ANNUAL REPORT
2018-19
Contents
Industry Trends
Key Highlights
Chairman and CEO's Message
Our Executive Team
Our Customers
Growing and Evolving Our Network
Environmental, Social and Governance (ESG)
Tax Transparency Report
Corporate Governance
Our Board
Shareholder Information
Annual Financial Report
Directory of Estia Homes
04
06
08
10
14
16
20
30
34
35
38
43
130
Thank you to all the residents and employees who feature in this report.
2018-19 Annual Report | Estia Health 3
Resident Allan enjoys
time in the garden.
Industry Trends | Key Highlights | Chairman and CEO’s Message | Our Executive Team | Our Customers | Growing and Evolving Our Network | ESG
Industry Trends
Influencing our Strategy
1. SECTOR REFORM
4. SUSTAINABILITY
The aged care sector has seen significant change in the past 18
months including the calling of the Royal Commission into Aged
Care Quality and Safety. The establishment of the Aged Care
Quality and Safety Commission and the new Aged Care Quality
and Safety Standards inform how providers design services to
meet community expectations and build trust in the sector.
Estia Health strongly supports reforms that deliver sustainable,
high quality and safe aged care services. We look forward to the
Interim Report from the Royal Commission into Aged Care Quality
and Safety due in October 2019.
As awareness of environmental issues increases, including the
impacts of climate change, waste and finite natural resources,
residential aged care providers are incorporating sustainability into
their broader business strategies. In FY19 Estia completed a formal
Materiality Assessment, asking over 2,000 of our stakeholders
what they believe our priority areas are for sustainability. This
assessment will form the basis of our first formal Sustainability
Strategy in FY20.
2. AGEING POPULATION
5. AGED CARE WORKFORCE
The demographic trends that support the growth in demand for
aged care are undeniable. Australia has one of the highest life
expectancies in the world and the number of Australians over
85 years of age will double by 20421. As people live longer,
the need for specialist aged care increases with dementia and
Alzheimer’s disease now the second leading cause of death in
Australia2. Residential aged care is a critical aspect of the health
system providing specialist aged care services to people that can
no longer live at home.
The Aged Care Workforce Strategy Taskforce’s 2018 report
‘A Matter of Care – Australia’s Aged Care Workforce Strategy’
outlined priority areas for training, developing and retaining
employees and providing career pathways to increase the skills
required to meet community expectations and the changing
requirements of aged care. Estia is implementing strategies to
address matters identified by the Taskforce to build the capacity of
our employees and shape our workforce to meet emerging trends.
3. GROWTH AND MARKET CONSOLIDATION
6. CUSTOMER CHOICE
The Aged Care Financing Authority (ACFA) has identified the
need for structural reform to the residential aged care sector.
ACFA has identified the need for regulatory certainty and
sustainable funding arrangements including greater contribution
by consumers according to capacity to pay. We support reforms
that provide greater consumer choice and policy settings that
enable aged care providers such as Estia, who have the scale
and capacity to respond to regulatory change and invest in their
people, portfolio and services.
As community expectations of quality care continue to rise,
building trust and confidence in the residential aged care sector is
essential. The introduction of Consumer Directed Care (CDC) into
home care, means customers have more control over the types of
care and services they can access, and are remaining at home for
as long as possible. At Estia we train and educate our people to
understand and deliver true person-centred care, combined with
developing services and products that offer choice and flexibility
to the residents in our care.
1. www.abs.gov.au/ausstats/abs@.nsf/mediareleasesbytitle/58FF5A2527DDD70ECA2568A90013634F?OpenDocument
2. www.aihw.gov.au/reports/life-expectancy-death/deaths-in-australia/contents/leading-causes-of-death
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Tax Transparency Report | Corporate Governance | Our Board | Shareholder Information | Annual Financial Report | Directory of Estia Homes Industry Trends | Key Highlights | Chairman and CEO’s Message | Our Executive Team | Our Customers | Growing and Evolving Our Network | ESG
Key Highlights
Financial Performance
OPERATIONAL BEDS
AVERAGE OCCUPANCY¹
REVENUE
5,909
6,046
6,102
93.5%
94.2%
93.6%
$524.6m
$546.9m
$586.0m2
FY17
FY18
FY19
FY17
FY18
FY19
FY17
FY18
FY19
PROFIT AFTER TAX
EARNINGS PER SHARE
DIVIDENDS PER SHARE
Key Highlights
Growth and Network of Homes
Statistics are as at 16 August 2019 (except as noted)
Total number of
operational homes
— Metro
— Regional
Freehold sites
Total operational places
– 30 June 2019
Total operational places
– 16 August 20191
69
53
16
62
6,102
6,180
$40.7m
$41.2m
$41.3m
18.2¢
15.8¢
15.8¢
15.8¢
15.8¢
Number of single rooms
5,091
8¢
FY17
FY18
FY19
FY17
FY18
FY19
FY17
FY18
FY19
1. Mature homes only
2. Total revenue includes the $10.3 million temporary funding increase
Single rooms as
percentage of total rooms
Average number of
places per home
Number of homes
receiving significant
refurbishment supplement
91%
90
34
QLD
8 homes
851 places
NSW
17 homes
1,890 places
VIC
27 homes
2,091 places
SA
17 homes
1,348 places
1. Total operational places reflects the removal of 48 beds on 1 July 2019 from the
mature home portfolio and the new Maroochydore home (126 beds) which opened
for first residents on 26 August 2019.
Health and Safety
Gender Diversity
Professional Development
Employees
LTIFR1
FY17
FY18
9.1
FY19
7.6
16.9
BOARD COMPOSITION
EXECUTIVE POSITIONS
EMPLOYEES TRAINED ACROSS PROFESSIONAL
DEVELOPMENT PROGRAMS
EMPLOYEE TURNOVER
FY17
FY18
FY19
3,894
3,092
4,959
21%
1. Lost Time to Injury Frequency Rate (LTIFR).
12 month rolling average.
57% Male
43% Female
56% Male
44% Female
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Industry Trends | Key Highlights | Chairman and CEO’s Message | Our Executive Team | Our Customers | Growing and Evolving Our Network | ESG
Chairman and
CEO’s Message
Access to affordable, quality residential aged care is one of the major
challenges facing older Australians. Estia Health plays a significant
role in meeting this need. As a result, your Company is well placed to
capture emerging growth opportunities in residential aged care,
while creating value for all our stakeholders.
Estia Health has delivered sound
results for the 2019 financial year
that reflect our disciplined approach
to delivering high quality and safe
residential aged care services to
everyday Australians.
Our focus is on continually improving
the quality of care and amenity for
residents while sustainably growing
earnings through measured, well-
executed investment in new homes and
refurbishments across our portfolio.
Total revenue increased 7.1 per cent
to $586.0 million, earnings before
interest, tax, depreciation and
amortisation are up 4.3 per cent to
$94.0 million and net profit of $41.3
million is in line with last year.
The Company’s performance for the
year is testament to the hard work
and dedication of our 7,500 people.
Access to affordable, quality residential
aged care is one of the major
challenges facing older Australians.
Estia plays a significant role in meeting
this need. As a result, your Company
is well placed to capture emerging
growth opportunities in residential
aged care, while creating value for all
our stakeholders.
THE FUTURE OPPORTUNITIES
AND CHALLENGES FOR
AGED CARE
With the number of Australians over
85 years of age expected to double
by 20421, Australians’ confidence
and trust in our aged care sector
is critical.
Estia strongly supports further
reform in the aged care sector to
ensure delivery of sustainable, high
quality and safe aged care services
for the future.
We look forward to the Interim
Report from the Royal Commission
into Aged Care Quality and Safety
due in October 2019 that may provide
the Government and the sector with
further guidance for reform.
Estia supports the recommendations
in the Aged Care Financing Authority
(ACFA) submission to the Royal
Commission for significant structural
reform in the way aged care is funded
to achieve stable, predictable and
equitable arrangements for allocating
appropriate funding for the sector.
We support strong prudential and
governance oversight systems to
ensure protections for residents and
transparency on how Government
aged care funding is applied
by providers.
Future sector funding should be
flexible to effectively and efficiently
meet Australia’s growing need for
aged care and increasing community
expectations including expanded
opportunities for contribution by
those with capacity to pay.
INVESTING IN SUSTAINABLE
GROWTH
Estia’s focus is sustainable growth
by continually improving clinical
governance, quality management
and resident care systems through
employee education, technology
development and service
enhancement. This is supported by
disciplined investment in acquisition,
construction of new homes and
redevelopment of existing properties
to grow bed capacity and drive
future earnings.
As a result, we were well prepared for
the introduction of the new Aged Care
Quality Standards from 1 July 2019.
During the period under review we
invested $93.8 million, our highest
level of capital investment since
listing in 2014, in expanding and
refurbishing our portfolio of homes.
Including a new 110 bed home at
Southport which opened in May and
a 126 bed home at Maroochydore
which opened in August 2019, both
in Queensland. Refurbishments
across the portfolio have enhanced
resident amenity, improved the
marketability of the homes and are
generating incremental earnings
through Higher Accommodation
Supplements. We have 34 of our
69 homes qualifying for the Higher
Accommodation Supplement as of
16 August 2019.
1. www.abs.gov.au/ausstats/abs@.nsf/mediareleasesbytitle/58FF5A2527DDD70ECA2568A90013634F?OpenDocument
Estia has outstanding leaders at
all levels of the Company who
understand both the opportunities
and challenges of the aged care
sector. We have strong teams in each
of our homes, including Registered
Nurses rostered in every home 24
hours a day, seven days a week, who
work hard to ensure the right level of
care is delivered to each resident to
address their increasingly complex
and varying needs.
To continue to attract, train and retain
the highest calibre employees we
regularly assess and refine our skills
development and leadership pathway
programs. We are building our
workforce in anticipation of the rising
demand for skilled and empathetic
employees to care for the increasing
number and complexity of care needs
of our residents.
We would like to thank our
employees and our leadership group
for their ongoing commitment,
compassion, professionalism and
hard work in ensuring our residents
receive the best care.
We also thank our shareholders for
their continued support.
We believe the future of residential
aged care in Australia will be driven
by well-governed, quality-focused
providers like Estia with capacity
to meet the demands for choice in
how we care for our elderly as the
country's population ages.
As one of Australia’s largest
residential aged care providers, we
look forward to continuing to play a
critical role in delivering sustainable,
high quality and safe aged care
services for all Australians.
Yours sincerely,
Dr Gary Weiss, AM
Chairman
Ian Thorley
Chief Executive Officer
Dr Gary Weiss, AM
Chairman
Ian Thorley
Chief Executive Officer
We experienced lower RAD inflows
of $14.6 million throughout the year
and anticipate this trend of lower
RAD preferences and higher level of
concessional residents will continue
in the short term ahead of major
sector reform.
Our balance sheet remains strong
with net bank debt of $110.4 million
at 30 June 2019. With available debt
facilities of $201.0 million we are well
capitalised and have flexibility to
manage changing resident payment
preferences, as well as capacity to
execute our growth plans.
Planned investment for FY20
includes between $120.0–150.0
million for the continuation of
the significant refurbishment
program and construction and
pre-planning for new greenfield
and brownfield projects.
COMMUNITY FOCUS
Our strong local community
engagement program is reflected in
Estia’s average occupancy of 93.6%
for the year.
SUSTAINABILITY
With a network of 69 homes across
four states, it is vital that we maintain
clear visibility on the impact we
might have on the communities in
which we operate. Recognising the
growing significance of non-financial
considerations for the long-term
sustainability of the organisation,
we developed our first Sustainability
Charter during the year.
We also conducted a materiality
review with over 2,000 of our key
stakeholders including residents,
families and employees to help
determine and prioritise the
issues Estia will address to ensure
sustainable social value creation
throughout our operations.
We are committed to delivering the
highest quality care to people who
choose to trust us at an important
time in their lives. We understand
that people want to stay at home
for as long as possible and when
entering residential aged care, have
a strong preference to remain in their
own community.
From this review we are developing
a Sustainability Strategy and
framework to report to stakeholders
and benchmark our progress on the
initiatives to support the sustainable
social value we create in our
communities and against our targets
for reduced energy consumption and
waste minimisation.
We aim to be the provider of choice
in the communities in which we
operate and ensure that each of our
homes and the services they offer
are reflective of their location and
the preferences of that community.
ESTIA IS A PEOPLE BUSINESS
There is no greater priority for Estia
than striving for the highest quality
of care, safety and wellbeing for the
8,000 residents we care for annually
and 7,500 employees.
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From left to right:
Standing: Damian Hiser, Rita Sheridan, Ian Thorley, Mark Brandon OAM, Jane Murray.
Seated: Steve Lemlin, Leanne Laidler, Sean Bilton, Fiona Caldwell
Our Executive Team
Our Executive Team is responsible for ensuring we provide consistently high quality residential aged care to all
the communities we serve. Led by Chief Executive Officer Ian Thorley, the team brings extensive expertise across
the health care, aged care and corporate sectors. As a team, they are responsible for setting and implementing
a strategy for Estia Health to become Australia’s most trusted residential aged care provider, providing access to
high quality residential aged care to all who need it.
DAMIAN HISER
Chief Customer
Officer
RITA SHERIDAN
General Manager
Development and
Property
IAN THORLEY
Chief Executive
Officer and
Managing Director
MARK
BRANDON, OAM
Chief Policy and
Regulatory Officer
JANE MURRAY
Chief People Officer
STEVE LEMLIN
Chief Financial
Officer
LEANNE
LAIDLER
Chief Quality and
Risk Officer
SEAN BILTON
Chief Operating
Officer and
Deputy Chief
Executive Officer
FIONA
CALDWELL
Chief Information
Officer
IAN THORLEY
Chief Executive Officer and Managing Director
Ian has over 30 years’ health and aged care experience
in both Australia and overseas.
Appointed as Chief Executive Officer in October 2018,
Ian was previously Estia's Chief Operating Officer
from October 2016, where he was responsible for
leading Estia’s operations and care teams, embedding
key improvements resulting in revenue growth and
operational efficiencies, while delivering consistently
high standards of quality care to residents across a
growing portfolio of homes.
Ian’s executive experience includes CEO and COO roles
in large aged care groups, acute private hospital groups
and diagnostic services. Ian has been at the forefront
of major developments that have shaped Australia’s
healthcare sector, including the privatisation of public
hospitals, new reimbursement and funding models, and
a broad range of public/private sector service models.
Ian has held the position of Non-executive Director in
private equity owned, and ASX listed companies and
has consulted to aged care operators, private hospital
groups, health insurers, health logistics and specialist
health recruitment businesses throughout Australia.
Ian is a Graduate of the Australian Institute of Company
Directors (GAICD) and holds a Master of Commerce
from the University of NSW.
DAMIAN HISER
Chief Customer Officer
Damian is a senior healthcare executive, with nearly
30 years’ experience in the private health care sector
in Australia and the Middle East, and the last eight
years in aged care in Australia. Damian brings a wealth
of experience and understanding of the complexities
of health care systems, looking at opportunities to
improve the customer experience to contribute to
business sustainability and growth.
Appointed to the role of Chief Customer Officer in
October 2017, Damian is responsible for programs that
improve the experience for residents and their families
as they navigate the difficult and emotional journey
into aged care, to help make the transition as easy
as possible.
He leads a team in the areas of hospitality and lifestyle,
marketing and communications and client services in
building Estia’s brand as one of the most respected and
preferred aged care providers in the local communities
in which it operates.
Damian holds a Bachelor of Optometry (UNSW) and a
Master of Business Administration (UTS).
RITA SHERIDAN
General Manager Development and Property
Rita Sheridan’s career spans capital development in
the aged care and accommodation sectors, residential
construction and commercial interior design.
Appointed to the role of General Manager Development
and Property in March 2018, Rita leads Estia’s capital
development and property maintenance programs.
Prior to joining Estia, Rita was General Manager
Property for Amana Living and previously Southern
Cross Care (WA) Inc where her responsibilities included
leadership and management roles in strategic planning
and developments, asset and maintenance services,
retirement living and affordable community housing.
She has a significant record of successful completion
of major capital developments in both aged care and
retirement living, bringing together strategic market
insight and functional service details that support the
key requirements of the business.
Rita holds a Business degree majoring in Accounting
and has held committee positions with ACSWA and the
Property Council WA.
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MARK BRANDON, OAM
Chief Policy and Regulatory Officer
STEVE LEMLIN
Chief Financial Officer
With 40 years’ experience in the health and aged care
sectors, Mark is an internationally recognised leader on
strategy, quality, accreditation and government relations.
Steve holds 30 years’ experience in senior financial and
operational leadership roles across a range of professional
services businesses in Europe and Australasia.
Joining Estia in February 2017 as Chief Financial Officer,
Steve is responsible for corporate finance and investor
relations and also leads the broader finance team in
supporting our homes deliver the best experience for
our residents through accurate and timely
management information.
Prior to joining Estia, Steve was Finance Director at
private equity owned Careers Training Group, which
followed his role as CFO and then COO at leading
digital advertising and engagement company, the
White Agency, part of STW Australia’s largest listed
communications group. Steve has held senior financial
leadership roles at MYOB/Solution 6, Reckon and
Ramsay Health Care as well as leading a management
buyout, turnaround and subsequent sale of a corporate
training business.
Steve is a Fellow of the ICAEW and holds an Honours
Degree in Accounting and Finance from the University
of Lancaster, UK.
He is a member of the panels of experts for the
International Society for Quality in Healthcare and the
International Federation on Ageing. His experience also
includes Vice Chair of the International Accreditation
Council and advisor to governments.
As Chief Policy and Regulatory Officer, Mark’s remit includes
key stakeholder relationship management and oversight
of regulatory compliance. Mark was CEO at the Australian
Government Aged Care Standards and Accreditation
Agency Ltd from 2002 to 2013. He previously held senior
executive positions at Medibank Private and Medicare and
was a member of the Aged Care Minister's Advisory Council.
He is a member of the Advisory Board in the School
of Business at University of Notre Dame Australia and
a mentor in the International Society for Quality in
Healthcare mentoring program.
JANE MURRAY
Chief People Officer
Appointed to the role of Estia’s People and Culture
Director in July 2017, Jane has had senior human
resources and change leadership roles for top ASX
listed companies and government agencies, including
AXA Asia Pacific, AMP, Australian Casualty and Life and
the Victorian Funds Management Corporation.
Jane leads the delivery of Estia’s people strategy,
founded on building a strong employee culture and
positioning Estia as the employer of choice in the aged
care sector. Her role includes delivering strategies
for attracting and retaining a high quality skilled
workforce and developing career pathways to ensure
the sustainability of Estia’s workforce. She is also
responsible for learning and development programs
for all of our employees, as well as specialist role based
training around clinical care and leadership. Jane is also
responsible for work health and safety programs.
As an internationally accredited Organisational
and Executive Coach, Jane has proven capability in
unlocking leadership potential within organisations.
Jane attained her International Coaching Federation
Associate Certified Coach (ACC) credential for
organisational coaching in early 2017.
Jane holds qualifications across Human Resources,
Project Management and Organisational Change.
LEANNE LAIDLER
Chief Quality and Risk Officer
SEAN BILTON
Chief Operating Officer and Deputy CEO
Appointed in May 2019 as the Chief Quality and Risk
Officer, Leanne is a senior healthcare executive with
over 40 years’ experience in the hospital sector in
Australia and overseas.
Appointed as Estia’s Chief Operating Officer and
Deputy CEO in October 2018, Sean brings a breadth
of experience from more than a decade as a senior
executive in the sector across a diverse range of roles.
Prior to her appointment with Estia, Leanne was National
Deputy Clinical Governance Manager for Ramsay Health
Care and previously Group Vice President Nursing,
Learning and Operational Excellence with Parkway Health
based in Singapore.
Leanne is responsible for leading Estia’s delivery of
high quality care to our residents in safe and supportive
environments. This involves the development and
implementation of a person-centred care framework
that combines quality and risk management strategies.
Leanne’s role is focused on embedding a continuous
improvement culture, using quality indicator
measurement and a risk management framework
that enables transparent incident reporting, data
analysis, trending and benchmarking with validation
of compliance via audit.
Leanne is a Registered Nurse with a post registration
Bachelor of Nursing awarded from Deakin University
and a Master of Business from Monash University. She is
currently enrolled in a Master of Gerontology program.
Sean is responsible for leading Estia’s operations teams,
initiating improvements to ensure the highest level of
care is delivered to the 8,000 residents in our homes
annually. Sean ensures that every one of our 69 homes
engage with their local communities and works closely
with teams on the ground, supporting and empowering
them to deliver exceptional and compassionate care to
all residents as they make the journey into aged care.
Prior to joining Estia, Sean was Commercial Director
at Opal Aged Care and previous to that was an
Investment Manager with AMP Capital Investors,
responsible for managing assets in aged care,
agriculture and resources sectors.
Sean commenced his career in the Financial Advisory
business of PricewaterhouseCoopers.
He holds a Bachelor of Economics from UNSW and is a
Fellow of the Financial Services Institute of Australia.
FIONA CALDWELL
Chief Information Officer
With over 25 years’ experience in various IT strategic
and operational leadership capacities, Fiona brings to
Estia a wealth of practised knowledge and a sound
background in managing IT solutions and projects.
Appointed to the role of Chief Information Officer in
October 2017, Fiona leads Estia’s IT team in the delivery
of modern and innovative technologies and services
and seeks to advance the level of assistance and
amenities available at Estia.
Fiona is a recognised leader in optimising the IT
user experience. She has extensive experience in the
Government and Commercial sectors, including
Village Roadshow, Cenitex and the Tatts Group.
Fiona holds a Bachelor of Computing and Master of
Business Administration from Monash University.
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Our Customers
• The care we deliver is monitored by uniform clinical
quality indicators, which are measured and reviewed by
our Quality Improvement Committee.
• As part of our culture of continuous improvement
and to address feedback from our residents and
families on the care and services they receive,
we conduct internal benchmarking on customer
satisfaction. This benchmarking is against The Aged
Care Quality and Safety Commission’s (ACQSC)
Consumer Experience Report (CER) Surveys
conducted at assessment visits at Estia homes.
Across our homes, we have received an average
satisfaction result of over 90% for CER Surveys
conducted by the ACQSC during FY19.
• We have also launched a pilot program of a digital
customer pulse survey for our homes to seek continuous
feedback across the customer journey, including the
CER Survey.
ENGAGING ACTIVITIES
Providing a range of activities for our residents is key to
the care we deliver.
All of our homes have a lifestyle team, who program
daily activities based on residents’ input and feedback.
This includes games, cooking and craft, the arts,
cultural activities, and spiritual and religious events.
Our lifestyle team also schedule regular outings to help
our residents remain connected to their community,
family and friends.
FRESH FOOD PHILOSOPHY
Our food philosophy is ‘thoughtfully sourced, freshly
prepared, served with love’. Each home’s menu is
crafted based on residents’ preferences. Where
possible, we source from Australian producers with a
focus on fresh ingredients and from suppliers who are
recognised as the best in their field. We are continuing
to invest in training our Chefs, running masterclasses to
upskill them in delivering nutritious, quality meals for all
residents. Our food is prepared fresh on-site every day.
At Estia Health, our priority is to ensure that our
residents settle into their new home. This means our
experienced clinical, hospitality and lifestyle teams
work closely together to provide tailored experiences
that best suit each resident’s needs.
With the introduction of the new Aged Care Quality
and Safety Standards on 1 July 2019, we have been
training and educating our people to understand the
changes and strive to deliver true person-centred care.
Supported by our revised brand purpose of enriching
and celebrating life together, we will continue to embed
our core values and principles through our family code.
Our teams understand that each resident has their
own story to tell; with different experiences, memories,
preferences, identity, values, beliefs, hobbies, likes
and dislikes. Of the 8,000 residents we care for
annually, there are over 95 cultural backgrounds and
22 languages spoken. We have a diverse family of
employees and where we see the opportunity, we will
utilise their breadth of experience and backgrounds to
help our residents settle into the home.
WHAT WE PROVIDE
Access to quality care
• Estia provides short-term respite care for people
that may need additional support if they are being
cared for at home by a loved one, or following a
hospital stay when they are unable to return
home immediately.
• We provide permanent care for people that are no
longer able to live at home. A number of our homes
have Memory Support Units, providing a safe and
supportive environment for residents requiring
additional specialist dementia care.
• Our homes are managed and led by Executive Directors
to ensure every resident has the best experience
possible. They work closely with Care Directors, who
lead an experienced team of Registered Nurses and
carers to provide support and care, tailored to our
resident’s needs. We have Registered Nurses rostered
on in all homes 24/7.
• When new residents are welcomed into an Estia home,
our skilled team assess each resident’s individual
needs to develop tailored clinical care plans. We also
include families in the process to learn more about
each resident beyond expected care needs, helping
us identify meaningful ways to assist them to feel
comfortable and supported in their new home.
When Ian Stock came to stay
Initially Ian was apprehensive about coming into aged
care, but he had suffered a series of falls in his family
home and was struggling to cope, so began to come
into Estia for short periods of respite care.
Ian says ‘The best thing about coming in for short-term
care was that it was so much easier for my wife – when
I was falling it was not fair on her. I’m a big guy, and she
would struggle to pick me up and help me’.
‘She bought me a special chair (which cost a fortune)
to try and make me more comfortable and help me get
up and out of it - but it was quite low and it was just
terrible and it was so hard to get in and out. I’ve learnt
you have to be very careful where you sit!’
‘I would come in for a week and we would both feel
better after having a period of respite – then I would
go home and I’d have another bad fall. I came in about
five or six times, but after this, we decided it was best
I moved in permanently. Since moving in, I haven’t felt
like I’m about to have a fall. I think it’s the fact that I’ve
always got something to hang on to, either the railing
or a seat, and I have people here to help me - these
have made me feel much safer and more stable.’
When Ian first moved in, all the staff were very friendly
– they all knew his name and took the time to get
to know him. Ian quickly started to like Estia and
appreciated the daily care he received.
Regular outings are an important part of the care ‘I like
to go to the Men’s Shed on Thursdays and Fridays –
in fact I love it. I used to be a mechanic by trade, but
I don’t do anything like that anymore. I just like to go
down and play snooker and have a rest. The thing I
enjoy most about the Men’s Shed is the company and
the friendly banter’, says Ian.
‘It’s nice when my wife comes to visit – we sit in my
room and we just get to talk. The most important thing
to me living here is the staff, they all respect you and
they treat you well.’
“I came in about five or six
times, but after this, we
decided it was best I moved in
permanently. Since moving in,
I haven’t felt like I’m about to
have a fall.”
— Ian, Resident at Estia
Estia resident Ian, is cared for by Registered Nurse, Charizza.
14 Estia Health | 2018-19 Annual Report
2018-19 Annual Report | Estia Health 15
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Growing and Evolving
Our Network
At Estia Health, we are continually looking at ways to provide local communities with access to quality residential
aged care. Our approach involves a combination of new homes, redevelopment and refurbishment to enhance and
expand our network.
This year we have invested a total of $93.8 million to increase the number of beds available in our network, as
well as continuing our overall refurbishment program focused on enhancing the resident experience and meeting
community expectations.
EXPANDING OUR NETWORK OF HOMES
This year we opened Estia Southport in May and
Estia Maroochydore in August. Both are examples of
our strategy to grow and expand our network of homes
and deliver high quality residential aged care facilities,
that meets community needs and expectations.
The homes were each constructed on time and
within budget with an integrated approach between
the architects, builders and commissioning teams,
to ensure a smooth transition from building design,
through to commissioning and launch.
Estia Southport is an example of capital recycling
where we developed the former 60 bed home into a
contemporary 110 bed home.
ENHANCING OUR HOMES
Our significant refurbishments program began in 2017
and has prioritised investment on the needs of each
home to improve the resident experience.
During FY19, 13 homes with a total 1,105 beds were
refurbished through capital investment of $15.5 million.
A further 15 homes with an additional 1,562 beds are
scheduled for refurbishment during FY20. This will
result in 49 homes with 4,801 beds being eligible for
the Higher Accommodation Supplement by 30 June
2020. The remaining homes are being assessed for
potential refurbishment or redevelopment opportunities.
Estia Grovedale
Estia Health breaks
ground at $39.2 million
Blakehurst site
In June 2019, Estia turned the first sod at an official
ground-breaking ceremony to mark the start of
construction of Estia Blakehurst. This shows the
benefits of redeveloping within the existing portfolio,
with the original home demolished in 2018. It is now
being developed as a new 108 bed home.
Gamilaroi representatives performed an
Acknowledgment to Country and smoking
ceremony before construction began.
Estia Southport
Opened May 2019
• 110 single rooms with ensuite.
• Integrated café, hairdresser, cinema.
• Project capital investment - $28.7 million.
• Dedicated 17 bed Memory Support Unit with
courtyard, provides a safe and supportive
environment for residents requiring specialist
dementia care.
• Private internal garden atrium.
Estia Maroochydore is a greenfield development
providing 126 single rooms with a dedicated 18 bed
Memory Support Unit. Located within close proximity
to the recently developed Maroochydore town centre,
this tranquil location allows residents and their families
to continue to be part of their community.
Estia Maroochydore
Opened August 2019
• 126 single rooms with ensuite.
• Integrated café, hairdresser, cinema.
• Project capital investment – $32.5 million.
• Dedicated 18 bed Memory Support Unit
with courtyard.
• Resort style design reflects the local
community setting.
16 Estia Health | 2018-19 Annual Report
2018-19 Annual Report | Estia Health 17
Tax Transparency Report | Corporate Governance | Our Board | Shareholder Information | Annual Financial Report | Directory of Estia Homes FUTURE DEVELOPMENT AND ACQUISITION PLANS AND OPPORTUNITIES
Estia will continue to grow via development and future acquisition opportunities within existing
geographic networks.
