Spire Healthcare Group plc (SPI) Earnings Call Transcript & Summary

Good morning. I'm Angus Prentice, Director of Investor Relations. Welcome to our Capital Markets event. This is a hybrid event once again, and I'd therefore like to extend a warm welcome to those of you joining on Zoom. We will have 2 Q&A sessions during the event. [Operator Instructions] I'll now hand you over to Justin.

Good morning, everybody. How are we? Good. I apologize about my voice. This is what happens when you run a triathlon with laryngitis. So words of the wise, not a good idea. So great to have you here. Thank you to the many attendees online as well. I am Justin Ash. I'm Chief Executive. And I'm joined here today by the Spire Executive Team and a lot of Spire colleagues. We've got 2 key objectives for our presentation to you this morning. Firstly, we're going to take a deep dive into our hospital business, demonstrating how we're going to improve margins to reach our medium-term objective of at least 21% and 13% EBITDA and EBIT, respectively, and secondly, to provide you with an introduction to Spire Occupational Health and Vita Health Group. So just taking a very quick look back. During the past 5 years, we have transformed the business of Spire. We navigated the pandemic. We have significantly improved quality, delivered growth, invested in our people, reduced debt and driven shareholder return. For those of you who may not be familiar with them to remind you of our recent full year results, we delivered a strong financial performance in 2023, recording our highest level of EBITDA and showing strong growth on PBT and ROCE. We grew EBITDA margin for the hospital business and the Board recommended a final dividend of 2.1p, up from 0.5p per share in the prior year. Looking forward to the next 3 years, 2024 to 2026. We are forecasting further strong financial performance, building on 2023. We expect revenue growth of at least 5% per annum, at least GBP 60 million in cost savings per annum by 2026 and further improvement in margins to 21% by the end of 2026. We anticipate the ROCE will therefore increase to more than 10% from the 7.5% we delivered in 2023. And importantly, by then, we will have transformed the group's business capability over the period. Here's a reminder of our strategy, which sits behind everything that we do and we have planned. We delivered strong financial performance by helping to meet Britain's healthcare needs. And we do that by running great hospitals, providing high-quality care, supporting our workforce and developing new services. We also do this at scale, now providing care for more than 1 million patients a year, while maintaining our focus on strong quality and patient safety. And this strategy is aligned with our medium-term financial targets that we set out at our Capital Markets Day in 2022, and we're making positive progress towards all of them. Hospital growth has been above 5%. We're within our financial framework and making progress in hospital margin, ROCE and new service mix. Our focus this morning, as I've mentioned, will be on 2 elements of this framework, how we are delivering the next phase of our savings program, targeted to provide a net benefit of at least GBP 60 million per annum by 2026, thereby driving the group's hospital margin and on our new services. So today's agenda is based on that focus. You may be relieved having heard me that I won't saying too much today. Rather Harbant, Cathy, John, Rachel and Peter will provide a deep dive into the hospitals business as regards how we deliver and support margin improvement, followed by a Q&A session. We'll then have a 15-minute break, which you can use to chat to us. And then Caroline Gardiner, MD of Spire Occupational Health, will give an overview of our Occupational Health business; and Derrick Farrell, CEO of Vita Healthcare Group, will follow with an introduction to that business. We'll then have another Q&A, and then there will be a buffet lunch for those of you here in person, and we hope that you'll stay for that and take another opportunity to chat to us and ask questions. So without further ado, I'm delighted to hand over to Harbant, who will begin our deep dive hospital session. Thank you. Harbant?

Thank you, Justin. And good morning to everybody. It's my pleasure to be covering this next session, where I should be talking about financial performance. I'm going to start by giving a financial overview of the last 5 years. As Justin said, we have transformed the business, delivering strong growth and significant savings and improved margin in a high inflation environment. We will continue to build on this success. As we communicated at the year-end results presentation, we are already moving forward at pace with the next phase of our savings program, which will deliver at least GBP 60 million of net benefit per annum by 2026. We are committed and well placed to deliver on our medium-term financial targets, namely an EBITDA margin of more than 21% for the hospital group, which translates to an EBIT margin of greater than 13% and a group ROCE in excess of 10% by the end of 2026. I will show how the future savings will drive the group towards this outcome and deliver higher shareholder returns. As a reminder, we delivered strong financial performance in 2023. This outcome has been built on the progress we have made over the past 5 years. As you can see, every measure is getting better. Revenue has grown from GBP 931 million in 2018 to close to GBP 1.4 billion in 2023, resulting in a CAGR of 6.1% and ahead of our medium-term target of 5%. We have grown EBITDA by 26% to GBP 234 million, but the growth in EBIT has been even larger at close to 35% and is the result of our disciplined approach towards CapEx and depreciation costs. EBITDA margin for the group fell from 19.9% for full year 2018 to 16.1% for full year 2021 due to a number of factors. This included decisions we took to invest in quality and in our workforce as well as significant costs associated with the pandemic. We have delivered EBITDA margin growth over the past 2 years. And as we mentioned at the year-end results presentation, GBP 6 million of IT investment costs were treated as OpEx as opposed to CapEx, diluting the 2023 margin by approximately 0.5%. Given that more IT investment in the future will also be accounted for as OpEx, it is becoming increasingly important to look at EBIT margin. Turning to EBIT. We have seen a strong improvement in margin, reaching 9.6% in 2023 and getting close to the outcome recorded in 2018 and 2019. We are committed to growing the business, but our ultimate objective is to deliver improved shareholder return, and we are particularly pleased by the strong conversion to profit before tax, which last year was ahead of consensus and almost double that for 2018. Our medium-term objective of growing EBITDA margin to more than 21% is relevant to the group's hospital business, which primarily excludes Vita. Financial information on Vita, including its margin, will be shared by Derrick in a later session. The future benefits from our savings program are wholly linked to our hospital business. Before I take you through the financial impact of these savings, I will quickly remind you of the EBITDA outturn for the hospital business. We have delivered significant growth in EBITDA and improved margin by 0.6% to 17.6% in the last financial year. Again, this outcome was diluted by the IT investments I have just mentioned, plus inflation, particularly in the case of payroll. Underpinning this overall outcome was the fact that we delivered on our promise in both 2022 and 2023 to identify and secure savings of at least GBP 15 million in each of these 2 years. Turning to the projected savings of GBP 60 million. Let's look at it in the context of our total costs. This is the first time we have shared this view of our cost base, where costs have been allocated against the relevant underlying service or activity. The vast majority of our costs relate to in-hospital care and include areas such as clinical and direct costs. As you can see, the proportion of total costs relating to this area has fallen as our establishment model support safety and efficiency, falling from 68% in 2022 to 66% in 2023. The remaining costs cover a number of different areas and are effectively non-direct hospital care costs. These amounted to GBP 317 million in 2022 and GBP 381 million in 2023. In particular, these areas include admin for bookings and payments as well as for other business processes. These costs are variable and linked to increases in volume, and they can be strongly influenced by inflationary pressure on payroll. As a consequence, it is these areas which will now give rise to the bulk of the net savings -- phase of savings. Taking these savings of at least GBP 60 million per annum by 2026 against the GBP 381 million of costs incurred in 2023, this will result in a reduction of close to 16%. Before I set out the financial impact of the additional GBP 60 million per annum of savings, I will broadly summarize the underlying activities into 4 work streams. John will give more information a little later in this presentation. Approximately 50% of the additional savings will be achieved from automation and digitalization of admin processes. And so going forward, it will become the biggest contributor. The second area, centralization will build on the work over the past 2 years to consolidate local admin functions. This will generate approximately 10% of the overall savings. One best way is non-IT related and will give rise to approximately 20% of the overall savings and is linked to procurement and operational processes. Lastly, we have standardization through tactical deployment of robotic process automation. This will generate approximately 20% of the total savings. As John will show, this all drives much improved