Good morning, ladies and gentlemen, and welcome to the Sonic Healthcare full year results conference call. All participants will be in a listen-only mode throughout the formal presentation. Following the presentation, there'll be a question-and-answer session. Should you wish to ask the question, please register by pressing star then one on your telephone keypad. I would now like to hand the conference over to Dr. Colin Goldschmidt, CEO. Please go ahead. Thank you very much and a very warm welcome to everyone on this call. Sonic Healthcare's full year results for the financial year ending thirtieth of June 2022. I'm very pleased to present the results today. They are record numbers. I'll say right at the start of this presentation, a huge thank you and congratulations to all our staff globally for performance through the year to generate these kind of numbers. If you look at the revenue, and we're on slide 3, revenue at AUD 9.3 billion is up 7% on the prior year. Both profit numbers, EBITDA and net profit, up 11% at AUD 2.8 billion and AUD 1.5 billion respectively. Incredible numbers. In terms of the growth, the 7% revenue growth can be split into 3% growth in COVID testing, 2% growth in our base business, and 2% was added via acquisitions. The organic revenue growth for the year is 5%. That's the 3 and the 2. We've invested AUD 628 million through the year on M&A and other opportunities, and we are, as always, pursuing further opportunities for the growth of Sonic Healthcare. The profit number this year, so you'll see up 11% versus revenue of 7%, is a reflection of the operating leverage in the company. We've hit a milestone in terms of our dividends. For the full year, the dividend is now AUD 1 per share. That's AUD 1, with the final dividend up 9% to AUD 0.60 per share, and all the dividends this year were fully franked. The board is as keen as ever to continue our long history of a progressive dividend strategy. At capital management level, just at headline level, the company is in an incredibly strong position, with gearing at record low levels and, very pleasingly, no exposure to current interest rate increases. We have available liquidity of AUD 1.6 billion and our previously announced on-market share buyback of up to AUD 500 million. We've now completed about two-thirds of that process. On the next slide, the table gives you the numbers related to our headline results. In terms of cash generation from operations, it was strong with 9% growth. The conversion from EBITDA at 95% was impacted this year by movements in working capital. In particular, we had increased debtors largely related to COVID testing, and particularly in Germany in the third quarter, where payments are delayed. Those payments only came through after the end of the financial year. We also, through the year, refunded a U.S. Medicare grant for COVID testing. That also impacted that conversion number. If you move to the next slide, which is slide 5, just going into some more detail with our revenue. Repeating again, total revenue growth for the year compared to last year was 7% up, with organic revenue growth of 5%. Just turning to the base business. If I can direct you to the chart on the right and looking at the dark blue bars, the base business organic growth was 2.1% against the previous year, against 2021. Pleasingly against pre-pandemic levels, FY 2022 against FY 2019, organic growth was 5.5%. We have adjusted the revenues in the prior years for currency exchange rates, acquisitions, and disposals. Just a statement about our revenue in general, we continue to pursue acquisitions, obviously. COVID testing, we think will continue at a level into the foreseeable future. We're very confident about the performance of our base business, which I'll talk about in a minute. In terms of COVID revenue, we grew 13% through the year, and this is an opportunity just for me to make mention of the 2022 financial year. It was quite a year. We're almost beginning to forget about the difficulties of the pandemic. At the start of the financial year was when the Delta wave hit most countries in which we operate. That then merged through into the Omicron wave round about January, that sort of period, so halfway through the financial year. We had these two big COVID waves occur through the year, which have obviously impacted Sonic's numbers through the year at various levels, COVID testing and base business equally. Just looking at the COVID revenue, that's the blue, pink or cerise bars, 13% growth in COVID revenue over the year, up to AUD 2.4 billion. That's incredible. Again, I want to just say a huge thank you to all our staff. All the labs have been involved in this in all our countries. An incredible performance to complete that many COVID tests through the year. If you look back to the beginning of the pandemic, we've now completed over 55 million COVID PCR tests to date. An amazing number. We also feel that, being in seven countries and with some diversity of our business lines, we smooth out the effects of things like the pandemic and any other adverse situations that occur for Sonic. We feel that that's an advantage and it becomes increasingly apparent to us. We've felt that before as well. If you go to slide 6, where we've given some more granular information about our base business in particular. Looking again here at the blue bars in the chart, first of all, these numbers are now split by half year. Looking at the far right-hand blue bar, which is H2 financial 2022, first of all, base business is at record level. When you compare it to the first half of the financial year, base business is up 3.4%. Our sense is that as the pandemic is waning right now, our base business is strengthening. I'll make the comment now that throughout our operations, labs are in strong position. Assuming the pandemic continues to wane, we expect our base business growth to accelerate under the drivers that normally exist. Industry growth drivers and such as aging, growing populations, preventative tests, et cetera, and new tests. If you compare H2 FY 2022 with the previous corresponding period, which is H2 FY 2021, there is slight growth. Again, you have to consider all the time what was going on in the pandemic at the time. In this financial year, the H2 was very much affected by the Omicron wave. COVID testing was up, and our base business was slightly impacted because of that. Achieving a small amount of growth was very pleasing for us, in fact. The other point to make just in terms of our base business in general is that the culture in Sonic remains ever strong. Our medical leadership model together with very strong market positions in all our markets does give us a competitive advantage. Moving on to the next slide talking about our dividends, and this is as I mentioned, a milestone year hitting AUD 1 per share for the full year dividend. The numbers are there in the table, but taking you to the chart, and we've just included this for your interest, going all the way back to 1994, when the maiden dividend was paid. That was an AUD 0.02 dividend back in 1994. Remember that Sonic didn't begin its life in 1994, it began in 1987. It took seven years before the first dividend was paid. Ever since then, the dividend has not gone backwards. We're calling this a progressive dividend, even though there was two years in the middle of this chart where it remained the same. I guess, you know, we could put out charts of revenue or earnings or market cap. This chart, in some ways, does just give you a sense of the achievements of our people over a long period of time, our staff. Again, it's a shout out to all our staff to say, "Well done." Shareholders have obviously benefited throughout this 29 years. The board is certainly involved very much in Sonic's strategy and is ever keen to continue this progressive dividend policy. The record date is the seventh of September, payment date 21 September, and the dividend reinvestment plan will remain suspended. Moving on to capital management. I mentioned a bit earlier that the company, from a balance sheet perspective, is in perhaps its strongest position ever in our history. If you look at first of all just the net debt, it's down to AUD 812 million with a gearing ratio of 9.7%. It's come right down. If you look at the debt cover history, which is charted on the right, we're down to 0.3 with interest cover at an incredible 47 times. I mentioned earlier also that we do not have exposure to interest rate movements with all our bank debt now fully repaid, and the remaining debt, that's AUD 812 million, is in long-term fixed rate notes. I mentioned the share buyback, which is continuing with a headroom of AUD 1.6 billion. We are in a very strong position to make further acquisitions into the future. We have said before that our longer term or medium and longer term strategy is to return to the pre-pandemic long-term average of our debt cover, which is just under 2.5 times. The pie chart on slide nine is a good segue into some commentary about our country operations. Just looking at that pie chart, first of all, the pie itself has expanded to AUD 9.3 billion now, and you'll see that we have now three, what we would call large divisions. That's Australian Lab Division, U.S.A., and Germany, all exceeding AUD 2 billion in revenue for this financial year. Incredible performance. We have 3, what we call medium divisions, medium-sized divisions, U.K., Switzerland and Radiology in the AUD 600-700 million revenue ranges, all pushing inexorably towards the AUD 1 billion dollar mark. You know, that's not to leave out our other divisions as well, Belgium, New Zealand and Sonic Clinical Services. If we move on to the first one, which is Australian Pathology or Australian Lab Division, total revenue growth was 24%, driven largely by incredible numbers of COVID tests. These accelerated through the Omicron wave. January, February was peak levels of COVID PCR testing in Australia, but they've been continued at different times in different states in Australia. Base business organic revenue growth was 1% down against the last year, and that