Sonic Healthcare Limited (SHL) Earnings Call Transcript & Summary

Well, good morning, everyone. We've got the post office clock about to hit 10:00, I think. But according to the iPhone, it's 10:00, so we'll start proceedings. Good morning to everyone in the meeting room here and those, who are joining us online, and welcome to Sonic Healthcare Limited's 2024 Annual General Meeting. My name is Mark Compton. I've met many of you in the room here previously. But for those, who haven't, please make sure we say hello after the meeting over a cup of tea. And as Chairman of Sonic's Board of Directors, I will chair today's AGM. Before we start the meeting, I'm aware that we are spread across different parts of the country and indeed across the world today. And I'd like to begin by acknowledging the traditional custodians of the land on which we meet in person today, the Gadigal people of the Eora Nation and pay my respects to their elders, past and present, and I extend that respect to all Aboriginal and Torres Strait Islander peoples, who are with us today. I've been advised by the Company Secretary that there is a quorum present, and therefore, declare the meeting open. Because we are running a hybrid meeting, some online and some in the room, there are a few procedural things. So please bear with me as I go through the important technical steps of how the meeting to be conducted. This AGM 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 technology of the meeting to proceed smoothly, but would appreciate your understanding if technological issues do occur. I'd like to introduce my fellow Board members, all of whom are attending the meeting in person in Sydney today, our CEO, Dr. Colin Goldschmidt; our CFO and Finance Director, Mr. Chris Wilks; Professor Christine Bennett; Professor 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've 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 also that Aishwarya Chandran, our partner from PricewaterhouseCoopers, our auditors, is also in attendance. 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 or 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. Once you have finished typing, please press the send button. Very important you press the send, otherwise the question won't come through. Questions submitted online during the meeting will be read out by the Company Secretary, Mr. Paul Alexander. Paul will identify the shareholder, who has asked each question unless you indicate your question 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's 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, if 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 it to the appropriate director or to the auditor to respond. We've received a number of questions from shareholders and the Australian Shareholders' Association in advance of the meeting, which we'll 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. I will open the polls now and keep them open, so you can vote at any time during the meeting. If you are 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 will receive a vote confirmation notification on your screen. You have the ability to change your vote during the meeting until I declare the polls closed. [ Maria Dzopalic ] 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 soon appear on your screen 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. That's all the housekeeping matters done, and now I'll move on to the matters of the meeting. The minutes of the company's last Annual General Meeting held on 16 November 2023 are tabled over here on your right and available for inspection by shareholders, and I will take these minutes as read. Sonic Healthcare today enjoys leading market positions in 7 countries, has a strong and unifying culture defined as medical leadership and is set fair strategically, financially and operationally for future growth. We provide essential health care services to our communities and indeed, our facilities, as dramatically demonstrated during the COVID-19 pandemic, are critical infrastructure elements of the health care systems in which we operate. The dynamics of the industries in which we operate are positive with strong underlying growth driven by growing and aging populations, new tests and technologies, such as AI and increasing focus on both preventative medicine and genetics-based personalized medicine. On top of these industry drivers, Sonic's medical leadership culture continues to provide strong competitive advantages and differentiation, which drives market share growth through excellent professional specialist medical practice. For the 2024 financial year, Sonic Healthcare achieved revenue of $9 billion and a net profit of $511 million. The net profit was lower than in 2023 due to a dramatic 87% reduction in COVID-related revenues. A significant reduction in COVID testing revenue was to be expected, as the pandemic receded, and vaccination rates increased. Our base business revenue, excluding COVID-related revenue, growth was strong at 16% and included 6% organic growth on a like-for-like basis, plus the contributions of targeted business acquisitions. The outlook is for earnings growth in future periods driven by ongoing strong organic revenue growth with consequent operating leverage, cost reduction programs and other earnings initiatives implemented during the 2024 and current year, and the realization of synergies and enhanced earnings from completed acquisitions and technology investments. The confidence we have in our earnings outlook, together with our strong balance sheet, allowed us to continue our progressive dividend policy, rewarding shareholders with a 2% increase in dividends over the previous year to $1.06 per share. The company's balance sheet remains in a very strong position with gearing still below pre-pandemic averages despite the significant investments made during the 2024 year. This strength will enable the company to take advantage of additional sensible growth opportunities, as they arise. To ensure that the strong governance required to oversee the company's growth is in place and effective, we continue to focus on the development, renewal and diversity of the membership of Sonic's Board of Directors and Board committees. During the 2024 year, Professor Suzanne Crowe AO was appointed as a member of the Remuneration and Nomination Committee and Professor Christine Bennett AO was appointed to the Risk Management Committee, in each case, bringing new insights and experiences to the committees. I congratulate and thank Suzanne and Christine on these appointments and the impact that they -- and for the impact they are already making to these committees, as members. Sonic's Board currently comprises 7 non-executive directors plus 2 executive directors being the Chief Executive Officer and the Chief Financial Officer. The Board includes a pathologist and 3 other medical practitioners in keeping with the company's medical leadership culture. The Board's gender diversity objective continues to be satisfied with 44% of directors currently being female and 56% male. As previously announced, Mr. Lou Panaccio will retire as a director at the end of this meeting. Lou has served Sonic and its shareholders extremely well and diligently for the last 19 years, and we are saddened to be losing his insights and experience from the Board. We have highly valued Lou's sage counsel and contribution to the Board and sincerely thank him for the work and expertise he has brought to bear for the benefit of all whom we serve. On behalf of the Board, management and shareholders of Sonic Healthcare, I wish Lou the very best for the future and thank him very much. Thanks, Lou. As disclosed in the -- in the 2024 Notice of Meeting, bad enough hearing me once [ let alone twice ] with the echo. As disclosed in the 2024 Notice of Meeting, Kate Spargo has advised that should she be reelected by shareholders today, she will permanently retire from the Board by the end of that 3-year term. Kate is an excellent director, acting on behalf of shareholders and is a strong advocate for and practitioner of medical leadership. The directors, excluding Kate, are strongly recommending her reelection at this meeting. As announced to the ASX yesterday, we are delighted that Ms. Nicola Wakefield Evans AM has agreed to join the Sonic Board, as an independent non-executive director with effect from 10 February 2025. Nicola will, therefore, stand for election by shareholders at our 2025 Annual General Meeting. As detailed in yesterday's announcement, Nicola is a very experienced director, who will further diversify the skills and viewpoints around our Board table. I note that Sonic's 2024 sustainability report is now available on Sonic's website. This document provides a compelling summary of Sonic Healthcare's efforts and achievements in sustainability initiatives. I highly recommend that all of our stakeholders take the time to read it. It really is an excellent report. There is much in the document that will be of interest and much of which to be proud, as shareholders. The report describes our sustainability governance structure, sets out our material sustainability topics and climate-related risks and opportunities, outlines our net zero strategy and milestones and our current progress in executing our strategies in this space. The report also sets out the ways in which Sonic demonstrates care for our people, communities and environment. As part of this, it describes the recent activities of the Sonic Healthcare Foundation, which was established and funded by Sonic in providing health care support for communities in acute need. We are extraordinarily proud of the difference the foundation is making to so many lives. Sonic's sustainability strategy and activities continue to be favorably recognized by external bodies. We have maintained our MSCI rating of AA, a leader and our ISS ESG rating of C+ or prime and continue to be included in the FTSE4Good Index series and the FTSE4Good Australia 30 Index. This year, we received a C rating from the Climate Disclosure Project, the CDP, based on our inaugural submission. A C rating is equal to the average for our region, and we are very pleased with this outcome from our first submission. Sonic's approach to human rights and our management of modern slavery risks are presented in the company's 2024 Modern Slavery Statement. You may access this statement on Sonic's website. Sonic's focus in this area is driven by our internal Global and Human Rights Committee and is overseen by the Sonic Board supported by its committees. In summary, Sonic Healthcare is one of the largest and most efficient operators in its markets, has stable, deep and experienced management globally, benefits from a unifying and differentiating culture of medical leadership, provides essential health care services to its communities and benefits from geographic market diversification, both in terms of risk management and growth opportunities. We, therefore, look ahead with great optimism and expectation. I wish to thank all of our 42,000 talented and dedicated staff, some of whom are with us today in the room and the executive leadership, also some of them in the room today and my fellow directors for the work they do every day to drive the company forward by providing outstanding services. I also thank you, our shareholders at Sonic, for your continuing support of Sonic Healthcare and for your investment in a company that makes a positive difference to lives every day. I'd now like to address a couple of the questions that have come in prior to the meeting from shareholders, if you would allow me to do so. A couple of questions from Mr. Philip Carlton, a shareholder, the first of which is -- reads as follows: to aid alignment with shareholders' interest, I would respectfully request that the newest Board members, Dr. Giles and Professor Bennett, top up their holdings of Sonic shares during their third year on the Board to an amount approaching their annual directors' fees. And I might move straight to the second question and answer them and [indiscernible]. Would the Chairman consider passing a Board guideline that new Board members purchase Sonic ordinary shares at a cost equivalent to their annual directors' fees by the end of their second year serving on the Board. And I thank Mr. Carlton for his question. Dr. Giles and Dr. Bennett are active purchasers of shares in Sonic, as are the rest of the Sonic directors, and we continue to encourage directors to purchase when they are able. And when they are able is important, too, because sometimes trading windows open and close depending on the flux and flow of matters that are coming before the Board. And of course, we want to make sure that there could never be any suggestion that directors are trading at an appropriate time. So sometimes it does make it difficult, but we will continue to encourage the directors to purchase all directors, including our newest, who've joined the Board, including -- in respect of Mr. Carlton's second part of that question about a policy at the Board level, we don't have such a thing at this point, but I'm happy to take that on notice and refer it to the Remuneration and Nomination Committee and to the Board generally for consideration in due course And I thank Mr. Carlton for his questions. I now 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 a very good morning to every shareholder here on behalf of Sonic Healthcare, I'd like to add my welcome to you to Sonic's Annual General Meeting. It is my pleasure to present to you an update about the company, to give you a sense of where we are at the moment and more importantly, where we're heading. So the first few slides are probably old news by now. This is just a quick review of the financial 2024 numbers. And the points to be made without going in too deep into the weeds here is, firstly, that these numbers are not directly comparable because of this big difference, can you see my pointer? No. No, no, no. And I can't use a laser pointer. But the second line on that table will show you the big difference in the COVID testing revenue between the respective financial years. So comparisons between FY '24 and '23 are not really tenable in this situation. So don't be alarmed by the minus 87%. The key thing that we take a lot of pride in is the base business organic growth, which is sitting at 6% per annum, and that excludes any COVID revenue. And we've also grown very strongly. You'll see the 16% overall reported growth, which also includes active acquisitional growth through the financial year 2024. So in terms of top line growth, many of our competitors around the world are struggling in the post-COVID environment in terms of top line growth. We are fortunate to be in a situation, where we show both strong organic growth and acquisitional growth as well. When we split the halves of FY 2024, we have shown margin accretion in the second half versus the prior -- versus H1 2024, which is good news for us coming out of the pandemic and it is a sign of a return to a more normal Sonic earnings growth situation. We can talk perhaps with questions just about how we, as a company, have dealt with the post-COVID environment. It's been quite a journey for us and something absolutely unique in