Good morning, and welcome, everyone. I'm Helen Kurincic, the Chair of Integral Diagnostics, and I'm pleased to welcome you to the 2023 Integral Diagnostics Annual General Meeting. For those of you in the room, could you all please check that your mobile phone is turned off and on silent? And for your safety, please note that in the event of an evacuation, an alarm will sound. Please wait in the room until a HSF emergency warden directs you to the evacuation points. It's now 10 A.M., and I'm joining you from Melbourne. I'd like to begin by acknowledging the traditional owners and custodians of the land on which we meet today, the Wurundjeri people of the Kulin Nation, and I pay my respects to elders past, present, and emerging.
Under Integral Diagnostics' constitution, a quorum is required for this meeting, and I have been advised that a quorum is present. Therefore, I declare this meeting open. Today's meeting is being held in person and virtually via the Computershare platform, where attendees can watch a live audio webcast of the meeting, and shareholders and proxies can ask questions and submit votes online. To provide you with sufficient time to vote, I will now declare voting open on all items of business. A number of shareholders have already voted and appointed proxies ahead of this meeting, and we thank them for doing so, and we will show the proxy voting results for each item ahead of the discussion on the item. I'll start today's meeting by walking you through a few procedural guidelines for voting and question submission for those in person and online.
In my address, I'll cover FY 2023 financial performance, capital management, and governance. Our MD and CEO, Dr. Ian Kadish, will cover operations, the FY 2024 trading update, and key operational improvement initiatives. Finally, we'll return, we'll turn to the formal business of the meeting. Before we begin, I'd like to introduce my fellow directors. Here with me today are Mr Toby Hall, Independent Non-Executive Director and Chair Elect, Dr. Ian Kadish, MD and CEO, Ms Ingrid Player, Independent Non-Executive Director, Raelene Murphy, Independent Non-Executive Director, and Audit, Risk, and Compliance Chair, Mr Andy Fay, Independent Non-Executive Director and People, Culture, and Remuneration Committee Chair. Unfortunately, Dr. Jacqueline Milne, Executive Director and Radiologist, could not be with us today as she is attending the RSNA Radiology Conference.
Niamh Hussey, Lead Engagement Partner of our auditor, PwC, is also in attendance and is available to answer questions related to the conduct of the audit and the auditor's report. Assisting us today is Kirsty Lally, our Company Secretary, who'll be reading out written questions and introducing audio questions. Members of our management team are also in the room, including Craig White, our CFO. The notice of meeting, dated 27th of October, 2023, has been distributed to all shareholders and is taken as read. By joining our annual meeting today, you, as an Integral Diagnostics shareholder or your appointed proxy, will have the opportunity to ask questions and submit votes if you haven't already done so. Voting today will be conducted by way of poll on all items of business, and Computershare will act as the independent returning officer.
For those attending the meeting online and who are eligible to vote, as the poll is open, a voting icon is available on your screen. Selecting this icon will bring up a list of resolutions and present you with voting options. For those voting online, you are free to submit your votes at any time. To cast your vote, simply select one of the options. There is no need to hit Submit, as the vote is automatically recorded. Please ensure you cast a vote for all resolutions. You will receive a vote confirmation notification on your screen. To change or cancel your vote, click the link. Click here to change your vote at any time until the poll is closed. Votes may be changed up to the time I declare voting is closed.
For shareholders, proxies, and corporate representatives in person, I'll ask you to vote once we've gone through all items of business today by completing the blue voting card that was provided to you upon admission. White cards are for visitors only who cannot vote or ask questions today. Shareholders with a yellow card are not entitled to vote on the items of business. Ask a question verbally, please follow the instructions shown below the broadcast window on the online platform. If you're asking a verbal question, please state your full name before asking your question. Please limit your questions to only one to two questions at a time, and then rejoin the queue to allow others to ask questions. Now turning to my chair address. Thank you, shareholders, radiologists, and staff, for the privilege of chairing your specialist healthcare company over the last nine years.
As you know, I'm retiring as chair at the end of this meeting, when Mr. Toby Hall, who has deep healthcare executive and leadership experience in Australia and New Zealand, will take over the reins as Chair of IDX, subject to his election today. You will hear from him during the meeting. As noted earlier in my address, I will cover FY 2023 financial performance, capital management, and governance, and our MD and CEO, Dr. Ian Kadish, will cover operations, the FY 2024 trading update, and key operational improvement initiatives. As chair of this company since 2014, prior to the listing of the company in October 2015, I've been proud to be part of a company whose purpose is to deliver the best possible outcomes for our patients by providing diagnostic imaging services in order to diagnose and treat illness and injury....
In 2014, we serviced patients and referrers at 44 sites in Australia, and now we service patients and referrers at 91 sites across Australia and New Zealand, and through our organic inception and development of our telehealth radiology business, IDXT. While I'm proud of this heritage and growth, I believe it's important to briefly touch on the share price performance over the last 12 months, which has been noticeably impacted by our recent trading update. As a fellow shareholder, I am as disappointed with the price performance as many of you are. After delivering materially stronger second half results in FY 2023, our year-to-date FY 2024 trading performance is not acceptable. At this meeting, Dr. Ian Kadish, Managing Director and CEO, will outline a number of the key operational improvements and initiatives targeted at improving our financial performance. Capital management remains a key priority for our group.
We remain comfortably within our bank covenants. We expect to improve our overall position as cost management and financial performance improves. Our capital structure is considered appropriate and fit for purpose. Our net debt to EBITDA at 30 June 2023 of 2.9 times is expected, based on current forecast, to gradually reduce over time towards the group's target leverage of 2.5 times and compares to IDX's bank covenant of not greater than 3.5 times. Turning to financial year 2023, the IDX team performed over 2.5 million exams on over 1 million patients, with a patient NPS score of +84.
