TIDMCRW
RNS Number : 2169Y
Craneware plc
28 February 2012
Craneware plc
("Craneware", "the Group" or the "Company")
Half Yearly Report
28 February 2012 - Craneware plc (AIM: CRW.L), the market leader
in automated revenue integrity solutions for the US healthcare
market, announces its unaudited results for the six months ended 31
December 2011.
Financial Highlights (US dollars)
-- Revenue increased 13% to $18.8m (H111: $16.6m)
-- Adjusted EBITDA(1) steady at $4.7m (H111: $4.6m),
-- Profit before tax $3.8m (H111: $4.3m)
-- Adjusted basic EPS decreased 11% to 11.2 cents (H111: 12.6 cents)
-- Cash at period end $23.6m (H111: $31.2m), from $24.2m at 30 June 2011
o Over $4m cash collected since period end
-- Proposed interim dividend of 4.8p per share (H111: 4.0p)
(1.) Adjusted EBITDA refers to earnings before interest, tax,
depreciation, amortisation, share based payments and transaction
related costs
Operational Highlights
-- New partnership signed at end of period
-- Further significant partnership announced this morning,
o Mitigates the $0.7m financial impact to EBITDA in the period
of third party contract loss previously announced
o Extends market opportunities for all Craneware products
o Further underlines the Board's confidence in current year
-- Signs of increased activity post 31 December 2011, the US
Government Electronic Health Records Incentive Payments claims
deadline
-- Renewal levels remain strong at over 100% of dollar value
-- Craneware InSight integration ahead of schedule and first cross-sales delivered
-- Increasing collaboration with partners presents enlarged market opportunity
-- Leading indicator, the Medicare Recovery Auditor programme
(previously RAC programme) continues to accelerate
Keith Neilson, CEO of Craneware commented:
"We are pleased to announce this morning a significant new
partnership which, combined with our growing pipeline gives us
confidence in securing a positive outcome for the year, and
mitigates the mixed results for the first half of the year which,
in management's opinion, were impacted by a combination of
temporary factors.
"The dramatic upheaval taking place in the US healthcare market
continues to present a significant long term opportunity for
Craneware. Our vision is to be the partner that healthcare
providers rely on to improve and sustain strong financial
performance through revenue integrity. With approximately a quarter
of US hospitals using one or more of our solutions and many of the
largest suppliers to this market seeking to add our software to
their offerings, we believe we are well placed to capitalise on
this significant opportunity, delivering continued growth and
shareholder value."
For further information, please contact:
Craneware plc Peel Hunt Newgate Threadneedle
+44 (0)131 +44 (0)20 7418 +44 (0)20 7653
550 3100 8900 9850
Keith Neilson, Dan Webster Caroline Evans-Jones
CEO
Craig Preston, Richard Kauffer Fiona Conroy
CFO
About Craneware
Founded in 1999, Craneware has headquarters in Edinburgh,
Scotland with offices in Atlanta, Boston, Nashville and Scottsdale
employing over 200 staff. Craneware is the leader in automated
revenue integrity solutions that improve financial performance for
healthcare organisations. Craneware's market-driven, SaaS solutions
help hospitals and other healthcare providers more effectively
price, charge, code and retain earned revenue for patient care
services and supplies. This optimises reimbursement, increases
operational efficiency and minimises compliance risk. By partnering
with Craneware, clients achieve the visibility required to
identify, address and prevent revenue leakage. To learn more, visit
craneware.com and stoptheleakage.com
Chairman's Statement
The Group reported revenue growth of 13% to $18.8m (H1
FY11:$16.6m) and adjusted EBITDA held steady at $4.7m (H1
FY11:$4.6m). These results include, for the first time, a full six
months contribution from Craneware InSight, Inc. Excluding
Craneware InSight, adjusted EBITDA for the period would have
increased by over 15%. While the results for the first half of the
year have been impacted by a combination of two factors, as is
explained in more detail in the Operational Review, there is
evidence that both are moving towards a positive resolution in the
second half.
The integration of Craneware InSight, the wholly owned
subsidiary of Craneware plc acquired on 17 February 2011 is well
advanced, with the introduction of consistent branding across the
organisation, new amalgamated products in development and
significant sales pipeline opportunities for both product sets into
the respective customer bases. Initial cross-sales into the
existing Craneware customer base have been achieved. The
partnership deal announced this morning includes the Craneware
InSight product range and reinforces the Board's confidence in the
value of the new solutions to the Craneware suite and the addition
of the Craneware InSight team.
The Company continues to seek similar alliances which will
broaden its market reach. We were delighted to secure a significant
new partnership at the end of the first half which will see
Craneware's proprietary technology and data sold to new areas
within hospitals in a non-competitive parallel segment to that in
which Craneware operates. This agreement includes a significant
minimum payment for software licenses to be paid to Craneware for
each of the next three years, to be recognised in the second half
of this fiscal year and beyond.
