Alcidion Group Limited (ALC) Earnings Call Transcript & Summary

Good morning, everyone, and welcome to Alcidion's Full Year Financial Results Webinar for the 12 months ending 30th of June 2024. Before we get started today, I would like to acknowledge the traditional owners of the land on which I'm presenting from today, that were injury people of the Koolan nation. And of course, acknowledge the lands from which all of you are joining me today, and I pay my respects to their orders past and present. And I extend that respect to all our original and terrestrial Islanders people who have joined us on the call. As this is our full year results. Joining me on the call today is our Chair, Rebecca Wilson; and our Chief Financial Officer, Matt Gepp. Today, we'll take you through a presentation covering the key financial and commercial highlights for the year. And then we'll give you some of our thoughts on the outlook ahead and we'll finish the call up with Q&A. All attendees have the opportunity to ask questions at the conclusion of the presentation. And if you would like to ask a question, please use the Q&A function that should be at the bottom of your screen. We will aim to answer as many as possible, albeit noting we will sort of grow together questions that are similar in nature to avoid repetition, and we have received a few questions prior to the call starting if there's -- if we run out of time or there is a question we're unable to and we welcome your giving you the opportunity to send that via e-mail to investor at alcidion.com. -- we'll seek to answer as many of those as we possibly can. As a reminder, the webcast is being recorded, and we will make it available on Alcidion's website later today, along with all of the documents that were lodged this morning. So before I get into the results, I thought I'd just take a moment to briefly provide an overview of Alcidion. For those of you who are perhaps new to the story or to the company or could do with an update. So really, what Alcidion's core proposition is that we are focused on solving -- providing technology that helps us solve problems and support the several problems on the health care system. We're essentially a health care data and informatics company that consolidates and analyze large amounts of information from many systems across the health care system and that we are able to present that in ways that helps to streamline hospital and health care workflows and ultimately, to improve patient care. Our aim is to support health care professionals by giving them the tools they need to make their jobs easier, which either directly or indirectly results in a more efficient health care system for everyone. We currently operate across 3 geographies: Australia, New Zealand and the United Kingdom. And our revenue is split roughly halfway -- half and half between the United Kingdom and Australia and New Zealand. Our flagship software platform is Miya Precision, which is a cloud-enabled modular solution that you can scale up or down depending on the required functionality and the budget that customers have at any particular time in their purchasing cycle. We firmly believe that this modular platform approach that we've taken from an architecture perspective is one of the key value drivers for our product. It provides a unique point of difference to some of the larger competitors in the market. At present, we have around 16 modules, which we have continued to add to over the last year. And one of those was recently added was the emergency department module, which we'll talk a little bit more about later on. We have a world-class development team that enables us to develop new modules and commercialize those. And that allows us to keep up with the needs of our customers, but also to keep up with the changing landscape in respect of the health care industry and what it needs at any particular point in time. Many of you will be familiar with the names of some of these customers. But I think as we get to the end of a full year, I think it's also good to take the opportunity to highlight the critical role that Alcidion and Miya Precision solution plays in providing health care infrastructure for these customers that has become really an integral part of their care delivery platform and not only processes daily patient information in very large volumes, but also helps to shape the clinical behaviors of hundreds, if not thousands of safer use our systems throughout the health care system. Therefore, when we partner with a customer like Dartford, Western Health or Leidos in respect of the Australian defense force delivery program. Whilst the initial contract may be 3 or 5 years, we typically see them staying with us for much longer. And in many cases, we'd expect to have those customers over decades. And this is one of the real value drivers for our business. And certainly, over the past 12 months, we've been able to demonstrate that with the extension of the South Tees contract until at least 2033. -- and Leidos partnership, which supports the Australian Defense Force rollout, which has several renewal periods across 5-year tranches in the decades to come. So that just gives you a little brief summary. We lodged a larger form presentation deck today on the ASX that will give you a little bit more background information should you be seeking it. Now I'm going to jump in with sort of a brief overview of the results, and I'm going to hand over to Matt, who's going to take you through them in more detail. It's no doubt that in a challenging year for Alcidion in FY '24, which was impacted by external market activity being slower than we'd expected and which then -- that was slower than expected in the first half. That then saw us move to reduce the cost base through Q2 and Q3. And we did that all the while accommodating what was an uptick in deployment activity, but also an uptick in tender activity as we moved into the second half of the year. And as we enter FY '25, we are seeing some of that tender activity culminating new contracts, which when we combine that with the actions we've taken on the cost base. sets Alcidion up well for positive results in the year ahead. Looking at a little bit more detail on the FY '24 financial highlights, which, as I said, I won't go into too much detail because Matt will just to point out a couple of key points there. We delivered full year revenue of $37.1 million, which was down 8% on the prior year. But whilst it's not on this slide, we are going to give you some greater detail as to the makeup of our revenue during the last year so that we can -- you can understand the components that go into that $37.1 million. Pleasingly, our annual recurring revenue was up 6%, and I think that's important to note during the course of this year, that continued increasing the annual recurring revenue. Underlying EBITDA for the full year was negative $3.4 million. However, following the cost-saving initiatives that we implemented in H2 fully, the EBITDA loss in the second half reduced to approximately $600,000. Despite the soft first half cash flow, we generated strong operating cash flow in the second half of $4.3 million, which leaves us with approximately $11.8 million of cash at the 30th of June. I touched on signing of new contracts with South Tees, Dartford integration. I'll touch on a little bit more detail about those into other contracts as we proceed through the presentation, but I'd like to hand over to Matt now, who will give some further color to the financial details.