was a reflection of the pandemic. If you look at base business against pre-pandemic levels, it's up by 11%. We do not have any concerns about the base business in Australia, and we're seeing that it's already coming back as the pandemic continues to wane. In terms of operations, our contract, it's a national contract to provide COVID testing for nursing homes right around the country, has been extended to at least the end of September, and we're hoping that it extends even further. This gives you some indication of where sustainable or ongoing COVID testing will come from, particularly in the setting where Omicron is having quite a significant impact on the elderly. Nursing homes and ongoing routine COVID testing, we believe, is here to stay or are here to stay. Another feature of our operations is the expansion of our genetics offering within Australia under the name of Sonic Genetics. Our growth in genetics exceeds our baseline other business growth. We certainly now believe we are in a preeminent position in terms of genetic testing within Australia, something that we're very, very proud of. The other thing is just talking about all our labs around Australia. We now have absolute state-of-the-art labs in every capital city, excluding Darwin and including Wollongong, where we have total lab automation fully installed. This is a big achievement and really puts our labs in Australia at the absolute cutting edge of modern laboratory operations. We've also already embarked on the second stage of the Sullivan Nicolaides Pathology Lab in Brisbane. We'd already completed stage one, and this is one of our many facilities around the world which are not just ultra-modern, but providing essential services and critical infrastructure for the communities they serve. In the case of the Sullivan Nicolaides lab, serving the whole of Queensland and even Northern New South Wales as well. I could say the same thing about all our operations around the world. It's worth just mentioning that we do provide absolutely essential services. The healthcare systems in these areas are dependent upon Sonic Healthcare's services and laboratories throughout. If we move on to the U.S.A., the total revenue for the year was down 6%, largely as a result of COVID revenue falling in the U.S.A. I mentioned earlier that there is a difference in COVID testing in different countries depending on when COVID waves hit. In the U.S.A., down 38% COVID testing, and you'll remember from the slide before, Australia, COVID testing was up. Base business organic growth in the U.S. is up 2%. At operations level, the ProPath acquisition, which was previously announced, completed December 21, is integrating smoothly into Sonic Healthcare U.S.A. We're very proud of our exclusive arrangement to provide ThyroSeq testing throughout the U.S.A. ThyroSeq is a genetic Test which classifies thyroid cancers. What we're finding is that the revenue is growing strongly. This is something that we are putting a lot of effort into. The revenue is pretty significant from one test. We've now set up a dedicated lab in New York, and we've staffed it with incredible experts in that field. We're selling and marketing the test throughout the United States, and it's a test that is providing huge utility to patients with thyroid nodules. This is a test which is not only financially significant, but at a medical level, very important. We've achieved labor productivity gains through the pandemic and continue to push that way in our workforce in the U.S.A. We need to make just a point that there is a possibility of PAMA fee cuts commencing next year, which was known for a long time. New legislation has been introduced into both Congress and the Senate to delay and reduce those cuts. This is known as the SALSA legislation, Saving Access to Laboratory Services Act. It is gaining support from congressmen and senators, and we're hoping that this legislation is passed before the end of the calendar year. If it is, then those PAMA cuts will be changed completely. They'll be delayed, and then reduced. We've also been one of five labs in the U.S. who's been appointed by the government to provide monkeypox testing, and we've launched that testing in our Sonic reference laboratory in July of this year. The volumes are currently quite low, but we're proud to be one of those five appointed labs. Moving on to slide 12, which is Germany. Revenue's 5% up. Base business revenue organic revenue's 3% up, and our COVID revenue is also up at 9%. Unlike in our other countries, we have the honor in Germany of being selected to provide whole genome sequencing of COVID variants by government. This is a national program. We are one of a handful of labs performing this, and we've currently now sequenced more than 140,000 sequences. This will continue at least until July of next year, July 2023. We are also in the process of building new labs in both Hamburg and Munich, and my comments about the Sullivan Nicolaides lab in Brisbane apply equally here, where our labs in Germany are absolutely at cutting-edge level. In the case of the Hamburg lab, we're building a facility for that city where we will merge three labs into one, three Sonic labs into one. In Munich, a big city in Germany, we are building a sizable facility there, where we will merge two of our labs into one, in that city. These are not only to create cutting-edge facilities for our staff and our services, but at the same time, they are generating efficiencies and providing capacity for future growth. Another feather in our cap in our German operations is that we have been appointed as the exclusive provider of the Oncotype DX test. The Oncotype DX test is a test for patients with breast cancer, and it's a genetic test, which looks at, in fact, 21 genes in breast cancers and is of great use in terms of determining recurrence rates and also the responses to therapies. We are the exclusive providers of this test in Germany and the only lab currently in the whole of Europe providing the Oncotype DX test. Moving on to the UK, which is slide 13. Total revenue for the year or revenue growth for the year was flat. The standout feature in the UK business is our very strong base business organic growth of 24%. COVID revenue down 41% and base business growth up 24%. This is a standout amongst all our divisions, and if I could just talk about that base business growth of 24%. It's being driven by our routine base business growing, but also, a significant increase in private sector GP referrals. What's happening in the U.K. is that GPs are setting up practices in the evenings and on weekends, outside of the NHS system, to provide services at a private level, at a fee for service level. I think this is a response to the difficulty in being able to see a GP in the U.K. We've also extended our contracts with Ramsay Health Care and Circle Health, previously known as BMI. These are networks of private hospitals throughout the U.K., which we've been servicing for several years now. Those contracts have both been extended for five years. We've also commenced operations in the Cleveland Clinic London Hospital, which opened in March 2022. We're very proud to be associated with the Cleveland Clinic, of course. This is an incredible hospital, smack bang in the center of London. We expect that work to grow as the hospital settles in. Our regular NHS sourced business work has also resumed and back to normal and growing again. In terms of base business in the U.K., we're sort of very optimistic about where that's tracking. In terms of COVID testing down 41%, the main reason for that is that our surge laboratory, which we set up under contract with the NHS, concluded its operations. That lab was actually closed down. There's a contract which ended. We continue to provide COVID testing at a routine level to NHS and private patients as well. Moving on to Switzerland, total revenue growth there was 8% with base business organic growth rate of 5% and COVID revenue up 27%. You get a sense through all these countries at the different levels of growth of COVID testing. Some it's up, some it's down. You know, our expectation, I'll just say again, is that with the current trend continuing, the current COVID or pandemic trend continuing and waning, we expect to reach a baseline level of COVID testing in all our countries. Exactly where that level will be is hard to predict. It's gonna be at something like maybe 10%-20% of peak levels is what we think. That's according to our experts within Sonic. In terms of operations in Switzerland, we've appointed a new CEO for our Zurich business. That's called Medica. Following the passing of the founder of that lab, Dr. Franz Käppeler. Dr. Käppeler set up this lab decades ago, and since we acquired the business, it has gone from strength to strength. The appointment of Dr. Willi Conrad has been seamless. Dr. Conrad comes from our other business in Switzerland called Medisupport. He has moved into the Zurich operation as leader and been welcomed and very well accepted by the Medica staff. We are facing a 10% reduction from a national fee schedule cut from 1 August of this year. That cut has impacted our business by about 7% per annum. With the strong base business growth and efficiency gains that we're putting in place, we expect to temper that, so we don't think it's gonna be all that significant for our Swiss operations. Moving on to Belgium, where our total revenue was down 4%. COVID revenue was down 13%. When you look at our base business, it was down in the first half, but then up in the second half. We're seeing growth returning in base business from the second half onwards and through into July as well. At operational level, like in Switzerland, we've appointed a new CEO for our Belgian operations to replace Mr. Geert Salembier, who was the founder, one of the two founders of that lab and our CEO of the operations. Geert has now assumed a non-executive chair role, and the transition there, like in Switzerland, has been seamless. These are two examples of internal appointments in terms of succession that have gone seamlessly. We do favor