Good morning, ladies and gentlemen. Great to have you here this morning. For those who don't know me, my name's David Thodey, and I'm the Chair of Ramsay Health Care. On behalf of the board and the management team, you know, a very warm welcome to our 2025 annual general meeting. Of course, we welcome those of you who have tuned in online and are part of the webcast, so welcome to you as well. I am informed that we have a quorum present, and accordingly, I declare this annual general meeting open. I would like to begin by acknowledging the traditional custodians of the land on which we're meeting today, the Gadigal people of the Eora Nation, and I pay my respects to elders past, present, and emerging.
I'd also like to acknowledge the many First Nations employees who contribute so greatly to our company right across the country, which we appreciate greatly. Let me begin by introducing the board of directors, all of whom are present with us today. I will start on my right with Natalie Davis, our Group CEO and Managing Director, who did attend last year, but she was really observing at that time. It's great to have her here today. Starting from my far left and then moving to the right, firstly, Helen Kurincic. Helen is a member of the Audit Committee and the Risk Management Committee. Then we have Craig Drummond. As you know, Craig joined our board in July, and he will address the meeting later on when he stands for election.
Craig brings extensive executive and board-level experience across the healthcare, financial, and regulated services industries, and we're very pleased to have him now on the board. Craig is a member of the Audit Committee. Alison Deans is Chair of the People and Remuneration Committee and a member of the Nomination and Governance Committee. Alison is standing for re-election today and will address the meeting later on. We have Michael Siddle, who I'm sure many of you know, our former chair and a member of the Nomination and Governance Committee and also the People and Remuneration Committee. Next to Michael is Henrietta Rowe, our Group Executive and also Legal and Company Secretary, and she does a wonderful job in that role. Now, moving to my right, next to Natalie is Karen Penrose.
Karen is Chair of the Audit Committee and a member of the Risk Management Committee and does a great job there. Steven Sargent. Steve is Chair of the Risk Management Committee and a member of the People and Remuneration Committee. Steve's also standing for re-election today and will address you later on as well. Next to Steve is Claudia Süssmuth Dyckerhoff, who has traveled to be with us here from Switzerland, and we're delighted to have her here, and she is a member of the Risk Management Committee. Lastly, James McMurdo. James is a member of the Audit Committee and, as you know from your notice of meeting, is retiring after the conclusion of today's meeting. James has been a valued member of the board since September 2019, particularly through his membership of the Audit Committee.
James, your insights, your expertise have been an asset to Ramsay and have strengthened our governance and financial oversight, and we thank you for all that you've done on behalf of the board and your service to Ramsay and wish you well in the future. That is sort of the introduction. I am now going to ask Henrietta to talk you through the procedural matters for this meeting, including how to ask a question and also how to vote. Henrietta, over to you.
Thank you, Chair. I'll just wait for the microphone. Thank you, Chair. Today we are taking questions from holders of ordinary shares or their representatives and holders of CARES. For anyone eligible to ask a question who is watching our webcast, you are now able to submit questions online. You can do this by clicking on the messaging icon and typing your question into the Ask a Question field. Once you have finished, please click the Send button. Please note that questions are limited to 1,000 characters and each question must be submitted separately. We will address your questions at the relevant item of business. If you are attending in person and have a question, please proceed to a microphone at the relevant item of business and show your blue voting card to our representatives from Boardroom.
Non-voting shareholders and cares holders can also ask questions today and have been issued with orange and pink cards, respectively. If you want to ask a question and can't proceed to a microphone, please raise your hand and a Boardroom representative will come to you. You will be introduced and you can then ask your question. We ask that you please confine your questions to the business of the meeting and shareholder issues. In order to ensure that shareholders as a whole who are attending today have an opportunity to ask questions, we ask that you limit your questions to a maximum of two at a time and then allow other people to ask a question. If your question relates to a personal experience at one of our hospitals, please speak to me or another member of our executive team who are here with us today following the meeting.
We are not able to address these questions during the meeting due to privacy concerns. We have also received some written questions from shareholders in advance of today's meeting. These will be addressed during the Chair or the Managing Director's address to the meeting or at the relevant item of business. Voting today will be conducted by way of a poll on all resolutions in the notice of meeting. All shareholders entitled to vote at the meeting will have received a blue voting card on registration. Shareholders and proxies who have been given discretion on how to vote should tick for, against, or abstain for each resolution. Any appointed proxy that has been directed how to vote and has no discretionary votes to cast does not need to vote today, as those votes will automatically be counted in accordance with those directions.
At the end of the meeting, please sign your completed voting card and place it in one of the polling boxes that will be at the back of the room at the end of the meeting. The poll will remain open for 10 minutes after the close of the meeting to ensure that all shareholders have had the opportunity to lodge their vote. The results of voting on all resolutions will be lodged with the ASX and posted on our website later this afternoon. I will now hand back to the Chair.
Thanks, Henrietta, and I now open the poll. In terms of the order today, I'm going to give you a quick update on the business, and then Natalie is going to give you some more detail about the operations of your business. This year, Ramsay has continued to navigate the industry-wide shifts impacting the provision of healthcare services across all the regions where we operate. The operating environment remains challenging, with ongoing cost pressures and the reluctance of some payors to recognize and pay their fair share of these inflationary cost increases. Elysium and Ramsay Santé, which is our French operation in particular, face a number of industry headwinds.
However, despite these headwinds, the board remains confident that our refreshed strategy, the new strengthened Group Executive Team, and a sharpened focus on our core Australian business positions us strongly to navigate the evolving private healthcare landscape and improve earnings in our core business operation in Australia. The key focus of the Ramsay board this year has been ensuring a smooth and successful transition to our new CEO and Managing Director, Natalie Davis. As you know, Natalie joined us on the 1st of October last year and then formally commenced as CEO on the 2nd of December. With the board's full support, Natalie has moved quickly, establishing three key priorities for the business. Firstly, transforming our market-leading Australian hospital businesses that are so important to us. Secondly, strengthening capital discipline and improving capital returns across the portfolio, which is a very important focus for us.
Thirdly, evolving our culture, people caring for people, to be innovative and drive performance while always focusing on the best possible patient outcomes. Since joining, Natalie has streamlined our group operating model considerably. She has made a number of key executive appointments to uplift our capability and drive performance. Today, I am very pleased to welcome Anthony Neilson, who has joined us at the front here, Stuart Winters, who has also joined us, Andrew Coombs, John Doulis, who is here also, and Joe O'Connor, who is running the Elysium business. It is a new and, I think, very strong executive team. While there is still much work ahead and cost pressures remain, the board is encouraged by the progress we are making towards improving the performance of our Australian and U.K. hospital businesses.
Natalie has laid out a clear pathway for our Australian business, and this morning she will update you on the progress against the key lead indicators we've established in this change program, as well as our first quarter trading performance. At the end of June 2025, we also farewelled our Australian CEO, Carmel Monaghan, and I just want to recognize her this morning because she did make a significant contribution to Ramsay over many years. Her dedication has left a positive impact on our people and the communities we serve, so we thank Carmel. Now let me turn to our financial results for the 12 months to 30 June 2025. We reported a 1.7% increase in underlying net profit after tax from continuing operations of AUD 305.3 million. This reflects a solid performance from our Australian private hospital portfolio and continued improvement in the U.K. acute hospital business.
These gains were partially offset by lower earnings from Elysium, our U.K. mental healthcare business, as well as a lower contribution from Ramsay Santé in France. Santé specifically has been impacted by declining government support for healthcare in France, higher funding costs, and a higher effective group tax rate. The board also determined a final fully franked dividend of AUD 0.40 per share, taking the full year dividend to AUD 0.80 per share, which is fully franked. This represents a payout ratio of 63.7% within our stated payout range of 67% of underlying net profit from continuous operations. While we were encouraged by the improvement in our results this year, we recognize that the pace of our earnings recovery and the returns we are generating are not where we want them to be. Generating an improvement in returns is a key focus of our multi-year transformation.
Now let me turn to the board. In May, we were pleased to announce the appointment of Craig Drummond as Nonexecutive Director effective 1st of July 2025, as I mentioned. Craig brings extensive executive and non-executive experience across the healthcare, financial, regulated services industries I mentioned, and has joined the board's Audit Committee. Today, Craig is standing for election, and I will invite him to say a few words when we get to that resolution. Alison Deans and Steven Sargent, both directors who contribute strongly to the board, are standing for re-election, and the board unanimously supports the election of all these directors, all three of them. At the conclusion of today's meeting, as I also mentioned, James will step down from the board after serving two terms as a Nonexecutive Director. He has made a valuable contribution to the board over many years.
