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

I think it's 10:30. So good morning, everybody, and as that famous song said, welcome back. It's been 2 years, we've missed you all. For those that don't know me, I'm Michael Siddle, and I'm the Chairman of Ramsay Health Care. And so on behalf of the Board, I want to extend you a warm welcome to the annual meeting. It's great to see some old faces and some new faces. And I just want to recognize Ed [ Walgien ] who got here at 5:45 this morning. He wasn't going to miss it for anything. I think you woke up early didn't you, Ed? Anyway, great to see you and great to see some of the others. I also want to acknowledge our Global ExCo group who are sitting here in the front row. Some of them have come from France and Malaysia, U.K. They're here for our Annual Strategy Day. So if you see them outside later, feel free to talk to them and ask them difficult questions, if you like. It would be good for them. So we're delighted to welcome everyone back. The last 2 meetings, of course, had to be held virtually due to the pandemic. And we also welcome those of you who tuned into our live webcast, our first live webcast this year. So I believe we've got a quorum present, and I'll declare the meeting open. I want to start by acknowledging the traditional owners of land in which we meet here today, which is the Gadigal people of the Eora Nation, of which there are 29 tribes I've been told. And I pay my respects to their elders past and present. But I'd also, like, to acknowledge all our First Nation staff members who contribute so much to our company, and we're happy to have them onboard. Let me start by introducing the Board. Firstly, Craig McNally, doesn't need a lot of introduction, 34 years. Is it 34 or more now? More than 34 years on the Board and what he doesn't know about health care isn't worth knowing. And then on my left, down here is Claudia Süssmuth Dyckerhoff, she always says you don't get the pronunciation right. Claudia has had a terrible year. She's our International Director, and of course, she hasn't been able to fly. And she's been in about three different quarantines between Shanghai and Switzerland and Hong Kong. So it's been very difficult for her. And so she had a lot of all-night meetings. And to the best of my knowledge, she hasn't fallen asleep in any of them. Well, we couldn't see anyway. So Claudia, welcome, and great to have you in person. Next to her is David Thodey, our Lead Independent Director, doesn't need much introduction. He's the Chair of the Nomination and Governance Committee, a member of the Audit Committee and the People Remuneration Committee and he's celebrating I think 5 years on the Board, is it David? And he wore a tie. He normally doesn't wear a tie, but he has worn a tie especially for you. Next is Alison Deans, standing for reelection today. Good luck, and she'll address them the meeting later on. She's the Chair of the People and Rem Committee, which is the hardest committee to be Chair, I think, and a member of the Nomination and Governance Committee. So good to see you also. James McMurdo, been involved with our company for 25 years, did our original IPO. So he knows a lot about our company, and he's standing for reelection, and he's a member of the Audit Committee. Further down in pink, Karen Penrose, our pretty tough Chairman of the Audit Committee. She doesn't let anything go by. I can tell you now, and she's a member -- also a member of the Risk Management Committee, Karen, always good to see you. And last, and certainly not least, our new Director, Steve Sargent. He was appointed to the Board in November and he's seeking well, not reelection, election. You're not a director yet. We're going to talk about Steven later. I'll now ask Henrietta to do the housekeeping and talk through the procedural matters and tell you how to vote.

Thank you, Chairman. We are taking questions from holders of ordinary shares or the representatives and holders of shares today. If you have a question in relation to an item of business, please proceed to a microphone at the relevant item of business and show your green voting cards to our representatives from Boardroom. Nonvoting shareholders and CARES holders can also to and have been issued with a pink card. If you need assistance at any time, please raise your hand and a boardroom representative will come to you with a microphone. You will be introduced and can then ask your question. We ask that you please confine your questions to the business of the meeting and shareholder issues. In order to ensure that shareholders as a whole have a reasonable opportunity to ask questions today. We do ask that you limit your questions to two at a time and then allow others to speak. If your question relates to a personal experience at one of our hospitals, please speak to me or any member of our executive team who are with us today following the meeting. We're not able to address these questions at the meeting due to privacy concerns. We have also received some written questions from shareholders in advance of today's meetings. These will be addressed during the Chair or the Managing Director addresses to the meeting or at the relevant item of business. Voting today will be conducted by way of a poll on all resolutions in the Notice of Meeting. All shareholders entitled to vote at the meeting will have received a green voting card on registration. Shareholders and proxies who have been given discretion on how to vote should tick for, against or abstain from each resolution. Any appointed proxy that has been directed how to vote and has no discretionary votes to cast does not need to vote as those votes will automatically be counted in accordance with the directions. At the end of the meeting, please sign your completed voting card and place it in one of the polling boxes at the back of the room at the end of the meeting. The poll will remain open for 10 minutes after the close of the meeting to ensure that all shareholders have had the opportunity to lodge their vote. The results of voting on all resolutions will be lodged with the ASX and posted on our website later this afternoon. I will now hand back to our Chairman.

