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Edited Transcript of MVF.AX earnings conference call or presentation 24-Aug-20 10:59am GMT

Full Year 2020 Monash IVF Group Ltd Earnings Call

RICHMOND Aug 31, 2020 (Thomson StreetEvents) -- Edited Transcript of Monash IVF Group Ltd earnings conference call or presentation Monday, August 24, 2020 at 10:59:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Malik Jainudeen

Monash IVF Group Limited - CFO & Company Secretary

* Michael D. Knaap

Monash IVF Group Limited - CEO, MD & Director

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Conference Call Participants

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* David Andrew Stanton

Jefferies LLC, Research Division - Equity Analyst

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Presentation

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Operator [1]

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Thank you for standing by, and welcome to the Monash IVF Group Full Year Results 2020 Conference Call. (Operator Instructions) I would now like to hand the conference over to Mr. Michael Knaap, CEO. Thank you. Please go ahead.

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Michael D. Knaap, Monash IVF Group Limited - CEO, MD & Director [2]

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Thank you, Jody, and good morning, and thank you all for joining us today for Monash IVF Group's results presentation for the financial year 2020. Our CFO, Malik Jainudeen, joins me and will be later stepping us through some of the details of the financials.

By a way of background, Monash IVF is a market leader in providing fertility solutions for all, in our core assisted reproductive services, diagnostics, genetics and pathology services, with a network of 45 IVF and women's ultrasound clinics and service centers across Australia and Malaysia.

Today, we continue to break new ground, with improvements in our best-in-class science, patient care and services, building on our pioneering heritage since achieving a world's first IVF pregnancy in 1973. Our experienced and capable team include 121 doctors and in excess of 550 scientific nursing and support staff.

I'd now like to touch on the key points for the financial year of 2020, represented on Page 3 of the presentation.

We delivered an adjusted or operating NPAT of $14.4 million, which was above our guidance provided in June. Our results have been adversely impacted by $3.9 million impact during the March to June period compared to the previous corresponding period, which was predominantly due to the COVID-19 related temporary suspension of elective surgery. However, our recovery from temporary suspension of IVF procedures in Australia was strong and swift, with our stimulated cycles up both 33.6% in the June to July 2020 period versus the previous corresponding period. After a sustained period of Movement Control Orders in Malaysia, our Kuala Lumpur clinic is well on the path to recovery, having demonstrated 72% stimulated cycle growth in the month of July versus the previous corresponding period. Our ultrasound clinics continued to operate throughout the whole of quarter 4, although impeded by a significant but effective infection control and social distancing measures, ensuring the environment was safe for all.

We delivered market share gains across South Australia, Queensland and New South Wales, although Victoria lost market share following the departure of 5 specialists in September 2019. Importantly, the rapid recovery of IVF services post the elective surgery restrictions highlights the IVF industry resilience, and indeed, it reconfirms our best-in-class market positioning as a trusted partner.

Our capital metrics following the $80 million equity raise allows us to navigate the uncertainty of COVID-19, whilst we continue to invest into future growth opportunities, including a new Sydney CBD clinic and partnerships in Southeast Asia.

If we move on to the financial summary slide on Page 4. Our revenue declined by 4.3% at $145.4 million for the year, which was impacted adversely by the circumstances attached to COVID-19 and the sudden departure of 5 fertility specialists in September 2019.

Monash IVF Group's underlying business and fundamentals remain solid, with positive momentum of our growth and improvement programs, along with a strong patient pipeline as we enter into financial year 2021.

We achieved a $14.4 million adjusted or underlying NPAT and adjusted EBITDA of $34.8 million and a $32.8 million reported EBITDA. Malik will take us through the adjustments and the AASB16 impact, but it is worth noting that the full impact of COVID-19 is included in these financial metrics.

If we move on to the implications of COVID-19 and give a flavor of the recovery on Slide 5.