His insights, his expertise has been really valued on the Audit Committee. On behalf of the board, again, James, just thank you for your service, and we do wish you well. Ongoing board renewal is a constant part of our governance process. We are committed to regularly reviewing and evolving the board's composition to maintain a balanced mix of skills, experience, and perspectives across all the domains that we need, especially in hospital management. This ensures the board is well placed to guide Ramsay through the opportunities and challenges of the current dynamic environment. Now, turning to the outlook for the coming year, the board is working closely with Natalie and with the new management team to focus on these three key priorities across the group, with our primary focus being a multi-year transformation of our Australian business. Alongside this, we are also actively managing our international businesses.
As you will probably be aware, we have finalized the strategic review of options related to our shareholding in Ramsay Santé together with Goldman Sachs. The board and management are committed to executing one of the options that we have worked through. We are also working on improving the performance of Elysium in a very challenging market in the U.K. with weak demand for our services. We have recently appointed a new CEO, Joe O'Connor, to drive this turnaround, which is very important to us. Across all our operations, we have also focused, as you'd imagine, on clinical safety, our patient and employee experience, and doctor partnerships, as well as ensuring that we are fairly compensated for our services, driving improved productivity and financial performance.
The board is pleased with the progress that the new group team is making towards transforming the business and driving improved performance and higher returns for shareholders. We have more to do. In conclusion, I'd like to take this opportunity to thank all our people and the clinicians who work with us for their dedication to caring for our patients and the many communities where we serve. I thank Natalie and the management team for their leadership. I would also like to thank my fellow directors for their dedicated work. Most importantly, I'd like to thank you, our shareholders, for your ongoing support and trust that during what I recognize has been a challenging period, you will continue to support us. I will now hand over to Natalie to give you a more detailed presentation on our strategies, priorities, and progress. Over to you, Natalie.
Thank you, David. Good morning, everyone, and thank you for joining us this morning, either in person or on the webcast. It has just been over a year since I joined Ramsay, and I feel very privileged to be leading a team and a business where our people, our doctor partnerships, clinical excellence, and care for our patients are at the heart of everything we do. I visited many of our hospitals, clinics, and support teams across our regions over the past year, and our dedicated teams bring our purpose of people caring for people to life every day across our sites. As we transform and reimagine Ramsay for the future, our patients, teams, and doctors remain at our core. Over the past year, we have maintained our leading patient NPS scores across all our regions.
We're growing our clinical trials network in Australia to expand access to new treatments, to strengthen our doctor value proposition, and to build partnerships that support clinical innovation. We continue to invest in our people with over 1 million student placement hours delivered in Australia across nursing, midwifery, allied health, and medicine, and 890 emerging and executive leaders completing Ramsay leadership programs. As David mentioned in his address, since joining Ramsay, I've determined three immediate priorities for the business, and we are progressing well against these. The three priorities are transformation of our market-leading Australian hospital business, strengthening capital discipline and improving capital returns across our entire portfolio, and evolving our culture of people caring for people to foster innovation and drive performance. To lead our transformation and to bring focus and capabilities to the Australian business, we have a new group leadership structure in place.
I would like to welcome Stuart Winters, our new Chief Operating Officer of Australia, Andrew Coombs, our Chief Commercial Officer for Australia, and John Doulis, our Group Executive Technology and Digital. They all have significant healthcare experience and will strengthen our execution capability. They are all here in the room with us today and have had a very rapid start at Ramsay, including spending time with our hospital teams, our doctors, and patients. Last week, we announced the appointment of our new Group CFO, Anthony Neilson, who started with us just yesterday. Anthony brings extensive financial and commercial experience to Ramsay that will help sharpen our focus on performance and capital returns. Welcome to Ramsay, Anthony. We also recently announced that Joe O'Connor will be joining as CEO of Elysium in January.
Joe was most recently the CEO of the Four Seasons Healthcare business in the U.K., where he led a significant transformation and delivered improved quality of care, team experience, occupancy, and financial performance. Turning now to our Australian business, we are Australia's leading private healthcare provider, underpinned by our strategically located and owned hospitals, providing care to 1.2 million Australians every year. Our focus is on specialized and high-acuity therapeutic areas, particularly cardiology, orthopedics, and cancer, and we partner with over 9,000 doctors nationwide to provide high-quality care to our patients. Our first group priority is to transform our leading Australian hospital business and to adapt at pace to changes facing our sector. This will be a multi-year journey, starting with an initial focus on strengthening our core hospital business and accelerating performance.
This includes delivering catchment growth, particularly focusing on growth in our 15 major hospitals across the country that are strategically located in very attractive catchment areas, creating centers of excellence nationally in cardiac, orthopedics, cancer, and mental health, clinical leadership, including growing research and trials, centralized and standardized procurement and hospital admin functions, including leveraging digital and AI capabilities to deliver one Ramsay scale advantages, dynamic revenue indexation to reflect historic and ongoing sector-wide cost pressures, and strategic proof of concepts with private hospital insurers to connect hospital and community care. This sets the platform for us to connect our healthcare services for patients and our doctors, in particular connecting hospital care with community-based care and enabling our long-term goal to become Australia's most trusted leading healthcare provider.
Our success will be measured by clear financial and non-financial metrics so we can track our progress and hold ourselves to account. Our initial indicators will include our patient, people, and doctor NPS scores, growth in admissions and the utilization, cost efficiencies through One Ramsay advantages, and revenue indexation adequately reflecting cost inflation. I'm pleased to report that our Australian Q1 performance is on track on almost all metrics. Patient NPS remains high at 72.6 as we continue to focus on patient care, including the rollout of Hello My Name Is, which you may have seen on our badges, a simple tool to help patients feel welcome and establish a trusted connection to our team. Employee NPS also increased plus 13 since our last survey in 2023 to 58.
Activity growth in the quarter was strong, supported by medical admissions associated with the winter flu season and growth in high-acuity surgical work. Inpatient days of admission grew by 3.2%, excluding Peel. Our focus on growth continues across our hospitals, with nationwide growth plans developed in August, enabled by database tools for our hospital teams, showing referral patterns and specialist presence in hospital catchments, as well as opportunities to lift the utilization. We increased the utilization in the quarter by one percentage point compared to Q1 FY 2025. Growth was supported by improved revenue indexation with labor costs well managed and performance improvement initiatives in the half ahead of target.
In the quarter, we completed a detailed data-driven fact base, confirming the opportunity in both non-clinical and clinical procurement, and our proof of concepts in our hospitals underway to standardize food menus, introduce on-demand ordering, and reduce variation in the use of consumables. This all contributed to Q1 revenue growth of 6.5% and EBIT growth of 5.8% compared to the prior corresponding period, reflecting strong performance in our private hospital business, offset by the impact of the return of the Peel hospital in August last year and the impact of the extended agreement and funding mechanism at Joondalup Public Campus. Revenue from our private hospital portfolio increased 8.6% for the same period, supported by improved revenue indexation. Excluding the impact of the new funding mechanism at Joondalup Public Campus, the EBIT margin in the Australian business increased compared to the prior period.
Our second priority is to strengthen our capital discipline and improve returns across the portfolio. Consistent with our commitment to improve return on capital, we remain disciplined in our approach to capital expenditure. We focused our Australian Development CapEx on procedural capacity in our major hospitals in growth catchments, and our Australian Development CapEx is expected to be at the low end of the guidance range of AUD 200 million-AUD 250 million as we reface spending on some projects and focus on utilizing existing capacity. Our Joondalup private hospital development is on track to open in the new calendar year, and we're actively recruiting doctors to serve private patients in our growing Northern Perth community. As David mentioned, we finalized the strategic review of options related to our shareholding in Ramsay Santé together with Goldman Sachs, and the board and management are committed to executing one of these options.
We'll provide an update to the market no later than our first half results in February 2026. Since reporting our full year results, we've successfully refinanced AUD 2.05 billion of funding group facilities, extending the duration of our facilities and reducing the margin. This has resulted in the funding group's weighted average cost of debt as at 30th of September 2025, declining 30 basis points compared to 30th of June 2025. Based on debt drawn as at 30th of June, this delivers annualized interest savings of approximately AUD 4 million. Our weighted average debt maturity now stands at 3.3 years, an extension of approximately a year from the 30th of June 2025.
