Welcome, everybody, and thank you very much for joining us this morning as we announce our first results as a public company. Today you've got myself, Jonathan Thomas, and Heidie Giles taking you through the agenda. I will talk through a little bit of an introduction to Optima Health and our business. I'll touch on the FY20, H1 half-year 20 25 financial headlines, kind of get my words out there. Then I will touch on our market overview and our strategic focus. I'll then hand to Heidie, who will talk through some of the details on the financials. Then Heidie will hand back to me, and I'll touch a little bit on our recent progress. Without further ado, introducing you to Optima Health. We are the U.K.'s leading provider of occupational health and wellbeing solutions.
So we operate a technology-enabled platform, which delivers on a national basis. So we deliver clinic-based, remotely, digitally, as well as through our mobile units, as you can see there, around 38 mobile units that we run. We deliver the full breadth of occupational health and well-being services, and we do that across a well-balanced portfolio of over 2,000 clients, which itself covers around 5 million of the U.K. workforce. And we do that through our employed people. We've got about 1,500 employees, of which 800 or so are directly employed clinicians. So a little bit more in terms of detail, in terms of what's the crux of the services that we deliver as a business. So our purpose is to optimize workplace health and well-being. So we implement multi-year health programs for our clients where we monitor, report, and advise on occupational or workplace-related health issues.
So that might be supporting organizations comply with the Health and Safety at Work Act, running health surveillance programs, fitness for task medicals, and immunization programs to protect their employees. It also might cover supporting organizations improve the productivity of their workforce. So in its most simple form, getting people back to work, recommending adaptations in the workplace, and ultimately rehabilitating and treating people so they can get back into the workplace. So our services, by their nature, are very essential, and that leads and underpinned by regulations. So that leads to a very non-discretionary and recurring demand for our services. Which brings me on to a few of our value drivers, if you like, that underpin our investment case. So I'll touch in a few slides' time.
We've got a large and growing market with favorable dynamics, which I'll touch on both in our core market, our core addressable market, and also in the adjacent markets. We've got a profitable, contracted, and recurring revenue model, which leads to our earnings being very recurring in nature, forecastable, and as such allows us to invest in our growth strategies. We've got an extensive track record of M&A and integration. We've integrated 12 businesses over recent years, nine in the past 18 months or so. Underpinned by our technology, clinical capability, and quality, that has been really successful, and we've got a great experience of being able to do that. And again, that will be a key focus for our growth as we go forward. And then finally, our technology platform, we're digital-enabled, and our operating model is really flexible.
And we think this positions us really well to be able to exploit and benefit from some of the growth opportunities as we look forward. Moving then on to our half year financial results. So we delivered robust revenues of GBP 50.8 million in the half, which is slightly down on our prior year. That contraction due to a couple of contract losses, which we previously disclosed, which happened in a prior period. If you look at our underlying position and take into account our new business wins, that suggests excluding those two contract losses, an underlying growth rate of 4%. And similarly, on adjusted EBITDA and EBITDA margins, despite that contraction in revenues, we've been able to deliver a robust and resilient adjusted EBITDA number, as well as maintaining good EBITDA margin.
And then really pleasingly, if we look at our new business, we've delivered in half one of FY 2025 annualized new business revenues of GBP 3.6 million. That's significantly up 24% on the same period in the prior year. So a big, big step forward in terms of new business wins that we've been able to deliver. And then in addition to that, we've won a further GBP 3.1 million of annualized business since the period end, so since 30th of September. So well on the way to continue that trend for half two of FY 2025. Operationally, we've touched on previously, we have completed all of our operational integration activity. And what that means in our financials is our restructuring and integration costs have significantly reduced. So they were GBP 1.1 million in half year 2025, down from GBP 4.4 million previously.
And we reconfirm our position that we've completed that activity now, and there will be no further. Don't anticipate any further restructuring costs from half two onwards. And again, pleasingly, what that means, if you look at a statutory operating profit or loss perspective, our half year 2025 position of a GBP 0.4 million statutory operating loss includes a charge of GBP 2.8 million, which related to our recent demerger and listing fees, which are one-off in nature. So if you were to exclude those two items, our adjusted statutory operating profit would be GBP 2.4 million, which is a big step forward at a bottom line profitability perspective. And then finally, our balance sheet. We've got a nice and strong balance sheet.
