Table of Contents
Our value cycle insights are delivered through our Trisus platform for revenue integrity and 340B
management, as well as margin and operational intelligence.
Final Results
3
Solutions
4-5
Chair’s Statement
6
Strategic Report: Operational and Financial Review
7-12
Strategic Report: Key Performance Indicators
13-14
Strategic Report: Principal Risks and Uncertainties
15-24
Strategic Report: Section 172 (1) Statement
25-29
Stakeholder Engagement
30-38
Environmental, Social and Governance (ESG) Statement
39-49
Directors, Secretary and Advisors
50
Board of Directors
51-52
Directors’ Report
53-59
Corporate Governance Report
60-74
Remuneration Committee’s Report
75-88
Independent Auditors' Report to the members of Craneware plc
89-95
Consolidated Statement of Comprehensive Income
Statements of Changes in Equity
Consolidated Balance Sheet
Company Balance Sheet
96
97
98
99
Statements of Cash Flows
100
Notes to the Financial Statements
101-140
2
Craneware plc Annual Report 2022 Final Results
The Craneware Group – Transforming the Business of HealthcareTM
Financial Highlights (US dollars)
•
•
•
•
•
•
•
•
•
Revenue increase of 119% to $165.5m (FY21: $75.6m)
Adjusted EBITDA1. increased 91% to $51.8m (FY21: $27.1m)
Profit before tax $13.1m (FY21: $13.2m) reflecting increased operating profit offset by amortisation
of acquired intangibles and bank interest payments resulting from the Sentry Data Systems, Inc
(“Sentry”) acquisition
Basic adjusted EPS1. increased 29% to 89.0 cents (FY21: 69.0 cents) and adjusted diluted EPS increased
to 88.1 cents (FY21: 68.1 cents)
Basic EPS 26.8 cents (FY21: 48.1 cents) and diluted EPS 26.5 cents (FY21: 47.5 cents)
Annual Recurring Revenue2. increased by 164% to $170.3m (FY21 $64.5m)
Robust operating cash conversion1. at 80% of Adjusted EBITDA (FY21: 99%) reflecting different cash
generation profiles of acquired business
Operating cash reserves at year-end of $47.2m (FY21: $48.3m) and Net Debt of $64.4m (FY21: Net
Debt $Nil)
Proposed final dividend increase to 15.5p per share (18.80 cents) (FY21: 15.5p, 21.47 cents) giving a
total dividend for the year of 28p per share (33.96 cents) (FY21: 27.5p, 38.10 cents) up 2%
Operational Highlights
•
•
•
•
•
•
•
Sentry and Agilum businesses successfully acquired and integrated during the year, providing
considerably increased scale, offering, team and opportunity
The enlarged business has successfully rebranded to The Craneware Group3.
Synergies realised have delivered target +30% Adjusted EBITDA1. margin ahead of schedule
Initial cross-sales achieved and building pipeline of opportunities
80% of ARR now from the Cloud, demonstrating successful execution of cloud strategy
Trisus Chargemaster launched and vast majority of customers expected to have moved to the Trisus
platform by end of current calendar year
Continued investment in R&D and innovation to capitalise on growing market opportunity
1. Certain financial measures are not determined under IFRS and are alternative performance measures as described in Note 27 of the financial statements.
2. Annual Recurring Revenue (“ARR”) includes the annual value of licence and transaction revenues as at 30 June 2022 that are subject to underlying contracts.
3. When we refer to 'Craneware', or 'The Craneware Group' or 'Group' in the annual report we mean the group of companies having Craneware plc as its parent and
therefore these words are used interchangeably.
3
Craneware plc Annual Report 2022 Solutions
Our applications and industry-leading team of experts contextualize operational, financial, and clinical data,
providing insights that clearly demonstrate realistic revenue integrity and 340B compliance opportunities for
our customers.
Trisus Chargemaster
Trisus Chargemaster is
designed with the user
in mind, to enhance
efficiency in workflow,
collaboration, and
communication across
clinical and financial teams.
Insight Medical
Necessity
InSight Medical
Necessity serves
all parts of your
organization that
need instant access
to medical necessity
requirements, from admissions and
order-entry to medical records and
external practices.
Trisus Claims Informatics
Trisus Claims
Informatics, a
retrospective charge
capture analytical
application, identifies
high-impact areas of
risk for your team to investigate.
Trisus Supply
Align data sets from
the item master,
chargemaster, and
operatory with
automated reviews
to eliminate disparity
which can result in lost or incorrect
data and revenue.
Appeals Services
Craneware has the
experienced staff you
need to review your
denials, write successful
appeals, and overturn
improper denials.
Trisus Healthcare
Intelligence
Trisus® Healthcare
Intelligence goes
beyond traditional
cost and accounting
tools and provides
insights into resource
consumption on the patient level.
Trisus Supplies Assistant
Trisus Supplies
Assistant is Craneware’s
proprietary supplies
coding search function
that delivers HCPCS
codes, UNSPSC codes,
manufacturer, description, catalog
ID, status indicator, reimbursable
flag, revenue codes, and other
reference information – in a single
screen.
Trisus Pricing
Transparency
Trisus Pricing
Transparency helps you
meet the requirements
of the rule and go
beyond posting prices
by providing valuable
analytics to monitor market
dynamics.
Trisus Pricing Analyzer
Trisus Pricing Analyzer
simplifies and
automates the price-
modeling process. Your
organization can readily
assess the potential
impact of pricing changes, such as
revenue shortfalls or changes in
payor contracts.
Pricing
4
Revenue
Craneware plc Annual Report 2022 Trisus Medication
Analytic Solutions
Prioritize, diagnose, and
resolve issues in your
medication systems
to impact finances,
workflow efficiencies,
and patient outcomes
while mitigating compliance risks.
Sentinel
Sentinel® helps you
capture more by
providing detailed
tracking of all drug
activity at the 11-digit
NDC level for a
complete audit trail and more
insights into your pharmacy
operations.
Sentrex
Sentrex® is a SaaS-based
solution that helps
covered entities expand
medication access while
maintaining compliance
with evolving
legislation.
Senturion Professional
Service
As the leader in
value cycle solutions
for nearly 20 years,
hospitals of all sizes
and types rely on The
Craneware Group’s
Professional Services to help
address their toughest challenges.
We deliver results that lead to
improved revenue recognition and
retention.
Professional Services
Catalog
Our team members
act as an extension of
your team, bringing
with them 20+ years
of experience working
with thousands of
covered entities and contract
pharmacies.
Customer Journey to
Value Cycle Success
Hospitals and health
systems across the
country leverage
the passion of our
professionals, strength
of our data and
innovative high-value solutions to
drive better outcomes for all.
Sentrex 330
Sentrex330™ helps
you leverage contract
pharmacy relationships
to expand your 340B
program benefit
to as many eligible
patients as possible, with the
most complete retail and specialty
pharmacy network.
Referral Verification
System (Sentrex)
Our Referral Verification
System™ (RVS™)
leverages your existing
Sentrex® platform to
access referrals initially
deemed ineligible,
helping you reclaim eligible
prescriptions and capture more
340B opportunity.
Referral Verification
System (Senturion)
Our Referral Verification
System™ (RVS™)
leverages your existing
Sentrex® platform to
access referrals initially
deemed ineligible,
helping you reclaim eligible
prescriptions and capture more
340B opportunity.
Sentry Core
Simplify the
complexities
of pharmacy
procurement,
utilization and
compliance, and
capture more with advanced NDC
mapping functionality and flexible
configuration options that reflect
your business processes and 340B
program requirements.
Cost
340B
Services
5
Craneware plc Annual Report 2022 Chair's Statement
I am pleased to report on a year of significant strategic
progress, in which the acquisitions of US-based Sentry Data
Systems, Inc. (“Sentry”) and Agilum Healthcare Intelligence,
Inc. (“Agilum”) (collectively referred to as the acquisition of
Sentry), were successfully completed, considerably increasing
the scale of The Craneware Group, enhancing our pharmacy
offering and cementing Craneware’s position as a leading
provider of Value Cycle solutions to the US healthcare
market. The combination of the three organisations paves
the way for long-term sustained growth, as COVID-19 related
impediments dissipate, and the Group unlocks the significant
opportunities of our extended product suite. With the
transition of the Craneware offerings to the Cloud, which
remains on track to complete in the current calendar year,
and 80% of ARR now derived from Cloud based solutions, we
are confident the building blocks are in place for our ongoing
success.
Financials demonstrate increased scale of the Group
The increased scale of the Craneware Group can be seen
in the financial figures we are reporting. Group Headline
Revenues increased 119% in the year to $165.5m with an
adjusted EBITDA increase of 91% to $51.8m, achieving the
combined Group adjusted EBITDA margin target of 30%
ahead of schedule.
Software revenue and customer retention continues to be
robust across the Group’s offerings, as demonstrated by the
growth in underlying ARR to $170.3m (30 June 2021: $64.5m).
As previously reported, professional services revenues
continue to be affected by the impact of the COVID pandemic
on hospital workforce and operations. We are confident we
will see professional services revenues return to pre-COVID
levels once hospital staffing pressures ease.
As at 30 June 2022, the Group had strong operating cash
reserves of $47.2m (30 June 2021: $48.3m) and net debt
of $64.4m (30 June 2021: $nil) representing circa 1.2 times
reported adjusted EBITDA. This balance sheet strength,
combined with our high levels of ARR, standing at $170.3m
at year end, and the potential for a return to pre-pandemic
levels of professional services revenue, leaves the Group well
positioned for FY23 and beyond.
Investment in innovation provides increased addressable
opportunity
With a customer base representing approximately 40%
of registered US hospitals including more than 12,000
US hospitals, health systems, clinics and affiliated retail
pharmacies, supported by access to over 20 years of
contextualised healthcare data, we have an enviable position
within the US healthcare industry.
Our investment in innovation and M&A strategy provide
us with a growing solution set to provide further value to
our customers. Following two years of intense pressure on
our customers and healthcare professionals, they are more
6
motivated than ever to implement strategic and long-term
planning. Our Trisus platform is specifically designed to help
them achieve this. While we may see fluctuations in our
professional services revenue in any individual reporting
period, our largely recurring revenue business model
provides us with the revenue visibility to continue to invest
in our people and offering, to capitalise on the significant
opportunity.
Making a positive contribution to society
Our purpose is to transform the business of healthcare
through the profound impact our solutions deliver, enabling
our customers to provide quality care to their communities.
This tangible positive impact our solutions can make on
the lives of others continues to be a great motivator for
our talented team. The Craneware Group has always had a
strong commitment to social responsibility and community
engagement, which has been enhanced by the integration of
our 340B offerings and colleagues We have been delighted
to welcome the Sentry and Agilum teams into The Craneware
Group as well as additional new colleagues across the Group,
on behalf of the Board, I would like to thank all the enlarged
team for their continued passion and commitment. We detail
more of the impact the Group makes within the communities
we serve in our ESG Statement.
We were pleased to welcome Issy Urquhart, the Group Chief
People Officer to the Craneware plc Board in April this year.
Issy has been central in the successful integration of the
Sentry team into The Craneware Group and the appointment
of a leader with her skillset reflects both the importance the
Board places on creating the right environment for our people
to thrive and the increased scale of The Craneware Group.
Positive Outlook
The strength of the newly enlarged Craneware Group, our
high levels of Annual Recurring Revenue, the breadth of
solutions we can provide and the scale of data flowing
through our platform are the solid foundations for growth.
Building on these foundations, whilst remaining cognisant of
the challenges our customers and partners continue to face,
the Board has confidence in Craneware’s ability to address the
expanded market opportunity presented.
Will Whitehorn
Chair
19 September 2022
Craneware plc Annual Report 2022 Operational Review
We are pleased to be reporting such positive results, which
clearly demonstrate the increased scale of the enlarged
Craneware Group and the breadth of our future market
opportunity. The addition of Sentry, which completed
during the fiscal year, represents a significant milestone
for Craneware. We are now bolstered by the deepened
pharmacy data insights within our platform, the addition of
new customers with further products and expertise. We are
delighted to have welcomed the Sentry and Agilum teams
along with their customers to The Craneware Group as we look
forward to our next phase of growth together, in line with our
shared vision of transforming the business of healthcare.
Following Sentry’s acquisition we have seen pleasing initial
cross-sales which we believe are only a glimpse of things
to come, as we look to capitalise on this considerable
opportunity moving forwards. Additionally we have made
good progress in growing the number of customers on Trisus,
our cloud-based platform, with the vast majority of hospital
customers now interacting with the platform, and we expect
to have largely completed the migration of customers onto
the platform by the end of calendar 2022. Having achieved
the scale and integration we had been aiming for during the
period, we now have a solid foundation to move to the next
step of our evolution.
There is great pride across the Group in the way in which the
team has achieved these results amid a significant integration
process and testing macro-economic challenges. Whilst
remaining cognisant of the challenges our customers and
partners continue to face, the strength of the newly enlarged
Craneware Group, the applicability of our powerful data sets
and solutions together with the scale of the opportunity
ahead, means the Board remains confident in the Group’s
future success.
Market – the move to value-based care continues at pace
As we move through 2022, market conditions are continuing
to normalise following the impact of the COVID pandemic,
although there is still some way to go before full recovery
in hospital workforce and operations to pre-pandemic
conditions.
The pandemic ushered in a new era for the industry with
healthcare providers having to adjust to new methods of
healthcare delivery, with a reduced workforce available to
them. Financially, both providers and payers struggled to
navigate the rapidly changing market. However, with the
US continuing to lag other developed nations in terms of
life-expectancy while incurring the highest cost per capita
in healthcare spend, the need to provide increased value in
healthcare has continued unabated. We expect investment
across the healthcare industry to deliver this change to grow,
with software and analytics being a key component.
Strategic Report:
Operational and Financial Review
The need for accurate financial data, supporting analytics
and the insights those analytics can bring along with the
efficiency of technology solutions has never been more
important. We provide our customers with access to the
market’s only platform that directly and holistically addresses
issues pertaining to the value cycle. Our products and
systems, which are built on the insights of our data, enhance
efficiency and helps ensure that both operational and
administrative functions of a hospital are working optimally,
enabling the existing teams to be more effective and efficient
in their roles. Through these insights our solutions can
deliver real financial returns and free up resource with a more
targeted approach, that can be re-invested and re-deployed
by healthcare providers to support the clinical care for their
communities.
Our customers have remained resilient in the face of this
challenging and evolving landscape and we are committed
to providing them with the support to navigate through the
future impacts of the pandemic and deliver value-based care.
Growth Strategy – innovation to profoundly impact US
healthcare operations which will drive demand and expand our
addressable market
To date, our growth has been driven through increases in
market share and product set penetration (land and expand).
In recent years, we have invested in the development of
the Trisus platform; a sophisticated cloud delivered data
aggregation and intelligence platform which will be the
foundation for our future growth as we migrate our existing
on-premise products to the Cloud, leverage our data assets
to expand our offering, integrate third party solutions to the
platform and benefit from the scalability of cloud-technology.
Three Growth Pillars
Our growth strategy has three fundamental growth pillars:
1. The transition of our customers to cloud-based versions
of our existing solutions, to act as a gateway to the benefits
and additional applications on the Trisus platform.
We are pleased with the rate at which our customers are
transitioning onto the Trisus platform, and we are on track
in our move to be a fully cloud based provider. We currently
have 80% of our annual recuring revenue (30 June 2021:
16%) being delivered from cloud based solutions, pointing to
the strong progress made and the Sentry products acquired
already being cloud based. There has been strong adoption
of the Trisus Chargemaster offering, the cloud version of our
original Chargemaster Toolkit product and we anticipate the
migration of our existing customers to Trisus to be largely
complete by end of calendar 2022. We are confident in
the value our new Trisus Chargemaster will bring to our
customers through more readily accessible insights into
7
Craneware plc Annual Report 2022 Strategic Report:
Operational and Financial Review [Cont'd]
hospital operations providing a more efficient and effective
manner of driving improvements.
Pharmacy operations within healthcare providers is the
largest cost area for US hospitals apart from staff costs and
an area where we see considerable opportunity to scale our
value-focused solutions. We are continually evolving our full
Pharmacy product suite, due to the dynamic nature of the
340B marketplace, to ensure our market leading position.
As a result of our R&D in this area and the acquisition of
Sentry, we now have four cloud based pharmacy offerings to
take to market, effectively replacing our existing on premise
offering, Pharmacy Chargelink (PCL) and 65% of the current
PCL customer base are already scheduled to migrate to the
new cloud-based replacements before the end of the calendar
year. These four offerings are: Trisus Pharmacy Financial
Management (TRxFM) and Trisus Medication Formulary, which
was launched in the last 12 months, and Trisus Medication
Claims and Trisus Medication Compare, which are both
evolutions of two original Sentry products.
While we are planning to refresh the user interface of the
existing Sentry offerings, to create the same look and feel
as the Craneware Trisus platform, they are using established
cloud architecture and do not require technical integration.
2. To continue to enhance the capabilities of the platform
through the addition of new technology layers and
applications - developed through internal R&D, selective
M&A and Third-Party Partnerships.
The dynamic nature of the healthcare market means that we
are consistently developing additional applications and tools
to provide benefits to our customers. We are continuing to
see additional opportunities for the Group as we evolve and
expand our capabilities.
While organic growth remains a priority, we continue
to evaluate the market for M&A opportunities and will
continue to pursue strategically aligned companies that will
accelerate our growth strategy, although it is unlikely that any
acquisitions in the short-term will be of the size of Sentry. We
maintain the same four key acquisition criteria of which target
companies must fit into at least one, being: the addition
of relevant data sets; the extension of the customer base;
the expansion of expertise; and the addition of applications
suitable for the US hospital market.
In evaluating acquisition opportunities, the Board implements
a rigorous and disciplined approach to valuation, seeking
to maintain its prudent approach to preserving balance
sheet strength and efficiency for the long-term. Targets that
are profitable with recurring revenue models that provide
earnings accretion within the first 12 months of ownership
are prioritised.
3. To grow our customer footprint, through increasing
the attractiveness of our offering and acquiring non-
overlapping customers, which in turn provides further
cross-sale opportunities.
8
In addition to seeing a higher percentage of our ARR from
cloud based solutions, we have also seen pleasing ARR
growth from sales activities during the period, including
our initial cross sale successes. ARR for the enlarged Group
now stands at $170.3m (30 June 2021: $64.5m). This
provides the foundation for further growth through our
sales successes and high levels of customer retention, to
deliver future organic growth. During the year we have seen
some significant customers transition to Trisus and extend
their long-term relationships with Craneware through both
renewals and extensions to existing contracts, along with
competitive wins in the Chargemaster and Pharmacy space.
We are confident that we will be able to further increase
sales activity in the future with our broadened and improved
products and add to our substantial existing customer base.
This success is underpinned by consistently strong customer
retention rates which remained high in the period at above
90%.
Post-Acquisition Integration Update
We were delighted with the Sentry acquisition integration
during the period. There are strong synergies between the
businesses through the complementary nature of Sentry's
product suite and customer base, which has been typified
by the collaboration between the teams. We have formed
one combined management team, including a new role of
Transformation Officer, to oversee the continued evolution
of The Craneware Group with our commitment to a lean
operating model.
We are proud of the manner in which the challenges of
integrating businesses of comparable size have been dealt
with by the team, achieving comparatively strong staff
retention rates and we have successfully achieved the scale
and level of integration we had been targeting.
We are now benefitting from an integrated, well-structured
team which will no doubt drive strong levels of new sales
moving forward.
Our People and Community
Our commitment to our people has always been at the centre
of what we do. We are always reviewing our work practices to
ensure that our employees are receiving maximum support.
We provide further details of these activities with our ESG
Statement.
Craneware continues to develop many social initiatives, such
as Craneware Cares and the Craneware Cares Foundation
which is driven by our employees. Further, following our
acquisition of Sentry, we have also become directly involved
with the 340B Coalition. This program aims to give back to
local communities with vulnerable populations. Even though
our staff were mostly working from home through this year,
they still managed to help a total of 42 different charities
across the UK and US, including our four Spotlight Charities.
Craneware plc Annual Report 2022 Our People and Community [Cont'd]
Underlying Business Model and Professional Services
Strategic Report:
Operational and Financial Review [Cont'd]
We are uniquely positioned to provide the insights our
customers need to manage their operations more efficiently
and mitigate risk while they focus on delivering increased
levels of care. Importantly, in the period our customers have
seen in excess of a $1 billion in benefit from utilising our
solutions including a significant contribution from our 340B
offerings, helping to stretch scarce federal resources as far
as possible, reach more eligible patients and provide more
comprehensive services.
Financial Review
We began this financial year as a standalone business, and
then completed the transformational acquisition of Sentry.
Whilst the financial results we are reporting have yet to
include a full twelve-month contribution from this acquisition,
they do demonstrate the significant step change that has
occurred within The Craneware Group. We are pleased to
report the successful integration of Sentry and be able to
demonstrate this evolution of our enlarged Group despite the
backdrop of the pandemic and the challenges this created for
all healthcare providers.
For the year ended 30 June 2022, The Craneware Group is
reporting an increase in revenue of 119% to $165.5m (FY21:
$75.6m) and a 91% increase in adjusted EBITDA to $51.8m
(FY21: $27.1m).
These results not only demonstrate the new scale of The
Craneware Group but, with our resulting enlarged portfolio
of products and data sets that support them, provide a new
‘foundation’ for all our key performance metrics. From this
foundation, we can demonstrate future organic growth as
we do even more to support our customers as they meet the
challenges of the post-pandemic macro environment.
Sentry Acquisition
Our intention to acquire Sentry was originally announced in
our prior financial year (June 2021) and was accompanied by
a share placing which resulted in the allotment of 6,192,652
new Ordinary Shares. Following the clearance of the relevant
regulatory hurdles, we completed the acquisition on 12 July
2021. The final consideration for the acquisition (being on
a cash free / debt free basis and after adjusting for working
capital) was $372.9m.
We have completed our assessment of the fair value of the
assets and liabilities acquired and the consolidated balance
sheet presented includes these amounts; as detailed in
Note 13 to the Consolidated Financial Statements, we have
recorded $226.5m of goodwill, having recognised $146.5m
of net assets acquired including the fair value of intangible
assets: customer list and customer contracts of $151m,
proprietary software of $51.5m and trademarks of $5.0m.
Deferred tax of $37.8m, $12.9.m and $1.2m has been provided
respectively in relation to the fair value of those intangible
assets. Sentry contributed revenue of $94.7m and net profit
of $1.6m to the Group for the period from 13 July 2021 to 30
June 2022.
In Sentry, we have acquired a business model which was
similar in its nature to the existing Craneware Annuity SaaS
business model. The Sentry business also signed multi-
year contracts albeit they are often for a slightly shorter
duration, usually three years. In addition to the licence fees,
Sentry also provides a number of transactional services to
customers, throughout the life of their underlying contracts.
These transactional services, whilst highly dependable, see
some variation period to period dependent on volume of
transactions.
As The Craneware Group, the new contracts we sign with
our customers provide a licence for the customer to access
specified products throughout their licence period. At the
end of an existing licence period, or at a mutually agreed
earlier date, we look to renew these contracts with our
customers.
Under the Group’s business model, we recognise software
licence revenue and any minimum payments due from
our ‘other long term’ contracts evenly over the life of
the underlying contract term. Transactional services
are recognised as we provide the service, and we are
contractually able to invoice the customer.
In addition to the licence revenues recognised in any year,
we also expect revenue to be recognised from providing
professional and consulting services to our customers. These
revenues are usually recognised as we deliver the service to
the customer, on a percentage of completion basis.
The COVID-19 pandemic and the current macro-economic
environment has resulted in shortages of available staff at
hospitals which has continued to impact our ability to deliver
professional services to our full capability, impacting the
underlying growth (especially organic) in the year. As a result,
we have experienced a reduction in our professional services
revenues, reducing to $13.9m from $14.5m in FY21 despite
the enlarged Group and well below our expectations of 15%+
of our combined revenues in any single year being generated
from delivery of these services.
However, we have retained our professional services capacity
and as this, anticipated to be, short-term impact reverses we
are well positioned to return to growth in our professional
services delivery and associated revenue.
Annual Recurring Revenue
By renewing our underlying contracts, and ensuring
we continue to deliver the transactional services to our
customers, we sustain a highly visible recurring revenue base,
which means sales of new products to existing customers or
sales to new hospital customers add to this recurring revenue.
9
Craneware plc Annual Report 2022 Strategic Report:
Operational and Financial Review [Cont'd]
Financial Review [Cont'd]
Following the acquisition of Sentry, we have introduced
a new KPI of Annual Recurring Revenue (“ARR”) to
supplement our existing financial KPIs. With the increasing
standardisation in how SaaS companies report, this KPI
will replace our historic three year visible revenue KPI. ARR
demonstrates the annual value of licence and transactional
revenues that are subject to underlying contracts.
At 30 June 2022, ARR had reached a new milestone of
$170.3m (30 June 2021: $64.5m). Within this metric we
include the annual value of licence and recurring transaction
revenues as at 30 June 2022 that are subject to underlying
contracts. In future years, we will introduce further KPIs
to demonstrate how the underlying growth of the Group
is progressing from this ‘foundation’, such as Net Revenue
Retention. We believe this will allow even easier comparison
between the Group and its peers.
Gross Margins
Our gross profit margin is calculated after taking account
of the incremental costs we incur to obtain the underlying
contracts, including sales commission contract costs which
are charged in line with the associated revenue recognition.
The gross profit for FY22 was $142.4m (FY21: $70.2m). This
represents a gross margin percentage of 86% (FY21: 93%)
which was expected following the Sentry acquisition and
reflects the nature of the enlarged portfolio of software and
services the Group now delivers. This represents a normal
level of Gross Margin, going forward.
Operating expenses
The increase in net operating expenses (to Adjusted
EBITDA) to $90.6m (FY21: $43.1m) again reflects the scale
of our enlarged Group. The bringing together of the
organisations has delivered on anticipated synergies to
deliver our combined target Adjusted EBITDA margin of
+30% ahead of schedule and has helped to offset the macro-
economic inflationary pressures faced. With the ongoing
macro-economic challenges, our ability to deliver focused
investment whilst retaining our normal prudent cost control
is key. Whilst the majority of our cost base is US-located, our
ability to balance our investment between the US and the UK
(and the associated Sterling exchange rate) will provide an
element of protection against the inflationary pressures that
currently exist.
Product innovation and enhancement continue to be core
to this future and our ability to achieve our potential. We
continue to pursue our buy, build, or partner strategy to build
out the Trisus platform and its portfolio of products. As we
are cash generative, we are able to use our cash reserves to
further “build” alongside the acquisition activities in the year
and therefore continue to invest significant resource in R&D.
The total cost of development in the year was $51.1m (FY21:
$24.7m), a 107% increase primarily as a result of bringing the
R&D departments together. We continue to capitalise only
the costs that relate to projects that bring future economic
benefit to the Group. With a focus in the year on integration
activities, the total amount capitalised in the year reduced
from 41% of total R&D spend in FY21 to 26% in the current
year, being $13.5m (FY21: $10.1m).
We continue to believe this investment is an efficient and
cost-effective way to further build out our Value Cycle
strategy alongside any acquisition strategy. With the
completion of our integration efforts, we expect to see both
the levels of development expense and capitalisation return
to our historical proportion of revenue in future years. As
specific products are made available to relevant customers,
the associated development costs capitalised are amortised
and charged to the Group’s income statement over their
estimated useful economic life, thereby correctly matching
costs to the resulting revenues.
Net impairment charge on financial and contract assets
This relates to the movement in the provision for the
impairment of trade receivables in the year, being $461,000
(FY21: $495,000). The nature of the market the Group serves
and the SaaS based business model limit the Group’s exposure
in this regard, but are required to be shown separately on
the face of the Consolidated Statement of Comprehensive
Income.
Adjusted EBITDA and Profit before taxation
To supplement the financial measures defined under IFRS the
Group presents certain non-GAAP (alternative) performance
measures as detailed in Note 27 to the Financial Statements.
We believe the use and calculation of these measures are
consistent with other similar listed companies and are
frequently used by analysts, investors and other interested
parties in their research.
The Group uses these adjusted measures in its operational
and financial decision-making as it excludes certain one-off
items, allowing focus on what the Group regards as a more
reliable indicator of the underlying operating performance.
Adjusted earnings represent operating profits, excluding costs
incurred as a result of acquisition and share related activities
(if applicable in the year), share related costs including IFRS
2 share-based payments charge, interest, depreciation and
amortisation (“Adjusted EBITDA”).
In the year, total costs of $2.1m (FY21: $6.5m) have been
identified as exceptional. These relate primarily to the costs
associated with the acquisition of Sentry. As such, these costs
were adjusted from earnings in presenting Adjusted EBITDA.
Adjusted EBITDA has grown in the year to $51.8m (FY21:
$27.1m) an increase of 91%. This reflects an Adjusted
EBITDA margin of 31% (FY21: 36%). This result confirms we
have achieved our post acquisition target of returning to a
combined Group adjusted EBITDA margin of 30% ahead of
10
Craneware plc Annual Report 2022 Strategic Report:
Operational and Financial Review [Cont'd]
Financial Review [Cont'd]
schedule. This is a result of the success of the integration
following the Sentry acquisition and the synergies the
combined organisations have delivered.
Following the amortisation charge relating to acquired
intangible assets relating to the Sentry acquisition of $20.2m
(FY21: $nil), profit before taxation reported in the year is
$13.1m (FY21: $13.2m).
Taxation
The Group generates profits in both the UK and the US.
The Group’s effective tax rate is primarily dependent on the
applicable tax rates in these respective jurisdictions. As Sentry
has no UK operations, its profits are solely generated in the US
and therefore the Group now generates a higher proportion
of its profits there.
In prior years, the Company qualified for the enhanced small
and medium-sized enterprises (SME) R&D tax relief in the
UK but, with the increased scale of the Group, this enhanced
relief is no longer applicable to the Group and we now fall
into the R&D Expenditure Credit (RDEC) scheme at reduced
rates of relief. R&D tax relief has reduced in the current year
to $0.5m (FY21: $0.7m) due to the reduced rate of applicable
relief. RDEC also requires the qualifying expenditure to be
included as a tax credit in other income and therefore taxable,
rather than a reduction to the tax charge and ultimately
results in a net increase of $0.4m.
In the year ended 30 June 2021, the effective tax rate had
been further positively affected by the finalisation of R&D tax
relief claims in respect to the two prior two years, totaling
$1.6m, along with the estimated R&D tax relief for that
year. In addition, in the year to 30 June 2021, following the
substantive enactment of the increase in UK corporation tax
rate to 25% effective from 1 April 2023, the UK deferred tax
assets and liabilities at 30 June 2021 were revalued which
reduced that year’s tax charge by $0.5m.
Other factors impacting the effective tax rate include tax
deductibility of amortisation of acquired intangibles, tax
losses brought forward in the new enlarged Group and
the number of share options exercised and associated tax
treatment. Reconciliation of the tax charge for the year
can be seen in Note 10. As a result of all these factors, the
effective tax rate for the year ended 30 June 2022 is 28%
(FY21: 2%).
EPS
The Group presents an Alternative Performance Measure
of Adjusted EPS, to provide consistency to other listed
companies. Both Basic and Diluted Adjusted EPS are
calculated excluding costs incurred as a result of acquisition
and share related activities, being $1.6m (tax adjusted) in the
year (FY21: $5.6m) and amortisation of acquired intangibles
of $20.2m (FY21: $nil).
Adjusted EPS, after the factors noted above including the
increased levels of Adjusted EBITDA has increased 29% to
$0.890 (FY21: $0.690) and adjusted diluted EPS has increased
to $0.881 (FY21: $0.681).
Basic EPS in the period reduced to $0.268 (FY21: $0.481) and
Diluted EPS reduced to $0.265 (FY21: $0.475) primarily as a
result of the exceptional items noted above and bank interest
relating to the new borrowings.
Cash and Bank Facilities
Cash generation and a strong balance sheet have always
been a focus of the Group. Our business model provides the
basis for high levels of cash generation and we continue to
monitor the quality of our earnings through Operating Cash
Conversion, this being our ability to convert our Adjusted
EBITDA to “cash generated from operations” (as detailed in the
consolidated cash flow statement).
Sentry, prior to its acquisition, whilst cash generative was
not achieving the levels of cash generation achieved by
Craneware. In the year, we have made improvements in the
operating cash conversion of Sentry and as a result achieved
Operating Cash Conversion across the combined group of
80% in the year after adjusting for cash outflows relating to
exceptional costs accrued in the prior year (FY21: 99%).
We continue to invest in our future and return funds to our
enlarged shareholder base via dividends, returning $13.0m in
the current year (FY21: $9.7m).
Also, as part of the funding for the acquisition of Sentry, the
Group entered into a debt facility and during the year drew
down $120m of secured funding provided by our consortium
of banking partners. This facility was provided on a 3+1+1
year term basis. During the year, $8m (FY21: $nil) of the
loan has been repaid on schedule, all covenants have been
met, and the first extension of the term has been agreed.
We would like to thank our banking partners, alongside our
shareholders, for their continued support of our growth
strategy.
Cash reserves at the year-end were $47.2m (FY21: $48.3m
operating cash reserves) with net debt of $64.4m (FY21: $nil)
representing a comfortable level of debt for the Group.
Balance Sheet
Whilst the consolidated balance sheet has significantly
changed following the Sentry acquisition (details of net assets
acquired are provided in Note 13 to the financial statements),
the Group maintains a strong balance sheet.
Within the balance sheet, deferred income levels reflect the
amounts of the revenue under contract that we have invoiced
but have yet to recognise as revenue. This balance is a subset
of the Annual Recurring Revenue described above and future
performance obligations detailed in Note 4 to the financial
statements.
11
Craneware plc Annual Report 2022 be paid will be calculated by reference to the exchange rate
to be announced on 25 November 2022. The final dividend
referred to above in US dollars of 18.80 cents is given as an
example only using the Balance Sheet date exchange rate of
$1.2128/£1 and may differ from that finally announced.
Outlook
Whilst we remain abreast of the ongoing challenges faced
by our customers and partners, we are proud of the manner
in which the Group has dealt with the challenging backdrop
during the year. A focus for the year was to integrate our
widened team which was achieved with great success. Now,
with our expanded team we are confident will be able to
serve the considerable market need within the US healthcare
space through the next stage of our evolution.
We anticipate accelerated levels of sales moving forwards
delivering our next phase of growth. We have a robust
balance sheet, high levels of recurring revenues and high
customer retention rates and we look forward to further
increasing shareholder value.
Keith Neilson
Chief Executive Officer
19 September 2022
Craig Preston
Chief Financial Officer
19 September 2022
Strategic Report:
Operational and Financial Review [Cont'd]
Financial Review [Cont'd]
Deferred income, accrued income and the prepayment of
sales commissions all arise as a result of our SaaS business
model described above and we will always expect them to be
part of our balance sheet. They arise where the cash profile of
our contracts does not exactly match how revenue and related
expenses are recognised in the Statement of Comprehensive
Income. Overall, levels of deferred income are significantly
more than any accrued income and the prepayment of sales
commissions, we therefore remain cash flow positive in
regards to how we account for our contracts.
Currency
The functional currency for the Group, debt and cash
reserves, is US dollars. Whilst the majority of our cost base
is US-located and therefore US dollar denominated, we
have approximately one quarter of the cost base situated
in the UK, relating primarily to our UK employees which is
therefore denominated in Sterling. As a result, we continue to
closely monitor the Sterling to US dollar exchange rate and,
where appropriate, consider hedging strategies. The average
exchange rate throughout the year was $1.3317 as compared
to $1.3466 in the prior year. The exchange rate at the Balance
Sheet date was $1.2128 (FY21: $1.3853).
Audit Tender
Following the audit tender process conducted in the prior
year, in which a number of audit firms were invited to
tender, the Board approved PricewaterhouseCoopers LLP
for recommendation to shareholders, for re-appointment
as auditors, and this was approved by shareholders at the
Company’s Annual General Meeting which was held in
November 2021.
Dividend
In proposing a final dividend, the Board has carefully
considered a number of factors including the prevailing
macro-economic climate, the Group’s trading performance,
our current and future cash generation especially in light of
the Sentry acquisition and our continued desire to recognise
the support our shareholders provide. After carefully
weighing up these factors, the Board proposes a final dividend
of 15.5p (18.80 cents) per share giving a total dividend for
the year of 28p (33.96 cents) per share (FY21: 27.5p (38.10
cents) per share), an increase of 2%. Subject to approval at
the Annual General Meeting, the final dividend will be paid
on 16 December 2022 to shareholders on the register as at 25
November 2022, with a corresponding ex-Dividend date of 24
November 2022.
The final dividend of 15.5p 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 25 November 2022. The exact amount to
12
Craneware plc Annual Report 2022 Strategic Report:
Key Performance Indicators
The key performance indicators listed below are focused on growing our revenues and improving our revenue mix as well as
improving earnings growth for our shareholders and generating sustainable cashflows. Detailed explanation of the movements
is contained in the Financial Review on pages 9 to 12. The contribution from Sentry for FY22 is disclosed in Note 13 of the
Financial Statements.
Key Performance Indicator Review
Revenue Growth
Revenue
Growth
2022
2021
$165.5m
$75.6m
119%
6%
Through the Group’s SaaS revenue recognition model, underlying sales levels in the current year and acquisition of Sentry
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.
Annual Recurring Revenue
Annual Recurring Revenue
Growth
2022
2021
$170.3m
$64.5m
164%
Annual Recurring Revenue includes the annual value of licence and recurring transaction revenues as at 30 June 2022 that are
subject to underlying contracts.
% Annual Recurring Revenue (ARR) from the Cloud
% ARR from the Cloud
2022
80%
2021
16%
ARR % from the Cloud relates specifically to cloud based products. We previously provided a metric of the percentage of new
sales relating to the Trisus platform, reflecting one of our fundamental growth pillars: ‘The transition of our customers to cloud
based versions of our existing on-premise solutions, to act as a gateway to the benefits and additional applications on the Trisus
platform’. The metric was replaced during the financial year with the key performance indicator ‘% ARR from the Cloud’. This
reflects the inclusion of Sentry products, which are already on the Cloud, within the Group’s portfolio of solutions and the sale of
these to our existing customer base is a key part of our growth strategy.
Adjusted EBITDA
Adjusted EBITDA
Adjusted EBITDA margin
Growth
2022
2021
$51.8m
$27.1m
31%
91%
36%
8%
We take a measured approach to our investment, ensuring to invest to support the future growth of the Group. The continued
revenue growth and acquisition of Sentry has allowed us to both continue and, in certain areas, accelerate this investment whilst
delivering Adjusted EBITDA growth. This result confirms we have achieved our post acquisition target of returning to a combined
Group adjusted EBITDA margin of 30% ahead of schedule. 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
Adjusted EPS
Growth
2022
2021
89.0 cents
69.0 cents
29%
6%
Adjusted EPS growth demonstrates the Group’s overall profitability, adjusted for exceptional items, 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.
13
Craneware plc Annual Report 2022 Strategic Report:
Key Performance Indicators [Cont'd]
Key Performance Indicator Review [Cont'd]
Net (Debt) / Cash
Net (Debt) / Cash
Operating Cash
2022
2021
$(64.4)m
$235.6m
$47.2m
$48.3m
The Group continues to maintain healthy operating cash reserves of $47.2m (2021: operating cash: $48.3m). The total cash
balance at 30 June 2021, of $235.6m, included the funds raised via the share placing in June 2021. Following the draw down
from the term loan and revolving loan facilities in July 2021, to fund part of the consideration for the acquisition of Sentry, net
debt of $64.4m at 30 June 2022 (at 30 June 2021: $235.6m cash) represents a comfortable level of debt for the business.
Net (Debt) or Cash / EBITDA
Net (Debt) or Cash / EBITDA
2022
(124%)
2021
869%
Net debt as a percentage of EBITDA represents the leveraging of the Group's Balance Sheet and its ability to access future
funds to continue its buy, build or partner strategy. At the current levels, the Board is comfortable with the level of debt and
leveraging of the Group. In the prior year, prior to the completion of the Sentry acquisition, the Group had yet to draw on its
debt facilities and the cash balance at 30 June 2021 included funds raised through the share placing the occurred in June 2021.
Operating Cash conversion
Operating Cash conversion
2022
80%
2021
99%
The Group continues to convert very high levels of the Adjusted EBITDA reported in the year into operating cash flows which,
having returned $13.0m to shareholders by dividend during the year. Overall operating cash conversion, at 80% for the year
ended 30 June 2022, is below the prior year of 99%.
14
Craneware plc Annual Report 2022 Risk Management, Principal Risks and Uncertainties
Risks and uncertainty (as well as opportunities) are intrinsic
factors of conducting a business. 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. Our approach to risk management is a key
consideration to how we deliver long-term stakeholder value
whilst protecting our business, people, assets, capital and
reputation.
The Board is very much aware that, as a public company,
reputational damage is a risk and as such a key concern.
Whilst the risks outlined in this report do not specifically
detail the risk from reputational damage, the potential effects
to our reputation are not under-estimated by the Board.
The acquisition of Sentry in July 2021 presented the Group
with increased opportunities as well as changes in the risk
dynamics which have been carefully assessed and monitored
during the year and included within the risk review and
assessment process on an ongoing basis. In the year ended 30
June 2022 this has included the consideration and monitoring
of integration risks.
Risk Management
The Directors have carried out a robust assessment of the
principal and emerging risks facing the Group, including
those that would threaten its business model, future
performance, solvency and liquidity. The Group maintains its
internal risk register that forms the foundation of the Board
and the Audit Committee review process. 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. The Board
recognises that the nature and scope of risks can change.
Whilst review of the risk register is a scheduled item on the
calendar of Board agenda items, the Board’s consideration
of risk matters is not limited to those occasions. Risks and
opportunities are factors which are continually considered
when the Board is making decisions about the business and
strategy.
The implications of the COVID-19 pandemic have been at the
forefront of the risk management process during the year and
in the previous two financial years. While the critical health
risks of the pandemic appear to be behind us, there remains
a level of uncertainty not least to the aftereffects and their
impact. Management has been considering and evaluating
the risk to the Group’s people, customers, business and
operations and has put in place mitigation wherever possible;
Strategic Report:
Principal Risks and Uncertainties
further details are provided in the section below. The Group
continues to demonstrate financial and operational resilience
to the ongoing impact resulting from the pandemic.
The Operations Board is chaired by the Chief Executive
Officer and also comprises the Chief Financial Officer, the
Chief People Officer and six further members of the Senior
Management Team. The risk review is exercised through
the monthly management reports and Operations Board
meetings and, due to the importance of this topic, there is
a sub-committee of the Operations Board (the Governance
Committee, chaired by the Chief Financial Officer) to ensure
there is specific focus on risk review and risk management.
The purpose of the Governance Committee is to function as a
sub-committee of the Operations Board focused on Corporate
Governance responsibilities and risk management.
The Group’s risk and compliance function was expanded
during the year. For each risk identified, the control strategy
and who is accountable for discharging that strategy is
identified and documented in the meeting minutes. During
monthly Operations Board meetings, material emerging risks
are reviewed with discussion concerning actions to reduce or
monitor Group exposure. In this way, risks are reviewed and
updated monthly.
The Governance Committee is a sub-committee of the
Operations Board that takes the lead responsibility of
monitoring and assessing risks across the Group. The
Committee usually meets monthly and comprises the
Chief People Officer, the Chief Legal Officer and the Chief
Information Officer, the Head of Risk and Compliance is the
secretary to this committee and attends all meetings. During
the year ended 30 June 2022, as was the case during the
previous two financial years, the Governance Committee, had
the responsibility of being the COVID-19 response Committee.
The Group also has two further committees that report into
the Governance Committee; the Security Council and the
Health & Safety Committee. The Security Council is chaired
by the Chief Information Officer and its purpose is to assess
current technology risks, approval and implementation of
mitigation plans and to inform the Chief Information Officer
of future strategy around this key business area. The Health
& Safety Committee, chaired by the Chief People Officer,
monitors The Craneware Group’s compliance with health and
safety regulations and develops and monitors the Group’s
health and safety policies and strategy. The Committee aims
to ensure there is a co-ordinated, compliant approach across
all Craneware locations to health and safety matters.
The Corporate Governance Report on pages 60 to 74 includes
an overview of the Group’s internal control systems.
We will continue to enhance our risk management processes,
prioritising specific areas of focus, including: cyber security
15
Craneware plc Annual Report 2022 Strategic Report:
Principal Risks and Uncertainties [Cont'd]
Risk Management [Cont'd]
risks and operational resilience, as well as being alert to the
identification of emerging risks.
Risk Appetite
Risk appetite is not static and is regularly assessed by the
Board to ensure it continues to be aligned with the Group’s
strategy. The Group’s risk appetite defines the level and
type of risk the Group is able and willing to accept in order
to achieve its strategic aims. The Group’s risk appetite
influences the Group’s culture and operating decisions, and
is reflected in the way risk is managed. The Board aims to
ensure that the Group is only exposed to appropriate risks
which are managed effectively in accordance with the Group’s
tolerance to risk.
The Group assesses, scores, ranks and then manages
individual risks. For each identified risk it is characterised,
estimated how often the specified events could occur and a
judgement is made regarding the magnitude of their likely
consequences. For each identified risk, the risk management
priorities are decided by evaluating and comparing the level
of risk. This allows each risk to be quantified as to the:
• effect of the risk and its impact;
likelihood of the risk occurring;
•
consideration of any advantage associated with
•
the risk;
• action to avoid or mitigate the risk;
• action to take if the risk occurs.
Principal Risks and Uncertainties
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. For each risk an indication is also
provided for the estimated trend in the risk exposure being
increased, decreased or relatively unchanged compared to
the prior year.
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 60 to 74.
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. Throughout the pandemic our customers were
on the front-line and whilst this year saw the easing of direct
impacts of the pandemic, this has not relieved the pressure
on all healthcare providers world-wide. Our customers
continue to take steps to create further resilience across their
financial operations. We are committed to partnering with our
customers by providing the platform, regulatory information
and data to enable them to do so. 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 employees, alongside
responsiveness to changes and the opportunities that result,
as they arise.
COVID-19
The Strategic Report on pages 7 to 12 acknowledges the
impact COVID-19 has on our customers and their operations.
