TIDMCRW
RNS Number : 3813M
Craneware plc
21 September 2021
Craneware plc
("Craneware" or the "Company" or the "Group")
Final Results
Strong sales and operational performance with continuing
adoption of the Trisus platform
21 September 2021 - 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 2021.
Financial Highlights (US dollars)
-- Revenue growth of 6% to $75.6m (FY20: $71.5m)
-- Three Year Total Visible Revenue(3) (including Sentry
contribution from 13(th) July 2021 onwards) of $471.2m (FY20 same 3
year period: $196.2m)
-- Adjusted EBITDA(1) increased 8% to $27.1m (FY20: $25.2m)
-- Profit before tax $13.2m (FY20: $19.3m) reflecting
exceptional costs associated with acquisition funding
-- Basic adjusted EPS(2) increased 6% to 69.0 cents (FY20: 65.4
cents) and adjusted diluted EPS increased to 68.1 cents (FY20: 64.4
cents)
-- Basic EPS 48.1cents (FY20: 62.8 cents) and diluted EPS 47.5cents (FY20: 61.9 cents)
-- Strong operating cash conversion(3.) at 99% of Adjusted EBITDA (FY20: 92%)
-- Cash at year-end of $235.6m (FY20: $47.9m) after raising
$187.3m (net) via a share placing and prior to completion of Sentry
acquisition
-- Proposed final dividend increase to 15.5p per share (21.47
cents) (FY20: 15.0p, 18.45 cents) giving a total dividend for the
year of 27.5p per share (38.10 cents) (FY20: 26.5p, 32.60 cents) up
4%
(1.) Adjusted EBITDA refers to earnings before interest, tax,
depreciation, amortisation, exceptional items and share based
payments
(2.) Adjusted Earnings per share (EPS) calculations allow for
the tax adjusted acquisition costs and share related transactions
together with amortisation on acquired intangible assets
(3) Refer to the Financial Review section of the Strategic
Report for further details
Operational Highlights
-- Total Sales (4) for the year increased 19% to $78.1m
(FY20: $65.4m)
-- New Sales (5) for the year increased 40% to $42.4m (FY20:
$30.4m)
-- Sales of Trisus Enterprise Value Platform products represented
17% of New Sales in the year (FY20: 14%)
-- Acceleration of migration of customers to the Trisus
platform, with the Trisus user base increasing to over
900 customers (FY20: 200 customers)
-- Continued investment in R&D and innovation to capitalise
on growing market opportunity
-- The acquisition of Sentry Data Systems, Inc. was completed
following the year end, significantly expanding Craneware's
scale, offering and opportunity
(4.) Total Sales refers to the total value of contracts signed
in the year, consisting of New Sales and Renewals
(5.) New Sales refers to the total value of contracts with new
customers or new products to existing customers at some time in
their underlying contract
Outlook
-- Continued sales momentum across the now enlarged Group
-- Integration of Sentry proceeding faster than original expectations
-- Long-term transition to value-based care provides ongoing basis for growth
-- Confident in return to double digit organic growth in future years
Keith Neilson, CEO of Craneware plc commented ,
"Our team delivered a positive performance in the year, against
the ongoing backdrop of the pandemic, supporting our customers
through an incredibly challenging period while continuing to
execute on our strategy. We experienced continued sales momentum
and strong adoption of our Trisus cloud based platform, paving the
way for accelerated future growth.
"The successful completion of the acquisition of Sentry Data
Systems following the end of the year marks a transformational
point in our journey, considerably expanding our customer base,
data sets, product offering and market presence. Together, we will
offer healthcare organisations innovative new ways to measurably
improved operational and financial performance to generate
sustainable margins that they can re-invest to provide better care
for those underserved communities.
"With a strong balance sheet, high levels of recurring revenues,
high customer retention rates and visible revenue in the next three
years of $471.2m, we have a strong financial foundation from which
to accelerate growth and to fulfil our potential, thereby
increasing future shareholder value.
"We have enjoyed early sales momentum across the now enlarged
Group and with our expanded opportunity we look to the future with
considerable excitement and confidence as we work with the Sentry
team to transform the business of US healthcare."
For further information, please contact:
Craneware plc +44 (0)131 550 3100
Keith Neilson, CEO
Craig Preston, CFO
Alma (Financial PR) +44 (0)20 3405 0205
Caroline Forde, Hilary Buchanan, Robyn Fisher, craneware@almapr.co.uk
Joe Pederzolli
Peel Hunt (NOMAD and Joint Broker) +44 (0)20 7418 8900
Dan Webster, George Sellar, Andrew Clark
Investec Bank PLC (Joint Broker) +44 (0)20 7597 5970
Patrick Robb, Henry Reast, Sebastian Lawrence
Berenberg (Joint Broker ) +44 (0)20 3207 7800
Mark Whitmore, Jack Botros, Alix Mecklenburg-Solodkoff
About Craneware
Craneware (AIM: CRW.L), the leader in automated value cycle
solutions, collaborates with U.S. healthcare providers to plan,
execute and monitor financial and operational performance so they
can continue to drive better outcomes for the communities they
serve. Craneware's Trisus platform combines revenue integrity, cost
management and decision enablement into a single SaaS-based
platform. Our flagship solution, Chargemaster Toolkit(R),
continually earns KLAS recognition in the Revenue Cycle -
Chargemaster Management category and is part of our value cycle
management suite, which includes charge capture, strategic pricing,
340B compliance, claims analytics, patient engagement, revenue
recovery and retention, and cost and margin intelligence
solutions.
Learn more at craneware.com.
Chairman's Statement
In a year still defined by the wider context of a global
pandemic, our purpose has been brought into sharp focus. As we
reflect on our mission, I am proud of the impact Craneware has made
in helping our US healthcare customers improve operational
efficiency and margins so that they can continue to invest in
providing quality care for their communities.
Our contribution and continued success are made possible through
the efforts of our dedicated and talented employees who work to
push Craneware closer towards the long-term ambition of being the
pre-eminent company in improving US healthcare. Our teams and
customers have shown great fortitude and adaptability in a complex
and challenging pandemic environment, and on behalf of the Board I
would like to extend our admiration and gratitude.
The Group has made strategic strides in the year through
positive sales momentum, targeted innovation and at the same time
sustained customer retention rates above 90%, all underpinning the
foundation for a return to double-digit organic growth in future
years . Continued new product releases drove strong adoption of
Trisus, the Group's cloud-based Financial and Operational
performance platform, from both new and existing customers. As a
result, New Sales increased 40% to over $42.4m (FY20: $30.4m) with
approximately 50% of Craneware customers now using one or more of
the platform's products. The growing sales momentum translated into
an increase in total recognised revenue of 6% to $75.6m, (FY20:
$71.5m), with Adjusted EBITDA growing 8% to $27.1m (FY20:
$25.2m).
Following the year end, the Group completed the acquisition of
US-based Sentry Data Systems, Inc. ("Sentry"), enhancing the
Group's pharmacy offering and cementing Craneware's position as a
leading provider of Value Cycle solutions to the US healthcare
market. This has provided an immediate step change in scale to
operations and expanded our coverage of the US Healthcare market
with Craneware now serving approximately 40% of all US hospitals
and more than 10,000 clinics and pharmacies. In Sentry we
identified a business aligned to our vision and the combined data
sets from both companies will deliver far-reaching actionable
insights for better operational and strategic decisions such that
our customers can spend dollars far more productively on keeping
people well.
The Group's cash reserves remain healthy, delivering an
operating cash conversion rate of 99%, ahead of the prior year's of
92%. We maintained a strong balance sheet, with cash of $235.6m at
30 June 2021, including the net funds of $187.3m received from the
equity raise in anticipation of the acquisition of Sentry (FY20:
$47.9m).
A continuing focus is our commitment to social responsibility
and community engagement . Craneware has and continues to develop
many initiatives that contribute to our credentials in these areas.
I am particularly proud of the work of Craneware Cares and the
Craneware Cares Foundation which is driven by our employees. Even
though our staff were mostly working from home through this year,
they still managed to help a total of 41 different charities across
the UK and US, including our eight Spotlight Charities.