The diagnostic imaging industry saw a continued improvement in operating conditions, especially during the second half of the financial year, as our communities recovered from the challenges brought on by COVID-19, albeit in a higher inflation and higher interest rate environment. For the twelve-month period ended 30 June 2023, operating NPAT declined by 17.6% to AUD 17.8 million. Statutory NPAT increased by 71.5% to AUD 25 million. Revenue grew 22.1% to AUD 440.8 million, with an additional 4 months of X-Ray Group revenue when compared to the prior year, and a full year contribution from both Peloton Radiology and Horizon Radiology, who became part of the IDX group on 1 July 2022.
The increase in operating revenue was also driven by solid growth in our existing businesses, seeing organic growth of 7% in Australia and 4.4% in New Zealand. IDX organic operating revenue growth in Australia of 7% compared favorably to the Medicare industry weighted average increase of 4.8% for the states in which IDX operates. FY 2023 operating EBITDA increased by 13.9% to AUD 85.2 million. FY 2023 operating EBITDA margin declined 1.5% to 19.3%, noting the FY 2023 result was a story of two halves, with second half FY 2023 margins improving by 1.7% to 20.2%. Operating diluted earnings per share declined by 26% as higher interest costs weighed down our results in FY 2023.
Debt to equity ratio was 52.1%, and the net debt EBITDA ratio was 2.9 times, down from 3.1 times at 31 December 2022, which is in compliance with our bank covenant of 3.5 times. We declared a fully franked dividend of AUD 0.035 per share, a total of AUD 0.06 per share for FY 2023, a decrease of 14.3% on the prior year, reflecting the operational performance of the company. The following slide shows FY 2023 performance in the context of historical performance. Moving to governance. The board has continued the advancement of its environmental, social, and governance responsibilities and again produced a dedicated ESG report with reference to the Global Reporting Initiative Standards and alignment with the United Nations Sustainable Development Goals.
We've developed a carbon emissions reduction strategy and continued to work on operational waste reduction. Noting that 76% of our workforce are female, we've improved diversity at senior levels, with 53% of our executive and senior management team female and 43% of our board members. We continued our now 10-year-long collaboration with Tonga's Ministry of Health to bring diagnostic imaging expertise, training, and equipment to the people of Tonga. IDX contributed to the development of an international certificate of radiology fundamentals in partnership with Radiology Across Borders and the University of British Columbia. The project was the first of its kind globally, designed specifically for improving radiology skills in developing countries. As part of board succession planning in August 2023, IDX welcomed Ms. Ingrid Player as an independent non-executive director to replace Mr.
John Atkin, who was a board member since October 2015, before the company listed. I'd like to take this opportunity to extend our sincerest thanks for his committed service during his tenure.... Ms. Player is an experienced former executive and current listed company non-executive director, whose legal, healthcare sector, and ESG skills are valuable to the board. Dr. Nazar Bokhari stepped down as an executive radiologist director in August 2023, given his relocation overseas, and I'd like to thank him for his radiologist leadership and contribution to the board. In September 2023, IDX welcomed Mr. Toby Hall as an independent non-executive director to the board, and chair-elect to replace me as chair of the board at the conclusion of this meeting, subject to his election by shareholders. We've executed a comprehensive chair transition process alongside site and radiologist engagements.
I'm pleased to pass the chair baton on to a person with such deep healthcare leadership experience, commercial nous, and stakeholder management skills. The company believes the underlying fundamentals of the essential radiology industry remain strong, with our industry benefiting from being at the confluence of two major global trends: demographic and technological, together with the structural shifts to higher acuity modalities. IDX, as a specialist, regionally focused, high-quality provider of diagnostic services, is strategically well-positioned to benefit from these important trends and to grow its services going forward. I would like to thank our whole team, including those who have joined our team more recently, for their commitment to the shared IDX ambition to combine the best people and technology to provide diagnostic imaging that saves lives.
It has been a privilege to have been part of the development of the IDX company since its formation, and I especially thank shareholders for your support of me as chair over the last nine years. Now I'd like to invite Dr. Ian Kadish to deliver the Managing Director and CEO's address.
Thank you very much, Helen, and good morning, everyone. It's good to see you all in the room and online. I am disappointed with our year-to-date financial 2024 trading performance, particularly after delivering a materially stronger second half result in financial year 2023. Today, I will outline a number of key operational initiatives targeted at improving performance. I'm also proud to be part of a company that is working hard to provide the best health outcome to every patient we serve, even during challenging times. I have every confidence that we will get our performance back on track. Our purpose at IDX is to deliver the best health outcome we can for every patient we serve, demonstrated by our high Net Promoter Score, NPS score of +84, together with employee engagement scores that are higher than industry benchmarks.
We differentiate ourselves in a number of key areas that position us strongly in the industry. We have demonstrated clinical leadership with industry-leading radiologists and strong clinical governance systems. Many IDX radiologists are fellowship and subspecialty trained, including more than 20 radiologists who have the credentials required to report high-value nuclear medicine and PET/CT studies. We demonstrate regional leadership as the number one provider in several key high-growth regional markets, including the Gold Coast, the Sunshine Coast, Western Victoria, and Southwest Western Australia. We provide high-acuity specialist care through the use of cardiac CT, MRI, nuclear medicine, and PET/CT, including in specialty centers of excellence in key clinical areas including orthopedics, spine, breast, cardiac, prostate, and neurological centers of excellence.
