Regis Healthcare Limited (REG) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. My name is Graham Hodges, and I'm the Chairman of your company. On behalf of the Board, I welcome you to our Annual General Meeting. I would like to start by acknowledging the traditional owners of the land upon which we meet today, the Wurundjeri people of the Kulin Nation, and pay my respects to elders, past and present, and to any aboriginal people here with us today. To all those present with me at the RACV Club in Melbourne, please note the location of your nearest exit in the unlikely event we need to evacuate the building. To assist with the conduct of the meeting, please switch off any mobile phones, cameras or other electronic devices for the duration of the meeting. I would also like to extend a warm welcome to those attending using the online platform. Should we experience any technical issues during the course of the meeting, you will be notified of steps to be undertaken by the moderator. I've been informed that a quorum is present. And now, as it's a little after 10:00, I declare the 2022 Annual General Meeting of Regis Healthcare Limited open. A notice of meeting has been distributed and will be taken as read. Details about how shareholders can attend using the online platform have been sent out in the notice of meeting. I appreciate that some shareholders may have to leave before the end of the meeting. I, therefore, now formally open the poll on resolutions and encourage shareholders who have joined online to ask their written questions now. [Operator Instructions] Voting in today's meeting will be conducted on a poll through the online meeting platform and voting cards for shareholders physically attending. As we move through the items of business, I will respond to questions from shareholders and proxies. Before I proceed to the formal business of the meeting, I'm pleased to introduce your Board of Directors. To my left, Dr. Linda Mellors, Managing Director and CEO; Mr. Ian Roberts; Ms. Sally Freeman; Mr. Bryan Dorman; and Professor Christine Bennett. I would also like to welcome the members of our executive team who are in attendance today. Those physically attending the RACV, please feel free to introduce yourselves to any of our directors or executive team members during the refreshments after the meeting. Finally, the company's auditor, Ernst & Young, is represented today by Mr. Brad Pollock, who is available to answer questions in relation to the conduct of the audit, the preparation and content of the auditor's report, the accounting policies adopted by the company and the independence of the auditor. I would now like to outline the program for this morning. Shortly, I will present my address. This will be followed by a presentation from Linda Mellors, your Managing Director and CEO. I will then go through some procedural matters for the AGM. Finally, we will move on to the formal business as set out in the notice of meeting. There are 6 items of business today and 1 conditional item, the Spill Resolution, Item 7. The Spill Resolution will have no effect, unless it turns out that the second strike on the remuneration port Item 3 is received. Shareholders and proxy holders attending the meeting using the online platform will be able to cast their vote using the electronic voting button once online registration is validated. If you encounter any issues casting your vote using the online platform, please refer to the online platform guide, which is also -- includes a help line number. Shareholders and proxy holders physically attending can cast their vote using the voting cards received during registration. After the formal business is finished, the meeting will be closed, and those physically attending the AGM are invited to join the board for refreshments in the area outside the meeting room. I would now like to turn to my address to the meeting. And I would like to start my address by thanking our Regis frontline staff, support staff and executives for their dedicated care and support for our residents, clients and their families over the past year. I recall saying, as we met this time last year, that with COVID restrictions reducing, there was increasing optimism that 2022 would usher in a more normal, if I can use that term. environment for the sector and for Regis. However, starting late December, the priorities of our business had to quickly adapt as Omicron dramatically impacted the community at our homes in the first months of calendar 2022. At its peak, more than half our 64 homes were subject to lock down at any one time. During this time, the focus of the business was on ensuring the ongoing provision of excellent clinical care and keeping our residents and staff safe. The point of raising this is not only to remind you how fortunate Regis is to have such a dedicated workforce, but to again state that 12 months on and with COVID easing once more, our teams will redouble their focus on improving key business metrics, which have suffered over the past several years. And Linda and I will touch on these shortly. Your Board has given substantial attention over the year to the reform program for the aged care sector and ensuring Regis is in a strong position for the post-reform environment. Your company is committed to sector reform and the important elements to deliver care and services to old Australians that are high quality, safe and desirable. This requires the sector to be safe and effective and functional with appropriate funding, a skilled and supported workforce and contemporary policy and regulatory settings. Your company will work cooperatively with the new government and the new provider association that Linda will speak about later. We encourage the new government to closely review the reform program to ensure it is co-designed to deliver the intended outcomes. Your Board has been particularly focused on the challenge of having sufficient workforce to deliver the level of care, which you would expect of your company. We are not unique as a sector in having workforce availability problems. What is unique is the mandating of increased workforce care minutes over the period ahead, despite the sector-wide shortage of qualified nursing and care staff. Government will need to prioritize workforce availability, adequate funding through the new activity-based model, AN-ACC, and regulation that does not unfairly penalize operators for the national workforce shortage. These challenges are driving management to reshape the way we structure our business resources and conduct our business day-to-day to adapt to these new requirements. While these matters have been and will remain a priority for management, shareholders should know that throughout this difficult period, the business has continued to reinvest for the future. Regis invested $49 million in capital expenditure during the year, significantly more than the $19 million in FY '21, to strengthen our operating business and invest in future growth. The business has removed multi-bed rooms across a number of homes to improve the quality of our portfolio, consistent with current resident expectations, and further reviews of our older homes will be part of our work program in the year ahead. Management has upgraded the WiFi infrastructure across all homes and refreshed our additional services and menu offerings to residents. We have also upgraded our ERP system, our clinical care system and approved the implementation of a new electronic medication management system, with implementation just commencing. These investments will prove our -- improve our data accuracy, reduce errors and manual input. This will assist monitoring and reporting for clinical and care staff and creating more time for resident care. To support future growth during the financial year, Regis acquired vacant land in Belrose, New South Wales, and took out an option over a new greenfield site in Carlingford, New South Wales. Both sites, together with Toowong and Brisbane, are earmarked for new residential aged care development. Regis also commenced development of a new 112-bed home in Camberwell, Victoria. We expect these new developments, once completed, will be well supported by resident RAD inflows. The decision to restart our investment program followed several years when Regis, and the sector more generally, slowed or stopped new residential developments in the face of significant uncertainties in the aged care policies, government funding and investment returns. The investment outlook is still challenging, but what we do know is that a significant proportion of existing homes across the sector are now too old to meet future resident and family needs. And operators who reinvest in their portfolio will do better in the period ahead. The independent health and aged care pricing authority will need to incorporate appropriate returns within its pricing recommendations to encourage efficient and quality operators to invest further in the sector. Part of our reinvestment program may also include closing or redeveloping some of our older homes to maintain portfolio quality. We have significant available funding lines and are rationalizing nonincome-producing assets to strengthen our balance sheet and improve returns. This detailed work is being oversighted by our new Board Property Committee chaired by Mr. Ian Roberts. Regis reported a large net loss after tax of $38.8 million in financial year 2022, but this outcome was largely a result of 2 important factors: An after-tax write-down of operational places of $42.7 million following the Australian government's decision in September 2021, to deregulate bed license market from the first of July 2024. This was a noncash item; the second item was a $27.8 million in COVID expenses in the year. That's the year until the end of June, which, as at 30 June, only $3.2 million had been refunded by the government. Excluding a number of one-off and nonrecurring items, Regis' 2022 underlying EBITDA was $78.1 million, up 8% on like terms from FY 2021. Regis' net operating cash flow was $114.8 million, assisted by a strong $83.9 million net RAD cash inflow. Pleasingly, these flows were generated from a strong performance by our existing homes rather than through new developments. This strong cash flow performance allowed Regis to further strengthen its balance sheet with net debt down 28% in the year to $102.9 million, and that's excluding the expected $20 million-plus, which is owed by the government as at the end of June to cover the COVID refunds. Our confidence in the medium-term sector -- future of the sector led the Board to approving an FY 2022 final dividend of $0.0232, taking the full year dividend to $0.0584 per ordinary share. Occupied bed days remain one of the key drivers of the business performance and was broadly stable across FY '22 despite the number of Omicron outbreaks across our homes in the second half of the financial year. Occupancy has improved in the first quarter of the current financial year from an average of 89.8% in full year 2022, to a spot rate of 91.7% as at 30 September 2022. Our expectation and our focus will be on achieving further increases in occupancy over financial year 2023. This will be important to grow our revenues and help offset the impact of higher labor costs associated with the introduction of mandated average 200 care minutes from October 2023. This past year saw a change in Regis' Board composition, with 2 directors stepping down and the appointment in January 2022 of Sally Freeman, who is standing for election at today's AGM. Sally is an experienced director and has been Chair of Regis's Audit and Risk Committee since her appointment. Sally will address the AGM during the meeting. As I mentioned earlier, the Board has established a property committee to advise and govern important strategic decisions regarding Regis' extensive property portfolio. As resident needs and expectations continue to change, and as we head towards a deregulated market for operational places, this committee will play an important role in shaping our property decisions and our investment returns. The Board supports strengthened governance of the sector, including responsibilities of directors, and Regis is well placed to exceed the requirements contemplated in the reform agenda. In closing, while the operating environment your company has faced in the last 12 months has continued to be more challenging than we would want, Regis remains strongly positioned heading into FY '23. We have a very capable CEO and executive management team and dedicated staff. Our operating capability has been upgraded significantly over recent years, and our portfolio of homes is of a high quality. And we continue to put care and safety of residents, clients and their families at the forefront of all we do. I would like to thank my fellow directors and all of the Regis team for their dedication and support throughout the year. And finally, I want to thank you, our shareholders, for your support in the past year. I'll now pass to our CEO, Dr. Linda Mellors, to address the meeting. Thank you.

