Craneware plc | Annual Report & Financial Statements 2024
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Trisus® Power of One
Final Results
Chair’s Statement
Strategic Report: Operational and Financial Review
Strategic Report: Key Performance Indicators
Strategic Report: Principal Risks and Uncertainties
Strategic Report: Environmental, Social and Governance (ESG) Intro
Strategic Report: Non-Financial and Sustainability Information Statement
Strategic Report: Environmental, Social and Governance (ESG) Statement
Strategic Report: Section 172 (1) Statement
Stakeholder Engagement
Directors, Secretary and Advisors
Subsidiaries
Board of Directors
Directors’ Report
Corporate Governance Report
Remuneration Committee’s Report
Independent Auditors' Report to the members of Craneware plc
Consolidated Statement of Comprehensive Income
Statements of Changes in Equity
Consolidated Balance Sheet
Company Balance Sheet
Consolidated Statement of Cash Flows
Company Statement of Cash Flows
Notes to the Financial Statements
3-4
5
6-7
8-16
17-18
19-29
30
31-40
41-55
56-60
61-63
64
65
66-68
69-77
78-94
95-113
114-119
120
121-122
123
124
125
126
127-169
Table of Contents
The Craneware
Group continues
to demonstrate
its ability to
innovate and
meet the needs
of its healthcare
customers, while
retaining a
strong financial
foundation.
- Chair’s Statement
Craneware plc | Annual Report & Financial Statements 2024
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Trisus® Power of One
Value-based
Margin and
Productivity
Charge
Capture
Pricing
Integrity
Chargemaster
Completeness,
Transparency &
Revenue Assurance
Rational &
Sustainable Pricing
Methodology
Regulatory
Awareness &
Education
Pricing
Transparency &
Market Visibility
Consulting,
Pricing, & CDM
Services
Payor Contract
Payment
Accuracy
Hospital &
Physician Margin
Management
Operational
Intelligence, Decision
Support & Labor
Productivity
Productivity &
Margin
Optimization
Consulting Services
Rational &
Sustainable Pricing
Methodology
Pricing
Transparency &
Market Visibility
Payor Contract
Payment
Accuracy
Chargemaster
Completeness, &
Revenue Assurance
Supplies/
Implants Revenue
Assurance
Medication
Claim Accuracy
& Compliance
Post Bill
Claim
Analysis
Charge Capture
Performance
Improvement
Consulting Services
Medication
Margin
Management
The Craneware Group's Trisus platform empowers healthcare organizations to optimize
financial performance by unifying compliance, operational efficiency, and revenue growth
through Microsoft Azure-based solutions within our Trisus Optimization Suites.
Craneware plc | Annual Report & Financial Statements 2024
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Business
of
Pharmacy
Revenue
Protection
Data
Integrity
Formulary,
Accuracy,
Alignment &
Completeness
340B
Performance &
Compliance
Real
World
Benchmarking
Medication Claim
Accuracy &
Compliance
Medication Revenue
Integrity & 340B
Consulting Services
Medication
Margin
Management
Regulatory
Awareness &
Education
Hospital & Professional
Chargemaster
Completeness &
Accuracy
Regulatory
Awareness &
Education
Consulting CDM,
IM & Formulary
Reviews
Item Master
Completeness,
Accuracy, & Alignment
Formulary
Completeness,
Accuracy & Alignment
Medical
Necessity
Audit &
Denials
Analytics
Appeal
Management &
Consulting Services
Leveraging innovative technology and real-time insights, these suites enable healthcare
leaders to make data-driven decisions that enhance patient care and maximize margins
for sustained growth.
- The Craneware Group
Craneware plc | Annual Report & Financial Statements 2024
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Final Results
Financial Highlights (US dollars)
•
Revenue increased 9% to $189.3m (FY23: $174.0m)
•
Adjusted EBITDA1. increased 6% to $58.3m (FY23: $54.9m)
•
Annual Recurring Revenue2. increased to $172.0m (FY23: $169.0m), associated Net Revenue Retention3 remains high at
98% (FY23: 100%)
•
Statutory Profit before tax increased 20% to $15.7m (FY23: $13.1m)
•
Adjusted basic EPS1. increased 9% to 94.8 cents (FY23: 87.0 cents) and adjusted diluted EPS increased to 93.9 cents
(FY23: 86.3 cents)
•
Basic EPS 33.5 cents (FY23: 26.3 cents) and diluted EPS 33.2 cents (FY23: 26.1 cents)
•
Robust Operating Cash Conversion4. at 90% of Adjusted EBITDA (FY23: 92%)
•
Total cash and cash equivalents $34.6m (FY23: $78.5m)
•
Significant reduction in total Bank Debt in the year at $35.4m (FY23: $83.0m), with continued investment in the Trisus
Platform
•
Proposed final dividend of 16.0p per share (FY23: 16.0p) giving a total dividend for the year of 29.0p per share (FY23:
28.5p) up 2%
•
Completed share buyback programme utilising £5m ($6.3m) allocated
Operational Highlights
•
Investments made over recent years coming to fruition, delivering strong revenue growth and results above market
expectations
•
US healthcare providers refocusing on their longer-term strategic priorities, including the delivery of value-based care,
provides an increasingly supportive market backdrop for Craneware
•
Strong sales performance, driven by positive market response to Trisus Optimization Suites and success of the Trisus
Platform Partner programme
•
Our Shelter platform partner programme has returned over $250m of additional benefit to hospitals and is expected to
contribute to ARR growth in FY25 and beyond
•
Continued high levels of customer retention, at over 90% across the multiple measures, demonstrating the value
Craneware brings to its customers
•
A new strategic alliance formed with Microsoft, enabling a joint go-to-market plan for Trisus offerings on the Microsoft
Azure Marketplace expanding Craneware’s market reach
Outlook
•
Increasing opportunity ahead, including accelerated innovation via the alliance with Microsoft
•
Momentum has continued post-year end, with good levels of trading and customer confidence, providing the Board with
confidence in continued growth momentum for FY25, delivering on current expectations and the sustainable return to
double digit growth rates
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 subscription license and related recurring revenues at 30 June 2024 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 18), 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.
Craneware plc | Annual Report & Financial Statements 2024
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Chair’s Statement
This has been a year of strategic and financial progress for Craneware. Investments made over recent years are coming to fruition,
delivering strong revenue growth and results above market expectations. The Group continues to demonstrate its ability to
innovate and meet the needs of its healthcare customers, while retaining a strong financial foundation. Through its Trisus platform
and the associated platform partnership programme, Craneware is uniquely positioned to be a leading player in the digitalization
of US healthcare, supporting its customers in the drive towards value-based care.
Strong financial results, above market expectations
The year has seen the Group deliver on its commitment to
increase its rate of growth, while maintaining strong profit
margins and reducing bank debt.
Group revenues increased 9% to $189.3m (FY23: $174.0m).
Adjusted EBITDA increased 6% to $58.3m (FY23: $54.9m),
maintaining the Group’s target EBITDA margin of above 30%.
The healthy sales performance and continued high levels of
customer retention have delivered growth in ARR to $172m
(30 June 2023: $169m), with further sales and platform
partner revenue expected to convert to ARR in future years.
The Group’s continued high levels of cash generation and
revenue visibility have enabled it to invest in the
strengthening and ongoing innovation of the Trisus
platform, continue our progressive dividend policy and
complete our share buyback programme, whilst reducing
total bank debt, at an accelerated rate, to $35.4m (FY23:
$83.0m). The strength of the Group’s balance sheet allows
the Board to continue to invest organically as well as review
appropriate acquisition opportunities aligned with its
growth strategy.
Leading market position & building momentum
Over the course of the financial year we have seen US
healthcare providers emerge from the high-pressure
environment of the COVID-19 pandemic into a more settled
state, allowing them to re-focus on other strategic priorities.
First in these priorities is the desire to deliver first class,
value-based care to their communities against the
challenging backdrop that includes increasing drug costs,
increasing wage bills and an aging population putting more
strain on the healthcare system. These challenges result in
continued financial pressures they need to understand and
actively manage.
Craneware holds a unique central position within the US
healthcare industry, with Craneware customers and
customers numbers representing approximately 40% of the
total number of registered US hospitals. Craneware
customers include more than 12,000 US hospitals, health
systems, affiliated retail pharmacies and clinics, and our data
sets now cover more than 200 million patient encounters.
Craneware’s independence within the US Healthcare
ecosystem allows an uncompromised focus solely on the
benefit to its customers.
This positioning has been enhanced further this year through
the growth of the Group’s platform partner programme,
leveraging the Group’s Trisus platform and data to bring
innovative additional offerings to its customers, as well as
the recently announced alliance with Microsoft, supporting
accelerated innovation and exploration of AI-based
opportunities.
Benefitting society through our Purpose
The driving force of Craneware is its commitment to its
purpose: to transform the business of healthcare through
solutions that streamline and improve the operational and
financial performance of its customers, providing the strong
foundation for them to continue the provision of high-
quality care for their communities. Social responsibility and
delivering a positive contribution to society is paramount to
Craneware and this is seen in the superb dedication of its
team.
The ESG Committee routinely reviews the Group’s
sustainability credentials and has introduced various
initiatives in the year to support its communities. Details
about the Group's impact on the communities it serves can
be found in the ESG Statement within the Annual Report.
On behalf of the Board, I would like to express my gratitude
to the team at The Craneware Group for the hard work and
passion they bring every day to serving our customers.
Board Changes
Following many years’ service on the Board of Directors,
Colleen Blye, Senior Non-Executive Director, and Russ
Rudish, Non-Executive Director, have informed the Board of
their intention to not stand for re-election at the Company’s
forthcoming Annual General Meeting. On behalf of the
Board, I would like to thank them both for their significant
contributions to Craneware’s success to date. Their insight
into the US healthcare industry has been invaluable and we
Craneware plc | Annual Report & Financial Statements 2024
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Chair’s Statement (continued)
Wish them all the very best. The Board is in the latter stages of reviewing replacement independent Non-Executive Director
candidates and will provide an update in due course.
Increased opportunity ahead
Craneware’s strong sales performance is testament to the strength of the Trisus platform, the increasing success of its platform
partnership programme, and the central role the Group plays in enabling its customers to deliver better value healthcare.
With an increasing opportunity ahead for Craneware, including accelerated innovation via the recently announced alliance with
Microsoft, the Board is confident in the Group’s ability to further its enviable market position and deliver successful outcomes for
all stakeholders.
Will Whitehorn
Chair
2 September 2024
Craneware plc | Annual Report & Financial Statements 2024
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Strategic Report:
Operational and Financial Review
Operational Review
Our mission is to transform the business of US healthcare. Our independent position in the market means we are uniquely placed
to support all US healthcare providers in this pressing agenda, providing them with the insights they need to achieve greater value
in healthcare. It is this powerful motivation that drives the whole Craneware team forward. We are immensely proud of the
fantastic support our teams provide to our growing customer base. Together, our offerings continue to return in excess of $1.5
billion to our customers each year.
This has been another year of progress and delivery. We
have seen many of the projects that were put in motion in
recent years, such as our Data Foundations work, collecting
and building our extensive proprietary data-sets, the launch
of Trisus Optimization Suites, and our platform partnership
programme, all start to come to fruition this year, as is
evidenced in the increasing revenue growth rate, continued
high levels of customer retention, and the recently
announced alliance with Microsoft.
With this success, the opportunity ahead of us only
continues to grow. Hospital management teams are
increasingly seeking a greater understanding of the revenue
and costs running through their extensive operations as they
look to ensure a sustainable financial future for their
facilities. Our recently introduced Optimization Suites
combine different solutions to directly address some of the
key strategic challenges our customers face today, typically
delivering a more than 3x return on investment within the
first year of ownership. Meanwhile our innovation teams are
exploring new applications, including the use of Generative
AI, and we will continue to invest in this area of the business
to capitalise on this unique position gained from our
extensive proprietary data-sets.
As we look to the year ahead, we do so from a position of
increasing strength and resilience. Our extensive customer
base, powerful cloud-based platform, significant data assets,
high levels of recurring revenue and strong balance sheet
provide us with a solid foundation from which to continue
our growth strategy.
Digitalization of US Healthcare
The US healthcare market continues to experience
challenges across three broad areas: clinical, financial and
operational. Examples within these areas include the opioid
epidemic, a mental health crisis, the increasing cost of
prescription drugs and the behaviour of manufacturers in
selectively honouring contracted and regulatory mandated
discounts, medical procedures and associated insurance
premiums, the shortage of healthcare professionals and
wage inflation.
The combination of these factors means our customers are
consistently being asked to do more, with less, while
improving patient care. We believe the key to successfully
achieving that is through accurate, accessible and
meaningful data and insights, providing the ability to deliver
enhanced
services,
improved
infrastructure,
robust
governance and the ability to make more informed choices
around resource allocation.
However, to make those choices our customers need to be
able to manage and analyse vast amounts of data, which
presents a significant and costly challenges for hospitals in
areas such as scalability, interoperability, processing costs,
security, and compliance.
Our vision is for the Trisus platform and its applications
whether developed by Craneware or third parties to address
these challenges, through connected technology in the
cloud.
Trisus combines revenue integrity, cost management and
decision enablement functions into a single cloud-based
platform. The platform brings together siloed data from the
various existing software systems in a hospital or healthcare
system, normalises that data and applies prescriptive
analytics in order to provide insights to customers to support
informed decision making regarding a hospital’s finances
and operations, in one place.
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
valuable 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.
Craneware plc | Annual Report & Financial Statements 2024
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Strategic Report:
Operational and Financial Review
(continued)
Digitalization of US Healthcare (continued)
We believe the digitalization of healthcare and improvement
of processes using data insights will provide the successful
foundation
for
value-based
care
and
enable
the
transformation of the business of US healthcare.
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 & expand).
In recent years, we have invested in the development of the
Trisus platform; a sophisticated cloud delivered data
aggregation and intelligence platform which is the
foundation for our future growth.
We are building on top of Trisus to strengthen our current
products, leverage our proprietary data assets to expand our
offering, integrate third party solutions to the platform and
benefit from the scalability of cloud-technology.
Through our 25 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 artificial intelligence (“AI”)
and machine learning (“ML”) means it is now easier and
faster to do so, particularly when combined with the large
language training capabilities of our own proprietary data.
Meanwhile, we are also using AI across the organisation for
efficiency and productivity gains.
Two Growth Pillars
Our strategy has two fundamental growth pillars:
1. Platform enhancements to increase ease of use and
interoperability
With all customers now connected to, and benefitting from,
the Trisus platform, our focus is on enhancing the
attractiveness and value of the platform. This includes three
areas of work:
• the ongoing reengineering of existing offerings
enhancing cloud-based applications;
• the growth of our data sets within the platform, to
support future product expansion; and
• our Data Foundations programme which aims to
increase the speed and ease of hospitals’ interaction
with the platform and interoperability of applications
on the platform.
Existing product improvements
The continual improvement of our existing offerings is an
ongoing process. Combinations of new technology and their
novel applications give speed, productivity and efficiency
gains that benefit the ease of use of our offerings by our
customers.
Growth of our data sets
The depth of our product offering continues to expand
through the mining of the proprietary and regulatory data
that we collect, identifying new ways that data can
illuminate and support decision making within the hospital
provider environment. We now have data sets covering
more than 200 million patient encounters, providing
incredibly valuable insights for our customers.
Whilst our Revenue Integrity and 340B related software
applications utilise different technology stacks within the
Trisus platform, they both supplement and further enrich
our 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 even more
attractive to customers as the speed and depth of insights
available is increased.
Data Foundations
As part of our Data Foundations programme of work, we are
utilising the advances in AI and ML data processing to
increase the interoperability and connectivity of our
applications, while making the platform’s back-end
processes more efficient and effective.
2. Value driven Customer Expansion
With the first stage of cloud-based enhancements for
existing products now complete, our focus is now on the
development of new applications and the extension of
existing applications, to expand our capabilities and the
benefits derived by our Provider customers. We anticipate
our customers’ success will in turn encourage new Providers
to visit or re-visit The Craneware Group’s solutions, which
will facilitate a greater level of cross sale and product
penetration across our extensive customer base and the
wider US Hospital market over time, driving further growth
in ARR as part of an ongoing cycle of transforming the
business of healthcare and winning new customers.
Craneware plc | Annual Report & Financial Statements 2024
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Strategic Report:
Operational and Financial Review
(continued)
Growth Strategy (continued)
Application Adoption and Measured Value
By equipping our internal teams with proactive indicators of
customer engagement, derived from their usage data from
the platform, we help customers maximise the value they
achieve from their Craneware software investment. Helping
customers boost their understanding of what good looks like
enables them to enact meaningful change in their
organisations en-route to sustainable operating model
improvements. Increasing this visibility of shared learnings
and success achieves individual customer value but also
serves to connect customers across the community of
Craneware software users.
Growth in ARR
Healthy sales performance and continued high levels of
customer retention in the year have delivered growth in
Annual Recurring Revenue (ARR) to $172m (30 June 2023:
$169m), Net Revenue Retention remains high at 98% for the
year, with additional growth expected in both these metrics
as more of the sales and platform partner success converts
to ARR.
We continue to see the opportunity to accelerate ARR
growth over the medium term, both as our initial platform
partners mature and begin generating demonstrable
recurring revenue and we unlock the considerable cross and
upsell opportunities within our enlarged customer base.
Customer retention for the year exceeded 90%, across the
multiple measures, which is testament to the value
Craneware brings to its customer base.
Six Trisus Optimization Suites
The Trisus software applications and corresponding service
offerings have now been grouped into six Trisus
Optimization Suites, bringing together the solutions that
address specific strategic and tactical issues facing
healthcare providers and are powered by the same sub-set
of customer data. Through packaging our 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 Optimization Suites are: Trisus Pricing Integrity, Trisus
Data Integrity, Trisus Business of Pharmacy, Trisus Revenue
Protection
Optimization,
Trisus
Charge
Capture
Optimization and Trisus Value-based Margin & Productivity.
We have seen a very strong response from the market to
these suites and their ability to address issues being faced by
hospitals at a more strategic level, providing hospitals with a
single vendor rather than multiple point solutions.
Sales mix
We have seen a significant increase in the overall level of
new sales, further demonstrating the US healthcare
industry’s returning focus to strategic priorities after the
Healthcare emergency that ended 11th May 2023. The
proportion of sales coming from each segment remained
broadly consistent with the prior year.
Expansion sales to existing customers represents 83% of our
total ‘new’ sales in the year (FY23: 81%), demonstrating the
positive response of our customers to the increased ROI
derived from the uptake of our partner programme, our
additional cloud applications and the packaging of
applications and services into our Optimization Suites.
Whilst overall sales to new customers have increased in real
terms, as a percentage of our total new sales it is 17% (FY23:
19%), reflecting the success of our Platform partner program
and other new sales to existing customers.
Growing Platform partnership programme
Our growing Platform partnership programme further
enables us to leverage the strength of our data, platform and
customer numbers to generate additional, highly scalable,
Platform Revenue streams. It is an umbrella term that
encompasses any revenue that is generated in association
with third parties and is typically net of any third party
outlays. This can be through the use of the data assets within
Trisus to directly support our customers in their ability to
leverage third parties or through hosting third party
applications on the platform.
Our customers will benefit from increased breadth of
solutions to deliver value from the platform partnership
solutions, available in an efficient and secure manner
through the Trisus platform. The application and service
providers can benefit from access to our unique positioning,
data sets and extensive customer base, and we can benefit
from new revenue opportunities and additional business
models. This work also creates important distinction and
strong competitive differentiation between our holistic
Trisus platform offerings and other Revenue Integrity and
340B potential competitors.
Craneware plc | Annual Report & Financial Statements 2024
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Strategic Report:
Operational and Financial Review
(continued)
Growth Strategy (continued)
We will seek to transition the majority of this income into
recurring revenue models, adding to our ARR, although the
nature of the offering may be such that this is not applicable.
These revenues from the platform, are initially categorised
as ‘Platform Revenues – non-recurring’, until a repeatable
pattern can be established.
We now have our initial programmes successfully generating
revenue, and there is a building pipeline of additional
programme opportunities, which will be rigorously assessed
prior to launch.
Microsoft Alliance
We were delighted to announce in early July 2024 that we
had formed an alliance with Microsoft to further transform
the business of healthcare. As part of this, Craneware was
named a Microsoft Global Partner Solution provider and we
are in the process of finalising our joint go-to-market plan for
our Trisus offerings on the Microsoft Azure Marketplace. The
collaboration will see the delivery of differentiated offerings
and increased value to customers through the application of
industry leading data analytics, AI, and modern platform
technology. As part of the agreement, we signed a Microsoft
Azure Consumption Commitment (MACC) agreement,
bringing predictability to our cloud spending, budget
optimisation, and enhanced financial planning, thus driving
cost efficiency.
A key factor of the agreement is the Microsoft Unified
Support Commitment, which provides for additional
resilience and cyber protection to us and our customers,
with a guaranteed response time and prioritisation of
technical resources were there to be any outages
irrespective of the cause.
Craneware
teams
have
begun
co-innovation
with
Microsoft’s AI experts to accelerate the application of AI
enhancements to existing Trisus offerings and the
exploration of new AI-based applications. Craneware’s long
heritage in the US healthcare industry, as well as more than
200 million unique patient encounters within its datasets,
mean it is uniquely positioned to provide powerful,
actionable insights to participants across the healthcare
industry. These insights support better operational and
strategic decisions, enabling further efficiencies in provider
performance so they can focus on serving their communities
and healthcare missions, transforming the business of
healthcare.
The first of the Trisus applications to be made available on
the
Microsoft
Azure
Marketplace
will
be
Trisus
Chargemaster, Trisus Decision Support, and Trisus Labor
Productivity. These offerings, supported by joint go-to-
market initiatives and other activities, will help expand The
Craneware Group’s market reach via the Microsoft partner
ecosystem.
To drive the success of both this and the platform partner
programme, we have created a new role, SVP of Strategic
Partnerships. The role will serve as the lead liaison between
The Craneware Group and its partners, working closely with
internal and external cross-functional teams to identify new
opportunities and negotiate mutually beneficial agreements
that drive success for our customers, engender customer
loyalty, produce both direct and indirect new revenue
opportunities for the Group and expand The Craneware
Group’s reach.
M&A
While organic growth across our portfolio remains the
priority, we continue to evaluate the market for suitable
M&A opportunities and will continue to pursue strategically
aligned companies that will accelerate our growth strategy.
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 platform partnering programme as a potential source of
future M&A activity, provided this would deliver mutual
benefits to all parties.
Our People and Community
Our three focus areas of Community, People and
Environment continue to guide our ESG efforts. Central to
our purpose is that our solutions benefit society. Our
solutions 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.
Our customers have seen more than $1.5bn in benefit from
utilising our solutions this year, helping to stretch scarce
federal resources, to reach more eligible patients and
provide more comprehensive services.
Craneware plc | Annual Report & Financial Statements 2024
12
Strategic Report:
Operational and Financial Review
(continued)
Our People and Community (continued)
Extending the considerable support provided for many
years,
we
continue
to
develop
programmes
and
opportunities to positively and directly impact our
communities; this complements our purpose and reflects
the causes which are important to our employees. This is
achieved through initiatives driven by our employees
through Craneware Cares and the Craneware Cares
Foundation. During the year, employees have supported
several causes and charitable organisations including our
quarterly Spotlight Charity and Community Outreach
Program.
Our team provides valuable support to our customers and
the achievements of the Group are due to the efforts,
experience and dedication of our people. Our team is a
talented mix of employees from diverse backgrounds, which
contributes to high levels 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 our team, our facilities and working
practices and we welcome feedback and suggestions for
improvements through a range of employee engagement
mechanisms. During the year we have held sessions under
our Craneware Spaces diversity, equity and inclusion
programme and relaunched our Employee Advisory Group
which is helping to support some of our diversity, equity and
inclusion efforts, along with other initiatives such as
sustainability.
We continue to progress actions that help to support our
environmental focus area. During FY24 we reduced our
rented office facility footprint in the US thereby assisting
with lowering our energy consumption and corresponding
emission reductions. This process involved the closure of our
Atlanta office and we relocated our office within Deerfield
Beach which provided the opportunity to configure
improved collaboration spaces in the new office facility. In
FY24 we also extended our climate scenario analysis and risk
assessment process and continue to develop the gathering
of emissions data in support of compiling appropriate
metrics and KPIs to guide our efforts towards our pathway
to net zero.
Financial Review
This has been a positive year for The Craneware Group,
where we have seen our end market of US Healthcare return
its focus to its longer-term strategic priorities. We have also
seen many of the investments we have made over recent
years begin to deliver the expected financial returns,
including the acceleration of our platform partnership
programme. For the year ended 30 June 2024, we are
reporting revenue of $189.3m (FY23: $174.0m) representing
accelerated and strong revenue growth of 9%.
We continue to invest in our future while delivering an
Adjusted EBITDA for the year of $58.3m, 6% ahead of the
prior year (FY23: $54.9m), representing an Adjusted EBITDA
margin of 31% (FY23: 32%).
The Group continues to be highly cash generative with a
strong balance sheet. Our continued high levels of cash
generation allowed us to reduce bank debt by $48m to
$35.4m, pay dividends of $12.8m, reduce interest costs, and
to commit a total of $6.3m to a share buyback programme.
The Group has maintained its Revolving Credit Facility
(“RCF”) and strong banking relationships, hence has
considerable financial resources at its disposal.
As a result of all of the above, our Adjusted Basic Earnings
per share increased 9% to 94.8 cents (FY23: 87.0 cents).
Underlying Business Model and Revenue Mix
The contracts we sign with our hospital customers provide a
license for that customer to access a specified product or
suite of products throughout their subscription license
period. At the end of an existing subscription license period,
or at a mutually agreed earlier date, we look to renew these
contracts
with
customers.
We
recognise
software
subscription license revenue and any minimum payments
due from any ‘other long term’ contracts evenly over the life
of the underlying contract term.
In addition to the subscription license fees, we provide
contracted transactional services, which are highly
dependable, and recurring, but can occasionally see some
variation year to year based on volume of transactions.
Transactional services are recognised as we provide the
service and include our contracts with our 340B customers
that enable them to engage with their network of contract
pharmacies.
We also provide professional and consulting services to our
customers. Where these services are provided over an
extended contract period, usually alongside the multi-year
software license as part of one of our Trisus Optimization
Suites, or where they relate to a complex implementation
integral to the use of the software, the revenue is recognised
evenly over the life of the underlying contract or project
term.
The combination of these two software revenue models plus
our recurring professional services represent the recurring
platform revenues of the business, which for the current
year have increased to $168.3m (FY23: $163.7m).
Craneware plc | Annual Report & Financial Statements 2024
13
Strategic Report:
Operational and Financial Review
(continued)
Underlying Business Model and Revenue Mix (continued)
Shorter professional or consulting services engagements are
also provided, usually taking less than one year to complete.
These revenues are usually recognised as we deliver the
service to the customer, on a percentage of completion
basis. In the year, despite increasing underlying sales, these
engagements have delivered $7.2m of revenue (FY23:
$9.2m), which reflects the timing and resource available to
complete the engagements during the year. However, a
building backlog of these projects has been generated and
associated revenues will be recognised during FY25.
We continue to look for new and innovative ways to leverage
the Trisus platform and the significant data assets within it.
Our Platform partnership programme aims to deliver
meaningful benefit to our customers and derive new
revenue opportunities and additional business models for
the Group. These revenues are recognised at the point we
are able to invoice our customers. As initially, it is often too
early to establish a pattern of what would become recurring,
they are shown separately as “Platform Revenues – non-
recurring”, however once proven we expect many of these
revenue opportunities to deliver future annual recurring
revenue.
In the year, we are reporting Platform Revenues – non-
recurring of $13.8m (FY23: $1.1m).
Annual Recurring Revenue
We define ARR as the annual value of subscription license
and related recurring 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 2024 increased to $172.0m (at 30 June 2023:
$169.0m) with Net Revenue Retention remaining high at
98% (FY23: 100%) and customer retention for the year,
again, exceeding 90%, all combining to provide a resilient
foundation for the future growth of the Group. These
metrics are a 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 FY24 increased 9% to $162.2m (FY23:
$148.4m). This represents a gross margin percentage of 86%
(FY23: 85%) which is in line with the expected gross margin
of the Group.
Operating Expenses
Net operating expenses (to Adjusted EBITDA) increased 11%
to $103.9m (FY23: $93.5m), which continues to reflect our
investment approach of assessing, priority ranking then
approving investment expenditure as we have clear
evidence of the revenue growth that will support our
commitment to deliver an Adjusted EBITDA margin of +30%.
We continue to ensure prudent cost control and leverage
our ability to balance our investment between the US and
the UK (and the associated Sterling exchange rate).
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 highly cash generative, we are able to use our cash
reserves to further “build” alongside the partner activities in
the year and therefore continue to invest significant
resource in R&D.
The total cost of development in the year was $52.1m (FY23:
$50.6m). We continue to capitalise only the costs that relate
to projects 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 $15.8m
(FY23: $15.0m) representing 30% of total R&D spend in FY24
(FY23: 30%), which represents a reduction to our historical
run rates 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 growth strategy
alongside any acquisition and Platform partner strategy. As
specific products and enhancements are made available to
relevant customers, the associated development costs
capitalised are amortised and charged to the Group’s
income statement over their estimated useful economic life,
thereby correctly matching costs to the resulting revenues.
Net Impairment (charge)/ reversal on financial and contract
assets
In the prior year, the culmination of efforts since the
acquisition of Sentry Data Systems, Inc. (‘Sentry’) and
associated improvements to ongoing relationships with
customers resulted in a benefit to FY23 of $2.1m. For the
current year we have seen a more normalised bad debt
provision in the current year of $1.1m.
Craneware plc | Annual Report & Financial Statements 2024
14
Strategic Report:
Operational and Financial Review
(continued)
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 (if applicable in the
year), 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 $0.7m (FY23: $0.5m) have been
identified as exceptional. These relate primarily to the one-
off costs associated with the later stages of 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 $58.3m (FY23:
$54.9m) an increase of 6%. This reflects an Adjusted EBITDA
margin of 31% (FY23: 32%), confirming we continue to meet
our target of a combined Group adjusted EBITDA margin of
30+%.
Following the amortisation charge on acquired intangible
assets relating to the Sentry acquisition of $20.9m (FY23:
$20.9m), and the reduction in our net Finance expense to
$4.0m (FY23: $6.1m) through the success of our treasury
management, profit before taxation reported in the year has
increased 20% to $15.7m (FY23: $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.
Other factors impacting the effective tax rate include tax
deductibility of amortisation of acquired intangibles, tax
losses brought forward and the number of share options
exercised and 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 2024 is 26%
(FY23: 29%).
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 $0.5m (tax adjusted) in the
year (FY23: $0.4m) and amortisation of acquired intangibles
of $20.9m (FY23: $20.9m).
Adjusted basic EPS, continues to move back in line with the
increased levels of Adjusted EBITDA and has increased 9% to
$0.948 (FY23: $0.870) and adjusted diluted EPS has
increased to $0.939 (FY23: $0.863). Basic EPS in the year
increased to $0.335 (FY23: $0.263) and Diluted EPS
increased to $0.332 (FY23: $0.261).
Cash and Bank Facilities
Cash generation and a strong balance sheet have always
been a focus of the Group. Our business model, based on
recurring revenues and our ongoing efforts to maintain high
levels of customer retention, provide the basis for high levels
of cash generation. We always 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, having made the necessary improvements to
Sentry’s cash management processes, bringing them into
line with the rest of the Group’s operations, we continue to
deliver high levels of Operating Cash Conversion across the
combined Group at 90% in the year (FY23: 92%).
We continually review our capital allocation approach,
ensuring we balance investing in our future with returning
funds to our shareholder base and reducing our external
bank debt. We have returned funds to our shareholders
during the year via our normal progressive dividend policy,
returning $12.8m in the current year (FY23: $12.1m), and
our share buyback.
In the prior year (on 12 April 2023), the Group commenced
a share buyback programme of up to £5 million. The shares
purchased through this programme are held in treasury and
will be used to satisfy employee share plan awards. The
Programme was undertaken using a phased approach. The
Programme was operated under the authority granted to
the Company by shareholders at the Company's Annual
General Meetings in 2022 and in 2023, and within the
regulatory guidance on the quantity of shares the Company
may purchase on any single day.
Craneware plc | Annual Report & Financial Statements 2024
15
Strategic Report:
Operational and Financial Review
(continued)
Cash and Bank Facilities (continued)
This programme completed during the year utilising the
balance of the allocated £5 million ($6.3 million) (FY23: £3.09
million ($3.87 million)). Through the programme the
Company purchased a total of 332,531 Ordinary Shares
(FY23: 223,632) at an average price of £15.03 per share. At
30 June 2024 the Company’s share price was £23.10. These
shares represent 0.94% (FY23: 0.63%) of the Company’s
issued Ordinary Shares and are held in treasury. During the
year 99,646 shares (FY23: 9,621 shares) were issued from
treasury to satisfy exercises under the existing employee
share plan awards as a result at the Balance sheet date,
223,264 Ordinary Shares (FY23: 214,011 Ordinary Shares)
are held in treasury.
