Good afternoon. I'm Scott St. John, the Chair of Fisher & Paykel Healthcare, and welcome to the 2024 Annual Shareholders Meeting. A warm welcome to all of you here in the room at our East Tamaki campus, and online via our virtual meeting platform. You are able to vote and ask questions both online and in the room today. For those online, please refer to the online portal guide for instructions. If you need assistance, phone the MUFG Corporate Markets Helpline on zero eight hundred two hundred two two zero. So first, some housekeeping matters for those of you who are in the room before we move into the formalities of the meeting. Bathrooms are located outside this meeting room to my left. In the event of a fire alarm, please follow the instructions from members of the F&P team who are wearing lanyards.
They will guide you to the assembly areas in the car park directly ahead of me. On the information conveyed to me, I declare that a quorum of shareholders is present, and the meeting has been duly convened. I would first like to introduce your directors to you. Joining me here is Managing Director and CEO, Lewis Gradon, Michael Daniell, Pip Greenwood, Lisa McIntyre, Graham McLean, Neville Mitchell, and Kate Simpson. We have our future director, Charlotte Walsh. Give us a wave, Charlotte. Over on my left. The minutes of the last annual shareholder meeting have been approved by the directors and are available for inspection at the back of the room. The notice of meeting, including the explanatory notes, has been circulated to all shareholders, and I intend to take it as read.
First on the agenda is the chair's address, in which I will provide some comments on our recent performance. I will also invite each of the chairs of our subcommittees to offer their remarks as part of this. Later in the program, our Managing Director and CEO, Lewis Gradon, will provide an update, including speaking in more detail about the trading update, which we issued to the market on Friday. After addressing any questions on the financial statements for the year ended 31 March 2024, we will move to the resolutions contained in the notice of meeting. After each resolution is proposed, you will have the opportunity to ask questions with respect to that resolution. Those attending in person may also do so by raising your hand, and we will bring you a microphone.
Online participants can submit questions at any time prior to voting on the resolution by using the online question function. The board will first address any questions in the room and then turn to those of you online. I'd like to begin my address by thanking our people, our customers, and our clinical partners. Approximately 20 million patients were treated with Fisher & Paykel Healthcare products over the last year. Behind that number is a cast of thousands, working tirelessly to get our products to where they're needed and administer care to patients. As a board, we applaud your efforts. We announced a pleasing performance for the 2024 financial year back in May. We saw a return to the trajectory of growth following several years of changing demand patterns.
Full-year operating revenue was NZD 1.74 billion, up 10% over the prior year, or 8% in constant currency. Reported net profit after tax was one hundred and 32.6 million, impacted by three abnormal items: the valuation of the company's land at Karaka, the removal of tax deductions for the depreciation of buildings, and the voluntary limited recall of Airvo 2 and the myAirvo 2 devices manufactured before August 2017. Underlying net profit after tax, which excludes these abnormal items, was two hundred and sixty-four point four million, a 6% increase over the previous financial year or 5% in constant currency. Hospital Product Group revenue for the full year was NZD 1.1 billion, a 6% increase compared to the previous year or 5% in constant currency.
We saw consumable sales return to patterns we were accustomed to seeing prior to COVID. HomeCare Product Group revenue for the full year was a record NZD 652.3 million, 18% higher than the previous year or 16% in constant currency. The Evora Full Mask has continued to support growth in North America and in Europe. There is positive momentum on the new product front across both product groups. Our investment in R&D continues to bear fruit. In the hospital space, we've recently launched the Airvo 3 and the 950 systems into the U.S., and we gained FDA approval for our new Optiflow Duet nasal cannula. In home care, our mask portfolio has been strengthened by the additions of the F&P Solo and the F&P Nova Micro.
We've made good headway in our efforts to return to our long-term margin targets. Underlying gross margin, which excludes the provision for the product recall, was 61.6%, compared to 59.8% a year earlier. Lower freight costs, manufacturing efficiencies, and pricing all contributed to this gain. Returning to 65% gross margin and 30% operating margin remains a priority for the business. I have confidence that we will get there through our normal behaviors of continuous improvement, and I note the board had a fascinating presentation on this just a couple of hours ago. We have a demonstrable track record of steady margin gains prior to the distortion we saw through the pandemic.
We are determined to achieve this recovery in a way that does not divert resources in the near term, nor compromise our long-term growth aspirations. This is a balancing act, and I am pleased with our progress so far. The board approved a dividend of NZD 0.235 per share for the second half, which was paid to shareholders on the tenth of July. This took the total dividend for the 2024 financial year to NZD 0.415 per share, an increase of 2% over the previous financial year. There were a number of significant non-financial milestones achieved through this year as well, and I'll call out two in particular that relate to our infrastructure expansion. We formally opened our third building in Mexico last September, and we were privileged to be there for that occasion as a board.
