Craneware plc

("Craneware" or the "Company" or the "Group")

 

FY24 Final Results
Strong strategic and financial progress, delivering results above expectations

 

3 September 2024 - Craneware (AIM: CRW.L), the market leader in Value Cycle software solutions for the US healthcare market, announces its audited results for the year ended 30 June 2024.

 

Financial Highlights (US dollars)

·	Revenue increased 9% to $189.3m (FY23: $174.0m)
·	Adjusted EBITDA1 increased 6% to $58.3m (FY23: $54.9m)
·	Annual Recurring Revenue2 increased to $172.0m (FY23: $169.0m), associated Net Revenue Retention3 remains high at 98% (FY23: 100%)
·	Statutory Profit before tax increased 20% to $15.7m (FY23: $13.1m)
·	Adjusted basic EPS1 increased 9% to 94.8 cents (FY23:  87.0 cents) and adjusted diluted EPS increased to 93.9 cents (FY23: 86.3 cents)
·	Basic EPS 33.5 cents (FY23: 26.3 cents) and diluted EPS 33.2 cents (FY23: 26.1 cents)
·	Robust Operating Cash Conversion4 at 90% of Adjusted EBITDA (FY23: 92%)
·	Total Cash and cash equivalents $34.6m (FY23: $78.5m)
·	Significant reduction in Total Bank Debt in the year at $35.4m (FY23: $83.0m), with continued investment in the Trisus Platform
·	Proposed final dividend of 16.0p per share (FY23: 16.0p) giving a total dividend for the year of 29.0p per share (FY23: 28.5p) up 2%
·	Completed share buyback programme utilising £5m ($6.3m) allocated

 

¹ Certain financial measures are not determined under IFRS and are alternative performance measures as described in Note 15

² Annual Recurring Revenue "ARR" includes the annual value of subscription license and related recurring revenues as at 30 June 2024 that are subject to underlying contracts and where revenue is being recognised at the reporting date

³ Net Revenue Retention is the percentage of revenue retained from existing customers over the measurement period, taking into account both churn and expansion sales

⁴ Operating Cash Conversion is cash generated from operations (as per Note 15), adjusted to exclude cash payments for exceptional items and movements in cash held on behalf of customers, divided by adjusted EBITDA

⁵ When we refer to 'Craneware', or 'The Craneware Group' or 'Group' in the annual report we mean the group of companies having Craneware plc as its parent and therefore these words are used interchangeably

 

Operational Highlights

·	Investments made over recent years coming to fruition, delivering strong revenue growth and results above market expectations
·	US healthcare providers refocusing on their longer-term strategic priorities, including the delivery of value-based care, provides an increasingly supportive market backdrop for Craneware
·	Strong sales performance, driven by positive market response to Trisus Optimization Suites and success of the Trisus Platform Partner programme
·	Our Shelter platform partner programme has returned over $250m of additional benefit to hospitals and is expected to contribute to ARR growth in FY25 and beyond
·	Continued high levels of customer retention, at over 90% across the multiple measures, demonstrating the value Craneware brings to its customers
·	A new strategic alliance formed with Microsoft, enabling a joint go-to-market plan for Trisus offerings on the Microsoft Azure Marketplace, expanding Craneware's market reach

 

Outlook

·	Increasing opportunity ahead, including accelerated innovation via the alliance with Microsoft
·	Momentum has continued post-year end, with good levels of trading and customer confidence, providing the Board with confidence in continued growth momentum for FY25, delivering on current expectations and the sustainable return to double digit growth rates

 

 Keith Neilson, CEO of Craneware plc commented:

 

"The strong financial results during the year demonstrates the strength of the Trisus platform, our increasing platform partnership successes and the role we play in helping healthcare providers drive for better value in the US healthcare market.

 

We see increased opportunity ahead. Our alliance with Microsoft will allow us to accelerate innovation and explore new AI-based applications in an efficient manner which, alongside the breadth of the Trisus platform, our unique data assets and our considerable and extensive customer base provides significant scope for expansion in the size of our addressable market.

 

We approach this opportunity from a position of strength and resilience, with a strong balance sheet, high levels of recurring revenue and consistently high customer retention rates. This gives us the confidence and the ability to continue investing for growth, to secure our long-term market position.

 

We have commenced FY25 with a good level of trading, and remain confident in achieving another positive year ahead, growth acceleration over the near term, and our ability to create further long-term value for all stakeholders."

 

 

For further information, please contact:

 

Craneware plc	+44 (0)131 550 3100
Keith Neilson, CEO
Craig Preston, CFO
Alma Strategic Communications	+44 (0)20 3405 0205
Caroline Forde, Kinvara Verdon	craneware@almastrategic.com
Peel Hunt (NOMAD and Joint Broker)	+44 (0)20 7418 8900
Neil Patel, Benjamin Cryer, Kate Bannatyne
Investec Bank PLC (Joint Broker)	+44 (0)20 7597 5970
Patrick Robb, Henry Reast, Shalin Bhamra
Berenberg (Joint Broker)	+44 (0)20 3207 7800
Mark Whitmore, Richard Andrews, Dan Gee-Summons

 

 

About Craneware

 

The Craneware Group (AIM:CRW.L), is the market leader in value cycle solutions. For 25 years, we have collaborated with U.S. healthcare providers to optimize revenue integrity, pricing intelligence, decision support, labor productivity, business of pharmacy, and 340B program management.  

 

Customers choose Trisus®, a HITRUST and SOC2 Type II-certified, SaaS platform, to achieve operational and financial excellence in pursuit of their healthcare mission - delivering quality care to their communities. The Craneware Group - Transforming the Business of Healthcare.

 

Learn more at www.craneware.com

 

 

 

Chair statement

 

This has been a year of strategic and financial progress for Craneware. Investments made over recent years are coming to fruition, delivering strong revenue growth and results above market expectations. The Group continues to demonstrate its ability to innovate and meet the needs of its healthcare customers, while retaining a strong financial foundation. Through its Trisus platform and the associated platform partnership programme, Craneware is uniquely positioned to be a leading player in the digitalization of US healthcare, supporting its customers in the drive towards value-based care.

 

Strong financial results, above market expectations

 

The year has seen the Group deliver on its commitment to increase its rate of growth, while maintaining strong profit margins and reducing bank debt.

 

Group revenues increased 9% to $189.3m (FY23: $174.0m). Adjusted EBITDA increased 6% to $58.3m (FY23: $54.9m), maintaining the Group's target EBITDA margin above 30%.

 

The healthy sales performance and continued high levels of customer retention have delivered growth in ARR to $172m (30 June 2023: $169m), with further sales and platform partner revenue expected to convert to ARR in future years.

 

The Group's continued high levels of cash generation and revenue visibility have enabled it to invest in the strengthening and ongoing innovation of the Trisus platform, continue our progressive dividend policy and complete our share buyback programme, whilst reducing total bank debt, at an accelerated rate, to $35.4m (30 June 2023: $83.0m). The strength of the Group's balance sheet allows the Board to continue to invest organically as well as review appropriate acquisition opportunities aligned with its growth strategy.

 

Leading market position & building momentum  

 

Over the course of the financial year we have seen US healthcare providers emerge from the high-pressure environment of the COVID-19 pandemic into a more settled state, allowing them to re-focus on other strategic priorities. First in these priorities is the desire to deliver first class, value-based care to their communities against the challenging backdrop that includes increasing drug costs, increasing wage bills and an aging population putting more strain on the healthcare system. These challenges result in continued financial pressures they need to understand and actively manage. 

 

Craneware holds a unique central position within the US healthcare industry, with Craneware customers and customer numbers representing approximately 40% of the total number of registered US hospitals. Craneware customers include more than 12,000 US hospitals, health systems, affiliated retail pharmacies and clinics, and our data sets now cover more than 200 million patient encounters. Craneware's independence within the US Healthcare ecosystem allows an uncompromised focus solely on the benefit to its customers.

 

This positioning has been enhanced further this year through the growth of the Group's platform partner programme, leveraging the Group's Trisus platform and data to bring innovative additional offerings to its customers, as well as the recently announced alliance with Microsoft, supporting accelerated innovation and exploration of AI-based opportunities.

  

Benefitting society through our Purpose

 

The driving force of Craneware is its commitment to its purpose: to transform the business of healthcare through solutions that streamline and improve the operational and financial performance of its customers, providing the strong foundation for them to continue the provision of high-quality care for their communities. Social responsibility and delivering a positive contribution to society is paramount to Craneware and this is seen in the superb dedication of its team.

 

The ESG Committee routinely reviews the Group's sustainability credentials and has introduced various initiatives in the year to support its communities. Details about the Group's impact on the communities it serves can be found in the ESG Statement within the Annual Report.

 

On behalf of the Board, I would like to express my gratitude to the team at The Craneware Group for the hard work and passion they bring every day to serving our customers.

 

Board Changes

 

Following many years' service on the Board of Directors, Colleen Blye, Senior Non-Executive Director, and Russ Rudish, Non-Executive Director, have informed the Board of their intention to not stand for re-election at the Company's forthcoming Annual General Meeting. On behalf of the Board, I would like to thank them both for their significant contributions to Craneware's success to date. Their insight into the US healthcare industry has been invaluable and we wish them all the very best. The Board is in the latter stages of reviewing replacement independent Non-Executive Director candidates and will provide an update in due course.

 

Increased opportunity ahead

 

Craneware's strong sales performance is testament to the strength of the Trisus platform, the increasing success of its platform partnership programme, and the central role the Group plays in enabling its customers to deliver better value healthcare.

 

With an increasing opportunity ahead for Craneware, including accelerated innovation via the recently announced alliance with Microsoft, the Board is confident in the Group's ability to further its enviable market position and deliver successful outcomes for all stakeholders.

