Craneware plc
Annual Report & Financial Statements
For the year ended 30 June 2023
Registered Number SC196331
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Final Results
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Solutions
4-5
Chair’s Statement
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Strategic Report: Operational and Financial Review
7-13
Strategic Report: Key Performance Indicators
14-15
Strategic Report: Principal Risks and Uncertainties
16-24
Strategic Report: Environmental, Social and Governance (ESG) Introduction
25
Strategic Report: Non-Financial and Sustainability Information Statement
26-33
Strategic Report: Environmental, Social and Governance (ESG) Statement
34-46
Strategic Report: Section 172 (1) Statement
47-51
Stakeholder Engagement
52-55
Directors, Secretary, Advisors and Subsidiaries
56
Board of Directors
57-58
Directors’ Report
59-65
Corporate Governance Report
66-79
Remuneration Committee’s Report
80-97
Independent Auditors' Report to the members of Craneware plc
98-103
Consolidated Statement of Comprehensive Income
104
Statements of Changes in Equity
105
Consolidated Balance Sheet
106
Company Balance Sheet
107
Consolidated Statement of Cash Flows
108
Company Statement of Cash Flows
109
Notes to the Financial Statements
110-151
"The Craneware Group's support is strong, and the vendor is very prompt in answering questions and finding information. They take
time to explain how to do things, and they are very responsive to needs. The vendor has great involvement in our success, and we
have regular one-on-one calls with our point person."
Director
May, 2023
Craneware plc
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Annual Report and Financial Statements 2023
Financial Highlights (US dollars)
$174.0m
Revenue increase of 5% to $174.0m
(FY22: $165.5m)
$54.9m
Adjusted EBITDA1 increased 6% to $54.9m
(FY22: $51.8m)
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$169.0m
Annual Recurring Revenue2 increased to $169.0m (H1 FY22: $166.4m),
with an associated Net Revenue Retention3 value in excess of 100%
(FY22: n/a)
$13.1m
Statutory Profit before tax $13.1m
(FY22: $13.1m)
87.0¢
Basic adjusted EPS1 87.0 cents (FY22: 89.0) and adjusted diluted EPS 86.3 cents
(FY22: 88.1 cents)
26.3¢
Basic EPS 26.3 cents (FY22: 26.8 cents) and diluted EPS 26.1 cents
(FY22: 26.5 cents)
92%
Robust Operating Cash Conversion4 at 92% of Adjusted EBITDA
(FY22: 80%)
$78.5m
Total Cash and cash equivalents $78.5m
(FY22: $47.2m)
$83.0m
Total Bank Debt $83.0m
(FY22: $111.6m)
16.0p
(20.19¢)
Proposed final dividend of 16.0p per share (20.19 cents) (FY22:15.5p, 18.80 cents) giving a
total dividend for the year of 28.5p per share (35.95 cents) (FY22: 28.0p, 33.96 cents) up 2%
Operational Highlights
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Migration of customers onto the Trisus® platform now complete, providing the foundation for future product and
customer expansion
Trisus® Chargemaster secured first place in the Chargemaster Management category of the “2023 Best in KLAS
Awards: Software & Services” – a record 13th time for the Group, demonstrating the success of the migration
process and enhancements made to the underlying application
Strong levels of customer retention, maintained at +90% in the year
Continued investment in R&D and innovation to capitalise on the growing market opportunity, including
the recent launch of Trisus Labor Productivity, addressing the highest single cost category for any healthcare
organsiation
Total R&D costs that have been capitalised are already covered by the total combined value of contracts written
for the Trisus® related products
First third-party partner applications are now accessing the Trisus® platform, with the potential to add to ARR in
future years
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 license and related recurring revenues including transaction revenues at 30 June 2023 that are subject to the underlying
contracts and where revenue is being recognised at the reporting date.
3. Net Revenue Retention is the percentage of revenue retained from existing customers over the measurement period, taking into account both churn and expansion sales.
4. Operating Cash Conversion is cash generated from operations (as per Note 19), adjusted to exclude cash payments for exceptional items and movements in cash held on behalf of
customers, divided by adjusted EBITDA.
5. 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.
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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
Designed with the user in mind, Trisus
Chargemaster enhances efficiency
in workflow, collaboration, and
communication across clinical and
financial teams.
Trisus® Claims
Informatics
Trisus Claims Informatics, a
retrospective charge capture
analytical application, identifies high-
impact areas of risk for your team to
investigate.
Revenue
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.
InSight
Audit®
InSight Audit is a powerful application
that allows your organization to
manage and streamline audit
reporting, tracking and workflow
processes to improve audit results
with reduced compliance and financial
risks.
Appeal
Services
The Craneware Group has the
experienced staff you need to review
your denials, write successful appeals,
and overturn improper denials.
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.
Trisus®
Supplies Assistant
Our proprietary supplies coding
search function delivers HCPCS
codes, UNSPSC codes, manufacturer,
description, catalog ID, status indicator,
reimbursable flag, revenue codes,
and other reference information – in a
single screen.
Pricing
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.
Trisus®
Decision Support
Trisus Decision Support goes beyond traditional
cost and accounting tools and provides insights into
resource consumption on the patient level.
Senturion™
Professional Services
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.
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Annual Report and Financial Statements 2023
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.
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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.
340B
Trisus® Medication
Financial
Management
Trisus Medication Financial
Management assesses purchase,
billing, and remittance data sets to
provide visibility into margins, at the
medication level
Trisus® Medication
Formulary
Trisus Medication Formulary
combines data from the formulary,
charge transactions, and medication
purchases to ensure all purchases are
captured in the formulary, coded, and
charged correctly.
Trisus® Medication
Claim
Designed to help you accelerate
payment for pharmacy claims
and minimize claim denials, while
managing complex, government-
mandated reporting requirements.
Trisus® Medication
Compare
Trisus Medication Compare helps
pharmacy leaders leap to value-
based care by comparing treatments,
medications, processes, and costs to
help identify treatment plans that
achieve the best patient outcomes
Referral Verification
System™
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.
Cost
Trisus®
Labor Productivity
Designed with the user in mind, Trisus Labor
Productivity enables healthcare providers to
strategically manage, analyze, and plan the
deployment of their workforce for cost-effective care.
Services
Professional
Services Catalog
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.
Customer Journey
to Value Cycle Success
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.
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.
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Chair's Statement
Making a positive contribution to society
In a year marked by the continuation of the Public Health
Emergency in response to the pandemic, I am pleased to report
on a period of robust performance. While we did not achieve
the revenue growth we anticipated at the start of the year, due
to the Group’s services related lines of business taking longer
to recover than previously expected, the team nonetheless
delivered growth in key financial metrics, continued to execute
on our product migration strategy, and closed the year on an
improving trading trajectory.
With the Public Health Emergency in the US now declared over,
attention is returning to improving the value and resilience of
the healthcare system. Through Trisus, our cloud-based data
analytics and intelligence platform, we can be a central player
in the digitalisation of US healthcare. The team is focused on
capturing this opportunity through product expansion and the
delivery of value to our extensive customer base.
Steady, profitable growth
Group revenues for the year increased 5% to $174.0m (FY22:
$165.5m) with an adjusted EBITDA increase of 6% to $54.9m
(FY22: $51.8m) maintaining our target EBITDA margin of above
30%. Within this, software and related revenue increased by
5% to $159.1m, accounting for 92% of revenue. This growth,
coupled with healthy levels of customer retention, at above 90%,
drove growth in underlying ARR to $169.0m (31 December 2022:
$166.4m), with an associated Net Revenue Retention value in
excess of 100%.
As at 30 June 2023, the Group maintained strong total cash and
cash equivalent balances of $78.5m (30 June 2022: $47.2m) with
a reduced total bank debt of $83.0m (30 June 2022: $111.6m).
The Group’s strong cash generation and high levels of revenue
visibility provides the Board with the confidence to maintain
our investment levels in the business, to support our growth
aspirations.
A valuable position from which to build
We hold an enviable central position within the US healthcare
industry, with approximately 40% of registered US hospitals as
Craneware customers, including more than 12,000 US hospitals,
health systems, affiliated retail pharmacies and clinics, and data
sets covering more than 175 million unique patient encounters.
The successful completion in the year of the migration of
customers onto Trisus provides the foundation for future growth
acceleration. Looking ahead, we will continue to seek ways
to extend our Trisus platform, through product development,
partnerships and M&A.
Increasing our Board expertise
We were delighted to welcome Anne McCune, a new Non-
executive Director, to the Board in November. Anne is a
recognised leader in the US Healthcare industry, who has served
as a senior Executive for several leading academic hospital and
physician centres and as a Managing Director in healthcare
consulting firms. Anne is currently a Community Board member
of the Strategy and Transformation committee at Salinas Valley
Memorial Healthcare System in California.
Our Purpose is to transform the business of healthcare through
the profound impact our solutions deliver, enabling our
customers to deliver quality care to their communities.
The 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 in recent years. As a Group, we have
developed many initiatives over the past several years which
contribute to our sustainability credentials, and we continue
to develop a number of programmes and opportunities to
positively impact the community around us.
The Group has always been cognisant of the importance of
sustainability and Environmental, Social and Governance (‘ESG’)
matters, particularly in the context of the Group’s Purpose.
However, we recognise that these areas are constantly evolving
and that organisations must continually strive to do more and as
such an ESG Committee has been established. We detail more
of the impact the Group makes, within the communities we
serve, in our ESG Statement within the Annual Report.
On behalf of the Board, I would like to thank all of The
Craneware Group team for their continued passion and
commitment to serving our customers.
An improving outlook
The breadth of solutions The Craneware Group can provide, as
well as the power of its operational and administrative platform
and data, give the Board confidence in the Group’s ability to
provide the insights its customers need to deliver greater value
healthcare to their communities.
With the sales growth experienced in the final quarter of the
year delivering incremental revenues, combined with further
momentum in the current period, the Group has seen a positive
start to trading in the new financial year.
The Group’s balance sheet strength, high levels of ARR and early
signs of increasing customer confidence, leave the Group well
positioned for FY24 and beyond.
Will Whitehorn
Chair
4 September 2023
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Strategic Report: Operational and Financial
Review
Operational Review
We are pleased to have delivered a robust financial
performance in the year, achieving growth in revenue and
EBITDA whilst maintaining a strong balance sheet. These
results demonstrate the resilience of the Group through a
prolonged period of disruption across the US healthcare
landscape and I am grateful for the team’s hard work and
dedication, amidst a challenging environment.
We successfully completed our primary strategic focus for
the year - the migration of customers onto Trisus, our cloud-
based platform. With the transition complete, we can focus
on the continued expansion of the Trisus product offering,
which we anticipate will in turn drive customer expansion.
While remaining cognisant of the challenges our customers
and partners continue to face, we are encouraged by
improving prospects across our market. The COVID-19
public health emergency in the US was formally declared
over in May 2023, and with the related pressures on
hospitals starting to ease we are seeing attention turn to
the improvement of hospitals’ underlying operations and
financial performance. This was reflected in a healthy close
to the financial year, as we saw an increasing number of
opportunities enter our pipeline in Q4, with momentum
carrying over to the new financial year.
Market – supportive underlying trends
The US healthcare market continues to experience
challenges across three broad areas: clinical, financial and
operational.
The clinical arena is grappling with issues such as the impact
of the opioid epidemic, a mental health crisis and an aging
population increasing the demand for services around
chronic conditions and long-term care. Financially the cost
of healthcare in the US has been increasing significantly,
including the cost of prescription drugs, medical procedures
and associated insurance premiums. Meanwhile, against
this backdrop, operational pressures are increasing, with
managers having to navigate issues such as a shortage of
healthcare professionals and wage inflation.
together siloed data from the various existing software
systems in a hospital or healthcare system, normalises that
data and applies prescriptive analytics to provide insights
to support informed decision making regarding a hospital’s
finances and operations, in one place.
This digitalisation of healthcare and improvement of
processes through the use of data insights, as opposed
to merely digitising healthcare, for example recording an
individual healthcare encounter in an electronic form such
as the recent move to electronic health records, provides
the foundation for Value Based Care and enables the
transformation of the business of healthcare.
We provide customers with the ability to build effective
strategies related to revenue, pricing, cost, and compliance
to mitigate the internal and external challenges described
above, delivering real financial returns and freeing up
resources that can be re-invested and re-deployed by
healthcare providers to support the clinical care of their
communities and tackle their clinical challenges.
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.
We are building on top of Trisus to strengthen our current
products, leverage our data assets to expand our offering,
integrate third party solutions to the platform and benefit
from the scalability of cloud-technology.
Through our 20+ year history in the US healthcare market,
we have collected our own unique and extensive data set,
which we believe contains the insights that will generate
our products of the future. While we have always had a team
analysing this data, the growth in AI means it is now easier
and faster to do so. Meanwhile, we are also using AI and
machine learning to make our coding more efficient and
productive.
Addressing the challenges through data and insights
Two Growth Pillars
The combination of these factors means our customers are
being asked to do more, with less. We believe the key to
successfully achieving that, while improving patient care,
is through accurate, accessible and meaningful data and
insights, providing the ability to deliver enhanced services,
improved infrastructure, governance and the ability to make
smarter choices around resource allocation.
However, to make those smarter choices our customers
need to manage and analyse vast amounts of data, which
presents significant and costly considerations for hospitals,
like scalability, interoperability, processing costs, security,
and compliance.
Our vision is for the Trisus platform and its applications to
address these challenges, providing connected technology
in the cloud. Our Trisus platform and applications combine
revenue integrity, cost management and decision
enablement into a single cloud-based platform. Through
our Data Foundations programme of work, Trisus brings
Our growth strategy has two fundamental growth pillars:
1. The transition of our customers to cloud delivered
versions of our existing on-premise solutions, to act as a
gateway to the benefits and additional applications on
the Trisus platform
We are pleased to now have all our customers connected to,
and benefiting from, the Trisus platform.
Of particular importance has been the migration of our
previous flagship application, Chargemaster Toolkit,
customers onto our Trisus Chargemaster offering. This has
been carried out in phases over the last 36 months, as we
have expanded the functionality of Trisus Chargemaster.
We were delighted Trisus Chargemaster secured first place in
the Chargemaster Management category of the "2023 Best
In KLAS Awards: Software & Services" during the year. For
The Craneware Group, this is a record 13th time, more than
any other vendor in our space. The award demonstrates
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Growth Strategy [Cont'd]
the success of the migration process, the enhancements
made to the application and the high levels of customer
support delivered by our teams.
All existing products now available as Trisus solutions, which
will be further enhanced
During the year we continued to re-engineer our existing
offerings into cloud-based applications – improving the
benefits of our offerings to customers to facilitate the
smooth transition onto Trisus. This continual improvement
will be an ongoing process. The depth of our product
offering continues to grow through the mining of the
proprietary and regulatory data that we collect, identifying
new ways the data can illuminate and support decision
making within the hospital provider environment. We
now have datasets for over 175 million unique patient
encounters, providing incredibly valuable insights for our
customers.
Whilst our Revenue Integrity and 340B related applications
sit on different technology stacks within the Trisus platform,
they both supplement and further enrich the Trisus data
sets. Eventually the work we are doing with our Trisus Data
Foundations programme will enable the full integration of
these stacks, making our offerings yet more attractive to
customers as the speed and depth of insights available is
increased.
The four Medication related Trisus applications launched
last year, replacing and adding to our non-340B pharmacy
offerings, have been well received and we anticipate will
support expansion sales in current and future periods.
Data Foundations increasing the interoperability of
applications to increase speed of entry to the platform and
facilitate cross sale
As part of our Data Foundations programme of work, we are
utilising the advances in AI and data processing to increase
the interoperability and connectivity of our applications,
while making the platform’s back-end processes more
efficient and effective. For example, new customers coming
onto the Trisus platform will only require one data feed,
thus accelerating entry to the platform and its benefits.
Six application suites
The Trisus applications have now been grouped into
six Trisus® Optimisation Suites, bringing together the
applications that address specific strategic issues facing
healthcare providers and are powered by the same sub-set
of customer data. Through bringing the applications into
suites, we aim to make it easier for our customers to identify
which of our multiple additional applications are likely to
unlock immediate value and address their challenges most
effectively, based on their existing data within the Trisus
platform.
The product portfolios are: Trisus Pricing Integrity,
Trisus Data Integrity, Trisus Business of Pharmacy, Trisus
Revenue Protection Optimisation, Trisus Charge Capture
Optimisation and Trisus Value-based Margin & Productivity.
Launch of Trisus Labor Productivity
Towards the end of the financial year we were pleased
to launch a new application, Trisus Labor Productivity, to
encouraging early feedback, addressing the concerns of the
market around effectively managing the workforce. Staff
costs represent the single highest cost for any healthcare
organisation. In addition, staffing shortages have resulted
in a need to do more with less. Trisus Labor Productivity
enables our customers to optimise their staffing by
department or organisation, providing insights into
daily staffing and productivity outcomes using detailed
analytics and predictive modelling, thereby reducing costs
and confusion for greater efficiency. The application also
integrates payroll, timecard, hospital EMR/ADT events, and
general ledger costs in one location for reporting, analysis,
and strategic management of the workforce.
2. Value driven Customer Expansion
It is the intention that the product enhancements and
expansion described above will facilitate cross sell and
upsell to existing customers, alongside an increase in
average contract value to new customers. The addition of
new customers and the expansion with existing customers
will in turn drive growth in ARR.
ARR at 30 June 2023 increased in the six months to
$169.0m from $166.4m reported at 31 December 2022,
demonstrating the Group's continued high levels of
contracted revenue visibility. We continue to see the
opportunity to accelerate ARR growth over the medium
term, as we unlock the considerable cross and upsell
opportunities within our enlarged customer base. The
Group is now in a position to report a Net Revenue
Retention figure, from the point of our first ARR calculation,
which was 100% for the six months to 30 June 2023.
Customer retention for the year exceeded 90%, which is
testament to the value Craneware brings to its customer
base.
With the first stage of cloud-based enhancements for
existing products now complete, we can turn our focus to
the development of new applications and the extension
of existing applications, to expand our capabilities and
provide benefits to our customers. We anticipate this in
turn will facilitate a greater level of cross sale and product
penetration across our extensive customer base over time.
We also continue to see considerable cross sale opportunity
between our 340B and Revenue Integrity customers and
this will be an ongoing area of focus.
We are encouraged to see expansion sales to existing
customers represent 81% of our total ‘new’ sales in the year,
demonstrating the positive response of our customers to
the increased ROI derived from the uptake of additional
cloud applications. However, this does mean our sales
to new customers as a percentage of our total new sales
is behind historical norms, consistent with the narrative
reported by other vendors that support hospitals. We
expect to see this mix move back towards our historical
norms in the near term, as healthcare is once again
returning its focus to Value Based Care now the impacts of
the pandemic are dissipating.
We also formalised our partnering processes during the
year, with the aim of hosting third party application
providers on the platform. In the future, revenue from these
partnerships, which are not directly derived from Trisus
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applications, will be categorised as third party revenues
while they are in the test phase. Once their value to
customers has been proven, we will seek to transition into
recurring revenue models, adding to our ARR.
and directly impact the community around us. This has
been achieved with our initiatives driven by our employees
through Craneware Cares and the Craneware Cares
Foundation.
Due to recent hospital fears surrounding cyber security, the
market environment is hindering new customer growth by
smaller software providers, and we therefore anticipate that
this will encourage smaller software providers to see the
value of their applications being delivered through the Trisus
platform, a certified HITRUST partner. In turn, our customers
will benefit from complementary applications which will
help them derive greater insight into their operations and
financial performance without increasing their exposure to
cyberthreats while we will benefit from a revenue share with
the partner.
While organic growth across our portfolio remains the
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 relative scale 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. We view our partnering programme as a
potential for building a pipeline of future M&A activity based
on the mutual benefits derived by both partners.
Our People and Community
Central to our Purpose is how we support our customers
and, in turn, how they support their communities and how
we collectively work towards delivering our strategy as a
team within The Craneware Group. Our solutions benefit
society; they continue to deliver value for our customers,
through the provision of accurate financial data, insight and
analytics, that can be reinvested to support our customers in
the provision of care to their communities. In addition, our
340B pharmacy solutions enable our customers to generate
cost savings which go directly to the provision of care for
the underserved in their communities. The Craneware Group
is also directly involved with the 340B Matters initiative,
which aims to educate the market regarding the importance
of the 340B program for the non-profit healthcare facilities
that provide accessible and affordable care within their
communities.
We recognise the value of our employees and that
supporting our customers and the achievements of the
Group is due to their efforts. Our team is 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 continue to
invest in the team, our facilities and working practices and
we welcome feedback and suggestions for improvements
through a range of employee engagement mechanisms.
Complementing our Purpose and reflecting the causes
which are important to our employees, our team, has meant
that, for many years, the Group has continually developed
a number of programmes and opportunities to positively
Craneware has advanced and supported many social
initiatives and continues to do so. However, we are conscious
of the need to coordinate all of our ESG-related initiatives
and policies, including environmental considerations, to
enable greater alignment to our ESG focus areas and also
recognising the general increased interest in ESG-related
credentials by our stakeholders. With these considerations
in mind, we established an ESG Committee during the year.
We provide further details of these activities and the ESG
Committee with our ESG Statement.
Financial Review
For the year ended 30 June 2023, The Craneware Group is
reporting an increase in revenue of 5% to $174.0m (FY22:
$165.5m) and a 6% increase in adjusted EBITDA to $54.9m
(FY22: $51.8m).
These results reflect a robust revenue performance
against the backdrop of an industry recovering from and
dealing with the aftereffects of the COVID-19 public health
emergency. The challenge for our customers has, inevitably,
impacted on Craneware, despite the solid performance of
our annual software licence revenues, we have not seen the
return of our professional services to the expected pre-
pandemic levels as a percentage of our revenues.
All industries and companies, including US healthcare and
Craneware, have had to meet the challenges of the current
macro-economic climate, including rising wage, medication,
and supply cost inflation as well as key staffing shortages.
Craneware has been successful in navigating these
inflationary challenges during the year, and as such we
have delivered an adjusted EBITDA performance in line with
the Board’s expectations. Our Adjusted earnings per share,
however, has been impacted by the significant increases
in interest rates that have occurred. With the interest
we paid in the year increasing from $3.1m to $6.5m, our
interest charge increased by 28% to $6.4m (FY22: $5.0m).
In addition, our amortisation charge increased by 32% or
$1.9m from the previous year. As a result, we are reporting
a 2% reduction in our adjusted earnings per share to 87.0
cents per share (FY22: 89.0 cents per share).
The increased scale and our enlarged portfolio of products
following the successful integration of Sentry Data Systems,
mean we can do even more to support our customers as
they look beyond the impact of the pandemic and return
their focus to the delivery of Value Based Care. The need for
accurate financial data, supporting analytics and the insights
those analytics can bring has never been more important.
Underlying Business Model and Professional Services
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.
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Financial Review [Cont'd]
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.
In addition to the licence fees, we have a number of 340B
customers whose underlying contracts provide for a
number of associated transactional services in addition to
their licences. These transactional services, whilst highly
dependable and recurring over the life of the contract, see
some variation period to period based on the volume of
transactions. Transactional services are recognised as we
provide the service, and we are contractually able to invoice
the customer.
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. As we have previously reported, the
challenges US hospitals have had regarding shortages
of available staff have continued to impact our ability
to deliver professional services throughout the year. As
a result, we have not seen the return in our professional
services revenues expected and as such we are reporting
Professional Service in the year of $13.7m (FY22: $13.9m).
This year, for the first time, we are reporting Other Revenue
of $1.1m (FY22: $nil). These revenues are derived from our
ability to leverage the Trisus platform in new and innovative
ways. This was both through new ways to use our data
assets to directly support our customers, and through
hosting third-party applications on the platform. These
revenues are recognised at the point we are able to invoice
our customers. They are not, initially, deemed recurring in
their nature, however once proven we expect many of these
revenue opportunities to deliver future annual recurring
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.
Annual Recurring Revenue (“ARR”) demonstrates the annual
value of licence and transactional revenues that are subject
to underlying contracts.
At our interim results we tightened our definition of ARR
to only include the annualised effect of bookings that are
subject to an underlying contract and have generated
revenue by the reporting date. This was done to better
align future growth of ARR to near term revenue growth as
well as facilitate the calculation of a Net Revenue Retention
metric. This change primarily relates to the exclusion of
contract pharmacy bookings where go live has not yet
happened and therefore they have not contributed to
revenue in the year.
As a result, ARR is now defined as the annual value of
licence and related recurring revenues including transaction
revenues as at the Balance Sheet date that are subject
to underlying contracts and where revenue is being
recognised at the reporting date.
ARR at 30 June 2023 increased to $169.0m from the
$166.4m reported at 31 December 2022, demonstrating
the Group's continued high levels of contracted revenue
visibility. The Group is also reporting Net Revenue Retention
for the first time, from the point of our first ARR calculation,
which was 100% for the six months to 30 June 2023.
Customer retention for the year exceeded 90%, which is
testament to the value Craneware brings to its customer
base.
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
and the direct costs of professional services employees
who deliver the services required to meet our contractual
obligations.
The gross profit for FY23 was $148.4m (FY22: $142.4m).
This represents a gross margin percentage of 85% (FY22:
86%) which is in line with the expected Gross Margins of the
Group.
Operating expenses
Net operating expenses (to Adjusted EBITDA) increased
3% to $93.5m (FY22: $90.6m), which is a below inflation
increase and reflects our ongoing prudent cost control,
including our ability to balance our investment between the
US and the UK (and the associated Sterling exchange rate).
This ultimately allows us to continue to deliver an Adjusted
EBITDA margin of +30%.
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 $50.6m (FY22:
$51.1m). We continue to capitalise only the costs that
relate to projects (including enhancements to our existing
products) that have yet to be released to the market and
will deliver new “future economic benefit” to the Group.
With the total amount capitalised in the year, being $15.0m
(FY22: $13.5m) representing 30% of total R&D spend in FY23
(FY22: 26%) which is still below our historical norms of 35 to
40% of total R&D spend.
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. 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.
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Net impairment reversal/ (charge) on financial and contract
assets
This relates to the movement in the provision for the
impairment of trade receivables in the year. Following the
considerable efforts in this year since the acquisition of
Sentry and our ongoing relationships with customers across
the Group we are seeing a reversal in the year of $2.1m
(FY22: charge of $0.5m).
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. 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, its integration 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 $0.5m (FY22: $2.1m) have been
identified as exceptional. These relate primarily to the one-
off costs associated with the back-office systems integration
of Sentry. As such, these costs were adjusted from earnings
in presenting Adjusted EBITDA.
Adjusted EBITDA has grown in the year to $54.9m (FY22:
$51.8m) an increase of 6%. This reflects an Adjusted EBITDA
margin of 32% (FY22: 31%), confirming we continue to meet
our target of a combined Group adjusted EBITDA margin of
30+%.
Following the amortisation charge relating to acquired
intangible assets relating to the Sentry acquisition of
$20.9m (FY22: $20.2m), profit before taxation reported in
the year is $13.1m (FY22: $13.1m).
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.
Following the Sentry acquisition, whose profits are solely
generated in the US, the Group now generates a higher
proportion of its profits there.
Following the substantive enactment of the increase in UK
corporation tax rate to 25% effective from 1 April 2023, the
UK corporation tax rate for the financial year increased from
19% to 20.5%.
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 the associated tax
treatment. Reconciliation of the tax charge for the year can
be seen in Note 9. As a result the effective tax rate for the
year ended 30 June 2023 is 29% (FY22: 28%).
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 $0.4m (tax adjusted)
in the year (FY22: $1.6m) and amortisation of acquired
intangibles of $20.9m (FY22: $20.2m).
Adjusted EPS, despite increased levels of Adjusted EBITDA,
has decreased 2% to $0.870 (FY22: $0.890) as a result of
increased bank interest charges and intangible amortisation
in the year. Adjusted diluted EPS has decreased to $0.863
(FY22: $0.881). Basic EPS in the period reduced to $0.263
(FY22: $0.268) and Diluted EPS reduced to $0.261 (FY22:
$0.265).
Prior Year Restatements
As reported in the prior year Financial Statements, the
Group completed its assessment of the fair value of the
assets and liabilities acquired and the consolidated balance
sheet and on the 12 month anniversary of the Sentry
acquisition the “window” to complete this assessment
closed.
However, during the current year, the Group has identified
an item of disclosure that requires adjustment and,
following the completion of the various US tax returns, two
matters relating to the tax balances recorded in the opening
balance sheet of the acquired business where the incorrect
fair value had been assessed. None of the items impact the
Consolidated Statement of Comprehensive Income nor any
profit measures reported by the Group in the prior year.
Disclosure adjustment
Deferred Income, non-current and current liabilities –
following a review of deferred income acquired through the
Sentry acquisition, we have identified $4.8m of deferred
income which should have been disclosed as a non-current
rather than a current liability, and as such this has been
corrected.
There is no change to the recorded Total Assets and
Liabilities of the Group as a result of these disclosure
restatements.
Taxation adjustments
Deferred and Current Taxation – Following completion of
the current year tax returns it was identified that an asset
class included in the opening balance sheet of the Sentry
acquisition had incorrectly been given a “tax basis” and as
such the deferred tax liability included $3.2m and the tax
debtor included $0.4m incorrectly in relation to this asset
class (with the net balance being in Goodwill). To correct
this both the deferred tax liability and tax debtor have been
reduced and Goodwill has been reduced by $2.8m.
Provision for Sales Taxes due – In the period since the
acquisition of Sentry, we have worked diligently to ensure
the acquired companies were in good standing with all the
States in which they operated. As part of this process
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Financial Review [Cont'd]
Taxation adjustments [Cont'd]
we identified two States where there were amounts due
in respect of periods prior to the acquisition. Whilst we
continue to work to reduce any liability, a provision should
have been made in respect of the net amounts that were
potentially due – being $0.4m and as such this provision has
been made as part of this re-statement.
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).
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
92% in the year (FY22: 80%).
We continue to invest in our future and return funds to
our shareholder base via our progressive dividend policy,
returning $12.1m in the current year (FY22: $13.0m), the
reduction being due to exchange rates and the majority of
our dividends being paid in Sterling.
Also, as part of the funding for the acquisition of Sentry,
the Group entered into a debt facility and during FY22
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, $28m (FY22:
$8m) of the loan has been repaid, $8m of the term loan on
schedule and the amount drawn down on the Revolving
Credit Facility was reduced by $20m. All covenants have
been met, and the second extension of the term has
been agreed. We continue to thank our banking partners,
alongside our shareholders, for their continued support of
our growth strategy.
Cash reserves at the year-end were $78.5m (FY22: $47.2m).
Restricted cash was disclosed separately in the prior year.
As the Group is unable to hold these amounts outside of its
own treasury facilities, these “restricted cash” balances have
now been incorporated within cash and cash equivalents
for FY23 rather than being classified separately on the face
of the balance sheet (FY22: $1.3m). Total borrowings of
$83.0m (FY22: $111.6m) gives the Group both significant
liquidity and a strong balance sheet.
Share Buy Back
On 12 April 2023, the Group commenced a share buyback
programme (of up to £5m). The shares purchased through
this programme are held in treasury and will be used
to satisfy employee share plan awards. The programme
is being undertaken using a phased approach. The
programme is operating under the authority granted to the
Company by shareholders at the Company's Annual General
Meeting, held on 15 November 2022, and within the
regulatory guidance on the quantity of shares the Company
may purchase on any single day.
Under this programme we have purchased 223,632 Ordinary
Shares (FY22: nil) at a total cost of £3.09m ($3.87m). These
shares represent 0.63% of the Company’s issued Ordinary
Shares and are being held in treasury. The Board considers
that a share buyback provides an optimal use of cash to
deliver value for shareholders by offsetting future dilution
from existing employee share plans and as such the share
buyback programme continued after 30 June 2023 and is
ongoing at the time of approval of this report.
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.
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 regard 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 $1.2043 as
compared to $1.3317 in the prior year. The exchange rate at
the Balance Sheet date was $1.2619 (FY22: $1.2128).
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 and our continued
desire to recognise the support our shareholders provide.
After carefully weighing up these factors, the Board
proposes a final dividend of 16.0p (20.19 cents) per share
giving a total dividend for the year of 28.5p (35.95 cents)
per share (FY22: 28p (33.96 cents) per share), an increase
of 2%. Subject to approval at the Annual General Meeting,
the final dividend will be paid on 15 December 2023 to
shareholders on the register as at 24 November 2023, with a
corresponding ex-Dividend date of 23 November 2023.
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The final dividend of 16.0p 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 24 November 2023. The exact
amount to be paid will be calculated by reference to the
exchange rate to be announced on 24 November 2023. The
final dividend referred to above in US dollars of 20.19 cents
is given as an example only using the Balance Sheet date
exchange rate of $1.2619/£1 and may differ from that finally
announced.
Outlook
With the COVID-19 public health emergency in the US
formally declared over in May 2023 and the related
pressures on hospitals starting to ease, we have begun
to see US hospitals return their attention to providing
Value-Based Care and investing in digitalisation, using data
insights provided by the Trisus platform to transform and
improve their processes. We remain committed to providing
the tools our customers need to manage their operations
and finances more efficiently, as we seek to transform the
business of US healthcare together.
Against this backdrop, we are pleased to have seen the
strong sales momentum seen at the close of the year carry
through into the start of the new financial year, resulting in
a growing sales pipeline. We are confident that our resilient
business model, extensive customer base, high levels of
Annual Recurring Revenue, together with our strategy for
delivering growth centred on the expansion of the Trisus
platform, will enable us to create further long-term value
for all our stakeholders.
Keith Neilson
Chief Executive Officer
4 September 2023
Craig Preston
Chief Financial Officer
4 September 2023
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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 13.
Key Performance Indicator Review
Revenue Growth
Revenue
Growth
2023
2022
$174.0m
$165.5m
5%
119%
Through the Group’s SaaS revenue recognition model, underlying sales levels in the current year combine with prior year’s
sales and continued high levels of customer retention, to increase the recurring revenue reported each year. The long-term
nature of our contracts supports sustainable growth with the majority of revenue resulting from current year sales being
recognised in future periods.