Our opportunity to effect real change is clear and our ability
to execute has been considerably enhanced. Following a year of
heightened pressure, our US hospital customers are more motivated
than ever to implement strategic and long-term planning and our
Trisus platform is specifically designed to help them achieve this.
The high visibility we have over future revenues combined with our
robust financial position gives us the ability to plan and execute
our long-term strategy to serve the best needs of our customers .
We enter the new year with a strong pipeline, supporting the
Board's confidence in the Group's continued growth and our ability
to increase stakeholder value .
Strategic Report
We are pleased to deliver this set of financial results in the
year, with the growth in customer numbers, New Sales and Trisus
Sales being strong indicators of the successes being achieved
across all three of our growth pillars, building the foundations
for accelerated growth. Through our Trisus platform we are at the
vanguard of change in healthcare, a force which continues to gather
momentum. Our strong New Sales growth demonstrates the relevance of
our offering and we are increasingly confident in achieving our
long-term vision of becoming the pre-eminent company in improving
US healthcare.
Following our growth in FY21 and the subsequent acquisition of
Sentry Data Systems, Inc., approximately 40% of US hospitals are
now Craneware customers, alongside more than 10,000 clinics and
retail pharmacies. Our enlarged scale and capabilities have
considerably strengthened our ability to achieve our mission: to
profoundly impact healthcare by improving our customers'
operational efficiency and margins so they can continue to invest
in providing quality care for their communities. This mission
guides our strategy and actions, ensuring that everything we do has
a positive impact on our customers' performance.
With over 900 US hospitals now interacting with our Trisus
platform, contributing many millions of individual anonymised data
points daily, it is an increasingly powerful source of insight into
the ways in which hospital management teams can improve their
financial and operational performance . Our Trisus platform and
applications combine revenue integrity, cost management and
decision enablement into a single cloud-based platform. The
platform makes the raw data taken from multiple disparate systems
useable for analysis, resolves communication gaps between
departments, remedies operational inefficiencies and helps to
manage and maintain our customers' competitive advantage while
preserving margin. In turn, t he mitigated risks, efficiencies and
returns on investment being delivered by our applications will
provide the confidence and continuity for our customers to invest
in the delivery of quality care to their communities.
The positive progress in the year has been achieved against the
ongoing backdrop of COVID-19. Whilst as a business we continue to
be relatively insulated from the direct impacts of the pandemic,
our customers are on the front-line, managing a constantly evolving
and complex situation. Supporting them and their phenomenal work
has been, and will continue to be our top priority. Never has the
need for accurate financial data, insight and analytics been more
important, and we will continue to do all we can to ensure our
customers have the tools they need to maintain the financial health
of their organisations and support them in their long-term
strategic ambitions.
Market - the move to value-based care continues at pace
Managing the impact of the COVID-19 pandemic has clearly been
the top priority for all healthcare-related organisations over the
past 18 months and will continue to be so. While elective
procedures have increased across the majority of US States, they
are yet to get back to pre-pandemic levels. However, industry
reports suggest that hospital operating margins have been largely
protected through this time.
Operationally, healthcare providers have had to adjust to new
methods of healthcare delivery, while ensuring their financial
operations have the flexibility and agility to charge for those
services appropriately, highlighting the importance of usable
financial and operational data. Healthcare providers' requirements
for greater insight into cost of care, associated margins and the
value being derived is as high, if not higher, than ever. Against
that backdrop, the US healthcare market continues to transition
from a fee-for-service reimbursement model, towards value-based
care, aiming to redress the current imbalance in US healthcare
between spend and outcomes. Under value-based care, healthcare
providers, including hospitals and physicians, are paid based on
patient health outcomes. A hospital's ability to remain financially
secure in a value-based care system is dependent on the collection
of granular data and the use of insightful analytics to understand
the opportunity to deliver better value. This presents a large,
growing opportunity for the Group given Craneware's specialism in
helping hospitals better understand and manage revenue and cost
through data-driven solutions.
Our customers continue to take steps to create further
resilience across their financial operations. We are committed to
partnering with them by providing the platform, regulatory
information and data to enable them to do so. We believe that both
the Group and our customer base are strongly placed to deal with
the future impacts of the pandemic and for our products to be part
of the solution in terms of helping hospital preparedness.
Both Republicans and Democrats have previously expressed their
desire for healthcare reform and the industry widely anticipates
that reform will remain a key agenda point moving forward, with the
drive to derive greater value from healthcare sitting at its heart.
Recent government initiatives have seen a robust defence of
existing healthcare legislation. In addition, the new
administration in the White House has recently expressed the desire
to see an increase in investment into healthcare, both from Private
Equity and the community, which we anticipate will in turn boost
operational investments by healthcare providers.
While other platforms have been designed to address the clinical
side of a hospital, from a competitive positioning perspective, we
have created the market's only platform addressing the breadth of
the value cycle, aiming to solve inefficiencies and waste across
both operational, administrative and financial functions of a
hospital. Through the acquisition of Sentry, we have created
considerable distance between us and other point solution vendors,
in terms of depth of data, breadth of offering, size of customer
base and scale of operations, increasing our ability to address
what is a growing and sustainable, long-term addressable
market.
Growth Strategy - innovation to profoundly impact US healthcare
operations which will drive demand and expand our addressable
market.
To date, our growth has been driven through increases in market
share and product set penetration (land and expand). In recent
years, we have invested in the development of the Trisus platform;
a sophisticated cloud data aggregation and intelligence platform
which will allow us to migrate our existing products to the cloud,
leverage our data assets to expand our offering, integrate third
party solutions to the platform and benefit from the scalability of
cloud-technology.
Our software solutions sit at the heart of our customers'
operations, tapping into the aggregated anonymised data held within
Trisus to provide greater insight and control to their financial
operations and thereby optimise their financial performance.
Three Growth Pillars
Our growth strategy has three fundamental growth pillars:
1. The transition of our customers to cloud-based versions of
our existing on-premise solutions, to act as a gateway to the
benefits and additional applications on the Trisus platform.
By the end of June 2021, over 900 customers, approximately half
of our customer base, were utilising one or more of the Trisus
applications, with almost the entirety of the remainder connecting
to the platform via the Trisus Bridge - the first step for
significant migration to the platform from within our user base.
This is another positive step forward, from the 500 reported at the
half year stage and 200 at the end of June 2020, evidence that both
our existing customer base and the wider healthcare provider market
have responded positively to the technological evolution of the
Craneware solution set.
The full Trisus Chargemaster solution, the re-platformed version
of our Chargemaster Toolkit, is on course to be available by the
end of calendar 2021. All existing Chargemaster Toolkit customers
are now on a hybrid version, with their data synchronised to the
Trisus platform, and using a single Trisus sign on, meaning
migration to the full cloud version and all its additional
functionality will take minutes once launched.
We are commencing the migration of customers to Trisus
Chargemaster in phases, with migration of early adopters now
complete. Customer feedback has been extremely positive,
identifying clear additional benefits that the platform is
delivering, including ease of migration, use and deployment
throughout large scale implementations. We are on track to have all
customers migrated to the platform by the end of calendar 2022.
All customers who have signed new contracts for Chargemaster
Toolkit in recent periods have an understood migration plan to
Trisus Chargemaster and recognise this as an easy entry to the
Trisus platform.
We have also commenced the migration of early adopter customers
to Trisus Pharmacy Financial Management (TRxFM), a new product,
which in phase one, will sit alongside our on-premise Pharmacy
ChargeLink. and the range of pharmacy products will subsequently be
expanded to include all Pharmacy ChargeLink functionality in a new
suite of applications. Pharmacy ChargeLink customers are currently
being offered the opportunity to extend their products with the
addition of the cloud based TRxFM, which is a precursor to further
applications in the Trisus Pharmacy suite, the complete replacement
for the on-premise solution. This will continue to be developed in
a modular fashion, allowing customers to select which mix of
applications best suits their needs as they become available. It is
anticipated that the cloud-based replacements for Pharmacy
Chargelink (PCL) will be available Q4 FY22.