Just reminding us all that post the temporary suspension of all nonurgent elective surgery in Australia, including IVF procedures, we recommenced IVF services on the 24th of April, and indeed, that led to IVF procedures commencing around mid-May. Furthermore, a Movement Control Order was in place from March in Malaysia, with substantial easing of these restrictions occurring in early June. The temporary suspension of IVF procedures resulted in a 71% decline in our Australian stimulated cycles in the April to mid-May period. The Movement Control Order in Malaysia resulted in a 76% decline in International stimulated cycles in April and May. As a result, we experienced a $3.9 million adverse NPAT impact during March to June as compared to the previous corresponding period, which was predominantly related to COVID-19. This includes $4.9 million before tax of Job Keeper Subsidy, which was utilized to maintain engagement with our workforce during the hibernation and recovery periods. During this period, our ultrasound clinics remained open, and scan volumes were moderately impacted, with the 3.4% decline in the March to June 2020 period.

As a priority, the group implemented measures designed to protect the health and safety of its patients, employees and doctors. We've swiftly focused on initiatives to ensure we mitigated the financial impact of COVID-19, including cost and workforce management and an equity raise of $80 million. This was important to secure our liquidity position and maintain momentum on our various strategic growth initiatives.

Our patient engagement activities during the shutdown period has driven the strong recovery of pent-up demand, and increased marketing activities post the equity raise is driving growth in the patient pipeline, leading into the financial year 2021.

As we move on to the specifics of the recovery as it stands today on Slide 6.

Following recommencement of IVF services in Australia, stimulated cycles increased by 34.3% between the 18th of May and the 30th of June 2020 compared to the previous corresponding period, with 20 -- with 32.1% growth continuing into July. As you can see in this total, the combined 2 months for June and July was 33.6% growth in stimulated cycles versus the previous corresponding period.

Kuala Lumpur is in recovery following easing of the Movement Control Orders on 9th of June, resulting in 23.5% stimulated cycle growth in the combined 2 months of June and July, with July specifically up by 72% as compared to the previous corresponding period, as previously outlined.

It is worthwhile noting that the Victorian IVF business has continued to operate, notwithstanding stage 4 restrictions that were effective from the 2nd of August 2020. IVF was deemed exempt from the current suspension of nonurgent elective surgery in Victoria. The state government support to continued services is a strong message in regards to the strength of our patient and industry advocacy as well as the government's view of the importance of the critical time-sensitive service that we offer. It is with this background that we can be relatively confident on the continuity of service through the next phases of COVID-19.

I would also like to note that after a moderate decline in ultrasound scans, the combined 2 months of June to July demonstrated 9.5% growth in scan volumes.

I would now like to welcome our CFO, Malik Jainudeen, to take us through the financial overview for the year.

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Malik Jainudeen, Monash IVF Group Limited - CFO & Company Secretary [3]

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Thanks, Michael.

So if we can all turn over to Slide 8, which provides some analysis of what's happened to our revenue during the year.

It is clear that our revenues were significantly impacted in the period from March to June, as Michael highlighted, and our stimulated cycles were down by about 472 stimulated cycles compared to the previous period. The COVID shutdown period had a particularly large impact from the start of April to the middle of May, which resulted in a 527 stimulated cycle decline in that 6-week period compared to the previous year. From following the resumption of services in May, there was a large volume of work by admin and nursing staff to get patients in the pipeline this year from the middle of May. This resulted in a 35% increase in activity between the middle of May to 30 June, which minimized the impact of volume declines between March and June to impact revenue by $5.7 million.

Touching on Malaysia. So the Movement Control Orders had a proportionately larger impact on our KL clinic. The stimulated cycles declined by 180 or 51% between March and June. As Michael noted, the clinic has rebounded fairly strongly in July, with stimulated cycles up by 72% on last year.

Just noting on the impact from the exit of the 5 specialists in Victoria in the first half, clearly has had an impact on our top line, but it is within expectations. The business outside of Victoria was quite strong during the year, and we saw growth in SA, Queensland and New South Wales, which had largely offset the volume impacts from the departing specialists.

Turning over to Slide 9, which provides a summary of our P&L. Just to note, any reference to adjusted financial metrics have adjusted for certain nonregular items, which I'll go through on Page 10, and includes the impact of AASB16. And the best way to look at this is the key point to note is EBITDA, excluding the lease impacts, declined by $10.1 million.

The March to June profitability was clearly impacted by the shutdown in services, but the strong recovery of pent-up demand from mid-May to June minimized that total decline in NPAT to $3.9 million in the period from March to June. As Michael noted earlier, we are and we're eligible for Job Keeper Subsidy in Q4, which amounted to $4.9 million pretax, which was available to best manage our workforce during stand-down periods as well as optimizing the onboarding process in the recovery phase.