Thanks very much, Graham, and good morning, everybody. I'd also like to begin by acknowledging the traditional owners of the lands on which we're holding our meeting today. The Wurundjeri people of the Kulin Nation, and to pay my respects to your elders, past, present and emerging. And of course, to extend that respect to any Aboriginal or Torres Strait Islander people who are joining us today. It's good to be back in a room with shareholders for the first time since the 2019 AGM, and following 2 years of virtual meetings due to the COVID-19 pandemic. Today, I will provide shareholders with an overview of Regis' performance over the past year in the context yet again of multiple industry headwinds. While headwinds remain in the current year, there are positive signs for the future through a broad reform program for the sector, noting there is still much detail to be worked through. Notably, the global pandemic continued, with the Omicron variant impacting the business heavily from the Christmas-New Year period. At a time when our teams were looking forward to a much needed quieter period, many returned to work to assist with the extraordinary increase in outbreaks due to rapidly escalating community transmission. Around half of our homes were impacted at the same time. While the Omicron variant proved much more easily transmitted, it caused milder illness in most people and a much lower risk of death. The introduction of COVID-19 antiviral treatments was extremely positive for our residents, and the company was quick to educate our residents, families, employees and visiting health professionals about the availability and efficacy of the treatments. The vast majority of COVID-19 positive residents elected to receive antivirals once they were available, and the results showed dramatic reductions in illness and death. Regis employees continued to meet our COVID-19 vaccination policy and adhered to the infection prevention and control requirements. And I would like to echo our Chairman's acknowledgment of our employees and particularly their ongoing commitment to the safety and well-being of our residents, clients and Regis colleagues. I would also note the team's focus on returning our homes and services to more normal settings in between the high community transmission periods with more visitors, activities and outings. Over the FY '22 year, Regis was also impacted by the extensive floods in Queensland and New South Wales, worsening workforce shortages, escalating costs and insufficient clarity regarding important parts of the reform agenda. Regis remains firmly in favor of sector reform across the key elements of workforce, funding, governance, quality and safety, regulation and system design. I'll come back to the reform agenda and the new single representative association, the Aged & Community Care Providers Association after discussing our financial performance. Our FY '22 financial results were adversely impacted by a number of factors, including the ongoing inadequate funding and indexation, the pandemic, lengthy delays in COVID-19 outbreak grant assessments by government, the floods, the timetable to redundancy of bed licenses and lack of certainty with respect to the government's reform agenda. The financial results were positively impacted by maintenance of occupied bed days, the updated additional services program and the disciplined approach to discretionary expenditure. In terms of our overall financial performance for the year ended 30 June 2022, underlying EBITDA increased to $78.1 million, up 8% on the prior corresponding period. The net loss after tax of $38.8 million was primarily due to the amortization of bed licenses. Correcting the result for the noncash impact of this amortization provided an underlying net profit after tax of $3.9 million. This result is well below what we would expect to deliver in a properly funded environment, but reflective of the difficult operating context, where it is reported by StewartBrown that around 70% of aged care operators are delivering operating losses. Notably, the company delivered stability in occupied bed days, which is the key driver of revenue and profitability. The stable occupied bed days result reflects significant occupancy improvements in targeted homes, somewhat masked by COVID-related occupancy reductions. I'd like to highlight the very strong net RAD cash inflows of $83.9 million delivered under pressured circumstances. As flagged to the market back in August, net RAD cash flow has been negative across the first quarter due to the timing of refund payments associated with the probate liabilities that peaked at 30 June 2022. Net debt at $102.9 million was a reduction of nearly 28% compared to the end of FY '21 and impacted by the circa $20 million in COVID outbreak grants owed by government. Average occupancy for the first 3 months of the FY '23 year was 91% across the entire portfolio, which is in line with the spot rate at 30 June. This improvement on FY '22 reflects a strong focus by management on initiatives to resume core business activities. The occupancy spot rate on 30 September was 91.7%. This is an encouraging result, and we are seeing higher inquiry levels across the country. Staffing expenditure was impacted by higher agency and overtime costs as our teams worked extremely hard to maintain our rosters during the steep Omicron wave and in an environment of sector-wide labor shortages. Over the financial year just closed, the pause on development and acquisitions largely continued due to the uncertainty around future funding and return on capital. In the background, we continue to plan for future developments and have projects ready to commence as conditions improve. The Chairman noted our new land acquisitions that will support expansion of high-quality facilities in the future. We recently recommenced our building program in Camberwell, Victoria, where we will deliver a new and contemporary 112-bed aged care home in late FY '25. We are also continuing to invest in our existing homes to improve amenities where needed. The company paused our home care expansion plans due to the reforms announced that would have been negative, as demonstrated by the number of existing providers exiting the market. The company was pleased that the new Minister for Aged Care, the Honorable Anika Wells, paused implementation of the program, pending further review and discussion with key stakeholders. The new government has committed to fund the outcome of the work value case before the Fair Work Commission. This remains one of the most important levers to attract and retain the aged care sector workforce, and the company looks forward to the decision being delivered and implemented. So this is now a good time to move to an update on our strategic plan and sector reform. I'm pleased to report that the company achieved the vast majority of the initiatives in the first year of our strategic plan as well as our ongoing work to ready the business for sector reform. The company is confident that the reform will be net positive over the medium term, with