Sonic Healthcare Limited (SHL) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to Sonic Healthcare Limited's 2023 Annual General Meeting. I'm Mark Compton, and as Chairman of Sonic's Board of Directors, I will chair today's meeting. Before we start the meeting, I'm aware that we are spread across different parts of the country and indeed the world today. And I'd like to begin by acknowledging the traditional custodians of the land on which we meet, the Gadigal People of the Eora Nation and pay my respects to their elders past and present. And I extend that respect to Aboriginal and Torres Strait Islander Peoples here today. I've been advised there is a quorum present, and therefore I declare the meeting open. The AGM today is a hybrid meeting, providing the opportunity for shareholders, proxies and guests to attend in person or participate via our online meeting platform. Online attendees can watch a live webcast of the meeting and have the ability to ask questions and submit votes in real time. We expect the -- I've touched the wrong button, there we are -- thank you. I expect that the meeting will proceed smoothly, but would appreciate your understanding if any technological issues do occur. And because of the hybrid nature of the meeting, there'll be a series of technical instructions only to go through in a minute, which to be those in the room, be patient. That really applies to the people who are joining us online today. I would like to introduce my colleague Board Members, all of whom are attending the meeting today: our Chief Executive, Dr. Colin Goldschmidt; our Chief Financial Officer, Mr. Chris Wilks; Prof. Christine Bennett; Prof. Suzanne Crowe; Dr. Katharine Giles; Mr. Neville Mitchell; Mr. Lou Panaccio and Ms. Kate Spargo. Also present is our Company Secretary, Mr. Paul Alexander. For our online attendees, whilst you have just seen a photo of the directors, you will be able to see each of them in real time if they are asked to speak as part of the meeting. I note that Brett Entwistle, partner from PricewaterhouseCoopers, our auditors, is also in attendance, along with Aishwarya Chandran from PwC. For our attendees who are here in person, in accordance with the admission card you would have received at registration today, only holders of green and pink admission cards are entitled to speak and vote at the meeting. Shareholders and proxy holders attending online can submit written questions through the online meeting platform at any time during the meeting. To ask a written question, select the Q&A icon. Select the topic your question relates to from the drop-down list, type your question in the text box. And once you're finished typing, please press the Send button. Important to press the Send button it does come to us here at the meeting. Questions submitted online during the meeting will be read out by the Company Secretary, Mr. Alexander, and Paul will identify the shareholder who has asked each question unless you specifically indicate in your question that you do not wish to be named. If the same or very similar question is asked by more than one shareholder, we may combine these and will endeavor to identify all relevant shareholders, although this may become difficult if there is a high volume of questions. Questions submitted online will be addressed at the relevant time in the meeting. Questions are limited to 2,000 characters in the Question field. However, questions are particularly lengthy, we may need to summarize them in the interest of time. For those shareholders who wish to ask a verbal question, an audio questions facility is available during this meeting. To use this service, please follow the instructions below the Broadcast Window icon. Please ensure your webcast is muted before joining the call. [Operator Instructions] Depending on the question asked, Paul will direct the question to the appropriate director or to the auditor to respond. We received a number of questions from shareholders and the Australian Shareholders Association in advance of the meeting, which we will endeavor to address at the appropriate point during the course of the meeting. Consistent with best practice, all items of business will be decided on a poll, and I will open the polls now. And I will keep the poll open so that you can vote at any time during the meeting. If you're eligible to vote and have logged into the online platform, select the Vote icon at the top of your device screen. Once you click this, the resolutions will appear on your screen, and you can select a voting option. There is no need to hit submit or enter, as the vote is automatically recorded. You'll receive a vote confirmation notification on your screen. You have the ability to change your mind and change your vote during the meeting until I declare the polls closed. Doris Grave from Computershare will act as the returning officer for the purposes of conducting and determining the results of the poll, the results of which will be announced to the ASX later today. The voting icon should appear on your screen quite soon if it hasn't already. Please submit your votes at any time. Following questions and discussion, I'll provide a warning before declaring the poll for all resolutions closed to allow sufficient time for votes to be submitted. If you're having any difficulties in locating the voting icon, please refer to the detailed guide available on Sonic's website. So all the housekeeping matters done for now, and so now I'll move on to the matters of the meeting. The minutes of the company's last Annual General Meeting held on 17 November 2022 are tabled on this -- tabled to my left over here, your right, and available for inspection by the shareholders. And I will take these minutes as read. I'll now move on to my address. It would be reasonable to say that the 2023 financial year was one of transition for Sonic Healthcare and indeed the world, as we all started to move past the 3 years of the COVID-19 pandemic. We have previously described to shareholders the extraordinary effect in many ways COVID-19 had on Sonic and the extraordinary measures, agility and sheer hard work given by Sonic people everywhere to do their bit in the control of this once-in-a-century pandemic. With the pandemic over, we continue our path back to the new normal, delivering excellent care and service and taking the steps needed inside the company to align our structures and costs with the post-pandemic world. Sonic's revenue for the year-end review was $8.2 billion, and net profit was $685 million. These figures were expectedly lower than in the prior year due to an 80% reduction in COVID-related revenues. Fortunately, our base business revenue, excluding COVID, continued to remain strong. When we compare financial year '23 results with financial year 2019, the last, if you like, normal year before the pandemic, Sonic's net profit is 25% higher. We continued with our progressive dividend policy, rewarding shareholders with a 4% increase in dividends over the previous year, to $1.04 per share. The financial year '23 dividends were fully franked, reflecting the strong performance of our Australian operations through the pandemic. Our now 30-year dividend history began with the payment of our inaugural dividend of $0.02 per share in 1994, and since that time, our annual dividend per share has never decreased, really an amazing track record. Strong operating cash flows have also meant that the company's balance sheet has significantly strengthened over the last few years. Net interest-bearing debt at 30 June '23 was $886 million versus the pre-pandemic level at 31 December 2019 of $2,352 million. This reduction in net debt -- in debt was achieved even though we continue to invest in the growth of the company through capital expenditure on equipment technology, infrastructure and business acquisitions, as well as increasing dividends and conducting our first on-market share buyback, which we reached an outlay of $425 million on the buyback. The low level of debt sets the company fair for future growth, and we've announced synergistic European acquisitions settling in the first half of financial year '24 for a total of $890 million, still leaving significant capacity available for further growth opportunities. And those with keen eyes would have seen an announcement to the market this morning of an acquisition that Dr. Goldschmidt will speak about during his presentation shortly. As part of planning for Sonic's future, the Sonic Board continues to focus on the development, renewal and diversity of the Sonic Board. You met and elected Prof. Christine Bennett AO and Dr. Katharine Giles at last year's AGM after they joined the Board in September 2022 as independent Non-executive Directors; and Dr. Philip Dubois and Dr. Jane Wilson retired at that meeting. More recent developments include the appointments of Prof. Suzanne Crowe as Chair of the Risk Management Committee effective 17 November '22, and as a member of the Remuneration and Nomination Committee effective 1 October '23. Prof. Christine Bennett was appointed as a member of the Risk Management Committee effective 1 October '23. I congratulate Suzanne and Christine on these appointments and thank them for their increased efforts for Sonic. Sonic's Board, therefore, currently comprises 7 Independent Non-executive Directors plus 2 Executive Directors, being the Chief Executive Officer and the Chief Financial Officer, including a pathologist and 3 other medical practitioners, in keeping with the company's medical leadership culture. The Board's current gender diversity objective is also being satisfied, with 44% of directors and 57% of non-executive directors being female. Another key element in planning for Sonic's future is to ensure that we operate in a sustainable manner. Sonic's 2023 Sustainability Report is now available on Sonic's website. The Sustainability Report is an extraordinary document, describing in the company's activities and how they contribute to society and reporting outcomes and progress against our sustainability targets. The report details the company's material sustainability topics and the net zero strategy as determined by the Sonic Sustainability Steering Committee. I strongly endorse this excellent report as recommended reading for all Sonic stakeholders. Sonic's sustainability strategy and the progress we are making have been recognized during the year with improved ratings from external agencies, such as our MSCI rating moving from A to A+, being classified as a leader, and our ISS ESG rating from C to C+. The company continues to be included in the FTSE4Good Index Series and the FTSE4Good Australia 30 Index. The Sonic Healthcare Foundation, which was established and funded by Sonic Healthcare, funds charitable programs, which promote the prevention and control of disease. These programs include establishing and supporting medical diagnostic services for hospitals and medical centers in some of the poorest regions of our world, specifically at the moment in Central Africa. The foundation also provides free medical checks for young indigenous Australians in partnership with organizations such as the Clontarf Foundation. Sonic's approach to human rights and our management of modern slavery risks is documented in our 2023 Modern Slavery Statement, also available on Sonic's website, and is overseen by the Sonic Board, supported by its committees. In financial year '23, Sonic expanded the company's existing Human Rights and Modern Slavery Working Group to include representatives from every country of operations, and the group was renamed the Global Human Rights Committee. This committee has 3 major functions: to provide a global forum to discuss potential human rights risks in our supply chains and operations and possible remediating actions; secondly, to oversee compliance with our relevant policies, processes and systems across our operations and supply chains; and thirdly, to meet global reporting requirements on human rights and modern slavery matters. Sonic's culture and approach to identifying and managing these risks helped to minimize the chance of human rights violations or instances of modern slavery in our operations or supply chains. Sonic Healthcare is a truly amazing health care and corporate success story in Australia, developing from one small laboratory in Sydney to market-leading or top 3 positions in 7 countries and #3 globally. This incredible development would never have occurred without the dedication and expertise of our people, ably led by Sonic's Global Office team and our operational leaders across the world. I'd like to take this opportunity to thank my colleague directors, Sonic's leadership team and our more than 40,000 staff for their tremendous contributions. And thank you to the Sonic shareholders for your continued support of and interest in the company. I'd now like to turn my comments to a couple of specific things that were raised -- have been raised with me prior to the meeting. We've had a few inquiries asking if Sonic Healthcare provided any support for the recent Australian voice referendum. I can confirm that Sonic did not provide any financial or other support for in relation to the voice referendum. In general, as a company, we do not take positions on social and political issues and the Board decided many years ago not to make political donations. With respect to the PricewaterhouseCoopers tax controversy this year and what that means for the audit relationship between PwC and Sonic. We have held a number of meetings with PwC to discuss the issue including most recently, Neville Mitchell, as Chair of the Audit Committee, and I met with Kevin Burrowes, the new Chief Executive of PwC Australia. Following these discussions, and after careful consideration, we are generally satisfied for PwC to continue as our auditors. I'd now like to invite Dr. Colin Goldschmidt, Sonic's CEO and Managing Director, to present a more detailed overview of the company. Thanks, Colin.