DEVELOPMENT
TOTAL NEW
PLACES
NET ADDITIONAL
PLACES
LAND
HELD
DEVELOPMENT
APPROVAL
LICENSES
SECURED
STATUS
EXPECTED
OPENING
COMPLETE
Twin Waters, QLD
Kogarah, NSW
Southport, QLD
114
72
110
Maroochydore, QLD
126
UNDERWAY/IN PROGRESS
Blakehurst, NSW
108
St Ives, NSW
Wollongong, NSW
Burton, SA
Aldgate, SA
Maitland, NSW*
Mona Vale, NSW
118
115
28
120
108
54
114
22
110
126
108
118
115
28
90
108
–
Open
Open
Open
Open
Sep 2017
Mar 2018
May 2019
Aug 2019
Under Development
1HFY21
Partial
Under Development
2HFY21
Advanced Planning
1HFY22
Advanced Planning
FY22
Advanced Planning
FY23
Contract subject to
approvals
FY22
Detailed Assessment
TBA
*Contract subject to closing terms and conditions (including the transfer of licences) and is expected to be completed by 31 December 2019.
Industry Trends | Key Highlights | Chairman and CEO’s Message | Our Executive Team | Our Customers | Growing and Evolving Our Network | ESG
Estia Southport – Part of your Community
QUALITY AGED CARE FOR THE
SOUTHPORT COMMUNITY
BUILDING FOR THE FUTURE –
ENVIRONMENTAL CONSIDERATIONS
The new home is a $28.7 million brownfield development
replacing the original home built in the 1970s. Bed capacity
has increased from 60 to 110 beds.
Through close consultation with the architects, the
home was developed to adapt to changing climate as
well as reducing negative environmental impact.
Estia Southport expanded our network of homes
in Queensland to eight homes, including Estia
Maroochydore. This is part of Estia’s strategy to provide
a breadth of choice for the local communities within
the South East Queensland region.
Key features
• Spacious single rooms with ensuite offer a
comfortable environment for residents.
• A 17 bed Memory Support Unit provides a safe and
supportive environment for people needing more
specialist care.
• Large café open to the local community.
• Lifestyle activities encouraging ongoing
community interactions.
• 1,800 LED lights installed resulting in an estimated
reduction of energy consumption of 20-30%
compared to traditional fluorescent lights.
• 368 solar panels installed with a solar capacity of
98 kW, reducing CO2 emissions by an estimated
107 tonnes per year.
• 110 POD bathrooms, pre-constructed and then
installed onsite, streamlining manufacturing process
resulting in total wastage of materials during
production is less than 1%.
• 10 solar pre-heat warm water systems will save
an estimated 203,670 MJ/year and approximately
$5,000 annual gas cost.
• The home is located alongside a sensitive mangrove
habitat and the design ensured low impact on the
environment, while presenting views and amenity for
our residents.
18 Estia Health | 2018-19 Annual Report
2018-19 Annual Report | Estia Health 19
Architects, builders and commissioning teams work together to ensure a smooth transition from building design, through to commissioning and launch.
Tax Transparency Report | Corporate Governance | Our Board | Shareholder Information | Annual Financial Report | Directory of Estia Homes Industry Trends | Key Highlights | Chairman and CEO’s Message | Our Executive Team | Our Customers | Growing and Evolving Our Network | ESG
Environmental, Social
and Governance (ESG)
A snapshot from FY19
GOVERNANCE:
Materiality:
Whistleblowing Policy:
ENVIRONMENTAL:
Carbon:
SOCIAL:
Our People:
• Completed first formal Materiality Assessment
of Environmental, Social and Governance related
issues in line with Global Reporting Initiative (GRI)
Standards, engaging more than 2,000 internal and
external stakeholders.
• Updated Estia’s Whistleblowing Policy to comply
with the Treasury Laws Amendment (Enhancing
Whistleblower Protections) Act 2019 that came into
effect on 1 July 2019 providing greater legislative
protections for whistleblowers.
Estia’s Sustainability Committee:
Nil Political donations
• Implemented Executive Sustainability Committee
representing all business units, meeting quarterly
formalising integration of ESG issues into wider
business strategy.
• Published Sustainability Charter on website.
• Commissioned a formal Sustainability Strategy to guide
focus areas and initiatives over the next three years.
Sustainability and Corporate Social Responsibility
Memberships:
• Member of the Ethics Alliance.
Estia’s Organisation Governance:
• Organisation risk management and risk
profiling framework updated and approved
by Board Risk Committee.
Data Protection:
• Developed Information Security Policy and security
incident response plan.
• Established Information Security Steering Committee
reporting to the Audit and Risk Committee.
Privacy Policy:
Tax Governance:
• Tax Transparency report provided in this Annual
Report. Estia’s tax governance is overseen by the
Board’s Audit Committee and is guided by its Board
Tax Policy and Tax Risk Management Framework.
Materialit y
O
u
r
P
e
o
p
e
l
S
o
c
i
a
l
O
u
r
C
o
m
m
u
n
i
t
i
e
s
s
t a i n a b i l i ty
C o m m i t t e e
u
S
Organisation
Governance
G
o
v
T
a
e
r
n
x
Our ESG
Approach
l
a
t
n
e
m
e
t
s
a
E
n viron
C a r b o n E n ergy W
• Updated Privacy Policy demonstrating commitment to
ensuring employee and consumer privacy is respected
in accordance with the Australian Privacy Principles.
O
ur Supply Chain
• Completed a carbon footprint assessment of Estia’s
operations and supply chain based on FY18 baseline.
Energy:
• Solar panels installed at an additional 19 homes by
the end of 2019, bringing the total number of Estia
homes with panels installed to 58 (84% of portfolio).
• LED lighting upgrade program will be completed
to additional 28 homes by the end of 2019, bringing
the total to 57 homes with upgraded lighting
(82% of portfolio).
• This second tranche of energy efficiency initiatives
will deliver a further reduction in energy consumption
of 3,606MWh across the portfolio, reflecting an
approximate cost saving of $659,000.
• Completed various energy efficiency projects in FY19
that will deliver an additional reduction of 3,361Te of
carbon dioxide across the organisation, combined
with initiatives from FY18 that targeted a reduction
of 6,109Te.
• Training and development: 4,959 employees trained
in professional development programs and industry
specialisation.
• Gender diversity: CEW highest ranked gender balanced
ASX200 company for second consecutive year.1
• Employee experience survey: 66% of all employees
surveyed in second bi-annual company-wide
Employee Experience Survey, higher than FY17
participation rate of 49%.
• Health and safety: continued to reduce lost time to
injury frequency rate from 9.1 in FY18 to 7.6 in FY19.
• Employee Assistance Program (EAP): counselling
service available to all employees 24/7 and extended
to residents and families in FY19.
Our Communities:
• Partnerships: major corporate sponsor in New South
Wales and Queensland of the Centenarian Project for
Teenagers; an intergenerational program between
100 young artists and 100 centenarians.
• Registered Training Organisations (RTOs) and
Universities: continued working relationships with
RTOs and Universities in local communities to provide
vocational education including student nurse placements.
• Maintained total water consumption at FY18 levels
Our Supply Chain:
across the portfolio including the addition of two new
homes in FY19.
• Human Rights: Modern Slavery Supply Chain Risk
Assessment undertaken for all major suppliers in
compliance with the Modern Slavery Act 2018.
1. CEW Senior Executives Survey 2019.
G o vernance
a
n
c
e
Waste:
r
e
t
a
W
Water:
• Maintained a 16% diversion rate of waste to landfill.
20 Estia Health | 2018-19 Annual Report
2018-19 Annual Report | Estia Health 21
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Our approach to Environmental,
Social, and Governance (ESG)
Governance
As one of Australia's largest residential aged care
providers, we understand the impact we have on our
residents, their families, our employees and the wider
community in which we operate.
Recognising the growing significance of these
non-financial considerations for the long-term
sustainability of the organisation, in FY19 we continued
our commitment to understanding ESG risks and
opportunities and considering these across all elements
of governance and decision making.
This approach aims to identify where our major
impacts occur and where we need to focus our efforts
to understand our stakeholders, our communities and
the environment. We have established the strategic,
operational and governance related foundations across
the organisation to ensure we deliver to our potential.
This year’s focus areas are summarised on the previous
page. These will be further refined in a formal Impact
Measurement Framework, which will be part of the
Sustainability Strategy published next year.
Residents enjoy a catch up over breakfast.
22 Estia Health | 2018-19 Annual Report
Our FY19 focus has been maturing our approach to ESG risks and
opportunities across the organisation. Driven by Estia Health’s
Sustainability Committee, Estia has adopted a strategic roadmap to
advance the sustainability agenda across the organisation, consisting
of four phases to be rolled out over a period of FY19-FY22:
1
RESTRUCTURING ESG
GOVERNANCE
A review of the original ESG Committee Terms of
Reference, resulted in a revision of membership
to include the CEO and Executive team to ensure
all aspects of the organisation are involved in
the development of Estia Health’s Sustainability
Strategy within the broader business strategy. The
Committee meets four times a year and has refined
the Sustainability Charter which is publicly available on
our website and outlines the Committee’s objectives,
authority, responsibilities, composition and operation.
The Committee reviews and approves key
deliverables outlined in the future roadmap and
Sustainability Strategy.
2
DEFINING KEY MATERIAL TOPICS
TO FOCUS ON OVER THE NEXT
THREE YEARS
In FY19 the Committee commissioned a formal
Materiality Assessment and an Environmental and
Social Impact Baseline Review.
The Materiality Assessment is a standard process
within international reporting standards. We asked
a range of stakeholders, including employees,
residents, families, and industry bodies which issues
mattered most to them and what should be of most
strategic importance to Estia. This was conducted via
quantitative and qualitative research, engaging over
2,000 stakeholders through online surveys, phone
interviews and focus groups.
The Environmental and Social Impact Baseline Review
is in development and will establish a formal baseline
to measure the environmental and social impact of
Estia’s operations and supply chain.
The insights gained through the Materiality
Assessment, in combination with the Environmental
and Social Impact Baseline Review will inform Estia’s
Sustainability and broader business strategy.
3
DEVELOPING A FORMAL ROADMAP
TO ADDRESS KEY HOTSPOTS
4
ADVANCED ENGAGEMENT
AND REPORTING
The Committee commissioned the development of
a formal Sustainability Strategy in FY20. This will
include a formal Impact Measurement Framework,
which will outline the focus areas and measures of
success, key short and long-term initiatives as well as
appropriate targets for a three-year plan.
The Committee investigated the most appropriate
reporting framework. Options are still being
considered with the objective of publishing a
more integrated Annual Report for FY20.
The Committee is also exploring opportunities to increase
knowledge and best practice ESG and sustainability
management within the organisation. This includes being
active members of ESG/Sustainability working groups,
including the Ethics Alliance, which Estia became a
member of in FY19.
2018-19 Annual Report | Estia Health 23
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BROADER ORGANISATION GOVERNANCE
DATA SECURITY
In addition to the ESG governance in place, Estia has
corporate governance practices which are contained
within Estia’s Corporate Governance Statement.
Summarised information is available on page 34
of this Annual Report.
There has been further refinement of the organisation risk
management and risk profiling framework, which has been
updated and approved by the Board Risk Committee.
WHISTLEBLOWING POLICY
The Whistleblowing Policy has been updated to
comply with the Treasury Laws Amendment
(Enhancing Whistleblower Protections) Act 2019,
that came into effect on 1 July and provides greater
legislative protections for whistleblowers.
Employees can make a disclosure under this new
legislation, via email, online through the website, by
phone or fax as well as via Estia’s Say Something
Hotline. This hotline is independently administered by
Deloitte and was introduced into Estia in 2017.
PRIVACY POLICY
Estia has a Chief Privacy Officer and our Privacy Policy
demonstrates our commitment to ensuring employees
and consumer privacy is respected in accordance
with the Australian Privacy Principles and the relevant
State laws. Our Policy describes how Estia protects
the privacy of personal and sensitive information that
is collected, used, disclosed and accessed. The Policy
statement is supported by detailed processes which
are available to all employees.
Customer privacy and data security are focus areas
for Estia. Internal governance structures include an
Information Security Committee that reports into
the Executive Risk Committee. Estia has continued
to improve data security and fraud prevention with
new threat identification and remediation capabilities
and ongoing employee training programs. Third-party
security risk assessments and audits are conducted to
assess and validate security controls and are performed
annually with internal self-assessments performed
on a monthly basis. To monitor Estia’s cyber security
maturity, the security program is aligned to a best
practice cyber security framework (National Institute of
Standards and Technology, NIST) which is updated and
reviewed bi-annually.
TAX GOVERNANCE
Estia’s tax governance is overseen by the Board Audit
Committee and is guided by its Board Tax Policy and
Tax Risk Management Framework. These policies
set out Estia’s approach to conducting its tax affairs
and the management of tax risk. The policies include
internal escalation processes, including to the Audit
Committee, dependent on the nature of the risk and are
reviewed on a periodic basis by Estia’s tax team with
recommendations referred to the Audit Committee
for approval.
Estia’s philosophy on Tax Risk Management is to ensure
that all tax related matters are treated responsibly in
line with the relevant tax laws. Estia has a commitment
to transparency and providing accurate disclosures and
acting with integrity.
Environment
The Sustainability Committee recognised that
to effectively demonstrate progress on reducing
environmental impact, baseline data and
measurement was needed.
BASELINE ENVIRONMENTAL AND SOCIAL
IMPACT ASSESSMENT
In FY19, Estia Health began a formal Environmental
Impact Baseline Review for its portfolio of homes
and offices. The collated data from utilities, suppliers
and internal systems was used to identify the carbon
footprint of Estia’s operations and supply chain, as
well as establish a baseline for electricity and water
consumption and waste diversion. The full results will
be published in Estia’s first dedicated Sustainability
Strategy in FY20.
CONTINUED ENERGY UPGRADES
Estia Health has in progress a continuation of the energy
savings projects across the portfolio. This includes
installation of solar panels on an additional 19 homes and
LED lighting upgrade on an additional 28 homes by the
end of 2019. The combined impact of these will deliver a
further reduction in energy consumption of 3,606MWh
across the portfolio, reflecting a cost saving of $659,000
and 3,361Te of carbon dioxide per year.
24 Estia Health | 2018-19 Annual Report
2018-19 Annual Report | Estia Health 25
Solar panels at Estia Bannockburn.
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Social
OUR PEOPLE
CAREER PATHWAYS AND PROGRESSION
DIVERSITY
As a residential aged care provider, we exist to enrich
and celebrate our resident’s lives, through the skills,
dedication and compassionate care of our people.
Attracting and retaining skilled clinicians, carers and
hospitality employees is a key risk for the aged care
industry. Estia Health has focused on strategies that will
evolve and grow aged care as an attractive profession
to clinicians, carers and those that want to make a real
difference to people’s lives.
ATTRACTING AND HIRING THE
RIGHT PEOPLE
The Aged Care Workforce Strategy1 identified the need
to attract and recruit experienced people and create
career pathways to build the skills and sustainability of
the aged care workforce.
In FY19 we commissioned Korn Ferry to undertake
a review of the competencies of our customer
facing roles. We are developing competency-based
recruitment, training and development to equip our
people with the skills to deliver person-centred care.
TRAINING AND DEVELOPMENT
Training and development remains central to retaining
and supporting our employees to ensure they can
confidently deliver quality care and the best overall
experience to our residents and their families. This
year almost 5,000 of our employees have been trained
in professional development programs and industry
specific initiatives.
In the past year we have designed and implemented
a suite of leadership programs aimed at developing
and retaining our people. Estia continues to provide
role specific development and training, including our
Emerging Leaders Program, which provides leadership
growth in our future leaders.
CULTURE AND SUPPORT
We understand the importance of listening to our
people to understand what matters most to them in
working for Estia.
We are currently completing our second biannual
Employee Experience Survey with Best Practice
Australia (BPA) and results show a completion rate of
66%, which is both above the industry average and the
49% participation rate in 2017. Results will be delivered
to every home by Estia’s Executive team and will
include action plans and culture workshops to embed
positive change and develop the organisation’s culture.
We have refined Estia’s brand strategy including our
employee values and principles with the intention
to embed the right behaviors to deliver a quality
experience to all in our care. This includes building a
strong employee culture that becomes recognised
within our local communities, supporting our
recruitment strategies. In addition to this, in FY19 Estia’s
People and Culture team undertook culture programs
to reinforce the importance of resident-focused care.
Utilisation of our Employee Assistance Program has
had a 25% increase in usage from FY18. This is a free
and confidential counselling service which can be
accessed by all Estia employees and their immediate
families. In FY19 it has been made available to residents
and their families.
Estia is committed to creating a diverse work
environment and embraces diversity as a core value
and attribute of our organisation. Diversity can increase
opportunity for recruitment of high-quality employees
from a range of backgrounds, which can help foster
closer connections with our diverse cohort of residents,
families and employees.
Estia is committed to gender diversity and our Board lead
by example with 43% of positions held by women, and
44% of Executive level roles held by women.
This year we have launched a new Diversity Policy.
The Policy will be reviewed annually and covers a
variety of factors such as gender, work and life balance.
HEALTH AND SAFETY
The safety of our residents, their families and our
employees remains paramount to our organisation. In
FY19 Estia has continued to build a strong culture of
health and safety, which has resulted in Lost Time to
Injury Frequency Rate (LTIFR) improving from 16.9 in
FY17, 9.1 in FY18 to 7.6 in FY19.
All employees participate in mandatory work ready
programs including manual handling, fire and
emergency and infection prevention. This training
continues with regular toolbox training delivered by
Estia’s Work Health and Safety teams.
All incidents are captured via a centralised reporting
system and there is regular communication and training
on how to use the system, with a mobile app also
available to record any incidents, which is utilised by
the leadership, Work Health and Safety and Quality
teams. Each Estia home has a Work Health and
Safety Committee, who meet monthly and review
reported incidents.
Our independent Dial-a-Doctor service using specialists
in occupational medicine has also been readily utilised
by our employees. Early intervention using this service,
enables employees to return to work following an injury.
HUMAN RIGHTS AND SUPPLY CHAIN RISK
In accordance with the requirements of the Federal
Modern Slavery Act 2018 the Sustainability Committee
commissioned a review of Estia’s supply chain for risk
of modern slavery violation (Supply Chain Social Risk
Screening). Results show that whilst overall risk is
low, the procurement categories of construction and
machinery and equipment contain the highest level
of risk for Estia. Over FY20 Estia will be working to
establish a category management plan to ensure these
risks are appropriately mitigated.
OUR COMMUNITIES
As a national residential aged care organisation, it is
vital we develop lasting and meaningful relationships
with our local communities
All of our homes engage with their communities in a
variety of ways. This includes visiting and supporting
local clubs, Churches and cultural groups, collaborating
with bowls clubs, men’s sheds and sports teams, as well
as developing intergenerational projects with schools
and kindergartens.
Moving forward as part of next year’s Sustainability
Strategy, we aim to implement a consistent and
streamlined approach to increasing community
engagement across Estia’s network, which will
enhance the social value of our homes within their
local communities.
1. Aged Care Workforce Strategy - agedcare.health.gov.au/reform/aged-care-workforce-strategy-taskforce
26 Estia Health | 2018-19 Annual Report
2018-19 Annual Report | Estia Health 27
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Case Studies
Emerging Leaders Program
Estia’s Emerging Leaders Program supports leadership
growth in our potential future leaders. This 12-month program
focuses on modules that include communications, financial
management, leadership and coaching.
Recent graduate of the inaugural program, Rohit Tiwari,
Senior Quality Manager for Estia said of the program
‘The Emerging Leaders program has certainly added a lot
of value to the way I work and the way I communicate with
my colleagues. The various modules that were included in
the program have helped build my confidence in these
areas and assist me in the journey to becoming an
influential leader’.
The Centenarian Portrait
Project by Teenagers
Estia is a major corporate sponsor in New South Wales
and Queensland of the Centenarian Project for Teenagers,
matching 100 teenage artists with 100 centenarians. From
storytelling, reminiscing, joy and laughter, comes unique
portraits of the centenarians. These portraits which are
exhibited at major community centres give the general public
the opportunity to see what 100 years of life looks like.
The project often results in unlikely friendships as the students
and centenarians build relationships helping them remain
connected with their community, while changing some of the
perceptions that younger generations may have around ageing.
Recent graduate of the ‘Emerging Leaders Program’
– Rohit Tiwari.
Estia resident Ilga with student artist.
28 Estia Health | 2018-19 Annual Report
Residents enjoy a friendly game of pool.
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CHIEF FINANCIAL OFFICER’S INTRODUCTION
Estia Health Limited (“Estia” or the “Company”) is one of Australia’s largest residential aged care providers
caring for over 8,000 residents in the year across 69 homes in New South Wales, Queensland, Victoria and
South Australia.
The Company’s core focus is on providing high-quality residential aged care which is formally recognised
in our Family Code and spreads through the Company in a range of initiatives across operations and
corporate governance.
The Company approaches tax risk in a way that minimises risk and aims to maintain appropriate relationships
with the Australian Tax Office (“ATO”) and other relevant tax authorities.
To minimise tax risk, Estia:
• Maintains a framework to ensure compliance with all statutory tax obligations;
• Maintains a tax risk management framework including undertaking tax assessments before implementing
material transactions or arrangements that may lead to an increase in tax risk;
• Manages its tax affairs in a proactive manner in accordance with the “spirit of the law”; and
• Maintains appropriate relationships with the ATO and other relevant tax authorities.
The information provided in this Report is released on a voluntary basis in accordance with the recommendations
contained in the Board of Taxation’s Voluntary Tax Transparency Code. The Report should be read in conjunction
with the financial statements on pages 43 to 128 of this Annual Report.
We are pleased to disclose our taxes paid in Australia and to detail our approach to tax management.
Stephen Lemlin
Chief Financial Officer
Tax
Transparency
Report
For the year ended
30 June 2019
ESTIA HEALTH LIMITED
ABN 37 160 986 201
Chief Financial Officer’s Introduction
A TAX PAYMENTS & RECONCILIATIONS
A1
Income Tax Expense Reconciliation
A2 Reconciliation of Income Tax Expense to
Current Tax Liability / Receivable
A3 Identification of Material Temporary
and Non-Temporary Differences
B OUR APPROACH TO TAX
B1 Tax Governance and Strategy
B2 Summary of Tax Contributions
B3 International Related Party Dealings
31
32
32
32
33
33
33
2018-19 Annual Report | Estia Health 31
TAX TRANSPARENCY REPORT FY19
PART A: TAX PAYMENTS & RECONCILIATIONS
A1
INCOME TAX EXPENSE RECONCILIATION
The below information is presented in accordance with the relevant Australian Accounting Standards and is an extract
from the information disclosed in Note B7 of this Annual Report.
Accounting profit before income tax
At the Australian statutory income tax rate of 30% (2018: 30%)
Adjustments in respect of income tax of previous year
Permanent differences
Utilisation of unrecognised tax losses
Other
Income tax expense
Effective tax rate
2019
$’000
57,829
17,349
(632)
4
(182)
-
16,539
29%
2018
$’000
57,165
17,150
(1,113)
(115)
-
89
16,011
28%
Estia’s Effective Tax Rate (“ETR”) is calculated as its income tax expense divided by accounting profit before income tax.
The ETR deviates from the Australian statutory tax rate of 30% due to differences between accounting standards and tax
legislation.
A2
RECONCILIATION OF INCOME TAX EXPENSE TO CURRENT TAX LIABILITY /
RECEIVABLE
Income tax expense in the consolidated income statement
Add/(subtract):
Net deferred tax liabilities charged to income
Over/(under) provision in prior years
Current tax expense included in income tax expense
Add/(subtract):
Tax payments to tax authorities
Net opening balance
Net current tax receivable
A3
2019
$’000
16,539
(642)
341
16,238
(15,932)
(913)
(607)
2018
$’000
16,011
190
966
17,167
(22,307)
4,227
(913)
IDENTIFICATION OF MATERIAL TEMPORARY AND NON-TEMPORARY DIFFERENCES
A detailed reconciliation of accounting profit to income tax expense and material temporary and non-temporary differences
is disclosed in Note B7 of this Annual Report.
The non-temporary difference of $4,000, as set out above, was driven by a number of small offsetting items including
share-based payment expenses. These expenses are considered to be non-temporary differences as they have no cash
settlement option and therefore are not deductible for tax purposes.
The temporary differences of $300,000 were driven by changes in accrued expenses, payroll related liabilities such as
annual leave and differences in tax and accounting depreciation rates of buildings. The temporary differences are as a
result of different timing rules between tax and accounting, however the differences will eventually align.
Tax Transparency Report | Corporate Governance | Our Board | Shareholder Information | Annual Financial Report | Directory of Estia Homes
TAX TRANSPARENCY REPORT FY19
PART B: OUR APPROACH TO TAX
B1
TAX GOVERNANCE AND STRATEGY
Estia’s tax governance is overseen by the Board’s Audit Committee and is guided by its Board Tax Policy and Tax Risk
Management Framework. These policies set out Estia’s approach to conducting its tax affairs and the management of tax
risk. The policies include internal escalation processes, including to the Board’s Audit Committee, dependent on the nature
of the risk and are reviewed on a periodic basis by Estia’s tax team with recommendations referred to the Audit Committee
for approval.
Estia’s philosophy on Tax Risk Management is to ensure that all tax related matters are treated responsibly in line with the
relevant tax laws. Estia has a commitment to transparency and providing accurate disclosures and act with integrity in all
our dealings.
Where there is uncertainty around a tax position in relation a transaction or category of transactions, the Company will
perform an analysis prior to adopting a tax position. No tax position will be taken unless the position taken is considered to
be more likely than not to be correct, as defined in the Taxation Administration Act 1953. All tax matters that are
considered to be high risk are to be reported to the Board’s Audit Committee. Where appropriate, Estia engages with its
external advisers to receive tax advice.
Estia seeks to have appropriate relationships with the ATO and other relevant tax authorities.
Estia adopts structures and positions that align to its business outcomes and values and are not driven by tax outcomes.
B2
SUMMARY OF TAX CONTRIBUTIONS
Taxes paid by Estia
Income Tax
Payroll Tax
Fringe Benefits Tax
Council Rates
Land Tax
Stamp Duty
Total
Taxes collected by Estia
Pay As You Go (PAYG) withholding
GST (collected and remitted)
GST (paid but reclaimed)
Total
Australian Federal Government
State Governments
Local Governments
Total
All taxes paid and collected by Estia are to Australian revenue authorities.
B3
INTERNATIONAL RELATED PARTY DEALINGS
Estia has no international related party dealings.
2019
$’000
15,932
17,584
180
1,946
1,065
325
37,032
2019
$’000
63,730
246
(17,795)
46,181
2019
$’000
62,293
18,974
1,946
83,213
2018
$’000
22,307
16,361
205
2,014
136
-
41,023
2018
$’000
58,377
98
(13,384)
45,091
2018
$’000
67,603
16,497
2,014
86,114
Estia Health Limited
32 Estia Health | 2018-19 Annual Report
4
Estia Health Limited
2018-19 Annual Report | Estia Health 33
5
Industry Trends | Key Highlights | Chairman and CEO’s Message | Our Executive Team | Our Customers | Growing and Evolving Our Network | ESG
Corporate Governance
CORPORATE GOVERNANCE STATEMENT
BOARD COMMITTEES
Under ASX Listing Rule 4.10.3, Estia Health is required to
benchmark its corporate governance practices against
the ASX Corporate Governance Council’s Corporate
Governance Principles and Recommendations, 3rd edition.
Estia confirms that it has complied with all the ASX
Governance Recommendations for the period 1 July
2018 to 30 June 2019 as outlined in our Corporate
Governance Statement and Appendix 4G. The
Corporate Governance Statement is current as at 16
August 2019 and has been approved by the Board.
Our Corporate Governance Statement and
Appendix 4G are available on the Estia website
at estiahealth.com.au
The Board and management are committed to
achieving the highest standards of professional conduct
across all Estia operations. There is regular review and
enhancement of mechanisms to achieve these standards.
Some of the governance activities conducted during
the year include:
• Continued Board succession, including the
appointment of Ms Karen Penrose, supported by a
refresh of the Board skills matrix.
• Regularly scheduled meetings with external auditors.
• Engagement of an independent external internal
auditor resource.
• Overseeing the succession of the CEO.
Mr Ian Thorley was appointed MD/CEO of Estia,
replacing Ms Norah Barlow who moved into a
Non-executive Director position.
• Overseeing a review of the Company’s risk
management framework and practices and
endorsing the findings and actions.
• Engaging with key regulators.
• Inviting industry experts to Board meetings.
• Board visits to homes, annual leadership
conference and new home openings.
• Undertaking a Board performance review.
• Reviewing the Company’s strategy.
• Reviewing key Corporate Governance policies
and processes, including a review of the Board
and Board Committee charters.
• Formation of an executive ESG Committee
with agreed focus areas.
Estia’s four standing Board Committees assist the
Board in its oversight role. The Audit Committee,
Risk Management Committee, Nomination and
Remuneration Committee, and Property and
Investment Committee comprise members who are
independent Directors and each Board Committee has
an independent Director as its Chairman.
All Board members are sent Board Committee papers
and may attend any Board meeting. Subsequent to
each Board Committee meeting, the Chair presents
matters discussed and puts forward recommendations
to the Board.
The Directors’ Report includes the membership of each
Board Committee.
In August 2019, an additional Board Committee was
formed, Class Action and Regulatory Committee.
RESPONSIBILITIES OF MANAGEMENT
The MD/CEO has been granted authority for matters
not reserved for the Board or a Board Committee.
The CEO, COO and CFO report to the Board at
each meeting. In addition to regular reporting from
management, the Board has unlimited access to senior
management and external advisers.
For further information on Corporate Governance at
Estia, refer to the Corporate Governance Statement
and the following documents, all found on the
Company website at estiahealth.com.au/investor-
centre/corporate-governance:
• Board and Committee Charters
• Disclosure and Communication Policy
• Diversity Policy
• Trading Policy
• Code of Conduct
• WEGA Report
• Investment Policy and
Liquidity Management Strategy
Additional information on Environmental, Social and
Governance is available on the Company website at
estiahealth.com.au
Tax Transparency Report | Corporate Governance | Our Board | Shareholder Information | Annual Financial Report | Directory of Estia Homes
From left to right
Dr Gary Weiss AM, Ian Thorley, Norah Barlow ONZM, Helen Kurincic, Paul Foster, The Hon. Warwick L Smith AO, Karen Penrose
Our Board
DR GARY WEISS, AM
Non-executive Director and Chairman
LL.B (Hons), LL.M (with Dist), JSD
Gary holds the degrees of LL.B (Hons) and LL.M (with
dist.) from Victoria University of Wellington, as well
as a Doctor of Juridical Science (JSD) from Cornell
University, New York.