a challenging period over the next 12 to 18 months as the new government consults with sector participants and key stakeholders. The most pressing challenges for this financial year are the workforce shortages, worsening at a time when workforce needs have increased, the new assessment for funding model and the scale of the reform program. The company is supportive of the new provider association, ACCPA, and looks forward to the role that a stronger industry voice will play, particularly in highlighting that all parts of the sector need a well-functioning, supported and appropriately regulated industry to provide older Australians with safe and high-quality care into the future. I'm confident that the recently expanded independent health and aged care pricing authority will prove to be a critical reform and assist to deliver a more predictable and transparent funding model in the future. As one of the largest and most sophisticated providers in Australia, Regis is well placed against many of the intended reforms, including corporate governance, clinical governance, prudential controls, food and nutrition standards, registered nurses on site 24/7, digital innovation and career pathways across all roles. I'd like to spend a few minutes highlighting some key progress areas for the company over FY 2022, starting with care of our residents and clients, where we delivered improvements to clinical risk interventions and results, including pressure injuries, medication administration, restrictive practices and feedback. The company continues to prioritize clinical and care outcomes, including through research partnerships that will have benefits to our residents in areas such as wound prevention and management; improved communication of residents' health needs information when transferring between hospital and their aged care home; personalized, high-quality end-of-life care; improvements in dementia practice; and further understanding how the built form supports quality of life and care delivery. Our focus on supporting care outcomes and our workforce has benefited from upgrades to our clinical management system and selection of an electronic medication management system just commencing as well as introduction of an electronic incident and feedback reporting system, allowing better data intelligence and decisions. Food and nutrition are key elements of care and well-being, and the company continued our long-standing partnership with the dietitian and our in-house catering experts to provide additional meal selections. And if you look at the picture on your screen, we also invested in expanding our program to present texture-modified meals in shapes resembling the original food source. This assists residents with swallowing problems or dementia to recognize food and increase nutritional intake. I would also like to remind shareholders that Regis meals are cooked fresh on site. The company formalized consumer engagement at a senior level through the establishment and regular meetings of the Regis Consumer Advisory Council, with a diverse range of consumers, including those with mild memory loss or cognitive impairment. The council has provided invaluable feedback and support to our teams through their insightful contributions. Moving now to our workforce, where attraction, retention, development and reward remain high priorities. Along with extensive work to improve and expand talent sourcing, we have systematically reviewed our teaching, training and support programs and introduced a leadership capability framework. Regis' well-established career progression pathways are [ geared ] to many of our employees moving to more senior roles across the year. Our revised work, health and safety program delivered fewer lost time injuries, fewer work cover claims and fewer days lost per claim, and I expect further improvements in the current year, including to our lost time injury frequency rate, which is already better than industry average. This year, we have introduced an early intervention program for injured workers to support them accessing advice and treatment and return to work. Regis enjoys economies of scale, and we have upgraded key systems to support our home services and back-office functions. The company upgraded our enterprise resource platform and finance systems during the year, with the program delivered on time and on budget. The expansion of high-speed WiFi to all residential aged care homes right away to the residents' bedside benefits our residents and families and provides our workforce with real-time information and streamlined processes. The company has enhanced our disciplined approach to cybersecurity and our product suite to support a secure environment. Our cybersecurity maturity is routinely measured against external frameworks. Our in-house and external experts monitor and adapt to market intelligence, and we updated our data collection, retention and destruction policy in FY '22. Regis uses enhanced password protection, multifactor authentication, penetration testing and phishing detection systems. We have also updated our learning programs for employees with a robust scanning and reporting program for suspicious content. Importantly, our future is very much led by the continuous improvement and learning philosophies and a consumer-focused culture, driven from the Board and executive through to our frontline teams. Regis has a strong purpose, and our almost 30-year-old company remains dedicated to the care and service of older people. The company has partnerships with the shared value project and ESG experts to ensure our program is contemporary and delivers meaningful impacts to the communities in which we operate. While the FY '22 year brought a range of challenges, our Board and executive team have remained fully committed to our purpose, ever mindful of the need for a strong business to underpin the care and services older Australians deserve. The Australian population continues to age and have higher expectations of aged care services. The sector reform will deliver an increased proportion of older people remaining in their own homes with support. While the proportion of those entering residential aged care is expected to decrease, the overall number of residents in aged care homes will increase with the baby boomer generation and the large numbers coming through. We continue to expect complexity of care needs to increase as Australians live longer and enter aged care later with more comorbidities. Our workforce will need additional skills, training and resources and more digital systems and automation. These changes are included in our strategic plan, and I look forward to updating you on progress against our FY '23 goals at the half year. I'd like to finish by commending the extraordinary efforts of our entire workforce and thank them for the important work they do in caring for older Australians with commitment, focus and kindness. I would also like to express my gratitude to our residents, clients and families for choosing Regis for their care and service needs. Thank you.