Marketing has been critical in growing our patient pipeline prior to COVID and continue to grow the pipeline leading into FY '21. Heavy marketing asset was made following the equity raising and in the recovery phase, which is now driving positive patient pipeline numbers across the country, including Victoria.

Just to touch on our funding costs, that reduced by about $200,000 once you add back the impact from AASB16 and the closure of ineffective interest rate swaps. And the key driver of the decline in lower funding costs was the lower BBSY, noting that our debt was higher leading into the equity raising.

Turning on to Slide 10, which provides a high level rec of our statutory profit to adjusted profit.

At half year, we had a number of nonregular items, including transaction costs and stamp duty costs associated with the Fertility Solutions acquisition as well as implementing a number of cost-out program initiatives at the time. In the second half, the cost-out program initiatives continued, which included the closure of our only low-cost clinic, MyIVF, in Brisbane during March. We also incurred $1.1 million of pretax impact, as I noted earlier, from ineffectiveness of our hedge relationships on our swaps following repayment of debt during Q4.

We also incurred additional leasing costs for the new Sydney CBD clinic, which commenced construction in late June and is now scheduled to be completed during the second half of FY '21.

Just touching on AASB16 and the lease impact, just to highlight that the EBITDA impact was to increase EBITDA by $7.2 million, increase EBIT by $1.6 million, which had a flow-on effect to increase NPAT by $300,000.

Turning on to Slide 11, which provides a high-level summary of our balance sheet at 30 June.

The equity raising was completed in late May. And the balance sheet now reflects lower net debt and is in a position to navigate any developments in the pandemic as we go forward and provides flexibility to pursue and execute on identified organic and nonorganic growth opportunities. And Michael will touch on some of those in the operational performance section.

Another thing to note is the size of our debt facility. The syndicated debt facility has reduced from $110 million to $40 million effective today, given where current net debt is sitting noting we still have access to the $40 million accordion facility for acquisitions and growth CapEx. As noted at the time of the equity raising, our banking covenants have been waived until 30 June 2021, but it's important to note that the key covenants as of 30 June being the net leverage ratio is well within the 3.5x requirement. To note that in regards to the first half FY '20 dividend, it is recognized as a liability at 30 June and will be paid on the 2nd of October.

Turning on to Slide 12, which illustrates our cash flows during the year.

You'll see the conversion of EBITDA to pretax operating cash flow was solid at 108%. And this is a considerable improvement compared to the position at half year, which was 78%. And the improvement is a reflection of some of the cash management activities in Q4 during the uncertain environment at the time. CapEx during the year was $7.5 million, which is higher than last year, due primarily to refurbishment of our strong performing Adelaide clinic, building a lab and new patient services infrastructure in Penrith in New South Wales, as well as beefing up our IT infrastructure to enhance and improve cyber risk controls.

I'll hand you back to Michael now to go through the operational performance in more detail.

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Michael D. Knaap, Monash IVF Group Limited - CEO, MD & Director [4]

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Thank you, Malik.

I would just like to take you through our domestic stimulated cycles on Slide 14.

We are pleased that we were able to predominantly mitigate the impact of the departure of 5 doctor specialists in September 2019, which is reflective of only a moderate decline in cycles of 0.8% in the third quarter of this -- of the last financial year.

The fourth quarter volume decline of 18.8% versus the previous corresponding period is a result of the implications of COVID-19. However, if we take a look at the graph on the right, this highlights that most of the decline in volumes occurred in April and the first couple of weeks of May, with a 71% decline. A rapid recovery in the cycle followed, with both June and July delivering in excess of 30% growth on the previous corresponding period.

Turning a clear picture of the phasing and impact of our IVF volumes. I would just like to cover off on the annual stim cycle volumes and our run rate prior to the COVID-19 impact in period on Slide 15.

Our overall domestic stimulated cycles declined by 5.6% for the full year, largely driven by the COVID-19 impacts and also the departure of specialists in Victoria. If I look at the year-to-date period to February 2020, we've demonstrated growth versus the previous corresponding period in all our domestic markets outside of Victoria. South Australia delivered growth of 10.1%, Queensland 15.9% growth, including the successful Fertility Solutions acquisition and New South Wales 1.9% growth. Vic declined by 14.6% in the same period for reasons outlined previously.

