Welcome to the Estia Health FY 2022 Full Year Results conference call. 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. I would now like to hand the conference over to Mr. Sean Bilton, Chief Executive Officer and Managing Director. Please go ahead. Good morning and welcome to the Estia financial year 2022 full year results. I'm Sean Bilton, Chief Executive Officer and Managing Director, and with me today is Steve Lemlin, our CFO. I would like to start by acknowledging the Gadigal people of the Eora nation, the traditional custodians of the land from which I join you today, and pay my respects to their elders, past, present, and emerging. The past 12 months have continued to reflect extremely challenging operating circumstances for the sector as the pandemic moved into its third year and Omicron heavily impacted the sector from December. This impact has largely dominated the landscape and further exacerbated the challenges of financial sustainability within the sector. We will spend time today looking at both issues in more detail, as well as the government reform agenda being implemented following the Aged Care Royal Commission. I will start by discussing the key themes which are likely to impact the outlook for both the company and the sector. Since the Royal Commission was announced a little over four years ago, the sector has faced a period of extreme scrutiny and uncertainty, which has resulted in the underlying attractiveness of the sector being overshadowed and somewhat overlooked. While uncertainty remains as the last elements of the reform agenda are implemented, the finalization is in itself a positive that will create an environment where decisions can be made with more confidence. As a large listed entity, these reforms, which ultimately drive governance, accountability and transparency, place the company in a strong relative position. I will spend more time shortly summarizing the key areas of the government reform agenda, which largely reflect the recommendations of the Royal Commission. At the same time, residential aged care will continue to benefit from the demographic tailwind of an aging population, with the cohort aged over 85 expected to grow by 60% to 871,000 over the next decade, which will end up underpinning demand. There will be an ability for strong providers to thrive in a more complex and competitive market, where more than half of the 850 aged care providers own one or two homes only. Estia has a sound operational platform, strong financial position and experienced leadership team, and as a result, we are well placed to take advantage of consolidation and growth opportunities in the sector. Our portfolio is high quality. More than 91% of our rooms are single occupancy. Almost all homes qualify as significantly refurbished and are well located in metro markets, underpinned by strong property value growth over the previous two years, offering further RAD uplift as older RADs and bonds are replaced. High building and land costs and regulatory uncertainty has resulted in a reduction in new supply, which is not expected to materially change in the short term despite the deregulation of licensing. The company has taken the opportunity over the last three years to further significantly invest in the clinical and quality framework and team, which has led to strong resident outcomes and better relative performance to the sector on measures of quality, compliance and satisfaction. Once again, this investment places the company in a strong position to meet the requirements of a sector reshaped by the reform agenda. Workforce is the biggest challenge being faced by the sector at this time. Large providers have an advantage due to an ability to invest in career pathways, central support for local teams, and enhanced recruitment and onboarding systems. The commitment and loyalty of the aged care workforce has been exceptional, notwithstanding the fact that rates of pay typically lag comparable sectors. The current Fair Work Commission work value case may provide a trigger for greater parity, make the sector more attractive, and facilitate the required growth of the sector workforce. COVID-19 remains a major factor, with large numbers of outbreaks and exposures. The largest issue remains workforce availability, which continues to drive higher costs. The cost and availability of PPE, RATs, antivirals and vaccination has resulted in a reduction in non-wage costs and importantly, the extent of serious illness. While operationally this is more manageable, it continues to come at a considerable cost, which is not being fully covered by funding or grants, and is impacting the financial sustainability of the sector. I'd like to now turn to a summary of the financial headlines, which demonstrate the impact of COVID-19, together with the continued divergence of government funding increases and input costs. There remains core strength in the company's balance sheet. EBITDA on mature homes fell to AUD 37.5 million in the year, almost exclusively due to the estimated incremental COVID-19 prevention and response costs of AUD 50.4 million, approximately twice the level seen in FY 2021. Although government grant schemes exist to provide for the recovery of a significant portion of these costs, as we advised the market in May and again earlier this month, a significant delay in the processing of these claims by government has resulted in only AUD 7.1 million of these claims being confirmed by the end of FY 2022. Had these costs been recovered in full during the period in which they were incurred, EBITDA on our mature homes would have been approximately AUD 80 million. Steve will talk more about the impact of grant recovery shortly, but clearly the combination of a high number of claims and processing delays is creating pressures for the sector. This year also saw the first round of the bed license amortization resulting from the abolition of the aged care approvals around ACAR, which we outlined extensively at the half year. The impact of COVID-19 on our results before bed license amortization was reflected in a loss of AUD 9.6 million after tax, due largely to the delayed recovery of grants applied for in relation to costs incurred in the period. Our average occupancy was again impacted by COVID-19 during FY 2022 and was below pre-COVID highs, which exceeded 93.5%. Occupancy for the full year averaged 91.6% in the period, a modest improvement compared to FY 2021. I'm pleased to say that as of Friday, our occupancy had recovered to 92% from the last spot rate of 91% disclosed in May this year, with the current rate above pre-Omicron levels. The decline in average occupancy in the second half also impacted our net RAD flows, which were AUD 22.8 million for the year. Pleasingly, our average incoming RADs continued to improve to AUD 453,000. The on-market share buyback announced in November was conducted in line with ASX rules, and we were able to purchase 3.6 million shares for consideration of AUD 8 million in the period, primarily due to ongoing low liquidity and volumes. As a result of the NPATA loss in the period, directors have determined there will be no final dividend declared, and as a result, the interim dividend of AUD 0.0235 will remain the full dividend distributed for the year. Notwithstanding the financial performance reflecting COVID-19 and a delay in grant recovery, our balance sheet remains in a healthy position with a net debt at the 30th of June of AUD 