Checkit : Annual Report and Accounts 2023-24

Innovate how you operate

Annual Report and Accounts 2024

Checkit is the augmented workflow solution for frontline workers and smart sensor automation, enabling large multinational and complex organisations to operate more safely, efficiently and sustainably - driving them towards achieving intelligent operations.

At Checkit, we have hundreds of customers across the globe, including Global Fortune 500 and public health organisations.

Our customers are digitising their manual processes through our highly customisable workflow software and our top-of-the-line Internet of Things (IoT) sensors, increasingly aided by Machine Learning and AI.

More than 12 billion sensor readings and 42 million completed workflows per year are sent through our platform enabling our customers to become more efficient, ensure safety and deliver complete operational visibility.

Software + Sensors + Services =

Intelligent Operations

Checkit is transforming how forward-thinking and digital- first organisations execute frontline work, blending software, hardware, and event-driven actions to deliver value across every frontline business process.

We enable organisations to progress in their digital maturity journey towards achieving intelligent operations by connecting people, assets and processes to create rich performance data which directly informs efficient operational strategy, execution, and compliance.

Our proven reliable single-source digital solution drives fast and scalable efficiencies across the entire frontline workforce and business asset portfolios. Checkit is helping customers uncover operational insights that lead to transformational reductions in cost and risk and better delivered experiences at point of use.

Intelligent operations make it simple for business and department leaders to quickly assess performance, visualise the entire operation and respond to changes by deploying enterprise-wide process and asset use improvements effortlessly.

To find out more visit: www.checkit.net

LinkedIn: checkit-ltd X: _checkit

STRATEGIC REPORT		CORPORATE GOVERNANCE	FINANCIAL STATEMENTS 1

HIGHLIGHTS

Financial highlights

Annual Recurring Revenue (ARR) run rate

£13.3m +16%

(FY23: £11.5m)1

Operational highlights

ARR growth of 16%

in line with market expectations, despite a challenging global economy

Recurring revenue

£11.2m +17%

(FY23: £9.6m)

Compound recurring revenue growth of 30%

since FY20, reflecting strategic focus on subscription-based sales

Total Group revenue from continuing operations

£12.0m +17%

(FY23: £10.3m)

Adjusted LBITDA3 from continuing operations

£3.4m

(FY23: loss of £6.4m)

Net cash at year end

£9.0m

(FY23: £15.6m)

Net revenue retention (NRR)2 of 111%

demonstrating land and expand strategy

New product functionality

enabling customers to deliver sustainability and energy-saving initiatives

Progress towards profitability

with a 46% improvement in adjusted LBITDA, driven by revenue growth of 17%, an increase in gross margins to 67% and an 11% reduction in operating costs

1. Annual Recurring Revenue (ARR) is defined as the annualised value of contracted recurring revenue from subscription services as at the period end, including committed annual recurring revenue from new wins. This has been restated from the prior year (reported ARR of £11.5m), where it related only to contracts that were installed.
2. Net retention revenue (NRR) is defined as the amount of recurring revenue from existing customers retained over the year, excluding new wins in the last twelve months.
3. Adjusted LBITDA is the loss on operating activities before depreciation and amortisation, share-based payment charges and non-recurring or special items.

Contents

Strategic report

1. Highlights
2. Company overview

1. Investment case

1. Non-ExecutiveChairman's statement
2. Chief Executive Officer's review

1. Market Overview

1. Platform Overview

1. Business model

1. Business strategy

1. Financial review

1. Chief People Officer's review

1. Strategy in action

26 Environment, Social and Governance (ESG)

30 Stakeholder engagement and Section 172

32 Principal risks and uncertainties

Corporate governance

1. Executive leadership
2. Corporate governance report

1. Audit Committee report

1. Remuneration report

1. Report of the Directors

1. Directors' responsibilities statement

Financial statements

51 Independent auditor's report

1. Consolidated statement of comprehensive income
2. Consolidated balance sheet
3. Consolidated statement of changes in equity
4. Consolidated statement of cash flows
5. Notes to the consolidated financial statements

1. Parent company balance sheet
2. Parent company statement of changes in equity
3. Notes to the parent company financial statements

IBC Web property and advisers

Checkit plc|  Annual Report and Accounts 2024

2 STRATEGIC REPORT

COMPANY OVERVIEW

Our vision:

Empowering work without waste.

Our mission:

To make it easy for organisations and workers to understand what they need to do, when they need to do it, and how to do it more efficiently, keeping their customers and teams safe whilst lowering costs and reducing waste.

We empower dispersed teams with smart sensors and a workflow platform that provides the agility and visibility that leaders need to deliver a high-quality, safe and profitable service.

