Full Year 2020 Regis Healthcare Ltd Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Thomas Godfrey - UBS Investment Bank, Research Division - Analyst : Maybe if I could just start on your occupancy. Are you able to help us with where spot occupancy currently sits today? And maybe just help us by characterizing where it is in your Victorian portfolio versus the rest of the country?

Question: Thomas Godfrey - UBS Investment Bank, Research Division - Analyst : Got it. Thanks, Rick. Apologies for missing that earlier. Can I just maybe move to the RAD flows, and you've laid that out nicely on the slide -- I think it's Slide 9 -- sorry, one earlier. Slide 7, actually. It looks like the mature portfolio had net outflows of about $17 million. Can you just help us sort of step through the key drivers there? Is it predominantly just the occupancy unwind? How much of a sort of change in preferences are you seeing? And can you also just speak to the incoming prices? They look like they've come off as well.

Question: Thomas Godfrey - UBS Investment Bank, Research Division - Analyst : Okay. Got it. And just on the pricing for incoming RADs. Is there a sort of discounting strategy going on there, guys, to assist occupancy? Or can you speak to that?

Question: Thomas Godfrey - UBS Investment Bank, Research Division - Analyst : Got it. And Rick, maybe one more for you. You called out the back-office restructuring. Can you just give us a sense for what that ongoing cost/benefit might look like?

Question: Thomas Godfrey - UBS Investment Bank, Research Division - Analyst : Yes. Got it. That's very clear. Linda, maybe just last one from me. You did mention before the sort of positioning of the Royal Commission final report and the funding response in the May budget next year. Can you just sort of step us through what your key expectations are around what the changes to the funding model might look like and also the regulatory framework?

Question: Matthew Johnston - Macquarie Research - Analyst : Just the first one, probably for you, Rick. $2.7 million of revenue from a former resident bequeathed to Regis. Did that hit in the second half? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 27, 2020 / NTS, REG.AX - Full Year 2020 Regis Healthcare Ltd Earnings Call

Question: Matthew Johnston - Macquarie Research - Analyst : And is that in the recurring EBITDA number in the second half as well?

Question: Matthew Johnston - Macquarie Research - Analyst : Okay. And then I guess if you start taking the second half and looking into FY '21 with the occupancy challenges, even though there is some cost/benefit from a rightsized cost base of staff. Just trying to understand next year is going to be really tough, and with that occupancy decline, what have you seen in net RAD to mature homes in the first quarter so far?

Question: Matthew Johnston - Macquarie Research - Analyst : Right. So I guess the sensitivity, but if there were to be further RAD outflows, obviously, that could offset the remaining ramp up RADs expected to come through. Because I think if you back-solve from the $50 million to $70 million guidance in February, we'd only have around $10 million to $30 million left expected from developments, if that math is right?

Question: Matthew Johnston - Macquarie Research - Analyst : Okay. And so I guess just from March to June, can you see similar things happening in the business in the first quarter, especially in Victoria of why -- what led to those RAD outflows? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 27, 2020 / NTS, REG.AX - Full Year 2020 Regis Healthcare Ltd Earnings Call

Question: Matthew Johnston - Macquarie Research - Analyst : Right, okay. And then I guess just what are the bankers saying around the outlook for EBITDA? I appreciate you're not going to give guidance, but the numbers flow through pretty uninspiring. What are they saying around you covenants level? And where does development sit at the moment?

Question: Matthew Johnston - Macquarie Research - Analyst : Look, if you annualize the second half, it's obviously a drop-down from the FY '20 EBITDA number. And assuming if you have -- whatever happens in greenfield ramp-ups on RADs, and your back book coming through on your mature, net debt may not move that much, but your earnings are going down. So I'm just wondering what the bank is saying around the covenants.

Question: Matthew Johnston - Macquarie Research - Analyst : Okay. I'll move on. And just with the redundancies, is there anything to do with corporate development staff in that as well?

Question: Matthew Johnston - Macquarie Research - Analyst : Okay. And so what sort of roles are they?

Question: Matthew Johnston - Macquarie Research - Analyst : Okay, great. And then final one for me. Just on the cybersecurity, do you envisage any sort of extra costs, I guess, just to bolster that up ongoing?

Question: Matthew Johnston - Macquarie Research - Analyst : Okay. Actually I want to squeeze one more in. Just in terms of, I guess, the comments around acquisitions and you still assess stuff, but you're then selling land. Just trying to get a sense of, is the acquisition more medium-term strategy at the moment rather than short term?