Thanks, Kate. Good morning to everyone who has joined us today for this full year results presentation. And we know it's a very busy day on the ASX. So we appreciate you attending. Okay. As Kate touched on, the business delivered $37.1 million revenue in '24. That's $3.3 million or 8% down on the prior year. To explain the movement in revenue, this year in the slide deck, we've presented the revenue view in a way that will help our investors better understand the individual components that make up our revenue. Firstly, we have the recurring revenue, which has been split for the first time between annual recurring revenue and capital license revenue. Annual recurring revenue represents our ongoing and underlying recurring revenue stream and mostly includes ongoing maintenance and support fees as well as license and subscription fees. Importantly, we saw a year-on-year increase in ARR of $1.5 million or 6%. Also included in recurring revenue is capital license revenue, which is typically a feature of new U.K. contracts. It relates to one-off multiyear license revenue, usually covering a 3- to 5-year period. We don't sell perpetual licenses at Alcidion, and it's our expectation that these capital license revenue component will revert to annual recurring revenue after the initial license period has ended. As seen here on this slide, capital license revenue fell $2.4 million year-on-year from $3.4 million in '23 to $1.1 million in '24. The slower-than-anticipated throughput of U.K. tenders is the cause of this decrease with the prior year seeing material contract wins in the U.K., such as Bolton, Dartford and UHS. And we didn't see the same level of sales activity in FY '24. Secondly, we have the nonrecurring revenue. This is being split here between pure implementation revenue and technical services revenue. Implementation revenue is directly linked to capital license revenue and new sales in general. Large capital license sales, we usually see a period of 6 to 12 months of implementation. -- smaller sales may see a period of 3 to 6 months of implementation, and this often crosses over multiple financial periods. And as a result of lower FY '24 sales activity, we've seen a decrease in the year-on-year implementation revenue of $2.4 million -- sorry, $2.5 million. Technical Service revenue has remained steady year-on-year at 2.3%. It's largely a result of ongoing legacy contracts, which see us provide support and consulting services to customers in the ANZ region. Our margin has remained steady at 86.1% this year with full year costs also relatively steady year-on-year, seeing us deliver a full year underlying EBITDA loss of $3.4 million. The restructure of the cost base undertaken in Q3 cannot be seen clearly in the year-on-year numbers here. So we'll flip over to the 2024 half-on-half P&L slide, and I'll talk to the changes we made in the business during the year. Financially, it was a tale of 2 halves in 2024. After reporting a first half underlying EBITDA loss of $2.8 million, the business went about restructuring the cost base in Q3. -- this restructure was largely focused on reducing head count in the business, reorganizing how we work and also focused on spend in general. The second half saw a $3.7 million reduction in OpEx versus H1. This includes a $3 million reduction in half-on-half staff costs and a $700,000 reduction in total nonstaff OpEx. And this saw a much improved second half EBITDA, underlying EBITDA loss of $600,000. It's worth noting here that we incurred around $900,000 of staff costs in Q3 in relation to head count that was no longer in the business at the end of the year. Our Q4 staff cost exit run rate was around $6.2 million. And as reported previously, we incurred $1 million of costs during the restructure, mostly in relation to redundancy costs. I'll move on to the revenue dashboard now, please. Thank you, Kate. Here, we demonstrate various cuts of the revenue. In the top left segment, we see the half-on-half revenue where we see a slower H2, a result of slower sales in the year and lower H2 implementation revenue. In the top right segment is the ANZ U.K. split, which has remained steady year-on-year at 51% and 49%, respectively. The bottom left segment is the most interesting, I think, and demonstrates the historical revenue split in the way I talked about in the first P&L slide. Here, you can see the business has delivered steady year-on-year growth in the annual recurring revenue since 2020. You can also see the historical capital license revenue, which made a material contribution in the 2021, '22 and '23 years. And as mentioned earlier, a much lower contribution in 2024. You can see the peak implementation revenue of $10 million in 2023, coming off the back of those large capital license sales in the preceding 3 years. Lastly, on the bottom right segment, we have shown historical recurring revenue percentage contributions. And in FY '24, with lower capital license revenue, this skews heavily to ARR, which represents 71% of the recurring revenue in 2024. -- moving on to the balance sheet, please. Kate, thank you. We started the year with $11.8 million in cash. We also start FY '25 with a much stronger balance sheet in terms of working capital than we did at the end of 2023. In the prior year, payables exceeded receivables by around $1.1 million, while we start 2025 with a reverse situation with receivables exceeding payables by around $2 million. This sets us up for a better cash flow performance in FY '25 Q1 compared to the prior corresponding period. Intangible assets continue to decrease as we amortize the acquired intangibles, and we end the year with $94 million on the balance sheet, down $2.9 million in the prior year. Unearned revenue or deferred income is up $1.2 million year-on-year. This represents funds received in advance of services being delivered. It's worth noting that this balance washes through the P&L each year. And for those who get this deep, Note 15 on Page 81 of the annual report shows the movements in and out of the opening unearned revenue balance -- thank you. So moving on to the cash flow side. The business delivered positive operating cash flow in H2 of $4.3 million. That's a $15.7 million improvement versus a challenging first half, where we saw an operating cash outflow of $11.4 million. We finished the year with net cash outflow from operating activities of $7.1 million. H2 benefited from a high level of cash receipts at $28.9 million compared to $15.1 million in the first half, delivering full year receipts of $43.9 million. $3 million lower than the previous year, which given the decrease in revenue is not unexpected. H2 also saw a $2.2 million decrease in the cash operating expenditure versus H1. And it's important to point out here that included in the H2 positive operating cash flow results is around $1.3 million of cash costs associated with the restructure and as mentioned earlier, about $900,000 of costs that are no longer in the business from Q4 onwards. We end FY '24 with $11.8 million of cash, a strong balance sheet with a much improved opening working capital position than in the previous year. Thanks for your time again today, and I'll pass back to Kate for an overview of the operations.