at all levels at this senior level to appoint from inside the company. These are two examples of the strength of our management teams right around the world. In our Belgian lab in Antwerp, we're almost completed with the installation or reinstallation. This is a refurbishment of our Total Laboratory Automation system in that very modern lab. Moving on to our radiology division, where revenues were up by 14% with organic revenue growth of 2%. It's important when you're looking at our radiology division to remember that the year before was a very strong year where we had 15% growth. It's just something to bear in mind as you look at these numbers. In terms of earnings, EBITDA growth was 3% up, but net profit was down 10%. The current year profit excluding acquisitions, however, was significantly higher than the year before and versus pre-pandemic as well. When you're assessing these numbers, our profit in this year was impacted by the cycling of that extraordinarily strong year, the year before. Also, the effects of the pandemic, and also by the acquisition of Epworth Medical Imaging, which at this stage is at breakeven level. Epworth Medical Imaging is a highly reputable and respected name in the Melbourne and Victorian market, and we have acquired this business as a foundation and platform to grow in that state. Interestingly enough, we expect the earnings to be turned around in the years ahead. We've bought this is a hospital-based radiology practice, which we have now acquired, and in our hands, we're confident that we will turn this into a profitable venture in itself. Very importantly, we will use it to, as a springboard to set up community sites within Melbourne. To that effect, we've already opened our first one, and it's called Radiology Victoria, and it's performing extremely well. The two operations, Epworth Medical Imaging and the community site, are working in tandem to grow our radiology in Victoria. We've also acquired Canberra Imaging Group, which was previously announced. That was completed in September 2021. The integration is going well, and its revenue and earnings are now added into the division's revenue and earnings. We've established four greenfield sites through the year, three of which incorporate PET/CT, and we now have nine extra MRI licenses, which are Medicare eligible. Those will all serve a great purpose for the division as well. Moving on to Sonic Clinical Services, we're on slide 17 now. Revenue growth of 5%, largely driven by pandemic-related services, and in particular, vaccination services provided by our team at Sonic Clinical Services. We've now delivered more than 1.1 million COVID vaccinations through clinics, mass vaccination hubs, which we ran, and also in aged care facilities and workplaces. We've also facilitated testing in occupational sites or workplace sites, testing for COVID-19. This has been facilitated by Sonic Clinical Services. Just a final point on Sonic Clinical Services is the fact that, or the issue that you've probably read about, and that is, there are issues facing primary care in Australia and elsewhere in the world. A shortage of GPs, and the movement away from bulk billing to private billing in the GP sector. We are working actively with both industry and government on various initiatives to address the GP shortage and workforce shortages in the primary care space. Okay, slide 18 talks about our partnership with Harrison.ai. This is about Sonic's endeavors in the artificial intelligence space. First of all, our investment in Harrison.ai. As previously announced, Sonic took a 20% strategic stake in Harrison.ai. That was in the first half of the financial year. At that time, Harrison already had a joint venture with another radiology operator. That joint venture was called Annalise. The Annalise chest X-ray product is a world beater. It had leapfrogged the entire world in developing a chest X-ray product that detects 124 abnormalities. That's an amazing thing. This is in an instant, 124 abnormalities are shown on the screen as an assistant to radiologists looking at a chest X-ray. That product has now been installed in over 500 sites globally, including in more than 100 Sonic Radiology sites. We are using the product every day now. Annalise has also now completed a brain CT scan product, and that's about to be commercialized as well. It was following this that we invested in Harrison and then formed a joint venture with Harrison.ai. That joint venture is called Franklin.ai. The purpose of Franklin.ai is to pursue AI in the space of pathology. I must say, since commencement. This joint venture has really taken off at great speed. We're working incredibly efficiently. We've built a team of 30 experts, covering all aspects of the project, and there's huge interaction between Harrison and Sonic. We're using Harrison's smarts at AI level, the technical level, and we're adding Sonic's experience, expertise, intellectual property, and material to provide a venture which has enormous potential. We're currently in the process of mass digitization of slides, not just in Australia, but globally. The whole product plan is now well underway, and we're targeting the release of our first product within a two-year timeframe. You might be interested to know where these names came from. That name, Annalise, is a play on the word analyze. The Franklin name, I don't know if anyone could guess this one, is an acknowledgement of Dr. Rosalind Franklin. Dr. Rosalind Franklin was an expert in X-ray crystallography working with Watson and Crick in the early 1950s in England. She was working at London's King's College, and Watson and Crick were working in Cambridge. Watson and Crick had done a lot of work trying to determine the structure of DNA, but it was really the X-ray crystallographic photography of Rosalind Franklin that absolutely nailed the structure of DNA in 1953. Interestingly enough, her famous photo, which is now called Photo 51, was actually given to Watson and Crick without her permission, without her knowledge. Watson and Crick famously went on to win the Nobel Prize for the discovery of the structure of DNA, and Rosalind Franklin didn't get anything. She died four years later, and the Nobel Prize to Watson and Crick was actually awarded after her death. The rules of Nobel Prizes is that nobody can be awarded anything posthumously. We're delighted to be honoring Rosalind Franklin in this joint venture. Of course, the link with Sonic's own logo, which you'll see at the bottom of the page, that double-stranded helix fits very well with the Franklin name. It's incredible that that discovery one minute molecule has enough information in it to create a whole person. Moving on to slide 19. That's our sustainability. This is something that is now very important in Sonic's overall strategies. We are moving ahead at speed. The sustainability report that we put out every year will have a lot of detail. That'll come out in November of this year. Just going quickly through some of the recent progress that we've made in the space. We've set up governance and management structures at board, executive, and operational level. We've set up a sustainability steering committee, which has now determined the company's sustainability topics and our net zero strategy, which will be included in the sustainability report. We've appointed a new Chief Leadership Officer that's at C-suite level in our global office here to promote Sonic's culture of medical leadership. We've established baselines for Scope 1 and 2 emissions. We're accelerating the transition of our global courier fleet and other cars to low-emission vehicles. We've commenced Sonic's global transition to renewable energy. In Australia, we've set 2030 as the date where we will be fully under renewable energy. We're also doing work on Scope 3 emissions, which are much trickier. The baseline will be established during financial year 2023, and targets to reduce will be set as well. In terms of the Sonic Healthcare Foundation, which fits into the sustainability ESG topic, we've established the foundation in 2022, as previously announced, with an initial contribution of AUD 40 million by Sonic. We have a majority independent board now appointed, as well as investment managers, and we have commenced our charitable activities with further projects to be considered as we go forward. Looking ahead to financial 2023, we have not provided guidance once again, and the reason for that is because of the great unpredictability related to the pandemic. That's unpredictability at base business level and COVID testing level. We do expect our base business growth to accelerate under the forces of the underlying industry growth drivers and market share gains. There's also the factor of potential rebound from postponed tests during the pandemic. We've given you just some insight into July's numbers there. If you look at July of this year, we're showing growth of 3.9% versus July of last year. If you look at July this year versus July pre-pandemic, we're showing 11% organic revenue growth. The demand for COVID testing continues, and I mentioned earlier that we're expecting to settle out at what we call a sustainable COVID testing or revenue level. That level will depend on the evolution and fluctuation of the pandemic. Assuming the pandemic continues to wane as it is now, we expect it to settle out at a level and then continue medium and long-term. Coronavirus is here to stay forever. We have also found that there's a heightened sensitivity of the non-COVID respiratory viruses as well. At a seasonal level, when people get coughs and colds and other respiratory symptoms, we are now testing not just for COVID, but for a panel of respiratory viruses. There's this cross shift or cross-demand from both COVID is driving non-COVID respiratory virus testing, and non-COVID respiratory virus tests are driving COVID testing. If somebody gets symptoms, you want to know what is it. Particularly if there is a need to use anti-COVID medications, you'd wanna know whether it's COVID or not, as opposed to the other respiratory viruses. Again, just