Cashrewards Annual Report 2018

FY2018 Annual Report · Cashrewards

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Craneware plc Annual Report
for the year ended 30 June 2018

About Craneware

Craneware enables healthcare providers to improve margins and enhance patient outcomes so
they can continue to provide quality outcomes for all.

Craneware is the leader in automated value cycle solutions that help US healthcare provider
organisations discover, convert and optimise assets to acheive best clinical outcomes and
financial performance.

Founded in 1999, Craneware is headquartered in Edinburgh, Scotland with offices in Atlanta
and Pittsburgh employing over 320 staff. Craneware's market-driven, SaaS solutions normalise
disparate data sets, bringing in up-to-date regulatory and financial compliance data to deliver
value at the points where clinical and operational data transform into financial transactions,
creating actionable insights that enable informed tactical and strategic decisions.

To learn more, visit craneware.com.

Contents

Financial and Operational Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1

Craneware Value Cycle Solutions® . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2

Chairman’s Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4

Strategic Report: Operational and Financial Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5

Strategic Report: Key Performance Indicators and Principal Risks and Uncertainties. . . . . . . . 11

Directors, Secretary, Advisors and Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Board of Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Directors’ Report. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Corporate Governance Report. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Remuneration Committee's Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Independent Auditors’ Report to the Members of Craneware plc . . . . . . . . . . . . . . . . . . . . 31

Consolidated Statement of Comprehensive Income for the year ended 30 June 2018 . . . . . . 35

Statements of Changes in Equity for the year ended 30 June 2018 . . . . . . . . . . . . . . . . . . . 36

Consolidated Balance Sheet as at 30 June 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

Company Balance Sheet as at 30 June 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

Statements of Cash Flows for the year ended 30 June 2018. . . . . . . . . . . . . . . . . . . . . . . . 39

Notes to the Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

Craneware plc Annual Report 2017Quick Facts — Financial

$67.1m

in revenue

$21.6m

in adjusted EBITDA1

$52.8m

cash at year end

24.0p

total dividend for year

Financial and Operational Highlights

Financial
Revenue increased 16% to $67.1m (FY17: $57.8m)

Adjusted EBITDA1. increased 20% to $21.6m (FY17: $18.0m)

Profit before tax increased 12% to $18.9m (FY17: $16.9m)

Basic adjusted EPS2. increased 17% to $0.602 (FY17: $0.514) and adjusted diluted EPS

increased to $0.591 (FY17: $0.503)

Total visible revenue increased 20% to $192.9m (FY17 same 3 year period: $160.7m)

Continued operating cash conversion above 100% of Adjusted EBITDA

Renewal rate remains above 100% by dollar value

Cash at year-end of $52.8m (FY17: $53.2m) after having returned $23.2m to shareholders
via a share buyback and dividends, while also investing $4.2m in the Employee Benefit
Trust

Proposed final dividend of 14.0p (18.48 cents) (FY17: 11.3p, 14.71 cents) per share giving a

total dividend for the year of 24.0p (36.68 cents) (FY17: 20.0p, 26.04 cents) per share

1 Adjusted EBITDA refers to earnings before interest, tax, depreciation, amortisation and share based payments.
2 Adjusted Earnings per share calculations allow for the tax adjusted acquisition costs and share related transactions
together with amortisation on acquired intangible assets.

Operational
Over 100% increase in new sales in the year, including five significant contracts wins or

contract extensions

Continued supportive market environment as the US healthcare market evolves towards
value-based care, with a critical dependency on accurate financial and operating data

Continued high levels of customer acquisition and retention

Increasing market engagement with newly launched cloud-based platform, Trisus™

Strong sales and opportunities across the product suite and across all classes of hospital

providers, including for the first Trisus product: Trisus Claims Informatics

Early adopters reporting positive results for our new Craneware Healthcare Intelligence

software, the next Trisus software release

Revenue $m

49.8

41.5

42.6

44.8

67.1

2018

57.8

21.6

18.0

15.9

14.4

13.1

2014

2015

2016

2017

2018

60.2

51.4

42.9

37.8

34.0

2014

2015

2016

2017

2018

Adjusted EBITDA1 $m

Basic adjusted EPS cents/share

21.6

18.0

15.9

14.4

13.1

60.2

1
1

51.4

42.9

37.8

34.0

2013

2014

2015

2016

2017

2014

2015

2016

2017

2018

2014

2015

2016

2017

2018

Craneware plc Annual Report 2018Craneware Value Cycle Solutions®

Craneware Solutions and Services

Craneware Value Cycle Solutions span five product families – Patient Engagement, Charge Capture & Pricing, Claims Analysis, Revenue Collection & Retention, and
Cost Analytics. In addition, hospitals of all sizes and types rely on Craneware’s Professional Services to help deliver results that lead to improved financial outcomes.

Value Cycle Areas

Patient Engagement

Charge Capture & Pricing

Claims Analysis

Revenue Recovery & Retention

Cost Analytics

Medical
Necessity & Prior
Authorisation

Patient
Responsibility

Business Outcomes

Estimate patient
responsibility
and payment
plans

Determine
requirement
for payers:
government &
commercial

Waiver forms
for non-covered
procedures

Multi-attribute
verification

Craneware Solutions

Procedures

Pharmacy

Supplies

Billing & Claims
Analyis

Audit
Management

Denials
Management

Cost of Care

Identify
and correct
discrepancies
between
purchased and
billed drugs

Identify and correct
discrepancies
between purchased
and billed supplies

Accurate HCPCS for
billable supplies

Integrity for all
earned revenue

I.D. and correct all
coding mistakes

Identify missed
charges

Automated
audit tracking
and execution

Automated
denial tracking
and execution

Multiple facility/
department
segmentation
and workflow

Defensible
accrual
and reserve
forecasting

Appeals
workflow

Analyse cost,
utilisation and
reimbursement
to Identify the
most effective and
efficient way to
provide care

Ensure charge
accuracy

Ensure
chargemaster
accuracy across
enterprise

Creation/
maintenance
of physician fee
schedule

Model contract
proposals

Model net
revenue
reimbursement

InSight Medical
Necessity®

Trisus® Patient
Payment

Chargemaster
Toolkit®

Pharmacy
ChargeLink®

Trisus® Supply

Supplies Assistant

Trisus® Claims
Informatics

InSight Audit®

InSight Denials®

Trisus® Healthcare
Intelligence

Physician
Revenue Toolkit®

Pricing
Analyzer™

Reference Plus™

Craneware Consulting and Professional Services

CDM Review & Educational Review

CDM Standardisation

Pricing Optimization Study

Supply Banding

Charge Capture Performance Improvement Services

Interim & full time Success Management Services

Revenue Integrity Assessments

Appeal Services

What Craneware Customers Are Saying

“…Craneware is helping my
hospital to increase revenue and
to survive and be there for our
community.”

“Craneware is invested in
our success. We are not just a
customer, we are a partner.”

“With the tool we've been able
to find pricing discrepancies that
allows us to capture revenue that
weren't capturing previously.”

Janet Kaneff, Chargemaster Analyst,
Southeastern Ohio Regional Medical Center

Kerry Topper, RHIA, Manager of Revenue Integrity,
Beebe Healthcare

Jim Jones, Director, Support Services
Nationwide Children's Hospital

Craneware plc Annual Report 2018

Craneware Value Cycle Solutions® [Cont’d.]

Patient Engagement

InSight Medical Necessity®
A SaaS solution that provides medical necessity
validation for all major U.S. payors and Advance
Beneficiary Notice (ABN) creation. The software
helps reduce accounts-receivable days by preventing
medical necessity denials, and facilitates payment
communication with patients.

Data dictionaries are now provided as an option for
medical necessity. These dictionaries function within a
hospital's existing billing and electronic health record
systems to prevent medical necessity denials without
the need to access an external, stand-alone system.

Trisus® Patient Payment
A SaaS solution that provides hospitals and health
systems a way to modernise patient payment by
moving collections to the front end, better manage
cash flow, reduce bad debt, and improve collection
rates while minimising administrative costs.

Charge Capture & Pricing

Chargemaster Toolkit®,
Chargemaster Toolkit® Discovery
Viewer, and Chargemaster Toolkit®
Corporate Discovery Viewer
Automated SaaS chargemaster management solutions
for capturing optimal legitimate reimbursement
for providers, while mitigating compliance risk.
Chargemaster Toolkit is customisable for any
organisation, from small community providers to large
healthcare networks, and addresses the challenges that
enterprise chargemaster data presents to hospitals by
enabling all related chargemaster data to be viewed in
one place.

Physician Revenue Toolkit®,and
Physician Revenue Toolkit® – Corporate
SaaS solutions for managing physician group KPIs,
charges, codes, RVUs, fee schedules, and
related information.

Pricing Analyzer™
SaaS solution that simplifies the price modelling
process, creating a repeatable, well-documented
method to establish transparent, defensible and
competitive pricing.

Reference Plus™
SaaS solution for providers with less than $44 million in
operating expenses to perform chargemaster analysis,
and efficiently optimise revenue, charge compliance
and coding integrity.

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 provider’s pharmaceutical
purchases and billing.

Trisus® Supply
Utilizes foundational data from the item master,
OR file, and chargemaster to identify data gaps
between the systems, ensuring every reimbursable
supply, implant, and device is billed.

Supporting Modules

Online Reference Toolkit®
Web-based and mobile-friendly tool for reducing
risk by providing access to reference and
regulatory resources.

Interface Scripting Module
Software that automatically uploads chargemaster
changes to the patient billing system for
accurate billing.

Supplies Assistant
Web-based, mobile-friendly supplies lookup tool
available in Supplies ChargeLink or Online Reference
Toolkit. Supplies Assistant enables providers to access
Craneware’s proprietary supply master catalog and
quickly and correctly code expensive implants
and devices.

Claims Analysis

Trisus® Claims Informatics
Software built on Craneware’s next generation SaaS
based product platform that 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.

Revenue Recovery & Retention

InSight Audit®
A comprehensive, web-based audit management tool
that empowers healthcare organisations to manage
government and commercial audits from one central
location.

InSight Denials®
Analyses, tracks, trends and reports on denial data,
providing workflow tools for expediting repair and
resubmission of denied claims.

Cost Analytics

Trisus® Healthcare Intelligence
A cost analytics and resource efficiency platform that
unites cost and operational information across the
provider organisation, delivering revenue, cost, and
operational information for each patient encounter.

Customer Success Management
and Consulting Services

Craneware provides 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 Academy and optional fee-
based training.

CHARGEMASTER
MANAGEMENT

2018

Chargemaster Toolkit® is ranked No.1 in the Revenue Cycle –
Chargemaster Management market category for the twelfth year
in a row (2006 – 2018) in the "2018 Best in KLAS Awards: Software
& Services" report, published January 2018. Data © 2018 KLAS
Enterprises, LLC. All rights reserved. . www.KLASresearch.com

*HFMA staff and volunteers determined that Craneware's
Chargemaster Toolkit® has 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 Gold Partner for Application Development.

Craneware plc Annual Report 2018I am delighted to report on another outstanding
trading performance by the Group, with underlying
new sales increasing by over 100%. Growth is being
driven by the investments we have made into the
business across our operations, people and product
suite, and the supportive market environment. We now
have the right structure and capabilities to capitalise
on what we believe to be a significant, long-term
growth opportunity supporting the movement of the
US healthcare industry towards value-based care.

This enhanced positioning can be seen in the financial
metrics. Revenue increased 16% to $67.1m (FY17:
$57.8m) and adjusted EBITDA increased 20% to $21.6m
(FY17: $18.0m). It is particularly pleasing to note
the continued strong cash conversion of the Group,
demonstrating the high quality of our earnings. The
Group had cash reserves at the end of the year of
$52.8m, a return to the level seen at the end of the
previous financial year (FY17: $53.2m), after having
returned $23.2m to shareholders via a share buyback
and dividends, while also investing a further $4.2m in
the Employee Benefit Trust during the year.

Sales in the year amounted to $98.6m (FY17: $54.0m)
of which $71.3m and $27.3m were new sales and
renewals, respectively (FY17: $35.4m and $18.6m
respectively). The continued sales success, combined
with renewals remaining above 100% (by dollar value),
has once again delivered very high levels of revenue
visibility that supports our continued future growth.

It is clear that Craneware has an exciting opportunity
in front of it, supporting healthcare providers in the
transition to value-based care. In an era of increasing
scrutiny and the need to drive value in healthcare, the
insight our suite of products provides will be crucial
in ensuring our customers’ long-term financial health
and their ability to deliver better clinical outcomes for
all their communities. As Craneware approaches its
twentieth anniversary as a business, the data that the
software has collected and the strong relationships
we have forged with our customers, mean we are
in a unique position to provide genuine insight into
the economics of healthcare provision. Our mission
is to identify and build solutions that will enable our
customers to unlock the value of that data so that
they can thrive in a new value-based environment,
delivering better outcomes for all their patients, staff
and stakeholders.

The strong progress within the business can be seen
in the successful initial sales of the first Trisus product,
which sits upon our newly launched cloud-based

platform, the exciting results being delivered by our
trial analytics customers and the expansion of our
customer base. We now supply one or more of our
solutions to a third of all US hospitals, with a strong
pipeline of additional opportunities.

Alongside technology innovation and organic
growth strategies, we continue to monitor potential
acquisitions and with our healthy cash balance and a
$50m funding facility in place, we have the resources to
execute upon our strategic vision should an appropriate
acquisition target arise. Strict criteria continue to be
applied to potential acquisition targets ensuring that
they would enhance our hospital footprint, data sets or
our product roadmap so that they are quickly accretive
to both the financial and operational strength of the
Group.

As we enter the new financial year, we remain positive
that the business environment in the US will continue
to be supportive of Craneware, given our unique
ability to support our customers. Our expanded market
opportunity, double digit growth rates, record sales
pipeline and increasing long-term revenue visibility
provide the Board with confidence in achieving a
successful outcome to the current year and beyond.

I would like to thank all our employees across the UK
and US for their continued dedication and passion for
our customers. They are the backbone on which the
success of the Company has been formed and grown.
Twenty years ago, Craneware was a small group of
people with a big vision – a notion that they could
deliver a solution that would positively influence the
United States healthcare market. Today, there are
more than 320 of us serving a third of US hospitals
and health systems, with a financial impact of over a
quarter of a trillion dollars. Each year, approximately
200 million encounters are provided by Craneware
customers to their patients. These customers chose
Craneware to help them grow and protect their future
vision, their legacy.

As we look to the next twenty years, I am confident
we have the right people in place to build Craneware
to a significant scale that will deliver on the sizeable
opportunity that it has created, to profoundly impact
healthcare delivery and improve the value achieved
from the vast amount spent on healthcare world-wide.

George Elliott
Chairman
3 September 2018

Chairman’s Statement

“In an era of increasing scrutiny
and the need to drive value
in healthcare, the insight our
suite of products provides
will be crucial in ensuring our
customers’ long-term financial
health and their ability to deliver
better clinical outcomes for all
their communities.”

George Elliott, Chairman

Craneware plc Annual Report 2018Strategic Report: Operational and Financial Review

“…we are well positioned to provide
the insight our customers need to
thrive in this new era of value-based
care and make a meaningful impact
on the quality of US healthcare."

Keith Neilson, CEO and co-founder

“The need to drive value in healthcare,
and the challenges this brings,
provide an ongoing supportive
market environment for Craneware
due to our ability to help our
customers meet these challenges."

Craig Preston, CFO

Operational Review

We have enjoyed another excellent year, with the
strong financial results just one proof point of the
successful execution of our strategy. Our double-digit
revenue and EBITDA growth rates are an indication
not only of the success of the investments we have
made into people, products and operations, but also
the growing urgency now being felt within the US
healthcare market to find a means to successfully adapt
to the new environment of value-based care and to
deliver value for the healthcare spend.

The combination of our significant expertise and
experience in the US healthcare industry, the data
that our solutions have gathered, and the continued
investment into the expansion of our product suite
means we are well positioned to provide the insight our
customers need to thrive in this new era of value-based
care and make a meaningful impact on the quality of
US healthcare.

Market and Strategy
The ongoing evolution of the US healthcare industry
towards the provision of value-based care, puts the
emphasis onto the healthcare provider to ensure they
are delivering the right care, in the right place and at
the right cost. This is a significant shift away from the
historic fee-for-service environment and requires every
hospital CFO to have a far greater understanding of
their costs and the value they provide.

The need to drive value in healthcare, and the
challenges this brings, provide an ongoing supportive
market environment for Craneware due to our ability
to help our customers meet these challenges. Recent
market developments include the announcement in
August by the US Centers for Medicare and Medicaid
Services (CMS), the US state and federal healthcare
coverage programmes, of the overhaul of the
‘meaningful use’ programme which includes emphasis
on measures that require the exchange of health
information between providers and patients, a key
capability of our Trisus platform. The new policies aim
to bring the US closer to the creation of a patient-
centred healthcare system by increasing pricing
transparency and fluid information exchange.

Three years ago, we developed the idea of the
‘value cycle’, being the process and culture by which
healthcare providers pursue quality patient outcomes
and optimal financial performance, through the
management of clinical, operational and financial
data assets. Craneware’s value cycle solutions provide
the financial insight and actionable data needed to
navigate this evolving and unchartered landscape.

Our strategy is to continue to build on our established
market-leading position in revenue cycle solutions
and expand our product suite coverage of the value
cycle. By expanding our offerings into operational
areas of the hospital, incorporating cost management
and combining this with data from the revenue cycle,
we will provide a comprehensive insight into the
management and analysis of clinical and operational
data, providing the best possible outcomes for all.

The expansion of our solutions is being achieved
through a combination of extensions to the current
product set; building products through internal
development; targeting potential acquisitions and
partnering with other technology and services
companies.

Product Roadmap
We continue to make progress in all areas of our
product roadmap: the development of our cloud-
based Trisus Enterprise Value Platform; the continued
evolution and support of our existing market-leading
product suite as we migrate to Trisus and the
development of new products to sit upon the Trisus
Platform including the development of our cost
analytics software. All of these solutions will increase
our coverage of the key areas of the value cycle and
therefore increase our addressable market.