Thanks, Matt. Appreciate that. As many of you aware, we recently announced we've been selected both North Cumbria, Integrated Care NHS Foundation Trust referred to by us as NCIC for their new electronic patient record system. And at the core of the EPR system will be our flagship -- Miya Precision platform, which provides a full suite offering, including PCS, our patient administration system, which is already live at the trust. But as part of this contract, we'll be moving to the cloud and also moving to the upgraded version of PCS. Some of you may recall PCS is the name for the silt well, the product from the SilverLink business. which LCDN acquired a few years ago as part of our strategy to expand our offering and provide a modern and modular electronic patient record or something that we refer to as an EPR. Our EPR solution will provide clinicians at North Cumbria with real-time access to patient records whilst also helping to streamline care delivery processes and the clinical decision-making processes in that trust. And it will also allow them to build on their existing digital footprint where they already have, for example, the medication management solution rolled out from our partner better, along with another -- a number of other modules from other providers who have got specialized niche solutions. And in selecting my precision that allows them to roll out a modern modular platform that will allow them to protect and keep their existing investments. and realize benefits more early in the process of rolling out an EPR such as electronic noding and observations without having to replace anything along the way. We're currently meeting regularly with the trucks to finalize the details of that contract, which is expected to have a 10-year term with a total contract value between $30 million and $40 million depending on what's in and out when we finally resolved that and the number of modules. Well, they'll be taking all of our modules, but there could be some partner or third-party modules that are added to that. Upon finalizing that contract, we'd expect to begin the deployment in Q3 2025, and I think North Cumbria is hoping that starts in January, and we expect revenue to flow immediately after the commencement of the project. It's the second U.K. EPR contract for Alcidion following the 10-year $23 million extension for South Tees contract that we signed in December 2023. And we've already announced that contract -- as we've already announced, the contract has optionality for several additional modules at South Tees, which if that was selected, could see an additional $10 million or so added to that contract to bring it up to a similar size as the North Cumbria contract, for example. Both of those contracts provide really good reference points is the shape and size of the various EPR contracts that we are tendering for, as I've iterated before, we do not go for all EPR tenders and nor do we expect to win all the ones that we tender for. And I think, again, I'd like to reiterate that the EPR part of the NHS market is just one market segment in that market, the Alcidion and are represent -- sorry, targets, it represents an opportunity at a point in time. One of the very strong positionings for Alcidion is that we have a multi modular platform that allows us to address many different challenges in health care and not require us to only be focused on a particular opportunity. The strategy has always been to have that platform approach so that it does allow us to be responsive to the changing market dynamics over time. Just further to my last sort of comment about how the EPR opportunities can build out. We have presented this slide previously, but I just want to touch on it briefly as it does a pretty good job of highlighting how we view the significant organic upside with a platform approach and with an existing customer base. So our competitive advantage is being able to work with customers over time. to deliver solutions that progressively meet their needs to mature digitally. And our work at Dartford, Gravesham and South Tees, along with several others, and North Cumbria will be another example of it, demonstrates how this sort of getting the customer first and starting to roll out the platform allows us to then build up over time to reach material contracts such as the North Cumbria opportunity. We have several customers both here and in the U.K. where we have Miya precision contracts for those initial modules such as Miya Flow or Miya observations and assessments. And in many of those cases, they've got modular options priced into their contracts so that they are able to come potentially back to us and select from those contracts without necessarily having to go to market again. Talking about notable contract wins during the year in Q3 of this financial year, we signed a $3.4 million 3-year extension with Dartford and but Gravesham, which was to build upon an existing 6-year relationship we've had with them. They were our first U.K. customer for Miya Precision platform. The contract included moving them to the cloud, which has been successfully done and continuing to roll out some of the modules that they had selected and they've recently gone live with medication management and electronic noting from our suite. And as I've previously indicated, they -- in order to get funding from NHS England, they are required to go to market for full EPR, but we will see ourselves -- would consider ourselves well placed in that procurement when they do that perhaps in 2025 calendar year. During the Q3, we also signed a