Pro Medicus Limited (PME) Earnings Call Transcript & Summary

So on behalf of my fellow directors, I'd like to welcome you to the Annual General Meeting of Pro Medicus Limited, and I do thank you all for joining us, particularly those who've come to have a face-to-face meeting with the directors that we're very pleased to see and we're glad to be back, I must say. For those of you who don't know me, my name is Peter Kempen, and I'm Chairman of the Board, and I'll act as Chairman of this meeting. We are meeting in the Melbourne CBD and I'd like to acknowledge the traditional owners of the land, the Wurundjeri people of the Kulin Nation. As indicated in the notice of meeting, this AGM, hopefully, will be a hybrid meeting with physical attendance at the offices of EY and online through Link Market Services facility. And I'd like to welcome all shareholders through the meeting. There will be opportunities to ask questions and to vote during the course of the meeting, either in person or online, and I'll go through the process later in the meeting. I'd now like to acknowledge my fellow directors. Those present are Ms. Deena Shiff, Non-Executive Director; Dr. Sam Hupert, Joint Founder, CEO and Executive Director; Mr. Anthony Hall, Joint Founder and Executive Director; Mr. Tony Glenning, Non-Executive Director; Dr. Leigh Farrell, Non-Executive Director, and we're also accompanied by Mr. Clayton Hatch, the Company's Secretary and Chief Financial Officer. Ms. Alice Williams, Non-Executive Director, is overseas on a trade mission presently and consequently can't be with us today. Also joining us is Mr. Tony Morse of Ernst & Young, who didn't have farther come, but we do appreciate him being here. Tony, of course, is our audit partner, and he's available to answer any questions in relation to the financial statements and his report to shareholders. It's very important to mention the following key personnel who have provided excellent leadership during the year, Malte Westerhoff, our General Manager, Europe and Global Chief Technology Officer; Sean Lambright, our Global Head of Sales; Teresa Gschwind, Global Head of Customer Service; Danny Tauber, General Manager of Australia; and Brad Levin, General Manager, North America and Global Head of Marketing. Each of these individuals is depicted on Page 9 of the annual report. I'd also again like to acknowledge the considerable contribution of Clayton Hatch, our CFO, who is also part of the global leadership team. Before we deal with the formal business of the meeting, I will provide my report to you, which will be followed by a report from Dr. Sam Hupert, our CEO. As I mentioned earlier, there will be opportunities to ask questions during the course of the meeting and following the formal business or during, and that includes during the formal business, of course. I'll now turn to my Chairman's report. The company has enjoyed another very successful year, both from an operational and financial point of view. Each of our businesses in our principal markets, Australia, Europe and North America, contributed strongly to the outcomes. The success of the company, despite the presence of COVID-19 in the markets that we serve has been due to the quality of our management team, the resilience of all of our staff, the flexibility of our leading-edge technology and the robustness of our business model. Pro Medicus, like most businesses, relies on its people to reach its ultimate goals and achieve overall success. Your company is fortunate to have a group of highly skilled professionals who are dedicated to meeting the clients' needs and that of their patients. The majority of our staff have been with the company for many years and the core management team for well over a decade. The company is well led by Dr. Sam Hupert and the management team, who have successfully never gated their way through another financial year. The company continued to deliver the highest level of service to all our existing clients, while at the same time, securing a number of significant new contracts and also renewing several existing relationships for further terms. The company also implemented a number of large-scale installations with new clients. COVID-19 has not had a material impact on the company's activities. As a consequence, the company has continued to deliver long-term sustainable financial results by delivering on the milestones outlined in the company's strategic plan. The group continues to invest in our best-of-breed suite of innovative products to maintain our market leadership, which we believe, is fundamental to your company's success. We continue to enhance our product offering through research collaboration agreements with some of our major clients, including the development of AI algorithms and next-generation products for Enterprise Imaging. During the fiscal 2022 year, the company announced 3 major new contract wins in North America for periods of 7 and 8 years and a key contract extension in Europe. We also renewed 3 major contracts with existing clients, all of which were renewed for contract periods of 5 or more years and increased fees per transaction. Details of these are included in the annual report. On the 29th of August 2022, we announced the signing of 3 new contracts with a combined value of AUD 16.5 million and the renewal of the University of Florida contract for a 7-year period for $15.5 million. Each of these contracts will make a major contribution to our future revenues. Despite the number of recently announced new contracts, new opportunities continue to present themselves. And as a result, our pipeline remains very strong. In Australia, our RIS product continues to be the undisputed market leader. New opportunity -- sorry, with revenue increasing due to the continued rollout of additional sites with some of our key customers during the period. Financial results. Fiscal '22 was another record year for the company, with revenue increasing by 37.7%, just $93.5 million, and underlying net profit after tax increasing by 43.7% to $44 million. The company continued to be cash flow positive. We've retained cash and liquid investments increasing from $62 million to $90 million after paying increased dividends. The Board anticipates fiscal '23 will be another strong year. The budget for the current financial year has been determined, recognizing anticipated continuing strong growth from both existing and new clients. I'm pleased to advise that results to date are ahead of budget on a constant currency basis and further ahead with the impact of the lower Australian dollar relative to the U.S. dollar. We anticipate that the second half of the financial year will be stronger than the first half as is traditionally the case. Surplus cash and M&A. As I indicated earlier, our cash and other financial instruments have continued to grow during the year. These funds are maintained to allow the company to continue to invest in the development of our product suite, including AI, to meet our dividend obligations and to take advantage of acquisition opportunities that might arise. The Board has considered a small number of acquisitions opportunities during the year. But to date, none have met our criteria. In the current circumstances surrounding the technology sector, the Board anticipates that there may be an increasing number of opportunities arising that could meet our criteria or put another way, the opportunities may -- expectations may have lowered, which may give us a better chance of meeting their expectations. Dividend policy. The Board was pleased to increase dividend payments for the 2022 financial year to $0.22 per share fully franked. This represents an increase of 47% over the previous year and a payout ratio of approximately 50%. The dividends were funded from the company's internally generated cash flow. The Board anticipates that future dividends will continue to be fully franked. The Board will continue to determine an appropriate level of dividends having regard to the profitability of the business, its needs for ongoing investment and the necessity to retain sufficient funds to pursue other growth opportunities. Review of our global management structure. At last year's AGM, I indicated that we are reviewing our current global management structure and had received an external advice to assist the Board in that process. We're currently implementing the initial stages of our plan and have added a number of senior -- additional senior managers to assist in meeting our future growth strategies. This will be an ongoing process as we implement a new strategic plan, which is in the process of development. And if I can just give you a little bit more color and light on the progress of our strategic plan. Earlier this month, the Board and the senior management met for 3 days to discuss the development of the company's next strategic plan. The previous plan expired last financial year. And whilst we achieved most of the objectives of that plan, particularly our growth strategy, it is now time to look ahead to set goals for the next 3 years of the company's journey. The meeting was extremely productive. And I'm very pleased to advise that the future looks very, very bright for the company. The Board and the senior management discuss the opportunities and the challenges we face, and we develop the fundamentals of the plan. The group was unanimous in the desire to continue with our growth strategy and investment in our products and our people. Notwithstanding the tremendous success of the company today, I want to assure our shareholders that the members of the Board and the management team are by no means complacent. We are all committed to achieving further successful outcomes envisaged within our new strategic plan. And I thought I should leave you on that very positive note. But in closing, on your behalf, I'd like, again, like to thank all of our dedicated staff in Australia, North America and Europe for their contribution to the company during what has been another very successful year. I would also like to thank my fellow directors who have also worked tirelessly and diligently, and in a very cooperative manner I must say, a cohesive group, I think we are, and we -- and we're all working to ensure that the company reaches its ultimate goals. I'll pause there, and I won't take questions at this point, but rather hand over to Dr. Sam Hupert for his report, and then we'll both come back for questions from the shareholders. So over to you, Sam.