As you can see there, our net debt has reduced from GBP 34 million in the previous half to GBP 0.6 million in half year 2025, which again stands as in good stead to support our growth ambitions. Moving then on to a market overview and our strategic focus and outlook. Looking then at our market, so what have we got here? So we've got GBP 150 billion combined economic cost of absenteeism and presenteeism in the U.K. So that equates to about 5.7 days per worker off absent. That's the highest since it's been around 2004, 2005. So a huge problem for the organizations and companies in the U.K. Set against a backdrop of NHS waiting lists being high and 2.8 million economically inactive, that presents a favorable outlook for demand for our services as we go forward.
Looking then at the size of our core addressable market, we've got a market that is GBP 1.2 billion in size, forecast to grow by 4% per annum through to 2028. And then I'll draw out two really key aspects, if you like, in terms of if you look at the doughnut over on the right-hand side, there is 57% of our market, which is outsourced, which presents a huge opportunity for us to continue to first-generation outsource occupational health provisions from companies and organizations. We are seeing an increasing trend, as you can see there on our growth drivers, and we see that as an opportunity to accelerate that headline market growth number. And then similarly, we have it's estimated 80% of small and medium-sized enterprises don't have any occupational health provision at all.
So again, we see that as a key facet and a key market driver as we increase the focus on health and well-being in a lot of companies and organizations that will be able to grow that area of our business. Against the macro level, if you like, from a favorable population dynamics, if you look at the workforce generally, we have an aging population that is progressively less healthy than it was previously, which leads to increasing demand for our services and increasing complexity of what we see come through our door. All I would say on the last part, in terms of we talk about 23% market share is covered by the four largest players. That presents lots of opportunity of lots of other companies from our M&A strategy as we go forward.
There are lots of opportunities for us to look to consolidate into Optima as we look forward. Moving then on to our, what's our strategic focus. So we've got a well-defined growth strategy, and we're targeting 25% market share of our core addressable market and looking to expand beyond our core market. A number of strategic fundamentals and track record, strong market dynamics, as I mentioned on the previous slide, and a well-invested scalable platform poised to support that growth. Coupled with a track record of M&A and integration over recent years, we think we're really well positioned. And our focus is going to be on those elements on the right-hand side there on the PowerPoint. We're going to focus on core market organic growth, as we've touched on the new business wins previously.
That will involve winning new contracts and market share from competitors, first-generation outsources, and looking to sell in additional complementary services to our existing clients. We will look to extend into new markets, very complementary stuff and similar clinical services that we're able to deliver in our core market. Then we will look to accelerate that with M&A. Focus-wise, from an M&A perspective, we'll be very discerning and quite targeted. Our areas of focus will be consolidation bolt-ons, as we've done very recently, leveraging our platform, using our technology systems and our operating model to deliver really good margin accretive bolt-ons. We will look at complementary services, those that present good opportunities for revenue synergies, so additional services that we're able to sell alongside our existing services. We may also focus and have a look at acquisitions that take us into entry into new markets.
So that's our core strategic focus and our plan for us to get us to 25% market share level from a growth perspective. We think we're really well positioned to benefit from that focus. And I'll hand over to Heidie now to talk you through in a little bit more detail on the financials.
Okay. So on this slide, you can see some of our key financial numbers. So as Johnny mentioned, our revenue is at GBP 50.8 million for half year 2025. That reduction compared to half year 2024 is due to the two contracts that we've mentioned. So one of them, we lost at tender, which exited at the end of half year 2024. And the second reduced their scope of services at that same time. So as a result of that reduction in revenue in the green graph, you can see that gross profit is at GBP 15.8 million.
And as a gross profit margin, that's 31%. Looking to the left at the adjusted EBITDA in blue, the adjusted EBITDA for half year 2025 is GBP 8.7 million. Now, through managing our cost of sales and our administrative costs, that adjusted EBITDA margin is 17%, which is the same and is consistent with half year 2024. So just to clarify for us, our adjusted EBITDA, that is EBITDA adjusted for exceptional costs, including the cost associated with the completion of the integration activities and also the cost relating to the demerger from Marlowe PLC and the listing on AIM. Just looking at revenue in a little bit more detail. So you can see here on the first line, we've got the reported revenue of GBP 50.8 million for half year 2025 compared to the half year number for 2024 of GBP 56.8 million.
Now, when we adjust both of those for the two client changes, so client A lost at tender and client B who descoped their services, you can see that the underlying revenue for both half year 2025 and half year 2024 is GBP 49.4 million. So that appears quite flat. However, as Johnny mentioned, we've had really good success with winning new business. And if we look at the new business, which we've won and is contracted for at this stage, but has not yet commenced, so there's no benefit in our numbers. The benefit of that on a half year would be GBP 2.8 million of revenue. Slightly offsetting that, business which is included in our half year results, we're aware that the business is exiting, would be GBP 0.7 million. So net benefit of GBP 2.1 million, which is really good.
