Craneware Limited
Annual Report and Financial Statements
For the year ended 30 June 2007
Registered Number SC196331
Craneware Limited
Annual Report and Financial Statements
for the year ended 30 June 2007
Contents
Directors and Officials....................................................................................................................................... 1
Directors' report for the year ended 30 June 2007 .......................................................................................... 2-4
Independent auditors' report to the members of Craneware Limited .............................................................. 5-6
Consolidated Income Statement for the year ended 30 June 2007 .................................................................... 7
Consolidated Statement of Recognised Income and Expense .......................................................................... 7
Consolidated Balance Sheet as at 30 June 2007 ................................................................................................ 8
Company Balance Sheet as at 30 June 2007...................................................................................................... 9
Consolidated cashflow statement for the year ended 30 June 2007................................................................. 10
Accounting Policies .................................................................................................................................... 11-15
Notes to the Accounts ................................................................................................................................. 15-32
Craneware Limited
Directors and Officials
Directors
G R Elliott (appointed 10 August 2007)
K Neilson
W G Craig
N P Heywood
D W Paterson
A M McDougall
J R Wilson
Secretary and registered office
A M McDougall
Rosebank Business Park
Kirkton Campus
Livingston
EH54 7EJ
Bankers
The Royal Bank of Scotland plc
36 St Andrew Square
Edinburgh
EH2 2YB
Registered Auditors
PricewaterhouseCoopers LLP
Erskine House
68-73 Queen Street
Edinburgh
EH2 4NH
Solicitors
McGrigors
Princes Exchange
1 Earl Grey Street
Edinburgh
EH3 9AQ
1
Craneware Limited
Directors' report for the year ended 30 June 2007
The directors present herewith their report and the audited financial statements for the year ended 30 June
2007. These are the Company’s first accounts prepared in accordance with IFRS for the year ending 30 June
2007.
Business Review and Principal Activities
The Group's principal activity continues to be the development, licensing and post contract support of computer
software for the healthcare industry.
The Group has continued to enhance its product range and functionality, whilst increasing the number of
hospitals using its software products within its market in the USA. The directors are satisfied with the
performance of the Company and Group for the year and expect this growth, as set out below, to continue in
future years.
Principal Risks and Uncertainties and Key Performance Indicators (“KPIs”)
The directors consider that the US healthcare software market is likely to continue to provide growth
opportunities for the Company’s existing products and development pipeline. In addition, and with a high
contract renewal rate, the Company’s predominantly annuity-based pricing models and revenue recognition
approach gives a high degree of revenue visibility and earnings growth predictability.
Nevertheless the market continues to be very competitive following a period of M&A activity and new product
offerings. The Company therefore requires to remain at the forefront of product innovation and delivery,
through a combination of in-house development whilst assessing opportunistic acquisition. This requires the
recruitment, retention, and reward of skilled staff, alongside a responsiveness to opportunities as they arise.
With approximately one third of its cost denominated in Sterling, a continuing weak US $ will have an effect
on earnings growth.
The directors consider that the Group’s risk profile is not significantly different from other companies of its
size, and continue to monitor any risks and uncertainties as they arise, and take whatever action is considered
necessary to minimise the Group’s exposure. The main financial risks are detailed in Note 3 to the financial
statements.
The directors consider that the following operating and financial KPIs are useful to give an understanding of
the development, performance, and position of the business:
Hospital sites (cum)
Contract renewal rate (cum)
Value of contracts written (cum)
Revenue
Profit/(loss) before share based
payments and taxation
2003
197
-
2004
376
92%
2005
455
84%
2006
631
84%
2007
801
88%
$m's
12.5
$m's
33.2
$m's
46.0
$m's
61.1
$m's
81.8
2.8
6.7
10.5
13.2
15.1
(0.6)
1.5
2.7
3.6
4.0
Cash and receivables less payables
4.6
8.2
8.9
10.5
11.4
Deferred income
Further contractual entitlements
Future revenue under contract
4.9
4.2
9.1
9.6
13.4
23.1
10.7
14.7
25.4
9.5
17.8
27.3
9.5
23.4
32.9
2
Craneware Limited
Directors’ report for the year ended 30 June 2007 (continued)
Dividends
An interim dividend of $1,000,000 was paid in the year (2006: $nil). The directors do not recommend the
payment of a final dividend (2006: $nil).
Going Concern
The directors have reviewed the financial forecast for the group and consider that it is appropriate to prepare
the financial statements on the going concern basis.
Research and development activities
The Group continues to develop software products for the US healthcare industry.
Directors and their interests
The directors of the Company are listed on page 1. KJ Lyon, who had served as chairman in the year, resigned
on 11 July 2007, and G R Elliott was appointed as chairman on 10 August 2007.
The interests of the directors in the Ordinary shares of the Company were as follows:-
K Neilson
W G Craig
K Neilson
W G Craig
D W Paterson
A M McDougall
J R Wilson
2007
12,777
12,777
25,554
2006
12,777
12,777
25,554
2007
2007
2006
Ordinary share Incentive share Ordinary share
options
-
-
833
690
690
2,213
options
-
-
833
690
690
2,213
options
-
-
667
260
110
1,037
2006
Incentive share
options
-
-
667
260
110
1,037
Note 8 shows the charge relating to the granting of share options with the criteria used for its calculation being
shown in Note 9.
The Company has an obligation to grant options over 500 Ordinary shares to J G Watson, a former executive
director.
Employee Involvement
The general policy of the Company is to welcome employee involvement as far as it is reasonably practicable.
Employees are kept informed by meeting, regular updates and web page postings.
Employment of Disabled Persons
Applications for employment by disabled persons are always fully considered, bearing in mind the respective
aptitudes and abilities of the applicant concerned. In the event of members of staff becoming disabled every effort
is made to ensure that their employment with the Group continues and the appropriate training is arranged. It is
the policy of the company that the training, career development and promotion of a disabled person should, as far
as possible, be identical to that of a person who does not suffer from a disability.
Statement of Directors’ Responsibilities
The directors are responsible for preparing the Annual Report and the financial statements in accordance with
applicable law and regulations.
3
Craneware Limited
Directors’ report for the year ended 30 June 2007 (continued)
Company law requires the directors to prepare financial statements for each financial year that give a true and
fair view of the state of affairs of the Company and the Group. Under that law the directors have elected to
prepare the financial statements in accordance with International Financial Reporting Standards (IFRSs) as
adopted by the European Union. In preparing those financial statements, the directors are required to:
• Select suitable accounting policies and apply them consistently;
• Make judgements and estimates that are reasonable and prudent;
• State whether applicable accounting standards have been followed, subject to any material departures
disclosed and explained in the financial statements; and
• Prepare the financial statements on the going concern basis, unless it is inappropriate to presume that
the Group and Company will continue in business
The directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at
any time the financial position of the company and the group and for ensuring that the financial statements
comply with the Companies Act 1985. They are also responsible for safeguarding the assets of the Group and
hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
Creditor Payment Policy
It is company policy to settle all debts with its creditors on a timely basis, taking account of the credit period
given by each supplier. The company’s average payment period at 30 June 2007 was 29 days (2006: 14 days).
