Fisher & Paykel Healthcare Corporation Limited (FPH) Earnings Call Transcript

All right. Good afternoon everyone. I'm Neville Mitchell, the Chair of Fisher & Paykel Healthcare Board. Welcome to the 2025 Annual Shareholders Meeting. A warm welcome to all of you here in person 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. And if you need assistance for our corporate market helpline on 0800-200-220. Some housekeeping issues for those in the room before we move into the formalities. Bathrooms are located outside this meeting room to my left. And in the event of a fire alarm, please follow instructions from members of the F&P team who will be wearing lanyards. They will guide you to the assembly area in the car park directly ahead of this. On the information conveyed to me, I declare that a quorum of shareholders is present and that the meeting has been duly convened. I would like to introduce your directors to you. Joining me here is the CEO, Lewis Gradon; Mark Cross; Mike Daniell; Pip Greenwood; Lisa McIntyre; Graham McLean; and Cather Simpson. The minutes of the last Annual Shareholders 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 all been circulated to 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 the company's progress on behalf of the Board. Following that, our Managing Director and CEO, Lewis Gradon will provide an update on our performance in the last financial year and in the year-to-date and our opportunities looking forward. After addressing any questions on the financial statements for the year ended 31st March 2025, 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. And then there will be an opportunity at the end to ask any general questions relating to the company. Now on to my talk. It is a privilege to address you for the first time as Chair of Fisher & Paykel Healthcare. I will focus my address on a number of high-level matters that your Board has spent time on over the last year and will largely leave the company's operational matters to Lewis to discuss in his CEO address. First, I wanted to reiterate the context in which your Board and management view this company and make our decisions. We have a long-term way of thinking. In some companies, the phrase long term means 1 to 5 years, but here at Fisher & Paykel, we take a 15-year and often more perspective. Each year, the management team produces a comprehensive long-term plan that outlines our business objectives, the market opportunities and the strategies for the next several decades. One of your Board's primary responsibilities is to critique that plan and to provide input. The plan does not alter substantially but it is a critical input to identifying long-term trends and the risks. The plan then determines which our R&D activities to prioritize to deliver on that on our growth aspirations and whether the right people and infrastructure are in place to achieve that. A good example of how we use the long-term plan was our approval of future building and land expansion. Those joining us in person will have seen the construction is well underway for the fifth building here at East Tamaki. And you may also recall that we have secured land for our second New Zealand campus at Karaka. These important infrastructure investments will help ensure the business continues to have capacity and resources to deliver innovative products well into the future and as identified in that long-term plan. The long-term need for them was identified in the plan and your Board approved the expenditure in that context. I wanted to say a little bit about global geopolitics. Global politics has been an important subject for the Board and management this last year. One of the benefits of long-term thinking is that when challenges arise, we can analyze them through a long-term lens. This year, tariffs have been imposed by the U.S. administration. The Board has stayed close to this important topic, and we have consulted with a range of trade policy experts. We have been meeting regularly with senior New Zealand government officials and have also taken advice from our contacts on the ground in Washington. Your company's finished goods manufactured in Mexico and for sale in the United States are currently compliant with the free trade agreement called the USMCA. U.S. tariffs do not apply to these products. The company's products, which are used in treating patients with obstructive sleep apnea are also largely exempt from U.S. tariffs, which leaves a tariff rate of 15% imposed on hospital products, which we make here in New Zealand. To respond to these tariffs, we continue to make decisions aligned with our long-term plan and thinking. We are not looking to make substantive changes to our current arrangements. The team is focused on mitigating cost increases from any source by making continuous improvements across every process and function in the company. We believe this is the right thing to do to support our people, keep the trust of our customers and maintain stability in our operations, all of which, of course, are essential for achieving sustainable profitable growth. Moving now to the financial results, and Lewis will explain the results in more detail, but 2025 was a successful year for your company. Operating revenue surpassed $2 billion, and this was a record revenue result and was in line with our expectations. Net profit after tax was $377 million, which on an underlying basis was a 43% increase over the previous financial year or a 30% increase in constant currency, also a great result. Now moving on to dividends and the Board's view on that. As you know, it is our practice to pay a percentage of the company's profit to our shareholders. And for the full financial year, the Board approved dividends totaling $0.425 per share. This was an increase of 2% over the previous full year and represented a dividend payout ratio of about 66% paid to shareholders. We are committed to ongoing investments in R&D, global sales and the support teams and also to funding the infrastructure for our long-term growth. Your Board also believes it is important to maintain a prudent balance sheet. With this in mind, we believe a dividend payout ratio of around 65% is the right ratio over the long term. In addition to rewarding shareholders, the Board believes it is important to award and retain selected high-performing employees who contribute to the company's success. One way to do this is by awarding discretionary long-term variable remuneration instruments or LTVRs. This year, the Board conducted a thorough review of these instruments and approved some modifications. The details are set out in explanatory note 4 of the notice of meeting. We believe these changes will create better alignment and outcomes for employees and also for shareholders. Are some updates on the Board itself. I'd like to update you on the composition of the Board. In October last year, Mark Cross joined as a Director, and he is up for election for the first time today. Mark is a strategic thinker with extensive governance experience and strong financial acumen. We have indeed been fortunate to have his perspective, and I ask for your support in his election today. I'm also very sad to announce the retirement of Pip Greenwood with effect from the 1st of September. Pip was recently appointed to the Australian Board of Westpac Banking Corporation and has other commitments in chairing the Boards of both the a2 Milk Company and Westpac New Zealand Limited. She has provided wise counsel and has been a valued colleague to me and we will all miss her. Pip, this is your last ASM, and I would like to invite you to say a few words to shareholders and any observations you may have had over your time at Fisher & Paykel.

