Ramsay Health Care Limited (RHC) Earnings Call Transcript & Summary

Good afternoon, everybody, and welcome to the second section of the Ramsay Healthcare Investor Briefing. This afternoon, we will be [indiscernible] our CEO of Ramsay Santé, Pascal Roche, followed by the CEO of Ramsay U.K., Dr. Andrew Jones. We will then move to Q&A. And Pascal and Andrew will be joined by Craig McNally, Martyn Roberts, Marcus Nord and Peter Evans. I will now hand you over to Ramsay Santé's CEO, Pascal Roche.

Thanks, Kelly, and welcome, everybody. I'm very pleased to be with you today. So if we move with you to describe what is currently, I would say, Ramsay Santé what we want to be and how we want to be. Just first, maybe as a reminder, going to the Page #5. Just to remind you that Ramsay Santé has 2 main shareholders, Ramsay Health Care 52%, and the leading bank in France, Crédit Agricole through one is -- of its subsidiary, roughly 40%. And besides Ramsay Santé is listed on the Paris stock market. So 2 key figures to share with you. Last year, so end of June 2021, $4 billion of revenue and $643 million of EBITDA. So on this page, so Page #6, who are we now? We are the second-largest hospital company in Europe, but certainly, more importantly, we are a leader, the leader already in integrated care in Europe. Why? Because we are the leading position in the market in which we are, meaning we are the #1 in France as a private operator in Sweden, pleased to share with you that now we are, too, the #1 in Norway following in the last 12 months, double-digit organic growth and 4 bolt-on acquisitions. We are the #2 in Denmark, and we've got 1 hospital in Italy. We have saw a strong healthcare footprint in Europe, 230 hospital, 116 primary care center clinics with GP, nurses, et cetera, [indiscernible] hospital. 900 operating rooms, close to 100 heavy equipment in imaging, mainly in France, 9 million patients visit last year from which, and that's very important for us, 6 million out of hospital, always pleased to share with you 33,000 deliveries, maybe in French Maternity Wards. A couple of key figures. Finally, in France, being public, private, nonprofit hospital 1 out of 9 surgery in France last year were done in one of the Ramsay's Health Care facility. We are, too, now the first player in dialysis in France, which is close to 806. And if we go back to Sweden, 10 million inhabitants close to 1 million of Swedish people and listed with it or clinics or primary care center. And we are through modern-quality-focused provider. Thanks to -- I would say, to strong investment in the last year. Very important, of course, to attract the best clinicians, to attract patients and we'll come back to this to later obtain additional sub-disease as more and more financing now moving towards quality-based subsidies? If we take France, we are the only public or private group with one other than first three, by the way, facilities, certified best-in-class level and the medical excellence in Sweden of our footprint of Capio is known as an example, Saint Göran, 4 years out of the last 5 years, was elected as the best-midsized hospital in Sweden. And finally, and we'll come through that through the COVID crisis, a key president partner to the institutional payers with whom we are working. So if we move to the next slide, Slide #7. We were saying undisputed leading position in key strategic markets. As you can see, France still accounts for 71% of the revenue; Sweden is $1 billion of revenue as well as Norway and Denmark. These 3 of them with a higher organic growth than France, by the way. This is a map complex, of course, with close to 400 hospitals and primary care center. As you may remind from further discussion in France, we have been clusterizing our business since already 10 years. We'll come back to this while it means in terms of efficiency and so forth. If we move to the next slide, Slide #8. Beyond this diversity, I would say now of geography, we have been entering to, in Europe, we consider, too, that, that diversification of payers, patients and specialty are critical, these are critical because certainly more that's in other countries being pegged by the French state of the Swedish country. Of course, their decision based on price, et cetera, on which to be honest, even if we are lobbying a bit of an external variable. So long story short for us, it's very important to be diversified. So if we look at the left of this slide, looking at the patient, the acquisition and integration of Capio has been a game-changer because now 9 million, we're saying a visit of patient payer in hospital and very proud to have, of course, a physical hospital. But many out-of-hospital visits in primary care, we consider imaging as out-of-hospital and now 0.5 million of venues last year; fully digital. And first, a digi-physical approach is totally critical. Moving on the right of this slide, as you can see, across a value chain, we're talking about being an integrated payer in Europe. MSO looks like a big, big part of the cake, 72%, but to some extent, MSO is a bit of a misleading word because from MSO, whereas medicine, you've got offset rate, you've got dialysis, you've got ED, you've got of course, surgery of all time. And as you can see, rehab accounts already for 5%, imaging 4%, mainly in France, but much bigger part of the revenue. One second on imaging, that's very important for us to be the leader in France because not only imaging is very interesting from a profit standpoint, but imaging is really at the crossroad of the patient pathway. Two figures when a doctor is asking for -- to have an IRM, a scan or an echo, whatever, in 64%, they will be, go back to the doctor. And another figure when somebody is entering an ED in close to 62% of the cases, the doctor in the ED will ask to our imaging, which is net-net within the same location in order to better assess the diagnosis. And beyond imaging, mental health, a growing part, primary care, Sweden, Norway and we'll see later since a couple of day, Denmark and France. And primary care is growing rapidly big pool, very interesting, different type of figure. And finally, at the end of this slide, diversification of a peer mix, the French public, of course, the Swedish counties, we are present in 13 out of the 21 Swedish counties with different rules, by the way, so diversification to our payer. We've got 10% by PHI in Norway, in France was a room, a bit in Sweden and out of pocket mainly in Norway and in the rest of the country. So more diversified business, diversification of the risk and integration of the pathway and that will be a key driver of our strategy we are going to share with you. We propose to skip the next slide because the next slide is, I would say, of some trends that you have seen already on Friday. So I propose to skip this slide and to move to the Slide #10. So the next one, just to give rapidly a highlight of the market, the key 4 markets beyond Italy, in which we are also playing a key role. We do think that this market on the mid and long term, have strong fundamentals driven by the fact the size. They are growing. The private health sector is playing a key role in France, just to remind that the private health sector, sorry, represent 23% of the wall -- health care at the wall, above 50% in surgery. So beyond being too big to fail, it's a very, very important footprint versus the institutional. And when we look at the end of this slide regarding the driver, we really do believe that in the mid and long term, there are favorable fundamentals for private player-driven either by the waiting list, mainly in Norway, Denmark and Sweden and the fact that PHI is growing rapidly in these 3 Nordic countries. And in the fact that -- and we're going to see that just after in France, which is totally regulated by authorization, we are currently gaining many new authorizations as a consequence to offer the world during the COVID. So beyond this fundamental in the market on the next slide, the Slide #11, we have tried and we are relentlessly looking at how to have stator our facilities. We had a sustained investment and innovation policy in the last year, respecting the financial order described by Craig and Martyn last Friday. So just a couple of examples you can see on this slide, such as a huge facility in Toulouse that was opened close to 3 years ago. In Saint Göran, this iconic hospital in Socom that we are managing, there is modernization of the existing building, creating a brand-new unit in the South of France, such as [indiscernible], in mental health and some example of extension in -- I mean, of the clinic Atlantic in La Roche, interesting one, by the way, because back to a year ago, we used to have 2 clinics. We have closed one clinic and bring back -- we have brought back the content, the doctor, et cetera, by expanding with 6 additional operating room. And of course, as you can imagine, cutting costs in this 1 out of the 2 facilities. And finally, Copenhagen, in which currently we have been merging 2 larger, 2 large facilities in the center of Copenhagen. So relentlessly investing in order, once again, to attract doctor and so first in the last years. So on the next slide, to share with you, and you may already have seen that. But Ramsay Santé, so have been refinancing our debt 6 months ago and through aligning our financing strategy with submission of vision, by including which was one of the first on the French market on ESG criteria. So where are we now regarding financing? We have been refinancing 2 term loan base for EUR 1.45 billion as you can see, 2 tranche maturity, 2026 and 2027 at a good price, one of the best price regarding, I would say, our rates. 225 basis points and 275 basis points on top of that. So we've got a line of CapEx and RCF, each of them for EUR 100 million undrawn. So it was oversubscribed twice maturity expansion. We have more flexibility of the documentation and net-net, we are around a double-digit savings in financial interest. As we're saying just at the beginning, on top of what, there will be some small or minus 25 basis point bonus of minus according to 4 ESG, CSR criteria that of course we plan to deliver. So that was to give you a shot on the refinancing. Now regarding our relationship with the institutional on the next slide, Page #13. We have been and we are really acknowledged as a unique present partner versus what the team has done in the last 18 months, I would say, through this dramatic and still ongoing, as you know, COVID crisis in Europe. A couple of points. In France, for example, since March 2020, Ramsay Santé has been taking care of more than 17,000 patients, COVID patients, not talking about those entering in emergency departments, only resuscitation bed and long medicine and 9,000 in critical care. France and Sweden, the team has been creating a lot of vaccination center, over 1 million of people were vaccinated in our own settings. In the case of Sandarne in Sweden, the team has been taken care in critical care of 700 patients. And in Norway, even in a hospital, we did not have any resuscitation bed. Proud to share with you that 20% of all the COVID testing has been paid for within the Ramsay Santé facility in Norway, which, for the first time, I would say, because we are working with private insurer. We are opening the gate to future tenders by delegation to do some public surgery by delegation of public hospital. So what does all this figure mean on the right of the slide for France, 2 very easy figure to remember or market share of the private sector is 23%, but close to half of the COVID patients taken care in private hospitalization has been within the Ramsay Santé facilities. If we take the Paris area, 12 million inhabitants during also waves, the Paris Public Hospital have taken care of 37 of the COVID patients