In the March to June period, the decline versus the previous corresponding period was 366 stimulated cycles. And furthermore, there was benefit of 99 cycles as we consolidated Fertility Tasmania into our group and a decline of 45 cycles as we closed the last of our low-cost clinics, MyIVF, in Brisbane.

If you take a look at Slide 16 on our market share.

In our key markets, our stimulated cycle market share was relatively stable at 20.4%. And it was also pleasing that our market share had improved by 0.8% compared to the 6-month period to December 2020, reflecting some positive operational momentum and a successful recovery post the COVID-19 period.

In line with the volume analysis on the prior slide, South Australia delivered growth in market share of 6.5%. It was 2.9% growth in Queensland. And New South Wales was relatively stable with a slight growth. Our Victorian market share declined by 4.1% in the same period.

As we now look at Slide 17 to focus on the broader ARS Australian market.

In our key markets, industry stimulated cycle volumes were adversely impacted by the COVID-19 disruption in April and May, with strong recovery commencing from late May to June, with an increase of 36% achieved in June versus the previous period, again, highlighting the resilience of the assisted reproduction services industry.

It is worthwhile highlighting that industry growth rates can be variable from quarter-to-quarter and more so month-to-month. We would expect to see further confirmation of the industry recovery as the July Medicare data is released towards the end of this month. And we anticipate that the recovery will continue into the first quarter of fiscal year '21, with normalization to occur from the second quarter in the financial year '21, which is subject to any further COVID-19 related disruptions.

If we take a look at Slide 18, as we start to work through some of the details of our Australian ARS operational performance, commencing with scientific leadership.

We have an unrelenting focus on investing and building scientific capability to ensure we are giving our patients the best possible outcomes and differentiating our value proposition to patients. We have demonstrated improvement in success rates. And we are prepared for the new reporting guidelines and framework as success rates become more transparent to the public later in the year. Our noninvasive preimplantation genetic screening test has increased genetic screening penetration rates to 29.8% of our domestic stimulated cycles. We continue to partner innovative organizations to advance new technologies, such as the safer and softer method of ICSI that is demonstrating improved fertility rates, therefore, creating more embryos for our patients. We anticipate commercialization to occur in this financial year. Furthermore, we are also trialing a better sperm selection device, which is targeted to further improve fertility rates.

Most importantly, our scientific team collaborated across the group on the well-established Monash Way, which continues to unify scientific practices through our group scientific advisory committee. This ensures we optimize patient outcomes, utilizing scalable and transferable scientific protocols, supported by lab benchmarking across our clinic network and learning and development programs to continually build our capability.

Turning to Slide 19 on doctor partnerships.

Doctor partnerships is a very important focus area for us, as we strive for Monash IVF to be a destination of choice for developing and experienced fertility specialists.

As highlighted on previous occasions, all our Victorian fertility specialists are now contracted with more than 97% of specialists being contracted across our group.

Our foundations for the future is strong, with 12 doctors currently in our fertility specialist traineeship programs across Australia, providing a strong pipeline for growth and succession plan. This includes 2 new Victorian fertility specialists ready for patient management in this current quarter.

Our priority is to attract new experienced Sydney-based fertility specialists to support our new New South Wales flagship clinic in Sydney CBD, which is due to open in the second quarter of financial year '21. We are continuing to focus on building our specialist strength in this very important strategic market.

I would formally like to thank our clinician group for their exceptional contribution during COVID-19, as they intensely supported a safe clinical protocols, minimal disruption in services and the recovery phase.

We are continuing to create opportunity for our doctors to develop and grow their business, particularly in our new normal during COVID-19, and we are ensuring there is high patient engagement with our doctors through digital pathways, such as webinars, Facebook and telehealth services.

We are investing in expanding our clinic and consulting network whilst enhancing our value proposition to patients and specialists. Our new Sydney CBD flagship clinic is on track to open during the second quarter of this financial year, representing best practice patient experience. This best-in-class clinic is a key initiative to attract new fertility specialists into the Monash IVF family. We have provided a preview of the construction status in this slide, which is well advanced.

We also have a particular focus on transformation of our Melbourne footprint and patient experience to ensure our infrastructure is best-in-class in our largest state-based business.

