Governance

Chair’s Introduction

On behalf of the Board, I am pleased to present our Corporate Governance Report for the year ended 30 June 2022 in the context of the UK Corporate Governance Code 2018 (‘the Code’), our chosen corporate governance framework. The Board believes that strong corporate governance, shareholder engagement and engagement with other stakeholders are critical to the success of our strategy outlined in the Strategic Report for the year ended 30 June 2022, and to delivering long-term, sustainable shareholder value.

Our purpose is to transform the business of healthcare through the profound impact our solutions deliver, enabling our customers to provide quality care to their communities. Throughout the pandemic our customers were on the front-line and whilst this year saw the easing of direct impacts of the pandemic, this has not relieved the pressure on all healthcare providers world-wide.  Supporting our customers, and the phenomenal work they do, continues to be our top priority.

This year has also seen us welcome the Sentry team to Craneware, following the completion of the acquisition of Sentry Data Systems, Inc. (‘Sentry’) on 12 July 2021. Since then the Board has been overseeing, within our corporate governance framework, the integration process which was effectively completed during the year. This successful integration was based on a structured implementation plan, driven, in part, through our employee engagement mechanisms (as outlined within the Stakeholder Engagement and Environmental, Social and Governance (ESG)  sections of our 2022 Annual Report). Underpinned by our purpose, it is clear that there are significant positive impacts that the combined team can provide to our stakeholders, including the communities in which we operate and wider society.  This therefore continues to progress The Craneware Group’s purpose, vision, strategy and values to ensure that the culture of the integrated organisation is aligned to enable their achievement.

I would like to thank the Board, the senior management team and all colleagues within The Craneware Group for the significant time, energy and commitment they have provided throughout the integration process and the ongoing enthusiasm to collectively uphold our purpose. I would like to thank all of The Craneware Group team for their continued passion and commitment.

Purpose, Values and Culture
Supporting our purpose is The Craneware Group’s Framework consisting of our core values of: be authentic; demonstrate integrity; provide excellent service; work hard to the highest quality; enjoy the challenge. Our framework of values was reviewed and evolved during the year, recognising the addition of Sentry to bring together a common set of values to the enlarged group, this is described further in the Stakeholder Engagement  and in the Environmental, Social and Governance (ESG) sections of our 2022 Annual Report.

The Board continues to monitor how the purpose, vision, strategy and values align to the Group’s culture (the section below contains further details). We have a talented mix of employees from diverse backgrounds with a range of skills and experience, which brings a high level of innovation and collaboration. The Group is supportive of, and recognises the importance of diversity, including gender, ethnicity, nationality, skills and experience. This is evident from the diverse, inclusive and breadth and depth of skills and experience within the team and we aim to ensure that we continue to attract diverse talent into The Craneware Group.

During the year the Board oversaw the Group’s progress with the three fundamental pillars of its growth strategy, as explained in my Chair’s Statement and in the Strategic Report sections within the Annual Report for the year ended 30 June 2022. This included the completion of the acquisition of Sentry and its integration as well as an increase in the Group’s investment in R&D. The acquisition of Sentry resulted in an immediate step change in the scale of our operations whilst expanding our coverage of the market, with The Craneware Group now serving approximately 40 percent of US hospitals, including more than 12,000 US hospitals, health systems and affiliated retail pharmacies and clinics.

In these circumstances, good governance and balancing the needs and expectations of our stakeholders continues to be an important responsibility.

Section 172 and Stakeholder Engagement
A key focus of the Code is the requirement to report on how the interests of the Group’s stakeholders and the matters set out in section 172 of the Companies Act 2006 have been considered in Board discussions and decision making. It is also important for the Board to keep stakeholder engagement mechanisms under review so that they remain effective, particularly with the expansion of the Group during the year. The Board’s section 172 (1) statement and details of our engagement with stakeholders can be found within the Annual Report.

Environmental, Social and Governance (ESG)
We have summarised within our ESG Statement, within the Annual Report for the year ended 30 June 2022, an overview of current programmes and alignment to sustainability principles. As a Board, we acknowledge the challenges facing businesses in general, and that of the Group, in respect of sustainability, including climate change and environmental, social and governance (ESG) considerations. Whilst The Craneware Group has developed many initiatives over the past several years which contribute to our sustainability credentials, in the financial year ending 30 June 2023, we aim to formalise a Group-wide ESG governance framework, building upon our purpose and with a specific focus on ESG matters.

