Okay. My clock has just ticked over to eight o'clock, so we'll get things underway. Welcome, everyone, and thanks for joining us. My name's Craig Sharp. I'm the Company Secretary for Kinatico. I'll run through a few formalities and then pass over to the panellists. Let me start with Paula. Thank you all for joining us. Apologies for any confusion with the change in the invitation for the webinar. We sent out an original webinar invitation, and we had noticed that there may be a slight security risk with running the meeting as it was originally configured, so we had to quickly adjust. Glad to see you caught up and made it. Now, we find my right controls. As we like to do at Kinatico, can I start by acknowledging the traditional owners of the land on which all today's participants, panellists, and audience are participating?
Personally, I come to you from the lands of the Wadjuk people of the Noongar Nation. I pay my respects to their elders, past, present, and emerging. As Company Secretary, it falls on me to point out this very important slide. Today's announcement is available on the ASX site and on kinatico.com. If you do go back to review anything, please take a little moment to stop and read this slide. It is important. The audited accounts, the accounts that have been published, financial figures in those accounts have been fully audited, and the assumptions set out in pages and pages of notes, often referring to accounting, cross-referring to accounting standards and more paper. In the interest, today's presentation will include those numbers and also some other numbers.
In the interest of not boring your socks off, we're not going to run through all the assumptions on which all of those numbers are prepared. Of course, any investment advice pertinent to you should be taken by your professional adviser, taking into account your personal circumstances. Today's panel, we're going to hear from Michael Ivanchenko, who's our Chief Executive Officer here at Kinatico, and Jeff Hoffman, who holds the role of Chief Revenue Officer. They're a lot more interesting than me, so I'll pass them off to them right now. Thanks.
Thank you, Craig. Next slide, please. Good morning, everybody, and thank you for taking the time to join. We're going to take you through not only the overview of the half-year just completed, but also a little bit of our view and our direction and positioning for what we believe or strongly encourage of what we've set up in moving forward. I'm not going to spend too much time on this slide. Obviously, these are the published results as published last week in our half-year accounts. The two that I'm going to call out here, specifically AUD 13.6 million worth of revenue, is actually a record number for us in H1 and also achieved in what we all know are interesting economic times. We're happy that we continue to grow. Of that, AUD 1.7 million in SaaS, 41% increased over the prior corresponding period. This is our target.
This is our strategy around the organisation that we'll be further going through today about establishing our recurring SaaS revenue base that we generate because we provide ongoing daily value to organisations. Next slide, please. A little bit, we get the high-level numbers around our achievement in the half-year, but it's important to actually have a look at what they actually mean, some of the factors behind the scenes that we'd like to point out. We outlined at the beginning of the year our CGIS strategy, continue to grow on innovative scale. We continue to invest in the business to make sure that we have the ongoing, the best features for compliance, monitoring, and management for organisations today, but also tomorrow, as we know that market is going to continue to grow and the opportunities are going to continue to increase.
Let's have a look at some of the numbers specifically as they've played out over H1. We've announced the impact of AUD 1 million negative for the half-year, but within that number is over 400,000 of one-off unusual items, the rebranding to Kinatico, restructuring costs that we've announced in terms of our annualized future expected savings of AUD 1.1 million as a result of our automation and business process improvements. Factoring those in, we've actually improved our impact performance for the half-year, despite it being a foundational half, by 8%. Within that, then when you look at where we've ended up with SaaS at the end of year, that now brings our annualized revenue even at December to AUD 3.9 million annualized against the number of 2.4 million last year, a 63% improvement.
Highly significantly, and we see this as the predictor of where we're going, is that the growth of our SaaS-built customers, the number of customers that we now have under SaaS contracts has increased in that same period by 92%. Now, we say that's significant because it's a lead indicator. You don't actually have those at AUD 3.9 million annualized number yet. The other one, though, when we continue to look at some of our traditional business lines under the CV Check product, we've seen a 45% growth in other background screening. This is things other than national police checks. This is a real indicator as to the successful implementation of the strategy of diversification and playing out further information, further value to organizations, and the other services that we provide.
