1、Craneware plc Annual Reportfor the year ended 30 June 2013Cranewareplc AnnualReport2013About 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 .11Board of Directors.12Directors Report.13Corporate Governance Report.17Remuneration Committee Report .21Independent Auditors Report to the Members of Craneware plc .24Consolidated Statement of Comprehensive Income fo
5、r the year ended 30 June 2013 .25Statements of Changes in Equity for the year ended 30 June 2013 .26Consolidated Balance Sheet as at 30 June 2013 .27Company Balance Sheet as at 30 June 2013.28Statements of Cash Flows for the year ended 30 June 2013.29Notes to the Financial Statements .301Cranewarepl
6、c AnnualReport2013Financial and Operational HighlightsQuick Facts Financial$41.5min revenue$12.4min adjusted EBITDA1$30.3mcash at year end11.5ptotal dividend for yearFinancial Continued revenue and profit growth:Revenue increased 1%to$41.5m(2012:$41.1m)Adjusted EBITDA1 increased 4%to$12.4m(2012:$11.
7、9m)Adjusted profit before taxation increased 4%to$11.2m(2012:$10.8m)Profit before tax decreased 5%to$10.6m(2012:$11.2m)Basic adjusted EPS increased 4%to 32.9 cents(2012:31.6 cents)Basic EPS decreased 7%to 30.7 cents(2012:33.0 cents)Cash at year end$30.3m(2012:$28.8m)after returning$4.7m to sharehold
8、ers by way of dividends Proposed final dividend of 6.3p(9.6 cents)per share giving total dividend for the year of 11.5p(17.4 cents)per share(2012:10.5p(16.4 cents)per share)1 Adjusted EBITDA refers to earnings before interest,tax,depreciation,amortisation,share based payments,released deferred consi
9、deration and transaction related costs.Operational Underlying growth in sales to individual hospitals and small hospital groups Exited the year with significantly higher sales run rate than at the start Renewal rates over 100%of dollar value Products achieved top rankings within their divisions of t
10、he KLAS industry awards Hospitals continue to face growing financial and administrative pressure including increased audit activity and significant backlogs in the appeal process Key appointments increase bandwidth of senior management teamRevenue$mAdjusted EBITDA$mBasic adjusted EPS cents/share5015
11、4012303092520201510610350002012201320092010201141.111.931.641.512.432.923.05.817.728.47.621.838.110.125.6352012201320092010201120122013200920102011Audit&Revenue RecoverySolutions that empower hospitals to manage payor denials and retain more cash in the face of retrospective claims audits helping th
12、em to collect and retain all the revenue to which they are entitledAccess Management&Strategic PricingSolutions that enable organisations to establish transparent,defensible pricing;quickly and accurately assess patient benefits and check medical necessity;and manage payment responsibility improving
13、 cash flow,compliance and patient satisfactionSupply ManagementSolutions that establish a critical connection between pharmaceutical and supply purchases and billing improving charge capture,coding and financial performanceRevenue CycleSolutions that automate chargemaster management processes increa
14、sing operational efficiency,minimising risk and helping to prevent revenue leakage2Cranewareplc AnnualReport2013Quick 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 te
15、chnologies to provide a comprehensive enterprise solution for healthcare financial performance management.Client 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)re
16、gulations related to sensitive patient information.Only registered users can access Cranewares extensive knowledge 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,permittin
17、g different prescribed levels of interaction with minimal impact to resource-strained IS teams and busy users.Craneware Revenue Integrity Solutions encompass four product families Access Management&Strategic Pricing,Revenue Cycle,Supply Management,and Audit&Revenue Recovery with corresponding module
18、s and services.Craneware Revenue Integrity SolutionsCranewares Chargemaster Toolkit is ranked No.1 in the Revenue Cycle Chargemaster Management market category and Bill Analyzer is ranked No.1 in the Revenue Cycle Other market category in the“2012 Best in KLAS Awards:Software&Services”report,publish
19、ed December 2012.www.KLAS.Data 2012 KLAS Enterprises,LLC.All rights reserved.Healthcare Financial Management Association staff and volunteers determined that Cranewares Chargemaster Toolkit,Chargemaster Corporate Toolkit,Bill Analyzer,Online Reference Toolkit,and Interface Scripting Module have met
20、specific criteria developed under the HFMA Peer Review Process.HFMA does not endorse or guarantee the use of these products.Craneware is a Microsoft Silver Independent Software Vendor.Craneware Products and Services3Cranewareplc AnnualReport2013Craneware Revenue Integrity Solutions Contd.Revenue Cyc
21、leChargemaster Toolkit,Chargemaster Corporate Toolkit and Chargemaster Toolkit-CAH automate chargemaster management processes for capturing optimal legitimate reimbursement for hospitals and mitigating compliance risk.The Toolkit is customisable for any organisation,from small community hospitals to
22、 large healthcare networks.Bill Analyzer software automates claim and coding reviews to identify missed charges,billing errors,and categorise areas of risk to help ensure that all legitimate revenue is captured.Bill Analyzer ranks#1 in its KLAS Revenue Cycle category for the second consecutive year.
23、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 manages charges to a corporate standar
24、d.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 to reference and regulatory resou
25、rces.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 empowers healthcare organisations to m
26、anage claim audits and workflow from one central location,leveraging an extensive proprietary knowledgebase that includes current payment rules,best practices,templates,checklists,forms,and references for winning appeals.InSight Payment Variance Analyzeridentifies,tracks and helps eliminate revenue
27、lost in the form of underpaid claims.InSight Denialsanalyses,tracks,trends and reports on denial data,providing workflow tools to distribute denied claims to the right departments and staff for resubmission.Professional ServicesCraneware Professional Services provide companion implementation and con
28、sulting services that help clients apply best practices and achieve a fast,sustainable return-on-investment.Craneware augments initial product training with live or self-led web-based training through the Craneware Performance Center and optional fee-based training.Access Management&Strategic Pricin
29、gPricing Analyzersoftware simplifies the price modeling process,creating a repeatable,well-documented method to establish transparent,defensible and competitive pricing.Patient Charge Estimatorsoftware simplifies the process of providing patient bill estimates for inpatient and outpatient services t
30、o improve upfront collections and reduce bad debt.InSight Medical Necessityprovides all-payor medical necessity validation and Advance Beneficiary Notice(ABN)creation,which reduces accounts-receivable days by preventing medical necessity denials,and facilitates payment communication with patients.Su
31、pply Management Pharmacy ChargeLinkimproves charge capture,pricing and cost management,while simplifying the process for ensuring drug coding and billing units are complete and compliant,and establishing and maintaining a connection between a hospitals pharmaceutical purchases and billing.Supplies C
32、hargeLinkhelps optimise reimbursement for codable supplies by identifying missing or invalid charges,and establishing and maintaining a connection between a hospitals supply purchase history and its chargemaster,which helps ensure accurate pricing,coding and billing of these supplies.4Cranewareplc A
33、nnualReport2013“We are confident that our market leading products and proven customer successes mean we are well positioned.”George Elliott,ChairmanChairmans StatementThis has been a year of consolidation for Craneware,in which we have taken advantage of changes within the industry to recruit high c
34、alibre individuals into the business,improve our sales process and further develop our products to help ensure the revenue integrity of our customers.Overall Group revenue reported in the year was marginally ahead of that of last year,masking the steady growth through the year in sales to individual
35、 hospitals,which was very encouraging and a reflection of the more stable trading environment.The Group remained very profitable,with adjusted EBITDA increasing by 4%to$12.4m and adjusted EPS increasing 4%to 32.9 cents.Craneware continues to benefit from strong operational cash flow,closing the year
36、 with a cash balance of$30.3m(30 June 2012:$28.8m).The confidence the Board has in the business means we are pleased to recommend an increased final dividend of 6.3p(9.6 cents)per share giving a total dividend for the year of 11.5p(17.4 cents)(2012:10.5p(15.9 cents)per share).Despite strong growth i
37、n the small and medium tier of the market,Craneware did not achieve a significant sale to the larger end of the healthcare market in the year under review via either large hospital groups or other routes to market,such as contracts with IT businesses or consultancies.Although these opportunities rem
38、ain significant prospects for the Group,they are,because of their nature,inherently difficult to forecast.We believe that in the current market environment of consolidation in the healthcare industry,a modified approach is required to secure these types of deals and we have just completed the first
39、stage of the restructuring of our organisation to work with these prospects more effectively.We are confident that our market leading products and proven customer successes mean we are well positioned to secure this business once revenue integrity moves up their corporate agenda.I am pleased to repo
40、rt that trading in the current year has begun well,in line with managements forecasts.With an underlying base of annuity revenue,renewal rates of over 100%by dollar value and a quarter of all US healthcare providers as customers,Craneware has a strong foundation for success.Our products consistently
41、 outperform our competitors solutions,delivering transparent and highly measurable cost savings and efficiencies to our customers.With a high proportion of the market still relying on manual processes and an ever increasing level of auditing pressure on hospitals,the Board is confident of Cranewares
42、 ability to grow its revenues and profits.I would like to take this opportunity to thank our staff for their commitment and enthusiasm and our shareholders for the support they have demonstrated this year.George Elliott,Chairman 9 September 20135Cranewareplc AnnualReport2013“Craneware has the right
43、people,products and strategy to succeed in this developing market.”Keith Neilson,CEO and co-founder“We have built on the investments made in prior yearswith initial indications of successandcontinued to increase the bandwidth of our senior management team.”Craig Preston,CFOOperational ReviewIntroduc
44、tionAs predicted,during the year under review we have seen the US healthcare market continue to evolve.Our focus over the year has been to ensure Craneware has the right people,products and strategy to succeed in this developing market.With the leading products in the market,$12.4m of EBITDA profit
45、secured in the year and$30.3m of cash at the year end,the Company is in a very strong position.We are pleased to report that we saw a general strengthening of trading conditions through the year,as the disruption caused by the introduction of Electronic Healthcare Incentive payments in 2011/12 conti
