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

Well, good morning. Every time I see that video of Paul Ramsay, it sort of makes me realize why I'm actually here, anyway. Well, good morning. My name is David Thodey, for those who don't know me, I'm Chair of your company, Ramsay Health Care. And on behalf of the Board and the management team, I extend you a very warm welcome to the company's 2024 Annual General Meeting. We also welcome those of you who are actually online joining the webcast this year. And I informed we have a quorum Henrietta. So present and accordingly, I declare this meeting open. So I'd like to begin by acknowledging the traditional custodians of the land where we're meeting today. And that's the Gadigal people of the Eora Nation, and I pay my respect to elders, past, present and emerging. And I'd also just to acknowledge the wonderful Indigenous First Nation employees who work in Ramsay right across the country, and they do such a wonderful job. I just wanted to really call them out as well. So we thought we'd start just by introducing the Board of Directors, which I'm delighted to say are all with us here today, but I should start with Craig McNally, our Managing Director and CEO. And then I'm going to go from my far left, your right. So firstly, Helen Kurincic. As you know, Helen joined our Board in March, and we'll address the meeting later on because she's standing for election this year, her first time. She brings extensive executive skills and Board level experience across the entire health care industry, which is really important for us, and we are very pleased to welcome her on to the Board. She's a member of the Audit Committee. So Helen, great to have you on board and we look forward to hearing from you later on. Then we have Alison Deans. Alison is Chair of the People Remuneration Committee and a member of the Norms Governance Committee and she will be able to talk to anything to do with remuneration today, if necessary. Then we have Michael Siddle, who many of you will know, our former Chair and a member of the Norms and Governance Committee, and he's also on the People and Remuneration Committee as well. And then, of course, we have Henrietta, Henrietta Rowe, our Group General Counsel and Company Secretary, and she keeps us all under control, which is very important. Okay. Moving to my right, your left, Karen Penrose, and Karen is Chair of the Audit and Risk Committee and does a wonderful job. Next to Karen is Steven Sargent. Steve Chairs the Risk Committee -- the Risk Management Committee as a member of the People and Rem Committee as well. And then we have Claudia Suessmuth Dyckerhoff, who's traveled with us all the way from Switzerland to be with us and a very important member of the Board and represents the European interest. So along with myself, Claudia and I are standing for reelection today, and we will be addressing the meeting accordingly. Claudia is member of the Risk Management Committee. And then we have James McMurdo and James, is the member of the Audit Committee and keeps us well under control there, too. So I'd like to also take this opportunity to welcome and introduce our group -- well, Group CEO-elect, but we announced this morning, she will be taking over on the second of December, Natalie Davis, and she's at the front here, and we're absolutely delighted that Natalie has joined the group, has been working closely with Craig during this leadership transition period. We're -- as I was just mentioning, we announced this morning that, that transition date has been set for the second of December, which is next Monday. It's quick, Craig, with the Board appointing Natalie as Group Managing Director and Group CEO, effective from this date. Natalie is going to be joining us for refreshments after. So you get an opportunity to meet with her, and I'm sure she's looking forward to talking and meeting with you as well, but we thought it might be an opportune time to get her to say a few words just so you get to know it a little bit. So Natalie, would you like to come up and say a few words?

Thank you, and good morning, everyone. I'm honored to be with you today as Ramsay Group's CEO-elect. It's an absolute privilege to be joining Ramsay at such a pivotal time for both the business and the broader health care sector. Every day, our dedicated people partner with our doctors to deliver the very best inpatient care. And we have the opportunity to build on our leading reputation in health care by innovating and transforming our business and to position Ramsay for success in the rapidly evolving health care sector. Today, I wanted to share a bit about what motivates me and what I bring to Ramsay. What first drew me to the business was our core purpose, People Caring for People. It really resonates with my focus on customers and team. I spent my first week at Ramsay working side-by-side with all the teams at Greenslopes Hospital in Brisbane, Queensland. And actually, I saw some very familiar faces on that opening video. From the kitchens to the facilities team, to our nursing team in wards, theaters, in our maternity service and in our cancer center, care and focus on patients is the heart of who we are at Ramsay. The doctors who we partner with choose our hospitals because of our high standards of care, our team and our trusted reputation in health care. At Greenslopes, many of our doctors had long-standing connections to Ramsay, having trained at the hospital early in their career as well. And over the past 2 months, I've been fully immersing myself in the business. I've had the opportunity to visit our hospitals and facilities in Australia, the U.K., France and Sweden, meeting our dedicated clinicians, doctors and leadership teams. I've engaged everyone I've met in understanding how we can innovate health care and further improve our business. I saw some really great examples of how we're already using data, digital and AI technology to innovate the way we provide health care to better enable our people and to realize efficiencies in the way we run our hospitals. I'm excited to bring my experience and successful business transformation to Ramsay and look forward to accelerating our journey to improve how we care for our patients, partner with our doctors, enable our people and deliver growth and business value. It's an absolute privilege to be the CEO of Ramsay Health Care from next week and to lead our people as we strengthen and transform our business for the future. Thank you, and I look forward to meeting you afterwards for refreshments.

Thanks, Natalie. And look, it's a real pleasure to work with Natalie. She's really settled in incredibly well in 2 months and changing time as we're going to miss Craig. It's just one of those things that in life goes on. Okay. So Henrietta, we now need to go through the procedural side. So would you like to take us through the arrangements today?

Sure. Today, we are taking questions from holders of ordinary shares or the representatives and holders of CARES. For anyone eligible to ask a question who is watching our webcast, you are now able to submit questions online. [Operator Instructions] Please note that questions are limited to 1,000 characters and each question must be submitted separately. We will address your questions at the relevant item of business. If you are attending in person today and have a question, please proceed to a microphone at the relevant item of business and show your blue voting card to our representatives from Boardroom. Non-voting shareholders and CARES holders can also ask questions today and have been issued with orange and pink cards, respectively. If you want to ask a question and can't proceed to a microphone, please raise your hand and a boardroom representative will come to you. 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. [Operator Instructions] If your question relates to a personal experience at one of our hospitals, please speak to me or another member of our executive team who are here with us today following the meeting. We are 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 meeting. These will be addressed during the Chair or Managing Director and Group CEO's 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 blue 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 today as these votes will automatically be counted in accordance with those directions. At the end of the meeting, please sign your completed voting card and place it in one of the polling boxes that will be at the back of the room at the end of the meeting. The poll will remain open for at least 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 the Chair.