It also explains the financial and operational impact on
Craneware. Whilst as a business Craneware continues to be
relatively insulated from the direct impacts of the pandemic,
our customers are on the front-line and, although this year
saw the easing of critical health risks of the pandemic, this
has not relieved the pressure on healthcare providers. We
have continued to support our US hospital customers to
assist them, where we can, with their challenges and adding
value by ensuring they can maximise their reimbursements,
optimise 340B program benefits to covered entity customers
and their communities and maintain their financial stability.
This in turn gives them the ability to better serve their
communities.
The impacts of the pandemic have highlighted the
importance of robust internal controls and risk management
systems to ensure that the Group remains resilient in the face
of change, while remaining operationally agile and adaptable.
The Governance Committee continued to have responsibility
for being the COVID-19 response Committee throughout the
financial year ended 30 June 2022, with the remit to enlist
the assistance of colleagues with specific industry knowledge
and expertise to assist the ongoing task of monitoring and
information sharing to both employees and customers in the
UK and in the US. This included, during the year ended 30
June 2022, the oversight of the arrangements for re-opening
the Group’s offices following the easing of public health
restrictions in each location.
Since mid-March 2020 until part way through the year ended
30 June 2022, all of Craneware’s office-based employees
were working remotely from home in line with Government
guidelines. This approach was driven by the desire to protect
and safeguard the well-being and health of our team and
allowing the continued support to our customers as they
faced the challenge of dealing with COVID-19 patients in their
hospitals.
The COVID-19 response committee facilitated regular update
calls to inform all employees of the changes in legislation in
16
Craneware plc Annual Report 2022 Principal Risks and Uncertainties {Cont'd]
Climate Change
Strategic Report:
Principal Risks and Uncertainties [Cont'd]
The Group is aware that, for all businesses, the profile and
therefore impact of climate-related risks are likely to change
not just in terms of physical impacts but also as a result
of evolving government policy to enable transition to low
carbon economies. Climate change has both immediate
effects and progressive, long-term effects on the risk profile
of all businesses. In the short-term there is an increasing
frequency of extreme weather events (wind/rain/flood); this
may lead to significant changes in certain costs, including
but not limited to taxation e.g. on emissions. In addition to
any physical impacts, Governments may seek to introduce
new regulations in this area to accelerate the transition to
a low carbon economy. The profile and therefore impact of
climate-related risks are set to alter as government policy
evolves through the transition to a low carbon economy. The
actions required to reduce carbon usage and to mitigate the
impacts of climate change may be wide-ranging, resulting in
an increase in operational costs or capital expenditure.
The nature of Craneware’s operations, i.e. not manufacturing
or transporting goods, means its environmental impact is
relatively low compared with other sectors and our overall
risk from climate change is assessed as low. However,
all businesses, including Craneware, must recognise the
importance of responding appropriately and reducing their
contribution to global climate change. Also, as the size of the
Group grows, we are conscious of the impact our operations
may increasingly have on the environment. Craneware aims
to manage its environmental impacts responsibly and this
is further outlined within the Environmental, Social and
Governance Statement on pages 39 to 49.
In regard to specific risks to Craneware; existing resilience
plans include mitigation strategies for extreme weather
events; energy costs are a relatively small proportion of
its costs and likely regulatory interventions are seen as
manageable; and COVID-19 has clearly demonstrated our
ability to work together using video conferencing, thereby
reducing our travel requirements. The Group also remains
cognisant of the significant reputational risk if it does not
continue to respond appropriately to global climate change.
both jurisdictions and any policy changes being implemented
by Craneware. These sessions were informative and also
provided time for questions and answers to allow any
concerns and queries to be addressed. All new updates were
conducted as and when significant changes occurred during
the period. A dedicated section on the Group’s intranet
continues to be maintained with up to date information
including related policies and the arrangements for the
Dynamic Working Framework which was rolled out during the
year ended 30 June 2022.
Operational efforts were designed with employee safety as a
priority. While all office-based employees worked from home
from mid-March 2020 until the latter part of the year ended
30 June 2022, various programmes were provided to ensure
their safety and wellbeing, including an increased emphasis
on mental health awareness and the training of mental
health first aiders within the organisation. These programmes
continued throughout the year and are ongoing. Employees
were further supported through the period when public
health restrictions required all office-based employees to
work from home with the ability to work reduced hours to fit
in with their personal circumstances.
With the easing of COVID-19 pandemic restrictions in the
latter part of the year, The Craneware Group introduced a
Dynamic Working Framework which aims to enable flexibility
in working arrangements for our employees and to create
a balance between work and life demands. Our Dynamic
Working Framework enables all office-based employees to
work flexibly between their home and the office in agreement
with their manager and in line with business needs. Further
details regarding the Dynamic Working Framework are
contained in the Stakeholder Engagement section and in
the Environmental, Social and Governance Statement in this
annual report.
Ukraine conflict
Craneware does not have any operations or customers
in Ukraine or in Russia or in bordering countries and the
Board considers that the risk of direct operational issues for
Craneware, as a result of this situation, is therefore relatively
low based on current knowledge. This situation is, however,
having geopolitical and macro-economic adverse impacts,
and uncertainty and instability in the UK and in the US where
Craneware operates. The Board will keep this situation under
review, including the following risks: increasing cyber threat;
escalating energy and fuel costs will increase Craneware’s
costs to power its offices and operations and travel costs; a
period of high inflation and longer-term economic downturn
may have a detrimental impact on the financial performance
of The Craneware Group.
17
Craneware plc Annual Report 2022 Strategic Report:
Principal Risks and Uncertainties [Cont'd]
Principal Risks and Uncertainties [Cont'd]
Data & Cyber Security
Trend since last year: Increased
Issue: Security of customer, commercial, and personal data poses increasing risks to all businesses, especially against a backdrop of
increasingly complex regulatory environments and safeguards over personal and patient data. The continually increasing instances
and variety of cyber and data-related threats presents a significant challenge in terms of securing data and systems against attack.
With the acquisition of Sentry came a significant increase in the amount of Protected Health Information being processed by the
Group. Craneware continues to strengthen its cyber security and information safeguarding capabilities, however it is recognised that
the global threat of cyber-attack is increasing along with a larger target area in the Group.
The Craneware Group’s utmost priority is the reliable protection of customer data. If our systems become compromised, this may
result in the loss of sensitive data and / or the interruption of services for our customers.
It is important to continually reinforce the level of awareness of these risks across all personnel within the Group. While it’s important
to have up to date policies and procedures in place, human error and increasing sophistication of the potential attackers will always
pose a risk to organisations.
Mitigating Actions: Security of our systems and data is critical to our business and we strive for strong, effective and comprehensive
security and governance aligned to the nature of the data the Group is handling and relevant and evolving regulations. Our systems
are monitored and actively managed to mitigate and address any threats. Whilst it is impossible 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 strict physical and data security systems and protocols with multiple layers of defences, 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 has a Security Council, chaired by the Chief Information Officer, which assesses current technology risks, approval and
implementation of mitigation plans as well as to inform the Chief Information Officer of future strategy around this key business area.
The Group has a dedicated Information Security team to focus efforts on security across the business.
The Group also recognises and supports (including through ongoing employee training and applicable policies and procedures) a
sustained evolution of culture within the organisation that embeds security across the business. Along that vein, as many studies
suggest that employees and contractors are the most common cause of data breaches, with phishing attacks being the predominant
cause, the Group requires mandatory data security training to be completed by all employees on at least an annual basis and when
employees join the Group. There is ongoing development and investment in additional training. The effectiveness of this training is
regularly tested and, where any shortcomings are identified, employees are required to reperform and supplement their mandatory
training.
In view of the importance of the procedures, security, regulation and controls around Craneware’s solutions and customer data,
Craneware met the requirements for and was awarded the HITRUST CSF certification for its Trisus and InSight solutions. Health
Information Trust Alliance (‘HITRUST’ Alliance) is a collaboration with healthcare, technology and information security organisations
which develops, maintains and provides broad access to its widely adopted common risk and compliance management and de-
identification frameworks; related assessment and assurance methodologies; and initiatives advancing cyber sharing, analysis and
resilience.
HITRUST has established a ‘common security framework’ (CSF) to address the multitude of security, privacy and regulatory challenges
facing organisations. The scope of the HITRUST CSF’s requirements is wide and requires a very high standard of data security
arrangements as these have been set in the context of the accreditation being relevant to US healthcare providers with handling
sensitive data (Protected Health Information) and impacts in some way all areas of the business (at least in respect of the required
enhancement to the Group-wide IT and data security policies). This serves to inform IT Security roadmaps and significant investments
with continued compliance being an ongoing a focus. Adherence to HITRUST security requirements go beyond basic government
regulations.
Sentinel, Sentrex, and DataNext applications meet American Institute of Certified Public Accountants (AICPA) Service Organization
Controls (SOC) requirements, completing the SOC1 and SOC2 Type II audits annually.
We reconfirm our audit certifications on an annual basis, and regularly evaluate to ensure our certification selections continue to be the
best measure of security controls.
Further details regarding the Group’s information security arrangements are contained in the Environmental, Social and Governance
Statement in this annual report.
18
Craneware plc Annual Report 2022 Strategic Report:
Principal Risks and Uncertainties [Cont'd]
Principal Risks and Uncertainties [Cont'd]
Data Protection
Trend since last year: Increased
Issue: The Group maintains a large amount of customer data and also holds and processes employee data, which is protected and
subject to legislative requirements in multiple jurisdictions. We have an obligation to protect the data we hold, whether it is customer
or employee data. Loss and/or misuse of this data could result in a loss of reputation, and regulatory sanctions or fines.
The protection of customer data, which includes Protected Health Information, falls under the provision of the Health Insurance
Portability and Accountability Act (HIPAA) and the Health Information Technology for Economic and Clinical Health (‘HITECH’) Act.
Any data breach must be reported and, depending on the size of the breach, it may be made public which could damage the Group’s
reputation.
In addition to the regulations for protection of Protected Health Information and also General Data Protection Regulation (GDPR)
compliance, over the past few years States across the US have been negotiating and passing data privacy legislation. As legislation is
occurring at the State level, there are now a considerable number of variations on data privacy to be addressed, increasing the
complexity of compliance and therefore resulting in a higher possibility of non-compliance.
Mitigating Actions: The ‘Mitigating Actions’ described above for Data and Cyber Security risks are relevant for Data Protection risks
too.
The Craneware Group maintains a detailed Information Security Program, which aligns with applicable laws and regulations. This
program governs how The Craneware Group employees and applications interact with sensitive, protected customer data. All
employees and contractors are required to undertake regular mandatory training in key topics.
The Chief Legal Officer is certified in privacy law in the US and the UK. We continue to ensure we address current and evolving
regulations.
The ‘Data and Cyber Security’ section above contains details regarding the HITRUST CSF certification for Trisus and InSight solutions
and also AICPA SOC1 and SOC2 Type II certification in place for Sentinel, Sentrex, and DataNext applications. HITRUST is expanding
their security and data privacy controls to cover key legislation.
Intellectual Property Risk
Trend since last year: No Change
Issue: The Group’s intellectual property is centred around the software solutions and services it develops for customers. Failure to
protect, register and enforce (if appropriate) the Group’s Intellectual Property Rights could materially impact the Group’s future
performance. The use of third party contractors within the Group’s software development organisation as well as increasing numbers
of customers using outsourced partners to operate parts of their finance departments, results in a larger number of third parties
having access to the Group’s Intellectual Property.
Mitigating Actions: The Group will continue to register its trademarks and protect access to its confidential information, as
appropriate. The Group continues to include appropriate legal protections in its contractual relations with customers, suppliers, and
employees. There are developed processes and procedures for the management and control of contractors as well as their access to
information. 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.
19
Craneware plc Annual Report 2022 Strategic Report:
Principal Risks and Uncertainties [Cont'd]
Principal Risks and Uncertainties [Cont'd]
US Healthcare: Complexity, Evolution and Reform
Trend since last year: Increased
Issue: The US healthcare industry, already a complex and highly regulated environment, 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.
Mitigating 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, across revenue cycle and 340B program
aspects, 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 and speaking engagements by senior management at healthcare forums and industry education events; and
customer forums.
The Group’s Value Cycle strategy, delivering revenue integrity visibility and optimisation as well as 340B program management,
together with the ongoing expansion of the Trisus platform strengthens our position as a trusted financial performance partner to
hospitals. In addition, the Group continues to innovate and develop further new products to meet evolving market needs, such as
the ongoing development of the Group’s new products in the medication area. Our focus on the core themes for data gathering,
regardless of reimbursement model, enables Craneware to be flexible in assisting hospitals to run more efficiently and adapt to
evolving models.
These strategies, in addition to the customer engagement activities outlined on pages 33 and 34, keep the Group at the forefront of
industry developments.
The reimbursement environment is constantly evolving. While the threat exists and ongoing changes continue to occur, the situation
has been ongoing for some time. Healthcare reform is a point of political focus and fluctuation; reform measures occur in varying
directions depending on the political party in power and their success in passing new legislation while in power.
Regulatory Environment
Trend since last year: Increased
Issue: The Group operates in an increasingly complex and heavily regulated market environment at both the federal and state levels.
This includes very specific requirements and policies in dealing with, for example, data privacy, security, labour / employment,
anti-kickback statutes, compliance with and operation of the 340B program. This risk is also driven by new state-level data privacy
legislation which is coming into play on a rolling basis across the US, in addition to existing 340B and GDPR and HIPAA regulations.
The US regulatory environment is driven by three areas of government focus that includes Congressional actions (federal and state),
Judicial decisions, and Administration actions. When there is uncertainty in regulatory oversight or a desire for change in policy, it
drives either judicial or congressional engagement or the opportunity for constituents to provide comments to the Administration.
In the case of healthcare, there is a current drive to lower drug pricing, create transparency, and reduce the total cost of care.
An increasing number of drug manufacturers (18) have been excluding their products from 340B contract pharmacies or placing
further data requirements on covered entities in order to alleviate these exclusions. These exclusions are reducing covered entities’
340B benefits and, as a result, potentially curtailing their ability to provide services in their underserved communities. These
restrictions and their implications have led to litigation (which is ongoing) both on and from the manufacturers with the federal
government agency Health Resources and Services Administration (HRSA). The outcome of these actions or any legislation to limit
the scope and benefit of 340B could result in a fundamental change (reduction) in potential revenue.
Additionally, we continue to monitor the annual changes to the hospital outpatient prospective payment system (OPPS) that is
administered by the Centers for Medicare and Medicaid Services (CMS) and any regulatory changes that can impact healthcare
reimbursement and payer strategies.
The Group operates in both the UK and the US and is therefore exposed to the changes in the political and economic environments
of both jurisdictions.
Mitigating Actions: The Group has a Governance Committee, comprised of the Chief Information Officer, Chief People Officer, Chief
Financial Officer, and the Chief Legal Officer to oversee activities and concerns pertaining to the strict regulatory environment.
All employees and contractors are required to undertake regular mandatory training in key topics. In addition to utilising external
experts in the relevant areas, senior management regularly attend educational events and forums to keep up to date with evolving
regulations.
Legislative changes are occurring on a regular basis. The Governance Committee, which is made up of senior management from both
countries, oversee activities and concerns pertaining to the strict regulatory environment.
20
Craneware plc Annual Report 2022 Strategic Report:
Principal Risks and Uncertainties [Cont'd]
Principal Risks and Uncertainties [Cont'd]
Complex Market Dynamics
Trend since last year: Increased
Issue: The global economic environment continues to be uncertain. Factors such as the post-COVID-19 environment, staffing
shortages, inflation, Russia’s invasion of Ukraine and supply chain issues, along with increased legislation around healthcare and
healthcare reform in the US require healthcare organisations to continuously shift in response to the changing environment.
While the critical health risks of the pandemic have subsided, the pressure on healthcare providers continues and the drive for
increased value from healthcare spend and the shift towards consumerisation (as evidenced by the recent CMS Pricing Transparency
Final Rule legislation) remains.
Consolidations and the scrutiny around some of those mergers among healthcare providers have increased. Continued consolidation
around technology service providers has accelerated. 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.
Mitigating Actions: Healthcare economies are increasingly challenged in terms of cost relative to outcomes. Providers need to adjust
to achieve margins that allow them to re-invest in clinical care. The continued move to value-based care is consistent with The
Craneware Group’s Value Cycle strategy and the ongoing expansion of the Trisus Platform.
The Group continues to innovate and develop further new products to meet market needs. The acquisition of Sentry provides The
Craneware Group with a significant product portfolio within the 340B space.
The Group has taken steps to ensure it stays at the forefront of how the healthcare organisations are interpreting current proposals
and the actions they are taking, including continually adding to and developing industry expertise at all levels of management
including the Board of Directors.
Competitive Landscape
Trend since last year: No change
Issue: New entrants to the market or increased competition from existing competitors and those with vertical growth strategies
could significantly impact the Group’s market opportunity.
Mitigating 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 that exists within its products. The Group continues to expand and develop its product portfolio and to ensure its products
are platform agnostic and actively seeks partnerships with other healthcare IT vendors. The Trisus platform continues to evolve and
expand, with new modules being released and a growing customer base. Our longer-term contracts help limit any unexpected
customer departures. We also monitor customer satisfaction to ensure delivery of services meets customer expectations.
The successful completion of the acquisition of Sentry in July 2021 considerably expanded the Group’s customer base, data sets,
product offering and market presence.
The Group’s combined suite of applications and industry-leading team of experts help our customers contextualise operational,
financial and clinical data, providing valuable insights and best practice. These value cycle insights deliver revenue integrity and 340B
compliance, as well as margin and operational intelligence – something no other single partner can provide.
Management of Growth
Trend since last year: Increased
Issue: Significant growth, both organically and through acquisition, can place strain on the current management bandwidth and
other resources across the Group. There is a risk that significant reliance can be placed on a few members of the senior management
team, the retention of which cannot be guaranteed. If the correct level of investment in people and technology is not maintained it is
possible that the quality of the Group’s service offering could drop and/ or cost control and operational effectiveness will deteriorate.
The integration of Sentry, following its acquisition in July 2021, required Board level focus and detailed operational planning to
address the increased risk resulting from acquiring an organisation similar in size to the Group at the time of the acquisition.
21
Craneware plc Annual Report 2022 Strategic Report:
Principal Risks and Uncertainties [Cont'd]
Principal Risks and Uncertainties [Cont'd]
Management of Growth [Cont'd]
Trend since last year: Increased
Mitigating Actions: Organisational development and design, including Lean initiatives, and aligning the corporate infrastructures
are helping drive accountability to the most appropriate levels.
Management bandwidth continues to be built at all senior levels of the organisation, this has included the formation of the
Transformation Office which is led by a new member of the Operations Board. The addition of the Transformation Office will support
future significant initiatives as the Group grows and evolves. The Operations Board has also benefitted during the year from the
addition of the Chief Customer Officer.
Ongoing leadership development programs ensure that the next generation of Craneware leadership is equipped to manage the
growth of the organisation.
The Group has a programme of continual investment in all aspects of the business including: operational, financial and management
controls, procedures and training programmes. This is constantly reviewed and monitored to ensure that the Group can continue to
maintain the high standards of customer service and product development activities.
Acquisition Risk
Trend since last year: No change
Issue: The Group has a stated acquisition strategy, as explained within the Operational Review and Financial Review section of the
Strategic Report. Any acquisition carries with it an inherent risk, including failure to identify material matters that could adversely
affect future Group performance and failure to effectively integrate an acquired business in order to realise the anticipated benefits
(including strategic goals, synergies and cost savings).
Mitigating Actions: The Group and Board members individually have relevant experience in regard to completing acquisitions and
this experience has been added to in recent years through key appointments to the Operations Board. The Craneware Group
continues to mature and has both wider management bandwidth and more experience to manage and integrate an acquisition. 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 integration of the Sentry business, following its acquisition
by Craneware in July 2021, was managed on a phased basis, using established change management controls and strong leadership
support across the organisation. Experience gained from that integration process will assist with the management of the integration
of any future acquisitions.
Macro-economic Environment
Trend since last year: Increased
Issue: The Group has significant operations in both the UK and the US and is therefore exposed to the changes in the political and
economic environments of both as well as relevant aspects of the global environment. The current macro-economic environment has
several compounding influences which are resulting in headwinds and challenges for many businesses globally. These factors include
(but are not limited to): government spending during COVID-19 pandemic and recovery measures as public health restrictions have
eased; escalation of energy prices; increase in interest rates; rise in food and commodity prices; resulting cost of living increases and
salary inflation pressures; increased employee attrition globally; supply chain issues; instability and uncertainties caused by the
Russia / Ukraine conflict. The compounding influences of these factors are setting the stage for significant inflation over a currently
unknown timeframe. The US and UK, where the Group operates, have already experienced inflation of several percentage points
within a relatively short period. The worsening of economic conditions could lead to further cost inflation and reduced healthcare
budgets which could impact demand for the Group’s solutions and services.
The COVID-19 pandemic and its aftereffects continue to create uncertainty and sets a challenging economic environment within
which the business operates. The Group’s operations were, until July 2021, evenly balanced between the UK and the US, contributing
positively to both economies. Since the completion of the acquisition of Sentry in July 2021, the Group has a larger presence in the
US.
Employee retention is an increasing challenge to all businesses. This issue is compounded by the ability to attract talent with specific
skillsets and experience. Globally there is a restricted supply of qualified personnel within the technology sector. There are also
associated costs of recruitment, onboarding and training. The potential impact is that we will have a gap in the required resources
needed to deliver on our short-term strategic goals. Falling short of these will impact customer contracts and revenue. High levels of
attrition can have a negative impact on the performance of the business, on customer service and on organisational culture.
22
Craneware plc Annual Report 2022 Strategic Report:
Principal Risks and Uncertainties [Cont'd]
Principal Risks and Uncertainties [Cont'd]
Macro-economic Environment [Cont'd]
Trend since last year: Increased
Mitigating Actions: Macro-economic risks are outside the Group’s control, but the Group will continue to focus on ensuring it has
effective measures in place to identify and react quickly to changes in macro-economic conditions, including robust planning,
forecasting and resource allocation procedures. The Group’s current financial position includes a strong balance sheet and cash
generation. There is regular monitoring of economic trends, review of financial forecasts and scenarios and tracking contract prices.
This supports regular forecast updates that allow the Board to monitor the performance of the Group on a timely basis and respond
accordingly. The Group has experienced Board members and senior management in both the UK and in the US.
There is close monitoring of the inflationary environment and the impact of inflationary increases is being assessed by financial
modelling. Our long term contracts with customers often contain annual increases which provide an element of annual increased
revenue to offset increasing costs.
With operations across both the UK and the US, we are able to recruit from talent pools in both geographies. We continue to develop
and enhance our employee value proposition, specifically the balance between investing in reward and other factors which are
important to our employees such as learning and development, employee engagement initiatives and the launch during the year of
the Dynamic Working Framework. These are outlined in the Stakeholder Engagement Statement on pages 30 to 33 and in the
Environmental, Social and Governance Statement. We conduct monitoring of salary and total compensation structures compared to
benchmarks. Regular reviews are performed and benchmark data obtained to understand and manage salary trends. Further
monitoring of attrition rates and exit interviews provide insight into the impact on the Group and help to direct actions.
Compliance with debt finance facility covenants
New Risk
Issue: As part of the funding for the acquisition of Sentry, which completed on 12 July 2021, the Group entered into debt facility
arrangements which provide up to $140m of secured funding. This secured committed debt facility, comprising a term loan and a
revolving loan facility, was in place at 30 June 2021 although there was no drawdown on this facility until July 2021 when $120m was
drawn down. Details of these borrowings are provided in Note 22 to the financial statements. This is the first time the Group has
drawn down borrowings since the Company’s initial public offering in 2007. The loan agreements require specific bank covenants
and quarterly reporting to ensure compliance with the conditions of the loan facilities. If the covenants were breached, the lenders
could take action against the Group. This could include the lenders using their security over the Group’s assets to repay the
outstanding debt, thus adversely impacting shareholders.
It is necessary that the borrowings are appropriately managed to ensure the Group continues meet all obligations as they fall due, to
ensure the Group has sufficient headroom to execute on our strategy and to deliver returns for our shareholders.
Mitigating Actions: There is regular monitoring of financial information across the organisation, including monitoring of compliance
with the loan covenants. The forecasting process enables evaluation of projected financial information against the bank covenant
requirements and this is kept under review.
The Group benefits from high levels of recurring revenues leading to strong cash generation which is improving levels of headroom
against the borrowing facilities and reducing leverage. The Group’s loan facility is provided by a broad and supportive banking
syndicate and the business is operating well within the loan covenants. The loan facility has been drawn down to the extent of
$120m of which $112m was outstanding at 30 June 2022 comprising a $32m term loan and a $80m revolving loan facility. These
facilities were originally due to expire on 30 June 2026 and on 7 June 2024 respectively.
We retain regular and detailed dialogue with our lenders. During the year ended 30 June 2022, we have completed an extension of
our banking facilities, as described on page 11. In the second half of the financial year ended 30 June 2022, we undertook
engagement with our lenders to agree the expected extension to the duration of the term loan and revolving loan facility. Based on
the relationships we have developed and regular engagement, each of the banks were supportive and agreed the requested
extension of the facilities. This demonstrates the positive support we continue to receive from our banking partners.
23
Craneware plc Annual Report 2022 of the scenarios considered by the Directors in making this
assessment, including a scenario which envisages no revenue
growth and a reduction in revenues during the assessment
period. The Directors confirm that they have a reasonable
expectation that the Group will be able to withstand the
impact of this severe adverse scenario, should this occur
during the three-year assessment period.
The Directors have therefore considered, in making this
assessment, the Group’s current financial position and future
prospects and have a reasonable expectation that the Group
will be able to continue in operation and meet its liabilities as
they fall due over the three-year period from 30 June 2022.
However, future assessments of the Group’s prospects are
naturally subject to uncertainty that increases with time and
therefore future performance cannot be guaranteed.
Strategic Report:
Principal Risks and Uncertainties [Cont'd]
Emerging Risks
Emerging risks are newly developing risks that cannot yet be
fully assessed but that could, in the future, affect the viability
of our strategy. In addition to known risks, we are consistently
reviewing and re-assessing other emerging risks and the need
for mitigation, as well as reporting to the Board, as part of our
existing risk management processes. These processes include
the identification of relevant internal and external factors
and are designed to capture those emerging risks which are
current and those that will impact future periods.
Viability Statement
In accordance with the UK Corporate Governance Code, the
Directors have considered the viability of the Group over the
three-year period from 30 June 2022.
Considerations that impact this assessment include the
Group’s current financial position, including the addition
of the bank facility and other available financial resources,
the Group’s SaaS business model as outlined within the
Strategic Report, the Group’s strategic initiatives, the financial
forecasts, the Group’s cost base and annual forecast.
In the current year this assessment has also included
consideration of the continuing impact of COVID-19 and the
current macro-economic climate on viability.
COVID-19 continues to affect our customers, primarily
through impacts to the hospital workforce and operations.
This inevitably has an impact to Craneware including our
ability to deliver professional services, a lengthening of sales
cycles, as well as the slowing of cash collection from certain
individual customers.
With regard to the current economic climate, significant
increases in inflation and interest rates have been modelled
as part of this assessment for their impact on the Group’s cost
base.
In addition, the Directors assessed the current banking
facilities and the Group’s ability to satisfy the terms and
covenants of the loan agreements, effective from July 2022.
The Directors also considered several other factors
including the Group’s risk management and internal control
effectiveness and the principal risks and uncertainties
and their likelihood of occurrence within the period of
assessment.
The Directors consider that three years is an appropriate
period for this assessment as it corresponds with the outlook
used internally and for strategic planning.
The SaaS business model with its underlying long-term
contracts (as described earlier in the Strategic Report), high
levels of associated cash generation and long-term focus on
customer success provides a foundation of revenue for future
years. This foundation of contracted revenue forms the basis
24
Craneware plc Annual Report 2022 Strategic Report:
Section 172 (1) Statement
This section of the Strategic Report intends to set out how the Directors, both individually and collectively, have had regard to
the following factors when undertaking their duties during the year ended 30 June 2022.
In accordance with the Companies Act 2006, each director of a company has a duty to promote the success of the company.
Section 172(1)(a) to (f) of the Companies Act 2006 (‘s172 (1)’) requires a director of a company to act in the way he/she
considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a
whole and, in doing so have regard (amongst other matters) to:
a.
b.
c.
d.
e.
f.
the likely consequences of any decision in the long-term;
the interests of the company’s employees;
the need to foster the company’s business relationships with suppliers, customers and others;
the impact of the company’s operations on the community and the environment;
the desirability of the company maintaining a reputation for high standards of business conduct; and
the need to act fairly as between members of the company.
The Directors consider, both individually and collectively, that they have taken these factors into account when exercising their
duty to promote the success of the Group and of the Company during the year. In addition, more information is provided in this
annual report relating to matters relevant to the Section 172 (1) statement in the following pages:
Section 172 (1) Factor
Examples
Further information on page(s)
Likely consequences of any decision in the
long term
Interests of the Company’s employees
Fostering business relationships with suppliers,
customers and others
Impact of operations on the community and the
environment
Maintaining a reputation for high standards of
business conduct
Acting fairly as between members of the company
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Craneware’s aim, driven by its purpose, of
generating long term value for its
stakeholders through its business model and
strategy
Viability Statement
Principal Risks and Uncertainties
Employee engagement and communication
Integration of Sentry, following completion
of the acquisition at the start of the financial
year
Dynamic Working Framework
Employee wellness programmes
Craneware Spaces
Enhancement of employee learning and
development initiatives
Employee share plan awards granted to all
employees in November 2021
Stakeholder engagement activities
Consideration of Environmental, Social and
Governance matters
The purpose of The Craneware Group
Craneware Cares initiatives
Consideration of Environmental, Social and
Governance matters
The promotion of responsible business
operations underpinned by Craneware’s
Framework, purpose and values
Corporate Governance
Policies and mandatory all employee
awareness training including: business
ethics, information security, whistleblowing,
anti-bribery and corruption, anti-slavery and
human trafficking
Shareholder engagement
Corporate Governance
7 to 24
27 and 28;
30 to 33;
41 to 45
33 and 34;
36 to 41
36 to 38;
39 to 41;
45 to 47
32, 39 to 49;
57 and 58;
60 to 74
35 and 36;
60 to 74
25
Craneware plc Annual Report 2022 Strategic Report:
Section 172 (1) Statement [Cont'd]
The sections referred to in the table above have been incorporated, by reference, into this Section 172 (1) Statement.
In discharging their Section 172 (1) duty, the Directors have regard for these factors and take them into consideration when
making decisions. Induction materials and briefings provided on appointment include an explanation of Directors’ duties, and
the Board is regularly reminded of their duties. Stakeholder considerations and our culture play an important part in the Board’s
discussions and decision making in promoting the long-term success of the Company, as outlined in this statement.
Based on the purpose and business model of The Craneware Group and as set out in our Stakeholder Engagement and in our
Environmental, Social and Governance Statement on pages 30 to 49, the Board identifies our Group’s key stakeholders as:
• Our customers
• Our employees
• Our shareholders
• Our banks and finance providers
• Our community
and it is committed to effective engagement with these stakeholders. Details of the Group’s key stakeholders and how we
engage with them are set out on pages 30 to 38.
Our key stakeholders have an important role to play in the successful operation of our business and our Directors are fully
aware of their responsibilities to the Group’s stakeholders under Section 172 (1) and take their responsibilities seriously. The
Directors have oversight of stakeholder matters and the Board factors the needs and concerns of the Group’s stakeholders into
its discussions and decisions in accordance with Section 172 (1).
These responsibilities are embedded in our culture, our values and our purpose. Our purpose, business model, strategy and
Board operations are focused on delivering long-term benefits for all of our stakeholders while maintaining a high standard
of ethical business conduct. The Board, led by the Chair, ensures that its processes have regard for key stakeholders and that
there is sufficient time, information and understanding to properly take into account their interests when making decisions
and considering their long-term implications. The Board does also rely on its committees and senior management to develop
relationships and to share the views of the relevant stakeholders.
The Board recognises that every decision it makes will not always result in a positive outcome for each of the Group’s
stakeholders, but it is important to ensure they are all treated consistently and fairly. By considering the Group’s purpose and
values, together with its strategic priorities and having a process in place for decision-making the Board does, however, aim to
make sure that its decisions are consistent and aligned. By understanding our stakeholders, the Directors can factor into Board
discussions the potential impact of decisions on relevant stakeholder groups and consider stakeholder needs and concerns, in
accordance with section 172 (1) of the Companies Act 2006.
26
Craneware plc Annual Report 2022 Strategic Report:
Section 172 (1) Statement [Cont'd]
The following table summarises some of the significant decisions made by the Board during the year ended 30 June 2022 which
demonstrate the way in which the Board has exercised their section 172 (1) duty and the stakeholder group(s) impacted by
these decisions.
Principal decisions /
events
Actions
and impact
Key Stakeholder group(s)
affected
Integration of Sentry The acquisition of SDS Holdco, Inc., the ultimate holding company of
Employees
Sentry completed on 12 July 2021. The successful conclusion of the
acquisition of Sentry marked a transformational point in Craneware’s
journey, considerably expanding our customer base, data sets, product
offering and market presence.
Customers
Shareholders
Suppliers
Employee engagement has been a high priority as we brought the
organisations and our employees together to create The Craneware
Group during the year ended 30 June 2022. This successful integration
was based on a structured implementation plan, driven, in part,
through our employee engagement mechanisms.
The engagement mechanisms for employees were adapted during the
year as part of the integration process, including the establishment of
an Advocacy Group, comprised of employees from across the enlarged
organisation. The Advocacy Group supported the Integration Steering
Group. Regular updates, regarding the status of the integration process
were provided to all employees during the year. Further details are
provided in the Stakeholder Engagement and in the Environmental,
Social and Governance sections of this Annual Report.
The acquisition has enhanced one of our focus areas – pharmacy
operations within healthcare providers. Pharmacy is the largest cost
area for US hospitals apart from personnel costs and the acquisition
of Sentry extends the intelligence of our Pharmacy product family to
hospital affiliated retail and contract specialty pharmacies. There are
considered to be significant cross-selling opportunities through the
complementary nature of Sentry’s product suite and customer base.
The Craneware Group has already secured cross-sales in each of the
three main categories of cross-sell (being both sales of Sentry and sales
of Craneware products to each other’s historic customer base as well as
expansion sales to historic joint customers).
Our full Pharmacy suite continues to be developed and now benefits
from the addition of the Sentry applications and expertise, with the
Pharmacy teams fully combined they have become our Medication
suite of products.
All of the acquired customers of Sentry are serviced utilising the Oracle
cloud architecture therefore no technical integration is required,
although we will refresh the user interface to create the same look and
feel as the Trisus platform.
The benefits of the Group’s increased scale are evident in greater
operational efficiencies across areas such as supply chain, office space,
product development and a considerably enlarged sales and marketing
team.
27
Craneware plc Annual Report 2022 Key Stakeholder group(s)
affected
Employees
Environment
Shareholders
Banks
Strategic Report:
Section 172 (1) Statement [Cont'd]
Principal decisions
/ events
Actions
and impact
Dynamic Working
Framework
Dividend Policy
(interim dividend
paid and proposed
final dividend for
year ended 30 June
2022)
The Craneware Group introduced a Dynamic Working Framework during
the year ended 30 June 2022 for office-based employees. With the easing
of COVID-19 pandemic restrictions in the latter part of the year, a Dynamic
Working Framework was established which aims to enable flexibility in
working arrangements for our employees and to create a balance between
work and life demands. Our Dynamic Working Framework enables all
office-based employees to work flexibly between their home and the office
in agreement with their manager and in line with business needs. The
introduction of this framework demonstrates a commitment to improving
the working lives and wellbeing of employees.
As explained on page 30 within the Stakeholder Engagement section, the
Dynamic Working Framework has been developed and evolved from
employee feedback and engagement, through the Employee Advisory
Committee and employee engagement surveys, and also from piloting the
Framework first in two of our offices in the US.
The Board considered the current and future liquidity and financial
position of the business and potential impact on dividend policy,
particularly in view of the prevailing macro-economic effects and the
ongoing uncertainties and challenges caused by the COVID-19 pandemic.
Craneware reported positive financial results, in line with expectations, for
the six month period to 31 December 2021 and continued to be cash
generative. The Board approved the payment of an increased interim
dividend in April 2022 of 12.5p (16.88 cents) per share (2021: interim
dividend of 12p per share (16.68 cents)).
Based on the financial position, the net debt and cash generation of the
Group, and the covenants applicable to the debt facility, it is the intention
of the Board to pay a final dividend for the year ended 30 June 2022. As
explained on page 12, the Directors are recommending the payment of a
final dividend of 15.5p (18.80 cents) per share based on the results for the
financial year. Subject to approval at the Annual General Meeting, the final
dividend will be paid on 16 December 2022 to shareholders on the register
as at 25 November 2022.
In reaching these dividend policy decisions, the Board had regard to the
need to act fairly between its shareholders, its banks and finance providers
and the long-term interests of the business.
28
Craneware plc Annual Report 2022 Strategic Report:
Section 172 (1) Statement [Cont'd]
Principal decisions
/ events
Actions
and impact
Key Stakeholder group(s)
affected
Establishment of
Transformation Office
As explained in Interim Report and Financial Statements for the six months
ended 31 December 2021, a new role of Chief Transformation Officer was
formed within the Group’s senior management team and this role serves
on the Operations Board. The Chief Transformation Officer oversees the
continued evolution of The Craneware Group with the Group’s
commitment to a Lean operating model.
Employees
Shareholders
Customers
Suppliers
The Craneware Group has a continuous improvement mindset that
embraces a Lean culture which respects and empowers employees. During
the year ended 30 June 2022, we standardised our operational model to
provide an embedded and consistent platform that underpins our Lean
culture and strategy deployment. To enable this the Transformation Office
was introduced, led by the Chief Transformation Officer.
The Transformation Office is responsible for coordinating and deploying
organisational initiatives and strategy to connect The Craneware Group’s
vision to our day-to-day operations. By applying progressive business
planning and change management techniques, The Craneware Group is
positioned to achieve immediate business targets while implementing
frameworks that foster innovation and provide opportunities to make
rapid and impactful breakthrough change.
Additionally, through the implementation and execution of shared best
practices, the Transformation Office provides the tools and data to support
operational success. This success is achieved by optimising and aligning
the drivers of performance (people, culture, processes, and measures) with
the business strategy in order to deliver maximum value to our customers.
Appointment of Chief
People Officer as an
Executive Director of
the Company
Issy Urquhart, the Group’s Chief People Officer was appointed as an
executive Director of the Company on 27 April 2022. Issy has been central
in the successful integration of the Sentry team into The Craneware Group
and the appointment of a leader with her skillset reflects both the
importance the Board places on creating the right environment for our
people to thrive and the increased scale of The Craneware Group.
Employees
Shareholders
On behalf of the Board
Craig Preston
Chief Financial Officer
19 September 2022
29
Craneware plc Annual Report 2022 Stakeholder Engagement
The Board recognises the importance of balancing the needs of stakeholder groups with the business purpose, values, culture and
strategy.
The Board is responsible for leading stakeholder engagement, ensuring that we fulfil our obligations to those impacted by the business.
We believe that considering our stakeholders in key business decisions is fundamental to our ability to drive value creation over the longer
term. Our key stakeholder groups and how we engage with them are summarised in the tables below.
The views of stakeholders have been considered in the scheduled Board and Operations Board meetings as well as in the context of
principal decisions and events including the integration of the team and the business operations following the completion of the
acquisition of Sentry in July 2021, as outlined in the Section 172 (1) Statement. By understanding our stakeholders, we can factor into
the Board’s discussions the potential impact of our decisions on each key stakeholder group and consider their needs and concerns, in
accordance with section 172 (1) of the Companies Act 2006, as outlined on pages 25 and 26.
Not all information is reported directly to the Board and not all stakeholder engagement takes place directly with the Board. The Board
does also rely on its committees and senior management to develop relationships and to share the views of the relevant stakeholders.
However, the output of this engagement informs business decisions, with an overview of developments and relevant feedback being
reported to the Board. More material matters require the Board’s consideration, with the Board engaging directly with, primarily, our
employees, shareholders and our bank finance providers.
EMPLOYEES
The Craneware Group is dependent on having an engaged team, that is motivated and aligned with the Group’s values and culture:
to support our customers; to achieve our strategic aims; and to strive to progress the Group’s purpose. We recognise the value of our
employees and that the success of the Group is due to their efforts. Employee engagement is based on Craneware’s Framework and
core values of: be authentic; demonstrate integrity; provide excellent service; work hard to the highest quality; and enjoy the
challenge. The team’s commitment to our purpose and values is critical to The Craneware Group’s long term success.
Following the completion of the acquisition of Sentry in July 2021, employee engagement has been a high priority within the
integration process as we brought the organisations, including our employees, together within The Craneware Group during the year
ended 30 June 2022. This successful integration was based on a structured implementation plan, driven, in part, through our
employee engagement mechanisms.
We aim to continue to further enhance employee engagement on an ongoing basis, appropriate to the development of the team
and in response to employee feedback, when this is received, regarding employee engagement mechanisms.
How we engage
Employee Advisory Committee (EAC): We launched our EAC during the year ended 30 June 2020. The EAC comprises a diverse
panel of employees who were selected, based on interested applicants, to represent a cross-section of teams. The mission of the EAC,
is: to enable a high contribution culture where employees feel empowered, valued, achieve personal development and contribute
effectively. The EAC was established with the full support of the Operations Board (which includes the executive Directors and other
members of the senior management team), as a forum through which employees can meaningfully and responsibly participate in an
advisory capacity to the Group. The EAC is not a decision-making body. The EAC provides a platform for information and discussions
about issues that are of interest to employees and provide recommendations back to the Operations Board and, if appropriate, to the
Board of Directors.
Following the acquisition of Sentry, there were two employee bodies in existence within the enlarged Group - the Employee
Advisory Committee and the Employee Advisory Group from Sentry. Both bodies of employees were working on impactful initiatives
and therefore the decision was made to maintain the two groups for a period. Outputs from their efforts informed the integration
initiatives, such as harmonising employee benefits across The Craneware Group.
The Dynamic Working Framework has been developed and evolved from employee feedback and engagement, through the
Employee Advisory Committee and employee engagement surveys, and also from piloting the Framework first in two of our offices
in the US. Further details regarding the Dynamic Working Framework are provided in the Environmental, Social and Governance
(ESG) Statement in this annual report.
Advocacy Group: To complement and bring cohesion to the integration efforts, the Advocacy Group was formed, being a mix of
employees from across the enlarged Group of companies. The Advocacy Group’s remit was to focus on supporting change
management and communication around the integration and particularly on bringing the cultures, values, and guiding principles
together. The Advocacy Group has also supported the social and Craneware Cares teams as employees have got to know each other
across the scaled organisation. A key outcome from the Advocacy Group during the year was the assimilation of the Craneware
Values and the Sentry Guiding Principles which were very similar. After carrying out a cultural crosswalk, The Craneware Group’s
Framework was established encompassing the core values of: be authentic; demonstrate integrity; provide excellent service; work
hard to the highest quality; and enjoy the challenge.
30
Craneware plc Annual Report 2022 Stakeholder Engagement [Cont'd]
EMPLOYEES [Cont'd]
How we engage [Cont'd]
Employee engagement surveys: Following the Sentry acquisition, a different cadence for the employee engagement surveys, to
the quarterly surveys we previously performed, has been adopted. In the first quarter of the year ended 30 June 2022, the Advocacy
Group carried out a cultural cross walk survey. This survey generated inputs and ideas for how the organisation cultures aligned, and
provided valuable input for integrating the businesses, especially with regard to the values. The survey also generated insights into
engagement, particularly in the early integration steps. The survey responses informed action planning around change management
as it helped identify areas where engagement was high and areas of possible risk. From the survey findings integration actions were
either accelerated, decelerated, or alternative courses of action taken.
An engagement pulse survey across The Craneware Group was also conducted which was hosted by an external survey vendor and
gathered anonymised responses. The decision to hold this type of survey, at appropriate points in the fiscal year, was made
recognising the fact that the integration was progressing and it is optimal timing to regularly gather feedback and inputs across
several areas of engagement. There was a positive response rate to this survey. The overall engagement index was slightly lower than
for previous surveys. In view of the recent acquisition and the scope of organisation change that the business and employees had
been absorbing, these slightly lower scores were not surprising. Managers were able to access their own manager dashboard within
the survey tool and create localised action plans to complement and reinforce the Group-wide action plan. Progress against the plan
is communicated regularly through cascades and on the Group’s intranet.
Annual all-employee meeting (plus mid-year update): a key part of this meeting is the explanation and roll out of Group-wide
strategic themes and outcomes, as agreed by the Board, and related operational plans and deliverables (with key performance
indicators) to all employees at the start of the financial year. The teams are then provided with regular updates on these strategic
themes and progress with deliverables during the year both through cascades from the Operations Board as well as on the Group’s
intranet. The format for this meeting for the past two years (and again in July 2022) was a virtual event and positive feedback was
received from employees regarding the format and content of the meeting.
Consistent with the arrangements in the prior year, we also held a mid-year all employee virtual meeting in January 2022. This
provided, amongst other information, an update for employees on progress with the strategic themes and the integration efforts.
All-employee update meetings: on a minimum six monthly basis, usually following the full and half year financial results
announcements, an all employee update meeting is hosted by the CEO and CFO to provide an update to employees on the business.
There is a question and answer section at the end of these meetings which provides the opportunity for employees to ask the CEO
and the CFO questions.
Ongoing communication: An inclusive working environment and a culture of openness are maintained by the regular
dissemination of information. We use the Group-wide intranet as a main point of communication to share information and updates
with employees. The intranet hosts the employee handbook of policies and procedures in addition to employee, company, and
industry news and other departmental and Group-wide information such as employee wellness activities and Craneware Cares
initiatives. The intranet has also played an important role during the COVID-19 pandemic as the host of the COVID-19 Information
Hub (explained further below). The intranet also is a place for employees to recognise their colleagues and peers through a digital
notice board called ‘Cudos, Cheers and Chat’; Cudos being the name of the Recognition Program.
We also use Teams channels to communicate general reminders on a Group-wide basis for topics including Craneware Cares
initiatives, wellness and benefits. A Teams channel was established early in the year to communicate to all employees regular
updates from the Advocacy Group. This Teams channel has transitioned, towards the end of the year, into the ‘Need to Know’ channel
for updates from the Advocacy Group.
