Good morning everyone, and a very warm welcome to this morning's presentation of Alcidion's 4C quarterly cash flow and business update for the second quarter of FY 2023, which was released on the ASX this morning. My name is Kerstin Wahlqvist, and I am the Investor Relations Manager here at Alcidion. I'd like to begin by acknowledging the traditional owners and custodians of the various lands on which we work and meet today, and to pay my respects to their elders, past and present. I extend that respect to Aboriginal and Torres Strait Islander peoples who have joined us on the call today. Today's webcast will feature a short presentation by Alcidion Managing Director, Kate Quirke, who'll take you through the numbers and an accompanying business update. This will be followed by some time for Q&A.
Joining us on the call today is also Alcidion CFO, Matt Jepp, who will be available for questions as required as well. All participants are currently in listen-only mode, and if you do wish to ask a question, you can do so at any time by typing it into the Q&A panel at the bottom of your screen. We've received some questions in the lead-up to today's sessions, but we'll hold all of those questions until the end of the presentation. With that, over to you Kate.
Thanks, Kerstin. Thank you everyone for joining us this morning, a very happy New Year to you all. This morning, as Kerstin said, I'll give you a general business update alongside the numbers that we released and reported this morning with the business update. Getting straight into it. Q2 was a really exciting quarter for Alcidion, I'm very pleased with the progress we're making. We had two very significant contracts were signed during the quarter, those contracts demonstrate and continue to validate our position to the healthcare market, which is demonstrated through the modular approach we're taking to providing solutions to the healthcare system.
As a result of those two contracts, plus a number of smaller contracts and renewals, we made AUD 16.8 million in total contract value on new sales, which is actually the second highest quarter of new sales in the company's history. Hence why I'm very pleased with the progress. The initial three-year contract with University Hospital Southampton, or UHS as we refer to them in the U.K., is to implement the Miya Precision platform as the foundation for their electronic patient record. It demonstrates exactly the proposition we have for the NHS. Alongside that, we had an AUD 8.4 million extension to our existing contract with Leidos Australia for the delivery of a Health Knowledge Management System for the ADF. Those two significantly contributed to that AUD 16.8 million, along with a number of other smaller contracts as well.
Of the AUD 16.8 million of new sales, AUD 4.2 million will be able to be recognized in this financial year. Both those contracts are strong validation of Alcidion's modular strategy for healthcare solutions deployment. It's important that we recognize the validation because it is the proposition we've been taking to the market very specifically. The reason we're doing that is 'cause it enables our customers to maintain rather than replace existing technologies and progressively build an electronic patient medical record over time.
That approach aligns both with their budget and their timing necessity and requirements to actually get some value and early value out of their investments in healthcare IT, rather than potentially traditional deployment of a large single integrated EMR that may take several years to implement and therefore the value is not recognized as early as we would see. I also note that our contracted revenue stands at AUD 32.9 million, which is up considerably on the same time last year. When coupled with expected renewals, it means that the revenue able to be recognized this year stands at around AUD 34 million, and that's without any further sales being made in this financial year, which of course, we would expect to happen.
The NHS remains a key target market for us, and we have seen significant activity in the last month, as in January, around tenders and funding guidelines for trusts, which is great to see. The activity is really kicking off now. It is somewhat behind the timing that was originally proposed. We would have expected to see this through the last quarter of last year. It's understandable. There was a lot of obviously political change and so forth, going on. What we're seeing now aligns with what our expectations are, as I said, albeit somewhat behind where we anticipated to be.
We remain confident in our ability to meet our expected target of being both cash flow and EBITDA positive in FY 2023, provided, as I said, the NHS continues the momentum that we've seen through the coming months through the end of the year. In the first half of FY 2023, we collected AUD 8.8 million of cash receipts, an increase of 15% on the prior corresponding period. This continues to illustrate our strong ability to turn revenue into cash. We have recorded negative operating cash flow for the quarter of AUD 4.5 million. In general, that's a result of lower than expected collections in December. This was due to the timing of the half year- end, which was the last year bank day being a Saturday.