the full history of Sonic Healthcare. But I think we're just about back to normal right now, where we show earnings growth and margins growth, and we're optimistic that, that will continue from here on. The pie chart that we normally show is just for information, but you'll see here that we have 3 large divisions, U.S.A., Australia, Germany and what we could call maybe 2 medium-sized divisions, that's Switzerland and the U.K. And thirdly, our Radiology division, which is purely in Australia. And this table shows you how active we have been in acquiring synergistic businesses around the world. It's principally been in Europe and mainly Germany and Switzerland. And you'll see that in the financial year, we've made 2 fairly large acquisitions, that's MLD and Diagnosticum coming up to about $200 million in revenue. But then if you go to Switzerland, we made 2 large acquisitions, each $175 million per annum in revenue, plus a small, that's Pathologie Enge, anatomical pathology business in Zurich. And in the U.S.A., we acquired PathologyWatch, which we can talk about. This is a very exciting AI-driven digital pathology company, which is right in our wheelhouse, which we are going to use to drive efficiencies and growth in skin pathology in particular. And just on this chart to show what's happened in Switzerland, is you'll see in 2023, Switzerland represented 7% of the pie, and it's now increased to 10% and will probably go even higher, as a proportion of our total business because the full effect of those acquisitions is still coming through in FY 2025. So we were already the market leaders in Switzerland. We're now well and truly the market leaders in Switzerland. And in terms of what's ahead of us in Switzerland, and it's a very important focus of our business right now, you'll see from this map -- well, I'll just put up the first bullet point to show you the 4 businesses that we've now acquired and own. The first 2, Medisupport and Medica, we have owned for quite a long time. And the new ones, each $175 million, Medisyn and the Dr. Risch Group. And difficult to see exactly where those dots are on the map, but you'll see that there's full coverage of Switzerland. By the way, the gap that runs diagonally is the [ ALPS ]. There's no labs there. But we're well and truly covering the waterfront in Switzerland. But we have a lot of work to do because there's mergers and all kinds of initiatives that we are very familiar with that we are in the middle of to improve the financials of these 4 entities. So some of these synergy initiatives include laboratory mergers and where you see the dots close together, those are obvious places, where we will merge labs without losing any referrals coming in. So we will get efficiencies and synergies out of that. And then there's procurement benefits, IT integrations, logistics and corporate savings as well. Now importantly, both Medisyn and the Dr. Risch Group were acquired at very low margins. We did this with eyes wide open. It's perhaps something that we haven't done before, where we're buying a business that is not immediately earning what would be expected from a business of $175 million. But given our strength in Switzerland and the strength of our management teams in Switzerland, we are very, very confident that we will turn these low-margin businesses, that's Medisyn and the Dr. Risch Group from low single-digit multiple -- margins up to 10% or even heading up towards 20% EBITDA margins. So if you take the $350 million that the 2 of those represent, if we get a 10% EBITDA margin, we're going to be adding $35 million of EBITDA. If it goes all the way up to $20 million, that will be $70 million of EBITDA. These are excellent acquisitions for us, but we have to ask shareholders to be just a little bit patient. We are running Sonic Healthcare for the medium and long term and not for the short term. So these are good examples, where perhaps the market doesn't quite fully understand or accept what we're doing, but we are confident that from FY 2025 through FY '26 and '27, these businesses will be firing on all cylinders because this is exactly what we've been doing for many, many years in Sonic Healthcare. So I'll make the point there that there is significant earnings upside weighted to FY 2026 and beyond in Switzerland. This slide, Mark has already mentioned the strength of our balance sheet, and I put this up not to go into the detail, but just to show you that we are running at investment-grade metrics, even though we are not formally rated, meaning that the company is in a very solid, strong position for the future in terms of protection of all our 42,000 staff, our capital expenditures on equipment and various other things and to grow via synergistic acquisitions into the future, as well. Mark also mentioned the dividends. And I guess, other than the actual numbers, just to show the chart over a long period of time, this progressive strategy, I think the Board is very keen to keep it rolling, so that you'll see the dividend has never gone backwards. And there's only, I think, 1 years or 2 years, where it stayed the same. Other than those 2 years, it's gone up every single year. Now these 2 slides following are perhaps the most important of the presentation, I'm not quite sure, but it's our guidance update. And first of all, after 4 months of trading in FY 2025, we reaffirm the guidance that we issued in August. And then a little bit more information about this. First of all, at revenue line, our total revenue growth is sitting at around 10% at a constant currency basis. Our organic revenue growth is in excess of 5%, again, constant currency, and we have adjusted so that the working days between the 2 corresponding periods are identical. And we are showing particularly strong top line growth in our Australian Pathology and Radiology divisions with somewhat weaker growth in the U.S.A. and the rest of our divisions are somewhere in between. And importantly, our EBITDA growth 4 months into the year is sitting in excess of 10% over the prior corresponding period. And the second -- this third major bullet point was exactly, as we released it in August. And just as a reminder, the guidance we put out was for EBITDA of $1.7 billion to $1.75 billion for the year, which we said back then reflects up to 10% EBITDA growth. So that 10% EBITDA growth is sitting -- if it's achieved, is sitting at the top end of our guidance. And so far, this financial year, that's where we're tracking at the moment. Now as we look ahead, we are very conscious that our earnings margins fell in the post-COVID years compared to pre-COVID, which we look at financial year '19. Financial year '19 was the last absolute zero COVID year. So we compare the post-COVID years to FY '19 to look at things like margins. And if you do that, our margins have fallen as have most lab players around the world. We embarked more than a year ago on a major project to address this issue. And the project is essentially to grow earnings and to grow our margins and get us back to where we were in FY '19 in terms of those 2 metrics. The initial outcomes are beginning to come through in this financial year, and we are confident they are going to gain momentum in FY '26 and beyond. This project has got 2 major prongs. One is to maintain strong top line growth and the other is at the cost management side. Now in terms of the top line, I mentioned earlier that we're fortunate to be enjoying strong revenue growth. It's such a critical thing in the pathology game, in particular, I guess, for any business. But with our big, fixed costs, top line growth is critically important. And so, we understand why some competitors around the world would be struggling a bit with low top line growth. So keeping that top line growth strong is critical to this project and critical to Sonic Healthcare going forward. And of course, when we go into why Sonic Healthcare is doing well at this time, both organically and at M&A, I will always point to the deep-seated culture of medical leadership that's been around for decades now, which we can talk about. It's a long discussion, but I'm absolutely certain that this sits at the base of our ongoing growth top line, and I think it will be there for a long time to come. So I've mentioned the organic growth, but also our M&A growth also stems to medical leadership, where labs are saying, yes, they want to join Sonic Healthcare in preference to joining others, private equity and other investors in pathology businesses and radiology businesses. And this has been a pattern that we've enjoyed for a long time now, where people are handing their baby, so to speak, over to somebody or a company with similar culture, and they find that in Sonic Healthcare. And we're seeing that that's continuing, which is -- augurs well for the future. So when you look at the top line, we've got particularly strong overall growth in Germany and Switzerland, driven mainly by those big acquisitions, and we've also won contracts in the U.K. as well. And organic growth, I've already mentioned, remains strong. Now on the cost management side, the biggest challenge for us was to reduce headcount in the immediate post-pandemic environment. Just to quickly revise, in order for us to do the millions and millions of COVID tests that we did through the pandemic, we had to put on huge numbers of additional staff, not only to do the COVID test itself, but to accession all these additional requests that came in, there's more couriers, there's drive-through centers, collection centers, a whole lot of our staff needed to be increased to handle this enormous additional volume that's never happened in the history of the lab game. So all labs, who were involved in COVID testing had this exact problem. We responded in an amazing way, but in order to do that, we put on a lot of staff. And then, of course, when COVID disappeared suddenly and it's basically gone, the challenge was then to begin to reduce the staff to right size the company back to where it should be. So this has been a very, very successful initiative throughout the whole company. Every division that does pathology, this is not radiology. And it's been a very proactive project in order to achieve this. not so easy, but we're basically at the end of that project. We've had to deal with inflation on top of all this. And the good news is that inflation is definitely now easing. I've mentioned the effect of -- and that's the third sub-bullet point of the 2 Swiss acquisitions. And by consolidating all 4 of those businesses into one, Sonic Swiss, as we call it, we are going to get a lot of benefit. We've also sold our West division in the U.S.A., which was subscale. And over years, we were unable to grow it to adequate scale in order to become profitable. And this will eliminate a roughly $20 million loss that we were incurring every year from that division. We've rolled out the PathologyWatch acquisition that I mentioned, which is going to be driving efficiencies in skin pathology for our skin pathologists, and it will also drive sales in the skin pathology sector of our business, which is pretty big. So when you talk about pathology -- histopathology, meaning the diagnosis of mainly cancers, but anything to do with a piece of tissue, skin is roughly half of all the cases. So when you get a basal cell carcinoma, sunspot, all of these things are melanoma, that's skin pathology, which we diagnose under the microscope, which is now turning away from the microscope to digital, where our pathologists will diagnose these cases on a screen. It's a hallelujah moment, by the way, for histopathology because for something like 100 years, we've used the microscope, and we now can digitize each of the slides that we present -- that we produce and then report on a screen, which then opens up the world because we can spread cases around, we can get second opinions. It's almost histopathology coming into the modern age. It was not an easy thing for the whole global industry to do because to digitize a piece of tissue on a slide is very unlike a radiology scan, for example. It was a difficult job to do, but it's now being done, and we're in the process of making that conversion and PathologyWatch will be at the forefront of that. We've won contracts in the U.K. and this one, Hertfordshire & West Essex is an example of where we are suffering a loss in its first year, which again, we knew all about when we won this contract, but that turns into profitability from FY '26 -- FY '25 or '26 onwards. And we've also finally rolled out an enhanced -- an enhanced billing system in the U.S. called XiFin, which is going extremely well. We've rolled it out to almost all our entities in the U.S. at this point. And that's going to be saving us roughly USD 10 million in FY 2025 this year. and then an additional amount of USD 20 million to USD 25 million in 2026 and even more in 2027. So you'll see from this slide that we are loaded up and very confident about where we are tracking. Now leaving the financials aside, just a few slides just to give you a quick snapshot, I guess, of Sonic Healthcare. First of all, we have 42,000 employees around the world. It's interesting, I was talking to -- Mark and I were talking to a company that I would call a health care software company yesterday. They have revenues of something like -- they have a market cap bigger than Sonic Healthcare. and 120 employees. I couldn't believe it. We have 42,000 employees and -- but all is well. We see roughly 130 million patient consultations a year, which is quite something, and we have 3,200 patient service points. That means either a collection center or a radiology center or a medical center of GPs. That's a lot of places, where we are interfacing with patients on a daily basis. We have approximately 1,800 pathologists and radiologists, a lot of highly qualified medical professionals. These are scientists, radiographers, sonographers, et cetera. And we are in 7 countries. We're actually in 8 because the Dr. Risch Group that I mentioned to you in Switzerland has a little lab in Liechtenstein. So we're in 8 countries, but this needs to be updated. Liechtenstein is not very big. 40,000 people in Liechtenstein. This slide, I think you might have seen before, and it just gives you an indication of how we've rolled out into the 7 countries, starting off at the beginning of Sonic's story in Australia, and we remain very much an Australian company despite the fact that more than half of our revenue is outside of Australia. And we are the market leaders in Australia -- in pathology-wise in Australia, in the U.K., in Germany and Switzerland. And we're the #3 player in the United States and the #2 player in Belgium. This revenue slide shows the revenue of Sonic Healthcare, again, since the beginning, which I think is 36 years ago or something like that, 36 years of Sonic's history. And I'm keen to show this because it demonstrates the COVID revenue that you'll see in green. And I wish I had a pointer that I can -- because you can barely see the tip on the last bar, the little green tip, that's the remains in financial 2024 of COVID testing. Now you might be asking, but hang on, there's still a lot of COVID around, and there is. But COVID testing is now basically not done