Ladies and gentlemen, thank you for standing by, and welcome to the Estia Health Limited H1 FY 2022 half year results. All participants are in a listen only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. We have with us today on the call Mr. Ian Thorley, CEO and Managing Director, and Mr. Steve Lemlin, CFO. I would now like to hand the conference over to Ian Thorley. Over to you, sir. Thank you, and good morning, everyone, and welcome to the Estia Health FY 2022 half year results briefing. COVID-19 has again impacted operations and our financial results, but I'm pleased to report that the investment that we've made over recent years to strengthen systems and key management roles has seen us successfully manage the subsequent challenges presented by the pandemic. Anticipating an increase in community infection rates with an opening up of the economy and the relaxation of restrictions that have been in place for much of 2021, we prepared for a surge in outbreaks by increasing PPE inventory levels, undertaking simulated COVID outbreak management exercises in homes that had not been previously impacted by COVID, and reviewing staffing arrangements. However, the combination of factors that drove the Omicron wave was beyond what the company could have reasonably anticipated. Despite the extreme circumstances faced, we've come through the period, and particularly the last six weeks, well-served by our planning, our good governance, balance sheet strength, and the depth of the leadership of the Estia team. On the basis of government grants meeting much of our COVID-related expenses, the company has delivered a sound financial result for the period, with all homes remaining fully accredited. We'll examine these details in detail, but we'll also look through the pandemic at the underlying fundamentals of the aged care sector and the future opportunities emerging as a result of the government reform agenda. First and foremost, the government response to the Royal Commission indicates a clear shift to a more competitive sector. With the introduction of greater consumer information, and as the restrictive supply practice associated with ACAR fall away, success in the sector will be dependent upon the ability to compete on quality of service and value for money. The Department of Health is unequivocal that ACAR reform will bring irrevocable change, and providers will have the flexibility to offer more services in more locations with less administrative burden. There is a clear expectation that these changes will result in a restructuring of the sector in the near term. Slide four looks at the opportunities for which we're positioning the company. Although the abolition of ACAR will not be legislated until 30th of June 2024, the government has announced transitional arrangements that will give assurance to providers planning to open homes before 2024 that funding will be provided under the act. Greater transparency over sector performance will be achieved by the star rating system, focusing on regulatory outcomes, staffing levels, clinical outcomes, and financial security. In areas such as increased financial reporting, Estia has already established the capability to comply. Other areas of the reform agenda, including increased regulatory compliance, are already being implemented. The aging baby boomer demographic will see a doubling of over 85-year-olds between 2020 and 2040. With the incidence of dementia and complex care increasing and a further tightening in supply of health professionals, residential-based care may well emerge as the preferred service model. I say this because the multidisciplinary skills required to meet complex needs is most effectively coordinated in an institutional setting. The increase in home care services will impact those providers of low acuity care. Over the last 20 months, COVID has tested the capabilities of the residential care operators. The most recent Omicron variant has seen occupancy fall to historic lows. It's been exacerbated by existing workforce issues and has challenged the ability to consistently meet care needs. Estia has not been immune from these issues, but we've focused on keeping our residents safe and well in homes impacted by the pandemic. Workforce is the biggest challenge facing the sector. The issue predated the COVID pandemic, and is likely to be exacerbated by a tightening of the health workforce and labor markets generally. Opening borders to skilled migration will not be the total solution. The ability of the sector and providers to secure sufficient numbers of skilled staff and at what cost to deliver services is a key uncertainty. Recently, we've seen two large portfolio transactions at valuations not seen for some years. We expect the enhanced regulatory environment to exacerbate exits and sector consolidation. As a result of the anticipated restructuring of the sector, Estia has the opportunity to realize development-led growth at a number of sites. We have over 800,000 meters of freehold land, most of which was acquired pre-2016 and which is recognized in our accounts at that historic cost, not current value. This supports the balance sheet and the capacity to debt finance growth within our target gearing range without impacting dividends or having a requirement to raise equity. We've got the operational capability to commission 3-4 homes per year. Revenue diversification opportunities, which have largely been shelved due to the short-term focus on COVID, remain to be explored. Going to slide five, slide five, and Steve will talk more in more detail to the foundational financial performance. Notwithstanding the impact of COVID, the company remains in a strong position. At period end, net bank debt, adjusted for the January 2022 prepaid subsidies, was AUD 43.1 million, with available liquidity in excess of AUD 282.4 million. Net RAD inflows of AUD 23.9 million in the period resulted in RAD balances of AUD 886.2 million as at 31 December. Group occupancy averaged 92.6% in the period, but has subsequently fallen as a result of the Omicron wave. EBITDA from mature homes was AUD 33.5 million, after direct incremental costs associated with COVID of AUD 12.1 million. This result does not include an estimated AUD 7.5 million expected to be reimbursed by COVID recovery grants to be received in the second half. NPAT, pre AUD 14 million non-cash bed license amortization charge, was AUD 6.1 million, resulting in a net overall loss of AUD 8.1 million. Capital investment in