79.6 million, with significant undrawn capacity in our AUD 330 million sustainability-linked debt facility. While the reported financial performance is clearly disappointing, the underlying results are sound considering the challenges that faced the sector during the period. I will briefly discuss the demographic profile and demand and supply considerations likely to impact the sector in the future. Residential aged care remains a needs-based essential service and represents a vital component of the continuum of care, with in excess of 250,000 older Australians being cared for in a typical year. With the oldest baby boomers now over 75, this cohort will increasingly intersect with the aged care sector over the coming two decades. While home care has seen significant growth over the past five years and will continue to play an important role in aged care services in Australia, the changed nature of residential aged care over the last decade, that is high acuity, needs-based services with a high proportion of residents with dementia, is not easily substituted by home care. Even allowing for a reduction in the utilization rate of residential aged care, the extreme growth in the population over 85 will require continued expansion in residential services. Coupled with the supply profile, which was estimated by ACFI to comprise up to 25% of existing stock, which requires replacement or substantial refurbishment and a reduction in supply over recent years, we remain confident in the underlying fundamentals of the sector. I'll move on to highlight the key areas of reform which have impacted or will soon impact the sector. The Royal Commission highlighted an underfunded sector with a predominance of older stock protected by the restricted licensing regime. Some key reforms have been passed through Parliament in recent weeks, with others expected to be approved in September. The impact of many of the changes are likely to create further barriers to entry and challenges for small providers. Much of the structure of these reforms will be more easily implemented for larger providers such as ourselves, and these changes are likely to further accelerate the consolidation of the sector. From a structural perspective, we see five key reform areas significantly impacting the outlook for the sector. Number one, the abolition of the restrictive license regime, which will open up previously protected areas to new supply and as a result, provide better choice for consumers. This represents both an opportunity and a threat for those providers who are operating non-contemporary stock or are unable to offer a competitive and compelling service proposition. Number two, the replacement of ACFI with AN-ACC, a case mix model, will come into effect in October this year. The linking of this new model to mandated care minutes from October 2023 increases the complexity of assessing the overall net effect for providers. While providers including Estia, have received shadow assessments for the majority of residents, a large number of these are now dated by up to 18 months, and a process of reassessment is now being pursued, which may impact the overall outcome. The government will commence the star rating system with effect from December 2022, which will provide an overall rating based on four criteria, namely compliance performance, customer satisfaction, clinical indicators, and average care minutes. This will provide greater transparency to consumers and drive continuous improvement in the sector. Number four, perhaps most importantly, the recently expanded and renamed Independent Health and Aged Care Pricing Authority, IHACPA, will have responsibility for making recommendations to government in relation to the costs of providing care from July 2023, which will replace the current indexation system, which has traditionally delivered increases in funding below the level of input cost inflation. While consultation and refinement is underway, a framework should be in place to end historic margin erosion. Responsibility will still lie with government to implement appropriate funding increases based on IHACPA recommendations, but it is expected that there will be transparency around the process. Estia has participated in the recently completed pilot program run by IHACPA to test technologies to facilitate a wider cost of care study. Number five, IHACPA and government will be required to consider the increased cost of mandated care minutes with an appropriate funding response in order to ensure the financial sustainability of the sector. There remains consultation on the regulations and arrangements which will underpin mandated care minutes and indeed the availability of labor to deliver these care minutes. As these reforms are implemented over the coming 18 months, it is likely that the issue of co-contribution will receive more focus. The intersection of mandated care minutes moving to 215 minutes, AN-ACC, and the work value case will likely require consideration to ensure that the cost of funding the sector is equitably borne between those receiving the services and the current or future taxpayers. While I am positive and looking forward to the challenges of the next few years, uncertainties remain, which may impact the financial performance of the group in the short to medium term, until such time as the impacts from COVID-19 reduce, workforce becomes more stable, and the new funding mechanism and mandated care minutes are fully defined and operational. On page eight, we have highlighted a summary of how the pandemic has impacted the sector and the group during the year. At present time, we continue to experience multiple outbreaks across our portfolio, which is putting a strain on workforce, resources and costs. However, the impact of high vaccination rates among staff and residents, together with antiviral treatments and our own experience in managing outbreaks, is seeing the severity of illness and death rates dramatically reduced. Notwithstanding the chronic health conditions of many of our residents, very few are being hospitalized with the virus, and death rates are not materially different from pre-pandemic times. The dedication and resilience of our workforce has been extraordinary, and I cannot acknowledge enough their commitment and contribution to the safety, well-being and comfort of our residents during the most challenging periods. I will now hand over to Steve Lemlin, who will take us through the detail of our financial performance. Thank you, Sean, and good morning. I'll start on page 10, which shows our overall financial performance and highlights the deep impact of the incremental costs of prevention and response to COVID-19. Our total government revenue, excluding temporary funding and grants, has increased by 6.6% compared to FY 2021, with the AUD 10 a day fee supplement offsetting the decline in occupied bed days, which arose primarily as a result of the closure of two small homes early in the year. There was no temporary or emergency funding in the period compared to FY 2021, when AUD 11.8 million was received to support homes through the pandemic. Resident revenues showed a modest increase of 1.1%, with indexation and higher accommodation revenue resulting from the significant refurbishments, which are partly offset by the decision to suspend additional service activities and charges at certain times during COVID-19 outbreaks. We have identified incremental costs associated with COVID-19, which