All of the acquired customers of Sentry are serviced utilising
the Oracle cloud architecture.
We are continuing to develop the additional functionality of all
our cloud offerings as we move towards general release.
2. To continue to enhance the capabilities of the platform
through the addition of new technology layers and applications,
developed through internal R&D, selective M&A and
Third-Party Partnerships.
During the first half of the year we announced the availability
of Trisus Pricing Transparency ("TPT") to all US healthcare
providers. This no cost Trisus solution was developed to enable
organisations not only to meet CMS Pricing Transparency Final Rule
requirements (which came into effect in January 2021) but ensure
that organisational pricing data is most accurately represented for
patients on an ongoing basis allowing individuals to "shop" for
their healthcare needs.
Adoption of the module has continued in the second half with an
acceleration of the migration of existing customers to the Trisus
platform alongside take-up by new users. This provides a clear
pathway for wider Trisus application uptake in the future by these
new customers and the significant majority of the 900 Trisus users
are now on paid for modules.
Through the growth of our Trisus customer base, and the
interaction of their data with the Trisus platform, we have in
excess of 120m individual anonymised patient encounters recorded on
the platform, an increase of more than 30% over the course of the
year. The greater number of data points, the more powerful the
analytics and insights that can be provided to help hospitals in
their financial decision-making. These encounters include one fifth
of all emergency room visits in the US during the last year and
almost one quarter of all hospital admissions.
We will continue to invest in expanding the capabilities of the
platform, developing additional applications and tools, to provide
further benefits to our customers. Following the acquisition of
Sentry post year end, the focus is on the integration of Sentry
data onto the platform, adding more contextual data which will in
turn drive the development of more applications and increase the
attractiveness of the platform and provide further reasons for a
healthcare provider to join. We are pleased to confirm that the
level of sales of Trisus applications exceeds 60% of the amount of
capitalised R&D spent on the platform and Trisus applications
development to date, already underwriting the majority of the
investment made.
M&A
While organic growth remains a priority, we continue to evaluate
the market and will continue to pursue strategically aligned
companies that will accelerate our growth strategy, although it is
unlikely that any acquisitions in the short-term will be of the
relative scale of Sentry. We maintain the same four key acquisition
criteria of which target companies must fit into at least one,
being:
1. the addition of data sets;
2. the extension of the customer base;
3. the expansion of expertise; and
4. the addition of applications suitable for the US hospital market.
In evaluating acquisition opportunities, the Board implements a
strong valuation discipline seeking to maintain its prudent
approach to preserving balance sheet strength and efficiency for
the long-term. Targets that are profitable with recurring revenue
models that provide earnings accretion within the first 12 months
of ownership are prioritised.
3. To grow our customer footprint, through increasing the
attractiveness of our offering and acquiring non-overlapping
customers, which in turn provides further cross-sale
opportunities.
We are pleased with the sales activity during the year, which
saw New Sales >40% ahead of the prior year. 26% of these New
Sales were to net new customers. Expansion Sales to existing
customers represented 74%, demonstrating Craneware's ability to
continue to cross sell further solutions. All sales have been
driven by mitigation of risk, efficiency of operations and
compelling ROIs for our customers.
Sales of Trisus products represented 17% of New Sales in the
year (FY20: 14%) representing a steadily increasing proportion of
sales in addition to the take up from our customers of the Trisus
Pricing Transparency product. We also saw our first Trisus renewals
in the year.
Customer retention has always been strong, and we continued to
see our customer retention rate remain high in the period above
90%.
Acquisition of Sentry Data Systems, Inc.
Sentry Data Systems, Inc. is a leader in pharmacy procurement,
compliance and utilisation management. The successful conclusion of
the acquisition following the end of the year marks a
transformational point in our journey, considerably expanding our
customer base, data sets, product offering and market presence.
The acquisition enhances our focus on pharmacy operations within
healthcare providers, the largest cost area for US hospitals
outside the workforce, and extends the reach of our Pharmacy
Chargelink product family within retail and contract specialty
pharmacies. Sentry's 147 million unique longitudinal patient
records collected over a 17 year period will enhance the power of
our Trisus platform and we also envisage significant cross-selling
opportunities will be provided by the complementary nature of
Sentry's product suite and customer base.
Having known the business and management team for over a decade
we are delighted they are now part of our organisation, with a
shared vision and purpose. Together, we will offer healthcare
organisations innovative new ways to measurably impact operational
and financial performance and generate sustainable margins that can
be re-invested in providing better care for underserved
communities.
Following the acquisition, the Group now serves approximately40
percent of U.S. hospitals and more than 10,000 clinics and retail
pharmacies across all the major pharmacy brands as well as local
community pharmacies and clinics.
The quality and breadth of the combined data sets from both
companies increases our ability to provide far-reaching actionable
insights for better operational and strategic decisions, enabling
further efficiencies in provider performance so our customers can
focus on serving their communities and healthcare missions. The
data will be integrated into the Trisus platform to help identify
new areas of product development to support our customers. Sentry
applications currently reside in modern web architecture
environments and no technical integration is required, just the
front end of the applications will be harmonised to create the same
look and feel.
We anticipate benefits of this increased scale to be seen in
greater operational efficiencies across areas such as office space
and future product development and provides for a considerably
enlarged sales and marketing team. Integration of the Sentry team
into our organisation is progressing well, with the various teams
now working through their first 100 day integration plans. We have
begun the analysis to identify cross-sale opportunities, with these
programmes expected to launch in H2 FY22. The successful
integration of Sentry will be a key focus for the year ahead.
Our People and Community
As part of our commitment to social responsibility and community
engagement, Craneware has continued to develop a number of programs
and opportunities to positively impact the community around us. A
number of years ago, we formed 'Craneware Cares', an employee
committee that is aimed at raising awareness and funds for charity.
Craneware Cares and its foundation are integral to our business -
'better outcomes for all' is not just a tag line, it is how we
approach our Social agenda.
The focus for 2021 was to help the charities who had been hit by
a shortfall in donations as a result of the COVID-19 pandemic.
Craneware Cares helped over 40 charities across the UK and the US,
not only by making cash donations, but also by providing housing
supplies, school supplies, care bags for children in the foster
system, holiday gifts and even chocolate easter eggs to The
Spartans CFA. Some of the charities we supported include one of our
US Spotlight Charities, Guardian Angels Suitcases 4 Kids where we
exceeded our goal and sponsored 24 children in need, the MS Therapy
Centre by raising funds to allow them to purchase essential
physiotherapy equipment so they could continue helping their
community, and one of our UK Spotlight Charities, CERT UK, a 100%
volunteer-run organisation that takes care of people affected by
crisis, emergencies created by natural disasters, to name only a
few. The fund-raising activities of Craneware Cares supplement the
Volunteer Time Off program where Craneware employees take paid
leave to support projects and charities in their communities.
With the addition of Sentry's solutions we are now directly
involved in the 340B Program, assisting eligible healthcare
organisations with regulatory compliance and pharmacy procurement
and utilisation that goes with this program, thereby enabling them
to generate cost savings which go directly to the provision of more
care for the underserved in their communities.
Financial Review
In a year that has been dominated by the ongoing global
pandemic, we are proud of the progress that Craneware has made,
whilst, at all times, focusing on delivering to our customers. Our
customers are on the front line in dealing with the pandemic and
supporting them has been, and will continue to be, our top
priority. The role Craneware continues to play, allowing our
customers to improve operational efficiency and margins so that
they can continue to invest in providing quality care for their
communities, has never been more important.
Through this year, the strength of the Craneware business model,
it's long term visible revenue, our strong balance sheet and
sensible cost management whilst investing for the future have
served us well. This has allowed us to continue our development of
new products, further building out the depth of the Trisus platform
across the Value Cycle, continue our sales momentum delivering a
further increase in New Sales in the year, and see a return to
growth in key financial metrics for the year. Further, post year
end, through the acquisition of Sentry, we have seen a
transformational change in the Group's scale and operations.