and Ramsay Santé, we have been taking care of 18, close to 20% of all the COVID patients. And as far as Sweden in the Stockholm area, 1.8 million inhabitants, 20% of the COVID patients were treated by Ramsay Santé by Capio in Stockholm. And as you can see at the end of this slide, it sounds like anecdote. But having, for example, the French Prime Minister visiting one of our facility a couple of months ago to frank Ramsay Santé is not an anecdote, because it is the first time a Prime Minister is visiting in France private hospitalization since close to 40 years, 4-0 years. And we have been the only private operator where a prime minister, the Minister of Health came 4 times in the last 18 months to France. And we will see later, what we have been already opening, I would say, other consequences to be a trusted partner for the long term of our footprint in Europe. So moving to the next slide. Of course, to be transparent, unfortunately, we are now in what is called the fifth wave of the COVID. So we are still under trouble. We are still under a huge concern to be, of course, transparent to you. You can see on the left of this slide that in France, in the last 7 days, there was an average of 15,000 new cases per day. Sweden is still a bit protected, but unfortunately, we consider that the number of new cases in Sweden is going to ramp up in the next week. Norway, Norway was a good student of Europe, I would say, with a 0 COVID strategy like in Asia. But since 3 weeks, as you can see, the number of new cases for the very first time in Norway is sky-rocketing. And as to Denmark, the situation is becoming worrying. So on the right of the slide, if we look at the number -- if we take the pink graph the number of French citizens, unfortunately, in resuscitation bed. You can see on this graph, the first wave of March, April 2020. The second, the third, the fourth wave, now we are over 2,600 this morning patients in critical care, knowing that the whole France capacity is 5,000. But contrary to the first wave, we won't be able all over, public or private, to go back to 5,000 if it was needed because we'll come back to this later. We are suffering from some labor shortages. And of course, critical care are occupied too with cardiac patients, no more patients, et cetera. So yes, once again, it is a difficult time to be transparent to you in Europe, as you know. So coming now on the next slide regarding a bit more on the mid and long term for France. So we consider that on various topic, on the mid and long term, we are in a better context than the one we used to be some years ago. First, because -- as you may remember, we've got a multiyear visibility of tariffs. So our tariff for France will change on March 1, 2022. We know they will be in positive territory. And all others, we are really advocating in order to have now a 5-year agreement on tariff with the French government. Second point to share with you, the quality base funding is a key opportunity. As you can see on this slide, a couple of years ago, there was no money or a very small amount of money dedicated to quality funding by the French state. It was EUR 200 million 2 years ago, EUR 450 million this calendar year. Next year, it will be EUR 700 million or EUR 750 million. It is important because it is a DNA. And as we are best-in-class as measured by the French state in terms of quality, we will obtain a bigger amount of money than our market share. On top of what the French state funding system, it not only DRG, it is quality, as we have just seen, but to moving on 4 February, for example, on chronic inmate diseases, and we will obtain a couple of millions of euros as well, and it is a first on capitation model fostering quality. We are the first one. We are going to share that to you in a couple of minutes to obtain capitation money in primary care. So on the right of the slide, we were saying we're expecting positive tariff for France this year, even more because the overall ONDAM, ONDAM is the well amount of money, close to EUR 240 billion. The French state is paying to GP, physio, hospital, et cetera. plus 2.7%. It is the higher percentage of these last 7 years. And finally, and very important first, there is a transparent regulation put in place. We have been to advocating for that if the volumes are below expectation, part of the money will be given us back. So on the mid and long term, we really consider that tricks are moving in the right direction. Now once again, we are in the very short term in the complex moment because of the COVID and because as we can see on the next slide, Slide #17, sorry, yes, on this slide, one second. So France, as we're saying to what we have had with our relationship with the French state. What has been the total amount of money we have been able to recover, I would say, in this, once again, very specific context and some one-off items. And as Ramsay Santé has taken care of 50% of the COVID patients in the private sector. As you can imagine, we have been a key player to discuss with the French state or the Swedish state in order to obtain these various extra fundings. On the left of the slide, and you certainly have seen that in our financial results end of June, the French revenue guarantee schemes that are protecting, I would say, our revenue, allowed us to recover EUR 103 million, to be precise, in the last financial year. All the extra costs related to COVID, we had a EUR 1 to EUR 1 payback by the French and the Swedish state if we stay for France, it did represent an amount of EUR 72 million, EUR 73 million, if we want to have a rounded figures. So grand subvention as to Sweden due to the huge amount of work during COVID and the cost we have been suffering, it was an amount of EUR 58 million. And now moving to the right and moving, I would say, to the future, we have been recently obtaining very important favorable decision for business development. For example, in mental health in the last 6 to 8 weeks, we have obtained 6-day hospital authorization and we expect more. We have been, as you can see, a 5 to 14, for which we will have the result in the next month. Imaging critical, it took us 30 years to obtain and to have 88 heavy equipment. In the last 2 months, we have obtained 26 new authorization of heavy equipment that we are going to implement in the next quarter. We are really very pleased with this authentication, I would say, of all these new imaging authorization. And on top of that, and beyond, I would say, the amount of money regarding operational investment and restructuring investment, and that's very important, of course. The French state has been giving us EUR 19 million to invest in a hospital and EUR 5 million to restructure. But beyond, I would say, this figure, it is the first. We are only the 1 in the private sector as a thank you and creating long-term relationship with the French state to have obtained this amount of money. So as we're saying, difficult on the short term because of COVID, but not only COVID, but on the long-term, good perspective. So coming back to the short-term topic on the next slide, so Slide #17, we are suffering as, I would say, also staying in France, all our competitors being more public or private, and it is more critical, to be honest to you, in France than in Sweden, Norway, or Denmark. We've got some short-term headwinds we are currently facing on nurse shortage leading to a difficulty of the volume catch-up between the various phases of waves of the COVID and supply cost inflation. If we stay on the nurse shortage, there is overall in France, as of today, 30,000 nurses meeting in public and private and nonprofit hospital. It's a lot, I would say, it's roughly 6% of the global headcount. And in spite of the fact that the French state following the third -- the first 3 waves of the COVID has increased the salary by 10% of health nurses and nurses and we have put in roughly a bit less so same amount of money. There is a huge and very complex certainly to find the right work even more in English to describe the fatigue, the tightness, so we propose et cetera, et cetera. So yes, it is a short-term issue we are tackling. And how do we tackle that? Honestly, there is not an easy and a single answer, but we are working according to each and every facility, do we need to increase salary versus the competition. We are working on the work organization. We have been opening with the World Council a lot of negotiation on the quality of life. We are doing a lot in order to work, I would say, in order to work on the carry path of the nurses joining us. We have been creating, for example, in Toulouse a nurse school, et cetera. We had, since the last 2 months, 108, to be precise, nurses coming from Lebanon, speaking French, et cetera, joining us, et cetera. So we are trying our best to tackle, I would say, this issue, which is an issue on the short term and after. And supplies cost, as you may know, there is an increase of the supply cost being on energy, on the 2 mass globe, et cetera, et cetera, that we are facing, and we are doing our best, I would say, on this in order to manage, thanks to worldwide procurement center in order to manage this short-term, I would say, challenge. Now that being said, if we move to the next slide, talking about headwinds on the Slide #18. Just to remind, and some of you do remember that, that we have been used, I would say, if I stay to France, to face headwinds in the last 7 or 8 years. Because during the period from 2014 to 2019, our tariff, by the French state, has decreased year-after-year. As you can see, the red graph here, minus EUR 225 million, minus EUR 195 million, but net-net, even worse in surgery, where we are the leader. So we have been facing a 10% decrease of tariffs and volumes a bit flattening. In spite of that, as we can see on the right of that slide, and this is not IFRS 16, we are pre-IFRS, we have been able to maintain our EBITDA in the range of 12%, 11% and EBITDA around 20% in the last year. Of course, the rapid increase in the last year was due to the Capio integration on which, pleased to share with you, is at the level of synergies obtained is well beyond our expectation. So we have been facing headwinds, and we will find solutions. We are working hard not to underestimate labor shortage and the labor, I would say, tension. Moving to the next slide, just to remind you that versus these headwinds, efficiency has been, is and still will be first key driver that we will relentlessly apply in order to find pockets, I would say, of savings. So on the left of this slide, and since we have been clustering our activity in France, relentlessly, we have been optimizing selling some assets, closing some assets, doing ground field restructuring and acquire a couple of them. So thanks to this, I would say, we have no shame to look 1 by 1 to an asset in order to restructure where it's sharing before the example of La Roche, closing 1 facility into the other. Last year, we had been selling 2 facilities in the East of France, a bit of a burning platform. So once again, we will do that. And when we look to the right of this slide, we've got an active development of outpatient care for France. As you can see, Ramsay Santé, in the 73% of all the surgery is done through outpatient care, which is good, of course, in terms of quality. And besides, we have been setting up K pathway, for example, we have been creating 12 oncology institutes in the last 8 years. Now we have been creating 13 nutrition and obesity center, and we are entering to new territories for example, by creating nonplanned emergency departments. So efficiency on the short term will be once again and the long term, one of the key drivers. Now stepping back, we would like to share with you beyond this -- what we are today beyond the short-term headwinds and