Craneware plc Annual Report
for the year ended 30 June 2013
About Craneware
Craneware is the leader in automated revenue integrity solutions that
improve financial performance and mitigate risk for US healthcare
organisations. Founded in 1999, Craneware has headquarters in
Edinburgh, Scotland with offices in Atlanta, Boston, Nashville and
Phoenix employing more than 200 staff. Craneware’s market-driven,
SaaS solutions help hospitals and other healthcare providers more
effectively price, charge, code and retain earned revenue for patient
care services and supplies. This optimises reimbursement, increases
operational efficiency and minimises compliance risk. By partnering
with Craneware, clients achieve the visibility required to identify, address
and prevent revenue leakage. To learn more, visit craneware.com and
stoptheleakage.com.
Contents
Financial and Operational Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Craneware Revenue Integrity Solutions® . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Chairman’s Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Operational Review. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
Directors, Secretary, and Advisors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Board of Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Directors’ Report. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Corporate Governance Report. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Remuneration Committee Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Independent Auditors’ Report to the Members of Craneware plc . . . . . . . . . . . . . . . . . . . . 24
Consolidated Statement of Comprehensive Income for the year ended 30 June 2013 . . . . . . 25
Statements of Changes in Equity for the year ended 30 June 2013 . . . . . . . . . . . . . . . . . . . 26
Consolidated Balance Sheet as at 30 June 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Company Balance Sheet as at 30 June 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Statements of Cash Flows for the year ended 30 June 2013. . . . . . . . . . . . . . . . . . . . . . . . 29
Notes to the Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Craneware plc Annual Report 2013 Financial and Operational Highlights
Financial
Continued revenue and profit growth:
Revenue increased 1% to $41.5m (2012: $41.1m)
Adjusted EBITDA1 increased 4% to $12.4m (2012: $11.9m)
Adjusted profit before taxation increased 4% to $11.2m (2012: $10.8m)
Profit before tax decreased 5% to $10.6m (2012: $11.2m)
Basic adjusted EPS increased 4% to 32.9 cents (2012: 31.6 cents)
Basic EPS decreased 7% to 30.7 cents (2012: 33.0 cents)
Cash at year end $30.3m (2012: $28.8m) after returning $4.7m to shareholders by way of
dividends
Proposed final dividend of 6.3p (9.6 cents) per share giving total dividend for the year of
11.5p (17.4 cents) per share (2012: 10.5p (16.4 cents) per share)
1 Adjusted EBITDA refers to earnings before interest, tax, depreciation, amortisation, share
based payments, released deferred consideration and transaction related costs.
Operational
Underlying growth in sales to individual hospitals and small hospital groups
Exited the year with significantly higher sales run rate than at the start
Renewal rates over 100% of dollar value
Products achieved top rankings within their divisions of the KLAS industry awards
Hospitals continue to face growing financial and administrative pressure including
increased audit activity and significant backlogs in the appeal process
Key appointments increase bandwidth of senior management team
Quick Facts — Financial
$41.5m
in revenue
$12.4m
in adjusted EBITDA1
$30.3m
cash at year end
11.5p
total dividend for year
Revenue $m
Adjusted EBITDA $m
Basic adjusted EPS cents/share
41.1
41.5
38.1
28.4
23.0
50
40
30
20
10
0
32.9
31.6
25.6
21.8
17.7
12.4
11.9
10.1
7.6
5.8
15
12
9
6
3
0
35
30
25
20
15
10
5
0
2009
2010
2011
2012
2013
2009
2010
2011
2012
2013
2009
2010
2011
2012
2013
1
Craneware plc Annual Report 2013 Craneware Revenue Integrity Solutions®
Quick Facts — The Technology
Craneware Products and Services
Craneware solutions are based on an annuity
subscription model. Craneware products employ a mix
of traditional client/server Windows applications and
hosted ASP technologies to provide a comprehensive
enterprise solution for healthcare financial
performance management. Client data is always kept
secure within healthcare facilities’ own networks or
Craneware’s high-security data centre, compliant with
US Health Insurance Portability and Accountability
Act (HIPAA) regulations related to sensitive patient
information.
Only registered users can access Craneware’s extensive
knowledge base and regulatory products through
available hospital-based browsers with Internet access.
This allows Craneware’s software to be rolled out to
a number of staff in a facility, permitting different
prescribed levels of interaction with minimal impact to
resource-strained IS teams and busy users.
Craneware Revenue Integrity Solutions encompass four
product families – Access Management & Strategic
Pricing, Revenue Cycle, Supply Management, and
Audit & Revenue Recovery – with corresponding
modules and services.
Access Management & Strategic Pricing
Solutions that enable organisations to establish
transparent, defensible pricing; quickly
and accurately assess patient benefits
and check medical necessity;
and manage payment
responsibility – improving
cash flow, compliance and
patient satisfaction
Revenue Cycle
Solutions that automate
chargemaster management
processes – increasing operational
efficiency, minimising risk
and helping to prevent
revenue leakage
Audit & Revenue
Recovery
Solutions that empower hospitals
to manage payor denials and retain more
cash in the face of retrospective claims audits
– helping them to collect and retain all the
revenue to which they are entitled
Supply Management
Solutions that establish
a critical connection between
pharmaceutical and supply purchases
and billing – improving charge capture,
coding and financial performance
Craneware’s Chargemaster Toolkit® is ranked No. 1 in the Revenue
Cycle – Chargemaster Management market category and Bill
Analyzer is ranked No. 1 in the Revenue Cycle – Other market
category in the “2012 Best in KLAS Awards: Software & Services”
report, published December 2012. www.KLASresearch.com.
Data © 2012 KLAS Enterprises, LLC. All rights reserved.
Healthcare Financial Management Association staff and
volunteers determined that Craneware’s Chargemaster Toolkit®,
Chargemaster Corporate Toolkit®, Bill Analyzer, Online Reference
Toolkit®, and Interface Scripting Module have met specific criteria
developed under the HFMA Peer Review Process. HFMA does not
endorse or guarantee the use of these products.
Craneware is a Microsoft Silver Independent Software Vendor.
2
Craneware plc Annual Report 2013 Craneware Revenue Integrity Solutions® [Cont’d.]
Access Management
& Strategic Pricing
Pricing Analyzer™
software simplifies the price modeling process, creating
a repeatable, well-documented method to establish
transparent, defensible and competitive pricing.
Patient Charge Estimator®
software simplifies the process of providing patient
bill estimates for inpatient and outpatient services to
improve upfront collections and reduce bad debt.
InSight Medical Necessity®
provides all-payor medical necessity validation and
Advance Beneficiary Notice (ABN) creation, which
reduces accounts-receivable days by preventing
medical necessity denials, and facilitates payment
communication with patients.
Supply Management
Pharmacy ChargeLink®
improves charge capture, pricing and cost management,
while simplifying the process for ensuring drug coding
and billing units are complete and compliant, and
establishing and maintaining a connection between a
hospital’s pharmaceutical purchases and billing.
Supplies ChargeLink®
helps optimise reimbursement for codable supplies by
identifying missing or invalid charges, and establishing
and maintaining a connection between a hospital’s
supply purchase history and its chargemaster, which
helps ensure accurate pricing, coding and billing of
these supplies.
Revenue Cycle
Audit & Revenue Recovery
InSight Audit®
software is a comprehensive, web-based audit
management tool that empowers healthcare
organisations to manage claim audits and workflow
from one central location, leveraging an extensive
proprietary knowledgebase that includes current
payment rules, best practices, templates, checklists,
forms, and references for winning appeals.
InSight Payment Variance Analyzer®
identifies, tracks and helps eliminate revenue lost in
the form of underpaid claims.
InSight Denials®
analyses, tracks, trends and reports on denial data,
providing workflow tools to distribute denied claims to
the right departments and staff for resubmission.
Professional Services
Craneware Professional Services provide companion
implementation and consulting services that help
clients apply best practices and achieve a fast,
sustainable return-on-investment. Craneware
augments initial product training with live or
self-led web-based training through the Craneware
Performance Center and optional fee-based training.
Chargemaster Toolkit®,
Chargemaster Corporate Toolkit®
and Chargemaster Toolkit® - CAH
automate chargemaster management processes for
capturing optimal legitimate reimbursement for
hospitals and mitigating compliance risk. The Toolkit
is customisable for any organisation, from small
community hospitals to large healthcare networks.
Bill Analyzer
software automates claim and coding reviews to
identify missed charges, billing errors, and categorise
areas of risk to help ensure that all legitimate revenue
is captured. Bill Analyzer ranks #1 in its KLAS Revenue
Cycle category for the second consecutive year.
Physician Revenue Toolkit®,
Physician Management Toolkit and
Physician Revenue Toolkit® – Corporate
are for managing physician group charges, codes,
RVUs, fee schedules, and related information –
includes Online Reference Toolkit® for physician
billing. The corporate version manages charges to a
corporate standard. The management version includes
Decision Dashboard® that tracks Key Performance
Indicators (KPIs) for strategic physician group charge
management.
Supporting Modules
Online Reference Toolkit®
is an HFMA Peer-Reviewed web-based tool for
reducing risk by providing access to reference and
regulatory resources.
Interface Scripting Module
is HFMA Peer-Reviewed software that automatically
uploads chargemaster changes to the patient billing
system for accurate billing.
3
Craneware plc Annual Report 2013 Chairman’s Statement
“We are confident that our market
leading products and proven
customer successes mean we are
well positioned.”
George Elliott, Chairman
This has been a year of consolidation for Craneware,
in which we have taken advantage of changes within
the industry to recruit high calibre individuals into the
business, improve our sales process and further develop
our products to help ensure the revenue integrity of
our customers.
Overall Group revenue reported in the year was
marginally ahead of that of last year, masking the
steady growth through the year in sales to individual
hospitals, which was very encouraging and a
reflection of the more stable trading environment.
The Group remained very profitable, with adjusted
EBITDA increasing by 4% to $12.4m and adjusted EPS
increasing 4% to 32.9 cents. Craneware continues to
benefit from strong operational cash flow, closing the
year with a cash balance of $30.3m (30 June 2012:
$28.8m). The confidence the Board has in the business
means we are pleased to recommend an increased final
dividend of 6.3p (9.6 cents) per share giving a total
dividend for the year of 11.5p (17.4 cents) (2012: 10.5p
(15.9 cents) per share).
Despite strong growth in the small and medium tier
of the market, Craneware did not achieve a significant
sale to the larger end of the healthcare market
in the year under review via either large hospital
groups or other routes to market, such as contracts
with IT businesses or consultancies. Although these
opportunities remain significant prospects for the
Group, they are, because of their nature, inherently
difficult to forecast. We believe that in the current
market environment of consolidation in the healthcare
industry, a modified approach is required to secure
these types of deals and we have just completed the
first stage of the restructuring of our organisation to
work with these prospects more effectively. We are
confident that our market leading products and proven
customer successes mean we are well positioned to
secure this business once revenue integrity moves up
their corporate agenda.
I am pleased to report that trading in the current year
has begun well, in line with management’s forecasts.
With an underlying base of annuity revenue, renewal
rates of over 100% by dollar value and a quarter of all
US healthcare providers as customers, Craneware has a
strong foundation for success. Our products consistently
outperform our competitors’ solutions, delivering
transparent and highly measurable cost savings and
efficiencies to our customers. With a high proportion
of the market still relying on manual processes and an
ever increasing level of auditing pressure on hospitals,
the Board is confident of Craneware’s ability to grow its
revenues and profits.
I would like to take this opportunity to thank our
staff for their commitment and enthusiasm and our
shareholders for the support they have demonstrated
this year.
George Elliott, Chairman
9 September 2013
4
Craneware plc Annual Report 2013 Operational Review
“Craneware has the right people,
products and strategy to succeed in
this developing market.”
Keith Neilson, CEO and co-founder
“We have built on the investments
made in prior years…[with] initial
indications of success…and…
continued to increase the bandwidth
of our senior management team.”
Craig Preston, CFO
Introduction
As predicted, during the year under review we have
seen the US healthcare market continue to evolve. Our
focus over the year has been to ensure Craneware has
the right people, products and strategy to succeed in
this developing market. With the leading products in
the market, $12.4m of EBITDA profit secured in the year
and $30.3m of cash at the year end, the Company is in a
very strong position.
We are pleased to report that we saw a general
strengthening of trading conditions through the year, as
the disruption caused by the introduction of Electronic
Healthcare Incentive payments in 2011/12 continued
to dissipate. This resulted in a steady increase in sales
through the year to individual hospitals and smaller
groups, and we exited the year with a significantly
higher sales run rate than at the start.
What also became apparent through the course of the
year was the decreasing predictability around sales to
larger hospital groups and other significant routes to
market. The consolidation taking place at the larger
end of the market both disrupted our discussions in this
area and made them more complex. For the first time
since our IPO in 2007, we did not achieve our historical
run rate of one or two larger deals, which has impacted
our reported results.
It is encouraging to note that whilst renewal rates
may fluctuate between periods, renewal rates for the
whole year ending the 30 June 2013 were above our
benchmark of 100% of dollar value. It is evident that,
once in place, Craneware’s revenue integrity solutions
are considered vital for ensuring the financial strength
of a hospital.
We continued to invest in the development and
enhancement of our product suite in the year, and
our products continue to lead the revenue integrity
industry, once again holding their top rankings within
their divisions in the KLAS industry awards.
US Healthcare Market
As the shape of healthcare reform in the US starts to
solidify, following the Supreme Court’s ruling on
6 December 2012 which upheld the Affordable
Healthcare Act as constitutional, there was an increase
in the year in consolidation among the hospital groups.
Integrated Delivery Networks grew in market share
to 45%, up from 41% in the prior year. These hospital
groups have been formed to achieve efficiencies
through scale and we believe will seek corporate-wide
software solutions to improve the efficiencies and
financial strength of their group hospitals, an area in
which Craneware is particularly competitive.
This consolidation has continued against a background
of increasing scrutiny of the smallest rural hospitals
in the Critical Access Hospital (CAH) Market as the
federal government continues to look at budget
deficit reduction plans. Since 1997 these hospitals
have had a protected status receiving 101% of cost
from the state and federal government to ensure
financial viability and provide healthcare in remote
rural communities. Management believe that the
proposed stricter enforcement of the current qualifying
criteria for these hospitals has refocused their need for
revenue integrity solutions. With their higher level of
financial constraints and lower staff levels, Craneware
will address their unique needs with our new hybrid
technology and services solutions.
Medicare’s Recovery Auditors continue to step up
the volume of activity that identifies and recovers
overpayments made to US hospitals by the Medicare
program. The American Hospital Association (AHA)
reported a dramatic increase in Recovery Audit activity
in the 2nd quarter of 2013, up 47% compared to the
4th quarter of 2012. Recover Auditors denied 40% of
claims reviewed and total overpayments identified
now exceed $2.2 billion. To make matters worse
for hospitals, the Center for Medicare and Medicaid
(CMS) recently initiated a pilot in 11 states that allow
Recovery Auditors to perform prepayment audits
in addition to the program’s traditional three year
retrospective audit. Prepayment audits deny payment
before the claim is adjudicated and force hospitals to
enter Medicare’s five level appeal process if they want
to be paid for services already provided.
The AHA report indicates an increasing number of
denied claims are now appealed (40%, although the
Craneware average is higher still at 51%) compared to
prior years (29%) resulting in significant backlogs in
the appeal process. For example, the Administrative
Law Judge level (3rd level of appeal) states a hearing
must be held within 90 days of a request for hearing,
however the average time is now reported as 321 days.
The AHA reports that three-quarters of all appeals are
delayed in the appeal process which at the present can
take up to two years to close. On a national level, 70%
of all cases appealed are overturned in favour of the
hospital. Craneware average is 88%, which results in
a 63% improvement for customers using Craneware
solutions in successfully appealed denials against the
national average.
5
Craneware plc Annual Report 2013 Operational Review [Cont’d.]
A recent report from the Office of the Inspector General
recommended further steps be implemented by CMS
to increase the level of evaluation of hospitals in the
area of fraud.
The current trends therefore reveal increased audit
activity, increased appeal activity, significant backlogs
in the appeal process but the findings clearly show a
preponderance of rulings in favour of hospitals. The
administrative and financial burdens for hospitals are
great but CMS is not showing any signs of reducing its
audit practices.
Strategy
Our vision is to be the partner healthcare providers rely
on to improve and sustain strong financial performance
through revenue integrity.
Our strategy is to provide software solutions
that help customers at the points in their system
where clinical and operational data transform into
financial transactions. Our solutions automate data
normalization, combining disparate data sets while
maintaining the localised context. This produces
valuable, actionable information and creates
organisation-wide visibility and accountability.
Our solutions enable our customers to optimise
reimbursement; increase operational efficiency;
minimise compliance risk; and manage audits.
Craneware’s software is predominantly sold directly by
the Company to hospitals. Its customer base comprises
12% critical access hospitals, 36% independent
community hospitals and 52% IDN hospitals (hospitals
which form part of a larger “integrated delivery
network” of healthcare providers), demonstrating the
Company’s historical success at selling into all parts of
the market.
Over the past year, it has become apparent that there
is an increased opportunity for sales of Craneware’s
solutions to organisations at the larger end of the
scale, whether they are large hospital groups, formed
through market consolidation, or large IT businesses
or consultancies. However, sales to these larger
organisations are naturally more complex and therefore
harder to forecast.
