Earnings Call: H2 2021

Aug 24, 2021

All righty, let's kick off. Good afternoon, everyone, and welcome to Alcidion's investor webcast for its financial results for the financial year ending 30 June 2021, or FY21. All participants are currently in a listen-only mode. Today's webcast will feature a short presentation from Alcidion Managing Director, Ms. Kate Quirke, and Chief Financial Officer, Matthew Jepp, followed by a Q&A. If you do wish to ask a question, you can type it into the Q&A panel at the bottom of your screen at any time. Please note, we will hold all questions until the conclusion of the presentation. I would now like to hand over to Kate Quirke, Managing Director of Alcidion. Thanks very much, Amy. Good afternoon, everyone, and thanks for joining us on today's call. I'll provide a bit of an overview, as Amy said, of our operational and commercial success for FY21, as outlined in the annual report and appendix that were lodged on the ASX this morning, and also a summary of the overall financial results for the year. Joining me today on the call is our Chair, Rebecca Wilson, and our Chief Financial Officer, Matthew Jepp. We'll run through the presentation first and the results. I'll hand over to Matt, who will give you a little bit more detail from a financial perspective, and then we'll move to taking questions at the end. Okay. We have delivered an exceptional year of growth here at Alcidion, resulting in a record full-year revenue of AUD 25.9 million, which was up 39% on the prior year. This was within the range that was identified when we did the quarterly reporting at the end of Q4. This is the top end of that range. Most notably and importantly, the recurring revenue increased significantly to AUD 16.3 million, which was up 56% on the previous financial year. From an EBITDA perspective, which is the information that is new in terms of some of this information was obviously alluded to or range given at before. The EBITDA loss was AUD 500,000 or half a million AUD, and that reflects our continued emphasis that we've had and always have explained to shareholders on investing to scale the business. As we are signing new revenue, we are investing back into the business to grow that business, to grow the opportunity, and to scale the business ready to support the continued growth and acceleration of that growth in the years ahead. The underlying EBITDA, though, once we remove the share-based payment and the M&A costs, was in fact positive AUD 500,000 or half a million. We delivered a positive operating cash flow for FY 2021 of AUD one and a half million, which is an uplift of AUD 3.6 million on FY 2020. We concluded the financial year with a strong cash balance of AUD 25 million. Also, the gross profit margins at 88.3% reflect an improvement of 2.4% on the prior year. This has been driven by the accelerated growth we've had in the recurring revenue with license fees and maintenance and subscription fees taking up a larger part of the revenue increasingly. We've seen that happening increasingly over the years since we completed the acquisition of MKM Health and Patientrack. With nearly 40% growth in the past 12 months on our revenue, we did that securing a greater market share across Australia, New Zealand, and the U.K. We have signed important new contracts that provide a solid foundation as we enter the new financial year. That sees us starting the new financial year with pre-sold contracted revenue and scheduled renewals that will take place during FY 2022 of a combination of AUD 18 million, as well as an established strong pipeline with contracted revenue out to FY 2026. Next slide. Oops. Jumped ahead there, sorry. From a contract perspective, as I said, the contracted revenue came across all our geographies. We did see a significant increase in the revenue coming from the U.K., which is following exactly the plan and the strategy that we have set out. It makes sense in that it being the largest market that we currently operate in and the opportunities there continue to grow. The commercial growth we saw was achieved by our execution on that accelerated growth strategy we've had in play. It was also executed in tandem with the M&A strategy that we have been executing over the last 12 months or so, which resulted in the acquisition of ExtraMed in April 2021. That acquisition also added new customers and further opportunities for us in the U.K. Just looking at some of the contracts in detail from the U.K. perspective, the South Tees NHS contract is the largest single Miya Precision contract we've signed. It was initially signed for around AUD 9.3 million and then extended fairly quickly to AUD 11.3 million over five years. We continued to see growth and opportunities in our Miya Observations and Assessments in the U.K., previously known as Patientrack. As I've talked about on a lot of these calls, the use of those shareholder frameworks in the U.K. is important to us. Not shareholder, contracted frameworks that procurement frameworks, sorry, that allow us to have our solutions actually sitting on those framework contracts that our customers can buy from those frameworks without needing to go to tender. That saw 5 wins during the financial year in the United Kingdom for Smartpage. Looking to the Australian New Zealand region, where we're seeing digital healthcare primarily focused around virtual care. This was always part of our strategy, that out-of-hospital or hospital in the home. As I've said before, we've seen that accelerated as a result of the activity around COVID. We've seen contracts with Murrumbidgee in Sydney. There's a lot of activity in this space across Australia. We have also signed renewals with key customers like ACT Health. That contract has been probably 17, 18 years longstanding renewals, and very pleasing to see Western Health, who have a contract for Miya, which is the predecessor