as a separate test. It's done together in a panel, which includes other respiratory viruses like rhinovirus and influenza and others. And so, we're now fortunately in a world, where we're considering the COVID virus, as a respiratory virus, just like the common cold virus, et cetera. So we don't have any more COVID-only testing or revenue. And hopefully, that's the end of pandemics. I wanted to just mention this because I touched on it before that the whole Sonic story so much depends on the deep-seated culture that we have in the company centered around this concept of medical leadership, but we also have stringent core values that apply throughout the whole company, and we operate what we call a federated structure. It's -- just in summary, a medical leadership model means that our leaders understand the business and understand doctors. So they understand our business, doctors and the health care profession. That might sound very obvious to everyone. Well, yes. But if you look around the world, most health care companies do not have that. They have CEOs, who do not understand the business and who do not understand doctors and the doctor-patient relationship. So the heart of our business is health care. We deal with patients. And so, we started a long time ago saying that our leaders must understand what we actually do and understand doctors our primary customer and certainly patients as well. And I'm absolutely convinced after quite a long time in this role that if you stick to this strategy, you end up with a higher quality of health care. So if you think about it, if you have leaders, who understand the business and if you involve pathologists and radiologists in the business, which we do, you will automatically trend up towards higher quality. And of course, that drives all kinds of good results in terms of the business, drives top line. It actually drives more efficiency. It drives a better business overall. And so, we are very, very proud to stand by this tagline that says quality is in our DNA. And I love this tagline because our logo is double-stranded DNA. And we certainly -- it's not just words. So we believe that the medical leadership model that is locked into the company leads to better quality. And so, we're using this tagline more and more, and we actually mean it. And just to give you before I end, just a few key points about Sonic Healthcare and what are our main attributes and what will stand us in good stead for the future. So first of all, and I've discussed that enough, is our culture of medical leadership, which is driving all sorts of good results. We are very fortunate. And again, I think it's because of the medical leadership model that we have stable, experienced outstanding managers, who actually don't churn very much. Some businesses say you've got to churn your top executives. We have a low churn rate of our senior executives and pathologists and radiologists. We've almost become a preferred place to work because of the medical leadership model. It is, in my view, the right way to practice in the health care game. So we do have an outstanding reputation, and I think we all are very, very proud of that, and I hope shareholders feel the same about that. And that reputation is based on not just the service we deliver, but also on our ethical practice throughout. I think I've mentioned already that we're fortunate to be in a situation, where our organic growth and M&A growth remains strong. Our rankings in the world, overall, we are the #3 in terms of pathology companies. But in terms of anatomical pathology, that's histopathology, looking at tissue, as I mentioned before, we are #1 with 1,500 pathologists, and there's no company in the world that even comes close to that. So we are absolutely strong in the space of histopathology, which is the area that's becoming digital. It's going to become a big focus for us, as we go forward. We're also getting a name for a company that is specialized in high-complexity testing, and there's so many more of these now just falling into the industry. So genetics, for example, is an exploding field, and it's going to just keep growing because there's so many more new tests coming on board that really make a difference in health care. We will be able to -- we offer them now, and we will be able to offer the new ones going forward. And there's a bunch of others, as well. So some of you might know about the microbiome, for example. We're deeply invested in the microbiome and the microbiome -- this is looking at the bugs in your gut, which is almost like a separate organ that has not yet been fully studied. It's not about just your gut health. The microbiome has been associated with many conditions yet to be fully elucidated, but more and more people are wanting their microbiome studied to get an indication of the overall health. We sort of feel that we're at the cutting edge, perhaps even leaders in the space of AI and digital pathology. And this is the one that I'm talking about, histopathology, not only through PathologyWatch, but through our investment in Harrison.ai, where there are products being developed that are world-first products. So for example, the prostate AI product that's now completed is quite amazing. And as an old histopathologist myself, I'm astonished that we now have a tool that can help a pathologist and make a pathologist much more efficient based on an AI tool in diagnosing prostate cancer and precancer. And right at the bottom, the radiology tool that's available via Harrison.ai, that's our investment there, is being used throughout Sonic Healthcare's radiology and already Annalise, as it's called, the product uses AI to diagnose chest x-rays, chest CT and brain CT as well, and there will be more and more coming down the pike. These like the pathology tool will assist radiologists to become much more efficient. We have a strong balance sheet, as I mentioned. And I like reminding everyone in Sonic Healthcare about our basic reason for being as a company that we are seeing over 0.5 million patients every single day right around the world and that what we do is essentially helping the sick and preventing disease. And it goes even further than that, and that I tell people that I believe we are a force for good, not just in what we do every single day, but through the Sonic Healthcare Foundation, which was set up just a few years ago through seed capital from Sonic Healthcare during the COVID years. And we are now using our earnings from that seed capital in the foundation to help underprivileged communities in the world. And just very quickly to let you know that we're involved in the foundation in 5 hospitals in Central Africa. And the one I want to point out is the new hospital that we are building in Northern Uganda called the Sonic Healthcare Foundation Kworo Hospital. You see it's pretty isolated in this area. This is an artist representation of what the hospital will look like when completed in just a few months. Completion will be in April or May of next year. So building works are well underway. And that third photo is an aerial shot, and that is a Kworo tree, which is a native tree to the area, and that explains the name. And this is a 42-bed maternity and obstetric fistula hospital that we are building. It's going to cost AUD 3.5 million. which is funded by the Sonic Healthcare Foundation. Annual running costs will be [ $635,000 ] per annum. And in addition to our financial support, we will be providing on-ground pathology and radiology training and assistance, as we do in those other hospitals in Central Africa as well. So what we do through the Foundation is not only provide financial support, but we provide on-the-ground training and support as well. It's interesting that the construction of this hospital, we've provided jobs for about 100 local people. And this hospital will service approximately 1 million people in a very, very isolated part of the world. And to just get a sense of reality, the maternal mortality rate in Northern Uganda is 750,000 per 100,000 births. In Australia, it's [ 5 ]. This is the very stark difference that we're facing and why the Sonic Healthcare Foundation is doing such a great job because this hospital is going to save thousands and thousands of lives, and it will serve, as a maternity hospital to mend maternity fistulas, obstetric fistulas, which is a huge problem throughout Africa. So it will serve a double effect. And I think we're all very, very proud and hopefully, shareholders feel the same about that. And just to end, and Mark's already mentioned, our great progress on sustainability, and I'm not going to go into the detail there because as Mark mentioned, our sustainability report for 2024 has just been published. It's available on our website. And like Mark, I would really, really recommend shareholders check it out because it's not only about sustainability, it's about the whole Sonic Healthcare. And if you really want to get a very good, summarized version of your company, this is a good place to find it. Thank you very much. Okay. So I believe it's my job to read out some of the questions that were received prior to the meeting that I think were addressed to me. Firstly, from Mr. Philip Carlton, a shareholder, who asks, what were the factors resulting in the revenue growth in the U.S. Pathology business underperforming other geographies during financial year 2024? Has organic revenue growth picked up so far in FY 2025? So I mentioned in my presentation that our growth rate -- our organic growth rate in the U.S. is below our average. So I said we're very strong in Australia and slightly weaker in the U.S. The weaker growth that we're experiencing in the U.S., we believe, is more or less at market rates. It's hard to actually get your hands exactly on what the market growth rate is, but we've done quite a bit of digging, and that's what we believe. As to why the U.S. market growth in pathology or the laboratory testing is low, I don't have the full explanation. Some people have suggested that patients are reluctant to attend medical consultations for fear of getting out-of-pocket expenses during a cost-of-living crisis. We don't know for sure. One thing I can say is that our skin pathology business is growing very strongly, and that's an important part of our business. And our high-end specialized testing, and I mentioned one test in particular called ThyroSeq, which is for thyroid cancer, also growing extremely strongly. So I think this is nothing to be concerned about. And it's one of the beauties of being diversified into more than one country. So we've had the situation before where one country might be growing at a lower rate than others, and we balance out because we're in multiple countries. Now next question from Mr. Philip Carlton again. Could you provide an update on the integration work plans of the Sonic Swiss business? What level of synergies have been achieved to date? Is the time line for significant profit growth in FY '26 still on track? So I think I've covered that in the presentation, and the answer is yes. We are on track, as we've previously said. Another question, why is Sonic's FY '24 other revenue category at the same level as in FY '19? Is the IPN business well positioned to benefit from the ongoing GP shortages in Australia? Given that IPN's number of GPs has decreased by 400 since 2019, is IPN's growth outlook linked to a resolution of this issue? So this question, and I thank Mr. Carlton for it, is around our clinical division, which represents something like 10% of our revenue, less than 10% of our revenue. It's our general practice business here in Australia. Our future there is linked to general practitioners. And general practitioner numbers in Australia have fallen, as I think most people know, there is a shortage of GPs. And it's not just confined to Australia. This is a global problem. But in the case of Australia, one thing is different between 2019 and today is that we had a fairly steady stream of overseas doctors come into Australia. And through the pandemic, this became almost impossible. It went down to about 0. Now the government recently has relaxed some of the legislation around this. And I'm confident that we're back into the mode of taking on suitably qualified general practitioners from overseas, as we did before, which will raise our number of general practitioners, and that will certainly assist the situation that Mr. Carlton is alluding to. Next question again from Mr. Carlton. Could technology help resolve the shortage of GPs in Australia? Has Sonic's primary care businesses trialed video consultations for common low-risk ailments similar to Amazon's One Medical service in the U.S. I'm looking around to see what the reaction is. So this question says, is there technology that could help solve the GP shortage problem? And the answer is, yes, there are tools, including AI, one of which I can mention here, I won't mention their name because it's a third-party company, but they offer an AI-based tool that records your consultation with your general practitioner with your permission. So you go to see your GP says, do you mind if we record the consultation. And through AI, ChatGPT, et cetera, at the end of the consultation, a summary is provided of the consultation to the general practitioner or a referral letter to a specialist, if you're being referred to a specialist is provided in an automated fashion via AI. So that saves a general practitioner quite a lot of time. And so, products like these are coming on stream right now. The question about online or telehealth is relevant to us. So in our general practitioner network, we do offer telemedicine consultations. It's only a small minority of our total consultations now. They were high during the pandemic, but it's now less than 10%. But we do not offer an online GP service to all comers such as InstantScripts and there's a bunch of others that offer that service. We don't offer that service yet. Not sure about whether or not we might do that in the future. So the next question comes from the Australian Shareholders' Association, and it goes like this. A considerable amount has been spent on acquisition over several years, resulting in sub-0 net tangible assets. While revenue over the last 5 years has increased by 45%, net profit has fallen 7%. COVID seemed to be a high-margin business that has not yet retreated. Could the company explain how it will return the company to a situation, where profit per unit of revenue is broadly similar to that in 2019. And so, the answer that I can give is that I've mentioned in the presentation that our margins have fallen in the post-COVID environment and that we're now well into a project to remedy that situation. And I've also addressed the effect of the COVID effect on our -- on -- the effect it had on our numbers. And just so that everyone knows that COVID, whilst we did lots of these tests, they were fed through to our earnings and our revenue, of course, and that's suddenly gone. We're very confident, just the end part of that question of ongoing uplifts in our earnings and margins going forward, as I mentioned before. I think those were all the pre-submitted questions. Are there any questions from the floor? Mark, am I meant to take these?

