Alcidion Group Limited (ALC) Earnings Call Transcript & Summary

Thanks, Beck. It is now 3:00 pm. You may start the meeting.

Good afternoon, everyone. My name is Rebecca Wilson, Chair of the Board and of today's meeting. It is my pleasure to welcome you to the Annual General Meeting of Alcidion Group Limited. I'd like to start by acknowledging and paying respects to the traditional custodians of the land, wherever those participating at this meeting are located. Shareholders will be able to participate and view a live webcast of this virtual meeting, ask questions and cast direct votes at the appropriate times whilst the meeting is in progress. As the time is now 3 p.m. and the company has complied with the relevant requirements for convening this meeting and we have received confirmation that a quorum is present, I formally declare the meeting open. I'm joined today by my fellow directors, Simon Chamberlain, Victoria Weekes, Danny Sharp and our Managing Director and CEO, Kate Quirke. Also in attendance is our Chief Financial Officer, Matt Gepp; and our Company Secretary, Melanie Leydin. In addition, we have Mr. Grant Martinelli, representing the company's external auditors, William Buck, in attendance at this meeting. The notice of meeting has been given in accordance with the company's constitution, and copies are available for you on the company's website, the share registry's online voting site or on the ASX market announcements platform. I will take the notice of meeting and explanatory statement as read. The format of today's meeting will be a brief Chair address from myself, a presentation by our Managing Director and CEO, Kate Quirke, followed by consideration of the formal business on today's agenda. Following the presentation by Kate, we will provide an overview of the Q&A and voting procedure for today's meeting. After this, shareholders will then have an opportunity to ask questions on the company's business operations. During the formal business for today's meeting, shareholders will have the opportunity to ask questions for each resolution. There will be an opportunity to submit written questions as well as to ask verbally if you wish to do so. Questions received during the meeting which are of a similar nature will be grouped and answered at the appropriate time and after we work through the resolutions. If you have any questions which you feel were not addressed at today's meeting, we invite shareholders to contact the company via phone or e-mail. I'm now pleased to present my annual Chair address for financial year '23. I will commence with an overview of the financial year, which is highlighted by solid growth in revenue, significant uplift in our contracted revenue base for future years and the signing of new important customer contracts. I will also address the post reporting period, given its influence on the value and sentiment of Alcidion. Our Miya Precision platform is a revolutionary solution tailored to the distinctive needs to our health care customers. Our modular architecture allows for a progressive evolution of digital health maturity, granting our customers the flexibility to adapt and expand seamlessly. Unlike traditional approaches, we aim not to replace entire digital health ecosystems but to unify patient environments through Miya. One of our core strength lies in the compatibility of our products with existing systems, allowing for the extraction of additional value from prior investments. Our commitment to customer satisfaction is evident in the continuous growth of our customer base and the successful acquisition of new contracts in what was a highly competitive landscape in financial year '23. Highlighting our ability to meet evolving health care is the introduction of new modules to our existing customers such as the recently launched Miya ED, a product targeting emergency departments. The success of Miya Noting, which was released in financial year '22 and implemented this year at South Tees, demonstrates the value that Alcidion can bring in modernizing the health care system and supporting it through a challenging time in regards to workforce and demand. With a solid 18% growth this last year with $40.4 million in revenue, we remain in a strong position this current year with just over $35 million of contracted locked-in revenue set to be recognized, providing a robust foundation to execute on short- and long-term strategic plans. Key factors contributing to our continued confidence include minimal customer churn and the long-term nature of our contracts. Aligned with the pressing issues facing health care globally, our technology platform addresses the challenges of overburdened health care systems, where hospitals consistently operate at capacity, impacting the welfare of both patients and health care professionals. What sets us apart is our commitment to innovation and the integration of AI in our technology. AI is not just a feature. It's the core of our product, utilizing machine learning to identify patient risk and provide predictive data, empowering doctors to make informed decisions and ultimately improving patient outcomes. Our focus remains enabling further growth but also on moving Alcidion to profitability. To achieve this, the Board is focused on executing solidly in areas within our control, such as nurturing existing customer relationships, optimizing team performance and strategically marketing and positioning our modular products to adapt to buying behavior. Equally, we're also prepared to adapt to challenges beyond our control to allow us to navigate these unpredictable and dynamic health care landscape successfully, which brings me to the activities post this reporting period. As mentioned at the time of our Appendix 4C release and small capital raising, the timing and speed with which contracts are being awarded, not our inability to win these contracts, has seen a shift in the short-term environment for Alcidion. Business growth and success are not a linear process. And whilst it is inevitable that there will be challenges along the way, we remain confident in our product proposition; the growing installed base of our technology across our 3 markets, the U.K., Australia and New Zealand; strong contracted revenue floor that does provide good predictability to minimum performance; and the critical need by our hospital customers for solutions to address massive pressures on health care systems around the world. Whilst we have seen delays in the speed in which contracts are moving through the procurement process and being finalized, our technology continues to have significant impact in the hospitals they support. I would like to thank my fellow Board Directors, our CEO, Kate Quirke, her senior executive team and the entire Alcidion team for their efforts and dedication. Many of them, like you, are shareholders and have a shared desire to see the valuation of Alcidion improve in parallel with us delivering positive performance this coming year and beyond. Thank you. I will now pass over to our Managing Director and CEO, Kate Quirke, who will present on the company's operations. Thank you, Kate.

