In a Trading Update for the six months to 31 July 2020 Checkit reports that, on a normalised basis, recurring revenue rose 23.4% YoY to £1.9m, whilst non-recurring revenue, on the same basis declined by 6.8% YoY to £4.3m. Normalised data is based on ownership of Checkit UK for the whole period - Checkit UK was acquired on 14 May 2019. Facing the circumstances occasioned by the COVID-19 pandemic the Group continues to base planning on recurring revenues which have remained resilient, in contrast to a contraction in installation and project-based non-recurring revenue streams. Total H1 ‘20 revenue rose 2.3% YoY to £6.4m compared to £6.2m, normalised, in H1 ‘19 (£3.2m on an actual basis).
Checkit provided a detailed breakdown of Quarterly and Semi-Annual revenues (summarised on p2) the main features of which are:
▪ For the six months to 31 July 2020 recurring revenue was £2.3m +97% YoY on an actual basis (H1 19: £1.2m), or +23.4% on a normalised basis.
▪ For the six months to 31 July 2020 non-recurring revenue was £4.1m, +105% YoY on an actual basis (H1 19: £2.0m), or -6.8% on a normalised basis.
▪ The change in recurring revenue from Q1 to Q2 was +6.2%, and in non-recurring revenue -29.7%, resulting in an overall change of -18.2%.
In the first half to 31 July 2020 recurring revenue rose 23%YoY to account for 36% of total compared to 31% a year earlier. Checkit noted the impact of new installations and conversion to a subscription basis of Checkit UK calibration and maintenance contracts in the healthcare sector. In terms of profitability this more than compensated for shortfalls in lower-margin installation operations.
Checkit maintained strong cash control, recording £14.3m at 31 January, £12.8m at the end of April and £13.4m at the close of Q2 in July. This included repayment of £0.5m from the repayment of the loan within the Group Employment Benefit Trust on the sale of remaining shares in the Trust to Chairman Keith Daley (9th July 2020).
Beginning with self-evident strong cash and cost control – resulting in a cash balance at the end of July close to year-end levels – the performance indicated in this Trading Update gives rise to optimism, not least in the resilience of recurring revenue streams and focus on healthcare as a promising demand vertical. The range of Checkit’s services offering, meeting increasing demand for remote and reliable monitoring, underpins the (detailed) numbers provided. Indeed, this Update introduces a note of optimism to counterbalance the uncertainties introduced by the COVID situation. Interim Results are expected to be released on 16 September 2020.