In summary, we're on track and continue to make good progress against our three priorities: transforming our market-leading Australian hospital business, strengthening our capital discipline and improving capital returns across the portfolio, and evolving our culture of people caring for people to innovate and drive performance. I would also like to thank the Ramsay team and our clinicians for the support I've received since joining. I look forward to working with all of you and the board to realize the significant opportunity we have to sustainably grow and transform the business. Thank you to our shareholders for your continued engagement and support. For those of you who have joined us today in the room, the management team and I will be available after the conclusion of proceedings to answer any questions you may have. I will now hand back to David for the formal proceedings. Thank you.
Thanks, Natalie, and encouraging to see those first quarter results. Good to have that update. Now I'd like to respond to questions from shareholders in relation to our addresses or the business or the operations generally. Henrietta, could you please run through the general written-in questions firstly, which we had in advance of the meeting, and then I'll invite general questions from shareholders in the room and then move to general questions from online. Firstly, the written ones that we've received.
Thank you, Chair. We have received questions in relation to the significant decline in the share price since 2022, including expressing discontent about the outcome of the proposals led by KKR to acquire Ramsay, as well as dissatisfaction with company performance and culture. These questions were from shareholders Lorraine Marshall, Paul Taliopoulos, and Veronica Burns.
Thanks for those questions. I understand the frustration shareholders feel when the share price drops, and it does not really reflect what we believe is the strength or potential of the business. It has been a challenging period for the private hospital sector globally, but also here in Australia. I want to stress we are focused on improving performance and rebuilding the value in the business. We are taking a more disciplined and commercial approach to how Ramsay operates while continuing to invest in innovation across all our hospitals. I mean, the aim is simple but hard to execute: better performance, stronger returns alongside excellent patient outcomes, because at the heart of our strategy is people caring for people. That purpose guides us as we transform the business and as we bring innovation for the future.
We are particularly proud of the range of programs we have introduced to develop people across the business, including structured leadership pathways and building the next generation of clinical leaders across Ramsay. It was encouraging in the recent employee survey, which actually Natalie briefly mentioned, the engagement and advocacy across our Australian workforce, where we are acting on feedback, but we are seeing some improvement in that area, which we are very pleased about. Now, to the last question regarding the 2022 KKR proposal, and this has been raised many times before over the last few years, and I want to be very clear. Ramsay did not reject a proposal from KKR. The consortium led by KKR withdrew its offer, and the board engaged constructively throughout that process. I think it is very important that you understand that. Back to you, Henrietta.
We have received a question from corporate shareholder Damir Proprietary Limited on how AI will affect Ramsay.
Thanks, Henrietta. It's hard to pick up a paper these days without reading something about AI. Look, I'm pleased to say that AI is already a part of a lot of the work we're doing across the business. Now, is there more to do? Of course. I mean, for example, in Australia and Sweden, we're trying ways to use AI to reduce administrative burden, which obviously is we can automate processes and generate better clinical notes or documents. We think there's enormous opportunity there. We will continue to adopt new technologies. We're also at the same time managing the risks that come with this new technology.
The board is overseeing Ramsay's systems of risk management, internal controls, legal compliance, all the things that you'd expect us to be doing in terms of making sure that we have the right structure and also the right internal audit function. We have also established specific AI governance measures, including Management AI Governance Committee, AI Governance Framework, which operate alongside Ramsay's existing cybersecurity controls and testing. I do want to stress technology innovation, be it AI or whatever comes next, be it Agentic AI, Nano Neural AI, we will look at these new technologies, see how we can apply them in the interests of the company and deliver a better patient outcome. Henrietta, back to you.
We've received two questions in relation to the dividend reinvestment plan that was deactivated this year. Sandra Cowburn has asked why it was ceased as she preferred having the option, and Timothy Clifton has asked if Ramsay intends to introduce it again.
Thanks for your question, the feedback. Yes, we deactivated the DRP earlier this year in August. As you know, DRP EPS is dilutive unless the additional capital is required and invested. Look, we do not have any current plans to reactivate the DRP, but we do consider it regularly. If you have feedback, please keep giving it to us. We will look at what is the best options going forward.
We've also received two questions from Timothy Clifton.
Right.
Mr. Clifton's next question is, at present, Ramsay Health Care dividends are 100% franked at the company tax rate. Does Ramsay intend to continue with this level of franking?
Thank you for that question. As at the 30th of June, we had just over AUD 970 million franking credit balance after taking into account the franking credits attached to the 2025 final dividend. Obviously, it is dependent on a number of factors. However, at the current time, we believe we have sufficient franking credits to pay fully franked dividends for the foreseeable future. Back to you.
Mr. Clifton's final question is, Ramsay Health Care at present employs Ernst & Young as its independent auditor. Does Ramsay Health Care intend to continue to use Ernst & Young?
Thank you for the question, Timothy. Yes, Ramsay intends to continue engaging EY as our external auditor, but I do want to stress the Audit Committee reviews the performance, independence, and objectivity of the company's external auditor annually. Ramsay also complies with all applicable legal requirements, including rotation of the lead audit partner. Henrietta, is that everything?
It is.
Okay. Thank you. Thank you to the shareholders who sent in advance questions. I'd now like to invite general questions from shareholders in the room or from shareholders watching online. I think we'll start with shareholders in the room. If you have a question, please come up to the microphone. If you need assistance, please raise your hand, but someone will introduce you at that time. Let's go to questions. Firstly, from the floor.
Mr. Chair, we have a question from shareholder Malcolm McCombs.
Great. Thank you, Chair. I've followed Ramsay for 30 plus years since it made four very strategic acquisitions of Hollywood, Green Slopes, and the Royal North Shore and Flinders. It's good to see these assets are still a key part of the best portfolio of health infrastructure assets in the country. People sometimes forget the origins of great wealth creation when share prices go down. Let's not forget how far this company has come since the IPO in 1997. Share price is up 17 times, market cap up 36 times. PE has doubled over that period. It's not CSL or CBA, but it's still best in class in its space. The CEO results presentation talked about the important three key issues that have been reiterated today: transformation of the Australian business, capital discipline, and an evolving culture that will create innovation and drive further performance.
Curiously, I don't think there's enough meaningful discussion about the elephant in the room, which of course is Ramsay Santé. I noted the words that it's been described as a self-funded covenant-like structured debt facility with no recourse to the funding group. You could have used those words 35-odd years ago with the acquisition of the first four businesses, so it's nice to see the circle coming back. Gearing and leverage is of course not new to Ramsay. Early asset acquisitions were highly leveraged, and that was the genesis of Ramsay's initial value proposition back last century, then transforming the assets with rigorous capital management and drive performance. Santé's financials show substantial revenue, an affordable price for a variety of reasons, and margins that clearly offer scope for improvement and, as I've said, leverage.
The question is, people have talked about progressing the evaluation of strategic options with Goldman Sachs and that Ramsay remains committed to optimizing shareholder returns and reviewing a range of options. You have talked about the time period of February 26. Specifically, is that going to turn into a formal process to divest Santé or acquire minorities? Does shrinking Ramsay through a sale in order to become great again help re-rate Ramsay? If you are an acquirer, is an unbinding offer coming down the tube to start that process off?
Great. Thank you for that very insightful view of Ramsay. Look, we try to manage for the long term, but we also are very conscious of the capital we're deploying. We look at the market conditions and whether we think we can get an adequate return over the medium to long term. As you would have seen at Santé, we've had very strong revenue growth based on volume growth, but the compensation we're receiving from the French government has not been commensurate. That is the options we're looking at about what we can do. We're not today declaring exactly what that is, but I should assure you that we have looked at a large number of options that are in the best interests of shareholders, and we will be coming forward with further statements in the future.
Thanks, Chair. I'd hope you'd unpack those from the interim results and make it a separate statement. Just one quick follow-up question. The annual report, a good read, lists over 600 subsidiaries, 613 in fact, and associated companies. It's a complex business, but this indicates to me there's plenty of scope for cutting complexity, simplifying processes, reducing the admin burden to earn such revenue, and lowering costs. Is this a task specifically for the new CFO? What are his short-term and long-term incentives and KPIs for reducing complexity, reducing indirect costs, and improving margins, some of which will be under his direct control?