And just last month, we received final regulatory clearance for our manufacturing facility in Guangzhou, China. The site is now operational. Environmental and social responsibility remains firmly on the agenda at a board level, and we have created a dedicated session in every audit and risk committee meeting for discussion on these matters. We have continued to expand our reporting in this area, and many of you may have seen our first climate-related disclosures in accordance with the External Reporting Board's new standards in New Zealand in our annual report. In these disclosures, we identify climate-related risks and opportunities for our business. Coming back to the present day, we updated the market on Friday with our latest line of sight for the 2025 financial year, and I'll leave Lewis to comment on that update in more detail shortly. Turning now to your board.
We farewelled Donal O'Dwyer at the end of December, following eleven years of incredibly valuable service to Fisher & Paykel Healthcare. We welcomed Graham McLean to the board in October last year, and he has brought with him significant experience in the medical devices industry, including more than a decade and a half in regional leadership roles with Stryker, and he will speak to his election later in the agenda. We also welcomed Charlotte Walsh into the fold at the beginning of this calendar year as part of the Future Directors program. We remain supporters of this initiative, which offers emerging New Zealand directors an opportunity to develop governance experience. More recently, we announced the appointment of Mark Cross to the board with effect from one October twenty-four. Mark is a global strategic thinker with strong financial acumen.
He is currently chair of both the Chorus Board and the ACC Investment Committee, while also serving as a director of Xero. Mark's appointment will bring the board up to full strength, given my departure. As indicated back in March this year, I am retiring from the board of Fisher & Paykel Healthcare at the close of this meeting. The highly capable Neville Mitchell, who is at the end of the table, has been selected by the board to become chair. Neville has been a director since two thousand and eighteen and has led our Audit and Risk Committee since two thousand and twenty. He has outstanding credentials, including more than 20 years as chief financial officer at Cochlear. He is currently on the board of Sigma Healthcare and Sonic Healthcare, two large listed companies.
I have every confidence in his ability to lead the board going forward. I'm incredibly encouraged by the current state of the business. In my view, Fisher & Paykel is in as good a position as we have been during my time on the board. We are well placed to capitalize on the considerable addressable markets we have in front of us. Holding to our processes, remaining focused on execution, and keeping an eye on long-term sustainable outcomes will continue to deliver exceptional outcomes for patients, partners, and shareholders, and I acknowledge my fellow directors for the role that they play in this regard. The board operates with the support of three subcommittees, which are the Audit and Risk Committee, the People and Remuneration Committee, and the Quality, Safety, and Regulatory Committee.
The chairs of each of these committees, Neville, Lisa, and Mike, will now provide an update on the past year. First, we will hear from Neville Mitchell, who chairs the Audit and Risk Committee and is the incoming chair of your board of directors.
Good afternoon, everybody. The Audit and Risk Committee is comprised of myself, Scott St. John, Lisa McIntyre, Pip Greenwood, and Graham McLean, and as we recently announced, Mark Cross has been appointed to the board with effect from the 1st of October, and will chair the committee after that. The primary functions of the Audit and Risk Committee are to assist the board in fulfilling its responsibilities relating to the company's risk management, internal control framework, integrity of the financial reporting, and the company's internal and external auditing processes and activities. Auditing performance is also reviewed annually. We also assist the board in monitoring and reporting the company's strategies, activities, and performance regarding climate-related risks, corporate social responsibility, and the environment. This involves monitoring the company's global carbon footprint and ensuring that climate-related risks are embedded into the broader risk management framework.
At the end of the 2024 financial year, the company produced its first set of climate disclosures under the new requirements of New Zealand's External Reporting Board. As part of these requirements, the business developed three different future climate scenarios and analyzed the risks and opportunities that may emerge in each, and then reported on these in the 2024 annual report. We noted that international standards on climate reporting are being developed, and the committee will keep an eye on these. We are well-placed to meet any future reporting obligations. Cybersecurity remains a key risk and is a standing agenda item for each committee meeting. Detailed reviews are undertaken, and the results from the system test are closely scrutinized. Over the past year, the company has continued to strengthen and test its processes for responding to unexpected events.