to Miya Precision, extend that contract whilst they look at a move to Miya Precision in the future. Looking to New Zealand, where we're seeing a lot of activity, and I'll talk a little bit more about the market opportunity later. We've signed the first contract in the ANZ region for the deployment of the Better Meds, which is one of the third-party products that we market and have been successful with in some sites in the U.K., and now seeing that down in this part of the world as well. Our reputation for servicing this growing sector of healthcare has provided us also with the opportunity to move into adjacent markets. I did want to skip over that important announcement that we made around the Australian Defence Force preferred provider status that we have. This is a contract where we'll be working in a consortium with other partners to provide a longitudinal health record to support the full end-to-end digital health requirements of the Australian Defence Force wherever they're deployed. That is a contract that is not expected to be signed until towards the end of this calendar year, in November to December, but it is progressing as expected. In terms of the corporate activity in general. It was September 2020 that we officially launched the Miya Precision product into the U.K. market, delayed slightly because of the activity of COVID over there. We've seen increasing interest in that. Its whole premise is to aggregate disparate information into meaningful dashboards, supporting the interoperability of the data or the sharing of data throughout healthcare systems, and facilitate communication using that data to support decision-making. It played very well to the current strategies that we're seeing. The NHS or the NHSX is the digital arm of the NHS. Our goal is to establish Miya Precision as a proven, yet pioneering solution, and it was pleasing to see growing demand for Miya Precision across the board in the last 12 months. Obviously, as I mentioned, the most significant was the South Tees deal. In April 2021, we completed the acquisition of ExtraMed for AUD 9.5 million, and that allowed us and Alcidion to be positioned as the leader in the U.K. market for patient flow management software. They brought to us 9 NHS trusts, 6 of which are entirely new to Alcidion. 3 have some presence of our current solution. That gives us a presence in 19% of the NHS trusts in the U.K. with at least one of our products. Opening up the opportunity from a market share perspective. To support that, we successfully completed an AUD 18.4 million placement and Share Purchase Plan through the support of institutions and sophisticated investors, which enabled us to complete that acquisition and to maintain a strong, healthy cash balance to continue to deliver on our strategy of growth. I would like to very much take this opportunity to thank all shareholders who participated in both the raise and the Share Purchase Plan. It was heavily oversubscribed. I know not everyone received all of what they wanted, or in some cases, any of what they would have liked as a result of that. The demand was extremely significant, and we really do appreciate everyone's interest and support in that. Kate, sorry to interrupt, your slides aren't advancing. Has that moved now? Yes, it has. Thank you very much. No problem. I'm actually doing this from home, obviously, in a COVID environment, but with a new Wi-Fi. Thank you for letting me know. I'm going to talk a little bit more about the changes to personnel as I get through the slides, I'll pick that up at that point. I'd like to hand over to our CFO, Matthew Gepp, now who will give you a little bit more detail on the financial results. Okay. I'm off mute. Thank you, Kate. I'd also like to welcome all of the shareholders who joined us today. We're on the financial dashboard slide. On the top left, you can see our 3-year revenue. Here you can see the strong year-on-year revenue growth that Alcidion has delivered with a 39% increase in FY 2021 to AUD 25.9 million. As Kate mentioned, that's at the upper end of the range that we talked about in our July 4C release. The revenue for the year does include a contribution from ExtraMed for the last 2 and a half months. The underlying organic growth is still an impressive 36%. We've now seen 3 consecutive halves of revenue growth since H1 FY 2020. The second half of 2021 has delivered AUD 14.8 million revenue, which is a 42% growth on the prior corresponding period. Moving to the right, this is our revenue by region. This is a new graph that we've not shown before in our presentations. It really demonstrates how important the U.K. market is to Alcidion, which makes sense considering it's a much greater addressable market for us in that region. The revenue contribution from the U.K. has increased from 16% in 2019 up to 44% in FY22. That's more than four times growth in two years. The U.K. growth in revenue has largely been underpinned by organic sales, particularly the South Tees deployment, and there was a smaller contribution from the ExtraMed acquisition of about AUD 600k. We completed that in mid-April. Moving to the bottom of the slide. This is our EBITDA for the year. We saw a substantial improvement in EBITDA, AUD 3.4 million improvement over FY20. We delivered an EBITDA loss of AUD 500k for the year. As Kate Quirke mentioned, that EBITDA loss includes around AUD 230,000 of non-cash share-based payments and around three-quarters of a million of costs relating to acquisition expenses totaling AUD 1 million. Excluding that, our underlying EBITDA is positive AUD half a million. Excluding those items, what's delivered the significant improvement to the EBITDA in FY 2021, it's really the difference in the rate of growth of our revenue, which increased AUD 7.3 million in the year, compared to the rate of growth in our staff costs, which increased AUD 3 million in the