Thank you very much, Mark, and good morning to everyone. It's a great pleasure for me to present a snapshot of Sonic Healthcare as CEO of the company. Initially -- I'll just wait for the directors to move. So in August, just a few months ago, we put out our full year results, and they're up on the screen. Not to go into too much detail, but just to point out that this 2023 was the year coming off the pandemic, coming out of the pandemic. And you'll see here a $2 billion difference in COVID revenue, very, very significant matter in terms of the normal way we look at financials, where we look at the year in question, 2023 versus the prior year. So to explain all those negatives, it's because we are exiting the pandemic. However, our base business, which is the top line of that table, was strong. So base business excludes any COVID revenue, strong at 11% and 7% at organic level. Our earnings per share, which we compared to the pre-pandemic period, was up 19% and cash generation was strong. The full year dividend, as Mark has mentioned, was up 4% to $1.04 per share. We had announced 3 acquisitions in the second half of the financial year, and I'll talk about those briefly shortly. And our pipeline for acquisitions remains very healthy. And of course, our balance sheet, which has been strengthened through the pandemic, remains in a very good position to support those acquisitions. A quick look at the split of our revenue, and it's not very different from prior years. But you'll see here that we have really 3 big divisions: the U.S., Australia and Germany, operating in pathology or laboratory medicine; and two, what we call medium pathology divisions, that's the U.K. and Switzerland; and then, of course, radiology at 10% and SCS, which is our primary care division running medical centers in Australia only. Both radiology and primary care are Australia only. And not to forget, Belgium and New Zealand, small in the scheme of Sonic's entire revenue. This pie chart is $8.2 billion for financial year 2023. Just to talk a little bit and briefly about the acquisitions that we announced in the second half of financial year 2023. And there were 2 in Germany. Firstly, diagnostic and laboratory group. And I hope you can see, these are the red dots. This is a lab of EUR 65 million roughly in annual revenues based around the city of Dresden in the eastern part of Germany. It's a highly complementary footprint for us, with labs in that area offering a broad range of testing. The other acquisition was Medical Laboratories, Dusseldorf. That's this green dot here, around EUR 50 million in annual revenue. And it's a leading lab in the city of Dusseldorf, where we were not operational. And I want to take the opportunity just to point out on this map how we cover the waterfront in Germany. We are the largest player in Germany in pathology. And to answer one of the questions that's coming up from a shareholder who asked about progress with our lab mergers in Hamburg and Munich. And of course, you can see on this that we actually have 4 labs in the city of Hamburg and we are going to be shortly only down to 2 in Hamburg. So 3 labs will merge into 1. And that will happen in April of next year. We're completing the construction of a new lab in Hamburg, which will be a fabulous facility. And in Munich, we are going from 2 labs to 1, and that's going to happen next month. And again, Munich is a very big city in Germany. We've created a brand-new state-of-the-art lab, and we will be merging 2 labs into 1 there, with a lot of optimism for our growth in that city. And in Germany, we have a lot of acquisition opportunities coming into the future. The other acquisition that we announced, that's the third one, was the acquisition of Synlab Suisse, a fairly big lab business in Switzerland, with annual revenues of CHF 100 million roughly per annum, that's AUD 175 million. And if you can see the dots here, you can see how very synergistic and complementary this acquisition actually is. So it offers us a lot of opportunity for all kinds of optimizations, lab mergers, procurement benefits and a whole range of synergies that will come out of this. This acquisition also gives us the opportunity to operate in the Italian-speaking part of Switzerland, Ticino, where we were not operational before. And again, I just want to say that we are the #1 player in Switzerland. We were the #1 player. We're still the #1 player. This takes us to an even larger size. And again, to answer one of the questions, which asked what's the progress with synergy from this acquisition. So I should let you know that there are something like between 15 and 20 work streams in full flight already, working on a fairly complex synergy aspiration for this acquisition. So we have little doubt that in the next 1, 2, 3 years, this business, which we bought at breakeven level, will turn into something very positive for Sonic Healthcare. And even though you might say, well, how big can you get in Switzerland, we have opportunities for more acquisitions in Switzerland. And again, there's a pipeline that we -- that's probably all we can say right now. In August, we also put out information about our earnings growth. And we stressed, of course, that we're transitioning from this high revenue year before of COVID testing back to business as usual. However in making this transition, 2023 and possibly 2024, become years where we are resetting the business and we've got in train a whole range of activities to right size the company, bring it back to normal business. And we've listed some of them here. So the good thing is that our base business, that's excluding COVID, remains very strong. And this is not just a rebound phenomenon coming out of the pandemic, we just see strength underlying in our business. Very importantly, the second bullet point, which is the normalization of our workforce, a huge amount of activity is ongoing throughout the global reaches of Sonic Healthcare right now because as you can imagine, through the pandemic, our volumes increased enormously to handle all the testing we did and we're now having to bring down our staff levels and do it as fast as we can. And we're being very successful. So we've got targets set right around the company built into our budgets and guidance for FY 2024 and progress is very positive so far. So I mentioned some of the others, the turnaround of Synlab Suisse, getting revenue and earnings and synergies from other acquisitions. We've got a new collection center system -- collection system, that's collection system in the U.S. We've got fee indexation that's happened in some of our markets. I've mentioned the laboratory rationalization, and we also mentioned digital pathology and AI to enhance efficiencies. And of course, today's announcement covers that, and I'll deal with that in a second. And of course, our future growth is going to be augmented by additional acquisitions and contract wins as per our pipeline. We put out guidance in August of EBITDA of $1.7 billion to $1.8 billion. And that equates to a 5% growth on FY 2023. And the basis of this was our strong base business growth offsetting the reduction in COVID testing that followed the ending of the pandemic. We gave guidance -- further guidance on our interest expense and on our tax rates as well and a few other subpoints associated with the guidance, including this one here that we built into our guidance a fee cut that we were expecting in the U.S., the so-called PAMA fee reductions. But