If we adjusted our underlying revenue to see what that looks like moving forward, that would be half year revenue of GBP 51.4 million compared to last year of GBP 49.4 million, which is where the 4% organic growth comes from. Looking at our statement of comprehensive income, so our P&L, you can see the revenue number that we have talked about. If you look at the cost of sales, you can see that we have reduced those from GBP 38 million down to GBP 35 million in response to the reduction in revenue. We have also managed to make some good improvements in our administrative expenses. You can see they have come down from GBP 14.3 million to GBP 12.3 million. Also, as Johnny mentioned, the exceptional items reduced from GBP 4.4 million down to GBP 3.9 million.
When you look at that in the half year 2025, we have a loss from operations of GBP 0.4 million. However, as was mentioned earlier in the presentation, within that exceptional cost, we had a real one-off expense of the demerger and listing of GBP 2.8 million. And if you look at that loss from operations and adjust for that one-off GBP 2.8 million, it would actually be a profit of GBP 2.4 million, which compared to last year being a loss of GBP 0.1 million shows the real underlying benefit that we're delivering in our results.
Looking down at the next section of the table, which focuses on the adjustments we make to get to an adjusted EBITDA, you can see that the amortization of acquisition intangibles, amortization of intangibles, depreciation on PPE, and right of use assets are all quite consistent with the prior year and are all where we would expect them to be. And then right at the bottom, as I mentioned previously, you can see that we have managed to retain that 17% adjusted EBITDA. So we consider that to be quite a resilient performance. Just having a slightly closer look at the exceptional costs. So within that GBP 3.9 million of exceptional costs in half year 2025, we have restructuring costs of GBP 1.1 million. Now, these are the final restructuring costs relating to the integration of the legacy businesses, which were acquired under Marlowe PLC.
Those activities completed in June this year, and we don't expect any more. We also have the demerger and listing costs of GBP 2.8 million. Those costs include the likes of legal costs, reporting accountant, and nominated advisor fees. The main message here is that no further exceptional costs are expected in 2025 and from half to 2025. All costs relating to the demerger and listing from Marlowe were either fully incurred and invoiced at half year or fully provided for. That's fully accounted for in the accounts. As we mentioned in previous presentations, we just want to reiterate that we've maintained our integration and change team. The team who will focus on activities like transitioning new customers, but also any M&A work in the future.
The costs of that team from the start of H2 2025 are spread appropriately across cost of sales and admin costs and will not be stripped out as an adjustment. Just a quick look at the balance sheet. What's really important here to note is that when you look at the bottom of the page, we have a much strengthened balance sheet following the demerger. Our net assets at half year 2025 are GBP 165.7 million, whereas at the end of the financial year, 31st of March, that was GBP 127.6 million. One of the main reasons for those movements is around our debt and cash. As mentioned earlier in the presentation, we've had a reduction in net debt from GBP 34 million to GBP 0.6 million when you exclude leases.
One of the contributors to that was as part of the demerger, the GBP 55 million of related party loans was released. Now, what you may also notice is we have GBP 10 million of our GBP 20 million RCF drawn and GBP 9 million of cash at half year. So following the dividend paid to Marlowe, we utilized some of the RCF for working capital. And the other main movement on the balance sheet is just around trade and other payables, where you can see there's a reduction and that relates to the MIP.
So overall, a really strengthened balance sheet, and we think it puts us in a really good position moving forward. So with our cash flow and our net debt, so you can see here that net cash generated from operations is GBP 0.1 million. Within that, we do have a working capital outflow in the period.
It's normal for us in H1 to expect a working capital outflow. Some of those reasons are we have any bonus payments, which was GBP 0.9 million in this period, will go out at the start. We also have a number of large prepayments we make every year around insurances and IT costs, and so they are slowly unwound during the year. In addition, we tend to see that our receivables and accrued revenue increases at half year compared to year end, and actually the increase this year of GBP 0.7 million was a lot smaller than the GBP 1.2 million in the prior year. In addition to that, we've had a few extra movements. You can see they're impacting working capital, which is really around timing, a decrease in trade payables, some movement in customer deferred revenue balances, and also a reduction in our VAT.
