Good morning, everyone, and a warm welcome to our beginning presentation of results for the H1 of FY 2022. We appreciate your interest, and thank you for joining this call. I'm Kirsten Baldock, new Investor Relations Manager for Alcidion, a role we've recently taken in-house. I'd like to begin by acknowledging the traditional owners and custodians of the land, various lands on which we work and meet today, and to pay my respects to their elders, past, present, and emerging. I extend that respect to Aboriginal and Torres Strait Islander peoples who have joined us on the call today. In terms of format this morning, Alcidion's Managing Director, Kate Quirke, will provide a short presentation, and we'll have some time for questions at the end of the presentation as well.
I'll begin the call currently in listen-only mode, but please do feel free to log your questions at any time using the chat function at the bottom of the Zoom window. Some questions have been logged prior to the call starting, and we'll address those at the end of the presentation as well. Joining us on the call this morning, we have Matt Gepp, Alcidion's CFO. He's gonna cover some of the financial results. We're also joined by Rebecca Wilson, CEO of Alcidion, and Lynette Booysen, Managing Director for our U.K. operations. With that, over to you, Kate.
Thank you very much, Kirsten, and thanks, everyone, for joining us this morning. First of all, my apologies that the call is a little earlier than has been the norm for us. Most of you will probably not have had a chance to go through the documents that were lodged this morning. The time is due to the fact that I'm currently in the U.K., visiting customers and our team for the first time in two years. We moved this call a little earlier due to the time difference and a heavy schedule of travel and meetings ahead of Lynette and I tomorrow. I hope you can understand that change. I've got to apologize for any noise you might hear outside.
I'm not sure if any of you follow the weather conditions we've been having in the U.K. We've had a couple of storms come through, and I've had some people chopping down trees outside my window. A big chainsaw effort, work's been going on. I am currently presenting to you from Burnley, which is in the north, in Lancashire, where one of our major offices is. As I said, I'm here visiting a number of trusts, current customers and prospective ones, as well as spending some time with our local team. That team, our base here in the U.K., numbered around 12 people when I was last here in March 2020, and now numbers nearly 50.
We've completed two acquisitions here in the last few years and have added 22 people through those acquisitions, but the rest of the growth has actually been a result of the success in the organic business here in the U.K.. So I'd like to acknowledge the UK team and their efforts over the last two years under the leadership of our U.K. MD, Lynette, who's on the call. Much has been done in that time to position Alcidion as a leading supplier of digital technology to the NHS. While I've only been here a couple of days thus far and still suffering a little bit from jet lag, I can clearly see and hear from our customers the impact our technology is having.
I'm actually really looking forward to the rest of the week, and hearing more from some of our clients and how they've progressed. Equally exciting this week was the restarting of in-person healthcare conferences. Earlier in the week, in fact, Monday and Tuesday, Alcidion attended its first in-person conference and trade exhibition in nearly two years, which was the Australasian Institute of Digital Health Summit that was held in Melbourne. Had a lot of customer interaction. We had a stand there and trade exhibition. All the reports I'm getting from the team was there was great excitement and interest in everyone coming back together. What's really important about it is it is a very important post-COVID step because it is one of the important sources for pipeline development for us. That's not been possible in recent times due to COVID.
Early next month, we'll be presenting at the U.K. equivalent, which is Digital Health Rewired. We're seeing positive signs emerging in our industry, which has been impacted so much and even more so, I think, in the second year of COVID. Today I'm gonna talk you through a short presentation that summarizes the Appendix 4D that's been released, summarize some of the business activity for the H1. I do acknowledge that a lot of what I'll cover today has been covered in the Appendix 4C quarterly update that we did, which was only three weeks ago. As Kirsten said, at the end of the call, there'll be opportunity for questions, plus some that we've already lodged previously. If you want to move slide, Kirsten. Beautiful. Thank you.
