Craneware plc CRW Final Results

  Craneware plc (CRW) - Final Results

RNS Number : 4053L
Craneware plc
04 September 2012




                                Craneware plc

                 ("Craneware", "the Group" or the "Company")

                                      

                                Final Results



04 September 2012 - Craneware plc (AIM: CRW.L), the market leader in automated
revenue integrity  solutions  for  the US  healthcare  market,  announces  its 
results for the year ended 30 June 2012.



Financial Highlights (US dollars)



§ Continued revenue and profit growth:

o Revenue increased 8% to $41.1m (2011: $38.1m)

o Adjusted EBITDA^1 increased 18% to $11.9m (2011: $10.1m)

o Adjusted profit before taxation increased 16% to $10.8m (2011: $9.3m)

o Profit before tax increased 29% to $11.2m (2011: $8.7m)

o Basic adjusted EPS increased 23% to 31.6 cents (2011: 25.6 cents)

o Basic EPS increased 43% to 33.0 cents (2011: 23.1 cents)

§ Positive operational cash flow of $10.6m (2011: $10.1m)

§ Cash at year end $28.8m (2011: $24.2m) after returning $4.1m to shareholders
by way of dividends

§ Proposed final dividend of 5.7p (8.9 cents) per share giving total  dividend 
for the year  of 10.5p (16.4  cents) per  share (2011: 8.8p  (14.2 cents)  per 
share)



^1. Adjusted EBITDA  refers to earnings  before interest, tax,  depreciation, 
amortisation,  share  based  payments,  released  deferred  consideration  and 
transaction related costs



Operational Highlights



· Extension of market reach through two significant customer deals signed
in the year, one providing entry into the Federal and State Healthcare  market 
and the  other taking  Craneware's software  into a  non-competitive  parallel 
market

· Increased sales activity in the second half of the year in core market

· Increasing  pressure being  placed on  hospitals by  Medicare  Recovery 
Auditors (formerly known as RAC programme)

· Craneware  InSight  fully  integrated  as  at  1^st  July  2012,  first 
cross-sales delivered

· Renewal levels strong at over 100% of dollar value

· Entered 2013 with revenue visibility back at historically high levels 



Keith Neilson, CEO of Craneware commented:



"In a mixed trading  environment Craneware delivered a  solid level of  growth 
across key financial  and operational  metrics, confirming the  health of  the 
business and giving a high degree of confidence for the future.



"Added  pressures  on  US  hospitals  have  led  to  an  increased  sales  and 
opportunity pipeline for our  products as we move  into the current  financial 
year. Craneware's  solutions  help  US  healthcare  providers  drive  business 
improvements that will result in  better financial health. In this  turbulent, 
demanding environment,  hospitals  need  financial  accuracy,  visibility  and 
shared accountability to survive. Fiscal  and regulatory drivers are  expected 
to increase  in the  year ahead  as  they push  for greater  transparency  and 
accuracy, and although this  creates a challenging ever-evolving  marketplace, 
it ultimately increases the opportunities for Craneware's solutions. 



"Craneware is  a  trusted  and  established  part of  the  fabric  of  the  US 
healthcare industry, with a client base consisting of around a quarter of  all 
US hospitals. We are  confident that the business  is ideally placed with  its 
in-house expertise, industry-leading product suite and balance sheet  strength 
to help  US healthcare  organisations deal  with their  increasing fiscal  and 
regulatory pressures. Furthermore with  revenue visibility having returned  to 
the historic high levels, we view the future with confidence."





For further information, please contact:



Craneware plc       Peel Hunt           Newgate Threadneedle
+44 (0)131 550 3100 +44 (0)20 7418 8900 +44 (0)20 7653 9850
Keith Neilson, CEO  Dan Webster         Caroline Evans-Jones
Craig Preston, CFO  Richard Kauffer     Fiona Conroy



About Craneware



Founded in  1999,  Craneware  has headquarters  in  Edinburgh,  Scotland  with 
offices in Atlanta, Arizona, Massachusetts and Tennessee employing over  200 
staff. Craneware is the leader  in automated revenue integrity solutions  that 
improve  financial  performance  for  healthcare  organisations.   Craneware's 
market-driven, SaaS solutions  help hospitals and  other healthcare  providers 
more effectively price,  charge, code  and retain earned  revenue for  patient 
care  services   and  supplies.   This  optimises   reimbursement,   increases 
operational efficiency  and  minimises  compliance risk.  By  partnering  with 
Craneware, customers achieve the visibility required to identify, address  and 
prevent  revenue   leakage.   To   learn   more,   visit   craneware.com   and 
stoptheleakage.com







Chairman's Statement



Despite a mixed trading environment in  the first half of the year,  Craneware 
has delivered a solid  set of results  showing an 8%  increase in revenues  to 
$41.1 million, an 18% increase in adjusted EBITDA to $11.9 million, and a  23% 
increase in basic adjusted EPS to 31.6 cents. The Company continues to benefit
from strong operational  cash flow, closing  the year with  a cash balance  of 
$28.8m. Renewal  rates  have  remained  high, at  109%  by  dollar  value  and 
Craneware has entered the  current financial year  with revenue visibility  of 
$108.7m for the next three years, back at historic high levels.



The level  of  new  sales secured  in  the  year was  impacted  by  short-term 
competing  IT  priorities  within  our  customer  base,  driven  primarily  by 
Electronic Health Records (EHR) incentive  payment deadlines. By June 2012,  a 
total of 3,779 hospitals  had registered for the  EHR Incentive Program and  a 
total of 2,596 unique hospitals had been  paid out $3.96 billion by that  date 
(source: Centers for Medicare &  Medicaid Services' (CMS)). During the  first 
half of the  year, this  resulted in  lengthier sales  cycles for  all of  the 
Group's products. However, the second half  saw an increase in sales  activity 
which supports our view that sales cycles will return to normal lengths in the
near-term,  as  healthcare  organisations   once  again  refocus  on   revenue 
integrity.



2012 has  been a  year of  unprecedented  change within  US hospitals  as  the 
unintended  consequences  of  some  of  the  recently  introduced   healthcare 
proposals work  through  the  system.  However,  it  is  unavoidable  that  US 
healthcare facilities will be  required to provide a  higher level of  patient 
care, to a greater number of people, at a lower cost per patient in a  climate 
of greater transparency.  Compounding these  issues, and  adding to  pressures 
placed on  US  healthcare organisations,  is  the Medicare  Recovery  Auditors 
(MRAs, formerly known  as RAC)  programme. MRAs  and their  other third  party 
equivalents, continue  to recover  overpayments  from hospitals.  Indeed,  the 
latest reported quarter (April-June 2012)  showed another consecutive rise  in 
the amount  of  overpayments  collected.  Audit  readiness  is  getting  real 
traction in the marketplace and we believe the combination of these factors is
resulting in  hospitals  refocusing  on  revenue  integrity  solutions.  These 
pressures create  a  compelling need  for  Craneware's software  in  order  to 
efficiently protect  the  revenue to  which  these healthcare  facilities  are 
entitled.



Craneware has a client  base consisting of approximately  25% of US  hospitals 
and it is now an established part of the fabric of the US healthcare  industry 
making it a trusted partner. We are confident that Craneware is ideally placed
with its in-house expertise, industry-leading product suite and balance  sheet 
strength to help US healthcare organisations deal with their increasing fiscal
and regulatory  pressures. Consequently  we continue  to be  confident in  the 
future growth of the Group.



We have entered the new financial year in a strong position, with a return  to 
the historic high levels of revenue visibility for the coming years, a  market 
leading product set,  a focused  sales force and  a large  and growing  market 
opportunity.



I would like to take this opportunity to thank our staff for their unrelenting
high levels of energy and commitment and our shareholders for their  continued 
support.





George Elliott

Chairman

3 September 2012







Operational Review



Introduction



Craneware's mission  is  to  stop  the loss  of  legitimate  revenue  owed  to 
healthcare organisations by establishing a culture of revenue integrity within
these organisations; our vision is to be the partner that can be relied on  to 
improve and sustain our customers' strong financial performance.



Over the history  of the Company  we have  come a long  way towards  achieving 
this. Today,  Craneware has  a  total of  nine  core products,  spanning  four 
product families; Audit & Revenue  Recovery, Revenue Cycle, Supply  Management 
and Access  Management  &  Strategic  Pricing.  Craneware  has  installed  its 
software into an extensive  customer base which  represents around quarter  of 
all registered US hospitals - from the smallest critical access facilities  to 
the largest healthcare networks. To support  this growing client base and  the 
Company's future  growth  prospects,  Craneware  now  employs  more  than  200 
professionals across the US and UK.



We have achieved and  are proud of  our valuable and  trusted position at  the 
centre of  this  expanding  market.  Through aiding  our  customers  in  their 
implementation of  a holistic  revenue  integrity model  we have  helped  them 
achieve  substantial  revenue  improvements  and  impressive  returns  on  the 
investments made in  our software,  which can  be reinvested  by hospitals  to 
deliver improved patient care. Over the  year, the value of Craneware and  its 
solutions to customers has increased, our  product set has been enhanced,  the 
addressable market has been extended and the sales team has been augmented for
future growth.



In the year Craneware was affected by the cessation of a third party  contract 
and lengthening sales  cycles due  to the  unforeseen consequences  of the  US 
government applying  incentive  payments  to Electronic  Health  Record  (EHR) 
implementations - in a year preceding a Presidential election, which is  being 
fought on healthcare  and economic  battle grounds. This  created a  competing 
healthcare priority of meeting the  initial EHR deadlines for these  incentive 
payments. This  was mitigated  to some  extent through  a significant  partner 
agreement signed in February 2012, opening market opportunities for the Group.
In addition, we are now seeing indications of sales cycles returning to normal
levels with the majority of qualifying hospitals having received their initial
payments for EHR.



Once again,  Craneware received  recognition  and awards  for several  of  its 
products, including a number one ranking by KLAS for Chargemaster toolkit® for
a sixth consecutive year, matched by  its Bill Analyzer product in the  first 
year of  appearance in  the programme.  Additionally, InSight  Audit  received 
platinum level status from Executive Health Resources.



