Thank you for standing by, welcome to the Ramsay Health Care FY 2023 interim results presentation. 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 1 on your telephone keypad. I would now like to hand the conference over to Mr. Craig McNally, Managing Director and CEO. Please go ahead. Okay. Thank you. Good morning, everyone, and thanks for joining us for our FY 2023 first half results presentation webcast. I'm also joined by Martyn Roberts, our Group Chief Financial Officer. Today, we'll provide an overview of our performance for the 6-month period, an update on our strategic direction before covering off on the outlook for the group. I'd like to start by thanking Ramsay's people and clinicians who have delivered the result today. The focus has been on providing the highest quality care to our patients and supporting colleagues and local communities impacted by regional issues such as natural disasters and conflict. On behalf of the board and senior management team, I would like to recognize their contribution in a challenging environment and thank them for their ongoing efforts. Turning to the key themes in the business at the current time. The momentum in activity we reported in our 1st quarter trading update continued into the 2nd quarter. While the December-January trading period was impacted by the resurgence in COVID cases and a spike in flu cases in the Northern Hemisphere, combined with doctors taking extended summer leave in Australia, I am pleased to say that we have returned to a positive momentum in activity levels in late January and into February. In response to the industry-wide labor shortages, we have implemented a range of measures across the regions over the last 18 months. There's been a particular focus on critical skills gaps, and we're starting to see the benefits, with vacancy levels declining from their peaks. In particular in Ramsay Santé, where vacancy rates are down 69% from the peak in January 2022. While the situation has improved, recruitment, retention, and development of employees remains a key focus. During the six-month period, we successfully completed negotiations with health funds both in Australia and the U.K. at rates that are more reflective of the current environment. We continue to work constructively with public health authorities in each of our regions to assist with reducing backlogs and returning systems to the provision of timely, quality healthcare. We're working with all stakeholders to ensure the high costs of operating in the current environment are reflected in the setting of public sector tariffs. We continue to invest in brownfield and greenfield expansion and redevelopment opportunities, although the pace has slowed due to the bottlenecks in planning and building sectors. We've also pursued our digital and data initiatives designed to drive growth in the business and enable transformation of business processes to improve operating efficiency. We are in a strong position to take advantage of the long-term dynamics driving the healthcare sector, leveraging the benefits of global collaboration and insight to establish communities of best practice to adapt to our local markets. As you can see from this slide, each region has a range of initiatives running in parallel to reduce vacancy rates, tackle critical staff shortages, and retain our key talent. It's pleasing to see that there's been an improvement in vacancy rates as a result. However, there's no easy fix to these issues, which have been exacerbated by COVID, and they will remain our primary focus for the foreseeable future. Our priority areas include providing flexible working conditions, more accessible learning and training opportunities, expanding our leadership program, and investing in technology to simplify processes and allow our people to spend more time with our patients. Moving to the group performance. All our regions experienced growth in surgical activity over the six-month period. This continued to be more heavily skewed to day surgery, primarily because a large proportion of deferred surgery during COVID was lower acuity day surgery. There has also been an acceleration of the trend towards day surgery in some elective specialties in France. Non-surgical admissions have seen a more mixed picture, with France and the U.K. seeing some growth and Australia still seeing a slower recovery, in particular in mental health day patients. The changes in mix compared to pre-COVID continued to impact margin recovery over the half. The estimated direct impact of COVID on the results in Australia and the U.K. combined was AUD 66.8 million in the first quarter, and this declined to an immaterial impact in the second quarter. We expect there will be residual COVID-related costs in the business while the virus continues to circulate in the community. The result includes a number of non-recurring items which we've called out. The key one this period was a profit on the sale of a property in the Nordics portfolio. On an after-tax and minority interest basis, the contribution to the result was AUD 19.3 million. The board determined a fully franked interim dividend of AUD 0.50 per share, up 3.1% on the prior period, representing a payout ratio of just over 60%. You'll also notice that we've reinstated the DRP as an additional option for shareholders. As we move towards a more normalized operating environment, the board is of the view that a target payout ratio of 60%-70% of statutory net profit is appropriate. Moving to the result in Australia. In Australia, the operating environment improved progressively across the first five months of the period, driving an improvement in activity levels, and importantly, a reduction in the costs associated with patient and doctor cancellations and staff sick leave. In line with the rest of the healthcare sector, the Australian business has continued to be impacted by staff shortages in selected hospitals and within specific critical skills. This has limited capacity utilization in some hospitals. In response, we re-introduced several initiatives to address this challenge. These programs are having an impact, with vacancies declining 20%-30% since March 2022, and staff turnover is declining from the peaks. We have completed negotiations on a number of health fund contracts during the period at rates that are more reflective of the current environment, ensuring that we are adequately reimbursed for higher costs across the business. Turning to the outlook. Following the expiry of the COVID viability agreements, Ramsay has agreed new contracts with state governments on commercial terms for public work moving forward. While the amount of work we receive will depend on the funding provided for these programs, we believe these agreements will deliver additional volume and assist with managing theater utilization and labor costs. COVID cases in the most recent wave peaked in late December, and the business has seen a decline in staff absentees and through January. We did see doctors take extended summer holidays after several years of COVID curtailed breaks. However, we are seeing an increase in activity in February. In the medium term, we will continue to focus on investing in our strategically important high-value hospital network to ensure that our facilities meet the future demand for healthcare services. We'll also invest in our new and adjacent out-of-hospital services, including our day surgery strategy, our Ramsay Psychology Clinics, Ramsay Health Plus, our allied health clinics, Ramsay Pharmacy, and in our in-community service, Ramsay Connect. This strategy is designed to extend our relationship with the patient, making healthcare more seamless for them, and creates a referral channel for