Each week a 30 minute Craneware Information Mini Series is held and all employees are invited to attend (the sessions are also
recorded and made available on the Group’s internet in case employees are unable to attend). The presenter and topic change each
week and is a way for employees to understand what other employees and teams are working on across the business.
COVID-19 response and office re-opening arrangements: Appropriate adaptations were made to employee engagement
mechanisms, including employee communications, policies and wellness initiatives, during the year ended 30 June 2020, and
continued through the years ended 30 June 2021 and 2022, with the ongoing changes to working practices required due to the
COVID-19 pandemic. Employees required regular updates on steps being taken, support to understand key policies and procedures
which might be helpful, links to guidance from the government and local authorities, and general wellness support.
Created in 2020 by the COVID-19 Response Committee, the COVID-19 Information Hub on the Group’s intranet continued to provide
a one stop shop for employees to access latest information. In addition, as public health restrictions eased the COVID-19 Information
Hub was updated to include information on the arrangements for office re-openings including the Dynamic Working Framework
(which is described further within the Environmental, Social and Governance (ESG) Statement and in the Section 172 (1) Statement
sections of this annual report).
31
Craneware plc Annual Report 2022 Stakeholder Engagement [Cont'd]
EMPLOYEES [Cont'd]
How we engage [Cont'd]
Framework: The Craneware Group’s Framework has been at the core of the Group since it was first formed. The Framework provides
the organisation with a clear definition of “who we are and how we perform”. It is part of employees’ onboarding when they join the
Group and underlies, and is interlinked to, contribution management. The Framework comprises: Craneware’s characteristics and
values connecting to each competency, articulating the way in which the organisation recognises The Craneware Group Framework
within employee contribution management. As explained within the Advocacy Group section above, during the year the Advocacy
Group worked on the assimilation of the Craneware Values and the Sentry Guiding Principles which were very similar. After carrying
out a cultural crosswalk, The Craneware Group’s Framework was established.
Learning and development: Contribution management is the process whereby employees collaborate with their line manager to
plan, monitor, and review their goals and overall contribution to The Craneware Group. It links the contribution of each individual to
the overall strategic direction of the organisation and provides clarity and transparency around expectations. The process aims to
drive a high contribution culture across the Group with strategy alignment, organisational development, and founded on The
Craneware Group Framework and purpose.
We endeavour to provide an environment and facilities for all employees to develop their skill sets. An overview of the learning and
development programmes, which were enhanced during the year, and our learning management system is provided in the
Environmental, Social and Governance (ESG) Statement in this annual report.
Onboarding: The onboarding of new employees into The Craneware Group is considered key to having employees who are role
ready as soon as possible. We have a comprehensive onboarding programme in place for new members of the team. Part of this
experience is delivered online through the learning management system, which contains all courses required for onboarding new
joiners to the business. In addition, a Welcome Wednesday is facilitated by the Employee Success team to provide knowledge,
information, and networking for new joiners.
Recognition: Employee recognition is embedded into Craneware’s culture, and includes a broad range of opportunities from casual
recognitions to formal annual peer-nominated awards. The Cudos program, as it’s known, also includes service commitment awards,
and informal peer to peer acknowledgements.
All-employee share 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, we operate a Save As You
Earn (‘SAYE’) share option plan for UK employees and an Employee Stock Purchase Plan (‘ESPP’) for US employees. Share options
were granted under these two share option plans in the year ended 30 June 2021 and in the prior year, as summarised in Note 8 to
the financial statements.
In order to acknowledge the considerable and wide ranging activities and efforts which the whole team have embraced during the
integration process during the year, the Remuneration Committee decided that the grant of share-based awards should be extended
to all employees within the Group during the year.
Wellness: We have enhanced our employee wellness programmes again during the financial year and increased the programme
content in respect of mental wellness topics and change management. During the year ended 30 June 2021, members of the team
became Mental Health First Aiders, being non-judgemental points of contact and reassurance to anyone experiencing a mental
health issue or a mental health crisis. All employees have access to an Employee Assistance Programme which offers access to a
confidential helpline 24 hours a day, 365 days a year.
Community initiatives: Craneware Cares, an employee committee, links an element of employee engagement with relevant
community engagement in an ongoing and active mechanism. Further details are contained in the ‘Community’ section below.
Overviews of other employee initiatives operating during the year are included in the Environmental, Social and Governance (ESG)
Statement in this annual report on pages 41 to 45.
32
Craneware plc Annual Report 2022 Stakeholder Engagement [Cont'd]
EMPLOYEES [Cont'd]
How this was considered in Board discussions and decision making
Since the completion of the acquisition of Sentry, the Board has been overseeing, within our corporate governance framework, the
integration process which was effectively completed during the year. Our framework of values was reviewed and evolved during the
year, led by the Advocacy Group, recognising the importance of bringing together a common set of values to the enlarged group.
During the year the Remuneration Committee of the Board recognised the considerable and wide ranging activities and efforts
which the whole team embraced during the integration process following the acquisition of Sentry. In order to acknowledge this, the
Committee decided that the grant of share-based awards should be extended to all employees within the Group during the year. The
Committee considered that the grant of share options to employees for this recognition award was appropriate and provided
alignment of employee interests across the enlarged Group with those of our shareholders. Further details are provided within the
Remuneration Committee’s Report on page 84.
The results and anonymised feedback received from the employee engagement surveys are collated and rated to identify any
aspects for improvement, which then guide initiatives to address those areas. The results and anonymised feedback are reviewed
and considered by both the senior management team and also by the Board.
The Board receives regular reports about a range of factors and issues affecting our employees to ensure that appropriate
consideration is given and early action taken where necessary. The Board also regularly considers matters and initiatives as part of its
commitment to promote diversity and equality across all of our teams.
The Board considers these employee engagement mechanisms, to be further supported and developed following the appointment
in April 2022 of the Group’s Chief People Officer, Issy Urquhart, to the Board as an executive Director. During the year ended 30 June
2022, the Board recognised, following the successful integration of the Sentry acquisition, the importance of having a strong
representation for, and extensive experience of, employee matters on the Board. It is considered that Issy’s appointment will
continue to improve the Board’s effectiveness in monitoring culture, support the focus on investment in The Craneware Group team
and enhance the awareness of employee engagement and other ESG matters
Measures exist for the Board and senior management to evaluate workforce composition and to ensure that these trends align with
objectives around diversity and inclusion.
CUSTOMERS
Craneware prioritises customer engagement as a critical component to our long-term partnership success. We recognise the
importance of, and are fully committed to, engaging with our customers in meaningful, two-way conversations. Understanding the
needs of, and challenges facing, our customers allows us to provide value-adding solutions and services. We continually enhance our
customers’ experience through several targeted initiatives that support our award-winning customer success efforts during
implementation, professional services engagements, and ongoing customer support.
How we engage
The Craneware Group Advisory Council: this forum represents leadership from both within Craneware, as well as key leaders from
our customer organisations. The Craneware Group Advisory Council focus on themes central to revenue integrity and 340B
management, precision, and advocacy to jointly define the future of scalable and cost-effective value cycle solutions. Through
innovative and collaborative focus groups, we collect qualitative feedback, which is prioritised and refined into application features
and services. This enables us to add value that benefits our customers and informs Craneware of guidance on issues of strategic
importance related to our applications and services; meeting the evolving needs of healthcare organisations through strategic,
focused effort to transform the business of healthcare. In addition to scheduled meetings, ongoing member feedback is collected
through surveys, mastermind sessions, and thought leadership projects. The Craneware Group Advisory Council are also asked to
participate in Communities of Practice training sessions, and attend Craneware webinars.
Craneware Performance Summit: this event is a broader opportunity to engage customers, providing users of Craneware
applications and services with educational and networking opportunities expanding our content in the value cycle to include 340B
compliance. With the challenges of live events during the past two years, we hosted our Craneware Performance Summit virtually
and will again in the year ending 30 June 2023. All current customers are invited to attend this event each year. We had significant
increase in attendance from previous years since we were able to host virtually and opened the event to non-customers.
Educational webinars: The Craneware Group regularly offers complimentary live webinars providing training and thought
leadership across our solutions. Webinars cover educational topics including billing, coding and regulatory changes which impact
hospitals’ revenues and costs, including advocacy and compliance with the 340B Program. These webinars were integral to The
Craneware Group’s response to the COVID-19 pandemic during the past two years. The Craneware Group’s webinar program
continues to evolve as we balance the return to live events and how our webinar program best supports our current and prospective
customers. In addition, The Craneware Group is involved in more than 25 annual advocacy events, including webinars and speaking
engagement in relation to the 340B Program and committee participation with leading advocacy organisations.
33
Craneware plc Annual Report 2022 Stakeholder Engagement [Cont'd]
CUSTOMERS [Cont'd]
How we engage [Cont'd]
Publications: The Craneware Group’s thought leaders within the organisation provided input into blogs, newsletters, case studies,
white papers, and insights to provide customers real-time content on breaking industry news and software functionality. The 340B
solution customers receive a weekly newsletter with product and industry updates and a monthly blog that provides insights and
perspectives on current events impacting healthcare and the 340B program.
Customer Recognition Program (for 340B solution customers): The customer recognition program was created within Sentry in
2018 with the purpose of recognising customers and industry partners that demonstrate program stewardship and responsibility.
Traditionally, 340B was viewed purely through a financial lens and many covered entities overlooked the complex risk and legal
compliance structure. The team decided that it was important to encourage and empower customers to take responsibility for those
lesser-considered aspects of the program, as well as to advocate for themselves and the program's success.
Executive Relationship Program: The intent of the executive relationship program is to provide our top strategic accounts an
exclusive experience with executive and senior leaders at The Craneware Group enabling us to grow and foster relationships with
strategic customer executives and leaders over the course of the customer journey with us to increase our revenue opportunity. The
program continues to provide our strategic 340B customers an executive touch point and will expand in the year ending 30 June
2023 to incorporate our revenue intelligence customers.
Craneware Academy: Craneware Academy is the knowledge centre of Craneware, with a triple aim: professional development,
Craneware knowledge, and industry knowledge. This has allowed customers to enjoy access to Craneware Academy developing
materials specific to their needs and the use of our solutions. Our 340B solutions began content development to also offer an
on-demand educational offering to connect with more customers and consultant users. Craneware Academy also provides a high
standard of healthcare financial industry training to support ongoing education. Customer proficiency with their Craneware
applications is assessed through courses that provide testing scenarios and hands-on practice within the system. These courses
contribute to levels of Craneware certification, which are celebrated annually.
Instructor Led Customer Training Programs: 340B customers are provided over 40 courses to select from on various topics to
address their product training needs with an on-line instructor throughout the customer life cycle. We also offer a Foundations
program that is a certificate program developed for our 340B solutions through a 12-week instructor led program offered three times
a year with an annual recertification.
Customer Experience: Through a closed-loop survey feedback process, our customers are provided the opportunity to provide
direct feedback on their experience with our entire organisation that can lead to discussions on processes, tools, and people. Our
customers may connect with the customer experience team via email to arrange for a follow up discussion such that the voice of the
customer is captured, and areas of opportunity are addressed that assist us determine sentiment and drivers. This continuous quality
improvement provides an opportunity to focus on the customer journey map and improve the overall experience with the voice of
the customer as our guide.
Customer Care Team: This is a designated team of problem-solving, relationship specialists. Their focus includes partnering with
customers to engage and optimise the value of the Craneware relationship, including our solutions, services, webinars, and expert
advice. This level of service contributes to customers renewing existing contracts and purchasing additional opportunities.
How this was considered in Board discussions and decision making
Customer feedback regarding the value of The Craneware Group’s applications and services, as well as sales data, is regularly
presented to the Board of Directors. These insights inform strategic decisions.
Customer feedback and overall metrics on consumer sentiment and trends are shared regularly with the Board and Operations
Board, steering our responses to the key issues impacting customers. Members of the Operations Board and executive directors
attend trade shows and conferences to meet with customers. Also, industry experts regularly present at Operations Board meetings.
34
Craneware plc Annual Report 2022 Stakeholder Engagement [Cont'd]
SHAREHOLDERS
The Company engages in full and open communication with both institutional and private investors and responds promptly to all
queries received.
How we engage
In conjunction with the Company’s nominated adviser, all relevant news is distributed in a timely fashion through the regulatory
news service of the London Stock Exchange to ensure shareholders are provided with material information on the Company’s and
the Group’s progress.
The primary point of contact for shareholders on operational matters is the Chief Executive Officer (CEO) and the Chief Financial
Officer (CFO). The primary point of contact for shareholders on corporate governance and other related matters is the Chair of the
Board. The Senior Independent Director is available as a point of contact should a shareholder not wish to contact the Chair of the
Board for any reason.
Annual General Meeting (AGM): All shareholders are usually invited to attend the AGM and encouraged to take the opportunity to
ask questions. The Board welcomes the opportunity to engage with the Company’s shareholders, typically providing a brief update
presentation at each AGM and with the Directors available to answer questions. Unfortunately, different arrangements had to be
made for the AGM in November 2020, due to the public health guidelines in relation to COVID-19 and consideration for the safety
and well-being of our shareholders, the Directors and employees of the Company. The AGM in November 2020 therefore had to be
held as a closed meeting with only the required quorum of shareholders present in person.
With some easing of COVID-19 restrictions, it was possible to arrange an open Annual General Meeting in November 2021 however
shareholders were encouraged to carefully consider their attendance at that AGM due to ongoing uncertainties regarding the
COVID-19 situation at that time. Shareholders were therefore strongly encouraged to participate in the AGM by voting by proxy
ahead of the meeting and, given the ongoing uncertainty around pandemic restrictions, it was recommended that all shareholders
appoint the Chair of the meeting as their proxy. The proxy voting, for the resolutions proposed for the AGM, could be submitted to
the Company’s Registrar online, through CREST or by paper forms submitted by post. In order to provide shareholders with an
opportunity to ask questions, as they would normally be entitled to do at the AGM, shareholders were invited to submit to the
Directors any questions they would otherwise have raised at the AGM, in advance of the meeting via email. Responses to the
questions were provided following the conclusion of the Annual General Meeting.
The AGM to be held in November 2022 is planned to be arranged as a normal AGM with all shareholders therefore being invited to
attend.
Meetings: The CEO and the CFO meet regularly with shareholders, normally immediately following the Company’s half year and full
year financial results announcements, to discuss Craneware’s performance and answer any questions.
Completion of acquisition presentation: On 13 July 2021, the date of the announcement of the completion of the acquisition of
Sentry, an online meeting was held regarding the acquisition (including the strategic rationale for the acquisition and an overview of
future prospects for the combined business) and presented by the CEO and CFO to which shareholders and analysts and other
interested parties were invited. There was the opportunity for attendees to ask questions at the end of the presentation. The
presentation slides from this meeting can be viewed on the Investors section of the Company’s website at www.thecranewaregroup.
com.
Investor conferences: The CEO and / or the CFO regularly attend (which through the pandemic has been virtual attendance)
investor conferences which provide an opportunity to meet with both existing and potential shareholders.
Capital Markets Day: These events are arranged by the Company for institutional investors and analysts, at appropriate times
following major developments in the Group. The last Capital Markets Day was held in November 2018 (pre the pandemic) and was
attended by all of the Directors of the Company.
Audit Committee: As explained in the Audit, Risk and Internal Control section of last year’s annual report, the Chair of the Audit
Committee wrote to the Company’s substantial shareholders to inform them in advance about the audit tender process and to
provide them with an opportunity to comment on the tendering and appointment of the external auditors.
Website: The Company’s website at www.thecranewaregroup.com, in compliance with the AIM Rules, has a section for investors
which contains all publicly available financial information and news on the Company.
35
Craneware plc Annual Report 2022 Stakeholder Engagement [Cont'd]
SHAREHOLDERS [Cont'd]
How this was considered in Board discussions and decision making
The Board monitors the success of CEO and CFO meetings with shareholders through anonymous evaluations from both
shareholders and analysts performed by the Company’s Corporate Broker and Financial PR advisor.
As noted within the AGM section above, with some easing of COVID-19 restrictions, it was possible to arrange an open Annual
General Meeting in November 2021 however shareholders were encouraged to carefully consider their attendance at that AGM due
to ongoing uncertainties regarding the COVID-19 situation at that time. Shareholders were therefore strongly encouraged to
participate in the AGM by voting by proxy ahead of the meeting and shareholders were invited to submit to the Directors any
questions they would otherwise have raised at the AGM, in advance of the meeting via email.
All Board decisions are made with regard for the long-term success of the Group and the Company, which are ultimately aligned to
our shareholders’ interests.
COMMUNITY
As part of the commitment to corporate social responsibility and community engagement, Craneware has continued to develop a
number of programs and opportunities to positively impact the community around us.
How we engage
Craneware Cares
Craneware Cares is The Craneware Group’s central mechanism for corporate charitable giving, employee fundraising, and community
volunteer work. An executive committee and various sub-committees comprising employees from across the Group coordinate all
charitable giving and volunteering for the Group across the US and UK. With these initiatives being co-ordinated by an employee
committee, Craneware Cares thereby links an element of employee engagement with relevant community engagement in an
ongoing and active mechanism. In addition to the focus charities supported in the year, Craneware Cares also supported a number of
employees’ personal charity efforts and celebrated global charity initiatives. Craneware Cares continues to support ad-hoc
fundraising and charity work by our employees. During the year, Craneware Cares supported eighteen different charities brought to
the committee by our employees through their own charity work.
Craneware Cares continues to be a central part of life at The Craneware Group, as it has been within Craneware for several years.
‘Better Outcomes for All’ is not just a tagline, it is how we approach our charitable giving and corporate responsibility.
Updates on the activities of Craneware Cares are provided to all employees on at least a quarterly basis to raise further awareness of
the various initiatives and how employees can get involved. The updates also help to generate support for the Craneware Cares
programs.
Further details regarding Craneware Cares are provided in the Environmental, Social and Governance (ESG) Statement in this annual
report.
Volunteer Time Off program
The fund raising activities of Craneware Cares supplement the Volunteer Time Off program where Craneware employees take paid
leave to support projects and charities in their communities.
How this was considered in Board discussions and decision making
The Board continues to support the operation of Craneware Cares and ensures that budgeted expenditure, to provide donations and
matching employee sponsorship, is included in the financial plan.
BANK FINANCE PROVIDERS
As part of the funding for the acquisition of Sentry, which completed on 12 July 2021, the Group entered into a debt facility to
provide up to $140m of secured funding. This secured committed debt facility, comprising a term loan and a revolving loan facility,
was in place at 30 June 2021 although there was no drawdown on this facility until July 2021. Details of these borrowings are
provided in Note 22 to the financial statements.
We recognise the importance of the Group having a good relationship with its lenders as well as continued compliance with the loan
covenants and the interest payments and loan repayments schedule. We endeavour to maintain and develop effective relationships
with our banks. We actively engage with our banks to develop and maintain the positive relationship, while also providing them with
information about the Group’s prospects and governance.
36
Craneware plc Annual Report 2022 Stakeholder Engagement [Cont'd]
BANK FINANCE PROVIDERS [Cont'd]
How we engage
In addition to formal covenant compliance reporting and monitoring, there is a combination of formal and informal meetings and
presentations held with our banks. Key topics include financial performance, strategy and risk management. Presentations have
been given to our banks after the half year and full year results are announced to update them on financial performance and give
them the opportunity to ask further questions.
In the second half of the financial year ended 30 June 2022, we undertook engagement with our lenders to confirm the extension to
the term of the term loan and revolving loan facility. Based on the relationships we have developed and regular engagement, each of
the banks were supportive and approved the extension of the facilities. This demonstrates the positive support we continue to
receive from our banking partners.
How this was considered in Board discussions and decision making
The Board monitors, based on reports and feedback provided by the Chief Financial Officer (CFO) the Group’s relationship with the
banks. In view of the availability of the right to request an incremental one year extension of the debt facilities and the appetite of
the banks to consider and support such a request, during the year the Board decided to initiate the process to make such a request.
This was successfully concluded before 30 June 2022, demonstrating the positive support we continue to receive from our banking
partners.
The Board receives information from the CFO regarding the Group’s compliance with financial covenants contained within the
committed term loan and revolving loan facility.
OTHER STAKEHOLDER GROUPS
SUPPLIERS
Relationships with suppliers and subcontractors are based on mutual respect, and Craneware 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 contractors. The Group aims to develop strong working relationships with our key suppliers and we expect our
suppliers to provide added value and fair pricing
ENVIRONMENT
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.
How we engage
Suppliers
Our teams interact with our main suppliers on a regular basis to strengthen trading relationships and to ensure that supplier
engagements continue to operate well to support the business. The procedures for review and monitoring of our vendor contracts
aim to ensure that fair and reasonable contract terms are in place with suppliers.
Where external vendors are engaged to support the business in a capacity involving sensitive or controlled data sets, members of
Craneware’s Security Council conduct Vendor Secure Assessment Questionnaires to validate the vendor's existing security measures.
The Group has also implemented a standard Business Associate Agreement. This agreement establishes clear expectations and
requirements on how data will be handled, along with required background checks and training for employees. Our Business Ethics
Policy is a mandatory policy for all employees and for any contractors and consultants engaged by us. The Policy includes and
explains the process and arrangements for reporting any ethics violations.
In accordance with The Modern Slavery Act we publish our annual slavery and human trafficking statement. The latest statement can
be found on the Craneware website at www.thecranewaregroup.com/modern-slavery-statement. Neither the Company or any of its
subsidiaries permit, condone or otherwise accept any form of human trafficking or slavery in its business or supply chains.
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.
The Board is provided with updates from management, as appropriate, regarding the Group’s relationships with its key suppliers,
including with respect to any material risks, performance issues or potential future changes.
37
Craneware plc Annual Report 2022 Stakeholder Engagement [Cont'd]
OTHER STAKEHOLDER GROUPS [Cont'd]
How we engage [Cont'd]
Environment
As an office-based operator using leased facilities, our environmental impact is relatively low compared with other sectors. We do
not manufacture or transport goods and the Group does not operate a vehicle fleet or otherwise provide company vehicles to
employees or Directors. 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 virtual meetings, hybrid working practises 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.
Our energy use reporting for the year ended 30 June 2022 is on page 46 in accordance with the Streamlined Energy and Carbon
Reporting (SECR) regulations.
Even prior to the public health restrictions, in respect of the COVID-19 pandemic, being imposed the majority of our US employees
were home-based. Further increasing our commitment to both our employees and the environment, during the year The Craneware
Group initiated a Dynamic Working Framework for all office-based employees, as explained on page 42. This framework aims to
enable flexibility in working arrangements for our employees and to create a balance between work and life demands. This
arrangement also reduces the impact of daily commuting upon the environment.
In the UK, we participate in Cyclescheme, an employee benefit programme which helps facilitate cycling, with the health and
environmental benefits this brings, by offering discounts on bicycles and equipment.
Whilst there has been some increase in trans-Atlantic business travel now that COVID-19 pandemic public health restrictions have
been lifted, The Craneware Group continues to leverage videoconferencing wherever possible as an alternative to travel. Where
domestic travel is necessary within the US, we have mandated that it be booked via a travel portal.
We engage in recycling programmes where possible within the parameters of building management for our offices. During the
renovation and refurbishment project conducted during the year within our office in Edinburgh, where possible, efforts were made
to minimise the level of waste going to landfill.
Further details of this and other environmental aspects of our working arrangements are provided in the Environmental, Social and
Governance Statement in this annual report.
How this was considered in Board discussions and decision making
The Board receives any significant information regarding our suppliers, payment practices and environmental matters in the Board
reports.
38
Craneware plc Annual Report 2022 Environmental, Social and Governance (ESG)
Statement
Our purpose is ‘to transform the business of healthcare through the profound impact our solutions deliver, enabling our customers to
provide quality care to their communities’. This purpose drives our strategy and defines our “why”. The Craneware Group’s solutions benefit
society. The Group provides solutions which save our customers significant administrative time and resources, allowing their teams to
focus on additional priorities that benefit both the hospital and their communities.
We aim to operate in a way that allows us to meet the needs of our stakeholders and have a positive impact on the communities in
which we operate and the wider society. Sustainable business practices will play an increasingly important role in our ability to grow and
continue to be successful. Craneware has developed many initiatives over the past several years which contribute to its sustainability
credentials. We continue to develop a number of programs and opportunities to positively impact the community around us. However,
we recognise that sustainability is a constantly evolving issue and that organisations must continually strive to do more.
As an office-based operator using leased facilities, our environmental impact is comparatively low, however this does not in any way
relieve us of the obligation to minimise the environmental impact of our business. We all have a collective responsibility within society
to help contribute towards efforts to address one of the greatest challenges facing society; climate change and our efforts in this area
are summarised below. We have organised this section in the following order of aspects relevant to The Craneware Group: Social,
Environmental and Governance.
Social
Our Solutions benefit our Customers and their Communities
For more than 20 years, Craneware has partnered with hospitals and health systems across the US to help improve and sustain operational
financial performance. Craneware now serves approximately 40 percent of US hospitals, including more than 12,000 US hospitals, health
systems and affiliated retail pharmacies and clinics. The Craneware Group’s solutions benefit society. Our solutions help deliver value for
our customers through the delivery of accurate financial data, insight and analytics. Our solutions help to save our customers significant
administrative time, resources and costs. Therefore we support our customers’ financial stability and long-term sustainability so that they
can focus and prioritise patient care and provide healthcare services which benefit their communities. Supporting our customers and the
vital work their teams provide has been, and will continue to be, a top priority for The Craneware Group.
The Craneware Group comprises expertise in clinical analytics and value cycle solutions, pharmacy procurement, compliance and
utilisation management solutions and provision of real-time pharmacy data analytics. This makes The Craneware Group a concentration of
intellect, skill and experience across the healthcare finance and 340B continuum.
Following the completion of the acquisition of Sentry in July 2021, The Craneware Group now provides software solutions for optimising
performance related to the interaction between eligible hospital and retail pharmacies in the community via the vital, complex 340B Drug
Pricing Program. The Craneware Group’s 340B management solutions support customers involved in the 340B Program (outlined in the
section below), assisting eligible healthcare organisations (‘covered entities’) with regulatory compliance and pharmacy procurement and
utilisation, thereby enabling them to generate cost savings which go directly to the provision of more care for the underserved in their
communities. Pharmacy is the largest cost area for US hospitals apart from personnel costs.
Supporting 340B management
The 340B program enables substantially discounted (or free) prescriptions to be provided to low income or uninsured patients and also
enables eligible healthcare organisations to use pharmacy cost savings to fund crucial programs that may not otherwise be financially
possible.
The 340B Drug Pricing Program
The 340B Drug Pricing Program (‘340B Program’) requires drug manufacturers to provide considerable discounts on outpatient
medications in order to have their drugs covered by Medicaid and Medicare Part B.
Health Resources and Services Administration (HRSA) (of the US Department of Health and Human Services) administers the 340B
Program. HRSA describes the 340B Program as enabling ‘covered entities to stretch scarce federal resources as far as possible,
reaching more eligible patients and providing more comprehensive services.’*
Eigible healthcare organisations for the 340B Program include Medicare / Medicaid Disproportionate Share Hospitals, children’s
hospitals, certain rural hospitals, State AIDS Drug Assistance programs, HRSA-supported health centers and additional federal
grantees as described by the 340B law.
*Source: www.hrsa.gov/opa/index.html
39
Craneware plc Annual Report 2022 Environmental, Social and Governance (ESG)
Statement [Cont'd]
Our Solutions benefit our Customers and their Communities
[Cont'd]
The 340B program does not present a cost to US taxpayers;
the savings come from manufacturer discounts on outpatient
medications. The 340B program sales represent $43.9 billion^ of
the total sales of medication in the US in 2021, which is estimated
to be $486 billion^. The percentage of 340B sales has steadily
increased over the last decade, with an emphasis on the high
cost of specialty medications accounting for some of the growth.
(^Source: www.hrsa.gov/opa/updates/2021-340b-covered-entity-
purchases)
The Craneware Group aims to help our customers, which are
eligible healthcare organisations, build and manage a successful
340B program. Our 340B solutions will continue to advance,
taking into account customer needs.
Advocacy
The healthcare marketplace that The Craneware Group serves, and
provides software and services to, can be impacted by a three-
pronged strategy through state and federal Congressional actions,
government agency policies referred to as “administration”, and
judicial or court outcomes.
In 2022, we monitored state 340B policies in 22 states designed
to protect covered entities from discriminatory pharmacy
benefit management (PBM) practices and to some extent
manufacturers. Additionally, four bills impacting 340B were
introduced in Congress, with one bill becoming a law to protect
certain hospitals from losing eligibility due to the public health
emergency related to COVID-19, and the second impacting
Medicare price negotiations and 340B. These laws may lead
to administrative clarifications through regulatory updates or
federal register notices for public comment. Last, we saw the most
lawsuits in the history of the 340B program in 2021 through 2022,
with a tremendous win for 340B covered entities in the Supreme
Court to stop deep reimbursement cuts in Medicare Part B. The
manufacturer challenges have created the use of the above three-
pronged approach to support stopping these new manufacturer
driven policies that are seen as contrary to the “340B law”.
These influencing branches of the government that can impact
the 340B program and demand that The Craneware Group have
an ear to the ground to understand what policies may shift how
our products and services are delivered. The Craneware Group
has a team of advocates internally and externally that monitor
state and federal policies that may impact 340B/value cycle or
other components of healthcare (i.e. Medicare, Medicaid, Health
Information Technology, Security). The team provides input into
strategy and how The Craneware Group can influence these
policies through notice and comment opportunities or meetings
with government officials to provide insights.
Supporting our customers with 340B management – responding to
industry demands impacting our customers
Example: The Craneware Group is helping Covered Entities contend
with contract pharmacy exclusions
In 2020, at the height of the COVID-19 pandemic, a small number
of drug manufacturers began to implement their own policies
for managing 340B utilisation increases through excluding
contract pharmacies from 340B purchases for their medications
or a subset of their medications. Since that time, it has grown
to 18 participating drug manufacturers which have the largest
volume of prescriptions. These contract pharmacy exclusions are
reducing covered entities’ 340B benefits and curtailing their ability
to provide services in their communities – the impact for affected
customers is real and has lasting effects on caring for the most
vulnerable.
Recognising these challenging circumstances, The Craneware
Group is committed to supporting its affected customers in a
number of ways, including: compilation of impact reports for each
of our customers; providing enhancements to our solutions; and
the development of resources to assist our customers. We have
prepared guides, court summaries and articles to help customers
decipher the various manufacturer letters and other information.
In addition, within our secure customer community we provide
updates as changes occur. Our customers also have access to our
account management team, our Senior Vice President Industry
Relations and a weekly newsletter.
Further information regarding our pharmacy solutions and other
340B-related activities by The Craneware Group is contained on
our website at: www.thecranewaregroup.com/solutions/340b-
pharmacy/
Our Trisus Platform
The Craneware Group’s Value Cycle solutions that go beyond
traditional revenue cycle to include pharmacy, supplies and
service line optimisation. By optimising critical data assets in these
areas, Craneware helps healthcare organisations optimise revenue.
The Craneware Group aims to be a partner to our customers,
not a product vendor. Through the provision of our solutions
and related services, we want to assist our customers’ teams in
solving problems efficiently, aligning data sets across the system
to provide actionable insights from the data that are digestible,
achievable and measurable. We offer not just exceptional support
but ongoing education and a strong consultative approach to
best practices that are provided by our team of enthusiastic
professionals, committed to our purpose, with deep industry
experience.
Our Trisus platform and applications combine revenue integrity,
cost management and decision enablement into a single cloud
based platform. With an increased number of hospitals now
interacting with our Trisus platform, contributing many millions
of individual anonymised data points daily, it is an increasingly
powerful source of insight into the ways in which hospital
management teams can improve their financial and operational
performance. The Trisus platform makes the raw data taken
from multiple disparate systems useable for analysis, resolves
communication gaps between departments, remedies operational
inefficiencies and helps to manage and maintain our customers’
competitive advantage while preserving margin.
40
Craneware plc Annual Report 2022 Environmental, Social and Governance (ESG)
Statement [Cont'd]
Our Solutions benefit our Customers and their Communities
[Cont'd]
In turn, the mitigated risks, efficiencies and returns on investment
being delivered by our applications will provide the confidence
and continuity for our customers to invest in the delivery of quality
care to their communities. We will continue to invest in expanding
the capabilities of the Trisus platform, developing additional
applications and tools, to provide further actionable insights
that bring tangible benefits to our customers. Our investment
in research and development during the year ended 30 June
2022 was $51.1m (2021: $24.7m) and this is explained within the
Financial Review section of the Strategic Report within this annual
report.
Our Customers
Customer engagement
Craneware recognises the importance of and is fully committed to
engaging its customers in meaningful conversations. Details of our
customer engagement mechanisms and initiatives are described
in the Stakeholder Engagement section on pages 33 and 34.
Our People
People are at the heart of every connection we build, whether it
be with our customers or our people. We recognise the value of
all our employees and that the success of The Craneware Group is
due to their efforts.
Integration of Sentry
The acquisition of Sentry in July 2021 marked a transformational
point in Craneware’s journey, enlarging our team, considerably
expanding our customer base, data sets, product offering and
market presence.
Employee engagement has been a high priority as we brought
the organisations and our employees together to create The
Craneware Group during the year ended 30 June 2022. This
successful integration was based on a structured implementation
plan, with a clear roadmap and milestones, supervised by an
Integration Steering Group (comprised mainly of senior managers
and reporting to the Board of Directors) and driven, in part,
through our employee engagement mechanisms.
The engagement mechanisms for employees were adapted
during the year as part of the integration process, including the
establishment of an Advocacy Group, comprised of employees
from across the enlarged organisation. The Advocacy Group
supported the Integration Steering Group. Regular updates,
regarding the status of the integration process were provided to
all employees during the year. Further details are provided in the
Stakeholder Engagement section of this Annual Report.
Our integration process included the harmonisation of
employment policies and the assessment of every role within the
enlarged organisation including role descriptions with articulated
responsibilities and accountabilities. In addition, we aligned all
roles into our grading structure across The Craneware Group.
Culture
The Framework provides our organisation with a clear definition
of “who we are and how we perform”. It is part of employees’
onboarding when they join Craneware and underlies, and
is interlinked to, contribution management. The Framework
comprises: Craneware’s characteristics and values connecting
to each competency, strengthening the way in which the
organisation recognises the Framework within employee
contribution management. As explained within the Advocacy
Group information within the Stakeholder Engagement section
of this Annual Report, during the year the Advocacy Group
worked on the assimilation of the Craneware Values and the
Sentry Guiding Principles which were very similar. After carrying
out a cultural crosswalk, The Craneware Group Framework was
established.
The Craneware Group Framework has five core values:
• Be Authentic
• Demonstrate integrity
• Provide excellent service
• Work hard to the highest quality
•
Enjoy the challenge
Each value has a characteristic or guiding principle which
articulates the way the value typically presents itself by our
employees.
The Craneware Group promotes a culture of openness through
a high contribution culture where employees feel empowered,
valued, achieve personal development and contribute effectively.
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 employees.
Diversity and inclusion
The Craneware Group respects the dignity and rights of all of its
employees. We have a talented mix of employees from diverse
backgrounds, which brings a high level of innovation and
collaboration. We believe in the importance of fostering a team
environment while also celebrating the individuals within the
team. We want to embrace this diversity in talent and location,
therefore, we offer flexible working and a blend of remote and
office-based work. Our Dynamic Working Framework, which was
launched in the year ended 30 June 2022 for our office-based
employees, is explained in the section below.
41
Craneware plc Annual Report 2022 Environmental, Social and Governance (ESG)
Statement [Cont'd]
Our People [Cont'd]
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 employees 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.
At the end of the financial year, our team comprised 47% female
and 53% male employees (at 30 June 2021: 39% female and 61%
male employees). At Operations Board plus vice president level,
the composition is approximately 37% female and 63% male (at
30 June 2021: 35% female and 65% male employees). The Board
of Directors, from 27 April 2022, is 25% female and 75% male
directors (at 30 June 2021: 14% female and 86% male directors).
The average base salary for female employees compared to male
employees is approximately 1.04:1.
We launched “Craneware Spaces” in the year ended 30 June 2021,
which are hosted sessions creating safe spaces for conversation
and community on the topic of racism, diversity, and inclusion.
The sessions are led by and involve employees and guest speakers.
During the year ended 30 June 2022, the formal Spaces program
was paused to focus on the integration efforts, with a renewed
focus planned for the year ending 30 June 2023.
With the easing of COVID-19 pandemic public health restrictions
in the latter part of the year, a Dynamic Working Framework
was established which aims to enable flexibility in working
arrangements for our employees and to create a balance between
work and life demands. Our Dynamic Working Framework enables
all office-based employees to work flexibly between their home
and the office in agreement with their manager and in line with
business needs. The introduction of this framework demonstrates
a commitment to improving the working lives and wellbeing of
employees.
As explained on page 30 within the Stakeholder Engagement
section, The Dynamic Working Framework has been developed
and evolved from employee feedback and engagement,
through collaboration with the Employee Advisory Committee
and employee engagement surveys, and also from piloting the
Framework first in two of our offices in the US.
Office working space
In advance of the re-opening of our head office in Edinburgh, the
space was extensively renovated and refurbished. The re-design of
the space complemented the Dynamic Working Framework by the
creation of more collaborative areas to work with colleagues whilst
offering a range of different desk configurations, collaborative
spaces, meeting areas and spaces to spend time away from work
areas to relax and socialise with colleagues. At the same time,
we took the opportunity to ensure that The Craneware Group re-
branding activity was also reflected within the office environment.
Employee engagement and communication
Lean initiatives
With the acquisition of Sentry in the year ended 30 June 2022,
employee engagement has been a high priority as we brought
our employees and processes together. We established additional
and complementary approaches throughout the integration to
inform, consult and engage our existing and new employees.
This included the introduction of an Advocacy Group, a group of
employees from across the organisations who have supported the
change management and integration efforts.
An inclusive working environment and a culture of openness are
maintained by the regular dissemination of information. Our
Employee Advisory Committee (‘EAC’) comprises a diverse panel
of employees whose mission is to enable a high contribution
culture where employees feel empowered, valued, achieve
personal development and contribute effectively. Further details
about the activities of the EAC, the Advocacy Group and other
aspects of our employee engagement mechanisms are contained
in the Stakeholder Engagement section on pages 30 to 33. We
utilise a variety of employee communication vehicles and these
are also outlined within the Stakeholder Engagement section.
Dynamic Working Framework
The Craneware Group introduced a Dynamic Working Framework
during the year ended 30 June 2022 for office-based employees.
The Craneware Group has a continuous improvement mindset
that embraces a Lean culture which respects and empowers
employees. During the year ended 30 June 2022, we standardised
our operational model to provide an embedded and consistent
platform that underpins our Lean culture and strategy
deployment. To enable this a new Transformation Office was
introduced, with representation on the Operations Board.
The Transformation Office is responsible for coordinating and
deploying organisational initiatives and strategy to connect
the corporate vision to the day-to-day operations. By applying
progressive business planning and change management
techniques, The Craneware Group is positioned to achieve
immediate business targets while implementing frameworks that
foster innovation and provide opportunities to make rapid and
impactful changes.
Additionally, through the implementation and execution of shared
best practices, the Transformation Office provides the tools and
data to support operational success. This success is achieved
by optimising and aligning the drivers of performance (people,
culture, processes, and measures) with the business strategy in
order to deliver maximum value to the customer.
42
Craneware plc Annual Report 2022 Environmental, Social and Governance (ESG)
Statement [Cont'd]
Our People [Cont'd]
Craneware Wellness
The Craneware Group is committed to improving the working lives
and wellbeing of all employees, enabling flexibility in working
arrangements and facilitating a balance between work and
life demands, as outlined in the Dynamic Working Framework
section above. We aim to continue to encourage and develop a
sustainable and high achieving team within a dynamic working
environment, for office-based employees, that is conducive to
attracting and retaining team members.
The Craneware Wellness programme is designed to encourage
and support a healthy lifestyle for our employees by connecting
one another, providing educational tools and resources and
having fun with challenges and events. This year we have again
enhanced our employee wellness programmes increasing the
programme content and information in respect of mental wellness
topics. The Craneware Group strives to be an organisation where
employees feel supported and empowered to speak about their
mental health.
There were two 8-week wellness information series offered to
all employees during the year in recognition of the change that
employees were going through with the integration efforts,
focussing on change management and also the fundamentals
of performing effectively in demanding conditions. During the
prior financial year, members of the team became Mental Health
First Aiders which are non-judgemental points of contact and
reassurance to anyone within the team experiencing a mental
health issue or emotional distress or if they are concerned about
someone else’s mental health. There is a section within the
Craneware Wellness area of the Group’s intranet dedicated to
Mental Health and Wellness which includes links to publications,
webinars and guidance, organisations which can provide
assistance and also information regarding the Mental Health First
Aiders. All employees have access to an Employee Assistance
Programme which offers access to a confidential helpline 365 days
a year and 24 hours a day.
Recruitment
The Craneware Group wishes to attract and retain the best
people. Our Talent Acquisition team, in partnership with hiring
managers, are responsible for identifying, acquiring, assessing
and supporting with the onboarding of new joiners. We promote
our opportunities, internally and externally, through our
applicant tracking system and careers portal and applications are
reviewed by our experienced team. Our Talent Acquisition team
have completed unconscious bias training, enabling them to
present an inclusive shortlist of suitable candidates to our hiring
managers. We offer candidates a structured selection process and
use a competency-based framework, against which to interview
candidates, in order to ensure consistency and fairness.
Many of our employees are sourced via our Employee Referral
Programme. This programme encourages our team to introduce
talented professionals to The Craneware Group and build our
brand within the local business community.
The onboarding of new employees into The Craneware Group is
considered key to having employees who are role ready as soon
as possible. Emphasis is placed on the joint responsibility of the
line manager and the HR team to deliver a specific onboarding
experience per employee. Part of this experience is delivered
online through our learning management system, which contains
all courses required for onboarding new joiners to the business.
In addition, a Welcome Wednesday is facilitated to provide
knowledge, information, and networking for new joiners.
Employee development and career progression
Contribution management is the process whereby employees
collaborate with their line managers to plan, monitor, and review
their goals and overall contribution. It links the contribution
of each individual to the overall strategic direction of the
organisation and provides clarity and transparency around
expectations. The process aims to drive a high contribution
culture, strategy alignment, organisational development, and The
Craneware Group Framework.
Employees are encouraged to maintain a personal development
plan, linked to their role and goals, as part of the contribution
management process. Personal development plans identify
proposed areas for learning as well as training and development
that employee wish to complete.
We have a Career Pathways, which is available for reference on the
Group’s intranet, to illustrate career progression and provide clarity
to employees, serving as a resource for employees to manage their
careers within The Craneware Group.
Learning and development
The Craneware Group endeavours to provide an environment
and facilities for all employees to develop their skill sets. Our
employees are encouraged to maintain a personal development
plan, linked to an employee’s role and goals, as part of the
contribution management process.
Craneware’s employee learning management system, called
the Academy, hosts on demand learning solutions, covering a
wide range of topics. Each Craneware employee has a personal
log-on and account within the portal system which allows the
allocation and tracking of training for each employee including:
product knowledge; leadership development; process guides; and
onboarding modules for new employees. The system also enables
the control of (and tracking of completion of) mandatory and
annual training modules.
LinkedIn Learning is an online training platform, which provides
users on demand access to over 16,000 instructor led courses
covering a wide range of business and technology skill sets. The
Craneware Group provides full, unlimited, access to LinkedIn
43
Craneware plc Annual Report 2022 Environmental, Social and Governance (ESG)
Statement [Cont'd]
Our People [Cont'd]
Learning for all permanent employees. LinkedIn Learning is a key
investment in our culture as a learning organisation. Managers
have the ability to create learning pathways and customised
curriculums supporting both individual and team development
and also complementing the onboarding process.
In addition, we have three categories of leadership programs
to bring together and further develop internal leaders. Rising
Leaders, Performing Leaders, and LINK a program of bite
sized sessions on leadership and management topics lead by
managers for managers, offering the participants the forum to
discuss and share management challenges and successes. This
drives a supportive manager network and culture where ideas,
opportunities and best practices can be shared.
For a number of years, Craneware has also supported a Masters
Degree in Business Administration (‘MBA’) program in partnership
with University of Strathclyde to provide employees, who are
interested in pursuing an MBA, a way of further developing their
business knowledge and leadership potential.
The Craneware Group supports individualised professional
development and other development in line with role-based
requirements to meet business needs.
Reward
A fair remuneration policy is adopted throughout The Craneware
Group. Our reward strategy aims to link pay progression to
contribution through our Contribution Management process to
promote a contribution culture. We aim to remain competitive,
with regard to employee reward, and keep pace with the
market through salary ranges which are created from real
time benchmarking data. The Group has sought to achieve,
at a minimum, on average, median levels of base salary for all
employees within the organisation in respect of their role, based
on external benchmark data (which is refreshed at least bi-
annually). We value the health and wellbeing of our employees
and their families. We offer a comprehensive benefits package
to our employees including medical insurances, life assurance,
pension and 401K plans, work-life balance benefits. The company
contribution matching for our UK pension plan was increased
from 5% to 6% from September 2021 and we harmonised benefits
for US employees including healthcare plans and 401K provisions
following the acquisition of Sentry. Our leave policies were also
harmonised during the year, with an additional two days’ leave
offered, for 2022 only, for the Queen’s Platinum Jubilee.
In order to provide a wider population of employees with an
opportunity to become Craneware shareholders, which promotes
alignment to shareholder interests and aids recruitment and
retention, we operate a Save As You Earn (‘SAYE’) share option plan
for UK employees and an Employee Stock Purchase Plan (‘ESPP’)
for US employees. These share option plans were launched in the
financial year ended 30 June 2020 with a further grant of share
options under these share option plans in 2021.
44
The Remuneration Committee of the Company’s Board of
Directors recognised the considerable and extensive activities and
efforts which the whole team embraced during the integration
process during the year ended 30 June 2022, following the
acquisition of Sentry in July 2021. In order to acknowledge this,
the Remuneration Committee decided that the grant of share-
based awards should be extended to all employees within the
Group during the year. It was considered that the grant of share
options to employees for this recognition award was appropriate
and provided alignment of employee interests across the enlarged
Group with those of our shareholders. Further details are included
in the Remuneration Committee’s Report section of this annual
report.