The Board has taken the decision to implement
changes across the business; augmenting domain
knowledge at the PLC Board level with at least one
new non-executive director sourced directly from the
hospital market, also creating two senior management
positions, and aligning operations to the expanded
opportunities at the larger end of our stated six other
routes to market: IDN’s & Large Hospital Systems,
Business Process Outsourcers/Consultants (BPO),
Hardware Vendors, Software Vendors, Group Purchasing
Organisations (GPO’s) and Content Acquirers. This
enables Craneware to more effectively deal with the
challenges and opportunities facing the organisation
today and those that management believe the Group
will face in the future.
The first new senior management position is that of
Chief Marketing Officer (CMO), which brings together
Marketing, Product Management and Corporate
Development. This will enhance the capabilities of
the Group, as we seek to increase the awareness
of Craneware and its solutions with all the levels
of senior management within the teams of these
larger organisations and identify further corporate
development opportunities for Craneware.
As our business increases in size, revenue related to
services is also expected to grow, in proportion with
the whole. We have created the new position of
Executive Vice President Revenue Integrity Operations,
(EVP RIO) to concentrate efforts in this area. This
role has been created to combine our strengths
in Customer Support, Professional Services and
Healthcare Consulting in a new department that will
be responsible for meeting all our customers’ Revenue
Integrity needs. Healthcare consulting will join the
award-winning Customer Support team and our
Professional Services team. These teams will provide
consulting services that use our products on behalf of
customers in addition to the work done by Professional
Services that enables our customers to get the most out
of using our software themselves.
M&A
The sales challenges that have been seen by Craneware
and others throughout the last few years within the
healthcare market due to the previous uncertainty of
the political and legislative landscape have weakened
many healthcare IT companies to the point that strong
and financially stable companies like Craneware can
take advantage of depressed valuations to complete
M&A activity. This combined with the settling of health
reforms makes M&A activity an attractive means
for Craneware to expand either market reach or the
product portfolio. The Board is therefore alert to
M&A opportunities.
Sales and Marketing
The levels of corporate activity in our market enabled
us to increase our recruitment activity in the year,
securing many high calibre people at various positions
throughout the Company, particularly within the sales
team including a new Executive Vice President of Sales.
We have been pleased with the initial indications of
success for the sales team in the year, with a steady
increase throughout the year of activity and contracts
signed at each point in the sales pipeline and across all
three sales regions. Sales momentum as we exited the
year is significantly up on where we started the year
with the sales team focused on delivery and having the
right tools to do so.
The average length of new customer contracts
continues to be in-line with our historical norms of
five years. Where Craneware enters into new product
contracts with its existing customers, contracts are
typically made co-terminus with the customer’s
existing contracts, and as such the average length of
these contracts is greater than three years, in-line with
our expectations.
The sales mix remained fairly constant through
the period, resulting in no change to the overall
product attachment rate, which remained steady at
approximately 1.6 products per customer. For FY14
the sales teams have been specifically incentivised to
complete cross product sales.
As the RAC programme continues to expand we have
seen a particularly strong period for our InSight Audit
solution for the management of the audit process and
the associated appeals processing service. The strength
of InSight Audit’s performance in the year reinforces
management’s view that it is a "Gateway Product"
and is reflective of hospitals positively responding
to defending themselves against RAC denials and
Craneware’s ability to support them in this effort.
6
Craneware plc Annual Report 2013 Operational Review [Cont’d.]
Product Development
Product development continues to be focused on
enhancements to functionality of current products and
the integration of those products in new innovative
combinations. The direction of the product set moves
consistently with the long-term strategic positioning of
Craneware as the revenue integrity partner of choice.
Integration, both within the solution set itself, and
externally with the Healthcare Information Systems,
has also been a focus, particularly with the EPIC
patient accounting system to ensure that all Craneware
customers currently in the midst of the replacement
of their system are fully supported and provided with
the monetary protections and safe guards that only
Craneware can provide.
Focus on Gateway Products
Within three of our four product families, we have
identified “Gateway” solutions, being a product or
service that can form a bridgehead into a customer,
allowing further products to be sold at a later date.
These three products are Pharmacy ChargeLink
(Supplies Management family), Chargemaster Toolkit
(Revenue Cycle family) and Insight Audit (Audit and
Revenue Recovery family). A fourth Gateway Product
is being developed from innovative new product
combinations in our Access Management and Strategic
Pricing family.
During the year we have begun the development
of a set of hybrid solutions, which combine services
with some of our core products to enable them to be
implemented at smaller hospitals that do not have
their own internal revenue integrity teams. We expect
these solutions to be released during the course of
the year. These solutions are particularly suited to the
1,329 Critical Access Hospitals as their status continues
to be reviewed and complement the appeals services
work that sits alongside our Insight Audit product in
our Revenue Integrity Operations team.
Financial Review
The results we are reporting are in line with the
guidance given in our trading statement of 26 June
2013. The backdrop to these results has been a year of
consolidation, both within Craneware and within the
larger US Healthcare market.
We have built on the investments made in prior years,
the initial indications of success of which have been
our sales to individual hospitals and small hospital
groups. In addition we have continued to increase the
bandwidth of our senior management team, at the
Operations Board and at the PLC Board where we are
close to announcing at least one non-executive director
who will add significant market experience.
As expected, the US healthcare market continues
to evolve. The ever-increasing financial pressures
on US hospitals have led to a number of hospitals
consolidating to achieve efficiencies, through
both scale and sharing best practice. Reducing
reimbursement rates, increasing self pay reliance and
the year on year growth of RAC denials all combine to
continually add pressure to the financial margins of
US hospitals.
However, despite the many successes we have seen in
the current year, the financial results reported have
been significantly impacted by this consolidation in the
US healthcare market. This consolidation has resulted
in delays to our sales negotiations with these larger
hospital groups and other routes to market. As a result
of these delays, for the first time since coming to the
public market in 2007, this year’s financial results did
not benefit from any revenue contribution from new
sales to this segment of our market.
Through the combination of these various factors, we
are reporting revenue of $41.5m (FY12: $41.1m) and
adjusted EBITDA of $12.4m (FY12: $11.9m).
Business Model
The Group’s business model and its underlying revenue
recognition policies remain consistent with prior years.
The Group continues to recognise revenue primarily
under its annuity Software-as-a-Service (SaaS) revenue
recognition policies with these revenues accounting
for between 75% to 80% of all revenue recognised in
any one year. Under this model we recognise software
licence revenue and any minimum payments due from
our ‘other route to market’ contracts evenly over the life
of the underlying signed contracts.
As we sign new customers, we normally expect to
deliver a professional services engagement. This relates
to implementation of the software as well as training
the hospital staff in its use. As part of this process we
provide further assistance to the hospital to develop
its processes, assisting in the delivery of best practice,
whilst ensuring the software is utilised to its maximum
potential. Within any individual contract we would
expect these services to account for 12% to 20% of
the total contract value (dependent on the product
and needs of the individual hospital). However of
total Group revenue in any one year we would expect
services revenues to account for between 10% to
20% of revenue. This revenue is typically recognised
as the service is delivered, usually on a percentage of
completion basis.
Our third revenue model is a result of the ClaimTrust,
Inc. acquisition in 2011. For revenue recognition
purposes it is effectively the same recognition as the
normal annuity SaaS model described above. It is
recurring in its nature, however, it is not signed under
long term non-breakable contracts and is invoiced
monthly in arrears rather than annual in advance,
therefore we believe it does not include the inherent
advantages of the Craneware annuity SaaS revenue
model. This revenue currently accounts for less than
10% of total revenues in any one year and as contracts
for both new and existing customers of the InSight
product range are being signed under the annuity SaaS
model, we would expect the proportion of revenue
derived from this model to reduce over time.
As a result of these revenue recognition models,
based on our historical average contract life for new
hospitals of 5 years, the maximum value of an average
contract that can be recognised as revenue in any
one year is 20% plus the value of associated services
that have been delivered. In all cases, if the contract
contains any material contingencies or any increased
risk of collection is identified, revenue is deferred until
the contingency or the increased risk of collection is
satisfied, at which point the revenue that has been
deferred is released and the revenue recognition
is ‘caught up’ to the level that would have been
recognised had there been no deferral.
7
Craneware plc Annual Report 2013 Operational Review [Cont’d.]
Revenue
Earnings
We are reporting revenue for the year of $41.5m
(2012: $41.1m). Underlying this marginal growth in
revenue we have seen an increase in our direct sales
to individual and smaller groups of hospitals, and the
sales momentum as we exited the year continues to
build. However these successes are masked by the
Group being unable to conclude any large sales in the
year to either large hospital groups or our other routes
to market. As described earlier in this report, due to
the ongoing consolidation in our marketplace these
deals, whilst increasing in size, have also increased in
complexity and as a result determining when these
deals will close and therefore contribute to revenue is
difficult to forecast.
In the prior year, two such deals did sign and
contribute to new revenue for that year. One included a
‘white-labelling fee’ of $3.5m which, as all associated
professional services were completed in the year, was
fully recognised as revenue in the Financial Year 2012.
This revenue was not repeated in the current year,
and as a result our Professional Services (including
white-labelling) recognised in the year has fallen from
$7.1m (or 17% of Group revenue) in FY12 to $5.3m (or
13% of Group Revenue) in FY13 despite underlying
professional services growing by 47%. As this white
labelling revenue was not repeated, it has effectively
been replaced with new software and services revenue
in reporting total Group Revenue of $41.5m.
Whilst professional services revenue at 13% of Group
revenue is still within our expected range of 10% to
20% of our revenue in any one year, we retain the
capacity within our existing business model to expand
this revenue stream contributing to future years’
revenue growth.
As a result of our 2011 acquisition of ClaimTrust, Inc.,
the Group introduced an ‘Adjusted’ earnings metrics
to adjust for one-off acquisition costs. In the prior
year this resulted in the one-off benefit of $0.95m
relating to the release of the provision for contingent
consideration being removed. In the current year,
there have been no further benefits or charges of this
nature; however this prior year adjustment still impacts
the comparatives reported. We continue to believe
the disclosure of these adjusted earnings metrics is
consistent with other acquisitive companies and that
it allows for a more accurate understanding of the
underlying profit generated from operations and for a
direct comparison year on year.
Adjusted earnings before interest, taxation, share
based payments, depreciation and amortisation
(“EBITDA”) has grown marginally in the year to $12.4m
(FY12: $11.9m) an increase of 4%. This reflects a stable
Adjusted EBITDA margin of c29%. This is consistent
with the Group’s measured approach to the release of
additional investment, continuing to make investments
in line with the revenue growth occurring, whilst
continually looking to ensure the efficiency of the
investments we make.
Revenue Visibility and other KPIs
Through the business model we utilise, the additional
new sales we make in any given year build on our
annuity base of revenues. This annuity base of revenue
allows us to better plan our investment strategy in
advance, and whilst in any one year we will always
rely on additional sales in the year to generate growth,
we enter our next financial year with a significant
percentage of that year’s revenue targets already
under contract. The Group illustrates this annuity base
through its “Three Year Visible Revenue” metric. This
metric includes:
Future revenue under contract;
Revenue generated from renewals (calculated at
100% dollar value renewal).
InSight revenue identified as recurring in nature
(subject to an estimated churn rate of 8% per year);
The different categories of revenue reflect any inherent
future risk in recognising these revenues. Future
revenue under contract, is, as the title suggests, subject
to an underlying contract and therefore only has to
be invoiced to be recognised in the respective years
(subject to future collection risk that exists with all
revenue). Renewal revenues are contracts coming to
the end of their original contract term (e.g., 5 years)
and will require their contracts to be renewed for the
revenue to be recognised, however as we track our
renewal metric, and consistently report over 100%
renewals by dollar value, it is reasonable to conclude
minimal additional risk is associated to this revenue.
The final category “InSight revenue identified as
recurring in nature” is revenue that we would expect to
recur in the future but as the underlying contracts are
not long term in their nature or contain break clauses
there is potential for this revenue not to be recognised
in future years, however we apply an estimated 8%
churn rate to make allowance for this risk.
To better aid understanding, the three year visible
revenue as at 30 June 2013 (i.e., visible revenue for
FY2014, FY2015 and FY2016) is presented against the
visible revenue for the same three year period as at
30 June 2012. This therefore demonstrates the growth
in our annuity base of revenues, which translates to
visible revenue for the next three years to 30 June 2016
of $109.5m from $105.5m at 30 June 2012. This breaks
down as follows:
InSight revenue identified as recurring in nature of
$8.1m.
Revenue generated from renewal activities
contributing $40.8m; being $5.4m in FY14, $15.0m
in FY15 and $20.4m in FY16.
Future revenue under contract contributing $60.6m
of which $30.4m is expected to be recognised in
FY14, $17.7m in FY15 and $12.5m in FY16.
(Figure 1.)
Average length of contracts signed with new
customers in the period is in line with our historical
normal average contract length of 5 years, this
is following a dip in the prior year to 4 years. The
product attachment rate, being the average number
of our nine products that are in place across our
entire customer base, has remained steady at 1.6
products. The remaining 7.4 reflects the significant
cross sell opportunity that still exists for the Group.
8
Craneware plc Annual Report 2013 Operational Review [Cont’d.]
Operating Expenses
Cash
Balance Sheet
The Group maintains a strong balance sheet position,
not only through our significant cash balance but with
rigorous controls over working capital and no debt.
With our measured investment strategy, our net
operating expenses (before acquisition benefits/costs,
share based payments, depreciation and amortisation)
have remained stable at $27.0m (FY12: $27.6m). We
continue to look to leverage the investments we have
made in prior years, as well as make further targeted
investment going forward, as we continue to increase
sales levels and hospital customer numbers.
We measure the quality of our earnings through our
ability to convert them into operating cash. As in prior
years, we have very high levels of cash conversion
which has enabled us to grow our cash reserves to
$30.3m (FY12: $28.8m). These cash levels are after
paying $3.4m in taxation (FY12: $1.3m) and a further
$4.7m (FY12: $4.1m) to our shareholders by way of
dividends.
As innovation will continue to be core to the Group’s
future we continue to invest in Product Development
spend which has remained at c$7m. We continue to
capitalise very low levels of Development spend with
$0.1m capitalised in the year (FY12: $0.3m).
We retain a significant level of cash reserves to fund
‘bolt-on’ acquisitions if suitable opportunities arise.
Figure 1.
40.0
35.0
30.0
25.0
$m
20.0
15.0
10.0
5.0
0.0
2014
2015
2016
30 Jun. 2012
30 Jun. 2013
ClaimTrust Legacy Revenue
Renewals
Contracted
9
Craneware plc Annual Report 2013 Operational Review [Cont’d.]
Currency
Dividend
The reporting currency for the Group (and cash
reserves) is US Dollars. Whilst the majority of our
cost base is US located and therefore US Dollar
denominated, we do have approximately one quarter
of the cost base based in the UK relating primarily
to our UK employees (and 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. During the
year, we have not seen a significant impact through
exchange rate movements, with the average exchange
rate throughout the year being $1.5685 as compared to
$1.5840 in the prior year.
Taxation
The Group’s effective tax rate remains dependent on
the proportion of profits generated in the UK and
the US and the applicable tax rates in the respective
jurisdictions. As detailed above, the current year has
seen levels of professional services revenues generated
at the lower end of the 10% to 20% of revenue range
we would normally anticipate in our business model.
As all professional services are delivered in the US,
the resulting lower levels of this revenue has reduced
the levels of income subject to taxation in the US
against our historical norms. This combined with the
reducing tax rate in the UK and our continued ability
to agree enhanced Research and Development tax
relief has resulted in an effective tax rate of 21.8%
(FY12: 20.6%). Effective tax rates will increase in future
years if the ratio of underlying professional services to
software license revenues increases.
EPS
The Board recommends a final dividend of 6.3p (9.6
cents) per share giving a total dividend for the year of
11.5p (17.4 cents) per share (2012: 10.5p (15.9 cents)
per share). Subject to confirmation at the Annual
General Meeting, the final dividend will be paid on
13th December 2013 to shareholders on the register
as at 15th November 2013, with a corresponding ex-
Dividend date of 13th November 2013.
The final dividend of 6.3p 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
15th November 2013. The exact amount to be paid
will be calculated by reference to the exchange rate
to be announced on 15th November 2013. The final
dividend referred to above in US dollars of 9.6 cents is
given as an example only using the Balance Sheet date
exchange rate of $1.5167/£1 and may differ from that
finally announced.
Outlook
The strengthening of sales activity has continued and
trading in the first few months of the new financial
year has been healthy. With a product suite that
addresses many of the fundamental financial issues
besetting healthcare providers in the US, an invigorated
sales team and a more stable trading environment, we
are confident Craneware has the platform to deliver
increased shareholder value in the years ahead.
As with EBITDA, the Group is reporting an Adjusted
EPS figure, with the prior year’s EPS figure having been
adjusting for the $0.95m of contingent consideration
provision released.
Keith Neilson, Chief Executive Officer
Craig Preston, Chief Financial Officer
9 September 2013
In the year adjusted EPS has increased to $0.329 (FY12:
$0.316) and adjusted diluted EPS has increased to
$0.328 (FY12: $0.315). The increase in EPS is driven
by the levels of EBITDA and the continued lower than
historically expected effective tax.