We've also seen a 12% increase in the number of checks per order, so under the CV Check product. Not only are we seeing a wider number of checks, but the actual package and volume within individual interactions is going up, again, playing out to that diversity of the increased value to organizations. As a result of that, there's been a 6% increase in the actual value of each of those orders. All of those things indicating that while we continue this evolution, transformation of the organization into a SaaS company that is providing daily value to organizations, at the same time, we continue to build within the traditional products of the company. That increase across the board, primarily driven by the increase in SaaS revenue, has seen us achieve a 1% increase in gross margin.
That is something we are focusing on and expect that to continue to improve as we increase our penetration of SaaS revenue. As I mentioned, with the underlying performance and some of the restructuring costs, etc., we had in the first half of the year. At the same time, we increased our sales headcount to drive growth by 25% in the organization. These are SaaS specialists brought in with that background, with that understanding, and they've been given further training and tools, etc., to help us achieve our future aspirations. That happened at the same time that we reduced our overall headcount by 19%, a real indication of achieving that scale aspect of our strategy and driving the efficiencies and making sure that as we continue to grow revenue, we can service it with our automation, our tools, and our platforms.
All of that results in our expected 1.1 million annualized savings. When I talk about an underlying impact performance of negative circa 550,000-600,000, and now you have annualized savings starting on Gen 1 of 1.1 million, it is not too hard to see where we are headed. Next slide, please. I notice there is a question that has been popped up in the chat. We will be providing time and an opportunity at the end of the session for questions and to make sure that anybody who does post anything, we do answer. I just want to spend a little bit of time on this slide. In terms of one of the things we noted in the half-year report, there is a change to the substantial purpose of the organization. We have done that because this is the evolution.
It is the reason we've changed the name to Kinatico. It is not just a rebranding exercise. It is better reflective of the aggregation of reg tech function that the organization has. Collectively, we provide solutions to organizations that simplify their end-to-end workforce compliance management, specifically for their organization. And the your or their is in capitals. They're specifically because, as we'll get further into the presentation and Jeff will share further, our ability to service the compliance organizations, irrespective of industry, irrespective of the personal workflows and procedures, etc., within a particular business is one of our key differentiators and our key strengths. Under that banner of Kinatico, it is the suite of products that we have that actually enable us to service whatever the requirements are for organizations. We're not going to spend too much time today speaking about the individual products.
This is about Kinatico's achievement as we holistically provide our services. I'm not going in, for instance, to say that there is a major release of Onsite this week that has gone out over the last couple of days with further features. We've had releases of all of the other products, and we will continue to do that. As I say, we continue to invest in them, continue to evolve them to ensure that they remain best in breed for the sector in which we play. Next slide, please, Craig. A little bit about that, further into that detail. We are driving our growth in SaaS that we are demonstrating through a number of steps. A big part of it is leveraging the very strong CV Check product customer base, of which 80% are returning customers year after year. They're long-term customers.
The opportunity that we have as a ready pool of prospective customers for further value add is clear. As Jeff will go into further detail, we'll talk about some of the successes there and some of the detail about where we're headed next. What is it that we're providing to these organizations? We've very much seen with the feedback, the market research, the analysis that's been done, is that this is about solving organizational problems in maintaining compliance. That is right through the life cycle, whether it's entry to the workforce, but then all of the conforming to regulatory environments and internal policy and procedure, whatever they may be. If an organization has a policy that is required, that actually becomes a compliance requirement in the event of an incident.
It is actually very important in capturing all of that information and maintaining its real-time visibility. Another aspect to our platforms that we're getting a lot of positive feedback on is this ability to communicate with workers or subcontractors, any supplier to an organisation, in a secure fashion and the provision of information in a secure way. We've certainly heard all of the recent incidents about the transfer of information and the heightened concerns around personal identity information, etc. With our platforms, you're not sending this information over the open internet. You're not attaching it via emails. It's not open to be replaced in transit without you knowing about it or captured in transit. This automated secure communication is actually a key aspect of our platform.