are more than twice the level seen in FY 2021, heavily driven by the Omicron variant in the second half and in particular, the chronic staffing pressures this caused. The critical factor in the significant fall in EBITDA on mature homes to AUD 37.5 million was due to the imbalance between COVID-19 costs and the timing of the receipt of government grants. In addition, government grants do not provide for recovery of costs associated with the prevention and protection against COVID-19, but rather only for some of the costs of responding during an outbreak. As announced to the market previously, it has been determined under Australian Accounting Standards, grant applications will not be recognized as income until confirmed by government. With only AUD 8 million of grant income confirmed in the period, AUD 1 million of which was related to the non-monetary provision of PPE, the difference between COVID-19 related costs and grant recovery was approximately AUD 42 million. This area is so significant that I'll spend more time on it later in the presentation, including the AUD 27.9 million of claims submitted for costs incurred in the year, which is still pending confirmation from government. Other costs were broadly in line with expectations. Overall staff costs outside of those identified as being related to COVID-19 will capture a modest 2.9% increase overall, reflecting the closure of the two homes, EA increases and wage pressures on non-EA and management roles. Non-wage costs overall were 3.2% higher than FY 2021, with a reduction from the closed homes being offset by higher costs in relation to insurances, services and related fees, with inflation beginning to make itself felt during the period. Electricity prices remained relatively constant as a result of being on fixed price contracts, but gas and food prices started to increase. We do expect utilities and food costs to be higher over FY 2023. Our new home at Blakehurst, which opened in February 2021, performed exceptionally well and despite COVID-19 outbreaks, has remained around 97% occupancy since May this year. Depreciation expense increased mainly as a result of an acceleration required for two homes, where brownfield developments are currently under detailed planning. The timing difference between the incurrence of COVID-19 related costs and associated grant recovery has therefore been the main difference compared to FY 2021 and resulted in the overall impairment loss before bed license amortization of AUD 9.6 million. Appendix C shows the movement between the first and second half year periods. As grants were not all assessed by the year-end, this has adversely impacted the results as advised to the market, and the second half produced an impairment loss of AUD 15.8 million compared to a profit of AUD 6.1 million in the first half. A fall of AUD 21.9 million, represented almost entirely by the COVID cost and grants differential. The non-cash bed license amortization following the announced abolition of ACAR in the year was explained fully at the half year and was AUD 60.3 million in the period, or AUD 42.7 million after tax. This is referenced in appendix F, highlighting that this post-tax non-cash charge will be AUD 57 million for each of the next two years until the carrying value of licenses is fully amortized. As a result, therefore, the statutory reported loss for the period was AUD 52.4 million. On page 11, we show in bridge format the movement in mature home EBITDA from FY 2021. The COVID-19 costs and the grant impacts are shown at the far left and far right of the chart, with the middle portion showing the movement excluding COVID-19 costs and grant impacts. The increase of AUD 35.2 million in government funding was driven largely by the AUD 10 a day fee supplement effective from July 2021, which contributed approximately AUD 20 million of revenue. AUD 5 million arose from indexation of 1.1%, and the remainder from higher acuity and higher accommodation supplements. The AUD 10 a day supplement would have likely seen a partial addressing of recent years' margin erosion in the absence of COVID-19. Not with standing at AUD 20 million increase in revenue, the growth in employee and non-wage expenses accounted for AUD 15.7 million, significantly reducing the benefit. The AUD 10 a day supplement ceases from 1 October 2022 and will be incorporated into the new AN-ACC pricing model. I move to page 12, where we provided further insight into the underlying performance of the business, showing key metrics associated, assuming a removal of the impact of COVID-19 costs and temporary funding and growth. These tables show more detail behind the EBITDA bridge to show. I went through, worked through all of these line by line today, and we show the half by half movement in appendix C. It can be seen that the AUD 10 a fee supplement supported a partial recovery of EBITDA per occupied bed, which would have been an adjusted outcome of AUD 14,285 per resident per year outside of COVID-19. Nevertheless, the financial sustainability of the sector is still to be addressed, with the adjusted annualized EBIT per occupied bed being only AUD 6,500. The movement between H1 and H2 is almost entirely accounted for by COVID cost grant differential. Costs and grant differential of around AUD 18 million and AUD 13 million of lower occupancy. Excluding these impacts, the average in EBITDA per bed per year, in that two halves was constant at around AUD 14,000. We've also shown on this page COVID-related costs within the period. Total costs in Q3, as previously reported, were approximately AUD 24 million, which had reduced in Q4 to approximately AUD 14 million. Costs have been falling as the health and risk settings ease, and if the levels and severity of community and home infections reduce, then settings and costs can be expected to reduce further. However, future severe waves and variants may cause a reversal of that trend. Pages 13 and 14 demonstrate the balance sheet strength and available liquidity. Prudent capital management resulted in net debt being AUD 79.6 million, with considerable capacity under our AUD 330 million debt facility. Approximately AUD 37.6 million of this debt represents land and work in progress costs for the new developments. Obviously, this low debt level would have been materially lower had the grants been processed more rapidly. Our cautious restart of greenfield and brownfield developments saw AUD 10 million of capital deployed in the period, and AUD 22 million was invested in home refurbishments, enhancements, remaining sustainability projects, and replacement CapEx. An increase in prior years as the homes have become more accessible as risk settings were adjusted. Sean will talk more about our views on future investments shortly, but our balance sheet provides adequate capacity to support expansion. Net RAD inflows in the period were AUD 22.8 million, despite a small outflow in the second half. Average RAD prices increased modestly and are sustaining the AUD 47,000 difference between incoming and outgoing prices. To provide more detail on the cash flows, appendix E shows the first and second half split, adjusted for the December prepayment of January subsidies, which distorts the trend. In addition to the RAD outflow in the second half, the difference between COVID-19 related costs and grant recovery was around AUD 30 million. The increased rate of spend on the new developments saw higher CapEx being deployed