This year, the business completed another multi-day crisis simulation with expanded participation by teams overseas. The exercise was critical for testing the company's crisis response procedures and its ability to implement its recovery plans. Now, before concluding, I did want to acknowledge Scott's tenure on the board and as a member of the committee, which we've just talked about. Scott, you guided the company through the pandemic and during an exciting time of growth, and I realize that I have very big shoes to fill. On behalf of the board, shareholders, and all stakeholders, I would like to thank you sincerely for your leadership. I now hand over to Lisa McIntyre, Chair of the People and Rem Committee.
Good afternoon, everyone. So at Fisher & Paykel Healthcare, we fully understand that people are our strength, and I want to just reiterate, we have many amazing people across thousands in many geographies. And our long-term people strategy is focused on sustaining this environment where our people can find fulfillment, reach their potential, and contribute to the success of the company over the long term. And the People and Remuneration Committee has overseen several initiatives this year towards fulfilling this strategy, and I'm gonna share some of those with you. In the talent and attraction space, we made improvements to our recruitment process, and we have embedded hiring procedures that ensure we continue to build a workplace that is inclusive and equitable and diverse. We've also worked on our coaching culture, which is fundamental to the way we work at F&P.
Over the past year, we have worked with leaders globally to develop initiatives to build our capability in coaching. We want to help our people be better at what they do and help everyone reach their full potential. A key aspect to achieving sustainable, profitable growth, in our view, is having a work environment where our people have a deep connection to our business and are motivated to contribute, and I think you saw some of that on that video just earlier at this meeting. This year, we began a big undertaking to collate and share comprehensive employee feedback data so that we can get better awareness and support effective decision-making. We expect to gain further insights as we expand this journey globally, underpinned by our continuous improvement mindset.
We also continue to make progress towards our diversity, equity, and inclusion objectives, and we're progressing actions in our international regions. We're analyzing recruitment strategies, and we're compiling ethnicity data to inform future initiatives... and we also reported on our overall gender pay gap in New Zealand for the first time this year. One of the responsibilities of the People and Remuneration Committee is board succession, to ensure there is a range of skills and experience and diversity represented on your board. As mentioned earlier, we're farewelling Scott from our board, and Scott, I'm just gonna add as well my thank yous for your immense contribution, your guidance and dedication over this time, and wish you all the best for your future endeavors.
We'll welcome Neville to take over as board chair, and we will have Mark Cross join us in October to fill the vacancy, and also a call-out to Charlotte Walsh, who joined us as a Future Directors program this year and is making many valuable contributions. This committee is also responsible for reviewing and recommending guidelines for our company's approach to remuneration. Our 2024 annual report provides more information on that and includes a comprehensive summary of our CEO remuneration structure. There were no significant changes to our remuneration arrangements this year, but with one notable exception, there was an increase in the non-executive director fee pool, which, as you may recall, was approved at the 2023 ASM.
This year, our employee-led networks have continued to grow and flourish, with the Women in Engineering employee group doubling in size to over three hundred women, and the launch of a group, Rethink, which is our new employee network that provides awareness and support around neurodiversity. We're also proud of all the great work that the Spectra and Manaaki networks do for our organization. These are employee-led groups that really support a whole range of the communities, and they do it in a voluntary capacity. In conclusion, I'd like to thank all the people at Fisher & Paykel Healthcare for their contribution and commitment to the company's purpose and for making F&P a great place to work. When you've got good people doing good work with intent, we can continue to make a positive and lasting impact on patient care.
I'm now gonna hand over to Mike Daniel, Chair of Quality, Safety and Regulatory.
Thank you, Lisa, and good afternoon, everyone. Firstly, again, with Scott retiring from the board, I would like to acknowledge and thank Scott for his guidance and his deep commitment to the company over the past nine years. Thank you, Scott. The Quality, Safety, and Regulatory Committee provides oversight of product quality, patient safety, regulatory compliance, and the health, safety, and wellbeing of our people. We operate within the heavily regulated medical device industry, and I'm pleased to report that the company continues to work collaboratively with the major regulators to achieve regulatory clearance in new markets, and when necessary, in the interests of patient and caregiver safety, to respond to any product issues. For example, in March, the company initiated a voluntary, limited recall of Airvo 2 devices, and we have made good progress towards replacing those devices for customers.
Over the year, we achieved some important regulatory milestones, including U.S. FDA clearance for the F&P 950 humidifier system, the F&P Optiflow Duet nasal cannula, and the F&P 820 and My820 systems for humidification. The health and safety of our people continues to be a priority as the company grows. This year, the business refreshed its critical risk assessments for nine work activities and embedded health and safety processes at our new manufacturing facility in China. In New Zealand, the team carried out a review of the contractor management processes and implemented enhanced injury and illness rehabilitation support for employees. In Mexico, the site earned certification in the voluntary Safe and Healthy Workplace Environments program and completed ergonomic assessments for employees who perform manual material handling. Now, before I conclude, I would like to seek your support for my re-election.