Yes, sir.

I noticed you haven't entered the Southeast Asian, Chinese, Indian markets. Is there any reason for that? And just a second question. I'm wondering whether you're considering any further radiology M&As. An example could be Envision. There are a lot of Australian ones or some Australian ones, which are very good, Envision being one of them, which uses a goal -- the -- a portable CT equivalent, if you're familiar with that. So that's it.

Thanks for your question. So the first part, we're always looking at opportunities to go into new countries, but we have maintained a very, very strict discipline about this. I think I've mentioned to shareholders before that many years ago, Chris Wilks and myself devised a list of what we believe to be critical features that needed to be present before we would contemplate going into a new country. And they included things like language, culture, can you trust the financial system? Can you trust the legal system? Is there corruption? Is there significant foreign exchange risk? And there was about a dozen of these points. And we have stuck to that very, very rigidly. We are very keen to keep looking at the Asian markets. And I'm confident that in time, Sonic will be well positioned to enter those markets. I think at the moment, we've got so much growth opportunity in Western Europe, even extending even towards Central and Eastern Europe and the U.S.A. that we're not going to be rushing at the moment into Asia -- South Asia, as you mentioned, any part of Asia at the moment or South America or elsewhere at the moment. In terms of radiology M&A, yes, we are interested in looking at new opportunities. And again, we are doing this all the time, both here in Australia and potentially even overseas because we've I think successfully branched out of Australia into overseas markets in pathology. So we know the countries that we operate in very well. And should suitable opportunities arise in those countries, we would consider them. Obviously, they've got to make sense financially as well. And we are expanding in Australia already through M&A. Yes, sir. You need a microphone.

Thank you. Good morning. Wayne Perry is my name. As always, thank you all for your time throughout the year and for this meeting today. Just some context, and then I'll ask some questions, which you've espoused the medical leadership culture, so I think we can take that as a known concept. We've talked about the 42,000 staff that you currently have. There's the concept of AI that's looking to be rolled out throughout the organization. And overlaying all of this is a medical knowledge base that is current and moving every day. So the question that I've got or the 2 questions is, to me, this implies that there's an ongoing requirement to review, improve, upskill individuals of their own skills, let alone the integration of their work practices with AI. So can you talk about what that thing means in terms of the business overall? And then secondly, you've talked about AI, but its use and value is only as good as its accuracy and its currency. So that implies that there's a piece of work involved in monitoring that, improving that in the context of medical knowledge changes and integrating it into the then current work practices. So can you talk to those 2 questions, please?

Yes. So the first one is an interesting one because in medicine and in medical practice, pathologists, radiologists, general practitioners, very much part of the ethos is learning and ongoing improvement. So when we're talking about our medical knowledge, I think that's happening almost automatically. And we fund that via conference allowances and various other opportunities that we give. And it's under the medical leadership model, this is something that I've seen just happening in an incredible way. It's even -- it's gone beyond expectation in terms of improving and doing research and putting out papers and attending conferences and staying absolutely at the cutting edge worldwide. So we started out in Australia, and we kind of hope that we're at the cutting edge worldwide, and that was the case. So I think from a medical point of view, we are absolutely keeping up and we're right at the forefront. I don't know if your question also implied mentoring and leadership at business level. Did it?

I wasn't thinking about it in those terms, no.

No. Okay. So -- and then on to the AI question, and I agree with you fully that AI is something that has to be very judiciously used and very carefully used. Now I mentioned our partnership with Harrison.ai, which is a start-up company from Sydney here in Australia. And Harrison are involved in both radiology and pathology and the pathology joint venture we have is a 50-50 one, where Harrison have the smarts, as far as AI goes. Sonic has the medical smarts. And it's not just that we can provide expertise at diagnosis of actual tissue specimens, but we have this whole enormous company of intellectual property that a company like Harrison would struggle to find unless they had a partner like Sonic Healthcare. So I have found -- and it has been a revelation as well that this combination of a very smart AI company with what I believe is an outstanding medical company, Sonic Healthcare. It's the synergy has been electric, and it's ignited the place. It's incredible. When I look at what's going on with our AI development in pathology, I say to some of our colleagues that how would a company like Harrison do this without a Sonic Healthcare. And of course, the converse might apply as well because we couldn't do it by ourselves either. But I think it's an ideal form of partnership. Now we've completed a tool for prostate cancer, as I mentioned. That's just the beginning. We have tested and tested and tested this. And you can get to a point given that we are experts diagnosing prostate cancer, where you can compare the AI tool to a pathologist report and do that many, many times and be sure that it is the right product. and we are absolutely confident that this is #1 in the world. There's nobody, who has a product like this. And our intention is, by the way, to sell this to the world, not just to use it inside Sonic Healthcare, sell the product to the world. Every pathology lab in the world might be interested once they go digital because you have to be digital to use it. And so I think the same applies with the radiology product where we have got such good ways of testing these products. And then, of course, there needs to be external accreditation and validation of these tools as well, which will follow. So I'm very confident that the partnership that we have is the right way to ensure that we're using products that are absolutely sharp and won't be making errors. By the way, these are not designed to be used as stand-alone. They're assistants to the pathologists or radiologists. And we're never going to replace a pathologist, and I don't believe a radiologist either. So it's just to help. And it's a very exciting field this.

Thanks very much. And also thank you to you all for the work you've been doing. Mine is a follow-on question from the gentleman over there. I just wondered, looking into the future, how would you see the possibility of going to Singapore as a starting point?

Okay. So the comments I made a little earlier apply. Singapore would be a very suitable market for us because just those few criteria that I mentioned would be fulfilled in terms of language, culture, trust, the legal system, foreign exchange, everything would work out. It's quite a small market for us. And so -- and the right opportunity would have to arise. So we feel good about it is the answer. Sir and madam.

I just want to ask you, with the new administration coming into the U.S.A., how do you think it will affect Sonic, if at all?

Yes. And I think, Paul, can we double up on that question? I think there is a question that's coming online along those lines.

Yes. So there's a question from Stephen Mayne. Could the CEO provide some early thoughts on what the second Trump administration will mean for our business, including the proposed appointment of anti-vaxxer and conspiracy theorist, Robert F. Kennedy Jr. to run the all-important U.S. Department of Health and Human Services?

Madam, that will cover your question as well.

I actually couldn't hear it. Your mic is too high.

Paul, say it again.

Apologies.

That's better.

So Stephen Mayne has asked a question, could the CEO provide some early thoughts on what the second Trump administration will mean for our business, including the proposed appointment of anti-vaxxer and conspiracy theorist, Robert F. Kennedy Jr., to run the all-important U.S. Department of Health and Human Services?