in the second half compared to the first. In relation to RADs, we have seen short periods of RAD outflows previously, and there have been multiple factors at play in the year which saw a fall in RAD preference in the last 12-18 months, as people have kept money in the housing market to benefit from the dramatic increase in prices. Combined with the unsustainably low MPIR or the DAP rate, this has resulted in an increased preference for DAPs, with the benefit in income being only modest because the MPIR has been so low compared to departing residents' rates. A non-concessional resident proportion of the population has increased slightly over the period. The recent increase in the MPIR, falling house prices and rising interest rates could be expected to contribute to reversal of payment preference trends in coming periods. A recovery in occupancy rates to previous levels, combined with the price difference between incoming and outgoing RADs, contributions to new homes and the external environment, provide the opportunity to realize improved RAD flows in coming periods. The first few weeks of this financial year has seen an increased preference for RADs. On page 15, we provide a greater detail in relation to our COVID cost grant recovery program. Without reading the whole page, I note again that grant submissions are limited to defined outbreak periods, and we've invested ensuring an appropriate level of due diligence is applied to recover all eligible costs which meet the grant criteria, including as required, securing an independent accountant certificate on submissions in excess of AUD 150,000. We submitted 379 claims with a total sum of AUD 36.6 million relating to our incremental COVID-19 expenditure in the period. Claims actually reviewed and processed by the department were largely remitted in full, although that was only 32 claims representing AUD 7.1 million. Grants approved in the future coming weeks and months will be recognized as income in FY 2023, which could be up to AUD 29.3 million referenced here. While we have confidence the claims submitted do meet all eligible criteria and are consistent with claims already approved, processing approval and remittance of these grants is out of the control of the company. Any adverse decision by the department may impact future financial outcomes. I'll finish this section by talking briefly about sector financial sustainability and the potential impact of upcoming funding and financing reform. The diminishing financial performance of the sector has been well documented for some time, and the group will continue to advocate for sector reform to secure a sustainable and high quality aged care sector, where the funding and financing arrangements, firstly, support the provision of services which deliver good resident outcomes. Secondly, support the financial viability of efficient providers. Thirdly, provide investment returns sufficient to attract the capital required to meet the increase in expected demand and quality. During this year, UTS, under the leadership of Professor Mike Woods, who oversaw the original Productivity Commission review into aged care more than a decade ago, issued a discussion paper on the sustainability of the sector, which highlighted the outcomes and approaches required in order to ensure that essential capacity and quality of the sector is sustained. As Sean said earlier, we see the role of the expanded Independent Health and Aged Care Pricing Authority and the government's response to its findings and pricing advice as being key in establishing reasonable margins to sustain and encourage new capacity following the abolition of ACAR. In this respect, we note that the department released a fact sheet in July 2022, which referenced its expectations as to how AN-ACC funding would remain aligned with the cost of delivering residential aged care services. The pricing authority also released its first consultation paper last week. We provided links and extracts of these important documents in the pack. Turning to page 17, we presented the upcoming changes resulting from AN-ACC, the operation of the new pricing authority, and the introduction of mandated minimum care minutes over the next 15 months. Government has estimated that average funding under AN-ACC for care services will be approximately AUD 225 a day, compared to the sector average ACFI and the 10-day fee supplement it is replacing of approximately AUD 207 a day on the first of July 2022, according to Mirus eX Source Data. In addition, there's the introduction of a one-off adjustment payment for new residents and changes to respite funding, which may also be positive to overall revenues. AN-ACC assessments are undertaken by independent third-party assessors, as opposed to ACFI, which was self-assessed by providers and subject to review by the department. The group is reviewing its provisional assessments and applying for reassessments. Although the group's average funding under AN-ACC for FY 2023 is expected to be broadly in line with the sector average announced by government, there remains uncertainty, not least while the process of reviewing shadow assessments continues. Each AN-ACC level has an associated level of care minutes, which at a home-by-home level, is then proposed to form the basis of the average mandated minimum care minutes to be in place from October 2023, a year after AN-ACC is introduced. StewartBrown have estimated that current average care minutes across the sector might be up to 12%-14% below the current level proposed by government based on the current proposed narrow definition of care minutes, which excludes some components considered vital to resident well-being, such as allied health and lifestyle. The cost associated with funding any increase across the sector, if it were to be applied based on the current approach, would be incorporated into IHACPA's costing analysis and pricing advice to government. The significant uncertainty around the completion of assessments, reassessments, definition of care minutes, the government's response to IHACPA findings, and the group's further response to the provision, means that at the current time, we're not in a position to provide further guidance on the net impact of the group in future periods of these proposed changes. I'll now hand back to Sean. Thanks, Steve. Page 19 is a brief reminder of the key parameters for our operational portfolio, highlighting the strong network clusters, a predominance of single rooms, the number of freehold sites and their underlying land value, together with the stability of the resident mix, reflecting greater than 50% non-supported residents. This combination of factors contributes directly to the subsequent outcomes we will outline, both financial and non-financial. Turning to page 20, as has been documented, the average occupancy across the sector has been heavily impacted by operational disruptions caused by COVID-19. While our occupancy has not been immune, it has been on a recovery path reflecting the quality of the portfolio and services provided. Victoria remains the state with the lowest occupancy across the sector overall, which is consistent with our experience where nearly a third of our homes are located. Excess supply and the residual effect of sustained COVID-19 impacts over two years has resulted in ongoing lower levels of occupancy in that state. While our New South Wales portfolio was similarly experienced occupancy challenges, it