We are a service provider to leading regional public health networks and private hospital groups, including the Western Australian Country Health Service, the Central Queensland Hospital and Health Service, St John of God, and Ramsay. We have a track record of integrating our acquisitions well. The IDX group currently comprises 91 clinics, 35 of which are comprehensive sites with CT and MRI and are located in hospitals and other locations that are near specialist referrers. It's important to note that IDX also has six positron emission tomography scanners, or PET scanners, evidencing the high-acuity work that we perform. We're opening a new PET/CT in South Auckland in February 2024. At IDX, the use of teleradiology and artificial intelligence has saved lives, particularly in some of the more remote areas that we serve. We launched IDXT, which is IDX's teleradiology service, in August of 2020.
IDXT provides services internally to the IDX group and also externally to public hospitals and to private radiology practices. IDXT has grown rapidly, organically, and now includes 56 contracted radiologists and reports more than 12% of IDX Australian revenue. IDXT facilitates subspecialist reporting so that patients can be triaged to a specialist radiologist as needed, adding significant value to the referring doctor. Teleradiology allows radiologists in different time zones to provide overnight reporting during daytime hours and also provides flexibility for radiologists to report at the time and from a place that they select. IDXT radiologists are remunerated on a variable remuneration rate based on their individual output. IDXT serves state hospitals in Western Australia, Queensland, and Victoria, and we recently secured our first New South Wales Public Hospital teleradiology tender, commencing in February 2024.
With regard to artificial intelligence at IDX, we employed our first AI algorithm at our Apex Radiology practice in February 2019. We expanded AI into IDXT in August 2020, and we now utilize AI algorithms in many IDX practices as an integral part of our workflow. AI shortens the time for acting on time-sensitive diagnoses, allowing for improved patient outcomes. For example, acute brain bleeds or blood clots, where speed is of the essence in saving brain tissue. We have selected proven algorithms in higher complexity areas based on their ability to materially improve patient care and service. Our suite of algorithms include CT-based algorithms for the detection of intracranial hemorrhage, brain aneurysms, large vessel occlusion, acute and incidental pulmonary embolism, cervical spine fractures, and rib fractures. We recently introduced our first general X-ray algorithm for bone fractures.
IDX was identified as a luminary site for Aidoc, a leading international radiology AI provider, AI supplier. As shown in the graphic on the slide, minutes after a patient is scanned, AI analyzes every exam relevant to that specific algorithm. It detects abnormalities and prioritizes those cases to the top of the radiologist work list, adding significant value as it ensures that the abnormal scans are reviewed first, and it highlights the abnormality for the radiologist. I'll now turn to industry performance. Industry growth rates on a 12-month rolling basis reflect improvement in calendar year 2023, up to October 31, 2023. In particular, note that both benefits and services growth rates are now above their long-term averages, and benefits are now also growing faster than services, illustrating the shift towards the higher acuity modalities. Moving to the regulatory environment.
On November 1, 2022, the federal government deregulated MRI services in regional and rural areas. Medicare introduced indexation of 3.6% on July 1, 2023, with a further 0.5% applied from the first of this month, November 1, 2023. Also on 1 November, 2023, Medicare materially increased the bulk billing incentive for GPs. The increase represents a meaningful uplift for GPs in regional locations. This increase has the potential to attract and retain GPs in regional areas, and IDX will benefit from more referrals from regional medical centers as these centers increase their GP staffing levels. In New Zealand, there's limited indexation of pricing. However, we have received CPI-related increases from the majority of private health funds starting in December 2023, and we continue to negotiate with other funders.
The regulatory authorities in New Zealand have determined that non-arm's length referral practices by referrers who own interest in radiology practices are acceptable. In response, IDX has pursued several strategic initiatives, including a broadening of our referrer base in New Zealand to include more general practitioners, as the GP market is less impacted by non-arm's length referrals. In both Australia and New Zealand, importantly, since immigration has recommenced, international medical graduates, including both radiologists and referring doctors, and other overseas trained clinicians, including sonographers and nuclear medicine technologists, are slowly returning to New Zealand and to regional Australia and helping to alleviate the skills shortage. Turning to our year-to-date September FY24 trading update, released on the third of November, 2023. Integral Diagnostics Limited provided the following trading update based on financial results for the first quarter to 30 September 2023.
In Australia, first quarter revenue growth of 8.4% was achieved compared with the prior corresponding period. In comparison, Medicare benefits for the states in which IDX operates have seen a 9.5% increase in weighted average benefits paid, adjusted for working days. In New Zealand, IDX achieved a 4.1% New Zealand dollar increase in revenue compared with the prior corresponding period. Clinical staff shortages, particularly in regional areas and cost inflation, have continued into FY 2024, driving labor costs to be higher than expected, adversely affecting operating EBITDA. As such, we have not seen the expected operating EBITDA margin improvement in quarter 1 FY 2024 relative to 1H FY 2023. IDX is responding to these pressures by accelerating productivity and efficiency initiatives.
These actions are expected to lead to an improvement in 2H FY 2024 trading performance and operating EBITDA margin compared to 1H FY 2024. FY 2024 CapEx depreciation and finance costs. For FY 2024, IDX expects replacement and growth CapEx to be in the range of AUD 30 million-AUD 40 million. Depreciation of about AUD 45 million, including depreciation of about AUD 17 million for right-of-use assets under AASB 16. Finance costs of about AUD 22 million, including finance costs of about AUD 5 million for right-of-use assets under AASB 16 and including the 0.25% interest rate increase announced in November 2023. Turning to our year-to-date October FY 2024 trading update.
As a further update, year-to-date October FY 2024, group-wide organic revenue growth of 9.0% was achieved year-to-date October, compared to 7.0% growth for the prior corresponding period or PCP. Year-to-date October 2023, Australian organic revenues grew 9.3%, continuing to deliver a strong, high acuity case mix. Adjusted for working days, year-to-date October 2023, Australian organic revenues grew by 8.0% versus PCP, slightly lower than the 9.0% weighted average Medicare benefits paid for the states in which IDX operates. On a rolling 12-month basis to 31 October 2023, Australian organic revenues grew by 8.8% versus PCP, which compares favorably to the 8.1% weighted average Medicare benefits paid for the states in which IDX operates.
