REG - Craneware plc - FY24 Final Results
03/09/2024 07:00
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RNS Number : 6159C Craneware plc 03 September 2024
Craneware plc
("Craneware" or the "Company" or the "Group")
FY24 Final Results
Strong strategic and financial progress, delivering results above expectations
3 September 2024 - Craneware (AIM: CRW.L), the market leader in Value Cycle
software solutions for the US healthcare market, announces its audited results
for the year ended 30 June 2024.
Financial Highlights (US dollars)
· Revenue increased 9% to $189.3m (FY23: $174.0m)
· Adjusted EBITDA(1) increased 6% to $58.3m (FY23: $54.9m)
· Annual Recurring Revenue(2) increased to $172.0m (FY23: $169.0m),
associated Net Revenue Retention(3) remains high at 98% (FY23: 100%)
· Statutory Profit before tax increased 20% to $15.7m (FY23: $13.1m)
· Adjusted basic EPS(1) increased 9% to 94.8 cents (FY23: 87.0 cents) and
adjusted diluted EPS increased to 93.9 cents (FY23: 86.3 cents)
· Basic EPS 33.5 cents (FY23: 26.3 cents) and diluted EPS 33.2 cents (FY23: 26.1
cents)
· Robust Operating Cash Conversion(4) at 90% of Adjusted EBITDA (FY23: 92%)
· Total Cash and cash equivalents $34.6m (FY23: $78.5m)
· Significant reduction in Total Bank Debt in the year at $35.4m (FY23: $83.0m),
with continued investment in the Trisus Platform
· Proposed final dividend of 16.0p per share (FY23: 16.0p) giving a total
dividend for the year of 29.0p per share (FY23: 28.5p) up 2%
· Completed share buyback programme utilising £5m ($6.3m) allocated
(1) Certain financial measures are not determined under IFRS and are
alternative performance measures as described in Note 15
(2) Annual Recurring Revenue "ARR" includes the annual value of subscription
license and related recurring revenues as at 30 June 2024 that are subject to
underlying contracts and where revenue is being recognised at the reporting
date
(3) Net Revenue Retention is the percentage of revenue retained from existing
customers over the measurement period, taking into account both churn and
expansion sales
(4) Operating Cash Conversion is cash generated from operations (as per Note
15), adjusted to exclude cash payments for exceptional items and movements in
cash held on behalf of customers, divided by adjusted EBITDA
(5) When we refer to 'Craneware', or 'The Craneware Group' or 'Group' in the
annual report we mean the group of companies having Craneware plc as its
parent and therefore these words are used interchangeably
Operational Highlights
· Investments made over recent years coming to fruition, delivering strong
revenue growth and results above market expectations
· US healthcare providers refocusing on their longer-term strategic priorities,
including the delivery of value-based care, provides an increasingly
supportive market backdrop for Craneware
· Strong sales performance, driven by positive market response to Trisus
Optimization Suites and success of the Trisus Platform Partner programme
· Our Shelter platform partner programme has returned over $250m of additional
benefit to hospitals and is expected to contribute to ARR growth in FY25 and
beyond
· Continued high levels of customer retention, at over 90% across the multiple
measures, demonstrating the value Craneware brings to its customers
· A new strategic alliance formed with Microsoft, enabling a joint go-to-market
plan for Trisus offerings on the Microsoft Azure Marketplace, expanding
Craneware's market reach
Outlook
· Increasing opportunity ahead, including accelerated innovation via the
alliance with Microsoft
· Momentum has continued post-year end, with good levels of trading and customer
confidence, providing the Board with confidence in continued growth momentum
for FY25, delivering on current expectations and the sustainable return to
double digit growth rates
Keith Neilson, CEO of Craneware plc commented:
"The strong financial results during the year demonstrates the strength of the
Trisus platform, our increasing platform partnership successes and the role we
play in helping healthcare providers drive for better value in the US
healthcare market.
We see increased opportunity ahead. Our alliance with Microsoft will allow us
to accelerate innovation and explore new AI-based applications in an efficient
manner which, alongside the breadth of the Trisus platform, our unique data
assets and our considerable and extensive customer base provides significant
scope for expansion in the size of our addressable market.
We approach this opportunity from a position of strength and resilience, with
a strong balance sheet, high levels of recurring revenue and consistently high
customer retention rates. This gives us the confidence and the ability to
continue investing for growth, to secure our long-term market position.
We have commenced FY25 with a good level of trading, and remain confident in
achieving another positive year ahead, growth acceleration over the near term,
and our ability to create further long-term value for all stakeholders."
For further information, please contact:
Craneware plc +44 (0)131 550 3100
Keith Neilson, CEO
Craig Preston, CFO
Alma Strategic Communications +44 (0)20 3405 0205
Caroline Forde, Kinvara Verdon craneware@almastrategic.com
Peel Hunt (NOMAD and Joint Broker) +44 (0)20 7418 8900
Neil Patel, Benjamin Cryer, Kate Bannatyne
Investec Bank PLC (Joint Broker) +44 (0)20 7597 5970
Patrick Robb, Henry Reast, Shalin Bhamra
Berenberg (Joint Broker) +44 (0)20 3207 7800
Mark Whitmore, Richard Andrews, Dan Gee-Summons
About Craneware
The Craneware Group (AIM:CRW.L), is the market leader in value cycle
solutions. For 25 years, we have collaborated with U.S. healthcare providers
to optimize revenue integrity, pricing intelligence, decision support, labor
productivity, business of pharmacy, and 340B program management.
Customers choose Trisus®, a HITRUST and SOC2 Type II-certified, SaaS
platform, to achieve operational and financial excellence in pursuit of their
healthcare mission - delivering quality care to their communities. The
Craneware Group - Transforming the Business of Healthcare.
Learn more at www.craneware.com (http://www.craneware.com/)
Chair statement
This has been a year of strategic and financial progress for Craneware.
Investments made over recent years are coming to fruition, delivering strong
revenue growth and results above market expectations. The Group continues to
demonstrate its ability to innovate and meet the needs of its healthcare
customers, while retaining a strong financial foundation. Through its Trisus
platform and the associated platform partnership programme, Craneware is
uniquely positioned to be a leading player in the digitalization of US
healthcare, supporting its customers in the drive towards value-based care.
Strong financial results, above market expectations
The year has seen the Group deliver on its commitment to increase its rate of
growth, while maintaining strong profit margins and reducing bank debt.
Group revenues increased 9% to $189.3m (FY23: $174.0m). Adjusted EBITDA
increased 6% to $58.3m (FY23: $54.9m), maintaining the Group's target EBITDA
margin above 30%.
The healthy sales performance and continued high levels of customer retention
have delivered growth in ARR to $172m (30 June 2023: $169m), with further
sales and platform partner revenue expected to convert to ARR in future years.
The Group's continued high levels of cash generation and revenue visibility
have enabled it to invest in the strengthening and ongoing innovation of the
Trisus platform, continue our progressive dividend policy and complete our
share buyback programme, whilst reducing total bank debt, at an accelerated
rate, to $35.4m (30 June 2023: $83.0m). The strength of the Group's balance
sheet allows the Board to continue to invest organically as well as review
appropriate acquisition opportunities aligned with its growth strategy.
Leading market position & building momentum
Over the course of the financial year we have seen US healthcare providers
emerge from the high-pressure environment of the COVID-19 pandemic into a more
settled state, allowing them to re-focus on other strategic priorities. First
in these priorities is the desire to deliver first class, value-based care to
their communities against the challenging backdrop that includes increasing
drug costs, increasing wage bills and an aging population putting more strain
on the healthcare system. These challenges result in continued financial
pressures they need to understand and actively manage.
Craneware holds a unique central position within the US healthcare industry,
with Craneware customers and customer numbers representing approximately 40%
of the total number of registered US hospitals. Craneware customers include
more than 12,000 US hospitals, health systems, affiliated retail pharmacies
and clinics, and our data sets now cover more than 200 million patient
encounters. Craneware's independence within the US Healthcare ecosystem allows
an uncompromised focus solely on the benefit to its customers.
This positioning has been enhanced further this year through the growth of the
Group's platform partner programme, leveraging the Group's Trisus platform and
data to bring innovative additional offerings to its customers, as well as the
recently announced alliance with Microsoft, supporting accelerated innovation
and exploration of AI-based opportunities.
Benefitting society through our Purpose
The driving force of Craneware is its commitment to its purpose: to transform
the business of healthcare through solutions that streamline and improve the
operational and financial performance of its customers, providing the strong
foundation for them to continue the provision of high-quality care for their
communities. Social responsibility and delivering a positive contribution to
society is paramount to Craneware and this is seen in the superb dedication of
its team.
The ESG Committee routinely reviews the Group's sustainability credentials and
has introduced various initiatives in the year to support its communities.
Details about the Group's impact on the communities it serves can be found in
the ESG Statement within the Annual Report.
On behalf of the Board, I would like to express my gratitude to the team at
The Craneware Group for the hard work and passion they bring every day to
serving our customers.
Board Changes
Following many years' service on the Board of Directors, Colleen Blye, Senior
Non-Executive Director, and Russ Rudish, Non-Executive Director, have informed
the Board of their intention to not stand for re-election at the Company's
forthcoming Annual General Meeting. On behalf of the Board, I would like to
thank them both for their significant contributions to Craneware's success to
date. Their insight into the US healthcare industry has been invaluable and we
wish them all the very best. The Board is in the latter stages of reviewing
replacement independent Non-Executive Director candidates and will provide an
update in due course.