efficiency per FTE and reduces the burden of repetitive tasks on our colleagues, freeing up time for value-add activities. Let's now turn to the financial impact of the additional savings, starting with the EBITDA margin for hospital business. Starting with 2022 and 2023, we have set out the underlying savings contribution to EBITDA margin. The overall EBITDA margin improvement for these years was less than the benefit from the savings due to various factors. This includes inflation and as outlined earlier, the fact that certain IT investment is now treated as OpEx. You will also note that the proportion of savings driven by digitalization was low over these 2 years. Here, I have set out a pro forma view of the EBITDA margin outcome as a consequence of the additional savings from 2024 to 2026 using 2023 full year as a baseline and holding all other things equal. As communicated in March, we anticipate at least GBP 15 million of savings in 2024. And for the purpose of this pro forma view, we have straight lined the rest, which takes us to a total of GBP 60 million per annum by 2026. However, holding all things equal, as you can see from the dotted blue line, the cumulative 3-year impact from the additional savings is an uplift in excess of 4.5 percentage points to EBITDA margin from today's base of 17.6%. This activity is therefore a key part of our plan to deliver an EBITDA margin of greater than 21%. Actual margin, however, will be dependent upon other factors, including mix and inflation. Here, I've illustrated the impact of additional savings to EBITDA, EBIT, profit before tax and for ROCE over the next 3 years, again by using 2023 actuals as a baseline. We reported an actual EBITDA margin of 17.6% for the hospital group in 2023. And as I've just said, the cumulative impact of the additional savings over the next 3 years would improve this by more than 4.5 percentage points. Turning to EBIT. We anticipate strong flow-through. In 2023, for the hospital business, we reported an EBIT margin of 9.9%. The cumulative impact of additional savings over the next 3 years is an uplift of more than 4 percentage points to EBIT margin. Similarly, we anticipate a strong benefit to profit before tax margin. This was 2.9% for 2023 and the cumulative impact of the new savings over a 3-year period is an uplift close to 4 percentage points. This high level of flow-through to EBIT and profit before tax will be delivered through us continuing to tightly manage CapEx investment and in turn, generate strong growth in cash and in ROCE. Whilst this disciplined and balanced approach will lead to strong improvement in these financial KPIs, I will note that, of course, the actual financial outcome will also be dependent upon other factors. To aid external understanding of how other factors impact our P&L, we are sharing for the first time some specific examples. Taking self-pay, note our improvements in ARPC result in a stronger benefit to margin versus volume growth. Our strategy in 2023, where we focus on ARPC as opposed to volume delivered a net improvement to margin of 1.4%. As for NHS, an increase in ARPC results in a much greater benefit to EBITDA margin than volume growth. Next is an example of P&L sensitivity as a consequence of mix. In the case of self-pay, a switch out of ophthalmology and into orthopedics, results in a significant benefit to margin. Conversely, a switch in volume from self-pay and into NHS for the same procedure results in a large fall in margin. Of course, in addition to price and mix, there are numerous other factors, which will also impact margin up or down. A key example in 2023 was cost inflation and taking payroll costs alone, each 1% in payroll amounted to a dilution in EBITDA margin of 0.3%. However, as you'll see from the following sessions, these factors are well understood, and we continue to manage them effectively. So before I hand over to Cathy, I'll finish by saying the group has achieved a great deal over the past 5 years. We have a track record of hitting our savings targets. Whilst we have grown margin, we know there is more to do. As we move further into 2024, we do so with real momentum. We have a clear plan, which is already being rolled out. We're excited by this next phase and are confident that it will play a key part in us meeting our medium-term financial objectives, which are geared towards significant improvement in shareholder return. So thank you. I'm now going to hand you over to Cathy.

Thank you, Harbant. At Spire Healthcare, we have a relentless focus on quality, and quality is integrated into every aspect of our business. Over the next few minutes, I will talk to you about some of the processes we have in place to ensure that we deliver safe care and the assurance and governance systems that we have to verify these are working and external assurance that our care is of high quality. Delivering safe care in well-run, high-quality hospitals is a fundamental underpin to our ability to deliver financial results. John will show you later how getting care right as evidenced by patient, colleague and consultant feedback results in good commercial outcomes. For this reason, quality is an integral part of every decision we make. We work as an integrated team with clinical input into commercial and operational meetings and vice versa. All business decisions at central and local level have clinical input and quality at their heart. The savings programs that you're hearing about today have all been reviewed by relevant clinical experts and none proceed unless we are satisfied that they either don't impact or have a beneficial effect on quality. Safe care means delivering care in the appropriate place with the appropriate people providing that care to the right patients and with processes in place to provide safe care on the rare occasions when complications occur. This is reflected in our investment in our sites and equipment, which we've discussed in previous presentations. The level of care we can provide in each hospital is clearly defined by specialty, complexity of procedures and complexity of patients. We have evidence-based staffing tools, which enable teams to check every day in every department, in every hospital, where we have the right staff available to care for patients at all times. Our resident doctors are an integral and valued part of our teams, and we check every day they're sufficiently rested and substitute them if they are not. Every patient is robustly assessed prior to surgery to ensure that they are suitable for the level of care we provide. Our comprehensive preoperative assessment process has been praised by the CQC, and Spire won an industry award for the quality of this electronic pre-op assessment process in 2022. Our teams escalate the consultant and senior hospital colleagues if a patient deteriorates. And on the rare occasions, a patient needs transferring for additional care, they are trained to provide ongoing safe care before transfer. We're currently introducing our version of Martha's rule called Ask to Escalate across our hospitals. Having processes in place is not enough. We need to ensure those processes work for every patient, every day. I've shown here the breadth of ways in which we seek to provide assurance from ward to board with examples of some of the metrics that we use. We are curious. We seek information and ask colleagues to report when they're concerned, when things don't go well, but also when colleagues have gone above and beyond with excellence reporting. We have robust oversight of consultant practice and conduct a comprehensive patient safety and quality review at all sites annually. We actively seek the views of our patients with feedback surveys, and each hospital has a patient engagement forum. We've well-established Freedom to Speak Up processes and know from the data published by the National Guardians office that our level of colleague engagement with this process is good. We use data to inquire and learn. This includes reviewing the data we submit to external bodies, such as PHIN, Procedure Registries and PROMs. We also use our data extensively for internal assurance with analysis of consultant intervention ratios, a standard set of quality KPIs and regular review of key patient safety metrics by our chief nurse, Professor Lisa Grant, who's here today, with hospitals as part of our excellence in care delivery reviews. Last year, we piloted the new NHS Patient Safety Instance Response Framework and have rolled this out across all our hospitals this month. We've chosen to implement this for all our patients as we believe it is a much more meaningful and holistic way of investigating and learning than the current frameworks. The feedback from our teams is that the new processes give them faster, more meaningful learning and therefore, more focused and impactful actions. And finally, we always act on the things we learn using quality improvement methodology. We've invested significantly in colleague training and at the end of 2023, 94% of our colleagues have received some level of QI training. We received an industry award last year for our QI program, reducing hyponatremia in patients. We don't just rely on our own assessment that our care is safe and of good quality. Spire is independently inspected by our regulators, with 98% of our sites rated good or outstanding by the CQC or our equivalent regulators in Scotland and Wales. Last year, 84% of patients rated their care as very good and 96% as good or very good. Although the rating scale is slightly different, 83% of consultants rated the care we provided to patients as very good or excellent. At Spire, we live our purpose, to provide outstanding personalized care every day. We can evidence that our integrated approach with quality at the center of everything we do translates into shareholder value. And I'll hand over to John.