giving you a little bit of insight into July, our COVID revenue globally was AUD 94 million. That's in a setting where the pandemic is waning. At cost management level, we're obviously keeping our eye very closely on inflationary pressures that exist in the marketplace. We expect wage increases to be moderate, and they will be staggered because of the multi-year agreements that we have in place in various countries around Sonic's operations. We're obviously working very hard to adjust our staffing levels to match COVID volumes. We also are focusing very much on automation and innovation. Interestingly enough, we've done extremely well with consumables through the year, with our consumable costs actually going down in financial year 2022, and we don't expect any price increases in 2023 financial. There will be some pressure on some of our minor cost categories. Utilities and transport are examples, but we don't think they're gonna be material in the scheme of Sonic's results. Looking ahead, also in terms of dividend, I've mentioned that we expect our progressive dividend to continue into financial 2023 and beyond. Just very briefly, going through a summary of this presentation. This was a record result, which was driven by COVID testing, growth of our base business, and acquisitions. We expect substantial ongoing COVID testing into the future. Dividend was at AUD 1 per share, which is up 10%, and franked to 100%. We've invested AUD 628 million in the year, and we're looking at further opportunities as we speak. Our gearing is at record low levels, and we're insulated at the moment against interest rate increases. Our share buyback will continue. We're making huge progress at sustainability ESG levels, and we will update the market on that in November of this year. Our AI initiative with Franklin.ai is progressing at pace, and we'll continue to strengthen Sonic's medical leadership culture, because it's given us enormous strength over Sonic's three or so decades of life, and giving us market differentiation and competitive advantage. Thank you very much, and I'm gonna hand you back to our host, who will coordinate your questions. Thank you. Thank you. Should you wish to ask a question, please register by pressing star then one on your keypad. If you wish to cancel your request, please press star then two. If you're on a speakerphone, please pick up your handset to ask your question. Your first question comes from Andrew Goodsall with MST Marquee. Please go ahead. Oh, thanks very much. Thank you for Thank you for my question. Just, Helen, do you mind just, contextualizing How loud is that? Yes. Is that better? Yes. Yes, sorry. That's much better. Headsets are fun. Just, when you mentioned with COVID testing, your expectation is gonna rebase 10%-20% versus your peak. Could you just contextualize that against the AUD 94 million you did in July on COVID testing? Just, would you expect that 10%-20% below that 94? Just trying to get a sense, 'cause we don't see the absolute peak. Yeah. Andrew, we obviously don't wanna give out numbers that we haven't released formally. And that's really just a guideline. This is not something that I think you can hardwire into a spreadsheet. Nobody knows exactly where the COVID testing is gonna settle out, but that is an estimate based on experts within Sonic and others. Now, peak levels are different in different countries. Mm-hmm. We would have to actually lay this all out country by country to give you that peak level. It's just to give you a sense of, you know, at the height of a wave where this is gonna be going forward. I guess, you know, maybe you could take the total revenue for the year and do some sums yourself and work out more or less where that's gonna be. Maybe if I just- Maybe I can actually give you a bit more guidance. Yeah, sorry. Andrew, it's Chris. It would be obviously more than just 10% of the AUD 2.4 billion we did for the year, 'cause that's the average rather than the peak. Mm. It's something less than 94 extrapolated for the year. It's, you know, somewhere in that gap. Yeah. I think if I just look at some of the charts of, you know, across your countries, like you can sort of probably get a bit of a bolder number that at this stage certainly looks below the 94%, so I'll work with that. Just moving on, obviously you've got a pretty significant war chest there. Just where you are on M&A in terms of near-term opportunities and just what you're seeing in terms of geographical focus and pricing. Yep. We haven't seen any real movement in terms of pricing up or down at this point. You know, one of the things that I could just say at this point is that, the market never knows what the deals we don't do. You know, we're looking at opportunities all the time. Obviously our biggest opportunities are going to be in Germany and the U.S.A., also in our radiology division. You know, there's opportunities elsewhere as well. We're not flagging anything in particular here, but I can say that in Germany and the U.S.A., we are looking at opportunities all the time. In the U.K., you've got to add that where we are looking at contract opportunities with the NHS, and we believe those will continue significantly into the future. You know, I look back at our U.K. division and it's a stunning growth result that you know I can go back when the number there was about GBP 30 million, we're now at GBP 700 million. When we bought in, it was GBP 20 million, wasn't it? Yeah. You can add the U.K., to this equation. You know, there's opportunities in other countries too, like Switzerland, for example, there will be opportunities as well. That's leaving out any decision by Sonic to enter new countries as well. I'm not flagging anything in particular, just saying that with the company in its very strong position right now, and it's not just the balance sheet, it's also the culture and the people, we are very well equipped to take advantage of growth opportunities at M&A level in particular. No, that's perfect. Thank you. The next question comes from David Loeb with JP Morgan. Please go ahead. Thanks very much. Colin, I see the comments on operating leverage, and we can obviously see the margins, which are way above where things were pre-pandemic. Just wondering if you could talk to some of the dynamics there. I mean, I'm inclined to think of COVID testing as quite significantly higher margin than the base business. But I recognize there's some operating leverage. And I guess what we're trying to understand is what's likely to happen to margins as COVID normalizes? I know you're not giving guidance, but if you can talk through some of the things to think about directionally, please. Yeah. Just to repeat your point there, that we can't talk about things that are not announced. You're right. There is leverage in our result as a result of COVID testing and the reverse leverage if COVID testing falls. Bear in mind that we are so conscious of this and working incredibly hard to manage the fall in COVID testing that is occurring and will occur as the pandemic dissipates. You know, I can't give you any numbers, but I think you've got the theory as well as we have, is that there's operating margin. In Sonic, we have established facilities and the ability to turn on a new test like COVID PCR testing. I think we also have the management smarts and capacity to actually manage the converse of that as well. It looks to me like margins in the pathology operations are 10 percentage points higher than they were in the pre-pandemic period. I mean, do you think you've done enough and there will be an ongoing benefit from COVID that we should assume margins will be better than they were pre-pandemic? You know, in general, I would say yes because it is gonna depend on the fees for COVID PCR testing, which will probably come down and become incorporated into the panels that I spoke about. You know, in time, COVID testing is gonna be just another respiratory virus that we test for. It won't be this kind of standout different test. It's a PCR test. You know, in general, I think there will be more PCR testing at respiratory virus level than we've ever had before. It'll be driven by COVID testing, settling out at whatever level it settles, and that will give us a benefit over pre-pandemic levels. That's in theory. You know, we're not at that point right now because the levels are quite high. You're asking what's gonna be the steady state, once we settle out, I presume. Is that correct? I am. Well, look, I think the simple analysis that's been done is a margin is being applied to COVID testing and taken out. The question that drops out of that is, particularly in an inflationary environment, there seems to be a real risk that underlying margins might in fact be lower as we end up on the other side of the pandemic. Now, I know there's lots of moving parts in there, but I'm really just trying to understand how you're thinking about managing it. Frankly, I'd like to understand whether you think COVID margins are already starting to fall in the period that we've just seen. Look, intuitively, I can just repeat, in another way what I was saying earlier is that. No, go on. It's fine. No, I won't repeat exactly. We will have a new test on our menu that's gonna be a very popular test, and that'll be the COVID PCR test in whatever form, whether it's alone or in a combination with other viruses. I think that's gonna be a positive factor on our margins. Maybe just add a bit more from me, David. As you said before, there are lots of factors at play. There's the fee we get for the test, which, you know, varies around the world, and it's changing at times around the world. There's what we pay for our consumables, which, now that things have settled down with supply, we can put more pressure on consumables costs. Overall, if it does settle at 10% or 20%, one would think that gives us pretty good insulation for the group's overall margins, even in an inflationary environment, and that's what we're trying to achieve, including as part of that, managing our labor costs down as volumes in of COVID testing moves around. We don't