Following the passing of the first Electronic Health Records
("EHR") Incentive Payments deadline on 31 December 2011, we have
seen an increase in hospital activity in the first two months of
the second half. Whilst it is still too early to see if sales
cycles have returned to more normal levels, pressure is mounting on
all US hospitals to rectify the underlying causes of the Recovery
Audit Contractors' (now renamed Medicare Recovery Auditors)
findings. In the 12 months to 31 December 2011, the Medicare
Recovery Auditor programme identified over $1.2bn in total
corrections, almost a seven fold increase on the amount identified
in the previous 12 months. The Board believes the focus of
hospitals has once again returned to Revenue Integrity Solutions
which provide the underlying return on invested capital for
EHR.
We continue to make progress with several other large channel
partner opportunities, which combined with the two announced in
recent weeks underpin our confidence in the current year. Moreover,
the growing interest from third parties wishing to integrate their
offerings with ours gives us confidence that Craneware is well
positioned to deliver continued growth as we capitalise on what we
believe to be a significant and growing market opportunity.
We would like to take this time to thank our customers for their
loyalty and our hard-working staff for their passion and commitment
which enables Craneware to maintain its market leading
position.
George Elliott
Chairman
27 February 2012
Operational Review
Introduction
We have continued to build on the fundamentals within our
business during the period, from increasing the value of Craneware
(and our solutions) to our customers, to augmenting our sales team,
enhancing our products and extending our addressable market through
partnerships. Against a backdrop of continued changes in the manner
of healthcare delivery and increasing pressures on US healthcare
providers themselves, our vision is to be the partner that
healthcare providers can rely on to improve and sustain strong
financial performance through revenue integrity.
The ongoing development of our market leading products and the
provision of high levels of customer support remain central to
achieving this vision. Our leading position in the revenue
integrity market was underlined once again during the period by the
prestigious KLAS awards, with our core product, Chargemaster
Toolkit, being named number one in its category for the sixth year
running. Additionally, in an excellent endorsement of one of our
newer products, Bill Analyzer was named as a new KLAS revenue cycle
market category leader in its first year of entry into the awards.
The KLAS awards are based entirely on independent user feedback and
demonstrate the continued high quality of Craneware's product
offerings.
The financial results in the period include, for the first time,
a full six months contribution from our acquisition of ClaimTrust,
Inc. (now Craneware InSight, Inc). Including Craneware InSight, the
Group increased revenue by 13% to $18.8m (H1 FY11: $16.6m) and
delivered adjusted EBITDA of $4.7m (H1 FY11: $4.6m). These results
were impacted primarily by two factors, one of which, being the
cessation of a third-party contract, has now been fully mitigated
and the opportunity extended, through the channel partner agreement
announced today. The other factor (EHR Certification), is discussed
in more detail in the Financial Review section.
We have continued to make significant progress with our channel
partner development work in the period. As a result, two
significant deals have now come to fruition; the first we announced
in January 2012 and the second was announced this morning. These
channel partner agreements not only provide for guaranteed minimum
levels of revenue in the current and future years, but more
importantly open new market opportunities for Craneware. In
addition to these announced deals there are currently a number of
other channel partner deals in process.
As the Medicare Recovery Auditor ("MRA") programme (formerly
known as the RAC programme) gathers momentum, so too does the
importance of Revenue Integrity and the number of businesses
seeking to partner with Craneware in this area. Through our
extensive customer base and acknowledged product leadership, we
have secured a valuable position at the centre of this expanding
market. Our focus in the second half will be the continued
execution on these opportunities.
Market Developments
With US healthcare expenditure in 2012 forecast to reach $3
trillion (approaching 20% of US GDP), Craneware operates in one of
the largest markets in the world, and one which is subject to
continuous change and ever increasing complexity. The US is at the
beginning of a long and extensive investment in healthcare reform
which seeks to increase access to quality healthcare while reducing
the overall financial burden on the State. Technologies like
Craneware's solutions when combined with better data sources such
as Electronic Health Records, are central to the ability of
healthcare organisations to achieve required improvements in
financial performance, operational efficiency, and compliance
within an environment of changing rules and regulations.
Changes to the US healthcare system will make it increasingly
difficult for healthcare organisations to manage coding and
reimbursements without products such as Craneware's. Yet, of the
5,754 registered US hospitals, at present fewer than half use
chargemaster management software, such as Craneware's award winning
product, Chargemaster Toolkit.
During the period the impact of the 31 December 2011 deadline
for obtaining the 'meaningful use' certificate to qualify for the
2011 government funded Electronic Health Records Incentive Payments
programme was not predicted by many in the sector, including
Craneware. Industry commentators have estimated that approximately
60% of all healthcare institutions registered to obtain their
certificate by the time of the deadline, a percentage that was
projected to be 10-15%. Now that this initial deadline has passed,
we are confident hospitals will now turn their attention to
solutions that will leverage their investments in EHR's by ensuring
they aid revenue integrity and protect against loss of revenue
whilst improving the quality of care they ultimately deliver.