Annual Recurring Revenue
Annual Recurring Revenue
Growth
30 June
2023
31 Dec
2022
$169.0m
$166.4m
2%
n/a
Annual Recurring Revenue includes the annual value of licence and recurring transaction revenues as at 30 June 2023 that
are subject to underlying contracts.
At our interim reporting, to better align future growth of ARR to near term revenue growth, our definition of ARR was
tightened to only include bookings that can be contractually invoiced or have generated revenue by the reporting date. As
a result, ARR is now defined as the annual value of licence and related recurring revenues including transaction revenues as
at the Balance Sheet date that are subject to underlying contracts and where revenue is being recognised at the reporting
date.
ARR at 30 June 2023 increased to $169.0m from the $166.4m reported at 31 December 2022, demonstrating the Group's
continued high levels of contracted revenue visibility.
Net Revenue Retention
% Net revenue retention
2023
100%
2022
n/a
The Group is reporting Net Revenue Retention for the first time, from the point of ARR calculation at 31 December 2022,
which was 100% for the six months to 30 June 2023.
Adjusted EBITDA
Adjusted EBITDA
Adjusted EBITDA margin
Growth
2023
2022
$54.9m
$51.8m
32%
6%
31%
91%
We take a measured approach to our investment, ensuring to invest to support the future growth of the Group. The
continued revenue growth has allowed us to both continue and, in certain areas, accelerate this investment whilst
delivering Adjusted EBITDA growth. By taking this approach, we aim to release additional investment, in line with revenue
growth, with the focus on delivering profitable growth to all stakeholders.
Adjusted EPS
Adjusted EPS
Growth
2023
2022
87.0 cents
89.0 cents
(2)%
29%
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.
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Key Performance Indicator Review
Net Borrowings / Cash
Net Borrowings
Cash
2023
2022
$(4.5)m
$(64.4)m
$78.5m
$47.2m
The Group continues to maintain healthy cash reserves of $78.5m (FY22: cash (excluding restricted cash): $47.2m). Net
Borrowings has reduced to $4.5m at 30 June 2023 (FY22: $64.4m Net Borrowings (excluding restricted cash)) due to
repayments on the term loan and a reduction in the outstanding revolving credit facility balance drawn down. This
represents a comfortable level of borrowing for the business.
Net Borrowings / Adjusted EBITDA
Net Borrowings / Adjusted EBITDA
2023
(8%)
2022
(124)%
Net Borrowings as a percentage of Adjusted 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.
Operating Cash conversion
Operating Cash conversion
2023
92%
2022
80%
The Group continues to convert very high levels of the Adjusted EBITDA reported in the year into operating cash flows.
Overall Operating Cash Conversion, at 92% for the year ended 30 June 2023, is above the prior year of 80%.
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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 R&C 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, the Chief Technology Officer and the
Chief Information Officer. The Head of Risk and Compliance
is the secretary to this committee and attends all meetings.
The Group also has three further committees that report
into the R&C Committee; the Security Council, the Health
& Safety Committee and the ESG 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 ESG Committee
was established during the year and is chaired by the Chief
People Officer. Further details regarding the ESG Committee
are included in the Non-Financial and Sustainability
Information Statement and the ESG Statement sections of
this Annual Report.
The Corporate Governance Report 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 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.
Strategic Report: Principal Risks and
Uncertainties
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
and how we intelligently assume risks that will provide for
future growth, are key considerations 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 years since and included within the
risk review and assessment process on an ongoing basis.
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 Operations Board is chaired by the Chief Executive
Officer and also comprises the Chief Financial Officer, the
Chief People Officer and seven 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 Risk
and Compliance Committee (“R&C Committee”), chaired
by the Chief Financial Officer) to ensure there is specific
focus on risk review and risk management. The purpose
of this Committee is to function as a sub-committee of
the Operations Board focused on Corporate Governance
responsibilities and risk management.
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Ukraine conflict
Craneware does not have any operations or customers in
Ukraine or any 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 in the
UK and in the US where Craneware operates. The Board
continues to 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.
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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.
In summary, and as explained in the Operational Review
section of this Strategic Report, the US healthcare market
is not immune to the macro-economic climate and, with
the increasing focus and requirements of the evolving
healthcare marketplace, the Group expects the market
to continue to be competitive. The US Public Health
Emergency was formally declared over in May 2023,
however, this has not completely relieved the pressure on
healthcare providers. 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.
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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. 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, especially the large amounts of Protected
Health Information being processed. If our systems become compromised, this may result in the loss of sensitive data and / or
the interruption of services for our customers. This could also lead to a significant Financial risk that can only be partially
mitigated through insurance, as well as significant reputational risk.
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,
since 2019 Craneware has met the requirements for and has maintained the HITRUST CSF certification for its Trisus and InSight
solutions and corporate services. 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 focus. Adherence to HITRUST security requirements go
beyond basic government regulations
Sentinel, Sentrex, and Trisus Decision Support applications meet American Institute of Certified Public Accountants (AICPA)
Service Organization Controls (SOC) requirements, completing the external audit verified SOC Type II assessments 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.
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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 SOC Type II certification in place for Sentinel, Sentrex, and Trisus Decision Support 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.
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Principal Risks and Uncertainties [Cont'd]
US Healthcare: Complexity, Evolution, & Reform
Trend since last year: No Change
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 36 to 37, 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 (24) 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). Additionally, legislation is ongoing in some
states that have enacted protections for their covered entities. 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 Risk & Compliance Committee, comprised of the Chief Information Officer, Chief People
Officer, Chief Financial Officer, Chief Technology 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 Risk & Compliance Committee, which is made up of senior management
from both countries, oversee activities and concerns pertaining to the strict regulatory environment.
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Complex Market Dynamics
Trend since last year: Increased
Issue: The global economic environment continues to be uncertain. Factors such as the post-pandemic 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 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 including our 340B product
portfolio.
The Group continues to innovate and develop further new products to meet market needs. 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 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: No Change
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.
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 includes the Transformation Office. The
Transformation Office supports current and future significant initiatives as the Group grows and evolves. The Operations Board has
also benefitted during the year from the addition of the new Chief Technology 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.
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Principal Risks and Uncertainties [Cont'd]
Acquisition Risk
Trend since last year: No Change
Issue: The Group has a stated acquisition strategy, as explained within the Operational 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 the UK and, predominantly, 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): widening political divide; climate of social instability and increased
industrial actions; 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 and higher interest
rate environment over a currently unknown timeframe. Any 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.
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.
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 our Dynamic
Working Framework. These are outlined 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.
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Compliance with debt finance facility covenants
Trend since last year: No Change
Issue: As part of the funding for the acquisition of Sentry, the Group entered into debt facility arrangements which provide up to
$140m of secured funding. This secured committed debt facility, comprises a term loan and a revolving credit facility. Details of
these borrowings are provided in Note 21 to the financial statements. 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 $84m was outstanding at 30 June 2023 comprising a $24m term loan and a $60m 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 2023, we have completed the second
extension of our banking facilities, as described on page 12. 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.
Banking Environment
New Risk
Issue:The financial services industry, and notably banking, have faced significant challenges that have led to increased risk
impacting cashflow and lending products.
In 2023, the unexpected collapse of a large US Bank resulted in issues with access to assets, employee credit cards, cash receipts,
and the stability of significant loans. Many businesses, including The Craneware Group, were impacted by the situation. This risk
of contagion to other banks remains a possibility.
Further industry risks exist with increased threats of security breaches, exacerbated by global conflicts and national tensions.
Mitigating Actions: Insurance measures are already in place, along with good relationships with a number of financial
institutions allows the Group’s cash reserves being “spread” across multiple banks.
We continue to implement process improvements, including increasing visibility on high-value contracts which result in
significant payments into a single account. Insurance measures have also been reviewed to ensure as effective coverage as is
possible.
We retain regular and detailed dialogue with our lenders, and these relationships continue to be supportive.
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.
Climate Change
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. 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. Climate-related risk considerations, including governance
arrangements, are disclosed within the Group’s Non-Financial and Sustainability Information Statement.
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Craneware plc
future years. This foundation of contracted revenue forms
the basis 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 Group also has a
committed but undrawn facility available to it of $60m. 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 2023. However, future assessments of the Group’s
prospects are naturally subject to uncertainty that increases
with time and therefore future performance cannot be
guaranteed.
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Emerging Risks [Cont'd]
Climate Change [Cont'd]
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.
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 we already rely on video conferencing
technology, 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.
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 2023.
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 the current
macro-economic climate on viability.
With regard to the current economic climate, significant
increases in inflation and the increased cost of current
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 2023.
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
Craneware plc
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Strategic Report: Environmental, Social and Governance (ESG) Introduction
ESG Committee Chair's Introduction
At the heart of our culture is our aim to operate in an ethical way that allows us not only to meet the needs of our
stakeholders, but most importantly have a profound and positive impact on the communities in which we operate and the
wider 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 social impact cannot be underestimated. In FY23
we delivered significantly over $1 billion of benefit to our customers from utilising our solutions, helping them stretch their
scarce healthcare resources as far as possible. This social impact continues within our Craneware Cares program, where our
employees led many efforts in providing time and precious resources to support the causes in their own communities.
As such ESG or sustainability is, and has been, inherently central to the Purpose of The Craneware Group. I am therefore
delighted to chair the newly formed ESG Committee and, along with my colleagues, to support and facilitate our strong
sustainability practices and ethos.
It’s important to note that we, as a software and services provider, operate with a low impact on the environment, and
where we do create a carbon footprint, we are working diligently to reduce this. We are also focussed on ensuring that our
people practices reward our employees for their contribution to The Craneware Group’s success and foster an inclusive,
equitable, diverse, and ethical culture.
In light of this we introduce our three ESG Focus Areas, and provide the details of our ESG initiatives and activities of the ESG
Committee within our ESG Statement on pages 34 to 46. Highlights of these three ESG Focus Areas are summarised in the
table below.
We hope you find our first Non-Financial and Sustainability Information Statement and accompanying ESG Statement
informative.
Issy Urquhart
Chair of the ESG Committee & Chief People Officer
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Key ESG Focus Area
Overview of our ESG credentials
Our Customers &
Community
Our People
Our Environment
Our solutions benefit society, supporting our customers’ financial stability and sustainability so that
they can focus and prioritise patient care and provide healthcare services which benefit their
communities. In FY23 our customers have seen significantly in excess of $1 billion benefit from
utilising our solutions, helping to stretch scarce healthcare resources as far as possible.
Craneware Cares, our CSR program, is driven and led by our employees and forms a central and
important part of life at Craneware; coordinating our approach to charitable giving and community
outreach.
> Further details are in our ESG Statement
We have a talented mix of employees from diverse backgrounds, which brings a high level of
innovation and collaboration. Our diversity metrics are on page 38.
Our reward practices, working arrangements, learning & development, employee engagement
strategies, talent acquisition and wellness focus support our diversity aims and facilitate a culture of
high contribution, equality and inclusion.
> Further details are in our ESG Statement
Our environmental impact is relatively low and our climate-related risks are not material. However,
in the global challenge of climate change we have a part to play by reducing our environmental
impact. We have various initiatives underway and in plan to reduce emissions and energy use and
supporting environmentally responsible practices.
> Further details are in our Non-Financial and Sustainability Information Statement (on pages 26 to
33) and in our ESG Statement
LEADERSHIP AND OVERSIGHT BY THE BOARD OF DIRECTORS
(Our Governance framework includes: business ethics, corporate governance, information security, anti-bribery
and corruption, modern slavery, whistleblowing policy)
UNDERPINNED BY OUR CULTURE and VALUES FRAMEWORK
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Strategic Report: Non-Financial and
Sustainability Information Statement
In accordance with section 414CB of the Companies Act
2006 (the ‘Act’), the Board provides, within this Statement,
the climate-related financial disclosures for the Group of
companies which has Craneware plc as its ultimate parent
company (the ‘Group’).
This is the Group’s first year of reporting in respect of these
provisions in the Act and the Group aims to make further
progress during the year ending 30 June 2024 in relation to
setting appropriate targets and defining key performance
indicators to monitor our response to climate-related risks
and steps to reduce the Group’s impact on the environment.
Introduction and overview
The nature of the Group’s operations, i.e. not manufacturing
or transporting goods, means that its environmental impact
is relatively low compared with other sectors and our overall
risk and impact from climate change is assessed as low.
As a result of what we do, we are not involved in energy-
intensive processes nor does the organisation generate
significant emissions or waste however, we understand we
all have a role to play in protecting the environment. The
Board believes that all businesses, including The Craneware
Group, must recognise the importance of responding
appropriately and reducing their contribution to global
climate change. Consequently, we seek to manage and
minimise the Group’s impact on the environment through
good governance, measuring and monitoring climate-
related risks and opportunities and taking steps to reduce
energy use, emissions and waste, in alignment with net zero
ambitions.
The Board acknowledges that s414CB of the Act states
that companies should include disclosures on climate
change-related risks and opportunities, where these are
material. Although not considered to be material risks and
opportunities to the Group at this time, we understand
that this information may be useful to stakeholders. We
recognise the importance of transparency and reporting
for our stakeholders to enable decision making and more
effective monitoring of risk mitigations and progress
towards targets as we transition to a low carbon economy.
Supported by our ESG Committee, the Board aims to
keep abreast of this evolving situation by monitoring and
ensuring risks and potential opportunities are assessed and
that we are implementing appropriate mitigating actions to
support the reduction in the Group’s environmental impact.
The Board recognises that further development of
assessments, emissions data and monitoring in this area are
required and we are committed to ensuring progress with
these activities through FY24. We intend to enhance our
reporting of climate-related information as we make further
progress as an organisation towards net zero emissions, in
the context of the UK and US governments’ targets for net
zero by 2050. We have initiated work to better quantify the
Group’s emissions. We assessed climate-related risks and
opportunities and their potential impact (described further
below); the results from this assessment along with a more
complete composition of the Group’s emissions data will
form the basis of our targets to manage climate-related
risks. We shall build upon the groundwork conducted by
the ESG Committee in the financial year to 30 June 2023
(‘FY23’) and progress with expanding our sustainability
activities in the year ahead and accordingly enhance our
climate-related reporting.
However we commit to more immediate actions rather than
waiting for data to be gathered or specific targets to be set
as climate concerns continue to evolve with an increased
urgency. Being aware of our main areas of energy use and
emissions we have initiatives already underway. The actions
initiated in FY23, which aim to assist with reducing our
environmental impact included the following, along with
our wider sustainability initiatives that are described within
the Environmental, Social and Governance (‘ESG’) Statement
on pages 34 to 46.
• An ESG Committee has been established to support
the Board with the operational coordination and
direction of the Group’s sustainability activities
(refer to the Governance section below and our ESG
Statement);
• The decision to reduce the rented office space in the
US. This will result in an initial 13% reduction in rented
office space in early FY24 with further reduction in
FY25; we anticipate that in FY24 this could result in a
Scope 2 emissions reduction of at least 10% at first.
This is described further below in the ‘Energy Use and
Emissions’ section and in the ESG Statement on pages
31 and 32;
•
Initial plans and steps taken to gather Scope 3
emissions data and this activity is ongoing;
• Continued migration of internal information
technology on-premise services to more energy
efficient cloud services;
• Review of some key suppliers’ sustainability initiatives,
renewable energy policies and other emission
reduction actions; this assessment will continue
during the year ahead; and
• The encouragement for, and facilitation of, carpooling
arrangements for the journey to work for some of our
UK office-based employees.
Further actions, which are anticipated to help to reduce our
environmental impact, are also in plan for the coming year
and we refer to some of these within this Statement and in
our ESG Statement. We therefore look forward to reporting
on progress in these areas in our FY24 annual report.
The Board is cognisant that the provisions of s414CB of the
Act comprise specified climate-related disclosures that are
aligned with the Task Force on Climate-related Financial
Disclosures (‘TCFD’), but do not directly reference these.
During our planning activities, we referred to the guidance
on the ‘Mandatory climate-related financial disclosures by
publicly quoted companies, large private companies and
LLPs’ issued by Department for Business, Energy & Industrial
Strategy in addition to TCFD guidance.
Set out below are the requirements of the Act in this regard
and the sections within this Statement containing the
relevant information, other than in the overview description
above:
Craneware plc
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Annual Report and Financial Statements 2023
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Craneware plc
27
Requirements of s414CB (2A) Companies Act 2006
(a)
(b)
(c)
a description of the company’s governance arrangements in relation to assessing and managing climate-
related risks and opportunities
a description of how the company identifies, assesses, and manages climate-related risks and opportunities
a description of how processes for identifying, assessing, and managing climate-related risks are integrated
into the company’s overall risk management process
(d)
a description of:
(i) the principal climate-related risks and opportunities arising in connection with the company’s operations,
and
(ii) the time periods by reference to which those risks and opportunities are assessed
a description of the actual and potential impacts of the principal climate-related risks and opportunities on
the company’s business model and strategy
an analysis of the resilience of the company’s business model and strategy, taking into consideration different
climate-related scenarios
a description of the targets used by the company to manage climate-related risks and to realise climate-
related opportunities and of performance against those targets
a description of the key performance indicators used to assess progress against targets used to manage
climate-related risks and realise climate-related opportunities and of the calculations on which those key
performance indicators are based
(e)
(f)
(g)
(h)
Section name in this
Statement and page
number containing
this information
Governance
(page 27)
Risk Management
(page 28)
Risk Management
(page 28)
Climate-related Risks &
Opportunites
(pages 28 to 30)
Potential Impacts &
Resilience
(pages 30 & 31)
Potential Impacts &
Resilience
(pages 30 & 31)
Metrics & Targets
(pages 31 to 33)
Metrics & Targets
(pages 31 to 33)
Governance
The Board of Directors has overall responsibility for sustainability or ‘environmental, social and governance’ (‘ESG’)
matters including oversight of climate-related considerations and effective management of any climate-related risks and
opportunities, as part of the Board’s responsibilities to monitor any issues which impact strategy, risk management and the
operations of the Group.
During the year ended 30 June 2023 our ESG Committee was established and the Board appointed Issy Urquhart, an
executive Director of the Company and the Group’s Chief People Officer, to chair the ESG Committee. Membership of this
Committee consists of senior representation from across the business, including the Chief Information Officer. The Board
maintains oversight of the ESG Committee and approved the terms of reference for its operation and receives regular
updates from the ESG Committee. In addition, from an operational perspective, the ESG Committee provides regular updates
and copies of Committee meeting minutes to the Risk & Compliance Committee (with three of the members of the ESG
Committee also being members of the Risk & Compliance Committee). The sustainability governance framework within the
Group is summarised below.
Overview of ESG / Sustainability governance framework
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The ESG Committee, for its initial period of operation, has
met each month although it is envisaged that the frequency
of Committee meetings will reduce to a quarterly cadence
following the completion of activities relating to the
Committee’s formation and initial assessment activities.
The ESG Committee’s remit is wider than environmental
(including climate-related) matters; and the Board has
approved three key focus areas within which to structure
the ESG Committee’s efforts, as explained within the ESG
Statement.
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Risk Management
The Group’s Risk Management process is described on page 16. The management of climate risks has been embedded into
those risk management arrangements. The process maintains a consistent approach to the management of climate-related
risks, in line with all other risks managed across the business so that their significance is evaluated relative to the same
appraisals as other identified risks.
The Board considers that the Group’s current processes, including risk management and the operational oversight by the
Operations Board and its subcommittees are sufficient at this time to maintain monitoring on climate-related risks and
mitigation plans.
Risks identified through this process are assessed based on their potential impact and likelihood of occurrence using
defined criteria which are applied throughout the risk assessment procedures. The process also considers mitigation of the
risks, the responsible owner(s) within the senior management team, emerging risks and ongoing monitoring.
Alongside the Group’s risk management process, the ESG Committee has conducted a preliminary assessment of the
identified potential climate-related risks and considered potential climate-related opportunities. This was a qualitative
climate risk impact appraisal including consideration of mitigation and adaptation arrangements.
In prior financial years, through this risk management process, climate change was identified as an ‘emerging risk’. Overall,
our analysis indicated no short term material climate-related risks that would affect our strategy or performance, and
therefore it was concluded that climate change remains an emerging risk. However we will continue to evolve and develop
our understanding of climate risks, with further appraisals, given the evolving nature of climate change and its progression
and impact updates based on scientific data and analyses.
Climate-related Risks and Opportunities
It is acknowledged that many of the more significant and prolonged effects of climate change are expected to arise in the
longer term and therefore come with an inherent uncertainty. We have identified those climate-related risks and potential
opportunities most likely to affect The Craneware Group as set out below.
In our initial appraisals of climate-related risks, both physical and transitional risks, and opportunities, from climate change,
have been considered as well as taking into account the geographical locations in which the Group operates. Physical risks
are those arising from the climatic impact of higher average temperatures (such as the increased frequency and severity
of extreme weather events), whilst transition risks are those arising from the changes in technology, markets, policy,
regulation, and consumer sentiment which will result from the transition to net zero.
None of the identified climate-related risks (which are described below), based on current assessments and mitigations, are
expected to have a significant negative or positive impact on the Group’s business model and / or strategy. It is considered
that the impacts of these risks are not material to an understanding of the business or its strategy but are disclosed to
provide context to readers of this Annual Report in relation to the developing nature of climate-related concerns. We
appreciate, as is the case for other potential risks, that these should be kept under review and as significant new pertinent
information or changes in the business occur.
Climate change is dynamic and is anticipated to have long term implications. Potential climate-related risks are being
assessed within the following three time horizons and for the main reasons outlined in the table below:
Short term
Medium term
Long term
Time period
Up to 3 years
3 to 15 years
More than 15 years
Rationale
Aligns to our business planning and
forecast period
We aim to set some emission reduction
targets to be achieved within this
timeframe
Covers 2050; the year by which UK
and US governments are targeting for
net zero emissions
To date, our climate-related assessments have primarily focussed on short to medium term time horizons with the intention
that more detailed and extensive appraisals will be conducted as part of our activities going forward.
The following climate-related risks have been identified as potentially relevant to the Group although none are considered
to be material and the impact for each is currently assessed as low. In summary:
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Risk title
Climate-related threats to
facilities and infrastructure
Carbon pricing in operations
and value chain
Reputational issues linked to
environmental performance
and reporting
Risk type
Potential
impact
overview
Physical
Transition
Transition
Disruption to operations as a result of
severe weather events or long term
changes to weather patterns
Increased operating costs due to higher
pricing of energy and other inputs
Potential damage to reputation and
higher cost of capital
Time horizon
Medium
Low
Unlikely
Impact
(with
mitigation)
Likelihood
(with
mitigation)
Mitigation /
adaptation
Medium
Low
Possible
Medium
Low
Unlikely
Refer to summary below
Refer to summary below
Refer to summary below
Climate-related threats to facilities and infrastructure
With potentially higher frequency or severity of weather-related events (for example floods, storms) and also longer term
changes to weather patterns and associated sea level rises caused by climate change, there is an increased potential for
business interruption and damage to premises and infrastructure.
The Group has several mitigations, as a result of its operations, facilities arrangements and business continuity plans. In
addition, the Group does not have a dependency on a single physical location and our working arrangements are such that
not all of our employees are office-based; the majority of our US employees are home-based. The Group utilises leased office
premises in geographically dispersed locations which are not highly vulnerable, based on our current resilience assessment.
As a consequence of the pandemic public health restrictions during the past few years, the Group has been able to operate
uninterrupted with our office-based employees working from home and, following the lifting of the restrictions, we have a
Dynamic Working Framework allowing flexibility to work between home and office (as described within the ESG Statement).
Over time the Group has also been migrating internal information technology on-premise services to cloud services
therefore increasing resilience from an infrastructure perspective.
Carbon pricing in operations and value chain
As regulations come into effect to implement the emission reductions needed to achieve governments’ net zero targets,
there is an anticipated increase in the price of carbon to drive organisations to reduce their carbon emissions and energy
use. The Craneware Group is therefore likely to see an increase in operational costs resulting from carbon pricing. This is
expected to be as a result of our own operations, as well as vendors within our value chain, due to higher costs associated
with energy and other inputs. This is anticipated to potentially affect some elements of the Group’s operating costs however
there are actions already in process and planning will assist with addressing some of this risk, for example the decision we
have made to reduce our rented office space in the US will result in a reduction in energy use and emissions (as outlined
further below).
The Group will keep under review vendor arrangements and activities in respect of energy use and renewable sources,
pricing and vendor initiatives for reducing emissions.
Reputational issues linked to environmental performance & reporting
The Board 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. We have an obligation to investors, regulators, and other stakeholders to communicate progress in respect
of sustainability considerations including climate-change. Failure to address this risk, which is relatively low for our
organisation, could nonetheless result in damage to our reputation and possible regulatory penalties in certain instances.
We acknowledge that damage to the Group’s reputation could potentially affect all of our stakeholders to some degree.
Whilst the Group’s business does not generate large levels of emissions or waste and therefore reputational sensitivities in
relation to climate-change could be thought to be low risk, we are mindful of the importance of the collective effort across
society to address the challenge of climate change whether or not it is considered to be a high risk in the near term to
individual entities. With the establishment of the ESG Committee during FY23 we are taking action to develop and enhance
our policies and processes in this area.
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Climate-related Risks and Opportunities
[Cont'd]
Metrics to track climate related risks
It is recognised that the Group’s initiatives to assist with
reduction in emissions, in the efforts to address climate
change in general, are more relevant and appropriate than
developing specific metrics for each climate-related risk
(which are each assessed as not material for the Group)
however this will be kept under review by the Board and
ESG Committee. No climate-related Key Performance
Indicators (KPIs) or targets are currently reported by the
Group however this information is not considered necessary
for an understanding of the business.
Overview
Based on current assessments, we do not expect any
material impact to the Group in the short term as a
consequence of these identified climate-risks. As a
consequence we do not believe it is meaningful at this
stage to quantify their financial impacts. Nevertheless we
will continue to keep these under review as climate-related
projection scenarios continue to evolve and we will also
further consider the range of potential impacts, in the
medium to long term, to estimate the implications of risks in
the longer term.
Climate-related opportunities
A few potential opportunities, which may arise as a direct
result of climate-related implications, were identified
however these are estimated to not be material to the
Group’s business model and strategy at this time. These
potential opportunities include:
• Hiring and retaining talent: it is recognised that
employers’ sustainability credentials are becoming
more important to stakeholders including employees
(and prospective employees). Therefore appropriate
sustainability initiatives, including those addressing
environmental impacts, can help to attract and retain
talent. We have a number of environmental and other
sustainability activities initiated or in plan, as outlined
within the ‘Introduction and overview’ section of this
Statement and in our ESG Statement respectively.
The direction, coordination and progression of these
initiatives is assisted by our ESG Committee.
• Efficiency of resource management and renewable
energy: improving the Group’s energy use and
transitioning to renewable energy sources could
help reduce exposure to carbon pricing and also
reduce our Scope 2 emissions. However, the Group’s
current ability to ensure it derives benefit from these
opportunities is limited because our office facilities
are leased within serviced premises and therefore
control over energy supply and waste treatment
resides with the landlords. Within the operation of our
office space we have recycling points and encourage a
reduction in waste such as single use plastics.
Potential impacts and resilience
In this dynamic situation of climate change, we understand
the need to assess the appropriateness and adequacy
of climate resilience in addressing both physical and
transitional climate risks and in estimating the materiality
of their impact (on a consistent basis to the materiality
estimation for all other identified risks, as described in the
Principal Risks and Uncertainties section of this Strategic
Report).
As part of its initial assessments, the ESG Committee has
referred to climate-related scenario analysis to improve
the understanding of the sensitivity of identified potential
physical and transition climate-related risks, as summarised
in the section above, to different climate outcomes. This
assists with the evaluation of the resilience of our business
to climate change. Three scenarios (ranging from high
to low emissions) were referred to in order to gauge the
resilience of the Group’s business model and strategy in
the context of risks arising in the event of different climate
change scenario projections. We recognise that further
scenario analysis should be conducted to support a more
detailed review and to ensure that the scenario projections
we reference in the analysis are the most appropriate for
the circumstances and up to date. It is intended that this
will be completed during FY24 and the Group will provide
information regarding that more detailed scenario analysis
in next year’s Non-Financial and Sustainability Information
Statement.
The ESG Committee referred to scenarios compiled and
published by the Intergovernmental Panel on Climate
Change (IPCC) in the IPCC’s sixth assessment report under
climate warming scenarios (‘Shared Socio-economic
Pathways (‘SSPs’)) which included:
• SSP5-8.5: a high-emissions scenario (often referred
to as 'business as usual'), where carbon emissions
continue growing unmitigated; suggesting a likely
outcome if global concerted efforts to cut greenhouse
gas emissions does not happen. This scenario
indicates a pathway to global temperature increase of
an average of around 4.4oC above pre-industrial levels
by the year 2100 and would therefore lead to more
severe physical risks.
• SSP2-4.5: represents a scenario where policies and
practices are implemented and nations worldwide
undertake emissions reductions effectively and
simultaneously. Rate of reductions would be slower
than in the SSP1-1.9 scenario. This scenario indicates a
global temperature increase to an average of around
2.9oC above pre-industrial levels by the year 2100
and this would still result in an increase in physical
climate-related risks.
• SSP1-1.9: a low-emissions scenario which indicates a
predicated global temperature increase, on average,
to 1.5oC or below compared to pre-industrial levels
by the year 2100. This scenario therefore reflects
the goal of the Paris Climate Agreement of limiting
global warming to less than a 1.5oC increase above
pre-industrial levels. This scenario would require
rapid global action (by governments and society) and
declining emissions.
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At present we are aiming for carbon reduction and we
do not have any short term plans to offset our carbon
emissions however this may be an aspect to evaluate as we
make further steps along a path to net zero.
Energy Use and Emissions
The Company is required to report its energy use and
impact under the Streamlined Energy and Carbon Reporting
(SECR) regulations. The data presented below is in respect
of the energy usage by the Company and its subsidiaries
in the year ended 30 June 2023 whereas the comparisons
for the prior financial year are as previously reported and
therefore are only in respect of the UK energy usage by the
Company.
Although only UK energy usage by the Company is required
to be reported in accordance with the SECR Regulations,
we have decided to voluntarily extend our energy use
and greenhouse gas (‘GHG’) emissions data collection and
reporting for the year ended 30 June 2023 in two ways.
Firstly, our energy use and GHG emissions data includes
our US leased office premises rather than being only in
respect of our UK facilities. Secondly, we have started to
report emissions for one category within Scope 3; this
being emissions from car travel on business journeys
(not commuting). We have widened the extent of this
data collection and reporting in order to move towards a
better baseline for setting emission reduction targets and
monitoring our progress. We will continue to assess and
keep under review the extent of our energy use and GHG
emissions data collection and completeness with a view to
potentially expanding our Scope 3 emissions reporting in
the future.
The Group has defined its organisational boundary using an
operational control approach. Therefore the figures include
all office locations in the UK and in the US for the financial
year ended 30 June 2023. In the previous financial year,
energy usage by subsidiaries, (which are not in the UK),
were outside the scope of previous reports and therefore
were excluded from the figures. It is intended that a
consistent Group basis will be applied for future reporting
periods.
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We have incorporated these scenarios into our initial
appraisals of climate change risks and, based on our
assessments so far, no significant risks have been identified
from the scenario review that we are unable to mitigate.
The vulnerability of the Group in the context of the climate-
related risks is considered to be low as a result of the
mitigations and adaptations referred to in the ‘Climate-
related risks and opportunities’ section above including our
working arrangements, use of leased office premises and
their locations.
Our business continuity plans seek to ensure that effective
business continuity practices and arrangements are in place,
so the Group is more likely to be able to prevent, quickly
respond to, and assist the organisation to recover from
disruptions. The Group’s business continuity plans appraise
threats, including climate-related effects and impacts, with
the aim of mitigations and adaptations being adequate and
appropriate.
Metrics and targets
In order to achieve our net zero commitment before 2050
we expect to set a number of targets to be achieved along
the way and we aim to define these targets and explain
them and provide and update on progress in our FY24
Annual Report. We aim to broaden our collection of, and
deepen our analysis of, emissions data to help to enhance
our monitoring and reporting and to help the organisation
to focus efforts on areas where the greatest reductions
can be made from a practical perspective although actions
have already been initiated, as summarised within the
‘Introduction and overview’ section above.
We are reviewing the Group’s environmental impact in
more detail and developing a carbon emission reduction
plan which will involve the setting of incremental targets
to monitor progress towards an overall goal of net zero
emissions. We expect, for example, to manage goals of
reducing emissions by having a series of targets which will
enable more practical focus. We appreciate that emissions
reductions will only realistically be achieved incrementally
and with a collective effort – employee engagement
is therefore part of this as is helping our people make
sustainable choices. We also appreciate that further work is
needed to conclude on appropriate KPIs and this is an aim
for the ESG Committee in FY24.
In relation to the selection of metrics for performance-
related elements of executive Director remuneration, as
noted in the Remuneration Committee’s Report, since
the financial year end the Remuneration Committee has
initiated a benchmarking study to focus on executive
Director remuneration policy. The recommendations from
that study will be considered by the Committee in FY24.
Reporting of our energy consumption and Scope 1, 2 and
one element of Scope 3 emissions is included within our
Streamlined Energy and Carbon Reporting (SECR) table
within the ‘Energy Use and Emissions’ section below. We
also explain in the section below the extent of our energy
use and emissions data and plans for extending that data
so that we have a better baseline for setting emission
reduction targets and metrics for reporting in the future.
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Metrics and targets [Cont'd]
Energy Use and Emissions [Cont'd]
Energy use (kWh):
Electricity
Group total
2023
US only
UK only
2022
UK only
580,000
492,162
87,838
81,832
Group total
2023
US only
UK only
2022
UK only
Gross emissions in metric tonnes of carbon dioxide equivalent (CO2e):
Scope 1 (Natural Gas)
Scope 2 (Electricity)
Scope 3 (business travel – cars only)
1.81
208.84
27.09
1.81
190.65
27.09
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18.19
15.82
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Total of the above Scope 1, 2 and 3 emissions
237.74
219.55
18.19
15.82
Intensity measure (average no. of employees)
Intensity ratio in tonnes of CO2e per employee:
Group total
2023
US only
UK only
2022
UK only
734
0.32
541
0.41
193
0.09
189
0.08
For the UK data, emissions were calculated from electricity billing information for our UK rented office premises and the UK
government’s 2023 GHG Conversion Factors Guidance. Emissions from our US rented office premises were calculated using
electricity billing information for each office and the US Government’s EPA 2021 eGrid conversion factors.
