Good morning, everyone. This is ACL's third AGM, and it gives me great pleasure to welcome you all to the meeting today. My name is Michael Alscher, and I have the privilege of being the Chair of your board. I'd like to start by acknowledging the traditional custodians of the land on which we meet today, which for me, in the city of Sydney, is the Gadigal people of the Eora nation. I also acknowledge the traditional custodians of country throughout Australia, and the places from which our participants join us for this virtual AGM, and their connections to land, sea, and community. I pay my respects to their elders, past and present, and extend that respect to Aboriginal and Torres Strait Islander peoples here today. I've been informed by our company secretary that we have a quorum present, and I now declare the meeting open.
Before we begin with today's agenda, I'd like to introduce my fellow board members who are present at the AGM today. Here in Sydney, I'm joined by the Chair of our Remuneration and Nominations Committee, Andrew Dutton, the Chair of our Audit and Risk Committee, Mark Haberlin, and also Christine Bartlett and Nathanial Thomson. Our Company Secretary, Eleanor Padman, is also joining us virtually from Sydney, as is the company's legal advisor, John Williamson-Noble from Gilbert + Tobin. Joining us virtually from Melbourne is our Chief Executive and Executive Director, Melinda McGrath, and fellow director, Leanne Rowe. They are joined by James Davison, our CFO. Also in Melbourne is ACL's auditor, Stephen Whitchurch from Pitcher Partners. Stephen will be available to answer questions that shareholders may have in relation to the 2023 financial statements and the conduct of the 2023 audit.
I will now take a moment to explain the interactive features of the webcast platform that we're using today. A virtual meeting online guide was sent to shareholders with a notice of meeting, and I'll now run through the key features. To vote, you'll need to register by clicking on the Get a Vote, Voting Card button and providing your security holder number and postcode. If you're an appointed proxy, please enter the proxy number issued by Link in the proxy details section. Once you have registered, your voting card will appear with the resolutions to be voted on by shareholders during today's meeting. You may need to use the scroll bar to view all resolutions. On your voting card, you'll see an option to enter a full vote or partial vote. To vote, you can click For, Against, or Abstain.
If you wish to submit a partial vote, please enter the number of votes you wish to lodge from the total you see displayed for each resolution. Once you have finished voting on all resolutions, please click Submit Vote. At the end of the meeting, a countdown timer will appear, and voting will end five minutes after the close of the meeting. Please ensure you get your votes in on time. To ask questions, shareholders can simply click Ask a Question. Depending on the volume of questions, we'll focus on answering the most frequently asked questions. I would also ask that you confine your questions and comments to the business of the AGM. If there is a technical issue that impacts the webcast, we ask for your patience while we work to address it as quickly as we can.
If a technical issue results in me being unable to continue to chair today's meeting for a period of time, Mark Haberlin is appointed chair in my place and will continue with the meeting until the technical issues are resolved. The notice of meeting for the AGM was made available to all shareholders, and I propose that it be taken as read. The notice of meeting can be found on our website under the Investor Centre tab, and there's also a link on the AGM platform if you wish to download it from there. Today, I will begin with my Chair's address. Then I'll invite our Chief Executive Officer and Executive Director, Melinda McGrath, to provide an overview of the FY 2023 financial and operational achievements and FY 2024 trading to date.
We'll then move to the formal part of the meeting, as well as the formal tabling of ACL's 2023 financial statements and auditors' report. We have a busy agenda with six resolutions for shareholders to consider. We will take questions as we address each item of business, and we'll try to move at a pace to ensure that we complete the agenda in our allocated time. Financial year 2023 was very much a transition year, dealing with the end of the pandemic, resetting the business for a post-COVID-19 operating environment, and the challenges of inflation, and a workforce that's been operating under considerable pressure for some time. I want to extend my appreciation to our exceptional ACL team throughout the organization, who rose to these and other challenges throughout the year and ultimately delivered a strong operating and financial result once more.
