Alcidion Group Limited (ALC) Earnings Call Transcript & Summary

Good morning, and welcome to Alcidion's Full Year Financial Results for FY '23. Before we begin, I would slightly like to acknowledge the traditional owners and custodians of the various land on which we work and meet today and pay my respect to their Elders past, present and emerging. I extend that respect to Aboriginal and Torres Strait Islander people, who have joined us on the call today. On the call today, we have Alcidion's Chair, Rebecca Wilson; Managing Director, Kate Quirke; and Chief Financial Officer, Matthew Gepp. We will begin with the presentation by Kate, who will go through the operational highlights of the year, followed by Matt, who will cover off the financial results. All participants are in a listen-only mode [Operator Instructions]. So, thank you very much again for joining, and I will now hand over to Kate.

Thanks very much, Hannah, and welcome, everyone, to the call. As Hannah mentioned, I'll go through a summary version of what was launched earlier today. And I actually going to laid my [indiscernible] Matt today, although I'Il speak in up in the end, I had a bit of a virus on voice is not what it could be. So hopefully, it won't flag too much during the course of the call. Those of you on the call, who are not familiar with our story, I thought I'd just maybe start by getting a bit of a snapshot of where Alcidion positioned as we close out the results for FY '23. We are quite right. And I think very part of the work the team has been doing to support our healthcare system. And as we outlined in the 4C call in late-July, we're really pleased with the results we've delivered for FY '23. Alcidion as you know, the healthcare software and informatics company, and we're very focused on providing an innovative technology platform that's really about improving the efficiency and quality of patient care, something that all healthcare systems around the world are focused on at the moment. What we do is aggregate and analyze data available in healthcare, and we use artificial intelligence to then enable a proactive rather than a reactive approach to patient care. Our aim is to support health care professionals. So the clinicians, doctors, nurses, all our health professionals, who are using our tools and who loves using our tools. And we do that really to make their jobs easier, so that ultimately, the patients have delivered better patient outcomes. As we stand today, we have around 400 hospitals across 95 healthcare organizations using our solutions. And that gives us a really strong and referenceable consumer base from which to continue to grow the business. The flagship platform is Miya Precision, which we have created as a platform with a number of modules capability implemented alongside that platform. And the modular approach allows us to accommodate our customers' priorities and budgets, which we've demonstrated to some success during the course of this year. We also are backed by really strong technical services capability, our integration consulting and training teams. It's very important and as we'll differentiate for us as it complements our software products and it's that team that ensures that what we can sell is actually implemented to our customers and supported in a way that helps those customers achieve their stated benefits. And that's how you get referenceability so that people continue to buy our software. In the year, we reached revenue of $40.4 million with the audit now complete and with now more than 70% of that being recurring in nature. We've got gross profit margins of over 85% operating cash flow positive into inflated in the period 2023, strong cash balance of $14.7 million and no debt. That will actually take you through the highlights in more detail and the financial in more detail, but at a high level, it wasn't really a positive one for us in FY '23 as we continue to build and scale the business, the incurring -- increase in recurring revenue supported us achieving positive operating cash flow for the year. As I just discussed, revenue was $40.4 million, up 18% on the same period last year and really pleasingly, the recurring revenue grew 21% to $28.1 million. The underlying EBITDA, which is the really new information that comes out in these results as we had already given it an indication of where revenue was going to land. So the underlying EBITDA was a loss of $1.5 million, which is an improvement on last year, not quite what we hoped for when we started planning FY '23. But as I indicated during the course of the second half of this year, we have experienced delays in the rollout of the NHS modernization program, which -- where we did expect to see more opportunities and contracts as a result of that initiative. And really, it's the process of procurement that's been delayed due to numerous challenges that they face, getting the funding moving, first political challenges and then really, I think the staffing challenges that are going on within the trust and the integrated care systems as they tend to push through the procurement processes, which as you can imagine, for contracts such as an APR of that time, the process and the input on all the clinical staff evaluating all of these solutions alongside delivering care is really important. And I think that has had an impact across all IT procurement in the U.K. as we've seen a real focus on the EPRs and perhaps distracting for more of the modular sales. We are seeing those many in these processes now. And whilst there they are at least a year behind the published program. I've just come back in the U.K. and I know the team is very busy in respect of how those procurements are progressing. I'll let Matt talk a little bit more around the details of the financials as we get into them. We did continue in FY '23 to execute on the strategy, and I will expand a little bit more after Matt talked about the financials about some of our new contract wins and deployments that will highlight for the year. We did have new sales with a TCV of $29.9 million for the year and those new sales came from across all of our markets and did demonstrate the diversity and variety of the opportunities that Alcidion now offers and they are, as you -- I'll talk to them, really quite varies, but driven from the capabilities of the Myer Precision platform. We also saw the strength of our delivery capabilities, which allowed us to really demonstrate some strong value for our customers. And I'll talk a little bit more about some of the results we're seeing from our deployments after Matt has spoken. The strategy is being validated as a result and has been strongly through FY '23, particularly as we continue to see modular sales on top of the Miya Precision platform. So that's been highlighted by additional modules wins at Dartford, Derby [indiscernible] and Bolton. We've got a foothold with at least one module in 28% of the U.K. Trust, which also provides us that streamlined route to broader trust and integrated care system or integrated care boards as they now call them, upsell. This Leidos contract extension, which was very significant, also further validates the Miya platform capability and our ability to deliver up scale on these very large programs of work. As we look forward, we've got $33.7 million of contracted and scheduled renewal revenue for FY '24 before [indiscernible] at the end of last year or at the start of this year before we're going to make any additional sales. We've got deep engagement with existing customers, as you'll see, which from some of the results I talked about a little while later. And so that is also strengthened by the increasing referenceability to have from our customers across Australia, New Zealand and the U.K. I'm going to hand over to Matt now, he will take you through the financial results in more detail.