Board composition
We were delighted to welcome Issy Urquhart, The Craneware Group’s Chief People Officer, to the Board on Issy’s appointment as an executive director of the Company on 27 April 2022.  Having joined the Craneware team in 2015, Issy is a valued member of the Operations Board of the Company and leads on the development and implementation of human resources, on organisation design and development and on change management strategies.  Issy was instrumental in the integration of the Sentry team. Issy is already making an important contribution to the Board and I am confident that Issy’s appointment will continue to improve the Board’s  effectiveness in monitoring culture, support our focus on investment in The Craneware Group team and enhance our awareness of employee engagement and other ESG matters.

We aim to attract a diverse pool of candidates, with relevant skills, experience and knowledge, for any senior appointments. As a Board, we are not in favour of setting specific diversity targets for the Board and senior management team and all appointments will ultimately be made on merit. Nonetheless, we are pleased to be able to demonstrate positive progress in this area over the past year.

With the prioritisation and focus on the integration process during the year following the acquisition of Sentry, it was considered appropriate to defer the Board evaluation by a few months.  It is, however, planned to conduct a Board evaluation process in the first half of the new financial year rather than during the year ended 30 June 2022.

Annual General Meeting (‘AGM’)
The Board recognises that the AGM is an important event for all shareholders. The arrangements for the AGM, to be held in November 2022, are outlined in the Notice of AGM and we look forward to welcoming shareholders at the AGM.

The year ahead
Aligned with our purpose, we aim to continue to operate in a way that allows us to meet the needs of our stakeholders and have a positive impact on the communities in which we operate and wider society. Although over several years The Craneware Group has established (and continues to encourage) many sustainability initiatives which benefit various stakeholder groups, we recognise that a Group-wide ESG governance framework should be formalised during the year ahead.

As a Board, inclusivity throughout the business is highly important to us and we continue to support our diverse and inclusive team within The Craneware Group and the development of our diverse talent pipeline.

We thank our shareholders, our other stakeholders, including our employees, for their ongoing support during this past year and for the future as we together uphold the Purpose of The Craneware Group.

Will Whitehorn
Chair
19 September 2022

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, including the Company and the Group’s contribution to the communities in which it operates and wider society. The Board recognises, as stated in the Code, that achieving this depends on the way it applies the spirit of the Principles of the Code. The Company is a smaller company for the purposes of the Code and, as such, certain provisions of the Code are judged to be disproportionate or less relevant in its case. Where the Company does not comply with any specific Code provision then this is highlighted and explained in this report.

Compliance statement
The Board has complied with the spirit of the UK Corporate Governance Code 2018 and applied the principles and complied with the provisions of the Code throughout the year ended 30 June 2022, 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;
• Provision 21: a formal evaluation of the performance of the Board, its committees, the Chair and individual directors was not conducted during the year. With the prioritisation and focus on the integration process during the year following the acquisition of Sentry, it was considered appropriate to defer the Board evaluation process by a few months. It is, however, planned to conduct a Board evaluation process during the first half of the financial year ending 30 June 2023;
• Provision 36: concerning the development of a formal policy for post-employment shareholding requirements. Post-employment shareholding policies are not usual practice for AIM Companies. The Remuneration Committee keeps this area under review but considers that, whilst no formal post-employment shareholding policy for executive Directors is in place, its current approach is acceptable. There is a current required shareholding guideline applicable to executive Directors and senior management in place and that guideline has already been significantly exceeded by two of the executive Directors. In addition, there is a post-vesting holding period applicable to Long Term Incentive awards granted since October 2020 (and intended to apply to future such awards) to the executive Directors and senior management.  These policies are considered to promote long-term shareholdings by executive Directors and senior management that support alignment with long-term shareholder interests although they do not include post-employment shareholding requirements; and
• Two of the seven elements of Provision 41: As an AIM listed company, Craneware plc is not required to comply with the Directors’ Remuneration Report regulations however the Company does aim to comply with the spirit of all of Provision 41 of the Code in so far as the Board considers is appropriate for the size of the Company and as such provides a Remuneration Committee’s Report within the Annual Report. With reference to two of the elements of Provision 41, the Remuneration Committee has not engaged directly with shareholders during the year ended 30 June 2022 regarding executive Director remuneration policy. However, shareholders have not raised any concerns with the Board during the year regarding the remuneration of the executive Directors. The Chair of the Remuneration Committee is available to discuss remuneration matters with shareholders if and when that is required or requested. There was no engagement with employees, in respect of executive Director remuneration, during the year however, the same policy of paying at median (based on benchmark data) applies across the whole Group. Notwithstanding that policy, due to the macro-economic environment, the Remuneration Committee decided to defer any benchmarking and associated base salary changes for the executive Directors.  This has been the decision for the past three financial years including the year ended 30 June 2022. As such there have been no changes to the base salary or bonus entitlements for the executive Directors during this time.

