Craneware plc (CRW) 2012年年度報告「AIM」.pdf

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1、Craneware plc Annual Reportfor the year ended 30 June 2012Cranewareplc AnnualReport2012About CranewareCraneware is the leader in automated revenue integrity solutions that improve financial performance and mitigate risk for US healthcare organisations.Founded in 1999,Craneware has headquarters in Ed

2、inburgh,Scotland with offices in Atlanta,Boston,Nashville and Phoenix employing more than 200 staff.Cranewares market-driven,SaaS solutions help hospitals and other healthcare providers more effectively price,charge,code and retain earned revenue for patient care services and supplies.This optimises

3、 reimbursement,increases operational efficiency and minimises compliance risk.By partnering with Craneware,clients achieve the visibility required to identify,address and prevent revenue leakage.To learn more,visit and .ContentsFinancial and Operational Highlights .1Craneware Revenue Integrity Solut

4、ions .2Chairmans Statement .4Operational Review.5Directors,Secretary,and Advisors .13Board of Directors.14Directors Report.15Corporate Governance Report.19Remuneration Committee Report .23Independent Auditors Report to the Members of Craneware plc .26Consolidated Statement of Comprehensive Income fo

5、r the year ended 30 June 2012 .27Statements of Changes in Equity for the year ended 30 June 2012 .28Consolidated Balance Sheet as at 30 June 2012 .29Company Balance Sheet as at 30 June 2012.30Statements of Cash Flows for the year ended 30 June 2012.31Notes to the Financial Statements .321Cranewarepl

6、c AnnualReport2012Financial and Operational HighlightsQuick Facts Financial18%increase in Adjusted EBITDA18%increase in revenues23%increase in basic adjusted EPS$28.8mcash at year end29%increase in profit before taxFinancial Continued revenue and profit growth:Revenue increased 8%to$41.1m(2011:$38.1

7、m)Adjusted EBITDA1 increased 18%to$11.9m(2011:$10.1m)Adjusted profit before taxation increased 16%to$10.8m(2011:$9.3m)Profit before tax increased 29%to$11.2m(2011:$8.7m)Basic adjusted EPS increased 23%to 31.6 cents(2011:25.6 cents)Basic EPS increased 43%to 33.0 cents(2011:23.1 cents)Positive operati

8、onal cash flow of$10.6m(2011:$10.1m)Cash at year end$28.8m(2011:$24.2m)after returning$4.1m to shareholders by way of dividends Proposed final dividend of 5.7p(8.9 cents)per share giving total dividend for the year of 10.5p(16.4 cents)per share(2011:8.8p(14.2 cents)per share)1 Adjusted EBITDA refers

9、 to earnings before interest,tax,depreciation,amortisation,share based payments,released deferred consideration and transaction costs.Operational Extension of market reach through two significant customer deals signed in the year,one providing entry into the Federal and State healthcare market and t

10、he other taking Cranewares software into a non-competitive parallel market Increased sales activity in the second half of the year in core market Increasing pressure being placed on hospitals by Medicare Recovery Auditors(formerly known as RAC programme)Craneware InSight fully integrated as at 1st J

11、uly 2012,first cross-sales delivered Renewal levels strong at over 100%of dollar value Entered 2013 with revenue visibility back at historically high levels Revenue$mAdjusted EBITDA$mBasic adjusted EPS cents/share501240103030825202061510410250002012201220122008200820082009200920092010201020102011201

12、1201141.111.931.618.74.513.723.05.817.728.47.621.838.110.125.635Audit&Revenue RecoverySolutions that empower hospitals to manage payor denials and retain more cash in the face of retrospective claims audits helping them to collect and retain all the revenue to which they are entitledAccess Managemen

13、t&Strategic PricingSolutions that enable organisations to establish transparent,defensible pricing;quickly and accurately assess patient benefits;and manage payment responsibility improving cash flow,compliance and patient satisfactionSupply ManagementSolutions that establish a critical connection b

14、etween pharmaceutical and supply purchases and billing improving charge capture,coding and financial performanceRevenue CycleSolutions that automate chargemaster management processes increasing operational efficiency,minimising risk and helping to prevent revenue leakage2Cranewareplc AnnualReport201

15、2Quick Facts The TechnologyCraneware solutions are based on an annuity subscription model.Craneware products employ a mix of traditional client/server Windows applications and hosted ASP technologies to provide a comprehensive enterprise solution for healthcare financial performance management.Clien

16、t data is always kept secure within healthcare facilities own networks or Cranewares high-security data centre,compliant with US Health Insurance Portability and Accountability Act(HIPAA)regulations related to sensitive patient information.Only registered users can access Cranewares extensive knowle

17、dge base and regulatory products through available hospital-based browsers with Internet access.This allows Cranewares software to be rolled out to a number of staff in a facility,permitting different prescribed levels of interaction with minimal impact to resource-strained IS teams and busy users.C

18、raneware Revenue Integrity Solutions encompass four product families Access Management&Strategic Pricing,Revenue Cycle,Supply Management,and Audit&Revenue Recovery with corresponding modules and services.Craneware Revenue Integrity SolutionsCranewares Chargemaster Toolkit is ranked No.1 in the Reven

19、ue Cycle Chargemaster Management market category and Bill Analyzer is ranked No.1 in the Revenue Cycle Other market category in the“2011 Best in KLAS Awards:Software&Services”report,published December 2011.www.KLAS.Data 2011 KLAS Enterprises,LLC.All rights reserved.Healthcare Financial Management As

20、sociation staff and volunteers determined that Cranewares Chargemaster Toolkit,Chargemaster Corporate Toolkit,Bill Analyzer,Online Reference Toolkit,and Interface Scripting Module have met specific criteria developed under the HFMA Peer Review Process.HFMA does not endorse or guarantee the use of th

21、ese products.Craneware is a Microsoft Silver Independent Software Vendor.Craneware Products and Services3Cranewareplc AnnualReport2012 Revenue CycleChargemaster Toolkit,Chargemaster Corporate Toolkit and Chargemaster Toolkit-CAH automate chargemaster management processes for capturing optimal legiti

22、mate reimbursement for hospitals.The Toolkit is customisable for any organisation,from small community hospitals to large healthcare networks.Bill Analyzer is HFMA Peer-Reviewed software that improves charge capture processes by identifying lost revenue and categorising areas of risk resulting in mo

23、re accurate and compliant claims.Physician Revenue Toolkit,Physician Management Toolkit and Physician Revenue Toolkit Corporateare for managing physician group charges,codes,RVUs,fee schedules,and related information includes Online Reference Toolkit for physician billing.The corporate version manag

24、es charges to a corporate standard.The management version includes Decision Dashboard that tracks Key Performance Indicators(KPIs)for strategic physician group charge management.Supporting Modules Online Reference Toolkit is an HFMA Peer-Reviewed web-based tool for reducing risk by providing access

25、to reference and regulatory resources.Interface Scripting Module is HFMA Peer-Reviewed software that automatically uploads chargemaster changes to the patient billing system for accurate billing.Audit&Revenue RecoveryInSight Auditsoftware is a comprehensive,web-based audit management tool that empow

26、ers healthcare organisations to manage Recovery Auditors and other retrospective claim audit workflows from one central location.InSight Payment Variance Analyzeridentifies,tracks and helps eliminate revenue lost in the form of underpaid claims.InSight Denialsanalyses,tracks,trends and reports on de

27、nial data,providing workflow tools to distribute denied claims to the right departments and staff for resubmission.Supporting ServicesCraneware Professional Services provide companion implementation and consulting services that help clients apply best practices and achieve a fast,sustainable return-

28、on-investment.Craneware augments initial product training with live or self-led web-based training through the Craneware Performance Center and optional fee-based training.Craneware Revenue Integrity Solutions Contd.Access Management&Strategic PricingPricing Analyzersoftware simplifies the price mod

29、eling process to ensure pricing is transparent,defensible and competitive.Patient Charge Estimatorsoftware supports defensible and transparent pricing,and simplifies providing estimates for inpatient and outpatient services.InSight Medical Necessityprovides all-payor medical necessity validation and

30、 Advance Beneficiary Notice(ABN)creation,which reduces accounts-receivable days by preventing medical necessity denials,and facilitates payment communication with patients.Supply Management Pharmacy ChargeLinkimproves charge capture,pricing and cost management,establishing and maintaining a connecti

31、on between a hospitals pharmaceutical purchases and billing.Supplies ChargeLinkhelps optimise reimbursement for chargeable supplies by establishing and maintaining a connection between a hospitals supply purchase history and its chargemaster,which helps ensure accurate pricing,coding and billing of

32、these supplies.4Cranewareplc AnnualReport2012“Craneware is ideally placed with a market-leading product setand a large and growing market opportunity.”George Elliot,ChairmanChairmans StatementDespite a mixed trading environment in the first half of the year,Craneware has delivered a solid set of res

33、ults showing an 8%increase in revenues to$41.1m,an 18%increase in adjusted EBITDA to$11.9m,and a 23%increase in basic adjusted EPS to 31.6 cents.The Company continues to benefit from strong operational cash flow,closing the year with a cash balance of$28.8m.Renewal rates have remained high,at 109%by

34、 dollar value and Craneware has entered the current financial year with revenue visibility of$108.7m for the next three years,back at historic high levels.The level of new sales secured in the year was impacted by short-term competing IT priorities within our customer base,driven primarily by Electr

35、onic Health Records(EHR)incentive payment deadlines.By June 2012,a total of 3,779 hospitals had registered for the EHR Incentive Program and a total of 2,596 unique hospitals had been paid out$3.96 billion by that date(source:Centers for Medicare&Medicaid Services(CMS).During the first half of the y

36、ear,this resulted in lengthier sales cycles for all of the Groups products.However,the second half saw an increase in sales activity which supports our view that sales cycles will return to normal lengths in the near-term,as healthcare organisations once again refocus on revenue integrity.2012 has b