10
Craneware plc Annual Report 2013 Independent Auditors
PricewaterhouseCoopers LLP
Chartered Accountants & Statutory Auditors
Erskine House
68-73 Queen Street
Edinburgh
EH2 4NH
Solicitors
Pinsent Masons LLP
Princes Exchange
1 Earl Grey Street
Edinburgh
EH3 9AQ
Directors, Secretary, and Advisors
Directors
Bankers
The Royal Bank of Scotland plc
36 St. Andrew Square
Edinburgh
EH2 2YB
Clydesdale Bank
20 Waterloo Street
Glasgow
G2 6DB
Barclays Commercial Bank
Aurora House
120 Bothwell Street
Glasgow
G2 7JT
HSBC Bank plc
7 West Nile Street
Glasgow
G1 2RG
Lloyds TSB
Henry Duncan House
120 George Street
Edinburgh
EH2 4LH
G R Elliott (Chairman, non-executive)
K Neilson
N P Heywood (non-executive)
C T Preston
R F Verni (non-executive)
Company Secretary &
Registered Office
C T Preston
1 Tanfield
Edinburgh
EH3 5DA
Stockbrokers and
Nominated Advisors
Peel Hunt LLP
120 London Wall
London
EC2Y 5ET
Registrars
Capita Registrars Ltd
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU
11
Craneware plc Annual Report 2013
Board of Directors
12
George R Elliott, 60 — Non-Executive Chairman :: Appointed 10 August 2007
George is currently non-executive Chairman of Cupid plc (CUP) an online dating company. Since 2007 he has been non-executive chairman/
director of a number of technology companies, including non-executive chairman of MicroEmissive Displays Group plc, Corsair Components
Inc, Kewill plc and Simple Audio Limited and non-executive director of Summit Corporation plc, Oxonica plc and ClearSpeed plc. From 2000-
2007 George was Chief Financial Officer of Wolfson Microelectronics plc (WLF), a leading global provider of high performance mixed-signal
semiconductors to the consumer electronics market. Previously, he was Business Development Director at McQueen International Ltd (now
Sykes), a manufacturing and support services provider, where he was responsible for strategic sales and marketing. George, formerly a
partner of Grant Thornton, is a member of the Institute of Chartered Accountants of Scotland and has a degree in Accountancy and Finance
from Heriot-Watt University.
Keith Neilson, 44 — Chief Executive Officer :: Co-founder
Keith co-founded Craneware in 1999 and has served as its CEO ever since. Under Keith’s guidance, Craneware became recognised as the
pioneer in revenue integrity management and a leading provider of superior products and professional services. Keith’s direction has helped
Craneware to win multiple prestigious awards in such areas as international achievement, business growth strategy and innovation. Keith
was named The Entrepreneurial Exchange’s “Emerging Entrepreneur of the Year 2003” and was a finalist in the 2004 World Young Business
Achiever Award, winning the Award of Excellence in the Business Strategy category. He received the UK Software & Technology Entrepreneur
of the Year Award from Ernst & Young in 2008 and was the Insider Elite Young Business Leader of the Year in 2009. Prior to launching
Craneware, Keith worked primarily in international management, where he handled sales, marketing and technical consulting for companies
with operations around the world. He studied Physics at Heriot-Watt University, Edinburgh, receiving a bachelor’s degree in 1991.
Craig T Preston, 42 — Chief Financial Officer :: Appointed 15 September 2008
Craig was appointed to the Board on 15 September 2008, just as the company was entering its second year as a publicly traded corporation
on the London Stock Exchange. As CFO, he directs Craneware’s financial operations in both the United Kingdom and United States. Craig has
significant experience in senior financial roles with other private and public technology companies, including those with a multi-national
presence. Prior to Craneware, he was group director of finance and company secretary at Intec Telecom Systems plc. Earlier, he served as
corporate development manager at London Bridge Software plc. During his time there, he also held the role of CFO for Phoenix International,
a previously NASDAQ-traded software company, following its acquisition by London Bridge. Earlier in his career, Craig worked for Deloitte in
both the United Kingdom and United States. Craig has a degree in Accounting and Financial Management from the University of Sheffield.
He is also a member of the Institute of Chartered Accountants in England and Wales.
Neil P Heywood, 51 — Non-Executive Director :: Appointed 31 January 2002
Neil is a director of Matrix Alpha Analytics, a company providing services to the hedge fund and non-executive Chairman of Codeplay
Software Limited and a non-executive Director of Games Analytics Limited. Neil was co-founder and CEO of Quadstone, a marketing analytics
software company, from 1995 to 2001. Previously Neil was head of the Edinburgh Parallel Computing Centre, a department at the University
of Edinburgh, and co-founder and Director of 3L Limited, a company specialising in software for parallel computers. 3L was bought by
Spectrum Signal Processing, Inc. Neil received his B.Sc. (Hons) in Computer Science from the University of Edinburgh in 1984.
Ron F Verni, 65 — Non-Executive Director :: Appointed 1 May 2009
Ron is currently a director of On Deck Capital, and on the Board of Advisors of Company.com, CEO Ventures, and the Robinson College of
Business. Before that he was President & CEO of Sage Software, Inc, and a member of the Board of Directors of the Sage Group plc. Under
his leadership, the company grew from less than $160 million in revenue to over $1 billion, from under 1,000 employees to over 5,000, and
from 1 million business customers to over 2.5 million. Ron also engineered over 20 acquisitions and oversaw their successful integration into
the company. Prior to Sage Software, Ron was President and CEO of Peachtree Software, Inc., a leading pioneer in business management
solutions for small to medium size businesses. Ron also was a Vice President of Marketing with Automatic Data Processing, President and CEO
of NEBS Software, Inc., and the founder and CEO of ASTEC Software.
Craneware plc Annual Report 2013 Directors’ Report
The directors present herewith their report and the
audited consolidated financial statements for the year
ended 30 June 2013.
Principal Activities and Business Review
The Group's principal activity continues to be the
development, licensing and ongoing support of
computer software for the US healthcare industry.
During the year the Company paid an interim dividend
of 5.2p (7.8 cents). The Directors are recommending the
payment of a final dividend of 6.3p (9.6 cents) per share
giving a total dividend of 11.5p (17.4 cents) per share
based on the results for 2013 (2012: 10.5p (15.9 cents)).
Subject to approval at the Annual General Meeting,
the final dividend will be paid on 13 December 2013 to
shareholders on the register as at 15 November 2013.
The Company is required by the Companies Act to
include a business review in this report. This includes
an analysis of the development and performance of
the Group during the financial year and its position at
the end of the financial year, including relevant key
performance indicators (principally revenue, adjusted
operating profit before acquisition costs, share based
payments, depreciation and amortisation, visibility
of revenue over the next three years and the product
attachment rate). Detailed information on all matters
required is presented in the Operational Review
contained in pages 5 to 10 and is incorporated
into this report by reference. A description of the
principal risks and uncertainties facing the Group is set
out below.
Where the Directors’ Report, Chairman’s Statement
and Operational Review contain forward looking
statements, these are made by the directors in good
faith based on the information available to them at the
time of their approval of this report. Consequently, such
statements should be treated with caution due to their
inherent uncertainties, including both economic and
business risk factors, underlying such forward looking
statements or information.
Financial Results and Dividends
The Group’s revenue for the year was $41.5m (2012:
$41.1m) which has generated an adjusted operating
profit (before acquisition related matters) of $11.1m
(2012: $10.8m). The full results for the year, which were
approved by the Board of Directors on 9 September
2013, are set out in the accompanying financial
statements and the notes thereto.
Dividends/Share (pence)
4.7
The level of dividend proposed for the year continues
(and the Directors intend to continue in future years)
the Company’s stated progressive dividend policy
based on the Group’s retained annual earnings. The
level of distributions will be subject to the Group’s
working capital requirements and the ongoing needs
of the business.
Research and Development Activities
The Group continues its development programme
of software products for the US healthcare industry
which includes research and development of new
complimentary products, integration (where
appropriate) of products acquired through the
ClaimTrust acquisition and the enhancements to the
Group’s existing portfolio of market leading products.
The Directors regard investment in development
activities as a prerequisite for success in the medium
and long term future. During the year development
expenditure amounted to $6.9m (2012: $6.8m) net of
expenditure capitalised of $0.1m (2012: $0.3m).
Financial Instruments
The financial risk management strategy of the
Group, its exposure to currency risk, interest rate risk,
counterparty risk and liquidity is set out in Note 3 to the
Financial Statements.
Principal Risks and Uncertainties
To deliver continued sustainable growth, the Group
recognises the need to minimise the likelihood and
impact of key risks. These risks are both general in
nature i.e. business risks faced by all businesses, and
more specific to the Group and the market in which it
operates. The nature of the US healthcare industry and
associated risks are detailed in the Operational Review
on pages 5 to 10.
The risks outlined here are those principal risks and
uncertainties that are material to the Group. They do not
include all risks associated with the Group and are not
set out in any order of priority.
US Healthcare Reform
Issue: The US healthcare industry continues to progress
through a period of fundamental reform, the outcome
of which has yet to be fully determined and as such
could impact the Group’s market opportunity.
Actions: The Group has taken steps to ensure it stays at
the forefront of how the industry is interpreting current
proposals and actions they are taking. It does this
through, amongst other things, its:
‘Strategic Advisory Council’ which is formed from the
industry experts from within the Group;
Having independent industry experts attend and
speak at internal Company events;
Regular attendance by members of this Council and
other senior management at healthcare forums and
industry education events; and
Client forums.
The Strategic Advisory Council, the Operations Board
and the PLC Board come together at periodic intervals to
review developments in the market and provide direct
input to the Group’s ongoing strategy appraisal and
product development.
Competitive Landscape
Issue: New entrants to the market or increased
competition from existing competitors could
significantly impact the Group’s market opportunity.
Actions: The Group continually monitors its competitive
landscape, including both existing and potential new
market entrants. Significant barriers to entry continue
to exist, including but not limited to the significant data
content built over the Group history which exists within
the products. The Group continues to ensure its products
are platform agnostic and actively seeks partnerships
with other Healthcare IT vendors.
8.0
8.8
10.5
11.5*
*Subject to approval at AGM
FY09
FY10
FY11
FY12
FY13
13
Craneware plc Annual Report 2013 Directors’ Report [Cont’d.]
Management of Growth
Issue: The Group continues to to plan for significant
growth both organically and through acquisition which
could place strain on the current management and other
resources of the Group.
Actions: The Group’s annuity SaaS (“Software as a
Service”) business model combined with the detailed
forecasting processes provide visibility to expected
growth rates. This provides a foundation when planning
in advance, including necessary resourcing levels
that result from this growth. To ensure the correct
infrastructure to support growth, assessments are
performed and improvements are made within systems,
policies and procedures and business controls are
upgraded, as appropriate, across the Group.
Dependence on Key Executives and Personnel
Issue: Due to the size of the Group significant reliance
is placed on a few members of the executive and senior
management team, the retention of which cannot
be guaranteed.
Actions: The Group continues to expand and strengthen
its senior management team, with two new
appointments to the Operations Board having been
made in the year and a further appointment since the
Balance Sheet date. In addition, the Group has utilised
its ‘leadership framework’ to help develop its leaders
of the future. In regards to retention the Remuneration
Committee continues to monitor and develop the
remuneration packages of key personnel to ensure
they are both competitive and include appropriate long-
term incentives.
Failure to develop or acquire
appropriate software solutions
Issue: Reliance on a small number of products could
significantly limit the Group’s market opportunity and
leave it unable to meet its customers’ needs.
Actions: Whilst remaining focused on its core ‘Revenue
Integrity’ market the Group has both internally
developed and acquired a total product suite of nine
core products (from the original one in 2007). The Group
publishes its product attachment rate during every
reporting period and has a medium term strategic goal
of generating no more than 55% of its revenue in any
year, from any one product.
Intellectual Property Risk
Issue: Failure to protect, register and enforce (if
appropriate) the Group’s Intellectual Property Rights
could materially impact the Group’s future performance.
Actions: The Group will continue to register its
trademarks and protects access to its copyrights and
confidential information, as appropriate. The Group
would vigorously defend itself against a third-party
claim should any arise. The Group also has in place strict
physical and data security processes and encryption to
protect its intellectual property.
Acquisition Risk
In summary, the US healthcare market is not immune to
the macro-economic climate and, with the increasing
focus and requirements of the proposed healthcare
reform, the Group expects the market to continue to be
competitive. The Group therefore aims to remain at the
forefront of product innovation and delivery, through
a combination of in-house development and specific
acquisition opportunities. This requires the recruitment,
retention, and reward of skilled staff, alongside
responsiveness to changes, and the opportunities that
result, as they arise.
Going Concern
The Directors, having made suitable enquiries and
analysis of the accounts, including the consideration of:
cash reserves;
no debt or debt related covenants;
continued cash generation; and
Annuity SaaS business model;
Issue: The Group has a stated acquisition strategy. Any
acquisition carries with it an inherent risk, including
failure to identify material matters that could adversely
affect future Group performance.
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 these financial statements.
Actions: Whilst the Group has limited experience of
acquisitions, the Board members individually have
significant experience in regards to completing
acquisitions.
In addition, and where appropriate, the Board
appoints independent professional advisors to assist
in the consideration of the acquisition and to assist
management in the due diligence process.
The principal financial risks are detailed in Note 3 to the
financial statements. How the Board determines and
manages risks is detailed in the Corporate Governance
report on pages 17 to 20.
Directors
The Directors of the Company are listed on page 12.
The Directors have the power to manage the business
of the Company, subject to the provisions of the
Companies Act, the Memorandum and Articles of
Association of the Company, and to any directions given
by special resolution, including the Company’s power
to purchase its own shares. The Company’s Articles
of Association may only be amended by a special
resolution of the Company’s shareholders.
Details of the Directors’ service contracts and
their respective notice terms are detailed in the
Remuneration Committee Report on page 22.
14
Craneware plc Annual Report 2013 Directors’ Report [Cont’d.]
Authorised and Issued Share Capital
The Company’s authorised share capital at the Balance
Sheet date was 50,000,000 ordinary shares of 1p each
of which 27,008,763 were issued and fully paid up.
During the year, options were exercised pursuant to
the Company’s share option schemes, resulting in the
allotment of 16,872 new ordinary shares. No further
new ordinary shares have been allotted since the end of
the financial year to the date of this report.
Directors and their interests
The interests of the Directors who held office at
30 June 2013 and up to the date of this report in the
share capital of the company, were as follows:-
G R Elliott
N P Heywood
K Neilson
2013
15,650
130,356
3,471,529
3,617,535
2012
15,650
130,356
3,453,459
3,599,465
Indemnity of Directors and Officers
Under the Company’s Articles of Association and subject
to the provisions of the Companies Act, the Company
may and has indemnified all Directors or other officers
against liability incurred by them in the execution or
discharge of their duties or exercise of their powers,
including but not limited to any liability for the costs
of legal proceedings where judgement is given in their
favour. In addition, the Company has purchased and
maintains appropriate insurance cover against legal
action brought against Directors and officers.
Corporate Social Responsibility
& Environmental Policy
The Group is committed to maintaining a high
level of social responsibility. It is the Group’s policy
to support and encourage environmentally sound
business operations, with aspects and impact on
the environment being considered at Board level.
Recognising that the Group’s operations have minimal
direct environmental impact, the Group aims to ensure
that:
Directors’ interests in share options are detailed in the
Remuneration Committee Report on page 23.
it meets all statutory obligations;
where sensible and practical, it encourages working
practices, such as teleconferencing, teleworking
and electronic information exchange that reduce
environmental impact; and
re-cycles waste products wherever possible,
encouraging use of environmentally friendly
materials, and disposing safely of any non-
recyclable materials.
Customers
The Group treats all its customers with the utmost
respect and seeks to be honest and fair in all
relationships with them. The Group provides its
customers with products and levels of customer service
of outstanding quality.
Community
The Group seeks to be a good corporate citizen
respecting the laws of the countries in which it operates
and adhering to best social practice where feasible. It
aims to be sensitive to the local community’s cultural
social and economic needs.
Substantial shareholders
As at 1 September 2013, the Company had been notified
of the following beneficial interests in 3% or more of
the issued share capital pursuant to section 793 of the
Companies Act 2006:
No. of
Ordinary
£0.01
Shares
% of
issued
share
capital
4,033,996
14.94
3,471,529
12.85
3,173,151
11.75
2,476,460
9.17
2,065,874
1,698,112
1,425,000
1,019,699
873,800
7.65
6.29
5.28
3.78
3.24
Liontrust Investment
Partners
K Neilson
W G Craig
Artemis Investment
Management
Fidelity Investments
Hargreave Hale
AXA Framlington
Baillie Gifford
D Paterson
The total number of shares as at 30 June 2013 and 1
September 2013 was 27,008,763.
Employees and Employee Involvement
The Group recognises the value of its employees and
that the success of the Group is due to their efforts.
The Group respects the dignity and rights of all its
employees. The Group provides clean, healthy and safe
working conditions. An inclusive working environment
and a culture of openness are maintained by the regular
dissemination of information. The Group endeavours
to provide equal opportunities for all employees and
facilitates the development of employees’ skill sets.
A fair remuneration policy is adopted throughout
the Group.
The Group does not tolerate any sexual, physical
or mental harassment of its employees. The Group
operates an equal opportunities policy and specifically
prohibits discrimination on grounds of colour, ethnic
origin, gender, age, religion, political or other opinion,
disability or sexual orientation. The Group does not
employ underage staff.