the COVID, unfortunately, wave we are facing, what do we want to be in the next 5 years? So let's go, I would say to the next slide to share with you first the assets, on which we plan to build -- or plan -- or yes, quicker 2025 plan. The first one is research and teaching versus our private competitors being in France, being in Sweden, we are much more advanced in research and teaching. The second driver, which is really more and more a competitive, sustainable advantage is a strong digital footprint. It is obvious in Sweden. It is obvious now in Norway. We'll come back to this later. We bought recently the leader in the remote platform and digital 2024 as an entry care to health care. And in France, we used to have unique digital funder called Ramsay Service, and we'll see in 5 minutes, one -- what we have launched last week. And finally, we've got strong asset aimed at fostering innovation, fine to know innovation hub, which is critical in the way to change our organization, to partner with startup and to in France, we have created in Sweden, an incubator for prevention solution, incubating 25 starter every year. So this is very important now to share with you with this asset what we are taking into account the context, what do we want to be and how we want to deliver in the next 5 years. So let's move to the next slide. which is, by the way, consistent with I would say, the Ramsay Health Care totally consistent with the Ramsay Health Care 2030 vision, Craig and Martyn, the team has been sharing with you last Friday. So we have defined what we wanted to be and what we want to be in a nutshell, we are already beginning to integrate suspension pathway. We want to go well beyond, I would say, we want really to be this orchestrator. We want to own the patient. We want to create loyalty. We want to create referrals between our various activity in this horizontal value chain, had to do that to be a digi-physical payer with 4 pillars. The first pillar on this slide is more than ever to defend, I would say, our core business our 250 physical hospital, but by extending what we do by connecting them to our adjacent business. Talking about adjacent businesses. The second pillar we clearly want to become the preferred primary entry point to the health system. Being through primarily care, we are already the leader in Sweden. We are expanding in Norway. We have bought a month ago as the leader in the clinics, in the primary GP in Denmark. I'm pleased to share with you that last Monday, a week ago, at first in the French territory, we have opened a brand-new primary care center paid by capitation, protocolizing the patient pathway with the stamp with, I would say, the agreement of the French state, and it is the first of many other. So a third pillar to create loyalty and to collect data, it will be more and more a data game where we are about to develop some prevention services. And finally, we want to expand our outpatient services with new delivery of care, and we have already moved. Our enablers are totally consistent at the same and aligned with Ramsay Health Care 2030 vision. So this is what we want to be in the next 5 years, how we want to be as a group. And on the next slide, talking about the group. So beauty, I would say, of being a group, it's not just an addition of country being in Europe or around the world, what we would like to share with you through the slides is that some core competency that we are in each and every country on the top of that slide, currently leveraged being used in order to do business development, to use the skills to enter new territories. So for example, if we go on the back of that slide, we can see in green, I was just sharing that we have been entering in France primary care. We never have been able last week to do that without putting in place a joint team with a Swedish person of the group. As well in Norway, we have recently bought as we're just saying, the leader in the telehealth platform using to, I would say, the skill of what we are doing already in Sweden. In France, just below in the mental health, we are currently developing a RTMS offering, thanks to what is done in Australia in mental health, imaging center in Denmark. We are opening imaging center because we've got a joint team with the French team, very experienced in managing imaging center. On the right of that slide, we are going to open a maternity ward, first in Santorini Hospital in Sweden. Once again, versus the Stockholm County, the fact that in France, we've got 35 maternity wards has been critical in order to demonstrate our experience on medical excellence, our organization experience in opening a maternity ward, et cetera, et cetera. So once again, what we tried to share on that slide is that being Ramsay Santé in Europe and being a group we are leveraging what we are doing on a global level. So on the next slide to give you a couple of examples of what we have already done to become this orchestrator of the patient pathway, [indiscernible] in the totally fragmented GP landscape, I would say, in Denmark with 2,000 GP. We bought a month ago as the leader, we consider it to be a profitable growth engine with already 32 primary care clinics, 3 to be signed in the coming months. We are over 100,000 listed patients and of course versus a physical hospital, we are going to implement referrals from the primary care center from the GP, if a patient does need to go to a hospital and that does need to do an imaging. We are working on the same territory in order to connect or different businesses. The next example to share with you, we have already on the next slide, if I may, we have already been explaining Norway. Norway, we've got 12 facilities, 12 hospitals. We've got 12 primary care center. And so this new company [indiscernible], that's really a remote platform, 24/7, 345 days a year in which you can have access to doctors, to nurse in order, I would say, when you've got a medical advice, prescription, vaccine, you want to explain what you have, et cetera. So that's really an entry date. And first, being ahead of the stream, it's really very important in order to capture and sorry for that word but you capture some patients at the beginning, to reduce the delay to give accessibility and once again, digital from the primary care physical hospital and development of at-home deliveries and follow-up of the patients as we are doing in Sweden. This is really what we are calling all case rates, the patient pathway for the sake of the patient and for the sake of the profitability of Ramsay Santé. And the last example to share with you on the next slide is Ramsay service for France. So if we can move on the next slide, we have launched already 3 years ago, a digital funder on which you can do your pre-admission, your admission online from your home and already 45% of patients every year are doing everything from home in order to register, to choose their room if we need a taxi when getting out, et cetera, et cetera. We have just launched a brand-new version of Ramsay service in terms of patient experience. We really think this is disruptive. We cannot, for example, you can have the practitioner online booking, you will find the emergency department waiting time, you will have some personalized notification, you've got a symptom checker with over 100,000 questions to become the reference on the French market. And once again, to Ramsay Santé to become the reference if you have an issue in health care for the very first time that's on the right of the slide. We are launching to new source of revenue with home care services last week and in the next month, such as medical home delivery of drugs. We have been partnering with the French starter where you've got medical assistance, you can buy a senior service pack, et cetera. So once again, we are in the world of services. We want to go through the patient before, during and after, and we consider really Ramsay service for France and building up to sharing some best practice in Sweden and vice versa as a key tool to orchestrate the patient pathway. So that's where a couple of examples we wanted to share with you. Now to move to the next slide before the conclusion is no surprise, I think -- we think to you, we are going to keep on investing in a physical asset, once again, respecting the financial figures. So on this slide, you will find 6 examples of that either of investments to expand some clinics, either an addition of 5 robots as a robot acquisition. On the top right of that slide, we have [indiscernible] in the east of Paris, 2 mental health facility, [indiscernible]. We are investing to merge, 2 of them to extend [indiscernible]. In a couple of months, [indiscernible] will encompass 232 beds. It will be the largest mental health facility in France, and we will reduce the cost. So classical but good, I would say, investments in broad field and not to try to recap on the last slide why we are confident in the midterm and long term for Ramsay Santé. So we rethink that on 4 drivers, I would say, being the market, being the patient, being the quality and the efficiency, we've got profitable growth avenue at [indiscernible]. Once again, not underestimating the COVID context. First, if we look at the market, really in the Nordic, we've got a strong underlying organic growth being on pricing and being on volume. So second topic, as we have been sharing, there is because of COVID, because of complexity in the public hospital, mainly in the Nordic country, we've got waiting list that we will capture. The third topic related to France, once again, this 26 new authorization and there will be more, we have just obtained at paving the future of imaging, for example. We've got -- we think with no arrogance of proven track record of M&A we have done in the last year 9 bolt-on acquisition in Sweden, Norway, Denmark, 2, 1 in France, and we have been selling facility as we have been sharing in France, so active management of the portfolio of assets, and we've got our brownfield roadmap. Regarding the patients. New patient segment to enter into primary care in France. The primary care as the GP, interim business in France is a EUR 42 billion business. So we have just opened the very first one. We've got strong ambition. Denmark, it's a brand-new market for us we have just acquired the leader in Norway where we use, I would say, to be up to now only working with private insurance and out of pocket. We are about to attend the public sector by delegation of volumes. And in Sweden, we are still underweight in PHI. We will develop in the PHI business. We will, from a patient standpoint, leverage of digital from a tool, Honestly, what is done in France with France service and with Capio in Sweden is really unique to some extent in Europe. Med is a Finnish player, I feel very good to that, but we are very confident that we still have some advantages in Sweden and France with all this new tool and not to overpay really a brand asset due to the COVID role is very strong. Quality with -- I mean, it's with no arrogance and we relentlessly need to improve, best-in-class in quality, good of first assay to attract patient and doctor. And once again, more and more money will be jeeped towards quality-based funding. And finally, efficiency, yes, I mean, through best practices, comparing the efficiency of our hospital in Europe, we will keep on extracting efficiency there is always through lean management and so of course seems to do better in all this on top of what and to close once again and more than ever, we will leverage the fact to be, I mean, a group, a team with Ramsay Health Care and, for example, to leverage the best practice to provide and the procurement platform in the group. So this is in a snapshot Ramsay Santé. And now I'm handing over to Andy Jones for Ramsay U.K.

