Craneware Stock

Good evening, ladies and gentlemen, and welcome to Craneware plc's Full Year 2026 Results Presentation. [Operator Instructions] I would like to remind all participants that this call is being recorded.

I will now hand over to Keith Neilson, Chief Executive Officer, to open the presentation. Please go ahead.

Thank you very much, Leila, and thank you very much, everyone, for joining us today on our fiscal '26 results. First slide, please. Thank you.

So we're going to handle today's results by really doing it in 3 parts. First of all, a brief introduction and overview of the fiscal '26 results, followed by an update of our cybersecurity incidents, which happened post balance sheet date in early July. I'll then hand over to Craig, who will then continue with a bit more of a deep dive into the financial review itself for fiscal '26, and then we'll come back to review some market opportunities and updates in both the 340B market and the revenue integrity market as well as giving an indication of our beliefs on the growth strategy and the outlook as we go forward.

It is worth starting off by saying we are obviously deeply disappointed by the fiscal '26 results. However, what we would like to remind people is not to throw the baby out with the bathwater, and we will go through some of the positives that we have for building blocks and foundations for future as we go through into fiscal '27 and fiscal '28. Next slide, please.

We do want to remind everyone that we operate in one of the largest, if not the largest B2B software verticals in the world of U.S. health care. U.S. health care is greater than 60% of the global health care spend. And as such, it is an incredibly dynamic marketplace and a very exciting marketplace to be part of. Our role within that is nonclinical, though. So we are not impacting on the clinical side, but we are working on the operational side of the hospital to make sure that it runs effectively. And our role is really in helping hospitals take forward and transform the business side of those hospitals and transforming the business of health care.

Our business and our business models are very financially resilient and have proven to be that. We continue with long-term relationships long-term software operations and tech-enabled services for our customers with a view to be able to complete that transformation for them. The underlying financials of the business are strong with strong ARR, long-term relationships, as I say, and very high consistency of customers over that period. Next slide, please.

Through the fiscal '26 performance itself, we did see a disappointing slowdown in our 340B transactional revenue towards the end of the second half of the period, very much due to manufacturers' unilateral restrictions on honoring 340B pricing and supplying drugs at 340B pricing to the hospitals themselves. Having said that, though, we did have a very resilient ARR through the period. The recurring revenue was $185 million, and then our NRR was sitting comfortably at 100%.

We saw a healthy customer retention of greater than 90% by all of our measures and a strong EBITDA performance and cash generation through that period. As I mentioned earlier, we did have a cybersecurity incident very early on into the new year, which was July coming in. I'm pleased to say that, that is moving into the remediation phase, and I've got more details of what will happen in that in and where we are at today.

That though, combined with some of the uncertainty that we saw towards the end of last period in 340B, which is still working its way through the system, has brought us to the difficult decision of rebasing our fiscal 2027 numbers backwards to our ARR level to allow us to have time to be able to see how some of these changes pan out and to take away some of this uncertainty and base our numbers on some certainty. So not only can we as a business make investment decisions, but also our stakeholders can make decisions about the business as well.

As such, we'll also be undertaking a comprehensive review of our cost base so that we are cutting our cloth accordingly across the business to reflect those changes in our revenue line as expected and then also to set out a plan of investments at the time when we then start to see that revenue growth come back again and step up as we go forward. Pleasingly, the business continues to work strongly with Microsoft as a very good partner that has brought both technology, AI resources and people resources to us as well as helping us accelerate new customer wins through the period and continuing through into this year.

And that gives us a great deal of confidence in being able to return to growth at least into the period of fiscal '28 through a number of different angles. One, by that stage, we are expecting to see a lot more certainty through the 340B program at both state and at a federal level. We're also expecting that our earlier investments that we've made in our products across both 340B and revenue integrity will result in further sales coming through. And that, combined with our cost initiatives and our cost base review will result in us returning back to far more positive margins by fiscal '28 as well as we see going forward. Next slide, please.

So I've mentioned the cybersecurity incidents, and this has created certainly some short-term and potentially medium-term uncertainty for the business. What happened was we became aware in early July that some threat actors had access to our system and had exfiltrated some files from our system with the threat that we would publish the details of those files onto the dark web. As it turns out, the vast majority of files that were taken from our systems were from -- or all of the files that were taken from our system were from nonoperational servers. They were from nonwork servers and nonproduction servers, but they did include some working servers that were used by members of our team to be able to do day-to-day work.

Some of those servers and some of those files did include elements of both internal staff details within there and some of our employees' details, but also included some of our customer details and some of our customers' patient details within there. And we're currently in the process of working with our customers to notify them of exactly what information was leaked and working with our staff on those just now.

What I am pleased to be able to say is our teams were able to very quickly verify and with the -- and then have third-party verification that the threat actors were no longer in our system within a matter of -- within a number of hours and within the first -- certainly well within 24 hours of the threat actors gaining access to our systems and that there was no ongoing effects from the threat actors on our systems either way -- otherwise. So as such, operations have continued through the period in between. And the data that was taken was a very small subset of our overall data that we have on behalf of our customers and was -- and that data was not breached in any way.

We have moved into the remediation phase, as I say. So we are now in the process of working with both third parties and through our own data teams to analyze down to the detail at the patient level exactly what data was taken and what data has been published on to the dark web. And we'll equally be moving into understanding what the financial impacts will be of the business. We are cautioning that although we will get better clarity through the course of this year through fiscal '27 with regards to some of the impacts of this, it may be a number of periods, so maybe going into future financial years where the full impact of this will be seen.

I am very pleased and thank our customers and our staff for their understanding in the meantime. I know that they have been very supportive and have been very appreciative of the efforts that we've taken so far with regards to this incident, and we do treat this incident with the utmost seriousness in terms of both remediation but also making sure that we are as protected as any organization can be going forward on this. Next slide, please.

So looking at fiscal '26 overall, I want to just highlight some of the positives from our sales performance. In the performance, although our sales were comparable to the prior year of fiscal '26 (sic) [ '25 ]. And as Craig will go into our revenue numbers were very comparable with that as well. One of the benefits we did see was an increase in the number of new customers, net new wins that came to us through the period. And those net new wins pleasingly came through a mix of competitive takeouts and competitive displacements as well as a significant number of expansion sales within our existing customer base. And pleasingly, some of those competitive wins and expansion sales have continued through into this first quarter of the new year, and we will be hopefully reporting -- or we will be reporting on this as we come through to our interims into the new calendar year as it goes.

And with that and that overview, I'll hand over to Craig for the financial details of fiscal '26.

If I could move to the next slide, please. So thank you, Keith. In the next few slides, I will step you through the financial results for fiscal '26. The fiscal '26 year was a year of some really good positive operational progress. But ultimately, we do recognize and are very, very aware of the fact that the financial outcome was below our expectations. A significant factor in that was the headwinds we experienced in the 340B marketplace. A good example of that is our shelter program. Here, we are able to identify significant opportunities for our customers -- we saw high levels of customer engagement. But due to the restrictions that were being placed on them, they were unable to take advantage of these opportunities and that had the knock-on effect of the expected transactions we expected to see did not materialize at the rate we anticipated.

Clearly, this is disappointing, but I think it is worth reminding ourselves the underlying financial characteristics of the group remains strong. We retain a substantial recurring revenue base, long-standing customer relationships, healthy margins, strong cash generation and significant financial flexibility, and I will demonstrate that in the next few slides. If I could move to the next slide, please.

Looking first at our headline financial measures. Revenue was broadly unchanged at $206 million. That generated an adjusted EBITDA of $67.1 million with a corresponding 33% EBITDA margin. Ultimately, we delivered adjusted basic earnings per share of $1.68. Our ARR, as Keith mentioned, our annual recurring revenue remained steady at $185 million and our operating cash conversion was 98%. Looking at our bank debt. Our bank debt did increase in the period from $27.7 million to $43.5 million, and that was a deliberate capital allocation decision we made. We decided to draw some debt down alongside our own cash resources to fund the $25 million share buyback we performed in the year.

Overall, though, we do acknowledge and we are very cognizant that these results were below our expectations, especially for revenue growth. But they also do demonstrate the resilience of this business during this more challenging year. A good example of the underlying resilience of our business is our annual recurring revenue. So let's have a look at that base for us. It's really important as we go forward.

Within our ARR, no individual customer represents more than 8%. Our 10 largest customers account for less than 30% and their average contracting relationship with ourselves is over 21 years. So that annual recurring revenue foundation gives us meaningful visibility, diversification and a dependable foundation against which we can plan the future of the business. As we enter fiscal '27 and in light of the post year-end cyber incident that Keith has talked you through, we have adopted a prudent planning basis we've reset our revenue expectations to approximately the level of our current ARR, and that's to provide certainty to all our stakeholders and allow us to make sensible planning decisions as we wait for various factors to work their way through the system.