In regard to the bank debt, the facility entered into for the
acquisition of Sentry comprised a term loan of $40m, which
continues to be repaid at $2m per quarter, and a Revolving
Credit Facility of up to $100m. During the year, $8m (FY23:
$8m) of the term loan has been repaid on schedule, and a
further $40m of the Group’s cash reserves have been offset
against the Revolving Credit Facility in line with our current
Treasury Management Policy. The RCF balance has reduced
from $60m to $20m, which provides further available facility
of $80m.
All covenants continue to be met, the facilities currently
expire in June 2026 and we have already had early stage
discussions in regards to their extension beyond this date.
We thank our banking partners, alongside our shareholders,
for their continued support of our growth strategy.
As a result, Cash reserves at the year-end were $34.6m
(FY23: $78.5m) and total bank debt outstanding of $35.4m
(FY23: $83m) giving the Group both significant liquidity and
a strong balance sheet.
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 and therefore
are subject to timing. This balance is a subset of the 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 twenty percent 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 $1.2595 as
compared to $1.2043 in the prior year. The exchange rate at
the Balance Sheet date was $1.2645 (FY23: $1.2619).
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 (20.23 cents) per share
giving a total dividend for the year of 29p (36.67 cents) per
share (FY23: 28.5p (35.95 cents) per share), an increase of
2%. Subject to approval at the Annual General Meeting, the
final dividend will be paid on 18 December 2024 to
shareholders on the register as at 29 November 2024, with
a corresponding ex-Dividend date of 28 November 2024.
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 29 November 2024. The exact amount
to be paid will be calculated by reference to the exchange
rate to be announced on 29 November 2024. The final
dividend referred to above in US dollars of 20.23 cents is
given as an example only using the Balance Sheet date
exchange rate of $1.2645/£1 and may differ from that finally
announced.
Craneware plc | Annual Report & Financial Statements 2024
16
Strategic Report:
Operational and Financial Review (continued)
Outlook
The strong financial results during the year demonstrates the strength of the Trisus platform, our increasing platform partnership
successes and the role we play in helping healthcare providers drive for better value in the US healthcare market.
We see increased opportunity ahead. Our alliance with Microsoft will allow us to accelerate innovation and explore new AI-based
applications in an efficient manner which, alongside the breadth of the Trisus platform, our unique data assets and our
considerable and extensive customer base provides significant scope for expansion in the size of our addressable market.
We approach this opportunity from a position of strength and resilience, with a strong balance sheet, high levels of recurring
revenue and consistently high customer retention rates. This gives us the confidence and the ability to continue investing for
growth, to secure our long-term market position.
We have commenced FY25 with a good level of trading, and remain confident in achieving another positive year ahead, growth
acceleration over the near term, and our ability to create further long-term value for all stakeholders.
Keith Neilson Craig Preston
Chief Executive Officer Chief Financial Officer
2 September 2024
2 September 2024
Craneware plc | Annual Report & Financial Statements 2024
17
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 12 to 15.
Key Performance Indicator Review
Revenue Growth
2024
2023
Revenue
$189.3m
$174.0m
Growth
9%
5%
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 years.
Annual Recurring Revenue
2024
2023
Annual Recurring Revenue
$172m
$169m
Growth
2%
2%
Annual Recurring Revenue (“ARR”) is defined as the annual value of subscription license and related recurring 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 2024 increased to $172m from the $169m reported at 30 June 2023, demonstrating the Group's continued high
levels of contracted revenue visibility.
Net Revenue Retention
2024
2023
% Net revenue retention
98%
100%
Net Revenue Retention is the percentage of revenue retained from existing customers over the measurement period, taking
into account both churn and expansion sales. NRR remains high at 98%.
Adjusted EBITDA
2024
2023
Adjusted EBITDA
$58.3m
$54.9m
Adjusted EBITDA margin
31%
32%
Growth
6%
6%
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.
Craneware plc | Annual Report & Financial Statements 2024
18
Strategic Report:
Key Performance Indicators
(continued)
Key Performance Indicator Review (continued)
Adjusted EPS
2024
2023
Adjusted EPS
94.8 cents
87.0 cents
Growth
9%
(2)%
Adjusted EPS growth demonstrates the Group’s overall profitability, adjusted for exceptional items, after taking into account the
taxation in the year, reduction in debt costs and any changes in share capital.
Net Borrowings / Cash
2024
2023
Net Borrowings
$(0.8)m
$(4.5)m
Cash
$34.6m
$78.5m
The Group continues to maintain healthy cash reserves of $34.6m (FY23: $78.5m). Net Borrowings has reduced to $0.8m at 30
June 2024 (FY23: $4.5m) 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
2024
2023
Net Borrowings / Adjusted EBITDA
(1)%
(8)%
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
2024
2023
Operating Cash Conversion
90%
92%
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 90% for the year ended 30 June 2024, is consistent with the prior year of 92%.
Craneware plc | Annual Report & Financial Statements 2024
19
Strategic Report:
Principal Risks and Uncertainties
Risk Management, Principal Risks and Uncertainties
Risks and uncertainty (as well as opportunities) are intrinsic
factors of conducting any 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 help enable future
growth, are key considerations for 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 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.
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 including 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. 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 six further members of the Senior
Management Team. The risk review is exercised through the
monthly management reports and Operations Board
meetings and, due to the importance of this topic, there is a
sub-committee of the Operations Board (the 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.
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 Financial Officer, the Chief Legal Officer, the Chief
Technology Officer and the Chief Information Officer. The
Head of Risk and Compliance role 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 compliance with health
and safety regulations and develops and monitors the
Group’s health and safety policies and strategy. The ESG
Committee is chaired by the Chief People Officer, further
details of this Committee and its activities 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 its continued alignment with the Group’s
strategy. The Group’s risk appetite defines the level and type
of risk the Group is able and willing to accept in order to
achieve its strategic aims. The Group’s risk appetite
influences the Group’s culture and operating decisions and is
reflected in the way risk is managed. The Board aims to
ensure that the Group is only exposed to appropriate risks
which are managed effectively in accordance with the
Group’s tolerance to risk.
The Group assesses, scores, ranks and then manages
individual risks. For each identified risk, it is characterised,
estimated how often the specified events could occur and a
judgement is made regarding the magnitude of their likely
consequences. For each identified risk, the risk management
priorities are decided by evaluating and comparing the level
of risk.
Craneware plc | Annual Report & Financial Statements 2024
20
Strategic Report:
Principal Risks and Uncertainties
(continued)
Risk Appetite (continued)
This allows each risk to be quantified as to the of risk.
•
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 considered to be 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
risk
assessment
conducted
through
the
risk
management process has not identified additions to the
principal risks category however the scope and title of two
of the principal risks have been changed. ‘Technology Risks’
encompasses broader interrelated risk considerations which
were described within ‘Competitive Landscape’ risk last
year. Also ‘Treasury Risk’ incorporates ‘Compliance with
debt finance facility covenants’ and ‘Banking Environment’
which were disclosed as separate risks in last year’s Annual
Report. It has also been concluded that:
•
based on an appraisal of its likely consequences,
‘Management of Growth’ is no longer a principal risk but
is instead a general business risk; and
•
having completed the transaction and integration of an
acquisition the size of Sentry, we are now confident that
the Group has the established and tested experience
within the management team. Therefore ‘Acquisitions’
is no longer assessed to be a principal risk.
The principal financial risks are detailed in Note 3 to the
financial statements. The Board’s process for determining
and managing risks is also 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. Our customers are continually
taking 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.
Conflicts in Ukraine and the Middle East
Craneware does not have any operations or customers in
any current conflict zone or any bordering areas and the
Board considers that the risk of direct operational issues for
Craneware, as a result of these situations, to be relatively
low based on current knowledge. There are, however,
geopolitical
with
macro-economic
adverse
impacts
occurring as a result in the UK and in the US where
Craneware operates. The Board continues to keep these
situations 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 relatively high
inflation and longer-term economic downturn may have a
detrimental impact on the financial performance of The
Craneware Group.
Principal Risk
Change /
Trend from
FY23
A
Data and cyber security
B
Protection of Data
C
Intellectual Property Risk
D
Regulatory Environment
E
US Healthcare: Complexity,
Evolution & Reform
F
Complex market dynamics
G
Technology Risks
H
Macro-economic Environment
I
Treasury Risks
Craneware plc | Annual Report & Financial Statements 2024
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Strategic Report:
Principal Risks and Uncertainties
(continued)
Data and cyber security
Trend since last year: Increased
Issue: Security of customer, commercial, and personal data poses heightened risks to all businesses, especially against a
backdrop of increasingly complex regulatory environments and safeguards over personal and patient data. The continually
growing 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 the Group becoming a larger target as
we grow.
The Craneware Group’s utmost priority is the reliable protection of customer data, especially the large amounts of Protected
Health Information being administered. 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 significant reputational risk as well as a significant
financial risk that can only be partially mitigated through insurance.
While it is 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, we are 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’s Security Council assesses current technology risks, approval and implementation of mitigation plans as well as to
advise on the future strategy around this key business area. The Group also has a dedicated Information Security team.
It is important to continually reinforce the level of awareness of these risks across all personnel within the Group. The Group
recognises and supports (including through ongoing employee training and applicable policies and procedures) a culture 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.
Craneware plc | Annual Report & Financial Statements 2024
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Strategic Report:
Principal Risks and Uncertainties
(continued)
Data and cyber security (continued)
Mitigating Actions (continued):
Sentinelâ, Sentrexâ, Trisus Decision Support, Trisus Labor Productivity and Trisus Medication Inpatient Rebate 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.
Protection of Data
Trend since last year: No Change
Issue: The Group maintains a large amount of customer data as well as holding and processing 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 seriously 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 also relevant for Protection
of Data risks.
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 corporate services and also AICPA SOC Type II certification in place for Sentinel, Sentrex, Trisus Decision Support,
Trisus Labor Productivity and Trisus Medication Inpatient Rebate applications. HITRUST is expanding their security and data
privacy controls to cover key legislation.
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Strategic Report:
Principal Risks and Uncertainties
(continued)
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, in addition to the
increased utilisation of third party content to provide services to our customers (especially by the Trisus platform), 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.
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 (37) 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). This is creating uncertainty across the
healthcare and pharmaceutical industries, potentially reducing the funding and support budget that non-profit US healthcare
facilities count on through 340B program pricing. 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.
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Strategic Report:
Principal Risks and Uncertainties
(continued)
Regulatory Environment (continued)
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, comprising senior management from
both countries, oversee activities and concerns pertaining to the strict regulatory environment.
The Craneware Group retains two lobbyists to support and advocate for positive changes to the 340B program (340B Matters)
as well as keeping Craneware up to date as potential legislation changes.
Increased regulatory requirements regarding price transparency has created a market need which The Craneware Group is able
to address within its product and service offerings.
US Healthcare: Complexity, Evolution and Reform
Trend since last year: Increased
Issue: The US healthcare industry, already a complex and highly regulated environment (as more fully detailed separately in
the ‘Regulatory Environment’ risk above), 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, which can be implemented by the
various participants within the US healthcare market such as insurers and drug manufacturers, and all of which 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 in the ESG Statement, 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.
Our independence is a compelling and differentiating attribute – The Craneware Group is not owned by a health insurance
provider or a pharmaceutical company unlike many organisations providing solutions to US healthcare providers.
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Strategic Report:
Principal Risks and Uncertainties
(continued)
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.
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 and there is also continued consolidation around technology service providers. 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.
Technology Risks
Trend since last year: Increased
(Note: this risk incorporates ‘Competitive Landscape’ which was included in the Principal Risks and Uncertainties section of prior year Annual
Reports)
Issue: With The Craneware Group’s solutions being primarily software, the business is exposed to relatively rapid changes in
technology and the risk of falling behind competitors if the Group does not keep pace with the relevant advances in technology,
including Artificial Intelligence (AI), and also the general trend for software to become commoditised during its lifecycle.
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.
The Group is also expanding its Platform partnership program which will see products developed externally to the Group being
hosted on the Trisus platform and as such these products will have some level of access to both the Group’s technology and its
data.
Mitigating Actions: Our data assets and the ability to generate new and innovative products from them strengthens our
competitive position. Going forward, this is expected to be further enhanced through the new Microsoft alliance providing
access to state of the art technologies, especially AI.
The Trisus platform continues to evolve and expand, with new modules being released and a growing customer base. The
Craneware Group is positioned to deliver a broader range of solutions, particularly in the medication and pharmacy areas,
helping improve revenue and profitability for our customers. The introduction of the Trisus Optimization Suites in FY24 are
creating more market relevance.
Partners that are provided access to the Trisus platform will be heavily vetted and required to meet the compliance standards
(such as SOC II or HITRUST) of the rest of the Group.
Craneware plc | Annual Report & Financial Statements 2024
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Strategic Report:
Principal Risks and Uncertainties
(continued)
Technology Risks (continued)
Mitigating Actions (continued):
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. 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.
Macro-economic environment
Trend since last year: No Change
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
industrial actions; relatively high interest rates; cost of living increases and salary inflation pressures; supply chain issues;
instability and uncertainties caused by ongoing conflicts. 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 a challenge to all businesses. This issue is compounded by the ability to attract talent with specific
skillsets and experience. Globally there continues to be 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 is 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.
Craneware plc | Annual Report & Financial Statements 2024
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Strategic Report:
Principal Risks and Uncertainties
(continued)
Macro-economic environment (continued)
Mitigating Actions (continued): 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.
Treasury Risks
Trend since last year: No Change
(Note: this risk incorporates ‘Compliance with debt finance facility covenants’ and ‘Banking Environment’ which were included as separate
risks in the Principal Risks and Uncertainties section of the prior year Annual Report)
Issues:
Cash management risks
There is an acknowledged expanding risk, in general for companies, from internally and externally perpetrated fraud in relation
to payments processing and / or transfer of funds, with wider scale use of electronic communications and documentation, use
of Artificial Intelligence and remote working arrangements. The Craneware Group reconciles and disburses customer cash as
part of services provided by the Group in connecting them to their contract pharmacy network, in conjunction with healthcare
partners.
Counterparty risks
The financial services industry, and notably banking, have faced significant challenges in recent years that have led to increased
risk impacting cashflow and lending products. Industry risks exist with increased threats of security breaches, exacerbated by
global conflicts and national tensions.
Compliance with debt finance facility covenants
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 20 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:
Cash management risks
Internal controls including authorisation protocols, segregation of duties and reconciliations are in place and kept under review
in addition to executive supervision of financial risk management considerations and policies and procedures.
Counterparty risks
Insurance measures, to the extent commercially available, 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.
Craneware plc | Annual Report & Financial Statements 2024
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Strategic Report:
Principal Risks and Uncertainties
(continued)
Treasury Risks (continued)
Mitigating Actions (continued):
Counterparty risks (continued)
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. As noted below, in addition to scheduled term loan repayments, the Group is actively reducing the cash reserves it
holds through offsetting the revolving loan facility balance whilst maintaining the available facility – therefore the Group’s cash
on its balance sheet has been reduced by offsetting the revolving facility.
Compliance with debt finance facility covenants
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. We retain regular and detailed dialogue with our lenders and these relationships
continue to be supportive.
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 Group has paid down some of the revolving facility and continues to allocate any excess cash to reduce the balance. The
loan facility has been drawn down to the extent of $120m of which $35.4m was outstanding at 30 June 2024 ($83.0m at 30
June 2023) comprising a $16m term loan and a $20m revolving loan facility ($24m term loan and $60m revolving loan at 30
June 2023). These facilities are due to expire on 30 June 2026 and on 7 June 2026 respectively.
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 years.
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.
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 to act responsibly in 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
Craneware plc | Annual Report & Financial Statements 2024
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Strategic Report:
Principal Risks and Uncertainties
(continued)
Emerging Risks (continued)
Climate Change (continued)
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 the Group’s costs and likely regulatory interventions are seen as manageable; and a
significant proportion of our employees are home-based 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 2024.
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.
The current economic climate has remained largely stable over the previous year which has been reflected in the forward view of
the model. Modest increases in revenue alongside cost increase greater than inflation provide a cautious base case against which
viability has been assessed.
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 2024.
The Directors also considered several other factors including the Group’s risk management and internal control effectiveness and
the principal risks and uncertainties and their likelihood of occurrence within the period of assessment.
The Directors consider that three years is an appropriate period for this assessment as it corresponds with the outlook used
internally and for strategic planning.
The SaaS business model with its underlying long-term contracts (as described earlier in the Strategic Report), high levels of
associated cash generation and long-term focus on customer success provides a foundation of revenue for future years. This
foundation of contracted revenue forms the basis of the scenarios considered by the Directors in making this assessment, including
a scenario which envisages no revenue growth. 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 2024. However, future assessments of the Group’s prospects are naturally subject to
uncertainty that increases with time and therefore future performance cannot be guaranteed.
Craneware plc | Annual Report & Financial Statements 2024
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Strategic Report:
Environmental, Social and Governance (ESG) Introduction
ESG Committee Chair’s Introduction
Our three ESG Focus Areas (outlined below) are founded on our Purpose and continued to guide our ESG initiatives and actions
through FY24.
At the very heart of our ESG endeavours are our customers and communities. We are honoured as a team at The Craneware
Group to be able to support and enable our customers to provide quality care to their communities through the profound
impact our solutions deliver. This social impact is substantial. In FY24 we delivered in excess of $1.5 billion of benefit to our
customers from utilising our solutions, helping them stretch their scarce healthcare resources as far as possible.
Craneware Cares continues to embody our team’s strong community ethos and is testament to our culture. We value our
colleagues on the Cares committee and everyone throughout the organisation as they continue to provide considerable time
and precious resources to the significant efforts and achievements of the Cares programs to support the causes in their own
communities.
I and my fellow ESG Committee members appreciate the support, enthusiasm and engagement from the Employee Advisory
Group and colleagues across The Craneware Group in helping to collectively progress our Diversity, Equity and Inclusion and
Environmental initiatives during the year. Thank you to everyone who has committed, and continues to provide, their time and
energy to these efforts.
We are mindful of the fact that climate change is a global challenge and a responsibility for everyone. As a software and
services provider, we operate with a relatively low impact on the environment however, we are working diligently to reduce
this impact.
We hope that our Non-Financial and Sustainability Information Statement and accompanying ESG Statement provides you with
both an understanding and appreciation of our team’s collective efforts and progress with the various initiatives within our
three ESG Focus Areas. I look forward to ongoing involvement with colleagues in the year ahead as we advance further activities
within our ESG Focus Areas.
Issy Urquhart
Chair of the ESG Committee & Chief People Officer
DRIVEN BY OUR PURPOSE: to transform the business of healthcare through
the profound impact our solutions deliver, enabling our customers to
provide quality care to their communities
Key ESG
Focus Area
Overview of our ESG credentials
Our
Customers &
Community
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 FY24 our
customers have seen in excess of $1.5 billion benefit from utilising our solutions, helping to stretch scarce
healthcare resources as far as possible.
Craneware Cares is driven and led by our employees and forms a central and important part of life at Craneware;
coordinating our charitable giving and community outreach.
•
Further details are in our ESG Statement
Our People
We have a talented mix of employees from diverse backgrounds, which brings a high level of innovation and
collaboration. Our diversity metrics are on pages 46 and 47.
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, equity and
inclusion.
•
Further details are in our ESG Statement
Our
Environment
Our environmental impact is relatively low and our climate-related risks are not significant. However, in the
global challenge of climate change we have a responsibility to reduce our environmental impact. We have various
initiatives underway and in plan to lower emissions and energy use and supporting environmentally responsible
practices.
•
Further details are in our Non-Financial and Sustainability Information Statement (on pages 31 to 40) 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 policy, anti-slavery and human trafficking policy, whistleblowing policy)
UNDERPINNED BY OUR VALUES AND CULTURE
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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’).
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 emission reductions as we transition to a low carbon economy.
During the year ended 30 June 2024 (‘FY24’) we continued to advance some actions in this the Group’s second year of reporting
under these provisions in the Act and the Group aims to make further progress in FY25. Whilst the compilation of a baseline
emissions data set for establishing appropriate targets and defining key performance indicators to monitor our response to
climate-related risks remain in progress, we have implemented steps to reduce the Group’s impact on the environment.
Introduction and overview
The nature of the Group’s operations means that our
environmental impact is relatively low compared with other
sectors, such as manufacturing or transporting goods, and
our overall risk and impact from climate change is assessed
as low. As a result of our activities, we are not involved in
energy-intensive processes nor do we generate significant
emissions or waste however, we understand that we all have
a responsibility to protect 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.
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
‘Potential impacts and resilience’ section of this Statement
describes that, in FY24, the ESG Committee was supported
by colleagues from various parts of the business to conduct
an externally facilitated qualitative climate scenario analysis
process thereby enhancing the initial high level scenario
analysis conducted by the Committee in FY23. This process
also assisted with expanding, to some extent, the awareness
of climate scenarios and implications for the organisation
beyond the Board and senior management level within the
Group.
The Board recognises that further development of
assessments, emissions data and monitoring in this area are
required, and we are committed to ensuring continued
progress with these activities through FY25. 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 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.
Our commitment, noted in our Non-Financial and
Sustainability Information Statement last year, was to
advance more immediate actions rather than waiting for
data to be gathered or specific targets to be set as climate
concerns continue to evolve with a heightened urgency.
Being aware of our main areas of energy use and emissions
we focussed our efforts in FY24 accordingly. Some of the
actions progressed in FY24 aimed to further our
understanding of potential climate-related scenarios and
their possible impacts facilitating the updating of our
appraisals of climate-related risks (and relevant mitigations)
and opportunities. In addition, activities to assist with
reducing our environmental impact included the following in
FY24, along with our wider sustainability initiatives that are
described within the Environmental, Social and Governance
(‘ESG’) Statement on pages 41 to 55.
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Strategic Report:
Non-Financial and Sustainability Information Statement
(continued)
Introduction and overview (continued)
•
Our ESG Committee continues to support the Board with the operational coordination and direction of the Group’s
sustainability activities (further details are in the Governance section below and our ESG Statement);
•
Reviewing climate-related risks identified from the Group’s risk management procedures, and resilience through applicable
mitigating actions;
•
Consideration of different climate change scenarios and an overview of potential impacts;
•
The reduction in the rented office space in the US was implemented, as planned, during FY24 with an initial 13% decrease
in rented office space in early FY24 with a full year impact of the reduced space to be realised in FY25. This contributed to
a decrease in Scope 2 emissions of 30% in FY24 compared to FY23 with further decline expected through FY25 when a full
year of the office space reduction is in place. This is described further below in the ‘Energy Use and Emissions’ section and
in the ESG Statement;
•
Further progress with the gathering of Scope 3 emissions data in additional categories (for voluntary reporting), where
practicable, and this activity is ongoing;
•
Reviewing availability of emissions data, particularly from significant vendors;
•
Continued migration of internal information technology on-premise services to more energy efficient cloud services;
•
Further review and monitoring of some key vendors’ sustainability credentials, renewable energy policies and other
emission reduction actions - this assessment will continue during the year ahead;
•
Enhancing employee engagement and broadening awareness of environmental impact considerations facilitated by our
Employee Advisory Group and this is ongoing in FY25; and
•
Continued progress with the review of business travel procedures, employee communications and availability of carbon /
emissions data.
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 activities within this Statement and in our ESG Statement. In addition to the actions noted above, we are
assessing the process and requested contents for disclosure of environmental information, during FY25, through the proposed
submission of responses to the 2024 CDP corporate questionnaire. Therefore, with these various activities underway or in plan,
we look forward to reporting on progress in our FY25 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 preparatory
activities for actions and reporting, we referred to various published guidance including (but not limited to): the TCFD guidance;
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 relevant publications by the Financial Reporting
Council (‘FRC’) including the FRC’s Annual Review of Corporate Reporting 2022/23 and the FRC’s Thematic Review of TCFD Metrics
and Targets.
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:
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Non-Financial and Sustainability Information Statement
(continued)
Introduction and overview (continued)
Requirements of s414CB (2A) Companies Act 2006
Section name in this Statement and
page number containing this
information
(a) a description of the company’s governance arrangements in relation to assessing and
managing climate-related risks and opportunities
Governance
(pages 33 and 34)
(b) a description of how the company identifies, assesses, and manages climate-related
risks and opportunities
Risk Management
(page 34)
(c) a description of how processes for identifying, assessing, and managing climate-related
risks are integrated into the company’s overall risk management process
Risk Management
(page 34)
(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
Climate-related Risks &
Opportunities
(pages 34 to 37)
(e) a description of the actual and potential impacts of the principal climate-related risks
and opportunities on the company’s business model and strategy
Potential impacts and
resilience
(pages 37 and 38)
(f) an analysis of the resilience of the company’s business model and strategy, taking into
consideration different climate-related scenarios
Potential impacts and
resilience
(pages 37 and 38)
(g) 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
Metrics and targets
(pages 38 to 40)
(h) 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
Metrics and targets
(pages 38 to 40)
Governance
The sustainability governance framework within the Group, which includes the assessment and management of climate-related
risks and opportunities, is summarised below.
Overview of ESG / Sustainability governance framework:
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.
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Strategic Report:
Non-Financial and Sustainability
Information Statement
(continued)
Governance (continued)
Our ESG Committee was chaired by Issy Urquhart, an
executive Director of the Company and the Group’s Chief
People Officer, throughout the year ended 30 June 2024 and
since the Committee’s inception during the prior financial
year. Membership of this Committee consists of senior
representation from across the business, including the Chief
Information Officer. The Board of Directors 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 two of the members of the ESG
Committee also being members of the Risk & Compliance
Committee).
The ESG Committee meets on at least a quarterly basis. 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.
Risk Management
The Group’s Risk Management process is described on page
19. 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. In
FY24 this process received the outputs from the climate-
related scenario analysis as described in the ‘Potential
impacts and resilience’ section of this Statement. This was a
qualitative
climate
risk
impact
appraisal
including
consideration of mitigation and adaptation arrangements.
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 of 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.
In prior financial years, through the Group-wide 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, develop and keep under review 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
Climate change is dynamic and is anticipated to have long
term implications. 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. Therefore, the use of climate-
related scenario analysis is applied to support the
identification of risks and opportunities and to appraise the
resilience of the organisation to potential future climate
states. We have identified those climate-related risks and
potential opportunities most likely to affect The Craneware
Group as set out in this section of the Statement but none of
these have been assessed as significant to the Group.
Building on our initial assessment conducted last year, in
FY24 our further 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 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.
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Strategic Report:
Non-Financial and Sustainability Information Statement
(continued)
Climate-related Risks and Opportunities (continued)
Potential climate-related risks are being assessed within the following three time horizons and for the main reasons outlined in
the table below:
Time period
Short term
Medium term
Long term
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 greenhouse gas emissions
Climate-related risks
The following climate-related risks have been identified as potentially relevant to the Group although none are considered to be
material to the Group and the impact for each is currently assessed as low. In summary:
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
Physical
Transition
Transition
Potential impact
overview
Disruption to operations as a
result of severe weather
events or long term changes
to climate and sea levels
Increased operating costs
due to higher pricing of
energy and other inputs
Potential damage to reputation and higher
cost of capital
Time horizon
Medium
Medium
Medium
Impact
(with mitigation)
Low
Low
Low
Likelihood
(with mitigation)
Unlikely
Possible
Unlikely
Mitigation / adaptation
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,
infrastructure
configurations 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 a
relatively small proportion 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. All our office-based
employees are able to work remotely and we operate 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. We also continue to appraise our
infrastructure requirements, including the use of cloud
services and data centres, in addition to the resilience of
those arrangements incorporating climate-related risk
mitigations. The Group will keep under review the potential
vulnerability (in particular to physical climate-related risks)
over the medium to longer term, of its office locations,
facilities and infrastructure and regularly appraise the
adequacy of mitigations.
We acknowledge the potential physical effects of climate
change in the longer term, depending on the severity of the
climate scenario projections, and those could have
significant adverse consequences for our stakeholders
thereby highlighting the importance that society collectively
work towards emission reductions.
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Strategic Report:
Non-Financial and Sustainability
Information Statement
(continued)
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 likely to be some increase in the price of
carbon to drive organisations to reduce their carbon
emissions and energy use. The Craneware Group is therefore
likely to experience 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 reduction in our rented office space
in the US implemented in FY24 is resulting in a reduction in
energy use and emissions (as outlined in the ‘Metrics and
targets’ section of this Statement).
The Group will continue to review vendor arrangements in
respect of energy use and renewable sources, pricing and
vendor activities for reducing emissions. Some of the
Group’s significant vendors have initiatives in place or in plan
for energy efficiencies, increased use of renewable energy
sources, and monitoring and reduction in utilities
consumption.
Reputational issues linked to environmental performance &
reporting
We have an obligation to investors, regulators, and other
stakeholders to communicate progress in respect of
sustainability considerations including climate-change. 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. 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 reputational sensitivities in relation to climate-
change could be thought to be low risk for the Group
because its business does not generate large levels of
emissions or waste, we are mindful of the importance of the
collective effort across society to address the challenge of
climate change and our ESG Committee is directing the
operational responses to develop and enhance our policies
and processes in this area.
Overview
We do not expect any material impact to the Group in the
short term as a consequence of these identified climate-
risks, based on current appraisals. 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 including scenario projections for the
medium to long term.
Metrics to track climate related risks
It is recognised that the Group’s initiatives to assist with
reduction in emissions are more relevant and appropriate
than developing specific metrics for each climate-related
risk. However, this will be kept under review by the Board
and ESG Committee. Whilst our activities to baseline our
relevant energy use and emissions data are still in progress
and climate-related Key Performance Indicators (KPIs) or
targets are not currently reported by the Group, we believe
this information is not considered necessary for an
understanding of the business.
Climate-related opportunities
A few potential opportunities, which may arise as a direct
result of climate-related implications, were identified and
considered as part of the climate scenario analysis in FY24.
However, these are regarded to be not 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. The direction,
coordination and progression of these initiatives is
assisted by our ESG Committee.
•
Increasing demand for lower carbon footprint
products, such as cloud-based and digital services:
Customers may increasingly seek lower carbon
product offerings to reduce their own carbon
footprints and be aligned with anticipated incoming
regulation. Offering cloud-based services with
providers who are on a pathway to net zero
emissions will help them achieve that, thereby
potentially increasing the demand for our solutions.
In addition, Craneware has an opportunity to help
customers transition to a more digitalised
infrastructure which can help towards improved
efficiencies and reducing their emissions.
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Strategic Report:
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Information Statement
(continued)
Climate-related opportunities (continued)
•
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
eliminating single use plastics. Some of the Group’s
significant vendors have arrangements in place or
are in progress towards an increasing proportion of
renewable
energy
coverage
and
improved
efficiencies in the use of utilities.
Potential impacts and resilience
We understand the need to assess, at suitable intervals, the
appropriateness and adequacy of climate resilience in
addressing both physical and transitional climate risks and in
estimating the materiality of their impact and doing this 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 explained in last year’s Non-Financial and Sustainability
Information Statement, the ESG Committee conducted an
initial high-level risk and opportunity assessment and
scenario analysis in FY23. Three climate-related scenarios
(ranging from high to low emissions) were referred to in that
appraisal to assist the Committee’s understanding of the
sensitivity of identified potential physical and transition
climate-related risks. We recognised then that further
scenario analysis should be conducted to support a more
detailed review and to ensure that the scenario projections
we referenced are the most appropriate for the
circumstances and up to date. We stated our intention to
complete this more detailed review during FY24.
Accordingly, during this year the ESG Committee engaged an
independent external consultancy firm, specialising in ESG
advisory services, to plan and facilitate this process. The
objective of this exercise was to validate and build on the
initial assessment, based on a more detailed scenario
analysis, especially over the longer term. In order to
enhance the breadth of perspectives for this assessment, the
Committee invited colleagues from a range of functions
across the business to participate in a scenario analysis
workshop. Background information, to provide context to
the proposed scenarios, was considered and initial thoughts
prepared by the participants ahead of the workshop event.
The process sought to assess the resilience of the Group’s
business model and strategy within projected climate
scenarios to:
•
understand key drivers causing potential risks or
opportunities;
•
identify and describe climate-related risks and
opportunities, with wider perspectives than solely the
ESG Committee, to provide appraisals of the potential
risks and opportunities;
•
(through
representation
from
across
the
organisation) provide indications of how these
climate projections may impact the different areas of
the business; and
•
propose the organisation’s existing mitigations and /
or possible response.
The climate scenario workshop referred to two scenarios
compiled and published by the Intergovernmental Panel on
Climate Change (IPCC) in the IPCC’s sixth assessment report
under climate warming scenarios which included:
•
RCP 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.
•
RCP 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.