46、nued to dissipate.This resulted in a steady increase in sales through the year to individual hospitals and smaller groups,and we exited the year with a significantly higher sales run rate than at the start.What also became apparent through the course of the year was the decreasing predictability aro
47、und sales to larger hospital groups and other significant routes to market.The consolidation taking place at the larger end of the market both disrupted our discussions in this area and made them more complex.For the first time since our IPO in 2007,we did not achieve our historical run rate of one
48、or two larger deals,which has impacted our reported results.It is encouraging to note that whilst renewal rates may fluctuate between periods,renewal rates for the whole year ending the 30 June 2013 were above our benchmark of 100%of dollar value.It is evident that,once in place,Cranewares revenue i
49、ntegrity solutions are considered vital for ensuring the financial strength of a hospital.We continued to invest in the development and enhancement of our product suite in the year,and our products continue to lead the revenue integrity industry,once again holding their top rankings within their div
50、isions in the KLAS industry awards.US Healthcare MarketAs the shape of healthcare reform in the US starts to solidify,following the Supreme Courts ruling on 6 December 2012 which upheld the Affordable Healthcare Act as constitutional,there was an increase in the year in consolidation among the hospi
51、tal groups.Integrated Delivery Networks grew in market share to 45%,up from 41%in the prior year.These hospital groups have been formed to achieve efficiencies through scale and we believe will seek corporate-wide software solutions to improve the efficiencies and financial strength of their group h
52、ospitals,an area in which Craneware is particularly competitive.This consolidation has continued against a background of increasing scrutiny of the smallest rural hospitals in the Critical Access Hospital(CAH)Market as the federal government continues to look at budget deficit reduction plans.Since
53、1997 these hospitals have had a protected status receiving 101%of cost from the state and federal government to ensure financial viability and provide healthcare in remote rural communities.Management believe that the proposed stricter enforcement of the current qualifying criteria for these hospita
54、ls has refocused their need for revenue integrity solutions.With their higher level of financial constraints and lower staff levels,Craneware will address their unique needs with our new hybrid technology and services solutions.Medicares Recovery Auditors continue to step up the volume of activity t
55、hat identifies and recovers overpayments made to US hospitals by the Medicare program.The American Hospital Association(AHA)reported a dramatic increase in Recovery Audit activity in the 2nd quarter of 2013,up 47%compared to the 4th quarter of 2012.Recover Auditors denied 40%of claims reviewed and t
56、otal overpayments identified now exceed$2.2 billion.To make matters worse for hospitals,the Center for Medicare and Medicaid(CMS)recently initiated a pilot in 11 states that allow Recovery Auditors to perform prepayment audits in addition to the programs traditional three year retrospective audit.Pr
57、epayment audits deny payment before the claim is adjudicated and force hospitals to enter Medicares five level appeal process if they want to be paid for services already provided.The AHA report indicates an increasing number of denied claims are now appealed(40%,although the Craneware average is hi
58、gher still at 51%)compared to prior years(29%)resulting in significant backlogs in the appeal process.For example,the Administrative Law Judge level(3rd level of appeal)states a hearing must be held within 90 days of a request for hearing,however the average time is now reported as 321 days.The AHA
59、reports that three-quarters of all appeals are delayed in the appeal process which at the present can take up to two years to close.On a national level,70%of all cases appealed are overturned in favour of the hospital.Craneware average is 88%,which results in a 63%improvement for customers using Cra
60、neware solutions in successfully appealed denials against the national average.6Cranewareplc AnnualReport2013Operational Review Contd.M&A activity.This combined with the settling of health reforms makes M&A activity an attractive means for Craneware to expand either market reach or the product portf
61、olio.The Board is therefore alert to M&A opportunities.Sales and MarketingThe levels of corporate activity in our market enabled us to increase our recruitment activity in the year,securing many high calibre people at various positions throughout the Company,particularly within the sales team includ
62、ing a new Executive Vice President of Sales.We have been pleased with the initial indications of success for the sales team in the year,with a steady increase throughout the year of activity and contracts signed at each point in the sales pipeline and across all three sales regions.Sales momentum as
63、 we exited the year is significantly up on where we started the year with the sales team focused on delivery and having the right tools to do so.The average length of new customer contracts continues to be in-line with our historical norms of five years.Where Craneware enters into new product contra
64、cts with its existing customers,contracts are typically made co-terminus with the customers existing contracts,and as such the average length of these contracts is greater than three years,in-line with our expectations.The sales mix remained fairly constant through the period,resulting in no change
65、to the overall product attachment rate,which remained steady at approximately 1.6 products per customer.For FY14 the sales teams have been specifically incentivised to complete cross product sales.As the RAC programme continues to expand we have seen a particularly strong period for our InSight Audi
66、t solution for the management of the audit process and the associated appeals processing service.The strength of InSight Audits performance in the year reinforces managements view that it is a Gateway Product and is reflective of hospitals positively responding to defending themselves against RAC de
67、nials and Cranewares ability to support them in this effort.The Board has taken the decision to implement changes across the business;augmenting domain knowledge at the PLC Board level with at least one new non-executive director sourced directly from the hospital market,also creating two senior man
68、agement positions,and aligning operations to the expanded opportunities at the larger end of our stated six other routes to market:IDNs&Large Hospital Systems,Business Process Outsourcers/Consultants(BPO),Hardware Vendors,Software Vendors,Group Purchasing Organisations(GPOs)and Content Acquirers.Thi
69、s enables Craneware to more effectively deal with the challenges and opportunities facing the organisation today and those that management believe the Group will face in the future.The first new senior management position is that of Chief Marketing Officer(CMO),which brings together Marketing,Produc
70、t Management and Corporate Development.This will enhance the capabilities of the Group,as we seek to increase the awareness of Craneware and its solutions with all the levels of senior management within the teams of these larger organisations and identify further corporate development opportunities
71、for Craneware.As our business increases in size,revenue related to services is also expected to grow,in proportion with the whole.We have created the new position of Executive Vice President Revenue Integrity Operations,(EVP RIO)to concentrate efforts in this area.This role has been created to combi
72、ne our strengths in Customer Support,Professional Services and Healthcare Consulting in a new department that will be responsible for meeting all our customers Revenue Integrity needs.Healthcare consulting will join the award-winning Customer Support team and our Professional Services team.These tea
73、ms will provide consulting services that use our products on behalf of customers in addition to the work done by Professional Services that enables our customers to get the most out of using our software themselves.M&AThe sales challenges that have been seen by Craneware and others throughout the la
74、st few years within the healthcare market due to the previous uncertainty of the political and legislative landscape have weakened many healthcare IT companies to the point that strong and financially stable companies like Craneware can take advantage of depressed valuations to complete A recent rep
75、ort from the Office of the Inspector General recommended further steps be implemented by CMS to increase the level of evaluation of hospitals in the area of fraud.The current trends therefore reveal increased audit activity,increased appeal activity,significant backlogs in the appeal process but the
76、 findings clearly show a preponderance of rulings in favour of hospitals.The administrative and financial burdens for hospitals are great but CMS is not showing any signs of reducing its audit practices.StrategyOur vision is to be the partner healthcare providers rely on to improve and sustain stron
77、g financial performance through revenue integrity.Our strategy is to provide software solutions that help customers at the points in their system where clinical and operational data transform into financial transactions.Our solutions automate data normalization,combining disparate data sets while ma
78、intaining the localised context.This produces valuable,actionable information and creates organisation-wide visibility and accountability.Our solutions enable our customers to optimise reimbursement;increase operational efficiency;minimise compliance risk;and manage audits.Cranewares software is pre
79、dominantly sold directly by the Company to hospitals.Its customer base comprises 12%critical access hospitals,36%independent community hospitals and 52%IDN hospitals(hospitals which form part of a larger“integrated delivery network”of healthcare providers),demonstrating the Companys historical succe
80、ss at selling into all parts of the market.Over the past year,it has become apparent that there is an increased opportunity for sales of Cranewares solutions to organisations at the larger end of the scale,whether they are large hospital groups,formed through market consolidation,or large IT busines
81、ses or consultancies.However,sales to these larger organisations are naturally more complex and therefore harder to forecast.7Cranewareplc AnnualReport2013Product Development Product development continues to be focused on enhancements to functionality of current products and the integration of those
82、 products in new innovative combinations.The direction of the product set moves consistently with the long-term strategic positioning of Craneware as the revenue integrity partner of choice.Integration,both within the solution set itself,and externally with the Healthcare Information Systems,has als
83、o been a focus,particularly with the EPIC patient accounting system to ensure that all Craneware customers currently in the midst of the replacement of their system are fully supported and provided with the monetary protections and safe guards that only Craneware can provide.Focus on Gateway Product
84、sWithin three of our four product families,we have identified“Gateway”solutions,being a product or service that can form a bridgehead into a customer,allowing further products to be sold at a later date.These three products are Pharmacy ChargeLink(Supplies Management family),Chargemaster Toolkit(Rev