Thank you, Linda. I'll now outline the question and voting procedure for today's meeting. This is a shareholders' meeting. Only shareholders, their attorneys, proxies and authorized company representatives are permitted to vote and speak at the meeting. The process today will be that I will introduce each of the 7 items separately, consider questions and then, if applicable, invite voting on the item. We will address telephone questions first, followed by online questions, and then move to questions from the floor at the RACV. The item in relation to the adoption of the financial statements and report will be your opportunity to ask questions relating to the management and the operation of the company generally. If your question relates to a particular item of business, for those present with us in person, please ask your question when we come to that item of business. Please ensure your questions are relevant to shareholders as a whole, and I encourage shareholders attending online who have questions to send their questions through as soon as possible. [Operator Instructions] The company will endeavor to address as many or more -- of the more frequent questions raised as possible through the course of the meeting. The online questions will be moderated by our company secretary on our right, Malcolm Ross. I will now explain the voting procedure. All votes will be conducted at the meeting by way of a poll, which means that each shareholder has 1 vote for every share held. Resolutions 2, 3, 4 and 5 set out in the notice of meeting are to be considered as ordinary resolutions and, as such, must be approved by a simple majority of the votes cast by shareholders entitled to vote and voting on the resolution. Resolution 6 set out in the notice of meeting is considered a special resolution and must be passed by at least 75% of votes cast. Resolution 7 is to be considered as an ordinary resolution on a contingent and conditional basis. This resolution will have no effect, unless it turns out that a second strike on the remuneration report is received. I will display the eligible proxy votes for each resolution as we get to each item. I confirm that I intend to vote any proxies left to my discretion as the Chairman in favor of each resolution except, for Resolution 7, the conditional spill. I intend to vote all available proxies against resolution 7. The final results of the poll will be announced to the ASX after the meeting. An officer of the company's share registrar, Link Market Services, will act as the returning officer in relation to the poll. Now to the formal business of the meeting. Ladies and gentlemen, the first item of business is to receive and consider the financial statements and report of the company and its controlled entities and the reports of the directors and the auditor for the year ended 30 June 2022. While there is no requirement for a vote on this item of business, this is an opportunity for shareholders to ask questions relating to the company's financial results, the management and operations of the company. Any questions in relation to the remuneration policies and practices will be considered when we come to the item of business covering the adoption of the remuneration report. As I previously mentioned, Mr. Brad Pollock is representing the company's auditors, Ernst & Young, and is available to answer questions. Are there any telephone questions on this item of business? Well, no phone questions. Okay. So are there any questions online? And Malcolm here will read those questions.