Further, the added benefit is that it actually removes a lot of the manual overhead within departments, within companies to actually chase this information on a daily basis or retrospectively. The big thing we're finding that is resonating is when we can actually reduce the administrative and manual processing within organisations, the administrative overhead, that actually frees them up to focus on the day-to-day business for which they are employed. Jeff will certainly be going into that in further detail. I often get asked about sort of what is compliance data. A little list on the right-hand side there further showing the breadth of what it is. Building on all of our experience, our interfaces, our knowledge around back-to-source credential validation is just the entry to that key. We now get all of the ESG reporting requirements and certainly within the governance aspect of ESG.
When organizations provide, whether it's cybersecurity or phishing training, capturing that it's been done, making sure that the recurring nature of it and the updates are done, that employees are confirmed that they've done it and actually been through it, anti-harassment training, sexual harassment training, all of the detail that more and more we are seeing coming to the fore as it is publicly expected, both from customers, shareholders, board customers, that organizations behave in an appropriate way, making sure that not only do you have those policies and procedures in place, but you can demonstrate that they're actually followed. These are the things that our platforms actually provide.
Then we look at some of the big legislative things that are coming up, whether it's the Critical Infrastructure Act or the Aged Care Quality and Safety Act requirements, and the role we can play heavily in those areas. Next slide, please. A little bit about how big is the—why are we confident of where we are that we've got the right solution at the right time? When you look at the data from the Reg Tech Global Market Opportunities and Strategies paper, the reg tech market is expected to grow to AUD 22 billion in 2026. We're absolutely seeing the market economics align with that. Every time there is a reportable incident in the press or documents about some incident that it's occurring, as I say, the expectation around consolidated ESG reporting.
Companies know that they cannot continue to have a lot of this information managed with spreadsheets. That is our biggest competitor. That is what we see, is that our biggest thing that we are enabling is the removal of manual processing and therefore in real-time visibility. The cloud market for reg tech or SaaS is actually recognized as the fastest growth sector. Certainly, as Jeff will share further in the presentation, in the press, you'll see how it's resonating. Along with traditionally reg tech, it's been very focused on the financial segments. We're seeing that the fastest growing segment is the non-financials, even though we play across both of them. I think the quote there from Eugenie Cassier, the GRC director at CloudsMatch in the U.K., is very telling and certainly resonates with our strategy and our positioning.
That is where achieving compliance used to be almost binary: apply the rule, meet the requirement. There is a trend towards a fundamentally different way of thinking about regulation. Digitisation and compliance is not only measured in efficiency, but also in gains in decreasing risk exposure. The best of both worlds, that real-time visibility, that knowledge that at any time to your fingertips, you have the status of compliance within your organisation is absolutely key in decreasing risk exposure. You have to do it in a way that does not create an operational or business overhead. Just a little bit further then, though, on some of the industry examples. The Australian government four-star ratings for residential aged care. Compliance is number two. I have listed it in that list there for obvious reasons, for self-serving purposes.
But the fact that it is now being called out as part of one of the key metrics that organizations in residential aged care get measured on is a perfect data point about the current market demand and expectation moving forward around this idea of real-time monitored and managed compliance. We are in the right place at the right time. As we like to say, for those of my generation with the Excel buster there on the left-hand side, who are you going to call? Next slide, please. As I mentioned, it's all very well to have the best systems to actually maintain your compliance, but if they are introducing an unacceptable cost overhead, it doesn't work. In fact, we believe with our solutions, we are actually doing the opposite.
Having the automation, having the systems in place actually helps you reduce your cost overhead or, in the very least, not let it get in the way. These 12 initiatives listed here, the industry recognized means of both reducing your compliance risks, but also your compliance costs. Of all of them, the green stars represent the components within those 12 that the Kinatico solutions provide. It is significant. Next slide, please, Craig.