85、enue Cycle family)and Insight Audit(Audit and Revenue Recovery family).A fourth Gateway Product is being developed from innovative new product combinations in our Access Management and Strategic Pricing family.During the year we have begun the development of a set of hybrid solutions,which combine s
86、ervices with some of our core products to enable them to be implemented at smaller hospitals that do not have their own internal revenue integrity teams.We expect these solutions to be released during the course of the year.These solutions are particularly suited to the 1,329 Critical Access Hospita
87、ls as their status continues to be reviewed and complement the appeals services work that sits alongside our Insight Audit product in our Revenue Integrity Operations team.Financial ReviewThe results we are reporting are in line with the guidance given in our trading statement of 26 June 2013.The ba
88、ckdrop to these results has been a year of consolidation,both within Craneware and within the larger US Healthcare market.We have built on the investments made in prior years,the initial indications of success of which have been our sales to individual hospitals and small hospital groups.In addition
89、 we have continued to increase the bandwidth of our senior management team,at the Operations Board and at the PLC Board where we are close to announcing at least one non-executive director who will add significant market experience.As expected,the US healthcare market continues to evolve.The ever-in
90、creasing financial pressures on US hospitals have led to a number of hospitals consolidating to achieve efficiencies,through both scale and sharing best practice.Reducing reimbursement rates,increasing self pay reliance and the year on year growth of RAC denials all combine to continually add pressu
91、re to the financial margins of US hospitals.However,despite the many successes we have seen in the current year,the financial results reported have been significantly impacted by this consolidation in the US healthcare market.This consolidation has resulted in delays to our sales negotiations with t
92、hese larger hospital groups and other routes to market.As a result of these delays,for the first time since coming to the public market in 2007,this years financial results did not benefit from any revenue contribution from new sales to this segment of our market.Through the combination of these var
93、ious factors,we are reporting revenue of$41.5m(FY12:$41.1m)and adjusted EBITDA of$12.4m(FY12:$11.9m).Business ModelThe Groups business model and its underlying revenue recognition policies remain consistent with prior years.The Group continues to recognise revenue primarily under its annuity Softwar
94、e-as-a-Service(SaaS)revenue recognition policies with these revenues accounting for between 75%to 80%of all revenue recognised in any one year.Under this model we recognise software licence revenue and any minimum payments due from our other route to market contracts evenly over the life of the unde
95、rlying signed contracts.As we sign new customers,we normally expect to deliver a professional services engagement.This relates to implementation of the software as well as training the hospital staff in its use.As part of this process we provide further assistance to the hospital to develop its proc
96、esses,assisting in the delivery of best practice,whilst ensuring 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 total contract value(dependent on the product and needs of the individual hospital).However
97、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 completion basis.Our third revenue model is a result of the ClaimTrust,Inc.acquisition in 20
98、11.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-breakable contracts and is invoiced monthly in arrears rather than annual in advance,therefore we bel
99、ieve 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 contracts for both new and existing customers of the InSight product range are being signed under the annuity SaaS mo
100、del,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 average contract life for new hospitals of 5 years,the maximum value of an average contract that can be recognised as revenue in any one y
101、ear 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 or the increased risk of collection is satisfied,at which point the re
102、venue 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 deferral.Operational Review Contd.8Cranewareplc AnnualReport2013Operational Review Contd.RevenueWe are reporting revenue for the year of$41.5m(2012:$41.1m)
103、.Underlying this marginal growth in revenue we have seen an increase in our direct sales to individual and smaller groups of hospitals,and the sales momentum as we exited the year continues to build.However these successes are masked by the Group being unable to conclude any large sales in the year
104、to either large hospital groups or our other routes to market.As described earlier in this report,due to the ongoing consolidation in our marketplace these deals,whilst increasing in size,have also increased in complexity and as a result determining when these deals will close and therefore contribu
105、te to revenue is difficult to forecast.In the prior year,two such deals did sign and contribute to new revenue for that year.One included a white-labelling fee of$3.5m which,as all associated professional services were completed in the year,was fully recognised as revenue in the Financial Year 2012.
106、This revenue was not repeated in the current year,and as a result our Professional Services(including white-labelling)recognised in the year has fallen from$7.1m(or 17%of Group revenue)in FY12 to$5.3m(or 13%of Group Revenue)in FY13 despite underlying professional services growing by 47%.As this whit
107、e labelling revenue was not repeated,it has effectively been replaced with new software and services revenue in reporting total Group Revenue of$41.5m.Whilst professional services revenue at 13%of Group revenue is still within our expected range of 10%to 20%of our revenue in any one year,we retain t
108、he capacity within our existing business model to expand this revenue stream contributing to future years revenue growth.EarningsAs a result of our 2011 acquisition of ClaimTrust,Inc.,the Group introduced an Adjusted earnings metrics to adjust for one-off acquisition costs.In the prior year this res
109、ulted in the one-off benefit of$0.95m relating to the release of the provision for contingent consideration being removed.In the current year,there have been no further benefits or charges of this nature;however this prior year adjustment still impacts the comparatives reported.We continue to believ
110、e the disclosure of these adjusted earnings metrics is consistent with other acquisitive companies and that it allows for a more accurate understanding of the underlying profit generated from operations and for a direct comparison year on year.Adjusted earnings before interest,taxation,share based p
111、ayments,depreciation and amortisation(“EBITDA”)has grown marginally in the year to$12.4m(FY12:$11.9m)an increase of 4%.This reflects a stable Adjusted EBITDA margin of c29%.This is consistent with the Groups measured approach to the release of additional investment,continuing to make investments in
112、line with the revenue growth occurring,whilst continually looking to ensure the efficiency of the investments we make.Revenue Visibility and other KPIsThrough the business model we utilise,the additional new sales we make in any given year build on our annuity base of revenues.This annuity base of r
113、evenue allows us to better plan our investment strategy in advance,and whilst in any one year we will always rely on additional sales in the year to generate growth,we enter our next financial year with a significant percentage of that years revenue targets already under contract.The Group illustrat
114、es this annuity base through its“Three Year Visible Revenue”metric.This metric includes:Future revenue under contract;Revenue generated from renewals(calculated at 100%dollar value renewal).InSight revenue identified as recurring in nature(subject to an estimated churn rate of 8%per year);The differ
115、ent categories of revenue reflect any inherent future risk in recognising these revenues.Future revenue under contract,is,as the title suggests,subject to an underlying contract and therefore only has to be invoiced to be recognised in the respective years(subject to future collection risk that exis
116、ts with all revenue).Renewal revenues are contracts coming to the end of their original contract term(e.g.,5 years)and will require their contracts to be renewed for the revenue to be recognised,however as we track our renewal metric,and consistently report over 100%renewals by dollar value,it is re
117、asonable to conclude minimal additional risk is associated to this revenue.The final category“InSight revenue identified as recurring in nature”is revenue that we would expect to recur in the future but as the underlying contracts are not long term in their nature or contain break clauses there is p
118、otential for this revenue not to be recognised in future years,however we apply an estimated 8%churn rate to make allowance for this risk.To better aid understanding,the three year visible revenue as at 30 June 2013(i.e.,visible revenue for FY2014,FY2015 and FY2016)is presented against the visible r
119、evenue for the same three year period as at 30 June 2012.This therefore demonstrates the growth in our annuity base of revenues,which translates to visible revenue for the next three years to 30 June 2016 of$109.5m from$105.5m at 30 June 2012.This breaks down as follows:InSight revenue identified as
120、 recurring in nature of$8.1m.Revenue generated from renewal activities contributing$40.8m;being$5.4m in FY14,$15.0m in FY15 and$20.4m in FY16.Future revenue under contract contributing$60.6m of which$30.4m is expected to be recognised in FY14,$17.7m in FY15 and$12.5m in FY16.(Figure 1.)Average lengt
121、h of contracts signed with new customers in the period is in line with our historical normal average contract length of 5 years,this is following a dip in the prior year to 4 years.The product attachment rate,being the average number of our nine products that are in place across our entire customer
122、base,has remained steady at 1.6 products.The remaining 7.4 reflects the significant cross sell opportunity that still exists for the Group.9Cranewareplc AnnualReport2013Operating ExpensesWith our measured investment strategy,our net operating expenses(before acquisition benefits/costs,share based pa
123、yments,depreciation and amortisation)have remained stable at$27.0m(FY12:$27.6m).We continue to look to leverage the investments we have made in prior years,as well as make further targeted investment going forward,as we continue to increase sales levels and hospital customer numbers.As innovation wi
124、ll continue to be core to the Groups future we continue to invest in Product Development spend which has remained at c$7m.We continue to capitalise very low levels of Development spend with$0.1m capitalised in the year(FY12:$0.3m).Cash We measure the quality of our earnings through our ability to co
125、nvert them into operating cash.As in prior years,we have very high levels of cash conversion which has enabled us to grow our cash reserves to$30.3m(FY12:$28.8m).These cash levels are after paying$3.4m in taxation(FY12:$1.3m)and a further$4.7m(FY12:$4.1m)to our shareholders by way of dividends.We re
126、tain a significant level of cash reserves to fund bolt-on acquisitions if suitable opportunities arise.Balance Sheet The Group maintains a strong balance sheet position,not only through our significant cash balance but with rigorous controls over working capital and no debt.Operational Review Contd.