That is just the VAT we hold on our balance sheet that we owe over to HMRC. That reduces when our revenue changes or when our mix of exempt versus standard supplies changes. From that GBP 0.1 million of net cash generated from operations, you can see we then also paid the dividend to Marlowe of GBP 20.7 million, and we had the related party loans released of GBP 55 million. That, along with the other movements mentioned around tax and CapEx, results in that improvement in net debt from GBP 34 million down to GBP 0.6 million. In terms of some guidance of where we think some of our numbers will land by the end of the year, we've talked about the exceptional costs. We've incurred GBP 3.9 million of exceptional costs this year, and we don't expect any further costs. That will be the number.
Our CapEx expenditure, we expect to be around GBP 3.7 million. Now, that includes the ongoing development and enhancement of our portals, our annual refresh of mobile delivery units, computer hardware, and also the fit out of our new London site that we're working on at the moment. Our amortization of acquired intangibles remains consistent at GBP 6.3 million, depreciation and amortization of GBP 4.2 million. We would expect our interest on our RCF to be between GBP 0.4 million and GBP 0.5 million if interest rates remain as they are today, and we are subject to a tax rate of 25%. That is the summary of the financials, and I will pass you back to Johnny now.
That's brilliant. Thank you very much, Heidie. J ust to close before Q&A, I will talk you through some of the recent progress that we've made in a number of areas in each of these pillars that you can see here. I've said previously, and I'll say again, our approach is to attract and retain the best people in the industry. We have invested quite heavily in a number of areas, including service excellence, people development frameworks, and also our Grow Academy, where we're able to bring on board non-occupational health qualified clinicians and put them through an industry-leading course to get them to qualification to support our growth. That's an area that we will continue to focus on as we go forward, which brings me on to growth. As I mentioned earlier, we've had a lot of success in the half from a new business perspective.
So we've won GBP 3.6 million worth of annualized new business, 24% upon the prior period, and we've made a really good start in quarter three of FY 2025 with GBP 3.1 million either won or at preferred bidder already as we talk today. That represents an underlying growth rate as we stand at the moment. If you adjust for those items and consider those items, we're around 4%. And underpinning that from a go forward perspective, we've got a pipeline that we're actively working on at the moment of GBP 11.5 million of annualized revenues. So all looking good and favorable from an organic growth perspective for the future. From an inorganic perspective and the M&A opportunities, as we've mentioned previously in our disclosures as well, we have one acquisition in exclusivity that we're looking to complete on in the coming months.
There are a number of other opportunities aligned with our areas of focus that we're in discussions, targets identified, and we're in discussions on at the moment. And then also some good news from our adjacent markets. I've previously as well talked about our digital assessment routing tool or our DART tool and its use in an NHS environment. We breached the 1,000 patient market in that trial within an NHS. So really significant progress there in that DART expansion opportunity. Operationally, we have completed the integration of our legacy businesses, everything from technology platforms, operating models, branding, etc., and coupled with completed our site rationalization of all the sites that we were looking to bring together. And in addition, we're looking to expand our sites.
So aligned with that new business growth, we will be opening a new London facility in February of next year, which is going to cater for about 14 clinic rooms and enables our delivery in London. Clinical delivery is at the heart of what we do. So again, in this half was the first time that we went for what's called SEQOHS accreditation in our industry as a combined business. And we've included there on the slides a number of excerpts in terms of from that report, excellent clinical governance, excellent customer service, two of the key headlines there, which is really pleasing. And then performance-wise, operationally, really strong and resilient. So strong KPI, quick turnarounds for appointments, and good robust delivery. Tech and transformation, we've also progressed quite significantly. Obviously, business as usual and continuous improvement.
We've made security enhancements to our portal, quality management system enhancements, and propositionally, we've improved our services for our clients. But slightly more transformationally, we've also kicked off a number of proof of concept studies in areas both clinical and administration, whereby we're looking at how we can improve that clinical assessment, support our clinicians and their job design to get the best out of them and the best quality output for our customers. So we look forward to reporting on those proof of concepts at future engagements. So before we open up for Q&A, Heidie and I and the wider team are really proud to report our first interim results as a public company. Good, robust, and resilient numbers in line with expectation.
Key headlines being, we've completed that integration of those businesses, which means our restructuring costs and integration-related costs have fallen away, which means our statutory profit is much cleaner and improved on a go-forward basis at a bottom line. We've got strong new business wins. I've talked about what we've won in half one, but also a strong pipeline to support future growth. And as I mentioned at the outset, the dynamics for our market and our position in the business is really good. So we're looking forward to delivering on some of those strategic objectives, both organic growth and also M&A in organic growth. And we look forward to updating you in due course. So we'll open up for Q&A. Julie.