In response  to  increasing  demand and  organisational  expansion,  Craneware 
opened its extended  premises in  Scottsdale, Arizona during  April 2012.  The 
opening of this  enlarged office  demonstrates Craneware's  commitment to  the 
financial success  of  its  clientele and  dedication  to  exceptional  client 
service across North America.



Market Developments



In 2012 total US healthcare expenditure is expected to exceed $3 trillion, and
with an anticipated 4% growth per annum, it will rapidly approach a  projected 
20% of US GDP by 2017; US  Healthcare is the largest Healthcare market in  the 
world. It is a market which is striving for greater levels of transparency  to 
understand and better quantify the areas of spend within healthcare providers,
resulting in ever-increasing  complexity as data  becomes more granular.  This 
complexity produces high levels of data which need to be analysed in an effort
to understand  and  bring some  control  to this  unsustainable  growth.  Even 
without changing legislation, the US healthcare industry's reimbursement model
is unique  and  complex.  Nearly 50%  of  healthcare  costs are  paid  by  the 
government, with the rest  paid by private insurers  and individuals; each  of 
these payers has different criteria and rates of reimbursement.



The US healthcare  market faces  new and increasing  regulatory challenges  as 
part of the US Government's healthcare reform which seeks to reduce the burden
of healthcare on  the State  whilst making  healthcare available  to a  larger 
percentage  of  the  population.  In  addition  to  this,  North  America   is 
experiencing the effects of  an increasing aging  population which brings  its 
own care and cost challenges.



This changing economic landscape necessitates that US healthcare organisations
find ways  to ensure  operational efficiency,  quality and  financial  success 
while managing  compliance  risks.  The evolving  regulations  and  healthcare 
reforms make  it more  important  than ever  for healthcare  organisations  to 
proactively ensure the  accuracy and  defensibility of their  charges as  they 
face tightening reimbursement and increasing scrutiny from auditors.



These factors mean a growing number of hospitals are seeking  technology-based 
solutions to help improve accuracy  of billing and reduce regulatory  burdens, 
thereby protecting their  slim profit  margins. Craneware's  strategy to  meet 
this growing need is to provide software solutions that help at the points  in 
systems  where  clinical  and   operational  data  transform  into   financial 
transactions. Our solutions automate  data normalisation, combining  disparate 
data sets while  maintaining the  localised context.  This produces  valuable, 
actionable  information   and   creates   organisation-wide   visibility   and 
accountability.



The need  for continued  innovation in  this changing  environment will  drive 
Craneware's future growth.  By providing  the tools to  normalise data  across 
disparate areas of  the hospital and  remaining agnostic to  data formats  and 
other vendors, Craneware gives  the power to  take a step  back and provide  a 
holistic view indentifying areas  of productivity improvement,  inefficiencies 
and errors.



The American Hospital Association estimates the total number of registered  US 
hospitals at 5,754. Fewer than half  of these manage their charge  description 
masters, the central dataset from which all bills are generated, with software
such as  Craneware's  Chargemaster  toolkit.  As  healthcare  reform  requires 
hospitals to manage  data and  resources better, charging  accurately will  be 
nearly impossible without automation tools. Craneware's four product  families 
enable the improvement of financial  performance along multiple points in  the 
hospital's operational areas,  far beyond the  charge description master.  One 
point of increasing importance is in  management of claims denials and  audits 
by  Medicare  Recovery  Auditors.  Reducing  risks  associated  with  managing 
financial transactions in order to keep earned revenue is a pressing  priority 
for US hospitals facing a myriad of audits from State and federal entities  as 
well as private payers.



Medicare Recovery Auditors (MRA)



Medicare Recovery  Auditors  are tasked  with  detecting and  correcting  past 
improper payments to hospitals, whether  these are overpayments which need  to 
be recouped or underpayments. The medical record submission process is lengthy
and has several strict deadlines. This,  coupled with the increased number  of 
audits expected, represents a significant  burden for healthcare providers;  a 
hospital can  lose  7%-10% of  its  revenue to  denied  claims that  could  be 
corrected and resubmitted, and this can make the difference between  financial 
success and failure.



Since its nationwide roll-out  on 1 January 2010,  the Centers for Medicare  & 
Medicaid Services' (CMS) Medicare  Fee-for-Service Recovery Audit Program  has 
consistently increased in scale. In the first quarter of FY2012 the recoupment
total was $397.8m, in  the second quarter  it was $588.4m,  and, in the  third 
quarter it was $657.2m; therefore in nine months a total of $1,643.4m has been
recouped, this represents an  increase of 206% when  compared to the  previous 
full 12 month period (FY2011 $797.4m). This escalating rate of take-backs  has 
driven a greater emphasis  on compliance in healthcare  and a demand for  best 
practice tools  to help  healthcare providers  support compliance  and  manage 
audits.  As  a  result,  several  healthcare  industry  associations   invited 
Craneware to share information at audit and compliance events and conferences.



Craneware's InSight Audit product organises, manages and reports on all  audit 
requests, responses and appeal activities for  all audit types. It stores  the 
relevant information and documents the  steps taken to appeal denials,  whilst 
also identifying trends and areas of  exposure. InSight Audit manages (1)  the 
patient record, (2) the RAC audit workflow, and (3) reports on areas of  risk. 
Craneware's solutions  have helped  hospitals  successfully manage  the  audit 
process to  win more  than twice  as many  appeals as  their peers,  defending 
millions of dollars in denials.



In February 2012, Craneware announced its participation in the CMS  electronic 
submission of medical documentation (edMD) Gateway Services pilot program. The
program provides  a  mechanism for  the  digital exchange  of  medical  record 
documentation in  order to  streamline  and improve  the efficiency  of  audit 
appeals; this therefore  also reduces  the potential cost  burden. In  August 
2012, Craneware was pleased to achieve certification from CMS as a  Healthcare 
Information Handler (HIH),  enabling its InSight  Audit solution to  digitally 
submit medical record documentation and joining a list of less than 20 to have
achieved this status.



The Patient Protection and Affordable Care Act (PPACA)



In June 2012, after years of  legislative and legal battles the Supreme  Court 
ruled that  the  Patient  Protection  and  Affordable  Care  Act  (PPACA)  was 
constitutional. The most significant  effect of this  wide ranging package  of 
legislation is to increase pressure on the entire US healthcare system to slow
the growth in  costs while  bringing roughly 32  million previously  uninsured 
Americans into the system.



Accountable Care Organisations (ACOs) and bundled payments



The Medicare  shared savings  program rewards  Accountable Care  Organisations 
(ACOs) that take responsibility for the costs and quality of care received  by 
their patients. ACOs  can include  groups of  healthcare providers,  including 
physician groups,  hospitals, nurse  practitioners, physician  assistants  and 
others. As stated by the PPACA, the objective of ACOs is to attain a degree of
financial responsibility  on  the providers  in  the hope  of  improving  care 
management  and  limiting   unnecessary  expenditures,  ultimately   fostering 
clinical excellence while simultaneously controlling costs.



ACOs that  meet quality-of-care  targets and  reduce costs  of their  patients 
relative to a spending benchmark are rewarded with a share of the savings they
achieve for the Medicare programme. There are two models based on a degree  of 
risk. Model one is low risk and  involves shared savings in year one, two  and 
shared savings/risk in year three. Model two is high risk and involves  shared 
savings/risk in all three years. Both models have caps on savings and  losses, 
but there are potential savings of up to 60%.



Bundled payments align incentives for  providers - hospitals, post-acute  care 
providers and doctors - to partner  closely across all specialties to  improve 
the patient's experience and  reduce costs by  replacing fragmented care  with 
coordinated care. Many organisations view bundled payments as a measured foray
into accountable care at an acceptable  level of risk and adjustment. Much  of 
the benefits from bundled payments can be reaped via data normalisation  which 
would have to  be a  key area  of an  informed bundled  payment movement.  The 
increased transparency  and  accountability  of this  normalisation  also  has 
obvious benefits to the ACO models.



Alternative payment  models like  Medicare  Shared Savings  and  bundled/value 
based payments have the potential of shifting the focus away from the quantity
of services to the clinical outcomes achieved. Currently there are 310 ACOs in
the US, located in mostly urban areas across 45 states.



However, with these alternative  models only expected to  yield savings of  $1 
billion over the next three years (less than 0.01% of total healthcare  costs) 
and the highly unpredictable nature of small population insurance risk, it is
being widely  predicted by  industry experts  that they  will have  a  limited 
impact on healthcare provision  for the foreseeable  future and will  probably 
remain at the fringes of the healthcare model accounting for no more than  20% 
of hospital reimbursement over the long-term. Similar models (e.g. capitation)
have been tried and failed in the past in different States to provide the cost
savings and clinical improvements expected from these models.



Electronic Healthcare Records (EHR)



Healthcare Reform  authorised  CMS  to  provide  incentives  to  providers  to 
implement Electronic Health Records (EHR).  There are two main programs  under 
EHR that  hospitals  can  register  for;  Medicare  and  Medicaid.  Qualifying 
hospitals may  register for  both.  As Medicare  has  set the  initial  higher 
standard, hospitals  that  meet  the  meaningful use  criteria  (MU)  and  are 
Medicaid eligible can automatically claim for a Medicaid incentive. A hospital
may, through choice or eligibility only apply for a Medicaid incentive payment
following the criteria set at the local State level.



At 30  June 2012,  with six  States still  to start  their Medicaid  Incentive 
scheme, 2,596 unique  hospitals have received  their share of  the $4  billion 
that has been paid to hospitals under the incentive schemes (~60% of  eligible 
hospitals).



It is likely that the disruption in hospitals seen to December 2011, caused by
EHR systems,  will continue  for  many years  to come  as  new levels  of  EHR 
integration and standards  are introduced.  However hospitals  need to  return 
their focus to revenue integrity very  quickly after making their initial  EHR 
purchasing decisions  as  it  is  widely recognised  that  there  are  limited 
additional returns  in the  short  and medium  term. Since  technologies  like 
Cranewares' with its unique normalisation of data approach, when combined with
EHR's are  critical to  achieving the  improvements necessary  to provide  the 
increased care  levels and  the required  cost efficiencies  expected of  this 
programme the  Company  is  well  placed  to  address  this  expanding  market 
opportunity.