Yes. Now we happen to have in the audience the CEO of our U.S. division, Dr. Cory Roberts is sitting at the back there, and he and I conferred about this just before the meeting. And we don't feel that there will be any significant change and certainly nothing negative. There could be some positives for us. The vaccine issue won't affect us at all. But the relaxation of some of the bureaucracy in the FDA and other health departments could be beneficial to us, particularly in the sanctioning of what they call lab-developed tests, which the FDA are currently looking at, making it almost impossible to offer a lab-developed test, which has been a stock standard thing in the U.S. market for some years. We understand that a Trump administration will relax that completely which will be much to the joy of all labs in the U.S. and to the benefit of the general population because these tests are absolutely thoroughly tested before they are released and they have to be accredited. But labs are allowed to develop new tests in-house. And at the moment, we're looking down the barrel of that not being possible, and we think that this will be rescinded. So we think it's a positive overall. Yes, sir.

My question relates to the impact of governments on your revenue opportunities. In Australia, I understand the fees you can charge is set by Medicare. Does this same sort of thing happen in Europe and the United States? In other words, are the governments there setting the fees? And to what extent is this a constraint, particularly in times of inflation?

Yes. I think that's a very good question. Now in Australia, we have quite a unique system. And I just want to preface whatever I say by saying that I think we have probably the finest health care system in the world here in Australia. I really mean that. Our fees in pathology are determined by government. And in fact, all fees for medical services are determined by government, federal government. In almost -- well, in every other field other than pathology -- thank you very much, Mark, indexation has been provided for the fees. So when you go and see a urologist or a gynecologist or GP, their fees for the service they provide you is indexed every year. It may not be exactly at the level of inflation, but it's close. In the case of pathology, this has not happened. And that's why I think some of you might be aware, if you're in Sydney, that there is -- or nationally, there's been a campaign around saying, keep pathology bulk build. And that is our campaign with the federal government to introduce indexation for pathology, specifically to address the matter that you've raised that we've gone many, many, many years without any fee increases for the tests that we offer. So any particular test, you all have different tests done, the fees have not changed for almost 20 years. Can you believe it? It's hard to believe. So the reason why companies are still viable and in our case, doing well is that we have consolidated the industry, and we have found efficiencies year after year after year, and the industry has become automated. There's now AI. There's a whole lot of things that we have done and continue to do to keep efficiency going. But there are specific tests like histopathology, like genetics, the high-end tests are much more manual and they should be indexed. Now what's happened is the government has partially responded. And in the last budget, they announced that there would be partial indexation for pathology tests. So roughly 1/3 of our tests from July 1 next year will get the indexation that others get in the health care sector. At the same time, they did talk about some adjustments to other tests, which we are dealing with. And so I think in Australia, the government is getting the message that something needs to be done. Without belaboring this point, Germany is a similar situation to Australia. Fees are kind of indirectly mandated by sickness funds and funded by government in the end. In the U.S., it's different because most of our fees come from private insurance companies, which are subject to negotiation and in many cases, indexation as well. In Switzerland, it's a similar situation to Germany. And in the U.K., we set our own fees other than our NHS partnership. So roughly half of our business in the U.K., we've -- it's entirely private and we set the fees and can increase them in line with inflation, et cetera. Now just a final point. Increasingly, in our game in pathology, there are more and more tests that are not covered by the fee schedule. So if a new test comes out that's valuable to a patient and it's not covered by Medicare, then it has to be paid for by the patient. And those are the tests where we do set our own fees. And in most cases, patients are prepared to pay for tests which add enormous value. So this is becoming an increasing source of revenue for the business right around the whole pathology world in all countries where there are tests not covered that are billed privately. And by the way, in radiology, it's quite different here in Australia. It is now fully indexed. And finally, the general practitioner division here in Australia, the government has responded. I said there's a shortage of GPs, and we could talk about why there's a shortage of GPs. And I've always said there needs to be better incentives for medical graduates to choose general practice. And a small number are now choosing general practice. It's scary. And the government has taken the first step by increasing the fees to general practitioners. So they tripled what's called the bulk bill incentive plus GP's services are now indexed fully as well. So that's going to be the beginning of addressing that problem as well. Look, just a final summary of your point is that we recognize that it might be of concern, but we're kind of on top of it. And this campaign is kind of saying that something needs to be done, if not all pathology companies will be forced to go to private billing of some degree where there will be a small patient gap. But hopefully, that can be avoided. I think that's it, Mark. Hang on, Paul has...

There is one more online question again from Stephen Mayne. It's actually addressed to me. I'm asked, please summarize the extent and breadth of engagement our senior executives have with analysts, brokers, fund managers and institutional investors after each 6 monthly results released to the ASX? How does this compare with what the company does for its 95,000 retail investors? And what is our approach to running an Annual Investor Day and will retail investors be invited to attend the next one? Also, what is the best explanation as to why we have so many retail shareholders? Are there particular brokers that push the stock? So the answer there is for each of our 6 monthly results, Colin provides a teleconference presentation of the results and anyone who has registered with us has provided those contact details to call into that. A recording of that presentation is then made available on our website, so all shareholders can access that. We do meet with fund managers, et cetera, that request a meeting of us, but we also answer questions from retail shareholders when they arrive. We've never failed to respond to anyone who has asked us a question or requested a meeting as long as logistics make that possible. We do hold Investor Days from time to time. We had one in Perth a few weeks ago, and we actually have one in London at the end of this week. And in each case, we invite anyone who has registered their interest with us to be invited to those sorts of functions. We don't differentiate between retail or other types of investors. As to why we have 95,000 retail investors, I'd like to think it's because we're a good stock. But there are a number of brokers who obviously follow Sonic. I'm not going to name any particular firm. But I think our progressive dividend policy and the fact that our brands are household names for many of you. So Douglass Hanly Moir Pathology here in Sydney, for example, are probably what attracts retail investors to our stock. That's the end of that question. I should just check with the moderator whether there are any audio questions, please. Take that as a no.

Yeah, at this time, I'm showing no audio questions.

Okay. Thank you very much, Paul. Thank you, Colin, for your presentation and question. Thanks, everyone, for your questions, which we welcome at this meeting and indeed at any time. It's now time to move to the formal business of the meeting, and there are some other questions from shareholders as we move through this formal part of the meeting, and we'll deal with those seriatim. The notice of the meeting has been made available to all shareholders and is available on the Sonic's -- on Sonic's website, and I propose to take the notice of the 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. Proxy results for all items of business being voted on today will be displayed on the screen and the screens of those joining you online 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 Limited. 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, the directors' report and the auditor's report of the company and the group for the financial year ended 30 June 2024. If you have not already done so, please submit or prepare to ask any questions now regarding the financial statements and reports. We will first address questions received prior to the meeting, then from the floor, followed by online written questions and then any audio questions. Are there any questions, Paul or any from the floor on the reports?

So there is -- there are 2 questions, Mark, online. Both are from a shareholder, [ Mark Bassett ]. The first question is and I direct this to Colin, both of these questions to Colin, I believe. It appears that organic revenue growth in your overseas operations, in particularly the U.S.A. is below that of organic revenue growth in the Australian segment. Why is it important for Sonic to continue to develop overseas operations?

Okay. So I guess I could answer this by saying we're going back 22 years when we left Australia and first ventured into the U.K. The reason was that we've reached a saturation point in terms of anticompetition. We hit 40% of the market and wish to expand further. So the -- the current lower growth rates in some of our non-Australian divisions is not of great concern, and I'm convinced that this will level out in time. It's just a current phenomenon.

Okay. The second question from Mr. Bassett is revenue growth in FY '24 has been about 10%, whereas labor and consumables costs have grown by 13%. Why has Sonic been unable to control these costs to align with revenue growth?

Yes. So thank you for that question. And the answer to this rests with something I touched on in the presentation, and that is coming from the COVID environment into the non-COVID environment was a major challenge for us where revenue fell quite precipitously because of the COVID testing revenue disappearing, whereas reducing labor costs takes a bit longer. And so there was a mismatch for 1 to 2 years in the post-COVID years, which we're now dealing with and have just about completed.

Thanks, Colin. Thanks, Paul. I have a couple of other questions here on the annual report from [ Mr. Lewis Gomes ], a shareholder on behalf of Nondescript Pty. Limited. I refer the Chairman to the comment on Page 17 of the annual report that "none of the business acquisitions made in the year were material to Sonic." In total, these acquisitions and some of their investments reportedly cost approximately $1.4 billion. Over the course of FY '24, NPAT fell 25%, net cash flow fell 27%, and net interest-bearing debt increased by about $1.5 billion, with gearing more than doubling. Net interest expense increased by 72% and is expected to increase by another 25% in FY '25 and ROIC at 6.5% was well below target of 9%. Intangible assets increased by $1.3 billion and comprised mostly goodwill from acquisitions with net tangible assets per share now negative $2.19 per share or negative $1 billion in total. How is it that these acquisitions were not material to Sonic? I begin answering this question by apologizing Mr. Gomes and other shareholders that my drafting in that section of the report was not as clear as it should have been. The reference to not material to Sonic referred to each individual acquisition rather than those acquisitions in total. Clearly, as a total, they are significant, but each of the acquisitions on the individual basis, which is what was intended in the drafting of the report were not material. Colin's presentation has already addressed the issues around the earnings in FY '24, mainly related to the transition from the pandemic to a non-pandemic operating environment and has also addressed prospects for the future. There are a couple of other questions from Mr. Gomes, which are directed to the Chief Executive. Colin, do you want to read those from where you are or I can read them and you can answer them? I can read them and Colin will answer. The first one is, we know that pathology services are low margin and subject to regulatory control, e.g., Medicare in Australia. Sonic is a price taker, not a price maker. We also know that underlying costs such as personnel, rent, utilities, insurance, transport, et cetera, are running well ahead of general levels of inflation, while rebates and subsidies from health funds and governments are very constrained, if not falling. We have seen ROIC fall from around 20% during the COVID peak years to now below pre-COVID levels. What are the prospects for long-term improvement in ROIC and investor returns given ongoing cost increases and revenue constraints? Colin can speak to that.

So Mark, I think I have dealt with this question in some detail in the presentation and in some of the questions. We're fully aware that ROIC has fallen. This is partly due to the low-margin acquisitions that we've made and from the post-COVID effect of our falling margins. These are fully being addressed. And so in the next 1, 2, 3 years, this will turn around significantly.