Thank you, Peter, and thank you, everybody, for joining us, both physically and hopefully, virtually. As you know, we specialize in health care informatics and imaging. We have a global presence. Our office in Melbourne. Berlin is our R&D center for the Visage product and the U.S. now, by far, our largest market. We have 2 product sets. The Visage RIS was the original product that Anthony and I worked on back in the early '80s that is developed over many, many years, and it's used, as Peter said, by over 55% to near 60% of the private market here in Australia. Visage7 was the result of our acquisition of Visage Imaging back in February 2009. It's the product we sell in the U.S. In terms of the financial results, I won't go through them all in great detail, but it was a record year financially. We had 4 major sales, as Peter alluded to, 3 in the U.S. and 1 in Europe. We had 2 key contract renewals. And importantly, we've made some very good progress on some of our research collaborations with our key academic partners in the U.S. The figures you would have seen at the full year presentation, we think they were -- we're very pleased with them. All the financials moved in the right direction including retained earnings and our margins, which were strong before, about double to triple the industry average, crept up a few basis points as well. In terms of the revenue split, this is important because the pink -- or on the screen, it looks a little greenish, but the lower bar is the transaction revenue we get largely from the U.S. And you will see there's a very material jump year-to-year. A lot of that was because we had 3 very large contracts that we implemented towards the end of financial year '21. And they, of course, gave a full 12 months of transaction revenue into the financial year. But all of the key columns, we think grew healthily. The blue, which is again, recurring revenue. It's more of the service contracts from our older more traditional licenses that we sold many years ago. That continued to grow. So all in all, revenue numbers continued strongly. This graph show the split by region. And on the left, the bright blue is the U.S.; green, Australia; and red, Europe. And again, each of the regions grew. So we were pleased with that. And as Peter mentioned, we had a very material uplift in our retained earnings to a bit over $90 million. The operational model that we pioneered 10 years ago continues to pay dividends for us. We are using it in pretty much 95% to 99% of our contracts. A few contracts like the European ones where you have to use more of a capital structure because of the way they purchase and most probably the few outliers. We -- it is delivered as a software as a service model. And at full year results, we have a 5-year window of about $450 million of committed contract revenue at their minimum, so that number continues to grow year-on-year. So we believe we have strong operating leverage. It's a highly scalable model. We don't have any CapEx in terms of hardware. So pretty much all of our revenue drops through to the bottom line. We do have a contained cost base, and our margin continues to grow. And you see it here. We did think around COVID, maybe there were a few extenuating circumstances, costs that we didn't have such as travel and conferences pumped margins up, and we expect that they would come down a little. Thankfully, they haven't and they've continued to grow as we continue to not only build our base in the U.S. We have increased staff numbers according to plan, but revenue has outstripped that hence the margin growth. A few highlights, as Peter mentioned during the year. A few key sales such as Novant, Inova, and Allina, and I'll go through those in a minute. And we had 2 major renewals. And I think the important thing about the renewals are, they are very long-term commitments. So normally in the industry, renewals are 1 to 2 years. Ours is a minimum for 5. They're all at a higher per transaction rate. So we think it shows a lot of confidence in the clients in our technology because they wouldn't renew on that basis if they didn't think it was leading edge. We're also pleased to still have 9 out of the top 20 hospitals as clients. These aren't the biggest hospitals necessarily, but the ones that have voted as being the best across a number of criteria. Mayo Clinic is always #1. Number 2, 3 and 4 change a little bit. Our nearest competitor has 3 and they've been going in the U.S. over double the number of years that we had. So we're very proud of that, but it's by no means the only market we work in. So there is the nonacademic space. The difference is they don't have a university medical school attached in a teaching program, but they're still quite large hospital systems. We call them IDN or Integrated Delivery Network. Some of them are even insurers in their own state or payers as the Americans call them. So they're quite large organizations. And so people used to pitch and hole us purely in academic, which actually wasn't correct because we previously had Mercy, Sutter, now Intermountain, Allegheny and Medstar as clients, and they're all IDNs. But we have cemented our footprint in that space with 3 new contracts, Novant, Inova and Allina. And we are seeing an increasing network effect in that space, which we think is very important because it's actually one of the largest segments of the U.S. market. As Peter said, we are tracking ahead of budget, which is great news. Transaction volumes are definitely above pre-COVID levels like-for-like. We are addressing more of mid-market with the contracts we announced, Bay, CHOP and Montage, and I'll talk about those in a minute. We have also 3 major implementations that were scheduled for this half that will set us up for the second half. And two of those are now complete, which I'm pleased to announce. And Novant is scheduled for December. So all 3 large IDNs will be fully deployed by the end of this calendar year. We've even done some of the smaller ones like Montage that we announced, Bay, they were all completed as well. So while we only talk about big implementations, we always have in background implementations of various sizes going on, and all of that contributes to future transaction revenue because it's one thing to sell it, but you've got to put it in to get the revenue. So I think we're fairly clear and confident we will have a stronger second half. A large part of that will be the transaction revenue from those big contracts coming online in the first. Peter also said -- mentioned our manpower planning. We have made 2 important hires, our Head of People and Culture, [ Shani Redenbach ], who's unfortunately not here today; and our Chief Strategy Officer, Nick Peace, who has joined us, have joined us in July of this year. Again, very instrumental in our strategic meeting with the Board and our management meetings that we held just a bit over a month ago. So as Peter mentioned, we had an in-person meeting, 3 days of management and then another 2.5 days with the Board. And we believe this is going to set the base for our future growth. The rest, as Peter said, we still are -- is increasing. We did have increased revenue from it and the segmental split of Australia will bear that out. We do have the 2 largest radiology providers in the country that use it and some of the increases when they undertake M&A and bolt-on acquisitions, we get that additional license revenue. In terms of the product. Visage7, we're still highly confident that it is the absolute market leader. It continues to be #1 in the 3 key things. That's the speed, which I'll show you and talk about a little later; the functionality, in other words, anything from a chest X-ray to the most sophisticated advanced visualization in one desktop. And we don't know any other product on the market that could do that; and importantly, scalability, which organize -- you don't see it as a radiologist only if it's not there. And so some of these organizations are literally doing 10 million to 15 million exams. So petabytes of data through the system and it's one system that allows them to scale. So incredibly important. Many of you will have seen this slide, legacy technology, which is pretty much all of our competitors at the moment, takes the file, compresses it, sends it down the network, and then uses a fairly heavily configured workstation to unpack it and do the image manipulation. We don't do that. We actually do all of that centrally in near-real time, we build all the 3D models, advanced visualization and then just stream the pixels. So it's a bit like Netflix, but it's a little bit more sophisticated because it is bidirectional because the radiologist is moving the mouse and the system is interacting to make sure that what they're anticipating they're going to get to look at, they do get to see. So this is a secret. It is pretty much our secret sauce. It is proprietary technology. I often get asked this, it's not one technology, it's about 15 unique proprietary technologies plus that actually make the total end user experience. So what is the solution? And I think this slide really encapsulates everything. The solution we see today is really hinged around cloud. We will talk a little bit more about that. So in the center, you see public cloud. And then you see the various applications that we have that come off of things such as the -- obviously, the Viewer, the radiologist's desktop, but then we start talking about other modalities, AI. So we see this whole Visage sort of ecosystem built around a single cloud instance, and that's materializing as we speak. The various deals. Novant was the first one, it was last year. It was our equal biggest deal. Again, a very large IDN. Novant is a group that is actually expanding quite rapidly. So this still most probably end up being materially bigger than the $40 million over the years. That's going to be, as I mentioned, deployed in December. We had to pause or hold because they had another project going that ran a bit over time, nothing to do with us. But now we are all clear to go, a bit like a plane taking off, we will be going full board and the whole thing will be completed in the month of December. Inova, interesting one because this again is a large IDN, but half of it is private radiology group, half hospitals. They were on 2 separate systems. And that was all completed. The private group first over 1 weekend and then a few weeks later, all the hospital systems. So for the first time, both hospitals and private group are under one platform. so they can cross-read and share radiologists, which is a big and a material improvement for them. Allina is based out of Minneapolis, more nonhospital ambulatory. Interesting, they've been looking at us for years because they're very close to Mayo Clinic in Rochester, which is just an hour away. And so there's been a lot of interest in us and we're eventually able to consummate that deal, which gives us a good footprint in the Minneapolis area. The WellSpan, Sutter renewals, I mentioned them before, so I won't go into too much detail. Sutter was actually renewed for longer than the original contract. So the original contract was a 5 plus 1, 1 bleeding year or 1 implementation year, 5 years of full transaction volume. It's now re-up for another 7 years. Now the important thing is when they re-up, once we do the contract, we don't need to do anything else. They just continue using it. So there's no additional cost of sale. There's no additional training. There's no additional upgrading that we need to do because our clients get upgraded 2 times a year every year. So they're always on the latest version. So it's important not only for us, for continuity, but it just means we don't have to do anything additional to realize the ongoing revenue from these sites. The 3 contracts, they are interesting. We put them up because they are 3 very different contracts. Originally, we were pitch and hold academic space only. Now with IDNs, obviously, a much bigger market. But now we often get asked by analysts, what about the mid-market. The big guys, okay, we get, but what about those guys the next level down? And this is really to prove that we do have a very viable model for them. So I think 2 things. One, the software is the same. So we don't have to do anything different. We don't have to repackage it. It's exactly the same software. The second thing is to make it viable, we needed 2 things that have now materialized for us. The first you'll hear me talk about a little later is called full stack, all 3 Visage products, Workflow Viewer, Archive and Cloud. Now if you don't have those 2 combinations, it's probably marginal in terms of the commerciality of all this. But with those 2 combinations, it's definitely good business. So the entry-level point, which it makes sense for us to engage with clients has actually come down because of full stack and cloud. And I think that's really important in terms of our total market -- total addressable market. University of Florida, Peter talked about that. Again, 7 years, the original contract was for 5. So implementation, we do talk about it a fair bit, but it really is one of our core strengths. In the past, one of the reasons groups didn't want to change their systems, they were worried to take 2.5 years. And in that sort of intervening period, it just was -- things just got out of whack, what was read on the old system, what's read on the new. It really was an impediment to people changing. But we're able to do it with 0 downtime, with 0 loss of productivity. And our actual go-lives when the radiologists change from the old to the new is usually in a week, not 2 years. So I think it's really, really important. And as I've mentioned there on the slide, it reduces the barrier to change. These were some of the implementations during the last financial year. As I mentioned, we've done additional since then. We've done Inova, Allina, Montage, Bay and a few others. And it will be rounded out with Novant in December. So why do people pay more for us? Because we are known as the most expensive system, what is it that they get back as per the dollars that they spend? And I think it can be really summarized in 2 camps. There's financial return on investment and then there's a clinical return on investment, which is to me, equally, if not more important, because we actually make the doctors be able to diagnose in a more advanced fashion. In other words, we make their desktop, enable them to do things they otherwise couldn't do. So what I'm going to do. This is a video that I'm going to play. These are some of our clients that came up ad hoc at a recent conference. So none of this is scripted. Let me just get the mouse here so I can start it. Sorry, it's a little hard. Just getting this on screen to start. [Presentation]