know exactly where we're gonna be because we would have given some guidance. We feel pretty comfortable with being able to maintain margins going forward at this point in time. Great. Thank you very much, both of you. I know it's not an easy one to answer, but it's certainly frankly what we're trying to do. Thank you. Thank you. The next question comes from Chris Cooper with Goldman Sachs. Please go ahead. Thanks. Morning. Just back on the expectation that COVID PCR settles at 10%-20% of peak. Just crude analysis, but the U.S., is currently around that range. Europe is about the upper end, maybe just slightly above. I just wanna clarify that you intend to imply in aggregate, the current volumes of COVID PCR are kind of where they're going to settle more sustainably. Is that the intention of those comments? Yeah. Chris, it's Chris Wilks here. I guess we're focused more on our numbers rather than the country numbers. Look, it is varying around the world. We haven't seen it come down to below 10% in any of our markets. I guess our feeling is that on average, we think for all the markets we sit in, that we should be able to achieve something between 10%-20%. That's, as Colin said before, not just a gut feeling, but based on discussions with our doctors and the like about where they think demand's gonna sit. We might be found in a year or two's time to be wrong there, but that's our best guess at this point in time. Margins as well. Sorry to come back to it, but obviously it's a pretty dynamic debate. I think you showed pretty good control, consumables and labor in that half, but still margins fell quite steeply first half to second half. You mentioned, Colin Goldschmidt, in terms of the, you know, where this profitability level settles over the longer term. You said the key swing factor is really where COVID PCR pricing stabilizes ahead. You also mentioned you think this is gonna be more or less in the form of a panel going forward. In the markets where COVID PCR is already part of a panel, is the margin on that test still above base business profitability? That's a very tough question. I would again, intuitively think it is, but I mean, to actually work out the numbers on one test is never easy. Because, you know, we've got all kinds of services leading up to the actual test at the bench. It's an impossible question. If you margin the cost, then I think. Yeah, of course. that would be the case. That's why, you know, knowing what the volumes will be going forward, because it is all marginal business. We've got all our infrastructure in place, and so you can marginally cost it, but there's also an argument for fully costing it. On a marginally costed basis, yes, you'd think the margins would be better than our base business. Sure. Okay. Very lastly, just on the base business, you mentioned, you know, some positive sequential trends you're seeing there. I just wanted to ask quickly on ASP. I know we saw a decent ASP benefit on the base business when volumes were suppressed due to the pandemic. Do we see the opposite? Do we see ASP pressure as base business volumes recover? As part of that is just how important could genetic testing be as part of that trade is something you called out today in a positive way. I'll give this one to Paul. Hi, Chris. It's Paul here. In terms of base business average fee, you're right to highlight that genetic things like genetic tests will sort of push that up over time, and that's been the long-term trend for decades that our average fee per patient does rise over time. There's no reason to think that that will not be the case going forward. You know, the ThyroSeq test that Colin mentioned, the genetic test in Germany as well, Oncotype DX, all have much higher average fees than our total average fee for base business. Those will drive it up. It is just, as I say, this general trend over decades that doctors request more expensive tests over time as new technologies come on board. We do expect that trend to continue. Just another point to this is that in our Australian market, for one, we are seeing, because we are very strong in the specialist and hospital sectors, we are finding that there's a slight shift towards the higher complexity tests because of that dominance in those two sectors. It applies less so in our other countries, but it's quite a marked difference here in Australia between Sonic and our competitors. Okay. You don't expect as the lower acuity tests continue to recover, you don't expect to see ASP pressure in the base business? No, no. Okay. All right. Thanks. Thank you. The next question comes from Sean Laaman with Morgan Stanley. Please go ahead. Good morning, Colin, Chris, and Paul. Hope you're all well. I have a question on the AI developments. Colin, are any products gonna be exclusive to Sonic or more broadly available? On Franklin.ai, what proportion of your current volume or revenue do you think these products could ultimately apply to? Mm-hmm. Our plan is, like with the Annalise.ai product in radiology, is not to keep it exclusive in-house, but to sell the product to the world. Sonic might get first mover advantage, and possibly advantageous pricing, but the idea is not to keep it in-house. As to the second part of your question, it's going to be a smaller proportion of our revenue, definitely. You know, I'm thinking at the moment, the AI initiative is around histopathology, and that's a very broad field with different projects in mind. You're talking. I don't know whether it's relevant to talk about what percentage of our revenue AI will cover, but more about, you know, is it going to improve our service and make us more efficient. As an assistant to a radiologist or a pathologist, this is gonna create enormous improvements in efficiency. I think that's probably a better way of measuring this, as opposed to on a revenue basis. It's in terms of cost and accuracy. Quality, yeah, I guess at the end of the day. Got it. Thank you. Thinking still along these lines of potentially transformative initiatives and a bit tongue in cheek, we're past the so-called Theranos threat. You talk about the new automation system in Belgium. Is there anything along those lines that Sonic may be doing or going to implement that could really introduce further efficiencies and see cost out? I mean, there's small things that we are doing all the time. Total Laboratory Automation was one of those big initiatives. You know, if you go back to when automation started two or three decades ago, that was a big step change. Total Laboratory Automation is a step change, and I think Sonic is very much a leader in this space because we've made the decision to spend the capital to install automated transport systems for specimens in our laboratories. That is hugely labor-saving and more efficient. You get the results quicker, and it's done cheaper as well. Whether there's anything like that on the horizon, probably not. I mean, we keep a very sharp eye out for any sort of new advance in technology that could be another step change. I know the whole world was kind of influenced by the Theranos phenomenon, but you know, we now know where that's gone. You know, there are movements to try and miniaturize testing to try and do more in the way of home testing, but there's nothing that's really significant that we could call a step change on the horizon. There's quite a few things, Sean, on the IT front. Using bots to do simple processing, back office type functions, including we're in the process of implementing a new system to help with billing in the U.S., and some of those have fairly significant economic benefits. That's kind of outside what happens in the actual lab, but certainly have potentially significant impacts on the broader Sonic business. And there are other- Okay. Automation projects like automation of microbiology departments, for example, where some of our labs around the world already have automated microbiology systems, but a number of our labs are looking to move that way in the coming year, given the focus on cost control and potential inflationary pressures. Great. Thanks, Paul. Squeeze one last one in on the U.K., if I may. Now, really stretching my memory here. I think when you guys first acquired TDL, it was largely a price making business, and then the business evolved to NHS contracting, and then you're calling out today, I guess, sort of, benefiting from more private work. Could you give us a bit of a description on what the mix is on the U.K., business on NHS versus privately insured? Yeah. I don't have exact proportions off the top of my head, but you're right that there's been a huge shift into contracted NHS work. Absolutely. Because remember, the UK is 90% NHS anyway. The whole healthcare system is dominated by the NHS. Our so-called Harley Street business, which was the TDL business when we acquired TDL, was price making. Yes, correct. That was private, non-NHS work. The growth that we've achieved in the U.K., could not have happened if we didn't enter the NHS market. That's just a peculiarity of that country. It's not really a negative. If you know, if you think about it's not a problem that we are price takers in a sense. We negotiate contracts, obviously. To some extent, we do have some control, and we do not have to accept contracts that don't make sense to us. Once the contracts are locked in, then it's up to us to make the best of those contracts. What's happening now with the GPs is an interesting additional phenomenon, because that's a return to, in a sense, private work. I'm not quite sure if you'd call it price making. There's now much more private insurance in the U.K. as well. If you go into a private hospital in the U.K., for example, that's covered by insurance, where we're not really price makers, we're price takers there as well. The private work that we're getting from GPs right now, it's private. We do have a fee schedule where we set the cost of those fees. We negotiate some of those fees with insurance companies, and some of them are patient pay. It's a mix at the moment, but I do find it a fascinating phenomenon that there's this shift