Thank you, Pascal. It was great to be with you and your team for the Ramsay Santé AGM last week in Paris. So good afternoon, everybody, or good morning from the U.K. It's my pleasure to be with you and to present how we're getting on in terms of Ramsay U.K. and our thoughts for the future. It feels like a long time since we saw the investor community in London, but it's fantastic that we're able to do this online. I would have loved to have been in Sydney last week until I saw the cricket score and realized that I've been there spared a little bit of a brief from my Australian colleagues. So let me start with the health care market overview. Spending on health as a percentage of GDP has been increasing in most developed countries over recent years, partly driven by the population, but also with a large impact from COVID. So in the U.K., it's been reasonably dramatic with funding as a share of GDP increasing from around 10.2% in 2019 to 12.8% in 2020. And we know that demand for treatment is only likely to keep growing, and this will keep spending into health high, certainly for many years to come. The private acute health care market in the U.K. is now worth GBP 6.8 billion and the independent acute hospital market in which we sit is worth around GBP 5.5 billion. So if we move on to the operating environment, the fundamental dynamics haven't changed. So we are faced with an aging population and an increasing mix of comorbidities, which we know drive the need for health care and hospitalization. Some of the changes that we've seen over recent times is the importance of safe and infection-free environment, which is ever more important to patients. And there still remains a degree of nervousness around entering any form of hospital in the U.K. at the moment, particularly with COVID cases remaining in circulation. The pent-up demand in the NHS system remains very significant. And as we'll come on to the waiting list and demand for health care remains high. We've seen pretty consistent growth in the private aspects of our business in self-pay treatment for patients willing to pay for their own care or as we're starting to see patients realizing that paying for themselves is a way to avoid a long wait for treatment. So there is a consumerization segment, which is going in the U.K. as patients to seek fast tracks as to their treatment. Vaccination has been a success in the U.K. We've been early adopters, and that's been right across the population as people look to protect themselves from the worst aspects of COVID-19, and it's also been important for us in terms of our workforce and I'm delighted that over 98% of our staff have been double vaccinated. And indeed, we're into the next wave of occupational health protections and we're currently rolling out the seasonal flu vaccine and booster vaccination. The third job is continuing across the U.K. at the moment. The big impact as we see for the future is that we're still learning to live with the long-term implications of COVID, so called pandemic COVID hence the impact this has had on the health of the nation and the way that referrals are coming through to hospitals and indeed, the way that patients are choosing not to present with early symptoms of [indiscernible] disease. So the emergence of the recent Omnicom variant, which is now growing quite rapidly in the U.K. shows that the virus hasn't gone away and short-term environment in which we operate is going to be with us for a period of time. Let me move on to NHS funding and what's been called the half 2 plan for the NHS. And as I mentioned earlier, health has been one of the only policy areas that's seen a sustained increase in funding from the government. In the last couple of months alone, 2 significant additional funding packages have been given to the NHS. That's in part to cope with the additional running costs that public hospitals are seeing to meet acute demand but also an intent to help clear the elective backlog, which has unfortunately grown during the pandemic period. Despite the additional money, there is still uncertainty about how and when the money will flow. And there's really a lack of a clear plan from the system on how to tackle the waiting list issues. Ramsay is well positioned. We continue to work in partnership with the NHS as we've done through the pandemic at a local and the central level to offer support capacity and indeed some of our waiting list solutions to help clear the waiting list. So in terms of elective recovery, one of the indirect and unfortunate impacts of COVID has been the growth in waiting list. At the start of the outbreak, the pandemic, the NHS had to really quickly and radically mobilize itself to treat the acute needs of patients presenting with the virus. And as a result, in the U.K., non-COVID-related health care really had to be scaled back in order to release capacity equipment and staff. The net result of this has been a huge increase in the number of people waiting for treatment. The current waiting list figures show that just under 6 million people are currently waiting for treatment. And in addition, it's reported that there are around another 7.5 million patients who are on a hidden waiting list. These are patients that have not yet presented to care that we would have normally expected to during the normal run of health care proceedings. So we believe these are patients that have yet to be referred, but are likely to enter the hospital system at some point in the future. Of particular note and concern is the growth of long waiters, so those waiting for a year or more for treatment. Before the pandemic started, this was just -- only just over 1,000 patients and often that was due to comorbidities. But currently, there are now over 300,000 patients waiting a year or more for treatment, which is a very difficult situation as a healthcare professional to observe. So as you can see, there's a big opportunity for Ramsay in the U.K. to assist in addressing the backlog in demand by working in partnership with the NHS and continuing to offer our private proposition to self-pay and private medically insured patients. So if we move forward to the response to COVID, I'm incredibly proud of the role that Ramsay has played in the last 2 years to support the NHS during the pandemic. This slide shows the extent of the support we've offered to the government and the NHS. And indeed, we delivered specialist equipment, ventilators, PPE to the NHS. We've accelerated our technology offering to patients through the provision of virtual consultations, adopting e-prescribing and enhancing our remote radiology reporting capabilities. This has really positively impacted our role as a valued local healthcare provider, and we're going to continue to support the NHS, both at a local level with our nearby and adjacent NHS hospital trusts. And indeed, as we've done all along in dialogue with NHS England. So addressing our financial performance. In this slide, we compare Q1 of FY '22 to Q1 of FY '19, which is the last full year of financial performance prior to the pandemic. And we can see on the graph, our revenues have grown on that FY '19 at baseline and this is encouraging for the reasons I've already mentioned, in spite of the short-range disruption that we felt across the business where we have seen short-notice cancellations and patients having to isolate during what's been turned in the U.K. as the pandemic, which has really impacted the ability to deliver some elective lists. Marginal conversion has been, as you can see, negatively impact, which is largely due to ongoing COVID-related costs, which include testing for patients coming in for elective surgery, PPE, preventive equipment for staff and patients from the additional cleaning protocols in our hospitals and to cover staff absence, which has unfortunately been pretty significant since the start of the pandemic in the summer. And we estimate currently that this is costing us GBP 3 million a month. In Q1, we also include some one-off costs of just under GBP 3 million for the Spire Healthcare transaction, which, as you all know, didn't proceed due to the shareholder vote at the end of July. So the short-term evolution of the business is really -- and financial performance is really dependent on what happens with the pandemic over the coming months. But we remain optimistic that the medium and indeed long-term outlook remains positive. As we get demand in the U.K. is at an all-time high, we've got a strong pipeline of patients from every payer group, and we continue to see growth in our private business through demand from insurers and self-pay patients. And because of the skills that we picked up during the pandemic, we're treating a higher complexity group of patients in our U.K. hospitals. So addressing organic growth, we continue to develop the business. And despite the pandemic, we've continued to invest in our facilities to ensure that we're offering the latest technology and the best quality of care to all our patients as well as our rolling upgrade program. We've invested heavily in -- as Pascal said, in diagnostic imaging to ensure that we meet demand much earlier in the pathway. And in addition, we've invested over GBP 20 million in digital capabilities as we develop our offering to patients. In terms of strategic expansion, one of Ramsay's U.K. ambitions was to expand our day case offering and create a hub-and-spoke model around our existing acute hospitals and expand that ability to offer day surgery in what is the highest growing hospital segment that we have. In 2020, during the pandemic, we opened 2 new day case facilities, one in [indiscernible] and the other near Birmingham in [indiscernible] side. And in October this year, we opened our third unit in Chorley Preston. And of course, all of these have utilized the capabilities we have in the group in terms of designing, commissioning and fitting out hospitals. They offer state-of-the-art facilities to the local communities in which these hospitals are based and enhance our operating capability, particularly set for the future to treat an increasing number of patients. Around the U.K.'s diagnostics capacity includes ambitions to ensure that our capability is there to drive and support growth with referrals from general practitioners, important areas for us or diagnostic pathology, imaging and endoscopy, where we're a major provider of services. And this is all part of as Craig and the team mentioned in the briefing on Friday, the view that we're taking on the whole clinical pathway and the longitudinal aspects of care. Quick access to diagnostics leads to early diagnosis, timely and appropriate intervention and ultimately, better outcomes for patients, which is why we're so proud to run our hospitals. Over the last 2 years, we've made significant investments in hospital and mobile capabilities, new models and state of the art modalities and facilities. And much of this diagnostic investment has gone into cross-sectional imaging with MRI and CT scanners. 94% of our hospitals are JAG accredited for endoscopy, which is the nationally recognized quality emblem for endoscopy. And digitization underpins all that we do in diagnostics, whether it's processing of tests, imaging, the storage of results or sharing and reporting across the multidisciplinary team. We've invested in our diagnostic workforce, which has been recognized for some years as a critical sector for skill shortages. These investments have already resulted in increases in capacity. We've seen improved efficiency in this service line, definitely better access for GPs and their patients and improved visibility on outcomes. We believe that this sets us up for the future to enable both timing access, reduce waiting time, which is going to be important in the U.K. going forward and position ourselves to address the diagnostic backlogs through some of the tenders that are being run in the U.K. The development of cancer services has been a key strategic development in the year, and I'll talk more about our gold standard approaches later in the presentation. We continue to work with insurers in respect of propositions, and we're proud to be one of the only Bupa center of breast excellence pathways outside of London. And we're looking to build on these concepts and accreditations in some of our other larger facilities around the U.K. We've invested in the latest modalities such as 3D mammography, surgical equipment and chemotherapy treatment suites as part of this offer to be able to offer a one-stop and service for patients. In terms of integrated patient center care, this has certainly been a big area of focus and an absolutely massive project to deliver. But I'm pleased to announce that last month in the U.K., we fully deployed our electronic patient record system across all of our acute hospital sites. So they're all live and running on a single electronic system. It's a huge achievement for the organization and a project of this magnitude required very significant project and operating management given us so much learning and opportunity in how to scale projects, deliver