 

Will Whitehorn

Chair

2 September 2024

 

 

 

Strategic Report

 

Operational Review

 

Our mission is to transform the business of US healthcare. Our independent position in the market means we are uniquely placed to support all US healthcare providers in this pressing agenda, providing them with the insights they need to achieve greater value in healthcare. It is this powerful motivation that drives the whole Craneware team forward. We are immensely proud of the fantastic support our teams provide to our growing customer base. Together, our offerings continue to return in excess of $1.5 billion to our customers each year.

 

This has been another year of progress and delivery. We have seen many of the projects that were put in motion in recent years, such as our Data Foundations work, collecting and building our extensive proprietary data-sets, the launch of Trisus Optimization Suites, and our platform partnership programme, all start to come to fruition  this year, as is evidenced in the increasing revenue growth rate, continued high levels of customer retention, and the recently announced alliance with Microsoft. 

 

With this success, the opportunity ahead of us only continues to grow. Hospital management teams are increasingly seeking a greater understanding of the revenue and costs running through their extensive operations as they look to ensure a sustainable financial future for their facilities. Our recently introduced Optimization Suites combine different solutions to directly address some of the key strategic challenges our customers face today, typically delivering a more than 3x return on investment within the first year of ownership. Meanwhile our innovation teams are exploring new applications, including the use of Generative AI, and we will continue to invest in this area of the business to capitalise on this unique position gained from our extensive proprietary data-sets.

 

As we look to the year ahead, we do so from a position of increasing strength and resilience. Our extensive customer base, powerful cloud-based platform, significant data assets, high levels of recurring revenue and strong balance sheet provide us with a solid foundation from which to continue our growth strategy.

 

Digitalization of US Healthcare

 

The US healthcare market continues to experience challenges across three broad areas: clinical, financial and operational. Examples within these areas include the opioid epidemic, a mental health crisis, the increasing cost of prescription drugs and the behaviour of manufacturers in selectively honouring contracted and regulatory mandated discounts, medical procedures and associated insurance premiums, the shortage of healthcare professionals and wage inflation.

 

The combination of these factors means our customers are consistently being asked to do more, with less, while improving patient care. We believe the key to successfully achieving that is through accurate, accessible and meaningful data and insights, providing the ability to deliver enhanced services, improved infrastructure, robust governance and the ability to make more informed choices around resource allocation.

 

However, to make those choices our customers need to be able to manage and analyse vast amounts of data, which presents a significant and costly challenge for hospitals in areas such as scalability, interoperability, processing costs, security, and compliance.

 

Our vision is for the Trisus platform and its applications whether developed by Craneware or third parties to address these challenges, through connected technology in the cloud.

 

Trisus combines revenue integrity, cost management and decision enablement functions into a single cloud-based platform. The platform brings together siloed data from the various existing software systems in a hospital or healthcare system, normalises that data and applies prescriptive analytics in order to provide insights to customers to support informed decision making regarding a hospital's finances and operations, in one place.

 

We provide customers with the ability to build effective strategies related to revenue, pricing, cost, and compliance to mitigate the internal and external challenges described above, delivering real financial returns and freeing up valuable resources that can be re-invested and re-deployed by healthcare providers to support the clinical care of their communities and tackle their clinical challenges.

 

We believe the digitalization of healthcare and improvement of processes using data insights will provide the successful foundation for value-based care and enable the transformation of the business of US healthcare.

 

Growth Strategy - innovation to profoundly impact US healthcare operations, which will drive demand and expand our addressable market.

 

To date, our growth has been driven through increases in market share and product set penetration (land & expand). In recent years, we have invested in the development of the Trisus platform; a sophisticated cloud delivered data aggregation and intelligence platform which is the foundation for our future growth.

 

We are building on top of Trisus to strengthen our current products, leverage our proprietary data assets to expand our offering, integrate third party solutions to the platform and benefit from the scalability of cloud-technology.

 

Through our 25 year history in the US healthcare market, we have collected our own unique and extensive data set, which we believe contains the insights that will generate our products of the future. While we have always had a team analysing this data, the growth in artificial intelligence ("AI") and machine learning ("ML") means it is now easier and faster to do so, particularly when combined with the large language training capabilities of our own proprietary data. Meanwhile, we are also using AI across the organisation for efficiency and productivity gains.

 

Two Growth Pillars

 

Our strategy has two fundamental growth pillars:

 

1.    Platform enhancements to increase ease of use and interoperability

 

With all customers now connected to, and benefitting from, the Trisus platform, our focus is on enhancing the attractiveness and value of the platform. This includes three areas of work:

 

·	the ongoing re-engineering of existing offerings enhancing cloud-based applications;
·	the growth of our data sets within the platform, to support future product expansion; and
·	our Data Foundations programme which aims to increase the speed and ease of hospitals' interaction with the platform and interoperability of applications on the platform.

 

Existing product improvements

 

The continual improvement of our existing offerings is an ongoing process. Combinations of new technology and their novel applications give speed, productivity and efficiency gains that benefit the ease of use of our offerings by our customers.

 

Growth of our data sets

 

The depth of our product offering continues to expand through the mining of the proprietary and regulatory data that we collect, identifying new ways that data can illuminate and support decision making within the hospital provider environment. We now have data sets covering more than 200 million patient encounters, providing incredibly valuable insights for our customers.

 

Whilst our Revenue Integrity and 340B related software applications utilise different technology stacks within the Trisus platform, they both supplement and further enrich our Trisus data sets. Eventually the work we are doing with our Trisus Data Foundations programme will enable the full integration of these stacks, making our offerings even more attractive to customers as the speed and depth of insights available is increased.

 

Data Foundations

 

As part of our Data Foundations programme of work, we are utilising the advances in AI and ML data processing to increase the interoperability and connectivity of our applications, while making the platform's back-end processes more efficient and effective.

 

2.    Value driven Customer Expansion

 

With the first stage of cloud-based enhancements for existing products now complete, our focus is now on the development of new applications and the extension of existing applications, to expand our capabilities and the benefits derived by our Provider customers. We anticipate our customers' success will in turn encourage new Providers to visit or re-visit The Craneware Group's solutions, which will facilitate a greater level of cross sale and product penetration across our extensive customer base and the wider US Hospital market over time, driving further growth in ARR as part of an ongoing cycle of transforming the business of healthcare and winning new customers.

 

Application Adoption and Measured Value

 

By equipping our internal teams with proactive indicators of customer engagement, derived from their usage data from the platform, we help customers maximise the value they achieve from their Craneware software investment. Helping customers boost their understanding of what good looks like enables them to enact meaningful change in their organisations en-route to sustainable operating model improvements. Increasing this visibility of shared learnings and success achieves individual customer value but also serves to connect customers across the community of Craneware software users.

 

Growth in ARR

 

This healthy sales performance and continued high levels of customer retention in the year have delivered growth in Annual Recurring Revenue (ARR) to $172m (30 June 2023: $169m), Net Revenue Retention remains high at 98% for the year, with additional growth expected in both these metrics as more of the sales and platform partner success converts to ARR.

 

We continue to see the opportunity to accelerate ARR growth over the medium term, both as our initial platform partners mature and begin generating demonstrable recurring revenue and we unlock the considerable cross and upsell opportunities within our enlarged customer base. Customer retention for the year exceeded 90%, across the multiple measures, which is testament to the value Craneware brings to its customer base.

 

Six Trisus® Optimization Suites

 

The Trisus software applications and corresponding service offerings have now been grouped into six Trisus® Optimization Suites, bringing together the solutions that address specific strategic and tactical issues facing healthcare providers and are powered by the same sub-set of customer data. Through packaging our applications into suites, we aim to make it easier for our customers to identify which of our multiple additional applications are likely to unlock immediate value and address their challenges most effectively, based on their existing data within the Trisus platform. 

 

The Optimization Suites are: Trisus Pricing Integrity, Trisus Data Integrity, Trisus Business of Pharmacy, Trisus Revenue Protection Optimization, Trisus Charge Capture Optimization and Trisus Value-based Margin & Productivity.

 

We have seen a very strong response from the market to these suites and their ability to address issues being faced by hospitals at a more strategic level, providing hospitals with a single vendor rather than multiple point solutions. 

 

Sales mix

 

We have seen a significant increase in the overall level of new sales, further demonstrating the US healthcare industry's returning focus to strategic priorities after the Healthcare emergency that ended on 11^th May 2023. The proportion of sales coming from each segment remained broadly consistent with the prior year.

 

Expansion sales to existing customers represents 83% of our total 'new' sales in the year (FY23: 81%), demonstrating the positive response of our customers to the increased ROI derived from the uptake of our partner programme, our additional cloud applications and the packaging of applications and services into our Optimization Suites.

 

Whilst overall Sales to new customers have increased in real terms, as a percentage of our total new sales it is 17% (FY23: 19%), reflecting the success of our Platform partner programme and other new sales to existing customers.

 

Growing Platform partnership programme

 

Our growing Platform partnership programme further enables us to leverage the strength of our data, platform and customer numbers to generate additional, highly scalable, Platform Revenue streams. It is an umbrella term that encompasses any revenue that is generated in association with third parties and is typically net of any third party outlays. This can be through the use of the data assets within Trisus to directly support our customers in their ability to leverage third parties or through hosting third party applications on the platform.

 

Our customers will benefit from increased breadth of solutions to deliver value from the platform partnership solutions, available in an efficient and secure manner through the Trisus platform. The application and service providers can benefit from access to our unique positioning, data sets and extensive customer base, and we can benefit from new revenue opportunities and additional business models. This work also creates important distinction and strong competitive differentiation between our holistic Trisus platform offerings and other Revenue Integrity and 340B potential competitors.

 

We will seek to transition the majority of this income into recurring revenue models, adding to our ARR, although the nature of the offering may be such that this is not applicable. These revenues from the platform, are initially categorised as 'Platform Revenues - non-recurring', until a repeatable pattern can be established.

 

We now have our initial programmes successfully generating revenue, and there is a building pipeline of additional programme opportunities, which will be rigorously assessed prior to launch.

