Search Resources Investors Careers Login Who We Serve What We Do Solutions News & Events Get Started Corporate Governance Report Chair’s Introduction On behalf of the Board, I am pleased to present our Corporate Governance Report for the year ended 30 June 2021 in the context of the UK Corporate Governance Code 2018 (‘the 2018 Code’), our chosen corporate governance framework. For the financial year and ongoing, at the time of compiling this report, Craneware is continuing to operate during a global pandemic. Whilst as a business we continue to be relatively insulated from the direct impacts of the pandemic, our customers continue to be on the front-line. Supporting them and the phenomenal work their teams have done has been, and will continue to be, our top priority. During the year the Board oversaw the Group’s progress with the three fundamental pillars of its growth strategy, as explained in my Chairman’s Statement and in the Strategic Report sections of the Annual Report 2021. This included the successful fund raise and share placing in June 2021 and the announcement of the strategically important acquisition of Sentry which completed in July 2021. This acquisition resulted in an immediate step change in scale of Craneware’s own operations whilst expanding our coverage of the market with Craneware now serving approximately 40% of all US hospitals and more than 10,000 clinics and pharmacies. In these circumstances, good governance and balancing the needs and expectations of our stakeholders has never been a more important responsibility. We thank our shareholders for their ongoing support and to our other stakeholders, including our employees, during this past year and for the future of the enlarged Craneware Group. Section 172 and Stakeholder Engagement A key focus of the 2018 Code is the requirement to report on how the interests of the Group’s stakeholders and the matters set out in section 172 of the Companies Act 2006 have been considered in Board discussions and decision making. It is also important for the Board to keep stakeholder engagement mechanisms under review so that they remain effective. The Board’s section 172 (1) statement and details of our engagement with stakeholders can be found in the Annual Report. Social responsibility and sustainability We have summarised, within our Social Responsibility and Sustainability Statement section of the Annual Report 2021, an overview of current programmes and alignment to sustainability principles. Purpose, Values and Culture Our Purpose is to profoundly impact healthcare by improving healthcare providers’ operational efficiency and margin, so they can continue investing in providing quality care for their communities. Supporting our Purpose is Craneware’s ethos framework and our core values of honesty, integrity, working hard to the highest quality, providing excellent service and quality. During the year, the Board has continued to monitor how the purpose, vision, strategy and values align to the Group’s culture (the Board Leadership and Company Purpose section below contains further details). Board composition and evaluation After 11 years of service to Craneware, Ron Verni decided not to stand for re-election as a Director of the Company at the AGM on 17 November 2020 and he stepped down as a non-executive director (and Senior Independent Director) at the conclusion of that meeting. We would like to thank Ron for his significant contribution to the Board throughout his tenure as a non-executive Director of the Company. Following this, Colleen Blye agreed to take over the role as the Senior Independent Director and the Board reviewed the membership of the Audit and Remuneration Committees, as is explained further in this report. With new non-executive Directors, including myself, joining the Board in 2020 it was considered appropriate to conduct a Board evaluation during the year ended 30 June 2021. An overview of the process is provided in this report and I thank my fellow Board members for their participation in this evaluation. Annual General Meeting (‘AGM’) The Board recognises that the AGM is an important event for all shareholders. Unfortunately, due to public health guidelines in relation to COVID-19 and the safety and well-being of our shareholders, the Directors and employees of the Company, the AGM in November 2020 had to be convened as a closed meeting with only the required quorum of shareholders present in person. The arrangements for the AGM, to be held in November 2021, are outlined in the Notice of AGM. Following our Annual General Meeting on 17 November 2020, we announced that all resolutions were passed with an over 72% majority, however there was one resolution, resolution 11, that had received a number of votes against. We understand the voting in relation to resolution 11 (re-appointment of PricewaterhouseCoopers LLP as auditors) was specifically in relation to the expectation that a competitive audit tender for the external audit services takes place where the existing auditors have been in role for a period of 10 years or longer, in line with best corporate governance practice. This was fully considered by the Board and resulted in the Audit Committee conducting, on behalf of the Board, a tender for external audit services during the year, as explained in the Audit, Risk and Internal Control section below. The year ahead The new financial year started with the exciting news, announced on 13 July 2021, of completion of the acquisition of Sentry. I would like to thank the Board, the Craneware and Sentry senior management teams and our advisors, in particular, for the significant time, energy and commitment they have provided in the process to complete this acquisition. It is a great pleasure to welcome the Sentry team to Craneware. The Board is overseeing, within our corporate governance framework, the integration process which is already making good progress. Underpinned by our purpose, to profoundly impact healthcare by improving healthcare providers’ operational efficiency and margin, it is clear that there are significant potential positive impacts that the combined team can provide to our stakeholders. This will therefore continue to drive Craneware’s purpose, vision, strategy and values to ensure that the culture of the integrated organisation is aligned to enable their achievement. Will Whitehorn Chairman 20 September 2021 Corporate Governance Report The Board of Directors (“the Board”) has always recognised the importance and value of good corporate governance and has elected to adopt the UK Corporate Governance Code 2018 (the ‘Code’) as its corporate governance framework but it is aware that this Code has been drafted in the context of larger, main-market listed companies. The Board is pleased to report how it has applied the principles and complied with the provisions of the Code in line with best practice and in view of the size of the Company. This Report sets out how it has complied with the individual provisions and applied the ‘spirit’ of the UK Corporate Governance Code 2018 as a whole and explains any areas of non-compliance with the provisions of the Code. The UK Corporate Governance