Increased opportunity ahead
Craneware's strong sales performance is testament to the strength of the
Trisus platform, the increasing success of its platform partnership programme,
and the central role the Group plays in enabling its customers to deliver
better value healthcare.
With an increasing opportunity ahead for Craneware, including accelerated
innovation via the recently announced alliance with Microsoft, the Board is
confident in the Group's ability to further its enviable market position and
deliver successful outcomes for all stakeholders.
Will Whitehorn
Chair
2 September 2024
Strategic Report
Operational Review
Our mission is to transform the business of US healthcare. Our independent
position in the market means we are uniquely placed to support all US
healthcare providers in this pressing agenda, providing them with the insights
they need to achieve greater value in healthcare. It is this powerful
motivation that drives the whole Craneware team forward. We are immensely
proud of the fantastic support our teams provide to our growing customer base.
Together, our offerings continue to return in excess of $1.5 billion to our
customers each year.
This has been another year of progress and delivery. We have seen many of the
projects that were put in motion in recent years, such as our Data Foundations
work, collecting and building our extensive proprietary data-sets, the launch
of Trisus Optimization Suites, and our platform partnership programme, all
start to come to fruition this year, as is evidenced in the increasing
revenue growth rate, continued high levels of customer retention, and the
recently announced alliance with Microsoft.
With this success, the opportunity ahead of us only continues to grow.
Hospital management teams are increasingly seeking a greater understanding of
the revenue and costs running through their extensive operations as they look
to ensure a sustainable financial future for their facilities. Our recently
introduced Optimization Suites combine different solutions to directly address
some of the key strategic challenges our customers face today, typically
delivering a more than 3x return on investment within the first year of
ownership. Meanwhile our innovation teams are exploring new applications,
including the use of Generative AI, and we will continue to invest in this
area of the business to capitalise on this unique position gained from our
extensive proprietary data-sets.
As we look to the year ahead, we do so from a position of increasing strength
and resilience. Our extensive customer base, powerful cloud-based platform,
significant data assets, high levels of recurring revenue and strong balance
sheet provide us with a solid foundation from which to continue our growth
strategy.
Digitalization of US Healthcare
The US healthcare market continues to experience challenges across three broad
areas: clinical, financial and operational. Examples within these areas
include the opioid epidemic, a mental health crisis, the increasing cost of
prescription drugs and the behaviour of manufacturers in selectively honouring
contracted and regulatory mandated discounts, medical procedures and
associated insurance premiums, the shortage of healthcare professionals and
wage inflation.
The combination of these factors means our customers are consistently being
asked to do more, with less, while improving patient care. We believe the key
to successfully achieving that is through accurate, accessible and meaningful
data and insights, providing the ability to deliver enhanced services,
improved infrastructure, robust governance and the ability to make more
informed choices around resource allocation.
However, to make those choices our customers need to be able to manage and
analyse vast amounts of data, which presents a significant and costly
challenge for hospitals in areas such as scalability, interoperability,
processing costs, security, and compliance.
Our vision is for the Trisus platform and its applications whether developed
by Craneware or third parties to address these challenges, through connected
technology in the cloud.
Trisus combines revenue integrity, cost management and decision enablement
functions into a single cloud-based platform. The platform brings together
siloed data from the various existing software systems in a hospital or
healthcare system, normalises that data and applies prescriptive analytics in
order to provide insights to customers to support informed decision making
regarding a hospital's finances and operations, in one place.
We provide customers with the ability to build effective strategies related to
revenue, pricing, cost, and compliance to mitigate the internal and external
challenges described above, delivering real financial returns and freeing up
valuable resources that can be re-invested and re-deployed by healthcare
providers to support the clinical care of their communities and tackle their
clinical challenges.
We believe the digitalization of healthcare and improvement of processes using
data insights will provide the successful foundation for value-based care and
enable the transformation of 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 & expand). In recent years, we have invested
in the development of the Trisus platform; a sophisticated cloud delivered
data aggregation and intelligence platform which is the foundation for our
future growth.
We are building on top of Trisus to strengthen our current products, leverage
our proprietary data assets to expand our offering, integrate third party
solutions to the platform and benefit from the scalability of
cloud-technology.
Through our 25 year history in the US healthcare market, we have collected our
own unique and extensive data set, which we believe contains the insights that
will generate our products of the future. While we have always had a team
analysing this data, the growth in artificial intelligence ("AI") and machine
learning ("ML") means it is now easier and faster to do so, particularly when
combined with the large language training capabilities of our own proprietary
data. Meanwhile, we are also using AI across the organisation for efficiency
and productivity gains.
Two Growth Pillars
Our strategy has two fundamental growth pillars:
1. Platform enhancements to increase ease of use and interoperability
With all customers now connected to, and benefitting from, the Trisus
platform, our focus is on enhancing the attractiveness and value of the
platform. This includes three areas of work:
· the ongoing re-engineering of existing offerings enhancing cloud-based
applications;
· the growth of our data sets within the platform, to support future product
expansion; and
· our Data Foundations programme which aims to increase the speed and ease of
hospitals' interaction with the platform and interoperability of applications
on the platform.
Existing product improvements
The continual improvement of our existing offerings is an ongoing process.
Combinations of new technology and their novel applications give speed,
productivity and efficiency gains that benefit the ease of use of our
offerings by our customers.
Growth of our data sets
The depth of our product offering continues to expand through the mining of
the proprietary and regulatory data that we collect, identifying new ways that
data can illuminate and support decision making within the hospital provider
environment. We now have data sets covering more than 200 million patient
encounters, providing incredibly valuable insights for our customers.
Whilst our Revenue Integrity and 340B related software applications utilise
different technology stacks within the Trisus platform, they both supplement
and further enrich our Trisus data sets. Eventually the work we are doing with
our Trisus Data Foundations programme will enable the full integration of
these stacks, making our offerings even more attractive to customers as the
speed and depth of insights available is increased.
Data Foundations
As part of our Data Foundations programme of work, we are utilising the
advances in AI and ML data processing to increase the interoperability and
connectivity of our applications, while making the platform's back-end
processes more efficient and effective.
2. Value driven Customer Expansion
With the first stage of cloud-based enhancements for existing products now
complete, our focus is now on the development of new applications and the
extension of existing applications, to expand our capabilities and the
benefits derived by our Provider customers. We anticipate our customers'
success will in turn encourage new Providers to visit or re-visit The
Craneware Group's solutions, which will facilitate a greater level of cross
sale and product penetration across our extensive customer base and the wider
US Hospital market over time, driving further growth in ARR as part of an
ongoing cycle of transforming the business of healthcare and winning new
customers.
Application Adoption and Measured Value
By equipping our internal teams with proactive indicators of customer
engagement, derived from their usage data from the platform, we help customers
maximise the value they achieve from their Craneware software investment.
Helping customers boost their understanding of what good looks like enables
them to enact meaningful change in their organisations en-route to sustainable
operating model improvements. Increasing this visibility of shared learnings
and success achieves individual customer value but also serves to connect
customers across the community of Craneware software users.
Growth in ARR
This healthy sales performance and continued high levels of customer retention
in the year have delivered growth in Annual Recurring Revenue (ARR) to $172m
(30 June 2023: $169m), Net Revenue Retention remains high at 98% for the year,
with additional growth expected in both these metrics as more of the sales and
platform partner success converts to ARR.
We continue to see the opportunity to accelerate ARR growth over the medium
term, both as our initial platform partners mature and begin generating
demonstrable recurring revenue and we unlock the considerable cross and upsell
opportunities within our enlarged customer base. Customer retention for the
year exceeded 90%, across the multiple measures, which is testament to the
value Craneware brings to its customer base.
Six Trisus® Optimization Suites
The Trisus software applications and corresponding service offerings have now
been grouped into six Trisus® Optimization Suites, bringing together the
solutions that address specific strategic and tactical issues facing
healthcare providers and are powered by the same sub-set of customer data.
Through packaging our applications into suites, we aim to make it easier for
our customers to identify which of our multiple additional applications are
likely to unlock immediate value and address their challenges most
effectively, based on their existing data within the Trisus platform.
The Optimization Suites are: Trisus Pricing Integrity, Trisus Data Integrity,
Trisus Business of Pharmacy, Trisus Revenue Protection Optimization, Trisus
Charge Capture Optimization and Trisus Value-based Margin & Productivity.
We have seen a very strong response from the market to these suites and their
ability to address issues being faced by hospitals at a more strategic level,
providing hospitals with a single vendor rather than multiple point
solutions.
Sales mix
We have seen a significant increase in the overall level of new sales, further
demonstrating the US healthcare industry's returning focus to strategic
priorities after the Healthcare emergency that ended on 11(th) May 2023. The
proportion of sales coming from each segment remained broadly consistent with
the prior year.
Expansion sales to existing customers represents 83% of our total 'new' sales
in the year (FY23: 81%), demonstrating the positive response of our customers
to the increased ROI derived from the uptake of our partner programme, our
additional cloud applications and the packaging of applications and services
into our Optimization Suites.
Whilst overall Sales to new customers have increased in real terms, as a
percentage of our total new sales it is 17% (FY23: 19%), reflecting the
success of our Platform partner programme and other new sales to existing
customers.
Growing Platform partnership programme
Our growing Platform partnership programme further enables us to leverage the
strength of our data, platform and customer numbers to generate additional,
highly scalable, Platform Revenue streams. It is an umbrella term that
encompasses any revenue that is generated in association with third parties
and is typically net of any third party outlays. This can be through the use
of the data assets within Trisus to directly support our customers in their
ability to leverage third parties or through hosting third party applications
on the platform.