Year-to-date October 2023, New Zealand organic revenues grew by 5.7% in New Zealand dollars versus the PCP. We're undertaking several important operational initiatives to grow margins going forward. We're improving our patients and referrer experience by rolling out an integrated patient booking system to minimize patient wait times and waiting lists. We've introduced priority service lines for referrers and are enhancing our e-referral platforms. And we're educating patients and referrers on important radiology tests for early diagnosis. Despite the current cost challenges and the high inflation environment in FY 2024, the company believes the fundamentals of the radiology industry are strong, and the company is well positioned to benefit from executing on these key operational improvements. My sincere thanks to our chair, Helen Kurincic, for her nine years of dedicated service to the company and for her leadership, mentorship, and support.
A warm welcome to Toby Hall, our incoming Chair. Sincere thanks to the board and management team, and to our radiologists, and to all IDX employees for their dedication, commitment, and support. My thanks also to our patients who put their trust in us, to our referrers who trust their patients to us, and to you, our shareholders, for putting your faith in us. Thank you very much.
Thank you, Ian. I'll now proceed to the formal business as set out in the notice of the meeting. Each of the resolutions will be taken in turn, and I'll introduce each resolution. Proxy results for each resolution will be displayed on the screen, and shareholders will have the chance to ask questions on the resolution before we move on to the next one. The first item of business is to receive and consider the financial report of the company and its controlled entities, and the reports of the directors and auditors for the year ended 30 June 2023. The Corporations Act and the company's constitution require these statements and reports to be laid before shareholders, but do not require a vote from shareholders to be taken on them.
In accordance with the Corporations Act, this is your opportunity to ask questions about or to make comment on the company's financial statements and reports. You may also ask the auditors questions in relation to the conduct of the audit, the preparation and content of the auditor's report, the accounting policies adopted by the company in relation to the preparation of the financial statements as a whole, and the independence of the auditor in relation to the audit. Again, there is no requirement for shareholders to vote on these reports. I now invite questions on this agenda item. Are there any questions on this item, Kirsty?
Helen, we have a statement from Donald Barry, shareholder. We have lost 5% EPS each year over the last three years and 57% decrease in share price despite earnings growth.
Thanks for the statement. I'm not sure the question is in there, but Don, I will respond and refer back to my address in terms of, you know, my thoughts in regards to our current, financial performance and my disappointment with that and the corresponding, share price impact. Clearly, over that period of time as well, we were impacted, by COVID, but we've got to control what we control, and we've actually charged management to ensure that the operational performance of the business improves. Are there any further questions?
Norm West. I'm representing the Australian Shareholders Association. I've got 32 proxies for 359,000 shares. However, I don't have a question. The ASA is supporting your resolution, so you won't have to listen again. Could I suggest that in the back of the annual report, any word that ends in ism, such as metabolism or nationalism or a few other isms orology, an explanation, in other words, medical terms that ends used, half of them I know, and the other half I'm guessing. But if you haven't had a lot of work with the hospitals, it becomes a problem. And the other thing I'd just like to mention, congratulations to the company for continuing to hold a hybrid meeting. There's a sneaking change in cross companies to hold virtual meetings only, and I think that's detrimental to everybody's relationship.
And lastly, Chairman Helen, I couldn't miss this meeting because I'd like to thank you and congratulate you for the way you've held your meetings. You have given questions a very, very good go, particularly me, and I wish you all the best on behalf of the ASA and myself for the future.
Thank you. That's really, you know, moving and, and I really appreciate the sentiment in there, and as a board and as chair, you know, we are very passionate about ensuring good access for our shareholders in terms of having a hybrid meeting, because that actually engages and gives people the opportunity to attend. Noting that we have shareholders from around this country and also in New Zealand and elsewhere, and so it does give people the opportunity to participate. Thank you for those words.
Helen, we have received some questions before the AGM. We have three questions on the financial statements and reports from Mr. Yusuf, as trustee for the Maara Trust. I'll read each one in turn. First questions to the audit team and CFO: What is the current fixed charge cover ratio? What is the current Net Debt to EBITDA Ratio? Debt level seems very high compared to earnings. Do management auditors, slash, auditors foresee an imminent need for a cash injection like Healius are having to do?
I'll address that question, given it's not related to the audit, and the conduct of the audit. As I said in my address, capital management remains a really key priority for the group. We remain comfortably within both of our debt covenants. We expect to improve our overall position as cost management and financial performance improves, and our capital structure is considered appropriate and fits the purpose.
The next question: Do management have any comprehension of the frustrations and anger held by many private investors at the continual stripping of shares and the value of the... by the company? An investor from three years ago now has a paper loss of up to 65%. How is this a justifiable way to treat your loyal shareholders, and what are your plans for recompense?
As I shared in my address, as a fellow security holder, I am also disappointed with the price performance, as many of you are, after delivering materially stronger second-half results in FY 2023. Our year-to-date FY 2024 trading performance is not acceptable. Dr. Ian Kadish, our Managing Director and CEO, earlier in his address, outlined a number of the key operational initiatives that are targeted at improving our performance, and he's accountable for that delivery.
Lastly, radiologists' income, both on a percentage payment per case and on a salary basis, are effectively static for the last three years, but IDX labor costs are reported as having gone up. Can you explain this discrepancy?
Firstly, I'd say your statement is inaccurate. Radiologist remuneration, both as a percentage of revenue and in absolute dollar terms, has increased at IDX over the last three years. Various factors have contributed to that increase in radiologist labor costs, including inflation and labor market supply constraints. This, combined with increased use of locums to ensure patient care in all our areas, especially in regional areas, has driven up labor costs.... Are there any further questions?