Well, thanks, Henrietta. And I think we can now open today's poll. Great. So we now declare the poll open for today. Now I'm going to give a quick overview of -- from the Board's perspective, and then I'm going to ask Craig to give a more detailed presentation about the business. So my presentation. Well, it's quite an incredible year really because this year, we're celebrating 60 years in the industry. And as we saw from the video of Paul Ramsay, an incredible time. We are a business underpinned by a strong purpose that Natalie mentioned that it is about People Caring for People. And that has been the backbone of Ramsay's success and longevity forever. The past few years, however, have been some of the toughest in the hospital industry that it's faced, and that's been around the world. And I'm sure many of you would have seen media coverage in Australia on the sustainability of private hospitals, closure of hospitals around the country and interactions with health insurers, unions and government. So it's not an easy time. However, private hospitals remain a critical part of the health care systems where we operate, and Ramsay is a key provider in these systems. Now the post-pandemic recovery in earnings that we're expecting has been slower than we would all like. We, like you, have been disappointed with our trading results through this period. And I want to assure you that the Board and management are confronting these challenges in the market head-on. We're using this opportunity presented by industry disruption to strengthen our business through investing in our people, in our systems and in the expansion of our services to ensure we emerge from this period in a stronger position. Now we acknowledge the Australian Government's Private Hospital Sector Financial Health Check findings, which were announced just a few weeks ago about the sustainability of this industry. And we will be working constructively with the Private Health CEO Forum that is now being set up to work on long-term reforms to strengthen the sector's financial viability. Now Craig is going to talk a little bit more about that when he speaks. Now the company's milestone anniversary also marks the beginning of this change of leadership that we've already just talked about. We announced at the end of July, and as we have talked about Natalie came and spoke to you that she would be joining us in October as Group CEO-elect. And we're very pleased as we put out an announcement this morning that the Board has appointed Natalie as Managing Director effective the 2nd of December. She will play a crucial role in guiding the business through the next phase of growth. This transition comes at a pivotal time for the company as we refine our strategy and invest in our operations to stay at the forefront of this dynamic industry. But I want to stress, it is a changing industry. Natalie is an accomplished senior executive and leader with extensive experience driving large-scale strategic transformations, as she mentioned. And of managing through periods of uncertainty and market disruption. Along with her strong customer focus, this makes her, we believe, an exceptional candidate to drive the changes that we need at Ramsay and to artfully and skillfully accelerate our growth. Natalie spent the last 2 months, as she mentioned, immersed in the business, both here in Australia and offshore. So at this moment, I do want to just take a moment to extend the Board's deep appreciation for our retiring Managing Director and Group CEO, Craig McNally, who has played such a pivotal role in shaping Ramsay's development over many years and most recently in leaving the business through a very difficult time of the COVID pandemic. He has set the groundwork for our transformation strategy and been a strong advocate for our culture. And Craig, we wish you all the best in the next stage of your wonderful career. So let me now turn to the performance of the company. So for the results for the 12 months to the 30th of June, we reported a 203% increase in statutory net profit after tax. That was about $880.7 million (sic) [ $888.7million ]. Now I want to be clear that this included the profit on the sale of our joint venture in Asia, Ramsay Sime Darby, which we completed in December last year. So our operating profit or our net profit after tax, excluding the sale of Ramsay Sime Darby, increased 2.4% and in constant currency on a 5.4% increase in revenue. So you can see from that, revenue was growing and our expenses were growing faster. Dividends declared during the year increased 6.7% for the year to $0.80 per share, reflecting a payout ratio just above our target band of 60% to 70%. The performance for the year was driven by an improved result in Australia and all credit to them and a strong growth in the U.K., offset by lower earnings from our European operation, and that was driven by higher financing charges reflecting the increase in interest rates. The result reflects an improvement on last year, and we are generally performing better than others in the industry, particularly in Australia. But I want to stress, we are not operating at a level that the Board and management team are satisfied with. That's why we are focused on a range of transformation programs across the business to drive a better financial performance, including shareholder returns. Some of these programs were described in more detail at a recent presentation done by the Australian management team, and I encourage you all to watch the recording on our website. It provides more color on our strategy in the Australian market. While we are committed to ensuring we drive improved productivity, financial performance and that we are fairly compensated for our services, I want to be really clear, we will never compromise on clinical safety or the well-being of our patients or our employees. Following the Annual General Meeting in November 2023, I had the honor of succeeding Michael Siddle as Chair. On behalf of the nonexecutive directors, I want to reiterate our deep gratitude to Michael for his years of dedicated leadership. Board renewal is an ongoing process, and we continually evaluate its composition to maintain a balanced mix of expertise, skills and diversity. This ensures that the Board is well equipped to guide the company in a dynamic environment. In March, as I mentioned, Helen Kurincic joined us as a Non-Executive Director, and Helen will introduce herself shortly. She has extensive experience in the Australian health care sector with valuable operational executive and Board level expertise. Helen's past roles include leadership positions in a range of health care organizations and involvement in significant government policy reforms. So turning now to the outlook. The changes in our operating environment have necessitated investment in reengineering how we approach all aspects of the business. We continue to believe there are strong long-term industry fundamentals that underpin the growth of this sector. These trends include strong population growth, in particular, in the over 65 demographic and simultaneous growth in chronic disease and cancer incidents. We expect these trends will continue to drive solid growth in hospitalizations into the future. Our immediate focus in all our regions is on accelerating our business transformation programs to drive top line growth, productivity and benefits, improvement in payor terms and procurement cost savings. We also continue to look at a range of options to unlock value in our portfolio and ultimately improve returns to shareholders. Finally, on behalf of the Board, I'd like to thank all our people, including our valued doctors for the remarkable work that they do each day. It is terrific to see our teams adapting to change, embracing new ways of working and innovating to meet the needs of those we serve. Through it all, our people keep compassion, quality care and genuine connection at the heart of how we look after our patients and each other. Thank you to you, our shareholders, for supporting us through a difficult period. And please be assured that the Board is committed to driving improved outcomes for all stakeholders as we take advantage of the opportunities ahead. So thank you. I now would like to hand over to Craig to provide an update on the business. So Craig, over to you.