the good news is that it looks highly likely that, that will not occur. It's going to be delayed again by another year. Now we are today giving guidance update after 4 months of trading, and we are reaffirming our guidance at this point in the year. We are also guiding the market today to a slightly more accentuated H1, H2 ratio. We verbally flagged this at the August full year result release. And there's good reason for this. Normally, our first half is about 46% and the second half, 54%. But this year, for very specific reasons, we're guiding the market to a 42-58 split. And the reason for that difference in phasing is those profit initiatives that I've just mentioned on the previous slide and also the timing of these recent acquisitions that I've just mentioned. The interest expense that we issued in August will now have to include the funding for Pathology Watch. That's the deal we announced this morning. And just a few words about our revenue growth. And this is really the good news about where Sonic sits at the moment post pandemic. Our base business revenue growth is sitting at 17% at the moment, per annum. That's after 4 months. That includes acquisitions. And if you take out the acquisitions, the straight organic revenue growth, it's sitting at a very healthy 7%. I mentioned the PAMA fee cuts are likely to be postponed. And of course, COVID revenue has come right down, and we expect that to continue. And for your interest, this is what has happened with our COVID revenue. So -- if you just go back to July, the start of the financial year, we were doing almost $100 million in revenue for that month, and it's really dropped off a cliff, thankfully. But -- so it's now sitting at something like less than $10 million per month. This is global, not Australia, it's the whole world. And whilst there might be little spikes up and you're probably reading that there's resurgence of, I think, the eighth variant, I don't -- we're not expecting COVID testing to ramp up at all significantly even though it may happen to a small extent. Certainly not built into our budgets or guidance. Now I'd like to spend just a couple of slides talking about something very interesting and very exciting for Sonic Healthcare: digital pathology and AI. And to explain what digital pathology is, it's essentially the digitization of anatomical pathology. And most people would not know what anatomical pathology is. Anatomical pathology is the study of organs or tissues to determine the cause of the disease. So to put that more simply, basically, all the tissue cancers that exist in the body have to be diagnosed somehow. So whether it's bowel cancer, breast cancer, brain cancer, bladder cancer, skin cancer, a biopsy will be taken or the tumor will be excised and it's got to be studied for a diagnosis before treatment can be instituted. So this is anatomical pathology, and it's a very, very important part of what we do. It's -- I think the next slide says it's required for 100% of the diagnosis of cancers. So a very important part of what we do. And of course, we, at Sonic Healthcare have become very, very big in this space over decades. Now digital pathology and AI added to digital pathology is set to transform this field through step changes in efficiency, quality and capacity. And just to give you an idea about this, anatomical pathology requires a pathologist and a microscope. And this has been the way anatomical pathology has been performed for many, many decades. It could be I think 100 years, something like that. Of course, it's got more and more sophisticated as years have gone by, and it's now an incredibly big field. So just for an anecdote, I'm a qualified anatomical pathologist. The training is rigorous. So after you've done your medical degree, it's another 5 or 6 years of specialized anatomical pathology training. It's a huge field, how to diagnose every cancer in the body. And every other abnormality, it may not always be cancer. So pathologists with a microscope, and you'll just see down the bottom here, a tray of slides, and really anatomical pathology revolves around a glass slide. What you see on that slide is a very thin section of a tissue specimen. Let's say it's a breast tumor which has been processed in a lab, dissected out and then cut with a microtome, which cuts very, very thin sections, put onto a slide and stained, and then the pathologist puts that under the microscope and makes the diagnosis. So what's going to happen now is that slide will be digitized, scanned in a machine like this, not very big. They're quite expensive though, but not very big. Scanned and digitized. Radiology has been doing this for a long, long time. But to get to this stage in the evolution of pathology and laboratory medicine, it has taken a while, and it requires a lot of technology. So that becomes digitized, and then we get that image on a screen. This is a revolution. It's a revolution in our space. And of course, the technology today is amazing. You can see that this is a common skin cancer, some of you might have had it called basal cell carcinoma, and you can magnify this simply by rolling the wheel on your mouse and keep the resolution beautiful. So the pathologist will eventually throw away the microscope and diagnose cases on a screen. Easier said than done. Pathologists love their microscopes. I didn't want to give up my microscope a long time ago. And so when I say it's a revolution, it's a revolution for a pathologist and it's a revolution for the whole field. And it's -- at a business level, this is going to be very, very significant and this relates very much to the announcement that we've made today. So just a few words about this. So we say anatomical pathology is undergoing a revolution to automation, digitization and the use of AI tools. You couldn't use AI readily unless you had a digitized -- digital image. Sonic is arguably the largest company in the space of anatomical pathology. We don't know this exactly, but we're certainly one of the largest. Our annual revenues in anatomical pathology alone are more than AUD 1 billion per annum. And we employ more than 1,000 anatomical pathologists. That is the biggest group of pathologists in any company in the world. And it's Sonic's medical leadership culture that has slowly drawn more and more expertise in this area and expert pathologists in particular, which is a wonderful thing for the company. So we are making investments in this field to be at the front of this revolution that's taking place. And our first step in this direction was to form a joint venture with harrison.ai, the joint venture is called Franklin.ai, to develop AI tools for anatomical pathology. And it's been wonderful. I spoke about this last year at the AGM to see the progress and the synergy between experts in AI, that's Franklin, and experts in healthcare and pathology, that's Sonic Healthcare, working together to make enormous progress and really get at the front of the whole world market in this space. So we're due to release our first product -- and that will be early next year sometime, the trials will start and the product will be released. That's the first fully fledged AI product, which will assist pathologists to make a diagnosis on a specific cancer. Now today's announcement is very, very exciting, and it's the acquisition of a company called Pathology Watch. I realized that most people here today would not have actually read the ASX release. Did anyone read it maybe? No? One.