Improving care and outcomes is our enduring purpose, and it has been my privilege to be able to contribute to that for almost forty-five years. I bring to the board and to the company specific experience and understanding of the clinical applications and markets that we serve, and also a broader experience in technology and medical devices, right from the initial idea through to encouraging the widespread adoption of innovative technologies. I believe that my depth and breadth of skills continue to provide support to the exceptional F&P Healthcare team and contribute to our ongoing strategic development and growth. Integrity, excellence, governance, and innovation are fundamental to our ongoing success. With your support and the support of the board and team, I look forward to being able to continue to be part of the company's progress. Thank you. Back to you, Scott.
So thank you, Mike, Neville, and Lisa. The second item on the agenda is the address from Lewis Gradon, the Managing Director and Chief Executive Officer. So over to you, Lewis.
... Well, look, thanks very much, Scott, and I would like to continue the theme of acknowledging the support of our customers, clinicians, suppliers, and the people at Fisher & Paykel to this year's results. And also, I'd like to acknowledge the support of you, our shareholders, over the last year. Thank you. We do appreciate it. Now, Scott's talked about last year. I'm going to try and give you some insights into the update we made at the end of last week, and then move on to talk about our longer-term prospects. So we gave guidance for the first half of the year. The numbers are there. You can see them. That guidance was based off a strong first four months, and we think that is largely driven by changing clinical practice, helped along by those new product introductions.
That's absolutely fundamental to our business, and it's kind of back to normal for us. Now, in addition, for the four months that we've had, we think there are signs of a relatively high hospital census over that period, and that's as hospitals return to their normal capacities and their normal staffing and their normal ability to do surgical operations and procedures, after COVID disruptions. We think there are also signs that the four months includes a lingering, hospital, seasonal hospitalization effect from last year. This is flu and all that, winter season, carrying on into the first few months of this year for us. We think there's signs of that in there. And we can also see signs of some COVID-19-driven hospitalizations during that four months. Now, we also gave full-year revenue guidance of between NZD 1.9 billion and NZD 2 billion.
For our hospital business, we think that is going to continue to be driven by that change in clinical practice, supported by the new product introductions. But we have something else going on in our hospital business every year, and that is the seasonal hospitalization effect. That's additional, and it's on top of our kind of normal business, and that's driven by the winter and the so-called flu season and things like that in the Northern Hemisphere. Generally happens late in our second half, and last year we also saw a seasonal COVID-19 hospitalization rate later in our second half. Now, these are all. Well, they are impossible to forecast, so that seasonal effect, that's one of the biggest contributors to the guidance range that we gave for revenue.
And then in home care, we think the rest of the year will continue to be supported by those new product introductions, as we've seen in the first four months. Now, we've touched on a lot of these new product introductions here. You can see on the left-hand side, under hospital there, we've had a number of new product launches, in the United States that we're expecting are gonna contribute during the current financial year. I will call out the bottom one there, Optiflow Duet. That is, our new technology respiratory support consumable, and it gives better physiological results for almost everything you can measure, which we expect over time would also lead to better outcomes.
When you move over to home care, on the right-hand side, you can see that our Solo OSA mask has been launched pretty much all around the world for FY 2025. During the year, we'll be launching our Nova Micro OSA mask around the world, various countries at different times during the year. Now, of course, we also gave guidance for full year for net profit after tax. That depends on revenue, which we've touched on, and of course, it also depends on costs, so I'll move on to our thinking about costs. Now, on the left-hand side, you've got our gross margin, so gross margin is when we take our sales minus what it costs to manufacture the product, and we express it as a % of sales.
What you can see there is gross margin steadily increases right up to about 2020, when COVID-19 hit, and then we turn our attention just to solely making as much as we can, as fast as we can, and our costs suffer. By 2024, we've returned back to our normal behavior of focus on costs and efficiency, and you can see gross margin starting to improve. So that's what we're thinking. When we return to our normal behavior, we should get our normal results, which is gross margin steadily improving. We're not planning to do anything short-term that would divert resources or compromise our long-term growth. We think our normal behavior will get us back to our gross margin target over a few years. Now, one thing I hope you appreciate, we'll come to that soon.