Yes. Thank you very much. I'm going to share my screen. This -- that's all good. All right. Thanks very much, Beck. Just to make sure that all the technology is working. Thank you very much, Beck, and welcome to all our shareholders. FY '23 was a very successful year for Alcidion and one that I and the staff at Alcidion are actually very proud of. Whilst growing the company revenue, we also focused on ensuring that there was demonstrable success across our customer base for all our products and services. We upgraded all customers on the old Miya Flow technology to the new Miya Precision platform. We released 2 new modules in Miya Noting and Miya in the ED, or emergency department. We had 7 go-lives, generated 33 million alerts across 95 health care providers, added 8 new customers, had 3 billion observations recorded in our systems and 119 million assessments and tasks completed. Most importantly, we delivered real benefits that are both quantifiable and qualitative in our customers and, obviously, ultimately for their patients. Since we first put this slide together in FY '23, the challenges facing health care providers, to be quite frank, have only intensified. The population is still aging with more complex health care conditions. There are serious workforce challenges and increasingly budget pressures as governments around the world are looking to recover from the COVID spend. Perhaps for the first time, we're seeing the impact health care -- the impact of this on health care budgets as the short-term focus is now on getting more doctors and more nurses into the system, and the lack of having those people is actually having a direct impact on decision-making. But what has definitely not changed is that as an industry, health care is still woefully behind in the adoption of smart technology and smart technology that relieves the administrative burden on our clinicians and then, therefore, leads to increasing automation that hopefully drives better efficiency. As a company, Alcidion is well placed to weather these short-term challenges, especially when you look at the opportunity ahead of us and the position that we are in at this point in time with respect to referenceability of our solutions and the benefits, strong recurring revenue, significant customers, such as the Australian Defence Force, Northern Territory Health, Alfred Health, South Tees, Western Health. We have long-term contracts in place. We've got a modern and modular platform that is really important, in that it is a platform that allows us to adapt and pivot to health care market trends and challenges as they change. And despite the challenges of being in a highly politicized market where some things such as timing and funding allocations are out of our hands, we have been able to focus on the ability to increase our revenue and customers through increased modular sales whilst also adding new health care organizations as well. Governments around the world remain committed to modernizing health care and to looking at how they automate it more efficiently. And they're doing this by delivering funding and certainly openly recognizing the need to support the health care workforce with newer and smarter technology. The explosive reaction to large language model sites such as ChatGPT and how these could be used to speed up note-taking in health care, speed up diagnosis and so forth demonstrates both the need, I think, and the desire even if there is still some significant governance issues that we need to address. There's no denying that the appetite is there. We know from the feedback from our customers and the benefits that our solutions deliver that the challenges in the U.K. and Australia and New Zealand are not unique. And at the right time, Alcidion will have the opportunity to look to new geographies as opportunities for further expansion for our solutions to be through -- either through partnership or direct entry into those new markets. Whilst I don't want to spend my whole time speaking about FY '23, as it actually seems some time ago now but it is obviously the AGM related to that financial year, I do want to point out that we [ did not ] add some notable new customers and significant extensions in FY '23, and they contributed positively to the FY '24 contracted revenue that we have now, which sees us with over $35 million in contracted revenue for FY '24 at the end of Q1 and still 3/4 of new sales to be made. We had a significant extension to the Leidos contract with the addition of new modules into the ADF health knowledge management system project. We added a new trust in University Hospital Southampton, which had potential for additional contract phases. The first of which was enacted during FY '23, which was to add observations and assessments into that capability. And in the first quarter of FY '24, we added another new trust in the U.K., which is in the same ICS, University Hospital Southampton, and they purchased Miya ED, which is obviously on the Miya Precision platform, and that was one in the competitive tender. What was most pleasing about FY '23 with a number of successful deployments we completed and the impact that this is having across our customer base, we're very pleased with the results of the benefit study into the implementation of Miya Precision at Alfred Health, which was to support electronic journey boards. This study was conducted by Monash Uni in conjunction with the Digital Health CRC and, therefore, provides independent analysis of the real benefits of implementation of our solution, and it's going to be published early next year in full, but we've pulled out some of the results of that today, and we'll be sharing that more widely. The Leidos JP2060 milestones for the ADF contract continue to be met on time, and we are really looking forward to the go-live of that total program in early 2024. Implementation and technical service delivery have always been a strength of the Alcidion business, and the tangible benefits are providing real savings in time and improvements in care for our customers. And to break that down a little, I thought it was worth pulling out some of those real tangible, measurable benefits. The real value, of course, of what we do does make [indiscernible] in either efficiency and savings in time to support the business cases that our customers put forward. The work we've been doing at the Alfred Health with journey boards has demonstrated a 28.6% reduction in emergency department length of stay for triage category 5, some of the more lower triage categories, where you see people waiting a lot longer to get from ED to be seen; 42% reduction in medical errors as a result of -- at Lancashire Teaching Hospital; 100% alignment of the patient flow information in the journey boards with the electronic medical record at Alfred; 81.1% bed management coordination time reduction for Alfred Health in terms of how much time they spend on the phone. So I mean just think about that, that is a massive saving in respect of time. Five, in Scotland, reported a 76% patient safety impact with the reduction in cardiac arrest. We're seeing significant savings in time as a result of the implementation of both Miya Noting and Smartpage across a number of our customers; 20 minutes reported at Lancs Teaching with the implementation of Smartpage in Guy's and St Thomas'; 90-minute reduction in time spent in handover at Northern Territory for nurses; and 60-minute reduction in the administrative burden per clinician per shift as a result of the South Tees eNoting. And these are results that generate real savings for our customers and deliver on the promise that we put forward when we propose our solutions to customers. Smartpage is our clinical communication platform and tasking tool that, whilst relatively inexpensive to implement, packs a real punch in terms of the demonstrable value. It integrates with Miya Precision, and it can be implemented stand-alone as well as integrated with the Miya Precision platform. And during FY '23, we expanded its uptake, particularly across the U.K. but also in New Zealand where we established the first master services agreement with the New Zealand national health body Te Whatu Ora. And we look forward to seeing the benefits of that rollout. But the results speak for themselves, 72% reduction in interruptions from a clinical perspective that can often lead to medical errors, 60% improvement in flagging deteriorating patients. These are statistics of which we're very proud. In our staffing -- in our staff engagement survey, which we do regularly, this demonstrable value is actually started as one of the reasons people work at Alcidion because we make a difference. It is real, and they can see that play out in the health care system. And I would like to share next a video with you that we're about to take live to a wider audience on our revamped website probably in the next week or 2. And we really put it together to share with everyone the value that something like Miya Noting can bring. And this is in relation particularly to South Tees and the work that has been done there. I'm just going to make sure that I'm -- sorry, sharing the audio. [Presentation]