Thank you. Julie Simmons, Panmure Liberum. On M&A, are you finding now that you're an independent company that's changed the opportunities that you're able to see, or is it too early to tell yet?
I wouldn't necessarily say it's changed the opportunities that we're able to see. I think it's definitely put, obviously, there's no listed peers in terms of on the stock market. So it's definitely made us people more aware of us as an organization who obviously we put our strategy out there of what we're looking to do. So over the past three, four months or so, there's probably been a dozen companies in terms of that I've had discussions with in terms of that potentially might look to be exiting their businesses in the future from private equity or private ownership, etc. So plenty of opportunities remain out there, Julie.
Then just on the changes in the budget on a National Insurance basis, clearly it's affecting you. Has that changed your customers' thoughts at all on the discussions? I'm thinking particularly with the SMEs, it's probably slightly more of a headwind for them. Is that changing your discussion with new customers?
So Heidie, I'll let you talk to kind of how we might look to mitigate that in our own business and pass on that in terms of in the future. But from a, our services are very non-discretionary in nature. So they're related to Health and Safety at Work Act, regulatory type medical health surveillance, which companies have to do. There's no choice around doing that unless you want to break the law in terms of. So we're not really seeing any reduction in that.
And we don't really deliver project-based work where people can choose whether or not they do. It's very repeatable in nature. So if anything, in terms of since the IPO and through the budget period, we've seen a little uptake in our volumes that we're seeing through the door. So v ery, very non-discretionary in nature, our services. So not really at this stage. Heidie, do you want to just touch on the National Insurance point in terms of how we go about mitigating that and passing that on, etc.? So I'll just to cover off.
So in terms of the actual costs that we've got coming towards us for that, from the time that it was announced in the budget, we have updated our pricing model. So any new tenders we're going for or any price renewals we're doing account for that extra cost in our business.
So obviously, there will be that short-term impact because it will take a while for new tenders to come in or for those pricing changes to benefit us. But that has been built in, and I think we will be looking at any even extensions we do with customers on current contracts to see where it's possible to adjust for that as well.
Hi, Christian Glennie from Stifel. Just thinking about new wins and the mix and obviously targeting increased market share. In terms of that, you've got 80% of the market that's not using any occupational health sort of program, particularly. Where do you see the mix of the wins? Is it from mostly organizations that have already made that step, or is it converting new organizations? What's the sort of answer there too?
So I think it will be both. We only report from a new business wins perspective on anything that we actively go out and tender. Generally speaking, that's a contract size of GBP 100,000 a year or more. Those are things that we've perhaps had a tender for, we bid for, gone on one and converted and what have you. Alongside that, where we don't report in those new business numbers is the SME market, which is obviously much more smaller opportunity. Following the integration of our activity, which was a big undertaking over the past 18 months, we've now focused our marketing, if you like, on that area. We're not really have done any proactive marketing on that regard in terms of over the past 18 months.
However, now we're actively going out with our model, with our propositions to go and market our services to those SME organizations as well and seeing some early success of growth in that area, so actually, the numbers that we quoted in the presentation, the £3.6 million is just the larger and bigger tender-based contracts. We're also obviously looking to grow that organic book of SME business as well, which will be generally speaking non-tender-based activity. Thank you. And then in terms of the, you talked about being able to grow your skilled clinicians and you've got programs there to do that. You've got the 800 today. How much to support your growth, how much do you need to grow that clinician base by? And is that sort of a KPI that you should be tracking as well? S o our clinical capability is key to our growth.
We recognize that actually a number of years ago. Our GROW program has been in place a number of years. Obviously, we recruit experienced and qualified hires, but we are increasingly now recruiting from other clinical specialties that perhaps don't have OH occupational health experience previously. We have our own accredited Faculty of Occupational Medicine-accredited course. So once they've been through our course with us, they can also go on to get the qualification, etc., which we're seeing as a great way to support that growth. Of course, we're always looking. We talked about some of those proof of concepts as well around actually how do we deliver our services in a better way as we go forward to be able to support that growth as well.
Thank you. One final one. Just to understand a bit more on the admin, reasonable reduction in the admin costs between the periods. W hat's been driving that?
So I think it's a mixture of items. So towards the end of probably calendar year 2024, we underwent quite a restructure program. And I think some final parts of that benefits coming through this year that it didn't all hit last year. So that was across the business. I think some things to do with the integration that are now coming through and delivering benefit. For example, when Johnny talked about the accreditations we need, historically that sits as an admin cost and historically we might have gone out and got five accreditations. Also, as part of those integration programs, we've further reduced any duplicate sites. So there's been benefits like that.