In the UK, in addition to operating Cyclescheme, Craneware offers
employees the opportunity to participate in Techscheme which
gives assistance with the purchase of electronic equipment whilst
spreading the payment over a period of time at a cost saving.
Employee recognition is embedded into Craneware’s culture and
includes a broad range of opportunities from casual recognitions
to formal annual peer-nominated awards through “Cudos”, The
Craneware Group’s recognition program.
Health & Safety
The Health & Safety Committee, chaired by our Chief People
Officer, reports into the Governance Committee and meets on
a quarterly basis to review related topics, discuss proposals,
and make recommendations as required. All employees are
required to complete mandatory health and safety awareness
training, provided through the Learning Management System,
on an annual basis and when employees join Craneware. As
part of creating a safe work environment for our employees, The
Craneware Group tracks all Health & Safety Incident Reports. There
were no incidents reported across all of the Group’s offices and our
home-based employees in the year ended 30 June 2022.
Following the acquisition of Sentry in July 2021, health and
safety has been integrated across the scaled business so that it
is managed consistently across the enlarged organisation and
all locations. Employees from across the enlarged organisation
were added to the Health & Safety Committee to provide
their perspectives as well as to ensure specific coverage of the
additional office location in the US.
During the year ended 30 June 2022, office locations within The
Craneware Group re-opened for normal business operations
in line with the lifting of COVID-19 public health restrictions
across the US and in the UK. The Dynamic Working Framework
was trialled and then introduced during the year, as explained
above. Before each office was re-opened, all health and safety
requirements were systematically re-examined in order to ensure
that all offices were safe to re-open including any appropriate
COVID-19 measures. Prior to the re-opening of each location, all
Craneware plc Annual Report 2022 Environmental, Social and Governance (ESG)
Statement [Cont'd]
Our People [Cont'd]
office based employees were given a briefing reminding them
of important health and safety information pertaining to their
particular office. All employees, whether they work from home
permanently or on a flexible basis under our Dynamic Working
Framework, are provided with guidance on the set up of suitably
safe and productive home workspaces.
Our Community
As part of the commitment to corporate social responsibility and
community engagement, The Craneware Group continues to
develop a number of programs and opportunities to positively
impact the community around us.
Craneware Cares
Craneware Cares and the Craneware Cares Foundation are driven
by our employees and form a central part of life at Craneware.
Importantly, they are how we approach our charitable giving and
corporate responsibility. Both the Craneware Cares Foundation
and Craneware Cares as an internal committee have been in
operation for several years now and over this time they have
expanded the scope and scale of their activities.
Craneware Cares is The Craneware Group’s core mechanism
for corporate charitable giving, employee fundraising, and
community volunteer work. An executive committee and various
sub-committees comprising employees from the scaled business
coordinate all charitable giving and volunteering for the Group
across the US and UK. All charitable giving in the US is distributed
through the Craneware Cares Foundation, an official charitable
foundation.
Craneware Cares further streamlined our ‘Spotlight Charity’ model,
for planned annual fundraising, in the year ended 30 June 2022
in order to give the maximum amount to each organisation every
quarter. Our quarterly charities alternated between US and UK
based charities, which continue to be nominated and chosen
entirely by employees. In the year ended 30 June 2022, Craneware
Cares supported the following four diverse organisations as our
Spotlight Charities:
•
•
•
•
Steps to Hope (UK)
The Gregory S. Fehribach Center (US)
Kindness Homeless Street Team Glasgow (UK)
Refugees International (US)
Craneware Cares raised funds for all of these Spotlight Charities;
combining employee donations and corporate donation-
matching, enabling The Craneware Group to make a significant
contribution to each organisation. Craneware Cares also produced
a second volume of the ‘At the Table with Craneware’ charity
cookbook, compiled from recipes shared by our employees, and
the proceeds are donated to our Spotlight Charities.
Alongside these quarterly Spotlight Charities, Craneware Cares
continues to support ad-hoc employee fundraisers and charity
work. Supporting our employees in their personal charitable
endeavours is an essential and popular part of the Craneware
Cares identity. Alongside the four Spotlight Charities, we
supported thirty eight other charities during the year.
Some of the causes which Craneware Cares assisted during the
year ended 30 June 2022 included the following wide-ranging
initiatives:
•
•
•
•
Craneware Cares continues to support our longstanding
‘Lotus Backpack’ fundraising campaigns. In the US, our Lotus
Backpack Committee completed a very successful Spring
Fundraiser in support of three domestic violence shelters in
the US, using the money raised to purchase many boxes of
essential supplies. In the UK, the Lotus Backpack campaign
took the form of a donation of backpacks and school supplies
for local children in need.
An International Women’s Day fundraising campaign for the
US charity March of Dimes, predominantly powered by the
production of fantastic charity t-shirts by a creative employee
of The Craneware Group.
In honour of ‘Movember’, the annual global fundraising
event directed to The Movember Foundation’s efforts to
improve men’s health, The Craneware Group supported a
huge fundraising drive across the whole organisation which
raised a total of over $2,500 thanks to the efforts of many
employees.
For the holiday season, Craneware Cares donated gifts to two
local organisations supporting local families in need and also
donated gifts to a Spotlight Charity to support their Easter
family event.
•
• When the conflict began in Ukraine in early 2022, Craneware
Cares donated to the Disasters Emergency Committee’s
Ukraine Appeal.
Craneware Cares made donations to two appeals in response
to tragic events that impacted two schools and their
communities in the US.
In honour of a beloved Craneware Group employee who
sadly passed away, a donation was made to the International
Myeloma Foundation.
The Craneware Group also donated prizes to charity auctions
for Cancer Research UK and The Yard.
•
•
Over this past year, Craneware Cares supported eighteen different
charities brought to the committee by our employees through
their own charity work. These causes were diverse and were for
charitable initiatives in both the UK and in the US.
In total during the year ended 30 June 2022, Craneware has
contributed $47,943 (2021: $45,368) to charities across all of
our many fundraising campaigns, employee-led donations and
corporate donations.
45
Craneware plc Annual Report 2022 Environmental, Social and Governance (ESG)
Statement [Cont'd]
Our Community [Cont'd]
Updates on the activities of Craneware Cares are provided to all
employees on at least a quarterly basis to raise further awareness
of the various initiatives and how employees can get involved. The
updates also help to generate support for the Craneware Cares
programmes.
Volunteer Time Off
The fundraising activities of Craneware Cares are supplemented
by Volunteer Time Off days for employees so that they can take
paid leave to support projects and charities in their communities.
During the year this included a group of our UK employees
donating their time to help a previous year’s Spotlight Charity to
prepare their treatment centre for vital renovations.
Environmental
Craneware aims to minimise any environmental impacts of its
business activities. We are in the early stages of our journey to
measure and reduce our impact on the environment, but we are
committed to making continuous improvements. 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.
The Group does not manufacture or transport goods. As a result
of what we do, we are not involved in any energy-intensive
processes nor does the organisation generate significant waste.
Whilst our environmental impact is relatively low compared with
other sectors, this does not reduce our commitment to reducing
our environmental impact. All businesses, including Craneware,
must recognise the importance of responding appropriately and
reducing their contribution to global climate change. Also, as
the size of the Group grows, we are conscious of the impact our
operations may increasingly have on the environment. Craneware
aims to manage its environmental impacts responsibly.
As a software company, we are primarily an office-based operator
in the UK, using leased facilities. However, since mid-March
2020 and until the latter part of the year ended 30 June 2022,
all UK employees have been working from home due to the
public health restrictions required in response to the COVID-19
pandemic. A Dynamic Working Framework was introduced
recently across the Group, as described within the ‘Our People’
section above, which further increased our commitment to both
our employees and the environment. This framework aims to
enable flexibility in working arrangements for our employees
and to create a balance between work and life demands. This
arrangement also significantly reduces the impact of daily
commuting upon the environment. In the US we operate a
relatively small office footprint with the vast majority of our
employees working from home even prior to the COVID-19
pandemic. Whilst the acquisition of Sentry in July 2021 resulted
in the Group gaining additional rented office space in the US, the
majority of our US employees remain home-based.
46
The rented office space for our head office in central Edinburgh
is easily reached by public transport, by bicycle or on foot. The
Craneware Group encourages cycling to work and all the related
health and environmental benefits this brings by participating in
the Cyclescheme programme, an employee benefit scheme in the
UK which helps facilitate cycling by offering discounts on bikes
and related equipment.
Although there has been some increase in trans-Atlantic and
domestic US business travel now that COVID-19 pandemic
public health restrictions have been lifted, The Craneware Group
continues to leverage video conferencing wherever possible
as an alternative to travel. Where domestic travel is necessary
within the US, we have mandated that it be booked via a travel
portal to enable a data review, as we aim to progress to more
sustainable travel practices. We do not provide company vehicles
to employees or Directors nor do we operate any form of vehicle
fleet.
The data centres which the Group uses have carbon reduction or
carbon neutral goals and many sustainability and ESG initiatives.
The Group is required to report its energy use and impact under
the Streamlined Energy and Carbon Reporting (SECR) regulations.
The data is in respect of the UK energy usage by the Company
in the year ended 30 June 2022, with comparisons for the prior
financial year. Energy usage by subsidiaries, which are not in the
UK, are outside the scope of this report and therefore are excluded
from the figures below.
UK Energy Use (kWh):
Electricity
2022
2021
81,832
87,373
Gross emissions in metric tonnes of
carbon dioxide equivalent (CO2e):
Electricity
15.82
18.55
Emissions were calculated from using electricity billing
information for our UK properties and the UK government’s 2022
GHG Conversion Factors Guidance. The Group does not purchase
fuel in the UK. The Group has identified that the key intensity
ratio, an expression of the quantity of emissions in relation to a
quantifiable factor of business activity, is tonnes of CO2e per UK
employee.
Intensity ratio in tonnes of CO2e per
UK employee:
2022
0.08
2021
0.10
Craneware plc Annual Report 2022 Environmental, Social and Governance (ESG)
Statement [Cont'd]
Environmental [Cont'd]
Governance
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: video conferencing rather than in person meetings;
the operation of the Dynamic Working Framework; and
electronic information exchange that reduce environmental
impact; and
it recycles waste products wherever possible, encouraging
use of environmentally friendly materials, and disposing
safely of any non-recyclable materials.
•
The rented office suite for our head office in central Edinburgh is
within a building which has an Energy Performance Certificate
(EPC) rating of B which denotes a high level of energy efficiency,
according to the current rating system. The whole building
features a full Building Energy Management System (BEMS),
which helps to optimise the energy efficiency of all tenant suites
and common areas. Office facilities have light timers and sensors
to help conserve energy. The building also includes large and
centrally maintained communal garden areas at both ground
level and roof level for the enjoyment of tenants.
As referred to in the ‘Our People’ section above, during the year our
rented office suite in Edinburgh was extensively renovated and,
during this process, we were committed to minimising the level
of waste going to landfill. As a result, we only engaged disposal
companies with strong sustainable practices to remove any of
our waste and surplus office furniture. All companies used for
our office clearance works are dedicated to diverting waste from
landfill and recycling as many items as possible using registered
recycling facilities. Craneware also donated a wide range of items,
including furniture and kitchen supplies, to local organisations
such as homeless charities and schools rather than let serviceable
goods become landfill. In particular, we gave a substantial number
of desks and chairs to a nearby school district for use in their
classrooms. This donation saved the schools much needed money
and it also helped minimise carbon emissions. The total weight of
the donated furniture was 3.25 tonnes, and the avoided emissions
in the value chain is calculated to be 5.41 tonnes of CO2e which no
longer needs to be expended to produce new furniture for these
schools.
The Craneware Group actively encourages employees to move
to a paperless environment and reduce printing requirements
whenever possible. All offices also have recycling points for paper,
cardboard, tins, and plastic throughout the suites.
Recognising the importance of corporate governance matters,
Craneware (an AIM quoted company) has selected the UK
Corporate Governance Code 2018 as its corporate governance
framework although this Code has been drafted in the context of
larger, main-market listed companies. Our Corporate Governance
Report is set out on pages 60 to 74.
Our purpose, business model, strategy and Board operations
are focused on delivering long-term benefits for all of our
stakeholders while maintaining a high standard of ethical business
conduct. These responsibilities are embedded in our culture, our
values and our purpose. We are committed to conducting our
business with honesty and integrity and it is expected that these
high standards be maintained throughout the organisation.
Our Business Ethics Policy is a mandatory policy for all employees
and for any contractors and consultants engaged by us. The Policy
includes and explains the process and arrangements for reporting
any ethics violations. To ensure a high level of understanding
of business ethics within our business, we provide training
to our employees as part of our annual mandatory Legal and
Regulatory curriculum as well as this training being included in
the onboarding programme for new employees.
Information security, data security and data protection
The Craneware Group prioritises the reliable protection of
customer data. Our aim is to defend against reasonably
anticipated threats and hazards, including risks created by
unauthorised access, to the security and integrity of sensitive
customer information entrusted with The Craneware Group. Since
Craneware’s inception, the healthcare landscape has evolved
and created new data security challenges for US hospitals and
health systems. We have evolved alongside our customers to meet
these challenges. With presence in the UK and US, and as part of
the Healthcare industry, Craneware has substantial obligations
and interest in data protection and ensuring access security.
Key legislation includes the Health Insurance Portability and
Accountability Act (HIPAA) in the US and Data Privacy (US and UK),
which has specificity on protecting patient data and personal data.
The Craneware Group maintains a detailed Information Security
Program which aligns with applicable laws and regulations. This
program governs how The Craneware Group employees and
applications interact with sensitive, protected customers’ data. The
policies and procedures which inform the Information Security
Program are reviewed and updated no less than annually and with
any significant changes to relevant laws, regulations, infrastructure
or company structure.
Craneware offers its shareholders the opportunity to register to
receive shareholder communications, such as the annual report,
notice of annual general meeting, and related forms of proxy,
electronically rather than printed documents.
Key oversight of the Information Security Program is managed
by The Craneware Group’s Security Council and led by the
Chief Information Officer. The Council is comprised of expert
representatives from the following functional areas: Information
47
Craneware plc Annual Report 2022 Environmental, Social and Governance (ESG)
Statement [Cont'd]
Governance [Cont'd]
Security; Risk & Compliance; Information Technology;
Infrastructure and Operations; Engineering; and the Governance
Committee. The Craneware Group employs a dedicated
Information Security Team and contracts with specialist third party
services, who assist with monitoring, testing and improving our
security position and technology. The Craneware Group requires
stringent training on information security and data protection for
all employees annually and when new employees join the Group.
The highest ethical standards are foundational to The Craneware
Group’s code of conduct.
Data and Information System assets include customer data and
company resources; these are protected with Data Loss Prevention
software and processes. The Craneware Group’s Information
Security Program manages those assets that are subject to
legislative requirements i.e. HIPAA and GDPR.
We require and compel adherence with all applicable laws
and regulations regarding data privacy and security. In view
of the importance of the procedures, security, regulation and
controls around our solutions and customer data, during
the financial year ended 30 June 2020, Craneware achieved
HITRUST CSF Certification for its Trisus and InSight solutions,
as well as associated operational processes. This involved an
external, validated audit of Craneware’s security and data
privacy practices. Health Information Trust Alliance (‘HITRUST’
Alliance) is a collaboration with healthcare, technology and
information security organisation which develops, maintains
and provides broad access to its widely adopted common risk
and compliance management and de-identification frameworks;
related assessment and assurance methodologies; and initiatives
advancing cyber sharing, analysis and resilience. HITRUST is
considered to be a gold standard for security frameworks within
the healthcare industry.
HITRUST has established a ‘common security framework’ (CSF)
to address the multitude of security, privacy and regulatory
challenges facing organisations. The scope of the HITRUST CSF’s
requirements is wide and requires a very high standard of data
security arrangements as these have been set in the context
of the accreditation being relevant to US healthcare providers
with handling sensitive data (Protected Health Information) and
impacts in some way all areas of the business (at least in respect of
the required enhancement to the Group-wide IT and data security
policies).
Full HITRUST CSF assessments are conducted every two years;
interim assessments are conducted during the intervening
periods. For HITRUST, our products and corporate infrastructure
are evaluated against around 500 controls mapped across 19
domains. Our portfolio of products regularly conducts penetration
testing using external security testing companies. The testing
occurs in conjunction with major product updates and no less
than annually.
48
Sentinel, Sentrex, and DataNext applications meet American
Institute of Certified Public Accountants (AICPA) Service
Organization Controls (SOC) requirements, completing the SOC1
and SOC2 Type II audits annually.
The Craneware Group engages with third party auditors to
support effective security practices and compliance with HITRUST,
HIPAA and AICPA SOC. We reconfirm our audit certifications on
an annual basis, and regularly evaluate to ensure our certification
selections continue to be the best measure of security controls.
The Craneware Group also follows individual US state-based
guidance and criteria where appropriate.
A copy of The Craneware Group’s Information Security Statement
is on the website at: www.thecranewaregroup.com/security-
statement/
Modern Slavery
In accordance with The Modern Slavery Act we publish our annual
slavery and human trafficking statement. The latest statement can
be found on the Craneware website at www.thecranewaregroup.
com/modern-slavery-statement/. The Craneware Group does
not permit, condone or otherwise accept any form of human
trafficking or slavery in its business or supply chains. We are
committed to conducting our dealings with customers, suppliers,
employees and the communities in which they are based, with
the utmost integrity and, as such, we are committed to supporting
the elimination of acts of modern slavery. Our Anti-Slavery
and Human Trafficking Policy reflects our commitment to act
ethically and with integrity in all our business relationships and to
implement and enforce effective systems and controls to ensure
slavery and human trafficking is not taking place anywhere in our
supply chains.
To ensure a high level of understanding of the risks of modern
slavery and human trafficking in our supply chains and in our
business, we provide training to our employees as part of our
annual mandatory Legal and Regulatory curriculum.
Anti-bribery and corruption
As a UK company, we are 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.
The Group has an Anti-Corruption and Bribery Policy which
applies to anyone working for The Craneware Group or on our
behalf in any capacity. To ensure that employees are aware of this
policy and relevant aspects of the Bribery Act, we provide training
to our employees as part of our annual mandatory Legal and
Regulatory curriculum.
Craneware plc Annual Report 2022 Environmental, Social and Governance (ESG)
Statement [Cont'd]
Governance [Cont'd]
Whistleblowing Policy
One element of providing a supportive and open culture within
the organisation, is our Whistleblowing Policy and associated
annual awareness training. This Policy includes arrangements by
which employees, consultants or contractors may, in confidence
and also anonymously should they wish, raise concerns regarding
possible improprieties in matters of financial reporting or other
matters. These concerns would then be investigated and followed
up appropriately. Craneware’s Board of Directors has provision
to review these arrangements and any reports arising from their
operation.
ESG Governance
The Board is conscious of the need to coordinate all of its ESG-
related policies and initiatives and to align these to a more
formalised governance framework appropriate to the Group. The
Board also acknowledges the requirements of the Companies
(Strategic Report) (Climate-related Financial Disclosure)
Regulations 2022. Any disclosures required by the Company, in
accordance with these regulations, shall be provided in the Annual
Report and Financial Statements for the year ending 30 June 2023.
49
Craneware plc Annual Report 2022 Directors, Secretary, Advisors and Subsidiaries
Directors
W Whitehorn (non-executive, Chair)
K Neilson
C T Preston
I Urquhart (appointed 27 April 2022)
C Blye (senior independent director)
R Rudish (non-executive)
A Erskine (non-executive)
D Kemp (non-executive)
Nominated Advisors and
Joint Stockbrokers
Peel Hunt LLP
120 London Wall
London
EC2Y 5ET
Company Secretary & Registered Office
Craig T Preston
1 Tanfield
Edinburgh
EH3 5DA
Registrars
Independent Auditors
Financial PR
Link Asset Services Ltd
10th Floor
29 Wellington Street
Leeds
LS1 4DL
PricewaterhouseCoopers LLP
Atria One
144 Morrison Street
Edinburgh
EH3 8EX
Alma PR
71-73 Carter Lane
London
EC4V 5EQ
Solicitors
Pinsent Masons LLP
58 Morrison Street
Edinburgh
EH3 8BP
HSBC Bank plc
7 West Nile Street
Glasgow
G1 2RG
Barclays Commercial Bank
Aurora House
120 Bothwell Street
Glasgow
G2 7JT
Craneware InSight, Inc.
3340 Peachtree Rd NE,
Suite 850
Atlanta, GA 30326
SDS Intermediate, Inc.
251 Little Falls Drive
Wilmington, DE 19808
Bryan Cave LLP
One Atlantic Center,
14th Floor
1201 W. Peachtree St. NW.
Atlanta, GA, 30309-3471
Bank of Scotland
The Mound
Edinburgh
EH1 1YZ
Craneware Healthcare
Intelligence , LLC
12570 Perry Highway
Suite 110
Wexford, PA 15090
Sentry Data Systems, Inc.
1946 Tyler Street
Hollywood, FL 33020
Joint Stockbrokers
Berenberg, Gossler & Co.
60 Threadneedle Street
London
EC2R 8HP
Bankers
The Royal Bank of Scotland plc
36 St Andrew Square
Edinburgh
EH2 2YB
Clydesdale Bank
20 Waterloo Street
Glasgow
G2 6DB
Investec Bank plc
30 Gresham Street
London
EC2V 7QP
Silicon Valley Bank
3003 Tasman Drive
Santa Clara, CA
95054
Wells Fargo
500 N Magnolia Avenue
8th Floor
Orlando, FL 32803
Subsidiaries and Registered Offices
Craneware, Inc.
3340 Peachtree Rd NE,
Suite 850
Atlanta, GA 30326
SDS Holdco, Inc.
251 Little Falls Drive
Wilmington, DE 19808
Craneware US Holdings, Inc.
Corporation Trust Center
1209 Orange St
Wilmington, DE 19801
Kestros Ltd. t/a Craneware Health
1 Tanfield
Edinburgh
EH3 5DA
Agilum Healthcare Intelligence, Inc.
300 Montvue Road
Suite 400
Knoxville, TN 37919
50
Craneware plc Annual Report 2022 The Directors of the Company and their responsibilities within the Group are set out below:
Board of Directors
Will Whitehorn, 62
Non-executive Chair
Appointed 1 January 2020
Will joined Craneware as Chair of the Board on 1 January 2020. Will joined Virgin in 1986 where he
established a career as Sir Richard Branson’s corporate affairs advisor and brand development director
for the group globally. He helped develop Virgin Galactic, Virgin Trains and Virgin Media as businesses
and went onto become the first President of Virgin Galactic taking the business from dream to reality. He
is currently Chair of Good Energy Group plc and a Director of AAC Clyde Space AB and was appointed as
Chair of Seraphim Space Investment Trust Plc in June 2021, which floated on the LSE in July 2021. He was
recently invited to the join the U.K. Government’s Space Exploration Advisory Committee.
Keith Neilson, 53
Chief Executive Officer & Co-founder
Keith co-founded Craneware in 1999 and has served as its CEO ever since. Under Keith’s guidance, The
Craneware Group 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.
Craig T Preston, 51
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.
Issy Urquhart, 54
Chief People Officer
Appointed 27 April 2022
Issy was appointed to the board on 27 April 2022. As Craneware’s Chief People Officer, Issy drives
sustainable growth and facilitates change through a focus on people. Issy brings 25-plus years
of strategic and operational global HR experience gained across a number of sectors including
Technology, BPO, mature FMCG and Financial Services. Key strengths are her breadth and depth
of global HR experience across all facets of HR and OD. Most notably prior to joining Craneware
in 2015, Issy worked at CommScope Inc, Wolfson Microelectronics plc and Convergys Corporation
in executive HR roles, where alongside delivering the HR agenda, she lead wide-scale change
programs to deliver acquisitions, changes in business strategies and operating models. Issy is also
prominent in the Scottish charitable and not-for-profit spheres, in her roles as Vice-Chair of the
Edinburgh Business Beats Cancer Board and member of the Scottish and North American Business
Council.
51
Craneware plc Annual Report 2022 Board of Directors [Cont'd]
Colleen Blye, 62
Non-executive Director, Senior Independent Director
Appointed 12 November 2013
Colleen Blye is the Executive Vice President and Chief Financial Officer for Montefiore Health System
and Montefiore Medicine. Montefiore Health System consists of eleven hospitals and an extended
care facility; it is a premier academic medical center and includes Montefiore 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 and Chief Financial Officer 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, 70
Non-executive Director
Appointed 28 August 2014
Russ Rudish has more than 40 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 staffing and consulting
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.
David Kemp, 52
Non-executive Director
Appointed 1 March 2020
David joined the Board as an Independent Non-executive Director in March 2020. David has
extensive UK public company experience. He is currently CFO of the FTSE 250 listed John Wood
Group plc, the global projects, operations and consulting business, a position he has held since
2015. He has held a number of CFO and Non-executive Director positions over the course of his
career and is a member of the Institute of Chartered Accountants.
Alistair Erskine, 52
Non-executive Director
Appointed 24 February 2020
Alistair joined the Board as an Independent Non-executive Director in February 2020. Alistair has
held a number of senior positions within the US healthcare sector. He is currently the Chief Digital
Health Officer of Mass General Brigham, a US not-for-profit healthcare system which is a leader
in the application of clinical information technology to care delivery. He has held academic and
government roles, including lecturing at Harvard Medical School and a Board Member of the Health
Information Technology Standards Committee of the Virginia General Assembly. He holds an MBA
from MIT with specialism in Business Analytics and Artificial Intelligence.
52
Craneware plc Annual Report 2022 Directors' Report
The Directors present herewith their report and the audited consolidated financial statements of the Group for the year ended 30 June
2022.
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 growth; annual recurring revenue; percentage of annual recurring revenue from the Cloud; adjusted
earnings before interest, tax, depreciation and amortisation (EBITDA); adjusted earnings per share; net debt; operating cash; net debt
divided by adjusted EBITDA; operating cash conversion. The adjusted measures are stated before exceptional costs and amortisation of
acquired intangible assets). Detailed information on all matters required is presented in the Strategic Report contained in pages 7 to 29 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, Chair’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.
The Company has chosen, in accordance with section 414C(11) of the Companies Act 2006, to provide disclosures and information in relation
to a number of matters which are included in the Strategic Report or elsewhere in this Annual Report and are incorporated into this Directors’
Report by reference. These matters and cross-references to the relevant sections of this Annual Report are shown in the table below.
53
Craneware plc Annual Report 2022 Directors' Report [Cont'd]
Information
Section within this Annual Report
Appointment and Reappointment of Directors
Biographical Details of the Directors
Business Model
Change of Control
Community and Charitable Giving
Corporate Governance Framework
Directors’ Conflicts of Interest
Directors’ Remuneration
Diversity, Equality and Inclusion
Employee Engagement
Employees with disabilities
Environmental Reporting
Directors’ Report
Corporate Governance Report
Board of Directors
Strategic Report
Directors’ Report
Remuneration Committee’s Report
Directors’ Report
Stakeholder Engagement
Environmental, Social and Governance Statement
Corporate Governance Report
Corporate Governance Report
Remuneration Committee’s Report
Stakeholder Engagement
Environmental, Social and Governance Statement
Directors’ Report
Corporate Governance Report
Directors’ Report
Corporate Governance Report
Stakeholder Engagement
Directors’ Report
Environmental, Social and Governance Statement
Directors’ Report
Financial Instruments and financial risk management Note 3 to the consolidated financial statements
Financial Results
Future developments and strategic priorities
Going Concern statement
Independent Auditor
Modern Slavery Statement
Principal Risks and Uncertainties
Principal Activities
Research and Development
Risk Management
Section 172 Statement
Consolidated and Company financial statements and
accompanying notes
Strategic Report
Directors’ Report
Directors’ Report
Corporate Governance Report
Directors’ Report
Environmental, Social and Governance Statement
Strategic Report
Directors’ Report
Strategic Report
Directors’ Report
Strategic Report
Corporate Governance Report
Strategic Report
Strategic Report
Significant Related Party Transactions
Note 25 to the consolidated financial statements
Stakeholder Engagement
Strategic Report
Subsidiary Undertakings
Viability Statement
Stakeholder Engagement
Strategic Report
Note 16 to the financial statements
Strategic Report
54
Pages
55
60 to 74
51 and 52
9
57
85
57
36
45 and 46
60 to 74
65
75 to 88
30 to 33
41 and 42
57 and 58
66
57 and 58
68
30 to 33
58
46 and 47
57
107 to 109
96 to 140
7 to 12
55
59
72 and 73
58
48
15 to 24
53
7 to 12
55
7, 8 and 10
68 to 74
15 and 16
25 to 29
136 to 138
30 to 38
7 to 29
126
24
Craneware plc Annual Report 2022 Financial Results and Dividends
The Group’s revenue for the year was $165.5m (2021: $75.6m)
which has generated a profit before tax of $13.1m (2021: $13.2m)
after exceptional costs of $2.1m (2021: $6.5m). The full results
for the year, which were approved by the Board of Directors on
19 September 2022, are set out in the accompanying financial
statements and the notes thereto.
During the year the Company paid an interim dividend of 12.5p
(16.88 cents) per share. The Directors are recommending the
payment of a final dividend of 15.5p (18.80 cents) per share giving
a total dividend of 28p (33.96 cents) per share based on the results
for 2022 (2021: 27.5p (38.10 cents)). Subject to approval at the
Annual General Meeting, the final dividend will be paid on 16
December 2022 to shareholders on the register as at 25 November
2022.
Year
FY17
FY18
FY19
FY20
FY21
FY22
Dividends per share
Dividend (pence)
20.0
24.0
26.0
26.5
27.5
28.0 (subject to AGM approval)
We believe the level of dividend proposed for the year balances
the Company’s stated progressive dividend policy based on
the Group’s retained annual earnings and the current macro-
economic climate.
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 including the ongoing development of the
Trisus platform and its cloud based solutions, to support the
Group’s Value Cycle strategy, delivering revenue integrity and 340B
compliance, as well as margin and operational intelligence. Full
details of the development activities and the Group’s roadmap
is provided in the Strategic Report contained in pages 7 to 12.
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 $51.1m
(2021: $24.7m) of which $13.5m (2021: $10.1m) has been
capitalised.
Going Concern
The Strategic Report on pages 7 to 29 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 9 to 12. The
Directors' Report [Cont'd]
Directors, having made suitable enquiries and analysis of the
financial statements, including the consideration of:
• net debt;
• continued cash generation;
• continued compliance with: debt facility covenants and
related payments (Note 22); and
• 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 the Company financial
statements.
Directors
The biographical details of the current serving Directors of the
Company are set out pages 51 and 52. The Directors who served
during the financial year ended 30 June 2022 were:
W Whitehorn
(Non-executive Chair)
K Neilson
C T Preston
I Urquhart
C Blye
R Rudish
A Erskine
D Kemp
(Chief Executive Officer)
(Chief Financial Officer)
(Chief People Officer): Appointed 27 April 2022
(Senior Independent Director)
(Non-executive Director)
(Non-executive Director)
(Non-executive Director)
New Directors, who were not appointed at the previous AGM,
automatically retire at their first AGM and, if eligible, can seek re-
appointment. The Board recognises the UK Corporate Governance
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. Further details regarding the appointment of
directors are contained in the Corporate Governance Report on
pages 60 to 74.
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 85.
Corporate Governance
The Corporate Governance Report on pages 60 to 74 should be
read as forming part of the Directors’ Report.
55
Craneware plc Annual Report 2022 Directors' Report [Cont'd]
Indemnity of Directors and Officers
Authority for purchase of own shares
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 the 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.
Share Capital
The Company’s issued and fully paid up share capital at 30 June
2022 was 35,542,169 Ordinary Shares of 1p each (2021: 33,019,191
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 www.thecranewaregroup.
com, contain the details of the rights and obligations attached to
the shares.
Each of the Company’s Ordinary Shares carries the right to one
vote at general meetings of the Company. Further information on
the voting and other rights of shareholders, including deadlines
for exercising voting rights, are set out in the Company’s Articles
of Association and in the explanatory notes that accompany the
Notice of the Annual General Meeting, which are available on the
Company’s website www.thecranewaregroup.com
Authorisation was given by shareholders at the Annual General
Meeting on 16 November 2021 for the Company to purchase up
to 3,552,654 Ordinary Shares. A resolution to renew this authority
will be proposed at the 2022 Annual General Meeting.
Share capital allotted
On 12 July 2021, 2,507,348 new Ordinary Shares in Craneware plc
were issued as part of the consideration for the acquisition of SDS
Holdco, Inc., the ultimate holding company of Sentry. Note 13
contains further details of this business combination.
During the year ended 30 June 2022, 15,630 Ordinary Shares
(2021: no Ordinary Shares) were issued on the exercise of share
options by employees in March 2022.
The new Ordinary Shares rank pari passu in all respects with the
existing Ordinary Shares of the Company, including the right to
receive all dividends and other distributions declared, made or
paid after the date of issue. Further details are included in Note 19
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 2022 the EBT held 411,323
Craneware plc Ordinary Shares (at 30 June 2021: 348,585 Ordinary
Shares). The EBT waived its right to dividends in the year ended 30
June 2022. Further details regarding the EBT are contained in Note
19 to the financial statements.
Restrictions on transfer of Ordinary Shares
Employee share plans
There are no specific restrictions on the transfer of Ordinary Shares
in the Company beyond those required by applicable law under
the Articles of Association or imposed by laws and regulations
(such as the Market Abuse Regulation) and pursuant to the
Company’s share dealing code, whereby Directors and employees
are required to obtain clearance to deal in the Company’s
securities.
The ‘share capital allotted’ section below refers to the issue of
2,507,348 new ordinary shares in Craneware plc on 12 July 2021,
as part of the consideration for the acquisition of SDS Holdco,
Inc., the ultimate holding company of Sentry. These shares were
distributed by the vendor of Sentry to the underlying equity
holders of the vendor of Sentry and were subject to restrictions
(subject to customary exceptions). These restrictions were a
twelve month hard lock-up and subsequent twelve month
orderly market arrangements in respect of certain members of
Sentry management or a six month hard lock-up and subsequent
six month orderly market arrangements in respect of the other
underlying equity holders of the vendor of Sentry.
Purchase of own shares
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.
Directors and their Interests
The interests of the Directors who held office at 30 June 2022 and
up to the date of this report in the share capital of the Company,
were as follows:
W Whitehorn
K Neilson
C T Preston
I Urquhart
C Blye
R Rudish
2022
No.
2,989
3,431,522
89,329
6,577
547
1,095
2021
No.
2,989
3,429,394
89,329
–
547
1,095
3,532,059
3,523,354
The Company did not purchase any of its own shares in the year
ended 30 June 2022 nor in the year ended 30 June 2021.
Directors’ interests in share options are detailed in the
Remuneration Committee’s Report on pages 87 and 88.
56
Craneware plc Annual Report 2022 Directors' Report [Cont'd]
Substantial Shareholders
Customers
As at 1 September 2022, 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. It
should be noted that, other than for K Neilson, W G Craig, these
holdings may have changed since the Company was notified.
However, notification of any change is not required until an
applicable threshold is crossed.:
No. of
Ordinary £0.01
Shares
4,605,912
3,431,522
2,563,567
2,342,756
1,544,266
1,460,000
1,191,171
1,152,927
% of issued
share capital
12.96
9.65
7.21
6.59
4.34
4.11
3.35
3.24
Liontrust Assset Management
K Neilson
Canaccord Genuity Group
W G Craig
Amati Global Investors
Sanford DeLand Asset Management
Abry Partners
abrdn
Change of control provisions
Within the Group’s revolving loan facility (as detailed in Note 22),
the lender has the right to demand immediate payment of any
outstanding balances upon a change of control of the Group.
There are change of control provisions within the rules of the
Company’s employee share option plans and its long term
incentive plan.
Section 172 Statement
The statement, in respect of section 172 (1) of the Companies Act
2006, is on pages 25 to 29.
Stakeholder Engagement
An explanation of the engagement with stakeholders, examples of
how the Directors have oversight of stakeholder matters and had
regard for these matters when making decisions are included in
the Stakeholder Engagement section on pages 30 to 38.
Corporate Social Responsibility & Environmental Policy
The Group is committed to maintaining a high level of social
responsibility as outlined in the Environmental, Social and
Governance Statement (on pages 39 to 49) section of this
Annual Report. 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; this
is explained within the Environmental, Social and Governance
Statement (on pages 46 and 47). The Group is required to report its
energy use and impact under the Streamlined Energy and Carbon
Reporting (SECR) regulations; the required information for the year
ended 30 June 2022 is contained on page 46 of this Annual Report
within the Environmental, Social and Governance Statement.
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. Further information
about engagement with customers is provided within the
Stakeholder Engagement section on pages 33 and 34 and within
Environmental, Social and Governance Statement on pages 39 to
41.
Community and Charitable Contributions
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.
As part of the Group’s commitment to Corporate Social
Responsibility and ESG matters, the Group has continued to
develop its “Craneware Cares” program. The focus of Craneware
Cares is to raise awareness and funds for charity. During the
year ended 30 June 2022 the Group contributed a total amount
of $47,943 (2021: $45,368) to charities in the UK and in the US
across all of the Group’s fundraising campaigns and employee-
led donations. Further information about Craneware Cares and
other aspects of engagement with the community is provided
within the Stakeholder Engagement section on page 36 and
Environmental, Social and Governance Statement on pages 45
and 46.
Political Donations
Neither the Company nor its subsidiaries made any donation for
political purposes in fiscal years 2022 or 2021.
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 and provides clean,
healthy and safe working conditions. Reviews are conducted on a
regular basis to ensure that policies for training, risk assessment,
safe working and accident management are appropriate. The
Group has a Health and Safety Committee, which reports to the
Governance Committee, comprised of appropriate US and UK
roles within the organisation. Further details, including employee
wellness initiatives, are contained within the Environmental, Social
and Governance Statement on pages 41 to 45.
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.
Share schemes, to encourage involvement of employees in the
Group’s performance, have been established, as detailed on page
84 of the Remuneration Committee's Report.
57
Craneware plc Annual Report 2022 Directors' Report [Cont'd]
Employees and Employee Involvement [Cont'd]
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 employees.
The Group maintains core values of: be authentic; demonstrate
integrity; provide excellent service; work hard to the highest
quality; enjoy the challenge. These values are actively promoted in
all activities undertaken on behalf of the Group.
The general policy of the Group is to welcome employee
involvement as far as it is reasonably practicable. Details regarding
employee engagement are included on pages 30 to 33.
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.
Anti-Slavery and Human Trafficking Policy
The Modern Slavery Act requires the Company to publish an
annual slavery and human trafficking statement. The latest
statement can be found on the Craneware plc website at www.
thecranewaregroup.com/modern-slavery-statement/ Neither the
Company or any of its subsidiaries permit, condone or otherwise
accept any form of human trafficking or slavery in its business
or supply chains. The Environmental, Social and Governance
Statement on page 48 also refers to this Policy.
Engagement with Suppliers and Policy on Payment of
Payables
Relationships with suppliers and subcontractors are based on
mutual respect, and the Group seeks to be honest and fair in its
relationships with suppliers and subcontractors, and to honour
the terms and conditions of its agreements in place with such
suppliers and subcontractors. The Stakeholder Engagement
section on page 37 includes a summary of the Group’s supplier
engagement processes.
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 2022
represented, on average, 29 days purchases (2021: 18 days) for the
Group and 38 days purchases (2021: 19 days) for the Company.
Although this is an increase compared to the position at 30 June
2021, it is anticipated this will return to historic norms in the next
fiscal year.
Annual General Meeting
The resolutions to be proposed at the Annual General Meeting
(’AGM’), together with explanatory notes, appear in a separate
Notice of Annual General Meeting which is issued to all
shareholders and will be made available on the Company’s
website at www.thecranewaregroup.com. The Directors
consider that these resolutions are in the best interests of the
Company and its shareholders as a whole. The proxy card for
registered shareholders is distributed along with the notice. The
arrangements for the AGM, to be held in November 2022, are
outlined in the Notice of AGM.
Voting at General Meetings of the Company is usually on a show of
hands with every holder of Ordinary Shares present in person and
entitled to vote has one vote. On a poll, every member present
in person or by proxy and entitled to vote has one vote for every
Ordinary Share held. The notice of the AGM specifies the deadlines
for exercising voting rights either by proxy notice or present in
person or by proxy in relation to resolutions to be passed at the
AGM. All proxy votes are counted and the numbers for, against
or withheld in relation to each resolution are announced at the
AGM and the voting results are released as an announcement,
on the Regulatory News Service of the London Stock Exchange,
after the meeting and are published as soon as practicable on the
Company’s website.
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 Company financial statements in
accordance with UK adopted international accounting standards
(IFRS) in conformity with the requirements of the Companies Act
2006.
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
58
Craneware plc Annual Report 2022 Statement of Directors’ Responsibilities [Cont'd]
Independent Auditors
Directors' Report [Cont'd]
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
19 September 2022
the profit or loss of the Group for that period. In preparing these
financial statements, the Directors are required to:
•
select suitable accounting policies and then apply them
consistently;
• make judgements and accounting estimates that are
•
reasonable and prudent;
state whether applicable international accounting
standards in conformity with the requirements of the
Companies Act 2006 have been followed, subject to
any material departures disclosed and explained in the
financial statements; and
• prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the
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.
The Directors are responsible for the maintenance and integrity
of the Company’s website. Legislation in the United Kingdom
governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
Directors’ Confirmations
The Directors consider that the annual report and financial
statements, taken as a whole, are fair, balanced and
understandable and provide the information necessary for
shareholders to assess the Group’s and the Company’s position
and performance, business model and strategy.
In the case of each Director in office at the date the Directors’
Report is approved:
•
•
so far as the Director is aware, there is no relevant audit
information of which the Group’s and 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 Group’s
and Company’s auditors are aware of this information.
59
Craneware plc Annual Report 2022 Corporate Governance Report
Chair’s Introduction
On behalf of the Board, I am pleased to present our Corporate
Governance Report for the year ended 30 June 2022 in the
context of the UK Corporate Governance Code 2018 (‘the Code’),
our chosen corporate governance framework. The Board believes
that strong corporate governance, shareholder engagement and
engagement with other stakeholders are critical to the success
of our strategy outlined on pages 7 to 9, and to delivering long-
term, sustainable shareholder value.
Our purpose is to transform the business of healthcare
through the profound impact our solutions deliver, enabling
our customers to provide quality care to their communities.
Throughout the pandemic our customers were on the front-
line and whilst this year saw the easing of direct impacts of the
pandemic, this has not relieved the pressure on all healthcare
providers world-wide. Supporting our customers, and the
phenomenal work they do, continues to be our top priority.
This year has also seen us welcome the Sentry team to
Craneware, following the completion of the acquisition
of Sentry on 12 July 2021. Since then the Board has been
overseeing, within our corporate governance framework, the
integration process which was effectively completed during
the year. This successful integration was based on a structured
implementation plan, driven, in part, through our employee
engagement mechanisms (as outlined within the Stakeholder
Engagement and Environmental, Social and Governance (ESG)
sections of this annual report). Underpinned by our purpose,
it is clear that there are significant positive impacts that the
combined team can provide to our stakeholders, including
the communities in which we operate and wider society. This
therefore continues to progress The Craneware Group’s purpose,
vision, strategy and values to ensure that the culture of the
integrated organisation is aligned to enable their achievement.
I would like to thank the Board, the senior management
team and all colleagues within The Craneware Group for the
significant time, energy and commitment they have provided
throughout the integration process and the ongoing enthusiasm
to collectively uphold our purpose. I would like to thank all of
The Craneware Group team for their continued passion and
commitment.
Purpose, Values and Culture
Supporting our purpose is The Craneware Group’s Framework
consisting of our core values of: be authentic; demonstrate
integrity; provide excellent service; work hard to the highest
quality; enjoy the challenge. Our framework of values was
reviewed and evolved during the year, recognising the addition
of Sentry to bring together a common set of values to the
enlarged group, this is described further in the Stakeholder
Engagement and in the Environmental, Social and Governance
(ESG) sections.
The Board continues to monitor how the purpose, vision,
strategy and values align to the Group’s culture (page 63
contains further details). We have a talented mix of employees
from diverse backgrounds with a range of skills and experience,
which brings a high level of innovation and collaboration.
The Group is supportive of, and recognises the importance
of diversity, including gender, ethnicity, nationality, skills and
experience. This is evident from the diverse, inclusive and
breadth and depth of skills and experience within the team and
we aim to ensure that we continue to attract diverse talent into
The Craneware Group.
During the year the Board oversaw the Group’s progress with the
three fundamental pillars of its growth strategy, as explained in
my Chair’s Statement and in the Strategic Report. This included
the completion of the acquisition of Sentry and its integration
as well as an increase in the Group’s investment in R&D. The
acquisition of Sentry resulted in an immediate step change in
the scale of our operations whilst expanding our coverage of the
market, with The Craneware Group now serving approximately
40 percent of US hospitals, including more than 12,000 US
hospitals, health systems and affiliated retail pharmacies and
clinics.
In these circumstances, good governance and balancing the
needs and expectations of our stakeholders continues to be an
important responsibility.
Section 172 and Stakeholder Engagement
A key focus of the Code is the requirement to report on how the
interests of the Group’s stakeholders and the matters set out in
section 172 of the Companies Act 2006 have been considered
in Board discussions and decision making. It is also important
for the Board to keep stakeholder engagement mechanisms
under review so that they remain effective, particularly with the
expansion of the Group during the year. The Board’s section 172
(1) statement and details of our engagement with stakeholders
can be found on pages 25 to 38.
Environmental, Social and Governance (ESG)
We have summarised within our ESG Statement, on pages
39 to 49, an overview of current programmes and alignment
to sustainability principles. As a Board, we acknowledge the
challenges facing businesses in general, and that of the Group,
in respect of sustainability, including climate change and
environmental, social and governance (ESG) considerations.
Whilst The Craneware Group has developed many initiatives
over the past several years which contribute to our sustainability
credentials, in the financial year ending 30 June 2023, we aim
to formalise a Group-wide ESG governance framework, building
upon our purpose and with a specific focus on ESG matters.
Board composition
We were delighted to welcome Issy Urquhart, The Craneware
Group’s Chief People Officer, to the Board on Issy’s appointment
as an executive director of the Company on 27 April 2022.