Furthermore, in Sydney, we have opened a new full-service clinic in Penrith, which commenced in October, and will provide great access to the greater western region of sudden in tandem with our clinic in Parramatta. In addition, we have refurbished our South Australia clinic, as seen in the picture below, which is an example of us continuing to modernize our clinic atmospherics to reflect the best-in-class patient experience.

Moving on to Slide 21.

Our patient experience principles remain focused on care, empathy, support and a consistent patient journey, which is validated through our net promoter score measuring tool.

It is pleasing how we successfully maintained strong positive patient engagement during the temporary suspension of services and current restrictions, which ensured pent-up patient demand converted to treatment following recommencement of services. And our patient pipeline continues to demonstrate growth on the previous period.

We remain focused on our cybersecurity program to ensure our patients' data is protected and secure. Furthermore, we are utilizing our technology to enable improved interactions with patients as the level of remote and digital engagement increases.

In regards to people engagement, our proactive approach when responding to COVID-19 included strong engagement and communication strategy to ensure our people and patients are safe and protected in all of the Monash IVF Group environments. This is a critical element in ensuring we have a safe and secure workforce to protect continuity of service where possible.

People engagement continues to remain a key priority, as we recognize our people through reward programs for demonstrating our principles. Furthermore, we are building on our specialized capability and knowledge through our dedicated learning and development framework and platforms.

Turning to Slide 22 on brands and marketing.

Hopefully, those of you in our target market have seen the new Brave Together advertising campaign. This illustrates our progressive, empathetic and empowering approach to patient care. If you haven't seen it and are interested, please do a search on Let's Be Brave Together on the Monash IVF website, and I'd be pleased to get any feedback from you all.

With an incremental marketing investment of $1.1 million, our new patient pipeline growth during May to July has exceeded pre COVID-19 levels in the previous corresponding period. Enhancements to the patient engagement strategy is building knowledge, support and empowering patients to make decisions earlier in this journey and proactively safeguard their security. Our marketing investment, innovation and strategy are key activities and points of difference to engage with our clinician group to ensure their private practices are supported by Monash IVF.

Turn to Slide 23 on our diagnostics performance.

Our ultrasound business continues to be resilient and has operated throughout COVID-19 and has demonstrated growth in the June to July period, as previously outlined. Our total scans across the group increased 1.8%. And noninvasive prenatal testing increased by 2.9%, which in light of a moderate decline in the March to June period was a good result.

There has been a demand shift between inner city and suburban clinics in both Sydney and Melbourne due to a shift in people's movement patterns. However, we continue to adjust resources where possible to ensure we capture demand.

It is essential that we protect our people and patients during COVID-19. As a result, the critical social distancing and infection control measures in place are having a negative impact on efficiency, including longer-term appointments for cleaning and underutilization of sonographer workforce due to the movement restrictions between clinics.

Implementation of our noninvasive genetic screening technology has resulted in an increase in PGT penetration from 18.3% to 29.8% as the clinician and patient uptake was strong. Furthermore, having recently launched a reproductive carrier screening service, the number of tests grew by 94% in this financial period. This service and related genetics capability is anticipated to be a key strategic driver of future stimulated cycle growth in order to prevent genetic disease in children as awareness and uptake for the service grows significantly.

Moving on to Slide 24 on our Kuala Lumpur clinic in Malaysia.

Kuala Lumpur was heavily impacted by the Movement Control Orders previously outlined. But importantly, as the Movement Control Order was eased on the month of June, there was positive early signs of recovery. Overall, the financial year 2020 Malaysia stimulated cycles declined by 205, with a decline of 189 during the March to June period due predominantly to COVID-19. This is following on from weak macroeconomic conditions in Malaysia that was experienced during the first half of FY '20. As a result, our KL revenue decreased by 14.5% from $11.6 million to $9.9 million and EBIT decreased by 24% from $5 million to $3.8 million.

I am pleased to announce that we acquired a majority stake of a boutique IVF operation in Johor Bahru, Malaysia, which was completed in June. The clinic services patients in Southern Malaysia and Singapore. And we are in a partnership with a large Malaysian private hospital group, known as KPJ Hospital Group. This clinic expands our footprint in the Southeast Asian region and is symbolic of our intention to continue strategic expansion in the region, notwithstanding the challenges given current border restrictions.