With that, I'm going to pass you over to Jeff Hoffman, our Chief Revenue Officer. Jeff has been with the organization, I think, coming up to nine months, Jeff?
Yeah, correct. Time flies. It certainly has made a tremendous difference in our focus around ensuring we are customer-focused, which we see is key to our success. He will talk about that a little bit further.
Also, he's going to share with you a little bit about how we're going about our strategy and execution around the transfer. Jeff, over to you. Yeah, thanks, Michael. I think here you got a call line. I'll break it when we've all got context to that. More importantly, if I take you through this first slide here around how our technology is actually helping organizations today, their people, we all know today that there is somewhat of a staffing crisis, you would probably say, not just in Australia and New Zealand, but at a global level around how people are looking to recruit, onboard. That seamless task that they need to do that in has become quite challenging.
They just don't have time, nor the patience, or the bandwidth, I suppose, more than anything else, to run through the manual process that they've had to do at recent times. One of the key things that we do really, really well at Kinatico is how we support that end-to-end life cycle of compliance. As I go through this presentation today, you're going to see, and Michael's touched on some of it, that the demand in the marketplace is significant. The insights that we get from the market right now around what organizations are looking for is that simplification around automation. How do they make this easier in their day-to-day space? The unfortunate thing today is that we know that there is a lot of manual work that's going on in this space.
Our luxury is, through a number of years of industry experience, we've got the technologies available to us to help drive that out. Businesses and organizations that are sitting out there today, they can focus on what they want to focus on in their business and leave the compliance and the monitoring component to what our technologies do. One of the key things that probably also sits around that is we know that the compliance tools that we've got today that sit just across the ANZ market alone, from individuals to organizations, is we are connected up with millions of people in that space. That's from the simple end to the complex. I'll touch on some of the complex shortly. If you can go to the next slide, Craig. Right, thank you. This is a really important slide. Michael touched on earlier about lead indicators.
You don't start to execute in the marketplace unless you have a process and a system. If you look at the customer journey here that we have in place with what we're rolling out and how we're making sure we're moving clients from transactional, from where they've been in the past, to an automated SaaS solution, that comes with steps and it comes with a journey. What this depicts here is, if you look all across that line there from transaction all the way through to SaaS delivery, I'm not going to go through every point, but you can see here step by step that there are some significant things that need to be done. Right now today in the marketplace, people are using spreadsheets. They're looking at multiple platforms on how they manage their day-to-day credentials with staff. That can be through multiple payroll systems.
What that does do, it slows them down to do what they need to do in their business. It creates poor candidate experience. The screening component for their part of their business, it pretty much is all they're doing. They lack any visibility of what they're doing in their organisation once they've onboarded someone. What we've been partnering with a number of clients, and we'll touch on some of them as we move forward, is we help identify the why. What I mean by identify the why is you need to sit down with these clients and understand, what are their requirements? What's going on in their space?
Michael touched on this earlier, the level of compliance that's needed across different sectors for different reasons, whether it's government-driven, segment-driven, whatever it may be. The marketplace is cutting a lot more procedures than it has been in previous years. We're partnering with clients, I'd like to say. The partnering is about helping them understand what's going on in their industry. That can be through partly education, because we're building a good knowledge base through other customers that we're working with across multiple segments, and also making sure that we're seen in a partnered space as a trusted advisor. We're dealing with another—we've got an energy brand that we're talking to right now that will evolve into a partner with us in coming months, where they're looking to have compliance at all business levels.
What I mean by that is they've got multiple different types of functions that sit within their organization that they need to be compliant to. That can vary across role. What we do is we help automate that and configure those systems to support them. Michael touched on in previous slides the industry requirements that are currently going on at the moment, whether it's the Aged Care Quality and Safety Act or whether it's the Critical Infrastructure Act that sits across multiple segments. Our role in partnering with a lot of these organizations is how we're actually helping them automate, help onboard, partner with even potentially training to get them more, I suppose, effective in the marketplace around how they can have automated tools.