year. Moving to the next slide, Kate Quirke, is the profit and loss. I've talked a little bit about this already. On this slide, we can see the changing nature of our revenue mix, with recurring revenue making up 63% of total revenue in 2021, compared to 56% of the revenue in FY 2020. While the non-recurring revenue increased at a respectable rate of 17%, it was really the recurring revenue increasing at 56% that led to the overall impressive increase of 39% for the year. As Kate mentioned, gross profit percentage increased 2.4 points to 88.3, and that's largely attributable to the increase in the recurring revenue mix of our total revenue. Year on year, our staff costs increased AUD 3 million or 19%. Much of that growth came in Q3 and Q4, and that also includes the onboarding of the ExtraMed staff that came with that acquisition in April. We will see the full year impact of those H2 hires in FY22, plus of course, the addition of new hires to support our organic growth strategy. Moving on to the balance sheet. We end the year with a strong, and what I can only say is an uncomplicated balance sheet. Our cash is up AUD 9.1 million to AUD 25 million, and we have no debt. That cash balance is more than sufficient to absorb the quarterly fluctuations in operating cash flow that we tend to see between quarters. Our trade receivables at the end of the year are at an acceptable level, and I'll note that the business has not had to take an impairment against its receivable now for many years. The intangible assets increased AUD 9.9 million off the back of the ExtraMed acquisition, and you can find more details about that in note 12 of the accounts. Of course, the intangibles of AUD 27.5 million have been tested for impairment, with the result being that there is no impairment required. The only other large movement on the balance sheet is the income in advance or deferred income. That's up AUD 2.4 million on the prior year, partly due to some deferred revenue we acquired with the ExtraMed acquisition, but really mostly due to the South Tees contract, which saw Alcidion receive record receipts in our Q3 appendix 4C of around AUD 11.5 million. There's nothing else of material interest on the balance sheet, we'll move on to the cash flow. Okay. Receipts from customers was a record AUD 32 million, up AUD 11.5 million or 56% on the prior year. Just a reminder that receipts from customers does include GST or VAT at various rates, and some of that cash can find its way into the income in advance. That being said, receipts from customers exceeded payments to suppliers for the year and saw us deliver positive operating cash flow of AUD 1.5 million. That's an improvement of AUD 3.6 million on the prior year, that's broadly in line with the AUD 3.4 million increase we saw in the EBITDA. When working capital doesn't move around too much year on year, that's what we would expect to see. Alcidion isn't a CapEx-heavy business, with only AUD 300,000 or AUD 300 odd thousand spent on fixed assets for the year, representing just a little over 1% of our total revenue. That spend was split fairly evenly between office space and equipment for our staff. We've talked about the ExtraMed acquisition already. You can see here we spent AUD 9.5 million on that acquisition. Finally on the cash flow, the business successfully raised AUD 15.4 million at AUD 0.32 in a placement in the second half of the year. That was followed very quickly by a successful AUD 3 million SPP at the same price. I'll note that nearly a quarter of our shareholders participated in that SPP, and we netted AUD 17.5 million cash after costs for both of those. More than happy to take questions on any of the above at the end of the session, and I'll hand back to our Managing Director, Kate Quirke. Thanks, Matt. Now I'll remember to unmute. Thank you very much for that. As I said earlier, we've got accelerating sales momentum, having signed significant contracts across all our territories. These contracts demonstrate the ongoing opportunity Alcidion has, having just begun to gain traction in our key markets with Miya Precision, our flagship product. You can see there the contracts that were signed. It's also worth noting that the contracts that we signed during the year are spread across the product portfolio with the Miya Precision contracts supported by ongoing interest in Smartpage and Miya Observations and Assessments, which previously was known to many shareholders as Patientrack, along with the services and the third-party contracts and opportunities that we have. This allows us to establish a really strong presence as a key player in healthcare IT globally in terms of what we offer and present to the market. In line with the company's strategy for scaling for growth, we continue to invest in our people. We added key roles in the corporate structure across an additional general counsel. We built up the people, place, and culture function. Continuing to build in our internal information technology capabilities to support both the scale of the organization and to protect obviously the data and the systems that Alcidion run from the current world in terms of cyber. We've continued to make those investments. In the first half of FY 2021, Lynette Ousby was elevated to the role of MD for the U.K., recognizing the growing opportunity we have there, the growing number of customers and staff. If you look at the annual report, you can see the growth in numbers that we've had in terms of people in the U.K. In the U.K., that's around looking after not just sales and marketing capability, but the delivery capability that comes with being successful in that region. In June 2021, we appointed Matt, who you've heard from today, as our CFO. Those functions were all previously performed by Colin MacKinnon, who will be familiar to many of you, and he had a role of both Chief Operating Officer and