our hospital network. Our digital and data strategy will support all of these channels to ensure they are as efficient and productive as they can be while also improving the patient outcome and experience. Given the impact of COVID in the first half of FY 2022 and in this half, a comparison of activity trends between the two periods is of only limited value. An assessment of the progress of the recovery in the market can be made to an extent looking at activity levels compared to the first half of FY 2020, which was pre-COVID. Total admissions per workday for the six-month period increased 3.6% on the first half of FY 2020, with day patients increasing 6.5%, recovering more quickly than overnight patients, which declined 2.2% due to nonsurgical overnight patients being down. As you can see in the graphs, surgical activity has rebounded more quickly than nonsurgical activity, increasing 7.4% compared to the first half of FY 2020. Mental health admissions have been the biggest drag on nonsurgical volumes due to a reluctance by both patients and psychiatrists to come back into a hospital setting. We are working on a number of initiatives to address this and are seeing some early success. Total admissions per workday in January were 9.4% above the Omicron impacted prior period and 2.3% above FY 2020, with the trends improving across the month. As I've said, we are seeing improving trends in February. Turning to the investment pipeline in Australia. Spend on projects during the period was AUD 101 million, including on the Northern Hospital, which is pictured here, due to completion as planned at the end of the year. The business continued to invest in its development pipeline, and while some projects scheduled to commence in FY 2023 have been delayed, such as our Wollongong expansion, due to the impact of COVID on the building industry and external approval processes, the pipeline remains strong. There was a number of smaller projects completed in the half year period, with a net investment of AUD 54.3 million. We continue to expect the development pipeline to be elevated for the next few years, with new projects recently approved, including an AUD 180 million redevelopment of Warringal Private Hospital in Victoria, which will see this facility almost double in size to be a 290-bed facility. Stage 1 of the three-stage project is expected to be completed in mid-2024, which will include two new operating theaters. We've also recently approved an AUD 30 million expansion of the Port Macquarie Hospital, which will include a new operating theater, on-site radiology services, and new medical consulting suites. We have commenced investment in our new digital and data strategy, which has a number of streams. The initial investments focused on building our foundations, improving efficiency and productivity, and driving better outcomes for our staff, doctors, and patients. Today, we've provided you with estimates of the net cost of our initiatives over the next few years based on current investment plans. These investments will underpin the long-term growth of the business and will deliver significant benefits over time. A number of large projects are already underway, while additional key projects are scheduled to be launched over the next 18 months. We've also delivered a number of smaller automation projects that create immediate value for the business. The multi-year projects that have commenced include an Electronic Health Record project, where we're currently shortlisting vendors, Patient Hub project, which will build out a full end-to-end seamless digital admission process and patient experience, and a predictive insights project designed to improve our capability in AI and machine learning to support improved decision-making and scenario analysis. In FY 2023, the focus of this work is to deliver better clinical coding and improve theater utilization. Capping off the Asia Pacific region is our joint venture in Southeast Asia, Ramsay Sime Darby, which reported a strong half-year result, principally reflecting growth in inpatient activity in our Malaysian hospitals. The equity accounted after-tax contribution increased 51.9% to AUD 12 million. Turning to the U.K. Ramsay UK, our acute hospital business, reported a good turnaround in performance, with the operating environment improving progressively over the period, despite further small waves of COVID and a severe flu season. Admissions over the six-month period increased 10.3% over the prior period, with growth in admissions in all payer channels. NHS volumes increased by 11%, and private volumes increased by 9%. An impairment of AUD 6.2 million taken in FY 2018 relating to the performance of one of our hospitals was reversed in the period due to a sustained improvement in performance over the past few years. The result in the prior year included a negative contribution from non-recurring transaction costs of AUD 24.7 million. Removing the impact of non-recurring items, EBIT increased from a negative AUD 10.7 million to a AUD 22.1 million contribution. Elysium, our U.K. mental health business, which was acquired on the 31st of January last year, performed in line with our expectations in the first six months of ownership. However, while the business reported a 17.4% increase in revenue for the first half of FY 2023, it has been impacted by labor shortages, which became more acute moving into the second quarter, reflecting the skew of their staffing mix to lower-paid non-clinical workers in demand by many businesses across the UK economy, and allied health workers equally in short supply across the stretched UK health system. This has resulted in increased agency use with higher rates, as well as the one-off costs of addressing the recruitment structure. Elysium have invested in a series of initiatives over the last few months. Position applications and appointments have increased significantly from January. In March, the business will open a centralized recruitment and onboarding hub, which is expected to accelerate the time taken to bring new people through the induction process and into the business. Both our businesses have strong partnerships with the NHS, which, combined with the underlying market demand for acute hospital care and mental health services, will drive growth in the medium term. Ramsay UK also expects to benefit from the growth in the privately insured market with success in open market tenders with a number of insurers over the last 12 months. Both businesses will continue to invest in their facility footprints, where demand for new capacity is identified, and repurpose or upgrade facilities to meet changes in the market. In the short term, we expect both businesses to improve as volumes continue to grow and the benefits of management initiatives start to flow through, despite the acute inflationary pressures in the U.K. and ongoing staff shortages. Turning to Ramsay Santé, where after a slow start post the Northern Hemisphere summer activity levels did pick up across the half. The French result includes AUD 93.8 million in revenue guarantee payments, which is flat on the prior period, and AUD 112.7 million in cost support, an increase of AUD 41.9 million. The cost compensation includes additional salary increases for staff, which Ramsay Santé passes through and partial support for the significant impact of inflation on general operating expenses. The Nordics received AUD 12.6 million of government-funded COVID cost support, down on the AUD 25.2 million of revenue and cost support in the prior period. The Nordics result was impacted by a decline in COVID-related activities such as testing, as well as lower volumes and average level of acuity at St. Göran Hospital. Absenteeism