Our customers will benefit from increased breadth of solutions to deliver
value from the platform partnership solutions, available in an efficient and
secure manner through the Trisus platform. The application and service
providers can benefit from access to our unique positioning, data sets and
extensive customer base, and we can benefit from new revenue opportunities and
additional business models. This work also creates important distinction and
strong competitive differentiation between our holistic Trisus platform
offerings and other Revenue Integrity and 340B potential competitors.
We will seek to transition the majority of this income into recurring revenue
models, adding to our ARR, although the nature of the offering may be such
that this is not applicable. These revenues from the platform, are initially
categorised as 'Platform Revenues - non-recurring', until a repeatable pattern
can be established.
We now have our initial programmes successfully generating revenue, and there
is a building pipeline of additional programme opportunities, which will be
rigorously assessed prior to launch.
Microsoft Alliance
We were delighted to announce in early July 2024 that we had formed an
alliance with Microsoft to further transform the business of healthcare. As
part of this, Craneware was named a Microsoft Global Partner Solution provider
and we are in the process of finalising our joint go-to-market plan for our
Trisus offerings on the Microsoft Azure Marketplace. The collaboration will
see the delivery of differentiated offerings and increased value to customers
through the application of industry leading data analytics, AI, and modern
platform technology. As part of the agreement, we signed a Microsoft Azure
Consumption Commitment (MACC) agreement, bringing predictability to our cloud
spending, budget optimisation, and enhanced financial planning, thus driving
cost efficiency.
A key factor of the agreement is the Microsoft Unified Support Commitment,
which provides for additional resilience and cyber protection to us and our
customers, with a guaranteed response time and prioritisation of technical
resources were there to be any outages irrespective of the cause.
Craneware teams have begun co-innovation with Microsoft's AI experts to
accelerate the application of AI enhancements to existing Trisus offerings and
the exploration of new AI-based applications. Craneware's long heritage in the
US healthcare industry, as well as more than 200 million unique patient
encounters within its datasets, mean it is uniquely positioned to provide
powerful, actionable insights to participants across the healthcare industry.
These insights support better operational and strategic decisions, enabling
further efficiencies in provider performance so they can focus on serving
their communities and healthcare missions, transforming the business of
healthcare.
The first of the Trisus applications to be made available on the Microsoft
Azure Marketplace will be Trisus Chargemaster, Trisus Decision Support, and
Trisus Labor Productivity. These offerings, supported by joint go-to-market
initiatives and other activities will help expand The Craneware Group's market
reach via the Microsoft partner ecosystem.
To drive the success of both this and the platform partner programme, we have
created a new role, SVP of Strategic Partnerships. The role will serve as the
lead liaison between The Craneware Group and its partners, working closely
with internal and external cross-functional teams to identify new
opportunities and negotiate mutually beneficial agreements that drive success
for our customers, engender customer loyalty, produce both direct and indirect
new revenue opportunities for the Group and expand The Craneware Group's
reach.
M&A
While organic growth across our portfolio remains the priority, we continue to
evaluate the market for suitable M&A opportunities and will continue to
pursue strategically aligned companies that will accelerate our growth
strategy. 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
platform partnering programme as a potential source of future M&A
activity, provided this would deliver mutual benefits to all parties.
Our People and Community
Our three focus areas of Community, People and Environment continue to guide
our ESG efforts. Central to our purpose is that our solutions benefit society.
Our solutions deliver value for our customers, through the provision of
accurate financial data, insight and analytics, that can be reinvested to
support our customers in the provision of care to their communities. In
addition, our 340B pharmacy solutions enable our customers to generate cost
savings which go directly to the provision of care for the underserved in
their communities. The Craneware Group is also directly involved with the 340B
Matters initiative, which aims to educate the market regarding the importance
of the 340B program for the non-profit healthcare facilities that provide
accessible and affordable care within their communities.
Our customers have seen more than $1.5bn in benefit from utilising our
solutions this year, helping to stretch scarce federal resources, to reach
more eligible patients and provide more comprehensive services.
Extending the considerable support provided for many years, we continue to
develop programmes and opportunities to positively and directly impact our
communities; this complements our purpose and reflects the causes which are
important to our employees. This is achieved through initiatives driven by our
employees through Craneware Cares and the Craneware Cares Foundation. During
the year, employees have supported several causes and charitable organisations
including our quarterly Spotlight Charity and Community Outreach Program.
Our team provides valuable support to our customers and the achievements of
the Group are due to the efforts, experience and dedication of our people. Our
team is a talented mix of employees from diverse backgrounds, which
contributes to high levels of innovation and collaboration. We believe in the
importance of fostering a team environment while also celebrating the
individuals within the team.
We continue to invest in our team, our facilities and working practices and we
welcome feedback and suggestions for improvements through a range of employee
engagement mechanisms. During the year we have held sessions under our
Craneware Spaces diversity, equity and inclusion programme and relaunched our
Employee Advisory Group which is helping to support some of our diversity,
equity and inclusion efforts, along with other initiatives such as
sustainability.
We continue to progress actions that help to support our environmental focus
area. During FY24 we reduced our rented office facility footprint in the US
thereby assisting with lowering our energy consumption and corresponding
emission reductions. This process involved the closure of our Atlanta office
and we relocated our office within Deerfield Beach which provided the
opportunity to configure improved collaboration spaces in the new office
facility. In FY24 we also extended our climate scenario analysis and risk
assessment process and continue to develop the gathering of emissions data in
support of compiling appropriate metrics and KPIs to guide our efforts towards
our pathway to net zero.
Financial Review
This has been a positive year for The Craneware Group, where we have seen our
end market of US Healthcare return its focus to its longer-term strategic
priorities. We have also seen many of the investments we have made over recent
years begin to deliver the expected financial returns, including the
acceleration of our platform partnership programme. For the year ended 30 June
2024, we are reporting revenue of $189.3m (FY23: $174.0m) representing
accelerated and strong revenue growth of 9%.
We continue to invest in our future while delivering an Adjusted EBITDA for
the year of $58.3m, 6% ahead of the prior year (FY23: $54.9m), representing an
Adjusted EBITDA margin of 31% (FY23: 32%).
The Group continues to be highly cash generative with a strong balance sheet.
Our continued high levels of cash generation allowed us to reduce bank debt by
$48m to $35.4m, pay dividends of $12.8m, reduce interest costs, and to commit
a total of $6.3m to a share buyback programme. The Group has maintained its
Revolving Credit Facility ("RCF") and strong banking relationships, hence has
considerable financial resources at its disposal.
As a result of all of the above, our Adjusted Basic Earnings per Share
increased 9% to 94.8 cents (FY23: 87.0 cents).
Underlying Business Model and Revenue Mix
The contracts we sign with our hospital customers provide a license for that
customer to access a specified product or suite of products throughout their
subscription license period. At the end of an existing subscription license
period, or at a mutually agreed earlier date, we look to renew these contracts
with customers. We recognise software subscription license revenue and any
minimum payments due from any 'other long term' contracts evenly over the life
of the underlying contract term.
In addition to the subscription license fees, we provide contracted
transactional services, which are highly dependable, and recurring, but can
occasionally see some variation year to year based on volume of transactions.
Transactional services are recognised as we provide the service and include
our contracts with our 340B customers that enable them to engage with their
network of contract pharmacies.
We also provide professional and consulting services to our customers. Where
these services are provided over an extended contract period, usually
alongside the multi-year software license as part of one of our Trisus
Optimization Suites, or where they relate to a complex implementation integral
to the use of the software, the revenue is recognised evenly over the life of
the underlying contract or project term.
The combination of these two software revenue models plus our recurring
professional services represent the recurring platform revenues of the
business, which for the current year have increased to $168.3m (FY23:
$163.7m).
Shorter professional or consulting services engagements are also provided,
usually taking less than one year to complete. These revenues are usually
recognised as we deliver the service to the customer, on a percentage of
completion basis. In the year, despite increasing underlying sales, these
engagements have delivered $7.2m of revenue (FY23: $9.2m), which reflects the
timing and resource available to complete the engagements during the year.
However, a building backlog of these projects has been generated and
associated revenues will be recognised during FY25.
We continue to look for new and innovative ways to leverage the Trisus
platform and the significant data assets within it. Our Platform partnership
programme aims to deliver meaningful benefit to our customers and derive new
revenue opportunities and additional business models for the Group. These
revenues are recognised at the point we are able to invoice our customers. As
initially, it is often too early to establish a pattern of what would become
recurring, they are shown separately as "Platform Revenues - non-recurring",
however once proven we expect many of these revenue opportunities to deliver
future annual recurring revenue.
In the year, we are reporting Platform Revenues - non-recurring of $13.8m
(FY23: $1.1m).
Annual Recurring Revenue
We define ARR as the annual value of subscription license and related
recurring revenues as at the Balance Sheet date that are subject to underlying
contracts and where revenue is being recognised at the reporting date.
ARR at 30 June 2024 increased to $172.0m (at 30 June 2023: $169.0m) with Net
Revenue Retention remaining high at 98% (FY23: 100%) and customer retention
for the year, again, exceeding 90%, all combining to provide a resilient
foundation for the future growth of the Group. These metrics are a testament
to the value Craneware brings to its customer base.
Gross Margins
Our gross profit margin is calculated after taking account of the incremental
costs we incur to obtain the underlying contracts, including sales commission
contract costs which are charged in line with the associated revenue
recognition and the direct costs of professional services employees who
deliver the services required to meet our contractual obligations.
The gross profit for FY24 increased 9% to $162.2m (FY23: $148.4m). This
represents a gross margin percentage of 86% (FY23: 85%) which is in line with
the expected gross margin of the Group.