The general policy of the Group is to welcome employee
involvement as far as it is reasonably practicable.
Employees are kept informed by meetings, regular
updates and web page postings. In addition the Group’s
UK and US senior management teams meet regularly to
review performance against the Group’s strategic aims
and development roadmaps.
The Group maintains core values of Honesty, Integrity,
Hard Work, Service and Quality and actively promotes
these values in all activities undertaken on behalf of
the Group.
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 Group 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.
15
Craneware plc Annual Report 2013 Directors’ Report [Cont’d.]
Policy on payment of Payables
Relationships with suppliers and subcontractors are
based on mutual respect, and the Group seeks to be
honest and fair in its relationships with suppliers and
subcontractors, and to honour the terms and conditions
of its agreements in place with such suppliers and
subcontractors.
The Group does not believe that the giving or accepting
of bribes is acceptable business conduct.
It is the Group’s normal practice to make payments
to suppliers in accordance with agreed terms and
conditions, generally within 30 days, provided that the
supplier has performed in accordance with the relevant
terms and conditions. Trade payables at 30 June 2013
represented, on average 16 days purchases
(2012: 20 days) for the Group and 22 days purchases
(2012: 22 days) for the Company.
Charitable and Political Contributions
As part of the Group’s commitment to Corporate
Social Responsibility it has continued to develop the
“Craneware Cares” program. The focus of Craneware
Cares is to raise awareness and funds for charity. In
2013, Craneware Cares led initiatives specifically to raise
awareness and funds for Alzheimer charities, which
support caregivers, patients and those researching cures
for people dealing with this devastating disease. In the
US, the company’s Arizona, Massachusetts, Tennessee
and Georgia offices participated in charity walks, while
staff at the Craneware headquarters in Edinburgh
undertook Walk the West Highland Way in a challenging
3 day, 96-mile hike across many of Scotland's iconic
mountains and glens. In total, Craneware Cares 2013
raised more than $37,000 donated directly to the
selected US and UK Alzheimer charities.
Neither the Company nor its subsidiaries made any
donation for political purposes in fiscal years 2013
or 2012.
Annual General Meeting
The resolutions to be proposed at the AGM, together
with explanatory notes, appear in a separate Notice
of Annual General Meeting which is sent to all
shareholders. The proxy card for registered shareholders
is distributed along with the notice.
Company Registration
The Company is registered in Scotland as a public
limited company with number SC196331.
Statement of Directors’ Responsibilities
The Directors are responsible for preparing the Annual
Report and the financial statements in accordance with
applicable law and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the
Directors have prepared the Group and Parent Company
financial statements in accordance with International
Financial Reporting Standards (IFRSs) as adopted
by the European Union. In preparing these financial
statements, the Directors have also elected to comply
with IFRSs, issued by the International Accounting
Standards Board (IASB). Under company law the
Directors must not approve the financial statements
unless they are satisfied that they give a true and
fair view of the state of affairs of the Group and the
Company and of the profit or loss of the Group for that
period. In preparing these financial statements, the
Directors are required to:
select suitable accounting policies and then apply
them consistently;
make judgements and accounting estimates that are
reasonable and prudent; and
state whether applicable IFRSs as adopted by the
European Union and IFRSs issued by IASB have
been followed, subject to any material departures
disclosed and explained in the financial statements.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and
explain the Company’s transactions and disclose with
reasonable accuracy at any time the financial position
of the Company and the Group and enable them to
ensure that the financial statements comply with the
Companies Act 2006. They are also responsible for
safeguarding the assets of the Company and the Group
and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities.
The Directors are responsible for the maintenance
and integrity of the company’s website. Legislation in
the United Kingdom governing the preparation and
dissemination of financial statements may differ from
legislation in other jurisdictions.
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.
Approved by the Board of Directors and signed on
behalf of the Board by:
Craig Preston
Company Secretary
9 September 2013
16
Craneware plc Annual Report 2013 Corporate Governance Report
The Board of Directors ("the Board") acknowledge
the importance of the Principles set out in The UK
Corporate Governance Code issued in September 2012
(the “Code”). Although the Code is not compulsory
for AIM listed companies, the Board recognises the
importance of good corporate governance practices
and therefore has applied the principles as far as
practicable for a Public Company of its size. This Report
and the Remuneration Committee Report (on pages
21 to 23) identify how it has complied with both
the individual principles and the ‘spirit’ of the Code as
a whole.
The Code itself defines the purpose of corporate
governance being “to facilitate effective,
entrepreneurial and prudent management that can
deliver the long-term success of the company;” it is
this overarching objective that the Board has sought to
achieve in applying the Code principles.
Leadership
The role of the Board
“Every Company should be headed by an effective Board
which is collectively responsible for the long-term success
of the company”
The Company’s Board continues to be headed by its
Chairman George Elliott and comprises two executive
Directors, Keith Neilson, Chief Executive Officer and
Craig Preston, Chief Financial Officer along with two
further non-executive Directors, Ron Verni (Senior
Independent Director) and Neil Heywood. Detailed
biographies of all Directors are contained on page
12. The Board meets regularly, usually monthly,
to discuss and agree on the various matters brought
before it, including the Group trading results. The Board
is well supported by the Group’s Operations Board
(details of which are provided below) and a broader
senior management team, who collectively have the
qualifications and experience necessary for the day to
day running of the Group.
There is a formal schedule of matters reserved for the
Board, which include approval of the Group’s strategy,
annual budgets and business plans, acquisitions,
disposals, business development, annual reports and
interim statements, plus any significant financing and
capital expenditure plans. As part of this schedule, the
Board has clearly laid out levels of devolved decision
making authority to the Group’s Operations Board.
The Board has further established an Audit Committee
and a Remuneration Committee details of which are
provided below. George Elliott is a member of both
these committees, in addition to the two independent
non-executives. In deciding this, the Company has
taken advantage of the Codes ‘relaxations’ available
to smaller companies. The Board has also established
a Nominations Committee which is chaired by Neil
Heywood and includes George Elliott and Ron Verni
as its members. Part of the role of the Nominations
Committee is to review and determine the composition
and structure of the Board as well as, if appropriate,
identify potential candidates to be appointed
as Directors. In the prior year it was determined
appropriate to add a further independent non-executive
Director. The Board has identified the specific skill sets,
including significant operation industry knowledge that
it will look for in the new appointment. An independent
recruitment agency has been engaged and the process
is nearing completion.
Attendance of Directors at Board and Committee
meetings convened in the year, along with the number
of meetings that they were invited to attend, are set
out below:
s
n
o
i
t
a
n
m
o
N
i
e
e
t
t
i
m
m
o
C
n
o
i
t
a
r
e
n
u
m
e
R
e
e
t
t
i
m
m
o
C
e
e
t
t
i
m
m
o
C
t
i
d
u
A
-
-
-
-
-
-
2
-
-
2/2
2/2
2/2
3
-
-
3/3
3/3
2/3
d
r
a
o
B
11
11/11
10/11
11/11
11/11
10/11
No. Meetings in year
Executive Directors
K Neilson
C T Preston
Non Executive Directors
G R Elliott
N P Heywood
R Verni
Where any Board member has been unable to attend
Board or Committee meetings during the year, input has
been provided to the Company Secretary ahead of the
meeting. The relevant Chairman then provides a
detailed briefing along with the minutes of the meeting
following its conclusion.
As detailed in the Directors’ Report on page 15, the
Company maintains appropriate insurance cover
against legal action brought against Directors and
officers. The Company has further indemnified all
Directors or other officers against liability incurred by
them in the execution or discharge of their duties or
exercise of their powers.
Division of Responsibilities
“There should be a clear division of responsibilities at
the head of the company between the running of the
Board and the executive responsible for the running of
the company’s business. No one individual should have
unfettered powers of decision”
The Board has established clearly defined and well
understood roles for George Elliott as Chairman of
the Company, and Keith Neilson as Chief Executive
Officer. The Chairman is responsible for the leadership
of the Board, ensuring its effectiveness and setting its
agenda. Once strategic and financial objectives have
been agreed by the Board, it is the Chief Executive
Officer’s responsibility to ensure they are delivered
upon. To facilitate this, Keith Neilson as CEO chairs the
Group’s Operations Board which comprises the Chief
Financial Officer and five further members of the Senior
Management Team. The day-to-day operation of the
Group’s business is managed by this Board, subject to
the clearly defined authority limits.
The Chairman
“The chairman is responsible for leadership of the Board
and ensuring its effectiveness on all aspects of its role”
George Elliott was appointed Chairman of the Board
in August 2007, shortly before the Company listed on
the AIM market. At that time the then Board satisfied
themselves that he was independent, fulfilling the
requirements of the Code.
In setting the Board agendas, the Chairman, in
conjunction with the Company Secretary, ensures input
is gathered from all Board Directors on matters that
should be included. ‘Board papers’ are issued in advance
of meetings to ensure Board members have appropriate
detail in regards to matters that will be covered, thereby
encouraging openness and healthy debate.
Non-Executive Directors
“As part of their role as members of a unitary board, non-
executive directors should constructively challenge and
help develop proposals on strategy.”
The Board has appointed Ron Verni as Senior
Independent Director. In this role, Ron provides a
sounding board for the Chairman as well as providing
an additional channel of contact for shareholders, other
Directors or employees, if the need arises.
In addition to matters outlined above, there is regular
communication between executive and non-executive
Directors, including where appropriate, updates
on matters requiring attention prior to the next
Board meeting. The non-executive Directors meet,
as appropriate but no less than annually, without
executive Directors being present and further meet
annually without the Chairman present.
17
Craneware plc Annual Report 2013
Corporate Governance Report [Cont’d.]
Effectiveness
The Composition of the Board
“The Board and its committees should have the
appropriate balance of skills, experience, independence
and knowledge of the company to enable them to
discharge their respective duties and responsibilities
effectively”
The composition of the Board has been designed to give
a good mix and balance of different skill sets, including
significant experience in:
High growth companies;
add to the existing Board composition. A formal
process is then undertaken, usually involving external
recruitment agencies (as has been the case with the
last two appointments to the Board), with appropriate
consideration being given, in regards to executive
appointments, to internal and external candidates.
Before undertaking the appointment of a non-executive
Director, the Chairman establishes that the prospective
Director can give the time and commitment necessary
to fulfil their duties, in terms of availability both to
prepare for and attend meetings and to discuss matters
at other times. This process is normally performed under
the remit of the Nominations Committee.
Software and healthcare sectors;
Commitment
Entrepreneurial cultures;
Both UK and US companies;
Acquisitions; and
Other listed plc companies.
Through this mix of experience the Board and the
individual Directors are well positioned to set the
strategic aims of the Company as well as drive
the Group’s values and standards throughout the
organisation, whilst remaining focused on their
obligations to shareholders and meeting their
statutory obligations.
The Board reviews on an annual basis the independence
of each non-executive Director. In making this
consideration the Board determines whether the
Director is independent in character and judgement
and whether there are relationships or circumstances
which are likely to affect, or could appear to affect,
the Director’s judgement. In regards to Neil Heywood,
the Board considered his appointment to the original
Craneware Limited Board being in January 2002. Whilst
Neil’s tenure is over 10 years, the Company and the
Board have significantly changed since the Company’s
IPO in 2007, as a result of this and Neil’s conduct,
the Board has concluded this has not affected his
independence.
As detailed earlier, the Board has previously determined
it was appropriate to add a further independent
non-executive Director, and is well progressed towards
making an appointment.
Appointments to the Board
“There should be a formal, rigorous and transparent
procedure for the appointment of new directors to
the Board”
When a new appointment to the Board is to be made,
consideration is given to the particular skills, knowledge
and experience that a potential new member could
“All directors should be able to allocate sufficient time
to the company to discharge their responsibilities
effectively”
All Board Directors recognise the need to allocate
sufficient time to the Company for them to be able
to meet their responsibilities as Board members. All
non-executive Directors’ contracts include minimum
time commitments; however these are recognised to be
the minimums.
Details of the other directorships held by each Board
member are provided in the Director Biographies
on page 12. The Board has evaluated the time
commitments required by these other roles and does
not believe it affects their ability to perform their duties
with the Company. No executive Director currently holds
any other plc directorship. The non-executive Director
contracts are available for inspection at the Company’s
registered office and are made available for inspection
both before and during the Company’s Annual General
Meeting.
Development
“The Board should be supplied in a timely manner with
the information in a form and a quality appropriate to
enable it to discharge its duties”
The Chairman is responsible for ensuring that all
the Directors continually update their skills, their
knowledge and familiarity with the Group in order
to fulfil their role on the Board and the Board’s
Committees. Updates dealing with changes in
legislation and regulation relevant to the Group’s
business are provided to the Board by the Company
Secretary/Chief Financial Officer and through the Board
Committees.
All Directors have access to the advice and services
of the Company Secretary, who is responsible to the
Board for ensuring that Board procedures are properly
complied with and that discussions and decisions are
appropriately minuted. Directors may seek independent
professional advice at the Company’s expense in
furtherance of their duties as Directors.
Training in matters relevant to their role on the Board
is available to all Board Directors. New Directors are
provided with an induction in order to introduce them
to the operations and management of the business.
In addition, the non-executive Directors meet with, at
least once a quarter, the Groups’s Operations Board on
an informal basis. This provides all Directors with direct
access to the senior management of the Company and
allows for better understanding of how the strategy set
by the Board is being implemented across the Group.
Evaluation
“The Board should undertake a formal and rigorous
annual evaluation of its own performance and that of its
committees and individual directors”
In the prior year, a formal evaluation was conducted
by means of a detailed questionnaire which was
completed by each Director. The results of this process
were collated by the Chairman and were presented to
the Board as a whole. This evaluation included a review
of the performance of individual Directors including
the Chairman and the Board Committees. Based on this
evaluation, the Board has taken steps to implement
certain agreed upon suggestions which has included the
process to recruit a further independent non executive
Director, but overall has concluded that its performance
in the past year had been satisfactory. This review
process will be repeated and updated in the upcoming
year.
The Board has considered the Code’s recommendation
that the evaluation of the Board be carried out
externally at least every three years. The Board
recognises this recommendation is not applicable to
AIM listed companies and has determined it was not
necessary to carry out an external review in the
current year.
Re-election
“All directors should be submitted for re-election at
regular intervals, subject to continued satisfactory
performance”
Under the Company’s Articles of Association, at every
Annual General Meeting, at least one-third of the
Directors who are subject to retirement by rotation, are
required to retire and may be proposed for re-election.
In addition, any Director who was last appointed or
re-appointed three years or more prior to the AGM is
required to retire from office and may be proposed for
18
Craneware plc Annual Report 2013 Corporate Governance Report [Cont’d.]
re-election. Such a retirement will count in obtaining
the number required to retire at the AGM. New
Directors, who were not appointed at the previous AGM,
automatically retire at their first AGM and, if eligible,
can seek re-appointment.
However, the Board recognises the Code’s
recommendation that all Directors should stand for
re-election every year, and whilst not a requirement,
the Board has decided to adopt this recommendation as
best practice. As such, all Directors will retire from office
at the Company’s forthcoming AGM and stand
for re-appointment.
Accountability
Financial and Business Reporting
“The Board should present a balanced and
understandable assessment of the company’s position
and prospects”
The Board recognises its responsibilities, including those
statutory responsibilities laid out on page 16. An
assessment of the Group’s market, business model and
performance is presented in the Chairman’s Statement
and the Operational Review on pages 4 to 10.
As detailed on page 14 of the Directors’ Report, the
Board has confirmed that it is appropriate to adopt the
going concern basis in preparing financial statements.
Risk Management and Internal Control
“The Board is responsible for determining the nature
and extent of the significant risks it is willing to take
in achieving its strategic objectives. The Board should
maintain sound risk management and internal
control systems”
The Directors recognise their responsibility for the
Group’s system of internal control, and have established
systems to ensure that an appropriate and reasonable
level of oversight and control is provided. These systems
are reviewed for effectiveness annually by the Audit
Committee and the Board. The Group’s systems of
internal control are designed to help the Group meet
its business objectives by appropriately managing,
rather than eliminating, the risks to those objectives.
The controls can only provide reasonable, not absolute,
assurance against material misstatement or loss.
Executive Directors and senior management meet
to review both the risks facing the business and the
controls established to minimise those risks and their
effectiveness in operation on an ongoing basis. The
aim of these reviews is to provide reasonable assurance
that material risks and problems are identified and
appropriate action taken at an early stage. From this
review the Company maintains its internal risk register
which forms the foundation of the Board and the Audit
Committee review process.
The annual financial plan is reviewed and approved by
the Board. Financial results with comparisons to plan
and forecast results are reported on at least a quarterly
basis to the Board together with a report on operational
achievements, objectives and issues encountered. The
quarterly reports are supplemented by interim monthly
financial information. Forecasts are updated no less
than, quarterly in the light of market developments
and the underlying performance and expectations.
Significant variances from plan are discussed at Board
meetings and actions set in place to address them.
Approval levels for authorisation of expenditure are
at set levels and cascaded through the management
structure with any expenditure in excess of pre-defined
levels requiring approval from the executive Directors
and selected senior managers.
Measures continue to be taken to review and embed
internal controls and risk management procedures
into the business processes of the organisation and
to deal with areas of improvement which come to the
management’s and the Board’s attention. Metrics and
quality objectives continue to be actively implemented
and monitored as part of a continual improvement
programme.