During the year ended 30 June 2021, we saw significant growth in
the Total Contract Value of New Sales of 40% to $42.4m (FY20:
$30.4m) which combined with the total value of renewals signed in
the year saw a 19% increase in the Total Value of all contracts
written to $78.1m (FY20: $65.4m). As a result of our business
model, "sales" and "revenue" have very different meanings and are
not interchangeable. With only a small proportion of the revenue
resulting from the sales made in the year impacting on the current
year's reported revenue, the vast majority is recognised in future
years, providing further long-term visibility over future revenues,
supporting our future growth.
As a result, we are reporting a 6% growth in our Revenue to
$75.6m (FY20: $71.5m) which has contributed to an 8% increase in
Adjusted EBITDA in the period, growing to $27.1m (FY20:
$25.2m).
Acquisition of Sentry Data Systems, Inc.
On 7 June 2021 the Board announced the proposed acquisition of
SDS Holdco, Inc., the ultimate holding company of Sentry Data
Systems, Inc.. The acquisition was completed on 12 July 2021. The
headline consideration for the acquisition of Sentry (on a cash
free / debt free basis) was $400m, subject to benchmark level of
working capital and other expected adjustments. The consideration
for the acquisition was satisfied by the payment of $312.5m (as
adjusted) in cash and $87.5m by the issuance of 2,507,348 new
ordinary shares in Craneware plc on 14 July 2021.
The cash consideration was funded from a combination of the
Group's existing cash resources, a new secured loan of $120m and
the $187.3m net proceeds of the share placing which completed in
June 2021.
The acquisition marks the next stage of Craneware's growth
journey, as the enlarged Group now serves approximately 40 percent
of U.S. hospitals and more than 10,000 clinics and retail
pharmacies. The increased scale that Sentry brings will deliver
greater operational efficiencies across all areas of the Group,
including considerably strengthened sales and product development
teams.
With the completion of this acquisition after the year end
Sentry has not contributed to these results. Also, with the
proximity to the publication of these accounts, we have yet to
complete the associated acquisition accounting. However, where
applicable and meaningful to the KPI's presented we have included
details of Sentry's expected contribution.
Associated share placing completed (June 2021)
To partly fund the acquisition of Sentry, in June 2021, the
Company completed a share placing which resulted in the allotment
of 6,192,652 new Ordinary Shares at an issue price of GBP22.00
($31.05) per share, representing approximately 23.1% of the issued
share capital prior to the placing.
The Placing was conducted through an accelerated bookbuild
process and was effected by way of a cash box structure. This
structure was necessary as the Company was required, by the
vendors, to reduce the execution risk of the acquisition
(recognising the normal risk profile of an expected US purchaser)
and, without such certainty, we would likely have been unable to
participate in the acquisition process. Whilst the Placing was not
carried out on a fully pre-emptive basis, we consulted with our
major shareholders prior to the Placing and working with our
advisors, respected the principles of pre-emption through the
allocation process.
Underlying Business Model
The new contracts we sign with our customers provide a licence
for the customer to access specified products throughout their
licence period. The underlying licence period of these New Sales
are expected to be, on average, four years. At the end of an
existing licence period, or at a mutually agreed earlier date, we
look to renew these contracts with our customers.
The existing contracts within Sentry are similar in their nature
albeit are for a slightly shorter duration. In addition to the
licence fees, Sentry can also provide a number of transactional
services to customers, throughout the life of their underlying
contracts. These transactional services, whilst highly dependable,
will see some variation period to period dependent on volume of
transactions.
Under the Group's business model, we recognise software licence
revenue and any minimum payments due from our 'other long term'
contracts evenly over the life of the underlying contract term.
Transactional services are recognised as we provide the service and
we are contractually able to invoice the customer.
By renewing the underlying contracts, and ensuring we continue
to deliver the transactional services to our customers we sustain a
highly visible recurring revenue base, which means sales of new
products to existing customers or sales to new hospital customers
are adding to this recurring revenue.
In addition to the licence revenues recognised in any year, we
also expect revenue to be recognised from providing services to our
customers. These services are typically separately identifiable
from any associated licence and as such, revenue is recognised as
we deliver the service to the customer, usually on a percentage of
completion basis. However, the nature and scope of these
engagements will vary depending on both our customers' needs and
which of our solutions they have contracted for. As a result, the
period over which we deliver the services and consequently
recognise the associated revenue will vary.
Sales, Revenue and Revenue Visibility
Total Sales, can be broken down into the total value of
contracts with new customers or new products to existing customers
at some time in their underlying contract ("New Sales") and the
total value of contracts of customers renewing their existing
products at the end of their current contract terms
("Renewals").
The table below shows the total value of contracts signed in the
relevant years, split between New Sales and Renewals and how these
sales have translated into reported revenue in the corresponding
year.
Year ended 30 June 2017 2018 2019 2020 2021
$m $m $m $m $m
Reported Revenue 57.8 67.1 71.4 71.5 75.6
----- ----- ----- ----- -----
New Sales 35.4 71.3 33.3 30.4 42.4
Renewals* 18.6 27.3 29.8 35.0 35.7
----- ----- ----- ----- -----
Total Contract
Value (TCV) 54.0 98.6 63.1 65.4 78.1
* As the Group signs new customer contracts for between three to
nine years, the number and value of customers' contracts coming to
the end of their term ("renewal") will vary year on year. This
variation, along with whether customers auto-renew on a one-year
basis or renegotiate their contracts for up to a further nine
years, will impact the total sales value of renewals in that
year
As the majority of the revenue resulting from sales in any one
year is recognised over future years, the results in any individual
year do not fully reflect this valuable 'asset' that is contracted,
but not yet recognised. As such, the Group presents its "Revenue
Visibility". This KPI identifies revenues which we reasonably
expect to recognise, over the next three-year period, based on
sales that have already occurred.
With the acquisition of Sentry, the visible revenue derived from
the existing contracts has been included over the three-year period
to 30 June 2024. However, as the acquisition only completed on
12(th) July, visible revenue is only included from this date
forward (i.e. FY22 includes Sentry visible revenues from 13(th)
July 2021 to 30 June 2022).
The Three-Year Revenue Visibility KPI is a forward looking KPI
and therefore will always include some judgement, especially in
regards to transactional revenues. To help assess this, we
separately identify different categories of revenue to better
reflect the nature of these recurring revenues. This Three-Year
Visible Revenue metric includes:
-- future revenue under contract
-- revenue generated from renewals (calculated at 100% dollar value renewal); and
-- other recurring revenue, including transactional revenues
Future revenue under contract is, as the title suggests, subject
to an underlying contract and therefore when invoiced, we
reasonably expect to recognise in the respective future years.
Renewal revenues relate to the contracts that are coming to the end
of their original contract term and will require their contracts to
be renegotiated and renewed for the revenue to be recognised. To
appropriately represent the quantum of revenue within this category
we present the total of revenue subject to renewal (i.e. 100% of
dollar value). The final category 'other recurring revenue' is
revenue that we would expect to recur in the future but is monthly
or transactional in its nature. Here, we estimate based on past
performance a level of revenue we would reasonably expect to
recognise associated to the service provided. No growth from new
sales is assumed to occur when making these estimates.
The Group's total visible revenue for the three years ended 30
June 2022, 2023 and 2024, including visible revenue from Sentry
from the date of its acquisition, identifies $471.2m of revenue
(FY20 same 3 year period: $196.2m) which we reasonably expect to
benefit the Group in this next three-year period. This visible
revenue breaks down as follows:
-- future revenue under contract contributing $270.5m of which
$130.3m is expected to be recognised in FY22, $86.3m in FY23 and
$53.9m in FY24
-- revenue generated from renewals contributing $160.6m; being
$13.8m in FY22, $57.0m in FY23 and $89.8m in FY24
-- other revenue identified as recurring in nature of $13.1m in
FY22 and $13.5m in FY23 and FY24
These future revenues, with customers continuing to renew their
contracts with us, expand beyond the three-year time horizon we
report on, creating a dependable base of recurring revenue. This
recurring revenue provides the foundation for future financial
growth as well as giving increased certainty to the Board when
making the annual assessment for the Viability Statement.