Chief Financial Officer. Following the recent management hires that we have made to increase the resourcing capability across the financial and operational areas, Colin will step down on the 30th of September from Alcidion, and the role of COO will be redundant and taken up by these other corporate roles. Many of you will know that Colin was the founder of the MKM Health business that was acquired by Alcidion in 2018. He's since then been a very key part of our senior management team. The board at Alcidion, and I personally, would like to thank Colin for his significant contribution to the business over the past three years. Recently, just announced last Friday, we also welcomed two new board members, Ms. Victoria Weekes and Daniel Sharp. I hope you've had an opportunity to read of the very extensive backgrounds and experience that these two individuals have. They will be joining our board effective the 1st of September. We're very excited to have them join our team. They each bring valuable skills and experience that will continue to support the growth and evolution of Alcidion. At the annual general meeting, one of our long-standing board members, Nick Dignam, will step down after having served on the board since 2016. This has all been part of a board-led strategy, Rebecca can certainly talk to it more, in terms of supporting the growth and scale of all of Alcidion. That involves not just the roles within the company, but also the board and its role in leading us. An increase in, as Matt referred to, there was an increase in staff costs during the year. That's consistent with the strategy that we have and have stated of scaling, particularly in the U.K., to take advantage of these emerging opportunities that we have. To further capitalize on those opportunities, you will see us continue to recruit in point roles that we are looking for during FY22 to continue to scale the business. There are some roles that we had planned to fill in FY 2021 that we had not yet filled. In some respects, that was due to COVID and the lack of access to people and skills. Starting to see that settle down now, and we're seeing a lot of interest from people in the industry who are watching what Alcidion is doing and who are bought into the purpose and the passion of the organization. I'd like to just touch a little bit before we finish on the opportunity ahead of us and the continuing growth of the pipeline. You will have heard me talk about the U.K. and the opportunity for us. We have a tremendous growth opportunity ahead of us in the U.K. as the new financial year unfolds. As we mentioned, we started with already a record contracted revenue, but we will see accelerating sales across all the regions we operate in. In terms of the U.K., the NHSX is the digital arm of NHS, and they continue to support through both funding and very targeted programs, the digitalization and modernization of the NHS. They're committed to the four-year Digital Aspirant programme that was announced under Matt Hancock, and they've recently openly stated that they want to see a shift from large systems that lock in data to ones that provide an open and modular approach, such as that which we've taken at Alcidion. We're really looking forward to working with our existing customers in Dartford and South Tees to prove out our proposition and how it supports the NHS executive initiatives. This will include us continuing to become part of relevant procurement frameworks that help us to streamline that procurement. That allows direct award to contracts to Alcidion where appropriate or where we have been chosen. I think importantly, the 4 stated pillars of the electronic patient record strategy for the NHS around openness, mobility, modular in nature, and able to connect the ecosystems of healthcare plays exactly to the strategy and to the product development that we have undertaken here on Alcidion. We're looking forward to continuing to work in that region and to grow the opportunities there. Closer to home, for those of you in Australia, in this region in general, the focus on digital healthcare, and the emphasis on it continues, very much with an eye on virtual care and hospital in the home at the moment. That's partly because of the investment we've already seen in Electronic Medical Records in Australia, they're now starting to look to unlock the opportunities from the data that is available in those Electronic Medical Records and to use a platform like Miya Precision to support the aggregation of the data that they have of patients in the Electronic Medical Record with remote monitoring of patients in the home, patients' collected data where patients are adding directly into their records, and people being able to treat patients outside of the home. Now, that makes sense in COVID, obviously, when you don't want COVID-positive patients in the hospital, but it's also really important to those patients that have chronic conditions that sees them as frequent flyers back and in and out of the hospital system. They're better off being at home for their own personal outcomes, and certainly in a pandemic environment, being able to treat them at home is a real positive. We're also seeing the reemergence of opportunities around patient flow and the management of patients through the healthcare system. Again, that's become about as a result of the pressures that having our hospitals, ICUs, and so forth filled up with COVID-positive patients has put on the overall healthcare system, and that plays very directly to Alcidion's sweet spot of patient flow. In New Zealand, we're seeing the centralization of health decisions. They have had 20 district health boards in New Zealand, where we have a very significant presence in a number of them, certainly the majority. They're going to consolidate those down to a smaller number of regions. One of the key pillars of being able to make