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 employee. For the 2023 ratio, this is based on the average number of
employees in the Group in the year ended 30 June 2023; the 2022 ratio was based on the average number of UK employees
in the year ended 30 June 2022.
Office-related energy use (natural gas consumption (Scope 1) and purchased electricity consumption (Scope 2))
During the year to 30 June 2023 the Group had four leased office premises located in: Edinburgh (UK), in Deerfield Beach,
Florida (US), in Pittsburgh, Pennsylvania (US) and in Atlanta, Georgia (US).
The Group has minimal Scope 1 emissions generated from the direct consumption of fossil fuels at one of our leased office
premises in the US. Other than in that situation, the Group does not purchase fuel.
Scope 2 emissions arise from the purchase of electricity for our leased office premises in the UK and in the US. As shown in
the table above, our energy use and resulting emissions from our UK office premises increased in the year ended 30 June
2023 as a result of our UK employees being able to work from the office throughout that year whereas the pandemic public
health restrictions in place in the prior year resulted in the office not being fully utilised. Likewise there was greater energy
use and emissions from our US offices in FY23 compared to the prior financial year.
As a consequence of the changes in how our employees choose to work, the types of spaces they prefer to work and
collaborate in, and also as a result of our commitments to reducing our impact on the environment, we have reviewed our
office facility requirements. Following this review we made two significant decisions about our US office space in FY23. We
decided not to renew the lease for the office space in Atlanta, Georgia (US) and during the second half of FY23 this office
was slowly decommissioned, with the lease expiring in October 2023. In addition, we decided to move office premises
within Deerfield Beach in Florida, reducing our facilities footprint in that location and this office relocation is planned to
occur in the second half of FY24. We provide further details regarding this plan within the ‘Environment’ section our ESG
Statement on pages 43 and 44.
We expect that, with this initiative, in FY24 our energy use and Scope 2 emissions should reduce by at least 10% compared
to FY23 with further reduction anticipated for FY25 based on current information. This will be an important aspect of our
emissions reduction targets and timelines.
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Scope 3 emissions
In terms of relevant background to the business travel category of Scope 3, all business travel for essential business
purposes has to be approved in advance in accordance with our travel policy and authorisation procedures. The level of
business travel was higher in the year ended 30 June 2023 reflecting a full year of the easing of COVID-19 pandemic public
health restrictions and therefore more in-person delivery of professional services and customer meetings were conducted
compared to the prior year. In addition more healthcare sector conferences and trade shows were held as in-person events
rather than virtual.
Although we currently do not calculate estimated emissions from employee commuting, we believe that qualitative
commentary on this aspect would be helpful context for readers of this report because the Group’s employees do not have
a daily commute to their workplace. The ESG Statement explains that the majority of our US employees are home-based
and for our office-based employees our Dynamic Working Framework enables flexibility in working arrangements between
their home and the office. Therefore our office-based employees do not have to commute to an office every day. From a
comparative point of view, the extent of employee commuting during the year ended 30 June 2023 was higher than in
the prior year reflecting a full year of being able to work in our offices following the lifting of restrictions in relation to the
pandemic.
In relation to another element of Scope 3 emissions, the providers of the cloud services and data centres, used by the Group,
have carbon reduction or carbon neutral goals and many sustainability and ESG initiatives.
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Strategic Report: 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’. We provide solutions and services which improve operational
and financial performance, allowing our customers to focus their resources on healthcare priorities, benefitting their
patients and communities.
Over several years Craneware has developed many initiatives which contribute to its sustainability credentials and we
continue to develop a number of programs and opportunities to positively impact the community around us.
In recognition of the increasing importance to stakeholders of sustainability considerations and their monitoring and
measurement, the Board decided that an ESG Committee should be established during the year ended 30 June 2023
to coordinate the ESG-related policies and initiatives and to align these to a more formalised governance framework
appropriate to the Group. The Board envisages that the ESG Committee will enable a coordinated and measured
approach, at an operational level, to the Group’s many activities under the sphere of sustainability (focussed on ‘Social’
and ‘Environmental’ initiatives).
ESG Committee
The Chair of the ESG Committee (appointed by the Board) is Issy Urquhart, the Chief People Officer and executive Director
of the Company. The membership of the ESG Committee includes senior representation from across the business.
The terms of reference of the ESG Committee were approved by the Board and the Board maintains oversight receiving
regular updates.
The general purpose of the ESG Committee is to provide assistance to the Board in implementing the sustainability
strategy and reviewing the ESG practices and initiatives ensuring they remain aligned to the ESG strategy.
The remit of the Committee is on three key focus areas: ‘Community’ and ‘People’ which form our social agenda and
‘Environmental’ matters. The Committee also supports the Board’s governance responsibilities in respect of sustainability.
Since formation the Committee’s time was directed to support the Board’s responsibilities in relation to climate-related
considerations as referenced in the Non-Financial and Sustainability Information Statement. The Committee’s activities
continue to evolve as we progress further initiatives in each of the key focus areas, including the oversight of operational
measures for reductions in energy use and emissions to enable the reduction in the Group’s environmental impact,
aligned to national governments’ net zero emission targets by 2050.
Other activities of the ESG Committee included the following:
• Reviewing availability of emissions data, particularly for our US offices and from significant vendors;
• Consideration of the extension of energy use and Scope 1 and 2 emissions data collection and reporting beyond the
mandatory UK only information;
• Reviewing climate-related risks identified through the Group’s risk management procedures, and mitigating actions;
• Consideration of different climate change scenarios and an overview of potential impacts;
• A review of various ESG initiatives including a review of plans and updates on progress;
• A review of business travel procedures and availability of carbon / emissions data; this will be progressed in FY24;
• Assisting with responses to ESG questionnaires received from shareholders.
Three key focus areas have been approved by the Board, appropriate to the Group’s Purpose and responsibilities, to serve
as a framework within which the Group’s ESG efforts are prioritised and to direct the work of the ESG Committee. These
are summarised below:
ESG Framework: Key Focus Areas
Community
• Customer needs met in support of their
community impact
• Advocacy for care access through
hospitals and clinics
Community
• Corporate Social Responsibility focused on
philanthropic and economic impact
• Diversity, Equity & Inclusion
• Engagement
• Learning Culture
• Wellbeing
People
• Facilities
• Travel
• Data Centres
• Vendors
Environment
Enviro n m e
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Peo p l e
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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 registered 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
provision 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 on 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.
Within its portfolio of solutions available to support
customers, The Craneware Group provides software
solutions for optimising performance related to the
relationship between eligible hospitals 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.
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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.’*
Eligible 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
The 340B program does not present a cost to US taxpayers;
the savings come from manufacturer discounts on
outpatient medications. The percentage of 340B sales, of the
total sales of medication in the US, has steadily increased
over the last decade, with an emphasis on pharmacy
participation and the high cost of specialty medications
accounting for much of the growth.
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.
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.
In March 2023, The Craneware Group publicly announced
that it supports and underwrites the advocacy group ‘340B
Matters’.
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Our Solutions benefit our Customers and their
Communities [Cont'd]
About 340B Matters
340B Matters is an informational campaign that seeks to
protect the 340B program for the non-profit healthcare
facilities and patients who benefit from it. 340B Matters is
supported and underwritten by Sentry Data Systems, Inc.,
now The Craneware Group. The 340B Matters website is at
www.340bmatters.org
The core mission of 340B Matters is to protect the 340B
program from corporate entities aiming to severely restrict
access to reduced cost outpatient medications for non-profit
healthcare organisations. 340B Matters supports patients
over profits; the advocacy group lends a voice to all safety-
net hospitals that provide accessible and affordable care to
their most vulnerable populations.
The Craneware Group, in stepping forward as the power
behind 340B Matters, demonstrates our continued and
unwavering commitment to being more than just a
revenue intelligence and 340B performance partner. We
are committed to transforming the business of healthcare
with our customers, closely engaging with them to achieve
operational and financial goals that make healthcare
more accessible and affordable for more people; including
advocacy efforts to support safety-net providers and their
mission to serve the unmet need in their communities.
Supporting our customers with 340B management –
responding to industry demands impacting our customers
our solutions and related services, we assist them in solving
problems efficiently and aligning data sets to provide
actionable insights that are digestible, achievable and
measurable. In doing this we help our customers optimise
their revenue, allowing them to stretch scarce resources
further across their communities’ healthcare.
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.
As explained within the Operational and Financial Review
sections of this Strategic Report, 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 Customers
Customer engagement
We recognise the importance of, and are fully committed
to, engaging with our customers in meaningful, two-way
conversations. Understanding the needs of 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. We have outlined some of these initiatives below:
Example: The Craneware Group is helping Covered Entities
contend with contract pharmacy exclusions
How we engage: examples of our Customer
Engagement initiatives
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 24
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.
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
We partner with our customers through the provision of
The Advisory Council powered by The Craneware Group
This forum represents leadership from within The
Craneware Group as well as key leaders from our
customer organisations. The Advisory Council focuses on
themes central to revenue integrity and 340B program
management, compliance, 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
their communities as well as informing Craneware on
issues of strategic importance related to the market, our
applications and services; meeting the evolving needs of
healthcare organisations through strategic, focused effort
to transform the business of healthcare. Ongoing member
feedback is also collected through surveys and thought
leadership projects. The Advisory Council are also asked to
participate in Communities of Practice training sessions and
attend webinars delivered by The Craneware Group.
Executive Relationship Program
This program provides our strategic accounts an exclusive
experience with executive and senior leaders at The
Craneware Group. This program connects c-suite executives
and decision makers with executives within The Craneware
Group enabling us to grow and foster relationships over
the course of the customer journey to better support our
customers in transforming the business of healthcare.
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The Craneware Group Performance Summit
Customer Experience
The Performance Summit is our key customer event held
annually in October. The event is a broader opportunity
to engage customers, providing users of The Craneware
Group’s applications and services with educational and
networking opportunities. We have seen an increase year
after year in attendee numbers to this event since it moved
to a virtual format in 2020.
Educational webinars
The Craneware Group regularly offers complimentary live
webinars providing training and thought leadership across
our solutions. Webinars cover live demonstrations of our
solutions and also educational topics including billing,
coding and regulatory changes which impact hospitals’
revenues and costs, including compliance with the 340B
Program.
Advocacy
An overview of our advocacy activities is provided
above. The Craneware Group is involved in a range
of annual advocacy events, including webinars and
speaking engagements in relation to the 340B Program
and committee participation with leading advocacy
organisations.
Publications
The Craneware Group’s thought leaders contribute to blogs,
newsletters, case studies, white papers, and insights to
provide customers real-time content on breaking industry
news and software functionality. Our 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.
The customer experience encompasses everyone at The
Craneware Group, and we work across all departments
to place the customer’s voice at the centre of everything
we do. We base our efforts on a robust data collection
process that analyses customer sentiment to help us
identify opportunities for improvement. This information is
instrumental in the development of our customer journey
map, visually detailing how we can help customers at
every step. We train our employees to put the needs of
customers first, with a bias toward action. In addition, we
regularly monitor all customer experience initiatives using
a dashboard of internal metrics intentionally selected to
encourage continuous improvement. The Craneware Group
has a department dedicated to customer experience to
provide oversight and to coordinate our efforts in these
activities.
Account Management Survey (for customers of our
340B Program solutions)
In January 2023 our 340B account executives added a new
survey to the automated transactional questionnaires we
send to our customers through our customer relationship
management platform, providing an additional feedback
loop for continuous improvements in our customer
experience. The Craneware Group donates $5 to the
American Cancer Society each time a customer completes
this type of survey.
Customer Care Team (for customers of our Revenue
Integrity solutions)
This is a designated team of problem-solving, relationship
specialists. Their focus includes partnering with customers
to engage and optimise the value of our solutions, services,
webinars, and expert advice.
The Academy
KLAS Results
The Academy is our knowledge centre, with a triple aim:
professional development, Craneware knowledge, and
industry knowledge. Access to The Academy allows our
customers to access materials specific to their needs and the
use of our solutions. The Academy provides a high standard
of healthcare financial industry training to support ongoing
customer education and certification. This is complemented
by courses that provide testing scenarios and hands-on
practice within the system. We enjoy recognising and
celebrating our customers on their certifications.
Instructor Led Customer Training Programs
The Craneware Group offers over 50 different courses to
our 340B customers who can select from various topics
to address their product training needs. In addition, we
host the foundations courses and webinars for external
customers. The Foundations program is a 12-week instructor
led program for our 340B solutions with the option for an
annual recertification.
KLAS’s annual “Best in KLAS” report provides unique insight
gathered from thousands of healthcare organisations across
the US. Best In KLAS is a recognition awarded to vendors
whose solutions help healthcare providers deliver better
patient care.
As highlighted in the Operational Review section of
this Strategic Report, The Craneware Group's Trisus
Chargemaster secured top ranking in the Chargemaster
Management category of the ‘2023 Best In KLAS Awards:
Software & Services’. We received a 91.3 overall score from
our customers. The Craneware Group has also witnessed
continued improvement for its Sentinel and Sentrex
solutions in the 340B Management Systems category, with
the overall score from our customers this year being an
increase from our previous rating in 2022.
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Our People
People are at the heart of every connection we build,
whether it be with our customers or our employees. We
recognise the value of our employees and that the success
of The Craneware Group is due to their efforts.
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 values and
characteristics (guiding principles) which also connect to
each competency in our competency model, strengthening
the way in which the organisation recognises the
Framework within employee contribution management.
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.
One of the outcomes of Contribution Management is to
assess that the values and characteristics, along with the
competencies, are being demonstrated in how our team
members deliver their day-to-day contribution which
is in turn recognised and linked to reward throughout
the organisation. We celebrate employees who embody
our Framework through an employee nominated annual
Framework Award which is presented to employees who
have demonstrated the values to the highest degree.
Diversity, Equity 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 do not tolerate any sexual, physical or mental
harassment of our employees. We operate an equal
opportunities policy and specifically prohibit discrimination
on grounds of colour, ethnic origin, gender, age, religion,
political or other opinion, disability or sexual orientation.
We do not employ underage employees.
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 2022: 47%
female and 53% male employees). At Operations Board plus
vice president level, the composition is approximately 34%
female and 66% male (at 30 June 2022: 37% female and
63% male employees). The Board of Directors is 33% female
and 67% male directors (at 30 June 2022: 25% female and
75% male directors). The average base salary for female
employees compared to male employees is approximately
1.04:1.
We monitor diversity data across the employee lifecycle
spanning applicant tracking for open positions, hiring
decisions through to pay and promotion decisions during
employment which includes gender, ethnicity, age data.
The following chart shows the ethnicity profile at The
Craneware Group as at 30 June 2023 which was 66.5%
White; 24.9% Black, Hispanic, Asian, Indigenous/Native,
or Two or more Ethnic groups; with a further 8.6% of
employees not specifying ethnicity.
In the year to 30 June 2023, we continued to evolve our
Diversity, Equity and Inclusion (‘DEI’) programme. Our
focus was on ensuring our day to day practices had a lens
on equity and inclusion such as updating our employment
policies where appropriate, scrutinising our pay and
promotion decisions, and introducing additional inclusive
benefits such as our fertility benefits. We also held sessions
for managers on Mental Health Literacy and gathered
information on DEI from our engagement survey. In the
year ahead, we will relaunch “Craneware Spaces” our Group-
wide DEI programme. This will include accumulating more
data from our employees to support decision making,
hosting education sessions, engaging community partners
in talent acquisition, and elevating the DEI content in our
leadership development programmes.
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Employee engagement and communication
All-employee Townhalls
The Craneware Group is dependent on having an engaged
team, that is motivated and aligned with the Group’s values
and culture. We recognise the value of our employees and
that the success of the Group is due to their efforts.
How we engage: examples of our Employee
Engagement activities
Advocacy Group
Towards the end of FY23 we commenced a review of our
employee engagement and advocacy approaches which
included the review of our employee advocacy group,
taking into account considerations of this body for the
longer term. This review considered the size and scale
of the organisation and the cultural requirements for
an organisation across two geographies with the aim to
implement the proposed solution during the first half of
FY24. This group will continue to have the remit of being
a platform for the voice of the employee, providing a
continual feedback loop to leadership and a resource and
support for employee-led initiatives.
Employee engagement surveys
In February 2023, we held our annual employment
engagement survey. A range of questions around
leadership, management and the strategy were included.
As well as quantitative feedback, employees were also able
to provide text comments. We had a high response rate of
84% and we were therefore confident acting on the results.
The overall engagement index was 71, which increased
our index closer to previous norms and there were several
highly scoring areas from the survey. In addition, results
from the engagement survey informed a Group-wide action
plan to focus the on lower scoring areas. Each action plan
area has an Executive Sponsor, and they are partnered with
a change practitioner to ensure successful outcomes from
the action plan. Regular updates regarding progress and
the status of the Group-wide action plan are communicated
regularly through cascades and on the Group’s intranet.
Managers can access their own manager dashboard
within the survey tool and create localised action plans to
complement and reinforce the Group-wide action plan. The
results from the survey and the Group-wide action plan
were presented to the Board of Directors and the Board are
updated on action plan progress.
To continue to improve the way The Craneware Group
measures engagement and drives engagement outcomes, a
new engagement survey provider has been chosen and is in
place from early in FY24.
Annual all-employee meeting (plus mid-year update)
A key part of the meeting is the explanation and cascade
to all employees of Group-wide strategic themes and
outcomes, as agreed by the Board, and related operational
plans and deliverables (with key performance indicators).
The teams are provided with regular updates on these
strategic themes and progress with deliverables throughout
the year through cascades from the Operations Board as
well as on the Group’s intranet. The event also provides
employees with updates regarding product development
and customer engagement activities in addition to an
overview of US healthcare sector trends.
On a minimum six monthly basis, usually following the
full and half year financial results announcements, an all
employee update 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 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
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 is also a place for employees to
recognise their colleagues through a digital notice board
called ‘Cudos, Cheers and Chat’; Cudos being the name of
our 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.
Each week a 30 minute ‘Craneware Information Mini Series’
Teams meeting 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, including
regular updates from the Craneware Cares team.
Leadership Roundtables
The Leadership Roundtable is an informal face-to-face
gathering of one or two Operations Board members and
8 to 10 employees (which is a mixture of employees from
different departments with various tenure). The Chair of
the Board of Directors attended one of the Roundtables
during the year. The purpose is for Leadership to get to
know the employee population better, to learn about their
experience of The Craneware Group, and to understand
the challenges they may be facing and potential solutions
they have. This is also a great opportunity for employees to
get face time with the leaders and to learn more about The
Craneware Group from their perspective.
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 ‘Our Community’ section below.
The Stakeholder Engagement overview section from page
52 explains how employee engagement outcomes are
considered in the discussions and decision making of the
Board of Directors
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Our People [Cont'd]
Office working space
The Craneware Group has offices located in Edinburgh
(UK), Pittsburgh (US), and Deerfield Beach, Florida (US).
Our head office in Edinburgh was extensively renovated
and refurbished in FY22 with the re-design of the space
complementing 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. Our office premises, and related initiatives, are
described further in the Environment section below.
Lean initiatives
The Craneware Group has a continuous improvement
mindset that embraces a Lean culture which respects
and empowers employees. 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 are
lean, 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.
Talent Acquisition and Onboarding
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. Hiring managers also undergo
unconscious bias awareness sessions through our manager
LINK programme. 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. We have a comprehensive
corporate onboarding programme which is delivered online
through the Academy learning management system. In
addition to the corporate onboarding, hiring managers also
deliver department specific onboarding.
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.
The Craneware Group endeavours to provide an
environment and culture where all employees can develop
their skills. Our 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 employees wish to
complete.
Career Pathways, which are available for reference on the
Group’s intranet, illustrate the possibilities and potential
routes to career progression, serving as a resource for
employees with management support to develop their
careers within The Craneware Group.
Craneware’s employee learning management system, called
the Academy, hosts on demand learning solutions, covering
a wide range of topics. Each employee has a personal
log-on and account within the portal system which allows
the allocation and tracking of training including product
knowledge; leadership development; process guides; and
onboarding modules for newer employees. The system also
enables the control of (and tracking of ) mandatory and
annual training modules.
LinkedIn Learning, also an online training platform,
provides employees with on demand access to over 16,000
instructor led courses covering a wide range of business
and technology skill sets. The Craneware Group enables full,
unlimited, access to LinkedIn Learning for all employees.
Managers have the ability to create learning pathways
and customised curriculums supporting both individual
and team development and also complementing the
onboarding process. During FY23, our employees invested
more than 4,200 hours on training modules through the
Academy and LinkedIn Learning.
In addition, we have three categories of leadership
programs to bring together and further develop internal
leaders. This includes LINK which is a program of bite
sized sessions on leadership and management topics led
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.
The Craneware Group also supports individualised
professional development and other development in line
with role-based requirements to meet business needs.
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Reward
Health & Safety
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 and keep pace with the market through
compensation structures which are developed from robust
benchmarking.
The Group has a median pay positioning policy and as such
has sought to position, on average, base salaries at the
median of the market for all employees in respect of their
role, their contribution and company affordability.
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. We also
commenced the introduction of fertility benefits in both the
UK and US in support of our DEI programme.
In the UK, Craneware offers employees the opportunity
to participate in Cyclescheme, Techscheme and season
ticket loan arrangements. All employees can also access
discount platforms which offer a variety of discounts on
specified purchases and expenditure including grocery
shopping, insurance, travel and leisure events and
activities. We enhanced our benefits offering in FY23 for UK
employees including the addition of company-paid critical
illness insurance and the availability of a range of health
assessments. An electric vehicle leasing scheme, through a
salary sacrifice arrangement, is being introduced in FY24.
During FY23 we also reviewed our various leave policies
to ensure that they are inclusive and equitable across all
employee populations.
The Remuneration Committee of the Company’s Board of
Directors recognises the importance of providing a wider
population of our employees with the opportunity to
become Craneware plc shareholders in the future, which
promotes alignment to shareholder interests and aids
recruitment and retention. As such, share option awards
were granted during the year to employees in junior roles
in addition to the usual senior leadership grants. Further
details are included in the Remuneration Committee’s
Report.
We also 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 FY21.
Recognition
Employee recognition is embedded into Craneware’s
culture, and includes an extensive range of opportunities for
recognition, from casual recognitions to formal annual peer-
nominated awards. The Cudos programme, as it is known,
also includes service commitment awards, and informal peer
to peer acknowledgements.
The Health & Safety Committee, which is chaired by
our Chief People Officer, meets on a quarterly basis
to review related topics, discuss proposals, and make
recommendations. These activities are reported to the
Group’s Risk and Compliance Committee.
Our Health & Safety Committee operates cohesively
across the organisation and it conducts reviews to ensure
compliance with legislation, guidelines, training and
certification both in the US and UK. Our focus is to ensure
that we comply with health and safety requirements in our
offices including the management of the retirement of our
Atlanta office and, in FY24, the relocation of our Deerfield
Beach office, as outlined in the Environment section below.
In accordance with our Health & Safety policy, we have a
shared responsibility with employees for achieving safe
working conditions, both in our offices and whilst working
from home or any other remote location and achieve this
by ensuring our Home Working & Display Screen Equipment
assessments meet current regulations as well ensuring
our employees are knowledgeable of our lone working
policies and procedures. In addition, we review our business
continuity plans, and our physical security plans, at least
annually to ensure that our policies and procedures provide
a safe working environment for all our employees.
As part of creating a safe work environment for our
employees, The Craneware Group tracks all Health & Safety
Incident Reports. There was one incident reported across
all of the Group’s offices and our home-based employees in
FY23.
The Craneware Group endeavours to support our employees
in their wellbeing. We do this by conducting safety sessions
in our offices and introducing our new employees to both
our First Aiders and our Mental Health First Aiders. We also
train our managers in supporting their teams with their
wellbeing. In FY23, we introduced a question into our
Employee Engagement Survey about employee wellbeing.
This survey question scored highly, and employees left
comments in the survey in recognition of the support they
receive from their managers about their wellbeing. Further
information is provided within the Wellness section below.
Craneware Wellness
Our Dynamic Working provides flexibility in working
arrangements for our office based employees supporting a
balance between work and life demands and demonstrates
our commitment to the wellbeing of our team.
The Craneware Wellness programme is designed to
encourage and support a healthy lifestyle for our employees
by providing educational tools and resources and having fun
with challenges and events. There is a section of the Group’s
intranet which is dedicated to Wellness information. In FY23
we launched our new wellness tool which is a platform that
provides more opportunity for employees to access wellness
awareness and education and the tool facilitates the creation
of fun challenges across the organisation or in a smaller
group of colleagues. We have reintroduced the provision of
in-person yoga classes in the Edinburgh office. Our US
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employees receive a cash incentive for attending their
annual preventative care appointments in support of their
wellbeing.
The Craneware Group strives to be an organisation where
employees feel supported and empowered to speak about
their mental health. Our Mental Health First Aiders are non-
judgemental points of contact and reassurance to anyone
experiencing a mental health issue or a mental health
crisis 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 our Mental Health First Aiders.
All employees have access to an Employee Assistance
Programme which offers access to a confidential helpline 24
hours a day, 365 days a year.
Our Community
‘Our Community’ Focus Area also encompasses our
commitment to corporate social responsibility and
community engagement. Complementing our Purpose and
reflecting the causes which are important to our employees,
The Craneware Group has for many years continually
developed 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 and important
part of life at Craneware; they coordinate our approach
to charitable giving and corporate responsibility within
our communities. The Craneware Cares Foundation and
Craneware Cares, which operate through an internal
committee, have both been in operation for several years
and over this time they have expanded the scope and scale
of their activities.
An executive committee and various sub-committees
comprising employees from across the business coordinate
all charitable giving and volunteering for the Group in
both the US and the UK. All charitable giving in the US is
distributed through the Craneware Cares Foundation, an
official charitable foundation.
Craneware Cares continued with its ‘Spotlight Charity’
model of planned yearly fundraising in FY23. Our quarterly
charities again alternated between US and UK based
charities, which are nominated and chosen entirely by
employees. In the year ended 30 June 2023, Craneware
Cares supported the following four diverse organisations
selected as our Spotlight Charities:
• Action for Children (UK)
• The National Breast Cancer Foundation (US)
• The Trussell Trust (UK)
• The Wounded Warrior Project (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.
In addition to supporting these quarterly Spotlight
Charities, Craneware Cares continued to support our
longstanding ‘Lotus Backpack’ fundraising campaigns and
further additional causes throughout the year, including
ad-hoc employee fundraisers and charity work. Supporting
our employees in their personal charitable endeavours
is a core and popular component of the Craneware Cares
identity and we not only provide monetary support but also
‘Volunteer Time Off’ (VTO) days for employees so they can
volunteer in their local communities.
Some of the causes which Craneware Cares assisted during
the year ended 30 June 2023 included the following wide-
ranging initiatives:
• A ‘Charity Golf Classic’ golf tournament and charity
auction was organised by The Craneware Group
which raised funds for Action for Children, our
selected Spotlight Charity at that time of the year.
• A team of our UK employees took part in the
‘Pentlands Peaks Challenge’ which involved the
team hiking up two peaks in the Pentlands Hills near
Edinburgh to raise donations for the nominated
charities for this event.
• The UK Lotus Backpack campaign involved a
donation of holiday gifts of art kits and clothing for
disadvantaged children in the Edinburgh area. In
the US, the Lotus Backpack committee completed
a successful Fall Fundraiser in support of two elder
care projects. The Spring Fundraiser also benefitted
from generous employee donations and corporate
donation-matching that supported three animal
charities to purchase care items and medical coverage
for pets.
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 large fundraising drive,
involving a number of activities across the whole
organisation. These included an activity challenge on
our company nominated wellness app which raised a
total of over $4,500 thanks to the collective efforts of
many employees in the UK and in the US.
In September and November 2022, two hurricanes
made landfall in Florida and caused terrible
devastation. Craneware Cares made a donation
to Feeding South Florida in order to assist people
displaced by these extreme weather events.
•
•
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• When communities and infrastructure in parts of
Turkey and Syria were significantly affected by a
devastating earthquake in February 2023, one of our
Edinburgh-based employees initiated a fundraising
campaign for the World Care Foundation’s Earthquake
Aid Appeal and Craneware Cares matched all
employee donations. This helped raise funds to
provide essential aid to people in Turkey and in Syria
affected by the tragedy.
• The arrangements for our Atlanta office closure, as
described within the Environment section below,
enabled us to donate boxes of unused office
supplies to our long-term charity partner in the US,
Thomasville Heights Slater Elementary School, to
support their students. Craneware Cares also made a
donation to the school’s campaign to provide special
t-shirts to their final year students.
• The Craneware Group also donated prizes to charity
auctions in the UK for Cancer Research UK and The
Yard.
The Craneware Group’s mid-year organisation-wide meeting
in January 2023 gave UK employees the opportunity to take
part in a number of activities to support charitable causes
during the face to face meeting including the donation of
items to a local food bank and the Edinburgh Dog & Cat
Home. In addition, employees helped to stuff over 100
teddy bears for The Teddy Trust, a UK-based charity which
works with aid agencies and other charities to ensure that
the teddy bears reach children across the world who are
affected by war, poverty or abuse. All the profits from a
corporate-branded merchandise stall and other charity
donation initiatives throughout the day contributed to a
great fundraising total to benefit several UK based charities.
During the year, Craneware Cares also supported many
charities in the US and in the UK, delivering aid, research
and support in a range of sectors, brought to the attention
of the committee by our employees through their own
charity work.
In total during the year ended 30 June 2023, Craneware has
contributed $40,706 (FY22: $47,943) to over 30 charities
across all of our many fundraising campaigns, employee-led
donations and corporate donations.
The employee-hosted ‘Craneware Information Mini Series’
(‘CIMS’), as explained in the Employee Engagement section
above, is frequently used to provide updates and cast a
spotlight on the various CSR initiatives across the Group,
and to showcase how employees can get involved and
support the Craneware Cares programmes. The CIMS
sessions can be interactive whereby messaging and chat
during and after the session is encouraged as part of this
weekly forum.
In addition to these initiatives, the Craneware Cares team
organise quarterly social gatherings both in person and
virtually.
Volunteer Time Off (‘VTO’)
We also encourage the fundraising activities of Craneware
Cares to be supplemented by Volunteer Time Off days so
employees can take paid leave to support projects and
charities in their own communities.
During the year our employees had the opportunity
to take part in volunteering opportunities as part of a
‘VTO Day in May’ campaign. This was inspired in the UK
specifically by the national volunteering initiative, ‘The Big
Help Out,’ in honour of the King’s Coronation. This resulted
in many employees both in the UK and US volunteering
in a range of community-based events and initiatives
spanning healthcare, animal rescue services, community
environment, educational and youth projects, clubs and
events.
Environment
Craneware aims to minimise any environmental impacts
of its business activities. As a SaaS company we are not
involved in any energy-intensive processes nor do we
generate significant waste. We have leased office facilities.
Whilst our environmental impact is relatively low compared
with other sectors, this does not reduce our commitment to
reducing our environmental impact.
We are in the initial stages of our journey to measure and
reduce our impact on the environment, however we are
committed to making continuous improvements. This has
been part of the work of the ESG Committee during the
year, as described in our Non-Financial and Sustainability
Information Statement. 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 and with operational coordination
by our ESG Committee.
Facilities and employee working arrangements
Across the organisation we utilise leased office premises
located in Edinburgh (UK), in Deerfield Beach, Florida (US)
and in Pittsburgh, Pennsylvania (US). Whilst the acquisition
of Sentry in July 2021 resulted in the Group gaining
additional rented office space in Florida, our office footprint
in the US is relatively small in comparison to the number
of our employees; the majority of our US employees are
home-based. Our Dynamic Working Framework also
significantly reduces the impact of daily commuting upon
the environment.
As a consequence of the changes in how our employees
choose to work, the types of spaces they prefer to work and
collaborate in, and as a consequence of our commitment
to the environment, we have reviewed our facility
requirements. As a result of this review, we made
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Environment[Cont'd]
Facilities and employee working arrangements [Cont'd]
two significant decisions about our US office space. We
decided not to renew the lease for the office space in
Atlanta, Georgia (US) and during the second half of FY23
this office was slowly decommissioned, with the lease
expiring in October 2023. In addition, we decided to move
office premises in Deerfield Beach in Florida, reducing our
facilities footprint and this relocation is planned to occur in
the second half of FY24.
As part of the decommissioning of the Atlanta office and
the planning for the move to the new office space in
Deerfield Beach, we are implementing sustainable practices
as far as practicable. We donated a wide range of items to
local organisations such as homeless charities and schools
rather than allow serviceable goods become landfill.
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.
Our rented office space in Deerfield Beach, Florida is
within a property which holds the globally recognised
‘Leadership in Energy and Environmental Design’ (LEED)
certification focused to be environmentally responsible and
use resources efficiently. Additionally, this property has an
Energy Star rating of 88 which promotes energy efficiencies.
The rented office suite which we used in previous years
and for part of FY23 located in Atlanta, Georgia (US) is also
recognised with sustainability achievement and awarded
with the Gold LEED Certification.
Greenhouse gas emissions and energy use in our rented
office premises are summarised within the Non-Financial
and Sustainability Information Statement on pages 31 and
32.
The Craneware Group actively encourages employees to
move to a paperless environment and reduce printing
requirements whenever possible. All offices have recycling
points for paper, cardboard, tins, and plastic throughout
the suites. Throughout FY23 we have moved to more
sustainable practices, where possible, such as reducing the
use of single use plastic for water consumption in our US
offices.