Trisus Enterprise Value Platform
In 2017 we launched the Trisus Enterprise Value
platform. This cloud-based platform provides a suite
of solutions for healthcare providers to identify
and take action on risks related to revenue, cost,
and compliance. It is designed to be versatile and
expandable, growing alongside our customers as the
healthcare industry continues to evolve. The platform
provides an environment to gather, process, and
deliver data across the continuum of care with an open
architecture and common components, allowing for
synergies between applications.

The first product on the platform, Trisus Claims
Informatics, was released in June 2017, with a good
level of early sales secured during the year. This
product enables hospitals and healthcare systems
to drive revenue growth and increase compliance by
automating claims review and analysing claims for
completeness, accuracy, and patterns of changing
charging behaviour.

Craneware plc Annual Report 2018Strategic Report: Operational and Financial Review [Cont’d.]

Trisus Supply was released in an early adopter version
in June 2018. This unique solution aligns data across
the supply item master database, the Operating
Room supply database, and the chargemaster.
Healthcare organisations need revenue preservation,
data reliability, and critical analytics to address the
ever-growing cost of supplies and medical devices,
which when combined with pharmacy are expected
to be higher than labour costs by 2020. With Trisus
Supply, providers can ensure their high-dollar medical
devices and supplies are accounted for, managed, and
reimbursed properly increasing both compliance
and revenue.

By the end of 2018, we are expecting a generally
available version of Trisus Pricing Analyzer, our solution
assisting healthcare organisations create transparent,
defensible, and competitive pricing strategies. As
government regulations begin requiring hospitals
to publish their pricing schedules for procedures
in 2019, providers will need to ensure their pricing
strategies are in-line with their patient demographics
and competitive hospitals. Trisus Pricing Analyzer will
contain contract modelling tools, which assess all
reimbursement methodologies by payor to identify
net patient revenue opportunities, which enhance the
predictive modelling used to create strategic pricing.
This automated solution provides speed and flexibility
to adapt to regulatory, payor contract, and market
changes throughout the year.

We are executing on a roadmap to migrate all our
solutions onto the Trisus platform, as well as continuing
to look for innovative combinations of our data sets
into new unique product offerings. As part of this
roadmap we expect to see further hybrid solutions
combining; the best of existing software regardless
of the development origin, including outside of
Craneware; elements of the Trisus platform; new
Trisus products; and new early adopter Trisus enabled
versions of other existing solutions.

We are particularly pleased to note how both our
existing customer base and the wider healthcare
provider market have responded positively to the
technological evolution of the Craneware solution set,
delivered on the Trisus platform. We have seen many
of our existing customers implement the Trisus Bridge
over the year, a connector layer linking their existing
on premise Craneware solutions to the advanced
functionality of Trisus in the cloud. This provides us
with confidence in the successful long-term transition
of all our products to the cloud platform.

Craneware Healthcare Intelligence
In the second half of the 2016 financial year, Craneware
formed a new wholly owned Group company,
Craneware Healthcare Intelligence, LLC, to develop Cost
Analytics and Resource Efficiency software for the US
healthcare industry. Healthcare intelligence is a vital
component within the emerging value cycle solutions
market, representing a market opportunity several
times larger than that of our existing product portfolio.

The aim of the business is to provide our customers
with an understanding of the true cost of every
episode of care given to their patients. Most hospitals’
accounting systems are set up to collect financial data
in aggregate and average metrics. This structure, while
useful in a fee-for-service system, does not adequately
support the shift to quality-centric healthcare delivery
system that provides true value. Our Healthcare
Intelligence platform unites cost and operational
information across the provider organisation,
delivering revenue, cost, and operational information
for each patient encounter. It enables understanding
of the critical components of operational metrics and
expenses across the entire episode of care.

In 2017 we engaged with two hospitals, in Missouri
and Pennsylvania, to run trial implementations of the
software under the pilot phase of release, combining
our Healthcare Intelligence models with live hospital
data. Both implementations were successful and have
led to multi-year contracts for the solution as well as
providing valuable development information as we
move towards general release. We have hired team
members through the year and now have 14 employees
and have plans to further increase headcount. The
Group has hired a dedicated VP of Sales and we expect
to see marketing activity increase in the year ahead.

Sales and Marketing
We have seen substantial, positive sales momentum,
securing a high level of new sales in the year across
all sizes, classes and types of hospital customer. This
sales momentum has continued into the new financial
year and the sales pipeline continues to be at record
highs, all combining to provide further confidence of
accelerated revenue and profit growth by supplying
products that are meeting real world customer needs.

During the year, sales to both new and existing
customers grew in absolute terms, with sales to new
hospitals becoming the larger proportion of the overall
sales mix, increasing our platform for future sales.
Of particular note in the year has been the strength
of sales of our Pharmacy ChargeLink solution (PCL),
which for the first time in its history was the Company’s
largest selling product. This is particularly pleasing
given the strategic aim in the year to leverage the
strength of our customer communities to assist in the
development and promotion of our solutions. PCL has

been championed by a number of our larger customers
particularly as they attempt to understand the growing
impact that pharmacy costs have on their organisation,
as well as other customers who are in the process of
migrating patient accounting systems.

The average length of contracts with new customers
continues to be in-line with our historical norms of
approximately five years. As with last year, for all other
contracts we have anticipated the crossover dates of
new product availability on the Trisus platform and the
impact for each individual customer contract as part of
our migration strategy. It is anticipated that our phased
migration of all current products to the Trisus platform
will be complete no later than 2021. With the adoption
of the Trisus Bridge by the majority of our customer
base, we are now able to offer customers a viable and
secure method of transitioning to our cloud based
platform at a pace that suits them.

At the end of any contract term, we expect to see our
renewal rates remain at their current high levels (well
above 100% by dollar value), along with additional
sales, as customers move to the improvements brought
to them by the Trisus platform.

Significant contract wins
Alongside excellent levels of sales to individuals and
mid-sized hospital groups, we were delighted to secure
five significant contracts during the year, ranging from
$3.5m to $16m in value. These included extensions
with existing customers to roll out our solutions to
newly acquired facilities, network roll outs to new
customers following successful trials, new customers
carrying out major systems changes and sales of the
newly launched Trisus Claims Informatics and Pharmacy
ChargeLink. These contracts demonstrate both the
relevance of Craneware at an enterprise-wide level and
the importance of Craneware value cycle solutions to
customers that are looking for innovation to help them
realise their strategic financial goals as they evolve in a
value-based world. Almost the entirety of revenue from
these sales will be recognised in future years, adding to
our growing visibility of future revenue.

Awards
Chargemaster Toolkit® was named Category Leader
in the “Revenue Cycle – Chargemaster Management”
market category for the twelfth consecutive year
in the annual “2018 Best in KLAS Awards: Software
& Services.” KLAS’s annual “Best in KLAS” report
provides unique insight gathered from thousands of
healthcare organisations across the US. The report
includes customer satisfaction scores and benchmark
performance metrics.

Craneware plc Annual Report 201870

Strategic Report: Operational and Financial Review [Cont’d.]

Acquisitions
The Board continues to assess acquisition opportunities
to complement the Group's organic growth strategy
and increase our product coverage of the value cycle.
The Board adheres to a rigorous criteria to evaluate
acquisition opportunities, including quality of earnings,
customer relationships, strategic fit and product
offering. In addition to the Company's cash reserves,
an undrawn $50 million funding facility provides the
Company with available resources to carry out strategic
acquisitions if, and when, these criteria are met.
Areas for consideration will include: competitors who
bring market share; businesses with complementary
data sources; or international companies with
complementary product suites of benefit to our
customers, who do not have a foothold in the US.

Financial Review

It is pleasing to report that our double-digit revenue
growth has continued for a third successive year and
Adjusted EBITDA has accelerated, growing to 20%.
Accordingly, we are reporting a growth in revenue of
16% to $67.1m (FY17: $57.8m) and an adjusted EBITDA
of $21.6m (FY17: $18.0m).

However, the true success of the year, underlying
these results continues to be the contracts we sign
with our hospital customers, our “sales”. In the year,
we have seen significant sales success delivering an
increase of over 100% in new sales contracts, signing
$71.3m of new total contract value with new and
existing customers. At the end of these initial licence
periods, or at a mutually agreed earlier date, we renew
our licences with our customers, these “renewals”

contributed an additional $27.3m to sales in the period.
As a result we are reporting the total value of contracts
signed in the year of $98.6m (FY17: $54.0m).

As demonstrated by the numbers reported above,
and as a result of our business model, “sales” and
“revenue” have very different meanings and are not
interchangeable. In fact, only a small proportion of
the revenue resulting from the sales made in the year
is recognised in the current year’s reported revenue,
instead the vast majority of the associated revenue is
recognised in future years, adding to the Group’s long-
term visibility of future revenue.

Three Year Visible Revenue

0.2
6.1

59.8

0.2

16.9

46.3

0.2

28.7

34.5

FY19

FY20

FY21

As at 30 June 2018

Contracted

Renewals

Other recurring revenue

0.2

5.7

50.1

0.2

14.9

38.8

0.3

24.6

29.0

FY18

FY19

FY20

Contracted

Renewals

Other recurring revenue

Craneware plc Annual Report 2018Strategic Report: Operational and Financial Review [Cont’d.]

New contracts provide a licence for a customer to access
specified products throughout their licence period.
This licence period on average, for a sale to a new
customer, is five years. In calculating averages, we only
take the contract length up to the first renewal point/
break clause for that specified product. By renewing
these contracts when they come to the end of their
initial term, we ensure we are sustaining and, with
new hospital sales, building our underlying annuity
revenue base. It is for this reason, we measure our
renewal rates by dollar value. We do this by measuring
the ‘last annual value’ of all customers due to renew in
the current year and compare it to actual value these
customers renew at (in total), including up-sell and
cross-sell. This metric for the current year is at 114%.

Through our business model and resulting revenue
recognition, the Group ensures that it is focused on
building its underlying annuity revenue base to deliver
sustainable growth.

Business Model
Under the Group’s ‘Annuity SaaS’ business 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 hospital contracts for an average life of
five years, we will see the revenue from any new sales
recognised over this underlying contract term.

As well as the incremental licence revenues we
generate from each new sale, we normally expect to
deliver an associated professional services engagement
to assist our customers in embedding the software
within their core processes to maximise the value
the software can bring to them. This revenue is
typically separately identifiable from the licence and is
recognised as we deliver the service to the customer,
usually on a percentage of completion basis. The nature
and scope of these engagements will vary depending
on both our customer needs and which of our solutions
they have contracted for. However these engagements
will always include the implementation of the software

as well as training the hospital staff in its use. As a
result of the different types of professional services
engagement, the period over which we deliver the
services and consequently recognise all associated
revenue will vary, however we would normally expect
to recognise this revenue over the first year of the
contract.

In any individual year, we would normally expect
around 10% - 20% of revenues reported by the Group
to be from services performed.

Sales, Revenue and Revenue Visibility
The table below shows the total value of contracts
signed in the relevant years, split between sales of new
products (to both new and existing hospital customers)
and the value of renewing products with existing
customers at the end of their current contract terms,
and how these sales have translated into reported
revenue in the corresponding year.

FY14

FY15

FY16

FY17

FY18

Revenue

Reported Revenue

FY14

FY15

FY16

FY17

FY18

FY14

FY15

FY16

FY17

FY18

Revenue

New Sales

FY14

FY15

FY16
New Sales

FY14

FY15

FY16
New Sales
Renewals*

FY17

FY18

FY14

FY15

FY17

FY18

FY16
New Sales

FY17
0

FY14

FY18

FY15

FY16
Renewals

FY17

FY18

*As the Group signs new customer contracts for between three to nine years, the number and value of customers’ contracts coming to the end of their term (“renewal”) will vary in any one year. This
variation along with whether customers auto-renew on a one year basis or renegotiate their contracts for up to a further nine years, will impact the total contract value of renewals in that year

FY14

FY15

FY16
Renewals

FY14

FY15

FY17

FY18

FY16
Renewals

FY17

FY18

Craneware plc Annual Report 2018Strategic Report: Operational and Financial Review [Cont’d.]

As the majority of the revenue resulting from sales in
any one year will be recognised over future years, the
financial statements do not fully reflect the valuable
‘asset’ that is contracted, but not yet recognised,
revenue. As such, at every reporting period, the Group
presents its “Revenue Visibility”. This KPI identifies
revenues which we reasonably expect to recognise over
the next three year period, based on sales that have
already occurred. This “Three Year Visible Revenue”
metric includes:
future revenue under contract
revenue generated from renewals (calculated at

100% dollar value renewal)

other recurring revenue

Through this metric we can demonstrate how the
underlying annuity base of revenue is building as we
sign new multi-year contracts with our customers and
at the end of these contracts by, on average, renewing
these customers at 100% of dollar value.

The Three Year Revenue Visibility KPI is a forward
looking KPI and therefore will always include some
judgement. To help assess this, we separately identify
different categories of revenue to better 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 once
invoiced will be recognised in the respective future
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. five years) and will require their contracts to
be renegotiated and renewed for the revenue to be
recognised. As this category of revenue is assumed
to renew at 100% of dollar value, we consistently
monitor and publish this KPI (at each reporting period)
to ensure the reasonableness of this assumption. The
final category “Other recurring revenue” is revenue
that we would expect to recur in the future but is
monthly or transactional in its nature and as such
there is increased potential for this revenue not to be
recognised in future years, when compared to the
other categories.

The Group’s total visible revenue for the three years
as at 30 June 2018 (i.e. visible revenue for FY19, FY20
and FY21) identifies $192.9m of revenue which we
reasonably expect to benefit the Group in this next
three year period.

This visible revenue breaks down as follows:

future revenue under contract contributing
$140.6m of which $59.8m is expected to be
recognised in FY19, $46.3m in FY20 and $34.5m
in FY21

revenue generated from renewals contributing

$51.7m; being $6.1m in FY19, $16.9m in FY20 and
$28.7m in FY21

other revenue identified as recurring in nature of

$0.6m

Gross Margins
Typically, we expect the gross profit margin to be
between 90% - 95% reflecting the incremental costs
we incur to obtain the underlying contracts. The
gross profit for FY18 was $63.7m (FY17: $54.2m)
representing a gross margin percentage of 94.9%
(FY17: 93.8%) which is towards the top of our historical
range. This reflects the correct matching of these
incremental costs with the associated revenue being
recorded.

Earnings
The Group presents an adjusted earnings figure as a
supplement to the IFRS based earnings figures. The
Group uses this adjusted measure in our operational
and financial decision-making as it excludes certain
one-off items, so as to focus on what the Group
regards as a more reliable indicator of the underlying
operating performance. We believe the use of this
measure is consistent with other similar companies
and is frequently used by analysts, investors and other
interested parties.

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

Adjusted EBITDA has grown in the year to $21.6m
(FY17: $18.0m) an increase of 20%. This reflects an
Adjusted EBITDA margin of 32.2% (FY17: 31.1%). This
is consistent with the Group’s continued approach to
making investments in line with the revenue growth.
The Group also takes opportunities where they exist
to accelerate investments in certain areas, such as
development (detailed below), to further build for
future growth whilst continually managing to ensure
the efficiency of the investments we make.

Operating Expenses
The increase in net operating expenses (to Adjusted
EBITDA) reflects our policy of investing in line with
revenue growth, increasing by 16% to $42.0m (FY17:
$36.2m). As detailed in the Operating Review, product
innovation and enhancement continues to be core
to the Group’s future; our customers are facing a
market that continues to evolve towards value-based
economics and the Group is in a unique position
with its value cycle strategy to help them meet the
challenges these new reimbursement models bring.
As such we continue to invest significant resource in
this area as we build out the Trisus Platform and the
portfolio of products that will be part of this platform.

We continue our Build, Buy or Partner strategy to
build out this portfolio of products, recognising
‘Build’ is often the best way forward. We undertake
the development of innovative new products whilst
maintaining our current product offerings and ensuring
they remain market-leading. As a result of this
investment the total cost of development in the year
was $17.9m (FY17: $12.3m), a 46% increase which
is ahead of our revenue growth and reflective of the
opportunities in the market for our products. From
this total investment we have capitalised very specific
projects relating to the development of the new
product offerings (“Build”), which includes our new
Trisus products and the Trisus Bridge extension of the
Trisus platform, as well as our new cost analytics and
Healthcare Intelligence product. With the significant
investment into our development and product
management teams we have ensured costs relating
to expanding and training the new teams are not
capitalised.

As a result the total amount capitalised in the year
was $4.7m (FY17: $3.5m). These capitalised amounts
represent further investment in our future and are an
efficient and cost effective way to further build out our
value cycle strategy. We expect to see both the levels
of development expense and capitalisation continue at
the current trends as we progress with building out this
solution set. As specific products are made available to
relevant customers, the associated amounts capitalised
are charged to the Group’s income statement over their
estimated useful economic life.

Craneware plc Annual Report 2018Strategic Report: Operational and Financial Review [Cont’d.]

Cash and Bank Facilities
We measure the quality of our earnings through our
ability to convert them into operating cash. During
the year we have seen continued high levels of cash
conversion, achieving over 100% conversion of our
adjusted EBITDA into operating cash.

During the year we have returned $23.2m to our
shareholders through a share buyback (detailed below)
in January of $15.4m and dividends paid in the year
of $7.8m. In addition we have provided additional
funding to our Employee Benefits Trust of $4.2m. The
success of our very high levels of cash conversion has
enabled us to return our end of year cash balances to
$52.8m, a level equivalent to the prior year balance of
$53.2m.

We retain a significant level of cash reserves and
balance sheet strength to fund acquisitions as suitable
opportunities arise. To supplement these reserves,
the Group retains a funding facility from the Bank of
Scotland of up to $50m. Whilst no draw down of this
facility occurred in the year, the Group continues to
investigate strategic opportunities to add to the value
cycle strategy.

Balance Sheet
The Group maintains a strong balance sheet position.
The level of trade and other receivables has decreased
in comparison to the prior year. This is a result of the
positive levels of cash collection, especially during the
last quarter of the year.