due to sickness and staff shortages impacted capacity utilization. The recently acquired GHP, combined with a number of other small acquisitions made last year in the Nordics, contributed AUD 177.9 million in revenue and AUD 18.8 million in EBITDA. GHP's results have a seasonal bias to the second half of the fiscal year. The business is currently trading in line with expectations at the time of the acquisition. Ramsay Santé's EBIT result includes non-recurring items of AUD 45.3 million compared to AUD 12.6 million in the prior period. Removing the impact of non-recurring items, EBIT declined 27.2% on the prior period, reflecting the inflationary pressures on costs, in particular labor costs, the impact of labor shortages on capacity utilization, a change in the mix of activity and the decline in COVID-related activities such as testing. Turning to the outlook. In the short term, Ramsay Santé's primary focus will be to continue to develop strategies to meet the dual challenges facing the sector. Firstly, the significant inflationary pressures and the critical labor shortages. The French government has indicated that it will extend the revenue guarantee from the first of January to the thirty-first of December 2023. This is yet to be confirmed by decree. The details of the structure are yet to be finally determined. Activity levels are improving following the decline in COVID cases from a recent wave over the Christmas-New Year period. The Nordics will be focused on the integration of recent acquisitions, the continued development of an integrated digital platform, and resolving the performance of Sun Garden. In the medium term, Ramsay Santé will continue to focus on its strategy to become an integrated digi-physical healthcare business, attracting and retaining patients through the delivery of a contiguous health services pathway. This will encompass investment in new services, including select investment in primary care, prevention services and outpatient and at-home services, as well as strengthening the base hospital network and exploring new payer opportunities. We continue to make progress on many fronts within our Ramsay Cares sustainability strategy, which has the strong support of our people. We have made good headway on our climate change targets, which are incorporated into our sustainability-linked loans. We launched our global responsible sourcing policy during the half, and external sustainability assessments have now been achieved for over 40% of our global spend, and we are on track to meet our target assessments on 80% of our spend by 2026. I'll now hand you over to Martyn to run through the financials in more detail. Thanks very much, Craig, good morning, everyone. As Craig has outlined, the 9.8% increase in revenue reflects improved surgical activity levels, combined with the contribution from recently acquired businesses of AUD 560 million. All regions felt the impact of high inflation, in particular labor costs, along with specific costs relating to operating in a COVID environment, including higher staff absenteeism and patient and list cancellations at short notice. As Craig mentioned, the result includes non-recurring items, which we have given you more detail on in the review of results of operations in the 4D. The after-tax and minority interest contribution this year was AUD 34.4 million, compared to a - AUD 33.1 million contribution in the prior year. The main components this year were the profit on the sale of property in Ramsay Santé and the non-cash mark-to-market of swaps in the Ramsay Santé debt facilities. Operating cash flow increased 146.2% on the PCP, reflecting an improvement in the operating environment and the change in working capital. Net financing costs, excluding the impact of swap mark-to-market movements, in this year and last year, increased 39%, reflecting higher base rates and higher average drawn debt across the period compared to the prior year. Full year total net interest expense, including AASB 16 leases, is currently forecast to be in the range of AUD 430 million-AUD 460 million, subject to movements in base rates and mark-to-market movements in swaps. Cash flow includes receipts from the sale of land and property in the Nordics of AUD 55.7 million and the acquisition by Elysium of two UK-based child and adolescent mental health service facilities for AUD 68.1 million. There's a deferred payment associated with the sale of the property in the Nordics of AUD 30.5 million, which is classified as a non-current asset. Moving to leverage. On this slide, we've given you the funding group net debt and leverage ratios on a AASB 117 basis and the consolidated group leverage both pre and post AASB 16. It's the funding group metrics which are used by our banks and Fitch. As we noted in our 1st quarter results release, the funding group lenders agreed to increase the maximum allowable leverage ratio within the funding group banking covenant from 3.5x-4x to take into account the short-term impact of COVID. We ended the 6-month period at just over 3.5 x. We expect that as the operating environment normalizes, our leverage ratio will decline. Reflective of the current environment, the weighted average cost of our consolidated debt has increased from 3.24%, excluding leases, at the beginning of FY 2023 to 4.3% at the end of January 2023. With regard to our funding, we continue to explore opportunities to diversify the funding group sources of financing and extend the duration of its debt. Moving to capital expenditure in more detail, total spend across the region has declined 4.2% on the prior year to AUD 370 million. Driven by decline in spend in Ramsay Santé and the acute hospital business in the U.K. after a high level investment in the past two years. Spend in Australia was above the prior period, but below our previous forecast, due to the impact of building approval delays and other related bottlenecks. Our full year spend is now expected to be lower than forecast, and currently at AUD 705 million-AUD 810 million. We continue to expect that CapEx will be at elevated levels for the next few years. With that, I'll now hand you back to Craig for some comments on strategy and the outlook. Thanks, Martyn. We have continued to invest in and make progress against our strategy despite all the distractions of the difficult operating environment. We believe we are in a relatively unique position amongst our global healthcare competitors. This means we're well-placed to win, share, and benefit from the growing demand for healthcare services across all delivery platforms. Our strategy is divided into four pillars and is guided by our vision to be a leading integrated healthcare provider. The first pillar is growing, modernizing, and leveraging our world-class hospital network to strategically grow our existing market share through organic growth, brownfield and greenfield expansion, and strategic acquisitions. The second pillar is to move purposefully into new and adjacent services, focused on moving along the patient pathway, retaining that patient relationship by providing coordinated care using our data and digital capabilities to improve the experience for our patients and clinicians. The third pillar is about extracting the highest potential value from the business through operational excellence. Building on our strong global advantage in strategic sourcing will continue to be one of the key areas of focus. Finally, the fourth pillar is about reinforcing Ramsay's strong organizational foundations to underpin the strategy and ensure we leverage our scale. Now turning to the trading outlook. Underlying earnings growth for the remainder of FY 2023 will benefit from the additional capacity created over the