In accordance with AIM Rule 26, details of compliance with the Code and explanations for any non-compliance are provided within this section on this website.

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, banks and finance providers and suppliers, is a core component of long-term sustainability and success. Stakeholder Engagement information is set out within the Annual Report. The Directors consider, both individually and collectively, that they have taken the factors, set out in s172(1)(a) to (f) of the Companies Act 2006, into account when exercising their duty to promote the success of the Group and of the Company during the year. The Board’s Section 172(1) Statement is within the Annual Report for the year ended 30 June 2022 and it includes examples of how those matters have been considered in significant decisions of the Board.

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 setting the Group’s purpose and values. Our purpose forms the basis of Group-wide strategic initiatives each year. Our purpose is to transform the business of healthcare through the profound impact our solutions deliver, enabling our customers to provide quality care to their communities. Our culture is the way that we work together and is fundamental to how we operate. The Board has a fundamental role in shaping our corporate culture defined by our values and purpose. The Board assesses and monitors the Group’s culture through regular interaction with management and other colleagues to ensure that its policies, practices and behaviours are aligned with the Group’s purpose, vision, strategy and values.

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 within 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 with the agreed strategy at each Board meeting.

The Board meets regularly to discuss and agree on the various matters brought before it, including the Group’s trading results. The Board is well supported by the Group’s Operations Board and a broader senior management team, who collectively have the qualifications and experience necessary for the day to day running of the Group. The Operations Board is chaired by the CEO and also comprises the Chief Financial Officer, the Chief People Officer and six further members of the Senior Management Team.

There is a formal schedule of matters reserved for the Board, which includes approval of the Group’s strategy, annual strategic themes and related  business plans, acquisitions, disposals, business development, annual reports and interim statements, plus any significant financing or funding related matters as well as significant capital expenditure plans. As part of this schedule, the Board has clearly laid out levels of devolved decision making authority to the Group’s Operations Board.

Board Composition and Division of Responsibilities

Board of Directors
Issy Urquhart, the Group’s Chief People Officer, was appointed as an executive Director of the Company on 27 April 2022. Therefore, in the period 27 April 2022 to 30 June 2022 the Company’s Board comprised of: its Chair, Will Whitehorn; three executive Directors: Keith Neilson, Chief Executive Officer; Craig Preston, Chief Financial Officer; and Issy Urquhart, Chief People Officer; along with 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 within the Annual Report and in the Board of Directors section of this website.

Board Composition and Division of Responsibilities (continued)

A summary of the composition of the Board for different periods during the year ended 30 June 2022 is:

Division of Responsibilities
The Board has established clearly defined and well understood roles for the Chair of the Company and the Chief Executive Officer. A summary of the main responsibilities of these roles, and also that of the Senior Independent Director, is contained in the table below.

The Chair
William Whitehorn was appointed Chair of the Board on 1 January 2020 and was independent on appointment, in accordance with Provisions 9 and 10 of the Code.

Non-Executive Directors
The Board has appointed Colleen Blye as Senior Independent Director. In this role, Colleen provides a sounding board for the Chair as well as providing an additional channel of contact for shareholders, other Directors or employees, if the need arises.

The non-executive Directors assist in the development of strategy and monitor its delivery within the Company’s established risk appetite. They are responsible for bringing sound judgement and objectivity to the Board’s deliberations and decision-making process. In addition, the non-executive Directors constructively challenge, support and review the performance of executive Directors.

In addition to matters outlined above, there is regular communication between executive and non-executive Directors including, where appropriate, updates on matters requiring attention prior to the next Board meeting. The non-executive Directors meet, as appropriate but no less than annually, without executive Directors being present and further meet annually without the Chair present.

The Composition of the Board
The composition of the Board has been designed to give a good mix and balance of different skill sets, including significant experience in:

• high growth companies;
• healthcare sector;
• software sector and analytics;
• entrepreneurial cultures;
• senior financial reporting;
• both UK and US companies;
• acquisitions;
• integration of acquired businesses; and
• other listed companies.

The Board was enhanced during the year with the appointment of Issy Urquhart, the Group’s Chief People Officer, as an executive Director of the Company.

Through this mix of experience and skills, the Board and the individual Directors are well positioned to set the strategic aims of the Company as well as drive the Group’s values and standards throughout the organisation, whilst remaining focused on their obligations to shareholders and meeting their statutory obligations.

The Board reviews, on an annual basis, the independence of each non-executive Director. In making this assessment, in addition to considering Provision 10 of the Code, the Board determines whether the Director is independent in character and judgement and whether there are relationships or circumstances which are likely to affect, or could appear to affect, the Director’s judgement.