127、0.05.010.015.020.025.030.035.040.0$m20142015201630 Jun.201330 Jun.2012ClaimTrust Legacy RevenueRenewalsContractedFigure 1.10Cranewareplc AnnualReport2013Operational Review Contd.CurrencyThe reporting currency for the Group(and cash reserves)is US Dollars.Whilst the majority of our cost base is US lo
128、cated 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 monitor the Sterling to US Dollar exchange rate,and where appropriate consi
129、der 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$1.5685 as compared to$1.5840 in the prior year.TaxationThe Groups effective tax rate remains dependent on the proportion of profits ge
130、nerated in the UK and the US and the applicable tax rates in the respective jurisdictions.As detailed above,the current year has seen levels of professional services revenues generated at the lower end of the 10%to 20%of revenue range we would normally anticipate in our business model.As all profess
131、ional services are delivered in the US,the resulting lower levels of this revenue has reduced the levels of income subject to taxation in the US against our historical norms.This combined with the reducing tax rate in the UK and our continued ability to agree enhanced Research and Development tax re
132、lief has resulted in an effective tax rate of 21.8%(FY12:20.6%).Effective tax rates will increase in future years if the ratio of underlying professional services to software license revenues increases.EPSAs with EBITDA,the Group is reporting an Adjusted EPS figure,with the prior years EPS figure ha
133、ving been adjusting for the$0.95m of contingent consideration provision released.In the year adjusted EPS has increased to$0.329(FY12:$0.316)and adjusted diluted EPS has increased to$0.328(FY12:$0.315).The increase in EPS is driven by the levels of EBITDA and the continued lower than historically ex
134、pected effective tax.DividendThe Board recommends a final dividend of 6.3p(9.6 cents)per share giving a total dividend for the year of 11.5p(17.4 cents)per share(2012:10.5p(15.9 cents)per share).Subject to confirmation at the Annual General Meeting,the final dividend will be paid on 13th December 20
135、13 to shareholders on the register as at 15th November 2013,with a corresponding ex-Dividend date of 13th November 2013.The final dividend of 6.3p 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 Di
136、vidend Currency Election,or who register to do so by the close of business on 15th November 2013.The exact amount to be paid will be calculated by reference to the exchange rate to be announced on 15th November 2013.The final dividend referred to above in US dollars of 9.6 cents is given as an examp
137、le only using the Balance Sheet date exchange rate of$1.5167/1 and may differ from that finally announced.OutlookThe strengthening of sales activity has continued and trading in the first few months of the new financial year has been healthy.With a product suite that addresses many of the fundamenta
138、l financial issues besetting healthcare providers in the US,an invigorated sales team and a more stable trading environment,we are confident Craneware has the platform to deliver increased shareholder value in the years ahead.Keith Neilson,Chief Executive Officer Craig Preston,Chief Financial Office
139、r 9 September 201311Cranewareplc AnnualReport2013Directors,Secretary,and AdvisorsDirectorsG R Elliott(Chairman,non-executive)K Neilson N P Heywood(non-executive)C T Preston R F Verni(non-executive)Company Secretary&Registered OfficeC T Preston1 Tanfield Edinburgh EH3 5DAStockbrokers and Nominated Ad
140、visorsPeel 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 Bot
141、hwell Street Glasgow G2 7JTHSBC Bank plc7 West Nile Street Glasgow G1 2RGLloyds TSBHenry Duncan House 120 George Street Edinburgh EH2 4LHIndependent AuditorsPricewaterhouseCoopers LLPChartered Accountants&Statutory Auditors Erskine House 68-73 Queen Street Edinburgh EH2 4NHSolicitorsPinsent Masons L
142、LPPrinces Exchange 1 Earl Grey Street Edinburgh EH3 9AQ 12Cranewareplc AnnualReport2013Board of DirectorsGeorge R Elliott,60 Non-Executive Chairman:Appointed 10 August 2007George is currently non-executive Chairman of Cupid plc(CUP)an online dating company.Since 2007 he has been non-executive chairm
143、an/director of a number of technology companies,including non-executive chairman of MicroEmissive Displays Group plc,Corsair Components Inc,Kewill plc and Simple Audio Limited and non-executive director of Summit Corporation plc,Oxonica plc and ClearSpeed plc.From 2000-2007 George was Chief Financia
144、l 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 McQueen International Ltd(now Sykes),a manufacturing and support services provider,where he w
145、as 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 from Heriot-Watt University.Keith Neilson,44 Chief Executive Officer:Co-founderKeith co-founded C
146、raneware 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 professional services.Keiths direction has helped Craneware to win multiple prestigious awards in suc
147、h 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 Business Achiever Award,winning the Award of Excellence in the Business Strategy category.He re
148、ceived the UK Software&Technology Entrepreneur of the Year Award from Ernst&Young in 2008 and was the Insider Elite Young Business Leader of the Year in 2009.Prior to launching Craneware,Keith worked primarily in international management,where he handled sales,marketing and technical consulting for
149、companies with operations around the world.He studied Physics at Heriot-Watt University,Edinburgh,receiving a bachelors degree in 1991.Craig T Preston,42 Chief Financial Officer:Appointed 15 September 2008Craig was appointed to the Board on 15 September 2008,just as the company was entering its seco
150、nd 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 senior financial roles with other private and public technology companies,including those with a mu
151、lti-national presence.Prior to Craneware,he was group director of finance and company secretary at Intec Telecom Systems plc.Earlier,he served as corporate development manager at London Bridge Software plc.During his time there,he also held the role of CFO for Phoenix International,a previously NASD
152、AQ-traded software company,following its acquisition by London Bridge.Earlier in his career,Craig worked for Deloitte in both the United Kingdom and United States.Craig has a degree in Accounting and Financial Management from the University of Sheffield.He is also a member of the Institute of Charte
153、red Accountants in England and Wales.Neil P Heywood,51 Non-Executive Director:Appointed 31 January 2002Neil is a director of Matrix Alpha Analytics,a company providing services to the hedge fund and non-executive Chairman of Codeplay Software Limited and a non-executive Director of Games Analytics L
154、imited.Neil was co-founder and CEO of Quadstone,a marketing analytics software company,from 1995 to 2001.Previously Neil was head of the Edinburgh Parallel Computing Centre,a department at the University of Edinburgh,and co-founder and Director of 3L Limited,a company specialising in software for pa
155、rallel computers.3L was bought by Spectrum Signal Processing,Inc.Neil received his B.Sc.(Hons)in Computer Science from the University of Edinburgh in 1984.Ron F Verni,65 Non-Executive Director:Appointed 1 May 2009Ron is currently a director of On Deck Capital,and on the Board of Advisors of C,CEO Ve
156、ntures,and the Robinson College of Business.Before that he was President&CEO of Sage Software,Inc,and a member of the 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 fr
157、om 1 million business customers to over 2.5 million.Ron also engineered over 20 acquisitions and oversaw their successful 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 si
158、ze businesses.Ron also was a Vice President of Marketing with Automatic Data Processing,President and CEO of NEBS Software,Inc.,and the founder and CEO of ASTEC Software.13Cranewareplc AnnualReport2013Directors ReportThe directors present herewith their report and the audited consolidated financial
159、statements for the year ended 30 June 2013.Principal Activities and Business ReviewThe Groups principal activity continues to be the development,licensing and ongoing support of computer software for the US healthcare industry.The Company is required by the Companies Act to include a business review
160、 in this report.This includes an analysis of the development and performance of the Group during the financial year and its position at the end of the financial year,including relevant key performance indicators(principally revenue,adjusted operating profit before acquisition costs,share based payme
161、nts,depreciation and amortisation,visibility of revenue over the next three years and the product attachment rate).Detailed information on all matters required is presented in the Operational Review contained in pages 5 to 10 and is incorporated into this report by reference.A description of the pri
162、ncipal risks and uncertainties facing the Group is set out below.Where the Directors Report,Chairmans Statement and Operational Review contain forward looking statements,these are made by the directors in good faith based on the information available to them at the time of their approval of this rep
163、ort.Consequently,such statements should be treated with caution due to their inherent uncertainties,including both economic and business risk factors,underlying such forward looking statements or information.Financial Results and DividendsThe Groups revenue for the year was$41.5m(2012:$41.1m)which h
164、as generated an adjusted operating profit(before acquisition related matters)of$11.1m(2012:$10.8m).The full results for the year,which were approved by the Board of Directors on 9 September 2013,are set out in the accompanying financial statements and the notes thereto.During the year the Company pa
165、id an interim dividend of 5.2p(7.8 cents).The Directors are recommending the payment of a final dividend of 6.3p(9.6 cents)per share giving a total dividend of 11.5p(17.4 cents)per share based on the results for 2013(2012:10.5p(15.9 cents).Subject to approval at the Annual General Meeting,the final
166、dividend will be paid on 13 December 2013 to shareholders on the register as at 15 November 2013.The level of dividend 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
167、 level of distributions will be subject to the Groups working capital requirements and the ongoing needs of the business.Research and Development ActivitiesThe Group continues its development programme of software products for the US healthcare industry which includes research and development of new
