Q3 FY2019 Highlights:
- $6.2 million cash receipts for Q3 FY2019, net operating cash surplus of $1.3 million for the quarter
- Cash reserves boosted to $2.9 million
- $5.3 million Total Contract Value (TCV) added in Q3, bringing total revenue to be recognised in FY19 to $15.9 million with a further $30.8 million to 2024
- Material new contracts signed include first sale of complete product suite in the UK
- Integration program on track, to be completed in Q1 FY2020
Adelaide, South Australia – Alcidion Group Limited (ASX:ALC) today released its Appendix 4C quarterly cash flow statement for the three month period ending 31 March 2019 (Q3 FY2019).
Net operating cash surplus was $1.3 million in Q3 FY2019 off the back of $6.2 million cash receipts compared to receipts of $4.1 million in Q2 FY2019. Receipts were boosted by a $880K payment in advance against a new UK contract, the related revenue to be recognised over the five year term of the contract. Adjusting for this, underlying operational cash flows still generated a surplus of $450K for the quarter. Management expects a similarly positive operational cash flow in Q4.
Alcidion’s available cash reserves as at 31 March 2019 were $2.9 million, compared to $1.5 million at the end of December 2018. Management expects Alcidion’s cash position will continue to improve over Q4. The improving cash position has confirmed we will not need to consider a capital raising to restore working capital.
New Business Update (Q3 FY19)
During the quarter, the Alcidion group signed or renewed a total of 24 contracts for Alcidion’s products (Miya, Patientrack and Smartpage) and specialist IT services, with a Total Contract Value (TCV) of $5.3 million.
Material contract wins announced to the market during Q3 FY2019 were:
- Dartford & Gravesham NHS Trust (UK) – 5-year contract worth £1.16 million (~$2.1 million) in respect of Alcidion’s total product suite (Miya, Patientrack and Smartpage). This will represent the first integrated installation of Alcidion’s core three products outside Australia
- Brighton & Sussex University Hospital NHS Trust (UK) – 5-year contract worth £574,000 ($1.03 million) to implement Patientrack across four hospital sites
- ACT Health – 2.5 year contract extension for Patientrack with ACT Health to further extend the use of the technology across the ACT. Contract worth $0.7 million
The Dartford and Gravesham NHS Trust contract in particular marked the achievement of a major strategic objective for FY2019. Winning this major procurement against established UK competitors provided a strong market endorsement of the value proposition of our combined product suite, as well as proof of UK market potential and the ability of our sales team to work effectively across products and territories.
Revenue Update (Q3FY19)
At the end of Q3, the contracted revenue to be recognised in FY19 had increased to $15.9 million (up from $14.8 million at the end of Q2). This contracted revenue includes service and product related fees, with $7.3 million being recurring revenue and $8.6 million non-recurring revenue.
Recurring revenue includes revenues derived from Alcidion’s SaaS subscription revenue, product licence fees (payable annually), product support and maintenance fees (payable annually) and recurring multi-year service contracts. Non-recurring revenues include revenues from upfront product licence fees and non-recurring services such as product implementation and commissioning services as well as fixed term professional services projects.
A further $30.8 million of contracted revenue will be recognised over the next five years from these contracts.
Transition Program Progress
The post-acquisition transition program is progressing well, and we aim to complete the final initiatives necessary for us to operate effectively as “one company” by the end of Q1 FY2020. The ongoing investment in this program is reducing quarter by quarter. The final phase of integration, to be conducted in Q1 of FY2020 primarily involves fine tuning the group’s organisational structure to rationalise the number operating entities and is not expected to require a major investment.
Changes to Board and Management
During Q3 FY2019, Alcidion also announced some important changes to the Board and Management team. As part of these changes, Mr Ray Blight transitioned to the role of Non-Executive Chairman and Ms Kate Quirke was appointed to the role of Group Managing Director in January 2019. In addition, Mr Colin MacKinnon has assumed the combined role of COO & CFO of the Alcidion Group, upon the departure of Duncan Craig at the end of February.
Alcidion today also announces the resignation of Mr Geoffrey Rohrsheim, who will step down from his role as Non-Executive Director of the Company with effect from 30 June 2019.
Geoffrey was appointed to the Alcidion Board in August 2017. He has decided to reduce the number of Board positions he holds in order to concentrate on his own business ventures.
Chairman, Ray Blight said, “The Board and management of Alcidion acknowledge and thank Geoffrey for his significant contribution to the Company during a critical time in its development. We wish him well in all his future endeavours.”
A search for a new Non-Executive Director has commenced and will be announced to ASX in due course.
Summary
Ms Kate Quirke, Alcidion Group Managing Director said:
“I am very pleased with the progress Alcidion has made this quarter, particularly delivering strategic contract wins in both the UK and ANZ. The contract wins during the quarter continue to demonstrate the progress our sales and marketing team is making in cross-selling the enlarged product portfolio of Miya, Patientrack and Smartpage across the larger international customer base.”
“While we are still in the process of making the necessary investments to finalise the business and technology integration of the MKM Health and Patientrack businesses, and further expand our sales and marketing capability, we expect the integration program to be substantially complete by the end of Q1 FY2020 This will provide a solid platform for further growth in revenues and profitability next financial year.”
“In the meantime, we remain firmly focused on rebuilding our cash reserves following completion of the acquisitions. We expect to do this from operating cash surpluses without needing to resort to a capital raising to boost working capital. We expect to continue to generate positive operating cash flows next quarter and beyond.”
You can access the full report here.
Investor Conference Call Recording
This morning, Group Managing Director Kate Quirke hosted a conference call to discuss the Appendix 4C Quarterly Cash Flow Report for the period ending 31 March 2019. If you were unable to join the call, you can listen to the recording below.