Please summarize it.

Yes, that's what I'm going to do. So -- and it's an interesting release. I recommend even after I've spoken, it's worth reading because it's quite a lengthy release, longer than usual because we're trying to explain what this is. So Pathology Watch is a medical technology and dermatopathology, that's a skin pathology company out of Salt Lake City, Utah, United States. This company, very, very innovative and exciting, has used proprietary intellectual property to create an end-to-end digital pathology system or platform. And the platform includes a laboratory information system. That means it's got its own IT system. It's got a pathology viewer system. It's got a system to store all these digital images that I talk about and they have an AI algorithm for skin cancers. It's amazing for us. This is an incredible achievement. And where is the value in this for Sonic Healthcare? Well, firstly, the company Pathology Watch has set up its own dermatopathology business in the U.S.A., with a current run rate revenue of about USD 15 million per annum. And so you can see what they've done is they've built this end-to-end system and then used it to go to dermatologists and to hire dermatopathologists, and it's really worked. It resonates with dermatologists who are the referrers of the skin pathology, the skin cancers, et cetera. So this acquisition will accelerate Sonic's transition from the microscope to digital pathology. We haven't yet started it in earnest. And I should probably, just as an aside, let people know that this is a rapidly evolving transition in the world of anatomical pathology. I would say that the United States is probably slightly ahead of the rest of the countries that we're in, certainly ahead of Australia. And so to have a system that will actually help you make this transition from the microscope to the digital pathology world is a big thing. Secondly or thirdly, there will be efficiencies that come out of this at pathologist level. So you've got to try and imagine instead of a pathologist looking down a microscope with piles of slides next to her or him, the cases are available on the screen and can be read anywhere. And the caseloads can be combined and you can pick cases off them, you can create national expertise in specific areas, like say, gynecological pathology or neuropathology. You can combine expertise and share that workload and also get ready access to second opinions, often with difficult cases. A pathologist has to take the slide and go and find somebody else and say, "Can you give me a second opinion?" Or worst, ship it some way to an expert and say, "Please, can you give me a second opinion on this because it's a difficult case?" That could take weeks. This is instant. So we can get second opinions a whole lot easier. Very importantly for us, this acquisition is going to give us competitive advantage in selling dermatopathology. Now we're getting very deep into detail here, but of course, we rely on winning business from all manner of clinicians out there. Now if you're just thinking about skin pathology, which makes up a big part of anatomical pathology, the way you win business is you go and visit a dermatologist or the -- and you say how about trying to use our lab. And this system has worked amazingly to resonate with dermatologists. And the reason for this is that it's actually got a system in it where the dermatologists can click a hyperlink in her office and call up the case herself. There it is. I can look at that BCC, the basal cell carcinoma I showed you. A click of a hyperlink, and there it comes up. Dermatologists like looking at the pathology themselves. And they can turn the screen around and show their patient -- so if you're the patient, and you had a BCC taken off, you go back to the dermatologist, the dermatologist says, "I've seen your case myself, and here it is." And turns the screen and you can have a look at it yourself. So this has actually worked very, very well for Pathology Watch in the U.S.A. They've grown very rapidly to $15 million run rate per annum revenue. So what we are going to do in the U.S. is take that system, the end-to-end system, and apply all our dermatopathology, and ours is much bigger than theirs, to this system and use it as a sales tool as well. Very exciting, it is. Maybe you're not getting it, but at our level -- I'm not saying you're not understanding it, but this is how we get excited because this is possibly -- it's a wonderful sales tool. There's no nonsense about it. This adds value to the dermatologist and to the dermatologist's patient. And it's an excellent system in terms of quality, accuracy, all those second opinions, everything about it is really, really good. So having a digital pathology system is also going to support our recruitment of pathologists and the retention of pathologists and also remote reporting, which is becoming more and more important. Young pathologists these days, this is the kind of system they will love. Instead of having looked down the microscope, I can report on the screen, and I can do it anywhere. The other thing about Pathology Watch is that they have what's called a prognostic AI tool, and this is in development, and it's potentially very exciting, but this is the blue sky part of Pathology Watch where it's a tool which will be able to determine the aggressiveness of a melanoma case using AI and some other tests, and we'll have to stay tuned with that one. Also, you might ask, well, hang on, you guys made this investment in Franklin.ai. How does this relate now to the Pathology Watch? There's a huge amount of synergy between these 2 acquisitions for us in the same space. So the acquisition of Pathology Watch will actually help to accelerate Franklin's AI products into our own practices. So I mentioned that next year, we hope to have the first AI product for a cancer diagnosis. We can drop it into the pathology watch end-to-end system and use it. That's a wonderful thing. It's also going to potentially accelerate the adoption of all of Franklin.ai's products in global markets. So Franklin.ai are the experts at making AI products only. Here, we now have a tool which we can go to any lab in the world and say, here's a product you can buy. You can buy an end-to-end system with an AI tool embedded in it. So for us, this is an exciting acquisition that's going to play out in the coming years. This is something that we hope to really take a big role and to lead the world in anatomical pathology and particularly in the digital pathology and AI space. The purchase price was USD 130 million. Settlement is expected next month. Moving on, I'm putting up 2 slides on sustainability really for information. And our teams are making enormous progress, as Mark has mentioned, in this space. There's some incredible results. If you look at some of the detail, for example, a 10% reduction in global emissions. I think that's a fantastic achievement for Sonic Healthcare. But a lot of these are also all positive. And my final few slides, just to give you just a quick snapshot of the company itself. And I thought these are interesting. So as at the 30th of June, we had 40,594 employees. And this is how they are split up by country. And you'll see that just over half of our employees are not in Australia. The weighting to Australia is because we've got 3 divisions in Australia: pathology, radiology and primary care. We also have a big IT team in Australia. And in Australia, we have more collection centers than anywhere else in the world per capita. Something that we can talk about another time. But you'll all have attended our collection centers. And so -- but it is very interesting that we've got almost 8,300 employees in the U.S. and over 8,000 in Australia. We have more collection centers than anywhere else in the world per capita. Something that we can talk about another time. But you'll all have attended our collection centers. And so -- but it is very interesting that we've got almost 8,300 employees in the U.S. and over 8,000 employees in Germany. Looking at our headcount by age, I think this is probably what you'd expect. Most of our staff are between 20 and 60 years of age. But a fair chunk of our staff is 60 to 69 and a few -- quite a few in the plus 70 bracket as well. And this one is, to me, the most interesting. It's a headcount by role. And just to call out, firstly, 5% of our staff are medical doctors. And then almost 40% of our staff are what I would call professionals, health care professionals. These are scientists, radiographers, sonographers, technologists and nurses. And then you've got about 20% who are phlebotomists. These are phlebotomists are the staff who are in our collection centers and take your blood. And so you can see from this that well over half, I think almost 2/3 of our staff, you would call real medical people, ranging from doctors being -- and those doctors are pathologists, radiologists and GPs and the rest. So it's a staff complement heavily weighted towards the professional side. And it really was that recognition way back that took us to locking in the concept of medical leadership into Sonic Healthcare that we are -- now many small companies or small practices do this. But as you get bigger and bigger, this kind of gets lost in the noise of the business. A short definition of what medical leadership is, is this, leaders who understand and respect doctors and the medical profession. You have to stop and say that twice because to understand doctors aren't that easy and to understand the medical profession is also not that easy. Yet I can tell you that around the world, health care companies are just flooded with people who don't qualify under this definition. So this is where Sonic Healthcare is different. And I make this statement that in health care, if your leaders are true medical leaders, you create an entirely different organization. Honestly, I think we all believe this so much and you hear so much feedback from colleagues who are in companies that don't have medical leadership where people are making decisions on a business basis rather than on a healthcare basis. And really, we ended up using this term internally, the Sonic difference, because I think Sonic is different in many ways. And when we induct our staff, we tell them that the Sonic difference is these 3 things: medical leadership, our core values and our federated structure. But if you had to choose between the 3, I really think it's the medical leadership thing that stands out as the difference because medical leadership has been transformative in Sonic Healthcare. And very importantly, it's a system that doctors can trust. So if you have leaders who are medical leaders, doctors trust the system. Now when I say doctors, it means our own doctors, pathologists, radiologists and -- in our medical centers. And if they trust the system, you're going to attract them. That's what's happened. But even perhaps more importantly, our customer is a clinician. It's your gynecologist and dermatologists and GP. If they trust the system, then you will attract them, too. So this has been a huge part of why Sonic Healthcare has grown to where it is over the years. And if you look at our 3 main stakeholders, and starting with staff, the medical leadership model has created a feeling for our staff that they're working in a medical practice even though we are now very big, that they're working to help patients and that they have this idea of a higher purpose in the company rather than I'm working in a business, which is how many large care companies have gone. It's all about making business decisions rather than decisions in the best interest of patients. If you look at our customers, what medical leadership has done, and if you have medical leaders and your pathologists and radiologists integrally involved in our businesses, the quality level just rises and rises and rises progressively over the years. And again, we've seen this to such an incredible extent in Sonic Healthcare. And of course, as the quality rises, that is best for patient care. And of course, shareholders, and I'll leave the best for last, there's been financial success and shareholder returns. But if I could just go back for a second to the customers, that natural trend to the highest levels of quality has been, I believe, absolutely at the heart of Sonic Healthcare's success and its future success going forward. And we use this tagline. You might have seen it on some of our courier cars, and we use it in various places. But when we use it, it really has meaning because I believe that the medical leadership model has driven quality in an enormous way. And I really do believe that -- we don't use this tagline because of our -- this logo because it's a double helix. It just works out very well. But really, what's in the DNA of Sonic Healthcare is medical leadership and very high quality. So using quality is in our DNA. I think we can stand very proudly and firmly behind that with great justification. And I believe it's that quality and medical leadership that's really driven shareholder returns consistently and over a long, long period of time. This is 30 years. And it's really fueled this extraordinary growth over 35 years, starting back in the '90s where when we locked in medical leadership and revenues were something like $20 million, going up to $8.2 billion in FY 2023, and it's really those 2 factors, the quality and medical leadership, that really sets Sonic up enormously well for a very bright future. Thank you very much.