As we take a look at Slide 26, which restates our comprehensive strategy that is consistent and unchanged.

It's worthwhile noting that we are constantly monitoring any implications to our business as a result of the current pandemic. However, the resilience demonstrated through the recovery period to date reconfirms our best-in-class market positioning.

Our Vision 2022 strategic road map provides a clear pathway forward and enables everyone to understand the priorities, actions and decisions required to achieve success and deliver profitable growth in the oncoming years. We have made significant progress on our strategic pillars, as outlined in previous slides, and we'll continue to do so in order to deliver our Vision 2022.

As we move to our outlook statement on Slide 22 -- sorry, Slide 27.

As previously highlighted, the industry fundamentals remain strong, as the community seeks assistance when trying to conceive, which was not changed due to the ongoing pandemic. Our strong balance sheet positions us well to navigate through the COVID-19 pandemic and optimize future earnings through strategic and operational momentum gained during the financial year 2020. These key initiatives include opening of the new Sydney CBD fertility clinic as a flagship offering in New South Wales, a key driver to recruit new fertility specialists in Sydney, which has been demonstrated from the recent attraction of new fertility specialists. We are investing in long-term domestic growth initiatives, including the transformation of the group's Melbourne footprint and optimizing that patient experience. Our recent domestic inorganic growth initiatives, including the Fertility Solutions acquisition and majority ownership of Fertility Tasmania, will support growth. Our innovative marketing activities, which is growing the patient pipeline and focused on earlier engagement with patients during their fertility period. We firmly believe there are significant opportunities available in relatively immature Southeast Asian IVF markets over coming years, including the recent Johor Bahru acquisition completed in June. These opportunities will take a number of years, and any dilution is expected to be minimal in the early phases.

In summary, notwithstanding strong long-term industry fundamentals, current positive treatment volume recovery and patient pipelines, the group is not providing FY '21 guidance due to the continued uncertainty created by the ongoing COVID-19 pandemic. We expect to be providing an update at the financial year '20 AGM that's occurring in November.

So with that said, I'll bring to a close the formal part of the presentation, and Malik and I are happy to move to Q&A.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Your first question is from David Stanton from Jefferies.

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David Andrew Stanton, Jefferies LLC, Research Division - Equity Analyst [2]

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I noticed that your market share fell across Australia by about 20 basis points, as you pointed out. Notwithstanding, it's tough to predict the market. I wonder if you could give us some color around your forecast internally regarding further market share losses in F '20. Are you indeed forecasting further share losses? If not, can you explain why you believe it will be flat to up or -- and how this will occur?

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Michael D. Knaap, Monash IVF Group Limited - CEO, MD & Director [3]

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No, we're certainly targeting market share growth into the oncoming year, David. We have now nearly cycled out of or we will have cycled out of in September the departure of the fertility specialists, so the comps are more reasonable without any departing doctors in those comps. I guess just the other aspects. We know we have a good strong pipeline in all of our states, in Queensland, New South Wales, Victoria and South Australia. And we will also get the benefit of full year of Fertility Solutions as well. So with that, in conjunction with our expansion projects, including Sydney CBD, where we are -- have executed new doctors, and we'll continue to search for new doctors, we expect to drive some growth in that market, given we're only around 8% market share in Sydney. So there's some of the fundamental sort of reasons for our growth. But clearly, also the pipeline in regards to trainee doctors is quite strong. We will see some of those converts pretty quickly into consulting with patients and treating patients during the financial year '21.

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David Andrew Stanton, Jefferies LLC, Research Division - Equity Analyst [4]

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Understood. And then could you give us approximately what your Victorian exposure as a percentage of revenue is? We calculate around the 40 number. Is it higher or lower than that?

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Malik Jainudeen, Monash IVF Group Limited - CFO & Company Secretary [5]

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I -- we don't disclose that, David. We do about 3,000 cycles in Victoria. So that will give you an indication as to how significant the Victoria market is to us.

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David Andrew Stanton, Jefferies LLC, Research Division - Equity Analyst [6]

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Great. And in terms of -- I know that you've talked to the number of specialists that you have under contract. Could you give us sort of the average contract lengths to go, particularly in Victoria, your biggest market?