The elements of these scenarios were contemplated and
discussed by the workshop participants with further detail of
projected impacts on the United Kingdom and the United
States provided from various IPCC’s Sixth Assessment
Report, Working Group II – Impacts, Adaptation and
Vulnerability Factsheets. The elements referred to within
the Factsheets included (but were not limited to): projected
change in relative sea levels; annual average temperatures;
extreme heat incidence; precipitation levels; human health
and wellbeing aspects. The scenario analysis benefitted from
involvement and insights provided through this focussed
workshop and assists with a broader evaluation of the
resilience of our business to climate change.
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Non-Financial and Sustainability
Information Statement
(continued)
Potential impacts and resilience (continued)
Following the climate scenario workshop, the ESG
Committee reviewed the outputs from the workshop session
and incorporated these into the Committee’s updated
appraisals of climate change risks and opportunities. These
risk appraisals were then included within the corporate risk
management and risk assessment process (as outlined on
pages 19 and 20) and therefore were subject to further
review in the context of the Group’s other identified risks
and were thereby assessed, in terms of their significance, on
a consistent basis. Based on those assessments, no
significant risks have been identified from the scenario
review that we are unable to adequately 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
facilities, infrastructure and working arrangements, use of
leased office premises and their locations.
Our business continuity plans, which are kept under review
by our Operations Board, 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.
The ESG Committee acknowledges that climate scenario
analysis is complex and involves many uncertainties
especially over the longer term. The Committee aims to
ensure that the scenario analysis will continue to be
enhanced and developed (taking into account updated
published assessments of climate-related scenarios), at
appropriate intervals in the future, to more fully establish
and quantify The Craneware Group’s climate related risks
and opportunities and an iterative approach will therefore
be required.
Metrics and targets
Conscious of the UK and US governments’ ambitions for net
zero emissions by 2050, in order to achieve The Craneware
Group’s aligned net zero goal within that timeframe, we
expect to set a number of targets to be achieved along the
way. We had envisaged in early FY24 to have progressed
further by now with the definition of such targets; advancing
this process has been slower than anticipated but we have
made some incremental steps towards broadening our
collection of, and deepen our analysis of, emissions data.
When this activity is further advanced, it is expected to help
to enhance our monitoring and reporting and to assist the
organisation to focus efforts on areas where the greatest
reductions can be made from a practical perspective.
However, in the meantime, actions are being implemented
or planned, as summarised within the ‘Introduction and
overview’ section above.
In the interim we are reviewing the Group’s environmental
impact in more detail so as to develop 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 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 and
some of these engagement activities were initiated in FY24
and are ongoing. We appreciate that further work is still
needed to conclude on appropriate KPIs and this continues
to be an action for the ESG Committee to develop.
The Remuneration Committee’s Report section of this
annual report explains the performance conditions which
currently apply to performance-related elements of
executive Director remuneration. Environmental or other
ESG-related metrics are not currently included in the metrics
selected by the Remuneration Committee for performance-
related elements of executive Director remuneration.
Reporting of our energy consumption and Scope 1, 2 and (on
a voluntary basis) two elements of Scope 3 emissions are
included within our Streamlined Energy and Carbon
Reporting (SECR) table within the ‘Energy Use and Emissions’
section below. We also explain in that section the extent of
our energy use and emissions data and plans for further
extending that data so that we have an improved baseline
for setting emission reduction targets and metrics for
reporting in the future.
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 2024 with comparisons for the prior financial
year.
Although only UK energy usage by the Company, Craneware
plc, is required to be reported in accordance with the SECR
Regulations, we decided from FY23 to voluntarily extend our
energy use and greenhouse gas (‘GHG’) emissions data
collection and reporting in two ways:
Craneware plc | Annual Report & Financial Statements 2024
39
Strategic Report:
Non-Financial and Sustainability
Information Statement
(continued)
Metrics and targets (continued)
a) our energy use and GHG emissions data includes
our US leased office premises rather than being
only in respect of our UK facilities; and
b) we have started to report emissions for one
category within Scope 3; this being emissions from
car travel on business journeys (not commuting).
We explained in last year’s Annual Report that we 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. Our Scope 3
emissions voluntary reporting has been expanded again in
FY24 with the inclusion of estimated emissions from our use
of cloud-based services, to the extent that such emissions
data was available, which is an element within the
‘Purchased Goods and Services’ category in Scope 3.
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 further 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 FY24 and for
FY23. It is intended that a consistent Group basis will
continue be applied for future reporting years.
2024
2023
Group total
US only
UK only
Group total
US only
UK only
Energy use (kWh):
Natural Gas
7,474
7,474
-
10,075
10,075
-
Electricity
423,496
344,653
78,843
580,000
492,162
87,838
2024
2023
Group total
US only
UK only
Group total
US only
UK only
Gross emissions in metric tonnes of carbon dioxide equivalent (CO2e):
Scope 1 (Natural Gas)
1.37
1.37
-
1.81
1.81
-
Scope 2 (Electricity)
146.26
129.94
16.32
208.84
190.65
18.19
Total of the above Scope 1
and 2 emissions
147.63
131.31
16.32
210.65
192.46
18.19
2024
2023
Group total
US only
UK only
Group total
US only
UK only
Intensity measure (average
no. of employees)
747
544
203
734
541
193
Intensity ratio in tonnes of
CO2e per employee (based
on Total Scope 1 and 2
emissions):
0.20
0.24
0.08
0.29
0.36
0.09
For the UK data, emissions were calculated from electricity
billing information for our UK rented office premises and the
UK Government’s 2024 GHG Conversion Factors Guidance.
Emissions from our US rented office premises were
calculated using electricity billing information for each office
and / or energy meter readings provided by the building
management organisation and by applying the US
Government’s EPA 2022 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 based on the average number of employees in the
Group in the relevant financial year.
Scope 3 emissions
(for elements of these categories)
2024
2023
Gross emissions in metric
tonnes of carbon dioxide
equivalent (CO2e):
Purchased goods & services A
24.92
16.88
Business travel – cars only
34.89
27.09
Total of the above reported
Scope 3 emissions
59.81
43.97
Intensity ratio in tonnes
of CO2e per employee
(based on Reported
Scope 3 emissions):
2024
2023
Total for the Group, based on
the above reported Scope 3
emissions
0.08
0.06
A In both financial years this category is limited to the esXmated emissions from the purchase of cloud-based services, to the extent that aZributed emissions
data was available (allocated on a usage or expenditure basis).
Craneware plc | Annual Report & Financial Statements 2024
40
Strategic Report:
Non-Financial and Sustainability
Information Statement
(continued)
Office-related energy use (natural gas consumption (Scope 1)
and purchased electricity consumption (Scope 2)) (continued)
During the year to 30 June 2024 the Group utilised leased
office premises located in:
•
Edinburgh (UK) – this office space was used
throughout FY24 and FY23;
•
Pittsburgh, Pennsylvania (US) – this office space
was used throughout FY24 and FY23;
•
Deerfield Beach, Florida (US) – until April 2024 we
utilised a larger office space in this location; we
relocated to a smaller office space within this
location in April 2024
•
Atlanta, Georgia (US) - until October 2023 when this
office space was vacated and the lease expired.
We explained in our FY23 Annual Report that, 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 reviewed our
office facility requirements. Following this review, 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 and the lease expired in
October 2023. In addition, we decided to move office
premises within Deerfield Beach in Florida, reducing our
facilities footprint in that location. We provide further
details within the ‘Environment’ section our ESG Statement.
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 declined in FY24 by some 10%
and this is considered to be a result of building energy
efficiency measures, an improvement in the air conditioning
arrangements and a reduction in on-premise information
technology hardware with the migration of further services
to the cloud. As a result of the reductions to our rented US
office space implemented during FY24, there was an almost
30% reduction in energy use and emissions from our US
offices in FY24 compared to the prior financial year. A further
reduction in energy use and emissions is expected for FY25
when there will be a full year’s effect of the smaller US office
footprint. We expect that, with this initiative, in FY25 our
energy use and Scope 2 emissions should reduce by at least
a further 10% compared to FY23. This is an important aspect
of our overall emissions reductions.
Scope 3 emissions
Purchased goods and services
The providers of the cloud services and data centres, utilised
by the Group, have carbon reduction or carbon neutral goals
and many sustainability and ESG initiatives including a high
proportion or 100% renewable energy coverage and
improving efficiencies in usage of utilities.
Business travel
The level of business travel was higher in FY24 compared to
FY23 reflecting in-person delivery of professional services
and customer meetings and more healthcare sector
conferences, trade shows and training events were attended
in-person.
Following the review during the year by the travel subgroup
directed by the ESG Committee, we have plans in place to
initiate the gathering of data for further elements of
business travel to enable the estimation of emissions from
at least one other mode of transport. We shall provide an
update on this initiative in next year’s Annual Report.
Employee commuting
Although we currently do not calculate estimated emissions
from employee commuting, we do plan to do so from FY25
subject to data gathered from the planned commuting
survey for our office-based employees. However, in the
meantime 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 general extent
and pattern of employee commuting during the year ended
30 June 2024 was similar to that for the prior year except
that, with the closure of our office in Atlanta in FY24, the
employees in the vicinity of that office are now home-based.
Craneware plc | Annual Report & Financial Statements 2024
41
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 focus their resources on their healthcare priorities and providing quality care to their patients and communities.
Craneware has well developed initiatives which contribute to its sustainability credentials, and we continue to develop these
further to positively impact the community around us. Our ESG Committee enables a coordinated and measured approach to the
Group’s many activities under the sphere of sustainability (focussed on ‘Social’ and ‘Environmental’ initiatives).
ESG Commi)ee
The composiron and oversight of the ESG Commisee is described in the Non-Financial and Sustainability Informaron Statement
on pages 31 to 40. The remit of the Commisee is guided by our ESG framework which has three key focus areas: ‘Community’
and ‘People’, which form our social agenda, and ‘Environmental’ masers - these are described below.
The Commisee’s acrvires evolved in FY24 as we made progress in the key focus areas. A porron of the Commisee’s rme in
FY23 and in FY24 was directed to support the Board’s responsibilires in relaron to climate-related considerarons as referenced
in the Non-Financial and Sustainability Informaron Statement. The other acrvires of the ESG Commisee during FY24 are
outlined in this Statement.
Three key focus areas have been approved by the Board, appropriate to the Group’s Purpose and responsibilities, that serve as a
framework within which the Group’s ESG efforts are prioritised:
Craneware plc | Annual Report & Financial Statements 2024
42
Strategic Report:
Environmental, Social and Governance (ESG) Statement
(continued)
Our Solutions benefit our Customers and their Communities
For more than 25 years, we have partnered with hospitals and health systems across the US to help
improve and sustain operational financial performance. The Group 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 by delivering
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.
We provide expertise in clinical analytics and value cycle solutions, pharmacy procurement, compliance and utilisation
management solutions and provision of real-time pharmacy data analytics across the healthcare finance and 340B continuum.
Within our portfolio of solutions we provide software solutions for optimising performance within the hospital’s owned pharmacy,
as well as related to the relationship between eligible hospitals and retail pharmacies in the community via the vital, complex 340B
Drug Pricing Program. Our 340B management solutions support customers registered in the 340B Program (outlined in the section
below), assisting eligible healthcare organisations (‘covered entities’) with regulatory compliance and pharmacy procurement and
utilisation, enabling them to generate cost savings which go directly to the provision of comprehensive care for their communities,
particularly the underserved. Pharmacy is the largest cost area for US hospitals after personnel costs.
Supporting 340B management
The 340B Program enables eligible facilities to stretch scarce federal resources through the ability to purchase drugs at
substantially discounted prices thereby allowing organisations to use pharmacy cost savings to fund crucial programs that may
not otherwise be financially possible. Through partnering with external pharmacies, prescriptions may be provided to low income
or uninsured patients at a discount (or free).
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
Craneware plc | Annual Report & Financial Statements 2024
43
Strategic Report:
Environmental, Social and Governance
(ESG) Statement
(continued)
Our Solutions benefit our Customers and their
Communities (continued)
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. We aim to help our
customers, which are eligible healthcare organisations, build
and manage a successful 340B program. Our 340B solutions
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,
federal, government agency policies and judicial or court
outcomes. These influencing branches of the government
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. We have 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, along with our lobbyists, provide 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.
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 pharmaceutical manufacturers and others
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
Example: The Craneware Group is helping Covered Entities
contend with contract pharmacy exclusions
In 2020, at the height of the COVID-19 pandemic, a small
number of drug manufacturers began to implement their
own policies for managing 340B utilisation increases through
excluding contract pharmacies from 340B purchases for
their medications or a subset of their medications. Since
that time, it has grown to 37 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/
Craneware plc | Annual Report & Financial Statements 2024
44
Strategic Report:
Environmental, Social and Governance
(ESG) Statement
(continued)
Our Solutions benefit our Customers and their
Communities (continued)
Our Trisus Platform
We partner with our customers through the provision of 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.
Our applications and industry-leading team of experts
contextualise data, pushing through the challenges of siloed
information and confusing operating signals, to provide
actionable insights with ease in Trisus, our SaaS-based cloud
platform. That is how the future works. We call this the
Power of One – one platform, one vendor, one data lift, one
best-in-KLAS experience for our customers – infinite
possibilities.
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
Our competitive edge is in our keen understanding of both
marketplace needs and listening to customer preferences,
allowing us to create valuable insights for customers, to
improve and sustain their operational and financial
performance, through the connectivity of data in our
solutions. We therefore recognise the importance of, and
are fully committed to, engaging with our customers in
meaningful,
two-way
conversations.
We
continually
enhance our customers’ experience through several
targeted initiatives that support our extensive customer
success efforts during implementation, professional services
engagements, and ongoing customer support. Some of
these initiatives are outlined below:
How we engage: examples of our Customer Engagement initiatives
The Advisory Council powered by The Craneware Group
A forum representing leadership from within The Craneware Group plus key leaders from our customer organisations which
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 our team about issues of strategic importance related
to the market, our applications and services; thereby meeting the evolving needs of healthcare organisations. Ongoing member
feedback is also requested through surveys and thought leadership projects. Advisory Council members are also asked to
participate in our Communities of Practice training sessions and webinars.
Executive Relationship Program
This program provides our strategic accounts an exclusive experience with our executive and senior leaders, thereby connecting
c-suite executives and decision makers, 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.
The Annual Performance Summit powered by The Craneware Group
This is our main customer event – a broader opportunity to engage customers in a virtual setting, providing users of our
applications and services with educational and networking opportunities.
Educational webinars and Communities of Practice
We regularly offer complimentary live webinars providing training and thought leadership across our solutions.
Craneware plc | Annual Report & Financial Statements 2024
45
Strategic Report:
Environmental, Social and Governance (ESG) Statement
(continued)
Our Customers (continued)
Customer engagement (continued)
How we engage: examples of our Customer Engagement initiatives (continued)
Publications
Our 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.
The Academy powered by The Craneware Group
This is our knowledge centre, with a triple aim: professional development, The Craneware Group knowledge, and industry
knowledge. The Academy allows our customers to access materials specific to their needs and the use of our solutions. It
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.
Instructor Led Customer Training Programs
We offer over 50 different courses to our 340B customers and we host the foundations courses and webinars for external
customers.
Customer Experience
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. We have
a department dedicated to customer experience to provide oversight and to coordinate our efforts in these activities.
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.
Account Management Survey (for customers of our 340B Program solutions)
This survey is sent through our customer relationship management platform, providing an additional feedback loop for
continuous improvements in our customer experience. Due to the success of this process, it is being expanded to similar
interactions across the Group’s business. The Craneware Group donates $5 to the American Cancer Society each time a
customer completes this survey.
KLAS Results
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.
The Craneware Group achieved continued positive and top echelon performance in the KLAS rankings in 2024, narrowly placing
second in the Chargemaster Management category and fourth in the 340B category. This year’s rankings mark the 17th year
that The Craneware Group has placed as a top vendor in these solution spaces, reaffirming our unwavering commitment to
excellence in the business of healthcare. This result reflected continued improvement for our Sentinel and Sentrex solutions in
the 340B Management Systems category, with the overall score from our customers being an increase from our rating in 2023.
Craneware plc | Annual Report & Financial Statements 2024
46
Strategic Report:
Environmental, Social and Governance (ESG) Statement
(continued)
Our People
Our employees are the reason for our success through the connections they make with our
customers and each other, maximising collaboration to drive innovations in the Company’s solutions
to deliver increasing value to our customers, aligned to our purpose.
Culture
The Framework provides clarity on who we are and how we show up every day to delight our
customers. It is part of employees’ onboarding when they join and underpins contribution
management. The Framework comprises of our values and target culture and has five core values:
Framework
Our Values
Our Target Culture
•
Be Authenrc
•
Demonstrate integrity
•
Provide excellent service
•
Work hard to the highest quality
•
Enjoy the challenge
•
Be the best version of yourself
•
Represent a learning organisaron
•
Fail fast and learn faster
•
We are in this together
Each value has a guiding principle which describes the value
and how it is demonstrated by our employees.
One of the outcomes of Contribution Management is to
assess that the values and target culture are being
demonstrated in how our employees perform in their role
which is, in turn, recognised and linked to reward
throughout the organisation. We celebrate employees who
embody our Framework through an employee nominated
annual Award which is presented to employees who have
demonstrated the values to the highest degree.
Diversity, Equity and Inclusion
We respect the dignity and rights of all of our employees. We
have a talented mix of employees from diverse backgrounds,
which contributes to high levels of innovation and
collaboration. We believe in the importance of fostering a
team environment while also celebrating individuals.
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 accommodations and training are
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 2023: 47%
female and 53% male employees). At Operations Board plus
Senior Vice and Vice President level, the composition is
approximately 39% female and 61% male (at 30 June 2023:
34% female and 66% male employees). The Board of
Directors is 33% female and 67% male directors (at 30 June
2023: 33% female and 67% male directors). The average
base salary for female employees compared to male
employees is approximately 1.007:1.
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 2024 which was 68.2% White
26.4% Black, Hispanic, Asian, Indigenous/Native, or Two or
more Ethnic groups; with a further 5.4% of employees not
specifying ethnicity (as at June 2023: 66.5% White; 24.9%
Black, Hispanic, Asian, Indigenous/Native, or Two or more
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47
Strategic Report:
Environmental, Social and Governance (ESG) Statement
(continued)
Our People (continued)
Diversity, Equity and Inclusion (continued)
Ethnic groups; with a further 8.6% of employees not specifying
ethnicity).
Through FY24 we continued to evolve our Diversity, Equity and
Inclusion (‘DEI’) programme by relaunching our Craneware Spaces
sessions. We held a ‘Women in the Boardroom’ session with our two
female non-executive directors and one female executive director, a
session on ‘Veterans in the Workplace’ and repeated mental health
sessions that we have hosted in prior years. In addition, our re-formed
Employee Advisory Group (as outlined below) focussed their time on
DEI topics including encouraging employees to update their
demographic data in our human resources information system to
improve our diversity reporting.
Employee engagement and communication
The Craneware Group is dependent on having a diverse and 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
Advisory Group
During FY24 we relaunched our Employee Advisory Group (EAG) which is comprised of employees, below senior management
level, representing a range of areas of the business. The membership of the EAG was compiled from employees who expressed
an interest and volunteered to be considered to serve on the EAG. The purpose of the EAG is a forum for employee
representatives to exchange ideas that influence the employee value proposition. It is not a decision-making body; the forum
provides a platform for employees to share information and have discussions about issues that are of interest to them and
make recommendations to decision makers. In FY24 the EAG focussed on DEI and sustainability topics and activities.
Employee engagement survey action plan
Through FY24 we continued to drive the action plan from the FY23 engagement survey. Each action plan area has an Executive
Sponsor partnered with a change practitioner to ensure successful outcomes from the action plan. Updates 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 Board of Directors and the
Operations Board are updated on action plan progress. The next employee engagement survey is scheduled for September
2024.
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 of Directors, and related operational plans and deliverables (with key performance indicators). The teams
across the business 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.
All-employee Townhalls
These meetings are hosted by our CEO and CFO, usually following the full and half year financial results announcements, to
provide an update to all employees on the business. There is a question and answer section for employees to ask questions.
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Strategic Report:
Environmental, Social and Governance (ESG) Statement
(continued)
Our People (continued)
Employee engagement and communication (continued)
How we engage: examples of our Employee Engagement activities (continued)
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 to share information and updates, including the employee handbook. The intranet is also a place
for employees to recognise their colleagues through a digital notice board. We also use Teams channels to communicate on
topics such as 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 intranet). The presenter and topic change each week and is a
way for employees to understand what other teams are working on across the business, including regular updates from the
Craneware Cares team and EAG.
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 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 organisation from their perspective.
Community and Social initiatives
Craneware Cares provides a direct link to employee engagement with relevant community engagement. Further details are
contained in the ‘Our Community’ section below.
We encourage our teams to have social time together whether that is informally organised or formally organised by the
Company. Budgets are available for remote employees who live close to each other to get together outside of working hours
to help with collaboration and engagement.
The Stakeholder Engagement overview section on page 61 explains how employee engagement outcomes are considered in the
discussions and decision making of the Board of Directors.
Office working space
We have offices in Edinburgh (UK), Pittsburgh (US), and Deerfield Beach, Florida (US). Our new Deerfield Beach office was opened
in April 2024 with the design of the space matching that of our UK headquarters with collaborative areas and offering a range of
different desk configurations, 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 in the ‘Environment’ section below.
Lean initiatives
We strive to develop continuous improvement mindsets that embrace a Lean culture which respects and empowers
employees. Through the implementation and execution of shared best practices, the Transformation Office provides the tools
and data to support operational success 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.
Craneware plc | Annual Report & Financial Statements 2024
49
Strategic Report:
Environmental, Social and Governance
(ESG) Statement
(continued)
Our People (continued)
Talent Acquisition and Onboarding
We want to attract and retain the best people. Our Talent
Acquisition team, in partnership with hiring managers, are
responsible for identifying, acquiring, assessing candidates
and supporting with the onboarding of new joiners. The
team have completed unconscious bias training, enabling
them to present an inclusive shortlist of suitable candidates
to our hiring managers. Hiring managers have attended
unconscious bias awareness sessions through our LINK
programme. We offer candidates a structured selection
process and use a competency-based framework, against
which to interview candidates, to ensure consistency and
fairness. Many of our employees are sourced via our
Employee Referral Programme.
The onboarding of new employees 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. Hiring managers also deliver
department and role specific onboarding.
During the year we designed a graduate recruitment
programme which will be implemented in FY25.
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. It
links the contribution of everyone to the overall strategic
direction of the organisation and provides clarity and
transparency around expectations. The process aims to drive
a high contribution culture with strategy alignment,
organisational
development,
and
founded
on
The
Craneware Group Framework and Purpose.
We endeavour 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, to identify proposed areas for
learning as well as training and development that employees
wish to complete.
Career Pathways illustrate the possibilities and potential
routes to career progression, serving as a resource, along
with line management support, for employees to develop
their careers.
The Academy (our learning management system) hosts on
demand learning solutions, covering a wide range of topics.
Each employee has an 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
all employees with on demand access to 23,200 instructor
led courses and learning paths covering a wide range of
business and technology skill sets. Managers have the ability
to create learning pathways and customised curriculums
supporting both individual and team development and also
complementing the onboarding process.
In addition, we have three categories of leadership programs
to bring together and further develop internal leaders. We
also support individualised professional development and
other development in line with role-based requirements to
meet business needs.
Reward
Our reward strategy links 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, wellbeing and work-life balance
benefits. We also have fertility benefits in both the UK and
US in support of our DEI programme. 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.
In the US we offer employees the opportunity to participate
in a variety of flexible spending accounts and a health
savings account. In addition, we offer supplemental health
benefits including accident, critical illness, and hospital
indemnity, a legal plan, identity theft protection plan, and
discount pet insurance options. US employees also have
short-term disability, and long-term disability benefits.
In the UK, we offer employees the opportunity to participate
in an electric vehicle leasing scheme, through a salary
sacrifice arrangement, Cyclescheme and Techscheme. UK
employees also have company-paid critical illness insurance
and can access private health assessments through a
monthly payroll deduction.
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Strategic Report:
Environmental, Social and Governance
(ESG) Statement
(continued)
Our People (continued)
Reward (continued)
The Remuneration Committee of the Company’s Board of
Directors
recognises
the
importance
of
providing
opportunities 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 long term
incentive grants. Further details are included in the
Remuneration Committee’s Report.
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 also includes
service commitment awards and informal peer to peer
acknowledgements.
Health & Safety
The Health & Safety Committee, which is chaired by our
Chief People Officer, meets on a quarterly basis and reports
to the 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.
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. In addition, we
review our business continuity plans, and our physical
security plans, at least annually.
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 FY24.
We endeavour 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.
Craneware Wellness
Our Dynamic Working Framework 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.
Our 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 including:
•
a section of the Group’s intranet dedicated to
Wellness
information
including
links
to
publications, webinars and guidance, organisations
which can provide assistance and also information
regarding our Mental Health First Aiders;
•
a
wellness
platform
that
provides
more
opportunities for employees to access wellness
awareness and education and facilitates the
creation of enjoyable challenges across the
organisation or in smaller groups;
•
two in-person yoga classes each week are held in
our Edinburgh office;
•
our US 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. All employees have access to an Employee Assistance
Programme which offers access to a confidential helpline 24
hours a day, 365 days a year. During the year we ran mental
health sessions for all employees.
Craneware plc | Annual Report & Financial Statements 2024
51
Strategic Report:
Environmental, Social and Governance
(ESG) Statement
(continued)
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, we have a significant number
of programs and opportunities to positively impact our local
communities.
Craneware Cares
Craneware Cares is our central mechanism for corporate
charitable giving, employee fundraising, and community
volunteer work. An executive committee and various sub-
committees comprised of employees from across the
business coordinate all charitable giving and volunteering in
the US and UK. All charitable giving in the US is distributed
through the Craneware Cares Foundation, our official
charitable foundation.
Craneware Cares engaged its quarterly ‘Spotlight Charity’
model of fundraising in FY24 which alternated between US
and UK based charities, selected entirely by employees. We
supported the following diverse organisations as Spotlight
Charities in FY24:
•
Q1 - The Drum Riding for the Disabled (UK)
•
Q2 - The Birthday Party Project (US)
•
Q3 - Border Women’s Aid (UK)
•
Q4 - Wigs For Kids (US)
The total support provided to these charities combined
employee donations and corporate donation-matching.
Alongside these quarterly Spotlight Charities, Craneware
Cares supports our longstanding Community Outreach
Program 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 part of the Craneware Cares identity.
We provide monetary donations as well as ‘Volunteer Time
Off’ (VTO) days for employees so they can volunteer in their
local communities. For example, employees took part in
walking the Seven Hills of Edinburgh to raise funds for Cancer
Research UK in September 2023.
Further details of the considerable work conducted by
Craneware Cares and the range of charitable organisations
and community causes, (including initiatives brought to the
Craneware Cares committee by our employees through their
own charity work or special circumstances) that have been
supported in FY24 are available within the Environmental,
Social and Governance section of our website at
www.thecranewaregroup.com/company/esg/.
Overall, including our four Spotlight Charities, we are proud
to have supported 22 charities this year. In FY24, The
Craneware Group contributed over $47,500 in charitable
donations (in addition to our VTO days) across all our various
fundraising campaigns and corporate donations.
Environment
We aim to minimise any
environmental impacts of
our business activities. As a
SaaS company we are not
involved in any energy-
intensive processes nor do
we
generate
significant
waste; we use leased office
facilities.
Whilst
our
environmental impact is
relatively low compared
with other sectors, this does not diminish our commitment
to reducing our environmental impact.
We recognise that we are in the relatively early stages of our
journey to measure, manage and reduce our impact on the
environment, however we are committed to making
continuous improvements as described in our Non-Financial
and Sustainability Information Statement. It is our policy to
support and encourage environmentally sound business
operations, when practical to do so, with factors and impact
on the environment being considered by the Board of
Directors 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). During the year we
significantly reduced our US office footprint (by over 70% on
an annualised basis) given that the vast majority of our US
employees are home-based. Our Dynamic Working
Framework, for office-based employees, also reduces the
impact of any daily commute upon the environment.
We operate sustainable practices within our offices, when
possible, and we encourage similar practices for our home-
based employees. The rented office suite for our head office
Craneware plc | Annual Report & Financial Statements 2024
52
Strategic Report:
Environmental, Social and Governance
(ESG) Statement
(continued)
Environment (continued)
Facilities and employee working arrangements
in central Edinburgh is within a building which has an Energy
Performance Certificate (EPC) rating of B thereby denoting 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 in Edinburgh and Deerfield
Beach have light timers and sensors to help conserve energy.
The Edinburgh building also includes large and centrally
maintained communal garden areas at both ground level
and roof level for the enjoyment of tenants.
Our US Headquarters relocated in FY24 to a rented office
within the Hillsboro Center in Deerfield Beach. This office
campus is centrally located on the city’s most established
business corridor with easy access to the highway, hotels
and has various recently refurbished and upgraded on-site
facilities for employees. This property has an Energy Star
rating of 79 which promotes energy efficiencies.
Greenhouse gas emissions and energy use in our rented
office premises are summarised within the Non-Financial
and Sustainability Information Statement on pages 39 and
40.
The Craneware Group actively encourages employees to
move to a paperless environment and reduce printing
requirements whenever possible. All offices have recycling
points for items such as paper, cardboard, tins, and plastic.
Throughout FY24 we continued to move 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 FY25, with oversight and
direction by the ESG Committee, will continue to focus on
employee engagement in environment-related initiatives
through active campaigns driven by the EAG.
Travel
We do not provide company vehicles to employees or
Directors nor do we operate any form of vehicle fleet.
Although there has been an increase in trans-Atlantic and
domestic US business travel in FY24, as a mainly home-based
workforce, we continue to leverage technologies such as
video conferencing as an alternative to travel and we have
invested in improved video conferencing equipment. We
encourage booking US domestic travel via a travel portal to
enable data collection and review, as we continue to aim to
progress to more sustainable travel practices. During the
year we provided travel related tips and information to help
our employees choose travel options which are more
sustainable.
Any overall daily commuting time and distance incurred by
our employees (and consequently the related emissions
generated by that activity) is not extensive. The vast majority
of our US employees are home-based and our office-based
employees across the Group work flexibly between their
home and an office and this significantly reduces the impact
of daily commuting upon the environment. During FY25 the
EAG plan to engage office-based employees in a commuting
survey so that it may be possible to obtain sufficient data for
the estimation of a further category of Scope 3 emissions.
The leased space for our head office in central Edinburgh is
easily reached by public transport, by bicycle or on foot. We
encourage cycling to work and all the related health and
environmental benefits this brings by participating in the
Cyclescheme programme in the UK. In addition, the
Company encourages and helps facilitate carpooling
arrangements in the UK.
Our travel-related initiatives during FY24, with oversight and
direction by the ESG Committee, included:
•
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;
•
Further development and updates to our business
travel policy, travel hints and tips 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
that are approved within our business travel policy;
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.
Cloud services and data centres
It was noted in prior year annual reports that many
previously internal IT services were being migrated to a
100% carbon neutral cloud services vendor. Our data centre
providers also report that they are using renewable energy
for power and improving efficiencies of their operations and
use of utilities and/or have strategies in place to reduce
emissions in line with climate science through science-based
targets.
Craneware plc | Annual Report & Financial Statements 2024
53
Strategic Report:
Environmental, Social and Governance
(ESG) Statement
(continued)
Environment (continued)
Other 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 and relevant to the goods and / or services provided
to the Group by those vendors.
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 is primarily responsible for the overall conduct of
the Group’s business and for promoting the long-term
success of the Group; our Section 172 (1) Statement explains
this and other responsibilities. 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. Our Corporate Governance Report is set
out on pages 78 to 94 which provides an explanation of our
corporate governance arrangements including the Board
composition, committee structure and responsibilities
together with the extent of compliance with the Code.
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 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, as amended) and
Health Information Technology for Economic and Clinical
Health Act (HITECH) in the US and General Data Protection
Regulation (GDPR) in the 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,
regulations and best practice guidelines. 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 the Group’s code of conduct.
Craneware plc | Annual Report & Financial Statements 2024
54
Strategic Report:
Environmental, Social and Governance
(ESG) Statement
(continued)
Governance (continued)
Information security, data security and data protection
(continued)
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/HITECH 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, ISO 27001 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
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). HITRUST CSF
is considered to be a gold standard for security frameworks
within the healthcare industry. Craneware currently has no
open findings in this audit, the very small number of items
from the previous audit, mostly related to a subcontractor,
are all remediated.
