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As profit and income surges

Craneware in ‘stronger position’ says chief executive

Confident: Keith Neilson (by Terry Murden)
Confident: Keith Neilson (by Terry Murden)

Scottish software company Craneware is poised for even bigger growth than it anticipated when it joined the stock market nine years ago, according to its chief executive.

The Edinburgh-based company is cashing in on surging demand for its solutions from US healthcare providers.

Unveiling the group’s third consecutive year of record sales and a 10% rise in annual pre-tax profits, CEO Keith Neilson said:  “Craneware is in a stronger position than ever and we are passionate about the opportunity ahead.  

“The double digit growth in our reported revenue and adjusted EBITDA are only beginning to reflect the record levels of sales which began three years ago. Importantly, the investment we are making in our product suite mean our market opportunity is now several times larger than it was when we joined AIM in 2007.

“The market continues to evolve as we anticipated. US healthcare providers are seeking the solutions to address the challenges the new value based reimbursement environment brings to them.”

 He added: “We are confident that the ongoing investment we are making, combined with our continuing sales successes, mean we are well positioned to deliver continued future growth as well as increasing stakeholder value.”

He told Daily Business this morning that the company had decided against making an acquisition in the cost analytics business and instead hired a team of international experts to build its own operation.

Chairman George Elliott said: “The excellent sales performances over the last three years, the clear strategy for growth and the strong financial position of the company provide the board with confidence in the success of Craneware in the year ahead.”

The company announced that co-founder Gordon Craig has decided after 16 years to retire as CTO and take on a salaried advisory role within the company. Daily Business has learned that his successor is Marty Smith, who will join the company next week from Fortune 10 healthcare company McKesson Health where he has been a VP (and Fellow) of R&D. 

Neil Heywood who has been a non-executive director for 14 years has decided not to stand for re-election at the forthcoming AGM. 

Headcount in Edinburgh has risen by 20% over the year to 120.

Financial Highlights

  • Total Contract Value in the year continues at record levels of $82.3m (FY15: $72.9m)
    • new sales increased by 63% to $58.6m (FY15: $35.9m)
    • renewal rate remains above 100% by dollar value
  • Revenue increased 11% to $49.8m (FY15: $44.8m)
  • Adjusted EBITDA1.  increased by 10% to $15.9m (FY15: $14.4m)
  • Profit before tax increased by 10% to $13.9m (FY15: $12.5m)
  • Basic adjusted EPS increased 13% to $0.429 (FY15: $0.378) and adjusted diluted EPS has increased to $0.423 (FY15: $0.375)
  • Continued operating cash conversion above 100% of Adjusted EBITDA
  • Cash at year-end of $48.8m (FY15: $41.8m) after payment of $6m dividend to shareholders
  • Proposed final dividend of 9p (12 cents) per share giving a total dividend for the year of 16.5p (22 cents) per share (FY15: 14p (22 cents) per share)AnalysisThe shares have enjoyed a huge uplift over the summer, up by 30% in the last three months and 64% over the year.
    Reaction

    Paraag Amin, an analyst at Peel Hunt, said: “We believe that Craneware is extremely well positioned to benefit from this dynamic for the medium and long term. The company is underpinned by long-term recurring revenues (average five-year contracts) and a strong balance sheet.”

    He said the company will grow faster than the market, thereby winning market share, and is forecasting a price of 1,335p.

    The shares opened up 25p higher at 1,055p before closing at 1,045p..

 

 

 



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