last few years, combined with full year contributions from Elysium and recent acquisitions in Europe. Capacity utilization is subject to our ability to cover labor force shortages in critical areas. The focus remains on driving the synergies from recent acquisitions, realizing the growth opportunities, and improving returns. The path out of COVID is not expected to be smooth as the healthcare services sector continues to be impacted more than other industries. Ramsay continues to focus on negotiating improved terms with payers to reflect the inflationary environment and COVID-related costs, leveraging the group's global scale in procurement and driving efficiency and productivity improvements. I believe the outlook for the group remains strong despite the short-term environment remaining variable. Our world-class hospital network, combined with our outstanding people and clinicians, give us confidence that we are well-placed to take advantage of the positive long-term dynamics driving the healthcare industry. We continue to expect a gradual recovery through FY 2023 and more normalized conditions from FY 2024 onwards. We'll now open 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're on speakerphone, please pick up the handset to ask your question. Your first question comes from Lyanne Harrison with Bank of America. Please go ahead. Martyn, thanks for taking my questions. Can I start with inflation and your cost pressures that you're seeing currently? What I'm hearing, based on your comments, is that, you know, you're continuing to see inflation broadly and more particularly in labor. Can you provide some color on, you know, what you saw in terms of labor rate increments through the first half and how that compared with, you know, broader national wage increases that we've seen and, you know, particularly for those critical areas, have you seen wage costs increase more significantly than the rest of your general employees? Okay. I'll take that initially. Martin can chip in if he needs to. I mean, it's, it really is hard to overgeneralize, and particularly when we're looking at different markets. You know, there is no doubt that we're seeing, increased, pressure on wages as all industries are. We're not, we're not seeing anything out of kilter with what we see, you know, across all the markets. I mean, there are elements and you called out some of the critical skills areas, but there are elements in geographies where there is a bit more pressure. When we, when we look at that, and we make our assumptions about where that wage growth is heading, we are looking at, in the negotiations we have with payers, whether they are private insurers or, you know, we're lobbying for government tariff increases. We are absolutely mindful of where wage inflation is going. We are looking to neutralize that, but those negotiations obviously still need to occur in many respects. Over the last six months, you know, we've had CBAs negotiated in Australia. We've had, you know, wage increases in Europe and U.K. more particularly. There is a mix of impact in the six-month period. Likewise, there's a mix of impact on pricing. Some of the negotiations have been completed with which reflect that. Other negotiations and, you know, sort of if I reflect on French tariffs, the French tariffs, which were issued nearly 12 months ago, didn't really anticipate the increasing inflationary costs that we saw, particularly through the second half of the year. You know, sometimes there's a bit of a lag, and I'm gonna say more generally there's a bit of a lag. Sometimes we are able to adequately predict in advance. It's a mixed bag. Do you wanna add anything, Martyn? Yeah. No, I mean, you know, as you quite rightly pointed out, you know, labor inflation is by far and away, you know, the biggest number for us. I mean, we're not seeing inflation, particularly in PPE, for example, whereas it probably should have gone down, it's probably stayed flat. Other costs are more insignificant. We generally have done a pretty good job in procurement at trying to sort of curtail any kind of inflationary pressures there. As Craig said, probably the highest wage inflation is in France and we got some compensation for it, but it didn't cover the whole inflation and so there's that lag that Craig said. Yeah, and for France calendar 2023, because like they're running calendar years, wage inflation there was around mid-threes. Okay. Thank you. And since you mentioned the negotiations you're having with them or you have had or having with private health insurers and also with governments, you know, to the extent that they're neutralizing this inflation, I'm assuming that it's not full coverage of inflation, given that you mentioned the lag. How do you also factor in, you know, particularly for those multi-year agreements where we can see that inflation is not going away, you know, how are you factoring that in through the negotiation process to say, "Well, prices or inflation costs are still gonna go up over the next, you know, whether it's one or two or three-year agreements that you have? I should just a nuanced message that, you know, the negotiations don't always absolutely line up with inflation, but they are reflective of the inflationary environment. You know, we just do our best to anticipate, what inflation is going to be. You know, we have multi-year agreements, as you say, on with health funds, we have multi-year agreements on EBAs in Australia. We have some line of sight on what we think will happen over the next few years. We make assumptions about where we think inflation is going to be. You know, we spend a lot of time working on those assumptions and making them as robust as we can. Then you get down to the negotiation. You know, we have one-on-one negotiations with health funds. We have industry negotiations with governments on tariffs. Obviously, given what has been a steep increase in inflation through this year, those negotiations take on a different tone than they have in the past. I think we've called out on health funds in Australia that those agreements that we had that were multi-year, that did not reflect the inflationary environment that we've entered into, we would renegotiate those, and we're in the process of doing that. Thank you very much. You're welcome. Your next question comes from David Lowe with JP Morgan. Please go ahead. Thanks very much for taking my questions. Just, if we could start with what you're seeing domestically in the start up to 2023. I noticed you said that there was a protracted decline through more holidays, but things have picked up in January and February. Where I really wanna go with the question, Craig, is just to understand, you know, what you think is likely in terms of activity levels versus pre-COVID levels and perhaps if you could touch on the business' ability domestically to handle higher demand. Could we see greater utilization through this calendar year? Yeah. Okay. Thanks, David. I think the last part of the question is the most important piece. You know, we absolutely saw doctors taking more extensive leave really from mid-December through January, and that is not what we've seen historically pre-COVID or through COVID, obviously. I think that's just a reaction to this is the first opportunity everyone's had to get overseas and have a long holiday, and I think it's understandable. What we have seen since really since schools have gone back and, you know, since the Australia Day long weekend, ostensibly, is a strong increase in surgical volumes, particularly. It is the staff availability that is the constraining factor. Anecdotally, as we talk to doctors and as we analyze other data points in the industry about, you know, specialist