37、een a year of unprecedented change within US hospitals as the unintended consequences of some of the recently introduced healthcare proposals work through the system.However,it is unavoidable that US healthcare facilities will be required to provide a higher level of patient care,to a greater number

38、 of people,at a lower cost per patient in a climate of greater transparency.Compounding these issues,and adding to pressures placed on US healthcare organisations,is the Medicare Recovery Auditors(MRAs,formerly known as RAC)programme.MRAs and their other third party equivalents continue to recover o

39、verpayments from hospitals.Indeed,the latest reported quarter(April-June 2012)showed another consecutive rise in the amount of overpayments collected.Audit readiness is getting real traction in the marketplace and we believe the combination of these factors is resulting in hospitals refocusing on re

40、venue integrity solutions.These pressures create a compelling need for Cranewares software in order to efficiently protect the revenue to which these healthcare facilities are entitled.Craneware has a client base consisting of approximately 25%of US hospitals and it is now an established part of the

41、 fabric of the US healthcare industry making it a trusted partner.We are confident that Craneware is ideally placed with its in-house expertise,industry-leading product suite and balance sheet strength to help US healthcare organisations deal with their increasing fiscal and regulatory pressures.Con

42、sequently we continue to be confident in the future growth of the Group.We have entered the new financial year in a strong position,with a return to historic high levels of revenue visibility for the coming years,a market leading product set,a focused sales force and a large and growing market oppor

43、tunity.I would like to take this opportunity to thank our staff for their unrelenting high levels of energy and commitment and our shareholders for their continued support.George Elliott,Chairman 3 September 20125Cranewareplc AnnualReport2012“We have achieved and are proud of our valuable and truste

44、d position at the centre of this expanding market.”Keith Neilson,CEO and co-founder“We have continued to invest in the futurewhilst delivering an 18%increase in our adjusted EBITDA.”Craig Preston,CFOOperational ReviewIntroductionCranewares mission is to stop the loss of legitimate revenue owed to he

45、althcare organisations by establishing a culture of revenue integrity within these organisations;our vision is to be the partner that can be relied on to improve and sustain our customers strong financial performance.Over the history of the Company we have come a long way towards achieving this.Toda

46、y,Craneware has a total of nine core products,spanning four product families;Audit&Revenue Recovery,Revenue Cycle,Supply Management and Access Management&Strategic Pricing.Craneware has installed its software into an extensive customer base which represents around a quarter of all registered US hosp

47、itals from the smallest critical access facilities to the largest healthcare networks.To support this growing client base and the Companys future growth prospects,Craneware now employs more than 200 professionals across the US and UK.We have achieved and are proud of our valuable and trusted positio

48、n at the centre of this expanding market.Through aiding our customers in their implementation of a holistic revenue integrity model we have helped them achieve substantial revenue improvements and impressive returns on the investments made in our software,which can be reinvested by hospitals to deli

49、ver improved patient care.Over the year,the value of Craneware and its solutions to customers has increased,our product set has been enhanced,the addressable market has been extended and the sales team has been augmented for future growth.In the year Craneware was affected by the cessation of a thir

50、d party contract and lengthening sales cycles due to the unforeseen consequences of the US government applying incentive payments to Electronic Health Record(EHR)implementations-in a year preceding a presidential election,which is being fought on healthcare and economic battle grounds.This created a

51、 competing healthcare priority of meeting the initial EHR deadlines for these incentive payments.This was mitigated to some extent through a significant partner agreement signed in February 2012,opening market opportunities for the Group.In addition,we are now seeing indications of sales cycles retu

52、rning to normal levels with the majority of qualifying hospitals having received their initial payments for EHR.Once again,Craneware received recognition and awards for several of its products,including a number one ranking by KLAS for Chargemaster Toolkit for a sixth consecutive year,matched by its

53、 Bill Analyzer product in the first year of appearance in the programme.Additionally,InSight Audit received platinum level status from Executive Health Resources.In response to increasing demand and organisational expansion,Craneware opened its extended premises in Scottsdale,Arizona during April 20

54、12.The opening of this enlarged office demonstrates Cranewares commitment to the financial success of its clientele and dedication to exceptional client service across North America.Market DevelopmentsIn 2012 total US healthcare expenditure is expected to exceed$3 trillion,and with an anticipated 4%

55、growth per annum,it will rapidly approach a projected 20%of US GDP by 2017;US healthcare is the largest healthcare market in the world.It is a market which is striving for greater levels of transparency to understand and better quantify the areas of spend within healthcare providers,resulting in eve

56、r-increasing complexity as data becomes more granular.This complexity produces high levels of data which need to be analysed in an effort to understand and bring some control to this unsustainable growth.Even without changing legislation,the US healthcare industrys reimbursement model is unique and

57、complex.Nearly 50%of healthcare costs are paid by the government,with the rest paid by private insurers and individuals;each of these payers has different criteria and rates of reimbursement.The US healthcare market faces new and increasing regulatory challenges as part of the US governments healthc

58、are reform which seeks to reduce the burden of healthcare on the State whilst making healthcare available to a larger percentage of the population.In addition to this,North America is experiencing the effects of an increasing aging population which brings its own care and cost challenges.6Cranewarep

59、lc AnnualReport2012Operational Review Contd.The Patient Protection and Affordable Care Act(PPACA)In June 2012,after years of legislative and legal battles the Supreme Court ruled that the Patient Protection Affordable Care Act(PPACA)was constitutional.The most significant effect of this wide ranging

60、 package of legislation is to increase pressure on the entire US healthcare system to slow the growth in costs while bringing roughly 32 million previously uninsured Americans into the system.Accountable Care Organisations(ACOs)and bundled paymentsThe Medicare shared savings program rewards Accounta

61、ble Care Organisations(ACOs)that take responsibility for the costs and quality of care received by their patients.ACOs can include groups of healthcare providers,including physician groups,hospitals,nurse practitioners,physician assistants and others.As stated by the PPACA,the objective of ACOs is t

62、o attain a degree of financial responsibility on the providers in the hope of improving care management and limiting unnecessary expenditures,ultimately fostering clinical excellence while simultaneously controlling costs.ACOs that meet quality-of-care targets and reduce costs of their patients rela

63、tive to a spending benchmark are rewarded with a share of the savings they achieve for the Medicare programme.There are two models based on a degree of risk.Model one is low risk and involves shared savings in year one,two and shared savings/risk in year three.Model two is high risk and involves sha

64、red savings/risk in all three years.Both models have caps on savings and losses,but there are potential savings of up to 60%.Bundled payments align incentives for providers hospitals,post-acute care providers and doctors to partner closely across all specialties to improve the patients experience an

65、d reduce costs by replacing fragmented care with coordinated care.Many organisations view bundled payments as a measured foray into accountable care at an acceptable level of risk and adjustment.Much of the benefits from bundled payments can be reaped via data normalisation which would have to be a

66、key area of an informed bundled payment movement.The increased transparency and accountability of this normalisation also has obvious benefits to the ACO models.Alternative payment models like Medicare Shared Savings and bundled/value based payments have the potential of shifting the focus away from

67、 the quantity of services to the clinical outcomes achieved.Currently there are 310 ACOs in the US,located in mostly urban areas across 45 states.Medicare Recovery Auditors(MRAs)Medicare Recovery Auditors are tasked with detecting and correcting past improper payments to hospitals,whether these are

68、overpayments,which need to be recouped,or underpayments.The medical record submission process is lengthy and has several strict deadlines.This,coupled with the increased number of audits expected,represents a significant burden for healthcare providers;a hospital can lose 7%-10%of its revenue to den

69、ied claims that could be corrected and resubmitted,and this can make the difference between financial success and failure.Since its nationwide roll-out on 1 January 2010,the Centers for Medicare&Medicaid Services(CMS)Medicare Fee-for-Service Recovery Audit Program has consistently increased in scale

70、.In the first quarter of FY2012 the recoupment total was$397.8m,in the second quarter it was$588.4m,and,in the third quarter it was$657.2m;therefore in nine months a total of$1,643.4m has been recouped,this represents an increase of 206%when compared to the previous full 12 month period(FY2011$797.4

71、m).This escalating rate of take-backs has driven a greater emphasis on compliance in healthcare and a demand for best practice tools to help healthcare providers support compliance and manage audits.As a result,several healthcare industry associations invited Craneware to share information at audit

72、and compliance events and conferences.Cranewares InSight Audit product organises,manages and reports on all audit requests,responses and appeal activities for all audit types.It stores the relevant information and documents the steps taken to appeal denials,whilst also identifying trends and areas o

73、f exposure.InSight Audit manages(1)the patient record,(2)the RAC audit workflow,and(3)reports on areas of risk.Cranewares solutions have helped hospitals successfully manage the audit process to win more than twice as many appeals as their peers,defending millions of dollars in denials.In February 2

74、012,Craneware announced its participation in the CMS electronic submission of medical documentation(esMD)Gateway Services pilot program.The program provides a mechanism for the digital exchange of medical record documentation in order to streamline and improve the efficiency of audit appeals;this th

75、erefore also reduces the potential cost burden.In August 2012,Craneware was pleased to achieve certification from CMS as a Healthcare Information Handler(HIH),enabling its InSight Audit solution to digitally submit medical record documentation and joining a list of less than 20 to have achieved this

76、 status.This changing economic landscape necessitates that US healthcare organisations find ways to ensure operational efficiency,quality and financial success while managing compliance risks.The evolving regulations and healthcare reforms make it more important than ever for healthcare organisation

77、s to proactively ensure the accuracy and defensibility of their charges as they face tightening reimbursement and increasing scrutiny from auditors.These factors mean a growing number of hospitals are seeking technology-based solutions to help improve accuracy of billing and reduce regulatory burden