Thank you. As many of you will know, South Tees is our flagship EPR reference site in the U.K. They are the first site to go live with Miya Noting, and we're incredibly excited about how excited they are about the value that Miya is bringing to them and how they're prepared to share that as you can see there widely with our future customers and other health care organizations around the world. Being the Annual General Meeting, I will take you briefly through the FY '23 financials. Rebecca has touched on them, so I won't go through them in enormous amount of detail, but the revenue was $40.4 million, which was up 18% on the same period last year. Pleasingly, the recurring revenue grew 21% to just over $28 million. Underlying EBITDA was a loss of $1.5 million, which was an improvement on the prior year, although not quite as strong as we hoped for. As I said when we did the full year financials, as I've been through before, we have experienced delays in the rollout of the NHS modernization program. So we expected to see a few more opportunities in that year. And those have been delayed, which contributed to that. But we were operating cash flow positive of $0.2 million for the year and yet finished the year along those lines. Obviously, we are focused on FY '23 for the purposes of -- [ go back one ] there, for the purpose of this AGM. But I would -- it would be remiss of me not to mention the $5 million that we recently raised via an equity placement. As mentioned at the time, we felt it was important given some of the delays in sales we're experiencing in the current health care market conditions that we strengthen the balance sheet to ensure we have maximum flexibility to respond. We're confident with the second half will be much stronger as we see opportunities come to closure. We do continue to review the cost base against the expected outlook. We have made some small adjustments to operating expenses through staff restructure and through attrition to align our cost base with the slower-than-expected sales thus far, and we will react further with cost reduction if the business outlook warrants that. If you look a little bit more at the detail around the revenue for FY '23. On the top left, you can see that the revenue growth over the 5 years with a CAGR of around 19% for the period shown. The current year saw 18% year-on-year growth. Half-on-half, the revenue split is 47% H1, 53% H2, not unexpected and not always consistent year-on-year. We have had, as I said before, a couple of big Q2s in the last 2 years. But the norm is to see more new contracts fall in Q3, Q4. The -- over to the right, we can see the U.K. now makes up almost half of our revenue. And it's worth noting that in FY '20, the U.K. only contributed or made up 22% of our total revenue, of course, acknowledging that some of that was due to acquisition, but there has also been significant organic growth. Looking forward and looking at FY '23, as I sat down, to think about what to cover in this presentation. I was drawn to review what I have said in the annual report about what I anticipated being the biggest drivers for Alcidion in FY '24. I said in that write-up that the year ahead would be one driven by the challenges facing the health care industry, in my opinion, the most challenging since I've been working in health care, which is some 3 decades. I said the key drivers would be about efficiency, flow and command centers, modernization and automation of health care and virtual care. And as we come to near the halfway point, we're seeing significant interest in the hospital and regional-wide command centers and patient flow solutions across all territories. They currently exist in pockets but not uniformly taken up as we've seen the uniform adoption of electronic patient records, but I can see that it is coming. Virtual care continues to be an area of great interest, although I think we have hit some roadblocks with funding and economics of it in Australia. In particular, we haven't yet settled on the appropriate funding models in this country. However, there are dedicated programs in the U.K. and New Zealand that are focused very heavily on these new models of care, which Miya Precision supports. I also called out in that write-up the U.K. EPR funding as been important to us because of the investment that was being made to level up trust to an equivalent digital maturity more quickly. As you know, the problem has been slower than we anticipated and, I think, quite frankly, more complex than the NHS expected. We had real opportunities in this program. And I said -- as I said before, the success of South Tees, the commitment we have to ongoing product development, the acquisition of Silverlink have all allowed us to be part of this significant program. The [ GBP 2.7 billion ] frontline digitization program was established to modernize the NHS to ensure a level playing field across all trust that they could reach this minimum digital foundation by 2025. Those dates have well slipped, as we all know. I think it's fair to say that what constitutes a minimum digital foundation seems to be changing as well. And that has impacted Alcidion sales in a number of ways and not the least of which that the EPR deals have not transpired as expected, but also, that changed kind of the whole landscape in the U.K. in respect of modular sales. Instead of looking to buy a replace -- a module such as ED, for example, all the trusts that were in group 2, for example, that we're supposed to be looking at modules, decided that this was an opportunity to review their total EPR and to see if there was funding at hand for them to look at a totally new EPR. And so that has actually led to slower procurements and disruption across the wider sales activity in the U.K. as well. Late last week, we received an announcement via the digital health press, so it's not official as yet, that trust CEOs have been informed that part of the remaining funds that have been put aside for this frontline digitization program in this year would need to be commandeered to address budget issues in the NHS with particular reference to the many doctor strikes that have occurred this year. The announcement indicated that the group 0 and 1 trust, those are the ones that are the most immature, would still receive funding but that the funding would be cut from those group 2 sites that are the more modular type sales that are leveling up. No one knows yet how this will be -- transpire. We have a monthly meeting along with other vendors with NHS England in the next couple of weeks, and I expect they'll explain how this will work. But we actually see this as a potential positive because we have some of the group 0 sites in our pipeline that we believe this may open up an opportunity. But we think it opens up an opportunity for further modular sales and getting back to a focus on efficiency and safety that is driven by the trust, and their perceived needs are not necessarily the centralized program. I call this out because I know some of our shareholders follow Digital Health Intelligence, which is the main sort of U.K. digital health press, and then I have seen this announcement. And I also call it out because on balance, I welcome more clarity rather than less on where the funding is going and the budget so that we can focus on where we can have the most impact. The strength of Miya Precision is that it is a platform. It allows us -- that allows us to pivot to where the key issues that our customers are that they want to -- have that they want to address. The platform and the modules allow flexibility to respond when the market changes or falters in one area. And this is different to other vendors who have built dedicated solutions to address one particular problem. This is a key differentiator of how we go to market and a very -- I think, a very powerful message that we have, but it maybe is not always understood. As we look forward this year, where it is underpinned by a strong $35.3 million of contracted revenue at the end of the first quarter before any other sales that Miya made. And as you've seen, from what we've demonstrated today, we've got a very strong engagement with our existing customers and an increasing ability to demonstrate the benefits from our reference sites. We expect to see new customers join these in FY '24 as well as additional module sales across our territories. We expect to be EBITDA and cash flow positive from conversion of the current pipeline opportunities, and we'll have a pro forma cash balance of around $11.5 million post the capital raise with no debt. In any business, the path is never straight. And we have and will continue to meet challenges along the way. We remain confident in the opportunity ahead, but we will alter the course as conditions change, if needed. I would like to personally thank the Alcidion team for their passion and their dedication to building the Alcidion business. They work very hard, and they really believe in the value of what we're building. My thanks also to the Board for their guidance and stewardship and commitment to the Alcidion strategy. As a fellow shareholder, I share your frustration when things don't seem to follow the exact path that's laid out. I am committed to building a sustainable company that is focused on making a real difference in health care at a time when the system has never needed at more. My thanks to all of you as shareholders who've remained supportive, and I do look forward to keeping you updated with progress during the rest of the FY '24. Thank you.