healthcare more accessible in New Zealand is around digital health. We already have a very good presence in each of those 4 regions. We're looking forward to working with our customers in New Zealand to looking to see how we can expand the opportunities there to support those changes in that market. Looking to FY22, we are set to continue sales growth across all regions. We'll continue scaling the business through investment in our people and to support the company's strategy to become a global leader in healthcare technology. We enter FY22 in a very strong position with AUD 15.1 of actually contracted signed revenue, which is 18% higher than where we were at the same time last year. We've got a further AUD 2.9 million scheduled contracted renewals during this financial year, that we don't count that as revenue until they're actually signed. As many of you know, we have a very high rate of renewal, in terms of our contracts. I think it's just worth noting that we only count in that contracted revenue, the revenue from signed contracts, that doesn't include anything that may come our way as a result of the Australian Defence Force contract. As you can see, contract revenue builds over the year as the existing contracts are renewed and new contracts are signed. Just to make clear about what that contracted revenue consists of. The focus for FY 2022 is to continue to grow, and accelerate the sales growth. We are at the beginning of the opportunity. We are currently two years into a three-year growth strategy that's focused on increasing revenues, delivering significant contract wins, expanding our technology capabilities, and developing programs with strategic partners that allow us to move into multiple and adjacent markets. Across all the markets that we operate, we'll continue to focus on creating and capitalizing on those growth opportunities with both new and existing customers. We have a strong growing sales pipeline across all those geographies in which we operate, and as we convert many of these opportunities into contracted sales and grow that revenue position, so will our focus continue to be on increasing shareholder value and expanding into ultimately new geographic markets when the kind of pandemic situation allows us to do that from a traveling perspective. I'd like to finish there. Perhaps just a note on our strategic acquisitions. We do remain interested in an acquisition strategy. We are very careful and considered about the opportunities and what we are looking for in terms of M&A activities. That will continue to be part of what we do through FY 2022 if the opportunities present themselves that allow us to expand our offering to our customers or increase market share, that then gives us an opportunity to further create organic growth opportunities. I'd like to thank the staff, the senior leadership team of Alcidion. They have been, as always, very passionate and very untiring in executing on our strategy and a great support to me. Equally, I would like to thank the board for the support that they give to all of us and for their guidance in terms of how we are growing this business. To you, the shareholders, I'd like to thank you very much for your continued support and interest. With that, it has been an exceptional year for Alcidion. We look forward to continuing with that success. Both Matt, Bec, and myself are now available for questions. Thank you, Kate and Matt. I'd now like to open up the webcast to questions. If you wish to ask a question, please type it in the panel below. Our first question is: how many third-party algorithms are run on our platform or the Alcidion platform, and will future revenue from these algorithms be significant? Thanks very much. We have a number of third-party algorithms running on the platform. We deploy some of our own as well as third party. Just to be clear, we don't see that as a revenue stream for us. It's actually a feature of the platform openness, and it's one of the things that we use as an important sales opportunity or, I would say, a positive thing around the platform, is that we do create an open environment where the customers can actually deploy algorithms that are generally available in the market, and there are many of these in healthcare. Part of our proposition to our customers is that we'll actually facilitate the sharing of that information across the customer base so there can be a shared benefit. It is not something that we see as a revenue opportunity at Alcidion. Thanks, Kate. In your view, what are the areas that Alcidion has underperformed over the past few years, and what are you doing to address the underperformance? Well, to be honest, I wouldn't say that Alcidion's underperformed at all, really, in any areas. I think we're definitely been executing on our strategy. We're in the final year of a 3-year strategy, and we've executed well against that, experiencing significant growth, scaling the business to support that growth, moving there towards break even in terms of how we achieved that. I think at times COVID has impacted some of those plans, but it's also presented us opportunities to accelerate our strategy, such as we've done with virtual care. Possibly 1 area we would have liked to have been further along is with the geographical expansion. However, COVID has made this challenging, of course. I do think that we have more than made up for that with the expansion that we're experiencing in the U.K. and the opportunity ahead of us. It will continue to be a focus for us into the next calendar year, but we just need to have the prevailing environment to execute on that. Thank you. Any new area to expand in 2022/23? Is this as in spend? I think you're saying any areas we'll have additional expenditure rather than expand. As indicated earlier into the presentation, we've still got a number of hires to support our growth, some of which