Our customers:

Some of our key customers include:

"The dashboard gives me all the information I need, wherever I happen to be and whenever

I need to check. This system puts everything in one place - and being web-based we can see which wards are doing well and which are not."

Nigel Barnes

Director of Pharmacy & Medicines Management,

Birmingham and Solihull Mental Health NHS Foundation Trust

"What Checkit put forward was a powerful solution to address a significant operational issue. Instead of staff having to fill in paperwork, the responsive actions of our teams are automatically logged when they tap on the screen of their mobile device."

Patrick Rix

Validation and Compliance Manager, Hallmark Care Homes

"We view Checkit in terms of efficiency. The work still needs to be done, but it's now done in a way that makes every second count. Once we input the data into Checkit, it's there for everyone involved to make best possible use of. Whether that means reporting, analysis or spotting ways to improve how we work."

Caitlin McArthur

Contract Catering Team Manager, Sodexo

Checkit plc|  Annual Report and Accounts 2024

STRATEGIC REPORT		CORPORATE GOVERNANCE	FINANCIAL STATEMENTS 3

Simplify.

Harmonize.

Empower.

Intelligent Operations:

Intelligent Operations - provided by digitally enabled frontline workers and sensors - drives value and impact from the outset. Checkit enhances the activities performed by deskless workforces and increases asset utilisation efficiency through its end-to-end platform, built to help organisations become digital and data-first.

Software

Sensors

Services

An end-to-end digital solution.

Sensors

• World-leadingsmart sensors
• Effective, reliable and compliant technology
• Fully-installedand maintained by Checkit's team of experts

Software

• Monitors and analyses all mission-critical sensor data
• Real time, pre-emptive digital alerts
• Task management and automated workflows
• Advanced analytics and dashboards

Services

• Enable an organisation to move from manual labour dependency to a digitally-optimised automated workplace
• Responsive, experienced staff who know sensors and software in multiple environments empowering reliable and stable operations

Checkit plc|  Annual Report and Accounts 2024

4 STRATEGIC REPORT

INVESTMENT CASE

Reasons to invest in Checkit

• World-classproducts, benefiting from AI enhancements
• Exposure to huge US market
• Focus on large vertical markets with reference customers in place
• Recurring revenue model delivering path to profitability

Guided workflow software, smart sensor automation

Organisations everywhere are spending more and more money to increase operational efficiency and to make scarce capital go further. Checkit's products help businesses and public sector bodies manage two of their most valuable resources - people and business assets - more productively.

IoT

Workflow

Define

t c e l l

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In

A

s s i s t

I

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f

orm

M

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nage

Intelligence

State-of-the-art products using ML and AI

Our software and sensors provide real-time intelligence, with value adding using AI tools, on staff workflow and asset health. This enables managers to better plan working practices to release gains in productivity as well as enhancing customer service for workers in the field and the more efficient management of assets such as freezers which cuts costs, minimises wastage and reduces emissions.

Checkit plc|  Annual Report and Accounts 2024

STRATEGIC REPORT		CORPORATE GOVERNANCE	FINANCIAL STATEMENTS 5

Succeeding in the United States

Our focus is to build a business of scale in the extensive US market in parallel with continuing to grow our UK business. We are succeeding in this ambition thanks to our "land and expand" strategy with the US now accounting for nearly a third of current Group annual recurring revenues.

Serving large vertical markets

We focus on two principal markets, the UK and the US, targeting sectors such as hospitality, leisure, healthcare and retail. Our flagship customers in leisure and retailing include John Lewis & Partners, Center Parcs and BP. In the healthcare sector, customers include Octapharma (the largest privately owned and independent plasma fractionator in the world), Grifols (a leading global healthcare company that develops plasma-derived medicines and other biopharmaceutical solutions) and the UK's NHS.

A recurring revenue model

That we serve fast-growing markets is illustrated by the 30% CAGR (Compound Annual Growth Rate) in recurring revenues over the last five years. We have great customer retention, with some 93% of revenues classed as recurring, underpinning the outlook for future financial years. With further growth in revenues and with careful control of costs, this provides us with a pathway to positive cash flow.

£12m

CAGR 30%

£11.2m

£11m

£10m

£9.6m

£9m

£8m

£6.8m

£7m

£6m

£5.2m

£5m

£3.9m

£4m

£3m

£2m

£1m

£0m

FY21

FY22

FY23

FY24

FY20

Checkit plc|  Annual Report and Accounts 2024

6 STRATEGIC REPORT

NON-EXECUTIVE CHAIRMAN'S STATEMENT

Investing in innovation

Following another year of strong progress, we are well placed to achieve sustainable growth and profitability.

Keith Daley

Non-Executive Chairman

"There is substantial long-term value to be created by continuing to invest in product innovation."