Against that, we've talked to a comprehensive review of our cost base. Here, again, the objective is to align the organization with that revenue framework we've set ourselves. We'll do this whilst protecting customer service, cybersecurity, regulatory compliance and the product investments that will be the foundation for our future growth. Our approach to capital allocation remains disciplined and unchanged in principle. If I could move to the next slide, please.

I've already covered the headline metrics. So on this chart, I think it's the graphs on the right-hand side, the 5-year chart, they really provide a useful context of the underlying strength of the business. They demonstrate the continued progress we've been making across revenue and adjusted EBITDA. And actually, if we took those graphs back, you'd see that continued progress all the way back to our IPO back in 2007. A strong business has to be able to adapt to difficult market conditions and unexpected events such as the cyber incident. Acting to preserve margins without curtailing investment will be what ultimately drives our future growth. We honestly believe that the actions we continue to take, we are going to meet those objectives, which will cause short-term pain. We understand that, but will ultimately benefit all our stakeholders. If I could move to the next slide, please.

Turning to cash and cash is obviously really important as you navigate this period in the company's history. 5-year chart again gave appropriate perspective. Whilst cash holdings have varied as we've made various investment decisions, we've reduced debt. We've returned capital to shareholders. We have always maintained substantial liquidity. And that really reflects the cash-generative nature of our annuity SaaS model. Operating cash conversion, 98% of adjusted EBITDA, again, confirms the quality of our underlying earnings that we delivered in the year. We did see a $10.4 million movement in the funds held on behalf of customers. Those funds fluctuate as part of normal customer operations.

What we do and consistent with prior years is we always exclude these from our operating cash conversion measure, that being a true measure of the cash generated by the business itself rather than how we deal with our customer cash. After investments, dividends and share buyback, year-end cash remained strong at $54.8 million. We have a further $56 million available to us under the RCF, and then we have a further $100 million accordion facility pre-agreed. I've talked about increasing the bank debt and funding the $25 million share buyback. After all these factors, the Board is proposing to maintain the total dividend for the year of 32p, resulting in a final dividend of 17p per share. We believe that balance is an appropriate return to our shareholders against the importance of retaining liquidity and investment capacity as we reset our medium-term objectives and assumptions. If I could move to the next slide, please.

I've mentioned our annuity SaaS model. It really is the foundation of our financial resilience. It's underpinned by multiyear contracts with software subscription revenue recognized over the contractual term. Contract recurring revenue was $175.1 million, approximately 85% of our total revenue. SaaS software revenue was $130.4 million. Transactional revenue, which is billed on a monthly basis that is supported by long-term underlying contracts was $38.9 million. And finally, our recurring professional services contributed $5.9 million.

Software license revenue did reduce in the year, but that primarily reflects an ongoing trend we've seen again in the 340B market where hospitals are to move from the license to recurring transaction revenues, and that allows for more transparency tying the actual benefit and the transaction cost to the individual patient encounter and the appearance of the pharmacy.

Both our transaction offer and platform revenues grew in the period. However, both were impacted. We previously explained that platform revenues are excluded from our ARR until we have sufficient evidence that they're recurring and reliably predictable. At that point, we can then record them as think of them as recurring. The headwinds we've outlined actually had a double impact. The growth in our platform revenues did not recur as we expect it to, but nor could we assess any of these revenues to be recurring in the current year. So that impacted both the growth of our transactional revenues and our ARR. If I could move to the next slide, please.

I've covered the key metrics, so let's dig into the margins themselves. Gross margin came at 84% compared to 87%. However, overall, our total cost base didn't significantly change. It really was just an allocation from our OpEx cost to our cost of sales, reflecting a slightly different revenue mix more geared towards the technology-enabled services in the period. Through this period, we've remained disciplined on pricing, cost to serve and contractual risk. Net operating expense, as I've mentioned, to adjusted EBITDA reduced to $105.7 million, a big factor of that being the movement into cost of sales. We've continued to invest with total development expenditure increasing 4% to $59.6 million, of which we capitalized $16.9 million. That small increase in the capitalization just reflects the stage of the qualifying work we've been doing in our development departments. So focus on data integration, AI-enabled applications and expanded pharmacy offering that Keith will talk to in a slide or two in his time.

Our capitalization criteria remains rigorous. Expenditure is only capitalized where projects are technically feasible, commercially supportable and expect to deliver future economic benefits. All this resulted in the 33% EBITDA margin I've mentioned, statutory profit before tax of 7%, increased 7% and a broadly stable adjusted and basic earnings per share number. If I go to the next slide, please.

Our balance sheet remains strong and provides as a real basis of our financial resilience. Total cash of $54.8 million. Cash less bank debt is a net positive of $11.3 million. Our RCF $56 million undrawn and about $100 million accordion. All banking covenants were met throughout the period and all our going concern viability work we performed as part of the audit to clear the audit sign-off this year, all banking covenants continue to be met as we navigate our way through the cybersecurity incident.

We performed a capital reduction exercise in November. That created additional distributable reserves that gives us even greater flexibility in the future in our capital allocation decisions. However, that flexibility doesn't change our discipline. We'll continue to assess liquidity, covenant headroom, investment requirements and the interest of all our stakeholders before making capital allocation decisions. Next slide.

That brings me neatly to the capital allocation. As you know, capital allocation is ultimately about balancing current returns with future investment, delivering value for all our stakeholders. I break them down in our different stakeholders. Over the last 5 years, we've returned nearly $100 million to our shareholders through dividends and share buybacks. At the same time, we have substantially reduced the debt we took on to part from the Sentry acquisition back in 2021, and we retained the extra capacity of $150 million through the accordion and undrawn facilities.

We've continued to invest in ourselves and investing approximately 25% to 30% of revenue in research and development, and that investment is not indiscriminate. We've talked to the cost review, expenditure we prioritized according to customer impact, demonstrable customer demand, future economic benefit and our ability to support future sustainable profit growth. Our objective is to protect the recurring revenue foundation, preserve strong cash generation and continue investing selectively in the opportunities that can support our return to future growth.

So in summary from me, we are very conscious we didn't deliver the revenue growth we expected. We've responded with a prudent reset and set around our recurring revenue and launched a comprehensive review of our cost base. Again, though, the group remains profitable, cash generative and financially well positioned, supported by $185 million of ARR, high customer retention, long-standing customer relationships and substantial liquidity.

With that, I'll hand back to Keith, and he'll take you through the 340B market, our response and the outlook.

Thank you, Craig. Next slide, please. And next slide again, please. So as we consider the 340B market, it's worth pointing out that it's coming into its 34th year and is an approximately $100 billion program now. So as such, it's not unsurprising that it's going through an evolution, and it comes under much regulatory, operational and financial scrutiny to see whether that is appropriate or not. The 340B market and the 340B benefits that our customers receive from 340B pricing help them fund health care across their communities, helps keep hospitals open and is absolutely critical to a large swath of hospitals across the U.S.' survival and operational effectiveness.

As such, we believe that it will stay around into the future even if some of the underlying change -- some of the underlying structures may change or evolve as we go forward. And as such, we are committed to supporting this marketplace for the future. Interestingly, through the course of this year, we've seen a number of different changes and proposals with regards to the market. First of all, we have seen new proposals for the rebate model coming in with a proposed start of a new pilot starting in the 1st of January for next year. And on top of that, we've seen different legislation proposed and moving into draft form in both the Senate and in the House in the form of the SUSTAIN 340B Act, SECURE 340B Act and ACCESS 340B Act. It's worthwhile noting that SUSTAIN, which is in the Senate currently and SECURE, which is in the House, have got bipartisan support.

And on top of that, have got a lot of commonality, which helps the pendulum swing back towards health care providers because of that benefit and the importance of health care providers to each of their communities. But at the same time, does hold health care providers accountable for transparency and reporting fairly and accurately on the 340B program, something which we both advocate for and support in our software and in our offerings with our customer base.

On top of these pieces of legislation that have been proposed going through the year, we've also seen the drug manufacturers themselves propose and enact unilateral restrictions on the 340B program. This has formed the fact of closing down the opportunities for hospitals to use contract pharmacies and insisting that hospitals provide data and patient identifiable data to those drugs manufacturers despite the fact the drugs manufacturers do not need these for their regular operations going forward.