Our facilities-related plans for FY24, with oversight and
direction by the ESG Committee, include the following
initiatives which will assist in our aims to reduce our
organisation’s environmental impact:
• Enhancing employee engagement in environment-
related initiatives through a more active campaign
driven from the ESG Committee;
• Updates to be provided to employees regarding our
recycling arrangements at our offices and reminders
to be enhanced at onboarding;
• Further reduction in single use items in our offices
and, when necessary, continue to source and use
biodegradable items whenever single use items are
unavoidable;
• Ensuring sustainability considerations continue to be
factored into the arrangements for the fit out of new
leased office space in Deerfield Beach, Florida; and
In the planning and management of the relocation
to new leased office space in Deerfield Beach, a focus
on minimising the extent of items going to landfill:
reuse, recycle or donate.
•
Vendors
As part of The Craneware Group's environmental
sustainability goals we aim to partner with vendors who
have a strong commitment to the environment wherever
possible. This has led to many previously internal IT services
being migrated to a 100% carbon neutral cloud services
vendor and ensuring our data centre providers are using
renewable energy for power and cooling and/or have
strategies in place to reduce emissions in line with climate
science through science-based targets.
Travel
We do not provide company vehicles to employees or
Directors nor do we operate any form of vehicle fleet.
Although there has been some increase in trans-Atlantic
and domestic US business travel in FY23 (being a full year
without COVID-19 pandemic public health restrictions),
as a mainly virtual workforce, we continue to leverage
technologies such as video conferencing as an alternative
to travel. When domestic travel is deemed necessary
within the US, we encourage booking via a travel portal to
enable data collection and review, as we continue to aim to
progress to more sustainable travel practices.
Relative to the size of our team, the overall daily
commuting time and distance incurred by our employees
(and consequently the related emissions generated by that
activity) is not extensive. As described above, the majority
of our US employees are home-based and our office-based
employees across the Group work flexibly between their
home and an office under our Dynamic Working Framework
which significantly reduces the impact of daily commuting
upon the environment.
The leased 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.
In addition, the Company encourages and helps facilitate
carpooling arrangements in the UK.
Our planned travel-related initiatives for FY24, with
oversight and direction by the ESG Committee, include:
•
Introduction of salary sacrifice electric vehicle leasing
scheme for UK employees;
• Regular and ongoing communication with UK
employees about the relevant benefits of the Cycle
to Work scheme and season ticket loan scheme in
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support of public transport arrangements;
• Further development and updates to our business
travel policy and data availability when travel and
accommodation choices are viewed by employees,
prior to booking. This is intended to allow more
informed decisions (including, when available,
carbon-related considerations by employees) when
selecting travel and accommodation for essential
business trips; and
• Facilitating employee engagement in travel and
environment-related initiatives through the
introduction of a subgroup of the ESG Committee to
help drive these activities.
Shareholder communications
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.
Governance
The Board of Directors of Craneware plc seeks to continue
to ensure the overarching objective that the governance of
the Company and the Group 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.
Recognising the importance of corporate governance
matters, Craneware plc (an AIM listed 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. The Board is primarily responsible for the overall
conduct of the Group’s business and for promoting the
long-term success of the Group. Our Corporate Governance
Report is set out on pages 66 to 79 which includes an
explanation of our corporate governance arrangements
including the Board composition, committee structure and
responsibilities.
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 the Company’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 &
HITECH as amended) in the US and General Data Protection
Regulation (GDPR) (EU and UK), which have 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 customer and corporate 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.
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:
Chief Technology Officer; Information Security; Information
Technology Infrastructure; Platform Engineering; DevOps
and Corporate Risk and Compliance. The Craneware Group
employs a dedicated Information Security Team and
additionally 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 company’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,
since 2019 The Craneware Group has maintained HITRUST
Certification for its Trisus, InSight solutions and Corporate
Services, as well as associated operational processes. It is
an external, validated audit of Craneware’s security and
data privacy practices based on the US Government’s
National Institute of Standards and Technology (NIST)
CyberSecurity and Privacy Framework, ISO27001 and HIPAA.
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
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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.
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.
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Governance [Cont'd]
Information security, data security and data protection
[Cont'd]
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 each intervening
year. For HITRUST, our products and corporate infrastructure
are evaluated against nearly 600 controls mapped across 19
domains including Infrastructure Protection and Security,
Configuration Management, Vulnerability Management,
Third Party Assurance, Business Continuity/Disaster
Recovery, Risk Management and Data Privacy. Our portfolio
of product groups regularly conducts penetration testing
using external security testing companies. The testing
occurs in conjunction with major product updates and no
less than annually.
340B Sentinel & Sentrex, and Trisus Decision Support
applications meet American Institute of Certified Public
Accountants (AICPA) Service Organization Controls (SOC)
requirements, completing the external audit verified SOC
Type II assessments annually.
The Craneware Group engages with third party auditors to
support effective security practices and compliance with
appropriate regulations. We 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
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47
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 2023.
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)
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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
•
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Craneware’s aim, driven by its purpose, of
generating long term value for its
stakeholders through its business model and
strategy
Principal Risks and Uncertainties
Viability Statement
Employee engagement and communication
Diversity, equity and inclusion
Heath and Safety
Employee wellness programmes
Dynamic Working Framework
Employee learning and development
initiatives
Employee reward (including share plan
awards)
Stakeholder engagement activities
Consideration of Environmental, Social and
Governance matters
The Purpose of The Craneware Group
Craneware Cares initiatives
Non-Financial and Sustainability Information
Statement
ESG Committee established
Consideration of Environmental, Social and
Governance matters and coordination of ESG
initiatives
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
38 to 42
52 to 55;
34 to 46
34 and 35;
42 and 43;
26 to 33;
34;
34 to 46
34 to 46;
66 to 79;
34 to 46
53, 73 and 74;
66 to 79
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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 give careful consideration to these factors and take them into
account 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 Environmental, Social and
Governance (‘ESG’) Statement and in the Stakeholder Engagement Overview section below, the Board identifies our Group’s
key stakeholders as:
• Our customers
• Our employees
• Our shareholders
• Our bank 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 52 to 55. The Board also recognises the importance of, and the responsibilities for,
having regard to the impact of the Group’s operations on the environment and our collective obligation, within society,
to help to address the global challenge of climate change. This is referenced in our Non-Financial and Sustainability
Information Statement.
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. Our stakeholder engagement mechanisms are
referred below, within the ‘Stakeholder Engagement Overview’ section.
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.
The following table summarises some of the significant decisions made by the Board during the year ended 30 June 2023
which demonstrate the way in which the Directors have exercised their section 172 (1) duty and the stakeholder group(s)
impacted by these decisions.
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Key Stakeholder
group(s) affected
Customers
Employees
Shareholders
Shareholders
Customers
Employees
Banks
Shareholders
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Principal decisions /
events
Actions
and impact
Strengthening
Engineering
Leadership and the
Senior Management
Team: Appointment
of new CTO
Board Composition:
Appointment of
Independent Non-
Executive Director of
the Company
Treasury-related
decisions
Aligned to the Group’s Purpose and strategy, the Board ensures that the
Group continues to invest in its team and operations. During the year
the Board has promoted Abhilesh Gandhi to the role of Group Chief
Technology Officer (CTO). In this role, Abhilesh oversees the Engineering
team and reports into the CEO and is a member of the Operations Board.
In addition, Abhilesh has a leading role within the Product Board and is
a member of the Risk and Compliance Committee. Abhilesh has over 20
years of Engineering experience including leading engineering teams in
Cerner Corporation and Sentry Data Systems, Inc.
The Board reviews its composition regularly, taking into consideration
various factors including the balance of independent directors, requisite
skills, knowledge and experience within the Board and diversity; this
is described within the Corporate Governance Report section of this
Annual Report. Following a process managed by a sub-committee of the
Board, the full Board reviewed and considered the recommendations
of the sub-committee. The Board appointed Anne McCune as an
Independent Non-executive Director of the Company on 16 November
2022.
Anne is a recognised leader in the US Healthcare industry, having served
as a senior executive for several leading academic hospital and physician
centres and as a managing director in consulting. Anne’s biography is on
page 58. The appointment of Anne has enhanced and broadened the US
Healthcare experience and skills within the Board.
During the year there have been several Board decisions relating to
Treasury considerations; some of these decisions are outlined below.
The macro-economic challenges during the year included the negative
impacts on parts of the US banking sector resulting in the unexpected
collapse of some US-based banks including, in March 2023, Silicon Valley
Bank (SVB). SVB in the UK was one of five banks in the syndicate for
the provision of the Group’s debt facility and SVB was one of the banks
used by the Group in the US for the provision of bank account services.
As a result of the acquisition of the UK arm of SVB by HSBC, the loan
syndicate has not changed and the provision of the former SVB banking
services in the US have continued to be maintained by First Citizens
Bank following its acquisition of the US operations of SVB.
The Craneware Group has relationships across multiple banks in the US
and in the UK and therefore is not dependent on a single bank and the
Group’s cash balances are held across a number of financial institutions.
The Board considered the updated assessment of the exposure to SVB,
and the wider US banking sector, immediately at the time of the SVB
collapse and the Board reviewed the policy for counterparty assessment
and cash deposit allocations.
With the increase in interest rates experienced during the year, the
Board directed that the Group should utilise $20m of its cash balances to
pay down part of the principal amount of the revolving loan in order to
lower the net interest cost going forward.
During the second half of the year the Board decided to initiate the
process to request an incremental one year extension to the debt
facilities; the right to make such a request being available within the
facility agreement. This extension was approved by the banks within the
syndicate before 30 June 2023.
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Key Stakeholder group(s)
affected
Shareholders
Banks
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Principal decisions
/ events
Actions
and impact
Capital Allocation
Policy
Dividend Policy
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.
Craneware reported positive financial results for the six month period
to 31 December 2022 together with a solid base of annual recurring
revenue. The Board approved the payment of an interim dividend in
April 2023 of 12.5p (15.13 cents) per share (2022: interim dividend of
12.5p per share (16.88 cents)).
Based on the financial position, overall group debt position 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 2023. As explained on page 61, the Directors are
recommending the payment of a final dividend of 16p (20.19 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 15 December 2023 to shareholders on the register as at 24
November 2023.
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, including the
continued investment in development of the Trisus platform and the
Group’s solutions. The Board believes that the total level of dividend
proposed for the year balances the Company’s stated progressive
dividend policy based on the Group’s financial results, the Company’s
retained earnings and the current macro-economic climate.
Share buyback
Early in the fourth quarter of the financial year, the Board concluded
that the market price of the Company’s shares at that time did not
reflect the substantial potential of the large addressable market
opportunity of the Group, nor the significant operational progress the
Group has made as it has successfully migrated to a cloud-based SaaS
model. As explained in the Strategic Report, this migration further
positions the Group to deliver on future growth and enhanced
shareholder value. As a result, the Board considered that a share
buyback would provide an optimal use of cash to deliver value for
shareholders by offsetting future dilution from existing employee
share plans.
The Board announced the commencement of a share buyback
programme (of up to £5 million) on 12 April 2023. The shares
purchased through this programme are held in treasury and will be
used to satisfy employee share plan awards. The Programme is being
undertaken using a phased approach. The Programme is operating
under the authority granted to the Company by shareholders at the
Company's Annual General Meeting, held on 15 November 2022, and
within the regulatory limit on the quantity of shares the Company may
purchase on any single day.
The share buyback programme continued after 30 June 2023 and is
ongoing at the time of approval of this report. Further details
regarding the share buyback are provided in the Directors’ Report on
page 62 and in Note 18 to the financial statements.
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51
Principal decisions
/ events
Actions
and impact
Key Stakeholder group(s)
affected
The Board has always been cognisant of the importance of
sustainability or Environmental, Social and Governance (‘ESG’) matters,
particularly in the context of the Group’s Purpose. In recognition of the
increasing importance to stakeholders of sustainability considerations
and their monitoring and measurement, on a consistent basis, the
Board decided that an ESG Committee should be established during
the year. The Board envisages that the ESG Committee will enable a
coordinated and measured approach, at an operational level, to the
Group’s many activities under the sphere of sustainability (focussed in
particular on ‘Social’ and ‘Environmental’ initiatives).
Employees
Customers
Community
Environment
Shareholders
Suppliers
The terms of reference of the ESG Committee were approved by the
Board and the Committee chair (appointed by the Board) is Issy
Urquhart, the Chief People Officer and executive Director of the
Company. Further details regarding the ESG Committee and its
activities during the year are contained in the ESG Statement.
ESG Committee
established
On behalf of the Board
Craig Preston
Chief Financial Officer
4 September 2023
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Stakeholder Engagement
Overview
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 referenced in the tables below to
denote where further details of engagement mechanisms are provided within this Annual Report.
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, 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 47 and 48.
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. During the year an ESG Committee has
been established (chaired by our Chief People Officer who is an executive Director of the Company), which reports to the Board
on a regular basis. The Non-Financial and Sustainability Information Statement and our Environmental, Social and Governance
(‘ESG’) Statement, contain details of our ESG Committee and its activities including operational oversight of relevant stakeholder
engagement programmes.
Key Stakeholders
CUSTOMERS
The Craneware Group 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.
How we engage
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. A
description of some of our customer engagement initiatives is provided within our ESG Statement.
How this was considered in Board discussions and decision making
Customer feedback regarding the value of The Craneware Group’s solutions, 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 attend trade shows and
conferences to meet with customers.
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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.
How we engage
Employee engagement is based on Craneware’s Framework and core values and the team’s commitment to our Purpose and
values is critical to The Craneware Group’s long term success.
A summary of some of our employee engagement mechanisms, including our employee engagement survey, is provided within
our ESG Statement.
How this was considered in Board discussions and decision making
The results and anonymised feedback received from the employee engagement survey 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.
With the Chief People Officer being an executive Director of the Company, 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.
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.
COMMUNITY
As part of our 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 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 in the US and UK. Details of the activities of Craneware Cares is
provided in the ESG Statement within this Annual Report.
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.
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
Our shareholder engagement arrangements are described within the Corporate Governance Report.
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 explained in the Remuneration Committee’s Report, the Remuneration Committee consulted with substantial shareholders
regarding the new long term incentive plan and considered feedback received from shareholders regarding the new plan prior
to this being proposed for approval by shareholders at the AGM in November 2022.
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.
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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 21 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.
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, including a number of meetings held around the time of the SVB Bank collapse to
ensure the smooth and continued availability of the Group’s debt facilities. 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 2023, we undertook engagement with our lenders to confirm a further
one year 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 a further 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 2023, 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.
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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 the impact on the
environment and potential climate-related risks being considered at Board level. Our governance arrangements, in respect of
climate-related considerations and other Environmental and Social (‘ESG’) matters are explained within the Non-Financial and
Sustainability Information Statement and in our ESG Statement.
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 vendors’ existing security
measures. The Group also operates 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.
Environment
Our environmental impact is relatively low as a consequence of the nature and operations of our business, however we recognise
that we have an obligation within society to help in the collective efforts to address the global challenge of climate change. Our
Non-Financial and Sustainability Information Statement and also our ESG Statement within this Annual Report provides details of
environmental aspects of our working arrangements and other environmental considerations and initiatives to assist with
reducing our impact on the environment.
How this was considered in Board discussions and decision making
The Board receives any significant information regarding our suppliers and payment practices and environmental matters in the
Board reports.
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Directors
W Whitehorn (non-executive, Chair)
K Neilson
C T Preston
I Urquhart
C Blye (senior independent director)
R Rudish (non-executive)
A Erskine (non-executive)
D Kemp (non-executive)
A McCune (non-executive) (appointed 16 November 2022)
Company Secretary & Registered Office
C T Preston
1 Tanfield
Edinburgh
EH3 5DA
Registrars
Independent Auditors
Financial PR
Link Group
Central Square
29 Wellington Street
Leeds
LS1 4DL
Investec Bank plc
30 Gresham Street
London
EC2V 7QP
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
Nominated Advisors and
Joint Stockbrokers
Peel Hunt LLP
100 Liverpool Street
London
EC2M 2AT
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
Silicon Valley Bank
(a division of First Citizens Bank)
3003 Tasman Drive
Santa Clara, CA 95054
HSBC Bank plc
7 West Nile Street
Glasgow
G1 2RG
Virgin Money
20 Waterloo Street
Glasgow
G2 6DB
Wells Fargo
500 N Magnolia Avenue
8th Floor
Orlando, FL 32803
Subsidiaries and Registered Offices
Craneware US Holdings, Inc.
Corporation Trust Center
1209 Orange St
Wilmington, DE 19801
SDS Holdco, Inc.
251 Little Falls Drive
Wilmington, DE 19808
Craneware, Inc.
3340 Peachtree Rd NE,
Suite 850
Atlanta, GA 30326
SDS Intermediate, Inc.
251 Little Falls Drive
Wilmington, DE 19808
Barclays Commercial Bank
Aurora House
120 Bothwell Street
Glasgow
G2 7JT
Craneware InSight, Inc.
3340 Peachtree Rd NE,
Suite 850
Atlanta, GA 30326
Agilum Healthcare Intelligence, Inc.
300 Montvue Road
Suite 400
Knoxville, TN 37919
Bryan Cave Leighton
Paisner LLP
One Atlantic Center,
14th Floor
1201 W. Peachtree St. NW.
Atlanta, GA, 30309-3471
Bank of Scotland
The Mound
Edinburgh
EH1 1YZ
Bank of America
101 E. Kennedy Blvd
Tampa, FL 33602
Craneware Healthcare
Intelligence, LLC
12570 Perry Highway
Suite 110
Wexford, PA 15090
Sentry Data Systems, Inc.
1946 Tyler Street
Hollywood, FL 33020
Craneware plc
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Board of Directors
The Directors of the Company and their responsibilities within the Group are set out below:
Will Whitehorn, 63
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, 54
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, 52
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, 55
Chief People Officer
Appointed 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.
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Colleen Blye, 63
Non-executive Director, Senior Independent Director
Appointed 12 November 2013
Colleen Blye is the Executive Vice President and Chief Financial Officer for Montefiore Medicine.
Responsible for financial strategy, reporting, investment and performance, Colleen’s work
strategically focuses on transformation; supply chain; information technology; population
health and care management; revenue cycle; payor relations; and ambulatory care growth.
Colleen has a distinguished background in large, complex healthcare organizations, and
previously served as Executive Vice President and Chief Financial Officer of Catholic Health
Services of Long Island. A Certified Public Accountant and member of the American Institute
of Certified Public Accountants, she is also a Member of the Greater New York Hospital
Association Board of Governors and the Healthcare Financial Management Association Board
of Directors.
Russ Rudish, 71
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, a healthcare professional services firm. Russ is also a principal in Healthcare IT Leaders
and Run Consultants, both of which provide IT staffing and consulting services and partner
in StoneBridge Healthcare, a hospital acquisition company. 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, 53
Non-executive Director
Appointed 1 March 2020
David has extensive UK public company experience. He is currently CFO of the FTSE 250
listed John Wood Group plc, a world leading consulting and engineering company operating
across the energy and materials markets, 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, 53
Non-executive Director
Appointed 24 February 2020
Alistair has held a number of senior positions within the US healthcare sector. He is currently
the Chief Information and Digital Officer of Emory Healthcare and VP of Digital Health for
Emory University, responsible to the digital transformation of the organisation. 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.
Anne McCune, 67
Non-executive Director
Appointed 16 November 2022
Anne joined the board as an Independent Non-executive Director on 16 November 2022.
Anne is a recognised leader in the US Healthcare industry, having served as a senior
executive for several leading academic hospital and physician centres and as a managing
director in consulting. She is currently a Community Board member of the Strategy and
Transformation committee at Salinas Valley Memorial Healthcare System in California, a
principal in the academic healthcare division at the ECG Management Consultants and
President and CEO of the Carol Emmott Foundation, an organisation dedicated to achieving
fully inclusive gender equality in healthcare leadership and governance. Anne holds an
MBA from Kellogg School of Management, Northwestern University and was recognised by
Modern Healthcare as one of the 2021 Top 25 Women Leaders in Healthcare.
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Directors' Report
The Directors present herewith their report and the audited consolidated financial statements of the Group for the year ended 30
June 2023.
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; adjusted earnings before interest, tax, depreciation
and amortisation (EBITDA); adjusted earnings per share; net borrowings; operating cash; net borrowings 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 13 and is incorporated into this
Report by reference. A description of the principal risks and uncertainties facing the Group is also presented in the Strategic Report.
Where the Directors’ Report, 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.
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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
Environmental, Social and Governance Statement
Corporate Governance Report
Corporate Governance Report
Remuneration Committee’s Report
Environmental, Social and Governance Statement
Directors’ Report
Corporate Governance Report
Environmental, Social and Governance Statement
Stakeholder Engagement
Directors’ Report
Corporate Governance Report
Directors’ Report
Non-Financial and Sustainability Information Statement
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
Strategic Report
Corporate Governance Report
Strategic Report
Significant Related Party Transactions
Note 24 to the consolidated financial statements
Stakeholder Engagement
Strategic Report
Subsidiary Undertakings
Viability Statement
Stakeholder Engagement
Environmental, Social and Governance Statement
Strategic Report
Note 15 to the financial statements
Strategic Report
Pages
61
66 to 79
57 to 58
9 and 10
63
93
64
42 and 43
66 to 79
72
80 to 97
38
64
72
39
53
64
74
64
26 to 33
43 to 45
63
116 to 117
104 to 151
7 to 13
61
65
75, 77 and 78
64
46
16 to 24
59
7 to 13
61
7 to 10
16
75 to 79
47 to 51
144 to 145
52 to 55
36 to 39
7 to 51
135
24
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Financial Results and Dividends
The Group’s revenue for the year was $174.0m (FY22: $165.5m)
which has generated a profit before tax of $13.1m (FY22:
$13.1m) after exceptional costs of $0.5m (FY22: $2.1m). The
full results for the year, which were approved by the Board of
Directors on 4 September 2023, are set out in the accompanying
financial statements and the notes thereto.
During the year the Company paid an interim dividend of 12.5p
(15.13 cents) per share. The Directors are recommending the
payment of a final dividend of 16p (20.19 cents) per share giving
a total dividend of 28.5p (35.95 cents) per share based on the
results for 2023 (FY22: 28p (33.96 cents)). Subject to approval
at the Annual General Meeting, the final dividend will be paid
on 15 December 2023 to shareholders on the register as at 24
November 2023.
Year
FY17
FY18
FY19
FY20
FY21
FY22
FY23
Dividends per Share
Dividend (pence)
20.0
24.0
26.0
26.5
27.5
28.0
28.5 (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 strategic and product direction are provided in
the Strategic Report contained in pages 7 to 13. The Directors
regard investment in development activities as a prerequisite
for success in the medium and long-term future. During the year
development expenditure amounted to $50.6m (FY22: $51.1m)
of which $15.0m (FY22: $13.5m) has been capitalised.
Financial Instruments
The financial risk management strategy of the Group, its
exposure to currency risk, interest rate risk, counterparty risk and
liquidity is set out in Note 3 to the financial statements.
Subsequent Events
There have been no reportable events since 30 June 2023.
Going Concern
The Strategic Report 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 13.
Going Concern
The Group is profitable and there is a reasonable expectation
that this will continue to be the case. Our business model is
delivering high levels of recurring revenue, supported by long
term underlying contracts, that deliver high levels of cash
generation. In addition, the Group has cash and cash equivalents
of $78.4m as well as a committed but undrawn facility available
to it of $60m.
The directors have prepared cash flow forecasts covering a
period of over twelve months from the date of approval of these
financial statements. These forecasts include consideration of
severe but plausible downsides, should these events occur, the
Group would have sufficient funds to meet its liabilities as they
fall due for that period. These scenarios anticipate a zero-growth
scenario, such that the only sales made by the Group would be to
replace losses of existing long-term contracts. Under this basis,
without the need to make cost savings, the Group remained in
compliance with its covenants and had no need to draw upon
the committed undrawn facility.
Based on this assessment, the Directors 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 on pages 57 and 58. The Directors who
served during the financial year ended 30 June 2023 were:
W Whitehorn
(Non-executive Chair)
K Neilson
C T Preston
I Urquhart
C Blye
R Rudish
A Erskine
D Kemp
A McCune
(Chief Executive Officer)
(Chief Financial Officer)
(Chief People Officer)
(Senior Independent Director)
(Non-executive Director)
(Non-executive Director)
(Non-executive Director)
(Non-executive Director) :
Appointed 16 November 2022
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.
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Directors [Cont'd]
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 93.
Corporate Governance
The Corporate Governance Report on pages 66 to 79 should be
read as forming part of the Directors’ Report.
Indemnity of Directors and Officers
Under the Company’s Articles of Association and subject to
the provisions of the Companies Act, the Company may and
has indemnified all Directors or other officers against liability
incurred by them in the execution or discharge of their duties or
exercise of their powers, including but not limited to any liability
for the costs of legal proceedings where judgement is given in
their favour. This indemnity was in place during 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.
buyback programme to operate under the authority granted by
shareholders at the Company's Annual General Meeting held
on 15 November 2022 and within the regulatory limit on the
quantity of shares the Company may purchase on any single
day. The share buyback programme was effected using a phased
approach and had an initial duration of three months which
was extended by a further three months. The share buyback
programme was therefore ongoing at 30 June 2023 and at the
date of approval of this report. The Company purchased 223,632
of its own Ordinary Shares in the year ended 30 June 2023
(FY22: nil) in accordance with this share buyback programme
at a total cost of £3.09 million ($3.87 million) of which £3.05
million ($3.82 million) had been paid by the Company at 30
June 2023. The shares purchased by the Company, which
represented 0.63% of the Company’s issued Ordinary Shares,
are being held in treasury (with no voting rights attached) to be
utilised in the satisfaction of employee share plan awards. The
Company has purchased a total of 253,894 of its own Ordinary
Shares under this buyback programme at the date of this report
which represents 0.71% of the Company’s issued share capital.
The Company did not purchase any of its own shares in the year
ended 30 June 2022.
Authority for purchase of own shares
Authorisation was given by shareholders at the Annual General
Meeting on 15 November 2022 for the Company to purchase
up to 3,554,217 Ordinary Shares. A resolution to renew this
authority will be proposed at the 2023 Annual General Meeting.
Share Capital
Ordinary Shares held in Treasury
The Company’s issued and fully paid up share capital at 30 June
2023 was 35,542,169 Ordinary Shares of 1p each (at 30 June
2022: 35,542,169 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
Restrictions on transfer of Ordinary Shares
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.
Purchase of own shares
On 12 April 2023 the Company announced a £5 million share
The 223,632 Ordinary Shares purchased by the Company
through the share buyback programme in the year ended 30
June 2023 (FY22: nil) are being held in treasury (with no voting
rights attached) for the purpose of satisfying employee share
plan awards. During the year ended 30 June 2023, a total
of 9,621 (FY22: nil) Ordinary Shares were transferred by the
Company from Treasury to satisfy the exercise of employee
share options. Therefore, at 30 June 2023, the Company held
214,011 Ordinary Shares in Treasury (as at 30 June 2022: nil).
Share capital allotted
During the year ended 30 June 2023, no Ordinary Shares were
issued. In the prior financial year, 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 12 contains further
details of this business combination.
During the year ended 30 June 2023, no Ordinary Shares (FY22:
15,630 Ordinary Shares) were issued on the exercise of share
options by employees.
The new Ordinary Shares issued in the prior financial year 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 regarding the Company’s share capital are
included in Note18 to the financial statements.
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Employee benefit trust
Change of control provisions
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 2023 the EBT held 365,475
Craneware plc Ordinary Shares (at 30 June 2022: 411,323
Ordinary Shares). The EBT waived its right to dividends in the
year ended 30 June 2023. Further details regarding the EBT are
contained in Note 18 to the financial statements.
Within the Group’s revolving loan facility (as detailed in Note 21),
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 47 to 51.
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 52
to 55.
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. 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. 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 2023 is contained on page 32 of
this Annual Report within the Non-Financial and Sustainability
Information Statement. The Group is also required to provide
climate-related disclosures in accordance with the Companies
(Strategic Report) (Climate-related Financial Disclosure)
Regulations 2022 (with these disclosure requirements now
being contained in section 414CB of the Companies Act 2006);
this information is contained within the Non-Financial and
Sustainability Information Statement section of the Strategic
Report on pages 26 to 33.
Customers
The Group treats all its customers with the utmost respect
and seeks to be honest and fair in all relationships with them.
The Group provides its customers with products and levels of
customer service of outstanding quality. Further information
about engagement with customers is provided within the
Stakeholder Engagement section and within Environmental,
Social and Governance Statement.
Employee share plans
Details of the Company’s employee share plans, including the
number of ordinary shares subject to employee share plan
awards, are included in Note 7 to the financial statements.
Directors and their Interests
The interests of the Directors who held office at 30 June 2023
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
2023
No.
2,989
3,446,539
93,872
8,300
547
1,095
2022
No.
2,989
3,431,522
89,329
6,577
547
1,095
3,553,342
3,532,059
Directors’ interests in share options are detailed in the
Remuneration Committee’s Report on pages 96 and 97.
Substantial Shareholders
As at 3 August 2023, 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
% of issued share capital
(excluding 231,175
Ordinary Shares held in
Treasury)
Liontrust Assset Management
K Neilson
Canaccord Genuity Group
W G Craig
Aegon Asset Management
abrdn
Rathbones
Octopus Investments
Amati Global Investors
4,466,720
3,446,539
2,667,773
2,340,756
1,546,201
1,188,237
1,182,011
1,095,579
1,092,929
12.65
9.76
7.56
6.63
4.38
3.37
3.35
3.10
3.10
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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 whilst also
supporting employee engagement and involvement. During the
year ended 30 June 2023 the Group contributed a total amount
of $40,706 (FY22: $47,943) 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 Environmental, Social and Governance Statement.
Political Donations
Neither the Company nor its subsidiaries made any donation for
political purposes in fiscal years 2023 or 2022.
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 Risk and Compliance 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.
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 pages 92 and 93 of the Remuneration Committee’s Report.
The Group does not tolerate any sexual, physical or mental
harassment of its employees. The Group operates an equal
opportunities policy and specifically prohibits discrimination on
grounds of colour, ethnic origin, gender, age, religion, political
or other opinion, disability or sexual orientation. The Group does
not employ underage 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 page 39.
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 46 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 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 2023 represented, on average 23 days
purchases (at 30 June 2022: 29 days) for the Group and 26 days
purchases (at 30 June 2022: 38 days) for the Company.
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 2023, are
outlined in the Notice of AGM.
Voting at General Meetings of the Company may be exercised
in person, by proxy or, in relation to corporate members, by
corporate representatives. Voting at General Meetings of the
Company may be conducted:
•
•
on a show of hands with every holder of Ordinary Shares
present in person and entitled to vote has one vote;
on a poll with every member present in person or
by proxy and entitled to vote has one vote for every
Ordinary Share held.
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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 are published as soon as practicable on the
Company’s website.
Directors’ Confirmations
The Directors consider that the Annual Report and
financial statements taken as a whole, is fair, balanced and
understandable and provides the information necessary for
shareholders to assess the Group’s and 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 that
information.
Independent Auditors
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
4 September 2023
Company Registration
The Company is registered in Scotland as a public limited
company with number SC196331
Statement of Directors’ Responsibilities in respect of the
financial statements
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law
and regulation.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the directors
have prepared the Group and the Company financial statements
in accordance with UK-adopted international accounting
standards.
Under company law, 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 Company and of
the profit or loss of the Group for that period. In preparing the
financial statements, the Directors are required to:
•
•
select suitable accounting policies and then apply them
consistently;
state whether applicable UK-adopted international
accounting standards have been followed, subject to
any material departures disclosed and explained in the
financial statements;
• make judgements and accounting estimates that are
reasonable and prudent; and
• prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the
group and company will continue in business.
The Directors are responsible for 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 also responsible for keeping adequate
accounting records that are sufficient to show and explain
the Group’s 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.
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Corporate Governance Report
Chair’s Introduction
The Board recognises that strong corporate governance is
an essential foundation for a sustainable organisation. On
behalf of the Board, I am pleased to present our Corporate
Governance Report for the year ended 30 June 2023 in
the context of the UK Corporate Governance Code 2018
(‘the Code’), our chosen corporate governance framework.
The Board believes that, with high standards of 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.
The challenges faced by our customers, and the healthcare
sector in general, in addition to the macro-economic
environment, as explained within the Strategic Report, creates
circumstances where good governance and balancing the
needs and expectations of our stakeholders continues to be an
important responsibility.
Purpose, Values and Culture
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.
Supporting our customers, and the phenomenal work they
do, continues to be our top priority and this ethos is evident
throughout The Craneware Group.
I would like to thank all colleagues within The Craneware
Group team for their continued enthusiasm, passion and
commitment to collectively uphold our Purpose. Our
team’s dedication to serving our customers cannot be
underestimated, whether it be directly in delivering services
or support to our customers, developing solutions to enhance
our portfolio to address customers’ current and future
requirements or colleagues within the team who enable the
continued efficient and reliable operation of our supporting
functions.
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. This is described further in the
Environmental, Social and Governance (ESG) Statement within
this Annual Report. The Board continues to monitor how
the Purpose, vision, strategy and values align to the Group’s
culture.
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.
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.
The Board’s section 172 (1) statement and details of our
engagement with stakeholders can be found on pages 47 to
51.
Employee engagement, including communication and
collaboration
We appreciate the importance of employee engagement and
we value honest and constructive feedback from employees,
both through the employee engagement surveys and other
engagement mechanisms including Leadership Roundtables
which, if practicable, are attended by Board members
including in the year, one I attended myself. The Board and
the Operations Board sees great benefit from employee
interaction, communication and collaboration. Whilst the
Group was able to function efficiently and effectively with
all employees working from home during the pandemic,
and although many of our US employees are home-based,
our office-based employees do benefit from working with
colleagues in-person in the collaboration spaces at our offices
in Edinburgh, Deerfield Beach (in Florida) and Pittsburgh (in
Pennsylvania).
Environmental, Social and Governance (ESG)
As a Board, we recognise and 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.