Auditors and Disclosure of Information to Auditors
Each director, as at the date of this report, has confirmed that insofar as they are aware there is no relevant audit
information (that is, information needed by the Company’s auditors in connection with preparing their report) of
which the Company’s auditors are unaware, and they have taken all the steps that they ought to have taken as a
director in order to make themselves aware of any relevant audit information and to establish that the Company’s
auditors are aware of that information.
A resolution to reappoint PricewaterhouseCoopers LLP as auditors will be proposed at the annual general
meeting.
On behalf of the Board
A M McDougall
Director and Company Secretary
21 August 2007
4
Craneware Limited
Independent auditors' report to the members of Craneware Limited
We have audited the group and parent company financial statements of Craneware Limited for the year ended
30 June 2007 which comprise the Group Income Statement, the Group Statement of Recognised Income and
Expense, the Group and Company Balance Sheets, the Group Cash Flow Statement and the related notes.
These financial statements have been prepared under the accounting policies set out therein.
Respective responsibilities of directors and auditors
The directors’ responsibilities for preparing the Annual Report and the financial statements in accordance with
applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union are
set out in the Statement of Directors’ Responsibilities.
Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory
requirements and International Standards on Auditing (UK and Ireland). This report, including the opinion,
has been prepared for and only for the company’s members as a body in accordance with Section 235 of the
Companies Act 1985 and for no other purpose. We do not, in giving this opinion, accept or assume
responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it
may come save where expressly agreed by our prior consent in writing.
We report to you our opinion as to whether the financial statements give a true and fair view and are properly
prepared in accordance with the Companies Act 1985. We report to you if, in our opinion, the information
given in the Directors' Report is consistent with the financial statements. We also report to you if, in our
opinion, the company has not kept proper accounting records, if we have not received all the information and
explanations we require for our audit, or if information specified by law regarding directors' remuneration and
transactions is not disclosed.
We read the Directors’ report and consider the implications for our report if we become aware of any apparent
misstatements within it.
Basis of audit opinion
We conducted our audit in accordance with the International Standards on Auditing (UK and Ireland) issued by
the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the
amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates
and judgements made by the directors in the preparation of the financial statements, and of whether the
accounting policies are appropriate to the group’s and company's circumstances, consistently applied and
adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we considered
necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial
statements are free from material misstatement, whether caused by fraud or other irregularity or error. In
forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial
statements.
5
Craneware Limited
Independent auditors' report to the members of
Craneware Limited (continued)
Opinion
In our opinion:
•
the financial statements give a true and fair view, in accordance with IFRSs as adopted by the European
Union, of the state of the group’s and the parent company’s affairs as at 30 June 2007 and of the group’s
profit and cashflows for the year then ended; and
•
the financial statements have been properly prepared in accordance with the Companies Act 1985; and
•
the information given in the Directors’ Report is consistent with the financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants and Registered Auditors
Edinburgh
21 August 2007
6
Craneware Limited
Consolidated Income Statement
For the year ended 30 June 2007
Revenue
Cost of sales
Gross profit
Net operating expenses
Operating profit
Analysed as:
Profit before share based payments, depreciation and
amortisation
Share based payments
Depreciation of plant and equipment
Amortisation of intangible assets
Finance income
Profit before taxation
Tax charge
Profit for the year
The results relate to continuing operations.
Notes
4
5
6
9
10
11
20
2007
$'000
15,111
(808)
14,303
(12,906)
1,397
3,796
(2,191)
(152)
(56)
446
1,843
(627)
1,216
2006
$'000
13,179
(1,121)
12,058
(8,983)
3,075
3,714
(286)
(93)
(260)
235
3,310
(1,165)
2,145
There is no difference between the profit before taxation and the retained profit for the year stated above their
historical cost equivalents.
Consolidated Statement of Recognised Income and Expense
For the year ended 30 June 2007
Profit for the year
Total recognised income for the year
2007
$'000
1,216
1,216
2006
$'000
2,145
2,145
7
Craneware Limited
Consolidated balance sheet as at 30 June 2007
Notes
2007
$'000
2006
$'000
ASSETS
Non-Current Assets
Plant and equipment
Intangible assets
Deferred Tax
Trade and other receivables
Current Assets
Inventory
Trade and other receivables
Cash and cash equivalents
Total Assets
EQUITY AND LIABILITIES
Non-Current Liabilities
Deferred income
Current Liabilities
Deferred income
Trade and other payables
Total Liabilities
Equity
Called up share capital
Share premium account
Other reserves
Retained earnings
Total Equity
Total Equity and Liabilities
13
14
18
17
16
17
22
23
19
20
20
20
20
487
434
810
75
1,806
8
4,016
9,664
13,688
135
57
135
-
327
19
3,035
10,167
13,221
15,494
13,548
903
903
8,579
2,261
10,840
2,251
2,251
7,231
2,722
9,953
11,743
12,204
1
1,823
2,477
(550)
3,751
1
1,823
286
(766)
1,344
15,494
13,548
The financial statements on pages 7 to 32 were approved by the board of directors on 21 August 2007 and were
signed on its behalf by:
K Neilson
Director
A M McDougall
Director and Company Secretary
8
Craneware Limited
Company Balance sheet as at 30 June 2007
Notes
2007
$'000
2006
$'000
ASSETS
Non-Current Assets
Plant and equipment
Intangible assets
Deferred Tax
Trade and other receivables
Current Assets
Trade and other receivables
Cash and cash equivalents
Total Assets
EQUITY AND LIABILITIES
Non-Current Liabilities
Deferred income
Current Liabilities
Deferred income
Trade and other payables
Total Liabilities
Equity
Called up share capital
Share premium account
Other reserves
Retained earnings
Total Equity
Total Equity and Liabilities
13
14
18
17
17
22
23
19
20
20
20
20
388
418
460
75
1,341
3,857
9,116
12,973
72
37
66
-
175
2,968
9,474
12,442
14,314
12,617
903
903
8,579
1,645
10,224
2,251
2,251
7,231
1,887
9,118
11,127
11,369
1
1,823
1,793
(430)
3,187
1
1,823
210
(786)
1,248
14,314
12,617
The financial statements on pages 7 to 32 were approved by the board of directors on 21 August 2007 and were
signed on its behalf by:
K Neilson
Director
A M McDougall
Director and Company Secretary
9
Craneware Limited
Consolidated cashflow statement for the year ended 30 June 2007
Cash flows from operating activities
Cash generated from operations
Interest received
Tax (paid) / refunded
Net cash from operating activities
Cash flows from investing activities
Purchase of plant and equipment
Capitalised intangible assets
Net cash used in investing activities
Cash flows from financing activities
Dividends paid to company shareholders
Net cash used in financing activities
Notes
21
2007
$'000
2,626
446
(1,638)
1,434
(504)
(433)
(937)
2006
$'000
2,489
235
1,516
4,240
(84)
(27)
(111)
(1,000)
(1,000)
-
-
Net (decrease) / increase in cash and cash equivalents
(503)
4,129
Cash and cash equivalents at the start of the year
10,167
6,038
Cash and cash equivalents at the end of the year
9,664
10,167
10
Craneware Limited
Notes to the financial statements for the year ended 30 June 2007
Basis of preparation
The financial statements are prepared in accordance with International Financial Reporting Standards (IFRS),
IFRIC interpretations and with those parts of the Companies Act 1985 applicable to companies reporting under
IFRS. The financial statements have been prepared under the historic cost convention. A summary of the
more important accounting policies is 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 applicable.