So just to give you some background to those radiologists. They just came up to the stand, so this was totally unscripted. Some of them work for Mass General. Some was the Head of Medical Informatics radiologists at Duke. There was UCSF, there was Yale. So these are people that normally would not actually speak in public about a product. And the only restriction we had is I couldn't -- at the bottom, they had their names, but we didn't tell you which institution they belong to. So clearly, this was, just come up and say what you think. And I think the overriding message there is it's made a huge difference, not only in the speed of it all, but the functionality. So the first guy is basically associate professor said, "It either gives us the tools that we either had but would take too long, so we never used" or "It gives us new tools that we never had." So we are moving the clinical outcomes. There's no doubt about it, not just in research but in day-to-day usage. So just some of the things that we actually do, do, what does the product do, who does it help? I thought I'd start off with the group close to home, Victoria. It's called the Victorian Stroke Telehealth. It's part of our Ambulance Victoria. It is some software that we have gifted to them. They've been using it now for a little while. The genesis of that was through Anthony and his cousin at the [ floor ] that said we are doing a lot of work. Victoria in Australia is leading in stroke, stroke rehabilitation. And after a lot of toing and froing dealing with government's never easy, even though we gave it away, we have been very successful. So the background is, it is a service. So anyone that has suspected stroke outside the main metropolitan area and all these sort of areas, Dutson, Victoria and Tasmania are the hospitals, their CTs are read by an expert stroke neurologist, not just a normal neurologists, the one that specializes in stroke and stroke diagnosis. We thought it'd be used to 1 or 2 patients a day, a few weeks. It's over 4,000 patients a year. So it's actually very material. There are a group of neurologists that can be anywhere. They're not just in Victoria. Some of them move about, some are in New Zealand, but they're at the top of their professional tree. So if you are a patient that's had a suspected stroke outside metropolitan area, you will have the top neurologist look at that pretty much instantly through our platform. Some other uses, some may remember, we talked about Yale and pediatric tumors or gliomas. Mariam Aboian, she was actually the female radiologist with the blonde hair, she's from Yale and she's hyper subspecialized pediatric neuroradiologist. And what we're doing there is we're taking a task that used to take hours down to minutes and in some cases, seconds. So actually segmenting or showing the tumor separate from the rest of the brain is a very delicate sort of almost like mapping or drawing around. We do it using AI and it takes the task, as I said, that used to take each tumor 4 hours, we've now got it down in most cases to under 6 seconds. So it's very, very important. We've had multiple abstracts accepted. The studies do show that being able to segment in 3D rather than just a single plane, makes it a very material difference. It helps in actually staging these tumors far more accurately than just taking a slice because tumors are not 2D, they're 3D, and they don't grow around like a golf ball, they grow all over the place. So actually understanding that volume from a 3D perspective is so important, but couldn't be done before, not in a more production environment. We will be doing some more, she is going to be speaking at RSNA as part of an expert panel, and it will be using the technology that we've actually developed with Yale. So we'll be looking forward to that. So something else, radiologist productivity. Its new name in America is burn out. It's the hottest topic after -- I've been showing you a few sort of examples from recent press simply because there's a shortage of radiologists. And in the old days, I used to look at a chest X-ray, it was 2 images. Today, a CT is 5,000 images. Now okay, they don't look at each one, they do it as a stack, but there's a lot more to look at per test. And so one of the key things we looked at and we've always talked about is increased radiologist productivity. Can we make them quicker doing the same thing. And I think the answer is definitely yes. So again, I'll play this video. [Presentation]