Thank you, Kate, and good morning to everyone who's joined us on the call today. We're looking at the P&L slide here. Oh, thank you Kate. Before I touch on both [indiscernible], we saw year-on-year revenue growth of 18% with recurring revenue growth outpacing the nonrecurring revenue quite considerably, year-on-year recurring revenue grew by 21%, that's versus our growth of 11% in nonrecurring revenue. Our recurring revenue now makes up just on 70% of total revenue for the year. That's marginally up on the prior year, where we saw it making up 68% of our revenue. The margin increased 18%, in line with the revenue. And as you'd expect, the margin percentage have come out in stable at 86%. And that's pretty much where we've actually been for the last 4 years. I think we've moved in to about 88% in FY '21, but 86% is where we've been sitting now for the last 4 years. On year-on-year, our staff costs increased by 27%. That's partly driven by the full year cost of the Silverlink team members, who joined us in the first half or late in the first half of FY '23, being incurred only 7 months of costs in the prior year. Here we also saw greater than usual increases in salaries across our employees as they address the cost of living pressures being experienced by our team members in the year. Our staff costs represented 74% of revenue in FY '23, and that's slightly higher than the level we saw last year of around 59% and you've probably talked about this before. This is a metric that we keep a very close eye on. And we anticipate this to start increasing again in FY '24. We ended the year with around 191 staffs with a 1/4 of those paid staff out of the U.K. Increases in head count in the year included a number of additional resources to reinforce our cyber security structure as well as increases in our product support capabilities. So looking at the non-staff OpEx half-on-half, that was pretty steady. We reported $2.9 million in H1, that increased slightly to $3.1 million in H2. We ended the year with $6 million in total. That's about $1 million up on the prior year, that represents just under 15% of our revenue, and that's very consistent with what we saw in the prior year. Now similar to discussion we had at H1 around costs, much of that increase is driven by increased expenditure on travel. And obviously, we're seeing in FY '23 travel earning through pre-COVID levels. Now finally, on the P&L, we delivered an H2 EBITDA loss of, I guess, $300,000, and that follows on from the EBITDA loss we report in H1 of $1.2 million, so we end the year with a full year EBITDA loss of $1.5 million. Moving on to the revenue dashboard. On the top left here, we can see the revenue growth over 5 years. We're looking at a CAGR of around 19% for the period [indiscernible] for the current year, year-on-year increase of 18% is consistent with our historical growth rate. Our half-on-half the revenue split quite even, 47% in H1, 53% in H2, that's not entirely unexpected. We now have strong month-on-month recurring revenue being generated from Silverlink customer base and for the full year versus at 7 months as in the prior year. Looking at the bottom left, we see the steady growth in recurring revenue over the 5-year period, noting that FY '19 recurring revenue made up about some half of that total revenue. It's now increased to 70%. And that's consistent with our strategy to focus on product sales, which leads to a steady recurring support and maintenance revenue stream as well as recurring ongoing posting revenue. Nonrecurring revenue in this year is largely made up of implementation revenue, and that's a feature that's going to remain of the business as all new software sales do need some level of implementation, but as a percentage of revenue, we expect it will continue to shrink as our product sales go. A quick look to the right now, we're seeing now that the U.K. makes up almost half of our revenue, sitting at 49% for FY '23. It's worth noting that just back in FY '20, the U.K. contributed less than a 1/4 of our total revenue. Okay, on to the revenue model. So this is quite a good diagram, especially for those new to the Alcidion story, we explained quite clearly with various sources and flows of revenue in the business. New sales of our software in the form of license fees is considered recurring revenue. And while it's not necessarily recurring annually in all instances, it's worth pointing out that we do not sell perpetual software licensees. So license revenue is recurring periodically. Licensing are renewable typically over 1 to 5 years. It very much depends on the installation of the customer. And this is one of the factors that can make our quarter-on-quarter cash flows and our revenue is quite lumpy during the year. I think as I mentioned on the previous slide, our license sales are always accompanied by implementation revenue. In the current year, implementation revenue was $10 million that's $10 million out of $12.3 million nonrecurring revenue, implementation revenue of 24% in total revenue. Depending on the size of the deployment, implementation revenue is usually recognized over a 3- to 6-month period. The exception, of course, being the ADS contracts, where the implementation period is quite a bit longer at 3 years, said that, what we've considering outlined at the moment. Following on from the implementation, we will build maintenance and support fees, which is very much ARR and as well as ongoing [indiscernible] increase. Non-product-related revenue makes up only 6% of total revenue now and consists of consulting and integration, technical design work and paper analytics. Now moving on to the balance sheet. So with the settlement of the final payment to Silverlink, our balance sheet is quite clean now. It's important to note here that Alcidion does not capitalize internal development costs. So we're not going to see staff costs on the balance sheet. There's been a lot of variation from the prior year of positive cash on the cash flow slide. The 2 large movements we saw this year were in the carrying value of the intangibles and the deferred tax liability, very much accounting issues there. We booked $2 million of that loss for the P&L through the amortizing intangibles we acquired with Silverlink and ExtraMed and we started unwinding the deferred tax liability, which again arose on the acquisitions of ExtraMed and Silverlink in the prior year, and that's another movement that we expect to see in the future as it reduces in line with the analogue, not expense of those intangible assets. Moving on to the cash flow [indiscernible]. Okay. We're re-exhibiting cash flow here. And this, of course, is unchanged from the cash flow we presented in July in the appendix 4C. After reporting $18.8 million receipt in H1, we collected a further $28.1 million in H2, taking a full year total receipt to $46.9 million. That's a record level of receipt for Alcidion, 13% higher than the previous year, and it's a result that we are very pleased with. Our operating cash flow was positive for the year. It was modest at $169,000, but it is notable that this is the first consecutive year our business has delivered positive operating cash flows. As expected, following the renewal of Dorset and Wolverhampton, in the year, the second tranche of the contingent consideration became payable and this is settled in full in Q4 and with the positive operating cash flow that is pretty much the driver of the year-on-year decrease in the cash balance. I will hand back over to Kate now.

