Thank you for standing by, and welcome to the Regis Healthcare Limited FY 22 results webcast. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Dr. Linda Mellors, Managing Director and CEO. Please go ahead.
Thank you very much, Darcy, and welcome, everybody, to the Regis Healthcare results presentation for the full year ended the 30th of June 2022. My name is Linda Mellors, Managing Director and Chief Executive Officer of Regis. I'd like to begin, of course, by acknowledging the Bunurong people of the Kulin nation, traditional custodians of the land on which we meet today, and pay my respects to the elders past and present. I extend that respect to any Aboriginal or Torres Strait Islander people joining us on the call today. With me is Rick Rostolis, our Chief Financial Officer. Rick will take you through the detailed financial information later in our presentation. Regis' team of more than 8,500 people has delivered care and services to more than 7,000 residents and clients at any given time over the last year.
I'm immensely proud of our team and their continued focus on care and service, while many were personally impacted by another year of the COVID-19 pandemic and extensive floods in Queensland and New South Wales. At a company level, the business was also impacted by the ongoing pandemic, floods, border closures, workforce shortages, escalating costs, and insufficient clarity regarding key elements of the government's reform agenda for the sector. The year has once again been challenging from an operating and financial perspective. Most of the meaningful sector reforms to funding, quality and safety, regulation, and pricing are still to come. In the meantime, expectations of provider delivery have increased within the context of critical labor constraints. The pause on residential aged care property development continued through part of the year, pending more certainty regarding the return on investment that providers and investors can expect.
The company was pleased to purchase land at Belrose in New South Wales and take out an option on land at Carlingford in New South Wales. Both sites are earmarked for residential aged care development. On a positive note, the company achieved the majority of the year's initiatives contained in our strategic plan, with key highlights covered on pages 22-24, as well as continuing to stabilize the business, harness efficiencies, and prepare for much-needed sector reforms. Our presentation today is in six main parts. I will start with a brief strategy overview and provide updates in relation to sector reform activity and the ongoing COVID-19 pandemic. We will then provide a summary of our financial and operational performance for the year, followed by some other matters, including the new AN-ACC funding model and the company strategy and outlook.
We'll be pleased to take any questions at the end of the presentation. Moving first to our strategy. As an almost 30-year-old company dedicated to the care and service of older people, our purpose is clear and remains completely centered on providing personalized and respectful care that embraces the experience of aging. Successful execution of the strategic plan will keep Regis at the forefront of the best industry providers and place the company in a strong position in a post-reform environment. Regis has worked extremely hard to form the right team, supported by contemporary systems and processes, an ethical framework, and a strong balance sheet to deliver our strategic plan and the best of care and services to our consumers. Care and service remain our core business drivers to improved consumer experience and operational and financial performance.
I've shared this strategy slide, previously, and I'll provide some more detail, later in the presentation. Moving then to industry reforms and developments post the Royal Commission, and just to note again that Regis continues to strongly support the need for urgent sector reform across the domains highlighted by the Royal Commission, including workforce, funding, governance, quality and safety, regulation, and system design. It is critical for the sector, and indeed the Australian community, that the reforms are implemented properly with transparency and accountability back to the public. The second bill arising from the Australian government's response to the Royal Commission has now been passed, including the key reforms of transitioning care funding from ACFI to AN-ACC, effective 1 October 2022, and the introduction of the new Independent Health and Aged Care Pricing Authority from 1 July 2023.
Regis is very supportive of the creation of the new aged care peak body, the Aged & Community Care Providers Association, or ACCPA, which came into effect from 1 July 2022. This new peak body is open to all providers, including the traditional members of the Aged and Community Services Australia Group, Leading Age Services Australia, and the former Aged Care Guild. A single unified peak body was a key recommendation of the Royal Commission, which the aged care sector has delivered.
Transformation of the sector's representation has been an important step to a stronger industry voice to support the sector's purpose, performance, needs, and aspirations. While the former Australian government committed significant funding to address the known challenges in the aged care sector, there is still much detail to be worked through, including the implementation and financial impact of the workforce changes, including known labor supply shortages, and whether the AN-ACC funding model is adequate. The company has managed the challenging operating environment as well as possible, given the circumstances, but cannot continue to cover costs that are underfunded by government. The sector was already under considerable pressure before the COVID-19 global pandemic.