Dear Shareholders,

Despite the economic uncertainty that has characterised the financial year ending 31 January 2024, Checkit has delivered an operating performance in line with Board and market expectations with annual revenues increased by 17% over last year. I am particularly pleased that we delivered losses (adjusted LBITDA) better than expected and nearly halving for the year to £3.4m (FY23: LBITDA of £6.4m) whilst recurring revenues now account for 93% of total revenues.

After transitioning to an exclusively subscription-based model, our goal now is to enhance revenue growth in our key markets of Western Europe and North America. With a solid financial foundation, we are well-positioned to pursue our growth objectives, advance our technology, improve operational efficiencies, and hasten our progress towards profitability. I should like to thank Chief Executive Officer Kit Kyte and the rest of the senior management team who led the Group effectively during what was

1. difficult macro-economic environment. You will read more about the team's vision below.

We are helping large blue-chip customers to be as productive, efficient, and compliant as possible in the face of cost pressures and operational complexities. Our industry-leading customer retention rates demonstrate how embedded

our growing range of capabilities have become within our clients' technology stacks; a trend we expect to continue as the tailwinds of digital transformation, operational efficiency imperatives, and automation strengthen.

In FY24, we have re-examined each of our markets and products and concluded there is substantial long-term value to be created by continuing to invest in product innovation to spearhead the growth of our high quality recurring subscription revenue. Our levels of recurring revenue give us excellent future income visibility and provide a stable platform from which to expedite the path to profitability, a key Company priority over the next two years.

On behalf of the Board, I would like to thank each member of our teams in Cambridge, London, Fleet and Tampa for their commitment in FY24. Across the business, our people consistently demonstrate their ingenuity, tenacity, ambition and humanity. They are our most valuable asset and the reason for our success.

Keith Daley

Non-Executive Chairman

24 April 2024

Checkit plc|  Annual Report and Accounts 2024

STRATEGIC REPORT		CORPORATE GOVERNANCE	FINANCIAL STATEMENTS 7

CHIEF EXECUTIVE OFFICER'S REVIEW

The road to profitability: consistent growth whilst driving down costs

Checkit has delivered a positive set of financial results in FY24, delivering balanced growth, retaining customers to an industry-leading standard and improving operational efficiency.

Kit Kyte

Chief Executive Officer

Annual recurring revenue grew by 16% to

£13.3m

(FY23: £11.5m)

17% growth in reported recurring revenue of

£11.2m

(FY23: £9.6m)

Reflecting on a year filled with macroeconomic challenges, we are both excited about our progress and proud of the support we've provided to our customers, equipping them with the insights, tools, and strategies needed to succeed in difficult times. Our 'land and expand' strategy of up-selling and cross-selling has generated growth from our existing customer base, whilst at the same time we have actively identified areas of expansion and opportunity both geographically and vertically. With recurring revenues now representing 93% of the total and our high net revenue retention of 111%, we have a sound base to pursue our drive towards profitability.

Financial performance

Checkit's financial results for FY24 were in line with Board and market expectations, generating an overall increase in ARR of 16% to £13.3m (FY23: £11.5m). Revenue has grown by 17% to £12.0m, despite the challenging global economy. This represents a fourth consecutive year of high-quality recurring revenue growth.

Our focus on gross margin expansion continues to deliver with a 4% improvement to 67%. We delivered losses (adjusted LBITDA) better than expected and nearly halving for the year to £3.4m (2023: LBITDA of £6.4m) as we drive operational efficiencies and carefully manage costs across the business.

The Company continues to expand into the extensive US market, achieving 21% year-on-year growth in US ARR contribution from £2.8m in FY23 to £3.4m in FY24. This steady expansion demonstrates the measurable benefits we offer to customers, including operational insight, enhanced staff retention, cost-effectiveness, and heightened compliance.

Our drive to profitability continues with an improvement in LBITDA for the year to £3.4m (FY23: £6.4m), driven by the growth in revenues and reduced operating costs. Product development spend reduced by 7% to £3.9m (FY23: £4.2m), although the amount capitalised increased by 11% to £2.0m (FY23: £1.8m), as the Group invested in developing AI capability and unifying products around our platform. Sales

and marketing investment decreased by 12% to £2.6m (FY23: 3.0m), with a focus on existing customers and identifying opportunities in adjacent markets and geographies.

Through our "land and expand" customer strategy, we win new business in a discreet customer location or function and form close customer bonds that allow us to expand the services we offer over time. We do this by building trust through valuable insights and enhancing our customers' own operational performance. Our ability to grow with our customers

is demonstrated by a net retention rate of 111% and provides visibility on future ARR growth.