Full HITRUST CSF assessments are conducted every two
years; interim assessments are conducted each intervening
year. For HITRUST, our in-scope products and corporate
infrastructure are evaluated against nearly 600 controls
mapped across 19 domains including Access Control,
Network
Protection,
Configuration
Management,
Vulnerability Management, Third Party Assurance, Business
Continuity and Disaster Recovery, Risk Management and
Data Protection and 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, Trisus Decision Support, Trisus
Labor Productivity and Trisus Medication Inpatient Rebate
applications meet American Institute of Certified Public
Accountants (AICPA) Service Organization Controls (SOC)
requirements, completing the external audit verified SOC1
and SOC2 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 2015 the Board
of Directors approves our Annual Modern Slavery Statement
(i.e. the annual slavery and human trafficking statement
required by the Act). We publish this annual statement
which can be found on the Craneware website at
www.thecranewaregroup.com/modern-slavery-
statement/. The Craneware Group does not permit,
condone or otherwise accept any form of human trafficking
or slavery in its business or supply chains. We are committed
to conducting our dealings with customers, suppliers,
employees and the communities in which they are based,
with the utmost integrity and, as such, we are committed to
supporting the elimination of acts of modern slavery. Our
Anti-Slavery and Human Trafficking Policy reflects our
commitment to act ethically and with integrity in all our
business relationships and to implement and enforce
effective systems and controls to ensure slavery and human
trafficking is not taking place anywhere in our supply chains.
To ensure a high level of understanding of the risks of
modern slavery and human trafficking in our supply chains
and in our business, we provide training to our employees as
part of our annual mandatory Legal and Regulatory
curriculum.
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55
Strategic Report:
Environmental, Social and Governance (ESG) Statement
(continued)
Governance (continued)
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
We recognise that our Whistleblowing Policy and associated annual awareness training is an important element of providing a
supportive and open culture within the organisation. 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.
Craneware plc | Annual Report & Financial Statements 2024
56
Strategic Report:
Section 172 (1) Statement
The Directors consider, both individually and collectively, that they have taken the following factors into account when exercising
their duty to promote the success of the Group and of the Company during the year ended 30 June 2024.
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. the likely consequences of any decision in the long-term;
b. the interests of the company’s employees;
c.
the need to foster the company’s business relationships with suppliers, customers and others;
d. the impact of the company’s operations on the community and the environment;
e. the desirability of the company maintaining a reputation for high standards of business conduct; and
f.
the need to act fairly as between members of the company.
This section of the Strategic Report intends to set out how the Directors, both individually and collectively, have had regard to
those factors when undertaking their duties during the year. In addition, more information is provided in this Annual Report
relating to matters relevant to the Section 172 (1) statement including on the following pages:
Section 172 (1) factor
Examples
Further
information on
page(s)
Likely consequences of
any decision in the long
term
•
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
6 to 29
Interests of the
Company’s employees
•
Employee engagement and communication
•
Diversity, equity and inclusion
•
Health and Safety
•
Employee wellness programmes
•
Dynamic Working Framework
•
Employee learning and development initiatives
•
Employee reward (including share plan awards)
46 to 50
Fostering business
relationships with
suppliers, customers
and others
•
Stakeholder engagement activities
•
Consideration of Environmental, Social and Governance matters
61 to 63
41 to 55
Impact of operations on
the community and the
environment
•
The Purpose of The Craneware Group
•
Craneware Cares initiatives
•
Non-Financial and Sustainability Information Statement
•
Consideration of Environmental, Social and Governance matters and
coordination of ESG initiatives, with oversight by the ESG Committee
42 to 44
51
31 to 40
41 to 55
Maintaining a
reputation for high
standards of business
conduct
•
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
41 to 55
78 to 94
53 to 55
Acting fairly as between
members of the
company
•
Shareholder engagement
•
Corporate Governance
62, 87 and 88
78 to 94
Craneware plc | Annual Report & Financial Statements 2024
57
Strategic Report:
Section 172 (1) Statement
(continued)
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 section below, the Board identifies our Group’s
key stakeholders as:
•
Our customers
•
Our employees
•
Our shareholders
•
Our banking partners
•
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 61 to 63. 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.
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’
section.
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.
The Board is cognisant 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
2024 which demonstrate the way in which the Directors
have exercised their section 172 (1) duty and the stakeholder
group(s) impacted by these decisions.
Craneware plc | Annual Report & Financial Statements 2024
58
Strategic Report:
Section 172 (1) Statement
(continued)
Principal
decision /
events
Actions and impact
Key
Stakeholder
group(s)
affected
Alliance with
Microsoft
The digitalization of US healthcare and our vision for the ongoing development of the
Trisus platform and its applications to address the challenges being experienced by the US
healthcare market, through connected technology in the cloud, is described within the
Operational Review of this Strategic Report. In view of these factors, the Board decided
it was in the best interests of the Company and the Group to expand and enhance the
existing vendor relationship with Microsoft, encompassing a number of services within a
formalised alliance with Microsoft. The alliance was announced by the Company on 2 July
2024, after the agreements with Microsoft had been signed.
The collaboration with Microsoft will see the delivery of differentiated offerings by The
Craneware Group and increased value to customers through the application of industry
leading data analytics, AI, and modern platform technology. In addition, amongst other
benefits expected from this alliance, the accelerated innovation of The Craneware Group's
solutions will be facilitated utilising Microsoft Azure's advanced tools and services. There
will also be ease of access for healthcare customers to purchase the Trisus Platform and
products via Microsoft’s Azure Marketplace, pre-configured and ready to deploy on
Microsoft Azure. A key factor of the arrangements for this alliance is the Microsoft Unified
Support Commitment, which provides for additional resilience and cyber protection to The
Craneware Group and our customers, with a guaranteed response time and prioritisation
of technical resources were there to be any outages irrespective of the cause. The alliance
with Microsoft is explained further within the Operational Review section of this Strategic
Report.
Customers
Shareholders
Employees
Treasury-
related
decisions
The Board ensures that the Group's business model provides ongoing investment in the
future, through its continued support of development activities, as explained within the
Operating and Financial Review sections of this Strategic Report. In addition, the Group's
high levels of cash generation have facilitated the cash and capital allocation policies, as
outlined below, and have also allowed Board decisions relating to Treasury considerations
whilst retaining a cash balance of $34.6m at 30 June 2024 (at 30 June 2023: $78.5m).
With the continued relatively high level of interest rates prevailing during FY24, the Board
directed that the Group should utilise some of its cash balances to offset more of the
principal amount of the revolving loan in order to further lower the net interest cost going
forward. This was in addition to the $8m scheduled loan repayments during the year and
$20m paid down on the revolving loan in the prior year. Therefore, at 30 June 2024, the
Group’s total bank debt was $35.4m (FY23: $83m) as shown in Note 20 to the financial
statements.
Banks
Shareholders
Craneware plc | Annual Report & Financial Statements 2024
59
Strategic Report:
Section 172 (1) Statement
(continued)
Principal
decisions /
events
Actions and impact
Key
Stakeholder
group(s)
affected
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, in view of the prevailing macro-economic effects
and US healthcare market dynamics. Craneware reported positive financial results for the
six-month period to 31 December 2023 together with a solid base of annual recurring
revenue, demonstrating the Group's continued high levels of contracted revenue visibility.
The Board approved the payment of an interim dividend in April 2024 of 13.0p (16.51
cents) per share (FY23: interim dividend of 12.5p per share (15.13 cents)).
Based on the financial position, overall bank debt and cash generation of the Group, and
the covenants applicable to the debt facility, it is the intention of the Board to pay a final
dividend for the year ended 30 June 2024. As explained on page 71, the Directors are
recommending the payment of a final dividend of 16.0p (20.23 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 18 December 2024 to shareholders on the register as at 29
November 2024.
In reaching these dividend policy decisions, the Board had regard to:
•
the long-term interests of the business, including the continued investment in
development of the Trisus platform and the Group’s solutions; alongside
•
the need to act fairly between its shareholders and its bank finance providers.
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
As explained in last year’s Annual Report, in April 2023 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.
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 are being used to satisfy employee share plan awards. During FY24 the Board
decided at each subsequent three-monthly interval, taking into account the financial
position of the Group, to extend the period for the share buyback programme and it
therefore continued until 21 May 2024 when the £5m total purchase cost of shares under
the programme was reached. Further details regarding the share buyback are provided in
the Directors’ Report and in Note 17 to the financial statements.
Shareholders
Banks
Craneware plc | Annual Report & Financial Statements 2024
60
Strategic Report:
Section 172 (1) Statement
(continued)
Principal
decision /
events
Actions and impact
Key
Stakeholder
group(s)
affected
Board
Committee
Composition
The Board considers that all of its non-executive directors are independent in character
and judgement notwithstanding that Colleen Blye and Russ Rudish have each served on
the Board for more than nine years, as explained within the Corporate Governance Report
section of both this year’s and last year’s Annual Reports.
The shareholder voting, in respect of each of the resolutions tabled at the Company’s
Annual General Meeting (‘AGM’) held on 16 November 2023, passed all of the resolutions.
However, a number of the votes received opposed the resolution in respect of the
reappointment of Colleen as a director of the Company.
Following consultation with shareholders during their AGM voting consideration, the
Board identified certain concerns regarding the composition of the Board’s Audit and
Remuneration Committees. Therefore, with effect from 16 November 2023, Anne
McCune replaced Colleen as a member of both the Audit and Remuneration Committees.
The Board reviews its composition (and that of its committees) 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.
Two of our independent non-executive directors, Colleen Blye and Russ Rudish, have
informed the Board of their intention not to stand for re-election as directors of
Craneware plc at the Company’s AGM to be held in November 2024. The Board is in the
latter stages of reviewing replacement independent non-executive director candidates.
The role of Senior Independent Director and the composition of our Board committees,
particularly the position of Chair of the Remuneration Committee, following the AGM in
2024, is being considered by the Board.
Shareholders
Employees
On behalf of the Board
Craig Preston
Chief Financial Officer
2 September 2024
Craneware plc | Annual Report & Financial Statements 2024
61
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 of Directors and Operations Board meetings as well as in
the context of principal decisions and events, as outlined in the preceding Section 172 (1) Statement. 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. Our ESG Committee (chaired by our Chief People Officer who is an
executive Director of the Company) 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
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 and are involved in the Executive Relationship Program.
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.
How we engage
Employee engagement is based on Craneware’s Framework and core values. A summary of some of our employee
engagement mechanisms is provided within our ESG Statement.
How this was considered in Board discussions and decision making
The Board of Directors and the Operations Board were updated regularly during FY24 on progress with the Group-wide action
plan from the FY23 employee engagement survey.
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
equity 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, equity and inclusion.
Craneware plc | Annual Report & Financial Statements 2024
62
Stakeholder Engagement
(continued)
Key Stakeholders (continued)
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 our local communities.
How we engage
Craneware Cares is The Craneware Group’s central mechanism for corporate charitable giving, employee fundraising, and
community volunteer work. Details of the activities of Craneware Cares are 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.
Following consultation with shareholders during their AGM voting consideration, the Board identified certain concerns
regarding the composition of the Board’s Audit and Remuneration Committees. Therefore, with effect from 16 November
2023, Anne McCune replaced Colleen Blye as a member of both the Audit and Remuneration Committees.
As explained in the Remuneration Committee’s Report, during the year the Remuneration Committee consulted with the
Company’s substantial shareholders regarding the proposed changes to base salary and benefits elements of the remuneration
arrangements for the executive Directors.
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.
BANK FINANCE PROVIDERS
The Group has a secured committed debt facility, comprising a term loan and a revolving loan facility as detailed in Note 20 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 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. Key topics include financial performance, strategy and risk management.
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 including the Group’s compliance with financial covenants contained within the committed term loan and revolving
loan facility. The Section 172(1) Statement includes, on page 58, an overview of some Treasury-related decisions by the Board
in FY24.
Craneware plc | Annual Report & Financial Statements 2024
63
Stakeholder Engagement
(continued)
Key Stakeholders (continued)
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
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.
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 fair and reasonable contract terms are in place with suppliers.
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.
Where external vendors are engaged to support the business in a capacity involving sensitive or controlled data sets, members
of Craneware’s Security Council appraise and validate the vendors’ existing security measures. The Group also operates a
standard Business Associate Agreement. This agreement, when applicable, 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.
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 Non-Financial and Sustainability Information Statement and also our ESG Statement provide 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 including updates from the ESG Committee.
Craneware plc | Annual Report & Financial Statements 2024
64
Directors, Secretary, and Advisors
Directors
W Whitehorn (non-executive, Chair)
K Neilson
C T Preston
I Urquhart
Company Secretary and Registered Office
C T Preston
1 Tanfield
Edinburgh
EH3 5DA
C Blye (senior independent director)
R Rudish (non-executive)
A Erskine (non-executive)
D Kemp (non-executive)
A McCune (non-executive)
Nominated Advisors and
Joint Stockbroker
Peel Hunt LLP
100 Liverpool Street
London
EC2M 2AT
Registrars
Link Group
Central Square
29 Wellington Street
Leeds
LS1 4DL
Independent
Auditors
PwC LLP
Atria One
144 Morrison Street
Edinburgh
EH3 8EX
Financial PR
Alma Strategic
Communications
71-73 Carter Lane
London
EC4V 5EQ
Joint Stockbrokers
Solicitors
Berenberg, Gossler & Co
60 Threadneedle Street
London
EC2R 8HP
Investec Bank plc
30 Gresham Street
London
EC2V 7QP
Pinsent Masons LLP
58 Morrison Street
Edinburgh
EH3 8BP
Bryan Cave Leighton
Paisner LLP
One Atlantic Center,
14th Floor
1201 W. Peachtree St. NW.
Atlanta
GA 30309-3471
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
Bank of Scotland
The Mound
Edinburgh
EH1 1YZ
Wells Fargo
500 N. Magnolia Avenue
8th Floor
Orlando
FL 32803
Bank of America
101 E. Kennedy Blvd
Tampa
FL 33602
Barclays Commercial Bank
Aurora House
120 Bothwell Street
Glasgow
G2 7JT
Craneware plc | Annual Report & Financial Statements 2024
65
Subsidiaries
Subsidiaries and Registered offices
Craneware US Holdings, Inc.
Corporation Trust Center
1209 Orange St
Wilmington, DE 19801
Craneware, Inc.
600 West Hillsboro Boulevard
Suite 500
Deerfield Beach, FL 33441
Craneware InSight, Inc.
600 West Hillsboro Boulevard
Suite 500
Deerfield Beach, FL 33441
Craneware Healthcare
Intelligence, LLC
200 Pinewood Lane
Suite 304
Warrendale, PA 15086
SDS Holdco, Inc.
251 Little Falls Drive
Wilmington, DE 19808
SDS Intermediate, Inc.
251 Little Falls Drive
Wilmington, DE 19808
Agilum Healthcare
Intelligence, Inc.
600 West Hillsboro Boulevard
Suite 500
Deerfield Beach, FL 33441
Sentry Data Systems, Inc.
600 West Hillsboro
Boulevard
Suite 500
Deerfield Beach,
FL 33441
Craneware plc | Annual Report & Financial Statements 2024
66
Board of Directors
The Directors of the Company and their responsibilities within the Group are set out below:
Will Whitehorn, 64
Non-executive Chair
Appointed 1 January 2020
Will joined The Craneware Group 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 was appointed as Chair of Seraphim Space Investment Trust
Plc in June 2021, which floated on the LSE in July 2021. Since 2021 Will has also been a member of the U.K.
Space Agency’s Space Exploration Advisory Committee and recently retired as Deputy Chair of Stagecoach
Group plc.
Keith Neilson, 55
Chief Executive Officer & Co-founder
Keith co-founded The Craneware Group 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 The Craneware
Group 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 The Craneware Group, Keith worked primarily in international management, where
he handled sales, marketing and technical consulting for companies with operations around the world. He
studied Physics at Heriot-Watt University, Edinburgh, receiving a bachelor’s degree in 1991.
Craig Preston, 53
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 The Craneware Group’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 The Craneware Group, 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, 56
Chief People Officer
Appointed 27 April 2022
As Craneware’s Chief People Officer, Issy brings global experience of strategic and operational HR gained
across a number of sectors including Technology, BPO, mature FMCG and Financial Services. Most notably
prior to joining Craneware Issy worked at CommScope Inc, Wolfson Microelectronics plc and Convergys
Corporation in executive HR roles, where alongside delivering the HR agenda, she led wide-scale change
programs to deliver acquisitions, changes in business strategies, and operating models. In addition, Issy is a
Non-Executive Director of AIM listed Concurrent Technologies plc, and a member of The Scottish and North
American Business Council.
Craneware plc | Annual Report & Financial Statements 2024
67
Board of Directors
(continued)
Colleen Blye, 64
Non-executive Director, Senior Independent Director
Appointed 12 November 2013
Colleen Blye is the Executive Vice President, Chief Financial Officer and Chief Business Officer for Montefiore
Health System and Montefiore Medicine. Montefiore Health System consists of eleven hospitals and an
extended care facility; it is a premier academic medical center and includes Montefiore Medicine. Colleen
has a distinguished background in large, complex healthcare organizations. Prior to joining Montefiore, she
served as Executive Vice President and Chief Financial Officer of Catholic Health Services of Long Island, an
integrated healthcare delivery system comprising six hospitals and three nursing homes. Earlier, she served
as Executive Vice President for Finance and Integrated Services at Catholic Health Initiatives, a health
system with 102 hospitals across the United States. Her previous experience includes responsibility for
treasury management, revenue cycle, financial reporting and planning, third-party contracting, supply
chain, accounts payable, payroll, and information technology. Colleen Blye is a Certified Public Accountant
and a member of the American Institute of Certified Public Accountants.
Russ Rudish, 72
Non-executive Director
Appointed 28 August 2014
Russ 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. 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 Executive Venture
Partner with Caduceus Capital Partners and serves on the Advisory Board of LRV Health, both venture
capital firms. He is an active speaker and contributor to thought leadership on today's most pressing
healthcare business issues.
David Kemp, 54
Non-executive Director
Appointed 1 March 2020
David has extensive UK public company experience. He was CFO until April 2024 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 held from 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.
Craneware plc | Annual Report & Financial Statements 2024
68
Board of Directors
(continued)
Alistair Erskine, 54
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, the Woodruff Health Science Center, and Emory
University, responsible to the digital transformation of the health, science, and academic organization. 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, 68
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 ECG Management
Consultants 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 the Kellogg School of
Management, Northwestern University and was recognised by Modern Healthcare as one of the 2021 Top
25 Women Leaders in Healthcare.
Craneware plc | Annual Report & Financial Statements 2024
69
Directors' Report
The Directors present herewith their report and the
audited consolidated financial statements of the Group
for the year ended 30 June 2024.
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; net revenue retention; adjusted earnings
before interest, tax, depreciation and amortisation
(EBITDA); adjusted earnings per share; net borrowings;
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 8 to 16 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.
Craneware plc | Annual Report & Financial Statements 2024
70
Directors' Report
(continued)
Information
Section within this Annual Report
Pages
Appointment and Reappointment of Directors
Directors’ Report
Corporate Governance Report
72
78 to 94
Biographical Details of the Directors
Board of Directors
66 to 68
Business Model
Strategic Report
12 and 13
Change of Control
Directors’ Report
Remuneration Committee’s Report
74
110
Community and Charitable Giving
Directors’ Report
Environmental, Social and Governance Statement
75
51
Corporate Governance Framework
Corporate Governance Report
78 to 94
Directors’ Conflicts of Interest
Corporate Governance Report
85
Directors’ Remuneration
Remuneration Committee’s Report
95 to 113
Diversity, Equality and Inclusion
Environmental, Social and Governance Statement
Directors’ Report
Corporate Governance Report
46 and 47
75
85
Employee Engagement
Environmental, Social and Governance Statement
Stakeholder Engagement
Directors’ Report
Corporate Governance Report
47 and 48
61
75
88
Employees with disabilities
Directors’ Report
75
Environmental Reporting
Non-Financial and Sustainability Information Statement
Environmental, Social and Governance Statement
Directors’ Report
31 to 40
41 to 55
74
Financial Instruments and financial risk
management
Note 3 to the consolidated financial statements
134 to 136
Financial Results
Consolidated and Company financial statements and
accompanying notes
120 to 169
Future developments and strategic priorities
Strategic Report
8 to 16
Going Concern statement
Directors’ Report
71
Independent Auditor
Directors’ Report
Corporate Governance Report
77
92 and 93
Modern Slavery Statement
Directors’ Report
Environmental, Social and Governance Statement
75
54
Principal Risks and Uncertainties
Strategic Report
19 to 29
Principal Activities
Directors’ Report
Strategic Report
69
8 to 16
Research and Development
Directors’ Report
Strategic Report
71
8 to 12
Risk Management
Strategic Report
Corporate Governance Report
19 to 29
89 to 92
Section 172 Statement
Strategic Report
56 to 60
Significant Related Party Transactions
Note 23 to the consolidated financial statements
164 to 166
Stakeholder Engagement
Stakeholder Engagement
Environmental, Social and Governance Statement
61 to 63
41 to 55
Strategic Report
Strategic Report
8 to 60
Subsidiary Undertakings
Note 14 to the financial statements
154
Viability Statement
Strategic Report
29
Craneware plc | Annual Report & Financial Statements 2024
71
Directors' Report
(continued)
Financial Results and Dividends
The Group’s revenue for the year was $189.3m (FY23:
$174.0m) which has generated a profit before tax of $15.7m
(FY23: $13.1m) after exceptional costs of $0.7m (FY23:
$0.5m). The full results for the year, which were approved
by the Board of Directors on 2 September 2024, are set out
in the accompanying financial statements and the notes
thereto.
During the year the Company paid an interim dividend of
13.0p (16.51 cents) per share. The Directors are
recommending the payment of a final dividend of 16.0p
(20.23 cents) per share giving a total dividend of 29.0p (36.67
cents) per share-based on the results for 2024 (FY23: 28.5p
(35.95 cents)). Subject to approval at the Annual General
Meeting, the final dividend will be paid on 18 December
2024 to shareholders on the register as at 29 November
2024.
Dividends per Share
Year
Dividend (pence)
FY18
24.0
FY19
26.0
FY20
26.5
FY21
27.5
FY22
28.0
FY23
28.5
FY24
29.0 (subject to AGM approval)
We believe the level of dividend proposed for the year
balances the Company’s stated progressive dividend policy
based on the Group’s current capital allocation approach
and the 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 8 to 16. 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 $52.1m (FY23: $50.6m) of which
$15.8m (FY23: $15.0m) 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
On 23 August 2024 the Company’s wholly owned subsidiary,
Craneware US Holdings, Inc., declared a dividend of $18m
payable to the Company with a resulting increase of $18m to
the Company’s retained earnings.
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 12 to 15.
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 $34.6m as well as a committed but undrawn
facility available to it of $80m.
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, with minor
but appropriate rebalancing of the cost base, 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.
Craneware plc | Annual Report & Financial Statements 2024
72
Directors' Report
(continued)
Directors
The biographical details of the current serving Directors of
the Company are set out on pages 66 to 68. The Directors
who served during the financial year ended 30 June 2024,
and up to the date of approval of the financial statements,
were:
W Whitehorn
(Non-executive Chair)
K Neilson
(Chief Executive Officer)
C T Preston
(Chief Financial Officer)
I Urquhart
(Chief People Officer)
C Blye
(Senior Independent Director)
R Rudish
(Non-executive Director)
A Erskine
(Non-executive Director)
D Kemp
(Non-executive Director)
A McCune
(Non-executive Director)
New Directors, who were not appointed at the previous
AGM, automatically retire at their first AGM and, if eligible,
can seek re-appointment. The Board recognises the UK
Corporate Governance Code’s recommendation that all
Directors should stand for re-election every year and, whilst
not a requirement, the Board has decided to adopt this
recommendation as best practice. As such, all Directors will
retire from office at the Company’s forthcoming AGM. It is
the intention of all Directors, except for C Blye and R Rudish,
to stand for re-appointment. Further details regarding the
appointment of directors and the composition of the Board
are contained in the Corporate Governance Report.
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 110.
Corporate Governance
The Corporate Governance Report on pages 78 to 94 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.
Share Capital
The Company’s issued and fully paid up share capital at 30
June 2024 was 35,542,169 Ordinary Shares of 1p each (at 30
June 2023: 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. The post vesting holding
period provisions applicable to long term incentive plan
awards granted to the executive Directors and senior
managers are described in the Remuneration Committee’s
Report on page 105.
Authority for purchase of own shares
Authorisation was given by shareholders at the Annual
General Meeting on 16 November 2023 for the Company to
purchase up to 3,535,071 Ordinary Shares. A resolution to
renew this authority will be proposed at the 2024 Annual
General Meeting.
Purchase of own shares
On 12 April 2023 the Company announced a £5 million share
buyback programme to operate under the authority granted
by shareholders at the Company's Annual General Meeting
(‘AGM’) held on 15 November 2022, then by the renewed
authority granted by shareholders at the Company's AGM
held on 16 November 2023, 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 until the cost of the Company’s
own shares purchased under this programme reached £5
million. The duration of the share buyback programme was
therefore from 12 April 2023 until 21 May 2024.
Craneware plc | Annual Report & Financial Statements 2024
73
Directors' Report
(continued)
Share Capital (continued)
Purchase of own shares (continued)
The Company purchased 108,899 of its own Ordinary Shares
in the year ended 30 June 2024 (FY23: 223,632) in
accordance with this share buyback programme with a total
amount incurred of £5.0m ($6.3m) (FY23: £3.09m ($3.87m)),
including directly attributable costs. In total, the Company
has purchased 332,531 of its own Ordinary Shares through
this share buyback programme, which represented 0.94%
(FY23: 0.63%) of the Company’s issued Ordinary Shares;
those Shares are being held in treasury (with no voting rights
attached).
Ordinary Shares held in Treasury
The Ordinary Shares purchased by the Company through 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
2024, a total of 99,646 (FY23: 9,621) Ordinary Shares were
transferred by the Company from Treasury to satisfy the
exercise of employee share options and vested employee
long term incentive plan awards. Therefore, at 30 June 2024,
the Company held 223,264 Ordinary Shares in Treasury (as
at 30 June 2023: 214,011).
Share capital allotted
During the year ended 30 June 2024, no Ordinary Shares
were issued (FY23: nil).
Further details regarding the Company’s share capital are
included in Note 17 to the financial statements.
Employee benefit trust
The Company established an Employee Benefit Trust (EBT),
‘The Craneware plc Employee Benefit Trust’ during the
financial year ended 30 June 2017. As at 30 June 2024 the
EBT held 390,620 Craneware plc Ordinary Shares (at 30 June
2023: 365,475 Ordinary Shares). The EBT waived its right to
dividends in the year ended 30 June 2024. Further details
regarding the EBT are contained in Note 17 to the financial
statements.
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 2024 and up to the date of this report in the share capital of the company,
were as follows:
2024
No.
2023
No.
W. Whitehorn
4,589
2,989
K. Neilson
3,467,707
3,446,539
C T Preston
100,417
93,872
I Urquhart
11,495
8,300
C Blye
547
547
R Rudish
1,095
1,095
3,585,850
3,553,342
Included within the figures in the table above are Ordinary Shares belonging to each of the executive Directors which were
received from the vested long term incentive plan awards on 2 October 2023 that are subject to a two year post vesting holding
period as described in the Remuneration Committee’s Report on page 105. The number of Ordinary Shares subject to the post
vesting holding period are: K Neilson 6,696 shares; C T Preston 4,977 shares and I Urquhart 3,195 shares.
Directors’ interests in share options are detailed in the Remuneration Committee’s Report on pages 112 and 113.
Craneware plc | Annual Report & Financial Statements 2024
74
Directors' Report
(continued)
Substantial Shareholders
As at 1 August 2024, 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.
% of issued share capital
No. of Ordinary
£0.01 Shares
(excluding 223,264
Ordinary Shares held in Treasury)
Liontrust Asset Management
3,725,003
10.55
K. Neilson
3,467,707
9.82
Canaccord Genuity Group
2,448,654
6.93
W G Craig
2,340,756
6.63
Octopus Investments
1,704,501
4.83
Aegon Asset Management
1,683,590
4.77
abrdn
1,272,805
3.60
Rathbones
1,159,430
3.28
Change of control provisions
Within the Group’s revolving loan facility (as detailed in Note
20), 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, in its long term
incentive plan and in the rules of the Group’s senior
employee annual performance related bonus plan.
Section 172 Statement
The statement, in respect of section 172 (1) of the
Companies Act 2006, is on pages 56 to 60.
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 61 to 63.
Corporate Social Responsibility & Environmental Policy
The Group is committed to maintaining a high level of social
responsibility. It is the Group’s policy to support and
encourage environmentally sound business operations, with
aspects and impact on the environment being considered at
Board level; 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 2024 is
contained on pages 38 to 40 within the Non-Financial and
Sustainability Information Statement. The Group is also
required
to
provide
climate-related
disclosures
in
accordance with 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 31 to 40.
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 seeks to provide 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 the
Environmental, Social and Governance Statement.
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.
Craneware plc | Annual Report & Financial Statements 2024
75
Directors' Report
(continued)
Community and Charitable Contributions (continued)
During the year ended 30 June 2024 the Group contributed
a total amount of $47,531 (FY23: $40,706) 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 2024 or 2023.
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 page 109 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 in the ESG
Statement.
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
54 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 2024 represented, on
average 25 days purchases (at 30 June 2023: 23 days) for the
Group and 40 days purchases (at 30 June 2023: 26 days) for
the Company.
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76
Directors' Report
(continued)
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 2024, 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.
The notice of the AGM specifies the deadlines for exercising
voting rights either by proxy notice or present in person or
by proxy in relation to resolutions to be passed at the AGM.
All proxy votes are counted and the numbers for, against or
withheld in relation to each resolution are announced at the
AGM and the voting results are released as an
announcement, on the Regulatory News Service of the
London Stock Exchange, after the meeting and are published
as soon as practicable on the Company’s website.
Company Registration
The Company is registered in Scotland as a public limited
company with number SC196331.
Statement of Directors’ Responsibilities in respect of the
financial statements
The Directors are responsible for preparing the Annual Report
and 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.
Craneware plc | Annual Report & Financial Statements 2024
77
Directors' Report
(continued)
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 by order of the Board by:
Craig Preston
Company Secretary
2 September 2024
Craneware plc | Annual Report & Financial Statements 2024
78
Corporate Governance Report
Chair’s Introduction
On behalf of the Board, I am pleased to present our Corporate Governance Report for the year ended 30 June 2024 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, including shareholder engagement and engagement with other
stakeholders, are critical to the success of our strategy outlined on pages 8 to 12, and to delivering long-term, sustainable
shareholder value.
Purpose, Values and Culture
Our Purpose is to help transform the business of healthcare through the profound impact our solutions deliver, enabling our
customers to provide quality care to their communities. We continue to demonstrate that The Craneware Group is uniquely
placed with our independent standing in our end market, and with our solutions across healthcare finance and 340B continuum,
to support US healthcare providers in their mission to serve their communities. Supporting our customers, and the phenomenal
work they do for their communities, continues to be our top priority and this ethos is evident throughout The Craneware Group.
I would like to thank all colleagues within the team for their unwavering commitment, enthusiasm and passion – together we
uphold our Purpose. 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.
Supporting our Purpose is our Framework consisting of our core values which are 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.
Employee voice and engagement
Our People are at the centre of our collective commitment to our Purpose and as a Board we are aware of our responsibilities
to prioritise their wellbeing, including working arrangements, conditions and reward, in support of our culture. The Board
appreciates the benefits from effective employee engagement mechanisms, including honest and constructive feedback from
employees, and these are referred to within this Report and further described within the ESG Statement. We continue to see
great benefit from employee interaction, communication and collaboration and the Board endorses the Operations Board’s
efforts to increase the opportunities for collaboration both within and across teams.
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 56 to 63.
Environmental, Social and Governance (ESG)
Our Purpose inherently prioritises the ‘Social’ emphasis for our Environmental, Social and Governance (ESG) endeavours. For
many years The Craneware Group has established (and continues to encourage) many sustainability initiatives which benefit
various stakeholder groups and 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.
The Board is supportive of the Group’s ESG Committee, chaired by Issy Urquhart, which has made great progress with
overseeing various initiatives within the context the framework of our three key ESG Focus Areas. The Non-Financial and
Sustainability Information Statement and ESG Statement sections of this annual report provide a comprehensive synopsis of
the range of activities in FY24 some of which are ongoing in FY25 within the Diversity, Equity and Inclusion and other
sustainability projects. It is pleasing to see the involvement of many employees with various ESG efforts, including those driven
by our Employee Advisory Group. The support and enthusiasm for this range of activities is appreciated and highlights the
breadth of issues that matter to our team.
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(continued)
Chair’s Introduction (continued)
The ESG Committee conducted a more detailed climate scenario analysis during the year, with the valuable support of other
colleagues, which assisted to provide a more extensive appraisal of potential climate-related risks and opportunities. We
continue to work on the baselining of our environmental data so that we have an appropriate foundation to establish targets
along the pathway to net zero emissions. This baseline data should also assist with the compilation of appropriate key
performance indicators for monitoring the reduction in our impact on the environment and for managing climate-related risks.
We are committed to make further progress with this during the year ending 30 June 2025.
Board composition
The Board, and Craneware as a whole, has benefitted significantly over the past ten years from the considerable US Healthcare
sector experience, governance credentials, dedication and support provided by Colleen Blye and Russ Rudish. The independent
guidance provided by Colleen and Russ has been invaluable, particularly in their respective Chair roles within the Board’s Audit
and Remuneration Committees and with Colleen serving as our Senior Independent Director for many years.