new trust in Townsville and Glossop integrated care trust for the use of our Miya observations and assessments, previously known as patient track. Their assisted trust to a current patient track user. So in the same integrated care system. That user Stockport, has actually been using our solutions for close to a decade. And this gives us market share in another trust within NICS as well. Post the end of the year, in July, we entered into a new partnership and exciting one with Human Rural Health Alliance in Victoria, which is an alliance that provides digital support to 15 hospitals across a rural region of Victoria. The contract is for the use of Miya Precision as an enterprise digital platform across multiple sites in regional Victoria or Brewdog Wangaratta being the biggest of those. And the initial contract is for both flow and virtual care, but they also have the options to add on additional modules over time. The implementation and use of that technology for Hume will increase the visibility of bed availability across the region and anybody following the news over the last couple of days in Victoria. In respect of health care, we'll know that there are a lot of challenges around bed blocking and bad management. And with our footprint at Hume Western and Alfred now, we are certainly helping to support those organizations in respect of their bad management and bad management of bad blockage. During last year, we also completed a lot deployments, some very significant ones. Looking at some of the successful deployments during the period, we notably went live with mergers our new emergency department module at Hampshire Hospitals Trust, which is the first site using our ED module of Miya Precision, and they created over 2,700 documents across 3 ED locations in the first 12 hours of using a solution, which really demonstrates Miya's ability to support high-demand health care services. And ED operates in effect as a mini hospital with an ED system needed to support all the elements of an electronic patient record, but in a very high volume, high stacks environment. We are also in the process of looking to roll that out at University Hospital, South Hampton, -- they've been a bit slower in their rollout than they're first initially planned, but they will be certainly looking to be one of the next to go with ED and similarly, a dark that is contracted for the ED module as well. So we're looking to have a number of reference sites in the U.K. for that new module. We implemented Miya's precision in our first community in Mental Health Trust in Herriot and Worcester. And whilst it's not huge in terms of contract value, it's strategically important for us because it demonstrates the first reference site we have for community and mental health in the U.K. market, and that is a segment of the NHS market that has the equivalent number of trusts that the acute care sector has. So in the vicinity 140. At Bolton, another NHS Trust, we went live with flow access and command modules of Miya Precision. -- which was replacing the Extra med solution. And this created another new Miya precision site in the U.K. Around that same time, as I touched on before, we also went live with medications management at Dartford and they're also using Miya noting now to produce discharge summaries that draw together information from electronic prescribing, but also from the existing Miya flow observations and assessment modules that Darin had already deployed. We continued our work with Calvary Health getting close to completing the full deployment of a data intelligence and analytics platform for them, producing 28 live dashboards, ingesting 38 data sources across 7 years of data that will provide them with a centralized view of all of the activity across Calvary, which is spread across many states. -- of Australia. So I think it's important to acknowledge that the ability to effectively and efficiently implement our platforms in this modular way has always been a strength of Alcidions. And with every one of these deployments, the referenceability increases, creating more opportunities and more opportunities to highlight the benefits of our solutions. And case in point, during the year, Alfred Health had an independent study conducted into the results and the benefits of their deployment of Miya's Flow Access Command solution. They deployed that in 2023 across 38 in patient awards at the Alfred core field in San Rohan. And post that deployment, the digital health CRC and Monash Unit, we're engaged to conduct the study on the benefits of the deployment of the journey ports. It was conducted over 12 months. We captured a baseline set of metrics, and they did and to compare the post-implementation results. Some of the key findings on this slide, you'll also see them in the annual report. But just to call out a couple. Digital bed allocations decreased the call duration by 67%, which is really important because a lot of time can be spent on phones chasing down where the beds are available or whether people can be moved from ED to the wards. And one of the whole benefits of our solution is that you have access to seeing what beds are available, freeing u a lot of that time that is spent chasing down on phones. There was a consistent decline in inpatient length of stay, decreasing 12.1% over an 18-month period, which is very significant as it can be translated into financial savings, more bed availability, more time to care. -- and a 17.7% reduction in the number of outliers at the point of admission. And what that means is outliers are patients that have