The H1 of FY 2022 has definitely been a transformational one for Alcidion, a significant step in our goal of becoming a leading global healthcare technology informatics company. In December, as many of you will know, we signed the largest contract in the company's history, and we completed the acquisition of Silverlink, all of which enables us to take on global vendors with our proposition of a cloud-native, modern, and modular EHR offering, which is resonating well with our market and our customers. Despite the challenging conditions we've had across those markets during the H1, we strengthened and grew the business. This included New South Wales with a total contract value of AUD 30.4 million. That did include, of course, the major healthcare IT contracts with the Commonwealth of Australia, which project is now underway.
We're very much looking forward to delivering that foundational component that Alcidion is providing in that consortium, which is for the longitudinal health record or the accumulation and consolidation of all healthcare interactions for an individual being able to be seen as a single view over the life of their healthcare interactions. While it was significant in both size and duration and our first Commonwealth contract, the opportunity also demonstrates the scalability and capability of our Alcidion solutions to address the challenge of integrating care across all healthcare sectors, which obviously during COVID, we've seen those expand to, you know, beyond hospitals and general practitioners and radiology and pathology providers to actually providing care in the home and in the community.
Also in the H1, we completed the successful acquisition of Silverlink, which as I've pointed out before, is one of the last remaining patient administration solutions in the U.K., independent. And to support that, we did a AUD 55 million capital raise to fund that very strategic and important acquisition for us. And I think it's really important to point out that these activities are firmly in line with the company's strategic plan in terms of both timing and activity. We will go on to discuss the finances in a little bit more detail on the next slide. You know, from our perspective, all indicators are progressing in the right direction. In summary, we added AUD 30.4 million in new revenue compared to AUD 17.4 million at the same time last year.
We've got AUD 27.1 million in revenue currently contracted that we expect to revenue this year, with another half of the year of sales still to come that's going to impact that. We've delivered revenue of AUD 12.9 million in the H1, which is 16% up on the prior calendar period, and a loss of AUD 3.2 million underlying EBITDA loss, that is, which is in line with our expectations. As indicated, when we did the full year results, we had a number of planned hires as part of our growth strategy that we were not able to make in the prior financial year. We continued to execute and make those as planned, and we're now seeing, you know, the cost of them through the full half year.
As reported in the quarterly, cash at the end of the half stands at AUD 18.9 million. Important to note, all of that has been achieved despite the challenging conditions that our customers are operating within, and they have been very challenging in this last year, as COVID has hit long and hard through both Australia and the U.K., to a lesser degree maybe in New Zealand, but when they have been fairly contained and locked down. While the first year of the pandemic brought many opportunities for digital health, the intensity of the second year has had an impact higher, and we've been seeing it, and I know that others and other suppliers and vendors and partners of ours have similarly been seeing it.
In this second year, the intensity of the COVID situation on the staff in healthcare delivery has certainly slowed down some of the procurement and decision-making, and has had that impact for most of the financial year. Given that, we're very pleased with the half year results we've been able to achieve, which are very positive in terms of continued revenue growth and continued interest in our Alcidion solutions. Next slide, please, Kirsten. Just the operational highlights here, which I've covered off previously, I won't talk too much in detail about. Just to reiterate how transformational that H1 has been and how we've executed on the plans that we set for ourselves.
Largest ever contract signed, foundational component for the longitudinal health record, contract with the Commonwealth, very significant in size, duration, creating recurring revenue for Alcidion initially for a six-year period. The contract itself actually can extend out to 15 years, and has the potential also to include Miya Observations and Assessments. You know, worth approximately AUD 50 million to Alcidion over that 15 years. The acquisition of Silverlink has contributed significantly to our product and solution strategy, both in the short term and longer term.
That acquisition provides us with core patient administration capability to expand our overall product offering and positions us strongly in being able to provide an alternative solution to the electronic patient records that are in the market at the moment, and one which aligns very much with the strategies that we're seeing emerging from our customers around cloud native, modern and modular. Being able to provide value quickly to customers in terms of the speed of implementation, which we've been able to demonstrate in all of our sites, but particularly here in the U.K. over the last 12 months. Silverlink is performing as expected with the forecast that they provided during due diligence, revenue of GBP 7.8 million and EBITDA contribution of about GBP 4.8 million on track.