So that's the 2 speakers. One was from Mass General Head of ER Radiology for Mass General Brigham. And so of course, being quick and being functional is incredibly important for them. The second one was Chris Roth from Duke. And I think the interesting thing was on his neuroradiologist, and on call on a weekend alone, he'll read over 300 CTs within hours. It's a monster workload, but they're able to do it and they're able to do it from home. Where before, they had to actually come into the hospital and stay there, have 2 shifts, 1 in the morning and 1 that went from afternoon to midnight. Now they're able to staff all of that from home. And they say the experience is exactly the same as being in the hospital. So effectively, this is one of the panels that we'll be putting up at the RSNA. Clearly, it resonates with radiologists in the U.S. But if you're a private group, it's the same thing. The biggest cost for any radiology group way ahead of the second phase is radiologists. They're by far the biggest. And we know that we can make them between 25% and in some cases, up to 50% more effective. So when we put in a system, the common thing they say is, "It wasn't that busy today on the first day." And we go, "Well, actually you read more cases than you normally do." And they went, "It didn't feel like it." So I think that's key not only for the academic and the hospital space. But if people do the real ROI on our system from a financial point of view and from the radiologist point of view, that efficiency is key. This last one is interesting. It's part of our collaboration with NYU. This is how our technology actually gets out to the patient because the radiologist there is Michael Recht, he's the Chair of Radiology at NYU. And he's always believed that patients just don't know the radiologists. Well, they never see them. They get put through a donut of the scanner. Next thing you know, they get $1,500 bill and they go, what happened. So they titled their tweet, your radiologist is the most important doctor you've never met until now. And it's a concept called video report. So they did a study of nearly 4,000 where the radiologist actually creates a video when they're reporting that the patient can see on an iPhone and iPad, a computer, and it explains to them in layman's terms, what the X-ray or the test actually showed. [Presentation]

Very interesting concept. It's been incredibly well accepted by the patients. The concern was what about the orthopedic surgeons, were they thinking that radiologists are muscling in on their territory? So being a university, they had a complete questionnaire to all the orthopedic specialists. Any of the specialists whose patients had a video report. And I think they were shocked uniformly. The specialists loved it. They said it makes our job so much easier. We can just flip the screen around. We don't have to call up images because we don't have a normal -- it's just so much better. So this has become mainstream at NYU, and it's very interesting because we're now getting inbound query from other hospitals because their patients hear about it, but they can't do it because they don't have the technology. You need to have Visage to do this. So again, we think it's been a very interesting sort of part of the upside of being at NYU and there are others. Growth strategy. I'll quickly finish the last few slides. We do -- we are, as Peter said, focusing on growth. We think the strategy we've had in place has been working certainly expanding our footprint, and we've done that materially in the U.S. in different market segments, which is important. So we've seen also transaction growth from existing clients. It's becoming more material. After COVID, our clients are acquirers, they're not sellers. So we've seen a number of bolt-on acquisitions. Northwestern just bought a new hospital, increased their volumes by 10%. We didn't have to do anything. No change to the contract. No change in the technology, nothing. So they're fantastic for us. And we hope that some of our clients will make even bigger acquisitions that will give us an even bigger leg up as time goes on. But we have noticed existing clients growing organically, but also bolt-on acquisitions. We talk about new product offerings. I think the workflow manager that we bought out or showcase that '19 is a work in progress. We now see that being sold at the majority of our sales. So it's really paid some dividends and it's very key to our cloud strategy. And we are looking at new geographical markets. And particularly in the management meeting, we identified some of the 4 segments of Europe. Won't surprise anybody that Germany was #1, a, because it's one of the biggest; b, it's the most well-funded of the government health systems; and we already have a foothold there. But there are others. It's just going to take a little longer because the opportunities there are much smaller and need to be addressed in a slightly different manner. And we are looking to leverage our R&D and that's more in the AI space that we'll talk about briefly. Pipeline, I won't go into it too much other than, as Peter mentioned, we believe it's very strong, not just in quantity and quality, but the diversity of the different markets, we are seeing more across multiple market spaces. So we think our total addressable market is actually over 60% of the market in the U.S., they only -- and may be even more than that. The reason we don't look at the last, let's say, 30% is purely around the commercial side, not the product side. And as consolidation continues, we think that percentage of the market that is borderline in terms of commercials, that will actually get less and less because the smaller guys are getting amalgamated by the bigger. The Open Archive, you've seen this before. Again, it's been very successful. We talk about full stack, these smaller groups and even some of the bigger ones, it is our second highest click rate or highest dollar per click next to the Viewer. We have had some large successes such as Intermountain, but a lot of the more recent ones and particularly the smaller ones are full stack that include Archive and we do think that trend will continue. And as I mentioned, the Workflow product, which we highlighted in 2019, it's now mainstream. It allows us to offer all 3 components of a product and again, very important when we look at cloud. And it has had terrific feedback from the market. It is by far the fastest. It does work at what I call Visage speed, which is important so that as the case of flip over, it's not the thing that's holding them back. It's pretty much instant like the images. And I think that Dr. [ Cole ] mentioned it, just saying if it flips over, it's a combination of the two. And we are bringing out new modules that we can add to it. We are announcing some at RSNA that I'll talk about briefly. So that will increase the total contract value or the amount we can sell it for because we'll sell it in separate bids. This is one of the new modules. It's called load balancer. It basically means it dynamically works out where the cases should go and who they should go to, based on waiting times, based on turnaround times, based on capability, based on geography. So it's got a little bit of AI on the back of it based on rules and it gets more and more intelligent as it goes. So for these large organizations, the workflow can actually be dynamically spread across the manpower force. And the beauty is they don't have to wait for the images because once it's in their worklist, they push the button. The images are on demand anywhere. The One Viewer product, we talked about that, the other ologies. I think the main thing is we showed last year a key part of function that as part of a cardiac package called ejection fraction that was work in progress. It now is in production. So we're a fair bit closer to offering the product as part of cardiology as well as radiology, and we are hopeful to have that in beta, in version 1.0 in the not-too-distant future. Cloud, again, you've heard a lot about Cloud from us recently. We are -- we see it as a huge strategic advantage. We believe we're the only ones who can work natively in cloud. I think there's been a big momentum shift to cloud. Unprecedented 3 years ago, no one wanted it. 18 months ago onwards, everybody wants it. And I think part of that is scale, but part of it is security because you have far better security in cloud than on-premise. And I won't go through all the reasons, but security is a big driver for this. The other thing is we are agnostic. So we do play nicely with all 3 big cloud vendors and no one else -- hey, they can't even get it in the cloud. But if they sort of try and smash it in, as we call it, we only do it with 1 vendor. So we have large-scale implementations with Amazon AWS, Microsoft Azure and Google GCP, and they're all working as we speak. The AI funneled it. As I mentioned, there are multiple use cases for AI. We think it will be embedded in software or imaging equipment and some of the stuff we're working on will be embedded in Visage under the bonnet makes it quicker. There will be things that will be seen as a second set of eyes, which we think will be one of its biggest uses. So here in Australia, if you have a screening mammogram, it's actually read by 2 radiologists. So the question is, can it be read by one and AI be the second set of eyes, therefore, doing away with the need for 2 people when you can do one. And I think that's coming and we see that as part of the reason AI will be adopted in various jurisdictions, we believe within the next 12 to 18 months. But clearly, the market has to decide that. We do have the accelerated program software that we give to our academic clients. It is unique. It has been well accepted, the likes of Mayo, Yale, NYU, and we have others that will come on to our program. We think it really helps -- it's the glue that helps the research side put things together. And so again, we're going to see more of that. We often get asked about our breast density. We now have it in a second site in preproduction. It was the only thing, one of the few things that COVID slowed down because we couldn't actually get into Yale to see it. It's only recently believe it or not, even though one of our people is on faculty. We now are putting it to a second site, nonacademic that's looking to assess it in beta. And if that gets a tick, then that will be our point of commercialization. So we'll keep you posted on that progress. The research collaborations I talked about quickly. The NYU one, again, COVID slowed us down a bit because we couldn't get our people into the U.S. We were lucky because NYU actually applied for Malte Westerhoff, our CTO, to be made a person of national significance or importance in the U.S. So he was actually allowed to come in, in August. They didn't open the borders till early November. So we started in August 2021. We have 1 staff member there already full time, and we've had a number of collaborations. Part of it is worklist, part of it is video reports and we are working with them on a number of AI projects. So we think the collaboration will be some material outcomes. Clayton and I, Thursday morning fly off to good old sunny Chicago. I think it's about minus 4 degrees there at the moment. So we're getting a bit of preppy with Melbourne's weather. It's a large in-person conference. Last year, it was in-person but restricted. So a lot of -- you had to wear mask, you had to show vaccination and numbers were down. We believe numbers this year will be 2019, if not bigger because people haven't been for 3 years. It will be our biggest stand ever. We used to have 50 by 50, it's now 50 by 80 feet. We will have more demonstration areas, and we already have pretty much fully booked in advanced bookings. So we are expecting a very positive conference. These are some of the new messaging. You'll see the CloudPACS which is the obviously, our cloud. Open Archive accelerator. But we do talk about workflow, full stack, full-go because we're seeing more and more in the pipeline that want all 3 products, which certainly is good for us because it increases the total contract value. And we're bringing out a new product called Deep Search. It sounds something mysterious and horrible, but it's not. It's the ability to look at all your reports and have key phrases and it will automatically show you which reports meet those criteria and the images to them. So if you wanted to see anyone between the ages of X and Y that had this lung tumor 2D that turned out to be x, you can put that in and literally in less than a second, you will have a complete list of the reports and images. So we see it as being an additional product on top of our worklist that we'll be releasing in the not-too-distant future. Finally, in summary, as Peter said, it's been our most successful FY '22, our most successful year. Our footprint continues to grow in North America. Our expanded product set is paying very significant dividends. We have continued to deliver on our promise of rapid implementation. We've never missed the deadline. We've never missed the deadline and we've never had a pulled implementation. Cloud is huge for us. I think it's going to just get bigger. I think you can see from the videos, we believe we have unparalleled ROI, both financial and clinical. Our pipeline continues to grow strongly, and we think AI accelerator will -- the way it's being used, and we hope will continue to be used will allow us to commercialize things from our academic partners. Before I finish off, I just also like to echo Peter's comments to thank my management team at U.S. and Germany, pound for pound, I think, they're the best anywhere. And they've really put in a big effort as had all the teams. Interestingly enough, when I go to RSNA, I have what's called the newbies dinner. So anyone that's new to the American organization that is at the show, I take out for dinner on the Saturday night may also [ deal or scare to see I do ] Normally, there's 1 or 2 this year, there's going to be 16 people coming to the newbies dinner. So it just shows that we've grown despite COVID, particularly in the U.S., and that's been a positive thing. And as I said, a tribute to the management. Thanks very much.