We also appreciate the importance of ESG matters to our
stakeholders. Whilst The Craneware Group has developed
many initiatives over the past several years which contribute
to our sustainability credentials, we decided to formalise
our coordination and oversight of ESG considerations,
building upon our Purpose and with a specific focus on ESG
matters. Accordingly, during the year our ESG Committee
was established and the Board appointed Issy Urquhart, an
executive Director of the Company and the Group’s Chief
People Officer, to chair the ESG Committee.
The Board maintains oversight of this Committee and
approved the terms of reference for the operation of
the Committee and receives regular updates from the
Committee. While we are in the early stages of baselining our
environmental data and conducting more detailed analyses
of climate-related risks, which require ongoing monitoring,
we believe we have initiated these appraisals during this year
in the context of appropriate materiality assessments. We do,
however, recognise that there is more to do and that this will
be an ongoing and evolving process and we are committed
to make further progress during the year ending 30 June
2024 in particular with formalising our targets and key
performance indicators for environmental matters, aligned
to climate-related national (UK and US) net zero ambitions.
For the first time we are providing a summary of climate-
risk considerations, as set out within the Non-Financial and
Sustainability Information Statement on pages 26 to 33. The
framework of our three key ESG Focus Areas along with an
overview of the ESG Committee’s activities and an update
on some of our many current programmes and alignment
to sustainability principles are contained within the ESG
Statement section of this Annual Report.
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Board composition
The year ahead
With the operational assistance and coordination from our
ESG Committee, we are now better placed to make good
progress during the year ahead with further expansion of
our emissions data monitoring and refining our targets and
key performance indicators for reducing our impact on the
environment and managing climate-related risks. We recognise
that, as we collectively work towards ESG-related targets, that
it will involve appropriate development of employee and other
stakeholder engagement initiatives. Although over several
years The Craneware Group has established (and continues
to encourage) many sustainability initiatives which benefit
various stakeholder groups, we are committed to continue, in
alignment with our Purpose, 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.
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
4 September 2023
In November we were delighted to welcome Anne McCune to
the Board as a non-executive director of the Company. Anne
is a recognised leader in the US Healthcare industry, having
served as a senior executive for several leading academic
hospital and physician centres and as a managing director
in consulting firms. Anne is currently a Community Board
member of the Strategy and Transformation committee at
Salinas Valley Memorial Healthcare System in California. Anne
has already made valuable contributions to the Board and its
deliberations.
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.
As a Board we are cognisant that Colleen Blye, our Senior
Independent Director, reached the milestone of nine years
serving on the Board in November 2022. In the context of
the director independence considerations, the Board has
carefully considered the role Colleen has within the Board
and ongoing contribution, including as one of the four senior
Board positions. We have concluded the knowledge and
independent challenge Colleen brings to the Board, including
discussions at Board meetings, continues to contribute great
value to the Board and as such it is appropriate to retain
Colleen’s independent services in the Senior Independent
Director role at this time. From August 2023 Russ Rudish has
also served on the Board for more than nine years, accordingly
the Board has performed a similar review of his independence
and concluded that Russ continues to be independent.
However, as a result, the Board will keep the composition of
the Board and its committees under review going forward
including its continued independent balance.
Board evaluation
Early in the financial year ended 30 June 2023, we conducted
a Board evaluation process, recognising that more than a year
had elapsed since the previous Board evaluation. An overview
of the process is provided within this Corporate Governance
Report. I would like to thank my fellow directors for their
engagement and helpful contributions to this evaluation
process. I am pleased to report that the overall outcome
of the evaluation was positive. We implemented and are
also working on several of the enhancements to our Board
meetings as well as reviewing how best to ensure a continued
balance of independent non-executive directors on the Board
whilst retaining the considerable industry knowledge and
experience that currently exists through our Board members.
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 2023, are outlined in the Notice of AGM and we
look forward to welcoming shareholders at the AGM.
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The Board of Directors ("the Board") has always recognised
the importance and value of high standards of 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 Group. 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 2023, with the exception of the following areas that the
Board believes are not appropriate for a Group of our size:
•
•
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. Included within this report is an explanation
of the process conducted during the year for the search
and recruitment of a new non-executive director;
Provision 36: concerning the development of a
formal policy for post-employment shareholding
requirements. Post-employment shareholding policies
continue to be the exception 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 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. Although the Remuneration
Committee did consult with substantial shareholders
ahead of the Company’s AGM, regarding the
establishment of a proposed new long term incentive
plan (as described in the Remuneration Committee’s
Report contained within this Annual Report), there
was no direct shareholder engagement regarding
other aspects of executive Director remuneration
policy as expected by one of the elements of Provision
41 of the Code. However, shareholders have not
raised any concerns with the Board during the year
regarding the remuneration of the executive Directors
and shareholders approved both the Directors’
Remuneration Report for the year ended 30 June 2022
and also approved the adoption and implementation
of the new long term incentive plan at the Company’s
AGM in November 2022. The Chair of the Remuneration
Committee is available to discuss remuneration matters
with shareholders if and when that is required or
requested.
Also, with reference to one of the other elements of
Provision 41 of the Code, during the year there was no
engagement with employees in respect of executive
Director remuneration. 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 again for the
fourth year defer any benchmarking and associated
base salary changes for the executive Directors. This
has been the decision for the past four financial years
including the year ended 30 June 2023. As such there
have been no changes to the base salary or bonus
entitlements for the executive Directors during this
time.
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 the overall conduct of the
Group’s business and for promoting the long-term success of
the Group. The Board 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
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The governance structure is summarised below.
Board Composition and Division of Responsibilities
is set out on pages 52 to 55. 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 47 to 51 and it includes examples of how
those matters have been considered in significant decisions of
the Board.
The Board delegates authority for the day to day management
of the Group to the Chief Executive Officer and the rest of senior
management within the Operations Board, under a set of
delegated authorities. 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 seven further members of the Senior
Management Team, including the Group’s Chief Technology
Officer who joined the Operations Board during the year.
Purpose, vision, strategy, values and culture
Board of Directors
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Anne McCune was appointed as a non-executive Director of
the Company on 16 November 2022. Therefore, in the period
from 16 November 2022 to 30 June 2023 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 five further non-executive Directors (each of whom
the Board considers to be independent), Colleen Blye (Senior
Independent Director), Russ Rudish, Alistair Erskine, David Kemp
and Anne McCune. Detailed biographies of all Directors are
contained on pages 57 and 58.
A summary of the composition of the Board for different periods
during the year ended 30 June 2023 is:
Period
Composition of the Board
Chair
(Independent on
Appointment)
Executive
Directors
Independent^
Non-executive
Directors
1 July 2022 to
15 November 2022
From 16 November 2022
1
1
3
3
4
5
^The Board considers that all of the non-executive directors are independent
in character and judgement, notwithstanding their tenure on the Board, as
described further below within the ‘Non-executive Directors’ section.
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. An overview of employee engagement mechanisms
is provided below within the ‘Stakeholder Engagement’ section.
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 13. 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.
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.
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Board Composition and Division of Responsibilities [Cont'd]
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.
Role
Summary of Responsibilities
The Chair is responsible for the leadership of the
Board, ensuring its effectiveness in directing the
Company and the Group, and setting its agenda.
The Chair is also responsible for upholding high
standards of corporate governance 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, in addition to
supporting governance matters, 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.
Non-Executive Directors
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. As Board committee
members the non-executive Directors also, amongst other
matters within the terms of reference of each committee, review
the integrity of the Group’s financial information and set the
remuneration of the 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.
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.
The Composition of the Board
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;
strategic and operational human resource
management;
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 Anne McCune as an independent non-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.
Throughout the year ended 30 June 2023 at least half the Board,
excluding the Chair, were non-executive Directors whom the
Board considers to be independent. 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.
In regards to all of the non-executive Directors, the Board has
not identified any matters that would affect their independence;
the Board considers that all of the non-executive Directors are
independent in character and judgement and free from any
business or other relationship that could materially interfere
with exercising that judgement. The Board acknowledges the
factors contained in Provision 10 of the Code. Notwithstanding
that both Colleen Blye and Russ Rudish have served on the
Board for more than nine years, having been appointed to the
Board in November 2013 and in August 2014 respectively, the
Board considers that both Colleen and Russ are independent in
character and judgement.
The Board has carefully considered the role Colleen has within
the Board and ongoing contribution, including in Colleen’s
role as the Senior Independent Director being one of the four
senior Board positions. The Board concluded the knowledge and
independent challenge Colleen brings to the Board, including
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discussions at Board meetings, continues to contribute great
value to the Board and as such it is appropriate to retain Colleen’s
independent services in the Senior Independent Director
role at this time. The Board has performed a similar review of
Russ’ independence and concluded that Russ continues to be
independent. However, as a result, the Board will keep the
composition of the Board and its committees under review
going forward, including its continued independent balance.
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 Board keeps the composition of the committees under
review. 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 2023
David Kemp (Chair)
Colleen Blye
Alistair Erskine
Throughout the year ended 30 June
2023
Russ Rudish (Chair)
Colleen Blye
Alistair Erskine
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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
A McCune*
Board
10
8/10
10/10
9/10
10/10
10/10
9/10
9/10
9/10
5/5
Remuneration
Committee
Audit
Committee
3
-
-
-
-
3/3
3/3
2/3
-
-
3
-
-
-
-
3/3
-
3/3
3/3
-
*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.
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.
As detailed in the Directors’ Report on page 62, 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.
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.
Following prior year discussions at Board meetings in relation to
balancing the diversity in the composition of the Board, a search
and selection process for the appointment of an additional non-
executive Director was initiated. The approach that the Board
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Board Appointments and Evaluation [Cont'd]
Appointments to the Board [Cont'd]
adopted for this process was the formation of a subcommittee
of the Board to act as the selection panel, with the remainder of
the Board taking part at the final interview stage. The majority of
the subcommittee comprised non-executive Directors.
The search for potential candidates for this non-executive
Director position was carried out by Rudish Health Solutions
LLC, an Executive Search company based in the US specialising
in appointments within the healthcare sector. Rudish Health
Solutions LLC is connected to one of Craneware plc’s non-
executive Directors, Russ Rudish, who was its founder. No fee
was charged to the Company for performing these services
and the ultimate choice of candidate was decided by the Board
independent of Rudish Health Solutions LLC.
Prior to making the appointment of Anne McCune, the Board
considered her existing commitments, in view of the time
required for the non-executive Director role at Craneware plc.
The Board concluded that Anne had sufficient time to dedicate
to the role.
Conflicts of interest
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. The Board is satisfied that there
is no compromise to the independence of, and nothing which
would give rise to conflicts of interest for, the non-executive
Directors who serve as directors on other company boards or
who hold other external appointments.
Diversity
The Group is supportive of, and recognises the importance
of diversity, including gender, ethnicity, nationality, skills and
experience and professional, educational and socio-economic
background. 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 Anne McCune to the Board on
16 November 2022, the Board comprises 33% female and 67%
male directors. The Senior Independent Director (one of the
four senior Board positions) is female. 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 34% female
and 66% 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 57 and 58. 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. 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.
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. The Board
considers succession planning periodically, usually as part
of its evaluation exercise. The composition of the Board has
been carefully considered with these factors in mind and the
addition of Anne McCune means the Board is well balanced
to address them. In FY24 the Board will again review the
composition of the Board and its Committees and will make
any changes it deems appropriate.
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, including
manager advancement, have been augmented in recent years
as outlined in the ESG Statement within this annual report. The
composition of the Operations Board was enhanced during the
year with the addition of the Group’s Chief Technology 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.
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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 advisers.
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
A Board evaluation process was conducted in the first half of
the financial year ended 30 June 2023. 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 on behalf of the Chair
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 at that time and from a succession planning
perspective, would benefit from being supplemented by the
addition of a further non-executive Director. Following this,
the candidate search process commenced which resulted in
the selection and appointment of Anne McCune.
Also as a result of the evaluation exercise, Alistair Erskine, on
behalf of the Board, spent additional time with the Product
Board to assess and evaluate the Group’s product strategy in
light of the ongoing evolution of the US Healthcare market.
This review was fully supportive of the strategy, whilst also
identifying further opportunities to provide additional support
to the Group’s customers.
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.
In determining whether a Director should be proposed for
re-election at the 2023 AGM, the Board took into account
each Director’s contribution to the Board’s effectiveness,
which formed part of the 2023 Board evaluation. This review
confirmed that all Directors continue to be effective and
demonstrate commitment to their roles and so the Board
recommended their reappointment.
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:
• All shareholders are invited to attend the AGM and
encouraged to take the opportunity to ask questions.
• 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.
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Stakeholder Engagement [Cont'd]
Dialogue with Shareholders [Cont'd]
During the year, the Chair of the Board met with shareholders
at their request. The Chair is available to answer questions and
to meet with shareholders on request.
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) were reviewed early in the year ended
30 June 2023 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 were proposed
to be implemented by the adoption of a new plan. The
Remuneration Committee consulted with the Company’s
substantial shareholders regarding the proposed new
LTIP. This process involved the chair of the Remuneration
Committee answering follow up questions received from
those shareholders, as required. Following the consultation,
the resolution for adoption of the new plan was approved by
shareholders at the AGM in November 2022.
The Board receives questionnaires from some shareholders
periodically in relation to ‘Environmental, Social and
Governance’ (‘ESG’) matters. These questionnaires are reviewed,
now with assistance from the ESG Committee, and then the
questionnaires are completed and returned to the requestor.
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 and the
Group.
Details of the Company’s share capital and substantial
shareholders are contained in the Directors’ Report on pages 62
to 63.
Constructive Use of General Meetings
The Board encourages attendance at its Annual General
Meeting (‘AGM’) from all shareholders. The Notice of AGM
together with all resolutions and explanations of these
resolutions are sent at least 20 working days before the
meeting. 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 can be
conducted on a show of hands or by way of poll votes.
Shareholders, if they are unable to attend the meeting in
person, are strongly encouraged to participate in the AGM by
voting by proxy ahead of the meeting.
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 15 November 2022, the Company announced that all
resolutions were passed and in respect of each resolution at
least 94.6% of the proxy votes received were ‘for’ each of the
resolutions proposed.
Employee engagement
The Board uses 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). There are several employee
engagement initiatives in place, as outlined in the Our People
section within the ESG Statement. The results from the
employee engagement survey conducted during the year and
the resulting Group-wide action plan were presented to the
Board and updates on the progress of the action plan are also
provided. The Board considers these employee engagement
mechanisms to be appropriate at this time, in view of the
size of the Group, and that they are supported by the Group’s
Chief People Officer, Issy Urquhart, being an executive
Director of the Company. 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.
The Chief People Officer ensures that 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.
As part of the regular agenda for Board meetings, the People
strategies, plans, policies, and practices have oversight from
the Board through the provision of key people metrics such as
retention and engagement metrics and updates on relevant
topics such as culture. The Board receives a summary of the
annual engagement and periodic pulse surveys and associated
action planning as well as the regular updates. In addition,
qualitative synopses from other lifecycle surveys such as
onboarding and exit surveys are also provided to the Board for
review and discussion.
The Human Resources team facilitates regular in person
Leadership Roundtables. These are sessions for a small group
of employees, between 10 to 15, from a cross section of
business functions and roles and responsibilities providing
an opportunity for face to face discussions with executive
leadership. In addition, the Chair of the Board and other non-
executive Directors have joined these sessions during the
year both in the UK and US. These have provided a two-way
feedback opportunity for employees, executive leadership
and Board members to discuss relevant topics such as culture
and engagement as well as business performance and other
matters of interest.
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.
ESG Committee
During the year our ESG Committee was established and the
Board appointed Issy Urquhart, an executive Director of the
Company and the Group’s Chief People Officer, to chair the
ESG Committee. Although this Committee is a subcommittee
of the Operations Board, the Board maintains oversight of the
ESG Committee and approved the terms of reference for the
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operation of the Committee and the Board receives regular
updates from the ESG Committee. Further details regarding
the ESG Committee, its members and activities during the year
are set out within the ESG Statement section of this Annual
Report. A description of the Group’s governance arrangements
in relation to assessing and managing climate-related risks
and opportunities is contained within the Non-Financial and
Sustainability Information Statement.
Audit, Risk and Internal Control
Audit Committee and Auditors
The Board has established an Audit Committee 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 2023 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
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 75 and 76.
Financial and Business Reporting
The Board recognises its responsibilities, including those
statutory responsibilities laid out on page 65. 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 13.
As detailed on page 61 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 2023. 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 16 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 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 credit facility. Further
details regarding these borrowing facilities are contained in
Note 21 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.
Internal controls and risk management procedures are
embedded into the business processes of the organisation
and these are subject to review and assessment so that
any identified areas of improvement, which come to
management’s and the Board’s attention, can be actioned,
as appropriate. Metrics and quality objectives continue to be
actively implemented and monitored as part of a continual
improvement programme. The visibility of regularly updated
metrics, across many areas of the business, have been
enhanced with oversight from the Group’s Transformation
team.
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 employee training and policy
acknowledgement for key areas. This is referred to in the ESG
Statement section.
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);
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Audit, Risk and Internal Control [Cont'd]
Audit Committee: role, responsibilities and activities during the year [Cont'd]
• developments in accounting and reporting requirements;
• matters of accounting significance, estimation and judgement including in the current year the Prior Year Restatements
detailed on pages 11 and 12 of the Strategic Report;
the systems of internal control and their effectiveness, reporting and making new recommendations to the Board on the
results of the review and receiving regular updates on key risk areas of financial control;
the requirements or otherwise for an internal audit function;
•
• external auditors’ plan for the year-end audit of the Company and the Group;
•
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 relevant 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 61 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.
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
2023. 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 2023, in particular the critical judgements and estimates of the Company as disclosed in the financial statements:
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)
Impairment assessment
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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.
The Group and the Company capitalise development costs when the conditions for capitalisation,
as outlined in the principal accounting policies within Note 1 to the financial statements, 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.
Goodwill and other intangible assets, as disclosed in Note 14 to the financial statements, are
significant assets on the Group’s balance sheet and the carrying amounts of these assets includes
those recognised in the prior year on the acquisition of Sentry. 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 respect of intangible assets
in the financial statements of the Group in the year ended 30 June 2023. 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.
Annual Report and Financial Statements 2023
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with appropriate regulations. We regularly evaluate to ensure
our certification selections continue to be the best measure of
security controls. 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.
External audit
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 in prior years, the Audit Committee
was responsible for conducting an audit tender process on
behalf of the Board in the year ended 30 June 2021 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 third 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.
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 2023 including management’s assessment of new
accounting standards that were not effective for adoption until
after 30 June 2023.
The Audit Committee considered and discussed with the rest
of the Board whether the Annual Report, taken as a whole
and including the need for and disclosure around the prior
year restatements, is fair, balanced and understandable and
provides the information necessary for stakeholders to assess
the Group’s position and performance, business model and
strategy.
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. 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 use of the same enterprise
resource planning system to maintain financial transaction
records across the Group and also 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 The Craneware Group’s solutions and
customer data, the focus for other assurance activities for the
Group is in respect of those areas. Since 2019 The Craneware
Group has maintained HITRUST CSF Certification for its Trisus
and InSight solutions and corporate services, as well as
associated operational processes. It is an external, validated
audit of Craneware’s security and data privacy practices based
on the US Government’s National Institute of Standards and
Technology (NIST) Cybersecurity and Privacy Framework,
ISO27001 and HIPAA. 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 each
intervening year. The Craneware Group engages with third party
auditors to support effective security practices and compliance
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Audit, Risk and Internal Control [Cont'd]
External audit [Cont'd]
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 2023, the Committee was satisfied that the
approach adopted was robust and appropriate and that auditor
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 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 2023 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 a limited
number of assurance related 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 2023, 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 5 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 for employees. 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 Board has established a Remuneration Committee which
comprises non-executive Directors all of whom the Board
considers to be independent, as described within the ‘Non-
executive Directors’ section above. 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 executive Directors’ and senior
management remuneration, and to oversee long-term
incentive plans (including share plans);
•
•
ensuring remuneration is both appropriate to the level
of responsibility and adequate to attract and/or retain
Directors and employees of the calibre required by the
Company and the Group; and
ensuring that executive Director remuneration is in line
with current industry practice as well as in line with
the internal policies for remuneration for all employees
within the Group.
The Committee has presented its Remuneration Report on
pages 80 to 98, which details the work it has 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.
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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;
•
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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 66 to 79.
Approved by the Board of Directors and signed on behalf
of the Board by:
Craig Preston
Company Secretary
4 September 2023
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In addition to the employee share option awards mentioned
above, in view of the greater emphasis on long term incentive
arrangements, the provisions of our long term incentive
plan (LTIP) were reviewed early in the fiscal year to ensure
that our LTIP continued 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. Although the fundamentals for long
term incentive plan awards would not significantly change,
improvements were identified as part of this review and were
implemented by the adoption of a new plan. This followed
the Committee’s consultation with the Company’s substantial
shareholders, ahead of the AGM vote, and I would like to thank
shareholders for providing their support for this new LTIP
(‘the 2022 LTIP’) which was adopted at the Company’s Annual
General Meeting (AGM) in November 2022.
The first conditional share awards were granted to the
executive Directors and senior managers from the 2022 LTIP
in November 2022, following the AGM. In advance of the
grant of those awards, the Committee considered carefully the
performance metrics which should apply to the awards and we
concluded that an appropriate profit-based measure should
be implemented in addition to a relative total shareholder
return metric, each metric to have equal weighting. The details
of these metrics are described further within the ‘Share-based
awards’ section of this Report.
Executive Director Remuneration Outcome for year ended 30 June
2023
Throughout the year, our remuneration focus has been on
navigating the uncertain macro-economic factors and the post
pandemic pressures on the US Healthcare market. We have
successfully maintained our stated goal of a 30+% EBITDA
margin whilst investing in the future of the business and its
products. The senior team have continued to drive the success
of the combined Group, which is significantly larger than we
were only two years ago. We have also been able to continue
to focus our policy of paying employees at median market
rates.
Whilst we have yet to see the revenue growth we aspire to
achieve; the combined Group has navigated these difficult
times and delivered the targeted EBITDA performance. This
has allowed for an element of the Bonus to be paid to all senior
employees (including the executive Directors) for the first time
in five years.
We believe our emphasis on Long Term Incentives within
our remuneration strategy continues to be successful in
aligning the interests of our Executive Team with those of our
shareholders. The associated performance targets continue
to appropriately reward performance without delivering any
windfall gains due to external factors.
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Remuneration Committee's Report
Chair’s introduction
On behalf of the Board, I am pleased to present the
Remuneration Committee’s Report for the year ended 30 June
2023.
The focus on supporting our culture, retaining key talent,
whilst at all times continuing to promote diversity and fair and
equal pay. The Group has a median pay positioning policy and
as such has sought to position, on average, base salaries at the
median of the market for all employees in respect of their role,
their contribution and company affordability.
The Financial Review section of our Strategic Report explains
the financial performance of the Group for FY23 which
has been achieved in a year when our customers and their
communities have faced significant demands post-pandemic
and in challenging macro-economic conditions for everyone.
We have been very mindful of these difficult circumstances for
all our stakeholders.
There continues to be a very competitive market in both
UK and US for talent acquisition and retention combined
with industry wide skill shortages. This brings an absolute
focus on ensuring a positive employee experience of
which remuneration is one factor. Many of our employee
engagement and other initiatives, including reward, are
summarised within the ESG Statement.
The Committee remains mindful of the importance of
providing the opportunity for employees across the
organisation, not only at senior levels, to become Craneware
plc shareholders and the benefits this delivers in further
aligning our stakeholders. We decided that it was appropriate
to expand this opportunity during the year through the
grant of market value share options in September 2022 to
employees across the Group in roles below senior manager
level.
Employee voice and engagement
People are at the centre of what we do and their wellbeing,
including reward and conditions, is a priority for our Board
of Directors and as a Committee we are conscious of our
responsibilities in this regard and the significance of getting
this right to support our culture, values and purpose of The
Craneware Group. To assist with this, we appreciate the
benefits of employee engagement and an overview of the
various employee engagement and other employee initiatives
across the Group are provided within the ESG Statement. The
Board has benefitted from the enhancement of the employee
perspective in Board deliberations and decision-making both
through Issy Urquhart’s contributions to the Board as an
executive Director, following Issy’s appointment in April 2022,
and also from a US healthcare perspective with Anne McCune’s
appointment in November 2022 as a non-executive Director of
the Company.
Executive Director Remuneration Policy
I explained in my introduction to last year’s Remuneration
Committee Report that the work of the Committee would
continue to focus on the long-term strategy in the fiscal year
ended 30 June 2023 as we sought to align that aspect of
our remuneration policies to the broader interests of all our
stakeholders.
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Looking ahead
The Remuneration Committee recognises that there is work to
be done to align short term aspects of executive remuneration
to market levels and practices and the steps towards this will
start to be implemented in FY24. While it is acknowledged that
the prioritisation of our focus on remuneration policies and
arrangements for employees in the wider organisation, rather
than the executives, was the right thing to do in recent years,
the lack of base salary increases for our executive Directors,
which has been the case for the past four years is recognised
to be unsustainable and inconsistent with our aim to provide
fair and competitive remuneration packages for all employees,
including our executives. Since the year end, we have
therefore initiated a benchmarking study, to be conducted
by an independent consultancy organisation, to focus on
executive Director remuneration policy.
On behalf of the Committee, I thank you for your support
and we hope that this report provides you with a good
understanding of remuneration matters within The Craneware
Group.
Russ Rudish
Chair of the Remuneration Committee
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Introduction
Shareholder consultation
The Board of Directors welcomes dialogue with its shareholders
over matters of remuneration and the Committee consulted
with the Company’s substantial shareholders during the year,
prior to the AGM, regarding the new long term incentive plan
(‘the 2022 LTIP’) and this is outlined further in the ‘Engagement
with stakeholders regarding executive Director remuneration’
section below. 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 2023. A similar resolution was
put to the AGM held on 15 November 2022 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 2022
Votes
for
Votes
Against
Votes
Total
Votes
Withheld
25,923,201
95.5%
1,229,346
4.5%
27,152,547
148,903
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.
Director Remuneration Policy
The Remuneration Committee is conscious of its need to
ensure that executive remuneration packages are designed to
attract, motivate and retain Directors of the calibre necessary to
achieve the Group’s growth objectives and to reward them for
enhancing shareholder value. The Remuneration Committee
intends that the Director Remuneration Policy conforms with
best practice, as far as reasonably practicable, and is appropriate
for the organisation; the Committee retains the right to exercise
discretion to ensure the appropriate outcomes in relation to
executive Director remuneration. 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
2023. 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. The Board of Directors has selected the UK
Corporate Governance Code 2018 (‘the Code’) as its corporate
governance framework and our extent of compliance with
the Code, is set out and explained within the Corporate
Governance Report on pages 66 to 79. Further details and
explanations regarding the extent of compliance with the
Remuneration provisions of the Code are included within this
report of the Remuneration Committee.
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 2023 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 78 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 and / or the Chief
People Officer will attend meetings on occasion, at the
invitation of the Committee, to advise on operational aspects
of implementing existing and proposed policies and also to
provide a summary of relevant results and feedback from
employee engagement surveys and roundtable discussions,
market data and updates on general remuneration policy
trends and peer group information. The Company Secretary
acts as secretary to the Committee. Under the Committee
Chair’s direction, the Chief Executive Officer, the Chief People
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 three times during the year and the meeting
attendance is shown on page 71.
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.
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Compliance with Provision 40 of the UK Corporate Governance Code 2018
Clarity
Simplicity
Risk
Predictability
Proportionality
Alignment to culture
The Committee aims to provide clear and transparent disclosures of Director remuneration
arrangements, as set out in this Report.
Simplicity is an important guiding feature to the Committee in the design of the remuneration
structure for executive Directors. The Remuneration Committee 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 main link of executive remuneration outcomes to long term performance is through the
long term incentive awards which have stretching targets, based on relative total shareholder
return performance and, in the current year, earnings. In addition to performance conditions,
post-vesting holding periods for LTIP awards and shareholding guidelines provide shareholder
alignment.
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. The Committee considers that
the executive incentive schemes promote behaviours consistent with Group’s purpose, values
and strategy. The Committee voluntarily puts this Remuneration Committee Report to an
advisory vote at the Company’s AGM.
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
although, as explained below, no direct comparison measures are applied / utilised. The Group has a median pay positioning policy
and as such has sought to position, on average, base salaries at the median of the market for all employees in respect of their role,
their contribution and company affordability.
This objective applies equally for the executive Directors however, as explained in last year’s report, due to the ongoing macro-
economic challenges, 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 four financial years including the year ended 30 June 2023, 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 to explain how executive remuneration aligns with the Group-
wide pay policy, 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. There has been an increase in employee-related information being presented or referred to during Board
meetings since the appointment of the Chief People Officer (Issy Urquhart) as an executive Director of the Company from 17 April
2022.
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. Although new offerings were not launched for the
SAYE and ESPP all employee savings-related share option plans (as described on page 92) in financial years ended 30 June 2022 and
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Director Remuneration Policy [Cont'd]
Consideration of employee pay structures across the Group [Cont'd]
2023, the Committee decided that share option awards should be granted, to employees in roles below senior manager level, in
order to provide an opportunity for more employees to become shareholders in the future, if they choose to do so, The share option
awards also provide further alignment to shareholder interests. 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 is applicable to all eligible senior employees within the Group for the year ended 30 June 2023.
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.
The Committee did not appoint a remuneration consultant during the year ended 30 June 2023. A share plans legal adviser, based
in the UK, was engaged in respect of the drafting of the rules of the 2022 LTIP and associated documentation along with a US-based
share plans legal adviser to review the draft rules and documentation.
Engagement with stakeholders regarding executive Director remuneration
The Remuneration Committee consulted with the Company’s substantial shareholders regarding the 2022 LTIP prior to its proposal
for approval by shareholders at the Annual General Meeting of the Company in November 2022. The Committee appreciated the
engagement by those shareholders during that process and their constructive feedback and support. The Committee has not
engaged with shareholders during the year ended 30 June 2023 regarding any other aspects of executive Director remuneration
policy.
There was no formal employee engagement, in respect of executive Director remuneration, during the year, however regular
employee and leadership round table discussions (which have an open agenda) have taken place during the year, as described on
page 39 and also our manager peer group sessions have included a Reward module. In addition, as noted above, the same policy of
paying at median applies across all employees of the Group (based on benchmark data) however, due to macro-economic factors,
this has not been applied to executive Directors and as such their base salaries have not changed for a number of years.
Elements of Executive Director Remuneration
The main elements of the remuneration package for executive Directors are:
•
•
•
•
base 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. It
was stated in the previous Remuneration Committee’s Report within the Annual Report for year ended 30 June 2022 that, following
a review of market practice in incentive scheme design amongst similarly sized AIM listed companies, a resolution was proposed at
the Company’s AGM in November 2022 to request shareholder approval for the new long term incentive plan. This was approved by
shareholders at the AGM and conditional share awards were granted to executive Directors and to senior managers from the new
plan on 18 November 2022, as described below within the ‘Share-based awards’ section. Other than establishing the new long term
incentive plan, there were no significant changes to the remuneration policy for executive Directors for the year ended 30 June 2023.
Base salary
Objective
Operation
Providing a competitive base 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.
The Committee intends that base salary for each executive Director should usually be reviewed annually,
or when an individual’s position or responsibilities change. A review will not necessarily result in an
increase to base salary. However, for the reasons outlined above and in previous years’ Remuneration
Committee Reports, the base salaries for executive Directors have remained unchanged for the past four
years.
Base salary is paid in cash, normally as a fixed amount each month.
Opportunity
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.
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Benefits
Objective
Operation
A benefits package, in line with market practice, is offered to executive Directors to complement base
salary.
Executive Directors are entitled to private medical and dental insurance, life assurance, critical illness
cover, permanent health insurance, annual health assessment and travel insurance.
The type of benefits offered, eligibility and the cost of benefits are reviewed periodically. Market rates
govern the cost of benefits which is not capped.
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 base salary (year ended 30 June
2022: 6% of base salary from September 2021; prior to that 5% of base 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 ($6,000 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.
Annual performance-related bonus
Objective
To incentivise the achievement of short-term financial and strategic goals.
Operation
Under the Group’s senior employee 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.
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Director Remuneration Policy [Cont'd]
Elements of Executive Director Remuneration [Cont'd]
Long term incentives
Objective
Operation
To incentivise the achievement of the Group’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. Award levels and applicable performance conditions are considered by the
Remuneration Committee prior to the grant of awards.
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.
Malus and Clawback provisions apply.
Opportunity
Maximum award in a financial year of 200% of base salary; with maximum of 300% of base salary in
exceptional circumstances.
Performance measures
Vesting will be subject to the extent of achievement of specified performance conditions, measured
over at least a three year period and 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 2023
are set out in the ‘Share-based awards’ section below.
Savings-related all employee share plans
Objective
Operation
Opportunity
Shareholding guideline
Objective
Operation
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.
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. Invitations to
participate for eligible employees (including the executive Directors) can be launched under these
plans, at times permitted by the relevant plan rules, at the discretion of the Committee.
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 63, exceed the shareholding guideline.
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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
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 base
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.
Basis of Fee
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 2023 are shown in the tables on page 94.
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 aims to develop 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 Group 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 2023 for the fourth consecutive year; and, as
a result, overall remuneration levels are continuing to fall below the Group policy of paying, on average, at the median. Therefore
since the year end we have initiated a benchmarking study, to be conducted by an independent consultancy organisation, to focus
on executive Director remuneration policy.
The remuneration package for the executive Directors, for the year ended 30 June 2023, comprised:
(i) Base salary
For the fourth consecutive year, due to the factors already outlined no changes were made to the executive Directors’ base salaries in
the year ended 30 June 2023.
(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 base salary
(year ended 30 June 2022: 6% of base salary from September 2021; prior to that 5% of base 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 and dental insurance, life assurance, critical illness cover, permanent
health insurance, annual health assessment and travel insurance.
(iv) Annual performance related bonus
The 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. In
addition to the executive Directors, the other members of the senior management team and other senior managers across the Group
were also eligible to participate in this bonus plan.