Thank you, Cathy. Good morning, everyone. Over the next 10 minutes or so, I'm going to give you further insight into how we run the business, maximizing performance and having operational control. We'll also look how we drive capacity and utilization and have significant room for further growth. And also our plans for margin expansion to more than 21% by the end of 2026 as we modernize the business. As Harbant explained a few minutes ago, our GBP 60 million per annum savings target is delivered across 4 main programs of activity: automation and digitization; centralization, leveraging hub ways of working; being a better us, doing things one best way; and standardization using robotic technology to reduce manual effort. Later in my section, I will share with you some example projects in each of these areas that we are delivering this account for circa GBP 25 million of the GBP 60 million per annum target. So to start, I want to share with you some insight into how we run the business. As Cathy outlined, patient safety is at the heart of everything we do. Performance of the business is driven by the combination of delivering great experience for our patients, our consultants and our teams. We use key performance indicators to track and ensure that the performance of our hospitals is balanced. We're seeing strong results from this approach. Where we get the conditions right for all 3 of our key stakeholders, the financial performance of the business follows, and we see improved profit returns. This approach has driven a significant improvement in profitability and growth of all our hospitals over the last 4 years. We're reducing the variability in our performance. In 2018, '19, we hit our targets with 23 of our hospitals in profit growth. By 2023, all 38 were in profit growth. At the heart of our operation is the aim of leveraging the power of the group and doing things one best way. Things like procurement, marketing and payroll are best done one way and centrally to drive consistency and value for money, whereas the power of local, that magic ingredient, our hospital directors and their teams, are focused on the things that make a difference locally, leading our teams, creating a great place to work and building relationships with consultants, commissioners and the local NHS teams. As a multisite business, we've adopted a retail approach to tracking performance and making trading decisions. Through a combination of daily reports and weekly site-led forecasts of activity and cost, we hold a weekly trading meeting to review all the levers from digital traffic to conversion, bookings, workforce planning and costs as well as the performance of key support functions such as IT. This approach drives consistency and gives clear guidance to maximize performance. Now key to our operational planning is the management of capacity and its utilization. Physical capacity is clearly the output of a number of key factors, the theater space, beds, outpatient capacity, imaging and the mix and acuity of patients, for example. Managing and coordinating this against the availability of the right surgeon, [ anesthetist ] and theater team is a key part of our daily job. As you can see from the chart on the left of the slide, whilst we've seen significant growth in activity and utilization over the last 3 years, we still have 30 sites with more than 20% unused capacity. At 9 sites, we are now targeting the breach level of 80% utilization, and we're therefore targeting capital investment to either add space and capacity or increase it by reformatting existing facilities or repurposing administrative space to clinical use. Our focus is targeting investment to grow our physical capacity where we are hitting more than our 80% utilization target and making more of the space we have by doing the right case in the right place, moving work out of our theater suites to ambulatory or daycare spaces to free up theater suites for more complex work. Our savings program that I'll explain in more detail shortly, will also give us the opportunity to recommission clinical space where we can move admin off site, for example, or reduce the storage and back office space. Overall, we have significant space to grow. Our performance will not be limited by a lack of space. Turning now to savings. I'm going to talk you through some examples to demonstrate that our plans are robust. We have a strong track record. Over the last 2 years, we have successfully removed more than GBP 30 million per annum of cost from our business and driven the efficiency of our teams and ways of working. As you can see in the first chart on the left, we have seen a significant improvement in our revenue per FTE. In the second chart, improvement in the clinical effectiveness of our teams, seen with the activity per clinical FTE back at pre-pandemic levels with higher volume of activity and acuity. The third chart shows that our nonclinical or admin FTE per activity is also improving, but represents the most significant opportunity to drive further improvement in returns, more on that to come. Additional clinical activity in today's world, as Harbant mentioned, drives a significant amount of additional manual admin effort and therefore, cost. For example, the average time to set up a new inpatient booking today is circa 45 minutes. Therefore, changes to planned activities, such as cancellations, bring with them significant additional effort and cost as we cancel, rebook and book replacements activity. During 2021, as Kathy mentioned, we developed new tools based on safe staffing levels from the NHS model hospital program adjusted for the private environment that allow us to consistently plan and manage our workforce establishment safely by department. The workforce planning tool alongside our daily acuity tool that our teams use 3 times a day to check current and next day staffing against patient mix and acuity have supported safe staffing driven by approved health care standards that are now consistent across departments and from hospital to hospital. In the last 2 years, these tools have supported us to avoid an additional GBP 30 million of clinical staffing costs compared to that we would have achieved through our previous methodology of managing it by a percentage of ratio -- percentage ratio to turnover. Between 2021 and 2023, we have delivered 1.3 million more patient activities, with 1,135 fewer FTE than our previous ways of working would have called for. This has significantly helped us to reduce the impact of clinical wage rate inflation and these benefits continue into 2024 and beyond. As Rachel will explain later, this alongside our new recruitment capability and the work we've done on reward have reduced employee turnover and significantly reduced agency costs. In the first year of our savings program, the majority of the savings came from the introduction of these workforce planning and scheduling tools, which I've just shown you. Last year, the balance shifted to savings driven by hub ways of working, including the transformation of our pathology business, better buying and procurement and one best way of working. As well as targeted savings activity and programs have changed, we're also seeing significant opportunity from being a better us. Our group procurement approach, for example, avoided over GBP 3 million of cost for inpatient catering, mitigating food inflation and holding cost per meal flat over 4 years. Our group procurement approach has allowed us to consolidate and tender things, such as printing and office supplies, saving us more than GBP 1 million per annum from last year onwards. In supply chain, we've seen significant savings from better buying of drugs with GBP 7 million of savings in 2023, for example, from generic drugs and parallel importing. Leveraging the scale of the group has also improved returns on our capital spend with a group coordinated buying avoiding more than GBP 5 million of costs in the rollout of our upgraded MRI and CTs across a 5-year deal. The next stage on our journey is to bolster this self-health approach with a managed business modernization that will see us invest in the digitalization to remove paper and repetitive actions and costs, not via a big bang IT-led transformation program, but via a series of planned and targeted changes to the way we work. Our approach is centered on ensuring we rightsized the investment and use integration layer technology to enable us to pick a best-fit solution for our business, avoiding the purchase of full-blown costly IT platforms and balancing the ability to purchase off-the-shelf solutions with business in-house developed solutions if they better fit our needs. Our modernization will deliver savings, better experience for our patients, teams and consultants as well as an advanced data capability to make better decisions and build long-term relationships with our patients and partners. In my experience, one of the biggest failings of programs such as these is that they lose their way. And if not tightly managed, can easily see costs increase and benefits not be delivered. You have to invest in new systems ahead of securing benefits. 2024 is that year of investment with savings ramping up in '25 and '26. To protect ourselves from this risk, we are investing in robotic process automation activity to bring forward benefits in the short term, whilst we deliver the longer-term solutions and upgrade our wider systems platforms. This small-scale CapEx investment allows us to harness the power of automation quickly with repetitive processes that involve manual effort to cut and paste from system to system or reenter data from system to system, being automated via simple coding and the use of bots. This supports the ability to secure in 2024 savings whilst wider development takes place. We can see this have been a benefit in many areas of our business that have manual processes today, and we will deliver more than GBP 10 million savings a year by 2026. Let me show you an example of this. Today, we have a process to open new clinics in our systems for patients to be booked into. As you can see on the left, there are 52 steps in this process and it's manually completed, taking about 15 minutes per clinic. Each consulting room in our business is currently planned in this way manually for 3 sessions a day, every day of the year, a significant workload. On the left, you can see an animation of the current process and the number of steps and screens visited. On the right is the new process. It can do the same task without any manual intervention in under 1 minute, less than the time it's taken me to explain that slide. What was a 12-week admin process across all our hospitals can now be completed in one overnight run with our team focusing on exceptions reported by the bot. The second example I want to share with you is one of the ways in which we can use hub ways of working to provide services and specialist skills input across the hub using a team that sit in one location and therefore, not required to be repeated at each site. For example, administration