Sales and Marketing



During the year the  geographical alignment of our  sales team across the  US, 
which began  in  the prior  year,  was completed.  Experienced  Regional  Vice 
Presidents now oversee each of our three geographical regions, and each has  a 
team comprised of mixed experience and  skill sets. In addition, the  separate 
Sales Support and Marketing Teams in our Atlanta office have been strengthened
allowing the field  Sales Team  to concentrate  on their  customers and  sales 
opportunities. We anticipate further investment into these teams, in line with
our revenue growth, as we work to address the market opportunity.



We have completed thorough internal and  external training as a result of  our 
enlarged product set and increasing market opportunities presented by  various 
US healthcare reforms, including  internally developed industry leading  'boot 
camps' for every member of the sales team and a sales partner 'boot camp'.



In addition to  our direct field  sales opportunities, there  are a number  of 
major contract opportunities which all  have the ability to yield  significant 
potential revenues. Previously  we have  referred to these  deals as  'channel 
partners'; however it is more accurate to instead refer to these as  different 
'routes to market', as  we shall do going  forward. These potential  contracts 
follow the same revenue recognition methodology as an individual hospital  and 
group hospital contracts; although the sales approach for these deals is quite
different. These  different routes  to  market can  be  broken down  into  six 
categories (as listed below), and range in potential total contract value from
$5 million to $100 million in any instance.



IDN's & Large Hospital Systems



An Integrated Delivery Network (IDN) is a network of facilities and  providers 
working together  to  offer  a continuum  of  care  to a  specific  market  or 
geographic area.  These  always involve  a  significant number  of  multi-site 
licences, and, like the  large hospital systems  involve multiple people  from 
within Craneware working as a team  to sign the contract. Craneware  continues 
to have very good traction in this area, being the only software company  with 
the ability to provide proven "corporate" solutions. Consolidation within  the 
US healthcare industry increases the reach and number of these  organisations. 
Typically a team of Craneware staff representing various areas of the  Company 
will be responsible for  the success of these  deals from prospecting  through 
implementation.



Business Process Outsourcers/Consultants (BPO)



Typically BPO's/consultants work  with hospitals, on  a gain-share model  ("at 
risk") with the improvements found generating the revenue for them (a model we
do not utilise).  The BPO's will  often employ erstwhile  hospital staff  and 
outsource large  functions  of  the  hospital's  back  office.  This  provides 
Craneware with the opportunity to provide best-of-breed software to BPO's  for 
a true win-win-win,  for them, their  hospital client and  Craneware. In  many 
instances we will explore white-labelling in this area so that we provide  the 
functionality of our software in a  software wrapper that they can brand,  but 
for which we charge a premium.

BPO's can range from large national players (including the largest accountancy
firms) to small, regional "mom & pop"  players. In some cases, IDN's or  Large 
Hospital Systems will spin-out experts in a particular field and create  BPO's 
that may also want to resell  our software into external hospitals. BPO  deals 
are typically  led by  Business  Development and  utilise the  experts  within 
Craneware as required.



Hardware Vendors



Hardware vendors  primarily  want to  use  advanced functionality  to  push  a 
greater requirement for further computer hardware and to embed their brand  in 
a facility. This is commonly under the auspices of a division of the  hardware 
manufacturer or distributor that provides  BPO or consultancy services.  These 
deals are typically led by Business Development and utilise the experts within
Craneware  as  required.  There  are  white-label  opportunities  within  this 
category.



Software Vendors



Third  party  software  vendors   often  wish  to   integrate  areas  of   our 
functionality with their software  so that they can  leverage more sales,  for 
which we are paid a  fee. Sometimes the opportunity is  on a pure Value  Added 
Reseller basis; where they are looking for more to sell to their customers and
it is seen by Craneware  as a quicker route to  market. This can work in  both 
directions where  Craneware  has  additional  functionality  to  sell  to  our 
customers. These deals are typically  led by Business Development and  utilise 
the experts within Craneware as required. There are white-label  opportunities 
within this category.



Group Purchasing Organisations (GPO's)



A Group Purchasing Organisation (GPO) is an entity that is created to leverage
the purchasing power of a group of hospitals to obtain discounts from  vendors 
based on their collective buying power.  GPO's also provide a route to  market 
and may  include  a  division  that  has a  BPO  or  consultancy  offering  in 
specialist areas. The  GPO involvement  can be  from simple  referral or  list 
generation through to  senior executive level  sponsorship and cross  hospital 
references. These deals are typically led by Business Development and  utilise 
the experts within Craneware as required. There are white-label  opportunities 
within this category.



Content Acquirers



Due to the ever-increasing  amount of data powering  the Craneware software  - 
and the added functionality we can offer our customers through blinded data  - 
there is a growing desire from some organisations to purchase the data that we
use  to  power   our  software  solutions,   to  incorporate  into   different 
non-competing offerings. These  would typically be  led by Product  Management 
who  utilise  Business  Development  for  the  commercial  terms.  There   are 
white-label opportunities within this category.



Routes to Market Summary



Craneware has experience in working with organisations in all these categories
and in FY2012 new revenues from these  sources accounted for less than 20%  of 
total revenue.  Although  there has  been  much debate  around  our  increased 
exposure to these opportunities in FY12,  it is merely their absence that  has 
further highlighted their always present existence. They are not  contributing 
a larger proportion of the revenue in this year than they have previously  nor 
are they increasing the risk profile of Craneware. In addition to our  direct 
sales  efforts,  these  different  routes  to  market  are  a  valuable  extra 
opportunity for Craneware to generate further revenues from its technology.



A larger number of these organisations successfully promoting products in  the 
US Healthcare  market, regardless  if by  their nature  they are  white-label, 
further educates and evangelises the importance of Revenue Integrity and leads
to further Craneware success.



Brand building, Conferences & Events



During the  year important  progress  was made  in  brand building  and  brand 
awareness. This has been  achieved through a  variety of activities  including 
sponsorship  in  support  of  our  different  market  segments  including  the 
Community Hospital 100, the American Association of Medical Audit  Specialists 
(AAMAS) and the Modern Healthcare Women Leaders in Healthcare. Brand  building 
continued through awards, conferences and white papers.



Several  healthcare  industry  associations   invited  Craneware  to   present 
information at audit and  compliance events and  conferences during the  year. 
Craneware was  selected to  lead  an educational  session at  ANI:  Healthcare 
Financial Management  Association's (HFMA)  National Institute  2012, held  in 
June 2012.  During the  presentation,  Craneware's client  University  Medical 
Center (UMC)  Health  System explained  that  moving to  a  revenue  integrity 
approach increased their  gross revenues  across all  clinical departments  by 
100%, enhanced electronic charge capture and improved UMC's Medicare case  mix 
by 7%.



Craneware and its client, The  Bellevue Hospital, presented at October  2011's 
Revenue Integrity HFMA MAP event. The Bellevue Hospital shared insights gained
from  their   revenue   integrity  initiatives,   including   the   successful 
implementation of revenue integrity solutions that helped them to improve  the 
accuracy  and  efficiency  of  charge  processes,  find  missed  revenue   and 
strengthen compliance.  The Bellevue  Hospital reduced  its denial  write-offs 
from $1.8 million  in 2009  to $155,000 in  2010, decreased  days in  accounts 
receivable by  approximately  30%, nearly  doubled  bad debt  collections  and 
achieved a net revenue potential impact of more than $1 million.



In its  first  year of  implementation  of Craneware's  Chargemaster  Toolkit, 
Online Reference Toolkit  and Bill  Analyzer products,  Amerinet member  Adams 
County Regional Medical Center (ACRMC),  a 25-bed Critical Access Hospital  in 
the Southern Ohio  region, significantly improved  its financial  performance, 
operational efficiency and compliance. The CFO  of ACRMC noted that there  has 
been a dramatic financial turnaround having significantly reduced errors,  and 
identified millions in financial performance improvement opportunities. AMRMC
is projecting a profit for the first time in five years.



Craneware is  a  partner in  the  Amerinet Strategic  Alliance  for  Financial 
Efficiency  (SAFE),  a  consortium   of  market-leading  companies   providing 
best-in-class revenue cycle  and financial  performance improvement  solutions 
that support healthcare facilities of all sizes.



Awards



The Company's supplier award from Amerinet demonstrates the continued  success 
with our partner network. Many awards were achieved during the year across the
product portfolio. Craneware's  Chargemaster toolkit received,  for its  sixth 
consecutive year,  the  number  one  ranking in  the  KLAS  'Revenue  Cycle  - 
Chargemaster Management  market' category.  Craneware was  delighted that  its 
Bill Analyzer product  also achieved the  number one ranking  in 2011 for  its 
KLAS ranking. KLAS is the leading source of healthcare information  technology 
vendor performance metrics.



In addition, the Chargemaster toolkit achieved Healthcare Financial Management
Association (HFMA) Peer-Review status for its eighth consecutive year.



Craneware's InSight  Audit  software,  one of  our  newer  products,  achieved 
platinum-level status; this is the highest level of integration  certification 
from Executive  Health  Resources, a  leading  provider of  medical  necessity 
compliance and appeals management solutions.



Product Development



In the  year, product  development has  been focused  on leveraging  the  best 
innovative combinations  of  the  Craneware  and  Craneware  InSight  enlarged 
product set,  whilst ensuring  that the  direction of  the product  set  moves 
consistently with  the long-term  strategic positioning  of Craneware  as  the 
revenue integrity partner of choice.



Organisational Changes



As of 1 July 2012 Craneware InSight (formerly ClaimTrust, acquired in February
2011) has been fully integrated into the management structure of the Group.



With this integration, Glen Johnson formerly CIO of ClaimTrust has joined  the 
Operational Board of the Company to lead our Product Management division.



Sharon Cuming  has  joined  the  Operational  Board  as  Senior  VP  of  Human 
Resources.



