EBOS Group Limited (EBO) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. My name is Liz Coutts, and I'm the Chair of EBOS Group Limited. I am delighted to welcome you to today's annual meeting. Today's meeting is taking place in Auckland, and I extend a warm welcome to all shareholders here today and to those joining the meeting online. For those joining us here at the Park Hyatt in Auckland, EBOS Group will cover car packing costs at the Wynyard car park located at 220 Pakenham Street West. If you are using this car park, please take your car parking ticket to the Park Hyatt concierge desk who will validate ticket upon departure. Today's meeting is also being webcast by the Computershare Online Meeting platform. This allows shareholders, proxies and guests who could not join us in Auckland to watch a live webcast of the meeting and read the company documents associated with the meeting. Welcome to all. For those of you attending the meeting virtually, if you have a question to submit during the live meeting, please select the Q&A tab on the right half of your screen at any time. Type your question in the field and press send. Your question will immediately be submitted. Should you require any assistance, you can type your query and one of the Computershare team will assist with the chat function and reply to your query. Alternatively, you can call Computershare on 0800-650-034. We would also take questions from the floor here in Auckland. Please note that while you can submit questions online from now on, I will not address them until the relevant time in the meeting. Please also note that your questions may be moderated if we receive multiple questions on one topic amalgamated together. Finally, due to time constraints, we may run out of time to answer all your questions that do not relate to items of business. Voting today will be conducted by way of a poll on all items of business. In order to provide you with enough time to vote, I will shortly open the voting for all resolutions. If you are eligible to vote at this meeting and are attending here in Auckland, voting forms have been -- alternately, you can cast your vote using the vote tab on the Computershare Online Meeting platform. shareholders viewing online can also vote via the platform. Once the voting begins -- has opened, the Computershare Meeting platform will allow votes to be submitted. To vote via the platform, simply select your voting direction from the options shown on screen. You can vote for all resolutions at once or by each resolution. Your vote has been cast when the tick appears. To change your vote, simply select change your vote. You have the ability to change your vote up until the time I declare voting closed. I now declare voting open on all items of business. The resolutions will now open and the vote tab so please submit your votes at any time. I will give you a warning before I move to close voting. I am advised that a quorum is present. I therefore declare the meeting open. Now to the business of the meeting. My first duty today is to introduce your directors and executives who are up here on the stage with me. Today, we have all directors and our CEO and CFO are here in Auckland. Joining me are fellow directors, Sarah Ottrey, Stuart McLaughlan, Peter Williams and Mark Bloom. Julie Tay, Stuart McGregor, Tracey Batten, also seated on the stage is our Chief Executive Officer, John Cullity and Chief Financial Officer, Leonard Hansen. Julie is seeking to be elected as an EBOS director today and will be addressing the meeting later. John will also be providing an outline of the group's activities in the past year. For those in the room, you will have the opportunity to meet the directors and executives at afternoon tea following today's proceedings. Today's meeting is comprised of three parts: Firstly, I will provide shareholders with a brief summary of the highlights from the past year and the strategic positioning of the group. Then, as I mentioned earlier, John Cullity, our CEO, will provide you with further details of the group's financial performance and activity over the last year and that will be followed by the formal business, and we have three resolutions for shareholder approval. As I mentioned, voting on all resolutions is now open. I have received our apologies, so we record the no apologies. As the notice of meeting has been circulated to all shareholders. I will take as read the notice convening the meeting. It gives me great pleasure to report on our results for the 2023 financial year. In the year where we celebrated EBOS' Centenary, we continued our strong momentum, delivering another record result for the first time exceeding $12 billion in revenue. As I've done in previous year's presentations, I will again take this opportunity to reinforce that our continued success is underpinned by our adherence to a disciplined strategy, one, continuing to protect, build and acquire leading market positions in a range of Healthcare and Animal Care sectors; two, focusing on generating strong operating cash flows to allow further investment and improve returns to shareholders. and thirdly, investing for growth, both organically and through complementary business acquisitions. The past year has again seen tangible results from delivering our