the period was modest, but will increase in coming months as we commence three new developments. Against this background, with the balance sheet strength and available capacity, directors have declared a dividend equivalent to 100% of net profit after tax, excluding the non-cash bed license amortization charge. Moving to slide six, I'll look at the key government reforms. The extensive reform program has ambitious guidelines, which the government is clearly intent on meeting. Nevertheless, I do need to note there is uncertainty regarding many of the proposed reform items which are yet to be legislated or details finalized, including funding and revenue reform. As I indicated, the reforms are heralding a fundamental shift to competitive markets. The abolition of ACAR is already impacting with the collapse of the secondary market for licenses. The removal of this barrier to competition creates the opportunity for the group to realize growth potential from greenfield and brownfield developments that already met at Estia. The regulatory oversight of the Aged Care Quality and Safety Commission is increasing, and we've invested in governance and other resources over the last three years in order to meet these compliance requirements and to support the care standards expected by consumers. The AUD 10 basic daily fee supplement was introduced from the first of July 2021. The role of the Independent Health and Aged Care Pricing Authority falls short of the Royal Commission recommendation of independent price setting, but the authority will independently assess the cost of providing quality care, and its recommendations to government will be transparent. In these circumstances, we would hope that funding policies that have led to margin erosion over many years will be addressed. ACFI will be replaced in October of this year by AN-ACC. Shadow assessments that underpin the transition to AN-ACC have been impacted by the pandemic, so it remains to be seen if the original timeline of this reform can be achieved. The level of governance and prudential regulation continues to increase. For example, providers wishing to receive the AUD 10 daily fee supplement are required to submit detailed financial and operational information on food and other services by the 21st working day following the quarter. Detailed quality P&L reporting for every home will be required from the 1st of July, 2022. This provides the Department of Health with the ability to undertake increased monitoring and an assessment of financial adequacy. This will not create a significant incremental burden for Estia, as we comfortably meet the increased financial monitoring and prudential requirements. There are also increased governance requirements, including independent skills of governing bodies. Again, the impact is likely to be minimal on the group. Slide seven looks at COVID in greater detail. The Delta variant impacted New South Wales and Victoria in the period. Estia's Queensland and South Australian operations were largely unaffected, as evident by the high occupancy enjoyed in both of those states. Vaccine effectiveness has reduced illness severity and death rates, and has contributed to shorter recovery periods compared to previous variants. This has seen a quicker return to work for infected staff, which to some degree mitigated workforce shortages. While vaccination is mandatory for staff, that is not the case for residents, and although we make every attempt to encourage and facilitate resident vaccination, it is ultimately of their choice. As of the thirty-first of December, 87.9% of all residents were double vaccinated, and we are admitting unvaccinated residents with appropriate pre-entry screening and admission protocols. Post the reporting period, the highly virulent Omicron wave resulted in extremely high community infection rates. This caused pressure on PPE supply chain, resulted in the collapse of the PCR testing system, and with that, a nationwide shortage of rapid antigen test kits. By the end of January, more than 70% of the homes in the sector had experienced COVID outbreaks. At the peak, mid-January, Estia was managing outbreaks or exposures in 50 homes. This has impacted the group performance in January and February, with falling occupancy and higher PPE and testing costs, and also some increased staffing costs. As of the twenty-first of February, we have a stable situation, with the peak having been significantly reduced and with three homes in outbreak and one home in exposure mode. Nevertheless, despite these encouraging signs, the future direction of the pandemic, including the evolution of new variants and consequences at a national or sector level, remains uncertain at this point in time. I will now hand over to Steve. Thank you, Ian. We're on slide 10. In another very challenging period, the company's strong financial position, highlighted on this overview slide, has allowed us to remain well-positioned for the reform of the sector ahead. I'll start on slide 11 and look at the P&L account in detail. Well, given the complexities of the last 18 months, we show three six-month periods to demonstrate the best of trends that we're experiencing. There were no temporary funding, nor grants received in the period compared to the prior two half-year periods. Recurring government funding increased by 8.7%, driven by the AUD 10 a day basic daily fee supplement, ACFI indexation, increased security, and occupancy recovery compared to H1 FY 2021. The resident revenue increase arose from higher DAP and additional services rates and increased penetration. Staff cost increases, excluding COVID, averaged 2.9%, in line with expectations, and generated from EBA increases and absorbing the 0.5% superannuation increase from July. Non-wage costs increased by 5.3% as a result of increases in a range of regulatory and compliance-related costs, including insurance premiums and higher consulting and business services costs. Direct incremental costs related to COVID-19 protection and the response at outbreak homes were AUD 12.1 million. Only AUD 7.5 million of which is eligible for government grants, which are currently restricted to some costs during outbreak periods at specific homes, and to a lesser degree, costs associated with the impact of mandated single-site arrangements for staff. Of the AUD 12.1 million, staff costs accounted for AUD 7.7 million, stemming from quarantine leave, agency costs, and higher overtime and surge workforce supplements. Non-staff