 

Microsoft Alliance

 

We were delighted to announce in early July 2024 that we had formed an alliance with Microsoft to further transform the business of healthcare. As part of this, Craneware was named a Microsoft Global Partner Solution provider and we are in the process of finalising our joint go-to-market plan for our Trisus offerings on the Microsoft Azure Marketplace. The collaboration will see the delivery of differentiated offerings and increased value to customers through the application of industry leading data analytics, AI, and modern platform technology. As part of the agreement, we signed a Microsoft Azure Consumption Commitment (MACC) agreement, bringing predictability to our cloud spending, budget optimisation, and enhanced financial planning, thus driving cost efficiency.

 

A key factor of the agreement is the Microsoft Unified Support Commitment, which provides for additional resilience and cyber protection to us and our customers, with a guaranteed response time and prioritisation of technical resources were there to be any outages irrespective of the cause.

 

Craneware teams have begun co-innovation with Microsoft's AI experts to accelerate the application of AI enhancements to existing Trisus offerings and the exploration of new AI-based applications. Craneware's long heritage in the US healthcare industry, as well as more than 200 million unique patient encounters within its datasets, mean it is uniquely positioned to provide powerful, actionable insights to participants across the healthcare industry. These insights support better operational and strategic decisions, enabling further efficiencies in provider performance so they can focus on serving their communities and healthcare missions, transforming the business of healthcare.

 

The first of the Trisus applications to be made available on the Microsoft Azure Marketplace will be Trisus Chargemaster, Trisus Decision Support, and Trisus Labor Productivity. These offerings, supported by joint go-to-market initiatives and other activities will help expand The Craneware Group's market reach via the Microsoft partner ecosystem.

 

To drive the success of both this and the platform partner programme, we have created a new role, SVP of Strategic Partnerships. The role will serve as the lead liaison between The Craneware Group and its partners, working closely with internal and external cross-functional teams to identify new opportunities and negotiate mutually beneficial agreements that drive success for our customers, engender customer loyalty, produce both direct and indirect new revenue opportunities for the Group and expand The Craneware Group's reach.

 

M&A

 

While organic growth across our portfolio remains the priority, we continue to evaluate the market for suitable M&A opportunities and will continue to pursue strategically aligned companies that will accelerate our growth strategy. We maintain the same four key acquisition criteria of which target companies must fit into at least one, being: the addition of relevant data sets; the extension of the customer base; the expansion of expertise; and the addition of applications suitable for the US hospital market. We view our platform partnering programme as a potential source of future M&A activity, provided this would deliver mutual benefits to all parties.

 

Our People and Community 

 

Our three focus areas of Community, People and Environment continue to guide our ESG efforts. Central to our purpose is that our solutions benefit society. Our solutions deliver value for our customers, through the provision of accurate financial data, insight and analytics, that can be reinvested to support our customers in the provision of care to their communities. In addition, our 340B pharmacy solutions enable our customers to generate cost savings which go directly to the provision of care for the underserved in their communities. The Craneware Group is also directly involved with the 340B Matters initiative, which aims to educate the market regarding the importance of the 340B program for the non-profit healthcare facilities that provide accessible and affordable care within their communities.

 

Our customers have seen more than $1.5bn in benefit from utilising our solutions this year, helping to stretch scarce federal resources, to reach more eligible patients and provide more comprehensive services.

 

Extending the considerable support provided for many years, we continue to develop programmes and opportunities to positively and directly impact our communities; this complements our purpose and reflects the causes which are important to our employees. This is achieved through initiatives driven by our employees through Craneware Cares and the Craneware Cares Foundation. During the year, employees have supported several causes and charitable organisations including our quarterly Spotlight Charity and Community Outreach Program.

 

Our team provides valuable support to our customers and the achievements of the Group are due to the efforts, experience and dedication of our people. Our team is a talented mix of employees from diverse backgrounds, which contributes to high levels of innovation and collaboration. We believe in the importance of fostering a team environment while also celebrating the individuals within the team.

 

We continue to invest in our team, our facilities and working practices and we welcome feedback and suggestions for improvements through a range of employee engagement mechanisms. During the year we have held sessions under our Craneware Spaces diversity, equity and inclusion programme and relaunched our Employee Advisory Group which is helping to support some of our diversity, equity and inclusion efforts, along with other initiatives such as sustainability.

 

We continue to progress actions that help to support our environmental focus area. During FY24 we reduced our rented office facility footprint in the US thereby assisting with lowering our energy consumption and corresponding emission reductions. This process involved the closure of our Atlanta office and we relocated our office within Deerfield Beach which provided the opportunity to configure improved collaboration spaces in the new office facility. In FY24 we also extended our climate scenario analysis and risk assessment process and continue to develop the gathering of emissions data in support of compiling appropriate metrics and KPIs to guide our efforts towards our pathway to net zero. 

 

Financial Review

 

This has been a positive year for The Craneware Group, where we have seen our end market of US Healthcare return its focus to its longer-term strategic priorities. We have also seen many of the investments we have made over recent years begin to deliver the expected financial returns, including the acceleration of our platform partnership programme. For the year ended 30 June 2024, we are reporting revenue of $189.3m (FY23: $174.0m) representing accelerated and strong revenue growth of 9%.

 

We continue to invest in our future while delivering an Adjusted EBITDA for the year of $58.3m, 6% ahead of the prior year (FY23: $54.9m), representing an Adjusted EBITDA margin of 31% (FY23: 32%).     

 

The Group continues to be highly cash generative with a strong balance sheet. Our continued high levels of cash generation allowed us to reduce bank debt by $48m to $35.4m, pay dividends of $12.8m, reduce interest costs, and to commit a total of $6.3m to a share buyback programme. The Group has maintained its Revolving Credit Facility ("RCF") and strong banking relationships, hence has considerable financial resources at its disposal.    

 

As a result of all of the above, our Adjusted Basic Earnings per Share increased 9% to 94.8 cents (FY23: 87.0 cents).

 

Underlying Business Model and Revenue Mix

 

The contracts we sign with our hospital customers provide a license for that customer to access a specified product or suite of products throughout their subscription license period. At the end of an existing subscription license period, or at a mutually agreed earlier date, we look to renew these contracts with customers. We recognise software subscription license revenue and any minimum payments due from any 'other long term' contracts evenly over the life of the underlying contract term. 

 

In addition to the subscription license fees, we provide contracted transactional services, which are highly dependable, and recurring, but can occasionally see some variation year to year based on volume of transactions. Transactional services are recognised as we provide the service and include our contracts with our 340B customers that enable them to engage with their network of contract pharmacies.

 

We also provide professional and consulting services to our customers. Where these services are provided over an extended contract period, usually alongside the multi-year software license as part of one of our Trisus Optimization Suites, or where they relate to a complex implementation integral to the use of the software, the revenue is recognised evenly over the life of the underlying contract or project term.

 

The combination of these two software revenue models plus our recurring professional services represent the recurring platform revenues of the business, which for the current year have increased to $168.3m (FY23: $163.7m).

 

Shorter professional or consulting services engagements are also provided, usually taking less than one year to complete. These revenues are usually recognised as we deliver the service to the customer, on a percentage of completion basis. In the year, despite increasing underlying sales, these engagements have delivered $7.2m of revenue (FY23: $9.2m), which reflects the timing and resource available to complete the engagements during the year. However, a building backlog of these projects has been generated and associated revenues will be recognised during FY25.  

 

We continue to look for new and innovative ways to leverage the Trisus platform and the significant data assets within it. Our Platform partnership programme aims to deliver meaningful benefit to our customers and derive new revenue opportunities and additional business models for the Group. These revenues are recognised at the point we are able to invoice our customers. As initially, it is often too early to establish a pattern of what would become recurring, they are shown separately as "Platform Revenues - non-recurring", however once proven we expect many of these revenue opportunities to deliver future annual recurring revenue.

 

In the year, we are reporting Platform Revenues - non-recurring of $13.8m (FY23: $1.1m).

 

Annual Recurring Revenue

 

We define ARR as the annual value of subscription license and related recurring revenues as at the Balance Sheet date that are subject to underlying contracts and where revenue is being recognised at the reporting date.

 

ARR at 30 June 2024 increased to $172.0m (at 30 June 2023: $169.0m) with Net Revenue Retention remaining high at 98% (FY23: 100%) and customer retention for the year, again, exceeding 90%, all combining to provide a resilient foundation for the future growth of the Group. These metrics are a testament to the value Craneware brings to its customer base.

 

Gross Margins

 

Our gross profit margin is calculated after taking account of the incremental costs we incur to obtain the underlying contracts, including sales commission contract costs which are charged in line with the associated revenue recognition and the direct costs of professional services employees who deliver the services required to meet our contractual obligations.

 

The gross profit for FY24 increased 9% to $162.2m (FY23: $148.4m). This represents a gross margin percentage of 86% (FY23: 85%) which is in line with the expected gross margin of the Group.   

 

Operating Expenses

 

Net operating expenses (to Adjusted EBITDA) increased 11% to $103.9m (FY23: $93.5m), which continues to reflect our investment approach of assessing, priority ranking then approving investment expenditure as we have clear evidence of the revenue growth that will support our commitment to deliver an Adjusted EBITDA margin of +30%. We continue to ensure prudent cost control and leverage our ability to balance our investment between the US and the UK (and the associated Sterling exchange rate). 

  

Product innovation and enhancement continue to be core to this future and our ability to achieve our potential. We continue to pursue our buy, build, or partner strategy to build out the Trisus platform and its portfolio of products. As we are highly cash generative, we are able to use our cash reserves to further "build" alongside the partner activities in the year and therefore continue to invest significant resource in R&D.

 

The total cost of development in the year was $52.1m (FY23: $50.6m). We continue to capitalise only the costs that relate to projects that have yet to be released to the market and will deliver new "future economic benefit" to the Group. With the total amount capitalised in the year, being $15.8m (FY23: $15.0m) representing 30% of total R&D spend in FY24 (FY23: 30%), which represents a reduction to our historical run rates of 35% to 40% of total R&D spend. 

