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Investor Presentaiton

OPERATING EXPENDITURE Operating costs increased by 3.1% ($33.3m including acquisitions) as a percentage of revenue, largely reflecting higher labour costs, driven by inflation and labour market supply constraints on below normal revenues, which are slowly gradually recovering from the COVID-19 pandemic • Employee and other costs were the main drivers of the increase in operating expenditure as a % of revenue driven by below normal revenues which are slowly gradually recovering from the COVID-19 pandemic, together with the following: • Employee costs increased by 2.0% as a percentage of revenue or $25.0m (an increase of 2.7% of revenue or $8.1m excluding the impact of acquisitions) driven by the relatively fixed nature of employee costs, radiologist demand vs supply cost pressures present in the industry (up $8.3m on the prior comparative period, and up $2.7m excluding the impact of acquisitions) and increased use of paid sick leave and/or personal leave during the winter months due to COVID-19 and influenza. In 1H FY23 executive LTI plan expense of $0.2m (non-tax deductible) has also been recorded as part of operating labour expenses, compared to prior years' treatment as a non-operating transaction. Consumables decreased by 0.2% as a percentage of revenue and increased by $1.4m (an increase of 0.2% of revenue or $0.6m excluding the impact of acquisitions) reflecting the higher cost of consumables for higher end modalities. • • Equipment costs increased 0.1% as a percentage of revenue or $1.5m (an increase of 0.1% as a percentage of revenue or $0.1m excluding the impact of acquisitions). • Occupancy costs decreased by 0.3% as a percentage of revenue and increased by $0.1m (a decrease of 0.4% as a percentage of revenue or $0.6m excluding the impact of acquisitions) reflecting CPI increases, offset by the reallocation of telecommunications expenses to 'other costs'. • Other costs increased by 1.7% as a percentage of revenue or $6.0m (an increase of 1.9% as a percentage of revenue or $3.8m excluding the impact of acquisitions) reflecting the reallocation of telecommunications expenses from 'occupancy costs', higher insurance premiums, investment in cyber security and higher travel costs following the removal of COVID-19 travel restrictions. Depreciation (including right-of use assets) of $20.1m increased by $4.1m ($1.3m excluding the impact of acquisitions) reflecting growth capital investments made over the last 24 months plus four months of the X-Ray Group compared to the prior comparative period and Peloton Radiology and Horizon Radiology from 1 July 2022. Execution of growth initiatives through partially debt funded acquisitions and higher interest rates led to higher interest expense (included as part of finance costs) of $5.8m (1H FY22 $5.2m). idx
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