Matt. Yes. So that probably sort of gives a little bit more detail around the operating activities for FY '23 and as a backdrop to the financials that Matt has just gone through. The new contracts continue to reinforce the modular strategy that we've taken in respect of our go-to-market, and it really is about catering to customers as they enhance their digital maturity. And it supports someone's progressing in a modular nature, which is in line with their capacity to receive, but also their budget and ability to spend, which allowed us to continue to expand our coverage in the U.K. with a new customer in University Hospital South Hampton. We're already quite a digitally mature site in terms of the modules that they have purchased over time and the work they've done themselves actually in developing software and they're considered what we would call inventing in class, what they've chosen the modules that suit them. And what they did was choose Miya Precision is the platform to bring together their existing investments into an Electronic Patient Record with the ability to add on digital modules from Alcidion suite to enhance those that they already have from other suppliers. And this added a new integrated care board, so as a system to our customers we met hamstring the all at once, we did not have done, as well as new trust, we did not have anything deployed in that ICV. And we do look forward to continuing to demonstrate to that whole ICV, the value that Alcidion continues to deliver. We also signed further contract renewals for PCS, the acquired [indiscernible] from Silverlink with Royal Wolverhampton becoming the important trust to raise signs since acquiring Silverlink in December 2021. And we really are now benefiting from that expanded product offering, enabling us to confidently tender the larger EPR type contracts that we're now seem to move through the NHS. As Matt mentioned, all earned out in relation with Silverlink acquisition have now been paid. Looking at another one of our acquisitions, we saw a further movement around the ExtraMed sites with Bolton deciding to upgrade to Miya Precision platform. We already had ExtraMed and Miya Observations and Assessments running at Bolton and then now moving from ExtraMed to use Miya flow access, command with Miya Precision. And that positions us really well for further penetration into the Greater Manchester area, which Bolton is kind of that [ master base ] and really does continue the ongoing value from the ExtraMed acquisition is implying some of the similar size that was running ExtraMed and then moved to Miya Flow. During the year, we also extended the contract with Leidos Australia for the Australian Defense Force Health Knowledge Management System program, and that was to include Miya Observations into the modules that they're going to be using, but also to extend the whole contract to cover further deployment areas for the [ ABS ]. And that brings the combined contract for the first 5.5 years to around $32 million, with options to extend that out for a further 15 years. So some very exciting new contract wins during the year. How we implement the solutions that we sell and the depth of that technical skills has always actually been a very strong positive Alcidion business and reference sites are absolutely critical in healthcare. And we've successfully worked with our customers during the year to ensure that they receive the benefits that we promised them when we go through that sales process. Alfred Hospital went live across the 3 hospitals, where we are there integrated to Cerner and the Victorian State patient administration systems. And this is really focused on helping the Alfred support the management of flows patients through and across their hospitals from an admission discharge process. And it really was great, I had the opportunity to take the Board there to visit during the year and to see the impact first hand that we've been doing. I think that was really exciting for them to be able to see the value that the Alcidion product brings day-to-day to [indiscernible]. The lot of programs work touched on that where there was new software sales, but also we continue to deliver into that. We're getting to a very exciting part of handing the whole system over to the Commonwealth. And we've been able to meet our deliveries in respect to that program of work, still more to continue