No further question.
There being no further questions, we come to the items of business for which voting is required. Item two relates to the adoption of the remuneration report. The resolution being put to the meeting is displayed on the screen. The remuneration report is contained in the annual report. It describes the policies and sets out the remuneration arrangements in place for directors and senior executives. The company has a remuneration framework, which aims to ensure that reward for performance is competitive and aligned to shareholders' interests. The vote on this item is advisory only and does not bind the directors or the company. Nevertheless, the People, Culture and Remuneration Committee will take into account the discussion on this item and the outcome of the vote when considering the future remuneration policies and practices of the company.
The Corporations Act provides that the results of the vote on the remuneration report may trigger the first leg of the two-strikes rule. The valid proxies received for item two by the company are shown on the screen. Are there any questions or comments in relation to this resolution?
Helen, we've received a number of written questions. The first question is from Mr. Stephen Mayne: Which of the five main proxy advisors, ACSI, Ownership Matters, Glass Lewis, ISS, and ASA, follow us? Did any of them recommend a vote against any of today's resolutions, including this remuneration report, and if so, what reasons did they give? Please comment on any material protest votes lodged today. Best practice is now to disclose the proxy position to the ASX, along with the formal addresses, to offer a more timely disclosure to the market. The likes of Origin Energy, NAB, Carsales, Viva Energy, Webjet, Xero, Myer, Brambles, and JB Hi-Fi all do this. Will incoming Chair Toby Hall, Toby Hall, commit to adopt this practice at next year's AGM?
Okay, so I'll take that. So firstly, in terms of the proxies, so out of all of the proxies, we are aware that every single one of them voted for all of our resolutions, or recommended for in regards to the resolutions being put to shareholders today. ASA doesn't make recommendations, and note your words of support earlier. In regards to the display of the proxies received, Stephen, if you were here in the room, you'd see that we make sure that as soon as we're considering any of the items of business, that we display the proxy results clearly and ahead of the discussion on the item, so that shareholders can actually transparently see the results of that.
As you can see on the screen, hopefully now, the proxies received are clearly there for you.
We have another question from Mr. Maine. There was an 11.3% protest vote against the remuneration report last year. What was the issue, and did we make any changes this year?
Yeah, I'll. Thanks, Stephen. In terms of the changes that we made, so if you look at the even the summary that's included in the letter in our remuneration report, we make it very clear to shareholders any changes that are made within the remuneration structure from one year to the other. We do engage with our shareholders and with proxies in terms of feedback around our remuneration report, and we take that feedback and consider that as part of the People, Culture, and Remuneration Committee, and in terms of the structure that we follow. You'll see in the remuneration report that we did make some changes in that year. We went from having a single measure for our LTI to having three measures.
We included a risk, compliance, and conduct gateway, in regards to our incentive structure, and we also removed the retesting provision. Are there any further questions?
The last question on this item by Mr. Campbell Jones: Chief Operating Officer Paul McCrow was listed as receiving a AUD 50,000 payment for additional duties. Could you please confirm whether this is an ongoing arrangement or this is a one-off cost and the position has now been filled? Further, can you confirm the additional duties impacted the day-to-day COO duties? And please confirm that Paul remains as COO.
Okay, so just in terms of, I'll try and remember each of the questions when I get multiple in a line. So it was a one-off cost, so it was an additional duty on top of his duties as COO. I can confirm that the position was filled, and so again, that was a one-off cost and not continued. And the final component?
Still with the group. Is he still with the group? Is he still in role?
So-
And did it impact his COO duties?
Right. So in, no, I can confirm that it didn't actually impact his COO duties. Are there any other questions? Okay, there's no other questions. That concludes item two, and I'll move to the re-election of Ms. Raelene Murphy as a director. The re-election of Raelene Murphy as a director of the company, and details of her re-election are set out in the notice of meeting, and I'd like to invite Raelene to say a few words regarding her re-election.
Thanks, Helen, and thank you to the IDX shareholders for considering my election. I'm an independent non-executive director who was appointed to the board in 2017. I'm Chair of the Audit, Risk, and Compliance Committee and a member of both the People, Culture, and Remuneration Committee and Nomination Committees. My background is both finance, where I started my career with PwC and have been a partner and managing director of large national accounting firms. In addition, I've also been a CEO of a significant successful Australian construction company. I've had over 30 years experience in strategic, financial, and operational leadership and have specialized in merger and acquisition integration across a range of public and private companies.
I bring that experience to the board and in particular to my role as Chair of the Audit, Risk, and Compliance Committee, which I've chaired since my appointment in 2017. I currently serve on three other ASX-listed companies, which ensure that my perspectives and insights are contemporary. I'm committed to IDX and will continue to devote my energy, commitment, and passion to our company. It's a great honor to have the support of my fellow directors, whose counsel and skill I value highly, and in turn, shareholders' support for my re-election. Thank you.
Thanks, Raelene. The resolution being put to the meeting is displayed on the screen. The board, with Ms. Murphy abstaining, unanimously recommends the re-election of Ms. Murphy as a director of the company and recommends that you vote in favor of the resolution. The valid proxies received for item three by the company are shown on the screen. Are there any questions or comments in relation to this resolution?
Don't have any questions on this item.
Thank you, Kirsty. There being no questions, I move that Ms. Raelene Murphy, who retires by rotation and being eligible, be re-elected as a director of the company. That concludes item three, and I move to the next item, the election of Ms. Ingrid Player as a director of the company, and details of her election are set out in the notice of meeting, and I invite Ingrid to say a few words in regarding her election.