hubs. Having successfully completed a pilot in Essex, we're now rolling out the consolidation of admin functions resulting in significant efficiencies. We expect this to deliver savings of at least GBP 6 million per annum from 2025. Bringing these teams together has improved patient response, accuracy and service with a reduction in average handling times and improved core capture rates. As we do this, we can also repurpose space and increase clinical capacity by reallocating it to clinical use rather than admin and gaining economies of scale and revenue. Our dedicated hub call centers also support a more efficient use of team FTE to offer extended opening hours, optimized holiday cover, more flexible shift patterns and remove single points of failure. They will also reduce the cost of digitalization as we roll out new systems to fewer locations. Another area where we see significant savings of at least GBP 3 million per annum is in our purchase to pay or P2P processes. Today in Spire, we manually order, receive, invoice match and pay over 35,000 invoices a month. This is a significant part of the 77.2 million sheets of A4 paper we used last year. P2P is a multiphase project to drive a major improvement in our admin processes across hospitals and our central accounts payable team. Through the introduction of automated reordering and the use of a centrally controlled catalog, directing procurement to preferred suppliers and cheapest available product. As in most modern businesses from June, Phase 1 of this program will automate invoice receipting for more than 50% of our hospital's invoices. It will also give us the ability to service increased invoice volumes without increasing the size of our team. And it will significantly reduce the clinical time spent money to recording and uploading information into our stock systems and NHS registries as it also will improve patient safety and be able to identify and notify us of any product recalls immediately. The final example I wanted to share drives at least GBP 6 million of savings per annum and its patient records. Today, in Spire, we have 7.5 million physical paper patient records, resulting in significant cost to produce, house and transport them. A move to a digital record for our operations will improve the patient booking experience as digital patient records provide secure, reliable and instantly available medical records. We've decided to develop this functionality in-house using our HMS or hospital management system to avoid the cost and complexity of major EPR systems, such as ethical [ CNER ]. We've worked with our clinicians and consultants to understand their needs, and we will deliver secure, faster, more searchable access to historic medical records from any location. We will, this year, cease to transport historic records and start scanning them using AI technology into that new electronic record. This will then be sent electronically and available to all our teams and consultants via our HMS system. The record of care during the episode of care, while the patient is in hospital, will remain on paper for now with the file being scanned and then destroyed at the end of episode of care with no need to maintain paper records. So that's 4 examples of the changes that we're making as we modernize and digitalize our business. And as I said, these 4 examples account for about GBP 25 million of the GBP 60 million per annum savings that we're planning. They all form part of our in-year plan. Beyond that, we have clearly identified, quantified and planned activity that's ready to go and will follow in '25 and '26 to support and deliver our EBIT margin target of more than 21% by the end of '26. As I mentioned earlier, we are investing in new systems ahead of securing benefits. 2024 is that year of investment with savings significantly ramping up in '25 and '26. So in summary, we have strong operational controls and management teams that are leveraging hub ways of working. We have significant capacity to grow, and we will maximize utilization and mix. We will not run out of space. We have a proven ability to deliver savings programs and a balanced 3-year program of activity that will deliver more than GBP 60 million of savings per annum by '26. And the hospital EBIT margin of at least 21% by the end of 2026. Thank you. I'll now hand you over to Rachel, our Group People Director, to explore more about how we build great teams and support our people. Thank you.

Thank you, John, and good morning, everyone. And hopefully, you can just about see me over the top of the letter. In this section, I'm going to give you an update on our workforce, the progress we have made and how this is reflected in the positive movement in some of our key people indicators and supports our ability to deliver on our people plans, our future plans. The numbers in this section relate to the Spire Hospital business. Our hospital business has 15,000 people, excluding self-employed consultants. This is made up of a combination of predominantly permanent employees, complemented by our [ bank ] colleagues who are typically regular temporary workers who work flexible shifts. Health care is a people business. And our workforce is critical to delivering safe, high-quality care. It isn't a surprise then that people-related costs make up around 47% of our cost base. So it is important that we have the most efficient workforce model with the optimum resource mix. We employ an 80:20 model, meaning that we typically aim for an 80% permanent, 20% temporary mix. Temporary workers include bank workers and agency workers. As part of our modernization plan, we'll be introducing technology solutions to make it easier to book our bank colleagues over more expensive agency workers. This model may flex depending on specific hospital requirements, for example, in areas of higher acuity work. But it gives us the flexibility to resource up and down depending on activity levels, an important factor in managing our costs. Pay and reward remain important elements of our people strategy given inflation and the demand for health care workers. In the last 2 years, we have given pay reviews of 5% or more with increasing -- increases benefiting those at the lower end of our pay ranges who have seen increases of around 16% in this period in addition to targeting roles, which have had hard-to-find specialist skills. We are proud of the capability we are building across Spire and can see that our investment in people is paying off. In April 2023, we invested in bringing our recruitment service back in-house from an outsourced provider and creating a new internal function. Attracting and retaining great people at Spire is a core requirement for us and having recruitment teams who are close to our brand and our culture, we felt was vital. As a result of this change, along with investments in recruitment technology, we have seen performance improve in all areas with record numbers of hires made year-on-year and improvements in our KPIs with both time to hire and cost per high reducing. In addition, during 2023, we delivered savings of over GBP 0.5 million in the cost of our recruitment service in the context of overall service improvement. John has already mentioned our clinical workforce model, and this is now well embedded in all our hospitals. We are passionate about growing our own talent, whether it is new hospital directors or new talent of healthcare. We're proud to continue investing in our nurse apprenticeship scheme, ensuring we're developing our clinical talent future. As Justin said at our results presentation, in 2024, we will again invest in pay, implementing our new reward framework across hospitals. This is an important fundamental, a solid framework that ensures that we can offer competitive pay and rewards so that we can continue to retain and attract people with the skills and experience we need to be able to provide outstanding personalized care. Finally, we're proud -- particularly proud of our strong culture, our Spire purpose, and this is reflected in the pride our people feel about working at Spire. The evidence is clear that organizations that have an engaged and empowered workforce perform better because engage people go the extra mile and we know that this discretionary effort drives outstanding patient care. And this is why recognizing our people and celebrating their success is a fundamental part of our culture at Spire. Here, you'll see a selection of pictures that tell that story and nurse apprentices, including our new apprentice at Nottingham, our festival of learning with our new 2023 cohort and our long service lunch, where we got together to celebrate those colleagues who achieved 21 years service in 2023. Finally, you will see the excitement of our team member on her first day as a newly qualified registered nurse at Spire Manchester. As I said at the beginning, I would show you how we're doing against some key indicators. Engagement of our people remains consistently high, up 1% year-on-year with participation in our annual survey up 9% to 86% in 2023. We have seen lever rates for our permanent employees, steadily come down during the course of 2023. And at the same time, we have consistently seen improved retention of our permanent team members. After the higher levels of absence seen by all employers during and after the pandemic, we're now seeing short-term absence rates reduce and stabilize. We'll continue to focus our efforts in this area both to support the health and well-being of our people, but also ensuring we manage our policies and procedures well. I talked earlier about the success of our in-sourcing of recruitment. And the second chart here illustrates the improvements we have delivered with a consistent month-on-month increase in the number of permanent offers made. We continue to see this trend in 2024 with a number of vacant roles reducing. The improvement in our recruitment service, along with negotiating rates and managing use appropriately is contributing to our reduction in agency costs. The chart here shows the year-on-year comparison between 2023 and 2022. And I am pleased to confirm that in 2024, we're continuing to see a continuing trend of year-on-year improvements. So in summary, we're making good progress on workforce measures. This year, there are 3 priorities, which are a continuation of our work to date. We'll implement our reward framework across our hospitals. As I've said, this is an important foundation ensuring we can continue to attract and retain people with the right skills and experience in this competitive environment. We know that getting this right will just drive discretionary effort and help deliver our results. John has talked about the modernization program and managing the process of people change is key for us this year. And finally, in order to ensure we manage workforce costs such as agency usage, ensuring that we continue to create an environment where our people engaged is key and will ensure we have a strong foundation on which to deliver our future plans. I will now hand over to Peter. Thank you.