Operating Expenses
Net operating expenses (to Adjusted EBITDA) increased 11% to $103.9m (FY23:
$93.5m), which continues to reflect our investment approach of assessing,
priority ranking then approving investment expenditure as we have clear
evidence of the revenue growth that will support our commitment to deliver an
Adjusted EBITDA margin of +30%. We continue to ensure prudent cost control and
leverage our ability to balance our investment between the US and the UK (and
the associated Sterling exchange rate).
Product innovation and enhancement continue to be core to this future and our
ability to achieve our potential. We continue to pursue our buy, build, or
partner strategy to build out the Trisus platform and its portfolio of
products. As we are highly cash generative, we are able to use our cash
reserves to further "build" alongside the partner activities in the year and
therefore continue to invest significant resource in R&D.
The total cost of development in the year was $52.1m (FY23: $50.6m). We
continue to capitalise only the costs that relate to projects that have yet to
be released to the market and will deliver new "future economic benefit" to
the Group. With the total amount capitalised in the year, being $15.8m (FY23:
$15.0m) representing 30% of total R&D spend in FY24 (FY23: 30%), which
represents a reduction to our historical run rates of 35% to 40% of total
R&D spend.
We continue to believe this investment is an efficient and cost-effective way
to further build out our growth strategy alongside any acquisition and
Platform partner strategy. As specific products and enhancements are made
available to relevant customers, the associated development costs capitalised
are amortised and charged to the Group's income statement over their estimated
useful economic life, thereby correctly matching costs to the resulting
revenues.
Net Impairment (charge) / reversal on financial and contract assets
In the prior year, the culmination of efforts since the acquisition of Sentry
Data Systems, Inc. ("Sentry") and associated improvements to ongoing
relationships with customers resulted in a benefit to FY23 of $2.1m. For the
current year we have seen a more normalised bad debt provision in the current
year of $1.1m.
Adjusted EBITDA and Profit before taxation
To supplement the financial measures defined under IFRS the Group presents
certain non-GAAP (alternative) performance measures as detailed in Note 15. We
believe the use and calculation of these measures are consistent with other
similar listed companies and are frequently used by analysts, investors and
other interested parties in their research.
The Group uses these adjusted measures in its operational and financial
decision-making as it excludes certain one-off items, allowing focus on what
the Group regards as a more reliable indicator of the underlying operating
performance.
Adjusted earnings represent operating profits, excluding costs incurred as a
result of acquisition (if applicable in the year), integration and share
related activities (if applicable in the year), share related costs including
IFRS 2 share-based payments charge, interest, depreciation and amortisation
("Adjusted EBITDA").
In the year, total costs of $0.7m (FY23: $0.5m) have been identified as
exceptional. These relate primarily to the one-off costs associated with the
later stages of the back-office systems integration of Sentry. As such, these
costs were adjusted from earnings in presenting Adjusted EBITDA.
Adjusted EBITDA has grown in the year to $58.3m (FY23: $54.9m) an increase of
6%. This reflects an Adjusted EBITDA margin of 31% (FY23: 32%), confirming we
continue to meet our target of a combined Group adjusted EBITDA margin of
30+%.
Following the amortisation charge on acquired intangible assets relating to
the Sentry acquisition of $20.9m (FY23: $20.9m), and the reduction in our net
Finance expense to $4.0m (FY23: $6.1m) through the success of our treasury
management, profit before taxation reported in the year has increased 20% to
$15.7m (FY23: $13.1m).
Taxation
The Group generates profits in both the UK and the US. The Group's effective
tax rate is primarily dependent on the applicable tax rates in these
respective jurisdictions. Following the Sentry acquisition, whose profits are
solely generated in the US, the Group now generates a higher proportion of its
profits there.
Other factors impacting the effective tax rate include tax deductibility of
amortisation of acquired intangibles, tax losses brought forward and the
number of share options exercised and associated tax treatment. Reconciliation
of the tax charge for the year can be seen in Note 5. As a result, the
effective tax rate for the year ended 30 June 2024 is 26% (FY23: 29%).
EPS
The Group presents an Alternative Performance Measure of Adjusted EPS, to
provide consistency to other listed companies. Both Basic and Diluted Adjusted
EPS are calculated excluding costs incurred as a result of acquisition and
share related activities, being $0.5m (tax adjusted) in the year (FY23: $0.4m)
and amortisation of acquired intangibles of $20.9m (FY23: $20.9m).
Adjusted basic EPS, continues to move back in line with the increased levels
of Adjusted EBITDA and has increased 9% to $0.948 (FY23: $0.870) and adjusted
diluted EPS has increased to $0.939 (FY23: $0.863). Basic EPS in the year
increased to $0.335 (FY23: $0.263) and Diluted EPS increased to $0.332 (FY23:
$0.261).
Cash and Bank Facilities
Cash generation and a strong balance sheet have always been a focus of the
Group. Our business model, based on recurring revenues and our ongoing efforts
to maintain high levels of customer retention, provide the basis for high
levels of cash generation. We always monitor the quality of our earnings
through Operating Cash Conversion, this being our ability to convert our
Adjusted EBITDA to "cash generated from operations" (as detailed in the
consolidated cash flow statement).
In the year, having made the necessary improvements to Sentry's cash
management processes, bringing them into line with the rest of the Group's
operations, we continue to deliver high levels of Operating Cash Conversion
across the combined Group at 90% in the year (FY23: 92%).
We continually review our capital allocation approach, ensuring we balance
investing in our future with returning funds to our shareholder base and
reducing our external bank debt. We have returned funds to our shareholders
during the year via our normal progressive dividend policy, returning $12.8m
in the current year (FY23: $12.1m), and our share buyback.
In the prior year (on 12 April 2023), the Group commenced a share buyback
programme of up to £5 million. The shares purchased through this programme
are held in treasury and will be used to satisfy employee share plan awards.
The Programme was undertaken using a phased approach. The Programme was
operated under the authority granted to the Company by shareholders at the
Company's Annual General Meetings in 2022 and in 2023, and within the
regulatory guidance on the quantity of shares the Company may purchase on any
single day.
This programme completed during the year utilising the balance of the
allocated £5 million ($6.3 million) (FY23: £3.09 million ($3.87 million)).
Through the programme the Company purchased a total of 332,531 Ordinary Shares
(FY23: 223,632) at an average price of £15.03 per share. At 30 June 2024 the
Company's share price was £23.10. These shares represent 0.94% (FY23: 0.63%)
of the Company's issued Ordinary Shares and are held in treasury. During the
year 99,646 shares (FY23: 9,621 shares) were issued from treasury to satisfy
exercises under the existing employee share plan awards as a result at the
Balance sheet date, 223,264 Ordinary Shares (FY23: 214,011 Ordinary Shares)
are held in treasury.
In regard to the bank debt, the facility entered into for the acquisition of
Sentry comprised a term loan of $40m, which continues to be repaid at $2m per
quarter, and a Revolving Credit Facility of up to $100m. During the year, $8m
(FY23: $8m) of the term loan has been repaid on schedule, and a further $40m
of the Group's cash reserves have been offset against the Revolving Credit
Facility in line with our current Treasury Management Policy. The RCF balance
has reduced from $60m to $20m, which provides further available facility of
$80m.
All covenants continue to be met, the facilities currently expire in June 2026
and we have already had early stage discussions in regards to their extension
beyond this date. We thank our banking partners, alongside our shareholders,
for their continued support of our growth strategy.
As a result, Cash reserves at the year-end were $34.6m (FY23: $78.5m) and
total bank debt outstanding of $35.4m (FY23: $83m) giving the Group both
significant liquidity and a strong balance sheet.
Balance sheet
Within the balance sheet, deferred income levels reflect the amounts of the
revenue under contract that we have invoiced but have yet to recognise as
revenue and therefore are subject to timing. This balance is a subset of the
future performance obligations detailed in Note 3.
Deferred income, accrued income, and the prepayment of sales commissions all
arise as a result of our SaaS business model described above and we will
always expect them to be part of our balance sheet. They arise where the cash
profile of our contracts does not exactly match how revenue and related
expenses are recognised in the Statement of Comprehensive Income. Overall,
levels of deferred income are significantly more than any accrued income and
the prepayment of sales commissions, we therefore remain cash flow positive in
regard to how we account for our contracts.
Currency
The functional currency for the Group, debt and cash reserves, is US dollars.
Whilst the majority of our cost base is US-located and therefore US dollar
denominated, we have approximately twenty percent of the cost base situated in
the UK, relating primarily to our UK employees which is therefore denominated
in Sterling. As a result, we continue to closely monitor the Sterling to US
dollar exchange rate and where appropriate, consider hedging strategies. The
average exchange rate throughout the year was $1.2595 as compared to $1.2043
in the prior year. The exchange rate at the Balance Sheet date was $1.2645
(FY23: $1.2619).
Dividend
In proposing a final dividend, the Board has carefully considered a number of
factors including the prevailing macro-economic climate, the Group's trading
performance, our current and future cash generation and our continued desire
to recognise the support our shareholders provide. After carefully weighing up
these factors, the Board proposes a final dividend of 16.0p (20.23 cents) per
share giving a total dividend for the year of 29p (36.67 cents) per share
(FY23: 28.5p (35.95 cents) per share), an increase of 2%. Subject to approval
at the Annual General Meeting, the final dividend will be paid on 18 December
2024 to shareholders on the register as at 29 November 2024, with a
corresponding ex-Dividend date of 28 November 2024.