On top of that, we've seen the states work to protect their hospitals in those areas by providing protections to contract pharmacy. And then we've then seen drug manufacturers challenge that legislation and in many cases, be unsuccessful in their appeals process against the findings of those challenges when they've been found to be wrong.

And lastly, we've seen proposals for centralized clearing houses for some of this data to get over the challenge of drugs manufacturers receiving data, which really they shouldn't be given access to and that coming through a centralized clearinghouse and being the arbiter of that data to make sure that there is no fraud and abuse in the system as we have seen and we have witnessed that there currently doesn't seem to be a high degree of that in any shape or form.

So what are the implications for our customers with regards to this? Well, first of all, a rebate model would be a change to the cash flows and the operating model of the 340B program over the last 34 years. Over the last 34 years, the 340B program has worked as a discount program where the hospital is able to purchase drugs for qualifying patients being able to purchase those drugs to be able to then see the benefit of the discount price being passed through to care into their community and care for those that can't afford it otherwise. It has stretched scarce federal resources as it has been intended to do from the initial legislation back in 1992.

On top of that, we've seen implications with regards to reporting for tougher compliance, tougher data gathering requirements and tougher audit requirements. We've seen tougher patient eligibility requirements being proposed and more complex processes for both approving patient eligibility and approving patient referrals through the system. Within specific programs, we've seen contract pharmacies both being protected under SUSTAIN and the SECURE proposals, and we've seen them restricted under the ACCESS proposals. And equally, we've seen the rebate model being either delayed or removed under SUSTAIN and SECURE, and we've seen it maintained or extended under ACCESS.

So with all that uncertainty, what are we likely to see? And what are we expecting to see over the course of next year and the following years. So first of all, we are expecting multiple legal challenges to the 340B program itself from both hospitals seeking clarity and from drugs manufacturers looking for change within that program. We're also seeing challenges and legal challenges to the rebate model that's proposed to come in from the 1st of January.

We're expecting though that those changes having analyzed and looked at both ACCESS, SUSTAIN and SECURE the 3 pieces of legislation that have been proposed will be more likely a gradual evolution rather than a big bang approach of changing everything. And part of the reason for that is we just don't believe U.S. health care can afford to lose the strength and the importance of the 340B program and the benefits that it provides not only to the hospitals, but to the patients in communities right across the whole of the U.S.

We do believe, though, that we would expect to see hospitals having to increase their evidence of valid claims and increase the complexity of the workflow so that they can withstand and be able to demonstrate auditability of their claims within 340B. And we do see that there will be pressure on 340B traditional third-party administrator revenue, and that will morph as these new business models come through. However, we believe that we can address those concerns with our software, which would be our Trisus OneLink - Medication software, which we've launched through the course of this year. Next slide, please.

So just touching on Trisus OneLink - Medication and those that are interested in finding out more of that, at the end of this presentation, if you go to the -- into the appendix, there are some links in there to some videos, which will give you more information, more detailed information about OneLink Medication. But what OneLink Medication is us taking our technology, moving our 340B expertise and utilizing our teams to move our 340B expertise into the Trisus platform to allow us to be flexible in both our reporting, auditability and transparency for our hospitals and for the industry on the behalf of our customers so that they can demonstrate and show the strength of the quality of their 340B claims that they make with regards to this.

It centralizes this onto the Trisus platform. It brings all of those workflows into one place regardless of the business models and the legislation, which is successful going through the coming years. With regards to that, it's adaptable to be able to deal with these changes, and it becomes a one-stop shop for our customers to be able to process all of their 340B claims coming through from there. Next slide, please.

On top of that, we continue to enhance and improve our revenue integrity offerings. We have built across all of our offerings a range of AI assistance and improvements to the software, and we continue to use AI, both internally to allow us to develop software quicker and more effectively and more efficiently, but also at a higher quality and in a greater depth with more performance than we've seen previously. And we continue to see this build through our product ranges with both launches that were made through fiscal '26 and ongoing development and launches that go into the new -- into this new year as well. If we then go to the next slide, please.

All of this is done by focusing on our strengths. And our strengths are leveraging the power of the data that we contain within our systems and working with our customers on those long relationships and those supportive relationships for us benefiting and doing everything to the benefit of our customers. And lastly, by playing to the strength to being able to be dynamic in this marketplace and address the real-world concerns of the uncertainty that our customers face by giving them certainty in both product offerings and the strength of our products and in the strength of our teams that have the knowledge to be able to back those products up and take that forward. Next slide, please.

And so drawing that all together, we believe that this indicates although we have had this reset back to our ARR number just now, we're giving a number of different areas where we can layer on top improvement and growth opportunity for the future, built on our strength, driven by the fact that there is a real market need from our customers who are under pressure from these changes in the rules and regulations from the complexity that comes through from the U.S. health care systems that are there, from having best-in-class products and having quality products that can address those workflows to make not only every member of our team more productive than every member of the customers' teams more productive so that they can address the needs of their patients.

By continuing to innovate at pace and at quality to be able to provide real offerings, which are game changers out there in the marketplace, this financial reset allows us to ensure that we will have growth in the future and that we can then have sustainable growth for the medium and the long term going forward with that.

And with that, I'll ask if we can take the first of the questions, please, and move to the next slide. Thank you.

[Operator Instructions] Here's our first question. Have any customer renewals been delayed or lost because of the cyber breach? And what level of EBITDA should shareholders expect if fiscal year 2027 revenue really is only around $185 million?

Okay. So first of all, with regards to cyber breach, no, our customers have been very, very supportive through there. The vast majority, almost all of them have been hugely supportive with us in going through there. Many of them themselves have already suffered breaches and understand the pain and the anguish that goes on and the responsibility that comes with having this data in the first place and so understand what we're going through from there. And the majority of them, if not all of them, have had multiple vendors almost on a monthly basis that have also been breached as well. So are very familiar with the processes that go through from that.

It is worth saying as well as when we discussed the breach and we worked with the breach with Microsoft, they actually relayed back to us that we were one of their few, if not the last of their global solutions health care providers in the U.K. that hadn't had a breach at that point. And so all of our interactions with third-party agencies that have been helping us with the breach as well have pointed to the team's performance and the ability of the team's performance through the course of this breach as being a top notch from there.

So no, at this stage, we haven't. We are not resting on our laurels, though, and we are working with each of our customers to make sure that we are addressing all of their concerns as quickly and as fast as we possibly can with regards to that.

As regards to costs, we are undergoing a review just now. Our expectation is that, that review will be ongoing through the course of this year. The impact of that will mean that we won't get back to our 30% plus margins by the end of this calendar year, but we will be somewhere on track to do that somewhere in the mid- to high 20% margins, but our exit run rate by the end of fiscal '27 will be aligned to take us into a 30% plus margin for fiscal '28. Next question, please.

What's the expected level of ARR for fiscal year '27?

$185 million as has been said will be the starting ARR.

How much is the cyberattack likely to cost?

We just don't know. It's too hard to quantify that at this stage. And I don't think it's in anyone's interest to speculate on this until we get a little bit further through the process. It's still very, very well in many ways for us.

Does the $185 million fiscal year '27 revenue guidance assume core subscription ARR stays flat with 0 transactional revenue? Or are you budgeting for a net drop in ARR?

No. So our transactional revenues because they are supported by underlying annual contracts are part of our ARR balance. So we model from a number of different angles and keep coming back to the ARR being the solid foundation that we can point to at this time. And as we see the uncertainties that Keith described start to work their way through during the course of the year, we'll be able to provide updated guidance, excuse me, at that point. But for now, we're not expecting a drop in our ARR. We're still modeling approximately 100% NRR. We're just giving ourselves a balance of risk as we look at our different revenue streams.

I presume you and your advisers have examined prior security issues in other companies and the impact such as penalties and time scales. And as such, what is the insight you have drawn from that specific to Craneware?

We've drawn the insight that companies that have not been negligent as so far we have been found not to be and that have been proactive in their security tend to do better than other companies and all the evidence shows that we have been in that way.

What are the steps Craneware would take to rationalize cost? Is there any potential bid for takeover from any investor?

So for the first part of that question, it's just too early. That review is ongoing for -- with regards to cost, but we are looking right across the whole of the company with regards to that. And the second part of the question I didn't quite -- sorry, could you say that again?

Is there any potential bid for takeover from any investor?

Any potential bid, nothing we're aware of.

And there are no further questions. I'll now hand over to Keith Neilson for closing remarks.