at primary care level now into the private sector. That's quite a dramatic turn of events. Great. Thank you, Colin. Thank you, gentlemen. A little more color there. It's around, in very broad terms, it's about half and half between NHS-sourced revenue and private source revenue in the U.K., at present. Great. Thank you, Paul. Thanks for the color. That's all I have. Thank you. The next question comes from Gretel Janu with Credit Suisse. Please go ahead. Thanks. Good morning, y'all. Just thinking about the short to medium-term growth rates for your base business, and test mix. Do you think COVID has driven any structural change in either behavior of patients or in GP referral behavior that may actually impact overall industry growth rates into the medium term? I guess, you know, has COVID impacted, you know, the frequency of screening tests, which might be more muted going forward? What are we seeing there? Thanks. Okay. That's an interesting question, because definitely during the pandemic, we have noticed that some of the routine tests that need to be done on the public were at lower volumes than pre-pandemic. Now, those tests, we certainly expect to resume, if not rebound as the pandemic wanes. As to the question about has there been any permanent structural change, it depends on which country you look at. Here in Australia, what's happened is that GPs have started doing many more consults by teleconference. So that became a very popular way of consulting during the pandemic, and it's still continuing, albeit at a lower level right now. Now, the question then is, you know, are GPs gonna do this permanently? Will that have an effect on referrals for pathology and radiology, for example? Of course, the industry is working very hard. We at Sonic are working extraordinarily hard to make it as easy as possible for a GP doing a teleconference or teleconsult to request pathology or radiology. This is largely now completed in radiology, where it's very easy for a doctor to order radiology, and it's all done electronically via apps, via your cell phone. It's almost completed in the space of pathology as well. This is less of a phenomenon in our other countries of operation. The point that I mentioned earlier where we're seeing sort of a slight shift in favor of the higher-end tests, you know, it's hard to tell at this point, Gretel. It might just be a hangover from the pandemic because as the pandemic ends, so all the routine tests, you know, things like even Pap smears, doing lipid studies, checking thyroid function, just doing a normal full blood count, stuff like this that is very important for people once in a while, those will all return once patients return to GP surgeries. Remember, GPs were reluctant to see patients throughout the pandemic for fear of spreading infection in their surgeries, and that's what drove the telehealth and so there was a temporary change in practice at GP level. We have not seen that at the specialist level. At specialist level, yes, volumes were down at the peak of the waves because elective surgery was canceled, colonoscopy centers were closed, et cetera, but that's come back with a vengeance now. All the specialist work is kind of in catch-up mode. I think that's gonna continue for quite some time because to clear the backlogs, I've heard it's gonna take up to 18 months, and that's with specialists working nights and weekends as well. It's gonna take quite a long time to clear that backlog. Gretel, just a couple other little anecdotes on that catch-up and the rebound. I was reading the other day that in the U.S., for 2020, there were 43% less melanomas diagnosed. Now, that doesn't mean they've gone away, and so that's another little anecdote about the evidence that there's a fair bit of catch-up. In Australia in 2021, I think it was, there were 15% less colonoscopies done. I think as Colin was just saying, we probably do expect in the next few years a fair bit of catch-up, which will flow through to our labs. Great. Understood. Thanks for that color. Just in terms of reimbursement for base business, so you've seen Switzerland cut fees. Is that because the government is trying to pull back on pathology funding given the strong levels over the pandemic? I guess, is that a risk that you see for other countries? Switzerland is a bit of a unique market. I won't bore you with the structure of it, but there's a whole lot more work done in the general practices and the labs that we run and tend to do the more esoteric work. The fee regime in Switzerland has always been a little stronger than, or better for us than in other European markets. I think this is essentially the government trying to right-size the cost compared with neighboring countries, essentially. As we said before, the effect on us is about 7%, but with growth, I think, last year at 3%, and we think with rebound and the like, we should be able to absorb that pretty easily. No risk for other countries at this stage, outside of Switzerland? No, I think everything else we think is generally pretty stable. Great. Thanks very much. The next question comes from David Stanton with Jefferies. Please go ahead. Good morning, team, and thanks very much for taking my questions. I'd just like an update on your Aurora business, your U.S., anatomical pathology business. How's that been going during COVID? Given Chris's comments just then, I would expect it's likely declined during the COVID period. What's the outlook for it, please? David, hi. You're right. You know, in line with many other specialties, our anatomical pathology volumes declined through the pandemic and were inversely related to pandemic waves. What we're seeing is now a recovery in those areas. Remember we're now calling it the anatomical pathology division of Sonic Healthcare U.S.A., Not Aurora, by the way, but that's fine. Because we've added ProPath to that, which is a big new anatomical pathology practice. Remember that all of these labs get their referrals from procedural specialists like dermatologists, gynecologists, urologists, et cetera, all of whom were affected in the pandemic. It was fully expected that the volumes would dip during the pandemic and that they would begin recovering as the pandemic ends. That's what's happening, just like our anatomical pathology elsewhere in the world, including here in Australia. Understood. A couple of housekeeping questions, if that's okay. Can you give us sort of some color on what you expect in the increase in depreciation or the change in depreciation might be for 2023, tax rate for 2023 and potentially CapEx for 2023? Any color there would be greatly appreciated. Thank you. Yeah. Dave, Chris again. Yeah, look, the CapEx Colin alluded to as he's working through the deck, that we've got a few building projects on. Yep. A couple of those we own. The Brisbane lab in Bowen Hills, we own. The new Munich lab, we will own. I think there's something in the order of AUD 120 million to be spent on those labs, most of it over the next 12 months, but some of it might flow into 2024. Depreciation, we don't get to see it quite the way we used to with AASB 16. I think we've always had the rule of thumb, and we try and manage within that, with the management of the CapEx spend, that we. As we're growing, it's probably the old depreciation, plus or minus 10%, as a rule of thumb. What was your other question? There was, I think. Tax rate. Ta- Tax rate. Tax rate. Tax rate's a bit of a function of the- Yeah. where the profitability sits in which country. I think we would be guiding, we hit 27% this year- Yep. As you will have seen. Somewhere between 26%-27% for 2023. Okay. Just a follow-up to that then. CapEx, we should expect on that basis then, overall CapEx likely to touch up into 2023 from 2022. Yeah. Yeah, absolutely. Because those are kind of one-offs that'll go on the balance sheet. Yeah. Thank you. Your next question comes from Craig Wong-Pan with Royal Bank of Canada. Please go ahead. Hi, everyone. Just a question on the base business revenue growth this year in July. I was wondering if that was reasonably uniform across your geographies or if there were any sort of standout countries that were seeing exceptionally strong growth. It's very similar, Craig. Worldwide, we have the pandemic in decline. Some countries more in decline than others, if I can put it this way. Plus, you've got potentially a seasonal effect, as well, just throw into the mix. Essentially, it's fairly uniform, and it appears to be the decline of the pandemic effect, which is roughly the same in all our countries. Okay, thanks. The next questions I had were just on your imaging business. Are you expecting any more greenfield developments in FY 2023? If so, what kind of timeframe do you expect those greenfields to kinda get to your target returns? Yeah. Maybe I'll take that. I think there's about three or four maybe, Paul. Some of them we had quite a few last year. I think there's something in that order, three or four for this year. We're also quite heavily rolling out PET/CT, but some of those are just added to our existing practices. Adding a PET/CT to an existing practice can add kind of like greenfields in a way. It's quite an investment, but they're ones that we're pretty confident about the ROI on. There's a combination of things that we're investing quite heavily in radiology at this point in time. Okay, thanks. Just my last question on the change in regulation around MRI licenses. What's your expectation for how that or the impact of that to the industry? Yeah, look, I guess no one. You're aware that it only affects the non-metropolitan areas at the moment. It'll be interesting to see whether the new government can proceed with what was announced by the old government in that regard. Look, at the end of the day, for the industry, it will be more money coming into the industry. How it gets split amongst the players, I guess no one can really determine at this point, but it's probably a net positive, I think, for the industry. You know, just to add to this. I think, you know, it would be handy just to recognize that the use of the higher end