consultations as a portion of GP attendance, et cetera, they all point to demand coming back. Our conversations with doctors are really positive. If there is a single constraining factor, it is the availability of operating theater nurses. We've been working on that for some time. You know, our general recruitment strategies reflect, you know, the need for us to address any shortages in critical areas, but also what we're doing around training staff, so internal training, and, you know, the grad nurse program is an example of that. We're into the second year of that increase in numbers, and they'll be into specialty training such as operating theaters. That will deliver, you know, an increased supply of workforce for us. I'm not avoiding quantifying it, but, you know, if we get the supply side right in terms of staff availability, then we should see surgical volumes back at premium levels that we probably saw coming out of the restrictions in FY 2020. Yeah, I might just add that the most recent reference point would be the 10% and 12% increases on pre-COVID in surgical volumes that we had, that we reported in our first quarter result, that were in September and October, before all the sort of. That little wave of COVID came in December and the surgeons all went on holiday. That's the most recent activity. We're probably at slightly better staffing levels than we were back in September and October as well. You know, to give you some indication of what can be done. Thanks, Martyn. My other question for you, just on interest costs, can you give us some sense as to what interest costs are likely to be in the second half into FY 2024? Perhaps touching on the degree of hedging. I'd like to understand if was the swaps benefit booked into that interest line? Sort of broadly, you know, do you think consensus is capturing the likely interest costs well in their numbers at the moment, please? I would say consensus is probably a bit all over the place for interest costs. We've given you our estimate for the full year, which includes the AASB 16 leases. You know, the current average cost of debt across the group is currently 4.3%. You'd have to make your own assumptions as to where base rates go to then extrapolate that through into the back end of this year and into FY 2024. Sorry, I must have missed it if you've given an estimate. Have you given a dollar estimate? It was in my, it was in my speech. AUD 430, I think. 4:30 P.M. AUD 430-AUD 460. Sorry. Excuse me, I missed that. All right. Yeah. I didn't listen to his speech, but Yeah. Craig switches off for that part, so yeah. Thank you very much. In terms of hedging, you know, I mean, our hedging goes out sort of four and a half years and it steps down gradually. We're normally sort of well above 50% for the first 12 months. Perfect. Thanks. Your next question comes from Mathieu Chevrier with Citigroup. Please go ahead. Yeah, good morning, Craig. Good morning, Martyn. Thanks for taking my question. You talked about more normalized trading conditions in FY 2024. How should we think about margins across the year for different businesses? It's a very general question. I mean, in terms of margins, you know, the result has got a lot of moving parts in it in this last six months. You know, our focus is on improving margins going forward. You know, you probably The Q2 is the best indicator of that, albeit in Santé, you've got a whole bunch of non-recurring items. We booked pretty much all the kind of COVID-related support in the second quarter rather than the first quarter. Yeah, I mean, just to tell you what margins are gonna be going forward, would be a forward-looking statement that we haven't given. Suffice to say, we are focused on improving our margins going forward. When volumes come back, that's always good for margin. When the mix of higher acuity work comes back, that's always good for margin. Mental health comes back, that's good for margin. As we said, we're trying to offset our cost inflation with negotiations with our payers. Yeah. Just in terms of, you know, relative to pre-COVID in FY 2024, do you think you can get back there or, especially in Australia, or do you think it'll take a little longer? Well, I mean, FY 2019 is becoming an increasingly long time ago, and, you know, our business is quite different now in terms of the breadth of activities we've got, the brownfield developments we've done. Getting back to FY 2019 becomes less and less of a relevant benchmark. You know, we obviously have that in sight in our plan over the next few years. We won't be there in FY 2024, but the idea is we're more focused on improving our margins year in, year out, as I said. Understood. Then, sorry to go back again in history, but, you know, in the three years before COVID, your Australian revenue growth was about 5.5%. How should we think about the revenue growth over the next two to three years, taking into account that, you know, there's a backlog in the systems, there's the contribution from the CapEx that you've completed, and then there's also the contributions of the public work that you're doing in inflation? Well, I mean, for obvious reasons, we haven't given any guidance on revenue increases going forward. It's gonna be a combination of all the things you just said. You know, the one thing that probably will be slightly different than pre-COVID is the revenue rate indexation, as we've talked about already on the call, where, you know, that is more reflective of the cost inflation that we've got in our cost base. From a volume base, yes, we, you know, the plan is to obviously grow with the market and take market share from the brownfield activity that we've done and invested in, you know, over the last three to four years, we've continued to invest and will continue to do so in the future. The other positive for us versus pre-COVID has been the, I think it's nine quarters now of consecutive increases in private health insurance participation in Australia. You've got a record number of people in Australia now with private health insurance, and so that should be a positive for us as well. Great. Thanks very much. The next question comes from Andrew Goodsall with MST Marquee. Please go ahead. Thanks very much for taking my questions. Just, I know you've had a few questions now already on the sort of forward bookings, I guess, coming off February. Just trying to understand whether all states are back running at the same run rate or whether there's still some laggards across the mix of the country by state? It's generally similar. I think we've got a bigger constraint in Western Australia on staff absenteeism. That's a bit higher than the rest of the country, because, you know, we're still giving COVID leave. I mean, we follow the state government. The state government is still giving COVID leave. That's due to expire at the end of March, but they've still got yet to make that decision. In Western Australia, for example, we've had over 100 people, you know, in the last week off with COVID leave, where it's been next to nobody in the rest of the country. And in Victoria, you know, Victoria's probably, on a general sense, under more pressure from staff shortages. It's, you know, whilst I say it's, you know, generally the same across the country, I think they're the things to call out. Okay. Sounds like a bit of work to do in several states, to get back to the same run rate still. Just while we're on the states, the agreements with the public sector, are they more progressed and flowing in some states versus others? Yeah, I think that's absolutely the case. I think that that's just going to be the nature of the beast going forward, Andrew. Would there, would you still see some opportunities