168、 complimentary products,integration(where appropriate)of products acquired through the ClaimTrust acquisition 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 lon
169、g term future.During the year development expenditure amounted to$6.9m(2012:$6.8m)net of expenditure capitalised of$0.1m(2012:$0.3m).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
170、 Note 3 to the Financial Statements.Principal Risks and Uncertainties To deliver continued sustainable growth,the Group recognises the need to minimise the likelihood and impact of key risks.These risks are both general in nature i.e.business risks faced by all businesses,and more specific to the Gr
171、oup and the market in which it operates.The nature of the US healthcare industry and associated risks are detailed in the Operational Review on pages 5 to 10.The risks outlined here are those principal risks and uncertainties that are material to the Group.They do not include all risks associated wi
172、th the Group and are not set out in any order of priority.US Healthcare ReformIssue:The US healthcare industry continues to progress through a 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
173、 taken steps to ensure it stays at the forefront of how the industry is interpreting current proposals and 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 expe
174、rts attend and speak at internal Company events;Regular attendance by members of this Council and other 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
175、review developments in the market and provide direct input to the Groups ongoing strategy appraisal and product development.Competitive LandscapeIssue:New entrants to the market or increased competition from existing competitors could significantly impact the Groups market opportunity.Actions:The Gr
176、oup continually monitors its competitive landscape,including both existing and potential new market entrants.Significant barriers to entry continue to exist,including but not limited to the significant data content built over the Group history which exists within the products.The Group continues to
177、ensure its products are platform agnostic and actively seeks partnerships with other Healthcare IT vendors.11.5*FY13FY10FY11FY09Dividends/Share(pence)*Subject to approval at AGM8.08.84.710.5FY1214Cranewareplc AnnualReport2013Directors Report Contd.Management of GrowthIssue:The Group continues to to
178、plan for significant growth both organically and through acquisition which could place strain on the current management and other resources of the Group.Actions:The Groups annuity SaaS(“Software as a Service”)business model combined with the detailed forecasting processes provide visibility to expec
179、ted growth rates.This provides a foundation when planning in advance,including necessary resourcing levels that result from this growth.To ensure the correct infrastructure to support growth,assessments are performed and improvements are made within systems,policies and procedures and business contr
180、ols are upgraded,as appropriate,across the Group.Dependence 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
181、and strengthen its senior management team,with two new appointments to the Operations Board having been made in the year and a further appointment 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 retentio
182、n the Remuneration Committee continues to monitor and develop the remuneration packages of key personnel to ensure they are both competitive and include appropriate long-term incentives.Failure to develop or acquire appropriate software solutionsIssue:Reliance on a small number of products could sig
183、nificantly limit the Groups market opportunity and leave it unable to meet its customers needs.Actions:Whilst remaining focused on its core Revenue Integrity market the Group has both internally developed and acquired a total product suite of nine core products(from the original one in 2007).The Gro
184、up publishes its product attachment rate during every reporting period and has a medium term strategic goal of generating 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 Pro
185、perty Rights could materially impact the Groups future performance.Actions:The Group will continue to register 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 Gr
186、oup also has in place strict physical and data security processes and encryption to protect its intellectual 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
187、 affect future Group performance.Actions:Whilst the Group has limited experience of acquisitions,the Board 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 co
188、nsideration of the acquisition and to assist management in the due diligence process.The principal financial risks are detailed in Note 3 to the financial statements.How the Board determines and manages risks is detailed in the Corporate Governance report on pages 17 to 20.In summary,the US healthca
189、re market is not immune to the macro-economic climate and,with the increasing focus and requirements of the 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 combinati
190、on of in-house development and specific acquisition opportunities.This requires the recruitment,retention,and reward of skilled staff,alongside responsiveness to changes,and the opportunities that result,as they arise.Going ConcernThe Directors,having made suitable enquiries and analysis of the acco
191、unts,including the consideration of:cash reserves;no debt or debt related covenants;continued cash generation;and Annuity SaaS business model;have determined that the Group has adequate resources to continue in business for the foreseeable future and that it is therefore appropriate to adopt the goi
192、ng concern basis in preparing these financial statements.DirectorsThe Directors of the Company are listed on page 12.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
193、directions given by special resolution,including the Companys power to purchase its own shares.The Companys 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 th
194、e Remuneration Committee Report on page 22.15Cranewareplc AnnualReport2013Authorised and Issued Share CapitalThe Companys authorised share capital at the Balance Sheet date was 50,000,000 ordinary shares of 1p each of which 27,008,763 were issued and fully paid up.During the year,options were exerci
195、sed pursuant to the Companys share option schemes,resulting in the allotment of 16,872 new ordinary shares.No further new ordinary shares have been allotted since the end of the financial year to the date of this report.Directors and their interestsThe interests of the Directors who held office at 3
196、0 June 2013 and up to the date of this report in the share capital of the company,were as follows:-20132012G R Elliott15,65015,650N P Heywood130,356130,356K Neilson3,471,5293,453,4593,617,5353,599,465Directors interests in share options are detailed in the Remuneration Committee Report on page 23.Su
197、bstantial shareholdersAs at 1 September 2013,the Company had been notified of the following beneficial interests in 3%or more of the issued share capital pursuant to section 793 of the Companies Act 2006:No.of Ordinary 0.01 Shares%of issued share capitalLiontrust Investment Partners4,033,99614.94K N
198、eilson3,471,52912.85W G Craig3,173,15111.75Artemis Investment Management2,476,4609.17Fidelity Investments2,065,8747.65Hargreave Hale1,698,1126.29AXA Framlington1,425,0005.28Baillie Gifford1,019,6993.78D Paterson873,8003.24The total number of shares as at 30 June 2013 and 1 September 2013 was 27,008,
199、763.Indemnity of Directors and OfficersUnder the Companys Articles of Association and subject to the provisions of the Companies Act,the Company may and has indemnified all Directors or other officers against liability incurred by them in the execution or discharge of their duties or exercise of the
200、ir 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 purchased and maintains appropriate insurance cover against legal action brought against Directors and officers.Corporate Social Responsibility
201、&Environmental PolicyThe Group is committed to maintaining a high level of social responsibility.It is the Groups policy to support and encourage environmentally sound business operations,with aspects and impact on the environment being considered at Board level.Recognising that the Groups operation
202、s have minimal direct environmental impact,the Group aims to ensure that:it meets all statutory obligations;where sensible and practical,it encourages working practices,such as teleconferencing,teleworking and electronic information exchange that reduce environmental impact;and re-cycles waste produ
203、cts wherever possible,encouraging use of environmentally friendly materials,and disposing safely of any non-recyclable materials.CustomersThe Group treats all its customers with the utmost respect and seeks to be honest and fair in all relationships with them.The Group provides its customers with pr
204、oducts and levels of customer service of outstanding quality.CommunityThe Group seeks to be a good corporate citizen respecting the laws of the countries in which it operates and adhering to best social practice where feasible.It aims to be sensitive to the local communitys cultural social and econo
205、mic 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 respects the dignity and rights of all its employees.The Group provides clean,healthy and safe working conditions.An inclusive working envir
206、onment and a culture of openness are maintained by the regular dissemination of information.The Group endeavours to provide equal opportunities for all employees and facilitates the development of employees skill sets.A fair remuneration policy is adopted throughout the Group.The Group does not tole
207、rate any sexual,physical or mental harassment of its employees.The Group operates an equal opportunities policy and specifically prohibits discrimination on grounds of colour,ethnic origin,gender,age,religion,political or other opinion,disability or sexual orientation.The Group does not employ under
208、age staff.The general policy of the Group is to welcome employee involvement as far as it is reasonably practicable.Employees are kept informed by meetings,regular updates and web page postings.In addition the Groups UK and US senior management teams meet regularly to review performance against the
209、Groups strategic aims and development roadmaps.The Group maintains core values of Honesty,Integrity,Hard Work,Service and Quality and actively promotes these values in all activities undertaken on behalf of the Group.Employment of Disabled PersonsApplications for employment by disabled persons are a