In regards to all of the non-executive Directors, the Board has not identified any matters that would affect their independence.  Throughout the year ended 30 June 2022, 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 has not changed during the year:

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:

*for this director, who was appointed to the Board during the year, the number of meetings attended is with reference to those from the date of appointment.

^ in addition, an Audit Committee meeting scheduled for June 2022 had to be reconvened and held in the first week of July 2022 (the first week of the new financial year) – all members of the Audit Committee attended that meeting but that meeting and the attendance is not included in this table.

Where any Director has been unable to attend Board or Committee meetings during the year, their input has been provided to the Company Secretary ahead of the meeting. The relevant Chair then provides a detailed briefing along with the minutes of the meeting following its conclusion.

As detailed in the Directors’ Report within 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.

Appointments to the Board
Board composition is regularly reviewed to ensure the requisite mix of skills, business experience and diversity is achieved and maintained, appropriate for the Group, as well as the balance within the Board of independent non-executive directors. When a new appointment to the Board is to be made, consideration is given to the particular skills, knowledge and experience that a potential new member could add to the existing Board composition. A formal process is then undertaken, usually involving external recruitment agencies, with appropriate consideration being given, in regard to executive appointments, to internal and external candidates. Before undertaking the appointment of a Director, the Board establishes that the prospective candidate can give the time and commitment necessary to fulfil their duties, in terms of availability both to prepare for and attend meetings and to discuss matters at other times. This includes, prior to appointment, significant existing commitments being disclosed and assessed along with an indication of time commitment involved.

During the year ended 30 June 2022, the Board (led by the Chair) recognised that, following the successful integration of the Sentry acquisition, the importance of a strong representation for, and extensive experience of, employee matters on the Board. The Board determined that it was an essential requirement for this executive director position to have the requisite skillset plus an in depth understanding of the organisation and team across the entire Group.  Further, experience and insights from the integration process conducted during the year would benefit the Board immediately.  As such, independent search consultancies were not engaged by the Board in respect of the formal process to identify potential candidates for this executive director position.

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.

Diversity
The Group is supportive of, and recognises the importance of diversity, including gender, ethnicity, nationality, skills and experience. This is evident from the diverse, inclusive and breadth and depth of skills and experience within the team at The Craneware Group. While not in favour of setting specific targets, in the event that a Board position is required to be filled, during succession planning, the Board aims to ensure that the search process is sufficiently inclusive to encourage applications from diverse candidates with relevant skills, experience and knowledge, and that the selection process is fair and transparent.

Following the appointment of Issy Urquhart to the Board on 27 April 2022, the Board comprises 25% female and 75% male directors. At the end of the financial year, across The Craneware Group, our team comprised 47% female and 53% male employees. At Operations Board plus vice president level, the composition is approximately 37% female and 63% 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 within the Annual Report and in the Board of Directors section of this website. 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. During the prior financial year the Chair, Will Whitehorn, was appointed in June 2021 as Chair of Seraphim Space Investment Trust Plc which floated on the London Stock Exchange in July 2021. This appointment was reviewed by the Board and the estimated time commitment required by that other role was considered not to affect the Chair’s ability to perform his duties with the Company. Prior approval of the Board is required in advance of executive Directors undertaking external appointments. No executive Director currently holds any other directorship of a listed company. 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
The Board as a whole recognises its responsibility to ensure that appropriate plans are in place for orderly succession to the Board and has plans in place for any unforeseen circumstances regarding the executive Directors.   Succession plans are in place for the senior management talent pipeline which are re-visited and reviewed with the Board as appropriate. The Board takes an active interest in the quality and development of talent and capabilities within Craneware, ensuring that appropriate opportunities are in place to develop high-performing individuals. The learning and development support and initiatives available to employees have been augmented during the year as outlined in the ESG section of the Annual Report. The composition of the Operations Board was expanded during the year, reflecting the larger scale and development of the organisation following the acquisition of Sentry, with the addition of the Chief Customer Officer and Chief Transformation Officer.

Development
The Chair is responsible for ensuring that all the Directors continually update their skills, their knowledge and familiarity with the Group in order to fulfil their role on the Board and the Board’s Committees. Updates dealing with changes in legislation and regulation and financial reporting requirements relevant to the Group’s business are provided to the Board by the Chief Financial Officer and through the Board Committees by the Group’s external auditors and advisors.

All Directors have access to the advice and services of the Company Secretary, who is responsible to the Board for advising the Board on all governance matters, ensuring that Board procedures are properly complied with and that discussions and decisions are appropriately minuted. Directors may seek independent professional advice at the Company’s expense in furtherance of their duties as Directors. The Board ensures that the Audit and Remuneration Committees are provided with sufficient resources to undertake their duties.