The final dividend of 16.0p 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 register to do
so by the close of business on 29 November 2024. The exact amount to be paid
will be calculated by reference to the exchange rate to be announced on 29
November 2024. The final dividend referred to above in US dollars of 20.23
cents is given as an example only using the Balance Sheet date exchange rate
of $1.2645/£1 and may differ from that finally announced.
Outlook
The strong financial results during the year demonstrates the strength of the
Trisus platform, our increasing platform partnership successes and the role we
play in helping healthcare providers drive for better value in the US
healthcare market.
We see increased opportunity ahead. Our alliance with Microsoft will allow us
to accelerate innovation and explore new AI-based applications in an efficient
manner which, alongside the breadth of the Trisus platform, our unique data
assets and our considerable and extensive customer base provides significant
scope for expansion in the size of our addressable market.
We approach this opportunity from a position of strength and resilience, with
a strong balance sheet, high levels of recurring revenue and consistently high
customer retention rates. This gives us the confidence and the ability to
continue investing for growth, to secure our long-term market position.
We have commenced FY25 with a good level of trading, and remain confident in
achieving another positive year ahead, growth acceleration over the near term,
and our ability to create further long-term value for all stakeholders.
Keith Neilson Craig Preston
CEO Craneware plc CFO Craneware plc
2 September 2024 2 September 2024
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2024
Total Total
2024 2023
Notes $'000 $'000
Continuing operations:
Revenue from contracts with customers 3 189,268 174,018
Cost of sales (27,072) (25,576)
Gross profit 162,196 148,442
Other income (398) 600
Operating expenses 4 (140,953) (131,876)
Net impairment (charge)/ reversal on financial and contract assets 4 (1,111) 2,062
Operating profit 4 19,734 19,228
Analysed as:
Adjusted EBITDA(1) 58,279 54,892
Share-based payments (4,487) (2,992)
Depreciation of property, plant and equipment (3,293) (3,451)
Exceptional Costs(2) 4 (675) (510)
Amortisation of intangible assets - other 8 (9,169) (7,781)
Amortisation of intangible assets - acquired intangibles 8 (20,921) (20,930)
Finance income 1,143 214
Finance expense (5,130) (6,357)
Profit before taxation 15,747 13,085
Tax on profit on ordinary activities 5 (4,044) (3,853)
Profit for the year attributable to owners of the parent 11,703 9,232
Total comprehensive income attributable to owners of the parent 11,703 9,232
1. See Note 15 for explanation of Alternative Performance
Measures.
2. Exceptional items relate to integration costs associated with
the purchase of Sentry Data Systems, Inc. ("Sentry")
Earnings per share for the year attributable to equity holders
Notes 2024 2023
Basic ($ per share) 7 0.335 0.263
*Adjusted Basic ($ per share) 7 0.948 0.870
Diluted ($ per share) 7 0.332 0.261
*Adjusted Diluted ($ per share) 7 0.939 0.863
* 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.
Statement of Changes in Equity for the year ended 30 June 2024
Share Capital
Share Premium Treasury Redemption Merger Other Retained Total
Capital Account Shares Reserve Reserve Reserves Earnings Equity
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
At 1 July 2022 659 97,204 - 9 186,981 5,933 42,236 333,022
Total comprehensive income - profit for the year - - - - - - 9,232 9,232
Transactions with owners:
Share-based payments - - - - - 3,231 - 3,231
Purchase of own shares through EBT - - - - - - (179) (179)
Purchase of own shares through share buyback - - (3,865) - - - - (3,865)
Deferred tax taken directly to equity - - - - - - (1,004) (1,004)
Impact of share options and awards exercised/lapsed - - 128 - - (2,324) 1,719 (477)
Dividends (Note 6) - - - - - - (12,119) (12,119)
At 30 June 2023 659 97,204 (3,737) 9 186,981 6,840 39,885 327,841
Total comprehensive income - profit for the year - - - - - - 11,703 11,703
Transactions with owners:
Share-based payments - - - - - 4,127 - 4,127
Purchase of own shares through EBT - - - - - - (863) (863)
Purchase of own shares through share buyback - - (2,435) - - - - (2,435)
Deferred tax taken directly to equity - - - - - - 1,893 1,893
Impact of share options and awards exercised/lapsed - - 1,680 - - (2,077) (479) (876)
Dividends (Note 6) - - - - - - (12,798) (12,798)
At 30 June 2024 659 97,204 (4,492) 9 186,981 8,890 39,341 328,592
Consolidated Balance Sheet as at 30 June 2024
Notes 2024 2023
$'000 $'000
ASSETS
Non-Current Assets
Property, plant and equipment 8,592 8,464
Intangible assets - goodwill 8 235,236 235,236
Intangible assets - acquired intangibles 8 145,406 166,327
Intangible assets - other 8 56,827 50,230
Trade and other receivables 9 3,634 2,758
Deferred tax 10 733 -
450,428 463,015
Current Assets
Trade and other receivables 9 58,638 35,424
Cash and cash equivalents 34,589 78,537
93,227 113,961
Total Assets 543,655 576,976
EQUITY AND LIABILITIES
Non-Current Liabilities
Borrowings 12 27,372 75,033
Deferred income 958 2,875
Leased property 3,823 2,224
Hire purchase equipment - 44
Deferred tax 10 33,441 41,337
Other provisions 708 243
66,302 121,756
Current Liabilities
Borrowings 12 8,000 8,000
Deferred income 65,859 49,643
Amounts held on behalf of customers 53,390 51,220
Tax payable 4,278 2,565
Trade and other payables 13 17,234 15,951
148,761 127,379
Total Liabilities 215,063 249,135
Equity
Share capital 659 659
Share premium account 97,204 97,204
Treasury shares (4,492) (3,737)
Capital redemption reserve 9 9
Merger reserve 186,981 186,981
Other reserves 8,890 6,840
Retained earnings 39,341 39,885
Total Equity 328,592 327,841
Total Equity and Liabilities 543,655 576,976
Consolidated Statement of Cash Flows for the year ended 30 June
2024
Notes 2024 2023
$'000 $'000
Cash flows from operating activities
Cash generated from operations 11 53,703 100,591
Tax paid (11,841) (1,843)
Net cash generated from operating activities 41,862 98,748
Cash flows from investing activities
Purchase of property, plant and equipment (1,191) (520)
Capitalised intangible assets 8 (15,766) (15,031)
Interest received 1,143 214
Net cash used in investing activities (15,814) (15,337)
Cash flows from financing activities
Dividends paid to company shareholders 6 (12,798) (12,119)
Proceeds from issuance of treasury shares 276 138
Loan arrangement fees - (252)
Repayment of borrowings 12 (48,000) (28,000)
Interest on borrowings (4,624) (6,503)
Purchase of own shares by EBT (863) (179)
Share buyback programme (2,485) (3,815)
Payment of lease liabilities (1,502) (2,552)
Net cash used in financing activities (69,996) (53,282)
Net (decrease) / increase in cash and cash equivalents (43,948) 30,129
Cash and cash equivalents at the start of the year 78,537 48,408
Cash and cash equivalents at the end of the year 34,589 78,537
Notes to the Financial Statements
General Information
Craneware plc ("the Company") is a public limited company incorporated and
domiciled in Scotland. The Company has a primary listing on the Alternative
Investment Market ('AIM') of the London Stock Exchange. The principal activity
of the Company continues to be the development, licensing and ongoing support
of computer software for the US healthcare industry.
Basis of preparation
The financial statements of the Group and the Company are prepared in
accordance with UK adopted international accounting standards (International
Financial Reporting Standards ("IFRS")) and the applicable legal requirements
of the Companies Act 2006.
The Group and the Company financial statements have been prepared under the
historic cost convention and prepared on a going concern basis. The Strategic
Report contains information regarding the Group's activities and an overview
of the development of its products, services and the environment in which it
operates. The Group's revenue, operating results, cash flows and balance sheet
are detailed in the financial statements and explained in the Financial
Review.
The Group is profitable and there is a reasonable expectation that this will
continue to be the case. Our business model is delivering high levels of
recurring revenue, supported by long term underlying contracts, that deliver
high levels of cash generation. In addition, the Group has cash and cash
equivalents of $34.6m as well as a committed but undrawn facility available to
it of $80m.
The directors have prepared cash flow forecasts covering a period of over
twelve months from the date of approval of these financial statements. These
forecasts include consideration of severe but plausible downsides, should
these events occur, the Group would have sufficient funds to meet its
liabilities as they fall due for that period. These scenarios anticipate a
zero-growth scenario, such that the only sales made by the Group would be to
replace losses of existing long-term contracts. Under this basis, with minor
but appropriate rebalancing of the cost base, the Group remained in compliance
with its covenants and had no need to draw upon the committed undrawn
facility.
Based on this assessment, the Directors 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
consolidated and the Company financial statements.
The applicable accounting policies are set out below, together with an
explanation of where changes have been made to previous policies on the
adoption of new accounting standards in the year, if relevant.
The preparation of financial statements in conformity with IFRS requires the
use of estimates and assumptions that affect the reported amounts of assets
and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting year. Although these
estimates are based on management's best knowledge of the amount, event or
actions, actual results ultimately may differ from those estimates.
The Company and its subsidiary undertakings are referred to in this report as
the Group.
1. Selected principal accounting policies
The principal accounting policies adopted in the preparation of these
financial statements are set out below. These policies have been consistently
applied, unless otherwise stated.
Reporting currency
The Directors consider that, as the Group's revenues are primarily denominated
in US dollars, the Company's functional currency is the US dollar. The Group's
financial statements are therefore prepared in US dollars.