Code 2018 is available from the Financial Reporting Council at www.frc.org.uk. Overview: Application of the UK Corporate Governance Code 2018 (the ‘Code’) The Board seeks to continue to ensure the overarching objective that the governance of the Company contributes to its long-term sustainable success and achievement of wider objectives. The Board recognises, as stated in the Code, that achieving this depends on the way it applies the spirit of the Principles of the Code. The Company is a smaller company for the purposes of the Code and, as such, certain provisions of the Code either do not apply or are judged to be disproportionate or less relevant in its case. Where the Company does not comply with any specific Code provision then this is highlighted and explained in this report. Compliance statement The Board has complied with the spirit of the UK Corporate Governance Code 2018 and applied the principles and complied with the provisions of the Code throughout the year ended 30 June 2021, with the exception of the following areas that the Board believes are not appropriate for a Group of our size or steps are ongoing to achieve compliance: Provision 17: due to the size of the Board, a separate nomination committee has not been established. Instead, these duties have been fulfilled by the Board as a whole; and Provision 36: concerning the development of a formal policy for post-employment shareholding requirements. Whilst still not considered the norm for AIM listed companies, a formal policy regarding minimum shareholding requirements and a post-vesting holding period have been introduced during the year in relation to Long Term Incentive grants for executive Directors and senior management. These new policies are considered to promote long-term shareholdings by executive Directors and senior management that support alignment with long-term shareholder interests although they do not include post-employment shareholding requirements. Further information regarding the Board’s committees is contained in this Corporate Governance Report and the Remuneration Committee’s Report section of the Annual Report 2021. Board Leadership and Company Purpose The role of the Board The Board is primarily responsible for promoting the long-term success of the Group and is collectively accountable to shareholders for its proper management. The Board must balance this responsibility with ensuring that the Directors have regard for key stakeholders and that there is sufficient time, information and understanding to properly take into account those stakeholders’ interests when making decisions and considering their long-term implications. The Board recognises that effective engagement with key stakeholders, including employees, customers, shareholders, the community and suppliers, is a core component of long-term sustainability and success. Purpose, vision, strategy, values and culture The Board leads and establishes the Group’s purpose, vision, strategy and values and ensures that they are being carried out in practice across the business. The Board provides leadership across the Group and applies a governance framework to ensure that this is delivered effectively with appropriate control mechanisms. The Board is responsible for delivering value for shareholders by setting the Group’s strategy and overseeing its implementation by the Operations Board. Our strategy and business model are explained within the strategic report section of the Annual Report. The Board, at least annually, meets to review the Group’s strategy, drawing on the wide and varied experience of the Board members, including detailed healthcare sector knowledge. The Board also receives regular updates on progress against the agreed strategy at Board meetings. The Board is responsible for setting the Group’s purpose and values and ensuring these are aligned with the Group’s culture. Our purpose forms the basis of Group-wide strategic initiatives each year. Our culture is the way that we work together and is fundamental to how we operate. The Board has a fundamental role in shaping our corporate culture defined by our values and purpose. The Board assesses and monitors the Group’s culture through regular interaction with management and other colleagues to ensure that its policies, practices and behaviours are aligned with the Group’s purpose, vision, strategy and values. The Board meets regularly to discuss and agree on the various matters brought before it, including the Group’s trading results. The Board is well supported by the Group’s Operations Board (details of which are provided below) and a broader senior management team, who collectively have the qualifications and experience necessary for the day to day running of the Group. There is a formal schedule of matters reserved for the Board, which includes approval of the Group’s strategy, annual budgets and business plans, acquisitions, disposals, business development, annual reports and interim statements, plus any significant financing or funding related matters as well as significant capital expenditure plans. As part of this schedule, the Board has clearly laid out levels of devolved decision making authority to the Group’s Operations Board. Board Composition and Division of Responsibilities Board of Directors Ronald Verni stepped down as a non-executive Director, and Senior Independent Director, of the Company at the conclusion of the Company’s AGM on 17 November 2020. Colleen Blye was then appointed by the Board as the Senior Independent Director, having served on the Board since November 2013. Therefore, in the period 18 November 2020 to 30 June 2021 the Company’s Board comprised of: its Chairman, William Whitehorn; two executive Directors: Keith Neilson, Chief Executive Officer; and Craig Preston, Chief Financial Officer; along with four further non-executive Directors (each of whom the Board considers to be independent), Colleen Blye (Senior Independent Director), Russ Rudish, Alistair Erskine and David Kemp. Detailed biographies of all Directors are contained in the ‘Board of Directors’ section of this website and in the Annual Report for the year ended 30 June 2021. Board Composition and Division of Responsibilities A summary of the composition of the Board for different periods during the year ended 30 June 2021 is: Period Composition of the Board Chairman (Independent on Appointment) Executive Directors Independent Non-executive Directors 1 July to 17 November 2020 1 2 5 From 18 November 2020 1 2 4 Division of Responsibilities The Board has established clearly defined and well understood roles for the Chairman of the Company and the Chief Executive Officer. A summary of the responsibilities of these roles is contained in the table below. The Chairman is responsible for the leadership of the Board, ensuring its effectiveness and setting its agenda. Once strategic and financial objectives have been agreed by the Board, it is the Chief Executive Officer’s responsibility to ensure they are delivered upon. To facilitate this, Keith Neilson as CEO chairs the Group’s Operations Board which comprises the Chief Financial Officer and five further members of the Senior Management