60
Craneware plc Annual Report 2022 Corporate Governance Report [Cont'd]
Having joined the Craneware team in 2015, Issy is a valued
member of the Operations Board of the Company and
leads on the development and implementation of human
resources, on organisation design and development and on
change management strategies. Issy was instrumental in
the integration of the Sentry team. Issy is already making an
important contribution to the Board and I am confident that Issy’s
appointment will continue to improve the Board’s effectiveness
in monitoring culture, support our focus on investment in The
Craneware Group team and enhance our awareness of employee
engagement and other ESG matters.
We aim to attract a diverse pool of candidates, with relevant
skills, experience and knowledge, for any senior appointments.
As a Board, we are not in favour of setting specific diversity
targets for the Board and senior management team and all
appointments will ultimately be made on merit. Nonetheless, we
are pleased to be able to demonstrate positive progress in this
area over the past year.
With the prioritisation and focus on the integration process
during the year following the acquisition of Sentry, it was
considered appropriate to defer the Board evaluation by a few
months. It is, however, planned to conduct a Board evaluation
process in the first half of the new financial year rather than
during the year ended 30 June 2022.
Annual General Meeting (‘AGM’)
The Board recognises that the AGM is an important event for
all shareholders. The arrangements for the AGM, to be held in
November 2022, are outlined in the Notice of AGM and we look
forward to welcoming shareholders at the AGM.
The year ahead
Aligned with our purpose, we aim to continue to operate in a
way that allows us to meet the needs of our stakeholders and
have a positive impact on the communities in which we operate
and wider society. Although over several years The Craneware
Group has established (and continues to encourage) many
sustainability initiatives which benefit various stakeholder
groups, we recognise that a Group-wide ESG governance
framework should be formalised during the year ahead.
As a Board, inclusivity throughout the business is highly
important to us and we continue to support our diverse
and inclusive team within The Craneware Group and the
development of our diverse talent pipeline.
We thank our shareholders, our other stakeholders, including
our employees, for their ongoing support during this past year
and for the future as we together uphold the Purpose of The
Craneware Group.
Will Whitehorn
Chair
19 September 2022
61
Craneware plc Annual Report 2022 Corporate Governance Report [Cont'd]
The Board of Directors ("the Board") has always recognised the
importance and value of good corporate governance and has
elected to adopt the UK Corporate Governance Code 2018 (the
‘Code’) as its corporate governance framework but it is aware that
this Code has been drafted in the context of larger, main market
listed companies.
The Board is pleased to report how it has applied the principles
and complied with the provisions of the Code in line with best
practice and in view of the size of the Company. This Report
sets out how it has complied with the individual provisions and
applied the ‘spirit’ of the UK Corporate Governance Code 2018
as a whole and explains any areas of non-compliance with the
provisions of the Code. The UK Corporate Governance Code 2018 is
available from the Financial Reporting Council at www.frc.org.uk.
Overview: Application of the UK Corporate Governance Code 2018
(the ‘Code’)
The Board seeks to continue to ensure the overarching objective
that the governance of the Company contributes to its long-
term sustainable success and achievement of wider objectives,
including the Company and the Group’s contribution to the
communities in which it operates and wider society. The Board
recognises, as stated in the Code, that achieving this depends
on the way it applies the spirit of the Principles of the Code. The
Company is a smaller company for the purposes of the Code
and, as such, certain provisions of the Code are judged to be
disproportionate or less relevant in its case. Where the Company
does not comply with any specific Code provision then this is
highlighted and explained in this report.
Compliance statement
The Board has complied with the spirit of the UK Corporate
Governance Code 2018 and applied the principles and complied
with the provisions of the Code throughout the year ended 30
June 2022, with the exception of the following areas that the
Board believes are not appropriate for a Group of our size or steps
are ongoing to achieve compliance:
•
•
Provision 17: due to the size of the Board, a separate
nomination committee has not been established. Instead,
these duties have been fulfilled by the Board as a whole;
Provision 21: a formal evaluation of the performance
of the Board, its committees, the Chair and individual
directors was not conducted during the year. With
the prioritisation and focus on the integration process
during the year following the acquisition of Sentry, it was
considered appropriate to defer the Board evaluation
process by a few months. It is, however, planned to
conduct a Board evaluation process during the first half of
the financial year ending 30 June 2023;
•
•
Provision 36: concerning the development of a formal
policy for post-employment shareholding requirements.
Post-employment shareholding policies are not
usual practice for AIM Companies. The Remuneration
Committee keeps this area under review but considers
that, whilst no formal post-employment shareholding
policy for executive Directors is in place, its current
approach is acceptable. There is a current required
shareholding guideline applicable to executive Directors
and senior management in place and that guideline
has already been significantly exceeded by two of the
executive Directors. In addition, there is a post-vesting
holding period applicable to Long Term Incentive awards
granted since October 2020 (and intended to apply to
future such awards) to the executive Directors and senior
management. These policies are considered to promote
long-term shareholdings by executive Directors and
senior management that support alignment with long-
term shareholder interests although they do not include
post-employment shareholding requirements; and
Two of the seven elements of Provision 41: As an AIM
listed company, Craneware plc is not required to comply
with the Directors’ Remuneration Report regulations
however the Company does aim to comply with the spirit
of all of Provision 41 of the Code in so far as the Board
considers is appropriate for the size of the Company and
as such provides a Remuneration Committee’s Report
within this annual report. With reference to two of the
elements of Provision 41, the Remuneration Committee
has not engaged directly with shareholders during the
year ended 30 June 2022 regarding executive Director
remuneration policy. However, shareholders have not
raised any concerns with the Board during the year
regarding the remuneration of the executive Directors.
The Chair of the Remuneration Committee is available
to discuss remuneration matters with shareholders if
and when that is required or requested. There was no
engagement with employees, in respect of executive
Director remuneration, during the year however, the
same policy of paying at median (based on benchmark
data) applies across the whole Group. Notwithstanding
that policy, due to the macro-economic environment,
the Remuneration Committee decided to defer any
benchmarking and associated base salary changes for
the executive Directors. This has been the decision for
the past three financial years including the year ended
30 June 2022. As such there have been no changes to
the base salary or bonus entitlements for the executive
Directors during this time.
62
Craneware plc Annual Report 2022 Corporate Governance Report [Cont'd]
In accordance with AIM Rule 26, details of compliance with the
Code and explanations for any non-compliance are also made
available on the Company’s website at www.thecranewaregroup.
com/company/governance/
Board Leadership and Company Purpose
The role of the Board
The Board is primarily responsible for promoting the long-
term success of the Group and is collectively accountable to
shareholders for its proper management. The Board must balance
this responsibility with ensuring that the Directors have regard for
key stakeholders and that there is sufficient time, information and
understanding to properly take into account those stakeholders’
interests when making decisions and considering their long-term
implications. The Board recognises that effective engagement
with key stakeholders, including employees, customers,
shareholders, the community, banks and finance providers and
suppliers, is a core component of long-term sustainability and
success. Stakeholder Engagement information is set out on pages
30 to 38. The Directors consider, both individually and collectively,
that they have taken the factors, set out in s172(1)(a) to (f) of the
Companies Act 2006, into account when exercising their duty to
promote the success of the Group and of the Company during
the year. The Board’s Section 172(1) Statement is on pages 25
to 29 and it includes examples of how those matters have been
considered in significant decisions of the Board.
Purpose, vision, strategy, values and culture
The Board leads and establishes the Group’s purpose, vision,
strategy and values and ensures that they are being carried out in
practice across the business. The Board provides leadership across
the Group and applies a governance framework to ensure that this
is delivered effectively with appropriate control mechanisms.
The Board is responsible for setting the Group’s purpose and
values. Our purpose forms the basis of Group-wide strategic
initiatives each year. Our purpose is to transform the business
of healthcare through the profound impact our solutions
deliver, enabling our customers to provide quality care to their
communities. Our culture is the way that we work together and
is fundamental to how we operate. The Board has a fundamental
role in shaping our corporate culture defined by our values and
purpose. The Board assesses and monitors the Group’s culture
through regular interaction with management and other
colleagues to ensure that its policies, practices and behaviours are
aligned with the Group’s purpose, vision, strategy and values.
The Board is responsible for delivering value for shareholders by
setting the Group’s strategy and overseeing its implementation
by the Operations Board. Our strategy and business model are
explained within the strategic report on pages 7 to 29. The Board,
at least annually, meets to review the Group’s strategy, drawing on
the wide and varied experience of the Board members, including
detailed healthcare sector knowledge. The Board also receives
regular updates on progress with the agreed strategy at each
Board meeting.
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 and
a broader senior management team, who collectively have the
qualifications and experience necessary for the day to day running
of the Group. The Operations Board is chaired by the CEO and also
comprises the Chief Financial Officer, the Chief People Officer and
six further members of the Senior Management Team
There is a formal schedule of matters reserved for the Board,
which includes approval of the Group’s strategy, annual strategic
themes and related business plans, acquisitions, disposals,
business development, annual reports and interim statements,
plus any significant financing or funding related matters as well
as significant 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.
Board Composition and Division of Responsibilities
Board of Directors
Issy Urquhart, the Group’s Chief People Officer, was appointed as
an executive Director of the Company on 27 April 2022. Therefore,
in the period 27 April 2022 to 30 June 2022 the Company’s Board
comprised of: its Chair, Will Whitehorn; three executive Directors:
Keith Neilson, Chief Executive Officer; Craig Preston, Chief Financial
Officer; and Issy Urquhart, Chief People Officer; along with
four further non-executive Directors (each of whom the Board
considers to be independent), Colleen Blye (Senior Independent
Director), Russ Rudish, Alistair Erskine and David Kemp. Detailed
biographies of all Directors are contained on pages 51 and 52.
63
Craneware plc Annual Report 2022 Corporate Governance Report [Cont'd]
Board Composition and Division of Responsibilities [Cont'd]
Non-Executive Directors
A summary of the composition of the Board for different periods
during the year ended 30 June 2022 is:
Period
Composition of the Board
Chair
(Independent on
Appointment)
Executive
Directors
Independent
Non-executive
Directors
1
1
2
3
4
4
1 July 2021 to
26 April 2022
From 27 April 2022
Division of Responsibilities
The Board has established clearly defined and well understood
roles for the Chair of the Company and the Chief Executive Officer.
A summary of the main responsibilities of these roles, and also
that of the Senior Independent Director, is contained in the table
below.
The Board has appointed Colleen Blye as Senior Independent
Director. In this role, Colleen provides a sounding board for the
Chair as well as providing an additional channel of contact for
shareholders, other Directors or employees, if the need arises.
The non-executive Directors assist in the development of strategy
and monitor its delivery within the Company’s established risk
appetite. They are responsible for bringing sound judgement
and objectivity to the Board’s deliberations and decision-making
process. In addition, the non-executive Directors constructively
challenge, support and review the performance of executive
Directors.
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 Chair present.
Role
Summary of Responsibilities
The Composition of the Board
The Chair is responsible for the leadership of the Board,
ensuring its effectiveness in directing the Company,
and setting its agenda. The Chair promotes a culture
of openness and debate facilitating constructive
Board relations and the effective contribution of
all Non-Executive Directors to provide constructive
support and challenge to the executive Directors
and senior management. The Chair ensures that the
Board receives accurate, timely and clear information.
The Chair is also responsible for ensuring that the
Board is aware of the views of shareholders and other
stakeholders.
The Chief Executive Officer (CEO) ensures that the
strategic and financial objectives, as agreed by the
Board, are delivered upon in addition to ensuring the
effective implementation of the Board’s decisions. To
facilitate this, the CEO chairs the Group’s Operations
Board which manages, subject to the clearly defined
authority limits, the day-to-day operation of the
Group’s business in an ethical and sustainable manner,
aligned to the culture of The Craneware Group.
Maintaining an effective framework of internal
controls and risk management are also within the
responsibilities of the CEO. In addition, the CEO is
responsible for leading, motivating and monitoring the
performance of the Group’s senior management.
The Senior Independent Director provides a sounding
board for the Chair as well as providing an additional
channel of contact for shareholders, other Directors or
employees, if the need arises.
Chair
Chief Executive
Officer
Senior
Independent
Director
The Chair
William Whitehorn was appointed Chair of the Board on 1 January
2020 and was independent on appointment, in accordance with
Provisions 9 and 10 of the Code.
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;
healthcare sector;
software sector and analytics;
entrepreneurial cultures;
senior financial reporting;
both UK and US companies;
acquisitions;
integration of acquired businesses; and
other listed companies.
The Board was enhanced during the year with the appointment
of Issy Urquhart, the Group’s Chief People Officer, as an executive
Director of the Company.
Through this mix of experience and skills, 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 assessment, in addition
to considering Provision 10 of the Code, 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.
64
Craneware plc Annual Report 2022 Corporate Governance Report [Cont'd]
Board Composition and Division of Responsibilities [Cont'd]
In regards to all of the non-executive Directors, the Board has
not identified any matters that would affect their independence.
Throughout the year ended 30 June 2022, a least half the Board,
excluding the Chair, were non-executive Directors whom the
Board considers to be independent.
As detailed in the Directors’ Report on page 56, 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.
The Board has established an Audit Committee and a
Remuneration Committee, details of which are provided below.
The Board does not have a separate Nomination Committee as the
Company has incorporated this function within the remit of the
entire Board. Although not in compliance with Provision 17 of the
Code, the Board considers this to be an appropriate arrangement
in view of the size of the Group.
The membership of both of the Committees has not changed
during the year:
Audit Committee members
Remuneration Committee members
Throughout the year ended 30 June 2022
David Kemp (Chair)
Colleen Blye
Alistair Erskine
Throughout the year ended 30 June 2022
Russ Rudish (Chair)
Colleen Blye
Alistair Erskine
Attendance of Directors at scheduled Board and Committee
meetings convened in the year, along with the number of
meetings that they were invited to attend, are set out below: *
No. Meetings in year
Executive Directors
K Neilson
C T Preston
I Urquhart*
Non-Executive Directors
W Whitehorn
C Blye
R Rudish
A Erskine
D Kemp
Board
12
12/12
12/12
2/2
12/12
10/12
12/12
10/12
12/12
Remuneration
Committee
Audit
Committee
2
-
-
-
-
2/2
2/2
2/2
-
1^
-
-
-
-
1/1
-
1/1
1/1
*for this director, who was appointed to the Board during the year, the number of meetings attended is
with reference to those from the date of appointment.
^iin addition, an Audit Committee meeting scheduled for June 2022 had to be reconvened and held
in the first week of July 2022 (the first week of the new financial year) – all members of the Audit
Committee attended that meeting but that meeting and the attendance is not included in this table.
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 Chair then provides a detailed briefing along with the
minutes of the meeting following its conclusion.
Board Appointments and Evaluation
Appointments to the Board
Board composition is regularly reviewed to ensure the requisite
mix of skills, business experience and diversity is achieved and
maintained, appropriate for the Group, as well as the balance
within the Board of independent non-executive directors. 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 regard to executive appointments,
to internal and external candidates. Before undertaking the
appointment of a Director, the Board establishes that the
prospective candidate can give the time and commitment
necessary to fulfil their duties, in terms of availability both to
prepare for and attend meetings and to discuss matters at other
times. This includes, prior to appointment, significant existing
commitments being disclosed and assessed along with an
indication of time commitment involved.
During the year ended 30 June 2022, the Board (led by the Chair)
recognised that, following the successful integration of the Sentry
acquisition, the importance of a strong representation for, and
extensive experience of, employee matters on the Board. The
Board determined that it was an essential requirement for this
executive director position to have the requisite skillset plus an
in depth understanding of the organisation and team across
the entire Group. Further, experience and insights from the
integration process conducted during the year would benefit the
Board immediately. As such, independent search consultancies
were not engaged by the Board in respect of the formal process to
identify potential candidates for this executive director position.
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.
65
Craneware plc Annual Report 2022 Corporate Governance Report [Cont'd]
Board Appointments and Evaluation [Cont'd]
Diversity
The Group is supportive of, and recognises the importance
of diversity, including gender, ethnicity, nationality, skills and
experience. This is evident from the diverse, inclusive and breadth
and depth of skills and experience within the team at The
Craneware Group. While not in favour of setting specific targets,
in the event that a Board position is required to be filled, during
succession planning, the Board aims to ensure that the search
process is sufficiently inclusive to encourage applications from
diverse candidates with relevant skills, experience and knowledge,
and that the selection process is fair and transparent.
Following the appointment of Issy Urquhart to the Board on
27 April 2022, the Board comprises 25% female and 75% male
directors. At the end of the financial year, across The Craneware
Group, our team comprised 47% female and 53% male employees.
At Operations Board plus vice president level, the composition is
approximately 37% female and 63% male.
Commitment
All 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 Directors’ biographies on pages 51 and 52. 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. During the prior financial year
the Chair, Will Whitehorn, was appointed in June 2021 as Chair of
Seraphim Space Investment Trust Plc which floated on the London
Stock Exchange in July 2021. This appointment was reviewed
by the Board and the estimated time commitment required by
that other role was considered not to affect the Chair’s ability to
perform his duties with the Company. Prior approval of the Board
is required in advance of executive Directors undertaking external
appointments. 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.
Succession Planning
The Board as a whole recognises its responsibility to ensure
that appropriate plans are in place for orderly succession to the
Board and has plans in place for any unforeseen circumstances
regarding the executive Directors. Succession plans are in
place for the senior management talent pipeline which are
re-visited and reviewed with the Board as appropriate. The
Board takes an active interest in the quality and development
of talent and capabilities within Craneware, ensuring that
appropriate opportunities are in place to develop high-
performing individuals. The learning and development support
and initiatives available to employees have been augmented
during the year as outlined in the ESG section of this annual
report. The composition of the Operations Board was expanded
during the year, reflecting the larger scale and development of
the organisation following the acquisition of Sentry, with the
addition of the Chief Customer Officer and Chief Transformation
Officer.
Development
The Chair 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 and financial reporting requirements relevant
to the Group’s business are provided to the Board by the Chief
Financial Officer and through the Board Committees by the
Group’s external auditors and advisors.
All Directors have access to the advice and services of the
Company Secretary, who is responsible to the Board for advising
the Board on all governance matters, 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. The Board ensures that
the Audit and Remuneration Committees are provided with
sufficient resources to undertake their duties.
Training in matters relevant to their role on the Board is available
to all Directors. New Directors, who have not been employed
within the Group prior to appointment, are provided with an
induction in order to introduce them to the operations and
management of the business. All new Directors receive a briefing
on their role and duties as a director of a company which has
its shares traded on AIM. This briefing is conducted by the
Company’s advisors.
Information and Support
In setting the agenda for each Board meeting, the Chair, 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 regard 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 have access to, and
correspond with, the Group’s Operations Board on an informal
basis. This allows for better understanding of how the strategy
set by the Board is being implemented across the Group.
Evaluation
With the prioritisation and focus on the integration process
during the year following the acquisition of Sentry, it was
66
Craneware plc Annual Report 2022 Corporate Governance Report [Cont'd]
Board Appointments and Evaluation [Cont'd]
• All shareholders are usually invited to attend the AGM
considered appropriate to defer the Board evaluation. It is,
however, anticipated that a Board evaluation process will be
conducted in the first half of the financial year ending 30 June
2023 rather than during the year ended 30 June 2022. A formal
Board evaluation process was conducted in the year ended
30 June 2021. This was performed by means of a detailed
questionnaire completed by each Director. This evaluation
included a review of the performance of the Chair and the Board
Committees. The results of the process were collated by the
Company Secretary and were reviewed by the Board as a whole.
Overall, the Board concluded that its performance in the period
under review had been satisfactory, however it did recognise
the Board, as constituted, was relatively new and resolved to
monitor its progress including the possibility of supplementing
the Board with a further non-executive Director.
The Board will continue to consider the Code’s recommendation
that the evaluation of the Board be carried out with an external
evaluator at least every three years, however, at present, remains
of the opinion that with the current size of the Board this is not
required.
Re-election
Under the Company’s Articles of Association, at every Annual
General Meeting (‘AGM’), at least one-third of the Directors who
are subject to retirement by rotation, are required to retire and
may be proposed for re-election. In addition, any Director who
was last appointed or re-appointed three years or more prior to
the AGM is required to retire from office and may be proposed
for 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.
Stakeholder Engagement
Shareholders
Dialogue with Shareholders
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:
and encouraged to take the opportunity to ask questions.
Unfortunately, different arrangements had to be made
for the AGM in November 2020, due to the public health
guidelines in relation to COVID-19 and consideration for
the safety and well-being of our shareholders, the Directors
and employees of the Company. The AGM therefore had to
be held as a closed meeting with only the required quorum
of shareholders present in person. With some easing of
COVID-19 restrictions, it was possible to arrange an open
Annual General Meeting in November 2021 however
shareholders were encouraged to carefully consider their
attendance at that AGM due to ongoing uncertainties
regarding the COVID-19 situation at that time. Shareholders
were therefore strongly encouraged to participate in the
AGM by voting by proxy ahead of the meeting and, given
the ongoing uncertainty around pandemic restrictions, it
was recommended that all shareholders appoint the Chair of
the meeting as their proxy. The AGM to be held in November
2022 is planned to be arranged as a normal AGM with all
shareholders therefore being invited to attend.
• The primary point of contact for shareholders on operational
matters are Keith Neilson as Chief Executive Officer and Craig
Preston as Chief Financial Officer.
• The primary point of contact for shareholders on corporate
governance and other related matters is Will Whitehorn
as Chair. Colleen Blye, as Senior Independent Director, is
available as a point of contact should a shareholder not wish
to contact the Chair for any reason.
• The Board welcomes regular engagement with major
shareholders to understand their views on governance and
performance against our stated strategy.
• The Chair ensures that the Board as a whole has a clear
understanding of the views of shareholders.
• The Board aims to ensure that both the investor and analyst
communities understand our purpose, strategy, business
model and financial and operational performance.
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.
On 13 July 2021, the date of the announcement of the
completion of the acquisition of Sentry, an online meeting was
held regarding the acquisition (including the strategic rationale
for the acquisition and an overview of future prospects for the
combined business) and presented by the CEO and CFO to
which shareholders and analysts and other interested parties
were invited. There was the opportunity for attendees to ask
questions at the end of the presentation. The presentation slides
from this meeting can be viewed on the Investors section of the
Company’s website at www.thecranewaregroup.com.
67
Craneware plc Annual Report 2022 Corporate Governance Report [Cont'd]
Stakeholder Engagement [Cont'd]
Shareholders [Cont'd]
As explained in the Audit, Risk and Internal Control section of
last year’s Corporate Governance Report, the Chair of the Audit
Committee wrote to the Company’s substantial shareholders to
inform them in advance about the audit tender process and to
provide them with an opportunity to comment on the tendering
and appointment of the external auditors. The Remuneration
Committee’s Report section of this annual report explains
that, in view of the greater emphasis on long term incentive
arrangements, the provisions of our long term incentive plan
(LTIP) have been reviewed since 30 June 2022 to ensure that
our LTIP continues to provide an effective mechanism for
incentivising and rewarding our executive Directors and senior
management team and aligning their interests with those of our
shareholders. The changes identified as part of this review are
planned to be implemented by the adoption of a new plan. The
Remuneration Committee is sending a letter to the Company’s
significant shareholders regarding the proposed new LTIP.
The Company’s website (at www.thecranewaregroup.com) has a
section for investors that contains all publicly available financial
information and news on the Company.
Details of the Company’s share capital and substantial
shareholders are contained in the Directors’ Report on pages 56
and 57 respectively.
Constructive Use of General Meetings
The Board normally encourages attendance at its Annual
General Meeting (‘AGM’) from all shareholders however the
arrangements for, and guidance for attendance at, the AGMs
held in November 2020 and in November 2021 were different as
a consequence of the COVID-19 restrictions applicable at those
times.
The Notice of AGM together with all resolutions and
explanations of these resolutions are sent at least 20 working
days before the meeting. The Company proposes separate
resolutions for each substantially separate issue and specifically
relating to the report and financial statements. 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 voting on each Resolution tabled at the AGM in November
2021 was conducted by way of poll votes (rather than votes
being conducted on a show of hands), in view of the fact that
shareholders were encouraged to carefully consider their
attendance at that AGM due to ongoing uncertainties regarding
the COVID-19 situation at that time. Shareholders were therefore
strongly encouraged to participate in the AGM by voting by proxy
ahead of the meeting and, given the ongoing uncertainty around
pandemic restrictions, it was recommended that all shareholders
appointed the Chair of the meeting as their proxy.
If an AGM resolution receives 20% or more of votes cast against,
the Board will consult with shareholders to understand the
reason behind the result. Following the AGM that was held on
16 November 2021, the Company announced that all resolutions
were passed and in respect of each resolution at least 94.9%
of the proxy votes received were ‘for’ each of the resolutions
proposed.
Employee engagement
The Board has decided to utilise alternative workforce
engagement mechanisms, instead of the suggested workforce
engagement mechanisms in the Code (i.e. a director appointed
from the workforce, a formal workforce advisory panel or a
designated non-executive director). As explained in previous
annual reports, Craneware has an established Employee
Advisory Committee and utilises the results and feedback
received from the annonymous engagement surveys, as well
as the other engagement mechanisms (including additions
and adaptations implemented during the year as part of the
integration process), as outlined in the Stakeholder Engagement
section and in the ESG Statement section within this Annual
Report. The additions during the year included the creation
of an Advocacy Group, represented by employees from
across the enlarged organisation. The Board considers these
employee engagement mechanisms, to be further supported
and developed following the appointment in April 2022 of
the Group’s Chief People Officer, Issy Urquhart, to the Board
as an executive Director, to be appropriate at this time, in
view of the size of the Group. The Board will continue to keep
these engagement mechanisms, in addition to those for other
stakeholders, under review to ensure that the engagement
mechanisms are effective.
Engagement with other key stakeholder groups
The Environmental, Social and Governance (ESG) Statement,
the Stakeholder Engagement section and the Directors’
Report within this Annual Report contain an overview of the
engagement with other key stakeholder groups including:
customers and the community and banks and finance providers.
Audit, Risk and Internal Control
Audit Committee and 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 twice a year. Throughout the year ended
30 June 2022 and for the period to the date of approval of this
Report, the Audit Committee is chaired by David Kemp and
its other members are Colleen Blye and Alistair Erskine. 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.
David Kemp and Colleen Blye, as current and previous chair
of the Audit Committee, have recent and relevant financial
experience and the Audit Committee as a whole has significant
experience and competence in healthcare and software sectors.
The terms of reference of the Audit Committee are available on
68
Craneware plc Annual Report 2022 Corporate Governance Report [Cont'd]
Audit, Risk and Internal Control [Cont'd]
the Company’s website, at www.thecranewaregroup.com, and
at the Company’s registered office. Details of how the Audit
Committee has discharged its responsibilities are provided on
pages 69 and 70.
Financial and Business Reporting
The Board recognises its responsibilities, including those
statutory responsibilities laid out on pages 58 and 59. An
assessment of the Group’s market, business model and
performance is presented in the Chair’s Statement and the
Strategic Report on pages 6 to 12.
As detailed on page 55 of the Directors’ Report, the Board has
confirmed that it is appropriate to adopt the going concern basis
in preparing the consolidated and Company financial statements
for the year ended 30 June 2022. The Board has explained within
the Viability Statement section of the Strategic Report on page
24 that it has assessed the prospects of the Company and the
Group, taking into account the Group and the Company’s current
position and principal risks, as well as projected compliance
with debt finance covenants.
Risk Management and Internal Control
Details of the principal risks and uncertainties and emerging
risks facing the Group, along with a description of the Group’s
risk management procedures, are detailed in the Strategic
Report on pages 15 to 24. The principal financial risks are
detailed in Note 3 to the financial statements.
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, which cover all material
controls, including financial, operational and compliance
controls are reviewed for effectiveness annually by the Audit
Committee and the Board. The Group’s systems of internal
control have been extended, as part of the integration process,
to include Sentry and 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.
The annual financial forecast is reviewed and approved by the
Board. Financial results, with comparisons to 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. During the financial year and in the period
to the date of approval of this report, the Board has received
information regarding the Group’s compliance with financial
covenants contained within the committed term loan and
revolving loan facility. Further details regarding these borrowing
facilities are contained in Note 22 to the financial statements.
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 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.
There is an extensive complement of policies and procedures,
applicable across The Craneware Group, including: business
ethics, information security, whistleblowing, anti-bribery and
corruption, anti-slavery and human trafficking along with
monitoring of mandatory training and policy acknowledgement
for key areas. This is referred to in the ESG Statement section of
this annual report.
Audit Committee: role, responsibilities and activities during the year
During the year the Audit Committee, operating under its terms
of reference (which are available on the Company’s website, at
www.thecranewaregroup.com, and 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;
• the integrity of the Annual Report and Financial Statements,
the Interim Report and any formal announcements relating
to financial performance, to ensure clarity and completeness
of disclosures, including those relating to alternative
performance measures (including adjusted performance
measures);
• developments in accounting and reporting requirements;
• matters of accounting significance, estimation and
judgement including those in respect of the Sentry
acquisition completed during the year;
• consideration of the disclosure matter noted in the letter
received from the Financial Reporting Council regarding
its review of the Group’s Annual Report and financial
statements for the year ended 30 June 2021;
• 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;
69
Craneware plc Annual Report 2022 Corporate Governance Report [Cont'd]
Audit, Risk and Internal Control [Cont'd]
Audit Committee: role, responsibilities and activities during the year [Cont'd]
• the requirements or otherwise for an internal audit function;
• external auditors’ plan for the year-end audit of the Company and the Group, including the updated Group audit scope following
the acquisition of Sentry;
• the performance and independence of the external auditors. The auditors provide annually a letter to the Committee confirming
their independence and stating the methods they employ to safeguard their independence;
• the audit fees charged by the external auditors;
• the formal engagement terms entered into with the external auditors;
• the provision of tax compliance services to the Group;
• the Committee’s effectiveness.
The Audit Committee has reviewed the Group’s profitability and liquidity as part of a number of forecast scenarios, incorporating
the impact of COVID-19 and the wider macro-economic conditions. As part of this assessment, the Committee has also reviewed the
viability statement and going concern note (as included on page 24 and page 55 respectively), following which it was agreed that the
going concern basis of accounting continues to be an appropriate basis of preparation for the financial statements.
In accordance with its terms of reference, the Committee has reported to the Board as to how it has discharged its responsibilities
throughout the year.
Financial Reporting Council Review
As explained in last year’s Corporate Governance Report section of the annual report, the Conduct Committee of the Financial Reporting
Council (‘FRC’) reviewed the Group’s Annual Report and Accounts for the year ended 30 June 2020 as part of its routine monitoring activity.
The Conduct Committee did not report any material errors in compliance with relevant reporting requirements or require any corrections.
It did make some recommendations to support continuous improvements in our financial reporting. These were addressed by additional
disclosures, where material and relevant, in the annual report and accounts for the year ended 30 June 2021. A further letter was received
from the FRC in April 2022, regarding the FRC’s review of the Group’s Annual Report and Accounts for the year ended 30 June 2021. The FRC
noted a disclosure point in that letter regarding solely the parent company accounts which has been addressed in the notes to the financial
statements for the year ended 30 June 2022.
The FRC has requested that we advise shareholders that this review provides no assurance that the Annual Report and Accounts are
correct in all material respects; the FRC’s role is not to verify the information provided but to consider compliance with reporting
requirements. The FRC and its officers, employees and agents therefore accept no liability for any reliance on its review by the
Company or any third parties, including but not limited to investors and shareholders.
Significant matters considered in relation to the financial statements
The Committee considers the appropriateness of accounting policies, critical accounting judgements and sources of estimation
uncertainty relating to the financial statements. To do this, the Committee reviewed information provided by the Chief Financial
Officer and reports from the external auditors setting out its views on the accounting treatments and judgements for the year ended
30 June 2022. The Audit Committee is satisfied that the judgements and estimates applied in the financial statements satisfy the
requisite standards both in terms of accounting treatment and disclosure.
The following table sets out the significant areas considered by the Committee in relation to the Group’s financial statements for the
year ended 30 June 2022, in particular the critical judgements and estimates of the Company as disclosed in the financial statements:
70
Craneware plc Annual Report 2022 Corporate Governance Report [Cont'd]
Audit, Risk and Internal Control [Cont'd]
Audit Committee: role, responsibilities and activities during the year [Cont'd]
Area of judgement or estimate Matter considered and Role of the Committee
Revenue recognition (Group and
Company), including compliance
with IFRS 15
Internally developed intangible
assets
(Group and Company)
Business Combination: Valuation
of assets and liabilities acquired as
part of the acquisition of Sentry
Impairment assessment
Revenue and deferred income are significant amounts in the context of the Consolidated Statement
of Comprehensive Income and the Group and Company Balance Sheets respectively. The amount of
revenue to be recognised and timing of revenue recognition are determined based on the details and
terms contained in the contracts with customers. Revenue recognition on non-standard contracts can
involve significant judgment and interpretation of both the Group’s policy and IFRS 15.
In the current year this included ensuring revenue related to Sentry contracts has been correctly
recognised in the consolidated financial statements of the Group in accordance with IFRS 15. Sentry’s
financial statements prior to its acquisition were prepared in accordance with US GAAP.
The Group and the Company capitalise development costs when the conditions for capitalisation, as
outlined in the principal accounting policies, have been met. Consequently, the Directors are required to
continually assess the commercial potential of each product in development and its useful life following
launch. There is judgement involved in determining whether or not costs being capitalised meet the
definition of intangible assets under IAS 38 Intangible assets. In addition, there may be judgement
involved in the assessment of whether or not the intangible assets will generate future economic benefit
sufficient to recover the carrying value of the intangible asset. The Committee reviews this area as there is
judgement involved in the Directors’ assessment.
During the year the Group completed the acquisition of Sentry and, as part of the accounting for this
business combination, engaged a third-party specialist to undertake a valuation of any intangible
assets generated. The judgements in relation to this valuation are those assumptions underpinning
the valuation methodology and relate to the future performance expectations of the business.
Plans prepared by senior management supporting the future performance expectations used in the
calculations were reviewed by the Board. The Audit Committee received a presentation on the outcome
of both the plan and finalised valuation report and was satisfied with the position. Note 13 to the
financial statements contains details of the accounting for this business combination.
Goodwill and other intangible assets, as disclosed in Note 15 to the financial statements, are significant
assets on the Group’s balance sheet and the carrying amounts of these assets increased during the year
as a result of the Sentry acquisition. The carrying amount of the Group’s and the Company’s tangible
and intangible assets, including goodwill on the Group’s balance sheet, is considered at each reporting
date to determine whether there is any indication that those assets have suffered an impairment loss.
The Committee reviews this assessment. 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. There are no impairment
losses recognised in the financial statements of the Group in the year ended 30 June 2022. The
Committee received and reviewed reports from both management and the external auditors and, where
appropriate, challenged the assumptions taken and the conclusion reached. The Committee reviewed
summary reports produced by management detailing the outcomes of the impairment assessment.
The Group uses Alternative Performance Measures (APMs) and provides additional disclosures, including reconciliations to statutory
measures, as set out in Note 27 to the financial statements. The Committee considers it important to take account of both the statutory
measures and the APMs when reviewing these financial statements. In particular, items excluded from underlying results were reviewed
by the Committee and it is satisfied that the presentation of these items is clear, applied consistently across years and that the level of
disclosure is appropriate.
The Audit Committee also reviewed and considered other matters during and in respect of the financial year ended 30 June 2022
including management’s assessment of new accounting standards that were not effective for adoption until after 30 June 2022.
The Audit Committee considered and discussed with the rest of the Board whether the Annual Report, taken as a whole, is
fair, balanced and understandable and provides the information necessary for stakeholders to assess the Group’s position and
performance, business model and strategy.
71
Craneware plc Annual Report 2022 Corporate Governance Report [Cont'd]
Audit, Risk and Internal Control [Cont'd]
External audit
Internal audit arrangements
The Committee has also reviewed the arrangements in place
for internal audit and concluded, due to the current size,
geographical dispersion, complexity and internal control
environment of the Company and the Group, that a formal
internal audit function was not required. This review by the
Committee considered the relevant implications of the enlarged
Group following the completion of the acquisition of Sentry. The
Audit Committee believes that management is able to derive
assurance regarding the adequacy and effectiveness of internal
controls and risk management procedures, given the close
involvement of the Directors and the senior management on a
day to day basis, without the need for an internal audit function.
In view of the importance of the procedures, security, regulation
and controls around Craneware’s solutions and customer data,
the focus for other assurance activities for the Group is in respect
of those areas. During the financial year ended 30 June 2020,
Craneware achieved HITRUST CSF Certification for its Trisus and
InSight solutions, as well as associated operational processes.
This involved an external, validated audit of Craneware’s security
and data privacy practices. Health Information Trust Alliance
(‘HITRUST’ Alliance) is a collaboration with healthcare, technology
and information security organisation which develops, maintains
and provides broad access to its widely adopted common risk
and compliance management and de-identification frameworks;
related assessment and assurance methodologies; and initiatives
advancing cyber sharing, analysis and resilience. HITRUST is
considered to be a gold standard for security frameworks within
the healthcare industry. HITRUST has established a ‘common
security framework’ (CSF) to address the multitude of security,
privacy and regulatory challenges facing organisations. The
scope of the HITRUST CSF’s requirements is wide and requires a
very high standard of data security arrangements as these have
been set in the context of the accreditation being relevant to
US healthcare providers with handling sensitive data (Protected
Health Information) and impacts in some way all areas of the
business (at least in respect of the required enhancement to
the Group-wide IT and data security policies). Full HITRUST CSF
assessments are conducted every two years; interim assessments
are conducted during the intervening periods. The Craneware
Group engages with third party auditors to support effective
security practices and compliance with HITRUST, Health Insurance
Portability and Accountability Act (HIPAA) and the System and
Organisation Controls as defined by the American Institute
of Certified Public Accountants (AICPA SOC). Further details
regarding information security are provided in the Principal Risks
and Uncertainties section and in the Environmental Social and
Governance (ESG) Statement within this annual report.
The Audit Committee will continue to monitor whether there
is a requirement for an internal audit function and will report
accordingly to the Board.
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.
As explained in the Corporate Governance Report section of
the annual report for the year ended 30 June 2021, the Audit
Committee was responsible for conducting an audit tender
process on behalf of the Board in that year and, based on the Audit
Committee’s assessment of the proposals received from invited
audit firms, the Committee made recommendations to the Board.
The Board considered the Audit Committee’s recommendation
and subsequently approved PricewaterhouseCoopers LLP
for recommendation to shareholders, for re-appointment as
auditors, at the Company’s Annual General Meeting (AGM) held
in November 2021. This resolution for the re-appointment of
PricewaterhouseCoopers LLP as the Company’s auditors was
approved by the Company’s shareholders.
The audit partner within PricewaterhouseCoopers LLP is required
to rotate every five years. This is the second year that the audit
partner, Paul Cheshire, has led the engagement team for the
audit of the Group’s full year financial statements. The audit plan
identified what the external auditors consider to be the key
audit risks, the planned scope of work, the audit timetable and
also details of how they have assessed their independence to be
able to undertake the audit work. With regards to the acquisition
of Sentry during the financial year, the auditors updated their
group audit scope assessment to include Sentry as a full scope
financially significant component.
This audit plan was reviewed, along with the Committee’s
assessment of auditors independence, and was agreed in
advance by the Audit Committee. Having considered the
planning work carried out and the results of the audit of
the Group and Company financial statements for the year
ended 30 June 2022, the Committee was satisfied that the
approach adopted was robust and appropriate and that
auditors independence and objectivity could be relied upon.
The Committee is satisfied with the performance of the
external auditors and with the policies and procedures in place
to maintain their objectivity and independence. The Audit
Committee conducted a review of PricewaterhouseCoopers
LLP’s effectiveness in respect of the audit of the Group and
Company financial statements for the year ended 30 June 2022.
The Committee considered several factors when determining
the effectiveness of the external auditors, including: the overall
quality and scope of the audit; the audit partner and team;
communication and engagement
72
Craneware plc Annual Report 2022 Corporate Governance Report [Cont'd]
Audit, Risk and Internal Control [Cont'd]
External audit [Cont'd]
with the Audit Committee and the way in which matters were
reported, followed up and resolved; the independence of
PricewaterhouseCoopers LLP and whether an appropriate level
of challenge and scepticism existed in the audit team’s work.
The Committee considers that PricewaterhouseCoopers LLP
possesses the skills and experience required to fulfil its duties
effectively and efficiently and that the audit of the Group and
Company financial statements for the year ended 30 June 2022
was effective. The Committee has therefore recommended to the
Board the reappointment of PricewaterhouseCoopers LLP as the
Company’s auditors at the forthcoming AGM of the Company.
Non-audit services provided by the external auditors
Craneware is an ‘Other Entity of Public Interest’ (‘OEPI’) in
accordance with the definition introduced by the Financial
Reporting Council and, consequently, the Company’s external
auditors are only able to perform a limited number of assurance
related non-audit services.
The Audit Committee has 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
Chair of the Audit Committee. The policy in respect of services
provided by the external auditors is set out below:
The external auditors may be appointed to provide non-
audit services where it is in the Group’s best interests to do
so, provided a number of criteria are met. These are that the
external auditors do not:
• Audit their own work;
• Make management decisions for the Group;
• Create a conflict of interest;
• Find themselves in the role of an advocate for the Group.
During the year ended 30 June 2022, as was the case in the
previous financial year, the Company’s auditors have not
provided the Group or the Company with any non-audit work.
Details of the fees paid to the auditors for audit services are
shown in Note 6 to the financial statements.
Whistleblowing Policy
The Group is committed to conducting its business with honesty
and integrity and it is expected that these high standards be
maintained throughout the organisation. As an element of
providing a supportive and open culture within the organisation,
the Group has a Whistleblowing Policy and associated
annual training. This Policy includes arrangements by which
employees, consultants or contractors may, in confidence and
also anonymously should they wish, raise concerns regarding
possible improprieties in matters of financial reporting or
other matters. These concerns would then be investigated and
followed up appropriately. The Board has provision to review
these arrangements and any reports arising from their operation.
Remuneration
The Company has established a Remuneration Committee to
assist the Board in this area. This Committee comprises non-
executive Directors and the Committee is chaired by Russ Rudish
and its other members are Colleen Blye and Alistair Erskine.
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, the remuneration of the Chair of the Board and setting
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 management remuneration,
and to oversee long-term incentive plans (including share
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 75 to 88, which details the work undertaken operating
under its terms of reference (which are available on the
Company’s website, at www.thecranewaregroup.com, and at the
Company’s registered office) to discharge its responsibilities. The
Remuneration Committee’s Report also explains the extent of
the Board’s compliance with provisions 32 to 41 of the Code.
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 for
Companies;
seek advice from its Nominated Advisor (“Nomad”)
regarding its compliance with the AIM Rules for
Companies whenever appropriate and take that advice
into account;
• provide the Company’s Nomad with any information it
reasonably requests or requires in order for the Nomad
to carry out its responsibilities under the AIM Rules for
Companies and the AIM Rules for Nominated Advisors,
including any proposed changes to the Board and
provision of draft notifications in advance;
73
Craneware plc Annual Report 2022 Corporate Governance Report [Cont'd]
AIM Rule Compliance Report [Cont'd]
•
•
ensure that each of the Company’s Directors accepts
full responsibility, collectively and individually, for
compliance with the AIM Rules for Companies; and
ensure that each Director discloses to the Company
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.
In addition, Craneware plc maintains compliance with AIM Rule
26, which specifies a list of information that the Company is
required to make publicly available. AIM Rule 26 also requires
the Company to adopt a corporate governance code and the
Company has chosen the UK Corporate Governance Code 2018,
against which the Directors are responsible for reporting the
Company’s compliance as set out on pages 60 to 74.
Approved by the Board of Directors and signed on behalf of
the Board by:
Craig Preston
Company Secretary
19 September 2022
74
Craneware plc Annual Report 2022 Remuneration Committee's Report
an effective mechanism for incentivising and rewarding our
executive Directors and senior management team and aligning
their interests with those of our shareholders. The changes
identified as part of this review are planned to be implemented
by the adoption of a new plan. A resolution is therefore to be
proposed at the Company’s Annual General Meeting (AGM) in
November 2022 to request shareholder approval for the new
LTIP. Further details are provided in the Notice of AGM which
shall be issued to shareholders and made available on the
Company’s website in due course.
On behalf of the Committee, I thank you for your support and
we hope that you find this report informative and helpful. The
Remuneration Committee will be delighted to receive any
questions or comments from shareholders regarding this report
or remuneration matters and we will respond.
Russ Rudish
Chair of the Remuneration Committee
Chair’s introduction
On behalf of the Board, I am pleased to present the
Remuneration Committee’s Report for the year ended 30 June
2022.
It has been an exciting and significant year for The Craneware
Group with the completion of the acquisition of Sentry near
the start of the fiscal year. The focus of the Committee during
the year has been on supporting the successful integration
of the Sentry business, retaining key talent, whilst at all times
continuing to promote diversity and fair and equal pay.
We recognise the considerable and wide ranging activities
and efforts which the whole team have embraced during the
integration process and to acknowledge this we decided that
the grant of share-based awards should be extended to all
employees within the Group during the year. The Committee
considered that the grant of share options to employees for this
recognition award was appropriate and provided alignment of
employee interests across the enlarged Group with those of our
shareholders and adds to the savings-related share plans which
we operated in the previous two years.
During the year ended 30 June 2022, as part of the Sentry
integration process, a project led by our Chief People Officer was
progressed with the objectives of: alignment of roles into our
grading structure across The Craneware Group; harmonisation of
reward practices and all employment policies. Further details of
this and other aspects of the integration process are contained
in the Stakeholder Engagement and Environmental, Social and
Governance (ESG) sections of this Annual Report.
We were pleased to welcome Issy Urquhart, our Chief People
Officer, to the Board in April 2022. Issy’s appointment as a
director of the Company enhances the Board’s appreciation
of the employee perspective in the decisions we take and
strengthens the employee representation at this critical time
with the macro-economic pressures all businesses are currently
facing especially in regards to working practices, recruitment
and retention.
Our remuneration strategy for executive Directors and senior
management is focusing to an even greater extent on long
term growth and retention, rather than shorter term base
salary increases – executive Director base salaries were not
increased in the year under review; those base salaries have
now been unchanged for three years.