Thank you, Kate. And I think particularly, it's great to see that video and the experience through the lens of South Tees. Our Company Secretary, Melanie, will now outline the questions and voting procedures for today's meeting.

Thank you, Beck. Shareholders will be able to participate, ask questions and cast direct votes at the appropriate time whilst the meeting is in progress. Visitors, the media are reminded that whilst we welcome you at this meeting, it is a shareholders' meeting, and you may not comment or ask questions. Given the online format, we may experience some time lag, and this may cause some delay in your text questions or comments coming to our attention. And we encourage you to lodge them as early as you can. And just a reminder that we will have the Q&A after our formal resolutions after each resolution and on operational matters following the conclusion of our formal business today. Shareholders wishing to ask questions via text, please click the Q&A icon located at the bottom of your screen. Type your questions in the ask a question box and press the send arrow, and your questions will be addressed at the appropriate time. Shareholders wishing to speak and ask a question, an audio questions facility is available during this meeting. And if you prefer this method, please select the raise a hand icon located at the bottom of your screen. You'll be placed in the queue and authorized to speak when we reach the Q&A session. Prior to asking your question, please state your full name and who you are representing. Regarding voting on today's resolutions, all shareholders, proxyholders, authorized corporate representatives and attorneys of shareholders who are entitled to vote will be able to do so via the webinar poll. It is important to note that if you have lodged a proxy form and voted prior to the meeting, you do not need to vote again at this meeting unless you wish to change your proxy instruction. For those proxyholders, shareholders and authorized corporate representatives who have not yet voted prior to the meeting, please cast your vote on each of the resolutions when the poll is opened. For proxyholders, you will have a summary of proxy votes, which detail the voting instructions, if any, for each item of business. By completing the voting via the webinar poll when instructed to vote in a particular manner, you are deemed to have voted in accordance with those instructions. Where the Chair has been appointed proxy on behalf of the shareholder, Rebecca Wilson, as the Chair of the meeting, intends to be voting these in favor of all the resolutions. When the poll is declared open, a poll window will appear on your screen. To vote, simply select the direction in which you would like to cast your vote. The selected option will then show as being marked. To submit your vote, simply click on the submit button, and you'll have the ability to change your vote up until the time that the voting is closed. And the voting on all resolutions is allowed up until the time of the poll is closed. Thank you, Beck.