that just haven't crystallized yet, from some states? Oh, yeah, no, absolutely. Yeah. Yeah. Yeah. I think, yeah, as I called out in the speech, we certainly anticipate more, but it will, you know, it won't be consistent across states. I think some states will be more progressive than others. Okay. Just switching to France, obviously their result out overnight, you've talked to the guarantee being extended to 2023. They didn't talk to the tariffs. Just any thoughts there. They also mentioned that the compensation for nursing salaries fell below. Just any comments on those two? Yeah. Tariff negotiations are underway currently. They're fairly robust. I think there's probably been some media speculation about where those increases are being negotiated at. Which is sort of around the 5% is where, you know, we'd like it to be. I think, yeah, they are. It's an industry negotiation, and both the private and public hospital sector are aligned in the negotiation. We'll get some clarity on that hopefully in the next month. It's a pretty robust negotiation. Is that tariff... I mean, I know the number you gave today was a grossed up number to include those nursing salaries. Yeah. Yeah, is that, would that tariff at 5% include nursing salaries, or is that separately? Don't hold the 5% 'cause that's just the media speculation. Oh, okay. Well, whatever the number is in the tariff, is that expected sort of to plug any gaps in nursing salaries or just...? Oh, yeah, no, it's absolutely. It's trying to address the, you know, the inflationary environment, which is predominantly around wage increases. As we've seen, Andrew, you know, there have been other sort of one-off payments into the industry to compensate for either cost inflation or wage inflation or COVID costs and those kind of things. we won't know the tariffs till probably mid-March, I think they're telling us, which is a bit later than normal. you know, there could be other things after that potentially. It may include all those things. It, it may not. I think the principle of the negotiation is trying to get to a simpler style. An all-in bucket. Yeah, an all-in bucket rather than, you know, the. Okay. different lumps of money that come elsewhere. I think that's part of the difficulty in the negotiation. Final one from me. Just the Nordics seem to have landed a couple of quite good contracts. Will they make a difference, in the fourth quarter, or is that too early? Do you wanna say that again, so I probably can get the gist of it? Sorry. The Nordics looks like they've landed a couple of good contracts that, whether they make a difference in fourth quarter this financial. Oh, look, no. I mean, there's generally a role of tender processes, as you appreciate in the Nordics. They contribute from time to time. We should see some growth moving forward in the Nordics from that. Okay. Well, I think as I called out in the speech, you know, the biggest issue in the Nordics, you know, primary care is going strongly. Just the reimbursement structures around St. Goran, to reflect the increase in, you know, the inflationary environment. Those discussions are happening at the moment and that's important for the Swedish performance. Got it. Thank you very much. Welcome. Your next question comes from Gretel Janu with Credit Suisse. Please go ahead. Thanks. Good morning, all. I just wanna go back to labor, firstly. Just understand the labor vacancy levels and where do they stand currently relative to pre-COVID levels? I understand they're down from peaks, just trying to understand that. How much do you think labor is constraining your overall utilization at this point? If you weren't constrained, you know, what is the revenue growth you can get to? Thanks. Yeah. Hi, Gretel. Was the question about percentage of agency in Australia? Agency, but then also overall vacancy levels as well. Agency in Australia has always been very low and probably no more than 3% currently. It's pretty insignificant. You know, we've called out it was a big impact in the Elysium result, but in Australia, it's a very small number. Hard to put a number on what the opportunity is if we were fully staffed. Suffice to say, you know, it's over and above some of those peak volumes that we had. I called out before that the 10%-12% incremental surgical volumes that we had versus pre-COVID in September, October, give you an indication of what's possible, even when we did have staff shortages. I think we've called out that the peak of the vacancies in Australia was back in March 2022, and we're sort of 20%-30% lower than that now and improving continually through. We will see a progressive improvement in terms of what we can achieve. How far relative to pre-COVID is those vacancy levels still now? Oh, still above. Yeah, still above. Still significantly above. Yeah. Yeah. as you know, Okay. 22% down from what they were. Yeah, yeah. Understood. just on. And, and- Sorry. Sorry. I'll just. The decline in vacancy rates continues. While we're down 20%-30%, that isn't where we think we stop. Yep, understood. Just on Elysium as well. The EBITDA margin, you know, at this point in time is well below what the margins were at the time of the acquisition. Understand the factors there, but I guess how are you viewing this acquisition now and its ability to reach the return targets that you initially set out? Yeah, no, still really positive about it. you know, it was a tough second quarter, from a cost point of view and a staff shortage point of view. Demand for the services is still strong. There's a couple of other factors. We've undertaken some brownfield projects. We're doing some retooling and changing case mix in some facilities. That's put a cost burden on Elysium in the short term. As those ramp up, they will deliver. Yeah, still, you know, despite the disappointment, really it was a disappointment in terms of where we finished the second quarter, still really positive about what Elysium will deliver. Understood. Thank you. Well- The next question comes from Sean Stewart with Morgan Stanley. Please go ahead. Good morning, Craig. Good morning, Martyn. I hope you're both well. Yeah, well, thank you. I'm just wondering if... Oh, great. Great to hear. Well done managing the business across a pandemic. I mean, I see myself- Thank you. -as just a rugby touch judge, running up and down the sideline waving my flag, but I'm not playing the game, so I can't imagine how hard it would be. Oh, thank you. Yeah. Yeah, well done. Yeah, with respect to, sort of, I guess, borders sort of opening and that, I'm just wondering if you could give us a sense of, you know, freeing up the cross flow of across borders of staff, you know, if that's maybe providing a benefit to your recruitment plans in the future? Yeah, no, I think it does. It's certainly better than it was when the borders were closed. I think Australia's still got a way to go, though. We're still not as competitive as other markets in the world in terms of the process to get people in. You know, I think, you know, the government's recognized that, and hopefully they'll do something about it. We are seeing increased numbers of people, you know, cross borders, and certainly, U.K. and Australia. And Elysium, particularly, we've seen, you know, there's been a significant effort to recruit international healthcare workers, we're seeing good results from that. I think, as we look at, I've called out in the speech to a certain extent, you know, the next three months look really positive for onboarding people. Sure. With respect to the cost inflation, as it pertains to staff and, you know, getting some or trying to bleed the payers a bit more, sort of where you sit today, do you think there's been a or will be a complete