Thank you, Sam. I think Sam has demonstrated that we're very busy and very excited about the future. And whilst this was our most successful year-to-date, we still think there's even better results to come in the future. So -- and with all this activity, we expect that to underpin that brave prediction. We'll now move to questions and -- which we'll firstly try and deal with those that have been raised either by myself or by Sam in our presentations. And then we'll see questions later in relation to items of our formal business. In dealing with the questions, I'll try -- we'll try and do them in the following order. Firstly, those received prior to the meeting of which the orders went. Secondly, questions from those attending in person. And then thirdly, questions from those attending online. And finally, if there's anybody on the telephone questions from those individuals. So starting with -- if I can just say [Operator Instructions]

So I can just turn to a question that was received prior to the meeting, which was in writing. And it comes from Dr. Roland Bema. What are the main features, benefits for customers that set Pro Medicus apart from competitors? And how will management defend its market position with more and more competitors, Intelerad, Ambra, Philips, Carestream, GE, entering the cloud-based solution base -- space? I'll ask Sam to answer that question to get us going. Thank you.

Thank you, Peter. We believe that the software we have is unique, and I think that's been proven in the market. Many years ago, I said -- we felt we were 18 to 24 months ahead, and we've been saying that for over 6 or 7 years. And we don't know of anyone that has caught up to where we work back then and we've continued to develop in the software. As Peter said, our #1 focus is R&D and making sure the software stays further ahead. If I had to summarize it, it is a bespoke platform. It is number 1 in the 3 key things: speed, functionality and that video showed the radiologist all saying we have everything we need in 1 desktop. We don't know if anyone that's able to do that. And then importantly, scale because the image sets are getting bigger, you need to do petabytes, not terabytes. And I think that those are the 3 things that differentiate us. Cloud is important, very important. But eventually, we believe some of the competitors may take them a few years, we'll be able to get into cloud. But that doesn't mean they'll be able to stream, be quick and have the functionality. It's purely changing on-premise to a public cloud environment. So whilst that's not simple, that will not allow them to leapfrog and come up to us.

Thank you, Sam. Now are there any questions from the floor? Sir, look, there's a microphone just coming to you now.

Question is the same, please. In your presentation, you mentioned risk density. Where does that put you with somebody like Volpara? I'm just curious.

Yes. No, that's a good question. They're sort of competitors. So in a Venn diagram, we intersect in some of it. So Volpara look at a patient experience. So it's not just density, although density is their cornerstone product. It's about positioning. It's about output to mammogram reporting. Ours is purely density. And we look at it from a clinician's desktop point of view because now it's mandated by law in the U.S., not only do you have to report on density, you actually have to inform the patient the implications of the density. Because in a nutshell, the denser the breast, the hard propensity of the carcinoma either because you can't see it or there's a link between the 2. And so you normally need to do other tests if it's above a certain level, either breast ultrasound or breast MRI. So there is an intersect, but we sell at some different angles. And we'll see what happens once we bring it out to our client base, which we believe will be very soon, whether it really does compete or looks at it from a different perspective.