has recently materially improved, and all but two homes are operating at a high level of occupancy. Our homes in South Australia and Queensland continue to sustain high levels of occupancy despite being affected by COVID over the last nine months. Overall, our spot occupancy outside Victoria at 94.7% reflects the strength of the overall portfolio and a recovery to pre-COVID levels. While there has been discussion in some forums of a structural adjustment in occupancy due to the increase in home care places, the strong performance across two-thirds of the portfolio would suggest local factors remain a key driver, and given the acuity of our residents, substitution by home care may be somewhat limited. We will continue to strive to return occupancy to previously experienced portfolio-wide levels, which will be assisted by the demographic demand profile, continued strategic investment in the portfolio, and the future development of resident services. I will now talk about three critical operational success factors, starting with workforce. As previously discussed, workforce remains the greatest issue facing the sector, with average pay levels for aged care staff well below other sectors, especially the NDIS. Aged care is finding it difficult to attract workers in an environment with historically low unemployment. This shortage of staff across the sector, coupled with the continuing high levels of COVID-19 cases in the community, which is driving high levels of leave and has seen experienced workers electing to leave the sector, is resulting in acute pressure. As a consequence, staff costs have increased with higher overtime COVID-19 allowances, surge payments, and agency costs, as well as high levels of pandemic related leave. The virtual cessation of immigration in the last two years has significantly reduced the available workforce across the whole country. Even with migration being restarted, the global competition for migrants, together with the limited eligibility of aged care workers for certain visas, means there is unlikely to be a short term solution. Nonetheless, I am confident in our ability to attract and retain staff, and to do so, we have invested in increased training and development programs, career pathways, a sector leading graduate nurse program, and more broadly, in recruitment strategies, systems and resources. In FY 2022, over 17,700 training hours were delivered in clinical development, dementia, and behavior management, and we hosted 1,936 student placements. We've also focused heavily on employee well-being in order to provide a safe and supportive environment through investment in our employee assistance programs, including the introduction of psychological first aid training across the group. Not with standing these initiatives, like most providers, we have seen permanent staff turnover continue to be a challenge in FY 2022. Although pleasingly, this has stabilized in the second half at just under 30%. A standout result in FY 2022 has been our employee safety metrics, which has allowed us to implement self-insurance for workers compensation in New South Wales and South Australia, with flow on benefits to costs and improved recovery and return to work rates. As a result, we have seen this year's LTIFR reduced to 8.8 from 11.9 in FY 2021, a figure approximately half the sector average. The proportion of our workforce on enterprise agreements increased during FY 2022 to 96%, with a new EA being implemented for our SA non-nursing staff. We also renewed two other EAs in the last 12 months at average increases of 2%-3%, and there is no material gender pay gap across non-EA roles. Looking forward, the Fair Work Commission work value case, which is considering a request for a 25% increase in aged care wage levels, will likely be critical to increase the attractiveness of the sector to new staff, retain current staff, and potentially motivate staff to return who have left the sector. The government have supported the claim and committed to funding the outcome. I would like to briefly spend some time on our clinical care quality and accreditation and compliance performance. Reform legislation, both which is passed and which is proposed, will see a requirement for increased governance framework and further obligations on aged care providers, many of which are already in place within the group. Sustained high performance in quality and clinical care is managed through a three-tier structure. Best practice policies and procedures which are established centrally. Implementation, training and communication, which is centrally led and locally delivered. Monitoring, audit and data analysis, which is used to support continuous improvement. Our clinical governance committee provides oversight of clinical care and governance with Professor Simon Willcock as an independent chair. We're also pleased to announce the appointment of Professor Willcock to the main Estia board from the first of September 2022. Professor Willcock brings a wealth of academic and sector experience while also delivering care directly into aged care homes as a GP. We've had a single online resident record management system operating across the group for many years, which incorporates individual care plans and allows central assessment and monitoring. We've invested in development programs for clinical employees, establishing a nursing community of practice to support our nurses who are rostered on every shift in every home. We have upgraded a significant proportion of our nurse call systems to enable better monitoring and reporting, and elevated the capability of our CCTV system in each home to facilitate a better understanding of incidents and enable the future capacity for technology enhancements. Whilst it has been an extremely challenging environment to deliver high quality aged care services, we are pleased with our accreditation and compliance record. During FY 2022, all homes have remained fully accredited. No homes sanctioned, no notices of non-compliance, and no notices to agree issued. We have assessed that the level of complaints made to the Aged Care Quality and Safety Commission about our homes is 28% below the industry level reported in the most recently published data. The final key operational limb is resident services. This is particularly critical as licensed deregulation, increased home care services and increased transparency, such as the star rating system, will create a more competitive environment with differentiation and high quality services required to ensure strong levels of occupancy. Some of the key areas where we see competitive advantage coming to play are strong connections in the local community and with regional health networks. An ability to accommodate a wide range of residents, including permanent care, dementia care, palliative care, short term respite, and reablement, post-trauma or surgery. A high quality portfolio, which is in contrast to a large proportion of the sector with non-contemporary multi-bed wards with shared facilities, generally low amenity and limited outdoor areas. Freshly prepared meals from an on-site chef who participates in active development programs for aged care. Delivery of an engaging, personalized and varied lifestyle program. Our commitment and investment in these areas has delivered strong results in a number of metrics, including our customer satisfaction levels, occupancy and resident mix, as well as benefit from higher accommodation