strategy as we continue to invest for growth which includes both acquisitions and the ongoing development and improvement of our industry-leading operational infrastructure. From the acquisition perspective, we recently acquired Superior Pet Food Company Superior, which began its journey about 40 years ago as a small business started by three rural Wairarapa lads as a leading manufacturer and supplier of premium dog wells based in New Zealand and is also a supplier of dog treats. Superior's portfolio of branded products, which may be familiar to our pet owning New Zealand-based shareholders are sold through major grocery and rural retailers throughout New Zealand. The acquisition of Superior is complementary to our existing animal key portfolio of products marketed under the Black Hawk and Vitapet brands. As we continue to build our leading positions in animal care in October 2022, we officially opened our new pet food manufacturing facility and parks, New South Wales. The facility represents a very important part of our strategy to invest and grow our business, expand our customer base and provide critical employment opportunities across Australia. I am pleased to report that since that time, the facility is now operating 24 hours a day, 5 days a week, and we have recently launched several new Black Hawk products manufactured at this facility, which John will expand upon in his presentation. We also continue to invest in operational infrastructure to support our growth. We have invested in two new Contract Logistics distribution centers in Auckland and Sydney, a new pharmaceutical wholesale distribution center in Auckland due for completion in 2024 and a new medical consumables distribution center in Auckland for Institutional Healthcare division with completion expected in 2025. In our strategy, we refer to protecting market-leading positions. And over more recent years, we have focused on minimizing the impact of any risk foreseeable or unforeseeable on our business by diversification across the group. In early June 2023, EBOS was informed by Chemist Warehouse that intends to pursue alternative wholesale supplier arrangements for its Australian stores. And as a result, this contract will not be renewed beyond its expiry date of 30th of June 2024. As can be seen here in FY '19, 50% of the group's gross operating revenue was derived from outside community pharmacy with this percentage increasing to 60% in FY '23. It is important to note that we always recognize the contract renewal was in risk and we are confident in our alternative growth strategies that John cover off in more detail. We value our people by supporting them to lead healthy, balanced lives, Investment in learning and development provides employees with opportunities for advancement while ensuring our business attracts and develops the skills and capabilities, we need to deliver for our stakeholders. We recognize and reward performance in a fair and equitable way to encourage all members of our team to strive for excellence in everything we do. Also, in an effort to equip our leaders to see this role models for the principles outlined in our diversity and inclusion policy, we enhanced our online integrity training in FY '23. We've recognized events, including International Women's Day and Are You Okay mental health awareness and I'll be Well from anywhere program offers staff a range of activities to improve their well-being and keep them connected. We welcome our employees to become shareholders in EBOS through the EBOS Employee she plan. The most recent employee share plan invitation in March 2023, was accepted by almost 60% of eligible employees. Workplace Safety remains a key priority for EBOS under the guidance of our Group Safety Committee led by John. The committee concentrates on driving consistent safety standards fostering knowledge exchange across business units and promoting stronger safety awareness to help the organization. In FY '23, we improved our safety metrics with a 5% reduction in recordable injuries, underlying our dedication to continued safety and well-being for all our employees. In FY '23, we achieved Net Zero on Scope 1 emissions in New Zealand and Australia. We achieved this by investing in operational improvements and procuring opposites. This included purchasing Australian carbon credit units, generated from the Darling River Eco Corridor project, which helped to offset the emissions and combat climate change. The next milestone in our journey is carbon neutrality. It has become carbon neutral for Scope 1 and 2 emissions in New Zealand and Australia during FY '27. In our pet food manufacturing facility, we've completed the first phase of our solar array project with the installation of 500 kilowatts of roof-mounted array. When fully complete, the entire 18.8 megawatts solar array is forecast to meet all of the Australian Group's Australian electricity requirements by FY '27. I -- from FY '24, EBOS is required to make certain climate-related disclosures. The standards for these compulsory disclosures were published by the New Zealand External Reporting Board in December 2022. We are well underway in our preparations, and we are well placed to respond to the New Zealand government's mandatory climate-related reporting requirements. We are also