I know that sounds crazy, but sometimes we do get quite a few payments coming in on the 30th and the 31st, post the Christmas period. Important to note is there were some larger receipts in that we did expect to collect in late December that didn't come through till early January. You know, that reflects some of the lumpy significant milestone payments that Alcidion receives for big projects like the ADF project, for example. The timing of payments at this time of year always has some uncertainty. As I said, if there's a significant milestone that falls around the end of the month, it could just slip over into early January. The reporting reflects that.
It doesn't in any way reflect the progress of the business in any negative manner. We are collecting cash and as indicated in the business update in January, we collected AUD 5.2 million in cash for that month, so that was a very strong month. Q2 cash payments were AUD 11.3 million compared to AUD 12.5 million in Q1. We have a cash balance at December 31st of nearly AUD 12 million with no debt, obviously, with further cash coming in January. As you can see from the graphs on this slide, all indicators are continuing in a positive direction. We generated new TCV sales of AUD 16.8 million in Q2, with approximately AUD 4.2 million of that able to be recognized in this financial year.
Those new sales comprised AUD 12.8 million in recurring product revenue. Around 76% is recurring product and around AUD 4 million of non-recurring services revenue, which is basically the revenue that we charge for implementation of our projects. As you would expect, the Defence Force project has always has a greater amount of services revenue perhaps than some of the others because of the way in which we work with Leidos to deploy our solutions. Cash receipts from customers in the first half were AUD 18.8 million, 15% higher than in the prior corresponding period. You'll see from the cumulative cash receipts graph, we're tracking in a positive and consistent manner to prior- years.
As I mentioned earlier, we have had the second highest quarter of new sales in the company's history, and I thought it was worth briefly talking you through some of those notable contracts that allowed us to achieve that result and why I'm excited about them. We're really pleased with the trajectory of new sales and also that these contracts landed within our expected timing, as I indicated on the quarterly call last quarter. The first of those I want to talk about is UHS or University Hospitals Southampton. We signed an initial three-year agreement with options to extend to four and then obviously beyond that. That was to implement Miya Precision as the foundation for their electronic patient record.
We will partner with UHS to deliver a modern modular electronic patient record using a combination of Alcidion solutions and modules and the incumbent products that UHS is already using that are part of those, and also that extended to us being able to resell a couple of UHS-owned products as part of our total modular EPR, which is exciting. The initial implementation will be for Miya Access, Command, Emergency and Flow and obviously the platform. Then the idea is that we will build on from there. The contract includes options to take additional modules such as the Silverlink, as we've referred to in the past, Silverlink, Patient Administration System, what we refer to as our PAS module now. UHS will allow them to build their modern modular EPR over time.
We expect it to result in significant growth of the overall contract value that was initially indicated to the market. It has the potential to reach around AUD 13.8 million just for a four-year period. As many people will know, if we are successful in rolling out all of those modules, it's very likely that UHS will use them for longer than a four-year period. We're very excited about it. It allows UHS to begin implementation of the Precision platform, which is already underway. Software is deployed in the cloud and accessible to them, and we're starting to build that now. Whilst that's happening, they'll look at other priority areas for the additional modules and the orders in which they wish to do that with.
The important part is they won't need to go to market or won't need to recontract for those additional modules. The agreement also increases our penetration in the National Health Service, the NHS, with at least one Alcidion product now in 40 NHS trusts, while further establishing the first implementation in a new integrated care system in Hampshire and Isle of Wight. As I mentioned at the beginning of the call, UHS is really well-recognized and acknowledged as a digital exemplar, and we're really very excited to be working with them to demonstrate the value of this modern modular EPR and to the rest of England predominantly, and what can be achieved using the Miya Precision platform and taking this modular approach.
We also signed a contract with Bolton NHS Foundation Trust, who is an existing customer for Alcidion in two areas. They use our Miya Observations and Assessments, so previously known as Patientrack, and they were also using the ExtraMed patient flow solution. You may remember we acquired ExtraMed for its patient flow market share back in April of 2021. A s we had planned, Bolton has now signed to upgrade from ExtraMed to put in Miya Precision with a focus on using the Miya Flow and Miya Access modules. This agreement introduces Miya Flow to the Greater Manchester ICS, and it extends our footprint at Bolton, at Royal Bolton Hospital, where we already had some modules deployed.