Gary has extensive international business experience
and has been involved in numerous cross-border
mergers and acquisitions.
Gary is Chairman of Ridley Corporation Limited and
Ardent Leisure Group Limited, Executive Director of
Ariadne Australia Limited, and a Director of several other
public companies including Thorney Opportunities Limited,
Hearts and Minds Investments Limited and The Straits
Trading Company Limited. Gary is also a Commissioner of
the Australian Rugby League Commission and a Director
of the Victor Chang Cardiac Research Institute.
Gary was Chairman of Clearview Wealth Ltd from 2013
to May 2016, Executive Director of Guinness Peat Group
plc from 1990 to April 2011 and has held directorships
of numerous companies, including Tag Pacific Limited,
Pro-Pac Packaging Limited, Coats Group plc (Chairman),
Premier Investments Ltd, Westfield Group, Tower
Australia Limi, Australian Wealth Management Limited,
Tyndall Australia Limited (Deputy Chairman), Joe White
Maltings Limited (Chairman), CIC Limited, Whitlam
Turnbull & Co Limited and Industrial Equity Limited.
Gary has authored numerous articles on a variety of
legal and commercial topics.
Committees: Nomination and Remuneration Committee,
Audit Committee, Property and Investment Committee,
Class Action and Regulatory Committee (Chair).
Listed Company Directorships (including those in the
last three years): Ridley Corporation Limited, Ariadne
Australia Limited, Ardent Leisure Group Limited, Thorney
Opportunities Ltd, Hearts and Minds Investments
Limited, Tag Pacific Limited (resigned 31 August 2017),
Premier Investments Limited (28 July 2018), Pro-Pac
Packaging Limited (resigned 27 November 2017).
IAN THORLEY
Chief Executive Officer and Managing Director
Ian has over 30 years’ health and aged care experience
in both Australia and overseas.
Appointed as Chief Executive Officer in October 2018,
Ian was previously Estia Health's Chief Operating
Officer from October 2016, where he was responsible
for leading Estia’s operations and care teams,
34 Estia Health | 2018-19 Annual Report
2018-19 Annual Report | Estia Health 35
Industry Trends | Key Highlights | Chairman and CEO’s Message | Our Executive Team | Our Customers | Growing and Evolving Our Network | ESG embedding key improvements resulting in revenue
growth and operational efficiencies, while delivering
consistently high standards of quality care to residents
across a growing portfolio of homes.
Ian’s executive experience includes CEO and COO roles
in large aged care groups, acute private hospital groups
and diagnostic services. Ian has been at the forefront
of major developments that have shaped Australia’s
healthcare sector, including the privatisation of public
hospitals, new reimbursement and funding models, and
a broad range of public/private sector service models.
Ian has held the position of Non-executive Director in
private equity owned, and ASX listed companies and
has consulted to aged care operators, private hospital
groups, health insurers, health logistics and specialist
health recruitment businesses throughout Australia.
Ian is a Graduate of the Australian Institute of Company
Directors (GAICD) and holds a Master of Commerce
from the University of NSW.
NORAH BARLOW, ONZM
Non-executive Director
BCA, ACA
Norah holds a Bachelor of Commerce and
Administration from Victoria University, and is a
Chartered Accountant.
Norah is amongst Australasia’s most experienced and
respected executives and directors, with an in-depth
knowledge of the aged and health care sector. Norah
also holds extensive experience as the highly-respected
former CEO and former Director of Summerset Group,
a NZX and ASX-listed company named Australasia’s
best retirement village operator four years running.
Norah has a strong background across business
leadership and management, strategy, corporate
finance, governance, tax and accounting. Norah
is a member of the National Advisory Council on
the Employment of Women, was President of the
Retirement Villages Association (NZ) for seven years
and made an Officer of the New Zealand Order of Merit
for services to business in 2014.
Norah was also a Non-executive Director of Ingenia
Communities Group and chair of the Audit Committee
for Methven Limited.
Norah stepped down as CEO of Estia in November 2018
and remains on the board as a Non-executive Director.
Norah is currently Chief Executive of Heritage Lifecare.
Listed Company Directorships (including those in
the last three years): Evolve Education Group Limited,
Ingenia Communities Group (resigned 15 November
2016), Methven Limited (resigned 11 October 2017).
HELEN KURINCIC
Non-executive Director
MBA, Grad Dip Wom Stud, PBC Crit Care, Cert Nsg, FAICD
Helen holds a Master of Business Administration from
Victoria University.
Helen has extensive executive and Non-executive
experience across the healthcare sector. Helen is
Chairman of Integral Diagnostics Limited, and a
Non-executive Director of HBF Health Limited and
McMillan Shakespeare Limited.
Helen was previously the Chief Operating Officer and
Director of Genesis Care for seven years from early
inception in 2007, creating Australia’s largest radiation
oncology and cardiology service business. Previous roles
also include Non-executive Director of Sirtex Medical
Limited, Non-executive Director of DCA Group Limited
which included residential aged care in Australia and
New Zealand, Non-executive Director of AMP Capital
Investor’s aged care business Domain Principal Group,
CEO and Executive Director of residential aged care
provider Benetas and Board member of Melbourne
Health and Orygen Research Centre.
Helen has also been actively involved in healthcare
government policy reform across various areas of the
healthcare sector.
Committees: Risk Management Committee (Chair),
Nomination and Remuneration Committee.
Listed Company Directorships (including those in
the last three years): Integral Diagnostics Ltd (Chair),
McMillan Shakespeare Limited, Sirtex Medical Limited
(resigned 19 September 2018).
PAUL FOSTER
Non-executive Director
B.Comm, MA, MAICD
Paul holds a Bachelor of Commerce from the University of
Wollongong and a Master of Arts from UNSW Australia.
Paul is an experienced financial services professional
and Company Director, with more than 20 years’
investment experience in the infrastructure, private
equity and real estate asset classes, including
substantial investments in the healthcare sector.
Paul is a Managing Director at Pacific Equity Partners,
one of Australia’s largest alternative investment
management firms.
Paul is also an alternate Director of Intellihub
Holdings Pty Ltd.
Until May 2015, he was head of AMP Capital’s
Infrastructure investment business in Australia and New
Zealand, where he was responsible for the management
of $4.5 billion of infrastructure investments on behalf of
Australian and global superannuation funds and investors.
Tax Transparency Report | Corporate Governance | Our Board | Shareholder Information | Annual Financial Report | Directory of Estia Homes
In this role, and amongst investments spanning
the aged care, transport, timberland and social
infrastructure sectors, Paul was responsible for the
investment that created the second largest for profit
aged care business in Australia. Paul was a Director of
the Opal Aged Care Group (formerly Domain Principal
Group) between 2010 and 2015 and was Chairman of
the Group in 2011. Prior to AMP Capital, Paul was an
investment professional at Macquarie Bank Group and
Perpetual Investments.
Committees: Nomination and Remuneration
Committee (Chair), Risk Management Committee,
Property and Investment Committee.
THE HON. WARWICK L. SMITH, AO
Non-executive Director
LLB
Warwick is Chairman of the Advisory Board of Australian
Capital Equity, which has significant interests in media,
entertainment, research and technology development,
as well as property and industrial activities.
He is a Director of Seven Group Holdings, a leading
Australian diversified operating and investment group
with market leading businesses and investments in
industrial services, oil and gas, and media, Chairman
of the Australia–China Council and newly announced
Chairman-designate of the National Foundation for
Australia-China Relations and Chairman of the China
Leadership Group of the Business Council of Australia.
In addition, he is Global Trustee of the Asia Society and
Chairman Emeritus of the Asia Society in Australia.
KAREN PENROSE
Non-executive Director
B.Com (UNSW), FAICD and CPA
Karen is an experienced Company Director who has
served as a Non-executive Director on the boards of ASX
listed companies in financial services, resources, aged
care and infrastructure sectors for the past five years.
Karen's executive career was in leadership and CFO
roles, mainly in financial services. She is passionate
about customer outcomes, financial management
and well-versed in operating in a rapidly changing
regulatory environment.
Karen is a Director and Chair of the Audit Committee
of Bank of Queensland, Spark Infrastructure RE Limited
and Vicinity Centres. She is also Deputy Chairman of
Marshall Investments.
Karen is a member of Chief Executive Women and
Women Corporate Directors.
Committees: Audit Committee (Chair),
Risk Management Committee, Class Action and
Regulatory Committee.
Listed Company Directorships (including those in the
last three years): Bank of Queensland Limited, Vicinity
Centres, Spark Infrastructure Group, Future Generation
Investment Company Limited (resigned October 2018),
AWE Limited (resigned April 2018).
LEANNE RALPH
Company Secretary
Formerly, he was Chairman of E*TRADE, Chairman
New South Wales & Australian Capital Territory and
Senior Managing Director of the Australia New Zealand
Banking Group Limited (ANZ), Chairman, ANZ Thailand
and Director, ANZ Greater China.
Leanne is an experienced Company Secretary with
over 15 years in this field, and holds this position for
a number of ASX-listed entities. Leanne is a fellow of
the Governance Institute of Australia and a Graduate
Member of the Australian Institute of Directors.
He was an Executive Director with Macquarie Bank
for 10 years and an Australian Federal Government
Minister, with a parliamentary career spanning 15 years,
including Minister for Family Services and Aged Care.
He was also Australia's first Telecommunications
Ombudsman and has received a Centenary Medal and
has twice been awarded an Order of Australia.
Committees: Property and Investment Committee
(Chair), Audit Committee, Class Action and
Regulatory Committee.
Listed Company Directorships (including those in
the last three years): Seven Group Holdings Limited,
Magnis Energy Technologies Limited, Coates Hire
Limited (resigned January 2019).
36 Estia Health | 2018-19 Annual Report
2018-19 Annual Report | Estia Health 37
Industry Trends | Key Highlights | Chairman and CEO’s Message | Our Executive Team | Our Customers | Growing and Evolving Our Network | ESG Shareholder Information
Additional information required under ASX Listing Rule 4.10 and not shown elsewhere in this Annual Report is
as follows. This information is current as at 23 August 2019.
DISTRIBUTION OF SHAREHOLDERS
The distribution of issued capital is as follows:
SIZE OF HOLDING
NO. OF SHAREHOLDERS
ORDINARY SHARES
% OF ISSUED CAPITAL
100,001 and Over
10,001 to 100,000
5,001 to 10,000
1,001 to 5,000
1 to 1,000
Total
75
959
1,185
3,135
1,655
7,009
220,174,413
22,121,928
8,938,591
8,577,009
804,501
260,616,442
84.48
8.49
3.43
3.29
0.31
100.00
DISTRIBUTION OF PERFORMANCE RIGHTS HOLDERS
The distribution of unquoted Performance Rights on issue are:
SIZE OF HOLDING
NO. OF HOLDERS
UNLISTED
PERFORMANCE RIGHTS
% OF TOTAL
PERFORMANCE RIGHTS
100,001 and Over
10,001 to 100,000
5,001 to 10,000
1,001 to 5,000
1 to 1,000
Total
3
6
0
0
0
9
1,219,074
303,629
0
0
0
1,522,703
80.06
19.94
0.00
0.00
0.00
100.00
LESS THAN MARKETABLE PARCELS OF ORDINARY SHARES
There are 357 shareholders with unmarketable parcels totalling 20,059 shares.
UNQUOTED EQUITY SECURITIES
The Company had the following unquoted performance rights on issue as at 23 August 2019:
9 holders of performance rights issued as part of an employee incentive scheme
1,522,703
100.0%
RESTRICTED SECURITIES
The Company had no restricted securities on issue as at 23 August 2019.
Tax Transparency Report | Corporate Governance | Our Board | Shareholder Information | Annual Financial Report | Directory of Estia Homes
20 LARGEST SHAREHOLDERS
The 20 largest shareholders of quoted equity securities are as follows:
NAME
NO. OF FULLY PAID ORDINARY SHARES
% OF ISSUED CAPITAL
HSBC Custody Nominees (Australia) Limited
J P Morgan Nominees Australia Pty Limited
Network Investment Holdings Pty Ltd
Citicorp Nominees Pty Limited
Argo Investments Limited
BNP Paribas Noms Pty Ltd
National Nominees Limited
BNP Paribas Nominees Pty Ltd
Emalyn Holdings Pty Limited
Custodial Services Limited
3rd Wave Investors Ltd
Peter & Lyndy White Foundation Pty Ltd
Mr Mark Edward Kennedy
UBS Nominees Pty Ltd
Mr Vincent Michael O'sullivan
Jenny Lynn Properties Pty Ltd
Mark Edward Kennedy
AMP Life Limited
Kennbros Pty Limited
National Nominees Limited
Total for top 20 shareholders
Total Quoted Equity Securities
57,749,844
40,307,082
24,665,858
23,854,361
11,809,250
10,376,833
8,683,995
5,703,835
4,102,766
3,204,274
3,000,000
2,181,568
1,910,678
1,822,154
1,485,000
1,315,963
1,277,438
1,186,593
1,156,834
854,684
206,649,010
260,616,442
22.16
15.47
9.46
9.15
4.53
3.98
3.33
2.19
1.57
1.23
1.15
0.84
0.73
0.70
0.57
0.50
0.49
0.46
0.44
0.33
79.29
SUBSTANTIAL SHAREHOLDERS
The names of the Substantial Shareholders listed as disclosed by notices submitted to the ASX as at 23 August 2019:
NAME
NO. OF ORDINARY FULLY PAID SHARES
% OF ISSUED CAPITAL
Perpetual Limited and Subsidiaries
Citigroup Global Markets Australia Pty Ltd
Seven Group Holdings Limited, Network Investment
Holdings Pty Ltd & SGHs other subsidiaries
Vanguard Group
Dimensional Entities
31,417,247
18,232,894
22,262,396
13,551,233
13,039,266
12.06
7.00
8.54
5.20
5.00
38 Estia Health | 2018-19 Annual Report
2018-19 Annual Report | Estia Health 39
Industry Trends | Key Highlights | Chairman and CEO’s Message | Our Executive Team | Our Customers | Growing and Evolving Our Network | ESG Tax Transparency Report | Corporate Governance | Our Board | Shareholder Information | Annual Financial Report | Directory of Estia Homes
VOTING RIGHTS
SHARE REGISTRY
In accordance with the Constitution each member
present at a meeting whether in person, or by proxy,
or by power of attorney, or in a duly authorised
representative in the case of a corporate member,
shall have one vote on a show of hands, and one vote
for each fully paid ordinary share, on a poll.
Performance rights have no voting rights.
ON-MARKET BUY-BACKS
There is no current on-market buy-back in relation to
the Company’s securities.
SHARE TRADING AND PRICE
Estia Health shares are traded on the Australian Stock
Exchange (ASX). The stock code under which they
are traded is ‘EHE’ and details of trading activity
and share price are available online through the
ASX website, asx.com.au. Share price data is also
available on the Company website at
estiahealth.com.au/investor-centre
WEBSITE ACCESS
You can access Estia’s online Investor Centre by
visiting estiahealth.com.au/investor-centre.
The Investor Centre provides you with access to
important information about Estia’s performance,
including ASX announcements, Annual Reports,
share price graphs and details about Estia’s corporate
governance framework.
Shareholders are also able to access and update their
shareholding information online by visiting the Investor
Centre and clicking on ‘Your Account’. Shareholders are
able to:
• Register and create a portfolio view of their holdings;
• Update or amend details;
• Download forms, and;
• View transaction history and download statements.
Shareholders with enquiries about their shares can also
contact Estia’s Share Registry as follows:
Estia Share Registry C/- Link Market Services Limited
Locked Bag A14, Sydney South, NSW, 1235
Telephone: 1300 554 474
ASX Code: EHE
Email: registrars@linkmarketservices.com.au
Website: linkmarketservices.com.au
When communicating with the Share Registry, please
quote your Security Reference Number (SRN) or Holder
Identification Number (HIN) as shown on your Issuer
Sponsored/CHESS statements together with your
current address. For Company related requirements,
please email investor@estiahealth.com.au.
CHANGE OF NAME, ADDRESS OR
BANKING DETAILS
Issued sponsored shareholders should contact the
Share Registry to advise of a change of personal
details. CHESS sponsored shareholders should notify
their sponsoring broker in writing of a change in their
personal details and instruct them to update the
Share Registry.
DIVIDEND REINVESTMENT PLAN
On 19 June 2019 Estia announced the reinstatement
of its DRP which allows eligible shareholders to
reinvest all or part of their dividends into Estia shares.
Further information on the DRP can be found at
estiahealth.com.au/investor-centre/dividend-
reinvestment-plan
TFN/ABN NUMBER
Shareholders are strongly advised to lodge their TFN,
ABN or relevant TFN exemption. For shareholders who
have not provided these details then Estia is obliged
to deduct tax at the highest marginal rate (plus the
Medicare levy) from the unfranked portion of any
dividend payment. Shareholders can obtain TFN/ABN
notification forms by contacting the Share Registry.
REGISTERED OFFICE
Estia Health Limited
Level 9, 227 Elizabeth Street
Sydney, NSW 2000
Telephone: +61 2 9265 7900
Website: estiahealth.com.au
40 Estia Health | 2018-19 Annual Report
Marcia, Client Services Officer
with resident Margaret.
Industry Trends | Key Highlights | Chairman and CEO’s Message | Our Executive Team | Our Customers | Growing and Evolving Our Network | ESG Annual
Financial
Report
For the year ended
30 June 2019
ESTIA HEALTH LIMITED
ABN 37 160 986 201
Corporate information
Directors' report
Auditor's independence declaration
Consolidated statement of profit or loss
and other comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Section A: About this report
Section B: Our performance
Section C: Assets and liabilities
Section D: Capital, financing, RADs and risk
Section E: Other information
Directors' declaration
Auditor's report
44
45
74
75
76
77
78
79
81
90
99
111
121
122
Registered Nurses and carers work closely
together to deliver care to our residents.
2018-19 Annual Report | Estia Health 43
REGISTERED OFFICE
Level 9, 227 Elizabeth Street
Sydney NSW 2000
PRINCIPAL PLACE OF BUSINESS
Level 9, 227 Elizabeth Street
Sydney NSW 2000
SOLICITORS
King & Wood Mallesons
Governor Phillip Tower
1 Farrer Place
Sydney NSW 2000
BANKERS
Westpac Banking Corporation
275 Kent Street
Sydney NSW 2000
AUDITORS
Ernst & Young
8 Exhibition Street
Melbourne VIC 3000
Corporate Information
ABN 37 160 986 201
DIRECTORS
Dr. Gary Weiss AM
Chairman
Ian Thorley
Managing Director and CEO
Appointed 23 November 2018
Norah Barlow ONZM
Non-executive Director
Resigned as Managing Director and CEO on
23 November 2018, resumed as Non-executive
Director on that date
Andrew Harrison
Resigned 17 October 2018
Paul Foster
Nomination and Remuneration Committee Chair
Hon. Warwick L Smith AO
Property and Investment Committee Chair
Helen Kurincic
Risk Management Committee Chair
Karen Penrose
Audit Committee Chair
Appointed 17 October 2018
COMPANY SECRETARY
Suzy Watson
Appointed 23 January 2019
Resigned 03 April 2019
Leanne Ralph
Resigned 23 January 2019
Re-appointed 03 April 2019
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DIRECTORS' REPORT
Your Directors submit their report for the year ended 30 June 2019.
DIRECTORS
The names and qualifications of the Group’s Directors in office during the financial year and until the date of this
report are set out below. Directors were in office for the entire period unless otherwise stated. More information
relating to the Directors can be found in the investor centre section of the Group's website
(http://www.estiahealth.com.au/investor-centre/corporate-profile).
DR. GARY H WEISS AM (CHAIRMAN)
Gary was appointed as an Independent Non-executive Director in February 2016 and was appointed as Chairman on
31 December 2016.
Gary holds the degrees of Bachelor of Laws (Hons) and Master of Laws (with distinction) from Victoria University of
Wellington, as well as a Doctor of Juridical Science (JSD) from Cornell University, New York.
IAN THORLEY (MANAGING DIRECTOR AND CEO)
Ian was appointed as the Managing Director and CEO on 23 November 2018. Ian previously held the roles of Chief
Operating Officer and Deputy CEO prior to the appointment.
Ian holds a Master of Commerce from the University of NSW.
NORAH BARLOW ONZM
Norah was appointed to the Board in November 2014 as an Independent Non-executive Director. Norah was
appointed Acting CEO from September 2016, and appointed permanently to the roles of Managing Director and CEO
in November 2016. Norah stepped down from the roles of Managing Director and CEO on 23 November 2018 and
remains on the Board as a Non-executive Director.
Norah holds a Bachelor of Commerce and Administration from Victoria University of Wellington and is a Chartered
Accountant.
PAUL FOSTER (NOMINATION AND REMUNERATION COMMITTEE CHAIR)
Paul was appointed as an Independent Non-executive Director in February 2016.
Paul holds a Bachelor of Commerce from the University of Wollongong and a Master of Arts from the University of
NSW.
HON. WARWICK L SMITH AO (PROPERTY AND INVESTMENT COMMITTEE CHAIR)
Warwick was appointed as an Independent Non-executive Director in May 2017.
Warwick holds a Bachelor of Laws from the University of Tasmania.
HELEN KURINCIC (RISK MANAGEMENT COMMITTEE CHAIR)
Helen was appointed as an Independent Non-executive Director in July 2017.
Helen originally qualified as a Registered Nurse specialising in Intensive Care and holds the degrees of Graduate
Diploma in Women's Studies and an MBA from Victoria University, Melbourne and has also attended Harvard
Business School where she completed programs in Best Practice Leadership and Business Innovations in Global
Healthcare.
KAREN PENROSE (AUDIT COMMITTEE CHAIR)
Karen was appointed to the Board on 17 October 2018 as an Independent Non-executive Director.
Karen holds a Bachelor of Commerce from UNSW, CPA and FAICD.
ANDREW HARRISON
Andrew was appointed to the Board in November 2014 as an Independent Non-executive Director. Andrew resigned
from the Board on 17 October 2018.
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COMMITTEE MEMBERSHIP
During the financial year, the Group had the following committees:
Membership Audit Committee
Nomination and
Remuneration
Committee
Risk Management
Committee
Property and
Investment Committee
Chair
Member
Member
Former
member
Karen Penrose
Dr. Gary H Weiss AM
Hon. Warwick L Smith AO Helen Kurincic
Andrew Harrison
Paul Foster
Dr. Gary H Weiss AM Paul Foster
Helen Kurincic
Karen Penrose
Andrew Harrison
Hon. Warwick L Smith AO
Dr. Gary H Weiss AM
Paul Foster
DIRECTORS' MEETINGS
The number of meetings of directors (including meetings of committees of directors) held during the year and the
number of meetings attended by each Director were as follows:
Directors’
meetings
Audit
Committee
Nomination
and
Remuneration
Committee
Risk
Management
Committee
Property and
Investment
Committee
No. of meetings held:
Dr. Gary H Weiss AM
Ian Thorley
Norah Barlow ONZM
Paul Foster
Hon. Warwick L Smith AO
Helen Kurincic
Karen Penrose
Andrew Harrison
DIRECTORS' HOLDINGS
12
4
Eligible Attended Eligible Attended Eligible Attended Eligible Attended Eligible Attended
5
7
2
12
9
12
12
12
12
10
2
12
9
12
11
12
12
9
2
5
-
-
-
5
-
4
1
5
-
-
-
4
-
4
1
4
-
-
4
-
4
-
-
3
-
-
4
-
4
-
-
-
-
-
7
-
7
3
1
-
-
-
7
-
7
3
1
2
-
-
2
2
-
-
-
2
-
-
2
2
-
-
-
As at the date of this report, the interest of the directors in the ordinary shares of Estia Health Limited were:
Director
Number of ordinary shares
Dr. Gary H Weiss AM
Ian Thorley
Norah Barlow ONZM
Paul Foster
Hon. Warwick L Smith AO
Helen Kurincic
Karen Penrose
COMPANY SECRETARY
SUZY WATSON
45,312
82,534
129,474
24,000
90,000
25,000
18,833
Suzy was appointed as Company Secretary on 23 January 2019 and resigned from the position on 3 April 2019. Suzy
remains employed as the General Counsel for the Group.
LEANNE RALPH
Leanne was appointed as Company Secretary on 21 December 2017. Leanne resigned from the position on 23
January 2019 and was re-appointed as Company Secretary on 3 April 2019.
Leanne is an experienced Company Secretary and is a Fellow of the Governance Institute of Australia and a member
of the Australian Institute of Company Directors.
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DIRECTORS' REPORT
PRINCIPAL ACTIVITIES AND STRATEGY
The principal activities of the Estia Health Group during the year ended 30 June 2019 continued to be the provision of
services in residential aged care homes in Australia as an Approved Provider under the Aged Care Act 1997.
The Group’s strategy remains to:
•
•
•
Be a market leader in owning and developing high quality residential aged care homes in Australia;
Provide residents in our homes with the highest standards of aged care services in an innovative, supportive and
caring environment; and
Deliver earnings growth through a development pipeline, enhancement of current homes, and acquisitions.
THE MARKET IN WHICH ESTIA OPERATES
In order to access Government supported residential aged care services, potential residents must be assessed as
qualifying for such services by a Government Aged Care Assessment Team (known as 'ACAT'), and may then choose
a residential aged care home of their choice. Only Approved Providers, such as Estia, with approved bed licences in
accredited homes are eligible to provide services which qualify for Government funding support.
The Aged Care Funding Authority's ('ACFA') 2018 Annual Report identified 200,689 operating beds/places in
Australia, and ACFA has further reported that 241,723 people accessed residential aged care services in 2017-18,
across 886 providers. The ageing of the Australian population and in particular the ageing of the “baby boomers” will
see a marked increase in the number of Australians likely to need aged care, including residential aged care in
coming years.
The Group’s growth strategy is to expand services to meet this growing demographic demand.
ACFA has also reported in its submission to the Aged Care Royal Commission in April 2019, that there has been a
significant overall decline in the financial performance of the sector in the last two years as a result of increases in
Government funding not being at a sufficient rate to cover the increase in operating cost, principally staff costs.
THE GROUP’S PORTFOLIO
The Group delivers services across 68 homes in New South Wales, Queensland, South Australia and Victoria, 61 of
which are freehold sites. As at 30 June 2019, these homes had 6,102 operational bed licences, and the Group holds a
further 356 off-line and provisional licences pending activation through future developments.
During the year, the Group opened a new home at Southport, QLD, with 110 beds, and expects to open a new home
at Maroochydore, QLD in August 2019 which has been constructed during FY19. An older home at Mona Vale, NSW
was closed in May 2019 to prepare the site for a new more contemporary home. Further information on future
developments is referred to later in this report.
The Group employs in excess of 7,500 employees as nurses, care workers, catering staff, support and administration
staff and management.
REGULATORY ENVIRONMENT, REFORM AND THE AGED CARE ROYAL COMMISSION
The residential aged care sector in which the Group operates is highly regulated within the provisions of the Aged
Care Act 1997. The Government approves providers, monitors the quality of care and services delivered, issues bed
licences on a strictly controlled basis, and governs the fees and services which are delivered and funded. As such
Government policy settings have a major impact on the financial performance of providers.
The Royal Commission into Aged Care was called by the Prime Minister in September 2018 amid growing community
concern about the quality of care in the sector. The Terms of Reference are broad, focussing on the quality of care,
and also future sustainability of the sector.
Along with all major aged care providers, the Group was requested to make an initial submission to the Royal
Commission in January 2019. The costs of this exercise and the ongoing monitoring and preparation for future
involvement, if required, by the Royal Commission during the year amounted to $1.7 million. Other than the initial
submission in January 2019, the Group has not been requested to provide further information nor appear before the
Royal Commission.
The Royal Commission is expected to hand down an interim report in October 2019 and a final report in April 2020.
Estia Health Annual Financial Report 2018 - 2019
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DIRECTORS' REPORT
REGULATORY ENVIRONMENT, REFORM AND THE AGED CARE ROYAL COMMISSION (CONTINUED)
OPERATING AND FINANCIAL REVIEW (CONTINUED)
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Since the publication of the Aged Care Roadmap in 2016 there have been and continue to be a number of significant
reviews and reports commissioned by Government into the operation of the sector. The Group has contributed to
these reviews, and continues to advocate with industry bodies, Government and review committees for a
consumer-focussed sector, where funding and financing arrangements are such as to provide a high quality of care,
and to generate the level of investment required to meet existing and prospective demand for services.
OPERATING AND FINANCIAL REVIEW
REVIEW OF FINANCIAL PERFORMANCE
During the year the impact of increases in Government regulated revenue rates were below the increases in staff
wage and other costs in the sector which impacted the Group. Declining sector occupancy rates were also seen
although the impact on the Group was mitigated by the performance of the Group's occupancy management teams.
Average occupancy during the year was 93.6%.
In March 2019 the Government announced a temporary funding increase from the 20th March to the 30th June 2019,
to all Approved Providers, including Estia, which contributed an additional $10.3m of revenue in the year. This
additional funding ceased on 30 June 2019.
Costs associated with the closure of the older style non-contemporary home at Mona Vale in May 2019 were $0.5m.
The initial ramp-up costs of opening Southport in May 2019, and preparing for the opening of Maroochydore in August
2019 were $0.7m in the period.
As a result of these factors, operating profit for the year of $64.8m was broadly in line with 2018.
Government funded residential care subsidies & supplements
Temporary funding increase
Resident & other revenue
Total operating revenues
Employee benefits expense
Non wage costs
Direct costs associated with the Royal Commission
EBITDA*
Depreciation, amortisation & impairment expense
Profit on sale of non-current assets
Operating profit for the year
Net finance costs
Profit before income tax
Income tax expense
2019
$'000
427,987
10,336
147,662
585,985
386,804
103,493
1,721
93,967
29,184
(36)
64,819
6,990
57,829
16,539
2018
$'000
404,064
-
142,990
547,054
360,216
96,755
-
90,083
26,002
(363)
64,444
7,279
57,165
16,011
2017
$'000
388,099
-
136,531
524,630
339,515
98,615
-
86,500
18,859
(1,037)
68,678
9,623
59,055
18,356
Profit for the year
*EBITDA is categorised as non-IFRS financial information prepared in accordance with ASIC Regulatory Guide 230 - Disclosing
non-IFRS financial information, issued in December 2011. EBITDA is a measure consisting of earnings before interest, tax,
depreciation, amortisation and impairment expenses and gain/loss on sale of assets held for sale and has been adjusted from the
reported information to assist readers to better understand the financial performance of the business in each financial period. This
non-IFRS financial information, while not subject to audit, has been extracted from the financial report, which has been subject to an
audit by the external auditors.
