Bank Bryan Cave Leighton Pinsent Masons
& Co plc Paisner LLP LLP
60 Threadneedle 30 Gresham Street One Atlantic Center, 58 Morrison Street
Street London 14(th) Floor Edinburgh
London EC2V 7QP 1201 W. Peachtree EH3 8BP
EC2R 8HP St. NW.
Atlanta
GA, 30309-3471
Bankers
The Royal Bank Silicon Valley HSBC Bank plc Bank of Scotland
of Scotland plc Bank 7 West Nile Street The Mound
36 St Andrew Square 3003 Tasman Drive Glasgow Edinburgh
Edinburgh Santa Clara G1 2RG EH1 1YZ
EH2 2YB CA, 95054
Clydesdale Bank Wells Fargo Barclays Commercial
20 Waterloo Street 500 N. Magnolia Bank
Glasgow Avenue Aurora House
G2 6DB 8(th) Floor 120 Bothwell Street
Orlando Glasgow
FL, 32803 G2 7JT
Subsidiaries and Registered offices
Craneware US Holdings, Craneware, Inc. Craneware InSight, Craneware Healthcare
Inc. 3340 Peachtree Inc. Intelligence, LLC
Corporation Trust Rd NE 3340 Peachtree Rd 200 Pinewood Lane
Center Suite 850 NE Suite 304
1209 Orange St Atlanta, GA 30326 Suite 850 Warrendale, PA
Wilmington, DE Atlanta, GA 30326 15086
19801
SDS Holdco, Inc. SDS Intermediate, Agilum Healthcare Sentry Data Systems,
251 Little Falls Inc. Intelligence, Inc. Inc.
Drive 251 Little Falls 300 Montvue Road, 1946 Tyler Street
Wilmington, DE Drive Suite 400 Hollywood, FL 33020
19808 Wilmington, DE Knoxville, TN 37919
19808
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END
IR EANDSEEFDEFA
(END) Dow Jones Newswires
March 06, 2023 02:00 ET (07:00 GMT)
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