multisite integration and learnings into the future as we work with colleagues around the globe on digitization type projects. The ePR offers a foundation which we can build on and deliver future digital platforms. It will improve access for patients and our consultant partners, improving the efficiency in the way that we operate, taking out many steps and bits of paper out of the pathway. We're pleased that it's already improving the experience for our clinicians, and in particular, our consultant partners. We believe that this is really going to help differentiate us from our competitors really competing by being the main private provider that can demonstrate that they're really open for business. Moving on to evolve. As part of our growth strategy, we're continuing to look for ways to make our operations better, more innovative and more efficient. We've developed a framework to make sure that we can continually challenge ourselves to grow efficiently and effectively. And within this framework, we can harness what we do really well and build on these practices as we consistently seek to improve the delivery of outstanding care. We're already applying the evolve framework across a number of initiatives. And we're using this methodology to review our pathways, which is all part of Ramsay 2030 Strategy so that care is delivered in the safest, most effective and efficient way. It's helping us to smooth the care process, help with teams in the way that they deliver care. And we're seeing benefits in terms of patient delivery and the customer response that we get to the pathway that we're offering. As part of efficiency, we've had a pretty heavy focus in the U.K. on developing our procurement strategy to develop a best-in-class procurement and supply chain service. And really, this has been part of the group-wide move to category management for the spend that we have in all our hospitals. And again, that's highly aligned to the clinical pathway and what we called longitudinal care. Our procurement function and working with the global teams is continuing to contribute to the development of longer-term profitability ensuring that growth in all service areas is sustainable in terms of profitability and making sure we're using the right products to offer the right patient care. Our procurement team is now managing all third-party spend to ensure that, that quality and service is there. We've also, as you'd expect, during the pandemic been working pretty hard to ensure that all of our suppliers have got the right sustainability requirements as part of the Ramsay CARES initiative, but also to think from a business point of view about managing supply chain risk. So if we think about the digital journey, we've definitely been on a pretty significant evolution in this space over the last few years. It started with the real need and desire to modernize what we have today, removing some of the barriers that we have in operating across different hospitals with different systems and some of the challenges that those legacy provides and really looking to go on a journey to provide our colleagues and clinicians with the tools to support their work. So to give you some of those highlights, we fully developed SAP as our finance and procurement platform in 2020, which is a great job with our finance team working in conjunction with the Australian colleagues to ensure that we get to the same enterprise configuration. I've already touched on electronic patient record, but I'm always happy to mention it again, if anybody wants to ask any questions. And we're also now in process with adopting a new HR information system called Workday, which will become our people platform, and we're using this to evaluate global opportunities. So in the first half of 2022, we'll introduce the core Workday product with core HR and payroll solutions. And this is ultimately going to provide our people and people leaders with a modern solution to manage all of our talent related activities and give us an organizational view and be able to increasingly informate -- get hold of information from single enterprise sources across the main operating spine of the business. Alongside this, we're now moving to take up commodity technology services in the cloud rather than to build or install things ourselves, and you can see some of the list of things on the slide. And we believe as we do with our global colleagues that these are all enablers which form part of our journey to cement our digital future, both in terms of how patients access care, how we deliver and run the business. And then with this enterprise view on the world, how we're going to be able to increasingly align and use health care data to improve outcomes. As I mentioned earlier in the presentation, the gold standards, and we've got a couple of examples to showcase the work that we've been doing. So the first of which is a gold standard clinical care in orthopedics. This is -- gold standard is 1 of the organizational foundations that we've been increasingly using as part of the Ramsay long-term strategy with the aim to deliver best-in-class care with exemplary standards, really thinking about the clinical and quality measures that we're looking to achieve for our patients. So orthopedics, it's nearly half of the business in the U.K. And I think one of our largest service lines globally is a key therapeutic priority for us. In the U.K., we're recognized as one of the leading providers in orthopedics, and in particular, for the quality data that we provide to the national joint registry, which is a nationally run single version of the truth, if you like, in all of the orthopedic procedures and implant register that we use in the U.K. We've also successfully piloted single-day hip and knee arthroplasty in 5 of our hospitals. And that project is a fantastic example, emanating from best practice that we saw in Paris and Sweden in terms of how you run the pathway. So we were really able to accelerate the implementation of that by taking the pathways that we learned from our European colleagues. So we've undertaken to do a lot of work on understanding where we have variations in these clinical pathways, the complexity and outcomes and it's allowed us to look at a lot of medical and clinical measures to look -- to see how we can standardize the pathway and improve the outcomes. And we know that things like single day hip and knee surgery in the U.K. has been very popular with patients during COVID because they've had the right pre-care, the right after care put in place, and the hospital experience has been very smooth. We further developed our concept of centers of excellence to design what [indiscernible] looks like. And again, that's really centered on patient experience, which in time will allow us to grow and improve our services and a number of our hospitals have been able to gain tertiary referrals from further away because of their standing. And again, this has initially been in the orthopedic area. We're obviously developing our marketing strategies with our doctors in line with this plan, which is obviously essential to growth and development of these services initiatives. If we turn to cancer. This is another key therapeutic area. It's much smaller in the U.K., but we believe that we can learn from our capabilities in places like Australia and France, where we have much greater service provision. And what's happened in the U.K. under COVID is that we've been asked to provide a lot more in terms of cancer services. So we've had to adopt the challenges of delivering these services for patients. Unfortunately, one of the trends that we've seen in the U.K. is far fewer patients coming forward to be referred urgently, but we suspect that this will transition through the recovery from the pandemic and the need for these treatments will become very significant as part of the recovery. It's widely accepted that early diagnosis, intervention and personalized treatment will lead to better outcomes and efficiency. And we've taken a very similar approach to that of orthopedics, undertaking baseline analysis of these services in terms of the pathway, looking for areas of good practice as well as areas for improvement. And our aim has been to support the clinicians and to develop the concierge for patients going through these pathways and looking for supporting technologies that can augment the -- this journey. This has been so important in the U.K. with the Paterson inquiry, which has highlighted the greater need for visibility of clinical practices and clinical data. We've always held in Ramsay that this is a function of leadership and good governance. But over the last few years, we've been really capturing data, the work of the multidisciplinary team adopting electronic platforms, as I've mentioned, and making sure that we share this information with all of the clinicians involved in the patient journey. So in terms of industry-leading talent, we've always known it, Ramsay, people at the heart of our success, and that's why we have developed and embedded our people plan working with the global talent proposition that you heard about on Friday and really look to strengthen leadership in this area of the business to support the recruitment and retention of staff in all of our facilities. As Pascal mentioned, workforce shortages remain a challenge and health care sector in the U.K. is not alone in this. We've had to develop a strong internal recruitment team to make sure that we're able to attract top talent and particularly clinicians to the business. We have seen challenges in retention. And this, we believe, is largely due to the COVID pandemic. We bolstered our pay and reward procedures, and we've been deliberately targeting the areas of scarcity to ensure that we've got the right clinical base in the U.K. to support the waiting list recovery plan when it really starts to roll. To deliver all of this, we've got to recognize that disciplined transformation is part of running a business, very important in terms of the implementation of strategy, but particularly in terms of the deployment of very significant IT projects. So we've built an embedded a program management office that allows us to track the progress of all our strategies, all of our initiatives and projects right through from concept to deployment and at the other end in terms of the outcomes that each project has delivered. And as you can see from the slide, it's a very detailed process. And really, I would say this has been a success for how we managed to get through SAP, ePR and next year, Workday as major multisite implementations. I've already referred to the work that we're doing in gold standards in cancer and orthopedics. And again, this work is led by our strategic working groups, and in conjunction with the operational evolve groups to make sure that we get the implementations and the efficiencies, and we've got the right measures in place to see how these initiatives impact the business. All of these programs report up through the executive team and what is increasingly now being held at the global transformation office and right up to the Board as we adopt the strategy that was laid out on Friday. Getting close towards the end, and I just wanted to touch on a very key initiative for all of us. I know there's a lot of passion in the business for Ramsay CARES and certainly in the U.K., we take our commitment to sustainability very seriously. You've already heard about the 3 pillars that I just wanted to bring to life, 3 examples that we have in the U.K. So in the past year, we've trained over 77 mental health first aiders, and this program continues as part of our commitment to people. In terms of environment, we've continued with our low energy light replacement program across all of our hospitals. And I'm proud to say 100% of our electricity that we use is now entirely from renewable sources. We've also introduced initiatives around single-use plastics. And this year alone, we've already swapped out 1.5 million plastic items to a recyclable alternative through the work that I mentioned in our supply chain. We continue to adopt the sustainable procurement approach, partnering with suppliers that share our concerns and ethos to ensure that we've got sustainability in our -- the manufacturing base that supports our hospitals. So I'm pleased to conclude. It's been a very proud time for us in the U.K. There have been a number of challenges. But as you can see, we think we're really operationally set for the future, and there's been some pretty major strategic transformations in the business over the last few years, which was 1 of the objectives through COVID was to successfully support the NHS during a time of difficulty, but make sure that Ramsay U.K. was well positioned on the other side of the recovery to get back to the high elective volumes that we're used to seeing in our hospitals. So I'll end my comments there, and I think we're going to open up the call to all of the participants that Kelly opened earlier so that we can take your questions. Thank you very much, everybody, for your time.