But what it's worth, I think you can run a better business and they can't.

Appreciate that. Thank you.

Thank you for your confidence, we appreciate that. Are there any other questions? Sir? And then...

Long-term contracts, are they fixed price or escalation for CPI or installation especially now that inflation is rather higher than before?

They are fixed price, but we factor in the length of the contract in the price. So we always -- even though there was pretty much 0 inflation, as they were factored in, we would need to make that price for the period of the contract. The 1 or 2 that has an escalation clause after -- if it's 7 years after 5, but they are effectively fixed price, but we factored that in. The other thing is we're not -- we are impacted as a company by inflation, but it is minimal even wage inflation. We have just over 100 staff. If we had 10,000, the impact would be much, much bigger. So we feel we can actually keep that price. The technology keeps getting faster and more scalable. So hence, the reasons our margins have gone up even with that fixed pricing.

Thank you for that question. I think we have debated that issue and decided that it's covered in our margin to start with. But if the contracts get past 5 years, then we are looking at some sort of inflationary increase, but that's a very good question. Lady at the back?

Visage Viewer is all known -- long known as a premium best-of-breed product. It sounds like Archiving and Workflow are also top of the shelf and more premium-ly priced products. Does it mean for expansion further out of the well-funded Western developed world, for example, into APAC, the company might put those geography into lower priority? Or maybe just leave them?

I think there's more to it on pricing, but that's a very good point. And I remember many, many years ago, clients of ours in Sydney, 2 radiologists, did some numbers. They thought, there's this country, Indonesia, the population, and they started a business called [ Acer Ray ] and they went there all -- this is fantastic, and then they realized that locally, they pay $6 for an ultrasound. And in Australia, it was $180, and all of a sudden they came straight back. So it's not purely, can we deliver the technology at a cost. It's what the reimbursement is locally. So we've had a look -- I mean Nick has done a lot of work on this and continues to, which markets can support a technology such as ours. Now things change. But we think certain parts of Asia will be -- could be good for us. The problem is they're relatively small, like Singapore and Hong Kong. They are one big authority with a few big hospitals, but that's about it. So the volume of people doesn't necessarily mean that market is a viable one for our technology simply because of the price expectation. But like I said, we've seen countries change over the years. And if they do, then certainly, there's nothing that would prohibit us from going into those countries.

And the other is in Asia, of course, South Korea and Japan. But they have their own issues as well. But I think the -- from a strategic point of view, we're still very small even in our major markets. Our percentage, and this is hard to actually calculate, but we think we've only got 5%, maybe 6% of the U.S. market. And so -- and that's a market that lends itself to our product and our product set or suite. And it's hard to divert attention away from the 95% that we don't have in the U.S. before we start diversifying too far out of the geographic regions within which we operate. It's not to say we're not looking at them, but it's not as high priority as exploiting our natural advantages that we have in the markets that we're currently in. Are there any other questions anyone wishes to raise. If not? Do we have any questions online?

Yes we do. Question from Stephen Mayne, do any of the 5 main proxy advisers, ACSI, Ownership Matters, Glass Lewis, ISS and ASA recommended vote against any of today's resolutions? I think I can answer that, which was no, they didn't. Which of the proxy advisers are covering us and did any of them have a material protest against us? Well, they didn't. But ACSI, Ownership Matters, Glass Lewis and ASA do reports on us, and they're all positive and voted for the recommendations. Will you disclose the proxy votes before the debate on each resolution?

Yes.

And why not disclose the proxies to the ASX and the formal address like others now do?

Well, we haven't thought about doing that, but we can consider it.

Next question from Wayne Arthur, retail shareholder. A couple of years ago, the company said it was showing promising results using artificial intelligence tool to detect breast cancer. I don't see any mention of this in the annual report. What happened to this? I know Sam covered this, but...

Yes, I did cover it. As we said, COVID did slow down our progress there simply because a, the organizations were focused on keeping the doors open. We forget, particularly when we got into 2020, they just shut down. Thankfully, they reopened, but not fully until recently actually. The second is we had at Yale. There was change of the Chair of Radiology, so they needed to wait for the new chair. But we are picking up progress on that, and we're hopeful sometime early in the next calendar year to update the market on that.

Another question from Wayne Arthur. Tell me about the competition? Who are your major competitors? What is your assessment on how they are going?

Well, I can only talk for ourselves. But certainly, when we come into a competitive environment, we win the vast majority of them. So I think that's telling. Now there would be some opportunities we may not get to see, some work almost exclusively at that lower end of the market. But in general, when we come up against them, we have won more than the rest put together. So I think competitively, we have a very compelling solution. We know we're not going to win every one. The 2 Ps usually get in the way, either price or politics. So if organization x has bought it and someone else's organization y in the area, they may want to quite differentiate themselves that sometimes happens, thankfully, not often. And price because our competitors, the main lever they've got is not the technology, it's dropping the price. And some organizations fall for that. I think it's a false economy. But again, thankfully, that doesn't happen often, but it does sometimes happen.

And another question from Wayne Arthur. The vast majority of the company's sales are in the U.S., but nothing on the -- its home turf. Is there any reason why there is no uptake in Australia?

There is some. It's not major. We do have some groups, midsized groups that use it, some smaller groups that use it. We tend not to bid for public hospital work, and we've been pretty upfront about that because we see the return just not being there. The RFPs are so onerous for such a little return that we tend not to do that. So that's part of the market. Whereas in the U.S., we don't have that. Big organizations like Mayo and Mercy and all the ones we have as clients, they may look public, but they're not. So there's far less impedance or friction in actually getting a deal done. So that's one thing. In the private market, there was a company Intelerad that came in, in the early 2000s. They have the lion's share of this market here in the private side, but we think that their technology is starting to age, and we think there may be some opportunities for us. But they sell it 1/3 our cost, and we don't want to come down to that level. There has to be that value argument. So we're hopeful that in the future, something may turn to the upside for us. But again, it's going to be a long going.

Another question from Stephen Mayne. The 2 founders, Sam Hupert and Anthony Hall jointly control the business owning about 26% each. Are there any agreements between the 2 major shareholders? Or is each completely and independently free to deal with their shares should they decide to sell or if a private equity work make a takeover offer? Also, what is the history of buying and selling Pro Medicus shares into the float?

Rather than put the 2 founders on the spot, I might answer that question. Seems a good friend of mine, but he's asked some difficult questions at me. The background, as you might recall, when the company was floated for those of you who've been around a long time, that only 20% of the shares were offered in the initial float. And Sam and Anthony have been gradually selling down since then, down to their current levels. And that was primarily not because they wish to sell, but they were asked to sell by the Board to give more shareholders the opportunity to participate in the company's success. And we did have an agreement effectively to sell down to the current level. The company doesn't have any formal agreement with the 2 founders now. And as far as I'm aware, the 2 founders don't have any specific agreement between each other. They haven't indicated to me any interest in selling further at this stage. But that's obviously a decision each of them make individually as they see fit. From a Board point of view, I'd have to say that having 2 shareholders who are so committed and 2 active directors who are so committed to the business has been helpful in making long-term decisions in the benefit of all shareholders. And so I'm not fussed about the fact that they hold a small majority position. I think it's the benefit of all shareholders.