We would also like to take this opportunity to thank Joe Ferro (former CEO  of 
ClaimTrust and EVP Craneware InSight) who left the Group in February 2012, for
his service  to both  organisations  and his  continued positive  advocacy  of 
Craneware Solutions in  his new role  heading-up one of  the partners we  have 
recently entered into a relationship with.



Financial Review



The financial results for the current year, for the first time, include a full
year contribution  from  our  February 2011  acquisition  ClaimTrust  Inc,  in 
comparison to the  4 months  contribution in  the prior  year. These  results 
reflect the mixed trading environment we experienced, especially in the  first 
half of  the  financial  year.  However,  despite  this  environment  we  have 
continued to invest in the future growth of the Group whilst delivering an 18%
increase in our Adjusted EBITDA to $11.9m from $10.1m in the prior year.



There have been no  changes during the year  to the business model  underlying 
the Group's revenue  recognition policies. The  Group continues to  recognise 
revenue primarily  under  its  Annuity  Software-as-a-Service  (SaaS)  revenue 
recognition policies with these revenues accounting for between 75% to 80%  of 
all revenue in any one year.  Under this model we recognise software  licence 
revenue and any minimum payments due from our 'partner' contracts evenly  over 
the life of the underlying signed contracts.



With any new contract  we sign, we normally  expect to deliver a  professional 
services engagement,  relating  to the  implementation  of the  software,  the 
training  of  the  hospital  staff  and  further  assisting  the  hospital  in 
developing its processes  to ensure the  software is utilised  to its  maximum 
potential. Within any individual contract  we would expect these services  to 
account for 12% to 20% of the  total contract value (dependent on the  product 
and needs of the individual hospital). However of total Group revenue in  any 
one year we would expect services revenues  to account for between 10% to  20% 
of revenue. This revenue is typically recognised as the service is delivered,
usually on a percentage of completion basis.



As a result  of the ClaimTrust  Inc acquisition in  2011 we now  have a  third 
revenue model. For revenue  recognition purposes it  is effectively the  same 
recognition as the normal Annuity SaaS model described above. It is recurring
in its  nature,  however, it  is  not  signed under  long  term  non-breakable 
contracts and is invoiced  monthly in arrears rather  than annual in  advance, 
therefore it does not include the inherent advantages of the Craneware Annuity
SaaS revenue model. This revenue currently accounts for less than 10% of total
revenues in any one year  and as new contracts  for the InSight product  range 
are being signed under the Annuity SaaS model, we would expect the  proportion 
of revenue derived from this model to reduce over time.



As a  result of  these revenue  recognition models,  based on  our  historical 
normal average  contract life  of 5  years, the  maximum value  of an  average 
contract that can be  recognised as revenue  in any one year  is 20% plus  the 
value of associated services that have  been delivered. In all cases, if  the 
contract  contains  any  material  contingencies  or  any  increased  risk  of 
collection is  identified,  revenue  is  deferred  until  the  contingency  is 
satisfied, at which point the revenue  that has been deferred is released  and 
the revenue  recognition is  'caught up'  to the  level that  would have  been 
recognised had there been no contingency.



Revenue



Revenue for the year has increased by 8% to $41.1m (2011: $38.1m). Growth  of 
8%, whilst meaningful, is  below both the challenging  targets we set for  the 
Group and  the historical  high levels  of growth  we have  reported in  prior 
years. The primary reasons for this relate to:



· The  cessation of  a  contract 'acquired'  as  part of  the  ClaimTrust 
acquisition at  the end  of the  first quarter  of the  financial year.  This 
contract  was  administered  through  a  third  party  and  was   unexpectedly 
terminated as a result  of the third  party losing its  contract with its  end 
hospital network.  As  with  most ClaimTrust  contracts,  this  contract  was 
subject to a 'break clause' which  allowed for early termination in the  event 
the end customer  contract was  lost. The  loss of  this contract  negatively 
impacted revenues by c$2m in the current year.



· The lengthening sales cycles due to the unforeseen consequences of  the 
US government applying  incentive payments to  Electronic Health Record  (EHR) 
implementations. Further details of  these unintended consequences have  been 
provided earlier,  however  the lengthening  of  these sales  cycles  and  the 
resultant reduction in new  contract signed in the  year has impacted  current 
year revenues. The most significant  impact relates to professional  services 
revenues. As stated above, with any new  sale we would expect to deliver  and 
recognise 12 to 20% of the total contract value within the first 3 to 6 months
of signing. As a  result of the lower  level of sales, professional  services 
revenues, on like  for like services,  have decreased in  the current year  by 
c$1.8m. Whilst we have managed to mitigate  some of this loss in other  areas, 
total professional services revenue is $1.2m below the prior year. However we
would expect to see this  revenue quickly return to  prior year levels as  new 
sales levels return to historical norms.



During the second  half of the  financial year,  we saw month  on month  sales 
activity increases which  based on our  historical norms for  sales cycles  we 
would expect to  positively impact  revenue growth  in the  second quarter  of 
FY2013 and thereafter.



In any single  year large  hospital deals  and/or deals  signed through  other 
routes to market are  an important part  of our growth  and we would  normally 
expect to sign at  least one significant contract  in each half year.  Whilst 
the quantum of revenue we derive from  any one deal has increased, the  actual 
percentage of our total revenues derived from these deals in any one year  has 
fallen considerably, with now less than  20% of our revenue expected from  new 
large deals in a single  year. Despite signing two  large deals in the  year, 
the revenue recognised from  these deals only served  to mitigate the  revenue 
shortfalls discussed above rather than significantly add to our annual revenue
growth as we would normally expect.



One of these large  deals signed in  the year introduced,  for the first  time 
since we  entered the  public markets,  a "White-Labelling  fee". This  is  in 
effect paid  for development  services (which  carry a  significant  premium), 
where we provide the functionality of our software in a software wrapper  that 
the partner can brand. We have recognised this revenue as we would any  other 
services revenue, i.e. as we deliver the underlying service on a percentage of
completion basis. As  a result $3.5m  of revenue has  been recognised in  the 
current year, bringing the  total services revenue recognised  in the year  to 
$7m or 17% of our  current year's revenue, this compares  to 12% in the  prior 
year. This increase is primarily a result of total revenue growth being below
expectations rather than a  significant long term  increase in total  services 
revenues.



Earnings



In the prior year,  the Company introduced an  'Adjusted' earnings metrics  to 
adjust for  one-off acquisition  costs.  In keeping  with this  methodology  a 
one-off benefit  of  $0.95m relating  to  the  release of  the  provision  for 
contingent consideration has been removed. We believe the disclosure of these
adjusted earnings metrics is consistent  with other acquisitive companies  and 
that it allows  for a  more accurate  understanding of  the underlying  profit 
generated from operations and for a direct comparison year on year.



Adjusted  earnings   before   interest,  taxation,   share   based   payments, 
depreciation and  amortisation ("EBITDA")  has  grown in  the year  to  $11.9m 
(2011: 10.1m) an increase  of 18%. Accordingly  Adjusted EBITDA margins  have 
increased from 26.5% in the prior year to 29%.



Revenue Visibility and other KPI's



The Company continues to  believe the "Three Year  Visible Revenue" metric  is 
key to assessing the medium term growth prospects. This metric includes:



· Future revenue under contract;

· Revenue  generated  from  renewals (calculated  at  100%  dollar  value 
renewal).

· InSight  revenue  identified as  recurring  in nature  (subject  to  an 
estimated churn rate of 8% per year);



The different  categories  of revenue  reflect  any inherent  future  risk  in 
recognising these revenues. Future  revenue under contract,  is as the  title 
suggests subject to contract without break  clauses and therefore only has  to 
be invoiced to be recognised in  the respective years (only subject to  future 
collection risk that exists with all revenue). Renewal revenues are contracts
coming to the  end of their  original contract  term (e.g. 5  years) and  will 
require the contracts to be renewed for the revenue to be recognised,  however 
as we are renewing  contracts at over  100% dollar value  it is reasonable  to 
conclude minimal additional  risk is  associated to this  revenue. The  final 
category "Insight revenue identified as  recurring in nature" is revenue  that 
we would expect  to recur in  the future  but as the  underlying contracts  do 
contain break clauses there is potential for this revenue not to be recognised
in future years, however we apply an estimated 8% churn rate to make allowance
for this risk.



To better aid understanding, the three year visible revenue as at 30 June 2012
(i.e. visible  revenue  for FY2013,  FY2014  and FY2015)  is  being  presented 
against the visible  revenue for  the same  three year  period as  at 30  June 
2011. As  such, visible  revenue for  the three  years to  30 June  2015  has 
increased to $108.7m from $100.9m at 30 June 2011, as follows:



· InSight revenue of $10.8m.

· Revenue generated from renewal activities contributing $38m; being $5.0m
in FY13, $12.5m in FY14 and $20.5m in FY15.

· Future revenue under  contract contributing $59.9m  of which $28.5m  is 
expected to be recognised in FY13, $20.6m in FY14 and $10.8m in FY15.



Average contract length during  the period has dipped  to c4 years, below  our 
historical normal  average contract  length of  5 years,  this is  due to  the 
smaller number of contracts signed  in the year and the  sales mix of size  of 
hospital being skewed as a result. The Company does not anticipate this to be
a long term trend as overall sales levels and mix return to historical levels.



The product attachment  rate, being the  average number of  our nine  products 
that are in place across our entire  customer base, has increased from 1.5  in 
the prior year to  1.6 products. The remaining  7.4 reflects the  significant 
cross sell opportunity that still exists for the Group.



Operating Expenses



The current  year cost  base includes  the  full year  cost of  the  Craneware 
InSight cost base as well as the planned for investment 'released and executed
on' in  the year.  As  a result  net  operating expenses  (before  acquisition 
benefits/costs, share  based  payments, depreciation  and  amortisation)  have 
increased to $27.6m an 18% increase  over the prior year (FY11: $23.4m).  The 
most significant increases relate to Client Servicing and Product  Development 
where ClaimTrust had made significant investment prior to the acquisition  and 
we will now look to leverage this  cost base investment in future years as  we 
increase sales levels and hospital customer numbers.