Okay. Thanks, Andy. And thanks, Pascal. So happy to take questions.

We have the first question from the audience coming from Andrew Goodsall at MST Marquee.

Okay, terrific. I just want to, I guess, start with a generic question, just asking your thoughts around where the baseload sort of COVID will be? And I guess what I'm thinking here is to what extent will the public be able to deal with COVID into the future, assuming pandemic and to what extent do you think the private sector will still be asked to play a role in coping in each of the jurisdictions?

Well, I think it's a very generalized answer. It will be different in different markets, obviously. But it's going to put extra pressure on the public sector and we're -- public sector provision has been under stress and under pressure pre-COVID, it will only exacerbate that. So -- and as I've said many times, I think, we and the private sector overall, have an increasing role going forward where there are taxpayer-funded systems and then providing solutions for them. And I think COVID just enhances that opportunity.

Just moving on. Obviously, we've had a chance to look at your first quarter, and we understand, obviously, there's a seasonal element to that. But just if you could give us any color on sort of direction in terms of costs since that time and whether things have been on improve? I'm not trying to push for a trading update of any nature, but just a more general comment on direction of travel?

Okay. I might let Martyn pick that 1 up.

Yes. Yes. No, add, Andrew. So I think as we said on Friday, in Australia, the costs, probably varies, there's no reason to suspect they are not around those that sort of GBP 3 million to GBP 4 million a month that we were saying. You heard Andy talk about GBP 3 million in the U.K., and they're very lumpy in France. So we're still suffering from a lot of disruptions in each of our markets, whether it be the pingdemic type activities and cancellations that we've had in the U.K., whether it be the fifth wave in France or still the border. The border has only just opened with Queensland today. And so that's been causing us disruptions. And so this quarter is still going to be very, very patchy and lumpy, I'd say.

And any sort of visibility on when that might turn over by jurisdiction, is it stabilizing or systems sort of getting used to understanding just the nature or the disruptions becoming normal?

I think if we had a crystal ball, it will be fantastic who would have predicted Omicron or fifth wave in France [indiscernible] 6 months ago. So I'd be loath to try, I mean you probably have as good an idea as we would in terms of what the situation is going to be like.

And the final one, just for Andy, NHS September quarter just didn't seem to be able to sort of get itself into gear and I think referrals to the private sector down about 4%. Just wondering whether that's -- whether that sort of engine starting to sort of rev up a bit better and will move along just whether you're seeing the channel of referrals improving?

Yes. Thanks, Andrew. So the -- what we've seen in the U.K. is whenever you get a spike in the wave of COVID coming through to the NHS, then everything else seems to slow down because the public system has to focus on the acute needs of patients. As each wave is abated then referrals and acceleration seems to commence again, but there's only been a very short wave from what we saw in the summer with rise in cases to where we are now.

I think -- well, just to add to that, in terms of referrals, I think we saw them coming back reasonably strongly, but significant cancellations. We did see the cancellations start to abate, but it will be interesting to see how they go off the back of Omicron.

We have the next question from David Low at JPMorgan.

Can we start with imaging. We had a lot in both presentations about plants and imaging. And I saw in the French presentation that it's a 4% of revenue, I think, from memory and the number of authorizations has gone up quite significantly from 88 to 100 and something. Just where do you think imaging as a revenue source is likely to go across the 2 across Europe and the U.K.? And how much of a portion of earnings do you see this becoming in the medium term?

I don't think it will be the major pipe. I'll let both Pascal and Andy respond because the markets are different. So maybe Pascal.

Yes. So thanks for your question. As of today, you're right, imaging represents 4% of the Ramsay Santé revenue but a better proportion of the EBIT. Long story short, so we plan to increase roughly by 25%, 30% in a couple of years, I would say, once all this imaging platform authorization will be developed. On top of what we consider roughly that there is more or less the same amount of money coming from referrals, from imaging to operating theaters. So this is, I would say, for Ramsay Santé not taking into account the development we are doing in Denmark.

Andy?

Thanks, Dave. There's kind of 2 reasons to get into imaging in the U.K. The first is a trading business in its own right. The margins are lower, but the reason why we've embarked on this is to build out the front door because health care is changing. In the past and particularly in the U.K. GPs would refer patients with general symptoms to be assessed by a consultant. As protocols have developed, diagnostics has become much more ingrained in the pathway, and there's very set protocols for what patients need depending on the symptom that they have. So as soon as you get the referral, we're increasingly being able to work out with our electronic systems, which tests and treatments for patients are going to need and some of the consultants are now offering the imaging or the diagnostics upfront before they see the patient so you can get to a diagnostic -- diagnosis quicker. So that's driver one. And then the second driver that we've seen is that by having cross-sectional imaging in the hospitals and a greater proportion of diagnostics. And that also includes endoscopy, which is a very important modality. You then get downstream impacts on the surgery that you're offering. So that's an upside from having a diagnostic platform as a front door, if you like.

Great. If I could ask another couple of questions. Just Pascal again, we were aware of a funding in place to cover COVID cost until the end of the calendar year. What's the expectation for 2022?

Yes. Thanks. So 2 comments on this. First, if I stick on France regarding the French revenue guarantee scheme. It will end in a couple of days, end of December. Now the French Minister of Health said exactly 4 days ago, that would the COVID on, would the condition keep worsening we would consider extending this revenue guarantee scheme entering into 2022. And as to the additional cost, we are currently facing due to the fact that as of yesterday evening, we were close to 200 COVID patients in critical care in France. We will be reimbursed for this additional cost as well would it occur in Sweden, crossed -- finger crossed -- to now there is no way, but unfortunately, we can expect, we plan to be reimbursed for all the costs we will be faced would it occur in Sweden.