A question from Claude Walker. Thank you for your excellent and informative presentation. Could you please quickly comment on whether you have lost any tenders out of your pipeline to a competitor in the last year?

Nothing material. There was a small one in Boston that are very small and part of that was politics because they were worried that we do Mass General, maybe they won't get the same attention. And there was another one that was recently announced by our competitor where we were a vendor of choice. And for the first time ever, it fell over in legals, that what they wanted in terms of the contract, I as the person that's [ back full stock ] for it all was not prepared to sign off on. And clearly, our other clients didn't ask for that because we've obviously been successful in creating those contracts, but they're the only 2. And that one was also medium to small, so none of the large ones.

Another question from Claude Walker. Given the importance of the key teams, can you comment on whether the company lost any employees this year, in particular, commenting on the development team in Germany?

That's easy, no.

Great. Next question. You mentioned you have 5% of the U.S. market. Is this the accessible market or the total market?

No, that's total market. So one of the things that we had done is we -- through various reports, and each report looks at it slightly differently. We believe there are around 450-plus million exams. Recent research, including NICs and other reports, which we've triangulated pretty much confirm it's more like 600 to 650. So we used to say we were 6 and a bit percent, and then we went to 5%. We didn't lose anything. The pie actually is bigger than we thought, which is good. So that's every test -- diagnostic imaging test done in the U.S., not North America, it doesn't include Canada, I think it's purely U.S. So we look at addressability or total addressable market through 2 prisms, the product. Can it actually work for the small guys to the biggest, most complex? And the answer there is unequivocally is because we have a 2-man practice of about 10 minutes in Melbourne Airport that's been using Visage for I don't know, 8 or 9 years, and we have Mayo Clinic, Mass General, and it's exactly the same software. So we know that the software can address every type of diagnostic imaging practice. Then the question is commercials, when is a deal too small? And as I mentioned before, that bar has been lowered because of full stack and cloud. But if you didn't have those 2 -- either 1 of those 2, the deal size would have to be bigger to be viable from a time and effort perspective. So whilst we don't believe 100% is addressable from commercial -- through a commercial perspective or prism, we think a much larger percentage is addressable than the market previously believed.

A question from Jackie Cambridge. What is the goal in putting the system in the VIC's Stroke Alliance?

Purely and foremost to help out. They had a need, it was a growing need. Originally, we went there to look at the stroke ambulance. They were looking at -- they got funding for an ambulance that had a CT scanner in it. And Anthony came to me after they've been to a lecture about it and said, look, maybe the software would be good for that. Let's at least go and speak to them. We started the whole conversation. What we found out was that the ambulance was still a few years away. So they've got money. But by the time they're going to get it -- but they said, look, we have another use case maybe you can help us with. It's actually even bigger in terms of volume, which was this Telehealth. So it's under the auspices of Victorian ambulance, but we did give some software and they do use it, as I said, over 4,000 cases a year and growing.

And final question from Stephen Mayne, at least on the general business. What are the dealings with Ramsay and Medibank, the 2 biggest ASX listed players in the health sector?

Again, easy. None. So Ramsay are a hospital operator, but they don't run their own radiology businesses or if they do, they're very small. They usually farmed out to the likes of I-MED and Healius and other groups. And in Medibank Again, the only touch point we have there is on the risk side in Australia, if someone's in a private hospital patients insured by Medibank, the bill goes through radiology and electronically to Medibank and to Medicare. So it all happens in background electronically, but other than that from a clinical diagnosis point of view, none.

Thank you, Clayton. Sorry. Just on the stroke ambulance. There is only one in Australia, I believe, at the moment and it's in Victoria, and it's centered at The Royal Melbourne Hospital. But I know there is desire to have a stroke ambulance in every capital city, but that's still coming. One of the -- there's a technological study being done at the moment to see whether they can get a reader or a viewer small enough in an ambulance so that they've become more prevalent across the whole sector and presumably it will play a part in that, if and when that happens. So there is a bit more to come. But we see that as part of being part of this community to be able to welfare that and I hope the shareholders would agree with us on that point. It's not a money-making exercise. It's really just playing a part within the community. Are there any questions on -- is there anybody on the telephone, Clayton, that we're aware of or that may wish to ask a question? And then we offered -- we -- as far as we're aware, no?

[indiscernible]

No? Okay. All right.

Well, we might move on to the business of the meeting itself. The formal business has been set out in the Notice of Meeting, which hopefully you have access to prior to this meeting. And with your permission, I'll take that Notice of Meeting as read. Minutes of the previous Annual General Meeting. The Board did review the minutes sold the meeting held on the 23rd of November 2021, and I've signed those minutes as a true and accurate record of that meeting and the company secretary has a copy if any shareholder would like to refer to them. I also indicate that for those of you who didn't attend last year's annual meeting, there is a recording on the website if you're so inclined and wish to go back in history and see what predictions we made last year. Hopefully, we managed to meet all of those. Now just before going to the business, I'd like to refer to the process of shareholder questions and voting on the resolutions before the meeting. Just bear with me for a moment. Those present at this meeting may ask questions that each resolution is considered. Those attending virtually online may ask questions and vote. Thank you. [Operator Instructions] To ensure questions reaches in time, I ask that you submit them now if you haven't already. Again, any general questions submitted online during the meeting will be addressed after the formal business is completed. If we aren't able to get through all of them today or there are specific questions that we better address on an individual basis, we'll respond to them after the meeting. If we receive multiple questions on the same -- that are similar, we'll try to amalgamate them. I don't think that's going to be necessary. Voting. Voting on the resolutions will be conducted by way of a poll. Those voting in person can do so by submitting their votes to the returning officer. And Jim has a box there that he'll collect your votes during or after each resolution or at the end of the resolutions. Those who are attending online can do so by using the electronic voting card. You should receive after clicking the Get a Voting Card button. And Pro Medicus share registry provider, Link Market Services, will conduct the voting by way of a poll. Mr. Jim Kompogiorgas of Link will act as returning officer. Votes will be counted after the end of the meeting and results published on the ASX and Pro Medicus Limited website. Shareholders can cast their vote using the electronic voting card received after validating online registration. To validate registration, you'll be asked to enter your security holder reference number or a whole ID plus postcode if you are in Australia or country if you're outside Australia. To then cast your vote, click the voting card button. If you are intending to vote, you'll be able to finalize and submit votes up until 5 minutes after the meeting ends. I'll remind you at the end of the meeting. The final results of each resolution is up and will be published on the ASX. Proxies. The proxy votes that have been submitted will be set out on the slide shown for each resolution. For some context, the current number of Pro Medicus shares on issue is approximately 104 million. A number of shareholders have appointed the Chair of today's meeting, myself, as their proxy. As indicated on the proxy form and the notice of meeting, my intention as Chair is to vote all discretionary or undirected proxies held in my favor. Now if I can move to the business of the meeting, accounts and reports. To receive and consider financial statements of the company for the year ended 30th of June 2022, and the related Directors' reports, Directors' declaration and the auditor's report. Whilst no vote is required on this item, I would call for any questions shareholders may have. Are there any questions? No questions on the financials. We're going to let the auditor off. Thank you so much. If there are no questions, we'll just report that those financial statements have been received. Remuneration report. To adopt the remuneration report, which is contained within the annual report on Pages 30 to 37 for the year ended 30th of June 2022. Whilst the vote in relation to this item is not immediately binding on the company, we naturally take any of your views seriously. Before putting this motion, are there any questions in relation to the remuneration report? Sir? Sure. Just wait -- so we can hear.