Training in matters relevant to their role on the Board is available to all Directors. New Directors, who have not been employed within the Group prior to appointment, are provided with an induction in order to introduce them to the operations and management of the business. All new Directors receive a briefing on their role and duties as a director of a company which has its shares traded on AIM. This briefing is conducted by the Company’s advisors.

Information and Support
In setting the agenda for each Board meeting, the Chair, in conjunction with the Company Secretary, ensures input is gathered from all Directors on matters that should be included. Board papers are then issued in advance of meetings to ensure Board members have appropriate detail in regard to matters that will be covered, thereby encouraging openness and healthy debate.  At a minimum, these board papers include the financial results of the Group and a report from both the Chief Executive Officer and the Chief Financial Officer.

In addition, the non-executive Directors have access to, and correspond with, the Group’s Operations Board on an informal basis. This allows for better understanding of how the strategy set by the Board is being implemented across the Group.

Evaluation
With the prioritisation and focus on the integration process during the year following the acquisition of Sentry, it was considered appropriate to defer the Board evaluation.  It is, however, anticipated that a Board evaluation process will be conducted in the first half of the financial year ending 30 June 2023 rather than during the year ended 30 June 2022. 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 Chair 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 constituted, was relatively new and resolved to monitor its progress 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. With some easing of COVID-19 restrictions, it was possible to arrange an open Annual General Meeting in November 2021 however shareholders were encouraged to carefully consider their attendance at that AGM due to ongoing uncertainties regarding the COVID-19 situation at that time. Shareholders were therefore strongly encouraged to participate in the AGM by voting by proxy ahead of the meeting and, given the ongoing uncertainty around pandemic restrictions, it was recommended that all shareholders appoint the Chair of the meeting as their proxy. The AGM to be held in November 2022 is planned to be arranged as a normal AGM with all shareholders therefore being invited to attend.

• The primary point of contact for shareholders on operational matters are Keith Neilson as Chief Executive Officer and Craig Preston as Chief Financial Officer.
• The primary point of contact for shareholders on corporate governance and other related matters is Will Whitehorn as Chair. Colleen Blye, as Senior Independent Director, is available as a point of contact should a shareholder not wish to contact the Chair for any reason.
• The Board welcomes regular engagement with major shareholders to understand their views on governance and performance against our stated strategy.
• The Chair ensures that the Board as a whole has a clear understanding of the views of shareholders.
• The Board aims to ensure that both the investor and analyst communities understand our purpose, strategy, business model and financial and operational performance.

Keith Neilson and Craig Preston meet regularly with shareholders, normally immediately following the Company’s half year and full year financial results announcements, to discuss the Group’s performance and answer any questions. The Board monitors the success of these meetings through anonymous evaluations from both shareholders and analysts performed by the Company’s Broker and Financial PR advisor.

On 13 July 2021, the date of the announcement of the completion of the acquisition of Sentry, an online meeting was held regarding the acquisition (including the strategic rationale for the acquisition and an overview of future prospects for the combined business) and presented by the CEO and CFO to which shareholders and analysts and other interested parties were invited. There was the opportunity for attendees to ask questions at the end of the presentation. The presentation slides from this meeting can be viewed on this Investors section of this website within the 2021 Reports section.

As explained in the Audit, Risk and Internal Control section of last year’s Corporate Governance 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 auditors.  The Remuneration Committee’s Report section of the Annual Report explains that, in view of the greater emphasis on long term incentive arrangements, the provisions of our long term incentive plan (LTIP) have been reviewed since 30 June 2022 to ensure that our LTIP continues to provide an effective mechanism for incentivising and rewarding our executive Directors and senior management team and aligning their interests with those of our shareholders. The changes identified as part of this review are planned to be implemented by the adoption of a new plan. The Remuneration Committee is sending a letter to the Company’s significant shareholders regarding the proposed new LTIP.

This website, within this Investors section, includes a Shareholder Centre 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. The details of the current substantial shareholders are also in the AIM Securities Information section of this website.

Constructive Use of General Meetings
The Board normally encourages attendance at its Annual General Meeting (‘AGM’) from all shareholders however the arrangements for, and guidance for attendance at, the AGMs held in November 2020 and in November 2021 were different as a consequence of the COVID-19 restrictions applicable at those times.

The Notice of AGM together with all resolutions and explanations of these resolutions are sent at least 20 working days before the meeting. The Company proposes separate resolutions for each substantially separate issue and specifically relating to the report and financial statements. All Directors, where possible, make themselves available to answer any questions shareholders may have. Results of all votes on resolutions are published as soon as practicable on the Company’s website.