Thanks, Mel. Firstly, if you have a question on any items of the business, please follow the question process that has just been [indiscernible] secretary. There will be an opportunity at the end of the resolution to also ask questions. Before opening the poll, I wish to remind shareholders that the poll will remain for an additional time after we have considered all resolutions. I now declare the poll open. I refer you to the first item of business as set out in the notice of meeting, which is to receive and consider the financial report of the company together with the directors' report and the auditors' report for the financial year ended 30th of June 2023. These items are contained in the annual report, so I will ask that they have been taken as read. The annual report is available on the ASX announcement platform or on the company's website. The Corporations Act requires the accounts and reports to put before shareholders at the AGM. However, except as set out in resolution 1 to be considered later, there is no requirement for a vote of members to be taken on them. [ No ] questions to the auditor were received by the cutoff date, 5 business days [indiscernible]. Questions may be directed through myself to the auditor in relation to the conduct of the audit, the audit report, the company's accounting policies or the independence of the auditor. As this matter does not require a vote, we will now move to resolution 1. The poll is now open, and shareholders and their representatives may cast their vote as and when the resolutions are being addressed. You will also have some time after all resolutions have been addressed to cast your votes. I now refer you to resolution 1, which is to consider the adoption of the remuneration report forming part of the directors' report for the financial year ended 30th of June 2023. The remuneration report is set out in the directors' report in the 2023 Annual Report. The remuneration report sets out the company's remuneration arrangements for the directors and key management personnel of the company. The vote on this resolution is advisory only and does not bind the directors or the company. Melanie, do we have any questions related to resolution 1?

No, we have no questions, Rebecca.

Thank you. The following percentages of proxies have been received for resolution 1, and full details of the results are outlined in the presentation. I move that shareholders consider, and if thought fit, pass the ordinary resolution. As this next item of business relates to myself, I will hand the chair to Victoria to conduct the resolution.

Thanks to you. I now refer to resolution 2, which relates to the reelection of Ms. Rebecca Wilson as a Director of the company. Ms. Wilson's profile has been provided on Page 7 of the notice of meeting. I now invite Ms. Wilson to comment on her reelection.

Thank you, Victoria. When I joined the Board of Alcidion, we are at an important intersection of really needing to productize what was groundbreaking, industry-leading innovation to focus more surely on commercial activation. And in doing so, Alcidion's revenue has grown from around $40 million -- sorry, $4 million back then to now moving well beyond $40 million. Today, we find ourselves at another intersection of enabling Alcidion to grow from where it is today, into a sustainable, resilient, profitable business that can achieve sales of $100 million or more and surely be a digital health care business of scale and influence in the years to come. And it can be a bumpy road as we've experienced over the last few months, but it's our role as a Board and mine as Chair to find the path forward that enables us to navigate the opportunities and the inevitable challenges. I appreciate the support of our shareholders in my reelection, and we will work tirelessly in these years ahead to continue to steer Alcidion in the right direction. So thank you.

Thanks, Beck. Melanie, did we receive any questions related to resolution 2?

No questions on this resolution.

Thank you. The following percentage of proxies have been received for resolution 2, and full details of the results are outlined in the presentation. I now move that shareholders consider, and if thought fit, pass the ordinary resolution. And back to you, Beck.

Thank you, Victoria. I now refer to the final special item of business, resolution 3, which relates to the approval of the company's 10% placement facility. The effect of this resolution is to allow the directors to issue equity securities under Listing Rule 7.1A during the 10% placement period without or in addition to using the company's 15% capacity under Listing Rule 7.1. The ability to issue equity securities under the 10% placement facility is subject to shareholder approval by way of a special resolution. Melanie, did we receive any questions related to resolution 3?

There are no questions on this resolution.

The following percentage of the proxy have been received for resolution 3, and full details of the results are outlined in the presentation. As this resolution is a special resolution, it requires 75% of votes cast in favor to be deemed as passed. So as we can see, this one did not pass. So I move that shareholders consider and if thought fit, pass the special resolution. We will now provide shareholders with an additional minute for poll voting to be completed. [Voting]

As the additional time is up, I now declare the poll closed. After the votes have been counted, the results of the poll will be released to the ASX later today. We will now address shareholder questions which were submitted prior to today's meeting and any received in relation to the business operations during the meeting.

Thanks, Beck. We have a question that's come through on operations. How may you leverage your AI expertise to proactively address the challenges facing your customers and their funders restreamlining the procurement process?

That's an interesting one, probably not the business that we're completely in. There are a number of people I know out there in respect of creating ways to use AI to, in fact, speed up the process. I think the reality of the challenge is they are multifaceted, but the largest of which is the workforce challenges in terms of capacity to get these procurements done whilst we are looking to put more people on the front line. So anything that we can do to streamline the administrative burden in relation to the delivery of health care, I think, will help with this. But AI is going to obviously change a lot of the ways in which we do things as we move into the future.