been placed in award that's not really suited to the underlying symptoms. So potentially a cardiac patients ended up in a new award. All research points to the fact that there are challenges to patient safety and certainly increase length of stay. If you are not in award that is aligned to the specialty under which you have been admitted. And that reduction indicates improved availability of beds and visibility for patient demand and bed capacity and definitely safe or better patient outcomes. I think these results and other studies of this nature, they help confirm the business case for our solutions and the material role we are playing in improving hospital workflow. And importantly, for our customers, these results can be directly correlated to financial savings for the health care service and offer our customers need that sort of information to support their business cases for investment. So it's really great to have that type of information available. As we head into the new financial year, we're very confident in our financial position, the product offering we have and the go-to-market strategy that we've developed, underpinned by several recent contract wins. If you couple that with the procurement processes that we're seeing move into the selection stage now, we see that as helping to underpin the confidence in our future profitability. As of always 2024, we start -- we sit with $28 million of contracted and renewal revenue that's expected to be recognized over FY '25 without selling anything further in this financial year. We would expect, of course, as we've done in every other year to build upon the value of that as the year progresses. I want to just provide some color to that contracted revenue figure for FY '25, particularly in relation to the starting figure being lower than the prior year. And it's to do with just some things that are significantly different between last year and this year. And this gives you, I think, again, gives you greater confidence that we've taken this into account and understand exactly what the starting position is -- we've assumed minimal implementation revenue from Leidos in FY '25, which is in line with the project completion of the implementation phase of what we've been doing. Obviously, there's ongoing subscription revenue from them. The Leidos contributed about $5.1 million to our FY '24 numbers of implementation revenue. So we'd expect to see this revenue line fall in FY '25 to something around $1 million or so. You'll note that we have, of course, adjusted the cost base in line with that, but it does talk to a significant impact on the starting revenue figure. As Matt previously touched on in the P&L slides, we've assumed 2.1 net recurring revenue reduction from an Australian contract, which was actually a contract that was initially really established in one by MKM Health with Queensland Health to provide a third-party providers solution, and we got to the end of the first 5 years of that. And in conjunction with that, with Queensland Health and the company that provides that software solution, we decided it made more sense for the software provider to be the prime and for us to act as -- to be taking the services revenue from it. So it will be an immaterial change to the gross profit contribution from it, but it will mean that the profit margin should actually go up to around 90% and obviously reduce our risk associated with being prime contract for software that we're not intimately involved with implementing. We also factored in, so that $28 million recognized as there's been a $1.5 million reduction in recurring revenue. for 2 of the PCS SilverLink customers that have, in this year gone live with their EPR deployments after several years of implementation. We knew when we acquired PCS that Northwest, London and Hillington had already chosen Oracle Cerner as their EPR, and they would be moving off PCS. And so that will occur and impact recurring revenue in this year coming. Important to note that we haven't included any potential revenue from North Cumbria contract, which would be material depending on the final structure and how -- and any other new business that comes through. So to reiterate that, that figure of $28 million is after all those adjustments are taken into account, but with no upside factored into the North Cumbria contract. And really, I've provided -- we've provided it to give you a really good understanding of why that standing revenue figure is lower than last year. Because of the -- based on the Q4 exit run rate cost base, our EBITDA breakeven to approximately $36 million of revenue. We are targeting to be EBITDA positive in FY '25. And that confidence is underpinned by the strong recurring revenue profile I've talked about, the expected implementation and contract with North Cumbria. -- and as well as that increasing market activity we're seeing across all regions with a lot of the opportunities that we've been responding through tender cycles starting to move into that selection process. And that's underpinned by several recent deployments, which are now giving us that demonstrable referenceability across all of our key markets. We have around $130 million of contract and renewal revenue able to be recognized out through FY '25 to 29%, excluding any upside expansion from contracts for new modules or the North Cumbria contract. And of course, that does represent significant long-term value in Alcidion. And before I hand over to Q&A, I would like to hand over to Beck because we're very excited to have made some new Board appointment as well.