Details of the principal risks and uncertainties facing
the Group are detailed in the Directors’ Report on
pages 13 to 14. The principal financial risks are
detailed in Note 3 to the financial statements.
Audit Committee and Auditors
“The Board should establish formal and transparent
arrangements for considering how they should apply
the corporate reporting risk management and internal
control principles and for maintaining an appropriate
relationship with the Company’s auditor.”
An Audit Committee has been established to assist
the Board with the discharge of its responsibilities in
relation to internal and external audits and controls. The
Audit Committee will normally meet at least three times
a year. The Audit Committee is chaired by Neil Heywood
and its other members are George Elliott and Ron Verni.
The Chief Financial Officer, Chief Executive Officer and
other senior management attend meetings by invitation
and the Committee also meets the external auditors
without management present. George Elliott, as a
member of the Audit Committee has recent and relevant
financial experience.
Details of how the Audit Committee has discharged its
responsibilities are provided below.
Remuneration
The Level and Components of Remuneration
“Levels of remuneration should be sufficient to attract,
retain and motivate directors of the quality required to
run the company successfully, but a company should
avoid paying more than is necessary for this purpose. A
significant proportion of executive directors’ remuneration
should be structured so as to link rewards to corporate
and individual performance”
The Company has established a Remuneration
Committee to assist the Board in this area. This
Committee is chaired by Ron Verni and its other
members are George Elliott and Neil Heywood. When
appropriate Keith Neilson, as Chief Executive Officer, is
invited to attend meetings (except where matters under
review by the Committee relate to him).
The Committee has responsibility for making
recommendations to the Board on the remuneration
packages of the executive Directors, and monitor
the level and structure of remuneration for senior
management, this includes:
making recommendations to the Board on the
Company’s policy on Directors’ and senior staff
remuneration, and to oversee long term incentive
plans (including share option schemes);
ensuring remuneration is both appropriate to the
level of responsibility and adequate to attract and/
or retain Directors and staff of the calibre required
by the Company; and
ensuring that remuneration is in line with current
industry practice.
The Committee has presented its Remuneration
Report on pages 21 to 23, which details the work
undertaken operating under its terms of reference
(which are available at the Company’s registered office),
to discharge its responsibilities.
Procedure
“There should be a formal and transparent procedure
for developing policy on executive remuneration and for
fixing the remuneration packages of individual directors.
No director should be involved in deciding his or her own
remuneration”
Details of how the Committee and Board have
discharged their responsibilities in this area are detailed
in the Remuneration Report on pages 21 to 23.
19
Craneware plc Annual Report 2013 Corporate Governance Report [Cont’d.]
Relations with Shareholders
Dialogue with Shareholders
“There should be a dialogue with shareholders based
on mutual understanding of objectives. The Board as a
whole has responsibility for ensuring that a satisfactory
dialogue with shareholders takes place”
The Company engages in full and open communication
with both institutional and private investors and
responds promptly to all queries received. In
conjunction with the Company’s brokers and other
financial advisors all relevant news is distributed in a
timely fashion through appropriate channels to ensure
shareholders are able to access material information on
the Company’s progress.
The Audit Committee
During the year the Audit Committee, operating
under its terms of reference (which are available
at the Company’s registered office), discharged its
responsibilities, including reviewing and monitoring:
interim and annual reports information including
consideration of the appropriateness of accounting
policies and material assumptions and estimates
adopted by management;
developments in accounting and reporting
requirements;
external auditors’ plan for the year-end audit of the
Company and its subsidiaries;
To facilitate this:
the Committee’s effectiveness;
all shareholders are invited to attend the AGM and
are encouraged to take the opportunity to ask
questions;
the primary point of contact for shareholders on
operational matters is Keith Neilson as CEO and Craig
Preston as CFO;
the primary point of contact for shareholders on
corporate governance and other related matters
is George Elliott as Chairman. Ron Verni as Senior
Independent Director is available as a point of
contact should a shareholder not wish to contact the
Chairman for any reason.
Keith Neilson and Craig Preston meet regularly with
shareholders, normally immediately following the
Company’s half year and full year financial results
announcements, to discuss the Group’s performance and
answer any questions. The Board monitors the success
of these meetings through anonymous evaluations
from both shareholders and analysts performed by the
Company’s Broker and Financial PR advisor.
The Company’s website has a section for investors which
contains all publicly available financial information and
news on the Company.
Constructive Use of the AGM
“The Board should use the AGM to communicate with
investors and to encourage their participation”
The Board encourages attendance at its AGM from
all shareholders. The Notice of AGM together with all
resolutions and explanations of these resolutions are
sent at least 20 working days before the meeting. All
Directors, where possible, make themselves available to
answer any questions shareholders may have. Results
of all votes on resolutions are published as soon as
practicable on the Company’s website.
the Internal Risk Register covering the systems of
internal control and their effectiveness, reporting
and making new recommendations to the Board
on the results of the review and receiving regular
updates on key risk areas of financial control;
the requirements or otherwise for an internal audit
function;
the performance and independence of the external
auditors concluding in a recommendation to the
Board on the reappointment of the auditors by
shareholders at the Annual General Meeting.
The auditors provide annually a letter to the
Committee confirming their independence and
stating the methods they employ to safeguard their
independence;
the audit and non-audit fees charged by the external
auditors; and
the formal engagement terms entered into with the
external auditors.
The Committee has also reviewed the arrangements
in place for internal audit and concluded, due to the
current size and complexity of the Company, that a
formal internal audit function was not required.
Under its terms of reference the Audit Committee
is responsible for monitoring the independence,
objectivity and performance of the external auditors,
and for making a recommendation to the Board
regarding the appointment of external auditors
on an annual basis. The Group’s external auditors,
PricewaterhouseCoopers LLP, were first appointed as
external auditors of the Company for the year ended 30
June 2003.
The Audit Committee has also implemented procedures
relating to the provision of non-audit services by the
Company auditors, which include non-audit work and
any related fees over and above a de-minimis level to
be approved in advance by the Chairman of the Audit
Committee. Details of the fees paid to the auditors for
audit and non-audit services are shown in Note 6 to the
financial statements.
The Audit Committee has considered the level of
non-audit services and the related fees paid and
have concluded they do not compromise auditor
independence.
AIM Rule Compliance Report
Craneware plc is quoted on AIM and as a result the
Company has complied with AIM Rule 31 which requires
the following:
have in place sufficient procedures, resources and
controls to enable its compliance with the AIM
Rules;
seek advice from its Nominated Advisor (“Nomad”)
regarding its compliance with the AIM Rules
whenever appropriate and take that advice into
account;
provide the Company’s Nomad with any information
it reasonably requests in order for the Nomad to
carry out its responsibilities under the AIM Rules
for Nominated Advisors, including any proposed
changes to the Board and provision of draft
notifications in advance;
ensure that each of the Company’s Directors accepts
full responsibility, collectively and individually, for
compliance with the AIM Rules; and
ensure that each Director discloses without delay
all information which the Company needs in
order to comply with AIM Rule 17 (Disclosure
of Miscellaneous Information) insofar as that
information is known to the Director or could with
reasonable diligence be ascertained by the Director.
Approved by the Board of Directors and signed on
behalf of the Board by:
Craig Preston
Company Secretary
9 September 2013
20
Craneware plc Annual Report 2013 Remuneration Committee Report
This report sets out Craneware plc’s remuneration and
benefits for the financial year under review. A resolution
to approve the report will be proposed at the Annual
General Meeting of the Company at which the financial
statements will be presented for approval.
Remuneration Committee
The Company has a Remuneration Committee (“the
Committee”) in accordance with the recommendations
of the UK Corporate Governance Code. The members of
the Committee are Ron Verni (Chairman), Neil Heywood
and George Elliott. None of the Committee has any
personal financial interests, other than as shareholders,
in matters directly decided by this Committee, nor
are there any conflicts of interests arising from cross
directorships or day to day involvement in the running
of the business.
The Company’s Chief Executive Officer on occasion will
attend meetings, at the invitation of the Committee, to
advise on operational aspects of implementing existing
and proposed policies. The Company Secretary acts
as secretary to the Committee. Under the Committee
Chairman’s direction, the Chief Executive Officer and
the Company Secretary have responsibility for ensuring
the Committee has the information relevant to its
deliberations. In formulating its policies, the Committee
has access, as required, to professional advice from
outside the Company and to publicly available reports
and statistics.
The remuneration of the non-executive Directors is
determined by the Board as a whole within limits set
out in the Articles of Association.
Policy
Executive remuneration packages are designed to
attract, motivate and retain Directors of the calibre
necessary to achieve the Group’s growth objectives
and to reward them for enhancing shareholder value.
The main elements of the remuneration package for
executive Directors are:
basic annual salary and benefits in kind;
annual performance related bonus;
pension entitlement; and,
share option awards.
The Company’s policy is that a substantial proportion
of the remuneration of executive Directors should be
performance related.
None of the executive Directors hold any outside
appointments.
Directors’ remuneration
In the prior year, the Remuneration Committee
engaged Hewitt New Bridge Street Consultants to
perform a review of director and senior management
remuneration. The conclusions and recommendations
of this report continue to be incorporated as part of the
longer term strategy for director remuneration.
As a result, the Committee continues to develop overall
directors’ remuneration packages to ensure both the
short and long term objectives of the Company are met
and potentially exceeded, thereby ensuring that the
Directors are incentivised to maximise return to the
Company’s shareholders. However, in the year under
review there were no changes made to the directors’
remuneration packages.
The remuneration package comprises:
(i)
Basic Salary and pension entitlement
This is normally reviewed annually, usually in
September, or when an individual’s position or
responsibilities change and is normally paid as a fixed
cash sum monthly.
In regards to pension entitlement, the Company pays a
fixed sum to a personal pension plan on behalf of the
Chief Executive Officer.
(ii)
Annual Performance Related Bonus
Under the annual performance related bonus
plan executive Directors are eligible to earn a cash
bonus payment based on targets that are set by
the Committee. In determining these targets, the
Committee’s objective is to set targets that reflect
challenging financial performance in the current year,
but also provide for the future growth of the Company.
Maximum bonus entitlements were set at a level that
allowed additional growth of overall remuneration for
out-performance of targets but still remains below the
appropriate levels of the benchmarking exercise referred
to above.
As these financial targets were not met in the current
year, no bonus has been paid.
(iii)
Share options
The Company operates the Craneware Employees’ Share
Option Plan 2007 (“Share Option Plan”) from which, and
at the discretion of the Committee, executive Directors
and other employees (including senior management)
may be awarded share options under this scheme.
During the year, the executive Directors were awarded
share options under this scheme, details of which are
shown in the table on page 23.
These options are normally exercisable three years
after the date the options were granted, provided the
Executive is still employed at the date of exercise. These
options are subject to stringent performance criteria
based on the share price performance in the preceding
three year period as compared to a comparator base
of companies that make up the Techmark 100. The
performance criteria is assessed annually (against the
preceding three year period) with no more than 1/3 of
the total options vesting (but not becoming exercisable
until three years from the original grant date). If
performance is below the median of the comparator
group over the relevant three year period then no shares
vest that year. The amount of shares that vest increases
as performance reaches top quartile when a third of the
total grant of options vest. As this performance criteria
was not met in the current year, all options that were
subject to testing in the current year lapsed.
Share Option grants in the year remain at a level
consistent with prior year but still remain below the
levels recommended by the benchmarking exercise
referred to above.
21
Craneware plc Annual Report 2013 Remuneration Committee Report [Cont’d.]
Service Contracts
The executive Directors and the non-executive Directors are employed under individual employment arrangements or letters of appointment where appropriate. Details of these
service contracts are set out below.
K Neilson
C T Preston
G R Elliott
N P Heywood
R Verni
Contract Date
Unexpired Term
Normal Notice Period
Founder
15 September 2008
10 August 2007
11 January 2002
1 May 2009
Rolling
Rolling
2 Years 11 months
Rolling
Rolling
*3 months
*3 months
1 month
1 month
1 month
* The notice terms for Keith Neilson and Craig Preston are normally three months, however in the event of a change of control, these notice periods are automatically extended to twelve months.
Directors’ Interests
The Directors’ interests in the ordinary shares of the Company are set out in the Directors’ Report on page 15.
Directors’ Emoluments
For Directors who held office during the course of the year, emoluments for the year ending 30 June 2012 were as follows (note: With the exception of R Verni, all Directors are
paid in UK Sterling; the amounts below are translated at the relevant average exchange rate for period being reported) :
Executives
K Neilson
C T Preston
Non-Executives
G R Elliott
N P Heywood
R Verni
Total
Salary/Fees ($)
Benefits ($)
Bonus ($)
Pension ($)
2013 Total ($)
2012 Total ($)
320,366
301,660
96,071
51,607
52,400
511
621
-
-
-
822,104
1,132
-
-
-
-
-
-
7,843
-
328,720
302,281
320,668
291,944
-
-
-
96,071
51,607
52,400
95,126
50,990
51,357
7,843
831,079
810,085
1. Aggregate emoluments disclosed above do not include any amounts for the value of options to acquire ordinary shares in the Company held by the Directors.
2. Benefits represent payments for health insurance, death in service and disability insurance.
22
Craneware plc Annual Report 2013 Remuneration Committee Report [Cont’d.]
Directors’ interests in share options
Directors’ share options as at 30 June 2013 were in respect of Directors who held office during the course of the year:
Exercise Price
(cents)
Exercise Price
(pence)
Issue
Date
Held At
30/06/12
Granted
During Year
Exercised
During Year
Lapsed
During Year
Held At
30/06/13
K Neilson
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
C T Preston
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
534.0
618.0
866.0
650.0
365.0
534.0
618.0
866.0
650.0
335.0
401.0
561.0
400.0
208.0
335.0
401.0
561.0
400.0
Employee share options as at 30th June 2013 were:
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Ordinary shares
Exercise Price
(cents)
Exercise Price
(pence)
534.0
618.0
866.0
572.0
520.0
335.0
401.0
561.0
360.0
343.0
Dec-09
Sept-10
Sept-11
Sept-12
Sep-08
Dec-09
Sept-10
Sept-11
Sept-12
Issue
Date
Dec-09
Sept-10
Sept-11
Sept-12
June-13
On behalf of the Remuneration Committee:
Ron Verni
Chairman of the Remuneration Committee
9 September 2013
-
-
-
52,313
-
-
-
-
48,081
-
-
-
-
-
-
-
-
-
-
(13,384)
(23,623)
(17,438)
-
-
(11,720)
(14,285)
(16,027)
28,580
13,383
23,623
34,875
72,115
25,099
11,721
14,284
32,054
Granted
During Year
Exercised
During Year
Lapsed
During Year
Held At
30/06/13
28,580
26,767
47,246
72,115
25,099
23,441
28,569
Held At
30/06/12
59,856
71,598
79,296
-
-
-
-
-
230,034
48,076
(16,872)
(10,629)
32,355
-
-
-
-
(44,111)
(45,361)
27,487
33,935
(85,880)
144,154
-
48,076
23
Craneware plc Annual Report 2013 Independent Auditors’ Report to the Members of Craneware plc
We have audited the Group and Parent Company
financial statements (the ‘‘financial statements’’) of
Craneware plc for the year ended 30 June 2013 which
comprise Consolidated Statement of Comprehensive
Income, the Group and Parent Company Statement
of Changes in Equity, the Consolidated and Parent
Company Balance Sheets, the Group and Parent
Company Statement of Cash Flow, the Accounting
Policies and the related notes. The financial reporting
framework that has been applied in their preparation
is applicable law and International Financial Reporting
Standards (IFRSs) as adopted by the European
Union and, as regards the parent company financial
statements, as applied in accordance with the provisions
of the Companies Act 2006.
Respective responsibilities of
directors and auditors
As explained more fully in the Statement of Directors’
Responsibilities set out on page 16, the directors
are responsible for the preparation of the financial
statements and for being satisfied that they give a true
and fair view. Our responsibility is to audit and express
an opinion on the financial statements in accordance
with applicable law and International Standards on
Auditing (UK and Ireland). Those standards require us
to comply with the Auditing Practices Board’s Ethical
Standards for Auditors.
This report, including the opinions, has been prepared
for and only for the company’s members as a body in
accordance with Chapter 3 of Part 16 of the Companies
Act 2006 and for no other purpose. We do not, in giving
these opinions, 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.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts
and disclosures in the financial statements sufficient to
give reasonable assurance that the financial statements
are free from material misstatement, whether caused by
fraud or error. This includes an assessment of: whether
the accounting policies are appropriate to the Group’s
and Parent Company’s circumstances and have been
consistently applied and adequately disclosed; the
reasonableness of significant accounting estimates
made by the directors; and the overall presentation of
the financial statements. In addition, we read all the
financial and non-financial information in the annual
report to identify material inconsistencies with the
audited financial statements. If we become aware of
any apparent material misstatements or inconsistencies
we consider the implications for our report.
Opinion on financial statements
In our opinion:
the financial statements give a true and fair view of
the state of the Group’s and of the Parent Company’s
affairs as at 30 June 2013 and of the Group’s profit
and Group and Parent Company’s cash flows for the
year then ended;
the Group financial statements have been properly
prepared in accordance with IFRSs as adopted by the
European Union;
the Parent Company financial statements have
been properly prepared in accordance with IFRSs as
adopted by the European Union and as applied in
accordance with the provisions of the Companies Act
2006; and
the financial statements have been prepared in
accordance with the requirements of the Companies
Act 2006.