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 period. Although these estimates are based on
management’s best knowledge of the amount, event or actions, actual results ultimately may differ from those
estimates.
IFRS 1 (First Time Adoption of International Financial Reporting Standards) sets out the rules for first time
adoption of IFRS. Generally, a company must determine IFRS compliant accounting policies and then apply
these retrospectively to derive it’s opening or “transition” balance sheet.
The impact of adopting IFRS on the income statement and balance sheet for the year ended 30 June 2006 is set
out in Note 27.
1
Principal accounting policies
The principal accounting policies adopted in the preparation of these accounts 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 principal
functional currency is the US dollar. The Group’s financial statements are therefore prepared in US dollars.
Currency Translation
Transactions denominated in foreign currencies are translated into US dollars at the rate of exchange ruling at
the date of the transaction. Monetary assets and liabilities expressed in foreign currencies are translated into US
dollars at rates of exchange ruling at the balance sheet date. Exchange gains or losses arising upon subsequent
settlement of the transactions and from translation at the balance sheet date, are included within the related
category of expense where separately identifiable, or in general and administrative expenses.
Basis of consolidation
The consolidated income statement and balance sheet include the accounts of the parent company and its
subsidiary made up to the end of the financial year. Intra group revenue and profits are eliminated on
consolidation and all sales and profit figures relate to external transactions only. As permitted by Section 230
of the Companies Act 1985, the income statement of the parent company is not presented.
Revenue recognition
The Group follows the principles of IAS 18, “Revenue Recognition”, in determining appropriate revenue
recognition policies. In principle revenue is recognised to the extent that it is probable that the economic
benefits associated with the transaction will flow into the Group.
11
Craneware Limited
Notes to the financial statements for the
year ended 30 June 2007 (continued)
1
Principal accounting policies (continued)
Revenue comprises the value of software license sales, installation, training, maintenance and support services,
and consulting engagements. Revenue is recognised when (i) persuasive evidence of an arrangement exists;
(ii) delivery has occurred or services have been rendered; (iii) the sales price has been fixed and determinable;
and (iv) collectability is reasonably assured.
For software arrangements with multiple elements, revenue is recognised dependent on whether vendor-
specific objective evidence (“VSOE”) of fair value exists for each of the elements. VSOE is determined by
reference to sales to external customers made on a stand-alone basis. Where there is no VSOE revenue is
recognised rateably over the full term of each contract.
Revenue from standard license products which are not modified to meet the specific requirements of each
customer is recognised when the risks and rewards of ownership of the product are transferred to the customer.
Revenue from installation and training is recognised as services are provided, and from consulting
engagements when all obligations under the consulting agreement have been fulfilled.
Software sub licensed to third parties is recognised in accordance with the underlying contractual agreements.
Where separate services are delivered, revenue is recognised on delivery of the service. All other revenue is
recognised rateably over the term of the sub licence agreement.
The excess of amounts invoiced and future invoicing over revenue recognised, is included in deferred revenue.
If the amount of revenue recognised exceeds the amounts invoiced the excess amount is included within
accounts receivable.
Tangible assets – Plant and Equipment
All equipment and fixtures are stated at historical cost less depreciation. Depreciation is provided to write off
the cost less estimated residual values of tangible fixed assets over their expected useful lives. It is calculated at
the following rates:
Computer equipment
Tenants improvements
Office furniture
- 33% straight line
- 20% straight line
- 25% straight line
Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down
immediately to its recoverable amount.
Gains and losses on disposal of assets are included in operating profit.
Repairs and maintenance are charged to the income statement during the financial year in which they are incurred.
The cost of major renovations is included in the carrying amount of the assets when it is probable that future
economic benefits in excess of the originally assessed standard of performance of the existing asset will flow to
the Group.
Acquired Intangible Assets
Computer software and licensed to use technology are capitalised at cost and amortised on a straight-line basis
over a prudent estimate of the time that the Group is expected to benefit from them, which is typically three to
five years.
12
Craneware Limited
Notes to the financial statements for the
year ended 30 June 2007 (continued)
1
Principal accounting policies (continued)
Intangible Assets – Research and Development Expenditure
Expenditure associated with developing and maintaining the Group’s software products are recognised as
incurred. Where, however, new product development projects are technically feasible, production and sale is
intended, a market exists, expenditure can be measured reliably, and sufficient resources are available to
complete such projects, development expenditure is capitalised until initial commercialisation of the product,
and thereafter amortised on a straight-line basis over its estimated useful life. Staff costs and specific third
party costs involved with the development of the software are included within amounts capitalised.
Impairment Tests
The Group considers whether there is any indication that non-current assets are impaired on an annual basis. If
there is such an indication, the Group carries out an impairment test by measuring the assets’ recoverable
amount, which is the higher of the assets’ fair value less costs to sell and their value in use. If the recoverable
amount is less than the carrying amount an impairment loss is recognised.
Taxation
The charge for taxation is based on the profit for the period and takes into account deferred taxation. 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 and are
measured using enacted rates and laws that will be in effect when the differences are expected to reverse. The
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 affects neither accounting nor 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 under each jurisdiction’s tax rules. As explained under “Share-based
payments” below, a compensation expense is recorded in the Group’s income statement over the period from
the grant date to the vesting date of the relevant options. As there is a temporary difference between the
accounting and tax bases a deferred tax asset is recorded. The deferred tax asset arising is calculated by
comparing the estimated amount of tax deduction to be obtained in the future (based on the Company’s share
price at the balance sheet date) with the cumulative amount of the compensation expense recorded in the
income statement. 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.
Investments in subsidiary
The investment in subsidiary is stated at cost.
Operating leases
The costs of operating leases are charged on a straight line basis over the duration of the leases in arriving at
operating profit.
Grants
Grants are recognised at their fair value where there is a reasonable assurance that the grant will be received
and the company will comply with all conditions pertaining to the grant. Government grants relating to costs
are deferred and recognised in the income statement over the period necessary to match them with the costs
that they are intended to compensate.