The voting on each Resolution tabled at the AGM in November 2021 was conducted by way of poll votes (rather than votes being conducted on a show of hands), in view of the fact that shareholders were encouraged to carefully consider their attendance at that AGM due to ongoing uncertainties regarding the COVID-19 situation at that time. Shareholders were therefore strongly encouraged to participate in the AGM by voting by proxy ahead of the meeting and, given the ongoing uncertainty around pandemic restrictions, it was recommended that all shareholders appointed the Chair of the meeting as their proxy.

If an AGM resolution receives 20% or more of votes cast against, the Board will consult with shareholders to understand the reason behind the result. Following the AGM that was held on 16 November 2021, the Company announced that all resolutions were passed and in respect of each resolution at least 94.9% of the proxy votes received were ‘for’ each of the resolutions proposed.

Employee engagement

The Board has decided to utilise alternative workforce engagement mechanisms, instead of the suggested workforce engagement mechanisms in the Code (i.e. a director appointed from the workforce, a formal workforce advisory panel or a designated non-executive director). As explained in previous annual reports, Craneware has an established Employee Advisory Committee and utilises the results and feedback received from the annonymous engagement surveys, as well as the other engagement mechanisms (including additions and adaptations implemented during the year as part of the integration process), as outlined in the Stakeholder Engagement section and in the ESG Statement section within the Annual Report. The additions during the year included the creation of an Advocacy Group, represented by employees from across the enlarged organisation.  The Board considers these employee engagement mechanisms, to be further supported and developed following the appointment in April 2022 of the Group’s Chief People Officer,  Issy Urquhart, to the Board as an executive Director, to be appropriate at this time, in view of the size of the Group. The Board will continue to keep these engagement mechanisms, in addition to those for other stakeholders, under review to ensure that the engagement mechanisms are effective.

Engagement with other key stakeholder groups

The Environmental, Social and Governance (ESG) Statement, the Stakeholder Engagement section and the Directors’ Report within the Annual Report contain an overview of the engagement with other key stakeholder groups including: customers and the community and banks and finance providers.

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. Throughout the year ended 30 June 2022 and for the period to the date of approval of this Report, the Audit Committee is chaired by David Kemp and its other members are Colleen Blye and Alistair Erskine. The Chief Financial Officer, Chief Executive Officer and other senior management attend meetings by invitation and the Committee also meets the external auditors without management present. David Kemp and Colleen Blye, as current and previous chair of the Audit Committee, have recent and relevant financial experience and the Audit Committee as a whole has significant experience and competence in healthcare and software sectors.

The terms of reference of the Audit Committee are available 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 Directors’ Report section of the Annual Report. An assessment of the Group’s market, business model and performance is presented in the Chair’s Statement and the Strategic Report within the Annual Report.

As detailed in the Directors’ Report within 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 2022. The Board has explained within the Viability Statement section of the Strategic Report in the Annual Report that it has assessed the prospects of the Company and the Group, taking into account the Group and the Company’s current position and principal risks, as well as projected compliance with debt finance covenants.

Risk Management and Internal Control
Details of the principal risks and uncertainties and emerging risks facing the Group, along with a description of the Group’s risk management procedures, are detailed in the Strategic Report within 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 have been extended, as part of the integration process, to include Sentry and are designed to help the Group meet its business objectives by appropriately managing, rather than eliminating, the risks to those objectives. The controls can only provide reasonable, not absolute, assurance against material misstatement or loss.

The annual financial forecast is reviewed and approved by the Board. Financial results, with comparisons to forecast results, are reported on at least a quarterly basis to the Board together with a report on operational achievements, objectives and issues encountered. The quarterly reports are supplemented by interim monthly financial information. Forecasts are updated no less than quarterly in the light of market developments and the underlying performance and expectations. Significant variances from plan are discussed at Board meetings and actions set in place to address them.  During the financial year and in the period to the date of approval of this report, the Board has received information regarding the Group’s compliance with financial covenants contained within the committed term loan and revolving loan facility. Further details regarding these borrowing facilities are contained in Note 22 to the financial statements for the year ended 30 June 2022.

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.

There is an extensive complement of policies and procedures, applicable across The Craneware Group, including: business ethics, information security, whistleblowing, anti-bribery and corruption, anti-slavery and human trafficking along with monitoring of mandatory training and policy acknowledgement for key areas. This is referred to in the ESG Statement section of the Annual Report.