Every year as we make sales, we pay out amounts
relating to sales commissions; these costs are
incremental costs in obtaining the underlying
contracts. Total sales commissions are based on
the total value of the contract sold; however for the
purposes of the Statement of Comprehensive Income,
a lower proportion of revenue from the contract value
is recognised in the year. As a result we charge an
equivalent percentage of the sales commission, thereby
properly matching revenue and incremental expense.
The resulting prepayment of $7.5m (FY17: $5.9m)
is the balance to be charged to the Group’s income
statement as we recognise the associated revenue. As
we only pay the sales commission upon receipt of the
first annual payment from the customer, we remain
cash flow positive from any new sale.

Deferred income levels reflect the amounts of the
revenue under contract that we have invoiced and/
or been paid for in the year, but have yet to recognise
as revenue. This balance is a subset of the total visible
revenue we describe above and reflected through our
three year visible revenue metric.

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

Currency
The functional currency for the Group, and cash
reserves, is US dollars. Whilst the majority of our
cost base is US-located and therefore US dollar
denominated, we have approximately one third of the
cost base based in the UK, relating primarily to our UK
employees which is therefore denominated in Sterling.
As a result, we continue to closely monitor the Sterling
to US dollar exchange rate, and where appropriate
consider hedging strategies. The average exchange rate
throughout the year being $1.3472 as compared to
$1.2688 in the prior year.

Taxation
The Group generates profits in both the UK and
the US, the overall levels are determined by both
the proportion of sales in the year and the level of
professional services income recognised. The Group’s
effective tax rate remains dependent on the applicable
tax rates in these respective jurisdictions. In the
current year the effective tax rate has seen the benefit
of a tax deduction related to share option exercises
that occurred in the year reducing the tax charge by
$1.4m (FY17: $0.2m) and increased R&D tax relief of
$0.3m. This benefit has been reduced by $0.5m as a
result of revaluing of the deferred tax asset, originally
established for US tax losses as part of the accounting
for the FY11 acquisition of Claimtrust Inc., following
the change in US Federal Tax rates in January 2018. As
such the current year effective tax rate is 17% (FY17:
20%).

EPS
In the year being reported adjusted EPS has seen the
benefit of the increased levels of Adjusted EBITDA
combined with the lower effective tax rate reported
above, offset by an increase in both the amortisation
and share based payment charges, and as such has
increased 17% to $0.602 (FY17: $0.514) and adjusted
diluted EPS has increased to $0.591 (FY17: $0.503).

Dividend
The Board recommends a final dividend of 14p (18.48
cents) per share giving a total dividend for the year of
24p (36.68 cents) per share (FY17: 20p (26.04 cents)
per share). Subject to confirmation at the Annual
General Meeting, the final dividend will be paid on 6
December 2018 to shareholders on the register as at
9 November 2018, with a corresponding ex-Dividend
date of 8 November 2018.

The final dividend of 14p 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 9
November 2018. The exact amount to be paid will be
calculated by reference to the exchange rate to be
announced on 9 November 2018. The final dividend
referred to above in US dollars of 18.48 cents is given
as an example only using the Balance Sheet date
exchange rate of $1.3198/£1 and may differ from that
finally announced.

Outlook
While the past year has been outstanding in terms of
financial results and operational progress, this is by no
means the end of the journey and we are excited by the
far greater opportunity that lies ahead. It is clear that
the investments we have made into the organisation’s
design, people and products are delivering excellent
results, and we will continue to invest in our people
and business to ensure we have the capabilities to
succeed. We believe that the breadth of our customer
base and the quantity of data within our solutions
means we have the opportunity to sit at the heart of
the move to value-based economics; collating and
analysing the information that will support hospital-
wide decision making and ultimately have a positive
impact on the quality of healthcare.

With an ongoing, growing market opportunity, a
record sales pipeline and increasing long-term revenue
visibility, we enter the new financial year with great
confidence for the future and the ongoing success of
the business.

Keith Neilson
Chief Executive Officer
3 September 2018

Craig Preston
Chief Financial Officer
3 September 2018

Craneware plc Annual Report 2018Strategic Report: Key Performance Indicators and Principal Risks and Uncertainties

Key Performance Indicator Review

Revenue Growth

Revenue

Growth

2018

$67.1m

16%

2017

$57.8m

16%

Revenue for the year grew by 16%. Through the Group’s Annuity SaaS revenue recognition model, underlying sales levels in the current year combine with prior year’s sales and
continued high levels of customer retention, to increase the recurring revenue reported each year. The long term nature of our contracts supports sustainable growth with the
majority of revenue resulting from current year sales being recognised in future periods.

Three Year Revenue Visibility

2018

2017

$192.9m

$160.7m

The Group’s revenue recognition model means the full benefit of current year’s sales are not reflected in the current year financial statements. Instead, the vast majority of
any new sales adds to the growth in the underlying ‘annuity’ of recurring revenue. This is demonstrated through the Group’s ‘Three Year Revenue Visibility’ KPI. This metric
compares the growth in the three years contracted revenue, revenue subject to renewal and other recurring revenue, for the same three year period starting 1 July 2018. Full
details of how this is calculated are detailed in the financial review section of the Strategic Report.

Adjusted EBITDA Growth

Adjusted EBITDA

Growth

2018

$21.6m

20%

2017

$18.0m

13%

We take a measured approach to our investment, ensuring to invest to support the future growth of the Group. The continued revenue growth has allowed us to both continue
and in certain areas accelerate this investment whilst delivering Adjusted EBITDA growth. By taking this approach, we aim to release additional investment, in line with revenue
growth, with the focus on delivering profitable growth to all stakeholders.

Adjusted EPS

Growth

2018

2017

60.2 cents

51.4 cents

17%

18%

Adjusted EPS growth demonstrates the Group’s overall profitability after taking into account the taxation in the year and any changes in share capital. The Group generates
profits in both the UK and the US. The Group’s effective tax rate remains dependent on the applicable tax rates in each respective jurisdiction.

Cash

2018

2017

$52.8m

$53.2m

The Group continues to convert very high levels of the Adjusted EBITDA reported in the year into operating cash flows which, having returned $23.2m to shareholders during the
year, has resulted in cash balances returning to c$53m. Overall Operating cash conversion continues above our long term target of 100%.

Craneware plc Annual Report 2018Strategic Report: Key Performance Indicators and Principal Risks and Uncertainties [Cont’d.]

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.

Management of Growth
Issue: The Group’s growth and its plans for further
significant growth, both organically and through
acquisition, could place strain on the Group’s resources
including management bandwidth.

Actions: The Group makes significant investments to
both add to available resources as well as provide
training to existing resources so as to increase
bandwidth at all levels of management including
the Board of Directors. The Group’s Annuity SaaS
business model combined with the detailed forecasting
processes provides visibility to expected growth rates.
This visibility provides a foundation when planning in
advance, including any additional resourcing necessary
as a result of this growth. The Group has in place
strategies to ensure a supportive infrastructure for
growth. This includes adopting “Lean” methodologies
to help promote “operational excellence” throughout
the organisation as well as ensuring assessments are
regularly performed and improvements are made, as
appropriate to systems, policies, procedures including
business controls being upgraded.

US Healthcare Evolution and Reform
Issue: The US healthcare industry continues to evolve,
with a drive for increased value from healthcare spend
and a shift towards consumerisation. The US healthcare
market is subject to continual change 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 has and it
continues to develop significant industry expertise
at all levels of management including the Board of
Directors. It actively promotes developing further
experience throughout the wider organisation by,
amongst other things:

key hires adding to the industry expertise across the
Group, both at operational and strategic levels;
having independent industry experts attend and
speak at internal and external Company events;
regular attendance by senior management at

healthcare forums and industry education events;
and

customer forums.
The Group’s “value cycle” strategy strengthens our
position as a trusted financial performance partner to
hospitals and it continually enhances and expands its
product offerings to meet the evolving challenges. In
addition, the Group continues to innovate and develop
new products to meet evolving market needs, such as
the ongoing development of the Group’s new product
in the cost analytics area.

These strategies keep the Group at the forefront of
industry developments.

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 has and will continue to expand and
strengthen its senior management team, including the
Board of Directors, as appropriate. The Group continues
to utilise programs to identify, train and mentor the
management and talent who will be the 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; this is explained further in the
Remuneration Committee’s Report on pages
24 to 30.

Political and Macroeconomic Changes
Issue: The Group has significant operations in both the
UK and the US and therefore is exposed to the changes
in the political and economic environments of both.
This includes the ongoing Brexit negotiations and any
changes in freedom of movement and international
trade.

Actions: The Group has experienced Board members
and senior management in both countries. The
Group’s operations are currently evenly balanced
between the two, contributing positively to both
economies. Globally there is a restricted supply of
qualified personnel within the technology sector.
Political uncertainty in the world can exacerbate this
situation within specific geographies. To ensure the
ongoing availability of qualified personnel, the Group
continues to support training programs both internally
and externally as well as develop partnerships with
private enterprise. As the Group is a manufacturer
in the knowledge economy, we are agnostic to the
territory that we are ultimately domiciled in and
therefore can mitigate any long term economic or
political detrimental change by adjusting the balance
of the organisation accordingly. This combined with the
current multi-jurisdictional operations of the business
substantially mitigates the Group’s exposure to foreign
exchange rates and risk to cross border trade which can
be volatile in times of uncertainty. The Group continues
to monitor emerging news and trends to stay alert to
any potential future impacts.

Market Consolidation
Issue: The evolving market in US Healthcare continues
to place significant pressure on Healthcare providers,
which is resulting in ongoing market consolidation. As
a result, the Group’s market is increasingly dominated
by larger hospital networks. Failure to enhance
products, ensure scalability or add to the current
product suite could significantly limit the Group’s
market opportunity and leave it unable to meet its
customers’ evolving needs.

Actions: The Group’s “value cycle” strategy and Trisus
Platform, combined with the continued evolution of
the product suite, positions the Group at the forefront
of providing solutions to US Healthcare providers of
all sizes.

Craneware plc Annual Report 2018Strategic Report: Key Performance Indicators and Principal Risks and Uncertainties [Cont’d.]

In summary, and as explained in the Operational
Review section of this Strategic Report, the US
healthcare market is not immune to the macro-
economic climate and, with the increasing focus and
requirements of the evolving healthcare marketplace,
the Group expects the market to continue to be
competitive. The Group 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.

Craig Preston
Chief Financial Officer
3 September 2018

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 copyrights and protect access to its
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.

Data and Cyber Security
Issue: Security of customer, commercial and personal
data poses increasing reputational and financial risk to
all businesses. In particular, the sharp rise in cyber and
data related crime presents a significant challenge in
terms of securing data and systems against attack.

Actions: Whilst it is not possible to completely
eliminate data and cyber security risk, it is clear that
effective mitigation now goes beyond building and
operating security controls. The Group continues to
invest in the strict physical and data security systems
and protocols, including data loss prevention systems,
internal and external threat monitoring. We deploy
comprehensive auditing of our controls and processes
targeted in these areas. The Group also recognises
and supports (including through ongoing employee
training) a sustained evolution of culture within the
organisation which embeds security across
the business.

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’s history which exists
within its products. The Group continues to ensure
its products are platform agnostic and actively seeks
partnerships with other healthcare IT vendors.

Acquisition Risk
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.

Actions: The Group and Board members individually
have relevant experience in regards to completing
acquisitions and this experience has been added
to in recent years through key appointments to the
Operations Board. In addition, and where appropriate,
the Board appoints independent professional advisors
to assist in the consideration of potential acquisitions
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 20 to 23.

Craneware plc Annual Report 2018
Directors, Secretary, Advisors and Subsidiaries

Solicitors

Pinsent Masons LLP
Princes Exchange
1 Earl Grey Street
Edinburgh
EH3 9AQ

Subsidiaries and
Registered Offices

Craneware, Inc.
3340 Peachtree Rd NE
Suite 850
Atlanta, GA 30326

Craneware InSight, Inc.
3340 Peachtree Rd NE
Suite 850
Atlanta, GA 30326

Kestros Ltd t/a Craneware Health
1 Tanfield
Edinburgh
EH3 5DA

Craneware Healthcare Intelligence, LLC
12570 Perry Highway
Suite 110
Wexford, PA 15090

Bankers

Bank of Scotland
The Mound
Edinburgh
EH1 1YZ

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

Independent Auditors

PricewaterhouseCoopers LLP
Chartered Accountants & Statutory Auditors
Atria One
144 Morrison Street
Edinburgh
EH3 8EX

Directors

G R Elliott (non-executive, Chairman)
K Neilson
C T Preston

R F Verni (non-executive)
C Blye (non-executive)
R Rudish (non-executive)

Company Secretary &
Registered Office

C T Preston
1 Tanfield
Edinburgh
EH3 5DA

Nominated Advisors

Peel Hunt LLP
120 London Wall
London
EC2Y 5ET

Registrars

Link Asset Services Ltd
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU

Stockbrokers

Peel Hunt LLP
120 London Wall
London
EC2Y 5ET

Investec Bank plc
30 Gresham Street
London
EC2V 7QP

Craneware plc Annual Report 2018
Board of Directors

The Directors of the Company and their responsibilities within the Group are set out below:

George R Elliott, 65 — Non-Executive Chairman : Appointed 10 August 2007

George Elliott has a proven track record in profitably growing technology companies. His main achievements have centred around building
and bringing to market companies (including three IPOs) that compete and win on the global stage. George is currently non-executive
Chairman of Indigovision Group plc, a leader in the design and manufacture of high performance video security systems, Calnex Solutions
Ltd, an Ethernet test equipment manufacturer, Optoscribe Ltd, an early stage company which provides high performance 3D waveguide
solutions for the data and telecommunication industries and a non-executive director of Cooper Software Ltd, an enterprise resource
planning (ERP) systems integrator. Since 2007 he has been non-executive chairman/director of over 20 companies including, MicroEmissive
Displays Group plc, Kewill plc, Cupid plc, Summit Corporation and Corsair Components Inc. From 2000 - 2007 George was CFO of Wolfson
Microelectronics plc, which was a leading global provider of high performance mixed-signal semiconductors to the consumer electronics
market. From 1996 - 2000 he was Director of Commercial Operations and latterly CFO at Calluna plc, which developed the first 1.8-inch hard
disk drive that was later used in several leading MP3 players and storage devices. 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, 49 — 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 value cycle 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. Keith is
an active member of the Young Presidents Organisation (YPO), a syndicate member and Partner in Par Equity LLP, a CBI Scotland Council
Member and a board member of the Scottish North American Business Council (SNABC). Keith is also proud to be a Patron of the Princes Trust
and a Trustee of the Polar Academy both charitable organisations that work for the benefit of young people.

Craig T Preston, 47 — 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.

Craneware plc Annual Report 2018Board of Directors [Cont’d.]

Ron F Verni, 70 — Non-Executive Director : Appointed 1 May 2009

Ron is currently a director of On Deck Capital. Before that he served on the Board of Directors of Kewill, Inc., was President & CEO of Sage
Software, Inc, and a member of the Board of Directors of the Sage Group plc. 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 the President and CEO
of NEBS Software, Inc., the founder and CEO of ASTEC Software, and Vice President of Marketing with Automatic Data Processing.

Colleen Blye, 58 — Non-Executive Director : Appointed 12 November 2013

Colleen Blye is the Executive Vice President and Chief Financial Officer for Montefiore Health System and Albert Einstein College of Medicine.
Montefiore Health System consists of eleven hospitals and an extended care facility, it is a premier academic medical center and includes
the Albert Einstein College of Medicine. Colleen has a distinguished background in large, complex healthcare organizations. Prior to joining
Montefiore, she served as Executive Vice President and Chief Financial Officer of Catholic Health Services of Long Island, an integrated
healthcare delivery system comprising six hospitals and three nursing homes. Earlier, she served as Executive Vice President for Finance
and Integrated Services at Catholic Health Initiatives, a health system with 102 hospitals across the United States. Her previous experience
includes responsibility for treasury management, revenue cycle, financial reporting and planning, third-party contracting, supply chain,
accounts payable, payroll, and information technology. Colleen Blye is a Certified Public Accountant and a member of the American Institute
of Certified Public Accountants and the Healthcare Financial Management Association

Russ Rudish, 66 — Non-Executive Director : Appointed 28 August 2014

Russ Rudish has more than 30 years' experience in serving the healthcare industry, both in the United States and internationally. Russ
holds a directorship in Rudish Health Solutions, LLC, and StarBridge Advisors, LLC, both healthcare professional services firms. Russ is also
a principal in Healthcare IT Leaders and Run Consultants, both of which provide IT staff augmentation services. Between 2006 and 2014,
Russ served as partner and Global Sector Leader for Healthcare at Deloitte Touche Tohmatsu, where he led the $2 billion global consulting,
audit, tax and financial advisory business, developing the firm's global health care strategy. He is an active speaker and contributor to
thought leadership on today's most pressing healthcare business issues.

Craneware plc Annual Report 2018Directors’ Report

The Directors present herewith their report and the
audited consolidated financial statements for the year
ended 30 June 2018.

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.

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
and share related payments, share based payments,
depreciation and amortisation), visibility of revenue
over the next three years and cash generation during
the year). Detailed information on all matters required
is presented in the Strategic Report contained in pages
5 to 13 and is incorporated into this report by
reference. A description of the principal risks and
uncertainties facing the Group is also presented in the
Strategic Report.

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 $67.1m (2017:
$57.8m) which has generated a profit before tax of
$18.9m (2017: $16.9). The full results for the year,
which were approved by the Board of Directors on
3 September 2018, are set out in the accompanying
financial statements and the notes thereto.

During the year the Company paid an interim dividend
of 10p (13.5 cents). The Directors are recommending
the payment of a final dividend of 14p (18.48 cents) per

Dividends/Share (pence)

FY14

FY15

FY16

FY17

FY18

*Subject to approval at AGM

12.5

14.0

16.5

20.0

24.0*

share giving a total dividend of 24p (36.68 cents) per
share based on the results for 2018 (2017: 20p (26.04
cents)). Subject to approval at the Annual General
Meeting, the final dividend will be paid on
6 December 2018 to shareholders on the register
as at 9 November 2018.