The MRA programme is now permanent and ramping up the efforts to
take back payments from heathcare providers. In the 12 months to 31
December 2011, the programme identified over $1.2bn in total
corrections, almost a seven fold increase on the amount identified
in the previous 12 months. We continue to believe this is a strong
leading indicator of future demand for Craneware solutions as
healthcare providers focus on addressing the underlying causes of
the corrections identified.
Craneware's solutions help US healthcare providers drive
business improvements that will result in better financial health,
allowing them to focus and invest in their primary purpose of
delivering quality patient care. The need for continued innovation
and product quality in this changing and complex environment will
continue to drive Craneware's growth in the future.
Integration of Craneware InSight and Channel Partner Contract
Win
Since the acquisition in February 2011 of ClaimTrust Inc., now
renamed Craneware InSight ("InSight"), we have made significant
progress with the integration, which is well advanced and ahead of
schedule. There is consistent branding across the enlarged
organisation, the first three of the ClaimTrust products have been
fully integrated into our core offering as the "Audit and Revenue
Recovery" product family, new amalgamated products are in initial
stages of development and significant sales pipeline opportunities
have been identified for both product sets into the respective
customer bases, as well as with new customers.
As announced this morning, Craneware has entered into a new
Channel Partner agreement and although specific terms of the
reseller agreement are confidential, Craneware will receive from
the Channel Partner, guaranteed minimum payments of $7,500,000
between now and 30 June 2014. The Channel Partner will use
multi-year licenses for all of the Craneware Solutions in its work
with Federal and State Healthcare facilities and projects.
Following the end of the minimum period, Craneware will continue to
license its solutions to those facilities that have been signed
during the period of the agreement and recognise revenue on a
normal basis until the end of the individual multi-year
contracts.
The Audit and Revenue Recovery product family was not immune to
the slowdown experienced due to the 31 December 2011 EHR meaningful
use deadline. However, we remain confident that the potential for
these products is significant as the MRA programme gathers pace
through the current year and into 2013.
Craneware InSight is a leader in the newly formed electronic
submission of medical documentation (esMD) task force, a government
sponsored initiative to speed the transit of medical records
between providers and the MRA's. Craneware InSight is one of only a
small number of vendors invited to participate in this pilot
programme.
The value of the product set was further underlined in February
2012 by the award of platinum-level status for Craneware InSight
Audit(TM) , the highest level of integration certification from
Executive Health Resources, a leading provider of medical necessity
compliance and appeals management solutions.
Sales and Marketing
We have completed the geographical alignment of our sales team
across the US, which began in the prior year, and have in place
experienced Regional Vice Presidents to head-up each of our three
geographical regions. Furthermore, as part of this programme we
have undertaken extensive training of all our sales personnel -
with a particular focus on the enlarged product set and increasing
market opportunities presented by US healthcare reform. Where
appropriate, we have also added additional personnel at senior
levels to our sales teams and strengthened our Sales Support
function.
The average length of new customer contracts continues to be
in-line with our historical norms of approximately five years.
Where Craneware enters into new product contracts with its existing
customers, contracts are typically made co-terminus with the
customer's existing contracts, and as such the average length of
these contracts is greater than three years, in-line with our
expectations. We are pleased to have seen renewals during the
period return to levels of greater than 100% by dollar value, as
well as the average number of products per customer increase to 1.6
at 31 December 2011 from 1.5 at 30 June 2011. Average facility
value has significantly spiked in the period, however with the
smaller number of contracts signed in the first half we do not
believe this trend is meaningful.
Product Development
Product development efforts during the period have been focussed
on leveraging the best of innovative combinations of the Craneware
and Craneware InSight enlarged product set, whilst ensuring that
the direction of all products is consistent with the long-term
strategic positioning of the Company as the partner that healthcare
providers rely on to improve and sustain strong financial
performance through revenue integrity.
Financial Review
Further to the trading update on 10 January 2012, we are
reporting an increase in revenues in the period of 13% to $18.8m
(H111:16.6m) and an adjusted EBITDA of $4.7m (H111: $4.6m). These
results include, for the first time, a full six months contribution
from our acquisition of Craneware InSight Inc. (completed on 17
February 2011).
As outlined above, the results for this period have been
impacted by a combination of two factors, both of which we expect
to be short-term in nature. The first of these two factors relates
to the cessation of a Craneware InSight contract administered
through a third party. This was a direct consequence of the third
party losing its contract with its end hospital network. This had
an impact of approximately $0.7m on EBITDA reported in the period
by InSight. Without this, the Group would have reported an increase
in EBITDA in the period of over 15%.