Currency translation
Transactions denominated in currencies other than US dollars are translated
into US dollars at the rate of exchange ruling at the date of the transaction.
The average exchange rate during the course of the year was $1.2595/£1 (FY23:
$1.2043/£1). Monetary assets and liabilities expressed in foreign currencies
are translated into US dollars at rates of exchange ruling at the Balance
Sheet date $1.2645/£1 (FY23: $1.2619/£1). Exchange gains or losses arising
upon subsequent settlement of the transactions and from translation at the
Balance Sheet date, are included within the related category of expense where
separately identifiable, or administrative expenses.
Revenue from contracts with customers
The Group follows the principles of IFRS 15, 'Revenue from Contracts with
Customers'; accordingly, revenue is recognised using the five-step model:
1. Identify the contract;
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; and
5. Recognise revenue when or as performance
obligations are satisfied.
Revenue is recognised 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.
Revenue is derived from sales of software licenses and professional services
including training and consultancy and transactional fees.
Revenue from software licenses
Revenue from both on premise and cloud-based software licensed products is
recognised from the point at which the customer gains control and the right to
use our software. The following key judgements have been made in relation to
revenue recognition of software license:
• This is right of use software due to the integral
updates provided on a regular basis to keep the software relevant and, as a
result, the licensed software revenue will be recognised over time rather than
at a point in time;
• The software license together with installation,
regular updates and access to support services form a single performance
obligation;
• The transaction price is allocated to each distinct
one year license period with annual increases being recognised in the year
they apply; and
• Discounts in relation to software licenses are
recognised over the life of the contract.
This policy is consistent with the Company's products providing customers with
a service through the delivery of, and access to, software solutions
(Software-as-a-Service ("SaaS")), and results in revenue being recognised over
the period that these services are delivered to customers.
Incremental costs directly attributable in securing the contract are charged
equally over the life of the contract and as a consequence are matched to
revenue recognised. Any deferred contract costs are included in both current
and non-current trade and other receivables.
Revenue from professional services
Revenue from all professional services, including training and consulting
services, is recognised when the performance obligation has been fulfilled and
the services are provided. These services could be provided by a third party
and are therefore considered to be separate performance obligations. Where
professional services engagements contain material obligations, revenue is
recognised when all the obligations under the engagement have been fulfilled.
Where professional services engagements are provided on a fixed price basis,
revenue is recognised based on the percentage complete of the relevant
engagement. Percentage completion is estimated based on the total number of
hours performed on the project compared to the total number of hours expected
to complete the project.
'White-labelling' or other 'paid for development work' is generally provided
on a fixed price basis and as such revenue is recognised based on the
percentage completion or delivery of the relevant project. Where percentage
completion is used it is estimated based on the total number of hours
performed on the project compared to the total number of hours expected to
complete the project. Where contracts underlying these projects contain
material obligations, revenue is deferred and only recognised when all the
obligations under the engagement have been fulfilled.
Revenue from transactional services
Transactional service fees are recognised at the point in time when the
service is provided.
Should any contracts contain non-standard clauses, revenue recognition will be
in accordance with the underlying contractual terms which will normally result
in recognition of revenue being deferred until all material obligations are
satisfied. The Group does not have any contracts where a financing component
exists within the contract.
The excess of amounts invoiced over revenue recognised are included in
deferred income. If the amount of revenue recognised exceeds the amount
invoiced the excess is included within accrued income.
Contract assets include sales commissions and prepaid royalties. Contract
liabilities include unpaid sales commissions on contracts sold and deferred
income relating to license fees billed in advance and recognised over time.
Exceptional items
The Group defines exceptional items as transactions (including costs incurred
by the Group) which relate to non-recurring events. These are disclosed
separately where it is considered it provides additional useful information to
the users of the financial statements.
Taxation
The charge for taxation is based on the profit for the year as adjusted for
items which are non-assessable or disallowable. It is calculated using
taxation rates that have been enacted or substantively enacted by the Balance
Sheet date.
Deferred taxation is computed using the liability method. Under this method,
deferred tax assets and liabilities are determined based on temporary
differences between the financial reporting and tax bases of assets and
liabilities. They are measured using enacted rates and laws that will be in
effect when the differences are expected to reverse. Deferred tax is not
accounted for if it arises from initial recognition of an asset or liability
in a transaction that at the time of the transaction does not affect
accounting or taxable profit or loss. Deferred tax assets are recognised to
the extent that it is probable that future taxable profits will arise against
which the temporary differences will be utilised.
Deferred tax is provided on temporary differences arising on investments in
subsidiaries except where the timing of the reversal of the temporary
difference is controlled by the Group and it is probable that the temporary
difference will not reverse in the foreseeable future. Deferred tax assets and
liabilities arising in the same tax jurisdiction are offset.
In the UK and the US, the Group is entitled to a tax deduction for amounts
treated as compensation on exercise of certain employee share options and on
the vesting of conditional share awards under each jurisdiction's tax rules.
"Share-based payments" are recorded in the Group's Consolidated Statement of
Comprehensive Income over the period from the grant date to the vesting date
of the relevant options and conditional share awards. As there is a temporary
difference between the accounting and tax bases a deferred tax asset is
recorded. The deferred tax asset arising is calculated by comparing the
estimated amount of tax deduction to be obtained in the future (based on the
Company's share price at the Balance Sheet date) with the cumulative amount of
the compensation expense recorded in the Consolidated Statement of
Comprehensive Income. If the amount of estimated future tax deduction exceeds
the cumulative amount of the remuneration expense at the statutory rate, the
excess is recorded directly in equity against retained earnings.
Intangible Assets
(a) Goodwill
Goodwill arising on consolidation represents the excess of the cost of
acquisition over the fair value of the identifiable assets and liabilities of
a subsidiary at the date of acquisition. Goodwill is recognised as a
non-current asset in accordance with IFRS 3 and is not amortised.
After initial recognition, goodwill is stated at cost less any accumulated
impairment losses. It is tested at least annually for impairment. Any
impairment loss is recognised in the Consolidated Statement of Comprehensive
Income.
Goodwill is allocated to cash generating units for the purpose of impairment
testing. The allocation is made to those cash-generating units that are
expected to benefit from the business combination in which the goodwill arose.
(b) Proprietary software
Proprietary software acquired in a business combination is recognised at fair
value at the acquisition date. Proprietary software has a finite useful
economic life and is carried at cost less accumulated amortisation.
Amortisation is calculated using the straight-line method to allocate the
associated costs over their estimated useful lives of five years.
(c) Customer relationships
Contractual customer relationships acquired in a business combination are
recognised at fair value at the acquisition date. The contractual customer
relationships have a finite useful economic life and are carried at cost less
accumulated amortisation. Amortisation is calculated using the straight-line
method over the expected life of the customer relationship which has been
assessed as up to fifteen years.
(d) Development costs
Expenditure associated with developing and maintaining the Group's software
products is recognised as incurred.
Development expenditure is capitalised where new product development projects
• are technically feasible;
• production and sale is intended;
• a market exists;
• expenditure can be measured reliably; and
• sufficient resources are available to complete
such projects.
Costs are capitalised until initial commercialisation of the product, and
thereafter amortised on a straight-line basis over its estimated useful life,
which has been assessed as between five and ten years. Expenditure not meeting
the above criteria is expensed as incurred.
Employee costs and specific third party costs involved with the development of
the software are included within amounts capitalised.
(e) Computer software
Costs associated with acquiring computer software and licensed to use
technology are capitalised as incurred, except cloud computing software where
the Group does not have control of the software which is expensed as incurred.
They are amortised on a straight-line basis over their useful economic life
which is typically three to five years.
(f) Trademarks
Trademarks acquired in a business combination are initially measured at fair
value at the acquisition date. Trademarks have a finite useful economic life
and are carried at cost less accumulated amortisation. Amortisation is
calculated using the straight-line method to allocate the associated costs
over their estimated useful lives of up to ten years.
Impairment of non-financial assets
At each reporting date the Group considers the carrying amount of its tangible
and intangible assets including goodwill to determine whether there is any
indication that those assets have suffered an impairment loss. If there is
such an indication, the recoverable amount of the asset is estimated in order
to determine the extent of the impairment loss (if any) through determining
the value in use of the cash generating unit that the asset relates to.
Where it is not possible to estimate the recoverable amount of an individual
asset, the Group estimates the recoverable amount of the cash generating unit
to which the asset belongs.
If the recoverable amount of an asset is estimated to be less than its
carrying amount, the impairment loss is recognised as an expense.
Where an impairment loss subsequently reverses, the carrying amount of the
asset is increased to the revised estimate of its recoverable amount, but so
that the increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised for the
asset. A reversal of an impairment loss is recognised as income immediately.
Impairment losses relating to goodwill are not reversed.
2. Critical accounting estimates and judgements
The preparation of financial statements in accordance with IFRS requires the
Directors to make critical accounting estimates and judgements that affect the
amounts reported in the financial statements and accompanying notes. The
estimates and assumptions that have a significant risk of causing material
adjustment to the carrying value of assets and liabilities within the next
financial year are discussed below:
Critical Estimates
· Impairment assessment: the Group tests annually whether Goodwill has
suffered any impairment and for other assets including acquired intangibles at
any point where there are indications of impairment. This requires an
estimation of the recoverable amount of the applicable cash generating unit to
which the Goodwill and other assets relate. Estimating the recoverable amount
requires the Group to make an estimate of the expected future cash flows from
the specific cash generating unit using certain key assumptions including
growth rates and a discount rate. These assumptions result in no impairment in
Goodwill.