 

We continue to believe this investment is an efficient and cost-effective way to further build out our growth strategy alongside any acquisition and Platform partner strategy. As specific products and enhancements are made available to relevant customers, the associated development costs capitalised are amortised and charged to the Group's income statement over their estimated useful economic life, thereby correctly matching costs to the resulting revenues.

 

Net Impairment (charge) / reversal on financial and contract assets

 

In the prior year, the culmination of efforts since the acquisition of Sentry Data Systems, Inc. ("Sentry") and associated improvements to ongoing relationships with customers resulted in a benefit to FY23 of $2.1m. For the current year we have seen a more normalised bad debt provision in the current year of $1.1m.

 

Adjusted EBITDA and Profit before taxation

 

To supplement the financial measures defined under IFRS the Group presents certain non-GAAP (alternative) performance measures as detailed in Note 15. We believe the use and calculation of these measures are consistent with other similar listed companies and are frequently used by analysts, investors and other interested parties in their research.

 

The Group uses these adjusted measures in its operational and financial decision-making as it excludes certain one-off items, allowing focus on what the Group regards as a more reliable indicator of the underlying operating performance.

 

Adjusted earnings represent operating profits, excluding costs incurred as a result of acquisition (if applicable in the year), integration and share related activities (if applicable in the year), share related costs including IFRS 2 share-based payments charge, interest, depreciation and amortisation ("Adjusted EBITDA").

 

In the year, total costs of $0.7m (FY23: $0.5m) have been identified as exceptional. These relate primarily to the one-off costs associated with the later stages of the back-office systems integration of Sentry. As such, these costs were adjusted from earnings in presenting Adjusted EBITDA. 

 

Adjusted EBITDA has grown in the year to $58.3m (FY23: $54.9m) an increase of 6%. This reflects an Adjusted EBITDA margin of 31% (FY23: 32%), confirming we continue to meet our target of a combined Group adjusted EBITDA margin of 30+%.  

 

Following the amortisation charge on acquired intangible assets relating to the Sentry acquisition of $20.9m (FY23: $20.9m), and the reduction in our net Finance expense to $4.0m (FY23: $6.1m) through the success of our treasury management, profit before taxation reported in the year has increased 20% to $15.7m (FY23: $13.1m).

 

Taxation

 

The Group generates profits in both the UK and the US. The Group's effective tax rate is primarily dependent on the applicable tax rates in these respective jurisdictions. Following the Sentry acquisition, whose profits are solely generated in the US, the Group now generates a higher proportion of its profits there. 

 

Other factors impacting the effective tax rate include tax deductibility of amortisation of acquired intangibles, tax losses brought forward and the number of share options exercised and associated tax treatment. Reconciliation of the tax charge for the year can be seen in Note 5. As a result, the effective tax rate for the year ended 30 June 2024 is 26% (FY23: 29%).

 

EPS

 

The Group presents an Alternative Performance Measure of Adjusted EPS, to provide consistency to other listed companies. Both Basic and Diluted Adjusted EPS are calculated excluding costs incurred as a result of acquisition and share related activities, being $0.5m (tax adjusted) in the year (FY23: $0.4m) and amortisation of acquired intangibles of $20.9m (FY23: $20.9m).

 

Adjusted basic EPS, continues to move back in line with the increased levels of Adjusted EBITDA and has increased 9% to $0.948 (FY23: $0.870) and adjusted diluted EPS has increased to $0.939 (FY23: $0.863). Basic EPS in the year increased to $0.335 (FY23: $0.263) and Diluted EPS increased to $0.332 (FY23: $0.261).

 

Cash and Bank Facilities

 

Cash generation and a strong balance sheet have always been a focus of the Group. Our business model, based on recurring revenues and our ongoing efforts to maintain high levels of customer retention, provide the basis for high levels of cash generation. We always monitor the quality of our earnings through Operating Cash Conversion, this being our ability to convert our Adjusted EBITDA to "cash generated from operations" (as detailed in the consolidated cash flow statement). 

 

In the year, having made the necessary improvements to Sentry's cash management processes, bringing them into line with the rest of the Group's operations, we continue to deliver high levels of Operating Cash Conversion across the combined Group at 90% in the year (FY23: 92%).

 

We continually review our capital allocation approach, ensuring we balance investing in our future with returning funds to our shareholder base and reducing our external bank debt. We have returned funds to our shareholders during the year via our normal progressive dividend policy, returning $12.8m in the current year (FY23: $12.1m), and our share buyback.

 

In the prior year (on 12 April 2023), the Group commenced a share buyback programme of up to £5 million. The shares purchased through this programme are held in treasury and will be used to satisfy employee share plan awards. The Programme was undertaken using a phased approach. The Programme was operated under the authority granted to the Company by shareholders at the Company's Annual General Meetings in 2022 and in 2023, and within the regulatory guidance on the quantity of shares the Company may purchase on any single day.

 

This programme completed during the year utilising the balance of the allocated £5 million ($6.3 million) (FY23: £3.09 million ($3.87 million)). Through the programme the Company purchased a total of 332,531 Ordinary Shares (FY23: 223,632) at an average price of £15.03 per share. At 30 June 2024 the Company's share price was £23.10. These shares represent 0.94% (FY23: 0.63%) of the Company's issued Ordinary Shares and are held in treasury. During the year 99,646 shares (FY23: 9,621 shares) were issued from treasury to satisfy exercises under the existing employee share plan awards as a result at the Balance sheet date, 223,264 Ordinary Shares (FY23: 214,011 Ordinary Shares) are held in treasury.

 

In regard to the bank debt, the facility entered into for the acquisition of Sentry comprised a term loan of $40m, which continues to be repaid at $2m per quarter, and a Revolving Credit Facility of up to $100m. During the year, $8m (FY23: $8m) of the term loan has been repaid on schedule, and a further $40m of the Group's cash reserves have been offset against the Revolving Credit Facility in line with our current Treasury Management Policy. The RCF balance has reduced from $60m to $20m, which provides further available facility of $80m.

 

All covenants continue to be met, the facilities currently expire in June 2026 and we have already had early stage discussions in regards to their extension beyond this date. We thank our banking partners, alongside our shareholders, for their continued support of our growth strategy. 

 

As a result, Cash reserves at the year-end were $34.6m (FY23: $78.5m) and total bank debt outstanding of $35.4m (FY23: $83m) giving the Group both significant liquidity and a strong balance sheet.

 

Balance sheet

 

Within the balance sheet, deferred income levels reflect the amounts of the revenue under contract that we have invoiced but have yet to recognise as revenue and therefore are subject to timing. This balance is a subset of the future performance obligations detailed in Note 3.

 

Deferred income, accrued income, and the prepayment of sales commissions all arise as a result of our SaaS business model described above and we will always expect them to be part of our balance sheet. They arise where the cash profile of our contracts does not exactly match how revenue and related expenses are recognised in the Statement of Comprehensive Income. Overall, levels of deferred income are significantly more than any accrued income and the prepayment of sales commissions, we therefore remain cash flow positive in regard to how we account for our contracts.

 

Currency

 

The functional currency for the Group, debt and cash reserves, is US dollars. Whilst the majority of our cost base is US-located and therefore US dollar denominated, we have approximately twenty percent of the cost base situated in the UK, relating primarily to our UK employees which is therefore denominated in Sterling. As a result, we continue to closely monitor the Sterling to US dollar exchange rate and where appropriate, consider hedging strategies. The average exchange rate throughout the year was $1.2595 as compared to $1.2043 in the prior year. The exchange rate at the Balance Sheet date was $1.2645 (FY23: $1.2619).

 

Dividend

 

In proposing a final dividend, the Board has carefully considered a number of factors including the prevailing macro-economic climate, the Group's trading performance, our current and future cash generation and our continued desire to recognise the support our shareholders provide. After carefully weighing up these factors, the Board proposes a final dividend of 16.0p (20.23 cents) per share giving a total dividend for the year of 29p (36.67 cents) per share (FY23: 28.5p (35.95 cents) per share), an increase of 2%. Subject to approval at the Annual General Meeting, the final dividend will be paid on 18 December 2024 to shareholders on the register as at 29 November 2024, with a corresponding ex-Dividend date of 28 November 2024.

 

The final dividend of 16.0p per share is capable of being paid in US dollars subject to a shareholder having registered to receive their dividend in US dollars under the Company's Dividend Currency Election, or who register to do so by the close of business on 29 November 2024. The exact amount to be paid will be calculated by reference to the exchange rate to be announced on 29 November 2024. The final dividend referred to above in US dollars of 20.23 cents is given as an example only using the Balance Sheet date exchange rate of $1.2645/£1 and may differ from that finally announced.

 

Outlook

 

The strong financial results during the year demonstrates the strength of the Trisus platform, our increasing platform partnership successes and the role we play in helping healthcare providers drive for better value in the US healthcare market.

 

We see increased opportunity ahead. Our alliance with Microsoft will allow us to accelerate innovation and explore new AI-based applications in an efficient manner which, alongside the breadth of the Trisus platform, our unique data assets and our considerable and extensive customer base provides significant scope for expansion in the size of our addressable market.

 

We approach this opportunity from a position of strength and resilience, with a strong balance sheet, high levels of recurring revenue and consistently high customer retention rates. This gives us the confidence and the ability to continue investing for growth, to secure our long-term market position.

 

We have commenced FY25 with a good level of trading, and remain confident in achieving another positive year ahead, growth acceleration over the near term, and our ability to create further long-term value for all stakeholders.