Thanks, Colin. Final question from Mr. Gomes, which I think has been dealt with, but I'll read it for completeness, and Colin can add any additional comments he may wish to. Mr. Gomes writes I refer to the table on Page 15 of the annual report, which presents revenue by country/region for laboratory services and radiology for FY '24. I note that no indications are given a relative EBIT contribution, but various comments are made in the annual report about opportunities for further growth, particularly in the U.S.A. and Germany. We know that the U.S.A. is a very complex environment for health services given some 50 different state jurisdictions and federal overlay that may become less generous under President Trump. How are we to ascertain the relative merits of further acquisitions in these countries without knowing their relative profitability? And are we likely to see further costly acquisitions that will increase debt and interest expense without commensurate additions to EBIT? Thanks, Colin.

And thank you, Mr. Gomes, for the question. So we do see opportunities in Europe and the U.S.A. for acquisition. It's important for shareholders to know that we are stringent and very diligent in assessing any acquisition that we make. And I'll make the point here that nobody gets to hear about the acquisitions that we don't make. And many people say that Sonic is what it is because of the deals we didn't do. So you can imagine that for every acquisition that we make, there are more and probably many more that we investigate and decline on the basis that these don't make sense at a cultural level and at a financial level or operational level and whatever the reason is. So in the situation in terms of the question, we have made acquisitions which are low margin in Switzerland and PathologyWatch. Those 3 acquisitions would initially be ROIC, ROIC dilutive. They would be dilutive in every sense of the word. But in the next 1, 2, 3 years, these are going to be very ROIC accretive and margin accretive, and we're very confident of achieving that. So it is not our intention to make an acquisition that is not ROIC accretive. So that's one of the key metrics that we look at with every deal. We don't look at year 1, though. We look generally at year 3 because several of the acquisitions that we make, even ones that are very profitable, we add our synergy benefits, which will take 1, 2 or 3 years to become fully effective.

Thanks, Colin. I think they're all the questions that we have on the reports.

There is one more, a new question has arrived online, which is -- and again, addressed to Colin. How does Sonic Healthcare plan to leverage AI technologies to improve patient care, operational efficiencies and competitive positioning? And what safeguards are in place to ensure ethical use and data privacy?

Now again, I think we've covered the question in some detail. We are very conscious of all those issues. So in terms of ensuring safety, our products are not quite in the space that is conventionally regarded as unsafe. We will only use a product as an assistant to a pathologist or radiologist. We will test and retest and get accreditation for any AI tool that we use. In terms of patient data, we are very, very conscious of all the requirements that are beholden to us in terms of protecting the security of the data that we hold. And we do hold a lot of data, as you might imagine, in the whole company. So I think we've -- we're just very conscious of our responsibility as a large health care company, and patients can be reassured that we will take every precaution to protect their privacy.

Thanks, Colin.

Mark, we should just check with the moderator again if there's any audio questions, please.

Yeah, at this time, I'm showing no audio questions.

Okay. So we'll now move on with the formal resolutions. The results -- proxy results will be shown on the screen. Resolution 1 is an ordinary resolution, which reads as follows: that Ms. Kate Spargo, who retires in accordance with Article 71 of the company's constitution and being eligible, offers herself for reelection, is reelected as a Director of the company. Kate's biography is included in your Notice of Meeting. Kate is a Nonexecutive Independent Director who has a legal background and is a very experienced and skilled Board member. Kate chairs the Remuneration and Nominations Committee and is a member of the Audit Committee of the Sonic Board. As noted in the Notice of Meeting, Kate has advised that if she is reelected today, she will retire from the Board by the end of this next 3-year term. I'd now invite Kate to speak to you and answer any questions that you might have. Thank you, Kate.

Thank you very much, Mark, and I'd like to add my welcome to everyone who's joined the meeting this morning. And I am pleased to be able to present myself again to the meeting for reelection to the Sonic Healthcare Board this morning. It's a privilege to be a member of the Board, and I've probably said that on previous occasions and to be able to influence the direction of the business, balancing both the risks and opportunities that we have. Our central value, and you've heard it from Colin this morning, again, is that of Medical Leadership. And it's essential that all of us on the Board maintain this aspect. At the same time, of course, we need to protect and advance your interest as shareholders, and I believe that Medical Leadership actually does this. I do chair the Remuneration and Nominations Committee, as Mark has said, which has the important task of balancing the interest of shareholders and also that of our executives in terms of remuneration. We work on the principle that those interests must be aligned. In other words, when shareholders gain, our executives deserve to be rewarded. And equally, if the reverse is true, then the same result follows. If shareholders don't benefit in a particular era, particular year, then similarly, our executives fare in the same way. I will now be the longest serving Nonexecutive Independent Director at the conclusion of this meeting with Lou's retirement. And this will be my last term on this Board, if I'm reelected. I would like to acknowledge Lou's incredible contribution to Sonic as he retires today. It's been a long and amazing contribution. Thank you. You'll be able to see, though, that we do have an ongoing process of renewal of the Board, and our directors have been here for various periods of time. In other words, we believe in a renewal process whereby we continue to renew directors, and you will see that various directors, some are very short term and new when we've announced a new director this morning and some, like myself, are longer term, but we do maintain the history over that time of the business. I'm looking forward to working with our new Director, Nicola Wakefield Evans, who will come on board early next year. We always have new challenges and opportunities, and Colin and Mark have both outlined them in some detail, our continued overseas expansion, rapidly moving technology and medical advancements on so many fronts and the external environment and its unpredictability. We saw that with COVID and questions have already been asked about perhaps the unpredictability of the new Trump presidency in the United States and what that might do for us. I do remain committed to Sonic and to you as our shareholders to achieve the best possible outcomes for you and for all stakeholders associated with the business, and I thank you for your continued support.

Thank you very much, Kate. Are there any questions from the floor at first for Kate? If there are none, any online, Paul?

Yes, we have a question from Stephen Mayne. Whilst this question is not about Kate Spargo's reelection, it relates to the broader issue of director elections and selection. Lendlease has not been a great experience for investors during Nicola Wakefield Evans' 11-year stint on the Board, which finished last week. Did we take into account before announcing her impending appointment to the Board yesterday? Could the Chair please summarize the recruitment process that led to Nicola's foreshadowed appointment to the Board on 15 February next year? Which recruitment firm was involved, if any? And did the full Board interview any other candidates as a group as part of the process? Did any of our directors know Nicola before this competitive recruitment process?

I'm happy to answer that initially, Kate, if you like, and then if there's anything you'd like to add as the Chair of the Relevant Committee. Thanks, Mr. Mayne, for your question. In summary, there was an open and competitive process using an external professional search firm to assist the company in the search for a new director. We looked far and wide and looked at a long, long list of people that had skills and talents in a number of areas that we thought were important around the Board table. We narrowed that list down with the assistance of the search firm. We interviewed a number of people as candidates. And of course, all of the Board had an opportunity to speak in detail to Ms. Wakefield Evans about her skills, talents, cultural fit, all understanding of Sonic, all of those sorts of things, Medical Leadership that are important. In terms of the experience of Lendlease, that was given some consideration. But whilst those matters could be considered, they're not determinative as to whether someone should be appointed. There are all sorts of different circumstances that might occur and who knows what an individual director did around the Board table in a company at any given point in time that doesn't necessarily determine their future career as a good director. So on the basis of Ms. Nicola Wakefield Evans experience, her skills, cultural fit, her passion for health care, et cetera, we believe that of those people who we did see and speak to about this role that she will be an excellent director on the Sonic Board. In terms of any personal relationships, to my knowledge, none of our existing directors has a personal relationship with Nicola Wakefield Evans, a number of directors know her because she is in the director sphere and met her at conferences or [ OSD ] meetings or Chief Executive Women meetings or whatever, but -- or have known of her. I personally interestingly had not met her previously to being considered for a position on the Sonic Board. So there's no close personal relationship there that has influenced anyone's decision. Kate, anything that we should add to that?

No, I think, thank you, Mark, that summarizes the process well.

Good. Thanks, Paul. Any other questions on this matter?

No more online, but if we can just check with the call moderator, please.

And once again at this time, I'm showing no questions on the audience side.

Thank you very much. So the proxy results for this resolution are shown on the screen and will be recorded in the minutes of the meeting. And as I advised earlier, these results will be released to the ASX once the poll is complete later today. So votes for the resolution, 245,950,000 and some, against, 37,019,000 and some, open, 924,000 and some, including 358,511 in favor of the Chairman, and I've indicated before that all proxies given to me as Chair of the meeting will be voted in favor of any of the resolutions and abstentions, 583,000 and some. I'll now move to the next item of business. Resolution 2 is an ordinary though nonbinding resolution, which reads as follows: that the remuneration report for the financial year ended 30 June 2024 is adopted. As you are aware, remuneration reports are topical and sometimes controversial given the application of the 2 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 would ask that you consider the report as a whole as well as the performance of the company and its management team. I will now ask Kate Spargo as Chair of our Remuneration and Nominations Committee, to address questions from shareholders regarding this ordinary resolution. Kate, any questions from the floor on the remuneration report?

We do have -- sorry, there's one on the floor. Apologies.

Yes, sir. Microphone coming to you.

Yes, [ Robert Kennelly ] again, Mr. Chair. I just haven't been able to locate in the annual report the directors' fees in any given year. I'm sure it's here, but I just haven't found it.

It is in the rem report. Someone's quickly flicking through, and I'll give you a page number. Just wait one...

It is on Page 45, Mark.

Page 45. Just make sure you find that, that answers your question. Got it. Thank you very much, Mr. Kennelly. Any other questions from the floor? If not, can we go to the online questions, Paul, if there are any?

Yes. So a question from Stephen Mayne. I think this one is probably more for you, Mark than Kate. In 2022, I politely asked you to embrace scheme like voting disclosure, which reports the poll results, both on shares and shareholders. You have refused for the past 2 years. The ASX itself embraced this concept in 2023 as did governance bad boys, Qantas. Your own share registry provider, Computershare, did it for the first time last week as well. Out of respect for your 95,000 shareholders when disclosing the outcome of voting on all resolutions today, including this remuneration report item, could you please advise the ASX how many shareholders voted for and against each item? This will provide a better gauge of retail shareholder sentiment and insight into Australia's chronically low retail shareholder participation rates. Did even 2% of your shareholders vote on the remuneration report today? At Qantas, it was less than 1% this year.

Thanks, Paul, and thanks, Mr. Mayne, for your question and your ongoing championing for retail shareholders, which I'm sure everyone appreciates. We haven't ignored or refused the comments that you've made on this matter. The Board did consider it previously, thought it was not necessarily in best interest of all. But I -- given you've raised the matter again, I undertake to take that back to the Board for consideration again at its next meeting, and we'll revisit that based on your request. Paul, are there any other questions online?