Thanks. Thanks, Helen, and good morning, everyone. I'm very pleased to present myself for election today for the IDX board. I'm also an independent non-executive director, and I was appointed on the twenty-ninth of August this year. I'm a member of the Audit, Risk, and Compliance Committee and the People, Culture, and Remuneration Committee. As Helen mentioned before, I've got a legal background, and I've got over 20 years experience in the healthcare industry, both in private and in public sector, including my most recent executive role, which was as Group Executive, Legal, Governance, and Sustainability at Healthscope, which is one of Australia's largest private healthcare organizations. I also serve on two other publicly listed boards, which complements my background and provides me with additional insights which I can bring from for the listed environment.
I look forward to working with my fellow board directors and the management team to deliver the best healthcare outcomes for our patients, and I thank shareholders for consideration.
Thanks, Ingrid. The resolution being put to the meeting is displayed on the screen. The board, with Ms. Player abstaining, unanimously recommends the election of Ms. Player as a director of the company and recommends that you vote in favor of the resolution. The valid proxies received for item four by the company are shown on the screen. Are there any questions or comments in relation to this resolution?
We have one question in relation to this resolution from Mr. Maine. Could the two new directors facing election for the first time today, Ingrid and Toby, comment on the recruitment process that led to their appointment to the board? Was a headhunter involved, and could the chair clarify if the full board interviewed any other candidates? Also, did any of the new directors know any existing directors before engaging with the recruitment process?
I'll take that question on behalf of the, the two new directors. So in regards to that, so firstly, in terms of the recruitment process, we work to a board skills matrix in terms of the skills that we're looking for to be able to fill for each director position. We actually engage with an external recruiting firm to be able to then provide us with a suitable list of candidates that actually matches, the requirements that we were seeking for each of those roles. The full board was involved in, in the selection process and the interview process, which was extensive, alongside the standard checks, et cetera, that you'd expect to be done. And, and neither of the two candidates were actually personally known to any director on the board.
This is not a relationship-driven, appointment process, Steven. Thank you.
No other questions on this item.
Could that skills matrix be included in the AGM sometime in the future?
We could consider that. So we actually do publish the board skills matrix in our corporate governance statement. It's one of the interesting conundrums we have nowadays, and we've got the annual report, the ESG report, and we have a corporate governance statement. As part of the corporate governance statement, reporting is where people look to the board skills matrix, and we clearly articulate the skills on the board in aggregating terms of what we're actually looking for and what skills are present on the board. Are there any other questions?
No other questions on that item.
There being no further questions, I move that Ms. Ingrid Player, who was appointed on the twenty-ninth of August 2023, retires, and being eligible, be elected as a director of the company. That concludes item four, and I move to the election of Mr. Toby Hall as a director of the company, and details of his election are set out in the notice of meeting. I would invite Toby to say a few words regarding his election.
Thanks, Helen. I'm very pleased to present myself today for election to the IDX board and thank shareholders for their consideration. I'm an independent, non-executive director and was appointed to the board on 28th of September as chair-elect, and subject to my election today, will become chair at the end of the meeting. I'm also a member of the Audit, Risk, and Compliance Committee, People and Culture, and Remuneration Committee and Nomination Committee. I've had over 25 years of experience in the health care space, and most recently as CEO of St Vincent's Health Australia, known to most people in the room, I'm sure. Our focus there particularly was to deliver excellent patient outcomes, and as an organization, we led the sector in our Net Promoter Score in terms of feedback from patients.
Also, we focused significantly on clinical relationships and had significant improvement on the feedback from our clinicians and their Net Promoter Score as well. A key focus at the organization was also to restore the financial situation of the organization, and I'm confident that was delivered by the end of my tenure. As part of the organization, we covered nearly every area of the health sector, including owning our own internal diagnostic imaging services in Melbourne and Sydney, in Sydney, in partnership with a radiologist group. We were, like, integral and early integrator of AI technology into our space, and I'm a big believer in that as part of the future of diagnostic imaging. I've got several other board roles in the unlisted space and chair two private equity-owned healthcare businesses and previously chair of SteriHealth, which was a listed entity.
I'd like to thank the board and the team for their somewhat intense but very enlightening induction into the organization, which has been really good over the last few weeks, and thank you, Helen, for being invited to join the board.
Thanks, Toby. The resolution being put to the meeting is displayed on the screen. The board, with Mr. Hall abstaining, unanimously recommends the election of Mr. Hall as a director of the company and recommends that you vote in favor of the resolution. The valid proxies received for item five by the company are shown on the screen. Are there any questions or comments in relation to this resolution?
We have a couple of questions on this resolution. The first question from Mr. Stephen Mayne: Chair Helen Kurincic was last elected in 2020. When did she decide not to seek another term, and why did it take until September this year to appoint the next chair, Toby Hall, to the board, leaving him just two months to get up to speed before taking over the chair role? Could Toby comment on what has surprised him during his first two months on the board?
Okay, I'll take the first parts of most of that question. So, so certainly in terms of the succession planning, that's been on the agenda for some time, as you'd expect when you come to the tenure that I've had in the organization, and that started with a market mapping exercise. For some that may not be aware, it's not exactly a prevalent skill set in terms of the criteria that we were looking for, which is someone with really deep healthcare experience, particularly at an executive level rather than at an advisory level. And so that was one of our key criteria, to have the commercial nous and also the stakeholder management skills, which are, again, really requisite in this type of role and for our company.
And so, so that certainly did take some time for us to be able to then find, and as I said, using an external firm to find the right candidate that was available at the right time for us to do that. I understand from your, your comment, in terms of what appears to be a short period of time, but usually, that is based on a very, you know, sort of a, perhaps outdated view that it's about directors turning up to a meeting once a month and getting experience, in that regard. That's certainly not the case in terms of the orientation and transition that we've had, and noting that, Toby is also, you know, deep in the, in the healthcare sector.