So Chairman, the first question is, as a large -- sorry, first question is from [ Stephen Mayne ]. As a large employer, what steps have been taken to deal with chronic staff shortages by recruiting overseas labor? What sort of reforms will be in support to the visa system to make it easier to attract and retain key workers in areas where the local workforce can't satisfy demand?

So thank you, Stephen, for your question. Clearly, this is an issue for Regis and of course, the whole of the aged care and health sector. So the acute shortage of nursing staff, in particular, but also care has been one of the things that has been really problematic for the sector overall. And obviously, Regis has had challenges around that, too. So in terms of the day to day, we obviously do rely also on agency staff, and we've had our staff operating extra shifts as well in order to meet workforce shortages, particularly in the case of where there's been COVID outbreaks and issues there. We have also looked to increase our recruitments. And significantly, we get good recruitment from staff referrals. So existing staff who are referring as to other carers or nurses who may wish to join Regis. And clearly, it's the policies and the practices within Regis, which is also important in terms of attracting them. But having said that, we are also looking at opportunities to recruit people overseas. And of course, everyone would be aware that since the COVID outbreaks in early 2020, the opportunity to bring labor in from offshore has been severely curtailed. And the demand for labor in other countries has also gone up across the health sector, making it more difficult for us to attract workers into Australia in a competitive sense. You talked about the visa system. We're all hearing about delays in getting the visas through. And obviously, that's not helping us. But we're working in whatever ways we can through partners to achieve those workforce increases to cover people who have departed the sector, because some have, because of the demands on the sector in the last few years. I might just pass to Linda to add a few comments on this as well.