The level of dividend proposed for the year continues
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 market. The
primary focus of this development continues to be the
enhancement and expansion of the product suite to
support the Group’s value cycle strategy. Full details
of the development activities and the Group’s roadmap
is provided in the Strategic Report contained in pages
5 to 13. 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 $13.2m (2017:
$9.1m) net of expenditure capitalised of $4.7 m
(2017: $3.5m).

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.

Going Concern
The Strategic Report on pages 5 to 13 contains
information regarding the Group’s activities and an
overview of the development of its products, services
and the environment in which it operates. The Group’s
revenue, operating results, cash flows and balance sheet
are detailed in the financial statements and explained
in the Financial Review on pages 5 to 10.
The Directors, having made suitable enquiries and
analysis of the financial statements, including the
consideration of:

net cash reserves;

continued cash generation; and

Annuity SaaS business model;

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

Directors
The Directors of the Company are listed on pages 15
and 16.

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’s Report on page 27.

Share Capital
The Company’s issued and fully paid up share capital
at 30 June 2018 was 26,662,271 Ordinary Shares of 1p
each (2017: 26,961,709 Ordinary Shares). The shares
are traded on the Alternative Investment Market (‘AIM’),
a market operated by the London Stock Exchange. The
Company’s Articles of Association, which are available
on the Company’s website, contain the details of the
rights and obligations attached to the shares.

Share buyback
In January 2018 the Company announced and
completed a share buyback which was effected as a
mechanism to return capital to shareholders and to
ameliorate dilution under the Group’s share incentive
plans. In accordance with this share buyback, the
Company purchased 628,869 of its own shares during
the financial year (2017: nil), at 1769 pence per share
which totalled £11.1 million ($15.4 million). The
nominal value of those shares was £6,289 ($8,725)
and they represented 2.33% of the Company’s issued
Ordinary Shares at that time. The shares purchased by
the Company were immediately cancelled.

Authority for purchase of own shares
Authorisation was given by shareholders at the Annual
General Meeting on 8 November 2017 for the Company
to purchase up to 1,348,085 Ordinary Shares. A
resolution to renew this authority will be proposed at
the 2018 Annual General Meeting.

Craneware plc Annual Report 2018Directors’ Report [Cont’d.]

Share capital allotted
During the year, 329,431 Ordinary Shares (2017: 111,461
Ordinary Shares) were allotted to satisfy employee
share options which were exercised in accordance
with The Craneware plc Employee’s Share Option Plan
2007. Details of the Company’s employee share plans,
including the number of ordinary shares subject to
employee share plan awards, are included in Note 8 to
the financial statements.

Employee benefit trust
The Company established an Employee Benefit Trust
(EBT), ‘The Craneware plc Employee Benefit Trust’ during
the financial year ended 30 June 2017. As at 30 June
2018 the EBT held 353,124 Craneware plc Ordinary
Shares (at 30 June 2017: 242,930 Ordinary Shares).
The EBT waived its right to dividends in the year ended
30 June 2018. Further details regarding the EBT are
contained in Note 18 to the financial statements.

Directors and their Interests
The interests of the Directors who held office at 30
June 2018 and up to the date of this report in the share
capital of the company, were as follows:-

G R Elliott
K Neilson
CT Preston

2018

10,000
3,377,799
82,103

3,469,902

2017

15,650
3,459,718
-

3,475,368

Directors’ interests in share options are detailed in
the Remuneration Committee’s Report on pages 29
and 30

Substantial Shareholders
As at 1 August 2018, 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

Liontrust Asset Management

4,664,137

17.49

K Neilson

3,377,799

12.67

Canaccord Genuity Group

2,850,212

10.69

W G Craig

2,379,518

AXA Investment Managers

1,130,130

8.92

4.24

Schroder Investment
Management

Baillie Gifford & Co Ltd

Bank of Montreal

D Paterson

1,112,773

4.17

953,601

886,512

884,758

3.58

3.32

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. This indemnity was in place during financial year
and is ongoing up to the date of this report. 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:

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

recycles 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.

Charitable and Political Contributions
As part of the Group’s commitment to Corporate
Social Responsibility it has continued to develop its
“Craneware Cares” program. The focus of Craneware
Cares is to raise awareness and funds for charity. The
focus for 2018 was the support of the Children’s Hospice
Association Scotland (CHAS) in the UK and Creative
Philanthropy in the US. For 2019 the focus will be the
support of both Scottish Association for Mental Health
and The Yard in the UK and both the Fanconi Anemia
Research Fund and KaBOOM! in the US. Fund raising
activities have already begun and these supplement
the Volunteer Time Off program where Craneware staff
take paid leave to support projects and charities in their
communities.

Neither the Company nor its subsidiaries made any
donation for political purposes in fiscal years 2018
or 2017.

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. Plans are being proposed for share schemes
to encourage involvement of employees in the
Group’s performance as detailed on page 26 of the
Remuneration Committee Report.

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.

Craneware plc Annual Report 2018The 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.

The auditors, PricewaterhouseCoopers LLP, have
indicated their willingness to be re-appointed and a
resolution for reappointment 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
3 September 2018

Directors’ Report [Cont’d.]

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.

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.

As a UK company, Craneware plc is bound by the laws
of the UK, including the Bribery Act 2010, in respect of
our conduct within and outside of the UK. In addition,
we uphold all laws relevant to countering bribery and
corruption in all the jurisdictions in which we operate.

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 2018
represented, on average 18 days purchases (2017: 18
days) for the Group and 15 days purchases (2017: 13
days) for the Company.

Annual General Meeting
The resolutions to be proposed at the Annual General
Meeting, together with explanatory notes, appear in
a separate Notice of Annual General Meeting which
is sent to all shareholders and made available on the
Company’s website at www.craneware.com 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. 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 and the Company 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;

state whether applicable IFRSs as adopted by the
European Union have been followed for the group
and the company financial statements, subject to
any material departures disclosed and explained in
the financial statements; and

prepare the financial statements on the going

concern basis unless it is inappropriate to presume
that the company will continue in business.

The Directors are also responsible for safeguarding the
assets of the Group and Company and hence for taking
reasonable steps for the prevention and detection of
fraud and other irregularities.

The Directors are responsible for keeping adequate
accounting records that are sufficient to show and
explain the Group and Company's transactions and
disclose with reasonable accuracy at any time the
financial position of the Group and Company and enable
them to ensure that the financial statements comply
with the Companies Act 2006 and, as regards the group
financial statements, Article 4 of the IAS Regulation.

Craneware plc Annual Report 2018Corporate Governance Report

The Board of Directors ("the Board") has always
recognised the importance and value of good corporate
governance. Changes to AIM rules on 30 March 2018
require AIM companies to apply a recognised corporate
governance code by 28 September 2018. Under the
new rules, the Company is required to comply with
the chosen code or explain why it is not complying.
The Company has always sought to comply with
both the principles and the spirit of the UK Corporate
Governance Code issued in April 2016 (the “Code”) and
has historically reported against these. Although not
yet compulsory for AIM listed companies, the Board is
pleased to report how it has and will continue to apply
the principles in line with best practice for an AIM listed
company. This Report sets out 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 three
further non-executive Directors, Ronald Verni (Senior
Independent Director), Colleen Blye and Russ Rudish.
Detailed biographies of all Directors are contained
on pages 15 and 16. The Board meets regularly
to discuss and agree on the various matters brought
before it, including the Group’s 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. The Board does not have a separate
Nominations Committee as the Company has again
taken advantage of the Code’s relaxations available

to smaller companies and incorporated this function
within the remit of the entire Board.

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:

n
o
i
t
a
r
e
n
u
m
e
R

e
e
t
t
i

m
m
o
C

-
-

2/2

t
i
d
u
A

e
e
t
t
i

m
m
o
C

-
-

3/3

d
r
a
o
B

8/8
8/8

7/8

8/8

No. Meetings in year

Executive Directors

K Neilson
C T Preston

Non-Executive Directors

G R Elliott

R Verni

C Blye

R Rudish

Where any director has been unable to attend Board
or Committee meetings during the year, their 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 18, 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.

Officer and seven further members of the Senior
Management Team. The day-to-day operation of the
Group’s business is managed by this Operations 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. George has a depth of
experience both as Chairman and a non-executive
director for a number of other companies, including
other listed companies, details of which can be found in
the Directors’ biographies on page 15.

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 Ronald Verni as Senior
Independent Director. In this role, Ronald 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.

Effectiveness

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 responsibility for the running of
the company’s business. No one individual should have
unfettered powers of decision.”

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 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

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;
software and healthcare sectors;
entrepreneurial cultures;
senior financial reporting;
both UK and US companies;
acquisitions; and
other listed companies.

Craneware plc Annual Report 2018

Corporate Governance Report [Cont’d.]

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 Ronald Verni, having
been appointed on 1 May 2009, he has completed his
ninth year of service on the Board this year, the Board in
making its assessment of independence has noted the
significant growth and changes in the Company during
this period, this combined with Ronald’s conduct has
led the Board to conclude his length of tenure has not
affected his independence. In regards to all other non-
executive directors the Board have not identified any
matters which would affect their independence.

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 add
to the existing Board composition. A formal process is
then undertaken, usually involving external recruitment
agencies, 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.

Any conflicts, or potential conflicts, of interest are
disclosed and assessed prior to a new Director’s
appointment to ensure that there are no matters
which would prevent that person from accepting the
appointment. The Group has procedures in place for
managing conflicts of interest and Directors have
continuing obligations to update the Board on any
changes to these conflicts. This process includes relevant
disclosure at the beginning of each Board meeting. If
any potential conflict of interest arises, the Articles of
Association permit the Board to authorise the conflict,
subject to such conditions or limitations as the Board
may determine.

Commitment
“All directors should be able to allocate sufficient
time to the company to discharge their
responsibilities effectively.”

Appropriate Information
“The board should be supplied in a timely manner with
information in a form and of a quality appropriate to
enable it to discharge its duties.”

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
pages 15 and 16. 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 directorship of a listed company. 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
“All Directors should receive induction on joining the
Board and should regularly update and refresh their skills
and knowledge.”

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 setting the Board agendas, the Chairman, in
conjunction with the Company Secretary, ensures input
is gathered from all Directors on matters that should be
included. Board papers are then 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. At
a minimum these board papers include the Financial
Results of the Group and a report from both the Chief
Executive Officer and the Chief Financial Officer.

In addition, the non-executive Directors periodically
meet with the Group’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.”

The Board has performed a full formal evaluation in
the current Financial Year. This was performed by
means of a detailed questionnaire to be completed
by each Director. This evaluation included a review
of the performance of the Chairman and the Board
Committees. The results of the process were collated by
the Senior Independent Director and were reviewed by
the Board as a whole.

Overall the Board has concluded that its performance
in the period under review had been satisfactory.
This review process will be repeated and updated as
appropriate.

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

Craneware plc Annual Report 2018Corporate Governance Report [Cont’d.]

re-appointed three years or more prior to the AGM is
required to retire from office and may be proposed for
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. It is the intention
of all Directors to stand for re-appointment.

Accountability

Financial and Business Reporting
“The Board should present a fair, balanced and
understandable assessment of the company’s position
and prospects.”

The Board recognises its responsibilities, including those
statutory responsibilities laid out on page 19. An
assessment of the Group’s market, business model and
performance is presented in the Chairman’s Statement
and the Strategic Review on pages 5 to 13.

As detailed on page 17 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 principal 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 Strategic Report on pages
12 and 13. 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 and risk management and internal
control principles and for maintaining an appropriate
relationship with the Company's auditors.”

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 Colleen Blye and
its other members are Ronald Verni and Russ Rudish.
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. Colleen Blye, as chair 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
“Executive Directors’ remuneration should be designed
to promote the long-term success of the company.
Performance-related elements should be transparent,
stretching and rigorously applied.”

The Company has established a Remuneration
Committee to assist the Board in this area. This
Committee comprises non-executive directors and is
chaired by Ronald Verni and its other members are
Colleen Blye and Russ Rudish. 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 24 to 30, 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 Committee’s Report on
pages 24 to 30.

Craneware plc Annual Report 2018Corporate 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.

To facilitate this:

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. Ronald 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 (at www.craneware.com)
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 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 the Group;
the Committee’s effectiveness;
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’s 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
has 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 company to:

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
3 September 2018

Craneware plc Annual Report 2018Remuneration Committee's Report

This report sets out Craneware plc’s remuneration
and benefits provided to Directors 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. As an AIM listed
company, Craneware plc is not required to comply
with the Directors’ Remuneration Report regulations
requirements under Main Market UK Listing Rules or
those aspects of the Companies Act 2006 applicable to
listed companies.

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 Ronald Verni (Chairman), Colleen
Blye and Russ Rudish. None of the Committee has any
personal financial interests 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 Committee met twice during the year
and the meeting attendance is shown on
page 20.

The remuneration of the non-executive Directors is
determined by the Board as a whole within limits set
out in the Articles of Association. The non-executive
Directors do not participate in performance related
bonus or share based incentive arrangements.

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,
long term incentives.

The Company’s policy is that a substantial proportion
of the remuneration of executive Directors should be
performance related.

None of the executive Directors holds any outside
appointments with any other publicly traded company.

Directors’ remuneration
The Committee develops 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.

The remuneration package for the executive Directors
comprises:

Basic salary

(i)
This is normally reviewed annually, or when an
individual’s position or responsibilities change and
is normally paid as a fixed cash sum monthly. It was
explained in the Remuneration Committee Report
section of the 2017 Annual Report that in April 2017,
following the outcomes of benchmarking studies
conducted over several years, the executive Directors’
basic salary levels were reviewed and adjustments were
made to bring the Directors’ salaries into line.

(ii)
Pension entitlement
The Company operates an open enrolment pension
scheme in which all UK employees, including executive
Directors, are entitled to participate. As part of
this scheme, the Company has matched employee
contributions into the scheme at up to 3% of basic
salary (effective from September 2017). In addition, the
Company pays a fixed sum to a personal pension plan on
behalf of the Chief Executive Officer.

Benefits in kind

(iii)
Executive Directors are entitled to private medical
insurance, life insurance and permanent health
insurance.

(iv)
Annual performance related bonus
Under the annual performance related bonus plan,
executive Directors are eligible to earn a cash bonus
(non-pensionable) 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.

Craneware plc Annual Report 2018Remuneration Committee's Report [Cont’d.]

If, in any year, executive directors are given a
combination of LTIP awards and options under the
Schedule 4 / Unapproved Option Plans, the same form
of performance condition will apply across each of the
arrangements and the individual limits on participation
will take into account both forms of grant.

Awards granted under the 2016 share plans in the year
ended 30 June 2018

In January 2018 the Chief Executive Officer and the
Chief Financial Officer were granted a combination of
a conditional share award under the LTIP and share
options under the Schedule 4 Option Plan and / or
the Unapproved Option Plan. The total value of these
awards at date of grant was equal to 100% of the
basic salary for each of these directors. These awards
are included in the tables on pages 29 and 30.
Conditional share awards and / or share options were
granted to certain other employees (including senior
management) in January 2018 under the 2016 share
plans.

The vesting of the awards, which were granted from the
2016 share plans in the year ended 30 June 2018, are
subject to performance conditions set by the Committee
that are appropriate to the strategic objectives of the
business, are considered to be challenging and in line
with best practice/investor guidelines and are measured
over three years.

For the conditional share awards granted under the LTIP
in January 2018 and for share options granted from the
2016 share option plans, the performance conditions
are based on the Company’s total shareholder return
(“TSR”) performance relative to the performance
achieved by a group of comparable companies in the
same sector (the “Comparator Group”). As disclosed
in the 2017 Annual Report, the same performance
conditions (but measured over the period of three
years commencing on the date of grant) apply to the
conditional share awards and share options granted in
March 2017.

The performance conditions are assessed over the
period of three years, commencing on the date of grant,
during which each company in the Comparator Group
will be ranked in order of TSR performance. Vesting will
then take place as follows:

Ranking of the Company
against the Comparator
Group

Below median
Median
Upper quartile or above
Between median and upper
quartile

% of Shares comprised
in conditional share
award or share option
that vest
0%
25%
100%
25% – 100% on a straight
line basis

The performance condition is measured in three
tranches such that one third of the Ordinary Shares over
which the conditional share awards and share options
subsist will vest based on performance over the three
years ending on 30 June 2018, one third based on
performance over the three years ending 30 June 2019
and the final third based on performance over the three
years to 30 June 2020 – an aggregate five year period.
Any tranche (or part thereof) that does not meet the
performance criteria will lapse and not be re-tested
in later years. However, notwithstanding the TSR
ranking achieved by the Company, no part of a share
plan award subject to the above conditions will vest
unless the Committee is satisfied that there has been an
overall satisfactory and sustained improvement in the
underlying financial performance of the Company over
the relevant period.

If and to the extent that the performance conditions are
satisfied and subject to the award holder’s continued
employment within the Craneware Group throughout
the period, the conditional share award will normally
vest three years after the date of grant; and the share
options will only become exercisable three years after
the date of grant. Share options will expire, at the
latest, 10 years after the date of grant

With the significant performance and development of
the Company in the financial year (including the overall
sales performance) the Remuneration Committee
has concluded that targets have been fully met for
the current financial year. The bonus amounts for
the executive directors are reflected in the directors’
emoluments table on page 27.

Share options and LTIP awards

(v)
During the year and historically the Company has
operated employee share plans from which, and at the
discretion of the Committee, executive Directors and
other employees (including senior management) could
be granted share-based awards.