Thank you, Henrietta, for that. And I now open today's poll. Just to remind you, and you probably know, you're invited to join the Board members outside for a cup of tea. It's been a long time between cups of tea and we look forward to speaking to you. I'll just do a short overview of what the company has done and Craig will give a much more detailed presentation. So look, I'll start by saying it would be sort of a something of an understatement to say that the last 12 months have been another disruptive period for the health industry -- health services industry globally. The rise of the Omicron strain of the COVID virus following months of lockdown and surgical restrictions associated with the Delta variant certainly took its toll on society. Our outstanding team of people continue to play a vital role in assisting governments and the community in rising to the challenges created by those further waves of the pandemic. On behalf of the Board, I'd like to thank our people at the front line. They have had to deal with extraordinary circumstances throughout the pandemic, adapting quickly to meet the rapidly changing environment and continuing to support each other and our patients, living the values of the Ramsay Way and embodying core Ramsay's vision of people caring for people. It's been a tough time for our people. You can imagine you're a nurse and you've got two children, and they can't go to school and how they school from home. Then you have to go to the hospital and the patients can't have visitors. It's very stressful. And a lot of people have been significantly affected. I was reading, I think, in the paper the other day, there's a report that I think health workers have a more -- a 50% more chance of having psychological issues in their workplace. And so it's been tough and I -- Pascal, here in France, they were right at the forefront of it, seeing lots of COVID patients. So it's taken the toll on our people, and they've come through it very well. As we announced at last year's AGM, Steve Sargent has joined the Board and is up for reelection. So I'd like to thank Steve for his strong contribution as we worked our way through the short-term disruption as well as ensuring we continue to pursue our long-term strategy to be a leading digital integrated health care provider. Steve visited five countries in two weeks didn't you, Steve? He said the only way to get to know this business is to get out and [ affirm ], so he went to Paris, Stockholm, London, Malaysia and Jakarta. So he's needed his director's fees so far. As a Board, we also work closely to assess the approach by IHH Healthcare to acquire our joint venture in Asia, Ramsay Sime Darby. And the approach by a consortium of financial investors led by KKR to acquire 100% of Ramsay, both of which I'll address in a moment. But I'd like to thank all my fellow Board members and senior management team for the support they've given me and the company through what has been a really busy period and a difficult period for us on top of the COVID issues. So turning to the results for the financial year 2022. The financial impact of COVID has been the most significant of the pandemic this year, reflecting the impact of further waves of COVID on both activity levels and costs. The estimated financial impact of the pandemic in Australia and the U.K. combined, was well in excess of $300 million at the EBIT level. And as a result, net profit after tax declined 39% to $274 million. So as you can see, this has had a massive impact on our company. And basically, it's been beyond our control, but we'll be back. Consequently, the Board declared a fully franked dividend of $0.485 a share, which was flat on the interim dividend, taking the full year dividend to $0.97. While shareholders might be disappointed, and I'm one of them, that the full year dividend was lower than last year. Your Board felt it prudent to maintain payments at a level we believe is sustainable given the lingering uncertainties with COVID. However, we haven't let the disruption caused by the pandemic distract us from focusing on our long-term strategy. During the year, we continued to invest in both organic and inorganic strategies to position the business for growth in demand for health care over the medium term and to meet our vision to be a leading health care provider for the future. This included the usual investment in our brownfields and greenfields developments with a number of new projects completed during the year. Also, we -- there were 2 new acquisitions of note being Elysium, a mental health provider all throughout the U.K. and GHP Specialty Health Care based in Sweden, and we're happy with both those acquisitions. Craig will go through the outlook for the projected pipeline investment later. As I mentioned, your Board received two unsolicited proposals during the year, both of which highlighted, I think, the underlying value of Ramsay's hard to replicate portfolio, world-class assets and their world-class management. In both cases, the Board and senior management spent considerable time working with advisers to see whether we could reach agreement on those transactions that had sufficient certainty of completion, were within a reasonable time frame and would deliver appropriate value for shareholders. In the case of the proposal by IHH to acquire 100% of Ramsay Sime Darby, it became apparent, after lengthy discussions and after the granting of due diligence, that we were not going to reach agreement on a binding unconditional proposal. We, therefore, terminated discussions on the 9th of September. And I think our view was that some of their conditions were pretty unreasonable. With regard to the approach from KKR, probably the elephant in the room, you'd say, we've received several questions in advance of the meeting from shareholders on this issue, asking why we rejected KKR's consortium proposals and whether we intend to recommence negotiations. These shareholders expressed disappointment with the outcome and with the Board. And I'm sure there's similar questions in the room, and we understand that some shareholders share the same view. But I want to make it clear, very clear that we did not reject either of the proposals. Both of which were eventually withdrawn. I'd like to reassure shareholders that we believe we did everything we could to facilitate constructive engagement with the consortium. The process was protracted and senior management and the Board spent a lot of time on it over the last 12 months. As we announced on the 26th of September, the Ramsay Board and the consortium mutually agreed to terminate discussions when it became apparent that the consortium was not going to submit a new offer for the Board to consider after withdrawal of both the all-cash offer and the alternative offer involving cash and Ramsay Santé Group. I'd like to reiterate again that we did not reject any proposal in the end, and there was no proposal to consider. There's been a lot of misinformation out there in the market. So I just wanted to make -- set the record straight that in the end, we didn't have anything to consider. While both approaches required a significant investment of time by the Board, Craig and some of his senior leadership team -- and sorry, and Craig and some of his leadership team, please be assured we have not let this process distract our people from delivering the best care for our patients and realizing the growth opportunities in the business. It's easy to get distracted when these things are around. And I assure you, your Board always remains open to proposals or initiatives that can create value for shareholders. We will continue to update shareholders when we have material matters to announce that are of sufficient certainty and materiality to warrant shareholders' attention. We're very pleased with the progress we made this year on our Ramsay Care sustainability strategy which focuses on action to support healthier people, a thriving planner and stronger communities. Craig will go through those initiatives in more detail, which on the whole, have been identified and driven by our passionate team and people throughout the business. The Board is actively involved in overseeing our approach to sustainability considering the social and environmental impact of Ramsay's activities and endorsing the strategies and improving key policies and disclosures. And I think these sustainability initiatives are coming more and more important, and I think they are more and more expected of us by our shareholders, and we're happy to comply. Before I hand over to Craig to talk about the future on how the next year's traveling, I'd like to say that your Board is feeling confident that the worst of the COVID pandemic is now behind us and that the operating environment should continue to normalize over the course of 2023. Like, all the businesses at the moment, we are facing the challenges caused by rising inflation and labor shortages, especially. We are proactively working with all our stakeholder groups to ensure the impact of these issues are mitigated and the costs shared appropriately. Importantly, we believe that our world-class hospital network combined with our outstanding team of people and clinicians give us confidence that Ramsay is well-placed to take advantage of the positive long-term dynamics driving the health care sector. In closing, I'd like to once again thank our people and clinicians. And I'd also, like, to thank our shareholders, many of whom have been with us for quite a long time. I'm talking to some people beforehand. I think one lady told me, she bought them at $9, so she's very happy. We appreciate that the uncertain operating environment, combined with the discussions around a whole of company takeover, created a lot of volatility in the share price over the last year. And I would like to thank you for your ongoing support. I'll now hand over to Craig.