That's all very positive. The announcement's been well received by the healthcare industry and by our customers. I'm actually visiting one of our Silverlink customers tomorrow, and I'm really looking forward to seeing firsthand their solution in action and discussing with them our plans for the future roadmap. That roadmap is talking about how we combine the capabilities of the Silverlink patient care system with Miya Precision. The Silverlink team is very much now part of the wider Alcidion U.K. team. I met with them today, although we didn't have everyone come together. They were part of a virtual meeting. We're now planning the full integration and merging of the capabilities of the solutions.
I think I've touched before on other contracts signed during the half, including, you know, a significant strategic contract with Sydney Local Health District, which is allowing us to demonstrate how Miya Precision supports virtual care or remote patient monitoring or care in the home. Lots of words used to describe what is a very similar component. That allowed us also to develop and release during that half, MyCare solution, which is a mobile application for the patients to interact with their physician and add their data. Again, increasing the pool and the strength of the data that our system is collecting in healthcare, and supporting our caregivers and clinicians to be able to provide the best possible care that they can in the home. We also saw additional contracts signed for ExtraMed.
One was a three-year renewal, and then another was an expansion into an existing Patientrack or Miya Observations customer, which demonstrated again execution on our strategy, which was in acquiring some of these U.K. companies that had existing footprints that we'd be able to take our Alcidion solutions into those markets. I'd like to now probably hand over to Matt, who's going to go over the H1 results in a little bit more detail. If you might move to the next slide, Kirsten. Over to you, Matt.
Okay. Good morning, all the shareholders and investors who've joined us today for the presentation. I'll reiterate what Kate said. It has been an extremely busy half for us here at Alcidion. Okay. Looking at the P&L, as Kate already touched on, the business delivered a 16% increase in revenue versus the prior year. Pleasing to see the steady shift towards recurring revenue that we're delivering in the business. We saw a 40% increase on the prior year recurring revenue to AUD 8.8 million in this half. 58% of total revenue in these results is recurring compared to 56% in the prior year. We only need to look back three years to 2019, where less than half of our revenue was recurring. That's a very good trend that we're seeing there.
I think it was pleasing to see revenue growth in both the ANZ and the U.K. business in the half versus prior year. Looking at the gross profit, it increased 12%, slightly less than the revenue, to AUD 10.9 million. With the margin percentage dropping three points from 88% to 85%. The percentage decrease was expected and is due to a high proportion of resold product revenue that's contained in these results compared to the prior year. While that resold revenue delivers a pretty solid incremental margin, it does put pressure on the percentage gross margin, which is typically led by our own products, which delivers in the high 80s, low 90s in terms of margin percentage. We talked quite a bit about the solid staff costs at the full year presentation in September last year. The business has been investing in staff for growth.
We made a number of new hires in the prior year Q4 and in Q1 and Q2 of this year, but the full effect of those hires from Q4 last year is seen in these H1 staff cost numbers, which also include the full six months of the 11 ExtraMed staff who joined us last April. Overall, staff costs are up AUD 3 million, 34% on the prior year, and that increase is consistent with our expectations for the half. That's talking about the large numbers there. That leaves us with an underlying EBITDA loss of AUD 3.2 million that was delivered for the half. Again, you know, this result is consistent with our expectations for the period.
It's worth pointing out that during the period, the business incurred significant expense costs in relation to the acquisition of Silverlink. These costs are consistent with an acquisition of this size, along with the non-cash cost of the options, has been excluded from the underlying EBITDA number of AUD 3.2 million that we're talking to you today. Over on the P&L page, so I'm gonna touch on cash. We ended the half year with AUD 18.9 million in cash. You will see from the cash flow in the Appendix 4B that it's a very busy cash flow for a half year, with AUD 66.5 million spent on the acquisition and gross receipts from the cap raise of AUD 55 million. I will draw your attention though to the H1 cash receipts of AUD 15.4 million.