Thank you very much, everyone, for your time today. I mean it is disappointing that we are having the reset, but we do believe that what this does is this gives us a strong solid foundation to get back to growth again. We definitely -- we've said the phrase a few times over the last -- a lot of times over the last few days is not throwing the baby out with the bathwater. Let's not forget that the company has a significant amount of ARR is cash flow positive, does have a good balance sheet to be able to do this, has strong resilience and very good supportive customers with long-term relationships and best-in-class products to be able to meet the needs of our customers.

We are working hard to get through what we believe and what we feel will be relatively short term in the big scheme of things issues. We have had 26 years of growth to this point. We are deeply disappointed that we're flagging that, that may not continue on into this year, but we are doing everything both operationally throughout the business and personally throughout the business to make sure that, that is not the case and that we continue on with that growth record that we have.

So thank you very much for your time as it goes, and I appreciate everything from there and your support from there. Thank you.

That concludes today's call. Have a nice day.

Thank you very much for joining the Craneware interim results for fiscal '26. Just to remind everyone, Craneware produces software for hospitals across the U.S. for their operational and financial performance improvement. It's been a very positive first half to the year for us. Like everybody, I think there's been lots of dynamism and lots of change through the course of the last 8 months or so that has been both very exciting and something that I believe that the company has dealt with very successfully coming through there.

That has left us in both a financially strong position with $184 million of ARR, continuing with a greater than 100% NRR. Long-term relationships with our customers on average, 5 years with some of our top 10, actually significantly exceeding 20 years in what is now 27th going on to our 28th year of business.

Circa 90% of our revenue is recurring. We are profitable. We generate cash, and we've had a very positive first half performance, not just from a financial perspective, but particularly from an operational perspective as well.

Next slide, please. So just reiterating that, I think strong performance and momentum -- continued momentum through the period, both strong financial performance with good key progress across our key metrics, good sales performance, which has included both competitive wins and competitive takeouts, which we'll cover in a few slides' time.

And then by continuing to evolve and grow our product set, an acceleration in our TAM and a continued growing total addressable market for the company as well.

Next slide, please. Thank you. So I mentioned very strong sales performance in the period and a positive both expansion wins, but also new hospital wins and new pins on the map as well. We grew our new hospital wins to 12% from about 2% of our new sales in the equivalent period last year.

So grew that to 12% mainly through a mix of competitive wins where both in head-to-head in various different RFPs for some of our point solutions. But again, taking out point solutions in competitive takeouts and replacing them with the Trisus platform and then building upon that with other wins.

And obviously, the importance of that is that then becomes future expansion sales, which made up 88% of our sales as we went forward. Some of the examples from that really come from all areas of the business and from various different areas. The first that we've highlighted there was a 5-year Business of Pharmacy Suite win with a large stand-alone hospital that was looking at that stage to consolidate down on their vendors.

Our second one was a critical access hospital where the hospital itself, a Midwest rural hospital was looking to then increase the amount of transparency and their understanding of the data that they held within their organization. Thirdly, listed here as one of the examples is then one of our 340B takeouts and wins that won there for a midsized health system that was suffering from operational delays with 340B and a very poor capture rate from 340B and recognized from both referrals and from customer references coming through that we could do a better job for them.

And we started that off on a 3-year contract coming through. And then the last one was another competitive takeout, which was across medication formulary, but also adding in a competitive takeout in our Chargemaster space and in our -- with our Trisus Supplies Assistant as well. Again, updating and modernizing systems as we take them forward.

I think it's important to say that also with our new sales wins, we then also had a very positive retention rate with our customers with across all metrics that being significantly above 90%.

Next slide, please. There's been a lot made of AI, particularly in the last couple of months. And I think I'd just like to highlight from here some of the strengths of both the business and some of the successes that we've seen and also my own personal view that AI rather than being the death of SaaS is actually the acceleration of SaaS and the ability for organizations like us to more fully and better develop our software offerings for our customers and do that at pace and do that in an environment that is completely secure for them as well.

So the combination of all the items that we believe that are important for success for the future is, one, we already have scale. We're in about 40% of U.S. hospitals. We have a reputation. So we have earned trust with our customers with winning the KLAS award for the 15th time for our Chargemaster -- Trisus Chargemaster products in there. We've got that significant amount of expertise. We're embedded into our customers' workflows and functions already, and we drive significant return on investment for our customers as we go forward.

If you mix all of that then with our technology partnerships and our long-term work with AI, we then get a very custom and very quick productivity and additional productivity going forward for that, which then allows us to continue to advance that and continue to move our software forward at a faster pace, I would argue, than anyone else.

And I'll come on to specific examples from that. And we're often asked about are we worried about that disruptor in the bedroom using AI and trying to generate software equivalent to ourselves. And we would argue that actually, no. Just as the disruptor in the bedroom has embraced AI, all of our developers have embraced AI. Greater than 80% are regularly using GitHub Copilot and then the remainders are using various other tools supplied to us through the Microsoft platform that allow them to be far more productive in their day-to-day jobs.

But let's not kid ourselves that currently, AI is not generating enterprise-grade software. AI is able to generate some very interesting routines, but unfortunately, is not grading stuff that is qualifying for high trust that gives security and a solid platform for an enterprise-grade solution to be able to move on to that en mass.

And that, combined with then our ability with our 200 million-plus patient records and the data from the 40% of those customers, being able to utilize that to test our software and to QA our software gives us real hope and real -- well, gives us real strength and trust in our ability to keep ahead of the marketplace with our offerings.

We've seen that through accelerated productivity gains. Those accelerated productivity gains have given us new products. They've set our products and be able to advance our products. So our products have not stayed static during the course of the last year, hence, the awards that we've won through there as well and taking that forward.

And that's giving us the really strong confidence that we can stay significantly ahead of any potential disruptive competitors coming into the market, of which we currently still are not seeing anyone from there. If we go to the next slide, please. I just want to touch a little bit on 340B because there's been a lot of changes in the 340B market through the course of the last 8 months as well.

A real evolution that came in and was introduced by the government body, HRSA, back in midway through the period, the last period, which was to introduce a pilot program for a rebate model for select drugs to be able to trial this out. This was launched in, I think, in September of -- approximately September of last year or announced in September of last year.

And the reasons for this were pressure from the drugs companies looking for change within the 340B program. I think I want to continue to underline the 340B program's critical role in keeping hospitals and particularly rural and disproportionate share hospitals share hospitals open. Drug spend in the U.S. has massively increased in recent years. Since 2010, there has been probably an additional -- almost a doubling -- an additional $200 billion spent on drugs in -- by health care in the U.S., a significant amount, and that is continuing to grow and shows no sign of letup.

At the same time, drugs companies have taken probably some of the strongest margins out of health care. Drugs companies' average margins are north of 20% when the average hospital margin for a not-for-profit is between 1% and 3%. So a significant difference in where profitability is going. So there is definitely something wrong in the equation with regards to drugs purchases in the U.S. going through.

Drugs tend to be one of the largest expenses that hospitals actually face coming forward and the quickest growing expense that they face as well behind just their labor costs going through from there. Yet the 340B program is actually a very efficient way of being able to manage some of that increase in cost, particularly for those that most can't afford it across the U.S.

If we combine this with the political situation whereby hospitals themselves are the largest employers in just about every state, you get a triple whammy effect of hurting hospitals, hurts the electoral and the political landscape as well. And so despite the move in these evolutions, there is a real need for a program like 340B being in U.S. health care, and we believe that there will be something like this around for a long time.

The rapid introduction of the 340B rebate pilot program despite it subsequently being halted and paused so that they could relook at that pilot and relaunch that pilot again is a good indication of the evolution that companies like ourselves and any companies in this space have to be able to deal with and have to be able to develop around in order to benefit and for our customers to continue to benefit from the program.

Next slide, please. I'm very pleased to say that actually, in this, we were the only software vendor that was able to deliver a true, integrated solution in time for the original kickoff date, which was the 1st of January within this. And that was in response to the pilot and being able to take this forward. So utilizing AI tools, utilizing our data sets, utilizing the talent, the expertise and the specialist knowledge within our teams across the organization, we're able to mobilize that and produce a brand-new product of enterprise grade ready to be able to roll out and to be able to sell to our customer base and also be ready for that 1st of January kickoff.

Unfortunately, with the pause on that, that did mean that we had a little bit of a double whammy coming through. And I know when Craig gets into the financials, he'll be able to demonstrate that. But a little bit of a double whammy of that coming through. And with the pause in that, we not only had to take all of the revenue out from the sales of the brand-new product with regards to rebate.

But on top of that, we also had to pause the conversion of our shelter program from transactional revenue into ARR into long-term revenue because some of that revenue was obviously associated with the drugs that were coming out and the change of the 340B program coming through. And so until we get a bit of certainty on the remodeling of the Rebate 340 program and the rebate pilot program, we won't be able to do that AR transfer coming through. So that allows for our ARR to be a little bit soft coming through on that. Next slide, please.