The Channel partner deal announced this morning has not only
replaced and potentially extended this original opportunity, but
ensures the financial impact from the cessation of the original
contract is mitigated and is limited to only these interim
results.
The second factor impacting the half year results was the
extension of sales cycles as a consequence of the unexpectedly high
percentage of healthcare providers choosing to focus on achieving
the 31 December 2011 deadline for the first Electronic Health
Records Incentive Payments. We have seen an increase in hospital
activity since 31 December; however it is still too early to
predict if sales cycles have subsequently returned to more normal
levels.
As reported in the Final Results, the Company's 'Three Year
Visible Revenue' KPI stood at $105m at the year end. There has been
no significant change to this metric in the period as a number of
smaller contract wins have been offset by the cessation of the
third party ClaimTrust contract. However, with the Channel Partner
deal announced this morning, visibility of revenue for the same
period (being 1 July 2011 to 30 June 2014) has now increased to
$111.4m with this contract forming part of 'revenue under contract'
rather than the 'SaaS revenue' the previous contract was under.
The inclusion of Craneware InSight, combined with the careful
investments we continue to make for future growth, has resulted in
an increase in our net operating expenses by $3.4m to $14.31m
(H111: $10.89m). As expected, the Group's adjusted EBITDA margin
has been diluted following the InSight acquisition as we leverage
its existing operating base for future growth. However despite this
and the factors described above, the Group is reporting EBITDA
margins of 25% (H111: 28%).
As reported in our full year results to 30 June 2011 and in-line
with our expectations, we have seen the rate of taxation return to
more normal levels, reflecting the mix of the Group's profits
between the UK and the US. This, combined with the increased number
of shares in issue following the InSight acquisition, and Employee
share option exercises in the prior year, has had a direct impact
on the Adjusted EPS numbers for the half. Adjusted basic EPS has
fallen by 11% to $0.112 (H111: $0.126) and Adjusted diluted EPS has
fallen by 10% to $0.111 (H111: $0.124).
The Group maintains a strong balance sheet position, with no
debt and a significant cash balance of $23.6m ($31.2 at 31 December
2010) ($24.2m at 30 June 2011). The movement in this balance is
after payment of $2m in dividends to shareholders during the
period. As has been experienced in prior years, a combination of
the dividend payment and cash cycles in the run up to 31 December
year ends has seen a reduction in the cash balance and operating
cash conversion. However, with over $4m of cash collected since the
period end, the Group retains healthy cash reserves which are
available for future investment.
We continue to report the results (and hold the cash reserves)
of the Group in US Dollars, whilst having approximately 25% of our
costs, being our UK employees and purchases, denominated in
Sterling. The average exchange rate for the Company during the
reporting period was $1.59/GBP1 as compared to $1.57/GBP1 in the
corresponding period last year.
Dividend
The Board has resolved to pay an interim dividend of 4.8p (7.5
cents) per ordinary share in the Company on 20 April 2012 to those
shareholders on the register as at 9 March 2012 (FY11 Interim
dividend 4.0p). The ex-dividend date is 7 March 2012.
The interim dividend of 4.8p per share is capable of being paid
in US dollars subject to a shareholder having registered to receive
their dividend in US dollars under the Company's Dividend Currency
Election, or who has registered to do so by the close of business
on 9 March 2012. The exact amount to be paid will be calculated by
reference to the exchange rate to be announced on 9 March 2012. The
interim dividend referred to above in US dollars of 7.5 cents is
given as an example only using the Balance Sheet date exchange rate
of $1.5541/GBP1 and may differ from that finally announced.
Outlook
We are pleased to announce this morning a significant new
partnership which, combined with our growing pipeline gives us
confidence in securing a positive outcome for the year, and
mitigates the mixed results for the first half of the year which,
in management's opinion, were impacted by a combination of
temporary factors.
The dramatic upheaval taking place in the US healthcare market
continues to present a significant long term opportunity for
Craneware. Our vision is to be the partner that healthcare
providers rely on to improve and sustain strong financial
performance through revenue integrity. With approximately a quarter
of US hospitals using one or more of our solutions and many of the
largest suppliers to this market seeking to add our software to
their offerings, we believe we are well placed to capitalise on
this significant opportunity, delivering continued growth and
shareholder value.