That's a 52% increase on prior year H1 cash receipts of AUD 10.8 million. The business delivered positive operating cash flow in Q4 and did deliver a negative operating cash flow for H1 of AUD 1.9 million. That is an improvement though on the AUD 1.3 million negative cash flow prior year results. It's also worth pointing out that three of our last four quarterly cash flows have delivered positive operating cash flow. I'll just point out one final thing on this slide before we move on, that these half year results we're looking at today do include 15 days of trading from the Silverlink acquisition.
Kate already said it, I'm gonna say again, I'm happy to say that, you know, two months into the acquisition following the completion, that our business is performing exactly in line with our expectations that we formed during due diligence. If we can move on to the next slide please, Kirsten. All right. We have a rather impressive contracted revenue graph here. The business ended the half with contracted revenue of AUD 27.1 million, and that surpasses the prior year full year revenue of AUD 25.9 million. So as you can see for us to be at this point in the year. That's 25% ahead of the 21.7 contracted revenue at the same time last year.
We also have a total of AUD 1.9 million of renewal revenue in the pipeline. We fully expect to be converted to revenue by the end of the year. Recurring revenue of AUD 18.7 million represents 69% of the total contracted revenue. That's marginally up from the actual numbers we delivered for 2020, 68% and full five percentage points higher than the contracted revenue at the same time last year, or the recurring portion, I mean. We'll have a few questions on our financials at the end of the presentation, and I will hand back over to Kate to go on to the next slide.
Couldn't find my get off mute button. Thank you very much, Matt . Just, I have touched a little bit on the momentum, but I think this is worth looking at in a little bit more detail, you know, what has been achieved in this H1. We are very pleased with the progress we've made in terms of the growth of the business in organic terms. As I've already outlined, we've signed a number of significant contracts in addition to the contract with the Commonwealth. All of them demonstrate execution of our business strategy. Larger long-term contracts that expand our market beyond both state-based healthcare systems demonstrate its success with expansion into remote and out-of-hospital care, demonstrated with the upsell of opportunities that the acquisition of companies like ExtraMed, Silverlink provide. That's all been achieved in the half.
We've continued to sign many contracts for ongoing services work alongside renewals, particularly in Australia. That demonstrates you know the continued relationship we have with our customers. I've spoken many times in the past about how important ongoing positive referenceable relationships are with our customers. They continue to contribute to a strong revenue position as well. Despite the customers being under enormous pressure from COVID, we have continued to be able to demonstrate our ability to successfully deploy the software once they've bought it as well and deliver value to customers. You know, we delivered on a really significant go-live project, the Suffolk Project, with Alcidion. You know, that is being very well received, and they'll now look at what happens in terms of rolling that out further.
We had the pilot evaluation of Better Meds in New Zealand, which is live, and we're continuing to work with them in terms of the evaluation of that program of work. Recently some of you may have seen on social media that we see our customers demonstrating and promoting the positive results that they get from solutions that they implement from us. A recent implementation of Miya Observations in Scotland at NHS Lanarkshire has been reporting very positive, measurable results from the implementation of Miya Observations and Assessments. They've reported 100% completion of all vital signs as a result of the implementation of Patient Direct, which is up from what was only 31% successfully completed before. This is critical because vital signs convert to an early warning score algorithm.
That algorithm then alerts the clinical team to patients that are at risk of deterioration, thereby increasing patient safety and reducing adverse events and in many cases, saving lives. Our customers are out there, you know, doing that work, measuring the benefits of the solutions that we're implementing and then promoting it for us. Next slide please, Kirsten. I want to talk a lot more, and I think at this point about Silverlink and I'll hand over to Lynette to have a word about the U.K. position. We, you know, we've talked about how important this acquisition is. We only made the acquisition in December, made an announcement to the market in December.