Looking ahead
The work of the Remuneration Committee will continue to
focus on the long-term strategy as we enter the new fiscal year;
the Committee seeks to align our remuneration policies to the
broader interests of all our stakeholders. In view of the greater
emphasis on long term incentive arrangements, the provisions
of our long term incentive plan (LTIP) have been reviewed
since 30 June 2022 to ensure that our LTIP continues to provide
75
Craneware plc Annual Report 2022 Remuneration Committee's Report [Cont'd]
Introduction
Shareholder consultation
The Company welcomes dialogue with its shareholders over
matters of remuneration. Shareholders will be informed by the
Remuneration Committee of any future changes in executive
Director remuneration policy in the Remuneration Committee’s
Report. In addition, if such policy changes are considered
substantial and after having taken advice from relevant advisers,
significant shareholders will be consulted in advance.
Voting at General Meeting: Directors’ Remuneration Report
The Directors’ Remuneration Report will be put to an advisory
vote at the AGM in November 2022. A similar resolution was put
to the AGM held on 16 November 2021 and was supported by
the resolution being passed on a poll vote at that meeting, with
the voting summarised as follows:
Resolution 2: To approve the Directors’ Remuneration Report for
the financial year ended 30 June 2021
Votes
for
Votes
Against
Votes
Total
22,413,713 (98.9%)
246,762 (1.1%)
22,660,475
Votes
Withheld
53,257
A vote withheld is not a vote in law which means that a vote withheld is not counted
in the calculation of votes for or against the resolution.
Directors' Remuneration 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. In addition, the Remuneration Committee also
considers that executive remuneration policy should not only
be easy to understand, but also straightforward and simple to
implement and administer, as outlined in the table below in the
context of Provision 40 of the Code.
This report sets out Craneware plc’s remuneration and benefits
provided to Directors for the financial year ended 30 June
2022. A resolution to approve the report will be proposed at
the Annual General Meeting (“AGM”) of the Company at which
the financial statements will be presented for consideration by
shareholders. 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 2018 (‘the Code’). The members of the
Committee throughout the financial year ended 30 June 2022
and for the period to the date of approval of this Report are
Russ Rudish (Chair), Colleen Blye and Alistair Erskine. 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 responsibilities of the Remuneration Committee are outlined
on page 73 and the Committee’s terms of reference are available
on the Company’s website at www.thecranewaregroup.com and
at the Company’s registered office.
The Company’s Chief Executive Officer will attend meetings
on occasion, 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 Chair’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 65.
No Director is involved in any decisions as to their own
remuneration.
Chair of the Remuneration Committee
Russ Rudish has been the Chair of the Remuneration Committee
since 18 November 2020, having previously served as a member
of the Committee for four years.
76
Craneware plc Annual Report 2022 Remuneration Committee's Report [Cont'd]
Directors' Remuneration Policy [Cont'd]
Compliance with Provision 40 of the UK Corporate Governance Code 2018
Clarity
Simplicity
Risk
Predictability
Proportionality and
alignment to culture
The Committee aims to provide clear and transparent disclosures of Director remuneration
arrangements, as set out in this Report.
The Remuneration Committee also considers that executive Director remuneration policy
should not only be easy to understand, but also straightforward and simple to implement and
administer. The Committee aims to ensure that remuneration arrangements across the Group
are not complicated in order to assist with understanding and engagement. Executive Director
remuneration policy is not complex with variable pay elements being an annual performance
bonus and equity-settled long term incentives. Only a small number of targets, based on the
Group’s performance, are used for these variable pay elements.
Performance conditions for bonus and share-based incentives are considered each year by
the Committee in view of corporate objectives including performance expectations as well as
alignment to shareholder interests. The Committee has the ability to apply discretion to formulaic
outcomes. Clawback provisions also apply to the LTIP. It is considered that the annual bonus and
long term incentive arrangements do not encourage inappropriate risk taking. Post-vesting holding
periods for LTIP awards granted from October 2020 onwards and shareholding guidelines also
apply to the executive Directors.
The executive Director remuneration policy has maximum opportunity levels for variable
components, with actual incentive outcomes varying depending on the level of performance
achieved against specific measures.
The metrics used to measure performance for the annual bonus and long term incentives are
considered to drive behaviours that are consistent with the business strategy, values and culture of
the organisation and aligned to shareholder interests. Post-vesting holding periods for LTIP awards
and shareholding guidelines also provide shareholder alignment.
Consideration of employee pay structures across the Group
The Committee has regard to pay structures across the wider Group when setting the remuneration policy for executive Directors. The
Group has sought to achieve, at a minimum, median levels of base salary for all employees within the organisation in respect of their role
based on external benchmark data (which is refreshed bi-annually). Annual remuneration planning takes place in consultation with all
managers across the Group.
This base salary objective applies equally for the executive Directors however, due to the macro-economic environment, the
Remuneration Committee has decided to defer any benchmarking and associated base salary changes for the executive Directors. This
has been the decision for the past three financial years including the year ended 30 June 2022, as such there has been no changes
to the base salary for the executive Directors during this time. The reference to internal and external measures for executive Director
remuneration review and assessment therefore is not presented due to this deferral of benchmarking during the period.
Although the Committee does not formally consult with employees as part of this process, all members of the Committee are members
of the Board and the Board receives employee updates which contain, amongst other updates, feedback from employee engagement
surveys which include general views on employee remuneration.
The remuneration policy overall for the executive Directors is more heavily weighted towards performance-related pay than it is for other
employees. Although more senior roles within the Group are usually eligible to receive long term incentive awards, the Committee and
the rest of the Board wish to encourage wider share ownership through the operation of the SAYE and ESPP all employee savings-related
share option plans (as described on page 84). In addition, during the year ended 30 June 2022, the Committee decided that share plan
awards should be granted to all employees below senior manager level to recognise the activities and efforts by the whole team during
the integration process following the acquisition of Sentry. These awards are described within the ‘All employee share option awards’
section below.
The Committee also reviews employee remuneration and related practices which includes approving the design of, and determining
targets for, the bonus plan which was Group wide and applicable to all eligible employees for the year ended 30 June 2022. The targets
set under the plan are consistent to all participants, including executive directors and senior managers. The Committee also authorises
the extent of any annual payments made under the bonus plan. In addition, the Committee provides guidance on general remuneration
practices across the Group and the Committee is consulted regarding any significant changes to benefit and pay structures throughout
the Group.
77
Craneware plc Annual Report 2022 Remuneration Committee's Report [Cont'd]
Directors' Remuneration Policy [Cont'd]
The Committee did not appoint a remuneration consultant during the year ended 30 June 2022.
Engagement with stakeholders regarding executive Director remuneration
The Committee has not engaged with shareholders during the year ended 30 June 2022 regarding executive Director remuneration
policy.
There was no workforce engagement, in respect of executive Director remuneration, during the year, However, as noted above, the
same policy of paying at median applies across the whole Group (based on benchmark data) but the Committee decided that it was not
appropriate to increase base salary for executive Directors for a number of years.
Elements of Executive Director Remuneration
The main elements of the remuneration package for executive Directors are:
• basic annual salary and benefits in kind;
• pension entitlement;
• annual performance related bonus; and
• long term incentives.
The Company’s policy is that a substantial proportion of the remuneration of executive Directors should be performance related. There
were no significant changes to the remuneration policy for executive Directors for the year ended 30 June 2022.
Basic salary
Objective
Operation
Opportunity
Benefits
Objective
Operation
Providing a competitive basic annual salary for the market in which the Group operates, allows the Company
to attract and retain high calibre executive Directors with the skills and experience required to help to achieve
the Group’s strategy.
Basic salary for each executive Director is usually reviewed annually, or when an individual’s position or
responsibilities change. A review will not necessarily result in an increase to basic salary.
Basic salary is paid in cash, normally as a fixed amount each month.
Any proposed executive Director salary increases are considered by the Remuneration Committee in the
context of factors such as: Group performance, role, responsibilities, experience, market data for comparable
roles, employment conditions elsewhere in the Group and the economic environment.
A benefits package, in line with market practice, is offered to executive Directors to complement basic salary.
Executive Directors are entitled to private medical insurance, life insurance and permanent health insurance.
Opportunity
Benefits are set at a level which the Remuneration Committee considers appropriate.
Pension Entitlement
Objective
To provide an appropriate level of post-retirement benefit for executive Directors.
Operation
The Company operates a defined contribution group personal pension plan in which all UK employees,
including executive Directors, are entitled to participate. As part of this pension scheme, the Company matches
employee contributions into the pension plan at up to 6% of basic salary (from September 2021, previously
5% of basic salary) (year ended 30 June 2021: 5% of basic salary from November 2020; prior to that 4% of basic
salary).
The Company will make payments in lieu of pension in the event that an executive Director has exceeded
their pension annual allowance.
In addition, the Company pays a fixed sum of £5,000 ($6,600 approximately) per annum in lieu of
contributions to a personal pension plan for the Chief Executive Officer.
Opportunity
The current level of contribution by the Company to the pension scheme for executive Directors is at the same
rate as applies for all other UK employees who participate in the pension scheme.
78
Craneware plc Annual Report 2022 Remuneration Committee's Report [Cont'd]
Directors' Remuneration Policy [Cont'd]
Elements of Executive Director Remuneration [Cont'd]
Annual performance-related bonus
Objective
To incentivise the achievement of short-term financial and strategic goals.
Operation
Under the Group’s 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 stretching targets that reflect challenging financial performance
in the current year, but also provide for the future growth of the Group. The choice of metrics reflects
those that have been identified as the key, primarily financial, indicators of the Group’s success against its
strategy.
Bonus plan rules are exclusively subject to Remuneration Committee discretion. This includes but is not
limited to whether or not to fund the bonus plan, to make any payment or the amounts to be paid by way
of bonus under the plan (regardless of whether the Group has achieved or exceeded the required targets).
The Committee has discretion to adjust the formulaic bonus outcomes both upwards (within the policy
limits) and downwards to ensure alignment of pay with the underlying performance of the business over
the financial year.
Annual bonuses are normally paid in cash following the publication of the Group’s audited annual financial
results for the relevant financial year.
Opportunity
Maximum bonus entitlements are set at a level that allow additional growth of overall remuneration for
out-performance of targets.
Long term incentives
Objective
Operation
To incentivise the achievement of the Company’s long-term strategy and the creation of long-term
shareholder returns.
Awards are granted annually with vesting dependent on the achievement of specified performance
conditions over three years. The awards granted to executive Directors, from October 2020, are also subject to
an additional two-year holding period after the vesting date.
The Remuneration Committee has discretion to decide whether and to what extent the performance
conditions have been met and, in appropriate circumstances, to override the formulaic outcome.
Clawback provisions apply.
Opportunity
Maximum award in a financial year of 150% of basic salary; with maximum of 200% of basic salary in
exceptional circumstances.
Performance measures
Vesting will be subject to the extent of achievement of specified performance conditions, usually tested on
an annual basis, as determined by the Remuneration Committee.
Details of the performance conditions applicable to the awards granted in the year ended 30 June 2022 are
set out in the ‘Share-based awards’ section below.
79
Craneware plc Annual Report 2022 Remuneration Committee's Report [Cont'd]
Directors' Remuneration Policy [Cont'd]
Elements of Executive Director Remuneration [Cont'd]
Savings-related all employee share plans
Objective
To provide a wider population of employees with an opportunity to become Craneware plc shareholders,
which promotes alignment to shareholder interests and aids with recruitment and retention
Operation
Opportunity
Shareholding guideline
Objective
Operation
Save As You Earn (‘SAYE’) and Employee Stock Purchase Plan (‘ESPP’) share option plans allow employees
and executive Directors, who choose to participate, to contribute regularly to the plans from their net salary
and then to use those funds to buy shares in Craneware plc at the end of the savings period. This is usually
at a discounted purchase price that is set at the start of the savings period.
The executive Directors are permitted, if they choose to do so, to participate in the savings-related share
option plan on the same terms as other employees in the same jurisdiction.
Executive Directors, who are all based in the UK, can participate on the same terms as all other eligible
UK employees therefore the maximum level of participation in the SAYE share option plan is at a savings
contribution amount of £500 per month.
To create greater alignment of executive Directors’ and senior managers’ interests with those of our
shareholders
A shareholding guideline was introduced, applicable for the executive Directors and for senior
management, effective from October 2020. The guideline expects executive Directors and senior managers
to build up a shareholding equivalent to 200% of base salary. Vested but unexercised share option awards
are included in the shareholding guideline on a net of exercise cost and tax basis.
The interests of the Chief Executive Officer and the Chief Financial Officer in the ordinary shares of the
Company, as set out in the Directors’ Report on page 56, exceed the shareholding guideline.
Policy on non-executive director remuneration
The remuneration of the non-executive Directors, other than the Chair of the Board, is determined by the Board as a whole within
limits set out in the Articles of Association. The levels of remuneration for non-executive Directors are considered to reflect the time
commitment and responsibilities of the role. The non-executive Directors, including the Chair of the Board, do not participate in
performance related bonus or share-based incentive arrangements.
Fees
Objective
Basis of Fee
Fees are not performance-related. Non-executive Director fees reflect the time commitment and
responsibilities of each role, appropriate for a Group of our size and complexity.
The aim is to set the fees at a level appropriate to attract and retain high calibre non-executive Directors with a
range of skills and commercial and other experience relevant to the Group and to complement the Board.
The Chair of the Board is paid a single annual fee. The other non-executive Directors are paid a basic
annual fee reflecting membership of the Board and Committee(s) of the Board. Additional fees may be
paid to non-executive Directors for further responsibilities such as chairing committees of the Board.
Fees are paid in cash.
The setting and review of the remuneration of non-executive Directors is a matter for the Chair of the
Board and the executive Directors. The non-executive Directors are not involved in any decisions about
their own remuneration.
The level of fees for the year ended 30 June 2022 are shown in the tables on pages 85 and 86.
Other Items
Non-executive Directors do not receive any benefits or pension contributions. Non-executive Directors do
not participate in the Group’s bonus plan or long term incentive plans.
Directors' Remuneration
The Committee develops overall Directors’ remuneration packages, based on the Director remuneration policy outlined in the previous
section, 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. It is considered, taking into account macro-economic factors
and remuneration practices across the Group, that executive Director remuneration policy operated as intended for the financial year,
in terms of Company performance and quantum. However the Committee is conscious that: there was again no change to executive
Directors’ base salaries in the year ended 30 June 2022 for the third consecutive year; and, as a result, overall remuneration levels are
falling below the Group policy of paying at or above median. The Committee aims to make some progress towards addressing and re-
80
Craneware plc Annual Report 2022 Remuneration Committee's Report [Cont'd]
Directors' Remuneration [Cont'd]
balancing, to some extent, these aspects of executive Director
remuneration policy during the financial year ending 30 June
2023 and beyond.
The remuneration package for the executive Directors, for the year
ended 30 June 2022, comprised:
(i) Basic salary
For the third consecutive year, in recognition of the wider macro-
economic environment, no changes were made to the executive
Directors’ base salaries in the year ended 30 June 2022.
(ii) Pension entitlement
The executive Directors participate in the same defined contribution
group personal pension plan which is available to all UK employees.
The Company matches the executive Director and other UK
employee contributions into the pension plan at up to 6% of basic
salary (from September 2021, previously 5% of basic salary) (year
ended 30 June 2021: 5% of basic salary from November 2020; prior
to that 4% of basic salary). In addition, the Company pays a fixed
sum to a personal pension plan on behalf of the Chief Executive
Officer. The Company makes payments in lieu of pension in the
event that an executive Director has exceeded their pension annual
allowance.
(iii) Benefits in kind
Executive Directors are entitled to private medical insurance, life
insurance and permanent health insurance.
(iv) Annual performance related bonus
The Group’s annual performance related bonus plan is outlined
in the Director Remuneration Policy section above and under
this plan, executive Directors are eligible to earn a cash bonus
(non-pensionable) payment based on targets that are set by the
Committee.
For the year ended 30 June 2022, the Remuneration Committee
has concluded that whilst there is growth the specific targets
required have not been met for the current financial year and
therefore no bonus amounts are payable to the executive
Directors.
(v) Share-based awards
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) can be granted share-based awards.
The 2016 share plans
The Company currently operates three discretionary employee
share plans and long term incentive awards can be granted to
executive Directors and to senior management from these plans:
• 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, the Committee was also of the
view that it would be useful for the Company to have the flexibility
to grant “market value” options if the need arises. 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.
It was highlighted in previous benchmarking analysis that
executive total remuneration packages within the Group were
below median levels, in particular the relative proportion of the
total remuneration value that comprises share-based incentives.
In view of this, the Committee had previously disclosed its
intention to use LTIPs “as the primary means of incentivising
senior management going forward”. The transition to address the
shortfalls identified in the benchmarking analysis continues to be
made over multiple years. In addition, in the financial year ended
30 June 2021, the Committee introduced a Clawback provision,
a post vesting holding period requirement and a shareholding
guideline, applicable to the LTIP awards granted during the year
and to all future LTIP awards which are granted to the executive
Directors and to senior management. As the Committee continues
to address these shortfalls as well as an increased focus on long
term reward and retention, recognising the significantly increased
responsibilities across the enlarged Group arising from the
integration of Sentry, the Committee deemed that exceptional
circumstances existed. As a consequence, the value of long term
incentive awards granted to the executive Directors in November
2021 were at 200% of base salary (awards in year ended 30 June
2021: at 200% of base salary; awards in previous years: at 100% of
base salary). Further details regarding these awards are provided
below.
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.
Clawback provision
The Rules of the LTIP provide for a Clawback provision, in respect
of awards granted under the LTIP, which may be applied in the
event of: material misstatement of financial results; error in
the calculation of performance condition outcomes; and/ or
misconduct.
81
Craneware plc Annual Report 2022 Remuneration Committee's Report [Cont'd]
Directors' Remuneration [Cont'd]
(v) Share-based awards [Cont'd]
Post vesting holding period
It was acknowledged in previous Remuneration Committee
Reports that, whilst it is still not common practice for holding
periods to be applied in respect of AIM companies, the Committee
considered whether it would be appropriate to introduce a post
vesting holding period for LTIP awards and/or a post-employment
shareholding guideline.
As part of the policy and transition referred to above and as
explained in last year’s annual report, the Committee introduced
a two-year post vesting holding period for LTIP awards (net of
associated taxes) applicable for all awards granted to executive
Directors and senior management on 2 October 2020. The post
vesting holding period also applies to the LTIP awards (net of
associated taxes) granted to the executive Directors and senior
management on 18 November 2021. The Committee intends
that a post vesting holding period requirement will also apply
to future awards granted to the executive Directors and senior
management.
Shareholding guideline
The interests of the Chief Executive Officer and of the Chief
Financial Officer in the ordinary shares of the Company, as set
out in the Directors’ Report on page 56, exceed the shareholding
guideline which expects executive Directors and senior managers
to build up a shareholding equivalent to 200% of base salary.
A post-employment shareholding policy for executive
Directors has not been developed and implemented although
it is acknowledged by the Committee that this is expected by
Provision 36 of the Code. The Committee will keep this under
review but considers that this is acceptable, in view of the
shareholding guideline applicable to executive Directors and
senior management and with that guideline already exceeded by
two of the executive Directors. In addition, there is post-vesting
holding period applicable to LTIP awards granted in the last
two years (and intended to apply to future LTIP awards) to the
executive Directors and senior management as well as post-
employment shareholding policies not being usual practice for
AIM companies.
Long Term Incentive Plan
The Committee is satisfied that the overall structure of The
Craneware plc Long Term Incentive Plan (2016) continues to
represent an effective mechanism for incentivising and rewarding
Craneware’s executive Directors and senior management team
and for aligning their interests with those of our shareholders.
However, in view of the greater emphasis on long term incentive
arrangements, the Committee decided in July 2022 to initiate a
review of the provisions of the Long Term Incentive Plan (2016).
The aim of this review, given that it has been nearly six years since
the 2016 plan was established, is to ensure that our LTIP continues
to appropriately reflect the most up-to-date market practice in
incentive scheme design amongst similarly sized AIM companies.
The substantive changes identified as part of this review are
proposed to be implemented by the adoption of a new plan. A
resolution is therefore to be proposed at the Company’s Annual
General Meeting (AGM) in November 2022 to request shareholder
approval for the new long term incentive plan. Further details
are provided in the Notice of AGM which shall be issued to
shareholders and made available on the Company’s website in
due course.
Awards granted to executive Directors under the 2016 share plans in
the year ended 30 June 2022
In November 2021, the Chief Executive Officer and the Chief
Financial Officer were each granted a conditional share award
under the LTIP. For the reasons explained in ‘The 2016 share
plans’ section above, the total value of the award at date of grant
was equal to a total of 200% of the basic salary for each of these
directors. These awards are included in the tables on page 88.
Conditional share awards and / or share options were granted
to certain other employees (including senior management) in
November 2021 under the 2016 share plans.
The vesting of the awards, which were granted from the 2016
share plans to the executive Directors and to senior management
in the year ended 30 June 2022, 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 in November 2021 under
the LTIP to executive Directors and to senior management and for
share options granted from the 2016 share option plans to other
senior employees, the performance conditions are based on the
Company’s total shareholder return (“TSR”) performance relative
to the performance achieved by the constituent companies in the
FTSE AIM 100 Index (the “Comparator Group”). These performance
conditions are the same, but are measured over a different period,
as those applicable for the share plan awards granted to the
executive Directors and to certain other employees (including
senior management) in October 2020.
The performance conditions applicable to the conditional share
awards granted under the LTIP to the executive Directors and to
senior management on 18 November 2021 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’s TSR
against the
Comparator Group
% of Shares comprised in
conditional share award or share
option that vest
Below median
Median
Upper quartile or above
0%
50%
100%
Between median and upper quartile
Between 50% to 100%
on a straight line basis
82
Craneware plc Annual Report 2022 Remuneration Committee's Report [Cont'd]
Directors' Remuneration [Cont'd]
(v) Share-based awards [Cont'd]
Awards granted to executive Directors under the 2016 share plans in the year ended 30 June 2022 [Cont'd]
The vesting profile applicable to share plan awards granted to the executive Directors in September 2018, in September 2019 and in
October 2020, although on a similar basis to the table above, allowed for 25% vesting at median with the vesting being between 25%
and 100% on a straight line basis between the median and the upper quartile.
The performance condition is measured in three tranches such that one third of the Ordinary Shares, over which the conditional share
awards and / or the share options subsist, will vest based on performance over the three years ending on 30 June 2022; one third based
on performance over the three years ending 30 June 2023; and the final third based on performance over the three years to 30 June
2024 – resulting in an aggregate five year performance evaluation period. 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. Share options
granted under the Schedule 4 Option Plan or the Unapproved Option Plan 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.
Performance condition measurement to 30 June 2022
For LTIP awards previously granted to the executive Directors: in November 2021, the first tranche is not due to vest until November
2022; in October 2020, the second tranche is not due to vest until October 2022; and for the LTIP awards granted in September 2019, the
third (final) tranche is not due to vest until 21 September 2022. However, the performance criteria for these tranches are tested against
the Company’s TSR for the three years to 30 June 2022 compared to the TSR of the constituent companies in the FTSE AIM 100 Index.
Craneware plc’s relative TSR for this period, when ranked against that Comparator Group was between the median and the upper quartile
and therefore these tranches, being one third each of the awards, will vest to the extent of:
• 57.8% for the first tranche of the LTIP awards which were granted in November 2021; and
• 36.8% for the second and third tranche of the LTIP awards which were granted in October 2020 and in September 2019
respectively.
In addition, and as explained in last year’s Remuneration Committee's Report, following the significant share placing (and associated
discount) that occurred, the Committee exercised its discretion as permitted in these circumstances, to defer testing to 30 June 2022
allowing the alignment of executive and shareholder interests to be maintained. Accordingly, for the Chief Executive Officer and the Chief
Financial Officer, the following tranches of LTIP awards and (for share plan awards granted in September 2018) share options were tested
alongside those stated in the previous paragraph: the first tranche of the awards which were granted in October 2020; the second tranche
of the awards granted in September 2019; and the final tranche of the awards granted in September 2018. As stated above, Craneware
plc’s relative TSR for the period ended 30 June 2022 was between the median and the upper quartile and therefore these tranches, being
one third each of the relevant awards, will each vest to the extent of 36.8%.
As a result of this performance condition measurement to 30 June 2022, for the final tranche of those LTIP awards and share option
awards which were granted to executive Directors in September 2018 and for the LTIP awards granted in September 2019, will result in
those awards vesting as follows on 21 September 2022:
Executive
Director
Award
(and grant date)
Held
At
30/06/22
Lapsed
(due to performance condition
assessment to 30 June
2022)
Due to vest in
September
2022^
K Neilson
Share option (5 Sept 2018)A
Conditional share award (5 Sept 2018)A
Conditional share award (4 Sept 2019)
C T Preston
Share option (5 Sept 2018)A
Conditional share award (5 Sept 2018) A
Conditional share award (4 Sept 2019)
I Urquhart
Conditional share award (4 Sept 2019)
5,692
5,692
17,100
4,218
4,218
12,710
5,122
(1,232)
(1,232)
(7,205)
(913)
(913)
(5,355)
(1,079)
4,460
4,460
9,895
3,305
3,305
7,355
4,043
^the vesting date for these awards will be (in accordance with the Rules of the LTIP and share option plan) 21 September 2022, being the day following the announcement of the Group’s audited financial results for the
year ended 30 June 2022.
A as explained in the Annual Report for the year ended 30 June 2019, the extent of vesting of the first tranche of these awards (being one third of the amount granted), with performance conditions tested for the three
year period to 30 June 2019, was 92%. The award amount held at 30 June 2022, in the table above, is therefore stated after the 8% of the first tranche lapsed when the performance condition for that measurement
period was tested.
83
Craneware plc Annual Report 2022 Remuneration Committee's Report [Cont'd]
Directors' Remuneration [Cont'd]
(v) Share-based awards [Cont'd]
All employee share option awards
shares in Craneware plc at the end of the savings period. This is
usually at a discounted purchase price that is set at the start of the
savings period.
Share options granted to employees in the year ended 30 June 2022
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”). Further details regarding the EBT are contained in Note 19
to the financial statements.
Conditional share awards granted under the LTIP and share
options granted from the 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 2022, are contained in Note 8 to the financial
statements.
The Committee recognises the considerable and wide ranging
activities and efforts which the whole team have embraced during
the integration process during the year. In order to acknowledge
this, the Committee decided that the grant of share-based
awards should be extended to all employees within the Group
during the year. The Committee considered that the grant of
share options to employees for this recognition award was
appropriate and provided alignment of employee interests across
the enlarged Group with those of our shareholders. Share options
were therefore granted to employees on 18 November 2021
from the Schedule 4 Option Plan (for UK employees) or from the
Unapproved Option Plan (for US employees).
There are no performance conditions applicable to these share
options, only a service condition applies whereby the share option
will become exercisable (subject to limited exceptions allowed
for in the rules of the option plan) from the third anniversary
of the date of grant if the option holder remains in continuous
employment within the Craneware group of companies
throughout that period.
Savings-related 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, 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 were established and were
first operated in the year ended 30 June 2020. The Committee
supported this enhancement to Craneware’s employee reward
offering. The executive Directors are permitted, if they choose
to do so, to participate in the SAYE share option plan on the
same terms as other UK employees. These share option plans
were approved by the shareholders at the 2018 Annual General
Meeting.
Share options were granted under these two share option plans in
the years ended 30 June 2020 and 30 June 2021, as summarised in
Note 8 to the financial statements. The executive Directors chose
to participate in the SAYE and the details of the share options
granted are contained in the table on page 87.
SAYE and ESPP share option plans allow employees and executive
Directors, who choose to participate, to contribute regularly to
the plans from their net salary and then to use those funds to buy
84
Craneware plc Annual Report 2022 Remuneration 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
I Urquhart
W Whitehorn
C Blye
R Rudish
A Erskine
D Kemp
Contract Date
Founder
15 September 2008
27 April 2022
1 January 2020
12 November 2013
28 August 2014
24 February 2020
1 March 2020
Unexpired Term
Normal Notice Period
Rolling
Rolling
Rolling
Rolling
Rolling
Rolling
Rolling
Rolling
3 months*
3 months*
3 months*
1 month
1 month
1 month
1 month
1 month
* The notice terms for Keith Neilson, Craig Preston and Issy Urquhart are normally three months, however in the event of a change of control, these notice periods are
automatically extended to twelve months.
None of the executive Directors holds any outside appointments with any other publicly traded company.
Directors’ Interests
The Directors’ interests in the ordinary shares of the Company are set out in the Directors’ Report on page 56.
Directors’ Emoluments (audited)
For Directors who held office during the course of the year, emoluments1 in respect of the year ended 30 June 2022 were as follows: (note:
with the exception of C Blye, R Rudish, A Erskine and, in the prior year, R Verni, all directors are paid in Sterling; the amounts below are
translated into US Dollars at the relevant average exchange rate for the period being reported)
Salary/Fees
$
Benefits2
$
Bonus
$
Pension
$
Total 2022
$
Total 2021
$
Executives
K Neilson
C T Preston
I Urquhart3
Non-Executives
W Whitehorn
D Kemp
R Verni4
C Blye
R Rudish
A Erskine
Total
432,669
321,606
40,244
99,878
62,198
-
60,708
60,708
54,216
934
1,039
179
-
-
-
-
-
-
1,132,227
2,152
-
-
-
-
-
-
-
-
-
-
31,897
18,760
2,777
-
-
-
-
-
-
465,500
341,405
43,200
99,878
62,198
-
60,708
60,708
54,216
465,535
341,321
-
100,992
59,526
25,295
60,708
56,676
54,216
53,434
1,187,813
1,164,269
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. I Urquhart was appointed as a Director of the Company on 27 April 2022
4. R Verni resigned from the Board on 17 November 2020
85
Craneware plc Annual Report 2022 Remuneration Committee's Report [Cont'd]
Directors’ Emoluments (audited) [Cont'd]
The following Directors were paid in Sterling:
Executives
K Neilson(i)
C T Preston(i)
I Urquhart(ii)
Non-Executives
W Whitehorn
D Kemp
Total
Salary/Fees
£
Benefits
£
Bonus
£
Pension
£
Total 2022
£
Total 2021
£
324,900
241,500
30,220
75,000
46,706
718,326
702
780
134
-
-
1,616
-
-
-
-
-
-
23,952
14,088
2,085
-
-
40,125
349,554
256,368
32,439
75,000
46,706
760,067
345,723
253,477
-
75,000
44,206
718,406
Further information regarding Directors’ share options and LTIP awards are contained in the tables on pages 87 and 88.
(i) For the third consecutive year, no changes have been made to either K Neilson or C T Preston’s base salary.
(ii) I Urquhart was appointed to the Board on 27 April 2022.
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 100
Index and the FTSE techMARK Focus Index. The FTSE AIM 100 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 generally
affected by similar economic and commercial factors to Craneware.
86
Craneware plc Annual Report 2022 Remuneration Committee's Report [Cont'd]
Directors’ interests in share options and LTIP awards
Directors’ interests in share options as at 30 June 2022, 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
30/06/21*
Granted
During
Year
Exercised
During
Year
Lapsed
During
Year
Held
At
30/06/22
Exercisable
from
date
Expiry
date
K Neilson
Share Option Plan 2007
Grant Date
21 Sep 2012
10 Sep 2013
22 Sep 2014
9 Mar 2016
12 Sep 2016
650.0
621.0
839.0
1066.0
1563.0
400.0
395.0
522.5
750.0
1177.5
Schedule 4 Option Plan
17 Jan 2018
2445.0
1775.0
Unapproved Option Plan
17 Jan 2018
5 Sep 2018
2445.0
3488.0
1775.0
2710.0
SAYE Option Plan
20 Apr 2020
1432.0
1147.5
C T Preston
Share Option Plan 2007
6,605
34,472
39,090
28,628
36,469
1,690
7,238
5,692
1,568
9 Mar 2016
1066.0
750.0
26,925
Schedule 4 Option Plan
24 Mar 2017
1544.0
1237.5
Unapproved Option Plan
24 Mar 2017
17 Jan 2018
5 Sep 2018
1544.0
2445.0
3488.0
1237.5
1775.0
2710.0
SAYE Option Plan
20 Apr 2020
1432.0
1147.5
I Urquhart
Schedule 4 Option Plan
24 Mar 2017
1544.0
1237.5
Unapproved Option Plan
24 Mar 2017
17 Jan 2018
5 Sep 2018
1544.0
2445.0
3488.0
1237.5
1775.0
2710.0
SAYE Option Plan
19 Apr 2021
2539.0
1836.0
2,424
6,162
6,618
4,218
1,568
2,424
1,236
2,654
1,747
196
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6,605
34,472
39,090
28,628
36,469
21 Sep 2015
10 Sep 2016
22 Sep 2017
9 Mar 2019
21 Sept 22
10 Sept 23
22 Sept 24
9 Mar 26
12 Sep 2019
12 Sept 26
1,690
17 Jan 2021
17 Jan 28
7,238
5,692
17 Jan 2021
Note (i)
17 Jan 28
5 Sep 28
1,568
1 May 2023
1 Nov 23
26,925
9 Mar 2019
9 Mar 26
2,424
24 Mar 2020
24 Mar 27
6,162
6,618
4,218
24 Mar 2020
17 Jan 2021
Note (i)
24 Mar 27
17 Jan 28
5 Sep 28
1,568
1 May 2023
1 Nov 23
2,424
24 Mar 2020
24 Mar 27
1,236
2,654
1,747
24 Mar 2020
17 Jan 2021
22 Sep 2021
24 Mar 27
17 Jan 28
5 Sep 28
196
1 May 2024
1 Nov 24
*for I Urquhart this is at 27 April 2022, being the date of appointment as a director of the Company
(i) these share options, to the extent that they vest as shown in the table on page 83, will be exercisable from 21 September 2022, being the day following the
announcement of the Group’s audited financial results for the year ended 30 June 2022.
Information regarding total share options, as granted to executive Directors and other employees, which were in existence during the year
is contained in Note 8 to the financial statements.
87
Craneware plc Annual Report 2022 Remuneration 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 2022 were
as follows, in respect of Directors who held office during the course of the year:
Grant
Date
Held
At
30/06/21*
Granted
During
Year
Released
During
Year
Lapsed
During
Year
Held
At
30/06/22
Share price at
date of grant
(pence)
Normal vesting
date
K Neilson
Conditional
share award
Conditional
share award
Conditional
share award
Conditional
share award
C T Preston
Conditional
share award
Conditional
share award
Conditional
share award
Conditional
share award
I Urquhart
Conditional
share award
Conditional
share award
Conditional
share award
5 Sep 2018
4 Sep 2019
2 Oct 2020
5,692
17,100
43,176
-
-
-
18 Nov 2021
-
24,896
5 Sep 2018
4 Sep 2019
2 Oct 2020
4,218
12,710
32,093
-
-
-
18 Nov 2021
-
18,505
4 Sep 2019
2 Oct 2020
18 Nov 2021
5,122
12,932
7,632
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
5,692
17,100
43,176
24,896
4,218
12,710
32,093
18,505
5,122
12,932
7,632
2,710.0
1,900.0
Refer to note
(a) below
Refer to note
(b) below
1,505.0
2 Oct 2023
2,610.0
18 Nov 2024
2,710.0
1,900.0
Refer to note
(a) below
Refer to note
(b) below
1,505.0
2 Oct 2023
2,610.0
18 Nov 2024
1,900.0
Refer to note
(b) below
1,505.0
2 Oct 2023
2,610.0
18 Nov 2024
*for I Urquhart this is at 27 April 2022, being the date of appointment as a director of the Company
(a) As explained in the annual report for the year ended 30 June 2021, in light of the significant share placing (and associated discount) conducted in June 2021, the
Committee concluded that the testing of relative TSR performance at 30 June 2021 was not appropriate. As such, the Committee exercised its discretion, as permitted in
these circumstances, to defer testing of the performance condition to 30 June 2022 allowing the alignment of executive and shareholder interests to be maintained. Further
details are on page 83.
(b) The normal vesting date for these awards, to the extent that they vest based on achievement of performance conditions, would have been 4 September 2022 however
because this date is at a time when Share Dealing Restrictions apply in respect of the Market Abuse Regulation, the vesting date for these awards will instead be (in
accordance with the Rules of the LTIP) 21 September 2022, being the day following the announcement of the Group’s audited financial results for the year ended 30 June
2022.
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 pages 82 and 83. The table above shows the maximum entitlement at 30 June 2022 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:
Russ Rudish
Chair of the Remuneration Committee
19 September 2022
88
Craneware plc Annual Report 2022 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 2022 and of the group’s profit and the group’s and
company’s cash flows for the year then ended;
•
•
have been properly prepared in accordance with UK-adopted international accounting standards; 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 and Financial Statements (the “Annual Report”), which comprise: the
consolidated and Company balance sheets as at 30 June 2022; the consolidated statement of comprehensive income, the consolidated and Company
statements of cash flows, and the 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 other listed entities of public interest, and we have fulfilled our other ethical responsibilities in
accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were not provided.
We have provided no non-audit services to the company or its controlled undertakings in the period under audit.
Our audit approach
Overview
Audit scope
• We performed an audit of the complete financial information of Craneware plc, Craneware, Inc. and Sentry Data Systems Inc.
•
We also audited material balances in Craneware Insight, Craneware Healthcare Intelligence LLC, Craneware U.S. Holdings Inc. and Craneware plc
Employee Benefit Trust.
•
Taken together, the entities we audited comprise 100% of Group revenues. The audit work for Sentry Data Systems Inc. was undertaken by the PwC
U.S. audit engagement team and rest of all other audit work was undertaken by a single engagement team in the UK.
Key audit matters
•
•
•
Revenue Recognition (group and parent)
Internally developed intangible assets (group and parent)
Valuation of assets and liabilities related to acquisition of Sentry Data Systems Inc. (group)
Materiality
• Overall group materiality: US$1,206,690 (2021: US$982,600) based on 2.5% of EBITDA adjusted for exceptional items. (2021: 5% of profit before tax
adjusted for exceptional items).
• Overall company materiality: US$530,999 (2021: US$658,250) based on 5% of 3 year average profit before tax adjusted for exceptional items.
(2021: profit before tax adjusted for exceptional items).
•
Performance materiality: US$905,018 (2021: £736,950) (group) and US$398,249 (2021: £493,700) (company).
89
Craneware plc Annual Report 2022 Independent auditors' report
to the members of Craneware plc [Cont'd]
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.
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.
Valuation of Purchase Price allocation related to acquisition of Sentry Data Systems Inc. (group) is a new key audit matter this year. Impact of Covid-19
(group and parent), which was a key audit matter last year, is no longer included because of no material impact of Covid-19 during the reporting period.
Otherwise, the key audit matters below are consistent with last year.
Key audit matter
Revenue Recognition (group and parent)
The Group has revenue of $165,544k (2021: $75,578k) and
the Company has revenue of $40,863k (2021: $43,700k).
These amounts are significant in the context of the Group
statement of comprehensive income. 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. The risk has
been identified at the journals level related to existence and
occurrence of the all revenue streams.
Internally developed intangible assets (group and parent)
As per note 15, the Group has net book value of development
costs capitalised amounting to $40,489k (2021: $31,652k) and
the Company has $37,500k (2021: 31,652k) 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.
We consider this as a key audit matter because there is a risk
that the costs being capitalised are not allowable under IAS 38
and also that the intangible assets will not generate sufficient
economic benefit to recover the value of the intangible asset.
How our audit addressed the key audit matter
To address significant risk at the journals level we ran unusual
account combinations tests and tested journals triggered by
the test to ascertain that it doesn’t represent fraud. No matters
arose during our testing.
On a sample basis we agreed additions to intangible assets
to supporting documentation, including invoices and time
records. We obtained an understanding for the proportion
of employee costs being capitalised and verified these
against payroll information (for example, payroll reports and
employee registers) and timesheets to verify the amount of
time that employees spend on the capital projects. The nature
of the costs being capitalised was assessed to ensure it met
the accounting requirements to capitalise and analysis was
obtained from the technical team to audit time charged by
employees. 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. Regarding recoverability of intangible assets, we had
discussions with management and obtained underlying
support to assess the ability of the projects to generate future
economic benefit which included project road maps, sales
order value generates so far as well as future pipeline and
potential of sales. We also assessed the intangible assets for
indications of impairment. No matters arose during our testing.
90
Craneware plc Annual Report 2022 Independent auditors' report
to the members of Craneware plc [Cont'd]
Key audit matter
How our audit addressed the key audit matter
Valuation of Purchase Price allocation related to acquisition of
Sentry Data Systems Inc. (group)
As per Note 13, the group has acquired Sentry Data
Systems, Inc. and it's holding Companies during the year for
consideration of $372.9m ($297.0m cash and $75.9m shares).
The identification of assets and liabilities for Purchase Price
allocation and their fair valuation per IFRS 3 are subject to
complex estimates and judgements hence we have identified
a significant risk related to the valuation of the purchase
price allocation and the completeness of assets and liabilities
identified.
We obtained management's purchase price allocation papers
and workings including supporting reports from experts
engaged by management to assist in determining the fair value
of assets acquired and liabilities subsumed. We challenged
management on the key judgements and estimates made
in identification and valuation of the assets and liabilities
acquired. We engaged our internal PwC valuations experts to
assist our audit of the methodology, approach and assumptions
used in the valuation exercises and challenged management
where anything wasn't in line with our expectations. Based
on the work performed we determined that the final fair
values determined for the assets and liabilities acquired were
reasonable.
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.
We performed an audit of the complete financial information of Craneware plc, Craneware, Inc. and Sentry Data Systems Inc. · We also audited material
balances in Craneware Insight, Craneware Healthcare Intelligence LLC, Craneware U.S. Holdings Inc. and Craneware plc Employee Benefit Trust. · Taken
together, the entities we audited comprise 100% of Group revenues. The audit work for Sentry Data Systems Inc. was undertaken by the PwC U.S. audit
engagement team and rest of all other audit work was undertaken by a single engagement team in the UK.
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.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Overall
materiality
How we
determined it
Rationale for
benchmark
applied
Financial statements - group
Financial statements - company
US$1,293,675 (2021: US$982,600).
US$530,999 (2021: US$658,250).
2.5% of EBITDA adjusted for exceptional items. (2021: 5%
5% of 3 year average profit before tax adjusted for
of profit before tax adjusted for exceptional items)
exceptional items. (2021: profit before tax adjusted for
exceptional items)
We believe the measure of EBITDA adjusted for
Given fluctuation in the profits for Company in last 3 years,
exceptional items is the most relevant measure to the
we have changed the benchmark this year, which is also a
shareholders to measure the underlying performance
generally accepted materiality benchmark and has resulted
of the Group post acquistion of Sentry. In prior year
in a more appropriate level of materiality to audit the
the benchmark used was profit before tax adjusted for
Company.
exceptional items.
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 $530,999 and $1,146,356. Certain components were audited to a local statutory audit materiality that was also
less than our overall group materiality.
We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements
exceeds overall materiality. Specifically, we use performance materiality in determining the scope of our audit and the nature and extent of our testing of
account balances, classes of transactions and disclosures, for example in determining sample sizes. Our performance materiality was 75% (2021: 75%) of
overall materiality, amounting to US$970,276 (2021: $736,950) for the group financial statements and US$398,249 (2021: $493,700) for the company
financial statements.
91
Craneware plc Annual Report 2022 Independent auditors' report
to the members of Craneware plc [Cont'd]
In determining the performance materiality, we considered a number of factors - the history of misstatements, risk assessment and aggregation risk and the
effectiveness of controls - and concluded that an amount in the middle of our normal range was appropriate.
We agreed with those charged with governance that we would report to them misstatements identified during our audit above $64,684 (group audit)
(2021: $49,000) and $26,550 (company audit) (2021: $32,900) as well as misstatements below those amounts that, in our view, warranted reporting for
qualitative reasons.
Conclusions relating to going concern
Our evaluation of the directors’ assessment of the group's and the company’s ability to continue to adopt the going concern basis of accounting included:
•
evaluating the appropriateness of management's assessment of the group's and the Company's ability to continue as a going concern, including
whether the form (e.g. in-depth knowledge of the business or detailed analysis) is appropriate given the nature of the group and the Company,
consideration of mitigating factors, the period covered is at least 12 months from the date of the financial statements, and all relevant information has
been included.
• making inquiries of management as to its knowledge of events or conditions beyond the period of management's assessment that may cast significant
doubt on the group's and the Company's ability to continue as a going concern.
•
•
testing the cash flow forecast for next 12 months from the date of the audit report within the financial model of the group and the Company.
determining whether a material uncertainty exists related to the events or conditions identified by evaluating magnitude of potential impact and
likelihood of occurrence of those events or conditions.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively,
may cast significant doubt on the group's and the company’s ability to continue as a going concern for a period of at least twelve months from when the
financial statements are authorised for issue.
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the financial
statements is appropriate.
However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the group's and the company's ability to
continue as a going concern.
In relation to the directors’ reporting on how they have applied the UK Corporate Governance Code, we have nothing material to add or draw attention to
in relation to the directors’ statement in the financial statements about whether the directors considered it appropriate to adopt the going concern basis of
accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
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 Director's report, we also considered whether the disclosures required by the UK Companies Act 2006 have been
included.
Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report certain opinions and matters as described
below.
92
Craneware plc Annual Report 2022 Independent auditors' report
to the members of Craneware plc [Cont'd]
Strategic report and Director's report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic report and Director's report for the year
ended 30 June 2022 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 Director's report.
Corporate governance statement
ISAs (UK) require us to review the directors’ statements in relation to going concern, longer-term viability and that part of the corporate governance
statement relating to the company’s compliance with the provisions of the UK Corporate Governance Code, which the Listing Rules of the Financial
Conduct Authority specify for review by auditors of premium listed companies. Our additional responsibilities with respect to the corporate governance
statement as other information are described in the Reporting on other information section of this report.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate governance statement,
included within the Corporate Governance Report is materially consistent with the financial statements and our knowledge obtained during the audit, and
we have nothing material to add or draw attention to in relation to:
•
•
The directors’ confirmation that they have carried out a robust assessment of the emerging and principal risks;
The disclosures in the Annual Report that describe those principal risks, what procedures are in place to identify emerging risks and an explanation of
how these are being managed or mitigated;
•
The directors’ statement in the financial statements about whether they considered it appropriate to adopt the going concern basis of accounting in
preparing them, and their identification of any material uncertainties to the group’s and company’s ability to continue to do so over a period of at least
twelve months from the date of approval of the financial statements;
•
The directors’ explanation as to their assessment of the group's and company’s prospects, the period this assessment covers and why the period is
appropriate; and
•
The directors’ statement as to whether they have a reasonable expectation that the company will be able to continue in operation and meet its
liabilities as they fall due over the period of its assessment, including any related disclosures drawing attention to any necessary qualifications or
assumptions.