Keith Neilson Craig Preston
Chief Executive Officer Chief Financial Officer
27 February 2012 27 February 2012
Craneware PLC
Interim Results FY12
Consolidated Statement
of Comprehensive Income
H1
2012 H1 2011 FY 2011
Notes $'000 $'000 $'000
------------------------------------- ------- --------- --------- ---------
Revenue 18,754 16,560 38,124
Cost of sales (658) (1,409) (4,696)
--------- --------- ---------
Gross profit 18,096 15,151 33,428
Net operating expenses (14,312) (10,891) (24,874)
--------- --------- ---------
Operating profit 3,784 4,260 8,554
Analysed as:
Adjusted EBITDA* 4,655 4,608 10,077
Acquisition costs on business
combination - - (517)
Share-based payments (68) (72) (139)
Depreciation of plant and
equipment (276) (103) (312)
Amortisation of intangible
assets (527) (173) (555)
---------------------------------------------- --------- --------- ---------
Finance income 37 74 99
--------- --------- ---------
Profit before taxation 3,821 4,334 8,653
Tax charge on profit on
ordinary activities (1,089) (1,093) (2,638)
--------- --------- ---------
Profit for the period attributable
to owners of the parent 2,732 3,241 6,015
---------------------------------------------- --------- --------- ---------
*Adjusted EBITDA is defined as operating profit
before acquisition costs, share based payments,
depreciation and amortisation.
Earnings per share for the period attributable
to equity holders
- Basic ($ per share) 1a 0.102 0.126 0.231
- *Adjusted Basic ($ per
share) 1a 0.112 0.126 0.256
- Diluted ($ per share) 1b 0.101 0.124 0.228
- *Adjusted Diluted ($
per share) 1b 0.111 0.124 0.253
--------- --------- ---------
*Adjusted Earnings per share calculations allow for acquisition
costs and amortisation on acquired intangible assets to form a
better comparison with previous periods.
Craneware PLC
Interim Results FY12
Consolidated Statement of Changes in Equity
-------------------------------------------------------------------------------------
Share Share Other Retained
Capital Premium Reserves Earnings Total
$'000 $'000 $'000 $'000 $'000
-------------------------- ----------- --------- ---------- ---------- ---------
At 1 July 2010 512 9,250 3,237 9,053 22,052
Total comprehensive
income - profit
for the period - - - 3,241 3,241
Transactions with
owners
Share-based payments - - 72 (535) (463)
Impact of share
options exercised 10 - - 1,498 1,508
Dividend - - - (1,333) (1,333)
-------------------------- ----------- --------- ---------- ---------- ---------
At 31 December
2010 522 9,250 3,309 11,924 25,005
-------------------------- ----------- --------- ---------- ---------- ---------
Total comprehensive
income - profit
for the period
Transactions with
owners - - - 2,773 2,773
Share-based payments - - 67 287 354
Impact of share
options exercised 3 - (3,074) 3,074 3
Issue of ordinary
shares related
to business combination 11 5,989 - - 6,000
Dividend - - - (1,730) (1,730)
At 30 June 2011 536 15,239 302 16,328 32,405
-------------------------- ----------- --------- ---------- ---------- ---------
Total comprehensive
income - profit
for the period
Transactions with
owners - - - 2,732 2,732
Share-based payments - - 68 (498) (430)
Impact of share
options exercised 2 169 (155) 603 619
Dividend - - - (2,036) (2,036)
At 31 December
2011 538 15,408 215 17,129 33,290
-------------------------- ----------- --------- ---------- ---------- ---------
Craneware PLC
Interim Results FY12
Consolidated Balance Sheet as at
31 December 2011
H1 2012 H1 2011 FY2011
Notes $'000 $'000 $'000
------------------------------ ------- -------- -------- -------
ASSETS
Non-Current Assets
Plant and equipment 2,182 467 2,167
Intangible assets 17,449 1,528 17,728
Deferred Tax 269 1,441 -
19,900 3,436 19,895
-------- -------- -------
Current Assets
Trade and other receivables 12,933 10,685 13,121
Corporation tax - 320 -
Cash and cash equivalents 23,621 31,234 24,176
36,554 42,239 37,297
-------- -------- -------
Total Assets 56,454 45,675 57,192
------------------------------ ------- -------- -------- -------
EQUITY AND LIABILITIES
Non-Current Liabilities
Contingent consideration 954 - 954
Deferred tax - - 52
Deferred income 73 3 250
1,027 3 1,256
-------- -------- -------
Current Liabilities
Deferred income 15,740 15,985 15,638
Corporation tax 1,060 - 288
Trade and other payables 5,337 4,682 7,605
22,137 20,667 25,531
-------- -------- -------
Total Liabilities 23,164 20,670 24,787
-------- -------- -------
Equity
Called up share capital 2 538 522 536
Share premium account 15,408 9,250 15,239
Other reserves 215 3,309 302
Retained earnings 17,129 11,924 16,328
Total Equity 33,290 25,005 32,405
-------- -------- -------
Total Equity and Liabilities 56,454 45,675 57,192
------------------------------ ------- -------- -------- -------
Craneware PLC
Interim Results FY12
Consolidated Statement of Cash Flow for the
six months ended 31 December 2011
H1 H1
2012 2011 FY 2011
Notes $'000 $'000 $'000
---------------------------------- ------ -------- -------- ---------
Cash flows from operating
activities
Cash generated from operations 3 2,501 4,320 10,089
Interest received 37 74 99
Tax paid (689) (763) (1,595)
---------------------------------- ------ -------- -------- ---------
Net cash from operating