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;
• the integrity of the Annual Report and Financial Statements, the Interim Report and any formal announcements relating to financial performance, to ensure clarity and completeness of disclosures, including those relating to alternative performance measures (including adjusted performance measures);
• developments in accounting and reporting requirements;
• matters of accounting significance, estimation and judgement including those in respect of the Sentry acquisition completed during the year;
• consideration of the disclosure matter noted in the letter received from the Financial Reporting Council regarding its review of the Group’s Annual Report and financial statements for the year ended 30 June 2021;
• the systems of internal control and their effectiveness, reporting and making new recommendations to the Board on the results of the review and receiving regular updates on key risk areas of financial control;
• the requirements or otherwise for an internal audit function;
• external auditors’ plan for the year-end audit of the Company and the Group, including the updated Group audit scope following the acquisition of Sentry;
• the performance and independence of the external auditors. The auditors provide annually a letter to the Committee confirming their independence and stating the methods they employ to safeguard their independence;
• the audit fees charged by the external auditors;
• the formal engagement terms entered into with the external auditors;
• the provision of tax compliance services to the Group;
• the Committee’s effectiveness.

The Audit Committee has reviewed the Group’s profitability and liquidity as part of a number of forecast scenarios, incorporating the impact of COVID-19 and the wider macro-economic conditions. As part of this assessment, the Committee has also reviewed the viability statement and going concern note (within the Annual Report for the year ended 30 June 2022), 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
As explained in last year’s Corporate Governance Report section of the annual report, 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 were addressed by additional disclosures, where material and relevant, in the annual report and accounts for the year ended 30 June 2021. A further letter was received from the FRC in April 2022, regarding the FRC’s review of the Group’s Annual Report and Accounts for the year ended 30 June 2021. The FRC noted a disclosure point in that letter regarding solely the parent company accounts which has been addressed in the notes to the financial statements for the year ended 30 June 2022.

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 Committee considers the appropriateness of accounting policies, critical accounting judgements and sources of estimation uncertainty relating to the financial statements.  To do this, the Committee reviewed information provided by the Chief Financial Officer and reports from the external auditors setting out its views on the accounting treatments and judgements for the year ended 30 June 2022.  The Audit Committee is satisfied that the judgements and estimates applied in the financial statements satisfy the requisite standards both in terms of accounting treatment and disclosure.

The following table sets out the significant areas considered by the Committee in relation to the Group’s financial statements for the year ended 30 June 2022, in particular the critical judgements and estimates of the Company as disclosed in the financial statements:

The Group uses Alternative Performance Measures (APMs) and provides additional disclosures, including reconciliations to statutory measures, as set out in Note 27 to the financial statements for the year ended 30 June 2022. The Committee considers it important to take account of both the statutory measures and the APMs when reviewing these financial statements. In particular, items excluded from underlying results were reviewed by the Committee and it is satisfied that the presentation of these items is clear, applied consistently across years and that the level of disclosure is appropriate.

The Audit Committee also reviewed and considered other matters during and in respect of the financial year ended 30 June 2022 including management’s assessment of new accounting standards that were not effective for adoption until after 30 June 2022.

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, geographical dispersion, complexity and internal control environment of the Company and the Group, that a formal internal audit function was not required. This review by the Committee considered the relevant implications of the enlarged Group following the completion of the acquisition of Sentry. 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). Full HITRUST CSF assessments are conducted every two years; interim assessments are conducted during the intervening periods. The Craneware Group engages with third party auditors to support effective security practices and compliance with HITRUST, Health Insurance Portability and Accountability Act (HIPAA) and the System and Organisation Controls as defined by the American Institute of Certified Public Accountants (AICPA SOC).  Further details regarding information security are provided in the Principal Risks and Uncertainties section and in the Environmental Social and Governance (ESG) Statement within the Annual Report.

The Audit Committee will continue to monitor whether there is a requirement for an internal audit function and will report accordingly to the Board.

External audit
Under its terms of reference, the Audit Committee is responsible for monitoring the independence, objectivity and performance of the external auditors, and for making a recommendation to the Board regarding the appointment of external auditors on an annual basis. The Group’s external auditors, PricewaterhouseCoopers LLP, were first appointed as external auditors of the Company for the year ended 30 June 2003.

As explained in the Corporate Governance Report section of the annual report for the year ended 30 June 2021, the Audit Committee was responsible for conducting an audit tender process on behalf of the Board in that year and, based on the Audit Committee’s assessment of the proposals received from invited audit firms, the Committee made recommendations to the Board. The Board considered the Audit Committee’s recommendation and subsequently approved PricewaterhouseCoopers LLP for recommendation to shareholders, for re-appointment as auditors, at the Company’s Annual General Meeting (AGM) held in November 2021. This resolution for the re-appointment of PricewaterhouseCoopers LLP as the Company’s auditors was approved by the Company’s shareholders.