Client Servicing  has  increased  24%  to  $7.2m  (FY11:  $5.8m)  and  Product 
Development has increased  36% to  $6.8m (FY11:  $5.0m). Product  Development 
spend has increased to 16.5% of  our total revenue (2011: 13%) reflecting  the 
increased number  of core  products we  are now  supporting. We  continue  to 
capitalise very low levels of Development spend with $0.3m capitalised in  the 
year (FY11: 0.2m).



Acquisition of ClaimTrust Inc.



In the prior year, Craneware completed the acquisition of ClaimTrust Inc.  via 
a newly formed  subsidiary Craneware InSight  Inc. During the  course of  the 
year we  made  substantial  progress  on the  integration  of  this  business, 
ultimately completing the integration by 1st July 2012. At an early stage  of 
the integration plan the InSight and the original Craneware sales forces  were 
brought together such that the Group  had one common sales force selling  nine 
core products. All  nine products are  sold into 'one  market segment'  being 
revenue integrity  solutions to  healthcare  organisations within  the  United 
States of  America.  As  a  result  of  the  level  of  integration  achieved 
throughout the year combined with the Group serving a single market it is  not 
appropriate to show the results of Craneware InSight separate from the rest of
the Group.



As required by International Accounting Standards (IAS), in the prior year  we 
were required, on consolidation, to both separately identify intangible assets
and their fair value and estimate  the fair value of contingent  consideration 
that would ultimately be paid. In  respect of intangible assets and the  fair 
value of assets  acquired, the finalisation  of the original  fair values  are 
detailed in Note 16 to the accounts and relate primarily to the recognition of
a deferred  tax asset  of $1.34m  relating to  pre-acquisition losses  and  an 
adjustment for a unrecorded  liability of $0.26m that  existed at the  opening 
balance sheet date. As a result finalised Goodwill is $11.2m (2011: $12.3m).



In respect  of the  estimate of  contingent consideration,  this estimate  was 
produced prior to both the cessation  of the third party contract reported  in 
the interim results statement and the  effect of lengthening sales cycles  due 
to the  unforeseen  consequences  of  the  US  government  applying  incentive 
payments to Electronic Health Record (EHR) implementations which impacted  the 
InSight products as  well as the  other Craneware products.  As a result,  no 
contingent  consideration  is  payable  in  respect  of  the  ClaimTrust  Inc. 
acquisition and as required by IAS  the original provision of $0.95m has  been 
released to the current year's results.



Again as required by IAS a detailed review for impairment of Goodwill has been
carried out at the balance sheet date and no impairment has been  identified. 
Full details  of  the  impairment review  are  disclosed  in Note  14  to  the 
accounts.



Cash



We continue to  measure the  quality of our  earnings through  our ability  to 
convert them into  operating cash. As  in prior years,  we have continued  to 
have very high levels of cash conversion which has enabled us to grow our cash
reserves to $28.8m (FY11: $24.2m). These cash levels are now approaching  the 
levels prior to the  $9m paid for  the acquisition despite  having paid out  a 
further $4.1m to our shareholders by way of dividends.



Our ability to  return our cash  balances to pre-acquisition  levels gives  us 
confidence in  our ability  to fund  further 'bolt-on'  acquisitions from  the 
Company's own reserves, and  as such acquisitions continue  to be part of  our 
future growth strategy.



Balance Sheet



The Group maintains  a strong  balance sheet  position, not  only through  our 
significant cash balance but with  rigorous controls over working capital  and 
no debt.



Currency



The reporting  currency for  the Group  (and cash  reserves) is  US  Dollars. 
Whilst the majority of  our cost base  is US located  and therefore US  Dollar 
denominated we do have approximately one quarter of the cost base based in the
UK relating  primarily  to our  UK  employees (and  therefore  denominated  in 
Sterling). As a  result, we continue  to closely monitor  the Sterling to  US 
Dollar exchange  rate, and  where  appropriate consider  hedging  strategies. 
During the year, we have not  seen a significant impact through exchange  rate 
movements, with the average exchange rate throughout the year being $1.5840 as
compared to $1.5906 in the prior year.



Taxation



The Group's effective tax rate remains dependent on the proportion of  profits 
generated in  the  UK  and  overseas  and the  applicable  tax  rates  in  the 
respective jurisdictions.  As detailed  above, the  current year  has seen  a 
significant  decrease  in  the   levels  of  professional  services   revenues 
generated. As  all  professional  services  are delivered  in  the  US,  this 
reduction combined with the lower level of sales generated in the year in this
revenue has significantly reduced the levels of income subject to taxation  in 
the US. This combined with the reducing  tax rate in the UK and our  continued 
ability to agree enhanced Research and Development tax relief has resulted  in 
an effective tax rate  of 20.6% (FY11: 30.5%).  We would expect effective  tax 
rates to increase in  future years as  sales levels return  to normal and  the 
levels of professional services increase accordingly.



EPS



As with EBITDA, the Group is  reporting an Adjusted EPS figure, adjusting  for 
the $0.95m of contingent consideration provision release.



In the year adjusted  EPS has increased  by 23% to  $0.316 (FY11: $0.256)  and 
adjusted diluted EPS has increased by  25% to $0.315 (FY11: $0.253). This  is 
despite the increase in weighted number of  average shares as a result of  the 
full year effect of the shares issued  in FY11 as a result of the  acquisition 
of ClaimTrust.  The increase  in EPS  is  driven by  the increase  in  EBITDA 
further enhanced by the lower effective tax rate resulting in the year.



Dividend



The Board recommends a final dividend of  5.7p (8.9 cents) per share giving  a 
total dividend for the year of 10.5p (16.4 cents) per share (2011: 8.8p (14.12
cents) per share). Subject to confirmation at the Annual General Meeting, the
final dividend  will be  paid on  7th  December 2012  to shareholders  on  the 
register as at 9th November 2012, with a corresponding ex-Dividend date of 7th
November 2012.



The final dividend of 5.7p  per share is capable of  being paid in US  dollars 
subject to a  shareholder having registered  to receive their  dividend in  US 
dollars under the Company's Dividend Currency Election, or who registerto  do 
soby the close of business on9th November 2012. The exact amount to be  paid 
will be calculated by reference  to the exchange rate  to be announced on  9th 
November 2012. The final dividend referred to above in US dollars of 8.9 cents
is given as  an example only  using the  Balance Sheet date  exchange rate  of 
$1.5685/£1 and may differ from that finally announced.



Outlook



In a mixed  trading environment Craneware  delivered a solid  level of  growth 
across key financial  and operational  metrics, confirming the  health of  the 
business and giving a high degree of confidence for the future.



Added pressures on US hospitals have led to an increased sales and opportunity
pipeline for  our  products  as  we move  into  the  current  financial  year. 
Craneware's solutions help US healthcare providers drive business improvements
that will  result in  better financial  health. In  this turbulent,  demanding 
environment,  hospitals  need  financial   accuracy,  visibility  and   shared 
accountability to  survive.  Fiscal and  regulatory  drivers are  expected  to 
increase in the year ahead as they push for greater transparency and accuracy,
and  although  this  creates  a  challenging  ever-evolving  marketplace,   it 
ultimately increases the opportunities for Craneware's solutions.



Craneware is a trusted and established part of the fabric of the US healthcare
industry, with  a  client  base consisting  of  around  a quarter  of  all  US 
hospitals. We  are confident  that the  business is  ideally placed  with  its 
in-house expertise, industry-leading product suite and balance sheet  strength 
to help  US healthcare  organisations deal  with their  increasing fiscal  and 
regulatory pressures. Furthermore with  revenue visibility having returned  to 
the historic high levels, we view the future with confidence.





Keith Neilson           Craig Preston

Chief Executive Officer Chief Financial Officer

3 September 2012        3 September 2012





Consolidated Statement of Comprehensive Income

For the year ended 30 June 2012



                                                                Total    Total
                                                                 2012     2011
                                                       Notes    $'000    $'000
Revenue                                                  3     41,067   38,124
Cost of sales                                                 (1,556)  (4,696)
Gross profit                                                   39,511   33,428
Net operating expenses                                   4   (28,416) (24,874)
Operating profit                                               11,095    8,554
Analysed as:
Adjusted EBITDA*                                               11,932   10,077
Acquisition costs on business combination                          -    (517)
Released deferred consideration on business
combination                                                       954       -
Share based payments                                            (152)    (139)
Depreciation of plant and equipment                             (579)    (312)
Amortisation of intangible assets                             (1,060)    (555)
Finance income                                                    107       99
Profit before taxation                                         11,202    8,653
Tax on profit on ordinary activities                     5    (2,309)  (2,638)
Profit for the year attributable to owners of the
parent                                                          8,893    6,015
Total comprehensive income attributable to owners of
the parent                                                      8,893    6,015





*Adjusted EBITDA  is defined  as operating  profit before  acquisition  costs, 
released  deferred  consideration,  share  based  payments,  depreciation  and 
amortisation.



Earnings per share for the period attributable to equity holders



                                Notes  2012  2011
Basic ($ per share)              7a   0.330 0.231
*Adjusted Basic ($ per share)    7a   0.316 0.256
Diluted ($ per share)            7b   0.329 0.228
*Adjusted Diluted ($ per share)  7b   0.315 0.253



*Adjusted Earnings per share  calculations allow for  the release of  deferred 
consideration on the business combination and acquisition costs (in the  prior 
year) together  with amortisation  on  acquired intangible  assets to  form  a 
better comparison with previous years.