We thank Colleen and Russ for their significant contribution to The Craneware Group and respect their decisions not to stand
for re-election as directors of the Company at the AGM to be held in November 2024. We appreciate their dedication to ensure
a smooth transition for new independent directors whom we are seeking to recruit in the coming months. We aim to attract a
diverse pool of candidates, with relevant skills, experience and knowledge, for any senior appointments. As a Board, identifying
the prerequisite skill sets for the highly regulated and complex environment of US Healthcare has taken precedent over setting
and specific diversity targets for the Board and senior management team. All appointments will ultimately be made on merit.
Board evaluation
We conducted a Board evaluation in the financial year. The helpful contributions and engagement provided by my fellow
directors through this process was appreciated and I am happy to report that the overall conclusions from the evaluation were
positive. An overview of the process is provided within this Corporate Governance Report.
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 2024, are outlined in the Notice of AGM and we look forward to welcoming shareholders at the AGM.
The year ahead
We are well progressed in our efforts to identify and appoint new non-executive Directors to take the place of Russ and Colleen.
Our short list of candidates bring with them a wealth of experience including direct experience of the ongoing challenges faced
by US hospitals and Healthcare, more generally. We look forward to working with our new Board dynamics and continuing to
see The Craneware Group support US hospitals and Healthcare as they provide care to their communities.
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
2 September 2024
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(continued)
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, aligned to its purpose, 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 2024 (‘FY24’), 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.
•
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
continues to keep 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 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 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: Craneware plc, being an AIM listed company, 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 therefore it
provides a Remuneration Committee’s Report, with the FY24 Report on pages 95 to 113. During the year there was no
specific 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.
Regarding one of the other elements of Provision 41 of the Code, the reference to internal and external measures for
executive Director remuneration review and assessment is not presented within the Remuneration Committee’s Report
due to the deferral of benchmarking during the previous four financial years. With the independent benchmarking study
for executive Director remuneration completed in FY24, external measures have been utilised for that assessment.
Going forward, it is anticipated that internal and external measures would be tracked by the Remuneration Committee
for executive Director remuneration comparison purposes.
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/
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(continued)
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, bank finance providers and
suppliers, is a core component of long-term sustainability
and success. Stakeholder Engagement information is set out
on pages 61 to 63. 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 56 to 60 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
Chief Executive Officer and also comprises the Chief
Financial Officer, the Chief People Officer and six further
members of the Senior Management Team.
The governance structure is summarised below.
Purpose, vision, strategy, values and culture
Purpose, vision, strategy, values and culture
The Board leads and establishes the Group’s purpose, vision,
strategy and values and ensures that they are being carried
out in practice across the business. The Board provides
leadership across the Group and applies a governance
framework to ensure that this is delivered effectively with
appropriate control mechanisms.
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.
Employee engagement mechanisms are referred to 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 8 to 16. The Board meets at least annually
to review the Group’s strategy, drawing on the wide and
varied experience of the Board members (as outlined below
within the ‘Composition of the Board’ section), including
detailed healthcare sector knowledge. The Board meets
regularly to discuss and agree on the various matters
brought before it, including progress with the agreed
strategy and 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 initiatives and related business plans, acquisitions,
disposals, business development, annual reports and interim
statements, plus any significant financing or funding related
matters as well as significant capital expenditure plans. As
part of this schedule, the Board has clearly laid out levels of
devolved decision making authority to the Group’s
Operations Board.
Board Composition and Division of Responsibilities
Board of Directors
Throughout the financial year ended 30 June 2024 and until
the date of approval of this report 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
66 to 68.
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(continued)
Board Composition and Division of Responsibilities (continued)
Board of Directors (continued)
A summary of the composition of the Board throughout the year ended 30 June 2024 is:
Period
Composition of the Board
Chair
(Independent on Appointment)
Executive
Directors
Independent^ Non-executive
Directors
Year ended 30 June 2024
1
3
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 Composition of the Board’ section.
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
Chair
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 and for promoting 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. In addition, the Chair’s
responsibilities include to ensure that the Board is aware of the views of shareholders and other
stakeholders.
Chief Executive
Officer
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.
Senior Independent
Director
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.
The Chair
Will 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. The responsibilities of this role are outlined in the
‘Division of Responsibilities’ section above.
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.
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(continued)
Non-Executive Directors (continued)
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 Board reviews its composition (and that of its
committees) regularly, taking into consideration various
factors including: the balance of independent directors,
requisite skills, knowledge and experience within the Board
and diversity. The composition of the Board has been
designed to give a good mix and balance of different skill
sets, including significant experience in:
•
healthcare sector;
•
high growth companies;
•
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.
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 2024 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 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. The Board
keeps the composition of the Board and its committees
under review, including its continued independent balance.
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(continued)
Board Composition and Division of Responsibilities (continued)
The Composition of the Board (continued)
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 changed during
the year as explained below.
Audit Commigee members
Remunerahon Commigee members
From 1 July 2023 to 16 November 2023
David Kemp (Chair)
Colleen Blye
Alistair Erskine
From 16 November 2023 to 30 June 2024
David Kemp (Chair)
Alistair Erskine
Anne McCune
From 1 July 2023 to 16 November 2023
Russ Rudish (Chair)
Colleen Blye
Alistair Erskine
From 16 November 2023 to 30 June 2024
Russ Rudish (Chair)
Alistair Erskine
Anne McCune
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:
Board
Remuneration Committee
Audit Committee
No. Meetings in year
10
3
2
Executive Directors
K Neilson
10/10
-
-
C T Preston
10/10
-
-
I Urquhart
10/10
-
-
Non-Executive Directors
W Whitehorn
10/10
-
-
C Blye
9/10
2/2
1/1
R Rudish
10/10
3/3
-
A Erskine
9/10
3/3
2/2
D Kemp
10/10
-
2/2
A McCune
10/10
1/1
0/1
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.
The shareholder voting, in respect of each of the resolutions tabled at the Company’s Annual General Meeting (‘AGM’) held on
16 November 2023, passed all of the resolutions. However, a number of the votes received opposed the resolution in respect of
the reappointment of Colleen as a director of the Company. Following consultation with shareholders during their AGM voting
consideration, the Board identified certain concerns regarding the composition of the Board’s Audit and Remuneration
Committees. Therefore, with effect from 16 November 2023, Anne McCune replaced Colleen Blye as a member of both the Audit
and Remuneration Committees.
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(continued)
Board Composition and Division of Responsibilities
(continued)
The Composition of the Board (continued)
Colleen and Russ have each informed the Board of their
intention not to stand for re-election as directors of
Craneware plc at the Company’s AGM to be held in
November 2024. The Board is in the latter stages of
reviewing replacement independent non-executive director
candidates. The role of Senior Independent Director and the
composition of our Board committees, particularly the
position of Chair of the Remuneration Committee, following
the AGM in 2024, is being considered by the Board.
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 the decision by both Colleen and Russ not to stand
for re-election as non-executive directors of the Company at
the Company’s AGM to be held in November 2024, in early
FY25 the Board commenced a search and recruitment
process for new independent non-executive directors.
Details of that process shall be provided in the annual report
for the year ending 30 June 2025.
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, any of the
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.
The Board comprised 33% female and 67% male directors
throughout the year ended 30 June 2024. 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 30 June 2023: 47% female and 53%
male employees). At Operations Board plus vice president
level, the composition is approximately 39% female and 61%
male (at 30 June 2023: 34% female and 66% male
employees). Further information regarding Diversity, Equity
and Inclusion is contained within the ESG Statement on
pages 46 and 47.
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
66 to 68. 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. In February
2024, I Urquhart was appointed as a non-executive director
of Concurrent Technologies plc whose shares are listed on
the AIM market of the London Stock Exchange. The other
executive Directors do not hold any outside appointments
with any other publicly traded company.
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(continued)
Board Appointments and Evaluation (continued)
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. In FY25
the Board is in the process of recruiting further independent
non-executive directors following the decision by Colleen
and Russ not to stand for re-election as directors of the
Company at the AGM to be held in November 2024.
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.
Development
The Chair is responsible for ensuring that all the Directors
continually update their skills, their knowledge and
familiarity with the Group in order to fulfil their role on the
Board and the Board’s Committees. Updates dealing with
changes in legislation and regulation and financial reporting
requirements relevant to the Group’s business are provided
to the Board by the Chief Financial Officer and through the
Board Committees by the Group’s external auditors and
advisors.
All Directors have access to the advice and services of the
Company Secretary, who is responsible to the Board for
advising the Board on all governance matters, ensuring that
Board procedures are properly complied with and that
discussions and decisions are appropriately minuted.
Directors may seek independent professional advice at the
Company’s expense in furtherance of their duties as
Directors. The Board ensures that the Audit and
Remuneration Committees are provided with sufficient
resources to undertake their duties.
Training in matters relevant to their role on the Board is
available to all Directors. New Directors, who have not been
employed within the Group prior to appointment, are
provided with an induction in order to introduce them to the
operations and management of the business. All new
Directors receive a briefing on their role and duties as a
director of a company which has its shares traded on AIM.
This briefing is conducted by the Company’s 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.
As detailed in the Directors’ Report on page 72, 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.
Evaluation
In the financial year ended 30 June 2024 a Board evaluation
process was conducted 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.
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.
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Corporate Governance Report
(continued)
Board Appointments and Evaluation (continued)
Re-election (continued)
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.
Colleen and Russ have each informed the Board of their
intention not to stand for re-election as directors of
Craneware plc at the Company’s AGM to be held in
November 2024. It is the intention of all of the other
Directors to stand for re-appointment.
In determining whether a Director, who wishes to stand for
re-appointment, should be proposed for re-election at the
2024 AGM, the Board took into account each Director’s
contribution to the Board’s effectiveness, which formed part
of the 2024 Board evaluation. This review confirmed that all
Directors continue to be effective and demonstrate
commitment to their roles and so the Board recommended
their re-appointment.
Stakeholder Engagement
Shareholders
Dialogue with Shareholders
The Company engages in full and open communication with
both institutional and private investors and responds
promptly to all queries received. In conjunction with the
Company’s brokers and other financial advisors all relevant
news is distributed in a timely fashion through appropriate
channels to ensure shareholders are able to access material
information on the Company’s progress.
To facilitate this:
•
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.
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, following the results of the
executive Director remuneration benchmarking study
conducted by the independent adviser, the Committee
consulted with the Company’s substantial shareholders
(excluding K Neilson and WG Craig). This was specifically in
relation to the Committee’s proposals for the changes to
elements of executive Director remuneration. No objections
were received from those shareholders regarding the
proposals. Also, feedback was received from a shareholder
during the year regarding one aspect of the performance
metrics for executive Directors’ long-term incentive awards
which will be addressed in one of the performance metrics
to apply to awards proposed to be granted in FY25.
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
72 to 74.
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Corporate Governance Report
(continued)
Stakeholder Engagement (continued)
Shareholders (continued)
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 16 November 2023 the Company
announced that all resolutions were passed and in respect of
each resolution, apart from one, at least 80% of the proxy
votes received were ‘for’ the resolutions proposed.
However, a number of the votes received opposed the
resolution in respect of the reappointment of Colleen as a
director of the Company. Following consultation with
shareholders during their AGM voting consideration, the
Board identified certain concerns regarding the composition
of the Board’s Audit and Remuneration Committees.
Therefore, with effect from 16 November 2023, Anne
McCune replaced Colleen as a member of both the Audit and
Remuneration Committees.
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 Group-wide acron plan from the FY23 employee
engagement survey conrnued to be advanced through FY24
and regular updates on the progress of the action plan were
provided to the Board and to the Operations Board. 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. 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 8 to 10, from a cross section
of business functions and roles and responsibilities providing
an opportunity for face to face discussions with executive
leadership. These have provided a two-way feedback
opportunity for employees and executive leadership 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 bank finance providers.
ESG Committee
Our ESG Committee was established in FY23 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 operation of the Committee and the Board receives
regular updates from the ESG Committee. Further details
regarding the ESG Committee 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.
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Corporate Governance Report
(continued)
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 2024 and for the period
to the date of approval of this Report, the Audit Committee
is chaired by David Kemp. Its other members during FY24
were as shown on page 84. 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 and a member of the Committee until 16
November 2023, 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 90 to
93.
Financial and Business Reporting
The Board recognises its responsibilities, including those
statutory responsibilities laid out on page 76. 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 16.
As detailed on page 71 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 2024. The
Board has explained within the Viability Statement section
of the Strategic Report on page 29 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 19 to 29. 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 20 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, continues to be
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-corruption and bribery, 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 of this
annual report.
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Corporate Governance Report (continued)
Audit, Risk and Internal Control (continued)
Audit Committee: role, responsibilities and activities during the year
During the year the Audit Committee, operating under its terms of reference (which are available on the Company’s website, at
www.thecranewaregroup.com, and at the Company’s registered office), discharged its responsibilities, including reviewing and
monitoring:
•
interim and annual reports information including consideration of the appropriateness of accounting policies and
material assumptions and estimates adopted by management;
•
the integrity of the Annual Report and Financial Statements, the Interim Report and any formal announcements relating
to financial performance, to ensure clarity and completeness of disclosures, including those relating to alternative
performance measures (including adjusted performance measures);
•
developments in accounting and reporting requirements;
•
matters of accounting significance, estimation and judgement including in the current year the Prior Year Restatement
detailed in Note 26 to the financial statements;
•
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 29 and page 71 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 2024. 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 2024, in particular the critical judgements and estimates of the Company as disclosed in the financial
statements:
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Corporate Governance Report (continued)
Audit, Risk and Internal Control (continued)
Audit Committee: role, responsibilities and activities during the year (continued)
Significant matters considered in relation to the financial statements (continued)
Area of judgement or
estimate
Matter considered and Role of the Committee
Revenue recognition
(Group and Company),
including compliance with
IFRS 15
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 judgement and
interpretation of both the Group’s policy and IFRS 15.
Internally developed
intangible assets (Group
and Company)
The Group and the Company capitalise development costs when the conditions for capitalisation,
as specified 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.
Impairment assessment
Goodwill and other intangible assets, as disclosed in Note 13 to the financial statements, are
significant assets on the Group’s balance sheet. 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
2024. The Committee received and reviewed reports from both management and the external
auditors and, where appropriate, challenged the assumptions taken and the conclusion reached.
The Committee reviewed summary reports produced by management detailing the outcomes of
the impairment assessment.
The Group uses Alternative Performance Measures (APMs) and provides additional disclosures, including reconciliations to
statutory measures, as set out in Note 27 to the financial statements. The Committee considers it important to take account of
both the statutory measures and the APMs when reviewing these financial statements. In particular, items excluded from
underlying results were reviewed by the Committee and it is satisfied that the presentation of these items is clear, applied
consistently across years and that the level of disclosure is appropriate.
The Audit Committee also reviewed and considered other matters during and in respect of the financial year ended 30 June 2024
including management’s assessment of new accounting standards that were not effective for adoption until after 30 June 2024.
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 restatement, is fair, balanced and understandable and provides the
information necessary for stakeholders to assess the Group’s position and performance, business model and strategy.
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Corporate Governance Report
(continued)
Audit, Risk and Internal Control (continued)
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 which is an external, validated audit of
Craneware’s security and data privacy practices, as
described on pages 53 and 54 within the ESG Statement. 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 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 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 fourth 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.
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 2024, 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 2024 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. Subject to the
limitations in respect of Craneware being an OEPI, a
summary of the policy in respect of non-audit services
provided by the external auditors is:
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Corporate Governance Report
(continued)
Audit, Risk and Internal Control (continued)
Non-audit services provided by the external auditors
(continued)
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 2024, 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
‘Composition of the Board’ section above. The Committee is
chaired by Russ Rudish and the membership of this
Committee during the financial year is set out on page 97.
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 95 to 113, 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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Corporate Governance Report
(continued)
AIM Rule Compliance Report
The Ordinary Shares of Craneware plc are listed on the Alternative Investment Market (‘AIM’) of the London Stock Exchange 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;
•
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 78 to 94.
Approved by the Board of Directors and signed on behalf of the Board by:
Craig Preston
Company Secretary
2 September 2024
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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 2024.
The focus for our remuneration continues to be in support of our culture and rewarding and retaining our employees, whilst
at all times remaining fair and equitable. The Group retains a median pay positioning policy and as such has sought to position,
on average, salaries and benefits at the median of the market for employees based on their role, their contribution and
company affordability.
The Financial Review section of our Strategic Report explains the financial performance of the Group for FY24 which has seen
the Group deliver results at the top end of expectations as the US Healthcare market begins to stabilise following the challenges
of the recent years. We continue to be very mindful of the priorities of all our stakeholders.
There continues to be a very competitive market in both the UK and US for talent and this brings an absolute focus on ensuring
a positive employee experience of which remuneration is one factor. Many of our employee engagement and other people
initiatives, including reward, are summarised within the ESG Statement.
We continue to believe providing the opportunity for employees across the organisation to become Craneware plc
shareholders delivers benefits by further aligning our stakeholders. As such we have continued our practice of a grant of
market value share options, first adopted in September 2022, to employees across the Group in roles below senior manager
level.
Executive Director Remuneration Policy
The Committee remains committed to playing its part in the future growth of The Craneware Group by meeting its requirement
to develop remuneration packages to attract, motivate and retain Directors of the calibre necessary to achieve the Group’s
objectives. I explained in my introduction to last year’s Remuneration Committee Report that in early FY24 we initiated an
executive Director remuneration benchmarking study to be conducted by an independent consultancy organisation. The
Committee appointed Mercer Ltd to conduct this benchmarking study and we carefully assessed the conclusions from the
study.
We consulted with our substantial shareholders regarding the proposed changes to Executive Director remuneration (i.e. base
salaries and benefits) arising from the Committee’s assessment of the conclusions from the study. We thank those shareholders
for their support for those proposals.
The resulting increases to base salaries for Executive Directors, which were effective from 1 September 2023, whilst greater
than the average increase in base salaries for other employees in percentage terms for this year alone, are actually below the
equivalent that has been awarded to employees over recent years when no increases to Executive remuneration were made
and brings Executive Director base salaries closer in line with median levels and therefore to the Group remuneration policy.
The Committee decided to supplement the benefits provided to Executive Directors, so these are commensurate with the
market median for UK Executive Directors, as indicated by the results from the benchmarking study.
We concluded the changes made to Executive Director remuneration were the minimum required to achieve this in the UK
market, however, should we need to recruit in the US market (being the end customer market for the Group) we would need
to significantly enhance these packages to attract equivalent talent.
Executive Director Remuneration Outcome for year ended 30 June 2024
Our remuneration focus has been to continue to support the organisation on its growth strategy as the US Healthcare market
begins to stabilise following the challenges of the recent years. The Group has successfully maintained its stated goal of a 30+%
EBITDA margin whilst investing in the future of the business and its products. The senior team continues to drive the success
of the enlarged Group. We have also been able to continue to focus our policy of paying all employees at median market rates.
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Remuneration Committee’s Report
(continued)
The Revenue and EBITDA growth achieved in the year, being at the upper end of consensus, has allowed for a portion of the
bonus to be payable to all senior employees (including the executive Directors).
The Remuneration Committee has assessed the extent to which the relative Total Shareholder Return performance condition
has been satisfied, over each of three overlapping three year measurement periods, for the long term incentive plan awards
which were granted to executive Directors and other senior managers in November 2021. The Committee considered that the
formulaic outcome of the performance condition provided an appropriate vesting level and therefore we did not apply
Committee discretion to override that outcome. This assessment will result in these awards vesting to the extent, in total, of
71.02% on 18 November 2024.
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.
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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Remuneration Committee’s Report (continued)
Introduction
This report sets out Craneware plc’s remuneration and benefits provided to Directors for the financial year ended 30 June 2024.
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 selected the UK Corporate Governance Code
2018 (‘the Code’) as its corporate governance framework and our extent of compliance within the Code, is set out and explained
within the Corporate Governance Report on pages 78 to 94. 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 Code. The
members of the Committee during the financial year were:
From 1 July 2023 to 16 November 2023
From 16 November 2023 to 30 June 2024 and to the date of
approval of this Report
Russ Rudish (Chair)
Russ Rudish (Chair)
Alistair Erskine
Alistair Erskine
Colleen Blye
Anne McCune
On 16 November 2023, Colleen Blye stepped down from the Committee and Anne McCune became a member of the Committee.
None of the Committee members 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 93 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 Committee met three times during the year and the meeting attendance is shown on page 84. No Director is involved in any
decisions as to their own remuneration. 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.
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.
Shareholder consultation
The Board of Directors welcomes dialogue with its shareholders over matters of remuneration. During the year the Committee
consulted with the Company’s substantial shareholders regarding the proposed changes to base salary and benefits elements of
the remuneration arrangements for the executive Directors. This is outlined further in the ‘Engagement with stakeholders’ 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.
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Remuneration Committee’s Report (continued)
Voting at General Meeting: Directors’ Remuneration Report
The Directors’ Remuneration Report will be put to an advisory vote at the AGM in November 2024. A similar resolution was put
to the AGM held on 16 November 2023 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 2023
Votes For
Votes Against
Votes Total
Votes Withheld
21,993,109
98.1%
415,087
1.9%
22,408,196
2,483,026
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 operate in the Group’s end market of US Healthcare whilst achieving 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.
Compliance with Provision 40 of the UK Corporate Governance Code 2018
Clarity
The Committee aims to provide clear and transparent explanations and disclosures of Director
remuneration arrangements, as set out in this Report.
Simplicity
Simplicity is an important guiding feature to the Committee in the design of the remuneration structure for
executive Directors. The Remuneration Committee believes that executive Director remuneration policy
should not only be easy to understand, but also straightforward and simple to implement and administer.
Executive Director remuneration policy is deliberately not complex with variable pay elements being an
annual performance bonus and equity-settled long term incentives. Only a small number of focused targets,
based on the Group’s performance, are used for these variable pay elements.
Risk
It is considered that the annual bonus and long term incentive arrangements do not encourage
inappropriate risk taking. Performance conditions for bonus and share-based incentives are appraised 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 apply to the Long Term Incentive Plan (LTIP). Post-vesting holding periods
for LTIP awards and shareholding guidelines also apply to the executive Directors.
Predictability
The executive Director remuneration policy has maximum opportunity levels for variable components, with
actual incentive outcomes varying depending on the level of the Group’s performance achieved against
specific measures.
Proportionality
A primary 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
earnings per share. In addition to performance conditions, post-vesting holding periods for LTIP awards and
shareholding guidelines provide shareholder alignment.
Alignment to
culture
The Committee believes that the executive incentive schemes promote behaviours consistent with Group’s
purpose, values and strategy. 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 voluntarily puts this
Remuneration Committee Report to an advisory vote at the Company’s AGM.
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Remuneration Committee’s Report
(continued)
Director Remuneration Policy (continued)
Review of Executive Director Remuneration
As explained in previous Remuneration Committee reports,
the Committee was very conscious that there had been no
benchmarked change to executive Directors’ base salaries
since the year ended 30 June 2017. In addition to this, the
Group’s “EBITDA gate” policy on bonus payments (ensuring
bonus payments do not result in EBITDA falling below
market consensus) has resulted in the Group only paying
bonuses twice in the past six years, in 2023 (a partial
payment) and 2018. This was despite the levels of growth
achieved by the Group and many individual goals being met.
As a result, overall remuneration levels for the executive
Directors had fallen well below the Group policy of paying,
on average, at the median. In early FY24, the Remuneration
Committee engaged Mercer Limited (‘Mercer’) to provide an
independent benchmarking study focusing on executive
Director remuneration. This appointment was made by the
Committee after an assessment of proposals from different
UK executive remuneration consultancy organisations.
Mercer Limited are members of the Remuneration
Consultants Group and, as such, voluntarily operate under
the code of conduct in relation to executive remuneration
consulting in the UK. The Committee is satisfised that the
advice it received from Mercer during the year was objective
and independent. Mercer does not provide any other
services to The Craneware Group nor does it have any
connections with the Group or any individual directors which
may impair Mercer’s independence. Fees charged by Mercer
for the services provided to the Committee during the year
totalled £20,000 ($24,475). The Committee did not appoint
a remuneration consultant during the previous financial year
ended 30 June 2023.
The results of the benchmarking study were reviewed and
considered by the Remuneration Committee. In summary,
the results confirmed that levels of base salary and benefits
normally expected to be a part of executive Director
compensation are below the lower quartile when compared
to a UK listed peer group and a more general index of AIM
listed companies. These results confirmed that the
executive Director remuneration failed to meet the stated
and generally applied Group policy.
The Committee concluded that this position was
unsustainable, did not meet the stated remuneration
strategy and objectives and as such, was not in the best
interest of our shareholders. Therefore, the following
adjustments (implemented after inviting consultation with
the Company’s substantial shareholders) to executive
Director remuneration were made, effective from 1
September 2023:
•
Base salary increases for each of the executive
Directors; and
•
Enhancements to the benefits offered to the
executive Directors by the addition of: family cover
for private medical, dental and travel insurance;
and a car allowance payment.
Since March 2017 (in FY17) the last time there was an
increase to Executive salaries, the Group has seen over 300%
growth in both Revenue and EBITDA and the average
number of employees in the Group has grown from 263 to
734 in FY23. The Committee acknowledges these individual
executive Director base salary increases were greater than
the general level of employee base salary increases in FY24.
However, the increases are below the average salaries
(excluding the executive Directors) increases across the
Group (over 30% cumulatively) in the timeframe under
review.
The current executive Director remuneration package
includes a bonus entitlement of 100% of base salary.
However, the “EBITDA gate” policy prevents any payment of
bonus if it would result in reported EBITDA falling below the
established market consensus. Whilst the benchmarking
study identified this as unusual in the market (and generally
more limiting than the bonus policies of other companies in
the peer group) the Committee intends to retain the EBITDA
gate at this time as it believes this further aligns directors’
and shareholders’ interests.
The Committee concluded, from the results of the
benchmarking study, that no changes should be made at
that time to the bonus arrangements or the long term
incentive policy but those elements of executive Director
remuneration will be kept under review by the Committee.
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Remuneration Committee’s Report
(continued)
Director Remuneration Policy (continued)
Consideration of employee pay structures across the Group
The Committee considers pay structures across the wider
Group when setting the remuneration policy for executive
Directors. As explained below, no direct comparison
measures are presented however the Committee believes
that the intentions of the Code are achieved in the resulting
executive Director remuneration policy applicable from 1
September 2023. 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 reference to internal and external measures for
executive Director remuneration review and assessment is
not presented due to the deferral of benchmarking during
the previous four financial years. With the benchmarking
study completed in FY24, external measures have been
utilised for that assessment. Going forward, it is anticipated
that internal and external measures would be tracked by the
Remuneration
Committee
for
executive
Director
remuneration comparison purposes.
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. This employee-related information
is provided and explained to the Board by the Chief People
Officer (Issy Urquhart) who is also an executive Director of
the Company. There was no formal employee engagement,
in respect of executive Director remuneration, during the
year, however employee and leadership roundtable
discussions (which have an open agenda) have taken place
during the year, as described on page 48. As noted above,
the same policy of paying at median applies across all
employees of the Group (based on benchmark data).
The Committee and the rest of the Board continue to believe
that encouraging wider share ownership, by all employees,
delivers benefits by further aligning our stakeholders. During
the year, the Committee again decided that discretionary
share option awards should be granted to employees in roles
below senior manager level in order to provide this
opportunity in the future, if employees choose to do so. The
‘All employee share option awards’ section below describes
these share option awards.
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 2024. 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.
Engagement with stakeholders regarding executive Director
remuneration
Following the results of the executive Director remuneration
benchmarking study conducted by Mercer, the Committee
consulted with the Company’s substantial shareholders
(excluding K Neilson and WG Craig). This was specifically in
relation to the Committee’s proposals for the changes to
elements of executive Director remuneration, being: to
increase the base salary for each of the executive Directors;
and enhancements to their benefits. No objections were
received from those shareholders regarding the proposals
and therefore they were implemented effective from 1
September 2023. These changes are explained above, they
are noted within the Base salary and Benefits sections below
and are reflected in the Directors’ Emoluments figures for
the year ended 30 June 2024 on page 111.
The Committee has not engaged with shareholders during
the year ended 30 June 2024 in relation to any other aspects
of executive Director remuneration policy. However,
feedback was received from a shareholder regarding the
performance metrics for executive Directors’ long-term
incentive awards. The Committee intends, in view of this
feedback, to adjust the vesting criteria of the Total
Shareholder Return (TSR) measure for long term incentives
to be granted in FY25, such that fewer shares will vest at
Median TSR performance. The specified vesting level at
Median shall be determined ahead of the next grant of long-
term incentive awards in FY25.
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Remuneration Committee’s Report
(continued)
Director Remuneration Policy (continued)
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.
Other than increases to the base salaries for the executive Directors and the additions to the complement of benefits effective
from 1 September 2023 mentioned above, there were no significant changes to the remuneration policy for executive Directors
for the year ended 30 June 2024.
Base salary
Objective
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 within the US Healthcare market.
Operation
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 in previous years’ Remuneration Committee Reports, the base
salaries for executive Directors had remained unchanged for the past four years, and had not been benchmarked
since FY17, until 1 September 2023 following the Committee’s review of the results of the executive
benchmarking study, as described above.
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.
Benefits
Objective
A benefits package, in line with market practice, is offered to executive Directors to complement base salary.
Operation
Executive Directors are entitled to private medical and dental insurance, life assurance, critical illness cover,
permanent health insurance, annual health assessment and travel insurance. In addition, with effect from 1
September 2023, executive Directors are entitled to: family cover for private medical and dental insurance;
family cover for travel insurance; and also a car allowance of £15,000 per annum.
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 a specified percentage 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 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.
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Remuneration Committee’s Report
(continued)
Director Remuneration Policy (continued)
Elements of executive Director remuneration (continued)
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
year, whilst ensuring returns to shareholders through the “EBITDA gate”, but also provide for the future growth of the
Group. The choice of metrics reflects those that have been identified as the key, primarily financial, indicators of the
Group’s success against its strategy.
Bonus plan rules are exclusively subject to Remuneration Committee discretion. This includes, but is not limited to,
whether or not to fund the bonus plan, to make any payment or the amounts to be paid by way of bonus under the
plan (regardless of whether the Group has achieved or exceeded the required targets). The Committee has discretion
to adjust the formulaic bonus outcomes both upwards (within the policy limits) and downwards to ensure alignment
of pay with the underlying performance of the business over the financial year.
Annual bonuses are normally paid in cash following the publication of the Group’s audited annual financial results for
the relevant financial year.
Opportunity
Maximum bonus entitlements are set at a level that allow additional growth of overall remuneration for out-
performance of targets.
Long term incentives
Objective
To incentivise the achievement of the Group’s long-term strategy and the creation of long-term shareholder
returns.
Operation
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 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.
The awards granted to executive Directors are also subject to an additional two-year holding period after the vesting
date.
Malus and Clawback provisions apply, as outlined in the ‘Share-based awards’ section below.
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 2024 are set out
in the ‘Share-based awards’ section below.
Shareholding guideline
Objective
To create greater alignment of executive Directors’ and senior managers’ interests with those of our shareholders
Operation
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 73, exceed the shareholding guideline.
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Remuneration Committee’s Report
(continued)
Director Remuneration Policy (continued)
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
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.
Objective
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.
Basis of fee
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.
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 2024 are shown in the tables on page 111.
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 considers, following the changes to base
salaries and benefits for executive Directors from 1
September 2023, as described above, also taking into
account
macro-economic
factors
and
remuneration
practices across the Group, that executive Director
remuneration policy operated in line with the Committee’s
aims for the financial year, in terms of Company
performance and quantum.
The remuneration package for the executive Directors, for
the year ended 30 June 2024, comprised:
(i) Base salary
Following the review of the results of the executive Director
remuneration benchmarking study, as described above, the
Committee specified an increase to the base salary for each
of the executive Directors with effect from 1 September
2023.
(ii) Benefits in kind
The ‘Benefits – Operation’ section above describes the
entitlement to benefits for the executive Directors in FY24.
(iii) 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
2023: 6% of base salary) per annum. In addition, the
Company pays a fixed sum, of £5,000 ($6,000 approximately)
per annum, 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.
(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 2024, 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. The
amount payable to each of the executive Directors is
included in the Directors’ Emoluments table below.
Craneware plc | Annual Report & Financial Statements 2024
104
Remuneration Committee’s Report
(continued)
Directors’ remuneration (continued)
(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:
•
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:
•
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”).
The Company no longer grants awards from the legacy share
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 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 awards
The value of long term incentive awards granted to the
executive Directors in September 2023 continued at 200% of
base salary. 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.
Craneware plc | Annual Report & Financial Statements 2024
105
Remuneration Committee’s Report
(continued)
Directors’ remuneration (continued)
(v) Share-based awards (continued)
Malus and Clawback provisions (continued)
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.