13
Craneware Limited
Notes to the financial statements for the
year ended 30 June 2007 (continued)
1
Principal accounting policies (continued)
Financial assets
The group classifies its financial assets in the following categories: (i) at fair value through profit and loss, (ii)
loans and receivables and (iii) available for sale. The classification depends on the purpose for which the
financial assets were acquired. Management determines the classification of its financial assets at initial
recognition. At each balance sheet date included in the financial information, the group held only items
classified as loans and receivables.
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market. They are included in current assets, except for maturities greater than 12 months
after the balance sheet date. These are classified as non-current assets. Loans and receivables are classified as
‘trade and other receivables’ in the balance sheet.
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the
effective interest method, less provision for impairments. A provision for impairment of trade receivables is
established when there is objective evidence that the group will not be able to collect all amounts due
according the original terms of the receivables. Significant financial difficulties of the debtor, probability that
the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments (more than
90 days overdue) are considered indicators that the trade receivable is impaired. The amount of the provision
is the difference between the asset’s carrying amount and the present value of the estimated future cash flows,
discounted at the original effective interest rate. The carrying amount of the asset is reduced through the use of
an allowance account, and the amount of the loss is recognised in the income statement within ‘net operating
expenses’. When a trade receivable is uncollectible, it is written off against the allowance account for trade
receivables. Subsequent recoveries of amounts previously written off are credited against net operating
expenses in the income statement.
Financial liabilities
The only financial liability held by the group at each balance sheet date included in the financial information is
trade payables. Trade payables are recognised initially at fair value and subsequently measured at amortised
cost using the effective interest method.
Inventories
Inventories consist of consumables and are valued at the lower of costs and net realisable value.
Cash and Cash Equivalents
Cash and cash equivalents include cash in hand, deposits held with banks and short term highly liquid
investments. For the purpose of the cash flow statement, cash and cash equivalents comprise of cash on hand,
deposits held with banks and short term high liquid investments.
Employee Benefits
The Group operates a defined contribution Stakeholder Pension Scheme as described in Section 3 of Welfare
Reform and Pensions Act 1999. Private medical insurance is also provided to every employee.
Share Based Payments
The Group issues equity-settled share based payments to certain employees. In accordance with IFRS 2,
“Share Based Payments” equity-settled share based payments are measured at fair value at the date of grant.
Fair value is measured by use of the Black-Scholes pricing model as amended to cater for the share options in
issue over incentive shares where vesting is based on future valuation performance conditions. The fair value
determined at the date of grant of the equity-settled share-based payments is expensed on a straight-line basis
over the vesting period, based on the Group’s estimate of the number of shares that will eventually vest.
The share-based payments charge is shown separately on the income statement and is also included in ‘Other
reserves’.
14
Craneware Limited
Notes to the financial statements for the
year ended 30 June 2007 (continued)
1
Principal accounting policies (continued)
Dividends
Dividends are recorded in the accounts in the year in which they are approved by the shareholders. Interim
dividends are recognised as a distribution when paid.
Forthcoming Accounting Standards
At the date of approval of these financial statements the following standards which have not been applied in
these financial statements were in issue but not yet effective: IFRS 7 “Financial Instruments: Disclosures” and
IFRS 8 “Segment Reporting”. The Directors expect that the adoption of these standards and interpretations in
future periods will have no material impact on the financial statements when they come into effect for periods
beginning on or after 1 January 2007.
2 Critical Accounting Estimates and Judgements
The preparation of financial statements in accordance with generally accepted accounting principles 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:-
• Provision for impairment of trade receivables:- the Group assesses trade receivables for
impairment which requires the directors to estimate the likelihood of payment forfeiture by customers
• Revenue recognition:- the Group assesses the economic benefit that will flow from future milestone
payments in relation to sub-licensing partnership arrangements. This requires the directors to estimate
the likelihood of the Group, its partners, and sub-licensees meeting their respective commercial
milestones and commitments
• Capitalisation of development expenditure:- the Group capitalises development costs provided the
conditions laid out below have been met. Consequently the directors require to continually assess the
commercial potential of each product in development and its useful life following launch
• Provisions for income taxes:- the Group is subject to tax in the UK and US and this requires the
directors to regularly assess the applicability of its transfer pricing policy
• Share based payments:- the Group requires to make a charge to reflect the value of share-based
equity-settled payments in the period. At each grant of options and balance sheet date, the directors
require to assess the value of the business and whether there has been an increase in the fair value of
equity-settled share options, their likely vesting dates, and expected participants.
3
Financial risk management
Financial risk factors
The group’s activities expose it to a variety of financial risks: market risk (primarily currency risk and cash
flow interest risk rate), credit risk and liquidity risk.
Risk management is carried out under policies approved by the board of directors. The board provides written
principles for overall risk management, as well as written policies covering specific areas, such as foreign
exchange risk, interest rate risk and credit risk.
15
Craneware Limited
Notes to the financial statements for the
year ended 30 June 2007 (continued)
3
Financial risk management (continued)
(a) Market risk
(i) Foreign exchange risk
Foreign exchange risk arises when future commercial transactions or recognised assets or liabilities are
denominated in a currency that is not the entity’s functional currency. The group operates primarily in the
USA however a significant proportion of costs are incurred in Sterling.
Due to the size of the group, management are required to continually assess the group’s foreign exchange risk
against the group’s functional currency, and whether to hedge against such exposure.
At 30 June 2007, if Sterling had weakened/strengthened by 10% against the dollar with all other variables held
constant, post-tax profit for the year would have been $250,000 (2006: $200,000) higher/lower respectively,
mainly as a result of foreign exchange gains/losses on Sterling denominated transactions and the translation of
Sterling denominated trade payables.
(ii) Cash flow and interest rate risk
As the group has no significant interest-bearing assets or liabilities, other than cash held on deposit at variable
rates, the group’s income and operating cash flows are substantially independent of changes in market interest
rates.
(b) Credit risk
Credit risk is managed on group basis. Credit risk arises from cash and cash equivalents and trade receivables.
In order to minimise the group’s exposure to risk, all cash deposits are placed with reputable banks and
financial institutions. The group’s exposure is reduced due to contractual terms which require installation,
training, annual licensing and support fees, to be paid annually in advance.
(c) Liquidity risk
Management review the liquidity position of the group to ensure that sufficient cash is available to meet the
underlying needs of the group as they fall due for payment.
The group’s financial liabilities to be settled on a net basis falling due within one year were $421,103 (2006:
$119,336) and are the contractual undiscounted cash flows. There is no difference between the undiscounted
liabilities and the amounts shown in Note 23 as the group’s financial liabilities are all short term in nature.
Capital risk management
The group is cash generative and trading is funded internally. As a result, management do not consider capital
risk to be significant for the group.
4 Revenue
The Group revenue is derived entirely from the sale, supply, installation and ongoing support of software
products to hospitals within the United States of America and is deemed to have no other segments.