In regards to Toby's observations over the last couple of months, happy for Toby to make some comments.
Thanks very much for the question, Steven. I think the things which I've enjoyed are meeting the radiologists and the doctors and hearing their passion for the business, and their love of the business, and the desire to see IDX continue to be incredibly successful. That's been really enjoyable. I've been very impressed with the uptake of the AI technology in this organization. I think we are a leader in that space, and I hope we continue to strive to lead in that space. As some of you would know, I sit on a foundation where we own shares in a large number of companies and engage with their boards, and I have to say, probably the most surprising thing about this board is the absolute quality that it presents in terms of governance. It's quite rare to see that.
I've been incredibly impressed with Helen and the whole board in terms of the diligence they put into the role, particularly given the size of the company, and that's been a joy for me, and, it's gonna be, it's gonna be very hard to fill the shoes and the quality of the team that has been in place, but I'm excited about that. And lastly, I think, I want to be clear that I believe this organization and this space is one of the most exciting in health, and I'm very pleased to have been able to join it.
Thank you, Toby. Are there any further questions?
No further questions on this item.
There being no further questions, I move that Mr. Toby Hall, who was appointed on the 28th of September 2023, retires, and being eligible, be elected as a director of the company. That concludes item five, and I move to the item six, which is the approval of equity grants to the Managing Director, CEO, under the company's equity incentive plan. Details of the terms and conditions of the proposed equity grants are set out in the notice of meeting. The resolution being put to the meeting is displayed on the screen. The board, with Dr. Kadish abstaining, unanimously recommends that shareholders approve the equity grants to Dr. Kadish and recommends that you vote in favor of the resolution. The valid proxies received for item six by the company are shown on the screen. Are there any questions or comments in relation to this resolution?
No comments.
There being no questions, I move that approval be given for all purposes, including ASX Listing Rule 10.14, for the granting of rights to Dr. Ian Kadish as his annual long-term incentive grant for the year ended 30 June 2024, and rights to Dr. Ian Kadish as the deferred component of his short-term incentive grant for the year ended 30 June 2024, on the terms described in the explanatory memorandum accompanying this notice of meeting. I draw shareholders' attention to the voting restrictions applicable to this resolution, as contained within the notice of annual general meeting. That concludes item six, and I move to the next item of business. Item seven, the approval of issue of securities under the company's equity incentive plans. The ratification of share issues in relation to acquisitions. Details of the equity incentive plan are set out in the notice of meeting.
The resolution being put to the meeting is displayed on the screen. The board unanimously recommends that shareholders approve the issue of securities under the company's equity incentive plan. The valid proxies received for item seven by the company are shown on the screen. Are there any questions or comments in relation to this resolution?
No questions or comments.
There being no questions, I move the issues of securities under the company's equity incentive plan, the terms and conditions of which are summarized in the explanatory memorandum, be approved as described in the explanatory memorandum for all purposes, including ASX Listing Rule 7.2, Exception 1.3. I draw shareholders' attention to the voting restrictions applicable to this resolution, as contained within the notice of annual general meeting, and that concludes item seven, and I move to the last item of business. The reinsertion of the proportional takeover approval provisions in the Constitution. The final item of business relates to that. The details of the resolution are set out in the notice of meeting. The resolution being put to the meeting is displayed on the screen.
The board unanimously recommends that shareholders approve reinsertion of the proportional takeover approval provisions in the Constitution. It should be noted that this item is a special resolution, and as such, requires at least 75% of all votes cast by shareholders entitled to vote on the resolution to pass. All other resolutions are ordinary resolutions and only require more than 50% of all votes cast by shareholders entitled to vote on the resolution to pass. The valid proxies received for item eight by the company are shown on the screen. Are there any questions or comments in relation to this resolution?
No questions or comments.
There being no questions, I move that pursuant to, and in accordance with Section 648G of the Corporations Act 2001, the existing proportional takeover provisions in the form set out in Rule 6 of the Company's Constitution, be reinserted into the Constitution of the Company for a period of three years from the date of this meeting, with effect from the close of the meeting. That concludes the last item of business. Now, we'll answer any remaining shareholder questions regarding the resolutions before the meeting. Kirsty, are there any remaining questions?
We have a number of questions, Helen. I'll start. The first one is from Mr. Campbell Jones. In last year's AGM presentation, it was mentioned that IDX was investing into a Torquay location. Could you provide an update on whether this Torquay site is continued, a continued item of focus, and the process and the progress update of where this is at?
... Thanks. I'll ask Ian to update that from a management perspective.
Thanks, Helen. The Torquay location has not gone ahead. It's, as a management team, we're focused on ensuring that we allocate capital judiciously. In the case of Torquay, when we progressed the initiative and ran a more detailed analysis in the area and given the additional competition that had moved to the area, we determined that it would not be worthwhile to go ahead, and we have not gone ahead with Torquay. We've rather looked at other places where we can invest on a far more beneficial basis for our shareholders.
Thanks, Ian. Are there further questions?
Yes. The next question is from Shareholder Mayne. Radiologists are clearly a major stakeholder for us. Are we going to return to having a radiologist director, given that Nazar Bokhari has resigned from the board when he moved overseas? Are radiologists worried that they are going to be undermined by AI? And could both Toby Hall and the CEO comment on what steps are taken to maintain good relations with the most important stakeholder group? How contractually protected are we from mass defection of radiologists to competitor or from a group of radiologists setting up their own practice competing against us?