Great. Thank you, Keith, and good morning, everyone. Well, as Keith just chatted you through, it has been a busy and eventful half, and that's not just for us, but for our U.S. hospital customers as well.

Through these next few slides, I will hopefully demonstrate how our annuity SaaS model, coupled with the investments we've already made and continue to make have delivered another period of healthy performance. So let's get on with it.

The headline metrics themselves. Revenue grew 6% to $105.7 million. That's flowed its way through to double-digit profit growth, demonstrating the operational leverage that exists within our business model. Adjusted EBITDA increasing 10% to $33.4 million and delivering a 32% margin at the top end of that range of 30% plus or minus 1% or 2% we have guided to through all these years.

We continue to increase our adjusted basic EPS. That grew 16% to $0.587, up from $0.506 in the prior period. Alongside this, despite the impact that Keith has just talked to, we have grown our annual recurring revenue. That now stands at $184.2 million, and that's up from $177.3 million this time last year.

Throughout all this, we have maintained our core financial dividend disciplines that you've come to expect from us. Our 12-month operating cash conversion at 85%, and we've continued to reduce our bank debt, reducing it by 26% to $23.4 million. So the headline message is growth, margin expansion, EPS up double digit and less debt.

We've done all this whilst delivering strong cash generation and strengthening the balance sheet. I move to the next slide, please. So in addition to the current year results, this slide shows the 5-year trend for our key P&L metrics. As you can see, there's a consistent step-up over time, and that's the whole purpose of our model, long-term sustainable growth.

Revenue has moved from just over $80 million in the first half of '22 to $105.7 million today. Our adjusted EBITDA has grown from $23.7 million to $33.4 million and continually delivering above 30% margins. We've seen a similar growth in our EPS. This steady, sustainable growth is driven by our multiyear contracts, our high customer retention and our net revenue retention. This is also coupled with our ability to expand within large health systems -- large and small health systems as they roll out Trisus and our 340B offerings.

Ultimately, we are building long-term value on top of high-quality foundations. Can I move to the next slide, please? On cash, there are a few moving pieces here worth just working our way through. On the face of it on the balance sheet, our cash and cash equivalents showed $40.9 million at the half year. But there was $30.3 million of cash in transit, and that relates to the customer monies we manage and we received that twice every month.

Last year, inevitably, that money came in just before December 31. This year, it was 5th of January. Well, that was the first Monday back at work. So 5th of January. But to get a true like-for-like comparison, you have to add the $30.3 million in. When we do that, we deliver a cash balance of $71.2 million. That's effectively flat against the $72.2 million this time last year.

I've already mentioned, whilst we've moved to a full RCF, we've continued to pay down our bank debt. That now stands at $23.4 million, down from the $31.6 million this time last year. Our operating cash conversion at 85% is slightly below that internal target we set ourselves between 90% to 100%. But if you go back historically, this level of seasonality is not unusual. We often see hospitals slow down cash payments as they run towards December 31 themselves, their own year-ends.

We monitor this as we start to see our cash collections pick back up in January. We've definitely seen that happen, and February has been a particularly strong month. So no concerns over the full year target of 90% to 100%. This cash conversion has allowed the Board to increase its interim dividend once again. So we're now proposing a 15p per share interim dividend, up 11% on last year and absolutely maintaining our progressive dividend policy. So we're funding investment, reducing debt and returning more to our shareholders. All of that is from internally generated cash. Can I move to the next slide, please?

So here, we look at the core foundation of our long-term growth, our recurring revenue. The bar chart on the left shows contracted recurring revenue in the year -- sorry, at the end of the period of $87 million, effectively flat on the $87.9 million a year ago. However, our nonrecurring revenues, our platform revenues have more than doubled to $14.6 million. That's from $7.1 million this time last year, and that's driven by the large part by shelter.

Keith has already mentioned how we couldn't actually take the 340B shelter revenue and call that recurring in the period. Remember, our platform revenues strategically are designed to become recurring. We start by recognizing revenue as it's invoiced. Once we see a stable pattern of usage and billing, we recategorize into ARR. The uncertainty of the rebate program and its announcement and then postponement cause, we have decided prudently to make no changes relating to shelter in any part of our ARR. So a large portion of that shelter revenue is classified as nonrecurring platform revenue.

And we've already mentioned, none of the rebate licenses we sold in the period have been included as ARR either. That has given us the 4% ARR growth compared to the 6% revenue growth we saw in the period. Also on this slide, you can see that our ARR is continually progressing. We started with $171.4 million. We're now sitting at $184.2 million. That's supported by an NRR figure of 103%, customer retention above 90% and continued expansion of our 6 Trisus optimization suites.

Can I turn to the next slide, please, to our detailed income statement. I already mentioned the 3 primary measures. But on top of this, it will be absolutely remiss of me not to mention the statutory measures, profit before tax up 29%, basic EPS up 38%. Our R&D spend is our investment on ourselves, and we continue to invest in ourselves. We've increased our R&D spend by 13% to $29.8 million, of which we've capitalized $8.4 million or 28%, very much in line with our 25% to 30% guidance we've given.

The slight increase on the level of capitalization to last year reflects the mix of products. We've moved several substantial Trisus and 340B initiatives from proof of concept into full development. These include our AI-enabled solutions that Keith will talk to in the next couple of slides and our 340B rebate project that whilst on hold will deliver value in future periods.

We continue to apply our tight controls to capitalization that I've described in previous years. We have an absolute focus on future economic benefit. If we continue down our P&L below EBITDA, EPS has benefited from lower net finance costs as we continue to delever the balance sheet. You combine that with an effective tax rate of about 23%, and we've delivered incremental growth of 16% on our EPS.

So we're not just growing our business, we're converting that growth into earnings per share for our shareholders. If I can move to the next slide, please.

To our balance sheet. Our balance sheet remains a strong software company balance sheet. The biggest change in the current period has been the completion of our share premium reclassification exercise. As a reminder, what we did here is through court approval, we got the share premium and merger reserves moved to retained earnings, effectively moving them to distributable reserves, giving us over $330 million of go-forward distributable reserves that gives the Board far greater flexibility in its future capital allocation decisions.

From a banking perspective, we continue to enjoy really good relationships with all our lenders, our consortium of 5 banks, and we've got significant headroom in our covenants. If I could move to the next slide, please. So bringing it all together, let's have a look at our capital allocation. Our business model, our strong balance sheet and high levels of cash generation, all combined to give us a really solid financial foundations and clear future revenue visibility.

With these factors, we're able to fund innovation that drives our own growth, keeping R&D at approximately 25% of revenue and focusing on priority areas where we see clear demand and strong ROI. We've got over $175 million of potential firepower in available facilities that, again, gives us added flexibility and options to move quickly in the future.

We've continued to deliver shareholder returns. We have our progressive dividend policy. So over the 4.5 years shown, if you take our dividends and the limited share buybacks we've done to date, we have returned over $66.1 million to our shareholders. On top of this, today, we're also announcing our intention to do a further $25 million share buyback, and there will be more details on that to follow.

When you combine all this with our high levels of ARR, our strong NRR and our independent ownership position within the health care IT marketplace, we believe we're well placed to support our customers as they navigate the evolving U.S. health care landscape, execute on the considerable opportunity we see ahead of us and all this whilst delivering for our shareholders.

So with that, I will say thank you, and I'll hand back to Keith.

Next slide, please. And one more. So one of the things that I think we want to make sure that is remembered is that there are 3 very strong catalysts for growth within the business. First of all is our existing customers and providing them more on the platform to deliver ROI for them that then allows us to continue to grow as well and drives our success.

As we've already mentioned, and we'll go into a bit more detail, we've got 2 new products launched that will be launched next week at the HIMSS conference, which I'll move on to. And all of our new wins that we've had this year are further expansion opportunities going forward into the future. We don't forget that other part of the market. I mean there is 60% of the market, although we are tackling that and we are growing that. We still see it an opportunity for us to have our software in all U.S. hospitals, and that's something we continue to go through.

The ongoing competitive wins and competitive takeout is very encouraging that, that is -- that long-term aim is very much achievable. And then lastly is adding on to the platform itself and providing new sources of return on investment for our customers and our customers' success will result in our success as we go forward from here. And so adding new products on and continuing to develop, of which we do believe that AI is a huge catalyst for -- and a huge enabler and a huge productivity tool for us as an organization.