You know, we have had very positive ongoing conversations with customers with the NHS about the positioning and what we're doing, but it's too early to expect that to turn into you know contracts at this point. Certainly is having a very positive impact on the pipeline. Next slide, please, Kirsten. As many of you are aware, you know, we have been focused on continuing to position Alcidion as a key provider to the NHS. I thought since we're in the same time zone was a great opportunity for Lynette to just give you a brief update on how she sees the Alcidion position in the U.K.. Over to you, Lynette.
Thanks, Kate. Over the last two years, the U.K., it's well documented as being heavily impacted by COVID and the admissions that have come through our health system. The result of that is also the backlog now that we're seeing in treatments beyond COVID, whether that be as a result of COVID, we're seeing an increase in long COVID, and all of the patients that were in the system for other treatments that have been postponed. In terms of our COVID exposure, year one in the NHS was very much focused on swift procurement to support immediate needs, of which Alcidion was well positioned to respond to. That was both with existing customers and new customers. The focus now and where Alcidion is absolutely positioning itself to help is around the backlog of patients.
How do we move these patients through their systems, through the care settings, ensuring that the right patients are in the right place, getting the right care, and moving those pathways along as quickly as possible using digital solutions. Through programs that are being announced and being rolled out at the moment, such as the Levelling Up Fund, the Elective Recovery Fund and the Digital Aspirant, Alcidion is well placed to respond to all of these challenges as the money flows out of the system and these initiatives to deal with the COVID recovery plans.
We have a material opportunity here in the U.K. to both upsell to our existing base, but also the new positioning with our modular, modern modular EPR as a result of the PAS acquisition of Silverlink. There are a number of upcoming procurements under the Digital Aspirant Plus initiative I've just talked about, which is a new, EPR initiative that looks at solving these challenges in a different way. Over 60 trusts are looking to either move to a new multi-modular EPR or have an alternative need to modernize their current EPR position, and we can focus on these sites as an immediate market opportunity. We have a unique advantage that we can both address their EPR needs or increase their digital maturity incrementally by introducing modules, which is Miya Flow and Miya Observations.
The position of the ICS as a layer is, of course, a recent occurrence at the moment in the U.K. They are becoming the buyer of the digital solutions, and it's an emerging opportunity and a very exciting opportunity, but it is still evolving in terms of the procurement process, so we're navigating our way around that. In some cases, it is having an initial impact in terms of slowing down the procurement with the extra layer of governance, but then it's also opening up great opportunity as ICSs tend to take a best practice solution and move it out into the region. As our presence is already very strong with 45% of those ICSs, we are seeing this as a very positive emerging opportunity. Back over to you, Kate.
Thanks. Thanks Kirsten . We'll move to that, to the final slide on outlook. Just for everyone to give you sort of an overview of the outlook from here, our pipeline remains very strong. It's supported by solid contracted revenue of AUD 27.1, plus a further AUD 1.9 we expect to sign, and that's without other opportunities being converted in the H2. Its pipeline does continue to grow, and it's been bolstered by some further opportunities since the acquisition. Albeit, as I said, just recently, it takes some time for those to work through the sales cycle. As I've said before, it will just continue to be the case, there are a number of minor opportunities in contract discussion phase.
I have indicated we're working with those customers in an environment that is challenging for them in terms of their ability to get the focus on decision-making when they've got frontline workers that would normally be involved in these types of procurements still actively out treating the large number of patients we have in hospital with COVID. We're still very positive about seeing more of those come to fruition in this H2. We, as Lynette has alluded to, the opportunity for Miya Flow and Access as a result of a worldwide backlog. Same backlog, same sorts of information we're seeing in Australia as we're seeing in the U.K. around being able to efficiently move patients through the hospital.
There's six million people here in the U.K. waiting for care, and that version is semi-urgent care. There's an enormous focus on how you can deploy digital strategies to address this, and we are, you know, in an excellent position and well-placed to do that. The feedback in response to the acquisition of Silverlink has been very positive and our customers are increasingly beginning to understand the power and the value that can come from that combined offering. As you, as shareholders, those of you certainly that have been following us for some time, you're aware that the H2 is traditionally a stronger half for new sales for us, notwithstanding the fact that we had our largest sale ever in Q2.