16
Craneware Limited
Notes to the financial statements for the
year ended 30 June 2007 (continued)
5 Net operating expenses
Net operating expenses are made up as follows:-
Administrative expenses
Sales and marketing expenses
Share based payments
Depreciation of plant and machinery
Amortisation of intangibles
Exchange gain
Net operating expenses
6 Operating profit
The following items have been included in arriving at operating profit
Staff costs (Note 8)
Depreciation of plant and equipment
Amortisation of intangible assets
Impairment of trade receivables
Purchased licences expensed
Operating lease rents for premises
2007
$'000
6,730
3,839
2,191
152
56
(62)
12,906
2007
$'000
9,701
152
56
109
111
174
Services provided by the Group's auditor
During the year the Group obtained the following services from the Group's auditors as detailed below:
Statutory audit - parent company
- subsidiary company
Tax compliance and other tax services
Employee incentive advice
Other assurance services
7 Grant
Grants received / receivable in the year
2007
$'000
45
29
43
13
30
160
2007
$000's
200
2006
$'000
5,421
2,988
286
93
260
(65)
8,983
2006
$'000
5,230
93
260
190
104
135
2006
$'000
36
25
38
44
-
143
2006
$000's
-
The grant receivable in the year related to an application made by the Group for a RSA grant. The criteria to
qualify for this consisted of adding to existing development and support staff. This grant is not shown
separately on the income statement but reduces net operating expenses.
17
Craneware Limited
Notes to the financial statements for the
year ended 30 June 2007 (continued)
8
Staff costs
The average number of persons employed by the Group during the year, including executive directors, is
analysed below:
Sales and distribution
Production
Research and development
Administration
Employment costs of all employees including executive directors:-
Wages and salaries
Social security costs
Share based payments
Total direct costs of employment
Key management compensation
Salaries and short-term employee benefits
Post employment benefits
Share based payments
Total key management compensation
Highest paid director
Remuneration
Post employment benefits
2007
Number
21
26
26
17
90
2006
Number
16
22
17
14
69
2007
$'000
6,890
620
2,191
9,701
2007
$'000
1,295
19
967
2,281
305
-
305
2006
$'000
4,479
465
286
5,230
2006
$'000
858
98
132
1,088
196
-
196
Key management compensation given above is for the Group Directors only and includes fees to third parties
for director’s services including non-executive directors. Retirement benefits are accruing to 2 directors under
a defined contribution scheme. (2006: 3)
9
Share based payments
The Group has an equity-settled share based payment scheme, whereby options over shares in Craneware
Limited can be granted to employees and directors. A charge is shown in the income statement of $2,190,911
(2006: $286,432) as detailed in Note 8 above.
Options over Ordinary shares and Incentive shares are granted at par value and are exercisable and vest on a
sale of the Group as defined in the Company’s Articles of Association. The performance schedule determining
the vesting of options over Incentive shares is based on the valuation of the Company at such an event. Options
lapse upon leaving employment or if not exercised within 10 years from the date of grant.
18
Craneware Limited
Notes to the financial statements for the
year ended 30 June 2007 (continued)
9
Share based payments (continued)
The fair value of options granted was estimated on the date of grant using the Black Scholes option pricing
model as adjusted for dividends. The Company estimates the number of options likely to vest by reference to
the Group’s high staff retention rate, and expenses the fair value over the relevant vesting period. Volatility has
been estimated by reference to similar companies whose shares are traded on a recognised stock exchange.
The assumptions for each option grant were as follows:
Date of Grant
Share price at date of grant
Vesting period (years)
Expected volatility
Risk free rate
Dividend yield
Options over Ordinary shares
Exercise price
Number of employees
Shares under option
Fair value per option
Options over Incentive shares
Exercise price
Number of employees
Shares under option
Weighted average fair value per option
16-Mar-07
$617.77
0.45
40%
5.25%
2%
26-Oct-06
$589.69
0.84
40%
4.75%
2%
11-May-06
$561.61
1.30
40%
4.50%
2%
$0.02
19
189
$612.17
$0.002
18
493
$1.34
$0.02
5
54
$579.82
$0.002
5
50
$11.05
The following options have been granted over Ordinary shares and Incentive shares:
options
number
2007
4,709
273
(30)
4,952
3,680
591
(48)
4,223
Ordinary options ($0.02 exercise price)
Outstanding at 1 July
Granted
Forfeited
Outstanding at 30 June
Incentive options ($0.002 exercise price)
Outstanding at 1 July
Granted
Forfeited
Outstanding at 30 June
10 Finance income
Deposit interest receivable
$0.02
48
4,709
$547.18
$0.002
42
3,680
$39.25
options
number
2006
-
5,034
(325)
4,709
-
3,736
(56)
3,680
2007
$'000
446
2006
$'000
235
19
Craneware Limited
Notes to the financial statements for the
year ended 30 June 2007 (continued)
11 Tax on profit on ordinary activities
Profit on ordinary activities before tax
Current tax
Corporation tax on profits of the period
Tax effect of loss carry back
Adjustments for prior periods
Total current tax charge
Deferred tax
Origination & reversal of timing differences
Adjustments for prior periods
Total deferred tax (credit) / charge
Tax on profit on ordinary activities
2007
$'000
1,843
2006
$'000
3,310
1,242
1,099
-
60
-
86
1,302
1,185
(678)
3
(675)
(20)
-
(20)
627
1,165
The difference between the current tax charge on ordinary activities for the period, reported in the income
statement, 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 (30%) (2006: 30%)
553
993
Effects of
Adjustment in respect of prior periods
Current tax
Deferred tax
State tax
US tax rate at 34% (2006: 34%)
Expenses not deductible for tax purposes
Adjustment to rate at which deferred tax will unwind
Total current tax charge
12 Dividends
Interim dividend - $15.725 / share (2006: $nil)
61
3
20
(40)
22
8
627
2007
$'000
1,000
86
-
16
5
65
-
1,165
2006
$'000
-
20
Craneware Limited
Notes to the financial statements for the
year ended 30 June 2007 (continued)
13 Plant and equipment
Group
Cost
At 1 July 2006
Additions
At 30 June 2007
Depreciation
At 1 July 2006
Charge for year
At 30 June 2007
Net book value at 30 June 2007
Cost
At 1 July 2005
Additions
At 30 June 2006
Depreciation
At 1 July 2005
Charge for the year
At 30 June 2006
Net book value at 30 June 2006
Computer
Equipment
$'000