Other Estimates
· Useful lives of intangible assets: in assessing useful life, the
Group uses careful judgement based on past experience, advances in product
development and also best practice. The Group amortises intangible assets over
a period of up to 15 years.
Judgements
· Capitalisation of development expenditure: the Group capitalises
development costs provided the aforementioned conditions have been met.
Consequently, the Directors require to continually assess the commercial
potential of each product in development and its useful life following
launch.
· Provisions for income taxes: the Group is subject to tax in the UK
and US and this requires the Directors to regularly assess the appropriateness
of its transfer pricing policy.
· Revenue recognition: in determining the amount of revenue and related
balance sheet items to be recognised in the year, management is required to
make a number of judgements and assumptions. These are detailed in Note 1
Revenue from contracts with customers.
3. Revenue
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 licenses and professional services (including installation) to
hospitals and health systems within the US. 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 assets are located in the
United States of America with the exception of the Parent Company's, the net
assets of which are disclosed separately on the Company Balance Sheet and are
located in the United Kingdom.
2024 2023
$'000 $'000
Software licensing 138,687 143,125
Professional services - recurring 4,907 4,533
Transactional revenue 24,708 16,018
Contracted recurring revenue 168,302 163,676
Professional services - non-recurring 7,174 9,208
Platform revenues - non-recurring 13,792 1,134
Total revenue 189,268 174,018
Contract assets
The Group has recognised the following assets related to contracts with
customers:
2024 2023
$'000 $'000
Prepaid commissions and royalties < 1 year 2,485 2,206
Prepaid commissions and royalties > 1 year 3,235 2,758
Total contract assets 5,720 4,964
Contract assets are included within deferred contract costs and prepayments in
the Balance Sheet. Costs recognised during the year in relation to assets at
30 June 2023 were $2.2m.
Contract liabilities
The following table shows the total contract liabilities from software license
and professional service contracts:
2024 2023
$'000 $'000
Software licensing 56,759 47,037
Professional services 10,058 5,481
Total contract liabilities 66,817 52,518
Contract liabilities are included within deferred income in the Balance Sheet.
Revenue of $49.4m was recognised during the year in relation to contract
liabilities as of 30 June 2023.
The following table shows the aggregate transaction price allocated to
performance obligations that are partially or fully unsatisfied from software
license and professional service contracts.
Total unsatisfied Expected recognition
performance obligations < 1 year 1 to 2 years 2 to 3 years > 3 years
Revenue expected to be recognised $'000 $'000 $'000 $'000 $'000
At 30 June 2024
- Software 301,215 119,167 93,304 57,086 31,658
- Professional services 19,493 12,947 3,309 1,847 1,390
Total at 30 June 2024 320,708 132,114 96,613 58,933 33,048
At 30 June 2023
- Software 348,919 124,279 99,613 67,757 57,270
- Professional services 14,376 8,313 3,207 1,981 875
Total at 30 June 2023 363,295 132,592 102,820 69,738 58,145
Revenue of $132.6m was recognised during the year in relation to unsatisfied
performance obligations as of 30 June 2023.
The majority of these performance obligations are unbilled at the Balance
Sheet date and therefore not reflected in these financial statements.
4. Operating profit
The following items have been included in arriving at operating profit:
2024 2023
$'000 $'000
Employee costs 92,496 87,755
Employee costs capitalised (9,811) (10,261)
Depreciation of property, plant and equipment 3,293 3,451
Amortisation of intangible assets - other 9,169 7,781
Amortisation of intangible assets - acquired intangibles 20,921 20,930
Impairment of trade receivables 1,822 463
Exceptional items* 675 510
Operating lease rents for premises 12 -
* Exceptional items relate to integration costs associated with the purchase
of Sentry Data Systems, Inc. ("Sentry")
Included in reaching operating profit is the movement in the provision for
impairment of trade receivables during the year of a $1,164,000 charge, plus
$53,000 net impairment credit for trade receivables recognised directly in
operating costs.
5. Tax on profit on ordinary activities
2024 2023
$'000 $'000
Profit on ordinary activities before tax 15,747 13,085
Current tax
Corporation tax on profits of the year 10,715 5,596
Adjustments for prior years 65 1,080
Total current tax charge 10,780 6,676
Deferred tax
Deferred tax for current year (6,097) (3,324)
Adjustments for prior years (630) 485
Change in UK tax rate (9) 16
Total deferred tax credit (6,736) (2,823)
Tax on profit on ordinary activities 4,044 3,853
The difference between the current tax charge on ordinary activities for the
year, reported in the Consolidated Statement of Comprehensive Income, and the
current tax charge that would result from applying a relevant standard rate of
tax to the profit on ordinary activities before tax, is explained as follows:
Profit on ordinary activities at the UK tax rate 25% (FY23 20.5%) 3,937 2,682
Effects of:
Adjustment for prior years (565) 1,566
Change in tax rate on opening deferred tax balance (9) 23
Additional US taxes on profits 25% (FY23: 25%) 229 392
Internally developed software (235) 628
Expenses not deductible for tax purposes 656 246
Income not taxable in the year (748) (1,004)
Spot rate remeasurement (27) 240
Movement in/ (use of) tax losses 1,018 (427)
(Deduction)/expense on share plan charges (271) (535)
Other 59 42
Total tax charge 4,044 3,853
6. Dividends
The dividends paid during the year were as follows:-
2024 2023
$'000 $'000
Final dividend, re 30 June 2023 - 20.19 cents (16.0 pence)/share 7,046 6,645
Interim dividend, re 30 June 2024 - 16.51 cents (13.0 pence)/share 5,752 5,474
Total dividends paid to Company shareholders in the year 12,798 12,119
Prior year:
Final dividend 18.80 cents (15.5 pence)/share
Interim dividend 15.13 cents (12.5 pence)/share
The proposed final dividend 20.23 cents (16 pence), as noted in the Financial
Review section of the Strategic Report, for the year ended 30 June 2024 is
subject to approval by the shareholders at the Annual General Meeting and has
not been included as a liability in these financial statements.
7. Earnings per share
The calculation of basic and diluted earnings per share is based on the
following data:
Weighted average number of shares
2024 2023
No. of Shares No. of Shares
000s 000s
Weighted average number of Ordinary Shares for the purpose of basic earnings 34,957 35,146
per share (excluding own shares held)
Effect of dilutive potential Ordinary Shares: share options and LTIPs 335 289
Weighted average number of Ordinary Shares for the purpose of diluted earnings 35,292 35,435
per share
The Group has one category of dilutive potential Ordinary shares, being those
granted to Directors and employees under the employee share plans.
Shares held by the Employee Benefit Trust and Treasury Shares held directly by
the Company are excluded from the weighted average number of Ordinary shares
for the purposes of basic earnings per share.
Profit for year
2024 2023
$'000 $'000
Profit for the year attributable to equity holders of the parent 11,703 9,232
Acquisition integration costs (tax adjusted) 507 405
Amortisation of acquired intangibles (tax adjusted) 20,921 20,930
Adjusted profit for the year attributable to equity holders of the parent 33,131 30,567
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 year.
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
2024 2023
cents cents
Basic EPS 33.5 26.3
Diluted EPS 33.2 26.1
Adjusted basic EPS 94.8 87.0
Adjusted diluted EPS 93.9 86.3
8. Intangible assets
Goodwill Customer Proprietary Development Computer
Relationships Software Trademarks Costs Software Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000
Cost
At 1 July 2023 235,486 153,964 52,724 5,000 71,056 4,461 522,691
Additions - - - - 15,761 5 15,766
Disposals - - - - - (220) (220)
At 30 June 2024 235,486 153,964 52,724 5,000 86,817 4,246 538,237
Accumulated amortisation and impairment
At 1 July 2023 250 22,773 21,494 1,094 22,084 3,203 70,898
Charge for the year - 10,066 10,300 555 8,061 1,108 30,090
Amortisation on disposal - - - - - (220) (220)
At 30 June 2024 250 32,839 31,794 1,649 30,145 4,091 100,768
Net Book Value at 30 June 2024 235,236 121,125 20,930 3,351 56,672 155 437,469
Cost
At 1 July 2022 235,486 153,964 52,724 5,000 56,096 4,840 508,110
Additions - - - - 14,960 71 15,031
Reclassification - - - - - (450) (450)
At 30 June 2023 235,486 153,964 52,724 5,000 71,056 4,461 522,691
Accumulated amortisation and impairment
At 1 July 2022 250 12,706 11,187 538 15,607 1,899 42,187
Charge for the year - 10,067 10,307 556 6,477 1,304 28,711
At 30 June 2023 250 22,773 21,494 1,094 22,084 3,203 70,898
Net Book Value at 30 June 2023 235,236 131,191 31,230 3,906 48,972 1,258 451,793
In accordance with the Group's accounting policy, the carrying values of
Goodwill and other intangible assets are reviewed for impairment annually or
more frequently if events or changes in circumstances indicate that the asset
might be impaired. Goodwill arose on the acquisition of subsidiaries and is
split into the following CGUs:
2024 2023
$'000 $'000
Craneware InSight 11,188 11,188
Sentry 224,048 224,048
Total Goodwill 235,236 235,236
Craneware InSight
The carrying values are assessed for impairment purposes by calculating the
value in use of the core Craneware business cash generating unit. This is the
lowest level of which there are separately identifiable cash flows to assess
the Goodwill acquired as part of the Craneware InSight, Inc. purchase.
Sentry
The carrying values are assessed for impairment purposes by calculating the
value in use of the Sentry business cash generating unit. This is the lowest
level of which there are separately identifiable cash flows to assess the
Goodwill acquired as part of the Sentry acquisition.