Thank you, Rachel. Rachel and her team have done a fantastic job over the last 12 months. Morning all. We're on the last strikes of this section. So we're going to focus now on the business deep dive. We're going to have a look at the volume, mix and also margin. We continue to have a strong market underpin with the size of the NHS waiting list, the growth of the PMI lives covered, which I've talked about before, and the growing awareness and the use of the private sector. As we look to deliver our 5% top line CAGR and 21% EBITDA margin targets, we're focused on developing our core commercial capabilities to support the business. As you know, there are 3 key payors with the emphasis on private, our focus is on the optimization of these payors and the mix of business and margin through our hospital business in line with our clinical capability. I've listed out a number of the commercial capabilities on this slide that we've developed to attract and convert business and we'll focus today's presentation on 3 I've highlighted. Firstly, our marketing strategy designed to grow brand awareness and consideration while attracting new patients. Secondly, our portfolio strategy and how we optimize volumes and margin. And finally, a brief update on our self-pay pricing engine. It's safe to say, we're not standing still in the other areas. Aligned to what John has already talked about, we're also excited about the plans ahead to transform our website, our customer relationship management capability, underpinning the improvements in data management and also the use of data across the whole business. So let's first turn to our marketing strategy and the role this has in attracting patients. You may wonder why we spend money on TV advertising. TV continues to play an effective role in an integrated marketing strategy as it acts as a multiplier. This is a modest GBP 2.5 million annual investment, which is highly targeted. As we grow awareness and consideration, the other digital activation elements of the marketing funnel work harder, delivering a better return on investment. The combination is a well-established winning strategy to develop a long-term sustainable growth in B2C businesses efficiently. As a key role to play, therefore, in generating self-pay inquiries as you'd expect, but it also has an important role in patient choice for those choosing private medical insurance. And as patients are increasingly encouraged to use the NHS app, to select which provider they would like to have their treatment with, we believe that brand awareness and consideration will also play a part here too. And finally, it has an important role to play in the excellent work, as I've already said, that Rachel and her team have been doing in attracting and retaining colleagues. People want to work for a company, they know and trust. As you can see, we've made good progress in building awareness and consideration amongst our target audience around our existing hospital facilities. We've closed the gap in the best-known hospital brand in our market, who also has a gym business. In a relatively short time frame and with a modest levels of investment relative to our size, I expect to see further improvement this year. Moving down that funnel, we then attract through a largely digital strategy. Door drops and press advertising have not completely had their day, but it's not where we put our focus any longer as they're less -- they're not as reliable and they're less efficient compared to digital. You can see on the graph that the impact of TV on volume of branded traffic to the website. So this is people searching for Spire Healthcare on Google, which increased by 20% when we're on air. This delivers a positive IRR in itself, a strong conversion even before we add back the benefit on other channels and of course, again, our people strategy. We're also able to measure the effectiveness of our integrated strategy down to an individual hospital level and track how we compare to our peers in terms of the clicks and return on investment. This is an independent valuation done by Google, looking at our relative digital efficiency, which shows the strategy is working, delivering a superior return on investment and reach through our investment in an intergraded strategy. As ever, there's always more to do, and we're already testing enhancement in our PPC strategy, which delivered really good improvements in response and conversion in quarter 1. And we have plans to also materially improve the patient digital journey online this year. Another key focus is the optimization of volume of activity we're able to manage through the hospital estate. Gross profit margins are a useful guide to the specialty and payor mix. It's important to state that all activity we do contributes to positive gross margin. However, the value of the contribution clearly varies depending on the payor and the type of procedure. In a perfect world, you would optimize your capacity to focus on the highest margin activity, self-pay of orthopedics as demonstrated in the table, but clearly, that doesn't reflect the complex nature of our business. We, therefore, look to provide guidance and tools to optimize capacity through a combination of payor mix, specialty mix, bed capacity, consultant availability, et cetera. at a hospital level. It is multidimensional chess. But as John has already said, we continue to drive capacity, freeing up more space to utilize. Finally, I want to briefly update you on the progress we're making on our self-pay pricing engine. As you'd expect, we also track prices across all our markets. As you can see here, we optimize 99% of our prices in 2023 with multiple changes across the year. This is a key strength of the engine and enables us to respond quickly to changes in inflation and competitor prices. As you can see, a number of the competitors took a less proactive approach to pricing last year. We believe our pricing engine reminds a strategic strength giving us detailed information, self-pay price, cost margin down to an individual hospital, procedure and consultant level for admitted care. We've recently expanded the pricing engine to also include outpatients, hospital fees, and increasing the number of prices we now essentially manage from GBP 22,000 to GBP 200,000. In addition to applying our pricing tools to outpatient, we're collecting new insights and opening up a new field of price optimization as we look at the full end-to-end pathway of patient while also starting the ultimate goal of looking for lifetime value. And in a practical level, it also gives access to up-to-date pricing for our teams, managing the sales centers, live chat, delivering a better patient experience when people want to find out about price. The most exciting addition, however, is the implementation of PROS AI for inpatient daycase self-pay hospital fees. It's a special neural network designed to identify and assess drivers of price elasticity. Each transaction becomes its own segment and PROS AI will help us by recommending price optimization based on a historical sales performance in a dynamic way. It is seamlessly integrated with the pricing engine, works on our entire automated care price catalog and to be clear, though we maintain central control and whether to accept and amend or refuse the pricing recommendations, the robot is not yet in control. Our ambition is to extend the use of AI to outpatient prices, and we expect to have an immediate positive impact on conversion and margin optimization in the coming months. As we look forward to the key drivers this year -- deliverables this year, therefore, we're focused on 3 exciting areas. Firstly, we plan to transform our website, improving the patient journey by developing a better patient experience to help people navigate their health care and delivering long-term relationships. Secondly, complementing this, we're also looking to enhance our sales management and improvement in our CRM skills and resilience. And finally, we're also looking at our data strategy enhancing not just the management, but also the application of data across the whole organization. So I hope that I've given you more color on both our capability today and how we deploy this to attract patients and manage the mix of margin, while also highlighting the exciting new capabilities coming online aimed at delivering our strategy to drive both revenue, margin and growth. I'm now going to hand back to Justin, who's going to conclude ahead of Q&A.