390
138
528
274
96
370
158
318
72
390
200
74
274
116
Office
Tenants
Furniture Improvements
$'000
$'000
84
129
213
68
30
98
115
73
11
84
53
15
68
16
84
237
321
81
26
107
214
83
1
84
77
4
81
3
Total
$'000
558
504
1,062
423
152
575
487
474
84
558
330
93
423
135
21
Craneware Limited
Notes to the financial statements
for the year ended 30 June 2007 (continued)
13 Plant and equipment (continued)
Company
Cost
At 1 July 2006
Additions
At 30 June 2007
Depreciation
At 1 July 2006
Charge for year
At 30 June 2007
Net book value at 30 June 2007
Cost
At 1 July 2005
Additions
At 30 June 2006
Depreciation
At 1 July 2005
Charge for year
At 30 June 2006
Net book value at 30 June 2006
Computer
Equipment
$'000
241
87
328
182
55
237
91
206
35
241
145
37
182
59
Office
Tenants
Furniture Improvements
$'000
$'000
64
94
158
54
21
75
83
56
8
64
44
10
54
10
84
237
321
81
26
107
214
83
1
84
77
4
81
3
Total
$'000
389
418
807
317
102
419
388
345
44
389
266
51
317
72
22
Craneware Limited
Notes to the financial statements
for the year ended 30 June 2007 (continued)
14
Intangible assets
Research and development and computer software
Group
Computer
Software
$'000
In Process
R & D
$'000
Cost
At 1 July 2006
Additions
At 30 June 2007
Amortisation
At 1 July 2006
Charge for the year
At 30 June 2007
NBV at 30 June 2007
Cost
At 1 July 2005
Additions
At 30 June 2006
Amortisation
At 1 July 2005
Charge for the year
At 30 June 2006
NBV at 30 June 2006
536
331
867
522
14
536
331
536
-
536
286
236
522
14
122
102
224
79
42
121
103
95
27
122
55
24
79
43
In Process
R & D
$'000
Company
Computer
Software
$'000
536
331
867
522
14
536
331
536
-
536
286
236
522
14
78
92
170
55
28
83
87
61
17
78
45
10
55
23
Total
$'000
658
433
1,091
601
56
657
434
631
27
658
341
260
601
57
Total
$'000
614
423
1,037
577
42
619
418
597
17
614
331
246
577
37
15
Investment in subsidiary
Company
2006
$
109
Value at 1 July
109
Net book value at 30 June
The following information relates to the subsidiary which, in the opinion of the directors, principally affected
the profits or assets of the Group:-
2007
$
109
109
Name of Company
Class of Shares held
Proportion of Nominal Value of
Issued Shares held by Craneware
Limited
Nature of Business
Craneware Inc
Ordinary
100%
Sales & Marketing
The above company is incorporated in the United States of America. The results of the subsidiary company
have been included in the consolidated financial statements
23
Craneware Limited
Notes to the financial statements
for the year ended 30 June 2007 (continued)
16
Inventory
Licence inventory
There are no provisions made against inventory.
17 Trade and other receivables
Trade receivables
less: provision for impairment
of receivables
Net receivables
Amounts owed by group companies
Corporation tax
Other receivables
Prepayments and accrued income
Less non-current trade receivables
Current portion
Group
2007
$'000
8
2006
$'000
19
Company
2007
$'000
-
2006
$'000
-
Group
2006
$'000
3,034
Company
2006
$'000
3,034
2007
$'000
3,728
(278)
2,756
-
-
26
253
3,035
-
3,035
(271)
3,457
-
-
131
344
3,932
(75)
3,857
(278)
2,756
99
-
26
87
2,968
-
2,968
2007
$'000
3,728
(271)
3,457
-
-
131
503
4,091
(75)
4,016
Amounts owed by group companies are non interest bearing and have no fixed repayment terms.
18 Deferred taxation
Deferred tax is calculated in full on the temporary differences under the liability method using a rate of tax of
29.5% (2006: 30%).
The movement on the deferred tax account is shown below:-
At the beginning of the period
Income statement (credit) / charge
At the end of the period
Group
2006
$'000
(115)
(20)
(135)
2007
$'000
(135)
(675)
(810)
Company
2006
$'000
(3)
(63)
(66)
2007
$'000
(66)
(394)
(460)
A deferred tax asset of $349,846 (2006: $67,614) has arisen in respect of net operating losses and other timing
differences in Craneware Inc. This asset is recognised in the Group balance sheet as the Directors are of the
view that Craneware Inc will establish a sufficient pattern of profitability.
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 net deferred tax asset to be recovered within 12 months to 30 June 2007 was $810,272
(2006: $134,595)
24
Craneware Limited
Notes to the financial statements
for the year ended 30 June 2007 (continued)
18 Deferred taxation (continued)
Deferred tax assets - recognised
Group
At 1 July 2006
Charged to income statement
Total provided at 30 June 2007
At 1 July 2005
Charged to income statement
Total provided at 30 June 2006
Deferred tax liabilities - recognised
Group
At 1 July 2006
Charged to income statement
Total provided at 30 June 2007
At 1 July 2005
Charged to income statement
Total provided at 30 June 2006
Deferred tax assets - recognised
Company
At 1 July 2006
Charged to income statement
Total provided at 30 June 2007
At 1 July 2005
Charged to income statement
Total provided at 30 June 2006
Deferred tax liabilities - recognised
Company
At 1 July 2006
Charged to income statement
Total provided at 30 June 2007
At 1 July 2005
Charged to income statement
Total provided at 30 June 2006
Accelerated
accounting
depreciation
$'000
(8)
4
(4)
Short term
timing
differences
$'000
(40)
(39)
(79)
(4)
(4)
(8)
Accelerated
tax
depreciation
$'000
1
30
31
-
1
1
-
(40)
(40)
Total
$'000
1
30
31
-
1
1
Accelerated
accounting
depreciation
$'000
(8)
8
-
Short term
timing
differences
$'000
-
-
-
(3)
(5)
(8)
-
-
-
Accelerated
tax
depreciation
$'000
-
32
32
-
1
1
Total
$'000
-
32
32
-
1
1
Losses
$'000
-
-
-
(111)
111
-
Share
Options
$'000
(88)
(670)
(758)
-
(88)
(88)
Total
$'000
(136)
(705)
(841)
(115)
(21)
(136)
Losses
$'000
-
-
-
-
-
-
Share
Options
$'000
(59)
(433)
(492)
-
(59)
(59)
Total
$'000
(67)
(425)
(492)
(3)
(64)
(67)
25
Craneware Limited
Notes to the financial statements
for the year ended 30 June 2007 (continued)
19 Called up share capital
Allotted called-up and fully paid
Equity share capital
Ordinary shares of 1p each
Ordinary A shares of 1p each
Authorised
Equity share capital
Ordinary shares of 1p each
Ordinary A shares of 1p each
Incentive shares of 0.1p each
2007
2006
Number
$'000
Number
$'000
50,500
13,093
1
-
50,500
13,093
1
-
2007
2006
Number
$'000
Number
$'000
9,980,361
19,639
5,087
165
-
-
9,980,361
19,639
5,087
165
-
-
The Company has four classes for share in issue at each reporting date:
− Ordinary shares of 1 pence each
− Ordinary A shares of 1 pence each
−
Incentive shares of 0.1 pence each
− Category “A” Member Shares
The shares have the following conditions:
Voting rights
Both classes of ordinary share carry one vote per share at general meetings of the Company. The Incentive
Shares and Category A Member Shares do not carry any vote.