For the year ended 30 June 2023, the Remuneration Committee determined, after careful consideration of the Group’s performance
and the interests of its relevant stakeholders, that the calculated outcome of the bonus payable to the executive Directors, was
appropriate. Consequently, no discretion has been applied by the Committee to the formulaic outcome for the bonus.
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Directors' Remuneration [Cont'd]
(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.
Share plans
The Company currently operates several employee share plans
which are described in Note 7 to the financial statements. Long
term incentive awards can be granted to executive Directors and
to senior management from these plans:
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The Craneware plc Long Term Incentive Plan (2022) (the
“2022 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”).
There are also two legacy share plans which are:
•
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The Craneware plc Employees’ Share Option Plan 2007
(the “Share Option Plan 2007”); and
The Craneware plc Long Term Incentive Plan (2016) (the
“2016 LTIP”).
These legacy plans have outstanding share-based awards which
were granted in previous financial years but which have not
yet been exercised or, in the case of the 2016 LTIP, vested. The
Company no longer grants awards from these plans but awards,
which were granted under these plans in the past and are still
outstanding, continue to subsist on their original terms and in
accordance with the rules of the relevant plan until they vest or
are exercised or lapse.
Following its establishment in November 2022, the 2022 LTIP
has been used to grant conditional rights to acquire shares in
the Company to executive Directors and senior employees, the
vesting of which is normally dependent on both the satisfaction
of prescribed performance conditions and the continued
employment of the relevant individual throughout the period
of three years from grant. Although the 2022 LTIP is now
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 and when it was appropriate to do so. The
Schedule 4 Option Plan allows for the grant of tax advantaged
options to UK based participants over shares worth up to
£60,000 per individual (for options granted prior to 6 April 2023,
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.
Long Term Incentive Plan
Although the mechanism for long term incentive plan awards
would not be fundamentally different to those granted
previously under the 2016 LTIP, the reasons for establishing the
2022 LTIP, to grant awards instead of from the LTIP 2016 going
forward, were explained in the Annual Report for the year ended
30 June 2022 and in the Notice of the Company’s AGM held in
November 2022. The Company’s shareholders approved the
adoption of the 2022 LTIP at that AGM. The basis of the 2022
LTIP is broadly similar to the 2016 LTIP but the 2022 LTIP reflects
the more up to date market practice in incentive scheme design
amongst similarly sized AIM companies. The main changes
introduced within the 2022 LTIP, compared to the 2016 LTIP,
were explained in the explanatory notes to the Notice of AGM.
The value of long term incentive awards granted to the
executive Directors in November 2022 were at 200% of base
salary (awards in year ended 30 June 2022 and 2021 were also
at 200% of base salary), being the maximum level of award
permitted in non-exceptional circumstances under the 2022
LTIP. Further details regarding these awards are provided below.
Malus and Clawback provisions
The Rules of the 2022 LTIP provide that awards may be
reduced (including to nil) at any time before they vest if the
Remuneration Committee determines that one or more of the
following circumstances arises or comes to light:
•
•
•
•
•
•
the material misstatement of the Company’s financial
results for whatever reason;
the discovery that the number of shares over which
the award was granted was based on an error or on
the basis of any information or assumption that the
Committee subsequently discovers to have been
inaccurate or misleading;
the relevant participant’s employment with the Group
is summarily terminated (or, in the opinion of the
Committee, could have been summarily terminated)
for any reason including, but not limited to, dishonesty,
fraud, misconduct, misrepresentation or breach of
trust;
the relevant participant has breached any applicable
anti-bribery or anti-corruption laws;
the Company or any other Group member becomes
insolvent or otherwise suffers a corporate failure so
that the value of the Company’s shares is materially
reduced, provided that the Committee determines
following an appropriate review of accountability that
the relevant individual should be held responsible
(in whole or in part) for that insolvency or corporate
failure;
any other circumstances arise where, in the
Committee’s reasonable opinion, any act or omission
of the relevant individual has caused, or is reasonably
expected to cause, significant damage to the business
interests or reputation of the Company or any other
Group Company.
The Rules of the 2022 LTIP also provide that during the period of
two years following vesting, the Committee may apply clawback
to all or a proportion of the shares received by a participant
in connection with their award in substantially the same
circumstances as apply to malus (as described above). Clawback
may be effected, among other means, by requiring the transfer
of shares back to the Company or as it directs, payment of cash
or reduction of outstanding or future awards.
Remuneration Committee discretion – share plans
The Remuneration Committee has the power to vary the terms
of the performance conditions attaching to an outstanding
share plan award in exceptional circumstances, provided
that the amended conditions are, in their opinion, neither
materially easier nor more difficult to achieve than the original
performance conditions as envisaged by the Committee at the
date of grant of that award.
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The Committee reviewed the appropriateness of the
performance metrics, applicable for the long term share-based
incentives to be awarded to the executive Directors and senior
management in the year ended 30 June 2023, in the context of
the Group’s purpose and strategy, business performance and
alignment to stakeholder interests. The Committee concluded
that a profit measure should be added to the performance
conditions applicable for the long term incentive awards (in
addition to a relative TSR metric) and that the inclusion of a
growth in adjusted diluted Earnings per Share (EPS) metric,
as an additional performance metric, would provide a more
appropriate assessment of the Group’s performance. The
Committee determined that the relative TSR metric and the
growth in adjusted diluted EPS metric should have equal
weighting.
Accordingly, for the conditional share awards granted on
18 November 2022 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:
(i) 50% of the quantity of each share plan award is subject to
a relative total shareholder return (‘TSR’) metric; and
(ii) 50% of the quantity of each share plan award is subject to
a performance condition based on the growth in adjusted
diluted earnings per share (‘EPS’) for the Group.
Relative TSR performance condition
This performance condition is based on the Company’s
TSR performance relative to the performance achieved by
the constituent companies in the FTSE AIM 100 Index (the
“Comparator Group”).
The TSR performance condition applicable to the conditional
share awards granted under the 2022 LTIP to the executive
Directors and to senior management on 18 November 2022 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. The relative
TSR performance condition, which applies to 50% of the total
of each award granted on 18 November 2022 to the executive
Directors and senior management, is measured in three tranches
such that one sixth of the Ordinary Shares, over which the
awards subsist, will vest based on performance over the three
years ending on 30 June 2023; one sixth based on performance
over the three years ending 30 June 2024; and the final sixth
based on performance over the three years to 30 June 2025
– resulting in an aggregate, minimum 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 Group over the relevant period.
Consistent with Provision 37 of The UK Corporate Governance
Code 2018, the rules of the 2022 LTIP contain an overarching
discretion for the Committee to vary (upwards or downwards)
the formulaic vesting outcomes produced by the operation of
the prescribed performance conditions (thereby reducing the
risk that there is a misalignment between overall corporate
performance, the award holder’s personal performance and the
level of reward delivered to executives). The rules of the 2022 LTIP
contain change of control provisions which allow the Committee
to take into account a range of considerations (including the
underlying performance of the Group) when determining
vesting levels in these circumstances.
Post vesting holding period
The Committee has previously considered whether it would be
appropriate to introduce a post vesting holding period for LTIP
awards and/or a post-employment shareholding guideline. 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, on 18
November 2021 and on 18 November 2022. The Committee
intends that a post vesting holding period requirement will also
apply to future LTIP 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 63, exceed the shareholding
guideline which expects executive Directors to build up a
shareholding equivalent to 200% of base salary.
Provision 36 of the Code expects there to be a post-employment
shareholding policy for executive Directors. This policy has not
been developed and implemented although this provision in
the Code is acknowledged by the Committee. The Committee
will keep this under review but considers that this is acceptable,
in view of the shareholding guideline applicable to executive
Directors and that this guideline is already significantly exceeded
by two of the executive Directors.
Share plan awards granted to executive Directors in the year ended
30 June 2023
In November 2022, the Chief Executive Officer, the Chief
Financial Officer and the Chief People Officer were each granted
a conditional share award under the 2022 LTIP. The total value
of the award at date of grant was equal to a total of 200% of the
base salary for each of these directors. These awards are included
in the tables on page 97.
Conditional share awards and / or share options were granted
to certain other employees (including senior management) in
November 2022 under the 2022 LTIP and the 2016 option plans.
The vesting of the awards, which were granted in November
2022 to the executive Directors and to senior management,
are subject to two sets of performance conditions, with equal
weighting, 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.
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Directors' Remuneration [Cont'd]
(v) Share-based awards [Cont'd]
Vesting will then take place as follows:
Ranking of the Company’s TSR
against the
Comparator Group
Below median
Median
Upper quartile or above
Between median and upper quartile
% of Shares comprised in one sixth tranche the conditional share award
or share option granted on 18 November 2022 that vest
0%
50%
100%
Between 50% to 100%
on a straight line basis
The share plan awards that were granted to the executive Directors and to senior managers in November 2021 and in October
2020 each had only a relative TSR performance metric and this is summarised within the table on page 91 as well as the applicable
vesting profile. The extent of vesting for the tranches of those awards measured to the period ended 18 July 2023 is described in the
‘Performance condition measurement assessment to 30 June 2023’ section below.
Growth in Adjusted Diluted EPS performance condition
This performance condition is based on the Adjusted Diluted EPS, as presented in the notes to the audited consolidated financial
statements of the Group for the relevant financial year but excluding the impact of any share-based payments expense recognised
in the financial statements. Adjusted Diluted EPS Growth (expressed as a compound annual growth rate percentage) is calculated by
comparing the Adjusted Diluted EPS for the final financial year in the three year measurement period with the Adjusted Diluted EPS
for the financial year which ended immediately prior to the commencement of that three year measurement period.
Adjusted Diluted EPS Growth over the applicable Measurement Period
% of Shares comprised in one sixth tranche the conditional share award or
share option granted on 18 November 2022 that vest
Below 8%
8%
15% or above
Between 8% and 15%
0%
50%
100%
Straight-line vesting between 50%
and 100%
For the long term incentive share plan awards which were granted on 18 November 2022, if and to the extent that the relative
TSR and / or the growth in adjusted diluted EPS 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. In relation to those employees (not the executive Directors or other members of the senior management team) who
were granted share options as part of their long term incentive awards, those 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 assessment to 30 June 2023
For LTIP awards previously granted to the executive Directors: in November 2022, the first tranche is not due to vest until November
2023; in November 2021, the second tranche is not due to vest until November 2023; and for the LTIP awards granted in October
2020, the third (final) tranche is not due to vest until 2 October 2023. However, the performance criteria for these tranches were to be
tested against the Company’s performance to 30 June 2023.
The performance metrics applicable to these awards is summarised in the table below. The extent to which the performance
conditions are achieved are assessed by the Committee each year, in respect of each tranche of one third of the quantity of shares
subject to each award, over a three year measurement period.
Craneware plc
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Long term incentive
share plan awards
Granted in year ended
30 June 2021 (grant
date: 2 October 2020)
Summary of Performance Metrics
Craneware plc’s TSR relative to the ranked TSR of the constituents of the FTSE AIM 100 Index (the
‘Comparator Group’):
•
•
25% will vest if ranking of the Company’s TSR against the Comparator Group is at the Median
100% will vest if ranking of the Company’s TSR against the Comparator Group is at or above the
Upper Quartile (with straight line vesting between median and upper quartile)
Granted in year ended
30 June 2022
(grant date: 18
November 2021)
Craneware plc’s TSR relative to the ranked TSR of the constituents of the FTSE AIM 100 Index:
•
•
50% will vest if ranking of the Company’s TSR against the Comparator Group is at the Median
100% will vest if ranking of the Company’s TSR against the Comparator Group is at or above the Upper
Quartile (with straight line vesting between median and upper quartile)
Granted in year ended
30 June 2023
(grant date: 18
November 2022)
For 50% of the quantity of each award: Craneware plc’s TSR relative to the ranked TSR of the
constituents of the FTSE AIM 100 Index:
•
•
50% will vest if ranking of the Company’s TSR against the Comparator Group is at the Median
100% will vest if ranking of the Company’s TSR against the Comparator Group is at or above the
Upper Quartile (with straight line vesting between median and upper quartile)
For 50% of the quantity of each award: Growth in Adjusted Diluted EPS of the Group (expressed as a
compound annual growth rate) :
•
•
50% will vest if growth in adjusted diluted EPS over the measurement period is 8%
100% will vest if growth in adjusted diluted EPS over the measurement period is 15% or above
(with straight line vesting between 8% and 15%)
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Relative TSR performance measure
To accurately assess the TSR performance in respect of the three relevant financial years under review, TSR performance is tested at the
later of the 30 June, or the day after the Trading Statement is issued in respect of the financial year under review. This ensures the TSR
incorporates the impact of the current year’s Group performance.
Craneware plc’s relative TSR for this period to 18 July 2023, when ranked against that Comparator Group (being the constituent
companies in the FTSE AIM 100 Index) was between the median and the upper quartile and therefore these tranches, being one third of
the quantity for each of the awards, will vest to the extent of:
•
•
•
55.26% for half of the first tranche of the long term incentive awards which were granted in November 2022 (the other half of the
first tranche being subject to the growth in adjusted diluted EPS metric; the testing of that metric is explained below);
55.26% for the second tranche of the long term incentive awards which were granted in November 2021; and
32.90% for the third (final) tranche of the awards which were granted in October 2020.
Growth in Adjusted Diluted EPS performance measure
The Adjusted Diluted EPS for the Group, excluding the impact of share-based payments expense recognised in the consolidated financial
statements, for the relevant financial years was:
Adjusted Diluted EPS (as per Note 11 to the financial statements for FY23)
Add back: Share-based payments expense (net of tax)
Adjusted Diluted EPS (for performance condition metric)
FY23
cents
FY20
cents
86.3
6.5
92.8
64.4
3.7
68.1
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Directors' Remuneration [Cont'd]
(v) Share-based awards [Cont'd]
Growth in Adjusted Diluted EPS performance measure [Cont'd]
The compound annual growth in the adjusted diluted EPS metric for the Group, for the purposes of assessing the extent of vesting of
50% of the first tranche of the awards granted on 18 November 2022, was therefore 10.83% for the three year measurement period
ended 30 June 2023. Accordingly, the share plan awards, which are subject to this performance condition shall vest to the extent of
70.24% for the other half of the first tranche of the awards which were granted on 18 November 2022.
Overview of performance condition assessment
In assessing the vesting outcome of the LTIP awards, the Committee has paid consideration to whether any Windfall Gains occurred
or whether it is appropriate to alter the formulaic outcome from the performance condition assessment. The Committee has
concluded, based on the outcomes detailed, that neither situation existed in the current year and therefore no exercise of the
Committee’s discretion in these regards was necessary.
Conditional Share Awards (granted from the 2016 LTIP ) due to vest in October 2023
As a result of the relative TSR performance condition measurement to 18 July 2023, for the final tranche of the LTIP awards which
were granted to the executive Directors in October 2020, will result in those awards vesting as follows on 2 October 2023:
Executive
Director
Award
(and grant date)
K Neilson
C T Preston
I Urquhart
Conditional share award (2 Oct 2020)A
Conditional share award (2 Oct 2020)A
Conditional share award (2 Oct 2020)B
Held
At
30/06/23
24,985
18,571
10,208
Lapsed
(due to performance condition
assessment to 18 July 2023)
Due to vest on 2 October
2023
(9,657)
(7,178)
(2,893)
15,328
11,393
7,315
Aas explained in the Annual Report for the year ended 30 June 2022, the extent of vesting of the first and second tranches of these awards (each being one third of the amount granted), with performance
conditions tested for the three year period to 30 June 2022, was 36.8% each. Therefore the award amount held at 30 June 2023, in the table above, is stated after the total of 42.13% of the original award
quantity lapsed when the performance condition for those first and second tranches was tested.
B the extent of vesting of the first tranche of this award (being one third of the amount granted), with performance conditions tested for the three year period to 30 June 2021 which was prior to I Urquhart being
an executive Director of the Company, was 100%. The extent of vesting of the second tranche of this award, with performance conditions tested for the three year period to 30 June 2022, was 36.8%. The award
amount held at 30 June 2023, in the table above, is therefore stated after the total of 21.06% of the original award quantity lapsed when the performance condition for the second tranche was tested.
All employee share option awards
Share options granted to employees in the year ended 30 June 2023
In order 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, the Committee decided that a grant of share option
awards should be made to most eligible employees within the Group, in roles below senior manager, during the financial year. The
Committee considered that the grant of share options to eligible employees for this share option was appropriate, in the context
of employee reward arrangements in the financial year and provided alignment of employee interests, at further levels within the
Group, with those of our shareholders. Share options were therefore granted to employees on 23 September 2022 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
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, these share option plans having been
approved by the shareholders at the 2018 Annual General Meeting. 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.
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 7 to the financial statements. The executive Directors chose to participate in the SAYE in FY20 and the details of the share
options granted are contained in the table on page 96.
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 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.
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Craneware plc
93
The Committee has the discretion to decide whether or not to launch invitations to participate under these plans, at times when it is
permitted to do so in accordance with the rules of the plans. There were no invitations to participate launched, or subsequent share
options granted, from these plans in the years ended 30 June 2022 or 30 June 2023. The Committee continues to keep under review
when it is appropriate to launch a new invitation under these plans, in view of the complement of other share-based awards across
the organisation.
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 18 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; and
no account will be taken of any Shares where the right to acquire them was released or lapsed prior to vesting / exercise.
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 2023, are contained in Note 7 to the financial statements.
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.
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K Neilson
C T Preston
I Urquhart
W Whitehorn
C Blye
R Rudish
A Erskine
D Kemp
A McCune
Contract Date
Founder
15 September 2008
27 April 2022
1 January 2020
12 November 2013
28 August 2014
24 February 2020
1 March 2020
16 November 2022
Unexpired Term
Normal Notice Period
Rolling
Rolling
Rolling
Rolling
Rolling
Rolling
Rolling
Rolling
Rolling
3 months*
3 months*
3 months*
1 month
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 63.
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Directors’ Emoluments (audited)
For Directors who held office during the course of the year, emoluments1 in respect of the year ended 30 June 2023 were as follows:
(note: with the exception of C Blye, R Rudish, A Erskine and A McCune, 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).
Executives
K NeilsonA,B
C T PrestonC
I UrquhartD
Non-Executives
W Whitehorn
D Kemp
C Blye
R Rudish
A Erskine
A McCune3
Total
Salary/Fees
$
Benefits2
$
391,277
290,838
199,914
90,323
56,248
60,708
60,708
54,216
33,885
1,764
1,617
1,409
-
-
-
-
-
-
Bonus
$
260,199
193,408
132,943
-
-
-
-
-
-
Pension
$
Total 2023
$
Total 2022
$
29,498
17,450
13,701
-
-
-
-
-
-
682,738
503,313
347,967
90,323
56,248
60,708
60,708
54,216
33,885
465,500
341,405
43,200
99,878
62,198
60,708
60,708
54,216
-
1,238,117
4,790
586,550
60,649
1,890,106
1,187,813
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. A McCune was appointed as a Director of the Company on 16 November 2022.
A. Conditional share awards, in respect of 4.460 and 9,895 Ordinary Shares in the Company, which were granted to K Neilson under the 2016 LTIP in September 2018 and in September 2019 respectively, vested in September 2022. Based on
the share price on the vesting date the total value of those Ordinary Shares was £291,407 ($329,906) before tax.
B. In September 2022 K Neilson exercised a share option, which was granted in 2012 detailed below, in respect of a total of 6,605 Ordinary Shares in the Company. Based on the share price on the date of exercise, the gain on exercise of that
share option was £102,378 ($116,737) before tax.
C. Conditional share awards, in respect of 3,305 and 7,355 Ordinary Shares in the Company, which were granted to CT Preston under the 2016 LTIP in September 2018 and in September 2019 respectively, vested in September 2022. Based on
the share price on the vesting date the total value of those Ordinary Shares was £216,398 ($244,988) before tax.
D. A conditional share award, in respect of 4,043 Ordinary Shares in the Company, which was granted to I Urquhart under the 2016 LTIP in September 2019, vested in September 2022. Based on the share price on the vesting date the value of
those Ordinary Shares was £82,073 ($92,916) before tax.
The following Directors were paid in Sterling:
Executives
K Neilson
C T Preston
I Urquhart
Non-Executives
W Whitehorn
D Kemp
Total
Salary/Fees
£
Benefits
£
324,900
241,500
166,000
75,000
46,706
854,106
1,465
1,343
1,170
-
-
3,978
Bonus
£
216,059
160,598
110,390
-
-
Pension
£
Total 2023
£
Total 2022
£
24,494
14,490
11,377
-
-
566,918
417,931
288,937
75,000
46,706
349,554
256,368
32,439
75,000
46,706
760,067
487,047
50,361
1,395,492
Further information regarding Directors’ share options and LTIP awards are contained in the tables on pages 96 and 97.
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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.
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Directors’ interests in share options and LTIP awards
Directors’ interests in share options as at 30 June 2023, 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
01/07/22
Granted
During
Year
Exercised
During
Year
Lapsed
During
Year
Held
At
30/06/23
Exercisable
from
date
Expiry
date
Grant Date
K Neilson
Share Option Plan 2007
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)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,232)
-
-
-
-
-
(913)
-
-
-
-
-
-
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
4,460
17 Jan 2021
21 Sep 2022
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
3,305
24 Mar 2020
17 Jan 2021
21 Sep 2022
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
Information regarding total share options, as granted to executive Directors and other employees, which were in existence during
the year is contained in Note 7 to the financial statements.
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Exercise
Price
(cents)
Exercise
Price
(pence)
Held
At
01/07/22
Granted
During
Year
Exercised
During
Year
Lapsed
During
Year
Held
At
30/06/23
Exercisable
from
date
Expiry
date
-
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
(1,232)
7,238
4,460
17 Jan 2021
21 Sep 2022
17 Jan 28
5 Sep 28
Grant Date
K Neilson
Share Option Plan 2007
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
Unapproved Option Plan
17 Jan 2018
2445.0
1775.0
17 Jan 2018
5 Sep 2018
2445.0
3488.0
1775.0
2710.0
SAYE Option Plan
C T Preston
Share Option Plan 2007
Schedule 4 Option Plan
Unapproved Option Plan
SAYE Option Plan
I Urquhart
Schedule 4 Option Plan
Unapproved Option Plan
6,605
34,472
39,090
28,628
36,469
1,690
7,238
5,692
1,568
2,424
6,162
6,618
4,218
1,568
2,424
1,236
2,654
1,747
196
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(6,605)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
20 Apr 2020
1432.0
1147.5
1,568
1 May 2023
1 Nov 23
9 Mar 2016
1066.0
750.0
26,925
26,925
9 Mar 2019
9 Mar 26
24 Mar 2017
1544.0
1237.5
2,424
24 Mar 2020
24 Mar 27
24 Mar 2017
17 Jan 2018
5 Sep 2018
1544.0
2445.0
3488.0
1237.5
1775.0
2710.0
6,162
6,618
3,305
24 Mar 2020
17 Jan 2021
21 Sep 2022
24 Mar 27
17 Jan 28
5 Sep 28
(913)
20 Apr 2020
1432.0
1147.5
1,568
1 May 2023
1 Nov 23
24 Mar 2017
1544.0
1237.5
2,424
24 Mar 2020
24 Mar 27
24 Mar 2017
17 Jan 2018
5 Sep 2018
1544.0
2445.0
3488.0
1237.5
1775.0
2710.0
SAYE Option Plan
1,236
2,654
1,747
24 Mar 2020
17 Jan 2021
22 Sep 2021
24 Mar 27
17 Jan 28
5 Sep 28
19 Apr 2021
2539.0
1836.0
(196)
-
1 May 2024
1 Nov 24
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The maximum number of Ordinary Shares subject to conditional share awards granted to Directors under the LTIP as at 30 June 2023
were as follows, in respect of Directors who held office during the course of the year:
Grant
Date
Held
At
01/07/22
Granted
During
Year
Released
During
Year
Lapsed
During
Year
Held
At
30/06/23
Share price at
date of grant
(pence)
Normal vesting
date
5 Sep 2018
5,692
4 Sep 2019
17,100
2 Oct 2020
43,176
18 Nov 2021
24,896
-
-
-
-
18 Nov 2022
-
30,796
5 Sep 2018
4,218
4 Sep 2019
12,710
2 Oct 2020
32,093
18 Nov 2021
18,505
-
-
-
-
18 Nov 2022
-
22,890
4 Sep 2019
5,122
2 Oct 2020
12,932
18 Nov 2021
7,632
-
-
-
18 Nov 2022
-
15,734
(4,460)
(1,232)
(9,895)
(7,205)
-
-
2,710.0
1,900.0
Refer to note
(a) below
Refer to note
(b) below
-
-
-
(18,191)
24,985
1,505.0
2 Oct 2023
(3,502)
21,394
2,610.0
18 Nov 2024
-
30,796
2,110.0
18 Nov 2025
(3,305)
(913)
(7,355)
(5,355)
-
-
2,710.0
1,900.0
Refer to note
(a) below
Refer to note
(b) below
-
-
-
(13,522)
18,571
1,505.0
2 Oct 2023
(2,603)
15,902
2,610.0
18 Nov 2024
-
22,890
2,110.0
18 Nov 2025
(4,043)
(1,079)
-
1,900.0
Refer to note
(b) below
-
-
-
(2,724)
10,208
1,505.0
2 Oct 2023
(1,074)
6,558
2,610.0
18 Nov 2024
-
15,734
2,110.0
18 Nov 2025
K Neilson
Conditional
share award
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
Conditional
share award
I Urquhart
Conditional
share award
Conditional
share award
Conditional
share award
Conditional
share award
(a) As explained in the annual reports for the year ended 30 June 2021 and 30 June 2022, 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. The vesting date for these awards was 21 September 2022, being the day following
the announcement of the Group’s audited financial results for the year ended 30 June 2022.
(b) The normal vesting date for these awards, to the extent that they vested based on achievement of performance conditions, would have been 4
September 2022 however because this date was at a time when Share Dealing Restrictions applied in respect of the Market Abuse Regulation, the
vesting date for these awards was instead (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 89 to 92. The table above shows the
maximum entitlement at 30 June 2023 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
4 September 2023
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Independent auditor's 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 2023 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 as applied in accordance with the provisions of
the Companies Act 2006; and
•
have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements, included within the Annual Report and Financial Statements (the “Annual Report”), which comprise:
the Consolidated and Company balance sheets as at 30 June 2023; 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 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 all other
audit work was undertaken by a single engagement team in the UK.
Key audit matters
•
Internally developed intangible assets (group and parent)
Materiality
•
Overall group materiality: $1,297,500 (2022: $1,206,690) based on 2.5% of EBITDA adjusted for exceptional items. (2022: 2.5% of EBITDA
adjusted for exceptional items).
• Overall company materiality: $487,688 (2022: $530,999) based on 5% of 3 year average profit before tax adjusted for exceptional items).
(2022: 5% of 3 year average profit before tax adjusted for exceptional items.
•
Performance materiality: $973,125 (2022: $905,018) (group) and $365,766 (2022: $398,249) (company)
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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. and Revenue Recognition, which were key audit matters last
year, are no longer included because of the fact that the acquistion is not applicable in the current year as the valuation for Sentry acquisition was
completed last year and because our view of the risk in revenue recognition has changed based on the continued standardisation of sales terms and
no history of misstatements in previous audits. Otherwise, the key audit matters below are consistent with last year
Key audit matter
How our audit addressed the key audit matter
Internally developed intangible assets (group and parent)
As per note 14, the Group has net book value of development costs
capitalised amounting to $48,972k (2022: $40,489k) and the
Company has $43,244k (2022: 37,500k) 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.
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 management to audit
time charged by employees. We challenged management on
how all criteria for capitalisation had been met and supporting
evidence was obtained to corroborate their explanations.
Regarding recoverability of intangible assets, we challenged
management and obtained underlying support to assess the
ability of the projects to generate future economic benefits which
included project road maps, sales order value generated 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.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements as a whole,
taking into account the structure of the group and the company, the accounting processes and controls, and the industry in which they operate.
The Group is structured into different components which include one in the UK and two in the US. One of the components in the US has the
intellectual property to Sentry software products and enters into software license agreements with customers. The component in the UK has
the intellectual property to Craneware software products and the other US component enters into license agreements with customers for those
products. The two US components also provide professional services to customers in the US. We identified all three of these components as
financially significant and performed full scope audit procedures. For the Sentry component we engaged our PwC US colleagues to complete the
audit under our instruction. We had regular engagement with our PwC US team as part of planning for the Group audit, during their fieldwork at
which time we independently reviewed their working papers over key audit areas, and as part of our audit completion when we received their
group reporting. For the two Craneware components the audit work was completed by the UK Group audit team. There were other significant
balances in other smaller parts of the Group where work was carried out by the UK Group audit team. This included borrowings which sits in a US
holding entity within the Group.
The impact of climate risk on our audit
As part of our audit we made enquiries of management to understand the extent of the potential impact of climate risk on the group’s and company’s
financial statements, and we remained alert when performing our audit procedures for any indicators of the impact of climate risk. Our procedures
did not identify any material impact as a result of climate risk on the group’s and company’s financial statements.
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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
$1,297,500 (2022: $1,206,690).
$487,688 (2022: $530,999).
2.5% of EBITDA adjusted for exceptional items.
(2022: 2.5% of EBITDA adjusted for exceptional
items)
5% of 3 year average profit before tax adjusted for
exceptional items). (2022: 5% of 3 year average profit
before tax adjusted for exceptional items.
We believe the measure of EBITDA adjusted for
exceptional items is the most relevant measure
to the shareholders to measure the underlying
performance of the Group post acquistion of Sentry.
In prior year the benchmark used was profit before
tax adjusted for exceptional items.
Given fluctuation in the profits for Company year
over year, consistent with last year, we have used
this benchmark, which is also a generally accepted
materiality benchmark and has resulted in a more
appropriate level of materiality to audit the Company.
For each component in the scope of our group audit, we allocated a materiality that is less than our overall group materiality. The range of materiality
allocated across components was between $487,688 and $1,227,576. 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% (2022: 75%) of overall materiality, amounting to $973,125 (2022: $905,018) for the group financial statements and $365,766
(2022: $398,249) for the company financial statements.
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 $64,875 (group
audit) (2022: $64,684) and $24,384 (company audit) (2022: $26,550) 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.
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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.
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 2023 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.
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Our review of the directors’ statement regarding the longer-term viability of the group and company 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.
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 UK
and US employment laws and Health and Safety regulations, and we considered the extent to which non-compliance might have a material effect on
the financial statements. We also considered those laws and regulations that have a direct impact on the financial statements such as UK Companies
Act 2006, UK and US tax legislations, UK Corporate Governance code and UK AIM listing rules. 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.
Enquiries of entity staff and management's expert in tax and compliance functions to identify any instances of non compliance with taxation laws
and regulations.
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.
Craneware plc
102
Annual Report and Financial Statements 2023
Annual Report and Financial Statements 2023
Craneware plc 103
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.
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• we have not 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
4 September 2023
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Consolidated Statement of Comprehensive Income for the year ended 30 June 2023
Continuing operations:
Revenue from contracts with customers
Cost of sales
Gross profit
Other income
Operating expenses
Net impairment reversal/(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
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
5
7
13
14
14
5
8
8
9
11
11
Total
2023
$’000
174,018
(25,576)
148,442
600
(131,876)
2,062
19,228
54,892
(2,992)
(3,451)
(7,781)
(20,930)
(510)
214
(6,357)
13,085
(3,853)
9,232
-
-
9,232
0.263
0.261
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
** Exceptional items relate to integration costs associated with the purchase of Sentry Data Systems, Inc (FY22: legal and professional fees associated with acquisition of Sentry Data Systems and related
integration costs).
Craneware plc
104
Annual Report and Financial Statements 2023
Annual Report and Financial Statements 2023
Craneware plc 105
Statements of Changes in Equity for the year ended 30 June 2023
Treasury
Shares
$’000
Capital
Redemption
Reserve
$’000
Group
At 1 July 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 18)
Deferred tax taken directly to equity
Impact of share options and awards exercised / lapsed
Dividends (Note 10)
At 30 June 2022
Total comprehensive income - profit for the year
Transactions with owners:
Share-based payments
Purchase of own shares through EBT (Note 18)
Purchase of own shares through share buyback (Note 18)
Deferred tax taken directly to equity
Impact of share options and awards exercised / lapsed
Dividends (Note 10)
At 30 June 2023
Company
At 1 July 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 10)
At 30 June 2022
Total comprehensive income - profit for the year
Transactions with owners:
Share-based payments
Purchase of own shares through share buyback (Note 18)
Deferred tax taken directly to equity
Impact of share options and awards exercised / lapsed
Dividends (Note 10)
At 30 June 2023
Share
Premium
Account
$’000
Share
Capital
$’000
624
21,097
-
-
-
35
-
-
-
-
-
-
-
76,107
-
-
-
-
659
97,204
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Share
Premium
Account
$’000
21,097
-
-
76,107
-
-
-
Share
Capital
$’000
624
-
-
35
-
-
-
659
97,204
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(3,865)
-
128
-
-
-
-
-
-
-
-
-
-
-
(3,865)
-
128
-
659
97,204
(3,737)
659
97,204
(3,737)
Treasury
Shares
$'000
Capital
Redemption
Reserve
$’000
S
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2
0
2
3
Merger
Reserve
$’000
186,993
Other
Reserves
$’000
4,728
-
-
2,294
-
-
-
(1,089)
-
-
-
(12)
-
-
-
-
Retained
Earnings
$’000
46,828
9,409
42
-
-
(1,726)
(366)
1,025
Total
Equity
$’000
260,279
9,409
42
2,294
76,130
(1,726)
(366)
(64)
-
(12,976)
(12,976)
186,981
5,933
42,236
333,022
-
-
-
-
-
-
-
-
9,232
9,232
3,231
-
-
-
(2,324)
-
(179)
-
(1,004)
1,719
3,231
(179)
(3,865)
(1,004)
(477)
-
(12,119)
(12,119)
186,981
6,840
39,885
327,841
Merger
Reserve
$’000
186,993
-
-
(12)
-
-
-
Other
Reserves
$’000
1,632
-
6,142
-
-
Retained
Earnings
$’000
28,774
6,034
-
-
19
(1,841)
1,357
Total
Equity
$’000
239,129
6,034
6,142
76,130
19
(484)
-
(12,976)
(12,976)
186,981
5,933
23,208
313,994
-
-
-
-
-
-
-
6,544
6,544
3,231
-
-
(2,324)
-
-
(666)
1,541
3,231
(3,865)
(666)
(655)
-
(12,119)
(12,119)
186,981
6,840
18,508
306,464
9
-
-
-
-
-
-
-
-
9
-
-
-
-
-
-
-
9
9
-
-
-
-
-
-
9
-
-
-
-
-
-
9
104
Craneware plc
Annual Report and Financial Statements 2023
Craneware plc 105
Annual Report and Financial Statements 2023
The accompanying notes are an integral part of these financial statements.