Long-term underfunding of the sector has had predictable outcomes in terms of workforce design and pressures, pay rates that are too low to be competitive with other sectors, declining profitability across all provider types, an increasing proportion of non-viable operators, and closures of residential aged care facilities. The additional government basic daily fee funding from 1 July 2021 was largely offset by the shortfall between enterprise agreement increases and inadequate government funding indexation, as well as increased consumables, compliance, and reporting costs. The regulatory reporting and compliance requirements and costs will only increase as part of the upcoming transition from ACFI to the AN-ACC funding model. Regis commends the new government's express commitments to an appropriate funding model, quality and safety improvements, and workforce support. Many of the reforms are complex and are still to be fleshed out in practice.
The company also notes the Fair Work Commission is currently considering aged care worker pay rates, and looks forward to its recommendations and the government's response. As one of the largest providers in Australia, Regis is well-placed to meet many of the intended reforms, including corporate governance, clinical governance, prudential controls, food and nutrition standards, registered nurses on site 24/7, and career pathways across all roles. Moving now to COVID-19 management and impact, and I'd again just like to highlight the support of our residents, families, and employees. As we've navigated the challenges of the pandemic, updated our operating procedures, provided opportunity for vaccination, and promoted availability of the new antiviral treatments to aged care residents. Regis continues to maintain all necessary support to protect residents, clients, and employees from the threat and impacts of COVID-19.
The key features of our response remain our pandemic planning committee, our hubs of personal protective equipment, testing protocols, and our outbreak management plans. Sector improvements over the year included better balancing of infection prevention and control responses with the overall needs and preferences of residents, including in relation to their physical and mental health, socialization needs, and wellbeing. Regis residents have continued to be provided with care services and support, and we have provided updates to impacted homes, residents, families, and employees. High levels of vaccination rates have provided additional protection to residents and staff against the disease, and the introduction of antiviral medications have been of significant benefit to residents. Regis continues to work closely with health and regulatory authorities as the pandemic continues. The company remains appreciative of government-provided PPE during outbreaks, rapid antigen tests, and the funded vaccination program.
Our experience, consistent with other reports, is that the Omicron wave has resulted in less severe illness and a much lower case fatality rate, due in large part to high vaccination rates and new treatments. Regis has coordinated a national program to provide vaccinations to our residents, employees, and volunteers. Our program for doses one, two, and three was successful, with full vaccination compliance achieved for the Regis workforce, and more than 81% of eligible residents now having received the fourth dose, noting that residents have choice about vaccination. The business continued to manage a significant number of exposures and outbreaks from late December through to the 30th of June 2022 and beyond. There were particularly pressured periods over the Christmas holiday period and at the beginning of winter, with rapid escalation of community cases and residential aged care outbreaks across the country.
As of today, Regis has four current outbreaks, which again, is consistent with the lower levels of community cases. Since the beginning of the pandemic, Regis has paid employees a supplement to work in a home in outbreak, and our PPE hubs ensured we could quickly provide safety equipment as needed across our portfolio. Regis incurred COVID-19 outbreak costs of AUD 27.8 million during the financial year, including incremental staff expenses mentioned earlier, personal protective equipment, infection prevention and control, and employee welfare. Government funding has been allocated for outbreak costs, vaccination, and the provision of rapid antigen tests for regular screening, however, has not been provided for the substantial COVID-19 preventative costs that have been incurred. During the financial year, Regis received AUD 3.2 million in COVID-19 government outbreak grants.
The Department of Health and Aged Care has advised of ongoing delays in processing the outbreak claims. Excluding the AUD 3.2 million received, Regis has or is in the process of submitting further COVID-19 outbreak claims of approximately AUD 19 million-AUD 21 million in relation to the financial year just closed. We note that the Australian government has extended the COVID-19 Aged Care Support Program extension grant for reimbursement of COVID-19 outbreak costs to the thirty-first of December 2022. Moving now to our financial and operational results. Revenue from services was AUD 725.3 million, up 3.4% on the prior corresponding period. The company delivered a full year increase in underlying EBITDA to AUD 78.1 million, and NPAT before amortization of operational leases, or NPAT-A, was AUD 3.9 million.
This result was positively influenced by the additional AUD 10 basic daily fee received from 1 July 2021. Given the extreme external factors, we have maintained stable occupancy levels, generated strong net RAD cash flows, and substantially reduced our debt. Noting our net debt level has been impacted by the delay in the Department of Health and Aged Care's assessment of COVID-19 outbreak grants. The overall results are again well below what we would expect to deliver in a properly funded environment. The company notes that most providers in the sector are now delivering operating losses. I'll now hand over to Rick to discuss the financial and operational performance of the business in greater detail.