Dividends
The profits of the Company available for distribution shall be used to pay dividends in the following order of
priority:-
In paying to the holders of the A ordinary share and ordinary shares (pari passu as if the same were one class of
share) in respect of each financial year of the Company a dividend (“the Participating Dividend”) as follows:
Amount
Accrual Date
Payment Date
a sum equal to 30% of Net Profit
accruing from the end of the financial year in which the Company first has sufficient
distributable reserves in order for the relevant dividend to be paid in full and the Board has
approved such payment.
subject to the approval of the board of directors not later than 4 months after the end of the
relevant accounting period or within 14 days after the audit report on the accounts of the
Company for the period is signed by the Company’s auditors, whichever is the earlier.
Once the foregoing dividend has been paid any remaining profits which the Company may determine to
distribute shall, if the holders of 75% of the A ordinary shares and the holders of 75% of the ordinary shares
agree in writing, be distributed amongst the holders of the ordinary and A ordinary shares (pari passu as if the
same were one class of share) unless the holders for the time being of 75% of the A ordinary shares and the
holders of 75% of the ordinary shares agree otherwise.
The Incentive Shares and Category “A” Member shares shall confer upon their holders no right to receive any
dividend (whether in cash or specie) or any other form of distribution.
26
Craneware Limited
Notes to the financial statements
for the year ended 30 June 2007 (continued)
19 Called up share capital (continued)
Return of capital
Subject to the provisions of the Act, the proceeds of (i) any liquidation, dissolution or winding up of the
Company (other than for the purposes of reconstruction) and (ii) any return of capital by the Company to
Shareholders (other than by way of capitalisation of reserves) after the payment of the Company’s liabilities
shall be applied as follows:-
−
−
−
first, in paying to the holder of each A ordinary share the subscription price paid on that share,
together with a sum equal to any arrears or accruals of the dividends on such share calculated down to
the date of the return of capital;
second, in paying to the holder of each ordinary share the subscription price paid on the share,
together with any sum equal to any arrears or accruals of the dividends on such share calculated down
to the date of the Share Sale;
the balance of such Proceeds shall be distributed equally amongst the holders of the A ordinary shares
and ordinary shares (pari passu as if the same constituted one class of share) in proportion to the
number of fully paid A ordinary shares and ordinary shares held by them respectively provided that
once the sum of £100,000,000 has been paid under this arrangement on each A ordinary share, each
ordinary share and each Category “A” Members Share the holder of each Incentive Share shall be
entitled to receive £0.001 on each Incentive share held by him.
Exit provisions
In the event of a share or asset sale where the net proceeds are equal to or in excess of US $60,000,001 less:
(i) the total of all sums paid by the Company to holders or original shares by way of a return of capital
(either by ways of share buy-back, share redemption or otherwise, but excluding any and all dividends
or other distributions); plus
(ii) the total of all sums received or due to the Company in respect of any subscription for new equity
share capital (as defined in section 744 of the Act) in the Company (the “Threshold Value”),
The directors shall not register any transfer of shares unless the proceeds of such share sale are distributed in
the following order of priority (save in respect of any shares not sold in connection with that share sale):
− first, in paying to the holder of each A ordinary share the subscription price paid on that share, together
with any sum equal to any arrears or accruals of the dividends on such share is calculated down to the
date of the Share Sale;
− second, in paying to the holder of each ordinary share and Category “A” Member Shares the
subscription price paid on that share, together with any sum equal to any arrears or accruals of the
dividends on such share calculated down to the date of the Share Sale;
− the balance of the Proceeds of such Share Sale shall be distributed equally amongst the holders of the A
ordinary shares, the ordinary shares and the Incentive Shares (pari passu as if the same constituted one
class of share) in proportion to the number of fully paid A ordinary shares, ordinary shares, Category
“A” Member Shares and Incentive Shares held by them respectively.
If the company, or any of its subsidiaries, is admitted to the Official List of the UK Listing Authority and the
admission to trading on the London Stock Exchange plc’s market for listed securities or the granting of
permission for any of the share capital of the Company or any of its subsidiaries to be dealt in on (i) any
recognised stock exchange (as defined in the Financial Services and Markets Act 2000) including NASDAQ
and EASDAQ or (ii) the Alternative Investment Market of the London Stock Exchange plc, then immediately
prior to, and conditional on the flotation, the Company shall allot and issue to each holder of the A ordinary
shares a bonus issue from the share premium account or any profits or reserves available for distribution of
such number of A ordinary shares calculated as follows:-
BS = (P/TC) x (1 – (total A ordinary shares in issue/total equity shares in issue)) x total equity shares in issue
27
Craneware Limited
Notes to the financial statements
for the year ended 30 June 2007 (continued)
19 Called up share capital (continued)
Where
BS = the number of bonus shares to be issued to the holders of the A ordinary shares
TC = the valuation (in pounds sterling) placed upon the whole of the issued equity share capital of the
Company (including any bonus shares) as shown in a prospectus or listing particulars published in
connection with such Flotation less the gross amount of any new money raised by the Company
from the subscription for new shares issued by the Company at the time of an in connection with
such flotation.
P = the total subscription monies paid by each Investor for ‘A’ Ordinary Shares in the Capital of the
Company.
If, while there are any Incentive Shares in issue or after any outstanding options to subscribe for Incentive
Shares have vested but not been exercised, a flotation occurs, where the net proceeds is equal to or in excess of
the Threshold Value, the Incentive Shares shall convert into, and any such options shall convert into options to
subscribe for, such number of ordinary shares as, in the reasonable opinion of the Board and the “Investors” (3i
plc and Scottish Equity Partners Limited), have a value equal to the value to the holders of Incentive Shares of
the rights given above with regard to priority of settlement.
Conversion of Ordinary A shares
The holders of the A ordinary shares may at any time convert the whole of their A ordinary shares into a like
number of ordinary shares and the ordinary shares resulting from the conversion shall rank from the date of
conversion pari passu in all respects with the other ordinary shares in the capital of the Company.
On the date of conversion the Company shall pay a dividend to the holders of the A ordinary shares of a sum
equal to all arrears and accruals of the Participating Dividend calculated down to the date of conversion.