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. The gross profit for FY21
was $70.2m (FY20: $67.0m) representing a gross margin percentage of
93% (FY20: 94%).
Operating Expenses
The increase in net operating expenses (to Adjusted EBITDA) to
$43.1m (FY20: $41.8m) reflects continued investment in our Research
& Development spend combined with prudent cost control across
the rest of the business.
We have remained highly cash generative and as a result we have
continued to use our cash reserves (after returning funds to
shareholders via dividends) to invest in our future. Product
innovation and enhancement continue to be core to this future and
our ability to achieve our potential. As such, alongside our
acquisition activities in the year, we have continued to invest
significant resource in R&D as we build out the Trisus platform
and its portfolio of products. As a result of this investment, the
total cost of development in the year was $24.7m (FY20: $21.6m), a
14% increase which is reflective of the opportunities in the market
for our products. We continue to capitalise only the costs that
relate to projects that bring future economic benefit to the Group.
As a result, the total amount capitalised in the year reduced from
43% of total R&D spend in FY20 to 41% in the current year,
being $10.1m (FY20: $9.3m).
The amounts we capitalise represent the cash reserves we have
utilised in the year, to invest in our future. This is an efficient
and cost-effective way to further build out our Value Cycle
strategy. We expect to see both the levels of development expense
and capitalisation to continue at the same proportion of revenue in
future years as we progress with building out this solution set. As
specific products are made available to relevant customers, the
associated amounts capitalised are charged to the Group's income
statement over their estimated useful economic life, thereby
correctly matching costs and the resulting revenues.
Net Impairment charge on financial and contract assets
This relates to the movement in the provision for the impairment
of trade receivables in the year (or 'bad debts'), being $495,000
(FY20: $529,000). The nature of the market the Group serves and the
SaaS based business model limit the Group's exposure in this
regard, but are required to be shown separately on the face of the
Consolidated Statement of Comprehensive Income.
Adjusted EBITDA and Profit before taxation
To supplement the financial measures defined under IFRS the
Group presents certain non-GAAP (alternative) performance measures.
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 use 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 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 $6.5m have been identified as
exceptional. These include the costs associated with the
acquisition of Sentry and its associated share placing as well as
the costs associated with the aborted share placing in connection
with a different acquisition target in August 2020. As such these
costs were adjusted from earnings in presenting Adjusted EBITDA in
the year. No costs were identified as exceptional in the prior
year.
Adjusted EBITDA has grown in the year to $27.1m (FY20: $25.2m)
an increase of 8%. This reflects an Adjusted EBITDA margin of 36%
(FY20: 35%). This is consistent with the Group's continued approach
to making investments in line with the revenue growth and prudent
cost management.
Primarily as a result of the costs detailed above as exceptional
and an increase in the IFRS 2 share-based payment charge, profit
before taxation reported in the year has reduced to $13.2m (FY20:
$19.3m). The increase in the share-based payment charge included
charges from Long-Term Incentive Grants made during the period, an
adjustment to retention rates and an increased accrual for
estimated employer National Insurance contributions on the
unexercised options granted under the 2007 Share Option Plan.
Taxation
The Group generates profits in both the UK and the US. The
overall levels are determined by both the proportion of sales in
the year and the level of professional services income recognised.
The Group's effective tax rate remains dependent on the applicable
tax rates in these respective jurisdictions.
In the current year the effective tax rate has been positively
affected by the finalisation of R&D tax relief claims in
respect to the prior two years of $1.6m (FY20: $0.3m) and the
R&D tax relief provision for the current year of $0.7m (FY20:
$0.5m). In addition, as a result of UK Corporation tax rates
increasing to 25% from 1 April 2023, closing UK deferred tax assets
and liabilities were revalued which has reduced the current year
tax charge by $0.5m (FY20: $nil) in accordance with the now enacted
rate.
As such the current year effective tax rate is 2% (FY20:
13%).
EPS
Regarding EPS, the Group again presents an Alternative
Performance Measure of Adjusted EPS, to provide consistency to
other listed companies and take account of certain one-off events.
Both Basic and Diluted Adjusted EPS are calculated excluding costs
incurred as a result of acquisition and share related activities,
being $5.6m (tax adjusted) in the year (FY20: $nil) and in the
prior year amortisation of acquired intangibles of $0.7m.
Adjusted EPS has seen the benefit of the increased levels of
Adjusted EBITDA combined with the effective tax rate reported
above, partially offset by an increase in both the amortisation and
share based payment charges, and as such has increased 6% to $0.690
(FY20: $0.654) and adjusted diluted EPS has increased to $0.681
(FY20: $0.644).
Basic EPS in the period reduced to $0.481 (FY20: $0.628) and
Diluted EPS reduced to $0.475 (FY20: $0.619) primarily as a result
of the exceptional items noted above.
Cash and Bank Facilities
Cash generation and a strong balance sheet have always been a
focus of the Group. Our business model provides the basis for high
levels of cash generation and we continue to 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 cash flow statement). We achieved
strong Operating Cash Conversion of 99% in the year (FY20:
92%).
As a result, we are able to continue to invest in our future and
return funds to our shareholders via dividends, returning $9.7m in
the current year (FY20: $9.1m).
As detailed above, to fund the acquisition of Sentry $187.3m
(net) was raised via a share placing in June. As the acquisition
did not complete until post year end, these amounts were held as
cash reserves of the Group. As a result, cash reserves at the
year-end were $235.6m (FY20: $47.9m) of which $48.3m represents
operating cash reserves.
Also, as part of the funding for the acquisition of Sentry, the
Group entered into a Debt Facility with Silicon Valley Bank to
provide up to a further $140m of secured funding. As the
acquisition did not complete until after that year end, no draw
down on this facility had taken place and as such any arrangement
and other related fees prepaid are recorded in Trade and Other
receivables.
Balance sheet
The Group maintains a strong balance sheet. Intangible assets
have increased by $6.3m to $43.1m (FY20: $36.8m) primarily as a
result of capitalised development costs in the year net of the
amortisation charged. The level of trade and other receivables has
decreased in comparison to the prior year. This is a result of the
factors identified in the prior year that impacted our cash
collections now having returned to a more normal position.
Deferred income levels reflect the amounts of the revenue under
contract that we have invoiced but have yet to recognise as
revenue. This balance is a subset of the total visible revenue we
describe above and reflected through our three-year visible revenue
metric.
Deferred income, accrued income and the prepayment of sales
commissions all arise as a result of our Annuity 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 regards to how we account for our
contracts.
Currency
The functional currency for the Group, and cash reserves, is US
dollars. Whilst the majority of our cost base is US-located and
therefore US dollar denominated, we have approximately one quarter
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 being $1.3466 as compared
to $1.2598 in the prior year.
Audit Tender
During the year the Audit Committee conducted an audit tender
process for the Group's External Audit. As part of this process a
number of audit firms were invited to tender. Details of the
process followed and the selection criteria are provided in the
Corporate Governance Report contained in the full Financial
Statements. As a result of this process the Board has approved
PricewaterhouseCoopers LLP for recommendation to shareholders, for
re-appointment as auditors, at the Company's Annual General Meeting
to be held in November 2021.
Dividend
In proposing a final dividend, the Board has carefully
considered a number of factors including the prevailing
macroeconomic effects of the COVID-19 pandemic, the Group's trading
performance, our current and future cash generation especially in
light of the Sentry acquisition and our continued desire to
recognise the support our shareholders provide. After carefully
weighing up these factors, the Board proposes a final dividend of
15.5p (21.47 cents) per share giving a total dividend for the year
of 27.5p (38.10 cents) per share (FY20: 26.5p (32.60 cents) per
share), an increase of 4%. Subject to approval at the Annual
General Meeting, the final dividend will be paid on 21 December
2021 to shareholders on the register as at 26 November 2021, with a
corresponding ex-Dividend date of 19 November 2021.