Opinion on other matter prescribed
by the Companies Act 2006
In our opinion the information given in the Directors’
Report for the financial year for which the financial
statements are prepared is consistent with the financial
statements.
Matters on which we are required
to report by exception
We have nothing to report in respect of the following
matters where the Companies Act 2006 requires us to
report to you if, in our opinion:
adequate accounting records have not been kept
by the Parent Company, or returns adequate for our
audit have not been received from branches not
visited by us; or
the Parent Company financial statements are not
in agreement with the accounting records and
returns; or
certain disclosures of directors’ remuneration
specified by law are not made; or
we have not received all the information and
explanations we require for our audit.
Mark Hoskyns-Abrahall
Senior Statutory Auditor
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Edinburgh
9 September 2013
Notes:
(a) The maintenance and integrity of the Craneware plc website is the responsibility of the Directors; the work carried out by the auditors does not involve consideration of these matters
and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the Financial Statements since they were initially presented on the website.
(b) Legislation in the United Kingdom governing the preparation and dissemination of Financial Statements may differ from legislation in other jurisdictions.
24
Craneware plc Annual Report 2013 Consolidated Statement of Comprehensive Income for the year ended 30 June 2013
Continuing operations:
Revenue
Cost of sales
Gross profit
Net operating expenses
Operating profit
Analysed as:
Adjusted EBITDA1
Released deferred consideration on business combination
Share-based payments
Depreciation of plant and equipment
Amortisation of intangible assets
Finance income
Profit before taxation
Tax charge on profit on ordinary activities
Profit for the year attributable to owners of the parent
Total comprehensive income attributable to owners of the parent
Earnings per share for the year attributable to equity holders
- Basic ($ per share)
- Adjusted Basic ($ per share)2
- Diluted ($ per share)
- Adjusted Diluted ($ per share)2
Notes
4
5
6
8
9
10
Total
2013
$’000
41,452
(2,071)
39,381
Total
2012
$’000
41,067
(1,556)
39,511
(28,881)
(28,416)
10,500
11,095
12,357
11,932
-
(181)
(621)
954
(152)
(579)
(1,055)
(1,060)
103
10,603
(2,307)
8,296
8,296
107
11,202
(2,309)
8,893
8,893
12a
12a
12b
12b
0.307
0.329
0.306
0.328
0.330
0.316
0.329
0.315
1Adjusted EBITDA is defined as operating profit before, released deferred consideration, share based payments, depreciation and amortisation.
2Adjusted Earnings per share calculations allow for the release of deferred consideration on the business combination
(in the prior year) together with amortisation on acquired intangible assets to form a better comparison with previous years.
The accompanying notes are an integral part of these financial statements.
25
Craneware plc Annual Report 2013 Statements of Changes in Equity for the year ended 30 June 2013
Group
At 1 July 2011
Total comprehensive income - profit for the year
Transactions with owners:
Share-based payments
Impact of share options exercised/lapsed
Dividends (Note 11)
At 30 June 2012
Total comprehensive income - profit for the year
Transactions with owners:
Share-based payments
Impact of share options exercised/lapsed
Dividends (Note 11)
At 30 June 2013
Company
At 1 July 2011
Total comprehensive income - profit for the year
Transactions with owners:
Share-based payments
Impact of share options exercised/lapsed
Dividends (Note 11)
At 30 June 2012
Total comprehensive income - profit for the year
Transactions with owners:
Share-based payments
Impact of share options exercised/lapsed
Dividends (Note 11)
At 30 June 2013
Share
Capital
$’000
Share
Premium
$’000
Other
Reserves1
$’000
536
15,239
-
-
2
-
-
-
169
-
538
15,408
-
1
-
-
88
-
539
15,496
536
15,239
-
-
2
-
-
-
169
-
538
15,408
-
-
1
-
-
-
88
-
539
15,496
302
-
152
(245)
-
209
181
(178)
-
212
137
-
100
(65)
-
172
-
116
(101)
-
187
Retained
Earnings
$’000
16,328
8,893
(538)
692
(4,093)
21,282
8,296
15
174
(4,693)
25,074
11,531
9,631
(76)
85
(4,093)
17,078
8,058
15
101
(4,693)
20,559
Total Equity
$’000
32,405
8,893
(386)
618
(4,093)
37,437
8,296
196
85
(4,693)
41,321
27,443
9,631
24
191
(4,093)
33,196
8,058
131
89
(4,693)
36,781
Other reserves relate to share-based payments and are detailed in Note 1 and these reserves are not available for distribution.
The accompanying notes are an integral part of these financial statements.
26
Craneware plc Annual Report 2013 Consolidated Balance Sheet as at 30 June 2013
ASSETS
Non-Current Assets
Plant and equipment
Intangible assets
Deferred tax
Current Assets
Trade and other receivables
Current tax assets
Cash and cash equivalents
Total Assets
EQUITY & LIABILITIES
Non-Current Liabilities
Deferred income
Current Liabilities
Deferred income
Current tax liabilities
Trade and other payables
Total Liabilities
Equity
Called up share capital
Share premium account
Other reserves
Retained earnings
Total Equity
Total Equity and Liabilities
Registered Number SC196331
Notes
2013
$’000
2012
$’000
13
14
17
16
20
21
18
1,596
15,291
1,615
18,502
15,128
468
30,277
45,873
64,375
30
30
16,419
1,055
5,550
23,024
23,054
539
15,496
212
25,074
41,321
64,375
2,027
16,010
1,470
19,507
12,560
428
28,790
41,778
61,285
183
183
15,766
1,955
5,944
23,665
23,848
538
15,408
209
21,282
37,437
61,285
The accompanying notes are an integral part of these financial statements.
The financial statements on pages 25 to 52 were approved and authorised for issue by the Board of Directors on 9 September 2013 and signed on its behalf by:
Keith Neilson
Director
Craig Preston
Director
27
Craneware plc Annual Report 2013 Company Balance Sheet as at 30 June 2013
ASSETS
Non-Current Assets
Investment in subsidiary undertakings
Plant and equipment
Intangible assets
Amounts due from subsidiary undertaking
Current Assets
Trade and other receivables
Cash and cash equivalents
Total Assets
EQUITY & LIABILITIES
Non-Current Liabilities
Deferred tax
Deferred income
Current Liabilities
Deferred income
Current tax liabilities
Trade and other payables
Total Liabilities
Equity
Called up share capital
Share premium account
Other reserves
Retained earnings
Total Equity
Total Equity and Liabilities
Registered Number SC196331
Notes
15
13
14
17
20
17
21
18
2013
$’000
9,000
1,163
1,131
6,000
2012
$’000
9,000
1,413
1,243
6,000
17,294
17,656
11,920
27,452
39,372
56,666
31
30
61
15,576
1,055
3,193
19,824
19,885
539
15,496
187
20,559
36,781
56,666
11,028
26,151
37,179
54,835
14
183
197
15,334
1,955
4,153
21,442
21,639
538
15,408
172
17,078
33,196
54,835
The accompanying notes are an integral part of these financial statements.
The financial statements on pages 25 to 52 were approved and authorised for issue by the Board of Directors on 9 September 2013 and signed on its behalf by:
Keith Neilson
Director
Craig Preston
Director
28
Craneware plc Annual Report 2013
Statements of Cash Flows for the year ended 30 June 2013
Cash flows from operating activities
Cash generated/(used) from operations
Interest received
Tax paid
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
Proceeds from issuance of shares
Net cash used in financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at the start of the year
Cash and cash equivalents at the end of the year
The accompanying notes are an integral part of these financial statements.
Notes
19
13
14
11
Group
Company
2013
$’000
2012
$’000
2013
$’000
2012
$’000
9,891
103
(3,377)
6,617
(190)
(336)
(526)
(4,693)
89
(4,604)
1,487
28,790
30,277
10,602
107
(1,316)
9,393
(439)
(418)
(857)
(4,093)
171
(3,922)
4,614
24,176
28,790
9,420
208
(3,330)
6,298
(77)
(316)
(393)
(4,693)
89
(4,604)
1,301
26,151
27,452
11,919
270
(1,930)
10,259
(95)
(363)
(458)
(4,093)
171
(3,922)
5,879
20,272
26,151
29
Craneware plc Annual Report 2013 Notes to the Financial Statements
General Information
Basis of preparation
Currency translation
Craneware plc (the Company) is a public limited
company incorporated and domiciled in Scotland.
The Company has a primary listing on the AIM stock
exchange. The address of its registered office and
principal place of business is disclosed on page
"Directors, Secretary, and Advisors" on page 11 of
the financial statements. The principal activity of the
Company is described in the Directors’ Report.
The financial statements are prepared in accordance
with International Financial Reporting Standards (IFRS),
as adopted by the European Union, IFRIC interpretations
and with those parts of the Companies Act 2006
applicable to companies reporting under IFRS. The
consolidated financial statements have been prepared
under the historic cost convention and prepared on a
going concern basis. The applicable accounting policies
are set out below, together with an explanation of
where changes have been made to previous policies on
the adoption of new accounting standards in the year,
if relevant.
The preparation of financial statements in conformity
with IFRS requires the use of estimates and assumptions
that affect the reported amounts of assets and liabilities
at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting
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.
The Company and its subsidiary undertakings are
referred to in this report as the Group.
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 Company’s
principal functional currency is the US dollar. The
Group’s financial statements are therefore prepared in
US dollars.
Transactions denominated in foreign currencies 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 $1.5685/£1
(2012 : $1.5840/£1). Monetary assets and liabilities
expressed in foreign currencies are translated into
US dollars at rates of exchange ruling at the Balance
Sheet date $1.5167/£1 (2012 : $1.5685/£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 in general and
administrative expenses.
New Standards, amendments and
interpretations effective in the year
The Directors have adopted the following Standards,
amendments and interpretations (where relevant to
the Group and subject to their endorsement by the EU)
and they have concluded that they have no material
financial impact on the financial statements of the
Group or Company.
IAS 1, ‘Financial statement presentation’ regarding
other comprehensive income (effective 1 July
2012*), the main change from these amendments is
a requirement for entities to group items presented
in other comprehensive income on the basis of
whether they are potentially reclassifiable to profit
or loss subsequently.
IAS 12, ‘Income taxes’ on deferred tax (effective 1
January 2012*), the amendments provide a practical
approach for measuring deferred tax liabilities and
deferred tax assets when investment properties are
measured using the fair value model in accordance
with IAS 40, ‘Investment property’.
30
Craneware plc Annual Report 2013 Notes to the Financial Statements [Cont’d.]
1 Principal accounting policies (cont’d.)
Basis of consolidation
The consolidated Statement of Comprehensive Income,
Balance Sheet, Statement of Changes in Equity and
Statement of Cashflows include the accounts of the
Parent Company and its subsidiaries. Subsidiaries are
all entities over which the Group has power to govern
the financial and operational policies, generally
accompanying a shareholding of more than one half
of the voting rights. Subsidiaries are fully consolidated
from the date on which control transferred to the Group
and are deconsolidated from the time control ceases.
Intra Group revenue and profits/(losses) are eliminated
on consolidation and all sales and profit figures relate
to external transactions only. As permitted by Section
408(4) of the Companies Act 2006, the Statement of
Comprehensive Income of the Parent Company is not
presented although the Company performance can been
seen in isolation in the Statements of Changes in Equity.
Accounting policies of subsidiaries have been changed
where necessary to ensure consistency with the policies
adopted by the Group.
Business combinations
The acquisition of subsidiaries is accounted for using
the purchase method. The cost of the acquisition is
measured at the aggregate of the fair values, at the
acquisition date, of assets given, liabilities incurred
or assumed, and the equity issued by the Group. The
consideration transferred includes the fair value of
any assets or liability resulting from a contingent
consideration and acquisition costs are expensed
as incurred.
Any contingent consideration to be transferred by the
Group is recognised at fair value at the acquisition date.
Subsequent changes to the fair value of the contingent
consideration that is deemed to be an asset or liability is
recognised in accordance with IAS 39 in the Statement
of Comprehensive Income. Contingent consideration
that is classified as equity is not re-measured and its
subsequent settlement is accounted for within equity.
Goodwill arising on the acquisition is recognised as an
asset and initially measured at cost, being the excess
of fair value of the consideration over the Group’s
assessment of the net fair value of the identifiable
assets and liabilities recognised.
New Standards, amendments and
interpretations not yet effective
The Directors anticipate that the future adoption of the
following Standards, amendments and interpretations
(where relevant to the Group and subject to their
endorsement by the EU) will have no material financial
impact on the financial statements of the Group and
Company. None of the below Standards, amendments or
interpretations has been adopted early.
Annual improvements 2011 (effective 1 January 2013*),
this set of annual improvements addresses issues in the
2009-2011 reporting cycle which includes changes to
five standards, none of which are expected to have a
material impact on the Group.
IFRS 1, ‘First time adoption’ on fixed dates,
hyperinflation and government loans (effective 1
January 2013*),
IFRS 7, ‘Financial instruments: disclosures’ (effective
1 January 2013*),
IFRS 9, ‘Financial instruments: classification and
measurement’ (effective 1 January 2014*),
IFRS 10, ‘Consolidated financial statements’
(effective 1 January 2013*),
IFRS 11, ‘Joint arrangements’ (effective 1 January
2013*),
IFRS 12, ‘Disclosures of interests in other entities’
(effective 1 January 2013*),
IFRS 13, ‘Fair value measurement’ (effective 1
January 2013*),
IAS 19, ‘Employee benefits’ (effective 1 January
2013*),
IAS 27, ‘Separate financial statements’ (effective 1
January 2013*),
IAS 28 (revised 2011), ‘Associates and joint ventures’
(effective 1 January 2013*),
IAS 32, ‘Financial instruments presentation’
(effective 1 January 2014*).
*effective for accounting periods
starting on or after this date.
If the Group’s assessment of the net fair value of a
subsidiary’s assets and liabilities had exceeded the fair
value of the consideration of the business combination
then the excess (‘negative goodwill’) would be
recognised in the Statement of Comprehensive Income
immediately. The fair value of the identifiable assets
and liabilities assumed on acquisition are brought onto
the Balance Sheet at their fair value at the date
of acquisition.
Revenue recognition
The Group follows the principles of IAS 18, “Revenue
Recognition”, in determining appropriate revenue
recognition policies. In principle revenue is recognised
to the extent that it is probable that the economic
benefits associated with the transaction will flow into
the Group.
Revenue is derived from sales of, and distribution
agreements relating to, software licenses and
professional services (including installation). Revenue
is recognised when (i) persuasive evidence of an
arrangement exists; (ii) the customer has access and
right to use our software; (iii) the sales price can
be reasonably measured; and (iv) collectability is
reasonably assured.
Revenue from standard licensed products which are
not modified to meet the specific requirements of each
customer is recognised from the point at which the
customer has access and right to use our software. This
right to use software will be for the period covered
under contract and, as a result, our annuity based
revenue model recognises the licensed software revenue
over the life of this contract. This policy is consistent
with the Company’s products providing customers with
a service through the delivery of, and access to, software
solutions (Software-as-a-Service (“SaaS”)), and results
in revenue being recognised over the period that these
services are delivered to customers.
‘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.
31
Craneware plc Annual Report 2013 Notes to the Financial Statements [Cont’d.]
1 Principal accounting policies (cont’d.)
(b) Proprietary software
Revenue from all professional services is recognised as
the applicable services are provided. 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
completion of the relevant engagement. Percentage
completion is estimated based on the total number of
hours performed on the project compared to the total
number of hours expected to complete the project.
Software and professional services sold via a
distribution agreement will normally follow the above
recognition policies.
Should any contracts contain non-standard clauses,
revenue recognition will be in accordance with the
underlying contractual terms which will normally
result in recognition of revenue being deferred until all
material obligations are satisfied.
The excess of amounts invoiced over revenue recognised
are included in deferred income. If the amount of
revenue recognised exceeds the amount invoiced the
excess is included within accrued income.
Intangible Assets
(a) Goodwill
Goodwill arising on consolidation represents the
excess of the cost of acquisition over the fair value of
the identifiable assets and liabilities of a subsidiary
at the date of acquisition. Goodwill is capitalised and
recognised as a non-current asset in accordance with
IFRS 3 and is tested for impairment annually, or on
such occasions that events or changes in circumstances
indicate that the value might be impaired.
Goodwill is allocated to cash generating units for the
purpose of impairment testing. The allocation is made
to those cash-generating units that are expected to
benefit from the business combination in which the
goodwill arose.
Proprietary software acquired in a business combination
is recognised at fair value at the acquisition date.
Proprietary software has a finite life and is carried at
cost less accumulated amortisation. Amortisation is
calculated using the straight-line method to allocate
the associated costs over their estimated useful lives
of 5 years.
(c) Contractual customer relationships
Contractual customer relationships acquired in a
business combination are recognised at fair value at
the acquisition date. The contractual customer relations
have a finite useful economic life and are carried at
cost less accumulated amortisation. Amortisation is
calculated using the straight-line method over the
expected life of the customer relationship which has
been assessed as 10 years.
(d) Research and Development expenditure
Expenditure associated with developing and
maintaining the Group’s software products is 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, which has been
assessed as 5 years. Staff costs and specific third party
costs involved with the development of the software are
included within amounts capitalised.