We're actually very happy to see further contract announcements in the H2, and to continue to deliver on the project milestones of those that we've already sold because our revenue in the H2 also relies on us being able to deliver on those projects. All of that is, you know, in an environment where the health system is, you know, under strain and patients are looking to be treated quickly. We are also on track to deliver a full year underlying positive EBITDA, as indicated at the beginning of the year. As always, I would like to thank you for your continued support of Alcidion. We're very confident in our long-term strategy and our ability to execute. Thank you for your attendance, and I'm happy to move on to Q&A.
Thanks, Kate. Right. Well, we do have a couple of questions in the queue. I'll kick off with this one. You've previously stated that you expected to break even in FY 2022, even make one EBITDA loss. Are you still confident in achieving this?
I think, yes, as I stated, we are still expecting to achieve positive EBITDA, underlying EBITDA. You know, we've got a strong pipeline. We've got projects that are moving through and such as the Commonwealth project and delivering on their milestones. I think we've had some one-off costs related to acquisitions and so forth, which we'll move out of that and focus on the underlying EBITDA. Yes, you know, all things continuing as planned, we expect to deliver a positive underlying EBITDA.
Thanks, Kate. We've also had a few questions around share price. In light of current market conditions, perhaps you could comment on the robustness of the share price.
Yeah. I'm happy to pick that one up, Kirsten. So I say as a board our role is really to focus on the delivery of long-term shareholder value over those sort of short-term fluctuations in share price that are outside of our control. To date, you know, we've delivered our largest single contract ever while completing the transformational acquisition of Silverlink, which really sets us up to become a meaningful player in that EPR market globally. You know, the board we're really confident that the value of those contracts and others will certainly pay out over the coming months and year. You know, we also have the continued growth in our revenue half on half and expect this to continue going forward.
Thanks. Yeah. Before we do go there, you might just stop sharing the screen, so we haven't got such a big blank.
Yeah, right.
That's fine. Ta-da.
Yes. That's better.
Thank you. All right. Okay, next question. You mentioned patient flow receiving increased interest levels from customers. Can you talk through what this means for Miya Precision?
Sure. Look, I mean, I think I probably covered it quite well in the presentation, and Lynette also talked about it. In all our markets, there is enormous pressure in relation to backlog. We've had elective surgery pretty well stopped for the best part of a year, if not more. There's an enormous number of patients that need to move efficiently through the system. Miya Precision was initially built, its first capabilities have been around patient flow, patient access. It's got proven resiliency in Australia, New Zealand, and the U.K. for this. We're very much focusing our marketing efforts and our sales efforts on this being a very key entry point for Alcidion in Miya Precision.
Next question. Why is the Australian health industry or Australian hospitals not being as heavily targeted in respect to digitization?
I think I'm not sure if you mean targeted by us in that question. I think someone lodged it or whether that question
Yeah.
In general. I mean, if you're talking about us, it's on the contrary. We're doing quite a lot of work in Australia. We continue to see this as a key market opportunity. You know, to be fair, the two main states, Victoria and New South Wales, have been pretty impacted by COVID. So we have definitely seen an impact on procurement across Australia, but I'm confident we'll see further contracts in that market. If you're talking about the Australian market in terms of investment in digitalization, I think we have seen a lot of investment in the last 12 months. We've been very focused on COVID vaccine and COVID booking systems and less so in hospital-based systems, except for virtual care. So a lot of investment and procurement going into virtual care. I think we're seeing increasing interest now in patient flow.
Alcidion is well-positioned in both of those areas of virtual care and patient flow. I look forward to, you know, to seeing those come to fruition. I can't talk about the speed of that. I just, I don't know how quick those procurements will be, but there's certainly increasing interest.
Great. Okay. Next question. How does Alcidion demonstrate to hospital clients that discharged patients have lower rates of readmissions by better adherence to medication?