Thank you, Peter, and thank you to the whole management team for those presentations, which I hope have given you insight and confidence in our go-forward plans. So I'm just going to do a brief recap on what we've shared with you before we go to Q&A. Cost savings will be the key driver for margin improvement with a target of at least GBP 60 million per annum by the end of 2026, delivered through transformation projects. This will be seen in particular, as improved efficient per FTE, especially in administrative areas, where repetitive tasks will be replaced with more value-adding activities. But this core program is supported by activity across the group's operations. To deliver successfully, people will be key. Key KPIs here include we need our colleagues to continue to be highly engaged in pursuit of our strategy, care and targets despite the significant changes that we will be leading. We are committed to limiting staff turnover, and this is partly about enhancing our competitiveness in terms of reward. Agency costs need to be maintained at low levels as a result of success in all these other KPIs and close management of this resource. Ensuring high quality and the safety of our patients is critical, and we cannot succeed without maintaining and enhancing our standards. To that end, we must maintain our regulatory ratings while sustaining or improving patient and consultant feedback. And we aim to be seen as leading on patient safety initiatives such as PSIRF. The commercial team has a critical role in helping to drive the top line and improve margins. We need to be visible as a brand. And at the forefront of patient choice through investment in effective marketing to grow, optimization is critical for margin delivery, and it's an area that's at the core of our operations. And we have sophisticated tools that are responsive to pricing, to balance profitability and demand stimulation. So margin improvement is a whole business endeavor. And this morning, I have been proud to showcase our talented and aligned management team and some of the programs that they are delivering towards that goal.

Am I on? Good morning. I'm Caroline Gardiner. I have run Occupational Health in Doctors Clinic Group and Spire since April 2023. But I've worked in Occupational Health for over 20 years. I'm delighted today to provide you an overview of our organization. We will discuss our identity, what is occupational health, who delivers our services, our recent accomplishments and our future direction and market-changing proposition. So who is Spire Occupation Health? Spire Occupational Health previously Maitland Medical and Soma Health until December 2023 were of approximately 700 clients spanning SMEs to mid-corporates throughout Great Britain, including household names such as Bosch and DPD. Our core services include house surveillance, sickness absence management, vaccinations and well-being initiatives. Our mode of delivery varies from us providing a regular service on our clients' premises to absence management conducted by Vita and pre-placement questionnaires received via our online portal. We pride ourselves on delivering tailored solutions that deliver real business benefits to our clients. I will now explain exactly what Occupational Health is for those of you who don't already know. So while work is good for your health, work practices and workplaces can also be a cause and driver for ill health too. The relationship between work and health work in both directions. So how work can effect your health. Consider the case of an employee working in the sawmill exposed to wood dust daily. If the employer has failed to provide adequate control measures to manage the risks such as appropriate face masks and ventilation, it could result in a respiratory health issues such as occupational asthma. By monitoring the health of the employees for a robust house surveillance program, we can identify any changes in house status of the employee early to then to be able to advise the employer of actions to consider to mitigate the risk for the employee and to ensure the employer is legally compliant. And how health can affect your work? Consider this scenario of an individual of Type 1 diabetes insulin dependent. They can work night shifts as long as they can demonstrate their diabetes is well controlled, with reasonable adjustments for consideration of regular brakes for food and drink to checking blood sugars prior to undertaking any critical safety tasks. Occupational Health assists employees to manage all these scenarios and more. My next slide explains what services companies purchase from Occupational Health and how it works. At Spire Occupational Health, our mission is clear, to empower and assist employers and employees alike through 3 foundational pillars of support. On the left-hand side of the slide, you can see how we support and promote employers to keep their workplace safe and legally compliant by delivering statutory house surveillance and medicals. For example, audiometry, spirometry, hand-arm vibration and forklift truck medicals. Within this pillar, all of these services are sticky revenues for OH due to the legally compliance enforced by the HSC. The middle pillar shows how we advise employees and employees through various services, such as preemployment screening through to assessing and advising on adjustments in the workplace supporting and advising on the management of employee absence, ill health and disability. We also offer but to a lesser extent, for now, more to come back that later, counseling, musculoskeletal services, employee assistance programs and [indiscernible]. These services can be delivered through an online portal, telephone, teams and face-to-face appointments. And finally, on the right-hand side, we help the employer to promote a healthy workforce by supporting our clients to take a proactive approach to health and well-being in the workplace. We do this through educating and advising employers on health and well-being initiatives such as Know Your Numbers Days, a mental health first aid training. We also provide high-level management information to employers to enable future targeted and relevant health information interventions. We have a dedicated and professional management team in the background, but I'll move on to talk you through who our client-facing colleagues are. Central to our success are dedicated professional teams. Unlike hospitals business, we do not have a consultant doctor-led service. Our workforce might best be described as alloyed health care professionals. These comprise of occupation health technicians adapt to house surveillance and wellbeing initiatives and occupational health advisers providing comprehensive absence management advice. These colleagues are in turn, guided by our occupational physicians who offer expertise in complex case management and clinical governance. We are committed to setting the standard for excellence in occupational health. While I have explained the fundamentals behind occupational health, I'm sure you're eager to hear about the size and opportunities within this market. Occupational Health is a growth market and has been growing consistently. Back in 2022, the occupational health and corporate wellbeing was estimated at around GBP 1.9 billion with a growth of 4% to 5% for the next 5 years. This is split equally between corporate wellbeing and occupational health. However, with recent developments, including the government's occupational health task force and the highest ever rate of people off work due to long-term sickness, market growth is now forecast in the mid- to high single digits. You can see from the second graph, occupational health is a highly fragmented market with the majority of providers spread across smaller companies. This provides an opportunity for us at Spire Occupational Health with our forthcoming innovative services and our historic and current customer-centric partner, not provider approach. There is currently significant market consolidation and investment from private equity and private hospital groups who are entering the Occupational Health market and for a very good reason indicating a pivotal shift towards more integrated health services and a need for an end-to-end -- and I hate the term, but I'm going to use it anyway, one stop shop, Occupational Health service provision. Spire now has a strong platform in this process of integration. Other bolt-on acquisitions may be available if they fit our portfolio and demonstrate the right quality and value metrics. The reason the market is growing is down to the following key points: Employee health and wellbeing is currently high on the corporate agenda and the government agenda, which has spurred market growth and investor activity. The landscape is ripe with opportunities for innovation and growth. By staying abreast of market dynamics and leveraging our strengths, notably being under the Spire Healthcare brand and collaboration with Vita, we are well positioned to capitalize on emerging opportunities. So one, the U.K. long-term sickness is the main reason why many working-age people are not in work. Currently, there are around 2.7 million people economically inactive due to long-term sickness. In 2022, a record of 186 million days were lost due to illness or injury. The CBI have recently estimated that working days lost to ill health cost the U.K. economy GBP 10 billion a year. Occupational Health are in a prime position to support organizations and the government to drive these figures down. Number two, a tightening labor market has made talent acquisition and retention challenging for employers. The provision of Occupational Health and corporate wellbeing initiatives can be an attractive prospect to job seekers as it shows an organization's commitment to overall