No more online. Just check with the call moderator, please.

Yeah, once again at this time, I'm showing no questions on the audience side.

Thank you very much. So the proxy results for this resolution, this Resolution 2 are now on the screen.

Mark, Mark, there is a question. Sorry.

Sorry. I do peg your pardon.

Sue Howes from the Australian Shareholders' Association. I do have a couple of questions still on this item. The first one is most ASX 200 companies have stopped using fair value in their LTI due to both complexity and the ramping up of benefits to employees that tends to occur with this. Will Sonic consider removing the current options arrangements from their remuneration plan and have all LTI as performance rights? And my second question is, we note the significant decrease in hurdles for aggregate EPS hurdles for the LTI for FY '25. Could the company explain the rationale for this reduction in hurdles, please?

Thanks, Sue, for your question. We won't ignore it. We did get it in advance because you sent it in to us, and we actually had it under Resolution 4 on the dealing with the LTI, but we're very happy to deal with it now. So I might hand that to Kate. Thank you.

Thanks, Mark, and thank you, Sue. We do use, as you no doubt aware from our remuneration report in terms of the LTI award, 50-50 options and performance rights, and we have done that for quite a number of years. I agree with Sue that there is a complexity in calculating and understanding the value of the options, but it is regularly done and it is transparent in terms of how you calculate. Of course, it's -- you can't be certain at the time that you make the award because it all depends on what the share price is at the time of the vesting and then of the exercising of that -- those options. By doing the 50-50 in terms of options and performance rights, we feel that, that has worked well for our executives. And we -- while we'll take into account your comments and perhaps do some more thinking about the extent of the use of options, for the time being, we consider that the complexity of the calculation doesn't really override, in our view, the significance of those 2 mechanisms for reward. The second question is around the hurdle for the EPS in this year. And of course, we do have an EPS in our LTI award. It relates to 25% of the award of the LTI. We reset those hurdles each year, and we reset them in the context of how the company is performing and what our expectations are about the performance. And so as you've heard from Colin, we have had an interesting set of performances over the last year since '19 and the COVID era and then coming out of the COVID era. And so that EPS target is set in the context of how our performance has been going over that time. We still set it as a rigorous target, but it is set against the context of performance.

Thanks, Kate. Paul, any other questions related to this particular matter?

No. Thanks, Mark.

Thank you, and there were none online. And so, thank you for your question. Also I thank the Australian Shareholders' Association for taking up the company's invitation to meet prior to the AGM. And we had a good discussion a couple of weeks ago. So thanks very much for taking up that invitation. So the -- this Resolution #2 on the rem report, the results are shown on the screen. So that's for some 253,598,000 and some, against, 28,810,000 and some, open proxies 915,871, including a number open to me as the Chair, which I'll vote in favor, and abstentions, 610,000. I'll now move to Resolution 3, an ordinary resolution, which reads as follows: that for the purposes of ASX Listing Rule 10.17 and Article 72 of the company's constitution, the maximum total annual amount of fees available for the company to pay nonexecutive directors as a whole be increased by $500,000 to give the company flexibility to pay total nonexecutive directors' fees of up to $3 million. The passage of this resolution will provide headroom for the Board to have flexibility over coming years to appoint further nonexecutive directors in order to bring new attributes and further diversity of membership to the Board, increase Board committee membership or to increase individual net fees in the future should any of these be considered appropriate. This flexibility is sought given the Board continues to review its composition to ensure that collectively, the nonexecutive directors provide the skill set appropriate to the increasing scope, complexity and global nature of the company's business, including relevant industry, medical and other professional experience. The time commitment of directors and demands being placed upon them to conscientiously and adequately perform their duties on behalf of shareholders is significantly increasing with the complexity of both regulatory environments and the medical diagnostic services business itself as well as Sonic's continued international growth. I note that we have never paid the maximum amount of the directors' fee pool and do not expect to do so. Paul Alexander, Sonic's Company Secretary will now read out any questions from shareholders regarding this ordinary resolution, and I'll ask Kate Spargo to address them. Just before Paul reads those, are there any questions from the floor on this resolution? If not, we'll go to the online environment.

So we have a question from a shareholder, [ Mr. Peter Colorio ]. Apologies if I haven't pronounced that correctly. His question is, is Sonic looking at increasing the size of the Board over the next few years?

Perhaps if I could start with that. There's no particular plan to increase the size of the Board. You can see the size of the Board. And with Lou's retirement and Nicola Wakefield Evans coming on to Board, we retain the same size. The request for the increase in directors' fees is simply to give us some scope and some buffer. There's no intention either at this stage to increase those directors' fees. And you'll see from the annual report that we come in underneath -- just underneath at the moment, the $2.5 million limit. Going to the $3 million limit is not an invitation for us to spend that money, but it is -- it does enable us if we do want to add another director, for instance, to increase the number to the Board or if we want to add more directors to some of our committees because we do pay a small committee fee for directors or if at some point in time, we want to increase directors' fees. We market test our directors' fees so that we make sure -- and we do that by an -- an independent company does that for us so that we make sure that we stay in line with what directors are paid for a company of our size and complexity. And we think it's important that we do, do that market testing so that we can remain competitive in looking for quality directors to join our Board.

Thanks, Kate. Any online questions, Paul?

No more online, but just check with the call moderator, please.

Yeah, once again at this time, I'm showing no questions on the audience side.

Thank you very much. So the results so far for Resolution 3 -- is there a question? Sorry, sir. Microphone coming to you.

Sorry for the lateness of the question. It just occurred to me. Does the Board consider it be helpful to have a greater international representation on the Board in future given the increasing contribution to the revenues and earnings of the company coming from offshore jurisdictions?

It's an excellent question. Thank you, and one that we do consider from time to time. If I might answer it this way, we do consider it. But Boards, like most teams, committees are teams. There are circles of trust where people meet together, look at each other deeply in the eyes across the table, have the coffee -- sidebar coffee conversations around Board meetings, trying to have a sandwich together at lunch time and talk about issues related to the company and so on. Having a director perhaps offshore and then dialing in by Zoom or whatever other means, that individual does not get to take part in those sort of intimate things. Sometimes they travel, although traveling out to Australia from the U.S. or from the U.K. or Europe, experience in other places is that novelty wears off after a little while and then people go to the Zoom or the telephone method when they're sort of in their pajamas at the bottom, have got their suit coat on, on the top, newsreader dress as it were, don't get the opportunity of having the interaction with other directors and with the executive and others and just sort of chewing the fat on the issues around the company. And I think ultimately, it all gets a bit frustrating for one individual. So we've taken the view to this point that rather than have a director who is offshore to -- and subjecting them to those circumstances that we look for directors who've got some significant international experience, business experience that they can bring to the Board table. If I can use Neville Mitchell as an example without embarrassing him, Neville is the former Chief Financial Officer for Cochlear before he joined our Board, of course, had substantial international experience, particularly in the U.S., and that continues in his role as a director in other places. And so we can bring that skill and experience into the boardroom and be part of that team rather than having sort of most of the team in the room and somebody else on a screen traveling out a couple of times a year maybe, et cetera. So there are arguments for and against, but we've fallen on that side at this point. I hope that makes sense. Yes, sir.

Thank you, Chair. Just following on from that last question. From time to time, does the Board as a whole hold meetings in Europe or U.K. or the United States so that you can interact with the senior executives in those areas?

Thank you. Again, it's an excellent question. And the short answer is yes. So for example, in April this year, the Board as a whole went to the U.S. and spent time in the U.S. head office -- well, in Dallas and then the head office in Austin to meet with Dr. Roberts, who's with us today, the CEO, but also the rest of the executive team, wandered through labs, talked to various staff, had that opportunity to interact. And we've done that in the U.K. We've done that in various parts of Europe. We have another similar trip planned for first half of calendar next year, particularly back up into Switzerland and Germany and so on to where we've just had those big acquisitions and other things up there to -- I won't say kick the tires that trivializes it, but to really engage with the executive there and the team on the ground and get a real sense of it. So yes, we do. Any other questions in the room? If I put the wrong glasses on, everyone goes blurry. So I've got to remember to take them off. Okay. So Resolution 3 results are on the screen for 256,533,000 and some, against, 25,952,000 and some, open, 915,089 with 356,000 open to the Chairman, which I will vote in favor, and abstentions 561,000. I now move to Resolution 4, 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 $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 described in the Notice of Meeting, the Board wishes to provide performance incentives for Colin and Chris through to the 2027 financial year by issuing options and performance rights. Vesting of the rights and options is subject to challenging performance conditions, aligning their interests with yours as shareholders, yours and mine, I should say. Colin and Chris have created enormous value for Sonic shareholders over 3 decades, and the Board wishes to incentivize them to continue to do so. Kate Spargo as Chair of the Remuneration Committee will now read out any questions and address questions from shareholders from the floor and online regarding this ordinary resolution that have been received prior to the meeting. Over to you, Kate.

Thanks, Mark. I think we've already dealt with the questions that were sitting under this section, the questions from Sue at the ASA, Australian Shareholders' Association. So I'm not sure whether there are other questions.

So we do have one online question. Again, this is from Stephen Mayne. There was a 20% protest vote against the LTI grants at last year's AGM. What caused that? Did any of the 5 main proxy advisers, ACSI, Ownership Matters, Glass Lewis, ISS and ASA recommend a vote against any of today's resolutions? If so, what reasons did they give? And has this translated into material protest votes? Also, why not disclose the proxy position to the ASX along with the formal addresses like many other companies do in order to allow for a more fully informed AGM debate?

Do you want me to open the batting?

Yes, if you like.

On that one. Thanks, Mr. Mayne, for your question, and I'll try and remember all the several parts. The vote that you referred to around the LTI last time, the vote, as I recall, the Company Secretary will get me back on piece if I ski off for the LTI was greater than 90%, but the support for the specific options plan, I think, was at about 80%, right? So the LTI, there wasn't a 20% vote against the LTI. It was over 90% vote in favor. In terms of the proxy adviser support or otherwise for the rem report and so on in this round of meetings, all the major proxy advisers that were referred to in the question voted in -- or recommended rather in support of voting in favor of all the resolutions. The only adviser that recommended a vote against was the ASA in that so all the others voted in favor. And the other was about disclosing proxy advisers' recommendations. I mean, again, we can take that away and consider it, but it's a matter for them as to what they publish and who they publish it to, I guess, but we can take that away and consider it. Were they the elements of the question, Paul?