Benefiting from the strong and resilient operating platform created over the past eight years, ACL delivered excellent results in FY 2023, including strong growth of our core non-COVID business operations. Among our FY 2023 financial highlights, ACL delivered more than 9 million pathology episodes, generating a revenue of just under AUD 700 million. ACL also continued its operational improvement program, which led to profit margins, as measured by earnings before interest and tax, reaching 10.1%. ACL's key growth drivers continue to guide our business forward. ACL delivered an 11.4% increase in base business growth compared to FY 2022, and above-market growth from our SunDoctors business. While COVID-related revenue has reduced sharply, our strategic investments in SunDoctors and Medlab have been fully integrated into the business ahead of schedule, making ACL a stronger company coming out of the pandemic....
than we were going into it. ACL continues to focus on key operational initiatives, and in FY 2023, we had a disciplined and structured wind- down of COVID-related costs in line with testing volumes. A significant upgrade of the base laboratory information system was also completed, and the rollout of our patient-centered digitization program was commenced. ACL also implemented a number of operational improvement projects, with benefits continuing to accrue into FY 2024. The challenges brought about by a high inflationary environment, coupled with the broader healthcare market still operating at lower levels of activity, and the supply constraints of clinicians throughout the healthcare sector, have been material impacts on the pathology sector, and our company has handled these operating dynamics head-on. One of the areas I'm proudest of as Chair, is ACL's continued position as a leader in science and technology.
In 2018, ACL made a strategic investment in an innovative genomic testing business, Geneseq. During FY 2023, Geneseq completed validation studies for both early and late-stage melanoma detection using genetic technology applied to tissue and blood. The tests that Geneseq have developed are material, and represent diagnostic leadership on a global basis. ACL has a 10-year exclusivity period for the international patent-pending technology, and commercialization is expected to begin in FY 2024 as final regulatory approvals are received in Australia. Geneseq will be making a number of announcements over the coming months as its products move to commercialization, and additional forms of cancer tests are developed using the same diagnostic platform. To give shareholders a sense of what we're talking about, one needs to look no further than at the success and opportunity of the Galleri product in the U.S., owned by Grail, an Illumina subsidiary.
In March 2023, ACL announced its intention to make an off-market takeover bid for Healius Limited, which, if successful, would create Australia's largest pathology provider, giving the combined entity the capacity to invest in emerging advances in diagnostics with international potential, as well as market-leading front-end solutions to enhance doctor, patient, and customer experience. The offer is subject to ACCC and FIRB approval, and other conditions. We remain in discussions with the ACCC, and as is always the case with larger mergers in concentrated industries, there are many stakeholders which wish to be heard and many questions to be answered. This takes time and requires patience. We continue to make our way through this process, and remain of the view that the proposed merger is in the national interest, and is good for the country, patients, staff, and shareholders.
In regards to shareholders in particular, the offer made to Healius shareholders represents a nil-premium merger, priced at the time of the announcement, and the merger structure allows both groups of shareholders to benefit from the value creation of a combined company. We believe the potential value creation of the proposed merger for both sets of shareholders is too large for either shareholder group to ignore. We are hopeful that following ACCC approval, we can work in a collaborative and productive way with the Healius board to ensure this transaction takes place, with the aim of achieving the potential value creation of the proposed merger for both shareholder groups. At the end of the day, for either company to ignore such a merger opportunity, it would need to form a view that it has a stronger future on its own.
We cannot see a basis for either company to genuinely come to this conclusion, given how compelling the value creation opportunity is. From a board governance point of view, I'm fortunate to be surrounded by an engaged and talented board, whose members uphold the ACL values as rigorously as our staff. In FY 2023, the ACL board completed a board performance evaluation, which resulted in a range of action items to be implemented. A new charter for Audit and Risk Committee was drafted and adopted, and we continue to review and update the board's skill matrix and succession plan. I'd like to take this opportunity to welcome Christine Bartlett, who commenced as a new non-executive Director of the ACL board on August 2023.
Christine is an experienced non-executive Director with extensive executive experience gained through chief executive officer and senior executive roles with National Australia Bank, IBM, and Jones Lang LaSalle. Pending Christine's election to the board by shareholders at this meeting, we look forward to drawing on her vast experience as we move forward. In FY 2023, ACL continued to prioritize environmental stewardship, good governance, and social responsibility. Our ESG strategy continues to deliver strong performance across all areas of our ESG mission. We've upheld our commitment to sustainability and environmental stewardship by the continued reduction in our carbon footprint through the rollout of hybrid cars, increased installation of solar panels in laboratories, and a reduction in consumable packaging. ACL's dedication to environmental sustainability aligns with our broader mission of improving health outcomes for generations to come.