41,154
41,290
40,699
REVIEW OF FINANCIAL POSITION AND CASH FLOWS
The Group’s capital and funding position is a product of the efficiency of operating profit to cash conversion, net RAD
flows, capital investment and dividend distributions. As at 30 June 2019, the Group had net bank debt of $110.4
million, representing a gearing ratio, excluding RAD liabilities of 1.2X EBITDA, and net assets of $761.5 million.
Conversion of EBITDA to cash remained strong with a near 100% conversion of EBITDA to cash in the year.
Total capital investment for the year ended 30 June 2019 was $93.8 million (2018: $61.3 million).
REVIEW OF FINANCIAL POSITION AND CASH FLOWS (CONTINUED)
Overall RAD balances increased from $791.5 million to $805.0 million over the course of the year, with Net RAD flows
of $14.6 million, of which $12.1 million came from new homes which opened in the prior year. This net inflow was
lower than seen in prior years as the number of incoming residents able or willing to pay a RAD fell. In the context of
the fall in transactional activity in the Australian housing market and lower sector-wide occupancy levels, the
maintenance of RAD levels consistent with the prior year was a positive result. The ability to refund RAD balances as
and when required by departing residents is managed by maintaining sufficient undrawn debt facilities, in accordance
with the Group's Liquidity Management Policy. More information in relation to RADs is included in Note D4.
As at 30 June 2019, the Group had total bank facilities of $330.0 million with an expiry date of 22 August 2020, of
which $201.0 million remained undrawn. These facilities provide the Group with significant levels of funding for future
developments and acquisitions.
DEVELOPMENTS AND ACQUISITIONS
The two homes which opened in FY18 at Twin Waters (Queensland) and Kogarah (New South Wales) reached full
capacity during the year ended 30 June 2019, delivering high quality of care in outstanding environments and
delivering strong financial performance.
In May 2019 the Group opened one new home at Southport (Queensland) which added a total of 110 new beds.
Three new homes are currently under development, with a total of 352 new beds, with the first opening in
Maroochydore (Queensland) in August 2019. In the 2-3 months preceding opening and in the early months of
operation, new homes will operate at a loss. Net losses associated with the new homes at Southport and
Maroochydore were $0.7 million in the year ended 30 June 2019.
13 homes with 1,105 beds completed a significant refurbishment program during the year, improving the quality of
amenity provided to residents, and bringing the total number of homes qualifying for the higher accommodation
supplements to 3,113, with a further 1,562 beds currently underway and due to completed by December 2019.
In May 2019 the Group’s old, non-contemporary home at Mona Vale was closed in order to accelerate the
re-development of a new home on a well-positioned site. All residents were assisted in finding new homes within the
Group or at other local providers. Staff were supported via alternative employment at other Group homes, or
redundancy packages, all with appropriate support. Costs associated with the closure were $0.5 million, mainly
redundancy related.
There were no acquisitions completed during the year, though the Group continues to identify and carefully consider
single or multiple home acquisition opportunities within existing geographic networks, and/or portfolio acquisition
opportunities.
DIVIDENDS
On 20 August 2019, the Directors resolved to pay a final fully franked dividend of 7.8 cents per share ($20,328,082)
bringing dividends per share for the financial year ended 30 June 2019 to 15.8 cents per share. The record date for
the final dividend will be 5 September 2019, with payment being made on 2 October 2019. Shares will trade excluding
entitlement to the dividend on 4 September 2019.
Dividends paid during the year were as follows:
Dividend
Date paid
Fully franked
dividend per
share
Total
Dividend
Final dividend for the year ended 30 June 2018
Interim dividend for the year ended 30 June 2019
28 September 2018
27 March 2019
8.0 cents
8.0 cents
$20,848,220
$20,848,220
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KEY BUSINESS RISKS
The following business risks are considered to be key risks to the Group’s performance and growth.
CHANGES TO REGULATORY OR FUNDING FRAMEWORK
Risk
Impact
The Australian residential aged care industry is highly regulated, with more than 70% of the total revenue
comprising funding from the Australian Government. Almost all of the Group’s revenues were derived
from services provided in accordance with, and legislated by, the Aged Care Act 1997 and subsequent
Amending Acts, and approximately 74% was paid to the Group from the Australian Government directly.
Capital flows from Refundable Accommodation Deposits ('RADs') are also governed by the same
legislation.
Any regulatory change or changes in Government policies in relation to existing legislation for the
industry may have an adverse impact on the way the Group promotes, manages and operates its homes,
and its financial performance and the carrying value of its assets, including bed licences. Changes to the
regulatory framework could also impact on competition through deregulation or changes to capital
requirements. Regulatory restrictions may also become more burdensome in the future, which may
require the Group to dedicate more time and expenditure to ensuring that the Group complies with such
regulations. The new Aged Care Quality Standards are effective from 1st July 2019 and require additional
time and resources to embed the required changes. Additional accreditation and or other requirements
may emerge prior to or following the Aged Care Royal Commission report being released.
Mitigant
Ageing demographics point to increasing demand for Residential Aged Care places and services in the
next decade, notwithstanding an expected increase in funding and take-up of Home Care. The Group
monitors demand, services and competitive market dynamics as well as RAD funding levels and
preferences and supports the Federal Government’s aspiration for the provision of the highest quality
residential aged care and value for money to the Government and residents.
ESTIA MAY EXPERIENCE SHORTAGE OF EMPLOYEES AND/OR UPWARD WAGE PRESSURE
Risk
Impact
The Group’s business depends on a specialised health and aged care workforce. There is a risk that the
Group may not be able to retain or expand a workforce that is appropriately skilled and trained to meet
the existing or future demands of residents at its homes and/or a risk that a shortage of employees leads
to upward wage pressure. Competition from other health care providers, such as hospitals and other
residential aged care homes, for appropriately skilled staff and a general industry shortage of staff in key
areas, such as nurses and other skilled staff may also increase the bargaining power of healthcare
professionals and can lead to upward pressure on applicable wages and salaries.
Increasing labour costs may adversely affect the Group’s business, financial performance and position
and future prospects. This may arise as a result of increases in wages which the Group is unable to pass
on to residents or is not recognised in full in the Aged Care Funding Instrument ('ACFI') consumer price
index adjustments, and/or increase in the use of agency staff, which typically results in higher staffing
costs to the Group.
Mitigant
The Group has a program to develop and deliver training for all staff in relation to specialised skills
required for quality aged care provision. Importantly the Group's training is provided to, and focused on,
both clinical and non-clinical staff.
The Group is also focused on optimising its existing workforce mix to offer secure long-term opportunities
to care employees, with extensive planning around leave and roster management to reduce dependence
on casual and agency employees.
RAD BALANCES
Risk
The Group is exposed to risks associated with a decline in RAD balances due to a range of factors. If a
larger than expected number of RAD paying residents were to leave the Group’s aged care homes, the
Group might be required to repay a large sum of RADs, all of which may not be able to be replaced
immediately. The Group is also exposed to risks that may adversely affect the future value of the Group’s
total accommodation bonds/RADs, including specific issues arising in the Group (such as a non-
compliance or loss of certification at a home), a general reduction in the price that can be achieved for
new RADs, a shift away from RAD payments due to a preference for other payment models by
consumers, or demand for the Group’s aged care services changing over time due to general economic
factors.
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DIRECTORS' REPORT
KEY BUSINESS RISKS (CONTINUED)
RAD BALANCES (CONTINUED)
Impact
Mitigant
There may be material impact on the Group’s cash flows and debt levels if a high number of departing
RAD payers are subsequently replaced by non-RAD paying residents, such as residents who elect to
make a daily accommodation payment or are concessional residents.
The Group regularly monitors and analyses RAD movements across the portfolio, maintains a formal
liquidity policy to ensure sufficient cash reserves are on-hand to refund RADs as and when they fall due,
supported by the Group’s bank debt facility that is available for use to fund future developments and
capital expenditure if RAD inflows reduce.
OCCUPANCY LEVELS MAY FALL
Risk
The Group's occupancy levels may fall below expectations as a result of numerous factors, including but
not limited to:
Increased competition
•
• Changing consumer trends
• Declining referrals from hospitals and other sources
• Growth of home care services
Impact
Mitigant
Reduced occupancy levels may adversely affect the Group’s financial performance as it will lead directly
to reduced revenues, whilst costs may not be able to decrease in line with the negative changes in
occupancy. Reduced occupancy levels may also have adverse effects on the cash flow of RADs.
The Group proactively manages its relationships with referrers as well as its standing in the communities
in which it operates. Due to the network structure of the homes, the Group is also able to provide
prospective residents of homes with a number of options if they are on a waiting list for a home that may
be at full capacity. The Group monitors demand, services and competitive market dynamics in relation to
each home.
FAILURE TO MEET CLINICAL CARE STANDARDS
Risk
As an approved aged care provider, the Group maintains an effective system of clinical governance to
promote and support the health, safety and quality of care provision to residents, and to ensure
compliance with the applicable legislation and departmental policies.
The Group may experience a decline in its clinical outcomes in circumstances where incidents are not
identified, assessed or reported, employees do not follow policies and procedures, or external health
consultants do not provide the service, or the quality of service expected.
Impact
Mitigant
Failures to meet clinical care standards may lead to adverse impacts on the Group’s reputation in the
industry and community, leading to a reduction in occupancy, notification of serious risk, sanction or in
certain circumstances, may lead to a loss of accreditation as an Approved Provider. As a result, there
may be an overall decline to profitability due to decreased occupancy and/or additional costs required to
ensure clinical care standards are improved. Additionally, there may be an increase in medico-legal risk,
regulator action and an increase to medical indemnity and other costs.
The Group seeks to ensure that its clinical care standards are of the highest quality and any decline in
standards are addressed swiftly. The Risk and Quality Management Frameworks, systems and
processes, with diligent oversight provided by the executive leadership team, provides clinical evaluation
with corrective actions as need is identified. The Group employs a Chief Quality and Risk Officer, who is
primarily responsible for clinical governance strategies and in partnership with People and Culture, the
clinical education and development of the Group’s employees.
ESTIA'S REPUTATION MAY BE DAMAGED
Risk
Impact
The Group operates in an industry in which its reputation could be adversely impacted should it, or the
aged care sector generally, suffer from any adverse publicity. The Group may also suffer reputational
damage in the event of medical indemnity claims, litigation or coronial inquests.
Any such damage to the Group’s reputation could result in existing residents moving from Estia’s homes
to other competitor residential aged care homes or reduce Estia’s ability to attract new residents to its
homes, both of which could adversely impact the Group’s financial performance, position and future
prospects.
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KEY BUSINESS RISKS (CONTINUED)
ESTIA'S REPUTATION MAY BE DAMAGED (CONTINUED)
Mitigant
The Group has Risk and Quality Management Frameworks that seek to identify and profiles risk and
quality outcomes across the business. These Frameworks are driven at Executive level by the Chief
Quality and Risk Officer. Trends across the business are also tracked through frequent analysis of the
feedback, complaints and other data and are reviewed by the home leadership and also by executive
leadership. The focus is to respond rapidly to concerns and to resolve matters in the most efficient and
effective manner.
Incidents that may damage the Group's reputation at a home level are escalated to the Executive as part
of the quality and risk policy in order to ensure investigation is conducted and actions taken as findings
indicate.
INFORMATION TECHNOLOGY (IT) SYSTEM BREACHES OR LOSS
Risk
Impact
Mitigant
Sensitive information is stored electronically, and there are risks of systems failure, cyber-attack, data
theft or other malicious actions that could cause business interruption or leakage of information.
These systems failures or breaches could adversely affect the Group’s operations, reputation and
financial performance.
The Group has implemented a framework of appropriate security and back-up protocols, including
training of staff in relation to privacy and data security. The strength and effectiveness of this framework
are regularly assessed, tested and improved. The Group also continually reviews and invests in its core
IT systems. Reporting and management of IT risk is part of the Board Risk Committee Charter.
GROWTH MAY BE CONSTRAINED BY ABILITY TO SECURE BED LICENCES
Risk
Impact
Mitigant
Approved Providers may only provide funded places to residents to the extent of bed licenses held. Bed
licenses are allocated by the Government under an allocation process known as the Aged Care
Approvals Round ('ACAR'). The process identifies geographical areas where it believes increased supply
is required, a number of provisional licenses are allocated to an area and providers are able to apply for
these. Past ACAR rounds have seen many more applications than has been available, and not all
providers receive the number of bed licenses they would like to secure.
Estia may not be able to secure bed licenses to allow it to grow the capacity as quickly as it might do if
such a constraint did not exist.
The Group applies for licences in ACAR rounds, will consider acquiring licences where they are available
for sale/transfer, and will consider applying to move licenses within its portfolio of homes to maximise
occupancy and development opportunities. The Company will not commit future significant development
funds unless licenses are substantially secured for a development.
INABILITY TO RECRUIT AND RETAIN KEY PERSONNEL
Risk
Impact
Mitigant
The Group may experience an inability to recruit and retain personnel to identified key positions at home
and or executive level. This may be due to approaches by recruitment professionals active in the market
or a decision to exit the sector due to the multiple challenges faced and or negative media sentiment in
response to the Aged Care Royal Commission. The decision may be triggered by opportunities that have
greater financial reward or other benefits.
High levels of turnover at the home and or executive level can affect occupancy, standards of clinical
care and operational efficiency and effectiveness. Replacement of key personnel is expensive and can
be destabilising to the business.
The Group People and Culture team works to develop an internal pipeline of management ready
candidates for key roles via bespoke Emerging Leader Programs. Group wide employee engagement
surveys are undertaken regularly to evaluate culture and the key personnel experience. Strategies are
developed to address issues identified. Communication strategies that celebrate the resident life
experience, recognise team initiatives and milestones and achievements are key elements to ensure
employees are recognised. The “Be Proud” initiative regularly provides recognition of employees work in
caring for residents.
SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS
There were no significant changes in the state of affairs of the Group during the financial year ended 30 June 2019.
SIGNIFICANT EVENTS AFTER THE BALANCE DATE
CLASS ACTION
On 16 July 2019, Estia was served with a class action proceeding filed by the law firm Phi Finney McDonald in the
Federal Court of Australia. The proceeding alleges breaches of market disclosure obligations in 2015 and 2016 and
has been filed on behalf of shareholders who, between 12 August 2015 and 6 October 2016: (i) acquired an interest in
Estia shares; or (ii) acquired long exposure to Estia shares by entering into equity swap confirmations in respect of
Estia shares.
Estia will vigorously defend the proceeding.
Estia is not in a position to state whether the proceeding is likely to have a material impact on its financial position or
performance.
ACQUISITIONS
On 15 August 2019 Estia entered into a contract to purchase a new greenfield development in the Maitland region of
NSW with 108 provisional licences attaching. The contract is subject to closing and settlement conditions including the
transfer of the licences from the vendor to Estia. Settlement of the transaction is expected to occur before 31
December 2019.
DIVIDENDS
On 20 August 2019, the Directors resolved to pay a final fully franked dividend of 7.8 cents per share ($20,328,082)
bringing dividends per share for the financial year ended 30 June 2019 to 15.8 cents per share. The record date for
the final dividend will be 5 September 2019, with payment being made on 2 October 2019. Shares will trade excluding
entitlement to the dividend on 4 September 2019.
BANK FACILITIES
On 16 August 2019 the Group elected to extend its existing $330 million syndicated debt facility with the support of a
syndicate of three domestic banks. The new facility expires in November 2022.
Other than those mentioned above, no matters or circumstances have arisen since the end of the reporting period
which significantly affected or may significantly affect the operations of the Group, the results of those operations, or
the state of affairs of the Group in future financial years.
LIKELY DEVELOPMENTS AND EXPECTED RESULTS
The Royal Commission into Aged Care commenced during the year and continues into FY20. The Commission is
expected to produce an interim report in October 2019 and a final report in April 2020. The Commission has wide
terms of reference including the financial sustainability of the sector and is likely to have recommendations which will
impact the sector, and the Group, both operationally and financially.
The Group continues to advocate for sector reform referred to earlier, including the recommendations from the Royal
Commission to achieve a sustainable and high-quality aged care sector where funding and financing arrangements
support the financial viability of efficient providers and provide investment returns sufficient to attract the capital
required to meet the increase in expected demand and quality.
The temporary funding increase which was announced in March 2019 contributed an additional $10.3 million of
revenue during the year ended 30 June 2019. This additional funding ceased on 30 June 2019.
The Group continued to pursue its strategy of growing the business through:
•
•
•
•
improving the operational and financial performance of the Group’s existing assets through a range of operational
initiatives;
improving the home portfolio through refurbishment and capital recycling programs;
opening new homes; and
acquisition of homes.
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DIRECTORS' REPORT
LIKELY DEVELOPMENTS AND EXPECTED RESULTS (CONTINUED)
ROUNDING
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The amounts contained in this report and in the financial report have been rounded to the nearest thousand dollars
($’000), under the option available to the Group under ASIC Corporations (Rounding in Financial/Directors’ Reports)
Instrument 2016/191. Estia Health Limited is an entity to which the class order applies.
This report is made on 20 August 2019 in accordance with a resolution of Directors.
Dr. Gary H Weiss AM
Chairman
Other than the likely developments disclosed above and elsewhere in this report, no matters or circumstances have
arisen which significantly affected or may significantly affect the operations of the Group, the results of those
operations, or the state of the affairs of the Group in future financial years.
ENVIRONMENTAL REGULATION AND PERFORMANCE
The Group is not subject to significant environmental legislation under either Commonwealth or State legislation.
PERFORMANCE RIGHTS
UNISSUED SHARES
As at the date of this report, there were 1,522,703 unissued ordinary shares under performance rights (2018:
907,684).
SHARES ISSUED AS A RESULT OF THE VESTING OF PERFORMANCE RIGHTS
A total of 13,693 performance rights vested during the year ended 30 June 2019 (2018: nil) and were issued as
shares on 18 July 2019. During the year ended 30 June 2019, 628,712 rights were granted (2018: 476,980) and no
rights were forfeited (2018: 93,534).
INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS
In accordance with provisions in its constitution, the Estia Health Limited (the 'Company') has executed deeds of
indemnity in favour of former and current directors and officers of the Company in relation to potential liabilities
including:
(a)
(b)
(c)
(d)
liabilities incurred by the person in the capacity as an officer where permitted under section 199A(2) of the
Corporations Act 2001;
legal costs incurred in relation to civil or criminal proceedings in which the officer becomes involved because
of that capacity;
legal costs incurred in connection with any investigation or inquiry of any nature because of that capacity; and
legal costs incurred in good faith in obtaining legal advice on issues relevant to the performance of their
functions and discharge of their duties as an officer.
The terms of these indemnities require repayment of sums advanced by way of legal costs in the event that the
relevant officer is found to have committed wrongs of a nature the Company is prohibited from indemnifying under
section 199A(2) of the Corporations Act 2001.
In accordance with its Constitution the Company has paid a premium for a contract insuring all directors, secretaries,
executive officers, officers and senior managers of the Company against liabilities incurred by those persons in that
capacity, on terms and conditions commonly available in the insurance market.
In accordance with usual commercial practice, the insurance contract prohibits disclosure of details of the nature of
the liabilities covered and the premium payable.
The contract does not provide cover for the independent auditors.
INDEMNIFICATION OF AUDITORS
To the extent permitted by law, the Group has agreed to indemnify its auditors, Ernst & Young Australia, as part of the
terms of its audit engagement agreement against claims by third parties arising from the audit (for an unspecified
amount). No payment has been made to indemnify Ernst & Young during or since the financial year.
NON-AUDIT SERVICES
The following non-audit services were provided by the Group's auditor, Ernst & Young Australia. The directors are
satisfied that the provision of non-audit services is compatible with the general standard of independence for auditors
imposed by the Corporations Act 2001. The nature and scope of each type of non-audit service provided means that
auditor independence was not compromised.
Ernst & Young Australia received or are due to receive the following amounts for the provision of non-audit services:
Tax compliance services
Assurance and other services
$
157,000
50,000
207,000
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Remuneration report – audited
Dear shareholders,
The Estia Board is pleased to present the Remuneration Report for the year ended 30 June 2019 (FY19).
Strategic and Operational Developments
Estia Health Limited’s (the ‘Group’ or ‘Estia’) strategic and operational focus during FY19 was reflected in a
number of key priorities that were pursued during the year:
1. Continued provision of leading quality residential care to each of the 8,000+ older Australians that the
Group delivers services to each year;
2. Pursuit of organic growth opportunities, illustrated by the completion and opening of the Group’s new
home at Southport in Queensland, the investment of $15.5 million in significant refurbishments across
13 of the Group’s existing homes, continued progress on further new homes being constructed at
Maroochydore in Queensland (due to open in August 2019) and Blakehurst in NSW (due to open in the
first half of FY21) and closure of the old Mona Vale home in NSW;
3. Preparation for and provision of information to the Royal Commission into Aged Care announced by the
Federal Government in September 2018. This included the creation of a non-standing, non-
remunerated Board Royal Commission and Regulatory sub-committee, led by Chairman Dr Gary Weiss
alongside Norah Barlow and Warwick Smith.
Executive leadership of the Group transitioned smoothly during FY19, with the Deputy CEO Ian Thorley replacing
Norah Barlow as the Group’s Managing Director and experienced aged care industry professional Sean Bilton
joining the Group as Chief Operating Officer and Deputy CEO. The Group was fortunate to retain Ms Barlow’s
expertise and knowledge through this transition as a result of her agreement to remain on the Board as a Non-
Executive Director, a position she had occupied prior to assuming the role of Managing Director in late 2016.
The experience, skills and diversity of the Board were further enhanced with the appointment of Karen Penrose
as a Non-Executive Director and Chair of Estia’s Audit Committee in October 2018, replacing Andrew Harrison.
The Group is proud of the quality and ASX200-leading gender diversity of Estia’s Executive leadership team and
Board.
Changes to FY19 Remuneration
Following a comprehensive review of the Group’s remuneration structures, the Board maintained a remuneration
framework for the Group’s senior executives in FY19 that included separate short term (STI) and long term (LTI)
incentive mechanisms, reflecting the conclusion from this review that this incentive structure provided better
shareholder alignment, employee motivation and balance between short and long term performance focus than
alternative Single Incentive Plan remuneration frameworks that were considered.
Within the Group’s STI and LTI incentive framework, the following changes for FY19 were made:
1. The STI scorecard comprised financial and non-financial performance metrics agreed with the Board
that are common across each KMP for 60% of the scorecard evaluation, with the remaining 40%
comprised of role-specific measures. Eligibility for STI payment consideration remained subject to a
clinical quality “gateway”, requiring achievement of compliance and accreditation targets;
2.
70% of LTI vesting entitlement had previously been measured against a Total Shareholder Return
(TSR) comparator comprised of the performance of the ASX200 excluding mining and energy
companies. Whilst 70% of the LTI vesting entitlement continued to be measured against a TSR
comparator for FY19, to make the comparator measure more directly relevant to the Group’s
performance against ASX- listed industry peers:
•
half of the TSR comparator was comprised of the performance of the ASX200 excluding mining
and energy companies; and
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DIRECTORS’ REPORT
Remuneration report – audited (continued)
•
half of the TSR comparator was comprised of the market capitalisation weighted average
performance of a peer group of ASX-listed companies operating in the provision of aged care
services.
FY19 Remuneration Outcomes
Whilst FY19 performance targets were achieved across a number of STI scorecard areas the clinical quality
gateway target was not met, resulting in no payments of STI’s for the year, apart from a payment that was agreed
with incoming COO Sean Bilton, at the time of him joining the Group, in lieu of a foregone vested incentive
payment from his prior employer. 25% of this agreed payment to the incoming COO is subject to deferral into
performance rights that will convert into Estia shares after a period of 12 months, subject to continuation of
service.
No vesting occurred under previous year’s Long Term Incentive Plan grants in FY19.
Looking Forward – Changes to FY20 Remuneration
Whilst key principles remain unchanged in terms of the FY20 remuneration structure applying to the Group’s
executive KMP’s, a number of mechanical changes to the operation of these principals have been made to reflect
the evolving nature and challenges evident across the aged care industry.
A clinical quality “gateway” to any STI entitlement remains in place, along with an expanded range of quality
conditions that must be met for KMP’s to achieve this gateway and be eligible for consideration to receive STI
payments. STI performance measures continue to comprise a mix of common and role-specific measures, with
common measures comprising 50% of the scorecard evaluation (compared with 60% in FY19) and role specific
measures comprising the other 50% (compared with 40% in FY19), to create enhanced role-specific performance
accountability. Finally, the Group’s senior executive accountable for overseeing clinical quality and risk
frameworks and processes has no financial performance metrics included in their STI scorecard, to eliminate the
perceived or actual risk of conflict between financial and clinical quality performance objectives and outcomes.
It is the Board’s policy that the remuneration of Non-Executive Directors should accord with market rates and the
level of responsibilities involved with each Board position. The existing Non-Executive Director (‘NED’) fee pool of
$900,000 per annum was established in 2014 upon the Group’s listing on the ASX. Fees paid to NEDs in FY19
totalled $852,159, making the Group unable to consider the appointment of an additional NED to the Board
possessing relevant skills or to allow payment of NEDs currently serving on Board committees who are not being
paid, in particular the non-standing, non-remunerated Royal Commission and Regulatory sub-committee, which
was established in 2018 to address the requirements of the Group’s participation in the Aged Care Royal
Commission and the increased regulatory environment of the sector.
It is proposed, subject to shareholder approval, to increase the maximum aggregate remuneration that may be
paid to NEDs by $200,000, from $900,000 per annum to $1,100,000 per annum. The proposed increase in the
maximum aggregate amount payable to NEDs will provide sufficient headroom to attract an additional director
should the board decide to. In addition, it will provide capacity to pay NEDs currently serving on Board
committees who are not being paid. For clarity, there is no intention to increase the current level of individual
fees paid annually to NEDs (Board Chair $250,000 per annum, Board Member $100,000 per annum, Board
Committee Chair $15,000 per annum, Board Committee Member $10,000 per annum).
On behalf of the Board, I am pleased to present to you the FY19 Remuneration Report for Estia and we look
forward to welcoming you at the 2019 AGM.
Yours sincerely
Paul Foster
Chair of the Nomination and Remuneration Committee
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Remuneration report – audited (continued)
This report for the year ended 30 June 2019 (FY19) outlines the remuneration arrangements of the Group in
accordance with the requirements of the Corporations Act 2001(Cth), as amended (the Act) and its regulations.
This information has been audited as required by section 308(3C) of the Act.
This report is presented under the following sections:
1.
2.
3.
4.
5.
6.
7.
8.
9.
Introduction
Remuneration governance
Group performance
Remuneration principles and strategy
Executive remuneration
Executive remuneration outcomes (including link to performance)
Executive employment contracts
Non-executive director fee arrangements
Additional disclosures relating to performance rights and shares
10.
Other transactions and balances with KMP and their related parties
1. Introduction
This report details the remuneration arrangements for Key Management Personnel (KMP) who are defined as
those persons having authority and responsibility for planning, directing and controlling the major activities of the
Group, directly or indirectly including any director (whether executive or otherwise) of the parent.
The table below outlines the KMP of the Group during FY19.
Key Management Personnel
Dr. Gary H Weiss AM
Non-Executive Chairman
Paul Foster
Non-Executive Director
Hon. Warwick L Smith AO Non-Executive Director
Helen Kurincic
Non-Executive Director
Full year
Full year
Full year
Full year
Karen Penrose
Non-Executive Director
From 17 October 2018
Andrew Harrison
Non-Executive Director
Until 17 October 2018
Norah Barlow ONZM
Non-Executive Director
From 23 November 2018
Chief Executive Officer (MD and CEO)
Until 23 November 2018
Ian Thorley
MD and CEO
Deputy CEO and COO
Sean Bilton
Deputy Chief Executive Officer and Chief
Operating Officer (Deputy CEO and COO)
From 23 October 20181
Until 22 October 2018
From 23 October 2018
Steve Lemlin
Chief Financial Officer (CFO)
Full year
Remuneration report – audited (continued)
2. Remuneration governance
2.1 Nomination and Remuneration Committee
The Nomination and Remuneration Committee (the Committee) was established to assist and advise the Board
on a range of matters including remuneration arrangements for KMP and ensuring the Board is of a size and
composition conducive to making appropriate decisions, with the benefit of a variety of perspectives and skills in
the best interests of the Group as a whole.
The Committee comprises three independent Non-Executive Directors (NEDs): Paul Foster (Committee Chair),
Dr. Gary H Weiss AM and Helen Kurincic. Further information on the Committee’s role, responsibilities and
membership, which is reviewed annually by the Board, can be viewed at http://www.estiahealth.com.au/investor-
centre/corporate-governance.
The Committee met four times in FY19. The MD and CEO attends certain Committee meetings by invitation,
where management input is required. The MD and CEO is not present during any discussions related to their
own remuneration arrangements.
2.2 Use of Independent Remuneration Consultants
The Committee seeks external remuneration advice to ensure it is fully informed when making remuneration
decisions. Remuneration advisors are engaged by, and report directly to, the Committee.
During the year ended 30 June 2019, the Nomination and Remuneration Committee engaged KPMG to provide
remuneration benchmarking data, advice regarding market practice and trends, and assistance with other adhoc
matters.
The services provided by KPMG do not constitute a ‘remuneration recommendation’ as defined in section 9B of
the Corporations Act 2001. The engagement with KPMG was based on an agreed set of protocols governing the
manner in which the engagement would be carried out. These protocols ensure that the remuneration advice
received from KPMG is free from undue influence from management.
3. Group performance
The table below illustrates Estia’s historic performance (since listing) against the key metrics upon which the
Group performance is measured.