Thanks, Michael. Good morning, everyone. It is good to be back face to face, and I also welcome those who are joining us on the webcast. I'd like to start by also adding my thanks to our people and clinicians in all of our regions. I'm really proud of what our people have achieved over the last few years and the role the organization has played in supporting the response to the pandemic as well as other significant events that have impacted our local communities, and I'll highlight those later. Workforce retention and well-being, combined with recruitment, remain critical challenges in all of our markets and are expected to remain the #1 focus of the senior management team in the foreseeable future. Our groupwide people strategy revolves around developing capability, culture and the best people in health care. We have lifted our investment in a range of activities to grow our workforce through graduate programs, cadetships and reskilling programs. Priority areas include providing flexible working conditions, more accessible learning and training opportunities, expanding our leadership programs and investing in technology to simplify processes and allow our people to spend more time with our patients. As Michael commented, during the year, we continued to invest time and resources in our long-term commitment to sustainability, which is driven through our Ramsay Cares sustainability strategy. Ramsay Cares reaffirms our intention to have a positive impact on current and future generations through the provision of health care services that are sustainable, in the loop and delivered in a manner consistent with the Ramsay Way. 2022 has been a milestone year for our sustainability program. In July, we announced a group commitment to achieving net zero greenhouse gas emissions by 2040. By setting ambitious science-based targets to reduce emissions across our value chain, we're showing that we are serious about being a responsible and sustainable business and continuing to support the UN Global Compact and its principles. Shareholders can read more about our sustainability activities and outcomes in our Impact report, which was lodged with the ASX in the last week, and it can be found on our website. We've long recognized that our responsibility as a business goes beyond connecting patients to skilled practitioners. And our people have always embraced the important role we have in serving society at large. During the year, Ramsay people across the world have continued to play a leading and active role in the COVID-19 response as well as delivering urgent care for COVID-19 patients. Our people have made significant and wide-ranging contributions to combat the pandemic and protect our communities. As an example, more than 10,000 COVID patients were treated at Ramsay Santé facilities in France, including 4,500 in critical care. Many Ramsay hospitals have also facilitated surgical care for public patients alleviating pressure on the public systems and have come up with new ways of delivering high-quality health care to people in lockdown or isolation. Our people have also been redeployed to support the public health system in remote locations, testing clinics and other community health settings. The conflict in Ukraine has mobilized teams across Ramsay, as well as giving financial aid to support the humanitarian response. We have donated vital medical supplies to Ukrainian hospitals and offered free health care to those fleeing the conflict. Extraordinary flooding in 2022 in Australia, sparked a quick response from Ramsay teams in Southeast Queensland, Northern New South Wales and most recently, in Shepparton in Victoria. Our people have stepped up to cover stranded colleagues and worked together to keep water out of our facilities and assist the broader community with first aid packs. We've also provided grants to our staff that have been financially impacted by the floods. As I mentioned, our most significant Ramsay Cares initiative this year is our commitment to achieving net zero greenhouse gas emissions by 2040. To achieve this target, we are profitably changing many facets of how we operate, the resources we use and our supplier relationships. Our global strategy is focused on switching to renewable energy sources, maximizing energy efficiency, cutting waste and boosting recycling, reducing anesthetic gas emissions, embedding sustainable design in new facilities and upgrades and engaging with suppliers to reduce supply chain emissions. Our greenhouse gas emissions will be reported annually against our targets. Our targets will be regularly reviewed for consistency with the latest climate sites and to reflect any significant changes to the business or baseline emissions. I'll now move to a brief update on current trading conditions, which follows on from a more in-depth update we released to the market on the 11th of November, which you can find out on our website. I'm pleased to say that trading conditions have improved across the first 4 months of the fiscal year in all markets after COVID impacted July. COVID cases have ticked up in all regions recently, but the impact on the business into November has been manageable. Encouragingly, the view in the U.K. is that they are now past the peak of cases in the current wave. And the short sharp nature of the surge in cases may be reflective of the shape of any future waves. Moving to each region in more detail. In Australia, the operating environment improved across the first quarter as the high level of COVID cases in the community in July declined, driving an improvement in activity levels and importantly, a reduction in the costs associated with patient and doctor cancellations and staff sick leave, although I will say staff sick leave has kicked up in the last week with COVID numbers increasing. The estimated impact of this disruption caused by COVID in the September quarter was $57.7 million compared to $55 million in the previous period. The costs associated with COVID declined from $38.7 million in July to $6.1 million in September. And the estimated impact in October was lower again with staff absenteeism back close to pre-COVID levels with the rider I've just given you. Pleasingly, we completed negotiations on a number of health fund contracts during the period at rates that are reflective of the current environment. And we're in negotiations with others to ensure that we are adequately reimbursed the higher costs across the business, being driven by labor shortages and inflationary pressures. We've also been working with state governments on commercial terms for public contracts and we anticipate that work moving forward to increase. We believe the backlog in the public system following COVID restrictions in recent years will see that volume increase in the future. A range of measures have been introduced to improve recruitment and retention with a particular focus on critical skills gaps. Longer-term initiatives continued during the quarter, including the continuation of an expanded international recruitment campaign, the onboarding of our August graduate cohort and the launching of a new cadetship program with 140 positions already filled. Ramsay's 50-50 joint venture with Ramsay Sime Darby has continued to perform well in the first 4 months of the year with a strong rebound in activity in Malaysia in local and foreign admissions, which has offset the decline in COVID-related testing and vaccination activities. Activity in Indonesia has been slow to pick up but is improving. In the U.K., we now have 2 businesses: Ramsay U.K., our acute hospital business; and Elysium, the mental health business work in January this year. The environment for our hospital business improved gradually over the quarter with admissions increasing 5% compared to the previous period with a positive momentum continuing into November. Growth came from both NHS and private patients. The estimated impact of COVID on the business over the quarter was GBP 5.7 million, which declined to GBP 1.7 million in the month of September. We are continuing to engage with NHS England on strategies to reduce waiting lists, which are significant. Elysium reported good top-line growth, reflecting the growth in bed numbers in existing and new facilities. However, the forecast expansion of the business has been curtailed by short-term labor shortages, which have slowed the ramp-up of new facilities and restricted capacity in existing facilities. Key focus of the business remains integrating new acquisitions, improving occupancy rates and addressing labor shortages with new recruitment programs. Both of our U.K. businesses have been impacted by inflationary pressures across all categories of costs. Tariff increases have been higher than historical levels. However, inflationary impacts in areas such as energy, clinical and nonclinical labor costs and PPE are growing rapidly at the current time. Both businesses will continue to look at efficiency and productivity measures to try and mitigate increased costs. Following a longer-than-normal seasonal lull in the business over July and August, Ramsay Santé activity levels have started to improve, although admissions have been capped in some facilities by labor shortages. While retention and recruitment of staff remains the most significant issue for the business, shortages have gradually improved over 2022 following the introduction of a series of measures developed in conjunction with our workforce earlier in the year. Revenue in the Nordics region increased 19.9% on the previous period, reflecting a 9.6% increase in acute admissions and an increase in specialty care services reflecting recent acquisitions. On a like-for-like basis, revenue increased 4.9% on the previous period, primarily driven by primary and specialist care patients in Sweden and Denmark. The business in Europe has also been impacted by the direct effect of inflation and higher personnel costs, including increased interim staff costs. While the French government, the revenue guarantee has been extended to the 31st of December, government-funded COVID-related revenue and cost subsidies booked for the quarter were EUR 14 million lower than the previous period. Moving to our strategy, which is divided into four pillars and is guided by our vision to be a leading integrated health care provider. We have absolute confidence in the future growth in demand for health care services. And so despite the challenges created by further ways of COVID, we have and will continue to invest significantly in both organic and inorganic growth strategies to upgrade and expand our facilities and broaden our service platform. This includes investment in our brownfield and greenfield development pipeline with a number of new projects completed and opened over the last year. We've also increased our investment in digital and data with the aim of leveraging our existing business base, improving the patient experience, delivering improved clinical outcomes and driving efficiencies while supporting our entry into adjacent health services. We made 2 acquisitions of note over the year, which Michael had mentioned. The mental health services business, Elysium in the U.K. and the Swedish specialty healthcare business, GHP Specialty Care. Both businesses build on our existing capabilities and the focus is now on extracting synergies and integrating the businesses. So in conclusion, we are pleased that the operating environment is continuing to improve, which is flowing through to activity levels and earnings. In the short to medium term, we're focused on returning the business to pre-COVID levels of operating efficiency and productivity, executing on our workforce strategies, negotiating improved terms with payers to reflect the inflationary environment and leveraging the group's global scale. We do expect a gradual recovery in the business through FY '23 and more normalized conditions from FY '24 onwards, or we get further waves of COVID cases may impact the trajectory of that recovery. We remain confident about the longer-term outlook for the group. And we believe we are in a strong position to take a leading role in the provision of integrated health care services over the longer term. Finally, I'd like to again thank our staff for the fantastic job they've done this year. I'll now hand back to Michael for questions.