Team. The day-to-day operation of the Group’s business is managed by this Operations Board, subject to the clearly defined authority limits. The following table summarises the main responsibilities of the roles of: Chairman, Chief Executive Officer and Senior Independent Director. Role Summary of Responsibilities Chairman The Chairman leads the Board and is responsible for its overall effectiveness in directing the Company. He promotes a culture of openness and debate facilitating constructive Board relations and the effective contribution of all Non-Executive Directors, and ensures that the Board receive accurate, timely and clear information. Chief Executive Officer The Chief Executive Officer (CEO) ensures that the strategic and financial objectives, as agreed by the Board, are delivered upon. To facilitate this, the CEO chairs the Group’s Operations Board which manages, subject to the clearly defined authority limits, the day-to-day operation of the Group’s business. Senior Independent Director The Senior Independent Director provides a sounding board for the Chairman as well as providing an additional channel of contact for shareholders, other Directors or employees, if the need arises. The Chairman William Whitehorn was appointed Chairman of the Board on 1 January 2020 and was independent on appointment, in accordance with Provisions 9 and 10 of the Code. Non-Executive Directors The Board has appointed Colleen Blye as Senior Independent Director from 18 November 2020; Ronald Verni served in this role prior to that date. In this role, Colleen provides a sounding board for the Chairman as well as providing an additional channel of contact for shareholders, other Directors or employees, if the need arises. In addition to matters outlined above, there is regular communication between executive and non-executive Directors, including where appropriate, updates on matters requiring attention prior to the next Board meeting. The non-executive Directors meet, as appropriate but no less than annually, without executive Directors being present and further meet annually without the Chairman present. The Composition of the Board The composition of the Board has been designed to give a good mix and balance of different skill sets, including significant experience in: high growth companies; software and healthcare sectors; entrepreneurial cultures; senior financial reporting; both UK and US companies; acquisitions; and other listed companies. The Board was enhanced last year with the appointments of three new non-executive directors. Through this mix of experience, the Board and the individual Directors are well positioned to set the strategic aims of the Company as well as drive the Group’s values and standards throughout the organisation, whilst remaining focused on their obligations to shareholders and meeting their statutory obligations. The Board reviews on an annual basis the independence of each non-executive Director. In making this assessment, in addition to considering Provision 10 of the Code, the Board determines whether the Director is independent in character and judgement and whether there are relationships or circumstances which are likely to affect, or could appear to affect, the Director’s judgement. Ronald Verni, having been appointed on 1 May 2009, completed his eleventh year of service on the Board in the year ended 30 June 2020. As reported last year, the Board in making its assessment of independence noted the significant growth and changes in the Company during this period, this combined with Ronald’s conduct led the Board to conclude his length of tenure had not affected his independence. Ronald decided not to seek re-election as a Director of the Company at the AGM in 2020 and therefore stepped down from the Board on 17 November 2020. In regards to all of the other non-executive directors, the Board has not identified any matters that would affect their independence. Throughout the year ended 30 June 2021, a least half the Board, excluding the Chair, were non-executive directors whom the Board considers to be independent. The Board has established an Audit Committee and a Remuneration Committee, details of which are provided below. The Board does not have a separate Nomination Committee as the Company has incorporated this function within the remit of the entire Board. Although not in compliance with Provision 17 of the Code, the Board considers this to be an appropriate arrangement in view of the size of the Group. The membership of both of the Committees changed during the year: Audit Committee members Remuneration Committee members 1 July to 17 November 2020 Colleen Blye (Chair) Russ Rudish Ronald Verni 1 July to 17 November 2020 Ronald Verni (Chair) Colleen Blye Russ Rudish From 18 November 2020 David Kemp (Chair) Colleen Blye Alistair Erskine From 18 November 2020 Russ Rudish (Chair) Colleen Blye Alistair Erskine Attendance of Directors at scheduled Board and Committee meetings convened in the year, along with the number of meetings that they were invited to attend, are set out below: Board Remuneration Committee Audit Committee No. Meetings in year 10 2 2 Executive Directors K Neilson 10/10 C T Preston 10/10 Non-Executive Directors W Whitehorn 10/10 R Verni* 5/6 1/1 1/1 C Blye 9/10 2/2 1/2 R Rudish^ 10/10 2/2 1/1 A Erskine^ 9/10 1/1 1/1 D Kemp^ 9/10 – 1/1 *for this director, who stepped down from the Board during the year, the number of meetings attended is with reference to those until their date of resignation. ^the membership of the Committees changed during the year, the number of meetings attended is with reference to those while each non-executive Director was a member of each Committee Where any Director has been unable to attend Board or Committee meetings during the year, their input has been provided to the Company Secretary ahead of the meeting. The relevant Chairman then provides a detailed briefing along with the minutes of the meeting following its conclusion. As detailed in the Directors’ Report section of the Annual Report, the Company maintains appropriate insurance cover against legal action brought against Directors and officers. The Company has further indemnified all Directors or other officers against liability incurred by them in the execution or discharge of their duties or exercise of their powers. Board Appointments and Evaluation Appointments to the Board When a new appointment to the Board is to be made, consideration is given to the particular skills, knowledge and experience that a potential new member could add to the existing Board composition. A formal process is then undertaken, usually involving external recruitment agencies, with appropriate consideration being given, in regard to executive appointments, to internal and external candidates. Before undertaking the appointment of a non-executive Director, the Board establishes that the prospective Director can give the time and commitment necessary to fulfil their duties, in terms of availability both to prepare for and attend meetings and to discuss matters at other times. This includes, prior to appointment, significant existing commitments being disclosed and assessed along