Good afternoon, everyone, and thank you for your kind words, Neville. I really appreciated them. It's been an honor and an absolute privilege to serve as a director on Fisher & Paykel Healthcare Board for the last 8 years, a time that's flown by. As I say goodbye, I'd just like to acknowledge what a phenomenal organization this is inventing world-class technology in New Zealand in taking it out to the rest of the world. The growth at Fisher & Paykel Healthcare since I have been here and the last decade has been incredible, and I feel very proud to have played a role in the company's success. I'm grateful to have had the opportunity to be involved with such an outstanding group of people. This is actually my first governance role, and I don't think I've realized quite at the time how lucky I was. I'd like to thank Lewis and the management team, a number of whom are here today, and I encourage you to have a check to them afterwards. And as well, all the other 7,000 employees make and deliver the products that are helping millions of people around the world. I'd also like to thank you, Neville and my Board colleagues. You are an insightful and principled growth of people, and I have enjoyed and valued working with you. I have high price for this board, and I feel confident that the company is headed in the right direction. Finally, I would like to thank you, our shareholders, there's a number of familiar faces here today for supporting my reelection over the years. As a fellow shareholder, I will continue to chair on the business from the sidelines and I look forward to more great news from Fisher & Paykel Healthcare in the years ahead. Thank you again for your support. Back to you, Neville.

Well, thank you very much, for those for those words. It's our intention to appoint another New Zealand-based director, and we will commence that process shortly. Recently, while we're on the Board recently, we farewelled Charlotte Walsh as she completed her tenure in the Future Directors program. We continue to support this initiative, and we'll be announcing another talented emerging director join us in due course. Now I'm standing for reelection as a director at this year's ASM. I've been with Fisher & Paykel Healthcare for almost 7 years. and remain as committed as ever to our purpose of improving care and outcomes to delivering value to shareholders. I believe my executive career and my directorships on a number of health care companies provides me with a depth of experience in the medical device industry that adds value to Fisher & Paykel. With your support, I look forward to continuing to work alongside my colleagues on the Board and the wider team. So in conclusion, Fisher & Paykel Healthcare is a unique company. A significant proportion of our manufacturing is done here in Auckland and nearly all of our research and development team is also based here. Yet only 1% of our sales are made in New Zealand, and we sell into over 120 different countries. While the geopolitical situation is complex and uncertain, our approach remains clear and considered. Our management team are committed, talented and experienced and we are the world leader in respiratory care. We have deep geographical diversity in our sales reach and a world-leading suite of products. All this argues well for our continued success in growing the company and continuing to help more patients. Finally, I want to say thank you to everybody who supports our success and our long-term way of thinking. That includes the people of Fisher & Paykel Healthcare as well as our clinical partners our suppliers, our customers and, of course, you, our shareholders. Your investment makes a positive difference. I now invite Lewis, our Managing Director and Chief Executive, to say a few words.