I can say if you look at the REM report and LTI metrics about what we're incentivizing management to, it's exactly that. In terms of driving improved margins, because we've got good volume growth, revenue growth, you saw from Natalie's comments, but we must manage costs and we must get simpler to operate. Part of that is technology, but part of it is just good operational excellence across the whole network. I am delighted to see Stuart and Andrew who have joined, but that's a very big focus for us going forward. I want to stress, I mean, it's still got to have clinical excellence and great patient outcomes because we can never compromise on that as we go forward. There is enormous opportunity, we think, to run a more efficient operation. The incentive structure, as outlined in the LTI, is very much aligned to that.
Thanks.
Good. Thank you. Okay. Next question.
Mr. Chairman, we have a question from Peter Gregory, a shareholder and a proxy holder representing the Australian Shareholders Association.
Good morning.
Good morning all. Excuse me. Good morning all. David, as was just said, I'm from the Australian Shareholders Association. As you know, we're a not-for-profit organization, largely volunteer organization that is the voice of individual shareholders. Today, I have proxies from 135 shareholders representing about 217,000 shares. As was noted, I'm also a shareholder myself. I'd also point out that I think it's around about 80% of Ramsay shareholders own less than 1,000 shares. Many smaller shareholders. I expect that a proportion of those are actually Ramsay employees. We speak on behalf of the smaller shareholders.
Thank you.
I'd like to thank you, David, and the Ramsay board for your engagement with us over the years, and particularly for listening to the points of view that we put to you on behalf of individual shareholders. A question. I'm going to restate the obvious. Ramsay has been a disappointment for shareholders for a couple of years. To the question, it's recognized that our industry is changing, and that means Ramsay must adapt. We also know that Ramsay needs to deliver a better outcome from shareholders, and that means a heightened business discipline is needed. We also know that there's been a substantial change in the leadership of the company, with a number of very new and I think very talented people joining the company. Those realities are demanding masters.
It is good to see action clearly underway as delivered in Natalie's end-of-year results presentation and also in the material she has presented to us today. However, I would just like to get to the crux of the matter that Ramsay is an organization that has 90,000 employees. While I acknowledge that you had an achievement in team NPS from 15 to 58, which is a good outcome, I would like to ask Natalie specifically, if I may, how you are working to have Ramsay evolve quickly while preserving the culture of the company. I would also like to ask a couple of specific questions in how you and the leadership team are personally interacting with people on the ground in the operating theater and in ICU to really understand how people feel.
Have you, in contacting people throughout the organization, identified any particular challenges that you think need to be addressed from a people point of view to have people on board in moving this company forward?
Do you want to take it from there? Are you okay to take it there?
Yes.
Great.
Thank you for that question. I was just reflecting with Karen before we started proceedings today that the best part of my job is getting out and about with the hospital teams and hearing from them directly what's on their mind, what matters, and just hearing the great inspirational stories of what we do at Ramsay every single day. Just in the last week, I've been in WA and spent some time with the Hollywood team, but also in Brisbane in Green Slopes as well. I very much try and get out and about across our hospitals as much as I can. In terms of what I'm hearing from the team, I think very pleasingly there's a recognition of the need for us to adapt and change the way we run Ramsay to actually make it easier for our frontline team.
Our teams choose to work with Ramsay because they love the culture, they love the care that we provide, and the work that we do. A lot of our systems and our processes are very challenging for them. Our nurse unit managers spend a lot of time on paperwork. One of the priorities for us as a leadership team that we're all very committed to is actually improving our rostering system because we do employ 35,000 people in Australia and 90,000 people globally. Actually, our rostering systems are very manual. It's difficult for our teams to tell us when they want to work. It's difficult for our nurse unit managers to roster. When something happens, for example, someone's unwell or someone's gone on holidays, it's very difficult to change who's available to work.
Actually, improving that will make a big difference both in terms of reducing the time we spend on administration in our hospitals and actually creating a more attractive workplace for our team because they'll have more control over the shifts and their availability, and they can flex their hours. That is one very important priority for us. The other positive feedback that I hear from the team is actually the investments we're making in our leadership programs, particularly for our nursing workforce and nurse leaders of the future. I often try and attend those as well. We have days where we have high-potential nurses come together or our nurse unit managers come together in every state. That is really about investing in our people, hearing from them, again, what matters, and developing and growing our own leaders of the future.
It is very much a very significant priority for us to focus on our people.
Great. Thanks, Natalie. Did you have one more question?
I had one.
I can attest that Natalie is out and about a lot. Yeah.
Doesn't she take your phone calls, David?
Right.
It calls very early.
Yeah. A question for David. We see that there was a full board effectiveness review that was conducted during the year. To the extent that you can, could you share with initiatives that have been put in place to improve or enhance board performance from recommendation from that review?
Yes. Look, by all means, we did do a board performance review, and it was a very good one. The critical thing was we stepped back. We think that the board and the management team in this period of change, we really need to invest in that going forward. That was number one. We need to keep looking at the capability across the board, especially in hospital management going forward, was a really big one. The perennial one of better board papers came up, but that's sort of like Groundhog Day. I think that they were the major three ones that came up, yeah, off the record. The board is working well together. I think we have an aspiration for the company to improve, obviously, as you'd imagine, and that is an overarching ambition.
We need to knuckle down and get on with it on behalf of shareholders. They would be the big ones.
Okay. Thanks very much.
Thank you. Good. Okay. Any other questions here?
Yes. Mr. Chairman, we have a question from David Kerwin, a shareholder.
Okay. Hi, David.
Thank you. Two questions. Firstly, I'd like to commend Natalie and the board for the operational excellence. Thank you for that. For assuaging the concerns of the noisy chair squad from last year that blocked the traffic in Castlereagh Street. Obviously, you've given the nurses a pay rise, and that's great because they're happy. We couldn't have them block the Bradfield Highway.
Thank you. Thank you, David. Could you talk up just a little bit?
Sure. How's that?
About the aging people? Yeah. Great. Thank you.
Everyone heard what I said, I hope.
Yeah. No, no. I'm sure they did.
Mr. Chairman, I have two questions that are related to the Ramsay share price. All shareholders are affected by these matters. Please allow me to continue. You sure? Yeah. Okay. Thank you. Two years ago, I suggested KKR abandon their takeover bid because their due diligence unearthed terrible Ramsay events in Albury, which had vast unquantified financial risk attached. Most people here do not know what those events were, but briefly, dozens of Ramsay patients were affected, many seriously, of which five died. All were caused when the patient's bone marrow fat was forcefully injected into their bloodstream. Their own bone marrow poisoned them, which it will do. Last year, the directors all held the surgical instrument, which can cause a fatal bone marrow injection. Directors now also know that the five deaths were all linked to financial crimes allegedly committed by senior Ramsay personnel.
Regardless of any vague legal denials, actions by senior Ramsay people may be found to have led to patient harm and death. Let that sink in. KKR spent $20 million-$30 million on their DD. Of course, they walked away with their $20 billion. With our shares now in their hands, or to them in real terms, US dollar terms, down by two-thirds, they have not returned, Mr. Siddle. With the weak share price, the FIN review now lists Ramsay as a potential takeover target. Any new suitor will find exactly what KKR found and presumably make the same decision. A successful takeover seems extremely unlikely until the company is purged of wrongdoing rather than continuing to hide it. Last year, I asked directors whether they would support the ongoing cover-up of those terrible events, leaving shareholders with the potential risk.
In contrast, coming clean might clean up future DD and relieve the shareholders of that burden, put it back where it belongs. Mr. McNally's predecessor was given ribbon. David?
How much longer?
Oh, there's a question, and it's important. I think people here really need to hear it because I did ask all this last year, and I didn't get an answer.
David, I just want to be very clear. You've written to us multiple times. We've done a full investigation.
You've marked your own homework.
Okay. We have said that we found no wrongdoing.
As I said, you've marked your own homework.
I think it's not appropriate to re-prosecute it here today. If you have a question, please get to it.
Okay. I'll get to the question. Mr. McNally's predecessor was provided with written specialist medical and surgical advice after the first two deaths. The advice clearly explained the mechanism of death and provided warnings of further deaths. I'll cut to the chase because you know the story.
Look, I didn't get an answer last year, so I don't need to repeat the questioning for you. Quite right.
Okay. There are two different questions. There are two different questions. If you'd been involved in bribery with an outlier doctor before he did the unthinkable and patients were harmed or killed, would you come clean now, or would you continue to cover up to protect yourself? Conversely, if you were aboard bribery, which I'm sure most of you do, would you expose those who committed the financial crimes, which led to multiple wrongful deaths, or would you become an accessory? The first question, David, which was not answered last year, do you wish to become an accessory to past Ramsay crimes and the terrible events which followed, or will you distance yourself, force the company to come clean and help the shareholders and eventually help the share price?