Outlook
The successful completion of the acquisition of Sentry Data
Systems following the end of the year marks a transformational
point in our journey, considerably expanding our customer base,
data sets, product offering and market presence. Together, we will
offer healthcare organisations innovative new ways to measurably
improve operational and financial performance to generate
sustainable margins that they can re-invest to provide better care
for those underserved communities.
With a strong balance sheet, high levels of recurring revenues,
high customer retention rates and visible revenue in the next three
years of $471.2m, we have a strong financial foundation from which
to accelerate growth and investment to fulfil our potential,
thereby increasing future shareholder value.
We have enjoyed early sales momentum across the now enlarged
Group and with our expanded opportunity we look to the future with
considerable excitement and confidence as we work with the Sentry
team to transform the business of US healthcare.
Keith Neilson Craig Preston
Chief Executive Officer Chief Financial Officer
20 September 2021 20 September 2021
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2021
Total Total
2021 2020
Notes $'000 $'000
--------------------------------------------- ------ --------- ---------
Continuing operations:
Revenue 3 75,578 71,492
Cost of sales (5,373) (4,518)
--------- ---------
Gross profit 70,205 66,974
Other income 37 9
Operating expenses 4 (56,507) (47,248)
Net impairment charge on financial
and contract assets 9 (495) (529)
--------- ---------
Operating profit 13,240 19,206
Analysed as:
Adjusted EBITDA(1) 27,111 25,189
Share based payments (2,141) (1,318)
Depreciation of property, plant and
equipment (1,403) (1,489)
Exceptional Costs(2) 12 (6,487) -
Amortisation of intangible assets (3,840) (3,176)
--------------------------------------------- ------ --------- ---------
Finance income 1 192
Finance expense (76) (94)
--------- ---------
Profit before taxation 13,165 19,304
Tax on profit on ordinary activities 5 (260) (2,468)
--------- ---------
Profit for the year attributable to
owners of the parent 12,905 16,836
Other comprehensive (expense)/ income
Items that may be reclassified subsequently
to profit or loss
Currency translation reserve movement (126) 26
--------- ---------
Total items that may be reclassified
subsequently to profit or loss (126) 26
--------------------------------------------- ------ --------- ---------
Total comprehensive income attributable
to owners of the parent 12,779 16,862
--------------------------------------------- ------ --------- ---------
1. Adjusted EBITDA is defined as operating profit before
interest, tax, depreciation, amortisation, exceptional items and
share based payments.
2. Exceptional items relate to legal and professional fees
associated with an aborted potential acquisition and a successful
acquisition post year end and its associated share placing.
Earnings per share for the year attributable to equity
holders
Notes 2021 2020
------------------------------- ------ ------ ------
Basic ($ per share) 7 0.481 0.628
*Adjusted Basic ($ per share) 7 0.690 0.654
Diluted ($ per share) 7 0.475 0.619
*Adjusted Diluted ($ per
share) 7 0.681 0.644
------------------------------- ------ ------ ------
* 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
2021
Share Capital
Share Premium Redemption Merger Other Retained Total
Capital Account Reserve Reserve Reserves Earnings Equity
$'000 $'000 $'000 $'000 $'000 $'000 $'000
------------------------------ -------- -------- ----------- -------- --------- --------- --------
At 1 July 2019 535 20,022 9 - 3,549 36,790 60,905
Total comprehensive
income - profit for
the year - - - - - 16,836 16,836
Total other comprehensive
income - - - - - 26 26
Transactions with owners:
Purchase of own shares
through EBT - - - - - (1,255) (1,255)
Share-based payments - - - - 1,176 (890) 286
Impact of share options
exercised/lapsed 1 1,075 - - (577) 175 674
Dividends (Note 6) - - - - - (9,077) (9,077)
------------------------------ -------- -------- ----------- -------- --------- --------- --------
At 30 June 2020 536 21,097 9 - 4,148 42,605 68,395
Total comprehensive
income - profit for
the year - - - - - 12,905 12,905
Total other comprehensive
expense - - - - - (126) (126)
Transactions with owners:
Share-based payments - - - - 1,332 - 1,332
Share placing 88 - - 186,933 - - 187,081
Purchase of own shares
through EBT - - - - - (422) (422)
Deferred tax taken directly
to equity - - - - - 1,212 1,212
Impact of share options
and awards exercised/lapsed - - - - (752) 354 (398)
Dividends (Note 6) - - - - - (9,700) (9,700)
------------------------------
At 30 June 2021 624 21,097 9 186,993 4,728 46,828 260,279
------------------------------ -------- -------- ----------- -------- --------- --------- --------
Co nsolidated Balance Sheet as at 30 June 2021
Notes 2021 2020
$'000 $'000
------------------------------------ ------ -------- --------
ASSETS
Non-Current Assets
Property, plant and equipment 2,552 3,798
Intangible assets 8 43,110 36,783
Trade and other receivables 9 5,427 3,915
Deferred tax 5,459 2,408
56,548 46,904
-------- --------
Current Assets
Trade and other receivables 9 19,435 21,003
Cash and cash equivalents 235,617 47,851
255,052 68,854
-------- --------
Total Assets 311,600 115,758
------------------------------------ ------ -------- --------
EQUITY AND LIABILITIES
Non-Current Liabilities
Lease liability > 1 year 1,148 2,017
Other provisions 764 -
-------- --------
1,912 2,017
-------- --------
Current Liabilities
Deferred income 33,670 37,155
Current tax liabilities - 797
Trade and other payables 15,739 7,394
49,409 45,346
-------- --------
Total Liabilities 51,321 47,363
-------- --------
Equity
Share capital 10 624 536
Share premium account 21,097 21,097
Capital redemption reserve 9 9
Merger reserve 186,993 -
Other reserves 4,728 4,148
Retained earnings 46,828 42,605
Total Equity 260,279 68,395
-------- --------
Total Equity and Liabilities 311,600 115,758
------------------------------------ ------ -------- --------
Statement of Cash Flows for the year ended 30 June 2021
Notes 2021 2020
$'000 $'000
------------------------------------------- ------ --------- ---------
Cash flows from operating activities
Cash generated from operations 11 26,711 23,134
Tax paid (3,174) (2,668)
------------------------------------------- ------ --------- ---------
Net cash from operating activities 23,537 20,670
Cash flows from investing activities
Purchase of property, plant and
equipment (159) (187)
Capitalised intangible assets (10,167) (9,522)
Interest received 1 204
------------------------------------------- ------ --------- ---------
Net cash used in investing activities (10,325) (9,505)
Cash flows from financing activities
Dividends paid to company shareholders 6 (9,700) (9,077)
Shares issued for cash 10 187,244 -
Proceeds from issuance of shares 10 88 614
Loan arrangement fees (1,692) -
Purchase of own shares from EBT (422) (1,255)
Payment of lease liabilities (964) (1,003)
------------------------------------------- ------ --------- ---------
Net cash used in financing activities 174,554 (10,721)
Net increase in cash and cash equivalents 187,766 240
Cash and cash equivalents at the
start of the year 47,851 47,611
Cash and cash equivalents at the
end of the year 235,617 47,851
------------------------------------------- ------ --------- ---------
Shares issued for cash includes net proceeds of $187,331,713
related to the share placing in June 2021 (see note 10), being
gross proceeds of $192,282,712 less transaction costs of
$4,950,999.
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 AIM 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 are prepared in accordance with
international accounting standards in conformity with the
requirements of the Companies Act 2006 (International Financial
Reporting Standards ("IFRS")) and the applicable legal requirements
of the Companies Act 2006.
The Group and Company financial statements have been prepared
under the historic cost convention and prepared on a going concern
basis. 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 principal
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 $1.3466/GBP1 (2020: $1.2598/GBP1). Monetary
assets and liabilities expressed in foreign currencies are
translated into US dollars at rates of exchange ruling at the
Balance Sheet date $1.3853/GBP1 (2020: $1.2302/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 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;
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 licences and
professional services including training and consultancy.
Revenue from Software Licenses
Revenue from both on premises and Trisus software licenced
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 licenced 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;
-- 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.