Okay, let me talk to the director issues, and then I'll ask management to comment in terms of the other matters raised in that question. Thanks, Steven. So in terms of the radiologist director position, we did leave that purposely open and haven't appointed anyone to date, and that was to allow Toby time as chair together with the board, to be able to then consider the skills that's required, other than being a radiologist executive director. You'll recall last time that with the appointment of Dr. Bokhari, we were particularly focused on AI and technology skills as part of that appointment. So that allows Toby some time to be able to really make a determination in regards to that position going forward.
In regards to AI, more broadly, as was covered in the address that you heard from Dr. Kadish, you can see that what we're doing is using AI as a quality adjunct to the work that we, we do in the business. This is not about replacing radiologists. You can see the many examples that were pointed to in his address in terms of how AI works to improve the quality of diagnostic imaging and the triaging of important cases, which indeed saves lives. In regards to other aspects, did you want to comment, Ian?
Yes, thanks, Helen. As you say, artificial intelligence is a tool for radiologists in the same way that teleradiology was a tool, and digital radiology before that. So, artificial intelligence, rather than, you know, threatening radiologists, is actually a tool that enhances the ability for radiologists to... We have, I'm pleased to say, seen an improvement in radiologist engagement consistently over the past three years. We work very hard to remain the employer of choice for all our radiologists. It is true that radiologists, like other employees, are free to move and to join other practices, but the offering that we provide to our radiologists do keep our radiologists very engaged.
We provide an interesting mix of work, both private and public, an interesting mix of pathology in more regional locations and also in more sophisticated and subspecialized locations. We provide a collegiate atmosphere for them to work in. We provide professional development opportunities, leadership opportunities, and an overall very attractive package that we've been fortunate to be able to retain radiologists and see, you know, a far lower level of turnover amongst our radiologists than indeed we see in other staffing areas.
Thanks, Ian. And just a comment from myself, just to shout out to radiologists in terms of what a privilege it's been to be part of this company, to have met many outstanding radiologists in that time, both founders of practices, new and emerging, you know, fantastic, really smart, you know, radiologists that provide just a fantastic service to our patients every day. So I just wanted to acknowledge that and thank them for what they do every day for our patients. Are there any further questions?
We have another question from Rocky Doss. Does the board have a list of exclusion criteria when appointing candidates into leadership positions in IDX?
Right. So, as a board, we certainly have selection criteria for board members, and certainly if we were appointing a CEO, which is our job, in terms of that's our sole, you know, appointment, and we absolutely have selection criteria that we work to rather than exclusion criteria. And so we don't get involved in the appointment of Ian's team. Ian is responsible and accountable for the appointment of his reports accordingly. Are there any further questions?
Yes. Howard Coleman has submitted a question. As a shareholder and as a shareholder, I expect that all shareholders who wish to acquire, acquire additional shares will be very pleased that the share price has fallen, and they can now acquire more shares for the same money. Why is the chair apologizing for a drop in the share price when this is beneficial to those wishing to acquire additional shares?
That's a great comment. And you know, I absolutely do hope that people do make the most of that opportunity to acquire shares in IDX. Thank you for the comment.
A question from Steven Maine. Thank you to Helen Kurincic for her nine years of service. It is always helpful for investors to have access to some exit perspectives from retiring independent directors. In her final contribution as a director, could Helen please comment on what she regards as the best decisions Integral Diagnostics made during her time on the board, and does she have any regrets?
Right. Thanks, Steven. I guess firstly, I'd say, you know, it's been quite a journey from start to finish. Probably the, you know, the highlights were listing the company, which was quite difficult at the time with the scenario, but we had such a great quality list of shareholders that supported us through thick and thin alongside that journey. Probably one of my other highlights would be how our people right across both countries came together at the time during COVID. We saw radiologists, you know, step up to take leadership positions to look at how we protected our people given that they were on the front line in terms of providing services in sites that don't close, like hospitals and clinics that had to continue through all of that time.
And so our absolute focus in terms of keeping people safe, both our employees and also our patients, and so I'm really proud of that. I'm really proud that unlike many other organizations at the time who made decisions to let clinical people go, we didn't do that. We stuck by our people during all of that period and supported them, as I said, to try and keep them safe in that time. And I'm also just really proud of the quality of the board that we've had, both in terms of past board members and also, existing and new board members now. It's been incredible in terms of, for a company of our size to have, I think, that quality and caliber of governance.
I'm really proud of because I don't think there's many, of our size that discharge, you know, their responsibilities in exactly that same way, and I think we've done that with really good integrity.
That comes to the end of the online questions. We just have a couple from... that were submitted prior to the meeting. We have a question from Mr. Yusuf as trustee of the Maara Trust. Did you discuss any of the matters with the audit committee relating to internal investigations of whistleblower matters? If so, what did they relate to, and what was the result of the investigation?
IDX does have whistleblower policy. If you have a look on our website, it's transparently available to everybody. As noted in that policy, matters are actually reported to the Audit, Risk, and Compliance Committee that Ms. Murphy chairs, and on a very regular basis. In regards to whistleblower matters, they are private and confidential, so we won't disclose the details of individual investigations in accordance with that legislation. Are there any further questions?
Shareholder Yusuf also submitted 6 other statements and 16 other questions prior to the meeting, unrelated to any items of business at the meeting. The questions and statements relate to detailed operational matters.
Thanks, Kirsty. I have actually reviewed those statements and 16 questions and determined that those statements and questions are of a very detailed operational nature and don't pertain to any items of business. As they relate to operational matters, I've asked the CEO, Dr. Ian Kadish, to contact doc Mr. Yusuf after the meeting to address those questions. You can confirm that. Thank you, Ian. Are there any further questions?
No further questions, Helen.
Shortly, I'll close the voting system, given that concludes our discussion on that item of business. Please ensure that you have cast your vote on all resolutions. I'll now pause to allow you time to finalize those votes.