on through FY '24. East Lancashire lined with Miya Flow and Miya Observations alongside a big flat bank deployment of the Cerner Electronic Patient Record, which is the first in the U.K. and demonstrates the value that Alcidion can bring alongside or on top of an Electronic Patient Record, of course. Now we have a reference site in South Tees and aligned full EPR with the acquisition of Silverlink we hope in the future, they would actually choose us for their whole EPR. That brings me on to taking a little bit about South Tees, where we are extremely pleased with the progress at South Tees the results coming out of this site are better than we could have hoped, I think, so soon after going live, especially with the electronic noting module called Miya Noting and it's a notoriously challenging part of an Electronic Patient Record rollout, where you're trying to take all the doctors and nurses from being in a paper environment which to be frank, they prefer in some respects to doing everything electronically. And this is the first go-live of this module anywhere in the world. And the feedback has been so positive that I just thought I'd share with you some of the statistics coming out of South Tees and we're getting more and more every month, when they meet to consolidate their data. But at the moment South Tees is doing administering about 15,000 dosages and medication per day. There are about 140 discharge letters or discharge summaries produced every day from the Alcidion's solution. There's been 11,000 [indiscernible] assessments assessing patients for their risk of venous thrombosis. There's been 37,000 documents created and some of the really positive 4 customers, 4 patients really is that 93% of discharged letter for discharge summaries have been completed by the time the patient is discharged and then which means they're immediately available to the [ GP ]. Previously, they had another electronic system that did this, and they were sort of around about 80% is completed. Miya letters, which is again the latest to everybody from [ a referral ] that is done on discharge are completed on average an hour and 15 minutes quicker than the prior system and so on and so on. And there's more to come. And so we're quite rightly very proud of how we are supporting the clinicians in the South Tees area to deliver better care to patients. Another module that we have had a lot of successes during the year, which we don't talk about much about really is Smartpage, which is an application that runs on smartphones for in-hospital communication and the management of tasks and where possible the automation of those tasks, you'll start to hear me talk more and more about the importance of automating some of the more mundane administrative tasks of our clinical team as we try to really support this challenge we have with a lack of clinical staff in the healthcare system. And we support both clinical and nonclinical environments with this solution, so doctors and nurse and vice versa communication and past management, but also management of orderlies and cleaner. So if you want to free a bed and you want to get people moving through the system, you need to really be able to efficiently manage the cleaning of beds and movement of patients to and from radiology and so forth. So it supports all of that in an electronic means, so really about automating and reducing administrative burdens. We've had some fantastic results out of Lancashire Teaching not [indiscernible], another trust in the same integrated care system. And there really are very significant results that have been published. There's been a 50% improvement in identifying deteriorated patients and getting help early for those patients that are demonstrating deterioration, 72% reduction in interruption in the clinical care, so you don't need to get interrupted once you're engaged with the patient. 125% improvement in the time and use of availability of clinical time. And effectively, it's resulted in measurable savings of 2 hours for every 12-hour shift keeping in mind that the NHS operates 2, 12-hour shifts rather than 3, 8-hour shifts as we do in Australia. So really exciting results. I hope that you, as shareholders, are proud of having the impact on patient care as we are in respect of those outcomes. I'm going to hand over to Beth now to talk a little bit about the work we've been doing in ESG.