The interesting piece around the Aged Care Act is they've put out some commentary of recent times talking about how they're putting older Australians at the centre of their system. The centre of their system at the moment is policy. People like ourselves at Kinatico can help and support that. As we continue to mature in this sort of cycle, as we're bringing customers onboard, you can see that we're taking a lot of learnings out of this. I'll touch on a couple of key accounts in a minute. This will get to a point as we mature that we believe that we'll get to a self-serve type solution. That becomes really effective for us in this SaaS space that people actually end up in a position they can plug and play. Craig, can you go to the next slide, if you could, please?
This just gives you a snapshot around how effective we're being at the moment. This is for this fiscal, of course. You can see that we're winning here across multiple industries. It's due to regulatory demand, government demand, acts that have been put in place, whatever it may be. Organisations are reaching out for guidance. They're reaching out for support. They're not quite sure how to go about automating particular solutions within their marketplace. What we're doing and what we're helping them with is, as I touched on earlier, sitting down with them as a partner and understanding what the demands are that sit across their individual business within that sector. That can range from the regulatory compliance. It may be just business compliance. They may be looking for some type of procedural type compliance. This isn't just about people.
This could also be about equipment that sits in their organization that they've got to be compliant to. If you start to see the opportunity here that sits with us and our customer base, it's actually quite deep. The numbers here, we're actually quite proud of. They're quite strong. I say it's exponential just due to the amount of opportunities that we've won and also our conversion rates that we've had of recent times. We can see we're on the cusp of something that's really starting to take off. Craig, if you can move to the next slide, please. This is two accounts out of one particular sector that we've been working with and just as a snapshot and focus on these for today's presentation. What we've got here is two accounts that sit within the disability sector.
One of the things that we've worked through with them is in the partnership that we've had with these accounts over the last, well, as we know, higher-ups have been for probably the last 12 months at Aruma, more of recent times, is these organizations are actually looking for how do they go in managing and monitoring and being compliant, not just from a pre-employment perspective, but all the way through to full workforce compliance. One of the key things that sits around this is that these organizations are bringing on thousands of people a year. Okay? You can see on the far right-hand side there with MDIS, we're talking 8,000-plus candidates they're bringing on, which they need to make sure are compliant, not just through the screening process, but ongoing.
In these organizations that have got a lot of rigor, a lot of regulation around, here are two organizations that actually decided to partner with us. This is only two use cases. You can see where the market's moving to and where these clients are looking for that sort of digitized workflow and how they can focus on what their businesses they do want to do on a day-by-day basis. They can leave the automation and the process to tools such as ours. Craig, can you just move to the next slide, if you could, please? Just to finish off on this slide, and I'll pass back to Michael, this is some work that we've currently got going into the market now around the aged care space. This is just another sector at the moment that we're actually focusing on.
You can see some of the brands, the logos there on the slide that we're currently working with today. Obviously, what we're looking to do is support these organizations, how we take time away or time out of their hands that they're doing today in a very, very manual-type process. They've got enough challenges going on within their businesses and their organizations where they're looking for that automation of control. One of the key stats and one of the key points that I'll take you to here, which is in the bottom right-hand corner of the slide, through our insights working in this industry, we've got 80% of managers in a week are spending their time doing admin work around checking and maintaining the compliance of the workforce.
You think of the efficiencies that we can save and also the controls that we can put in place and how they can stay compliant to what's going on in the sector. This is where we come in and play our part. Great opportunity for us. You can see some of the partners where we're currently working with them at the moment. I think that's enough from me. Michael, I'll pass back to you.
Thanks, Jim. Thank you, everybody. That is the end of our formal presentation. If there are any questions, just put them into the Q&A section or raise your hand, which we are very happy to attempt to answer.