costs, primarily PPE, testing costs, and cleaning and waste disposal, accounted for AUD 4.4 million. The AUD 7.5 million currently expected to be recovered in the second half through grants cannot be recognized under accounting standards until received, which is expected to take place in the second half. Overall, the net unrecovered costs associated with COVID in the first half are approximately AUD 4.6 million. Overall, we generated an EBITDA for mature homes of AUD 33.5 million, compared to AUD 41.2 million shown in last year's second half. I'll talk through the movement between these two periods when I get to the next slide. Costs associated with the closure of the two small homes at Keilor Downs and Prahran in Victoria were AUD 0.7 million. Our new home at Blakehurst in New South Wales, which opened in late February 2021, was consistently EBITDA positive after six months, following an outstanding occupancy build, and generated AUD half a million dollars EBITDA in the period. Fixed asset and software depreciation and amortization remained relatively constant at AUD 21.7 million, with recent capital increases being offset by fully depreciated assets from prior periods. Net finance costs of AUD 3.4 million remain consistently low as a result of low debt levels and low interest rates. As a result, profit for the period after tax and before bed license amortization was AUD 6.1 million, which is after the AUD 12.1 million of COVID costs and doesn't recognize around AUD 7.5 million of grant recovery expected to be received in the second half, but which relates to first half costs. We'll refer to this metric as NPATA from now on, and it'll be the profit line which will be used to assess our dividend payout ratio. In future, this would essentially be the same NPAT figure as if bed licenses had been fully impaired now rather than being amortized. We've made substantial references to the bed license accounting issue over the last six months as a result of the ACAR abolition. As advised in January, notwithstanding the directors' view, confirmed by independent advice, the bed licenses have a fair value of nil. It has been determined that in order to comply with accounting standards, the carrying value of these licenses needs to be amortized over the period to thirteenth of June 2024, rather than being fully written off now. We provided a comprehensive explanation of this in Appendix F, together with the expected future non-cash charges. In addition, subject to no change to current tax legislation, it is anticipated that the formal abolition of bed licenses on thirteenth of June 2024 will result in a capital gains tax loss of approximately AUD 200 million, which should be available to be carried forward against future capital gains of the group. Due to the nature of the gain and materiality, it's unlikely that the future potential benefit can be recognized in the financial statements until such time as capital profits are realized or known with sufficient certainty. Clearly, this represents another material benefit to the group beyond June 2024. I'll move to slide 12, where we show the EBITDA movement on mature homes, highlight the key movements compared to the immediately preceding six-month period. Moving left to right, second half FY 2021 EBITDA was AUD 41.2 million. We next show the temporary funding provided in that period and the direct COVID-19 costs incurred. This takes us to an equivalent second half FY 2021 EBITDA of AUD 32.3 million, excluding COVID-19. Key movements on a like-for-like basis are therefore a reduction in EBITDA, caused by the AUD 9.9 million increase in staff costs and a marginal increase in non-wage costs of AUD 9.5 million. Increases in government funding contributed AUD 18.2 million, primarily from the AUD 10 daily fee supplement, which contributed AUD 10 million, with the remainder from indexation, higher acuity, and the impact of significant refurbishments. Occupancy contributed an additional AUD 2.8 million. Indexation of the basic daily fee and higher DAP and additional services penetration and rate generated another AUD 2 million. These movements took mature home EBITDA, excluding the direct impact of COVID, to AUD 45.6 million, an increase of AUD 13.3 million in the prior period. We report AUD 12.1 million of costs arising from the preventative measures and responses to COVID, which results in reported half-year EBITDA on mature homes of AUD 33.5 million. Slide 13 shows the key operating metrics in the period, stripping out the direct cost impact of COVID-19 in order to understand the ongoing revenue and cost structure which we are carrying as we move beyond the acute phase of the pandemic towards a post-reform sector. Occupancy in the early part of the year remained relatively constant at 30 June 2021 spot rates, despite the continuing lockdowns in New South Wales and Victoria. Margin erosion was mitigated in the period as a result of the AUD 10 a day daily fee supplement, which represented half of the increase in government revenue per occupied bed day. The remainder was from higher accommodation supplements, indexation, and acuity. Resident revenue per occupied bed day increased by 3.9%, resulting from the higher DAP and additional services section, and a slight increase in non-concessional residents. Staff costs rose at higher than EBA rates, with higher overtime and agency costs affected by staffing pressures and the increase in superannuation. Non-wage cost increases were higher than CPI, with increased compliance, business services, and significant insurance cost increases being the main call-outs. Average annualized EBITDA per occupied bed returned to historic levels at 16,034 or 14.4% of revenue. Now, bearing in mind that these metrics exclude the AUD 12.1 million of COVID-related costs, clearly, a full and sustained recouping of all costs associated with COVID-19 will need to be secured in future to ensure the necessary suspension of margin erosion is sustained. If we move to slide 14, we'll see how this underlying solid financial performance is reflected in cash flows. The net cash flows from operations of AUD 39.3 million reflected the continued 100% conversion of EBITDA into cash, and we also benefit in the period from AUD 36.3 million of prepaid January subsidies, which arises at each half year. Net RAD flows of AUD 23.9 million, of which AUD 9 million came from Blakehurst, represented a sound performance in a period when occupancy did not materially increase. Other cash flows