78、s,thereby protecting their slim profit margins.Cranewares strategy to meet this growing need is to provide software solutions that help at the points in systems where clinical and operational data transform into financial transactions.Our solutions automate data normalisation,combining disparate dat

79、a sets while maintaining the localised context.This produces valuable,actionable information and creates organisation-wide visibility and accountability.The need for continued innovation in this changing environment will drive Cranewares future growth.By providing the tools to normalise data across

80、disparate areas of the hospital and remaining agnostic to data formats and other vendors,Craneware gives the power to take a step back and provide a holistic view identifying areas of productivity improvement,inefficiencies and errors.The American Hospital Association estimates the total number of r

81、egistered US hospitals at 5,754.Fewer than half of these manage their charge description masters,the central dataset from which all bills are generated,with software such as Cranewares Chargemaster Toolkit.As healthcare reform requires hospitals to manage data and resources better,charging accuratel

82、y will be nearly impossible without automation tools.Cranewares four product families enable the improvement of financial performance along multiple points in the hospitals operational areas,far beyond the charge description master.One point of increasing importance is in management of claims denial

83、s and audits by Medicare Recovery Auditors.Reducing risks associated with managing financial transactions in order to keep earned revenue is a pressing priority for US hospitals facing a myriad of audits from State and federal entities as well as private payers.7Cranewareplc AnnualReport2012However,

84、with these alternative models only expected to yield savings of$1 billion over the next three years(less than 0.01%of total healthcare costs)and the highly unpredictable nature of small population insurance risk,it is being widely predicted by industry experts that they will have a limited impact on

85、 healthcare provision for the foreseeable future and will probably remain at the fringes of the healthcare model accounting for no more than 20%of hospital reimbursement over the long-term.Similar models(e.g.capitation)have been tried and failed in the past in different States to provide the cost sa

86、vings and clinical improvements expected from these models.Electronic Healthcare Records(EHR)Healthcare Reform authorised CMS to provide incentives to providers to implement Electronic Health Records(EHR).There are two main programs under EHR that hospitals can register for:Medicare and Medicaid.Qua

87、lifying hospitals may register for both.As Medicare has set the initial higher standard,hospitals that meet the meaningful use criteria(MU)and are Medicaid eligible can automatically claim for a Medicaid incentive.A hospital may,through choice or eligibility only apply for a Medicaid incentive payme

88、nt following the criteria set at the local State level.At 30 June 2012,with six States still to start their Medicaid Incentive scheme,2,596 unique hospitals have received their share of the$4 billion that has been paid to hospitals under the incentive schemes (60%of eligible hospitals).It is likely

89、that the disruption in hospitals seen to December 2011,caused by EHR systems,will continue for many years to come as new levels of EHR integration and standards are introduced.However hospitals need to return their focus to revenue integrity very quickly after making their initial EHR purchasing dec

90、isions as it is widely recognised that there are limited additional returns in the short and medium term.Since technologies like Cranewares with its unique normalisation of data approach,when combined with EHRs are critical to achieving the improvements necessary to provide the increased care levels

91、 and the required cost efficiencies expected of this programme,the Company is well placed to address this expanding market opportunity.Sales and MarketingDuring the year the geographical alignment of our sales team across the US,which began in the prior year,was completed.Experienced Regional Vice P

92、residents now oversee each of our three geographical regions,and each has a team comprised of mixed experience and skill sets.In addition,the separate Sales Support and Marketing Teams in our Atlanta office have been strengthened allowing the field Sales Team to concentrate on their customers and sa

93、les opportunities.We anticipate further investment into these teams,in line with our revenue growth,as we work to address the market opportunity.We have completed thorough internal and external training as a result of our enlarged product set and increasing market opportunities presented by various

94、US healthcare reforms,including internally developed industry leading boot camps for every member of the sales team and a sales partner boot camp.In addition to our direct field sales opportunities,there are a number of major contract opportunities which all have the ability to yield significant pot

95、ential revenues.Previously we have referred to these deals as channel partners;however it is more accurate to instead refer to these as different routes to market,as we shall do going forward.These potential contracts follow the same revenue recognition methodology as an individual hospital and grou

96、p hospital contracts;although the sales approach for these deals is quite different.These different routes to market can be broken down into six different categories(as listed below),and range in potential total contract value from$5m to$100m in any instance.IDNs&Large Hospital SystemsAn Integrated

97、Delivery Network(IDN)is a network of facilities and providers working together to offer a continuum of care to a specific market or geographic area.These always involve a significant number of multi-site licences,and,like the large hospital systems involve multiple people from Craneware working as a

98、 team to sign the contract.Craneware continues to have very good traction in this area,being the only software company with the ability to provide proven“corporate”solutions.Consolidation within the US healthcare industry increases the reach and number of these organisations.Typically a team of Cran

99、eware staff representing various areas of the Company will be responsible for the success of these deals from prospecting through implementation.Business Process Outsourcers/Consultants(BPO)Typically BPOs work with hospitals,on a gain-share model(“at risk”)with the improvements found generating the

100、revenue for them(a model we do not utilise).The BPOs will often employ erstwhile hospital staff and outsource large functions of the hospitals back office.This provides Craneware with the opportunity to provide best-of-breed software to BPOs for a true win-win-win,for them,their hospital client and

101、Craneware.In many instances we will explore white-labelling in this area so that we provide the functionality of our software in a software wrapper that they can brand,but for which we charge a premium.BPOs can range from large national players(including the largest accountancy firms)to small,region

102、al“mom&pop”players.In some cases,IDNs or large hospital systems will spin-out experts in a particular field and create BPOs that may also want to resell our software into external hospitals.BPO deals are typically led by Business Development and utilise the experts within Craneware as required.Hardw

103、are VendorsHardware vendors primarily want to use advanced functionality to push a greater requirement for further computer hardware and to embed their brand in a facility.This is commonly under the auspices of a division of the hardware manufacturer or distributor that provides BPO or consultancy s

104、ervices.These deals are typically led by Business Development and utilise the experts within Craneware as required.There are white-label opportunities within this category.Software VendorsThird party software vendors often wish to integrate areas of our functionality with their software so that they

105、 can leverage more sales,for which we are paid a fee.Sometimes the opportunity is on a pure value added reseller basis;where they are looking for more to sell to their customers and it is seen by Craneware as a quicker route to market.This can work in both directions where Craneware has additional f

106、unctionality to sell to our customers.These deals are typically led by Business Development and utilise the experts within Craneware as required.There are white-label opportunities within this category.Operational Review Contd.8Cranewareplc AnnualReport2012Operational Review Contd.Group Purchasing O

107、rganisations(GPOs)A Group Purchasing Organisation(GPO)is an entity that is created to leverage the purchasing power of a group of hospitals to obtain discounts from vendors based on their collective buying power.GPOs also provide a route to market and may include a division that has a BPO or consult

108、ancy offering in specialist areas.The GPO involvement can be from simple referral or list generation through to senior executive level sponsorship and cross hospital references.These deals are typically led by Business Development and utilise the experts within Craneware as required.There are white-

109、label opportunities within this category.Content AcquirersDue to the ever-increasing amount of data powering the Craneware software-and the added functionality we can offer our customers through blinded data-there is a growing desire from some organisations to purchase the data that we use to power

110、our software solutions,to incorporate into different non-competing offerings.These would typically be led by Product Management who utilise Business Development for the commercial terms.There are white-label opportunities within this category.Routes to market SummaryCraneware has experience in worki

111、ng with organisations in all these categories and in FY2012 new revenues from these sources accounted for less than 20%.Although there has been much debate around our increased exposure to these opportunities in FY2012,it is merely their absence that has further highlighted their always present exis

112、tence.They are not contributing a larger proportion of the revenue in this year than they have previously nor are they increasing the risk profile of Craneware.In addition to our direct sales efforts,these different routes to market are a valuable extra opportunity for Craneware to generate further

113、revenues from its technology.A larger number of these organisations successfully promoting products in the US healthcare market,regardless if by their nature they are white-label,further educates and evangelises the importance of revenue integrity and leads to further Craneware success.Brand buildin

114、g,Conferences&Events During the year important progress was made in brand building and brand awareness.This has been achieved through a variety of activities including sponsorship in support of our different market segments including the Community Hospital 100,the American Association of Medical Aud

115、it Specialists(AAMAS)and the Modern Healthcare Women Leaders in Healthcare.Brand building continued through awards,conferences and white papers.Several healthcare industry associations invited Craneware to present information at audit and compliance events and conferences during the year.Craneware w

116、as selected to lead an educational session at ANI:Healthcare Financial Management Associations(HFMA)National Institute 2012,held in June 2012.During the presentation,Cranewares client University Medical Center(UMC)Health System explained that moving to a revenue integrity approach increased their gr

117、oss revenues across all clinical departments by 100%,enhanced electronic charge capture and improved UMCs Medicare case mix by 7%.Craneware and its client,The Bellevue Hospital,presented at the October 2011 Revenue Integrity HFMA MAP event.The Bellevue Hospital shared insights gained from their reve

118、nue integrity initiatives,including the successful implementation of revenue integrity solutions that helped them to improve the accuracy and efficiency of charge processes,find missed revenue and strengthen compliance.The Bellevue Hospital reduced its denial write-offs from$1.8m in 2009 to$155,000

119、in 2010,decreased days in accounts receivable by approximately 30%,nearly doubled bad debt collections and achieved a net revenue potential impact of more than$1m.In its first year of implementation of Cranewares Chargemaster Toolkit,Online Reference Toolkit and Bill Analyzer products,Amerinet membe

120、r Adams County Regional Medical Center(ACRMC),a 25-bed Critical Access Hospital in the Southern Ohio region,significantly improved its financial performance,operational efficiency and compliance.The CFO of ACRMC noted that there has been a dramatic financial turnaround having significantly reduced e