activities 1,849 3,631 8,593
Cash flows from investing
activities
Purchase of plant and equipment (291) (289) (1,790)
Acquisition of subsidiary,
net of cash acquired - - (8,772)
Capitalised intangible
assets (248) (227) (247)
---------------------------------- ------ -------- -------- ---------
Net cash used in investing
activities (539) (516) (10,809)
Cash flows from financing
activities
Dividends paid to company
shareholders (2,036) (1,333) (3,063)
Paid up ordinary share
capital 171 10 13
---------------------------------- ------ -------- -------- ---------
Net cash used in financing
activities (1,865) (1,323) (3,050)
Net (decrease)/increase
in cash and cash equivalents (555) 1,792 (5,266)
Cash and cash equivalents
at the start of the period 24,176 29,442 29,442
Cash and cash equivalents
at the end of the period 23,621 31,234 24,176
---------------------------------- ------ -------- -------- ---------
Craneware PLC
Interim Results FY12
Notes to the Financial Statements
1. Earnings per Share
(a) Basic
Basic earnings per share is calculated by dividing
the profit attributable to equity holders of
the company by the weighted average number
of ordinary shares in issue during the period.
--------------------------------------------------------------------
H1
H1 2012 2011 FY 2011
--------------------------------------- -------- ------- --------
Profit attributable to equity
holders of the Company ($'000) 2,732 3,241 6,015
Weighted average number of
ordinary shares in issue (thousands) 26,905 25,662 26,079
Basic earnings per share ($
per share) 0.102 0.126 0.231
-------- ------- --------
Profit attributable to equity
holders of the Company ($'000) 2,732 3,241 6,015
Acquisition costs and amortisation
of acquired intangibles ($'000) 287 - 664
-------- ------- --------
Adjusted Profit attributable
to equity holders ($'000) 3,019 3,241 6,679
-------- ------- --------
Weighted average number of
ordinary shares in issue (thousands) 26,905 25,662 26,079
Adjusted Basic earnings per
share ($ per share) 0.112 0.126 0.256
-------- ------- --------
(b) Diluted
For diluted earnings per share, the weighted
average number of ordinary shares calculated
above is adjusted to assume conversion of all
dilutive potential ordinary shares. The Group
has one category of dilutive potential ordinary
shares, being those granted to directors and
employees under the share option scheme.
--------------------------------------------------------------------
H1
H1 2012 2011 FY 2011
--------------------------------------- -------- ------- --------
Profit attributable to equity
holders of the Company ($'000) 2,732 3,241 6,015
Weighted average number of
ordinary shares in issue (thousands) 26,905 25,662 26,079
Adjustments for: - share options
(thousands) 170 438 324
Weighted average number of
ordinary shares for diluted
earnings per share (thousands) 27,075 26,100 26,403
Diluted earnings per share
($ per share) 0.101 0.124 0.228
-------- ------- --------
1. Earnings per Share (Cont.)
H1
H1 2012 2011 FY 2011
--------------------------------------- -------- ------- --------
Profit attributable to equity
holders of the Company ($'000) 2,732 3,241 6,015
Acquisition costs and amortisation
of acquired intangibles ($'000) 287 - 664
Adjusted Profit attributable
to equity holders ($'000) 3,019 3,241 6,679
-------- ------- --------
Weighted average number of
ordinary shares in issue (thousands) 26,905 25,662 26,079
Adjustments for: - share options
(thousands) 170 438 324
Weighted average number of
ordinary shares for diluted
earnings per share (thousands) 27,075 26,100 26,403
Adjusted Diluted earnings per
share ($ per share) 0.111 0.124 0.253
-------- ------- --------
2. Called up share
capital
H1 2012 H1 2011 FY 2011
Number $'000 Number $'000 Number $'000
---------------------- ----------- ------ ----------- ------ ----------- ------
Authorised
Equity share capital
Ordinary shares
of 1p each 50,000,000 1,014 50,000,000 1,014 50,000,000 1,014
Allotted called-up
and fully paid
Equity share capital
Ordinary shares
of 1p each 26,987,018 538 25,964,950 522 26,792,681 536
3. Consolidated Cash Flow generated
from operating activities
Reconciliation of profit before taxation
to net cash inflow from operating
activities:
H1 2012 H1 2011 FY 2011
$'000 $'000 $'000
-------------------------------- -------- -------- --------
Profit before taxation 3,821 4,334 8,653
Finance income (37) (74) (99)
Depreciation on plant
and equipment 276 103 312
Amortisation on intangible
assets 527 173 555
Share-based payments 68 73 139
Movements in working
capital:
Decrease/(increase) in
trade and other receivables 238 (2,091) (3,353)
(Decrease)/increase in
trade and other payables (2,392) 1,802 3,882
Cash generated from operations 2,501 4,320 10,089
-------------------------------- -------- -------- --------
4. Basis of Preparation
The interim financial statements are unaudited and do not
constitute statutory accounts as defined in S435 of the Companies
Act 2006. These statements have been prepared applying accounting
policies that were applied in the preparation of the Group's
consolidated accounts for the year ended 30th June 2011. Those
accounts, with an unqualified audit report, have been delivered to
the Registrar of Companies.