30 June
2019
30 June
2018
30 June
2017
30 June
2016
30 June
2015
Revenue - $’000
Net profit after tax - $’000
EBITDA - $’000
Share price at start of the year
Share price at the end of the year
Dividends paid per share – cents
Basic earnings per share – cents
Diluted earnings per share – cents
$585,985
$41,290
$93,967
$3.29
$2.64
16.0
15.8
15.8
$547,054
$41,154
$90,083
$3.05
$3.29
15.8
15.8
15.7
$524,630
$40,698
$86,500
$4.37
$3.05
8.0
18.2
18.0
$442,821
$27,640
$89,059
$5.70
$4.36
25.6
15.1
15.1
$284,798
($22,523)
$30,900
$5.75*
$5.68
13.6
(16.3)
(16.3)
*share price at
date of listing
4. Remuneration principles and strategy
The remuneration strategy and framework set by the Nomination and Remuneration Committee is designed to
support and drive the achievement of Estia’s business strategy, including effective governance and management
of the Group’s risks. It aims to ensure that remuneration outcomes are linked to the Group’s performance and
aligned with shareholder outcomes.
1 Ian commenced the role of MD and CEO on 23 October 2018, undertaking a one-month hand-over with Norah Barlow. Ian was formally
appointed as MD and CEO on 23 November 2018.
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DIRECTORS’ REPORT
Remuneration report – audited (continued)
Estia is committed to creating and ensuring a diverse work environment in which everyone is treated fairly and
with respect and where everyone feels responsible for the reputation and performance of the Group. The Board
believes that Estia’s commitment to this policy contributes to achieving the Group’s corporate objectives and
embeds the importance and value of diversity within the culture of the Group. Diversity can broaden the pool for
recruitment of high quality employees, enhance employee retention, improve the Group’s corporate image and
reputation and foster a closer connection with and better understanding of customers.
The Board regularly reviews the remuneration framework against the evolving business strategy and in the
context of the commercial environment to ensure that it remains relevant.
5. Executive remuneration
5.1 Remuneration Framework and link to strategy
In FY19, the executive remuneration framework comprised a mix of fixed annual remuneration, and short and
long-term performance-linked incentive plans. The Group aims to reward executives with a level and mix of
remuneration appropriate to their position and responsibilities, while being market competitive and delivering
outcomes that are aligned to the experience of Estia's shareholders.
Component
Approach
Link to business and remuneration strategy
Competitive remuneration packages that attract
and retain high calibre employees from a
diverse pool of talent.
Short term incentives align the interests of
executives with achievement of business
strategic objectives over the short to medium
term.
The STI scorecard highlights Estia’s focus on
achieving key financial and operational targets,
while also continuing to deliver quality care.
Deferral of 25% of any STI award into equity
increases alignment with shareholder interests.
Fixed Annual
Remuneration
(FAR)
Short-Term
Incentive Plan
(STI)
FAR is set with reference to role,
market and experience of the
employee with reference to external
benchmarking data, particularly
looking at competition in the same
sector, both public and private.
Group and individual performance are
considered during the annual
remuneration review.
In FY19, the STI was measured
against shared EBITDA, NPAT and
Culture targets, as well as other role
specific measures over a 12-month
period. A resident quality gateway
hurdle was also used which required
ongoing compliance and accreditation
targets to be met in order for any of
the STI to be eligible to vest.
For executive KMP's the STI award is
delivered in a mix of cash and equity.
75% of the award is delivered in cash,
with the remaining 25% delivered in
performance rights, which require
participants to remain employed for
an additional 12 months for the
performance rights to vest.
Long-Term
Incentive Plan
(LTI)
The LTI is delivered in the form of
performance rights subject to the
following performance conditions,
measured over a three-year period:
The LTI is designed to drive sustainable value
creation for shareholders; encourage retention
and encourage a multi-year performance focus.
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DIRECTORS’ REPORT Remuneration report – audited (continued) Estia Health Annual Financial Report 2018 -201920ComponentApproach Link to business and remuneration strategy•Total shareholder return (TSR)(70%)performance:-35%relative to the ASX200 excluding mining and energy companies; and-35%relative tothe weighted average performance of agroup of ASX-listed (including dual-listed NZX/ASX entities) companies involved in the provision of aged care services.•Earnings Per Share (EPS) (30%).Relative TSR focuses executives on generating returns for shareholders, while EPS challenges management to increase profitability by growing earnings over a long-termhorizon.A TSR comparator group of companies providing aged care services was introduced in order to assess performance against peers with which Estia competes for shareholder capital.The LTI is delivered in equity which aligns theinterests of executive with achievementof increased shareholder wealth over the long-term.Total remunerationThe overall remuneration framework is designed to support and drive the achievement of Estia’s business strategy: •be the leader in providing high quality residential aged care homes in Australia•providing our residents with the highest standards of aged care services in an innovative, supportive and caring environment•deliver profitable growth through our robust development pipeline, significant refurbishment opportunities and through maximising the performance of our core assets.5.2 FY19Remuneration Opportunity MixIndustry Trends | Key Highlights | Chairman and CEO’s Message | Our Executive Team | Our Customers | Growing and Evolving Our Network | ESG
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Remuneration report – audited (continued)
5.4.1 STI remuneration outcomes
Whilst FY19 performance targets were achieved across a number of STI scorecard areas the clinical quality
gateway target was not met, resulting in no payments of STI’s for the year, apart from a payment that was agreed
with incoming COO Sean Bilton, at the time of him joining the Group, in lieu of a foregone vested incentive
payment from his prior employer. 25% of this agreed payment to the incoming COO is subject to deferral into
performance rights that will convert into Estia shares after a period of 12 months, subject to continuation of
service.
The table below sets out each Executive KMP’s STI awarded and foregone in FY19.
Senior Executive
STI opportunity
($)
STI awarded
($)
STI awarded
(%)
STI foregone
(%)
Ian Thorley
Sean Bilton
Steve Lemlin
360,000
250,000
135,000
Nil
250,000
Nil
0%
100%
0%
100%
0%
100%
Remuneration report – audited (continued)
5.3 Fixed Annual Remuneration
FAR includes base salary, non-cash benefits such as travelling allowances (including any fringe benefits tax), as
well as leave entitlements and superannuation contributions.
Remuneration levels are reviewed annually by the Committee and the Board.
As part of the review, the Committee engages KPMG to benchmark the remuneration of the current KMP against
relevant roles from a comparator group of ASX-listed companies2.
While having regard for the results of the benchmarking, the Committee considers the skills and experience of
each individual, as well as the complexity and accountabilities associated with the role, in setting FAR.
5.4 Short-Term Incentive Plan
The Group provides an annual STI to executives and awards a cash and deferred equity incentive subject to the
attainment of clearly defined Group measures.
Participation
STI value
Performance
conditions
Delivery of STI
Ian Thorley, Sean Bilton and Steve Lemlin all participated in the FY19 STI plan. Norah
Barlow did not participate.
In FY19, Ian Thorley and Sean Bilton had a maximum STI opportunity of 50% of FAR and
other executive KMP had a maximum STI opportunity of 30% of FAR.
The FY19 performance measures were EBITDA, NPAT and Culture targets, as well as other
role specific measures. The STI is subject to a resident quality gateway hurdle which
requires ongoing compliance and accreditation targets to be met in order for any of the STI
to be eligible to vest.
Performance against the measures is tested annually after the end of the financial year. All
payments under the STI plan are determined and approved by the Committee and the
Board.
Once STI payments have been approved, they are delivered in cash and equity. For senior
executives 25% of any payment is deferred for a period of 12 months in the form of
performance rights. The quantity of instruments granted in performance rights is determined
using face value allocation methodology, using the VWAP for the 10 trading days
immediately following the release of results (i.e. deferred STI amount divided by share
price).
Cessation of
employment
For “Bad Leavers” (defined by the Group as resignation or termination for cause), any
unpaid or deferred STI is forfeited, unless otherwise determined by the Board.
Clawback policy
Changes in FY20
For any other reason, the Board has discretion to award STI on a pro-rata basis taking into
account time and the current level of performance against performance hurdles.
The Board has discretion to reduce, cancel or clawback any unvested performance-based
remuneration in the event of serious misconduct or a material misstatement in the Group’s
financial statements.
The weighting of role specific performance measures in each KMP’s STI scorecard has
been increased from 40% to 50% to enhance individual, role specific performance
accountability. The range of clinical quality “gateway” performance measures that must be
met for KMP’s to be eligible for consideration to receive STI payments has been expanded
to further elevate the primacy of resident clinical quality and care.
2 The comparator group is comprised of ASX-listed companies within the Health Care, Real Estate and Consumer Discretionary sectors,
with a market capitalization of 50% - 200% of Estia’s.
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Remuneration report – audited (continued)
5.5 Long-Term Incentive Plan
A longer-term incentive is offered to senior executives to assist in the reward, motivation and retention of
personnel over the long-term and to improve alignment between executive and shareholder wealth. The LTI is
also designed to recognise the abilities, efforts and contributions of participants to Estia’s performance and
success and provide the participants with an opportunity to acquire or increase their ownership interest in the
Group.
Participation
Delivery of LTI
LTI value
Allocation methodology
LTI performance rights were offered to all members of executive KMP in FY19.
LTIs are delivered in the form of performance rights. On exercise, performance
rights entitle the holders to ordinary shares.
In FY19, Ian Thorley had a LTI opportunity of 100% of FAR, both Sean Bilton and
Steve Lemlin had a LTI opportunity of 70% of FAR.
The quantity of instruments granted under the LTI is determined using face value
allocation methodology, using the VWAP for the 10 trading days immediately
following the release of results (i.e. LTI opportunity divided by share price).
Performance conditions
The performance conditions for FY19 performance rights are as follows.
70% of award will be subject to a relative TSR performance measure:
•
•
35% relative to the ASX200 excluding mining and energy companies;
and
35% relative to the weighted average performance of a group of ASX-
listed (including dual-listed NZX/ASX entities) companies involved in the
provision of aged care services comprised of Regis Healthcare Limited
(25%), Japara Healthcare Limited 25%, Aveo Healthcare Limited (25%),
Oceania (12.5%) and Summerset Group Holdings Limited (12.5%).
TSR vesting schedules are provided below.
Estia’s TSR relative to the ASX200 (excluding
mining and energy companies)
Less than median of comparator group
At median of comparator group
Between median and 75th percentile of comparator
group
Percentage of
performance rights
that vest
Nil
50%
Straight line pro rata
vesting between 50% and
100%
Greater than 75th percentile of comparator group
100%
Estia’s TSR relative to the weighted average
performance of aged care services peer
group
Below weighted average performance
At weighted average performance
Straight line vesting
Percentage of
performance rights
that vest
0%
50%
50% - 100%
15 percentage points above weighted average
performance
100%
30% of award subject to EPS performance measure, with the below vesting
schedule.
Remuneration report – audited (continued)
Between threshold and target rate (6% to 10.3%)
At target rate or above (10.3% to 11%)
Straight line pro rata
vesting between 25% and
50%
Straight line pro rata
vesting between 50% and
100%
When assessing performance against targets, EPS will be adjusted to account for
acquisitions made during the performance period.
Performance period
The performance rights granted in FY19 have a performance period of three
years.
Lapse of performance rights
Any performance rights that remain unvested at the end of the performance
period will lapse immediately.
Total shares issued
Cessation of employment
Change of control
Clawback policy
The number of shares allocated on the vesting of all outstanding rights may not
exceed 5% of the total number of shares on issue at the time of the offer.
For “bad leavers” (defined by the Group as resignation or termination for cause),
all of the performance rights held by that employee upon cessation will
automatically lapse.
Cessation of employment for any other reason, a portion of the performance
rights held by that employee upon cessation will lapse according to a formula
which takes into account the length of time the participant has held the
performance right and the performance period for the performance right, unless
otherwise determined by the Board.
The Board may exercise its discretion to allow all or some unvested rights to vest
if a change of control event occurs, having regard for the performance of the
Group during the vesting period up to the date of a change of control event.
The Board has discretion to reduce, cancel or clawback any unvested
performance-based remuneration in the event of serious misconduct or a material
misstatement in the Group’s financial statements.
Changes in FY20
There will be no change to the plan in FY20.
5.5.1 LTI Vesting Outcomes
The FY17 LTI performance rights will be tested for vesting in FY20. As a result, no portion of the FY17 LTI have
vested or have been forfeited at the date of this report.
Group’s compound annual growth of EPS
from FY18 base year
Below threshold rate (<6%)
At threshold rate (6%)
Estia Health Annual Financial Report 2018 - 2019
Percentage of
performance rights
that vest
Nil
25%
23
Estia Health Annual Financial Report 2018 - 2019
24
64 Estia Health | 2018-19 Annual Report
2018-19 Annual Report | Estia Health 65
Industry Trends | Key Highlights | Chairman and CEO’s Message | Our Executive Team | Our Customers | Growing and Evolving Our Network | ESG
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Tax Transparency Report | Corporate Governance | Our Board | Shareholder Information | Annual Financial Report | Directory of Estia Homes
DIRECTORS’ REPORT
Remuneration report – audited (continued)
7. Executive employment contracts
Remuneration arrangements for executives are formalised in employment agreements. Key conditions for
executives are outlined below:
Name
FAR
Agreement
commence
Agreement
expire
Notice of
termination by
Group
Employee
notice
Ian Thorley
$720,000
Sean Bilton
$500,000
23 October 2018 No expiry,
continuous
agreement
6 months (or
payment in lieu
of notice)
6 months
23 October 2018 No expiry,
continuous
agreement
3 months (or
payment in lieu
of notice)
3 months
Steve Lemlin
$450,000
1 February 2017 No expiry,
continuous
agreement
3 months (or
payment in lieu
of notice)
3 months
7.1 Norah Barlow
Norah Barlow stepped down from the role of MD & CEO effective 23 November 2018, and has reassumed her
role as non-executive Director.
Unvested equity based incentives granted to Norah in connection with her role as MD & CEO will remain on foot
and be subject to performance testing in line with the ordinary terms of the plan. Details of such awards can be
found in section 9 of this report. Norah is not a member of the Nomination and Remuneration Committee, and
will not be involved in assessment of vesting levels of any of these plans.
8. Non-executive director fee arrangements
The Board seeks to set NED fees at a level which provides the Group with the ability to attract and retain NEDs
of the highest calibre, whilst incurring a cost which is acceptable to shareholders.
In FY19, there were no increases to NED fees.
8.1 Fee Pool
The NED fee pool at Estia is currently $900,000 (including superannuation contributions as required by law).
5
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Estia Health Annual Financial Report 2018 - 2019
26
66 Estia Health | 2018-19 Annual Report
2018-19 Annual Report | Estia Health 67
Industry Trends | Key Highlights | Chairman and CEO’s Message | Our Executive Team | Our Customers | Growing and Evolving Our Network | ESG
DIRECTORS’ REPORT
DIRECTORS’ REPORT
Tax Transparency Report | Corporate Governance | Our Board | Shareholder Information | Annual Financial Report | Directory of Estia Homes
Remuneration report – audited (continued)
8.2 Director’s 2019 Fee Structure
The table below summarises the annual Base NED fees, inclusive of superannuation:
Board
Audit Committee
Nominations & Remuneration Committee
Risk Management Committee
Property & Investment Committee
Description
Fees
Chair
$250,000
Director
$100,000
Chair
$15,000
Member
$10,000
Chair
$15,000
Member
$10,000
Chair
$15,000
Member
$10,000
Chair
$15,000
Member
$10,000
A Board Royal Commission and Regulatory Committee was established in FY19. No fees were paid to the
members of this committee due to lack of payment capacity under the current NED fee pool cap of $900,000 per
annum. NEDs may be reimbursed for expenses reasonably incurred in attending to the Group’s affairs. NEDs do
not receive retirement benefits, nor do they participate in any incentive programs.
8.3 Changes for FY20
It is proposed, subject to shareholder approval, to increase the maximum aggregate remuneration that may be
paid to NEDs by $200,000, from $900,000 per annum to $1,100,000 per annum. The proposed increase in the
maximum aggregate amount payable to NEDs will provide sufficient headroom to attract an additional director
should the board decide to. In addition, it will provide capacity to pay NEDs currently serving on Board
committees who are not being paid. For clarity, there is no intention to increase the current level of individual
fees paid annually to NEDs (Board Chair $250,000 per annum, Board Member $100,000 per annum, Board
Committee Chair $15,000 per annum, Board Committee Member $10,000 per annum).
Remuneration report – audited (continued)
8.4 Non-Executive director remuneration
The table below outlines NED remuneration for FY19 in accordance with statutory rules and applicable
accounting standards.
Non-Executive Director
Gary Weiss
Paul Foster
Warwick Smith
Helen Kurincic
Karen Penrose7
Norah Barlow8
Former Non-Executive Director
Andrew Harrison9
Patrick Grier10
Total
Year
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
2019
2018
Board fees
$
Superannuation
$
Total fees
$
259,469
250,992
123,288
123,288
114,155
114,155
114,155
114,155
79,597
-
58,333
-
38,052
114,155
-
41,133
787,049
757,878
20,531
20,049
11,712
11,712
10,845
10,845
10,845
10,845
7,562
-
-
-
3,615
10,845
-
3,908
65,110
68,204
280,000
271,041
135,000
135,000
125,000
125,000
125,000
125,000
87,159
-
58,333
-
41,667
125,000
-
45,041
852,159
826,082
Estia Health Annual Financial Report 2018 - 2019
27
Estia Health Annual Financial Report 2018 - 2019
28
68 Estia Health | 2018-19 Annual Report
2018-19 Annual Report | Estia Health 69
7 Karen Penrose was appointed on 17 October 2018.
8 Remuneration received in respect of Norah Barlow's role as executive is included in table 6.1, including the expense recognised for the
year relating to the LTI performance rights issued during her time as MD and CEO.
9 Andrew Harrison resigned on 17 October 2018.
10 Patrick Grier retired on 14 November 2017.
Industry Trends | Key Highlights | Chairman and CEO’s Message | Our Executive Team | Our Customers | Growing and Evolving Our Network | ESG
DIRECTORS’ REPORT
DIRECTORS’ REPORT
Tax Transparency Report | Corporate Governance | Our Board | Shareholder Information | Annual Financial Report | Directory of Estia Homes
Remuneration report – audited (continued)
9.2 Performance rights holdings of KMP and related parties
KMP, or their related parties directly, indirectly or beneficially held a number of performance rights in the Estia
Group as detailed in the table below.
Number of
rights at
1 July 2018
Granted as
remuneration
Rights
exercised
Net change
other
Number of
rights at
30 June
2019
Vested at 30 June 2019
Exercisable
Not
exercisable
Executive
director
Ian Thorley
Senior executive
Sean Bilton
Steve Lemlin
Former executive
Norah Barlow
Total
181,748
205,338
-
141,644
484,233
807,625
81,454
109,547
110,257
506,596
-
-
-
-
-
387,086
4,016
-
-
-
-
81,454
251,191
594,490
- 1,314,221
-
3,303
6,374
13,693
-
-
-
-
-
Remuneration report – audited (continued)
9. Additional disclosures relating to performance rights and shares
9.1 Performance rights granted, vested and lapsed during the year
The table below discloses the number of performance rights granted, vested or lapsed during the year.
Performance rights do not carry any voting or dividend rights and can only be exercised once the vesting
conditions have been met, until their expiry date. No options were granted to members of KMP during FY19.
Number of
rights
granted
during the
year
Grant date
Fair
value
per right
at grant
date
Vesting date
Exercise
price per
right
Expiry date
Number of
rights
vested
during the
year
Number of
rights
lapsed
during the
year
Executive
director
Ian Thorley11
70,463
29/11/18
70,463
29/11/18
60,396
29/11/18
4,016
29/11/18
Senior
executive
Sean Bilton
28,509
29/11/18
28,509
29/11/18
24,436
29/11/18
Steve Lemlin
37,185
29/11/18
37,185
29/11/18
31,874
29/11/18
3,303
29/11/18
Former
executive
Norah Barlow12
36,359
29/11/18
36,359
29/11/18
31,165
29/11/18
6,374
29/11/18
Total
506,596
0.47
0.46
1.92
2.96
0.47
0.46
1.92
0.47
0.46
1.92
2.96
0.47
0.46
1.92
2.96
30/06/21
30/06/21
30/06/21
30/06/19
30/06/21
30/06/21
30/06/21
30/06/21
30/06/21
30/06/21
30/06/19
30/06/21
30/06/21
30/06/21
30/06/19
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
30/06/21
30/06/21
30/06/21
30/06/19
30/06/21
30/06/21
30/06/21
30/06/21
30/06/21
30/06/21
30/06/19
30/06/21
30/06/21
30/06/21
30/06/19
-
-
-
4,016
-
-
-
-
-
-
3,303
-
-
-
6,374
13,693
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
11 Shareholders approved the grant of 201,322 performance rights to Ian Thorley in respect of the FY19 LTI, at the Group’s FY18 AGM held
on 29 November 2018.
12 Shareholders approved the grant of 103,883 performance rights to Norah Barlow in her role as MD and CEO in respect of the FY19 LTI, at
the Group’s FY18 AGM held on 29 November 2018.
Estia Health Annual Financial Report 2018 - 2019
29
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Remuneration report – audited (continued)
9.3 Value of performance rights awarded, exercised and lapsed during the year
The table below discloses the value of performance rights granted, exercised or lapsed during the year.
Value of rights
granted during the
year a
Value of rights
exercised during the
year b
Value of rights lapsed
during the year c
Remuneration
consisting of rights
for the year
$
$
$
Executive director
Ian Thorley
Senior executive
Sean Bilton
Steve Lemlin
Former executive
Norah Barlow
Total
124,020
45,360
68,957
76,750
315,087
a Determined at the time of grant per the AASB 2.
b Determined at the time of exercise.
c Determined at the time of lapse.
-
-
-
-
-
%
18%
43%
17%
48%
-
-
-
-
-
There were no alterations to the terms and conditions of options awarded as remuneration since their award
date.
Remuneration report – audited (continued)
9.4 Shareholdings of KMP and related parties
KMP or their related parties directly, indirectly or beneficially held a number of shares in Estia Group as detailed
in the table below.
Number of
shares at
1 July 201813,14
Granted as
remuneration
Exercise of
rights
Net change
other
Number of
shares at
30 June 201915
Held
nominally
Non-Executive
Director
Gary Weiss
Paul Foster
Warwick Smith
Helen Kurincic
Norah Barlow
Karen Penrose
Andrew Harrison
Senior executive
Ian Thorley
Sean Bilton
Steve Lemlin
Total
45,312
14,000
45,000
25,000
123,100
4,500
54,208
28,518
-
8,000
347,638
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
10,000
45,000
-
-
14,333
-
50,000
-
8,500
45,312
24,000
90,000
25,000
45,312
24,000
90,000
25,000
123,100
123,100
18,833
54,208
18,833
54,208
78,518
78,518
-
-
16,500
16,500
127,833
475,471
475,471
All equity transactions with KMP have been entered into under terms and conditions no more favourable than
those the Group would have adopted if dealing at arm's length.
10. Other transactions and balances with KMP and their related parties
There were no other transactions with KMP or their related parties during the year.
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31
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72 Estia Health | 2018-19 Annual Report
2018-19 Annual Report | Estia Health 73
13 The number of shares held for KMP who were appointed during the year are as at the date of their respective appointments.
14 The number of shares held for KMP at 1 July 2018 includes a restatement of prior period holdings for Andrew Harrison (previously
reported as 25,542).
15 The number of shares held for KMP who have resigned during the year are as at the date of their respective resignations.
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CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2019
Revenues
Other income
Expenses
Employee benefits expense
Administrative expenses
Occupancy expenses
Resident expenses
Depreciation and amortisation expense
Impairment expense
Impairment losses on trade receivables
Direct costs associated with the Royal Commission
Operating profit for the year
Net finance costs
Profit before income tax
Income tax expense
Profit for the year
Notes
B1
B1
B4
B2
B5
B3
B3
B1
2019
$'000
2018
$'000*
585,985
546,934
36
483
386,804
19,782
31,297
51,613
28,719
465
801
1,721
64,819
360,216
15,064
29,598
51,093
25,547
455
1,000
-
64,444
B6
6,990
7,279
57,829
57,165
B7
16,539
41,290
16,011
41,154
Other comprehensive income
Other comprehensive income to be reclassified to profit or loss in subsequent
periods, net of tax
Other comprehensive income not to be reclassified to profit or loss in
subsequent periods, net of tax
Blank
-
-
-
-
Total comprehensive income for the year, net of tax
41,290
41,154
Earnings per share
Basic, profit for the year attributable to ordinary equity holders of the Parent
Diluted, profit for the year attributable to ordinary equity holders of the Parent
B8
B8
cents
cents
15.84
15.77
15.79
15.75
*The comparative information above has been restated for classification purposes only. Amounts relating to
impairment expenses as reported in the prior year of $3,384,000 have been reclassified to depreciation and
amortisation expense. Refer to Note B3 for further information.
The accompanying notes form part of these consolidated financial statements.
Estia Health Annual Financial Report 2018 - 2019
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AS AT 30 JUNE 2019
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2019
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As at 1 July 2017
Profit for the year
Other comprehensive income
Total comprehensive income
Transactions with owners in their capacity as
owners:
Repayment of management equity plan
Dividends
Share-based payments
As at 30 June 2018
Adjustment on adoption of AASB 9 (net of tax)
Restated total equity at the beginning of the
financial year
Profit for the year
Other comprehensive income
Total comprehensive income
Transactions with owners in their capacity as
owners:
Repayment of management equity plan
Dividends
Share-based payments
As at 30 June 2019
D1
D1
D2
E9
D1
D1
D2
Issued
capital
$'000
Share-based
payments
reserve
$'000
Accumulated
losses
$'000
Notes
801,830
-
-
-
6
-
-
673
-
-
-
-
-
463
801,836
1,136
Total
equity
$'000
761,116
41,154
-
41,154
(41,387)
41,154
-
41,154
-
(41,175)
-
(41,408)
6
(41,175)
463
761,564
-
-
(316)
(316)
801,836
1,136
(41,724)
761,248
-
-
-
-
-
-
41,290
-
41,290
41,290
-
41,290
7
-
-
801,843
-
-
658
1,794
-
(41,696)
-
(42,130)
7
(41,696)
658
761,507
Current assets
Cash and cash equivalents
Trade and other receivables
Income tax receivable
Prepayments and other assets
Assets held for sale
Total current assets
Non-current assets
Property, plant and equipment
Investment properties
Goodwill
Other intangible assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Income received in advance
Refundable accommodation deposits and bonds
Other financial liabilities
Provisions
Total current liabilities
Non-current liabilities
Deferred tax liabilities
Loans and borrowings
Provisions
Other payables
Total non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Share-based payments reserve
Accumulated losses
Total equity
Notes
C3
C4
B7
C5
C1
C6
C2
C2
C7
D4
C9
C8
B7
D3
C8
C7
D1
2019
$'000
14,631
9,046
607
6,540
-
30,824
2018
$'000*
11,198
11,433
913
6,884
902
31,330
822,696
1,620
817,074
222,575
1,863,965
757,110
1,620
817,074
218,714
1,794,518
1,894,789
1,825,848
44,046
-
805,033
1,304
45,616
895,999
107,775
125,000
4,496
12
237,283
42,647
25
791,508
1,371
41,793
877,344
107,610
75,000
4,269
61
186,940
1,133,282
1,064,284
761,507
761,564
801,843
1,794
(42,130)
761,507
801,836
1,136
(41,408)
761,564
*The comparative information above has been restated for classification purposes only. Refer to Notes C4 and C7 for
further information.
The accompanying notes form part of these consolidated financial statements.
The accompanying notes form part of these consolidated financial statements.
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76 Estia Health | 2018-19 Annual Report
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FOR THE YEAR ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
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Cash flows from operating activities
Receipts from residents
Receipts from government
Payments to suppliers and employees
Net operating cash flows before interest, income tax and RAD,
accommodation bond and ILU entry contributions
Interest received
Finance costs paid
Income taxes paid
Net cash flows from operating activities excluding RAD, accommodation
bond and ILU entry contributions
RAD, accommodation bond and ILU entry contribution received
RAD, accommodation bond and ILU entry contribution refunded
Net cash flows from operating activities
Cash flows from investing activities
Payments for intangible assets
Proceeds from sale of property, plant and equipment
Proceeds from sale of assets held for sale
Purchase of property, plant and equipment
Net cash flows used in investing activities
Cash flows from financing activities
Proceeds from repayment of MEP loans
Proceeds from borrowings
Repayment of borrowings
Dividends paid
Net cash flows from/(used in) financing activities
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
Notes
2019
$'000
2018
$'000
148,427
437,556
(489,880)
96,103
70
(6,878)
(15,932)
73,363
246,454
(231,888)
87,929
(4,850)
19
956
(88,932)
(92,807)
7
225,000
(175,000)
(41,696)
8,311
3,433
11,198
14,631
141,732
403,746
(442,438)
103,040
186
(6,940)
(22,307)
73,979
269,566
(206,781)
136,764
(942)
-
4,167
(60,323)
(57,098)
6
65,000
(111,514)
(41,175)
(87,683)
(8,017)
19,215
11,198
B9
C2
C5
C1
D1
D1
C3
SECTION A: ABOUT THIS REPORT
A1
CORPORATE INFORMATION
The consolidated financial statements of Estia Health Limited and its subsidiaries (collectively, the “Group”) for the
year ended 30 June 2019 were authorised for issue in accordance with a resolution of the directors on 20 August
2019.
Estia Health Limited (the “Company” or the “parent”) is a for-profit company limited by shares incorporated in
Australia, whose shares are publicly traded on the Australian Securities Exchange (ASX) under the code 'EHE'.
The nature of the operations and principal activities of the Group are described in the Directors’ Report.
A2
BASIS OF PREPARATION
The financial report is a general purpose financial report which has been prepared in accordance with the
requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements
of the Australian Accounting Standards Board. The financial report has been prepared on a historical cost basis,
except for investment properties and derivative financial instruments which have been measured at fair value.
The financial report is presented in Australian dollars and all values are rounded to the nearest thousand ($’000)
unless otherwise stated.