 

Keith Neilson CEO Craneware plc 2 September 2024

Craig Preston CFO Craneware plc 2 September 2024

 

 

 

Consolidated Statement of Comprehensive Income

For the year ended 30 June 2024

 

		Total	Total
		2024	2023
	Notes	$'000	$'000
Continuing operations:
Revenue from contracts with customers	3	189,268	174,018
Cost of sales		(27,072)	(25,576)
Gross profit		162,196	148,442
Other income		(398)	600
Operating expenses	4	(140,953)	(131,876)
Net impairment (charge)/ reversal on financial and contract assets	4	(1,111)	2,062
Operating profit	4	19,734	19,228
Analysed as:
Adjusted EBITDA1		58,279	54,892
Share-based payments		(4,487)	(2,992)
Depreciation of property, plant and equipment		(3,293)	(3,451)
Exceptional Costs2	4	(675)	(510)
Amortisation of intangible assets - other	8	(9,169)	(7,781)
Amortisation of intangible assets - acquired intangibles	8	(20,921)	(20,930)
Finance income		1,143	214
Finance expense		(5,130)	(6,357)
Profit before taxation		15,747	13,085
Tax on profit on ordinary activities	5	(4,044)	(3,853)
Profit for the year attributable to owners of the parent		11,703	9,232
Total comprehensive income attributable to owners of the parent		11,703	9,232

1.        See Note 15 for explanation of Alternative Performance Measures.

2.        Exceptional items relate to integration costs associated with the purchase of Sentry Data Systems, Inc. ("Sentry")

 

Earnings per share for the year attributable to equity holders

 

	Notes	2024	2023
Basic ($ per share)	7	0.335	0.263
*Adjusted Basic ($ per share)	7	0.948	0.870
Diluted ($ per share)	7	0.332	0.261
*Adjusted Diluted ($ per share)	7	0.939	0.863

 

* Adjusted Earnings per share calculations allow for the tax adjusted acquisition costs and share related transactions (if applicable in the year) together with amortisation on acquired intangible assets.

                       

Statement of Changes in Equity for the year ended 30 June 2024

 

		Share		Capital
	Share	Premium	Treasury	Redemption	Merger	Other	Retained	Total
	Capital	Account	Shares	Reserve	Reserve	Reserves	Earnings	Equity
	$'000	$'000	$'000	$'000	$'000	$'000	$'000	$'000
At 1 July 2022	659	97,204	-	9	186,981	5,933	42,236	333,022
Total comprehensive income - profit for the year	-	-	-	-	-	-	9,232	9,232
Transactions with owners:
Share-based payments	-	-	-	-	-	3,231	-	3,231
Purchase of own shares through EBT	-	-	-	-	-	-	(179)	(179)
Purchase of own shares through share buyback	-	-	(3,865)	-	-	-	-	(3,865)
Deferred tax taken directly to equity	-	-	-	-	-	-	(1,004)	(1,004)
Impact of share options and awards exercised/lapsed	-	-	128	-	-	(2,324)	1,719	(477)
Dividends (Note 6)	-	-	-	-	-	-	(12,119)	(12,119)
At 30 June 2023	659	97,204	(3,737)	9	186,981	6,840	39,885	327,841
Total comprehensive income - profit for the year	-	-	-	-	-	-	11,703	11,703
Transactions with owners:
Share-based payments	-	-	-	-	-	4,127	-	4,127
Purchase of own shares through EBT	-	-	-	-	-	-	(863)	(863)
Purchase of own shares through share buyback	-	-	(2,435)	-	-	-	-	(2,435)
Deferred tax taken directly to equity	-	-	-	-	-	-	1,893	1,893
Impact of share options and awards exercised/lapsed	-	-	1,680	-	-	(2,077)	(479)	(876)
Dividends (Note 6)	-	-	-	-	-	-	(12,798)	(12,798)
At 30 June 2024	659	97,204	(4,492)	9	186,981	8,890	39,341	328,592

 

 

Consolidated Balance Sheet as at 30 June 2024

 

	Notes	2024	2023
		$'000	$'000
ASSETS
Non-Current Assets
Property, plant and equipment		8,592	8,464
Intangible assets - goodwill	8	235,236	235,236
Intangible assets - acquired intangibles	8	145,406	166,327
Intangible assets - other	8	56,827	50,230
Trade and other receivables	9	3,634	2,758
Deferred tax	10	733	-
		450,428	463,015
Current Assets
Trade and other receivables	9	58,638	35,424
Cash and cash equivalents		34,589	78,537
		93,227	113,961
Total Assets		543,655	576,976
EQUITY AND LIABILITIES
Non-Current Liabilities
Borrowings	12	27,372	75,033
Deferred income		958	2,875
Leased property		3,823	2,224
Hire purchase equipment		-	44
Deferred tax	10	33,441	41,337
Other provisions		708	243
		66,302	121,756
Current Liabilities
Borrowings	12	8,000	8,000
Deferred income		65,859	49,643
Amounts held on behalf of customers		53,390	51,220
Tax payable		4,278	2,565
Trade and other payables	13	17,234	15,951
		148,761	127,379
Total Liabilities		215,063	249,135
Equity
Share capital		659	659
Share premium account		97,204	97,204
Treasury shares		(4,492)	(3,737)
Capital redemption reserve		9	9
Merger reserve		186,981	186,981
Other reserves		8,890	6,840
Retained earnings		39,341	39,885
Total Equity		328,592	327,841
Total Equity and Liabilities		543,655	576,976

 

 

Consolidated Statement of Cash Flows for the year ended 30 June 2024             

 

	Notes	2024	2023
		$'000	$'000
Cash flows from operating activities
Cash generated from operations	11	53,703	100,591
Tax paid		(11,841)	(1,843)
Net cash generated from operating activities		41,862	98,748
Cash flows from investing activities
Purchase of property, plant and equipment		(1,191)	(520)
Capitalised intangible assets	8	(15,766)	(15,031)
Interest received		1,143	214
Net cash used in investing activities		(15,814)	(15,337)
Cash flows from financing activities
Dividends paid to company shareholders	6	(12,798)	(12,119)
Proceeds from issuance of treasury shares		276	138
Loan arrangement fees		-	(252)
Repayment of borrowings	12	(48,000)	(28,000)
Interest on borrowings		(4,624)	(6,503)
Purchase of own shares by EBT		(863)	(179)
Share buyback programme		(2,485)	(3,815)
Payment of lease liabilities		(1,502)	(2,552)
Net cash used in financing activities		(69,996)	(53,282)
Net (decrease) / increase in cash and cash equivalents		(43,948)	30,129
Cash and cash equivalents at the start of the year		78,537	48,408
Cash and cash equivalents at the end of the year		34,589	78,537

 

 

Notes to the Financial Statements

 

General Information

Craneware plc ("the Company") is a public limited company incorporated and domiciled in Scotland. The Company has a primary listing on the Alternative Investment Market ('AIM') of the London Stock Exchange. The principal activity of the Company continues to be the development, licensing and ongoing support of computer software for the US healthcare industry.

 

Basis of preparation

The financial statements of the Group and the Company are prepared in accordance with UK adopted international accounting standards (International Financial Reporting Standards ("IFRS")) and the applicable legal requirements of the Companies Act 2006.

The Group and the Company financial statements have been prepared under the historic cost convention and prepared on a going concern basis. The Strategic Report contains information regarding the Group's activities and an overview of the development of its products, services and the environment in which it operates. The Group's revenue, operating results, cash flows and balance sheet are detailed in the financial statements and explained in the Financial Review.

The Group is profitable and there is a reasonable expectation that this will continue to be the case. Our business model is delivering high levels of recurring revenue, supported by long term underlying contracts, that deliver high levels of cash generation. In addition, the Group has cash and cash equivalents of $34.6m as well as a committed but undrawn facility available to it of $80m.

The directors have prepared cash flow forecasts covering a period of over twelve months from the date of approval of these financial statements. These forecasts include consideration of severe but plausible downsides, should these events occur, the Group would have sufficient funds to meet its liabilities as they fall due for that period. These scenarios anticipate a zero-growth scenario, such that the only sales made by the Group would be to replace losses of existing long-term contracts. Under this basis, with minor but appropriate rebalancing of the cost base, the Group remained in compliance with its covenants and had no need to draw upon the committed undrawn facility.

Based on this assessment, the Directors have determined that the Group has adequate resources to continue in business for the foreseeable future and that it is therefore appropriate to adopt the going concern basis in preparing the consolidated and the Company financial statements.

The applicable accounting policies are set out below, together with an explanation of where changes have been made to previous policies on the adoption of new accounting standards in the year, if relevant.

The preparation of financial statements in conformity with IFRS requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting year. Although these estimates are based on management's best knowledge of the amount, event or actions, actual results ultimately may differ from those estimates.

The Company and its subsidiary undertakings are referred to in this report as the Group.

 

1.    Selected principal accounting policies

 

The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied, unless otherwise stated.

 

Reporting currency

The Directors consider that, as the Group's revenues are primarily denominated in US dollars, the Company's functional currency is the US dollar. The Group's financial statements are therefore prepared in US dollars.

Currency translation

 

Transactions denominated in currencies other than US dollars are translated into US dollars at the rate of exchange ruling at the date of the transaction. The average exchange rate during the course of the year was $1.2595/£1 (FY23: $1.2043/£1). Monetary assets and liabilities expressed in foreign currencies are translated into US dollars at rates of exchange ruling at the Balance Sheet date $1.2645/£1 (FY23: $1.2619/£1). Exchange gains or losses arising upon subsequent settlement of the transactions and from translation at the Balance Sheet date, are included within the related category of expense where separately identifiable, or administrative expenses.

 

Revenue from contracts with customers

The Group follows the principles of IFRS 15, 'Revenue from Contracts with Customers'; accordingly, revenue is recognised using the five-step model:

1.             Identify the contract;

2.             Identify the performance obligations in the contract;

3.             Determine the transaction price;

4.             Allocate the transaction price to the performance obligations in the contract; and

5.             Recognise revenue when or as performance obligations are satisfied.

 

Revenue is recognised either when the performance obligation in the contract has been performed (point in time recognition) or over time as control of the performance obligation is transferred to the customer. 

Revenue is derived from sales of software licenses and professional services including training and consultancy and transactional fees.