with an indication of time commitment involved. It was explained in last year’s annual report that there were three new appointments to the Board in the year ended 30 June 2020. External independent search consultancies were engaged by the Board in respect of the formal process to identify potential candidates for those positions. Any conflicts, or potential conflicts, of interest are disclosed and assessed prior to a new Director’s appointment to ensure that there are no matters which would prevent that person from accepting the appointment. The Group has procedures in place for managing conflicts of interest and Directors have continuing obligations to update the Board on any changes to these conflicts. This process includes relevant disclosure at the beginning of each Board meeting. If any potential conflict of interest arises, the Articles of Association permit the Board to authorise the conflict, subject to such conditions or limitations as the Board may determine. The Group is supportive of and recognises the importance of diversity, including gender, ethnicity, nationality, skills and experience. This is evident from the diverse, inclusive and breadth and depth of skills and experience within the Craneware team. While not in favour of setting specific targets, in the event that a Board position is required to be filled, during succession planning, the Board aims to ensure that the search process is sufficiently inclusive to encourage applications from diverse candidates with relevant skills, experience and knowledge, and that the selection process is fair and transparent. Across the Group, at the end of the financial year, the team comprised 39% female and 61% male employees. At Operations Board plus vice president level, the composition is approximately 35% female and 65% male. Commitment All Directors recognise the need to allocate sufficient time to the Company for them to be able to meet their responsibilities as Board members. All non-executive Directors’ contracts include minimum time commitments; however, these are recognised to be the minimums. Details of the other directorships held by each Board member are provided in the Directors’ biographies in the ‘Board of Directors’ section of this website and in the Annual Report. The Board has evaluated the time commitments required by these other roles and does not believe it affects their ability to perform their duties with the Company. No executive Director currently holds any other directorship of a listed company. The non-executive Director contracts are available for inspection at the Company’s registered office and are made available for inspection both before and during the Company’s Annual General Meeting. Succession Planning During the prior financial year, a new Chair and two new independent non-executive directors were appointed to the Board. Ronald Verni stepped down from the Board at the AGM in November 2020. Succession plans are in place for the senior management talent pipeline which are re-visited and reviewed with the Board as appropriate. The Board takes an active interest in the quality and development of talent and capabilities within Craneware, ensuring that appropriate opportunities are in place to develop high-performing individuals. Development 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 role on the Board and the Board’s Committees. Updates dealing with changes in legislation and regulation relevant to the Group’s 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 Company Secretary, who is responsible to the Board for advising the Board on all governance matters, ensuring that Board procedures are properly complied with and that discussions and decisions are appropriately minuted. Directors may seek independent professional advice at the Company’s expense in furtherance of their duties as Directors. The Board ensures that the Audit and Remuneration Committees are provided with sufficient resources to undertake their duties. Training in matters relevant to their role on the Board is available to all Directors. New Directors are provided with an induction in order to introduce them to the operations and management of the business. Information and Support In setting the Board agendas, the Chairman, in conjunction with the Company Secretary, ensures input is gathered from all Directors on matters that should be included. Board papers are then issued in advance of meetings to ensure Board members have appropriate detail in regard to matters that will be covered, thereby encouraging openness and healthy debate. At a minimum, these board papers include the Financial Results of the Group and a report from both the Chief Executive Officer and the Chief Financial Officer. In addition, the non-executive Directors have access to and correspond with the Group’s Operations Board on an informal basis. This allows for better understanding of how the strategy set by the Board is being implemented across the Group. Evaluation With the changes to the Board part way through last year, a Board evaluation process was not conducted during that year. A formal Board evaluation process was conducted in the year ended 30 June 2021. This was performed by means of a detailed questionnaire completed by each Director. This evaluation included a review of the performance of the Chairman and the Board Committees. The results of the process were collated by the Company Secretary and were reviewed by the Board as a whole. Overall, the Board concluded that its performance in the period under review had been satisfactory, however it did recognise the Board, as currently constituted, was relatively new and resolved to monitor its progress over the coming year including the possibility of supplementing the Board with a further non-executive Director. The Board will continue to consider the Code’s recommendation that the evaluation of the Board be carried out with an external evaluator at least every three years, however, at present, remains of the opinion that with the current size of the Board this is not required. Re-election Under the Company’s Articles of Association, at every Annual General Meeting (‘AGM’), at least one-third of the Directors who are subject to retirement by rotation, are required to retire and may be proposed for re-election. In addition, any Director who was last appointed or re-appointed three years or more prior to the AGM is required to retire from office and may be proposed for re-election. Such a retirement will count in obtaining the number required to retire at the AGM. New Directors, who were not appointed at the previous AGM, automatically retire at their first AGM and, if eligible, can seek re-appointment. However, the Board recognises the Code’s recommendation that all Directors should stand for re-election every year, and whilst not a requirement, the Board has decided to adopt this recommendation as best practice. As such, all Directors will retire from office at the Company’s forthcoming AGM. It is the intention of all Directors to stand for re-appointment. Stakeholder Engagement Shareholders Dialogue with Shareholders The Company engages in full and open communication with both