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Consolidated Balance Sheet as of 30 June 2023
ASSETS
Non-Current Assets
Property, plant and equipment
Intangible assets - goodwill
Intangible assets - acquired intangibles
Intangible assets - other
Trade and other receivables
Current Assets
Trade and other receivables
Cash and cash equivalents
Restricted cash
Total Assets
EQUITY & LIABILITIES
Non-Current Liabilities
Borrowings
Deferred Income
Leased property
Hire purchase equipment
Deferred tax
Other provision
Current Liabilities
Borrowings
Deferred income
Amounts held on behalf of customers
Tax payable
Trade and other payables
Total Liabilities
Equity
Share capital
Share premium account
Treasury shares
Capital redemption reserve
Merger reserve
Other reserves
Retained earnings
Total Equity
Total Equity and Liabilities
Registered Number SC196331
Notes
13
14
14
14
16
16
20
21
17
21
22
18
2023
$’000
8,464
235,236
166,327
50,230
2,758
463,015
35,424
78,537
-
113,961
576,976
75,033
2,875
2,224
44
41,337
243
121,756
8,000
49,643
51,220
2,565
15,951
127,379
249,135
659
97,204
(3,737)
9
186,981
6,840
39,885
327,841
576,976
Restated
2022
$’000
8,819
235,236
187,257
43,430
3,234
477,976
39,584
47,157
1,251
87,992
565,968
103,589
4,792
1,206
290
44,417
568
154,862
8,000
53,930
672
-
15,482
78,084
232,946
659
97,204
-
9
186,981
5,933
42,236
333,022
565,968
The accompanying notes are an integral part of these financial statements.
The financial statements on pages 104 to 151 were approved and authorised for issue by the Board of Directors on 4 September 2023 and signed on its behalf by:
Keith Neilson,
Director
Craig Preston,
Director
Craneware plc
106
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Annual Report and Financial Statements 2023
Craneware plc 107
Company Balance Sheet as of 30 June 2023
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
Deferred tax
Current Liabilities
Deferred income
Trade and other payables
Total Liabilities
Equity
Share capital
Share premium account
Treasury shares
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
15
13
14
17
16
16
20
22
18
2023
$’000
84,905
2,348
43,297
-
-
130,550
207,191
25,102
232,293
362,843
1,887
243
1,226
3,356
30,253
22,770
53,023
56,379
659
97,204
(3,737)
9
186,981
6,840
18,508
23,208
6,544
(11,244)
306,464
362,843
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2
3
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 104 to 151 were approved and authorised for issue by the Board of Directors on 4 September 2023 and signed on its behalf by:
Keith Neilson,
Director
Craig Preston,
Director
106
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Annual Report and Financial Statements 2023
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Consolidated Statement of Cash Flows for the year ended 30 June 2023
Cash flows from operating activities
Cash generated from operations
Tax paid
Net cash generated from 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
Share issue professional fees
Paid up share capital
Proceeds from issuance of treasury shares
Proceeds from borrowings
Loan arrangement fees
Repayment of borrowings
Interest on borrowings
Purchase of own shares by EBT
Share buyback programme
Payment of lease liabilities
Net cash (used in) / generated from financing activities
Net increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at the start of the year
Restricted cash previously excluded from cashflow*
Notes
2023
$’000
2022
$’000
19
100,591
(1,843)
98,748
32,943
(5,979)
26,964
12
13
14
-
(293,288)
(520)
(353)
(15,031)
(13,680)
214
1
(15,337)
(307,320)
10
(12,119)
(12,976)
18
18
21
21
21
18
18
-
-
138
-
(252)
(28,000)
(6,503)
(179)
(3,815)
(2,552)
(53,282)
(263)
236
-
120,000
(268)
(8,000)
(3,080)
(1,726)
-
(2,027)
91,896
30,129
(188,460)
47,157
235,617
1,251
-
Cash and cash equivalents at the end of the year
20
78,537
47,157
*Restricted cash was not included within cash and cash equivalents on the Balance Sheet or within the Cashflow Statement in the prior period. As the Group is unable
to hold these amounts outside of its own treasury facilities, these “restricted cash” balances are now incorporated within cash and cash equivalents for FY23 and are
therefore included within the Cashflow Statement for the current year.
The accompanying notes are an integral part of these financial statements.
Craneware plc
108
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Annual Report and Financial Statements 2023
Craneware plc 109
Company Statement of Cash Flows for the year ended 30 June 2023
Cash flows from operating activities
Cash generated from / (used in) operations
Tax paid
Net cash generated from / (used in) operating activities
Cash flows from investing activities
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
Share issue professional fees
Paid up share capital
Proceeds from issuance of treasury shares
Intergroup loan repaid
Share buyback programme
Funds (advanced to) / returned from EBT
Payment of lease liabilities
Net cash generated from / (used in) financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at the start of the year
C
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2
3
Notes
2023
$’000
2022
$’000
19
18,220
(175,869)
(1)
(1,088)
18,219
(176,957)
13
14
(205)
(170)
(11,539)
(10,300)
443
354
(11,301)
(10,116)
10
(12,119)
(12,976)
18
18
18
18
-
-
138
6,000
(3,815)
(263)
236
-
-
-
-
(1,304)
(420)
(583)
(10,216)
(14,890)
(3,298)
(201,963)
28,400
230,363
Cash and cash equivalents at the end of the year
20
25,102
28,400
The accompanying notes are an integral part of these financial statements.
108
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Craneware plc 109
Annual Report and Financial Statements 2023
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Notes to the Financial Statements
General Information
Craneware plc (“the Company”) is a public limited company
incorporated and domiciled in Scotland. The Company has a
primary listing on the Alternative Investment Market (‘AIM’)
of the London Stock Exchange. The address of its registered
office and principal place of business is disclosed on page 56
of the Annual Report. The principal activity of the Company is
described in the Directors’ Report.
Basis of preparation
The financial statements of the Group and the Company
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
24 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 13.
Going concern
The Group is profitable and there is a reasonable expectation
that this will continue to be the case. Our business model
is delivering high levels of recurring revenue, supported by
long term underlying contracts, that deliver high levels of
cash generation. In addition, the Group has cash and cash
equivalents of $78.4m as well as a committed but undrawn
facility available to it of $60m.
The directors have prepared cash flow forecasts covering a
period of over twelve months from the date of approval of these
financial statements. These forecasts include consideration
of severe but plausible downsides, should these events occur,
the Group would have sufficient funds to meet its liabilities as
they fall due for that period. These scenarios anticipate a zero-
growth scenario, such that the only sales made by the Group
would be to replace losses of existing long-term contracts.
Under this basis, without the need to make cost savings, the
Group remained in compliance with its covenants and had no
need to draw upon the committed undrawn facility.
Based on this assessment, the Directors 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,
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event or actions, actual results ultimately may differ from those
estimates.
The Company and its subsidiary undertakings are referred to in
this report as the Group.
1. Principal accounting policies
The principal accounting policies adopted in the preparation of
these financial statements are set out below. These policies have
been consistently applied, unless otherwise stated.
Reporting currency
The Directors consider that, as the Group’s revenues are primarily
denominated in US dollars, the Company’s principal functional
currency is the US dollar. The Group’s financial statements are
therefore prepared in US dollars.
Currency translation
Transactions denominated in currencies other than US dollars
are translated into US dollars at the rate of exchange ruling at
the date of the transaction. The average exchange rate during
the course of the year was $1.2043/£1 (FY22: $1.3317/£1).
Monetary assets and liabilities expressed in foreign currencies
are translated into US dollars at rates of exchange ruling at the
Balance Sheet date $1.2619 /£1 (FY22: $1.2128/£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.
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*).
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.
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*), Deferred Tax related to Assets and
Liabilities arising from a Single Transaction (Amendments to IAS
12) (effective 1 January 2023*).
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.
*Effective for accounting periods starting on or after this date.
Annual Report and Financial Statements 2023
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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.
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 Consolidated
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; and
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-premise 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; and
• Discounts in relation to software licenses are recognised
over the life of the contract.
This policy is consistent with the Company’s products providing
customers with a service through the delivery of, and access to,
software solutions (Software-as-a-Service (“SaaS”)), and results
in revenue being recognised over the period that these services
are delivered to customers.
Incremental costs directly attributable in securing the contract
are charged equally over the life of the contract and as a
consequence are matched to revenue recognised. Any deferred
contract costs are included in both current and non-current
trade and other receivables.
Revenue from 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.
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1. Principal accounting policies [Cont'd]
Share-based payments
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 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.
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 share options
and / or conditional share awards that are expected to vest.
At the end of each reporting period, the entity revises its
estimates of the number of options and / or conditional share
awards 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 Consolidated
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.
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.
When the share 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.
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.
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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. “Share-based
payments” are recorded in the Group’s Consolidated 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 Consolidated 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.
Employee 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.
(f) Trademarks
Trademarks acquired in a business combination are initially
measured at fair value at the acquisition date. Trademarks
have a finite useful 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 (‘CGU’)
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.
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1. Principal accounting policies [Cont'd]
Property, Plant and Equipment [Cont'd]
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 is probable that future
economic benefits in excess of the originally assessed standard
of performance of the existing asset will flow to the Group.
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.
Lease liabilities resulting from an extension to the lease term
not included in the initial lease liability are measured using
the same method as for the initial lease. The right-of-use asset
relating to the lease liability is recognised as the present value of
the future lease payments related to the extension.
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.
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.
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Borrowings
Other reserves
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 and potential sales tax due in
relation to audits in respect of Sentry Data Systems for periods
prior to the acquisition.
Cash and cash equivalents
For the purpose of the Statements of Cash Flows, cash and cash
equivalents comprise cash on hand, deposits held with banks
and short term highly liquid investments including, on the
Consolidated Balance Sheet, any cash held at the balance sheet
date by the Employee Benefit Trust.
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.
Treasury shares
Treasury Shares are Ordinary Shares of the Company which are
purchased by the Company in a share buyback programme and
held for the purpose of satisfying employee share plan awards.
The consideration paid, including any directly attributable
costs, for the Company’s shares held in treasury is deducted
from equity in the Treasury Shares reserve until the shares are
transferred or disposed. When these shares in the Company are
transferred to employees, in accordance with employee share
plans, the cost is transferred from the Treasury Shares reserve to
retained earnings.
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 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.
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.
Intangible assets acquired and liabilities assumed:
the Group measured assets acquired and liabilities
assumed on the 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.
114
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Annual Report and Financial Statements 2023
(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 $267,000 higher/
lower respectively.
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 $217,000
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 56.
(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.
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2. Critical accounting estimates and judgements [Cont'd]
Estimates [Cont'd]
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 appropriateness 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 USD 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 $1,523,000 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.
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Annual Report and Financial Statements 2023
Craneware plc 117
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At 30 June 2023
Trade and other payables
Lease Liabilities
Borrowings
At 30 June 2022
Trade and Other Payables
Lease Liabilities
Borrowings
Less than 1
year
$'000
Between 1
and 2 years
$'000
Between 2
and 5 years
$'000
Over 5
years
$'000
14,006
1,389
13,808
29,203
13,331
2,439
11,035
26,805
-
420
13,234
13,654
-
1,219
11,035
12,254
-
2,050
72,660
74,710
-
325
102,070
102,395
-
-
-
-
-
-
-
-
Total
$'000
14,006
3,859
99,702
117,567
13,331
3,983
124,140
141,454
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 22 and the Group Balance Sheet is future finance charge on the
lease liabilities of $0.2m.
Borrowings relate entirely a term and revolving loan as described in Note 21 and are floating rate financial liabilities. The difference
between the undiscounted cash flows above and the liabilities per Note 21 is future finance charge on the borrowings of $16.7m.
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 FY22 drew down $120m of secured funding provided by our consortium of banking
partners. During the year, $8.0m (FY22: $8.0m) of the term loan has been repaid on schedule and the revolving credit facility drawn
down has been reduced by an additional $20.0m (FY22: nil), all covenants have been met, and the second extension of the term loan
has been agreed. Net borrowings of $4.5m (FY22: $63.2m restated) 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 and health systems 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 revenue
Other revenue
Total revenue
2023
$'000
143,125
13,741
16,018
1,134
174,018
2022
$'000
137,956
13,893
13,695
-
165,544
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4. Revenue from contracts with customers [Cont'd]
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
2023
$'000
2,206
2,758
4,964
2022
$'000
2,504
3,208
5,712
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 2022 were $2.5m.
Contract liabilities
The following table shows the total contract liabilities from software license and professional service contracts:
Software licensing
Professional services
Total contract liabilities
2023
$'000
47,037
5,481
52,518
2022
$'000
53,596
5,126
58,722
Contract liabilities are included within deferred income in the Balance Sheet.
Revenue of $53.7m was recognised during the year in relation to contract liabilities as of 30 June 2022.
The following table shows the aggregate transaction price allocated to performance obligations that are partially or fully unsatisfied
from software license and professional service contracts:
Revenue expected to be recognised
At 30 June 2023
- Software
- Professional services
Total at 30 June 2023
At 30 June 2022
- Software
- Professional services
Total at 30 June 2022
Total unsatisfied
performance obligations
$'000
Expected recognition
< 1 year
$'000
1 to 2 years
$'000
2 to 3 years
$'000
348,919
14,376
363,295
370,081
13,274
383,355
124,279
8,313
132,592
137,234
6,891
144,125
99,613
3,207
102,820
102,247
3,080
105,327
67,757
1,981
69,738
71,642
1,910
73,552
> 3 years
$'000
57,270
875
58,145
58,958
1,393
60,351
Revenue of $144.1m was recognised during the year in relation to unsatisfied performance obligations as of 30 June 2022.
The majority of these performance obligations are unbilled at the Balance Sheet date and therefore not reflected in these financial
statements.
Craneware plc
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Craneware plc 119
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5. Operating profit
The following items have been included in arriving at operating profit:
Employee costs (Note 6)
Employee costs capitalised
Depreciation of property, plant and equipment (Note 13)
Amortisation of intangible assets - other (Note 14)
Amortisation of intangible assets - acquired intangibles (Note 14)
Impairment of trade receivables (Note 16)
Exceptional items*
Operating lease rents for premises
2023
$'000
87,755
(10,261)
3,451
7,781
20,930
463
510
-
2022
$'000
88,698
(9,584)
3,259
5,905
20,239
77
2,106
72
* Exceptional items relate to integration costs associated with the purchase of Sentry Data Systems, Inc (FY22: exceptional items relate to legal and professional fees
associated with a successful acquisition and related integration costs).
Included in reaching operating profit is the movement in the provision for impairment of trade receivables during the year of a
$1,971,000 credit, as per Note 16, plus $91,000 net impairment credit for trade receivables recognised directly in operating costs.
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
6. Employee costs
2023
$'000
477
-
477
2022
$'000
414
103
517
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
2023
Group Number
2022
Group Number
2023
Company Number
2022
Company Number
103
241
281
109
734
92
226
321
85
724
1
37
111
44
193
1
37
114
37
189
Employment costs of all employees excluding non-executive Directors:
Wages and salaries
Social security costs
Other pension costs
Share based payments
Total direct costs of employment
2023 Group
$'000
2022 Group
$’000
2023 Company
$'000
2022 Company
$'000
75,890
6,049
2,824
2,992
87,755
78,422
5,805
2,355
2,116
88,698
19,705
1,668
919
1,196
23,488
18,795
1,677
981
978
22,431
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Craneware plc 119
Annual Report and Financial Statements 2023
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6. Employee costs [Cont'd]
Employee costs are included in Cost of Sales and Operating Costs.
The remuneration of the highest paid Director is $1.2m (FY22: $0.5m), including the $0.5m gain from exercising share options and
vested LTIPs in the year (which were granted in 2012, 2018 and 2019 respectively). Full details of Directors’ emoluments and share
option exercises are detailed in the Remuneration Committee’s Report on page 94 and key management compensation is given in
Note 24, Related Party Transactions.
Contributions are made on behalf of three of the executive Directors to a defined contribution retirement benefit scheme (FY22:
three).
7. Share-based payments
During the year the Group operated seven (FY22: 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 96 and 97. 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 $2,992,270 (FY22: $2,115,285) was recognised in the Consolidated Statement of Comprehensive Income for the year, as stated in
Note 6. This comprises a credit of $238,542 (FY22: $178,238 credit) 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 $3,230,812 (FY22:
$2,293,523) 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 $1,196,370 (FY22: $978,075) was
recognised in the Statement of Comprehensive Income for the year, as stated in Note 6 above. This comprises a credit of $238,542
(FY22: $178,238 credit) 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 $1,434,912 (FY22: $1,156,313) 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 2016 LTIP
Conditional share awards granted under the 2022 LTIP
Contingent share awards
Total share-based payments charge
Share option plans
Group
2023
$'000
-
558
71
31
62
1,780
729
-
3,231
2022
$'000
-
333
60
88
89
1,724
-
-
2,294
Company
2023
$'000
-
81
71
-
62
941
280
-
1,435
2022
$'000
-
74
60
-
89
933
-
-
1,156
Share options, granted by the Company to employees in respect of the following number of Ordinary Shares, were outstanding at 30
June 2023.
Craneware plc
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Craneware plc 121
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Date of grant
Exercise price
(GBP)
Exercise price
(USD)
2007 Share Option Plan
Remaining
life at 1 July
2022 (years)
No of
options at 1
July 2022
Granted
Exercised
Lapsed
No of
options at
30 June 2023
Remaining life
at 30 June
2023 (years)
21 Sep 2012
10 Sep 2013
22 Sep 2014
09 Mar 2016
£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
23 Sep 2022
£20.500
18 Nov 2022
£21.100
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
23 Sep 2022
£20.500
18 Nov 2022
£21.100
$6.50
$6.21
$8.39
$10.66
$15.63
$15.44
$24.45
$34.88
$23.01
$19.36
$35.21
$23.03
$25.09
$15.44
$24.45
$34.88
$23.01
$19.36
$35.21
$23.03
$25.09
2018 Employee Stock Purchase Plan
23 Mar 2021
£18.360
$25.42
2018 SAYE Option Plan
20 Apr 2020
£11.475
$14.32
19 Apr 2021
£18.360
$25.39
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
6,605
47,191
94,416
100,758
36,469
31,288
43,447
37,353
17,878
57,033
127,014
-
-
11,110
5,914
3,229
3,392
9,533
24,194
-
-
6,139
34,936
3,292
-
-
-
-
-
-
-
-
-
-
-
183,151
74,976
-
-
-
-
-
-
35,402
8,357
-
-
-
(6,605)
(12,719)
-
-
-
(1,616)
(1,126)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(4,928)
(5,316)
(16,283)
-
34,472
94,416
100,758
36,469
29,672
42,321
32,425
12,562
40,750
(17,952)
109,062
(24,492)
158,659
(3,598)
71,378
-
-
-
(1,337)
(2,533)
(4,328)
(9,124)
(1,307)
11,110
5,914
3,229
2,055
7,000
19,866
26,278
7,050
(6,139)
-
(9,621)
-
(2,335)
(1,274)
22,980
2,018
701,191
301,886
(31,687)
(100,946)
870,444
-
0.2
1.2
2.7
3.2
3.7
4.5
5.2
6.2
7.3
8.4
9.2
9.4
3.7
4.5
5.2
6.2
7.3
8.4
9.2
9.4
-
0.3
1.3
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7. Share-based payments [Cont'd]
The weighted average share price at the date of exercise of share options in the year ended 30 June 2023 was £16.72 ($19.58) (FY22:
£19.62 ($26.37)). The market value of Craneware plc Ordinary Shares at 30 June 2023 was £13.65 ($17.22) per share. The weighted
average remaining contractual life of the options outstanding at 30 June 2023 is 5.8 years (at 30 June 2022: 5.3 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
2023
2022
Number of
Options
Weighted average
exercise price (£)
Numer of
Options
Weighted average
exercise price (£)
701,191
301,886
(31,687)
(100,946)
870,444
428,383
14.72
20.67
7.17
20.61
16.38
10.93
604,994
197,681
(31,956)
(69,528)
701,191
417,781
11.80
26.10
12.46
22.74
14.72
10.51
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 were subject to time-based vesting and were 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 in each financial year since 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. Share options
granted, in prior financial years, to each executive Director are disclosed in the Remuneration Committee’s Report on page 96. During
the year ended 30 June 2023, share options were granted to certain employees as summarised and described below.
Grant date
in FY23
23 Sep 2022
18 Nov 2022
18 Nov 2022
18 Nov 2022
Description of share options granted to employees in FY23
Share options granted with service-based vesting condition only
Share options granted with service-based vesting condition only
Share options granted with market-based performance conditions
Share options granted with non-market performance conditions
Total share options granted during the year ended 30 June 2023
Share options granted with service-based vesting condition only
2016 Unapproved
Option Plan
Number of Options
2016 Schedule 4
Option Plan
Number of Options
Total
Number of Options
183,151
26,113
24,431
24,432
258,127
35,402
6,775
791
791
43,759
218,553
32,888
25,222
25,223
301,886
As explained in the Remuneration Committee’s Report on page 92, share options were granted on 23 September 2022, on 18
November 2022 and, in the prior financial year, on 18 November 2021, to certain employees with a service-based vesting condition
such that those 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. At the end of each reporting period, the Group revises its estimates of the
number of share options that are expected to vest on the basis of the service-based vesting condition. The impact of the revision to
original estimates, if any, are recognised in the Statement of Comprehensive Income, with a corresponding adjustment to equity. The
fair value of these share options was estimated using the Black-Scholes option pricing model, as appropriately adjusted, based on the
following assumptions:
Craneware plc
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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 (number)
Fair value per option
18-Nov-22
23-Sep-22
18-Nov-21
£21.30
$25.33
3
42.7%
3.20%
1.68%
£21.10
$25.09
32,888
$7.27
£20.50
$23.03
3
43.6%
4.01%
1.63%
£20.50
$23.03
218,553
$7.01
£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 the date of grant of the respective share options. 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.
Share options granted with performance conditions
Market-based performance conditions
The relative total shareholder return (TSR) (i.e. market-based) performance conditions applicable to those share options granted in
November 2021, October 2020 and in September 2019 are outlined in the Remuneration Committee’s Report on page 91.
On 18 November 2022 share options were granted from the 2016 Unapproved and the 2016 Schedule 4 Option Plans to certain
employees relating to a total of 48,863 and 1,582 Ordinary Shares in the Company respectively. 50% of the quantity of each of these
share option awards were subject to a relative TSR performance condition and the other 50% of those share options were subject to
a performance condition in respect of growth in adjusted earnings per share of the Group, each condition being measured separately
over three overlapping three year periods. The performance conditions were the same as are applicable to the conditional share
awards which were granted from the 2022 LTIP, on 18 November 2022, to the executive Directors of the Company and to senior
managers, as described in the Remuneration Committee’s Report on pages 89 and 90. The fair value of the share plan awards granted
on 18 November 2022, which are subject to the relative TSR performance condition, were estimated using a Monte Carlo pricing
model as outlined below.
The fair value of the share options granted under the 2016 Unapproved Option Plan and the 2016 Schedule 4 Option Plan, 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
18-Nov-22
18-Nov-21
02-Oct-20
04-Sep-19
05-Sep-18
17-Jan-18
24-Mar-17
Share price at date of grant (£)
Share price at date of grant ($)
Vesting period (years)
Expected volatility
Risk free rate
Exercise price (£)
Exercise price ($)
Shares under option at date of grant
Fair value per option
£21.300
$25.33
3
42.7%
3.18%
£26.100
$35.21
3
41.1%
0.36%
£21.100
£26.100
$25.09
25,222
$8.59
$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%
£12.375
$15.44
3
20.5%
0.11%
£17.750
£12.375
$24.45
88,074
$3.05
$15.44
93,029
$1.55
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7. Share-based payments [Cont'd]
Market-based performance conditions [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 and on 18 November 2022, 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.
Non-Market performance conditions
Share options in respect of a total of 25,223 Ordinary Shares in the Company were also granted on 18 November 2022 but with
performance conditions based on growth in adjusted Earnings per Share (EPS) (i.e. a non-market vesting condition) measured
over three consecutive three year periods. The Remuneration Committee’s Report on page 90 contain a details of the performance
conditions.
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. At the end of each reporting period, the Group revises its estimates of the
number of share options that are expected to vest based on the non-market vesting condition. The impact of the revision to original
estimates, if any, are recognised in the Statement of Comprehensive Income, with a corresponding adjustment to equity. 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 (number)
Fair value per option
The Craneware plc Employee Stock Purchase Plan (2018)
The Craneware plc SAYE Option Plan (2018)
18-Nov-22
£21.30
$25.33
3
42.7%
3.20%
1.68%
£21.10
$25.09
25,223
$7.24
Share options were granted under the Save As You Earn (SAYE) option plan and the Employee Stock Purchase Plan (ESPP), to those
employees who chose to participate, in the financial years ended 30 June 2020 and 30 June 2021. The exercise price of those
share options was at a 15% discount to the Company share price on the business day immediately preceding the date of grant, in
accordance with the rules of the ESPP and the SAYE plans.
The fair value of the share options granted under these two Plans was estimated using the Black-Scholes option pricing model, as
appropriately adjusted, based on the following assumptions:
Craneware plc
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Craneware plc 125
Date of Grant
Share Option Plan
Share price at date of grant (£)
Share price at date of grant ($)
Vesting period (years)
Expected volatility
Risk free rate
Dividend yield
Exercise price (£)
Exercise price ($)
Number of employees
Shares under option at date of grant (number)
Fair value per option
19-Apr-21
23-Mar-21
20-Apr-20
24-Mar-20
SAYE
£25.50
$35.27
3
54.2%
0.12%
1.01%
£18.360
$25.39
18
4,498
$16.51
ESPP
£21.60
$29.91
2
57.9%
0.02%
1.01%
£18.360
$25.42
29
7,420
$16.19
SAYE
£20.50
$25.58
3
50.6%
0.11%
1.58%
£11.475
$14.32
67
42,328
$8.89
ESPP
£13.10
$15.23
2
55.8%
0.11%
1.58%
£11.475
$13.34
37
21,669
$8.27
The expected volatility was determined by calculating the historic volatility of the Group’s share price over the previous three and two
years respectively.
Long Term Incentive Plan
The Craneware plc Long Term Incentive Plan (2016) (the ‘2016 LTIP’)
Conditional share awards were granted under the 2016 LTIP to certain senior managers and to the executive Directors from financial
year 2017 through to November 2021, as summarised in the table below. The market-based performance conditions, measured over
three consecutive three year periods, applicable to those conditional share awards granted in November 2021, in October 2020, in
September 2019, and in September 2018, are outlined in the Remuneration Committee’s Report on pages 90 and 91.
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Balance outstanding at 1 July
Awards granted in the year
Vested awards released during the year
Forfeited / lapsed during the year
Balance outstanding at 30 June
Number of conditional
share awards
2023
Number of conditional
share awards
2022
464,173
-
(68,356)
(114,771)
281,046
337,900
173,983
(15,863)
(31,847)
464,173
The remaining weighted average contractual life of the conditional share awards outstanding from the 2016 LTIP at 30 June 2023 is 0.8
years (at 30 June 2022: 1.4 years).
The fair values of the conditional share awards granted from the 2016 LTIP in financial years 2017 through 2022 were estimated using the
Monte Carlo pricing model, as appropriately adjusted, with the following main assumptions:
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7. Share-based payments [Cont'd]
Date of Grant
Share price at date of grant (£)
Share price at date of grant ($)
Vesting period (years)
Expected volatility
Risk free rate
Fair value per conditional share award
18-Nov-21
02-Oct-20
04-Sept-19
05-Sept-18
17-Jan-18
24-Mar-17
£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
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.
The Craneware plc Long Term Incentive Plan (2022) (the ‘2022 LTIP’)
This new long term incentive plan was established during the year ended 30 June 2023 and was approved by the Company’s
shareholders at the Annual General Meeting on 15 November 2022. The reasons for establishing this plan are explained in the
Remuneration Committee’s Report on page 88 and were also outlined in the Annual Report for the year ended 30 June 2022.
Conditional share awards were granted under this Plan to certain senior managers and to the executive Directors, following the AGM,
in November 2022.
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
2023
Number of conditional
share awards
2022
-
256,088
-
(5,212)
250,876
-
-
-
-
-
The remaining weighted average contractual life of the conditional share awards outstanding under the 2022 LTIP at 30 June 2023 is
2.4 years (there were no conditional share awards granted from this plan and outstanding at 30 June 2022).
The performance conditions, each measured over three consecutive three year periods, applicable to the conditional share awards
granted on 18 November 2022, are outlined in the Remuneration Committee’s Report on pages 89 and 90.
Market-based performance conditions
Performance conditions, based on a relative TSR measure, apply to 121,451 of the conditional share awards granted on 18 November
2022. The fair values of those conditional share awards 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
Dividend yield
Shares subject to conditional share awards with market-based performance conditions (number)
Fair value per conditional share award
18-Nov-22
£21.300
$25.33
3
42.7%
3.18%
1.68%
121,451
$21.12
Craneware plc
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Craneware plc 127
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Within the assumptions used for the estimation of the fair values of conditional awards, the expected volatility was determined by
calculating the historic volatility of the Company’s share price during the period from early April 2020 to the grant date was used, as
explained above.
Non-Market performance conditions
For a further 121,451 of the conditional share awards granted on 18 November 2022, which have performance conditions based on
growth in adjusted EPS of the Group as outlined in the Remuneration Committee’s Report on pages 91 and 92, the fair value of these
conditional share awards is recognised as a share-based payments expense over the vesting period based on the number of awards
which are expected to vest. At the end of each reporting period, the Group revises its estimates of the number of contingent share
awards that are expected to vest based on the non-market vesting condition. The fair value of these conditional share awards was
estimated using the Black-Scholes option pricing model, as appropriately adjusted, based on the following assumptions:
Date of Grant
Share price at date of grant (£)
Share price at date of grant ($)
Vesting period (years)
Expected volatility
Risk free rate
Dividend yield
Shares subject to conditional share awards with non-market performance conditions (number)
Fair value per conditional share award
Conditional share awards granted with service-based vesting condition only
18-Nov-22
£21.30
$25.33
3
42.7%
3.18%
1.68%
121,451
$25.09
Conditional share awards in respect of 13,186 Ordinary Shares in the Company were also granted on 18 November 2022 which have
service-based vesting conditions but no performance conditions. The fair value of these conditional share awards is recognised as a
share-based payments expense over the vesting period of three years based on the number of awards which are expected to vest. At
the end of each reporting period, the Group revises its estimates of the number of contingent share awards that are expected to vest
based on the service condition. The fair value of these conditional share awards, of $25.09 per share, was estimated using the Black-
Scholes option pricing model, as appropriately adjusted, based on the assumptions summarised in the table above.
Other share-based payments – contingent share awards
In addition to the employee share plans detailed above, contingent share awards have also been granted by the Company to certain
employees. Contingent share awards in respect of a total of 159,336 Ordinary Shares were outstanding at 30 June 2023 (159,336
Ordinary Shares at 30 June 2022).
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 2024 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.
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8. Finance income and expense
Finance Income
Deposit interest receivable
Total finance income
Finance Expense
Interest on borrowings (Note 21)
Interest on lease liabilities
Total finance expense
9. 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 (credit) / charge
Tax on profit on ordinary activities
2023
$'000
214
214
2023
$'000
6,212
145
6,357
2023
$'000
13,085
5,596
1,080
6,676
(3,324)
485
16
(2,823)
3,853
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
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 20.5% (FY22: 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% (FY22: 25%)
Internally developed software
Expenses not deductible for tax purposes
Income not taxable in the period
Use of tax losses
Spot rate remeasurement
(Deduction) / expense on share plan charges
Other
Total tax charge
2,682
1,566
23
-
392
628
246
(1,004)
(427)
240
(535)
42
3,853
2,490
103
(26)
339
328
-
119
-
-
39
301
-
3,693
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Craneware plc 129
10. Dividends
The dividends paid during the year were as follows:
Final dividend, re 30 June 2022 - 18.80 cents (15.5 pence)/ share (FY22: 21.47 cents (15.5 pence) / share)
Interim dividend, re 30 June 2023 - 15.13 cents (12.5 pence)/ share (FY22: 16.88 cents (12.5 pence) / share)
Total dividends paid to Company shareholders in the year
2023
$'000
6,645
5,474
12,119
2022
$'000
7,227
5,749
12,976
The proposed final dividend of 20.19 cents (16 pence), as noted on page 12, for the year ended 30 June 2023 is subject to approval by
the shareholders at the Annual General Meeting and has not been included as a liability in these financial statements.
11. 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 (excluding own shares
held)
Effect of dilutive potential Ordinary Shares: share options and LTIPs
Weighted average number of shares for the purpose of diluted earnings per share
2023
No. of Shares
000s
2022
No. of Shares
000s
35,146
289
35,435
35,110
367
35,477
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 and Treasury Shares held directly by the Company are excluded from the weighted average
number of Ordinary shares for the purposes of basic earnings per share.
Profit for the year
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Profit for the year attributable to equity holders of the parent
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
2023
$'000
9,232
-
405
20,930
30,567
2022
$'000
9,409
1,279
325
20,238
31,251
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
2023
cents
26.3
26.1
87.0
86.3
2022
cents
26.8
26.5
89.0
88.1
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12. Business Combination
Year ended 30 June 2023
There were no business combinations in the year ended 30 June 2023.