Some of our other ESG highlights include achieving a continued reduction of our lost time injury frequency rate, increasing female board and management representation, respectively, increasing digital pathology referrals to 19%, up from 11% in the first half of FY 2022, and commencing our Reflect Reconciliation Action Plan, which aims to strengthen relations between Aboriginal and Torres Strait Islander and non-Indigenous peoples, and contribute in a meaningful way to national reconciliation. On behalf of the ACL board, I'd like to thank Melinda McGrath, the senior leadership team, and all of ACL's dedicated employees for their commitment and the important work that they do on a daily basis. By creating a culture of innovation, continuous improvement, and doctor-patient centricity, we uphold our mission to empower decision-making that saves and improves patient lives.
I would also like to extend my gratitude to our shareholders for their support and trust in our organization. I'd like to now hand you over to Melinda McGrath for the group CEO presentation. Thank you.
Thank you, Michael, and good morning to you all. I would like to start by thanking Australian Clinical Labs, more than 5,000 employees, who as always, have worked tirelessly to reorient the business post-COVID, and continue to provide our usual outstanding service to our patients and medical communities. It was a difficult undertaking to dismantle our COVID infrastructure in a timely manner, due to the steep drop-off in COVID testing rates, and the teams did an excellent job of managing this change. I'm pleased to let you know that in financial year 2023, despite Australia's healthcare access and resource challenges, caused in part by years of low immigration rates for medical and nursing workers, ACL has just delivered a strong performance, with the growth trajectory of our base business increasing 11.4% compared to financial year 2022.
The majority of this growth came from specialists and general practitioners. As a brief overview, I'd like to share with you some of the key metrics to illustrate our financial year 2023 performance. In the 12 months to 30th of June, 2023, Clinical Labs has achieved revenue of $ 697 million, with non-COVID revenue up 11.4% on financial year 2022. EBITDA of $ 193 million, representing a 27.7% margin. EBIT of AUD 70.3 million, representing a 10.1% margin. Strong operating cash flow of $ 59.2 million with 90.5% cash conversion. Low gearing with net debt at $ 45.7 million, which is 0.7 times financial year 2023 EBITDA, AASB 1 1 7. We have a strong balance sheet with capacity for growth.
The final dividend declared was $ 0.07 per share, which, combined with the interim dividend of $ 0.07 per share, takes the full-year dividend to $ 0.14 per share. The full-year dividend represents 67% of NPAT and a 4.4% dividend yield, based on the share price at 18th August of $ 3.18, and 5.1%, based on the share price on 17th October of $ 2.75. The board continues with its target dividend payout ratio of 50%-70% of NPAT, based on the full-year NPAT, and in the last two years, the company has paid out $ 0.67, fully franked. The ACL team has delivered a continued strong financial performance, executed in a disciplined manner. As part of our growth plan, we've continued our commitment to bring new genetic tests to Australia.
In 2018, we made a strategic investment in a company called Geneseq, to develop a multi-tissue and blood plasma genomic test for melanoma. The test, named Melaseq, is an exciting development to aid in the diagnosis and appropriate treatment of a key cause of cancer. Melaseq opens up the potential for earlier, less invasive, and more accurate screening and diagnosis of individuals at risk of melanoma, and can detect the cancer at all stages. Following groundbreaking research, recently published in the British Journal of Dermatology, showing 93% sensitivity and 98% specificity for invasive melanoma detection, commercialization of the Melaseq test for melanoma is planned within the coming months, with final approval for the skin biopsy application of Melaseq expected soon, followed quickly by plasma approval.
As medical science progresses, we'll continue to invest in this space, and these and other tests, such as our liquid biopsy options, will form part of a suite of personalized medicine options that our doctors and patients can turn to as they seek to improve their outcomes. In financial year 2023, our IT team introduced some innovative patient-facing solutions designed to improve the way pathology request forms are received. SMS eRequests were made available for patients, allowing them to receive electronic copies of their referrals directly from their doctor's practice management system.