Revenue from software licenses

Revenue from both on premise and cloud-based software licensed products is recognised from the point at which the customer gains control and the right to use our software. The following key judgements have been made in relation to revenue recognition of software license:

•           This is right of use software due to the integral updates provided on a regular basis to keep the software relevant and, as a result, the licensed software revenue will be recognised over time rather than at a point in time;

•           The software license together with installation, regular updates and access to support services form a single performance obligation;

•           The transaction price is allocated to each distinct one year license period with annual increases being recognised in the year they apply; and

•           Discounts in relation to software licenses are recognised over the life of the contract.

 

This policy is consistent with the Company's products providing customers with a service through the delivery of, and access to, software solutions (Software-as-a-Service ("SaaS")), and results in revenue being recognised over the period that these services are delivered to customers.

Incremental costs directly attributable in securing the contract are charged equally over the life of the contract and as a consequence are matched to revenue recognised. Any deferred contract costs are included in both current and non-current trade and other receivables.

Revenue from professional services

Revenue from all professional services, including training and consulting services, is recognised when the performance obligation has been fulfilled and the services are provided. These services could be provided by a third party and are therefore considered to be separate performance obligations. Where professional services engagements contain material obligations, revenue is recognised when all the obligations under the engagement have been fulfilled. Where professional services engagements are provided on a fixed price basis, revenue is recognised based on the percentage complete of the relevant engagement. Percentage completion is estimated based on the total number of hours performed on the project compared to the total number of hours expected to complete the project.

'White-labelling' or other 'paid for development work' is generally provided on a fixed price basis and as such revenue is recognised based on the percentage completion or delivery of the relevant project. Where percentage completion is used it is estimated based on the total number of hours performed on the project compared to the total number of hours expected to complete the project. Where contracts underlying these projects contain material obligations, revenue is deferred and only recognised when all the obligations under the engagement have been fulfilled.

Revenue from transactional services

Transactional service fees are recognised at the point in time when the service is provided.

Should any contracts contain non-standard clauses, revenue recognition will be in accordance with the underlying contractual terms which will normally result in recognition of revenue being deferred until all material obligations are satisfied. The Group does not have any contracts where a financing component exists within the contract.

The excess of amounts invoiced over revenue recognised are included in deferred income. If the amount of revenue recognised exceeds the amount invoiced the excess is included within accrued income.

Contract assets include sales commissions and prepaid royalties. Contract liabilities include unpaid sales commissions on contracts sold and deferred income relating to license fees billed in advance and recognised over time.

Exceptional items

The Group defines exceptional items as transactions (including costs incurred by the Group) which relate to non-recurring events. These are disclosed separately where it is considered it provides additional useful information to the users of the financial statements.

Taxation

The charge for taxation is based on the profit for the year as adjusted for items which are non-assessable or disallowable. It is calculated using taxation rates that have been enacted or substantively enacted by the Balance Sheet date.

Deferred taxation is computed using the liability method. Under this method, deferred tax assets and liabilities are determined based on temporary differences between the financial reporting and tax bases of assets and liabilities. They are measured using enacted rates and laws that will be in effect when the differences are expected to reverse. Deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction that at the time of the transaction does not affect accounting or taxable profit or loss. Deferred tax assets are recognised to the extent that it is probable that future taxable profits will arise against which the temporary differences will be utilised.

Deferred tax is provided on temporary differences arising on investments in subsidiaries except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets and liabilities arising in the same tax jurisdiction are offset.

In the UK and the US, the Group is entitled to a tax deduction for amounts treated as compensation on exercise of certain employee share options and on the vesting of conditional share awards under each jurisdiction's tax rules. "Share-based payments" are recorded in the Group's Consolidated Statement of Comprehensive Income over the period from the grant date to the vesting date of the relevant options and conditional share awards. As there is a temporary difference between the accounting and tax bases a deferred tax asset is recorded. The deferred tax asset arising is calculated by comparing the estimated amount of tax deduction to be obtained in the future (based on the Company's share price at the Balance Sheet date) with the cumulative amount of the compensation expense recorded in the Consolidated Statement of Comprehensive Income. If the amount of estimated future tax deduction exceeds the cumulative amount of the remuneration expense at the statutory rate, the excess is recorded directly in equity against retained earnings.

Intangible Assets

(a)   Goodwill

 

Goodwill arising on consolidation represents the excess of the cost of acquisition over the fair value of the identifiable assets and liabilities of a subsidiary at the date of acquisition. Goodwill is recognised as a non-current asset in accordance with IFRS 3 and is not amortised. 

After initial recognition, goodwill is stated at cost less any accumulated impairment losses. It is tested at least annually for impairment. Any impairment loss is recognised in the Consolidated Statement of Comprehensive Income.

Goodwill is allocated to cash generating units for the purpose of impairment testing. The allocation is made to those cash-generating units that are expected to benefit from the business combination in which the goodwill arose.

(b)   Proprietary software

 

Proprietary software acquired in a business combination is recognised at fair value at the acquisition date. Proprietary software has a finite useful economic life and is carried at cost less accumulated amortisation. Amortisation is calculated using the straight-line method to allocate the associated costs over their estimated useful lives of five years.

(c)    Customer relationships

 

Contractual customer relationships acquired in a business combination are recognised at fair value at the acquisition date. The contractual customer relationships have a finite useful economic life and are carried at cost less accumulated amortisation. Amortisation is calculated using the straight-line method over the expected life of the customer relationship which has been assessed as up to fifteen years.

(d)  Development costs

 

Expenditure associated with developing and maintaining the Group's software products is recognised as incurred. 

Development expenditure is capitalised where new product development projects

•              are technically feasible;

•              production and sale is intended;

•              a market exists;

•              expenditure can be measured reliably; and

•              sufficient resources are available to complete such projects.

 

Costs are capitalised until initial commercialisation of the product, and thereafter amortised on a straight-line basis over its estimated useful life, which has been assessed as between five and ten years. Expenditure not meeting the above criteria is expensed as incurred. 

Employee costs and specific third party costs involved with the development of the software are included within amounts capitalised.

(e)  Computer software

 

Costs associated with acquiring computer software and licensed to use technology are capitalised as incurred, except cloud computing software where the Group does not have control of the software which is expensed as incurred. They are amortised on a straight-line basis over their useful economic life which is typically three to five years.

 

(f)    Trademarks

 

Trademarks acquired in a business combination are initially measured at fair value at the acquisition date. Trademarks have a finite useful economic life and are carried at cost less accumulated amortisation. Amortisation is calculated using the straight-line method to allocate the associated costs over their estimated useful lives of up to ten years.

Impairment of non-financial assets

At each reporting date the Group considers the carrying amount of its tangible and intangible assets including goodwill to determine whether there is any indication that those assets have suffered an impairment loss. If there is such an indication, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any) through determining the value in use of the cash generating unit that the asset relates to.

Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash generating unit to which the asset belongs.

If the recoverable amount of an asset is estimated to be less than its carrying amount, the impairment loss is recognised as an expense.

Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset. A reversal of an impairment loss is recognised as income immediately. Impairment losses relating to goodwill are not reversed.

 

2.    Critical accounting estimates and judgements

 

The preparation of financial statements in accordance with IFRS requires the Directors to make critical accounting estimates and judgements that affect the amounts reported in the financial statements and accompanying notes. The estimates and assumptions that have a significant risk of causing material adjustment to the carrying value of assets and liabilities within the next financial year are discussed below:

 

Critical Estimates

·    Impairment assessment: the Group tests annually whether Goodwill has suffered any impairment and for other assets including acquired intangibles at any point where there are indications of impairment. This requires an estimation of the recoverable amount of the applicable cash generating unit to which the Goodwill and other assets relate. Estimating the recoverable amount requires the Group to make an estimate of the expected future cash flows from the specific cash generating unit using certain key assumptions including growth rates and a discount rate. These assumptions result in no impairment in Goodwill.

 

Other Estimates

·    Useful lives of intangible assets: in assessing useful life, the Group uses careful judgement based on past experience, advances in product development and also best practice. The Group amortises intangible assets over a period of up to 15 years.

 

Judgements

·    Capitalisation of development expenditure: the Group capitalises development costs provided the aforementioned conditions have been met. Consequently, the Directors require to continually assess the commercial potential of each product in development and its useful life following launch. 

·    Provisions for income taxes: the Group is subject to tax in the UK and US and this requires the Directors to regularly assess the appropriateness of its transfer pricing policy.

·    Revenue recognition: in determining the amount of revenue and related balance sheet items to be recognised in the year, management is required to make a number of judgements and assumptions. These are detailed in Note 1 Revenue from contracts with customers.

 

3.    Revenue

 

The chief operating decision maker has been identified as the Board of Directors. The Group revenue is derived almost entirely from the sale of software licenses and professional services (including installation) to hospitals and health systems within the US. Consequently, the Board has determined that Group supplies only one geographical market place and as such revenue is presented in line with management information without the need for additional segmental analysis. All of the Group assets are located in the United States of America with the exception of the Parent Company's, the net assets of which are disclosed separately on the Company Balance Sheet and are located in the United Kingdom.

	2024	2023
	$'000	$'000
Software licensing	138,687	143,125
Professional services - recurring	4,907	4,533
Transactional revenue	24,708	16,018
Contracted recurring revenue	168,302	163,676
Professional services - non-recurring	7,174	9,208
Platform revenues - non-recurring	13,792	1,134
Total revenue	189,268	174,018

 

Contract assets

The Group has recognised the following assets related to contracts with customers:

	2024	2023
	$'000	$'000
Prepaid commissions and royalties < 1 year	2,485	2,206
Prepaid commissions and royalties > 1 year	3,235	2,758
Total contract assets	5,720	4,964

 

Contract assets are included within deferred contract costs and prepayments in the Balance Sheet. Costs recognised during the year in relation to assets at 30 June 2023 were $2.2m.

Contract liabilities

The following table shows the total contract liabilities from software license and professional service contracts:

 

	2024	2023
	$'000	$'000
Software licensing	56,759	47,037
Professional services	10,058	5,481
Total contract liabilities	66,817	52,518

 

Contract liabilities are included within deferred income in the Balance Sheet.