Thanks, Linda, and good morning, everyone, and thanks for making time on what's a very busy reporting day. Just turning to slide 9, the financial summary. FY 2022 has once again been challenging for the business and the broader sector, with COVID-19 and workforce supply constraints being key issues confronting us all. The government-funded basic daily fee from 1 July 2021 was welcome, but was largely absorbed by the increased impact of enterprise agreements, consumables, and the significant additional regulatory compliance and reporting. Disappointingly, as Linda's mentioned, there's been no government funding support to combat substantial costs associated with COVID-19 preventative measures put in place by the company.
As Linda's also mentioned, revenue from services of AUD 725.3 million was up 3.4% on the previous year, with the majority of the increase made up by AUD 22.9 million of government-funded basic daily fee. However, this increase, this increased funding needs to be put into perspective. In FY 2021, Regis received one-off government funding, not including COVID-19 grants, of AUD 13.1 million for both COVID-19 related matters and a top-up payment following the release of the Royal Commission's final report. This funding was not repeated in FY 2022. Government revenue of almost AUD 518 million was up 3.6% on FY 2021 and made up 71% of revenue from services, consistent with the previous financial year.
The increase in government revenue also included COPE indexation of 1.1%. Resident revenue of AUD 200 million was up over 3% of the prior year, mainly reflecting BDF indexation. Average occupancy of 89.8% was steady compared to the prior year and comprises the entire residential aged care portfolio of 64 homes. Our ability to maintain average occupancy levels was once again driven by a disciplined management approach, targeting specific homes with strategies in place to drive occupancy. I'll come back to occupancy in a moment. Other income of AUD 71.6 million included imputed income on RADs of AUD 62.4 million per AASB 16, COVID-19 outbreak grants of AUD 3.2 million, and the revaluation of our investment properties based on independent valuations. Investment properties comprise our retirement villages and development sites.
Please note that the net revaluation increase was AUD 3 million, as we wrote off AUD 2.9 million of previously capitalized work in progress during the second half of the financial year. Staff expenses of AUD 550.4 million accounted for 75.9% of revenue from services, up from 74.3% in the prior corresponding period. The increase in staff expenses was primarily due to three key factors. Firstly, the impact of COVID-19 outbreaks, with AUD 20.3 million of staff outbreak incentive payments incurred during the year, of which AUD 16.6 million related to the second half of the financial year as a result of the Omicron variant that emerged in mid-December 2021 .
Secondly, enterprise agreement increases, which have averaged circa 2.5%-3%, and significant overtime and agency fees incurred due to continuing workforce supply constraints. Staff expenses were also impacted by the previously reported potential employee entitlement underpayments. While the review is ongoing and based on analysis conducted during the financial year, we have provided an additional AUD 2.7 million, taking the provision to AUD 37.7 million at 30 June 2022. Underlying EBITDA, which excludes the net impact of COVID-19 outbreak costs, other one-off items, and RAD imputation, was AUD 78.1 million, up 8% on the prior year, with the additional AUD 10 BDF being a key contributor. Depreciation was relatively steady year-over-year. Finance costs of AUD 70 million included AUD 62.4 million of imputed interest under AASB 16.
Excluding the impact of AASB 16, finance costs were down from AUD 9.6 million to around AUD 8 million in line with reduction in debt levels. As previously reported, as a result of the Australian government's decision to discontinue operational places from 1 July 2024, the company has commenced amortizing the value of operational places from 1 October 2021 on a straight-line basis to 30 June 2024. As a result, the company has incurred a before-tax non-cash amortization expense of AUD 61 million for the nine-month period, with a partial reversal to the related deferred tax liability of AUD 18.3 million. Therefore, a net impact of AUD 42.7 million to the bottom line.
Accordingly, the company reported an FY 2022 statutory net loss after tax of AUD 38.8 million compared to a net profit in the previous year of AUD 19.9 million. Excluding the after-tax impact of the non-cash amortization of operational places, the company reported a net profit after tax, or NPATA, of AUD 3.9 million. Now moving to slide 10. During the year, average available operational places across all homes reduced to 7,057, mainly due to the permanent removal of multi-bed room capacity in line with consumer preferences. As already mentioned, average occupancy has remained steady at 89.8%. During the first half of the year, the business averaged 89.3%, with 90.3% the average in the second half on reduced bed capacity. Western Australia, Tasmania, and importantly, Victoria, showed improvement, with Queensland relatively flat.