Thanks, Craig, a fairly comprehensive report, I thought, and there are a lot going on out there. Before we -- I'd now like to invite questions from shareholders on the business and the operation, not the motions there'll be later. So before we get into questions, I noticed that, as I flagged in my earlier address, we received several questions from shareholders in advance of today's meeting in relation to the indicative KKR proposal and they largely cover the same ground. So I don't really have anything to add other than what I said in my address other than to reiterate again, I don't know how many times you're allowed to reiterate, that we did everything we did to facilitate constructive engagement with the consortium. And in the end, there was nothing to consider. So Henrietta, we've got some questions, written questions from the shareholders.

We do. Our first question is from Dr. [ Kenneth Illet ]. Why is Ramsay performing so poorly on the ASX in the last financial year? We also have a question on performance from Mr. [ Timothy Clifton ], who has asked, to what extent has Ramsay been financially impacted by the recent COVID-19 pandemic and its associated lockdowns on a worldwide basis?

Okay. Thanks for those questions, Kenneth and Timothy. I think I've answered them to an extent. I'd like to say that we're -- again, we're proud of what our people have achieved over a challenging couple of years. Clearly, the business continues to be impacted by COVID. The financial impact, as I said, was the most severe of the pandemic. And in high incidence of cases of COVID across all regions of elective surgery -- and sorry, all regions and elective surgery restrictions in Australia. As I said, the estimated impact is somewhere in the vicinity of $300 million and consequently, our profits declined. In terms of the share price, the number of companies in the health care space have been impacted by COVID and Ramsay has before performed in line with them. For example, over the last 12 months, Ramsay has actually performed in line with the ASX 200 basket of health care stocks, which includes Sonic Healthcare, CSL and Resmed.

Mr. Clifton has also asked whether a dividend reinvestment plan will be offered in the future? Mr. [ Rex Maury ] and Mrs. [ Deborah Maury ], have asked a similar question and have also asked about a rights issue.

Look, in answer to the first question, we haven't activated a DRP at this time. DRP plans are EPS dilutive unless the additional capital is required and invested. However, we regularly look at it, and we're always happy to consider. In answer to the second question, we have no current plans to raise further capital via rights issue.

We have two questions from company shareholder [ Demuir ] Propriety Limited. What are the company's cybersecurity protections? And when was the last penetration test?

I think I'll hand that to you.

Cybersecurity is an issue for all industries, and we're well aware that health care is a target in the threat landscape. So we're continuously working on strengthening our protection measures and limiting the prospect of cyber risk as much as possible. However, it can't be perfect. We have a global cybersecurity framework, which includes controls associated with prevention, detection and recovery. And the framework is externally validated, routinely tested and subject to ongoing review and continuous improvement. On a regional level, each region monitors cyber risks and data and privacy concerns and has its own accountability framework to reduce risk protect data and meet regulatory requirements, which are different in each region. And as part of this, each region has dedicated data protection and privacy offices or their equivalent and delivers comprehensive training to staff. Our information security teams across our regions, led by our group CISO are continually monitoring our systems and the external threats to limit the risk as much as we can. In relation to the question on penetration testing, we conduct penetration tests regularly across all our regions. For example, in Australia, the last test of a specific system was completed last week, and the last comprehensive test of Internet-facing systems was conducted in June. Additionally, we recently completed a group-wide independent audit of the control framework.

Thanks, Craig. For those like me who don't understand, a CISO is a global Chief Information Security Officer. Is that right, Andrew? Thank you. Next question.

Mr. [ Matthew Tindle-May ] and Mrs. [ Jacinta Tindle-May ], have asked what percentage of income is Ramsay Health going to dedicate to energy efficiency in '23, '24 and beyond?

I think Craig, I'll throw that to you.

It's difficult to put in income terms. But as touched on in my address, we made a significant commitment during the year to a net zero target by 2040 and that involves near-term and long-term science-based targets. So this was a major milestone for the business. Some of the initiatives launched include Ramsay U.K. and Elysium switching to 100% renewable electricity, a major solar panel rollout in Australia and shifting more energy-efficient lighting, heating and cooling into our facilities. Numerous operating theaters globally have joined the switch to more environmental-friendly anesthetic gas, given anesthetic gases have a large carbon footprint.