were planned for FY 2021 and some of which will support us in FY 2022. As we sell that in the area of service delivery, contracts like the Defence Force contract will have significant revenue with them, but we will also have some costs associated with that delivery in both the services area and the product area. We'll also invest in systems to support growth to help us run more efficiently where appropriate. Thanks, Kate. Can you provide some insights into Alcidion's response to intellectual property infringement? Well, we haven't, as far as I know, and I know identified IP infringement. Of course, we have a very active engagement across this. We have a new general counsel joined us this year, Maria, who one of her key areas of focus is to ensure that our IP is adequately protected. All our contracts with our staff, with our board members, and so forth, have clauses around IP, including with our contracts that we have with customers. We have all engagements with partners are covered by NDAs. We're very actively aware of it, and it is a key part of what we need to do as a business from a protecting the assets of the organization. What do you expect the growth in annual revenue and annual profit to be over the next coming year? At this point in time, we don't give guidance on annual growth and profit. Where we are in terms of our development, we're very focused on growth in revenue. We hope to continue to accelerate growth. It's been a very strong year in terms of growth. I have indicated in previous presentations that we will look to break even in FY22 in terms of profitability and then see an acceleration of revenue into the following year, which should drop to the bottom line in terms of profitability. Of course, if some of that revenue growth comes earlier than we planned, we may see ourselves moving to profitability earlier, but we are still sticking with that in terms of our guidance. We've been quite transparent in our quarterly reporting on the current sold revenue for the year and the revenue figure for five years out generally. We believe that gives shareholders pretty good insight into how we're progressing, and we'll continue to do that through this year. Great. Thank you. The Alcidion team has been working hard. Investing in people has been key to my investment in Alcidion. What have you been doing to ensure the health and well-being of your team, including the executive team, so they can continue to drive the business to continued success? I think I'm going to get Rebecca to answer that one, seeing you've asked for how the executive are being looked after as well. Yeah, absolutely. I can certainly answer that one. Obviously, it's really important in the current environment as well, and it's very multifactorial in that we look at both career development, career succession, as well as really looking at employee health and wellbeing. As you said, I think, in this sort of COVID environment, you would expect to see, and we do a lot around employee assistance programs to really make sure that we're supporting our employees. All of that was in place prior to COVID as well, and I think it's really sort of set the culture of the organization where we really try to be best practice when it comes to looking after our team. I would say that also with the flexible work, that was something that we have really embraced in Alcidion well before that's been forced on us with COVID, both in terms of how people like to work from a schedule perspective. As you can imagine, we have some very innovative people, and technology people tend to like to work at different hours, as well as our staff that have families. We want to make sure that we can really accommodate how team members like to work and what's the best way for them to work and the best environment for them to work, but also where they work as well. Prior to COVID, we certainly supported work from home back then, and obviously now we're fully embracing the opportunity to be able to work from home. I think for us, it is really sort of being able to do all of those things in addition to some of the fun things as well. As you've seen, our staff numbers have increased really significantly over this last 12 months, with more to come this year. For us, it's really about how do we keep our teams connected, particularly as we start to see some really big growth in our overseas markets. We do that through sort of fun things, as well as sort of the professional development elements of the role. Thanks, Rebecca. Does Alcidion support the push to value-based healthcare, VBHC, as described by U.S. academic Michael Porter? What ALC products could be used to facilitate the company's approach to VBHC, supportive or otherwise? Thanks very much for that question. This is potentially a long answer, so I'm not going to embark on the whole detail of it. We are actually thinking about the subject of a blog article in the coming months because it is an emerging area, talked about a lot more in the U.S., emerging in discussions in the U.K., and a little bit less so in Australia. That's partly the way in which we fund the healthcare system. In short, my position supports and aids value-based care through giving a view of a patient or through the lens of the integration of care, both in-hospital and out-of-hospital, primary care, social data, and so forth, and allowing that data to be aggregated in such a way that value-based care decisions can be more easily made. We believe that we're really well-placed to support that as an initiative. We obviously keep a good eye on the discussion coming out of the U.S. around that, and we'll be sort of interested in how we start to position that when we see our markets moving slightly more towards that as a consideration. Thanks, Kate. Next question is, Matthew mentioned income fluctuates quarterly. What's the reason? Is it the invoicing cycle? Kate can