The 2016 share plans

The Craneware Employees’ Share Option Plan 2007
(“2007 Share Option Plan”) was operated by the
Company from 2007 and further details regarding this
option plan are provided below. As the 2007 Share
Option Plan was approaching the tenth anniversary
of its original adoption date (after which no further
grants could be made under its terms), the Company
implemented three new discretionary employee
share plans in the year ended 30 June 2017, following
approval and authorisation obtained from shareholders
at the Annual General Meeting on 8 November 2016:

The Craneware plc Long Term Incentive Plan (2016)

(the “LTIP”);

The Craneware plc Schedule 4 Company Share

Option Plan (2016) (the "Schedule 4 Option Plan”);
and

The Craneware plc Unapproved Company Share

Option Plan (2016) (the "Unapproved Option Plan”).;

Although the LTIP is intended to be used as the
primary means of incentivising senior management
going forward, the Committee was also of the view
that it would be useful for the Company to retain the
flexibility to grant “market value” options if the need
arises. Accordingly, two share option plans were
also established as direct replacements for the 2007
Share Option Plan. The Schedule 4 Option Plan allows
for the grant of tax advantaged options to UK based
participants over shares worth up to £30,000 per
individual; and the Unapproved Option Plan is used to
grant options where the above limit has been reached
or where the relevant individual is not based in the UK.

Craneware plc Annual Report 2018Remuneration Committee's Report [Cont’d.]

As a result, performance criteria are based on share
price performance over a five year period which must be
maintained over that period if all options granted are to
become exercisable.

These performance criteria were met in the three year
period ended 30 June 2018 and as a result all options
that were subject to the testing of performance criteria
over that period vested but will only become exercisable
on the third anniversary of the grant of the original
option.

Proposed all employee share option plans

In order to provide a wider population of employees
with an opportunity to become Craneware shareholders,
which promotes alignment to shareholder interests
and aids with recruitment and retention, it is proposed
to establish a Save As You Earn (‘SAYE’) share option
plan for UK employees and an Employee Stock Purchase
Plan (‘ESPP’) for US employees within the Group. The
Committee supports this proposed enhancement to
Craneware’s employee reward offering. The executive
directors would be permitted, if they choose to do so, to
participate in the proposed SAYE share option plan on
the same terms as other UK employees. Details of these
proposed share option plans are contained within the
Notice of the 2018 Annual General Meeting.

SAYE and ESPP share option plans allow employees,
who choose to participate, to contribute regularly to
the plans from their net salary and to use those funds

Performance condition measurement to 30 June 2018

For share options and LTIP awards granted in March
2017, the second tranche is not due to vest until March
2019 and, for the share option and LTIP awards granted
in January 2018, the first tranche is not due to vest until
January 2019. However the performance criteria for
each of these tranches is tested against the Company’s
TSR for the three years to 30 June 2018 compared to
the TSR of the companies in the Comparator Group.
Craneware plc’s relative TSR for this period, when ranked
against the Comparator Group was within the upper
quartile and therefore the respective tranches, being
one third of each award, will vest in full.

2007 Share Option Plan

No share options were granted to directors or employees
under this plan in the year ended 30 June 2018. Options
granted under this scheme in prior financial years 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. Each option grant is split into three tranches
(of no more than a 1/3 of the total options granted)
which allows the performance criteria to be assessed
annually (against the preceding three year period). If
performance is below the median of the comparator
group over the relevant three year period then no
options vest that year. The amount of options that vest
increases as performance reaches top quartile when the
relevant tranche of options vests in full. No more than
1/3 of each option grant can vest in any single year and
options do not become exercisable until three years from
the original grant date.

to buy shares in the parent company, at the end of the
savings period. This is usually at a discounted purchase
price which is set at the start of the savings period.

Source of shares and dilution limits

The share plans are being operated in conjunction with
an Employee Benefit Trust, The Craneware plc Employee
Benefit Trust, (“EBT”) which was established during
the year ended 30 June 2017. Further details regarding
the EBT are contained in Note 18 to the financial
statements.

Conditional share awards granted under the LTIP and
share options granted from the new share option plans
may be satisfied either by the issue of new Ordinary
Shares, the transfer of shares from treasury or the
transfer of existing Ordinary Shares purchased in the
market.

In any ten year period, the Company may not issue
(or grant rights to issue) more than 10% of the issued
ordinary share capital of the Company under the LTIP
and any other employee share plan adopted by the
Company. For the purpose of this limit:

any Shares which are purchased in the market by the
EBT for the purposes of satisfying Awards will not
be counted;

treasury Shares will count as new issue Ordinary

Shares unless institutional investors decide that they
need not count;

no account will be taken of any Shares where the

right to acquire them was released or lapsed prior to
vesting / exercise; and

no account will be taken of any Shares where the
right to acquire them was granted prior to the
Company’s original admission to AIM in 2007.

Details of all share options and conditional share
awards, which have been awarded and had not lapsed
or been exercised or released at 30 June 2018, are
contained in Note 8 to the financial statements.

Craneware plc Annual Report 2018Remuneration Committee's 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
R Verni
C Blye
R Rudish

Contract Date

Unexpired Term

Normal Notice Period

Founder
15 September 2008
10 August 2007
1 May 2009
12 November 2013
28 August 2014

Rolling
Rolling
11 months
Rolling
Rolling
Rolling

3 months*
3 months*
1 month
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 18.

Directors’ Emoluments (audited)
For Directors who held office during the course of the year, emoluments1 in respect of the year ended 30 June 2018 were as follows (note: with the exception of R Verni, C Blye
and R Rudish, all directors are paid in Sterling; the amounts below are translated into US Dollars at the relevant average exchange rate for period being reported):

Executives

K NeilsonA
C T PrestonB

Non-Executives

G R Elliott
R Verni
C Blye
R Rudish

N P Heywood3

Total

Salary/Fees ($)

Benefits 2 ($)

Bonus ($)

Pension ($)

2018 Total ($)

2017 Total ($)

420,285
316,523

104,139
58,658
56,078
52,388

808
781

436,757
328,928

20,150
10,197

878,000
656,429

908,277
533,950

-
-
-
-

104,139
58,658
56,078
52,388

84,864
57,228
53,508
51,108

16,335

1,008,071

1,589

765,685

30,347

1,805,692

1,705,270

1. Aggregate emoluments disclosed above do not include any amounts for the value of options to acquire, or conditional share awards in respect of, ordinary shares in the Company held by the Directors.
2. Benefits represent payments for health insurance, death in service and disability insurance.
3. N P Heywood resigned from the board 8th November 2016.
A. In March 2018 K Neilson exercised share options, which were granted in 2009 and in 2012 detailed above, in respect of a total of 29,081 Ordinary Shares in the Company. Based on the share price on the date of

exercise, the gain on exercise of those share options was £0.5 million.

B. In March 2018 C T Preston exercised share options, which were granted in the years 2008 to 2014 detailed above, in respect of a total of 194,229 Ordinary Shares in the Company. Based on the share price on

the date of exercise, the gain on exercise of those share options was £3.1 million.

Craneware plc Annual Report 2018Remuneration Committee's Report [Cont’d.]

The following Directors were paid in Sterling:

Executives

K Neilson
C T Preston

Non-Executives

G R Elliott

N P Heywood

Total

Salary/Fees (£)

Benefits (£)

Bonus (£)

Pension (£)

2018 Total (£)

2017 Total (£)

311,969
234,949

68,557

600
580

311,969
234,949

14,957
7,569

639,495
478,047

715,855
420,831

68,557

66,885

12,873

615,475

1,180

546,918

22,526

1,186,099

1,216,444

Further information regarding directors’ share options and LTIP awards are contained in the tables on pages 29 and 30.

Total Shareholder Return Performance Graph
The following graph charts the cumulative shareholder return of the Company over the past three years, compared to the FTSE AIM All Share Index and the FTSE techMARK Focus
Index. The FTSE AIM All Share Index provides a comparison to a broad equity market index (of which Craneware is a constituent company). The FTSE techMARK Focus Index is
selected because the constituents of this index are affected by similar economic and commercial factors to Craneware.

Craneware plc Annual Report 2018Remuneration Committee's Report [Cont’d.]

Directors’ interests in share options and LTIP awards
Directors’ interests in share options as at 30 June 2017, in respect of Ordinary Shares of 1p each in Craneware plc, were for the following Directors who held office during the
course of the year:

Exercise Price
(cents)

Exercise Price
(pence)

Held At
30/06/17

Granted
During
Year

Exercised
During Year

Lapsed
During Year

Held At
30/06/18

Exercisable from date

Expiry date

K Neilson
Share Option Plan 2007
Grant Date
23 Dec 2009

6 Sep 2010

21 Sep 2012

10 Sep 2013

22 Sep 2014

9 Mar 2016

12 Sep 2016

Schedule 4 Option Plan

534.0

618.0

650.0

621.0

839.0

1066.0

1563.0

335.0

401.0

400.0

395.0

523.0

750.0

1177.5

28,580

13,383

17,438

34,472

39,090

28,628

36,469

17 Jan 2018

2445.0

1775.0

Unapproved Option Plan

17 Jan 2018

2445.0

1775.0

1,690

7,238

C T Preston
Share Option Plan 2007

Grant Date

15 Sep 2008

23 Dec 2009

6 Sep 2010

21 Sep 2012

10 Sep 2013

22 Sep 2014

9 Mar 2016

Schedule 4 Option Plan

365.0

534.0

618.0

650.0

621.0

839.0

1066.0

208.0

335.0

401.0

400.0

395.0

523.0

750.0

72,115

25,099

11,721

16,027

32,459

36,808

26,925

24 Mar 2017

1544.0

1237.5

2,424

Unapproved Option Plan

24 Mar 2017

17 Jan 2018

1544.0

2445.0

1237.5

1775.0

6,162

6,618

(18,248)

(10,833)

(72,115)

(25,099)

(11,721)

(16,027)

(32,459)

(36,808)

10,332

13,383

6,605

34,472

39,090

28,628

36,469

23 Dec 12

23 Dec 19

6 Sep 13

6 Sept 20

21 Sep 15

21 Sept 22

10 Sep 16

10 Sept 23

22 Sep 17

22 Sept 24

2/3rd vested

9 Mar 26

1/3rd vested

12 Sept 26

1,690

Not yet vested

17 Jan 28

7,238

Not yet vested

17 Jan 28

15 Sep 11

15 Sept 18

23 Dec 12

23 Dec 19

6 Sep 13

6 Sept 20

21 Sep 15

21 Sept 22

10 Sep 16

10 Sept 23

22 Sep 17

22 Sept 24

26,925

2/3rd vested

9 Mar 26

2,424

1/3rd vested

24 Mar 27

6,162

1/3rd vested

24 Mar 27

6,618

Not yet vested

17 Jan 28

Information regarding total share options, as granted to Directors and other employees, which were in existence during the year is contained in Note 8 to the financial
statements.

Craneware plc Annual Report 2018Remuneration Committee's Report [Cont’d.]

Directors’ interests in share options and LTIP awards [Cont’d.]
The maximum number of Ordinary Shares subject to conditional share awards granted to Directors under the LTIP as at 30 June 2018 were as follows, in respect of Directors who
held office during the course of the year:

Grant date

Held At
30/06/17

Granted
During
Year

Exercised
During Year

Lapsed
During Year

Held At
30/06/18

Share price at date of
grant (pence)

Vesting date

K Neilson

Conditional share award

17 Jan 2018

8,928

C T Preston

Conditional share award

24 Mar 2018

8,586

Conditional share award

17 Jan 2018

6,618

8,928

1,775.0

17 Jan 2021

8,586

6,618

1,237.5

1,775.0

24 Mar 2020

17 Jan 2021

There was no consideration for the grant of these conditional awards and no consideration will be payable by the award holders to receive the Shares from these awards, if and
to the extent that they vest. The entitlement to shares under the LTIP is subject to achieving the performance conditions referred to on page 25. The table above shows the
maximum entitlement and the actual number of shares (if any) that vest from the awards will depend on those conditions being achieved.

On behalf of the Remuneration Committee:

Ronald Verni
Chairman of the Remuneration Committee
3 September 2018

Craneware plc Annual Report 2018
Independent Auditors’ Report to the Members of Craneware plc

Report on the audit of the financial statements

Opinion
In our opinion, Craneware plc’s group financial statements and company financial statements (the “financial statements”):

give a true and fair view of the state of the group’s and of the company’s affairs as at 30 June 2018 and of the group’s profit and the group’s and the company’s cash flows for

the year then ended;

have been properly prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the company's

financial statements, as applied in accordance with the provisions of the Companies Act 2006; and

have been prepared in accordance with the requirements of the Companies Act 2006.

We have audited the financial statements, included within the Annual Report, which comprise: the consolidated and company balance sheets as at 30 June 2018; the
consolidated statement of comprehensive income, the group and company statements of cash flows, and the group and company statements of changes in equity for the year
then ended; and the notes to the financial statements, which include a description of the significant accounting policies.

Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities under ISAs (UK) are further described
in the Auditors’ responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our opinion.

Independence

We remained independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, which includes the FRC’s
Ethical Standard as applicable to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.

Our audit approach
Overview

Overall group materiality: $947,000 (2017: $842,500), based on 5% of profit before tax.

Overall company materiality: $565,600 (2017: $747,690), based on 5% of profit before tax.

We performed an audit of the complete financial information of Craneware plc and Craneware, Inc.

We also audited material balances in Craneware Insight, Inc and Craneware Healthcare Intelligence LLC.

Taken together, the entities audited comprise 100% of Group revenues.

All audit work was performed by one team in the UK.

Revenue and deferred income (Group and Company).

Provision of income tax (Group and Company).

Internally developed intangible assets (Group and Company).

The scope of our audit

As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. In particular, we looked at where the
directors made subjective judgements, for example in respect of significant accounting estimates that involved making assumptions and considering future events that are
inherently uncertain. As in all of our audits we also addressed the risk of management override of internal controls, including evaluating whether there was evidence of bias by

Craneware plc Annual Report 2018Independent Auditors’ Report to the Members of Craneware plc [Cont’d.]

the directors that represented a risk of material misstatement due to fraud.

Key audit matters

Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the financial statements of the current period and
include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by the auditors, including those which had the greatest effect on:
the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters, and any comments we make on the results
of our procedures thereon, were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters. This is not a complete list of all risks identified by our audit.

Key audit matter

Revenue and deferred income (Group and Company)
The Group has revenue of $67,067k (2017: $57,796k) and deferred income of $35,371k (2017: $29,803k).
The Company has revenue of $31,433k (2017: $32,036k) and deferred income of $35,362k (2017: $29,797k).
These amounts are significant in the context of the Group statement of comprehensive income and the
Group and Company balance sheets. The amount of revenue to be recognised is determined based on the
contract details. The timing of revenue recognition is dependent on the terms contained in the contracts with
customers. There is a risk that revenue and deferred income are not recognised appropriately or within the
correct period.

Provision for income tax (Group and Company)
The Group has cross border activities and is subject to tax in the UK and the US. The Directors must regularly
assess the applicability of the transfer pricing policy being applied to revenue transactions and costs between
Craneware plc and Craneware, Inc. We focus on this area as there is judgement involved in the creation of the
policy and it is important that the policy is applied as written. If the policy were to be challenged by either
the UK or the US authorities it could lead to a material difference in the current tax charge.

Internally developed intangible assets (Group and Company)
The Group has $10,067k (2017: $6,191k) and the Company has $9,734k (2016: 5,844k) of development costs
capitalised on the balance sheet. Development costs are capitalised when the following criteria have been
met: new product development costs 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.
The Directors are required to continually assess the commercial potential of each product in development
in order to determine if costs can continue to be capitalised. We focus on this area as there is judgement
involved in the Directors’ assessment.

How our audit addressed the key audit matter

For a sample of revenue transactions we agreed the key inputs
for revenue recognition to contracts, and agreed to invoices and
cash receipts. For each transaction tested we recalculated the
revenue recognised in the current year in order to conclude that
the correct amount of revenue had been recognised and in the
correct period. A sample of revenue transactions recorded post
year end were assessed to conclude that they should not have
been recorded in an earlier period. No matters arose during our
testing.

We obtained and assessed the transfer pricing policy that
management has in place. We reviewed the transfer pricing
adjustments to confirm they were made in line with the policy.

On a sample basis we agreed additions to intangible assets
to supporting documentation, including invoices and time
records. The nature of the costs being capitalised was assessed
to ensure it met the accounting requirements to capitalise.
Discussions were held with management in order to understand
how all criteria for capitalisation had been met and supporting
evidence was obtained to corroborate this.

How we tailored the audit scope

We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements as a whole, taking into account the
structure of the group and the company, the accounting processes and controls, and the industry in which they operate.

The Group is comprised of five entities. We performed an audit of the complete financial information of Craneware plc and Craneware, Inc due to their financial significance
within the Group. We also audited material balances in Craneware Insight, Inc and Craneware Healthcare Intelligence LLC. Taken together, the entities where we performed our
audit work accounted for 100% of Group revenues.

All audit work was undertaken by a single engagement team at the Group's head office.

Materiality

The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together with qualitative considerations,
helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures and in
evaluating the effect of misstatements, both individually and in aggregate on the financial statements as a whole.

Craneware plc Annual Report 2018Independent Auditors’ Report to the Members of Craneware plc [Cont’d.]

Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:

Group financial statements

Company financial statements

Overall materiality

$947,000 (2017: $842,500)

$565,600 (2017: $747,690)

How we determined it

5% of profit before tax

Rationale for benchmark
applied

Consistent with last year, we have applied this
benchmark, a generally accepted auditing practice.
We also believe the measure of profit before tax is the
measure most commonly used by the shareholders to
measure the performance of the Group.

Consistent with last year, we have applied this benchmark,
a generally accepted auditing practice. We also believe the
measure of profit before tax is the measure most commonly
used by the shareholders to measure the performance of the
Company.

For each component in the scope of our group audit, we allocated a materiality that is less than our overall group materiality. The range of materiality allocated across
components was between $565,000 and $850,000. Certain components were audited to a local statutory audit materiality that was also less than our overall group materiality.

We agreed with the Audit Committee that we would report to them misstatements identified during our audit above $47,000 (Group audit) (2017: $42,125) and $28,000
(Company audit) (2017: $37,400) as well as misstatements below those amounts that, in our view, warranted reporting for qualitative reasons.

Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which ISAs (UK) require us to report to you when:

the directors’ use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the group’s and company’s ability to
continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the group’s and company’s ability to continue as a going concern.

Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’ report thereon. The directors are responsible
for the other information. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except to the
extent otherwise explicitly stated in this report, any form of assurance thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially
inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If we identify an apparent material
inconsistency or material misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the financial statements or a material
misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to
report that fact. We have nothing to report based on these responsibilities.

With respect to the Strategic Report and Directors’ Report, we also considered whether the disclosures required by the UK Companies Act 2006 have been included.

Based on the responsibilities described above and our work undertaken in the course of the audit, ISAs (UK) require us also to report certain opinions and matters as
described below.

Strategic Report and Directors’ Report

In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic Report and Directors’ Report for the year ended 30 June 2018 is
consistent with the financial statements and has been prepared in accordance with applicable legal requirements.

In light of the knowledge and understanding of the Group and company and their environment obtained in the course of the audit, we did not identify any material
misstatements in the Strategic Report and Directors’ Report.

Craneware plc Annual Report 2018
Independent Auditors’ Report to the Members of Craneware plc [Cont’d.]

Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements

As explained more fully in the Statement of Directors’ Responsibilities, the directors are responsible for the preparation of the financial statements in accordance with the
applicable framework and for being satisfied that they give a true and fair view. The directors are also responsible for such internal control as they determine is necessary to
enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the group’s and the company’s ability to continue as a going concern, disclosing as applicable,
matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or the company or to cease operations,
or have no realistic alternative but to do so.

Auditors’ responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to
issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK)
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at: www.frc.org.uk/auditorsresponsibilities. This description
forms part of our auditors’ report.

Use of this report

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.

Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion:

we have not received all the information and explanations we require for our audit; or

adequate accounting records have not been kept by the company, or returns adequate for our audit have not been received from branches not visited by us; or

certain disclosures of directors’ remuneration specified by law are not made; or

the company financial statements are not in agreement with the accounting records and returns.

We have no exceptions to report arising from this responsibility.

Kenneth Wilson
Senior Statutory Auditor
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Edinburgh

3 September 2018

Craneware plc Annual Report 2018Consolidated Statement of Comprehensive Income for the year ended 30 June 2018

Continuing operations:

Revenue

Cost of sales

Gross profit

Operating expenses

Operating profit

Analysed as:

Adjusted EBITDA1

Share based payments

Depreciation of plant and equipment

Amortisation and impairment of intangible assets

Finance income

Profit before taxation

Tax on profit on ordinary activities

Profit for the year attributable to owners of the parent

Other comprehensive (expense) / income

Items that may be reclassified subsequently to profit or loss

Currency translation reserve movement

Total items that may be reclassified subsequently to profit or loss

Total comprehensive income attributable to owners of the parent

Earnings per share for the year attributable to equity holders

- Basic ($ per share)

- Diluted ($ per share)

The accompanying notes are an integral part of these financial statements.

1Adjusted EBITDA is defined as operating profit before, share based payments, depreciation and amortisation.

Notes

Total
2018
$’000

67,067

(3,407)

63,660

Total
2017
$’000

57,796

(3,582)

54,214

(44,968)

(37,588)

18,692

16,626

21,611

18,002

(663)

(578)

(1,678)

241

18,933

(3,136)

15,797

(283)

(478)

(615)

258

16,884

(3,359)

13,525

(10)

15,787

13,565

12a

12b

0.590

0.579

0.502

0.491

Craneware plc Annual Report 2018Statements of Changes in Equity for the year ended 30 June 2018

Group

At 1 July 2016

Total comprehensive income - profit for the year

Total other comprehensive income

Transactions with owners:

Company share movement in employee benefit trust (Note 18)

Share-based payments

Impact of share options exercised / lapsed

Dividends (Note 11)

At 30 June 2017

Total comprehensive income - profit for the year

Total other comprehensive income

Transactions with owners:

Company share movement in employee
benefit trust (Note 18)

Buyback and cancellation of shares

Share-based payments

Impact of share options exercised / lapsed

Dividends (Note 11)

At 30 June 2018

Company

At 1 July 2016

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 2017

Total comprehensive income - profit for the year

Transactions with owners:

Buyback and cancellation of shares

Share-based payments

Impact of share options exercised / lapsed

Dividends (Note 11)

At 30 June 2018

Share
Capital
$’000

Share
Premium
Account
$’000

Capital
Redemption
Reserve
$’000

Other
Reserves1
$’000

Retained
Earnings
$’000

Total
Equity
$’000

536

17,451

523

537

17,974

(9)

1,803

534

19,777

555

34,266

52,808

13,525

(3,083)

519

(116)

1,078

416

1,597

824

(6,356)

958

39,886

59,355

15,797

(10)

(4,248)

(15,378)

1,503

(377)

634

378

2,137

1,810

(7,817)

2,084

29,242

51,646

536

17,451

537

(9)

523

17,974

1,803

534

19,777

381

159

(36)

504

232

(251)

485

27,119

12,052

627

(6,356)

33,540

10,360

45,487

12,052

786

586

(6,356)

52,555

10,360

(15,378)

202

252

(7,817)

21,159

434

1,810

(7,817)

41,964

1Other 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.

Craneware plc Annual Report 2018Consolidated Balance Sheet as at 30 June 2018

ASSETS
Non-Current Assets
Plant and equipment
Intangible assets
Trade and other receivables
Deferred tax

Current Assets
Trade and other receivables
Cash and cash equivalents

Total Assets

EQUITY & LIABILITIES
Current Liabilities
Deferred income
Current tax liabilities
Trade and other payables

Total Liabilities

Equity
Share capital
Share premium account
Capital redemption reserve
Other reserves
Retained earnings

Total Equity

Total Equity and Liabilities

Registered Number SC196331

Notes

2018
$’000

2017
$’000

13
14
16
17

16
20

1,223
23,267
5,275
3,831
33,596

12,503
52,833
65,336
98,932

35,371
80
11,835
47,286

47,286

534
19,777
9
2,084
29,242

51,646

98,932

1,375
19,845
4,278
3,102
28,600

15,381
53,170
68,551
97,151

29,803
198
7,795
37,796

37,796

537
17,974
-
958
39,886

59,355

97,151

The accompanying notes are an integral part of these financial statements.

The financial statements on pages 35 to 62 were approved and authorised for issue by the Board of Directors on 3 September 2018 and signed on its behalf by:

Keith Neilson
Director

Craig Preston
Director

Craneware plc Annual Report 2018Company Balance Sheet as at 30 June 2018

ASSETS
Non-Current Assets
Investment in subsidiary undertakings
Plant and equipment
Intangible assets
Deferred tax
Amounts owed from group companies

Current Assets
Trade and other receivables
Cash and cash equivalents

Total Assets

EQUITY & LIABILITIES
Current Liabilities
Deferred income
Current tax liabilities
Trade and other payables

Total Liabilities

Equity

Share capital
Share premium account
Capital redemption reserve
Other reserves
Retained earnings
At 1 July
Profit for the year attributable to owners
Other changes in retained earnings
Total Equity

Total Equity and Liabilities

Notes

2018
$’000

2017
$’000

15
13
14
17
16

16
20

10,107
748
10,156
1,204
6,000

28,215

17,042
43,955
60,997

89,212

35,362
-
11,886

47,248

534
19,777
9
485
21,159
33,540
10,360
(22,741)

41,964

89,212

10,107
826
6,240
980
6,000

24,153

15,468
49,819
65,287

89,440

29,797
1,539
5,549

36,885

537
17,974
-
504
33,540
27,119
12,052
(5,631)

52,555

89,440

Registered Number SC196331

The accompanying notes are an integral part of these financial statements.

The financial statements on pages 35 to 62 were approved and authorised for issue by the Board of Directors on 3 September 2018 and signed on its behalf by:

Keith Neilson
Director

Craig Preston
Director

Craneware plc Annual Report 2018Statements of Cash Flows for the year ended 30 June 2018

Cash flows from operating activities
Cash generated from operations
Interest received
Tax paid

Net cash generated 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
Company shares acquired by employee benefit trust
Buy back of ordinary shares

Net cash used in financing activities

Net (decrease)/ 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.

Group

Company

2018
$’000

2017
$’000

2018
$’000

2017
$’000

33,110
227
(3,349)

29,988

(434)
(4,258)

(4,692)

(7,817)
1,810
(4,248)
(15,378)

(25,633)

23,068
258
(5,474)

17,852

(654)
(3,925)

(4,579)

(6,356)
524
(3,083)
-

26,820
432
(3,111)

24,141

(244)
(4,128)

(4,372)

(7,817)
1,810
(4,248)
(15,378)

(8,915)

(25,633)

(337)

53,170

52,833

4,358

48,812

53,170

(5,864)

49,819

43,955

19,378
420
(2,271)

17,527

(251)
(3,866)

(4,117)

(6,356)
524
(3,083)
-

(8,915)

4,495

45,324

49,819

Notes

Craneware plc Annual Report 2018Notes to the Financial Statements

General Information
Craneware plc (the Company) is a public limited
company incorporated and domiciled in Scotland.
The Company has a primary listing on the AIM stock
exchange. The address of its registered office and
principal place of business is disclosed on page 14
of the Annual Report. The principal activity of the
Company is described in the Directors’ Report.

Basis of preparation
The financial statements are prepared in accordance
with International Financial Reporting Standards
(IFRS), as adopted by the European Union, International
Financial Reporting Standards Interpretation Committee
(IFRS IC) 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 year. Although these estimates are based on
management’s best knowledge of the amount, event or
actions, actual results ultimately may differ from
those estimates.

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

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

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

Currency translation
Transactions denominated in currencies other than
US dollars are translated into US dollars at the rate
of exchange ruling at the date of the transaction.
The average exchange rate during the course of the
year was $1.3472/£1 (2017: $1.2688/£1). Monetary
assets and liabilities expressed in foreign currencies
are translated into US dollars at rates of exchange
ruling at the Balance Sheet date $1.319765/£1 (2017:
$1.30197/£1). Exchange gains or losses arising upon
subsequent settlement of the transactions and from
translation at the Balance Sheet date, are included
within the related category of expense where
separately identifiable, or administrative expenses.

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.

Annual improvements 2014-2016 – IFRS 12
(effective 1 January 2017*),
This amendment clarifies that the disclosures
requirement of IFRS 12 are applicable to interest
in entities classified as held for sale except for
summarised financial information.

IAS 7, ‘Statement of Cash Flows’
(effective 1 January 2017*),
These amendments introduce an additional disclosure
that will enable users of the financial statements to
evaluate changes in liabilities arising from financing
activities.

IAS 12, ‘Income Taxes’ (effective 1 January 2017*),
These amendments on the recognition of deferred
tax assets for unrealised losses clarify how to account
for deferred tax assets related to debt instruments
measured at fair value.

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) will have no material financial impact
on the financial statements of the Group and Company
in their current form. None of the below Standards,
amendments or interpretations have been adopted
early but their potential impact is
continually monitored.

IFRS 9
IFRS 9 replaces IAS 39 Financial Instruments –
Recognition and Measurement and will be effective for
annual periods beginning on or after 1 January 2018.
Transition to IFRS 9 for the Group will take place on 1
July 2018 and therefore the results presented for the
year ended 30 June 2019 will be the first presented in
accordance with IFRS 9.

IFRS 9 introduces three key changes when compared to
IAS 39 relating to: the classification and measurement
of financial assets and financial liabilities; impairment
of financial assets; and general hedge accounting.

Upon adoption of IFRS 9, financial assets will be
reclassified into the categories required by the standard,
however no significant impact regarding measurement
of financial assets has been identified. For financial
liabilities, the existing classification and measurement
requirements of IAS 39 are largely retained.

The financial asset impairment requirements of IFRS
9 introduce a forward-looking expected credit loss
model that results in earlier recognition of credit losses
than the incurred loss model of IAS 39. The Group has
performed a preliminary assessment of the adoption
of the standard on the basis of average default risk
of customers groups and will continue to analyse
the impact during the 2018/19 financial year. We do
not expect this to have a significant impact on the
consolidated income statement or consolidated balance
sheet.

The hedge accounting requirements of IFRS 9 have been
simplified and are more closely aligned to an entity’s
risk management strategy. The Group does not currently
hedge account, however IFRS 9 introduces a new hedge
accounting model which is optional to apply and is
closer aligned to commercial activities, such that it may
be applied in the future if deemed appropriate.

With the exception of disclosure requirements,
adoption of the new standard is not expected to have
a significant impact on the Group because it does not
have any complex financial instruments, and does not
currently apply hedge accounting. Due to the exemption
in IFRS 9 the Group is not required to restate prior year
comparatives. If however an adjustment resulted from
the retrospective application of this standard this would
be recognised at 1 July 2018.

Craneware plc Annual Report 2018Notes to the Financial Statements [Cont’d.]

1 Principal accounting policies (cont’d.)

Key judgements

IFRS 15
IFRS 15 is effective for annual periods beginning on or
after 1 January 2018. The Group will adopt IFRS 15 for
the first time in the year ending 30 June 2019 and will
adopt the cumulative effect transition method. The
cumulative effect of initially applying the standard
reflected as an adjustment to the opening balance of
retained earnings as of 1 July 2018 and the comparative
period will not be restated.

Accounting for revenue

Revenue from contracts with customers will be
recognised using the five-step model, requiring the
transaction price for each identified contract to be
apportioned to separate performance obligations
arising under the contract. Revenue is recognised
either when; the performance obligation in the contract
has been performed (point in time recognition) or
over time as control of the performance obligation
is transferred to the customer. Management have
finalised the assessment of contracts with variable
consideration and have concluded that IFRS 15 will not
have a material impact on the recognition of revenue
under these contracts. Management are in the process
of finalising the assessment of their contracts which
include fixed annual inflators but have not reached
a conclusion on the impact IFRS 15 will have on
revenue recognition. There will be no impact on the
cash received from the contracts or the total revenue
recognised over the life of the contracts.

Accounting for costs

Costs incurred related to contracts are currently
recognised over the life of the contract. Under IFRS
15, contract fulfilment costs will be recognised as an
expense consistent with the transfer of related services
to the customer over the life of the initial term of the
contract. This change is not expected to impact the
timing of costs recognised.

Balance sheet

Contract assets include sales commissions and
prepaid royalties. Contract liabilities include unpaid
commissions and deferred income. No significant
impact on the balance sheet is expected as a result of
the transition to IFRS 15.

Software licences are provided for a specified licence
period including the right to regular software releases
and regular updates of underlying data tables. Under
IFRS 15, judgement is required when assessing whether
the licence is providing a right to access or a right
to use Craneware’s intellectual property. The Group
has assessed that the ongoing updates and software
releases are fundamental to the value of the software
and that without these the value of the software would
substantially deteriorate over time. Therefore licences
are considered to be right to access and revenue is
recognised over time.

Installation and training revenue are currently
recognised as separate performance obligations.
Judgement is required as to whether installation and
training are separate performance obligations under
IFRS 15. Installation has been identified as not distinct
and is therefore not a separate performance obligation
from the software licence. Training could be performed
by a third party and is therefore still considered a
separate performance obligation under IFRS 15.

Consulting services are separate engagements to the
above relating to process re-engineering and best
practices. These services could be provided by a third
party and are therefore considered to be separate
performance obligations.

Other standards

Annual improvements 2014-2016
(effective 1 January 2018*),
This set of annual improvements addresses issues in the
2014-2016 reporting cycle, which affects two different
standards.

Annual improvements 2015-2017
(effective 1 January 2019*),
This set of annual improvements addresses issues in the
2015-2017 reporting cycle, which affects four different
standards.

IFRS 2, ‘Share based payments’ (effective 1 January
2018*),

IFRS 4, ‘Insurance contracts’ (effective 1 January 2018*),

IFRS 16, ‘Leases’ (effective 1 January 2019*). The Group
has commenced an initial assessment of the potential
impact on its consolidated financial statements; this
assessment is not yet concluded.

IFRS 17, ‘Insurance contracts’ (effective 1 January
2021*),

IFRIC 22, ‘Foreign currency transactions and advance
consideration’ (effective 1 January 2018*),

IFRIC 23, ‘Uncertainty over income tax treatments’
(effective 1 January 2019*),

IAS 19, ‘Employee benefits’ (effective 1 January 2019*),

IAS 28, ‘Investments in associates’ (effective 1 January
2019*),

IAS 40, ‘Investment property’ (effective 1 January
2018*).

*effective for accounting periods starting on or after this date.

Basis of consolidation
The consolidated Statement of Comprehensive Income,
Balance Sheet, Statement of Changes in Equity
and Statement of Cash flows include the financial
statements of the Company and its subsidiaries.
Subsidiaries are all entities over which the Group has
control. The Group controls an entity when the Group
is exposed to, or has rights to, variable returns from
its involvement with the entity and has the ability
to affect those returns through its power over the
entity. 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.

Craneware plc Annual Report 2018Notes to the Financial Statements [Cont’d.]

1 Principal accounting policies (cont’d.)

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 a financial asset
or financial liability is recognised in accordance with
IAS 39 in the Statement of Comprehensive Income and
any balances at the balance sheet date are categorised
as ‘fair value through profit and loss’. 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.

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 licences 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.

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

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

Revenue from 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.

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

(c) Contractual customer relationships
Contractual customer relationships acquired in a
business combination are recognised at fair value at
the acquisition date. The contractual customer 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 up to ten years.

Craneware plc Annual Report 2018Notes to the Financial Statements [Cont’d.]

1 Principal accounting policies (cont’d.)

(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 five 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
licenced to-use technology are capitalised as incurred.
They are amortised on a straight-line basis over their
useful economic life which is typically three to
five years.

Impairment of non-financial assets
At each reporting date the Group considers the carrying
amount of its tangible and intangible assets including
goodwill to determine whether there is any indication
that those assets have suffered an impairment loss. If
there is such an indication, the recoverable amount of
the asset is estimated in order to determine the extent
of the impairment loss (if any) through determining
the value in use of the cash generating unit that the
asset relates to. Where it is not possible to estimate
the recoverable amount of an individual asset, the
Group estimates the recoverable amount of the cash
generating unit to which the asset belongs.