New South Wales occupancy was down year-on-year, and this trend flowed into the second half. New South Wales has been the most impacted by COVID-19 outbreaks and lockdowns. Spot occupancy across all residential aged care homes improved to 91% at 30 June 2022 and was 91.4% at 19 August. We have a continued focus on improving occupancy across all homes, and the occupancy result reflects the positive effect of management initiatives despite the ongoing impact of COVID. Having said that, we expect that COVID, whether it be Omicron or other emerging variants, will continue to have an impact on occupancy during FY 2023. Aged care revenue per occupied bed day was up 4.7%. This excludes COVID-19 grants, and the previous year excludes COVID-19 government funding.
Government revenue per occupied bed day, excluding COVID-19 grants, was up 5.3% of the prior year, supported by the additional AUD 10 BDF, COPE indexation, and the increased acuity of residents. Aged care resident revenue per occupied bed day was up 3.5% of the previous year. As mentioned, this mainly reflected BDF indexation. Staff expenses per occupied bed day increased by 6.2%, primarily due to the impact of EA increases and significant costs associated with additional overtime and agency fees. The number of RADs held increased during the year, with the increase occurring in the second half. The value of RADs held increased by 6.7% to AUD 1.268 billion. The average incoming RAD increased to AUD 482,000, which is up 4.3% on the prior corresponding period.
Now moving to slide 11. We presented on this slide the impact of one-offs and normalization items for the year. Of note are the following items: direct COVID-19 outbreak expenses, which excludes preventative costs, of AUD 27.8 million. In the AUD 27.8 million, there are staff expenses of AUD 20.3 million, of which AUD 16.6 million was incurred in the second half. The remainder makes up PPE, infection prevention control, and other items of AUD 7.5 million. As we've previously mentioned, COVID-19 protection and preventative measures are now embedded in the business with a level of ongoing infection prevention and control included in our cost profile. The company has applied for, or is in the process of applying for, FY 2022 outbreak grants under the government's Aged Care Support Program that will total in excess of AUD 20 million.
Apart from AUD 3.2 million recognized as other income in the second half of FY 2022, should grants be approved, we will recognize this income in FY 2023. Based on past claims experience, we expect to receive payment for a significant portion of costs claimed. The normalization adjustment at the bottom of the screen there relates to the non-cash amortization of operational places that I've previously mentioned. This will be a recurring normalization adjustment for the 2022 through to 2024 financial years. Moving on to slide 12, net debt and cash flow. Given insufficient clarity over the financial impact of the new AN-ACC funding model, the company has continued to take a disciplined approach to managing debt. Net cash inflows from operating activities of AUD 114.8 million were underpinned by EBITDA and, despite the negative impacts of COVID, net cash inflows.
Sorry, net RAD cash inflows of AUD 83.9 million. Total net debt at 30 June 2022 of AUD 102.9 million was well within our bank facility limit and reflects a reduction in bank debt over the last 12 months of AUD 39.5 million or 28%. The extension of AUD 150 million tranche of our syndicated debt facility occurred during the second half of the year with a new maturity date of March 2026. Also, the board of directors resolved to pay a final dividend of AUD 0.0232 per share, 50% franked, payable on 30 September 2022. Moving on to capital expenditure on slide 13. During the year, the company invested AUD 48.6 million on capital expenditure projects.
This is significantly up from AUD 18.7 million in the previous corresponding period and includes the AUD 15 million purchase of land in Belrose, New South Wales, with approved plans for a future residential aged care home. In line with our strategic plan, the company has invested heavily in technology with an ERP upgrade and various Wi-Fi enabled initiatives put in place to support residents, clients, and staff. In the coming year, Regis will continue to invest in technology as a key enabler of improved processes and systems across clinical, quality, safety, and commercial aspects of the business. The overall level of capital expenditure reflects, in part, the board's decision to pause a number of planned residential aged care developments until the policy and funding environment is more certain and supportive of appropriate returns on investments in new developments.