offset of that wage inflation? Do you think you'll have to be eating some as we, you know, get back to more normalized levels? It's hard to know. I mean, we certainly have that objective. I wouldn't say we're bleeding the insurers. They're pretty strong financially, so they can share that benefit around a bit. Yeah, look, you know, they're always in negotiation. They don't wanna pay us as much as we want us for them to pay. You know, it's the tension in that negotiation that always delivers the result. Sure. Thanks, Craig. Maybe lastly, just given where leverage sits, just your thoughts on sort of M&A going forward, and I think you mentioned other adjacencies and maybe give us a flavor for what and where some of those adjacencies could be. Yeah. There's nothing material on foot at the moment. We continue to look. I think as we've said in the past, the most sort of obvious gap in our portfolio is radiology and imaging in Australia. Yeah, we have those in-house in our other markets. That's something we'd like to pursue in Australia. Yeah, I think there's still probably opportunities in terms of bolt-ons, in Santé, in Elysium, but nothing of any great significance or huge materiality that we're currently looking at the moment. Right. That's all I have. Thank you, gentlemen. Thanks, Sean. Your next question comes from David Stanton with Jefferies. Please go ahead. Good morning, team, and thanks very much for taking my questions. In terms of, you know, just to follow up on Sean's question, is it fair to think that you should be seeing at least cost and maybe cost plus increases for your new PHI contracts in Australia? Well, David, I think I answered that as best I could to Sean's question. But, yeah, our objective is to have price increases that are more reflective of this environment. You know, that's a robust discussion. Now, if we can get better than that, fantastic. But, you know, they're not, as you appreciate, not straightforward negotiations at any time. Understood. If, all complete renegotiation or renegotiation with every PHI is 100%, where are you now? Are you at 80%, 60%, somewhere around there? Yeah. Well, it's. Well, I'm not sure if. We're at, we are well progressed on the normal timetable, so that rolls around. Yeah, on some of the, and, you know, a couple of the health fund agreements that we are bringing forward the negotiation, we are well progressed on one of those and early days on another. There's a bit of water to go under that bridge. Moving on though, you talked to residual costs continuing in Australia. Can you potentially estimate those for us? You know, the impact or the EBIT impact of those for us for the second half of FY 2023, please? Yeah. Well, I mean, we've said that they're immaterial now and, you know, that really comes about because it becomes more and more gray in terms of what is COVID related. You know, there's, you know, we're not in any lockdowns, we're not in any surgical restrictions, et cetera. So we kind of wanna move away from ascribing any dollars to that. To be honest, the staff shortages and inflation are probably more material challenges that we've got than direct COVID costs. Yeah, there'll still be the minimal sort of, you know, inflated PPE, et cetera, but it's immaterial now. Okay. Very small residual costs going forward. Yeah. Okay. You also mentioned in Australia you've signed these new public hospital contracts, which has been mentioned in a question. I just wanna check, are they material to earnings at any stage and potentially FY 2024 onwards? not in the. They're too small. Not in the short term. You know, whether they- Fair enough. in a few years' time become more material. You know, all volume. Sure. is, there's a tailwind, so, you know, that's, it's positive volume coming in. Understood. My last question, one I always ask, can you tell me, how many operating theaters you plan to open for 2023 and for 2024 in Australia, please? Do you have that number? We haven't said how many for 2024. 2023, we've given you the number for the first half, but. That's it. Okay. Thank you. Sorry. It is, you know, if I gave you a number, it'd be wrong tomorrow, because these projects are moving around quite a bit, as we've said, due to approvals and, you know, builders falling over, et cetera. We've gone giving you the broad CapEx number. Yeah, to give you a specific theater number would be probably remiss of us to do that. Okay, thank you. No problem. Your next question comes from Saul Hadassin with Barrenjoey Capital. Please go ahead. Good morning, Craig. Good morning, Martyn. Just a couple of questions for me. The first one just on France. I'm just trying to understand or get some context around the extension potentially of the revenue guarantee. I mean, modeling the earnings for this region is proving quite challenging. You've mentioned that there is a, you know, the notion that the revenue will be extended in terms of that guarantee. What happens on the cost side and that cost support? Is there an expectation that will continue to come through this calendar year, or is that totally separate to the discussions around that revenue guarantee? Totally separate. Well, no, I say totally separate. In principle, separate because the cost recovery stuff is being bundled into the tariff negotiation. It depends on where that falls out and then what other, you know, sort of grants will come through the year. They're always hard to predict. First thing to settle is tariff and what that is attempted to cover, and then address what it doesn't cover. On that basis, the margin outlook for that division as that government support washes away, do you think the tariff, if that tariff rate ends up being at that roundabout that 5% level, would be enough to preserve your, you know, the second quarter margin that you delivered for Ramsay Santé? Okay. I'm going to reiterate, which I should never have said the first thing 'cause it's not my number. That was just the media speculation number. Sure. Yeah. I've lost the rest of the question having answered it. The margin. Just the outlook for the margin of that region. Yeah, look, I mean, all, you know, so critical, as you can appreciate on the outcome of the tariff negotiation. If the tariff negotiation is where it should be. What we are seeing in the business is improving volumes. So, you know, whilst it's a real positive to get the revenue guarantee as a safety net through to the end of December this year, what we anticipate seeing through the year is continued increase in volumes. Our concern was always when the revenue guarantee came off, where that gap was. We've got a year of working through that, so we're pretty positive about where we should come out of that. As volumes increase, then, you know, they retail into margin. Yeah. Thanks, Craig. Then just, one other just, I know you're not really wanting to give a, sort of a percentage growth rate for February, but if you look at volumes where they are in Australia now for the last few weeks, the insurers are continuing to say it's a benign claims environment. When you look back, say, at where admissions were in February, March of 2020, and you assume a historic CAGR volumes admission, say, 3%, do you think your volumes are looking like they have grown at a rate of 3% on that basis? Or do you think you're still below where they would've otherwise been? If you had that trajectory from it, you know, start of FY 2020, then they haven't caught up to that yet. Okay. I think one of the again, you know, I think what we've called out is, you know, again, strong surgical volume increase, and a bit more concern around non-surgical, particularly mental health and, you know, we've particularly called out mental health day cases. Mental