payments resulting from RAD price growth, which Steve referred to earlier. Page 24. Growth remains a key focus of the group, albeit in a disciplined manner. We are ensuring that we are well-placed to expand as industry dynamics result in opportunities for strong, well-funded providers. The current acute inflationary and supply pressures in the construction industry have had an impact on build costs, with new supply remaining suppressed. Combined with the difficult operating environment, which may result in some smaller providers seeking to exit the sector, it is likely that the investment cycle is tilted more towards acquisition growth for the short to medium term, and we continue to review opportunities in the ordinary course. As previously announced, during FY 2022, we commenced the greenfield projects at St Ives and Aberglasslyn in New South Wales, and our first brownfield development for some time at Burton in South Australia is nearing completion. These developments are scheduled to complete in the next 12 months, bringing an additional 260 places online. These new homes and rooms will be commissioned in a manner consistent with the successful approach taken to our most recent builds. Each of these five homes, built in good time, attracted good RAD flows and consistently operate at or close to 100% occupancy. We exchanged contracts on a new development site at Woodcroft in Adelaide, which is expected to deliver another 120 places to the pipeline in an attractive market. Our refurbishment program, executed over recent years, sees 62 homes now qualifying for the higher accommodation supplement. We will continue our rolling program of home upgrades and asset lifecycle replacements to ensure our homes remain competitive in their markets. In relation to diversification, due to sector challenges, increased regulation and low returns, it is considered unlikely at this time that we would seek to enter the home care market at any significant scale. It is more likely there may be opportunities to further develop or refine allied health services, in particular in the reablement space, which has been successful on a pilot basis at our newest home at Blakehurst, and where there are opportunities to expand this to other locations in the portfolio with suitable demographics. I'd like to close with an outline of our progress on our ESG commitments. We established a four-year plan across three core pillars, supporting our people, respecting our environment, enhancing our community. We have 11 focus areas with specific targets, each of which is mapped against the UN Sustainable Development Goals. Positive progress against the goals has been made, although some have been impacted by external factors, including COVID-19. For example, waste reduction and diversion from landfill due to PPE use. In FY 22, we made progress on a number of our people-related measures, such as LTIFR, internal promotion, and wellbeing, and further reduced our emissions intensity. In October 2021, we established a new AUD 330 million sustainability-linked financing facility with targets across four key areas. I'm pleased to say that despite the challenges of the last 12 months, we've managed to make good progress against these targets, which will also lead to a reduction in our future financing costs. Included in our financial results for the first time is a fulsome TCFD report reflecting management's commitment to ensuring the company plays a role in making an appropriate contribution to a more sustainable future. In conclusion, I reiterate my comments from the start of the presentation that the regulatory landscape is nearing a point where we will have a significant degree of certainty for the first time in four years. The group is well placed to benefit from opportunities created by a more competitive and transparent sector. The underlying strength of the opportunity is based on the demographic trends, which will increase the core 85+, 85+ cohort by 60% over the next decade. The quality of our portfolio, the strong financial position of the group with significant capacity for growth, historical investment in the clinical quality people and safety framework, a strong existing governance framework, and the introduction of IHACPA, which is expected to facilitate pricing and subsidies that better reflect the underlying cost of delivering services. Nevertheless, key challenges and uncertainties remain in the short term in the form of the introduction of AN-ACC and mandated care minutes, continued COVID-19 exposures and outbreaks, and the need to secure a committed and skilled workforce for the sector. Before we take questions, I'd like to take the opportunity to acknowledge the incredible commitment and contribution made by my predecessor as CEO, Mr. Ian Thorley, who has retired after a long and distinguished career in healthcare, particularly the last six years here at Estia Health. It's been an honor to work with Ian over an extended period, and I am excited by the opportunity to build on his legacy. Finally, I'd like to acknowledge the extraordinary commitment, dedication, passion and care shown by our employees here at Estia Health. They care for our residents at a time of deepest need. They put others before themselves, and over the last two years have been at the forefront in the battle against the pandemic. They bring to life our purpose of enriching and celebrating lives together. We are deeply grateful to them. I look forward with them to a bright future for the sector and the company. Thank you. We'll now take 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're on a speakerphone, please pick up the handset to ask your question. We ask today that you please limit yourself to one question per person, after which you may then rejoin the queue. Your first question comes from Tom Godfrey with MST. Please go ahead. Oh, good morning, Sean and Steve. Thanks for taking my questions. Can you hear me okay? We can hear you, Tom. Great. I did have a few, but I'll just ask the one and jump back in the queue. Just in terms of the comment on that slide around you expect your AN-ACC funding to be broadly in line with the sector expectation of AUD 225 per day. Do we take that as an AUD 8 reduction versus the AUD 233 reported for FY 2022, or are there more moving pieces we need to think about there? The 233. Where did you get the 233 from, Tom? 232.8. FY 2022, slide 12. No, that AUD 232.8 will include other government revenues as well. It's not just AN-ACC. That will include not just ACFI, that includes accommodation supplements as well. Got you. Okay. In terms of a like for like with the 225, Steve, how should we sort of be thinking about that? Look, Tom, we've never disclosed the ACFI for a number of years, as you know, but we have said that overall, we expect that AN-ACC change to be positive for our revenue. In terms of quantifying exactly what that will look like, as Shaun said, there's a lot still to be done around the reassessments. We've not had all of our assessments, and we continue to do reassessments at present. We have said we expect it to be positive for us. Got it. Great. I'll jump back in the queue. Thanks. Your next question comes from Craig Wong-Pan with Royal Bank of Canada. Please go ahead. Morning. My question, just on the non-wage expenses, where you started to see some inflation, I was wondering if you could provide an expectation for what you think the cost growth could be for non-wages in