Again, this demonstrates our strategy to provide modular and incremental modules to customers where we have an existing footprint and thereby create an opportunity to continue to extend to all of our modules so that Miya Precision could become their electronic patient record of choice. We also signed a contract renewal agreement with University Hospitals Dorset for the use of the Silverlink Patient Care System, PCS. As you know, we acquired PCS at the end of 2021. The interest in that acquisition, as I said at the time, was very much in how it expands the offering that Alcidion can take to the market and allows us to compete in these electronic patient records.
Very clearly, if we had not had access to a PAS, University Hospitals Southampton would not have been in a position to take on Alcidion solutions to replace an EPR, as at some point in the near future, they need to replace their existing legacy PAS. Signing additional renewals for the Silverlink PCS customers is exciting for us because it extends the relationship for another three years, and it also validates the long-standing relationship Alcidion has with our existing customers and the trust that the England hospitals place in Alcidion and the Alcidion offerings. We also signed, as I touched on, an AUD 8.4 million TCV that is extension to the existing Leidos Australia contract for the Health Knowledge Management System to support healthcare services to Australian Defence Force personnel.
The contract extension includes the addition of Miya Observations and Assessments to what was already contracted. Again, additional modules being sold in, going to the customer first. Land, I guess it's often referred to as land and expand, but we've been able to then increase the number of modules that the ADF is using. Also, excitingly, it's extended the reach, to new environments within the ADF or new care delivery settings within the ADF. The combination of those brings the total contract value for Alcidion products and services to roughly AUD 31.7 million. That is the combination of the initial scope plus this scope. Then there's also, of course, on top of that, the option for renewals up to 15 years.
We at Alcidion are very proud of the role that Miya Precision is playing, and it's increasingly more and more crucial to supporting the health outcomes of ADF personnel through the provision of a consistent longitudinal health record for clinicians who are providing such varied care across so many different settings, when it comes to supporting ADF personnel. I know that this is a challenge for defense forces around the world, in respect of how you get that single view of all of the varied environments. It's fantastic for us to be in a position to work with Leidos to deliver a world-class healthcare management system for the ADF. A little bit in respect of outlook, as I said, we're very excited about the progress. We're absolutely on track.
We end the quarter with total contract revenue able to be recognized, around AUD 32.9 million. That's an increase of 21% on where we were at the same time last year. We have a further AUD 1.1 million of scheduled renewal revenue from existing customers that would be renewing their subscriptions during the period which we expect to see converted in this financial year. As we move into the second half of FY 2023 that is, we continue to see the need for digital solutions to streamline patient flow, to support clinical processes, and of course, as I touched on in the AGM presentation, to continue to support this move to virtual care or care being delivered in new care settings, of which we're seeing a lot of interest, obviously, in the Australian market.
I'm very excited not only for what we are doing within the NHS in England, but also how that is translating in the Australian and New Zealand market. With The Alfred and Northern Territory Hospitals going live with the flow solutions in this quarter, it will be great to see how that is represented to the rest of the market as well in terms of their success and benefits. We do continue to research market expansion to new territories. I think it's important to note that we have a significant opportunity in our current territories, which we are completely focused on. Entry to new markets will involve a considered approach. It'll be based on adequate research that's aligned to our strategy.
It will take time, but we are actively looking at different markets, and some people will have seen on social media that we are attending Arab Health, which is a huge conference in Dubai this week, really just to look at what is going on in that market and understand more about that market. Our half-year results will be released towards the end of February, and at that time, I will provide a detailed update on progress during the first half and our focus for Alcidion for whole of the 2023 year. I continue to thank you for your support and attendance, and we now can move to Q&A.
Thanks, Kate. Many thanks also to those of you who have submitted questions already. Just to recap, if you do have a question, please feel free to type it into the Q&A panel at the bottom of your screen, and we'll look to address it alongside the questions we've already received. Any questions that are of a similar nature, I'll look to group by theme to allow for a greater breadth of discussion. To kick off, Kate, you touched on this in the presentation, but we've had a few questions around Silverlink. Perhaps if you could just provide a bit of an update on Silverlink.