Statements of Changes in Equity for the year ended 30 June 2012



                                               Share
                                       Share Premium    Other Retained   Total
                                     Capital Account Reserves Earnings  Equity
Group                                  $'000   $'000    $'000    $'000   $'000
At 1 July 2010                           512   9,250    3,237    9,053  22,052
Total comprehensive income - profit
for the year                              -      -       -    6,015   6,015
Transactions with owners:
Share-based payments                      -      -      139    1,249   1,388
Impact of share options exercised         13      -  (3,074)    3,074      13
Issue of ordinary shares related to
business combination                      11   5,989       -       -   6,000
Dividends (Note 6)                        -      -       -  (3,063) (3,063)
At 30 June 2011                          536  15,239      302   16,328  32,405
Total comprehensive income - profit
for the year                              -      -       -    8,893   8,893
Transactions with owners:
Share-based payments                      -      -      152    (538)   (386)
Impact of share options exercised          2     169    (245)      692     618
Dividends (Note 6)                        -      -       -  (4,093) (4,093)
At 30 June 2012                          538  15,408      209   21,282  37,437





Consolidated Balance Sheet as at 30 June 2012



                             Notes   2012   2011
                                    $'000  $'000
ASSETS
Non-Current Assets
Plant and equipment                 2,027  2,167
Intangible assets              8   16,010 16,652
Deferred tax                        1,470  1,287
                                   19,507 20,106
Current Assets
Trade and other receivables        12,560 13,121
Cash and cash equivalents          28,790 24,176
                                   41,350 37,297
Total Assets                       60,857 57,403
EQUITY AND LIABILITIES
Non-Current Liabilities
Contingent consideration       9       -    954
Deferred income                       183    250
                                      183  1,204
Current Liabilities
Deferred income                    15,766 15,638
Current tax liabilties              1,527    288
Trade and other payables            5,944  7,868
                                   23,237 23,794
Total Liabilities                  23,420 24,998
Equity
Called up share capital       10      538    536
Share premium account              15,408 15,239
Other reserves                        209    302
Retained earnings                  21,282 16,328
Total Equity                       37,437 32,405
Total Equity and Liabilities       60,857 57,403





Statements of Consolidated Cash Flows for the year ended 30 June 2012



                                                   Notes    2012     2011
                                                           $'000    $'000
Cash flows from operating activities
 Cash generated/(used) from operations             11    10,602   10,089
 Interest received                                          107       99
 Tax paid                                               (1,316)  (1,595)
 Net cash from operating activities                     9,393    8,593
Cash flows from investing activities
 Purchase of plant and equipment                          (439)  (1,790)
 Acquisition of subsidiary, net of cash acquired    9        -  (8,772)
 Capitalised intangible assets                      8     (418)    (247)
 Net cash used in investing activities                  (857) (10,809)
Cash flows from financing activities
 Dividends paid to company shareholders             6   (4,093)  (3,063)
 Proceeds from issuance of shares                           171       13
 Net cash used in financing activities                (3,922)  (3,050)
Net increase/(decrease) in cash and cash equivalents       4,614  (5,266)
Cash and cash equivalents at the start of the year        24,176   29,442
Cash and cash equivalents at the end of the year          28,790   24,176







Notes to the Financial Statements



General Information



Craneware plc  (the Company)  is  a public  limited company  incorporated  and 
domiciled in Scotland.  The Company  has a primary  listing on  the AIM  stock 
exchange. The principal activity of the Group continues to be the development,
licensing and  ongoing support  of  computer software  for the  US  healthcare 
industry.



Basis of preparation



The  financial  statements  are  prepared  in  accordance  with  International 
Financial Reporting Standards, as adopted by the European Union (IFRS),  IFRIC 
interpretations and with those parts of  the Companies Act 2006 applicable  to 
companies reporting under  IFRS. The consolidated  financial statements  have 
been prepared  under the  historic cost  convention and  prepared on  a  going 
concern basis. The applicable accounting policies are set out below,  together 
with an explanation of  where changes have been  made to previous policies  on 
the adoption of new accounting standards in the year, if relevant.



The preparation of financial statements  in conformity with IFRS requires  the 
use of estimates and  assumptions that affect the  reported amounts of  assets 
and liabilities  at the  date of  the financial  statements and  the  reported 
amounts of revenues and expenses during the reporting period. Although  these 
estimates are based  on management's best  knowledge of the  amount, event  or 
actions, actual results ultimately may differ from those estimates.



The Company and its subsidiary undertakings are referred to in this report  as 
the Group.



1 Selected Principal accounting policies



The principal accounting policies adopted in the preparation of these accounts
are set  out below.  These policies  have been  consistently applied,  unless 
otherwise stated.



Reporting currency



The Directors consider that as the Group's revenues are primarily  denominated 
in US dollars the  Company's principal functional currency  is the US  dollar. 
The Group's financial statements are therefore prepared in US dollars.



Currency translation



Transactions denominated in foreign currencies are translated into US  dollars 
at the rate of exchange ruling at the date of the transaction. Monetary assets
and liabilities expressed in foreign currencies are translated into US dollars
at rates  of exchange  ruling at  the balance  sheet date  $1.5685/£1 (2011  : 
$1.6055/£1). Exchange gains or losses  arising upon subsequent settlement  of 
the transactions and from translation at the balance sheet date, are  included 
within the related category  of expense where  separately identifiable, or  in 
general and administrative expenses.



Revenue recognition



The Group  follows  the  principles  of  IAS  18,  "Revenue  Recognition",  in 
determining appropriate revenue recognition policies. In principle revenue  is 
recognised to  the extent  that  it is  probable  that the  economic  benefits 
associated with the transaction will flow into the Group.



Revenue is derived  from sales  of, and distribution  agreements relating  to, 
software licenses and professional services (including installation). Revenue
is recognised when (i) persuasive evidence of an arrangement exists; (ii)  the 
customer has access and right to use  our software; (iii) the sales price  can 
be reasonably measured; and (iv) collectability is reasonably assured.



Revenue from standard  licensed products which  are not modified  to meet  the 
specific requirements of each customer is  recognised from the point at  which 
the customer has  access and right  to use  our software. This  right to  use 
software will be for the period covered  under contract and, as a result,  our 
annuity based revenue model recognises the licensed software revenue over  the 
life of this contract. This policy is consistent with the Company's  products 
providing customers with  a service through  the delivery of,  and access  to, 
software solutions (Software-as-a-Service  ("SaaS")), and  results in  revenue 
being recognised  over  the  period  that  these  services  are  delivered  to 
customers.



'White-labelling' or other 'Paid for  development work' is generally  provided 
on a  fixed  price basis  and  as such  revenue  is recognised  based  on  the 
percentage completion or delivery of  the relevant project. Where  percentage 
completion is  used  it  is estimated  based  on  the total  number  of  hours 
performed on the  project compared to  the total number  of hours expected  to 
complete the  project.  Where  contracts  underlying  these  projects  contain 
material obligations, revenue  is deferred  and only recognised  when all  the 
obligations under the engagement have been fulfilled.



Revenue from  all  professional  services  is  recognised  as  the  applicable 
services  are  provided.  Where  professional  services  engagements  contain 
material obligation, revenue is recognised when all the obligations under  the 
engagement have been  fulfilled. Where professional  services engagements  are 
provided on a fixed price basis, revenue is recognised based on the percentage
completion of  the relevant  engagement. Percentage  completion is  estimated 
based on the total number  of hours performed on  the project compared to  the 
total number of hours expected to complete the project.



Software and  professional services  sold via  a distribution  agreement  will 
normally follow the above recognition policies.



Should any contracts contain non-standard clauses, revenue recognition will be
in accordance with the underlying contractual terms which will normally result
in recognition of revenue  being deferred until  all material obligations  are 
satisfied.



The excess  of  amounts  invoiced  over revenue  recognised  are  included  in 
deferred income.  If the  amount  of revenue  recognised exceeds  the  amount 
invoiced the excess is included within accrued income.



Intangible Assets



(a) Goodwill



Goodwill arising  on  consolidation  represents  the excess  of  the  cost  of 
acquisition over the fair value of the identifiable assets and liabilities  of 
a  subsidiary  at  the  date  of  acquisition.  Goodwill  is  capitalised  and 
recognised as a non-current asset in accordance with IFRS 3 and is tested  for 
impairment  annually,  or  on  such  occasions  that  events  or  changes   in 
circumstances indicate that the value might be impaired.



Goodwill is allocated to cash-generating  units for the purpose of  impairment 
testing. The  allocation  is made  to  those cash-generating  units  that  are 
expected to benefit from the business combination in which the goodwill arose.



(b) Proprietary software



Proprietary software acquired in a business combination is recognised at  fair 
value at the acquisition date. Proprietary  software has a finite life and  is 
carried at  cost less  accumulated  amortisation. Amortisation  is  calculated 
using the straight-line  method to  allocate the associated  costs over  their 
estimated useful lives of 5 years.



(c) Contractual customer relationships



Contractual customer  relationships acquired  in  a business  combination  are 
recognised at fair  value at  the acquisition date.  The contractual  customer 
relations have a  finite useful  economic life and  are carried  at cost  less 
accumulated amortisation. Amortisation is  calculated using the  straight-line 
method over the  expected life  of the  customer relationship  which has  been 
assessed as 10 years.



(d) Research and Development expenditure



Expenditure associated with  developing and maintaining  the Group's  software 
products is recognised  as incurred. Where,  however, new product  development 
projects are technically feasible, production  and sale is intended, a  market 
exists, expenditure can  be measured  reliably, and  sufficient resources  are 
available to complete  such projects, development  expenditure is  capitalised 
until initial commercialisation of the product, and thereafter amortised on  a 
straight-line basis over its estimated useful life, which has been assessed as
5 years.  Staff  costs  and  specific third  party  costs  involved  with  the 
development of the software are included within amounts capitalised.



(e) Computer software



Costs  associated  with  acquiring  computer  software  and  licensed   to-use 
technology are capitalised as incurred. They are amortised on a  straight-line 
basis over their useful economic life which is typically 3 to 5 years.



Impairment of non-financial assets



At each reporting date the Group considers the carrying amount of its tangible
and intangible assets  including goodwill  to determine whether  there is  any 
indication that those  assets have suffered  an impairment loss.  If there  is 
such an indication, the recoverable amount of the asset is estimated in  order 
to determine the extent  of the impairment loss  (if any) through  determining 
the value in use of the cash generating unit that the asset relates to.  Where 
it is not possible to estimate the recoverable amount of an individual  asset, 
the Group  estimates the  recoverable amount  of the  cash-generating unit  to 
which the asset belongs.