FY 2023? Craig, look, as you know, we don't provide formal guidance, but a large part of those costs in non-wage costs will be subject to whatever inflation rates that we see in the Australian economy. I'd probably look from a forecasting point of view to you know, the RBA's inflation expectations. Okay, thanks. Your next question comes from Vanessa Thomson with Jefferies. Please go ahead. Morning, Sean and Steve, and thank you for taking my question. I just wanted to ask about staffing and wages and agency nursing? I can see that casual hours as a percentage of total hours worked has declined. We're hearing that more agency staff are being employed and more people are moving from permanent to casual contracts, which in healthcare generally seems in contrast to your situation? I just wanted some color on that. Thanks. Yeah, thank you for the question. Yeah, look, Yeah, we haven't seen a material change in our casuals. I mean, it's always been a focus for us to have an appropriate level of casual staff to ensure that you've got flexibility around rosters without sort of carrying the additional cost of a high casual load. We have seen some reduction in casuals and, you know, I think in the current environment, there has been more agency use across healthcare more broadly, and we've certainly seen a higher reliance on agency than we typically have in the past. Part of that is sort of what I would call more steady state, but there is a significant proportion of that is related to outbreaks. It's a little bit hard to see where that will fall, Vanessa. You know, certainly, the degree of outbreaks and the extent of them has meant that you know, there has been a reliance on surge agency to deal with those over the last sort of 12 months, and that has you know, created a lot of noise around what the sort of steady state ongoing level of agency use is. As I said, I expect it to be a little bit higher than before, but I think you know, obviously, as I said, it's been the significant factor in the last 12 months has been around the outbreaks rather than a sort of I would say, at this time, a noting of a significant structural adjustment in the overall workforce. Thank you. Your next question comes from Matt Johnston with Jarden. Please go ahead. Good morning, Sean and Steve. My question is just around occupancy. A good tick up in first quarter 2023. Can you give us some color around what's driving that, whether it's respite or permanent residence and what the lead indicators look like at the moment? Yeah, thank you. Well, I think there's a couple of things at play. There is a slightly higher level of respite, but that is not atypical for this time of year because on the first of July, you get a resetting of respite allowances. You do tend to get a higher degree of respite early in the financial year, and that then translates typically into a higher permanent occupancy. We're not seeing anything that I would say is out of the ordinary in that regard. Overall, look, I think we do have some you know some good momentum around occupancy, albeit the challenges in Victoria. I will say, I think from a positive perspective around occupancy, noting the trend you did for the new financial year, that's been done through a period of high community transmission of COVID, obviously with that most recent wave of the new strains of Omicron. I think the fact that we've been able to maintain and sort of push forward through a period like that is a good sign for what we have in front of us at the moment. Sorry, just on the Victoria, like the issues, do you think there's opportunities to rationalize facilities and or get rid of underperforming facilities? Look, we're always looking at our portfolio across these timelines. We've always got a range of, you know, we often focus, you know, on our what we call our bottom quartile. You know, the thing about a bottom quartile, is this always a bottom quartile. It's sort of we're always looking at our portfolio with opportunities to improve either through personal or other opportunities. We've demonstrated that in the last sort of 12-15 months with the sort of closure of a couple of the smaller homes in Victoria that weren't performing. One of those was a leasehold property that we were just the lessee on, and we weren't, you know, we didn't think the forward terms were attractive. You know, we have done that in the past, and like any provider with the number of homes we have, we will continue to review opportunities across the portfolio. Okay, thanks. Your next question comes from David Bailey with Macquarie. Please go ahead. Yeah, thanks. Good morning, Sean and Steve. My question is just around following on that comment around M&A probably or possibly being preferred to new developments at this point in time. Just in the context of those higher costs, are you not seeing the returns on investment you expect from new developments compared to what you might have seen previously? The extension of that question is if the industry is not adding places at the moment. I mean how are you sort of thinking about industry supply demand fundamentals and what that means for occupancy over the next couple of years? Yeah, thanks for the question. Yeah. I mean, I think what we're saying in the presentation is effectively that right here, right now, you know, today, you know, we think it's likely that you could probably buy a bed cheaper than you could build it. You know, the developments we've delivered, you know, historically, and Steve mentioned Blakehurst, you know, have all performed very well. We have a couple of developments on the go at the moment that commenced sort of prior to the most, you know, to the acute sort of cost pressures, impacting more broadly the construction sector. We still remain confident in those developments that we have underway. You know, time will tell, I suppose, whether the current heightened cost of building is, you know, passes or whether it continues, and that will really reflect as to whether, you know, how hard the sector and indeed ourselves look to push into our pipelines, you know, where we've committed to, you know, building our pipeline as in developing our pipeline. You know, it takes probably up to four years to commence a development. We have a really strong pipeline there, and we will continue to review the underlying market conditions, you know, prior to commencing each of those projects. Yeah, I mean, really our comment at the moment is that, you know, we are at a, you know, a sort of a particular cyclical high around building costs. Yes, that is being seen I think across the sector in the cost to develop beds. I do think that will suppress supply, and I think, you know, that should have some positive implications for occupancy in the short term. Thanks. Your next question comes from David Low with JP Morgan. Please go ahead. Thanks so much. Could you just start with a little bit more on COVID costs? I mean, that's obviously a pretty good trend there, as much as you can call those level of costs a good trend. Do you expect that to continue based on what you've seen so far? Just related question there, my quick calculation suggests that government grants theoretically cover about 75% of those costs. Is that the right way to think about it going forward? Good day, David. Yeah, thanks for the question. I'll just deal with that, the last point first. Yeah, that rough percentage is around about correct. Look, the decline that we've seen