are relatively modest by comparison and consistent with prior periods, other than capital expenditure of AUD 12 million, which is lower than previously but will increase as we commence construction of St. Ives and Aberglasslyn in the second half. As can be seen in the table, most of the capital was invested in enhancements, replacements, maintenance, and sustainability projects, with no major developments or significant refurbishments in the period. Statutory reported net debt at 31 December was AUD 6.7 million, though adjusting for the prepayment of January subsidies, the true net debt figure was AUD 43.1 million, representing a reduction of AUD 38 million since July. I'll move on to the RAD and bond movements on slide 15, which shows the increase in RADs in the period to AUD 886.2 million. This increase was generated by the AUD 9 million from the new home at Blakehurst, which had reached 86% occupancy by the end of the year, and other net inflows from mature homes of AUD 19.4 million. We also highlight here the RAD refunds following the home closures at Prahran and Keilor in Victoria. The average RAD incoming and outgoing differential was in excess of AUD 45 thousand, and we still have 176 pre-July 2014 bonds yet to be replaced by new high-price RADs. Resident preferences remained relatively constant in the period, although we saw a slight increase in our total non-concessional population and an increase in the total number of RADs paid, which was as a result of the increase in combination payers as opposed to pure RAD payers. This trend has been evident in the sector for some time, partly driven by the unsustainably low and uncommercial DAP rates. As the next phase of the interest rate cycle sees rates rise, we'd expect to see DAP rates also increase and potentially slightly higher precedence for RADs or RAD component of combination payers. Appendix G shows the usual detail on resident preferences. I'll now move to capital management on slide 16. Capital preservation and prudent management throughout the COVID-19 crisis has maintained the group's strong balance sheet and capital base. As a result, if it chooses, the group is well-placed to deploy significant capital to appropriate investments without needing to raise equity or over-gear the balance sheet. RADs remain a key funding source. Government reviews highlighting the importance of the total AUD 32 billion of RADs financing the sector and determining that they'll not be replaced in the foreseeable future. The group has the opportunity to realize further RAD funds from capacity growth and occupancy recovery, supported by increased metropolitan house prices and increasing interest rates, which will likely positively impact that refund rates over time. The majority of the 830,000 sq m of mainly metropolitan freehold land is accounted for at pre-2016 acquisition prices, with a significant unrecognized uplift in many areas. These land holdings are highlighted in detail in Appendix K, and this amount of land represents further underpinning of the balance sheet, providing security and opportunity for growth. Our net bank gearing ratio remains well below the target range of 1.5x-1.9x EBITDA. The bank debt equity ratio reduced to 1%, with AUD 598 million of shareholders' funds underpin gross assets of AUD 1.8 billion. Bearing in mind that within the intangibles balance, the unamortized bed licenses, net of the associated deferred tax liability, represent AUD 142 million at 31 December 2021. Although the fair market value of these licenses is nil, this amount will not be fully amortized to nil until 30 June 2024. As I mentioned earlier, the ACAR abolition is expected to give rise to a AUD 200 million capital gains tax loss in FY 2024, which will be available for offset against future capital gains from that time. I'll now hand back to Ian for the remainder of the presentation. Thank you, Steve. Moving to slide 18. As I indicated at the start of the presentation, we are now entering a new era for residential aged care. ACFA indicated in its final report that 10% of beds in the sector were in a multiple ward type accommodation. Previously, ACFA had opined that around 25% of beds in the sector enjoyed a level of occupancy that was being supported by protected markets. The abolition of bed licensing opens up new opportunities to these previously inaccessible markets. Success in the future will require providers to deliver across the critical success factors, which we summarize on slide 19. Workforce, clinical care, consumer services, community and social impact, and of course, how to realize growth in earnings. Slide 20 presents an overview of the scale of our operations. The structure of our portfolio of 68 homes distributed across four states has again proved to be important in our ability to withstand shocks in specific markets. The asset base is good, with 91% single rooms and 57 of our homes have completed significant refurbishments and qualify for the higher accommodation supplement. 62 freehold sites, and as noted, 837,000 sq m of freehold land, primarily in metropolitan locations, supports the balance sheet. Resident mix has remained relatively constant over the last three years, and the higher accommodation supplement for supported residents is a rent equivalent of approximately AUD 500 thousand. Slide 21 demonstrates how the quality of the portfolio and the resident experience has translated into occupancy and market share. Our portfolio continues to materially outperform sector occupancy. While we had recovered from the low points of the first wave of the pandemic in quarter two 2020, when occupancy fell to 89%, the extended New South Wales and Victoria community lockdowns prevented a material recovery during the first half of FY 2022. We're pleased with our South Australian and Queensland occupancy performance, which in the period exceeded 97% and reflects the underlying community support for residential aged care generally, but as well, the reputation that we enjoy in those markets. While the Omicron wave had a very limited impact on average occupancy in the first half, spot occupancy at the 31st of December had fallen to 91.7%, and occupancy across the portfolio is 90.1% as of the 18th of February. Inquiries are improving across most regions, and the sales and marketing teams are again activating admissions. On slides 22 and 23, we've highlighted our progress and outcomes in the key areas of resident experience, clinical care, workforce, people and culture. We