For residential aged care developments in the pipeline, activities such as development approval and design documentation continue, with the commencement of Camberwell construction to occur once conditions are favorable to do so. As mentioned at the half year announcement, the intended deregulation of operational places presents new market opportunities for Regis to invest in geographic areas previously not open to the business. The removal of operational places will increase competition around quality of care, service, and accommodation, which should be an advantage to providers such as Regis that have a strong balance sheet and access to capital to further develop the sector. Now moving to resident profile. As you can see on this slide, in the second half of FY 2022, there has been a move to RADs and DAPs from RAD:DAP combos, with 100% RAD payers now representing 59% of non-concessional residents.
Residents paying a DAP have increased during the year, while RAD:DAP combos have decreased. With the MPIR attached to DAPs still at a low 5% as at 1 July 2022, there is little likelihood of a significant swing back to RADs. The industry trend of preferencing DAPs most likely will continue to be favored in FY 2023. With that, I'll hand you back to Linda.
Thanks very much, Rick. If we move now to slide 16 and the transitioning from ACFI to AN-ACC. The Australian government is progressing the five-year aged care reform program in response to the recommendations of the Royal Commission, and this includes the introduction of the AN-ACC funding model from 1 October 2022 and the care minutes mandate. In the 2022-2023 federal budget, the former Australian government announced an AN-ACC starting payment of AUD 216.80, compared to an industry average ACFI of AUD 188.60, which excluded the AUD 10 per resident per day basic daily fee supplement received from 1 July 2021. Note that the AN-ACC starting payment includes the AUD 10 basic daily fee supplement.
A key reform milestone, effective 1 July 2023, will be the introduction of the Independent Health and Aged Care Pricing Authority, which will review costing data and set a price for quality aged care, as per the recommendation from the Royal Commission. The company received shadow assessments for most residents late in the financial year and continues to review government communications regarding care minute inclusions, as well as monitoring the labor market. Based on the shadow assessments received to date, we expect government-funded revenue per resident per day to increase marginally under AN-ACC. We note that there are still residents to be assessed or reassessed. Progress on the government's reform agenda has been mixed and was interrupted by the federal election and caretaker conventions.
Like many providers, Regis continues to be concerned about the adequacy of AN-ACC funding to cover the increased care minutes, as well as proper funding levels for increased labor and other costs, including compliance and reporting. We'll continue to work proactively with government and the new industry peak body to support the development of an effective funding and care model, including addressing challenges relating to workforce shortages. Moving now to some other matters. As previously reported, Regis announced to the ASX on the ninth of August 2021 that it had identified potential underpayments of employee entitlements to certain current and former employees under its enterprise agreements. Regis, with the assistance of external advisors, has commenced a review to determine the extent of underpayments. Based on preliminary analysis, Regis provided AUD 35 million as at 30 June 2021 in relation to the issue.
While the review is ongoing, based on further analysis undertaken during the financial year, Regis has increased the provision to AUD 37.7 million at 30 June 2022. Workforce challenges are a significant issue for the aged care sector, the health sector, and for other sectors more broadly. I note that Ministers Anika Wells and Mark Butler have convened workforce roundtables over the past two weeks as they consider the government response to this accepted problem. I've previously addressed the impact of the widespread Omicron variant, and note that we expect ongoing clinical, operational, financial, and workforce impacts going forward. I'm pleased to report that on 14 April 2022, Regis settled its dispute with OneView Healthcare regarding an alleged breach of a collaboration agreement between the two parties.
The terms of the settlement are confidential and did not have a material impact on Regis' 2022 financial results. Disappointingly, on the 11th of August, 2022, the Aged Care Quality and Safety Commission applied regulatory penalties of a sanction and notice to agree to Regis Port Coogee, based in Western Australia. The company has complied with all actions and requirements stipulated by the Commission under the notice to agree, and will be seeking reconsideration of the sanction decision. Now on to our business update, and I'd like to spend some time taking you through our progress against key elements of our strategic plan. Needless to say, we require an ongoing adaptive strategic response given the current operating environment. Due to the ongoing impact of the pandemic, a greater focus has been placed on tactical management of clinical and business outcomes.
Notwithstanding this, management has ensured appropriate attention has been given to strategic goals and improvements. I've spoken now many times about the need to elevate the status of aged care workers in the general community and to advocate for higher wages for these essential workers. The company looks forward to the outcome of the Work Value case before the Fair Work Commission, and has noted the new Australian Government's assurances that it will fund the recommended increase. Increased wages are an important lever to appropriately recognize the value of the work, stabilize the workforce, reduce turnover, and attract new workers to our sector. During the year, the company made a significant investment in various technology platforms, as Rick mentioned, including an ERP upgrade, Wi-Fi enabled upgrades across our residential aged care homes, and also improvements to our clinical care management system.