Now I believe I'm going to read out some of the shareholder questions first. These were not the online questions. So [ Mr. Philip Carlton ], a shareholder, has asked a number of questions. The first one was, what were the key drivers behind Sonic Healthcare raising its organic revenue growth forecast above the long-term market average of 5% per annum? And so the answer to that really goes in some ways to some of what I've presented. The medical leadership model has really taken Sonic into the higher realms, if I could say, or the more complex realms of our space. And so we end up being very, very strong in the specialist markets and hospital markets. So if we divide the markets into general practice, GP, specialist, hospital, those are 3 big markets within pathology, we are -- we're strong in the GP market, but we're very strong in the specialist and hospital market, especially in Australia and Germany. And we're finding of late that the growth in those 2 markets, the specialist market, is particularly strong. And so Sonic is in good position to reap the benefits from that growth. And that's probably the main reason why we've upgraded our growth. We're also seeing in that space certain blockbuster tests that we do. These are not easy to set up, but they're at a fairly high level. So some of them -- one example is our ThyroSeq test, which is a test for thyroid cancer. We have a proprietary test that we are the only ones offering it in the United States. Revenues are now approaching $100 million per annum from one test. It's a very complicated test, and it's very well reimbursed. It's a blockbuster and a very useful test for patients with thyroid nodules. But there are others. There's the Oncotype DX breast cancer test that we are running exclusively in Germany. Also, in the space of women's health, we are running what's called NIPT, or non -- I won't go into all the details. But we're running tests for abnormalities in the fetus at genetic level. So NIPT is noninvasive prenatal testing, which is a test for Down syndrome. But it's not just that. There's also another test running for 3 abnormalities in the fetus, and it's called reproductive carrier screening. These are tests that not everyone can run. And so these are also driving our growth, also blockbuster tests. Part of that question was, were the PAMA fee cuts factored in? And I've mentioned PAMA before. And another question from the same shareholder. Given the continuing normalization of the laboratory acquisition and hospital partnership markets, can Sonic give any medium-term targets for future sales growth coming from inorganic sources? In other words, M&A, acquisitions or contracts. So as everyone knows, our growth is a mix of organic growth, where we just grow by winning new customers but also acquisitions. We obviously can't talk about future acquisitions. But our growth in both organic and inorganic is strong. We have a very active pipeline, as I mentioned, with a strong balance sheet to support that. And I guess that's all we can say on that space. It's very positive, both organic and inorganic at the moment. Same shareholder, final question. Does the recent consolidation in the Australian pathology industry offers Sonic an opportunity to expand its market share in the GP submarket or other markets? Now, unfortunately, there has been a small amount of consolidation that's happened, but there's another bigger one that's in front of the ACCC at the moment. And because of that, I probably would be better off not commenting on that one. Next question, I'm going to hand to Chris Wilks, Sonic's CFO; and it is, could you give us an update on the national rollout of the enhanced revenue collection system by the U.S.A. laboratory businesses? Are the benefits of the system meeting expectations? Thank you, Chris.

Happy to answer that one, Colin. Look, maybe before I do, I'll give a bit of context. You probably appreciate, being Australians, that when it comes to getting paid for what we do here, it's quite straightforward. A lot of it is handled through bulk billing. And so whilst we have teams of people to collect our debtors, it's not that complicated. And similarly in Germany. But when it comes to the U.S., the market is quite different. About 20% of our revenue comes from Medicare and Medicaid. The other 80% comes from relationships we have with about 400 insurers. And so when someone gets a test by us, we have to claim the money, it's almost like making an insurance claim we would have here. If you claimed something for your car, you've got to provide lots of details and they'll decide whether they're going to pay you or not. And if you don't have all the information about the policy and the deductibles and even in some cases, now they require what they call prior authorization. So we actually have to get -- we have to contact the insurance company for the patient and get authorization before we do the test. So it's a lot more complicated. And we've had pretty good systems to handle that. It's quite manual, too. So we have something like 900 people who collect our debtors in the U.S. Now what we've been testing is a product that's produced by a company called XiFin, X-I-F-E-N -- F-I-N, sorry. That started off as a lab collection technology company. They have created a whole lot of automation tools that clean up the claim forms and everything before you submit. And as a consequence of that, and our trials have been exceptional, it means that not only do you need less people to do the collection, you actually collect more money. So instead of writing off debtors, when you try 3x and don't get paid, you write them off. Now we get paid for a whole lot more. And as a consequence, you actually get more revenue for the work you've already done. So we've trialed it in our California operation. The results of that were better than we expected, kind of significantly more money per test on average, and we're in the process of rolling that out in our other divisions now. And so we expect that our big divisions, which will come in the early part of next year, it will all be rolled out by June '24.

Thank you, Chris. The next question is, given Sonic's below-target gearing, does the company propose to undertake any further share buyback programs? Over to you again, Chris. Thank you.

Thanks, Colin. So look, at this point in time, there's no plan for share buyback. Obviously, this is something that the Board and management team monitor all the time. It's a balance between our leverage. And we have spent -- Colin mentioned before that we've spent close to $1 billion. We've announced Pathology Watch. So it's a bit close to $1.1 billion. And so that is increasing gearing a bit more, but there's still room to grow. But we'd probably prefer, as we have for 30 years, to grow by acquisition because that's -- we think we can get a better return on invested capital from doing that. But if the opportunities don't exist and we're still undergeared, something like a share buyback will be considered again.

Thank you, Chris. Next questions come from the Australian Shareholders Association. While the underlying non-COVID business continues to grow, does Sonic expect total revenues to fall again in financial year 2024? We don't give revenue guidance. The answer is no. I've mentioned that our revenue growth year-to-date is strong. It's 17% at the moment or 7% organic. So the answer is no. Next question. Could Sonic provide an update on the progress of the turnaround of the Synlab Suisse acquisition? We've dealt with that one. Next, could Sonic provide an update on the progress with its AI initiatives? We've dealt with that one. While roughly businesses of similar size, base business organic growth in the U.S. at 4% seems to lag Australia and Germany at 11% and 10%, respectively, are there any reasons why U.S. organic growth will not reach similar levels to Australia and Germany? Yes. So the answer to that is really, we see that the market growth rate in the U.S. appears to be lower than it is in Australia and Germany. And we believe that we are more or less at market growth rate in America. We're not sure why the market growth rate is lower, but it just is. And so I don't think there's anything to be concerned about coming out of that question. Those are all the questions that have come in to date. Paul, are there more?

Yes, Colin, there's 3 questions online at the moment. So the first one is from [ Mr. Brian Rathborne ] who asks, won't digital pathology and businesses like Pathology Watch result in a reduction in the number of pathologists required by Sonic?

Okay. So I think that's a fair question. Digital pathology is not designed to replace the pathologist, just like digitization or AI and radiology isn't designed for that at all. What -- I think perhaps how it should be answered is that there is a worldwide shortage of pathologists at the moment. Now fortunately, in Sonic Healthcare, and I think it's because of our medical leadership culture, we don't suffer all that much. But what it will do is just create better efficiencies. So we don't plan this as a business tool to reduce pathologists, but there will be greater efficiency. Pathologists will no longer have to deal with the logistics of slides and trays being brought in and sending out elsewhere. So in the end, for the same amount of work, it could reduce the total number of pathologists. But I think that, that will probably be a good thing given that there is a shortage. Now that's going to take years to play out, and it's not really the main reason for this acquisition.

Okay. The next question, the shareholder prefers not to be identified. But the question is, with respect to digital pathology, does this open global clinical leadership opportunities where, for example, a pathology slide in Germany could be diagnosed by a pathology leader in the U.S.A.? How does privacy and data sovereignty impact this advance?