Let's talk about operating margin. So that's when we now, we take our operating expenses, subtract them from the gross profit, express that as a % of revenue, there's operating margin. That normally follows gross margin, but you can see two exceptions here to the history. First of all, operating margin benefits from that high revenue years during COVID, so that ticks it up a bit. And then, during those years, we continued to grow our R&D, we continued to grow our salespeople, and you can see those, costs starting to impact, operating margin in FY 2023, 2024. Now, going forward, we expect that we will continue to grow operating expenses, but we're planning to grow operating expenses just a bit below our revenue growth, until we get back to that operating margin target.
Now, those gross margins improvements, they're built on a culture and cycle of continuous improvements. Now, for us, continuous improvements, that is business as usual. It's part of the DNA, from the manufacturing floor to the management teams. You name it, it involves everyone. You can see last year we had seven thousand suggestions for continuous improvements across the business. That tells us that people are thinking about efficiency, they're thinking about improvements. We executed over four thousand of those suggestions during the year. That gives us confidence that gross margin should probably improve during the year. It's certainly a nudge in the right direction. What I hope you can appreciate is that it's very, very, very difficult to put a precise financial number on the impact of four thousand improvements during a year, in a precise twelve-month period.
You know, that's a tough ask, but we're confident it's a, it's a good nudge in the right direction. That's the, that's the main thing. So I want to move now to a bit more about the longer term view or the longer term opportunity. So when we look at our hospital business, so across all of our therapies, that's invasive ventilation, non-invasive ventilation, respiratory support, anesthesia, and surgical, we pretty conservatively estimate that over 150 million patients around the world would benefit from those therapies each year. Across our home care business, for obstructive sleep apnea and home respiratory support, again, conservative estimate, over 100 million patients would benefit from our therapies each year globally. You heard earlier on, last year, our products were used in the treatment of about 20 million patients each year.
So we think it's pretty clear that we have a long way to go, and we're confident that we have significant opportunities in front of us. And then, when we put that all together, we think that over the short term, for us, that's five years or so. So over the short term, hospital respiratory support is likely to continue to be our primary growth driver, assisted by everything else growing. But our primary growth driver is, anesthesia gains momentum, and then we're expecting anesthesia would become more material as the primary growth driver in that medium term, five to 10-year timeframe.
And then, over the longer term, 10-20 year plus, we are continuing to build out our home respiratory support product portfolio and, clinical data and evidence in support of that, and our surgical product portfolio and the clinical data and evidence that would support that. So, you know, we remain comfortable with our long-term aspirations, as described on the slide there, of sustainably doubling our constant currency revenue every 5 or 6 years. Now, in closing for me, I would like to say thank you very much for attending today. Look, we do really appreciate, that, you guys have taken the time and trouble to come out here and see us and see our site. So, you know, absolutely sincere, thank you. And finally, as I, hand over to Scott.
Scott, I'd like to say on behalf of management, on behalf of our company, thank you for your contribution to Fisher & Paykel Healthcare over the last nine years, and we certainly wish you well in your future endeavors. Thank you.
Okay. Thank you, Lewis. So item number three on the agenda is to receive and consider the financial statements and the auditor's report as contained in the company's annual report for the year ended 31 March 2024. So this is an opportunity for shareholders to ask questions specifically on the financial statements, the auditor's report, or the company's twenty twenty-four annual report. And we have Indy Sena and the PwC team with us in the room to assist us in that endeavor. So please note that there will be an opportunity for general questions once all the items on the agenda have been considered. So would anyone in the room wishing to ask a question specifically on the financial statements, auditor's report, or the annual report, please raise your hand and a microphone will be passed to you.
We will begin with questions in the room, and then we will turn to our online audience. We ask that you please state your name before asking your question. So are there any questions on the account from inside the room? While you're contemplating that, I'll go online.
There are no questions online.
Nothing, Marcus? Okay, so there don't appear to be any questions, so I will move to the next item. The fourth item on the agenda is the consideration of the formal resolutions. There are five resolutions, and each resolution is an ordinary resolution. So this means that they are required to be passed by a simple majority, more than fifty percent of the votes of shareholders who are entitled to vote on the resolutions and who do vote. For shareholders joining us in person today, you will have received a voting card on arrival. If you did not, and wish to vote by this method, could you please make your way to the registration desk at the back, and MUFG Corporate Markets staff will assist you with registration. Please also ask MUFG Corporate Markets staff if you require a PIN to vote.