Thank you, Neville, and good afternoon, everyone. And I just want to say a heartfelt appreciation that we have for the people that have turned up here today. I really hope you get something out of this. I hope you enjoy your afternoon with us. And for us, it's so much nicer to be speaking to a room full of people relative to a camera. So thank you so much. We really appreciate it. Now so I usually start by running through our achievements over the last year, and I'll give an overview, as Neville said, of the financial results. Now every year, we actually do this on the day of our announcement with a video that we circulate will make available internally. We do that across all 7,500 people. We do that across the manufacturing staff. We do it across sales teams in the more than 50 countries that those people are present in. So what we thought we'd do this year is we'll play you that video it gives you the review that I normally would anyway. And then also give you an insight into the culture and to how we communicate internally. I think it gives you a bit more of an insight into thinking and how we think. So we'll play that staff video for now, I think. Hello, everyone. Today, we announced our full year results for the 2025 financial year. And when we do that, we like to share it with you all as well. So first, Andy will cover some highlights of the year, and then Lyndal will give us an overview of the results. And then I'll tell you more about what's next. So over to Andy.

Thanks, Lewis. In FY '25, our products were used to treat 22 million patients. That was a truly amazing achievement. We continued the rollout of our F&P EVO3 F&P 950 system and our suite of anesthesia products. We also launched some exciting new OSA masks. All our sales regions performed well, which contributed to a very successful year. Our manufacturing facility in China also became fully operational in FY '25, and we started shipping products for sale. We also signed the construction contract for our fifth building on our New Zealand campus, which is now well underway. Across the business, we stayed focused on continuous improvement that is making a really big difference day-to-day. More than 8,000 ideas for improvement were raised in FY '25, 1,400 of which came from our Mexico facility alone and 3,000 were implemented globally. We'll be celebrating the best projects for FY '25 at the global CI Awards in June. So all of that helped us achieve a great result. And with that, I'll hand over to Lyndal to tell us about the financials.

Thanks, Andy. Well, I have some really exciting news. Our full year revenue surpassed $2 billion for the first time in our company's history. If you were at F&P back in 2019, you may remember that revenue passed $1 billion that year. So 6 years on, we have doubled our revenue, which is exactly what we strive to do. Total operating revenue for the 2025 financial year was $2.02 billion, up 14% in constant currency, where we take out all of the impacts of exchange rates. In our Hospital business, revenue was $1.28 billion, up 16% in constant currency. In our Home Care business, revenue was $739.9 million, up 11% in constant currency. So that brings us to profit, which is the amount left over after our costs and our taxes are paid. For the full financial year 2025, profit was $377.2 million, up 30% in constant currency when we exclude the 3 abnormal items that we had last year. Now you may remember that we have a target of 65% for our gross margin. Gross margin is the percentage of money we keep from our sales revenue after we cover our costs to make our products. If we are making a simple product like a T-shirt, we could have a lower gross margin target, but we're making complex medical devices. So we have to keep a certain amount of money left over to spend on developing new products and for our sales teams to explain the benefits of our products to our customers. We also need money left over in case there's an unexpected event like a product recall. I'm pleased to report that we got a little closer to our target. For FY '25, gross margin was 62.9%, an increase of 1.3% in constant currency. So this is a great result, and we want to acknowledge everyone's contribution to it. Back to you, Lewis.