there, and we've shown on page 12, you know, around AUD 8 million a month in the first quarter, and that covered the really extreme and acute pressures that were felt in January into February. That's the first really heavy and acute wave, which does seem a long time ago now. Then going into Q4, you're right, the cost did reduce almost by 50%. June certainly through June and into early July, there was, you know, a lot of press around that wave, and we were heavily impacted at that time. At times, we had up to 50 homes at any one time experiencing some kind of outbreak. You can see with the lower levels of cost there that with the reduced settings and the factors that Sean spoke about, we are incurring less cost. If community transmission continues to fall, and we've seen the numbers significantly drop in the last couple of weeks, I don't think it's unreasonable to expect those costs to drop further, David. As of yesterday, when I last checked, we had 16 homes in outbreak. Now when we talk about homes in outbreak, that may just be one wing or one area. The settings are considerably reduced. So long as COVID continues to go on its downward trend, then I would expect those costs and the unrecoverability to reduce. The unrecoverability portion of it doesn't get lower? I mean, as you say, you managed it much better in the June quarter, carried by you go. I think it will, David. On a longer-term basis, the role of IHACPA is critical in this. I would encourage people to read their consultation paper because essentially, you know, the degree to which COVID becomes endemic and settings are required to protect residents and staff, those costs would be reflected in their recommendations and pricing to government. I think the unrecoverable proportion does relate to protection and prevention, so that will reduce as the prevalence in the community reduces. I mean, aged care is almost the only place where you see people wearing PPE, you know, consistently. Some of us still on transport. Moving on, I saw the comment on StewartBrown saying 175 minutes in FY 2021. Just interested to see or to hear how you think this year compares to that number and obviously the target of 200 and then 225. I think at the moment, we don't feel that it's appropriate to specifically disclose that, and that's for a couple of reasons. One is that the legislation which actually will mandate care minutes, and indeed the regulation that will underpin it, you know, hasn't been passed and/or finalized. You know, there are still discussions about the makeup of care minutes and the like, and they could have a particularly material impact on, I suppose, the outcome as a result of that. You know, I think at the moment, yeah, we have referenced the sector averages, but we don't believe there's significant sufficient certainty to specifically disclose our own care minutes. Okay. Can I get you to suggest whether you're good, bad, indifferent versus, better than industry averages? Too much? No. All right. Moving on, I see the comment that the NDIS wages are a challenge. What's the rough differential there? By how much more are NDIS workers paid on average? Well, look, it's highly variable, I suppose. Yeah. You know, I think it sort of relates relatively to the sort of Fair Work work value case that you're seeing at the moment, play out, the Fair Work Commission. You know, I think that would go, as we've referenced, a long way to. Yeah. No, no, I get that. I'm just wondering how even if we got a, that level of increase, you know, would that take, aged care workers to a level which would be comparable or strong or, you know, significantly better and, hence attract workers back. I mean, obviously, the government is presumably gonna think about both sides of that equation. Yeah. Thanks, David. We've got a couple more in the queue. All right. If we can appreciate that. Thank you. Thank you. Your next question comes from Tom Godfrey with MST. Please go ahead. Oh. Good morning, guys. Can you hear me okay? Sorry. Yeah. We might have had a few more. Maybe if I can just have one follow-up, just around the comments around the Fair Work Commission and the ongoing case there. Like, there's been a bit of feedback that quite a few for-profit providers pay personal care workers above the award wage, and therefore wouldn't have to pass through the full, call it, you know, 10, 15, 20%, whatever the decision is. Just wondering whether you could sort of give us any sort of framework to think about where your personal care workers are versus the award wage and how much of the uplift you'd have to pass through? Look, it's very hard to seek to guide a conclusion to that, Tom. I mean, we have a number of different EAs in different states, and you've obviously seen our reference to the proportion of our employees that are on EAs. You know, our EAs are typically higher than the awards, but that again varies by role, by state, and the like. But our EAs are ahead of the awards, but to different amounts in different states and different class of workers, so I can't really give you a definitive outcome on that. Okay. No, makes sense. I'll jump back in the queue. Thanks, Tom. Your next question comes from Vanessa Thomson with Jefferies. Please go ahead. Hi there. I just wanted to ask a question around AN-ACC. We've seen charts of subsidy per care minute by class of resident, and, you know, declining as the class gets higher. You guys have fairly acute residents. How does that sit with paying, hoping to receive an AN-ACC higher than the industry average? Or is it just that everyone has, you know, very sick residents? Thank you. I think it's probably too early, Vanessa, to guide too much on that. I think we, as a sector, are still working through all of our shadow assessments. We've obviously received the vast majority of those shadow assessments, but there's a significant effort across the sector and indeed within Estia to review those shadow assessments, potentially seeking reassessment. As I referenced in the presentation, a number of those are quite dated now from when the assessment process commenced. I think for us, it'll be too early to sort of give an indication of where we're sitting. We've given an overall mix that we believe it'll be broadly in line with the 225 average that the government have published. Yeah, providing more detail than that at this point, we're not in a position to do. Thank you. Your next question comes from Matt Johnston with Jarden. Please go ahead. Hey, guys. Just quickly around the MPIR. Obviously it went up on the first of July. We've had, I think, 100 basis points increase in interest rates, likely gonna get another one. Under your understanding of the calculation, is it likely that it will go up again on the first of October? Yes, I think it will go up further, Matt. Yeah, that should be beneficial. I mean, that 1% increase was the highest it's been. Obviously, there's a delayed impact 'cause that only applies to new residents, and some of the older residents who are departing. Some of them will still be departing on those rates that were in place then. Certainly, that movement will be beneficial for new residents. I think it will have an impact on RAD flows as well. I mean, households are feeling inflation. That's gonna make the DAP much more expensive. Yeah. Understood. Thanks, Steve. That is all the time we have for questions today, and that does conclude our conference. Thank you for participating. You may now disconnect.