institutional and private investors and responds promptly to all queries received. In conjunction with the Company’s brokers and other financial advisors all relevant news is distributed in a timely fashion through appropriate channels to ensure shareholders are able to access material information on the Company’s progress. To facilitate this: All shareholders are usually invited to attend the AGM and encouraged to take the opportunity to ask questions. Unfortunately, different arrangements had to be made for the AGM in November 2020, due to the public health guidelines in relation to COVID-19 and consideration for the safety and well-being of our shareholders, the Directors and employees of the Company. The AGM therefore had to be held as a closed meeting with only the required quorum of shareholders present in person. The primary points of contact for shareholders on operational matters are Keith Neilson as Chief Executive Officer and Craig Preston as Chief Financial Officer. The primary point of contact for shareholders on corporate governance and other related matters is Will Whitehorn as Chairman. Colleen Blye, as Senior Independent Director, is available as a point of contact should a shareholder not wish to contact the Chairman for any reason. The Board welcomes regular engagement with major shareholders to understand their views on governance and performance against our stated strategy. The Chairman ensures that the Board as a whole has a clear understanding of the views of shareholders. Keith Neilson and Craig Preston meet regularly with shareholders, normally immediately following the Company’s half year and full year financial results announcements, to discuss the Group’s performance and answer any questions. The Board monitors the success of these meetings through anonymous evaluations from both shareholders and analysts performed by the Company’s Broker and Financial PR advisor. The Company undertook two share placing processes during the year, the first in August 2020. Despite a strong oversubscription, the Board decided it would be in the best interests of the Company and its shareholders not to proceed with the placing at that time. The second, in June 2021, relating to the acquisition of Sentry Data Systems, Inc., was completed. Craneware consulted with a number of its major shareholders prior to the Placing and has subsequently held further calls with analysts and shareholders to provide further details in respect of the acquisition. The Company was pleased by the support it received from both existing and new shareholders. As explained in the Audit, Risk and Internal Control section of this report, the Chair of the Audit Committee wrote to the Company’s substantial shareholders to inform them in advance about the audit tender process and to provide them with an opportunity to comment on the tendering and appointment of the external auditor. This website has a section for investors that contains all publicly available financial information and news on the Company. Details of the Company’s share capital and substantial shareholders are contained in the Directors’ Report within the Annual Report. Constructive Use of General Meetings The Board normally encourages attendance at its Annual General Meeting (‘AGM’) from all shareholders. The Notice of AGM together with all resolutions and explanations of these resolutions are sent at least 20 working days before the meeting. The Company proposes separate resolutions for each substantially separate issue and specifically relating to the report and accounts. All Directors, where possible, make themselves available to answer any questions shareholders may have. Results of all votes on resolutions are published as soon as practicable on the Company’s website. Update to the 2020 AGM Following the AGM that was held on 17 November 2020, the Company announced that all resolutions were passed and a majority over 72% of the proxy votes received were ‘for’ each of the resolutions proposed at the AGM however there were was one resolution (number 11) that had received a number of proxy votes ‘against’. Following the conclusion of the AGM in November 2020, the Board committed to consult with the Company’s shareholders to more fully understand the reasons for those votes against and to carefully reflect on the feedback received. As reported within the Company’s interim results announcement on 1 March 2021, to understand the voting in relation to resolution 11 (re-appointment of PricewaterhouseCoopers LLP as auditors) the Board consulted with shareholders to more fully understand the reasons for those votes against the resolution and it is understood that the voting was specifically in relation to the expectation that a competitive tender for external audit services takes place where the existing auditors have been in place for a period of 10 years or longer. Although the Board and the Audit Committee had been satisfied with the performance of PricewaterhouseCoopers LLP as external auditors, it was concluded that it was an appropriate time to review the market and conduct a tender. The Audit, Risk and Internal Control section below outlines the audit tender process conducted and its outcome. Employee engagement The Board has decided to utilise alternative workforce engagement mechanisms, instead of the suggested workforce engagement mechanisms in the 2018 Code (i.e. a director appointed from the workforce, a formal workforce advisory panel or a designated non-executive director). Craneware has established an Employee Advisory Committee and utilises the results and feedback received from the annonymous quarterly engagement surveys, which have a high response rate, as well as the other engagement mechanisms outlined in the Stakeholder Engagement section and in the Directors’ Report within the Annual Report. The Board considers these employee engagement mechanisms to be appropriate at this time, in view of the size of the Group, but will keep these engagement mechanisms under review, in particular in view of the integration process following the acquistion of Sentry in July 2021. Engagement with other key stakeholder groups The Social Responsibility and Sustainability Statement, the Stakeholder Engagement section and the Directors’ Report within the Annual Report 2021 contain an overview of the engagement with other key stakeholder groups including: customers and the community. Audit, Risk and Internal Control Audit Committee and Auditors An Audit Committee has been established to assist the Board with the discharge of its responsibilities in relation to internal and external audits and controls. The Audit Committee will normally meet at least twice a year. From 1 July 2020 until 17 November 2020, the Audit Committee was chaired by Colleen Blye and its other members were Ronald Verni and Russ Rudish. From 18 November 2020, the Audit Committee is chaired by David Kemp and its other members are Colleen Blye and Alistair Erskine. The Chief Financial Officer, Chief Executive Officer and other senior management attend meetings by invitation and the Committee also meets the external auditors without management present. David Kemp and Colleen Blye, as