Mr. Peter Allen has asked whether we can have the AGMs in Adelaide now and again, to be fair to our shareholders?

Look, I'd be delighted to have the meeting at Adelaide. We can go to the Barossa Valley. But look, we've considered it, but from a logistics and a cost point of view, I think we're determined to keep our AGM in Sydney. But look, we keep our AGM arrangements under review, and we'll take that into consideration.

Mr. [ Jack De Mulder ] has commented that COVID was used as an excuse to stop providing paper reports and that elderly investors are thus left in the dark.

Look, I'll respond to that. I apologize to Mr. [ De Mulder ] any confusion, confirm that Boardroom has now adjusted your preferences so that you will receive the annual report by post going forward. All shareholders can elect how they wish to receive communications by going to the communications tab under the Investor Center page on our website or by contacting our share registry directly. Their contact details are on our web page.

That concludes the questions.

Okay. So do we have any questions from the floor? If you want to come forward to the microphone.

Mr. Chairman, we have a question from a shareholder, [ Kevin Daly ].

A long-standing shareholder, I recall.

Indeed. This winter, Mr. Chairman, there's an energy crisis unfolding in Europe. I'm just wondering if you could give us some idea if this will have any effect on Ramsay's operations in Europe.

Obviously, it'll have some effect.

Yes. Look, certainly, from a cost point of view, without going into each of the markets, we have different arrangements in each of the markets in Europe, but there's no question that there are increasing costs associated with energy. From a supply point of view, being a health care provider, we extensively do have a preferred position. So we're not so concerned about supply arrangements, but costs are increasing. But -- and in saying that, though, it's important to understand that energy costs are up and not a significant line item in our P&L.

Does that answer that question for you?

Mr. Chairman, a question from a proxy holder, Mr. [ Giles Edwards ].

Mr. Chairman, I'd like to say thank you for doing well under difficult conditions not at your making. Both the speeches from CEO and yourself indicate that we're on the upswing of the ferris wheel, so to speak. You yourself said net profit's down, but we will be back. That's what shareholders like to hear. You've coped well under difficult circumstances, no doubt. You've acquired two businesses, U.K. and Sweden. You mentioned hard to replicate assets, world-class assets and delivering value to shareholders, all of which is very shareholder friendly, and I thank you for it. My concern is, and I'm sorry to have to repeat this for some of you who might have heard it before, but it's the same issue, and it'll get the same comments from me. Why would you, in such a company, unless you don't have enough faith in your own directorial sharing and managing abilities, why would you consider a takeover when the best way to deliver shareholder value, and my antenna twitch when I hear delivering shareholder value, a bit like when AMP and NRMA, they neutralized that were going to release shareholder value. Wasn't that a great idea? Anyone who was in those companies, well, it speaks for itself the greatest loss of shareholder value in Australian ASX history. I think this is a good company. I don't consider you people, idiots. Otherwise, I wouldn't be here. I wouldn't be a shareholder at whatever price I bought in. It's not about my entry price, whether it's $100 or $10 or anything in between. If you want to release shareholder value, may I make a suggestion, run the company the way you've done under very great stresses and strains, participate in the upswing and let shareholders equally participate in better dividends, better share price as time rolls by, doesn't have to be tomorrow. I'm not greedy. I'm ready to wait. A lot of companies are down with COVID and all sorts of things. This is not a company that's, I hope, about to go bankrupt. Otherwise, I'd ask for a spill motion get rid of a lot of you and sell to anybody who's silly enough to buy it. But that's not what I'm saying. Time and again, we've got companies that sell out at the bottom of this cycle of various cycles, which every company has individually or collectively. And shareholders have got to think that even if we do accept an offer, where are you going to put your money? Why don't you invest in Westfield? Oh no, that's gone. Sorry. Sydney Airport, that's a good -- oh, no, that's gone. Bradken, oh no, that went about 5 years ago to Hitachi in Japan. Capilano Honey, everyone likes -- oh no, that's gone. Sorry. Green Cross Veterinary, it has sell, only a few weeks ago, Biota, Webster, almost APA and Woodside nearly went overseas, but for the intervention of the Federal Treasurer of the day. Now if you're trying to release shareholder value, my suggestion is, do what you're doing, participate in the upswing rather than selling out to some sleezy greasy low-ball offer, which has been so much a feature of all those companies I mentioned. Just do your job, we'll stick with you. And if you can stay the course, then shareholders similarly can stay the course in the expectation of better share price and dividends in the future. How about that?

Would you, like, a position on the Board, I think we need you. Look, thank you. Let me just ask -- answer the first part of the question. As public company directors, we have obligations. And when someone makes an offer, we can either accept it and reject it. But we are obligated, at some stage, to consider an offer if it gives value to shareholders. And it's basically an offer we just have to consider, which is what we did. And we negotiated and we negotiate hard to get the price up. But at some stage, we had to engage with them, and we did. And of course, in the end, there wasn't an offer there. I mean what -- I mean I've been around 50 years here, and so I agree with everything you say, sometimes against some of the other directors. But I agree. I think we just -- what we're going to do now is just run this company, do well. Our overseas operations are strong. We may try and make some acquisitions. And we're basically going to do what you tell us to do.

Tell any low-ball offer roles to go take a jump. But a lot of companies don't do that. They seem to take it as a badge of honor to sell out good assets at prices that have either already been achieved on the market a year or 2 ago or as every company has its cycle of every sort, obviously, if you're a takeover company, you want to take over the week zebra in the pack, so to speak, the outlier when they're on their way down. But the future earnings and fortunes of this company and all the ones that I mentioned are at risk for a good, solid, steady mom-and-dad shareholder like me. It's the future earnings of this company, which if you guys do your job and the managers manage, the directors direct and the Chairman chairs, the shareholders now and in the future will partake in the real release of shareholder value. That's the real release. And it's not a case of whether it's a foreign company or a foreign this or a foreign that. It's a case of a good Australian company right here, right now in open session. where shareholders can keep the finger on the pulse 1 day of the year at least and participate in the real upswing of shareholder value. And I don't want to see companies that are good companies -- I mean, if they were bad companies, get rid of them immediately. Accept any offer. Yes, we're not talking about that. Do your job, pump the value, we'll stick with you as long as you will stick with us in a similar fashion.