modalities is increasing quite dramatically over the years, the recent years. I'm talking CT, MRI, and PET/CT. We're very well-placed with all of those. These MRI licenses are very important. You know, we operate in some of these rural and remote areas. As Chris says, it's possible that this is taken further, whereby more licenses are allowed in the future to free up those high-end modalities, certainly in the MRI space. Okay, thanks. That's all my questions. Thank you. Your next question comes from Steven Wheen with Jarden. Please go ahead. Yeah, good morning. Two of the things that stand out to me in, particularly in Australia, is the performance that you've been able to achieve in path and radiology in the second half relative to Medicare data. I just wondered if you could help, and I know we always have misgivings about the Medicare data, but if you could help to some degree explain why the industry growth rates are so much lower than perhaps what you achieved in second half. The second observation. Sorry, why don't we just start with that one? Steve, just on the pathology side of things, I think first of all, an important point to make is that. You know, you might think, yes, he's gonna say this, but our company is in a very strong and stable position, not just in Australia, but worldwide, based on medical leadership culture. That and staff who are absolutely, you know, doing everything within that culture to the benefit of the company. That's just the baseline statement. Then in pathology, I mentioned earlier that, we do tend to dominate the specialist and hospital markets. Those are sub-markets within the whole pathology market. Through the pandemic, with telehealth and a GP shortage, it would be expected that GP referrals are, I guess, slightly lower than they would have been normally, as opposed to the specialist and hospital referrals, which are now, you know, pulling out of that at a great speed. It's almost expected on the basis of what I've just said that we would be outperforming the market. I'm pleased to hear that because as you know, I've never placed a whole lot of confidence in those Medicare stats. If you look at them over a six-month period, say, then they do make some sense. Yeah. Great. Thanks, Colin. The second observation is every other company that operates in similar space to yourself is crying out about staffing issues and, you know, the cancellations that is causing. There seems to be relatively neutral impact on your numbers. I just wonder again how you've managed to achieve that. I mean, I note that you're talking about labor productivity gains in the U.S. Maybe that's a good place to start as to how you're achieving that there, and any other sort of observations around labor costs in other markets would be helpful. Thanks. Yeah. Just on the U.S., remember that, I think at the start of the pandemic, our management team in the U.S. was very intent on using the opportunity to right-size the organization, and that's continued throughout the pandemic. We have globally just been very, very conscious of how we control labor cost, which is by far our biggest cost item in terms of providing outstanding COVID testing, but then also being able to adjust down as COVID testing levels come down as well. You know, it's been a huge issue, I guess, for just about every company, especially through the Omicron wave, where staff absenteeism became a massive problem. You know, nobody can work from home in our business. You know, we have to put on overtime, new staff, casual staff increasing their hours, part-time staff increasing their hours, and we've done that. Of course, that group of people is the most flexible of all. Overtime goes up. You know, you'll see this if you study our radiology result for the half or for the year, where we kept our radiology centers open despite the fact that volumes were down in order to keep delivering the service. To keep those centers open required additional staff and overtime because we had staff absenteeism as well. It's a complicated equation that occurred different in radiology and pathology. I think we've All the time, we're talking about how we keep control over that cost item while at the same time delivering our usual excellent service. I think we're at a point now where the absenteeism is falling, thankfully. We're now very quickly coming back to normal staffing and normal volumes through our businesses. I guess that's probably the best way I can answer the question. This is not a clear-cut yes or no answer. Yep. Fair enough. Thanks very much, Colin. Thank you, Steve. The next question comes from John Deakin-Bell with Citi. Please go ahead. Thank you. Colin, I just wanted to clarify, in the U.S., you were talking about anatomical pathology recovery, et cetera. In your numbers, you said the first half, the base business grew 4% in the U.S., and the second half was up 2%. I'm assuming it was flattish in the second half. Can you say that the anatomical pathology kind of improved after the end of the half, or was it impacted by Omicron? Just because I'm just trying to understand how the numbers flow. Yeah. In fact, that's basically it. We're seeing the recovery of the AP business towards the end of the second half and into 2023. Remember, you're looking at the whole division then, not just anatomical pathology. Yeah. The AP business is probably only 20%-25% or something of the whole business. Yeah. The recovery in that, the effect of the whole group is a bit. Is different. Is a bit diluted. Yeah. Yeah. Understand. Thank you. Just to try and get some insight into COVID testing. In the U.K., you called out that COVID testing declined 40% for the year. It was down 20% in the first half, so I'm assuming 60% in the second half. They stopped funding it properly in April. Can you just give us some anecdotal feel for actually what happened in May, June, and July once the funding disappeared for PCR testing? Yeah. The U.K,. is different from our other markets in the sense that. Well, first of all, that surge lab was a specific contract, where we were providing COVID testing for Greater London, during the pandemic, and then was closed. Now, the difference post that is that the U.K., does not have the collection center infrastructure that we have in Australia or the U.S. Nor do we have, that widespread G.P. referral base, that you might find in Germany and the other countries as well, where, G.P.s are referring into a private lab out of the NHS. We do have G.P. work as part of some of our NHS contracts, but it is different. Our sense is that the residual COVID level that we're reaching in the U.K., might be at the lower end of that range that we gave because of the reasons I've just outlined. Whereas, you know, if you've got an infrastructure like Australia with lots of collection centers and drive-through centers as well, it's probably gonna be more towards the top end of that range, simply because in the U.K., much of the COVID testing might go into hospitals. Whereas the COVID testing coming into our labs will be from some from NHS, but not a whole lot, some from the Harley Street market, that's specialists in the U.K., and now some from the GPs who are setting up in private practice around the country. Okay. The cessation of the funding also, you know, they stopped paying for the PCR test, not everywhere, I understand. I mean, if that happens in other countries, do you still stick by the 10%-20% number that you've pulled out? Absolutely. Yeah, this, that 10%-20% is a statement independent of funding for the test. Now, once we start talking about funding, it gets very complicated because it's different in different countries. Even in Australia, there are two funding sources. There is Medicare and state governments. There are nursing home contracts. There are all kinds of different ways that COVID testing is funded. The bottom line is that COVID PCR testing will be required into the future, and I don't think anyone's disputing that. It'll always be funded in other markets. The U.K., Is a bit unique because of the NHS. That's good color. Thanks very much, Colin. Mm-hmm. Your next question comes from Saul Hadassin with Barrenjoey. Please go ahead. Good morning, Colin, Chris, and Paul. Sorry to labor the PCR margin question again, but when asked the same question a few weeks ago in the U.S., one of your peers there who's listed suggested that the operating margin or operating income margin on PCR testing was around 60%. Chris, cognizant of your comments about, you know, it depends on region, what the price is and maybe what the COGS are, but why would your PCR margins be any different roughly to that margin that was provided? That's a very good question. Look, it depends on. You can marginally cost any test and probably get, if you take out everything other than the direct cost, whether you're marginally costing it, depending on assuming labor's in or out or just on the consumables. I'm not sure how he's responding to that question. If you assume that the labor's the same cost, then, you know, sure, it might be 60%. If I could. Even more if you just take the consumable. If I could just add to that. It's just nigh impossible to cost out a single test out of the blue like that, because bear in mind, first of all, if you're running a drive-through center to collect your COVID test, there's that cost. Now, there's that. There's courier costs. There's front-end costs in the lab long before you get to the molecular lab which does the PCR test. And then there's all the post-testing costs as well. Now, as Chris says, you can say all those costs are sunk and don't count them, then you might get your 60%. But if you do factor them in, it's nothing like 60%. You know, this is not a clear-cut statement. I'm interested in who the who the- There's very significant variation by country because pricing is different, consumable costs are different, the way collection occurs is different. There's no way you should extrapolate a number that was given for the U.S., market across Sonic's seven countries. It's fair to say the reimbursement in the U.S., because they've still got the