Thanks, David, and good morning to everyone in the room and on the webcast. I'd like to start by also thanking our people and clinicians for their ongoing commitment to our patients, delivering on Ramsay's purpose of People Caring for People, which has been the backbone of our success over the last 60 years. Turning to the key takeaways and consistent with our expectations at the full year results, we expect activity growth in FY '25 in all our regions, albeit the growth rate is expected to be below the prior period. Discussions with our payors in each market to improve tariff indexation to reflect the cumulative impact of inflation have continued. To this end, we've signed to improved contracts with payors in Australia over the last few months and have reignited discussions with others. Following the U.K. elections, we've also seen an increase in the NHS tariff for the year commencing the 1st of April '24 from 0.6% to 3.9%, which I'll discuss in more detail shortly. We continue to focus on our accelerated transformation programs to drive improved business performance across the group with a particular focus on the Australian market. We also continue to invest in our facilities footprint in a disciplined way, focusing on treatment capacity in key growth corridors. We are reviewing the business in the context of optimizing shareholder returns, and we are actively assessing a range of strategies to unlock value and drive improved performance from our portfolio of assets. This has resulted in decisions to close or restructure services and facilities in each of our regions over the last 12 months, and this process is ongoing. Following the repayment of some of our debt facilities in FY '24, we are comfortable with the funding group leverage at around 2x, which is well within the target range of less than 2.5x. We continue to expect further growth in activity in FY '25. But as I said, albeit we think the rate of growth will be lower than FY '24. This is expected to drive growth in net profit after tax from continuing operations. Ramsay recognizes that our greatest asset is our workforce, and we are focused on attracting, developing and retaining the right people with the best skills to deliver excellent patient care and our business strategy. We continue to invest in our people, focused on growing our own talent through apprenticeships, graduate pathway programs and developing our internal leaders through our Global and Regional Leadership Academies. The acute global shortage of nurses and clinical staff that we experienced during COVID has eased significantly. And while we do from time to time, still have site or skill-specific shortages, the impact on our operations is minimal. Our Ramsay Cares sustainability strategy was implemented in 2020. And since then, we have continued to make good progress across our pillars of caring for our people, our planet and our community as illustrated in the Sustainability Roadmap. From an environmental perspective, I'm pleased to announce that the Science-Based Target Initiative has reviewed and recently approved our near-term and net zero targets, confirming our Scope 1 and 2 ambition is in line with a 1.5-degree trajectory. This year, our activities in this area have helped deliver a 23% reduction in Scope 1 and 2 emissions, which was better than our FY '24 science-aligned target of a 16.8% reduction from the 2020 baseline. Activities have included rolling out energy efficiency and solar projects, and we've also reduced emissions from anesthetic gas use by 26% over the last 2 years. Engaging our suppliers remains a key focus. And this year, we achieved an important milestone to have independent sustainability assessments across 60% of suppliers by spend. We continue to work towards our goal of 80% coverage in FY '26. Reflecting our commitment in this area, we continue to link a number of our sustainability goals with our financing. This year, a successful amend and extend of the Funding Group's Sustainability-Linked Loan KPIs and targets was completed, covering over $1.7 billion of financing facilities, which is 56% of our Australian and U.K. funding. Turning to the Australian business. We constructively participated in the federal government's private hospital sector review, the purpose of which was to improve the government's understanding of the issues facing the sector at the current time. We will continue to work with the industry to address some of the longer-term pressures we all face. However, Ramsay's focus in FY '25 is on driving our own destiny through transformation programs that optimize our strong core hospital business and drive margin recovery over time. Activity trends for the first quarter have been similar to what we saw in FY '24, with surgical, medical and rehab admissions all reporting growth versus the prior period and maternity and mental health admissions declining. We continue to expect growth in activity for the full year with the growth rate impacted by the return of the Peel Health Campus to the Western Australian government, which represented about 3% of our admissions in FY '24. We have progressed discussions with our payors and negotiated 2 contracts for improved indexation during the first quarter. We continue to face the risk of above-inflation wage cost pressure, and we're ready to recommence discussions with payors if wage inflation increases above forecast levels. Given ongoing macro uncertainties, the immediate focus of our transformation programs is on activities within our remit to improve margins. Firstly, we are focused on driving volume growth by further leveraging our market-leading hospital footprint in key growth corridors. We continue to invest in robotics and treatment capacity to ensure that we are attracting the best doctors. We have developed data and analytic tools for managers to optimize their theaters, and to better target doctor recruitment. We are investing in technology for doctors, such as improved practice management software, improved referral management tools and AI that will improve our value proposition and enhance their retention. All of this is designed to drive more growth to our business. Secondly, we need to achieve appropriate payor terms and indexation. Through this process, we are remediating funding shortfalls arising from recent cost inflation exceeding historical trends. We are implementing indexation models that better reflect current cost inflation and future changes in costs. And we are developing and implementing contemporary funding models. We have achieved some recent success and remain focused on upcoming negotiations. Thirdly, we are focused on delivering sustainable productivity savings with our performance acceleration program focused on driving further sustainable labor productivity through supplying our management teams with improved data analytic tools. And finally, we have an extensive multiyear focus on driving procurement benefits across all our spend with suppliers. This program includes transforming how we move our inbound supply chain from being site-managed to a more centralized approach, along with center-led purchasing. We'll focus our buying on fewer suppliers and products, strengthening our controls. Moving to the U.K., where our acute hospital business has seen continued growth in NHS and private pay volumes over the first quarter, with growth in private insurer volumes offsetting weaker self-pay volumes. Pleasingly, since we reported our FY '24 results in August, the NHS tariff for the year commencing the 1st of April '24 has been lifted from 0.6% to 3.9%, while this will benefit revenues, it will be partially offset by further wage inflation and higher payroll taxes. NHS volume in the second half of FY '25 may also be restricted by limitations on the NHS budget imposed by the U.K. government's own budget position. Elysium opened 4 new sites in FY '25 and combined with the recent acquisition, this will deliver a 6% to 7% increase in available beds, and there's an ongoing focus on occupancy across the portfolio. Elysium continues to have discussions with its funders around indexation, which reflects inflation, in particular, from minimum wage increases and payroll taxes announced in the U.K. budget. Ramsay Santé reported good growth in revenues for the first quarter of FY '25, supported by activity growth, higher tariffs and the recent acquisition of a primary care business in Central Paris. The business continues to expect growth in activity for the full year. Discussions with the French government continue around its commitment towards ensuring the sustainability of the private sector, including establishing a multiyear tariff agreement. We are leading these discussions on behalf of the private hospital sector. The current political environment in France has created a lot of uncertainty and impacted the timeline on these discussions. And as a result of this instability, it's also difficult to be certain as to whether previously received grants and subsidies will recur from 2025. Turning to the outlook for FY '25. We expect activity to continue to grow. And while the growth rate is expected to be lower than FY '24, we've had a positive start for FY '25. We expect the increase in activity to drive growth in NPAT from continuous operations. I would reinforce that as we did in FY '24, if wage inflation increases above our forecast levels, we will be recommencing discussions with our payors to achieve fair compensation for our services. Turning to our long-term strategy. The health care industry globally continues to be tested. And as a result, we expect a lot of change over the next few years. As a leader in the provision of private health care services, we need to invest in change to build on our market position and to ensure we drive greater value from our core and improve our returns. The longer-term growth of the private health care industry continues to be underpinned by structural tailwinds, including technological and clinical developments, rising health care expenditure as a proportion of GDP, a growing and aging population and the associated rising incidence of chronic conditions, which all contribute to increasing health care costs for governments. Private health care providers have a critical role to play in supporting the health care system and establishing commercial solutions in partnership with governments will be an important part of that. With Ramsay's unmatched network of strategically located facilities, world-class health care team, industry-leading investment in clinical excellence, trusted payor relationships, targeted push into new and adjacent services and investment in technology, we feel that we are uniquely positioned to benefit from these tailwinds and deliver attractive long-term benefits to all stakeholders. Our priority is to continue to leverage and strengthen our core hospital business through a series of transformation programs and by investing in a wider range of services that support our core, ultimately driving improved outcomes for patients. As I've said, our immediate focus continues to be on improving margins and returns. I'd like to close my final public speech as CEO by once again thanking our people who have made my 37-year journey with Ramsay so incredibly rewarding. The caliber and commitment of our people is tested time and again and none more so than through COVID, where our purpose of People Caring for People really came to life. I'd like to extend my best wishes to you all for the years ahead. I leave knowing that the culture that Paul Ramsay built is alive and well, and our patients will continue to receive the best of care into the future. I'll now hand you back to David for general questions followed by the formal part of the proceedings. Thank you.

Thanks, Craig. 37 years. Great. Congratulations, really, really great. Okay. Well, now we are going to respond to questions from shareholders and in relation either to the presentations or to the business or the operations generally. Henrietta, could you please run through the general written questions first, and we'll go through that, and then we'll open it to the general questions on the floor. We've got microphones here that you can come up and if you can line up and just make sure you say your name and who you are, and we can try to address the question. Okay. So Henrietta, over to you.

Thank you, Chair. We have received questions in relation to the significant decline in the share price since 2022 from [ Michelle Eales and Neil Hine ] and company performance from [ Victor Zapia ]. We've received related questions regarding intentions with respect to Ramsay Santé from Deborah and Glenn [ Good ] and the status of negotiations with health funds from Allan and Rosemary, Baird.

Okay. Well, thanks, Henrietta. I think Craig and I have addressed some of those issues, but let me comment a little bit further. Look, we do understand shareholders concerned with the underperformance of Ramsay's share price. It has been an extremely challenging period for the health care sector and particularly the private hospital sector. This needs to change. And as I said in my address, we have a number of transformation programs underway to drive improved performance. And of course, regarding the question on negotiations with health funds, we continue to work with our payors to achieve indexation, which is trying to keep aligned with inflation over the last few years. And of course, we've got to think about future inflation as well because cost of living is high in the community, and we're very conscious of that. Craig has mentioned the negotiation of two contracts for improved indexation during the first quarter and the increases also in the NHS, which -- for the tariff in '24, '25 in the U.K. Now in terms of Ramsay Santé, we recognize that its value is not reflected in the Ramsay share price. It's important to note that during COVID, the European business provided valuable financial diversification and operation and clinical insights during the pandemic that were really invaluable. And I'm glad to see Pascal here, who runs Santé. And I know Ramsay Santé has continued to be rewarded for the work they did during COVID with the government awarding a number of imaging and primary health care licenses as well. So we continue to look at ways to create further value within the business and obviously improve returns, but more work to do.

We have received additional questions from Victor Zapia. First, if every time the government wishes to take control of RHC, you let this happen, you're destroying RHC. Explain why shareholders should tolerate this. And second, will RHC continue to be taken over by the government every time the government deems it necessary, will RHC deny the government in order to save RHC?

Okay. Well, look, we've responded to similar questions in the past, which we're referring to the role of Ramsay and the role we played during the pandemic. I'll say again that we're really proud of what we did and the incredible dedication of our staff through that period. Our relationship with governments globally strengthened as a result. It was a difficult period for everybody. And we part with all types of organizations, the benefit of our patients and all our stakeholders. But I can assure you that Ramsay always will make its own decisions.

We have another question from Amanda Hook, who has asked what sustainable measures Ramsay is involved with?

Craig has spoken to our sustainability roadmap in his address, which is very important about ESG matters. And I would also commend you to read our impact report that is very extensive, and it's available on our website and outlines how we progress Ramsay CARES goals in our Australian and the U.K. operations and in Europe through Ramsay Santé during the last financial year.

We have a question from Kate Duncan, who has asked, why don't you value your nursing staff?

Well, let me say welcome to your shareholders and staff here today, and you're very welcome. I want to start by saying that we do value and respect all our people and appreciate all that you do, the work you do by our nurses and our clinical staff every day, and we understand that it is trying. Because at the end of the day, our people, as we've said, are the heart of what we do and they are the driving force behind high-quality care. It's not us who do it, it's our staff who do that. And we deliver to millions of patients every year. Now we understand that some of our nurses are advocating for changes, and they believe that they are very important. And we are committed. I want to say we are very committed to working through those discussions respectfully and in good faith. While our talks do reflect different perspectives, they are an opportunity to reaffirm how central our nursing staff are, and we are committed to working through any concerns constructively and respectfully. Our goal is to find a balanced outcome that supports our people and is sustainable for the business and trying to get that balance right so we can continue investing in a safe and modern services and providing attractive places to work. Henrietta?