So what I heard is that you would expect this funding to continue on next year, it's just not yet formal?

No, no, no. What I was -- no, no, we -- what I was trying to explain is, It will end at end of December, but the Minister of Health, the French government opened the door, I would say, couple of days ago to say would the COVID keep on for some time, we would consider, the French government would consider an expansion of the French revenue guarantee. So nothing decided yet.

And I was trying to get you to give me a view as to whether you thought it was likely, but we can move on. All right. The quality payments, Pascal, I mean, you gave us some numbers there, and I think we've heard about the quality payments in the past and the opportunity. Could I get you to give a little bit more detail as to what level of payments the business saw in those previous structures? And can we use that as a guide, perhaps as a percentage as to what we should expect in future?

Well, let's summarize. I would say that next year versus the amount of money we plan to be given, I would say, this year up to end of December, we will increase, we should increase, I would say, our quality-based payment for a double-digit figure in the range of EUR 10 million to EUR 15 million for France.

Okay. And so I assume that, that given the pool is getting bigger in the future, you would expect that to also expand at a similar rate?

It's a fair assumption. Would the pool keeps on being bigger and we are really advocating for that, we were expecting, I would say, this quality figure to keep on increasing. Once again, I would say we recover a larger amount that of market share for the wallet of France.

Okay. And then my last one, and Craig, you and I spoke about this on Friday. But Pascal, there's been a little bit of disruption between the relationship between Australia and France in recent times. I mean are there any implications for the way Ramsay is treated by the French system?

No. So short answer is no. I have sat in close coordination with the ambassador and the Minister of Economy. And by the way, Craig's too, and the short answer is no. And as you may have seen, I would say, our 2 countries have certainly common interest yesterday from Nouvelle-Calédonie, New Caledonia to stay a French territory, what will be the case. So I would say it is over and no impact at all for our business.

We have the next question from Chris Cooper at Goldman Sachs.

Great. Pascal, if you don't mind, I'll start with you. You mentioned in your comments there that staffing has been the limiting factor. I think the term used is hampering potential volumes. Could you just give us some estimation of how much volume is currently not being serviced because of a lack of availability of staffing? And then by extension of those currently not being serviced, what proportion do you expect to ultimately return?

Sorry, I'm going to try to rephrase because I could not hear you very well. You are asking what is the impact of the staff shortage on volume. Am I right?

Correct. Yes.

Okay? Well, it's difficult to give a precise figure, but let's try to say that if we were to miss, let's say, 8% of the staff the impact of the volume will be hard, so net-net 4%. This is what we consider. But beyond the fact that, unfortunately, being in the fifth wave of COVID, the French government last week, in many of the regional health agency has triggered what is called the white plan. So asking us to begin to stop some elective surgery. So let's say, to share with you beyond this fifth wave with a specific consequences. So staff shortage would have its impact. That being said, versus where we were 6 weeks ago. we are facing less disruption, I would say, beyond, of course, the COVID. But to be honest to you, we still are facing some complexity would we, if we were to be able to reopen our 800 operating theaters in fall. So a couple of percent, long story short, would be the answer...

And sorry just to add to that. Most of the work that would be deferred would be elective and you would expect a good proportion of that to come back?

Yes. Because maybe just to add something, if I may, that even if you take the first wave of the COVID that was totally stark and incredibly dramatic as the first. And so first, if I stay on France, beyond the COVID patient, our revenue has stayed at a bit more than half because being the leader in France, in specialties such as cardiac, [indiscernible], dialysis, obstetric by definition, unfortunately, this dramatic, I would say, topics, in spite of the COVID, of course, we are running full speed, if you allow me to say that.

Okay. And 1 for Andy. You mentioned the pingdemic was a primary challenge in the first quarter in terms of matching revenue to cost a lot of short-term cancellations. We note recent media speculation over the weekend suggesting that those sort of measures are going to be reenacted in the U.K. Are you better positioned at this point to withstand those challenges going forward? Or should we expect a similar degree of disruption from the second quarter onwards as well?

Yes, thanks. So the reality is that the disruption under the kind of the term pingdemic really started during the summer. And it's never really gone away through our autumn period over the last few months. We've been seeing disruption north of 10% of patients each month in terms of cancellation, and if you think about the nature of COVID and any government rules that are put in place, you only need for a member of staff, a member of staff -- children with their school being impacted, the patient, anesthetist or the doctor, any 1 of those things, if any of those get impacted, then you've got disruption to part of your list or indeed the whole list if it's 1 of the consultants. So unfortunately, the pingdemic has been quite disruptive in our ability to drive volumes over the last 4 or 5 months. What we've seen is when the government announces rules, it changes consumer behavior, and everybody becomes a lot more cautious. So I think it suggests that we're in for some further short-run disruption into the winter as we work out the severity of Omicron and the government tries to push booster vaccines.

And I'll just add to that as well. We've taken a decision in principle that we wouldn't manage staff levels lining up with activity as much as we would pre-COVID. Taking a view that we want to maintain the staff level. And so we're carrying some unproductive hours, if you like. And so we will continue to do that through this. And 1 because it puts us in a -- one, it's the culture of the organization; two, it puts us in a good position in terms of the workforce and the pressure on workforce that we're seeing as supporting them. So we will carry some inefficiency as the cancellation is increasing.

And final one for Andy. You showed us some very striking data points and charts around the backlog and the latent demand there in the industry collectively. I believe you didn't specifically address the NHS backlog tender that had been proposed through last year and appears to have been progressing. What's the latest on that tender, please?

Yes. Thanks. We're full participants in that. Maybe I'll let -- Pete, do you want to come in and just update on the different initiatives we got running in terms of conversations?

Yes. Thanks, Andy, and hello, everybody. There are quite a few initiatives going on in the business at the moment with regards to various tenders. So we're a full participant in the framework as Andy mentioned. We've also applied and been successful to be part of the community diagnostics home tender that went out recently, and that kind of underpins our investment in our diagnostics capabilities as a business. There is an identified shortfall in NHS capacity in particular. So we're happy to be part of that tender process and to support. I think it's fair to say, though, that, again to Andy's point previously that some of the recovery in elective backlog has been a bit lumpy and the COVID developments have not helped with that. But again, I think we're well placed to Craig's point with our starting numbers in particular to respond as the Omicron variant hopefully abates. And we get into better time probably in H2.

We have the next question from Steve Wheen at Jarden Group.

This is a question for Pascal. Pascal, just with regards to the revenue guarantee that in the event it doesn't get extended, what does your business look like for the back half of fiscal '22 when you're standing on your own 2 feet? Does that -- is it better for you to not have that guarantee because that allows the profitability of what you get paid and [indiscernible] you're doing at that point to shine through? Or just curious as to what the change would be to go from 1 system to sort of the way it always used to be?

I think -- well, thanks for your question. Well, it's very complex because on 1 side, if you want the system, let's call the revenue guarantee versus the activity if it was not. It depends on the impact of the COVID. It depends on our ability at the same time while stopping elective surgery to stop some variable, let's say, more direct costs attached to the stop of elective surgery. So you've got 2, I don't know what's that in English, 2 variables, 2 ifs and why. So there is no easy answer to that from a theoretical standpoint, long story short. So either I would say there is some COVID keeping on. And in such a case, there could be a revenue guarantee or there is not, and it's a question of ramp-up. Now that being said, if I may, regarding the fact that what's taking care with the COVID, I don't want to bet, I would say, on such a topic, as you can imagine. It's so dramatic including for the team. We -- it's -- we had some Ramsay Santé people dying from COVID. We have tens of the team members in resuscitation beds. As you can imagine, I don't want to bet on this type of topic. We will play more than a role versus the French, Swedish state to take COVID patients, would it keep on happening. And I'm convinced that in such a case, we will obtain a fair amount of compensation. But if COVID were to stop in a couple of days, let's put it that way. We will do our best of course to ensure the ramp-up in spite of the labor tension, but there is a lot of activity postponed and so forth. So yes, complex to have the current service as the direct cost as a percentage of the stop of the elective surgery to come back to you.

I'll just add to that, not that [indiscernible] is complex. But regardless of when the revenue guarantee expires, whether it's the end of December or it's the end of March or the end of June, there will be a transition period, which will create uncertainty. Because the revenue guarantee is in there to deal with what the government believes is going to be pressure -- potential pressure on the system as a whole and wanting to maintain the capacity and capability in the system. So whenever that changes, you're going to get into, as Pascal was alluding to, what is the profile of the ramp up. And so then what are the cost issues around that. So regardless of the timing of it, there's going to be a period of uncertainty in that transition, I would think.