Our review of the directors’ statement regarding the longer-term viability of the group was substantially less in scope than an audit and only consisted of
making inquiries and considering the directors’ process supporting their statement; checking that the statement is in alignment with the relevant provisions
of the UK Corporate Governance Code; and considering whether the statement is consistent with the financial statements and our knowledge and
understanding of the group and company and their environment obtained in the course of the audit.
In addition, based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate governance
statement is materially consistent with the financial statements and our knowledge obtained during the audit:
•
The directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and understandable, and provides the information
necessary for the members to assess the group’s and company's position, performance, business model and strategy;
•
•
The section of the Annual Report that describes the review of effectiveness of risk management and internal control systems; and
The section of the Annual Report describing the work of the audit committee.
We have nothing to report in respect of our responsibility to report when the directors’ statement relating to the company’s compliance with the Code does
not properly disclose a departure from a relevant provision of the Code specified under the Listing Rules for review by the auditors.
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.
93
Craneware plc Annual Report 2022 Independent auditors' report
to the members of Craneware plc [Cont'd]
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.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined
above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting
irregularities, including fraud, is detailed below.
Based on our understanding of the group and industry, we identified that the principal risks of non-compliance with laws and regulations related to U.K.
and U.S. employment law, U.K. and U.S. tax legislation and Health and Safety laws and regulations, and we considered the extent to which non-compliance
might have a material effect on the financial statements. We evaluated management’s incentives and opportunities for fraudulent manipulation of the
financial statements (including the risk of override of controls), and determined that the principal risks were related to posting inappropriate journal entries
and the risk of management bias in accounting estimates. The group engagement team shared this risk assessment with the component auditors so that
they could include appropriate audit procedures in response to such risks in their work. Audit procedures performed by the group engagement team and/
or component auditors included:
•
Enquiries of management around known or suspected instances of non-compliance with laws and regulations, claims and litigation, and instances of
fraud;
Understanding of management’s controls designed to prevent and deter irregularities;
Review of board minutes;
Challenging management on assumptions and judgements made in their significant accounting estimates;
Identifying and testing journal entries, including those with unexpected account combinations impacting revenue and EBITDA.
•
•
•
•
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws
and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a material
misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example,
forgery or intentional misrepresentations, or through collusion.
Our audit testing might include testing complete populations of certain transactions and balances, possibly using data auditing techniques. However, it
typically involves selecting a limited number of items for testing, rather than testing complete populations. We will often seek to target particular items for
testing based on their size or risk characteristics. In other cases, we will use audit sampling to enable us to draw a conclusion about the population from
which the sample is selected.
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.
94
Craneware plc Annual Report 2022 Independent auditors' report
to the members of Craneware plc [Cont'd]
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 ave not obtained 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.
Paul Cheshire (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Edinburgh
19 September 2022
95
Craneware plc Annual Report 2022
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2022
Continuing operations:
Revenue from contracts with customers
Cost of sales
Gross profit
Other income
Operating expenses
Net impairment charge on financial and contract assets
Operating profit
Analysed as:
Adjusted EBITDA*
Share-based payments
Depreciation of property, plant and equipment
Amortisation of intangible assets - other
Amortisation of intangible assets - acquired intangibles
Exceptional costs**
Finance income
Finance expense
Profit before taxation
Tax on profit on ordinary activities
Profit for the year attributable to owners of the parent
Other comprehensive income/ (expense)
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.
* See Note 27 for explanation of Alternative Performance Measures.
Notes
4
5
17
6
8
14
15
15
5
9
9
10
12
12
Total
2022
$’000
165,544
(23,178)
142,366
551
(124,324)
(461)
18,132
51,757
(2,116)
(3,259)
(5,905)
(20,239)
(2,106)
1
(5,031)
13,102
(3,693)
9,409
42
42
9,451
0.268
0.265
Total
2021
$’000
75,578
(5,373)
70,205
37
(56,507)
(495)
13,240
27,111
(2,141)
(1,403)
(3,840)
-
(6,487)
1
(76)
13,165
(260)
12,905
(126)
(126)
12,779
0.481
0.475
** Exceptional items relate to legal and professional fees associated with a successful acquisition and related integration costs (FY21: legal and professional fees associated with an aborted potential acquisition in H1
2021 and a successful acquisition completed post year end and its associated share placing).
96
Craneware plc Annual Report 2022 Statements of Changes in Equity
For the year ended 30 June 2022
Group
At 1 July 2020
Total comprehensive income - profit for the year
Total other comprehensive expense
Transactions with owners:
Share-based payments
Share placing
Purchase of own shares through EBT (Note 19)
Deferred tax taken directly to equity
Impact of share options and awards exercised / lapsed
Dividends (Note 11)
At 30 June 2021
Total comprehensive income - profit for the year
Total other comprehensive income
Transactions with owners:
Share-based payments
Share issue
Purchase of own shares through EBT (Note 19)
Deferred tax taken directly to equity
Impact of share options and awards exercised / lapsed
Dividends (Note 11)
At 30 June 2022
Company
At 1 July 2020
Total comprehensive income - profit for the year
Transactions with owners:
Share-based payments
Share placing
Deferred tax taken directly to equity
Impact of share options and awards exercised / lapsed
Dividends (Note 11)
At 30 June 2021
Total comprehensive income - profit for the year
Transactions with owners:
Share-based payments
Share issue
Deferred tax taken directly to equity
Impact of share options and awards exercised / lapsed
Dividends (Note 11)
At 30 June 2022
The accompanying notes are an integral part of these financial statements.
Share
Capital
$’000
536
Share
Premium
Account
$’000
21,097
-
-
-
88
-
-
-
-
-
-
-
-
-
-
-
-
624
21,097
-
-
-
35
-
-
-
-
-
-
-
76,107
-
-
-
-
659
97,204
Share
Capital
$’000
536
-
-
88
-
-
-
Share
Premium
Account
$’000
21,097
-
-
-
-
-
-
624
21,097
-
-
35
-
-
-
-
-
76,107
-
-
-
659
97,204
Capital
Redemption
Reserve
$’000
Merger
Reserve
$’000
9
-
-
-
-
-
-
-
-
9
-
-
-
-
-
-
-
-
9
9
-
-
-
-
-
-
9
-
-
-
-
-
-
9
Other
Reserves
$’000
4,148
-
-
1,332
-
-
-
(752)
-
-
-
2,294
-
-
-
(1,089)
-
-
-
-
186,993
-
-
-
-
-
-
-
(12)
-
-
-
-
186,993
4,728
-
-
-
186,993
-
-
-
1,402
-
521
-
-
(291)
-
186,993
1,632
-
6,142
-
-
-
-
(12)
-
-
-
Retained
Earnings
$’000
42,605
12,905
(126)
-
-
(422)
1,212
354
(9,700)
46,828
9,409
42
-
-
(1,726)
(366)
1,025
Total
Equity
$’000
68,395
12,905
(126)
1,332
187,081
(422)
1,212
(398)
(9,700)
260,279
9,409
42
2,294
76,130
(1,726)
(366)
(64)
Retained
Earnings
$’000
25,205
13,159
-
-
579
(469)
(9,700)
28,774
6,034
-
-
19
Total
Equity
$’000
48,249
13,159
521
187,081
579
(760)
(9,700)
239,129
6,034
6,142
76,130
19
(484)
(1,841)
1,357
-
(12,976)
(12,976)
186,981
5,933
23,208
313,994
97
-
(12,976)
(12,976)
186,981
5,933
42,236
333,022
Capital
Redemption
Reserve
$’000
Merger
Reserve
$’000
Other
Reserves
$’000
Craneware plc Annual Report 2022
Consolidated Balance Sheet
As at 30 June 2022
ASSETS
Non-Current Assets
Property, plant and equipment
Intangible assets - goodwill
Intangible assets - acquired intangibles
Intangible assets - other
Trade and other receivables
Deferred tax
Current Assets
Trade and other receivables
Cash and cash equivalents
Restricted cash
Total Assets
EQUITY & LIABILITIES
Non-Current Liabilities
Borrowings
Leased property
Hire purchase equipment
Deferred tax
Other provision
Current Liabilities
Borrowings
Deferred income
Trade and other payables
Total Liabilities
Equity
Share capital
Share premium account
Capital redemption reserve
Merger reserve
Other reserves
Retained earnings
Total Equity
Total Equity and Liabilities
Registered Number SC196331
Notes
14
15
15
15
17
18
17
21
21
22
18
22
4
23
19
2022
$’000
8,819
237,646
187,257
43,430
3,234
-
480,386
40,001
47,157
1,251
88,409
568,795
103,589
1,206
290
47,606
568
153,259
8,000
58,722
15,792
82,514
235,773
659
97,204
9
186,981
5,933
42,236
333,022
568,795
2021
$’000
2,552
11,188
-
31,922
5,427
5,459
56,548
19,435
235,617
-
255,052
311,600
-
1,148
-
-
764
1,912
-
33,670
15,739
49,409
51,321
624
21,097
9
186,993
4,728
46,828
260,279
311,600
The accompanying notes are an integral part of these financial statements.
The financial statements on pages 96 to 140 were approved and authorised for issue by the Board of Directors on 19 September 2022 and signed on its behalf by:
Keith Neilson
Director
98
Craig Preston
Director
Craneware plc Annual Report 2022 Company Balance Sheet
As at 30 June 2022
ASSETS
Non-Current Assets
Investment in subsidiary undertakings
Property, 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
Non-Current Liabilities
Lease liabilities > 1 year
Other provisions
Current Liabilities
Deferred income
Trade and other payables
Total Liabilities
Equity
Share capital
Share premium account
Capital redemption reserve
Merger 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
Registered Number SC196331
Notes
16
14
15
18
17
17
21
23
19
2022
$’000
84,905
679
37,537
805
6,000
129,926
222,516
28,400
250,916
380,842
-
568
568
34,947
31,333
66,280
66,848
659
97,204
9
186,981
5,933
23,208
28,774
6,034
(11,600)
313,994
380,842
The accompanying notes are an integral part of these financial statements.
The financial statements on pages 96 to 140 were approved and authorised for issue by the Board of Directors on 19 September 2022 and signed on its behalf by:
Keith Neilson
Director
Craig Preston
Director
2021
$’000
9,000
1,201
31,885
2,217
6,000
50,303
28,170
230,363
258,533
308,836
387
764
1,151
33,670
34,886
68,556
69,707
624
21,097
9
186,993
1,632
28,774
25,205
13,159
(9,590)
239,129
308,836
99
Craneware plc Annual Report 2022 Statements of Cash Flows
For the year ended 30 June 2022
Cash flows from operating activities
Cash generated from operations
Tax paid
Net cash generated from/(used in) operating activities
Cash flows from investing activities
Acquisition of subsidiary, net of cash acquired
Purchase of property, plant and equipment
Capitalised intangible assets
Interest received
Net cash used in investing activities
Cash flows from financing activities
Dividends paid to company shareholders
Shares issued for cash
Share issue professional fees
Paid up share capital
Proceeds from borrowings
Loan arrangement fees
Repayment of borrowings
Interest on borrowings
Purchase of own shares by EBT
Funds (advanced to)/ returned from EBT
Payment of lease liabilities
Group
2022
$’000
2021
$’000
Company
2022
$’000
2021
$’000
Notes
20
32,943
26,711
(175,869)
19,718
(5,979)
26,964
(3,174)
(1,088)
(919)
23,537
(176,957)
18,799
13
14
15
11
19
19
22
22
22
19
(293,288)
(353)
-
(159)
-
(170)
-
(55)
(13,680)
(10,167)
(10,300)
(10,136)
1
1
354
77
(307,320)
(10,325)
(10,116)
(10,114)
(12,976)
(9,700)
(12,976)
(9,700)
-
187,244
-
187,244
(263)
236
120,000
-
88
-
(268)
(1,692)
(8,000)
(3,080)
(1,726)
-
-
(422)
(263)
236
-
-
-
-
-
-
-
(1,304)
(2,027)
(964)
(583)
-
88
-
-
-
-
-
136
(570)
Net cash generated from/(used in) financing activities
91,896
174,554
(14,890)
177,198
Net (decrease)/ increase in cash and cash equivalents
(188,460)
187,766
(201,963)
185,883
Cash and cash equivalents at the start of the year
235,617
47,851
230,363
44,480
Cash and cash equivalents at the end of the year
21
47,157
235,617
28,400
230,363
In FY21 shares issued for cash includes net proceeds of $187,331,713 related to the share placing in June 2021, being gross proceeds of $192,282,712 less transaction costs of
$4,950,999.
The accompanying notes are an integral part of these financial statements.
100
Craneware plc Annual Report 2022 Notes to the Financial Statements
General Information
Reporting currency
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 50 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 UK
adopted international accounting standards (International
Financial Reporting Standards (“IFRS”)) and the applicable legal
requirements of the Companies Act 2006.
The Group and the Company financial statements have been
prepared under the historic cost convention and prepared on
a going concern basis. The Strategic Report on pages 7 to 29
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 9 to
12. The Directors, having made suitable enquiries and analysis of
the financial statements, including the consideration of:
•
•
•
•
net debt;
continued cash generation;
continued compliance with: debt facility covenants and
related payments (Note 22); and
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 the Company financial
statements.
The applicable accounting policies are set out below, together
with an explanation of where changes have been made to
previous policies on the adoption of new accounting standards in
the year, if relevant.
The preparation of financial statements in conformity with IFRS
requires the use of estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and
expenses during the reporting year. Although these estimates are
based on management’s best knowledge of the amount, event or
actions, actual results ultimately may differ from those estimates.
The Company and its subsidiary undertakings are referred to in
this report as the Group.
1. 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.
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.
Currenty 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 $1.3317/£1 (2021: $1.3466/£1). Monetary
assets and liabilities expressed in foreign currencies are translated
into US dollars at rates of exchange ruling at the Balance Sheet
date $1.2128 /£1 (2021: $1.3853/£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 they have
concluded that they have no material financial impact on the
financial statements of the Group or Company.
Covid-19 Related Rent Concessions (Amendments to IFRS16)
(effective 1 January 2021*), Interest Rate Benchmark Reform
(Amendments to IFRS 9, IAS 39, IFRS 7 and IFRS 16) (effective 1
January 2020*).
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.
Reference to the Conceptual Framework (Amendments to IFRS 3)
(effective 1 January 2022*), Onerous Contracts – Cost of Fulfilling
a Contract (Amendments to IAS 37) (effective 1 January 2022*),
Annual Improvements to IFRS 2018-2020 (effective 1 January
2022*), Classification of Liabilities as Current or Non-current
(Amendments to IAS 1) (effective 1 January 2023*), Disclosure of
Accounting Policies (Amendments to IAS 1) (effective 1 January
2023), Definition of Accounting Estimates (Amendments to IAS 8)
(effective 1 January 2023).
*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.
101
Craneware plc Annual Report 2022 Notes to the Financial Statements [Cont'd]
1. Principal accounting policies [Cont'd]
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 be 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.
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.
Employee Benefit Trust (EBT)
Craneware plc established an employee benefit trust (EBT) in
conjunction with the operation of the Company’s employee share
plans for the benefit of the employees of the Group. While it is run
by independent trustees, the assets and liabilities of the employee
benefit trust are viewed to be ultimately under the control of the
Board of directors and hence have been consolidated into the
Group results.
Investments in the Company’s own shares held by the EBT are
presented as a deduction from Retained Earnings.
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
liabilities resulting from any contingent consideration. Any costs
directly attributable to the acquisition costs are expensed as
incurred.
Any contingent consideration to be transferred by the Group
is recognised at fair value at the acquisition date. Subsequent
changes to the fair value of the contingent consideration that is
deemed to be a financial asset or financial liability is recognised
in accordance with IFRS 9 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 from contracts with customers
The Group follows the principles of IFRS 15, ‘Revenue from
Contracts with Customers’; accordingly, revenue is recognised
using the five-step model:
Identify the contract;
Identify the performance obligations in the contract;
1.
2.
3. Determine the transaction price;
4. Allocate the transaction price to the performance
obligations in the contract;
5. Recognise revenue when or as performance obligations
are satisfied.
Revenue is recognised either when the performance obligation
in the contract has been performed (point in time recognition) or
over time as control of the performance obligation is transferred
to the customer.
Revenue is derived from sales of software licences, professional
services, including training and consultancy, and transactional
fees.
Revenue from Software Licenses
Revenue from both on premises and cloud based software
licenced products is recognised from the point at which the
customer gains control and the right to use our software. The
following key judgements have been made in relation to revenue
recognition of software license:
•
•
•
This is right of use software due to the integral updates
provided on a regular basis to keep the software relevant
and, as a result, the licenced software revenue will be
recognised over time rather than at a point in time;
The software license together with installation, regular
updates and access to support services form a single
performance obligation;
The transaction price is allocated to each distinct one year
license period with annual increases being recognised in
the year they apply;
• Discounts in relation to software licenses are recognised
over the life of the contract.
102
Craneware plc Annual Report 2022 Notes to the Financial Statements [Cont'd]
1. Principal accounting policies [Cont'd]
This policy is consistent with the Company’s products providing
customers with a service through the delivery of, and access to,
software solutions (Software-as-a-Service (“SaaS”)), and results in
revenue being recognised over the period that these services are
delivered to customers.
Incremental costs directly attributable in securing the contract are
charged equally over the life of the contract and as a consequence
are matched to revenue recognised. Any deferred contract costs
are included in both current and non-current trade and other
receivables.
Revenue from professional services
Revenue from all professional services including training
and consulting services is recognised when the performance
obligation has been fulfilled and the services are provided. These
services could be provided by a third party and are therefore
considered to be separate performance obligations. Where
professional services engagements contain material obligations,
revenue is recognised when all the obligations under the
engagement have been fulfilled. Where professional services
engagements are provided on a fixed price basis, revenue is
recognised based on the percentage complete of the relevant
engagement. Percentage completion is estimated based on the
total number of hours performed on the project compared to the
total number of hours expected to complete the project.
‘White-labelling’ or other ‘paid for development work’ is generally
provided on a fixed price basis and as such revenue is recognised
based on the percentage completion or delivery of the relevant
project. Where percentage completion is used it is estimated
based on the total number of hours performed on the project
compared to the total number of hours expected to complete
the project. Where contracts underlying these projects contain
material obligations, revenue is deferred and only recognised
when all the obligations under the engagement have been
fulfilled.
Revenue from transactional services
Transactional service fees are recognised at the point in time when
the service is provided.
Should any contracts contain non-standard clauses, revenue
recognition will be in accordance with the underlying contractual
terms which will normally result in recognition of revenue being
deferred until all material obligations are satisfied. The Group does
not have any contracts where a financing component exists within
the contract.
The excess of amounts invoiced over revenue recognised are
included in deferred income. If the amount of revenue recognised
exceeds the amount invoiced the excess is included within
accrued income.
Contract assets include sales commissions and prepaid royalties.
Contract liabilities include unpaid sales commissions on contracts
sold and deferred income relating to license fees billed in advance
and recognised over time.
Exceptional items
The Group defines exceptional items as transactions (including
costs incurred by the Group) which relate to material non-
recurring events. These are disclosed separately where it is
considered it provides additional useful information to the users of
the financial statements.
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 and service-based 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 and service-based 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.
Market vesting conditions and non-vesting conditions are factored
into the fair value of the share options or conditional share awards
granted. As long as all other vesting conditions are satisfied, a
charge is recognised irrespective of whether the market vesting
conditions are satisfied. The cumulative expense is not adjusted
for failure to achieve a market vesting condition or where a non-
vesting condition is not satisfied.
103
Craneware plc Annual Report 2022 Notes to the Financial Statements [Cont'd]
1. Principal accounting policies [Cont'd]
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’.
Charges relating to subsidiaries are recharged by Craneware plc to
the relevant subsidiary.
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. They are measured using
enacted rates and laws that will be in effect when the differences
are expected to reverse. Deferred tax is not accounted for if it
arises from initial recognition of an asset or liability in a transaction
that at the time of the transaction does not affect accounting
or taxable profit or loss. Deferred tax assets are recognised to
the extent that it is probable that future taxable profits will arise
against which the temporary differences will be utilised.
Deferred tax is provided on temporary differences arising on
investments in subsidiaries except where the timing of the reversal
of the temporary difference is controlled by the Group and it is
probable that the temporary difference will not reverse in the
foreseeable future. Deferred tax assets and liabilities arising in the
same tax jurisdiction are offset
In the UK and the US, the Group is entitled to a tax deduction
for amounts treated as compensation on exercise of certain
employee share options and on the vesting of conditional share
awards under each jurisdiction’s tax rules. 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.
Intangible Assets
(a) Goodwill
Goodwill arising on consolidation represents the excess of the
cost of acquisition over the fair value of the identifiable assets
and liabilities of a subsidiary at the date of acquisition. Goodwill is
recognised as a non-current asset in accordance with IFRS 3 and is
not amortised.
After initial recognition, goodwill is stated at cost less any
accumulated impairment losses. It is tested at least annually
for impairment. Any impairment loss is recognised in the
Consolidated Statement of Comprehensive Income.
Goodwill is allocated to cash generating units for the purpose
of impairment testing. The allocation is made to those cash
generating units that are expected to benefit from the business
combination in which the goodwill arose.
(b) Proprietary software
Proprietary software acquired in a business combination is
recognised at fair value at the acquisition date. Proprietary
software has a finite useful economic life and is carried at cost less
accumulated amortisation. Amortisation is calculated using the
straight-line method to allocate the associated costs over their
estimated useful lives of five years.
(c) Customer relationships
Contractual customer relationships acquired in a business
combination are recognised at fair value at the acquisition
date. The contractual customer relationships have a finite
useful economic life and are carried at cost less accumulated
amortisation. Amortisation is calculated using the straight-line
method over the expected life of the customer relationship which
has been assessed as up to fifteen years.
(d) Development Costs
Expenditure associated with developing and maintaining the
Group’s software products is recognised as incurred.
Development expenditure is capitalised where new product
development projects
• are technically feasible;
• production and sale is intended;
• a market exists;
• expenditure can be measured reliably; and
• sufficient resources are available to complete such projects.
Costs are capitalised until initial commercialisation of the product,
and thereafter amortised on a straight-line basis over its estimated
useful life, which has been assessed as between five and ten
years. Expenditure not meeting the above criteria is expensed as
incurred.
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, except cloud
computing software where the Group does not have control of the
software which is expensed as incurred. They are amortised on a
straight-line basis over their useful economic life which is typically
three to five years.
104
Craneware plc Annual Report 2022 Notes to the Financial Statements [Cont'd]
1. Principal accounting policies [Cont'd]
(f) Trademarks
Trademarks acquired in a business combination are initially
measured at fair value at the acquisition date. Trademarks
have a finite usefule economic life and are carried at cost less
accumulated amortisation. Amortisation is calculated using the
straight-line method to allocate the associated costs over their
estimated useful lives of up to ten years.
Impairment of non-financial assets
At each reporting date the Group considers the carrying amount
of its tangible and intangible assets including goodwill to
determine whether there is any indication that those assets have
suffered an impairment loss. If there is such an indication, the
recoverable amount of the asset is estimated in order to determine
the extent of the impairment loss (if any) through determining the
value in use of the cash generating unit that the asset relates to.
Where it is not possible to estimate the recoverable amount of an
individual asset, the Group estimates the recoverable amount of
the cash generating unit to which the asset belongs.
If the recoverable amount of an asset is estimated to be less than
its carrying amount, the impairment loss is recognised as an
expense.
Where an impairment loss subsequently reverses, the carrying
amount of the asset is increased to the revised estimate of its
recoverable amount, but so that the increased carrying amount
does not exceed the carrying amount that would have been
determined had no impairment loss been recognised for the
asset. A reversal of an impairment loss is recognised as income
immediately. Impairment losses relating to goodwill are not
reversed.
Property, Plant and Equipment
All property, plant and equipment are stated at historic cost less
depreciation. Costs are measured at 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. Right-of-use assets are depreciated over their expected
useful lives on the same basis as owned assets. It is calculated at
the following rates:
Leased property
Computer equipment
Tenant’s improvements
Office furniture
- over the life of the lease straight line
- 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
Leases
When entering into a contract the Group assesses whether or not
a lease exists. A lease exists if a contract conveys a right to control
the use of an asset for a period of time for consideration.
The Group recognises right-of-use assets at cost and lease
liabilities at the lease commencement date based on the
present value of future lease payments. The right-of-use assets
are depreciated on a straight-line basis in line with the Group’s
accounting policy for property, plant and equipment.
The lease liabilities are recognised at the present value of the
future lease payments from the commencement date of the lease.
Discount rates used reflect the incremental borrowing rate specific
to the lease. Each lease payment is allocated between the lease
liability and finance cost, which is charged at a constant periodic
rate over the term of the lease.
The Group subsequently remeasures the lease liability at each
reporting date by increasing the carrying amount to reflect the
interest on the lease liability.
Leases of low value items and short-term leases (leases of less
than 12 months at the commencement date) are recognised on
a straight-line basis over the life of the lease as an expense to the
income statement instead of recognising a right-of-use asset and
lease liability.
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.
Financial assets
The Group classifies its financial assets in the following categories:
(i) at fair value through profit and loss (FVTPL);
(ii) financial assets at amortised cost; and
(iii) fair value through other comprehensive income (FVTOCI).
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 financial assets at amortised cost.
Financial assets at amortised cost 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. They are classified as
‘trade and other receivables’ or ‘cash and cash equivalents’ in the
Balance Sheet.
105
Craneware plc Annual Report 2022 Notes to the Financial Statements [Cont'd]
1. Principal accounting policies [Cont'd]
Cash and cash equivalents
Trade receivables are recognised initially at fair value being the invoice value and
subsequently measured at amortised cost using the effective interest method, less
provision for impairments.
Impairment of financial assets
IFRS 9 uses a forward-looking expected credit loss model. The
Group recognises an allowance for expected credit losses (ECLs)
for all debt instruments not held at fair value through profit and
loss. ECLs are based on the difference between the contractual
cash flows due in accordance with the contract and all the cash
flows the Group expects to receive.
For trade receivables, the Group applies a simplified approach
to calculating ECLs. Therefore the Group does not track changes
in credit risk but instead recognises a loss allowance based on
lifetime ECLS at each reporting date.
The expected credit losses on these trade receivables are
estimated using a provision matrix based on the Group’s historical
credit loss experience, adjusted for management judgement
concerning factors that are specific to the receivables, general
economic conditions and assessment of the current as well as
the forecast direction of conditions at the reporting date based
on reasonable and supportable information available. A financial
asset is written off when there is no reasonable expectation of
recovering the contractual cashflow.
Amounts owed from Group companies and other receivables due
to the Company are also subject to the impairment requirements
of IFRS 9. All amounts owed from Group companies are repayable
on demand and sufficient funds are held or are readily available
to satisfy repayment of the loans. Other debtors consists mainly
of the loan to the Employee Benefit Trust. Therefore the identified
impairment loss was assessed as immaterial for both.
Borrowings
Borrowings represent bank loans, initially measured at fair value
net of transaction costs and subsequently measured at amortised
cost, using the effective interest rate method.
Finance charges are accounted for in the profit or loss over the
term of the loan.
Financial liabilities
Trade payables and other short term liabilities are recognised
initially at fair value and subsequently measured at amortised cost
using the effective interest method.
Other provisions
Provisions are recognised where the Group has a present
obligation (legal or constructive) as a result of a past event, it
is probable that an outflow of resources embodying economic
benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation.
Other provisions relate to employer taxes due in relation to
employee share awards from the 2007 Share Option Plan payable
on exercise of options.
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 including any cash held at
the balance sheet date by the Employee Benefit Trust.
Restricted Cash
Restricted cash is non-distributable and held in separate bank
accounts from distributable cash. The balance comprises amounts
held on behalf of customers as part of services in connecting them
to their contract pharmacy network.
Share capital
Ordinary shares are classified as equity.
Share premium
The share premium account represents the difference between
the par value of the shares issued and the subscription or issue
price.
Merger reserve
The merger reserve represents the difference between the fair
value and nominal value of shares issued on the acquisition of
subsidiary companies where the company has taken advantage of
merger relief.
Other reserves
Other reserves relate to share-based payments and these reserves
are not available for distribution.
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:
Estimates
•
Impairment assessment: the Group tests annually
whether Goodwill has suffered any impairment and for
other assets including acquired intangibles at any point
where there are indications of impairment. This requires
an estimation of the recoverable amount of the applicable
cash generating unit to which the Goodwill and other
assets relate. Estimating the recoverable amount requires
the Group to make an estimate of the expected future
cash flows from the specific cash generating unit using
certain key assumptions including growth rates and a
discount rate. These assumptions result in no impairment
in Goodwill.
106
Craneware plc Annual Report 2022 Notes to the Financial Statements [Cont'd]
2. Critical accounting estimates and judgements [Cont'd]
Estimates [Cont'd]
•
•
Useful lives of intangible assets: in assessing useful
life, the Group uses careful judgement based on past
experience, advances in product development and also
best practice. The Group amortises intangible assets over
a period of up to 15 years (2021: 5 to 10 years). During the
year, the Group has updated the estimated useful life of
Customer Relationships to up to 15 years as a result of the
valuation work performed on the acquisition of Sentry
Data Systems. This has been applied on a prospective
basis. All historic customer relationship assets were fully
amortised at 30 June 2021 and therefore there is no
change to historic asset amortisation as a result of the
change.
Intangible assets acquired and liabilities assumed:
the Group has measured assets acquired and liabilities
assumed on acquisition of Sentry at their fair value on
acquisition. Assessing the fair value required the use of
a number of assumptions and estimates in relation to
future cash flows generated by the assets and the use
of valuation techniques. The assumptions were based
on the best information available to management and
valuation techniques were supported by third party
valuation experts. The valuations methods used for the
intangibles acquired were:
o Customer relationships – the residual income method
was used for arriving at the fair value of this asset.
This calculates the residual profit attributable less the
appropriate returns for all other assets that benefit the
business.
o Proprietary software – the cost approach was used
in determining the fair value of this asset. This
method estimates the cost to replicate the asset as
at the purchase date using current prices for time
and materials adding an appropriate margin and
opportunity cost.
o Trademarks – the relief from royalty method was
used to provide the fair value of this asset. This uses
an estimate of the cost savings that accrue on an
intangible asset that would otherwise incur royalties
or licence fees on revenues generated from the use of
the asset.
Judgements
•
Capitalisation of development expenditure: the
Group capitalises development costs provided the
aforementioned conditions have been met. Consequently,
the Directors require to continually assess the commercial
potential of each product in development and its useful
life following launch.
•
•
Provisions for income taxes: the Group is subject to
tax in the UK and US and this requires the Directors to
regularly assess the applicability of its transfer pricing
policy.
Revenue recognition: in determining the amount of
revenue and related balance sheet items to be recognised
in the period, management is required to make a number
of judgements and assumptions. These are detailed in
Note 1 Revenue from contracts with customers.
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 proportion of costs are incurred in
Sterling.
Management is 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 $3,497,000 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, consistent with the prior year,
10% is appropriate for the sensitivity analysis.
(ii) Cash flow and interest rate risk
The Group’s external borrowings at the balance sheet date
comprise loan facilities on floating interest rates charged on
a daily basis at margin and compounded reference rate. The
Group’s main interest rate risk arises from these loan facilities
and considers the exposure to interest rate risk acceptable. The
Directors believe that a 25 basis point move in interest rates on
loans would, with all other variables held constant, alter post-tax
profit and equity for the year in the region of $291,000 higher/
lower respectively.
107
Craneware plc Annual Report 2022 Notes to the Financial Statements [Cont'd]
3. Financial risk management [Cont'd]
(ii) Cash flow and interest rate risk (Cont'd)
Cash held on deposit attracts interest at variable rates. The Directors believe that a 25 basis point move in interest rates on deposits would,
with all other variables held constant, alter post-tax profit and equity for the year in the region of $114,000 higher/ lower respectively.
The Directors believe that 25 basis points is appropriate for the sensitivity analysis based on recent market conditions.
(b) Credit risk
Credit risk is managed on a Group basis. Credit risk arises from cash and cash equivalents and trade receivables. In order to minimise
the Group’s exposure to risk, all cash deposits are placed with reputable banks and financial institutions. The Group’s exposure to trade
receivables is reduced due to contractual terms which require installation, training, annual licensing and support fees, to be invoiced in
advance. Transactional revenue is billed monthly in arrears.
Credit risk also arises on cash and cash equivalents placed with the Group’s banks. The Group monitors the financial standing of any
institution with which it deposits cash.
(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 50.
(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.
At 30 June 2022
Trade and other payables
Lease Liabilities
Borrowings
At 30 June 2021
Trade and Other Payables
Lease Liabilities
Less than 1
year
$'000
Between 1
and 2 years
$'000
Between 2
and 5 years
$'000
Over 5
years
$'000
13,331
2,439
11,035
26,805
14,686
1,053
15,739
-
1,219
11,035
12,254
-
812
812
-
325
102,070
102,395
-
380
380
-
-
-
-
-
25
25
Total
$'000
13,331
3,983
124,140
141,454
14,686
2,270
16,956
There is no difference between the undiscounted trade and other payable liabilities and the amounts shown in Note 23 as these liabilities
are all short term in nature.
Lease liabilities relate to leases under IFRS 16 and hire purchase financing and are fixed rate financial liabilities. The difference between
the undiscounted cash flows above and the liabilities are per Note 23 and the Group Balance Sheet is future finance charge on the lease
liabilities of $48,000.
Borrowings relate entirely a term and revolving loan as described in Note 22 and are floating rate financial liabilities. The difference
between the undiscounted cash flows above and the liabilities per Note 22 is future finance charge on the borrowings of $12,551,000.
108
Craneware plc Annual Report 2022 Notes to the Financial Statements [Cont'd]
Capital risk management
The Group is cash generative and trading is funded internally. As a result, management does not consider capital risk to be significant
for the Group. Contracts are normally billed in advance, except transactional revenue which is billed monthly in arrears. 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. The Group entered into
a debt facility and during the year drew down $120m of secured funding provided by our consortium of banking partners. During the
year, $8m (FY21: $nil) of the loan has been repaid on schedule, all covenants have been met, and the first extension of the term has been
agreed. Net debt of $64.4m (FY21: $nil) represents a comfortable level of debt for the Group.
4. Revenue from contracts with customers
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 US. Consequently, the Board
has determined that Group supplies only one geographical market place and as such revenue is presented in line with management
information without the need for additional segmental analysis. All of the Group assets are located in the United States of America with
the exception of the Parent Company’s, the net assets of which are disclosed separately on the Company Balance Sheet and are located in
the United Kingdom.
Software licensing
Professional services
Transactional fees
Total revenue
Contract assets
The Group has recognised the following assets related to contracts with customers:
Prepaid commissions and royalties < 1 year
Prepaid commissions and royalties > 1 year
Total contract assets
2022
$'000
137,956
13,893
13,695
165,544
2022
$'000
2,504
3,208
5,712
2021
$'000
61,115
14,463
-
75,578
2021
$'000
2,483
3,735
6,218
Contract assets are included within deferred contract costs and prepayments in the Balance Sheet. Costs recognised during the year in
relation to assets at 30 June 2021 were $2.5m.
Contract liabilities
The following table shows the total contract liabilities at 30 June 2022 from software license and professional service contracts:
Software licensing
Professional services
Total contract liabilities
Contract liabilities are included within deferred income in the Balance Sheet.
Revenue of $33.0m was recognised during the year in relation to contract liabilities as of 30 June 2021.
2022
$'000
53,596
5,126
58,722
2021
$'000
29,245
4,425
33,670
109
Craneware plc Annual Report 2022 Notes to the Financial Statements [Cont'd]
4. Revenue from contracts with customers [Cont'd]
The following table shows the aggregate transaction price allocated to performance obligations that are partially or fully unsatisfied at 30
June 2022 from software license and professional service contracts:
Revenue expected to be recognised
At 30 June 2022
- Software
- Professional services
Total at 30 June 2022
At 30 June 2021
- Software
- Professional services
Total at 30 June 2021
Total unsatisfied
performance obligations
$'000
Expected recognition
< 1 year
$'000
1 to 2 years
$'000
2 to 3 years
$'000
370,081
13,274
383,355
155,617
11,513
167,130
137,234
6,891
144,125
57,862
6,475
64,337
102,247
3,080
105,327
43,485
2,419
45,904
71,642
1,910
73,552
28,282
1,306
29,588
Revenue of $64.3m was recognised during the year in relation to unsatisfied performance obligations as of 30 June 2021.
The majority of these performance obligations are unbilled at the Balance Sheet date and therefore not reflected in these financial statements.
5. Operating expenses
Sales and marketing expenses
Client servicing
Research and development
Administrative expenses
Share-based payments (Note 8)
Depreciation of property, plant and equipment (Note 14)
Amortisation of intangible assets - other (Note 15)
Amortisation of intangible assets - acquired intangibles (Note 15)
Exceptional items*
Exchange loss
Operating expenses
2022
$'000
15,268
17,729
37,584
20,383
2,116
3,259
5,905
20,239
2,106
196
124,785
> 3 years
$'000
58,958
1,393
60,351
25,988
1,313
27,301
2021
$'000
6,620
12,615
14,549
9,300
2,141
1,403
3,840
-
6,487
47
57,002
* Exceptional items relate to legal and professional fees associated with a successful acquisition and related integration costs (FY21: legal and professional fees associated
with an aborted potential acquisition in H1 2021 and a successful acquisition completed post year end and its associated share placing).
Included in operating expenses is the movement in the provision for impairment of trade receivable during the year of $444,000 (FY21:
$495,000), as per Note 17, plus $17,000 net impairment charge for trade receivables recognised directly in operating expenses.
110
Craneware plc Annual Report 2022 Notes to the Financial Statements [Cont'd]
6. Operating profit
The following items have been included in arriving at operating profit:
Staff costs
Staff costs capitalised
Depreciation of property, plant and equipment (Note 14)
Amortisation of intangible assets - other (Note 15)
Amortisation of intangible assets - acquired intangibles (Note 15)
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
Statutory audit - non recurring fees
7. Staff costs
2022
$'000
88,698
(9,584)
3,259
5,905
20,239
77
72
2022
$'000
414
103
517
2021
$'000
40,873
(6,797)
1,403
3,840
-
46
83
2021
$'000
175
-
175
The average monthly number of people employed by the Group and Company during the year, excluding non-executive Directors, is
analysed below:
Sales and distribution
Client servicing
Research and development
Administration
Wages and salaries
Social security costs
Other pension costs
Share based payments
Total direct costs of employment
2022
Group Number
2021
Group Number
2022
Company Number
2021
Company Number
92
226
321
85
724
Group
$'000
78,422
5,805
2,355
2,116
88,698
36
108
181
45
370
Group
$’000
34,409
2,975
1,348
2,141
40,873
1
37
114
37
189
Company
$'000
18,795
1,677
981
978
22,431
1
38
113
36
188
Company
$'000
18,611
1,705
812
1,389
22,517
Employee costs are included in Cost of Sales and Operating Costs.
The remuneration of the highest paid Director is $0.5m (2021: $0.5m). Full details of Directors’ emoluments and share option exercises
are detailed in the Remuneration Committee’s Report on page 85 and key management compensation is given in Note 25, Related Party
Transactions.
Contributions are made on behalf of three of the executive Directors to a defined contribution retirement benefit scheme (2021: two).
111
Craneware plc Annual Report 2022 Notes to the Financial Statements [Cont'd]
8. Share-based payments
During the year the Group operated six equity-settled share-based payment plans whereby options over, or conditional awards of,
Ordinary Shares in Craneware plc can be granted to employees and Directors. Directors’ interests in share plan awards are set out in
the Remuneration Committee’s Report on pages 87 and 88. 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 for the Group of $2,115,285
(2021: $2,141,351) was recognised in the Consolidated Statement of Comprehensive Income for the year, as stated in Note 7 above.
This comprises a credit of $178,238 (2021: $239,418 charge) relating to the movement in the accrual for estimated employer National
Insurance contributions on the unexercised options granted under the 2007 Share Option Plan and $2,293,523 (2021: $1,901,933) share-
based payment charge for the Group in respect of awards granted from the share plans as shown in the following table.
With reference to the Company, a total share based payments expense for the Company of $978,075 (2021: $1,388,709) was recognised
in the Statement of Comprehensive Income for the year, as stated in Note 7 above. This comprises a credit of $178,238 (2021: $239,418
charge) relating to the movement in the accrual for estimated employer National Insurance contributions on the unexercised options
granted under the 2007 Share Option Plan and $1,156,313 (2021: $1,149,291) share-based payment charge for the Company in respect of
awards granted from the share plans as shown in the following table:
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
Share options granted under the 2018 Employee Stock Purchase Plan
Share options granted under the 2018 SAYE Option Plan
Conditional share awards granted under the LTIP
Contingent share awards
Total share-based payments charge
Group
2022
$'000
-
333
60
88
89
1,724
-
2,294
2021
$'000
-
246
37
69
85
1,465
-
1,902
Company
2022
$'000
-
74
60
-
89
933
-
1,156
2021
$'000
-
178
37
-
85
849
-
1,149
112
Craneware plc Annual Report 2022 Notes 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
2022.
Date of grant
Exercise price
(GBP)
Exercise price
(USD)
2007 Share Option Plan
Remaining
life at 1 July
2021 (years)
No of
options at 1
July 2021
Granted
Exercised
Lapsed
No of
options at
30 June 2022
Remaining life
at 30 June
2022 (years)
04 Sep 2012
21 Sep 2012
10 Sep 2013
22 Sep 2014
09 Mar 2016
£3.60
£4.00
£3.95
£5.225
£7.50
12 Sep 2016
£11.775
2016 Unapproved Option Plan
24 Mar 2017
£12.375
17 Jan 2018
£17.750
05 Sep 2018
£27.100
04 Sep 2019
£19.000
02 Oct 2020
£15.050
18 Nov 2021
£26.100
2016 Schedule 4 Option Plan
24 Mar 2017
£12.375
17 Jan 2018
£17.750
05 Sep 2018
£27.100
04 Sep 2019
£19.000
02 Oct 2020
£15.050
18 Nov 2021
£26.100
2018 Employee Stock Purchase Plan
24 Mar 2020
£11.475
23 Mar 2021
£18.360
2018 SAYE Option Plan
$5.72
$6.50
$6.21
$8.39
$10.66
$15.63
$15.44
$24.45
$34.88
$23.01
$19.36
$35.21
$15.44
$24.45
$34.88
$23.01
$19.36
$35.21
$13.34
$25.42
20 Apr 2020
£11.475
$14.32
19 Apr 2021
£18.360
$25.39
1.2
1.2
2.2
3.2
4.7
5.2
5.7
6.5
7.2
8.2
9.3
-
5.7
6.5
7.2
8.2
9.3
-
0.7
1.7
2.3
3.3
1,725
6,605
47,190
94,416
100,756
36,469
35,126
48,517
38,970
19,456
63,509
-
-
-
-
-
-
-
-
-
-
-
-
168,036
15,958
6,759
3,588
5,312
11,692
-
-
-
-
-
-
29,645
18,498
7,420
38,726
4,302
-
-
-
-
(1,725)
-
-
-
-
-
(3,838)
(5,070)
-
-
-
-
(4,848)
(845)
-
-
-
-
(15,630)
-
-
-
-
-
-
-
-
-
-
-
(1,615)
(1,578)
(6,476)
-
6,605
47,190
94,416
100,756
36,469
31,288
43,447
37,355
17,878
57,033
(41,021)
127,015
-
-
(359)
(1,920)
(2,159)
(5,451)
(2,868)
(1,281)
(3,790)
(1,010)
11,110
5,914
3,229
3,392
9,533
24,194
-
6,139
34,936
3,292
-
0.2
1.2
2.2
3.7
4.2
4.7
5.5
6.2
7.2
8.3
9.4
4.7
5.5
6.2
7.2
8.3
9.4
-
0.7
1.3
2.3
604,994
197,681
(31,956)
(69,528)
701,191
113
Craneware plc Annual Report 2022
Notes to the Financial Statements [Cont'd]
8. Share-based payments [Cont'd]
The weighted average share price at the date of exercise of share options in the year ended 30 June 2022 was £19.62 ($26.37) (2021:
£19.11 ($25.79)). The market value of Craneware plc Ordinary Shares at 30 June 2022 was £18.40 ($22.32) per share. The weighted average
remaining contractual life of the options outstanding at 30 June 2022 is 5.3 years (2021: 5.1 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 the end of the year
2022
2021
Number of
Options
Weighted average
exercise price (£)
Numer of
Options
Weighted average
exercise price (£)
604,994
197,681
(31,956)
(69,528)
701,191
417,781
11.80
26.10
12.46
22.74
14.72
10.51
584,300
94,095
(47,382)
(26,019)
604,994
393,523
11.12
15.47
7.79
17.19
11.80
8.92
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. The final grant of options under the 2007
Share Option Plan was on 12 September 2016 and therefore the fair values of the share options granted under this plan were recognised
as share-based payments expense in previous financial years until during the year ended 30 June 2020.
The Craneware plc Unapproved Company Share Option Plan (2016) (‘the 2016 Unapproved Option Plan’)
The Craneware plc Schedule 4 Company Share Option Plan (2016) (‘the 2016 Schedule 4 Option Plan’)
Share options were granted under these Plans to certain employees, senior managers and executive Directors in October 2020, in
September 2019, in September 2018, January 2018 and in March 2017, as summarised in the table above. 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 October 2020, in September 2019, and in September 2018 are outlined in the Remuneration
Committee’s Report on pages 82 and 83. On 18 November 2021, share options in respect of 36,193 and 1,149 ordinary shares in the
Company were granted under the 2016 Unapproved Option Plan and the 2016 Schedule 4 Option Plan respectively to certain employees
and senior managers. The market-based performance conditions applicable to those share options are outlined in the Remuneration
Committee’s Report on page 82. The exercise price of these share options was at the Company share price on the day before the grant
date.