progressing well with our ethical sourcing strategy, which aims to engage suppliers that are aligned with EBOS corporate values. This initiative is supported by a supplier code of conduct that outlines our expectations from suppliers and complying with laws and ethical behavior. Consistent with EBOS Board renewal process, independent directors, Sarah Ottrey and Stuart McGregor will retire as directors with effect from the end of today's meeting. The retirements are part of a carefully considered succession process that has included the appointment of two new independent directors in the last 12 months. We will be acknowledging this service later in today's proceedings. In September 2022, Mark Bloom was appointed to our Board, bringing 35 years of commercial and financial experience with listed companies in Australia and globally to EBOS. In May 2023, Julie Tay joined EBOS Board with over 30 years experience in international Executive and Non-Executive roles across consumer healthcare, medical devices and digital healthcare. You will hear from Julie shortly as she seeks election for shareholders. Following Julie's appointment, the Board now consists of 50%, 50% female and male representation, including myself as Chair. This ratio will be maintained following the resignations of Sarah and Stuart. Across the EBOS executive leadership team, the female representation is currently 27%. A across the wider organization, excluding Southeast Asia, females and management make up 40%. The directors declared a final dividend of $0.57 per share. In combination with the interim dividend, this brings total dividends declared for FY '23 to NZD 0.110 cents per share. which is an increase of 14% on the previous year. We live in our dynamic macroeconomic and political environment but particularly so following the recent events in the Middle East. The defensive and diversified nature of our portfolio of businesses has provided us stability and the demand for our products and services continues to demonstrate resilience to economic conditions. We will continue to follow our strategy as we strive to provide superior returns for shareholders. The success we have achieved as a business across the 2023 financial year is thanks to the combined efforts of more than 5,000 employees across New Zealand, Australia and Southeast Asia. We acknowledge their commitment to each other and our businesses and to the communities they serve to John and his executive team, thank you for your continued dedication and discipline and continuing to drive our company forward. To all of our shareholders, thank you for your ongoing support and trust in the Board, executive and employees of EBOS. I will now hand over to John for a more in-depth review of the operational performance of the business. Thank you.

Kia Ora, and thank you, Liz. I'm pleased to report on the performance of our company for the 2023 financial year. And as we review the outstanding results of the group, I'd like to reiterate the Chair sentiments in acknowledging the exceptional contribution made by all our employees over the last 12 months. Before commencing, however, on a more detailed review of the year, I'd like to present our highlights video that provides a visual overview of EBOS' key activities over the last 12 months. [Presentation]

I trust you agree with me in that video is very nice in showing just the breadth of our and your company's operations and also the great work that we do in the community across Australia and New Zealand. I'd also encourage all our shareholders when you have time to read more about our activities in both our FY '23 annual report and sustainability reports. In a year where EBOS' focus was on consolidating our most recent strategic acquisitions, we were pleased to report another record result for the 2023 financial year, reflecting the strength of our defensive mix of businesses. Our excellent performance was again driven by both growth in Healthcare and Animal Care, including strong performances from our Community Pharmacy, Institutional Healthcare, Contract Logistics and Animal Care divisions. And the key highlights included double-digit earnings growth substantial contributions from prior year acquisitions, particularly the $1.2 billion acquisition of LifeHealthcare, delivering return on capital employed in line with our target of 15% and maintaining a strong balance sheet to support our growth initiatives, as evidenced by the most recent acquisition of Superior Pet Food Company. The key financial headlines of our full year results were revenue increased by 14% to over $12 billion. Underlying EBITDA of $582 million was up by 3.2%, and Underlying net profit after tax of $282 million represented 23% growth on the prior year. Healthcare's underlying EBITDA was up by just under 33%, including the benefit of acquisitions completed in the prior year and Animal Care's EBITDA was up by 24%, reflecting strong organic growth and the benefits from our investment in the new pet food manufacturing facility. FY '23 continued our long-term track record of delivering strong and consistent performance for the benefit of all our shareholders. We have been able to generate over 11% compound annual growth in underlying earnings per share and dividends per share over the last 10 years whilst maintaining