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
There is a two-year post vesting holding period for LTIP
awards (net of associated taxes) applicable for all awards
granted to and whilst serving as, executive Directors and
senior management on LTIP awards including those awards
granted on 6 September 2023. 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 73, 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 2024
On 6 September 2023, each of the executive Directors were
granted a conditional share award under the 2022 LTIP and
these awards are included in the tables on page 113. 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.
Conditional share awards and / or share options were
granted to certain other employees (including senior
management) on 6 September 2023 under the 2022 LTIP and
the 2016 option plans. 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.
The vesting of the awards, which were granted in September
2023 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.
Craneware plc | Annual Report & Financial Statements 2024
106
Remuneration Committee’s Report
(continued)
Directors’ remuneration (continued)
(v) Share-based awards (continued)
Share plan awards granted to executive Directors in the year
ended 30 June 2024 (continued)
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 2024, in
the context of the Group’s purpose and strategy, business
performance and alignment to stakeholder interests. The
Committee concluded that a profit measure - a growth in
adjusted diluted Earnings per Share (EPS) metric, should
again apply to the long term incentive awards in addition to
a relative total shareholder return (TSR) metric and the
Committee considered that these measures would provide
an appropriate assessment of the Group’s performance.
Accordingly, for the conditional share awards granted on 6
September 2023 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 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 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 6 September 2023
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, 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 2024;
one sixth based on performance over the three years ending
30 June 2025; and the final sixth based on performance over
the three years to 30 June 2026 – resulting in an aggregate,
minimum five year performance evaluation period.
Vesting will then take place as shown in the table on page
107 based on the TSR ranking. 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.
A similar vesting profile applies to the LTIP awards granted
to executive directors in November 2022, as shown in the
table on page 107. The share plan awards that were granted
to the executive Directors and to senior managers in
November 2021 had only a relative TSR performance metric
and this is summarised within the table on page 107 as well
as the applicable vesting profile. The extent of vesting for
the tranches of those awards measured to the period ended
19 July 2024 is described in the ‘Performance condition
measurement assessment to 30 June 2024’ 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.
Vesting will then take place, based on the Committee’s
assessment of this performance condition, as noted in the
table on page 107.
For the long term incentive share plan awards which were
granted on 6 September 2023, 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.
Craneware plc | Annual Report & Financial Statements 2024
107
Remuneration Committee’s Report (continued)
Directors’ remuneration (continued)
(v)
Share-based awards (continued)
Performance condition measurement assessment to 30 June 2024
For LTIP awards previously granted to the executive Directors: in September 2023, the first tranche is not due to vest until 6
September 2024; in November 2022, the second tranche is not due to vest until 18 November 2024; and for the LTIP awards
granted in November 2021, the third (final) tranche is not due to vest until 18 November 2024. However, the performance criteria
for these tranches were to be tested against the Company’s performance to 30 June 2024. 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.
Long term incentive
share plan awards
Summary of Performance Metrics
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% to 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 the 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% to 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 the 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% growth)
Granted in year
ended 30 June 2024
(grant date:
6 September 2023)
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% to 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 the 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% growth.
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. The Trading Statement in respect of the
financial year ended 30 June 2024 was published on 18 July 2024.
Craneware plc’s relative TSR for this period to 19 July 2024, when ranked against that Comparator Group (being the constituent
companies in the FTSE AIM 100 Index) was within the Upper Quartile and therefore these tranches, being one third of the quantity
for each of the awards, will vest to the extent of:
Craneware plc | Annual Report & Financial Statements 2024
108
Remuneration Committee’s Report (continued)
Directors’ remuneration (continued)
(v) Share-based awards (continued)
Performance condition measurement assessment to 30 June 2024 (continued)
•
100% for half of the first tranche and second tranche, respectively, of the long term incentive awards which were granted
in September 2023 and in November 2022 (the other half of those tranches being subject to the growth in adjusted
diluted EPS metric; the testing of that metric is explained below) and;
•
100% for the third (final) tranche of the awards which were granted in November 2021.
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:
FY24
cents
FY21
cents
Adjusted Diluted EPS (as per Note 11 to the financial statements for FY24)
93.9
68.1
Add back: Impact of Share-based payments expense (net of tax)
9.5
6.1
_________
_________
Adjusted Diluted EPS (for performance condition metric)
103.4
74.2
_________
_________
The compound annual growth in the adjusted diluted EPS metric for the Group was therefore 11.72% for the three-year
measurement period ended 30 June 2024. Accordingly, the share plan awards, which are subject to this performance condition
shall vest to the extent of 76.57% for the other half: of the first tranche of the awards which were granted on 6 September 2023;
and of the second tranche of the awards granted on 18 November 2022.
Overview of performance condition assessment
In assessing the vesting outcome of the LTIP awards, the Committee has evaluated 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 was necessary for such factors.
Conditional Share Awards (granted from the 2016 LTIP) due to vest in November 2024
As a result of the relative TSR performance condition measurement to 19 July 2024, for the final tranche of the LTIP awards which
were granted to the executive Directors on 18 November 2021, will result in those awards vesting as follows on 18 November
2024:
Executive
Director
Maximum
no. of
shares
subject to
award at
grant
Lapsed from 1st &
2nd tranches
following testing of
performance
conditions for FY22
and FY23
Held
At
30/06/24
Lapsed
(due to performance
condition assessment
to 19 July 2024)
Due to vest on 18
November 2024
Number of Ordinary Shares subject to the LTIP awards granted on 18 November 2021
K Neilson
24,896
(7,215)
17,681
-
17,681
C T Preston
18,505
(5,363)
13,142
-
13,142
I Urquhart
7,632
(2,212)
5,420
-
5,420
Craneware plc | Annual Report & Financial Statements 2024
109
Remuneration Committee’s Report (continued)
Directors’ remuneration (continued)
All employee share option awards
Share options granted to employees in the year ended 30 June 2024
The Committee and the other Directors are supportive of providing the wider population of employees with an opportunity to
become Craneware plc shareholders as this promotes alignment to shareholder interests, and aids with recruitment and retention.
As such, the Committee again decided (in the context of employee reward arrangements) that a grant of share option awards
should be made during FY24 to most eligible employees within the Group in roles below senior manager. Share options were
therefore granted to employees on 6 September 2023, and in the previous two financial years, 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
Share options were granted under 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) in the years ended 30 June 2020 and 30 June 2021, as referenced in
Note 7 to the financial statements. The executive Directors chose to participate in the SAYE in FY20, on the same terms as other
UK employees, and the details of the share options granted are contained in the ‘Directors’ interests in share options’ table below.
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 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 Committee has the discretion to decide whether 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 2023 or 30 June 2024. 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 17 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 2024, are contained in Note 7 to the financial statements.
Craneware plc | Annual Report & Financial Statements 2024
110
Remuneration Committee’s Report (continued)
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.
Contract Date
Unexpired Term
Normal Notice Period
K Neilson
Founder
Rolling
3 months*
C T Preston
15 September 2008
Rolling
3 months*
I Urquhart
27 April 2022
Rolling
3 months*
W Whitehorn
1 January 2020
Rolling
1 month
C Blye
12 November 2013
Rolling
1 month
R Rudish
28 August 2014
Rolling
1 month
A Erskine
24 February 2020
Rolling
1 month
D Kemp
1 March 2020
Rolling
1 month
A McCune
16 November 2022
Rolling
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.
Subject to the prior approval of the Board in each case, executive Directors can accept external appointments as non-executive
directors of other companies provided that any such appointment does not conflict with the director’s duties or time commitment
to The Craneware Group. Executive Directors are permitted to retain any fees received from such non-executive director
appointments. In February 2024, I Urquhart was appointed as a non-executive director of Concurrent Technologies plc whose
shares are listed on the AIM market of the London Stock Exchange. The other executive Directors do not hold 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 73.
Directors’ Emoluments
For Directors who held office during the course of the year, emoluments1 in respect of the year ended 30 June 2024 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 year being reported).
Craneware plc | Annual Report & Financial Statements 2024
111
Remuneration Committee’s Report (continued)
Directors’ Emoluments (continued)
Salary/Fees
$
Benefits2
$
Bonus
$
Pension
$
Total 2024
$
Total 2023
$
Executives
K NeilsonA,B,C
451,300
18,844
307,303
31,608
809,055
682,738
C T PrestonC,D
355,074
18,590
243,547
19,166
636,377
503,313
I UrquhartE
232,168
18,709
158,233
15,857
424,967
347,967
Non-Executives
W Whitehorn
94,463
-
-
-
94,463
90,323
D Kemp
58,826
-
-
-
58,826
56,248
C Blye
60,708
-
-
-
60,708
60,708
R Rudish
60,708
-
-
-
60,708
60,708
A Erskine
54,216
-
-
-
54,216
54,216
A McCune3
54,216
-
--
-
54,216
33,885
Total
1,421,679
56,143
709,083
66,631
2,253,536
1,890,106
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, disability insurance, critical illness insurance and car allowance.
3. A McCune was appointed as a Director of the Company on 16 November 2022.
A. A conditional share award, in respect of 15,328 Ordinary Shares in the Company, which was granted to K Neilson under the 2016 LTIP in October 2020, vested in October 2023. Based
on the share price on the vesting date the total value of those Ordinary Shares was £228,387 ($276,915) before tax.
B. In September 2023 K Neilson exercised a share option, which was granted in 2013 detailed below, in respect of a total of 34,472 Ordinary Shares in the Company. Based on the share
price on the date of exercise, the gain on exercise of that share option was £375,745 ($469,670) before tax.
C. In October 2023 K Neilson and C T Preston each exercised share options, which were granted in 2020 from the SAYE Option Plan, in respect of 1,568 Ordinary Shares each in the
Company. Based on the share price on the date of exercise, the gain on exercise of each of those share options was £6,860 ($8,323).
D. A conditional share award, in respect of 11,393 Ordinary Shares in the Company, which was granted to C T Preston under the 2016 LTIP in October 2020, vested in October 2023.
Based on the share price on the vesting date the total value of those Ordinary Shares was £169,756 ($205,825) before tax.
E. A conditional share award, in respect of 7,315 Ordinary Shares in the Company, which was granted to I Urquhart under the 2016 LTIP in October 2020, vested in October 2023. Based
on the share price on the vesting date the value of those Ordinary Shares was £108,994 ($132,152) before tax.
The following Directors were paid in Sterling:
Salary/Fees
£
Benefits
£
Bonus
£
Pension
£
Total 2024
£
Total 2023
£
Executives
K Neilson
358,317
14,962
227,212
25,095
625,586
566,918
C T Preston
281,917
14,760
180,525
15,217
492,419
417,931
I Urquhart
184,333
14,854
117,030
12,590
328,807
288,937
Non-Executives
W Whitehorn
75,000
-
-
-
75,000
75,000
D Kemp
46,706
-
-
-
46,706
46,706
Total
946,273
44,576
524,767
52,902
1,568,518
1,395,492
Further information regarding Directors’ share options and LTIP awards are contained in the tables on pages 112 and 113.
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.
Craneware plc | Annual Report & Financial Statements 2024
112
Remuneration Committee’s Report (continued)
Directors’ interests in share options and LTIP awards
Directors’ interests in share options as at 30 June 2024, 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:
Grant Date
Exercise
Price
(cents)
Exercise
Price
(pence)
Held
At
01/07/23
(number)
Granted
During
Year
(number)
Exercised
During
Year
(number)
Lapsed
During
Year
(number)
Held
At
30/06/24
(number)
Exercisable
from date
Expiry
date
K Neilson
Share Option Plan 2007
10 Sep 2013
621.0
395.0
34,472
-
(34,472)
-
-
10 Sep 2016
10 Sept 23
22 Sep 2014
839.0
522.5
39,090
-
-
-
39,090
22 Sep 2017
22 Sept 24
9 Mar 2016
1066.0
750.0
28,628
-
-
-
28,628
9 Mar 2019
9 Mar 26
12 Sep 2016
1563.0
1177.5
36,469
-
-
-
36,469
12 Sep 2019
12 Sept 26
Schedule 4 Option Plan
17 Jan 2018
2445.0
1775.0
1,690
-
-
-
1,690
17 Jan 2021
17 Jan 28
Unapproved Option Plan
17 Jan 2018
2445.0
1775.0
7,238
-
-
-
7,238
17 Jan 2021
17 Jan 28
5 Sep 2018
3488.0
2710.0
4,460
-
-
-
4,460
21 Sep 2022
5 Sep 28
SAYE Option Plan
20 Apr 2020
1432.0
1147.5
1,568
-
(1,568)
-
-
1 May 2023
1 Nov 23
C T Preston
Share Option Plan 2007
9 Mar 2016
1066.0
750.0
26,925
-
-
-
26,925
9 Mar 2019
9 Mar 26
Schedule 4 Option Plan
24 Mar 2017
1544.0
1237.5
2,424
-
-
-
2,424
24 Mar 2020
24 Mar 27
Unapproved Option Plan
24 Mar 2017
1544.0
1237.5
6,162
-
-
-
6,162
24 Mar 2020
24 Mar 27
17 Jan 2018
2445.0
1775.0
6,618
-
-
-
6,618
17 Jan 2021
17 Jan 28
5 Sep 2018
3488.0
2710.0
3,305
-
-
-
3,305
21 Sep 2022
5 Sep 28
SAYE Option Plan
20 Apr 2020
1432.0
1147.5
1,568
-
(1,568)
-
-
1 May 2023
1 Nov 23
I Urquhart
Schedule 4 Option Plan
24 Mar 2017
1544.0
1237.5
2,424
-
-
-
2,424
24 Mar 2020
24 Mar 27
Unapproved Option Plan
24 Mar 2017
1544.0
1237.5
1,236
-
-
-
1,236
24 Mar 2020
24 Mar 27
17 Jan 2018
2445.0
1775.0
2,654
-
-
-
2,654
17 Jan 2021
17 Jan 28
5 Sep 2018
3488.0
2710.0
1,747
-
-
-
1,747
22 Sep 2021
5 Sep 28
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.
Craneware plc | Annual Report & Financial Statements 2024
113
Remuneration Committee’s Report (continued)
Directors’ interests in share options and LTIP awards (continued)
The maximum number of Ordinary Shares subject to conditional share awards granted to Directors under the LTIP as at 30 June
2024 were as follows, in respect of Directors who held office during the course of the year:
Grant
Date
Held
At
01/07/23
(number)
Granted
During
Year
(number)
Released
During
Year
(number)
Lapsed
During
Year
(number)
Held
At
30/06/24
(number)
Share price at
date of grant
(pence)
Normal
vesting date
K Neilson
Conditional
share award
2 Oct 2020
24,985
-
(15,328)
(9,657)
-
1,505.0
2 Oct 2023
Conditional
share award
18 Nov 2021
21,394
-
-
(3,713)
17,681
2,610.0
18 Nov 2024
Conditional
share award
18 Nov 2022
30,796
-
-
(3,824)
26,972
2,110.0
18 Nov 2025
Conditional
share award
6 Sep 2023
-
43,320
-
-
43,320
1,500.0
6 Sep 2026
C T Preston
Conditional
share award
2 Oct 2020
18,571
-
(11,393)
(7,178)
-
1,505.0
2 Oct 2023
Conditional
share award
18 Nov 2021
15,902
-
-
(2,760)
13,142
2,610.0
18 Nov 2024
Conditional
share award
18 Nov 2022
22,890
-
-
(2,842)
20,048
2,110.0
18 Nov 2025
Conditional
share award
6 Sep 2023
-
32,200
-
-
32,200
1,500.0
6 Sep 2026
I Urquhart
Conditional
share award
2 Oct 2020
10,208
-
(7,315)
(2,893)
-
1,505.0
2 Oct 2023
Conditional
share award
18 Nov 2021
6,558
-
-
(1,138)
5,420
2,610.0
18 Nov 2024
Conditional
share award
18 Nov 2022
15,734
-
-
(1,954)
13,780
2,110.0
18 Nov 2025
Conditional
share award
6 Sep 2023
-
22,133
-
-
22,133
1,500.0
6 Sep 2026
There was no consideration for the grant of these conditional awards and no consideration will be payable by the award holders
to receive the Shares from these awards, if and to the extent that they vest. The entitlement to shares under the LTIP is subject
to achieving the performance conditions referred to on page 107. The table above shows the maximum entitlement at 30 June
2024 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
2 September 2024
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114
Independent auditors’ report to the members of
Craneware plc
Report on the audit of the financial statements
Opinion
In our opinion, Craneware plc’s group financial statements and company financial statements (the “financial statements”):
•
give a true and fair view of the state of the group’s and of the company’s affairs as at 30 June 2024 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 2024; 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, comprising
material accounting policy information and other explanatory information.
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., Craneware Insights 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: $1,378,736 (2023: $1,297,500) based on 2.5% of EBITDA adjusted for exceptional items.
•
Overall company materiality: $381,331 (2023: $487,688) based on 1% of revenue of company (2023: 5% of 3 year average profit before tax adjusted
for exceptional items).
•
Performance materiality: $1,034,052 (2023: $973,125) (group) and $285,998 (2023: $365,166) (company).
Craneware plc | Annual Report & Financial Statements 2024
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Independent auditors' report to the members of Craneware plc (continued)
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.
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 13, the Group has net book value of development costs
capitalised amounting to $56,672k (2023: $48,972k) and the Company
has $48,440k (2023: $43,244k) 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.
To address this key audit matter we performed the following testing:
We targeted those projects during the year that had the greatest
amount of development costs capitalised and we challenged
management on what the capitalisation related to; We obtained
corroborating evidence to support the existence of enhancements to
projects and to ensure they were enhancing the product and not just
maintenance; We audited the underlying costs being capitalised, being
employee costs and third party license fees, to timesheets and third
party support; We obtained corroborating evidence, including
evidence of sales pipeline and renewals success by product, to
challenge management’s assessment of future economic benefits to
be generated. We considered the results from other areas of audit
testing, including our audit work on management’s impairment
assessments, to identify any contradictory evidence. We did not
identify anything in our testing to indicate costs had been capitalised
inappropriately.
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. The group team
visited the US component to review the component audit file and discuss key issues and findings related to audit. 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.
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:
Craneware plc | Annual Report & Financial Statements 2024
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Independent auditors' report to the members of Craneware plc (continued)
Financial statements - group
Financial statements - company
Overall
materiality
$1,378,736 (2023: $1,297,500).
$381,331 (2023: $487,688).
How we
determined it
2.5% of EBITDA adjusted for exceptional items
1% of revenue of company (2023: 5% of 3 year average profit
before tax adjusted for exceptional items)
Rationale for
benchmark
applied
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
acquisition of Sentry. In prior year the benchmark used was
profit before tax adjusted for exceptional items.
There was year on year volatility in the Company standalone
results (moved from a profit to loss). We changed our approach
to use revenue as the benchmark as we considered this to the
most consistent indicator of scale and performance of the
business year on year. In the prior year the benchmark used was
5% of the 3 year average of profit before tax adjusted for
exceptional items.
For each component in the scope of our group audit, we allocated a materiality that is less than our overall group materiality. The range of materiality
allocated across components was $381,331 and $1,309,799. 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% (2023: 75%)
of overall materiality, amounting to $1,034,052 (2023: $973,125) for the group financial statements and $285,998 (2023: $365,166) 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 $68,937 (group audit)
(2023: $64,875) and $19,066 (company audit) (2023: $24,384) 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:
•
reviewing management’s going concern assessment (which includes a base case and a severe but plausible downside scenario) for reasonableness
and consistency with our audit work; and to ensure covers the going concern period;
•
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 of management’s cashflow forecast model which includes challenging the key assumptions within the model as well as the mathematical
accuracy and its integrity;
•
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;
•
reviewing available banking facilities, including consideration of covenant requirements;
•
reviewing management’s going concern disclosures.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively,
may cast significant doubt on the group's and the company’s ability to continue as a going concern for a period of at least twelve months from when the
financial statements are authorised for issue.
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the
financial statements is appropriate.
However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the group's and the company's ability to
continue as a going concern.
In relation to the directors’ reporting on how they have applied the UK Corporate Governance Code, we have nothing material to add or draw attention
to in relation to the directors’ statement in the financial statements about whether the directors considered it appropriate to adopt the going concern
basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
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117
Independent auditors' report to the members of Craneware plc (continued)
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’ report thereon. The
directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and, accordingly, we
do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially
misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform procedures to conclude whether there
is a material misstatement of the financial statements or a material misstatement of the other information. If, based on the work we have performed,
we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report based on
these responsibilities.
With respect to the Strategic report and Directors' report, we also considered whether the disclosures required by the UK Companies Act 2006 have
been included.
Based on 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 Directors' report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic report and Directors' report for the year
ended 30 June 2024 is consistent with the financial statements and has been prepared in accordance with applicable legal requirements.
In light of the knowledge and understanding of the group and company and their environment obtained in the course of the audit, we did not identify
any material misstatements in the Strategic report and Directors' report.
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 is
materially consistent with the financial statements and our knowledge obtained during the audit, and we have nothing material to add or draw attention
to in relation to:
•
The directors’ confirmation that they have carried out a robust assessment of the emerging and principal risks;
•
The disclosures in the Annual Report that describe those principal risks, what procedures are in place to identify emerging risks and an explanation
of how these are being managed or mitigated;
•
The directors’ statement in the financial statements about whether they considered it appropriate to adopt the going concern basis of accounting in
preparing them, and their identification of any material uncertainties to the group’s and company’s ability to continue to do so over a period of at
least twelve months from the date of approval of the financial statements;
•
The directors’ explanation as to their assessment of the group's and company’s prospects, the period this assessment covers and why the period is
appropriate; and
•
The directors’ statement as to whether they have a reasonable expectation that the company will be able to continue in operation and meet its
liabilities as they fall due over the period of its assessment, including any related disclosures drawing attention to any necessary qualifications or
assumptions.
Our review of the directors’ statement regarding the longer-term viability of the group 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.
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118
Independent auditors' report to the members of Craneware plc (continued)
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 in respect of the financial statements, 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 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; and
•
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.
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.
Craneware plc | Annual Report & Financial Statements 2024
119
Independent auditors' report to the members of Craneware plc (continued)
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.
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
2 September 2024
Craneware plc | Annual Report & Financial Statements 2024
120
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2024
Notes
Total
2024
$’000
Total
2023
$’000
Continuing operations:
Revenue from contracts with customers
4
189,268
174,018
Cost of sales
(27,072)
(25,576)
Gross profit
162,196
148,442
Other income
(398)
600
Operating expenses
5
(140,953)
(131,876)
Net impairment (charge)/ reversal on financial and contract assets
(1,111)
2,062
Operating profit
5
19,734
19,228
Analysed as:
Adjusted EBITDA*
58,279
54,892
Share-based payments
7
(4,487)
(2,992)
Depreciation of property, plant and equipment
12
(3,293)
(3,451)
Amortisation of intangible assets – other
13
(9,169)
(7,781)
Amortisation of intangible assets – acquired intangibles
13
(20,921)
(20,930)
Exceptional costs**
5
(675)
(510)
Finance income
8
1,143
214
Finance expense
8
(5,130)
(6,357)
Profit before taxation
15,747
13,085
Tax on profit for ordinary actions
9
(4,044)
(3,853)
Profit for the year attributable to owners of the parent
11,703
9,232
Total comprehensive income attributable to owners of the parent
11,703
9,232
Earnings per share for the year attributable to equity holders
- Basic ($ per share)
11
0.335
0.263
- Diluted ($ per share)
11
0.335
0.261
The accompanying notes are an integral part of these financial statements.
* See Note 27 for explanation of Alternative Performance Measures.
** Exceptional items in both FY24 and FY23 relate to integration costs associated with the purchase of Sentry Data Systems, Inc. (‘Sentry’).
Craneware plc | Annual Report & Financial Statements 2024
121
Statements of Changes in Equity
For the year ended 30 June 2024
Group
Share
Capital
$’000
Share
Premium
Account
$’000
Treasury
Shares
$’000
Capital
Redemption
Reserve
$’000
Merger
Reserve
$’000
Other
Reserves
$’000
Retained
Earnings
$’000
Total
Equity
$’000
At 1 July 2022
659
97,204
-
9
186,981
5,933
42,236
333,022
Total comprehensive income -
profit for the year
-
-
-
-
-
-
9,232
9,232
Transactions with owners:
Share-based payments
-
-
-
-
-
3,231
-
3,231
Purchase of own shares through
EBT (Note 17)
-
-
-
-
-
-
(179)
179)
Purchase of own shares through
share buyback (Note 17)
-
-
(3,865)
-
-
-
-
(3,865)
Deferred tax taken directly to
equity
-
-
-
-
-
-
(1,004)
(1,004)
Impact of share options and
awards exercised / lapsed
-
-
128
-
-
(2,324)
1,719
(477)
Dividends (Note 10)
-
-
-
-
-
- (12,119)
(12,119)
At 30 June 2023
659
97,204
(3,737)
9
186,981
6,840
39,885
327,841
Total comprehensive income -
profit for the year
-
-
-
-
-
-
11,703
11,703
Transactions with owners:
Share-based payments
-
-
-
-
-
4,127
-
4,127
Purchase of own shares through
EBT (Note 17)
-
-
-
-
-
-
(863)
(863)
Purchase of own shares through
share buyback (Note 17)
-
-
(2,435)
-
-
-
-
(2,435)
Deferred tax taken directly to
equity
-
-
-
-
-
-
1,893
1,893
Impact of share options and
awards exercised / lapsed
-
-
1,680
-
-
(2,077)
(479)
(876)
Dividends (Note 10)
-
-
-
-
-
- (12,798)
(12,798)
At 30 June 2024
659
97,204
(4,492)
9
186,981
8,890
39,341
328,592
The accompanying notes are an integral part of these financial statements.
Craneware plc | Annual Report & Financial Statements 2024
122
Statements of Changes in Equity
For the year ended 30 June 2024
Company
Share
Capital
$’000
Share
Premium
Account
$’000
Treasury
Shares
$’000
Capital
Redemption
Reserve
$’000
Merger
Reserve
$’000
Other
Reserves
$’000
Retained
Earnings
$’000
Total
Equity
$’000
At 1 July 2022
659
97,204
-
9
186,981
5,933
23,208
313,994
Total comprehensive income -
profit for the year
-
-
-
-
-
-
6,544
6,544
Transactions with owners:
Share-based payments
-
-
-
-
-
3,231
-
3,231
Purchase of own shares through
share buyback (Note 17)
-
-
(3,865)
-
-
-
-
(3,865)
Deferred tax taken directly to
equity
-
-
-
-
-
-
(666)
(666)
Impact of share options and
awards exercised / lapsed
-
-
128
-
-
(2,324)
1,541
(665)
Dividends (Note 10)
-
-
-
-
-
-
(12,119)
(12,119)
At 30 June 2023
659
97,204
(3,737)
9
186,981
6,840
18,508
306,464
Total comprehensive income -
profit for the year
-
-
-
-
-
-
(3,065)
(3,065)
Transactions with owners:
Share-based payments
-
-
-
-
-
4,127
-
4,127
Purchase of own shares through
share buyback (Note 17)
-
-
-
-
-
-
-
(2,435)
Deferred tax taken directly to
equity
-
-
(2,435)
-
-
-
996
996
Impact of share options and
awards exercised / lapsed
-
-
1,680
-
-
(2,077)
(697)
(1,094)
Dividends (Note 10)
-
-
-
-
-
-
(12,798)
(12,798)
At 30 June 2024
659
97,204
(4,492)
9
186,981
8,890
2,944
292,195
123
Craneware plc | Annual Report & Financial Statements 2024
Consolidated Balance Sheet as at 30 June 2024
Note
2024
2023
$'000
$'000
ASSETS
Non-Current Assets
Property, plant and equipment
12
8,592
8,464
Intangible assets - goodwill
13
235,236
235,236
Intangible assets - acquired intangibles
13
145,406
166,327
Intangible assets - other
13
56,827
50,230
Trade and other receivables
15
3,634
2,758
Deferred tax
16
733
-
450,428
463,015
Current Assets
Trade and other receivables
15
58,638
35,424
Cash and cash equivalents
19
34,589
78,537
93,227
113,961
Total Assets
543,655
576,976
EQUITY AND LIABILITIES
Non-Current Liabilities
Borrowings
20
27,372
75,033
Deferred income
4
958
2,875
Leased property
3,823
2,224
Hire purchase equipment
-
44
Deferred tax
16
33,441
41,337
Other provisions
708
243
66,302
121,756
Current Liabilities
Borrowings
20
8,000
8,000
Deferred income
4
65,859
49,643
Amounts held on behalf of customers
53,390
51,220
Tax payable
4,278
2,565
Trade and other payables
21
17,234
15,951
148,761
127,379
Total Liabilities
215,063
249,135
Equity
Share capital
17
659
659
Share premium account
97,204
97,204
Treasury shares
(4,492)
(3,737)
Capital redemption reserve
9
9
Merger reserve
186,981
186,981
Other reserves
8,890
6,840
Retained earnings
39,341
39,885
Total Equity
328,592
327,841
Total Equity and Liabilities
543,655
576,976
Registered Number SC196331
The accompanying notes are an integral part of these financial statements.
The financial statements on pages 120 to 169 were approved and authorised for issue by the Board of Directors on 2 September
2024 and signed on its behalf by:
Keith Neilson
Craig Preston
Director
Director
Craneware plc | Annual Report & Financial Statements 2024
124
Company Balance Sheet as at 30 June 2024
Note
2024
2023
$'000
$'000
ASSETS
Non-Current Assets
Investment in subsidiary undertakings
14
277,405
277,405
Property, plant and equipment
12
2,007
2,348
Intangible assets
13
48,448
43,297
Deferred tax
16
733
-
Trade and other receivables
15
337
-
328,930
323,050
Current Assets
Trade and other receivables
15
31,974
25,701
Cash and cash equivalents
19
2,957
25,102
34,931
50,803
Total Assets
363,861
373,853
EQUITY AND LIABILITIES
Non-Current Liabilities
Lease liabilities > 1 year
1,424
1,887
Other provisions
645
243
Deferred tax
-
1,226
2,069
3,356
Current Liabilities
Deferred income
30,459
30,253
Trade and other payables
21
39,138
33,780
69,597
64,033
Total Liabilities
71,666
67,389
Equity
Share capital
17
659
659
Share premium account
97,204
97,204
Treasury shares
(4,492)
(3,737)
Capital redemption reserve
9
9
Merger reserve
186,981
186,981
Other reserves
8,890
6,840
Retained earnings
2,944
18,508
At 1 July
18,508
23,208
(Loss)/ profit for the year attributable to owners
(3,065)
6,544
Other changes in retained earnings
(12,499)
(11,244)
Total Equity
292,195
306,464
Total Equity and Liabilities
363,861
373,853
Registered Number SC196331
The accompanying notes are an integral part of these financial statements. See Note 26 for details of the restatement in the prior
year.
The financial statements on pages 120 to 169 were approved and authorised for issue by the Board of Directors on 2 September
2024 and signed on its behalf by:
Keith Neilson
Craig Preston
Director
Director
Craneware plc | Annual Report & Financial Statements 2024
125
Consolidated Statement of Cash Flows
For the year ended 30 June 2024
Note
2024
2023
$'000
$'000
Cash flows from operating activities
Cash generated from operations
18
53,703
100,591
Tax paid
(11,841)
(1,843)
Net cash generated from operating activities
41,862
98,748
Cash flows from investing activities
Purchase of property, plant and equipment
12
(1,191)
(520)
Capitalised intangible assets
13
(15,766)
(15,031)
Interest received
1,143
214
Net cash used in investing activities
(15,814)
(15,337)
Cash flows from financing activities
Dividends paid to company shareholders
10
(12,798)
(12,119)
Proceeds from issuance of treasury shares
17
276
138
Loan arrangement fees
20
-
(252)
Repayment of borrowings
20
(48,000)
(28,000)
Interest on borrowings
(4,624)
(6,503)
Purchase of own shares by EBT
17
(863)
(179)
Share buyback programme
17
(2,485)
(3,815)
Payment of lease liabilities
(1,502)
(2,552)
Net cash used in financing activities
(69,996)
(53,282)
Net (decrease)/ increase in cash and cash equivalents
(43,948)
30,129
Cash and cash equivalents at the start of the year
78,537
48,408
Cash and cash equivalents at the end of the year
19
34,589
78,537
The accompanying notes are an integral part of these financial statements.
Craneware plc | Annual Report & Financial Statements 2024
126
Company Statement of Cash Flows
For the year ended 30 June 2024
Note
2024
2023
$'000
$'000
Cash flows from operating activities
Cash generated from operations
18
7,937
18,220
Tax paid
(2,185)
(1)
Net cash generated from operating activities
5,752
18,219
Cash flows from investing activities
Purchase of property, plant and equipment
12
(213)
(205)
Capitalised intangible assets
13
(12,151)
(11,539)
Interest received
93
443
Net cash used in investing activities
(12,217)
(11,301)
Cash flows from financing activities
Dividends paid to company shareholders
10
(12,798)
(12,119)
Proceeds from issuance of treasury shares
17
276
138
Intergroup loan repaid
-
6,000
Share buyback programme
17
(2,485)
(3,815)
Funds advanced in EBT
17
(382)
-
Payment of lease liabilities
(237)
(420)
Net cash used in financing activities
(15,626)
(10,216)
Net decrease in cash and cash equivalents
(22,145)
(3,298)
Cash and cash equivalents at the start of the year
25,102
28,400
Cash and cash equivalents at the end of the year
19
2,957
25,102
The accompanying notes are an integral part of these financial statements.