A3
STATEMENT OF COMPLIANCE
The financial report also complies with International Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board.
A4
BASIS OF CONSOLIDATION
The consolidated financial statements comprise the financial statements of the Group and its controlled subsidiaries
as at 30 June 2019 (refer to Note E6 for the group structure). Control is achieved when the Group is exposed, or has
rights, to the variable returns from its involvement with the investee and has the ability to affect those returns through
its power over the investee.
Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group
loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during
the year are included in the statement of profit or loss and other comprehensive income from the date the Group gains
control until the date the Group ceases to control the subsidiary.
All intercompany balances and transactions, and any unrealised gains and losses arising from intra-group
transactions, are eliminated in preparing the Consolidated Financial Statements.
A5
CURRENT/NON-CURRENT CLASSIFICATION
Assets are disclosed as current when they are expected to be converted to cash or receivable within 12 months of 30
June 2019. Liabilities are disclosed as current when they are due within 12 months of 30 June 2019 or when there is
no unconditional right to defer settlement for at least 12 months after 30 June 2019.
The accompanying notes form part of these consolidated financial statements.
Estia Health Annual Financial Report 2018 - 2019
37
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
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SECTION A: ABOUT THIS REPORT (CONTINUED)
A6
GOING CONCERN
The financial report has been prepared on a going concern basis which assumes that the Group will be able to meet
its obligations as and when they fall due. The Group’s current liabilities exceed current assets by $865,175,000 as at
30 June 2019 (2018: $846,014,000) resulting in a net deficiency of current assets. This mainly arises because of the
requirement to classify Refundable Accommodation Deposits ("RAD") and Independent Living Unit (ILU) entry
contributions of $806,337,000 (2018: $792,879,000) as current liabilities.
RADs and Bonds are classified as a current liability as the Group does not have an unconditional right to defer
settlement of any specific RAD or Bond for at least twelve months after the reporting date. The total RAD and Bond
liability represents the sum of separate payments from individual residents in different locations with differing
circumstances, and frequently a departing RAD and Bond paying resident is replaced shortly afterwards with a new
RAD paying resident. The repayment of individual balances that make up the total current balance will be dependent
upon the actual tenure of individual residents, which can be more than ten years but averages approximately 2 - 2.5
years (refer Notes D4 and C9 for further details).
The Group has a debt facility of $330,000,000 of which $201,000,000 remains undrawn as at 30 June 2019, which
excludes $4,000,000 of bank guarantees disclosed in Note E2. This debt facility can be drawn down to re-pay RAD
and Bond refunds should the Group experience significant RAD and Bond net outflows.
A7
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
The preparation of the Group’s consolidated financial statements requires management to make judgements,
estimates and assumptions that affect the reported amounts and are reviewed on an ongoing basis.
Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the
carrying amount of assets or liabilities affected in future periods.
Information about critical judgements, estimates and assumptions that affect the application of the Group's accounting
policies within the year ended 30 June 2019 are included in the following notes:
Significant accounting judgements, estimates and assumptions
Note B7 Recognition of deferred tax assets
Note C2 Recoverability of Intangible assets
Note C4 Recoverability of trade receivables and future credit risks
Note D2 Measurement of equity-settled share-based payment transactions
SECTION B: OUR PERFORMANCE
B1
REVENUE AND OTHER INCOME
Revenues
Government funded residential care subsidies & supplements
Resident daily care fees
Other resident fees
Total revenues
Other income
Net gain on disposals of assets held for sale
Increase in fair value of investment property
Net gain on disposals of property, plant and equipment
Total other income
2019
$'000
2018
$'000
438,323
104,253
43,409
585,985
404,064
101,065
41,805
546,934
17
-
19
36
363
120
-
483
The Group is in the business of providing residential aged care services to residents. The terms and conditions for
discretionary and non-discretionary services are agreed within a single customer contract with the resident, which are
enforceable primarily on a daily basis. Contracts with customers contain provision for accommodation, use of common
areas/facilities, provision of care and other services.
Total revenue includes the provision of accommodation, that is accounted for in accordance with AASB 117 Leases.
Operating lease revenue is recognised on a straight line basis over the length of stay. For residents that have chosen
to pay a RAD or Bond, the adoption of AASB 16 as of 1 July 2019, would regard there being a reduction in, or no,
cash charge for accommodation. The accounting treatment for the non-cash consideration component of this
arrangement is expected to change and result in the recognition of an increase in revenue for accommodation and an
increase in financing costs relating to the outstanding RAD liability, with no net impact on the Operating Profit for
periods affected. Refer to Note E9 for further analysis of the impact on the new standard.
Disaggregation of Revenue
The Group has disaggregated revenue based on the source of the funding for the provision of residential aged care.
(a) Government Funded Residential Care Subsidies & Supplements
The Australian Government determines the amount of subsidies and supplements in accordance with the provisions
of the Aged Care Act. In accordance with the Act the level of subsidy or supplement is dependent on a range of
factors, including a resident’s care needs, supported resident ratios in a particular home and whether a home has
been newly built or significantly refurbished on or after 20 April 2012. The subsidies and supplements are calculated
as a daily rate and is payable for each day that a resident is in a home.
The Government may require a resident to pay a proportion of that subsidy or supplement dependent on their own
financial circumstances, referred to as a Means Tested Care Fee ('MTCF'). The MTCF reduces the amount the
Government pays directly to the provider as a result. The total MTCF included within the total Government Funded
Residential Care Subsidies and Supplements was $16,782,000 in the period (2018: $17,367,000).
(b) Resident Daily Care Fees
The Group receives Daily Care Fees in accordance with the Aged Care Act which are funded directly by the resident
as a Daily Care Fee which is set by the Government. The Daily Care Fee is calculated as a daily rate and is payable
by a resident for each day that a resident is in a home.
Estia Health Annual Financial Report 2018 - 2019
39
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
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SECTION B: OUR PERFORMANCE (CONTINUED)
B1
REVENUE AND OTHER INCOME (CONTINUED)
(c) Other Resident Fees
The Group provides additional services and accommodation to residents that are funded directly by the resident,
under mutually agreed terms and conditions.
The services provided are determined on a standalone price, typically as a daily rate and the resident simultaneously
receives and consumes the benefits provided by the Group.
Impairment Losses on Receivables
The Group recognised impairment losses on receivables arising from contracts with customers, included under
Impairment losses on trade receivables in the statement of profit or loss of $801,000 for the year ended 30 June 2019
(2018: $1,000,000).
Contract Assets and Liabilities
AASB 15 requires presentation of the following items separately in the statement of financial position:
(i) ‘contract asset’ for the right to consideration in exchange for services that have transferred to a customer;
(ii) ‘contract liability’ for the obligation to transfer services to a customer for which the entity has received consideration
(or an amount of consideration is due) from the customer; and
(iii) ‘receivable’ for the right to consideration that is unconditional (only the passage of time is required before payment
of that consideration is due).
The Group presents these separately in the statement of financial position. The Standard allows an entity to use
alternative descriptions and therefore the Group has used the description ‘Income received in advance’ to refer to
contract liabilities.
Other Income
During the year, the Group sold two properties for a total of $956,000 (2018: five properties sold for a total of
$4,167,000) and recognised a net gain on sale of $17,000 (2018: net gain on sale $363,000).
The Group recognises gains and losses from the sale of assets held for sale at the point in time that control transfers
to the purchaser, which is when the legal title is transferred between the parties, typically upon settlement.
SIGNIFICANT ACCOUNTING POLICY
The Group recognises revenue under AASB 15 Revenue from Contracts with Customers which supersedes AASB
118 Revenue and related interpretations and applies to all revenue arising from contracts with customers, unless
those contracts are in the scope of other standards. The Group uses the five-step model as set out in AASB 15 to
account for revenue arising from contracts with customers.
The transaction price is allocated to performance obligations on the basis of their relative standalone selling prices
and recognised as revenue accordingly as those performance obligations are satisfied over time each day as the
customer simultaneously receives and consumes the benefits provided by the Group.
The provision of care to a resident is a single performance obligation. Other services, such as Additional Services
(including services such as in-room foxtel and additional menu choices) and Accommodation charges contain a
number of different performance obligations.
The Group has applied the practical expedient not to disclose the transaction price allocation to unperformed
performance obligations.
All performance obligations are considered to be met on a daily basis and therefore the Group does not have any
outstanding performance obligations that have not been met at the reporting date.
SECTION B: OUR PERFORMANCE (CONTINUED)
B2
ADMINISTRATIVE EXPENSES
Advertising and marketing expenses
Telephone and communication expenses
Travel expenses
Printing and stationery expenses
Professional services expenses
Other administrative expenses
Total administrative expenses
2019
$'000
924
2,108
2,152
2,369
5,476
6,753
19,782
B3
DEPRECIATION, AMORTISATION AND IMPAIRMENT EXPENSES
Depreciation expense
Accelerated depreciation due to home closures
Amortisation expense
Impairment expense
Total depreciation, amortisation and impairment expenses
Notes
C1
C1
C2
C1
2019
$'000
26,432
1,298
989
465
29,184
2018
$'000
672
1,797
1,605
2,625
3,065
5,300
15,064
2018
$'000*
21,019
3,384
1,144
455
26,002
The accelerated depreciation due to home closures above relates to the closing of the home at Mona Vale. In the
prior year, the amounts relate to the closure of the home at Southport and Blakehurst.
*The comparative information above has been restated for classification purposes only. Amounts relating to
impairment expenses as reported in the prior year of $3,384,000 have been reclassified to accelerated depreciation
due to home closures. The homes were depreciated at an accelerated rate due to changes in their useful life
estimates based on decisions to redevelop the sites at an earlier date than previously anticipated.
B4
EMPLOYEE BENEFITS EXPENSES
Salaries and wages expense
Superannuation expense
Other employee expenses
Total employee benefits expenses
2019
$'000
322,290
29,462
35,052
386,804
2018
$'000
303,027
27,837
29,352
360,216
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41
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FOR THE YEAR ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
SECTION B: OUR PERFORMANCE (CONTINUED)
SECTION B: OUR PERFORMANCE (CONTINUED)
Tax Transparency Report | Corporate Governance | Our Board | Shareholder Information | Annual Financial Report | Directory of Estia Homes
B5
OCCUPANCY EXPENSES
Rent expense
Repairs and maintenance expense
Other occupancy expenses
Total occupancy expenses
B6
NET FINANCE COSTS
Interest income from cash at banks
Total finance income
Interest expense on bank loans
Interest capitalised1
Interest expense on accommodation bonds for departed residents
Other finance costs
Total finance costs
2019
$'000
5,849
9,578
15,870
31,297
2019
$'000
70
70
2,549
(960)
3,402
2,069
7,060
2018
$'000
5,703
8,509
15,386
29,598
2018
$'000
186
186
2,298
(338)
3,257
2,248
7,465
Net finance costs
6,990
7,279
1 Interest directly attributable to the construction of homes has been capitalised to construction in progress at a
weighted average rate of 3.04% (2018: 2.99%). Assets have been funded through general borrowings and the
capitalisation rate represents the average cost of interest on such borrowings.
SIGNIFICANT ACCOUNTING POLICY
Interest income
Interest income is recognised based on the effective interest method.
Borrowing costs
Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a
substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset. All
other borrowing costs are expensed in the period in which they occur. Refer to Note D3 for information relating to
loans and borrowings.
B7
INCOME TAX
Current income tax
Current income tax expense
Adjustments in respect of income tax of previous year
Deferred income tax
Relating to origination and reversal of temporary differences
Adjustments in respect of income tax of previous year
2019
$'000
2018
$'000
16,529
(290)
17,314
(788)
642
(342)
(190)
(325)
Income tax expense reported in the consolidated statement of profit or loss and
other comprehensive income
16,539
16,011
Reconciliation of income tax expense and the accounting profit:
Accounting profit before income tax
At the Australian statutory income tax rate of 30% (2018: 30%)
Adjustments in respect of income tax of previous year
Non-taxable income
Utilisation of previously unrecognised tax losses
Recognition of tax on bed licences
Expenditure not allowable for income tax purposes
- Other expenditure
Income tax expense
2019
$'000
57,829
17,349
(632)
-
(182)
-
2018
$'000
57,165
17,150
(1,113)
(143)
-
89
4
28
16,539
16,011
(74,368)
(73,176)
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FOR THE YEAR ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
SECTION B: OUR PERFORMANCE (CONTINUED)
SECTION B: OUR PERFORMANCE (CONTINUED)
Tax Transparency Report | Corporate Governance | Our Board | Shareholder Information | Annual Financial Report | Directory of Estia Homes
B7
INCOME TAX (CONTINUED)
Accelerated depreciation
IPO transaction fees
Other
Assets held for sale
Bed licences
Share-based payments
Provisions and accruals
Investment properties
Deferred tax expense
Deferred tax assets/(liabilities), net
Reflected in the statement of financial position as follows
Deferred tax assets
Deferred tax liabilities
Deferred tax assets/(liabilities), net
Reconciliation of deferred tax liabilities, net:
Balance at 1 July 2017
Tax income during the year recognised in profit or loss
Adjustments in respect of income tax of previous year
Balance at 30 June 2018
Adjustment due to AASB9 adoption
Adjusted balance as at 1 July 2018
Tax expense during the year recognised in profit or loss
As at 30 June 2019
Consolidated statement of
profit or loss and other
comprehensive income
Consolidated statement of
financial position
2019
$'000
1,003
(2,059)
(184)
(17)
-
(341)
1,298
-
(300)
(300)
2018
$'000
1,223
(2,059)
(496)
(119)
(89)
139
1,627
(36)
190
190
2019
$'000
(59,848)
16
(825)
-
(64,571)
-
17,489
(36)
2018
$'000
(60,851)
2,075
(641)
17
(64,571)
341
16,056
(36)
(107,775)
(107,775)
(107,610)
(107,610)
17,672
(125,447)
(107,775)
18,665
(126,275)
(107,610)
$'000
(108,765)
190
965
(107,610)
135
(107,475)
(300)
(107,775)
-
-
-
-
-
-
-
-
The Group has tax losses which arose as part of the acquisition of the Hutchinson component entities. These are
subject to an available fraction which determines the annual rate at which the losses may be recouped. A deferred tax
benefit has not been recognised in these financial statements in relation to these losses.
B7
INCOME TAX (CONTINUED)
SIGNIFICANT ACCOUNTING POLICY
Current income tax
Current income tax assets and liabilities for the current period are measured at the amount expected to be recovered
from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are
enacted or substantively enacted at the reporting date.
Current income tax relating to items recognised directly in equity is recognised in equity and not in the statement of
profit or loss. Positions taken in the tax returns are evaluated with respect to situations in which applicable tax
regulations are subject to interpretation and establishes provisions where appropriate.
Deferred tax
Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and
liabilities and their carrying amounts for financial reporting purposes at the reporting date.
Deferred income tax liabilities are recognised for all taxable temporary differences except:
• When the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a
transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting
profit nor taxable profit or loss; and
• In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests
in joint ventures, when the timing of the reversal of the temporary differences can be controlled and it is probable
that the temporary differences will not reverse in the foreseeable future.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset
is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted
at the reporting date.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax
assets against current income tax liabilities and the deferred taxes relate to the same taxable entity and the same
taxation authority.
Tax consolidation legislation
Estia Health Limited and its wholly-owned controlled entities implemented the tax consolidation legislation as of 19
June 2013.
The head entity, Estia Health Limited and the controlled entities in the tax consolidated group continue to account for
their own current and deferred tax amounts. The Group has applied the Group allocation approach in determining the
appropriate amount of current taxes and deferred taxes to allocate to members of the tax consolidated group.
In addition to its own current and deferred tax amounts, Estia Health Limited also recognises the current tax liabilities
(or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from
controlled entities in the tax consolidated group.
Assets or liabilities arising under tax funding agreements with the tax consolidated entities are recognised as amounts
receivable from or payable to other entities in the Group.
Any difference between the amounts assumed and amounts receivable or payable under the tax funding agreement
are recognised as a contribution to (or distribution from) wholly-owned tax consolidated entities.
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FOR THE YEAR ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
SECTION B: OUR PERFORMANCE (CONTINUED)
SECTION B: OUR PERFORMANCE (CONTINUED)
Tax Transparency Report | Corporate Governance | Our Board | Shareholder Information | Annual Financial Report | Directory of Estia Homes
B7
INCOME TAX (CONTINUED)
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which
the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be
utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no
longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised.
Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has
become probable that future taxable profits will allow the deferred tax asset to be recovered.
B8
EARNINGS PER SHARE
Basic Earnings Per Share (EPS) amounts are calculated by dividing the profit for the year attributable to ordinary
equity holders of the Parent by the weighted average number of ordinary shares outstanding during the year. Diluted
EPS amounts are calculated by dividing the profit attributable to ordinary equity holders of the Parent by the weighted
average number of ordinary shares outstanding during the year plus the weighted average number of ordinary shares
that would be issued on conversion of all the dilutive employee Performance Rights into ordinary shares.
Profit attributable to ordinary equity holders of the Parent for basic and diluted
earnings
2019
$'000
2018
$'000
41,290
41,154
2019
2018
Weighted average number of ordinary shares for basic EPS
260,602,749
260,580,283
Effect of dilution
1,270,857
791,893
Weighted average number of ordinary shares for the effect of dilution
261,873,606
261,372,176
Basic earnings per share
Diluted earnings per share
2019
cents
15.84
15.77
2018
cents
15.79
15.75
B9
CASH FLOW RECONCILIATION
(a) Reconciliation of net profit after income tax to net cash flows from operations
Profit for the year
41,290
41,154
2019
$'000
2018
$'000
Adjustments to reconcile profit after income tax to net cash flows:
Depreciation of property, plant and equipment
Amortisation of intangibles
Impairment of property, plant and equipment
Net gain on disposal of property, plant and equipment
Net gain on sale of assets held for sale
Bond retention revenue
Movement in allowance for expected credit losses
Share-based payments
Stepped lease costs
Net gain on fair value of investment properties
Changes in assets and liabilities
Decrease in trade and other receivables
Decrease/(Increase) in prepayments and other assets
Decrease in deferred tax assets
Decrease in deferred tax liabilities
Increase/(Decrease) in current tax payable
(Decrease)/Increase in trade and other payables
Increase in provisions
Increase in refundable accommodation deposits and bonds
Net cash flows from operating activities
SIGNIFICANT ACCOUNTING POLICY
Operating cash flow
27,730
989
465
(19)
(17)
(1,041)
(387)
658
209
-
2,000
344
1,129
(828)
306
(3,306)
3,841
14,566
87,929
24,403
1,144
455
-
(363)
(1,499)
74
463
134
(120)
809
(1,541)
638
(1,793)
(5,141)
11,631
3,531
62,785
136,764
Daily inflows and outflows of refundable accommodation deposits are considered by the Group to be a normal part of
the operations of the business and are utilised at the discretion of the Group within the guidelines set out by the
Prudential Compliance Standards and are therefore classified as an operating activity for the purposes of cash flow
reporting.
(b) Reconciliation of liabilities arising from financing activities
Non-current loans and borrowings
Total liabilities from financing activities
75,000
75,000
50,000
50,000
125,000
125,000
2018
$'000
Net cash flows
$'000
2019
$'000
Estia Health Annual Financial Report 2018 - 2019
47
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48
88 Estia Health | 2018-19 Annual Report
2018-19 Annual Report | Estia Health 89
Industry Trends | Key Highlights | Chairman and CEO’s Message | Our Executive Team | Our Customers | Growing and Evolving Our Network | ESG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Tax Transparency Report | Corporate Governance | Our Board | Shareholder Information | Annual Financial Report | Directory of Estia Homes
SECTION C: ASSETS & LIABILITIES
C1
PROPERTY, PLANT AND EQUIPMENT
Reconciliation of property, plant and equipment
Land
$'000
Buildings
$'000
Property
Improvements
$'000
Note
Furniture,
fixtures
&
equipment
$'000
Motor
vehicles
$'000
Construction
in progress
$'000
Total
$'000
Cost
Balance at 1 July 2017
Additions
Transfers
Disposals
Transfers to assets held for
sale
Balance at 30 June 2018
Additions
Transfers
Disposals
Transfers to assets held for sale
Balance at 30 June 2019
Accumulated depreciation
Balance at 1 July 2017
Depreciation expense
Impairment expense
Disposals
Balance at 30 June 2018
Depreciation expense
Impairment expense
Disposals
Balance at 30 June 2019
Net book value
As at 30 June 2018
As at 30 June 2019
193,441 446,487
-
38,247
(3,000)
2,187
-
-
(2,415)
-
193,213 481,734
-
23,868
(786)
-
192,840 504,816
99
-
(435)
(37)
B3
B3
B3
B3
455
-
58
(513)
-
-
-
-
-
19,256
12,576
-
(3,000)
28,832
11,884
-
(786)
39,929
36,199
2,259
11,091
(195)
-
49,354
2,521
14,215
(1,267)
-
64,823
1,019
1,349
-
(194)
2,174
3,306
-
(1,267)
49,230
11,212
8,588
(720)
-
68,310
13,140
13,574
(2,979)
-
92,045
16,422
10,244
-
(719)
25,947
12,438
-
(2,965)
4,213
35,421
900
45
-
-
-
945
87
-
(43)
-
989
554
234
-
-
788
102
-
(43)
847
34,998 761,255
60,323
44,620
-
(57,926)
(4,312)
(397)
-
(2,415)
21,295 814,851
94,471
78,624
-
(51,657)
(6,179)
(669)
(37)
-
47,593 903,106
-
-
397
(397)
-
-
465
(465)
37,706
24,403
455
(4,823)
57,741
27,730
465
(5,526)
-
80,410
193,213 452,902
192,840 464,887
47,180
60,610
42,363
56,624
157
142
21,295 757,110
47,593 822,696
SECTION C: ASSETS & LIABILITIES (CONTINUED)
C1
PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
SIGNIFICANT ACCOUNTING POLICY
Construction in Progress, Plant and Equipment and Land and Buildings are stated at cost, net of accumulated
depreciation and accumulated impairment losses, if any. Land is not depreciated. Such cost includes the cost of
replacing part of the plant and equipment and borrowing costs for long-term construction projects if the recognition
criteria is met. When significant parts of plant and equipment are required to be replaced at intervals, the Group
recognises such parts as individual assets with specific useful lives and depreciates them accordingly. All other repair
and maintenance costs are recognised in profit or loss as incurred.
Property, plant and equipment transferred from vendors are initially measured at fair value at the date on which
control is obtained.
Depreciation is calculated on a straight-line or written down value basis over the estimated useful life of the asset as
follows:
Buildings and property improvements
Furniture, fittings and equipment
Motor vehicles
4 - 50 years
3 - 20 years
4 - 8 years
An item of property, plant and equipment and any significant part initially recognised is derecognised upon disposal or
when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of
the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is
included in the statement of profit or loss when the asset is derecognised.
Property, plant and equipment forms part of one cash-generating unit (CGU) and has been tested for impairment in
accordance with Note C2.
The Group also assesses the indicators for impairment at each financial year end. If impairment indicators are
present, the Group assesses the residual values, useful lives and methods of depreciation of property, plant and
equipment and adjust prospectively, if appropriate.
*The comparative information above has been restated for classification purposes only. Amounts relating to
impairment expenses as reported in the prior year of $3,384,000 have been reclassified to depreciation due to home
closures. The homes were depreciated at an accelerated rate due to changes in their useful life estimates based on
decisions to redevelop the sites at an earlier date than previously anticipated.
Estia Health Annual Financial Report 2018 - 2019
49
Estia Health Annual Financial Report 2018 - 2019
50
90 Estia Health | 2018-19 Annual Report
2018-19 Annual Report | Estia Health 91
Industry Trends | Key Highlights | Chairman and CEO’s Message | Our Executive Team | Our Customers | Growing and Evolving Our Network | ESG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Tax Transparency Report | Corporate Governance | Our Board | Shareholder Information | Annual Financial Report | Directory of Estia Homes
SECTION C: ASSETS & LIABILITIES (CONTINUED)
C2
GOODWILL AND OTHER INTANGIBLE ASSETS
Balance at 1 July 2017
Additions
Balance at 30 June 2018
Additions
Disposals
Goodwill
$'000
Bed licences
$'000
Note
817,074
-
817,074
-
-
214,940
296
215,236
2,695
-
Software
costs
$'000
Total
$'000
6,383
646
7,029
1,038,397
942
1,039,339
2,155
(89)
4,850
(89)
Balance at 30 June 2019
817,074
217,931
9,095
1,044,100
Accumulated amortisation
Balance at 1 July 2017
Amortisation expense
Balance at 30 June 2018
Amortisation expense
Disposals
Balance at 30 June 2019
Net book value
As at 30 June 2018
As at 30 June 2019
B3
B3
-
-
-
-
-
-
-
-
-
-
-
-
2,407
1,144
3,551
989
(89)
2,407
1,144
3,551
989
(89)
4,451
4,451
817,074
817,074
215,236
217,931
3,478
1,035,788
4,644
1,039,649
SECTION C: ASSETS & LIABILITIES (CONTINUED)
C2
GOODWILL AND OTHER INTANGIBLE ASSETS (CONTINUED)
SIGNIFICANT ACCOUNTING POLICY
Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets
acquired in a business combination is their fair value at the date of acquisition. Following initial recognition, intangible
assets are carried at cost less any accumulated amortisation and accumulated impairment losses. Internally
generated intangibles, other than capitalised development and software costs, are not capitalised and the related
expenditure is reflected as a profit or loss in the period in which the expenditure is incurred.
The useful lives of intangible assets are assessed as either finite or indefinite.
Intangible assets with finite lives are amortised over the useful economic life and assessed for impairment whenever
there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method
for an intangible asset with a finite useful life are reviewed at the end of each reporting period. Changes in the
expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are
considered to modify the amortisation period or method, as appropriate, and are treated as changes in accounting
estimates and adjusted on a prospective basis.
Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually, at the Cash
Generating Unit (CGU) level. The CGU is consistent with the operating segment identified in Note E5. The
assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable.
If not, the change in useful life from indefinite to finite is made on a prospective basis.
Software costs are amortised over the estimated useful life of 5 years.
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net
disposal proceeds and the carrying amount of the asset and are recognised in the statement of profit or loss when the
asset is derecognised.
Bed licences
Bed licences for the Group’s aged care homes are initially carried at cost or if acquired in a business combination, at
fair value at the date of acquisition in accordance with AASB 3 Business Combinations. Following initial recognition,
the licenses are not amortised but are measured at cost less any accumulated impairment losses. Bed licences are
tested for impairment annually as at 30 June and when circumstances indicate that the carrying value may be
impaired. Testing is performed in line with the procedures noted below in Goodwill.
Bed Licenses are assessed as having an indefinite useful life as they are issued for an unlimited period and therefore
are not amortised. The assessment of indefinite life is reviewed annually to determine whether the indefinite life
continues to be supportable.
Goodwill
Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the
amount recognised for non-controlling interests, and any previous interest held, over the net identifiable assets
acquired and liabilities assumed.
Goodwill is tested for impairment annually as at 30 June and when circumstances indicate that the carrying value may
be impaired. Impairment is determined for goodwill by assessing the recoverable amount of the CGU to which the
goodwill relates. When the recoverable amount of the CGU is less than its carrying amount, an impairment loss is
recognised. Impairment losses relating to goodwill cannot be reversed in future periods.
Estia Health Annual Financial Report 2018 - 2019
51
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FOR THE YEAR ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Tax Transparency Report | Corporate Governance | Our Board | Shareholder Information | Annual Financial Report | Directory of Estia Homes
SECTION C: ASSETS & LIABILITIES (CONTINUED)
C2
GOODWILL AND OTHER INTANGIBLE ASSETS (CONTINUED)
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
Goodwill and bed licenses acquired through business combinations were tested for impairment at the reporting date.
The recoverable amount of the CGU was assessed by reference to the CGU’s value in use based on financial
forecasts covering a five year period (2020 to 2024) and a terminal value.
A post-tax discount rate was applied in the value in use model, which was determined based on the specific
circumstances of the Group and is derived from its weighted average cost of capital (WACC). Market-specific risk is
incorporated by applying individual beta factors which are evaluated annually based on publicly available market data.
Adjustments to the discount rate are made to factor in the specific amount of the future tax flows in order to reflect a
pre-tax discount rate. The recoverable amount was determined to be higher than the carrying amount and therefore
the Directors determined that the intangible assets with an indefinite useful life were not impaired.
As impairment testing is based on assumptions and judgements, the Directors have considered changes in key
assumptions that they believe to be reasonably possible. The recoverable amount exceeds the carrying amount when
testing for reasonably possible changes in key assumptions.
Post-tax discount rate
Pre-tax discount rate
Terminal growth rate
C3
CASH AND CASH EQUIVALENTS
Cash at bank
Cash on hand
Total cash and cash equivalents
2019
%
9.5
11.8
2.1
2018
%
9.5
11.8
2.1
2019
$'000
14,555
76
14,631
2018
$'000
11,123
75
11,198
Cash at bank earns interest at floating rates based on daily bank deposit rates.
At 30 June 2019, the Group had available $201,000,000 (2018: $251,200,000) of undrawn committed borrowing
facilities, which excludes $4,000,000 (2018: $3,800,000) of bank guarantees disclosed in Note E2. Refer to Note D3
for further details.
SIGNIFICANT ACCOUNTING POLICY
Cash and cash equivalents in the statement of financial position comprise cash at bank and in hand and short-term
deposits with an original maturity of three months or less that are readily convertible to known amounts of cash and
which are subject to an insignificant risk of changes in value.
For the purposes of the consolidated statement of cash flows, "cash and cash equivalents" are as defined above, net
of outstanding bank overdrafts.
SECTION C: ASSETS & LIABILITIES (CONTINUED)
C4
TRADE AND OTHER RECEIVABLES
Trade receivables
Other receivables
Allowance for expected credit losses
Total trade and other receivables
2019
$'000
8,045
2,574
(1,573)
9,046
2018
$'000*
10,487
2,455
(1,509)
11,433
*The comparative information above has been restated for classification purposes only. Credit balances of $1,948,000
included in Trade receivables in 2018 have been reclassified to Trade and other payables.