Thanks very much, Graham. And to Stephen for your question. So I won't repeat what Graham said. I'll just add a couple of points. The first is that we partner with overseas recruitment specialists and particularly those who operate within a highly ethical framework. So whilst there is a global shortage of registered nurses, we know that there are some countries where qualified nurses are unable to fill nursing jobs in their own countries. So we're just making sure that we're not depleting another country of their important workforce. We support our employees with the Visa process and also the cost. It's a difficult process -- we continue to hope for a more streamlined process through reform. One of the things that we did during COVID was we asked the government to increase the cap on the number of hours that those on student visas could work, and that was successful and that was an incredibly helpful intervention. But we certainly would encourage further reform in that area to streamline the [ process ] and also just acknowledge that the international students who are key contributors to the Care workforce, we'd like to see more international students returning to Australia as well.

Thank you, Linda. We'll turn to the second question online.

Second question is from Stephen Mayne. In November 2020, Co-Founder Bryan Dorman and Soul Pattinson proposed to $1.85 a share privatization bid, which the Board rejected. Could Bryan, please comment on whether he has had any subsequent engagement with Soul Pattinson and whether he remains a committed long-term shareholder in Regis as a public company.

So I might take that question, Stephen, rather than pass to Brian. I think it's a board issue rather than an individual director issue. If we had further sort of contact, if you like, which -- from any bidder, then the Board under advice from our advisers would obviously have to disclose that publicly. Should there be a bid as there was back in November 2020. So the fact that we haven't announced any of that would suggest that there's been no disclosable bid that has been needed. Bryan's still on the board. He's still a committed long-term shareholder and has the same shareholdings that he had back in 2020. So I don't think there's anything more I can say in terms of updating on that.

Chairman, there's one more question from Stephen Mayne. Well done in lodging the proxy votes for the ASX along with the formal address and well done on achieving more than 95% support on all resolutions. In keeping with transparency progress, would you be able to publish a transcript of today's AGM debate in addition to the webcast. Also, what led to the early proxy disclosure decision, which is a good move because it allows for a more informed debate at the AGM.

Absolutely, I'm fine to publish the transcript from today's meeting. If that's something that we can do, Mark, we've got that. Yes. So I'm happy to do that.

No more questions.

No more questions online. So I'll now turn to the room. Are there any questions from the room? If so, raise your hand, we've got a microphone, which we'll pass to you. Please state your name, I think, would be helpful.

It's [ Peter Rae ] from the Australian Shareholders' Association, and we're representing retail shareholders. I note your average occupancy was maintained during the year, but below 90%. I note the comments today that first quarter, there's been an improvement. In view of the importance of occupancy, can you just fill out a little bit more as to what actions are being taken to increase the occupancy? And also what the decision to remove multi-bed rooms has had on your financial performance? One other question, if you don't mind. The -- you're back into building again, would you like to comment on the impact of increased building costs and supply issues in that area?