All these investments will ensure that Regis stays at the forefront of technology-enabled process and system improvements. Moving now to the Regis culture of care, and you can see on the left-hand side of slide 22, the initiatives that Regis had in place prior to the reporting period. Importantly, Regis has a strong clinical governance program in place. We already have, and have had for some time now, registered nurses rostered 24/7 across all of our homes, a range of in-house senior clinical and operational support teams, an electronic clinical management system, market-leading additional services offerings, and a range of research projects with leading universities and partners. These are all important structures and platforms to underpin high-quality care and service experience for our residents and to support our very important frontline workers.
During the financial year, our teams delivered significant improvements across key quality, safety, and satisfaction indicators. We've also progressed a number of important research partnerships with a focus on translational research that will make a meaningful difference to our residents, clients, our employees, and our business. We are also prioritizing quality and safety data insights and predictive analysis, digital technology improvements, and additional quality and safety indicators reported through our business and to the board. These improvements will support the transition to the coming star rating system and new care reporting requirements back to consumers. Moving then to slide 23. Regis is a people and service business, and the company has a long history of investment in teaching, training, and support programs for our workforce. A valued workforce supports attraction and retention of capable and engaged people, again, leading to better care and service outcomes.
Regis' investments in this area contributed to the discretionary effort of our workforce throughout the pandemic, which has allowed Regis to reduce disruptions to our residents and clients. Management is progressing well through the strategic initiatives for the year, including a new workforce strategy, an updated learning and development framework, and our recently launched leadership capability framework. These are all essential programs of work to respond to the labor supply constraints and the training and development needs of the workforce going forward. Management is executing our new safety strategy, called the Regis Circle of Care, with employees guided to consider those in their circle, including residents, clients and their families, colleagues, visitors, and of course, the employees themselves and their family and friends.
On slide 24, we cover our ensuring our future pillar, where the Regis board and management have prioritized keeping ahead of sector reforms as far as possible, noting the uncertainty regarding details of some key reforms and dates in areas that are major operational changes facing the sector. Some examples include the AN-ACC shadow assessment outcomes, the new AN-ACC funding model, and the new Aged Care Act. Management has completed as much preparation as possible for the new activity-based funding program and will continue to prioritize this area over the next 12 months. Earlier in the year, management completed a brand refresh, which is guiding our marketing and promotion activities and supporting our occupancy improvements. Our sales and marketing strategies are driven by data insights and monitored for efficiency and effectiveness.
Management has also reviewed and updated the Regis design standards, which are specific requirements for our partner architects and builders. The latest version of the design standards paid particular attention to the future needs of residents living with dementia, infection prevention and control, efficient workflow management, and building cost control. In terms of our aged care developments, management continues to plan for future developments and have projects ready to commence as conditions improve. We are particularly keen to progress our development projects in Camberwell, Victoria, and Toowong in Queensland. In line with our plan to derive benefit from the deregulated license conditions from 2024, the company acquired a parcel of land in Belrose, New South Wales in August 2021, and has taken an option over a parcel of land in Carlingford, New South Wales. Both sites are earmarked for residential aged care homes.
With the right conditions, Regis will continue to build contemporary, fit-for-purpose, and desirable aged care homes for older Australians with high care and service standards. From an investor perspective, these homes are expected to have higher occupancy and RADS than older homes. Regis's progress on our environmental, social, and governance responsibilities is summarized on this next slide. Overall, the company is proud of our history and our work to create happy and safe residential aged care environments for our consumers, which includes our residents and families, and of course, our employees. We're also proud that we create shared value in an essential industry for the Australian community. The board and management have recommunicated our purpose to our stakeholders in response to the negative industry sentiment over recent years.
Aged care plays a vital role in the broader Australian social landscape and is a critical part of the service economy, with Regis providing an important opportunity for wider sector and investor community involvement to support the sector. Regis has strong governance and transparency in place and continues to ensure our systems and processes are contemporary and fit for purpose. The company is in a strong position to meet the post-reform requirements in this area. Regis has continued to make gains in environmental sustainability, but this has been countered by an increase in single-use disposable item waste due to the pandemic. The company is reviewing waste management to see whether improvements can be made in our pandemic response, as well as our longer term program of work.