Allowance for expected credit loss
Set out below is the movement in the allowance for expected credit losses of trade receivables for the year ended 30
June 2019. The comparative information for the year ended 30 June 2018 is based on the incurred loss model under
AASB 139.
As at 1 July
AASB 9 Adjustment
Provision for expected credit loss
Utilised
At 30 June
Note
E9
2019
$'000
1,509
451
801
(1,188)
1,573
2018
$'000
1,435
-
1,000
(926)
1,509
See Note D5 on credit risk which discusses how the Group manages and measures credit quality of trade receivables.
SIGNIFICANT ACCOUNTING POLICY
Trade receivables and other receivables are recognised and carried at original invoice amount less an allowance for
lifetime expected credit losses.
The Group uses a provision matrix based on days past due for groupings of customers with similar credit risk
characteristics, adjusted for any material expected changes to the future credit risk of that group to determine the
lifetime expected credit losses at the reporting date.
Refer to Note E9 for further information relating to the change in accounting policy following the adoption of AASB 9.
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
In calculating the allowance for expected credit loss, the Group applies judgements when identifying debtors with
similar risk characteristics to group together in the provision matrix. The Group is also required to estimate the rate of
allowance of expected credit loss for each group of debtor, which requires the use of historical rates of default and
assumptions based on future economic conditions, for instance a downturn in the Australian economy or adverse
changes to the aged pension, that may materially impact on the ability to collect outstanding debtor balances.
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Industry Trends | Key Highlights | Chairman and CEO’s Message | Our Executive Team | Our Customers | Growing and Evolving Our Network | ESG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
SECTION C: ASSETS & LIABILITIES (CONTINUED)
SECTION C: ASSETS & LIABILITIES (CONTINUED)
Tax Transparency Report | Corporate Governance | Our Board | Shareholder Information | Annual Financial Report | Directory of Estia Homes
C7
TRADE AND OTHER PAYABLES
Current trade and other payables
Trade creditors
Payroll liabilities
Sundry creditors and accruals
Total current trade and other payables
Non-current other payables
Sundry creditors and accruals
Total non-current other payables
2019
$'000
12,865
14,832
16,349
44,046
12
12
2018
$'000
16,682
13,290
12,675
42,647
61
61
Total trade and other payables
44,058
42,708
*The comparative information above has been restated for classification purposes only. Credit balances of $1,948,000
included in Trade receivables in 2018 have been reclassified to Trade creditors.
C5
ASSETS HELD FOR SALE
Assets held for sale
Total assets held for sale
2019
$'000
-
-
2018
$'000
902
902
During the year, the Group sold two properties for a total of $956,000, including a parcel of land that was transferred
to assets held for sale during the year of $37,000. The sales resulted in a profit of $17,000 and has been included in
other income (see Note B1).
SIGNIFICANT ACCOUNTING POLICY
Non-current assets are classified as held-for-sale if it is highly probable that they will be recovered primarily through
sale rather than through continuing use.
Such assets are generally measured at the lower of their carrying amount and fair value less costs to sell. Impairment
losses on initial classification as held-for-sale or held-for-distribution and subsequent gains and losses on
re-measurement are recognised in profit or loss.
C6
INVESTMENT PROPERTIES
Balance at beginning of period
Fair value adjustments
Total investment properties
2019
$'000
1,620
-
1,620
2018
$'000
1,500
120
1,620
Investment properties comprise Independent Living Units (ILUs) located in one retirement village located in Bendigo.
The retirement village is subject to a loan licence agreement which confers the right to occupancy of the unit, until
such time as the resident’s occupancy terminates and the occupancy rights are transferred to another resident. Upon
entry, a resident will loan the Group an amount equal to the fair value of the unit. On termination the resident is
entitled to repayment of the loan inclusive of any uplift in fair value since the agreement date less the deferred
management fee.
SIGNIFICANT ACCOUNTING POLICY
Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition,
investment properties are stated at fair value, which reflects market conditions at the reporting date. Gains or losses
arising from changes in the fair values of investment properties are included in profit or loss in the period in which they
arise, including the corresponding tax effect. Fair values are determined based on an annual evaluation performed by
an accredited external independent valuer applying a valuation model recommended by the International Valuation
Standards Committee.
Investment properties are derecognised either when they have been disposed of or when they are permanently
withdrawn from use and no future economic benefit is expected from their disposal. The difference between the net
disposal proceeds and the carrying amount of the asset is recognised in profit or loss in the period of derecognition.
Transfers are made to (or from) investment property only when there is a change in use. For a transfer from
investment property to owner-occupied property, the deemed cost for subsequent accounting is the fair value at the
date of change in use. If owner-occupied property becomes an investment property, the Group accounts for such
property in accordance with the policy stated under property, plant and equipment up to the date of change in use.
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Industry Trends | Key Highlights | Chairman and CEO’s Message | Our Executive Team | Our Customers | Growing and Evolving Our Network | ESG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
SECTION C: ASSETS & LIABILITIES (CONTINUED)
SECTION D: CAPITAL, FINANCING, RADS AND RISK
Tax Transparency Report | Corporate Governance | Our Board | Shareholder Information | Annual Financial Report | Directory of Estia Homes
C8
PROVISIONS
Current provisions
Employee benefits
Stepped lease provision
Total current provisions
Non-current provisions
Employee benefits
Total non-current provisions
Total provisions
2019
$'000
44,558
1,058
45,616
4,496
4,496
2018
$'000
40,944
849
41,793
4,269
4,269
50,112
46,062
SIGNIFICANT ACCOUNTING POLICY
General
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event,
it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a
reliable estimate can be made of the amount of the obligation.
Long service leave and annual leave
The Group does not expect its long service leave or annual leave benefits to be settled wholly within 12 months of
each reporting date but is recognised as a current liability when the Group does not have an unconditional right to
defer settlement. The liability for long service leave and annual leave is recognised and measured as the present
value of expected future payments to be made in respect of services provided by employees up to the reporting date
using the projected unit credit method.
Consideration is given to expected future wage and salary levels, experience of employee departures, and periods of
service. Expected future payments are discounted using market yields at the reporting date on national corporate
bonds with terms to maturity and currencies that match, as closely as possible, the estimated future cash outflows.
C9
OTHER FINANCIAL LIABILITIES
Independent living unit (ILU) entry contributions
Total other financial liabilities
2019
$'000
1,304
1,304
2018
$'000
1,371
1,371
Terms and conditions relating to independent living units (ILUs)
ILU entry contributions are non-interest bearing loans made by ILU residents to the Group upon entering into an
agreement to occupy the ILU and are settled after a resident vacates the property based on the applicable
State-based Retirement Village Acts.
D1
SHARE CAPITAL AND RESERVES
Issued and fully paid
Ordinary shares
Total share capital
(a) Movements in ordinary shares on issue
2019
$'000
2018
$'000
801,843
801,843
801,836
801,836
Beginning of the financial year
Movement in management equity plan
End of the financial year
2019
Number of
shares
2018
$'000
Number of
shares
260,602,749
-
260,602,749
801,836
7
801,843
260,602,749
-
260,602,749
$'000
801,830
6
801,836
(b) Share-based payments reserve
The share-based payments reserve is used to recognise the value of equity-settled share-based payments provided
to employees, including key management personnel, as part of their remuneration. Refer to Note D2 for further details
of these plans.
(c) Franking credits
The franking credit balance of Estia Health Limited for the year ended 30 June 2019 is $23,917,303 (2018:
$25,855,432).
(d) Dividends paid and proposed
The final dividend for the year ended 30 June 2018 of $20,848,220 (8.0 cents per share) was paid on 28 September
2018. The interim dividend for the year ended 30 June 2019 of $20,848,220 (8.0 cents per share) (2018:
$20,327,014) was paid on 27 March 2019.
The Directors propose a fully franked final cash dividend for the year ended 30 June 2019 of 7.8 cents per share
totalling $23,328,082. Proposed dividends on ordinary shares are not recognised as a liability at 30 June 2019.
(e) Dividend reinvestment plan
The Dividend Reinvestment Plan (DRP) was not applicable for the final dividend paid on 28 September 2018 or the
interim dividend paid on 27 March 2019.
The DRP has been reinstated which will allow eligible shareholders to reinvest all or part of their distribution into
shares for the final dividend.
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Industry Trends | Key Highlights | Chairman and CEO’s Message | Our Executive Team | Our Customers | Growing and Evolving Our Network | ESG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
SECTION D: CAPITAL, FINANCING, RADS AND RISK (CONTINUED)
SECTION D: CAPITAL, FINANCING, RADS AND RISK (CONTINUED)
Tax Transparency Report | Corporate Governance | Our Board | Shareholder Information | Annual Financial Report | Directory of Estia Homes
D2
SHARE-BASED PAYMENTS
At 30 June 2019, the Group had the following share-based payments arrangements:
(a) Long-Term Incentive Plan (LTIP)
Under the LTIP, awards are made to executives who have a significant impact on the Group’s performance. LTIP
awards are delivered in the form of performance rights entitling the holder to shares which vest following a period of
three years subject to meeting performance measures.
For rights granted prior to 1 July 2018, the Group uses Total shareholder return (TSR) performance relative to the
ASX200 excluding mining and energy companies (70%) and Earnings Per Share (EPS) (30%) as performance
measures for the LTIP.
For rights granted post 1 July 2018, the TSR component is split into two components, half against the ASX200
excluding mining and energy companies and half against the market capitalisation weighted average performance of
a peer group of ASX-listed companies operating in the provision of aged care services. The TSR component remains
at 70% with EPS remaining at 30% of the performance measures of the LTIP.
During the year, the Group granted a total of 615,019 rights to executives. Further details can be found in section 9 of
the Remuneration Report.
(b) Short-Term Incentive Plan (STIP)
Under the STIP, awards are made to executives who have an impact on the Group’s performance. STIP awards are
delivered in a mix of cash and equity. 75% of the award is delivered in cash, with the remaining 25% delivered in
performance rights, which require participants to remain employed for an additional 12 months for the rights to vest.
The STIP is measured against Earnings Before Interest, Tax and Depreciation and Amortisation, Net Profit After Tax
and Lost Time Injury Frequency targets, as well as other role specific measures over a 12-month period. A resident
quality gateway hurdle is also used, which requires ongoing compliance and accreditation targets to be met in order
for any of the STIP to be eligible to vest.
For awards made under the STIP from 1 July 2018, the Lost Time Injury Frequency target has been replaced with a
Culture target.
The number of performance rights granted and deferred under the STIP during the year ended 30 June 2019 relating
to the incentive payments earned in the year ended 30 June 2018 was 13,693 (2018: nil).
(c) Management Equity Plan (MEP)
The MEP is a legacy plan which was approved by the Board and implemented prior to listing and other than for
existing holders, it is no longer offered.
Under the plan, the former Managing Director and a number of senior employees of the Group were invited to
subscribe for shares on the terms specified in the MEP rules. Most MEP participants were also offered a 10 year
limited recourse loan to subscribe for MEP shares.
The following table details the MEP loans outstanding at 30 June 2019:
Number of MEP
shares
Total amount
subscribed ($’000)
% of MEP Shares
funded through MEP
loans
Interest rate on MEP
loan
Total
50,000
100
100%
5.95%
All MEP shares listed above were released from escrow on 11 December 2017.
D2
SHARE-BASED PAYMENTS (CONTINUED)
(d) Movements during the year
The following tables illustrate the number and weighted-average exercise prices (WAEP) of, and movements in, MEP
shares and performance rights during the year:
MEP shares only
Outstanding at 1 July
Outstanding at 30 June
Exercisable at 30 June
Performance rights only
Outstanding at 1 July
Granted during the year
Forfeited during the year
Outstanding at 30 June
Exercisable at 30 June
2019
2018
Number
WAEP
Number
WAEP
50,000
50,000
50,000
2.00
2.00
2.00
50,000
50,000
50,000
2.00
2.00
2.00
2019
2018
Number
WAEP
Number
WAEP
907,684
628,712
-
1,536,396
13,693
-
-
-
-
-
524,238
476,980
(93,534)
907,684
-
-
-
-
-
-
The weighted average remaining contractual life for the MEP shares and performance rights outstanding as at 30
June 2019 was approximately 1.31 years.
The exercise price for MEPs outstanding at the end of the year was $2.00. There is no exercise price for performance
rights.
The weighted average fair value of performance rights granted during the year was $0.61.
(e) Expense recognised in profit or loss
The share-based payments expense recognised in profit or loss as an employee benefit for each of the share
arrangements were as follows:
Long-term incentive plan
Short-term incentive plan
Management equity plan
Share-based payments expense recognised in profit or loss
2019
$'000
605
41
12
658
2018
$'000
451
-
12
463
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Industry Trends | Key Highlights | Chairman and CEO’s Message | Our Executive Team | Our Customers | Growing and Evolving Our Network | ESG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
SECTION D: CAPITAL, FINANCING, RADS AND RISK (CONTINUED)
SECTION D: CAPITAL, FINANCING, RADS AND RISK (CONTINUED)
Tax Transparency Report | Corporate Governance | Our Board | Shareholder Information | Annual Financial Report | Directory of Estia Homes
D2
SHARE-BASED PAYMENTS (CONTINUED)
SIGNIFICANT ACCOUNTING POLICY
The cost of equity-settled transactions is determined by the fair value at the date when the grant is made using an
appropriate valuation model.
That cost is recognised in employee benefits expense, together with a corresponding increase in equity (other capital
reserves), over the period in which the service and, where applicable, the performance conditions are fulfilled (the
vesting period). The cumulative expense recognised for equity-settled transactions at each reporting date until the
vesting date reflects the extent to which the vesting period has expired and the Group’s best estimate of the number
of equity instruments that will ultimately vest. The expense or credit in the statement of profit or loss for a period
represents the movement in cumulative expense recognised as at the beginning and end of that period.
Service and non-market performance conditions are not taken into account when determining the grant date fair value
of awards, but the likelihood of the conditions being met is assessed as part of the Group’s best estimate of the
number of equity instruments that will ultimately vest. Market performance conditions are reflected within the grant
date fair value. Any other conditions attached to an award, but without an associated service requirement, are
considered to be non-vesting conditions. Non-vesting conditions are reflected in the fair value of an award and lead to
an immediate expensing of an award unless there are also service and/or performance conditions. No expense is
recognised for awards that do not ultimately vest, except for equity-settled transactions for which vesting is conditional
upon a market or non-vesting condition. These are treated as vesting irrespective of whether or not the market or
non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied.
When the terms of an equity-settled award are modified, the minimum expense recognised is the expense had the
terms not been modified, if the original terms of the award are met. An additional expense is recognised for any
modification that increases the total fair value of the share-based payment transaction, or is otherwise beneficial to the
employee as measured at the date of modification. Where an award is cancelled by the entity or by the counterparty,
any remaining element of the fair value of the award is expensed immediately through profit or loss.
The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings
per share.
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS
LTIP-Recognition and measurement of fair value
As the exercise price is zero upon vesting, the fair value of the performance rights issued under the LTIP are
determined by the fair value at grant date by utilising methodologies allowable under AASB 2 Share-Based Payments,
including the use of a Monte Carlo simulation (TSR component) and the Binomial Model (EPS component). The
contractual term of the performance rights is three years and there are no cash settlement alternatives for the
employees. The Group does not have a past practice of cash settlement for these awards.
Assumption
FY19 Plan
FY18 Plan
FY17 Plan
$3.02 - $3.51
$3.05 - $3.51
Share price at grant date
Dividend yield
Volatility
Risk free rate
Probability of achieving EPS
$2.19
5.0%
38%
2.0%
40%
3.5%
40%
2.0%
50%
Fair value of right - TSR
$0.46 - $0.47
Fair value of right - EPS
$1.92
$1.16 - $1.58
$2.73 - $3.21
6.5%
40%
1.7% - 2.0%
50%
$0.76 - $1.82
$2.67 - $3.33
D2
SHARE-BASED PAYMENTS (CONTINUED)
SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS (CONTINUED)
STIP-Recognition and measurement of fair value
The fair value of the performance rights issued under the STIP are determined by the volume weight average share
price of the Group in the 10 trading days prior to the release of the Group's annual results. The performance rights
issued under the STIP during the year had a fair value of $2.96 per right and related to the prior year's performance.
The performance rights are deferred for a 12 month period and are settled in the Group's equity if the participants
remains employed by the Group at the end of the 12 month period.
MEP-Recognition and measurement of fair value
In accordance with AASB 2 Share-Based Payments, the granting of shares in exchange for a limited recourse loan is
effectively the same as granting a share option as it gives the MEP participant the right, but not the obligation, to
subscribe to Estia’s shares at a fixed price for a specified period of time. Even though Estia records the MEP shares
as issued for legal purposes, they are not considered to be issued for accounting purposes. When MEP shares are
granted, limited recourse loans to assist in the purchase of the shares are recognised in equity. As the MEP holder
repays the loan through the application of dividends and/or instalments, those payments are accounted for as partly
paid capital. Effectively, the grant of MEP shares and limited recourse loan are set off against each other in equity.
The grants of MEP loans were accounted for as an option and the fair value at grant date is independently determined
using the binomial options pricing model that takes into account the discount to market price at grant date, the
expected life/term of the loan and its limited recourse nature, the vesting terms, the expected price volatility, the
expected dividend yield and the risk-free interest rate for the term.
The fair value of the shares granted is recognised to profit or loss on a straight-line basis over the expected vesting
period (i.e. 10 years) with a credit to the share-based payments reserve in equity. Loan payments received are
credited to issued capital.
In the case where MEP loans are not granted to assist in the purchase of MEP shares, the MEP shares are fully
self-funded and are therefore treated as issued for accounting purposes, which is no different to legal purposes.
The following table lists the inputs to the model used in the measurement of the fair value at grant date of the MEP
loans:
Share price at grant date
$1.00 - $5.75
2015
Exercise price
Volatility
Risk free rate
$1.80 - $5.75
30%
3.04% - 3.26%
Expected life of options
10 years
The expected life of the MEP shares are based on the assumption that these are exercised at the end of the MEP
loan term and is not necessarily indicative of exercise patterns that may occur. The expected volatility is based on the
historical volatility of the Group’s share since listing on 5 December 2014 and reflects the assumption that this
volatility is indicative of future trends, which may not necessarily be the actual outcome.
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Industry Trends | Key Highlights | Chairman and CEO’s Message | Our Executive Team | Our Customers | Growing and Evolving Our Network | ESG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
SECTION D: CAPITAL, FINANCING, RADS AND RISK (CONTINUED)
SECTION D: CAPITAL, FINANCING, RADS AND RISK (CONTINUED)
Tax Transparency Report | Corporate Governance | Our Board | Shareholder Information | Annual Financial Report | Directory of Estia Homes
D3
LOANS AND BORROWINGS
Non-current loans and borrowings
Bank loans, secured
Total non-current loans and borrowings
2019
$'000
125,000
125,000
2018
$'000
75,000
75,000
Terms and conditions of loans
The Facility may be used for general corporate purposes including funding acquisitions, capital expenditure, working
capital requirements and providing sufficient liquidity to ensure repayment of RADs and Bonds as they fall due.
The Facility is secured by real property mortgages over all freehold property, security over material leases, cross
guarantees and indemnities from the Group and first ranking fixed and floating charges over the assets and
undertakings of the Group.
The total debt facility available to Estia at 30 June 2019 was $330,000,000. The maturity date of the Facility is 22
August 2020.
SIGNIFICANT ACCOUNTING POLICY
Borrowings are recognised initially at fair value. Directly attributable transaction costs are amortised over the life of the
facility agreement.
Subsequently, interest-bearing loans and borrowings are measured at amortised cost using the Effective Interest Rate
(EIR) method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as
through the EIR amortisation process. Amortised cost is calculated by taking into account any discount or premium on
acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance costs in
the statement of profit or loss.
D4
REFUNDABLE ACCOMMODATION DEPOSITS AND BONDS
Current residents
Departed residents
Total refundable accommodation deposits and bonds - amounts received
2019
$'000
698,242
106,791
805,033
2018
$'000
697,227
94,281
791,508
Terms and conditions relating to refundable accommodation deposits (RADs) and accommodation bonds
(Bonds)
The RADs and Bonds are paid by residents upon their admission to homes and are refunded after a resident departs
a home in accordance with the Aged Care Act 1997. Providers must pay a base interest rate on all refunds of RADs
and Bonds within legislated time frames and must pay a higher rate on refunds that are not made within legislated
time frames. Accommodation bond balances held prior to 1 July 2014 may be reduced by annual retention fees
charged in accordance with the Aged Care Act 1997.
RAD and Bond refunds are guaranteed by the Government under the Accommodation Payment Guarantee Scheme,
in the event that a provider is unable to refund the amounts. Providers are required to maintain sufficient liquidity to
ensure that they can refund all amounts as they fall due. As required under legislation, the Group maintains a Liquidity
Management Policy, which is monitored on regular basis and a full review is undertaken on an annual basis as a
minimum, to ensure it has sufficient liquidity to meet its RAD and Bond refund and other financial obligations.
To ensure that funds are readily available when required, the minimum level of funds chosen by the Group are to be
held in cash (placed on deposit but readily available) or met by undrawn lines of credit from a bank or financial
institution.
RADs and Bonds are classified as a current liability as the Group does not have an unconditional right to defer
settlement for at least twelve months after the reporting date. The total RAD and Bond liability represents the sum of
separate payments from a significant number of individual residents in different locations with differing circumstances,
and frequently a departing RAD- or Bond-paying resident is replaced shortly afterwards with a new RAD-paying
resident. The repayment of individual balances that make up the total current balance will be dependent upon the
actual tenure of individual residents, which can be more than ten years but averages approximately 2 - 2.5 years.
D5
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group’s principal financial liabilities consist of interest-bearing loans and borrowings, trade and other payables
and Refundable Accommodation Deposits. The main purpose of these financial liabilities is to finance the Group’s
operations. The Group’s principal financial assets include trade and other receivables, and cash and short-term
deposits that derive directly from its operations.
The Group is exposed to market risk, credit risk and liquidity risk. The Group’s senior management oversees the
management of these risks. It is the Group’s policy that no trading in derivatives for speculative purposes may be
undertaken. Policies for managing each of these risks are summarised below.
Market risk
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes
in market prices. Market risk comprise three types of risk: interest rate risk, currency risk and other price risk, such as
equity price risk and commodity risk. Financial instruments affected by market risk include loans and borrowings and
deposits.
The sensitivity analyses in the following sections relate to the position as at 30 June 2019 and 30 June 2018.
The Group is not exposed to commodity risk and equity risk.
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Industry Trends | Key Highlights | Chairman and CEO’s Message | Our Executive Team | Our Customers | Growing and Evolving Our Network | ESG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
SECTION D: CAPITAL, FINANCING, RADS AND RISK (CONTINUED)
SECTION D: CAPITAL, FINANCING, RADS AND RISK (CONTINUED)
Tax Transparency Report | Corporate Governance | Our Board | Shareholder Information | Annual Financial Report | Directory of Estia Homes
D5
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
Market risk (continued)
The sensitivity analyses have been prepared on the basis that the amount of net debt and the ratio of fixed to floating
interest rates of the debt are all constant at 30 June 2019 and 30 June 2018.
The following assumption has been made in calculating the sensitivity analyses:
•
The sensitivity of the relevant statement of profit or loss item is the effect of the assumed changes in respective
market risks. This is based on the financial assets and financial liabilities held at 30 June 2019 and 30 June 2018.
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in market interest rates. The Group’s exposure to the risk of changes in market interest rates relates primarily
to the Group’s cash and cash equivalents and long-term debt obligations with floating interest rates.
The Group’s exposure to interest rate risk and the effective interest rate of financial assets and liabilities both
recognised and unrecognised at the reporting date are as follows:
All other financial assets and liabilities are non-interest bearing.
.
Cash and liquid assets
Bank loans
Refundable accommodation deposits – departed residents
Weighted average effective
interest rates
2019
%
0.9
2.7
3.8
2018
%
1.4
3.1
3.8
Fixed or
Floating
Floating
Floating
Floating
The details of debt are disclosed in Note D3 to the financial statements.
Interest rate sensitivity
The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of
cash and cash equivalents and loans and borrowings affected. With all other variables held constant, the Group’s
profit before tax and equity are affected through the impact on floating rate financial instruments existing at the end of
the respective period, as follows:
+ 0.25% (25 basis points)
- 0.25% (25 basis points)
Effect on profit before tax
Higher/(lower)
Effect on equity
Higher/(lower)
2019
$'000
(193)
193
2018
$'000
(112)
112
2019
$'000
(135)
135
2018
$'000
(78)
78
Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of
changes in foreign exchange rates. The Group does not carry out any transactions or business that would give rise to
foreign currency risk.
Credit risk
Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract,
leading to a financial loss. The Group is exposed to credit risk from its operating activities (primarily trade receivables)
and from its financing activities, including deposits with banks and financial institutions and other financial instruments.
The Group’s exposure to credit risk arises from potential default of the counter party, with a maximum exposure equal
to the carrying amount of the assets.
D5
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
Credit risk (continued)
Approximately 74% of the revenue of the Group is obtained from Commonwealth Government funding by way of
payments for residential aged care residents. This funding is maintained for providers as long as they continue to
comply with Accreditation standards and other requirements per the Aged Care Act 1997 and are paid in advance at
the beginning of each month.
Trade and other receivables
Customer credit risk is managed subject to the Group’s established policy, procedures and controls relating to
customer credit risk management. Outstanding customer receivables are regularly monitored and any outstanding
balances regularly followed up.
The Group limits its exposure to credit risk from trade receivables by establishing a maximum payment period of 30
days, and where possible, setting customers up to settle accounts on direct debits.
An impairment analysis is performed at each reporting date using a provision matrix to measure expected credit
losses. The provision rates are based on days past due for groupings of customers with similar credit risk
characteristics, adjusted for any material expected changes to the future credit risk of that group. The Group applies
the simplified approach for measuring expected credit losses, using the lifetime expected loss allowance for all trade
and other receivables.
The Group's other receivables are due from the Australian Government and other state based revenue offices. The
Group does not believe that there is a material credit risk for amounts owing from the Australian Government or other
state based revenue offices.
The Group considers a financial asset in default when contractual payments are past due. Generally, financial assets
are written-off when the Group have exhausted all reasonable avenues to recover the balances.
The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial asset. The
Commonwealth Government accounts for approximately 23% (2018: 26%) of the trade receivables balance. There is
no concentration of credit risk with respect to remaining trade receivables.
In addition, receivables balances are monitored on an ongoing basis with the result that the Group’s exposure to bad
debts is not significant.
The following table provides information about the expected credit losses for trade receivables, excluding the
Commonwealth Government balance of $1,813,000 at 30 June 2019:
As at 30 June 2019
Current (not past due)
<30 days past due
30-60 days past due
61-90 days past due
>90 days past due
Expected
credit loss
rate
%
Gross
carrying
amount
$'000
Allowance for
expected
credit loss
$'000
1%
8%
11%
17%
53%
25%
756
1,792
838
491
2,355
6,232
8
135
95
83
1,252
1,573
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Industry Trends | Key Highlights | Chairman and CEO’s Message | Our Executive Team | Our Customers | Growing and Evolving Our Network | ESG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
SECTION D: CAPITAL, FINANCING, RADS AND RISK (CONTINUED)
SECTION D: CAPITAL, FINANCING, RADS AND RISK (CONTINUED)
Tax Transparency Report | Corporate Governance | Our Board | Shareholder Information | Annual Financial Report | Directory of Estia Homes
D5
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
Credit risk (continued)
Comparative information under AASB 139
An analysis of the ageing of trade receivables at 30 June 2018 allowance for impairment under AASB 139 are tabled
below:
Neither past due nor impaired
Past due but not impaired
<30 days
30-60 days
61-90 days
>90 days
Past due and impaired
Total
2018
$'000
3,565
1,646
948
768
2,051
1,509
10,487
Liquidity risk
The Group monitors its risk to a shortage of funds on a regular basis. The Group maintains a balance between
continuity of funding and flexibility through the use of bank loans that are available for potential business acquisitions
and working capital requirements. The Group assessed the concentration of risk with respect to refinancing its debt
and concluded it to be low.
The table below summarises the maturity profile of the Group’s financial liabilities based on contractual undiscounted
payments.
Year ended 30 June 2019
Trade and other payables
Loans and borrowings
Refundable accommodation deposits and
bonds
Other financial liabilities
Year ended 30 June 2018
Trade and other payables
Loans and borrowings
Refundable accommodation deposits and
bonds
Other financial liabilities
On demand
Less than
12 months 1 to 5 years
More than 5
years
$'000
$'000
$'000
$'000
1,382
-
805,033
1,304
807,719
1,195
-
791,508
1,371
794,074
42,664
3,375
-
-
46,039
41,452
2,325
-
-
43,777
12
125,499
-
-
125,511
61
77,669
-
-
77,730
-
-
-
-
-
-
-
-
-
-
Total
$'000
44,058
128,874
805,033
1,304
979,269
42,708
79,994
791,508
1,371
915,581
D5
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED)
Capital management
For the purpose of the Group’s capital management, capital includes issued capital and all other equity reserves
attributable to the equity holders of the parent. The primary objective of the Group’s capital management is to
maximise the shareholder value.
The Group manages its capital structure and considers adjustments in light of changes in economic conditions and
the requirements of the financial covenants. To maintain or adjust the capital structure, the Group may adjust the
dividend payment to shareholders, return capital to shareholders or issue new shares. In order to achieve this overall
objective, the Group’s capital management, amongst other things, aims to ensure that it meets financial covenants
attached to the interest-bearing loans and borrowings that define capital structure requirements. Breaches in meeting
the financial covenants would permit the bank to immediately call loans and borrowings. There have been no
breaches of the financial covenants of any interest-bearing loans and borrowings in the current period.
No changes were made in the objectives, policies or processes for managing capital during the year ended 30 June
2019.
D6
FAIR VALUE MEASUREMENT
The Group uses various methods in estimating the fair value of its financial assets and liabilities which are categorised
within the fair value hierarchy. The Group only uses fair value for Investment Properties, which are valued using Level
3 inputs.
Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is
unobservable.