The first one, I noticed your head of sales has got a heck of a lot of the remuneration at risk. I was just interested in the controls around pricing margins, which I think the presentations, I'll probably be comfortable with that. But the one sleeper I noticed I'd just be interested in is in the notes of the accounts that there are apparently some debtors that get 90-day terms. And I would just hope that any sales, 90-day terms don't qualify for around -- to count under those arrangements.

The answer to that is no, they don't.

No?

Yes. No. The -- I think it's pretty sure it's clear in the annual report, the way the remuneration of the head of sales occurs. Part of it's upfront and part of it's over time, as you probably know. But it has nothing to do with terms in that regard. And of course, all contracts are overseeing and the final contract arrangements are overseen by the CEO. So there is no unilateral position on his part.

Just one other question, if you don't mind. I noticed some awards were made where the targets weren't quite met and the Board exercised its discretion. I'm just wondering did the Board consider the cultural consequences and the message that sends out the start right through the organization when that decision was made.

We did. And I think it indicated in the remuneration report that they were very close to meeting the minimums. It's only that -- we're talking about the minimum threshold. So we certainly consider that. And we felt that the difficulty for us is that it's about timing of when a contract is implemented and starts to generate revenue. And sometimes the delay in that process is outside the control of our management team. The revenue hasn't been lost. It will come to us in a subsequent year. And so we felt, given those circumstances, it would be unfair to penalize the management team in that regard, at least for their minimum threshold. And it wasn't -- it was less than 1% miss. So I think we were comfortable that it was a reasonable and fair thing to do. Are there any other questions on the remuneration report? If not, do we have the proxies here? Now that's the proxy report. And of course, we'll then take into account the shareholder views that are expressed today through your voting either virtually or on -- or in person. And then that will be what we publish on the ASX. So there's a clear majority there up to this point in the acceptance of the remuneration report. I should emphasize, of course, that, that number looks quite low relative to the 104 million that I referred to earlier, but that's because the directors and any person involved in the remuneration -- or referenced in the remuneration report cannot vote. And therefore, those votes -- the votes will have to abstain or if they did vote, they would be ignored. So that's all -- that's shareholders who are not founders or directors of the company or senior management. So it would appear there's a reasonably clear majority there, but we'll wait to see how the rest of your vote before we finalize that. Whilst, as you know, this vote of itself is not binding on the company. We do take shareholders' views very seriously on this issue. And obviously, if we received 2 negative votes or 25% of the shareholders voted against the remuneration report, then we would need to spill the Board, but we don't expect that based on those numbers, that, that will happen. So I can't say the motion is carried at this point, but it looks likely that it will be, and we'll wait the final outcome of the final votes. So reelection of directors is the next item on the agenda. And the first part of this is that Mr. Anthony Glenning being a director who is retiring in accordance with the company's constitution and Listing Rule 14.4 and being eligible, offers himself for reelection, be reelected as a Director of the company. And before I invite questions, I'll invite Tony to speak -- address you to give you his reasons why he thinks he should be reelected perhaps. Over to you, Tony.

Thank you, Peter. So good morning, all, just a few minutes to go. So firstly, I'd like to thank you, the shareholders for allowing me to represent your interest on the Board for these past 6 years. And I hope you all agree with me that in that time, mostly thanks to the efforts of Sam, Anthony and their teams, the company has made incredible progress, which I'm really proud to be a part of. But I think more than that, the company remains incredibly well-positioned for the future. And hopefully, you've got that impression and share those views with me from the presentation that Peter and Sam have given here today. So certainly, from my position, I'm incredibly optimistic about the future of the company and indeed think that the best years of Pro Medicus are in the future and not behind us. Notwithstanding the incredible progress that we've made, as I said. So as I said, well, just to conclude really. I'm up for reelection and I certainly appreciate the opportunity to continue to represent your interest on the Board into the future and be a continued partner, I think, the success of the company. Thank you.

As Tony said, he joined us 6 years ago, and he has been a very significant voice. He brings an additional technology bent to the company in addition to Anthony, and he's also a very strategic thinker. So he's not so much focused on today's issues but rather than tomorrow and looking ahead. And he was very instrumental at our latest strategic planning meeting where he was pushing the management to try harder and I think he was successful. He managed to encourage them and they embraced the challenge that he put to them. So I can't underestimate his value to us as a Board member, and he certainly brings a very clear and positive viewpoint to our deliberations. So there's a very clear majority there. And I think that does indicate that Anthony has been reelected. So I'd like to congratulate him on his reelection. Now the second part of the reelection of directors is Dr. Sam Hupert, being a Director who is retiring in accordance with the company's constitution and Listing Rule 14.4 and being eligible offers himself for reelection, be reelected as a Director of the company. And I think you've heard enough from Sam, so I won't ask him to speak again. But obviously, the Board is very supportive of Sam's reelection. And we hope he will continue on in the role for some time to come. Are there any questions of anybody about this motion? If not...

Yes, Peter, online. A question from Stewart Burn, representing the Australian Shareholders Association. The ASA has a preference to the directors to be independent. Dr. Hupert has been in the role for 12 years and is not considered independent by the ASA. We recognize that Dr. Hupert has a unique role in Pro Medicus. Can you please detail what you see as Dr. Hupert's ongoing role? And is a succession plan being developed for him?

I think Dr. Hupert's ongoing role is still to continue to lead the company. And you can see it has an incredible and unique knowledge of the business, and he will be hard to replace. There's no doubt about that. However, we have been -- the Board is very cognizant of our succession issues, which we have throughout the organization. As I mentioned earlier, we've got our senior management team has been with us for 10 years or more. They are a little younger, most of them, than Sam. However, we are very aware of that issue and the Board is currently looking to devise a plan for an orderly succession over time. It's not something that we're contemplating wholesale changes in the immediate future. Are there any other questions on this?

No, there was some for Anthony, though.

I'll go to the proxies now. And I'm not sure whether Sam got more votes than Anthony or not, but it's clearly supportive of Sam's reelection. So I think that's a clear majority. And so I'd like to congratulate Sam on his reappointment. Other business. I don't have any notice of any other business, but are there any other questions anyone wishes to raise before I close the meeting?

So there's some online. More for reelection of Tony Glenning, so I missed those. Did Tony know either of the founders before he was appointed to the Board 6 years ago, and what's the process through which he first engaged the Board recruitment?

No, I didn't know the founders are -- so no, I did not know the founders are prior to my appointment 6 years ago. And the process -- the original process of recruitment was through a recruiter.

Any other questions?

No.

All right. Well, before closing, I just -- as I said, I would -- I'd like to remind those online, in particular if you have another 5 minutes after the conclusion of the meeting to cast your vote on any of the resolutions. And those of you who are present and voting, if you wouldn't mind, well, Jim will come around and collect your votes now. And that only leads me to thank you all for your attendance, particularly those, as I said earlier, who took the trouble to journey into the CBD on a cold wet Melbourne Day. We do appreciate your attendance, and we look forward to enjoying some refreshments with you immediately after the meeting. So thank you again for coming and your attendance and your questions. And I'll close the meeting now. Thank you.