strong returns on capital and a strong balance sheet. The performances from both our Healthcare and Animal Care segments underlines the benefits of our diversified portfolio of leading businesses and our growth-focused investment strategy. The key business highlights were our Community Pharmacy division benefited from customer growth and maintaining share leadership. TerryWhite Chemmart expanded its national network by another 40 stores and now has over 550 stores nationwide. Our Institutional Healthcare division continued to perform strongly, driven by the acquisitions undertaken in the prior year, particularly in our med tech and med consumables businesses, as well as organic growth from our Symbion Hospitals business. Our Animal Care segment continued its growth with key brands, Black Hawk and Vitapet and our vet wholesaling business, Lyppard delivering strong performances. In addition, our new pet food manufacturing facility delivered improved product supply and margins. We continue to look for value-accretive acquisitions, whether they be in Healthcare or Animal Care, and we look forward to a positive contribution in future years from our most recent acquisition being the superior pet food company. We have also continued to invest in our wholesale and logistics facilities to support our ongoing growth. And as Liz outlined earlier, the major projects that we have underway and near completion. As noted earlier, our Healthcare segment growth was driven by our leading positions and contributions from our Community Pharmacy, TerryWhite Chemmart, Institutional Healthcare and Contract Logistics divisions. Each of our divisions in the Healthcare segment recorded strong growth. with Institutional Healthcare care benefiting significantly from the performance of our LifeHealthcare business. The integration of LifeHealthcare into the group's enlarged med tech business is now well progressed. LifeHealthcare's performance for FY '23, its first full year under EBOS' ownership was in line with our expectations with both the ANZ and Southeast Asia businesses achieving solid growth. Despite the current inflationary environment we operate in, our Healthcare segment, excluding LifeHealthcare, was able to maintain its EBITDA margin and after inclusion of the LifeHealthcare business, which was the acquisition that we undertook, our EBITDA margin actually improved by 61 basis points. Our wholesale businesses both New Zealand and Australia operate in very fluid and regulated environments. The Australian government has recently implemented a policy, allowing pharmacists to now dispense 2 months' supply of PBS medicines compared to the previous policy of 1-month supply. This policy now applies to approximately 300 PBS medicines and is being implemented over three stages over a 12-month period with the first stage actually commencing on the first of September 2023. On its own, this change in policy has a negative impact on our gross margin. However, to offset the impact, the Australian government has advised that it will increase the community service obligation funding pool available to wholesalers like our Symbion business and introduce other initiatives in support of community pharmacies. We will continue to work productively with all stakeholders as we work through the implications of these recent changes. Our TerryWhite Chemmart franchise continued its robust growth delivering more than $2 billion in network sales and with the continued expansion of pharmacies across the network, this further strengthens TWC's position as Australia's largest health advice orientated Community Pharmacy network. TWC's performance was driven by our continued investment in media our TWC catalog, our promotional program and our industry-leading vaccination and pharmacist education programs. Our Animal Care's key brands and businesses Black Hawk, Vitapet and Lyppard performed strongly with Black Hawk and Vitapet continuing to maintain their strong positions in their respective market segments. The growth in Animates our New Zealand pet care retail joint venture also contributed to the segment's performance. Consistent with our Animal Care growth strategy and a key benefit of having direct control of the manufacturing process at our new parks facility, several new product development and launches are planned for FY '24. One initiative that has recently been launched is the Black Hawk Healthy Benefits range. And for those in the room outside -- you'll be able to see samples of that range at the conclusion of this meeting. The specially formulated diets are focused on supporting the health of dogs with specific needs such as weight management, dental and joints and muscles. Manufacturing of the new range commenced at parks in July 2023, and the new products are now available in leading pet specialty retailers and vet clinics. As Liz referenced earlier, the Australian Chemist Warehouse contract will not be renewed beyond its expiry date of 30 June 2024. We EBOS generated approximately $2 billion in revenue from sales to Chemist Warehouse Australian stores in FY '23. Group earnings have grown strongly across all our divisions, excluding this contract. From FY '20 to FY '23. Group underlying EBITDA, excluding the contract grew at a CAGR of approximately 20% with around half