Leveraging our team of experienced in-house developers, we continue to enhance our customer-friendly, front-facing e-health products, including eOrders, eDownloads, and eResults. Our paperless pathology project is now underway, aimed at increasing the accuracy of pathology referrals and decreasing wastage and paper, by utilizing our digital health suite to enhance and improve these clinical outcomes.
It is our focused business improvement programs, such as these, that enable us to continue to grow and innovate, and achieve and maintain strong operating margins. Some of the projects progressed across financial year 2023 and into financial year 2024 include a continuous ACCC review process to allow us to focus on profitable growth. Removal of COVID collection centers, achieved in a timely manner in half one, 2023. Integration of Medlab Pathology, generating $ 20 million of annual savings, achieved in 2023. Digitization rollout and transition to progress to paperless referrals. We've also commenced an exciting and transformational operational project to complement our growth plans. This project, Lab of the Future, is focused on redesigning our operations to maximize our strategic advantage, our one lab information system across the country, and our learnings about borderless workflow we gained through COVID.
During COVID, we were able to trial operations without borders, based on the most efficient way to do the work, not its location. The Lab of the Future project will integrate these learnings, our digitization projects, the latest in laboratory automation and digital enhancement in the world, with world-class front-end processes and logistics to improve clinical service and connectivity, while minimizing our laboratory footprint and maximizing our efficiency further. This project will have benefits from this year and over several years, and applying these benefits from our one lab information system allows us to measure and share best practice innovations in our laboratories throughout Australia.
Looking forward to financial year 2024, while the underlying core business continues to grow back to trend, negligible COVID revenue is expected in the financial year 2024 result, a gap that needs to be closed to deliver total revenue growth as we focus on our revenue enhancement programs. First quarter results in the underlying core business remain affected by a healthcare sector reemerging after nearly three years of dealing with the COVID-19 pandemic. Workforce availability and access to services are affecting healthcare service volumes. The market continues to rebuild volume levels post-COVID as doctor access issues and private hospital capacity improves. In quarter one, human pathology is more than 5% growth for the first quarter of financial year 2024 versus the same time last year. This excludes Queensland, where we've exited a number of underperforming Medlab legacy collection centers.
COVID and respiratory testing are down 76% for the quarter on the prior year, representing about 5% of total revenue. As a result, as per previous guidance, we believe that ACL will achieve a similar EBIT result in financial year 2024 of between $65 million and $ 70 million. In conclusion, I would like to thank all our stakeholders, our more than 5,000 employees, our many supportive medical professionals, and our excellent management teams at all levels. I'd like to thank our pathologists for their leadership, and I'd also like to thank our shareholders for their continued support in our shared vision. I'd like to now hand you back to our chair, Michael Alscher.
Thank you, Melinda. I'd now like to proceed with the formal business of the meeting. The first item of business is to table and consider the financial statements for the year ended 30 June 2023, together with the director's report and the auditor's report, which are included in our 2023 annual report, and which have been published on our website. I formally table the 2023 financial statements of ACL for the financial year ended 30 June 2023, the director's report and the auditor's report. I will take all of these reports as read. We will now take any questions submitted via the virtual meeting platform. Ellie, are there any questions for Melinda or for me in relation to the company's performance or any of the matters raised by Melinda in her address?
Michael, there are no questions on this item of business.
Are there any questions? Thank you. Are there any questions in respect to the 2023 financial statements for the auditor?
Michael, there are no questions on this item.
Okay, thank you. The next item of business is the non-binding shareholder resolution to consider the adoption of ACL's 2023 remuneration report. The remuneration report is contained within the 2023 directors' report and forms part of the 2023 financial statements and reports. Ellie, are there any questions in relation to this resolution?
Michael, there are no questions for this item of business.
Thank you. Displayed now on the screen are the proxies that have been received to date. Any votes from directors, key management personnel, and their associates have been excluded from this resolution. As Chair, I intend to vote all undirected proxies in favor of the resolution. I now move for members to consider, and if in favor, to pass the following resolution: That for the purposes of Section 250R(2) of the Corporations Act, and for all other purposes, the remuneration report of the company for the financial year ended 30 June 2023, as disclosed in the directors' report, be adopted. Please, can you all take a moment to cast your vote. Thank you. The second resolution is to consider the re-election of Christine Bartlett in accordance with the Corporations Act and ACL's constitution.