(e) Computer software
Costs associated with acquiring computer software and
licensed to-use technology are capitalised as incurred.
They are amortised on a straight-line basis over their
useful economic life which is typically 3 to 5 years.
Impairment of non-financial assets
At each reporting date the Group considers the carrying
amount of 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.
Plant and Equipment
All plant and equipment are stated at historical cost less
depreciation, costs include the original purchase price of
the asset and the costs attributable to bring the asset to
its working condition for its intended use. 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
- Between 20% - 33%
straight line
- Between 10% - 20%
straight line
- Between 14% - 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 Statement
of Comprehensive Income 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.
32
Craneware plc Annual Report 2013 Notes to the Financial Statements [Cont’d.]
Taxation
Operating leases
Cash and cash equivalents
The charge for taxation is based on the profit for the
period as adjusted for items which are non-assessable
or disallowable. It is calculated using taxation rates
that have been enacted or substantive 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 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”, a compensation expense is recorded in the
Group’s Statement of Comprehensive Income over the
period from the grant date to the vesting date of the
relevant options. As there is a temporary difference
between the accounting and tax bases a deferred
tax asset is recorded. The deferred tax asset arising is
calculated by comparing the estimated amount of tax
deduction to be obtained in the future (based on the
Company’s share price at the Balance Sheet date) with
the cumulative amount of the compensation expense
recorded in the Statement of Comprehensive Income. If
the amount of estimated future tax deduction exceeds
the cumulative amount of the remuneration expense
at the statutory rate, the excess is recorded directly in
equity against retained earnings.
Investment in subsidiaries
Investment in Group undertakings is recorded at cost,
which is the fair value of the consideration paid, less
any provision for impairment.
The costs of operating leases are charged on a straight
line basis over the duration of the leases in arriving at
operating profit.
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’ or ‘cash and cash
equivalents’ 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 to 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 Statement of
Comprehensive Income 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
Statement of Comprehensive Income.
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.
Cash and cash equivalents include cash in hand,
deposits held with banks and short term highly liquid
investments. For the purpose of the Statements of Cash
flows, cash and cash equivalents comprise cash on
hand, deposits held with banks and short term highly
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 offered to every employee. Amounts
payable in respect of these benefits are charged to the
Statement of Comprehensive Income as they fall due.
The Group has no further payment obligations once
the payments have been made. The contributions are
recognised as an employee benefit expense when they
are due. Prepaid contributions are recognised as an
asset to the extent that a cash refund or a reduction in
future payments is available.
Share-based payments
The Group grants share options to certain employees.
In accordance with IFRS 2, “Share-Based Payments”
equity-settled share-based payments are measured at
fair value at the date of grant. Fair value is measured by
use of the Black-Scholes pricing model as appropriately
amended. The fair value determined at the date of grant
of the equity-settled share-based payments is expensed
on a straight-line basis over the vesting period, based
on the Group’s estimate of the number of shares that
will eventually vest. Non-market vesting conditions
are included in assumptions about the number of
options that are expected to vest. At the end of each
reporting period, the entity revises its estimates of
the number of options that are expected to vest based
on the non-market vesting conditions. It recognises
the impact of the revision to original estimates, if
any, in the Statement of Comprehensive Income,
with a corresponding adjustment to equity. When the
options are exercised the Company issues new shares.
The proceeds received net of any directly attributable
transaction costs are credited to share capital and
share premium.
The share-based payments charge is included in
net operating expenses and is also included in
‘Other reserves’.
Share capital
Ordinary shares are classified as equity.
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.
33
Craneware plc Annual Report 2013 Notes to the Financial Statements [Cont’d.]
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:-
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
value in use of the applicable cash generating unit
to which the Goodwill and other assets relate.
Estimating the value in use requires the Group to
make an estimate of the expected future cashflows
from the specific cash generating unit using
certain key assumptions including growth rates
and a discount rate. Reasonable changes to these
assumptions such as increasing the discount rate
by 5% (20% to 25%) and decreasing the long term
growth rate applied to revenues by 1% (2% to 1%)
would still result in no impairment.
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 previously within
the accounting policies note 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.
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 rate risk), 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.
(a) Market risk
(i) Foreign exchange risk
Foreign exchange risk arises when 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 US however a significant proportion of costs are
incurred in Sterling.
Management are therefore required to continually
assess the Group’s foreign exchange risk against the
Group’s functional currency, and whether any form of
hedge should be entered into. The Group’s policy has
not been to enter into hedging arrangements, although
the Board continues to assess the appropriateness of
this approach.
The Directors believe that a 10% change in the value
of Sterling relative to the Dollar would impact post-tax
profits and equity between approximately $802,000
and $883,000 (dependent on whether lower or higher)
as a result of foreign exchange gains/losses on Sterling
denominated transactions and the translation of
Sterling denominated current liabilities. The Directors
believe that 10% is appropriate for the sensitivity
analysis based on recent movements in the
exchange rates.
(ii) Cash flow and interest rate risk
The Group has no significant interest-bearing assets or
liabilities, other than cash held on deposit at variable
rates. The Directors believe that a 25 basis point move
in interest rates would, with all variables held constant,
alter post-tax profit and equity for the year in the region
of $65,000 higher/lower respectively. The Directors
believe that 25 basis points is appropriate for the
sensitivity analysis based on recent market conditions.
(b) Credit risk
Credit risk is managed on a 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 to trade receivables
is reduced due to contractual terms which require
installation, training, annual licensing and support fees,
to be invoiced annually in advance.
34
Craneware plc Annual Report 2013 Notes to the Financial Statements [Cont’d.]
3 Financial risk management (cont’d.)
(c) Counterparty risk
The Group has significant cash and cash equivalent balances and in order to mitigate the risk of failing institutions management have treasury deposits spread across a range of
reputable banks, the details of which are disclosed on page"Directors, Secretary, and Advisors" on page 11.
(d) 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 table below analyses the Group’s financial liabilities which will be settled on a net basis into a relevant maturity grouping based on the remaining period from the Balance
Sheet date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.
Less than 1 year
$’000
Between 1 and 2
years
$’000
Between 2 and 5
years
$’000
Over 5 years
$’000
At 30 June 2012
Trade Payables
At 30 June 2013
Trade Payables
855
1,699
-
-
-
-
-
-
Total
$’000
855
1,699
There is no difference between the undiscounted liabilities and the amounts shown in Note 21 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. Contracts are normally billed
annually in advance. Assuming timely receivables collection, the Group will have favourable movements from working capital by generating cash ahead of revenue recognition.
Consequently funds are retained in the business to finance future growth, either organically or by acquisition.
35
Craneware plc Annual Report 2013 Notes to the Financial Statements [Cont’d.]
4 Revenue
The chief operating decision maker has been identified as the Board of Directors. The Group revenue is derived entirely from the sale of software licences, white labelling and
professional services (including installation) to hospitals within the United States of America. Consequently the Board has determined that Group supplies only one geographical
market place and as such revenue is presented in line with management information without the need for additional segmental analysis. All of the Group assets are located in
the United States of America with the exception of the Parent Company’s, the net assets of which are disclosed separately on the Company Balance Sheet and are located in the UK.
Revenue is analysed as follows:
Software licensing
White labelling
Professional services
Total revenue
5 Net operating expenses
Net operating expenses comprise the following:
Sales and marketing expenses
Client servicing
Research and development
Administrative expenses
Release of contingent consideration on business combination
Share-based payments (Note 8)
Depreciation of plant and equipment
Amortisation of intangible assets
Exchange loss/(gain)
Net operating expenses
2013
$’000
36,174
-
5,278
41,452
2012
$’000
34,002
3,500
3,565
41,067
2013
$’000
8,251
7,306
6,932
4,433
-
181
621
1,055
102
2012
$’000
8,804
7,189
6,844
4,763
(954)
152
579
1,060
(21)
28,881
28,416
36
Craneware plc Annual Report 2013 Notes to the Financial Statements [Cont’d.]
6 Operating profit
The following items have been included in arriving at operating profit:
Staff costs (Note 7)
Release of contingent consideration on business combination
Depreciation of plant and equipment
Amortisation of intangible assets
Impairment of trade receivables
Operating lease rents for premises
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 financial statements and consolidation
Tax compliance and other tax services
Other assurance services
2013
$’000
17,807
-
621
1,055
41
828
2013
$’000
85
111
-
196
2012
$’000
17,847
(954)
579
1,060
417
812
2012
$’000
97
88
5
190
37
Craneware plc Annual Report 2013
Notes to the Financial Statements [Cont’d.]
7 Staff costs
The average number of persons employed by the Group during the year, excluding non-executive Directors, is analysed below:
Sales and distribution
Client servicing
Research and development
Administration
Employment costs of all employees excluding non-executive Directors:
Wages and salaries
Social security costs
Post employment benefits
Share-based payments
Total direct costs of employment
Highest paid director:-
Salary and short-term employee benefits
Post employment benefits
Share-based payments
2013
Number
2012
Number
36
69
66
27
37
72
66
28
198
203
2013
$’000
16,202
1,408
16
181
2012
$’000
16,222
1,457
16
152
17,807
17,847
321
8
38
367
313
8
33
354
Directors’ emoluments are detailed in the Remuneration Committee Report on page 22 and key management compensation is given in the Related Party Transaction note on
pages 51 and 52. Retirement benefits are accruing to 1 of the executive Directors under a defined contribution scheme (2012: 1).
38
Craneware plc Annual Report 2013 Notes to the Financial Statements [Cont’d.]
8 Share-based payments
The Group has an equity-settled share-based payment scheme, whereby options over shares in Craneware plc can be granted to employees and directors. A charge is shown in the
Statement of Comprehensive Income of $180,623 (2012: $152,489) as detailed in Note 7 above.
Directors and employees interests in share options are set out in the Remuneration Committee Report on page 23.
The market value of share options exercised during the year ranged from $6.64 (£4.12) to $6.71 (£4.42). The market value at 30 June 2013 was $5.19 (£3.42).
Options over ordinary shares under the 2007 Share Options Plan may be granted with an exercise price no less than the market value of the Ordinary shares on the date of grant, and
in the case of the Directors of the Company will be granted subject to sufficiently stretching performance targets. These options will be subject to time based vesting and will not
normally be exercisable before the third anniversary of grant. Such options will lapse on the tenth anniversary of grant.
The fair value of options granted was estimated on the date of grant using the Black-Scholes option pricing model as appropriately adjusted. The Company estimates the number of
options likely to vest by reference to the Group’s staff retention rate, and expenses the fair value over the relevant vesting period. A sufficiently long trading history of the Company’s
own share price, dating from IPO to date of grant, results in an actual volatility calculation for all grants from December 2010. Prior to this date volatility had to be 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
28-Jun-13 21-Sep-12
4-Sep-12 23-Sep-11
6-Sep-10 22-Dec-09
8-Sep-08
Options over Ordinary shares
Share price at date of grant
Share price at date of grant
Vesting period (years)
Expected volatility
Risk free rate
Dividend yield
Exercise price
Exercise price
Number of employees
Shares under option
Fair value per option
$5.20
£3.43
3.00
36%
0.73%
2.7%
$5.20
£3.43
1
48,076
$1.23
$6.50
£4.00
3.00
37%
0.37%
2.6%
$6.50
£4.00
2
100,394
$0.94
$5.72
£3.60
3.00
37%
0.16%
2.5%
$5.72
£3.60
28
230,034
$0.82
$8.66
£5.61
3.00
28%
0.83%
1.6%
$8.66
£5.61
25
255,520
$1.42
$6.18
£4.01
3.00
24%
1.18%
2.2%
$6.18
£4.01
20
255,655
$1.40
$5.34
£3.35
3.00
23%
1.96%
1.5%
$5.34
£3.35
10
170,303
$1.34
$3.65
£2.08
3.00
40%
4.41%
1.5%
$3.65
£2.08
1
72,115
$1.67
39
Craneware plc Annual Report 2013 Notes to the Financial Statements [Cont’d.]
8 Share-based payments (cont’d.)
The following options have been granted over Ordinary shares:
2007 Share Option Plan:
2013 options number
2012 options number
Ordinary share options (£2.08 exercise price)
Outstanding at 1 July
Forfeited
Exercised
Outstanding at 30 June
Ordinary share options (£3.35 exercise price)
Outstanding at 1 July
Forfeited
Exercised
Outstanding at 30 June
Ordinary share options (£4.01 exercise price)
Outstanding at 1 July
Forfeited
Outstanding at 30 June
Ordinary share options (£5.61 exercise price)
Outstanding at 1 July
Granted
Forfeited
Outstanding at 30 June
Ordinary share options (£3.60 exercise price)
Outstanding at 1 July
Granted
Forfeited
Outstanding at 30 June
Ordinary share options (£4.00 exercise price)
Outstanding at 1 July
Granted
Forfeited
Outstanding at 30 June
Ordinary share options (£3.43 exercise price)
Outstanding at 1 July
Granted
Forfeited
Outstanding at 30 June
72,115
-
-
72,115
113,535
(10,629)
(16,872)
86,034
121,806
(69,215)
52,591
155,111
(83,269)
71,842
-
230,034
(85,880)
144,154
-
100,394
(33,465)
66,929
-
48,076
-
48,076
72,115
-
-
72,115
170,303
(56,768)
-
113,535
208,107
(86,301)
121,806
-
255,520
(100,409)
155,111
-
-
-
-
-
-
-
-
-
-
-
-
40
Craneware plc Annual Report 2013 Notes to the Financial Statements [Cont’d.]
9 Finance income
Deposit interest receivable
Total interest receivable
10 Tax on profit on ordinary activities
Profit on ordinary activities before tax
Current tax
Corporation tax on profits of the year
Foreign exchange on taxation in the year
Adjustments for prior years
Total current tax charge
Deferred tax
Origination & reversal of timing differences
Adjustments for prior years
Change in tax rate
Total deferred tax (credit)
Tax on profit on ordinary activities
2013
$’000
103
103
2013
$’000
10,603
2,453
152
(168)
2,437
133
(264)
1
(130)
2,307
2012
$’000
107
107
2012
$’000
11,202
3,790
2
(762)
3,030
(1,371)
645
5
(721)
2,309
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 23.75% (2012: 25.5%)
Effects of:
Adjustment in respect of prior years
Change in tax rate
Additional US taxes on losses/profits 39% (2012: 39%)
Foreign Exchange
Non taxable income
Expenses not deductible for tax purposes
Tax deduction on share plan charges
Total tax charge
2,518
(432)
1
39
152
-
(4)
33
2,307
2,857
(117)
5
(256)
2
(243)
82
(21)
2,309
41
Craneware plc Annual Report 2013
Notes to the Financial Statements [Cont’d.]
11 Dividends
The dividends paid during the year were as follows:-
Final dividend, re 30 June 2012 - 8.9 cents (5.7 pence)/share
Interim dividend, re 30 June 2013 - 7.82 cents (5.2 pence)/share
Total dividends paid to Company shareholders in the year
2013
$’000
2,481
2,212
4,693
2012
$’000
2,036
2,057
4,093
The proposed final dividend for 30 June 2013 is subject to approval by the shareholders at the Annual General Meeting and has not been included as a liability in these accounts.
12 Earnings per share
a) Basic
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of shares in issue during the year.
Profit attributable to equity holders of the Company ($'000)
Weighted average number of ordinary shares in issue (thousands)
Basic earnings per share ($ per share)
Profit attributable to equity holders of Company ($'000)
Release of deferred consideration on business combination
Amortisation of acquired intangibles ($'000)
Adjusted Profit attributable to equity holders ($'000)
Weighted average number of ordinary shares in issue (thousands)
Adjusted Basic earnings per share ($ per share)
2013
8,296
26,998
0.307
8,296
-
574
8,870
26,998
0.329
b) Diluted
For diluted earnings per share, the weighted average number of ordinary shares calculated above is adjusted to assume conversion of all dilutive potential ordinary
shares. The Group has one category of dilutive potential ordinary shares, being those granted to Directors and employees under the share option scheme.
Profit attributable to equity holders of the Company ($'000)
Weighted average number of ordinary shares in issue (thousands)
Adjustments for:- Share options (thousands)
Weighted average number of ordinary shares for diluted earnings per share (thousands)
Diluted earnings per share ($ per share)
Profit attributable to equity holders of Company ($'000)
Release of deferred consideration on business combination
Amortisation of acquired intangibles ($'000)
Adjusted Profit attributable to equity holders ($'000)
Weighted average number of ordinary shares in issue (thousands)
Adjustments for:- Share options (thousands)
Weighted average number of ordinary shares for diluted earnings per share (thousands)
Adjusted Diluted earnings per share ($ per share)
2013
8,296
26,998
69
27,067
0.306
8,296
-
574
8,870
26,998
69
27,067
0.328
2012
8,893
26,946
0.330
8,893
(954)
574
8,513
26,946
0.316
2012
8,893
26,946
84
27,030
0.329
8,893
(954)
574
8,513
26,946
84
27,030
0.315
42
Craneware plc Annual Report 2013
Notes to the Financial Statements [Cont’d.]