121、rrors,and identified millions in financial performance improvement opportunities.ACRMC is projecting a profit for the first time in five years.Craneware is a partner in the Amerinet Strategic Alliance for Financial Efficiency(SAFE),a consortium of market-leading companies providing best-in-class rev

122、enue cycle and financial performance improvement solutions that support healthcare facilities of all sizes.AwardsThe Companys supplier award from Amerinet demonstrates the continued success with our partner network.Many awards were achieved during the year across the product portfolio.Cranewares Cha

123、rgemaster Toolkit received,for its sixth consecutive year,the number one ranking in the KLAS Revenue Cycle Chargemaster Management market category.Craneware was delighted that its Bill Analyzer product also achieved the number one ranking in 2011 for its KLAS ranking.KLAS is the leading source of he

124、althcare information technology vendor performance metrics.In addition,Chargemaster Toolkit achieved Healthcare Financial Management Association(HFMA)Peer-Review status for its eighth consecutive year.Cranewares InSight Audit software,one of our newer products,achieved platinum-level status;this is

125、the highest level of integration certification from Executive Health Resources,a leading provider of medical necessity compliance and appeals management solutions.Product DevelopmentIn the year,product development has been focused on leveraging the best innovative combinations of the Craneware and C

126、raneware InSight enlarged product set,whilst ensuring that the direction of the product set moves consistently with the long-term strategic positioning of Craneware as the revenue integrity partner of choice.Organisational ChangesAs of 1 July 2012 Craneware InSight(formerly ClaimTrust,acquired in Fe

127、bruary 2011)has been fully integrated into the management structure of the Group.With this integration,Glen Johnson,formerly CIO of ClaimTrust has joined the Operational Board of the Company to lead our Product Management division.Sharon Cuming has joined the Operational Board as Senior VP of Human

128、Resources.We would also like to take this opportunity to thank Joe Ferro(former CEO of ClaimTrust and EVP Craneware InSight)who left the Group in February 2012,for his service to both organisations and his continued positive advocacy of Craneware Solutions in his new role heading-up one of the partn

129、ers we have recently entered into a relationship with.9Cranewareplc AnnualReport2012Financial ReviewThe financial results for the current year,for the first time,include a full year contribution from our February 2011 acquisition ClaimTrust Inc,in comparison to the 4 months contribution in the prior

130、 year.These results reflect the mixed trading environment we experienced,especially in the first half of the financial year.However,despite this environment we have continued to invest in the future growth of the Group whilst delivering an 18%increase in our Adjusted EBITDA to$11.9m from$10.1m in th

131、e prior year.There have been no changes during the year to the business model underlying the Groups revenue recognition policies.The Group continues to recognise revenue primarily under its Annuity Software-as-a-Service(SaaS)revenue recognition policies with these revenues accounting for between 75%

132、to 80%of all revenue in any one year.Under this model we recognise software licence revenue and any minimum payments due from our partner contracts evenly over the life of the underlying signed contracts.With any new contract we sign,we normally expect to deliver a Professional Services engagement,r

133、elating to the implementation of the software,the training of the hospital staff and further assisting the hospital in developing its processes to ensure the software is utilised to its maximum potential.Within any individual contract we would expect these services to account for 12%to 20%of the tot

134、al contract value(dependent on the product and needs of the individual hospital).However of total Group revenue in any one year we would expect services revenues to account for between 10%to 20%of revenue.This revenue is typically recognised as the service is delivered,usually on a percentage of com

135、pletion basis.As a result of the ClaimTrust Inc acquisition in 2011 we now have a third revenue model.For revenue recognition purposes it is effectively the same recognition as the normal Annuity SaaS model described above.It is recurring in its nature,however it is not signed under long term non-br

136、eakable contracts and is invoiced monthly rather than annually in advance,therefore it does not include the inherent advantages of the Craneware Annuity SaaS revenue model.This revenue currently accounts for less than 10%of total revenues in any one year and as new contracts for the InSight product

137、range are being signed under the Annuity SaaS model,we would expect the proportion of revenue derived from this model to reduce over time.As a result of these revenue recognition models,based on our historical normal average contract life of 5 years,the maximum value of an average contract that can

138、be recognised as revenue in any one year is 20%plus the value of associated services that have been delivered.In all cases,if the contract contains any material contingencies or any increased risk of collection is identified,revenue is deferred until the contingency is satisfied,at which point the r

139、evenue that has been deferred is released and the revenue recognition is caught up to the level that would have been recognised had there been no contingency.Revenue Revenue for the year has increased by 8%to$41.1m(2011:$38.1m).Growth of 8%,whilst meaningful,is below both the challenging targets we

140、set for the Group and the historical high levels of growth we have reported in prior years.The primary reasons for this relate to:The cessation of a contract acquired as part of the ClaimTrust acquisition at the end of the first quarter of the financial year.This contract was administered through a

141、third party and was unexpectedly terminated as a result of the third party losing its contract with its end hospital network.As with most ClaimTrust contracts,this contract was subject to a break clause which allowed for early termination in the event the end customer contract was lost.The loss of t

142、his contract negatively impacted revenues by c$2m in the current year.The lengthening sales cycles due to the unforeseen consequences of the US government applying incentive payments to Electronic Health Record(EHR)implementations.Further details of these unintended consequences have been provided e

143、arlier,however the lengthening of these sales cycles and the resultant reduction in new contracts signed in the year has impacted current year revenues.The most significant impact relates to professional services revenues.As stated above,with any new sale we would expect to deliver and recognise 12%

144、to 20%of the total contract value within the first 3 to 6 months of signing.As a result of the lower level of sales,professional services revenues,on like for like services,have decreased in the current year by c$1.8m.Whilst we have managed to mitigate some of this loss in other areas,total professi

145、onal services revenue is$1.2m below the prior year.However we would expect to see this revenue quickly return to prior year levels as new sales levels return to historical norms.During the second half of the financial year we saw month on month sales activity increases which,based on our historical

146、norms for sales cycles,we would expect to positively impact revenue growth in the second quarter of FY2013 and thereafter.In any single year,large hospital deals and/or other deals signed through other routes to market are an important part of our growth and we would normally expect to sign at least

147、 one significant contract in each half year.Whilst the quantum of revenue we derive from any one deal has increased,the actual percentage of our total revenues derived from these deals in any one year has fallen considerably,with now less than 20%of our revenue expected from new large deals in a sin

148、gle year.Despite signing two large deals in the year,the revenue recognised from these deals only served to mitigate the revenue shortfalls discussed above rather than significantly add to our annual revenue growth as we would normally expect.One of these large deals signed in the year introduced,fo

149、r the first time since we entered the public markets,a“White-Labelling fee.”This is in effect paid for development services(which carry a significant premium),where we provide the functionality of our software in a software wrapper that the partner can brand.We have recognised this revenue as we wou

150、ld any other services revenue,i.e.as we deliver the underlying service on a percentage of completion basis.As a result$3.5m of revenue has been recognised in the current year,bringing the total services revenue recognised in the year to$7m or 17%of our current years revenue,this compares to 12%in th

151、e prior year.This increase is primarily a result of total revenue growth being below expectations rather than a significant long-term increase in total services revenues.EarningsIn the prior year,the Company introduced Adjusted earnings metrics to adjust for one-off acquisition costs.In keeping with

152、 this methodology a one-off benefit of$0.95m relating to the release of the provision for contingent consideration has been removed.We believe the disclosure of these adjusted earnings metrics is consistent with other acquisitive companies and that it allows for a more accurate understanding of the

153、underlying profit generated from operations and for a direct comparison year on year.Adjusted earnings before interest,taxation,share based payments,depreciation and amortisation(“EBITDA”)has grown in the year to$11.9m (2011:$10.1m)an increase of 18%.Accordingly Adjusted EBITDA margins have increase

154、d from 26.5%in the prior year to 29%.Operational Review Contd.10Cranewareplc AnnualReport2012Operational Review Contd.Revenue Visibility and other KPIsThe Company continues to believe the“Three Year Visible Revenue”metric is key to assessing the medium term growth prospects.This metric includes:Futu

155、re revenue under contract;Revenue generated from renewals(calculated at 100%dollar value renewal);ClaimTrust legacy revenue identified as recurring in nature(subject to an estimated churn rate of 8%per year).The different categories of revenue reflect any inherent future risk in recognising these re

156、venues.Future revenue under contract,is as the title suggests subject to contract without break clauses and therefore only has to be invoiced to be recognised in the respective years(only subject to future collection risk that exists with all revenue).Renewal revenues are contracts coming to the end

157、 of their original contract term(e.g.5 years)and will require the contracts to be renewed for the revenue to be recognised,however as we are renewing contracts at over 100%dollar value it is reasonable to conclude minimal additional risk is associated to this revenue.The final category“ClaimTrust re

158、venue identified as recurring in nature”is revenue that we would expect to recur in the future but as the underlying contracts do contain break clauses there is potential for this revenue not to be recognised in future years,however we apply an estimated 8%churn rate to make allowance for this risk.