And across the board, we're quite conscious and being quite careful around external costs we incur in sort of reviewing our contracts with our suppliers as well and managing our headcount.
That's now a rebase sort of level now that there's not always a ZEM or to come on that?
No, I think that is a rebase level. I think if you look at both the presentations we did previously and also the guidance that's out there, the difference moving forward into half two and onwards is that there will be some incremental PLC costs coming through, which we didn't previously bear.
S o Adam McCarter, Cavendish, I guess it's maybe more of a kind of top-level question. I guess it's sort of in terms of competitive environment and what would you say is sort of Optima's sort of key USP when you go into some of these tender processes versus competitors? Is that a personnel, a technology, a delivery component, or all of the above? I guess sort of you mentioned about one of the re-tenders weren't successful, but what's your kind of pitch going into some of these sales processes?
I t's a good question. I mean, being able to differentiate, of course, we've got competitors. Competitive environment is tough. There's some good competitors out there, of course, as well. Where we really are able to shine in terms of is on that, the first slide that I talked about kind of some of the key value drivers as a business.
We have got a nationwide operating model that is technology-enabled that allows us to, in my view, deliver industry-leading turnaround times for availability for clinicians and appointments, which all has an impact and a return on investment for our customers. If you imagine there's a ticking clock in terms of people being off sick in terms of awaiting an appointment, that every day that you're waiting and delayed for an appointment is an impact to that organization. Actually being able to show that operational excellence turnaround times for appointments is really important. The technology is key as well, so the user experience for the managers, generally speaking, that use our services is important, how they're able to interact, because this is embedded in their business processes.
And how they use our services, what data and MI do they get out, and how they're able to manage their own businesses and obviously their own resourcing in their own businesses. And then I would say lastly, in terms of is our deep clinical expertise and understanding of pretty much every industry sector in the U.K. So we have specialist senior medical directors that head up verticals within our business that have got an intimate understanding of the job roles, the risks, the health environments of what people in U.K. PLC impact every day. So that insight and knowledge is really, really important to a lot of organizations because they effectively, they trust us to interact with their employees and support them to get them back to work, protect them, whether it be immunizations or from a health surveillance perspective as well.
Thank you. And then probably just one over one, you probably won't be able to say too much, but I'll ask anyway. I guess sort of the, you mentioned the release, the sort of later stage acquisition targets where you seem to be a little bit further down the line. Can you give us an idea of maybe sort of the profile with obviously giving too much away of those kind of later stage?
So I mean, we previously put out in one of our announcements a little bit of information about this in terms of, so from an area of focus perspective, it's in the bolt-on category in terms of area of focus. It's a mid to high single-digit revenue business and will be a nice one for us to bring in, integrate into our platform and drive out better margins from there.
Thank you very much.
Hi there, Ed from Singer Capital Markets. So maybe just a question on the GBP 11.5 million pipeline for me. So I just kind of want to understand how much visibility does that give you over sort of future year revenues? And is that primarily, I think you might have mentioned it's, is it public sector work? And is there much sort of pressure from sort of frameworks in terms of the value you can charge to those specific customers?
S o our pipeline, so in terms of if I think about our revenue profile more generally, we've got a really contracted recurring rate. So our contracts generally are three to five years in length. And as we talked about in answer to Julie's question, very recurring in nature, the types of things that we deliver. So we've got really good visibility over next year's revenue, generally speaking.
Of course, things come up for renewal in terms of three to five years. It's going to be what, 20% to a third of our business coming up for renewal in any given year. But we've got really good visibility of that base underlying revenue, generally speaking. The pipeline that we have at the moment, that's our point in time, if you like, in terms of the activity that our new business sales team is actively working on. So that is a mixture of public sector and private sector. Pretty much every piece of business that we go for above GBP 100,000 a year and sometimes a little bit lower comes out with a tender. So it's a mixture of the two in terms of not just public sector.
Again, as we put out in our previous note in our admission document, generally speaking, or not generally speaking, in FY24, our prior year, we won of the order of magnitude of 50% of everything that we bid for. So that gives you an indication of our conversion rate of that pipeline, if you like, on a go-forward base. And obviously, that pipeline evolves as new contracts and customers come to market with tenders and will be replaced as we go forward. In answer to your question around the public sector specifically, again, it's a mixture. So there is a number of frameworks out there, NHS framework and Crown Commercial Services, which covers central government and local government, generally speaking, but those are not out with market norms in terms of pricing, in terms of that we're able to deliver those contracts out.