Thanks, Kate, and good morning, everyone. We wanted to give a little bit of visibility to investors on our ESG program, which we formalized over the last 12 months, we first foreshadowed that we would be taking a more focused view on ESG in the last annual report. We've had a -- with some really active cost functional team with representation across our customer, across investor relation, people and culture and operations, and I'm a member of that ESG taskforce, which really directly links the Board with support for that ESG program and direction. Certainly last year, we've really focused on progressing the areas of ESG materiality to us as a business within our industry and society as a whole. And to do that, we've sought feedback from our staff, from our customers, from our investors to ensure that we evolve the program and create a framework to really prioritize and operationalize that ESG program and ensure that we're committing in the right areas to really have an impact. And I just wanted to share a couple of examples of how we're approaching it. So within our sort of the employee engagement and well-being program, we've implemented an employee systems program, monthly well-being things, mental health, first aiders and well-being support tools. But also, we really empower our staff and give them time annually to do back to the community through volunteering. And we just love seeing our teams around the world really embracing that and doing the things that they really love doing. We're absolutely committed to supporting families and we've implemented a new pay parental and miscarriage and leave policy and also industry-leading leave allowances for primary and secondary carers. We've also implemented health and well-being schemes and initiatives at various levels across the company. And for diversity inclusion, we're only for more than 50% female representation across senior executive leadership teams and 60% female board representation, which we have. But I think some of the broader things we're doing there is we've implemented a gender-neutral paid lead scheme and promoted diverse workforce participation, including the option to self-identify diversity information and education and support and value our diversity within Alcidion. We're taking sustainability actions, targeting flights and community, including carbon offsets the flights to [indiscernible] sacrifice for electric vehicle purchases in the U.K. in particular, and we support remote working as well as choose office locations that are proximate to public transport to really ease and minimize the impact of transportation to and from work. And we've also focused on the protection, not surprising of sensitive data to maintain the privacy of individuals and our customers even if that were a digital health business. We've appointed a CIO during the year and also grown our internal cyber security team as well as now building out a cyber resilience, which has improved our incident preparedness with 24/7 support. And then I just think finally in terms of our ongoing actions, we've commenced investigation into developing a baseline for our carbon footprint and have already introduced initiatives to really support that in the coming year. It's certainly something that we'll be giving our shareholders great visibility to as that comes together. So it's great to see the progress during the year, but also to see a great group of people across the Alcidion business coming together to ensure that we not only take this seriously, but we very much live and breathe that the policies we're putting in place.