also highlight progress towards our ESG goals on slide 24, including the establishment of the first sustainability-linked loan in the residential aged care sector in Australia. I will not go through these slides today, but they do contain important information which we look forward to discussing with you during our scheduled meetings over the next week. I'll now turn to slide 25 and talk about the growth opportunities and potential. While organic growth in earnings can be expected through a recovery in group occupancy as the management of COVID normalizes. As noted earlier, we are 2%-3% below historic activity levels, and we've got an 8% variance between occupancy in the higher performing states and those most affected by COVID. As a 1% increase in occupancy will generate more than AUD 6 billion of revenue at low marginal costs. The potential for earnings recovery by restoring occupancy to previous levels is significant. Operational optimization and efficiencies through reducing customer acquisition costs and gains through strategic purchasing and procurement benefiting from our scale should see Estia continue to generate margins in excess of sector averages. Brownfield growth opportunity to extend capacity at multiple Estia sites by partial or full redevelopment can now be achieved without necessity to secure licenses, and the same opportunity arises from greenfield developments. We'd also expect to see further opportunities to consider single turnkey sites and acquire selected quality assets on either a going concern or asset purchase basis, but only at appropriate prices. While there remains the need for more clarity over government reform agenda, we've demonstrated the ability to commission new homes, achieving full occupancy and delivering good returns. Slide 26 shows the key financial metrics and outcomes of our three most recent developments at Southport, Maroochydore, and Blakehurst. Each of these homes have strong rent balances, consistently operate at almost 100% occupancy, and have achieved top quartile EBITDA performance and solid return on investment on the net capital invested. I should point out that there are multiple homes in the portfolio which generate higher EBITDA per occupied bed than these homes. Blakehurst is particularly impressive given the operating environment from the time of commissioning, impacted by community lockdowns and its own COVID outbreak. Blakehurst also achieved the Master Builders Association of NSW 2021 award for the best aged care facility above AUD 35 million at its recent awards night. Our business model of matching new homes with community demographics underpins the economic and clinical success of these homes. Turning to slide 27, our potential development pipeline has two distinct streams, work in progress and projects currently undergoing detailed planning. The Aberglasslyn, St. Ives, and Burton projects will commence construction over the next few months and will deliver an additional 260 beds in Q1 FY 2024. We have four projects at detailed design planning stage, Toorak Gardens, Mount Barker, Lockleys in South Australia, and Bentleigh in Melbourne. These projects are not yet committed. However, subject to board approval, they are capable of being activated in a short timeframe, contributing a further 300 beds. In addition, we've identified those homes where we have the opportunity with adjoining land or through increasing site density to extend or redevelop. These are typically smaller, older facilities that will improve their performance through better amenity and increased scale. None of these projects are certain, but we are actively assessing them. Slide 28 provides the detail of the current projects that are underway. In summary, and as we move to slide 30, I believe that we are at a critical point in the evolution of the sector. The sector has been through extraordinarily demanding and challenging times brought about by the pandemic. The Omicron wave has been dramatic but somewhat of a short cycle in its ultimate impact on the sector, as vaccination programs have resulted in lower levels of illness and swifter recovery periods. I'd like to extend my condolences to those families of residents who have died during this recent phase of the pandemic. The reform agenda is moving at pace, and the greater transparency over clinical performance, elevated governance, higher clinical standards, and a strengthening of the regulatory and compliance regime will lead to a higher quality sector for consumers. The reforms will also lead to more transparent and competitive sector, which will reward quality providers who, with access to capital and quality assets, will have the opportunity to grow market share, increase occupancy level, and deliver earnings growth. After almost two years of the pandemic, our frontline staff continue to provide exemplary care for our residents. Many of the staff is, have experienced COVID-19 firsthand and having family members fall ill. Their dedication and commitment to supporting our residents and their colleagues in such difficult circumstances has been extraordinary, and I'd like to sincerely thank all of them. The resilience of the group has been tested, but I'm confident that we're stronger and remain well-placed as we emerge from the pandemic to take a leading role in the restructure of the sector. Thank you. We will now open the lines for questions. Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you are on a speakerphone, please pick up the handset to ask your question. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in this conference call, please limit your questions to one per participant. For any further questions, you may come back for a follow-up. The first question is from Vanessa Thomson from Jefferies. Please go ahead. Hi, Ian and Steve. Thank you for taking my question this morning. I just wanted to ask, you said that the AN-ACC shadow assessments have been disrupted through the pandemic. I wonder whether you're anticipating any disruption, if the timetable goes ahead, whether that be not necessarily for Estia but for the industry at large. Thank you. Yeah, look, we're uncertain as to what the ultimate impact might be on that. It has certainly been a period where access to homes to do their shadow assessing has been disturbed. So it's just something that we're conscious of, Vanessa, but really don't have an opinion as to, you know, what the broader implications might be, it's at this stage. You know, whether it's a