Thanks, Andy and Lyndal. Now lately, we've been talking a lot about our fundamentals. These are the basic principles that guide how we work and how we make decisions. For example, we put the patient first in everything we do. That's one of our fundamentals. We deliver products that have unique customer value benefits. That's another one of our fundamentals. And of course, long-term thinking, that's another one. In this year, I think it's really important that we stay focused on our fundamentals. There's a lot of noise out there right now about tariffs, but we don't want to let that noise distract us from our fundamentals. We want to continue to support our customers and each other and maintain stability in our operations. Now for some of us, that means progressing work on new products. For some, it's supporting our people or our customers. And for others, it's about coming to work every day and assembling high-quality products. It's also important to keep working on those continuous improvement projects across the business. even if it's the one centers, it all helps. Everyone's effort makes a difference. I'm pleased with our performance for the year, and I'd like to thank everyone for contributing to the success. The work we do has a positive impact on so many people around the world. Thank you, everyone. So that was the review that we shared internally. Now you saw mention in the video about U.S. tariffs. Neville's touched on U.S. tariffs. I haven't had a conversation with anyone anywhere in the last 6 months tariffs doesn't come up. So I'm going to spend just a little more time on that. And I kind of want to try and do 2 things, give you a good understanding of the current status. And then I want to try and give you a good understanding of our thinking and maybe try and future-proof your understanding of how we might respond if things should change. So first of all, the current status. So our obstructive sleep apnea products go into the U.S. under an exemption for products used to treat chronic or permanent disabilities. Our products from Mexico into the United States under a free trade agreement called the USMCA, and that's the agreement that replaced NAFTA in 2020. We don't ship to the United States from our China plant. So now that just leaves tariffs only on hospital products that are shipped from New Zealand to the United States. And the current status of that is that they have attracted a 10% tariff from shipping approximately June through to August and then 15% thereafter. In our outlook note in our press release, we said that for this financial year will be about a 75 basis point cost to gross margin. And I'll just translate that for you. That's about $16 million to $17 million for the year. So that's the current state play. Yes. So moving on now to -- that's current state plate. What are we going to do about that? So the first thing you have to consider is that our supply chain right now across all the raw material suppliers from all around the world from -- across 3 manufacturing sites, 120 countries all the way through to customers, that's about as efficient as we can make it today. And if we were to now make some changes specifically to deal with tariffs, we'd be adding some kind of inefficiency into that. If the tariffs were to change, we'd be left with the inefficiency. And not only that, we would have made an investment in making that change, and that investment would have been a set of investing in growth. So for now, at least, we are taking a holistic but of how we're thinking about these tariffs. We're thinking there are another source of cost in. We're a manufacturer. We have cost ins every year, year after year after year from all sorts of sources. We're used to dealing with that. It's that's business as usual for us, having a constant cost in occurring, hacking to us year after year after year. So we're thinking we'll manage that the same way as we always have. And that's those never-ending continuous improvements and efficiency improvements and across the whole business. You would have seen the reference on the video to the about 8,000 suggestions during last year, over 3,000. I saw a number the day it was 3,800 actually implementation the year. And we're thinking the important thing is we keep doing that, and we do it across all the opportunities and not just through a tariff lens. And that's how we mitigate cost ins -- well, in all times, really. And one benefit of that is these are all things that are going to pay back whatever happens politically. And these are pretty much all things we would do sooner or later anyway. Now over the longer term, if the tariff situation stabilizes for what seems like a foreseeable future, we always have another option, which is where we put our growth in manufacturing. So we can adjust our global manufacturing footprint by where we put the growth. We're always growing. We're always going to have to do something somewhere else. So it's something we would always do sooner and later. And again, that's the most efficient use of our resources. If we need to make an adjustment and a stable situation, do it by where the growth goes. So I hope that makes sense, and I hope that future proofs short understanding of that as well. to outlook. There is a second topic I want to cover. And this is seasonal, respiratory hospitalizations. Now we used to call that the flu season, right? And this is a phenomenon where in the winter, more people are more likely to have some kind of respiratory element. So that means, generally, there's more admissions to hospital during the winter season with or for a respiratory ailment. Probably, that means an increased demand for our products because of this. Now the first point is, for us, that's a northern hemisphere winter. That's where most of our volume goes. So that's in our second half. Typically, these flu seasons would last 3 or 4 months, and they might start October, November, December, occasionally in January. So that's a thing that affects our second half. Now having said all that, I just want to put a context on it for you. Before COVID, we estimated that less than 5% of our hospital business most years is due to this season effect. So we're talking about less than 5%. It's a directional signal. It's not quantifiable. You can't work it out, predict it, forecast it or analyze it. But the point of all this is that if we have a big flu season, and then it's followed by a male flu season or vice versa, it can impact what our growth looks like depending on what is following. And just occasionally, I think historically, it's every decade or 2, you have a very small one, then a very big one or vice versa, and it affects our numbers. We'll fix what growth looks like. So the reason I want to spend a little bit of time on this is these days, you've got covert in that seasonal respiratory hospitalization rate. That's why we don't call it flu season anymore. You got COVID there as well. And that seasonal respiratory hospitalization rate has been steadily declining since 2022. So that number has been going down. But we've grown our hospital business over the last 2 years despite that decline in second half seasonal admissions. So that is a really good indicator for you that the primary growth driver is that change in clinical practice, and that's more clinicians using more of our therapies to treat more patients, not cover, right? And now here's the point of all of this is that if we were to see a second half for us with subdued growth in our hospital business, and that coincided with a big reduction in that seasonal hospitalization number, that's not a scenario that would cause us any panic. We've certainly seen it before in our business. And it would probably just be a movement in that seasonal component from a bigger year to a smaller year. So now having said all that, I can move on to our outlook for the full year. So company's outlook for the full year revenue is in the range of approximately $2.15 billion to $2.25 billion and full year net profit after tax in the range of approximately $390 million to $440 million. And then as we talked about -- as we've just talked about, if those seasonal respiratory hospitalization rates for FY '26 were similar to what they were in FY '25. We'd expect that to push us towards the top end of that range. And if they were lower, we'd be expecting that to push us towards the lower end of that range. And then also first half outlook for our first half of FY '26, we've provided outlook for revenue of approximately $1.075 billion. Net profit after tax approximately $200 million. And you can see on the slide there, we've done the math for you. That's about 13% growth in revenue and 30-ish percent growth in net profit after tax compared to last year. So I talked about this year, I spent a lot of time talking about a couple of things that might affect this year. So I'd like to take the next few slides just to stand back from this year, next year and look over a bit of a longer time frame. So what you can see there is our revenue since listing in 2001. You can see the obvious COVID impact bumping up there for a few years. And then more recently, more like a return to our solid growth driven what our historical growth drivers, which is the ongoing adoption of therapies and products that improve current outcomes. And then our business is also supported by a demographic effect of aging populations, requiring more health care and developing countries, building out their health care infrastructure. And if we look at financial performance over a 10-year time frame, you can see that 10-year compound annual growth rate to FY '25 for revenue is moving closer to aspiration. If you look at net profit after tax, you can see the COVID effect there in FY '20, '21 and '22. And that's as we pretty much doubled output without doubling the people or the assets doing it. So that's clearly not sustainable. And then you can see the impact in FY '23 and FY '24 of us adding that infrastructure over the previous 3 years and during those years, to deal with that kind of volume, and then FY '25 looks like back on track to solid growth. And then second to last slide. I expect many of you will have seen this before, our long-term aspiration of doubling our constant currency revenue every 5 or 6 years in a sustainable way. And you can also see there the opportunities that might allow us to achieve that over time. But every time I show this graphic, I've got to remember to point out, probably not to this audience, most audiences, I've got to remember to point out short term, 5 years, long term, more like 20 to 30. Now I didn't mean to waste your time, but I've just talked an awful lot about tariffs and seasonal respiratory hospitalizations that can impact our numbers from 1 year to the next. They're very, very topical. We're talking about them all the time. But the point is, neither of those are things that affect the inspiration the opportunity, they don't affect the growth drivers and they don't affect our long-term thinking or plans in any way. That was the point I was hoping to communicate. But they're important and they're topical now. Now before I hand back to Neville, I am standing for reelection as a director this year. I have been with Fisher & Paykel Healthcare for over 40 years now. The last 9 years as Managing Director and CEO and that's pretty much my whole CV. I'm here to tell you that's a good thing. But as always, I just want to say I really appreciate and thank you for your support over all that time. Thank you -- and in the future.