current and previous chair of the Audit Committee, have recent and relevant financial experience and the Audit Committee as a whole has significant experience and competence in healthcare and software sectors. The terms of reference of the Audit Committee are available here, and at the Company’s registered office. Details of how the Audit Committee has discharged its responsibilities are provided below. Financial and Business Reporting The Board recognises its responsibilities, including those statutory responsibilities laid out in the ‘Statement of Directors’ Responsibilities’ section of the Directors’ Report contained in the Annual Report (which can be viewed and downloaded from the ‘Financial Reports’ section of this website). An assessment of the Group’s market, business model and performance is presented in the Chairman’s Statement and the Strategic Report within the Annual Report. As detailed in the Directors’ Report section of the Annual Report, the Board has confirmed that it is appropriate to adopt the going concern basis in preparing the consolidated and Company financial statements for the year ended 30 June 2021. The Board has explained within the Viability Statement section of the Strategic Report within the Annual Report for the year ended 30 June 2021 that it has assessed the prospects of the Company and the Group, taking into account the Group and the Company’s current position and principal risks. Risk Management and Internal Control Details of the principal risks and uncertainties and emerging risks facing the Group, along with a description of the Group’s risk management procedures, are detailed in the Strategic Report section of the Annual Report. The principal financial risks are detailed in Note 3 to the financial statements. The Directors recognise their responsibility for the Group’s system of internal control and have established systems to ensure that an appropriate and reasonable level of oversight and control is provided. These systems, which cover all material controls, including financial, operational and compliance controls are reviewed for effectiveness annually by the Audit Committee and the Board. The Group’s systems of internal control are designed to help the Group meet its business objectives by appropriately managing, rather than eliminating, the risks to those objectives. The controls can only provide reasonable, not absolute, assurance against material misstatement or loss. The annual financial forecast is reviewed and approved by the Board. Financial results, with comparisons to forecast results, are reported on at least a quarterly basis to the Board together with a report on operational achievements, objectives and issues encountered. The quarterly reports are supplemented by interim monthly financial information. Forecasts are updated no less than quarterly in the light of market developments and the underlying performance and expectations. Significant variances from plan are discussed at Board meetings and actions set in place to address them. Approval levels for authorisation of expenditure are at set levels and cascaded through the management structure with any expenditure in excess of pre-defined levels requiring approval from the executive Directors and selected senior managers. Measures continue to be taken to review and embed internal controls and risk management procedures into the business processes of the organisation and to deal with areas of improvement which come to management’s and the Board’s attention. Metrics and quality objectives continue to be actively implemented and monitored as part of a continual improvement programme. Audit Committee: role, responsibilities and activities during the year During the year the Audit Committee, operating under its terms of reference (which are available here and at the Company’s registered office), discharged its responsibilities, including reviewing and monitoring: interim and annual reports information including consideration of the appropriateness of accounting policies and material assumptions and estimates adopted by management; developments in accounting and reporting requirements; consideration of the points reported by the Financial Reporting Council from its review of the Group’s Annual Report and financial statements for the year ended 30 June 2020; external auditors’ plan for the year-end audit of the Company and the Group; the Committee’s effectiveness; the systems of internal control and their effectiveness, reporting and making new recommendations to the Board on the results of the review and receiving regular updates on key risk areas of financial control; the requirements or otherwise for an internal audit function; the audit tender process which was conducted during the year; the performance and independence of the external auditors. The auditors provide annually a letter to the Committee confirming their independence and stating the methods they employ to safeguard their independence; the audit and non-audit fees charged by the external auditors; the formal engagement terms entered into with the external auditors; the provision of tax compliance services to the Group. The Committee and the Board as a whole has considered the impact of COVID-19 on our Group and Company financial statements. It has reviewed the Group’s profitability and liquidity as part of a number of forecast scenarios. As part of this assessment, the Committee has also reviewed the viability statement and going concern note (as included in the Annual Report for the year ended 30 June 2021), following which it was agreed that the going concern basis of accounting continues to be an appropriate basis of preparation for the financial statements. In accordance with its terms of reference, the Committee has reported to the Board as to how it has discharged its responsibilities throughout the year. Financial Reporting Council Review The Conduct Committee of the Financial Reporting Council (‘FRC’) reviewed the Group’s Annual Report and accounts for the year ended 30 June 2020 as part of its routine monitoring activity. The Conduct Committee did not report any material errors in compliance with relevant reporting requirements or require any corrections. It did make some recommendations to support continuous improvements in our financial reporting. These have now been addressed by additional disclosures where material and relevant. The FRC has requested that we advise shareholders that this review provides no assurance that the Annual Report and accounts are correct in all material respects; the FRC’s role is not to verify the information provided but to consider compliance with reporting requirements. The FRC and its officers, employees and agents therefore accept no liability for any reliance on its review by the Company or any third parties, including but not limited to investors and shareholders. Significant matters considered in relation to the financial statements The following table sets out the significant areas considered by the Committee in relation to the Group’s financial statements for the year ended 30 June 2021: Area of judgement or estimate Matter considered and Role of the Committee Revenue