Chair, we have received two questions on the proposals made in 2022 by a consortium of financial investors led by KKR to acquire Ramsay. The questions expressed discontent about the outcome. The questions were received from [ Michelle Eales, Neil Hine and Alan Woo ].

So we've had several questions on this matter over the last couple of years. And we've tried to consistently make it very clear that we did not reject proposals made in 2022 by a consortium of financial investors led by KKR to acquire Ramsay Private Equity. As we previously reassured shareholders, we believe we did everything we could to facilitate a constructive engagement with the consortium. In the end, the proposal was withdrawn by KKR and its consortium. So our focus, as always, is on delivering the best possible care for our patients and realizing the benefits from these transformation programs that we've got underway and of course, to drive a better financial performance, which we've got to do for all our shareholders.

We have received a question from corporate shareholders, Stokes Partners Super Fund, which I will read out in full. Further to my question at last year's Annual General Meeting regarding the amendment to the 2023 annual report, in order to correct the misstatement of a director's claimed professional qualification, to which the Chair responded that prior to the appointment of any director or senior executive, background checks are carried out to verify the credentials of the individual. Could the Chair now please explain the failure in the company's verification process that led to that correction and the steps the company takes to verify the retention of stated qualifications given its importance to the company and in the medical health field.

Well, thanks, Henrietta, and thanks for this question. And let me again reiterate that prior to the appointment of any director or any senior executive, we do, do background checks and carried out to verify the credentials of any individual. Now in relation to James, appropriate background checks were undertaken in accordance with requirement, and we're satisfied with the verification process in place. Now let me ask Henrietta, our General Counsel, to provide some additional details in relation to James. In relation to the broader question about qualification of our people, I confirm that appropriate internal processes are in place and audits undertaken. So Henrietta?

Mr. McMurdo has a Bachelor of Economics and passed the Institute of Chartered Accountants in England Wales, ICAEW exams in 1997. Mr. McMurdo is not and does not hold himself out to be a practicing accountant. We removed the post nominal ICA against his name last year after becoming aware of the ICAEW's view, but Mr. McMurdo is not able to use them because he is not currently an ICAEW member. To address the ongoing concern that you have raised about potential confusion, we have now removed any reference to accounting experience in Mr. McMurdo's biographical details. Finally, Chair, we have received questions from corporate shareholder, Demir Proprietary Limited on the strength of the company's cybersecurity and's internal controls.

Right. So look, internal controls are really important because controls are about managing a business well. And it is a focus from the Board, and it goes all the way through the organization. One of the Board's key responsibilities is monitoring systems of risk management, to be internal controls and legal compliance, and we're supporting this by the Board committee structure and an internal audit function. Now our Group Chief Risk Officer, Andrew Wearne, is here today. Andrew is in the front here. And in terms of cybersecurity, I'm going to pass to Craig to answer that one on cyber.

Thank you, David. I've certainly learned more about cybersecurity in the last 2 or 3 years than I ever thought was possible. So cybersecurity is an issue for all industries, but we're acutely aware that health is a target and of the threat landscape. Ramsay recognizes the importance of cybersecurity and privacy in an increasingly hostile environment and in light of the increasing importance of digital systems. As previously disclosed, our investment in this area has increased significantly over the last few years. We're continuously working on strengthening our protection measures and preempting the prospect of cyber risk as much as possible. We're also focusing on response and resilience in the event of an attack. We have a global cybersecurity framework, which includes controls associated with prevention, detection and recovery. It aligns with the NIST cybersecurity framework and includes increasing annual maturity targets. The framework is externally validated, routinely tested and subject to ongoing review and continuous improvement. Our information security teams across our regions, led by our Group Chief Information Security Officer, are continuously monitoring our systems and the external threats to limit the risk as much as we can.

Chair, that concludes the general questions received in advance of the meeting.

Okay. Well, thanks, Henrietta, and thank you to all our shareholders who sent in previous questions. So now we're going to move to invite questions from the floor, and then we will go to online questions. So let's start with questions from the floor first. And if you could just keep them to only 2 questions and keep them pretty short, and then we'll go from there. Okay.

Mr. Chairman, we have a question from shareholder, Charlie Kingston.

Charlie Kingston from K Capital. Can I just ask a few questions, please? Firstly, around the margins or EBIT margins that the company has earned and as has been discussed today, you are hoping to improve those EBIT margins. But I was hoping to understand what you think a sustainable target is going forward. The company has consistently said that it wants to get back to a pre-COVID level of profitability, where the Australian division made around about 14% EBIT margins. Today, we're closer to 9%, still seems like a fair margin. But this 9% is similar to what we used to earn back in 2010, 2011, et cetera. And clearly, again, compared to the rest of the industry, Healthscope, I presume, would be very envious of our margins today, as with a lot of unprofitable providers out there. But the narrative for Ramsay, and I suppose that the bull case for the company going forward, noting that we are trading at a 10-year low. So everyone is looking for a bit of hope with the stock. But the bull case is that, of course, the insurers, you said, are making more of the profit pool, which indeed their margins have been going up and ours are slightly down compared to where they once were. But again, we are still making a pretty nice EBIT margin, but I was just hoping to understand the Board's view on what a fair margin target is going forward and how we intend on getting there. I'm sure that cost cuts wouldn't be populating all the lovely staff here and they wouldn't be excited about any cost cuts or sort of wage hits given et cetera. But how do you get to that target? And what is a fair target, please?

Okay. Well, thanks, Charlie. Look, you're right. The company as our costs have increased and we haven't had the same revenue coming in from payors that inevitably that puts a squeeze on your margins. That's been true around the world. We have not declared a target margin going forward, but we are trying to drive what we can to reduce our costs in areas of -- from procurement and supplies and things like that, to improving our revenues and looking for how we can extract more from the payors. So it's a work in progress. We think we've got opportunity to improve going forward, but we have not said what that will be or what time frame.

Okay. Second question around the global.

Just one more. This is the last one.

Two quick questions, if that's all right.

Can you just put them together?

Yes, sure. The global strategy, which I believe has failed the Empire Building strategy. In 2014, we bought Ramsay Santé or a stake in Ramsay Santé for EUR 16.75. Today, that price is $11.80, 10 years later. I'm not sure if there's been any consolidations. But if not, that's clearly a nasty loss near 30% over 10 years. We bought a business of private equity, Elysium for $1.4 billion. I think that's been a bad acquisition. The targets were all significantly missed. All the global businesses earn a very inferior margin to the core Australian business. So I was just hoping to understand, I mean, part of the strategic review, which seems to be ongoing. I don't think there's any update today. When can we actually expect an outcome from the global sort of Empire building, which I believe has failed? Why has it failed? And maybe it was a question for the incoming CEO. Can we expect just to focus on getting our Australian business back to where it once was? And is any M&A sort of on the cards going forward? And then to ask the other one was just around the property book, noting the KKR bid everyone at the time said property was a key part of that bid. Clearly, times have changed. Interest rates are up, cap rates have blown out, but everyone at the time was sort of suggesting that the property that we own is worth $30 to $35 per share. Share price today is $38, so not implying much of a value. But could you give us your thoughts on value of the properties that we do own and if there's any intention to sell those personally, I wouldn't -- I'm convinced as to whether we should, given the listed peer, HCW, [indiscernible] health care hospital owner, that floated at $2. It's been smashed. It's now floating at $1.10. So not sure whether it would be wise to sort of spin off or sell our properties. But clearly, it's very significant to the Ramsay value. So if you could provide what you actually think those properties are worth because it does seem like a very large proportion of our share price today.

Okay. Well, thanks, Charlie. I mean, firstly, I'll address global strategy and then the property portfolio. Look, our global strategy, I think both Craig and I did touch on it. We continue to work actively with both our U.K. assets and with Santé to improve our operating results as much as we can. We have publicly said we are actively managing the portfolio, and we know the return on capital that we need to get. And if we're not getting the return on capital, we'll look at whatever options we need to do. But we have not declared any time frame at all. But I want you to know it is very actively being managed, and we will continue to look at what is in the best interest of shareholders going forward. So that's the first one. In terms of the property book, yes, we've looked at the property in many different ways. And Martyn, who's in the front here, we have looked at different options. They are incredibly valuable assets. And we will continue to look at what is in the best interest of shareholders and the maximization of those assets. And we've looked at many options. There's many different considerations you've got to look at in terms of some of the proposals that came from KKR, but it's not completely straightforward. But if it's in our interest to do so and your interest, we will actively do that. So -- but we don't want to find ourselves where we're caught with long-term leases that we -- that may or may not change. So -- but we're happy to pick this up later on. So thank you very much.