The last part was why don't we disclose the proxy position, i.e., the outcomes along with the formal addresses prior to the meeting. So we do it at the meeting...

We do it at the meeting, yeah, which is probably fair to shareholders who come to the meeting and feel like they want to have a vote at the time rather than necessarily trying to bias people one way or the other with what others are doing, I think. Kate, anything you'd like to add to that?

Thanks, Mark. Perhaps if I could just add, and I know many of you are aware of it, Mark and myself and Paul do a series of meetings with the proxy advisers and also with investors, any investor who would like to speak with us in anticipation of the Annual General Meeting. And it does give us the opportunity to discuss and explain and perhaps put in context the detail of our remuneration report and our particular aspects of remuneration. Sometimes we agree to differ in terms of some of the aspects of the remuneration. And sometimes, of course, we are advised by some of our major -- particularly institutional investors that they have a series of guidelines, which aren't necessarily in line with the treatments that we have in the remuneration report. And so as a matter of principle, vote contrary to what we've recommended. But the proxy advisers, apart from the ASA this year, I recall, did all vote quite clearly in favor of all the resolutions.

Thanks, Kate. So any other questions on this matter before I put it, and the audio.

We just check with the call moderator, please.

And once again at this time, I'm showing no questions on the audience side.

Thank you very much. So for this resolution, Resolution 4, the proxy results are shown on the screen for, 266,458,000 and some, against, 13,651,000 and some, open, 912,691, of which there are 356-odd-thousand available to me, which I'll vote in favor, and abstentions, 3,455,157. I'll now move on to Resolution 5, which is also an ordinary resolution, which reads as follows: that for the purpose 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 $1,447,445 to Mr. Chris Wilks, Finance Director and Chief Financial Officer under the Sonic Healthcare Limited Employee Option Plan and the Sonic 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. Paul, as Company Secretary, will now read out any questions that he's got after I take questions from the floor. And as previously, Kate will deal with them. So do we have any questions from the floor on this resolution? If not, can I ask Paul if there are any additional questions online?

None online. The call moderator, please.

And once again at this time, I'm showing no questions on the audience side.

Thank you very much. Any last gasp in the room? If not, the proxy results for this resolution, Resolution 5 are shown on the screen. So in favor, 266 million-and-some, against, 13 million-and-some, open, 913,842, including those allocated to me, which I will vote in favor, and abstentions, 3,456,503. So now that we've completed the formal business of today's meeting, are there any other questions about the company that anyone would like to ask? Yes, sir. Microphone coming. And of course, there'll be opportunities to speak to any of the directors over a cup of tea in a minute if anyone feels that they would more comfortable doing that. Yes, sir.

Chair, David Kingston, just interested, the share price peaked a number of years ago at over $40. It's down at $26, $27 levels. So obviously, that's a bit disappointing. Also interested in your view on the Australian government's position on pathology. There's been plenty of commentary and press about the failure to index rates, which is putting pressure certainly in Australia on the margins of pathology operators. So appreciate your comments both on the share price performance and also on -- it may not impact you overseas, I'm not sure, but certainly, it seems the Australian government is being pretty unfair on pathology operators.

Sure. I might open the batting and then ask Colin if he's got any additional comments. In terms of share price, if I knew what caused share price movements, we probably wouldn't be sitting here. We'd all be on small islands with drinks with umbrellas in the top. But -- so it had this incredible run-up to $45. Again, who knows why that was. The market is the market, and it responds to internal, I guess, signals as well as other things that are happening in the market. So I can't really give you a particular question as to why there might have been a big run-up. In terms of the Australian government, we are part of the industry body that lobbies, if you like, and takes the case for pathology to the federal government and the key pathology bulk bill and the arguments about indexation. And given we're in a sector that hasn't had indexation for 25 years, we think it's appropriate that pathology is considered and given proper indexation. There was some, as Colin referred to earlier, some staggering early starts in some of that, but there's more to be done in our view. But Colin is very close to this. I might ask him to make some additional comments.

Thanks, Mark. Yes, the share price during the pandemic went crazy. It was a reaction to our incredible earnings through that period. And it obviously came down when the pandemic subsided. I couldn't agree with you more about the position taken by the federal government on pathology fees. I think there's a misunderstanding about the importance of private pathology for the entire Australian health care system. And just to give you an example, if Douglass Hanly Moir -- given most of you in Sydney, if Douglass Hanly Moir failed to operate for even 1 day, the whole system, the whole system collapses. That's how big our big labs are. We provide the infrastructure. Nobody thinks about the capital involved in buildings, in equipment, et cetera. And so to have gone 20 years without indexation of fees, fair enough right at the beginning where the industry was consolidating and getting benefits from that, but our industry has been consolidated now for probably 10 years. And that is why we're putting a lot of pressure on government to consider full indexation for pathology fees. Now to be fair, they've begun the process. As I mentioned earlier, 1/3 of the fees will be indexed as of 1 July. It's a small offering. I can tell you in the scheme of the entire budget, it's nothing. And we will keep up the pressure because Sonic is in a strong position, not only in Australia, but we're the only global pathology player in Australia. The other 3 major competitors are not. They're fully dependent on Australia and the reimbursement structures that we have. So any help that we can get from shareholders or the general public and supporting our campaign would be very much appreciated through our industry association.

Thanks, Colin. And just without over-egging the pudding, just to reinforce the importance of private sector health care and certainly private pathology in making this whole system work in Australia. And that couldn't have been more evident than during the pandemic, where the only -- before vaccination was available, the only tools that the governments had in any jurisdiction was test, trace and isolate and to do the testing that was required and to trace people and allow them to isolate. That couldn't have been done without Sonic and others being involved in that to support government. So it is a critical part of the infrastructure to provide the standard of health care that we've got in this country and other jurisdictions, and it should be supported with that in mind. Thank you for your question. Any other questions on the company? Yes, ma'am.

Hello. I'm very happy with the results today, but I'm an individual shareholder. And my question is, what is your policy going forward for franking credits, as they weren't included in this last dividend?

I wonder whether Chris might -- who's the Finance Director, might deal with that.

Yes. Thanks for the question. You might remember that, I'm trying to recall, Paul, you can remind me, but we had a fully franked dividend a year ago, I think it was. And so we used all of our franking credits. We regard them as assets for the shareholders. So we tried to get them out. We didn't frank the last dividend, and I think we probably won't be franking the next one. That's still to be seen. But going forward, it's probably going to be more at a rate of about 30% because that represents the amount of tax that we pay here, which generates the franking credits. So going forward, I think we'll probably end up back at the more normal rate of about 30% franked, and the intention will always be to get those franking credits out to shareholders as quickly as we can. Did that answer the question?

You are happy with that? Just a microphone coming, ma'am, so we can all hear.

I'm happy with the results of your payments going forward to yourselves, but I do wish you would think of the individual shareholder as well with franking credits.

You will certainly bear that in mind going forward.

Are there questions from the floor on the company, general questions? As I said, don't waste the opportunity to do it over a cup of tea later if you prefer. I see no other hands. So if not, thank you very much indeed.

Sorry, Mark, there's a question online that's just come in.

And just when we thought we were on the home stretch.

From [ Mr. Adam Joyce ], who asked what -- and sorry, Colin, this will be for you. What metrics or benchmarks does Sonic Healthcare use to measure the return on investment and success of its AI-driven technologies in pathology and radiology? And how are these technologies expected to integrate with existing operations?

It's a difficult question to link the overall company return on investment to a fledgling technology that's still evolving. It's safe to say that we are using AI to gain efficiencies and/or to drive revenue, both of which feed to return on investment. So in the case of AI, we can talk about what we've invested in, for example, Harrison.ai, that was an investment, and there is some hardware that we need to invest in, in order to deliver AI products. But essentially, the capital spend is relatively low to what we hope the benefits will be going forward. At the moment, the benefits are in the very early stages, but we think AI will become more and more significant and will assist our return on invested capital aspirations.

Thanks, Colin. Paul, nothing on the audio?

I'm showing no questions on the audience side.

I thought it was a problem. I wasn't hearing voices for a minute. Okay. So I think everyone's had a good opportunity to ask various questions of Board, management, and that concludes our discussion on the items of business. For those attending and voting online, I will soon close the online voting system. That's your 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 and you can select the voting option. If there is any person physically in attendance who believe they are entitled to vote but has not yet registered to vote, would you please raise your hand for assistance and the very nice people from Computershare will help you out with that. The persons entitled to vote on the polls are all shareholders, representatives and attorneys of shareholders and proxy holders who hold the green admission card and who are otherwise not excluded from voting in accordance with the voting restrictions for key management personnel and their closely related parties as set out in the Notice of Meeting. On the reverse of your green admission card is your voting paper and instructions. I will now go through the procedures of filling in the voting papers. Proxy holders have attached to their admission card a summary of the proxy votes, which details the voting instructions for business items on the appointment documents in your favor. By completing the voting paper, when instructed to vote in a particular manner, you are deemed to have 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 -- each individual 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 each of the resolutions to indicate how you wish to cast your votes. Please ensure right at the very bottom of your voting thing, there is a place to put your name printed and to sign the voting paper to make it valid. When you have finished filling in your voting paper, please lodge it in the ballot boxes that are moving amongst you now to ensure your votes are counted. If you require any help, please raise your hand. I remind those online, the polls will close soon. So if you're intending to vote, please do so now. If anyone needs any more time to complete their voting paper, please raise your hand. If you've got one that has not yet been collected, wave it fetchingly in the air and somebody will come and collect that and you can pop it in the box. Last gasp, does anyone have a ballot paper that has not yet been collected or silent or done? Anyone online, if you're going to vote, please do so now. It's another 5 seconds, and we'll be closing the polls. All collected, Maria. One to go. Then if that's the case, I will now declare the poll closed. Maria will report the results of the polls to me later today, and those results will be announced also later today to the ASX and posted on the company's website and be available to everyone later this afternoon. On behalf of the Board, I'd like to thank you for participating in today's AGM, whether in person here or online. I hope that you and your families stay safe and well in the weeks and months ahead. Enjoy the festive period in the summer. And we thank you again very much for your support of the company. And with that, ladies and gentlemen, I will declare the meeting closed at 12:20 p.m. Thank you very much indeed.