I have an easy answer. I agree with everything you say. Thank you. Any more questions from the floor? I don't think so.

I think there's one going.

Yes, there's one. Oh, yes.

Mr. Chairman, a question from a shareholder, [ Wayne Perry ].

Yes. We were talking earlier.

Thank you for your time today. And as always, for your efforts throughout the year. Thinking about what everyone said today and some of the questions, I've got hopefully, an open question that can enlighten us going forward in some areas. What are some of the key learnings over the COVID period? And how have you applied these or will you apply these learnings going forward, so over the next 1 to 3 years?

Key learnings, I think we've learned a lot, I can tell you. We didn't expect it to happen. It was probably the first learning. And we probably have to learn that it may happen again. But we are very vulnerable. We are very vulnerable to that sort of pandemic, and we can probably only do not a lot more than we did. Maybe we can.

Look, now you always learn something. I think what we learned is the strength of the culture of this organization and what the values of this organization were and the engagement that we had with our people and our patience and prioritizing our people and patients over any financial outcomes was one of the things I'm most proud of what we've done over the last few years. And I think the learning from that is that's what we should stick to. The values of this organization are incredibly important to the successes that we have. There are lots of other learnings from a practical sense that whether it was a COVID environment or others that we try and share across the organization. I think one of the beauties of the organization through this period was the engagement that we had across markets and the different experiences that we saw in each market that allowed the rest of our teams to be a little bit more prepared than they might have otherwise been. But sort of plenty of learnings without going into specifics.

Mr. Chairman, a question from a shareholder, Ms. [ Christine Hamilton Prime ].

Thank you, and I appreciate your work during the pandemic and obviously continuing the pandemic. A question was raised earlier about cybersecurity. I'm also a Medibank private shareholder and they too came with us with great motherhood statements about in annual reports about how they're cybersecure and they're fully protected, when really, in reality, they met the bare minimum. Bare minimum also includes pen testing. As we all know, it's a bit like taking a blood test. It tells you what is wrong at that point in time. It doesn't tell you what's happening in the future. I just guess as a shareholder, I'd love to know a bit further what Ramsay is doing to ensure it is cybersecure from all elements? And I think even the directors, whether they're getting some cybersecurity skill set to also bring to the Board as well, I think, it's an important aspect. I'd like to know.

Thank you. The Directors have undergone training. I'll answer that, please. And we are getting more aware and we have Alison and David, who are experts in that area. So I guess from the Board's point of view, we are probably as prepared as we can be. Craig, you might want to talk more about the company generally.

Yes. Certainly, we're not unlike many other organizations where the priority on cyber protection and focus has increased dramatically over the last 2 years. Now it's a journey. Cyber is on the Board agenda every meeting. The Risk Management Committee, it's one of the more significant risk that we continue to focus on. Resourcing it has become more of a priority for us. And so there are plenty of requests for investment into people and systems to improve our exposure for cyber and that will continue to be the case. We're not water tight, but I don't think there are any organizations that are. But rest assured that we do give it the priority that it deserves, irrespective of recent events with Optus and Medibank. This has been something we've been working on for a number of years, and it continues to get the priority that it should get.

So just to reiterate, the Board is committed to -- sorry, continuous setting aside money to actually put towards improving cybersecurity at every point.

Absolutely. And when you get the chance to talk to the global executive after this meeting, I'm sure the answers you'll get -- I won't put words in their mouth, the continued discussions and sort of critique of our cyber strategy is a priority.

And just from a patient perspective as well, is that going from the top down? Because I think if you think about the most simplest things that people can do in terms of having a cybersecure organization, a patient going to a patient room as a plug and an outlet. Very simple stuff, but I don't think I've seen it filtered down, to be honest. Plug a device into a power outlet.

Yes. And we -- public spaces, generally, and people can walk in the front door and find an access somewhere. So it's something we're very mindful of.

And sorry, just one final one, and I'm okay if you don't answer this.

Given the changes in that in that market and about the relevance of that and what your ability to claim. I think there's a lot of uncertainty around that, but we do have the cyber insurance currently.

Thanks for those questions. They're very, very relevant. And it's certainly on the top of our list at Board meetings because we're as worried about it as you were. From the patient's point of view, reputation point of view, it hasn't done Medibank a lot of good. But of course, we need Medibank to be strong because they provide income for us. Are there any more questions? Okay. We'll move on to the formal agenda.

The first item of business is the consideration of the financial report of the company and its controlled entities and the reports of the directors and auditor for the financial year ended 2022. Whilst there's no resolution for this item, it's an opportunity for shareholders to ask questions on the accounts, and we have our auditors here. Ryan Fisk from Ernst & Young, who's happy to answer any questions on the conduct of the audit, the preparation and the content of the auditor's reports and the company's accounting policies and the auditor's independence. Welcome, Ryan, and [ Evita ], how are you? Again, any questions on the accounts? Nothing, okay. I think we can move on to the next question -- next item, which is the adoption of the 2022 remuneration report. So I think we have some written questions. So if anyone wants to ask a question, they can come to the microphone and ask. We've done the written questions.

We have received a couple of questions from shareholders in advance. Mrs. [ Christine Gay Watts ] has asked why did 50% of the performance rights vest under the TSR test when this is just average performance? Performance rights should reward outstanding performance, not average performance.

I might get Alison who has the unenviable as being Chairman of the Talent Remuneration Committee.

Yes. It's a great question. It's standard market practice for TSR performance rights to vest 50% at 50% performance, percentile performance. And we're comfortable that, that creates the right level of alignment and motivation for the executives. A couple of thoughts to add to that would be this year, that tranche of the LTI didn't vest because the performance was in the 40th percentile of -- relative to the peer group. And so that portion, not vesting is not what any of us would want, but it does show that there's a level of alignment between that LTI performance hurdle and shareholder outcomes. And the other thought would be that there are two parts to the LTI. There's one tranche which is related to shareholder returns and the other, which is related to EPS. And so there's a balance between those two, which, again, we think adds an extra layer of alignment between the executives and shareholders.

Thanks, Alison, and I agree with all that. Any other question?

We have also received a question from Mr. [ Maurice Atkinson ] and Ms. [ Cheryl Atkinson ], who have asked, why the so-called Board of Directors getting performance rights? They are paid a wage and that should be it? If they have to have performance incentives to do their job, then what are they getting paid for?

