Overall performance shows resilience to the impact of COVID-19, with comprehensive restructuring and a focus on recurring, software-driven, revenue streams. H1’21 revenue grew 2.3%YoY (normalised basis) to £6.4m. Checkit UK, acquired on 24 May 2019, contributed 2.5 months of earnings, in H1’20 equivalent to £6.2m on an annualised basis. Notably, gross profitability improved significantly from 21.9% at July 2019 to 9% by July 2020.
The cash position as of 31 July was £13.4m, compared to £14.3m on 31 January.
With healthy cash resources and cost controls in place Checkit plans to continue a programme of product development and marketing, in which £1.0m was invested in the half year (H1’20: £1.2m). As a result, the company expects to record a near-term operating loss. COVID-19 has brought into focus the services Checkit offers, particularly as working practices change, perhaps permanently. This means management of dispersed workforces through more, data-driven, remote monitoring, an increased reliance on automated, continuous systems surveillance and access to analytical tools for improvement. The factors introduced by COVID-19 effectively define Checkit’s strengths in the provision of SaaS-based, automated monitoring and workflow management services (CAM, CWM and CBM) and analytical tools.
We reinstate forecasts based on estimated 2.3%YoY (normalised) revenue growth this year to £13.1m followed by +7%YoY in FY22 (£14.0m), underpinned by strong recurring revenue growth of 34% and 22% respectively. We expect continued investment in product, sales and marketing, resulting in near-term operating losses of £4.0m in FY21 and £3.0m in FY22 within a programme primed by strong cash reserves which we estimate at £10.1m at year-end FY21 and £7.5m at the close of FY22.