Mr. Chairman, we have a question from employee shareholder, Carol Cook.

My name is Carol Cook. I'm a registered nurse and registered midwife. I've worked at North Shore Private for 26 years. And this is my certificate, but I'm not being supported. I've loved the marketing today. On the cold face, I just want you to know that your patients are not getting the best care. When we opened up North Shore Private 26 years ago, I was there before we even built the building, had a lot to do with Paul Ramsay. He used to come in and work with us. He would give us equipment, whatever we wanted. We were well staffed. I want you to know that when I come to work, not only am I caring for your women, your babies, I have 2 lives in my hands. 12-hour shifts, I start at 7, I finish at 7:30 at night. I don't get breaks. I answer the phone. I admit patients, I get water, I change flowers. I deal with PPHs, I deal with interpreting CTGs. I'm your hands, I'm your patient safety. And without me and all my team here, you would not have safe practices, and it's getting unsafe. Without -- on every shift, we would probably do a risk man. I'm a very, very experienced midwife. And we work as a team here. It's not the doctors. I've been so embarrassed -- I'm not embarrassed. You've talked about the doctors, and I know they bring income in, David. Without the doctors, you don't have it. But it's Ramsay Health Care. Without nurses, your patients will not come. And you've got to be really worried that outside in those streets, you have got nurses who have taken time off to be here, unpaid to let everyone know that we are hurting. Our patients are hurting, our patient safety is down. Our ratios are very poor. So, okay, have I asked the question? I think you need to open your eyes up and talk to people like me because I am the eyes and the hands to the doctors. When there is a disaster at 2:00 a.m. in the morning at North Shore Private, it is me and my team that are dealing with it. Okay. And you noticed that we're practically all women. Why is that? I actually heard a sexist comment coming from one male coming up the stairs today saying, "No men here". Why aren't the men here? So I will say I am a proud employee of North Shore Private. I have stood by you. 3 years, I wore an N95 mask. And you know what that's like in PPE? We talk patients in. We didn't know about COVID. I had mothers who were critically ill and babies. I did that for you. And where are you behind me now?

Well, I mean, Carol, I mean, firstly, thank you and to the whole team for all that you do. We're very conscious of the work you do and how dependent we are on what you do every day. And we want to find a way through this. And the only way we can do this is by talking. And -- so let's keep that dialogue going because we need each other. We need you, and we care deeply about it. And if there's anything that in terms of patient care or in terms of staff care that you're worried about, please let us know because for all of us -- yes. Okay. Okay. Well, look, I'm giving you the opportunity, and that's what we want to do. And so thank you for sharing that, and we'll -- let's keep going to the next question, but thank you. And thank you for all that you do.

Mr. Chairman, the next question is from employee shareholder, Deanna Hayes.

Yes, I'm also a long-term employee of Ramsay Health Care. I've been with St. George Private for 23 years. I've been listening today, a lot of your words, some of which resonate, some of which I don't really think that are true anymore for the company. You said we need to keep talking. We've been in this enterprise bargaining -- protracted enterprise bargaining this time around for 20 months already. We've been talking. We've told them. We've told them stories from the floor. We have representatives from all over New South Wales. We have been talking, and we still can't convince you that this is what we need. We say -- you say that Ramsay is living by their mantra of people caring for people. This certainly isn't obvious to your workforce. I'm sure some of you in this room know that we've been in this bargaining period already for nurses and midwives. Ramsay have refused to acknowledge their valuable staff, most of whom have university degrees in a cost of living crisis, and we are the people who keep your business making profits. My question is, when will Ramsay finally agree to our reasonable demands around the pay rise that reflects that we are valued and agreed to clauses to allow us to provide safe staffing for your patients?

Thanks, Deanna. Look, I can only reiterate, we've got to keep talking, and I understand the frustration. But if we stop talking, we'll never get to a conclusion. And as you can see, there's lots of different things we're all trying to wrestle with. But look, I know that there's a number of meetings taking place. So we'll just keep at it, and we've got to get to a conclusion. So we want to get to a conclusion.

We do too.

Yes, great.

Mr. Chairman, next question is from shareholder, David Kirwan.

First of all, [indiscernible], I'm going to be voting for your reelection for all it's worth. And I'd like to welcome Natalie as well and commend you as obviously being someone who's willing to embrace a challenge. I do have 2 questions. Last year, and I'm going to read them purposely, I'm sorry, rather than Natalie. But last year, when asked about the terrible Ramsay events in Auburn, Mr. Siddle said, "I have absolutely no idea what you're talking about". And then normally, rather for both, Mr. McNally, flat out refused to answer at all. So I pose 2 questions to the new directors, the other directors. And as warned last year, the terrible Ramsay events have, in fact, started to come to light. We've all seen the press reports about Albury. And I'm ashamed -- deeply ashamed to say that we had an epidemic of fat embolism-induced disease after total knee replacement in Albury, and this included 5 deaths. You're primarily a hospital company. I'm about to show you a surgical instrument, which can be inserted in the canal of a long bone. That instrument can be inserted into the canal of a long bone during knee replacement. It doesn't have to be used. But if it is, this insertion must be done with exquisite gentleness. If not, liquid bone marrow, oil or fat will be forced into the circulation. And as Mr. McNally knows well, more bones rotted equals more oil injected. The oil injection is toxic, bone marrow fat, it's called, but it's an oil. It causes an immediate clotting disturbance and causes inflammation to develop in the lung, the latter taking several hours. So patients wake up initially after surgery quite normally, no problem with the anesthetic. But as the lung changes unfold, they become very sick, usually takes 8 to 12 hours. Unwanted clotting always occurs initially. It's followed by its opposite, the unwanted -- and they can coexist, but unwanted bleeding then follows. Fat embolism is a very creative condition. It can present many ways, including a variety of heart, lung and brain effects and of course, the widely disturbed clotting. And as clinicians -- sorry, and clinicians often miss it, believe it or not. Even once when you give them a robot, they'll still miss it. They won't cause it as much, but robots do not attract good doctors, that robots help poor doctors to do an operation better, but they don't improve outcomes that's been shown. Thanks for that lovely applause. I might just digress for a little bit, if you don't mind. People caring for people. It seems to have that, that little mantra, a little marketing trick has upset people, at least it's illustrated to divide. You guys are pinch stripes, accountants, your directors, your job is to care about share price, profit, assets, et cetera, which I know you do very well. Your job is not to care for people. That's the role of doctors and nurses. And for Ramsay to somehow -- for Ramsay to intentionally suggest to the market somehow that they are better than other companies, say, banks or supermarkets or telecommunications companies that they are people caring for people, it's -- I think it's deeply offensive to those who actually provide that care. Doctors and nurses are the people who care for people. It is stolen valor, no less to assert that it's the company that does so. I bet you've never put your hands on a surgical instrument before, but I may be wrong. Anyway, please pass it around. I'll get back to it. Thanks for your support. I have 2 questions, and I'll spend less time on the microphone than all have precede to speak. The epidemic cases only occurred after those rods were used. All 5 deceased patients awoke normally after surgery, then became sick hours later and died in a day or 2. After the first death, the others should have been prevented, but they were not. And Ramsay were warned at the highest level in writing and in person that there would be more deaths. The explanatory warning letter presented to Ramsay even mentioned accelerated blood clot formation. In response, Ramsay restricted bilateral knee replacement for a time, but fat embolism problems continued with single total knee replacement if the rods were used. The patient harm and severe bleeding was common, yet incredulously, Ramsay abandoned their single restriction. So as Mr. McNally knows well, that even after the warnings, Ramsay actions led to the occurrence of more patient harm. The surgeon peer review group all understand the medicine thoroughly and exceedingly well. Some of us have published internationally on it. We're international experts now because of the Albury experience I might add. However, the coroner and the inquest lawyers are yet to legally work their way through any of the medical events. Let's face it, they're not doctors. Peer review is a profoundly important thing and Ramsay's have prevented it. Only a judge can suggest or even determine whether any of these rods were inserted with the intention of causing harm. So Mr. Chairman, my 2 questions. Ramsay have attempted to convey an alternate diagnosis of blood clots rather than fat embolism. Perhaps that they won't -- they can say they weren't warned. But will the Board members, the new Board members, fully support the investigation and continuation of the inquest unfettered by Ramsay. So the inquest can support the rights of victims rather than deceive them. And what actions will the Board take to assist the inquest in its support for the family of victims?