Date of Valuation
30 June 2019
Total
$'000
1,620
1,620
Fair value measurement using
Level 1
Level 2
Level 3
$'000
$'000
-
-
-
-
$'000
1,620
1,620
Investment properties
.
Fair values of Investment Properties are determined based on an annual valuation performed by an accredited
external independent valuer applying a valuation model recommended by the International Valuation Standards
Committee.
At the reporting date, the key unobservable inputs used by the Group in determining the fair value of its investment
properties are summarised below:
Unobservable inputs
Discount rate
Growth rate
Cash flow term (years)
30 June 2019 30 June 2018
15.00%
2.85%
50
15.00%
2.84%
50
The carrying amounts of all financial assets and financial liabilities not measured at fair value are considered to be a
reasonable approximation of their fair values.
There were no transfers between levels during the financial year.
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Industry Trends | Key Highlights | Chairman and CEO’s Message | Our Executive Team | Our Customers | Growing and Evolving Our Network | ESG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Tax Transparency Report | Corporate Governance | Our Board | Shareholder Information | Annual Financial Report | Directory of Estia Homes
SECTION D: CAPITAL, FINANCING, RADS AND RISK (CONTINUED)
D6
FAIR VALUE MEASUREMENT (CONTINUED)
SIGNIFICANT ACCOUNTING POLICY
Construction in progress, plant and equipment and land and buildings are stated at cost, net of accumulated
depreciation and accumulated impairment losses, if any. Land is not depreciated. The Group measures other
non-financial assets including investment properties, at fair value at each balance sheet date.
Fair value is the price that would be received upon selling an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date.
The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability
takes place either:
• In the principal market for the asset or liability; or
• In the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible by the Group. The fair value of an asset or a
liability is measured using the assumptions that market participants would use when pricing the asset or liability,
assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market participant's ability to generate
economic benefits by using the asset in its highest and best use or by selling it to another market participant that
would use the asset in its highest and best use.
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are
available to measure fair value, maximising the use of relevant observable inputs and minimising the use of
unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within
the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value
measurement as a whole:
• Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities;
• Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is
directly or indirectly observable; and
• Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is
unobservable.
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines
whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest
level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
SECTION E: OTHER INFORMATION
E1
RELATED PARTY DISCLOSURES
Note E6 provides the information about the Group’s structure including the details of the subsidiaries and the holding
company. Note D2 provides the information about the loans to related parties. There were no other transactions and
outstanding balances that have been entered into with related parties for the relevant financial year.
The table below discloses the compensation recognised as an expense during the reporting period related to Key
Management Personnel.
Short-term employee benefits
Post-employment benefits
Short-term incentive payments
Share-based payments
Termination payments
Total compensation of key management personnel
E2
COMMITMENTS AND CONTINGENCIES
2019
$'000
1,697
66
188
581
-
2,532
2018
$'000
1,538
62
122
392
155
2,269
Operating lease commitments – Group as lessee
During the year, the Group had commercial property leases for two corporate offices in New South Wales and
Victoria, and seven aged care homes.
The remaining non-cancellable leases have remaining terms of between 1 and 17 years.
Future estimated minimum rentals payable under non-cancellable operating leases, excluding future optional periods,
as at 30 June are as follows:
Within one year
After one year but not more than five years
More than five years
Total operating lease commitments
2019
$'000
5,308
12,464
6,710
24,482
2018
$'000
5,368
14,986
7,111
27,465
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69
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Industry Trends | Key Highlights | Chairman and CEO’s Message | Our Executive Team | Our Customers | Growing and Evolving Our Network | ESG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Tax Transparency Report | Corporate Governance | Our Board | Shareholder Information | Annual Financial Report | Directory of Estia Homes
SECTION E: OTHER INFORMATION (CONTINUED)
E2
COMMITMENTS AND CONTINGENCIES (CONTINUED)
SIGNIFICANT ACCOUNTING POLICY
Leases
The determination of whether an arrangement is, or contains, a lease is based on the substance of the arrangement
at the inception of the lease. The arrangement is, or contains, a lease if fulfilment of the arrangement is dependent on
the use of a specific asset or assets or the arrangement conveys a right to use the asset or assets, even if that right is
not explicitly specified in an arrangement.
A lease is classified at the inception date as a finance lease or an operating lease. A lease that transfers substantially
all the risks and rewards incidental to ownership to the Group is classified as a finance lease. An operating lease is a
lease other than a finance lease.
Finance leases are capitalised at the commencement of the lease at the inception date at fair value of the leased
property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between
finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining
balance of the liability. Finance charges are recognised in finance costs in the statement of profit or loss.
A leased asset is depreciated over the useful life of the asset. However, if there is no reasonable certainty that the
Group will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated
useful life of the asset and the lease term. Operating lease payments are recognised as an operating expense in the
statement of profit or loss on a straight-line basis over the lease term.
Refer to Note E9 for further information to the changes resulting from the implementation of AASB 16.
Capital commitments
During the year, the Group entered into contracts relating to the development of aged care homes. As at 30 June
2019, the remaining capital commitments amounted to $41,700,000 (2018: $54,300,000).
Bank guarantees
The Group has entered into a number of bank guarantees with its bankers in relation to the Group's rental agreements
for leased properties, totalling $4,000,000 (2018: $3,800,000). These are secured against the borrowing facilities
disclosed in Note D3. As at the date of signing this report, the Directors are not aware of any situations that have
arisen that would require these bank guarantees to be presented.
E3
AUDITOR REMUNERATION
Audit of the financial report
Tax compliance services
Other assurance services
Other services
Total auditor remuneration
The auditor of Estia Health Limited and its subsidiaries is Ernst & Young.
2019
$'000
688
157
14
36
895
2018
$'000
560
170
10
13
753
SECTION E: OTHER INFORMATION (CONTINUED)
E4
SUBSEQUENT EVENTS
CLASS ACTION
On 16 July 2019, Estia was served with a class action proceeding filed by the law firm Phi Finney McDonald in the
Federal Court of Australia. The proceeding alleges breaches of market disclosure obligations in 2015 and 2016 and
has been filed on behalf of shareholders who, between 12 August 2015 and 6 October 2016: (i) acquired an interest in
Estia shares; or (ii) acquired long exposure to Estia shares by entering into equity swap confirmations in respect of
Estia shares.
Estia will vigorously defend the proceeding.
Estia is not in a position to state whether the proceeding is likely to have a material impact on its financial position or
performance.
ACQUISITIONS
On 15 August 2019 Estia entered into a contract to purchase a new greenfield development in the Maitland region of
NSW with 108 provisional licences attaching. The contract is subject to closing and settlement conditions including the
transfer of the licences from the vendor to Estia. Settlement of the transaction is expected to occur before 31
December 2019.
DIVIDENDS
On 20 August 2019, the Directors resolved to pay a final fully franked dividend of 7.8 cents per share ($20,328,082)
bringing dividends per share for the financial year ended 30 June 2019 to 15.8 cents per share. The record date for
the final dividend will be 5 September 2019, with payment being made on 2 October 2019. Shares will trade excluding
entitlement to the dividend on 4 September 2019.
BANK FACILITIES
On 16 August 2019 the Group elected to extend its existing $330 million syndicated debt facility with the support of a
syndicate of three domestic banks. The new facility expires in November 2022.
Other than those mentioned above, no matters or circumstances have arisen since the end of the reporting period
which significantly affected, or may significantly affect, the operations of the Group, the results of those operations, or
the state of affairs of the Group in future financial years.
E5
SEGMENT REPORTING
For management reporting purposes, the Group has identified one reportable segment. Estia operates predominantly
in one business and geographical segment being the provision of residential aged care services in Australia. The
Group’s operating performance is evaluated across the portfolio as a whole by the Chief Executive Officer on a
monthly basis and is measured consistently with the information provided in these consolidated financial statements.
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Industry Trends | Key Highlights | Chairman and CEO’s Message | Our Executive Team | Our Customers | Growing and Evolving Our Network | ESG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
Tax Transparency Report | Corporate Governance | Our Board | Shareholder Information | Annual Financial Report | Directory of Estia Homes
SECTION E: OTHER INFORMATION (CONTINUED)
E6
INFORMATION RELATING TO SUBSIDIARIES
The consolidated financial statements of the Group include:
Name
Estia Finance Pty Ltd2
Estia Investments Pty Ltd3, 5
Estia Mezzco Pty Ltd6
Estia Midco Pty Ltd6
Spirytus Pty Ltd4, 6
Jaid Residential Services Pty Ltd4, 6
TGM Care Pty Ltd ATF the TGM Care Unit Trust1, 6
East Coast Senior Care Pty Ltd4, 6
William Kennedy Holdings Pty Ltd1, 5
Wollongong Nursing Home Pty Ltd4, 6
Kenna Investments Pty Ltd4, 5
Ranesta Holdings Pty Ltd6
Hayville Pty Ltd6
Eddystone Nursing Home Pty Ltd6
Merrylands Nursing Home Pty Ltd6
Kennedy Health Care Group Pty Ltd6
Camden Village Pty Ltd5
Camden Nursing Home Pty Ltd6
Camden House Pty Ltd6
Kilbride Village Pty Ltd5
Bankstown Aged Care Facility Pty Ltd6
Principal activities
1.
Holding company
2.
3.
4.
5.
6.
Holder of financing facilities
Current accredited provider of aged care home
Accredited provider status transferred to Estia Investments Pty Ltd
Holder of assets
Dormant entity
Country of
% Equity Interest
Incorporation
2019
2018
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
SECTION E: OTHER INFORMATION (CONTINUED)
E7
PARENT ENTITY INFORMATION
Information relating to Estia Health Limited
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Issued capital
Reserves
Retained earnings
Total shareholders’ equity
Profit of the parent company
Total comprehensive income of the parent entity
2019
$'000
565,622
476,207
1,041,829
-
228,297
228,297
2018
$'000
675,197
174,802
849,999
-
22,841
22,841
813,532
827,158
801,843
1,794
9,895
813,532
27,405
27,405
801,836
1,136
24,186
827,158
36,316
36,316
The information presented above relating to the Parent is prepared using the same accounting policies that apply to
the Group, except for the recognition and measurement of investments in subsidiaries.
The Parent has issued the following guarantees in relation to the debts of its subsidiaries:
Pursuant to Class Order 98/1418, Estia Health Limited entered into a deed of cross guarantee on 13 May 2016 with
the following entities:
•
•
•
•
•
•
•
•
Estia Finance Pty Ltd
Estia Investments Pty Ltd
Estia Midco Pty Ltd
Estia Mezzco Pty Ltd
William Kennedy Holdings Pty Ltd
Wollongong Nursing Home Pty Ltd
Kenna Investments Pty Ltd
Camden House Pty Ltd
The effect of the deed is that Estia Health Limited has guaranteed to pay any deficiency in the event of winding up of
any controlled entity or if they do not meet their obligations under the terms of overdrafts, loans, leases or other
liabilities subject to the guarantee. The controlled entities have also given a similar guarantee in the event that Estia
Health Limited is wound up or if it does not meet its obligations under the terms of overdrafts, loans, leases or other
liabilities subject to the guarantee.
Pursuant to Class Order 98/1418, relief has been granted to these entities from the Corporations Act 2001
requirements for the preparation, audit and lodgement of their financial reports.
The Closed Group includes all entities listed in Note E6. The Statement of Financial Position and the Statement of
Profit or Loss and Other Comprehensive Income of the Closed Group are the same as the Estia consolidated group.
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Industry Trends | Key Highlights | Chairman and CEO’s Message | Our Executive Team | Our Customers | Growing and Evolving Our Network | ESG NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
SECTION E: OTHER INFORMATION (CONTINUED)
SECTION E: OTHER INFORMATION (CONTINUED)
Tax Transparency Report | Corporate Governance | Our Board | Shareholder Information | Annual Financial Report | Directory of Estia Homes
E8
TREATMENT OF GST
Revenues, expenses and assets are recognised net of the amount of GST, except:
•
•
When the GST incurred on a purchase of assets or services is not recoverable from the taxation authority, in
which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense
item, as applicable; and
When receivables and payables are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or
payables in the statement of financial position. Commitments and contingencies are disclosed net of the amount of
GST, where the GST is expected to be recoverable.
Cash flows are included in the statement of cash flows on a gross basis and the GST component of cash flows arising
from investing and financing activities, are classified as part of operating cash flows.
E9
NEW ACCOUNTING STANDARDS AND INTERPRETATIONS
Changes in accounting policy, disclosures, standards and interpretations
New and amended standards and interpretations
The Group has adopted the following new or amended Australian Accounting Standards and AASB Interpretations as
of 1 July 2018:
AASB 15 Revenue from Contracts with Customers
AASB 15 supersedes AASB 111 Construction Contracts, AASB 118 Revenue and related Interpretations and it
applies to all revenue arising from contracts with customers, unless those contracts are in the scope of other
standards. The new Standard establishes a five-step model to account for revenue arising from contracts with
customers. Under AASB 15, revenue is recognised at an amount that reflects the consideration to which an entity
expects to be entitled in exchange for transferring goods or services to a customer.
The Standard requires entities to exercise judgement, taking into consideration all of the relevant facts and
circumstances when applying each step of the model to contracts with their customers.
The Group has adopted this Standard from 1 July 2018, using the full retrospective method of adoption, thereby
restating the 2018 comparatives. The introduction of this Standard did not have a material impact on the Group's
financial statements, accordingly there were no adjustments made to previously reported information.
Refer to Note B1 for further details and disclosures relating to Revenue from Contracts with Customers.
AASB 9 Financial Instruments
AASB 9 Financial Instruments replaces IAS 39 Financial Instruments: Recognition and Measurement for annual
periods beginning on or after 1 January 2018, bringing together all three aspects of the accounting for financial
instruments: classification and measurement; impairment; and hedge accounting. The adoption of AASB 9 did not
result in any material changes to the Group's classification of financial assets and liabilities.
Upon adoption, trade receivables were reclassified from 'loans and receivables' to 'financial assets at amortised cost',
resulting in a change in balance from $9,845,000 to $9,394,000. The difference being due to the increase in
allowance for expected credit losses, as shown below.
AASB 9 replaces the 'Incurred Loss' model in AASB 139 with an 'Expected Credit Loss' model. The new impairment
model applies to financial assets measured at amortised cost. Under AASB 9, credit losses are recognised earlier
than under AASB 139. There were no changes in classification due to the nature of the Group's financial assets.
E9
NEW ACCOUNTING STANDARDS AND INTERPRETATIONS (CONTINUED)
Changes in accounting policy, disclosures, standards and interpretations (continued)
AASB 9 Financial Instruments (continued)
The Group applies the simplified approach for measuring expected credit losses, using the lifetime expected loss
allowance for all trade receivables. To measure the expected credit losses, trade receivables have been grouped
based on shared credit risk characteristics and the days past due. A provision matrix is then determined based on
historic credit loss rates for each group, adjusted for any material expected changes to the future credit risk of that
group.
The Group has adopted this Standard retrospectively and has recognised the following adjustments to the opening
balances:
Provision for doubtful debts
Deferred tax liabilities
Accumulated losses
30 June 2018
$'000
AASB 9
Adjustment
$'000
1,509
107,610
(41,408)
451
(135)
(316)
1 July 2018
$'000
1,960
107,475
(41,724)
The change in the Standard has had an immaterial impact on the Group's profit for the year ended 30 June 2019.
AASB 2016-5 Amendments to Australian Accounting Standards - Classification and Measurement of Share-based
Payment Transactions
The adoption of this amending Standard did not have any impact on the disclosures or the amounts recognised in the
Group's consolidated financial statements.
AASB 2017-1 Amendments to Australian Accounting Standards - Transfers of Investment Property, Annual
Improvements 2014-2016 Cycle and Other Amendments
The adoption of this amending Standard did not have any impact on the disclosures or the amounts recognised in the
Group's consolidated financial statements.
Accounting Standards and Interpretations issued but not yet effective
Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet
effective and have not been adopted by the Group for the annual reporting period ending 30 June 2019, are outlined
below:
AASB 2018-1: Annual Improvements to IFRS Standards 2015-2017 Cycle
Effective for the Group from 1 July 2019.
The amendments clarify certain requirements in:
•
•
•
AASB 3 Business Combinations
AASB 112 Income Taxes - income tax consequences of payments on financial instruments classified as equity
AASB 123 Borrowing Costs - borrowing costs eligible for capitalisation.
The Group is in the process of evaluating the impact of the new standard with no material impact expected.
The Group has not early adopted the amendments.
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116 Estia Health | 2018-19 Annual Report
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FOR THE YEAR ENDED 30 JUNE 2019
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2019
SECTION E: OTHER INFORMATION (CONTINUED)
SECTION E: OTHER INFORMATION (CONTINUED)
Tax Transparency Report | Corporate Governance | Our Board | Shareholder Information | Annual Financial Report | Directory of Estia Homes
E9
NEW ACCOUNTING STANDARDS AND INTERPRETATIONS (CONTINUED)
Accounting Standards and Interpretations issued but not yet effective (continued)
AASB Interpretation 23, and relevant standards: Uncertainty over Income Tax Treatments
Effective for the Group from 1 July 2019.
The interpretation clarifies the application of the recognition and measurement criteria in AASB 112 Income Taxes
when there is uncertainty over income tax treatments. The Interpretation specifically addresses the following:
• Whether an entity considers uncertain tax treatments separately
•
•
•
The assumptions an entity makes about the examination of tax treatments by taxation authorities
How an entity determines taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates
How an entity considers changes in facts and circumstances
The Group is in the process of evaluating the impact of the new standard with no material impact expected.
The Group has not early adopted the interpretation.
AASB 16: Leases
Effective for the Group from 1 July 2019.
AASB 16 requires lessees to account for all leases under a single on-balance sheet model in a similar way to finance
leases under AASB 117 Leases. AASB 16 addresses the classification, recognition, measurement and disclosure
requirements for both lessees and lessors.
The Group has evaluated the full impact from the application of AASB 16 in relation to the following:
•
•
leasehold properties under which it is a lessee; and
arrangements that provide a resident with rights to occupy a room.
As a lessee, the Group currently has seven aged care homes, two offices and various minor leases that are subject to
operating leases. Adopting AASB 16 will result in the recognition of these leasehold properties on the balance sheet
with adjustments to the recognition of rent expense and depreciation and interest.
The Group has elected to adopt AASB 16 under the modified retrospective approach, and measured the right-to-use
asset as if the standard has been applied since the commencement date of respective lease agreements.
Based on Management’s preliminary analysis, the adoption of AASB 16 is expected to result in the recognition of
lease liabilities in the range of $75.0 million to $85.0 million, and right of use assets in the range of $70.0 million to
$78.0 million onto the Statement of Financial Position at 1 July 2019. The difference of amount of lease liability and
right of use asset will be recognised in retained earnings and net of deferred taxes on adoption.
Expenses in respect of leases will include depreciation of the right-of-use asset and interest expense in respect of the
lease liability and will replace the ‘rent expenses’ charged in the superseded standard. As per preliminary analysis by
Management, using FY19 as a base, the rent expenses of existing lease arrangements of $5.9 million will be replaced
by depreciation and interest expenses of approximately $4.4 million to $5.0 million and $2.2 million to $2.6 million,
respectively.
The exact impact is subject to the finalisation of the work surrounding the reasonably certainty of extension options,
determination of the discount rate and assessment of potential leases embedded in other contracts.
E9
NEW ACCOUNTING STANDARDS AND INTERPRETATIONS (CONTINUED)
Accounting Standards and Interpretations issued but not yet effective (continued)
AASB 16: Leases (continued)
For arrangements that provide a resident with the right to occupy a room, the Group has performed a detailed
assessment of the contractual arrangements and has provisionally determined that adopting AASB 16 will result in the
conclusion that the arrangements will generally be defined as a lease for accounting purposes.
Where residents have opted to pay a Daily Accommodation Payment, adopting AASB 16 is not expected to result in a
material change in the accounting treatment. However, for residents that have chosen to pay a Refundable
Accommodation Deposit (RAD) or Bond, the application of AASB 16 would regard there being a non-cash charge for
accommodation. The accounting treatment for the non-cash consideration component of this arrangement is expected
to result in the recognition of an increase in revenue for accommodation and an increase in interest expense on the
outstanding RAD liability, with no net impact on the result for the period.
Below is an illustration of the potential impact on the Statement of profit or loss and other comprehensive income had
AASB 16 been applied to the current year, for RADs and Bonds only. Overall, there would be a net nil impact to profit
for the year.
Potential impact of AASB 16 for Estia as a lessor on the Statement of profit or loss and other
comprehensive income for the year ended 30 June 2019 (for changes to RADs and Bonds
only)
Revenue
Net finance costs
Increase
$'000
43,820
43,820
The Group has not early adopted the standard.
AASB 2018-6 Amendments to Australian Accounting Standards: Definition of a Business
Effective for the Group from 1 July 2020.
Clarifies the definition of a business to assist entities to determine whether a transaction should be accounted for as a
business combination or as an asset acquisition. The amendment specifically addresses:
•
•
•
The new business definition is narrower;
There is a new optional asset concentration test; and
New considerations have been incorporated to help identify when an acquired process is substantive.
The Group is in the process of evaluating the impact of the new standard with no material impact expected.
The Group does not plan to early adopt the amendment.
AASB 2018-7 Amendments to Australian Accounting Standards: Definition of Material
Effective for the Group from 1 July 2020.
Clarifies the definition of ‘material’ and its application across AASB Standards and other pronouncements. The
principal amendments are to AASB 101 Presentation of Financial Statements.
The Group is in the process of evaluating the impact of the new standard with no material impact expected.
The Group does not plan to early adopt the amendment.
Estia Health Annual Financial Report 2018 - 2019
77
Estia Health Annual Financial Report 2018 - 2019
78
118 Estia Health | 2018-19 Annual Report
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FOR THE YEAR ENDED 30 JUNE 2019
DIRECTORS' DECLARATION
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SECTION E: OTHER INFORMATION (CONTINUED)
E9
NEW ACCOUNTING STANDARDS AND INTERPRETATIONS (CONTINUED)
Accounting Standards and Interpretations issued but not yet effective (continued)
The Conceptual Framework for Financial Reporting
Effective for the Group from 1 July 2020.
The revised Conceptual Framework for Financial Reporting is not standard, and none of the concepts override those
in any standard or any requirements in a standard. The purpose is to assist the International Accounting Standards
Board in developing standards, to help preparers develop consistent accounting policies if there is no applicable
standard in place and to assist all parties to understand and interpret the standards.
The changes in the Framework may affect the application of AASB in situations where no standard applies to a
particular transaction or event.
The Group is in the process of evaluating the impact of the new standard with no material impact expected.
The Group does not plan to early adopt the Conceptual Framework for Financial Reporting.
In accordance with a resolution of the directors of Estia Health Limited, I state that:
1.
in the opinion of the directors:
(a)
the financial statements and notes of the consolidated entity for the financial year ended 30 June 2019 are
in accordance with the Corporations Act 2001, including:
(i)
(ii)
giving a true and fair view of the consolidated entity’s financial position as at 30 June 2019 and of its
performance for the year ended on that date; and
complying with Australian Accounting Standards (including the Australian Accounting Interpretations)
and the Corporations Regulations 2001;
the financial statements and notes also comply with International Financial Reporting Standards as
disclosed in Note A3; and
there are reasonable grounds to believe that the Group will be able to pay its debts as and when they
become due and payable; and
there are reasonable grounds to believe that the Company and the controlled entities identified in Note E6
of the financial statements will be able to meet any obligations or liabilities to which they are or may become
subject to by virtue of the Deed of Cross Guarantee between the Company and those controlled entities
pursuant to ASIC Class Order 98/1418.
(b)
(c)
(d)
2. This declaration has been made after receiving the declarations required to be made to the directors by the Chief
Executive Officer and Chief Financial Officer in accordance with section 295A of the Corporations Act 2001 for
the financial year ended 30 June 2019.
On behalf of the Board
Dr. Gary H Weiss AM
Chairman
20 August 2019
Estia Health Annual Financial Report 2018 - 2019
79
Estia Health Annual Financial Report 2018 - 2019
80
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122 Estia Health | 2018-19 Annual Report
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124 Estia Health | 2018-19 Annual Report
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126 Estia Health | 2018-19 Annual Report
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Intentionally Left Blank
EV
Building a better
working world
Report on the Audit of the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 56 to 73 of the directors' report for the
year ended 30 June 2019.
In our opinion, the Remuneration Report of Estia Health Limited for the year ended 30 June 2019,
complies with section 300A of the Corporations Act 2001.
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the
Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our
responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in
accordance with Australian Auditing Standards.
Ernst & Young
Paul Gower
Partner
Melbourne
20 August 2019
A member firm of Ernst & Young Global Limited
Liability limited by a scheme approved under Professional Standards Legislation
87
128 Estia Health | 2018-19 Annual Report
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For all new resident enquiries call 1300 682 833
NEW SOUTH WALES
Albury
Bankstown
Bexley
Camden
Dalmeny
Epping
Figtree
Forster
Kilbride
Kogarah
Manly Vale
Merrylands
Ryde
Taree
Tea Gardens
Tuncurry
Willoughby
SOUTH AUSTRALIA
Aberfoyle Park
Aldgate
Burton
Craigmore
Daw Park
Encounter Bay
Flagstaff Hill
Golden Grove
Hope Valley
Kadina
289 Elizabeth Mitchell Drive, Thurgoona, 2640
74 Chiswick Road, Greenacre, 2190
3-5 Eddystone Road, 2207
82 Old Hume Highway, 2570
25-29 Noble Parade, 2546
64-66 Norfolk Road, 2121
12 Suttor Place, 2525
105 Southern Parkway, 2428
70 Glendower Street, Rosemeadow, 2560
74-76 Rocky Point Road, 2217
5-13 King Street, 2093
42 Cumberland Road, Greystanes, 2145
94 Bowden Street, 2112
424 Wingham Road, 2430
42 Spinifex Avenue, 2324
4 Bonventi Close, 2428
202 Mowbray Road, 2068
39 Campus Drive, 5159
4 Gibb Road, 5154
367-379 Waterloo Corner Road, 5110
150 Adams Road, 5114
7 Lancelot Drive, 5041
150 Bay Road, 5211
40 Skyline Drive, 5159
27-31 Capt Robertson Avenue, 5125
1099 Grand Junction Road, 5090
8 Mine Street, 5554
Kensington Gardens
421 The Parade, 5068
Lockleys
Parkside
Salisbury
Salisbury East
Strathalbyn
Toorak Gardens
8 Mellor Avenue, 5032
17 Robsart Street, 5063
7 Salisbury Highway, 5108
8 Oakmont Court, 5109
7 Langhorne Creek, 5255
401 Portrush Road, 5065
02 6057 4100
02 8709 9200
02 8318 1100
02 4655 2531
02 4476 8744
02 9877 4300
02 4271 6855
02 6555 5699
02 4633 1100
02 9053 1800
02 9951 0400
02 9631 1837
02 9809 3068
02 6539 3700
02 4919 7000
02 6554 7522
02 9958 8290
08 8370 5766
08 8370 9311
08 8280 2800
08 8256 8800
08 8397 2100
08 8552 5100
08 8296 3456
08 8251 9600
08 8396 3167
08 8821 2233
08 8331 8098
08 8128 8888
08 8271 5679
08 8182 6477
08 8285 4600
08 8536 3422
08 8431 5399
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QUEENSLAND
Albany Creek
Gold Coast
Maroochydore
Mount Coolum
Mudgeeraba
Nambour
Southport
Twin Waters
VICTORIA
Altona Meadows
Ardeer
Bannockburn
Benalla
Bendigo
Bentleigh
Coolaroo
Dandenong
Epping
Glen Waverley
Grovedale
55 Faheys Road West, 4035
34 Scarborough Street, Southport, 4215
2-6 Amity Ave, Maroochydore, 4558
15 Suncoast Beach Drive, 4573
21-25 Old Coach Road, 4213
27 Glenbrook Drive, 4560
40 William Street, Southport, 4215
190 Ocean Drive, 4564
297 Queen Street, 3028
30 North Street, 3022
71 McPhillips Road, 3331
73 Samaria Road, 3672
9 Brown Street, Long Gully, 3550
34-36 Clairmont Avenue, 3204
15 Mladen Court, 3048
151 David Street, 3175
30 Epping Road, 3076
2B Grace Street, 3150
6A Perrett Street, 3216
Heidelberg West
413-415 Waterdale Road, 3081
Keilor
Keysborough
Knoxfield
Leopold
Melton South
Oakleigh East
Plenty Valley
Prahran
Ringwood
South Morang
Victoria Heights
Wattle Glen
Werribee
Wodonga
Yarra Valley
2-6 Copernicus Way, Keilor Downs, 3038
15 Stanley Road, 3173
428 Scoresby Road, 3180
52-60 Ash Road, 3224
34-42 Brooklyn Road, 3338
23A Elizabeth Street, 3166
806 Plenty Road, South Morang, 3752
241 Dandenong Road, Windsor, 3181
211-217 Wantirna Road, 3134
879 Plenty Road, 3752
41-47 Victoria Street, Ironbark, 3550
45 Silvan Road, 3096
8-10 Russell Street, 3030
240 Felltimber Creek Road, 3690
21 Hoddle Street, Yarra Junction, 3797
07 3264 4850
07 5551 0307
07 5391 4800
07 5343 0200
07 5565 0900
07 5459 3600
07 5646 4170
07 5646 4120
03 9369 4568
03 9360 4552
03 5281 1991
03 5762 6933
03 5449 2400
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03 9404 8000
03 9533 7855
03 9879 5155
03 9404 8600
03 5443 2731
03 9718 2267
03 9749 8000
02 6043 5000
03 5967 5500
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Registered Office
Level 9, 227 Elizabeth Street
Sydney NSW 2000
T +61 2 9265 7900
E info@estiahealth.com.au
Victoria Office
Level 2, 1155 Toorak Road
Camberwell VIC 3124
T +61 3 9811 9777
F +61 3 8657 0899
E info@estiahealth.com.au
Investor Relations
Company Secretary
T +61 2 9265 7900
E investor@estiahealth.com.au
Shareholder Enquiries
Link Market Services
T +61 1300 554 474
E registrars@linkmarketservices.com.au
estiahealth.com.au
Resident, Rosemary and Care Director, Robyn.