Fantastic. Yes. Thanks very much, Kate. I'm sure people on the call will have seen our lodgement this morning in relation to a new Board appointment, really excited to welcome William Smart, -- well Smart to our Board. As a Board, we have a very transparent process around Board evolution and really constantly looking at the types of skills and experience that we need to add to the Board to really support our pathway to growth over the coming years and really looking at the nuances in the markets that we represent. So the fact that Will has such demonstrable experience both in terms of deploying EPRs in the U.K. and working for the trust themselves. We think is a fantastic addition to our team and obviously being based in the U.K. and really helping to guide how we navigate the various nuances in that market, I think, is going to be a really important point for us in the coming years as we continue to sort of expand our footprint in the U.K. Certainly, though, we sort of see Will's experience absolutely as being global and someone that, as I said, has that real demonstrable track record in health IT to really support to support the Board. So excited to welcome him on board. He commences on the 1st of October. And with that, we'll be saying goodbye to Simon, who has done a fantastic job over the last 5 years. Really, for him, he felt that time was right for him to step down, and we really felt that it's also important to keep quite a tight board as well. And so really looking forward to the sort of next chapter with the Board and to getting the influence of well over the coming years. So with that, I'm going to pass over to Matt, who's going to take us through the Q&A. Thanks, Matt.