210、lways fully considered,bearing in mind the respective aptitudes and abilities of the applicant concerned.In the event of members of staff becoming disabled every effort is made to ensure that their employment with the Group continues and the appropriate training is arranged.It is the policy of the G
211、roup that the training,career development and promotion of a disabled person should,as far as possible,be identical to that of a person who does not suffer from a disability.Directors Report Contd.16Cranewareplc AnnualReport2013Policy on payment of PayablesRelationships with suppliers and subcontrac
212、tors are based on mutual respect,and the Group seeks to be honest and fair in its relationships with suppliers and subcontractors,and to honour the terms and conditions of its agreements in place with such suppliers and subcontractors.The Group does not believe that the giving or accepting of bribes
213、 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 days,provided that the supplier has performed in accordance with the relevant terms and conditions.Trade payables at 30 June 2013 represen
214、ted,on average 16 days purchases (2012:20 days)for the Group and 22 days purchases(2012:22 days)for the Company.Charitable and Political ContributionsAs part of the Groups commitment to Corporate Social Responsibility it has continued to develop the“Craneware Cares”program.The focus of Craneware Car
215、es is to raise awareness and funds for charity.In 2013,Craneware Cares led initiatives specifically to raise awareness and funds for Alzheimer charities,which support caregivers,patients and those researching cures for people dealing with this devastating disease.In the US,the companys Arizona,Massa
216、chusetts,Tennessee and Georgia offices participated in charity walks,while staff at the Craneware headquarters in Edinburgh undertook Walk the West Highland Way in a challenging 3 day,96-mile hike across many of Scotlands iconic mountains and glens.In total,Craneware Cares 2013 raised more than$37,0
217、00 donated directly to the selected US and UK Alzheimer charities.Neither the Company nor its subsidiaries made any donation for political purposes in fiscal years 2013 or 2012.Annual General MeetingThe resolutions to be proposed at the AGM,together with explanatory notes,appear in a separate Notice
218、 of Annual General Meeting which is sent to all shareholders.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
219、 are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations.Company law requires the Directors to prepare financial statements for each financial year.Under that law the Directors have prepared the Group and Parent Company financial
220、 statements in accordance with International Financial 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
221、must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and the Company and of the profit or loss of the Group for that period.In preparing these financial statements,the Directors are required to:select suitable ac
222、counting policies and then apply them consistently;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 th
223、e financial statements.The Directors are responsible 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 fina
224、ncial statements comply with the Companies Act 2006.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 integr
225、ity of the companys website.Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.Auditors and Disclosure of Information to AuditorsEach Director,as at the date of this report,has confirmed that insofa
226、r as they are aware there is no relevant audit information(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 themselve
227、s aware of any relevant audit information and to establish 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:
228、Craig Preston Company Secretary 9 September 2013Directors Report Contd.17Cranewareplc AnnualReport2013Corporate Governance ReportThe Board of Directors(the Board)acknowledge the importance of the Principles set out in The UK Corporate Governance Code issued in September 2012(the“Code”).Although the
229、Code is not compulsory for AIM listed companies,the Board 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 21 to 23)identify how
230、it has complied with both the individual principles and the spirit of the Code as a whole.The Code itself defines the purpose of corporate governance being“to facilitate effective,entrepreneurial and prudent management that can deliver the long-term success of the company;”it is this overarching obj
231、ective that the Board has sought to achieve in applying 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 continues to be headed by its Chairman George
232、 Elliott and comprises two executive Directors,Keith Neilson,Chief 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 12.The Boar
233、d meets regularly,usually monthly,to discuss and agree on the various 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 qualificat
234、ions and experience necessary for the day to day running of the Group.There is a formal schedule of matters reserved for the Board,which include approval of the Groups strategy,annual budgets and business plans,acquisitions,disposals,business development,annual reports and interim statements,plus an
235、y significant financing and capital expenditure plans.As part of this schedule,the Board has clearly laid out levels of devolved decision making authority to the Groups Operations Board.The Board has further established an Audit Committee and a Remuneration Committee details of which are provided be
236、low.George Elliott is a member of both these committees,in addition 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 a
237、nd includes George Elliott and Ron Verni as its members.Part of the 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.In the prior year it was determined appropr
238、iate to add a further independent non-executive Director.The Board has identified the specific skill sets,including significant operation industry knowledge that it will look for in the new appointment.An independent recruitment agency has been engaged and the process is nearing completion.Attendanc
239、e 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 CommitteeAudit CommitteeNo.Meetings in year11-23Executive DirectorsK Neilson11/11-C T Preston10/11-Non Execu
240、tive DirectorsG R Elliott11/11-2/23/3N 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 to the Company Secretary ahead of the meeting.The relevant Chairman then provides a detailed briefing a
241、long with the minutes of the meeting following its conclusion.As detailed in the Directors Report on page 15,the Company maintains appropriate insurance cover against legal action brought against Directors and officers.The Company has further indemnified all Directors or other officers against liabi
242、lity 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 company between the running of the Board and the executive responsible for the running of the companys
243、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 Neilson as Chief Executive Officer.The Chairman is responsible for the leadership of the Board,ensuring its
244、 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 facilitate this,Keith Neilson as CEO chairs the Groups Operations Board which comprises the Chief Financi
245、al 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 Chairman“The chairman is responsible for leadership of the Board and ensuring its effectiveness on all aspect
246、s of its role”George Elliott was appointed Chairman of the Board in August 2007,shortly before the Company listed on the AIM market.At that time the then Board satisfied themselves that he was independent,fulfilling the requirements of the Code.In setting the Board agendas,the Chairman,in conjunctio
247、n 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 appropriate detail in regards to matters that will be covered,thereby encouraging openness and healthy debate
248、.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 Ron Verni as Senior Independent Director.In this role,Ron provides a sounding board for the Chairman as
249、 well as providing an additional channel of contact for shareholders,other Directors or employees,if the need arises.In addition to matters outlined above,there is regular communication between executive and non-executive Directors,including where appropriate,updates on matters requiring attention p
250、rior to the next Board meeting.The non-executive Directors meet,as appropriate but no less than annually,without executive Directors being present and further meet annually without the Chairman present.18Cranewareplc AnnualReport2013Corporate Governance Report Contd.EffectivenessThe Composition of t
251、he Board“The Board and its committees should have the appropriate balance of skills,experience,independence and knowledge of the company to enable them to discharge their respective duties and responsibilities effectively”The composition of the Board has been designed to give a good mix and balance
252、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 companies.Through this mix of experience the Board and the individual Directors are well positioned to
253、 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 statutory obligations.The Board reviews on an annual basis the independence of each non-executive Direct
254、or.In making this consideration the Board determines whether the Director is independent in character and judgement and whether there are relationships or circumstances which are likely to affect,or could appear to affect,the Directors judgement.In regards to Neil Heywood,the Board considered his ap
255、pointment 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 result of this and Neils conduct,the Board has concluded this has not affected his independence.As det
256、ailed earlier,the Board has previously determined it was appropriate to add a further independent non-executive Director,and is well progressed towards making an appointment.Appointments to the Board“There should be a formal,rigorous and transparent procedure for the appointment of new directors to
257、the Board”When a new appointment to the Board is to be made,consideration is given to the particular skills,knowledge and experience that a potential new member could add to the existing Board composition.A formal process is then undertaken,usually involving external recruitment agencies(as has been
258、 the case with the last two appointments to the Board),with appropriate consideration being given,in regards to executive appointments,to internal and external candidates.Before undertaking the appointment of a non-executive Director,the Chairman establishes that the prospective Director can give th