We're often asked with the 25% of R&D spend is should we be reducing that? And our argument is no because what we're actually seeing is we're seeing opportunities to create even more products that are to the benefit of our customers that will be monetized in the future and will allow us to continue to accelerate our growth. So adding to the platform is a very strong part of what we can continue to do.

Next slide, please. So I mentioned 3 different areas of expansion for us and major increases in our Trisus capability. And this is one of the features that I believe that AI is really strong for our SaaS companies that already have preexisting offerings is not only analyzing exactly what our customers truly want from all of the feedback and all the information that we get from them, but then designing products in conjunction with them that we can then take back to them in rapid fashion in a very similar way to the way that we were able to do with our 340B rebate program.

On top of that, we've increased the capability and continue to bring forward the capability of our Trisus Assist offerings in our Chargemaster space and across the platform. We've added agentic capability and platform level orchestration within there to really have scalable agent integration. So the whole piece is all kind of coming together in there. On top of that, we're able to build application-specific AI tools that come through.

The first being our Trisus Labor & Productivity product with AI capabilities that allow predictively for hospitals to manage their workforce at a web -- sorry, at a ward level offering and to be able to take that forward there and give them true visibility in that with massive benefits to productivity within the hospital, freeing up clinical staff's time away from administrative duties into being able to care for patients and providing a far more stable and predictable scaling system, which is -- which provides a better work-life balance for the teams involved in the hospitals themselves.

And then on top of that next week at HIMSS, we will also be launching our Reimbursement Intelligence products. And that's where we allow hospitals utilizing the power of AI to be able to manage contracts to be able to understand these very complex payor contracts, bump that up against their internal data and be able to not only leverage those contracts and negotiations with insurance companies and payors, but also make sure that they're getting paid what they are entitled to be paid from those contracts as well and to be able to make sure that they understand and they keep on top of the management of those contracts going forward. So both of those 2 new capabilities resulting in new product lines, which add to our TAM and our expansion opportunities within our existing customer base.

Next slide, please. So with the launch of those 2 new major solutions and more to come through the course of this calendar year as we continue to be able to create products that will matter for our customers, capitalizing on both on the HIMSS conference, which is next week, the Global Health Information Management Systems Society Conference, working with our partnership for -- with Microsoft on that, both appearing on their stage and them appearing in our booth and doing work with us in our booth on our go-to-market strategy with them and our co-marketing with them.

And then continuing to leverage the strength and the power of the Trisus platform to provide really unique customer insights to delight and grow our customer base. We truly believe that by making our customers happy, by supporting our customers through the navigation of this evolving landscape in health care through here that, that is where we will find our success as well. And that's where our focus and the focus of my team is all based on.

Next slide, please. And so just pulling that all together, some really unique strengths underpinning the future of our revenue and our growth acceleration. We've got that strength of ARR, our NRR in the period coming through and adding to our overall expansion story. We've got continued opportunities in the market. As the market continues to evolve, that creates new opportunities for new applications to sit on top of the platform and for new partnerships to be formed for us to work with other vendors with the data that we have to be able to provide real value on behalf of our customers and for our customers.

Disciplined capital allocation from the group and from the Board, as Craig has discussed, and then continued innovation alongside those powerful partners to make sure that not only do we stay ahead, but we accelerate and continue to accelerate ahead in not only this AI journey, but the next wave of SaaS enabled by AI productivity, both for ourselves, but also for that productivity for our customers so that our customers, each individual user becomes more productive as well. And all of that means that the opportunity continues to be even greater ahead despite the fantastic success that we've had in the first half of the period, and we continue to see that acceleration in growth coming in the near term.

Welcome, everyone, as we continue our journey to transform the business of health care. We do this through a number of different software solutions, as many of you will know. We've had a very good period, which has really been part of the culmination of efforts that have been put in over the last few years coming to fruition and have resulted in a very strong both financial performance, but also we believe in a strategic performance. I'm fortunate that I've also got Craig Preston with me today, and he will cover more in detail on the numbers. However, and I think one of the very pleasing things for me is seeing the culmination of many years' worth of effort on what we would call our delight and grow project, which is where we make customers as happy as we can, and therefore, we benefit from that. And we're really seeing that in the average length of customer tenure.

Not only is in our top customer base got an average tenure of greater than 20 years, which I think the least of them is about 14.5 years with us. But right across our customer base, we -- if we're not already into double digits with that tenure, we're certainly rapidly approaching that as well. Why I mentioned that is obviously, I think one of the things we hope to that you will appreciate by the end of this presentation is the strength of the annuity SaaS model and the slightly uniqueness of that model, but also the benefits that can be derived from that model as we go forward.

As I mentioned, strong performance across the group. Craig will cover the financial performance as we see across the various different metrics. I think strategically, we've had ongoing strength in sales. And I think this is, as I say, is a culmination of a number of years of our crisis platform play coming together. And then that's resulted in then through the course of the year, 1st of July last year, signing our Microsoft partnership. And then that really creates an ongoing opportunity for us, not only to deepen our relationships with our customers across the board, our existing customer set, but also to penetrate into a new customer base as well as we continue to show the benefits that we can derive to hospitals. We're often asked about the political landscape across the U.S. And I think it is very valid to be keeping an eye on the political situation and the macro picture with health care is obviously worth keeping an eye on full stop.

But within health care, I think there's a couple of sort of underlying things that are worth tempering down some of the high emotion and some of the headlines that come out. The first is that there really is bipartisan support to try and drive better value through health care. Health care in the U.S. has changed over even in time the 26 years that we've been working in the field in that the operational and administrative part and component of the cost base has continued to grow. That's sitting at somewhere around about 40% of the operating expense of a hospital just now will be on that operational administrative stage. In days gone by, the hospital was probably less worried about driving efficiency through there and more worried about driving efficiency through on the clinical side.

But actually, with things like the pandemic and with just structural changes in hospitals, they now really need to address that operational administrative side, and that's where we come in. We've seen a number of executive orders come out through the course of the year, but there have been none that have really tackled that driving value through in health care. And so we have seen the political landscape, we believe, has been very positive towards health care. That's resulted as well in actually an improvement in not-for-profit hospital margins, almost tripling over the period with an increase from 0.4% margin, so relatively thin margins to a comparatively healthy 1.1% margin within not-for-profit hospital systems. This means that hospitals have to concentrate on return on investment. I'm very pleased to say we've returned something like $1.5 billion back to our hospitals over the course of the last 12 months, which is a clear 6:1 return on investment. So very, very pleased with that.

We continue to provide new and innovative insights for our hospitals. And that's really powered and at the heart of that is our data sets that we have and we've been gathering for the last 26 years. So we're sitting with about 200 million-plus patient lives coming through that data, and that allows us to both current solutions to provide new feature functionality onto our current solutions, but also develop the solutions for the future as hospitals continue to drive that efficiency through there. The way that we do that is by gathering data from a number of different sources across the hospital system. We bring that up into the cloud. That allows us to bring that data together to normalize that data and then to be able to analyze that data on behalf of that hospital, but also contextualizing that data for them.

We can then set a layer of optimization suites on top of that, that solve real-world problems for the hospitals and then provide those results that we've talked about for them. In the period, we've seen a really positive sales performance. Again, a mix of customer wins. The orange is net new wins, and I will come back to that in a second, but net new wins where we didn't have a contractual relationship with those hospitals previously. The first one that we've highlighted here on the right-hand side was a competitive takeout, whereby the strength and breadth of our platform, particularly on the 340B side and our independence on the 340B side allowed us to displace a major competitor within there for quite a significant contract win in there.

Second one was a brand-new hospital system on our revenue integrity side of things, multiyear commitment in there. Actually came about again from our thesis of if you make our customer happy, then they will remember that and then we will become a strategic partner for them. In this case, this was where someone from another hospital group that was very familiar with us and we've gone through that journey with them had moved to this hospital group and then have purchased our solutions in there and have expanded their solutions within there. The light blue one was a significant hospital group that's been with us for more than 23 years that was moving electronic health record system to EPIC.

We work very well with EPIC, but we can also monitor that transition from -- in this case, with this hospital system, they had multiple different EHRs before they're consolidating on the EPIC platform. So we're able to work with them on that and provide additional services on top of the solutions we're already providing for them. And then lastly is a very significant expansion all the way out to 2033, both a renewal of the contract and also adding additional hospitals into here through the financial success of this hospital group, then acquiring other hospitals and expanding our offerings right across all of their parent hospitals and all the children hospitals and clinics throughout there, providing a very good expansion through to 2033 as well. So a real mix of different examples there, all coming in, in the second half, adding on to our wins in the first half.

And with that, I'll hand over to Craig to allow him to highlight some of those financial wins and financial successes.