5. Segmental Information
The Directors consider that the Group operates in one business
segment, being the creation of software sold entirely to the US
Healthcare Industry, and that there are therefore no additional
segmental disclosures to be made in these financial statements.
6. Significant Accounting Policies
The significant accounting policies adopted in the preparation
of these statements are set out below.
Reporting Currency
The Directors consider that as the Group's revenues are
primarily denominated in US dollars the principal functional
currency is the US dollar. The Group's financial statements are
therefore prepared in US dollars.
Currency Translation
Transactions denominated in foreign currencies are translated
into US dollars at the rate of exchange ruling at the date of the
transaction. Monetary assets and liabilities expressed in foreign
currencies are translated into US dollars at rates of exchange
ruling at the balance sheet date ($1.5541/GBP1). Exchange gains or
losses arising upon subsequent settlement of the transactions and
from translation at the balance sheet date, are included within the
related category of expense where separately identifiable, or in
general and administrative expenses.
Revenue Recognition
The Group follows the principles of IAS 18, "Revenue
Recognition", in determining appropriate revenue recognition
policies. In principle revenue is recognised to the extent that it
is probable that the economic benefits associated with the
transaction will flow into the Group.
Revenue is derived from sales of, and distribution agreements
relating to, software licenses and professional services (including
installation). Revenue is recognised when (i) persuasive evidence
of an arrangement exists; (ii) the customer has access and right to
use our software; (iii) the sales price can be reasonably measured;
and (iv) collectability is reasonably assured.
Revenue from standard licensed products which are not modified
to meet the specific requirements of each customer is recognised
from the point at which the customer has access and right to use
our software. This right to use software will be for the period
covered under contract and, as a result our annuity based revenue
model, recognises the licensed software revenue over the life of
this contract. This policy is consistent with the Company's
products providing customers with a service through the delivery
of, and access to, software solutions (Software-as-a-Service
("SaaS")), and results in revenue being recognised over the period
that these services are delivered to customers.
Revenue from all professional services is recognised as the
applicable services are provided. Where professional services
engagements contain material obligation, revenue is recognised when
all the obligations under the engagement have been fulfilled. Where
professional services engagements are provided on a fixed price
basis, revenue is recognised based on the percentage completion of
the relevant engagement. Percentage completion is estimated based
on the total number of hours performed on the project compared to
the total number of hours expected to complete the project.
Software and professional services sold via a distribution
agreement will normally follow the above recognition policies.
Should any contracts contain non-standard clauses, revenue
recognition will be in accordance with the underlying contractual
terms which will normally result in recognition of revenue being
deferred until all material obligations are satisfied.
The excess of amounts invoiced over revenue recognised are
included in deferred income. If the amount of revenue recognised
exceeds the amount invoiced the excess is included within accrued
income.
Business combinations
The acquisition of subsidiaries is accounted for using the
purchase method. The cost of the acquisition is measured at the
aggregate of the fair values, at the acquisition date, of assets
given, liabilities incurred or assumed, and the equity issued by
the Group. The consideration transferred includes the fair value of
any assets or liability resulting from a contingent consideration
and acquisition costs are expensed as incurred.
Goodwill arising on the acquisition is recognised as an asset
and initially measured at cost, being the excess of fair value of
the consideration over the Group's assessment of the net fair value
of the identifiable assets and liabilities recognised.
If the Group's assessment of the net fair value of a
subsidiary's assets and liabilities had exceeded the fair value of
the consideration of the business combination then the excess
('negative goodwill') would be recognised in the statement of
comprehensive income immediately. The fair value of the
identifiable assets and liabilities assumed on acquisition are
brought onto the Balance Sheet at their fair value at the date of
acquisition.
Intangible Assets
(a) Goodwill
Goodwill arising on consolidation represents the excess of the
cost of acquisition over the fair value of the identifiable assets
and liabilities of a subsidiary at the date of acquisition.
Goodwill is capitalised and recognised as a non-current asset in
accordance with IFRS 3 and is tested for impairment annually, or on
such occasions that events or changes in circumstances indicate
that the value might be impaired.