Firstly, we agree that avoidable readmissions are a significant problem for patients, and also that the hospitals are increasingly seeing financial penalty as they occur. Our product offering, with Miya Precision, which is targeting out-of-hospital care, specifically looks at how we can reduce the risk of going from home to hospital, but also we've built in algorithms and capabilities to identify at-risk components for patients and alert those. The work we're doing at Sydney LHD is absolutely focused on how we can reduce readmissions to hospital. Adherence to medication is only one of the many triggers that can lead to a readmission from hospital care. Social circumstances, in fact, have generally a large impact as to whether they end up back in hospital.
Okay. Next question, I think is from Elyse Shapiro. Are you still expecting further contracts by the end of March in the U.K., as you previously stated? And what does the pipeline look like compared to a few months ago?
I think I probably answered that as well. I can't tell you whether they're gonna be, you know, signed this side of March or, you know, in early April, 'cause in fact, the financial year ends on the seventh of April, I believe. We are working on some of those opportunities. There are other opportunities in the U.K. that we'll see potentially in this half, but may not be before March. Yeah, while I am here, we are visiting some people this week, can't make any promises on exactly when that will fall. The pipeline remains healthy, continues to grow. I sat in the office today and watched Lynette and the team.
They're certainly very busy and very active with a number of opportunities in the pipeline.
Great. Next question from Peter Lim. Can you provide more detail of the components of the top line revenue growth? I.e., how much was this Silverlink?
That's me, I think.
To you, Matt.
Look, Silverlink was in the business 15 days. The revenue they contributed to the half was only about AUD 350,000.
Right. Another question for you. Can you provide your current ARR for U.K. market?
Short answer is no. It's not a number we disclose. Also, ARR is not a term that we use in the business or speak about, you know, publicly. Our revenue is not annual recurring revenue. It is recurring revenue, so it might recur annually, it might recur every two years or three years. We just have to be careful about that distinction. Yeah, we don't disclose the split between the ANZ and U.K. business publicly at the moment.
Next question. Can you provide an update on user customer feedback on Miya Precision? Is there growing interest from prospective customers and key system partners such as SAP?
You can take that one, Lynette.
Miya Precision went live in August 1 at the end of the half. It's also went with Miya Observations or Patientrack, then now they are live with Miya Flow. We are doing measurements so that we can support this perception with data. The reaction from the clinical staff and the operational staff has been extremely positive. It's also generated a lot of interest with the body that was formerly known as NHSX, which is now known as NHSEI, who are also watching that with keen eye and are very supportive of what we've achieved there. South Tees will go live in the next six months with their version of Miya Flow, but they've gone live with Miya Observations.
We have got a very strong perception in the U.K. market of our ability to deliver on our commitments made to those customers. They are both reference sites. They are very positive reference sites and very open to investing sites. We will do more published information at the time when it's available. We can support that perception, as I said, with true impact data.
Thanks, Claire. Next question. Given the cash on hand, is this the time that you're earmarked for further acquisition?
Look, I think we'd like to bed down the very significant acquisition that we've already made. We're very focused on that at the moment. I'm not saying that we're not going to consider further acquisitions, but it's certainly not a key part of our strategic plan in the short term. We've very much got a lot that we want to do to demonstrate the value from the two acquisitions that we did in 2021.
Great. Can you provide an overview of the type of company culture that you're trying to foster and build in Alcidion, and how does this support operational performance?
I'm happy to have to jump in, and Kate, you can build on this if you wish. Thanks for your question, Tina. I think given that Alcidion is a high-growth business, but one that also needs to remain really focused on execution at this point in time, that really reflects the culture that, you know, not only are we trying to create, but we're really sort of embedding across the organization. That is one that has, I suppose, equal parts of an entrepreneurial mindset where we need to continue to be at the fore in our industry, but also, you know, really mature and focused on delivering for our customers. I think that really sort of describes, you know, what we're really trying to achieve.