20 Statement of changes in equity
Group
At 1 July 2005
Other reserves
Retained profit for the year
At 30 June 2006
Other reserves
Retained profit for the year
Dividends (Note 12)
At 30 June 2007
Company
At 30 June 2005
Other reserves
Retained profit for the year
At 30 June 2006
Other reserves
Retained profit for the year
Dividends (Note 12)
At 30 June 2007
Share
Capital
$'000
1
-
-
1
-
-
-
1
Share
Premium Retained
Earnings
Account
$'000
$'000
(2,911)
1,823
-
-
2,145
-
(766)
1,823
-
-
1,216
-
(1,000)
-
(550)
1,823
1
-
-
1
-
-
-
1
1,823
-
-
1,823
-
-
-
1,823
(2,836)
-
2,050
(786)
-
1,356
(1,000)
(430)
Other
Reserves
$'000
-
286
-
286
2,191
-
-
2,477
-
210
-
210
1,583
-
-
1,793
Other reserves relate to share based payments as detailed in Note 1 accounting policies.
Total
$'000
(1,087)
286
2,145
1,344
2,191
1,216
(1,000)
3,751
(1,012)
210
2,050
1,248
1,583
1,356
(1,000)
3,187
28
Craneware Limited
Notes to the financial statements
for the year ended 30 June 2007 (continued)
21 Cash flow generated from operating activities
Reconciliation of profit before tax to net cash inflow from operating activities
Group
Profit before tax
Finance income
Depreciation on plant and equipment
Amortisation on intangible assets
Share based payments
Movements in working capital:
Decrease / (increase) in inventory
(Increase) / decrease in trade and other receivables
(Decrease) / increase in trade and other payables
Cash generated from operations
22 Cash and cash equivalents
2007
$'000
1,843
(446)
152
56
2,191
11
(1,056)
(125)
2,626
2006
$'000
3,310
(235)
93
260
286
104
(797)
(532)
2,489
Cash at bank and in hand
Group
2007
$'000
9,664
2006
$'000
10,167
Company
2007
$'000
9,116
2006
$'000
9,474
The effective rates on short term bank deposits were 5.25% (2006: 4.80%)
23 Trade and other payables - current
Trade payables
Amounts owed to group companies
Social security and PAYE
Corporation tax
Accruals
Advance receipts
Group
2006
$'000
119
-
69
1,099
1,272
163
2,722
2007
$'000
421
-
262
764
754
60
2,261
Company
2006
$'000
57
-
69
1,048
551
162
1,887
2007
$'000
195
470
117
562
241
60
1,645
Amounts owed to group companies are non interest bearing and have no fixed repayment terms.
24 Contingent liabilities and financial commitments
(a) Capital commitments
The Group has no capital commitments at 30 June 2007 (2006: $nil).
29
Craneware Limited
Notes to the financial statements
for the year ended 30 June 2007 (continued)
24 Contingent liabilities and financial commitments (continued)
(b) Lease commitments
The Group leases certain land and buildings. The commitments payable by the Group under these leases are as
follows:-
Within one year
Between 2 and 5 years
2007
$'000
172
379
551
2006
$'000
166
368
534
The rents payable under these leases are subject to renegotiation at various intervals specified in the leases. The
Group pays all insurance, maintenance and repairs of these properties.
Contingent Liabilities
(c)
In connection with the appointment of a former director and chairman of the Company, it was proposed that an
option arrangement over 757 ordinary shares of 1 pence each in the capital of the Company be considered for
grant. The details and terms of this option arrangement required to be determined, considered and approved by
the Company. No such consideration, determination or approval occurred prior to his date of resignation as a
director of the Company, on 15 April 2005. The Company recently resolved not to grant share options and
advised the former director of this decision. The Company was subsequently advised, on 28 July 2007, that he
did not agree with this decision and was proposing to pass the relevant papers to his lawyers for consideration.
The Company has received no further communication from the former director or his advisors.
25 Related party transactions
During the period the Group has traded in its normal course of business with shareholders, consultancy businesses
and its wholly owned subsidiary in which directors, former directors and the subsidiary have a material interest as
follows:-
Group
Investor monitoring fees
2007
2006
Outstanding
at year end
$
848
Charged
$
21,344
Charged
$
31,970
Outstanding
at year end
$
49,283
Fees for services provided as Non-Executive Directors
K J Lyon
N P Heywood
53,725
43,919
908
5,812
53,703
25,422
4,419
2,159
30
Craneware Limited
Notes to the financial statements
for the year ended 30 June 2007 (continued)
25 Related party transactions (continued)
Company
Investor monitoring fees
2007
2006
Charged/ Outstanding
Charged/ Outstanding
(credited)
at year end
(credited)
at year end
$
21,344
$
848
$
$
31,970
49,283
Fees for services provided as Non-Executive Directors
K J Lyon
N P Heywood
53,725
43,919
908
5,812
53,703
25,422
4,419
2,159
Amounts due to (from) Craneware Inc - Subsidiary company
Sales commission
Net operating expenses
Balance (Notes 16 & 23)
6,402,959
1,583,133
-
-
4,974,054
497,945
-
-
-
470,278
-
(98,412)
Investor monitoring fees have been charged by the Groups institutional shareholders (Scottish Equity Partners
Limited, 3i plc and Lothian Investment Fund for Enterprise Limited) who hold A Ordinary and Ordinary shares
in Craneware Limited.
There were no other related party transactions in the period which require disclosure in accordance with
IAS24.
26 Ultimate controlling party
The directors have deemed that there are no controlling parties of the Company.
27 Adoption of IFRS
These are the Company’s first accounts prepared in accordance with IFRS for the year ending 30 June 2007.
The accounting policies on pages 11 to 15 have been applied in preparing the accounts for the years ended 30
June 2006 and the preparation of an opening IFRS balance sheet at 1 July 2005.
In preparing its opening IFRS balance sheet and accounts for the year ended 30 June 2006, the Company had
adjusted amounts reported previously in accounts prepared in accordance with UK GAAP.
A summary of the impact of the effects of IFRS on the Company balance sheet at 30 June 2006 and on the
income statement for the year ended 30 June 2006 is shown below:
31
Craneware Limited
Notes to the financial statements
for the year ended 30 June 2007 (continued)
27 Adoption of IFRS (continued)
Total equity at 1 July 2006 (as previously reported under UK GAAP)
Effect of adoption of IFRS from 1 July 2006
Total equity at 1 July 2006 (as restated)
2006
$'000
1,256
88
1,344
Summary of Impact on the Income statement for the year ended 30 June 2006
The table below sets out a summary reconciling the Company’s UK GAAP to IFRS income statement for the
year ended 30 June 2006.
Proft for the year as previously reported
IFRS2 - Share based payment
Additional charge for employee share option scheme
IFRS2 - Deferred tax
Additional deferred tax asset provision for share based payments
IFRS profit as restated
2006
$'000
2,343
(286)
88
2,145
Summary of Impact on the Balance sheets as at 30 June 2006
The table below sets out a summary reconciling the Company’s net assets reported under UK GAAP and IFRS
as at 30 June 2006.
Net asset as previously reported
IFRS 2 - Deferred tax asset
Additional deferred tax provision for share based payments
Net assets as restated
2006
$'000
13,460
88
13,548
32