Thank you, Lewis. The next item 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 31st March 2025. This is the opportunity for shareholders to ask any questions specifically on the financial statements, the auditor's report or the annual report. We have Andy Senner, who is the lead audit partner from PwC with us in the room to answer any specific questions you might have on those items. Please note that there will be an opportunity for general questions once all the items on the agenda have been considered.

Would anybody in the room wishing to ask a question specifically on the financial statement, auditor's report or annual report, please raise your hand and a microphone will be passed to you. We will begin with questions in the room and then turn to our online audience. We ask that you please state your name before asking the question. Are there any questions from shareholders? Any questions online? .

Yes, there is one question online. The question is from Stephen Maine. And the question is Zero suffered a 48% vote against its rem report at today's AGM partly because it is the only major New Zealand-registered company, trading on the ASX, which voluntarily does this. As a company capitalized at $20 billion, which recently ran a major Investor Day in Melbourne, why haven't we done the same? Could Sydney-based Board candidate, Neville Mitchell, a veteran of mini remuneration report vote processes, comment on whether he personally supports rem voting and whether he'll attempt to persuade his colleagues to make the change next year?

Well, the first point that I would make is that we are a New Zealand-based company, and we comply with all of the New Zealand regulations. In fact, we go further when it comes to remuneration, and we don't have to, under the current regulations, provide all the details that we do on Lewis' PSRs and options that you'll vote on a little bit later. So we go beyond what we're required to do in New Zealand, and I think that we make very wholesome and adequate disclosures in our annual report as well as those disclosures that we've made today in the notice of meeting. So my personal view and the view I know of the Board is that we are adequate in our disclosures that we make to the market and we won't be looking to adopt the Australian remuneration report.

We have one more online question from Robert Keane. And the question is the 5-year summary on Page 165 makes interesting reading. The FY '25 underlying profit of $377.2 million was virtually identical to FY '22. FY '23 and FY '24 underlying profits then dips before restoring back to the FY '25 reported value. The financial highlight percentage increase for FY '25 on Page 6 of plus 43%, therefore, looks very healthy compared to FY '24. What are the directors' expectations for FY '26 underlying profit and percentage increase compared to FY '25?

