Craneware Aktie

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.