of this growth being attributable to organic growth and around half attributable to acquisitions. That growth is equivalent to the Group's actual underlying EBITDA CAGR, including the contract over the same period. All our divisions have contributed to this growth, reflecting our well-established and diverse strategies, which we believe positions us well for the future. EBOS's Community Pharmacy division remains a leading pharmacy wholesaler across Australia and New Zealand and is the franchisor for the TerryWhite Chemmart, one of Australia's largest community pharmacy networks. Our Community Pharmacy division, excluding the Australian Chemist Warehouse contract, services more than 4,000 pharmacy customers and has approximately a 30% market share. And we have pets in Australia, and we have greater than 50% share in New Zealand. It generated over $5 billion of revenue in FY '23. The division has a well-established organic growth strategy, which includes expanding pharmacy wholesale services to both branded and independent pharmacy customers and growing the TWC network. As can be seen here, we have multiple organic and inorganic growth drivers that are well established across our divisions and we believe positions us very well for the future. EBOS has a clear strategy to replace the Chemist Warehouse earnings through four key areas. Firstly, growth in the base business through the strategies that I outlined on the previous page. Second, we see new revenue opportunities in community pharmacy that are now available due to the changed market landscape. Thirdly, we have already commenced a review of our costs across the group and identified a range of efficiency measures, which we will embark upon. And finally, we will continue to explore additional merger and acquisition opportunities across both our Healthcare and Animal care sectors. Further to the Chair's comments earlier regarding EBOS's ESG program, we continue throughout the year with a range of activities, sponsorships and partnerships focused on our employees, the environment and community. EBOS has again built strong connections with communities in New Zealand and Australia through partnerships with organizations aligned with our purpose of advancing opportunities to enrich lives. Our company and employees through our ECHO program, which stands for environment, community and helping others, supported organizations, including ovarian cancer Australia, Backtrack, lanser, 5 M&D, cerebral palsy, Alliance and Street as well as donating sanitary personal and first aid products to victims of the Turkey and Syrian earthquake. Our Group's match funding program also continued throughout the year with EBOS matching the donations and funds raised by employees for many charity-based events and activities. We are proud to continue to commit to EBOS' reconciliation action plan in Australia and to improve the cultural awareness in both Australia and New Zealand. One recent initiative has seen our Symbion business, partnering with the pharmacy guild of Australia to deliver a scholarship initiative for Aboriginal and Torres Strait Islander pharmacy students. In addition, following the weather events in New Zealand in early 2023, our teams ensure that supply channels for important medicines remained open to continue to service the local communities. Our Onelink, Healthcare, Logistics and ProPharma businesses here in New Zealand joined forces with the government's health organizations and the New Zealand defense forces to supply emergency oncology and pharmaceutical inventory to impacted regions. This is another example of the critical importance our Healthcare businesses are to the supply of medicines and related products across both New Zealand and Australia and underlines the commitment of our teams and people in times of crisis. And as I mentioned at the start of my presentation, further details on our ESG program are contained in our 2023 sustainability report, which is available online. In closing, I would like to share some brief comments on our year-to-date -- current year-to-date trading performance. In the first 3 months of financial year 2024, we have recorded high single-digit underlying earnings growth compared to the prior corresponding period. During this period, the group recorded revenue growth of 5.9%, EBITDA growth of just under 8%, EBIT growth of 7.4% and net profit after tax growth of 7%. Year-to-date EBITDA and EBIT growth is higher at approximately 9% to 10% in were normalized to exclude both the earnings from the Chemist Warehouse Australia contract and wholesaling of COVID-19 antiviral medicines. Whilst the macroeconomic environment continues to be uncertain. Our earnings have shown resilience, reflecting the defensive and diverse nature of our group. And finally, I'd like to sincerely thank all of my executive team and all our employees who have shown incredible dedication, strength and resilience in managing all that has been put before them during these challenging economic times. I'd also like to thank our Chair, Liz, and all the directors for their guidance and support during the last 12 months. Thank you, everyone, here for your attention and your ongoing support as shareholders. And I'll now hand back to Liz to continue with the formal process of the meeting. Thank you.