emergency arrangement is probably a bit healthier than it is in other parts of the world. Yeah. No, understood. That's helpful. Just another question. We've seen in Australia, and certainly this calendar year, there's concerns in the GP community about rapidly declining bulk billing rates as GPs struggle to make money. Colin, just we talked about structural changes from referrals due to telehealth. What about some potential structural changes of just people attending GPs in a world where bulk billing rates are significantly lower than where they were, you know, three to five years ago? Look, this is a real problem, and it's gotta be tackled at the highest levels of government, in my opinion. It is being pursued now by various people, AMA, industry, GP groups. We don't wanna land up in Australia with a problem whereby patients are no longer able to access GPs. GPs are the front line of the healthcare system. They are absolutely vital to the prevention of disease and the treatment of disease. Something has to be done about this because I agree with you that if GPs are forced to go to private billing, patients will stay away. Now you might say, "Well, what's that gonna do to pathology volumes?" I don't think it's gonna be all that significant, but there will be significant health and there will be epidemiological consequences that we just simply don't want. Now in the U.K., the problem already exists, and it's very difficult to get to see a GP in the U.K. That's why this phenomenon of private GPs has occurred. In Australia, I think until reimbursement levels are changed, the decline in GP numbers will continue. I guess that's all I can say is that there is a fundamental problem that's got to be aired more and addressed at the highest levels. Got it. Thanks, Colin. Last one, just a quick one. The $550 million that was evident in the cash flow from investing for businesses acquired, outside of ProPath and Canberra Imaging, is there anything else in that line that we should be aware of? The investment in Harrison is one. Mm-hmm. There are a number of other smaller businesses, including some GP or medical center operations, I should say. You know, a few other smaller businesses as well. Oh, sorry, I think we called out at the half that number actually includes an earn-out for the Tria acquisition that occurred in a number of years ago, but there was a significant earn-out payment in the current year. Great. Thanks, Paul. That's all I had. Thank you. Your next question comes from Rod Sleith with Rimor Equity Research. Please go ahead. Oh, hi, guys. Thank you very much for your time today. I apologize for this one, for the first question up front, but that is just a clarification, 'cause I know when you were talking about your best current guesstimate for a base level of COVID business going forward being 10% of what it currently is now. I just wanna clarify that I presume you are talking about volumes rather than revenues, and we know what's happening in terms of revenues per test in Australia. Yeah. If I could just clarify two points. It's 10%-20% of peak volume levels. Yes. Yeah. not what we're doing. Okay. Peak volume levels. Yes. Sorry. My apologies. Yes, I did understand that. Okay. Great. All right. Secondly, I was just interested in the Franklin.ai, and I suppose as the step toward that joint venture being effective, the digitization of your histopathology. When you made that comment on the slide, I haven't got the slide open. Does that mean that basically what you're trying to do is get to a point where everything is being digitized at source at the time that the pathologist is looking at the slide? Or are you talking about- Yeah. digitizing the back library? There's two processes. One is to get the system set up and to achieve a project outcome, we need to get a large cohort of digitized slides to set up the AI model. Once that's done and the product is launched, it can only be used on digitized material, and the whole world is moving in that direction anyway. There's a move away from looking down a microscope to reading off a screen, where you've got digitized slides. Now, the two are running in parallel, and you are correct that the AI solution in anatomical pathology can only be applied to a digitized product. Now in radiology, that's easy because everything the radiologists look at at the moment or almost everything is in digital format already. Whereas in pathology, it's not. We have tissue samples that get processed and put on a slide, very much in analog form. Yes, you know, over the next year or two, I think there's gonna be a big shift towards digitized anatomical pathology, quite independent of AI. It's probably worth mentioning that in itself has the potential to bring efficiency gains. There's quite a few studies on that. Admittedly, most of them are done by the vendors of the equipment, so they're probably a little biased. You can imagine, for example, in our AP business in the U.S., where we've got something like 35 sites, is it, Colin? Thirty. You know, if you can move specimens around to load share, there's probably a whole lot of efficiency you can get by simply moving images around rather than trying to move physical slides around, which is not so easy. Absolutely. I guess that leads pretty directly onto my extension to that question, which is if you guys are in a position that you have seen the changes that have happened in sort of clinical pathology and automation and changes therefore in the economics of that business over the last really 30 years. As you look forward at what's happening in AI for both histopathology and I guess also in radiology, is this the beginning of a very perhaps large change in the potential economics of this business? I know it's only gonna be incremental in the next 3-5 years, but if we look out for the next 10-15 years, is this transformational to the economics of histopathology and possibly radiology? Yes. I'll add one more question onto the end of that, though. If we look at your historic acquisitions outside of Australia, obviously you have been pathology-focused, including histo and anatomic. Does this make radiology potentially more interesting to you outside of your existing Australian operations? It does. You know, I think this is off the back of a very strong performance of our radiology division. You know, if you go back five or 10 years ago, perhaps we wouldn't have been saying this, but I think the radiology division has strengthened dramatically. We've got a great leadership team, great radiologists. Yes, the digitization and the move towards AI would be encouraged, I suppose. Even apart from that, we're sort of tentatively interested in that process. Great. All right. Thank you very much. Thank you. Your next question comes from Lyanne Harrison with Bank of America. Please go ahead. Good morning, all. Thank you for taking my questions. I just wanna follow up on those questions on costs and inflation. I understand that you've got multi-year agreements that will help support wage increases. In terms of those multi-year agreements, are the wage increases in them fixed rate increases or are they linked to CPI? The existing multi agreements have. Yeah. Generally have fixed amounts specified in them. Okay, fantastic. Just to follow up on radiology. Obviously you've given us some data on the July base business growth for pathology, but can you give us a sense of how radiology's performed, you know, obviously in June, July last year, Australia, specifically Sydney, was in lockdown. You know, has that bounced back in June and July of this year? I mean, the growth that we quoted for July was for the total company, including radiology, not just for pathology. Okay. We probably shouldn't go into too much more detail on that. I don't think that the growth in radiology is substantially different to the rest of the company, as Colin sort of touched on earlier in response to an earlier question. The growth was reasonably uniform in July. Okay, thank you. One more on, I guess routine testing. Obviously that fell away through COVID. Do you get a sense of new diagnosis now and indications? Is the diagnosis or the severity of the illness more so because of that lack of routine testing? Yeah, the information we have is purely anecdotal, and I'm not aware of any published data on this yet, but the anecdotal information does suggest that to be the case. You know, for example, if you stop doing colonoscopies just as a principle, colon cancer doesn't go away. If you stop doing HPV testing or if you for cervical cancer, or if you stop doing even some of the more basic blood tests, we're gonna miss diseases. I think it's almost inevitable that there is going to be some increase in incidence of some of the diseases that routine blood tests would normally forestall or pick up early. It's probably a bit early to see those just at this point in time. The anecdotal evidence that I'm talking about comes from labs here in Australia from pathologists who are saying things like, "I'm seeing more advanced cases of lymphoma than I've seen before," or, "I'm seeing deeper melanomas than I've seen before." When I say deeper, that's the thickness of the melanoma, which is directly proportional to the prognosis. Those are anecdotal comments that are coming from our pathologists. As I say, they're not to be quoted because it's not published data. Is it right to say, you know, to the extent that that increased severity or more advanced diseases, you know, to the extent that, you know, we get more of that over the next 12, 24 months, that would lead to, I guess, higher complexity testing scans? Look, that's possible. Obviously this is the last thing we'd wanna rely on for our business. I mean, this is just something that may happen. It's not going to be material in Sonic's numbers. Okay. Thank you very much. Thank you. Thank you. There are no further questions at this time. I'll now hand the conference back to Dr. Goldschmidt. Simply to say thank you very much to all who've attended and lasted this long. We very much appreciate your attendance. Thank you and have a good day. Bye.