Christine is our newest director and was appointed to the board as a casual vacancy on 23 August 2023. In accordance with ACL's constitution, Christine now stands for formal re-election by shareholders at this, the first AGM following her appointment. The board is delighted that Christine agreed to join ACL's board, given her extensive executive experience, going through Chief Executive Officer and Senior Executive roles with National Australia Bank, IBM, and Jones Lang LaSalle. Christine has held roles with national and global responsibilities and has a strong commercial perspective, particularly in fostering innovation and leveraging new emerging technologies.
Christine also has significant experience in the healthcare industry, having been a non-executive director of Sigma Healthcare Limited since March 2016. Christine's a member of the University of New South Wales Australian School of Business Advisory Council, Chief Executive Women, and the Australian Institute of Company Directors.
Christine holds a Bachelor of Science from the University of Sydney and has completed senior executive management programs at INSEAD. The board, with Christine abstaining, unanimously recommends that shareholders vote in favor of her re-election. Ellie, are there any questions in relation to this resolution?
Michael, there are no questions on this item of business.
Thank you. Displayed now on the screen are the proxies that have been received today. As chair, I intend to vote all undirected proxies in favor of the resolution. I will now put the resolution as follows: That Christine Bartlett, having been appointed by the board as director on 23 August 2023 to fill a casual vacancy under Rule 6.1(d) of the Company's Constitution, and retiring as a director of the Company for the purposes of ASX Listing Rule 14.4 and Rule 6.1(e) of the Company's Constitution, and has consented to stand for re-election, and being eligible, be re-elected as a director of the Company in accordance with Rule 6.1(i) of the Company's Constitution. Please, can you all take a moment to cast your vote? Thank you. Moving to Resolution Three, which is the re-election of Mr.
Mark Haberlin. Mark was appointed as a non-executive Director on 28 April 2021 as part of ACL's IPO and has been a member of the board for two and a half years. Mark is considered to be an Independent Director and adds great value to the board as the Chair, initially of our Audit Committee, and now the chair of our combined Audit and Risk Committee. Mark is a former partner of PwC and has extensive experience in audit, risk management, capital transactions, and mergers and acquisitions experience across industries including healthcare, real estate, and financial services.
Further information about Mark's background and skill set can be found in the explanatory memorandum that accompanied the notice of meeting sent to shareholders. The board, with Mark abstaining, unanimously recommends that shareholders vote in favor of his re-election. Ellie, are there any questions in relation to this resolution?
Michael, there are no questions on this item of business.
Thank you. Displayed now on the screen are the proxies that have been received to date. As chair, I intend to vote all undirected proxies in favor of the resolution. I will now put the resolution as follows, that Mark Haberlin, retiring as Director of the Company in accordance with Rule 6.1(f)(i)(a) and 6.1(g) of the Company's Constitution, and has consented to stand for re-election, and being eligible, be re-elected as Director of the Company in accordance with Rule 6.1(i) of the Company's Constitution. Please, can you all take a moment to cast your vote? Thank you. Moving on to the fourth resolution, which is the re-election of Leanne Rowe as a non-executive Director.
Leanne was also appointed as a non-executive Director on 28 April 2021 as part of ACL's IPO and has been a member of the board for two and a half years. Leanne is considered an independent director and is a great asset to the board, given her background as a clinical professor and medical practitioner with over 30 years of clinical experience in the public and private health systems across acute care, aged care, mental health, and community health. Leanne is currently, and has previously served, as director to a number of other healthcare companies and has extensive non-executive Director experience in the industry. Leanne is also a member of the Audit and Risk Committee. Further information about Leanne's skills and background can be found in the explanatory memorandum to shareholders that accompany... that accompanied the notice of meeting.
The board, with Leanne abstaining, unanimously recommends that shareholders vote in favor of her re-election. Ellie, are there any questions in relation to this resolution?
Michael, there are no questions on this item of business.