Thank you, John. We will now proceed with the formal business of the meeting. The first item of business is to consider and receive the annual report. The annual report contains the financial statements, directors' report and the auditor's report for the year ended 30th of June 2023. A formal resolution is not required. We will then move on to other matters to vote. With three ordinary resolutions to deal with today. Resolution 1 as the election of Julie Tay as a Director. Julie was appointed as a Director with effect from 15th of May 2023 and is now required to be put forward for election by shareholders at the annual meeting. Resolution 2 is a resolution to increase the total remuneration fee pool for nonexecutive directors by $78,250 from 1.5 -- at $1,565,000 per annum to $1,643,250 per annum with effect from first of July 2023. Resolution 3, is a resolution that the directors of the company be authorized to fix the fees and expenses of Deloitte as auditor of the company. As required under the NZX listing rules, voting will be conducted by a poll in respect of each resolution. Shareholders will have an opportunity to ask questions as each resolution is proposed. If you wish to ask a question or make a comment online, I ask that you follow the directions previously advised by the Q&A tab on the Computershare site, which you are currently viewing. Your question will come to immediately, but I may ask your patients as the questions are sent through. Those attending here in Auckland can either use the app or raise your hand and a member of the team will hand you a microphone. I remind you that only shareholders and valid proxy holders are permitted to vote and ask questions. The directors hold proxies representing 120,337,103 shares. In respect to resolutions 1 and 3, where a director holds an undirected or discretionary proxy, they intend to vote those proxies in favor of the resolutions. In respect of Resolution 2, a director will only vote those proxies in accordance the shareholders express instructions. The annual portion of financial statements were subject to audit by Deloitte, who gave an unqualified audit opinion, the annual report and financial statements are required to be audited and lodged prior to the annual meeting, and therefore, there is no formal resolution required to be put to the meeting. I will, however, take questions on the annual report and financial statements and any other aspects of the business that you may want to discuss. The auditors, Deloitte, are represented today by Mike Hawken, the signing audit partner. Are there any questions on the annual report, please. No, I have none in the room. No questions. I will now move to -- as Julie was appointed a director by the Board since the last annual meeting, Julie is required to be to be put forward for election by shareholders at the annual meeting. The resolution is it is resolved that Julie Tay be elected as a Director of the company. I now invite Julie to address the meeting.

Thank you, Liz. Hello, everyone, and good afternoon. I'm Julie Tay, Singaporean and residing in Singapore. I want to thank Liz and the EBOS Board for the nomination to stand for election today. And thank you for being here with us today and giving me the opportunity to introduce myself. My career spans more than 30 years in consumer health care, medical device and digital health across the Asia Pacific region in both B2B and B2C channels. My last executive role was Senior Vice President and Managing Director and also a member of the Global Executive Management Committee with Align Technology. Align is better known for their product Invisalign. I started the Asia Pacific business for Align and under my team's effort and my leadership -- we delivered record growth for the whole region, grew China to become #2 globally and achieved leading market share across every single market in Asia Pacific. Prior to Align held regional executive roles with Bayer Healthcare leading and turning around their diabetes management business. I also work for Johnson Diversey, assisted company of S.C. Johnson, built up their marketing function and launched the Healthcare segment. I was also with Johnson & Johnson Medical for more than 15 years, managing different franchises across the region. Currently, I serve as a Non-Executive Independent Board member of Sonova. Sonova is a global leader in innovative hearing care solutions from personal audio devices to wireless communication systems to audiological care. I serve as a member of the Nomination and Remuneration Committee and Sonova is public listed in Switzerland. I'm passionate about diversity and inclusion, especially on women and Asian leadership. I have spoken on various forums on topics, including growth mindset and success in emerging markets. Currently, I spent a significant amount of time as a [pro bono] mentor with Asia Mentor an executive adviser to signature program, in addition to helping companies develop their leadership talent. I'm also a member of Young President Organization better known as YPO globally. I hold MBA from Curtin University and a BA from the National University of Singapore and alumni of INSEAD. EBOS is well positioned to seize the many opportunities in the region. I bring both breadth and depth of knowledge of the Asia Pacific region, and I believe I can contribute to EBOS growth and future success. It is a privilege and honor to be given the opportunity to serve EBOS as an independent nonexecutive board member. Thank you.