259、e time and commitment necessary to fulfil their duties,in terms of availability both to prepare for and attend meetings and to discuss matters at other times.This process is normally performed under the remit of the Nominations Committee.Commitment“All directors should be able to allocate sufficient
260、 time to the company to discharge their responsibilities effectively”All Board Directors recognise the need to allocate sufficient time to the Company for them to be able to meet their responsibilities as Board members.All non-executive Directors contracts include minimum time commitments;however th
261、ese are recognised to be the minimums.Details of the other directorships held by each Board member are provided in the Director Biographies on page 12.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
262、 the Company.No executive Director currently holds any other plc directorship.The non-executive Director contracts are available for inspection at the Companys registered office and are made available for inspection both before and during the Companys Annual General Meeting.Development“The Board sho
263、uld 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 responsible for ensuring that all the Directors continually update their skills,their knowledge and familiarity with the Group in order to fulfil their rol
264、e on the Board and the Boards Committees.Updates dealing with changes in legislation and regulation relevant to the Groups business are provided to the Board by the Company Secretary/Chief Financial Officer and through the Board Committees.All Directors have access to the advice and services of the
265、Company Secretary,who is responsible to the Board for ensuring that Board procedures are properly complied with and that discussions and decisions are appropriately minuted.Directors may seek independent professional advice at the Companys expense in furtherance of their duties as Directors.Training
266、 in matters relevant to their role on the Board is available to all Board Directors.New Directors are provided with an induction in order to introduce them to the operations and management of the business.In addition,the non-executive Directors meet with,at least once a quarter,the Groupss Operation
267、s Board on an informal basis.This provides all Directors with direct access to the senior management of the Company and allows for better understanding of how the strategy set by the Board is being implemented across the Group.Evaluation“The Board should undertake a formal and rigorous annual evalua
268、tion of its own performance and that of its committees and individual directors”In the prior year,a formal evaluation was conducted by means of a detailed questionnaire which was completed by each Director.The results of this process were collated by the Chairman and were presented to the Board as a
269、 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 steps to implement certain agreed upon suggestions which has included the process to recruit a further independent non exec
270、utive Director,but overall has concluded that its performance in the past year had been satisfactory.This review process will be repeated and updated in the upcoming year.The Board has considered the Codes recommendation that the evaluation of the Board be carried out externally at least every three
271、 years.The Board recognises this recommendation is not applicable to AIM listed companies and has determined it was not necessary to carry out an external review in the current year.Re-election“All directors should be submitted for re-election at regular intervals,subject to continued satisfactory p
272、erformance”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 who was last appointed or re-appointed three years o
273、r more prior to the AGM is required to retire from office and may be proposed for 19Cranewareplc AnnualReport2013re-election.Such a retirement will count in obtaining the number required to retire at the AGM.New Directors,who were not appointed at the previous AGM,automatically retire at their first
274、 AGM and,if eligible,can seek re-appointment.However,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 practice.As such,all Directors will retire from office
275、 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 responsibilities,including those statutory responsibilities l
276、aid out on page 16.An assessment of the Groups market,business model and performance is presented in the Chairmans Statement and the Operational Review on pages 4 to 10.As detailed on page 14 of the Directors Report,the Board has confirmed that it is appropriate to adopt the going concern basis in p
277、reparing 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 risk management and internal control systems”The Dire
278、ctors 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 sy
279、stems of internal control are designed to help the Group meet its business objectives by appropriately managing,rather than eliminating,the risks to those objectives.The controls can only provide reasonable,not absolute,assurance against material misstatement or loss.Executive Directors and senior m
280、anagement meet to review both the risks facing the business and the controls established to minimise those risks and their effectiveness in operation on an ongoing basis.The aim of these reviews is to provide reasonable assurance that material risks and problems are identified and appropriate action
281、 taken at an early stage.From this review the Company maintains its internal risk register which forms the foundation of the Board and the Audit Committee review process.The annual financial plan is reviewed and approved by the Board.Financial results with comparisons to plan and forecast results ar
282、e reported on at least a quarterly basis to the Board together with a report on operational achievements,objectives and issues encountered.The quarterly reports are supplemented by interim monthly financial information.Forecasts are updated no less than,quarterly in the light of market developments
283、and the underlying performance and expectations.Significant variances from plan are discussed at Board meetings and actions set in place to address them.Approval levels for authorisation of expenditure are at set levels and cascaded through the management structure with any expenditure in excess of
284、pre-defined levels requiring approval from the executive Directors and selected senior managers.Measures continue to be taken to review and embed internal controls and risk management procedures into the business processes of the organisation and to deal with areas of improvement which come to the m
285、anagements and the Boards attention.Metrics and quality objectives continue to be actively implemented and monitored as part of a continual improvement programme.Details of the principal risks and uncertainties facing the Group are detailed in the Directors Report on pages 13 to 14.The principal fin
286、ancial risks are detailed in Note 3 to the financial statements.Audit Committee and Auditors“The Board should establish formal and transparent arrangements for considering how they should apply the corporate reporting risk management and internal control principles and for maintaining an appropriate
287、 relationship with the Companys auditor.”An Audit Committee has been established to assist the Board with the discharge of its responsibilities in relation to internal and external audits and controls.The Audit Committee will normally meet at least three times a year.The Audit Committee is chaired b
288、y Neil Heywood and its other members are George Elliott and Ron Verni.The Chief Financial Officer,Chief Executive Officer and other senior management attend meetings by invitation and the Committee also meets the external auditors without management present.George Elliott,as a member of the Audit Co
289、mmittee has recent and relevant financial experience.Details of how the Audit Committee has discharged its responsibilities are provided below.RemunerationThe Level and Components of Remuneration“Levels of remuneration should be sufficient to attract,retain and motivate directors of the quality requ
290、ired to run the company successfully,but a company should avoid paying more than is necessary for this purpose.A significant proportion of executive directors remuneration should be structured so as to link rewards to corporate and individual performance”The Company has established a Remuneration Co
291、mmittee to assist the Board in this area.This Committee is chaired by Ron Verni and its other members are George Elliott and Neil Heywood.When appropriate Keith Neilson,as Chief Executive Officer,is invited to attend meetings(except where matters under review by the Committee relate to him).The Comm
292、ittee has responsibility for making recommendations to the Board on the remuneration packages of the executive Directors,and monitor the level and structure of remuneration for senior management,this includes:making recommendations to the Board on the Companys policy on Directors and senior staff re
293、muneration,and to oversee long term incentive plans(including share option schemes);ensuring remuneration is both appropriate to the level of responsibility and adequate to attract and/or retain Directors and staff of the calibre required by the Company;and ensuring that remuneration is in line with
294、 current industry practice.The Committee has presented its Remuneration Report on pages 21 to 23,which details the work undertaken operating under its terms of reference(which are available at the Companys registered office),to discharge its responsibilities.Procedure“There should be a formal and tr
295、ansparent procedure for developing policy on executive remuneration and for fixing the remuneration packages of individual directors.No director should be involved in deciding his or her own remuneration”Details of how the Committee and Board have discharged their responsibilities in this area are d
296、etailed in the Remuneration Report on pages 21 to 23.Corporate Governance Report Contd.20Cranewareplc AnnualReport2013Relations with ShareholdersDialogue with Shareholders“There should be a dialogue with shareholders based on mutual understanding of objectives.The Board as a whole has responsibility
297、 for ensuring that a satisfactory dialogue with shareholders takes place”The Company engages in full and open communication with both institutional and private investors and responds promptly to all queries received.In conjunction with the Companys brokers and other financial advisors all relevant n
298、ews is distributed in a timely fashion through appropriate channels to ensure shareholders are able to access material information on the Companys progress.To facilitate this:all shareholders are invited to attend the AGM and are encouraged to take the opportunity to ask questions;the primary point