Yes. Okay. Great. Second question was just -- sorry, again, Pascal. My understanding was during COVID you were getting an additional supplement to cover for things like COVID-related costs, screening costs, maybe additional protocols around sterilization. Is that something that will continue on as a separate subsidy for the industry?

Yes. So short answer is, yes, the COVID patient we are taking care of now, we will be reimbursed for all additional, I would say, a marginal costs, being the ventilator, being the [indiscernible] in the operating room. And so first, for example, in Norway, where we are enjoying, I would say, a huge organic growth and double-digit EBITDA margin. We are reimbursed for all the PCR tests we are doing in Norway. So yes, on that. If COVID is keeping on, I'm totally convinced that being in France, being in Sweden, being in Norway for the PCR, we will be given back some money in order to cover all these costs.

Yes. And then last 1 and picking up on what David Low mentioned before, just with regards to the quality payments. Is that something that you could express in as a percentage. So you clearly as a base getting 20% or 0.2 of a percent in terms of indexation. Can you express the quality payments as to what that would take the tariff up to in '22 versus '21?

Well, honestly, the best answer we can give at this stage if the French government is moving to EUR 700 million, EUR 750 million. The unknown as of today is this all amount how -- what will be the rules of allocation, the French public hospital can advocate as a percentage of revenue, which net-net is nonsense as if it were a tariff, we're advocating on quality-based outcomes. So long story short, we know there will be a huge increase next year. We don't know yet the allocation rules. But the best answer estimate at this stage is that it will represent EUR 10 million to EUR 50 million of additional brands and net-net EBITDA because it comes I would say, with roughly low cost versus this.

We have the next question from David Bailey at Macquarie.

Pascal, just another 1 for you. Thinking about volume trends in France. Just wanted to understand what volume growth looked like pre-COVID? As we look further past COVID past potential staffing shortages, what could a backlog mean for volume growth? And what could volume growth look like in fiscal '23 and '24?

Yes, it's -- thanks for your question. It's a difficult one, I would say, because we are [indiscernible] that according to the territory, according to cultural behaviors of [indiscernible] doctors in France, whatever, a concept of backlog, are we going to find 100% of the backlog, for example, in cataract and orthopedic to be postponed, let's see. It's difficult. And for example, we tend to think that it could be different between Denmark, Sweden and France. Now that being said, versus your question, I would say, in France, beyond the COVID, in average between medicine and surgery et cetera, and dialysis, we are in the range maybe of 1.5% to 2% volume growth. Now there is a shift to outpatient volumes versus inpatient was first the impact of changing to our operating model versus the individual rules. For example, in emergency department in which for the last 10 years the growth in the French market was 3% per year. Ramsay Santé, we had enjoyed a 6% growth figure, mainly because whereas on the French market, the average waiting time in an ED is 2 hours, 50 minutes. It's only 17 minutes in Ramsay Santé. We are a bit more cautious on the 6% because we really think that due to cover some French citizens that used to go to French ED department, so ED services in order to have very rapid appointment versus GP for small issue "maybe" they will avoid going back to the hospital because they are recovering, survivors, they scared or whatever. So let's keep on this, I would say, a [indiscernible], 1.5%, 2%. Obstetrics in France to be transparent, the number of births has been a bit declining in last year. And coming back to what we were saying during the presentation, we expect in the Nordic a nicer volume growth versus 1.5% to 2% will be above this figure for Sweden and Norway, Denmark, maybe between the 2, I would say.

Okay. Understood. And then just, Andy, lots of commentary around backlogs in the U.K. funding might come through? What's the actual catalyst for some of this funding to come into the system to help deal with the backlog? It feels like there's been stops and starts couple of years now. What's the actual catalyst for some of this money to come in the system and then the backlog to start to be addressed?

Yes. I think ultimately, it comes down to a political drive. There has to be a political imperative to reset some waiting targets and performance targets in the system. So that waiting lists get measured and actively monitored. That would be the first thing, I think, I would say. We've been in conversations with NHS England and government, and there is a desire to construct a plan to do the heavy lifting to clear the waiting list. I think it's unfortunately being delayed due to Omicron. And perhaps it was delayed in the summer due to other factors. So you're right, it's been -- it has felt as though it's slightly slow in coming. The other thing...

Sorry, Andy, I'll just kind of cross that for a second. I think 1 of the things and correct me if I get this incorrectly, Andy. There's a lot of politics between treasury and health. And so just throwing money at the system, there was a concern that money would just be absorbed and the increase in activity wouldn't flow through. And so if they lose the benefit of what was attempted to be waiting list reduction. So I think that is still a live issue. And hence, Andy's comments about getting some measures in place to be able to make sure that the money is well spent.

Yes. Thanks, Craig. The public hospitals have been on block contracts, and they're coming off those block contracts at the end of March, and we're going back to payment by results once again. And again, that could be a driver underneath to get things moving once again.

We have the next question from Saul Hadassin at Barrenjoey Capital.

Maybe 1 for Andy. Andy, historically, Ramsay U.K. has spoken about building out the specialties that are serviced by the business and moving up the acuity channel and rolling out. I noticed you mentioned cancer care, but I'm just wondering, with COVID is that delayed? Do you think any broadening of that service offering, you investing in ICUs, CCU and sort of cardiac and neuro, you've talked to the outlook for those services?

Yes. So within the context of one, you got to remember these hospitals are much smaller than hospitals you'd see in Ramsay in, say, Australia or France or Saint Göran in Sweden. But actually, the reverse has happened. We've gone up the acuity spectrum as part of COVID because we hosted a number of new services with the NHS and offered the greater range of treatments that we would have normally provide. It hasn't and it won't go as far as delivering intensive care units because the facilities aren't big enough, but we're doing higher acuity surgery across the spectrum. So we're doing a lot more breast care pathway surgery, spinal surgery, in particular, some of the heavier orthopedics and some of the general cancer specialists. So that's been a positive from our perspective, treating patients with greater need. And the main driver for that was during COVID some urgent elective cancer surgery couldn't take place in the public hospitals. So it came across to some of our hospitals. And the good news from our perspective is that those commissions enjoyed working in Ramsay facilities and by and large, have stayed. So we've been a net beneficiary of that, which is why it's catalyzed investment in diagnostics and surgical kit to make sure that we can maintain that pathway.

There's one question from Sean Laaman from Morgan Stanley. I think probably for both Pascal Andy. Do you think there is a structural element to the nurse shortages quantifying this, what is the invitation for margins in '22 and '23?

Pascal?

Sorry, your first question, is there a structural element in nurse shortages, I'm right? This is the question.

Yes.

I think, yes, there is a bit of that due to undoubtedly beyond the entire nurse decrease. I don't know, sorry if you say vocation purpose, if it is the right word in English. So the answer to that would be the fact that the number of the new nurses entering the school will be very rapidly increased by the various governments. That being said, it will take a while in other, I would say, for these additional nurses to be trained. So yes, there could be a bit of a structural element. Now that being said, we are working with tens of thousands of nurses [indiscernible] to reduce the time they are spending on nonfacing patient added value time. So we have already engaged in order to simplify all the administrative tasks which represents maybe 35% to 30% of the time by keeping on digitalizing the pathway. We are doing a lot of things on that. And very pleased to give you a couple of examples in order, it's a same amount, I would say, or FTE to be able to add more time devoted to the patient.

Andy?

Yes. Very similar in the U.K., there has been a long-standing mismatch between the training of clinical colleagues and the demand as patient growth continues. It's got worse during COVID for the reason that Pascal has just aligned in terms of staff fatigue, and unfortunately, some clinicians have left the workforce to go and work in other areas. So turnover and recruitment are obviously key factors. Brexit probably hasn't helped. 7% of our workforce was European prior to Brexit, and obviously, the supply and movement of that labor has become much more heavily restricted. So that hasn't helped the offer in the U.K. In terms of your question about impacts on margin, it's probably couple of percentage points on staff cost as a percentage of revenue because if you net all this out, you're seeing labor wage inflation in pretty much every sector in the U.K.

Any other reason for question, Kelly?

No. Great. Thanks, Craig. I think I'll hand it back to you.

Okay. Well, thanks, everyone, for joining, not only today but also Friday. So hopefully, you've been able to get another level of insight into the business and particularly the evolution of the strategy and what the regions are doing to execute on that. And we've also been able to let you have more exposure to some of the senior management team. So I hope you're seeing that the quality of executives we have in the group is very strong. And on that, I'd like to thank my team. It's been a hectic few days, as you can imagine. And so the work that's gone in to deliver the investor briefings is much appreciated. So thank you all. Have a great festive season, and I look forward to talking to you in the new year.