Well, Firstly, on the specific side refer to the outlook which Lewis gave, which gave guidance, very specific guidance for F '26, both at the revenue and the profit line. So I refer to those. But going back to those anomalies during the COVID period. And again, I think it came out very clearly from the graph that Lewis showed that we're on a long-term projectile here. And yes, there was a huge perturbation that came through from the COVID years, and there were spikes and then fall off after that. But we're on a long-term projectile here trying to double every 5 to 6 years in terms of our revenue and then the profit falls in from that. And I think that we're well placed to be on that projectile as Lewis showed on that graph, and the numbers are what they are for the specifics as we increase from year-to-year, but it's really that longer-term trend, which is the important one. Any other?

There are no further questions online. .

As there are no further questions, I will then move on to the next item. The fourth item on the agenda is the consideration of the formal resolution. There are 7 resolutions and each resolution is an ordinary resolution. This means they are required to be passed by a simple majority, more than 50% of the votes of shareholders who are entitled to vote on the resolutions and do vote. For shareholders joining us in person today, you would have received a voting card on your 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 the staff will assist you with that registration. Please also ask the corporate market staff if you require a pen 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 web page or below the video. You will be asked to enter your shareholder number or proxy number to validate. You can then select how you wish to vote by clicking for or against or abstain in respect of each resolution. Remember to click submit vote on the bottom of the card once you have selected all of your votes. For -- further information is available from MUFG corporate markets, online portal guide, and you can call the help line on 0800-200-220 for assistance. Following voting on the resolutions, we will be happy to take any general questions you may have in regard to your company and operation. For those online, you can submit general questions at any time during the meeting. by using the online question function. The registrar 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 ASX once this process has been completed. We now move to consideration of the individual resolution. Explanatory Note 1 of the Notice of Meeting explains the requirement that a director of the company must not hold office without reelection past the third annual meeting following the director's appointment of 3 years, whichever is longer. We accordingly have 4 directors up for reelection today. I will ask Lisa McIntyre, Chair of our People and Rem Committee to take over his chair for the first resolution as it relates to my own reelection.

Thanks, Neville. Good afternoon, everyone. Neville addressed his reelection earlier in the meeting and I now have the pleasure in moving as an ordinary resolution that Neville Mitchell be reelected as a Director of the company. Are there any questions in the room from shareholders? Are there any questions online from shareholders?

Yes, there's one question from Stephen Maine. It says in 2024, we lodged the 44 pages of formal addresses with the ASX at 9:31 a.m. ahead of the 2:00 p.m. AGM commencement. Why haven't we done the same today? This practice is to disclose the proxy votes early with the formal addresses something we didn't do last year. We'll, Chair Neville Mitchell commit to do that next year. Also, after 7 years so far, could Neville confirm that this will be his final 3-year term on the Board, and he won't be seeking reelection in 2028. Does he believe his successor is currently on the board?

Well, just tackle the last one first, I won't be committing to that. We have a 9-year term, which is when we have a look at how directors are performing, what are their commitments and the likes. And at that 9-year period, we take a close look at things, but there is no fixed rule that we need to retire at 9 years and with 3 years out, I'm certainly not making those sorts of commitments at this point. Now to the first one, which regards the proxies and how we deal with the proxy numbers. There's 2 ways of having a look at this. The first is that before every resolution is looked at. We put up the proxy votes, which inevitably are overwhelmingly in favor. And it is my view that, that actually stifles conversation within the room here. I think it's a better process to have the full conversation within the room and then at the conclusion of the meeting to display the proxies. And that's what we'll do today. So you will see what the proxy votes come in at. And -- but it will be after you've had time to consider those and talk about them here in the room without having a look at what the major shareholders have voted. So we'll be listening to you, and then we'll be displaying those proxies later. So that's our response to that.

Thank you, Neville. Excellent answers. Any other questions online?

There are no further questions online.

Thank you, Marcus. There -- since there's no further discussion, could you please now record your vote on this resolution? Thank you. [Voting]

I will now hand back to Neville.

Thank you, Lisa. Resolution 2 relates to the reelection of Lewis Gradon. Lewis spoke earlier in support of his own reelection, and I now move as an ordinary resolution that Lewis Gradon be reelected as a Director of the company. Are there any questions from shareholders in the room? There being no questions in the room, I move to you, Marcus.