Revenue of $49.4m was recognised during the year in relation to contract liabilities as of 30 June 2023.

The following table shows the aggregate transaction price allocated to performance obligations that are partially or fully unsatisfied from software license and professional service contracts. 

 

	Total unsatisfied	Expected recognition
	performance obligations	< 1 year	1 to 2 years	2 to 3 years	> 3 years
Revenue expected to be recognised	$'000	$'000	$'000	$'000	$'000
At 30 June 2024
-    Software	301,215	119,167	93,304	57,086	31,658
-    Professional services	19,493	12,947	3,309	1,847	1,390
Total at 30 June 2024	320,708	132,114	96,613	58,933	33,048
At 30 June 2023
-    Software	348,919	124,279	99,613	67,757	57,270
-    Professional services	14,376	8,313	3,207	1,981	875
Total at 30 June 2023	363,295	132,592	102,820	69,738	58,145

 

Revenue of $132.6m was recognised during the year in relation to unsatisfied performance obligations as of 30 June 2023.

The majority of these performance obligations are unbilled at the Balance Sheet date and therefore not reflected in these financial statements.

 

4.    Operating profit

 

The following items have been included in arriving at operating profit:

 

	2024	2023
	$'000	$'000
Employee costs	92,496	87,755
Employee costs capitalised	(9,811)	(10,261)
Depreciation of property, plant and equipment	3,293	3,451
Amortisation of intangible assets - other	9,169	7,781
Amortisation of intangible assets - acquired intangibles	20,921	20,930
Impairment of trade receivables	1,822	463
Exceptional items*	675	510
Operating lease rents for premises	12	-

 

* Exceptional items relate to integration costs associated with the purchase of Sentry Data Systems, Inc. ("Sentry")

Included in reaching operating profit is the movement in the provision for impairment of trade receivables during the year of a $1,164,000 charge, plus $53,000 net impairment credit for trade receivables recognised directly in operating costs.

 

5.    Tax on profit on ordinary activities

	2024	2023
	$'000	$'000
Profit on ordinary activities before tax	15,747	13,085
Current tax
Corporation tax on profits of the year	10,715	5,596
Adjustments for prior years	65	1,080
Total current tax charge	10,780	6,676
Deferred tax
Deferred tax for current year	(6,097)	(3,324)
Adjustments for prior years	(630)	485
Change in UK tax rate	(9)	16
Total deferred tax credit	(6,736)	(2,823)
Tax on profit on ordinary activities	4,044	3,853
The difference between the current tax charge on ordinary activities for the year, reported in the Consolidated Statement of Comprehensive Income, and the current tax charge that would result from applying a relevant standard rate of tax to the profit on ordinary activities before tax, is explained as follows:
Profit on ordinary activities at the UK tax rate 25% (FY23 20.5%)	3,937	2,682
Effects of:
Adjustment for prior years	(565)	1,566
Change in tax rate on opening deferred tax balance	(9)	23
Additional US taxes on profits 25% (FY23: 25%)	229	392
Internally developed software	(235)	628
Expenses not deductible for tax purposes	656	246
Income not taxable in the year	(748)	(1,004)
Spot rate remeasurement	(27)	240
Movement in/ (use of) tax losses	1,018	(427)
(Deduction)/expense on share plan charges	(271)	(535)
Other	59	42
Total tax charge	4,044	3,853

 

 

6.    Dividends

 

The dividends paid during the year were as follows:-

	2024	2023
	$'000	$'000
Final dividend, re 30 June 2023 - 20.19 cents (16.0 pence)/share	7,046	6,645
Interim dividend, re 30 June 2024 - 16.51 cents (13.0 pence)/share	5,752	5,474
Total dividends paid to Company shareholders in the year	12,798	12,119

 

Prior year:

Final dividend 18.80 cents (15.5 pence)/share

Interim dividend 15.13 cents (12.5 pence)/share

The proposed final dividend 20.23 cents (16 pence), as noted in the Financial Review section of the Strategic Report, for the year ended 30 June 2024 is subject to approval by the shareholders at the Annual General Meeting and has not been included as a liability in these financial statements.

 

7.    Earnings per share

 

The calculation of basic and diluted earnings per share is based on the following data:

 

Weighted average number of shares

	2024	2023
	No. of Shares	No. of Shares
	000s	000s
Weighted average number of Ordinary Shares for the purpose of basic earnings per share (excluding own shares held)	34,957	35,146
Effect of dilutive potential Ordinary Shares: share options and LTIPs	335	289
Weighted average number of Ordinary Shares for the purpose of diluted earnings per share	35,292	35,435

 

The Group has one category of dilutive potential Ordinary shares, being those granted to Directors and employees under the employee share plans.

Shares held by the Employee Benefit Trust and Treasury Shares held directly by the Company are excluded from the weighted average number of Ordinary shares for the purposes of basic earnings per share.

Profit for year

	2024	2023
	$'000	$'000
Profit for the year attributable to equity holders of the parent	11,703	9,232
Acquisition integration costs (tax adjusted)	507	405
Amortisation of acquired intangibles (tax adjusted)	20,921	20,930
Adjusted profit for the year attributable to equity holders of the parent	33,131	30,567

 

Basic earnings per share are calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of shares in issue during the year.

For diluted earnings per share, the weighted average number of Ordinary shares calculated above is adjusted to assume conversion of all dilutive potential Ordinary shares.

Earnings per share

	2024	2023
	cents	cents
Basic EPS	33.5	26.3
Diluted EPS	33.2	26.1
Adjusted basic EPS	94.8	87.0
Adjusted diluted EPS	93.9	86.3

 

 

8.    Intangible assets

 

 

	Goodwill	Customer	Proprietary		Development		Computer
		Relationships	Software	Trademarks	Costs		Software		Total
	$'000	$'000	$'000	$'000	$'000		$'000		$'000
Cost
At 1 July 2023	235,486	153,964	52,724	5,000	71,056		4,461		522,691
Additions	-	-	-	-	15,761		5		15,766
Disposals	-	-	-	-	-		(220)		(220)
At 30 June 2024	235,486	153,964	52,724	5,000	86,817		4,246		538,237
Accumulated amortisation and impairment
At 1 July 2023	250	22,773	21,494	1,094	22,084		3,203		70,898
Charge for the year	-	10,066	10,300	555	8,061		1,108		30,090
Amortisation on disposal	-	-	-	-	-		(220)		(220)
At 30 June 2024	250	32,839	31,794	1,649	30,145		4,091		100,768
Net Book Value at 30 June 2024	235,236	121,125	20,930	3,351	56,672		155		437,469
Cost
At 1 July 2022	235,486	153,964	52,724	5,000	56,096		4,840		508,110
Additions	-	-	-	-	14,960		71		15,031
Reclassification	-	-	-	-	-		(450)		(450)
At 30 June 2023	235,486	153,964	52,724	5,000	71,056		4,461		522,691
Accumulated amortisation and impairment
At 1 July 2022	250	12,706	11,187	538	15,607		1,899		42,187
Charge for the year	-	10,067	10,307	556	6,477		1,304		28,711
At 30 June 2023	250	22,773	21,494	1,094	22,084		3,203		70,898
Net Book Value at 30 June 2023	235,236	131,191	31,230	3,906	48,972		1,258		451,793

 

In accordance with the Group's accounting policy, the carrying values of Goodwill and other intangible assets are reviewed for impairment annually or more frequently if events or changes in circumstances indicate that the asset might be impaired. Goodwill arose on the acquisition of subsidiaries and is split into the following CGUs:

	2024	2023
	$'000	$'000
Craneware InSight	11,188	11,188
Sentry	224,048	224,048
Total Goodwill	235,236	235,236

 

Craneware InSight

 

The carrying values are assessed for impairment purposes by calculating the value in use of the core Craneware business cash generating unit. This is the lowest level of which there are separately identifiable cash flows to assess the Goodwill acquired as part of the Craneware InSight, Inc. purchase.

 

Sentry

 

The carrying values are assessed for impairment purposes by calculating the value in use of the Sentry business cash generating unit. This is the lowest level of which there are separately identifiable cash flows to assess the Goodwill acquired as part of the Sentry acquisition.

 

The key assumptions in assessing value in use for the CGU's are:

 

	Growth rate in perpetuity		Post-tax discount rate
	2024	2023	2024	2023
Craneware InSight	2.0%	2.0%	9.0%	9.0%
Sentry	2.0%	2.0%	9.0%	9.0%

 

 

After the initial term of 5 years, the Group applied a growth rate for each CGU. These take into consideration the customer bases and expected revenue commitments from it, anticipated additional sales to both existing and new customers and market trends currently seen and those expected in the future.

 

The Group has assessed events and circumstances in the year and the assets and liabilities of the business cash-generating unit; this assessment has confirmed that no significant events or circumstances occurred in the year and that the assets and liabilities showed no significant change from last year.

 

After review of future forecasts, the Group confirmed the growth forecast for the next five years showed that the recoverable amounts would continue to exceed the carrying values. There are no reasonable possible changes in assumptions that would result in an impairment in the Craneware CGU and certain disclosures, including sensitivities, relating to goodwill have not been made for this CGU given the significant headroom on impairment testing. For the Sentry CGU the impairment test was most sensitive to the discount rate assumption. There is no impairment, with all other assumptions remaining the same, with a discount rate up to 17%. There are no reasonable possible changes in any of the other assumptions for this CGU that would result in an impairment.

 

9.   Trade and other receivables

	2024	2023
	$'000	$'000
Trade receivables	48,007	27,594
Less: provision for impairment of trade receivables	(2,763)	(3,421)
Net trade receivables	45,244	24,173
Other receivables	1,862	1,024
Current tax receivable	1,921	-
Prepayments and accrued income	7,787	8,270
Deferred contract costs	5,458	4,715
	62,272	38,182
Less non-current receivables:
Other debtors	(399)	-
Deferred contract costs	(3,235)	(2,758)
Current portion	58,638	35,424

 

10.  Deferred tax

 

Deferred tax is calculated in full on the temporary differences under the liability method using a rate of tax of 25% (FY23: 25%) in the UK and 25% (FY23: 25%) in the US including a provision for state taxes.