Thanks, Rebecca. Okay. So we have a few questions that came in before the meeting, and we've had a few questions come in during the meeting. I'll start with the ones that came in early. So the first question, Kate, for you, I think, is will management consider a debt facility for rainy days?

Look, I mean, I think at this point, we're comfortable that with the reduced cost base, the revenue booked in the pipeline activity that we've got a solid cash position and will not require a debt facility. Debt facilities comes with cost and input on the business, so we need to take that into account and considering it. We would remain open, but we do not see it as a need at this point in time.

Okay. The second question is -- are any existing Silverlink sites being upgraded to Miya Paz?

The first one will be North Cumbria. We do have another one of our sites already running PCS sites running in the cloud, but they haven't moved to Miya Paz with the new front end as yet. We continue to look at that opportunity within the construct of the EPR deployments as well.

Thanks, Kate. Is Alcidion looking at opportunities in Canada or India, at the moment, can our software be easily implemented in those jurisdictions.

I don't see any -- we've done a bit of work on checking applicability of what we do in Canada and India. So there's no work that needs to be done from my perspective or our perspective in terms of going into those markets. We continue to look at the opportunities in those markets and others in the coming year, having dialed back the focus on market expansion a little bit in FY '24. We certainly are gathering greater understanding of the opportunities in the Canadian market and putting a little bit more emphasis on that end market as well.

The next question, what are the opportunities and threats presented by the recent advances in generative AI? And how is the company addressing those?

Yes. Generative AI is one of the most exciting developments we've probably seen in health care, the potential for it. I mean, I guess, everyone would say it's not just health care, it's everywhere. But in health care, the opportunities presented range from clinical decision support to personalized medicine and drug discovery. There's just many, many ways of looking at the potential application. We're looking at a range of opportunities to support our customers in taking advantage of this emerging technology. However, as you point out in your question, it is critical to understand the potential threats and negative outcomes to make sure that we're avoiding patient harm. It is relatively new, although, of course, gaining traction fairly quickly. Some areas of concern in health care, in particular, are around explainability, which is really the ability to understand how the algorithm has come to the conclusion that it has. -- and to validate that it's appropriate, what has been tested on, what is the diversity of the group on which these sorts of algorithms have been tested and tried. And then, of course, there's the security and privacy aspects around the data and then the accuracy of the advice being provided to the clinician. So there's many points along the way in health care, in particular, that you've got to be mindful of the deployment of generative AI. So some of the problems lend themselves well to it today and others require a bit more foundational work in respect of how it could be applied in clinical settings. We're well placed with our standardized data platform to support algorithmic deployment as the opportunities progress, and we already have some examples where we've done that. Perhaps the earliest opportunities in health care are going to be in the use of ambient intelligence to support clinical documentation, and we're seeing quite a bit of interest in this. And we're really well placed, I think, to support that alongside our noting solution. So yes, really exciting, very much something that is at the forefront of our development and product teams and what they're looking for in respect of innovation.

Thanks, Kate. Now we've had a flurry of questions come in online, and I am conscious of time. So I might have to cherry pick some of those. The next question is, can you provide an update on the UHS contract? Have any extension options being taken up since December '22.

Yes. I think I just touched on before the fact that they've taken a little bit longer to deploy ED than they planned. We're currently just about to go -- I think we're going down there next month to have a chat about the order in which they want to do things. So they haven't taken up anything additional yet because they've had a lot of constraints and changes in their trust in respect of any new digital deployment.

The next question is probably for me, but you can probably take it to. Can you break down the contracted revenue for future years of $130 million into the revenue categories you are now reporting -- do you want me to take that one, Kate?

You can have that one.

Look, the answer to this question is, for the most part, that $130 million represents annual recurring revenue, there will be implementation revenue in FY '25 that we know about, but we'll run into 25 possibly into H2 even. But past 2016 and onwards, we don't have visibility of implementation revenue. So it's very much recurring revenue. There's another question, which I'll answer quickly. Can you provide a breakdown of OpEx by territory? So the answer to this is yes, of course, we have that information, but it's not that relevant to shareholders with the way our company is structured, we are a global company. And a lot of our engineering team, the lion's share of our engineering team and development team is in Australia. The splitting OpEx out by territory doesn't give very useful information to anyone. And obviously, the Australian company bears a lot of the costs, the administrative costs of running the company, the board, the ASX, et cetera. So yes, we do have the information. It's just not that useful to shareholders, I don't think. The next question for you, Kate, I think is, how much interest have the excellent Alfred Health results generated from other services in Victoria and other states?

Yes, quite a lot with the answer to that. We've been at a series of conferences across Australia. We've presented -- Belfast presented those results that we've presented alongside the Alfred, and they have generated a lot of enthusiasm, a lot of connections wanting to come and talk to us more about those results, and we'll continue to amplify those results. We also use them to help customers with the definition of benefits to support their business cases. So very pleased and hope to continue to do those types of studies with future customers as well.

The next question might actually be for Rebecca. -- with Will Smart being a nonexecutive Director of -- great Western, will this represent a conflict of interest or create potential issues?

Yes. Thanks, Matt. I mean, certainly, during the due diligence phase, we looked at all of will's, the formal appointments and relationships and certainly determined that, that was not a conflict nor do they see it as a conflict either. There's no sort of active tenders where we're involved. I think just generally, we would see Will's relationships in the U.K. market as being absolutely a benefit to us in the future. So certainly, we did address that during that diligence phase.