Yes. There is one question online, again from Stephen Maine. When Lewis Gradon was last reelected at the 2022 AGM, he was supported by 99.99% of voted stock. If he was CEO of an Australian registered public company, he wouldn't have evidence of such remarkable popularity because Australian law doesn't require CEOs to be subjected to the 3 yearly election cycle. Did Lewis enjoy the election process would he support U.S. style annual director elections and how many of our 23,888 shareholders voted in favor of his reelection by proxy. Did he crack 1,000 votes on the headcount measure?

Well, maybe I'll have a go at some of those is. First of all, it's a requirement under New Zealand law and Lewis is standing under New Zealand regulations. And so that's not going to change. In terms of what the question is going at is how many shareholders as opposed to how many votes did Lewis get. Now we'll be disclosing the number of votes that we got at the end of the meeting so that you can see what the proxies. So in other words, those companies that have voted by proxy have done. We're not going to be showing the number of individual shareholders that have voted. We are showing the number of votes in a corporation, it's 1 vote -- 1 share, 1 vote, and that's the route that we'll be taking. We won't be showing the number of individual shareholders that have voted. Are there any further questions from online?

There are no further questions online.

There appears to be no further discussions. Could you please now record your vote on the resolution. Thank you. Resolution 3 relates to the reelection of Lisa McIntyre. I'd now invite Lisa to say a few words.

Thank you again, Neville. Good afternoon, everyone. As you can see from all of our presentations today, it's no exaggeration to say that Fisher & Paykel Healthcare, it's an outstanding company, an outstanding New Zealand company. It delivers world-class products in a global market, and I consider it a great privilege and a great responsibility to serve on this Board. I have past experience as an adviser to the biomedical and health care industries in the U.S., Australia and globally as well as recent nonexecutive director experience with other successful medical technology, health care and clinical services companies. One of the key perspectives I have gained across a variety of health care organization is the extraordinary ways in which innovation can improve clinical care. And the patience, the experience, the intelligence that the Fisher & Paykel teams bring to solving important clinical problems and changing clinical practice to improve patient care is really inspiring. All of my governance roles over the past several decades in healthcare have been linked by one common thread. When you deliver the best care for patients, the best support for clinicians, that is the best way to deliver optimal returns for shareholders. I am committed to supporting the Board's high standards of corporate governance. I would be honored to continue my work with Fisher & Paykel Healthcare to provide market-leading respiratory, surgery and sleep apnea solutions and continuing to deliver strong shareholder value. I look forward to continuing to work with my Board colleagues, with our management team and to create ongoing value for you, our shareholders, and also for our customers, for our employees and for the communities in which we operate. And with your support, I'll put myself forward for election again at this year's ASM. Thank you.

Thank you, Lisa. I now move as an ordinary resolution that Lisa McIntyre be reelected as a director of the company. Are there any questions from shareholders in the room? Appears to be none, are there -- a question. Hold on, we'll just get you a mic.

Lewis, why do you consider your tenure at Fisher & Paykel. Let me rephrase that question. How long -- I know you've been here 40 years. Why have you been here that long?

Look, we're actually on to M. McIntyre's election, which has -- so the question is relevant.

Why don't we take question first. We'll answer that question.

I'll clear it up now then. Do you want to answer it, Tim?

Almost forgotten -- why have I been here for 40 years? Was that the question? Yes. I'm very tempted to say I couldn't get a better job. That would be self-evident, wouldn't it? I think one of the -- have a shot.

Well, to a certain extent, that is true, but I can't imagine a better job in New Zealand. And one of the things about our company, I think it makes us different to a lot of companies is when you look at what we do, it's very inspiring. And it's very fulfilling to think that as a result, whatever you do in this company, as a result of your activities, someone's going to get better care this year. We said we impacted 22 million patients. We'll then add families, friends. And I think it's a great kind of business to be in. And for most of us, most of the people I see around this business, that's the driver. That's why we're here. That's what we enjoy. Yes. I'm no different. -- it's a very fulfilling kind of business. I can't imagine doing anything else.

Thank you for the question. Anybody on --... There are no questions on the line. There appears to be no further discussion on this matter. So could you please now record your vote on this resolution, which is to elect Lisa on the paper. Resolution 4 relates to the reelection of Cather Simpson. I'd invite Cather to say a few words.