Yes. At the moment, reimbursement for medical services and pathology, in particular, does not cross borders. So whilst you might be able to get a second opinion, within a company, which, again, would be a good thing for patients, this is not going to happen. Countries will probably not change their systems. As Chris mentioned, you've got a reimbursement system in the U.S. It's entirely different in Germany, it's entirely different in Switzerland as it's entirely different in Australia and every other country. So I don't think there's a risk of suddenly going international. I think a big benefit could be that within a country, we form national areas or centers of excellence. So if you take dermatopathology, our whole Sonic team of dermatopathologists, and it's a big team -- or let's take something more specialized. Let's say, neuropathology, tumors of the brain and other pathologies of the brain, we can combine our expertise in Australia. That's a wonderful thing. And I think that will occur. And this can be applied at all levels. So experts in lymph node pathology or experts in any organ of the body, I think this will be a great thing within countries, but I don't think it's going to happen across borders.

The next question is from [ Jeff Rogers ], who asks, how accurate is NIPT, i.e., what is the false positive rate for Down's syndrome? What is the process for handling the initial and following tests before assisting the parents with a very difficult decision on what to do next?

Well, it's very technical. And now we're very fortunate we've got Sonic's Chief Medical Officer in the audience. Dr. Stephen Fairy. And Steve, can I ask you to make a comment on this one?

The false negative rate for NIPT is very low. It's a low percentage. We communicate what the sensitivity specificity of our tests are to our referring doctors so that they can interpret those results knowing the limitations of the test. And we have extensive systems in place to make sure that when we are aware of issues with quality that, that's also communicated with our referring doctors and the patients.

Thank you very much, Steve. That's excellent.

There are no more questions online at this point, but I might just check whether the conference call moderator has any voice questions. No. So Colin, any questions in the room?

Yes, we can open up for questions in the room. Yes, sir.

We might just get a microphone to you just so the people online can hear as well.

Good morning. And as always, thank you for your time throughout the year and to be here today. Listening to what you've talked about, I want to understand the track record and where we are today. I want to talk a bit about the future and some of the concepts that we've talked about. So I'll give you some independent variables as a context, and then I'll ask a question. Sonic is a global business that has staff around the world. So there's a concept of the overall medical knowledge that these staff have, and it's potentially different for different things in different places. Your artificial intelligence system being developed, that's, if you like, leading-edge, bleeding-edge, it's current and ongoing system integrity as a concept. The body of knowledge of medicine in the space that you're working in is not static. It continues to move. And the ability -- because you're a global business, there's the concept potentially of learnings or mistakes or what have you globally that can be cross-referenced to other staff around the world. So if you take those concepts, can you discuss -- so now the question. To discuss those concepts in the ongoing management of medical leadership in the organization.

Thank you very much for that question. It's very dear to my heart. I think the concept of medical leadership, it precisely addresses your question. If you're running a business whereby everything revolves around financials, so we're here to make a dollar. Many of the issues that you've raised will be overlooked. They will -- it will be determined, and this does happen that these are excess to the business. We don't need to do them, and they don't get done. In our medical leadership model, because you've got -- most of our CEOs are doctors around the world, and including myself as CEO of Sonic, but I'm talking about divisional and operational businesses. You take our Radiology division here in Australia, 6 practices, all radiologist CEOs. Our Pathology division, 8 divisions, 7 out of 8 are CEOs, and the eighth is a true medical leader, and it's the same around the world. So when you've got this, you've got -- given that in our training as doctors, are you perhaps a doctor?

No.

You could have been one because teaching and education are absolutely paramount. It gets inculcated into all the training that we do. And so the issue of keeping up with the world through conferences, through research, through reading, through giving people that extra time to make sure that we are changing and staying ahead is integral to medical leadership. And that's why I really appreciate this question because I can see in other places, it doesn't happen. So I hope that's sufficient for your answer.

You got to spend on meetings.

Yes. I mean we have many, many examples of -- Mark just reminded me. So I'll give you an example. Almost all our pathologists are given conference leave and conference allowance. Now that's like, shareholders might say, well, hang on, isn't that a waste of money? And if you were just looking at the financials in the short term, you might say, yes. Mark's reminded me that we have what we call a SPAM meeting here in Australia, Sonic Pathologists Academic Meeting. That's a meeting once a year of all Sonic's pathologists. It's a weekend meeting where all the stuff is discussed, the stuff that you've asked your question around. We have the same thing in Germany and the same thing in the U.S.A., exactly the same thing and the same in radiology. So there's so many issues. We actually document all the things we do in that space. And in the end, it does feed through to the business. That's, I guess, the bottom line just in case shareholders think, well, yes, you should cut them out. But really, if you stay ahead of the field, if pathologists feel they are staying current, they will go the extra mile. We will attract more customers. It all feeds to the business in the medium and long term. And I think that's what's happened with medical leadership, specifically in this area that you're talking about.

Thank you.

Any more questions? I'm going to hand back to Mark Compton, Chairman.

Thanks, Colin. Thank you very much, Colin, and thanks, shareholders, in the room and online for those insightful and helpful questions. It's time now to move on to the formal business of the meeting. The Notice of Meeting has been made available to all shareholders and is available on Sonic's website, and I propose to take the Notice of Meeting as read. As I mentioned before, you may submit or ask a question on any item of business via the online platform at any time during the meeting. Shareholders attending in person will also be given the opportunity to ask questions during the meeting. The poll remains open on all items, and proxy results for all items of business being voted on today will be displayed on your screen as well as the screen here in the meeting room as we consider each resolution. I note that I will read out each formal resolution to the meeting. Proxies have been reviewed by our share registry, Computershare Investor Services Pty. Ltd., and I note that I have cast undirected proxy votes given to me as the Chairman in favor of all resolutions. The first item of business per the Notice of Meeting is the receipt and consideration of the Financial Report, Directors' Report, Auditor's Report of the company and the group for the financial year ended 30 June 2023. If you've not already done so, please submit or prepare to ask any questions now regarding the financial statements and reports. I'll just check with the Company Secretary to see if there are any questions online, and nothing through the audio, the conference call, nothing there. Can I see if there are any questions in the room from shareholders on resolution -- this particular resolution? No? Thank you very much. We'll move on now with the specific resolutions. As Resolution 1 seeks my reelection as a director of the company, I will hand over the chair to Kate Spargo, who is Chair of the Remuneration and Nomination Committee, to deal with this item. Thanks, Kate.

Thank you, Mark, and good morning, everyone. Resolution 1 is an ordinary resolution, which reads as follows: that Prof. Mark Compton, who retires in accordance with Article 71 of the company's constitution, and being eligible, offers himself for reelection, and is reelected as a director of the company. Mark's biography is included in your Notice of Meeting. Mark is a Non-executive Independent Director who has extensive senior executive and Board experience in health care services. Mark is a member of the Audit Committee and the Remuneration and Nomination Committee of the Board. I'd like to invite Mark to speak to you and also to answer any questions you might have of him.

Thanks, Kate. Can we hear on this microphone okay?

Yes.