Thanks, Rebecca. The next question, will we expect Q4 2023 labor costs base of $6 million or $6.2 million to be impacted by salary increases for FY '25. Are you able to provide magnitude of salary increases.

Well, I mean, obviously, at this point in time, we haven't done salary increases in terms of letting the staff know. But we are working on a salary increase that's in line with CPI. Matt, you can tell me whether that -- I mean, that's not a massive impact to that underlying cost base, though.

No, that's right. Of course, there will be a round of salary increases and that 6.2% that we talked about was not to indicate exactly what FY '26 full year staff costs are going to be, but it's a base indicator of where we're starting. The next question, are you able to share the average contract size of these tenders currently being progressed into the election stage of the procurement cycle.

Look, it will represent all different sizes of contracts. So our pipeline at any point in time is representative of the sort of announcements that we've done. So there'll be EPR tenders in there, there will be flow tenders, yes, a wide range. So that will represent -- there wouldn't be an average contract size that will be depending on how many modules and which type of modules are being tendered for.

Thanks, Kate. Now there's one -- this is the second last question before we have our last question. I think this one is for Rebecca. How is the Board holding itself and management to account for the execution of the long-term strategy. As a long-term shareholder, I want accountability and visibility over Action's progress in meeting its KPIs and understanding why when goals and understanding why we goals have not been met. I think you understand the question back...

Yes, I do. Yes. Thanks very much, Matt. So I think the first thing to say is that we have KRAs or KPIs in place for both our executive team and Kate that need to meet minimum requirements. And just to give some visibility to that, and it certainly is outlined in our REMreport. We actually have a gated process, certainly around the STI, where if the sort of minimum financial goals that have been set for the year aren't matched, then 70% of any available bonus is not paid. And I can confirm that, that did occur this year. So that first 70% was not paid to Kate or anyone else in the leadership team. And for us, then it really comes down to the setting of appropriate other goals that help us to achieve both our short-term, medium- and longer-term objectives. And each of those has very defined metrics that the team is assessed against. And so this certainly is a very measured approach to it. And as a Board, we really need to balance, recognizing the important elements that go towards building the foundations to inform and enable our success in the future with recognizing acknowledging where we've underperformed, which, as Kate has said, we see this year as being underperformance irrespective of whether that has occurred from an external perspective or things internally in the business.

Thanks, Rebecca. And we have run a little bit over, but there is one last question, and this one is for Kate. How can you be confident that the year ahead will be a more positive one?

I think there's a lot of elements to that. Many of them I've touched on, hopefully, in the presentation today. But we do start FY '25 with a much stronger balance sheet in terms of working capital than we did in 2023 or FY '24. In the payables -- in the prior year, the payables exceeded trade receivables by $1.1 million, while we start FY '25 with the reverse situation with the trade receivables exceeding payables. And this sets us up for definitely for better cash flow performance in Q1 FY '25 compared to the prior calendar period, which I'm sure everyone will be grateful for. In terms of revenue, it's really important whilst we start with $28 million, -- we already know we expect a reasonable additional contribution from North Cumbria, protect 3 to 4 or even potentially higher than that, depending on how it lands. Historically, we've done new revenue year-on-year in the range of $6 million at the low end last year and around $10 million in the year prior to that. So if you combine that sort of expected new revenue historical figure with the North Cumbria revenue, the level of sales activity seen picked up and the fact that we've adjusted the cost base in the manner in which we have. We are therefore -- that leaves us confident with the achieving at least the level required to deliver a small EBIT positive result and hopefully better you've gone to mute, Matt. Apologies.

Thank you, Kate. That's the end of our questions.

Thank you. As Matt said, that brings us to the end of the Q&A session for today. Thanks to Matt and Rebecca. I would like to thank, at this point, all the staff of Alcidion, for the hard work and commitment this last year, it's not been an easy year for them, and they have remained loyal and worked hard to ensure that our customers are supported and the commitments that we have are delivered and delivered well. And I think it's important to acknowledge them. My personal thanks to the senior leadership of Alcidion and the Board for the support they've shown to me and the company during the year. And very importantly, I would like to thank our shareholders who have remained supportive throughout the year. I know it's been a challenging one to you, and I definitely look forward with optimism into the year ahead and keeping you appraised of that as the year progresses. Thank you.