If the  recoverable amount  of  an asset  is estimated  to  be less  than  its 
carrying amount, the impairment loss is recognised as an expense.



Where an impairment  loss subsequently  reverses, the carrying  amount of  the 
asset is increased to the revised  estimate of its recoverable amount, but  so 
that the increased carrying  amount does not exceed  the carrying amount  that 
would have been  determined had  no impairment  loss been  recognised for  the 
asset. A reversal of an impairment  loss is recognised as income  immediately. 
Impairment losses relating to goodwill are not reversed.



Taxation



The charge for taxation is based on  the profit for the period and takes  into 
account deferred taxation. Taxation is computed using the liability  method. 
Under this method, deferred tax assets and liabilities are determined based on
temporary differences between the financial reporting and tax bases of  assets 
and liabilities and are measured using enacted rates and laws that will be  in 
effect when the differences are expected to reverse. The deferred tax is  not 
accounted for if it arises from  initial recognition of an asset or  liability 
in a  transaction  that  at  the  time  of  the  transaction  affects  neither 
accounting nor taxable profit or loss. Deferred tax assets are recognised  to 
the extent that it is probable that future taxable profits will arise  against 
which the temporary differences will be utilised.



Deferred tax is provided  on temporary differences  arising on investments  in 
subsidiaries except  where  the  timing  of  the  reversal  of  the  temporary 
difference is controlled by  the Group and it  is probable that the  temporary 
difference will not reverse  in the foreseeable  future. Deferred tax  assets 
and liabilities arising in the same tax jurisdiction are offset.



In the UK and  the US, the Group  is entitled to a  tax deduction for  amounts 
treated as compensation on  exercise of certain  employee share options  under 
each jurisdiction's tax rules. As  explained under "Share-based payments",  a 
compensation expense is  recorded in  the Group's  statement of  comprehensive 
income over the period from the grant date to the vesting date of the relevant
options. As there is  a temporary difference between  the accounting and  tax 
bases a deferred  tax asset is  recorded. The deferred  tax asset arising  is 
calculated by comparing the estimated amount  of tax deduction to be  obtained 
in the future (based on the Company's  share price at the balance sheet  date) 
with the  cumulative  amount  of  the compensation  expense  recorded  in  the 
statement of  comprehensive income.  If the  amount of  estimated future  tax 
deduction exceeds the  cumulative amount  of the remuneration  expense at  the 
statutory rate, the  excess is  recorded directly in  equity against  retained 
earnings.



Share-based payments



The Group grants share options to certain employees. In accordance with  IFRS 
2, "Share-Based Payments" equity-settled share-based payments are measured  at 
fair value  at the  date  of grant.  Fair  value is  measured  by use  of  the 
Black-Scholes  pricing  model  as   appropriately  amended.  The  fair   value 
determined at the date of grant of the equity-settled share-based payments  is 
expensed on  a straight-line  basis  over the  vesting  period, based  on  the 
Group's estimate of the number of shares that will eventually vest. Non-market
vesting conditions are  included in  assumptions about the  number of  options 
that are expected to  vest. At the  end of each  reporting period, the  entity 
revises its estimates of the number of options that are expected to vest based
on the non-market vesting conditions. It recognises the impact of the revision
to original estimates, if any, in the statement of comprehensive income,  with 
a corresponding  adjustment to  equity.  When the  options are  exercised  the 
Company  issues  new  shares.  The  proceeds  received  net  of  any  directly 
attributable transaction  costs  are  credited  to  share  capital  and  share 
premium.



The share-based payments charge is included  in net operating expenses and  is 
also included in 'Other reserves'.



2 Critical accounting estimates and judgements



The preparation of financial statements  in accordance with IFRS requires  the 
directors to make critical accounting estimates and judgements that affect the
amounts reported  in  the financial  statements  and accompanying  notes.  The 
estimates and assumptions  that have  a significant risk  of causing  material 
adjustment to the  carrying value of  assets and liabilities  within the  next 
financial year are discussed below:-



· Impairment assessment:- the Group  tests annually whether Goodwill  has 
suffered any impairment and for other assets including acquired intangibles at
any point  where  there  are  indications  of  impairment.  This  requires  an 
estimation of the value in use of the applicable cash generating unit to which
the Goodwill and other assets relate too. Estimating the value in use requires
the Group  to make  an estimate  of  the expected  future cashflows  from  the 
specific cash generating unit using  certain key assumptions including  growth 
rates and a  discount rate. Reasonable  changes to these  assumptions such  as 
increasing the discount rate by 5% (18%  to 23%) and decreasing the long  term 
growth rate applied  to revenues by  1% (2% to  1%) would still  result in  no 
impairment.

· Provision for  impairment of  trade receivables:-  the Group  assesses 
trade receivables for impairment which requires the directors to estimate  the 
likelihood of payment forfeiture by customers.

· Revenue recognition:- the Group assesses the economic benefit that will
flow from future milestone payments  in relation to sub-licensing  partnership 
arrangements. This requires the  directors to estimate  the likelihood of  the 
Group, its  partners, and  sub-licensees meeting  their respective  commercial 
milestones and commitments.

· Capitalisation  of  development  expenditure:-  the  Group  capitalises 
development costs provided the conditions  laid out previously have been  met. 
Consequently the  directors  require  to  continually  assess  the  commercial 
potential of each product in development and its useful life following launch.

· Provisions for income taxes:-the Group is subject to tax in the UK  and 
US and this requires  the directors to regularly  assess the applicability  of 
its transfer pricing policy.

· Share-based payments:- the Group requires  to make a charge to  reflect 
the value of share-based equity-settled payments in the period. At each  grant 
of options and  Balance Sheet  date, the  directors are  required to  consider 
whether there has  been a change  in the fair  value of share  options due  to 
factors including number of expected participants.



3 Revenue



The chief  operating  decision maker  has  been  identified as  the  Board  of 
directors. The Group  revenue is derived  entirely from the  sale of  software 
licences, white labelling and  professional services (including  installation) 
to hospitals within the United States  of America. Consequently the Board  has 
determined that Group supplies only one geographical market place and as  such 
revenue is presented in line with management information without the need  for 
additional segmental analysis.  All of  the Group  assets are  located in  the 
United States of America with the  exception of the Parent Company's, the  net 
assets of which are disclosed separately on the Company Balance Sheet and  are 
located in the UK.



Revenue is analysed as follows:-
                                   2012   2011
                                  $'000  $'000
Software licencing               34,002 33,381
White labelling                   3,500     -
Professional services             3,565  4,743
Total revenue                    41,067 38,124







4 Net operating expenses



Net operating expenses are comprised of the following:-
                                                                   2012   2011
                                                                  $'000  $'000
Sales and marketing expenses                                      8,804  8,368
Client servicing                                                  7,189  5,775
Research and development                                          6,844  5,024
Administrative expenses                                           4,763  4,143
Acquisition costs on business combination                            -    517
Release of contingent consideration on business combination
(Note 9)                                                          (954)     -
Share-based payments                                                152    139
Depreciation of plant and equipment                                 579    312
Amortisation of intangible assets                                 1,060    555
Exchange loss/(gain)                                               (21)     41
Net operating expenses                                           28,416 24,874





5 Tax on profit on ordinary activities



                                                          2012           2011
                                                         $'000          $'000
Profit on ordinary activities before tax                11,202          8,653
Current tax
Corporation tax on profits of the year                   3,790          3,257
Foreign exchange on taxation in the year                     2             42
Adjustments for prior years                              (762)             68
Total current tax charge                                 3,030          3,367
Deferred tax
Origination & reversal of timing differences           (1,371)          (749)
Adjustments for prior years                                645             -
Change in tax rate                                           5             20
Total deferred tax (credit)                              (721)          (729)
Tax on profit on ordinary activities                     2,309          2,638
The difference between the current tax charge on ordinary activities for the
year, reported in the consolidated statement of comprehensive income, and the
current tax charge that would result from applying a relevant standard rate
of tax to the profit on ordinary activities before tax, is explained as
follows:
Profit on ordinary activities at the UK tax
rate 25.5% (2011: 27.5%)                                 2,857          2,380
Effects of:
Adjustment in respect of prior years                     (117)             68
Change in tax rate                                           5             20
Additional US taxes on losses/profits 39%
(2011: 39%)                                              (256)            136
Foreign Exchange                                             2             34
Non taxable income                                       (243)             -
Expenses not deductible for tax purposes                    82             13
Tax deduction on share plan charges                       (21)           (13)
Total tax charge                                         2,309          2,638





6 Dividends



The dividends paid during the year were as follows:-



                                                                  2012  2011
                                                                 $'000 $'000
Final dividend, re 30 June 2011 - 7.68 cents (4.8 pence)/share   2,036 1,333
Interim dividend, re 30 June 2012 - 7.54 cents (4.8 pence)/share 2,057 1,730
Total dividends paid to company shareholders in the year         4,093 3,063





The proposed final dividend  for 30 June  2012 is subject  to approval by  the 
shareholders at the  Annual General  Meeting and has  not been  included as  a 
liability in these accounts.



7 Earnings per share



a) Basic

Basic earnings per share is calculated by dividing the profit attributable  to 
equity holders of  the Company  by the weighted  average number  of shares  in 
issue during the year.



                                                          2012            2011
Profit attributable to equity holders of the
Company ($'000)                                   8,893   6,015
Weighted average number of ordinary shares in
issue (thousands)                                  26,946    26,079
Basic earnings per share ($ per share)            0.330   0.231
Profit attributable to equity holders of
Company ($'000)                                   8,893   6,015
Release of deferred consideration on business
combination (Note 9)                                     (954)              -
Acquisition costs ($'000)                                    -  517
Amortisation of acquired intangibles ($'000)     574  147
Adjusted Profit attributable to equity holders
($'000)                                           8,513   6,679
Weighted average number of ordinary shares in
issue (thousands)                                  26,946    26,079
Adjusted Basic earnings per share ($ per share)   0.316   0.256



b) Diluted

For diluted earnings per share, the weighted average number of ordinary shares
calculated above is adjusted  to assume conversion  of all dilutive  potential 
ordinary shares. The Group  has one category  of dilutive potential  ordinary 
shares, being those granted to directors and employees under the share  option 
scheme.