127
Craneware plc | Annual Report & Financial Statements 2024
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 64
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 8 to
29 contains information regarding the Group’s activities and
an overview of the development of its products, services and
the environment in which it operates. The Group’s revenue,
operating results, cash flows and balance sheet are detailed
in the financial statements and explained in the Financial
Review on pages 12 to 16.
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 $34.6m as well as a committed but undrawn
facility available to it of $80m.
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, with minor
but appropriate rebalancing of the cost base, 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, 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
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 $1.2595/£1 (FY23:
$1.2043/£1). Monetary assets and liabilities expressed in
foreign currencies are translated into US dollars at rates of
exchange ruling at the Balance Sheet date $1.2645/£1 (FY23:
$1.2619/£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.
Craneware plc | Annual Report & Financial Statements 2024
128
Notes to the Financial Statements
(continued)
1 Principal accounting policies (continued)
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.
Disclosure of Accounting Policies (Amendments to IAS 1)
(effective 1 January 2023*),
Definition of Accounting Estimates (Amendments to IAS 8)
(effective 1 January 2023*).
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 2024*),
Non-current Liabilities with Covenants (Amendments to IAS
1) (effective 1 January 2024*),
Clarify the accounting where there is a lack of
exchangeability (Amendments to IAS 21) (effective 1 January
2025*).
*Effective for accounting periods starting on or after this date.
Basis of consolidation
The consolidated Statement of Comprehensive Income,
Balance Sheet, Statement of Changes in Equity and
Statement of Cash Flows include the financial statements of
the Company and its subsidiaries.
Subsidiaries are all entities over which the Group has
control. The Group controls an entity when the Group is
exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect
those returns through its power over the entity. Subsidiaries
are fully consolidated from the date on which control
transferred to the Group and are deconsolidated from the
time control ceases.
Intra-Group revenue and profits / (losses) are eliminated on
consolidation and all sales and profit figures relate to
external transactions only.
As permitted by Section 408(4) of the Companies Act 2006,
the Statement of Comprehensive Income of the Parent
Company is not presented although the Company
performance can 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.
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:
1. Identify the contract;
2. Identify the performance obligations in the
contract;
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 licenses,
professional services, including training and consultancy,
and transactional fees.
Revenue from software licenses
Revenue from both on-premise and cloud-based software
licensed 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:
Craneware plc | Annual Report & Financial Statements 2024
129
Notes to the Financial Statements
(continued)
1 Principal accounting policies (continued)
•
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 licensed
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. 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.
Share-based payments
The Group grants share options and / or conditional share
awards to certain employees. In accordance with IFRS 2,
“Share-Based
Payments”,
equity-settled
share-based
payments are measured at fair value at the date of grant.
Fair value is measured using the Black-Scholes pricing model
or the Monte Carlo pricing model, as appropriately
amended, taking into account the terms and conditions of
the share-based awards.
Craneware plc | Annual Report & Financial Statements 2024
130
Notes to the Financial Statements
(continued)
1
Principal accounting policies (continued)
Revenue from contracts with customers (continued)
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 year as
adjusted for items which are non-assessable or disallowable.
It is calculated using taxation rates that have been enacted
or substantively enacted by the Balance Sheet date.
Deferred taxation is computed using the liability method.
Under this method, deferred tax assets and liabilities are
determined based on temporary differences between the
financial reporting and tax bases of assets and liabilities.
They are measured using enacted rates and laws that will be
in effect when the differences are expected to reverse.
Deferred tax is not accounted for if it arises from initial
recognition of an asset or liability in a transaction that at the
time of the transaction does not affect accounting or taxable
profit or loss. Deferred tax assets are recognised to the
extent that it is probable that future taxable profits will arise
against which the temporary differences will be utilised.
Deferred tax is provided on temporary differences arising on
investments in subsidiaries except where the timing of the
reversal of the temporary difference is controlled by the
Group and it is probable that the temporary difference will
not reverse in the foreseeable future. Deferred tax assets
and liabilities arising in the same tax jurisdiction are offset.
In the UK and the US, the Group is entitled to a tax deduction
for amounts treated as compensation on exercise of certain
employee share options and on the vesting of conditional
share awards under each jurisdiction’s tax rules. “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.
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131
Notes to the Financial Statements
(continued)
1 Principal accounting policies (continued)
Intangible Assets (continued)
(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
licensed 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.
Craneware plc | Annual Report & Financial Statements 2024
132
Notes to the Financial Statements
(continued)
1 Principal accounting policies (continued)
Property, plant and equipment
All property, plant and equipment are stated at historic cost
less depreciation. Costs are measured at the original
purchase price of the asset and the costs attributable to
bring the asset to its working condition for its intended use.
Depreciation is provided to write off the cost less estimated
residual values of tangible fixed assets over their expected
useful lives. Right-of-use assets are depreciated over their
expected useful lives on the same basis as owned assets. It
is calculated at the following rates:
Leased property
- over the life of the lease straight line
Computer equipment
- between 20% - 33% straight line
Tenant’s improvements - between 10% - 20% straight line
Office furniture
- 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.
Craneware plc | Annual Report & Financial Statements 2024
133
Notes to the Financial Statements
(continued)
1 Principal accounting policies (continued)
Impairment of financial assets
IFRS 9 uses a forward-looking expected credit loss model.
The Group recognises an allowance for expected credit
losses (ECLs) for all debt instruments not held at fair value
through profit and loss. ECLs are based on the difference
between the contractual cash flows due in accordance with
the contract and all the cash flows the Group expects to
receive.
For trade receivables, the Group applies a simplified
approach to calculating ECLs. Therefore the Group does not
track changes in credit risk but instead recognises a loss
allowance based on lifetime ECLs at each reporting date.
The expected credit losses on these trade receivables are
estimated using a provision matrix based on the Group’s
historical credit loss experience, adjusted for management
judgement concerning factors that are specific to the
receivables, general economic conditions and assessment of
the current as well as the forecast direction of conditions at
the reporting date based on reasonable and supportable
information available. A financial asset is written off when
there is no reasonable expectation of recovering the
contractual cashflow.
Amounts owed from Group companies and other
receivables due to the Company are also subject to the
impairment requirements of IFRS 9. All amounts owed from
Group companies are repayable on demand and sufficient
funds are held or are readily available to satisfy repayment
of the loans. Other debtors consists mainly of the loan to the
Employee
Benefit
Trust.
Therefore,
the
identified
impairment loss was assessed as immaterial for both.
Borrowings
Borrowings represent bank loans, initially measured at fair
value net of transaction costs and subsequently measured at
amortised cost, using the effective interest rate method.
Finance charges are accounted for in the profit or loss over
the term of the loan.
Financial liabilities
Trade payables and other short term liabilities are
recognised initially at fair value and subsequently measured
at amortised cost using the effective interest method.
Other provisions
Provisions are recognised where the Group has a present
obligation (legal or constructive) as a result of a past event,
it is probable that an outflow of resources embodying
economic benefits will be required to settle the obligation
and a reliable estimate can be made of the amount of the
obligation.
Other provisions relate to employer taxes due in relation to
employee share awards from all share plans (FY23: 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, Inc. (‘Sentry’) 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
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.
Craneware plc | Annual Report & Financial Statements 2024
134
Notes to the Financial Statements
(continued)
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:
Critical 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. See Note 13 for
current year assumptions.
Other Estimates
•
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.
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 year, 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 US dollars 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 $1,922,000 lower/ higher
respectively as a result of foreign exchange gains/losses on
Sterling denominated transactions and the translation of
Sterling denominated current liabilities. The Directors
believe that, consistent with the prior year, 10% is
appropriate for the sensitivity analysis.
(ii) Cash flow and interest rate risk
The Group’s external borrowings at the balance sheet date
comprise loan facilities on floating interest rates charged on
a daily basis at margin and compounded reference rate. The
Group’s main interest rate risk arises from these loan
facilities and considers the exposure to interest rate risk
acceptable. The Directors believe that a 25 basis point move
in interest rates on loans would, with all other variables held
constant, alter post-tax profit and equity for the year in the
region of $151,000 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
$140,000 higher/ lower respectively.
The Directors believe that 25 basis points is appropriate for
the sensitivity analysis based on recent market conditions.
135
Craneware plc | Annual Report & Financial Statements 2024
Notes to the Financial Statements (continued)
3 Financial risk management (continued)
Financial risk factors (continued)
(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 64.
(d) Liquidity risk
Management reviews the liquidity position of the Group to ensure that sufficient cash is available to meet the underlying needs
of the Group as they fall due for payment.
The table below analyses the Group’s financial liabilities which will be settled on a net basis into relevant maturity grouping based
on the remaining period from the Balance Sheet date to the contractual maturity date. The amounts disclosed in the table are the
contractual undiscounted cash flows.
Less than 1
year
Between 1
and 2 years
Between 2
and 5 years
Over 5 years
Total
At 30 June 2024
$’000
$’000
$’000
$’000
$’000
Trade and other payables
15,516
-
-
-
15,516
Lease liabilities
952
954
1,765
1,651
5,322
Borrowings
8,000
28,000
-
-
36,000
24,468
28,954
1,765
1,651
56,838
At 30 June 2023
Trade and other payables
14,006
-
-
-
14,006
Lease liabilities
1,309
420
2,050
-
3,859
Borrowings
13,808
13,234
72,660
-
99,702
29,203
13,654
74,710
-
117,567
There is no difference between the undiscounted trade and other payable liabilities and the amounts shown in Note 21 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 21 and the Group Balance Sheet is future finance
charge on the lease liabilities of $0.5m.
Borrowings relate entirely a term and revolving loan as described in Note 20 and are floating rate financial liabilities. The difference
between the undiscounted cash flows above and the liabilities per Note 20 is future finance charge on the borrowings of $0.6m.
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 has a debt facility of secured funding provided by our consortium of banking partners consisting of a term
loan of $16m (FY23: $24m) and a $100m revolving credit facility. During the year, $8.0m (FY23: $8.0m) of the term loan has been
Craneware plc | Annual Report & Financial Statements 2024
136
Notes to the Financial Statements (continued)
3 Financial risk management (continued)
Capital risk management (continued)
repaid on schedule and the revolving credit facility drawn down has been reduced by an additional $40m (FY23: $20m) and all
covenants have been met. Net borrowings of $0.8m (FY23: $4.5m) 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 licenses 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.
Revenue is analysed as follows:
2024
$’000
2023
$’000
Software licensing
138,687
143,125
Professional services – recurring
4,907
4,533
Transactional revenue
24,708
16,018
Contracted recurring revenue
168,302
163,676
Professional services – non-recurring
7,174
9,208
Platform revenues – non-recurring
13,792
1,134
Total revenue
189,268
174,018
Contract assets
The Group has recognised the following assets related to contracts with customers:
2024
$’000
2023
$’000
Prepaid commissions and royalties < 1 year
2,485
2,206
Prepaid commissions and royalties > 1 year
3,235
2,758
Total revenue
5,720
4,964
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 2023 were $2.2m.
Contract liabilities
The following table shows the total contract liabilities from software license and professional service contracts:
2024
$’000
2023
$’000
Software licensing
56,759
47,037
Professional services
10,058
5,481
Total contract liabilities
66,817
52,518
Contract liabilities are included within deferred income in the Balance Sheet.
Revenue of $49.4m was recognised during the year in relation to contract liabilities as of 30 June 2023.
Craneware plc | Annual Report & Financial Statements 2024
137
Notes to the Financial Statements (continued)
4 Revenue from contracts with customers (continued)
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:
Total unsatisfied
Expected recognition
Revenue expected to be recognised
performance obligations
$’000
< 1 year
$’000
1 to 2 years
$’000
2 to 3 years
$’000
> 3 years
$’000
At 30 June 2024
- Software
301,215
119,167
93,304
57,086
31,658
- Professional services
19,493
12,947
3,309
1,847
1,390
Total at 30 June 2024
320,708
132,114
96,613
58,933
33,048
At 30 June 2023
- Software
348,919
124,279
99,613
67,757
57,270
- Professional services
14,376
8,313
3,207
1,981
875
Total at 30 June 2023
363,295
132,592
102,820
69,738
58,145
Revenue of $132.6m was recognised during the year in relation to unsatisfied performance obligations as of 30 June 2023.
The majority of these performance obligations are unbilled at the Balance Sheet date and therefore not reflected in these financial
statements.
5 Operating profit
The following items have been included in arriving at operating profit:
2024
$’000
2023
$’000
Employee costs (Note 6)
92,496
87,755
Employee costs capitalised
(9,811)
(10,261)
Depreciation of property, plant and equipment (Note 12)
3,293
3,451
Amortisation of intangible assets – other (Note 13)
9,169
7,781
Amortisation of intangible assets – acquired intangibles (Note 13)
20,921
20,930
Impairment of trade receivables (Note 15)
1,822
463
Exceptional items*
675
510
Operating lease rents for premises
12
-
* Exceptional items relate to integration costs associated with the purchase of Sentry Data Systems, Inc.
Included in reaching operating profit is the movement in the provision for impairment of trade receivables during the year of a
$1,164,000 charge, as per Note 15, plus $53,000 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:
2024
$’000
2023
$’000
Statutory audit – Parent Company financial statements and consolidation
515
477
Statutory audit – non recurring fees
-
-
515
477
Craneware plc | Annual Report & Financial Statements 2024
138
Notes to the Financial Statements (continued)
6 Employee costs
The average monthly number of people employed by the Group and Company during the year, excluding non-executive Directors,
is analysed below:
2024
Group
Number
2023
Group
Number
2024
Company
Number
2023
Company
Number
Sales and distribution
98
103
1
1
Client servicing
245
241
39
37
Research and development
292
281
118
111
Administration
112
109
45
44
747
734
203
193
Employment costs of all employees excluding non-executive Directors:
2024
Group
$’000
2023
Group
$’000
2024
Company
$’000
2023
Company
$’000
Wages and salaries
78,541
75,890
19,559
19,705
Social security costs
6,512
6,049
1,849
1,668
Other pension costs
2,956
2,824
984
919
Share-based payments
4,487
2,992
2,035
1,196
Total direct costs of employment
92,496
87,755
24,427
23,488
Employee costs are included in Cost of Sales and Operating Costs.
The remuneration of the highest paid Director is $1.6m (FY23: $1.2m), including the $0.8m gain from exercising share options and
vested LTIPs in the year (which were granted in 2013, 2020 and 2020 respectively). Full details of Directors’ emoluments and share
option exercises are detailed in the Remuneration Committee’s Report on page 111 and key management compensation is given
in Note 23, Related Party Transactions.
Contributions are made on behalf of three of the executive Directors to a defined contribution retirement benefit scheme
(FY23: three).
7 Share-based payments
During the year the Group operated seven (FY23: seven) 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 112 and 113. 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 $4,486,622 (FY23: $2,992,270) was recognised in the Consolidated Statement of Comprehensive Income
for the year, as stated in Note 6. This comprises a charge of $359,349 (FY23: $238,542 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 $4,127,273 (FY23: $3,230,812) 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 $2,034,507 (FY23: $1,196,370) was
recognised in the Statement of Comprehensive Income for the year, as stated in Note 6 above. This comprises a charge of $359,349
(FY23: $238,542 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 $1,675,158 (FY23: $1,434,912) share-based payment charge
for the Company in respect of awards granted from the share plans as shown in the following table:
Craneware plc | Annual Report & Financial Statements 2024
139
Notes to the Financial Statements (continued)
7 Share-based payments (continued)
Group
Company
2024
$’000
2023
$’000
2024
$’000
2023
$’000
Type of award and name of share plan
Share options granted under the 2016 Unapproved Share Option Plan
851
558
80
81
Share options granted under the 2016 Schedule 4 Share Option Plan
131
71
131
71
Share options granted under the 2018 Employee Stock Purchase Plan
-
31
-
-
Share options granted under the 2018 SAYE Option Plan
5
62
5
62
Conditional share awards granted under the 2016 LTIP
1,180
1,780
635
941
Conditional share awards granted under the 2022 LTIP
1,960
729
824
280
Total share-based payments charge
4,127
3,231
1,675
1,435
Share option plans
Share options, granted by the Company to employees in respect of the following number of Ordinary Shares, were outstanding at
30 June 2024.
Date of
Grant
Exercise price
(GBP)
Exercise
price (USD)
Remaining
life at 1 July
2023 (years)
No. of
options at 1
July 2023
Granted
Exercised
Lapsed
No. of
options at 30
June 2024
Remaining
life at 30
June 2024
(years)
2007 Share Option Plan
10 Sep 2013
£3.950
$6.21
0.2
34,472
-
(34,472)
-
-
-
22 Sep 2014
£5.225
$8.39
1.2
94,416
-
-
-
94,416
0.2
09 Mar 2016
£7.500
$10.66
2.7
100,758
-
(5,610)
-
95,148
1.7
12 Sep 2016
£11.775
$15.63
3.2
36,469
-
-
-
36,469
2.2
2016 Unapproved Option Plan
24 Mar 2017
£12.375
$15.44
3.7
29,672
-
(14,080)
-
15,592
2.7
17 Jan 2018
£17.750
$24.45
4.5
42,321
-
(3,317)
(845)
38,159
3.5
05 Sep 2018
£27.100
$34.88
5.2
32,425
-
-
(1,075)
31,350
4.2
04 Sep 2019
£19.000
$23.01
6.2
12,562
-
(2,699)
(519)
9,344
5.2
02 Oct 2020
£15.050
$19.36
7.3
40,750
-
(12,305)
(12,459)
15,986
6.3
18 Nov 2021
£26.100
$35.21
8.4
109,062
-
-
(12,730)
96,332
7.4
23 Sep 2022
£20.500
$23.03
9.2
158,659
-
(513)
(15,093)
143,053
8.2
18 Nov 2022
£21.100
$25.09
9.4
71,378
-
-
(11,384)
59,994
8.4
06 Sep 2023
£15.000
$18.75
-
-
316,064
-
(32,208)
283,856
9.2
2016 Schedule 4 Option Plan
24 Mar 2017
£12.375
$15.44
3.7
11,110
-
-
-
11,110
2.7
17 Jan 2018
£17.750
$24.45
4.5
5,914
-
(1,408)
-
4,506
3.5
05 Sep 2018
£27.100
$34.88
5.2
3,229
-
-
(90)
3,139
4.2
04 Sep 2019
£19.000
$23.01
6.2
2,055
-
(332)
(955)
768
5.2
02 Oct 2020
£15.050
$19.36
7.3
7,000
-
(2,406)
(1,983)
2,611
6.3
18 Nov 2021
£26.100
$35.21
8.4
19,866
-
-
(2,780)
17,086
7.4
23 Sep 2022
£20.500
$23.03
9.2
26,278
-
-
(3,758)
22,520
8.2
18 Nov 2022
£21.100
$25.09
9.4
7,050
-
-
(1,192)
5,858
8.4
06 Sep 2023
£15.000
$18.75
-
-
77,153
-
(11,423)
65,730
9.2
2018 SAYE Option Plan
20 Apr 2020
£11.475
$14.32
0.3
22,980
-
(20,019)
(2,961)
-
-
19 Apr 2021
£18.360
$25.39
1.3
2,018
-
(1,568)
(254)
196
0.3
870,444
393,217
(98,729)
(111,709) 1,053,223
Craneware plc | Annual Report & Financial Statements 2024
140
Notes to the Financial Statements (continued)
7 Share-based payments (continued)
The weighted average share price at the date of exercise of share options in the year ended 30 June 2024 was £18.36 ($22.99)
(FY23: £16.72 ($19.58)). The market value of Craneware plc Ordinary Shares at 30 June 2024 was £23.10 ($29.21) per share. The
weighted average remaining contractual life of the options outstanding at 30 June 2024 is 6.4 years (at 30 June 2023: 5.8 years).
2024
2023
Number of
Options
Weighted average
exercise price (£)
Number of
Options
Weighted average
exercise price (£)
Balance outstanding at beginning of the year
870,444
16.38
701,191
14.72
Share options granted during the year
393,217
15.00
301,886
20.67
Exercised during the year
(98,729)
9.97
(31,687)
7.17
Lapsed during the year
(111,709)
18.28
(100,946)
20.61
Balance outstanding at end of the year
1,053,223
16.26
870,444
16.38
Exercisable at end of the year
358,794
11.52
428,383
10.93
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. During
the year ended 30 June 2024, share options were granted to certain employees as summarised and described below.
2016
Unapproved
Option Plan
2016
Schedule-4
Option Plan
Total
Grant date
In FY24
Description of share options granted to employees in FY24
Number of
Options
Number of
Options
Number of
Options
06-Sep-23
Share options granted with service-based vesting condition only
262,064
63,153
325,217
06-Sep-23
Share options granted with market-based performance conditions
27,000
7,000
34,000
06-Sep-23
Share options granted with non-market performance condition
27,000
7,000
34,000
Total share options granted during the year ended 30 June 2024
316,064
77,153
393,217
Craneware plc | Annual Report & Financial Statements 2024
141
Notes to the Financial Statements (continued)
7 Share-based payments (continued)
Share options granted with service-based vesting condition only
As explained in the Remuneration Committee’s Report on page 109, share options were granted on 6 September 2023 and, in
prior financial years, on 23 September 2022, on 18 November 2022 and 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:
Date of Grant
06-Sep-23
18-Nov-22
23-Sep-22
18-Nov-21
Share price at date of grant (£)
£14.85
£21.30
£20.50
£26.10
Share price at date of grant ($)
$18.56
$25.33
$23.03
$35.21
Vesting period (years)
3
3
3
3
Expected volatility
43.9%
42.7%
43.6%
42.4%
Risk free rate
4.75%
3.20%
4.01%
0.53%
Dividend yield
2.38%
1.68%
1.63%
1.16%
Exercise price (£)
£15.00
£21.10
£20.50
£26.10
Exercise price ($)
$18.75
$25.09
$23.03
$35.21
Shares under option at date of grant (number)
325,217
32,888
218,553
160,339
Fair value per option
$5.61
$7.27
$7.01
$9.52
For the estimation of the fair value of the share options granted on 6 September 2023, the expected volatility was determined by
calculating the historic volatility of the Company’s share price over the historic three year period to the date of grant.
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
on 6 September 2023 and, in prior financial years, in November 2021 and in October 2020 are outlined in the Remuneration
Committee’s Report on page 107.
On 6 September 2023 share options were granted from the 2016 Unapproved and the 2016 Schedule 4 Option Plans to certain
employees relating to a total of 54,000 and 14,000 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 6 September 2023, to the executive Directors of the
Company and to senior managers, as described in the Remuneration Committee’s Report on page 106. The fair value of the share
plan awards granted on 6 September 2023, which are subject to the relative TSR performance condition, were estimated using a
Monte Carlo pricing model as outlined below.
Craneware plc | Annual Report & Financial Statements 2024
142
Notes to the Financial Statements (continued)
7 Share-based payments (continued)
Share options granted with performance conditions (continued)
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
06-Sep-23
18-Nov-22
18-Nov-21
02-Oct-20
04-Sep-19
Share price at date of grant (£)
£14.85
£21.30
£26.10
£15.05
£19.00
Share price at date of grant ($)
$18.56
$25.33
$35.21
$19.36
$23.01
Vesting period (years)
3
3
3
3
3
Expected volatility
43.9%
42.7%
41.1%
52.5%
43.5%
Risk free rate
4.92%
3.18%
0.36%
-0.04%
0.38%
Exercise price (£)
£15.00
£21.10
£26.10
£15.05
£19.00
Exercise price ($)
$18.75
$25.09
$35.21
$19.36
$23.01
Shares under option at date of grant
34,000
25,222
37,342
82,177
33,469
Fair value per option
$6.01
$8.59
$8.06
$3.98
$5.63
Within the assumptions used for the estimation of the fair values of share options granted on 6 September 2023, the expected
volatility was determined by calculating the historic volatility of the Company’s share price over the previous three years.
Non-Market performance conditions
Share options in respect of a total of 34,000 Ordinary Shares in the Company were also granted on 6 September 2023 but with
performance conditions based on growth in adjusted Earnings per Share (EPS) (i.e. a non-market vesting condition) measured over
three consecutive three year periods. The Remuneration Committee’s Report on page 106 contains details of the performance
conditions.
The Group recognises the fair value of these share options, as a share-based payments expense, over the vesting period based on
the number of share options which are expected to vest. At the end of each reporting period, the Group revises its estimates of
the number of share options that are expected to vest based on the non-market vesting condition. The impact of the revision to
original estimates, if any, are recognised in the Statement of Comprehensive Income, with a corresponding adjustment to equity.
The fair value of these share options was estimated using the Black-Scholes option pricing model, as appropriately adjusted, based
on the following assumptions:
Date of Grant
06-Sep-23
18-Nov-22
Share price at date of grant (£)
£14.85
£21.30
Share price at date of grant ($)
$18.56
$25.33
Vesting period (years)
3
3
Expected volatility
43.9%
42.7%
Risk free rate
4.75%
3.20%
Dividend yield
2.38%
1.68%
Exercise price (£)
£15.00
£21.10
Exercise price ($)
$18.75
$25.09
Shares under option at date of grant (number)
34,000
25,223
Fair value per option
$5.58
$7.24
Craneware plc | Annual Report & Financial Statements 2024
143
Notes to the Financial Statements (continued)
7 Share-based payments (continued)
The Craneware plc Employee Stock Purchase Plan (2018)
The Craneware plc SAYE Option Plan (2018)
Share options were granted under the Save As You Earn (SAYE) option plan and the Employee Stock Purchase Plan (ESPP), to those
employees who chose to participate, in the financial years ended 30 June 2020 and 30 June 2021. The exercise price of those share
options was at a 15% discount to the Company share price on the business day immediately preceding the date of grant, in
accordance with the rules of the ESPP and the SAYE plans.
The fair value of the share options granted under these two Plans was estimated using the Black-Scholes option pricing model, as
appropriately adjusted, based on the following assumptions:
Date of Grant
19-Apr-21
23-Mar-21
20-Apr-20
24-Mar-20
Share Option Plan
SAYE
ESPP
SAYE
ESPP
Share price at date of grant (£)
£25.50
£21.60
£20.50
£13.10
Share price at date of grant ($)
$35.27
$29.91
$25.58
$15.23
Vesting period (years)
3
2
3
2
Expected volatility
54.2%
57.9%
50.6%
55.8%
Risk free rate
0.12%
0.02%
0.11%
0.11%
Dividend yield
1.01%
1.01%
1.58%
1.58%
Exercise price (£)
£18.360
£18.360
£11.475
£11.475
Exercise price ($)
$25.39
$25.42
$14.32
$13.34
Number of employees
18
29
67
37
Shares under option at date of grant (number)
4,498
7,420
42,328
21,669
Fair value per option
$16.51
$16.19
$8.89
$8.27
The expected volatility was determined by calculating the historic volatility of the Group’s share price over the previous three and
two years respectively
Long Term Incentive Plans
The Craneware plc Long Term Incentive Plan (2016) (the ‘2016 LTIP’)
Conditional share awards were granted under the 2016 LTIP to certain senior managers and to the executive Directors from
financial year 2017 through to November 2021. The market-based performance conditions, measured over three consecutive
three year periods, applicable to those conditional share awards granted in November 2021 and in October 2020 are outlined in
the Remuneration Committee’s Report.
Number of
conditional
share awards
2024
Number of
conditional
share awards
2023
Balance outstanding at 1 July
281,046
464,173
Awards granted in the year
-
-
Vested awards released during the year
(111,246)
(68,356)
Forfeited / lapsed during the year
(73,822)
(114,771)
Balance outstanding at 30 June
95,978
281,046
Craneware plc | Annual Report & Financial Statements 2024
144
Notes to the Financial Statements (continued)
7 Share-based payments (continued)
Long Term Incentive Plans (continued)
The remaining weighted average contractual life of the conditional share awards outstanding from the 2016 LTIP at 30 June 2024
is 0.4 years (at 30 June 2023: 0.8 years).
The fair values of the conditional share awards granted from the 2016 LTIP in financial years 2020 through 2022 were estimated
using the Monte Carlo pricing model, as appropriately adjusted, with the following main assumptions:
Date of Grant
18-Nov-21
02-Oct-20
04-Sep-19
Share price at date of grant (£)
£26.10
£15.05
£19.00
Share price at date of grant ($)
$35.21
$19.36
$23.01
Vesting period (years)
3
3
3
Expected volatility
41.1%
52.5%
43.5%
Risk free rate
0.36%
-0.04%
0.38%
Dividend yield
1.44%
2.27%
1.74%
Fair value per conditional share award
$19.95
$9.33
$16.47
Within the assumptions used for the estimation of the fair values of conditional awards granted in financial years 2020 and 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
reflected 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’)
As explained in last year’s Annual Report and Financial Statements, this 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 in November 2022.
Conditional share awards were granted under this Plan, to certain senior managers and to the executive Directors, on 6 September
2023 and also, following the AGM, in November 2022.
Number of
conditional
share awards
Number of
conditional
share awards
2024
2023
Balance outstanding at 1 July
250,876
-
Awards granted in the year
332,445
256,088
Vested awards released during the year
(3,012)
-
Forfeited / lapsed during the year
(44,846)
(5,212)
Balance outstanding at 30 June
535,463
250,876
The remaining weighted average contractual life of the conditional share awards outstanding under the 2022 LTIP at 30 June 2024
is 1.9 years (at 30 June 2023: 2.4 years).
Craneware plc | Annual Report & Financial Statements 2024
145
Notes to the Financial Statements (continued)
7 Share-based payments (continued)
Long Term Incentive Plans (continued)
The performance conditions, each measured over three consecutive three year periods, applicable to the conditional share awards
granted on 6 September 2023, are outlined in the Remuneration Committee’s Report on page 106.
Market-based performance conditions
Performance conditions, based on a relative TSR measure, apply to 166,222 of the conditional share awards granted on 6
September 2023. 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
06-Sep-23
18-Nov-22
Share price at date of grant (£)
£14.85
£21.30
Share price at date of grant ($)
$18.56
$25.33
Vesting period (years)
3
3
Expected volatility
43.9%
42.7%
Risk free rate
4.92%
3.18%
Dividend yield
2.38%
1.68%
Shares subject to conditional share awards with
market-based performance conditions (number)
166,222
121,451
Fair value per conditional share award
$13.45
$21.12
Within the assumptions used for the estimation of the fair values of the conditional awards granted on 6 September 2023, the
expected volatility was determined by calculating the historic volatility of the Company’s share price over the previous three years.
Non-Market performance conditions
For a further 166,223 of the conditional share awards granted on 6 September 2023, which have performance conditions based
on growth in adjusted EPS of the Group as outlined in the Remuneration Committee’s Report, the fair value of these conditional
share awards is recognised as a share-based payments expense over the vesting period based on the number of awards which are
expected to vest. At the end of each reporting period, the Group revises its estimates of the number of contingent share awards
that are expected to vest based on the non-market vesting condition. The fair value of these conditional share awards was
estimated using the Black-Scholes option pricing model, as appropriately adjusted, based on the following assumptions:
Date of Grant
06-Sep-23
18-Nov-22
Share price at date of grant (£)
£14.85
£21.30
Share price at date of grant ($)
$18.56
$25.33
Vesting period (years)
3
3
Expected volatility
43.9%
42.7%
Risk free rate
4.92%
3.18%
Dividend yield
2.38%
1.68%
Shares subject to conditional share awards with
non-market performance conditions (number)
166,223
121,451
Fair value per conditional share award
$18.75
$25.09
Conditional share awards granted with service-based vesting condition only
In the prior financial year, conditional share awards in respect of 13,186 Ordinary Shares in the Company were 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 for the other conditional share awards granted on that date with non-market
performance conditions.
Craneware plc | Annual Report & Financial Statements 2024
146
Notes to the Financial Statements (continued)
7 Share-based payments (continued)
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 2024
(159,336 Ordinary Shares at 30 June 2023).
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.