Shareholders joining online will be able to cast their vote using the electronic voting card received when online registration is validated. To vote, you will need to click Get a Voting Card at the top of the webpage or below the video. You'll be asked to enter your shareholder number or proxy number to validate. You can then select how you wish to vote by clicking For, Against, or Abstain in respect to each resolution. Remember to click Submit Vote on the bottom of the card once you have selected all your votes. Further information is available in the MUFG Corporate Markets online portal guide, and you can call the helpline on zero eight hundred two hundred two two zero for assistance. Following voting on the resolutions, we'll be happy to take any general questions you may have with regard to our company and operations.
For those online, you can submit general questions at any time during the meeting by using the online questions function. The registrar, MUFG Corporate Markets, will complete the counting of all votes and complete their duties as scrutineer for the purposes of the poll. We will make an announcement of the results of the voting to the NZX and the ASX once the process has been completed. We now move to consideration of the individual resolutions. Our first resolution relates to the election of Sir Michael Daniell. Explanatory note one of the notice of meeting explains the requirement that a director of the company must not hold office without re-election past the third annual meeting following that director's appointment, or three years, whichever is longer. Mike is the director retiring in 2024, and the first motion relates to his re-election.
Mike has already spoken to this as part of his subcommittee update, so we will move proceedings along. I have great pleasure in moving as an ordinary resolution that Sir Michael Daniell be re-elected as a director of the company. Are there any questions in the room? Are there any questions online?
There are no questions online.
Okay, so there appears to be no further discussion. Could you please now record your vote on this resolution? Thank you. Resolution two relates to the election of Graham McLean. Explanatory note two of the notice of meeting explains the requirement that a director appointed by the board must not hold office without election past the next annual meeting following the director's appointment. To that end, our second resolution is on the election of Graham McLean to the board. Graham joined the board in October last year and is already making a valuable contribution. Now, based in Sydney, Graham has carved out an impressive global career, which I mentioned earlier, including spending 16 years at leading medical device manufacturer, Stryker Corporation. So pass to you, Graham.
Thank you very much, Scott. Good afternoon, everybody. I am delighted and honored to stand for election for the board of Fisher & Paykel Healthcare at this year's ASM. Since being appointed to the board in October last year, I've been privileged to support the governance and strategy of this exceptional New Zealand-based company. My role as a member of the Audit and Risk Committee has enabled me to gain insights into the company, its culture, and its people. I'm confident that the experience and skills that I have gained over a long and varied global career will enable me to make a valuable and insightful contribution to the company. I've held a number of senior leadership positions in both the medical device sector and in other industries over several decades, and whilst living in five different countries.
I understand what it takes to successfully develop and commercialize new products, and I have a track record of delivering growth and outstanding results for both shareholders and employees. I've worked for both large and small companies. I've worked as a listed company CEO, and I've served as a non-executive director for both public and not-for-profit organizations. I am deeply impressed with the unique and collaborative culture at Fisher & Paykel Healthcare, and I believe that this company has outstanding prospects for the future. I'm committed to maintaining the board's very high standards of corporate governance and to guiding the business in its relentless pursuit of innovative solutions and patient care. I will act with the utmost integrity while supporting this company's leaders and people to deliver genuine value to all stakeholders. It will be a privilege for me to have the opportunity to contribute to your success.
I ask for your support for my election to the Fisher & Paykel Healthcare board. Thank you very much.
Thank you, Graham. I now move as an ordinary resolution that Graham McLean be elected as a director of the company. Are there any questions from shareholders in the room? Marcus, anything?
There are no questions online.
Thank you. So there appears to be no further discussion. Could you please now record your vote on this resolution? The third resolution is to authorize the directors to fix the fees and expenses of PwC as the company's auditor. Under the Companies Act, PwC is automatically reappointed as the auditor of the company. A reminder that we have, in the center, a PwC partner here with us in the room to answer any questions you may have. I now move as an ordinary resolution that the directors be authorized to fix the fees and expenses of PwC as the company's auditor. Are there any questions from shareholders in the room? Are there any questions from shareholders online?
There are no questions online.
Thank you, Marcus. There appears to be no further discussion, so could you please record your vote on this resolution? The fourth resolution is to approve the issue of performance share rights, or PSRs, to Lewis Gradon, Managing Director and Chief Executive Officer of the company. Approval is being sought to issue up to one hundred thousand PSRs to Lewis. The PSRs are to be issued in accordance with the Fisher & Paykel Healthcare 2022 Performance Share Rights plan. The key terms of the plan are summarized in Explanatory Note four of the Notice of Meeting. The board believes that consistent issues of PSRs will create strong incentives for management to grow the value of the business at a rate greater than a peer group of multinational medical device companies, but effectively excluding the effects of movements in the New Zealand dollar.