Okay. David, as I said, we have done a full investigation. We've gone through everything we know, and there is no grounds for the accusation. I have nothing more to say today, and I think that it's better that we move on.
Thank you, David. I guess you and I will agree to disagree. Your investigation was not a robust investigation.
Okay. Look, David.
People.
David, I'm sorry. I'm going to ask you to take your seat because it's not appropriate to prosecute it here. We've done a full investigation, independent. There's nothing more to say. Could you please retake your seat?
Can I get a second question?
Have you got a second question?
Yes.
Is it related to this matter?
Somewhat.
There is nothing more to be said.
There is.
No, I'm sorry. I'm going to have to ask you to sit down.
I'm going to ask two questions a year. I know one last year didn't answer the question.
Okay. One very short question, and then I will answer the same way. I will let you do it. If you do not sit down, we will have to take action.
I'm happy to sit down after this question.
Okay. Just do a quick question, okay?
The following is abbreviated from a barrister's website. So-and-so has extensive experience, specialized in criminal law, representing clients for murder, manslaughter, large-scale fraud, perverse sexual offenses.
David, we need the question. It goes on.
Yep. Question? David.
How come you get a teleprompter?
David, I'm looking at you.
Okay. What's the question?
This criminal barrister is an expert in defending health crimes. If Ramsay's done nothing wrong and there's nothing to hide from the courts, I wonder why they chose an expert like this from the thousands of barristers to represent them at an inquest. Will the current board instruct their expert criminal barrister to allow the truth to prevail when the inquest resumes in Albury? Will they instruct her to deceive the victim's families, mislead the young coroner, and pervert the course of justice?
Okay, David. Is that the question? Will we be instructing anyone? Is that the question?
That'll do.
Okay. Thank you. We have taken action. We've got independent advice. We've written to you. The matter is closed at the moment. Thank you very much.
You're right. It's closed for the moment. Thank you.
Thank you. Good. We'll now move ahead. Okay. Next question.
Mr. Chair, we have a question from shareholder Peter Scott.
Okay. Sorry. Could you repeat your name again, please?
My name's Peter Scott. I represent Aardvark Tasmania Corporation, limited shareholder.
Okay. Great. Nice to have you here.
Yeah. Thank you. Nice to see you all. I found your presentation very positive but somewhat vague. The share price for Ramsay across the last five years has declined by around 45%. The share price in the last year has declined by about $4. An 80-cent dividend is no way it compensates for that loss of shareholder value. My question to the board is whether you will implement short, medium, and long-term finite measurable goals in your reporting to allow shareholders to understand your plan for recovering the share price. When I say short, I mean 0 to 1 year. When I say medium, I mean 2 to 5 years. And when I say long-term, 5 to 10 years.
Thank you. Yes, we understand the share price has declined, but the industry has changed a lot. Natalie took you through the lead indicators that we have put out there, which I am sure that she will continue to update you on. We have set our long-term ambitions in the LTI. If you refer to that, you will be able to see exactly where we think we are heading. We understand your desire as we share it as well.
I would just supplement my question by saying that we need to see a record of your measurable outcomes against your LTIs or against that short, medium, and long-term plan so that shareholders can review performance from the board across the short, medium, and long term.
You will see the achievements against the LTI because that's how we pay out.
Thank you.
Great. Good. Thank you.
Mr. Chair, we have a question from shareholder David Kingston representing K Capital.
Yeah. Morning, David.
Good morning, Chair. I'll change my comments because there's already been a lot of comments on share price, so I won't repeat that.
We don't need to be reminded about it, but we take the point.
I'm very happy to be flexible. I'll start with a positive, Chair. This company has been an outstanding Australian icon, as Michael Siddle knows. It's had an extraordinary performance at the start of the 2000 period. In fact, it went up in share price 60 times, 60 times from AUD 1 in June 2000 to AUD 60 in June 2015. That's the hurdle for the future of 15 years, Chair.
It's a big ambition that we have from here. Yes.
It was a remarkable period, but it set this company up as an icon in the markets. Look, clearly what's gone wrong, Chair, is mainly the offshore expansion. I'm not going to go into Santé much, but it has debt. You own 53% of it. Its share price has fallen a lot. Your investment is now worth less than AUD 1 billion. It's a real positive that the board has commissioned Goldman Sachs to do the review with the update in February 2026, only a couple of months away. The resolution of Santé is so positive. It's part of the reason, Chair, you won't know this. The stock is up 10% to date.
Thank you. We are delighted, but we still have a lot of work to do, David. Yes.
Some good news. Let's cut to the other issues. It's not just Santé. After you didn't acquire Spire in 2021 in the U.K., you bought Elysium for AUD 1.4 billion enterprise value from private equity. Now, I've got a lot of respect for private equity, but it's really quite dangerous to buy an asset from them. That asset that you paid AUD 1.4 billion for is now delivering EBIT of AUD 22 million. There has been a large impairment in fiscal year 2025. Clearly, Santé and Elysium are a real problem. The second challenge, Chair, obviously, through no fault of your own, I totally accept that Australian hospitals are in a different era. They're hard. Labor costs have gone up. A lot of costs have gone up. The revenue growth hasn't matched it. That is outside your control. That is clearly a factor for the reduction in share price.
I also note that the company keeps on spending a huge amount of CapEx. Look, again, on the positive, I'm being positive today.
Thank you.
The major part of Ramsay's value remains the higher quality Australian hospital operations: 47 freeholds containing 6,700 freehold beds, 28 leaseholds. The reason you're in this position, unlike the Healthscope debacle, is you own the freeholds.
We do.
Well done on retaining the freeholds. My first question, Chair, I've got two questions. Look, you joined in November 2017. You became Chair two years ago. Just be interested in what do you think the lessons that you have learned from the problems overseas, in particular, Santé that was initially bought in 2014, but it's declined in value significantly over your period, and secondly, the acquisition of Elysium because it has meant that the share price over your board duration has fallen by half. I think the big lessons that were within your control were the acquisitions and the growth overseas and the management overseas. Appreciate your thoughts on that. Thanks, Jim.
Great. Firstly, thank you for those observations. I think they are on the mark, really. What have we learned through Santé? Santé and Elysium are different. I think the whole proposition of Ramsay buying hospitals offshore was we believed that we could leverage our hospital expertise here into other countries. The truth is that they are very different regulatory environments, and therefore you have a different payor like the French government or the NHS in the U.K. While we've had very talented people and execs here from the U.K., our ability to drive leverage across nations has not been as strong as we originally thought. That's been the big learning. I think the U.K. operation is performing well. As you know, the French economy is not strong. Politically, it's in a dire strait. We have been, unfortunately, the recipients of a very difficult environment.
There is not much we can do about that except we have to go and fix the business and make it run as properly as we possibly can. Our ability to leverage internationally has not been proven out. Elysium was slightly different. When we bought Elysium, that was that period when mental health was seen as a growth factor across the sector. The demand statement we saw there was a lot higher. That has not proven out to be the case. Mental healthcare has changed radically differently. It has gone more from acute care into the community. We are now sitting on an asset where volume is not as strong as it used to be, and NHS has changed as well. Nick has been actively working on that. That has been a strategic misstep in that sense.
We are now, as Natalie said, working hard to get the cost base under control and get that business working as well as it possibly can. That would be the two things that we've learned from it.
Thank you, Chair. My second question relates to either yourself or the auditor. In the accounts, Chair, you have AUD 6 billion of goodwill. That's broken down to Australia, AUD 1.2 billion. That's fine.
Yep.
The goodwill in Australia is much more than that. That includes pharmacy. In the U.K., goodwill is shown at AUD 1.6 billion, which I'm concerned about. France is shown at AUD 1.4 billion, I'm also concerned about, and the Nordics at AUD 1.7 billion. Noted that in FY 2025, there was an AUD 248 million impairment of the U.K., which is mainly Elysium.
Right.
Noted also, from the auditor's point of view, the audit report, risk report states that impairment testing incorporated significant judgment and estimates and is inherently subjective. I accept that. Valuation is not a science. It's an art form. A question, Chair, is are the directors and the auditors comfortable on these very substantial amounts of goodwill for offshore, given that offshore is the Achilles heel? Santé is poor. Elysium is really bad. The U.K. acute hospitals are okay. It just seems a huge amount of goodwill for some assets that are seriously underperforming. Either the auditor, if they'd like to comment, or yourself, Chair.