                                                          2012            2011
Profit attributable to equity holders of the
Company ($'000)                                   8,893   6,015
Weighted average number of ordinary shares in
issue (thousands)                                  26,946    26,079
Adjustments for:- Share options (thousands)    84  324
Weighted average number of ordinary shares
for diluted earnings per share (thousands)         27,030    26,403
Basic earnings per share ($ per share)            0.329   0.228
Profit attributable to equity holders of
Company ($'000)                                   8,893   6,015
Release of deferred consideration on business
combination (Note 9)                                     (954)              -
Acquistion costs ($'000)                                     -  517
Amortisation of acquired intangibles ($'000)     574  147
Adjusted Profit attributable to equity
holders ($'000)                                   8,513   6,679
Weighted average number of ordinary shares in
issue (thousands)                                  26,946    26,079
Adjustments for:- Share options (thousands)    84  324
Weighted average number of ordinary shares
for diluted earnings per share (thousands)         27,030    26,403
Adjusted Basic earnings per share ($ per
share)                                            0.315   0.253



8 Intangible assets



Goodwill and Other Intangible assets



Group
                Goodwill      Customer Proprietary Development Computer
                         Relationships    Software       Costs Software  Total
                   $'000         $'000       $'000       $'000    $'000  $'000
Cost
At 1 July 2011    11,188         2,964       1,222       2,584      453 18,411
Additions             -            -          -         328       90    418
At 30 June 2012   11,188         2,964       1,222       2,912      543 18,829
Amortisation
At 1 July 2011        -            66          82       1,308      303  1,759
Charge for the
year                  -           329         244         410       77  1,060
At 30 June 2012       -           395         326       1,718      380  2,819
Net Book Value
at 30 June 2012   11,188         2,569         896       1,194      163 16,010
Cost
At 1 July 2010        -            -          -       2,385      293  2,678
Additions             -            -          -         199       48    247
Additions
acquired at
Fair Value        11,188         2,964       1,222          -      112 15,486
At 30 June 2011   11,188         2,964       1,222       2,584      453 18,411
Amortisation
At 1 July 2010        -            -          -         944      260  1,204
Charge for the
year                  -            66          82         364       43    555
At 30 June 2011       -            66          82       1,308      303  1,759
Net Book Value
at 30 June 2011   11,188         2,898       1,140       1,276      150 16,652



In accordance  with the  Group's  accounting policy,  the carrying  values  of 
goodwill and other intangible assets  are reviewed for impairment annually  or 
more frequently if events or changes in circumstances indicate that the  asset 
might be impaired. Goodwill arose on the acquisition of Craneware InSight Inc.
(Note 9).



The carrying values are  assessed for impairment  purposes by calculating  the 
value in use (net  present value (NPV) of  future cashflows) of the  Craneware 
InSight cash generating unit. The goodwill impairment review assesses  whether 
the carrying value of goodwill is supported by the NPV of the future cashflows
based on management forecasts  for 5 years and  then using an assumed  sliding 
scale annual growth  rate which is  trending down to  give a long-term  growth 
rate of 2% in the residual years of the assessed period. Management have  made 
the judgement that this  long-term growth rate does  not exceed the  long-term 
average growth rate  for the industry  and also estimated  a pre-tax  discount 
rate of 18% based on the Groups estimated weighted average cost of capital.



Sensitivity analysis was  performed using  a combination  of different  annual 
growth rates and a range of different weighted average cost of capital  rates. 
Management concluded that the tempered growth rates resulting in 2% during the
residual period and the pre-tax discount rate of 18% were appropriate in  view 
of all relevant factors and reasonable  scenarios and that there is  currently 
sufficient headroom over  the carrying  value of  the assets  in the  acquired 
business that any  reasonable change  to key  assumptions is  not believed  to 
result in impairment.



9 Acquisition of subsidiary: Craneware InSight Inc



On 17 February 2011, the Company acquired 100% of the issued share capital  of 
ClaimTrust Inc.  On the  date of  acquisition the  assets and  liabilities  of 
ClaimTrust Inc. were merged into  the newly created entity, Craneware  InSight 
Inc. The total consideration for the acquisition along with the fair value of
the identified assets and assumed liabilities is shown below:



                                         Fair Value        Final         Final
                                        Adjustments   Fair Value    Fair Value
Recognised amounts of
identifiable               Book Value     30-Jun-11  Adjustments
assets acquired and
liabilities assumed             $'000         $'000        $'000         $'000
Tangible fixed assets
Plant and equipment               408             -            -           408
Intangible assets
Computer software                 112             -            -           112
Customer relationships              -         2,964            -         2,964
Proprietary software                -         1,222            -         1,222
Other assets and
liabilities
Trade and other
receivables                     1,171             -            -         1,171
Bank and cash balances            228             -            -           228
Trade and other
payables                        (741)             -        (263)       (1,004)
Deferred tax                        -       (1,674)        1,339         (335)
                                          
                                1,178         2,512        1,076         4,766
Goodwill                                                                11,188
Fair Value                                                              15,954
Satisfied by:                                                            $'000
Cash                                                                     9,000
Ordinary shares issued - 641,917 shares at $9.347
(£5.83)                                                                  6,000
Fair value of contingent deferred
consideration                                                              954
                                                                        15,954
Bank balances and cash
acquired                                                                   228
Cash consideration                                                     (9,000)
Net cash on
acquisition                                                            (8,772)



Provisional accounting  for  the  business combination  as  disclosed  in  the 
Financial Statements for the year ended 30 June 2011



The contingent  consideration is  subject to  performance criteria,  including 
revenue and profit targets, set for  the next financial year and  consequently 
the actual consideration  is payable  following the respective  year end.  The 
maximum potential  deferred  consideration  payable  is  an  additional  $4.5m 
subject to  meeting  all  the performance  criteria.  The  acquisition  costs, 
including all due diligence costs that related to the transaction amounted  to 
$516,796 and these have  been expensed as operating  costs in compliance  with 
IFRS 3 (revised).



Goodwill of $12,263,819 has been recognised on acquisition and is attributable
to future customers, future software and the assembled workforce.



In the period  following the acquisition,  Craneware InSight Inc.  contributed 
$2,612,624 to Group  revenue and  $3,016 to  adjusted EBITDA*  which has  been 
included with the consolidated statement of comprehensive income for the year.
Had  Craneware  InSight  Inc.  been   consolidated  from  1  July  2010,   the 
consolidated  statement  of  comprehensive   income  would  show  revenue   of 
$42,958,489 and adjusted EBITDA* of $10,235,219.



*Adjusted EBITDA  is defined  as operating  profit before  acquisition  costs, 
share based payments, depreciation and amortisation.



Completed accounting in respect  of the business  combination reported in  the 
prior year



The accounting for the business combination was completed during the year  and 
resulted in  two further  separate  fair value  adjustments, as  reflected  in 
amended table  above,  both of  which  had a  resulting  impact on  the  final 
Goodwill recognised  on  acquisition,  which remains  attributable  to  future 
customers, future software and the assembled workforce.



The first fair value adjustment to  the acquired balance sheet was in  respect 
of obligations to third parties which were not recorded in the opening balance
sheet. Following the  completion of  a rigorous internal  review of  inherited 
systems and all potential obligations to a total of $262,776 and as such  this 
liability was  recognised  as  at  the date  of  acquisition,  the  subsequent 
expenditure satisfies the liability that existed on the 17 February 2011.



With regard  to  the second  fair  value  adjustment the  directors  have  now 
determined that the cumulative historical  net operating losses of  ClaimTrust 
Inc. have survived the merger agreement. As such they are therefore  available 
to offset against future profits, in so  much as they are derived in the  same 
trade and tax jurisdiction as before. Consequently, Craneware InSight Inc. has
recognised a deferred tax asset that existed at the date of acquisition  equal 
to the net operating losses at the  Federal rate of US tax against which  they 
may be utilised. The directors have  also considered any potential lapses  and 
restrictions that apply to the utilisation of these losses in conjunction with
the timing of forecasted future taxable  profits made by Craneware InSight  in 
order to arrive in their conclusion.  The resulting fair value adjustment  was 
to recognise a deferred tax asset of $1,338,800.



These fair  value  adjustments  concluded  the  accounting  for  the  business 
combination and as  such the  initial recognised Goodwill  of $12,263,819  was 
amended to a finalised Goodwill of $11,187,795. Comparative balances have been
restated throughout to reflect the fair value adjustments note above.





10 Called up share capital



Authorised



                                 2012             2011
                               Number $'000     Number $'000
Equity share capital
Ordinary shares of 1p each 50,000,000 1,014 50,000,000 1,014





Allotted called-up and fully paid



                                 2012             2011
                               Number $'000     Number $'000
Equity share capital
Ordinary shares of 1p each 26,991,891   538 26,792,681   536





The movement in share capital during the year is represented as follows:

· 175,024 Ordinary Share options were exercised in the year.

· 24,186 Ordinary Shares  were issued in the  year which represented  the 
remaining outstanding equity  in respect  of the final  consideration for  the 
Craneware InSight Inc acquisition at price of $9.35 (£5.83).





11 Cash flow generated from operating activities



Reconciliation of profit before tax to net cash inflow from operating
activities



                                                        2012    2011
                                                       $'000   $'000
Profit before tax                                     11,202   8,653
Finance income                                         (107)    (99)
Depreciation on plant and equipment                      579     312
Amortisation on intangible assets                      1,060     555
Share-based payments                                     152     139
Movements in working capital:
Increase / (decrease) in trade and other receivables     611 (3,353)
(Decrease) / increase in trade and other payables    (2,895)   3,882
Cash generated from operations                        10,602  10,089









                     This information is provided by RNS
           The company news service from the London Stock Exchange

END


FR BRGDCSDGBGDX -0- Sep/04/2012 06:00 GMT
 
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