Goodwill is allocated to cash-generating units for the purpose
of impairment testing. The allocation is made to those
cash-generating units that are expected to benefit from the
business combination in which the goodwill arose.
(b) Proprietary software
Proprietary software acquired in a business combination is
recognised at fair value at the acquisition date. Proprietary
software has a finite life and is carried at cost less accumulated
amortisation. Amortisation is calculated using the straight-line
method to allocate the associated costs over their estimated useful
lives of 5 years.
(c) Contractual Customer relationships
Contractual customer relationships acquired in a business
combination are recognised at fair value at the acquisition date.
The contractual customer relations have a finite useful economic
life and are carried at cost less accumulated amortisation.
Amortisation is calculated using the straight-line method over the
expected life of the customer relationship which has been assessed
as 10 years.
(d) Research and Development Expenditure
Expenditure associated with developing and maintaining the
Group's software products are recognised as incurred. Where,
however, new product development projects are technically feasible,
production and sale is intended, a market exists, expenditure can
be measured reliably, and sufficient resources are available to
complete such projects, development expenditure is capitalised
until initial commercialisation of the product, and thereafter
amortised on a straight-line basis over its estimated useful life.
Staff costs and specific third party costs involved with the
development of the software are included within amounts
capitalised.
(e) Computer software
Costs associated with acquiring computer software and licensed
to-use technology are capitalised as incurred. They are amortised
on a straight-line basis over their useful economic life which is
typically 3 to 5 years.
Impairment of non-financial assets
At each reporting date the Group considers the carrying amount
of it tangible and intangible assets including goodwill to
determine whether there is any indication that those assets have
suffered an impairment loss. If there is such an indication, the
recoverable amount of the asset is estimated in order to determine
the extent of the impairment loss (if any) through determining the
value in use of the cash generating unit that the asset relates to.
Where it is not possible to estimate the recoverable amount of an
individual asset, the Group estimates the recoverable amount of the
cash-generating unit to which the asset belongs.
If the recoverable amount of an asset is estimated to be less
than its carrying amount, the impairment loss is recognised as an
expense.
Where an impairment loss subsequently reverses, the carrying
amount of the asset is increased to the revised estimate of its
recoverable amount, but so that the increased carrying amount does
not exceed the carrying amount that would have been determined had
no impairment loss been recognised for the asset. A reversal of an
impairment loss is recognised as income immediately. Impairment
losses relating to goodwill are not reversed.
Cash and Cash Equivalents
Cash and cash equivalents include cash in hand, deposits held
with banks and short term highly liquid investments. For the
purpose of the statement of Cash flows, cash and cash equivalents
comprise of cash on hand, deposits held with banks and short term
high liquid investments.
Share-Based Payments and Taxation Implications
The Group issues equity-settled share-based payments to certain
employees. In accordance with IFRS 2, "Share-Based Payments"
equity-settled share-based payments are measured at fair value at
the date of grant. Fair value is measured by use of the
Black-Scholes pricing model as appropriately amended. The fair
value determined at the date of grant of the equity-settled
share-based payments is expensed on a straight-line basis over the
vesting period, based on the Group's estimate of the number of
shares that will eventually vest.
The share-based payments charge is shown separately on the
income statement and is also included in 'Other reserves'.
In the UK and the US, the Group is entitled to a tax deduction
for amounts treated as compensation on exercise of certain employee
share options under each jurisdiction's tax rules. A compensation
expense is recorded in the Group's statement of comprehensive
income over the period from the grant date to the vesting date of
the relevant options. As there is a temporary difference between
the accounting and tax bases a deferred tax asset is recorded. The
deferred tax asset arising is calculated by comparing the estimated
amount of tax deduction to be obtained in the future (based on the
Company's share price at the balance sheet date) with the
cumulative amount of the compensation expense recorded in the
statement of comprehensive income. If the amount of estimated
future tax deduction exceeds the cumulative amount of the
remuneration expense at the statutory rate, the excess is recorded
directly in equity against retained earnings.
7. Acquisition of subsidiary: Craneware InSight Inc
On 17 February 2011, the Company acquired 100% of the issued
share capital of ClaimTrust Inc. On the date of acquisition the
assets and liabilities of ClaimTrust Inc. were merged into the
newly created entity, Craneware InSight Inc.
In line with the audited financial statements at 30 June 2011,
the initial accounting for the business combination continues to
remain incomplete as at 31 December 2011 and is based on
provisional amounts. In particular, the directors are still to
determine if there is a deferred tax asset in relation to net
operating losses carried forward from the acquired business that
can be recognised. The final position will be reported in the
year-end financial statements.
8. Availability of announcement and Half Yearly Financial
Report
Copies of this announcement are available on the Company's
website, www.craneware.com. Copies of the Interim Report will be
posted to shareholders, downloadable from the Company's website and
available from the registered office of the Company shortly.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR UBVNRUKAUUAR
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