Helpful. Then maybe just touching upon Julie's M&A question, do you have a sort of target in terms of how much growth is going to come from organic and perhaps how much is coming from inorganic?
S o I mean, we've obviously just integrated quite a lot of businesses over the past 18 months or so and developed a really good platform and expertise and know-how. And as Heidie mentioned, the team to be retained in our organization to be able to onboard those and integrate them into our operations. So we'll be looking. I would say an order of magnitude one-three bolt-on acquisitions a year type order of magnitude. So if they're in the GBP 5-15 million range in terms of obviously that gives you a view of growth from an inorganic perspective in our core market.
And then obviously market from an organic perspective at headline levels growing at 4%. We've talked about our underlying growth rate, if you like, in terms of excluding the prior year contract losses and new bins at roughly 4%. So I would imagine that that would be a fair estimate for organic growth rate as well. That's really helpful.
Thank you.
Any more questions that we've done? Just checking yet. Brilliant.
Ladies and gentlemen, we now begin the question and answer session from the phone line. To ask a question on the phone line, please signal by pressing star one on your telephone keypad. We'll pause for a moment to assemble the queue. And your first question comes from the line of Tanya Makovere from RBC. Your line is open.
Hi there. Thanks for taking my question. Just a couple of follow-on questions with respect to your pipeline. I mean, how sensitive are they on pricing and are you able to capture some of the costs and fees that are coming in 2025? And then are these contracts most likely to hit sort of the H2 or are they more likely to still kind of sit sort of revenue-resistant?
I didn't catch much of that question. I think, Tanya, your question was on the pipeline and profile of... S o I'll just talk to... Go on. Would you mind repeating?
Sorry, can you hear me better now? That's slightly better. Would you mind repeating that, Tanya? S orry. Just generally, the gist of the question was just how sensitive are these contracts to pricing and can you capture some of the cost increases coming in 2025 with these new contracts or do you have like a target margin that you're trying to achieve? And then the timing of them, are they more likely to hit FY 2026 rather than H2?
T hat's 2025 if they come on. S o as Heidie mentioned before, in terms of absolutely we're able to capture kind of any cost increases and we update our pricing model very regularly in terms of to accommodate whether that be cost increases in terms of in wage inflation or also productivity improvements where we've made technology enhancements. So our model is updated all the time to reflect those. Of course, we have hurdle rates in terms of obviously we know where we're able to deliver profitably at and we stick to being able to deliver profitably. So we don't go for work that we think is a loss leader or not going to deliver the margins that we expect it to.
We want high-quality revenues and high-quality work, so we're quite discerning in that regard. Typically speaking, things that we are bidding on and winning now will be FY 2026 delivery. And so some of the GBP 3.1 million that we mentioned that we've won in Q3 , so since 30th of September, is due to start between now and the end of the year. Some are starting in December, some are starting end of February, March, and there's a few weeks, so there'll be full years' worth of revenue in FY 2026.
That being said, occasionally we get a client who comes with a tender or directly and says, "I've got this piece of work, we're having not the best of time with our existing provider, or we've got a real issue, can you stand up a service in four weeks' time?" And if we're able to and it makes sense for us, then we do that. So there will be some work that comes to us between now and the end of the year that we're able to start before the new financial year. But typically speaking, the biggest stuff that we're bidding on now will be commencing in FY 2026.
Those are in line with the sort of the 17% margin, or is that sort of, or is there a longer-term target that you're trying to, that you think you can achieve?
S o we're at 17% EBITDA margin at the moment. Obviously, that's following the integration of all those businesses. As we grow and scale, we're targeting to be able to expand that margin. So our medium-term target is to get that up to 20%. We're a technology-enabled clinical services business. So the more that we can improve the way that we operate, the more contracts that we win and our growth in terms of not having to leverage, sorry, not having to increase our indirect overheads, given that we've already invested and have already got a scalable platform at the same rate, all leads to us being able to push up and improve those EBITDA margins over time is our plan.
Obviously, set against that, we've obviously got the recent budgetary pressures in terms of from the October Budget of increasing NI and things like that and what have you, which will be looking at strategies to mitigate as well, but our target over the medium term is to get that starting with a two, Tanya, from a margin perspective. London site opening in February. Is that in support of specific contracts or is that just to handle general growth that's expected? And then how much of the GBP 3.7 million CapEx in the year is attributed to that? S o that was about the London clinic, I think, so the London clinic, so we obviously already deliver in London. So we've got a number of clients based in London and we've got some clinic facilities in various locations, so this is twofold.