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

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

Plant and equipment
All plant and equipment are stated at historic 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.

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

Deferred taxation is computed using the liability
method. Under this method, deferred tax assets
and liabilities are determined based on temporary
differences between the financial reporting and tax
bases of assets and liabilities 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 and on
the vesting of conditional share awards under each
jurisdiction’s tax rules. As explained under “Share based
payments”, a compensation expense is recorded in
the Group’s Statement of Comprehensive Income over
the period from the grant date to the vesting date of
the relevant options and conditional share awards. As
there is a temporary difference between the accounting
and tax bases a deferred tax asset is recorded. The
deferred tax asset arising is calculated by comparing
the estimated amount of tax deduction to be obtained
in the future (based on the Company’s share price at
the Balance Sheet date) with the cumulative amount of
the compensation expense recorded in the Statement
of Comprehensive Income. If the amount of estimated
future tax deduction exceeds the cumulative amount
of the remuneration expense at the statutory rate, the
excess is recorded directly in equity against retained
earnings.

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.

Kestros Ltd
Kestros Ltd (SC362481), one of Craneware plc's
subsidiaries is exempt from the requirement for its
financial statements to be audited under the provisions
of section 479 A of the Companies Act 2006.

Operating leases
The costs of operating leases are charged on a straight
line basis over the duration of the leases in arriving at
operating profit.

Craneware plc Annual Report 2018Notes to the Financial Statements [Cont’d.]

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 ‘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 operating
expenses in the Statement of Comprehensive Income.

Financial liabilities
Trade payables are recognised initially at fair value and
subsequently measured at amortised cost using the
effective interest method.

Cash and cash equivalents
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 and / or conditional
share awards to certain employees. In accordance with
IFRS 2, “Share Based Payments”, equity-settled share
based payments are measured at fair value at the date
of grant. Fair value is measured using the Black-Scholes
pricing model or the Monte Carlo pricing model, as
appropriately amended, taking into account the terms
and conditions of the share based awards. The fair value
determined at the date of grant of the equity-settled
share based payments is expensed on a straight-line
basis over the vesting period, based on the Group’s
estimate of the number of shares that will eventually
vest. Non-market vesting conditions are included in
assumptions about the number of options that are
expected to vest. At the end of each reporting period,
the entity revises its estimates of the number of options
that are expected to vest based on the non-market
vesting conditions. It recognises the impact of the
revision to original estimates, if any, in the Statement
of Comprehensive Income, with a corresponding
adjustment to equity. When the options are exercised
and are satisfied by new issued shares, the proceeds
received net of any directly attributable transaction
costs are credited to share capital and share premium.

The share based payments charge is included in
‘operating expenses’ with a corresponding increase in
‘Other reserves’.

Share capital
Ordinary shares are classified as equity.

Dividends
Dividends are recorded in the financial statements
in the year in which they are approved by the
shareholders. Interim dividends are recognised as a
distribution when paid.

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 recoverable amount of the applicable cash
generating unit to which the Goodwill and other
assets relate. Estimating the recoverable amount
requires the Group to make an estimate of the
expected future cash flows from the specific cash
generating unit using certain key assumptions
including growth rates and a discount rate. These
assumptions result in no impairment in goodwill.

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.

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

Craneware plc Annual Report 2018Notes to the Financial Statements [Cont’d.]

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, counterparty 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 Board continues
to assess the appropriateness of the Group’s hedging
policy.

The Directors believe that a 10% change in the value of
Sterling relative to the US dollar would impact post-tax
profits and equity in the region of $1,225,000 lower/
higher respectively 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.

(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.

(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 other variables held
constant, alter post-tax profit and equity for the year
in the region of $119,400 higher/lower respectively.
The Directors believe that 25 basis points is appropriate
for the sensitivity analysis based on recent market
conditions.

(c) Counterparty risk
The Group has significant cash and cash equivalent
balances and in order to mitigate the risk of failing
institutions management has treasury deposits spread
across a range of reputable banks, the details of which
are disclosed on page 14.

(d) Liquidity risk
Management reviews 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 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 2017

Trade and Other Payables

7,741

At 30 June 2018

Trade and Other Payables

11,374

Total
$’000

7,741

11,374

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.

Craneware plc Annual Report 2018Notes 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 almost entirely from the sale of software licences and professional
services (including installation) to hospitals within the United States of America. Consequently, the Board has determined that Group supplies only one geographical market
place and as such revenue is presented in line with management information without the need for additional segmental analysis. All of the Group assets are located in the
United States of America with the exception of the Parent Company’s, the net assets of which are disclosed separately on the Company Balance Sheet and are located in the UK.

Software licensing

Professional services

Total revenue

5 Operating expenses
Operating expenses comprise the following:

Sales and marketing expenses

Client servicing

Research and development

Administrative expenses

Share based payments (Note 8)

Depreciation of plant and equipment (Note 13)

Amortisation of intangible assets (Note 14)

Exchange (gain)

Operating expenses

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

Staff costs (Note 7)
Staff costs capitalised
Depreciation of plant and equipment (Note 13)
Amortisation of intangible assets (Note 14)
Loss on disposal
Impairment of trade receivables

Operating lease rents for premises

Services provided by the Group’s auditors
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

2018
$’000

56,346

10,721

67,067

2018
$’000

8,257

11,981

13,174

8,736

663

578

1,678

(99)

44,968

2018
$’000

34,343
(2,978)
578
1,678
10
416

775

2018
$’000

91
146
237

2017
$’000

49,556

8,240

57,796

2017
$’000

7,326

10,688

9,108

9,216

283

478

615

(126)

37,588

2017
$’000

26,861
(2,308)
478
615
-
653

1,173

2017
$’000

75
135
210

Craneware plc Annual Report 2018
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
Pension costs - defined contribution plans

Share based payments

Total direct costs of employment

2018
Group
Number

2017
Group
Number

2018
Company
Number

2017
Company
Number

32
97
136
30

295

2018
Group
$’000

30,305
2,707
668

663

34,343

32
89
112
30

263

2017
Group
$’000

24,311
1,954
313

283

26,861

-
30
88
21

139

-
31
73
21

125

2018
Company
$’000

2017
Company
$’000

9,563
1,380
273

232

11,448

8,258
801
199

158

9,416

The remuneration of the highest paid Director including the gain from exercising share options in the year (granted from 2008 to 2014) is $3.8m (FY17: $0.9m). Full details
Directors’ emoluments and share option exercises are detailed in the Remuneration Committee’s Report on page 27 and key management compensation is given in Note 23,
Related Party Transactions. Contributions are made on behalf of two of the executive directors to a defined contribution retirement benefit scheme (2017: two).

8 Share-based payments
During the year the Group operated four equity-settled share based payment plans whereby options over, or conditional awards of, Ordinary Shares in Craneware plc can be
granted to employees and executive Directors. Directors’ interests in share plan awards are set out in the Remuneration Committee’s Report on pages 29 and 30. The fair
value of the share based awards is recognised as an expense, with a corresponding increase in equity, during the vesting period. A total share based payments expense of
$663,158 (2017: $283,446) was recognised in the Statement of Comprehensive Income for the year, as stated in Note 7 above, which comprises:

Type of award and name of share plan

Share options granted under the 2007 Share Option Plan
Share options granted under the 2016 Unapproved Share Option Plan
Share options granted under the 2016 Schedule 4 Share Option Plan
Conditional share awards granted under the LTIP

Contingent share awards

Total share based payments charge

2018
$’000

2017
$’000

132
145
35
172

179

663

237
15
6
25

283

Craneware plc Annual Report 2018Notes to the Financial Statements [Cont’d.]

8 Share-based payments (cont’d.)

Share option plans
Share options, granted by the Company to employees in respect of the following number of Ordinary Shares, were outstanding at 30 June 2017.

Date of grant

Exercise
price (GBP)

Exercise
price (USD)

Remaining
life at
1 July 2017
(years)

No. of options
at 1 July 2017

Granted

Exercised

Lapsed

No. of
options at
30 June 2018

Remaining
life at 30
June 2018
(years)

2007 Share Option Plan
15 Sep 2008
22 Dec 2009
06 Sep 2010
04 Sep 2012
21 Sep 2012
10 Sep 2013
22 Sep 2014
09 Mar 2016
01 Apr 2016

£2.08
£3.35
£4.01
£3.60
£4.00
£3.95
£5.225
£7.50
£7.50

$3.65
$5.34
$6.18
$5.72
$6.50
$6.21
$8.39
$10.66
$10.72

12 Sep 2016

£11.775

$15.63

2016 Unapproved Option Plan
24 Mar 2017
17 Jan 2018
2016 Schedule 4 Option Plan

£12.375
£17.750

$15.44
$24.45

24 Mar 2017

17 Jan 2018

£12.375

$15.44

£17.750

$24.45

1.2
2.5
3.2
5.2
5.2
6.2
7.2
8.7
8.8

9.2

9.7
-

9.7

72,115
79,169
42,505
20,904
33,465
120,894
269,361
240,627
10,000

41,263

-
-
-
-
-
-
-
-
-

67,173
-

-
77,795

25,856

10,279

(72,115)
(61,702)
(22,195)
(15,726)
(26,860)
(60,823)
(126,179)
-
-

-
-
-
-
-
(3,221)
-
(15,895)
-

-
17,467
20,310
5,178
6,605
56,850
143,182
224,732
10,000

-
-

41,263

(6,060)
(4,224)

61,113
73,571

(4,848)

21,008

(704)

9,575

1,023,332

88,074 (385,600)

(34,952)

690,854

-
1.5
2.2
4.2
4.2
5.2
6.2
7.7
7.8

8.2

8.7
9.5

8.7

9.5

The weighted average share price at the date of exercise of share options in the year ended 30 June 2018 was £19.43 ($26.17) (2017: £11.96 ($15.17)). The market value of
Craneware plc Ordinary Shares at 30 June 2018 was £21.20 ($27.98) per share. The weighted average remaining contractual life of the options outstanding at 30 June 2018 is 7.2
years (2017: 6.7 years).

Balance outstanding at beginning of the year
Share options granted during the year
Exercised during the year
Lapsed during the year
Balance outstanding at end of the year

Exercisable at end of the year

2018

2017

Number of Options

Weighted average
exercise price (£)

Number of Options

Weighted average
exercise price (£)

1,023,332
88,074
(385,600)
(34,952)
690,854

249,592

6.06
17.75
3.91
10.14
8.53

4.64

1,019,226
134,292
(111,461)
(18,725)
1,023,332

369,051

5.01
12.19
3.70
6.93
6.06

3.45

Craneware plc Annual Report 2018Notes to the Financial Statements [Cont’d.]

The Craneware plc Employees’ Share Option Plan 2007 (‘the 2007 Share Option Plan’)

Options over Ordinary Shares were granted under the 2007 Share Option Plan 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, were granted subject to sufficiently stretching performance conditions. These options are subject to time-based vesting and
are not normally exercisable before the third anniversary of the date of grant. Such options lapse no later than the tenth anniversary of the date of grant.

For share option awards granted under the 2007 Share Option Plan, fair value has been estimated on the date of grant using a Black-Scholes option pricing model, as
appropriately adjusted. The Company estimates the number of options likely to vest by reference to the Group’s employee 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 the IPO to date of grant, results in an actual volatility calculation for
all grants from December 2010. The assumptions applied in the option pricing model, in respect of each option grant were as follows:

Date of Grant

12-Sep-16

1-Apr-16

9-Mar-16

22-Sep-14

21-Oct-13

10-Sep-13

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

$15.63
£11.775
3.00
16%
0.15%
2.0%
$15.63
£11.775
2
41,263

$1.07

$10.72
£7.50
3.00
31%
0.48%
2.0%
$10.72
£7.50
1
10,000

$5.78

$10.66
£7.50
3.00
31%
0.51%
2.0%
$10.66
£7.50
49
257,459

$8.39
£5.23
3.00
33%
1.33%
2.4%
$8.39
£5.14
36
306,765

$1.78

$2.28

$7.55
£4.67
3.00
36%
0.90%
2.8%
$7.55
£4.67
1
3,975

$1.79

$6.21
£3.95
3.00
36%
1.02%
2.8%
$6.21
£3.95
26
321,855

$1.48

The Craneware plc Unapproved Company Share Option Plan (2016)
The Craneware plc Schedule 4 Company Share Option Plan (2016)

Share options were granted under these Plans to certain employees, senior managers and executive Directors in January 2018 and in March 2017, as summarised in the table
below. The exercise price of these share options was at the Company share price on the day before the grant date. The market-based performance conditions applicable to all
of those share options granted in January 2018 and in March 2017 are outlined in the Remuneration Committee’s Report on page 25.

The fair value of the share options granted under these two Plans was estimated using a Monte Carlo pricing model, as appropriately adjusted, based on the following
assumptions

Date of Grant

Share price at date of grant
Share price at date of grant
Vesting period (years)
Expected volatility
Risk free rate
Exercise price
Exercise price
Shares under option at date of grant
Fair value per option

17-Jan-18

24-Mar-17

£17.750
$24.45
3
21%
0.66%
£17.750
$24.45
88,074
$8.24

£12.375
$15.44
3
22%
0.23%
£12.375
$15.44
93,029
$2.58

The expected volatility was determined by calculating the historic volatility of the Company's share price over the previous three years.

Craneware plc Annual Report 2018Notes to the Financial Statements [Cont’d.]

8 Share-based payments (cont’d.)

Long Term Incentive Plan
The Craneware plc Long Term Incentive Plan (2016) (the ‘LTIP’)

Conditional share awards were granted under this Plan to certain senior managers and to the executive Directors in January 2018 and in March 2017, as summarised in the table
below. The market-based performance conditions, measured over three consecutive three year periods, applicable to those conditional share awards granted in January 2018
and in March 2017, are outlined in the Remuneration Committee’s Report on page 25.

Balance outstanding at 1 July
Awards granted in the year
Forfeited / lapsed during the year

Balance outstanding at 30 June

Number of
conditional
share awards
2018

Number of
conditional
share awards
2017

46,770
46,814
(2,742)

90,842

-
46,770
-

46,770

The remaining weighted average contractual life of the conditional share awards outstanding at 30 June 2018 is 2.7 years (at 30 June 2017: 3.2 years).

The fair values of the conditional share awards granted in 2018 and in 2017 were estimated using the Monte Carlo pricing model, as appropriately adjusted, with the following
main assumptions:

Date of Grant

17-Jan-18

24-Mar-17

Share price at date of grant
Share price at date of grant
Vesting period (years)
Expected volatility
Risk free rate
Fair value per conditional share award

£17.750
$24.45
3
21%
0.66%
$11.56

£12.375
$15.44
3
22%
0.23%
$6.11

Other share based payments
In addition to the employee share plans detailed above, employee contingent share awards have also been granted by the Company. Contingent share awards in respect of a
total of 159,336 Ordinary Shares were outstanding at 30 June 2018 (in respect of 94,560 Ordinary Shares at 30 June 2017).

There are three sets of non-market performance conditions applicable to each of the contingent share awards such that the vesting of each one-third amount of the award
shares is assessed against one of the performance conditions. If the respective performance conditions are achieved, and subject to continuous employment within the Group
throughout the period from the grant date: a maximum of 94,560 award shares will vest on 1 July 2019 at the earliest; and a separate maximum of 64,776 award shares would
vest on 1 July 2020.

The fair value of the contingent share awards is based on the market value of an Ordinary Share on the date of grant. An assessment of the expected extent of vesting of the
awards is made at the end of each reporting period and the share based payments expense recognised is adjusted so that over the whole vesting period the expense recognised
is based on the fair value of the quantity of shares awards that actually vest. In the year ended 30 June 2018, as some of the expense in respect of these contingent share awards
related to employee costs incurred on the eligible development of software, $839,932 (2017: $235,844) of those costs have been capitalised within development costs.

9 Finance income

Deposit interest receivable

Total interest receivable

2018
$’000

241

2017
$’000

258

Craneware plc Annual Report 2018Notes to the Financial Statements [Cont’d.]

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

2018
$’000

18,933

3,536
-

(305)

3,231

382
(8)

(469)

(95)

3,136

2017
$’000

16,884

3,463
(65)

300

3,698

(161)
(178)

(339)

3,359

The difference between the current tax charge on ordinary activities for the year, reported in the consolidated Statement of Comprehensive Income, and the current
tax charge that would result from applying a relevant standard rate of tax to the profit on ordinary activities before tax, is explained as follows:

Profit on ordinary activities at the UK tax rate 19% (2017: 19.75%)
Effects of:
Adjustment for prior years
Change in tax rate
Additional US taxes on profits 32% (2017: 39%)
Foreign Exchange
R&D tax credit
Expenses not deductible for tax purposes
Originaition and reversal of temporary differences

Deduction on share plan charges

Total tax charge

11 Dividends
The dividends paid during the year were as follows:-

3,597

(313)
(469)
1,137
-
(327)
29
847

(1,365)

3,136

3,335

122
-
209
(65)
-
(16)
-

(226)

3,359

Final dividend, re 30 June 2017 - 14.71 cents (11.3 pence)/share (2017: 12.1 cents (9 pence) / share)
Interim dividend, re 30 June 2018 - 13.5 cents (10 pence)/share (2017: 10.83 cents (8.7 pence) / share)

Total dividends paid to Company shareholders in the year

2018
$’000

4,065
3,752

7,817

2017
$’000

3,246
3,110

6,356

The proposed final dividend of 18.48 cents (14 pence), as noted on page 10, for 30 June 2018 is subject to approval by the shareholders at the Annual General Meeting and
has not been included as a liability in these financial statements.

Craneware plc Annual Report 2018

Notes to the Financial Statements [Cont’d.]

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 the Company ($'000)

Adjustments* ($'000)

Adjusted Profit attributable to equity holders ($'000)

Weighted average number of Ordinary shares in issue (thousands)

Adjusted Basic earnings per share ($ per share)

2018

15,797

26,790

0.590

15,797

329

16,126

26,790

0.602

2017

13,525

26,934

0.502

13,525

329

13,854

26,934

0.514

*Relate to acquisition, share related activities and amortisation of acquired intangibles if applicable in the year. These adjustments are to focus on what the Group regards as a more reliable indicator
of the underlying operating performance and are consistent with other similar companies.