recognition (Group and Company), including compliance with IFRS 15 Revenue and deferred income are significant amounts in the context of the Consolidated Statement of Comprehensive Income and the Group and Company Balance Sheets respectively. The amount of revenue to be recognised and timing of revenue recognition are determined based on the details and terms contained in the contracts with customers. Revenue recognition on non-standard contracts can involve significant judgment and interpretation of both the Group’s policy and IFRS 15. Internally developed intangible assets (Group and Company) The Group and the Company capitalise development costs when the conditions for capitalisation, as outlined in the principal accounting policies, have been met. Consequently, the Directors are required to continually assess the commercial potential of each product in development and its useful life following launch. There is judgement involved in determining whether or not costs being capitalised meet the definition of intangible assets under IAS 38 Intangible assets. In addition, there may be judgement involved in the assessment of whether or not the intangible assets will generate future economic benefit sufficient to recover the carrying value of the intangible asset. The Committee reviews this area as there is judgement involved in the Directors’ assessment. Impairment assessment The carrying amount of the Group’s and the Company’s tangible and intangible assets, including goodwill, is considered at each reporting date to determine whether there is any indication that those assets have suffered an impairment loss. The Committee reviews this assessment. If there is such an indication, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any) through determining the value in use of the cash generating unit that the asset relates to. Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash generating unit to which the asset belongs. If the recoverable amount of an asset is estimated to be less than its carrying amount, the impairment loss is recognised as an expense. There are no impairment losses recognised in the financial statements of the Group in the year ended 30 June 2021. Provision for income tax (Group and Company) The Group is subject to tax in the UK and in the US and this requires the Directors to regularly assess the applicability of its transfer pricing policy relevant to the revenue transactions and costs between companies in the Group. The Audit Committee also reviewed and considered other matters during and in respect of the financial year ended 30 June 2021 including management’s assessment of new accounting standards that were not effective for adoption until after 30 June 2021. The Audit Committee considered and discussed with the rest of the Board whether the Annual Report, taken as a whole, is fair, balanced and understandable and provides the information necessary for stakeholders to assess the Group’s position and performance, business model and strategy. Internal audit arrangements The Committee has also reviewed the arrangements in place for internal audit and concluded, due to the current size, complexity and internal control environment of the Company and the Group, that a formal internal audit function was not required. The Audit Committee believes that management is able to derive assurance regarding the adequacy and effectiveness of internal controls and risk management procedures, given the close involvement of the Directors and the senior management on a day to day basis, without the need for an internal audit function. In view of the importance of the procedures, security, regulation and controls around Craneware’s solutions and customer data, the focus for other assurance activities for the Group is in respect of those areas. During the financial year ended 30 June 2020, Craneware achieved HITRUST CSF Certification for its Trisus and InSight solutions, as well as associated operational processes. This involved an external, validated audit of Craneware’s security and data privacy practices. Health Information Trust Alliance (‘HITRUST’ Alliance) is a collaboration with healthcare, technology and information security organisation which develops, maintains and provides broad access to its widely adopted common risk and compliance management and de-identification frameworks; related assessment and assurance methodologies; and initiatives advancing cyber sharing, analysis and resilience. HITRUST is considered to be a gold standard for security frameworks within the healthcare industry. HITRUST has established a ‘common security framework’ (CSF) to address the multitude of security, privacy and regulatory challenges facing organisations. The scope of the HITRUST CSF’s requirements is wide and requires a very high standard of data security arrangements as these have been set in the context of the accreditation being relevant to US healthcare providers with handling sensitive data (Protected Health Information) and impacts in some way all areas of the business (at least in respect of the required enhancement to the Group-wide IT and data security policies). As we move forward, Craneware will also be embracing HITRUST standards to help us align with new data privacy legislation. The Audit Committee will continue to monitor whether there is a requirement for an internal audit function and will report accordingly to the Board. External audit Under its terms of reference, the Audit Committee is responsible for monitoring the independence, objectivity and performance of the external auditors, and for making a recommendation to the Board regarding the appointment of external auditors on an annual basis. The Group’s external auditors, PricewaterhouseCoopers LLP, were first appointed as external auditors of the Company for the year ended 30 June 2003. For the Annual General Meeting of the Company held in November 2020, the resolution for re-appointment of PricewaterhouseCoopers LLP as auditors, whilst passed, received a number of votes against. The Board consulted with shareholders to more fully understand the reasons for those votes against the resolution and it is understood that the voting was specifically in relation to the expectation that a competitive tender for external audit services takes place where the existing auditors have been in place for a period of 10 years or longer. Although the Board and the Audit Committee had been satisfied with the performance of PricewaterhouseCoopers LLP as external auditors, it was concluded that it was an appropriate time to review the market and conduct a tender. The Audit Committee was responsible for conducting the audit tender process on behalf of the Board and, based on the Audit Committee’s assessment of the proposals received from invited audit firms, the Committee made recommendations to the Board. The Chair of the Audit Committee wrote to the Company’s substantial shareholders to inform them in advance about the audit tender process and to provide them with an opportunity to comment on the tendering and appointment of the external auditor. The Chair of the Audit Committee and management were available to meet with the invited