The fair value of the share options granted under these two Plans, which have market-based performance conditions, 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
18-Nov-21
02-Oct-20
04-Sep-19
05-Sep-18
17-Jan-18
24-Mar-17
£26.100
$35.21
3
41.1%
0.36%
£26.100
$35.21
37,342
$8.06
£15.050
$19.36
3
52.5%
-0.04%
£15.050
$19.36
82,177
$3.98
£19.000
$23.01
3
43.5%
0.38%
£19.000
$23.01
33,469
$5.63
£27.100
$34.88
3
26.6%
0.77%
£27.100
$34.88
60,976
$5.88
£17.750
$24.45
3
22.8%
0.56%
£17.750
$24.45
88,074
$3.05
£12.375
$15.44
3
20.5%
0.11%
£12.375
$15.44
93,029
$1.55
114
Craneware plc Annual Report 2022 Notes to the Financial Statements [Cont'd]
8. Share-based payments [Cont'd]
Within the assumptions used for the estimation of the fair values of share options granted in financial years 2017 through 2021, the
expected volatility was determined by calculating the historic volatility of the Company’s share price over the previous three years.
However, for the estimation of the fair values of the share options granted on 18 November 2021, the historic volatility of the Company’s
share price during the period from early April 2020 to the grant date was used. It was considered that this reflects a more normalised level
of volatility, given that it is based on the period after the global equity markets were abnormally impacted by the immediate economic
effects of the Covid-19 pandemic in February / March 2020.
As explained in the Remuneration Committee's Report on page 84, share options were also granted on 18 November 2021, under the
2016 Unapproved Option Plan and the 2016 Schedule 4 Option Plan, to employees (below senior management level), in respect of
131,843 and 28,496 ordinary shares in the Company respectively. The exercise price of these share options was at the Company’s closing
share price on the day before the grant date. There are no performance conditions applicable to these share options but there is a service
condition such that these share options are not normally exercisable before the third anniversary of the date of grant, subject to the
option holder being continuously employed within the Group throughout that period. The Group recognises the fair value of these share
options, as a share-based payments expense, over the vesting period based on the number of share options which are expected to vest.
The fair value of these share options was estimated using the Black-Scholes option 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
Dividend yield
Exercise price
Exercise price
Shares under option at date of grant
Fair value per option
18-Nov-21
£26.10
$35.21
3
42.4%
0.53%
1.16%
£26.10
$35.21
160,339
$9.52
The expected volatility was determined by calculating the historic volatility of the Company’s share price over the period from the start of
April 2020 to 18 November 2021. It was considered that this reflects a more normalised level of volatility, rather than for the historic three
year period to the date of grant, given that it is based on the period after the global equity markets were abnormally impacted by the
immediate economic effects of the Covid-19 pandemic in February / March 2020.
The Craneware plc Employee Stock Purchase Plan (2018)
The Craneware plc SAYE Option Plan (2018)
Share options were granted under the Save As You Earn (SAYE) option plan and the Employee Stock Purchase Plan (ESPP), to those
employees who chose to participate, in the financial years ended 30 June 2020 and 30 June 2021. The exercise price of those share
options was at a 15% discount to the Company share price on the business day immediately preceding the date of grant, in accordance
with the rules of the ESPP and the SAYE plans.
115
Craneware plc Annual Report 2022 Notes to the Financial Statements [Cont'd]
8. Share-based payments [Cont'd]
The fair value of the share options granted under these two Plans was estimated using the Black-Scholes option pricing model, as
appropriately adjusted, based on the following assumptions:
Date of Grant
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
19 April 2021
23 March 2021
20 April 2020
24 March 2020
SAYE
$35.27
£25.50
3
54.2%
0.12%
1.01%
$25.39
£18.360
18
4,498
$16.51
ESPP
$29.91
£21.60
2
57.9%
0.02%
1.01%
$25.42
£18.360
29
7,420
$16.19
SAYE
$25.58
£20.50
3
50.6%
0.11%
1.58%
$14.32
£11.475
67
42,328
$8.89
ESPP
$15.23
£13.10
2
55.8%
0.11%
1.58%
$13.34
£11.475
37
21,669
$8.27
The expected volatility was determined by calculating the historic volatility of the Company’s share price over the previous three and two
years respectively.
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 November 2021, in
October 2020, in September 2019, in September 2018, 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 November 2021, in October 2020, in September 2019, and in September 2018, are outlined in the Remuneration Committee’s Report
on pages 82 and 83.
Balance outstanding at 1 July
Awards granted in the year
Vested awards released during the year
Forfeited / lapsed during the year
Balance outstanding at 30 June
Number of conditional
share awards 2022
Number of conditional
share awards 2021
337,900
173,983
(15,863)
(31,847)
464,173
161,826
226,664
(35,421)
(15,169)
337,900
The remaining weighted average contractual life of the conditional share awards outstanding at 30 June 2022 is 1.4 years (at 30 June
2021: 1.9 years).
The fair values of the conditional share awards granted in financial years 2022, 2021, 2020, 2019, 2018 and in 2017 were estimated using
the Monte Carlo pricing model, as appropriately adjusted, with the following main assumptions:
Date of Grant
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
18 Nov 2021
02 Oct 2020
04 Sep 2019
05 Sep 2018
17 Jan 2018
24 Mar 2017
£26.100
$35.21
3
41.1%
0.36%
$19.95
£15.050
$19.36
3
52.5%
-0.04%
$9.33
£19.000
$23.01
3
43.5%
0.38%
$16.47
£27.100
$34.88
3
26.6%
0.77%
$31.48
£17.750
$24.45
3
22.8%
0.56%
$19.84
£12.375
$15.44
3
20.5%
0.11%
$12.50
116
Craneware plc Annual Report 2022 Notes to the Financial Statements [Cont'd]
8. Share-based payments [Cont'd]
Within the assumptions used for the estimation of the fair values of conditional awards granted in financial years 2017 through 2021,
the expected volatility was determined by calculating the historic volatility of the Company’s share price over the previous three years.
However, for the estimation of the fair values of the conditional awards granted on 18 November 2021, the historic volatility of the
Company’s share price during the period from early April 2020 to the grant date was used. It was considered that this reflects a more
normalised level of volatility, given that it is based on the period after the global equity markets were abnormally impacted by the
immediate economic effects of the Covid-19 pandemic in February / March 2020.
Other share-based payments – contingent share awards
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 2022 (159,336 Ordinary Shares at 30
June 2021).
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 159,336 award shares will vest in the financial year commencing 1 July 2022 at the earliest.
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 share
awards that actually vest.
9. Finance income and expense
Finance Income
Deposit interest receivable
Total finance income
Finance Expense
Deposit interest charge
Interest on borrowings (Note 22)
Interest on lease liabilities
Total finance expense
10. Tax on profit on ordinary activities
Profit on ordinary activities before tax
Current tax
Corporation tax on profits of the year
Adjustments for prior years
Total current tax charge
Deferred tax
Deferred tax for current year
Adjustments for prior years
Change in UK tax rate
Total deferred tax charge/ (credit)
Tax on profit on ordinary activities
2022
$'000
1
1
2022
$'000
-
4,823
208
5,031
2022
$'000
13,102
2,774
94
2,868
842
9
(26)
825
3,693
2021
$'000
1
1
2021
$'000
7
-
69
76
2021
$'000
13,165
3,772
(1,673)
2,099
(1,656)
122
(305)
(1,839)
260
117
Craneware plc Annual Report 2022 Notes to the Financial Statements [Cont'd]
10. Tax on profit on ordinary activities [Cont'd]
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% (2021: 19%)
Effects of:
Adjustment for prior years
Change in tax rate on opening deferred tax balance
Change in tax rate on closing deferred tax balance
Additional US taxes on profits 25% (2021: 25%)
R & D tax credit
Expenses not deductible for tax purposes
Spot rate remeasurement
Expense/ (deduction) on share plan charges
Other
Total tax charge
11. Dividends
The dividends paid during the year were as follows:
Final dividend, re 30 June 2021 - 21.47 cents (15.5 pence)/ share (FY21: 19.80 cents (15 pence) / share)
Interim dividend, re 30 June 2022 - 16.88 cents (12.5 pence)/ share (FY21: 16.68 cents (12 pence) / share)
Total dividends paid to Company shareholders in the year
2022
$'000
2,490
103
(26)
339
328
-
119
39
301
-
3,693
2022
$'000
7,227
5,749
12,976
2021
$'000
2,501
(1,551)
(305)
(227)
116
(712)
703
12
(258)
(19)
260
2021
$'000
5,329
4,371
9,700
The proposed final dividend of 18.80 cents (15.5 pence), as noted on page 12, for the year ended 30 June 2022 is subject to approval by
the shareholders at the Annual General Meeting and has not been included as a liability in these financial statements.
12. Earnings per share
The calculation of basic and diluted earnings per share is based on the following data:
Weighted average number of shares
Weighted average number of Ordinary Shares for the purpose of basic earnings per share
Effect of dilutive potential Ordinary Shares: share options and LTIPs
Weighted average number of shares for the purpose of diluted earnings per share
2022
No. of Shares
000s
35,110
367
35,477
2021
No. of Shares
000s
26,811
374
27,185
118
Craneware plc Annual Report 2022 Notes to the Financial Statements [Cont'd]
12. Earnings per share [Cont'd]
The Group has one category of dilutive potential Ordinary shares, being those granted to Directors and employees under the employee
share plans.
Shares held by the Employee Benefit Trust are excluded from the weighted average number of Ordinary shares for the purposes of basic
earnings per share.
Profit for the year
Profit for the year attributable to equity holders of the parent
Aborted share placing costs (tax adjusted)
Acquisition and associated share placing costs (tax adjusted)
Acquisition integration costs (tax adjusted)
Amortisation of acquired intangibles (tax adjusted)
Adjusted profit for the year attributable to equity holders of the parent
2022
$'000
9,409
-
1,279
325
20,238
31,251
2021
$'000
12,905
386
5,210
-
-
18,501
Basic earnings per share are calculated by dividing the profit attributable to equity holders of the Company by the weighted average
number of shares in issue during the year.
For diluted earnings per share, the weighted average number of Ordinary shares calculated above is adjusted to assume conversion of all
dilutive potential Ordinary shares.
Earnings per share
Basic EPS
Diluted EPS
Adjusted basic EPS
Adjusted diluted EPS
13. Business Combination
2022
cents
26.8
26.5
89.0
88.1
2021
cents
48.1
47.5
69.0
68.1
On 12 July 2021, the Group acquired 100% of the voting rights of SDS Holdco, Inc., the ultimate holding company of Sentry Data
Systems, Inc. (‘Sentry’), a leader in the pharmacy procurement, compliance and utilisation management, based in Florida, USA. For
further information on the reasons for the acquisition see Note 25 of the annual report for the year ended 30 June 2021. The aggregate
consideration for the acquisition of Sentry on a cash free/ debt free basis subject to an adjustment against a benchmark level of working
capital on the date of acquisition as calculated and determined in accordance with the terms of the agreement relating to the acquisition.
The deal was funded by $297.0m (as adjusted) of cash and $75.9m from the issue of 2,507,348 new ordinary shares at fair value on 12 July
2021 (measured using the closing market price of the Company’s ordinary shares on that date). The cash consideration was funded from
the Group’s existing cash resources, $120m from a new debt facility and $187.3m net proceeds from a share placing completed in June
2021.
Details of the purchase consideration, net assets acquired and goodwill, are as follows:
Cash paid (net of working capital adjusted)
Shares issued (fair value)
Total purchase consideration
$'000
297,015
75,905
372,920
119
Craneware plc Annual Report 2022 Notes to the Financial Statements [Cont'd]
13. Business Combination [Cont'd]
The fair values for assets and liabilities recognised as a result of the acquisition are as follows:
Non-current assets
Property, plant and equipment
Intangible assets - customer relations
Intangible assets - proprietary software
Intangible assets - trademarks
Intangible assets - other
Other contract assets
Total non-current assets
Current assets
Trade and other receivables
Cash and cash equivalents
Restricted cash
Total current assets
Non-current liabilities
Leased property > 1 year
Leased equipment > 1 year
Deferred tax
Total non-current liabilities
Current liabilities
Deferred income
Trade and other payables
Total current liabilities
Net identifiable assets acquired
Add: goodwill
Total consideration
Fair value
$'000
9,179
151,000
51,496
5,000
3,762
376
220,813
13,671
3,727
1,880
19,278
1,540
1,146
51,874
54,560
27,164
11,905
39,069
146,462
226,458
372,920
The goodwill is attributable to Sentry’s strong position in the market and synergies expected to arise after the company’s acquisition of
these new subsidiaries.
The fair value of the acquired customer list and customer contracts of $151m, proprietary software of $51.5m and trademarks of $5.0m
have been valued as per the details in Note 2. Deferred tax of $37.8m, $12.9m and $1.2m has been provided respectively in relation to
these intangible assets.
Acquisition related costs of $2.1m (FY21: $6.5m) are included within exceptional costs in profit and loss.
The fair value of trade and other receivables is $13.7m and includes trade receivables with a fair value of $9.5m. The gross contractual
amount for trade receivables due is $12.7m of which $3.2m is expected to be uncollectible.
Sentry contributed revenue of $94.7m and net profit of $1.6m to the Group for the period from 13 July 2021 to 30 June 2022. If the
acquisition had occurred on 1 July 2021, consolidated revenue and consolidated profit after tax for the year ended 30 June 2022 would
have been $168.2m and $9.5m respectively.
120
Craneware plc Annual Report 2022 Notes to the Financial Statements [Cont'd]
14. Property, plant and equipment
Leased
Properties
$’000
Computer
Equipment
$’000
Office
Furniture
$’000
Tenants
Improvements
$’000
Group
Cost
At 1 July 2021
Additions
Acquisition of subsidiary
Disposals
At 30 June 2022
Accumulated depreciation
At 1 July 2021
Charge for year
Depreciation on disposals
At 30 June 2022
Net Book Value at 30 June 2022
Cost
At 1 July 2020
Additions
Disposals
At 30 June 2021
Accumulated depreciation
At 1 July 2020
Charge for year
Depreciation on disposals
At 30 June 2021
Net Book Value at 30 June 2021
Leased properties
3,826
-
2,155
-
5,981
1,834
1,575
-
3,409
2,572
3,826
-
-
3,826
917
917
-
1,834
1,992
1,954
282
6,781
(51)
8,966
1,686
1,583
(46)
3,223
5,743
2,409
129
(584)
1,954
1,915
355
(584)
1,686
268
676
30
183
(1)
888
669
44
(1)
712
176
713
2
(39)
676
698
8
(37)
669
7
Total
$’000
8,134
352
9,179
(52)
1,678
40
60
-
1,778
17,613
1,393
57
-
1,450
328
1,652
28
(2)
1,678
1,272
123
(2)
1,393
285
5,582
3,259
(47)
8,794
8,819
8,600
159
(623)
8,134
4,802
1,403
(623)
5,582
2,552
All leased properties are right-of-use assets. These properties consist of office spaces used by the Group in the UK and the US.
One new right-of-use leased property was acquired through the purchase of Sentry and there were no disposals during the period.
Depreciation of $1,575,000 (FY21: $917,000) was recognised during the year in respect of right-of-use assets.
The average remaining lease term is 2 years.
The Group does not have any other right-of-use assets other than those disclosed under leased properties.
121
Craneware plc Annual Report 2022
Notes to the Financial Statements [Cont'd]
14. Property, plant and equipment [Cont'd]
Leased
Properties
$’000
Computer
Equipment
$’000
Office
Furniture
$’000
Tenants
Improvements
$’000
1,988
-
-
1,988
1,097
548
-
1,645
343
1,988
-
-
1,988
548
549
-
1,097
891
1,015
100
(19)
1,096
885
106
(16)
975
121
1,171
54
(210)
1,015
926
169
(210)
885
130
456
30
-
486
453
2
-
455
31
492
1
(37)
456
486
4
(37)
453
3
1,454
40
-
1,494
1,277
33
-
1,310
184
1,455
-
(1)
1,454
1,172
106
(1)
1,277
177
Total
$’000
4,913
170
(19)
5,064
3,712
689
(16)
4,385
679
5,106
55
(248)
4,913
3,132
828
(248)
3,712
1,201
Company
Cost
At 1 July 2021
Additions
Disposals
At 30 June 2022
Accumulated depreciation
At 1 July 2021
Charge for the year
Depreciation on disposal
At 30 June 2022
Net Book Value at 30 June 2022
Cost
At 1 July 2020
Additions
Disposals
At 30 June 2021
Accumulated depreciation
At 1 July 2020
Charge for year
Depreciation on disposals
At 30 June 2021
Net Book Value at 30 June 2021
122
Craneware plc Annual Report 2022
Notes to the Financial Statements [Cont'd]
Goodwill
$’000
Customer
Relationships
$’000
Proprietary
Software
$’000
Trademarks
$’000
Development
Costs
$’000
Computer
Software
$’000
15. Intangible assets
Group
Cost
At 1 July 2021
Additions
Acquisition of subsidiary
Disposals
At 30 June 2022
Accumulated amortisation and impairment
At 1 July 2021
Charge for the year
Amortisation on disposal
At 30 June 2022
11,438
-
2,964
-
226,458
151,000
-
-
237,896
153,964
250
-
-
250
2,964
9,742
-
12,706
3,043
-
51,496
(1,815)
52,724
3,043
9,959
(1,815)
11,187
41,537
Net Book Value at 30 June 2022
237,646
141,258
Cost
At 1 July 2020
Additions
Disposals
At 30 June 2021
11,438
2,964
3,043
-
-
-
-
-
-
11,438
2,964
3,043
Accumulated amortisation and impairment
At 1 July 2020
Charge for the year
Amortisation on disposal
At 30 June 2021
250
-
-
250
Net Book Value at 30 June 2021
11,188
2,964
3.043
-
-
2,964
-
-
-
3,043
-
-
-
5,000
-
5,000
-
538
-
538
4,462
-
-
-
-
-
-
-
-
-
42,976
13,506
-
(386)
56,096
11,324
4,669
(386)
15,607
40,489
32,877
10,099
-
42,976
7,794
3,530
-
11,324
31,652
1,004
174
3,762
(100)
4,840
734
1,236
(71)
1,899
2,941
2,104
68
(1,168)
1,004
1,592
310
(1,168)
734
270
Total
$’000
61,425
13,680
437,716
(2,301)
510,520
18,315
26,144
(2,272)
42,187
468,333
52,426
10,167
(1,168)
61,425
15,643
3,840
(1,168)
18,315
43,110
123
Craneware plc Annual Report 2022
Notes to the Financial Statements [Cont'd]
15. Intangible assets [Cont'd]
In accordance with the Group’s accounting policy, the carrying values of Goodwill and other intangible assets are reviewed for impairment
annually or more frequently if events or changes in circumstances indicate that the asset might be impaired. Goodwill arose on the
acquisition of subsidiaries and is split into the following CGUs:
Craneware InSight
Sentry
Total Goodwill
Craneware InSight
2022
$'000
11,188
226,458
237,646
2021
$'000
11,188
-
11,188
The carrying values are assessed for impairment purposes by calculating the value in use of the core Craneware business cash generating
unit. This is the lowest level of which there are separately identifiable cash flows to assess the Goodwill acquired as part of the Craneware
InSight, Inc purchase.
Sentry
The carrying values are assessed for impairment purposes by calculating the value in use of the Sentry business cash generating unit. This
is the lowest level of which there are separately identifiable cash flows to assess the Goodwill acquired as part of the Sentry acquisition.
The key assumptions in assessing value in use for the CGU’s are:
Craneware InSight
Sentry
Growth rate in perpetuity
Post-tax discount rate
2022
2%
2%
2021
2%
-
2022
12.1%
9.5%
2021
13.5%
-
After the initial term of 5 years, the Group applied a growth rate for each CGU. These take into consideration the customer bases and
expected revenue commitments from it, anticipated additional sales to both existing and new customers and market trends currently
seen and those expected in the future.
The Group has assessed events and circumstances in the year and the assets and liabilities of the business cash-generating units; this
assessment has confirmed that no significant events or circumstances occurred in the year and that the assets and liabilities showed no
significant change from last year.
After review of future forecasts, the Group confirmed the growth forecast for the next five years showed that the recoverable amounts
would continue to exceed the carrying values. There are no reasonable possible changes in assumptions that would result in an
impairment. Certain disclosures, including sensitivities, relating to goodwill have not been made, given the significant headroom on
impairment testing.
124
Craneware plc Annual Report 2022 Notes to the Financial Statements [Cont'd]
15. Intangible assets [Cont'd]
Company
Cost
At 1 July 2021
Additions
Disposals
At 30 June 2022
Accumulated amortisation
At 1 July 2021
Charge for the year
Amortisation on disposal
At 30 June 2022
Net Book Value at 30 June 2022
Cost
At 1 July 2020
Additions
Disposals
At 30 June 2021
Accumulated amortisation
At 1 July 2020
Charge for the year
Amortisation on disposal
At 30 June 2021
Net Book Value at 30 June 2021
Development Costs
$’000
Computer Software
$’000
42,569
10,299
-
52,868
10,917
4,451
-
15,368
37,500
32,470
10,099
-
42,569
7,287
3,530
-
10,917
31,652
686
1
(100)
587
453
168
(71)
550
37
1,706
37
(1,057)
686
1,245
265
(1,057)
453
233
Total
$’000
43,255
10,300
(100)
53,455
11,370
4,619
(71)
15,918
37,537
34,176
10,136
(1,057)
43,255
8,632
3,795
(1,057)
11,370
31,885
125
Craneware plc Annual Report 2022
Notes to the Financial Statements [Cont'd]
16. Investment in subsidiary undertakings
The following information relates to all of the direct and indirect subsidiaries of the Company:
Name of
Company
Class of
Shares held
Percentage of
ordinary shares held
Country of
Incorporation
Nature of
Business
Craneware US Holdings, Inc.
Kestros Ltd
Craneware, Inc.
Craneware InSight, Inc.
Craneware Healthcare Intelligence, LLC
SDS Holdco, Inc.
SDS Intermediate, Inc.
Sentry Data Systems, Inc.
Agilum Healthcare Intelligence, Inc.
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Held directly by Craneware plc
100%
100%
Held indirectly by Craneware plc
100%
100%
100%
100%
100%
100%
100%
USA
UK
USA
USA
USA
USA
USA
USA
USA
Holding company
Dissolved
Sales & Marketing
Software Development &
Professional Services
Software Development
Dormant
Dormant
Software Development &
Professional Services
Software Development
Craneware US Holdings, Inc. was incorporated on 30 June 2021 in the United States of America and Craneware plc holds 1,000 shares with
a nominal value of $0.01 each.
Kestros Ltd (t/a Craneware Health) was incorporated within the United Kingdom. During the year, the accounting period end was
extended to 31 December 2021. Notice to strike off the entity was submitted on 8 June 2022 and this company was dissolved on 30
August 2022 (2021: 1,075 Ordinary shares held with nominal value £1 each).
Kestros Ltd (SC362481) is exempt from the requirement for its financial statements to be audited under the provisions of section 479 A of
the Companies Act 2006.
Subsidiary registered addresses are listed on page 50.
Cost
At 1 July
Acquisition of subsidiary
At 30 June
2022
$'000
9,000
75,905
84,905
2021
$'000
9,000
-
9,000
The results of the Subsidiary companies have been included in the consolidated financial statements. Subsidiary registered addresses are
listed on page 50. The carrying value of the subsidiaries is supported by the underlying net assets.
126
Craneware plc Annual Report 2022 Notes to the Financial Statements [Cont'd]
17. Trade and other receivables
Trade receivables
Less: provision for impairment of trade receivables
Net trade receivables
Other receivables
Current tax receivable
Amounts owed from group companies
Prepayments and accrued income
Deferred contract costs
Less non-current amounts owed from group companies
Less non-current prepayments
Less non-current deferred contract costs
Current portion
Group
Company
2022
$'000
34,730
(5,855)
28,875
827
3,349
-
4,714
5,470
43,235
-
(26)
(3,208)
40,001
2021
$'000
16,450
(2,270)
14,180
302
278
-
4,090
6,012
24,862
-
(1,692)
(3,735)
19,435
2022
$'000
17,025
(2,714)
14,311
9,252
1,000
202,350
1,603
-
228,516
(6,000)
-
-
2021
$'000
16,450
(2,270)
14,180
9,051
750
8,331
1,858
-
34,170
(6,000)
-
-
222,516
28,170
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 financial assets at amortised cost.
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%.
Expected credit loss allowance for trade receivables - Group
The following table provides information about the Group’s exposure to credit risk and ECLs for trade receivables as at 30 June 2022.
30 June 2022
Expected credit loss rate
Gross carrying amount
Expected credit loss
Net carrying amount
30 June 2021
Expected credit loss rate
Gross carrying amount
Expected credit loss
Net carrying amount
Current
$'000
0.4%
20,457
92
20,365
Current
$’000
0.0%
10,667
-
10,667
<30 days
$'000
30-60 days
$'000
3.8%
1,869
71
1,798
10.7%
1,055
113
942
61-90 days
$'000
10.7%
419
45
374
> 90 days
$'000
50.6%
10,930
5,534
5,396
<30 days
$’000
30-60 days
$’000
61-90 days
$’000
>90 days
$’000
3.2%
1,079
34
1,045
1.9%
614
12
602
4.8%
130
6
124
56.0%
3,960
2,218
1,742
127
Craneware plc Annual Report 2022 Notes to the Financial Statements [Cont'd]
17. Trade and other receivables [Cont'd]
Expected credit loss allowance for trade receivables - Company
The following table provides information about the Company's exposure to credit risk and ECLs for trade receivables as at 30 June 2022.
30 June 2022
Expected credit loss rate
Gross carrying amount
Expected credit loss
Net carrying amount
30 June 2021
Expected credit loss rate
Gross carrying amount
Expected credit loss
Net carrying amount
Current
$'000
0.3%
10,203
29
10,174
Current
$’000
0.0%
10,667
-
10,667
Movement on the provision for impairment of trade receivables is as follows:
At 1 July
Acquisition of subsidiary
Provision for receivables impairment on revenue recognised
Receivables written off during year as uncollectable
Unused amounts reversed
At 30 June
<30 days
$'000
30-60 days
$'000
1.5%
799
12
787
1.9%
317
6
311
61-90 days
$'000
3.0%
54
2
52
> 90 days
$'000
47.2%
5,652
2,665
2,987
<30 days
$’000
30-60 days
$’000
61-90 days
$’000
>90 days
$’000
3.2%
1,079
34
1,045
1.9%
614
12
602
4.8%
130
6
124
Group
Company
2022
$'000
2,270
3,141
716
(77)
(195)
5,855
2021
$'000
1,775
-
631
(46)
(90)
2,270
2022
$'000
2,270
-
840
(202)
(194)
2,714
56.0%
3,960
2,218
1,742
2021
$'000
1,775
-
631
(46)
(90)
2,270
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.
128
Craneware plc Annual Report 2022 Notes to the Financial Statements [Cont'd]
18. Deferred tax
Deferred tax is calculated in full on the temporary differences under the liability method using a rate of tax of 25% (2021: 25%) in the UK
and 25% (2021: 25%) in the US including a provision for state taxes.
At 1 July
Credit/ (charge) to comprehensive income
Transfer direct to equity
Deferred tax arising on acquisitions
At 30 June
Group
Company
2022
$'000
5,459
(825)
(366)
(51,874)
(47,606)
2021
$'000
2,408
1,839
1,212
-
5,459
2022
$'000
2,217
(1,431)
19
-
805
2021
$'000
1,139
500
578
-
2,217
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 liability at 30
June 2022 was $47,606,000 (2021: net deferred tax asset $5,459,310).
Deferred tax assets - recognised
Group
At 1 July 2021
Credited/ (charged) to comprehensive income
(Charged) to equity
Total provided at 30 June 2022
At 1 July 2020
(Charged) / credited to comprehensive income
Credited to equity
Total provided at 30 June 2021
Deferred tax liabilities - recognised
Group
At 1 July 2021
Charged / (credited) to comprehensive income
Arising on acquisition
Total provided at 30 June 2022
At 1 July 2020
Credited to comprehensive income
Total provided at 30 June 2021
Short term
timing
differences
$'000
759
3,167
-
3,926
760
(1)
-
759
Losses
$’000
1,058
(765)
-
293
148
910
-
1,058
Share
Options
$'000
3,924
(357)
(366)
3,201
1,983
729
1,212
3,924
Long term
timing differences
$'000
Accelerated tax
depreciation
$'000
-
764
(51,874)
(51,110)
-
-
-
(282)
(3,634)
-
(3,916)
(483)
201
(282)
Total
$’000
5,741
2,045
(366)
7,420
2,891
1,638
1,212
5,741
Total
$’000
(282)
(2,870)
(51,874)
(55,026)
(483)
201
(282)
129
Craneware plc Annual Report 2022 Notes to the Financial Statements [Cont'd]
18. Deferred tax [Cont'd]
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 (liabilities) / assets
The Company's deferred tax assets and liabilities are all expected to be recovered in the future.
Short term
timing differences
$'000
178
(77)
-
101
317
(139)
-
178
Deferred tax assets - recognised
Company
At 1 July 2021
Charged to comprehensive income
Credited to equity
Total provided at 30 June 2022
At 1 July 2020
(Charged) / credied to comprehensive income
Credited to equity
Total provided at 30 June 2021
Deferred tax liabilities - recognised
Company
At 1 July 2021
Charged to comprehensive income
Total provided at 30 June 2022
At 1 July 2020
Credited to comprehensive income
Total provided at 30 June 2021
2022
$'000
7,126
294
7,420
(50,026)
(5,000)
(55,026)
(47,606)
Share
Options
$'000
2,054
(412)
19
1,661
903
573
578
2,054
Accelerated tax
depreciation
$'000
(15)
(942)
(957)
(81)
66
(15)
2021
$'000
4,919
822
5,741
(282)
-
(282)
5,459
Total
$’000
2,232
(489)
19
1,762
1.220
434
578
2,232
Total
$’000
(15)
(942)
(957)
(81)
66
(15)
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.
130
Craneware plc Annual Report 2022 Notes to the Financial Statements [Cont'd]
19. Share capital and reserves
(a) Share capital
Authorised
Equity share capital
Ordinary shares of 1p each
2022
2021
Number
$’000
Number
50,000,000
1,014
50,000,000
$’000
1,014
Allotted called-up and fully paid
2022
2021
Number
$’000
Number
$’000
Equity share capital
Ordinary shares of 1p each
At 1 July
Share placing
Allotted and issued in the year as part of the consideration for the
acquisition of Sentry (Note 13)
Allotted and issued in the year on exercise
of employee share options
At 30 June
33,019,191
-
2,507,348
15,630
35,542,169
624
-
34
1
659
26,826,539
6,192,652
-
-
33,019,191
536
88
-
-
624
The Company did not purchase any of its own shares during the financial year ended 30 June 2022 (2021: nil).
Shares issued during the year ended 30 June 2022
On 12 July 2021, 2,507,348 new Ordinary Shares in Craneware plc were issued as part of the consideration for the acquisition of SDS
Holdco, Inc., the ultimate holding company of Sentry. Note 13 contains further details of this business combination. The fair value of
the consideration given in excess of the nominal value of these issued Ordinary Shares was $75,870,408 which is included in the share
premium account.
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 2022 15,630 Ordinary Shares (2021: no Ordinary Shares) were issued on the exercise of share
options by employees in March 2022. The exercise price of those share options was £11.475 per share (approximately $15.13 cents per
share) and therefore the total amount received by the Company was $236,464 (£179,354) including share premium totalling $236,258
(£179,198) recognised on the issue of those Ordinary Shares.
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, JTC Employer Solutions Trustee Limited. 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 2022 is summarised in the table below.
Loan balance (from Company to the EBT) at 1 July
Exchange (loss) / gain
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
2022
$'000
8,732
(1,169)
3,421
(2,117)
8,867
2021
$'000
7,709
964
560
(501)
8,732
131
Craneware plc Annual Report 2022 Notes to the Financial Statements [Cont'd]
19. Share capital and reserves [Cont'd]
The EBT purchased 67,420 Craneware plc Ordinary Shares of 1 pence each in the market in the year ended 30 June 2022 (2021:
17,087 Ordinary Shares in the Company were purchased by the EBT in the market) and the EBT purchased 15,797 Ordinary Shares in
the Company off market, based on the prevailing market price per share on the date of purchase (2021: 20,904 Ordinary Shares in
the Company were purchased by the EBT off market). As such the net outflow from the Group in the current year as disclosed in the
Statement of Changes in Equity and Consolidated Cashflow Statement is $1,726,000 (2021: $422,000 net outflow).
The Shares held by the EBT are utilised to satisfy employee share plan awards and, during the financial year ended 30 June 2022, a total
of 20,479 of the Shares from the EBT (2021: 55,600 Shares) were used to satisfy the exercise of employee share options and employee
vested conditional share awards. At 30 June 2022 the EBT held 411,323 Craneware plc Ordinary Shares (at 30 June 2021: 348,585 Ordinary
Shares).
(b) Reserves
Share premium account
The share premium represents amounts received in excess of the nominal value of shares issued, net of the direct costs of issuing those
shares.
Merger reserve
The merger reserve contains the excess of the net proceeds over the nominal value of shares issued in the situation where the conditions,
under section 612 of the Companies Act 2006, for merger relief are satisfied. The balance on the merger reserve as at 30 June 2022 and as
at 30 June 2021 comprises the excess of the net proceeds over the nominal value of the Ordinary Shares issued on a share placing in June
2021. The purpose of the share placing was to obtain net proceeds to part fund the acquisition of SDS Holdco, Inc., the ultimate holding
company of Sentry Data Systems, Inc. (Note 13 contains further details of this acquisition). The placing was effected by way of a cash
box structure and the resulting transactions satisfied all of the required conditions under section 612 of the Act to obtain merger relief.
This merger reserve is not considered to be distributable as a consequence of the net proceeds of the share placing being for a specific
acquisition.
Capital redemption reserve
The capital redemption reserve includes the nominal value of own shares purchased back by the Company and subsequently cancelled.
This is not a distributable reserve.
Other reserves
Other reserves are the credit arising on share-based payment charges in relation to the Company’s employee share plans. Amounts are
released from this reserve to Retained Earnings when employee share plan awards are exercised, released or lapsed. Historically share-
based payment charges for the subsidiaries were being processed through other reserves in each subsidiary instead of through other
reserves of Craneware plc, resulting in a difference in other reserves between the Group and the Company.
This has been rectified in the current year with a transfer to other reserves in the Company from the subsidiary of $3.8m. There has been
no impact on reserves at a Group level.
132
Craneware plc Annual Report 2022 Notes to the Financial Statements [Cont'd]
20. Cash generated from operations
Reconciliation of profit before taxation to net cash generated from operations:
Profit before tax
Finance income
Finance expense
Depreciation on property, plant and equipment
Amoritsation on intangible assets - other
Amortisation on intangible assets - acquired intangibles
Gain on disposals
Share based payments
FX on non cash items
Movements in working capital:
(Increase)/ decrease in trade and other receivables
(Decrease)/ increase in trade and other payables
Cash generated from operations
Group
Company
2022
$'000
13,102
(1)
5,031
3,259
5,905
20,239
(5)
2,116
-
(3,203)
(13,500)
32,943
2021
$'000
13,165
(1)
76
1,403
3,840
-
-
2,141
(136)
2,026
4,197
2022
$'000
8,633
(279)
28
689
4,619
-
-
978
-
(193,542)
3,005
2021
$'000
12,468
(75)
47
828
3,795
-
-
1,389
-
296
970
26,711
(175,869)
19,718
21. Cash and cash equivalents and restricted cash
For the purpose of the statement of cash flows, cash and cash equivalents comprise cash held by the Group and short-term bank deposits.
Cash at bank and in hand
The effective rates on short-term bank deposits were 0.003% (2021: 0.002%).
Group
Company
2022
$'000
47,157
2021
$'000
2022
$'000
2021
$'000
235,617
28,400
230,363
Restricted cash balances comprises amounts held on behalf of customers as part of services provided in connecting them to their contract
pharmacy network. These amounts are generally held by the Group for less than 30 days. The Group retains fees from the restricted cash
accounts for services provided to customers in managing the transfer of cash and for reconciliation services. The related creditor is held
within other creditors in Note 23.
Restricted cash
Group
2022
$'000
1,251
2021
$'000
-
133
Craneware plc Annual Report 2022 Notes to the Financial Statements [Cont'd]
22. Borrowings
In June 2021, the Group entered into a new debt facility to finance the purchase of Sentry Data Systems, Inc. The total available amount under the facility
is $140m, of which $120m was drawn down on 12 July 2021.
The debt facility comprises a term loan of $40m which is repayable in quarterly instalments over 5 years up to 30 June 2026, and a revolving loan facility
of $80m which expires on 7 June 2025. The Group has the ability to extend the revolving loan facility for an additional one year term. Interest is charged
on the facility on a daily basis at margin and compounded reference rate. The margin rate was fixed at 2.55% for the initial 9 months of the facility
term. Following this initial period, the margin is related to the leverage of the Group as defined in the loan agreement. As the leverage of the Group
strengthens, the applicable margin reduces.
The facility is secured by a Scots law floating charge granted by the Company, an English law debenture granted by the Company and a New York law
security agreement to which the Company and certain of its subsidiaries are parties. The securities granted by the Company and the relevant subsidiaries
provide security over all assets of the Company and specified assets of the Group.
Current interest bearing borrowings
Non current interest bearing borrowings
Total
2022
$'000
8,000
103,589
111,589
2021
$'000
-
-
-
Arrangement fees paid in advance of the setting up of the facility are being recognised over the life of the facility in operating costs. The
remaining balance of unamortised fees and interest at 30 June 2022 is $3.2m.
See Note 3 for the contractual maturity of the Group’s borrowings at the period end. See Note 27 for a reconciliation between borrowings,
cash and net debt.
Loan covenants
Under the facilities the Group is required to meet quarterly covenants tests in respect of:
a) Adjusted leverage which is the ratio of total net debt on the last day of the relevant period to adjusted EBITDA.
b) Cash flow cover which is the ratio of cashflow to net finance charges in respect of the relevant period.
The Group complied with these ratios throughout the reporting period.
Financing arrangements
The Group’s undrawn borrowing facilities were as follows:
Term loan
Revolving facility
Undrawn borrowing facilities
2022
$'000
-
20,000
20,000
2021
$'000
40,000
100,000
140,000
134
Craneware plc Annual Report 2022 Notes to the Financial Statements [Cont'd]
23. Trade and other payables
Trade payables
Amounts owed to group companies
Lease creditor due < 1 year
Other provisions < 1 year
Social security and PAYE
Other creditors
Accruals
Advanced payments
Trade and other payables
Group
Company
2022
$'000
3,587
-
2,439
17
2,705
800
6,222
22
2021
$'000
1,844
2022
$'000
1,592
-
27,720
1,053
-
1,556
50
10,808
428
353
17
514
-
1,115
22
15,792
15,739
31,333
2021
$'000
1,759
29,698
647
-
507
-
1,847
428
34,886
Amounts owed to Group companies are non-interest bearing and are payable on demand. 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 2022 was 29 days (2021: 18 days). Trade and other payables are classified as financial
liabilities at amortised cost.
24. Contingent liabilities and financial commitments
(a) Capital commitments
The Group has no capital commitments at 30 June 2022 (2021: nil).
(b) Lease commitments
The Group leases certain buildings and equipment under short term (less than 12 months) and low value assets. The commitments
payable by the Group under these leases are as follows:
Within one year
Between 1 and 5 years
More than 5 years
The undiscounted lease liability maturity analysis of leases under IFRS 16 is disclosed in Note 3.
2022
$'000
3
2
-
5
2021
$'000
5
5
-
10
135
Craneware plc Annual Report 2022 Notes to the Financial Statements [Cont'd]
25. Related party transactions
During the year the Group has traded in its normal course of business with shareholders and its wholly owned subsidiaries in which
Directors and the subsidiaries have a material interest as follows:
Group
Fees for services provided as non-executive Directors
Fees
Salaries and short-term employee benefits
Executive Directors
Salaries and short-term employee benefits
Post employment benefits
Share based payments
Other key management
Salaries and short-term employee benefits
Post employment benefits
Share based payments
2022
2021
Charged
$
Outstanding
at year end
$
Charged
$
Outstanding
at year end
$
175,632
162,076
796,671
53,435
447,139
1,764,885
73,071
494,728
-
-
-
-
-
-
-
-
196,895
160,518
764,531
42,325
336,320
1,413,069
55,257
351,792
-
-
-
-
-
-
-
-
-
136
Craneware plc Annual Report 2022
Notes to the Financial Statements [Cont'd]
25. Related party transactions [Cont'd]
Company
Fees for services provided as non-executive Directors
Fees
Salaries and short-term employee benefits
Executive Directors
Salaries and short-term employee benefits
Post employment benefits
Share based payments
Other key management
Salaries and short-term employee benefits
Post employment benefits
Share based payments
Amounts due from Craneware US Holdings, Inc. - Subsidiary company
Net operating expenses
Balance
Amounts due to Craneware, Inc. - Subsidiary company
Sales commission
Net operating expenses
Balance
Net Amounts due to Craneware InSight, Inc. - Subsidiary company
Sales commission
Net operating expenses
Balance
Net Amounts due from Craneware Health/Kestros - Subsidiary company
Net operating expenses
Balance
Net Amounts due to Craneware Healthcare Intelligence, LLC - Subsidiary company
Net operating expenses
Balance
Net Amounts due from Sentry Data Systems, Inc. - Subsidiary company
Net operating recharges
Balance
Net Amounts due from Agilum Healthcare Intelligence, Inc. - Subsidiary company
Net operating recharges
Balance
2022
2021
Charged
$
Outstanding
at year end
$
175,632
162,076
796,671
53,435
447,139
380,142
26,451
133,210
-
-
-
-
-
-
-
-
Charged
$
196,895
160,518
764,531
42,325
336,320
420,020
23,513
111,150
Outstanding
at year end
$
-
-
-
-
-
-
-
-
-
(2,331,489)
194,653,801
2,331,489
26,129,580
5,723,046
3,880,648
1,032,308
27,625,177
8,882,680
(11,672,683)
(17,448,082)
4,299,122
889,652
(10,531,030)
(6,062,988)
-
59,813
-
-
1,908,459
1,627,000
(5,515,981)
(6,186,704)
(823,486)
(276,250)
1,419,494
276,250
-
-
-
-
137
Craneware plc Annual Report 2022
Notes to the Financial Statements [Cont'd]
25. Related party transactions [Cont'd]
Note 19 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 Information Officer, Chief Marketing Officer, Chief Revenue
Officer, Chief Legal Officer, Chief Customer Officer and Chief Transformation Officer.
There were no other related party transactions in the year which require disclosure in accordance with IAS 24.
26. Ultimate controlling party
The Directors have deemed that there are no controlling parties of the Company.
27. Alternative performance measures
The Group’s performance is assessed using a number of financial measures which are not defined under IFRS and are therefore non-GAAP
(alternative) performance measures.
The Directors believe these measures enable the reader to focus on what the Group regard as a more reliable indicator of the underlying
performance of the Group since they exclude items which are not reflective of the normal course of business, accounting estimates and
non-cash items. The adjustments made are consistent and comparable with other similar companies.
Adjusted EBITDA
Adjusted EBITDA refers to earnings before interest, tax, depreciation, amortisation, exceptional items and share based payments.
Operating profit
Depreciation of property, plant and equipment
Amortisation of intangible assets - other
Amortisation of intangible assets - acquired intangibles
Share based payments
Exceptional items - aborted share placing
Exceptional items - acquisition and associated share placing
Exceptional items - integration costs
Adjusted EBITDA
Adjusted earnings per share (EPS)
2022
$'000
18,132
3,259
5,905
20,239
2,116
-
1,705
401
51,757
2021
$'000
13,240
1,403
3,840
-
2,141
283
6,204
-
27,111
Adjusted earnings per share (EPS) calculations allow for the tax adjusted acquisition costs and share related transactions together with
amortisation on acquired intangibles via business combinations. See Note 12 for the calculation.
138
Craneware plc Annual Report 2022 Notes to the Financial Statements [Cont'd]
27. Alternative performance measures [Cont'd]
Operating cash conversion
Operating cash conversion is calculated as cash generated from operations (as per Note 20), adjusted to exclude cash payments for
exceptional items, divided by EBITDA.
Cash generated from operations (Note 20)
Total exceptional items
Accrued exceptional items at the start of the year paid in the current year
Accrued exceptional items at the end of the year
Trade payable exceptional items at the start of the year paid in the current year
Trade payables exceptional items at the end of the year
Cash generated from operations before exceptional items
Adjusted EBITDA
Operating cash conversion
Adjusted PBT
2022
$'000
32,943
2,106
5,509
(60)
683
(12)
41,169
51,757
79.5%
Adjusted PBT refers to profit before tax adjusted for exceptional items and amortisation of acquired intangibles.
Profit before taxation
Amortisation of intangible assets - acquired intangibles
Exceptional items - aborted share placing
Exceptional items - acquisition and associated share placing
Exceptional items - integration costs
Adjusted PBT
Net debt
2022
$'000
13,102
20,239
-
1,705
401
35,447
2021
$'000
26,711
6,487
-
(5,509)
-
(683)
27,006
27,111
99.6%
2021
$'000
13,165
-
283
6,204
-
19,652
Net debt refers to the net balance of short term borrowings, long term borrowings and cash and cash equivalents (excluding restricted
cash).
Cash and cash equivalents (Note 21)
Borrowings (Note 22)
Net (debt)/ cash
Lease liabilities are excluded from borrowings for the purpose of net debt.
2022
$'000
47,157
(111,589)
(64,432)
2021
$'000
235,617
-
235,617
139
Craneware plc Annual Report 2022 Notes to the Financial Statements [Cont'd]
27. Alternative performance measures [Cont'd]
Total Sales
Total Sales refer to the total value of contracts signed in the year, consisting of New Sales and Renewals.
New Sales
New Sales refers to the total value of contracts with new customers or new products to existing customers at some time in their
underlying contract.
Annual Recurring Revenue
Annual Recurring Revenue includes the annual value of license and transaction revenues at 30 June 2022 that are subject to underlying
contracts.
% Annual Recurring Revenue from the Cloud
Annual Recurring Revenue from the Cloud is the Annual Recurring Revenue as described above relating specifically to cloud-based
products expressed as a percentage of total Annual Recurring Revenue.
Revenue Growth
Revenue Growth is the increase in Revenue in the current year compared to the year expressed as a percentage of the previous year
Revenue.
140
Craneware plc Annual Report 2022 Notes
141
Craneware plc Annual Report 2022 Notes
142
Craneware plc Annual Report 2022 Notes
143
Craneware plc Annual Report 2022