Thank you. We do have one other that's come through. Beck or Kate can answer this. Will the next 2 dividends increase proportionate to profit or growth?

So first of all, I mean, we're not paying dividends. So not exactly sure what is being asked in that question, Melanie.

Yes. If that shareholder can please just provide a bit of clarity given that this company is not currently paying dividends. So at this stage, there's no other questions that have come through.

There's someone with their hand up, Mel, in the [indiscernible].

Apologies. [ Ms. Lee ], you are now in the meeting. Could you please ask your question?

Sorry, you're addressing me. Someone else was talking to me. This is [ Miriam Lee ]. Am I on now?

Yes, you are. Please ask your question.

Sorry, I thought there'd be a dozen other people before me. Look, I'm a terribly naive shareholder and really need a bit of help understanding some things that perhaps I should have followed up earlier. But when you talk about this $35.3 million in contracted and scheduled renewal revenue, does that apply to everything that is annualized recurring revenue that you already have and -- but also what you've already sold and you're expecting to get? So -- but -- and it doesn't, of course, even come up yet to the $40 million of revenue that you've made in FY '23. So you've even got to make up nearly $5 million even to get back to what you're making then. And obviously, we're hoping that you'll grow another 18% in the next year. So anyway, can you sort of address those -- that rather simple question?

No, that's all right. I fully understand what you're asking, [ Miriam ]. We let our shareholders understand the revenue that has been booked and will definitely be able to be contracted at a minimum as we progress through the year. We then add additional sales as we go on. So we are actually ahead of where we were at the same time last year. So we assume that as we have new sales, we will continue to grow at the pace that we have, provided that those sales transpire. So the $35.3 million is where we are at the end of Q1 that will be definitely booked revenue without any further sales being made in the next few quarters.

Thank you. Just a clarification on that dividend question. When will the company start paying or considering paying dividends?

I'm happy to take that question. Look, it's not on the Board's agenda in the short term to be paying a dividend. I mean, I think number one, we are yet to be a profitable business. And so our focus over this next year and certainly into the next few years is to really show that we can make this business profitable and growing profitable -- growing profits, at which time we would then start to consider a dividend. I think the other thing is, too, is I referenced this in my reelection is that we see ourselves really aspiring to be a much bigger business than we are today. And that requires us to continue to invest in that growth. And so for us, it's really about balancing the desire and the need to be profitable and have growing profitability as well as ensuring that we continue to invest in areas that will allow us to grow this business to global scale.

Thank you. Just a question just on resolution 3. Just do we think the results of resolution 3 is a result of holding a virtual rather than a hybrid meeting? What alternative initiatives are you putting in place to foster direct engagement between Board and C-suite executives with shareholders?

So I don't think resolution 3 is related to doing this meeting virtually. I think to be fair, the AGM followed very closely the placement that we did a couple of weeks ago. I think it's fair to say shareholders were surprised by the need to do that placement. And I think the voting on that particular resolution is actually shareholders indicating that they're not wanting us to do sort of further capital raisings, which we completely appreciate. I think in terms of the second part of it, we evaluate every year whether we would do a virtual, a hybrid or an in-person meeting. And we look for different ways to engage with our shareholders throughout the year. Kate is very, very active in meeting with investors. She presents at most of the [ broker ] presentations, but we'll absolutely continue to look at the appropriateness of holding these virtually in the future or other ways that we can engage with shareholders.

With respect to the recent placement and SPP, which seems to have been hastily decided, can you understand why shareholders have lost some confidence in the Board and management to manage stakeholder communications and ongoing risk management, especially given the specific expertise of those skills amongst Board members?

Look, I think it's, in some ways, easy to look from outside to inside and make some assumptions on how decisions have been made. We actually felt that it was in the best interest to align that placement with the announcement of the 4C. We felt that it's important for shareholders to be able to get both those pieces of news together. From the Board's perspective, it certainly wasn't a last-minute decision. We looked at lots of different options leading up to the announcement of our 4C that we thought would be important in providing confidence for our shareholders that we had a strong balance sheet that would allow us to continue to navigate the uncertainties of the environment that we work with in and be able to make the right decisions in how we run the business and grow the business.

How confident are you that health sector decision-makers in the U.K. and Australia, New Zealand are aware that Alcidion has solutions to immediately critical problems such as ambulance ramping patient flow, et cetera?

Obviously, we're very focused on getting our messaging across around this. If you look at some of the information I presented today, around the benefit study we've done for Alfred Health, we've got a marketing campaign around patient flow, specifically at the moment, we're about to revamp the website, these are all activities that we undertake to strengthen, refresh the messaging about what Alcidion stands for and what we're doing. Of course, we can always do more, and we can always do a greater reach and look at different ways to engage our customer base, and we continue to do that. I'm over -- with the team of us are over at Digital Health Week in New Zealand next week, and we'll be very much focused on these as issues to address. The U.K. team have, I think, 4 conferences that they're stretched across attending this week. It is very much conferences in Digital Health World at the moment. So we have many different ways to amplify this message, and we continue to look at opportunities to do so even more strongly.

Just a question on the ESPP. Are management participating in the SPP, considering the share price is not 20% higher than the issue price, and therefore, management is able to participate?

So I'm going to assume you -- that question means management and directors. So I'll answer from that perspective. Certainly, there is a desire from the directors to participate if we're legally able to participate in that SPP.