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 the Company ($'000)

Adjustments* ($'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)

2018

15,797

26,790

492

27,282

0.579

15,797

329

16,126

26,790

492

27,282

0.591

2017

13,525

26,934

590

27,524

0.491

13,525

329

13,854

26,934

590

27,524

0.503

Craneware plc Annual Report 2018
Notes to the Financial Statements [Cont’d.]

13 Plant and equipment

Group

Cost
At 1 July 2017
Additions
Disposals

At 30 June 2018

Accumulated depreciation
At 1 July 2017
Charge for year

Depreciation on disposals

At 30 June 2018

Net Book Value at 30 June 2018

Cost
At 1 July 2016

Additions

Disposals

At 30 June 2017
Accumulated depreciation

At 1 July 2016

Charge for year

At 30 June 2017

Net Book Value at 30 June 2017

Company

Cost
At 1 July 2017
Additions
Disposals

At 30 June 2018

Accumulated depreciation
At 1 July 2017
Charge for year
Depreciation on disposals

At 30 June 2018

Net Book Value at 30 June 2018

Cost
At 1 July 2016
Additions

At 30 June 2017

Accumulated depreciation
At 1 July 2016
Charge for year

At 30 June 2017

Net Book Value at 30 June 2017

Computer
Equipment
$’000

Office
Furniture
$’000

Tenants
Improvements
$’000

2,661
418
(1,324)

1,755

2,060
371

(1,322)

1,109

646

2,281

383

(3)

2,661

1,779

281

2,060

601

1,092
1
(375)

718

985
57

(374)

668

1,045

(9)

1,092

920

985

107

1,856
15
(391)

1,480

1,189
150

(386)

953

527

1,643

215

(2)

1,856

1,057

132

1,189

667

Computer
Equipment
$’000

Office
Furniture
$’000

Tenants
Improvements
$’000

1,214
239
(644)

809

996
173
(642)

527

282

1,125
89

1,214

868
128

996

218

685
1
(197)

489

638
16
(197)

457

644
41

685

624
14

638

1,650
4
(337)

1,317

1,089
131
(337)

883

434

1,529
121

1,650

968
121

1,089

561

Total
$’000

5,609
434
(2,090)

3,953

4,234
578

(2,082)

2,730

1,223

4,969

654

(14)

5,609

3,756

478

4,234

1,375

Total
$’000

3,549
244
(1,178)

2,615

2,723
320
(1,176)

1,867

748

3,298
251

3,549

2,460
263

2,723

826

Craneware plc Annual Report 2018
Notes to the Financial Statements [Cont’d.]

14 Intangible assets

Goodwill and other intangible assets

Group

Cost
At 1 July 2017
Additions
Disposals

At 30 June 2018

Accumulated amortisation
At 1 July 2017
Charge for the year
Amortisation on disposal

At 30 June 2018

11,438
-
-

11,438

250
-
-

250

Net Book Value at 30 June 2018

11,188

Cost

At 1 July 2016

Additions

At 30 June 2017

Accumulated amortisation

At 1 July 2016

Charge for the year

At 30 June 2017

11,438

250

Net Book Value at 30 June 2017

11,188

Goodwill
$’000

Customer
Relationships
$’000

Proprietary
Software
$’000

Development
Costs
$’000

Computer
Software
$’000

2,964
-
-

2,964

2,042
329
-

2,371

593

2,964

1,713

329

2,042

922

3,043
-
-

3,043

1,976
213
-

2,189

854

3,043

1,976

1,067

9,237
4,732
-

13,969

3,046
856
-

3,902

10,067

5,755

3,482

9,237

2,926

120

3,046

6,191

1,436
368
(409)

1,395

959
280
(409)

830

565

993

443

1,436

793

166

959

477

Total
$’000

28,118
5,100
(409)

32,809

8,273
1,678
(409)

9,542

23,267

24,193

3,925

28,118

7,658

615

8,273

19,845

In accordance with the Group’s accounting policy, the carrying values of goodwill and other intangible assets are reviewed for impairment annually or more frequently if
events or changes in circumstances indicate that the asset might be impaired. Goodwill arose on the acquisition of Craneware InSight Inc.

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

The key assumptions in assessing value in use are the discount rate applied, future growth rate of revenue and the operating margin. These take into account the customer
base and expected revenue commitments from it, anticipated additional sales to both existing and new customers and market trends currently seen and those expected in
the future.

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

After review of future forecasts, the Group confirmed the growth for next five years was consistent with last year’s growth calculations confirming that the recoverable
amount would continue to exceed the carrying value. There are no reasonable possible changes in assumptions that would result in an impairment.

Craneware plc Annual Report 2018

Notes to the Financial Statements [Cont’d.]

14 Intangible assets (cont’d.)

Goodwill and Other Intangible assets (Cont’d.)

Company

Cost
At 1 July 2017
Additions
Disposals

At 30 June 2018

Accumulated amortisation
At 1 July 2017
Charge for the year
Amortisation on disposal

At 30 June 2018

Net Book Value at 30 June 2018

Cost
At 1 July 2016
Additions
At 30 June 2017

Accumulated amortisation

At 1 July 2016
Charge for the year

At 30 June 2017

Net Book Value at 30 June 2017

Development
Costs
$’000

Computer
Software
$’000

8,824
4,725
-

13,549

2,980
835
-

3,815

9,734

5,342
3,482
8,824

2,882
98

2,980

5,844

1,121
243
(296)

1,068

725
217
(296)

646

422

737
384
1,121

594
131

725

396

Total
$’000

9,945
4,968
(296)

14,617

3,705
1,052
(296)

4,461

10,156

6,079
3,866
9,945

3,476
229

3,705

6,240

15 Investments in subsidiary undertakings
The following information relates to all of the subsidiaries 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

Craneware Health
(Kestros Ltd)

Ordinary

Craneware Healthcare
Intelligence, LLC

Ordinary

100%

Nature of Business

Sales & Marketing

Product Development &
Professional Services

Software Development

Craneware Inc, Craneware InSight Inc and Craneware Healthcare Intelligence, LLC are incorporated in the United States of America and Craneware plc holds 10,000 (2017:
10,000) and 1,000 (2017: 1,000) common shares respectively with a nominal value of $0.01 each. Kestros Ltd (t/a Craneware Health) is incorporated within the United Kingdom
and Craneware plc holds 1,075 (2017: 1,075) Ordinary shares respectively with a nominal value of £1 each.

The results of the Subsidiary companies have been included in the consolidated financial statements

Kestros Ltd

Kestros Ltd (SC362481), one of Craneware plc's subsidiaries is exempt from the requirement for its financial statements to be audited under the provisions of section 479 A of the
Companies Act 2006.

Craneware plc Annual Report 2018

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

Deferred contract costs

Less non-current receivables
Deferred contract costs

Current portion

Group

Company

2018
$’000

9,215

(1,072)

8,143
230
-
1,904

7,501

17,778
-
(5,275)

12,503

2017
$’000

13,102

(1,353)

11,749
144
-
1,826

5,940

19,659
-
(4,278)

15,381

2018
$’000

9,066

(1,072)

7,994
8,284
6,000
764

23,042
(6,000)
-

17,042

2017
$’000

12,928

(1,353)

11,575
3,218
6,000
675

21,468
(6,000)
-

15,468

There is no material difference between the fair value of trade and other receivables and the book value stated above. All amounts included within trade and other receivables
are classified as loans and receivables.

The $6,000,000 loan due to the Company from Craneware InSight Inc. remains outstanding and is payable on demand, interest is charged quarterly in accordance with the
agreement at LIBOR plus 1%.

As at 30 June 2018, trade receivables of $1,386,828 (2017: $2,501,771) were past due and deemed to be impaired. The amount of the provision against these receivables
was $1,053,655 as of 30 June 2018 (2017: $1,270,008). 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

2018
$’000

-
67
292
1,028

1,387

2017
$’000

48
-
-
2,454

2,502

As at 30 June 2018, trade receivables of $1,304,942 (2017: $7,335,171) 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

2018
$’000

264
392
175
474

2017
$’000

4,297
717
1,162
1,159

1,305

7,335

As at 30 June 2018, trade receivables of $6,362,239 (2017: $2,973,334) were not past due or impaired, and the Group does not anticipate collection issues.
A further $160,872 was not past due but deemed to be impaired due to a client in financial difficulty. The amount of the provision against these receivables was $18,046
as at 30 June 2018 (2017: $82,550).

Craneware plc Annual Report 2018

Notes to the Financial Statements [Cont’d.]

16 Trade and other receivables (cont’d.)

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

2018
$’000

1,353
1,318
(416)
(1,183)

2017
$’000

1,135
1,038
(435)
(385)

1,072

1,353

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 19% (2017: 19.75%) in the UK and 25% (2017: 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

2018
$’00
3,102
95
634

3,831

2017
$’000
1,685
339
1,078

3,102

2018
$’000
980
22
202

1,204

2017
$’000
405
(21)
596

980

Craneware plc Annual Report 2018

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 2018 was $3,831,282 (2017: $3,101,546).

Losses
$’000

Share Options
$’000

Total
$’000

3,591
(203)
634

4,022

2,247
266
1,078

3,591

833
(372)
-

461

817
16
-

833

(489)
298

(191)

(562)
73

(489)

2018
$’000

3,574
448

4,022

(66)
(125)

(191)

3,831

2,098
28
634

2,760

797
223
1,078

2,098

Total
$’000

(489)
298

(191)

(562)
73

(489)

2017
$’000

2,801
790

3,591

(341)
(148)

(489)

3,102

Deferred tax assets - recognised

Group

At 1 July 2017
Credited/ (charged) to comprehensive income
Credited to equity

Total provided at 30 June 2018

At 1 July 2016
Credited to comprehensive income
Credited to equity

Total provided at 30 June 2017

Deferred tax liabilities - recognised

Group

At 1 July 2017
Credited to comprehensive income

Total provided at 30 June 2018

At 1 July 2016
Credited to comprehensive income

Total provided at 30 June 2017

Short term
timing
differences
$’000

660
141
-

801

633
27
-

660

-
-

Long-term
Timing
differences
$’000

Accelerated
tax
depreciation
$’000

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.

Craneware plc Annual Report 2018

Notes to the Financial Statements [Cont’d.]

17 Deferred taxation (cont'd.)

Deferred tax assets - recognised

Company

At 1 July 2017
Charged to comprehensive income
Credited to equity

Total provided at 30 June 2018

At 1 July 2016
Credited to comprehensive income
Credited to equity

Total provided at 30 June 2017

Deferred tax liabilities - recognised

Company
At 1 July 2017
Credited to comprehensive income

Total provided at 30 June 2018

At 1 July 2016
Charged to comprehensive income

Total provided at 30 June 2017

Share
Options
$’000

1,124
(57)
202

1,269

465
32
627

1,124

Accelerated
tax depreciation
$’000
(144)
79

(65)

(60)
(84)

(144)

Total
$’000

1,124
(57)
202

1,269

465
32
627

1,124

Total
$’000
(144)
79

(65)

(60)
(84)

(144)

The Group continues to monitor the recoverability of deferred tax assets and are satisfied that the continuing profitability will utilise the assets in respect of losses and there
remains the expectation that share options will be exercised which will give rise to the utilisation of the asset in this regard.

18 Share Capital

Equity share capital
Ordinary shares of 1p each

Allotted called-up and fully paid

Equity share capital
Ordinary shares of 1p each

At 1 July
Cancelled, following purchase by
Company of own shares
Allotted and issued in the year on
exercise of employee share
options

At 30 June

Share buyback

2018

2017

Number

$’000

Number

50,000,000

1,014

50,000,000

$’000

1,014

2018

2017

Number

$’000

Number

$’000

26,961,709

(628,869)

329,431

537

(9)

26,850,248

111,461

26,662,271

534

26,961,709

536

537

The Company purchased 628,869 of its own shares during the financial year (2017: nil), at 1769 pence per share, in accordance with the share buyback completed in January
2018. The shares purchased by the Company were cancelled immediately.

Craneware plc Annual Report 2018

Notes to the Financial Statements [Cont’d.]

18 Share Capital (cont'd.)

Shares issued during the year

The Company has granted share options and conditional share awards in respect of its Ordinary Shares and details of these are contained in Note 8. During the year ended 30
June 2018 a total of 329,431 Ordinary Shares (2017: 111,461 Ordinary Shares) were issued on the exercise of share options by employees.

Employee Benefit Trust

The Company established the ‘The Craneware plc Employee Benefit Trust’ (the EBT) during the year ended 30 June 2017. This is a discretionary trust established, in conjunction
with the operation of the Company’s employee share plans, for the benefit of the employees of the Company and its subsidiaries. The EBT has an independent trustee, RBC cees
Trustee Ltd. The Company has provided a loan to the EBT. The movement in the balance of the loan, which is denominated in Sterling, from the Company to the EBT during the
year ended 30 June 2018 is summarised in the table below.

Group

Loan balance (from Company to the EBT) at 1 July
Addition to the loan from the Company to the EBT during the year
Partial repayment of loan, by the EBT, during the year

Loan balance (from Company to the EBT) at 30 June

2018
$’000

3,083
5,315
(1,067)

7,331

2017
$’000

-
3,083
-

3,083

The EBT purchased a further 166,363 Craneware plc Ordinary Shares of 1 pence each in the market on 16 March 2018 at a price of 1950 pence per share. The Shares held by the
EBT are utilised to satisfy employee share plan awards and, during the financial year ended 30 June 2018, a total of 56,169 shares from the EBT (2017: nil) were used to satisfy
the exercise of employee share options. At 30 June 2018 the EBT held 353,124 Craneware plc Ordinary Shares (at 30 June 2017: 242,930 Ordinary Shares).

19 Cash generated from operations

Reconciliation of profit before tax to net cash inflow from operating activities

Profit before tax
Finance income
Depreciation on plant and equipment
Amortisation and Impairment on intangible assets
Share-based payments
Loss on disposals
Movements in working capital:
Decrease in trade and other receivables
Increase / (Decrease) in trade and other payables

Cash generated from operations

Group

Company

2018
$’000

18,933
(241)
578
1,678
663
10

1,881
9,608

33,110

2017
$’000

16,884
(258)
478
615
283
-

6,146
(1,080)

23,068

2018
$’000

11,178
(447)
320
1,052
232
2

3,404
11,079

26,820

2017
$’000

14,986
(420)
269
230
158
-

1,962
2,193

19,378

Craneware plc Annual Report 2018

Notes to the Financial Statements [Cont’d.]

20 Cash and cash equivalents

Cash at bank and in hand

The effective rates on short term bank deposits were 0.51% (2017: 0.54%).

21 Trade and other payables

Trade payables
Amounts owed to group companies
Social security and PAYE
Other creditors
Accruals

Group

Company

2018
$’000

52,833

2017
$’000

53,170

2018
$’000

43,955

2017
$’000

49,819

Group

Company

2018
$’000

824
-
461
41
10,509

11,835

2017
$’000

759
-
54
47
6,935

7,795

2018
$’000

390
7,484
291
127
3,594

11,886

2017
$’000

278
2,217
234
1
2,819

5,549

Amounts owed to Group companies 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 2018 was 18 days
(2017: 18 days). Trade and other payables are classified as financial liabilities at amortised cost.

22 Contingent liabilities and financial commitments

a) Capital commitments
The Group has no capital commitments at 30 June 2018 (2017: $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

2018
$’000

1,048
3,761
405

5,214

2017
$’000

914
3,966
1,191

6,071

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.

Craneware plc Annual Report 2018

Notes to the Financial Statements [Cont’d.]

23 Related party transactions
During the year the Group has traded in its normal course of business with shareholders and its wholly owned subsidiary in which Directors and the subsidiary have a material
interest as follows:-

Group

Fees for services provided as non-executive Directors
Fees
Short-term employee benefits
Executive Directors
Short-term employee benefits
Post employment benefits
Share based payments
Other key management

Short-term employee benefits

Post employment benefits

Share based payments

Subsidiary registered addresses listed on page 14.

2018

Outstanding
at year end

-
-

765,685
-
-

Charged

167,124
104,139

1,530,044
30,374
103,570

2,474,345

1,006,413

60,666

191,438

2017

Outstanding
at year end

-
-

844,390
-
-

384,388

Charged

101,199
161,844

1,420,916
21,311
64,887

1,992,705

22,336

100,052

Company

Charged

Fees for services provided as non-executive Directors
Fees
Short-term employee benefits
Executive Directors
Short-term employee benefits
Post employment benefits
Share-based payments
Other key management
Short-term employee benefits
Post employment benefits
Share-based payments
Amounts due to Craneware Inc - Subsidiary company
Sales commission
Net operating expenses
Balance
Net Amounts due from Craneware InSight Inc - Subsidiary company
Balance
Net Amounts due from Craneware Health/Kestros - Subsidiary company

167,124
104,139

1,530,044
30,347
103,570

646,425
14,968
55,339

31,303,528
4,252,117
-

Balance

Net Amounts due to Craneware Healthcare Intelligence - Subsidiary company

Balance

2018

Outstanding
at year end

-
-

765,685
-
-

252,462
-
-

-
-
7,768,936

8,529,727

1,268,431

3,512,779

2017

Outstanding
at year end

-
-

844,390
-
-

145,656
-
-

-
-
2,800,613

7,331,174

1,080,695

1,828,578

Charged

101,199
161,844

1,420,918
21,311
64,887

566,335
17,925
33,597

21,812,184
4,849,023
-

Note 18 contains details of the transactions and balances between the Company and the employee benefit trust during and at the end of the financial year.

Key management are considered to be, the Directors together with the Chief Intelligence Officer, Chief Technology Officer, the Chief Marketing Officer, Chief People Officer, EVP of
Sales, EVP of Customer Management and Chief Legal Officer. 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.

Craneware plc Annual Report 2018
Personal Notes

Craneware plc Annual Report 2018Personal Notes

Craneware plc Annual Report 2018Craneware 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