You're going to explain that one?

Yes, sure. So I should probably start by clarifying that the nonexecutive directors don't receive any performance rights or any form of performance-based pay. The NEDs receive fees for board fees and committee fees and they're set with regard to the responsibilities and the competitive market for non-exec directors. What we do, do is to create alignment between the non-exec directors and shareholders is that we encourage NEDs to hold shares in the company encouraged to hold up to 1 year's fees as in shares in the company, but the NEDs acquire those shares themselves.

Thank you. I think that explains that question. Another question?

Ms. [ Melanie Watts ] has asked, I note all documents provided relate to fiscal measures. So for example, in remuneration and incentivization, where do overall health outcomes and performance stand in relation to fiscal measures?

Yes. It's a good question and an important one. We are very conscious that we want all -- we want the performance of the executives to reflect financial and nonfinancial measures, because we're clear that, that's going to be -- the long-term drivers of the business will be related to short-term financial outcomes but also to the foundations that are being set in the business. So if you look at the balanced scorecard, the STI scorecard in the remuneration report, 50% of short-term incentive is based on financial metrics and 50% is based on nonfinancial metrics. And they're a combination of achieving strategic milestones, patient quality outcomes, patients' satisfaction and also employee engagement, because we know that they're the long-term drivers of the success of the business.

That concludes the questions on this side.

Okay. So there are any questions from the floor on the remuneration report? I think Alison has answered a lot of the questions that could be outstanding. All right. Well, thank you. I think I have to ensure you cast your vote on this item by marking your green voting card. The proxy results received are shown on the screen and I think it seems that it's fairly well, overwhelmingly supported. So thank you. The third item is the election of directors. And the first Director to be considered for election is Mr. Steve Sargent, down there on the end. Steve was appointed as a Non-Executive Director on the 25th of November 2021, and I strongly recommend a vote in favor of Steve's election. And Steve, you'd like to say a few words.

Thank you very much, Chairman. I appreciate that. And good morning, ladies and gentlemen here in the room. Today, I am seeking your support for election as an Independent Non-Executive Director of our company. I joined the Ramsay Health Care Board in November of 2021, and I assumed the chairmanship of the Risk Committee in October of 2022. Separately, I also serve on the Board of Origin Energy and I Chair the Board of an infection prevention and medical device company, Nanosonics Limited. The capabilities I bring to Ramsay have been gained from 44 years of multi-industry, multinational operating experience. I worked 22 years at General Electric, leading businesses across the United States, Europe, Asia, Australia and New Zealand. I've led businesses across several industries, including health care, energy and financial services. The skills I bring to Ramsay are strong operational leadership skills with a deep understanding of how to lead globally dispersed multinational companies with a view to delivering optimum value. I bring strong people leadership skills, specifically how to ensure our people are engaged, aligned and inspired with working at Ramsay. I bring a deep understanding of international markets and their interplay with Ramsay's complex operations. I've worked in several industries that have undergone significant change and significant disruption. And the experience from that, I use to help the Ramsay team as we navigate the road to recovery from the pandemic. Finally, my work as a public company director has provided me with excellent insight into effective governance practices, which I do put into effect at Ramsay. The health care industry is experiencing turbulent times. This is as exciting as it is challenging. I'm encouraged by how Ramsay is navigating these turbulent times, and I'm energized and committed to representing you in helping guide Ramsay forward. Finally, while I am an active company director, I do have ample time to dedicate to my commitments at Ramsay. Thank you for the opportunity to address you for today for my election. With your support, I would be honored to work with my Board colleagues, with our management team to create ongoing value for our shareholders, for our customers and for our employees and the communities in which we operate. Thank you very much.

Thanks, Steve. And as I said, he's made a great contribution in the 12 months that he's been here. Are there any questions on Steve's election, not reelection? No questions? Okay. So please ensure you cast your vote again on this item by marking the green voting cards. The proxy results are received on the screen. [Voting]

And I think, Steve, you've just scraped in, so congratulations. The second Director be considered for election is Alison Deans. You've already heard a lot from her today already. She -- Alison was elected as a Director in 2019. And is the Chair of the People and Remuneration Committee and a member of the Nomination and Governance Committee. So on behalf of the Board, I strongly recommend a vote in Alison -- for Alison's reelection. So I'll let her come and say a few words.

Thank you, Chairman, and good morning, ladies and gentlemen, and thank you for the opportunity to talk with you this morning. Over the last 30 years, there have been three consistent themes in all my work, technology-enabled innovation, strategic decision-making in environments with really high levels of uncertainty and the importance of people and purpose in building extraordinary organizations. I was the first Managing Director of eBay in Australia, and I've been the CEO of 2 venture capital companies. I also spent 8 years with McKinsey focused on issues related to culture, technology and global growth. I'm currently the Chairman of Cochlear, a purpose-led and technology-enabled company that delivers world-class medical devices to enable thousands of people to hear each year. I'm the Director of Deputy, an entrepreneur-led SaaS business that delivers a global platform for workforce management. And I serve on the investment committee of MainSequence Ventures, a venture capital fund initiated by CSIRO, investing in deep tech companies with the potential to solve global problems. In each of these environments, I've experienced how to leverage technology to deliver better customer outcomes and better business outcomes. I've experienced the role of purpose, leadership and culture in driving innovation and higher performance. And I've experienced how to navigate high levels of uncertainty to drive ongoing growth. Three years ago, in 2019, when I first stood here seeking your support, none of us could have foreseen the COVID health crisis that would envelop the world and the economic uncertainty that's followed. For Ramsay and all health care operators around the world, it's been a period of unprecedented challenge. It's been essential for the Board and executive to work together to navigate that uncertainty, focusing on the immediate challenges but always with an eye on the long-term position of Ramsay. And at the heart of the response has been the extraordinary people, purpose and culture of Ramsay, deeply anchored in people caring for people. It's these organizational strengths that have enabled agile responses to the strategic, operational and very human challenges. At the same time, we've worked together to develop the 2030 strategy which builds on the company's existing strengths towards becoming a health care operator of the future. One of the foundations of this strategy is strengthening our digital and data capability and developing a hybrid digital physical approach to health care delivery. I believe that my experience in technology-enabled organizations, which thrive in these levels of uncertainty, has been helpful in navigating the immediate challenges of the pandemic and also in setting the long-term strategy. And I believe these perspectives will continue to be valuable to Ramsay as we emerge from the pandemic and build towards Ramsay 2030. I relish the opportunity to contribute to the ongoing development of this remarkable business and to serve as your representative on the Board. And once again, I thank you for the opportunity to speak to you today.