Thank you. I am just going to open up the floor to [ Ms. Lee ]. Just a moment. [ Ms. Lee ], you're now in the meeting.

Can you hear me?

Yes, we can.

All right. Now coming back to that $35.3 million, divided 72% into products and 28% into services. Does the services related to the implementation of, say, the -- whatever platform it is and then the 72% is the recurring revenues? Is that the way it works?

Predominantly, yes. So the 72% relates to product revenue, licensing and recurring support and maintenance. And then the services relate to predominantly the implementation of the actual solutions that we have sold them.

Right. So really, you're hoping that 72% is going to keep tugging over the -- every time that the contract is renewed, you hope that's going to keep going?

Yes. And to date, that has almost universally 100% being the case. We have what is considered a very sticky contract environment that once our contracts are in place and the solutions are being used and delivering value, you don't see a great deal of customer churn in health care.

So what did sound a bit of a [ shutdown ] in the back was in the latest webinar, the reference that some people have ditched one of the Miyas, I think, the Miya Precision solution by Epic now. How likely is that to happen?

From time to time, Epic is an electronic patient record that's fully integrated. Anybody who chooses to buy Epic tends to need to replace their existing systems in order to have a business case that stacks up in respect to how much you need to pay. So we have seen that occur at ACT Health. It is not something that occurs very frequently at all.

And do you feel that most of your modules offer something special and different, better than some of the larger organizations that can sort of plunk down their EPRs with perhaps other things integrated into them?

Yes. Obviously, we've positioned ourselves to be a modular EPR because we believe that's where the world is heading. A lot of these EPR technologies are 20 and 30 years old. And once upon a time in order to get the value out of it and to integrate systems, you needed them all to be from one vendor. As technology has changed and we have a very modern open platform, we are able to add value to some of those deployed electronic patient records but also provide a very viable and more cost-effective alternative.

Right. So is one of the directions you're taking trying to add on some of your special modules, for example, added on to Cerner or things that they may not have?

Yes, [ Miriam ], we have several examples where we've done that in the U.K. and in Australia, RPA Virtual, at Royal. Prince Alfred, East Lancs. Alfred is actually adding to -- at the Alfred, we're adding to Cerner. At Western, we add to Cerner. So nearly all of our deployments in Australia are actually adding on to or adding value around an existing electronic patient record.

Yes. And I think one of the things, [ Miriam ], that we talk about quite a lot is that, our technology platform is not disruptive to those investments in systems that have already been put in. What we do is extract value from them. So we actually find it's often that clinicians and the hospitals, the doctors, et cetera, who are actually sort of setting the environment that Alcidion is to sort of [ sit ] on top of some of these other systems.

Right. Any chance you might be a takeover target?

We're currently very focused on building a proposition to this market that is unique and building the business to be an ongoing concern.

That was just a bit silly. Look, could I ask you one more [ tin-tacky ] type of question. Somewhere -- whether it was in the last quarterly webinar, some statement that was made that I just don't understand, saying that you needed a total contract value of $30 million of new sales. How did that -- what was -- what did that mean?

We might get Matt to respond to this if he is online there?

Yes, I'm online. And so -- [ Miriam ], I think you're referring to a comment that was made by us in the last quarterly announcements in response to a question where a shareholder asked what level of sales, TCV sales do you need in order to achieve your cash flow positive and EBITDA positive target for FY '24. And the response to that question was a level of sales at around $30 million TCV, which is consistent with what we have delivered in the last 3 years, I mean, FY '21, FY '22 and FY '23.

Right. So that's new sales, not renewals, sales of new more markets you've ever done before? Right, right.

We've done -- which we've done in [indiscernible].

Which we have done.

Every year, we've done around $30 million. If not more -- as a matter of fact, I think the year before last, it was about $50 million something because of the ADF contract.

Yes. So it was $29.5 million in FY '21, $57.7 million in '22 and $29.9 million in FY '23. So we need around $30 million in FY '24 in order to achieve our targets.

Right. And so it doesn't include renewals? Sorry, I didn't quite get [ you ].

No, no. It's brand new sales in the year.

Right. And I suppose the thing that really worries a shareholder like me is that besides you have contracts slipping into quarter 3 or quarter 4. And then you wonder whether you're going to make them at all this year. But -- so you may not achieve them -- achieve that target this year, but anyway, I know a lot of this is out of your hands.

We're doing everything that we can, [ Miriam ], and remain confident that we have a well-established set of opportunities that allow us to do that.

Have you also considered like some of the [indiscernible] being made is that shares, either salaries or as director fees to try to keep [indiscernible] of outflow of actual money to get a bit closer to breakeven?

I mean we obviously have a remuneration strategy that is documented in the annual report that combines a number factors in terms of staff retention and staff motivation. Regardless of how you position that, we have scaled the business to allow us to support a business that is going to continue to grow in revenue. And we have invested in growing the business, ready to deliver on that. I remain confident that we'll continue to do that. But as I said in my presentation, if we need to look at adjustment of that at some point in the next little while, we will do so.

Okay. [indiscernible] 2 years to perhaps even to get -- I mean there's a difference between cash flow breakeven and actually breaking in on the profits. If you look at the $3 million loss or whatever, it comes down to -- on the actual bottom line. It's a bit of a worry to a shareholder, but anyway -- luckily, I don't have an enormous amount of money in your company. Anyway, all the best.