8 Finance income and expense
2024
2023
Finance income
$’000
$’000
Deposit interest
1,143
214
Total finance income
1,143
214
2024
2023
Finance expense
$’000
$’000
Interest on borrowings (Note 20)
4,964
6,212
Interest on lease liabilities
166
145
Total finance expense
5,130
6,357
Craneware plc | Annual Report & Financial Statements 2024
147
Notes to the Financial Statements (continued)
9 Tax on profit on ordinary activities
2024
2023
$'000
$'000
Profit on ordinary activities before tax
15,747
13,085
Current tax
Corporation tax on profits of the year
10,715
5,596
Adjustments for prior years
65
1,080
Total current tax charge
10,780
6,676
Deferred tax
Deferred tax for current year
(6,097)
(3,324)
Adjustments for prior years
(630)
485
Change in UK tax rate
(9)
16
Total deferred tax credit
(6,736)
(2,823)
Tax on profit on ordinary activities
4,044
3,853
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 25% (FY23: 20.5%)
3,937
2,682
Effects of:
Adjustment for prior years
(565)
1,566
Change in tax rate on opening deferred tax balance
(9)
23
Additional US taxes on profits 25% (FY23: 25%)
229
392
Internally developed software
(235)
628
Expenses not deductible for tax purposes
656
246
Income not taxable in the year
(748)
(1,004)
Movement in/ (use of) tax losses
1,018
(427)
Spot rate remeasurement
(27)
240
(Deduction)/ expense on share plan charges
(271)
(535)
Other
59
42
Total tax charge
4,044
3,853
Craneware plc | Annual Report & Financial Statements 2024
148
Notes to the Financial Statements (continued)
10 Dividends
The dividends paid during the year were as follows:
2024
$’000
2023
$’000
Final dividend, re 30 June 2023 – 20.19 cents (16.0 pence)/share
7,046
6,645
Interim dividend, re 30 June 2024 – 16.51 cents (13.0 pence)/share
5,752
5,474
Total dividends paid to Company shareholders in the year
12,798
12,119
Prior year:
Final dividend 18.80 cents (15.5 pence)/share
Interim dividend 15.13 cents (12.5 pence)/share
The proposed final dividend of 20.23 cents (16.0 pence), as noted on page 15, for the year ended 30 June 2024 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
2024
No. of Shares
000s
2023
No. of Shares
000s
Weighted average number of Ordinary Shares for the purposes of basic
earnings per share (excluding own shares held)
34,957
35,146
Effect of dilutive potential Ordinary Shares: share options and LTIPs
335
289
Weighted average number of shares for the purposes of diluted earnings per
share
35,292
35,435
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.
Craneware plc | Annual Report & Financial Statements 2024
149
Notes to the Financial Statements (continued)
11 Earnings per share (continued)
Profit for the year
2024
$’000
2023
$’000
Profit for the year attributable to equity holders of the parent
11,703
9,232
Acquisition interigation costs (tax adjusted)
507
405
Amortisation of acquired intangibles (tax adjusted)
20,921
20,930
Adjusted profit for the year attributable to equity holders of the parent
33,131
30,567
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
2024
cents
2023
cents
Basic EPS
33.5
26.3
Diluted EPS
33.2
26.1
Adjusted basic EPS
94.8
87.0
Adjusted diluted EPS
93.9
86.3
12 Property, plant and equipment
Group
Leased
Properties
$'000
Computer
Equipment
$'000
Office
Furniture
$'000
Tenants
Improvements
$’000
Total
$’0000
Cost
At 1 July 2023
7,845
9,917
889
1,751
20,402
Additions
2,455
863
88
240
3,646
Disposals
(1,308)
(676)
(376)
(162)
(2,522)
At 30 June 2024
8,992
10,104
601
1,829
21,526
Accumulated depreciation
At 1 July 2023
4,736
4,943
767
1,492
11,938
Charge for year
1,335
1,848
49
61
3,293
Amortisation on disposals
(1,205)
(663)
(310)
(119)
(2,297)
At 30 June 2024
4,866
6,128
506
1,434
12,934
Net Book Value at 30 June 2024
4,126
3,976
95
395
8,592
Cost
At 1 July 2022
5,981
8,996
888
1,778
17,613
Additions
2,521
504
3
13
3,041
Reclassification
-
450
-
-
450
Disposals
(657)
(3)
(2)
(40)
(702)
At 30 June 2023
7,845
9,917
889
1,751
20,402
Accumulated depreciation
At 1 July 2022
3,409
3,223
712
1,450
8,794
Charge for year
1,607
1,721
55
68
3,451
Depreciation on disposals
(280)
(1)
-
(26)
(307)
At 30 June 2023
4,736
4,943
767
1,492
11,938
Net Book Value at 30 June 2023
3,109
4,974
122
259
8,464
Craneware plc | Annual Report & Financial Statements 2024
150
Notes to the Financial Statements (continued)
12 Property, plant and equipment (continued)
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.
A new right-of-use property lease was entered into during the year for a term of 11 years. Another right -of-use leased property
was vacated during the year at the end of the lease term. There were no other additions or disposals during the year. Depreciation
of $1,335,000 (FY23: $1,607,000) was recognised during the year in respect of right-of-use assets.
The average remaining lease term is 4.3 years (FY23: 2.4 years).
The Group does not have any other right-of-use assets other than those disclosed under leased properties.
Company
Leased
Properties
$'000
Computer
Equipment
$'000
Office
Furniture
$'000
Tenants
Improvements
$’000
Total
$’0000
Cost
At 1 July 2023
4,073
1,294
487
1,498
7,352
Additions
-
204
9
-
213
Disposals
-
(404)
-
-
(404)
At 30 June 2024
4,073
1,094
496
1,498
7,161
Accumulated depreciation
At 1 July 2023
2,161
1,036
464
1,343
5,004
Charge for year
417
91
10
32
550
Depreciation on disposals
-
(400)
-
-
(400)
At 30 June 2024
2,578
727
474
1,375
5,154
Net Book Value at 30 June 2024
1,495
367
22
123
2,007
Cost
At 1 July 2022
1,988
1,096
486
1,494
5,064
Additions
2,085
200
1
4
2,290
Disposals
-
(2)
-
-
(2)
At 30 June 2023
4,073
1,294
487
1,498
7,352
Accumulated depreciation
At 1 July 2022
1,645
975
455
1,310
4,385
Charge for year
516
62
9
33
620
Depreciation on disposals
-
(1)
-
-
(1)
At 30 June 2023
2,161
1,036
464
1,343
5,004
Net Book Value at 30 June 2023
1,912
258
23
155
2,348
Leased properties
All leased properties are right-of-use assets. These properties consist of office spaces used by the Company in the UK.
There were no additions or disposals of right-of-use assets during the year. Depreciation of $417,000 (FY23: $516,000) was
recognised during the year in respect of right-of-use assets.
The average remaining lease term is 3.6 years (FY23: 4.6 years).
151
Craneware plc | Annual Report & Financial Statements
Notes to the Financial Statements (continued)
13 Intangible assets
Group
Goodwill
$'000
Customer
Relationships
$'000
Proprietary
Software
$'000
Trademarks
$'000
Development
Costs
$’000
Computer
Software
$’000
Total
$’000
Cost
At 1 July 2023
235,486
153,964
52,724
5,000
71,056
4,461
522,69
Additions
-
-
-
-
15,761
5
15,766
Disposals
-
-
-
-
-
(220)
(220)
At 30 June 2024
235,486
153,964
52,724
5,000
86,817
4,246
538,237
Accumulated amortisation and impairment
At 1 July 2023
250
22,773
21,494
1,094
22,084
3,203
70,898
Charge for the year
-
10,066
10,300
555
8,061
1,108
30,090
Amortisation on disposal
-
-
-
-
-
(220)
(220)
At 30 June 2024
250
32,839
31,794
1,649
30,145
4,091
100,768
Net Book Value at 30 June
2024
235,236
121,125
20,930
3,351
56,672
155
437,469
Cost
At 1 July 2022
235,486
153,964
52,724
5,000
56,096
4,840
508,110
Additions
-
-
-
-
14,960
71
15,031
Reclassification
-
-
-
-
-
(450)
(450)
At 30 June 2023
235,486
153,964
52,724
5,000
71,056
4,461
522,691
Accumulated amortisation and impairment
At 1 July 2022
250
12,706
11,187
538
15,607
1,899
42,187
Charge for the year
-
10,067
10,307
556
6,477
1,304
28,711
At 30 June 2023
250
22,773
21,494
1,094
22,084
3,203
70,898
Net Book Value at 30 June
2023
235,236
131,191
31,230
3,906
48,972
1,258
451,793
152
Craneware plc | Annual Report & Financial Statements
Notes to the Financial Statements (continued)
13 Intangible assets (continued)
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:
2024
$’000
2023
$’000
Craneware InSight
11,188
11,188
Sentry
224,048
224,048
Total Goodwill
235,236
235,236
Craneware InSight
The carrying values are assessed for impairment purposes by calculating the value in use of the core Craneware business cash
generating unit. This is the lowest level of which there are separately identifiable cash flows to assess the Goodwill acquired as
part of the Craneware InSight, Inc. purchase.
Sentry
The carrying values are assessed for impairment purposes by calculating the value in use of the Sentry business cash generating
unit. This is the lowest level of which there are separately identifiable cash flows to assess the Goodwill acquired as part of the
Sentry acquisition.
The key assumptions in assessing value in use for the CGU’s are:
Growth rate in perpetuity
Post-tax discount rate
2024
2023
2024
2023
Craneware InSight
2.0%
2.0%
9.0%
9.0%
Sentry
2.0%
2.0%
9.0%
9.0%
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 17%. There are no reasonable possible changes in any of the other assumptions for this CGU that would result in an
impairment. The risk associated with the 340B regulatory environment is monitored consistently and is referenced in the Principal
Risks and Uncertainties section of the Strategic Report.
Craneware plc | Annual Report & Financial Statements 2024
153
Notes to the Financial Statements (continued)
13 Intangible assets (continued)
Company
Development
Computer
Costs
Software
Total
$'000
$'000
$'000
Cost
At 1 July 2023
64,336
658
64,994
Additions
12,146
5
12,151
At 30 June 2024
76,482
663
77,145
Accumulated amortisation
At 1 July 2023
21,092
605
21,697
Charge for the year
6,970
30
7,000
At 30 June 2024
28,062
635
28,697
Net Book Value at 30 June 2024
48,420
28
48,448
Cost
At 1 July 2022
52,868
587
53,455
Additions
11,468
71
11,539
At 30 June 2023
64,336
658
64,994
Accumulated amortisation
At 1 July 2022
15,368
550
15,918
Charge for the year
5,724
55
5,779
At 30 June 2023
21,092
605
21,697
Net Book Value at 30 June 2023
43,244
53
43,297
Craneware plc | Annual Report & Financial Statements 2024
154
Notes to the Financial Statements (continued)
14 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
Held directly by Craneware plc
Craneware US Holdings, Inc.
Ordinary
100%
USA
Holding company
Held indirectly by Craneware plc
Craneware, Inc.
Ordinary
100%
USA
Sales & Marketing
Craneware InSight, Inc.
Ordinary
100%
USA
Software Development
& Professional Services
Craneware Healthcare
Intelligence, LLC
Ordinary
100%
USA
Software Development
SDS Holdco, Inc.
Ordinary
100%
USA
Dormant
SDS Intermediate, Inc.
Ordinary
100%
USA
Dormant
Sentry Data Systems, Inc.
Ordinary
100%
USA
Software Development
& Professional Services
Agilum Healthcare
Intelligence, Inc.
Ordinary
100%
USA
Software Development
2024
$’000
Restated
2023
$’000
Cost
At 1 July and 30 June
277,405
277,405
The results of the Subsidiary companies have been included in the consolidated financial statements. Subsidiary registered
addresses are listed on page 65. The carrying value of the subsidiaries is supported by the underlying net assets and future
cashflows.
See Note 26 for details of the restatement in the prior year.
Craneware plc | Annual Report & Financial Statements 2024
155
Notes to the Financial Statements (continued)
15 Trade and other receivables
Group
Company
Restated
2024
2023
2024
2023
$'000
$'000
$'000
$'000
Trade receivables
48,007
27,594
17,425
13,958
Less: provision for impairment of trade receivables
(2,763)
(3,421)
(1,827)
(2,623)
Net trade receivables
45,244
24,173
15,598
11,335
Other receivables
1,862
1,024
11,035
9,666
Current tax receivable
1,921
-
1,921
1,020
Amounts owed from group companies
-
-
1,992
2,167
Prepayments and accrued income
7,787
8,270
1,765
1,513
Deferred contract costs
5,458
4,715
-
-
62,272
38,182
32,311
25,701
Less non-current other debtors
(399)
-
(337)
-
Less non-current deferred contract costs
(3,235)
(2,758)
-
-
Current portion
58,638
35,424
31,974
25,701
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.
See Note 26 for details of the restatement in the prior year.
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.
Current
< 30 days
30 – 60 days
61 – 90 days
> 90 days
30 June 2024
$’000
$’000
$’000
$’000
$’000
Expected credit loss rate
2.3%
0.1%
2.1%
9.8%
18.1%
Gross carrying amount
21,881
9,855
1,605
5,414
9,252
Expected credit loss
511
13
33
533
1,673
Net carrying amount
21,370
9,842
1,572
4,881
7,579
Current
< 30 days
30 – 60 days
61 – 90 days
> 90 days
30 June 2023
$’000
$’000
$’000
$’000
$’000
Expected credit loss rate
0.3%
0.3%
7.7%
4.9%
46.8%
Gross carrying amount
11,377
5,004
1,677
2,913
6,623
Expected credit loss
37
14
130
143
3,098
Net carrying amount
11,340
4,990
1,548
2,771
3,525
Craneware plc | Annual Report & Financial Statements 2024
156
Notes to the Financial Statements (continued)
15 Trade and other receivables (continued)
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.
Current
< 30 days
30 – 60 days
61 – 90 days
> 90 days
30 June 2024
$’000
$’000
$’000
$’000
$’000
Expected credit loss rate
3.8%
2.0%
2.3%
55.5%
40.2%
Gross carrying amount
13,464
666
343
705
2,247
Expected credit loss
511
13
8
391
904
Net carrying amount
12,953
653
335
314
1,343
Current
< 30 days
30 – 60 days
61 – 90 days
> 90 days
30 June 2023
$’000
$’000
$’000
$’000
$’000
Expected credit loss rate
0.4%
2.0%
14.9%
9.7%
78.9%
Gross carrying amount
9,392
484
616
361
3,105
Expected credit loss
37
10
92
35
2,449
Net carrying amount
9,355
474
524
326
656
Movement on the provision for impairment of trade receivables is as follows:
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.
Group
Company
2024
2023
2024
2023
$’000
$’000
$’000
$’000
At 1 July
3,421
5,855
2,623
2,714
Provision for receivables impairment on revenue
recognised
2,602
704
2,002
704
Receivables written off during year as
uncollectable
(1,822)
(463)
(1,556)
(447)
Unused amounts reversed
(1,438)
(2,675)
(1,242)
(348)
At 30 June
2,763
3,421
1,827
2,623
Craneware plc | Annual Report & Financial Statements 2024
157
Notes to the Financial Statements (continued)
16 Deferred tax
Deferred tax is calculated in full on the temporary differences under the liability method using a rate of tax of 25% (FY23: 25%) in
the UK and 25% (FY23: 25%) in the US including a provision for state taxes.
Group
Company
2024
$’000
2023
$’000
2024
$’000
2023
$’000
At 1 July
(41,337)
(44,417)
(1,226)
805
Credit/ (charge) to comprehensive income
10,522
4,084
963
(1,365)
Transfer direct to equity
(1,893)
(1,004)
996
(666)
At 30 June
(32,708)
(41,337)
733
(1,226)
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 balances for the
Group are analysed as follows:
Group
2024
2023
$’000
$’000
Net deferred tax asset
733
-
Net deferred tax liability
(33,441)
(41,337)
At 30 June
(32,708)
(41,337)
Deferred tax assets – recognised
Group
Short term
timing differences
$’000
Losses
$’000
Share
Options
$’000
Total
$’000
At 1 July 2023
4,511
428
2,357
7,296
(Charged)/ credited to comprehensive income
(1,901)
(38)
4,050
2,111
Charged to equity
-
-
(1,893)
(1,893)
Total provided at 30 June 2024
2,610
390
4,514
7,514
At 1 July 2022
3,926
293
3,201
7,420
Credited to comprehensive income
585
135
160
880
Charged to equity
-
-
(1,004)
(1,004)
Total provided as 30 June 2023
4,511
428
2,357
7,296
Deferred tax liabilities - recognised
Long term
Accelerated
Group
timing differences
$’000
tax depreciation
$’000
Total
$’000
At 1 July 2023
(44,378)
(4,255)
(48,633)
Credited to comprehensive income
6,399
2,012
8,411
Total provided at 30 June 2024
(37,979)
(2,243)
(40,222)
At 1 July 2022
(47,921)
(3,916)
(51,837)
Credited/ (charged) to comprehensive income
3,543
(339)
3,204
Total provided as 30 June 2023
(44,378)
(4,255)
(48,633)
Craneware plc | Annual Report & Financial Statements 2024
158
Notes to the Financial Statements (continued)
16 Deferred tax (continued)
The analysis of the deferred tax assets and liabilities is as follows:
2024
2023
Group
$’000
$’000
Deferred tax assets:
Deferred tax assets to be recovered after more than 1 year
7,124
6,867
Deferred tax assets to be recovered within 1 year
390
429
7,514
7,296
Deferred tax liabilities:
Deferred tax liabilities to be recovered after more than 1 year
(40,222)
(43,633)
Deferred tax liabilities to be recovered within 1 year
-
(5,000)
(40,222)
(48,633)
Net deferred tax liability
(32,708)
(41,337)
The Company's deferred tax assets and liabilities are all expected to be recovered in the future.
Deferred tax assets - recognised
Short term
Share
Company
timing differences
$’000
Options
$’000
Total
$’000
At 1 July 2023
55
1,059
1,114
Credited to comprehensive income
10
126
136
Credited to equity
-
996
996
Total provided at 30 June 2024
65
2,181
2,246
At 1 July 2023
101
1,661
1,762
(Charged)/ credited to comprehensive income
(46)
64
18
Charged to equity
-
(666)
(666)
Total provided as 30 June 2023
55
1,059
1,114
Deferred tax liabilities – recognized
Company
Accelerated tax
depreciation
$’000
Total
$’000
At 1 July 2023
(2,341)
(2,341)
Credited to comprehensive income
828
828
Total provided at 30 June 2024
(1,513)
(1,513)
At 1 July 2022
(957)
(957)
Charged to comprehensive income
(1,284)
(1,384)
Total provided at 30 June 2023
(2,341)
(2,341)
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.
Craneware plc | Annual Report & Financial Statements 2024
159
Notes to the Financial Statements (continued)
17 Share capital and reserves
(a) Share capital
Authorised
2024
2023
Number
$’000
Number
$’000
Equity share capital
Ordinary shares of 1p each
50,000,000
1,014
50,000,000
1,014
Allotted called-up and fully paid
2024
2023
Number
$’000
Number
$’000
Equity share capital
Ordinary shares of 1p each
At 1 July and at 30 June
35,542,169
659
35,542,169
659
Share buyback
During the year, the Company purchased a total of 108,899 of its own Ordinary Shares (FY23: 223,632) in accordance with a share
buyback programme which commenced on 12 April 2023 and completed on 21 May 2024. Further details regarding the share
buyback are contained in the Directors’ Report on pages 72 and 73. Total consideration for this share buyback programme,
including directly attributable costs, incurred since 12 April 2023 was $6,300,000, of which $2,485,000 was paid during the year
ended 30 June 2024 (FY23: $3,815,000 paid).
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 2024, a total of 99,646 (FY23:
9,621) Ordinary Shares were transferred from treasury by the Company to satisfy the exercise of employee share options.
Therefore, at 30 June 2024, the Company held 223,264 Ordinary Shares in treasury (as at 30 June 2023: 214,011).
Shares issued during the year ended 30 June 2024
In the year ended 30 June 2024, no new Ordinary Shares in Craneware plc were issued (FY23: nil).
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.
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 2024 is summarised in the table below.
2024
2023
$’000
$’000
Loan balance (from Companyu to the EBT) at 1 July
9,263
8,867
Exchange gain
37
355
Addition to the loan form the Company to the EBT during the year
863
179
Partial repayment of loan by the EBT during the year
(218)
(138)
Loan balance (from Company to the EBT) at 30 June
9,945
9,263
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160
Notes to the Financial Statements (continued)
17 Share capital and reserves (continued)
(a) Share capital
Employee Benefit Trust (continued)
The EBT did not purchase any Craneware plc Ordinary Shares of 1 pence each in the market in the year ended 30 June 2024 (FY23:
no Ordinary Shares in the Company were purchased by the EBT in the market). The EBT purchased 42,123 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 2024
(FY23: 10,086 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 $863,000 (FY23:
$179,000 net outflow).
The Shares held by the EBT are utilised to satisfy employee share plan awards and, during the financial year ended 30 June 2024,
a total of 16,978 of the Shares from the EBT (FY23: 55,934 Shares) were used to satisfy the exercise of employee share options
and vested employee conditional share awards. At 30 June 2024 the EBT held 390,620 Craneware plc Ordinary Shares (at 30 June
2023: 365,475 Ordinary Shares).
(b) Reserves
Share premium account
The share premium represents amounts received in excess of the nominal value of shares issued, net of the direct costs of issuing
those shares.
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 2024 and as at 30 June 2023 comprises the excess of the net proceeds over the nominal value of the Ordinary Shares
issued on a share placing in June 2021. The purpose of the share placing was to obtain net proceeds to part fund the acquisition
of SDS Holdco, Inc., the ultimate holding company of Sentry Data Systems, Inc. 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.
Craneware plc | Annual Report & Financial Statements 2024
161
Notes to the Financial Statements (continued)
18 Cash generated from/ (used in) operations
Reconciliation of profit before taxation to net cash generated from/ (used in) operations:
Group
Company
2024
$’000
2023
$’000
2024
$’000
2023
$’000
Profit/ (loss) before tax
15,747
13,085
(3,147)
8,486
Finance income
(1,143)
(214)
(93)
(443)
Finance expense
5,130
6,357
105
40
Depreciation on property, plant and equipmemnt
3,293
3,451
550
620
Amortisation on intangible assets – other
9,169
7,781
7,000
5,779
Amortisation on intangible assets – aquired intangibles
20,921
20,930
-
-
Loss on disposals
113
7
-
-
Share-based payments
4,487
2,992
2,035
1,196
Movements in working capital:
(Increase)/ decrease in trade and other receivables
(21,183)
1,116
(3,511)
15,668
Increase/ (decrease) in trade and other payables
14,999
(5,462)
4,998
(13,126)
Increase in amounts held on behalf of customers
2,170
50,548
-
-
Cash generated from operations
53,703
100,591
7,937
18,220
19 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.
Group
Company
2024
$’000
2023
$’000
2024
$’000
2023
$’000
Trade cash and cash equivalents
34,589
78,537
2,957
25,102
The effective rates on short-term bank deposits were 2.038% (FY23: 0.247%).
20 Borrowings
The debt facility comprises a term loan of $16m (FY23: $24m) which is repayable in quarterly instalments over 5 years up to 30
June 2026, and a revolving loan facility of $100m of which $20m (FY23: $60m) is drawn down and which expires on 7 June 2026.
During the year, $8m (FY23: $8m) was repaid on the term loan and the amount drawn down on the revolving credit facility was
reduced by $40m (FY23: $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.
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162
Notes to the Financial Statements (continued)
20 Borrowings (continued)
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.
2024
2023
$’000
$’000
Current interest bearing borrowings
8,000
8,000
Non current interest bearing borrowings
27,372
75,033
Total
35,372
83,033
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 2024 is $0.67m (FY23: $0.97m).
See Note 3 for the contractual maturity of the Group’s borrowings at the year 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:
2024
2023
$’000
$’000
Revolving facility
80,000
40,000
Undrawn borrowing facilities
80,000
40,000
21 Trade and other payables
Group
Company
Restated
2024
$’000
2023
$’000
2024
$’000
2023
$’000
Trade payables
3,725
4,005
2,849
2,185
Amounts owed to group companies
-
-
32,019
28,138
Lease creditor due < 1 year
952
1,389
557
226
Other provisions < 1 year
512
420
508
58
Social security and PAYE
2,268
1,299
623
552
Other creditors
156
237
-
89
Accruals
9,367
8,466
2,531
2,397
Advanced payments
254
135
51
135
Trade and other payables
17,234
15,951
39,138
33,780
See Note 26 for details of the restatement in the prior year.
Craneware plc | Annual Report & Financial Statements 2024
163
Notes to the Financial Statements (continued)
21 Trade and other payables (continued)
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 2024 was 25 days (FY23: 25 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 plan awards of $512,000 (FY23: $59,000 for 2007
Share Option Plan only). There is a corresponding receivable of $218,000 included in other debtors (FY23: nil). Timing of the use
of this provision is entirely dependent on employees requesting to exercise share awards. The provision for potential sales tax
due in relation to audits in respect of Sentry for periods prior to the acquisition from the prior year has been utilised in full during
the year (FY23: $362,000).
22 Contingent liabilities and financial commitments
a) Capital commitments
The Group has no capital commitments at 30 June 2024 (FY23: 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:
2024
2023
$’000
$’000
Within one year
-
3
Between 1 and 5 years
-
-
More than 5 years
-
-
-
3
The undiscounted lease liability maturity analysis of leases under IFRS 16 is disclosed in Note 3.
Craneware plc | Annual Report & Financial Statements 2024
164
Notes to the Financial Statements (continued)
23 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:
2024
2023
Outstanding
Outstanding
Group
Charged
$
at year end
$
Charged
$
at year end
$
Fees for services provided as non-executive Directors
Fees
229,848
-
209,517
-
Salaries and short-term employee benefits
153,289
-
146,571
-
Executive Directors
Salaries and short-term employee benefits
1,803,768
709,083
1,473,370
586,549
Post employment benefits
66,631
-
60,649
-
Share based payments
970,663
-
929,609
-
Other key management
Salaries and short-term employee benefits
2,311,668
575,068
2,625,438
670,743
Post employment benefts
61,258
-
69,971
-
Share based payments
885,173
-
824,662
-
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165
Notes to the Financial Statements (continued)
23 Related party transactions (continued)
2024
2023
Outstanding
Outstanding
Company
Charged
$
at year end
$
Charged
$
at year end
$
Fees for services provided as non-executive Directors
Fees
229,848
209,517
Salaries and short-term employee benefits
153,289
146,571
Executive Directors
Salaries and short-term employee benefits
1,803,768
709,083
1,483,370
586,549
Post employment benefits
66,631
60,649
Share based payments
970,663
929,609
Other key management
Salaries and short-term employee benefits
307,216
79,990
273,708
81,955
Post employment benefts
12,362
13,399
Share based payments
134,333
144,202
Amounts due to Craneware US Holdings, Inc. – Subsidiary company
Net operating expenses
-
-
Balance (FY23: restated)
(2,766,020)
(11,010,082)
Amounts due to Craneware, Inc. – Subsidiary company
Sales commission
27,585,616
25,775,233
Net operating expenses
10,000,745
7,430,275
Balance
(11,592,059)
(3,346,820)
Net Amounts due to Craneware InSight, Inc. – Subsidiary company
Sales commission
2,519,243
2,051,137
Net operating expenses
(311,246)
597,648
Balance
(10,600,237)
(7,392,240)
Net Amounts due to Craneware Healthcare Intelligence LLC – Subsidiary company
Net operating expenses
2,885,732
3,560,729
Balance
(7,060,514)
(6,388,775)
Net Amountds due from Sentry Data Systems, Inc. – Subsidiary company
Sales commission
521,379
Net operating recharges
(2,379,478)
(808,402)
Balance
1,991,890
1,199,309
Net Amounts due from Agilum Healthcare Intelligence, Inc. – Subsidiary company
Net operating recharges
-
(949,002)
Balance
-
967,455
Craneware plc | Annual Report & Financial Statements 2024
166
Notes to the Financial Statements (continued)
23 Related party transactions (continued)
Note 17 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
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.
24 Ultimate controlling party
The Directors have deemed that there are no controlling parties of the Company.
25 Subsequent events
On 23rd August 2024 the Company’s wholly owned subsidiary, Craneware US Holdings, Inc., declared a dividend of $18m payable
to the Company with a resulting increase of $18m to the Company’s retained earnings.
26 Restatement of prior year
Craneware plc investment in Subsidiary
On the acquisition of Sentry Data Systems, Inc. and related entities (‘Sentry’) in July 2021, a new US holding company was set up
as a direct subsidiary of Craneware plc, Craneware US Holdings, Inc. to acquire the Sentry entities. A portion of the funding for
this acquisition was provided by Craneware plc, by way of a subscription by Craneware plc for 1,000 shares in Craneware US
Holdings, Inc. This transaction was initially recorded as an intercompany loan rather than the subscription for shares it
represented. As such the Craneware plc Company Balance Sheet has been restated to reflect the movement between asset types.
The impact on the opening Company Balance Sheet at 1 July 2022 is the same as the adjustment below, increasing the investment
in subsidiary undertaking and reducing the trade and other receivables by $192.5m.
There is no impact on the Consolidated Balance Sheet or the Consolidated Statement of Comprehensive Income.
Craneware plc | Annual Report & Financial Statements 2024
167
Notes to the Financial Statements (continued)
26 Restatement of prior year (continued)
Craneware plc investment in Subsidiary (continued)
Company Balance Sheet extract
Restated
Adjustment
Note
2023
2023
2023
$’000
$’000
$’000
Non-Current Assets
Investment in subsidiary undertakings
277,405
192,500
84,905
323,050
192,500
130,550
Current Assets
Trade and other receivables
25,701
(181,490)
207,191
50,803
(181,490)
232,293
Total assets
373,853
11,010
362,843
Current Liabilities
Trade and other payables
33,780
11,010
22,770
64,033
11,010
53,023
Total liabilities
67,389
11,010
56,379
Total Equity and Liabilities
373,853
11,010
362,843
Note 14 Investments in subsidiary undertakings have been updated to reflect the increase in the investment in subsidiary by the
Company of $192.5m.
Note 14 extract
Restated
Adjustment
2023
2023
2023
Cost at 1 July and 30 June
277,405
192,500
84,905
Note 15 Trade and other receivables and Note 21 Trade and other payables have been updated for the Company to reflect the
reduction in the intercompany receivable from subsidiary of $192.5m, which results in a movement from a receivable to payable
intercompany balance at 30 June 2023.
Note 15 Company extract
Restated
Adjustment
2023
$’000
2023
$’000
2023
$’000
Amounts owed from group companies
2,167
(181,490)
183,657
25,701
(181,490)
207,191
Current portion
25,701
(181,490)
207,191
Note 21 Company extract
Restated
Adjustment
2023
$’000
2023
$’000
2023
$’000
Amounts owed to group companies
28,138
11,010
17,128
Trade and other payables
33,780
11,010
22,770
Craneware plc | Annual Report & Financial Statements 2024
168
Notes to the Financial Statements (continued)
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.
Alternative performance measures may be viewed as having limitations due to certain items being excluded that would be
included in GAAP measures.
Adjusted EBITDA
Adjusted EBITDA refers to earnings before interest, tax, depreciation, amortisation, exceptional items and share-based payments.
2024
$’000
2023
$’000
Operating profit
19,734
19,228
Depreciation of property, plant and equipment
3,293
3,451
Amortisation of intangible assets – other
9,169
7,781
Amortisation of intangible assets – acquired intangibles
20,921
20,930
Share – based payments
4,487
2,992
Exceptional items – integration costs
675
510
Adjusted EBITDA
58,279
54,892
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 18), adjusted to exclude cash payments
for exceptional items and movements in cash held on behalf of customers, divided by adjusted EBITDA.
2024
$’000
2023
$’000
Cash generated from operations (Note 18)
53,703
100,591
Total exceptional items
675
510
Movement in amounts held on behalf of customers (Note 18)
(2,170)
(50,548)
Accrued exceptional items at the start of the year paid in the current year
92
60
Accrued exceptional items at the ended of the year
-
(92)
Trade payable exceptional items at the start of the year paid in the current year
-
12
Trade payables exceptional items at the end of the year
-
-
Cash generated from operations before exceptional items
52,300
50,533
Adjusted EBITDA
58,279
54,892
Operating cash conversion
89.7%
92.1%
Craneware plc | Annual Report & Financial Statements 2024
169
Notes to the Financial Statements (continued)
27 Alternative performance measures (continued)
Adjusted PBT
Adjusted PBT refers to profit before tax adjusted for exceptional items and amortisation of acquired intangibles.
2024
$’000
2023
$’000
Profit before taxation
15,747
13,085
Amortization of intangible assets – acquired intangibles
20,921
20,930
Exceptional items – integration costs
675
510
Adjusted PBT
37,343
34,525
Net borrowings
Net borrowings refers to the net balance of short term borrowings, long term borrowings and cash and cash equivalents.
2024
$’000
2023
$’000
Cash and cash equivalents (Note 19)
34,589
78,537
Borrowings (Note 20)
(35,372)
(83,372)
Net borrowings
(783)
(4,496)
Lease liabilities are excluded from borrowings for the purpose of net borrowings.
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 is the annual value of subscription license and related recurring revenues as at 30 June 2024 that are
subject to underlying contracts and where revenue is being recognised at the reporting date.
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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Notes
Craneware plc | Annual Report & Financial Statements 2024
171
Notes
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172