Thank you. Displayed now on the screen are the proxies that have been received today. As chair, I intend to vote all undirected proxies in favor of the resolution. I will now put the resolution as follows, that Leanne Rowe, retiring as a director of the Company in accordance with Rule 6.1(f) (i) (a) and 6.1(g) of the Company's Constitution, and has consented to stand for re-election, and being eligible, be re-elected as a director of the Company in accordance with Rule 6.1(i) of the Company's Constitution. Please, can you all take a moment to cast your vote? Thank you. Turning to Resolution Five, which is to consider the approval to grant and issue performance rights for Melinda as part of her remuneration for FY 2024 under ACL's long-term variable remuneration plan.
ACL's long-term variable remuneration plan has been designed to facilitate the company adopting modern best practice remuneration equity structures for executives. A key component of effective remuneration for executives is equity interests in the form of long-term, long-term variable remuneration to drive shared performance objectives, link remuneration to company performance and align interests with sustainable value creation for shareholders. This year, the board has introduced two gates to the grant, being board-approved ESG metrics that must be met before any rights will be granted.
The performance rights are also subject to a number of other terms and conditions, which are set out in the explanatory memorandum to the notice of meeting. A voting exclusion also applies to this resolution. The board, with Melinda abstaining, unanimously recommends that shareholders vote in favor of this resolution. Ellie, are there any questions in relation to this resolution?
Michael, there are no questions on this item of business.
Thank you. Displayed now on the screen are the proxies that have been received to date. As chair of the meeting, I intend to vote all undirected proxies in favor of the resolution. I will now put the resolution as follows: That approval be given for the purposes of ASX Listing Rule 10.14, and for all other purposes, for the grant and issue of up to 395,490 performance rights to Melinda McGrath, Chief Executive Officer and Executive Director of the company, in relation to her LTVR for FY 2024. In accordance with the LTVR plan and on the terms and conditions described in the explanatory memorandum accompanying this notice of meeting. Please, can you all take a moment to cast your vote? Thank you. And now to the sixth and final resolution for today's meeting.
This resolution relates to the renewal of the proportional takeover provisions that are contained in ACL's constitution, which are required to be renewed by shareholders every three years. The proportional takeover provisions were contained in the constitution that was adopted by the company as part of its admission to the official list of the ASX on 14 May 2021, and will expire on 14 May 2024, which will be before the company's 2024 AGM. Resolution six therefore seeks to renew the proportional takeover provisions for a period of three years from the date of today's AGM. If the proposed resolution is approved by shareholders, the proportional takeover provisions will be reinserted into the Constitution and have effect on exactly the same terms as the existing provisions until 23 October 2026.
A proportional takeover bid involves a bidder offering to buy a proportion only of each shareholder's shares in the company. This means that the control of the company may pass without shareholders having the chance to sell all their shares to the bidder. It also means that the bidder may take control of the company without paying an adequate amount for gaining control. In order to deal with this possibility, the Constitution contains proportional takeover provisions that require shareholders to vote on such a bid and decide collectively whether or not to accept it, with the majority decision binding all shareholders. Further information on the mechanics of the provisions and their advantages and disadvantages are set out in the explanatory memorandum that was sent to shareholders with the notice of meeting.
Because Resolution six relates to ACL's constitution, it is a special resolution, which requires at least 75% of the votes cast by shareholders entitled to vote must be in favor of this resolution. The board unanimously recommends that shareholders vote in favor of this resolution. Ellie, are there any questions in relation to this resolution?
Michael, there are no questions for this item of business.
Thank you. Displayed now on the screen are the proxies that have been received to date. As chair of the meeting, I intend to vote all undirected proxies in favor of the resolution. I will now put the resolution as follows: That the proportional takeover provisions contained in Rule 14 of the company's constitution be renewed for a period of three years, commencing on the date this resolution is passed. Please, can you all take a moment to cast your vote? Thank you. Fellow shareholders, that now concludes the formal part of the meeting. Voting is about to end, so please take a moment to ensure that your votes have been submitted. Once all the votes have been reconciled by our share registry, Link Market Services, the results will be published on the ASX later today.
I'd like to thank you all for attending our third AGM and for your continued support of our company. Thank you again and goodbye.