[ Miriam ], thanks for your time. We're going to take some other questions now. Just another question that's come through. Did you anticipate the share price response to the placement announcement? And would you have done anything differently?

So we did anticipate that the share price was likely to fall, I think, on the basis of market expectations. And we knew that the market would likely to have been surprised by our decision to take capital, but we stand behind that decision irrespective of -- [ we are ] expecting that to occur. As a Board, we constantly sort of look at the decisions that we've made, the learnings from those decisions, and that certainly informs decisions in the future. So to this particular decision, we felt that this was the right thing for our shareholders in the sort of medium term, as I said, to ensure that we had a strong balance sheet to really to support the business going forward.

Thank you. A current challenge to closing the digital maturity gap and accelerating the adoption of these technologies at scale lies at establishing a robust governance framework to support a culture that embraces digital transformation. What can Alcidion do or is doing to support this with their current potential customers?

Thanks for the question, [ Peter ]. I mean, I think it's something that occupies the mind, particularly of our service delivery team. We have a team within that group whose role is to look at implementation processes and adoption. We have a Chief Medical Officer and a Chief Nursing Information Officer, who are working to continue to help develop ways in which we can assist our customers with adoption. Obviously, some of the information that we're seeing come out of studies like what we've done with the Alfred to contribute into that. So Alcidion is quite focused on it. But we are also partnering with large organizations in the U.K. and here and in New Zealand, who are very focused on change management and adoption who see our platform as being beneficial to their processes of making change in health care and vice versa. So partnering with people who have real skills in that adoption area is also something that we're quite focused on and developing further at the moment, [ Peter ].

Thank you. There's just a follow-up question on the SPP and the directors being legally able to participate. The rules around the SPP are quite strict. We're very close to directors being able to participate under the rules of the SPP, and we won't know that position until our close date. So we'll assess at that time. And next question, does the Board expect the company's free cash flow to improve this financial year?

You need to answer that, Beck. It's a Board's question.

Well, certainly, we do, absolutely. So I think one of the things that Kate and myself have communicated, I hope, pretty strongly off the back of the last 4Cs is that the Board absolutely remains focused on this year being both cash flow positive and EBITDA positive. And as result of that, we would expect to have improved cash flow generation from those activities.

Thank you. Whilst Alcidion has delivered impressive double-digit revenue growth in FY '23, cost growth outstripped this. How should we look at cost growth, specifically ongoing growth in employee expenses against the backdrop of uncertain revenue growth in FY '24?

Thanks. I think as I addressed in my presentation, we have already looked at some restructure, some nonreplacement staff through attrition. So we're already addressing the cost base. So you should not expect to see further growth in the operating cost base at this point in time, and we continue to monitor that as we move through this financial year.

Thank you. With digital care part -- whilst digital care pathways deliver huge benefits, those digital health systems require the right skills and a number of staff in place to operate and implement those practices throughout the NHS. Can you please provide any insights on this risk area and potential impact on Alcidion?

And I think we're seeing the impact of that right now in respect of the slow procurement processes and the impact that it's having on people being available to do that. At the end of day, our technology is really about trying to provide more time to care, more time be available, more time to free up time as we demonstrated through the video and some of the results that are coming out. So it is a bit of a chicken and egg is that you need to invest in the technology in order to free up the time. And so we are working really -- in a really focused way on ensuring that the benefits that we've been talking about today, and there's more and more depth those, are available to our customers to help them make the case for why employing technology will actually have an impact that allows the right number of staff and the right number of skills to be available to make these purchases.

Thank you. How are you exploring to use Alcidion's products in aged care settings, aged care hospital relations?

Look, there's a real intersect between what we do in patient flow and the aged care system. A lot of the challenges with capacity in hospitals is people waiting to find places where they could be better cared for outside of the hospital system. So we are already engaged at that end in respect of flow. We are also -- we are open to looking at the -- and have had some conversations about supporting hospital in the home like we do for RPA Virtual for aged care patients or aging in home or aging in place as it's referred to. I think this is a very early -- in the very early areas of adoption, and the models, again, the funding models need to be in place to support it. But we keep an open mind to it, and we do explore this as a future growth opportunity for us.

Thank you. Does ALC intend on further capital raise that has diluted investment by shareholder? And when will you conduct a share buyback to address the dilution of share price?

So certainly, there is no intention to raise capital -- any further capital. I think for us, we have a good sort of cash balance in combination with that strong contracted revenue that Kate referenced several times in today's meeting. For us, we would be looking at further adjustments to the cost base before making any sort of further decisions around capital raising. And I think it's worth just reminding shareholders that we look at these decisions through the eyes of our shareholders. We are all shareholders. Kate is our fourth largest shareholder. And so we completely understand that these decisions have an impact on shareholders, are dilutive. But on the balance of all of those things as a Board, we still stand by the decisions that we made, and we do believe that it was in the best interest of our shareholders.

Thank you. There's no other questions through the Q&A box.

Thank you, Mel. The company has not received notice of any other business and, as such, concludes the formal business of today's meeting, and I now declare the meeting closed. Thank you for your attendance, and we look forward to your continued support. Have a great afternoon.

Thank you all. We will now close the webinar.