employee wellbeing. Three, companies are increasingly outsourcing occupational services for cost efficiency, expertise and flexibility. The biggest driver I see for outsourcing is the need for employees to feel they have an unbiased objective third-party service. Number four. Employers are prioritizing employee wellbeing to create a more supportive work environment and enhance productivity. The proactive approach of health promotion initiatives such as neuro-diversity awareness, and managing menopause in the workplace can increase the feeling of inclusivity, provide awareness to others and equip people with methods to manage their health. Number five, Positive political sentiment included the new government task force and the fundamental growth drivers like corporate responsibility, encourage market growth with mental health issues, in particular, driving increased demand for Occupation Health services. Number six. NHS waiting times are leading employers to seek faster and tailored heart care solutions from private providers. We all know that Occupational Health has a key role to play and a thought we could shift care out of hospital settings and reduce the burden on the NHS with proactive and preventive intervention is a real prospect. Furthermore, we're seeing a shift in employers willing to budget for private imaging in order to progress treatments and facilitate a faster return to work. So what has been our focus in 2023, '24? It's certainly been a busy year. In quarter 4 2023, we successfully merged Soma and Maitland to form Spire Occupational Health, marking a significant milestone in our journey. Aligned with prevailing market trends, we are actively exploring opportunities for marketplace consolidation, guided by our commitment to identifying the right partnerships at the opportune moment and at the right price. Our efforts to centralize operations and streamline processes have resulted in enhanced service delivery and cost savings. By building an exceptional team and optimizing our operations, we are better positioned to meet the evolving needs of our clients while ensuring improved overall margins. Recognizing the limited exposure to Occupational Health undergraduate level for both doctors and nurses, we aim to boost visibility by introducing a student-nurse placement program in occupational health, which is our commitment to nurturing future talent and raising awareness of occupational health among health care professionals. Concurrently, the government's pledge to launch an occupational health workforce expansion scheme tailored specifically for doctors and nurses underscores the growing recognition of occupational health importance. We have reaffirmed our dedication to maintaining the highest standards of clinical excellence and have recently successfully renewed our SEQOHS accreditation. For those of you who don't know, it's a mouthful, but it's safe, effective quality occupational health services. It has always been our priority through this merger to retain and win clients while integration and changes are going on in the background. We have been successful in doing so by retaining our most profitable and valued clients such as the University of Worcester in Quarter 4 2023, while securing significant contracts with industry leaders like Formula 1 and Danone. Additionally, recognizing the importance of accessibility, we are developing a Pay As You Go e-commerce solution tailored to meet the needs of U.K. SMEs. This initiative aims to facilitate easier access to occupational health services and is a significant opportunity to bridge the gap and support the health and well being of 5.51 million SMEs in the United Kingdom. So let me now talk about how we are going to strengthen our proposition. And this is where I get a little bit excited. So as mentioned previously, we are in the business of promoting, advising and supporting corporate customers. However, with the help of Vita, we will now have a unique multidisciplinary winning formula by integrating mental health and musculoskeletal services into our core proposition, which will strengthen our referral pathways. Vita with its significant experience and specialist resource in this area will allow us to move forward in the market. Historically, we have directed all our absence management referrals to our occupational health advisers. Now we are able to be more targeted by triaging cases musculoskeletal and mental health into Vita's already established care pathways and specific practitioners in these areas. What we now have is an extremely powerful proposition. Income from this activity will appear in the Vita P&L over time. Similarly, our client base of over 700 companies today have a real appetite to access other services from Spire, including potentially GP services and access to Spire's insurance product for employees. These synergies will appear over time in Spire P&L primarily. The key takeaway messages are we have an extremely strong brand. This is a growing market and highly fragmented. We are working internally on our strategy to improve operational efficiency to improve margins whilst maintaining clinical excellence. The occupational health sector has government backing, evidenced by the occupational health government task force. There are great synergies with Spire Healthcare and Vita Health. And finally, these are exciting times. Occupational Health emerges as a vital component in safeguarding both employee wellbeing and economic prosperity. With a shared commitment to innovation and excellence, we are poised to lead the way in shaping the future of workplace, health and wellness. I'm now going to hand you over to Derrick, who will introduce you to Vita Health Group. Thank you.

Thank you, Caroline, and thank you for not overrunning because I've been sent up here with 3 words, which I stick to script. My script says good morning. Had she overrun. I would have to change it to good afternoon and God knows where we would have gone from there. Good morning, everybody. Delighted to be here this morning. I'm delighted to introduce you to Vita Health. Caroline's introduced you to our corporate business in terms of how it will fit together with Spire OH. I think this is a massively exciting opportunity. I'll come back to that a little bit later when I got to focus on for the main part on the NHS part of our business. Firstly, a little bit about me. I'm Derrick Farrell, I'm the Chief Exec of Vita. I'm an accountant by training, and I've been 8 years in my current role. Before that, I was 5 years at Nuffield and 15 years at Bupa before that. So hopefully, I can bring those nearly 3 decades of experience here this morning. And for the next 15 minutes, articulate 3 key messages for you. Firstly, Vita is a scale business that operates in markets with a lot of potential. Secondly, Vita plus Spire are stronger together. And thirdly, Vita has strong growth drivers and that growth will flow through to Group PBT. As you can see from the agenda, I'm going to talk you through our markets, our services, our KPIs, our staffing and some specifics on talking therapy contracts, which I hope will illustrate the key mechanics in our business model. I will then end with an overview of synergies and talk about future growth drivers. So let's start with the markets. There is significant room for growth. We are in markets that have large potential. Community MSK is a market of around GBP 2 billion. Talking therapies is valued at about GBP 1 billion and community dermatology at GBP 500 million. They all have historical good growth rates of about 5% to 7%, and that's projected and forecast into the future. Vita remains below 10% in every market that we operate in. So there's a large market to target and there are no dominant players in any of the markets. These are services with strong patient need. Mental health and MSK issues have always driven a significant percentage of GP visits placing huge pressure on the NHS. They are the largest drivers of absence from work and mental health issues, particularly with younger adults, is a growing issue as I'm sure you're all aware. These younger adults are also prioritizing organizations that actively support their wellbeing, which is leading to corporate customers, prioritizing services that provide this support. So with that market backdrop, here's a little bit more detail about who we are and what we do. So who are we? We concentrate on culture, quality and people. That's where our focus is. Since 19 -- 2016, I'm not that old. Since 2016, when I joined the business, these have sat central to our purpose and remain so today. This is a key similarity to Spire and is a key reason why the business has landed well and will fit well within the group. So what do we do? Vita provide mental health and musculoskeletal services at scale in a community setting. We also have a fledgling dermatology business. So what does that mean? For acute interventions, it means we get people better who have a mild to moderate common mental health problem, usually depression or anxiety. And we get people better who have an acute MSK issue. The guidance to our over for 2024 is GBP 100 million. Of this, roughly 75% of our business is mental health and 25% of it is MSK. In terms of markets, 75% of our business comes from the NHS and 25% of our business comes from a mix of corporate and PMI. The table in the bottom right-hand corner is particularly important for us and it articulates our key KPIs. Not surprisingly, these focus around clinical quality and effectiveness, patient satisfaction and speed of access. The core quality metric for all our services is recovery. Have our patients rather recover to the extent that the issues they presented with are no longer having an impact on them. This is the same for MSK and mental health. We have an additional measure