The key assumptions in assessing value in use for the CGU's are:
Growth rate in perpetuity Post-tax discount rate
2024 2023 2024 2023
Craneware InSight 2.0% 2.0% 9.0% 9.0%
Sentry 2.0% 2.0% 9.0% 9.0%
After the initial term of 5 years, the Group applied a growth rate for each
CGU. These take into consideration the customer bases and expected revenue
commitments from it, anticipated additional sales to both existing and new
customers and market trends currently seen and those expected in the future.
The Group has assessed events and circumstances in the year and the assets and
liabilities of the business cash-generating unit; this assessment has
confirmed that no significant events or circumstances occurred in the year and
that the assets and liabilities showed no significant change from last year.
After review of future forecasts, the Group confirmed the growth forecast for
the next five years showed that the recoverable amounts would continue to
exceed the carrying values. There are no reasonable possible changes in
assumptions that would result in an impairment in the Craneware CGU and
certain disclosures, including sensitivities, relating to goodwill have not
been made for this CGU given the significant headroom on impairment testing.
For the Sentry CGU the impairment test was most sensitive to the discount rate
assumption. There is no impairment, with all other assumptions remaining the
same, with a discount rate up to 17%. There are no reasonable possible changes
in any of the other assumptions for this CGU that would result in an
impairment.
9. Trade and other receivables
2024 2023
$'000 $'000
Trade receivables 48,007 27,594
Less: provision for impairment of trade receivables (2,763) (3,421)
Net trade receivables 45,244 24,173
Other receivables 1,862 1,024
Current tax receivable 1,921 -
Prepayments and accrued income 7,787 8,270
Deferred contract costs 5,458 4,715
62,272 38,182
Less non-current receivables:
Other debtors (399) -
Deferred contract costs (3,235) (2,758)
Current portion 58,638 35,424
10. Deferred tax
Deferred tax is calculated in full on the temporary differences under the
liability method using a rate of tax of 25% (FY23: 25%) in the UK and 25%
(FY23: 25%) in the US including a provision for state taxes.
2024 2023
$'000 $'000
At 1 July (41,337) (44,417)
Credit to comprehensive income 10,522 4,084
Transfer direct to equity (1,893) (1,004)
At 30 June (32,708) (41,337)
The movements in deferred tax assets and liabilities during the year are shown
below. Deferred tax assets and liabilities are only offset where there is a
legally enforceable right of offset and there is an intention to settle the
balances net. The balances for the Group are analysed as follows:
2024 2023
$'000 $'000
Net deferred tax asset 733 -
Net deferred tax liability (33,441) (41,337)
At 30 June (32,708) (41,337)
Deferred tax assets - recognised
Short term timing differences Losses Share options Total
$'000 $'000 $'000 $'000
A 1 July 2023 4,511 428 2,357 7,296
(Charged)/ credited to comprehensive income (1,901) (38) 4,050 2,111
Charged to equity - - (1,893) (1,893)
Total provided at 30 June 2024 2,610 390 4,514 7,514
3,926 293 3,201 7,420
At 1 July 2022
Credited to comprehensive income 585 135 160 880
Charged to equity - - (1,004) (1,004)
Total provided at 30 June 2023 4,511 428 2,357 7,296
Deferred tax liabilities - recognised
Long term timing differences Accelerated tax depreciation Total
$'000 $'000 $'000
A 1 July 2023 (44,378) (4,255) (48,633)
Credited to comprehensive income 6,399 2,012 8,411
Total provided at 30 June 2024 (37,979) (2,243) (40,222)
(47,921) (3,916) (51,837)
At 1 July 2022
Credited/ (charged) to comprehensive income 3,543 (339) 3,204
Total provided at 30 June 2023 (44,378) (4,255) (48,633)
The analysis of the deferred tax assets and liabilities is as follows:
2024 2023
$'000 $'000
Deferred tax assets:
Deferred tax assets to be recovered after more than 1 year 7,124 6,867
Deferred tax assets to be recovered within 1 year 390 429
7,514 7,296
Deferred tax liabilities:
Deferred tax liabilities to be recovered after more than 1 year (40,222) (43,633)
Deferred tax liabilities to be recovered within 1 year - (5,000)
(40,222) (48,633)
Net deferred tax liability (32,708) (41,337)
11. Cash generated from operations
Reconciliation of profit before taxation to net cash generated from operations
2024 2023
$'000 $'000
Profit before tax 15,747 13,085
Finance income (1,143) (214)
Finance expense 5,130 6,357
Depreciation on property, plant and equipment 3,293 3,451
Amortisation on intangible assets - other 9,169 7,781
Amortisation on intangible assets - acquired intangibles 20,921 20,930
Loss on disposals 113 7
Share-based payments 4,487 2,992
Movements in working capital:
(Increase)/ decrease in trade and other receivables (21,183) 1,116
Increase/ (decrease) in trade and other payables 14,999 (5,462)
Increase in amounts held on behalf of customers 2,170 50,548
Cash generated from operations 53,703 100,591
12. Borrowings
The debt facility comprises a term loan of $16m (FY23: $24m) which is
repayable in quarterly instalments over 5 years up to 30 June 2026, and a
revolving loan facility of $100m of which $20m (FY23: $60m) is drawn down and
which expires on 7 June 2026. During the year, $8m (FY23: $8m) was repaid on
the term loan and the amount drawn down on the revolving credit facility was
reduced by $40m (FY23: $20m).
Interest is charged on the facility on a daily basis at margin and compounded
reference rate. 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 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.
2024 2023
$'000 $'000
Current interest bearing borrowings 8,000 8,000
Non current interest bearing borrowings 27,372 75,033
Total 35,372 83,033
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 30 June 2024 is $0.67m (FY23:
$0.97m).
See Note 15 for a reconciliation between borrowings, cash and net borrowings.
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:
2024 2023
$'000 $'000
Revolving facility 80,000 40,000
Undrawn borrowing facilities 80,000 40,000
13. Trade and other payables
2024 2023
$'000 $'000
Trade payables 3,725 4,005
Lease creditor due < 1 year 952 1,389
Other provisions < 1 year 512 420
Social security and PAYE 2,268 1,299
Other creditors 156 237
Accruals 9,367 8,466
Advanced payments 254 135
Trade and other payables 17,234 15,951
Other provisions relate to employer taxes due in relation to employee share
plan awards of $512,000 (FY23: $59,000 for 2007 Share Option Plan only). There
is a corresponding receivable of $218,000 included in other debtors (FY23:
nil). Timing of the use of this provision is entirely dependent on employees
requesting to exercise share awards. The provision for potential sales tax due
in relation to audits in respect of Sentry for periods prior to the
acquisition from the prior year has been utilised in full during the year
(FY23: $362,000).
14. Subsequent events
On 23(rd) August 2024 the Company's wholly owned subsidiary, Craneware US
Holdings, Inc. declared a dividend of $18m payable to the Company with a
resulting increase of $18m to the Company's retained earnings.
15. 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. Alternative
performance measures may be viewed as having limitations due to certain items
being excluded that would be included in GAAP measures.
Adjusted EBITDA
Adjusted EBITDA refers to earnings before interest, tax, depreciation,
amortisation, exceptional items and share based payments.
2024 2023
$'000 $'000
Operating profit 19,734 19,228
Depreciation of property, plant and equipment 3,293 3,451
Amortisation of intangible assets - other 9,169 7,781
Amortisation of intangible assets - acquired intangibles 20,921 20,930
Share based payments 4,487 2,992
Exceptional items - integration costs 675 510
Adjusted EBITDA 58,279 54,892
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 7 for the
calculation.
Operating Cash Conversion
Operating Cash Conversion is calculated as cash generated from operations (as
per Note 11), adjusted to exclude cash payments for exceptional items and
movements in cash held on behalf of customers, divided by adjusted EBITDA.
2024 2023
$'000 $'000
Cash generated from operations (Note 11) 53,703 100,591
Total exceptional items 675 510
Movement in amounts held on behalf of customers (Note 11) (2,170) (50,548)
Accrued exceptional items at the start of the year paid in the current year 92 60
Accrued exceptional items at the end of the year - (92)
Trade payable exceptional items at the start of the year paid in the current - 12
year
Cash generated from operations before exceptional items 52,300 50,533
Adjusted EBITDA 58,279 54,892
Operating Cash Conversion 89.7% 92.1%
Adjusted PBT
Adjusted PBT refers to profit before tax adjusted for exceptional items and
amortisation of acquired intangibles.
2024 2023
$'000 $'000
Profit before taxation 15,747 13,085
Amortisation of intangible assets - acquired intangibles 20,921 20,930
Exceptional items - integration costs 675 510
Adjusted PBT 37,343 34,525
Net Borrowings
Net Borrowings refers to net balance of short term borrowings, long term
borrowings and cash and cash equivalents.
2024
2023
$'000 $'000
Cash and cash equivalents 34,589 78,537
Borrowings (Note 12) (35,372) (83,033)
Net Borrowings (783) (4,496)
Lease liabilities are excluded from borrowings for the purpose of net
borrowings.
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 refer 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 is the annual value of subscription license and
related recurring revenues as at 30 June 2024 that are subject to underlying
contracts and where revenue is being recognised at the reporting date.
Net Revenue Retention
Net Revenue Retention is the percentage of revenue retained from existing
customers over the measurement period, taking into account both churn and
expansion sales.
Revenue Growth
Revenue Growth is the increase in Revenue in the current year compared to the
prior year expressed as a percentage of the previous year Revenue.
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