deferral in the introduction time or whether there would be other arrangements that would be put in place. So it really is a bit of a wait and see on that one, I think. Thank you. Thank you. The next question is from David Low from JP Morgan. Please go ahead. Thank you very much. Ian, if we could just start with occupancy, and I heard your comments just then that the Omicron wave is moving through quite quickly. Would we be right in understanding that if you have an outbreak, you can't take new residents for some time until the outbreak is cleared? I mean, it seems to me more likely than not that occupancy is gonna remain under pretty serious pressure across the country, probably through the next few months. Is that the right way to think about it, do you think? David, I think we're at a real point of flux on that one. I will say that it's a little bit hard to fully predict how what I'm gonna say might flow. There's been a series of policy changes over the last fortnight where the state governments, emanating from work that was done centrally with the AHPPC and other Commonwealth bodies, is moving to a far more risk-based approach to managing outbreaks. Previously, David, there was almost a doctrinaire one size approach, lock down the homes, restrict residents, and have a fairly extended lockdown of the entire home. These new policies that have been promulgated, as I indicate, are more risk-based, and we will see zoning of the home. There will be limited, you know, a very different approach to what had previously been undertaken. For example, visiting arrangements will still be enabled. As a result of that, we do think that there is likely to be greater access to homes in terms of the ability to tour. I think there will be greater confidence in people entering homes, that they're not entering something that resembles those previous lockdowns that were pretty hard on the psychosocial wellbeing of residents and I do think impacted the way in which people might have wanted to come into residential care. Of course, those policies were pretty much driven by the public health units. Now, there's a big change occurring. I'm thinking that those open doors, if you wanna express it that way, are likely to see greater admission rates. In terms of a recovery to previous levels, I think that's gonna be a U-shaped recovery in New South Wales and Victoria because the impact in both of those states was so extensive. You know, we went into this Omicron wave with both of those states with occupancy below historical run rates. I think U-shape recovery in those two states. One would anticipate, I think, a stronger recovery in South Australia and Queensland. Thanks for that. I did hear the operator ask us to limit it to one. I suspect there's not a huge queue. Is it all right if I ask one or two more? Hi, David. Yes, one or two more, absolutely. Thank you. All right. Thank you. Just on staffing availability, I mean, obviously we've heard a lot about it. We've heard about a workforce, you know, across the health system that's been a terribly challenging period. Could I get you to talk a little bit to, you know, how comfortable you are with the availability of staff and, you know, have you been able to run your homes as you would've liked, or has it been a period of extraordinary pressure? And I guess frankly, sort of where to from here on that one, please. Oh, look, I think, as you observed, this is a healthcare workforce issue as opposed to an aged care workforce issue, and I think it's gonna take some time to resolve, in terms of the entire health economy. You know, I don't necessarily think the opening up of borders is going to be, you know, an immediate solution. I think there's some longer burn things that across the entire healthcare sector needs to be achieved across all health workers, just not the carers and nurses that we're mainly focused with. In terms of the last six weeks, Omicron challenged us, there's no doubt about that, because there were large numbers of staff infected. We relied on surge workforce to the extent that we can, but that was well documented, but that was pretty much exhausted as well. You know, we had preferred supply arrangements with the big national providers and they did the best they could for us, but we still felt that pressure. The one thing that I would note, and to reinforce the point that I made, the short nature of this Omicron variant saw a return to work in about half the time that the previous variants saw probably less than half the time. There was a really quick recovery rate for our staff, and clearly our residents that saw this immense peak, but then it was, you know, resolved fairly readily. I think going forward, the work value case that is before the Fair Work Commission is gonna be a really important consideration as we go forward, because there is a pretty substantial rate variance between aged care and disability services for effectively doing fairly similar roles for carers and support workers. I think that's gonna be a really important thing. In terms of ourselves, we've got a whole range of programs that we're working through and we've had in planning and have been executing over a period of time in terms of our value proposition. Putting a lot of effort into the development of leadership programs because we know that, you know, creating career pipelines is really important to keep your employees sticky. You know, things like de-casualization of the workforce. We're now down to about 6% casual usage. We think things like that, again, David, are really important in getting the commitment of our staff rather than this highly fractionalized, highly casualized workforce that I think doesn't drive culture and doesn't necessarily get worker loyalty. They're all the things we're doing. Steve, did you? Yeah. It certainly was challenging. All right. Last. Thank you for that. Last question. I don't follow this sector as closely as I have in the past. I mean, I think we expect to, but it's been a very difficult period, and we've kind of kept it busy all over the place. I mean, in terms of visibility then, I mean, do you have better visibility on what FY 2023 is gonna look like now than six months ago? Because frankly, I still feel like we're very much in the dark around how the new funding reforms are gonna work, both in terms of revenue and cost line. Yeah. Look, David, there are some details that, you know, we certainly look forward to in terms of, you know, the revenue makeup and also, you