Great. Well, thank you, Kate, and thanks to fellow shareholders with the opportunity just to say a few words about my reelection. It's indeed a privilege for me to be able to serve as a director of Sonic and with the added privilege with the support of my colleague directors to serve you as Chair of the Board. I remain absolutely passionate, dedicated and energized to work to drive the central engine of Sonic, which is the culture of medical leadership, which Colin has displayed again today on -- in his presentation. This really drives, I think, excellent care, excellent service attracts and retains outstanding people in the organization, indeed, attracts fantastic opportunities for acquisition for Sonic people, come and bring their pathology or radiology or general practices to Sonic with a view of perhaps coming into the company, vending in because of medical leadership and the way that the organization is run and the trust there for doctors in the way that they can then care for their patients. And of course, it then drives exceptional results for shareholders. And those things are in that order. If reelected by shareholders, my strong commitment to that absolutely remains. I do bring broad experience in health care, ranging from frontline clinical environments to research, to teaching, executive leadership roles, governance roles in the for-profit, not-for-profit, listed and unlisted spaces. My experiences remain current, and I believe still useful to Sonic and its shareholders. Some people might have noticed that I -- my usual 100% attendance at Board meetings in this last year was just under 100%. I did miss a Board meeting and a couple of such associated committee meetings for a particular reason. I have a volunteer and charitable role as the Lord Prior of the Order of St. John globally. Some of you might know that as St. John Ambulance more familiarly in your jurisdictions. And it is one of the Crown Orders. And as a consequence of this wonderful position of what's called Lord Prior, I was required to attend and be part of the formal processions at Her Late Majesty The Queen's funeral and, of course, the coronation and procession of the King's procession as part of that. Somewhat unusual circumstances and in discussing it with my colleagues on the Board, they thought that was not unreasonable to be excused anticipating those. My work for Sonic otherwise and turning my mind to matters before Sonic and so on goes on, even if I'm not physically in the room for a Board meeting. So I hope that shareholders will understand that in this last year, it's quite an unusual circumstance, otherwise, my attendance, I think, is impeccable. So thanks for the opportunity of saying a few words, and I'd certainly be happy, subject to Kate's guidance, of answering any questions that there might be from shareholders either online, on the phone or from the floor.

There are no questions online or on the phone at this point.

Well, thank you, Mark, and thank you, Paul. Are there any questions from the floor of Mark? If there are none, the proxy results for this resolution is shown on the screen and will be recorded in the minutes of the meeting, and you can see them displayed above. So I'll hand back to Mark.

Thank you very much, Kate. I'll now move to the next item of business. Resolution 2 is an ordinary resolution which reads as follows: that Mr. Neville Mitchell, who retires in accordance with Article 71 of the company's constitution, and being eligible, offers himself for reelection and is reelected as a director of the company. Neville's biography is included in your Notice of Meeting. Neville is a Non-executive Independent Director, who serves as Chair of the Audit Committee, and is a member of the Risk Management Committee of the Board. I now invite Neville to speak to you and answer any questions that you may have. Thanks, Neville.

Good morning, everyone. I'm standing for election as an Independent Non-executive Director at this AGM, and I'm currently the Chair of the Audit Committee. By way of background, I'm a Chartered Accountant and my executive experience was largely as Chief Financial Officer at Cochlear Limited for over 25 years. This provided me with not only a sound financial background, but also practical hands-on experience in the global health care sector. Since leaving Cochlear in 2017, I've served on a number of Boards, both in industry and in government. Currently, I am a Non-executive Director on Sigma Healthcare and Fisher and Paykel Healthcare Boards. I'm the Audit and Risk Committee Chair at both of those Boards. Sonic plays a unique and essential role in supporting the overall health of Australia, a role that I think is often unrecognized, but I'm very proud to be part of the Sonic team. I believe I have the depth of relevant experience to add value to Cochlear, and I look forward to working alongside my colleagues on the Board and the wider team to deliver shareholder value. I seek your support for my election.

Thank you very much, Neville. I'll go first to the Company Secretary to see if there's any online...

Nothing online or phone. Thanks, Mark.

Questions, and nothing on the phone. So I'll then hand over to shareholders in the room if there are any questions for Neville Mitchell. There are none. Thank you very much. The proxy results for this resolution are shown on the screen will be recorded in the minutes of the meeting. For is 284,300-and-some-thousand; against 10,294,252; open, 2,976,000 and some; and abstentions, 186,500 and some. I'll now move to the next item of business. Resolution 3 is an ordinary resolution, which reads as follows: that Prof. Suzanne Crowe, who retires in accordance with Article 71 of the company's constitution, and being eligible, offers herself for reelection and is reelected as a director of the company. Suzanne's biography is included in your Notice of Meeting. Suzanne is a Non-executive Independent Director who serves as Chair of the Risk Management Committee and a member of the Remuneration and Nomination Committee of the Sonic Board. I now invite Suzanne to speak to you and answer any questions. Suzanne?

Good morning, everybody. It was a pleasure to meet with a couple of you before we sat down to business this morning over coffee. And I'm very pleased to be renominated by my fellow directors, having served on the Sonic Board for the past 3 years. With regard to my background, I'm an infectious diseases physician, and I worked as a specialist medical practitioner for 3 decades or more. I'm now an Emeritus Professor of Medicine at Monash University in Melbourne. I currently serve on the Board of 2 ASX-listed companies, one also NASDAQ-listed, and I'm a fellow of the Australian Institute of Company Directors. Recognizing the responsibility, I take my positions of service on the Sonic Board and the Sonic Risk Management and Sonic Remuneration and Nomination Committee very seriously, and I do my best to act in your interest in my governance role. I joined the Sonic Board at the beginning of the COVID epidemic where my infectious diseases background as a clinician, a virologist and a pathology provider enabled me to provide additional COVID-related oversight for the very capable Sonic executive team. My medical perspective harmonizes with the Sonic ethos of medical leadership, which is the foundation, as we know, of the success of Sonic and to which I am very firmly committed. If I am reelected, I look very -- I look forward very much to continue working on the Sonic Board over the coming years. And it is an enormous privilege, truly an enormous privilege to be part of this company. Thank you, and I'm happy to answer any questions.

Thank you, Suzanne. I'll just check with Paul.

No.

No questions online or on the audio call. Questions from shareholders in the meeting room? There are no questions there. The proxy results for this resolution are shown on the screen, be recorded in the minutes of the meeting. For, 287,580,000 and some; against, 7,059,000 and some; open 2,977,000 and some; and abstentions, 162,298. I'll now move to the next item of business. Resolution 4 is an ordinary resolution, which reads as follows: that Mr. Chris Wilks, who retires in accordance with Article 71 of the company's constitution, and being eligible, offers himself for reelection, is reelected as a director of the company. Chris's biography is included in your Notice of Meeting. Chris, as you know, is Sonic's Finance Director and Chief Financial Officer, whose strategic input experience and reputation in the market are extremely valuable to Sonic, Chris, along with Colin, having been the driving forces behind Sonic's growth and value creation over the last 3 decades. I'd now invite Chris to speak to you and answer any questions you may have.

Thank you, Mark, and good morning, ladies and gentlemen. It's been both an honor and a pleasure to have served on this Board for the last 35 years -- or 34 years, sorry. That's gone unbelievably quickly. Over that time, I've seen the company grow from what was effectively a start-up to a highly respected health care organization with a market cap of over $14 billion, 41,000 staff in 7 countries, all doing amazing work at the front line of health care. Prior to joining Sonic, I worked in a number of industries, including mining and banking, and I must say it's particularly satisfying to now work for an organization with a great culture that plays such an important role in supporting health care systems in our various markets. The Sonic Board and management have achieved a great deal since I was first elected but there's plenty more to do. In fact, I can see more opportunity for this company now than I've seen in its history. And I'd like to think I still have something to offer this Board in terms of financial management, governance oversight, strategy and a passion for success. Whilst the proxy vote looks pretty positive for my election, I appreciate that in the current climate, an additional executive on the board is now somewhat unusual. So if I'm fortunate enough to be reelected, I will not take for granted and will work hard for the next 3 years in the interest of all Sonic stakeholders. Mark, that was all I was going to say, but happy to answer some questions.

Thank you, Chris. Questions?

None online or phone questions. Thanks, Mark.

No question online or on the phone. Questions from the floor? Where are the ones that I seeded in the audience?

Thanks, Mark.

If there are no questions, the proxy results for this resolution are shown on the screen where we recorded in the minutes of the meeting. For, 285,598,000 and some; against, a little over 9 million; open, 2,976,000 and some; and abstentions, 179,452. I'll now move on to the next item of business. Resolution 5 is an ordinary though nonbinding resolution, which reads as follows: That the Remuneration Report for the financial year ended 30 June 2023 is adopted. As you are all aware, remuneration reports are topical and sometimes controversial given the application of the two-strikes rule, which is described in the Notice of Meeting. There will always be differences in views on individual elements of the report and the pay structures it describes, but we'd ask you to consider the report as a whole as well as the performance of the company and its management team. I'll now ask Kate Spargo as Chair of our Remuneration and Nomination Committee and a member of the Audit Committee of the Board, to address any questions shareholders might have regarding this ordinary resolution. So we'll take questions from the online and the audio platforms first and then come to the room.