firms to assess their proposed approach and ability to meet the Group’s needs. Proposals compiled by audit firms in response to the invitation to tender were reviewed, carefully considered and evaluated by a review panel against an agreed range of factors considered by the Audit Committee to be most relevant and important to the Group. The Committee felt that the breadth and depth of the proposed team’s experience of particular relevance to the Group’s business, and geographic coverage meant that PricewaterhouseCoopers LLP were assessed as being the most suitable to provide external audit services to the now enlarged Group. The Board considered the Audit Committee’s recommendation, including the proposal to appoint a new audit partner to the audit and subsequently approved PricewaterhouseCoopers LLP for recommendation to shareholders, for re-appointment as auditors, at the Company’s Annual General Meeting to be held in November 2021. PricewaterhouseCoopers LLP, under the new audit partner, Paul Cheshire, prepared and presented their audit plan to the Audit Committee for the audit of the full year financial statements. The audit plan identified what the external auditors consider to be the key audit risks, the planned scope of work, the audit timetable and also details of how they have assessed their independence to be able to undertake the audit work. As part of ensuring independence, the audit partner within PricewaterhouseCoopers LLP is required to rotate every five years. This audit plan is reviewed, along with the Committee’s assessment of auditor independence, and is agreed in advance by the Audit Committee. Having considered the planning work carried out and the results of the audit of the Group and Company financial statements for the year ended 30 June 2021, the Committee was satisfied that the approach adopted was robust and appropriate and that their independence and objectivity could be relied upon. Non-audit services provided by the external auditors Craneware is an ‘Other Entity of Public Interest’ (‘OEPI’) in accordance with the definition introduced by the Financial Reporting Council and, consequently, the Company’s external auditors are only able to perform a limited number of assurance related non-audit services. The Audit Committee has implemented procedures relating to the provision of non-audit services by the Company’s auditors, which include non-audit work and any related fees over and above a de-minimis level to be approved in advance by the Chairman of the Audit Committee. The policy in respect of services provided by the external auditors is set out below: The external auditors may be appointed to provide non-audit services where it is in the Group’s best interests to do so, provided a number of criteria are met. These are that the external auditor does not: Audit their own work; Make management decisions for the Group; Create a conflict of interest; Find themselves in the role of an advocate for the Group. Therefore, during the year ended 30 June 2021, the Company’s auditors have not provided the Group or the Company with any non-audit work. Details of the fees paid to the auditors for audit services are shown in Note 6 to the financial statements. Whistleblowing Policy The Group is committed to conducting its business with honesty and integrity and it is expected that these high standards be maintained throughout the organisation. As an element of providing a supportive and open culture within the organisation, the Group has a Whistleblowing Policy and associated annual training. This Policy includes arrangements by which employees, consultants or contractors may, in confidence and also anonymously should they wish, raise concerns regarding possible improprieties in matters of financial reporting or other matters. These concerns would then be investigated and followed up appropriately. The Board has provision to review these arrangements and any reports arising from their operation. Remuneration The Company has established a Remuneration Committee to assist the Board in this area. This Committee comprises non-executive Directors and, from 18 November 2020, the Committee is chaired by Russ Rudish and its other members are Colleen Blye and Alistair Erskine. Until 17 November 2020, the Committee was chaired by Ronald Verni and its other members were Colleen Blye and Russ Rudish. When appropriate Keith Neilson, as Chief Executive Officer, is invited to attend meetings (except where matters under review by the Committee relate to him). The Committee has responsibility for making recommendations to the Board on the remuneration packages of the executive Directors, the remuneration of the Chairman of the Board and setting the level and structure of remuneration for senior management, this includes: making recommendations to the Board on the Company’s policy on Directors’ and senior management remuneration, and to oversee long-term incentive plans (including share schemes); ensuring remuneration is both appropriate to the level of responsibility and adequate to attract and/or retain Directors and staff of the calibre required by the Company; and ensuring that remuneration is in line with current industry practice. The Committee has presented its Remuneration Report within the Group’s Annual Report, which details the work undertaken operating under its terms of reference (which are available here and at the Company’s registered office) to discharge its responsibilities. The Remuneration Committee’s Report also explains the Board’s compliance with provisions 32 to 41 of the Code. AIM Rule Compliance Report Craneware plc is quoted on AIM and as a result the Company has complied with AIM Rule 31 which requires the Company to: have in place sufficient procedures, resources and controls to enable its compliance with the AIM Rules; seek advice from its Nominated Advisor (“Nomad”) regarding its compliance with the AIM Rules whenever appropriate and take that advice into account; provide the Company’s 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 changes to the Board and provision of draft notifications in advance; ensure that each of the Company’s Directors accepts full responsibility, collectively and individually, for compliance with the AIM Rules; and ensure that each Director discloses without delay all information which the Company needs in order to comply with AIM Rule 17 (Disclosure of Miscellaneous Information) insofar as that information is known to the Director or could with reasonable diligence be ascertained by the Director. In addition, Craneware plc maintains compliance with AIM Rule 26, which specifies a list of information that the Company is required to make publicly available. AIM Rule 26 also requires the Company to adopt a corporate governance code and the Company has chosen the UK Corporate Governance Code 2018, against which the Directors are responsible for reporting the Company’s compliance as set out above. Approved by the Board of Directors and signed on behalf of the Board by: Craig Preston Company Secretary 20 September 2021 Ready to learn more? Contact Us 1-877-624-2792 Privacy Policy Legal Contact Us © Craneware 2021 All rights reserved.