help me with this one as well. Cash flow fluctuates quarterly quite a bit, as we've talked about, and often we see Q3 and Q4 being quite high cash inflow months for us. Invoicing and revenue also fluctuate quarterly, and that's very much driven by the type of sales that we're making in that period, whether it's a large product deployment or a large license sale, for example. There's always an underlying revenue level, but there are quite large peaks and troughs intra-month and intra-quarter. Yeah. I mean, yeah, some of it is just purely the nature of healthcare. It is funded often in a capitalized manner rather than an accrual-based manner. They have to use some of that. They spend the first half of the year deciding what they want to buy and the second half of the year buying it. Yeah, sometimes customers will pay for a very large upfront sum, and the revenue we recognized over 12 months, maybe 18 months. The cash and the invoicing will happen now. Okay. Thanks, Kate and Matt. What are your key ESG considerations? I'm going to let Rebecca answer that. Thanks, Kate. It wouldn't be surprising that this is very much on the board agenda at the moment. In fact, I'm leading a workstream with some of the members of the senior executive team, really to bring to life what we're already doing at Alcidion. For us, when we look at ESG, we have a really clear sort of social impact, and that is the purpose of this organization, to improve patient care. Certainly, we've got lots of sort of validation points to really support that. Not surprisingly, also, we're very over-indexed when it comes to privacy and data integrity and so forth. For us, I think it's about how do we really sort of articulate that in a compelling way so we're giving investors visibility to the work that we're doing there. I think on the other side, the E side of ESG, yeah, it's perhaps not as obvious as it would be for ASX-listed companies in the resources sector, for instance, when we look at our environmental impact. If you look at, certainly travel would be one that we continue to look at clearly low these days in that sort of COVID environment as well. Because we are a cloud-based technology business, obviously we don't have the same infrastructure as well that would sort of lead to some of the upcycling sort of considerations of technology. Certainly very much on the agenda, very much a board and senior leadership team collaboration in how we support this, but certainly will be a lot of initiatives happening in the organization. Thanks, Rebecca. Will Alcidion ever consider acquiring a portfolio of medical devices that enhances Alcidion's offering? Certainly not on the strategy for us. I think there are a lot of medical device companies. There is probably going to be continued growth in this market because as we evolve into much more home care monitoring, our position is to remain a very open platform in respect of this, in being able to receive data from a multitude of medical devices. Thanks, Kate. Someone has asked about North America. I'm assuming they are asking if we're planning to expand there. Look, I'm very consistent on this. As I said through the presentation, the geographical expansion has probably just been put slightly on the back burner for us in the last 6 to 12 months due to the pandemic. We continue to be interested in North America through entry in Canada. Not saying that we wouldn't go straight to the U.S. if the opportunity presented, but it seems to us that healthcare systems that are very aligned to what we do, in both the NHS and Australia, are those that would be the easiest to enter at this point in time. Look potentially to the United States. Thank you. Salaries and wages represent 72% of current total revenue. Will this be a typical percentage going forward? This is a question for me, I think. In FY 2020, that ratio was 84%, so it's certainly improving at 72%. Is it a metric that we'll use moving forward? Look, I wish it was that easy. There are scenarios where we'll have to staff up before the revenue is earned to put staff in place to facilitate a large deployment, for example. Intra-period, quarter to quarter, half on half, that metric probably won't hold in the short term, but it's certainly a metric that we're very aware of and that I'm certainly watching over the next few years. I can't guarantee it's going to stay at that level and continue to decrease in the very short term, but in the long term, it's certainly something that I'd like to see happen, yes. Thanks, Matt. Your focus seems to be on sales and market share rather than R&D investment. Is this on purpose? Not at all, and we continue to invest very heavily in our product. It's evolving all the time. Our move into virtual care has been an indication of that. Our R&D at the moment is in the areas of natural language processing and e-noting. We do continue to do that. We don't allocate it separately, R&D to product development, though, in terms of what we're doing. We have it all within our product development, and we continue to evolve the product to meet that. What we believe, though, is that we have a very sophisticated platform available that is really making a market at the moment in terms of creating new opportunities, expanding the horizons and the opportunities of our healthcare providers and thinking about what they can do with data. We're really moving along at that pace in line with our customers' ability to uptake new technology. Thanks, Kate. Can you please discuss some of the broader and global sector themes promoting best-of-breed technology versus overarching softwares like an Epic or Cerner? Well, certainly the biggest is around data locking. There is a lot of global activity around this. In the U.S., there has been legislation that is really impacting Cerner and Epic in terms of a mandated requirement that patients can access their data in an easily