159、To better aid understanding,the three year visible revenue as at 30 June 2012(i.e.visible revenue for FY2013,FY2014 and FY2015)is being presented against the visible revenue for the same three year period as at 30 June 2011.As such,visible revenue for the three years to 30 June 2015 has increased to

160、$108.7m from$100.9m at 30 June 2011,as follows:ClaimTrust legacy revenue of$10.8m.Revenue generated from renewal activities contributing$38m;being$5.0m in FY2013,$12.5m in FY2014 and$20.5m in FY2015.Future revenue under contract contributing$59.9m of which$28.5m is expected to be recognised in FY201

161、3,$20.6m in FY2014 and$10.8m in FY2015.Figure 1.Average contract length during the period has dipped to c4 years,below our historical normal average contract length of 5 years,this is due to the smaller number of contracts signed in the year and the sales mix of size of hospital being skewed as a re

162、sult.The Company does not anticipate this to be a long term trend as overall sales levels and mix return to historical levels.Figure 1.11Cranewareplc AnnualReport2012Operational Review Contd.The product attachment rate,being the average number of our nine products that are in place across our entire

163、 customer base,has increased from 1.5 in the prior year to 1.6 products.The remaining 7.4 reflects the significant cross sell opportunity that still exists for the Group.Operating ExpensesThe current year cost base includes the full year cost of the Craneware InSight cost base as well as the planned

164、 for investment released and executed on in the year.As a result net operating expenses(before acquisition benefits/costs,share based payments,depreciation and amortisation)have increased to$27.6m an 18%increase over the prior year(2011:$23.4m).The most significant increases relate to Client Servici

165、ng and Product Development where ClaimTrust had made significant investment prior to the acquisition and we will now look to leverage this cost base investment in future years as we increase sales levels and hospital customer numbers.Client Servicing has increased 24%to$7.2m (2011:$5.8m)and Product

166、Development has increased 36%to$6.8m(2011:$5.0m).Product Development spend has increased to 16.5%of our total revenue(2011:13%)reflecting the increased number of core products we are now supporting.We continue to capitalise very low levels of Development spend with$0.3m capitalised in the year(2011:

167、$0.2m).Acquisition of ClaimTrust Inc.In the prior year,Craneware completed the acquisition of ClaimTrust Inc.via a newly formed subsidiary Craneware InSight Inc.During the course of the year we made substantial progress on the integration of this business,ultimately completing the integration by 1st

168、 July 2012.At an early stage of the integration plan the InSight and the original Craneware sales forces were brought together such that the Group had one common sales force selling nine core products.All nine products are sold into one market segment being revenue integrity solutions to healthcare

169、organisations within the United States of America.As a result of the level of integration achieved throughout the year combined with the Group serving a single market it is not appropriate to show the results of Craneware InSight separate from the rest of the Group.As required by International Accou

170、nting Standards(IAS),in the prior year we were required,on consolidation,to both separately identify intangible assets and their fair value and estimate the fair value of contingent consideration that would ultimately be paid.In respect of intangible assets and the fair value of assets acquired,the

171、finalisation of the original fair values are detailed in Note 16 to the accounts and relate primarily to the recognition of a deferred tax asset of$1.34m relating to pre-acquisition losses and an adjustment for an unrecorded liability of$0.26m that existed at the opening balance sheet date.As a resu

172、lt finalised Goodwill is$11.2m(2011:$12.3m).In respect of the estimate of contingent consideration,this estimate was produced prior to both the cessation of the third party contract reported in the interim results statement and the effect of lengthening sales cycles due to the unforeseen consequence

173、s of the US government applying incentive payments to Electronic Health Record(EHR)implementations which impacted the InSight products as well as the other Craneware products.As a result,no contingent consideration is payable in respect of the ClaimTrust Inc.acquisition and as required by IAS the or

174、iginal provision of$0.95m has been released to the current years results.Again as required by IAS a detailed review for impairment of Goodwill has been carried out at the balance sheet date and no impairment has been identified.Full details of the impairment review are disclosed in Note 14 to the ac

175、counts.Cash We continue to measure the quality of our earnings through our ability to convert them into operating cash.As in prior years,we have continued to have very high levels of cash conversion which has enabled us to grow our cash reserves to$28.8m(2011:$24.2m).These cash levels are now approa

176、ching the levels prior to the$9m paid for the acquisition despite having paid out a further$4.1m to our shareholders by way of dividends.Our ability to return our cash balances to pre-acquisition levels gives us confidence in our ability to fund further bolt-on acquisitions from the Companys own res

177、erves,and as such acquisitions continue to be part of our future growth strategy.Balance Sheet The Group maintains a strong balance sheet position,not only through our significant cash balance but with rigorous controls over working capital and no debt.CurrencyThe reporting currency for the Group(an

178、d cash reserves)is US dollars.Whilst the majority of our cost base is US located and therefore US dollar denominated we do have approximately one quarter of the cost base based in the UK relating primarily to our UK employees(and therefore denominated in Sterling).As a result,we continue to closely

179、monitor the Sterling to US dollar exchange rate,and where appropriate consider hedging strategies.During the year,we have not seen a significant impact through exchange rate movements,with the average exchange rate throughout the year being$1.5840 as compared to$1.5906 in the prior year.TaxationThe

180、Groups effective tax rate remains dependent on the proportion of profits generated in the UK and overseas and the applicable tax rates in the respective jurisdictions.As detailed above,the current year has seen a significant decrease in the levels of professional services revenues generated.As all p

181、rofessional services are delivered in the US,this reduction combined with the lower level of sales generated in the year has significantly reduced the levels of income subject to taxation in the US.This combined with the reducing tax rate in the UK and our continued ability to agree enhanced Researc

182、h and Development tax relief has resulted in an effective tax rate of 20.6%(2011:30.5%).We would expect effective tax rates to increase in future years as sales levels return to normal and the levels of professional services increase accordingly.12Cranewareplc AnnualReport2012Operational Review Cont

183、d.EPSAs with EBITDA,the Group is reporting an Adjusted EPS figure,adjusting for the$0.95m of contingent consideration provision release.In the year adjusted EPS has increased by 23%to$0.316(2011:$0.256)and adjusted diluted EPS has increased by 25%to$0.315(2011:$0.253).This is despite the increase in

184、 weighted number of average shares as a result of the full year effect of the shares issued in 2011 as a result of the acquisition of ClaimTrust.The increase in EPS is driven by the increase in EBITDA further enhanced by the lower effective tax rate resulting in the year.DividendThe Board recommends

185、 a final dividend of 5.7p(8.9 cents)per share giving a total dividend for the year of 10.5p(16.4 cents)per share(2011:8.8p(14.12 cents)per share).Subject to confirmation at the Annual General Meeting,the final dividend will be paid on 7th December 2012 to shareholders on the register as at 9th Novem

186、ber 2012,with a corresponding ex-Dividend date of 7th November 2012.The final dividend of 5.7p 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 Companys Dividend Currency Election,or who registerto do soby t

187、he close of business on9th November 2012.The exact amount to be paid will be calculated by reference to the exchange rate to be announced on 9th November 2012.The final dividend referred to above in US dollars of 8.9 cents is given as an example only using the Balance Sheet date exchange rate of$1.5

188、685/1 and may differ from that finally announced.OutlookIn a mixed trading environment Craneware delivered a solid level of growth across key financial and operational metrics,confirming the health of the business and giving a high degree of confidence for the future.Added pressures on US hospitals

189、have led to an increased sales and opportunity pipeline for our products as we move into the current financial year.Cranewares solutions help US healthcare providers drive business improvements that will result in better financial health.In this turbulent,demanding environment,hospitals need financi

190、al accuracy,visibility and shared accountability to survive.Fiscal and regulatory drivers are expected to increase in the year ahead as they push for greater transparency and accuracy,and although this creates a challenging ever-evolving marketplace,it ultimately increases the opportunities for Cran

191、ewares solutions.Craneware is a trusted and established part of the fabric of the US healthcare industry,with a client base consisting of around a quarter of all US hospitals.We are confident that the business is ideally placed with its in-house expertise,industry-leading product suite and balance s

192、heet strength to help US healthcare organisations deal with their increasing fiscal and regulatory pressures.Furthermore with revenue visibility having returned to the historic high levels,we view the future with confidence.Keith Neilson,Chief Executive Officer Craig Preston,Chief Financial Officer

193、3 September 201213Cranewareplc AnnualReport2012Directors,Secretary,and AdvisorsDirectorsG R Elliott(Chairman,non-executive)K Neilson N P Heywood(non-executive)C T Preston R F Verni(non-executive)Secretary&Registered OfficeC T Preston1 Tanfield Edinburgh EH3 5DAStockbrokers and Nominated AdvisorsPeel

194、 Hunt LLP120 London Wall London EC2Y 5ETRegistrarsCapita Registrars LtdThe Registry 34 Beckenham Road Beckenham Kent BR3 4TUBankersThe Royal Bank of Scotland plc36 St.Andrew Square Edinburgh EH2 2YBClydesdale Bank20 Waterloo Street Glasgow G2 6DBBarclays Commercial BankAurora House 120 Bothwell Stre

195、et Glasgow G2 7JTHSBC Bank plc7 West Nile Street Glasgow G1 2RGLloyds TSBHenry Duncan House 120 George Street Edinburgh EH2 4LHRegistered AuditorsPricewaterhouseCoopers LLPErskine House 68-73 Queen Street Edinburgh EH2 4NHSolicitorsPinsent Masons LLPPrinces Exchange 1 Earl Grey Street Edinburgh EH3

196、9AQ 14Cranewareplc AnnualReport2012Board of DirectorsGeorge R Elliott,59 Non-Executive Chairman:Appointed 10 August 2007George is non-executive Chairman of Cupid plc(CUP).He is also a non-executive Director of Summit Corporation plc(SUMM),a drugs discovery company and Corsair Components Inc,a manufa

197、cturer and supplier of high performance PC components.From 2000-2007 George was Chief Financial Officer of Wolfson Microelectronics plc(WLF),a leading global provider of high performance mixed-signal semiconductors to the consumer electronics market.Previously,he was Business Development Director at

198、 McQueen International Ltd(now Sykes),a manufacturing and support services provider,where he was responsible for strategic sales and marketing.George,formerly a partner of Grant Thornton,is a member of the Institute of Chartered Accountants of Scotland and has a degree in Accountancy and Finance fro

199、m Heriot-Watt University.Keith Neilson,43 Chief Executive Officer:Co-founderKeith co-founded Craneware in 1999 and has served as its CEO ever since.Under Keiths guidance,Craneware became recognised as the pioneer in revenue integrity management and a leading provider of superior products and profess

200、ional services.Keiths direction has helped Craneware to win multiple prestigious awards in such areas as international achievement,business growth strategy and innovation.Keith was named The Entrepreneurial Exchanges“Emerging Entrepreneur of the Year 2003”and was a finalist in the 2004 World Young B

201、usiness Achiever Award,winning the Award of Excellence in the Business Strategy category.He received the UK Software&Technology Entrepreneur of the Year Award from Ernst&Young in 2008 and was the Insider Elite Young Business Leader of the Year in 2009.Prior to launching Craneware,Keith worked primar

202、ily 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 bachelors degree in 1991.Craig T Preston,41 Chief Financial Officer:Appointed 15 September 2008C

203、raig 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 Cranewares financial operations in both the United Kingdom and United States.Craig has significant experience in senio

204、r financial roles with other private and public technology companies,including those with a multi-national presence.Prior to Craneware,he was group director of finance and company secretary at Intec Telecom Systems plc.Earlier,he served as corporate development manager at London Bridge Software plc.