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Michael D. Knaap, Monash IVF Group Limited - CEO, MD & Director [7]

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So all our contracts are evergreen, so they're perpetual. And in Victoria, they all have a 12-month bonus period and a subsequent restraint for another 12 months, so they're long-term permanent contracts.

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David Andrew Stanton, Jefferies LLC, Research Division - Equity Analyst [8]

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Great. And before I get back in the queue, should we be thinking an increase in depreciation in F '21 compared to F '20 in absolute numbers?

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Malik Jainudeen, Monash IVF Group Limited - CFO & Company Secretary [9]

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Yes. Dave, once you take away the noise of the leasing standards, you will see an increase given Sydney -- well, the new Sydney clinic would have come out of [WIP] and start depreciating once we open in Q2. So yes, you will see a higher number.

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David Andrew Stanton, Jefferies LLC, Research Division - Equity Analyst [10]

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And then CapEx in F '21, approximately should be the same or higher?

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Malik Jainudeen, Monash IVF Group Limited - CFO & Company Secretary [11]

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Higher given the build of Sydney, say, you can put $11 million to $12 million in your modeling.

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Operator [12]

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(Operator Instructions) We'll go back to David Stanton from Jefferies.

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David Andrew Stanton, Jefferies LLC, Research Division - Equity Analyst [13]

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This is just about my ideal call, just me. So job key for F '21, I know that you did 4.5 -- 4.9 in '20. Should we be thinking that, that will continue at least for the first quarter? Or is it over now?

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Malik Jainudeen, Monash IVF Group Limited - CFO & Company Secretary [14]

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So it will continue for Q1. Eligibility beyond that is questionable. Yes, I think it's certain for Q1.

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David Andrew Stanton, Jefferies LLC, Research Division - Equity Analyst [15]

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And at about that rates, do you think?

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Malik Jainudeen, Monash IVF Group Limited - CFO & Company Secretary [16]

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Yes, yes.

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David Andrew Stanton, Jefferies LLC, Research Division - Equity Analyst [17]

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Okay. High-end IVFs compared to the low end of your -- I guess it's pretty easy to tell. But would it be fair to say that high-end IVF was marginally more impacted due to COVID than low end?

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Michael D. Knaap, Monash IVF Group Limited - CEO, MD & Director [18]

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No. We -- actually, we're well out of low-end now, David. So we closed our last low-cost clinic in MyIVF investment for internal visibility. But just based on the strength of our recovery and positive market share towards the end of the financial year, I'd suggest that we've over-delivered to the market, which indeed potentially means that the high-end full-service IVF has grown greater than low cost.

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David Andrew Stanton, Jefferies LLC, Research Division - Equity Analyst [19]

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Fair enough. And you mentioned further M&A in Southeast Asia. Would you be willing to sort of talk about which countries you'd be focusing on?

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Michael D. Knaap, Monash IVF Group Limited - CEO, MD & Director [20]

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Look, I'll talk to one particularly country that we're highly interested in is Indonesia, which is very immature from an IVF penetration perspective and very unsophisticated in regards to the scientific capability. So there's a real reason for being in that particular market given the low penetration rate. So 260 million population. It is a complex market. So we certainly aren't taking that sort of lightly, but we are learning a lot. And we're advanced in some discussions with some hospital groups to see how that pans out over the next sort of 6 months. But that's the reason why we are doing partnerships in that region because it can be complex.

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David Andrew Stanton, Jefferies LLC, Research Division - Equity Analyst [21]

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Understood, understood. And finally for me, tax rate into F '21. Anything new that we should be knowing about compared to F'20?

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Malik Jainudeen, Monash IVF Group Limited - CFO & Company Secretary [22]

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No. Fairly vanilla, Dave, the same type of 28%, 29% we have seen for the last couple of years will be consistent going into '21.

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Operator [23]

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(Operator Instructions) There are no further questions at this time. I will now hand back to Mr. Knaap for any closing remarks.

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Michael D. Knaap, Monash IVF Group Limited - CEO, MD & Director [24]

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Thank you, Jody. And thank you all for participating in the call. Malik and I look forward to catching up with many of you over the next week or so, albeit remote and working from home given we're both in Melbourne. So I look forward to catching up with you. Thank you.

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Operator [25]

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Thank you. That does conclude our conference for today. Thank you all for participating. You may now disconnect your lines.