13 Plant and equipment
Group
Cost
At 1 July 2012
Additions
At 30 June 2013
Accumulated depreciation
At 1 July 2012
Charge for year
At 30 June 2013
Net Book Value at 30 June 2013
Cost
At 1 July 2011
Additions
At 30 June 2012
Accumulated depreciation
At 1 July 2011
Charge for the year
At 30 June 2012
Net Book Value at 30 June 2012
Company
Cost
At 1 July 2012
Additions
At 30 June 2013
Accumulated depreciation
At 1 July 2012
Charge for year
At 30 June 2013
Net Book Value at 30 June 2013
Cost
At 1 July 2011
Additions
At 30 June 2012
Accumulated depreciation
At 1 July 2011
Charge for year
At 30 June 2012
Net Book Value at 30 June 2012
Computer
Equipment
$’000
Office
Furniture
$’000
Tenants
Improvements
$’000
1,565
167
1,732
1,069
289
1,358
374
1,293
272
1,565
811
258
1,069
496
852
9
861
451
143
594
267
758
94
852
310
141
451
401
1,654
14
1,668
524
189
713
955
1,581
73
1,654
344
180
524
1,130
Computer
Equipment
$’000
Office
Furniture
$’000
Tenants
Improvements
$’000
643
60
703
525
80
605
98
609
34
643
450
75
525
118
618
3
621
348
106
454
167
599
19
618
234
114
348
270
1,494
14
1,508
469
141
610
898
1,452
42
1,494
329
140
469
1,025
Total
$’000
4,071
190
4,261
2,044
621
2,665
1,596
3,632
439
4,071
1,465
579
2,044
2,027
Total
$’000
2,755
77
2,832
1,342
327
1,669
1,163
2,660
95
2,755
1,013
329
1,342
1,413
43
Craneware plc Annual Report 2013
Notes to the Financial Statements [Cont’d.]
14 Intangible assets
Goodwill and Other Intangible assets
Group
Cost
At 1 July 2012
Additions
At 30 June 2013
Accumulated amortisation
At 1 July 2012
Charge for the year
At 30 June 2013
11,188
-
11,188
-
-
-
2,964
-
2,964
395
329
724
Net Book Value at 30 June 2013
11,188
2,240
Cost
At 1 July 2011
Additions
At 30 June 2012
Accumulated amortisation
At 1 July 2011
Charge for the year
At 30 June 2012
11,188
-
11,188
-
-
Net Book Value at 30 June 2012
11,188
2,964
-
2,964
66
329
395
2,569
Goodwill
$’000
Customer
Relationships
$’000
Proprietary
Software
$’000
Development
Costs
$’000
Computer
Software
$’000
1,222
-
1,222
326
244
570
652
1,222
-
1,222
82
244
326
896
2,912
92
3,004
1,718
383
2,101
903
2,584
328
2,912
1,308
410
1,718
1,194
543
244
787
380
99
479
308
453
90
543
303
77
380
163
Total
$’000
18,829
336
19,165
2,819
1,055
3,874
15,291
18,411
418
18,829
1,759
1,060
2,819
16,010
In accordance with the Group’s accounting policy, the carrying values of goodwill and other intangible assets are reviewed for impairment annually or more frequently if
events or changes in circumstances indicate that the asset might be impaired. Goodwill arose on the acquisition of Craneware InSight Inc.
The carrying values are assessed for impairment purposes by calculating the value in use (net present value (NPV) of future cashflows) of the Craneware InSight cash
generating unit. The goodwill impairment review assesses whether the carrying value of goodwill is supported by the NPV of the future cashflows based on management
forecasts for 5 years and then using an assumed sliding scale annual growth rate which is trending down to give a long-term growth rate of 2% in the residual years of
the assessed period. Management have made the judgement that this long-term growth rate does not exceed the long-term average growth rate for the industry and also
estimated a pre-tax discount rate of 20%.
Sensitivity analysis was performed using a combination of different annual growth rates and a range of different weighted average cost of capital rates. Management
concluded that the tempered growth rates resulting in 2% during the residual period and the pre-tax discount rate of 20% were appropriate in view of all relevant factors
and reasonable scenarios and that there is currently sufficient headroom over the carrying value of the assets in the acquired business that any reasonable change to key
assumptions is not believed to result in impairment.
44
Craneware plc Annual Report 2013
Notes to the Financial Statements [Cont’d.]
14 Intangible assets (cont’d.)
Goodwill and Other Intangible assets (Cont’d.)
Company
Cost
At 1 July 2012
Additions
At 30 June 2013
Accumulated amortisation
At 1 July 2012
Charge for the year
At 30 June 2013
Net Book Value at 30 June 2013
Cost
At 1 July 2011
Additions
At 30 June 2012
Accumulated amortisation
At 1 July 2011
Charge for the year
At 30 June 2012
Net Book Value at 30 June 2012
Development
Costs
$’000
Computer
Software
$’000
2,912
92
3,004
1,718
382
2,100
904
2,584
328
2,912
1,308
410
1,718
1,194
296
224
520
247
46
293
227
261
35
296
224
23
247
49
Total
$’000
3,208
316
3,524
1,965
428
2,393
1,131
2,845
363
3,208
1,532
433
1,965
1,243
15 Investments in subsidiary undertakings
The following information relates to the subsidiaries which, in the opinion of the Directors, principally affected the profits or assets of the Group:-
Name of Company
Class of Shares held
Proportion of
Nominal Value of
Issued Shares held by
Craneware plc
Craneware Inc
Ordinary
Craneware InSight Inc
Ordinary
100%
100%
Nature of Business
Sales & Marketing
Product Development &
Professional Services
Craneware Inc. and Craneware InSight Inc. are both incorporated in the United States of America and Craneware plc holds 10,000 (2012: 10,000) and 1,000 (2012: 1,000)
common shares respectively with a nominal value of $0.01 each. In FY12 $9,000,000 of the outstanding debt due from Craneware InSight Inc. was converted to equity.
The results of the Subsidiary companies have been included in the consolidated financial statements.
45
Craneware plc Annual Report 2013
Notes to the Financial Statements [Cont’d.]
16 Trade and other receivables
Trade receivables
less: provision for impairment of trade receivables
Net trade receivables
Other receivables
Amounts owed from group companies
Prepayments and accrued income
Less non-current trade receivables
Current portion
Group
Company
2013
$’000
8,448
(607)
7,841
203
-
7,084
15,128
-
15,128
2012
$’000
7,779
(750)
7,029
342
-
5,189
12,560
-
12,560
2013
$’000
7,748
(505)
7,243
103
6,000
4,574
17,920
(6,000)
11,920
2012
$’000
7,344
(745)
6,599
76
6,000
4,353
17,028
(6,000)
11,028
There is no material difference between the fair value of trade and other receivables and the book value stated above.
The $6,000,000 loan due to the Company from Craneware InSight Inc. is five years in its duration from the date of issue (the acquisition date) and interest is charged quarterly in
accordance with the agreement at LIBOR plus 1%.
As at 30 June 2013, trade receivables of $623,906 (2012: $1,328,237) were past due and therefore deemed to be impaired. The amount of the provision against these receivables
was $607,032 as of 30 June 2013 (2012: $749,898). The individually impaired receivables mainly relate to customers’ financial difficulties and unresolved disputes. It was
assessed a portion of the receivables is expected to be recovered. The ageing of these receivables is as follows:
Less than 30 days past due
30 – 60 days past due
61 – 90 days past due
91 + days past due
2013
$’000
-
45
317
262
624
2012
$’000
417
6
2
903
1,328
46
Craneware plc Annual Report 2013
Notes to the Financial Statements [Cont’d.]
16 Trade and other receivables (cont’d.)
As at 30 June 2013, trade receivables of $4,630,211 (2012: $1,515,257) were past due but not impaired. These relate to a number of customers for whom there is no recent
history of default. The ageing analysis of these trade receivables is as follows:
Less than 30 days past due
31 – 60 days past due
61 – 90 days past due
91 + days past due
2013
$’000
2,752
1,265
359
254
4,630
2012
$’000
811
186
148
370
1,515
As at 30 June 2013, trade receivables of $3,192,432 (2012: $4,935,213) were not past due or impaired, and the Group does not anticipate collection issues. A further $1,750 was
not past due but deemed to be impaired due to a client in financial difficulty (2012: None).
Movement on the provision for impairment of trade receivables is as follows:
At 1 July
Provision for receivables impairment on revenue recognised
Receivables written off during year as uncollectable
Unused amounts reversed
At 30 June
2013
$’000
750
568
(184)
(527)
607
2012
$’000
876
561
(399)
(288)
750
The creation and release of provision for impaired receivables has been included in net operating expenses in the Statement of Comprehensive Income. Amounts charged to the
allowance account are generally written off when there is no expectation of recovering additional cash.
The other classes within trade and other receivables do not contain impaired assets.The maximum exposure to credit risk at the reporting date is the fair value of each class of
receivable mentioned above. The Group does not hold any collateral as security.
17 Deferred taxation
Deferred tax is calculated in full on the temporary differences under the liability method using a rate of tax of 23% (2012: 24%) in the UK and 39% (2012: 39%) in the US
including a provision for state taxes.
The movement on the deferred tax account is shown below:-
At 1 July
Credit/(charge) to comprehensive income
Transfer direct to equity
At 30 June
Group
Company
2013
$’000
1,470
130
15
1,615
2012
$’000
1,287
721
(538)
1,470
2013
$’000
(14)
(32)
15
(31)
2012
$’000
67
(6)
(75)
(14)
47
Craneware plc Annual Report 2013 Notes to the Financial Statements [Cont’d.]
17 Deferred taxation (cont'd.)
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 at 30 June 2013 was $1,615,387 (2012: $1,470,259).
Deferred tax assets - recognised
Group
At 1 July 2012
Credited to comprehensive income
Credited to equity
Total provided at 30 June 2013
At 1 July 2011
(Charged)/Credited to comprehensive income
Debited to equity
Total provided at 30 June 2012
Deferred tax liabilities - recognised
Group
At 1 July 2012
Credited to comprehensive income
Total provided at 30 June 2013
At 1 July 2011
Credited to comprehensive income
Total provided at 30 June 2012
Total
$’000
2,890
(67)
15
2,838
3,009
419
(538)
2,890
Accelerated
accounting
depreciation
$’000
Short term
timing
differences
$’000
Losses
$’000
Share Options
$’000
-
-
-
38
(38)
-
-
125
327
-
452
89
36
-
125
Accelerated
tax
depreciation
$’000
(1,420)
197
(1,223)
(1,722)
302
(1,420)
2013
$’000
1,581
1,257
2,838
(927)
(296)
(1,223)
1,615
19
2
15
36
645
(88)
(538)
19
2,746
(396)
-
2,350
2,237
509
-
2,746
Total
$’000
(1,420)
197
(1,223)
(1,722)
302
(1,420)
2012
$’000
1,572
1,318
2,890
(1,157)
(263)
(1,420)
1,470
The analysis of the deferred tax assets and liabilities is as follows:
Group
Deferred tax assets:
Deferred tax assets to be recovered after more than 1 year
Deferred tax assets to be recovered within 1 year
Deferred tax liabilities:
Deferred tax liabilities to be recovered after more than 1 year
Deferred tax liabilities to be recovered within 1 year
Net deferred tax assets
The Company's Deferred tax assets and liabilities are all expected to be recovered in the future.
48
Craneware plc Annual Report 2013
Notes to the Financial Statements [Cont’d.]
Deferred tax assets - recognised
Company
At 1 July 2012
Credited to comprehensive income
Credited to equity
Total provided at 30 June 2013
At 1 July 2011
Charged to comprehensive income
Debited to equity
Total provided at 30 June 2012
Deferred tax liabilities - recognised
Company
At 1 July 2012
Charged to comprehensive income
Total provided at 30 June 2013
At 1 July 2011
Charged to comprehensive income
Total provided at 30 June 2012
18 Called up share capital
Authorised
Equity share capital
Ordinary shares of 1p each
Allotted called-up and fully paid
Total
$’000
19
1
15
35
115
(75)
(21)
19
Accelerated
accounting
depreciation
$’000
Share
Options
$’000
-
-
-
-
-
-
-
-
Accelerated
tax depreciation
$’000
(33)
(33)
(66)
(48)
15
(33)
19
1
15
35
115
(75)
(21)
19
Total
$’000
(33)
(33)
(66)
(48)
15
(33)
2013
2012
Number
$’000
Number
50,000,000
1,014
50,000,000
2013
2012
Number
$’000
Number
Equity share capital
Ordinary shares of 1p each
27,008,763
539
26,991,891
The movement in share capital during the year is represented as follows:
16,872 Ordinary Share options were exercised in the year, as detailed in the Remuneration Committee Report on page 23.
$’000
1,014
$’000
538
49
Craneware plc Annual Report 2013
Notes to the Financial Statements [Cont’d.]
19 Cash flow generated from operating activities
Reconciliation of profit before tax to net cash inflow from operating activities
Profit before tax
Finance income
Depreciation on plant and equipment
Amortisation on intangible assets
Share-based payments
Movements in working capital:
(Increase)/decrease in trade and other receivables
Increase/(decrease) in trade and other payables
Cash generated from operations
20 Cash and cash equivalents
Cash at bank and in hand
The effective rates on short term bank deposits were 0.36% (2012: 0.43%).
21 Trade and other payables - current
Trade payables
Amounts owed to group companies
Social security and PAYE
Other creditors
Accruals
Advance receipts
Group
Company
2013
$’000
10,603
(103)
621
1,055
181
(2,721)
255
9,891
2012
$’000
11,202
(107)
579
1,060
152
611
(2,895)
10,602
2013
$’000
10,520
(208)
327
428
115
(1,971)
209
9,420
2012
$’000
12,870
(270)
329
433
100
1,598
(3,141)
11,919
Group
Company
2013
$’000
30,277
2012
$’000
28,790
2013
$’000
27,452
2012
$’000
26,151
Group
Company
2013
$’000
1,699
-
376
8
3,467
-
5,550
2012
$’000
855
-
387
92
4,590
20
5,944
2013
$’000
569
1,355
160
1
1,108
-
3,193
2012
$’000
477
2,433
158
-
1,065
20
4,153
Amounts owed to Group companies on trading accounts are non-interest bearing and have no fixed repayment terms. Trade payables are settled in accordance with those terms
and conditions agreed, generally within 30 days, provided that all trading terms and conditions on invoices have been met. The Group’s average payment period at 30 June 2013
was 16 days (2012: 20 days).
50
Craneware plc Annual Report 2013
Notes to the Financial Statements [Cont’d.]
22 Contingent liabilities and financial commitments
a) Capital commitments
The Group has no capital commitments at 30 June 2013 (2012: $nil).
b) Lease commitments
The Group leases certain land and buildings. The commitments payable by the Group under these operating leases are as follows:-
Within one year
Between 2 and 5 years
More than 5 years
2013
$’000
679
2,876
4,760
8,315
2012
$’000
592
2,469
3,944
7,005
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. At the end of the financial year the Group signed a new lease expanding the Atlanta office which is due to start in FY14, all other leases are consistent with the end of
the previous year.
23 Related party transactions
During the year 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:-
2013
2012
Group
Fees for services provided as non-executive Directors
Fees
Salaries and Short-term employee benefits
Executive Directors
Salaries and Short-term employee benefits
Post employment benefits
Share-based payments
Other key management
Salaries and Short-term employee benefits
Post employment benefits
Share-based payments
Charged
$
91,165
108,913
623,158
7,843
66,775
958,521
7,843
40,734
Outstanding
at year end
$
-
-
-
-
-
-
-
-
Charged
$
102,347
95,126
604,692
7,920
57,635
834,355
7,920
33,894
Outstanding
at year end
$
4,323
-
-
-
-
-
-
-
51
Craneware plc Annual Report 2013
Notes to the Financial Statements [Cont’d.]
23 Related party transactions (cont’d.)
Company
Fees for services provided as non-executive Directors
Fees
Salaries and Short-term employee benefits
Executive Directors
Salaries and Short-term employee benefits
Post employment benefits
Share-based payments
Other key management
Salaries and Short-term employee benefits
Post employment benefits
Share-based payments
Amounts due to Craneware Inc - Subsidiary company
Sales commission
Net operating expenses
Balance
Amounts due from Craneware InSight Inc - Subsidiary
company
2013
Outstanding
at year end
$
-
-
-
-
-
-
-
-
Charged
$
91,165
108,913
623,158
7,843
66,775
454,665
7,843
26,064
2012
Outstanding
at year end
$
4,323
-
-
-
-
-
-
-
Charged
$
102,347
95,126
604,692
7,920
57,635
447,974
7,920
22,985
13,282,825
2,249,402
-
-
2,011,375
12,135,044
1,037,951
-
-
-
2,727,573
Balance
6,656,168
-
6,294,917
Key management are considered to be the Directors together with the Chief Operating Officer, Chief Technology Officer (President of US Operations), the EVP of Marketing, SVP of
Product Management, SVP of Human Resources (appointed to the Operations Board in July 2012) and EVP of Sales (appointed to the board in May 2013).
There were no other related party transactions in the year which require disclosure in accordance with IAS 24.
24 Ultimate controlling party
The Directors have deemed that there are no controlling parties of the Company.
52
Craneware plc Annual Report 2013 Personal Notes
53
Craneware plc Annual Report 2013 Craneware plc
1 Tanfield
Edinburgh
EH3 5DA
Scotland, UK
Telephone: +44 [0] 131 550 3100
Facsimile: +44 [0] 131 550 3101
craneware.com
marketing@craneware.com
training@craneware.com
sales@craneware.com
support@craneware.com
Company Registration No. SC196331
Craneware plc
Company Registration No. SC196331
Craneware plc