Thank you, Julie. Are there any questions from the floor on this resolution. No. Are there any questions online on this resolution? No. I now move the adoption of resolution 1. I'll give you a few minutes just to vote. I now move to Resolution 2 relating to Non-Executive Directors' remuneration. The resolution is it is resolved that pursuant to Index listing rule 2.11.1, and ASX Listing Rule 10.17, the total remuneration for Non-Executive Director be increased by $78,250 from $1,565,000 per annum to $1,643,250 per annum with effect from first of July 2023. Are there any questions from the floor on this resolution? Yes, if you could -- we'll wait for a microphone to come...

[indiscernible] shareholder. I'd like to commend the directors who are choosing to abstain from this particular vote because I attended a meeting last month, and we're asked to vote through the same issue to find that the shareholders the directors themselves had voted against the issue. And I've commend you for your approach.

Are there any questions online on this resolution to now? No. I now move the adoption of resolution 2. The third resolution. Deloitte is the current auditor of the company and is automatically reappointed in accordance with the company's act. It is proposed that the directors be authorized to fix the fees and expenses of the auditor. However, I should first advise that the Board undertook in August 23, a competitive tender for the provision of Group external audit services for the financial year ending 30th of June 2024 to 2026. After conducting this tender, which invited proposals from all four major accounting firms the Board determined that Deloitte should be retained as the group's external auditor. I now move to the resolution, which is it is resolved, the directors of the company be authorized to fix the fees and expenses of Deloitte as auditor of the company. Are there any questions from the floor on this resolution. A question over here? John will bring you a microphone.

I think I must miss the opportunity. I wanted to ask a question of the auditor. Now in regard to the specific resolution but a question to the auditor.

I'm sure Mike will be very happy to answer. It's right of you in the front row.

I'm going to warn you and advance like, I've got permission to ask this question from the CEO and the CFO, okay? So I'm not willing to be followed off on this -- you are the company's auditor. And last year and this year, you flagged in the annual report, a key audit matter in regard to the LifeHealthcare acquisition and the accounting that went with that. You audited that again this year, raised it as a key audit matter. And noted the subjectivity and complexity of a lot of the questions that you put to manage it in regard to this acquisition, you indicated that management, EBOS management had also engaged an external expert to evaluate the LifeHealthcare acquisition in addition to all the due diligence that they made at the time of the acquisition. You also indicated that you yourself had engaged your own internal evaluation, your own internal expert to go over this information as well. So you asked a lot of very interesting questions of the EBOS management. But as is the auditor is custom as you didn't express a separate opinion, so I'm now inviting you to do just that. Tell me what you think of that LifeHealthcare acquisition and take us as long as you like.

I think I understand the question. And look, I get our responsibility is to form an opinion on the financial statements as a whole. And so when we look at that acquisition we do look at that in the context of the financial statements. And as you've alluded to yourself, it's a comprehensive process that both Management and ourselves go through and concluding that, and we were satisfied with the outcome of that exercise.