Thanks, Beck. Just turning now a little to the outlook as we move forward. I probably talked a little bit about this at the [indiscernible] as well. We are really looking forward in respect of accelerating our momentum. We start this year very strongly with a contracted revenue base of $33.7 million of revenue items to be recognized in FY '24 as of the end of 30 June. That's without any further sales being made. And if you couple that with a strong balance sheet in respect of cash and no debt, we are really well placed as we move forward. As I touched on in the release that we've made today, we have invested in the scale of the business. If you look at some of the things that we have done and achieved and including what we've done from an ESG perspective, we have made the investments that now position us incredibly well in respect of starting to gain that leverage as the revenue growth from this point forward. We've got deep engagement with the new and existing customers, and touched on in respect of their referenceability we have with those sites and their ability to be prepared to act as reference sites for us and support us. We had a very strong position in the U.K. during a time of significant investment in the modernization of the NHS, and we're optimistic in an increased number of procurements commenced as we've seen an increased number of procurements commencing, but this will result in new business over the next 6 months. We have an excellent product position for healthcare, particularly at a time when an insurer resources and leading technologies that automate and drive efficiency. We have, I think, in the full-tech [indiscernible] today, talked a little bit about potential to look at expansion beyond the current markets we are in. We continue to cautiously investigate the opportunities beyond Australia, New Zealand and the U.K. We know that what we are doing will resonate well with countries outside of those that we are at the moment. And we are certainly continuing to explore this, and we'll keep the market updated as we see potential opportunities arise. So in summary, Alcidion is really excellently placed as we enter FY '24, having scaled the business created strong references and the capabilities that we have as a company, I think, create a compelling investment profile. We have a very large addressable market in a market that is continuing to see the need to invest in modernization, to invest in technology, the desire and need for better patient management and better flow is across the world. We're seeing it certainly in Australia, New Zealand and the U.K. In respect of our financial profile, we have a very strong position in terms of recurring revenue. We start the year strongly. We know what the base revenue to recognize this for this year, we have very strong gross profit margins and positive operating cash flow. We've several very strong marketing customers. I talked about the life of the Australians are best [indiscernible] South Tees, Northern Territory Health, Queensland Health in respect to the work we do there in the referral management and a number of NHS, large NHS trust. When people look at Alcidion they see that there are very significant customers choosing to work with us. Our product offering is modern. It's modular, it's cloud native. It supports better decision-making in hospitals. And it is modular in nature, which I think is a real differentiator for us to be in that, we can work with our customers over time to deliver on their needs as they mature and have access to funds to afford those modules. The type of market we're engaged with the long-term nature of the contracts that we have with these customers whilst as you can see from what I've talked about in respect of their procurement cycles, it can take some time to win these very large contracts. When you do win them, they are lengthy in nature whilst they might start at 3 to 5 years, we see negligible churn, and we see significant rates of renewal, and we have demonstrated the rates of renewal over the past few years. We have very strong market tailwinds. Health systems are stretched as limited bed availability. We have under resourcing of clinical staff. The governments across the world are committed to seeing technology as one of the differentiators to increase productivity. I think we're hearing about that, not just in healthcare, but with the intergenerational statement coming out and looking at productivity and the importance that technology is going to play in that as we move forward, Alcidion is very well placed to help the healthcare system to support a better delivery for our patients and our clinicians. So with that, I think we will hand over to questions.