No online or audio questions.

Thank you. Questions from the floor? Thank you very much. The proxy results for this resolution are shown on the screen, and we'll record the minutes of the meeting. For, 263,464,000 and some; against, 24,445,000 and some; open 969,000 and some; abstentions, 5,950,238. I will now move on to the next item of business. Resolution 6 is an ordinary resolution which reads as follows: That for the purposes of seeking approval as an exception to the ASX Listing Rule 7.1 and all other purposes, the issue of options and shares following the valid exercise of such options under and in accordance with the terms of the Sonic Healthcare Limited employee option plan, be approved. This resolution is the one we put forward routinely every 3 years, and along with Resolution 7, enables options and performance rights to be issued under our employee option plan and Performance Rights Plan, respectively, without counting towards the annual 15% limit on equity, which can be issued without shareholder approval. We do not expect that this will be an issue in the foreseeable future; however, it is common practice to seek this approval to provide the Board with flexibility. I'll see if there are any questions from Paul.

No questions. Thanks, Mark.

Thank you. And questions from the floor? Thank you. If not, then the proxy results for this resolution are shown on the screen and will be recorded in the minutes. For, 232,039,000 and some; against, 56,914,000 and some; open, 963,613; and abstentions of 4,955,000 and some. Resolution 7 is an ordinary resolution, which reads as follows: That for the purposes of seeking approval as an exception to ASX Listing Rule 7.1 and all other purposes, the issue of performance rights and shares following the valid exercise of such performance rights under and in accordance with the terms of the Sonic Healthcare Limited performance rights plan be approved. I'll ask Paul if there are any questions on this resolution.

No questions. Thanks.

Thank you. Any questions from the floor? There are no questions. That being the case, the proxy results for this resolution are shown on the screen. For, 232,326,000 and some; against, 56,628,000 and some; open, 977,088; and abstentions, 4,941,901. Moving on to Resolution 8. Resolution 8 is an ordinary resolution, which reads as follows: That for the purposes of ASX Listing Rules 10, 14 and 71 and all other purposes, the grant of long-term incentives up to a maximum value of AUD 3,449,251 to Dr. Colin Goldschmidt, Managing Director and Chief Executive Officer, under the Sonic Healthcare Limited Employee Option Plan and the Sonic Healthcare Limited performance rights plan and the subsequent allotment of shares in respect of those incentives on the terms summarized in the explanatory notes be approved. As discussed and described in the Notice of Meeting, the Board wishes to provide performance incentives for Dr. Goldschmidt, and indeed, Mr. Wilks, through to the 2026 financial year, voting options and performance rights. Vesting of the rights and options is subject to challenging performance conditions, aligning their interests with yours as shareholders. Colin and Chris have created an enormous value for Sonic shareholders over almost 3 decades, and the Board wishes to incentivize them to continue to do so. I'll now ask Paul if there are any questions online or on phone?

No. Thanks, Mark.

None? Thank you. Any questions from the floor? If there are not, then the proxy results for Resolution 8 are on the screen, and they will be recorded in the minutes of the meeting. For, 269,017,000 and some; against 19,902,000 and some; open, 976,637; and abstentions, 4,981,560. I'll now move on to the next item of business, Resolution 9. Resolution 9 is an ordinary resolution, which reads as follows: That for the purposes of ASX Listing Rules 10.14 and 7.1 and all other purposes, the grant of long-term incentives up to a maximum value of AUD 1,447,445 to Mr. Chris Wilks, Finance Director and Chief Financial Officer, under the Sonic Healthcare Limited Employee Option Plan and the Sonic Healthcare Limited Performance Rights Plan, and the subsequent allotment of shares in respect of those incentives on the terms summarized in the explanatory notes, be approved. We've described the rationale for that as part of the previous resolution. So I'll go straight to questions. If I may, Paul?

No questions. Thanks, Mark.

Thank you. Questions from shareholders in the room? Thank you. If there are no questions, the proxy results for this Resolution 9 are shown on the screen. For, 269,176,000 and some; against 19,735,000 and some; open, 970,000 and some; and abstentions, 4,995,499. I will now move on to the next item of business, Resolution 10, which is our final resolution for the meeting. I note that Resolution 10 is a special resolution, which reads as follows: That the modification of the company's constitution to renew the proportional takeover bid approval provisions contained in clauses 113 to 115 of the constitution for a period of 3 years from the date of approval of this resolution is approved under and for the purposes of Section 648G(4) and 136(2) of the Corporations Act and for all other purposes. The rationale for this resolution has been laid out in detail in the notice of meeting, and I'll ask the company secretary if there's any questions.

No questions. Thanks.

Questions from the floor? If there are no questions from the floor, the proxy results for all of this resolution are shown on the screen and will be recorded in the minutes. For, 294,080,000 and some; against 289,000 and some; open 2,978,000 and some; and abstentions, 431,009 votes. Now that we've completed the formal business of today's meeting, we'll be very happy to take any other general questions either online, on the phone or from the floor about the company and its performance. Anything online, Paul or on the phone?

None online. Thanks.

Thank you. Any further questions from shareholders on the floor? Then I think we've given everyone a pretty fair opportunity to ask questions of the Board and management today, and very much appreciate the participation of shareholders in that process and for your questions. We find them helpful, insightful, and hope you've learned -- we've all learned something as a result of the answers to those questions. So that really now concludes the discussion of items -- various items of business. For those attending and those voting online, I will soon close the online voting system. First warning, first warning. Please remember to cast your votes by using the voting icon on your device screen or navigation bar. Once you have clicked this, the resolutions will appear on your screen, you can select the voting option. If there's any person physically in attendance who believes they're entitled to vote but is not yet registered to vote, please raise your hand for assistance. Persons entitled to vote on the polls are all shareholders, representatives and attorneys of shareholders and proxy holders who hold the green admission cards and were not excluded for voting in accordance with the voting restrictions. On the reverse of your green admission card is your voting paper and instructions. Proxy holders have attached to their admission card a summary of the proxy votes, the voting for details which details the voting instructions on the various business items. And by completing the voting paper, when instructed to vote in a particular manner, you ideally voted in accordance with those instructions. In respect of any open votes, a proxy holder may be entitled to cast, you need to mark a box beside the motion to indicate how you wish to cast your open votes. Proxy holders should refer to the summary of proxy votes form attached to your voting paper for further information. Shareholders also need to mark a box beside the motion to indicate how you will cast your votes. Please ensure you print your name or indicated and sign the voting paper. Once you've finished filling in the voting paper, please lodge it in the ballot box. And Doris and her team are running around collecting green and pink cards or green cards, even as we speak. So please lodge them in the ballot box to ensure your votes are counted. If you do need any help, please raise your hand. I say to those people online, I will be closing the poll soon. So if you have not voted online, that's the second warning, last one to come. So another sort of half a minute. Has anyone in the room still got a ballot paper for Doris? One here. 10 second warning for those online. You still need to use the Vote icon and vote on the resolutions. Are we all done inside in the floor here? No other green voting papers? All done. Thanks, Doris. So that being the case, I will now formally close the polls and appoint Doris Grave as returning officer to count the votes. Doris will report the results of the polls to me. And the results will be announced later today to the ASX and posted on the company's website when they'll be available later this afternoon. On behalf of the Board, I would like to thank you for participating in today's hybrid AGM. Thank you for your support, as always, the shareholders of the company. I hope that you and all of your loved ones stay safe over this time. Remember, COVID is circulating as this respiratory insidious virus and influenza and lots of nasty things. So take care. Look after yourselves over summer. Enjoy the festive period as you celebrate it. And thank you very much again for all the support of Sonic. And hopefully, we see you all again next year. And with that, ladies and gentlemen, I declare the meeting closed. Thank you.