I mean, I can comment, and then Ryan may want to give an independent view. Look, we look at carrying value in a lot of detail, both as the bottoms up, and we look at it in the audit committee, and Karen may want to comment as well, then review it with the board. We look at our future projections of the business, where the profitability, the cash generation capability, our ability to service debt. Yes, it has been, I think, rigorously considered, and we are comfortable where we are today. Do we want the businesses to perform better? Yes, we do. That would be it. I do not know, Karen, do you want to make a comment at all?
Chair, they're the right comments to make. We spend a lot of time looking at the underlying corporate model, not at the strategic initiatives we're taking, but the underlying corporate plan for the entities and test the assumptions. To David's point, where we stand today, they're supported in the 30 June numbers.
Look, I'll just add, though, that I think auditors, obviously, it's the board and the directors who prepare it. The auditors do a review. It does seem very anomalous, Chair, when the market cap today of Santé is AUD 1.8 billion, and yet the goodwill is significantly above that. I know that's going to be fleshed out in the Goldmans review and the decision by the board as to what to do with Santé. In my view, the goodwill stands out as a real anomaly. Maybe you can have a look at it for next year. Thank you.
Thank you, David. As you know, the shares are traded there, but it is a very illiquid stock, as you know, in France. Yes, I take your point. Ryan, do you want to add anything? Just for comfort, because it is very important to us. We do not.
Yes, thanks, David. I think the comments you made are spot on around the process that we go through. From an audit perspective, we obviously look at management's forecast cash flows, the assumptions that they use in those models. We use our valuation experts, and we use teams in basically France, the U.K., and in Australia to do that. We have had a robust process with the audit committee and management to work through the valuations, and we are comfortable with the conclusions that have been reached.
Okay. We will keep an eye on it, I assure you. Okay. Okay. Any more questions? Yeah. Another question on the right here.
Mr. Chair? We have a question from two shareholders who would like to address the mic together. Is that okay?
Yeah. Okay.
To a shareholder.
Great. Please, yeah, come on up.
It's Diana Hayes and Juliet Steptoe.
Which hospital are you from?
Well done.
Yeah. Are you going to say, "Great to see you"?
Good morning, Mr. Thodey. My name's Diana Hayes. I'm from St. George Private. I'm a clinical nurse specialist and a long-term Ramsay employee of 25 years. And I'm a Ramsay shareholder as well.
Great. Good. Thank you.
Hi. My name's Juliet Steptoe. I'm a registered nurse at Northshore Private ICU. I've been with Ramsay 17 years, and I've been nursing 33 years. I'm also a Ramsay shareholder.
Great. Great to have you here. Fire away with your questions.
It's too bad. It's a shame our friends couldn't be here today, but they're all busy working.
Good. Yes. There was more of you last year as well.
Question. As the largest private hospital provider in the country, Ramsay plays a significant leadership role. Ramsay's purpose, people caring for people, recognizes the importance of investment in people like the future of the nursing and midwifery sector. However, we know that student nurses and midwives, the future of the health sector, face significant poverty placements by having to complete unpaid clinical placement hours in hospitals. This places the future of our sector under financial stress from lost wages, travel, and accommodation costs, which leads to many nurses and midwives dropping out of their studies and contributing to the nursing and midwifery shortage.
Our questions are, what steps is Ramsay taking to address the issue of unpaid placements and financial stress for student nurses and midwives? Also, would you consider supporting the Australian Nursing and Midwife Federation in lobbying the federal government to improve paid placements for student nurses and midwives across Australia?
Right. The first one was the rectify the unpaid what? What was that?
Yeah. When the student nurses come to do their placements in the hospitals, and they're quite substantial, they have to sometimes come for a month or six weeks. All of this work is normal full-time hours, and it's unpaid. A lot of nurses really struggle because they have to drop their paid jobs to come and do the placements, and they can't get the qualifications without doing the placements.
Okay. Look, I'm going to have to take that one on notice unless Natalie's got a particular—yep. Okay. Look, we'll take that one. We'll come back to you on that one. In terms of lobbying, the government would be very happy to come with you on that. No problem at all because, look, we feel very strongly our nursing community is the heart of Ramsay. Without you and our great midwives, that's where care is provided. AI is not going to replace that ever. We still need people next to the bed. Look, we understand cost of living is going up. It's difficult for many people in Australia, including our staff. We will continue to look at what we can do.
As you know, last year, we did come to an arrangement, and we will continue to keep that dialogue open and active going forward. Yeah, so.
Yeah. Thank you. We'd appreciate the support if we are going to see something like that.
We thank you for everything you do every day and all your colleagues, and give them our best regards.
Thank you.
Thank you. Good. All the best.
Mr. Chairman, we have a question from a shareholder, Mr. Brian Allison.
Good morning. Also representing my company, Logical Thinking Proprietary Limited. When I heard about the problems at Healthscope, my first reaction was that this would be an opportunity for Ramsay. I’d appreciate any information you could give on your considerations of whether you had opportunities there or if you didn’t, why you felt that they weren’t an opportunity.
Okay. I'll get Natalie to say a few words. We have been actively involved with the receivers at Healthscope. We are very conscious to spend capital wisely where we can get a return. As you know, many of those properties have been sold, and therefore some of the rentals are very high. There is also a consideration as to where they are based in terms of ACCC competition. We have been actively involved in the process, and it is still ongoing. Natalie, do you want to mention anything?
Yeah. I think when I've been asked this question, all we can really say is we're very much focused on our own business and making sure we strengthen it. We will always look at opportunities to acquire attractive hospitals if they're in the right catchments and the sort of hospitals that we run the best, which are the hospitals often next door to a public hospital that are doing complex therapeutic area work. We will always be very disciplined when we look at any of those opportunities. Of course, we're always out and about trying to attract more doctors to Ramsay Hospitals.
Yeah. Besides the hospitals, we have wonderful hospitals and great operating theaters that many doctors are free to use.
Yeah. I just thought, particularly with our reputation, that we'd be able to run it maybe a lot better than they did.
Yeah. Thank you. It is great credit to Natalie and the team and the work they do. We do run good hospitals. Okay. I think that's all questions from here. We've got a couple of questions from people who are watching online. Henrietta.
We have a question from Mr. Timothy Vishenden. He has asked, are there any non-performing hospitals or services that are not meeting the company's cost of capital and are targeted for divestment or closure?
I think the best way to answer that is we continue to look at return on capital against all our operations and taking appropriate action. Ongoing work.
Last question is, could we address why voting is not available to online attendees? It is an ask for a hybrid AGM, David.
Could I ask the Company Secretary to answer that one?
Can I say we will continue to monitor market factors? We are delighted to welcome shareholders in person this year and also make available, obviously, the webcast so that people can see.
Great. There you are. That's the answer to the question. Thanks very much, Henrietta. As there are no more questions, I think we should move to the next item of business. Really, the first item of business on the agenda is a consideration of the financial report of the company and its controlled entities and reports of directors and the auditor for the financial year through to June 2025. While there is no resolution on this item, there is an opportunity for shareholders to ask questions on the council. I know that some people have already asked questions. We do have Ryan Fisk here from Ernst & Young and Siobhan, who can answer any questions, any detailed auditor, accounting type questions. Of course, we have Karen, who is the Chair of the Audit Committee. Great to have you here, Ryan.
Anyone here have any questions on the accounts at all? With that, I'm going to move right ahead. Anything online at all?
None.
None at all. We will just note that item. We will move on to the next item. The second item is the adoption of the 2025 remuneration report. As we covered in the report in 2025, Ramsay Health Care made a leadership transition and a strategic reset to position the company for longer-term growth. We have talked about that this morning. We also pledge changes in the structure of what we call the short-term incentive and the long-term incentive. The board has worked to align the remuneration framework and the outcomes, performance, which we talked about before. We hope that it is aligned to shareholder value creation. If you have any questions at all on the remuneration report, please make your way to the microphone or raise your hand if you have a problem. We okay. Yes.
We have a further question from shareholder Malcolm McCombs.
Great. Good.
Thanks, Chair. Do we have the proxies available for this resolution?
We will show them shortly.
We do.
Yeah. We do. I sort of know there'll be somewhere about 80% in favor and 20%, roughly around that.
Are they coming up now?
Yeah. Coming up now. They should be. Yes.