Hopefully, you see from the presentation, we're very happy with the progress that we've made in establishing the solutions that we have right across the product suite and where we're going and the opportunities that present us.
Craig, I'll let you moderate the questions, please.
Okay. Michael, we've got one question. I haven't got the name of who's posed it, but the question is, how much of the CV Check customer base have we tried to harvest and turn into the cited workforce compliance monitoring SaaS customers? That is, are we early in that process or are we almost through it? The second part of that question is roughly what percentage of the base, can we estimate, would be eligible for a full SaaS solution?
Yeah. Look, we are at the very beginning of that process of looking at the CV Check customer database.
We know, if you like, we've looked at the top X% of customers and the most likely that would benefit from a short-term transfer. It's fair to say, in terms of the overall percentage, by far and away, the majority of them will benefit in some way or another from access to the ongoing features and functions. There is very little information that has traditionally been provided by CV Check that otherwise doesn't maintain relevance. The fact that the CV Check product initially was about that screening for pre-employment meant it hasn't actually focused in on where that is or the things that we're focusing on now. We see that as a very, very large opportunity.
I've got the questions up on page there, Craig, so I can handle them in terms of the SaaS sales team increasing by 25%. That is now 16 for the total sales team. We've got what are the shareholder catalysts that we expect to be announceable? Look, the account wins like higher-up. You talked to Progress as an energy brand. I'm just reading the question there. We're not going to get into the habit of announcing every time we've got a win. You've seen in this, we've announced there's a 92% increase in the SaaS customers coming up. We will demonstrate our progress primarily around that as we see that SaaS number continuing to increase and as we increase that penetration. If we partner with somebody of a significant brand sector relevance, then we'll treat it on a case-by-case basis. At that point, it would probably be announceable.
The next question I've got here is the competitive environment you operate in fragmented or are there some large rivals? That's a really interesting question. Look, I'd actually say it's heavily fragmented. As I say, our biggest competitor is Excel. Across all organizations, it's the majority of organizations, the realization of the required overhead that organizations have, they've got to that tipping point of there's got to be a better way to do this. Now that has presented that opportunity. What we do see, though, is within the larger competitor space, the large ERP companies, whatever it may be, then their attitude to it, irrespective of whether they can do this, is the short answer is, "Yeah, of course we can do this.
Give us six months and this amount of money and we'll add that functionality to the system. Nobody ever got fired for buying IBM-type mentality. We don't see them necessarily as much of a competitive threat because they are a partnership opportunity. Those conversations have commenced, and we are looking at those opportunities where the smart thing for them to do practically, and they didn't get to that size by not being smart, is that the extension of the ecosystem where the customer requirements are satisfied, even if it's not them directly satisfying the requirements, still entrenches them within that position. We certainly see it's a convoluted competitive space. The question is, is buyback the best use of capital? We've said we will spend up to AUD 2 million on the buyback. We are cash flow positive from operations, striving towards full impact and full cash flow positivity.
It is within the capital that we have, and we do see that right now as one of the ways of providing value back to shareholders. The next question, what strategy do you have for international expansion and how high on the priority list? We have very big aspirations about our international expansion, and I've spoken about them before, and I will continue to do so. What I've said before is still current. We are looking for opportunities that are creative, not a distraction, and give us the appropriate reach and expansion to allow us to expand successfully. I think I've quoted a few times places in saying I've kissed plenty of frogs. I haven't come across any prince or princesses yet. The moment that changes, we will look at it.
Having said that, we have plenty of runway in Australia, and we're not going to do anything that distracts the management team and the organization from taking advantage of that. For the right opportunity that we are looking for, we will jump all over it.
All right. That seems to have dried up our supplier questions. We scheduled this for half an hour. We've gone five or ten minutes out of time. Thank you all for joining. Thank you all for your attention. We will look forward to meeting you again in the future. Thank you.
Thank you very much for your time.
Thank you.