So that's the first question. Second question?

Your first question, would anyone like to answer it?

No, let's take the second question and then...

So yes, the first question is -- well, you know the first question. Second question, as the terrible Ramsay events that Mr. Siddle knew nothing about come to light further, brand damage will occur, and that will affect share price at a very vulnerable time. The company will survive this damage, though, if you have a proper cleanout. But there is a concern for shareholders that litigation arising from the inquest, especially as it expands to include all 5 deaths now, will lead to claims for damages. What does the Board intend to do about this? How do they intend to protect the shareholders who are not perpetrators of any Ramsay wrongdoing from that financial burden? And I might paraphrase by saying that Mr. Siddle wanted to sell the company in 2021. KKR apparently didn't want to buy it. Maybe KKR had the same concern that I've just expressed right now.

Yes. I think -- Thanks, David. So look, a few points. Under the Corporations Act, we're actually responsible to the organization, to all parts, not just to shareholders, and that's our responsibility. So we take it very very carefully. Look, people caring for people, we are not saying we're better than anybody else. We're just saying people are at the heart of what we do. So put that to the side. In answer to your 2 questions, look, we will -- we've got to pick that up. You can't ask the directors. We don't have enough information in front of us right now. But we will come back and talk to you afterwards. And you've got more information, we'll take that on board and see what...

I think those directors need that information, don't they? Because otherwise, they're going to assume responsibility for the actions of past directors. And let's face it. In 2020, 2019, there was a massive Board spill, massive board spill. All of a sudden, after the last death and Mr. Siddle was not [indiscernible] that either.

We've got our Chief Medical Officers here. We will look at this and if there's.

He will know all about fat embolism. He's an intensivist. So that's great.

Yes. So look, I'm not -- I don't want to endorse or criticize. I'm just saying we'll keep looking at it. Look, in terms of brand damage, look, we stand by our reputation every day. And we hope to be able to do the right thing. I mean, from staff to patients, to shareholders, to everyone. So look, we will pick that up. I can't give you any more assurance of that, but that's our job to do that.

Well, I'll just close by saying I'm not here for the nurses. I'm not here for myself as a shareholder. I'm actually here for the families of the people who died. And the dozens of people who suffered terrible harm.

David, I relate to that enormously, and I just want to be able to say we just need to get the information that we can. And so we can see you afterwards. We'll pick up that information, that would be great. Okay. Thank you.

Mr. Chairman, next question is from proxy holder, Peter Gregory from the Australian Shareholders' Association.

I'm also a shareholder. I'm here representing Australian Shareholders' Association, which is a not-for-profit independent volunteer-led organization that represents the interest of individual shareholders. Today, I have proxies from 174 shareholders totaling about 250,000 shares. And I'll just further note that about 80% of Ramsay's shareholders own less than 1,000 shares. So individual shareholders are important to Ramsay.

Right, very much so.

2 questions. Firstly, about reimbursement. Ramsay is the middleman between the people who have the money and whose charter it is to spend it appropriately and the patients who need the services and need the care. Craig in his address talked about contemporary funding models. I'd like to ask if he could expand on that and what it means and also share the ways that Ramsay is working to achieve a different approach to funding moving forward?

Great. Craig, would you like to have a go at that?

Well certainly, the relationship we have with health funds is a really important part of the way we operate the business. And so for a long time, when the industry was growing, health funds and the hospital operators all grew at the same time. And so the -- whilst there was always a tension between health funds and hospitals around funding agreements and pricing, particularly, that certainly increased dramatically over the last 5 years. And so what we've seen is a massive shift of profitability and margin from the hospital sector to the health insurers. And so rebasing that is really important. So what we need to do is continue to engage with insurers. And when we talk about contemporary funding models, it's about how we share risk. So rather than -- not rather than, the whole Australian system is really built up on a fee-for-service model. And so how do we look at what that should encompass? Should it be bundled funding? And so rather than siloed funding where you get paid for different pieces of it. Should it be -- we have a model which we've had in Adelaide for quite some time and a capitated model. So it's looking at what can we do to increase the value of private health care by working with the insurers. And changing reimbursement systems is really sensitive and takes a long time. So to be able to pilot new models and test them and see whether they achieve the benefits. And we've got some models that we have in orthopedics and rehab where we bundle a payment and then try and look at how the care is provided within that package. So it's really important that the engagement continues and that we pilot new funding models to see whether they're effective, but it does take a long time for those things to change and to then impact what happens down the track.

Okay. Another question. Ramsay has a long history of developing new facilities and improving existing ones. Now many of those in process have been impacted by delays. You've experienced increased building costs and interest rates are steadily going up. How is this impacting on the return on investment Ramsay is achieving for these projects? Have any been changed or canceled? And how will this affect future projects?

Right. Well, Peter, you're right. And as the other thing is they are often multiyear projects when we start to build or do a development on a new site. So sometimes you start with a certain set of financials and they completely change through that period as well. I'll get Craig to mention -- take you through it. But look, we're actively reviewing the portfolio, and it's reviewed every month in terms of progress. We've looked at our return rates, how we're managing the costs and what return on capital we need, what hurdle rates. So Craig, do you want to add anything else on that?

Yes. Thanks, David. Peter, there's no question that the investments that we made or decisions on investments that we made prior to COVID that we then had to deliver through COVID haven't hit the returns yet that we had anticipated. And that's a combination of increased costs, the increasing construction costs, but also that deterioration of margin that we've spoken about through that period of time. And it has impacted the way we look at current projects, certainly, increased construction costs make them more difficult. We have increased the hurdle rate for investment. So that's gone from what was a 10% post-tax hurdle to a 12% post-tax hurdle, and that's to reflect the increasing interest rates. So business cases for investment are more challenging. There's no question. However, we do have -- still have a strong pipeline of those opportunities that despite those impacts still meet the hurdle rates. And so when we look at incremental investment, we've got to be sure where the market is going to be or as best as we can, understand where the market is going to be not next year, but in 5 and 10 years because it takes a number of years for those investments to come online.

Thanks, Peter. Good. One more question.

Mr. Chairman, we have Darren Peters, employee shareholder.

I'd like to know why Queensland nurses are paid more than New South Wales nurses.

Look, I think that there's a lot of EBAs that are different around the country. But look, as I said, we need to sit down and get this sorted out here in New South Wales. And that's our intent. And so I think that's what I want to focus on going forward. Okay. If there's no more questions in the room, Henrietta, are there any online?

There are a number of questions we've received online. The first is from Mrs. Jill Margaret Rathbourn. Prior to COVID, the profits were growing strongly over the preceding 10 years. Since then, profits have declined very substantially and 2024 profits are below 2014 profits. It is recognized that COVID was a major disruption to health care businesses as well as leading to inflation. What is preventing Ramsay from getting back to growing profits continuously and exceeding the pre-COVID profits? To what extent is government control the problem?

Well, I think we've sort of addressed part of that. I mean the short version is that our costs have increased with inflation enormously, and we have not been compensated by either governments or private health insurers. So therefore, margins have declined. So that's a short version.

We've received a further question from Ms. Karen [indiscernible]. With the current contractual issues happening between Healthscope and the insurers, do you envisage that some doctors may transition over to Ramsay facilities?

Sorry, say that again, Henrietta what was...

So with the difficulties happening between Healthscope and the insurers, do you envisage that some doctors will transition from those Healthscope facilities to Ramsay?

They may.

A further question from Ms. Athena Risoli. Anecdotal evidence is that sick people dread going to hospitals. COVID showed the fallibility of hospitals. What can be done to repair the lack of trust in hospitals as a significant part of the population?

Right. Well, that's a big question. But I think we've got to make the experience as welcoming and enjoyable as possible, and that's why our staff is so important to that.

There's a further question from Mr. [Kartan]. RHC share price is at a historic low. Has RHC become a takeover target again? And what defense strategy does RHC have?