The economic environment remains very challenging and the Board remains cautious about the impact of geopolitical trends on the development of the business. As a result, our focus is to achieve an accelerated path to profitability by balancing our growth ambitions with an increased emphasis on cost efficiency. This was demonstrated in FY24 by an increased gross margin of 67% (FY23: 63%), as well as operational cost savings across the business. The net cash position of £9m as at 31 January 2024 means we are well positioned to continue on our growth trajectory, and to develop our technology at the same time as achieving further cost efficiencies.

Checkit plc|  Annual Report and Accounts 2024

8 STRATEGIC REPORT

CHIEF EXECUTIVE OFFICER'S REVIEW CONTINUED

Growth strategy and ambitions

Our growth strategy is showing results. We are fulfilling market needs with a comprehensive solution that excels in data and analytics, offering insights that empower our customers to make informed decisions. Our goal to lead in augmented workflow management for the deskless industry is within reach. We've made significant strides in transforming Checkit into a predominantly subscription-based model, with non-recurring revenues now only 7% of our total revenue. This shift enhances our revenue predictability and strengthens our customer engagements, paving the way for increased

contract values.

The Group's focus is around building a sustainable and higher conversion rate pipeline across the retail, healthcare, facilities management, franchise and biopharma verticals. We are increasing customer loyalty by continuously investing in our platform, including its capacity to incorporate external technologies, positioning us at the forefront of the market. Our sales and marketing efforts are geared towards generating high- quality leads with improved conversion rates, especially in our key sectors and expanding further into the US market. Checkit's new customer pipeline in the US

• a key growth market - includes a number of multi-site organisations across the healthcare, food retail, hospitality, and biopharma sectors. The US remains on course to be the largest contributor to Group revenues

Concurrently, we are committed to refining our operational efficiencies to expedite profitability and deliver shareholder value. Looking ahead, we are open to strategic partnerships that could further scale

our business. However, balancing cost management with growth initiatives will be crucial to maintain a culture of excellence within the Checkit team.

Innovation

Our vision is to reshape business performance through a combination of automation and human ingenuity. Our ambition is to pioneer in leveraging the transformative potential of three pivotal technological trends: the integration of Internet of Things (IoT) sensors, the digitisation of frontline work, and the application of Artificial Intelligence (AI). Individually, each of these technologies

offers significant advantages; however, their true power is realised when they are seamlessly integrated, unlocking unparalleled value for our clients.

The essence of our innovation lies in the intelligent orchestration of IoT sensors, digital workflows, and AI. IoT sensors revolutionise traditional data collection methods with continuous and automated sensing capabilities. When coupled with AI, these sensors not only capture and monitor data but also unveil opportunities to enhance customer performance and foresee potential issues. This integration is further amplified when combined with digital workflows, enabling real-time, actionable responses by dedicated workforces.

Our digital workflows transform outdated manual processes into streamlined, guided procedures for our customers. This transformation is exponentially enhanced by IoT automation and AI-driven insights, facilitating process improvements and targeted training opportunities. AI's capability to process and analyse vast data sets becomes significantly more valuable when integrated with IoT and digital workflows, allowing for immediate application of insights and converting them into tangible actions.

At the core of Checkit's strategy and competitive edge is the exploitation of these combined capabilities within a unified platform. This unique capability positions us to solve a broad spectrum of our customers' business challenges. Our initial focus has been on critical areas such as food safety, service operations, and the monitoring of medical and life science environments-sectors that demand rigorous continuous monitoring and efficient workflow management, areas where the synergy of modern analytics and AI surpasses traditional human oversight.

As we continue to navigate this journey, we are resolved to harness emerging technological opportunities that are relevant. We are committed to expanding our reach and enhancing the value we deliver. The road ahead is filled with promise, and we are eager to lead the way in transforming how businesses leverage technology for unparalleled efficiency and effectiveness.

Positive outlook

Our mission is to streamline and digitise the work and processes of the deskless workforce, a goal that has never been more critical. We understand the profound effect that simplifying operational management can have on organisational success, employee wellbeing, and customer satisfaction.

Alongside our Chair and management team, I extend heartfelt thanks to our global team for their resilience and dedication. I am immensely proud of what we have accomplished, from establishing a leading market position to building a robust, long-term customer base with international, blue-chip clients. We are just at the beginning of our journey and the potential for growth is vast. Current global supply chain issues, increasing labour costs and higher compliance demands highlight the growing importance of making deskless work simpler and more efficient. Looking forward, the Board

is optimistic about meeting market expectations for FY25 and confident in our ability to continue to achieve strong, sustained organic growth.

Kit Kyte

Chief Executive Officer

24 April 2024

Checkit plc|  Annual Report and Accounts 2024