Kate, we do have a few that have come in. I'll start with the one live today, and then I'll move on to some that came in, in advance. And the first one being how do you differentiate yourself from being free and other similar operatives in your space?

I don't want to talk [indiscernible] necessarily, but I am very aware of being [indiscernible] and as a matter of fact, I think we are complementary to each other rather than at all competitive in respect of what we do. [indiscernible] has a number of elements to what they do in respect of looking at clinical coding and data quality and coding quality. And those sorts of capabilities could very much exist alongside. What Alcidion does, we don't necessarily do what they do, but they have algorithms, for example, that could be deployed across the Alcidion platform, we are very much focused on the workflow, supporting the workflow. So what actually happens day to day, our solutions are in the hands of doctors and nurses day to day.

The next one is the current sales are being focused on upselling existing accounts or signing new customers, particularly in the U.K.?

It's absolutely both. As a matter of fact, we've, in some ways, segregated the sales team in the U.K., so they can focus on these things differently. I've just come back from the U.K. and spending time with the sales team. We've got a team that are really focused on responding to the EPR procurement engagement. And then we also have business development teams focused on the upselling opportunities. So they are equally important to us and equally will impact the FY '24 revenue for us in this year.

I think this one might be for you, Matt. And it says while underlying EBITDA has improved for those of us who follow [indiscernible] Charlie Manga prepared to look at EBIT which actually went in the long direction. Can we expect this metric to improve going forward? And when might it turn positive?

Good question. FY '23, was the first time that the market find visibility of our full DNA profile. So in the prior year because of the date of the Silverlink acquisition, we didn't be a full year of analyte in the books. So we're running at $3.2 million D&A in FY '23. The increase from FY '22 is around $900,000, and that's led by the amortization of those acquired intangibles, that stands at $700,000. Okay. So I'm taking a long time to get to the answer. So the short answer is, with $3.2 million D&A profile and about $300,000 or $400,000 of share-based payment costs, we've been needing to see an EBITDA between $3 million and $4 million to cover that. So that's a mathematical answer, when do we get the positive EBIT we need to get enough EBITDA to cover those recurring D&A costs.

Matt. And the next one, regarding growth in employee OpEx due to previous investments in new hires, Silverlink and wage inflation. Could you give some more perspective on the trajectory of employee OpEx growth relative to revenue going forward, particularly given your comments regarding previous investment in resources being able to support a materially larger business?

Thanks, Hannah. I would expect as I've said throughout and that we expect operating expenses to level out with the exception of salary increases that may flow through in FY '24. We are comfortable that the business is well scaled at this point in time.

And what is the strategy for broadening Alcidion implementation capabilities into appropriate partner at time?

We keep out, we already do a little bit of that. We work with an implementation partner in the U.K. So far, we've been able to deliver most of our implementation needs of our existing team. We're really to win a number of sizable deals at the same time. We will make use of some of those partner if not basically integrated weIl. And we keep our eye open on similar opportunities in Australia and New Zealand as well.

If a customer buys a single module and then purchases additional module, is the incremental revenue from each additional module is the same?

No, not all. Some modules deliver more value than others and therefore, we charge accordingly.

All right. And then we have one specifically on ESG. So I guess this will be for you Beck. It says, as a shareholder, I welcome Alcidion's focus on ESG. There is now a significant opportunity for Alcidion to improve reporting on the nonfinancial metrics that ESG covers, closing the gap and providing greater confidence with stakeholders in delivering on the strategy and ESG commitments. This means setting specific and measurable targets against KPIs for material ESG aspects and driving desired behaviors by embedding performance against these targets in executive and management performance programs. Is this something we can expect to see moving forward?

A long question. Look, first of all, completely [ concur ] of it ESG is a really important thing, and it needs to be more than just a policy on the page. It does absolutely needs to be leased and actioned within the organization. And so I would agree that as we mature in the approach that we're taking on ESG, we will absolutely be ensuring that we have very clear goals that are measurable and that we're really identifying what those metrics are to measure those goals. So I think it's really important that we're looking at it very holistically. And then that would also flow through to the expectation of taking her team in terms of how they embrace those. We are at the earlier stage of our ESG program. So you will start to see those types of things coming through as we mature. I think one of the things that is in our favor with our ESG program. It's not something we've had to create. I mean this business was founded through a very strong purpose that has an inherent social impact. So I feel very confident that we have social and the governance side really tight. I think for [indiscernible], it's around how do we have a meaningful impact on the environmental element of just conducting business and being a part of the global community. Yes. So great question. And certainly, we remain sort of committed to providing visibility to shareholders as we continue on our journey.

A few more here. Given the ongoing headwinds in the NHS digitization program and procurement charges affecting new sales amongst U.K. trusts and ICSs, when is the business likely to get positive EBITDA?

We are not giving guidance at this point in the year, but all things going according to plan, it is our aim to look to be EBITDA positive. We're holding operating expenses. And with the exception of some salary increases, we're focused on the revenue growth continuing as it has. We are waiting to see how quickly those procurements in U.K. proceeds. They are moving at the moment, but the timing of those is somewhat out of our hands. But we will keep the market updated as they progress and reflect the impact that that's having on our move towards EBITDA positive.

There's one more, which is a follow-on question from the one previously on wages. What magnitude of salary increases do you expect to flow through to FY '24? And what degree is this driver additional hires or weighted inflation?