I really can't comment on that because that depends on how other people consider Ramsay. But I can -- all we can say is we're focused on improving the operations of the business, doing everything we possibly can to do what we do every day, which is run great hospitals.

That concludes the online questions.

Great. Okay. Well, thank you, Henrietta. As there's no more questions, we're going to move to the formal agenda. But thank you for all the questions. I mean that's, I think, been a good opportunity for people to express where they're at. And look to the shareholder staff, thank you for coming, and we really appreciate and we've got more work to do. So -- but we are committed to getting it done. Okay. So the first item of business is the consideration of the financial report of the company as controlled entities and the reports of directors and auditor for the financial year ended 30th of June 2024. While there is no resolution for this item, it's an opportunity for shareholders to ask questions on the accounts. And we have our auditor, Mr. Ryan Fisk from Ernst & Young, present and available to answer any questions you have on the conduct of the audit, preparation, content of the auditor's report and the company's accounting policies and the auditor's independence. Welcome to the meeting, Ryan. Good to have you here. If any shareholders present would like to ask a question on the accounts, please make your way to the microphone. Please raise your hand if you need assistance. So any questions on the accounts? It doesn't look like there are any questions. So Henrietta, are there any questions from shareholders?

No questions online.

Okay. Thank you. Henrietta, as there are no more questions, we will move to the next item of business. The second item is the adoption of the 2024 remuneration report. As we have covered, financial year '24 was another challenging period for the health care industry. The sector faced ongoing cost pressures, particularly from labor inflation, which are not fully covered by current reimbursement structures as well as rising interest rates. While there was a gradual, albeit inconsistent recovery in business environment, Ramsay did not meet its financial expectations in financial year '24. The Board has worked to align the remuneration framework and outcomes with performance and shareholder outcomes. Reflecting the group's performance in financial year '24, the short-term incentive vested at 48% of the maximum for the Group CEO and 41.6% or 7% for the CFO and the financial year '22 long-term incentive did not vest at all. In addition, no increases were made to fixed remuneration for executive KMP for the '24 year, and there are no planned changes for '25. So if any shareholders would like to ask a question on remuneration report, please make your way to the microphone, but our view is that the remuneration was commensurate with the performance, and none of us were happy with the performance. Any questions? Okay. I'm going to -- look, stand up if you and go quickly, but I'm going to keep moving forward. Are there are no more questions in the room, Henrietta, are there any questions online?

No questions online, David.

Okay. Let's keep going. Are there -- so the proxy results are shown on the screen. So there they are there. And if you haven't voted, can you please vote on your blue voting card now. Okay. Just give you a few seconds if you need to do that. Okay. The third item is the election of directors. As I am the first director to be considered for reelection, I'm going to step down from the Chair and hand over to Karen Penrose, who is the Chair of the Audit Committee. So Karen, over to you.

Good afternoon, everybody. Thank you, David. Of course, David is well known to many of you. He has been the Chair since November 2023, having formerly been the Lead Independent Director since March 2020 and a Non-executive Director since November 2017. On behalf of the Board, I strongly recommend a vote in favor of David's reelection. Before we get to questions, I would like to invite David to say a few words in relation to his reelection. David?

Thanks, Karen. Well, look, what do I say, I mean, look, despite all the challenges we've had with COVID, health entry changes, our desire to have -- look after our staff, tariff structures, I do fundamentally believe this company has got a great future, and that's why I'm here. I do think we need to adapt. And I think we need to be leaders in the health industry in that change process. And I think we've begun that. And I think we are investing in new technologies, and we're going to look at new things we can do. And that's what I want to be a part of. And I look for -- well, I want to represent you in that change program. I've had enormous experience in -- not always successful, but mostly in big complex change programs. I do desperately care about providing great service to -- and looking after staff because I think that's what makes great companies. I think that driving new technologies in this age of technology innovation is critically important to any organization. And of course, we need to work with governments and other key bodies in the industry to continue to change and drive innovation. And of course, now it's amazing. I've been here 7 years. So I'm part of the problem or the solution. I'm not sure which one anyway. And of course, I've been on public listed boards. So look, I'm looking forward to -- should you vote me on to work in your best interest and for you and for the whole organization, we've got a lot of work to do. And I'm really committed to working with this incredible Board and with Natalie, and we look forward to keeping in touch with Craig. So I'm pleased to make myself available. Thanks, Karen.

Thank you, David. Can I ask if there are any questions from shareholders in the room? Okay. Thank you, Henrietta. Any questions...

No questions online, Karen.

All right. Thank you. As there are no more questions, can you please ensure that you cast your vote on this item by marking your blue voting card. The proxy results are now shown on the screen. And congratulations, David. I will now hand the chair back to you.

Okay. I'm still here. Okay. Thank you. It looks like you got me for a bit longer. Okay. Well, thanks, Karen, and thank you for your shareholders for your support. Now the second director to be considered for reelection is Dr. Claudia Suessmuth Dyckerhoff and delighted to have Claudia here. And on behalf of the Board, I just want to say how -- what an important role Claudia plays, and we strongly recommend her where she brings enormous experience across Asia and Europe. So Claudia, would you like to say a few words? You're going to come up here? Yes. Great.

Thank you, Chair, and good morning, everyone. So you know it already, I'm Claudia Suessmuth Dyckerhoff, and I cannot tell you how grateful I am to be here in person with all of you. When I look back at my commentary from 2021, back then, I could not join due to the pandemic and the related travel restrictions. The world has changed quite a bit with COVID since then, and the health care environment is clearly a different one. I stand before you today seeking your support for my reelection to the Board of Ramsay Health Care. Let me briefly provide a little bit of background about myself and clearly, more importantly, about my work on the Ramsay Board and what excites me about serving on the Ramsay Board. I have had the privilege of serving Ramsay as an Independent Non-executive Director since 2018. I also serve on the Risk Management Committee. I am, I think you can tell from my accent, a German passport holder, happily married mother of 5 children between 11 and 24 years. My family and I lived in Asia for a long time, more than 17 years, and all my work was focused on health care across the region. And because of that work, I got quite deep into health systems work and quickly learned how important it is to align the needs of different stakeholders within the system and that this is the only way to be able to deliver the best outcomes for patients. I'm a dedicated and passionate health care person. And after 21 years in consulting in health care, I was approached to join global boards, and that's what I did. I moved into non-executive Board roles and work with large corporates, listed as well as start-ups in the health care space. In 2022, we moved back to Switzerland, our home base because as a family, we went through quite a lot during COVID in China and Hong Kong wasn't much better. But I keep my network in Asia very active. My heart goes for Asia and this region, but also for Europe. And so I come back to Asia every 8 to 10 weeks. As stated at the beginning of my introduction, the pandemic was a clear catalyst for significant change for Ramsay and the industry more broadly. And I'm very, very proud of the way how Ramsay -- and Ramsay is not the name, but Ramsay is the people met the challenges we faced and supported the public system across our regions because there were a lot of demands that typically we didn't have. And Ramsay, the people made it clear that we are a very reliable partner that we take our duties very seriously and that we do what is best for our patients. Now the changes are not getting lower bar. We are engaging now with more important long-term trends shaping the health care sector. There are positive ones like technology advancements, but there are also societal and demographic shifts that are creating new challenges. And I'm sure that there are various drivers of health care demand that we, as Ramsay can address. And yes, we talked about it at length in different parts of the presentations. There are challenges to overcome for us in markets like Australia or France, and we constantly need to bridge this gap time-wise and resource-wise when health care systems need longer, longer time to adjust the reimbursement in line with the real health care costs. That's a challenge we are always confronted with. Now what makes me really confident about our ability to take full advantage of the increase in demand is, number one, our focus on comprehensive health care networks, then I'm very proud and excited about the expansion of our clinical capabilities and the excellence in the core key priority therapeutic areas. Our real focus on outcomes, our digital enablement, and that is really key to optimally serve our patients, but also to really support performance management at the hospital level. We need that granularity, and we need the data to really support what the hospitals and the people in the hospitals are doing. And then we mentioned it a few times, but I strongly believe in our people. We have amazing talent in Ramsay. And also we invest significantly in systematic talent development. Great people deserve great support. And I think that's what they get in Ramsay. And if there are areas that we need to improve, we will improve. But then they will do the best for our patients, and that's what really counts. Now personally, I believe that my extensive international experience in health care from pharma to provider to payer as well as my contribution to large transformations, utilizing technologies to drive qualitative, but also, as I said, quantitative improvements will also help and be a contribution to Ramsay. So I respect your support for my reelection and the responsibility that goes with that to work diligently as a Board member for the benefit of all Ramsay shareholders. And I thank you for your attention.