It's consolidating our existing London clinic provision and also expanding that to support a new contract win, which is a large public sector contract within London, multi-year contract in London. So a bit of both, Tanya, a bit of consolidation of existing platform and also making sure that we've got room for growth in London to support new business. And then there was a question on the, was there a question on pipeline?
How much of it was how much of the CapEx is that? Oh, CapEx.
G o on.
How much CapEx for the London site, Tanya?
D o you have a breakdown of the CapEx?
S o the CapEx, additional CapEx costs for the London fit-out will be around GBP 600,000 for the 14 clinic site.
I think the one other benefit to mention about the London site that hasn't been mentioned is, by bringing all our London-based teams together in this one site, we can offer them a really good standard of clinic facility to work from, so it's also part of our employee retention program as well, whereas now we're in more temporary accommodation as we need less rooms at the moment, so that future will be up to the standard of recent sites we've opened up, so really good standard.
W hich goes down well with our employees, our clinicians, and also our clients, so we've done that a number of times over recent years, opening new clinic facilities in Manchester, Norwich, Glasgow, and obviously now we're getting on to our London clinic facility, so good high standard of clinic facility.
Okay, perfect. That's all for me for now. Thank you.
Thanks, Tanya.
Your next question comes from line of Kevin Tracy from Oberon Asset Management. Your line is open.
Great, thank you. Going back to the Autumn Budget, can you quantify the impact on your cost base from that? And I hear that you hope to offset that in terms of pricing for new contracts and renewals. But looking to next year, FY 20 26, previously analyst numbers were forecasting margins to improve. And I'm wondering if that's still the expectation in the context of the new budget. Do you want to go with that one, Heidie, and I'll augment it if need be?
T hat's fine. Hi, so at a high level, our rough calculations based on the number of employees and average salary at the top end, it could be an annual impact of around GBP 1.5 million across 1,500 employees.
I think if you see Panmure's analyst has released an updated document this morning to reflect the impact of that in next year. So when we talked before about offsetting that with increases in contracts or new contract wins, whilst some contracts we may be repricing now or tendering now, which will come in in 2026, because our contracts do have that three to five-year cycle, there will be some contracts that will have a couple more years to go before we can adjust that pricing. So we will be looking to fully mitigate that in the medium term. We won't be able to do that immediately.
Understood. Okay, and my understanding was that you were involved in a bid along with a partner for a large armed services recruitment project. I'm wondering what the status of that is and if that's included in this GBP 11.5 million of new business pipeline.
So the status of that, you're correct in terms of we are partnered and tendering for that opportunity. That opportunity was, remind myself now, I think submitted in the spring of this calendar year, so has been in evaluation for a number of months. And the outcome of that tender is expected early in the new calendar year, so other side of Christmas. That's a, we consider that in adjacent markets in terms of slightly different than our core business. And actually, we've got a separate team that's looking after that. So that isn't included in the 11.5 million of pipeline. That is core occupational health-related contracts that's within that GBP 11.5 million pipeline.
That larger scale contract that you refer to there is in addition to that GBP 11.5 million of pipeline. And on DART, I'm happy to hear the pilot continues to expand. What's the timeline for that to move beyond the pilot stage? And that's it for me. Thank you. So we are right at that point now. So with the trust that we're delivering the pilot with, we're in conversations around contractualizing that agreement now and obviously commercializing that. So imminent discussions in terms of what's happening on that with that particular trust. Given the nature, obviously some adjacent trusts to the one that is using that have shown some interest in that. And we're obviously also talking to them as well around the potential to deploy DART into their musculoskeletal pathways and workflow. A handful, so three or four other trusts are showing some interest in that.
W e're looking at progressing that and getting our first commercial agreement signed on DART, which t he pilot has been around a year now, so we're good track record good outcomes from that pilot. And obviously, as I mentioned before, 10,000 patients so it's a l arge scale pilot now. H opefully we're able to report something favorable in that regard in due course.
Great, thank you.
There are no further questions. We want to hand back to the management for closing remarks.
Lovely. Thank you very much, as I said at the outset. Thank you very much for joining us today and being here as we announce our first set of results as a public company. As I said, we're really, really excited and proud of those resilient results that we have delivered for the half.
L ots of opportunity for us as we go forward, both organic and some inorganic opportunities. We're really excited to crack on and deliver the strategy. T hank you again for joining us today, those of you in person, and thank you for your questions, those who've dialed in on the call. We'll wrap up and close there. Thank you.