know, the particular impact on those average number of minutes and things like that. You know, we're taking a cautiously optimistic approach to what the future look like. Again, hard to predict what the next variant of Omicron, if there is one, how that might impact. I just look to you know the fact that those states that were lightly impacted by the COVID experience of the last six months had particularly high levels of occupancy. I think we could potentially think of occupancy rebounding in a reasonably positive way across the board. Don't wanna guide on occupancy at all, but there is that essential need that we see that sits there that I think is important, that underpins overall success in the sector. You're right, in terms of some of those Royal Commission and government reforms, we look to some more detail. I think that, again, the thing that encourages me there is that when the Royal Commission was released, the naysayers said, "Well, you know, they could have done a better job here." When the government at its main budget last year, you know, responded to the, I think it was 126 recommendations of the 144, again, it was said, "Well, this is not necessarily, you know, a good response." Well, this reform agenda is absolutely occurring at a cracking pace. You know, there is sixty-odd projects being run by government, addressing all of these areas. You know, there was suggestions that the ACAR reform was, you know, being kicked down the road and it wouldn't happen till 2024. Well, we've seen in the last fortnight the government come through with, you know, some level of conviction on what they would be prepared to do for providers that wanna open homes without having licenses in advance of that date. On one hand, I'd love a lot more detail, but on the other hand, I actually see the reform agenda really pushing ahead quite strongly. Great. Thank you very much for that. Very generous of you. Thank you. Participants, to ask a question, please press star one on your telephone keypad. The next question is from Sinclair Currie from NovaPort Capital. Please go ahead. Thanks for taking my question. Just, there've been headlines of some homes closing of late, and I was interested in your comments around the market value of your portfolio potentially being higher than book, combined with, Hello? Yes, we can hear you. Yeah, combined with now the ability to write off on CGT some of those bed licenses. I was wondering if that do you think is impacting on decisions for operators to remain in the industry now there's you know maybe a tax concession to exiting? Secondly, how that impacts on your own decisions around you know refurbishments, et cetera. Does it make sense to refurb if you can sell and access tax losses? Oh, a couple of questions there, Sinclair. I might take them. In terms of sector exits, yeah, as Ian reported, you know, there's two large acquisitions that took place, the portfolio acquisitions, but there are a large number of small single home providers who are exiting or exchanging hands at not very much. So we're certainly seeing that, and I think the burden there is they're just not equipped to be able to cope with this extra intensity from the government in terms of regulation, expected increased compliance costs, whether that's financial or regulatory. I don't know whether those homes will see much future tax potential. Not everybody has a high license value in their books. You know, we have a large carrying value because they were acquired and valued through acquisitions. That's why we have that. I don't think that it will serve to help smaller operators who probably and if you read the StewartBrown reports, largely don't have a carrying value associated with their licenses. They're not required to count within accounting standards. I'm not sure that it will lead to people staying here. In relation to our own portfolio, as Ian said, you know that we have a confidence that the Royal Commission recommendations and the Independent Pricing Authority guidelines will see a recommendation for sustained margin. You know, the government wouldn't have abolished ACAR if they didn't want people to come in and invest, and they know that to do that, they've got to offer reasonable returns. From our point of view, you know, we've got good assets that we can develop. If we find we have surplus assets and the best alternative is to dispose, then potentially those disposals will be tax-free disposals after 2024. It's not something that we're looking to actively look at what we can dispose of now. It's a long way off. As Ian said, we're more looking at what we can develop and what the abolition of ACAR, which for the first time, really introduces open and fair competition into what was previously a protective anti-Sinclair. Yeah. Thanks for the clarity and thanks for the results presentation. That was really informative. Thank you. The next question is from Tom Godfrey from MST. Please go ahead. Good morning, guys. Thanks for taking my questions. Can you hear me okay? We can. How are you, Tom? Great. I was just going to ask, just to follow up to one of David's questions earlier, just around the pace of the reform agenda, and appreciate all of your comments, Ian. I was just gonna ask around AN-ACC, like, the go-live date's October this year. Are you surprised that we haven't had more detail from government just around how that shakes out? I think there's a comment in the pack just sort of saying that it doesn't necessitate lower funding levels. It's just looking to simplify the process. Surely if it is a sort of reappropriation of the pie, someone has to lose. Just interested in your thoughts around either of those sort of two elements of AN-ACC. Yeah, Tom, I think as Ian said, the timing certainly looks like it's gonna present a challenge for government. But there has been no indication yet from government as to what the levels of funding under AN-ACC might be. They did issue quite a sharp riposte to some speculation by consulting businesses as to what might happen. We've been, you know, privy to conversations with Department and, you know, they confirmed that the intention is not to reduce funding, but to streamline and simplify the process. I think speculating on reduced levels of funding, increased levels of funding or redistribution is probably not helpful. Just to bear in mind, the government has set aside additional funding in the forward estimates to cover potentially increased minutes for nursing. Again, that's not been