Virtus Health (VRT) 2015 AGM Report

Company/ASX Code : Virtus Health Limited (VRT)
Venue :
2pm Hilton Sydney
488 George St
Sydney, New South Wales
Monitor : Ms Joyce Yong
AGM Details / NoM : Wednesday 28th October, 2015
# of Attendees : 40
# Holdings represented by ASA : 25
Value of Proxies : $390,000
# Shares Represented by ASA : 63,500
Market Capitalisation : $490 million

The Chairman, Mr Peter Macourt, opened the meeting saying how pleased he was that Virtus has retained its leadership position in Assisted Reproductive Services (ARS) in Australia and more recently in Ireland. He continued saying he was gratified with the growth in overall revenue by 16% to $233.7 million.

He highlighted some non recurring costs which he thought in the long term would benefit patients and the organisation: start-up and set-up losses in Singapore of almost $1.9 million, a change in clinical practices at Melbourne IVF resulting in a reduction of frozen cycles, approximating to a revenue loss of almost $3 Million, in addition a $2.4 million expense incurred on the purchase of clinics in Tasmania, the Sunshine Coast and Ireland.

In discussing the growing importance to the organisation of diagnostics, Mr Macourt said the application of genetic testing has improved ARS success rates and opened ARS up to a group of more complex patients. Virtus’ recent acquisition of Independent Diagnostic Services (IDS) has allowed the organisation to expand the range of in-house-testing available and to retain revenue from these services.

The CEO Sue Channon presented some excellent statistics on the business broken down into product categories, APS, specialised diagnostics and day hospitals. There are also some interesting numbers on staff by category; it is good to know that of the organisations workforce 18% are classified as scientists. Ms Channon’s presentation covered the business where it is now and her predictions on where growth will come from. Most of this is in the Annual Report so is not worth repeating here. 

It was gratifying to see that both directors standing for re-election spoke of the attributes they brought to their positions on the Board.

The ASA monitor spoke with regard to the remuneration report, commenting that the ASA considered LTIs of four rather than three years, would demonstrate better alignment with shareholders interests and that vesting should start at the 51st not the 50th percentile.

More importantly the conditions for satisfying the key performance indicators for the STIs and LTIs are not specified at the beginning of the year but are set by the Board at the time they are granted. This causes the report to be less than transparent and does not meet ASA guidelines. In his response, the Chairman said that he would take those comments on board.

On the re-election of Mr Peter Turner, the monitor asked if Mr Turner could tell shareholders how Ashley Services Group got into trouble with the regulators under his watch as Chairman. Mr Turner responded that there had been no issue with the regulator and there had been governance and confidentiality issues with regard to senior staff which he was not in a position to discuss.

ASA also noted that VRT has a number of business areas: IVF, cryogenics, genetic testing, day hospitals and sought the Chairman’s view on what he saw as the biggest area of growth in the next five years. The Chairman thought that even though 65% of revenue was derived from non IVF services, IVF would still be biggest growth area.

Full results of the meeting can be viewed here. ASA voted in favour of all resolutions other than the Remuneration Report. 

This company is monitored by Ms Joyce Yong, assisted by Ms Elizabeth Fish.