Look, I think those questions generally are around, you know, the rationale for the acquisition, and the progress in respect of that. I think it's really important to note it is progressing as we anticipated and as we outlined really at the time of the acquisition. UHS has included Silverlink PAS in their contract, and we would not have been selected to provide an EPR to UHS without access to that PAS. And the ability to have to use that PAS as part of our stack and demonstrate it as an integrated module within that modular EPR means that we can respond to the current tenders for EPR because we have a PAS. As I said, we couldn't have done that prior to that.
The current Silverlink customers are signing renewals, which provides us ongoing commitment, ongoing recurring revenue, and an opportunity to further upsell into that customer because of the relationship that brings us. I'm very pleased with what the acquisition's enabled thus far, and I know it will continue to do so into the future.
Thanks, Kate. Just a follow on from that, if you could provide some more color on where the pipeline sits now versus this time last year, and if we're seeing an average TCV uplift from Silverlink.
Thanks. I guess it is related. The pipeline is definitely, you know, greatly advanced from where it was last year, and a lot of that is driven by these EPR opportunities and the funding that's coming from the U.K. We also see increased pipeline and activity in Australia and New Zealand as well. In terms of the TCV, the overall TCV, has of course increased because it's an opportunity to sell, the Precision platform with additional modules alongside Silverlink. Whether they will be contracted like UHS in a modular nature or all at once like South East remains to be seen in respect of how that, how that progresses. You know, I think there's a definitely an uplift in the overall contract possibility, but they won't always contract for everything up front.
Great. Thanks, Kate. Next question. Can you talk a bit about the relationship of Alcidion with other healthcare technologies on the ASX? For example, Mach7's product service, eUnity. What happens in the situation that there's overlapping, other services from both pieces of software?
Well, there are many solutions, obviously, in healthcare. Some are listed here, some are overseas, some are large, some are small. Miya Precision as a platform seeks to ingest that data from platforms such as Mach7 and others that have got information that helps to build that longitudinal health record. That data is part of the data that we need to support clinical decision support in a single data location. So it would be from them, it would be from laboratory systems that are listed. Many data sources that can be used to build a deeper and wider, data source within Miya Precision.
Great. Thanks. Just to follow on from that one, if there was a software that didn't already have synergy with Miya, how long does it take for that software to be integrated and usable with Alcidion technologies? I think we've just frozen.
I've got bad internet connection, it's telling me, so I'm hoping that's working all right.
We're back on, Kate.
Okay. Yes. Not sure. I might get everyone off the off the internet. In many cases, it's gonna be more about understanding how the data is to be used and what it represents in the overall longitudinal health record rather than the actual technical integration, which is a fairly straightforward approach.
Great. Thanks. Perhaps one for Matt, can you comment on the proportion of the AUD 5 million cash received in January? Sorry. On what proportion of the AUD 5 million cash received in January was scheduled to be paid in December?
Thanks, Kerstin. I'm happy to answer that. Look, there's probably about just shy of half of that could have/should have been collected in December, but as Kate said, with the way the days fell, some of our receivables or some of our customers felt that the first week of January was on time as opposed to the last week of December. It was just shy of half for that number.
Thanks, Matt. Kate, you have touched on this, but just perhaps if you could just reiterate, if you can explain what happened with the contracts that you mentioned at the end of last quarter, that were then gonna be closed, and just an re-update on that. I think we've frozen again. Sorry, everybody. I'm sure she'll be back in a moment.
Stop sharing and see if that helps. Is there an internet? I'm just gonna ask Miya. Is there a problem with the internet? Okay. They're letting me know, so.
We're back on, Kate. Yeah.
Yeah. I don't know. I've got sharing, hopefully. I don't know. I'm in the office, so I'm not sure why it's causing problems. Just put your hand up to let me know, Kerstin , if that occurs again.
Yeah.
Okay, back to this question. I think it's fair to say that we, so with a quarter where we've had our second highest quarter of new sales in TCV, I feel as though we have, in fact, delivered on what I had indicated, being the, you know, the second highest that we have, and that the contracts that I expected to sign were in fact signed. I think what it potentially tells me is that maybe the manner in which I indicated that is being received differently. People were expecting different contracts or contracts of different nature. I indicated that there were several contracts to be signed, several contracts were signed, and they were in value, you know, very significant for us when compared to prior historical contracts.