The audit partner within PricewaterhouseCoopers LLP is required to rotate every five years.  This is the second year that the audit partner, Paul Cheshire, has led the engagement team for the audit of the Group’s full year financial statements. The audit plan identified what the external auditors consider to be the key audit risks, the planned scope of work, the audit timetable and also details of how they have assessed their independence to be able to undertake the audit work. With regards to the acquisition of Sentry during the financial year, the auditors updated their group audit scope assessment to include Sentry as a full scope financially significant component.

This audit plan was reviewed, along with the Committee’s assessment of auditor independence, and was agreed in advance by the Audit Committee. Having considered the planning work carried out and the results of the audit of the Group and Company financial statements for the year ended 30 June 2022, the Committee was satisfied that the approach adopted was robust and appropriate and that auditor independence and objectivity could be relied upon. The Committee is satisfied with the performance of the external auditors and with the policies and procedures in place to maintain their objectivity and independence. The Audit Committee conducted a review of PricewaterhouseCoopers LLP’s effectiveness in respect of the audit of the Group and Company financial statements for the year ended 30 June 2022. The Committee considered several factors when determining the effectiveness of the external auditors, including: the overall quality and scope of the audit; the audit partner and team; communication and engagement with the Audit Committee and the way in which matters were reported, followed up and resolved; the independence of  PricewaterhouseCoopers LLP and whether an appropriate level of challenge and scepticism existed in the audit team’s work. The Committee considers that  PricewaterhouseCoopers LLP possesses the skills and experience required to fulfil its duties effectively and efficiently and that the audit of the Group and Company financial statements for the year ended 30 June 2022 was effective. The Committee has therefore recommended to the Board the reappointment of PricewaterhouseCoopers LLP as the Company’s auditors at the forthcoming AGM of the Company.

Non-audit services provided by the external auditors
Craneware is an ‘Other Entity of Public Interest’ (‘OEPI’) in accordance with the definition introduced by the Financial Reporting Council and, consequently, the Company’s external auditors are only able to perform a limited number of assurance related non-audit services.

The Audit Committee has implemented procedures relating to the provision of non-audit services by the Company’s auditors, which include non-audit work and any related fees over and above a de-minimis level to be approved in advance by the Chair of the Audit Committee. The policy in respect of services provided by the external auditors is set out below:

The external auditors may be appointed to provide non-audit services where it is in the Group’s best interests to do so, provided a number of criteria are met. These are that the external auditors do not:

• Audit their own work;
• Make management decisions for the Group;
• Create a conflict of interest;
• Find themselves in the role of an advocate for the Group.

During the year ended 30 June 2022, as was the case in the previous financial year, the Company’s auditors have not provided the Group or the Company with any non-audit work. Details of the fees paid to the auditors for audit services are shown in Note 6 to the financial statements for the year ended 30 June 2022.

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 the Committee is chaired by Russ Rudish and its other members are Colleen Blye and Alistair Erskine. When appropriate Keith Neilson, as Chief Executive Officer, is invited to attend meetings (except where matters under review by the Committee relate to him).

The Committee has responsibility for making recommendations to the Board on the remuneration packages of the executive Directors, the remuneration of the Chair of the Board and setting the level and structure of remuneration for senior management, this includes:

• making recommendations to the Board on the Company’s policy on 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 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 extent of 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 for Companies;
• seek advice from its Nominated Advisor (“Nomad”) regarding its compliance with the AIM Rules for Companies whenever appropriate and take that advice into account;
• provide the Company’s Nomad with any information it reasonably requests or requires in order for the Nomad to carry out its responsibilities under the AIM Rules for Companies and the AIM Rules for Nominated Advisors, including any proposed changes to the Board and provision of draft notifications in advance;
• ensure that each of the Company’s Directors accepts full responsibility, collectively and individually, for compliance with the AIM Rules for Companies; and
• ensure that each Director discloses to the Company without delay all information which the Company needs in order to comply with AIM Rule 17 (Disclosure of Miscellaneous Information) insofar as that information is known to the Director or could with reasonable diligence be ascertained by the Director.

In addition, Craneware plc maintains compliance with AIM Rule 26, which specifies a list of information that the Company is required to make publicly available. AIM Rule 26 also requires the Company to adopt a corporate governance code and the Company has chosen the UK Corporate Governance Code 2018, against which the Directors are responsible for reporting the Company’s compliance as set out above and in the Corporate Governance Report section within the Annual Report.

Approved by the Board of Directors and signed on behalf of the Board by:

Craig Preston
Company Secretary
19 September 2022