in the corporate market, which measures return to work, which I'll come back to in a second. Recovery is measured through a series of scientifically proven criteria, and our recovery rate at the moment is 56% for our talking therapy services in the NHS. And so as an aggregate, all of our services are at 56% recovery. In terms of our national profile, that would put us within the top 5 within the country under our 167 talking therapy services in the country. For people who complete treatment in our corporate services for both MSK and mental health, we are currently recording return to work statistics of above 93%, an excellent return on investment for corporate to invest. Some of our MSK services do stretch to dealing with more longer-term issues, such as rheumatology and pain management. These services are -- predominantly operate out of Oldham and Northern Manchester. And these are used as a regular example for what could looks like in terms of speed of access and quality of service. So we operate a quality business at scale in markets that have considerable growth potential. What about our staff profile? So in same as OH, our services are not consultant-led, but we use the skills of alloyed health professionals. Looking at our activities, the main professions we employ are physiotherapists in MSK and a combination of high-intensity therapists and psychological well-being practitioners for our mental health services. Our rheumatology and dermatology services employ nurses with specialty skills in those areas. So a large chunk of our growth has come from mental health services in the NHS. And I thought it would be worth spending a few minutes articulating specific attributes of those contracts. We've used an example of a contract we won some years ago to help illustrate this. So starting from the top and working down. In this area, there are roughly 1 million adults. Those adults will have an expected prevalence of mental health conditions. This is measured using GP presenting data and will vary slightly by region. Of that total prevalence, the talking therapy service will be targeted with achieving a percentage access of that or percentage of that as access, rather. There is an NHS England target to achieve 25% access. Most services are currently below this level. Very importantly, as access targets grow, so does funding. So I'll say that again, as access targets grow, so does funding. In this example, funding and service has grown from GBP 8 million in 2019 to GBP 12 million in 2024. This is a great source for organic growth and is a win-win because it means people in need are accessing our service. So what do the contracts look like? So unlike hospitals, which are episodic payments by patient with no volume guarantee, there is a high degree of revenue assurance through our long-term NHS contracts. This gives us the ability to plan forward into the future, gives us a mandate and an incentive to innovate. We have never lost an NHS contract. The last material corporate contract loss was 2019, and we have always achieved were applicable contract extensions. The normal contract length in the NHS is 7 years, which is basically a 5-year standard contract and a 2-year extension. So we operate at scale. We are good at what we do. We have a high degree of revenue assurance through long-term contracts and have a large market opportunity. But what about Vita and Spire together? Synergies represent the area where I'm most excited about the acquisition and the merger into Spire. Caroline has already covered after potential for joining up Spire OH and Vita. For completeness, I've included some of the points at the bottom of this slide. I worked in the OH market in the previous life and so I know the market very well. I think the 2 businesses together provide a compelling and exciting profile of services. In terms of Vita and Spire Hospitals, I think the opportunities are numerous and material, but I'm going to just articulate the ones highlighted at the top of the page. We have, as in Vita, have 2 community-based MSK services that have the ability to direct list to surgery. Those 2 services will list around 4,000 patients per annum. If we can join up our services to better need -- to better meet rather, the needs of our customer, we should be able to unlock some of that downstream revenue opportunity for our hospitals. Through our compliance services, we now have the ability to offer full end-to-end MSK services. So that's everything from triage and community physio through to rheumatology and pain management and now consultant-led services and surgical interventions. These propositions have been worked up and have been presented as part of a recent tender, and we await the outcome. Conversations are also happening with some of our PMI customers around a number of potential initiatives that join our services. End-to-end mental health, as mentioned above, is interesting to them, but we're also thinking about things like the addition of mental health intervention for people undergoing cancer treatments. So to end on some numbers, growth in the main comes from winning and mobilizing new contracts or expanding and growing current contracts. In April 2024, as in 2 weeks ago, we went live with a new talking therapy service in Canton Medway. It's the biggest ever mobilized in the U.K. The first 9 months of that contract will add growth in 2024, and the additional 3 months will obviously feed through into 2025. We've got to continue to look for opportunities to grow through tenders, but we are also ramping up our focus on organic growth. As explained above, increasing access targets can be a good way to organically grow and we are currently in conversation with several NHS customers to agree these targets. In addition, we are also actively researching locations to expand their services. We will look to push our services into new geographies, and we will prioritize areas where we already have a hospital presence. This will increase the opportunity for downstream revenue into our hospitals. Similar to hospitals, we have several areas where we are going to be targeting improvements in gross margin and EBITDA. Staff utilization, use of digital in our customer journey, process automation and the exploration of how we use hopes to make ourselves more effective are all key areas of focus. Finally, you should note but that the nonhospital services, so that is Vita, Spire OH and London Doctors Clinic are not capital-intensive businesses. The CapEx requirements by comparison to hospitals are very modest. As a result, a very large percentage of EBITDA percentage improvement will flow through to PBT. You can see this from the footnote at the bottom of the slide. So in closing, I hope I've been able to showcase Vita in enough detail to give you the assurance that we are a scale business. We do a good job. There is a big growth opportunity, and the Vita and Spire are better together. So I'm just going to hand back to Justin, who's going to wrap up this session, and then we'll open our way to Q&A.

So thank you very much, Caroline and Derrick for those presentations. So what we'd like you to take away from this section is whilst clearly, they are small businesses today, we are excited by the potential for Vita and Spire occupational health. So we've made these acquisitions to participate in the current and future trend areas for health care in the U.K. addressing the problem of 2.8 million economically unproductive people in the U.K. Most of them have a mental health or MSK issue. This overlaps with the growing mental health crisis, which is especially prevalent amongst young people. And all of these topics are top on the agenda both for the government that has the task force and for the opposition. Corporates see employees wellbeing and recovery as a key responsibility, which helps staff retention. And generally, there is a push to provide more care in the community. So Vita and Spire Occupational Health. They're in growth markets, namely NHS for Vita, but also corporate and corporate markets for Occupational Health and they have new contract and organic growth potential. They are strong platforms in themselves, and that, in turn, may support small bolt-ons at the right price with the right capabilities and good synergies with the normal discipline that we apply. We are identifying more and more synergies especially in referrals and corporate relationships across Vita and Occupational Health and Spire. Now we've given guidance for Vita of GBP 10 million EBITDA for 2024. A further EBITDA growth from both businesses will flow through strongly to PBT. That is one of the rationale behind these low CapEx businesses. And from '25, we're going to report them together, and then we will give more guidance when we've had a chance to fully integrate them and see the opportunity. So what we wanted to achieve today was 2 things. We wanted to give you a deeper dive into our hospitals business and our focus on margin improvement. And second, to showcase 2 key elements of the group's new services. We think they're really good businesses, Spire Occupational Health and Vita Health Group and to show you the growth potential for these businesses. What I hope you'll take away from these presentations is, one, quality and patient safety is integral to all we do at Spire and all the programs we've showcased today. We're focused on our target of reaching an EBITDA margin of at least 21% for the hospitals business and have firm plans to deliver these whilst enhancing business capability. And we're excited -- I might not sound it, but we're excited about the integrated offering, strong growth opportunities and synergies that we've identified as part of Spire Occupational Health and Vita Health Group. I'm going to stop there. Thank you for listening. Have a nice lunch.