accessible form. Not something that the big vendors have been used to or necessarily supportive of. In the NHS, we've seen the health minister come out and say that we are looking for providers of software in this market to unlock and separate the data layer from the application layer. This is a movement we are seeing everywhere. As the movement in the use of data is becoming a driver in every industry, so too is it in healthcare, and it needs to be unlocked from these kind of silo-driven, monolithic-type systems. That is the overarching push that we are seeing and why we are seeing people moving to these sorts of markets. Technology like ours also is well-positioned to actually integrate or to create an orchestration layer for those best-of-breed solutions. It protects the investment they've already made in those best of breed. They don't have to rip everything out and replace it. They can actually build on the investments they've already made. Thanks, Kate. How has the Salford-Hitachi contract for the digital control center progressed? When does it go live? The software is deployed. I can't tell you the actual go-live date off the top of my head, but it is in the last quarter, calendar and fiscal, I shouldn't say. It's in October, November timeframe, I should say. Yeah, we look forward to that. That will be Salford go-live first and then hopefully look to that rolling out through the Northern Care. Great. Thank you. Please could you advise the size of the addressable market for ALC in the U.K. and that in proportion to the addressable market for ALC in other geographies? It's a hard thing to actually articulate it in terms of AUD, because there are many parts to the opportunity in the U.K. I think in previous presentations, I've talked about a AUD 1 billion-dollar market in terms of the U.K. A third of that market is probably tied up in implementing-Big EMRs like Cerner or Epic, and will be doing so for the next little while. I sort of discount them from the opportunity that is ahead of us. Comparatively, it's probably easily 7 or 8 times the size of the ANZ market in terms of when you narrow it down. It does depend on what you're talking about. Are we talking about Miya Precision? Are we talking about Miya Observations and Assessments and so forth? The opportunity is significant, to say the least. Thanks, Kate. What is the value and length of the ADF contract? There is no contract yet. It is a preferred provider opportunity. If it progresses, the way in which it's currently being discussed, it's an AUD 21 million contract over five years. AUD 10 million of that is in subscription fees over the five years, and AUD 11 million of that is in deployment fees, to get that up and running. Obviously, we would then hope that it would be extended beyond the five years, and the contract, I think, will have extension options as well. Contracts as we do quarter-on-quarter, in any year. As we always do, at the end of when we do the quarterly report, we'll give you an indication of the updated booked revenue at the end of that quarter. Thanks, Kate. Another question on the ADF contract. Are you able to advise who the other members involved in the consortium for the ADF contract are? What percentage of the contract will be attributed to Alcidion Group directly? No, I cannot give any information. You know how it is with Defence Force engagement. We have been allowed only to indicate that we were part of this successful consortium because of the requirements to have that included in a disclosure statement when we were raising capital. Otherwise, we would not be talking about it either. They will obviously make those announcements when their contract is signed. Just so you know, the dollars that I talked about, they are just what Alcidion will take out of the contract. There's no reference there to any of the other consortium partners or what the bigger overarching contract value is. Thank you, Kate. The virtual health trial had been on for a while. What is the plan to next step and timeframe? It's no longer a trial, that's been in contract for some time. Both Murrumbidgee Local Health District and Sydney LHD signed initial contracts with us, and are looking to renew those for a further amount of time. Thanks very much, Kate. Final question we have here is, good to see an increase in the gross profit margin. What are you expecting for this metric looking ahead? Matt, I'll give that to you. Thank you. If the questioner is asking about the gross profit percentage, it's very much going to be dictated by the mix of our revenue. While it's nice to see the GP percentage at 88.3% up a few points on the prior year, I'm more interested, to be honest, in the dollar value of the margin we're getting from our revenue. More than happy to see a slight decrease in the percentage if that means a higher dollar value. Based on what we're seeing at the moment, we're expecting that GP percentage to stay in that range of very high 80s to low 90s moving forward. Thanks, Matt. To what extent does the ADF contract position ALC to pursue the U.K. MOD for a similar approach? I believe that the U.K. Ministry of Defence may already have made a decision on the solution that they used in the last year or two. It wasn't something that we were actively pursuing or probably even aware of at the time when that went to market. Thanks, Kate. There are no further questions. I'd now like to hand back over to you for closing remarks. Thank you very much, everyone, for your time and attention today. As I said earlier, we are very much grateful for your continued interest. These calls always have a large number of people attending them. I hope they provide you with the information and further ability to delve into some of the information that we provide. We're very grateful for your ongoing support, and we look forward to keeping you updated as FY 2022 progresses. Goodbye