Therefore, I now move, as an ordinary resolution, that approval be given for the issue of up to 100,000 performance share rights to a total value of NZD 606,060 under the Fisher & Paykel Healthcare 2022 Performance Share Rights plan to Lewis Gradon, Managing Director and Chief Executive Officer of the company. Are there any questions from shareholders in the room? Marcus, anything from you?
Questions online.
There appears to be no further discussion, so could you please now record your vote for this resolution? The fifth resolution is to approve the issue of options to Lewis Gradon, Managing Director and Chief Executive Officer of the company. Approval is being sought to issue up to 190,000 options to Lewis. The options are to be issued in accordance with the Fisher & Paykel Healthcare 2022 Share Option Plan. The key terms of that plan are summarized in Explanatory Note four of the Notice of Meeting.
Therefore, I now move, as an ordinary resolution, that approval is given for the issue of up to 190,000 options to a total value of NZD 606,060 under the Fisher & Paykel Healthcare 2022 Share Option Plan to Lewis Gradon, Managing Director and Chief Executive Officer of the company. Are there any questions from shareholders in the room? Marcus?
No questions online.
Thank you. There being no further discussion, could you please now record your vote on this resolution? That concludes the voting on resolutions today, so thank you for your participation in that. If you have voted using a voting card here in person, you should now have completed your voting card. Our registrar, MUFG Corporate Markets, will begin to move through the room, collecting these. For those of you online, please ensure that you have submitted your electronic votes. The votes will now be counted by MUFG Corporate Markets. The results of the voting will be announced to the NZX and the ASX as soon as they are available later today. So now I would like to give shareholders the opportunity to ask any general questions concerning any matters relating to the company. So I'm gonna start with the room.
Are there any questions from shareholders in the room on general matters? In the corner.
Don Huse, a small shareholder. I would like to congratulate the company on its wonderful trend line and, looking forward, that seems to be likely to happen, continuing on this sort of pace in the future. What I would like to ask a question about is: how do we now compare with ResMed, the big Australian company in the same field, with their trend line and their sales and profits? Would somebody on the board like to comment and give me feedback on that? Thanks.
I'm actually gonna pass to the Managing Director and CEO. But, I do note that, as I inquired a little earlier, ResMed's having a good day on the market today. Last time I looked, they were up 5% because one of the brokers has upgraded their estimates for the company. But Lewis, do you want to comment? It's quite a different... ResMed's a different company.
Sure. Look, I appreciate the question. I know where it's coming from. Our focus is on our business, and our concerns are about our business. When it comes to that company, we compete in one place, one place only, which is the OSA masks. Otherwise, we're following very, I would say, different strategies and trajectories, and the businesses are going in different directions. I mean, having said that, I mean, I think that is a great company and, you know, they've had great results. No complaint about that.
Other questions from inside the room? Sir.
Malcolm Tweed from the New Zealand Shareholders Association. And, Scott, on behalf of the 280 shareholders that I'm voting shares and their directions as proxy today, I'd like to thank you for your contribution over the last-
Thank you
eleven years. But I do have a question for Lewis, if I may-
Yeah.
Just direct to him. In the presentation, there's quite acute reference to having lapped previous periods with regard to hospital hardware, and a remark that some markets have been lapped or a few markets have been lapped. We heard the same remark last year, that we'd lapped some of the earlier supply into the hospital industry of hardware. So my question is, of the hundred and nine million, that is the result for the year just completed, have those few lapped markets from the previous year contributed greater than the decline, and that there were some markets that were, in fact, performing better than pre-COVID? Unpack it a bit for me.
Yeah, sure. So, again, I see where the question's coming from. So during COVID, we supplied hospital hardware as fast as we could make it and as, you know, as much as we could possibly make. I think from memory, we did the equivalent of... We did, oh, I can't remember now, five or six years' worth of hardware in two years, or we did NZD 1 billion worth of hardware in four years, something like that. I'm asking for confirmation that I'm about on the right track.
You're about a billion.
They're nodding.
Yeah. Yeah. We had about NZD 1 billion worth of hardware in four years. So, when we look at FY 2024 that we've just finished, we've still got that massive supply of hardware in FY 2023 that we're lapping. So we don't really think there's anything unusual about the FY 2024 hardware. In fact, we think that's kind of back to normal, a normal run rate. It, it looks like a decline 'cause we did five years worth of hardware or 10 years worth of hardware in the previous couple of years. So we don't really think of it, in our minds, as a decline. We think of FY 2024 as back to normal, as kind of a normal volume.