205、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 Financ

206、ial Management from the University of Sheffield.He is also a member of the Institute of Chartered Accountants in England and Wales.Neil P Heywood,50 Non-Executive Director:Appointed 31 January 2002Neil is Managing Director of Matrix Alpha Analytics and Chairman of Codeplay Software.Prior to Matrix,N

207、eil was co-founder and CEO of Quadstone from 1995 to 2001.Quadstone won numerous awards for its software and was named best“Small Start-up”of the year at the Financial Times/BVCA awards in 1999.It was acquired by Portrait Software in 2006.Quadstone was a buy-out from the Edinburgh Parallel Computing

208、 Centre,a department at the University of Edinburgh,which Neil managed.Prior to EPCC,Neil was a co-founder and later Commercial Director of 3L,a software firm specialising in software for parallel computers.3L was bought by Spectrum Signal Processing,Inc.Neil received his B.Sc.in Computer Science fr

209、om the University of Edinburgh in 1984.Ron F Verni,64 Non-Executive Director:Appointed 1 May 2009Ron is currently a director of On Deck Capital,and on the Board of Advisors of C,CEO Ventures,and the Robinson College of Business.Before that he was President&CEO of Sage Software,Inc,and a member of th

210、e Board of Directors of the Sage Group plc.Under his leadership,the company grew from less than$160 million in revenue to over$1 billion,from under 1,000 employees to over 5,000,and from 1 million business customers to over 2.5 million.Ron also engineered over 20 acquisitions and oversaw their succe

211、ssful integration into the company.Prior to Sage Software,Ron was President and CEO of Peachtree Software,Inc.,a leading pioneer in business management solutions for small to medium size businesses.Ron also was a Vice President of Marketing with Automatic Data Processing,President and CEO of NEBS So

212、ftware,Inc.,and the founder and CEO of ASTEC Software.15Cranewareplc AnnualReport2012Directors ReportThe Directors present herewith their report and the audited consolidated financial statements for the year ended 30 June 2012.Principal Activities and Business ReviewThe Groups principal activity con

213、tinues 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

214、and its position at the end of the financial year,including relevant key performance indicators(principally revenue,adjusted operating profit before acquisition costs,share based payments,depreciation and amortisation,visibility of revenue over the next three years and the product attachment rate).D

215、etailed information on all matters required is presented in the Operational Review contained in pages 5 to 12 and is incorporated into this report by reference.A description of the principal risks and uncertainties facing the Group is set out below.Where the Directors Report,Chairmans Statement and

216、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 e

217、conomic and business risk factors,underlying such forward looking statements or information.Financial Results and DividendsThe Groups revenue for the year was$41.1m(2011:$38.1m)which has generated an adjusted operating profit(before acquisition related matters)of$10.8m(2011:$9.3m).The full results f

218、or the year,which were approved by the Board of Directors on 3 September 2012,are set out in the accompanying financial statements and the notes thereto.During the year the Company paid an interim dividend of 4.8p(7.5 cents).The Directors are recommending the payment of a final dividend of 5.7p(8.9

219、cents)per share giving a total dividend of 10.5p(16.4 cents)per share based on the results for 2012(2011:8.8p(14.12 cents).Subject to approval at the Annual General Meeting,the final dividend will be paid on 7 December 2012 to shareholders on the register as at 9 November 2012.The level of dividend

220、proposed for the year continues(and the Directors intend to continue in future years)the Companys stated progressive dividend policy based on the Groups retained annual earnings.The level of distributions will be subject to the Groups working capital requirements and the ongoing needs of the busines

221、s.Research and Development ActivitiesThe Group continues its development programme of software products for the US healthcare industry which includes research and development of new complementary products,integration(where appropriate)of products acquired through the ClaimTrust acquisition in the pr

222、ior year and the enhancements to the Groups existing portfolio of market leading products.The Directors regard investment in development activities as a prerequisite for success in the medium and long term future.During the year development expenditure amounted to$6.8m(2011:$5.0m)net of expenditure

223、capitalised of$0.3m(2011:$0.2m).Financial InstrumentsThe financial risk management strategy of the Group,its exposure to currency risk,interest rate risk,counterparty risk and liquidity is set out in Note 3 to the financial statements.Principal Risks and Uncertainties To deliver continued sustainabl

224、e growth,the Group recognises the need to minimise the likelihood and impact of key risks.These risks are both general in nature i.e.business risks faced by all businesses,and more specific to the Group and the market in which it operates.The nature of the US healthcare industry and associated risks

225、 are detailed in the Operational Review on pages 5 to 12.The risks outlined here are those principal risks and uncertainties that are material to the Group.They do not include all risks associated with the Group and are not set out in any order of priority.US Healthcare ReformIssue:The US healthcare

226、 industry is going through a continued period of fundamental reform,the outcome of which has yet to be fully determined and as such could impact the Groups market opportunity.Actions:The Group has taken steps to ensure it stays at the forefront of how the industry is interpreting current proposals a

227、nd actions they are taking.It does this through,amongst other things,its:Strategic Advisory Council which is formed from the industry experts from within the Group;Having independent industry experts attend and speak at internal Company events;Regular attendance by members of this Council and other

228、senior management at healthcare forums and industry education events;and Client forums.The Strategic Advisory Council,the Operations Board and the PLC Board come together at periodic intervals to review developments in the market and provide direct input to the Groups ongoing strategy appraisal and

229、product development.Competitive LandscapeIssue:New entrants to the market or increased competition from existing competitors could significantly impact the Groups market opportunity.Actions:The Group continually monitors its competitive landscape,including both existing and potential new market entr

230、ants.Significant barriers to entry continue to exist,including but not limited to the significant data content built over the Group history which exists within the products.The Group continues to ensure its products are platform agnostic and actively seeks partnerships with other Healthcare IT vendo

231、rs.3.1FY08FY10FY11FY09Dividends/Share(pence)*Subject to approval at AGM8.08.84.710.5*FY1216Cranewareplc AnnualReport2012Directors Report Contd.Management of GrowthIssue:The Group continues to grow significantly both organically and through acquisition which could place strain on the current manageme

232、nt and other resources of the Group.Actions:The Groups Annuity SaaS(“Software as a Service”)business model combined with its detailed forecasting processes provide visibility to expected growth rates.This is the foundation when planning in advance,including necessary resourcing levels.To ensure the

233、correct infrastructure to support growth,assessments are performed and improvements are made within systems,policies and procedures and business controls are upgraded,as appropriate,across the Group.In 2012 these included Sales,Sales support,Pricing and Contracting,as well as various IT systems.Depe

234、ndence on Key Executives and PersonnelIssue:Due to the size of the Group significant reliance is placed on a few members of the executive and senior management team,the retention of which cannot be guaranteed.Actions:The Group continues to expand its senior management team,with a new appointment to

235、the Operations Board having been made since the Balance Sheet date.In addition,the Group has utilised its leadership framework to help develop its leaders of the future.In regards to retention the Remuneration Committee continues to monitor and develop the remuneration packages of key personnel to e

236、nsure they are both competitive and include appropriate long term incentives.Failure to develop or acquire appropriate software solutionsIssue:Reliance on a small number of products could significantly limit the Groups market opportunity and leave it unable to meet its customers needs.Actions:Whilst

237、 remaining focused on its core Revenue Integrity market the Group has both internally developed and acquired a total product suite of 9 core products(from the original 1 in 2007).The Group publishes its product attachment rate during every reporting period and has a medium term strategic goal of gen

238、erating no more than 55%of its revenue in any year,from any one product.Intellectual Property RiskIssue:Failure to protect,register and enforce(if appropriate)the Groups Intellectual Property Rights could materially impact the Groups future performance.Actions:The Group has,and will continue to regi

239、ster its trademarks and protects access to its copyrights and confidential information,as appropriate.The Group would vigorously defend itself against a third-party claim should any arise.The Group also has in place strict physical and data security processes and encryption to protect its intellectu

240、al property.Acquisition RiskIssue:The Group has a stated acquisition strategy.Any acquisition carries with it an inherent risk,including failure to identify material matters that could adversely affect future Group performance.Actions:Whilst the Group has limited experience of acquisitions,the Board

241、 members individually have significant experience in regards to completing acquisitions.In addition,and where appropriate,the Board appoints independent professional advisors to assist in the consideration of the acquisition and to assist management in the due diligence process.The principal financi

242、al risks are detailed in Note 3 to the financial statements.How the Board determines and manages risks is detailed in the Corporate Governance report on pages 19 to 22.In summary,the US healthcare market is not immune to the macro-economic climate and,with the increasing focus and requirements of th

243、e proposed healthcare reform,the Group expects the market to continue to be competitive.The Group therefore aims to remain at the forefront of product innovation and delivery,through a combination of in-house development and specific acquisition opportunities.This requires the recruitment,retention,