Thank you, Keith, and good morning to everyone. Keith has outlined how we're seeing continued momentum and improvement in our core marketplace. Hospital margins -- operating margins are indeed starting to normalize post COVID, but that doesn't mean they're not still facing financial pressures. There's definitely increasing cost pressures out there on them. They're still facing labor constraints. Hospitals know they need to be financially sound if they're to deliver on their mission to provide care to their communities. It's for that reason, we're still hearing from our hospital CFOs that they are still very focused on the fundamentals. And that really is where we come in.

So let's jump straight into some of our key performance indicators for fiscal '25. Fiscal '25 has been another strong year for us, underscoring the effectiveness of our ongoing platform strategy and the continued operational focus. Our balance sheet strength, combined with our underlying business model continues to be the foundation, and that's allowing us to drive acceleration of our growth rates, delivering double-digit growth in profitability. And indeed, at our ultimate earnings level, we have far exceeded expectations. We continue to benefit from our capital allocation strategy in the prior years. We are seeing our net interest charge in the current year dropped nearly $3 million compared to the prior year, and that has again contributed to our EPS growth.

And then as we start our new fiscal year, we've entered into a new unsecured revolving credit facility with our banking partners on improved terms, only further strengthening the foundations that underlie our future growth. So here goes. Revenue is up 9% to $205.7 million, meeting market expectations. I'll run through a breakdown of our revenue in a later slide. Within this, we are seeing continued success of our platform revenues. This is both with more customers signing up to these platform opportunities, these platform solutions we provide. They generate the initial nonrecurring opportunity, but we're also starting to see our other longer-term customers who have been on the platform revenue model for some time starting to transition to annual recurring revenue model. We still deliver professional services. They're both recurring and nonrecurring, and they continue to grow at a steady pace, but we're very focused on ensuring that they never exceed 10% of our total revenues.

And then when we look at our recurring revenue model, we do show a separation of our software licensing and our transactional revenue, but that is really just reflecting the different billing frequency, whether it be monthly versus annually because they're both very much subject to long -- underlying long-term contracts, and that's why they're part of our annuity SaaS model. And overall, recurring revenue continues to grow. Add to that, we have a solid base of further platform revenues that will convert to recurring revenue in the future.

Moving to profitability. We've retained our commitment to deliver above 30% EBITDA margin while continuing to invest in our own future. We do this by carefully managing our cost base and ensuring we're releasing the investment in any 1 year as we start to see our revenue growth coming through, and that allows us to keep to that commitment. And indeed, in the current year, adjusted EBITDA is actually up 12% to $65.3 million, above market expectations and delivering on a 32% EBITDA margin. I've already mentioned the benefit we're seeing from our capital allocation decisions and the impact on our net interest charge. But we've also seen an effective tax rate in the year of 18%. Those 2 factors combined with our EBITDA growth has directly impacted our EPS growth, and that's delivered a 22.5% increase in our adjusted and diluted basic EPS. So on the basic level, EPS increased to $1.161 per share.

Our annual recurring revenue, that has trailed revenue growth for a couple of years now. We were always confident that this was an impact of timing. And this year, we're really starting to see that growth come through. Whilst it's still slightly trailing revenue growth, the NRR of 170% -- I say, 107% and our over 90% customer retention rate means we're still very confident we will see further sales come through and those further sales will move from nonrecurring to recurring, and we'll see this metric grow yet further.

Operating cash. Our operating cash conversion remains high at 94% of our EBITDA. So EBITDA to operating cash conversion of 94%. That just continues to confirm the quality of our underlying earnings.

Our cash reserves is still very healthy at $55.9 million. Our capital allocation focus remains from the past moving forward to future years. As a result, we've continued to pay down our scheduled payments of our term loan. So $8 million of our term loan payments has seen bank debt levels fall to just below $28 million. I've mentioned post year-end, we've entered into a new facility. That actually consolidates the old term loan and the revolving credit facility into one unsecured facility that's on better terms and available to us for a further 5 years on a 3 plus 1 plus 1 basis. And indeed, that new facility has a further $100 million accordion accompanying it. That provides us with easy access to further debt financing if we find the right opportunity.

Let me move to the next slide, please, Keith. Turning to our business model. Consistent with prior periods, we continue to operate an annuity SaaS business model. That's a SaaS business model that you've seen elsewhere, but supported by long-term underlying contracts and a really high level of renewals at the end of those initial contract terms. The annuity SaaS model delivers prudent revenue recognition focused on long-term growth rather than short-term gain. It delivers really high levels of cash generation, as I've shown with our 94% conversion of operating -- operating cash conversions. It also has really high levels of future contracted revenue visibility. That revenue visibility is effectively an off-balance sheet asset. It doesn't turn up in the accounting records until we invoice and bring it into deferred revenue to be recognized in future periods. So that's out there under contract waiting to be recognized.

Our benchmark is approximately 90% of our revenues are recurring. And in this current year, we are slightly below that benchmark, but I'd argue that's a really positive thing. It's because of the ongoing success of our platform revenues. These initial nonrecurring revenues that we've now proven will convert to recurring revenue growth in future years, so we can keep that momentum moving forward. I think it's important to remind our audience today that our platform revenues are a result of us looking at new and innovative ways to leverage the Trisus platform and the extensive data set that sits within it. Now this at times will involve third parties. But then currently, our major successes are coming from using our own existing tools and our own data sets in yet more inventive ways.

Can I move to the next slide, please, Keith? So now to move to the primary statements. We've already discussed our revenue and EBITDA growth. So let's focus in on research and development. We are a software company. Research and development is the lifeblood of our future growth. It's one of the ways we invest in our own future. In the current year, we've invested a total of $57.3 million in research and development, and that's up from the $52.1 million we did this time last year. It continues to represent about 25% to 30% of our revenues, and that's how we see it going forward. That's about the benchmark we're operating to as we build out our own internal plans. We continue to capitalize a portion of the spend. Now albeit in the current year, it's a reduced portion because through our work on our partnership with Microsoft, we're looking at a number of new proof of concepts that will further enhance that platform revenue in future years.

Those proof of concepts have yet to achieve technical feasibility, so we're expensing the costs as incurred rather than capitalizing. Again, real focus on strict criteria around anything we capitalize. So in the year, we've capitalized $14.9 million, and that compares to $15.8 million in the prior period. I say it every year, but it's so fundamental. The key to capitalizing any development cost is that it will bring future economic benefit to the group. We consistently monitor how this is going to transpire, and we look at the total value of contracts for the Trisus products, those new products we're developing. And already, we're seeing that, that exceeds the total investment we've made in the platform. So we have more contracts than this cost. That means any new sales, any further sales we make of these products is only enhancing our investment case.

But our current year, those 2 effects, the increased R&D spend and the lower capitalization means that we've actually increased the P&L charge from research and development by $6 million. We've also had to absorb the increase that was came through, through the increased national insurance contribution throughout the year. So we've managed to do those 2 things and still deliver an 87% gross margin and an EBITDA margin of 32%. So I believe that's a real proof point that we're successfully balancing our investment in our growth whilst delivering on our returns to our shareholders.

Two other points I think worth mentioning on this slide. One is that we did see a reduction in our effective tax rate, it's down to 18% from 26% last year. Here, we were able to recover certain tax-related matters from the prior owners of Sentry. These matters have been charged to the P&L in prior periods because we couldn't assess collection as certain. As a result, we had to charge as we incurred them. However, we have seen that recovery. So that reversed in the current year P&L. In effect, we've had $1.5 million of prior year charges reversed in the current period. If we adjust for that, our effective tax rate would be 24% and that again reflects the tax deductible portion of share-based incentives. So going forward, I think that's probably around the benchmark we will see. And then ultimately, as we take all of that in context, all of this has contributed to a 68% growth in our profits after tax.

Can I move to the next slide, please, Keith? Quickly to adjusted EPS. We covered both these metrics. Both of these have grown in excess of 22%. We still clearly lay out the adjustments we've made on the right-hand side of the slide, and they're completely consistent with prior years. At the unadjusted level, growth rates are actually over 60%. So real sizable growth there. No change in the shares in issue of $35.5 million, and we do still have about 132,000 shares held in treasury, and that's as a result of our prior year share buyback program.

If I could move to the next slide, please, Keith. Let's have a look at the balance sheet. I said it before, and I'll say again, it is simply a strong software company balance sheet, healthy cash reserves, strong banking relationships, which have culminated this new unsecured facility on improved terms, and we have access to a further $100 million accordion should we find the right opportunity to deploy it.