Our solar panels, lighting changes, produce gardens, worm farms, and recycling programs are all meeting expectations in terms of cost savings, environmental impact, and resident and employee engagement. I'd like to finish today by providing some brief statements about the outlook and the areas that Regis sees as urgent priorities for action. Regis continues to prioritize our key drivers of quality care, service, and accommodation. High performance in these areas will support the continued improvement in occupancy, which is a focus for us. Key drivers of success over the next financial year and beyond are a valued, trusted and supported and appropriately paid workforce, a transparent and sustainable funding model, delivery of reforms that are fit for purpose and value-adding, and appropriate funding for the real ongoing costs of COVID-19 preparation and prevention activities.
Regis continues to focus on the levers within our control while pressing for change in other areas, particularly relating to national policy and funding reform. The company remains positive about growth prospects, including better conditions to recommence our development program. The company is reviewing our home care expansion strategy in light of changes to the program that have seen a range of providers exit the market due to a lack of financial viability. I note that the new minister has paused further rollout of the program pending review, with a target date returned to the original recommendation. At this point, the board remains of the view that it is not prudent to put forward any earnings guidance, given insufficient clarity over the financial impact of the new AN-ACC funding model, the ongoing challenges of the COVID-19 pandemic, and critical sector labor shortages.
Regis will continue to focus on the care of our residents and clients and support of our workforce. The company is hopeful that the new Australian government will prioritize meaningful sector reform in collaboration with the sector. On behalf of the Regis board, I would like to thank our frontline workforce and management team. Their extra diligence and care over this prolonged and unprecedented period of continued challenges has led to a more resilient Regis and contributed to better outcomes for our residents, clients, and our business. With that, I'll thank you and hand over to our operator, Darcy, to open the meeting to questions.
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Tom Godfrey from MST. Please go ahead.
Good morning, Linda and Rick. Thanks for taking my questions. Can I just start on occupancy and the management initiatives you've made reference to a few times? I'm just interested, should we expect to see more upside from those into FY 2023, or is that a program that's now largely run its course? Maybe secondly, just any feedback around what you're hearing from facility managers, referral networks, just around the outlook for occupancy.
Sure. Thank you very much, Tom, and good morning. So we would expect to see continued occupancy improvement, and indeed, that is what we are seeing already. Feedback from the referral networks, inquiries are increasing again, which is good news. As we've talked about before, we know that there's a cohort of people who've delayed their entry into residential aged care during the pandemic. We would expect to see continued improvements.
Great. Just in terms of the 91.4% August spot rate, is that a reasonable sort of proxy for us to sort of think about where you can get to in FY 2023, or is that a seasonally strong sort of number?
No, I don't think it's seasonal, Tom. We would still be looking to improve on that number.
Great. Okay, that's very helpful. Maybe just next question. Just around the comment on the outlook slide around purchasing land ahead of bed license deregulation on July 2024. I suppose just in the context of that statement and where build costs have gotten to, can you speak to your current thoughts around M&A versus developing?
Sure. I think, in terms of acquiring the land, with the deregulation, it means we can now look in places that were not open to us previously, because we couldn't get the bed licenses. It's actually really exciting to be able to go into those other areas for us. Build costs are higher at present, and that's something that we absolutely keep a very close watch on. We expect that will start to normalize over time, once that really intense pressure coming out of the floods, in particular, abates.
Tom, the other point I'd make just on the M&A piece is depending on what it is you're looking at, multiples that have been asked or the ones we're looking at are quite high. So again, it depends what you're looking at and what you're after. What we're looking for in the main is metro, you know, new, no compliance issues, those sorts of things. There's a lot out there that don't make that sort of category at a lower multiple, but we're not interested in those.
Got it. In that context, the return on invested capital still probably stacks up better for you guys in a greenfield rather than acquiring low quality stock.
Well, we've always said two things. We've said we've got a history of greenfield, so we've got the competency around the greenfield. But it will always. There's always gonna be a mixture of both. I don't think anything's changed really.
That's clear. Maybe just last one. Just on the Port Coogee sanction, I know it's only 120 beds, but any sort of estimate around the financial impact in 2023 from that?
No, we're not gonna provide. It's not material, Tom, but we're not gonna provide any estimates on that.
Got it. Thanks for taking my questions, guys.
Thanks, Tom.
Thank you. Your next question comes from Vanessa Thomson from Jefferies. Please go ahead.