244、and reward of skilled staff,alongside responsiveness to changes,and the opportunities that result,as they arise.Going ConcernThe Directors,having made suitable enquiries and analysis of the accounts,including the consideration of:cash reserves;no debt or debt related covenants;continued cash generat

245、ion;and Annuity SaaS business model,have determined that the Group has adequate resources to continue in business for the foreseeable future and that it is therefore appropriate to adopt the going concern basis in preparing these financial statements.DirectorsThe Directors of the Company are listed

246、on page 13.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 Companys power to purchase its own shares.The Company

247、s Articles of Association may only be amended by a special resolution of the Companys shareholders.Details of the Directors service contracts and their respective notice terms are detailed in the Remuneration Committee Report on page 24.Authorised and Issued Share CapitalThe Companys authorised shar

248、e capital at the Balance Sheet date was 50,000,000 ordinary shares of 1p each of which 26,991,891 were issued and fully paid up.During the year,the Company has issued 199,210 shares;the remaining 24,186 were issued to give the final total issue of 641,917 in respect of the ClaimTrust Inc acquisition

249、 that took place on 17th February 2011.In addition,options were exercised pursuant to the Companys share option schemes,resulting in the allotment of 175,024 new ordinary shares.No further new ordinary shares have been allotted as a result of these matters since the end of the financial year to the

250、date of this report.17Cranewareplc AnnualReport2012Directors and their interestsThe interests of the Directors who held office at 30 June 2012 and up to the date of this report in the share capital of the company,were as follows:-20122011G R Elliott15,65015,650N P Heywood130,356130,356K Neilson3,453

251、,4593,448,7793,599,4653,594,785Directors interests in share options are detailed in the Remuneration Committee Report on page 25.Substantial shareholdersAs at 1 August 2012,the Company had been notified of the following beneficial interests in 3%or more of the issued share capital pursuant to sectio

252、n 793 of the Companies Act 2006:No.of Ordinary 0.01 Shares%of issued share capitalLiontrust Investment Partners3,473,99312.87K Neilson3,453,45912.79W G Craig3,173,15111.76Artemis Investment Management2,750,07410.19Fidelity Investments1,640,4006.08Hargreave Hale1,259,1404.66Baillie Gifford1,046,6993.

253、88D Paterson873,8003.24Black Rock Investment Management819,8113.04The total number of shares as at 30 June 2012 and 1 August 2012 was 26,991,891.Indemnity of Directors and OfficersUnder the Companys Articles of Association and subject to the provisions of the Companies Act,the Company may and has in

254、demnified all Directors or other officers against liability incurred by them in the execution or discharge of his duties or exercise of their powers,including but not limited to any liability for the costs of legal proceedings where judgement is given in their favour.In addition,the Company has purc

255、hased and maintains appropriate insurance cover against legal action brought against Directors and officers.Corporate Social Responsibility&Environmental PolicyThe Group is committed to maintaining a high level of social responsibility.It is the Groups policy to support and encourage environmentally

256、 sound business operations,with aspects and impact on the environment being considered at Board level.Recognising that the Groups operations have minimal direct environmental impact,the Group aims to ensure that:it meets all statutory obligations;where sensible and practical,it encourages working pr

257、actices,such as teleconferencing,teleworking and electronic information exchange that reduce environmental impact;and re-cycles waste products wherever possible,encouraging use of environmentally friendly materials,and disposing safely of any non-recyclable materials.CustomersThe Group treats all it

258、s customers with the utmost respect and seeks to be honest and fair in all relationships with them.The Group provides its customers with products and levels of customer service of outstanding quality.CommunityThe Group seeks to be a good corporate citizen respecting the laws of the countries in whic

259、h it operates and adhering to best social practice where feasible.It aims to be sensitive to the local communitys cultural social and economic needs.Employees and Employee InvolvementThe Group recognises the value of its employees and that the success of the Group is due to their efforts.The Group r

260、espects the dignity and rights of all its employees.The Group provides clean,healthy and safe working conditions.An inclusive working environment and a culture of openness are maintained by the regular dissemination of information.The Group endeavours to provide equal opportunities for all employees

261、 and facilitates the development of employees skill sets.A fair remuneration policy is adopted throughout the Group.The Group does not tolerate any sexual,physical or mental harassment of its employees.The Group operates an equal opportunities policy and specifically prohibits discrimination on grou

262、nds of colour,ethnic origin,gender,age,religion,political or other opinion,disability or sexual orientation.The Group does not employ underage staff.The general policy of the Group is to welcome employee involvement as far as it is reasonably practicable.Employees are kept informed by meetings,regul

263、ar updates and web page postings.In addition the Groups UK and US senior management teams meet regularly to review performance against the Groups strategic aims and development roadmaps.The Group maintains core values of Honesty,Integrity,Hard Work,Service and Quality and actively promotes these val

264、ues in all activities undertaken on behalf of the Group.Employment of Disabled PersonsApplications 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

265、 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

266、a disability.Directors Report Contd.18Cranewareplc AnnualReport2012Policy on payment of PayablesRelationships 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 con

267、ditions of its agreements in place with such suppliers and subcontractors.The Group does not believe that the giving or accepting of bribes is acceptable business conduct.It is the Groups normal practice to make payments to suppliers in accordance with agreed terms and conditions,generally within 30

268、 days,provided that the supplier has performed in accordance with the relevant terms and conditions.Trade payables at 30 June 2012 represented,on average 20 days purchases(2011:21 days)for the Group and 22 days purchases(2011:22 days)for the Company.Charitable and Political ContributionsThe Group ha

269、s continued to develop the“Craneware Cares”program.The focus of Craneware Cares is to raise awareness and funds for charity.In 2012,the Group ran a sponsorship through Craneware Cares where employees were encouraged to raise more than$2,000 charitable donations each to go towards the Villa La Paz Fo

270、undation.The employees who were most successful in raising the monies were allowed to volunteer for a week at the Villa La Paz Foundation in Peru.This involved assisting with the children within the Foundation.The Groups financial costs of this sponsorship for 2012 was$10,102.The Villa La Paz Founda

271、tion,in Peru,assists children living in deprived areas and who suffer from disabilities and illness.In 2011,the Craneware Cares program raised$3,500 towards the same foundation as well as donating$2,374 towards Highland 100 charitable bike riding events and$7,820 towards CHAS,Childrens Hospice Assoc

272、iation Scotland.Neither the Company nor its subsidiaries made any donation for political purposes in fiscal years 2012 or 2011.Annual General MeetingThe resolutions to be proposed at the AGM,together with explanatory notes,appear in a separate Notice of Annual General Meeting which is sent to all sh

273、areholders.The proxy card for registered shareholders is distributed along with the notice.Company RegistrationThe Company is registered in Scotland as a public limited company with number SC196331.Statement of Directors ResponsibilitiesThe Directors are responsible for preparing the Annual Report a

274、nd the financial statements in accordance with applicable law and regulations.Company law requires the Directors to prepare financial statements for each financial year.Under that law the Directors have prepared the Group and Parent Company financial statements in accordance with International Finan

275、cial Reporting Standards(IFRSs)as adopted by the European Union.In preparing these financial statements,the Directors have also elected to comply with IFRSs,issued by the International Accounting Standards Board(IASB).Under company law the Directors must not approve the financial statements unless t

276、hey are satisfied that they give a true and fair view of the state of affairs of the Group and the Company and of the profit or loss of the Group for that period.In preparing these financial statements,the Directors are required to:select suitable accounting policies and then apply them consistently

277、;make judgements and accounting estimates that are reasonable and prudent;and state whether applicable IFRSs as adopted by the European Union and IFRSs issued by IASB have been followed,subject to any material departures disclosed and explained in the financial statements.The Directors are responsib

278、le for keeping adequate accounting records that are sufficient to show and explain the Companys transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and enable them to ensure that the financial statements comply with the Companies Act 200

279、6.They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.The Directors are responsible for the maintenance and integrity of the companys website.Legislation in the Uni

280、ted Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.Auditors and Disclosure of Information to AuditorsEach Director,as at the date of this report,has confirmed that insofar as they are aware there is no relevant audit inf

281、ormation(that is,information needed by the Companys auditors in connection with preparing their report)of which the Companys 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 e

282、stablish that the Companys auditors are aware of that information.A resolution to reappoint PricewaterhouseCoopers LLP as auditors will be proposed at the Annual General Meeting.Approved by the Board of Directors and signed on behalf of the Board by:Craig Preston Company Secretary 3 September 2012Di

283、rectors Report Contd.19Cranewareplc AnnualReport2012Corporate Governance ReportThe Board of Directors(“the Board”)acknowledge the importance of the Principles set out in The UK Corporate Governance Code issued in June 2010(the“Code”).Although the Code is not compulsory for AIM listed companies,the B

284、oard recognises the importance of good corporate governance practices and therefore has applied the principles as far as practicable for a public Company of its size.This Report and the Remuneration Committee Report(on pages 23 to 25)identify how it has complied with both the individual principles a

285、nd the spirit of the Code as a whole.The Code itself defines the purpose of corporate governance being“to facilitate effective,entrepreneurial and prudent management that can deliver the long-term success of the company;”it is this overarching objective that the Board has sought to achieve in applyi

286、ng the Code principles.LeadershipThe role of the Board“Every Company should be headed by an effective Board which is collectively responsible for the long-term success of the company”The Companys Board is headed by its Chairman George Elliott and comprises two executive Directors,Keith Neilson,Chief

287、 Executive Officer and Craig Preston,Chief Financial Officer along with two further non-executive Directors,Ron Verni(Senior Independent Director)and Neil Heywood.Detailed biographies of all Directors are contained on page 14.The Board meets regularly,usually monthly,to discuss and agree on the vari

288、ous matters brought before it,including the Group trading results.The Board is well supported by the Groups Operations Board(details of which are provided below)and a broader senior management team,who collectively have the qualifications and experience necessary for the day to day running of the Gr