I'll start my question, if I may. The remuneration report received a negative recommendation from ISS. Could you share with the meeting the reasons for this negative report? Does it relate to your comp or to the CEO or other KMPs in relation to their comp or short-term or long-term incentives? Also, could you please advise the meeting what you intend to do in response to this negative review, if anything?
Yeah. Do you want to go? I've been talking a lot. I'll let Alison because there is a good answer.
Yeah. The primary reason for ISS's vote was that they took issue with the second half STI to the outgoing CEO. Unfortunately, we were not able to talk to them. I think it is a misunderstanding about the nature of that payment. If I explain that the remuneration of the CEOs last year was very much in the two halves. In the case of the outgoing CEO, he was a KMP for the first half, and his remuneration was set on CEO metrics. For that half, we took into account the write-down on Elysium. As a result, his whole STI for that half was taken to zero. In the second half, he was no longer a KMP, but his main role was in helping the transition for Natalie and in particular, continuing as chair of Ramsay Santé.
All of the STI component in that second half was related to those transition metrics, in particular, the ongoing relationships and handovers within Sonte. It was his standard STI, but on a different payment, on different metrics, which reflected what was most important to the business in terms of that handover. I think because he was no longer a KMP, we actually did not need to put that into the REM report, but we did. For the proxy advisors who we had conversations with and investors we had conversations with and explained this, they supported that decision, but ISS did not.
Thank you. Right. Let me just add a bit. There was one proxy advisor who voted against us who did not talk to us either. I will leave that with you.
It's an extraordinary phenomenon.
Yeah. Yeah. It is extraordinary. Anyway, it is what it is. We feel very comfortable that we are aligning executive remuneration with shareholder outcome. LTI has not paid out for four years, four years. We did make a decision to have Craig to stay on because Santé needed attention. We wanted Natalie to get across the business. We make no apology for the structure we put in, and we think it is absolutely aligned with shareholder values. That is my opinion. Okay. Righto. Any other questions here? Any questions online? On that, thank you, Henrietta. Is there no more questions? Please make sure you cast your vote on that blue voting card and the proxy results. We put the proxy results up as we have the question come up rather than at the end.
Now we move on to the third item, which was the election of directors. The first director to be considered for reelection is Alison Deans, your Chair of the People and Remuneration Committee. She was last elected in November 2022. As I said before, on behalf of the board, I strongly recommend a vote in favor of Alison's reelection. I'll now ask Alison to say a few words. Alison.
Thank you. Oh, I'm short.
Yes.
Thank you, David. Good morning, ladies and gentlemen, and thank you for the opportunity to talk with you today. It has been a privilege to serve on your board for the last seven years and more recently as the Chair of People and Remuneration and a member of the Nomination and Governance Committee. As you've heard today, there is no question it has been a challenging time. The health industry globally has navigated the intense disruption of COVID, the longer-lasting impact of staffing and cost pressures in the industry, and ongoing tariff challenges across all markets. As we know, Ramsay has certainly not been immune to these dynamics. Despite this, I remain excited about the potential for Ramsay. I also believe that we are clear on the strategy for realizing that potential and well on the way to building the leadership team we need to deliver.
Natalie and David laid out the strategy in their addresses, and if reelected by you, I'll continue to support execution of this strategy with a particular focus on building the people and technology capability of Ramsay. Doing this will build on the three consistent themes of my career: leveraging technology and innovation for commercial impact, navigating uncertainty, and the importance of people and purpose in delivering outcomes. Over the last 35 years, I was the first Managing Director of eBay in Australia. I've been the CEO of two venture capital firms, and I spent eight years with McKinsey focused on technology and innovation and building growth organizations. I also currently serve on the board of Cochlear, excuse me, a purpose-led and technology-enabled healthcare business, as well as the board of Kalix, an Australian company leveraging technology to decarbonize heavy industry.
I serve on the investment committee of Main Sequence, investing in Australian deep tech companies. In each of these environments, I've learned how to leverage technology to deliver better customer outcomes and better business outcomes. I've experienced how to navigate high levels of uncertainty, and I've also experienced the role of purpose, leadership, and culture in driving innovation and higher performance. I believe these perspectives will continue to be valuable to Ramsay as we build towards Ramsay 2030. I can confirm that alongside my other roles, I continue to have plenty of time to diligently exercise my role as a director of Ramsay Health Care. I'd relish the opportunity to contribute to this ongoing development of this remarkable business and serve as your representative on the board. Once again, thank you for the opportunity to talk with you today.
Thank you, Allison. I am going to invite some questions in a moment. Before I do, I just want to mention that we did receive feedback prior to the AGM. I think it was from ASA, from Peter, about the workload of both Allison and Craig, who you will hear from in a moment. I would just like to say that we take very seriously the workload about preparation of directors coming in, their contribution to the board. If there was ever, in fact, I mean, I do not even need to say anything. They take their responsibilities very, very seriously. A part of those reviews we talked about is that we look at the external commitments. Before we accept any reappointment, we do go through this with a lot of detail.
I just wanted to reassure you that all our directors are committed to our company and take their duties as director very seriously, and we take that very seriously. Are there any questions for Alison? I'm sorry, Peter, if I took your thunder. Yeah. Okay. Sorry. We do take it very seriously when I did with your unit. Okay. Any other questions? Yeah. Over here.
We do have a further question from David Kingston.
Okay. Hi, David. Yeah.
Thank you. Look, I've had the pleasure of working with Alison a number of years ago on a transaction for a company controlled by the great Kerry Packer. That's good training for both of us. She's got an outstanding CV, so clearly she will be reelected comfortably. I'm sure she can make a great contribution. My question, Chair, is to Alison: bearing in mind you have worked for one of the great corporate guys in Australia, the great Kerry, who was certainly very interested in dollars. He did love the dollar. Could you just comment from your perspective as to whether Ramsay has got the balance right? Ramsay has to provide outstanding healthcare, otherwise it won't have a business. It also has to provide a reasonable return to shareholders.
Given your role with Kerry Packer and others, given your role in this company, just be interested in your views about whether you think Ramsay does have the balance right. Bearing in mind what I said before, that when it was controlled by Paul Ramsay, the entrepreneur, it shot the lights out, up 60 times in 15 years. Since then, it's gone sideways to down. One of my concerns is whether the balance is right. I'm sure the healthcare is fantastic, but certainly the shareholder value hasn't been great. Appreciate your thoughts, Allison. Thank you.
Sure. It's good to see you, David. It's been a very long time. As I've touched on in my short address, I've had the good fortune to work in organizations and perhaps sort out organizations where it is less of a balance and more of a reinforcing cycle. That actually, to get shareholder returns, you have to deliver extraordinary results for the customers in all their forms. To do that, you also need extraordinary people. That's everyone from a leadership team through to the front line who we saw today who are absolutely the ones delivering care. I think there is, call it the balance or the reinforcing cycle, very much front of mind at Ramsay.
I think when Natalie talked it through her three priorities, they're kind of reflected into those three, the role of purpose and people sitting in the third and the Ramsay way, but evolving it so that it is very much about reinforcing commercial outcomes. Also, when I look at technology, I've always often found that technology can be tricky, but actually it's the adoption of technology and making sure that it has commercial returns, which again will reinforce and create a positive cycle for reinvestment, which is really important.
Thanks, Allison. I won't say more. Okay. Are there any more questions, anything online? Okay. You can see the incredible vote, 98.9% for Allison. That's the proxy result. Congratulations, Allison. Our second director to be considered today is the reelection of Steven Sargent. Steve is Chair of the Risk Management Committee and member of the People and REM Committee. He was last elected in November 2022 as well. On behalf of the board, I strongly recommend a vote for Steve's reelection. Over to you, Steve.
Thanks very much, David. Good morning, ladies and gentlemen. This morning, I'm seeking your support for reelection as an independent non-executive director of Ramsay Health Care. I joined the Ramsay board in November of 2021 and serve as Chair of the Risk Management Committee and as a member on the People and Remuneration Committee. I am also on the board of Ramsay Santé, which is listed on the Euronext. In addition to my role with Ramsay, I also chair the board of Nanasonics Limited, a leading medical device company focused on infection prevention. The experience I bring to Ramsay has been built over 46 years across multiple industries and multiple geographies. I spent 22 years with General Electric, leading businesses in the United States, Europe, Asia, Australia, and New Zealand, and also across the healthcare sector, energy, and financial services sector.