You know, at this point, I feel as though, you know, we have delivered on that, but the message I take from that is that I need to be, you know, consider the manner in which I provide guidance to the market.
Thanks, Kate. Next question is around, just moving to the senior sales team, if you could just give an update on that?
You know, I'm not sure. I'm not quite sure what is behind the question other than, you know, as per normal, you would have some people sort of leave, and come, and new people join you during the course of any year. We have Tom Scott, who heads up the U.K. sales team. Tom has been with us, coming on three years. We have, I think, Steve Leggett has just moved on to a new company. We have people in Tom's team that are very experienced in the modular sale, and I think that's really important in terms of the construct of the sales team in that market.
Here in Australia, Florian Stroehle, has been with us over a year, and has leads the sales and marketing team in Australia/New Zealand market. Omkar, senior sales exec, has been with us for a number of years, and we have appointed a new salesperson who's replacing somebody who left during the year. I wouldn't have considered any of that, abnormal movement. I'm very happy with the skills of the sales team, and I look forward to them continuing, hopefully, to deliver quarters like we have just had.
Thanks, Kate. Okay, next question. If you could provide some more color on the significant activity in the NHS that you mentioned.
I think significant activity, I mean by that is that there's a number of tenders to market for Electronic Patient Records, but not everybody will be. We're not reliant 100% on the EPR tenders in terms of new business. There's a lot of activity around integrated care system consolidation, around flow, being a real driver for investment in technology in that market. What I'm really referring to is that there is an a funding stream for the Frontline Digitisation Programme. That whole program of work really should have been actively underway early in the second half of last calendar year and has really only got that significant momentum behind it at the beginning as we start 2023.
Thanks, Kate. All right, next question. I think one for Matt. This is the fourth quarter in a row that cash expenses have been around AUD 10 million-AUD 10.5 million. Is this sustainable? Yeah.
Is that expenses in particular, yeah?
Yeah.
Look, I think it is. The fact that, you know, that cash expenditure has leveled out and been flat pretty much now for four quarters in a row, you know, goes to our cost control. You know, look, I think that is sustainable, and I think that's kind of around the level that we're going to expect to see for the rest of the year and moving forward.
Thanks, Matt. Next question. Given the delays in the Frontline Digitisation Programme, has there been any change in timing for when the NHS trusts need to procure an EPR system?
They have not changed their deadlines, which was to procure one by the end of 2023 and be live at HIMSS Level 5 by the end of 2025. There's been no change to that stated aim from the NHS England.
Thanks, Kate. I think just one last question, if I can. Just around quarterly cash flow reporting and when we think we might be able to be relieved of that?
That's an interesting question. We've been having some debate about whether there is any actual firm guidance from the ASX on what constitutes relief from quarterly reporting. I think it's fair to say from our perspective, if we can demonstrate consistent positive cash flow, as we did last year into this year, we will probably start to look at how that, how we approach the ASX about that. At this point we're still following on with what we understand to be the guidelines. I think it gives us an opportunity to update the market.
The flip side of that is we have reporting that is, because of the lumpy nature and of the way in which, our milestones can land in terms of payment of those, doesn't always reflect accurately what is really happening, within the business. You know, I think being able to give an update like this is really important to give, the depth and color to what is actually reflected in that, Appendix 4C.
Great. Thanks, Kate. Well, that actually brings us to the conclusion of our Q&A session and to today's webinar. It just remains for me to hand back to you Kate, for final remarks.
Thank you, Kerstin. Thank you to everyone for joining the call. I'm always very grateful for the interest of shareholders and the number of people that join us on this call to get a direct update, and for your very considered questions. I look forward to giving you an update on the half year. Again, obviously we will conduct an investor update similar to this, giving you a view of how we've traveled in that first half and what the outlook is for the rest of this year. We're very excited about 2023.
There's, as I've indicated, there's a lot going on in our markets, and we think Alcidion is very well placed, and certainly we have gained the attention and the awareness in our markets of Alcidion and what we've got to offer. We look forward to that turning into hopefully more contract wins as the calendar year progresses. Thank you very much.