Okay. Thank you, Peter. Maybe I'll take that second question first and then I'll get Linda to talk to the more detailed issues that you're looking to chase on the occupancy side. So in terms of the building, yes, we have started construction at -- well, we start the process of building at Camberwell. We've obviously gone out to tender a couple of years ago on that side. But because of just the uncertainties around government funding and the expected return we would get on that. We delayed development there by a couple of years. We retendered and surprisingly, we didn't see as big an increase in the cost for the retender as we would have expected, just given the regular discussion that you're hearing in the media about the increase in building costs. That's here in Victoria, but we've also looked at Toowong in Brisbane, and we have been looking to build there as well, but we've delayed up there because of a rapid escalation in building costs, partly associated with the floods earlier in the year, which has obviously led to increased demand for construction, both product and builders. So I think it's different across different parts of the country. But our experience in Camberwell, where we are progressing now was a less dramatic increase in the cost. I think looking forward, we've got the two Sydney sites, which we expect to start to develop through the course of 2023 and into 2024. And Obviously, we are aware of the increased cost there and what we are doing in some of these facilities, and we did in Camberwell, was do a small rig design to accommodate more rooms within the facility to improve the metrics, the financial returns on those investments. So -- the Property Committee, which I talked about is obviously going to be right across those sort of decisions and make sure that we are making the best possible investments. But we do think we need to continue to invest because each year, your stock of a portfolio of homes gets a year older and we need to keep refreshing our homes. So on the occupancy side, I would say that the Board reviews the strategies that the company is using, obviously, monthly, but we also get a weekly update from Linda in terms of the detail of how we're going across all of our homes. It's something which we do understand is a key driver of revenue, and we have seen that uplift in occupancy. It's really since midyear now, partly reflecting the fact of the decline in the impact of Omicron across our homes and now people are able to get out and market more. But I will just ask Linda to add a few comments specifically about what her executive team are doing to drive that occupancy.

Thanks very much, Graham. So I'll just add a couple of things. So along with the COVID outbreaks, we also had to evacuate one of our homes due to the floods in Brisbane, which also had an occupancy impact, as you can imagine. What we are seeing is with the initiatives that we put in place in areas where the homes are open, we're seeing good success with occupancy up lifts. The figures are really masked by the downward pressure caused by the COVID outbreaks. We've certainly worked very closely with government to get the sector to more sensible settings in terms of how much of a home is shut down during an outbreak. So at the beginning, it was the entire home for an extended period of time, and that has lessened more and more and particularly across the last financial year, where you might actually now just have a single resident isolated in their own room if they're the only resident with COVID rather than having an expansive shutdown. So then the other things that we're doing, of course, is we work very closely with our hospital and primary care partners around assisting people make decisions around their residential aged care needs. And we rely very heavily on our care, the quality of care and our reputation there. And also, if you follow us at all on social media, you'll see that we're telling many more of the stories directly from our residents because they are in the end, the best advocates for the care and services that we provide. Sorry, I will also just pick up the multi-bed room question. So the reason we've closed, and just to be clear, when we say multi-bed, we're talking about 3 and 4 beds in a single room. So we've closed the third and fourth beds where they were still open. It's had a negligible impact on occupancy. Consumers are very clear in their preference, not to be in 3 and 4 bedded rooms.

Thanks, Linda. Are there any other questions from the floor? Okay. So thank you. We shall now move on to the next item of business. The next item of business are the election of directors. Ian Roberts' term comes to an end at today's meeting. Being eligible, Ian is standing for reelection at this AGM. Ms. Sally Freeman joined the Board on the 17th of January 2022, and in accordance with the ASX listing rules, must hold office -- must not hold office past the Annual General Meeting without an election. Both Ian and Sally's background and experience are detailed in the notice of meeting. So I'll now turn to Item 2.1, the reelection of Ian Roberts as a director. The Board supports the reelection of Ian Roberts as a Director of the company. I now invite Ian to briefly address the meeting regarding his reelection.

Thanks, Graham. Welcome, everybody. I'm Ian Roberts. That's a very flattering image. It's my pleasure to offer myself for reelection as a Director of Regis Healthcare. I've been involved for many decades in the Regis journey and currently hold the positions in the Remuneration and Property Committees. I think I also want to just while I get the moment to thank all of the Regis team. I think they've shown high degrees of resilience in what have been really tough times in caring for our residents. And my focus as a Board member is to ensure that we continue to provide improved care to our residents going forward and with good care and a good position in the marketplace. I'm sure that shareholder value will be reestablished.

Thank you very much, Ian. Are there any questions online regarding the reelection of Ian. So as there are no questions, we'll proceed to vote on regarding this resolution. So the proxy position for this resolution will now be shown. And if you have not yet voted, please now select either for, against or abstain for Resolution 2.1. We'll now move to Item 2.2, the election of Sally Freeman as a director. The Board supports the election of Sally Freeman as a Director of the company. I now invite Sally to provide a brief address to the meeting. Thank you, Sally.