As a director, my focus is on bringing strong operational and people leadership grounded in a deep understanding of how to drive performance in complex, globally dispersed organizations. I am passionate about ensuring that our people are engaged, aligned, and inspired by Ramsay's purpose and the important role we play in healthcare. I also bring experience helping organizations navigate significant industry change and disruption, experience that is particularly relevant to Ramsay as it continues to evolve and lead in the healthcare transition as we go through this period of change. My work across several public company boards has strengthened my commitment to good governance, disciplined risk oversight, and a culture of accountability, principles I apply actively in my role at Ramsay. The healthcare industry is certainly at an inflection point, full of both challenges and opportunity.
I am encouraged by how Ramsay is positioning itself for the future and remain energized and committed to contributing to its continued success. Thank you for the opportunity to address you today. With your support, I would be honored to continue working with my fellow directors and the management team to deliver sustainable value for our shareholders, our patients, our doctor partners, employees, and the communities we serve. Thank you.
Thanks, Steve. I share your ambition. Are there any questions from the room? Are there any questions online? Okay. You can see again, the four proxy votes are up there. We are delighted. Congratulations, Steve, that you'll be with us again. I will say before I introduce Craig, the industry continues to have a lot of changes. We've not had a period of inflationary growth like we've had in the last four to five years. That has weighed heavily on us. Anyway, the third director to be considered for election is Craig Drummond. Craig joined the Ramsay board in July 2025 and is standing for election today, not reelection. On behalf of the board, I strongly recommend a vote in favor of Craig's election. I'm going to ask Craig to come and say a few words. Craig.
Thank you, Mr. Chairman. Good morning or good afternoon, ladies and gentlemen. I was fortunate to have been appointed to the board of Ramsay Health Care on 1 July 2025. Today, I'm seeking your support as I offer myself for election to the board. I do so on the basis that I have the time available to work diligently for shareholders in a thoughtful and collaborative way. Furthermore, I believe that my experience and skill set will be highly relevant to Ramsay. In particular, my 30 years working in financial markets with two large US investment banks and eight years as a public company executive are most relevant. This experience culminated in me becoming the Chief Financial Officer of National Australia Bank and Chief Executive Officer of Medibank Private.
Those roles gave me considerable insight into large public company management, governance, and in particular, the Australian healthcare system and its challenges and opportunities. Subsequent to my executive career, I've also joined two other public company boards in 2021, Transurban and Australian Foundation Investment Company. Both organizations have honed my skills as a non-executive director and now enable me to bring additional diverse insights to the board of Ramsay. Should I be fortunate to be elected today to the Ramsay board, the specific areas of expertise that I will bring to the company will include financial, customer, risk management, and healthcare insight, along with extensive regulatory and capital markets knowledge and connectivity. Thank you for considering my appointment to the Ramsay board, and I look forward to your support.
Thanks, Craig. Your experience is very valuable on this board. Questions in the room? We have one over here.
Yes. We have a question from shareholder David Kingston.
Yeah.
Keep on raising this.
You're doing well, David. Look, obviously, Craig's got an outstanding CV. So again, we'll be reelected comfortably. I'm just interested in a couple of insights from Craig. One of the challenges for Ramsay is that it's a for-profit, and it's competing against hospital operators, a lot of whom are not-for-profit. The biggest single expense is wages, labor. The not-for-profits don't pay payroll tax, which is a huge advantage to them. They have multiple other tax advantages. I just appreciate your insights given your excellent experience. Also, you've been on the other side of the fence with Medibank Private. What are your thoughts about how the for-profits can actually go in Australia? Can they return a good ROIC? Will more Australian hospitals be sold to the government, like Healthscope's Northern Beaches? Will the not-for-profits take a larger market share?
I just appreciate your insights into whether you see that the government will support for-profit hospitals in Australia and whether there will be any improved position from the health insurers. The government has massively supported the aged care industry. You have got an anomaly, Chair, where Regis has shot the lights out because of the government's support. In my view, anomalously, the government is not supporting the hospitals. With your background, Craig, appreciate your thoughts on those industry issues.
Thank you for the question. You've asked me a question that we could speak to for an hour or so. Let me just make a couple of observations. Firstly, 70% of elective surgery is done in the private system. There is absolutely no doubt in my mind that we have one of the best healthcare systems, a mixed healthcare system in the world. It is sustainable only because we have a mix of public and private. I have no doubt that the government would like to see very strongly, both sides of the House would like to see a strong public and private system. I think the most important thing that we continue to do is put the patient first, patient, doctor first.
If we do that and give great clinical outcomes and we manage our assets appropriately, efficiently, effectively, I have no doubt that we will make a sensible return and an acceptable return on our capital.
Thanks, Craig. Thanks, David, for that question. Look, it is something we think about a lot. I am pleased to say that we work diligently. Natalie spent a lot of time in Canberra working with the minister and the department. Next question.
We have a question from Malcolm McCombs.
Great. Good.
Thanks, Chair. Comment to Craig. Hi, Craig. Congratulations on your role and your new appointment. That's a phenomenal 99.6% result. I'm voting in favor of you as well.
Thank you.
You've known me for an awfully long time as a distinguished finance person with a long career in competitor organizations and a best-in-class analyst. And most importantly, you've had a successful second life as a CEO and now the AFL Commissioner. Congratulations on that. Specifically, are you involved in the Santé review, given your deep experience in organizations during transition?
As a member of the board and a collaborative member of the board, I'm absolutely involved.
Is there a subcommittee specifically looking at this issue that you're involved in?
I think the Audit Committee has had a very active, but the board has as well been very active in that review.
Thank you.
Thank you. Nice way of checking how we're going. That's good. Okay. Are there any other questions in the room? Any other questions online? Okay. With that, Craig, welcome to the board officially. Great to have you on. And thank you for your contribution already. Okay. We come to the last item, which is the proposed grant of performance rights to Managing Director Natalie Davis. If any shareholders present would like to ask a question on this item, please make your way to the microphone. It is pretty standard. Okay, David, you don't need an introduction. You can go straight for it. Yeah.
Thank you, Chair. Look, I'm fully supportive of Natalie. I think she spoke well. I think it's a perfect time to have a change from previous CEO. Did a good job, but he'd been there for a while. To be frank, women are taking over the world, Natalie. Head of the Reserve Bank, head of Coles, head of Woollies, head of Qantas. There's no jobs left for guys. Look, I think she started well. I just have a question on the performance right. It is a reasonably complex formula. Half of the performance rights, AUD 2.7 million, will be based on relative TSR based on ASX 100. 50% will vest if Ramsay's performance is at the midpoint of the ASX 100 total shareholder return. The second half, based on number one, achieving a positive growth in three-year return on invested capital.
Secondly, earnings per share, compound annual growth of 8% per annum. If you achieve that, 8% is the midpoint, you will get 50% of the LTIs will vest. My question, Chair, is that over most recent years, Ramsay has not delivered on either of those two tests. If the previous performance continued, Natalie would receive no LTI benefit. I'd just be interested, maybe, Chair, if Natalie could comment. Are you confident that you will receive some of the LTI? From a shareholder's point of view, there is total alignment. I think there's nothing better for shareholders than if the chief executive does receive the full LTI, or at least half. I think the 50% tests are quite challenging for you to achieve, Natalie. I'd just be interested in your thoughts. You're obviously involved in negotiating that.
Yeah, I think it'd be fantastic if you get them. Thank you.
Thank you, David. The big question, I think, whether I get Natalie to answer this one or not. You are okay to answer it? I am happy to answer it.
I am okay to answer it. We obviously considered this issue together with the board. I joined Ramsay because I saw an amazing Australian company that had so much potential. That is what I'm excited about. Together with the leadership team, we've developed the corporate plan for the next five years of where we want to take the company. The LTI is based on what we think we can achieve together. I do think it's actually a bigger stretch than even you've outlined because we've increased to get to that 8-13%. It used to be lower. I enjoy transformation, and I see the potential in the company. We are here as a leadership team to deliver that.
Thank you, David. We do have a lower base from where we're starting, which is the other thing to consider. Okay. Are there any other questions at all in the room? Online? Wow. Okay. As there's no more questions on this thing, please make sure you do cast your vote. The proxy results are shown on the screen. I think we're all good on that. As I said, just make sure that you do fill out your forms. That concludes the meeting. Thank you for your time. Thank you for your questions. We, the board and the management team, have a lot of work to do, and we're looking forward to doing it. We've got a great team. We're delighted with the new executive team. We appreciate all your support. Thank you very much.
Please join us for a drink if you've got a moment. Thank you. That's the end of the meeting. Thank you.