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 material non-recurring
events. These are disclosed separately where it is considered it
provides additional useful information to the users of the
financial statements.
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 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 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) Contractual 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 ten years.
(d) Research and Development expenditure
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.
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 licenced
to-use technology are capitalised as incurred. They are amortised
on a straight-line basis over their useful economic life which is
typically three to five 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.
Taxation
The charge for taxation is based on the profit for the period 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. As explained under "Share-based
payments", 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 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
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.
Share-based payments
The Group grants share options and / or conditional share awards
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 using the
Black-Scholes pricing model or the Monte Carlo pricing model, as
appropriately amended, taking into account the terms and conditions
of the share-based awards.
The fair value determined at the date of grant of the
equity-settled share-based payments is expensed on a straight-line
basis over the vesting period, based on the Group's estimate of the
number of shares that will eventually vest. Non-market vesting
conditions are included in assumptions about the number of options
that are expected to vest. At the end of each reporting period, the
entity revises its estimates of the number of options that are
expected to vest based on the non-market vesting conditions. It
recognises the impact of the revision to original estimates, if
any, in the Statement of Comprehensive Income, with a corresponding
adjustment to equity.
When the options are exercised and are satisfied by new issued
shares, the proceeds received net of any directly attributable
transaction costs are credited to share capital and share
premium.
The share-based payments charge is included in 'operating
expenses' with a corresponding increase in 'Other reserves'.
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:-
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.
-- 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 5 to 10 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 applicability of its transfer pricing policy.
-- Revenue recognition : - in determining the amount of revenue
and related balance sheet items to be recognised in the period,
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 licences and professional services
(including installation) to hospitals within the United States of
America. Consequently, the Board has determined that Group supplies
only one geographical market place and as such revenue is presented
in line with management information without the need for additional
segmental analysis. All of the Group 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.
2021 2020
$'000 $'000
----------------------- ------- -------
Software licencing 61,115 59,390
Professional services 14,463 12,102
Total revenue 75,578 71,492
----------------------- ------- -------
Contract assets
The Group has recognised the following assets related to
contracts with customers:
2021 2020
$'000 $'000
-------------------------------------------- ------ ------
Prepaid commissions and royalties < 1 year 2,483 2,565
Prepaid commissions and royalties > 1 year 3,735 3,915
Total contract assets 6,218 6,480
-------------------------------------------- ------ ------
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 2020 were $2.6m.
Contract liabilities
The following table shows the total contract liabilities at 30
June 2021 from software license and professional service
contracts:
2021 2020
$'000 $'000
---------------------------- ------- -------
Software licencing 29,245 30,329
Professional services 4,425 6,916
Total contract liabilities 4,425 37,155
---------------------------- ------- -------
Contract liabilities are included within deferred income in the
Balance Sheet.
Revenue of $37.1m was recognised during the year in relation to
contract liabilities as of 30 June 2020.
The following table shows the aggregate transaction price
allocated to performance obligations that are partially or fully
unsatisfied at 30 June 2021 from software license and professional
service contracts.
Total unsatisfied Expected recognition
performance 1 to 2 to > 3
obligations < 1 year 2years 3 years years
Revenue expected to be
recognised $'000 $'000 $'000 $'000 $'000
------------------------------ ------------------ --------- -------- --------- -------
At 30 June 2021
* Software 155,617 57,862 43,485 28,282 25,988
* Professional services 11,513 6,475 2,419 1,306 1,313
Total at 30 June 2021 167,130 64,337 45,904 29,588 27,301
------------------------------ ------------------ --------- -------- --------- -------
At 30 June 2020
* Software 151,383 53,944 44,028 29,756 23,655
* Professional services 15,131 8,730 3,413 2,103 885
------------------------------ ------------------ --------- -------- --------- -------
Total at 30 June 2020 166,514 62,674 47,441 31,859 24,540
------------------------------ ------------------ --------- -------- --------- -------
Revenue of $62.7m was recognised during the year in relation to
unsatisfied performance obligations as of 30 June 2020.
The majority of these performance obligations are unbilled at
the Balance Sheet date and therefore not reflected in these
accounts.
4. Operating expenses
Operating expenses are comprised of the following:
2021 2020
$'000 $'000
---------------------------------------------------- ------- -------
Sales and marketing expenses 6,620 7,207
Client servicing 12,615 12,330
Research and development 14,549 12,266
Administrative expenses 9,300 9,980
Share-based payments 2,141 1,318
Depreciation of property, plant and equipment 1,403 1,489
Amortisation of intangible assets 3,840 3,176
Exceptional costs* 6,487 -
Exchange (gain) 47 11
Operating expenses 57,002 47,777
---------------------------------------------------- ------- -------
* Exceptional items relate to legal and professional fees
associated with an aborted potential acquisition of $283,000 and a
successful acquisition post year end and its associated share
placing of $6,204,000.
Included in operating expenses is the net impairment charge for
the year of $495,000.
5. Tax on profit on ordinary activities
2021 2020
$'000 $'000
--------------------------------------------------- --------- ------
Profit on ordinary activities before tax 13,165 19,304
Current tax
Corporation tax on profits of the year 3,772 2,806
Adjustments for prior years (1,673) (446)
--------------------------------------------------- --------- ------
Total current tax charge 2,099 2,360
Deferred tax
Deferred tax for current year (1,656) 108
Adjustments for prior years 122 -
Change in UK tax rate (305) -
Total deferred tax charge (1,839) 108
--------------------------------------------------- --------- ------
Tax on profit on ordinary activities 260 2,468
--------------------------------------------------- --------- ------
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 19% (2020: 19%) 2,501 3,666
Effects of:
Adjustment for prior years (1,551) (635)
Change in tax rate on opening deferred tax
balance (305) -
Change in tax rate on closing deferred tax
balance (227) -
Additional US taxes on profits 25% (2020:
25%) 116 700
R & D tax credit (712) (490)
Expenses not deductible for tax purposes 703 181
Spot rate remeasurement 12 -
Deduction on share plan charges (258) (793)
Other (19) (230)
Total tax charge 260 2,468
--------------------------------------------------- --------- ------
On 31 March 2021, the UK Government announced an increase in the
rate of corporation tax to 25% from 1 April 2023. The change in
rate was substantively enacted on 24 May 2021 and therefore the
closing UK deferred tax assets and liabilities have been recognised
in accordance with the rate enacted.
6. Dividends
The dividends paid during the year were as follows:-
2021 2020
$'000 $'000
---------------------------------------------- ------ ------
Final dividend, re 30 June 2020 - 19.80
cents (15 pence)/share 5,329 5,311
Interim dividend, re 30 June 2020 - 16,68
cents (12 pence)/share 4,371 3,766
Total dividends paid to Company shareholders
in the year 9,700 9,077
---------------------------------------------- ------ ------
Prior year:
Final dividend 19.05 cents (15 pence)/share
Interim dividend 15.1 cents (11.5 pence)/share
The proposed final dividend 21.47 cents (15.5 pence), as noted
in the Financial Review section of the Strategic Report, for the
year ended 30 June 2021 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
2021 2020
No. of Shares No. of Shares
000s 000s
------------------------------------------------ -------------- --------------
Weighted average number of Ordinary Shares
for the purpose of basic earnings per share 26,811 26,796
------------------------------------------------ -------------- --------------
Effect of dilutive potential Ordinary Shares:
share options and LTIPs 374 404
------------------------------------------------ -------------- --------------
Weighted average number of Ordinary Shares
for the purpose of diluted earnings per share 27,185 27,200
------------------------------------------------ -------------- --------------
The Group has one category of dilutive potential Ordinary
shares, being those granted to Directors and employees under the
share option schemes.
Shares held by the Employee Benefit Trust are excluded from the
weighted average number of Ordinary shares for the purposes of
basic earnings per share.