Well, salary increases not driven necessarily from additional hires, although to be, what we do and have done in quite a bit of detail this year. It goes through and analyze and ensure that all our staff are being paid at a market competitive rate. And that is really where we come from. We aim to be as indicated in the [indiscernible] report we aim to pay our staff around about the median for their role and so we have budgeted around 3%, 4% increase across the board in respect of addressing not only increases, but ensuring that our staff are paid in line with our end policy.

There's one that came in advance, which I will just find. And this one, I also think, it's to you Beck, which is how is it that a company that is so innovative in the healthcare space have few directors on the board without a medical background?

Look, I think shareholders are well aware that this company was established through the vision of a medical doctor, who I see as a real visionary in identifying the power of technology to solve complex problems in healthcare. And that DNA very much remains in the business today. And we see that through the types of staff that we have now. We have a Chief Medical Officer. We have a Chief Nursing Officer. We have many staff, who are being trained and work across medical ecosystem [indiscernible] in nursing, in pharmacy, so I'm really confident that Kate has the right team to really leverage our opportunities globally and that her deep and demonstrable experience in digital health is supported by that clinical team. And I think, clearly, the evidence remains in our ability to build and sell products into customers is really facing those big healthcare challenges. I'd just say particularly to the Board, I just think that, that was a good context. I think while none of our directors are clinically or medically trained, several of us have quite extensive healthcare experience. But we do acknowledge that we [indiscernible] I'm stepping down from the Board this time or moving the last year, but there is an opportunity for us to consider the future skill set and experience of our Board really to align with our aspirations and our opportunities, and we've had a really ongoing and active board succession program and faced for many, many years, and we do expect that future changes to our Board would focus on acquiring someone with global digital health and/or that medical expertise. So it's a great question, and I think it's a really relevant question. And certainly, we would, as I said, continue to see the evolution of our Board and really looking at bringing people in with those skills.

We just have a few more here, which I'll go through quickly because we are running out of time. Will the business be looking at inorganic growth via acquisitions or mostly focused on organic growth at this point in time?

We're very much focused on organic growth at this point in time.

And you say you have $33.7 million of contracted and scheduled revenue for FY '24 as of June. How are sales going so far in FY '24?

Very early on in the year, sales are progressing as expected, procurements are progressing as expected and the market will be notified of any of those sales deals that are above the threshold for material reporting. Otherwise, we will report them as we do regularly in our business updates to the market.

I think we've just got one more here. [Operator Instructions] And it says, obviously, the NHS situation is out of control, but with you having scaled up expenses in anticipation of contract wins and dysfunctional NHS, how do you think the risk of that procurement will be delayed further?

First of all, I think, [indiscernible] out of your control because I never said the NHS has control nor did I say they were disfunctional. So I would not want to be quoted as having said that, I find the NHS amazing in respect of what it delivers for the amount of funding that it receives. We have scaled up the business to deliver on a particular type amount of revenue and to see that revenue growth continue. I am confident that, that revenue will come. I'm anticipating that some of that will come from the NHS. As of it timing can be impactful, but we have a very long runway ahead of us in terms of signing those contracts and recognizing it as revenue. And at this stage, I'm confident.

We have one more here. And congratulations on another great result. You start the year with $33-plus million of contracted revenue, up 20% plus on last year. And last year, you generated $30 million of new sales. Is it fair to say you anticipate growing in the next 12 months?

I could just say yes. Very confidently. So, thank you for that question.

All right. Well, thank you, everybody, for joining us today. Kate, before we go, do you have any closing remarks?

So as we draw another year to a close, and they also seem to run by very quickly. It is hard for me to believe that I have been in this role, what I consider a very privileged role of CEO of Alcidion since 2018. I would like to thank the Board for their ongoing support. We have a very close working relationship, and I enjoy the support and advice that they give to us. I'd very much like to say the senior leadership team and the staff at Alcidion, who have continued to work extremely hard during FY '23 to ensure that we are providing to our customers to patients and ultimately, also to shareholders, the sort of results that we present today. And I would also like very much to thank our customers and our shareholders for their ongoing support and commitment of Alcidion and we're continuing to keep you updated on our EBITDA positive results as the year progresses.

Thank you very much, Kate, and to Beck and Matt. Again to everybody, if you didn't get to ask your questions today, and I would like to answer it for you, please send an e-mail to the contact details at the bottom of the ASX announcement, and we will come back to you as soon as possible. But for now, thank you very much for joining, and goodbye.