299、of contact for shareholders on operational matters is Keith Neilson as CEO and Craig Preston as CFO;the primary point of contact for shareholders on corporate governance and other related matters is George Elliott as Chairman.Ron Verni as Senior Independent Director is available as a point of contac
300、t should a shareholder not wish to contact the Chairman for any reason.Keith Neilson and Craig Preston meet regularly with shareholders,normally immediately following the Companys half year and full year financial results announcements,to discuss the Groups performance and answer any questions.The B
301、oard monitors the success of these meetings through anonymous evaluations from both shareholders and analysts performed by the Companys Broker and Financial PR advisor.The Companys website has a section for investors which contains all publicly available financial information and news on the Company
302、.Constructive Use of the AGM“The Board should use the AGM to communicate with investors and to encourage their participation”The Board encourages attendance at its AGM from all shareholders.The Notice of AGM together with all resolutions and explanations of these resolutions are sent at least 20 wor
303、king days before the meeting.All Directors,where possible,make themselves available to answer any questions shareholders may have.Results of all votes on resolutions are published as soon as practicable on the Companys website.The Audit CommitteeDuring the year the Audit Committee,operating under it
304、s terms of reference(which are available at the Companys registered office),discharged its responsibilities,including reviewing and monitoring:interim and annual reports information including consideration of the appropriateness of accounting policies and material assumptions and estimates adopted b
305、y management;developments in accounting and reporting requirements;external auditors plan for the year-end audit of the Company and its subsidiaries;the Committees effectiveness;the Internal Risk Register covering the systems of internal control and their effectiveness,reporting and making new recom
306、mendations to the Board on the results of the review and receiving regular updates on key risk areas of financial control;the requirements or otherwise for an internal audit function;the performance and independence of the external auditors concluding in a recommendation to the Board on the reappoin
307、tment of the auditors by shareholders at the Annual General Meeting.The auditors provide annually a letter to the Committee confirming their independence and stating the methods they employ to safeguard their independence;the audit and non-audit fees charged by the external auditors;and the formal e
308、ngagement terms entered into with the external auditors.The Committee has also reviewed the arrangements in place for internal audit and concluded,due to the current size and complexity of the Company,that a formal internal audit function was not required.Under its terms of reference the Audit Commi
309、ttee is responsible for monitoring the independence,objectivity and performance of the external auditors,and for making a recommendation to the Board regarding the appointment of external auditors on an annual basis.The Groups external auditors,PricewaterhouseCoopers LLP,were first appointed as exte
310、rnal auditors of the Company for the year ended 30 June 2003.The Audit Committee has also implemented procedures relating to the provision of non-audit services by the Company auditors,which include non-audit work and any related fees over and above a de-minimis level to be approved in advance by th
311、e Chairman of the Audit Committee.Details of the fees paid to the auditors for audit and non-audit services are shown in Note 6 to the financial statements.The Audit Committee has considered the level of non-audit services and the related fees paid and have concluded they do not compromise auditor i
312、ndependence.AIM Rule Compliance ReportCraneware plc is quoted on AIM and as a result the Company has complied with AIM Rule 31 which requires the following:have in place sufficient procedures,resources and controls to enable its compliance with the AIM Rules;seek advice from its Nominated Advisor(“N
313、omad”)regarding its compliance with the AIM Rules whenever appropriate and take that advice into account;provide the Companys Nomad with any information it reasonably requests in order for the Nomad to carry out its responsibilities under the AIM Rules for Nominated Advisors,including any proposed c
314、hanges to the Board and provision of draft notifications in advance;ensure that each of the Companys Directors accepts full responsibility,collectively and individually,for compliance with the AIM Rules;and ensure that each Director discloses without delay all information which the Company needs in
315、order to comply with AIM Rule 17(Disclosure of Miscellaneous Information)insofar as that information is known to the Director or could with reasonable diligence be ascertained by the Director.Approved by the Board of Directors and signed on behalf of the Board by:Craig Preston Company Secretary 9 Se
316、ptember 2013Corporate Governance Report Contd.21Cranewareplc AnnualReport2013This report sets out Craneware plcs remuneration and benefits for the financial year under review.A resolution to approve the report will be proposed at the Annual General Meeting of the Company at which the financial state
317、ments will be presented for approval.Remuneration CommitteeThe Company has a Remuneration Committee(“the Committee”)in accordance with the recommendations of the UK Corporate Governance Code.The members of the Committee are Ron Verni(Chairman),Neil Heywood and George Elliott.None of the Committee ha
318、s any personal financial interests,other than as shareholders,in matters directly decided by this Committee,nor are there any conflicts of interests arising from cross directorships or day to day involvement in the running of the business.The Companys Chief Executive Officer on occasion will attend
319、meetings,at the invitation of the Committee,to advise on operational aspects of implementing existing and proposed policies.The Company Secretary acts as secretary to the Committee.Under the Committee Chairmans direction,the Chief Executive Officer and the Company Secretary have responsibility for e
320、nsuring the Committee has the information relevant to its deliberations.In formulating its policies,the Committee has access,as required,to professional advice from outside the Company and to publicly available reports and statistics.The remuneration of the non-executive Directors is determined by t
321、he Board as a whole within limits set out in the Articles of Association.PolicyExecutive remuneration packages are designed to attract,motivate and retain Directors of the calibre necessary to achieve the Groups growth objectives and to reward them for enhancing shareholder value.The main elements o
322、f the remuneration package for executive Directors are:basic annual salary and benefits in kind;annual performance related bonus;pension entitlement;and,share option awards.Remuneration Committee Report The Companys policy is that a substantial proportion of the remuneration of executive Directors s
323、hould be performance related.None of the executive Directors hold any outside appointments.Directors remunerationIn the prior year,the Remuneration Committee engaged Hewitt New Bridge Street Consultants to perform a review of director and senior management remuneration.The conclusions and recommenda
324、tions of this report continue to be incorporated as part of the longer term strategy for director remuneration.As a result,the Committee continues to develop overall directors remuneration packages to ensure both the short and long term objectives of the Company are met and potentially exceeded,ther
325、eby ensuring that the Directors are incentivised to maximise return to the Companys shareholders.However,in the year under review there were no changes made to the directors remuneration packages.The remuneration package comprises:(i)Basic Salary and pension entitlementThis is normally reviewed annu
326、ally,usually in September,or when an individuals position or responsibilities change and is normally paid as a fixed cash sum monthly.In regards to pension entitlement,the Company pays a fixed sum to a personal pension plan on behalf of the Chief Executive Officer.(ii)Annual Performance Related Bonu
327、sUnder the annual performance related bonus plan executive Directors are eligible to earn a cash bonus payment based on targets that are set by the Committee.In determining these targets,the Committees objective is to set targets that reflect challenging financial performance in the current year,but
328、 also provide for the future growth of the Company.Maximum bonus entitlements were set at a level that allowed additional growth of overall remuneration for out-performance of targets but still remains below the appropriate levels of the benchmarking exercise referred to above.As these financial tar
329、gets were not met in the current year,no bonus has been paid.(iii)Share optionsThe Company operates the Craneware Employees Share Option Plan 2007(“Share Option Plan”)from which,and at the discretion of the Committee,executive Directors and other employees(including senior management)may be awarded
330、share options under this scheme.During the year,the executive Directors were awarded share options under this scheme,details of which are shown in the table on page 23.These options are normally exercisable three years after the date the options were granted,provided the Executive is still employed
331、at the date of exercise.These options are subject to stringent performance criteria based on the share price performance in the preceding three year period as compared to a comparator base of companies that make up the Techmark 100.The performance criteria is assessed annually(against the preceding
332、three year period)with no more than 1/3 of the total options vesting(but not becoming exercisable until three years from the original grant date).If performance is below the median of the comparator group over the relevant three year period then no shares vest that year.The amount of shares that ves
333、t increases as performance reaches top quartile when a third of the total grant of options vest.As this performance criteria was not met in the current year,all options that were subject to testing in the current year lapsed.Share Option grants in the year remain at a level consistent with prior year but still remain below the levels recommended by the benchmarking exercise referred to above.22Cra
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