Thanks, Claudia. That's great. Now are there any questions from shareholders to Claudia about her nomination? Yes, Peter. We don't need to introduce you again.

Back again. Claudia, thanks for those short words. I'd like to ask, given that you're from Europe, which is a very significant contributor to Ramsay's business and future success. If you can expand a little on the contemporary knowledge and experience you have of health care delivery in Europe and how that contributes to the operation of the Ramsay Board?

Happy to do that. Peter, it was right. Yes. As I said, I mean, I say now my focus has very much been on Asia because I lived and worked in Asia for 17 years. But in my role as a consultant, I always kept very close to the U.S. system as well as to the European system. And you know what, I follow the different trends. And I would say, yes, there are -- in Europe, there are some special challenges and France is clearly a challenge. It's maybe the acceleration of health care costs increasing and reimbursement levels kind of being behind. And I think the U.K. is a great example for where it worked over time. The key takeaways for me are in Europe, we need to always be patient how long it takes on the one hand, but also be innovative in terms of our delivery. And I think what France is doing to really think about, for instance, how to start with primary care, create a loyalty to the patient and show how we can support the continuum of care is the right trend to go for. And also digitalization as we can really leverage within Ramsay from the whole Capio acquisition is still where we can do more. And that's now what the team is doing on the digitalization. So I think I personally -- I follow not only those trends, but I'm also serving other companies on the Board that for whom Europe is a big market. And so I think I'm very close to those trends.

Thanks, Claudia. Thanks, Peter. Any more questions? Okay. Henrietta, any written questions?

No written questions, David.

Okay. Well, as there's no more questions, please ensure that you cast your vote on this item making on the blue card and the proxy results should pop up -- there they are. Great. Okay. So congratulations, Claudia. Really good. Okay. The third director to be considered for election is Helen Kurincic, who we've spoken about before, and she joined the Board in March and has just been a great contributor to the Board. So on behalf of the Board, we strongly recommend and delighted to have Helen on the Board. So over to you, Helen.

Thank you, Chair, and good afternoon. Thank you, shareholders, for considering my election as an Independent Non-Executive Director of our company. I have a track record of passion for and commitment to health care over my entire working career. I believe there is no greater impact one can have on a nation's individual and collective lives than through health care. My last operational leadership role was as the COO and Director during the first 7 years of the formation, rapid growth and development of radiation oncology and cardiology business, GenesisCare. My involvement with Genesis spanned its earliest inception and management and doctor buyout during the GFC, rapid organic growth through M&A and through public-private partnerships to become the first and largest of its kind in Australia with a large presence in hospitals, including Ramsay. In that period, we delivered transformational change in access and quality outcomes for patients and strong financial outcomes for shareholders. Oncology and cardiology are key therapeutic areas for Ramsay and public-private partnership opportunities and ongoing focus. Earlier operational leadership roles have included being the CEO of HeartCare Victoria, CEO of residential aged care provider, Benetas, creating a high-growth aged care at home segment, leading the early days of those services through to being a clinical nurse specialist in intensive care, which has given me knowledge of hospitals from the ground up. From a governance perspective, my first listed company Board role was nearly 20 years ago now at DCA Group, an ASX 100 diagnostic imaging and aged care business. Over the last 9 years, I've held both Chair and Non-executive Director roles on listed company boards predominantly in health care. In total, during my career, I've been on over a dozen health care boards in areas, including diagnostic imaging, clinical genetics, medical devices, mental health, public hospitals and private health insurance. Until earlier this year, I was on the Board of private health insurer HBF over the last 8 years as it underwent a major transformation strategy. I've also contributed to health care government policy reform in the past and have been a health care advisor to global and local investment firms. In summary, I believe my strategic and risk management skills and experience across public, private equity and listed health care spanning a 360-degree view around hospital, medical specialist, allied health services and private health insurance will add to the strong diverse skills mix of the existing Ramsay Board. Thank you for the opportunity to serve as your representative on this important Board. I'm up for the challenges we have. I believe my deep sector insights and experience will be valuable as we utilize Ramsay's significant strengths to navigate challenges and change and lead the future of health care. Thank you.

Thanks, Helen. And I think you can tell Helen brings enormous hospital health care experience, and that's been a big focus for the Board as we build out capability across the different roles we have. Now are there any other questions from shareholders here today? It looks like there's none in the room, Henrietta?

None online, David.

Okay. We're on a roll here. So as there's no more questions, please ensure you cast your vote on that wonderful blue voting card. And we have the proxy results up -- the results with proxies up there, too. So congratulations, Helen. Great to have you for another 3 years, really good. Great. Right. So now we go to item 4, and this is the proposed grant of performance rights to incoming Managing Director, Natalie Davis. As mentioned earlier, Natalie was appointed to the Board and commenced as Group CEO on the 1st of October, elect. And now on the 2nd of December will become the real thing. If any shareholders present would like to ask a question on this item, please make your way to the microphone. Henrietta, as they're making their way, is there anything on?

No questions either, David.

And looking around, no. And I was going to get Alison to answer all the hard questions, but not.

So Michelle Eales and Neil Hine have asked whether the Board seriously thinks it is entitled to performance rights with the share price being what it is?

Thanks, Henrietta. I should start with a clarification. Non-executive directors don't receive any performance rights or any form of performance-based pay. We all receive Board fees and committee fees, and they're set with the responsibilities of the role. Our Managing Director and Group CEO, Craig McNally, has participated in our long-term incentive plan over time, and that's following normal practice and as set out in the remuneration report. The approval today under this resolution is seeking approval for rights for our incoming CEO, Natalie Davis, to receive performance rights under the LTI plan. Those rights will only vest under the LTI plan if hurdles are met and those hurdles are aligned to company performance. For the proposed F '25 grant to Natalie, the hurdles are described in the Notice of Meeting, and they continue to include relative shareholder return and also earnings per share. I'll also note that the FY '22 LTI, which was tested at the end of FY '24, did not vest, and that's a result of not achieving the performance hurdles over that time period.

Thanks, Alison, and the performance rights. Yes. Okay. I'm happy to take any questions from the floor. And there's still no written questions. Okay. Right. So then we will now look at the -- please fill out your form and the proxy results are shown there. Great. Okay. So that's done. Okay. On to the final item that we're on the back straight here. Item 5 proposes that the company amend its constitution by provisions would prohibit the registration of transfers of shares acquired under a proportional takeover bid unless a resolution is passed by the shareholders approving the bid. Basically it's giving control to shareholders. Similar provisions are commonly found in the constitution of public listed companies on the ASX and are regularly renewed or reinserted. Directors believe that amending the company's constitution to insert the proposed proportional takeover provisions is in the best interest of you, our shareholders. Details of the special resolution are set out in the explanatory note to the Notice of Meeting for this item and a signed copy of the amended constitution is tabled meeting and copies of the constitution with markup showing the insertion of the proposed proportional takeover provisions in the new Rule 15 have been available on the website since late September '24, and copies are available today as well. Now this is a little bit technical, but are there any questions on this? It's important, actually. Okay. It doesn't look like there's any questions here. Henrietta, anything on board?

No. None online, David.

Well, thank you, Henrietta. Well, as there are no more questions, please make sure you cast your vote on the blue form. Proxy results are shown on the screen, and that looks pretty conclusive. So ladies and gentlemen, it's -- thank you for coming. It concludes our meeting today. We have a lot to get done, but we are committed to doing it with the Board, working with the management team and with Natalie. Please make sure you have signed your card, your blue voting card and items 2 to 5, place it in the polling boxes as you leave. The poll closes 10 minutes after the end of the meeting. If you have any question relating to the voting, please see a member of the Boardroom staff. So that brings us to the end of the meeting. Thanks for your participation. We look forward to seeing you again soon. And please do join us for something to eat or to drink, and we'll be around for the next hour, and we can follow up with any questions. So I now declare the meeting -- the AGM 2024 is finally closed, and that will be finalized -- subject to finalize in the poll. Thank you. All the best. Bye-bye.