Year ended 30 June 2022
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, were as follows:
Cash paid (net of working capital adjusted)
Shares issued (fair value)
Total purchase consideration
The fair values for assets and liabilities recognised as a result of the acquisition were 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
$'000
297,015
75,905
372,920
Restated
Fair value
$'000
9,179
151,000
51,496
5,000
3,762
376
220,813
13,254
3,727
1,880
18,861
1,540
1,146
48,685
51,371
27,164
12,267
39,431
148,872
224,048
372,920
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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, $9.7m (restated) and $1.2m has been provided respectively in
relation to these intangible assets. Acquisition related costs of $2.1m were included within exceptional costs in profit and loss in the
year ended 30 June 2022.
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 $3.1m was 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.
See Note 26 for details of the restatement in the prior year.
13. Property, plant and equipment
Group
Cost
At 1 July 2022
Additions
Reclassification
Disposals
At 30 June 2023
Accumulated depreciation
At 1 July 2022
Charge for year
Depreciation on disposals
At 30 June 2023
Net Book Value at 30 June 2023
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
Leased
Properties
$’000
Computer
Equipment
$’000
Office
Furniture
$’000
Tenants
Improvements
$’000
Total
$’000
5,981
2,521
-
(657)
7,845
3,409
1,607
(280)
4,736
3,109
3,826
-
2,155
-
5,981
1,834
1,575
-
3,409
2,572
8,966
504
450
(3)
9,917
3,223
1,721
(1)
4,943
4,974
1,954
282
6,781
(51)
8,966
1,686
1,583
(46)
3,223
5,743
888
3
-
(2)
889
712
55
-
767
122
676
30
183
(1)
888
669
44
(1)
712
176
1,778
17,613
13
-
(40)
3,041
450
(702)
1,751
20,402
1,450
68
(26)
1,492
259
1,678
40
60
-
8,794
3,451
(307)
11,938
8,464
8,134
352
9,179
(52)
1,778
17,613
1,393
57
-
1,450
328
5,582
3,259
(47)
8,794
8,819
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13. Property, plant and equipment [Cont'd]
Leased properties
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 right-of-use leased property had the lease extended for a further 5 year term during the year. Another right -of-use leased
property was vacated at the request of the lessor, with a new property being provided by the lessor. There were no other additions or
disposals during the period. Depreciation of $1,607,000 (FY22: $1,575,000) was recognised during the year in respect of right-of-use
assets.
The average remaining lease term is 2.4 years.
The Group does not have any other right-of-use assets other than those disclosed under leased properties.
Company
Cost
At 1 July 2022
Additions
Disposals
At 30 June 2023
Accumulated depreciation
At 1 July 2022
Charge for the year
Depreciation on disposals
At 30 June 2023
Net Book Value at 30 June 2023
Cost
At 1 July 2021
Additions
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
Leased
Properties
$’000
Computer
Equipment
$’000
Office
Furniture
$’000
Tenants
Improvements
$’000
1,988
2,085
-
4,073
1,645
516
-
2,161
1,912
1,988
-
-
1,988
1,097
548
-
1,645
343
1,096
200
(2)
1,294
975
62
(1)
1,036
258
1,015
100
(19)
1,096
885
106
(16)
975
121
486
1
-
487
455
9
-
464
23
456
30
-
486
453
2
-
455
31
1,494
4
-
1,498
1,310
33
-
1,343
155
1,454
40
-
1,494
1,277
33
-
1,310
184
Total
$’000
5,064
2,290
(2)
7,352
4,385
620
(1)
5,004
2,348
4,913
170
(19)
5,064
3,712
689
(16)
4,385
679
One right-of-use leased property had the lease extended for a further 5 year term during the year. There were no other additions
or disposals during the period. Depreciation of $516,000 (FY22: $548,000) was recognised during the year in respect of right-of-use
assets.
The average remaining lease term is 4.6 years.
Craneware plc
132
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Annual Report and Financial Statements 2023
Craneware plc 133
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o
t
e
s
t
o
t
h
e
F
i
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a
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s
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14. Intangible assets
Group
Cost
At 1 July 2022
Additions
Reclassification
At 30 June 2023
Goodwill
$’000
Customer
Relationships
$’000
Proprietary
Software
$’000
Trademarks
$’000
Development
Costs
$’000
Computer
Software
$’000
235,486
153,964
52,724
5,000
-
-
-
-
-
-
-
-
56,096
14,960
-
235,486
153,964
52,724
5,000
71,056
Accumulated amortisation and impairment
At 1 July 2022
Charge for the year
At 30 June 2023
250
-
250
12,706
10,067
22,773
Net Book Value at 30 June 2023
235,236
131,191
Cost
At 1 July 2021
Additions
11,438
-
2,964
-
Acquisition of subsidiary - restated
224,048
151,000
Disposals
At 30 June 2022 - restated
-
-
235,486
153,964
Accumulated amortisation and impairment
At 1 July 2021
Charge for the year
Amortisation on disposal
At 30 June 2022
250
-
-
250
2,964
9,742
-
12,706
Net Book Value at 30 June 2022 - restated
235,236
141,258
See Note 26 for details of the restatement in the prior year.
11,187
10,307
21,494
31,230
3,043
-
51,496
(1,815)
52,724
3.043
9,959
(1,815)
11,187
41,537
538
556
1,094
3,906
-
-
5,000
-
5,000
-
538
-
538
15,607
6,477
22,084
48,972
42,976
13,506
-
(386)
56,096
11,324
4,669
(386)
15,607
Total
$’000
508,110
15,031
(450)
522,691
42,187
28,711
70,898
4,840
71
(450)
4,461
1,899
1,304
3,203
1,258
451,793
1,004
174
3,762
(100)
4,840
734
1,236
(71)
1,899
61,425
13,680
435,306
(2,301)
508,110
18,315
26,144
(2,272)
42,187
4,462
40,489
2,941
465,923
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
2023
$'000
11,188
224,048
235,236
Restated
2022
$'000
11,188
224,048
235,236
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.
132
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14. Intangible assets [Cont'd]
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
2023
2.0%
2.0%
2022
2.0%
2.0%
2023
9.0%
9.0%
2022
12.1%
9.5%
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 in the Craneware CGU and certain disclosures, including sensitivities, relating to goodwill have not been made for
this CGU given the significant headroom on impairment testing. For the Sentry CGU the impairment test was most sensitive to the
discount rate assumption. There is no impairment, with all other assumptions remaining the same, with a discount rate up to 12%.
There are no reasonable possible changes in any of the other assumptions for this CGU that would result in an impairment.
Company
Cost
At 1 July 2022
Additions
At 30 June 2023
Accumulated amortisation
At 1 July 2022
Charge for the year
At 30 June 2023
Net Book Value at 30 June 2023
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
Development Costs
$’000
Computer Software
$’000
52,868
11,468
64,336
15,368
5,724
21,092
43,244
42,569
10,299
-
52,868
10,917
4,451
-
15,368
37,500
587
71
658
550
55
605
53
686
1
(100)
587
453
168
(71)
550
37
Total
$’000
53,455
11,539
64,994
15,918
5,779
21,697
43,297
43,255
10,300
(100)
53,455
11,370
4,619
(71)
15,918
37,537
Craneware plc
134
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Annual Report and Financial Statements 2023
Craneware plc 135
15. 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.
Ordinary
100%
Held directly by Craneware plc
Held indirectly by Craneware plc
Craneware, Inc.
Craneware InSight, Inc.
Craneware Healthcare Intelligence, LLC
SDS Holdco, Inc.
SDS Intermediate, Inc.
Sentry Data Systems, Inc.
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
Agilum Healthcare Intelligence, Inc.
Ordinary
100%
100%
100%
100%
100%
100%
100%
USA
USA
USA
USA
USA
USA
USA
USA
Cost
At 1 July
Acquisition of subsidiary
At 30 June
Holding company
Sales & Marketing
Software Development &
Professional Services
Software Development
Dormant
Dormant
Software Development &
Professional Services
Software Development
2023
$'000
84,905
-
84,905
2022
$'000
9,000
75,905
84,905
The results of the Subsidiary companies have been included in the consolidated financial statements. Subsidiary registered addresses
are listed on page 56. The carrying value of the subsidiaries is supported by the underlying net assets and future cashflows.
16. Trade and other receivables
Group
Company
N
o
t
e
s
t
o
t
h
e
F
i
n
a
n
c
i
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l
S
t
a
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e
m
e
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t
s
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t
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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
2023
$'000
27,594
(3,421)
24,173
1,024
-
-
8,270
4,715
38,182
-
-
(2,758)
35,424
Restated
2022
$'000
34,730
(5,855)
28,875
827
2,932
-
4,714
5,470
42,818
-
(26)
(3,208)
39,584
2023
$'000
13,958
(2,623)
11,335
9,666
1,020
183,657
1,513
-
207,191
-
-
-
2022
$'000
17,025
(2,714)
14,311
9,252
1,000
202,350
1,603
-
228,516
(6,000)
-
-
207,191
222,516
See Note 26 for details of the restatement in the prior year.
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.
134
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F
e
h
t
o
t
s
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t
o
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16. Trade and other receivables [Cont'd]
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.
30 June 2023
Expected credit loss rate
Gross carrying amount
Expected credit loss
Net carrying amount
30 June 2022
Expected credit loss rate
Gross carrying amount
Expected credit loss
Net carrying amount
Current
$'000
0.3%
11,377
37
11,340
Current
$’000
0.4%
20,457
92
20,365
<30 days
$'000
30-60 days
$'000
61-90 days
$'000
> 90 days
$'000
0.3%
5,004
14
4,990
7.7%
1,677
130
1,548
<30 days
$’000
30-60 days
$’000
3.8%
1,869
71
1,798
10.7%
1,055
113
942
4.9%
2,913
143
2,771
61-90 days
$’000
10.7%
419
45
374
46.8%
6,623
3,098
3,525
>90 days
$’000
50.6%
10,930
5,534
5,396
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.
30 June 2023
Expected credit loss rate
Gross carrying amount
Expected credit loss
Net carrying amount
30 June 2022
Expected credit loss rate
Gross carrying amount
Expected credit loss
Net carrying amount
Current
$'000
0.4%
9,392
37
9,355
Current
$’000
0.3%
10,203
29
10,174
<30 days
$'000
2.0%
484
10
474
<30 days
$’000
1.5%
799
12
787
30-60 days
$'000
14.9%
616
92
524
30-60 days
$’000
1.9%
317
6
311
61-90 days
$'000
> 90 days
$'000
9.7%
361
35
326
61-90 days
$’000
3.0%
54
2
52
78.9%
3,105
2,449
656
>90 days
$’000
47.2%
5,652
2,665
2,987
Craneware plc
136
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Annual Report and Financial Statements 2023
Craneware plc 137
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
Group
Company
2023
$'000
5,855
-
704
(463)
(2,675)
3,421
2022
$'000
2,270
3,141
716
(77)
(195)
5,855
2023
$'000
2,714
-
704
(447)
(348)
2,623
2022
$'000
2,270
-
840
(202)
(194)
2,714
The creation and release of provision for impaired receivables has been included in net operating expenses in the Statement of
Comprehensive Income. Amounts charged to the allowance account are generally written off when there is no expectation of
recovering additional cash.
The other classes within trade and other receivables do not contain impaired assets. The maximum exposure to credit risk at the
reporting date is the fair value of each class of receivable mentioned above. The Group does not hold any collateral as security.
17. Deferred tax
Deferred tax is calculated in full on the temporary differences under the liability method using a rate of tax of 25% (FY22: 25%) in the
UK and 25% (FY22: 25%) in the US including a provision for state taxes.
See Note 26 for details or the restatement in the prior year.
N
o
t
e
s
t
o
t
h
e
F
i
n
a
n
c
i
a
l
S
t
a
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e
m
e
n
t
s
[
C
o
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t
'
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At 1 July
Credit/ (charge) to comprehensive income
Transfer direct to equity
Deferred tax arising on acquisitions
At 30 June
Group
Company
2023
$'000
(44,417)
4,084
(1,004)
-
(41,337)
Restated
2022
$'000
5,459
(825)
(366)
(48,685)
(44,417)
2023
$'000
805
(1,365)
(666)
-
(1,226)
2022
$'000
2,217
(1,431)
19
-
805
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 2023 was $41,337,000 (FY22: net deferred tax liability $44,417,000 restated).
136
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F
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s
e
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o
N
17. Deferred tax [Cont'd]
Deferred tax assets - recognised
Group
At 1 July 2022
Credited to comprehensive income
Charged to equity
Total provided at 30 June 2023
At 1 July 2021
(Charged) / credited to comprehensive income
Charged to equity
Total provided at 30 June 2022
Deferred tax liabilities - recognised
Group
At 1 July 2021
Charged / (credited) to comprehensive income
Total provided at 30 June 2023
At 1 July 2021
Credited / (charged) to comprehensive income
Arising on acquisition restated
Total provided at 30 June 2022 restated
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 liability
Short term
timing
differences
$'000
3,926
585
-
4,511
759
3,167
-
3,926
Losses
$’000
293
135
-
428
1,058
(765)
-
293
Share
Options
$'000
3,201
160
(1,004)
2,357
3,924
(357)
(366)
3,201
Long term
timing differences
$'000
Accelerated tax
depreciation
$'000
(47,921)
3,543
(44,378)
-
764
(48,685)
(47,921)
(3,916)
(339)
(4,255)
(282)
(3,634)
-
(3,916)
2023
$'000
6,867
429
7,296
(43,633)
(5,000)
(48,633)
(41,337)
Total
$’000
7,420
880
(1,004)
7,296
5,741
2,045
(366)
7,420
Total
$’000
(51,837)
3,204
(48,633)
(282)
(2,870)
(48,685)
(51,837)
Restated
2022
$'000
7,126
294
7,420
(46,837)
(5,000)
(51,837)
(44,417)
The Company's deferred tax assets and liabilities are all expected to be recovered in the future.
Craneware plc
138
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Annual Report and Financial Statements 2023
Craneware plc 139
Deferred tax assets - recognised
Company
At 1 July 2022
(Charged) / credited to comprehensive income
Credited to equity
Total provided at 30 June 2023
At 1 July 2021
Charged to comprehensive income
Credited to equity
Total provided at 30 June 2023
Deferred tax liabilities - recognised
Company
At 1 July 2022
Charged to comprehensive income
Total provided at 30 June 2023
At 1 July 2021
Charged to comprehensive income
Total provided at 30 June 2023
Short term
timing differences
$'000
101
(46)
-
55
178
(77)
-
101
Share
Options
$'000
1,661
64
(666)
1,059
2,054
(412)
19
1,661
Accelerated tax
depreciation
$'000
(957)
(1,384)
(2,341)
(15)
(942)
(957)
N
o
t
e
s
t
o
t
h
e
F
i
n
a
n
c
i
a
l
S
t
a
t
e
m
e
n
t
s
[
C
o
n
t
'
d
]
Total
$’000
1,762
18
(666)
1,114
2,232
(489)
19
1,762
Total
$’000
(957)
(1,384)
(2,341)
(15)
(942)
(957)
The Group continues to monitor the recoverability of deferred tax assets and are satisfied that the continuing profitability will utilise
the assets in respect of losses and there remains the expectation that share options will be exercised which will give rise to the
utilisation of the asset in this regard.
18. Share capital and reserves
(a) Share capital
Authorised
Equity share capital
Ordinary shares of 1p each
Allotted called-up and fully paid
Equity share capital
Ordinary shares of 1p each
At 1 July
Allotted and issued in the year as part of the consideration for the
acquisition of Sentry (Note 12)
Allotted and issued in the year on exercise
of employee share options
At 30 June
2023
Number
50,000,000
2023
$’000
1,014
2022
Number
50,000,000
2022
$’000
1,014
Number
$’000
Number
$’000
35,542,169
659
33,019,191
-
-
35,542,169
-
-
659
2,507,348
15,630
35,542,169
624
34
1
659
138
Craneware plc
Annual Report and Financial Statements 2023
Craneware plc 139
Annual Report and Financial Statements 2023
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18. Share capital and reserves [Cont'd]
Share buyback
During the year, the Company purchased a total of 223,632 of its own Ordinary Shares (FY22: nil) in accordance with a share buyback
programme which commenced on 12 April 2023 and is ongoing at the time of approval of these financial statements. Further
details regarding the share buyback are contained in the Directors’ Report on page 62. Total consideration for this share buyback
programme, including directly attributable costs incurred up to the date of approval of these financial statements, was $4,417,000,
of which $3,815,000 was paid during the year ended 30 June 2023. The Ordinary Shares purchased by the Company in the share
buyback programme are held in treasury (with no voting rights attached) for the purpose of satisfying employee share plan awards.
During the year ended 30 June 2023, a total of 9,621 (FY22: nil) Ordinary Shares were transferred from treasury by the Company to
satisfy the exercise of employee share options. Therefore at 30 June 2023, the Company held 214,011 Ordinary Shares in treasury (as
at 30 June 2022: nil).
Shares issued during the year ended 30 June 2023
In the year ended 30 June 2023, no new Ordinary Shares in Craneware plc were issued. In the prior financial year, 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 12 contains further details of this business combination. The fair value of the consideration
given in excess of the nominal value of these Ordinary Shares issued in July 2021 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 7. During the year ended 30 June 2023 no new Ordinary Shares (FY22: 15,630 Ordinary Shares) were issued on the
exercise of share options by employees.
Employee Benefit Trust
The Company established the ‘The Craneware plc Employee Benefit Trust’ (the EBT) during the year ended 30 June 2017. This is a
discretionary trust established, in conjunction with the operation of the Company’s employee share plans, for the benefit of the
employees of the Company and its subsidiaries. The EBT has an independent trustee, 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 2023 is summarised in the table below.
Loan balance (from Company to the EBT) at 1 July
Exchange gain / (loss)
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
2023
$'000
8,867
355
179
(138)
9,263
2022
$'000
8,732
(1,169)
3,421
(2,117)
8,867
The EBT did not purchase any Craneware plc Ordinary Shares of 1 pence each in the market in the year ended 30 June 2023 (FY22:
67,420 Ordinary Shares in the Company were purchased by the EBT in the market). The EBT purchased 10,086 Ordinary Shares in the
Company off market, based on the prevailing market price per share on the date of purchase, in the year ended 30 June 2023 (FY22:
15,797 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 $179,000 (FY22: $1,726,000
net outflow).
The Shares held by the EBT are utilised to satisfy employee share plan awards and, during the financial year ended 30 June 2023,
a total of 55,934 of the Shares from the EBT (FY22: 20,479 Shares) were used to satisfy the exercise of employee share options and
vested employee conditional share awards. At 30 June 2023 the EBT held 365,475 Craneware plc Ordinary Shares (at 30 June 2022:
411,323 Ordinary Shares).
Craneware plc
140
Annual Report and Financial Statements 2023
Annual Report and Financial Statements 2023
Craneware plc 141
(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.
Treasury shares
Treasury Shares represent Ordinary Shares of the Company which were purchased by the Company in a share buyback programme,
which commenced in April 2023, and held for the purpose of satisfying employee share plan awards.
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 2023 and as at 30 June 2022 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 (Note 12 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 comprise the credit corresponding to share-based payment charges recognised in the Statement of Comprehensive
Income 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.
19. Cash generated from/ (used in) operations
Reconciliation of profit before taxation to net cash generated from/ (used in) operations:
N
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Profit before tax
Finance income
Finance expense
Depreciation on property, plant and equipment
Amoritsation on intangible assets - other
Amortisation on intangible assets - acquired intangibles
Loss / (gain) on disposals
Share based payments
Movements in working capital:
Decrease / (increase) in trade and other receivables
(Decrease) / increase in trade and other payables
Increase in amounts held on behalf of customers
Cash generated from / (used in) operations
Group
Company
2023
$'000
13,085
(214)
6,357
3,451
7,781
20,930
7
2,992
1,116
(5,462)
50,548
2022
$'000
13,102
(1)
5,031
3,259
5,905
20,239
(5)
2,116
2023
$'000
8,486
(443)
40
620
5,779
-
-
1,196
2022
$'000
8,633
(279)
28
689
4,619
-
-
978
(3,203)
15,668
(193,542)
(13,500)
(13,126)
-
-
3,005
-
100,591
32,943
18,220
(175,869)
140
Craneware plc
Annual Report and Financial Statements 2023
Craneware plc 141
Annual Report and Financial Statements 2023
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20. Cash and cash equivalents
For the purpose of the statement of cash flows, cash and cash equivalents comprise cash held by the Group and short-term bank
deposits.
Total cash and cash equivalents
Group
Company
2023
$'000
78,537
2022
$'000
47,157
2023
$'000
25,102
2022
$'000
28,400
The effective rates on short-term bank deposits were 0.247% (FY22: 0.003%).
Restricted cash balances comprises amounts held on behalf of customers as part of services provided in connecting them to their
contract pharmacy network. After further assessment during the year, these amounts have been included within cash and cash
equivalents in the current year.
Restricted cash
21. Borrowings
Group
2023
$'000
-
2022
$'000
1,251
The debt facility comprises a term loan of $24m (FY22: $32m) which is repayable in quarterly instalments over 5 years up to 30 June 2026, and a
revolving loan facility of $100m of which $60m (FY22: $80m) is drawn down and which expires on 7 June 2026. During the year, $8m was repaid on
the term loan and the amount drawn down on the revolving credit facility was reduced by $20m.
Interest is charged on the facility on a daily basis at margin and compounded reference rate. 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
2023
$'000
8,000
75,033
83,033
2022
$'000
8,000
103,589
111,589
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 2023 is $0.97m (FY22: $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 borrowings.
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 borrowings 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:
Revolving facility
Undrawn borrowing facilities
Craneware plc
142
Annual Report and Financial Statements 2023
2023
$'000
40,000
40,000
2022
$'000
20,000
20,000
Annual Report and Financial Statements 2023
Craneware plc 143
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22. 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
Restated
2022
$'000
3,587
2023
$'000
2,185
2022
$'000
1,592
-
17,128
27,720
2,439
379
2,705
128
6,222
22
226
58
552
89
2,397
135
353
17
514
-
1,115
22
31,333
15,951
15,482
22,770
2023
$'000
4,005
-
1,389
420
1,299
237
8,466
135
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 2023 was 25 days (FY22: 29 days). Trade and other payables are classified as
financial liabilities at amortised cost.
Other provisions relate to employer taxes due in relation to employee share awards from the 2007 Share Option Plan payable on
exercise of options of $59,000 (FY22: $17,000) and potential sales tax due in relation to audits in respect of Sentry Data Systems for
periods prior to the acquisition of $362,000 (FY22: $362,000 restated).
Amounts held on behalf of customers of $0.7m was included within other creditors in the prior year. Due to the size of the balance in
the current year, it has been included on face of the Balance Sheet.
See Note 26 for details for restatement in the prior year.
23. Contingent liabilities and financial commitments
(a) Capital commitments
The Group has no capital commitments at 30 June 2023 (FY22: 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.
2023
$'000
3
-
-
3
2022
$'000
3
2
-
5
142
Craneware plc
Annual Report and Financial Statements 2023
Craneware plc 143
Annual Report and Financial Statements 2023
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24. 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
2023
2022
Charged
$
Outstanding
at year end
$
209,517
146,571
-
-
Charged
$
175,632
162,076
1,473,370
586,549
796,671
60,649
929,609
-
-
53,435
447,139
2,625,438
670,743
1,764,885
69,971
824,662
-
-
73,071
494,728
Outstanding
at year end
$
-
-
-
-
-
-
-
-
-
Craneware plc
144
Annual Report and Financial Statements 2023
Annual Report and Financial Statements 2023
Craneware plc 145
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 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
2023
2022
Outstanding
at year end
$
-
-
-
-
-
-
-
-
Charged
$
175,632
162,076
796,671
53,435
447,139
380,142
26,451
133,210
-
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Charged
$
209,517
146,571
Outstanding
at year end
$
-
-
1,473,370
586,549
-
-
81,955
-
-
60,649
929,609
273,708
13,399
144,202
-
25,775,233
7,430,275
2,051,137
597,648
181,489,918
194,653,801
26,129,580
5,723,046
(3,346,820)
(11,672,683)
3,880,648
1,032,308
(7,392,240)
(10,531,030)
3,560,729
1,908,459
(6,388,775)
(5,515,981)
(808,402)
(823,486)
1,199,305
1,419,494
(949,002)
(276,250)
967,455
276,250
Note 18 contains details of the transactions and balances between the Company and the employee benefit trust during and at the
end of the financial year.
Key management are considered to be the Directors together with the Chief Information Officer, Chief Marketing Officer, Chief
Revenue Officer, Chief Legal Officer, Chief Customer Officer, Chief Transformation Officer and Chief Technology Officer.
There were no other related party transactions in the year which require disclosure in accordance with IAS 24.
144
Craneware plc
Annual Report and Financial Statements 2023
Craneware plc 145
Annual Report and Financial Statements 2023
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25. Ultimate controlling party
The Directors have deemed that there are no controlling parties of the Company.
26. Restatement of prior period
Deferred revenue in Sentry opening balance sheet
On acquisition of Sentry Data Systems, Inc. in FY22, $4.792m of the deferred revenue for one contract recorded in the Sentry opening
balance sheet related to a period more than one year from 30 June 2022. This was disclosed as less than one year on the prior year
balance sheet. The balance sheet has been restated to reflect the long term portion of the deferred revenue on the closing balance
sheet. There was no impact on the opening balance sheet at 1 July 2021.
Non-Current Liabilities
Deferred income
Current Liabilities
Deferred income
Total Liabilities
Note
Restated
2022
$'000
4,792
158,051
53,930
77,722
235,773
Adjustment
2022
$'000
4,792
4,792
(4,792)
(4,792)
-
2022
$'000
-
153,259
58,722
82,514
235,773
Deferred tax, current tax and sales tax and goodwill on acquisition
On acquisition of Sentry Data Systems, Inc. in FY22, $51.874m of the deferred tax liabilities and $1.100m of corporation tax
receivables were recognised at 30 June 2022, with the other side going against goodwill. Following the completion of the FY22
tax returns it was identified that an asset class included in the fair value of assets and liabilities recognised on acquisition liabilities
has incorrectly been given a ‘tax basis’ and as such the deferred tax liability included $3.189m and the tax debtor included $0.417m
incorrectly in relation to this asset class.
In the period since acquisition, it has been identified that there are two states in which Sentry Data Systems, Inc operates where
amounts are due in respect of sales tax for periods prior to the acquisition. A provision should have been made in respect of these
amounts as part of the fair value of assets and liabilities recognised on acquisition. A provision of $0.362m should have been
included on acquisition.
The balance sheet has been restated to reflect the reduction in the deferred tax liability on acquisition of $3.189m, an increase
in trade and other payables of $0.362m on acquisition, a decrease in trade and other receivables of $0.417m on acquisition and
a corresponding reduction in goodwill of $2.410m. While these adjustments have decreased total assets and total liabilities by
$2.827m each, there is no impact on net assets. There was no impact on the opening balance sheet at 1 July 2021.
Craneware plc
146
Annual Report and Financial Statements 2023
Annual Report and Financial Statements 2023
Craneware plc 147
Balance sheet extract
Assets
Non-Current Assets
Intangible assets - goodwill
Current Assets
Trade and other receivables
Total Assets
Equity and Liabilities
Non-Current Liabilities
Deferred tax
Current Liabilities
Trade and other payables
Total Liabilities
Total Equity and Liabilities
Note
14
17
22
Restated
2022
$'000
235,236
477,976
39,584
87,992
565,968
44,417
154,862
15,482
78,084
232,946
565,968
Adjusted
2022
$'000
(2,410)
(2,410)
(417)
(417)
(2,827)
(3,189)
(3,189)
362
362
(2,827)
(2,827)
N
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2022
$'000
237,646
480,386
40,001
88,409
568,795
47,606
158,051
15,120
77,722
235,773
568,795
Note 12 Business combinations has been updated to reduce the deferred tax liability on acquisition by $3.189m, increase trade
and other payables by $0.362m and decrease trade and other receivables by $0.417m with a respective decrease to goodwill on
acquisition of $2.410m
Note 12 extract
Current assets
Trade and other receivables
Total current assets
Non-current liabilities
Deferred tax
Total non-current liabilities
Current liabilities
Trade and other payables
Total current liabilities
Net indentifable assets acquired
Add: goodwill
Total consideration
Restated
Fair Value
$'000
13,254
18,861
48,685
51,371
12,267
39,431
148,872
224,048
372,920
Adjusted
Fair Value
$'000
(417)
(417)
(3,189)
(3,189)
362
362
2,410
(2,410)
-
Fair Value
$'000
13,671
19,278
51,874
54,560
11,905
39,069
146,462
226,458
372,920
146
Craneware plc
Annual Report and Financial Statements 2023
Craneware plc 147
Annual Report and Financial Statements 2023
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26. Restatement of prior period [Cont'd]
Deferred tax, sales tax and goodwill on acquisition [cont'd]
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, $9.7m restated (FY22: $12.9m) and $1.2m has been
provided respectively in relation to these intangible assets.
Note 14 Intangible assets has been updated to reflect the reduction in goodwill on acquisition of $2.410m.
Note 14 extract
Group
Cost
Acquisition of subsidiary restated
At 30 June 2022 restated
Net book value at 30 June 2022 restated
Cost
Acquisition of subsidiary adjusted
At 30 June 2022 adjusted
Net book value at 30 June 2022 adjusted
Cost
Acquisition of subsidiary
At 30 June 2022
Net book value at 30 June 2022
Craneware InSight
Sentry
Total Goodwill
Goodwill
$'000
224,048
235,486
235,236
(2,410)
(2,410)
(2,410)
226,458
237,896
237,646
Adjusted
2022
$'000
-
(2,410)
(2,410)
Restated
2022
$'000
11,188
224.048
235,236
Note 16 Trade and other receivables has been updated to reflect the reduction in the tax receivable $0.417m.
Note 16 extract
Current tax receivable
Current portion
Restated
2022
$'000
2,932
42,818
39,584
Adjusted
2022
$'000
(417)
(417)
(417)
Note 17 Deferred tax has been updated to reflect the reduction in deferred tax liabilities on acquisition of $3.189m.
Note 17 extract
Group
Deferred tax arising on acquisitions
At 30 June
Craneware plc
148
Annual Report and Financial Statements 2023
Restated
2022
$'000
(48,685)
(44,417)
Adjusted
2022
$'000
3,189
3,189
Total
$'000
435,306
508,110
465,923
(2,410)
(2,410)
(2,410)
437,716
510,520
468,333
2022
$'000
11,188
226,458
237,646
2022
$'000
3,349
43,235
40,001
2022
$'000
(51,874)
(47,606)
Annual Report and Financial Statements 2023
Craneware plc 149
Deferred tax liabilities - recognised
Group
Arrising on acquisition restated
Total provided at 30 June 2022 restated
Arising on acquisition adjusted
Total provided at 30 June 2022 adjusted
Arising on acquisition
Total provided at 30 June 2022
The analysis of the deferred tax assets and liabilities is as follows:
Group
Deferred tax liabilities:
Deferred tax liabilities to be recovered after more than 1 year
Net deferred tax liabilities
Restated
2022
$'000
(46,837)
(51,837)
(44,417)
Note 22 has been updated to reflect the inclusion of the provision for sales taxes of $0.362m.
Note 22 extract
Other provisions < 1 year
At 30 June
Restated
2022
$'000
379
15,482
Long term timing
differences
$'000
(48,685)
(47,921)
3,189
3,189
(51,874)
(51,110)
Adjusted
2022
$'000
3,189
3,189
3,189
Adjusted
2022
$'000
362
362
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Total
$'000
(48,685)
(51,837)
3,189
3,189
(51,874)
(55,026)
2022
$'000
(50,026)
(55,026)
(47,606)
2022
$'000
17
15,120
Other provisions relate to employer taxes due in relation to employee share awards from the 2007 Share Option Plan payable on
exercise of options of $59,000 (FY22: $17,000) and potential sales tax due in relation to audits in respect of Sentry Data Systems for
periods prior to the acquisition of $362,000 (FY22: $362,000 restated, FY22: nil).
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 - acquisition and associated share placing
Exceptional items - integration costs
Adjusted EBITDA
2023
$'000
19,228
3,451
7,781
20,930
2,992
-
510
54,892
2022
$'000
18,132
3,259
5,905
20,239
2,116
1,705
401
51,757
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148
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27. Alternative performance measures [Cont'd]
Adjusted earnings per share (EPS)
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 11 for the calculation.
Operating cash conversion
Operating cash conversion is calculated as cash generated from operations (as per Note 19), adjusted to exclude cash payments for
exceptional items and movements in cash held on behalf of customers, divided by adjusted EBITDA.
Cash generated from operations (Note 19)
Total exceptional items
Movement in amounts held on behalf of customers (Note 19)
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
2023
$'000
100,591
510
(50,548)
60
(92)
12
-
50,533
54,892
92.1%
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 - acquisition and associated share placing
Exceptional items - integration costs
Adjusted PBT
Net borrowings
2023
$'000
13,085
20,930
-
510
34,525
2022
$'000
32,943
2,106
-
5,509
(60)
683
(12)
41,169
51,757
79.5%
2022
$'000
13,102
20,239
1,705
401
35,447
Net borrowings refers to the net balance of short term borrowings, long term borrowings and cash and cash equivalents (excluding
restricted cash in the prior year).
Cash and cash equivalents (Note 20)
Borrowings (Note 21)
Net borrowings
2023
$'000
78,537
(83,033)
(4,496)
2022
$'000
47,157
(111,589)
(64,432)
Lease liabilities are excluded from borrowings for the purpose of net borrowings.
Cash and cash equivalents have been restated to include amounts held on behalf of customers as per note 26. The change has
resulted in a decrease in Net borrowings of $1.251m.
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Craneware plc 151
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 2023 that are subject to
underlying contracts.
Net Revenue Retention
Net Revenue Retention is the percentage of revenue retained from existing customers over the measurement period, taking into
account both churn and expansion sales.
Revenue Growth
Revenue Growth is the increase in Revenue in the current year compared to the prior year expressed as a percentage of the previous
year Revenue.
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150
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