289、oup.There is a formal schedule of matters reserved for the Board,which include approval of the Groups strategy,annual budgets and business plans,acquisitions,disposals,business development,annual reports and interim statements,plus any significant financing and capital expenditure plans.As part of t

290、his schedule,the Board has clearly laid out levels of devolved decision making authority to the Groups Operations Board.The Board has further established an Audit Committee and a Remuneration Committee details of which are provided below.George Elliott is a member of both these committees,in additio

291、n to the two independent non-executives.In deciding this,the Company has taken advantage of the Codes relaxations available to smaller companies.The Board has also established a Nominations Committee which is chaired by Neil Heywood and includes George Elliott and Ron Verni as its members.Part of th

292、e role of the Nominations Committee is to review and determine the composition and structure of the Board as well as,if appropriate,identify potential candidates to be appointed as Directors.During the year,the Board as a whole performed a review of its composition as part of its annual performance

293、review and determined it was appropriate to add a further independent non-executive Director.Attendance of Directors at Board and Committee meetings convened in the year,along with the number of meetings that they were invited to attend,are set out below:BoardNominations CommitteeRemuneration Commit

294、teeAudit CommitteeNo.Meetings in year11-23Executive DirectorsK Neilson11/11-C T Preston11/11-Non Executive DirectorsG R Elliott10/11-2/23/3N P Heywood11/11-2/23/3R Verni10/11-2/22/3 Where any Board member has been unable to attend Board or Committee meetings during the year,input has been provided t

295、o the Company Secretary ahead of the meeting.The relevant Chairman then provides a detailed briefing along with the minutes of the meeting following its conclusion.As detailed in the Directors Report on page 17,the Company maintains appropriate insurance cover against legal action brought against Di

296、rectors and officers.The Company has further indemnified all Directors or other officers against liability incurred by them in the execution or discharge of their duties or exercise of their powers.Division of Responsibilities“There should be a clear division of responsibilities at the head of the c

297、ompany between the running of the Board and the executive responsible for the running of the companys business.No one individual should have unfettered powers of decision”The Board has established clearly defined and well understood roles for George Elliott as Chairman of the Company,and Keith Neils

298、on as Chief Executive Officer.The Chairman is responsible for the leadership of the Board,ensuring its effectiveness and setting its agenda.Once strategic and financial objectives have been agreed by the Board,it is the Chief Executive Officers responsibility to ensure they are delivered upon.To fac

299、ilitate this,Keith Neilson as CEO chairs the Groups Operations Board which comprises the Chief Financial Officer and five further members of the Senior Management Team.The day-to-day operation of the Groups business is managed by this Board,subject to the clearly defined authority limits.The Chairma

300、n“The chairman is responsible for leadership of the Board and ensuring its effectiveness on all aspects of its role”George Elliott was appointed Chairman of the Board in August 2007,shortly before the Company listed on the AIM market.At that time the then Board satisfied themselves that he was indep

301、endent,fulfilling the requirements of the Code.In setting the Board agendas,the Chairman,in conjunction with the Company Secretary,ensures input is gathered from all Board Directors on matters that should be included.Board papers are issued in advance of meetings to ensure Board members have appropr

302、iate detail in regards to matters that will be covered,thereby encouraging openness and healthy debate.Non-Executive Directors“As part of their role as members of a unitary board,non-executive directors should constructively challenge and help develop proposals on strategy.”The Board has appointed R

303、on Verni as Senior Independent Director.In this role,Ron provides a sounding board for the Chairman as well as providing an additional channel of contact for shareholders,other Directors or employees,if the need arises.In addition to matters outlined above,there is regular communication between exec

304、utive and non-executive Directors,including where appropriate,updates on matters requiring attention prior to the next Board meeting.The non-executive Directors meet,as appropriate but no less than annually,without executive Directors being present and further meet annually without the Chairman pres

305、ent.EffectivenessThe Composition of the Board“The Board and its committees should have the appropriate balance of skills,experience,independence and knowledge of the company to enable them to discharge their respective duties and responsibilities effectively”20Cranewareplc AnnualReport2012Corporate

306、Governance Report Contd.The composition of the Board has been designed to give a good mix and balance of different skill sets,including significant experience in:High growth companies;Software and healthcare sectors;Entrepreneurial cultures;Both UK and US companies;Acquisitions;and Other listed plc

307、companies.Through this mix of experience the Board and the individual Directors are well positioned to set the strategic aims of the Company as well as drive the Groups values and standards throughout the organisation,whilst remaining focused on their obligations to shareholders and meeting their st

308、atutory obligations.The Board reviews on an annual basis the independence of each non-executive Director.In making this consideration the Board determines whether the Director is independent in character and judgement and whether there are relationships or circumstances which are likely to affect,or

309、 could appear to affect,the Directors judgement.In regards to Neil Heywood,the Board considered his appointment to the original Craneware Limited Board being in January 2002.Whilst Neils tenure is over 10 years,the Company and the Board have significantly changed since the Companys IPO in 2007,as a

310、result of this and Neils conduct,the Board has concluded this has not affected his independence.As detailed earlier,during the year the Board performed a review of its composition and determined it was appropriate to add a further independent non-executive Director.The process of identifying appropr

311、iate candidates is underway.Appointments to the Board“There should be a formal,rigorous and transparent procedure for the appointment of new directors to the Board”When a new appointment to the Board is to be made,consideration is given to the particular skills,knowledge and experience that a potent

312、ial new member could add to the existing Board composition.A formal process is then undertaken,usually involving external recruitment agencies(as has been the case with the last two appointments to the Board),with appropriate consideration being given,in regards to executive appointments,to internal

313、 and external candidates.Before undertaking the appointment of a non-executive Director,the Chairman establishes that the prospective Director can give the time and commitment necessary to fulfil their duties,in terms of availability both to prepare for and attend meetings and to discuss matters at

314、other times.This process is normally performed under the remit of the Nominations Committee.Commitment“All directors should be able to allocate sufficient time to the company to discharge their responsibilities effectively”All Board Directors recognise the need to allocate sufficient time to the Com

315、pany for them to be able to meet their responsibilities as Board members.All non-executive Director contracts include minimum time commitments;however these are recognised to be the minimums.Details of the other directorships held by each Board member are provided in the Director Biographies on page

316、 14.The Board has evaluated the time commitments required by these other roles and does not believe it affects their ability to perform their duties with the Company.No executive Director currently holds any other plc directorship.The non-executive Director contracts are available for inspection at

317、the Companys registered office and are made available for inspection both before and during the Companys Annual General Meeting.Development“The Board should be supplied in a timely manner with the information in a form and a quality appropriate to enable it to discharge its duties”The Chairman is re

318、sponsible 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 Boards Committees.Updates dealing with changes in legislation and regulation relevant to the Groups business are provided to

319、 the Board by the Company Secretary/Chief Financial Officer and through the Board Committees.All Directors have access to the advice and services of the Company Secretary,who is responsible to the Board for ensuring that Board procedures are properly complied with and that discussions and decisions

320、are appropriately minuted.Directors may seek independent professional advice at the Companys expense in furtherance of their duties as Directors.Training in matters relevant to their role on the Board is available to all Board Directors.New Directors are provided with an induction in order to introd

321、uce them to the operations and management of the business.In addition,the non-executive Directors meet with,at least once a quarter,the Groups Operations Board on an informal basis.This provides all Directors with direct access to the senior management of the Company and allows for better understand

322、ing of how the strategy set by the Board is being implemented across the Group.Further to this the non-executive Directors periodically join the Groups Strategic Advisory Council.This is a committee of the Groups industry experts who meet to assess potential changes in the US healthcare market ident

323、ifying both opportunities and risks to the Group.Evaluation“The Board should undertake a formal and rigorous annual evaluation of its own performance and that of its committees and individual directors”During the year,a formal evaluation was conducted by means of a detailed questionnaire which was c

324、ompleted by each Director.The results of this process were collated by the Chairman and were presented to the Board as a whole.This evaluation included a review of the performance of individual Directors including the Chairman and the Board Committees.Based on this evaluation,the Board has taken ste

325、ps to implement certain agreed upon suggestions which has included the process to recruit a further independent non executive Director,but overall has concluded that its performance in the past year had been satisfactory.The Board has considered the Codes recommendation that the evaluation of the Bo

326、ard be carried out externally at least every three years.The Board recognises this recommendation is not applicable to AIM listed companies and has determined it was not necessary to carry out an external review in the current year.Re-election“All directors should be submitted for re-election at reg

327、ular intervals,subject to continued satisfactory performance”Under the Companys Articles of Association,at every Annual General Meeting,at least one-third of the Directors who are subject to retirement by rotation,are required to retire and may be proposed for re-election.In addition,any Director wh

328、o 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 re

329、tire at their first AGM and,if eligible,can seek re-appointment.21Cranewareplc AnnualReport2012However,the Board recognises the Codes 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 prac

330、tice.As such,all Directors will retire from office at the Companys forthcoming AGM and stand for re-appointment.AccountabilityFinancial and Business Reporting“The Board should present a balanced and understandable assessment of the companys position and prospects”The Board recognises its responsibil

331、ities,including those statutory responsibilities laid out on page 18.An assessment of the Groups market,business model and performance is presented in the Chairmans Statement and the Operational Review on pages 4 to 12.As detailed on page 16 of the Directors Report,the Board has confirmed that it is

332、 appropriate to adopt the going concern basis in preparing financial statements.Risk Management and Internal Control“The Board is responsible for determining the nature and extent of the significant risks it is willing to take in achieving its strategic objectives.The Board should maintain sound ris

333、k management and internal control systems”The Directors recognise their responsibility for the Groups system of internal control,and have established systems to ensure that an appropriate and reasonable level of oversight and control is provided.These systems are reviewed for effectiveness annually by the Audit Committee and the Board.The Groups systems of internal control are designed to help the