health is still, it's affected by, you know, as I said, the psychiatrists' willingness to come back to the full hospital practice that they had. It's also an patient's reluctance, and the patient's reluctance still centers around the COVID restrictions. Still having to wear a mask in a mental health facility isn't, you know, conducive to that environment. You know, those things have to repair themselves. The biggest issue is supply of psychiatrists. Going back to the original question around growth, you know, it's just to differentiate between surgical and non-surgical growth. Great. Thanks for that. That's all I have. Yeah. Thanks. Your next question comes from Steven Wheen with Jarden. Please go ahead. Good morning. I just wanted to follow up on Saul's question on France. I'd totally agree. It's a bit of a black box to actually try and forecast that region. The first part of this is with the consent decree that guarantees your revenue, does the tariff really play a part in that? Because my understanding of the consent decree is it's just guaranteeing the amount of revenue that was being paid to you pre-COVID. Yeah. Maybe with some indexation. Well, I was gonna say that's the point, though. You know, the guarantee takes the volume or the revenue from 2019, and then has indexed that every year since. Whatever the tariff indexation is, well, it should be applied to that revenue guarantee, it is quite important. Yeah. Got it. Okay. As you say, that will then determine whether or not there's the additional support payments for staff and costs. That's all mixed in together as to whether it does or it doesn't cover that. Is that correct? Well, I think it's what Craig said earlier, is our hope is that we get an all-in kind of tariff increase that covers everything. Our experience to date would suggest that, you know, it maybe doesn't, and then we get these one-off benefits that as we booked in Q2 for, you know, compensation for inflation, compensation for wage inflation, and all sorts of other things. Okay. By that, it's obviously less predictable. Yeah, yeah. Okay. If you think about that decree and then roll forward to when the decree won't be there, I mean, you had an expectation for the second half of this year that the decree wouldn't be there. Are the volumes at a level whereby you would be able to deliver an improvement in your EBITDA for that region? Yeah. I guess that's the disconnect, right? Is whether or not we're back in the volume perspective to kind of allow us to sort of compensate for the loss of the decree. Yeah. What we're seeing is not dissimilar to what we see in Australia. You know, stronger recovery in surgical volumes and non-surgical volumes, recovering a bit more slowly, albeit I think non-surgical volumes are recovering more quickly in France than they are in Australia. The, you know, the surgical and non-surgical volumes have a different rate of recovery. We, we forecast, I mean, I'm not gonna be blasé about it, but we sort of forecast where that growth is occurring through calendar 2023. Given that the revenue guarantee will be there right through calendar 2023. We're pretty confident where we end up at the end of that. It was a, it was a, you know, if the revenue guarantee expired last December, then we'd have a bigger gap to fill than we are, you know, projecting that we'll have December 2023. Yeah. I'll probably just add that, you know, we called out that we received AUD 93.8 million worth of revenue guarantee in the half. That was the same as what it was in the prior period. You know, that shows some hospitals were below where they were in 2019. I mean, that's AUD 94 million on a total revenue of AUD 2.5 billion. You know, yes, that's, it's very helpful, but it's becoming less material. It does show you that, you know, there was that big wave in July, obviously, that would've been the predominant reason for that small shortfall. It's on a hospital by hospital basis, not done in aggregate across France. It does show that some hospitals are still slightly below 2019 in that half. If we don't have any more big waves like we had in July and things get back to normal, we probably should start to hopefully get off that revenue guarantee scheme at some stage if things start to normalize. We'll take the revenue guarantee while it's there. It's a great guarantee. Yeah. Put some more on it. Understood. last question was just around the rationalization of some of the hospitals in Europe. I just wonder if there's any other ones that you've identified that we might see in the next half or next year? Yeah, nothing material that springs to mind, Stu. There might be a few little things but, yeah, nothing material. We've obviously got the big project in Norway. We've got a hospital with a whole with a bit of land next to it with some car parks. We acquired the whole site. We sold off the bit with the car parks, and that was a big profit on sale. We also leased back the hospital as part of our overall development project that we're doing there. That will be bigger but, yeah, I think as Craig said, we're always looking at the portfolio, but nothing of any great materiality that we've been considering currently. There are some projects that are underway. There's a project in Marseille that's a multi-year project that we'll progress through the year but, yeah, things are on foot. I can't think of anything material that's new. Sorry, you just reminded me of something, and you'd be disappointed if I didn't ask. just about sale and leaseback. Why did you say that? You did indicate that you were looking at a potential process at your full year result. I just wondered what your updated thinking is on that front. I think what we said was we were looking at how we might go about a process. We never said we were looking at doing a process. I think as we've said before, we've done huge amount of work on looking at it in Australia, and the outcome is that to reduce any kind of significant capital gains tax bill, you end up with a structure that, to be honest, is far too much disruption for the benefit that it would provide. We paused it any consideration of that for the foreseeable future. Yeah. Good. Great. Thanks, guys. Once again, if you wish to ask a question, please press star one on your telephone. Your next question comes from David Bailey with Macquarie. Please go ahead. Yeah, thanks. My question is just around the balance sheet and CapEx. Commentary that it's expected to be lower than AUD 705-AUD 810. Our first question is how much lower? Secondly, you know, does the current level of leverage constrain your ability to deploy capital into CapEx projects in the second half of 2023 and 2024? Yeah. No, thanks, David. I may have mumbled my words there. The point is that the AUD 705-AUD 810 is our current forecast. It's lower than our previous forecast. Okay. In terms of the actual level of leverage, 3.5 x, is it just the plan to let that delever naturally as cash flows improve or is there anything else you're considering over and above that to get that level of gearing down? No, the main focus is on the operational performance delevering over time. We're not doing anything specific in terms of any sort of financial activities to try and boost that. We do see that 3.5x as the high point. We got the extra wiggle room from our banks, which was good. Yeah, our absolute focus is now on that reducing as we improve our operational performance. That's it for me. Thanks. Thanks. Okay. There are no further questions at this time. I'll now hand back to Mr. McNally for closing remarks. Okay. Thank you. Thanks everyone for your attendance. Again, I'd like to thank all our people for what they do. Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.