exactly articulated as to how it's gonna work. As I said, in relation to, you know, Sinclair's question, the government is on clear notice and clearly understands that if it wishes to attract investment and keep people in the sector, then they've got to deliver appropriate funding to deliver quality care. That's what we would expect the pricing authority to be recommending. Bear in mind, they will start their recommendations from June 2023. That's only a sort of nine-month period on the proposed introduction of AN-ACC until their independent pricing recommendations come into play. Thanks, Stephen. That was actually my follow-up question, was just your initial dealings with IHACPA, and sort of management there and your sort of take on how strong a sort of advocate they will be for that sort of, I suppose, you know, fair level of funding in the sector. Do you think they'll be a strong independent voice as they've been in public hospitals? How should we sort of view the negative jaws dynamic longer term just under their stewardship? I've had the opportunity to meet with them on a couple of occasions, Tom, and I think everything that we saw in terms of their reputation in what they did in the hospital world will flow through in terms of the competency, the skills, methodological rigor, and the culture of the organization in terms of being an independent voice. Everything that we've seen generally as a sector to date would be encouraging in terms of independence and you know a skilled organization to do the complex work that they'll be expected to perform. Great. Thanks for your time, guys. Thank you. The next question is from Matthew Johnston from Jarden. Please go ahead. Good morning, Ian. Good morning, Steve. Can you hear me okay? We can. Apologies, I jumped on late, but just a quick one from me. Just on slide 12, you've given an EBITDA bridge. Just on the direct COVID-19 cost of AUD 12.1 million, can you give any sort of color around what would qualify for government grants to get money back from that? And then moving forward, am I right in thinking that all those direct COVID-19 costs should disappear as we get away from COVID? I'll take that, Matt. In terms of the costs that are eligible, we have estimated that of that AUD 12.1 million in the first half, AUD 7.5 million will be recoverable from grants. Those are estimated. They've been lodged and confirmed as received. In terms of costs that are not recoverable, it's basically increased preventative measures outside of an outbreak period. During outbreaks, the government won't pay for leave costs. Now both of those are areas that we're engaging with government on about the reasonableness of that approach. Essentially, if you're paying, you know, quarantine leave or sick leave, the government won't recover those. That's the level of unrecovery. In terms of looking forward, you know, the situation does change daily. That's why we've tried to show on that slide 13, the cost base, assuming that COVID-19 sort of moves to the endemic phase. The ongoing impact of COVID costs will be dependent on the level of outbreaks in the community, 'cause that flows into homes, and on the willingness of government to support all costs. You know, clearly, as we've said, that delta between what you incur and what you can recover is an important item for the future. I think there's very encouraging signs when you look overseas into what's happening in Europe. The rapid fall in infections in homes in Australia is really, you know, quite promising for the future. Yeah, it's a very volatile and uncertain situation, that's for sure. Okay. I might just try and get a quick one. Just on occupancy, obviously the drop-off. Can you give any color around in terms of what was due to, I guess, a shortfall in short-term stay given elective surgery went away? Once elective surgery comes back on full line, do you expect, you know, a good tick up in occupancy in the second half? Oh, Matt, look, it's probably, as Ian said, we don't really wanna guide to occupancy. There is the chart that we show in the pack that shows the recovery rate that we experienced last year, and I think that shows the rate at which, you know, it can come up. On slide 21, we've got the rate recovery from last year. We haven't reached the levels quite as low as last year. You can see that the current levels in Queensland and South Australia are still very high. I think that shows what's possible. Yeah, we're certainly seeing an increase in tours and visits. Hopefully we can sustain a similar occupancy recovery. As you say, it would be wrong for us to forecast how quickly that might come back. Matt, I think, you know, the proposition you make about the recovery of surgery and all of that, you know, we understand that. That's certainly one of the main supply channels for, you know, those admission paths into residential aged care. I think probably if anything is going to see a different form of occupancy recovery, it's what I said in response to David Low's question. There are new settings that have just recently been released, and you might not have heard me if you joined late. Happy to talk in more detail later in the week. These new settings, as I previously indicated, are now more risk-based. In the past, the typical response to a COVID outbreak was a very doctrinaire, close the home down, almost irrespective of the number of cases, be they residents or staff. It meant that there were no visitors. It was very difficult to undertake tours. In fact, in South Australia, you were prohibited from touring by state government directives. These new guidelines that have been promulgated are more risk-based. There is far more freedoms and, you know, almost in all circumstances, visitation continues. You know, depending on the use of PPE and other protocols, you know, the home basically continues largely unimpacted. Rather than whole of home closures, again, it's more risk-based. Depending on the circumstances, it well may be just a wing of the home closed or a resident restricted to a room for a short-ish period of time. I think that's gonna be a very interesting new dynamic, and it's probably just a little bit too early to call in actual numbers what the occupancy response has been, you know. We suspect it's likely to be, you know, quite positive. Okay, that's good, Thorley. I'll leave it there. Thanks, guys. Thank you. Ladies and gentlemen, with that, we conclude our conference for today. Thank you for participating. You may now disconnect.