If I can move to the next slide, please, Keith. Cash flows, again, here, more of the same financial performance. Operating cash generation at 94% of the adjusted EBITDA, sensible capital allocation decisions. And we continue to pay the appropriate level of tax in the appropriate jurisdictions with the year-on-year fluctuations in cash tax being a factor of timing and when we make our payments on accounts.

If I could move to the next slide, please, Keith. So bring it all together, how do we think about our capital allocation? It is a balancing act. There's different stakeholders out there looking for different things. So the decisions we've made in this current year, our banking partners, there's been a total of $10.2 million in loan payments and interest in the year, reducing our overall levels of bank debt. For ourselves, I've mentioned the $57.3 million invested in product development, again, supporting innovation and future growth rates. And for our shareholders, we paid out $13.3 million in dividends in the year, and we are continuing our progressive dividend policy. We're proposing the final dividend for this year to be 18.5p per share. That gives a total dividend for the year of 32p, up 10% on the year, rewarding our shareholders as we see the continued growth in our own company. So our strong cash generation, disciplined capital allocation is really providing that foundation for continued investment and future value creation.

And then the final slide for me, it's just a step back, a reminder of the last 5 years. It has been quite a 5 years indeed. And whilst it feels a lifetime ago, within this 5-year period, there was a global pandemic, our hospital customers were on the forefront of the battle against COVID. We've completed and integrated the Sentry acquisition, doubling the size of the group in the process. And that's never easy, but it's now successfully completed and in the rearview mirror. There's been raging inflation and rapidly increasing interest rates. And as all these charts show, we've successfully navigated these challenging times.

So for me, believe it or not as CFO, it's not just about the numbers. It's about the underlying momentum in the business, the combination of high customer retention, market opportunity, expansion within our existing base and the transition of yet more revenues to recurring. All of that is driving sustainable, profitable and cash-generative growth.

So with that, I'll hand back to Keith and say thank you.

Thank you, Craig. Really appreciate that. So as we look forward to the future, what have we done differently through the course of this year? Well, what we've really done is we've extended through a program internally, we call Delight & Grow. As I mentioned earlier, this is not rocket science. This is about making sure that our customers are getting the most out of our software and our solutions that they possibly can. Happy customers and customers getting a return on investment, then have capacity to be able to then be successful in their own right, treat the patients within their communities. And therefore, that success then drives their ability to be able to then work more with us, which will drive our success. And that's a virtuous circle.

As I mentioned, we've already -- we already see hospital executives moving and team members moving from one hospital system to another, and we get taken along with them because we've been a contributing part to their success previous to that. Delight & Grow just means we've aligned our customer support teams and our customer engagement teams with -- across our customer portfolio. And then from there, our direct sales teams, bringing together everything that relies on the contact with the customer and promoting that success through sales marketing, both our strategic partnerships and then also our Microsoft relationships and our corporate development team all coming together under our Chief Growth Officer.

So between the Chief Customer Officer and the Chief Growth Officer, really dealing with our customers and driving us forward at pace. Why have we done this? Well, actually, we've done this because we've seen lots of success in doing this with our top customers. On the chart on the left-hand side of this screen here, you can see those top customers as you look at them over the last 10 years. We've taken them all the way back. We've analyzed pre-acquisition whether there was revenue on the Sentry side, whether there was revenue on the Craneware side and also where they were joint customers where there was combined revenue there. And then we've seen that effect going through. The acceleration is really twofold. One is the start of our cross-sell, which you can start to see coming in, in sort of '22 and through our fiscal -- into our fiscal '23 results.

And then the next big step-up is as we've moved onto the Trisus platform. And what that's really allowed us to do is to turbocharge our land and expand strategy. Historically, we would have -- when new products were brought to market, we would then wait until hospitals were approaching the end of their multiyear contract often 3 to 5 years out. We will then present new products and negotiate the renewal at the same time. And what that would do at that point is that would then result in growth opportunities for us. Now with having the hospitals data there, we can demonstrate far earlier on in that cycle and the benefits that they will get and therefore, drive growth for them based on the back of success that they will get and return on investment that they will get from our product.

When we look at that, that's been a sixfold increase in the size of our revenue opportunity with these customers that we've put through. And we believe that over the very near term, there's probably -- and with existing products, there's probably another 2x growth that we have within that cohort of our most successful customers. As you will see and as we have often said, this is by no means ever straight line. It's real world, not spreadsheet on this. So this is actually data that we have delivered on already. So you'll see various rates of growth. It's not always straight line, but it reflects the reality of the hospital marketplace. And we -- as I say, we believe we've got another doubling. Importantly for me is that these top 10 customers, there's not a heavy dependency on them, they account for about 30% of our total revenue.

And then when we look at doing that same analysis that gets us at 2x on these top 10, and we do that right across our entire customer base, the blended rate is sitting at about 8x growth opportunity for us to be able to deliver to our customers with existing opportunities. Now bearing in mind that top 10 is 20-plus years on average with us. We think that, that is something that's worth emulating. We are enhancing those relationships utilizing AI and our Microsoft partnership. But what that really means is it's all about catalysts for growth for future. And so we believe that this very much proves the case for Delight & Grow and why we've doubled down that investment through the course of the period with that alignment that's come through.

So I've mentioned the first of our 3 catalysts for growth, that's working with our existing customer base and promoting and demonstrating the return on investment they can get from our existing solutions, which we already have available. We also have 60% of the market that we believe that we can penetrate and we can work into, which again should be a big growth for us in future periods. And then on top of that, the platform has a robustness in it that we can then layer on other solutions through there. And we can do that through our build partner -- or build, borrow or buy strategy. So with our platform, we can add on third parties into there. We can trial third parties to see if we're going to be able to deliver return on investment for our customers.

We can do M&A through there, and we can generate revenues and more opportunity for our sales team, but more interestingly and more importantly, more opportunity for our hospitals to improve their operations and transform from there. We also see Microsoft as being a significant catalyst, particularly into new hospitals and is consolidating into new hospitals where it's a win for the hospital because they get more effective compute power as we leverage the Microsoft relationship. It's a win for Microsoft because they get into more hospitals and potentially get into some of the biggest consumers of AI in the future. And it's a win for us for success for us getting our solutions out there as well.

And we mentioned the Microsoft relationship again because we do think it's a very unique relationship with Microsoft. We have weekly calls between the Microsoft teams and the Craneware teams with regards to strategizing and synchronizing messages across the customer base and across potential targets -- selling targets from there. We are operating and organizing joint executive customer advocacy meetings. And in fact, actually, we're co-hosting with Microsoft across in Redmond and Seattle later this year, a number of our customers there as well where we can work through the benefits of health care and how we can continue to improve health care and transform health care for the future. Although we will say that the Microsoft relationship has been very strong. It is still early stage, and we still think that the opportunity is very much ahead of us with that.

So those joint marketing and co-sell initiatives have really commenced in earnest during the period and will continue on through the course of this year. At the same time, we are focusing on utilizing AI on a number of different strategies within the organization, everything from my office and trying to make me a little bit more efficient and more effective in my role there in both testing strategy and developing strategy and continuing on with that through our engineering teams and our development teams, through our customer service-facing teams, utilizing AI to make them more efficient in their day-to-day role, taking away some of the drudgery and automating where we can so that every individual has not only got a more exciting role, but is also more effective and more productive in each of their roles and mirroring that on behalf of our customers with our Trisus Assist solution, which then will continue to be rolled out across all of our Trisus applications, which really sits as a coworker with them to be able to help them make informed decisions as it goes forward.

And then lastly, with AI, as utilizing AI on top of our data sets to spot new product opportunities to be able to help our customers, to be able to really drive home and successfully transform the business operations of their hospitals for that as it goes forward with those unique insights.

And with that, I'll come to my last slide, really to say that today's results are really, really pleasing for us, not for any reason because we doubted them, but because what we can do is we can actually demonstrate what we've been saying and we have been building on for the last few years and particularly since we came out of COVID in May of 2023. So it's that building on that's there. It's the clarity and the visibility that those results give us going forward and our confidence that we can continue to and our passion is to delight our customers in its own right that will create success for us as a group.

So as we say that NRR growth that we're seeing, the ARR growth that we're seeing, continuing with an evolving opportunities which are still out there for us, the disciplined capital allocation that's brought to bear by Craig and his team and by the Board, ongoing investment in innovation, not resting on our laurels at any stage, but driving that forward, all means that we have this huge opportunity in front of us. And actually, I would argue very significantly a growing opportunity in front of us as well. And so we are very positive about the future and very excited about the future and being able to work with our customers to improve the role that they -- the very important role that they have within their communities.