I think the other thing I would say, too, is clearly we've had a lot of acquisitions over the last couple of years, and there's a real conscious program to make sure that we're really bringing in what could be quite disparate cultures to ensure that we're unifying those very in the way that we think is most beneficial to the business. Kate, I'm not sure if you've got anything to add to that.
No, that's a very good answer. I think we definitely focus in on the culture of openness, sharing direct and clear communication, so that we can continue, you know, to kind of learn from each other.
Thanks, Kate. Next question. Wages are such a high percentage of sales. Will they continue to grow, or will sales income outpace wages growth?
Oh, I mean, yes, I think that's our plan. We were always going to build a base on which we could, you know, maintain the organic growth for the business. We are still, you know, we've just come into that phase of kind of leveling out that, you know, investment. As sales continue to grow, you will see that outpace our costs.
Thanks, Kate. In terms of GP margin, how do you think that will sit in H1 against the H2 of the larger contracts executed and potentially more resale products?
Can I take that one, Kate?
You can, although probably not as able to comment necessarily on the contracts that are coming down the pipeline.
Yeah, it looks exactly like you know, based on our contractual revenue right now, we're expecting margin in H2 to be higher than margin in H1, particularly because we'll have six months of the Silverlink business in H2, which typically trades at 89%-91% margin. On that basis, I'm expecting it to go up. That being said, if we do make new sales into three and four that have a you know, retail component, then that will put pressure on the GP percentage. That's just the math of those deals, and it's still a good potential margin for us.
Thanks, Matt. You've completed what appears to be a very strategic acquisition in Silverlink. Can you comment on what this means in the U.K. market and how it's been received by both clients and potential customers?
With Silverlink?
Yes, please.
It was very positively received. I expected it to be very positively received, but it was beyond my expectations. It's not just from our existing customers or our potential customers, it's actually from the market as well. It's from, as I said, the center or the NHS EI, whether that's partners or potential partners or people who want to work with us. Also recently, the minimum viable product release that has come out into the public domain, which talks about the expectation of digital maturity. Their response played really well into our acquisition as well. It's given us more depth to our conversation.
It's been able to open doors that weren't necessarily open for us before who may have had a legacy path but looking to change that. I think it definitely aligns, as I said, with the MVP. It went very well and yeah, a lot better. We had a great fourth quarter, of course, fourth time for an industry tour, hoping to build on that.
Thanks, Lynette. Just one last one. Do you have comments on the overall U.K. market?
I think I've covered that in what I've got to say. We are uniquely placed to be able to answer a lot of the challenges that are here in the U.K. Kate's over here, taking the role of number one sales person this week to help out. We are very encouraged. You know, we've had a slow start due to some of the pivoting in terms of priorities, but the pivot has turned in the direction that we wanted it to, which is around patient flow. We're very encouraged by what's happening here now.
Okay. All right. Well, thank you to Kate and Jack and Matt and Lynette for taking a lot of the questions. That brings us to the conclusion of our Q&A session and to today's update. It just remains for me to hand back to you, Kate, now for some final remarks.
Thanks, Kirsten, and everyone on the panel. Just in summary, as I said at the outset, it's been a transformational six months for Alcidion. It's been a very exciting time for us. We're very pleased and proud of what we've achieved in this H1 and very much looking forward to building on it in the H2. We signed our largest contract, which provides strong validation for what we've been saying we can do. We completed a strategic acquisition which provided critical elements to establish the EPR offering. While we've had to address the challenges of COVID, including the speed of procurement and contract negotiations, we have seen maturing and growth in the pipeline in the H2 of the year. We're very confident that we've got our product offering right.
We've got a strong balance sheet. The market is looking at what we're doing. I very much look forward to updating the market on what we believe will be a very positive H2 . We will, notwithstanding all of the things that I've said before, as always, I thank you, the shareholders, for your continued support. We are always, as I said, open to responding to your questions and queries. We have got investor relations in-house with Kirsten. Very much open to responding to any questions that we haven't got to today. I thank you very much for your time and interest, and I hope you have a fabulous day. Thank you.