She's pretty good, isn't she? I mean it's pretty impressive to see. We are so lucky to have her on the Board. She's a great contributor. So thank you. And I -- sorry, I've got to tell you how to vote again. Please fill in your -- sort of the green card or -- I'm sorry I'm lost here.

And Michael, we've got one written question.

Oh, we have a question. Sorry. Okay.

From Mr. [ Raymond Logan ] has asked did Ms. Deans, as a consultant with McKinsey & Company, conduct a review of CSIRO or a division of CSIRO?

It's a very simple answer. No, I didn't. Now green card.

So yes, I'm sorry. Please ensure that you cast your vote by marking your blue voting card. [Voting]

The proxy results are shown on the screen. And I think everyone seems to be pretty happy reelecting Alison. So congratulations.

Thank you.

The third director is James McMurdo, who as I said has had a long connection with this company. He was elected a Director in 2019 as a member of the Audit Committee, and I strongly recommend his reelection. His investment banking experience was extremely valuable in the KKR transaction, as Mr. [ Sweetman ] down there, who was our adviser would attest. It's nice to have your own in-house investment banker around. They're a lot cheaper than the external ones as well. So I'd like to ask James to say a few words.

Thank you, Chair, and good morning, all. I'm seeking reelection today as a Non-Executive Director of your company. As Michael said, I joined the Board of Ramsay Health Care in 2019, and I'm a member of the Audit Committee. It's frankly been an honor to serve on the Ramsay Board through what's been a very challenging period, given both the COVID pandemic and now more broadly, the macroeconomic environment we find ourselves in. As a key player in the health care system in each of its markets, Ramsay has faced significant operational challenges with long-standing implications. As shareholders, you are all well aware of this. But as a Board member, it has been humbling to witness the Ramsay employees, doctors and management pulled together tirelessly to serve our communities through the period. I think it's been a true reflection on the company's culture. For us on the board, I believe we've worked with management actively and remain focused on delivering for you, our shareholders. I hope that I've been able to contribute meaningfully to some of the company's decision-making stewardship over this period. And I believe Ramsay is now emerging with a solid position to perform and grow strongly. As mentioned, I've had a long association with the company prior to joining the Board. I worked as a corporate adviser to the group on several assignments. And through that, I've been able to witness firsthand the successful growth of Ramsay, both in Australia and internationally, and I've also built an understanding of Ramsay's key strengths and its ability to assess and manage risk. I have an appreciation for the company's culture and of the Ramsay Way, which are such key foundations to our global success. Through my experience as a corporate adviser to companies over many years, both in Australia and internationally, I hope I'm able to make a big contribution to decisions when we're considering M&A and financing. I'm also able to draw my own operational management expertise, having held senior management positions with different banks in Europe, Asia and Australia. Through those roles, I have experience and a deep understanding of dealing with different regulators, governments and an awareness of cultural sensitivities in different markets, many of which Ramsay operates in today, given its own geographical footprint. I think my experience is complementary to the other Board members who all are excellent and bring a broad range of different expertise across many areas. In my opinion, we have an engaged board with diversity of experience and views which supports better decision-making and governance. Lastly, it's a pleasure to work for an organization with such clarity of purpose and importance to the community. I'll be honored to serve as your Board representative if reelected. And I can assure you, I will do my best to serve Ramsay and its shareholders. Thank you.

Thank you, James. And as I said, we were lucky to have him around. Are there any questions on James' reelection? No? So please ensure you cast your vote by marking your green voting card. [Voting]

The proxy results are shown on the screen. I think you've safely been reelected so congratulations. The next item is the proposed grant of performance rights to Craig McNally. And I'd like to say the Board firmly believes that the company's long-term growth has been sustained and underpinned by our long-term incentive program. And this aligns executive reward with shareholder wealth through the achievement of performance conditions as described in the Notice of Meeting. Do we have any questions on Craig's performance rights?

We do, company shareholder [ Kumquat ] Proprietary Limited has asked, it is set in the Notice of Meeting that if shareholder approval is not obtained, the Board will consider alternative arrangements to appropriately remunerate and incentivize the Managing Director. Why does the Board think that delivering ultimatums will be productive? It [ snaps ] of arrogance. Ramsay's share price has gone from $84.37 on the 22nd of April to $57.54 on the 4th of November. And for this, it is thought that the Managing Director should be further remunerated and incentivized.

Yes. It's a pretty tough question, I think. I mean, the share price went down. But as I said before, I think it was very much beyond our control. But Alison, do you want to respond to that one?

Sure. Look, I do apologize if that was interpreted as an ultimatum. That certainly wasn't the intent. But we are clear that our remuneration -- one of the most important functions it needs to perform is to attract, retain and motivate the best global talent and to reward performance fairly. We're also conscious that we also want it to be aligned with the long-term value to shareholders, and we believe that the way we've structured the reward program does that. But if you go back to -- we're conscious that if this isn't approved, we will need to find alternative ways to attract, retain, motivate the team that we do have to run this company.

Look, our greatest assets are our people, and we want to retain them. There's plenty of private equity people out there approaching executives for large amounts of money. So we want to keep him here. Are there any questions from the floor? All right. So please ensure you cast your vote by marking your green voting card. [Voting]

And I think the proxy summary says that I think that, that motion probably is approved. So well done, Craig. And thank you for all your hard work in a pretty tough year, the toughest year in your 34 years, I suppose.

I would think so, yes.

As there are no more questions at the -- please ensure you cast your -- so I've done that one. That concludes our discussion on the last item of business. please ensure you've marked and signed your green voting card line items 2 to 4 and place it in one of the polling boxes that are placed at the back of the room. The poll will close 10 minutes after the end of the meeting. If you have any questions in relation to voting, please see a member of the Board room staff. So that brings us to the end of our 2022 annual meeting. Thank you for coming along today. It was great to see people back again in person. I promise you we won't have another virtual meeting. You're very welcome to join the Board outside and the management and ask them any questions you like. The meeting is closed pending the finalization of the poll.