Morning, Linda and Rick, and thank you for taking my questions. I just wanted to pick up on the construction Tom was talking to just then. I think you said that you would restart once there was more certainty around the return on investment. I just wondered what it would take for you to feel more confident about return on investment. Thank you.
I think, Vanessa, this will be a question that will come up today, tomorrow, around AN-ACC and associated care minutes. I think that the short answer is we're still looking to get better visibility over both aspects of the new funding model. When we do, then we'll have certainty around what we do next around things such as new developments.
Right. Okay. Sorry, I thought it was around certainty on the construction side, but it's on the funding side. Okay. I wanted to then ask what if you guys have a debt target, a leverage target, given you're paying down debt, and you've said, I think you would have paid down more if those government grants had come through.
The board does not have a target range. Having said that, we've worked pretty diligently over the last couple of years to get our debt down, and we've quite often said, Linda and I, that we're trying to build a war chest for better days that we think are coming. That's just been really what we've done in FY 2022 again. There's no target range the board set us.
Thank you. I wanted to ask about the amortization of bed licenses. Sorry, a bit croaky. I think in 2023 and 2024, we were advised of AUD 58 million after tax. Is that still appropriate?
Correct.
Okay.
It's 81 gross and 30% of that, so it's around 57-58 for both years. That, what that will do, Vanessa, it'll take it down to zero come 30 June 2024.
Right. Yes. Okay. My last question was just around AN-ACC. We've seen some charts with subsidization by class of resident, subsidy per minute by class of resident, which seems to imply that if the class of resident is more acute, then the subsidy is lower. I'm not sure if I'm interpreting that correctly. Is that-
What remains to be seen or is that how it reads at present, or have I got it wrong?
Yeah, no, I don't think that's right, Vanessa. The way that the AN-ACC classification system works is residents are allocated into a particular category, and based on the acuity of that category, the funding changes, but so do the care minutes. Just for that to make sense, if somebody say has higher mobility problems and therefore requires more time to deal with those, there's a higher care minute requirement and a higher funding allocated. Does that make sense?
Okay. You wouldn't be penalized for having more acute residents?
No.
Okay. Thank you. That was all. Thanks.
Thank you. Your next question comes from Craig Wong-Pan from Royal Bank of Canada. Please go ahead.
Hi, good morning, everyone. First one, just wanted to touch on the comment you made about the amount of people being delayed or delaying their entry into aged care. I was wondering if you have a feel or kinda get a sense of what that backlog might be.
Not that we can put a number on, Craig. The hospital certainly communicates that out to the sector. As soon as hospitals are under pressure in terms of their bed capacity, they look to move people more rapidly into other care settings. We've got the hospital side of it, and then we have people who are still trying to manage at home, who probably really need to come into residential aged care. We certainly saw it across the sector in terms of reduced admissions, but we're seeing inquiry levels go back up. Nothing I can quantify for you.
Okay. No, no worries. Next question I had is just the flood impact that you experienced. I don't know if you're able to kinda quantify what that has been and whether that sort of impact has dissipated, as of today.
I can give you the operational impact, and then I'll ask Rick just to speak about the financial impact. From an operational perspective, we evacuated an entire home in Brisbane that was impacted by the flooding, and we had multiple other homes that were impacted. The operational disruption was extremely well managed by our workforce, and this is where, you know, I talk about the discretionary effort that the workforce continues to put in terms of getting to the workplace, staying overnight when they were flooded in. You know, I just think we as a company could not be more pleased and proud with the way that the workforce responded.
In terms of the home that we evacuated, all of the residents who wished to move back into that home have done so, and that home is back to being fully operational. I might just ask Rick just to talk about the financial impact.
Yeah. Craig, thanks for the question. Look, the one home we're talking about is Yeronga in Queensland. Suffice to say that, as Linda's mentioned, a number of residents moved to other homes, so we didn't lose that, the income side of things. There was a bit of damage to some plant and equipment that's being dealt with by insurance, but it's small fry. We're not talking material numbers. So nothing that's gonna disturb the numbers that you're seeing for FY 2022.
Okay, great. Thanks. That's all my questions.
Thank you.
Thank you. There are no further questions at this time. I'll now hand back to Dr. Mellors for closing remarks.
Terrific. Thanks very much, Darcy, and thanks to everybody who's joined us on the call today. We look forward to catching up with many of you over the coming days. Thank you.
Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.