So no more lapping?
We don't know what the future holds, but we're not lapping billions of dollars worth of hardware over a couple of years. I can't see that in the immediate future.
Anything else from inside the room? Sir.
This is a technology question more. As you know, I think people have read in the news about artificial intelligence. Will that be incorporated with- within your industry eventually? I know it's a very new thing. Well, it's not actually a new thing, but it's, but in the public eye, it's starting to be a new thing now.
Look, it already is and has been for some time, but Lewis, when the board's had a presentation on various elements of this today, in fact, but Lewis, I'm gonna get you to answer this 'cause you have a very concise answer on it.
Oh, I can't think of it right now, Scott. A concise one. I mean, you know, as an R&D company, an innovation company, we've actually had AI in our product offering. I'm struggling to remember, since we're in early 2000s, I suppose. I'm intimately familiar with one of the engineers that worked on that project. So we've used AI for quite a while. Now, this kind of new generation of generative AI, as Scott referred to, we just saw a presentation on that today, and we saw some numbers collated today. And you've got two things to consider there. Do people have access to those tools, and are they utilizing them? The data we saw today, yeah, absolutely, they're being used. And then we've got to make sure we're using them in a safe way.
And, we certainly saw that in our presentation today that we have, you know, approved, secure, AI engines and types of AI that we use within our business. And we allow people, for innovation purposes, we allow people access to pretty much whatever they want, but we control information that goes out of our company when they do that. And then, the other reason you've given it, I've forgotten the concise answer, Scott. The other reason, you've got a long answer is that on the data we saw today, we've got, it's like 4,000 users of AI, and it's, they're just massive, of some kind of AI. When we say AI, man, that's a whole lot of stuff. It's not just ChatGPT. Yeah.
So, as a management team and as a business, we've got the controls in place. People have access to try and ask us what they're using it for. Oh, goodness, I don't know, you know. It's like asking me, what are we using screwdrivers for?
What about for the respirators, actually, make sure that-
Okay. In products, we've had it in our home care product, as I said, for, I just can't remember now, maybe 15 years. We've had it in the product for a long time. You have to be very, very careful when you're using AI in the product. It still needs to comply with regulatory medical device regulations, and it needs to comply with our quality management system. That means you can't tolerate, let's say, unknown provenance of what you're doing. You have to absolutely know what your product's doing, why it's doing it, when it's doing it, and what it will do. It can be challenging, actually, in the product.
Any other questions inside the room? Might go over to you, Marcus.
Sure. So we have a question, online from Lara Corey Boyd, and the question is: Could you please provide some more information to shareholders about the land purchase at Karaka? The purchase price seems very high, and even after the revaluation, it seems high. What is so valuable about that land? What were your expectations with zoning rules, and why did you get caught with the writedown? Planning ahead is a good thing, but planning 30-40 years ahead is an unusually long timeline. Can you please explain your plans?
Okay, so there's quite a bit in that. I might start by saying if we were faced with the same choice today, we would make that same choice again. We weren't just looking for a piece of land, we wanted that piece of land, and it didn't exist in one piece. It had to be assembled, and it was quite a complex thing. What has happened since then is that clearly the interest rate environment changed, so interest rates went up quite meaningfully. That goes to value. And then there were some changes brought in by Auckland Council, which also contributed to the valuation outcome. That said, our view... well, we don't think so much about the short-term oscillations in land prices. We're much more focused on our long-term strategic planning.
And we don't, we actually don't think it's so unusual to be planning 30 years out. In fact, it's very usual at this company. And I was discussing this with Sir Michael Daniell a little earlier in the meeting and before the meeting, and some of you will have been party to this. This particular site was a seed of an idea 30 odd years ago. So that is really the cadence of the way that we think, and we remain very pleased to own that land.
Next question comes from Bruce Parkes. "Is the company using AI as part of the recruitment process for new employees? If the answer is yes, what are the perceived advantages?
I can give you a concise answer on that one, Scott. The answer is no, we don't. We do sometimes use video interviewing for bulk screening, but otherwise, no, we do it in person.
Thank you, Lewis. Marcus?
There are no more questions online.
So is there anything else from inside the room? Okay, so that appears to be it for today, ladies and gentlemen, barring the refreshments. Thank you for coming out. I invite everyone to stay and share some refreshments afterwards, at the back of the room. For those that have joined online, we appreciate your attendance and participation. I speak on behalf of the board and the wider company when I say that we value your backing and your confidence in our growth story. Ngā mihi nui. That is the end.