Thank you, Chairman, and thank you, shareholders. My name is Sally Freeman, and it is my pleasure to offer myself for election as an independent Non-Executive Director of Regis Healthcare. As Graham has mentioned, my involvement began in January when I was invited on to your Board and to chair the Audit Committee for Regis. I have been impressed with how Regis is focused on providing quality service and care for all residents in an industry that's experiencing several challenges, be it resourcing as have been mentioned, the COVID pandemic and insufficient clarity around the legislative reform. While doing this, Regis have also had the opportunity to not take their eye off a robust strategy. So I bring to the Board 30 years' experience of audit and risk management in health, IT and financial services sectors. My immediate prior executive experience was as partner in charge of Risk Consulting with KPMG. As a consulting partner, I had the privilege of wondering in and out of many businesses, both listed, unlisted and looking at many healthcare organizations. And what this taught me was how important the leadership of an organization is to have that growth mindset. And in meeting with the executive, who are here today and with the Board, I was confident that I was joining a bold organization that was driving for growth. I see the Aged Care sector as a really important part of Australian society and one, in which the private sector plays a key role. My passion and knowledge for healthcare allows me to contribute effectively to your Board, and my credentials are set out in the Notice of Meeting. I am proud of how Regis has dealt with the challenges it has faced since I joined the Board. And how they are focused on providing excellent care and that prevails in all circumstances. I offer myself for election as director so that I can continue my contribution to Regis. Thank you, Chairman.

Thanks very much, Sally. We got some questions online on Sally's?

Sorry, my microphone. Yes, we do, Chairman. First question, what was the process through which we recruited Sally to the Board? Was a recruitment firm involved and did the full board interviewed multiple candidates? Could Sally [ priorly ] knew any of the Regis directors before engaging with the recruitment process? Question from Stephen Mayne.

So just some quick answers to some of those. Yes, a recruitment firm was involved. The Board did interview multiple candidates for director roles. I don't know whether I can speak for Sally. I think I can speak for Sally here, but she may want to clarify. But I don't believe that Sally knew any of the directors before engaging in the recruitment process. And certainly, as leading that process, I didn't know Sally ahead of time. The reason we looked at Sally as a very strong candidate for the Board is her background experience, which she has just gone through, Risk Management, Audit. We were replacing the Chair of the Audit Committee, and she was very well suited to that. And she had a passion for working across this sector, which not every potential director has, and we were very grateful for her involvement and she's been an excellent director in terms of their contributions on the Board.

Thank you, Graham. And I can confirm that I didn't know any of the Board members prior to meeting with your recruitment firm and then being introduced to yourself and the board.

Are there any other questions online?

No more questions.

Okay. Are there any questions from the room on Sally's election as a Director? No. As there are no further questions regarding this resolution, we'll proceed to the vote. The proxy position of this resolution will now be shown. If you have not voted already, please now select either for, against or abstain for Resolution 2.2. [Voting]

Ladies and gentlemen, the next item of business is -- on the agenda is item 3, the adoption of the remuneration report for the financial year ended 30 June 2022. This report was included in the directors' report on Pages 58 to 70 of the Company's annual report. This report sets out the Company's remuneration arrangements for the executive and nonexecutive directors and key management personnel of the company. At the 2021 Annual General Meeting, 27.06% of eligible votes cast were against the adoption of our remuneration report, resulting in a first strike. In response to this, the company sought feedback from stakeholders, including proxy advisers and external remuneration consultants and completed a review of the reward framework. The company is pleased to advise that consistent with the broader market practice, for the year ending 30 June 2023, that's the current year we're in, the variable reward and retention plan will be replaced with an executive reward framework with a separate short-term incentive and long-term incentive plans. Changes have been made to ensure the alignment of the remuneration structure with company performance to drive long-term shareholder value and provide transparency. The Board takes shareholder concerns about executive remuneration seriously and believes that based on the feedback received, the new plan addresses the key concerns that led to the first strike at last year's Annual General Meeting. The vote on this resolution is advisory only and does not bind the company or directors. The resolution does, however, serve as an indication of shareholders' views regarding the company's remuneration practices and the result will be taken into consideration by the Board. Please note that if 25% or more of eligible shareholders vote against this item of business, the company will receive a second strike. And the outcome of the spill resolution to be voted on in Item 7 will take effect. So we'll move to questions. Are there any questions online about this resolution?