Profit for year
2021 2020
$000's $'000s
-------------------------------------------- ------- -------
Profit for the year attributable to equity
holders of the parent 12,905 16,836
Aborted share placing costs (tax adjusted) 386 -
Acquisition and associated share placing
costs (tax adjusted) 5,210 -
Amortisation of acquired intangibles - 688
-------------------------------------------- ------- -------
Adjusted profit for the year attributable
to equity holders of the parent 18,501 17,524
-------------------------------------------- ------- -------
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
2021 2020
cents cents
---------------------- ------ ------
Basic EPS 48.1 62.8
Diluted EPS 47.5 61.9
Adjusted basic EPS 69.0 65.4
Adjusted diluted EPS 68.1 64.4
---------------------- ------ ------
8. Intangible assets
Goodwill and Other Intangible assets
Goodwill Customer Proprietary Development Computer
Relationships Software Costs Software Total
$'000 $'000 $'000 $'000 $'000 $'000
-------------------------- --------- -------------- ------------ ------------ --------- --------
Cost
At 1 July 2020 11,438 2,964 3,043 32,877 2,104 52,426
Additions - - - 10,099 68 10,167
Disposals - - - - (1,168) (1,168)
At 30 June 2021 11,438 2,964 3,043 42,976 1,004 61,425
-------------------------- --------- -------------- ------------ ------------ --------- --------
Accumulated amortisation
and impairment
At 1 July 2020 250 2,964 3,043 7,794 1,592 15,643
Charge for the
year - - - 3,530 310 3,840
Amortisation on
disposal - - - - (1,168) (1,168)
At 30 June 2021 250 2,964 3,043 11,324 734 18,315
Net Book Value
at 30 June 2021 11,118 - - 31,652 270 43,110
-------------------------- --------- -------------- ------------ ------------ --------- --------
Cost
At 1 July 2019 11,438 2,964 3,043 23,539 1,910 42,904
Additions - - - 9,328 194 9,522
At 30 June 2020 11,438 2,964 3,043 32,877 2,104 52,426
-------------------------- --------- -------------- ------------ ------------ --------- --------
Accumulated amortisation
and impairment
At 1 July 2019 250 2,701 2,618 5,698 1,200 12,467
Charge for the
year - 263 425 2,096 392 3,176
At 30 June 2020 250 2,964 3,043 7,794 1,592 15,643
Net Book Value
at 30 June 2020 11,188 - - 25,083 512 36,783
-------------------------- --------- -------------- ------------ ------------ --------- --------
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 Craneware InSight, Inc.
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.
The key assumptions in assessing value in use are the pre-tax
discount rate applied of 13.5% (2020: 14.9%), future growth rate of
revenue and the operating margin. After the initial term of 5
years, the Group applied a growth rate in perpetuity of 2% (2020:
2%). These take into consideration the customer base 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 amount
would continue to exceed the carrying value. There are no
reasonable possible changes in assumptions that would result in an
impairment. Certain disclosures, including sensitivities, relating
to goodwill have not been made, given the significant headroom on
impairment testing.
9. Trade and other receivables
2021 2020
$'000 $'000
----------------------------------- -------- --------
Trade receivables 16,450 18,171
Less: provision for impairment of
trade receivables (2,270) (1,775)
----------------------------------- -------- --------
Net trade receivables 14,180 16,396
Other receivables 302 172
Current tax receivable 278 -
Prepayments and accrued income 4,090 2,055
Deferred Contract Costs 6,012 6,295
----------------------------------- -------- --------
24,862 24,918
Less non-current receivables:
Prepaid loan arrangement fees (1,692) -
Deferred Contract Costs (3,735) (3,915)
Current portion 19,435 21,003
----------------------------------- -------- --------
10. Share capital
2021 2020
Number $'000 Number $'000
---------------------------- ----------- ------ ----------- ------
Equity share capital
Ordinary shares of 1p each 50,000,000 1,014 50,000,000 1,014
---------------------------- ----------- ------ ----------- ------
Allotted called-up and fully paid
2021 2021
Number $'000 Number $'000
------------------------------- ----------- ------ ----------- ------
Equity share capital
Ordinary shares of 1p each
------------------------------- ----------- ------ ----------- ------
At 1 July 26,826,539 536 26,698,984 535
------------------------------- ----------- ------ ----------- ------
Share placing 6,192,652 88 - -
Allotted and issued in the
year on exercise of employee
share options - - 127,555 1
------------------------------- ----------- ------ ----------- ------
At 30 June 33,019,191 624 26,826,539 536
------------------------------- ----------- ------ ----------- ------
Shares issued during the year
In June 2021, the Company completed a placing of 6,192,652 new
Ordinary Shares at an issue price of GBP22.00 ($31.05) per share,
representing approximately 23.1% of the issued share capital prior
to the placing. The new Ordinary Shares rank pari passu in all
respects with the existing Ordinary Shares of the Company,
including the right to receive all dividends and other
distributions declared, made or paid after the date of issue,
including the final dividend declared in respect of the year ended
30 June 2021. The placing raised proceeds of approximately
GBP132,549,237 ($187,080,731) net of transaction costs. The placing
was effected by way of a cash box structure, the resulting
transactions satisfied all of the required conditions under section
612 of the Companies Act 2006 to obtain merger relief and therefore
the excess of the net proceeds over the nominal value of the shares
issued, of GBP132,487,307 ($186,993,326), has been credited to a
merger reserve rather than to the share premium account. The
purpose of the share placing was to obtain net proceeds to part
fund the acquisition of SDS Holdco, Inc., the ultimate holding
company of Sentry Data Systems, Inc. (Note 25 contains further
details of this acquisition which completed in July 2021). This
merger reserve is not considered to be distributable as a
consequence of the net proceeds of the placing being for a specific
acquisition.
The Company has granted share options and conditional share
awards in respect of its Ordinary Shares and details of these are
contained in Note 8. During the year ended 30 June 2021 no Ordinary
Shares (2020: 127,555 Ordinary Shares) were issued on the exercise
of share options by employees.
11. Cash flow generated from operating activities
Reconciliation of profit before taxation to
net cash inflow from operating activities
2021 2020
$'000 $'000
----------------------------------- ------- --------
Profit before tax 13,165 19,304
Finance income (1) (192)
Finance expense 76 94
Depreciation on property, plant
and equipment 1,403 1,489
Amortisation and Impairment on
intangible assets 3,840 3,176
Share-based payments 2,141 1,318
FX on non cash items (136) -
Movements in working capital:
Decrease/ (increase) in trade and
other receivables 2,026 (1,183)
Increase / (decrease) in trade
and other payables 4,197 (872)
Cash generated from operations 26,711 23,134
----------------------------------- ------- --------
12. Subsequent events
On 12 July 2021, the Group acquired 100% of the voting rights of
SDS Holdco, Inc, the ultimate holding company of Sentry Data
Systems, Inc ('Sentry'), a leader in pharmacy procurement,
compliance and utilisation, management based in Florida, USA. The
reasons for the purchase and expected synergies have been described
in the Strategic Report and in the initial announcement on 7 June
2021.
The aggregate consideration for the acquisition of Sentry on a
cash free/ debt free basis was $400m subject to an adjustment
against a benchmark level of working capital on the date of
acquisition as calculated and determined in accordance with the
terms of the agreement relating to the acquisition.
The consideration for the acquisition was satisfied by $312.5m
(as adjusted) in cash and $87.5m by the issuance of 2,507,348 new
ordinary shares in Craneware plc on 14 July 2021. The cash
consideration was funded from the Group's existing cash resources,
$120m from a new $140m debt facility and $187.3m net proceeds from
a share placing completed in June 2021.
The new debt facility comprises a term and revolving facilities
agreement and 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 of the
assets of the Company and specified assets of the Group.
Arrangement fees paid in advance in relation to the new debt
facility prior to the year end are included within Trade and Other
receivables > 1 year on the Balance Sheet as per Note 16.
Due to the proximity of the acquisition to the publication of
these accounts, the Group has not yet completed the acquisition
accounting. Therefore not all required IFRS 3 Business Combination
disclosures have been included.
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END
FR DGGDCIGDDGBG
(END) Dow Jones Newswires
September 21, 2021 02:00 ET (06:00 GMT)
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