As Neville said, I'm seeking reelection to the Board at this shareholders' meeting. It has been a privilege to be a member of the Fisher & Paykel Healthcare Board for the last 3 years. I joined the Board in 2022 in interesting times just as the company and the rest of the world were coming up out of the COVID-19 pandemic. Now Fisher & Paykel Healthcare stepped up when it was most needed by increasing production and putting respiratory technologies, critical respiratory technologies in the hands of clinicians worldwide. The stories the Board has heard from doctors in the U.S. in particular, about how our products and our people made such a difference in life-saving technologies in saving the lives of patients and in helping all of the people that Lewis just talked about, that's truly inspirational. The medical device industry continues to evolve rapidly, shaped by technological innovation, shifting regulatory landscapes and growing demand for patient-centered care. I believe my experience in founding and leading science and technology businesses and advocating for the commercialization of research offers a very practical perspective to help this company navigate the opportunities and the challenges ahead. Through my lens as a serial deep tech entrepreneur, I'm confident that Fisher & Paykel Healthcare's investment in research and innovation will continue to drive success, both in positive patient outcomes and in strong business performance. Now serving as a Director for a company like this is both an honor and a responsibility. And I remain committed to contributing my diligence and whatever wisdom I possess to the Board as it guides and test the company's ambitious strategies for growth and superior patient care. I will continue to act with the highest integrity, aligned with the Board's high standards of corporate governance and bring a laser focus to supporting the Fisher & Paykel leadership team to deliver value to all stakeholders. I ask for your vote for reelection to the Board. Thank you.

Thank you, Cather. And I move as an ordinary resolution that Cather Simpson be reelected as a Director of the company. Are there any questions from shareholders in the room? Are there any questions online?

There is a question against this resolution from Stephen Maine. I'm not sure that it really relates directly to Cather, but we'll put it forward anyway. There was an 18.8% protest vote against Graham McLean's reelection last year. What was that about? And have any of the proxy advisers recommended a vote against any of today's resolutions leading to any material proxy protest votes? There was also a 17% protest vote against the increase in the fee cap for directors at the 2023 AGM. Staying with remuneration where any concerns raised about the CEO's LTI grant and could he briefly summarize his visiting history when it comes to past incentive grants approved by shareholders.

There is a lot in that. I'm sure I'll remember each part of it. But the gist of it, I think, is that -- well, the first part was about Graham and the vote last year, which related to board -- the number of boards that he was on, which has been addressed. And so along with Graham and all of the directors, we look at all of our commitments and see that we have adequate time and I'm satisfied on all of those fronts. Second part of the question was...

It's about a 17% protest vote against the increase in the fee cap for directors last...

In 2023, look, we haven't sought another increase, and that was passed at that point. And you can see our numbers are all in the annual report. And I'm satisfied with those. I'm on a number of other boards, and I have a good sense of this, and I'm very satisfied with where those director fees are.

And then the last part of the question, is there any concerns raised about the CEO's LTI grant? And could he briefly summarizes vesting history when it comes to past incentive grant?

Look, we will get to this when we get to the LTIs. But perhaps if we just cover it now, look, their word. So we had a very comprehensive consultation period before. I went along with Marcus and others to go and have a look at all the proxies, and we worked with them on the new scheme. As you know, there are a few changes to it. I then went and saw all of the top 20 shareholders in the company, and we spoke through it with them. There were no major concerns that related to that. And so we were very happy to put the motion forward, knowing that it had strong shareholder support. In terms of all of the share dealings. They're all reported in terms of the NZX and the ASX guidelines, and I refer to the ASX and NZX if he wants to get a very detailed history of all the trading. Yes.

There are no further questions online.

All right. There appears to be no further discussion. So could you please record your vote on this resolution? Thank you. [Voting]

Explanatory Note 2 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 fifth resolution is on the election of Mark Cross to the Board. Mark joined our Board in October last year, and I will now ask Mark to say a few words.

Thanks, Neville. As you said, this is the first time that you get to have a say on my election having joined the Board in October last year. And it's great to have that opportunity to address you on why I joined the Board and what I believe I can contribute as a Director of your iconic company. The question I asked myself when I joined a new board as whether the inside matches the outside when it comes to culture and values. And in my relatively short time as a director, I can say that I've been incredibly impressed by the long-term thinking and commitment of our people to their purpose, values and beliefs. And recently, the Board visited Middlemore Hospital to talk to the staff there. And I can say that seeing our products in action and the neonatal emergency and intensive care awards was a powerful reminder of value scalability, capital allocation and management and risk management. All in pursuit of driving shareholder value. So with your support, I look forward to continuing as a director. Thank you.

Thank you, Mark. I now move as an ordinary resolution that Mark Cross be elected as a Director of the company. Are there any questions from shareholders in the room? Are there any questions online?