 

 

	2024	2023
	$'000	$'000
At 1 July	(41,337)	(44,417)
Credit to comprehensive income	10,522	4,084
Transfer direct to equity	(1,893)	(1,004)
At 30 June	(32,708)	(41,337)

 

 

The movements in deferred tax assets and liabilities during the year are shown below. Deferred tax assets and liabilities are only offset where there is a legally enforceable right of offset and there is an intention to settle the balances net. The balances for the Group are analysed as follows:

 

	2024	2023
	$'000	$'000
Net deferred tax asset	733	-
Net deferred tax liability	(33,441)	(41,337)
At 30 June	(32,708)	(41,337)

 

 

 

Deferred tax assets - recognised

 

	Short term timing differences $'000	Losses $'000	Share options $'000	Total $'000
A 1 July 2023	4,511	428	2,357	7,296
(Charged)/ credited to comprehensive income	(1,901)	(38)	4,050	2,111
Charged to equity	-	-	(1,893)	(1,893)
Total provided at 30 June 2024	2,610	390	4,514	7,514
At 1 July 2022	3,926	293	3,201	7,420
Credited to comprehensive income	585	135	160	880
Charged to equity	-	-	(1,004)	(1,004)
Total provided at 30 June 2023	4,511	428	2,357	7,296

 

 

Deferred tax liabilities - recognised

 

		Long term timing differences $'000	Accelerated tax depreciation $'000	Total $'000
A 1 July 2023		(44,378)	(4,255)	(48,633)
Credited to comprehensive income		6,399	2,012	8,411
Total provided at 30 June 2024		(37,979)	(2,243)	(40,222)
At 1 July 2022		(47,921)	(3,916)	(51,837)
Credited/ (charged) to comprehensive income		3,543	(339)	3,204
Total provided at 30 June 2023		(44,378)	(4,255)	(48,633)

 

 

The analysis of the deferred tax assets and liabilities is as follows:

	2024	2023
	$'000	$'000
Deferred tax assets:
Deferred tax assets to be recovered after more than 1 year	7,124	6,867
Deferred tax assets to be recovered within 1 year	390	429
	7,514	7,296
Deferred tax liabilities:
Deferred tax liabilities to be recovered after more than 1 year	(40,222)	(43,633)
Deferred tax liabilities to be recovered within 1 year	-	(5,000)
	(40,222)	(48,633)
Net deferred tax liability	(32,708)	(41,337)

 

 

11.    Cash generated from operations

 

Reconciliation of profit before taxation to net cash generated from operations
	2024	2023
	$'000	$'000
Profit before tax	15,747	13,085
Finance income	(1,143)	(214)
Finance expense	5,130	6,357
Depreciation on property, plant and equipment	3,293	3,451
Amortisation on intangible assets - other	9,169	7,781
Amortisation on intangible assets - acquired intangibles	20,921	20,930
Loss on disposals	113	7
Share-based payments	4,487	2,992
Movements in working capital:
(Increase)/ decrease in trade and other receivables	(21,183)	1,116
Increase/ (decrease) in trade and other payables	14,999	(5,462)
Increase in amounts held on behalf of customers	2,170	50,548
Cash generated from operations	53,703	100,591

 

12. Borrowings

 

The debt facility comprises a term loan of $16m (FY23: $24m) which is repayable in quarterly instalments over 5 years up to 30 June 2026, and a revolving loan facility of $100m of which $20m (FY23: $60m) is drawn down and which expires on 7 June 2026. During the year, $8m (FY23: $8m) was repaid on the term loan and the amount drawn down on the revolving credit facility was reduced by $40m (FY23: $20m).

Interest is charged on the facility on a daily basis at margin and compounded reference rate. The margin is related to the leverage of the Group as defined in the loan agreement. As the leverage of the Group strengthens, the applicable margin reduces.

 

The facility is secured by a Scots law floating charge granted by the Company, an English law debenture granted by the Company and a New York law security agreement to which the Company and certain of its subsidiaries are parties. The securities granted by the Company and the relevant subsidiaries provide security over all assets of the Company and specified assets of the Group.

 

	2024	2023
	$'000	$'000
Current interest bearing borrowings	8,000	8,000
Non current interest bearing borrowings	27,372	75,033
Total	35,372	83,033

 

Arrangement fees paid in advance of the setting up of the facility are being recognised over the life of the facility in operating costs. The remaining balance of unamortised fees and interest at 30 June 2024 is $0.67m (FY23: $0.97m).

 

See Note 15 for a reconciliation between borrowings, cash and net borrowings.

 

Loan covenants

 

Under the facilities the Group is required to meet quarterly covenants tests in respect of:

a)     Adjusted leverage which is the ratio of total net debt on the last day of the relevant period to adjusted EBITDA.

b)    Cash flow cover which is the ratio of cashflow to net finance charges in respect of the relevant period.

 

The Group complied with these ratios throughout the reporting period. 

 

Financing arrangements

 

The Group's undrawn borrowing facilities were as follows:

 

	2024	2023
	$'000	$'000
Revolving facility	80,000	40,000
Undrawn borrowing facilities	80,000	40,000

 

 

13. Trade and other payables

	2024	2023
	$'000	$'000
Trade payables	3,725	4,005
Lease creditor due < 1 year	952	1,389
Other provisions < 1 year	512	420
Social security and PAYE	2,268	1,299
Other creditors	156	237
Accruals	9,367	8,466
Advanced payments	254	135
Trade and other payables	17,234	15,951

 

Other provisions relate to employer taxes due in relation to employee share plan awards of $512,000 (FY23: $59,000 for 2007 Share Option Plan only). There is a corresponding receivable of $218,000 included in other debtors (FY23: nil). Timing of the use of this provision is entirely dependent on employees requesting to exercise share awards. The provision for potential sales tax due in relation to audits in respect of Sentry for periods prior to the acquisition from the prior year has been utilised in full during the year (FY23: $362,000).

 

14. Subsequent events

 

On 23^rd August 2024 the Company's wholly owned subsidiary, Craneware US Holdings, Inc. declared a dividend of $18m payable to the Company with a resulting increase of $18m to the Company's retained earnings.

 

15. Alternative performance measures

 

The Group's performance is assessed using a number of financial measures which are not defined under IFRS and are therefore non-GAAP (alternative) performance measures. 

 

The Directors believe these measures enable the reader to focus on what the Group regard as a more reliable indicator of the underlying performance of the Group since they exclude items which are not reflective of the normal course of business, accounting estimates and non-cash items. The adjustments made are consistent and comparable with other similar companies. Alternative performance measures may be viewed as having limitations due to certain items being excluded that would be included in GAAP measures.

 

Adjusted EBITDA

 

Adjusted EBITDA refers to earnings before interest, tax, depreciation, amortisation, exceptional items and share based payments.

 

		2024	2023
		$'000	$'000
Operating profit		19,734	19,228
Depreciation of property, plant and equipment		3,293	3,451
Amortisation of intangible assets - other		9,169	7,781
Amortisation of intangible assets - acquired intangibles		20,921	20,930
Share based payments		4,487	2,992
Exceptional items - integration costs		675	510
Adjusted EBITDA		58,279	54,892

 

 

Adjusted earnings per share (EPS)

 

Adjusted earnings per share (EPS) calculations allow for the tax adjusted acquisition costs and share related transactions together with amortisation on acquired intangibles via business combinations. See Note 7 for the calculation.

 

Operating Cash Conversion

 

Operating Cash Conversion is calculated as cash generated from operations (as per Note 11), adjusted to exclude cash payments for exceptional items and movements in cash held on behalf of customers, divided by adjusted EBITDA.

 

		2024	2023
		$'000	$'000
Cash generated from operations (Note 11)		53,703	100,591
Total exceptional items		675	510
Movement in amounts held on behalf of customers (Note 11)		(2,170)	(50,548)
Accrued exceptional items at the start of the year paid in the current year		92	60
Accrued exceptional items at the end of the year		-	(92)
Trade payable exceptional items at the start of the year paid in the current year		-	12
Cash generated from operations before exceptional items		52,300	50,533
Adjusted EBITDA		58,279	54,892
Operating Cash Conversion		89.7%	92.1%

 

 

Adjusted PBT

 

Adjusted PBT refers to profit before tax adjusted for exceptional items and amortisation of acquired intangibles.

 

		2024	2023
		$'000	$'000
Profit before taxation		15,747	13,085
Amortisation of intangible assets - acquired intangibles		20,921	20,930
Exceptional items - integration costs		675	510
Adjusted PBT		37,343	34,525

 

Net Borrowings

 

Net Borrowings refers to net balance of short term borrowings, long term borrowings and cash and cash equivalents.

 

		2024	2023
		$'000	$'000
Cash and cash equivalents		34,589	78,537
Borrowings (Note 12)		(35,372)	(83,033)
Net Borrowings		(783)	(4,496)

 

Lease liabilities are excluded from borrowings for the purpose of net borrowings.

 

Total Sales

 

Total Sales refer to the total value of contracts signed in the year, consisting of New Sales and Renewals.

 

New Sales

 

New Sales refer to the total value of contracts with new customers or new products to existing customers at some time in their underlying contract.

 

Annual Recurring Revenue

 

Annual Recurring Revenue is the annual value of subscription license and related recurring revenues as at 30 June 2024 that are subject to underlying contracts and where revenue is being recognised at the reporting date.

 

Net Revenue Retention

 

Net Revenue Retention is the percentage of revenue retained from existing customers over the measurement period, taking into account both churn and expansion sales.

 

Revenue Growth

 

Revenue Growth is the increase in Revenue in the current year compared to the prior year expressed as a percentage of the previous year Revenue.